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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P M L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. President

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Speaker 1: Donald Trump's a fiscal budget proposal calls for one point

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Speaker 1: seven trillion dollars in cuts to mandatory spending and receipts

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Speaker 1: and a two percent yearly reduction in non defense discretionary

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Speaker 1: budget after twenty nine, but it also includes spending for infrastructure.

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Speaker 1: Here to tell us more about the plan is Nathan Dean,

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Speaker 1: our senior analyst Financial Services Policy for Bloomberg Intelligence, and

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Speaker 1: you can follow Nathan on Twitter at Nathan Dean d C.

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Speaker 1: All Right, Nathan Dean d C. Tell us about this

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Speaker 1: infrastructure proposal and what we should take away from it. So,

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Speaker 1: the first thing you can take away from it is

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Speaker 1: that the odds of this actually going into law extremely low.

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Speaker 1: It's two billion in federal spending. That two billion would

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Speaker 1: then entice the one point three trillion and spending that

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Speaker 1: one point three trillion would come from local and state municipalities,

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Speaker 1: would also come from the private sector. Uh, it's a

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Speaker 1: five fifty five page plan. You know, this is a

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Speaker 1: little bit more detailed than what we saw from the

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Speaker 1: tax reform plan that came up from the White House,

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Speaker 1: which is about eight or nine pages. Now it has

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Speaker 1: to go to Congress to actually come up with a

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Speaker 1: piece of legislation, and like I just said, during an

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Speaker 1: election year, this is probably not the best time for

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Speaker 1: this plan to come out. The odds of it actually

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Speaker 1: passing are quite low. But that said, do we learn

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Speaker 1: anything from this as far as what President Trump's approach

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Speaker 1: will be to infrastructure spending of perhaps not something that

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Speaker 1: will get implemented or even passed any time this year,

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Speaker 1: but even even beyond well, you know, it's really a

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Speaker 1: fundamental disagreement between the Republicans and the Democrats of who's

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Speaker 1: going to pay for the infrastructure. So, you know, this

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Speaker 1: plan is fairly it's a new idea. It's you know,

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Speaker 1: let's actually dial back the frill spending and let's get

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Speaker 1: public private partnerships and state and local municipalities put that up.

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Speaker 1: Now that that's the problem because these P three's, they

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Speaker 1: only account for about three percent of total infrastructure spend,

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Speaker 1: and in its entirety, P three have only done about

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Speaker 1: thirty billion dollars worth of spend. Uh, you know where

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Speaker 1: this is something where they want one point three trillion

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Speaker 1: to come out. The Democrats on the other side are

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Speaker 1: saying this is extremely too low. And so I think

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Speaker 1: the problem for this plan is that even if you

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Speaker 1: were to get the sixty votes to go, you know,

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Speaker 1: and pass this thing, because you can't use reconciliation. It's

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Speaker 1: got to be a bipartisan measure. Even if you are

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Speaker 1: to get that sixty sixty votes, then you need the

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Speaker 1: state and local municipalities to pay for it or come

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Speaker 1: up with their own user fees. So if you're sitting

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Speaker 1: in New York, for example, and you're wondering whether or

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Speaker 1: not this tunnel between New York and New Jersey are

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Speaker 1: gonna come, well, then it's gonna be up to New

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Speaker 1: York and New Jersey to decide, well, are we going

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Speaker 1: to charge a fifteen dollar toll every time you go

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Speaker 1: through that tunnel, etcetera. Okay, another thing that we are

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Speaker 1: learning is that President Trump is going to call for

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Speaker 1: one point seven trillion dollars in cuts to mandatory spending

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Speaker 1: and receipt um. This he will be announcing later today

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Speaker 1: as part of his fiscal year nineteen budget proposal. How

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Speaker 1: realistic is that a one point seven trillion dollars and

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Speaker 1: cuts and where are they likely to come? So the

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Speaker 1: President President Trump's budget essentially is just something that we

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Speaker 1: what we tell our our clients is don't pay attention

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Speaker 1: to the big numbers, pay attention to the specifics the

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Speaker 1: plan that they put out last week and they agreed

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Speaker 1: to essentially set the budget. This thing is pretty much irrelevant. However,

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Speaker 1: you know, there are specific things in there for specific industry.

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Speaker 1: So if you're in the healthcare sector, for example, look

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Speaker 1: at what they say specifically to the FDA for example.

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Speaker 1: And then what we'll see is is that there there's

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Speaker 1: a couple more must pass pieces of legislation coming up

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Speaker 1: between now and the end of the year. Maybe you know,

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Speaker 1: the Federal Aviation Administration has to be re author in March.

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Speaker 1: That's the time where specific sectors could be inserted. So, uh,

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Speaker 1: you know, avoid the high level noise goes specifically to

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Speaker 1: the industries that you care about, and then look for

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Speaker 1: those opportunities for the rest of the year. That's where

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Speaker 1: some of that stuff may be inserted. Nathan, What are

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Speaker 1: private activity bonds and how do they play into this conversation?

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Speaker 1: So this is something that the Trump administration has pushed forth.

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Speaker 1: It's a new way of financing. Uh. It's something that

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Speaker 1: hasn't been really tested on this grant of a scale. UH.

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Speaker 1: And so you know, that's one of the other hardships

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Speaker 1: that's really coming up with this plan is that you know,

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Speaker 1: they're coming up with a lot of new ideas and

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Speaker 1: they're trying to say, this is where we want to

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Speaker 1: take infrastructure. And I think everybody agrees that, you know,

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Speaker 1: we need about five you know, billions and billions and

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Speaker 1: billions of dollars of new infrastructure spending. The problem is

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Speaker 1: how do you go forth and pay for these Republicans

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Speaker 1: are trying you know, private activity bonds, they're trying local

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Speaker 1: and state municipalities to try and get to pay for it.

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Speaker 1: The Democrats just want the federal government to do it.

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Speaker 1: So again, it's it's not like they're not coming up

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Speaker 1: with good idea or new ideas. It's just the two

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Speaker 1: teens done that, not the year to do it. What

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Speaker 1: about the highway the federal highway tax you know for

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Speaker 1: the Highway Trust Fund. Isn't that right? About eighteen cents

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Speaker 1: a gallon right now hasn't really changed, No, and that's correct.

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Speaker 1: And you know, this is something that the you know,

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Speaker 1: the gas tax is something that the US Chamber has

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Speaker 1: actually pushed and said, let's let's increase this. And you know,

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Speaker 1: if the US Chamber is pushing that, let's go forth

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Speaker 1: and do you know that that's something that's actually they're

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Speaker 1: gonna give some political coverage to the Republicans pushing this.

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Speaker 1: You know, one thing that we were Bloomberg Intelligence we've

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Speaker 1: looked at in terms of the gas tax is that

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Speaker 1: it really doesn't change behavior, uh in auto drivers. So

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Speaker 1: if you're investing in auto companies, for example, twenty five

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Speaker 1: or thirty cent gas tax isn't really going to change

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Speaker 1: consumer behavior. It's the optics of putting in a tax, uh.

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Speaker 1: When you know, we've just been lauding all these tax

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Speaker 1: cuts and tax reform and so forth in the era

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Speaker 1: of an election or an election year, the putting an

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Speaker 1: additional gas tax on consumers is probably not good politics. So,

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Speaker 1: you know, we don't think the gas tax is actually

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Speaker 1: something to be too concerned about. Uh, you know, even

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Speaker 1: if it were to go through, I don't think we

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Speaker 1: would see much impact on uh, you know, position on

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Speaker 1: the auto companies. How much unity is there right now

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Speaker 1: among Republicans as they try to push this through and

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Speaker 1: as we look at the details of the proposal where

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Speaker 1: there might be actually some really intel So I don't

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Speaker 1: think there's a lot of unity right now. I mean

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Speaker 1: you'll hear it publicly. You know, everybody wants to say, yet,

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Speaker 1: we need to do infrastructure spending. But you know, they've

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Speaker 1: just passed tax reform, they've just passed a budget deal.

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Speaker 1: You know, if you're on the Republican side and you're

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Speaker 1: a deficit hawk, you know, there's not a lot of

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Speaker 1: good standing for you right now. But uh, you have

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Speaker 1: to go into an election year and you have to

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Speaker 1: say that within ten years our deficit is going to be,

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Speaker 1: you know, well above the twenty trillion dollars that it

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Speaker 1: is right now, and so, uh, you know, there is

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Speaker 1: some unity on the public side, but when they privately talk,

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Speaker 1: I don't I don't think there is there. I think

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Speaker 1: a lot of the Republicans, especially in the Senate and

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Speaker 1: those who are running for reelection right now, we'll just say,

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Speaker 1: you know what, this is a great plan, Thank you,

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Speaker 1: White House. We're gonna take it. We're gonna review it. Uh,

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Speaker 1: we're gonna spend the next two to three months talking

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Speaker 1: about it, and then come summer, let's just move off

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Speaker 1: and actually deal with the elections. So is there anything

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Speaker 1: that we should take away from this that would actually

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Speaker 1: be put into uh into place. I mean, maybe some

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Speaker 1: kind of proposal that would actually gain some kind of agreement. Well,

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Speaker 1: you know, again, I would just go back to the specifics.

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Speaker 1: And you know, this fifty five page plan came out,

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Speaker 1: and you know there's a lot of money in here

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Speaker 1: for rural infrastructure projects. Uh. So that's something that I

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Speaker 1: think that you know, both sides of the aisle would

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Speaker 1: agree on. Uh. You know, infrastructure growth is going to

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Speaker 1: be positive for two thousand eighteen. That's what we estimate anyway. Uh.

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Speaker 1: You know, I don't think that this bill or this

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Speaker 1: plan is going to enhance that all that much. Uh.

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Speaker 1: You know, again, you need sixty votes in the Senate.

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Speaker 1: I don't think they're gonna get it. Uh. And so

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Speaker 1: I think what I would just say is is that

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Speaker 1: you know, is This is just the first step of

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Speaker 1: the negotiation, and that if the administration decides that they

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Speaker 1: want to try and do infrastructure again in ten this

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Speaker 1: is something that they can start working with and maybe

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Speaker 1: dial it down. So that's not one point five trillion.

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Speaker 1: But you know, again, I just say stay tuned. Nathan Dean,

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Speaker 1: thank you so much for joining us. Nathan Dean, senior

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Speaker 1: analyst for Financial services policy for Bloomberg Intelligence, coming to

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Speaker 1: us from our Bloomberg studios in Washington, d C. I

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Speaker 1: want to bring in Jason Shanker. He is the president

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Speaker 1: and the founder of Prestige Economics. He is also a

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Speaker 1: Bloomberg prophet. Bloomberg Profits are professionals offering actionable insights on

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Speaker 1: markets and the economy as well as monetary policy. He's

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Speaker 1: based in Austin, Texas. Jason, the topic is commodities. What

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Speaker 1: is the best commodity to invest in? Now, well, there

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Speaker 1: are a number are different commodities that I think offer

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Speaker 1: opportunities to leverage what's going on in the global economy.

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Speaker 1: We don't normally, we don't offer explicit investment advice, but

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Speaker 1: you know, I'd say that if we're looking at what's

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Speaker 1: going on in the global economy. I think that um

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Speaker 1: China offers big insights into what will happen with aluminum

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Speaker 1: with oil. Just this morning Opex monthly oil report was out.

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Speaker 1: China is expected to see even greater oil demand growth

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Speaker 1: than last year the global economy. Those I m F

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Speaker 1: numbers really convey that industrial metals and oil prices are

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Speaker 1: like to see some upward pressure. And that's despite the

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Speaker 1: fact that there's potential for capacity to come online, especially

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Speaker 1: for say oil with with shale. But a lot of

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Speaker 1: this will hinge on what happens with the outlook for

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Speaker 1: the global economy, the outlook for the dollar, and I

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Speaker 1: think US inflation will remain the biggest question as to

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Speaker 1: how much upside there really is for monty prices. You know, Jason,

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Speaker 1: I want to I want to home in on oil

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Speaker 1: because last week we had the worst week for crude

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Speaker 1: I believe since twenty sixteen and two years, and today

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Speaker 1: we are seeing a little bit of a bounds. But

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Speaker 1: you know, you were talking about the good numbers that

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Speaker 1: we're getting out of China. It's surprising, it's not more

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Speaker 1: if people really believed that there was significant further upside

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Speaker 1: for oil. So you know, how far could we go

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Speaker 1: right now, we're underneath sixty dollars of barrel? Where do

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Speaker 1: you see crewde ending the year? Well, for the year's

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Speaker 1: average price, you know we see w t I between

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Speaker 1: sixty and sixty five. But you know we're going to

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Speaker 1: have a really hot driving season this year. You know,

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Speaker 1: the job markets that's been since two thousands, two thousand one,

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Speaker 1: we've seen. Uh. Now with the tax cuts, people are

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Speaker 1: gonna have more disposable income. You're gonna see this be

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Speaker 1: a very big, rocking driving season. And that means that

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Speaker 1: gasoline demand in the US is going to be very strong,

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Speaker 1: and that drives global oil prices. So once we get

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Speaker 1: to the latter part here of Q one and we

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Speaker 1: go into Q two and we see the ramp up

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Speaker 1: for the US driving season, there's going to be a

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Speaker 1: lot of demand for refineries for crude oil, and that

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Speaker 1: could some prices higher. We could see spikes to seventy,

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Speaker 1: We could see spikes above that. I wouldn't expect those

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Speaker 1: to be sustained prices because the shale drillers are going

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Speaker 1: to see those spikes as opportunities to lock in production

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Speaker 1: at a certain price level. But I think you're gonna

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Speaker 1: see most of the price action for the year being

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Speaker 1: the six sixty five range for w t I and

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Speaker 1: a few dollars higher for brents. So but one of

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Speaker 1: the question though with oil, how much is uh sort

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Speaker 1: of the direction of prices they're dependent on the dollar,

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Speaker 1: because we are seeing a bit of a rebound today

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Speaker 1: in prices, although not recouping even the losses on Friday. Uh,

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Speaker 1: And of course the dollar is weakening a little bit,

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Speaker 1: and this has sort of been a move in tandem.

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Speaker 1: So how much do you sort of judge that? Well,

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Speaker 1: that's more of a long term thing, you know, we've

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Speaker 1: looked at these dollar crude price dynamics. That's more of

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Speaker 1: a long term uh. You know, over a multi year

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Speaker 1: period or over a single year period, you can see

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Speaker 1: that there's an inverse correlation. What's more important is the

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Speaker 1: expectation of how stable is growth. And that's why I

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Speaker 1: say US inflation is gonna be really important right now.

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Speaker 1: That's CPI report on Wednesday is going to be critical

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Speaker 1: for what happens to the dollar, what happens to equities,

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Speaker 1: what happens to oil, what happens to metals, Because the

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Speaker 1: sell offs we've seen not just in oil, but in equities,

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Speaker 1: the rebound in the green back and the rise in

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Speaker 1: bond yields that was all triggered by the wage inflation

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Speaker 1: in the February second release of that January jobs report

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Speaker 1: that was two point nine percent year over year. And

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Speaker 1: so I think you're gonna see folks looking for this

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Speaker 1: to be you know, kind of a modest CPI report

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Speaker 1: and and that would you know, potentially send oil prices,

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Speaker 1: medals prices, equities back up on yields, and the dollar

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Speaker 1: back down. But against that backdrop, if you get a

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Speaker 1: surprise of more inflation, uh, then you know that that

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Speaker 1: party is over and you see these things take another hit.

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Speaker 1: So I think that's the biggest economic data point to watch,

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Speaker 1: and that's going to impact what happens to prices right

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Speaker 1: for a couple of weeks because you've got um Now,

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Speaker 1: then the eyes will be on the next FED meeting

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Speaker 1: where we expect the rate high can we have been

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Speaker 1: for a number of months? Jason just quickly, does that

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Speaker 1: mean that it would be a good investment refining companies

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Speaker 1: oil refineries like Marathon patrol it Well, you know we

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Speaker 1: don't comment on specific company names. You know, it'll depends

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Speaker 1: what they called the crack spreads, and crack spread is

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Speaker 1: a profit margin between product and crewde prices. UM. You know,

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Speaker 1: if you were to see the demand for those products

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Speaker 1: be high and crew prices below, then that should make

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Speaker 1: the profit margins for refineries UH quite high. Especially if

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Speaker 1: we see that that that demand that driving season be

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Speaker 1: as strong as we expect to. Refineries are likely as

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Speaker 1: an industry to do well going into the driving season.

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Speaker 1: Jason Shanker, thank you so much for joining us. Jason Shanker,

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Speaker 1: president and founder of Prestige Economics. He also is a

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Speaker 1: Bloomberg Profit writing columns on everything from commodities to equities.

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Speaker 1: Thank you so much for being with us. For e

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Speaker 1: t F that has been largely a one way road

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Speaker 1: over the past few years with investors pouring money into

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Speaker 1: these funds. Last week there was a change with exchange

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Speaker 1: traded funds seeing thirty one billion dollars in withdrawals. You

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Speaker 1: to talk about the industry, Karen Shnoony. She has a

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Speaker 1: fixed income strategist for black Rock based in San Francisco. UH,

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Speaker 1: And Karen, before we get into a study that black

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Speaker 1: Rock conducted about E t F investing, I want to

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Speaker 1: get your take on last week because we did see

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Speaker 1: some very big withdrawals across the board from some corporate

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Speaker 1: debt fixed income ETFs, but really from the big broad

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Speaker 1: US equity e t s. Is this a signal of

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Speaker 1: something broader? And are are you concerned about it? No,

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Speaker 1: we're not concerned. What we tend to see whenever we

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Speaker 1: have these market sell offics is ets really step in

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Speaker 1: and help the capital markets because they provide pricing transparency

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Speaker 1: and they allow a lot of investors to be able

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Speaker 1: to get in an out of asset classes very easily.

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Speaker 1: Having said that, maybe you could just step back and

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Speaker 1: tell us about this survey for a moment and what

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Speaker 1: you learned that may be surprising to some investors. Absolutely, so,

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Speaker 1: black Rock conducted an e t F Pulse survey, and

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Speaker 1: this talks to both investors who are users of ets

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Speaker 1: and non users of ets to really help them help

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Speaker 1: us understand what's driving their behavior and how they think

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Speaker 1: about ets. So there were some pretty interesting trends that

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Speaker 1: came out of this year's surveys. About one in three

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Speaker 1: investors right now is using e t s and they're

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Speaker 1: using them in a variety of different nasset classes, not

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Speaker 1: only that we've noticed that the holding period for e

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Speaker 1: t s has really increased. So it was only about

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Speaker 1: five years was the average holding period. That's increased to

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Speaker 1: five point seven years, and we're seeing that over of

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Speaker 1: investors plan on keeping their et F holdings over eleven years.

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Speaker 1: So we're releasing that these are low cost investments that

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Speaker 1: are really driving the core of investors portfolios UM. But

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Speaker 1: one of the other interesting things that we noticed was

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Speaker 1: the boomers, the baby Boomers actually had some of the

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Speaker 1: lowest usage of ETS, even below the silver's Gen X

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Speaker 1: and millennials in terms of their portfolio adoption. Karen, what's

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Speaker 1: the breakdown with respect to institutional use versus retail use?

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Speaker 1: So at least I would say it depends on the fund.

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Speaker 1: What we've noticed this with some of the larger, most

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Speaker 1: liquid funds, we are seeing more institutional adoption. It can

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Speaker 1: be as high as sixty seventy UM, but we're noticing

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Speaker 1: with some of the smaller, newer funds or more niche exposures,

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Speaker 1: it still is primarily dominated by retail. But in general,

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Speaker 1: we're seeing more pension plans, insurance companies, either other other

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Speaker 1: asset managers using ETS as a way to get exposure

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Speaker 1: to different asset classes to give any reason for why

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Speaker 1: they are opting for exchange traded funds, Yes, I think

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Speaker 1: some of the biggest reasons that we're seeing is that

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Speaker 1: people are starting to use them more as a long

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Speaker 1: term holding. And we're also seeing that some people are

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Speaker 1: migrating away from using actively managed mutual funds, and I

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Speaker 1: think the flows um helped demonstrate that narrative as well.

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Speaker 1: Just as we've seen a lot of money coming out

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Speaker 1: of especially active stock funds in favor of more index products.

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Speaker 1: So with respect to pensions, uh, and say perhaps even

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Speaker 1: insurance companies, which funds do they tend to gravitate toward?

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Speaker 1: And what what are et f s replacing? Is it

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Speaker 1: managed to counts exactly what you're saying. Uh. Some of

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Speaker 1: it is individual bonds, so they might be especially on

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Speaker 1: the fixed income side. We might see pension plans and

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Speaker 1: insurance companies. They've they've been very big buyers of individual securities.

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Speaker 1: They're also looking for creative ways to build liquidity into

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Speaker 1: their portfolios so they can be more nimble as well.

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Speaker 1: So we're seeing go ahead, so know that, just to

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Speaker 1: make sure that I understand this. In other words, Uh,

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Speaker 1: they might own specific bonds which is not E t

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Speaker 1: F s U, and they would go after and uh

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Speaker 1: look at specific securities that they analyze, but they would

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Speaker 1: then have basically E t F exposure that they could

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Speaker 1: sell if they wanted to change their positioning. On a

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Speaker 1: broad level, that's right. Our our flagship investment grade corporate

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Speaker 1: bond fund l q D is being held by quite

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Speaker 1: a bit of insurance companies and pension plans because they

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Speaker 1: know that they can get that exposure to corporate bonds

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Speaker 1: that they're looking for in a much more diversified liquid

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Speaker 1: way than they compare that with maybe other securities that

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Speaker 1: are higher and book yield that they wanted to buy

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Speaker 1: um and then they can do the look through and

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Speaker 1: DTF to see how much exposure they have to individual issuers.

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Speaker 1: When you mentioned the sort of relative popularity of exchange

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Speaker 1: traded funds between millennials and other age cohorts, could it

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Speaker 1: be possible that, you know, millennials, they may be invest

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Speaker 1: through there for oh one K plans and many for

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Speaker 1: oh one case don't include e t F s as

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Speaker 1: an option. You're right, A lot of foreign k as,

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Speaker 1: a lot of retirement plans don't currently have very much

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Speaker 1: at F usage, but we found that the millennials indicated

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Speaker 1: that about forty of them do own E t F

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Speaker 1: and the current allocations about eighteen percent. So we're seeing

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Speaker 1: that especially with robo advisors. UM it's a very popular

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Speaker 1: way for millennials to invest because they can literally use

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Speaker 1: an app on their phone to do it. So we're

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Speaker 1: finding that that's one of the ways that a lot

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Speaker 1: of monials get started with investing, and those robo advisors

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Speaker 1: are using a lot of ets. Just real quick, Karen,

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Speaker 1: I'm wondering from your perspective, how much can people read

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Speaker 1: into flows as being significant with respect to a broad market.

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Speaker 1: I'm I'm thinking about l QT, which you were talking

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Speaker 1: about just then, with insurance companies and pensions. It saw

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Speaker 1: about two billion dollars about outflows over the past week.

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Speaker 1: Is that significant? I think it's just an indication that

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Speaker 1: a lot of investors are either a thinking that credit

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Speaker 1: spreads are very tight and maybe they want to lighten

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Speaker 1: up some of their corporate credit. Maybe they might want

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Speaker 1: to go to either risk your securities, like we've seen

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Speaker 1: a lot of them flows into emerging market debt. The

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Speaker 1: last few weeks, we've seen some people using the price

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Speaker 1: dislocation in the equity markets as a as a buying

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Speaker 1: opportunity to go back into equities. So I think you

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Speaker 1: can look at thet F flows and understand that they're

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Speaker 1: indicative of broader sentiment on an asset class. Thanks very

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Speaker 1: much for being with us. Karen Shinnoni is fixed income

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Speaker 1: strategist for black Rock, joining us from San Francisco, giving

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Speaker 1: us details about the results of their latest black Rock

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Speaker 1: e t F Pulse survey, Luxury travel in Asia. What

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Speaker 1: makes it luxurious? Let's find out more from deep pac Ory.

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Speaker 1: He is the chief executive of Lebua Hotels and Resorts.

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Speaker 1: They are based in Bangkok, and Deepak joins us here

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Speaker 1: in our eleven three oh studios. Thank you very much

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Speaker 1: for being here. Thank you very much. All right now

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Speaker 1: you're going to have to do all the pronunciations here

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Speaker 1: because this is a new world for many of us.

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Speaker 1: And maybe you could just describe your background and how

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Speaker 1: you came to be employee number one. I came to

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Speaker 1: Bangkok for honeymoon and we went to Bangkok and my

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Speaker 1: wife said, you know what, I love this city and

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Speaker 1: I'm not going back. And I said, okay. Then we

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Speaker 1: stay there and then this was building after the financial

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Speaker 1: crisis seven years lying vacant and no interior designer wanted

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Speaker 1: to design that. We came to us. We went to

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Speaker 1: Hong Kong, London, uh and we ended up hiding an

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Speaker 1: office designer to design our first restaurant. And actually, the

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Speaker 1: the reason we are quite known in luxury today is

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Speaker 1: ours is the inverted moderate. Meaning most of the hotel

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Speaker 1: companies in the world start with the hotels and then

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Speaker 1: go to the restaurants. We started with the restaurant, building

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Speaker 1: a luxury and then came with the hotel. I want

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Speaker 1: to talk to you about where tourists come from that

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Speaker 1: visit your your hotels, because you know, there was this

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Speaker 1: story on the Bloomberg yesterday that I thought was really

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Speaker 1: interesting talking about how China is emerging as one of

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Speaker 1: the biggest provide are of tourists around the world. Frankly, okay,

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Speaker 1: I'm not flattering Bloomberg listeners, but still in the world,

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Speaker 1: the number one luxury spending comes from the United States

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Speaker 1: of America. Okay, so when I say number one luxury spending,

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Speaker 1: China is a blip meaning they have to put a

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Speaker 1: tick mark. So the population is huge they've got a

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Speaker 1: lot of money, they will go shop. They have take

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Speaker 1: that box, then they will continue. But in US, when

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Speaker 1: it comes to luxury, it's become a not a luxury,

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Speaker 1: but it's become a style. And in Asia, if we

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Speaker 1: have to pick up any countries, Japan, because after World

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Speaker 1: War Two, Japan became very financially independent and they started

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Speaker 1: spending on luxury like that. So China is more of

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Speaker 1: a mass tourism than luxury. Is there a difference in

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00:22:45,240 --> 00:22:49,359
Speaker 1: how you cater to different clients depending on where they're from.

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00:22:49,400 --> 00:22:52,280
Speaker 1: I mean, they sort of demand different things, so we

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00:22:52,320 --> 00:22:54,920
Speaker 1: cannot cater to different clients. If I will be telling

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Speaker 1: that we cater to different clients with the different needs,

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00:22:57,080 --> 00:22:59,080
Speaker 1: I'll be telling a lie. So we have a model

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00:22:59,119 --> 00:23:00,640
Speaker 1: that this is what we all king at in our

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00:23:00,680 --> 00:23:06,520
Speaker 1: clients and we put filters. Our filters are menu prizing,

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00:23:06,680 --> 00:23:09,840
Speaker 1: the dress codes, the design of the restaurants, and that's

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00:23:09,880 --> 00:23:13,040
Speaker 1: how people come to us. Uh. You know, when I

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00:23:13,119 --> 00:23:16,000
Speaker 1: asked you about your background, there's more than just a

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00:23:16,080 --> 00:23:20,280
Speaker 1: honeymoon in in Bangkok, because you have experience working for

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00:23:20,320 --> 00:23:26,399
Speaker 1: the Kampinski German kamp Pinsky brands as well as TAJ International.

447
00:23:27,800 --> 00:23:30,600
Speaker 1: Was that what allowed you to gain the credibility to

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00:23:30,680 --> 00:23:35,120
Speaker 1: raise the money in order to build out the hotel business.

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Speaker 1: That I met the promoters in Thailand, so they were

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00:23:38,600 --> 00:23:42,400
Speaker 1: high promoters. Just the credibility came neither from Kapinsky nor

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00:23:42,480 --> 00:23:45,960
Speaker 1: from that, but came from Carlson. I I did work

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Speaker 1: for Region Brand for some period of time. That was

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00:23:48,680 --> 00:23:50,920
Speaker 1: brought by Carlson at that point of time, So that's

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Speaker 1: where the credibility came. But actually the credibility came to us.

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Speaker 1: Anybody could have done that project at that point in

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00:23:56,840 --> 00:23:59,320
Speaker 1: time because nobody wanted to touch it. We ended up

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00:23:59,400 --> 00:24:01,960
Speaker 1: hiding office as anato designer restaurant, and today it is

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00:24:02,000 --> 00:24:04,280
Speaker 1: the hottest restaurant. You know, there's a saying you can

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00:24:04,359 --> 00:24:06,880
Speaker 1: visit Rome and not visit Vatican, but when you visit

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00:24:06,920 --> 00:24:09,200
Speaker 1: Bangkok you have to visit Laboa otherwise it's a said,

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00:24:09,720 --> 00:24:11,960
Speaker 1: So anybody could have done that. And this is the Dome.

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00:24:12,280 --> 00:24:15,320
Speaker 1: This is the Dome, and this became sort of an

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00:24:15,520 --> 00:24:18,720
Speaker 1: icon right in the city. It became an icon. See

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00:24:18,840 --> 00:24:21,680
Speaker 1: when we opened Dome in ther two thousand three, Hiroco,

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00:24:22,000 --> 00:24:24,760
Speaker 1: there was no rooftop restaurant in New York today. You

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00:24:24,800 --> 00:24:27,520
Speaker 1: tell me sitting here. How many rooftop places are there?

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Speaker 1: So we started a trend. We started a trend. Just

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00:24:30,440 --> 00:24:32,480
Speaker 1: to give an example, we have a champagne bar which

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00:24:32,520 --> 00:24:36,800
Speaker 1: is eighteen square meter. Only eighteen square meter one particular

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00:24:36,840 --> 00:24:40,640
Speaker 1: champagne is sold more than whole Singapore, including duty free Singapore.

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00:24:40,680 --> 00:24:44,560
Speaker 1: I'm talking about city, so so you can imagine what

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00:24:44,760 --> 00:24:47,360
Speaker 1: kind of clientele what And it's a corporate b city,

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00:24:47,480 --> 00:24:51,120
Speaker 1: developing city. So the luxury market group by about five

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Speaker 1: last year. I'm wondering, what's the sort of price point

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00:24:56,080 --> 00:24:59,840
Speaker 1: for say a night in a hotel or for an entree.

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00:25:00,280 --> 00:25:04,600
Speaker 1: Uh that is sort of enough that you can survive

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00:25:04,640 --> 00:25:09,359
Speaker 1: and thrive. That won't okay? So I say, are depends

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00:25:09,359 --> 00:25:12,040
Speaker 1: on what kind of restaurants. So if if we go

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Speaker 1: to our two Michigan Star restaurant, which is Mezzaluna, it's

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00:25:14,800 --> 00:25:18,800
Speaker 1: a set coast, so that sets you per person, including

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00:25:18,840 --> 00:25:23,280
Speaker 1: some beverages not all in some and the room. I

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00:25:23,320 --> 00:25:26,040
Speaker 1: think the cheapest room rate in the world comes from Bangkok.

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00:25:27,400 --> 00:25:30,520
Speaker 1: It's because of supply and demand, and though the supply

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00:25:30,600 --> 00:25:33,120
Speaker 1: is huge, thirty five million tourists ended up in near

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00:25:33,160 --> 00:25:37,159
Speaker 1: two thousand seventeen. It is the second year. That is

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00:25:37,200 --> 00:25:40,760
Speaker 1: the largest tourist in bound tourism in any city in

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Speaker 1: the world million. So it's sort of because it's cheaper

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00:25:45,880 --> 00:25:48,679
Speaker 1: though because there are more because of the experience. So

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00:25:48,840 --> 00:25:52,080
Speaker 1: see when we talk about luxury prices a nonrelative, it's

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00:25:52,119 --> 00:25:54,639
Speaker 1: the experience. You know, when a customers start looking at

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00:25:54,640 --> 00:25:58,080
Speaker 1: the right side of the menu, he's not looking at

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00:25:58,080 --> 00:26:01,320
Speaker 1: the luxury, he's just looking at the price. So it

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00:26:01,400 --> 00:26:03,640
Speaker 1: can be cheap, it can be expensive, it doesn't matter.

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Speaker 1: It's an experience. Thank you so much for being here.

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Speaker 1: Thank you, Lisa. Thank you Ari, chief executive officer of

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Speaker 1: Leboa Hotels and Resorts based in Bangkok, Thailand, and the

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Speaker 1: luxury travel market is certainly huge and growing rapidly and

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Speaker 1: definitely a trend to watch as it does contribute so

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Speaker 1: much to the economy. Thanks for listening to the Bloomberg

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00:26:30,640 --> 00:26:33,280
Speaker 1: P and L podcast. You can subscribe and listen to

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00:26:33,320 --> 00:26:37,840
Speaker 1: interviews at Apple Podcasts, SoundCloud or whatever podcast platform you prefer.

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00:26:38,240 --> 00:26:41,840
Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm

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00:26:41,840 --> 00:26:45,160
Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.

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Speaker 1: You can always catch us worldwide on Bloomberg Radio