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Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in

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Speaker 1: local communities, economies and a sustainable future. That's the power

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Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated

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Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best of economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course, on the Bloomberg. Carl Weinberg is the

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Speaker 1: founder of in the chief economist at High Frequency Economics.

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Speaker 1: He's here in our bloombergod leveming three studios. It's great

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Speaker 1: to see you as always. Let's start with the data

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Speaker 1: this week. What you're looking for especially, I mean industrial

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Speaker 1: production tomorrow, Matt. And that's a big one you'll be

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Speaker 1: paying attention to this week. Yeah, I mean, we think

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Speaker 1: the industrial production number is probably going to turn out

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Speaker 1: okay based on the surveys that we're seeing. You know,

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Speaker 1: the economy is chugging along. You know, we're not going

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Speaker 1: to see any great numbers out of industrial production though. Um.

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Speaker 1: You know we're looking about maybe seven tenths of a

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Speaker 1: percent for the month. At high frequency, that's a little

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Speaker 1: bit more than the consensus. Uh. But overall, you know,

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Speaker 1: the economic growth numbers are not going to knock anybody's

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Speaker 1: socks off anytime soon, as we're only looking for about

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Speaker 1: you know, two plus percent growth for the year, and

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Speaker 1: that's not going to be a scary number for most people.

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Speaker 1: We have the House of Representatives back in session in

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Speaker 1: Washington at d C this week. They were off last week,

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Speaker 1: the Senate was there. They were not what's your sense

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Speaker 1: of what's happening in Washington right now? The degree which

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Speaker 1: that's that's influencing the direction of this economy in the US. Wow, Well,

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Speaker 1: you know, I don't really know exactly how to go

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Speaker 1: at that answer, you know, without going getting into the

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Speaker 1: politics of it. You know, the Commey affair has turned

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Speaker 1: into a big distraction. And we had been skeptical at

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Speaker 1: High Frequency Economics about the prospects for a lot of

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Speaker 1: fiscal stimulus to begin with, for a really strong tax

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Speaker 1: reform package to begin with, and now with all of

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Speaker 1: these distractions, were even more skeptical. So work in the

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Speaker 1: process of marking down you know, it only takes a

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Speaker 1: tenth of a percent or two tenths off of GDP growth.

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Speaker 1: But when you're only growing on two and a half percent,

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Speaker 1: you can't really afford to lose a lot of it.

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Speaker 1: And we think we might see a little bit of

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Speaker 1: tax cuts coming up, but no major tax reform as

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Speaker 1: anybody had hoped for, and not the big, not very

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Speaker 1: little of the big infrastructure spending that people have been

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Speaker 1: looking for just a few months ago. What's distracting the

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Speaker 1: Fed Reserve right now is they push your head to

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Speaker 1: their next meeting and they're looking at all of the

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Speaker 1: data that we've gotten recently in the data will get

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Speaker 1: here before they gather again in the equals building. What's

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Speaker 1: what's preoccupying them, Well, their eyes are crossed right now.

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Speaker 1: You know, they're looking at, you know, a lot of inconsistencies.

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Speaker 1: They're looking at, you know, an unemployment rate that's at

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Speaker 1: their level of nairo They're looking at inflation numbers that

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Speaker 1: aren't delivering the inflation that you would expect to see.

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Speaker 1: And they're looking at an economy that should be growing

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Speaker 1: even though you know, interest rates are down at zero

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Speaker 1: right now. So they are walking a lot of different things.

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Speaker 1: I think that core belief is that at the end

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Speaker 1: of the day, the laws of supply and demand haven't

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Speaker 1: been repealed, that their job is to protect the country

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Speaker 1: from the worst possible outcome, which, given their mandate, is

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Speaker 1: not a recession as much as it is an overshoot

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Speaker 1: of inflation. So with rising risks of inflation on the horizon,

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Speaker 1: we think they're going to be responding to reducing this

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Speaker 1: chance of the worst possible outcome given their mandate. Oh yeah,

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Speaker 1: back in the nearest students, I remember where the red buttons.

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Speaker 1: There's a guy to my right, Good morning, sir. Yeah.

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Speaker 1: It is one of the great early successes of Boston Biotechnology,

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Speaker 1: Thermo Fishers Scientific Certific. It's fifty five thou employees out

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Speaker 1: of Scenic Waltham, Massachusetts, and they've got themselves a new transaction.

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Speaker 1: It's a seven billion dollar deal to billion Dad. It's

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Speaker 1: not that big, but it's just what Thermo Fisher has done,

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Speaker 1: Thermo Scientific has done. David Gura for years. I remember that.

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Speaker 1: I was like, who are these guys? Who are these guys?

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Speaker 1: And they have just built and built and built this

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Speaker 1: thing forever. Thermo Fisher takes up Pathion as well. Seven

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Speaker 1: billion dollars um David, you know, it's good to be here.

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Speaker 1: It's nice to have a global cyber attack. So we

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Speaker 1: got something to talk about besides the administration. What did

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Speaker 1: you come back? You came back Friday right after the show.

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Speaker 1: British Airways did it right actually, and what what was

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Speaker 1: sad was the pilots actually listened to us. I met

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Speaker 1: the pilots and they did the one of those YouTube

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Speaker 1: landings JFK. They came in a little bit sideways in

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Speaker 1: the pouring rain, and then we thank them for landing

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Speaker 1: the beast on the ground. Carl Weinberg knows about sheer.

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Speaker 1: There's wind shear within the economy. Where's the risk now

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Speaker 1: for the U. S. Economy? Is it a lack of investment?

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Speaker 1: Is it this this colossal reality we may not get

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Speaker 1: wage growth? What's the wind shear out there for this economy?

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Speaker 1: You know, I am a pilot and I can explain

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Speaker 1: that that crooked landing to you. We were doing it.

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Speaker 1: We're we're looking at Connecticut when we landed in great detail.

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Speaker 1: You know the risk of the U. S. Economy? I think,

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Speaker 1: first of all, from I'm the international guidet high frequency economics,

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Speaker 1: so I look overseas, you know, and we're looking at

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Speaker 1: a world where the I m S forecast of accelerating

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Speaker 1: growth just isn't happening. And most of their hopes at

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Speaker 1: the i m F annual meetings for an acceleration of

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Speaker 1: world growth over the next two years was that the

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Speaker 1: emerging world was going to pick up the pace. And

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Speaker 1: they're growing their bigger share of world GDP now, so

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Speaker 1: they matter and they do. But now with commodity prices

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Speaker 1: on the down swing, and I don't consider fifty fifty

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Speaker 1: two dollars in oil barrels being an upswing, I considered

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Speaker 1: to be a down swing, we're seeing their incomes being

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Speaker 1: trimmed again. That's a hit to world trade, that's a

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Speaker 1: hit to their ability to import, and that's a hit

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Speaker 1: to our ability to x sport. So to me, the

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Speaker 1: from the international guy at High Frequency Economics, to me,

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Speaker 1: that's where the biggest threats are right now. Help us

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Speaker 1: understand what's going on with with OLPEC. We saw I

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Speaker 1: take up a little bit, could be the broader downturn

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Speaker 1: you're talking about gently, but did see oil prices move

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Speaker 1: on on reports that there was going to be an agreement,

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Speaker 1: perhaps a longer agreement than was expected to extend the

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Speaker 1: production cuts. What what's the influence that that OPEC plays

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Speaker 1: right now in oil oil prices? Well, the influence that

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Speaker 1: OLPEX plays right now is that they have don't have

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Speaker 1: an influence, and that their ability to influence prices is

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Speaker 1: increasingly decreasing with the rise of not just shell oil

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Speaker 1: producers in the United States, but emerging market oil everywhere.

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Speaker 1: You know, there are now a much smaller part of

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Speaker 1: the world or oil market than they were in the

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Speaker 1: nineteen seventies. And the adaptation or the consequence of that

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Speaker 1: is that with everybody pumping the stuff up, there's more

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Speaker 1: supply than demand. Uh. The OLPEC ministers talk about getting

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Speaker 1: inventories back down to the levels of the last five years,

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Speaker 1: but that's the wrong bar. Oil prices have tumbled over

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Speaker 1: the last five years, hitting that bar. The real metric

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Speaker 1: is that pair to the last twenty years average. Always

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Speaker 1: see the inventories are over their normal range for twenty

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Speaker 1: years by ten days of supply, that's half a billion

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Speaker 1: barrels of oil for to come to market. And if

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Speaker 1: they're a deal between Russia and Saudi Arabia manages to

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Speaker 1: keep you know, a million barrels a day off of

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Speaker 1: the market was still more than a year away from

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Speaker 1: just getting inventories back down to normal, and their deal

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Speaker 1: probably doesn't make even that much of a difference because

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Speaker 1: everybody ramped the production beforehand to come back with Carl

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Speaker 1: Weinberger US. Right now, we speak with Commander Weinberg on

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Speaker 1: runway component thrust vector. Captain Weinberg, excuse me, Captain Weinberg,

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Speaker 1: and they and they crab the crab the airplane. That's right.

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Speaker 1: What does that mean? It means that they turn the

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Speaker 1: airplane into the wind so that it tracts along the

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Speaker 1: runway and then at the last minute they straighten it

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Speaker 1: out so that it hits with the wheels pointing down

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Speaker 1: the runway instead of towards the terminal too soon, so

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Speaker 1: you go off the runway. Do they do They do

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Speaker 1: it manually like a big plane, like a seven. I

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Speaker 1: would say the odds of them flying it manually would

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Speaker 1: be very low. It would depend on the currency of

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Speaker 1: the captain who has to do certain number of medical landings.

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Speaker 1: But for the most part they depend on the machines.

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Speaker 1: The machines are so much better, and the machines do

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Speaker 1: that tilting into the wind. The technology on these aircraft,

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Speaker 1: these air busses and these bowing airplanes are just absolutely incredible.

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Speaker 1: Auto land is what it's called. How many how many

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Speaker 1: degrees do they go when they crab? It depends on

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Speaker 1: it's well, if you were landing in a forty knot wind,

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Speaker 1: it wouldn't be quite as much as that, but it

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Speaker 1: might be substantial. But the planes coming in at a

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Speaker 1: hundred and forty knots and if they have a ten

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Speaker 1: or fifteen not cross wind component, they're probably not going

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Speaker 1: to have to crab all that much. Why I mean,

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Speaker 1: this is why we love to have these guests on

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Speaker 1: driving planes. Driving planes. Yeah, that's the future. Now, I

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Speaker 1: don't think so Tom could land one of these planes,

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Speaker 1: that's what you're saying. No, my wife says that in

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Speaker 1: our plane, that the way that I fly as I

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Speaker 1: push buttons until it does what I wanted to do.

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Speaker 1: And that's more or less what these guys on the

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Speaker 1: big planes they do. I feel like I'm with hap

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Speaker 1: Arnold or something. This is the founder of American aviation.

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Speaker 1: Do you know David girl hap Arnold His first flight

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Speaker 1: was with the Wright brothers. That is so cool. This

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Speaker 1: is your surveillance aviation moment, Carl Heinberg. That was fabulous

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Speaker 1: because all of us have confronted this bad weather and

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Speaker 1: one of these big airplanes. We'll come back with Dr

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Speaker 1: Weinberg and talk about international economics in the state of America. Carl.

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Speaker 1: There was a jewel at the FED twenty years ago

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Speaker 1: out of m my team named one Carl Whalen. Carl

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Speaker 1: Whalen was fabulous. He's now at the Irish Central Bank

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Speaker 1: and he wrote a paper which I remember called real

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Speaker 1: Wage Dynamics in the Phillips Curve. That's where we are

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Speaker 1: right now. If we get a better economy, does inflation

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Speaker 1: go up faster than real wages go up? Where all

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Speaker 1: of our listeners are gonna feel miserable because they inflation

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Speaker 1: adjusted wages go flat or down. You know, someone else

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Speaker 1: was talking about that on Bloomberg this morning and I

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Speaker 1: nearly drove off the road I heard it, you know, John,

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Speaker 1: it wasn't it was super early. I think it was

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Speaker 1: one of those guys on the other side of the pond.

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Speaker 1: You know, when you have inflation, inflation is a parallel

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Speaker 1: increase in both prices, all prices and wages at the

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Speaker 1: same time. So real incomes stay the same, Savers are poorer,

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Speaker 1: spenders are richer, and there's an incentive to spend more

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Speaker 1: when there's inflation, because you want to buy that refrigerator

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Speaker 1: or that host today before the price goes up. And

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Speaker 1: that's the traditional analysis of inflation. It's a windfall for some,

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Speaker 1: but at the expense of savers? Is it a windfall

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Speaker 1: for our listeners who are out there working in the

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Speaker 1: real world. They're going to get a three percent pay raise.

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Speaker 1: Is an inflation going to make that evaporate? It's going

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Speaker 1: and if it's a true inflation, we're going to make

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Speaker 1: it evaporate. But Tom, I'm just going to be critical here.

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Speaker 1: You know, the world has gotten into this notion that

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Speaker 1: CPI increases our inflation, and they're not all right, c

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Speaker 1: p I. I'm not putting on my pointing headed economiside here.

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Speaker 1: But every time every time the CPI goes up, all right,

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Speaker 1: doesn't mean there's inflation. Every time there's inflation, the CPI

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Speaker 1: goes up. But say the price of gasoline goes up,

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Speaker 1: all right, that's a price change relative to everything else

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Speaker 1: that makes people poor actually because their wages don't go up.

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Speaker 1: David Blanche Flower would know about money illusion. Blanche Flower

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Speaker 1: Oswald wage curve, which was done at the time of

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Speaker 1: the Whaland paper, really suggests some pain within society. Are

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Speaker 1: we going to see that? Well? If we if we

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Speaker 1: get a true inflation, we will see that right right now.

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Speaker 1: What we're all dissecting is an acceleration of the c

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Speaker 1: p I and if we don't see a parallel and

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Speaker 1: proportionate acceleration of wages to match it, then we'll either

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Speaker 1: workers will either be better off or worse off, but

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Speaker 1: always at the expense of someone else, like either capitalists,

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Speaker 1: God forbid, or savers, which is more areous. With such

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Speaker 1: a big baby boomer generation now approaching retirement, you start

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Speaker 1: reducing the present purchasing value of their savings. Then you

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Speaker 1: get into a situation where a big segment of society

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Speaker 1: is worse off. Yesterday, the new president of France put

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Speaker 1: on a snappy new suit and road around Paris in

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Speaker 1: an open air jeep. Today I think he meets with

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Speaker 1: his German counterpart. How much does the European economy change

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Speaker 1: now with his election? We had a more state elections

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Speaker 1: in Germany over the weekend. Does your outlook for the

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Speaker 1: European economy change is a result of what we've seen

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Speaker 1: in France and Germany over these last two weekends. Well,

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Speaker 1: I think the betting has been on macall for some

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Speaker 1: time now, so I think that there's no surprise to

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Speaker 1: the markets this morning, right out of the box. So

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Speaker 1: thinking longer term, one of the issues that Tom and

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Speaker 1: I were discussing earlier today is this question of Ken

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Speaker 1: Macon and Angela Merkel agree on what to do about England,

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Speaker 1: and this I think is the most immediate question in

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Speaker 1: front of everybody alright at stake. The biggest jewel out

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Speaker 1: there is the city. Will they allow the city to

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Speaker 1: continue to exist? Well, they want that business for Paris

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Speaker 1: very high taxes of course, or Frankfurt much more of

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Speaker 1: a friendly environment for these kinds of businesses. And the British,

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Speaker 1: of course are concerned because uh percent of the UK

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Speaker 1: economy comes from the city and two million jobs are

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Speaker 1: associated with the financial sector. Those are more Carney's numbers.

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Speaker 1: So I think that to me, the real question moving forward,

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Speaker 1: what I want to see is what comes out of

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Speaker 1: their meeting today and their subsequent communications on the Brexit question.

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Speaker 1: That's the big elephant in the room. Very quickly. Here

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Speaker 1: we have the snap election come up here in June.

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Speaker 1: Are we're starting to see effects of Brexit playing out

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Speaker 1: in the UK economy Now, Well, Tom was just over there, uh,

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Speaker 1: and I think he's probably got a bigger sense of

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Speaker 1: it than I do. But certainly, sitting over on this

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Speaker 1: side of the pond, it looks to me like this

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Speaker 1: election is a slam dunk. It just validates the national

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Speaker 1: commitment to proceed with Brexit. I think there was a

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Speaker 1: great cloud put over that by some of the stuff

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Speaker 1: that came out that the court challenges and all that,

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Speaker 1: And I think that Prime Minister May needs that unit

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Speaker 1: unitiminity behind her in order to be able to confront

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Speaker 1: the Europeans. I don't think it will help her any

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Speaker 1: but it certainly puts her in a better position than

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Speaker 1: she otherwise might have been. I don't know what was better.

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Speaker 1: David Girl, Carl Weinberg on cross wind vectors at JFK

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Speaker 1: or on the wage curve, cross winds and gray clouds

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Speaker 1: with the Carl Weinberger. Michael Cannon joins US now. He's

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Speaker 1: the director of Health Policy Studies at KATE the Cato Institute,

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Speaker 1: and read from an op ed he wrote recently for

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Speaker 1: The Hill. He said, the reality is that Republicans are

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Speaker 1: not repealing Obamacare, They're making it worse and offering to

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Speaker 1: take the blame for its failures, which will ultimately cement

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Speaker 1: that law in place. A bleak assesspect of where things

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Speaker 1: stand here on Capitol Hill at Michael Cannon. Great to

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Speaker 1: see once again, Let's let's start with the state of play. Uh,

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Speaker 1: this is out of the House, his hands now moves

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Speaker 1: onto the Senate. Are you at all more optimistic that

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Speaker 1: the law that you would like to see could be

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Speaker 1: crafted by senators there? What do you think is that

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Speaker 1: the stat of healthcare reform, of healthcare reform in Washington

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Speaker 1: right now? Well, I think you have to start with

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Speaker 1: what's happening in the marketplace right now, which is we're

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Speaker 1: seeing insures flee the Obamacare exchanges to the point where

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Speaker 1: you have some parts of the country where there are

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Speaker 1: no carriers in the exchanges after December, and there are

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Speaker 1: lots of lots more parts of the country where there's

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Speaker 1: only one carrier in the exchanges, so there's just one

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Speaker 1: insure exit away from having no exchange plans there, and

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Speaker 1: the carriers that are remaining are asking for premium increases

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Speaker 1: on the order that's uh that comes out of Maryland,

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Speaker 1: where Blue Cross, Blue Shield has asked for that on

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Speaker 1: top of all the past years increases like and and

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Speaker 1: So this is obviously unsustainable. And the House didn't show

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Speaker 1: much of an appetite for really repealing Obamacare. They want

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Speaker 1: to leave in place the regulations that are causing all

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Speaker 1: this instability, causing these premium increases, and it's unsure that

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Speaker 1: the Senate has any more of an appetite for that.

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Speaker 1: So it may have to get worse before it gets better.

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Speaker 1: We may have to see more of these premium increases,

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Speaker 1: more of these market collapses, more people going without health

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Speaker 1: insurance to help them pay for the medical care they need,

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Speaker 1: before Congress focuses on what the real problem is, which

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Speaker 1: are these Obamacare regulations that are really destroying healthcare for something.

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Speaker 1: Here's my question about those companies pulling out of these

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Speaker 1: Obamacare exchanges. How much of that has to do with

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Speaker 1: problems with the law and the marketplace itself versus just

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Speaker 1: the uncertainty of the conversation about healthcare reform continuing. If

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Speaker 1: if the CEO of ETNA Says Say cites the fact

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Speaker 1: that there's uncertainty in the air. Uh, it seems like

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Speaker 1: that's being contributed to or driven by the fact that

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Speaker 1: there's still so much legislative uncertainty surrounding Obamacare, at least

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Speaker 1: in part to agree with that. Well, yeah, that's certainly

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Speaker 1: a part of it. But the the the centerpiece of

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Speaker 1: Obamacare is a series of system of government price controls

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Speaker 1: that the deeds stabilizes the market. Remember when the Obama

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Speaker 1: administration went to the Supreme Court, they said, well, you

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Speaker 1: can't block the individual mandate because Obamacare will destroy health

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Speaker 1: insurance markets if you do that. So so the core

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Speaker 1: of this law destabilizes insurance markets, and you need all

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Speaker 1: sorts of subsidies in order to then stabilize the markets.

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Speaker 1: And and and those subsidies were not authorized. There are

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Speaker 1: a lot of them. Warrant as. If one federal judge

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Speaker 1: told us, were you in that photo shoot at the

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Speaker 1: White House? Did they invite you to the unless you

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Speaker 1: have evidence, I'm just gonna what did you think of that?

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Speaker 1: They took a victory lap before the thing even got

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Speaker 1: to the Senate. Actually, it did seem it did seem bizarre. Yeah,

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Speaker 1: it seemed like a mission accomplished. Moment because they're having

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Speaker 1: this Rose garden Um press conference to sell lible grate

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Speaker 1: House passage of a bill, which is you know, that's

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Speaker 1: usually the sort of thing and you uh, you hold.

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Speaker 1: After the bill passage, you have a signing ceremony, and

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Speaker 1: that's when you invite everyone to I think that the

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Speaker 1: Trump administration was desperate for a win. Okay, I'll go

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Speaker 1: with that. In your essay, You've got a beautiful quote

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Speaker 1: from President Clinton on the challenges of his Obamacare. I

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Speaker 1: get that. Who's in support of Michael Cannon health economics

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Speaker 1: who have those bodies on Capitol Hill? Want your vision

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Speaker 1: of where we should go? Well, there are people who

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Speaker 1: who have introduced the Health Saving Account expansion idea that

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Speaker 1: I put forward a number of years ago, that would

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Speaker 1: be a bigger tax cut than the reagular Bush tax

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Speaker 1: cuts combined. Jeff Flake in the Senate, Dave Bratton the

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Speaker 1: House of Interest gets the music, and and then and

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Speaker 1: and there are others. There are other members of Congress

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Speaker 1: who are working on legislation right now that would be

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Speaker 1: that would actually appeal and replace Obamacare, and they're trying

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Speaker 1: to get that into the debate. David gurn Time King

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Speaker 1: Michael Cannon of Kato truly one of the nation's experts

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Speaker 1: on healthcare. Michael CNN's got it. We thank singing and

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Speaker 1: for this. And as the usual person who really needs

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Speaker 1: healthcare coverage, she has cancer in Tennessee. Quote it's that

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Speaker 1: or die? So what else would you do? Which I

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Speaker 1: think is a question for a lot of us. You

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Speaker 1: mentioned earlier. East Tennessee is an example of where this

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Speaker 1: is not working out. Where are we going to be

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Speaker 1: in one year? And her name is Melissa and Ants

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Speaker 1: and she has an advanced form of leukemia. How did

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Speaker 1: you know that? I know? All so uh so? And

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Speaker 1: Melissa's one of those people who is having their access

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Speaker 1: to care threatened by the instability created by Obamacare's regulations. Now,

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Speaker 1: if Melissa has a pre existing condition in decent society,

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Speaker 1: if she can't afford the medical care that she needs,

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Speaker 1: we should do something to help her. We used to

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Speaker 1: do that to be stable. Well, you know, there are

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Speaker 1: a lot of people falling through the cracks of health

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Speaker 1: care sector. But that has to be a stable system

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Speaker 1: of assistance, and Obamacare is not that. Does Trump Care

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Speaker 1: help that? No, actually makes it worse. She she and

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Speaker 1: people like her would be I think even worse shape

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Speaker 1: under Trump Care, because you have a race to the

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Speaker 1: bottom even for those who have coverage. What's the motivation,

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Speaker 1: as you see it, for structuring and completing and voting

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Speaker 1: upon the law that Republicans in the House voted on.

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Speaker 1: Are are you a a cynic who thinks this is

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Speaker 1: all about politics? Or do you believe that there are

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Speaker 1: Republicans that thought in good faith that they were doing

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Speaker 1: something to change or two to better the Affordable Care Act? Well,

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Speaker 1: you know, Republicans have their own sort of pre existing condition,

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Speaker 1: which as they care about taxes and don't care about healthcare.

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Speaker 1: Uh there. I like to call them the Christians scientists

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Speaker 1: of public policy. They just don't do healthcare. And if

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Speaker 1: you look at this bill, it really shows the motivation

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Speaker 1: for this bill was to cut the taxes in Obamacare,

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Speaker 1: set up tax reform, and who really cares about the

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Speaker 1: healthcare part? And people who care about the healthcare part

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Speaker 1: are people like Melissa and NaN's, people like me, people

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Speaker 1: who actually want a stable system of subsidies to help

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Speaker 1: those with expensive illnesses. So if if if I'm running

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Speaker 1: a major health insurer, if this law were to pass,

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Speaker 1: say the Senate were to adopt the bill as as written.

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Speaker 1: Does that provide me with more certainty? And if so,

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Speaker 1: for how long if you're an insurer? Yeah, I don't

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Speaker 1: really think so, because there's there's still this question of

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Speaker 1: um because the very part of Obamacare that is destabilizing

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Speaker 1: the market is still on the books. And the only

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Speaker 1: way to solve that is either to repeal that which

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Speaker 1: we call community rating, it's a system of price controls,

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Speaker 1: or you can try to just subsidze the heck out

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Speaker 1: of insurance companies to keep the markets from collapse, to

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Speaker 1: keep them from leaving. And uh and and so your

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Speaker 1: choices are. It's really a binary choice. You can either

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Speaker 1: repeal Obamacare's regulations or you can just go hole hog

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Speaker 1: on Obamacare and and and and do what the Democrats

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Speaker 1: wanted to do is just subsidize the heck out of

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Speaker 1: the market. What do you see all of this going?

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Speaker 1: It goes to the Senate. Now, as I mentioned, they

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Speaker 1: rewrite it, right, holy right, like it's gonna be a

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Speaker 1: whole new thing. Yeah, there are other their senators who've

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Speaker 1: already written bills that they think would be a better approach.

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Speaker 1: They're going to try to call together fifty Senators. But

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Speaker 1: I don't know how. I don't know what can pass

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Speaker 1: the Senate. But I think that I think the longer

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Speaker 1: this drags out, the probably probably the better the product

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Speaker 1: will be because you will see more of the dislocation,

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Speaker 1: we'll get more of the stories from people like it

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Speaker 1: will be more urgency, and it'll focus their attention on

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Speaker 1: the actual problem, which is the regulation. But isn't this

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Speaker 1: debate no different than when you were doing healthcare debates

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Speaker 1: on that beautiful law at the University of Reginia. I mean,

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00:22:01,000 --> 00:22:03,879
Speaker 1: what's changed? We're arguing about do we want to be

430
00:22:03,960 --> 00:22:07,399
Speaker 1: like Britain? Many people say yes, many people say no.

431
00:22:07,800 --> 00:22:11,760
Speaker 1: I believe Cato says no. But what's the difference between

432
00:22:11,800 --> 00:22:15,320
Speaker 1: this conversation and your first healthcare chat at U v

433
00:22:15,480 --> 00:22:19,280
Speaker 1: A a million years ago? I wish there were more difference.

434
00:22:19,880 --> 00:22:24,760
Speaker 1: For a while there we had Republicans who were we

435
00:22:24,760 --> 00:22:28,280
Speaker 1: had Republicans opposed to this sort of Obamacare approach, that

436
00:22:28,320 --> 00:22:29,919
Speaker 1: it would be a step in the direction of a

437
00:22:29,920 --> 00:22:33,160
Speaker 1: single payer system. And now that they're sort of caving

438
00:22:33,280 --> 00:22:35,159
Speaker 1: on this pledge that they made for seven years to

439
00:22:35,160 --> 00:22:38,480
Speaker 1: repeal Obamacare, they're gonna bring us closer in two ways.

440
00:22:38,560 --> 00:22:42,120
Speaker 1: The first way is by giving a republican UH imper

441
00:22:42,240 --> 00:22:45,240
Speaker 1: mater to these ideas, and the second way is by

442
00:22:46,040 --> 00:22:48,960
Speaker 1: UH taking such a drubbing at the polls. The Democrats

443
00:22:49,000 --> 00:22:50,760
Speaker 1: are going to take over Congress and they're gonna want

444
00:22:50,760 --> 00:22:52,960
Speaker 1: single But the fact of the matter is, I believe

445
00:22:53,000 --> 00:22:57,199
Speaker 1: most polls show people have an affection for some elements

446
00:22:57,640 --> 00:23:01,000
Speaker 1: of the Affordable Care Act. How can you ca to

447
00:23:01,119 --> 00:23:07,000
Speaker 1: wise those constructive elements of Obamacare? Well, they're not constructive,

448
00:23:07,000 --> 00:23:09,640
Speaker 1: the destructive, and polls say that not the whole thing

449
00:23:09,680 --> 00:23:11,919
Speaker 1: people love it? Yes, the whole thing, people do not

450
00:23:12,040 --> 00:23:14,200
Speaker 1: love it. We've done pulling on this at the Cato Institute.

451
00:23:14,400 --> 00:23:17,879
Speaker 1: We've asked people, when you tie the costs to the

452
00:23:17,880 --> 00:23:20,800
Speaker 1: benefits to the supposed benefits of Obamacare, do you still

453
00:23:20,840 --> 00:23:23,800
Speaker 1: like it? And Democrats oppose it? Okay? So what Senator

454
00:23:24,000 --> 00:23:28,040
Speaker 1: where I need a common ground between Uve Reinhardt, Michael Cannon,

455
00:23:28,320 --> 00:23:31,920
Speaker 1: Senator Schumer and I'll pick on Jeff Flake? Okay? Where

456
00:23:32,040 --> 00:23:36,359
Speaker 1: is the common ground to get our seventent of g

457
00:23:36,480 --> 00:23:41,480
Speaker 1: d P in control? So there's some sense of coherence?

458
00:23:41,760 --> 00:23:44,439
Speaker 1: I think that the only way that we're going you know,

459
00:23:44,440 --> 00:23:50,000
Speaker 1: what are the necessary ingredients to getting a build through Congress.

460
00:23:50,000 --> 00:23:51,679
Speaker 1: It's a step in the right direction. Is the president

461
00:23:51,720 --> 00:23:54,480
Speaker 1: has to engage. He has to engage by saying that

462
00:23:54,560 --> 00:23:57,280
Speaker 1: in his Obamacare's regulations that are reducing the quality of

463
00:23:57,320 --> 00:24:01,080
Speaker 1: care for people in the exchanges, and that's the because

464
00:24:01,119 --> 00:24:03,959
Speaker 1: that is what that's the cost of Obamacare. That actually

465
00:24:04,000 --> 00:24:06,800
Speaker 1: motivates Democrats to oppose it. When you tell Democrats that

466
00:24:06,840 --> 00:24:11,680
Speaker 1: these supposedly beneficial provisions actually reduced the quality of care

467
00:24:11,720 --> 00:24:14,879
Speaker 1: that they and their family received, they flipped from support

468
00:24:14,880 --> 00:24:18,240
Speaker 1: to opposition. Was there or is there a piece of

469
00:24:18,320 --> 00:24:20,760
Speaker 1: legislation that mirrors what you think should happen to the

470
00:24:20,760 --> 00:24:23,080
Speaker 1: affordable A character? It always surprised when I lived in

471
00:24:23,119 --> 00:24:24,800
Speaker 1: Washington for a very long time there was so much

472
00:24:24,880 --> 00:24:27,680
Speaker 1: conversation about the repeal of Obamacare. I guess you could

473
00:24:27,680 --> 00:24:29,040
Speaker 1: say the same thing of tax to form as well.

474
00:24:29,160 --> 00:24:31,520
Speaker 1: There there wasn't a piece of legislation ready to go.

475
00:24:32,200 --> 00:24:34,480
Speaker 1: Is there or was there a piece of legislation that

476
00:24:34,520 --> 00:24:38,160
Speaker 1: would would in in some reflect what you think should

477
00:24:38,160 --> 00:24:39,919
Speaker 1: happen to this law? I think there is. You know,

478
00:24:40,000 --> 00:24:42,400
Speaker 1: Ran Paul has a bill. Senator Ran Paul from Kentucky

479
00:24:42,480 --> 00:24:45,199
Speaker 1: has a bill that would repeal Obamacare in full, provide

480
00:24:45,280 --> 00:24:48,199
Speaker 1: some transition assistance for people with pre existing conditions, and

481
00:24:48,359 --> 00:24:51,199
Speaker 1: vastly expand health savings account which would actually start to

482
00:24:51,280 --> 00:24:54,920
Speaker 1: bring down healthcare prices, which is the most important form

483
00:24:54,960 --> 00:24:57,080
Speaker 1: of assistance we can provide to people with pre existing

484
00:24:57,119 --> 00:25:00,280
Speaker 1: conditions and low incomes. I have some quibbles on the

485
00:25:00,320 --> 00:25:03,199
Speaker 1: margins with how he goes about that, but yeah, there's that,

486
00:25:04,280 --> 00:25:07,640
Speaker 1: there's legislation out there. A lot of politicians talk about

487
00:25:07,640 --> 00:25:11,160
Speaker 1: the hardness of healthcare. This is difficult stuff. Are there

488
00:25:11,160 --> 00:25:13,879
Speaker 1: politicians who get it, who you admire their engagement with

489
00:25:13,960 --> 00:25:15,639
Speaker 1: the issue, who are who are willing to hear you

490
00:25:15,720 --> 00:25:20,000
Speaker 1: out and to to walk through these uh these thorny woods. Well,

491
00:25:20,359 --> 00:25:23,680
Speaker 1: they're like I said, Republicans have this prexistant condition where

492
00:25:23,680 --> 00:25:27,000
Speaker 1: they don't do healthcare. And unfortunately, there's a real, you know,

493
00:25:27,359 --> 00:25:30,240
Speaker 1: sort of a wonk gap in Congress and outside of

494
00:25:30,280 --> 00:25:32,840
Speaker 1: Congress where Democrats invest in this issue much more heavily

495
00:25:32,880 --> 00:25:35,760
Speaker 1: than Republicans do and they out maneuver Republicans as a result.

496
00:25:36,320 --> 00:25:38,159
Speaker 1: And so one of our jobs that the CAT and

497
00:25:38,200 --> 00:25:40,960
Speaker 1: students have been trying to bridge or make up that

498
00:25:40,960 --> 00:25:44,080
Speaker 1: that that walk gap and Uh, you know, Obamacare helped

499
00:25:44,080 --> 00:25:46,359
Speaker 1: for for a time, but it didn't do enough to

500
00:25:46,400 --> 00:25:48,840
Speaker 1: focus their attention on this. We're gonna talk about taxi

501
00:25:48,880 --> 00:25:50,480
Speaker 1: form a little bit later, but let's let's devetail it

502
00:25:50,520 --> 00:25:54,760
Speaker 1: quickly in the two minutes that that we have a

503
00:25:54,760 --> 00:25:56,320
Speaker 1: lot of people said to get to tax before, we

504
00:25:56,359 --> 00:25:58,879
Speaker 1: had to see some reform of the affordable character. You

505
00:25:58,920 --> 00:26:01,360
Speaker 1: buy that argument. Do you think it's gonna gonna forestall

506
00:26:01,720 --> 00:26:03,960
Speaker 1: movement on tax before not having this done? Well, what

507
00:26:04,000 --> 00:26:05,920
Speaker 1: it'll do is it will make it harder to make

508
00:26:05,960 --> 00:26:09,160
Speaker 1: the tax reduction permanent because of some weird Senate budget rules.

509
00:26:09,240 --> 00:26:12,359
Speaker 1: And that is really what motivated the House to pass

510
00:26:12,600 --> 00:26:16,520
Speaker 1: this awful healthcare bill, because it does cut taxes and

511
00:26:16,520 --> 00:26:18,960
Speaker 1: so it facilitates tax reform. And Republicans are playing to

512
00:26:19,640 --> 00:26:21,720
Speaker 1: the stereotype, which is all they care about is cutting

513
00:26:21,720 --> 00:26:23,760
Speaker 1: taxes and they don't care about health care. Tommy didn't

514
00:26:23,760 --> 00:26:28,360
Speaker 1: ask you what happens in twelve months? Questions what happens

515
00:26:28,640 --> 00:26:31,959
Speaker 1: not to not to the Cadillac plans, but what is it?

516
00:26:32,040 --> 00:26:34,199
Speaker 1: Is it? John Tucker? V W plan we have? Is

517
00:26:34,200 --> 00:26:38,200
Speaker 1: it a Cadillac Plan? VW. Beetle Plan, the Bentley Plan,

518
00:26:38,359 --> 00:26:40,760
Speaker 1: the Bentley Plan. Okay, but it's not a joke. I

519
00:26:40,800 --> 00:26:42,639
Speaker 1: mean to the people of East Tennessee and name the

520
00:26:42,680 --> 00:26:46,200
Speaker 1: eighteen other geographies, where are these people in twelve months?

521
00:26:47,800 --> 00:26:52,040
Speaker 1: That's hard to say. I don't think it's Uh, it's

522
00:26:52,080 --> 00:26:55,800
Speaker 1: hard to say. I see two possible outcomes. One Congress

523
00:26:55,840 --> 00:26:58,720
Speaker 1: actually repeals the regulations that are causing this problem and

524
00:26:59,000 --> 00:27:01,320
Speaker 1: in the same legislation provide some assistance for people like

525
00:27:01,359 --> 00:27:04,520
Speaker 1: Melissa and ants. Or they just try to put band

526
00:27:04,520 --> 00:27:06,640
Speaker 1: aids on this, and we have more and more stories

527
00:27:06,680 --> 00:27:08,919
Speaker 1: like that and more and more people falling through the cracks.

528
00:27:08,960 --> 00:27:10,920
Speaker 1: How cool was it to have Ellen Meltzer at CATO?

529
00:27:11,359 --> 00:27:14,920
Speaker 1: Was it great? Just meeting after meeting time after time. Um,

530
00:27:15,200 --> 00:27:18,440
Speaker 1: he's a He's an impressive person. Yeah. A great loss

531
00:27:18,480 --> 00:27:22,160
Speaker 1: to all of economics and cluely to our policy in Washington.

532
00:27:22,240 --> 00:27:25,720
Speaker 1: Michael Kennon's with the CATO Institute, Allen Meltzer was with

533
00:27:25,800 --> 00:27:30,159
Speaker 1: Carnegie Mellon University. David Gura, and Tom King worldwide coast

534
00:27:30,160 --> 00:27:44,240
Speaker 1: to coast in New York. Together, this is Bloomberg, brought

535
00:27:44,320 --> 00:27:47,959
Speaker 1: you by Bank of America Mary Lynch, dedicated to bringing

536
00:27:47,960 --> 00:27:51,679
Speaker 1: our clients insights and solutions to meet the challenges of

537
00:27:51,720 --> 00:27:56,240
Speaker 1: a transforming world. That's the power of global connections. Mary Lynch,

538
00:27:56,359 --> 00:28:06,639
Speaker 1: Pierce Federin, Smith Incorporated, Member at side PC. There's something

539
00:28:06,680 --> 00:28:10,080
Speaker 1: new from Bloomberg. It's called Lens. Starting right now, you

540
00:28:10,119 --> 00:28:13,360
Speaker 1: can use the Bloomberg Io s app off your iPhone

541
00:28:13,480 --> 00:28:18,080
Speaker 1: or iPad, or our new Google Chrome extension to read

542
00:28:18,160 --> 00:28:22,080
Speaker 1: any news story on any website, scan it, and then

543
00:28:22,119 --> 00:28:26,280
Speaker 1: instantly see the news stories relevant market data from Bloomberg.

544
00:28:26,560 --> 00:28:29,679
Speaker 1: In addition, see all the bios of the key people

545
00:28:30,119 --> 00:28:33,320
Speaker 1: mentioned in the story. It's called Lens, and it is

546
00:28:33,400 --> 00:28:36,480
Speaker 1: just that, a lens into the people and the data

547
00:28:36,600 --> 00:28:40,840
Speaker 1: of any story you may be reading. Again, Lens brings

548
00:28:40,840 --> 00:28:44,120
Speaker 1: you the power of Bloomberg's news and data. Download or

549
00:28:44,120 --> 00:28:47,520
Speaker 1: Io s app or search for the Bloomberg extension at

550
00:28:47,520 --> 00:28:50,880
Speaker 1: the Chrome Store to try Lens out. Learn more at

551
00:28:50,880 --> 00:28:58,520
Speaker 1: Bloomberg dot com slash Lens. David Grant, Tom Keene in

552
00:28:58,520 --> 00:29:00,680
Speaker 1: New York. This is bloom e Surveillance on Bloomberg Graded.

553
00:29:00,720 --> 00:29:02,720
Speaker 1: We had the pleasure of speaking with retired Admirald James

554
00:29:02,720 --> 00:29:05,160
Speaker 1: to Rita's last week while he was in Washington preparing

555
00:29:05,200 --> 00:29:08,000
Speaker 1: to head up to the DIRKS and building to testify

556
00:29:08,160 --> 00:29:11,520
Speaker 1: before a Senate committee on cybersecurity. He did that, and

557
00:29:11,560 --> 00:29:14,360
Speaker 1: a day later there was a huge malware attack, ransomware

558
00:29:14,400 --> 00:29:17,280
Speaker 1: attack worldwide. We're still figuring out the source of that.

559
00:29:17,480 --> 00:29:20,160
Speaker 1: They're still concerned about its spreading. Adamlald James to Vida's

560
00:29:20,160 --> 00:29:21,880
Speaker 1: now deal in the Fletcher School of Law Diplomacy, A

561
00:29:21,960 --> 00:29:24,440
Speaker 1: tough university, joins us Adams Derida's great to speak with

562
00:29:24,440 --> 00:29:27,479
Speaker 1: you once again. Describe what we saw here on Friday,

563
00:29:27,480 --> 00:29:29,760
Speaker 1: the degree to which you were worried about this beforehand,

564
00:29:29,760 --> 00:29:31,400
Speaker 1: and how worried we should be that we could see

565
00:29:31,400 --> 00:29:34,200
Speaker 1: something like this happen again and perhaps again and again

566
00:29:34,280 --> 00:29:38,320
Speaker 1: and again. I was very worried when I testified, and

567
00:29:38,360 --> 00:29:42,120
Speaker 1: I'm even more worried now. And let's face that David

568
00:29:42,160 --> 00:29:45,040
Speaker 1: dis is going to be a rolling thunder of a

569
00:29:45,120 --> 00:29:48,720
Speaker 1: series of attacks. This is This particular one was derived

570
00:29:48,760 --> 00:29:51,960
Speaker 1: from tools that were if you released into the wild

571
00:29:52,280 --> 00:29:55,440
Speaker 1: from the National Security Agency, They're very potent. They can

572
00:29:55,520 --> 00:29:59,640
Speaker 1: be manipulated. We should expect more of this. Unfortunately. On

573
00:29:59,760 --> 00:30:01,960
Speaker 1: that note, I read the blog post by the president

574
00:30:01,960 --> 00:30:04,840
Speaker 1: of Microsoft, that being one Brad Smith, and he said

575
00:30:05,040 --> 00:30:06,960
Speaker 1: the government should treat this attack as a as a

576
00:30:06,960 --> 00:30:09,600
Speaker 1: wake up call, and he said, this attack provides yet

577
00:30:09,600 --> 00:30:12,760
Speaker 1: another example of why the stockpiling of vulnerabilities by governments

578
00:30:12,840 --> 00:30:16,320
Speaker 1: is such a problem. Here you have some particular expertise set.

579
00:30:16,400 --> 00:30:18,640
Speaker 1: Why is the government stockpiling all of this? What would

580
00:30:18,640 --> 00:30:22,320
Speaker 1: a company like Microsoft like to see the government do well.

581
00:30:22,400 --> 00:30:26,600
Speaker 1: Let's think of two kind of similar looming towers. One

582
00:30:26,800 --> 00:30:30,640
Speaker 1: was Pearl Harbor and another one was nine eleven. In

583
00:30:30,680 --> 00:30:35,880
Speaker 1: both cases, the nation took a devastating blow, and afterwards

584
00:30:35,960 --> 00:30:39,400
Speaker 1: we convened a blue ribbon commission and looked at what

585
00:30:39,440 --> 00:30:42,440
Speaker 1: we need to do this time. You can see this

586
00:30:42,520 --> 00:30:45,920
Speaker 1: looming tower. Let's get that group of smart people together

587
00:30:45,960 --> 00:30:47,960
Speaker 1: and tell us what we need to do to protect ourselves.

588
00:30:48,120 --> 00:30:50,840
Speaker 1: James trevide us with us with such your school Bloomberg surveillance.

589
00:30:50,840 --> 00:30:54,719
Speaker 1: This morning worldwide brought you by Investco. Looking for investment views,

590
00:30:54,840 --> 00:30:58,720
Speaker 1: Investco's high conviction portfolio managers are just a click away.

591
00:30:58,760 --> 00:31:03,160
Speaker 1: Go to investco dot com slash us to subscribe to

592
00:31:03,280 --> 00:31:08,000
Speaker 1: the investial blog and follow at investo us on Twitter. Okay, Admiral,

593
00:31:08,040 --> 00:31:10,840
Speaker 1: So we had Pearl Harbor. No one saw it coming

594
00:31:10,920 --> 00:31:12,840
Speaker 1: except maybe hauls that you'll put a third of the

595
00:31:12,880 --> 00:31:17,360
Speaker 1: fleet out to see where's Admiral King, where's the Admiral

596
00:31:17,480 --> 00:31:21,920
Speaker 1: King of cyber security? To give us the urgency to

597
00:31:22,000 --> 00:31:25,640
Speaker 1: get up on the table and start screaming. I think

598
00:31:25,760 --> 00:31:29,080
Speaker 1: it reposes in the business world. So it's people like

599
00:31:29,400 --> 00:31:33,120
Speaker 1: Eric Schmidt, Uh, it is, people like Bill Gates, is

600
00:31:33,160 --> 00:31:36,920
Speaker 1: people like Dan Shulman of PayPal. They see this looming

601
00:31:36,960 --> 00:31:39,719
Speaker 1: tower and that's why you're hearing them as I am

602
00:31:39,760 --> 00:31:43,920
Speaker 1: talking about the danger ahead. Well, on Windows, where's Microsoft?

603
00:31:43,960 --> 00:31:46,800
Speaker 1: You know how it's going? My Walter Cronkite imitation today

604
00:31:46,840 --> 00:31:50,520
Speaker 1: from Moscow to Maine. Okay, great, Microsoft, I got all

605
00:31:50,520 --> 00:31:53,520
Speaker 1: the ms in there. Where is Microsoft? If this is

606
00:31:53,520 --> 00:31:59,120
Speaker 1: a core Windows issue, they need to be prepared for

607
00:31:59,400 --> 00:32:03,640
Speaker 1: more this. And what is different Tom is the release

608
00:32:03,840 --> 00:32:07,600
Speaker 1: of these tools from the National Security Agency. They are

609
00:32:07,840 --> 00:32:12,040
Speaker 1: lethal devices, and I assure you in Washington State today

610
00:32:12,440 --> 00:32:15,360
Speaker 1: those engineers are all hands on deck to try and

611
00:32:15,560 --> 00:32:18,520
Speaker 1: be prepared for the next wave that's coming. How fierce

612
00:32:18,560 --> 00:32:21,600
Speaker 1: is the competition for talent here? You've unveiled a proposal

613
00:32:21,600 --> 00:32:24,680
Speaker 1: here for new service Academy focused on un cyber security.

614
00:32:24,680 --> 00:32:26,400
Speaker 1: Just in terms of how many people are trained and

615
00:32:26,440 --> 00:32:28,280
Speaker 1: able to do this kind of work. How fierce is

616
00:32:28,320 --> 00:32:32,200
Speaker 1: the competition. The short answer is not enough. The competition

617
00:32:32,400 --> 00:32:35,360
Speaker 1: is beyond fierce. It's white hot, and we are going

618
00:32:35,440 --> 00:32:39,640
Speaker 1: to have to ask our young men and women, as

619
00:32:39,680 --> 00:32:42,160
Speaker 1: they do in the other branches of the military, to

620
00:32:42,240 --> 00:32:45,640
Speaker 1: stand and deliver in a cyber force. Here's the good news.

621
00:32:45,680 --> 00:32:48,160
Speaker 1: It doesn't have to be massive. We don't need hundreds

622
00:32:48,160 --> 00:32:50,800
Speaker 1: of thousands of people, but we need five to ten

623
00:32:50,880 --> 00:32:56,240
Speaker 1: thousand dedicated cyber warriors who can stand and respond to

624
00:32:56,360 --> 00:32:58,960
Speaker 1: these kinds of attacks, whether they come in this case

625
00:32:59,160 --> 00:33:02,640
Speaker 1: from cyber criminal or from nation states or from terror.

626
00:33:02,800 --> 00:33:07,360
Speaker 1: Do you assume, Admiral, because these people are evil, they'll

627
00:33:07,400 --> 00:33:12,720
Speaker 1: always be one step ahead of our good technology intentions.

628
00:33:13,960 --> 00:33:16,320
Speaker 1: I think so in the case of cyber crime. Another

629
00:33:16,360 --> 00:33:19,840
Speaker 1: way to put it, Tom is that almost inevitably, offense

630
00:33:19,840 --> 00:33:23,720
Speaker 1: will overcome defense in this world. So you have to

631
00:33:23,760 --> 00:33:27,280
Speaker 1: treat these cyber criminals the way we've treated pirates at sea.

632
00:33:27,360 --> 00:33:30,840
Speaker 1: You need a global response to them. Okay, folks, I failed.

633
00:33:30,840 --> 00:33:32,560
Speaker 1: I tried to get through this Trump fee with the

634
00:33:32,600 --> 00:33:37,040
Speaker 1: adimalle And what makes a good FBI director a wise

635
00:33:37,080 --> 00:33:41,480
Speaker 1: one up? First of all, he or she has to

636
00:33:41,520 --> 00:33:45,960
Speaker 1: be unbiased Secondly, a law enforcement professional. I would argue

637
00:33:46,000 --> 00:33:48,200
Speaker 1: someone who's been to law school, who served at the

638
00:33:48,280 --> 00:33:52,640
Speaker 1: highest level of advising. In number three, the ability to

639
00:33:52,680 --> 00:33:56,680
Speaker 1: speak truth to power. I think James Comey had those attributes,

640
00:33:57,240 --> 00:34:00,400
Speaker 1: but he was burned by this president. Now we're gonna

641
00:34:00,440 --> 00:34:03,720
Speaker 1: have to ask another American to step into a very

642
00:34:03,800 --> 00:34:08,080
Speaker 1: fought situation. James Stevidis is it Fletcher School. His book

643
00:34:08,280 --> 00:34:11,440
Speaker 1: is fantastic. I'll put it on Twitter here in a

644
00:34:11,480 --> 00:34:16,400
Speaker 1: moment on leadership is just absolutely out short, you know,

645
00:34:16,520 --> 00:34:20,239
Speaker 1: just typical Stevidis. Uh, David, it's just short, right to

646
00:34:20,239 --> 00:34:22,120
Speaker 1: the point. And the syllabus for you, I know you've

647
00:34:22,120 --> 00:34:25,920
Speaker 1: been reading in Disco'm like doing the voracious reading. That's

648
00:34:25,960 --> 00:34:29,439
Speaker 1: what I'm doing to try to keep calm given this

649
00:34:29,480 --> 00:34:32,560
Speaker 1: new slow from Kevin's Really, how did you observe this weekend?

650
00:34:32,640 --> 00:34:36,719
Speaker 1: David in the Washington Zeitgeist. Yeah, I'm curious to see

651
00:34:36,719 --> 00:34:38,319
Speaker 1: how fast all of this plays out. The White House

652
00:34:38,400 --> 00:34:40,320
Speaker 1: very eager to get somebody helming the the FBI. I

653
00:34:40,360 --> 00:34:55,319
Speaker 1: will see if they're able to do animals read. We've

654
00:34:55,320 --> 00:34:57,879
Speaker 1: been talking about retail over these last couple of weeks.

655
00:34:57,880 --> 00:35:00,640
Speaker 1: How Davidvitz joined us the last week Shelley Band columns

656
00:35:00,640 --> 00:35:03,480
Speaker 1: from Bloombergadfly as well painting a picture for us of

657
00:35:03,560 --> 00:35:07,759
Speaker 1: the UH bleak retail senior here in the US. Joining

658
00:35:07,840 --> 00:35:10,239
Speaker 1: us now UH is Oliver Chin. He is with the

659
00:35:10,320 --> 00:35:12,200
Speaker 1: counting Company. Great to have him. As always to Oliver,

660
00:35:12,280 --> 00:35:14,399
Speaker 1: I look at the companies you cover, the three dozen

661
00:35:14,480 --> 00:35:17,120
Speaker 1: or so that you're you're covering. How similar is the narrative?

662
00:35:17,160 --> 00:35:21,560
Speaker 1: Is the story among those three dozen companies? Yeah? What

663
00:35:21,600 --> 00:35:24,000
Speaker 1: we do have in terms of a similar narrative is

664
00:35:24,040 --> 00:35:29,000
Speaker 1: really the decline of physical store traffic in terms of football. Um. However,

665
00:35:29,080 --> 00:35:33,040
Speaker 1: it's it's not true everywhere, I would say department stores

666
00:35:33,080 --> 00:35:36,799
Speaker 1: and mall based retailers are seeing the brunt of this.

667
00:35:37,000 --> 00:35:39,880
Speaker 1: On the other hand, UM, I cover a wide swath

668
00:35:39,920 --> 00:35:43,400
Speaker 1: of over thirty stocks luxury goods. In terms of the

669
00:35:43,480 --> 00:35:46,920
Speaker 1: luxury spending environment that's been great and then deep value,

670
00:35:47,360 --> 00:35:49,719
Speaker 1: so customers want to shop it out let's, they want

671
00:35:49,719 --> 00:35:52,040
Speaker 1: to shop it off prices like t j X and

672
00:35:52,160 --> 00:35:55,319
Speaker 1: Ross and so it's not all doom and gloom, but

673
00:35:55,560 --> 00:35:57,239
Speaker 1: there is a lot of doom and gloom. We'll get

674
00:35:57,280 --> 00:35:58,879
Speaker 1: to the luxury space in just a minute. Let's start

675
00:35:58,920 --> 00:36:01,239
Speaker 1: with with Macy's, which is where the story began during

676
00:36:01,560 --> 00:36:04,040
Speaker 1: earning season last last week. I look at your your

677
00:36:04,080 --> 00:36:06,720
Speaker 1: note about Macy's and you say that it's a company

678
00:36:06,800 --> 00:36:09,800
Speaker 1: on a journey. How much longer are investors prepared to

679
00:36:09,800 --> 00:36:12,920
Speaker 1: give this company as it travels on? Um? It is

680
00:36:12,960 --> 00:36:15,359
Speaker 1: on this journey. It's at the epicenter of a lot

681
00:36:15,400 --> 00:36:18,640
Speaker 1: of problems and disruption in the industry. UM. I mean

682
00:36:18,680 --> 00:36:22,239
Speaker 1: investors have really penalized the stock. So the multiples come

683
00:36:22,280 --> 00:36:26,120
Speaker 1: in tremendously to to below ten times about seven times

684
00:36:26,200 --> 00:36:29,920
Speaker 1: to e multiple the industries around fourteen to fifteen when

685
00:36:29,920 --> 00:36:34,359
Speaker 1: things are normal, So investors have really penalized evaluation. How

686
00:36:34,400 --> 00:36:38,520
Speaker 1: long will this take? This disruption occurring with store closures

687
00:36:39,000 --> 00:36:42,760
Speaker 1: is quite painful and we'll take multiple years, So negative

688
00:36:42,760 --> 00:36:46,040
Speaker 1: calmp store closures. UM it looks like it's a rough

689
00:36:46,080 --> 00:36:48,880
Speaker 1: spot for for a while and Macy's is trying their best.

690
00:36:49,080 --> 00:36:51,160
Speaker 1: Part of your your prescription here is from Macy's to

691
00:36:51,200 --> 00:36:54,960
Speaker 1: reinvent product lead times. How difficult is that for for

692
00:36:54,960 --> 00:36:58,560
Speaker 1: for a retailer to do? It is challenging because it's

693
00:36:58,560 --> 00:37:01,640
Speaker 1: an organizational challenge in terms of restructuring the right people

694
00:37:01,640 --> 00:37:04,200
Speaker 1: in the right place at the right time. But Macy's

695
00:37:04,200 --> 00:37:07,520
Speaker 1: has about a one year lead time, and retailers such

696
00:37:07,560 --> 00:37:10,240
Speaker 1: as t J Max work on one to two quarters,

697
00:37:10,600 --> 00:37:13,080
Speaker 1: and retailers such as prim Mark and h and M

698
00:37:13,160 --> 00:37:16,200
Speaker 1: and Endo texts can work as short as a month

699
00:37:16,320 --> 00:37:18,799
Speaker 1: or a few weeks. So Macy's needs to shrink it

700
00:37:19,160 --> 00:37:21,560
Speaker 1: um and that's the name of the game. Oliver Chin

701
00:37:21,680 --> 00:37:23,879
Speaker 1: with us account and on retail, Oliver, one of your

702
00:37:23,880 --> 00:37:27,040
Speaker 1: great strengths as the kids. You look at specialty retail

703
00:37:27,120 --> 00:37:28,920
Speaker 1: and you look at what the kids want and they

704
00:37:28,960 --> 00:37:32,520
Speaker 1: don't want. Is any of this discussion we're having a

705
00:37:32,560 --> 00:37:37,480
Speaker 1: generational shift away from the Internet, away from Amazon. When

706
00:37:37,520 --> 00:37:39,480
Speaker 1: you look at the kids today, is there just a

707
00:37:39,520 --> 00:37:44,160
Speaker 1: different way they consume versus before there is. There's profound

708
00:37:44,160 --> 00:37:47,720
Speaker 1: transformations happening, and one of the key things is authenticity

709
00:37:48,040 --> 00:37:50,319
Speaker 1: and really being true to yourself when you do you.

710
00:37:50,600 --> 00:37:53,880
Speaker 1: So a lot of the macy story has been the

711
00:37:53,960 --> 00:37:58,120
Speaker 1: consolidation and the sameness factor, which just isn't as appealing.

712
00:37:58,200 --> 00:38:01,240
Speaker 1: You want things that really, you know, show your personal style.

713
00:38:01,440 --> 00:38:05,560
Speaker 1: So Macy's needs to radically reinvent products. Also, keep in

714
00:38:05,560 --> 00:38:10,600
Speaker 1: mind experiences and experiential has really transformed. So the stores

715
00:38:10,680 --> 00:38:14,360
Speaker 1: need to be entertaining and everybody wants to really display

716
00:38:14,440 --> 00:38:18,080
Speaker 1: what they're doing on social media. And then casualization in

717
00:38:18,200 --> 00:38:21,359
Speaker 1: terms of really the the yoga pan is here to stay,

718
00:38:21,400 --> 00:38:24,120
Speaker 1: Tom and Turn I felt the same thing this weekend.

719
00:38:24,239 --> 00:38:28,160
Speaker 1: What the hell is why you this guy's on never again?

720
00:38:28,440 --> 00:38:32,520
Speaker 1: What is casualization? Um, it's kind of the opposite of

721
00:38:32,520 --> 00:38:39,120
Speaker 1: your both ties. But basically, um, you know, at leisure

722
00:38:39,239 --> 00:38:42,560
Speaker 1: is a new formal wear see heard of the prestige

723
00:38:42,880 --> 00:38:46,560
Speaker 1: cf A institute word for that on level three c

724
00:38:46,800 --> 00:38:50,640
Speaker 1: f A David Slab. We are printing new words here

725
00:38:50,640 --> 00:38:53,879
Speaker 1: every day on Bloomberg Surveillance already mentioned luxury at the top.

726
00:38:53,960 --> 00:38:55,760
Speaker 1: Let me go there into this two point four billion

727
00:38:55,800 --> 00:38:58,719
Speaker 1: dollar deal coach buying Kate Spade. Does that deal make

728
00:38:59,280 --> 00:39:02,680
Speaker 1: sense to you? I walked by the Madison Avenue coach house.

729
00:39:02,760 --> 00:39:05,160
Speaker 1: See all the coaches investig in becoming a luxury brand.

730
00:39:05,160 --> 00:39:06,960
Speaker 1: This is something we've talked about with Jelly Banjo, our

731
00:39:07,000 --> 00:39:10,680
Speaker 1: colleague here at Bloomberg gadfly about as well. Does the

732
00:39:10,719 --> 00:39:14,200
Speaker 1: deal make sense to you? Yeah, it does because we

733
00:39:14,360 --> 00:39:17,960
Speaker 1: think there's a lot of synergy. Specifically, UM, Kate Spade

734
00:39:18,080 --> 00:39:21,360
Speaker 1: can expand in China and Japan. Also, Coach has a

735
00:39:21,440 --> 00:39:27,640
Speaker 1: leading leather supply chain capability and Coaches really building America's conglomerate.

736
00:39:27,719 --> 00:39:31,319
Speaker 1: In terms of a modern luxury platform, we cover the

737
00:39:31,400 --> 00:39:35,480
Speaker 1: European luxury retailers such as Richemont Cartier as well as

738
00:39:35,600 --> 00:39:40,360
Speaker 1: Louis Vuitton, which we're recommending LVMH, but Coach coaches approach

739
00:39:40,400 --> 00:39:43,239
Speaker 1: will be different. It will be inclusive in terms of

740
00:39:43,239 --> 00:39:46,800
Speaker 1: a house of modern luxury brands. We like that thesis,

741
00:39:46,880 --> 00:39:50,480
Speaker 1: and we also think Kate Spade excuse very attractively towards

742
00:39:50,560 --> 00:39:55,000
Speaker 1: millennials and and everybody does want youth, and it's important

743
00:39:55,080 --> 00:39:56,960
Speaker 1: for the long term health and growth of of a

744
00:39:57,080 --> 00:39:59,839
Speaker 1: of a platform. Who's the competitor there when you look

745
00:39:59,880 --> 00:40:02,359
Speaker 1: at American houses trying to get into that luxury space

746
00:40:02,400 --> 00:40:04,640
Speaker 1: to compete with some of those European brands you mentioned,

747
00:40:05,160 --> 00:40:08,239
Speaker 1: who stands a chance of rivaling them? Well, we have

748
00:40:08,360 --> 00:40:11,600
Speaker 1: a really limited set of luxury within the United States,

749
00:40:11,640 --> 00:40:15,000
Speaker 1: So Coach kind of stands alone because they have very

750
00:40:15,440 --> 00:40:19,440
Speaker 1: good handback store product and marketing execution. The other players

751
00:40:19,520 --> 00:40:24,200
Speaker 1: we have are Tiffany, Ralph, Lauren Southeby. Southby's is really

752
00:40:24,680 --> 00:40:28,960
Speaker 1: on an awesome journey becoming much more modern and their

753
00:40:29,000 --> 00:40:32,920
Speaker 1: approach and broadening appeal. But Coach is really unique in

754
00:40:33,040 --> 00:40:35,800
Speaker 1: terms of being keming for multi brand. You've used the

755
00:40:35,840 --> 00:40:38,120
Speaker 1: word journey twice, Oliver. The only thing I know about

756
00:40:38,120 --> 00:40:41,120
Speaker 1: retailers of my wallets on a journey to Gucci. It

757
00:40:41,200 --> 00:40:46,960
Speaker 1: comes back lighter, Oliver Chen, thank you this morning. Greatly

758
00:40:47,040 --> 00:40:50,759
Speaker 1: appreciate seriously, folks. He does just terrific work across a

759
00:40:50,880 --> 00:41:06,719
Speaker 1: really wide group of redown we should frame the Congressman

760
00:41:06,800 --> 00:41:10,839
Speaker 1: Kevin Brady is being north of north of Houston and

761
00:41:11,280 --> 00:41:14,880
Speaker 1: uh and the woodlands and and I love one of

762
00:41:14,880 --> 00:41:17,319
Speaker 1: the articles on the woodlands again north of Houston, the

763
00:41:17,360 --> 00:41:21,160
Speaker 1: eighth District couple. But above that is it's a safe

764
00:41:21,160 --> 00:41:23,799
Speaker 1: place if you don't like snakes, because there's only three

765
00:41:23,880 --> 00:41:28,160
Speaker 1: venomous ones. Which is it's it's it's a different part

766
00:41:28,160 --> 00:41:30,680
Speaker 1: of the country. Kevin Brady joins us now of the

767
00:41:30,719 --> 00:41:34,800
Speaker 1: Texas eighth Congressional District. Key's chairman of House Ways and

768
00:41:34,880 --> 00:41:38,560
Speaker 1: Means Committee. Chairman, Are you distracted by all going on

769
00:41:38,719 --> 00:41:42,520
Speaker 1: at the White House? Or can you actually commit legislation

770
00:41:42,920 --> 00:41:45,719
Speaker 1: through the end of this year? Yes, I can, so

771
00:41:45,880 --> 00:41:49,520
Speaker 1: thanks for having me this morning, and the answer is that, yeah,

772
00:41:49,600 --> 00:41:53,960
Speaker 1: we're completely completely focused on tax reforms. So is the

773
00:41:53,960 --> 00:41:56,520
Speaker 1: President's tax team as well. And so I think one

774
00:41:56,520 --> 00:41:59,080
Speaker 1: of the important things here two weeks ago when the

775
00:41:59,719 --> 00:42:03,040
Speaker 1: pres Since tax team talked about his principles, what they

776
00:42:03,080 --> 00:42:06,880
Speaker 1: also laid out was the the timetable head, which is

777
00:42:06,920 --> 00:42:09,640
Speaker 1: for the House, the White House, and Senate to work

778
00:42:09,719 --> 00:42:12,480
Speaker 1: together and see if we can't unify behind a single

779
00:42:12,560 --> 00:42:16,440
Speaker 1: tax plan. I think that is critically important if we

780
00:42:16,480 --> 00:42:21,120
Speaker 1: can finish that out, and I think it uh better

781
00:42:21,280 --> 00:42:25,080
Speaker 1: assures that we can finish this in which is our goal.

782
00:42:25,239 --> 00:42:27,600
Speaker 1: Chairman Brady, how did you react when you saw that

783
00:42:27,680 --> 00:42:30,200
Speaker 1: one pager as it's called, from the White House, those

784
00:42:30,200 --> 00:42:32,839
Speaker 1: two hundred words, those principles that you just described. When

785
00:42:32,840 --> 00:42:36,239
Speaker 1: I talked to guests here at Bloomberg, executive's accountants, people

786
00:42:36,280 --> 00:42:39,279
Speaker 1: from the business world, they've been operating off of your blueprint,

787
00:42:39,320 --> 00:42:42,040
Speaker 1: which is more fulsome than that document we got from

788
00:42:42,040 --> 00:42:43,799
Speaker 1: the White House. What do you do with that one

789
00:42:43,800 --> 00:42:48,360
Speaker 1: page piece of paper you got from the White House? Well, actually,

790
00:42:48,360 --> 00:42:50,919
Speaker 1: as I was pretty encouraged, because you know, where there's

791
00:42:50,920 --> 00:42:55,560
Speaker 1: about eight percent agreement on the key um issues, we

792
00:42:55,600 --> 00:42:58,279
Speaker 1: still have some work to do. Obviously, there's some differences

793
00:42:58,360 --> 00:43:01,279
Speaker 1: on the rights and someone that's on as well, the

794
00:43:01,360 --> 00:43:04,720
Speaker 1: family um. A portion of this, which I think keeps

795
00:43:04,719 --> 00:43:08,080
Speaker 1: getting lost in discussion, was very close. That the two

796
00:43:08,080 --> 00:43:10,560
Speaker 1: were very close and so well. I think we start

797
00:43:10,640 --> 00:43:14,239
Speaker 1: from a very solid foundation. So I was I was encouraged.

798
00:43:14,800 --> 00:43:17,759
Speaker 1: You've got that left then one fit of this thing

799
00:43:17,800 --> 00:43:20,040
Speaker 1: to sort out. I imagine part of that is this

800
00:43:20,080 --> 00:43:23,200
Speaker 1: border adjusted tax, where you're disappointed to see the White

801
00:43:23,200 --> 00:43:28,000
Speaker 1: House not embrace that. No, not necessarily. Our discussions with

802
00:43:28,080 --> 00:43:30,480
Speaker 1: them and have been pretty positive. Look, I think the

803
00:43:30,480 --> 00:43:34,440
Speaker 1: way Secretary Manuchin talked about at the morning earlier that

804
00:43:34,480 --> 00:43:37,680
Speaker 1: morning on that day was accurate, which he said, in effect,

805
00:43:37,760 --> 00:43:40,920
Speaker 1: he said, the way that that that provision was originally

806
00:43:40,920 --> 00:43:44,319
Speaker 1: introduced won't work, but we'll work with the House going

807
00:43:44,360 --> 00:43:46,759
Speaker 1: forward to see if we can't design it and make

808
00:43:46,800 --> 00:43:50,920
Speaker 1: that work. I think that's exactly accurate. Here's what we're doing.

809
00:43:51,400 --> 00:43:54,440
Speaker 1: We know what our competitors do in China, Europe, Mexico,

810
00:43:54,480 --> 00:43:57,080
Speaker 1: and Canada. They beat us on lower rates, they beat

811
00:43:57,120 --> 00:43:59,919
Speaker 1: America by no longer tax and worldwide, and they border

812
00:44:00,080 --> 00:44:02,680
Speaker 1: or just we made in the House a conscious decision

813
00:44:02,719 --> 00:44:05,880
Speaker 1: to go straight after our competitors. And the principle is

814
00:44:05,920 --> 00:44:09,520
Speaker 1: this in border justability, which is, look, do we want

815
00:44:09,560 --> 00:44:13,879
Speaker 1: to keep the status quote that encourages jobs to move

816
00:44:13,920 --> 00:44:19,680
Speaker 1: overseas and actually favors foreign products and workers over US

817
00:44:19,719 --> 00:44:23,720
Speaker 1: products and workers, or do we want to tax everyone

818
00:44:23,880 --> 00:44:27,440
Speaker 1: equally in the United States so you have true competition

819
00:44:27,520 --> 00:44:30,719
Speaker 1: for the first time, and it not only eliminates every

820
00:44:30,800 --> 00:44:34,680
Speaker 1: tax incentive for companies to move their jobs and research

821
00:44:34,760 --> 00:44:37,960
Speaker 1: overseas and actually creates strong incentives to to bring them

822
00:44:37,960 --> 00:44:40,600
Speaker 1: back to the United States. We're gonna make the argument

823
00:44:41,000 --> 00:44:43,239
Speaker 1: and bring the case in a new design by the

824
00:44:43,280 --> 00:44:47,120
Speaker 1: way of border justability to our discussions with the White

825
00:44:47,160 --> 00:44:51,719
Speaker 1: House and the Senate. Mr Brady, you have a wonderful

826
00:44:51,800 --> 00:44:54,840
Speaker 1: experience in this nation from the spine of the Midwest,

827
00:44:54,880 --> 00:44:59,439
Speaker 1: from South Dakota on down Texas. When when you when

828
00:44:59,480 --> 00:45:03,080
Speaker 1: you look at the importance of the US Senate, how

829
00:45:03,120 --> 00:45:06,719
Speaker 1: will they rewrite Trump Care? Do you look for them

830
00:45:06,760 --> 00:45:10,360
Speaker 1: to do a complete redo? Then you will have to

831
00:45:10,440 --> 00:45:16,040
Speaker 1: compromise on you know, I don't know. That's a great question.

832
00:45:16,360 --> 00:45:19,359
Speaker 1: I don't know the answer yet. What I'm what I'm

833
00:45:19,480 --> 00:45:22,480
Speaker 1: encouraged by is that I think they'll take the key

834
00:45:22,560 --> 00:45:25,960
Speaker 1: provisions from the House and continue to improve upon it.

835
00:45:26,080 --> 00:45:30,680
Speaker 1: For example, we know that in these two big steps

836
00:45:30,719 --> 00:45:34,680
Speaker 1: were taking beyond repeal. Those two big steps being let's

837
00:45:34,880 --> 00:45:37,960
Speaker 1: let's restore the free market of insurance so people have

838
00:45:38,080 --> 00:45:42,200
Speaker 1: broader choices. Let's restore state control rather than Washington control,

839
00:45:42,520 --> 00:45:46,040
Speaker 1: so more innovative, so the states can design healthcare better

840
00:45:46,239 --> 00:45:50,440
Speaker 1: to meet their needs. In that is this individual tax

841
00:45:50,480 --> 00:45:53,600
Speaker 1: credit that can travel with people from job to job,

842
00:45:53,680 --> 00:45:56,680
Speaker 1: state to state home to start a business or raise

843
00:45:56,760 --> 00:46:00,719
Speaker 1: a family, even into those early retirement years. What we

844
00:46:00,920 --> 00:46:04,080
Speaker 1: noticed is that those in the fifties six four year

845
00:46:04,120 --> 00:46:08,680
Speaker 1: old arrange frankly, need a more muscular tax credit at

846
00:46:08,719 --> 00:46:12,920
Speaker 1: that point in their lives. The House sent over gotah

847
00:46:12,960 --> 00:46:16,680
Speaker 1: almost ninety billion dollars to the Senate. You know, we

848
00:46:16,680 --> 00:46:20,560
Speaker 1: we expect them to use those dollars, uh to muscle up,

849
00:46:21,160 --> 00:46:24,440
Speaker 1: power up that part of the tax credit for Americans

850
00:46:24,480 --> 00:46:27,600
Speaker 1: in that age. Right, That's one example, Chairman Brady, Thank

851
00:46:27,600 --> 00:46:29,480
Speaker 1: you so much. David Gourd and I look forward to

852
00:46:29,520 --> 00:46:33,160
Speaker 1: speaking to you. Mr Brady's from the eighth Congressional listart

853
00:46:33,200 --> 00:46:44,520
Speaker 1: just north of Houston, Texas. Thanks for listening to the

854
00:46:44,560 --> 00:46:51,440
Speaker 1: Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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Speaker 1: Tom Keene David Gura. Is that David Gura? Before the

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Speaker 1: pod cast, you could always catch us worldwide. I'm Bloomberg Radio,

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Speaker 1: brought you by Bank of America Mary Lynch. Dedicated to

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Speaker 1: bringing our clients insights and solutions to meet the challenges

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Speaker 1: of a transforming world. That's the power of global connections.

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Speaker 1: Mary Lynch, Pierce, Fenner and Smith Incorporated, Member s I

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Speaker 1: p C.