1 00:00:09,720 --> 00:00:12,920 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,560 --> 00:00:16,560 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,239 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:35,280 Speaker 1: on the Bloomberg Taking a few sensitive meetings is Kelster's 6 00:00:35,479 --> 00:00:40,400 Speaker 1: chief investment officer, Mr Christopher Allman. Chris unmiffed on the 7 00:00:40,520 --> 00:00:45,080 Speaker 1: changing of expenses for research on what guys like you 8 00:00:45,400 --> 00:00:48,199 Speaker 1: are going to pay for research? Where are we going 9 00:00:48,240 --> 00:00:50,680 Speaker 1: to be in one year. Yeah, it's gonna be an 10 00:00:50,680 --> 00:00:53,000 Speaker 1: interesting question, Tom, because a lot of people are wondering 11 00:00:53,000 --> 00:00:56,720 Speaker 1: what really is the value of that research. We already 12 00:00:56,760 --> 00:01:00,600 Speaker 1: pay for some independent economic research services. We pay for 13 00:01:01,040 --> 00:01:04,720 Speaker 1: geo political research services because we found that the Street 14 00:01:04,720 --> 00:01:07,240 Speaker 1: doesn't do a good job on that. Um. But I'm 15 00:01:07,280 --> 00:01:10,360 Speaker 1: really gonna be interested. We've been out of soft dollars, 16 00:01:10,440 --> 00:01:14,199 Speaker 1: as it's called in the USA for over about six 17 00:01:14,280 --> 00:01:17,319 Speaker 1: years now, UM and have really limited the use with 18 00:01:17,360 --> 00:01:19,640 Speaker 1: our managers. So I'm not quite sure how the USA 19 00:01:19,760 --> 00:01:22,800 Speaker 1: is going to navigate what happens in Europe. But you know, 20 00:01:22,880 --> 00:01:25,080 Speaker 1: if it's really a value, then you should be willing 21 00:01:25,120 --> 00:01:28,039 Speaker 1: to pay for it. This is incredibly important, folks, And 22 00:01:28,080 --> 00:01:30,760 Speaker 1: if you're not part of global Wall Street, trust me. 23 00:01:30,840 --> 00:01:33,600 Speaker 1: There's all this other stuff going on. The President just 24 00:01:33,640 --> 00:01:36,319 Speaker 1: tweeting about the NFL. We'll get to that in a moment. 25 00:01:36,400 --> 00:01:40,240 Speaker 1: Chris Ellman, you are way out front on where the 26 00:01:40,280 --> 00:01:44,200 Speaker 1: regulators want to go. If the regulators get the wish 27 00:01:44,280 --> 00:01:48,200 Speaker 1: if we see research diminished, does that drive people to 28 00:01:48,440 --> 00:01:51,760 Speaker 1: passive investing? Well, Tom, I don't think that. You know, 29 00:01:51,840 --> 00:01:56,560 Speaker 1: people that rely on Wall Street research are really just 30 00:01:56,720 --> 00:01:58,800 Speaker 1: using it as a guidebook. What I think is going 31 00:01:58,840 --> 00:02:01,800 Speaker 1: to happen in the future, you'll see a bifurcation. The 32 00:02:01,960 --> 00:02:06,360 Speaker 1: real quality research analysts will go to independent services and 33 00:02:06,400 --> 00:02:08,680 Speaker 1: they'll be and they'll be people will be willing to 34 00:02:08,720 --> 00:02:11,120 Speaker 1: pay for that. So they're still gonna be active management 35 00:02:11,320 --> 00:02:13,520 Speaker 1: because a lot of the active managers like to do 36 00:02:13,560 --> 00:02:17,000 Speaker 1: their own work anyway. Um, will it drive more people 37 00:02:17,000 --> 00:02:19,520 Speaker 1: to passive Frankly, I hope so, because the amount of 38 00:02:19,560 --> 00:02:22,600 Speaker 1: four O one K money in the USA alone, it 39 00:02:22,760 --> 00:02:26,680 Speaker 1: needs to be impassive because otherwise active management is not 40 00:02:26,800 --> 00:02:30,760 Speaker 1: beating the cost it charges and therefore there's no value. 41 00:02:30,800 --> 00:02:34,160 Speaker 1: Add Good morning from Milan Chris, do you worry about 42 00:02:34,480 --> 00:02:36,920 Speaker 1: a lot of hedge funds taking big position on the 43 00:02:36,960 --> 00:02:40,960 Speaker 1: markets and therefore the markets almost being distorted by all 44 00:02:41,040 --> 00:02:44,240 Speaker 1: this you know, passive money, and if that changes it 45 00:02:44,320 --> 00:02:47,959 Speaker 1: doesn't you know, is there a correction coming that could 46 00:02:48,000 --> 00:02:51,919 Speaker 1: be quite ugly. Well, good morning for Milan, so good 47 00:02:51,919 --> 00:02:54,440 Speaker 1: to see you again. I don't believe that that the 48 00:02:54,560 --> 00:02:58,200 Speaker 1: passive money is actually distorting the market. I think that 49 00:02:58,320 --> 00:03:01,600 Speaker 1: it's just it's actually creating some stabilization and the numbers 50 00:03:01,639 --> 00:03:05,320 Speaker 1: that we've seen, there's more money following indexes than before. 51 00:03:05,880 --> 00:03:08,400 Speaker 1: But what we're seeing is a market that's actually fairly 52 00:03:08,720 --> 00:03:11,760 Speaker 1: quiet because there's not a lot of people swing trading 53 00:03:11,800 --> 00:03:13,680 Speaker 1: in it. And the hedge funds that have been in 54 00:03:13,760 --> 00:03:17,120 Speaker 1: out of the market. Um, it's really the leveraged etf 55 00:03:17,280 --> 00:03:19,560 Speaker 1: that have an impact. I don't think it's going to 56 00:03:19,680 --> 00:03:22,920 Speaker 1: cause a significant change in trading habits. If we have 57 00:03:22,960 --> 00:03:25,079 Speaker 1: a bear market, it's really going to be signaled due 58 00:03:25,080 --> 00:03:27,960 Speaker 1: to the economy, Um, due to some kind of a recession, 59 00:03:28,080 --> 00:03:30,720 Speaker 1: some kind of a regulatory or a tax law change. 60 00:03:31,120 --> 00:03:33,120 Speaker 1: We'll see if we get this same as tax law, 61 00:03:33,200 --> 00:03:36,360 Speaker 1: they've been so successful so far, I guess I have 62 00:03:36,440 --> 00:03:38,880 Speaker 1: to have hope for the tax change. But you know, 63 00:03:39,200 --> 00:03:42,320 Speaker 1: I don't foresee that this market is really uh in 64 00:03:42,400 --> 00:03:45,960 Speaker 1: the internal dynamics. So the market look okay, it's just 65 00:03:46,040 --> 00:03:48,240 Speaker 1: price to perfection, and it could stay that way for 66 00:03:48,320 --> 00:03:51,160 Speaker 1: considerable period of time. And I don't think hedge fund 67 00:03:51,160 --> 00:03:55,160 Speaker 1: activity is going to trigger that recession. What would trigger 68 00:03:55,200 --> 00:03:58,080 Speaker 1: actually a readjustment of the market is its central bank policy. 69 00:03:58,160 --> 00:04:00,960 Speaker 1: And if yet, it's do we know how the markets 70 00:04:00,960 --> 00:04:05,320 Speaker 1: would function without all of this free cash out there? Well, Francine, 71 00:04:05,400 --> 00:04:08,760 Speaker 1: that's the million gazillion dollar question. I have been asking 72 00:04:08,800 --> 00:04:12,120 Speaker 1: all of our economic services, what is that trigger point? 73 00:04:12,480 --> 00:04:15,400 Speaker 1: Certainly it could be a federal reserve policy action. We've 74 00:04:15,400 --> 00:04:17,920 Speaker 1: seen that before, like in four when the Fed moved 75 00:04:17,920 --> 00:04:22,640 Speaker 1: too quickly too fast, surprises the market, triggers a trade off. 76 00:04:23,000 --> 00:04:25,440 Speaker 1: We've also seen it where there's a change in federal 77 00:04:25,440 --> 00:04:28,920 Speaker 1: policy that causes the economy to stumble. We've also seen 78 00:04:28,960 --> 00:04:32,520 Speaker 1: it where there are international geopolitical events that cause consumers 79 00:04:32,520 --> 00:04:35,400 Speaker 1: to lose their confidence. So it could be any one 80 00:04:35,440 --> 00:04:37,880 Speaker 1: of those, and I don't I can't tell you that 81 00:04:37,920 --> 00:04:42,160 Speaker 1: there's a particular action to look for to gauge and 82 00:04:42,200 --> 00:04:45,200 Speaker 1: the challenges this could go on for a week, but 83 00:04:45,279 --> 00:04:47,359 Speaker 1: it can also go on for another two years. So 84 00:04:47,400 --> 00:04:49,640 Speaker 1: you don't want to be out of this market. But 85 00:04:49,720 --> 00:04:53,039 Speaker 1: I'm I'm very cautious enough not wanting to be overweight 86 00:04:53,120 --> 00:04:56,120 Speaker 1: the market and bet too much. Chris Sellman, thank you 87 00:04:56,200 --> 00:04:59,000 Speaker 1: so much, greatly appreciate your effort from Berlin today use 88 00:04:59,080 --> 00:05:15,920 Speaker 1: Concler's investment officer. We're gonna have an adult conversation now 89 00:05:16,040 --> 00:05:18,960 Speaker 1: about oil and along the way we'll explain the jargon 90 00:05:19,680 --> 00:05:21,560 Speaker 1: as we go. I think it's been something missing in 91 00:05:21,600 --> 00:05:23,920 Speaker 1: the discussion. You can do that when you've got someone 92 00:05:23,920 --> 00:05:27,760 Speaker 1: as smart as Michael mcgloan joining it, with Bloomberg Intelligence, 93 00:05:27,800 --> 00:05:32,640 Speaker 1: with decades of uh learning the humility of trying to 94 00:05:32,680 --> 00:05:36,280 Speaker 1: game where oil is gonna go. I saw Opec Resolve 95 00:05:36,440 --> 00:05:39,440 Speaker 1: open for def Leopard a few years ago. They were 96 00:05:39,440 --> 00:05:42,600 Speaker 1: a great band, and you're talking about the way they 97 00:05:42,600 --> 00:05:45,960 Speaker 1: got the name OPEC Resolve. There used to be Opec 98 00:05:46,120 --> 00:05:49,680 Speaker 1: Resolve when a sterea came out, you know, thirties some 99 00:05:49,880 --> 00:05:54,840 Speaker 1: years ago. Where's the OPEC Resolve today? Well, let's say 100 00:05:54,880 --> 00:05:57,720 Speaker 1: good leading and I've definitely lost my hair trying to 101 00:05:57,760 --> 00:06:00,240 Speaker 1: figure out the oil market. But um, I think the 102 00:06:00,320 --> 00:06:02,440 Speaker 1: key thing from OPEC is the job bonning. They know 103 00:06:02,480 --> 00:06:04,160 Speaker 1: what they have to say to get the market up, 104 00:06:04,160 --> 00:06:07,360 Speaker 1: whether they're doing or not. Still have power to Yeah, 105 00:06:07,360 --> 00:06:09,560 Speaker 1: well they do. I mean they're still producing over one 106 00:06:09,600 --> 00:06:11,440 Speaker 1: third of the world's oil. I mean, not much of 107 00:06:11,480 --> 00:06:14,080 Speaker 1: it's exported to US anymore, but they still that's one third. 108 00:06:14,080 --> 00:06:18,680 Speaker 1: Now that's their power is definitely diminishing, but they still 109 00:06:19,040 --> 00:06:21,760 Speaker 1: and the differences. They all need money, we know that, 110 00:06:22,200 --> 00:06:24,839 Speaker 1: but open I mean Saudi Arabia is a key factor, 111 00:06:24,880 --> 00:06:26,520 Speaker 1: and they know they have to cut back and it'll 112 00:06:26,520 --> 00:06:28,200 Speaker 1: get the old price up, and so far it's working. 113 00:06:29,000 --> 00:06:31,880 Speaker 1: When when you look at the sort of the spread 114 00:06:31,880 --> 00:06:33,800 Speaker 1: here between Brent and w t I, what does that 115 00:06:33,880 --> 00:06:37,200 Speaker 1: tell you at this point? How what happens when it's 116 00:06:37,360 --> 00:06:40,760 Speaker 1: want as it is hurricane distorted typically right now it's 117 00:06:40,960 --> 00:06:43,440 Speaker 1: um it's a bit of a bullish sign because it's distorted, 118 00:06:43,520 --> 00:06:45,440 Speaker 1: distorted by a hurricane. I don't think we you know, 119 00:06:45,520 --> 00:06:48,440 Speaker 1: we have to get US exports back online and they're 120 00:06:48,480 --> 00:06:52,120 Speaker 1: coming fast. Add to that the declining dollar and it's 121 00:06:52,160 --> 00:06:55,080 Speaker 1: just a pretty good bullish situation for US. W t 122 00:06:55,279 --> 00:06:57,920 Speaker 1: I catching up to Brent at the moment. The key 123 00:06:57,960 --> 00:06:59,520 Speaker 1: point is right now. I look at it as a 124 00:06:59,560 --> 00:07:03,279 Speaker 1: percent about twelve percent that Brent's above w T I. 125 00:07:03,360 --> 00:07:05,080 Speaker 1: The last time we were this wide was right at 126 00:07:05,080 --> 00:07:07,599 Speaker 1: the bottom in the underlying market in February two thousand 127 00:07:07,680 --> 00:07:11,080 Speaker 1: and sixteen. So it's it can it can mark peaks 128 00:07:11,120 --> 00:07:13,320 Speaker 1: and trials in the market about here. I'm just thinking 129 00:07:13,360 --> 00:07:15,560 Speaker 1: of looking at it as it's an indication to w 130 00:07:15,920 --> 00:07:17,800 Speaker 1: it's getting a little too cheap. You've you've written a 131 00:07:17,800 --> 00:07:20,040 Speaker 1: lot about this. The role of the dollar plays here. 132 00:07:20,040 --> 00:07:22,560 Speaker 1: Commodities appeared to have been waiting for some dollar backfill. 133 00:07:22,640 --> 00:07:26,160 Speaker 1: It may be commencing explained the role here of of 134 00:07:26,200 --> 00:07:28,960 Speaker 1: the dollar week or strong in oil prices well right now. 135 00:07:29,000 --> 00:07:30,680 Speaker 1: I think initially the quantities were a bit of a 136 00:07:30,720 --> 00:07:33,400 Speaker 1: shock mode. I mean, the dollar is down eight percent 137 00:07:33,480 --> 00:07:35,360 Speaker 1: in the year, and almost all industries you look at, 138 00:07:35,400 --> 00:07:38,640 Speaker 1: which is one of the worst years in in forty 139 00:07:38,840 --> 00:07:41,600 Speaker 1: and it's overdue for a bit of a back and field. 140 00:07:41,600 --> 00:07:43,720 Speaker 1: We know that. But every day that goes by that 141 00:07:43,960 --> 00:07:46,040 Speaker 1: it's just kind of backing up a little. But the 142 00:07:46,040 --> 00:07:48,880 Speaker 1: market's getting it. The dollar has likely peaked. So if 143 00:07:48,880 --> 00:07:50,760 Speaker 1: you look at it simply at the end of the year, 144 00:07:51,360 --> 00:07:54,280 Speaker 1: if the dollars unchanged. It's down eight percent of the year, 145 00:07:54,360 --> 00:07:57,600 Speaker 1: but the commandity market is still basically unchanged, so that's 146 00:07:57,640 --> 00:07:59,240 Speaker 1: got to catch up. And crude oil and I think 147 00:07:59,240 --> 00:08:03,680 Speaker 1: in all commanies are doing it. Goal definitely medals number one. Okay, 148 00:08:03,680 --> 00:08:06,360 Speaker 1: And now we go, folks, to clear the jargon, which 149 00:08:06,400 --> 00:08:11,200 Speaker 1: we take pride in its surveillance. Let's begin with backwardation. 150 00:08:11,600 --> 00:08:14,840 Speaker 1: What is backwardation? One of my favorite terms that the 151 00:08:15,360 --> 00:08:18,440 Speaker 1: key point to remember about backwardation is it's one that 152 00:08:18,600 --> 00:08:22,400 Speaker 1: front futures contract is higher than the backs now November 153 00:08:22,760 --> 00:08:26,080 Speaker 1: is higher than next June exactly. Or I like to 154 00:08:26,080 --> 00:08:28,040 Speaker 1: look at it as one year base. It's a simplistic 155 00:08:28,040 --> 00:08:30,400 Speaker 1: way to look at it is November now versus November 156 00:08:30,400 --> 00:08:32,520 Speaker 1: a year from now. One year is the best way 157 00:08:32,559 --> 00:08:35,360 Speaker 1: to measure cross all commodities because there's no c seasonally. 158 00:08:35,440 --> 00:08:38,000 Speaker 1: So if you look at futures a year from now 159 00:08:38,040 --> 00:08:41,840 Speaker 1: and all the petroleum products, they are four percent lower, 160 00:08:42,800 --> 00:08:45,240 Speaker 1: the current prices are four percent higher. That's the most 161 00:08:45,320 --> 00:08:49,400 Speaker 1: extreme backwardation since it isn't fortunately because of Harvey, well 162 00:08:49,480 --> 00:08:52,400 Speaker 1: not part of it is Generally, backwardation means more demand 163 00:08:52,559 --> 00:08:55,040 Speaker 1: versus supply. It means there's demand. It's a more macro, 164 00:08:55,240 --> 00:08:58,839 Speaker 1: bigger martial in thing, exactly exactly, and it's also the 165 00:08:58,920 --> 00:09:00,880 Speaker 1: key thing to remember. It's kind of a forward looking 166 00:09:00,920 --> 00:09:02,800 Speaker 1: way of looking at the market. Now we get supplying 167 00:09:02,840 --> 00:09:06,400 Speaker 1: demand data. Yeah, that's a backward measure. The curves forward looking. 168 00:09:06,440 --> 00:09:10,600 Speaker 1: It's basically a positive and then critical with backwardation. Is 169 00:09:10,640 --> 00:09:13,560 Speaker 1: it a bet typically that the near term is a 170 00:09:13,640 --> 00:09:16,960 Speaker 1: higher price, or is it a bet that the year 171 00:09:17,080 --> 00:09:20,640 Speaker 1: out price is lower. It's it's asymmetric. It's got to 172 00:09:20,679 --> 00:09:24,200 Speaker 1: be an overweight to one of those, right. It's more 173 00:09:24,240 --> 00:09:27,640 Speaker 1: of an indication that demand is greater now versus supply, 174 00:09:28,120 --> 00:09:30,480 Speaker 1: and it's that much it's taking that carry out of 175 00:09:30,480 --> 00:09:33,200 Speaker 1: the market. So it's just an indication of greater demand now. 176 00:09:33,240 --> 00:09:36,240 Speaker 1: And often sometimes it gets too much extreme it could 177 00:09:36,360 --> 00:09:38,120 Speaker 1: lead the other way now getting I think we're getting 178 00:09:38,120 --> 00:09:40,800 Speaker 1: close to that. Was that good enough to keep off 179 00:09:40,840 --> 00:09:42,920 Speaker 1: from New Jersey happy? I think what he said is 180 00:09:43,000 --> 00:09:45,480 Speaker 1: I want my oil and I want it now. Well, 181 00:09:45,520 --> 00:09:48,320 Speaker 1: this is from the gentleman that drive Rummer to David, 182 00:09:48,400 --> 00:09:51,520 Speaker 1: I insist you ask about contango. Oh my gosh, can 183 00:09:51,559 --> 00:09:54,480 Speaker 1: we do a jargon on jargon alert? Jargon explanation of 184 00:09:54,520 --> 00:09:56,840 Speaker 1: contango and what what it is. Well, contango is the 185 00:09:56,880 --> 00:09:59,320 Speaker 1: opposite as we know. It's when the front price is 186 00:09:59,559 --> 00:10:02,679 Speaker 1: lower for the out prices. That's just normally pricing in 187 00:10:02,679 --> 00:10:06,360 Speaker 1: the carrol that's normal. That's normal. And you think of 188 00:10:06,360 --> 00:10:09,640 Speaker 1: credile's expensive to store. That's kind of faced in the 189 00:10:09,840 --> 00:10:11,520 Speaker 1: it's thing and you can't store it on your finger 190 00:10:11,600 --> 00:10:15,360 Speaker 1: like you can't gold. I mean, it's faltil, it's it's dangerous. 191 00:10:15,559 --> 00:10:16,960 Speaker 1: So it's got to be in the price. When you 192 00:10:17,040 --> 00:10:19,760 Speaker 1: take that out in backgardation, that's the sign of demand. 193 00:10:19,800 --> 00:10:22,400 Speaker 1: So you look at a year ago, it was six 194 00:10:22,440 --> 00:10:24,640 Speaker 1: percent in contango all and that was a sign that 195 00:10:24,679 --> 00:10:27,880 Speaker 1: we're pretty well supplied. Now it's the opposite. Demand is great. 196 00:10:27,920 --> 00:10:31,440 Speaker 1: But the key idea here is contango is normal and 197 00:10:31,480 --> 00:10:36,840 Speaker 1: the backwardation now is the odd thing. Final question, can 198 00:10:36,880 --> 00:10:41,920 Speaker 1: nontangibles like treasury futures, etcetera. Can they do these two things. 199 00:10:42,559 --> 00:10:45,840 Speaker 1: Treasuries in the futures curve are completely priced off the 200 00:10:45,960 --> 00:10:49,480 Speaker 1: forward short term interest rates, so they do. But that's 201 00:10:49,520 --> 00:10:52,000 Speaker 1: not an indication of supply demand. It's like gold, it's 202 00:10:52,040 --> 00:10:54,600 Speaker 1: just the exact cost of that character. If we exhausted 203 00:10:54,600 --> 00:10:58,960 Speaker 1: this Taylor Riggs is taking notes on this level three 204 00:10:59,200 --> 00:11:01,280 Speaker 1: did we of it? I think we just killed that. Well, 205 00:11:01,280 --> 00:11:05,400 Speaker 1: we could move on No. One worldwide. Yes, Michael mcgloane 206 00:11:05,760 --> 00:11:08,680 Speaker 1: has done a better discussion about gartment is down in 207 00:11:08,760 --> 00:11:11,400 Speaker 1: Virginia in tears over this right now. One of my 208 00:11:11,440 --> 00:11:17,360 Speaker 1: big herosscartment is in tears over that discussion of backward backwards, 209 00:11:17,840 --> 00:11:21,320 Speaker 1: backwardation and contango. David, good morning to Escarpment. And let 210 00:11:21,320 --> 00:11:23,079 Speaker 1: me ask you about other commodities. We talked about the 211 00:11:23,080 --> 00:11:24,960 Speaker 1: effect of the hurricane on on the oil market, What 212 00:11:25,000 --> 00:11:28,400 Speaker 1: about other commodities and otherways concerned around Harvey around irma 213 00:11:28,400 --> 00:11:31,320 Speaker 1: about cotton in particular in the South. Have we seen 214 00:11:31,440 --> 00:11:33,720 Speaker 1: other commodities take a hit as a result of those storms. Well, 215 00:11:33,720 --> 00:11:36,280 Speaker 1: the number one was cotton, lumber party in there and 216 00:11:36,360 --> 00:11:39,080 Speaker 1: orange juice. The key thing of all those threet commodities, 217 00:11:39,120 --> 00:11:41,080 Speaker 1: cotton is the only one that's worthy of being a 218 00:11:41,080 --> 00:11:43,280 Speaker 1: bloomer commodity list because it's the only one has decent 219 00:11:43,400 --> 00:11:46,200 Speaker 1: enough trading, enough trading voluments, so much significant. It's still 220 00:11:46,200 --> 00:11:48,440 Speaker 1: one of our major exports in his country. But has 221 00:11:48,440 --> 00:11:51,680 Speaker 1: come back. Cotton has just well still well supplied despite 222 00:11:51,679 --> 00:11:53,559 Speaker 1: the fact and get distorted by the hurricanes. In the 223 00:11:53,600 --> 00:11:57,280 Speaker 1: big picture, it's more um. This distortion in in creude 224 00:11:57,320 --> 00:12:00,440 Speaker 1: oil I think helps spark this rally because it took it, 225 00:12:00,480 --> 00:12:03,120 Speaker 1: flushed out some of those weak longs and then boom 226 00:12:03,160 --> 00:12:04,600 Speaker 1: now goes right back to where it should be going. 227 00:12:04,679 --> 00:12:06,800 Speaker 1: How much better are we at forecast? And we talked 228 00:12:06,800 --> 00:12:08,960 Speaker 1: about weather in the role that it can have on 229 00:12:09,080 --> 00:12:11,880 Speaker 1: commodities here in the US and around the world. Uh, 230 00:12:11,960 --> 00:12:15,800 Speaker 1: do we see a more nimble commodities? Uh, commodities market 231 00:12:15,800 --> 00:12:17,560 Speaker 1: than we have in the past. Well, the first thing 232 00:12:17,640 --> 00:12:19,839 Speaker 1: I think of the weather is the grain market, the 233 00:12:19,960 --> 00:12:22,800 Speaker 1: US grain market, and this global warming situation was supposed 234 00:12:22,840 --> 00:12:25,520 Speaker 1: to hurt US grains of play, it's done the opposite. 235 00:12:26,640 --> 00:12:30,319 Speaker 1: Climate change has added a massive amount of Yes, it's 236 00:12:30,320 --> 00:12:32,920 Speaker 1: heated up the in temperature lit but it's added moisture 237 00:12:33,160 --> 00:12:35,040 Speaker 1: to the grain belt. For instance, look at this year. 238 00:12:35,200 --> 00:12:38,160 Speaker 1: August was one of the coolest August in a hundred years, 239 00:12:38,200 --> 00:12:40,400 Speaker 1: but it wasn't And so it's just been added the 240 00:12:40,480 --> 00:12:43,920 Speaker 1: volatility in moisture. So we've had five years of bumper crops. 241 00:12:44,200 --> 00:12:46,600 Speaker 1: The questions at some point that's got to end and 242 00:12:46,640 --> 00:12:49,280 Speaker 1: the grain market is an area I see very much brewing. 243 00:12:49,320 --> 00:12:51,760 Speaker 1: It just needs a little bit of basically needs a 244 00:12:51,840 --> 00:12:54,400 Speaker 1: dry August, and we had the opposite last this August. 245 00:12:54,520 --> 00:12:56,400 Speaker 1: That's close here. By talking about gold, I know you're 246 00:12:56,400 --> 00:12:58,400 Speaker 1: you're watching gold here as we approached the end of 247 00:12:58,400 --> 00:13:00,520 Speaker 1: the month. What are you looking at in particularly what 248 00:13:00,520 --> 00:13:02,280 Speaker 1: will the close of gold here at the end of 249 00:13:02,320 --> 00:13:05,160 Speaker 1: September tell you about the about the commodity key pivots. 250 00:13:05,840 --> 00:13:08,360 Speaker 1: Bottom line with gold is it's a much better founded 251 00:13:08,480 --> 00:13:10,440 Speaker 1: market than it was a year ago. It failed right 252 00:13:10,440 --> 00:13:14,040 Speaker 1: after September meeting. It declined ten percent this year. It's 253 00:13:14,120 --> 00:13:17,160 Speaker 1: the number one factor behind it declining dollar and if 254 00:13:17,160 --> 00:13:19,520 Speaker 1: the do unless the dollar really reversus, gold has hasn't 255 00:13:19,520 --> 00:13:22,199 Speaker 1: been to it. It was a September being Now gold 256 00:13:22,200 --> 00:13:26,200 Speaker 1: failed at the February four meet. Well, look at golden 257 00:13:26,240 --> 00:13:28,640 Speaker 1: this tightening cycle, gold is actually outperform the SMP five 258 00:13:28,960 --> 00:13:30,560 Speaker 1: and people don't really get that yet. And during the 259 00:13:30,640 --> 00:13:35,640 Speaker 1: entire tyking cycle it's about about spy. We make jokes 260 00:13:35,640 --> 00:13:37,719 Speaker 1: about it, folks. But what you just heard there was 261 00:13:37,760 --> 00:13:42,520 Speaker 1: the clearest exposition I've ever heard of degradation in Contango. 262 00:13:42,600 --> 00:13:46,839 Speaker 1: That was people seriously people flunk exams on this stuff. 263 00:13:46,920 --> 00:13:50,480 Speaker 1: What a public service. Michaelmgloan giving his perspective here from 264 00:13:50,520 --> 00:13:55,200 Speaker 1: Bloomberg Intelligence on some of the pro talk and discussion 265 00:13:55,440 --> 00:13:58,280 Speaker 1: that you hear in the commodity markets at Bloomberg that 266 00:13:58,440 --> 00:14:02,000 Speaker 1: oftentime in the media gets thrown around like David, that 267 00:14:02,080 --> 00:14:06,240 Speaker 1: was great. Absolutely, I'm not I go I can. I 268 00:14:06,240 --> 00:14:09,880 Speaker 1: can fake it like anything. Mcloan is a real deal, 269 00:14:10,000 --> 00:14:14,000 Speaker 1: So that really works. Terrific. Thank you very much, the 270 00:14:14,040 --> 00:14:16,760 Speaker 1: commity strategistic to Bloomberg Intelligence here on Bloomberg eleven three 271 00:14:16,840 --> 00:14:29,640 Speaker 1: studios in New York. For a long time, he represented 272 00:14:29,680 --> 00:14:32,000 Speaker 1: Maryland's eighth Congressional district and moved on to the Senate 273 00:14:32,000 --> 00:14:35,320 Speaker 1: when Barbara mcculsky retired. He's the junior Senator from Maryland. 274 00:14:35,400 --> 00:14:37,120 Speaker 1: Chris van Holland joins us now on our phone lines, 275 00:14:37,160 --> 00:14:38,680 Speaker 1: and there's a lot to talk about this morning, from 276 00:14:38,680 --> 00:14:41,560 Speaker 1: healthcare to tax reform and the deficit. Let's start with healthcare, 277 00:14:41,600 --> 00:14:44,120 Speaker 1: if we could. Senator. We heard from Senator Susan Collins 278 00:14:44,240 --> 00:14:46,320 Speaker 1: yesterday she does not intend to support the bill known 279 00:14:46,680 --> 00:14:49,960 Speaker 1: as the Graham Cassidy Bill, a a revision to uh 280 00:14:50,040 --> 00:14:52,640 Speaker 1: the Affordable Care Act I wonder what kind of conversations 281 00:14:52,680 --> 00:14:54,440 Speaker 1: you've had with Larry Hogan, the governor of your state 282 00:14:54,440 --> 00:14:59,400 Speaker 1: of Maryland, about healthcare and about this bill in particular. Well, 283 00:14:59,480 --> 00:15:02,120 Speaker 1: Larry hold and the governor of Maryland has come out 284 00:15:02,320 --> 00:15:06,600 Speaker 1: against this bill. It would be very harmful to Maryland, 285 00:15:06,640 --> 00:15:09,920 Speaker 1: as it would to most states around the country, and 286 00:15:09,960 --> 00:15:12,560 Speaker 1: in fact, every state would be badly heard in the 287 00:15:12,680 --> 00:15:15,440 Speaker 1: in the out years when medicaid would face an absolute 288 00:15:15,440 --> 00:15:19,240 Speaker 1: cliff beyond a decade from now and between now and then, 289 00:15:19,800 --> 00:15:23,680 Speaker 1: it does eliminate the guarantee for protections against things like 290 00:15:23,720 --> 00:15:27,960 Speaker 1: pre existing conditions and eliminates the guarantee of essential benefits. 291 00:15:28,000 --> 00:15:32,720 Speaker 1: So uh, that is why you've seen every patient protection 292 00:15:32,760 --> 00:15:36,720 Speaker 1: group in the country come out against it, all the nurses, doctors, hospitals. 293 00:15:37,240 --> 00:15:40,800 Speaker 1: So I'm I'm very much hoping that this is defeated 294 00:15:41,200 --> 00:15:42,880 Speaker 1: once and for all and we can get back to 295 00:15:42,960 --> 00:15:48,080 Speaker 1: the bipartisan discussions about how we can improve the Affordable 296 00:15:48,120 --> 00:15:51,240 Speaker 1: Care Act in the healthcare system. Yes, I'm curious about 297 00:15:51,240 --> 00:15:54,080 Speaker 1: the status of those bipartisan discussions. I know that Lamar 298 00:15:54,120 --> 00:15:56,960 Speaker 1: Alexander has been working on a bipartisan bill with your 299 00:15:57,000 --> 00:16:00,160 Speaker 1: colleague from from Washington state. Uh, And I'm curious just 300 00:16:00,240 --> 00:16:02,200 Speaker 1: to what it looks like on Capitol Hill when a 301 00:16:02,200 --> 00:16:04,760 Speaker 1: piece of legislation like Graham Cassidy is being worked on 302 00:16:04,800 --> 00:16:07,800 Speaker 1: and worked through. Is the door open for Democrats to 303 00:16:07,920 --> 00:16:10,080 Speaker 1: join the discussion or is this something that's really happening 304 00:16:10,240 --> 00:16:15,160 Speaker 1: on a parallel track, a different track from everything else. Well, 305 00:16:15,200 --> 00:16:20,520 Speaker 1: once the Graham Cassity initiative really started, as the Republicans 306 00:16:20,560 --> 00:16:25,440 Speaker 1: in the Senate dropped the bipartisan negotiations, they essentially ended. 307 00:16:25,480 --> 00:16:28,880 Speaker 1: At that point, you had a situation where the Trump 308 00:16:28,920 --> 00:16:31,720 Speaker 1: administration and the Speaker of the House Paul Ryan and 309 00:16:31,760 --> 00:16:36,480 Speaker 1: then Republican Leader Mitch McConnell decided to go back to 310 00:16:36,520 --> 00:16:39,320 Speaker 1: the effort to blow up the Affordable Care Act, and 311 00:16:39,360 --> 00:16:42,960 Speaker 1: at that time those bipartisan talks ended, Which was why 312 00:16:43,000 --> 00:16:46,480 Speaker 1: I'm hopeful that if we're able to defeat Graham Cassidy, 313 00:16:47,040 --> 00:16:51,520 Speaker 1: that we will resume those negotiations, which I understand from 314 00:16:51,520 --> 00:16:56,480 Speaker 1: both sides were making progress, making progress. What are the 315 00:16:56,480 --> 00:16:58,600 Speaker 1: the areas of commonality? In other words, if you get 316 00:16:58,600 --> 00:17:01,200 Speaker 1: back to the negotiating table with Republicans, what are things 317 00:17:01,200 --> 00:17:03,960 Speaker 1: that you think need to change where you think Democrats 318 00:17:04,040 --> 00:17:06,919 Speaker 1: Republicans can can come together? Is there unanimity? Is their 319 00:17:06,960 --> 00:17:09,800 Speaker 1: agreement here that parts of the Affordable Care Act need 320 00:17:09,880 --> 00:17:14,119 Speaker 1: to be changed? Yes, I think everybody agrees that the 321 00:17:14,200 --> 00:17:18,520 Speaker 1: Affordable Care Act needs changes. So the main things that 322 00:17:18,560 --> 00:17:22,480 Speaker 1: were on the table were making permanent the cost sharing 323 00:17:22,880 --> 00:17:26,639 Speaker 1: provisions so that there would be some certainty in the 324 00:17:26,680 --> 00:17:30,640 Speaker 1: marketplace that they would be there. The lack of certainty 325 00:17:30,680 --> 00:17:34,720 Speaker 1: has created some wild fluctuations with respect to premium offerings. 326 00:17:34,720 --> 00:17:37,960 Speaker 1: Even as we had into this fall uh, there was effort. 327 00:17:38,080 --> 00:17:42,080 Speaker 1: There was an effort at reinsurance provisions so that there 328 00:17:42,080 --> 00:17:47,080 Speaker 1: would be some relief for the very high cost patients 329 00:17:47,119 --> 00:17:50,720 Speaker 1: that really drive many of the costs that are face. 330 00:17:51,359 --> 00:17:55,680 Speaker 1: And then there was a discussion about more flexibility in 331 00:17:55,760 --> 00:18:01,040 Speaker 1: the Medicaid waiver provisions. States already have a lot of flexibility, 332 00:18:01,119 --> 00:18:03,720 Speaker 1: but there had been complaints about the amount of time 333 00:18:04,000 --> 00:18:06,960 Speaker 1: that they get, how amount of time it takes for 334 00:18:07,000 --> 00:18:11,159 Speaker 1: them to have their proposals reviewed and implemented. So that 335 00:18:11,280 --> 00:18:13,720 Speaker 1: was a package coming together Senate out whether or not 336 00:18:13,840 --> 00:18:18,760 Speaker 1: that would pass in the House is a whole different question. Senator, 337 00:18:19,040 --> 00:18:23,720 Speaker 1: you have leapt into the leadership of the Democratic Party 338 00:18:23,760 --> 00:18:27,520 Speaker 1: in the Senate. It's a hugely dynamic time. And if 339 00:18:27,560 --> 00:18:29,800 Speaker 1: we could turn over to the mundane politics of the 340 00:18:29,880 --> 00:18:33,840 Speaker 1: moment you're managing for the two thousand and eighteen election 341 00:18:33,920 --> 00:18:36,000 Speaker 1: with the d s CC trying to get it done 342 00:18:36,320 --> 00:18:40,320 Speaker 1: against some difficult math. Are you impatient that you need 343 00:18:40,400 --> 00:18:43,760 Speaker 1: to see a new Democratic party now or can it 344 00:18:43,920 --> 00:18:48,520 Speaker 1: wait till left the midterm elections. Well, I'm not sure 345 00:18:48,600 --> 00:18:50,800 Speaker 1: quite what you mean by a new Democratic Party. I mean, 346 00:18:51,080 --> 00:18:54,679 Speaker 1: in this cycle, even a few months ago, the Democrats 347 00:18:54,800 --> 00:18:59,040 Speaker 1: put forward a lot of ideas with respect to jobs 348 00:18:59,359 --> 00:19:02,439 Speaker 1: in the ecount. To me, it's understandable that that hasn't 349 00:19:02,480 --> 00:19:04,840 Speaker 1: gotten a whole lot of attention because the focus has 350 00:19:04,880 --> 00:19:08,160 Speaker 1: been on what's going on in the Congress right now, 351 00:19:08,200 --> 00:19:11,840 Speaker 1: which is controlled, of course by Republicans in both houses, 352 00:19:11,880 --> 00:19:15,880 Speaker 1: and so I think for the mid terms you're gonna 353 00:19:15,880 --> 00:19:20,159 Speaker 1: see primarily a referendum on the Trump administration and the 354 00:19:20,200 --> 00:19:23,600 Speaker 1: conduct of the majority in the House and Senate. That's 355 00:19:23,720 --> 00:19:26,600 Speaker 1: been the traditional pattern of mid terms. But at the 356 00:19:26,640 --> 00:19:31,040 Speaker 1: same time, we will have our senators are incumbent senators 357 00:19:31,080 --> 00:19:34,320 Speaker 1: in every one of their race is talking about what's 358 00:19:34,359 --> 00:19:36,840 Speaker 1: best for their state, and of course our challenges will 359 00:19:36,880 --> 00:19:39,080 Speaker 1: be doing the same thing. You are in the crosshairs 360 00:19:39,160 --> 00:19:41,000 Speaker 1: of this debate. You're not sitting on the couch in 361 00:19:41,080 --> 00:19:43,720 Speaker 1: the Oval office, but you're in the cross hears of 362 00:19:43,800 --> 00:19:46,760 Speaker 1: this debate. Do you desire in terms of a new 363 00:19:46,800 --> 00:19:49,760 Speaker 1: Democratic Party the same old, same old, and let's call 364 00:19:49,760 --> 00:19:52,920 Speaker 1: it a progressive party of the two coasts, or does 365 00:19:52,920 --> 00:19:55,960 Speaker 1: it have to be a Democratic party that that pays 366 00:19:56,040 --> 00:20:01,200 Speaker 1: homage to Michigan, to Wisconsin, into other areas rural less, 367 00:20:01,240 --> 00:20:07,120 Speaker 1: sanctuary city areas well. However you define the Democratic Party, 368 00:20:07,160 --> 00:20:11,520 Speaker 1: we absolutely have to do a better job of connecting 369 00:20:11,560 --> 00:20:14,680 Speaker 1: with voters in every part of the country. It's very 370 00:20:14,680 --> 00:20:19,640 Speaker 1: clear from the last presidential election that many voters who 371 00:20:19,640 --> 00:20:22,719 Speaker 1: had supported Democrats in the past, who had voted for 372 00:20:23,080 --> 00:20:28,640 Speaker 1: Barack Obama, decided to vote for Donald Trump because uh, 373 00:20:28,680 --> 00:20:32,120 Speaker 1: he somehow persuaded them that he had their best economic 374 00:20:32,240 --> 00:20:35,639 Speaker 1: interests in mind. And so, uh, the Democrats have been 375 00:20:35,720 --> 00:20:39,040 Speaker 1: very clear since the end of the election that we 376 00:20:39,560 --> 00:20:43,160 Speaker 1: need to refocus our efforts on what the Democratic Party 377 00:20:43,160 --> 00:20:46,520 Speaker 1: has always stood for, which is the chance for everybody 378 00:20:46,640 --> 00:20:49,639 Speaker 1: uh to have a good, pain decent job, in a 379 00:20:49,720 --> 00:20:52,600 Speaker 1: in a good future. So to answer your question, yes, 380 00:20:52,760 --> 00:20:56,280 Speaker 1: we need to do a better job of connecting with voters, 381 00:20:56,280 --> 00:20:58,080 Speaker 1: and a lot of the Senate races that we've got 382 00:20:58,119 --> 00:21:01,040 Speaker 1: up this time are in the is you've talked about. 383 00:21:01,040 --> 00:21:04,800 Speaker 1: And we have incoming senators who have been very successful 384 00:21:05,560 --> 00:21:07,639 Speaker 1: at making it clear that they're looking out for the 385 00:21:07,680 --> 00:21:10,239 Speaker 1: best interests of their states. A few weeks back, I 386 00:21:10,240 --> 00:21:12,280 Speaker 1: imagine a copy of the Washington Post landed with the 387 00:21:12,320 --> 00:21:14,639 Speaker 1: thud outside your office and the Heart State Office Building 388 00:21:14,640 --> 00:21:17,280 Speaker 1: and many others on Capitol Hill. John McCain, your colleague 389 00:21:17,280 --> 00:21:21,280 Speaker 1: from Arizona, writing about comedy on Capitol Hill, about by partisanship, 390 00:21:21,320 --> 00:21:24,800 Speaker 1: about regular order, And I wonder how you processed what 391 00:21:24,880 --> 00:21:26,919 Speaker 1: he wrote in that op ed piece, and how you 392 00:21:26,960 --> 00:21:29,280 Speaker 1: process what he said in his statement about why he 393 00:21:29,320 --> 00:21:31,680 Speaker 1: doesn't intend to to to vote for Graham. Casting. Yes, 394 00:21:31,680 --> 00:21:33,680 Speaker 1: it has to do with some aspects of the bill, 395 00:21:33,720 --> 00:21:35,280 Speaker 1: but it also has to do with the way things 396 00:21:35,280 --> 00:21:39,919 Speaker 1: are proceeding on Capitol Hill right now. There's there's his 397 00:21:40,000 --> 00:21:42,240 Speaker 1: encouragement to get back to regular order. What's it gonna 398 00:21:42,280 --> 00:21:44,040 Speaker 1: take to get there? What's it gonna take to get 399 00:21:44,040 --> 00:21:49,680 Speaker 1: back to by partisanship and the traditions of the U. S. Senate. Well, 400 00:21:49,720 --> 00:21:52,159 Speaker 1: I applaud Senator McCain for calling out the Senate to 401 00:21:52,200 --> 00:21:54,520 Speaker 1: get back to the regular order. You mentioned that I've 402 00:21:54,560 --> 00:21:56,439 Speaker 1: been in the House and now I'm in the Senate 403 00:21:56,560 --> 00:21:59,440 Speaker 1: my first term, and you know, one of the one 404 00:21:59,440 --> 00:22:02,120 Speaker 1: of the whole lawks of the Senate in the past 405 00:22:03,040 --> 00:22:06,600 Speaker 1: has been the idea that people can work together to 406 00:22:06,640 --> 00:22:09,720 Speaker 1: get things done across party lines. In fact, the rules 407 00:22:09,760 --> 00:22:14,359 Speaker 1: are structured to encourage that kind of compromise. So I 408 00:22:14,440 --> 00:22:18,000 Speaker 1: really hope we're able to do it. Uh. The healthcare 409 00:22:18,040 --> 00:22:21,840 Speaker 1: debate has been very polarizing, as we've seen, which is 410 00:22:21,880 --> 00:22:25,720 Speaker 1: why I'm hopeful that if we can defeat this Graham 411 00:22:25,840 --> 00:22:30,320 Speaker 1: Cassidy proposal, that we can get back to those Alexander H. 412 00:22:30,640 --> 00:22:33,639 Speaker 1: Murray talks that you reference. I hope we can do 413 00:22:33,680 --> 00:22:36,960 Speaker 1: it in other areas. I always thought modernizing our infrastructure 414 00:22:37,280 --> 00:22:40,239 Speaker 1: would be an area where people could come together. You know, 415 00:22:40,280 --> 00:22:42,840 Speaker 1: that shouldn't be a democratic or a publican or any 416 00:22:42,920 --> 00:22:47,159 Speaker 1: other issue. Uh, And so that would be in a 417 00:22:47,240 --> 00:22:52,359 Speaker 1: fruitful area. I think for discussion. Tax reform is an 418 00:22:52,400 --> 00:22:57,280 Speaker 1: area where it's possible to have bipartisan cooperation because I 419 00:22:57,280 --> 00:22:59,720 Speaker 1: think there's general agreement that you know, we've got a 420 00:22:59,720 --> 00:23:01,479 Speaker 1: lot of junk in the tax code and it can 421 00:23:01,520 --> 00:23:05,239 Speaker 1: be simplified. How you do that, of course, is a 422 00:23:05,240 --> 00:23:07,760 Speaker 1: whole another debate, and I guess that's when we're going 423 00:23:07,800 --> 00:23:09,439 Speaker 1: to have, so I hope we can have it here. 424 00:23:09,440 --> 00:23:10,920 Speaker 1: Thank you very much for joining us this morning. Don't 425 00:23:10,920 --> 00:23:12,399 Speaker 1: be a stranger. Would love to have you back against. 426 00:23:12,520 --> 00:23:14,600 Speaker 1: We talked a bit about tax reform, if you're so inclinent. 427 00:23:14,600 --> 00:23:17,040 Speaker 1: Senator Chris van Holland, the junior Senator from Maryland, joining us. 428 00:23:28,440 --> 00:23:30,560 Speaker 1: David right here with the Tom Keene Limberg eleven three 429 00:23:30,640 --> 00:23:33,600 Speaker 1: studios in the yourk Librick surveillance on Limberg Radio, continuing 430 00:23:33,640 --> 00:23:35,720 Speaker 1: to talk about a number of big stories days. We 431 00:23:35,720 --> 00:23:37,840 Speaker 1: look at the Janet Yellen speech at twelve forty five 432 00:23:37,840 --> 00:23:41,080 Speaker 1: Wall Street Time speak at the NAB conference in Cleveland. 433 00:23:41,080 --> 00:23:42,960 Speaker 1: Be carrying that for you live here on Bloomberg Radio. 434 00:23:43,200 --> 00:23:47,120 Speaker 1: Presidential press conference this afternoon as well, and focusing also 435 00:23:47,160 --> 00:23:50,720 Speaker 1: on what's happening legislatively on Capitol Hill. Conversation about healthcare 436 00:23:50,720 --> 00:23:53,520 Speaker 1: reform continues, so does the conversation about a tax reforum 437 00:23:53,560 --> 00:23:55,200 Speaker 1: as well. And in just about we're gonna be joined 438 00:23:55,200 --> 00:23:57,320 Speaker 1: by Kathleen Sebelia. She's the former U S Secretary of 439 00:23:57,320 --> 00:23:59,600 Speaker 1: Health and Human Services, She'll be on our phone line 440 00:23:59,640 --> 00:24:01,800 Speaker 1: forgiving in our studio on Bloomberg nine one one studio 441 00:24:01,880 --> 00:24:04,000 Speaker 1: in Washington, d C. Secretaries to beilias. Let me ask you, 442 00:24:04,080 --> 00:24:06,400 Speaker 1: first of all here just where we go from here? 443 00:24:06,720 --> 00:24:08,720 Speaker 1: Indications seemed to be that the Republicans do not have 444 00:24:08,800 --> 00:24:11,560 Speaker 1: the support they need to get this particular piece of legislation, 445 00:24:11,560 --> 00:24:14,640 Speaker 1: Graham Cassidy through. Where do we go from here? There's 446 00:24:14,640 --> 00:24:16,880 Speaker 1: talk of bipartisanship. We heard it from Senator at Van 447 00:24:16,920 --> 00:24:19,159 Speaker 1: Hollen a few moments ago here on the show. What 448 00:24:19,280 --> 00:24:21,760 Speaker 1: is what is a bipartisan approach to healthcare going forward? 449 00:24:21,800 --> 00:24:25,640 Speaker 1: Look like, well, I think if the Graham Cassidy bill 450 00:24:25,760 --> 00:24:28,919 Speaker 1: is either pulled from the floor or fails to get 451 00:24:28,960 --> 00:24:32,200 Speaker 1: the majority in the Senate, it's really important to act 452 00:24:32,240 --> 00:24:36,520 Speaker 1: quickly on some kind of bipartisan solution. Because eight we're 453 00:24:36,560 --> 00:24:42,200 Speaker 1: about six weeks away from open enrollment under the existing law, 454 00:24:42,280 --> 00:24:45,840 Speaker 1: which means that insurers have to know that the law 455 00:24:45,880 --> 00:24:50,479 Speaker 1: will be followed, that actually the administration intends to enforce 456 00:24:50,600 --> 00:24:54,520 Speaker 1: the I R S penalty, that they will indeed pay 457 00:24:54,680 --> 00:24:59,800 Speaker 1: the um cost sharing subsidies to insurance companies as the 458 00:25:00,040 --> 00:25:05,560 Speaker 1: law outlines so insurance companies can participate in the marketplace, 459 00:25:05,600 --> 00:25:09,639 Speaker 1: and then the administration hopefully will change course and actually 460 00:25:10,280 --> 00:25:14,760 Speaker 1: inform people that open enrollment is approaching, have people available 461 00:25:14,800 --> 00:25:18,040 Speaker 1: to help on the ground um instead of the really 462 00:25:18,119 --> 00:25:22,879 Speaker 1: continuous sabotage that's underway. I think Chairman Alexander and Senator 463 00:25:23,040 --> 00:25:26,280 Speaker 1: Murray are working hard. They've had hearings where governors have 464 00:25:26,400 --> 00:25:29,400 Speaker 1: come in, insurance commissioners have come in, others to talk 465 00:25:29,440 --> 00:25:32,480 Speaker 1: about three or four steps that need to be done 466 00:25:32,560 --> 00:25:35,879 Speaker 1: very quickly to stabilize the existing market and make sure 467 00:25:35,960 --> 00:25:40,480 Speaker 1: that the people who buy marketplace coverage in the individual 468 00:25:40,560 --> 00:25:45,359 Speaker 1: market have choices going forward. Sectariy belies. I look at 469 00:25:45,359 --> 00:25:48,160 Speaker 1: the commentary surrounding this particular piece of legislation. There are 470 00:25:48,200 --> 00:25:50,720 Speaker 1: a lot of people saying Republicans talked a lot about 471 00:25:50,760 --> 00:25:53,000 Speaker 1: repealing the Affordable Care Act, but never had a solution 472 00:25:53,040 --> 00:25:54,760 Speaker 1: to to put in place. As you look back on 473 00:25:54,800 --> 00:25:57,520 Speaker 1: these last few years, a few months, few years, has 474 00:25:57,560 --> 00:26:00,359 Speaker 1: there been anything proposed by the Republicans you had a 475 00:26:00,440 --> 00:26:02,840 Speaker 1: chance of making it through here? And when we look 476 00:26:02,840 --> 00:26:06,200 Speaker 1: ahead to buy partisan solutions, what are the things they've 477 00:26:06,200 --> 00:26:09,240 Speaker 1: proposed that you think have legs that need to happen 478 00:26:09,240 --> 00:26:11,640 Speaker 1: that when it comes to healthcare in this country, well, 479 00:26:11,680 --> 00:26:17,320 Speaker 1: both the original House and Senate bills had some kind 480 00:26:17,320 --> 00:26:21,080 Speaker 1: of stabilization fund that would be applied at the state level, 481 00:26:21,119 --> 00:26:25,920 Speaker 1: particularly in states where um there is not enough coverage 482 00:26:25,960 --> 00:26:29,280 Speaker 1: and participation by companies. I think that's a very good idea. 483 00:26:30,240 --> 00:26:34,560 Speaker 1: The original law had risk sharing pools, had an ability 484 00:26:34,640 --> 00:26:38,240 Speaker 1: to balance risk a state by state UM that was 485 00:26:38,359 --> 00:26:43,160 Speaker 1: not funded intentionally by Congress. So a stabilization fund uh 486 00:26:43,560 --> 00:26:48,119 Speaker 1: administered at the state level by insurance commissioners would I 487 00:26:48,160 --> 00:26:51,639 Speaker 1: think make the market not only more secure, but also 488 00:26:52,040 --> 00:26:55,280 Speaker 1: hopefully prompt competition. I'm a I'm a market believer that 489 00:26:55,359 --> 00:27:00,240 Speaker 1: more competition actually is the best rate UM risk ricter, 490 00:27:01,240 --> 00:27:03,160 Speaker 1: and what we need to do is make sure that 491 00:27:03,280 --> 00:27:06,360 Speaker 1: people have choices of a couple of different companies. So 492 00:27:06,680 --> 00:27:09,400 Speaker 1: that's a that is a very good idea. I think 493 00:27:09,440 --> 00:27:13,040 Speaker 1: just telling the insurance companies what the rules are. This again, 494 00:27:13,760 --> 00:27:18,919 Speaker 1: is a private sector plan run by insurance companies in 495 00:27:19,040 --> 00:27:23,600 Speaker 1: each state. The products licensed or not only selling marketplace 496 00:27:24,080 --> 00:27:27,840 Speaker 1: products for those who qualify for Obamacare subsidies, but they 497 00:27:27,920 --> 00:27:32,520 Speaker 1: also sell insurance products to farm families and mom and 498 00:27:32,560 --> 00:27:36,440 Speaker 1: pop businesses and um families who are buying their own coverage. 499 00:27:36,600 --> 00:27:39,640 Speaker 1: It's really important that that market doesn't blow up, and 500 00:27:40,000 --> 00:27:42,800 Speaker 1: that's really at risk right now. So what are the 501 00:27:42,880 --> 00:27:46,280 Speaker 1: rules insurance companies will then sell products in those states? 502 00:27:46,400 --> 00:27:48,000 Speaker 1: And the short time we got left with you, and 503 00:27:48,119 --> 00:27:50,040 Speaker 1: we'd love to have you come on and spend more 504 00:27:50,080 --> 00:27:53,280 Speaker 1: time with us. We learn in civics that Kansas is 505 00:27:53,320 --> 00:27:57,000 Speaker 1: worth studying. You lived Kansas, your father in law, I believe, 506 00:27:57,080 --> 00:28:01,840 Speaker 1: was first district Congress. There's all that crazy cibilious Robert's 507 00:28:01,960 --> 00:28:06,520 Speaker 1: relationship over the years. What's the state of Kansas right now? 508 00:28:06,560 --> 00:28:09,720 Speaker 1: To borrow from an acclaimed book, I mean, after all 509 00:28:09,760 --> 00:28:14,320 Speaker 1: the tax work, in the turmoil of all Republicans Kansas 510 00:28:14,359 --> 00:28:19,240 Speaker 1: your Democrat, what's what's the state of your Kansas? Governor? Well, 511 00:28:19,280 --> 00:28:22,119 Speaker 1: I think it's important that people actually take a really 512 00:28:22,200 --> 00:28:27,280 Speaker 1: hard look at Kansas. So Senator brown Back came back, 513 00:28:27,440 --> 00:28:30,320 Speaker 1: ran for governor, was successfully elected, and then put in 514 00:28:30,359 --> 00:28:33,760 Speaker 1: place a tax plan that I think will look eerily 515 00:28:33,920 --> 00:28:36,960 Speaker 1: like what's being proposed at the federal level. It it 516 00:28:37,119 --> 00:28:39,840 Speaker 1: sounds like all the harmarks of what the Trump tax 517 00:28:39,920 --> 00:28:44,800 Speaker 1: plan may include. It has been a total economic disaster 518 00:28:44,840 --> 00:28:47,680 Speaker 1: can you print money in Lawrenceville? I mean you have 519 00:28:48,120 --> 00:28:50,600 Speaker 1: a printing press there. We do not have a printing press. 520 00:28:50,640 --> 00:28:52,560 Speaker 1: We have to work on a balanced budget, and the 521 00:28:52,600 --> 00:28:56,800 Speaker 1: tax framework has been such a disaster that a Republican 522 00:28:56,880 --> 00:29:00,600 Speaker 1: legislature finally got rid of the plan and overrode the 523 00:29:00,640 --> 00:29:04,280 Speaker 1: governor's veto because the state is in economic turmoil. So 524 00:29:04,400 --> 00:29:06,240 Speaker 1: we need to pay attention to that. We need to 525 00:29:06,240 --> 00:29:09,920 Speaker 1: pay attention to you know what what happens when a 526 00:29:10,000 --> 00:29:13,080 Speaker 1: Democrat gets elected in a Republican state and actually can 527 00:29:13,120 --> 00:29:15,280 Speaker 1: get some things done. So we do have a good 528 00:29:15,320 --> 00:29:18,760 Speaker 1: bye pers in history. Here's our governor. Please promise if 529 00:29:18,760 --> 00:29:21,400 Speaker 1: you'll come back to a Washington studios, Mr Gura will 530 00:29:21,440 --> 00:29:23,960 Speaker 1: spend an hour review or more. There's that much to 531 00:29:24,040 --> 00:29:28,760 Speaker 1: talk about about Kansas as well, Kathleen sibilious of course 532 00:29:29,200 --> 00:29:33,360 Speaker 1: on our politics. Stay with this coast to coast and 533 00:29:33,400 --> 00:29:48,800 Speaker 1: in Kansas. This is Bloomberg plecture to bring in now 534 00:29:48,880 --> 00:29:51,840 Speaker 1: somebody who knows the history of principles of American philanthy 535 00:29:51,840 --> 00:29:54,680 Speaker 1: better than anybody else. That's Joe Fleischman, Professor of Law 536 00:29:54,680 --> 00:29:56,880 Speaker 1: and Public Policy a Duke University, the author of a 537 00:29:56,880 --> 00:29:59,440 Speaker 1: new book putting wealth to work philanthropy for today, we're 538 00:29:59,480 --> 00:30:01,640 Speaker 1: investing for tomorrow. It's great to have you with us 539 00:30:01,640 --> 00:30:04,320 Speaker 1: here in New York. I could wander a few blocks 540 00:30:04,320 --> 00:30:05,959 Speaker 1: south of here at forty two Street and look at 541 00:30:05,960 --> 00:30:09,040 Speaker 1: that Kevin Roach building, the Ford Foundation constructed uh full 542 00:30:09,040 --> 00:30:11,360 Speaker 1: of people working hard on any number of issues, but 543 00:30:11,400 --> 00:30:14,200 Speaker 1: also a monument to a certain kind of foundation. And 544 00:30:14,240 --> 00:30:17,320 Speaker 1: central to your book, Joel, is attention in philanthropy today. 545 00:30:17,600 --> 00:30:19,959 Speaker 1: Do you build a monument like that, an institution like that, 546 00:30:20,160 --> 00:30:22,520 Speaker 1: or do you in your lifetime decide to spend off 547 00:30:22,560 --> 00:30:24,480 Speaker 1: the fortune that that you've made. How do we get 548 00:30:24,480 --> 00:30:26,560 Speaker 1: to the point where we're at this turning point where 549 00:30:26,560 --> 00:30:28,600 Speaker 1: where where those who have been blessed with a lot 550 00:30:28,600 --> 00:30:31,440 Speaker 1: of money have to make that decision. I think we're 551 00:30:31,440 --> 00:30:33,280 Speaker 1: at that port largely because a lot of people have 552 00:30:33,360 --> 00:30:35,520 Speaker 1: made a lot of money when they were young, and 553 00:30:35,640 --> 00:30:39,840 Speaker 1: therefore they would like to translate into a public impact 554 00:30:40,000 --> 00:30:42,760 Speaker 1: the same kind of impact they had in building their companies. 555 00:30:43,000 --> 00:30:44,880 Speaker 1: I think that's the reason where we're where we are 556 00:30:45,080 --> 00:30:47,000 Speaker 1: at this point. You use the word impact, and there 557 00:30:47,080 --> 00:30:49,400 Speaker 1: is a trend that I can pick up in philanthropy 558 00:30:49,400 --> 00:30:52,080 Speaker 1: to day to measure impact you look at a foundation 559 00:30:52,120 --> 00:30:55,400 Speaker 1: like the Gates Foundation, very data dependent foundations want to 560 00:30:55,400 --> 00:30:57,360 Speaker 1: see that the money that they're putting towards something is 561 00:30:57,400 --> 00:31:00,120 Speaker 1: being used as best as it can be used. Is 562 00:31:00,160 --> 00:31:03,080 Speaker 1: that necessarily a good thing? Can we measure everything with metrics? 563 00:31:03,080 --> 00:31:05,560 Speaker 1: The answer is you can't measure everything with metrics, and 564 00:31:05,640 --> 00:31:08,000 Speaker 1: most of the good foundation people know that. On the 565 00:31:08,000 --> 00:31:10,480 Speaker 1: other hand, you should measure what you can measure. Uh, 566 00:31:10,480 --> 00:31:13,920 Speaker 1: And those things which lend themselves to metric metrical measurement 567 00:31:14,120 --> 00:31:17,200 Speaker 1: to do it. Qualitative measurements are also very good. So 568 00:31:17,400 --> 00:31:20,680 Speaker 1: the answer is it's it's it's fine to do both. Uh. 569 00:31:21,320 --> 00:31:22,800 Speaker 1: What you don't want to do is to say we're 570 00:31:22,840 --> 00:31:24,680 Speaker 1: not going to do anything because it can't be measured, 571 00:31:24,840 --> 00:31:27,000 Speaker 1: because some of the most interesting things have in fact 572 00:31:27,160 --> 00:31:30,080 Speaker 1: been done that can't be measured. A small time foundation 573 00:31:30,160 --> 00:31:34,200 Speaker 1: charity player, when d Rubinstein of Carlisle Group says, shut 574 00:31:34,280 --> 00:31:37,120 Speaker 1: up and read this book. What I love about your effort, Professor, 575 00:31:37,440 --> 00:31:41,160 Speaker 1: putting Wealth to work is it's hugely accessible. We have 576 00:31:41,320 --> 00:31:46,840 Speaker 1: foundation itis today and you beautifully write about the reality 577 00:31:47,080 --> 00:31:51,880 Speaker 1: of trusty fatigue. What is trusty fatigue, which is a 578 00:31:51,880 --> 00:31:55,240 Speaker 1: clear and present danger? Yes, what is trusting fatigue is 579 00:31:55,280 --> 00:31:59,560 Speaker 1: that foundations and and many many smaller foundations have the 580 00:31:59,600 --> 00:32:03,120 Speaker 1: problem of their trustees basically have gotten tired of what 581 00:32:03,120 --> 00:32:06,280 Speaker 1: they're doing, basically because either there's not enough money to 582 00:32:06,320 --> 00:32:09,240 Speaker 1: justify what they're doing, or or it is simply a 583 00:32:09,280 --> 00:32:11,320 Speaker 1: fact that they've got they've they've gotten bored, or they 584 00:32:11,360 --> 00:32:14,680 Speaker 1: maybe family. Okay, so John Tucker here has a twenty 585 00:32:14,720 --> 00:32:18,360 Speaker 1: three million dollar foundation, small potatoes. He sets it up, 586 00:32:18,600 --> 00:32:21,600 Speaker 1: and his grandchildren are going to get fatigue over it. Yes, 587 00:32:21,840 --> 00:32:24,520 Speaker 1: where's the money go? The money has to go to 588 00:32:24,560 --> 00:32:29,320 Speaker 1: a charity, simple as that. As simple as that. Either 589 00:32:30,200 --> 00:32:33,120 Speaker 1: under the terms of an internal Revenue Act, once you 590 00:32:33,200 --> 00:32:36,000 Speaker 1: set up the foundation, anything that happens that money has 591 00:32:36,040 --> 00:32:40,560 Speaker 1: to be charitably certified. Basically, we've seen another trench here 592 00:32:40,680 --> 00:32:45,760 Speaker 1: that is record I'm not bored. A lot of these 593 00:32:45,800 --> 00:32:47,560 Speaker 1: set up is five O, one C three's. We're seeing 594 00:32:47,560 --> 00:32:50,840 Speaker 1: a movement into other configurations. Has the notion of a 595 00:32:51,000 --> 00:32:53,280 Speaker 1: philanthropy what it is under the tax laws and just 596 00:32:53,360 --> 00:32:55,920 Speaker 1: in general change here we're seeing lcs. For instance, when 597 00:32:55,960 --> 00:32:59,720 Speaker 1: it comes to to philanthropic enterprises, right, the answer is yes, 598 00:32:59,760 --> 00:33:03,160 Speaker 1: and know I mean the major major events in the 599 00:33:03,240 --> 00:33:05,800 Speaker 1: in the sector, such as the donor advised funds is 600 00:33:05,800 --> 00:33:09,120 Speaker 1: a very good example. The assets held by all the 601 00:33:09,160 --> 00:33:14,160 Speaker 1: private foundations is somewhere around seven hundred million dollar billion dollars. UH. 602 00:33:14,240 --> 00:33:16,880 Speaker 1: The the the amount of money in the donor advised 603 00:33:16,880 --> 00:33:19,760 Speaker 1: funds accumulatively at the last time the figures were reported 604 00:33:19,880 --> 00:33:23,040 Speaker 1: was seventy billion dollars. So you've got ten percent of 605 00:33:23,080 --> 00:33:26,360 Speaker 1: what the foundations hold in donor advised funds. That's all 606 00:33:26,360 --> 00:33:31,000 Speaker 1: happened since UH And the consequence is many people use, 607 00:33:31,160 --> 00:33:34,600 Speaker 1: even foundations used donor advised funds they in order to 608 00:33:34,600 --> 00:33:36,720 Speaker 1: facilitate if they can't get the money out of the 609 00:33:36,760 --> 00:33:38,520 Speaker 1: door as quickly as they'd like to, they've got the 610 00:33:38,560 --> 00:33:40,440 Speaker 1: donor advised funds where they can simply write a check. 611 00:33:40,960 --> 00:33:43,480 Speaker 1: I started off by asking you about the Ford Foundation 612 00:33:43,600 --> 00:33:46,280 Speaker 1: mentioning the building down street, and let me use it 613 00:33:46,280 --> 00:33:47,880 Speaker 1: here lastly, just to ask you about the moment that 614 00:33:47,920 --> 00:33:51,120 Speaker 1: we're at right now. Under Darren Walker's leadership, we've seen 615 00:33:51,160 --> 00:33:54,280 Speaker 1: a rethinking of what that foundation in particular does. Are 616 00:33:54,320 --> 00:33:57,920 Speaker 1: we seeing that more broadly? UH introspection in the philanthropic 617 00:33:57,960 --> 00:34:00,479 Speaker 1: sector about what philanthropies can do and how best they 618 00:34:00,520 --> 00:34:03,600 Speaker 1: can do it absolutely. The many foundations are doing it. 619 00:34:03,800 --> 00:34:06,720 Speaker 1: They're not moving with great alacrity, I should tell you. Uh. 620 00:34:06,920 --> 00:34:10,640 Speaker 1: For example, impact investing foundations have not done anywhere near 621 00:34:10,719 --> 00:34:14,399 Speaker 1: They have not moved as rapidly, for example, as the 622 00:34:14,440 --> 00:34:17,120 Speaker 1: for profit businesses. JP Morgan has moved a lot faster 623 00:34:17,280 --> 00:34:20,120 Speaker 1: in impact investment than any of the foundations have. But 624 00:34:20,239 --> 00:34:22,239 Speaker 1: some of them are coming along. The Ford Foundations said 625 00:34:22,440 --> 00:34:24,759 Speaker 1: now it is aiming towards spending putting ten percent of 626 00:34:24,760 --> 00:34:27,799 Speaker 1: its assets, and that the Krasky Foundations decided to put 627 00:34:27,800 --> 00:34:30,560 Speaker 1: ten percent of its assets and the impact investiting. But 628 00:34:30,560 --> 00:34:33,120 Speaker 1: but it's it's a very slow process. I like how 629 00:34:33,160 --> 00:34:38,000 Speaker 1: you quote the attorney and professor Leo Tolstoy. All happy 630 00:34:38,080 --> 00:34:42,560 Speaker 1: families are alike. Each unhappy family is unhappy in its 631 00:34:42,840 --> 00:34:46,160 Speaker 1: own way. And you discussed that and solve that in 632 00:34:46,200 --> 00:34:48,560 Speaker 1: this book, right, And I try to in any event, 633 00:34:48,600 --> 00:34:51,080 Speaker 1: there's not very The one thing I can say I 634 00:34:51,160 --> 00:34:53,160 Speaker 1: do say in the book is that the donors who 635 00:34:53,239 --> 00:34:57,319 Speaker 1: want to solve their families uh interpersonal problems by putting 636 00:34:57,360 --> 00:35:01,080 Speaker 1: their getting their kids involved in philanthropy barking up on 637 00:35:01,160 --> 00:35:04,839 Speaker 1: the wrong trail. It has never happened. Joe Flashman, Thank 638 00:35:04,840 --> 00:35:06,600 Speaker 1: you very much. Joel Fleishman is gonna join me on 639 00:35:06,600 --> 00:35:09,120 Speaker 1: television as well. Joel Flashman, Professor of Public Policy and 640 00:35:09,160 --> 00:35:10,719 Speaker 1: Law at Duke University and the author of the new 641 00:35:10,719 --> 00:35:13,760 Speaker 1: book Putting Wealth to Work Philanthropy. For today, We're investing 642 00:35:13,920 --> 00:35:16,359 Speaker 1: for tomorrow. This is Bloomberg Surveillance on Bloomberg Radio David 643 00:35:16,360 --> 00:35:28,160 Speaker 1: Gura and Tom Keene in New York. Thanks for listening 644 00:35:28,200 --> 00:35:32,560 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 645 00:35:32,920 --> 00:35:38,000 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 646 00:35:38,560 --> 00:35:41,520 Speaker 1: I'm on Twitter at Tom Keene David Gura. Is that 647 00:35:41,719 --> 00:35:46,600 Speaker 1: David Gura before the podcast? You can always catch us worldwide. 648 00:35:46,760 --> 00:35:47,840 Speaker 1: I'm Bloomberg Radio.