WEBVTT - We'll See a Split in Market Research, Ailman Says 0:00:09.720 --> 0:00:12.920 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 0:00:13.560 --> 0:00:16.560 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.239 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 0:00:27.320 --> 0:00:35.280 on the Bloomberg Taking a few sensitive meetings is Kelster's 0:00:35.479 --> 0:00:40.400 chief investment officer, Mr Christopher Allman. Chris unmiffed on the 0:00:40.520 --> 0:00:45.080 changing of expenses for research on what guys like you 0:00:45.400 --> 0:00:48.199 are going to pay for research? Where are we going 0:00:48.240 --> 0:00:50.680 to be in one year. Yeah, it's gonna be an 0:00:50.680 --> 0:00:53.000 interesting question, Tom, because a lot of people are wondering 0:00:53.000 --> 0:00:56.720 what really is the value of that research. We already 0:00:56.760 --> 0:01:00.600 pay for some independent economic research services. We pay for 0:01:01.040 --> 0:01:04.720 geo political research services because we found that the Street 0:01:04.720 --> 0:01:07.240 doesn't do a good job on that. Um. But I'm 0:01:07.280 --> 0:01:10.360 really gonna be interested. We've been out of soft dollars, 0:01:10.440 --> 0:01:14.199 as it's called in the USA for over about six 0:01:14.280 --> 0:01:17.319 years now, UM and have really limited the use with 0:01:17.360 --> 0:01:19.640 our managers. So I'm not quite sure how the USA 0:01:19.760 --> 0:01:22.800 is going to navigate what happens in Europe. But you know, 0:01:22.880 --> 0:01:25.080 if it's really a value, then you should be willing 0:01:25.120 --> 0:01:28.039 to pay for it. This is incredibly important, folks, And 0:01:28.080 --> 0:01:30.760 if you're not part of global Wall Street, trust me. 0:01:30.840 --> 0:01:33.600 There's all this other stuff going on. The President just 0:01:33.640 --> 0:01:36.319 tweeting about the NFL. We'll get to that in a moment. 0:01:36.400 --> 0:01:40.240 Chris Ellman, you are way out front on where the 0:01:40.280 --> 0:01:44.200 regulators want to go. If the regulators get the wish 0:01:44.280 --> 0:01:48.200 if we see research diminished, does that drive people to 0:01:48.440 --> 0:01:51.760 passive investing? Well, Tom, I don't think that. You know, 0:01:51.840 --> 0:01:56.560 people that rely on Wall Street research are really just 0:01:56.720 --> 0:01:58.800 using it as a guidebook. What I think is going 0:01:58.840 --> 0:02:01.800 to happen in the future, you'll see a bifurcation. The 0:02:01.960 --> 0:02:06.360 real quality research analysts will go to independent services and 0:02:06.400 --> 0:02:08.680 they'll be and they'll be people will be willing to 0:02:08.720 --> 0:02:11.120 pay for that. So they're still gonna be active management 0:02:11.320 --> 0:02:13.520 because a lot of the active managers like to do 0:02:13.560 --> 0:02:17.000 their own work anyway. Um, will it drive more people 0:02:17.000 --> 0:02:19.520 to passive Frankly, I hope so, because the amount of 0:02:19.560 --> 0:02:22.600 four O one K money in the USA alone, it 0:02:22.760 --> 0:02:26.680 needs to be impassive because otherwise active management is not 0:02:26.800 --> 0:02:30.760 beating the cost it charges and therefore there's no value. 0:02:30.800 --> 0:02:34.160 Add Good morning from Milan Chris, do you worry about 0:02:34.480 --> 0:02:36.920 a lot of hedge funds taking big position on the 0:02:36.960 --> 0:02:40.960 markets and therefore the markets almost being distorted by all 0:02:41.040 --> 0:02:44.240 this you know, passive money, and if that changes it 0:02:44.320 --> 0:02:47.959 doesn't you know, is there a correction coming that could 0:02:48.000 --> 0:02:51.919 be quite ugly. Well, good morning for Milan, so good 0:02:51.919 --> 0:02:54.440 to see you again. I don't believe that that the 0:02:54.560 --> 0:02:58.200 passive money is actually distorting the market. I think that 0:02:58.320 --> 0:03:01.600 it's just it's actually creating some stabilization and the numbers 0:03:01.639 --> 0:03:05.320 that we've seen, there's more money following indexes than before. 0:03:05.880 --> 0:03:08.400 But what we're seeing is a market that's actually fairly 0:03:08.720 --> 0:03:11.760 quiet because there's not a lot of people swing trading 0:03:11.800 --> 0:03:13.680 in it. And the hedge funds that have been in 0:03:13.760 --> 0:03:17.120 out of the market. Um, it's really the leveraged etf 0:03:17.280 --> 0:03:19.560 that have an impact. I don't think it's going to 0:03:19.680 --> 0:03:22.920 cause a significant change in trading habits. If we have 0:03:22.960 --> 0:03:25.079 a bear market, it's really going to be signaled due 0:03:25.080 --> 0:03:27.960 to the economy, Um, due to some kind of a recession, 0:03:28.080 --> 0:03:30.720 some kind of a regulatory or a tax law change. 0:03:31.120 --> 0:03:33.120 We'll see if we get this same as tax law, 0:03:33.200 --> 0:03:36.360 they've been so successful so far, I guess I have 0:03:36.440 --> 0:03:38.880 to have hope for the tax change. But you know, 0:03:39.200 --> 0:03:42.320 I don't foresee that this market is really uh in 0:03:42.400 --> 0:03:45.960 the internal dynamics. So the market look okay, it's just 0:03:46.040 --> 0:03:48.240 price to perfection, and it could stay that way for 0:03:48.320 --> 0:03:51.160 considerable period of time. And I don't think hedge fund 0:03:51.160 --> 0:03:55.160 activity is going to trigger that recession. What would trigger 0:03:55.200 --> 0:03:58.080 actually a readjustment of the market is its central bank policy. 0:03:58.160 --> 0:04:00.960 And if yet, it's do we know how the markets 0:04:00.960 --> 0:04:05.320 would function without all of this free cash out there? Well, Francine, 0:04:05.400 --> 0:04:08.760 that's the million gazillion dollar question. I have been asking 0:04:08.800 --> 0:04:12.120 all of our economic services, what is that trigger point? 0:04:12.480 --> 0:04:15.400 Certainly it could be a federal reserve policy action. We've 0:04:15.400 --> 0:04:17.920 seen that before, like in four when the Fed moved 0:04:17.920 --> 0:04:22.640 too quickly too fast, surprises the market, triggers a trade off. 0:04:23.000 --> 0:04:25.440 We've also seen it where there's a change in federal 0:04:25.440 --> 0:04:28.920 policy that causes the economy to stumble. We've also seen 0:04:28.960 --> 0:04:32.520 it where there are international geopolitical events that cause consumers 0:04:32.520 --> 0:04:35.400 to lose their confidence. So it could be any one 0:04:35.440 --> 0:04:37.880 of those, and I don't I can't tell you that 0:04:37.920 --> 0:04:42.160 there's a particular action to look for to gauge and 0:04:42.200 --> 0:04:45.200 the challenges this could go on for a week, but 0:04:45.279 --> 0:04:47.359 it can also go on for another two years. So 0:04:47.400 --> 0:04:49.640 you don't want to be out of this market. But 0:04:49.720 --> 0:04:53.039 I'm I'm very cautious enough not wanting to be overweight 0:04:53.120 --> 0:04:56.120 the market and bet too much. Chris Sellman, thank you 0:04:56.200 --> 0:04:59.000 so much, greatly appreciate your effort from Berlin today use 0:04:59.080 --> 0:05:15.920 Concler's investment officer. We're gonna have an adult conversation now 0:05:16.040 --> 0:05:18.960 about oil and along the way we'll explain the jargon 0:05:19.680 --> 0:05:21.560 as we go. I think it's been something missing in 0:05:21.600 --> 0:05:23.920 the discussion. You can do that when you've got someone 0:05:23.920 --> 0:05:27.760 as smart as Michael mcgloan joining it, with Bloomberg Intelligence, 0:05:27.800 --> 0:05:32.640 with decades of uh learning the humility of trying to 0:05:32.680 --> 0:05:36.280 game where oil is gonna go. I saw Opec Resolve 0:05:36.440 --> 0:05:39.440 open for def Leopard a few years ago. They were 0:05:39.440 --> 0:05:42.600 a great band, and you're talking about the way they 0:05:42.600 --> 0:05:45.960 got the name OPEC Resolve. There used to be Opec 0:05:46.120 --> 0:05:49.680 Resolve when a sterea came out, you know, thirties some 0:05:49.880 --> 0:05:54.840 years ago. Where's the OPEC Resolve today? Well, let's say 0:05:54.880 --> 0:05:57.720 good leading and I've definitely lost my hair trying to 0:05:57.760 --> 0:06:00.240 figure out the oil market. But um, I think the 0:06:00.320 --> 0:06:02.440 key thing from OPEC is the job bonning. They know 0:06:02.480 --> 0:06:04.160 what they have to say to get the market up, 0:06:04.160 --> 0:06:07.360 whether they're doing or not. Still have power to Yeah, 0:06:07.360 --> 0:06:09.560 well they do. I mean they're still producing over one 0:06:09.600 --> 0:06:11.440 third of the world's oil. I mean, not much of 0:06:11.480 --> 0:06:14.080 it's exported to US anymore, but they still that's one third. 0:06:14.080 --> 0:06:18.680 Now that's their power is definitely diminishing, but they still 0:06:19.040 --> 0:06:21.760 and the differences. They all need money, we know that, 0:06:22.200 --> 0:06:24.839 but open I mean Saudi Arabia is a key factor, 0:06:24.880 --> 0:06:26.520 and they know they have to cut back and it'll 0:06:26.520 --> 0:06:28.200 get the old price up, and so far it's working. 0:06:29.000 --> 0:06:31.880 When when you look at the sort of the spread 0:06:31.880 --> 0:06:33.800 here between Brent and w t I, what does that 0:06:33.880 --> 0:06:37.200 tell you at this point? How what happens when it's 0:06:37.360 --> 0:06:40.760 want as it is hurricane distorted typically right now it's 0:06:40.960 --> 0:06:43.440 um it's a bit of a bullish sign because it's distorted, 0:06:43.520 --> 0:06:45.440 distorted by a hurricane. I don't think we you know, 0:06:45.520 --> 0:06:48.440 we have to get US exports back online and they're 0:06:48.480 --> 0:06:52.120 coming fast. Add to that the declining dollar and it's 0:06:52.160 --> 0:06:55.080 just a pretty good bullish situation for US. W t 0:06:55.279 --> 0:06:57.920 I catching up to Brent at the moment. The key 0:06:57.960 --> 0:06:59.520 point is right now. I look at it as a 0:06:59.560 --> 0:07:03.279 percent about twelve percent that Brent's above w T I. 0:07:03.360 --> 0:07:05.080 The last time we were this wide was right at 0:07:05.080 --> 0:07:07.599 the bottom in the underlying market in February two thousand 0:07:07.680 --> 0:07:11.080 and sixteen. So it's it can it can mark peaks 0:07:11.120 --> 0:07:13.320 and trials in the market about here. I'm just thinking 0:07:13.360 --> 0:07:15.560 of looking at it as it's an indication to w 0:07:15.920 --> 0:07:17.800 it's getting a little too cheap. You've you've written a 0:07:17.800 --> 0:07:20.040 lot about this. The role of the dollar plays here. 0:07:20.040 --> 0:07:22.560 Commodities appeared to have been waiting for some dollar backfill. 0:07:22.640 --> 0:07:26.160 It may be commencing explained the role here of of 0:07:26.200 --> 0:07:28.960 the dollar week or strong in oil prices well right now. 0:07:29.000 --> 0:07:30.680 I think initially the quantities were a bit of a 0:07:30.720 --> 0:07:33.400 shock mode. I mean, the dollar is down eight percent 0:07:33.480 --> 0:07:35.360 in the year, and almost all industries you look at, 0:07:35.400 --> 0:07:38.640 which is one of the worst years in in forty 0:07:38.840 --> 0:07:41.600 and it's overdue for a bit of a back and field. 0:07:41.600 --> 0:07:43.720 We know that. But every day that goes by that 0:07:43.960 --> 0:07:46.040 it's just kind of backing up a little. But the 0:07:46.040 --> 0:07:48.880 market's getting it. The dollar has likely peaked. So if 0:07:48.880 --> 0:07:50.760 you look at it simply at the end of the year, 0:07:51.360 --> 0:07:54.280 if the dollars unchanged. It's down eight percent of the year, 0:07:54.360 --> 0:07:57.600 but the commandity market is still basically unchanged, so that's 0:07:57.640 --> 0:07:59.240 got to catch up. And crude oil and I think 0:07:59.240 --> 0:08:03.680 in all commanies are doing it. Goal definitely medals number one. Okay, 0:08:03.680 --> 0:08:06.360 And now we go, folks, to clear the jargon, which 0:08:06.400 --> 0:08:11.200 we take pride in its surveillance. Let's begin with backwardation. 0:08:11.600 --> 0:08:14.840 What is backwardation? One of my favorite terms that the 0:08:15.360 --> 0:08:18.440 key point to remember about backwardation is it's one that 0:08:18.600 --> 0:08:22.400 front futures contract is higher than the backs now November 0:08:22.760 --> 0:08:26.080 is higher than next June exactly. Or I like to 0:08:26.080 --> 0:08:28.040 look at it as one year base. It's a simplistic 0:08:28.040 --> 0:08:30.400 way to look at it is November now versus November 0:08:30.400 --> 0:08:32.520 a year from now. One year is the best way 0:08:32.559 --> 0:08:35.360 to measure cross all commodities because there's no c seasonally. 0:08:35.440 --> 0:08:38.000 So if you look at futures a year from now 0:08:38.040 --> 0:08:41.840 and all the petroleum products, they are four percent lower, 0:08:42.800 --> 0:08:45.240 the current prices are four percent higher. That's the most 0:08:45.320 --> 0:08:49.400 extreme backwardation since it isn't fortunately because of Harvey, well 0:08:49.480 --> 0:08:52.400 not part of it is Generally, backwardation means more demand 0:08:52.559 --> 0:08:55.040 versus supply. It means there's demand. It's a more macro, 0:08:55.240 --> 0:08:58.839 bigger martial in thing, exactly exactly, and it's also the 0:08:58.920 --> 0:09:00.880 key thing to remember. It's kind of a forward looking 0:09:00.920 --> 0:09:02.800 way of looking at the market. Now we get supplying 0:09:02.840 --> 0:09:06.400 demand data. Yeah, that's a backward measure. The curves forward looking. 0:09:06.440 --> 0:09:10.600 It's basically a positive and then critical with backwardation. Is 0:09:10.640 --> 0:09:13.560 it a bet typically that the near term is a 0:09:13.640 --> 0:09:16.960 higher price, or is it a bet that the year 0:09:17.080 --> 0:09:20.640 out price is lower. It's it's asymmetric. It's got to 0:09:20.679 --> 0:09:24.200 be an overweight to one of those, right. It's more 0:09:24.240 --> 0:09:27.640 of an indication that demand is greater now versus supply, 0:09:28.120 --> 0:09:30.480 and it's that much it's taking that carry out of 0:09:30.480 --> 0:09:33.200 the market. So it's just an indication of greater demand now. 0:09:33.240 --> 0:09:36.240 And often sometimes it gets too much extreme it could 0:09:36.360 --> 0:09:38.120 lead the other way now getting I think we're getting 0:09:38.120 --> 0:09:40.800 close to that. Was that good enough to keep off 0:09:40.840 --> 0:09:42.920 from New Jersey happy? I think what he said is 0:09:43.000 --> 0:09:45.480 I want my oil and I want it now. Well, 0:09:45.520 --> 0:09:48.320 this is from the gentleman that drive Rummer to David, 0:09:48.400 --> 0:09:51.520 I insist you ask about contango. Oh my gosh, can 0:09:51.559 --> 0:09:54.480 we do a jargon on jargon alert? Jargon explanation of 0:09:54.520 --> 0:09:56.840 contango and what what it is. Well, contango is the 0:09:56.880 --> 0:09:59.320 opposite as we know. It's when the front price is 0:09:59.559 --> 0:10:02.679 lower for the out prices. That's just normally pricing in 0:10:02.679 --> 0:10:06.360 the carrol that's normal. That's normal. And you think of 0:10:06.360 --> 0:10:09.640 credile's expensive to store. That's kind of faced in the 0:10:09.840 --> 0:10:11.520 it's thing and you can't store it on your finger 0:10:11.600 --> 0:10:15.360 like you can't gold. I mean, it's faltil, it's it's dangerous. 0:10:15.559 --> 0:10:16.960 So it's got to be in the price. When you 0:10:17.040 --> 0:10:19.760 take that out in backgardation, that's the sign of demand. 0:10:19.800 --> 0:10:22.400 So you look at a year ago, it was six 0:10:22.440 --> 0:10:24.640 percent in contango all and that was a sign that 0:10:24.679 --> 0:10:27.880 we're pretty well supplied. Now it's the opposite. Demand is great. 0:10:27.920 --> 0:10:31.440 But the key idea here is contango is normal and 0:10:31.480 --> 0:10:36.840 the backwardation now is the odd thing. Final question, can 0:10:36.880 --> 0:10:41.920 nontangibles like treasury futures, etcetera. Can they do these two things. 0:10:42.559 --> 0:10:45.840 Treasuries in the futures curve are completely priced off the 0:10:45.960 --> 0:10:49.480 forward short term interest rates, so they do. But that's 0:10:49.520 --> 0:10:52.000 not an indication of supply demand. It's like gold, it's 0:10:52.040 --> 0:10:54.600 just the exact cost of that character. If we exhausted 0:10:54.600 --> 0:10:58.960 this Taylor Riggs is taking notes on this level three 0:10:59.200 --> 0:11:01.280 did we of it? I think we just killed that. Well, 0:11:01.280 --> 0:11:05.400 we could move on No. One worldwide. Yes, Michael mcgloane 0:11:05.760 --> 0:11:08.680 has done a better discussion about gartment is down in 0:11:08.760 --> 0:11:11.400 Virginia in tears over this right now. One of my 0:11:11.440 --> 0:11:17.360 big herosscartment is in tears over that discussion of backward backwards, 0:11:17.840 --> 0:11:21.320 backwardation and contango. David, good morning to Escarpment. And let 0:11:21.320 --> 0:11:23.079 me ask you about other commodities. We talked about the 0:11:23.080 --> 0:11:24.960 effect of the hurricane on on the oil market, What 0:11:25.000 --> 0:11:28.400 about other commodities and otherways concerned around Harvey around irma 0:11:28.400 --> 0:11:31.320 about cotton in particular in the South. Have we seen 0:11:31.440 --> 0:11:33.720 other commodities take a hit as a result of those storms. Well, 0:11:33.720 --> 0:11:36.280 the number one was cotton, lumber party in there and 0:11:36.360 --> 0:11:39.080 orange juice. The key thing of all those threet commodities, 0:11:39.120 --> 0:11:41.080 cotton is the only one that's worthy of being a 0:11:41.080 --> 0:11:43.280 bloomer commodity list because it's the only one has decent 0:11:43.400 --> 0:11:46.200 enough trading, enough trading voluments, so much significant. It's still 0:11:46.200 --> 0:11:48.440 one of our major exports in his country. But has 0:11:48.440 --> 0:11:51.680 come back. Cotton has just well still well supplied despite 0:11:51.679 --> 0:11:53.559 the fact and get distorted by the hurricanes. In the 0:11:53.600 --> 0:11:57.280 big picture, it's more um. This distortion in in creude 0:11:57.320 --> 0:12:00.440 oil I think helps spark this rally because it took it, 0:12:00.480 --> 0:12:03.120 flushed out some of those weak longs and then boom 0:12:03.160 --> 0:12:04.600 now goes right back to where it should be going. 0:12:04.679 --> 0:12:06.800 How much better are we at forecast? And we talked 0:12:06.800 --> 0:12:08.960 about weather in the role that it can have on 0:12:09.080 --> 0:12:11.880 commodities here in the US and around the world. Uh, 0:12:11.960 --> 0:12:15.800 do we see a more nimble commodities? Uh, commodities market 0:12:15.800 --> 0:12:17.560 than we have in the past. Well, the first thing 0:12:17.640 --> 0:12:19.839 I think of the weather is the grain market, the 0:12:19.960 --> 0:12:22.800 US grain market, and this global warming situation was supposed 0:12:22.840 --> 0:12:25.520 to hurt US grains of play, it's done the opposite. 0:12:26.640 --> 0:12:30.319 Climate change has added a massive amount of Yes, it's 0:12:30.320 --> 0:12:32.920 heated up the in temperature lit but it's added moisture 0:12:33.160 --> 0:12:35.040 to the grain belt. For instance, look at this year. 0:12:35.200 --> 0:12:38.160 August was one of the coolest August in a hundred years, 0:12:38.200 --> 0:12:40.400 but it wasn't And so it's just been added the 0:12:40.480 --> 0:12:43.920 volatility in moisture. So we've had five years of bumper crops. 0:12:44.200 --> 0:12:46.600 The questions at some point that's got to end and 0:12:46.640 --> 0:12:49.280 the grain market is an area I see very much brewing. 0:12:49.320 --> 0:12:51.760 It just needs a little bit of basically needs a 0:12:51.840 --> 0:12:54.400 dry August, and we had the opposite last this August. 0:12:54.520 --> 0:12:56.400 That's close here. By talking about gold, I know you're 0:12:56.400 --> 0:12:58.400 you're watching gold here as we approached the end of 0:12:58.400 --> 0:13:00.520 the month. What are you looking at in particularly what 0:13:00.520 --> 0:13:02.280 will the close of gold here at the end of 0:13:02.320 --> 0:13:05.160 September tell you about the about the commodity key pivots. 0:13:05.840 --> 0:13:08.360 Bottom line with gold is it's a much better founded 0:13:08.480 --> 0:13:10.440 market than it was a year ago. It failed right 0:13:10.440 --> 0:13:14.040 after September meeting. It declined ten percent this year. It's 0:13:14.120 --> 0:13:17.160 the number one factor behind it declining dollar and if 0:13:17.160 --> 0:13:19.520 the do unless the dollar really reversus, gold has hasn't 0:13:19.520 --> 0:13:22.199 been to it. It was a September being Now gold 0:13:22.200 --> 0:13:26.200 failed at the February four meet. Well, look at golden 0:13:26.240 --> 0:13:28.640 this tightening cycle, gold is actually outperform the SMP five 0:13:28.960 --> 0:13:30.560 and people don't really get that yet. And during the 0:13:30.640 --> 0:13:35.640 entire tyking cycle it's about about spy. We make jokes 0:13:35.640 --> 0:13:37.719 about it, folks. But what you just heard there was 0:13:37.760 --> 0:13:42.520 the clearest exposition I've ever heard of degradation in Contango. 0:13:42.600 --> 0:13:46.839 That was people seriously people flunk exams on this stuff. 0:13:46.920 --> 0:13:50.480 What a public service. Michaelmgloan giving his perspective here from 0:13:50.520 --> 0:13:55.200 Bloomberg Intelligence on some of the pro talk and discussion 0:13:55.440 --> 0:13:58.280 that you hear in the commodity markets at Bloomberg that 0:13:58.440 --> 0:14:02.000 oftentime in the media gets thrown around like David, that 0:14:02.080 --> 0:14:06.240 was great. Absolutely, I'm not I go I can. I 0:14:06.240 --> 0:14:09.880 can fake it like anything. Mcloan is a real deal, 0:14:10.000 --> 0:14:14.000 So that really works. Terrific. Thank you very much, the 0:14:14.040 --> 0:14:16.760 commity strategistic to Bloomberg Intelligence here on Bloomberg eleven three 0:14:16.840 --> 0:14:29.640 studios in New York. For a long time, he represented 0:14:29.680 --> 0:14:32.000 Maryland's eighth Congressional district and moved on to the Senate 0:14:32.000 --> 0:14:35.320 when Barbara mcculsky retired. He's the junior Senator from Maryland. 0:14:35.400 --> 0:14:37.120 Chris van Holland joins us now on our phone lines, 0:14:37.160 --> 0:14:38.680 and there's a lot to talk about this morning, from 0:14:38.680 --> 0:14:41.560 healthcare to tax reform and the deficit. Let's start with healthcare, 0:14:41.600 --> 0:14:44.120 if we could. Senator. We heard from Senator Susan Collins 0:14:44.240 --> 0:14:46.320 yesterday she does not intend to support the bill known 0:14:46.680 --> 0:14:49.960 as the Graham Cassidy Bill, a a revision to uh 0:14:50.040 --> 0:14:52.640 the Affordable Care Act I wonder what kind of conversations 0:14:52.680 --> 0:14:54.440 you've had with Larry Hogan, the governor of your state 0:14:54.440 --> 0:14:59.400 of Maryland, about healthcare and about this bill in particular. Well, 0:14:59.480 --> 0:15:02.120 Larry hold and the governor of Maryland has come out 0:15:02.320 --> 0:15:06.600 against this bill. It would be very harmful to Maryland, 0:15:06.640 --> 0:15:09.920 as it would to most states around the country, and 0:15:09.960 --> 0:15:12.560 in fact, every state would be badly heard in the 0:15:12.680 --> 0:15:15.440 in the out years when medicaid would face an absolute 0:15:15.440 --> 0:15:19.240 cliff beyond a decade from now and between now and then, 0:15:19.800 --> 0:15:23.680 it does eliminate the guarantee for protections against things like 0:15:23.720 --> 0:15:27.960 pre existing conditions and eliminates the guarantee of essential benefits. 0:15:28.000 --> 0:15:32.720 So uh, that is why you've seen every patient protection 0:15:32.760 --> 0:15:36.720 group in the country come out against it, all the nurses, doctors, hospitals. 0:15:37.240 --> 0:15:40.800 So I'm I'm very much hoping that this is defeated 0:15:41.200 --> 0:15:42.880 once and for all and we can get back to 0:15:42.960 --> 0:15:48.080 the bipartisan discussions about how we can improve the Affordable 0:15:48.120 --> 0:15:51.240 Care Act in the healthcare system. Yes, I'm curious about 0:15:51.240 --> 0:15:54.080 the status of those bipartisan discussions. I know that Lamar 0:15:54.120 --> 0:15:56.960 Alexander has been working on a bipartisan bill with your 0:15:57.000 --> 0:16:00.160 colleague from from Washington state. Uh, And I'm curious just 0:16:00.240 --> 0:16:02.200 to what it looks like on Capitol Hill when a 0:16:02.200 --> 0:16:04.760 piece of legislation like Graham Cassidy is being worked on 0:16:04.800 --> 0:16:07.800 and worked through. Is the door open for Democrats to 0:16:07.920 --> 0:16:10.080 join the discussion or is this something that's really happening 0:16:10.240 --> 0:16:15.160 on a parallel track, a different track from everything else. Well, 0:16:15.200 --> 0:16:20.520 once the Graham Cassity initiative really started, as the Republicans 0:16:20.560 --> 0:16:25.440 in the Senate dropped the bipartisan negotiations, they essentially ended. 0:16:25.480 --> 0:16:28.880 At that point, you had a situation where the Trump 0:16:28.920 --> 0:16:31.720 administration and the Speaker of the House Paul Ryan and 0:16:31.760 --> 0:16:36.480 then Republican Leader Mitch McConnell decided to go back to 0:16:36.520 --> 0:16:39.320 the effort to blow up the Affordable Care Act, and 0:16:39.360 --> 0:16:42.960 at that time those bipartisan talks ended, Which was why 0:16:43.000 --> 0:16:46.480 I'm hopeful that if we're able to defeat Graham Cassidy, 0:16:47.040 --> 0:16:51.520 that we will resume those negotiations, which I understand from 0:16:51.520 --> 0:16:56.480 both sides were making progress, making progress. What are the 0:16:56.480 --> 0:16:58.600 the areas of commonality? In other words, if you get 0:16:58.600 --> 0:17:01.200 back to the negotiating table with Republicans, what are things 0:17:01.200 --> 0:17:03.960 that you think need to change where you think Democrats 0:17:04.040 --> 0:17:06.919 Republicans can can come together? Is there unanimity? Is their 0:17:06.960 --> 0:17:09.800 agreement here that parts of the Affordable Care Act need 0:17:09.880 --> 0:17:14.119 to be changed? Yes, I think everybody agrees that the 0:17:14.200 --> 0:17:18.520 Affordable Care Act needs changes. So the main things that 0:17:18.560 --> 0:17:22.480 were on the table were making permanent the cost sharing 0:17:22.880 --> 0:17:26.639 provisions so that there would be some certainty in the 0:17:26.680 --> 0:17:30.640 marketplace that they would be there. The lack of certainty 0:17:30.680 --> 0:17:34.720 has created some wild fluctuations with respect to premium offerings. 0:17:34.720 --> 0:17:37.960 Even as we had into this fall uh, there was effort. 0:17:38.080 --> 0:17:42.080 There was an effort at reinsurance provisions so that there 0:17:42.080 --> 0:17:47.080 would be some relief for the very high cost patients 0:17:47.119 --> 0:17:50.720 that really drive many of the costs that are face. 0:17:51.359 --> 0:17:55.680 And then there was a discussion about more flexibility in 0:17:55.760 --> 0:18:01.040 the Medicaid waiver provisions. States already have a lot of flexibility, 0:18:01.119 --> 0:18:03.720 but there had been complaints about the amount of time 0:18:04.000 --> 0:18:06.960 that they get, how amount of time it takes for 0:18:07.000 --> 0:18:11.159 them to have their proposals reviewed and implemented. So that 0:18:11.280 --> 0:18:13.720 was a package coming together Senate out whether or not 0:18:13.840 --> 0:18:18.760 that would pass in the House is a whole different question. Senator, 0:18:19.040 --> 0:18:23.720 you have leapt into the leadership of the Democratic Party 0:18:23.760 --> 0:18:27.520 in the Senate. It's a hugely dynamic time. And if 0:18:27.560 --> 0:18:29.800 we could turn over to the mundane politics of the 0:18:29.880 --> 0:18:33.840 moment you're managing for the two thousand and eighteen election 0:18:33.920 --> 0:18:36.000 with the d s CC trying to get it done 0:18:36.320 --> 0:18:40.320 against some difficult math. Are you impatient that you need 0:18:40.400 --> 0:18:43.760 to see a new Democratic party now or can it 0:18:43.920 --> 0:18:48.520 wait till left the midterm elections. Well, I'm not sure 0:18:48.600 --> 0:18:50.800 quite what you mean by a new Democratic Party. I mean, 0:18:51.080 --> 0:18:54.679 in this cycle, even a few months ago, the Democrats 0:18:54.800 --> 0:18:59.040 put forward a lot of ideas with respect to jobs 0:18:59.359 --> 0:19:02.439 in the ecount. To me, it's understandable that that hasn't 0:19:02.480 --> 0:19:04.840 gotten a whole lot of attention because the focus has 0:19:04.880 --> 0:19:08.160 been on what's going on in the Congress right now, 0:19:08.200 --> 0:19:11.840 which is controlled, of course by Republicans in both houses, 0:19:11.880 --> 0:19:15.880 and so I think for the mid terms you're gonna 0:19:15.880 --> 0:19:20.159 see primarily a referendum on the Trump administration and the 0:19:20.200 --> 0:19:23.600 conduct of the majority in the House and Senate. That's 0:19:23.720 --> 0:19:26.600 been the traditional pattern of mid terms. But at the 0:19:26.640 --> 0:19:31.040 same time, we will have our senators are incumbent senators 0:19:31.080 --> 0:19:34.320 in every one of their race is talking about what's 0:19:34.359 --> 0:19:36.840 best for their state, and of course our challenges will 0:19:36.880 --> 0:19:39.080 be doing the same thing. You are in the crosshairs 0:19:39.160 --> 0:19:41.000 of this debate. You're not sitting on the couch in 0:19:41.080 --> 0:19:43.720 the Oval office, but you're in the cross hears of 0:19:43.800 --> 0:19:46.760 this debate. Do you desire in terms of a new 0:19:46.800 --> 0:19:49.760 Democratic Party the same old, same old, and let's call 0:19:49.760 --> 0:19:52.920 it a progressive party of the two coasts, or does 0:19:52.920 --> 0:19:55.960 it have to be a Democratic party that that pays 0:19:56.040 --> 0:20:01.200 homage to Michigan, to Wisconsin, into other areas rural less, 0:20:01.240 --> 0:20:07.120 sanctuary city areas well. However you define the Democratic Party, 0:20:07.160 --> 0:20:11.520 we absolutely have to do a better job of connecting 0:20:11.560 --> 0:20:14.680 with voters in every part of the country. It's very 0:20:14.680 --> 0:20:19.640 clear from the last presidential election that many voters who 0:20:19.640 --> 0:20:22.719 had supported Democrats in the past, who had voted for 0:20:23.080 --> 0:20:28.640 Barack Obama, decided to vote for Donald Trump because uh, 0:20:28.680 --> 0:20:32.120 he somehow persuaded them that he had their best economic 0:20:32.240 --> 0:20:35.639 interests in mind. And so, uh, the Democrats have been 0:20:35.720 --> 0:20:39.040 very clear since the end of the election that we 0:20:39.560 --> 0:20:43.160 need to refocus our efforts on what the Democratic Party 0:20:43.160 --> 0:20:46.520 has always stood for, which is the chance for everybody 0:20:46.640 --> 0:20:49.639 uh to have a good, pain decent job, in a 0:20:49.720 --> 0:20:52.600 in a good future. So to answer your question, yes, 0:20:52.760 --> 0:20:56.280 we need to do a better job of connecting with voters, 0:20:56.280 --> 0:20:58.080 and a lot of the Senate races that we've got 0:20:58.119 --> 0:21:01.040 up this time are in the is you've talked about. 0:21:01.040 --> 0:21:04.800 And we have incoming senators who have been very successful 0:21:05.560 --> 0:21:07.639 at making it clear that they're looking out for the 0:21:07.680 --> 0:21:10.239 best interests of their states. A few weeks back, I 0:21:10.240 --> 0:21:12.280 imagine a copy of the Washington Post landed with the 0:21:12.320 --> 0:21:14.639 thud outside your office and the Heart State Office Building 0:21:14.640 --> 0:21:17.280 and many others on Capitol Hill. John McCain, your colleague 0:21:17.280 --> 0:21:21.280 from Arizona, writing about comedy on Capitol Hill, about by partisanship, 0:21:21.320 --> 0:21:24.800 about regular order, And I wonder how you processed what 0:21:24.880 --> 0:21:26.919 he wrote in that op ed piece, and how you 0:21:26.960 --> 0:21:29.280 process what he said in his statement about why he 0:21:29.320 --> 0:21:31.680 doesn't intend to to to vote for Graham. Casting. Yes, 0:21:31.680 --> 0:21:33.680 it has to do with some aspects of the bill, 0:21:33.720 --> 0:21:35.280 but it also has to do with the way things 0:21:35.280 --> 0:21:39.919 are proceeding on Capitol Hill right now. There's there's his 0:21:40.000 --> 0:21:42.240 encouragement to get back to regular order. What's it gonna 0:21:42.280 --> 0:21:44.040 take to get there? What's it gonna take to get 0:21:44.040 --> 0:21:49.680 back to by partisanship and the traditions of the U. S. Senate. Well, 0:21:49.720 --> 0:21:52.159 I applaud Senator McCain for calling out the Senate to 0:21:52.200 --> 0:21:54.520