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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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

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

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

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,

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Speaker 1: you know, we talk a lot about some of the

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Speaker 1: political turmoil in Washington, from the Russia intrigue to everything else.

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Speaker 1: But really the most important thing, uh, that many in

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Speaker 1: the market are watching is the healthcare bill that the

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Speaker 1: GOP has been working on, and Senate Republican leaders did

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Speaker 1: present a revised healthcare plan today to try to gin

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Speaker 1: up enough support to get it past in the near terms.

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Speaker 1: To take a look at how it differs from previous

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Speaker 1: incarnations of this legislation, and I want to bring in

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Speaker 1: Max Neeson, Bloomberg gad Fly columnist, fabulous columnist, Reada's columns,

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Speaker 1: Bloomberg dot Com, slash gadfly or on the terminal, uh,

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Speaker 1: he joins us. Now, so, Max, how is this new

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Speaker 1: bill different from the old ones? And what does this

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Speaker 1: tell us about the direction that it's going in, so

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Speaker 1: we we don't yet have a full bill. We're kind

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Speaker 1: of working off a leaked outline UM that that seems

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Speaker 1: to have come from globbyists, So we'll have to kind

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Speaker 1: of dig into the bill text to get really all

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Speaker 1: the details. But what it looks like so far are

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Speaker 1: are a few major changes. Keeps some a c AT

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Speaker 1: taxes on the wealthy in order to spend more on

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Speaker 1: helping states cover people's out of pocket costs. UM, helps

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Speaker 1: with the tax treatment of health savings accounts, spending on

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Speaker 1: the opioid crisis, lowering premiums UM actually some programs that

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Speaker 1: Republicans have criticized that were part of the affordable character

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Speaker 1: in the first place. UM, and also in covering some

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Speaker 1: higher skin divid jewels UM. But it keeps Medicaid cuts

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Speaker 1: just about the same, which which might be an area

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Speaker 1: of trouble. And the thing we really still don't know

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Speaker 1: is to what degree UH ted cruz IDEA for basically

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Speaker 1: letting people buy less generous health coverage than the a

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Speaker 1: c A would have allowed. UM. We don't know how

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Speaker 1: much of that's going to be included yet, But does

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Speaker 1: this give us any indication of which direction it's moving

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Speaker 1: in and sort of which factions are gaining the most

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Speaker 1: cloud in these negotiations. So the kind of interesting thing

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Speaker 1: here is that it's it's this sort of bizarre compromise

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Speaker 1: where everyone gets a little and we're not exactly sure

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Speaker 1: how much everyone gets. Um So I think that's what

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Speaker 1: might give it a little bit of difficult even though

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Speaker 1: they're kind of shifting things around to kind of meet

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Speaker 1: that fifty vote margin. I mean, it's not a good

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Speaker 1: sign that, you know, there they didn't do anything to

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Speaker 1: ameliorate the Medicaid cuts when that's a huge issue for

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Speaker 1: a lot of the potential moderate no votes. Conservatives might

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Speaker 1: be angry that this basically rose a lot of money

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Speaker 1: at some of the issues in it, which is just

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Speaker 1: a general kind of ideological point that they don't agree with,

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Speaker 1: and they might not get that kind of cruisily amendment

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Speaker 1: in the version that they wanted. And the fact that

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Speaker 1: Lindsay Graham and Bill Cassidy went on TV a few

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Speaker 1: minutes before the Republicans were set to have a meeting

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Speaker 1: about this bill and pitch their own alternative to this bill.

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Speaker 1: So it's kind of still everything is still up in

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Speaker 1: the area. Um. I just guess I'm trying to just

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Speaker 1: absorb the concept that we're basically watching the horse trading

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Speaker 1: in real time? Is that is that kind of where

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Speaker 1: I mean, that's just seems so otherworldly, but I guess

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Speaker 1: that's the way it goes, right, It's absolutely accurate. And um,

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Speaker 1: it's kind of been the case the entire lifespan of

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Speaker 1: this bill, both in the House and the Senate, and

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Speaker 1: and it's just seems to be particularly active horse trading

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Speaker 1: right now, where um, not only do you know, senators

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Speaker 1: don't know what's going to be in the bill that's

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Speaker 1: going to be possibly released to this day, and they're

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Speaker 1: doing it to themselves right because it's it was about

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Speaker 1: ten GOP senators that we're holding up the works, and

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Speaker 1: then they you know, they were horse trading. For example,

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Speaker 1: I remember Susan Collins, I believe Maine Republican from Maine,

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Speaker 1: uh wanted more money for the opioid crisis in May. Yes,

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Speaker 1: so there was a lot of different senators that wanted

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Speaker 1: that particular bit. But yeah, it's when you have a

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Speaker 1: small group of people writing something a process that's not

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Speaker 1: that transparent. Um, you know, you you kind of see

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Speaker 1: the reason that they did that is they're trying to

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Speaker 1: move quickly to kind of move forward their legislative agenda.

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Speaker 1: But it's sort of backfired because when you don't have

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Speaker 1: an open process, you have people to get surprised, and

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Speaker 1: then you know, they come out with demands and then

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Speaker 1: you have to make these last minute little shifts. And

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Speaker 1: with something is complicated as as healthcare legislation, you obviously

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Speaker 1: run into some issues. You know. I was looking at

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Speaker 1: some polls recently about the general favorability ratings of the

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Speaker 1: A c A and how it's actually gone up pretty

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Speaker 1: substantially over the past few months. UM, And I'm wondering

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Speaker 1: whether that will complicate things. The fact that there is

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Speaker 1: greater favorability feeling towards the current system then there has

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Speaker 1: been in the past were complicate things if UH senators

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Speaker 1: do go on recess and do go back to their

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Speaker 1: districts and end up having conversations with people who suddenly

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Speaker 1: have have a better feeling about this. And by the way,

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Speaker 1: we're getting a redhead right now, we're getting a headline

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Speaker 1: center Republicans have released the updated draft the healthcare bill.

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Speaker 1: So I am sure that MAXI will go back to

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Speaker 1: your seat and scrutinize every passage. But you know what

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Speaker 1: I'm saying, though, right and your day was just you

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Speaker 1: and your evening, I would imagine evening. But it's already

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Speaker 1: complicating things. I mean, people are looking ahead to and

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Speaker 1: over kind of lifespan of the bill. It's moved kind

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Speaker 1: of ever closer to the A C. A it's not.

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Speaker 1: You know that this is much closer to the A

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Speaker 1: C than what the housepell was, particularly when you look

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Speaker 1: at how the like subsidies and tax credits are structured.

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Speaker 1: So the other the other thing that people are really

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Speaker 1: watching is whether there is any cohesion among the Republican senators, uh,

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Speaker 1: and whether there has been any kind of melding of minds.

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Speaker 1: I mean, you talk about, you know, Senator Graham releasing

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Speaker 1: his own healthcare bill before going into a meeting to

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Speaker 1: talk about the ongoing negotiations. But I wonder, you know,

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Speaker 1: just from a market perspective, what people are looking for

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Speaker 1: is what does this mean about fiscal stimulus, about other

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Speaker 1: sort of market friendly activities in a tax bill. Um,

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Speaker 1: Are we getting any sense that there is some kind

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Speaker 1: of consensus building among the Republican factions or is it

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Speaker 1: splintering further. You know, you know, if anything, it's the opposite.

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Speaker 1: And I think what revealed that the most was the

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Speaker 1: fact that after they pulled the initial version of the

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Speaker 1: Senate bill they were going to vote on it, they

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Speaker 1: decided not to. Um, just a whole bunch of senators

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Speaker 1: jumped out of the woodwork and said, I'm definitely not

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Speaker 1: going to vote for this, even people that previously had

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Speaker 1: been counted as pretty votes. You know, on one hand,

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Speaker 1: you have to discount that a little bit, because you know,

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Speaker 1: the bill was dead in its current form. It's not

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Speaker 1: like they were taking a vote or a major stand.

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Speaker 1: But it also indicates that that pretty clearly there um

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Speaker 1: some fractions, some divisions. People aren't willing to just fall

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Speaker 1: in line up behind leadership because they said this is

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Speaker 1: what we need to do. I just wanna veer you

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Speaker 1: off course from the health bill because I know you're

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Speaker 1: going to spend the rest of your day doing that.

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Speaker 1: But just about about this cancer breakthrough, I mean, this

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Speaker 1: is something Can you just explain it what we've learned? Yeah? Absolutely,

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Speaker 1: And I have a column coming out later today on this,

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Speaker 1: and it's actually really a pretty stunning treatment. Basically, what

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Speaker 1: they do is for a group of patients that um,

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Speaker 1: you know, really have failed other treatments and would likely

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Speaker 1: die without it. What they're able to do is take

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Speaker 1: out their imman cells, modify them, and inject them back

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Speaker 1: into the body of people with the really serious blood

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Speaker 1: cancer and in some patients that can very literally wipe

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Speaker 1: out that cancer. Um, it's really quite amazing. Sing. The

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Speaker 1: question is whether it's commercially viable. Um. You know, it

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Speaker 1: has to be made specifically for each patient. It's likely

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Speaker 1: to cost many hundreds of thousands of dollars um. You know,

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Speaker 1: it's it's unprecedented in that way as well. So it's

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Speaker 1: gonna be really fascinating to fall over the next couple

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Speaker 1: of years. And we're gonna want to read your column

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Speaker 1: about this because I know you're gonna give us details,

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Speaker 1: tell us about who did it in the companies and

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Speaker 1: so on. Thank you very much, Max Needson, Gadfly columnists

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Speaker 1: Time Pim Fox along with Lisa Abramowitz and a very

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Speaker 1: extensive bit of questioning Lisa Abramowitz and I thought very

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Speaker 1: appropriate at the end when a chair Yellen was asked

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Speaker 1: would she accept an appointment, you know, to be reappointed,

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Speaker 1: and there was that pause just beforehand and a couple

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Speaker 1: of very pointed questions. Everyone wanted her to basically weigh

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Speaker 1: in on this, and Carl Kadana, who is chief US economist,

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Speaker 1: we're gonna let him in on this. Well, you know

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Speaker 1: he was. He was making the argument yesterday to us

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Speaker 1: off air that this would be the time for her

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Speaker 1: to actually make a statement about whether or not she

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Speaker 1: think you only, yeah, we kind of bet that here

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Speaker 1: so he can weigh in on the surprise I got

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Speaker 1: because Carl is hardly ever wrong. However, yeah, Carlon knows.

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Speaker 1: So the terms of the bet were a cup of coffee, right,

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Speaker 1: that's right, So I'll meet you downstairs for a cup

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Speaker 1: of coffee. Yea perfect um. No, This, in contrast to

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Speaker 1: the post meeting statements and press conferences, uh now, would

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Speaker 1: have been a yeah. I think a good time for

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Speaker 1: her to show her hand. Obviously, fed continuity is so

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Speaker 1: critical at this point, and there's basically six months left

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Speaker 1: in her terms, so I think that before Gary Cohne

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Speaker 1: takes over, well before her term expires, will say on

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Speaker 1: February three. Uh, and so you know it's important at

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Speaker 1: some point, you can't don February two. Finally, reveal your intentions,

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Speaker 1: especially with such high stakes right now, do you say never?

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Speaker 1: You said you can never say never? You never say never.

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Speaker 1: It would be I'll say it would be a bad

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Speaker 1: idea to wait until the last right. We need to

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Speaker 1: know what course the Feds on with the balance sheet

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Speaker 1: with interest rates, uh you know, keeping markets as calm

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Speaker 1: as possible as they tried to normalize policy in an

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Speaker 1: economy that's uh performing so so uh so the Fed

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Speaker 1: wants to be transparent, don't save a big surprise for

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Speaker 1: the last minute at some point, And she didn't have

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Speaker 1: to do it today, but the clock is ticking and

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Speaker 1: it will soon be appropriate for her to express her intentions, Carl. Yesterday,

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Speaker 1: the market was interpreting Janet Allen's statements as being dovish.

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Speaker 1: Is being a sort of conducive to an ongoing rally

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Speaker 1: and risk assets as well as an ongoing rally and

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Speaker 1: government at everything is great. The world is in the

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Speaker 1: goldilocks area today it's different. Today. We're seeing somewhat of

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Speaker 1: a sell off in von Marcus. Is this people basically

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Speaker 1: taking a step back and saying she really hasn't made

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Speaker 1: any material changes or is this not related to her

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Speaker 1: testimony at all. I don't think today's move is too

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Speaker 1: heavily related to her testimony. I think the market interpretation

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Speaker 1: yesterday that she was sounding more dovish, incrementally more dovish

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Speaker 1: h than she did at the June meeting press conference.

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Speaker 1: I think that was a correct interpretation. And the Fed

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Speaker 1: is UH being more ponderous about potential disinflation threats. I yeah,

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Speaker 1: earlier today looked back to what see what the Fed's

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Speaker 1: report card on the inflation mandate was over Cherry Yellen's term. UH,

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Speaker 1: And if we go back to fourteen and look at

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Speaker 1: either the PC deflator or the core PC deflator, basically

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Speaker 1: they have missed the entire time. There was one month

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Speaker 1: during Janet Yellen's FED term as chair where the headline

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Speaker 1: PC deflator, which is the objective they're trying to not

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Speaker 1: hit two percent with, actually was at two percent or better.

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Speaker 1: The rest of the term they have missed. In fact,

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Speaker 1: if we go back and look from two thousand and

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Speaker 1: nine to present, UH, the FED has missed the two

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Speaker 1: percent inflation mandate on the court inflator percent of the

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Speaker 1: time you look at the headline, it's eight percent. You know,

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Speaker 1: if carbon Kadana were an economic was an economics professor,

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Speaker 1: and he could certainly be. He would never let anybody slide,

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Speaker 1: not even a little. He is he you hold their

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Speaker 1: feet to the great high. Can I just point out

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Speaker 1: something though, that if you take a look at what's

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Speaker 1: going on in equity markets right now. I know you're

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Speaker 1: worried about your bonds, but you know you had that

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Speaker 1: big sell off a couple of weeks ago. I marked

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Speaker 1: that because that's when you leave, you leave whenever. That's

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Speaker 1: the best indicators when you leave the bond market tanks.

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Speaker 1: And then we've seen this run up, and now we've

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Speaker 1: seen yields kind of back up a little bit because

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Speaker 1: everyone went, oh, Okay, maybe maybe we're not going to

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Speaker 1: get this raise right because she's delish. Take a look

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Speaker 1: at stocks today. Stocks are up very very little, but

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Speaker 1: they're up. And that's very important because that's what they

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Speaker 1: I believe it has to do with what's called an

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Speaker 1: inside day, because it has to do with a lot

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Speaker 1: of market technicals that have to do that demonstrate buying

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Speaker 1: and selling, strength and pressure. And the couple with your

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Speaker 1: point about emerging market debt, which chair Yellin spoke about,

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Speaker 1: or said she spoke about um. I want to know

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Speaker 1: Lisa Brownwoods from you. There were a couple of questions

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Speaker 1: there about the financial crisis that brought up the words

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Speaker 1: Bear Stearns and Lehman Brothers. I mean, come on, of

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Speaker 1: course there is and you've got the Financial Committee, but

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Speaker 1: there was anything they're going to bring up the crisis.

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Speaker 1: And then they talked about glass Stiegel and they asked

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Speaker 1: about the reinstatement with a possible reinstatement of glass Steel.

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Speaker 1: And I'm wondering what you thought, because it's almost as

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Speaker 1: if are yelling came back and said, yes, it was

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Speaker 1: that there was a long pause before she answered that question.

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Speaker 1: You know, honestly, I think that it's it's nice to

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Speaker 1: pontificate on on that particular thing. I think it doesn't

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Speaker 1: really matter though, to be honest, I mean, it's sort

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Speaker 1: of like that. It's nice. They're they're basically grandstanding, right,

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Speaker 1: And I think that as far as the senators, the senators,

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Speaker 1: and she's trying to respond in a way that's the

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Speaker 1: least destructive as possible. Carl, I mean, but that's what well, Carl,

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Speaker 1: I mean, you've even that's one of the that goes

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Speaker 1: to the heart of what you're saying, which is that

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Speaker 1: the presentation to the audience that may maybe not matter more,

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Speaker 1: but matter as much, which is the financial community and

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Speaker 1: the people who have to live and breathe all this

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Speaker 1: stuff that they need more than just what leases describing

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Speaker 1: as kind of this what did you say a grand Uh.

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Speaker 1: She's not trying to deliver soundbites here, so she's not

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Speaker 1: going to say, yes, bring back last Stiegel, So she

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Speaker 1: instead gives a very crap the answer that the meanders

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Speaker 1: around and talks about regulations on banking and uh, preventing

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Speaker 1: the next financial crisis and whatnot. But back to the

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Speaker 1: original point on because and what you're highlighting here is

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Speaker 1: this focus on financial stability risks, which is one of

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Speaker 1: the moting motivating factors for the FED. Uh. My. My

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Speaker 1: contrary point is that they have missed on core inflation

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Speaker 1: of the time uh since the Great Recession. Uh. Now

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Speaker 1: you have inflation backsliding at the same time that the

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Speaker 1: FED is ramping up the pace of tightening. It's very hard.

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Speaker 1: The FED is very sensitive to its inflation credibility. Uh,

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Speaker 1: and I think that they risk seeding some of that

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Speaker 1: credibility if inflation is backsliding. You've been below target of

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Speaker 1: the time, and now you're accelerating the pace of tightening.

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Speaker 1: So if you want to say there's symmetric uh, you know,

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Speaker 1: a symmetric focus on that two percent inflation target and

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Speaker 1: you've missed. Yeah. The other student in the class, Lisa Bromwitz,

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Speaker 1: has a question, sure, real quick. I think that underlying

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Speaker 1: all of her testimony was who is going to be

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Speaker 1: her successor? We've gotten some names, including Gary Cohne, who

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Speaker 1: I somewhat flippantly mentioned before, former chief operating officer of

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Speaker 1: Woman Sex. Who do you think is the most likely

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Speaker 1: next fight chair? Well, I mean the fact that we're

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Speaker 1: hearing Gary Cohn's name so much, I think means that

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Speaker 1: that could be he could be a prime candidate. I

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Speaker 1: think also New York Fed President Bill Dudley that could

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Speaker 1: be a potential candidate. He would be yelling too, so

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Speaker 1: to speak, because he does have a devish policy inclination. Uh.

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Speaker 1: It could be someone from the current Board of Governors,

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Speaker 1: but it just I don't say any names jumping out

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Speaker 1: at that point. So you have to be on the

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Speaker 1: Board of Governors to be chair. So that would mean

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Speaker 1: President Dudley would have to be appointed into one of

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Speaker 1: the governor's seats. So there seems to be this game

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Speaker 1: of chicken with yelling at exactly. Rickadonna, thank you so

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Speaker 1: much for joining us. Actually important always to get your

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Speaker 1: insights at Carcadona's chief US economist for Bloomberg Intelligence. Thanks

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Speaker 1: for listening to the Bloomberg P and L podcast. You

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Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

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Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.

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Speaker 1: It's one before the podcast. You can always catch us

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Speaker 1: worldwide on Bloomberg Radio