WEBVTT - Trumpcare Bill Doesn't Age Well, Nisen Says 0:00:05.800 --> 0:00:08.360 Welcome to the Bloomberg P and L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.440 Fox along with my co host Lisa Abramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg P M 0:00:20.680 --> 0:00:32.080 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:32.080 --> 0:00:34.479 So we were talking about that healthcare bill that was 0:00:34.680 --> 0:00:36.440 just released, and we want to bring in Max Niece 0:00:36.440 --> 0:00:41.080 and bloombergad Fly columnists covering all things healthcare and Max 0:00:41.800 --> 0:00:45.040 as Greg was just saying, healthcare shares are surging, Can 0:00:45.080 --> 0:00:47.800 you give us a sense of what in this bill 0:00:47.880 --> 0:00:51.080 that was just released caused this rally? Why is this 0:00:51.159 --> 0:00:55.240 being viewed as a positive for the healthcare industry? Um? 0:00:55.280 --> 0:00:58.360 You know, so I'm just like everybody else, including a 0:00:58.480 --> 0:01:01.680 large number of Republican senator I'm still making my way 0:01:01.680 --> 0:01:05.200 through the bill yet, I I you know, i'd like 0:01:05.240 --> 0:01:07.039 to say I have, but but not quite yet. I'm 0:01:07.080 --> 0:01:10.200 kind of just jumping through looking for snippets. Um. So 0:01:10.240 --> 0:01:11.959 what it looks like is that this isn't kind of 0:01:12.000 --> 0:01:16.319 a dramatic departure from what the House passed. There are 0:01:16.400 --> 0:01:20.400 some modest differences to the subsidies that low income people get, 0:01:20.840 --> 0:01:23.520 and um, some of the Medicaid cuts are deeper in 0:01:23.560 --> 0:01:27.479 the long run, but this doesn't diverge dramatically from what 0:01:27.520 --> 0:01:30.039 people know already. And I guess resolving some of that 0:01:30.120 --> 0:01:33.280 uncertainty might, um might be causing some of that jump 0:01:33.280 --> 0:01:36.119 in stock rise based on what you know, how likely 0:01:36.240 --> 0:01:38.440 is this to be reconciled with the House bill and 0:01:38.520 --> 0:01:41.720 actually make it to the President's desk. Um, You know, 0:01:41.840 --> 0:01:45.319 I I think that the issue isn't gonna be reconciling 0:01:45.319 --> 0:01:47.560 it with the House bill in this case, it's whether 0:01:47.640 --> 0:01:50.560 it can get through the Senate, because I mean, the 0:01:50.920 --> 0:01:54.640 really kind of salient detail here is that the Republican 0:01:54.680 --> 0:01:57.120 senators who have to vote for have not seen it yet, 0:01:57.200 --> 0:01:59.360 most of them, so they're kind of grappling it in 0:01:59.440 --> 0:02:02.360 the same way that um, we are as reporters and 0:02:02.360 --> 0:02:04.840 and the country is right now, so there are there 0:02:04.840 --> 0:02:07.160 are things that some you know, conservatives aren't gonna like 0:02:07.240 --> 0:02:09.400 parts of this bill, and moderates as well. It's the 0:02:09.400 --> 0:02:12.400 same problem that's been there for the start politically, so 0:02:12.440 --> 0:02:13.880 that's going to have to be worked throughing in a 0:02:13.919 --> 0:02:15.720 pretty short time period. If they want to vote on 0:02:15.760 --> 0:02:17.839 it next week. Well, and let's talk about the fact 0:02:17.919 --> 0:02:20.919 that U. S. Senate Majority Leader Mitch McConnell has said 0:02:20.919 --> 0:02:23.959 that he would like a vote to come next week. 0:02:24.120 --> 0:02:26.560 And given the fact that it's just being released now, 0:02:26.639 --> 0:02:33.119 even to some Republican the Republicans own members in the Senate, UM, 0:02:33.200 --> 0:02:36.800 why do they want to rush this? Um? I think 0:02:36.880 --> 0:02:39.880 the kind of thing we've learned over the course of 0:02:39.919 --> 0:02:42.600 the process with the House polls that this bill doesn't 0:02:42.840 --> 0:02:46.000 or this particular effort, policy effort does not age well, 0:02:46.639 --> 0:02:50.720 does not hold up to UM. Scrutineer right Eric, particularly well, 0:02:50.760 --> 0:02:53.000 it does some things that are are going to be 0:02:53.120 --> 0:02:57.440 very unpopular, including weakening protections for those with pre existing 0:02:57.440 --> 0:02:59.600 conditions in a different way than the House will, but 0:02:59.680 --> 0:03:03.320 but a heres to still do so, and cutting Medicaid 0:03:03.520 --> 0:03:06.359 really substantially, and that's not popular at all. Medicaid do 0:03:06.360 --> 0:03:09.720 doesn't just cover low income people, it also covers kids 0:03:09.840 --> 0:03:12.640 and a majority of people that are in nursing homes 0:03:12.639 --> 0:03:15.600 in the United States. So, um, you know, they the 0:03:15.720 --> 0:03:19.320 point of kind of rushing the process is potentially getting 0:03:19.360 --> 0:03:22.880 less political backlash actually getting it done. For people. Senators 0:03:22.919 --> 0:03:25.639 go back to their districts and get uh and get 0:03:25.680 --> 0:03:28.400 another earful about the bill. Well that's the thing, right, 0:03:28.440 --> 0:03:32.239 because of the congressional recess. Yeah, exactly. So Congress is 0:03:32.280 --> 0:03:34.520 out after next week for a for a pretty long one, 0:03:34.560 --> 0:03:37.360 and then again in August. So they really want to 0:03:37.360 --> 0:03:39.080 get this done as quickly as they can. Just to 0:03:39.080 --> 0:03:42.480 play devil's advocate. A lot of Republican Senate leaders have 0:03:42.560 --> 0:03:44.880 come out and said, look, uh, more money does not 0:03:45.000 --> 0:03:49.120 necessarily mean better healthcare, and they're trying to allocate cash 0:03:49.200 --> 0:03:51.520 and and and create the right incentives to create a 0:03:51.560 --> 0:03:55.960 better health care system. What's your response to that, Um, 0:03:56.520 --> 0:04:00.480 I think that's just kind of typical uh rhetoric that 0:04:00.520 --> 0:04:03.400 you hear. I mean, of course, government is not always 0:04:03.400 --> 0:04:06.119 the most efficient way of allocating money. That I don't 0:04:06.160 --> 0:04:08.520 I don't think anyone would argue that. But when you 0:04:08.760 --> 0:04:12.000 cut in this case, Medicaid by more than eight hundred 0:04:12.040 --> 0:04:15.840 billion dollars, people lose a lot of healthcare. That that's 0:04:15.880 --> 0:04:18.920 just that's not an equation you can really contest or 0:04:19.040 --> 0:04:22.920 argue with. And the same goes for subsidies for health insurance. 0:04:23.160 --> 0:04:25.800 Let's get a little more detail from Max and Neeson 0:04:25.880 --> 0:04:30.080 are a Bloomberg Gadfly columnist. Listening to both a Senator 0:04:30.120 --> 0:04:33.960 Schumer and Senator McConnell, I wanted to begin by asking you. 0:04:34.480 --> 0:04:39.240 Senator Schumer talked about affordable insurance, and I'm wondering he 0:04:39.320 --> 0:04:42.400 made certain claims about this will do away with affordable 0:04:42.480 --> 0:04:45.880 insurance for people. Is that accurate? I think it will 0:04:45.960 --> 0:04:49.280 definitely be accurate for for certain subsets of the population. 0:04:49.279 --> 0:04:52.240 And the ones that come to mind are people that 0:04:52.360 --> 0:04:55.640 get subsidies under the A C A that will get 0:04:55.720 --> 0:05:00.120 less generous subsidies under under they change the acronym. I 0:05:00.160 --> 0:05:03.599 think it's the B C R A now UM. And 0:05:03.920 --> 0:05:05.480 the other thing one that comes to mind is people 0:05:05.520 --> 0:05:09.000 that lose coverage under the Medicaid Expansion or Medicaid in general, 0:05:09.360 --> 0:05:12.839 and also people that have certain conditions. While the Senate 0:05:12.880 --> 0:05:16.719 bill appears to maintain a prohibition against charging people with 0:05:16.720 --> 0:05:20.640 pre existing conditions more which was states could wave that 0:05:20.720 --> 0:05:24.839 under the House version, it does maintain um, the ability 0:05:25.000 --> 0:05:27.800 for states to get rid of the requirement that states 0:05:27.800 --> 0:05:31.080 cut that ensures cover a certain essential health benefits like 0:05:31.120 --> 0:05:34.239 mental health care, for example, So you can't charge someone 0:05:34.480 --> 0:05:38.279 with mental health care issues more. But you can offer 0:05:38.279 --> 0:05:41.080 a plan that doesn't have mental health care in it 0:05:41.320 --> 0:05:43.760 and make it much less expensive, and the plan with 0:05:43.800 --> 0:05:46.960 that kind of care much more expensive, so effectively with people, 0:05:46.960 --> 0:05:49.720 it's those sort of long term expensive issues. Health health 0:05:49.720 --> 0:05:54.240 care will become unaffordable potentially in some states. Maxim struck 0:05:54.279 --> 0:05:57.520 by the GOP's UH sent a proposal to include an 0:05:57.560 --> 0:06:00.520 additional fifty billion dollars over four years to stay abilize 0:06:00.560 --> 0:06:04.320 insurance exchanges. This was exactly the provision the Republicans have 0:06:04.400 --> 0:06:07.080 criticized in the past, is a way to keep insurers 0:06:07.120 --> 0:06:10.479 in the marketplace. Why did they reverse course and include this? 0:06:11.800 --> 0:06:13.920 I think it was an effort to kind of build 0:06:14.160 --> 0:06:16.919 a broader consensus around the bill. Um, you know, some 0:06:17.000 --> 0:06:20.680 more near term stability and and more cynically, Um, it 0:06:20.760 --> 0:06:23.080 just means that going into the next couple of electoral 0:06:23.080 --> 0:06:25.760 cycles you have a more stable market. A lot of 0:06:25.760 --> 0:06:28.480 the impact of this bill the kind of big shift 0:06:28.480 --> 0:06:31.599 from the households that it's pushed out further, so the 0:06:31.640 --> 0:06:35.000 big Medicaid cuts, the ending of the Medicaid expansion, it's 0:06:35.040 --> 0:06:36.760 pushed out a little bit further. The big changes to 0:06:36.800 --> 0:06:39.280 the A c A as well. UM, and that's kind 0:06:39.320 --> 0:06:42.119 of evidence by these these funds. So that might create 0:06:42.160 --> 0:06:44.400 a problem with the conservative wing of the party. They 0:06:44.440 --> 0:06:47.760 they especially hated these payments when they were part of 0:06:47.800 --> 0:06:50.279 the A C. A. They won't like it. That something 0:06:50.320 --> 0:06:52.800 that could be described, I imagine as something of a 0:06:52.839 --> 0:06:55.480 bailout by by that wing of the party. It's now 0:06:55.520 --> 0:06:58.000 in this bill, so that might be a problem. Thank 0:06:58.040 --> 0:07:00.599 you so much for joining us Maxnis and Blueberg Gadfly columnists. 0:07:00.880 --> 0:07:02.920 UH you can follow his work at Bloomberg dot com 0:07:03.160 --> 0:07:05.920 slash gad fly, and I'm sure Max you will be 0:07:06.240 --> 0:07:10.720 opining on this proposal. Center Republic Industry Itierate did release 0:07:10.800 --> 0:07:14.320 their healthcare proposals to replace Obamacare, providing an additional fifty 0:07:14.320 --> 0:07:17.520 billion dollars over four years to stabilize insurance exchanges. This 0:07:17.680 --> 0:07:20.520 is the plan that has been long awaited that Senate 0:07:20.560 --> 0:07:22.760 Majority Leader Mitch McConnell would like to have a vote 0:07:22.800 --> 0:07:25.400 on as soon as next week, and it will affect 0:07:25.600 --> 0:07:40.560 a broad swath of the US economy. Right now, we 0:07:40.680 --> 0:07:44.200 are looking at oil prices that are finding some stability 0:07:44.320 --> 0:07:47.520 after a pretty significant swoon, after falling to the lowest 0:07:47.600 --> 0:07:50.600 levels UH in ten months. It is rising just a 0:07:50.640 --> 0:07:53.400 bit with the value of crude going to forty three 0:07:53.400 --> 0:07:55.360 a little over forty three dollars a barrel. To get 0:07:55.400 --> 0:07:57.840 a better sense of the direction of these prices, I 0:07:57.880 --> 0:07:59.840 want to bring in John killed Off. He has founding 0:08:00.040 --> 0:08:03.280 partner of again at Capital in New York. John, have 0:08:03.480 --> 0:08:09.080 we seen the lows this year? Four crew? It's hard 0:08:09.160 --> 0:08:11.880 to tell at this moment not to uh cop out 0:08:11.960 --> 0:08:15.280 or avoid your question. Yesterday's sell off to two oh 0:08:15.400 --> 0:08:17.880 five a barrel with significant it matches up with the 0:08:17.960 --> 0:08:21.120 low from November. So there's a potential for technical traders 0:08:21.160 --> 0:08:23.840 to see that as a double bottom, and I'm having 0:08:23.880 --> 0:08:25.920 to abide that at the moment. But really I think 0:08:25.960 --> 0:08:28.880 the path of least resistance is still lower down into 0:08:28.920 --> 0:08:32.640 the upper thirties, upper thirties. How long would it stay there, 0:08:34.800 --> 0:08:36.800 that's a good question, PIM. I think it would stay 0:08:36.880 --> 0:08:40.079 there um for a good amount of time. What the 0:08:40.160 --> 0:08:42.319 market is right now in the process of doing is 0:08:42.960 --> 0:08:46.600 is calling and taking OPEC to task for not doing enough, 0:08:47.320 --> 0:08:49.800 so they're challenging. The market gets into these modes where 0:08:49.840 --> 0:08:53.520 they challenge the producing community, sometimes on the upside. Right 0:08:53.559 --> 0:08:57.040 now it's on the downside to react and the statis 0:08:57.080 --> 0:09:00.360 apparently are scrambling right now to to find the way 0:09:00.400 --> 0:09:03.080 to react to this and to get the prices back up. John, 0:09:03.120 --> 0:09:06.600 when I talk with bulls oil bulls, they say, look 0:09:06.720 --> 0:09:11.040 Saudio Saudi Arabia in particular has great incentive to prop 0:09:11.200 --> 0:09:13.640 up and give a floor to oil prices based on 0:09:13.679 --> 0:09:16.800 the fact that they're planning to do an initial public 0:09:16.920 --> 0:09:20.760 offering for Saudi Aramco in the near future. What do 0:09:20.840 --> 0:09:25.120 you say to those traders who still have faith that 0:09:25.240 --> 0:09:29.440 there will be a floor because of those political incentives. Well, 0:09:29.480 --> 0:09:32.600 I think that the sadis you know, bristle at having 0:09:32.679 --> 0:09:36.079 to go with a loan. They've they've been carrying most 0:09:36.160 --> 0:09:40.840 of the load since the beginning, and now they're having 0:09:40.880 --> 0:09:44.360 to deal with potentially covering as the as the oil 0:09:44.400 --> 0:09:48.439 Minister put it, Libya and Nigeria, whose production in a 0:09:48.520 --> 0:09:50.760 surprise I think to the market and certainly to OPEC 0:09:50.840 --> 0:09:53.880 and the non OPEC participants have come rowing back. They're 0:09:53.920 --> 0:09:57.880 back to really full output from being near zero for 0:09:57.960 --> 0:10:01.240 the better part of the year or two oh in 0:10:01.360 --> 0:10:06.120 the Historically, the Staudies reach a point where they won't 0:10:06.160 --> 0:10:09.920 do it, and they instead turned press the market by 0:10:10.000 --> 0:10:12.959 over supplying it. Now, this Stadio ramfil thing is a 0:10:13.040 --> 0:10:15.360 new wrinkle. And with the new Crown Prince and the 0:10:15.440 --> 0:10:19.239 new oil Minister, UH, they seem more committed to engineering 0:10:19.280 --> 0:10:22.959 a higher price, potentially through more cutbacks. But boy, it's 0:10:23.000 --> 0:10:25.800 a bitter pill for them to swallow, and historically in 0:10:26.120 --> 0:10:29.360 my experience with them, they don't swallow it. Well, John, 0:10:30.040 --> 0:10:34.040 to bring into the equation the swing producer, the United 0:10:34.120 --> 0:10:38.720 States and its role in uh not only domestic energy markets, 0:10:38.840 --> 0:10:43.160 but now international energy markets as an exporter, well that 0:10:43.440 --> 0:10:45.240 and that is the big monkey wrench that has also 0:10:45.280 --> 0:10:48.599 been thrown into this OPAC non OPEC agreement UM. And 0:10:48.760 --> 0:10:52.000 also to keep pointing out to everyone that while the 0:10:52.080 --> 0:10:55.839 shale players get all the glory and the headlines, you know, 0:10:55.920 --> 0:10:58.560 like a big wide receiver on a football team, we've 0:10:58.600 --> 0:11:00.240 had a lot of production increases from the Gulf of 0:11:00.280 --> 0:11:02.520 Mexico this year from projects that have been on in 0:11:02.640 --> 0:11:05.160 the works for years, and they're that production is not 0:11:05.240 --> 0:11:07.640 going away no matter how low prices go. And a 0:11:07.679 --> 0:11:09.640 lot of the shale plates have hedged a lot of 0:11:09.679 --> 0:11:13.880 their production when prices got back up into the that 0:11:14.040 --> 0:11:16.040 production is going to be a lot more stickier this 0:11:16.200 --> 0:11:18.640 time around. And as you said, pim Uh China in 0:11:18.720 --> 0:11:21.640 particular has sought out the U S shale producer oil 0:11:21.720 --> 0:11:25.880 and we've been exporting increased the masts to China again 0:11:26.120 --> 0:11:28.800 in a battle from market share with the Saudis that 0:11:29.000 --> 0:11:32.160 they bristle at historically, that they don't accept and that 0:11:32.240 --> 0:11:34.719 they end up fighting back on. So that's that's the 0:11:34.800 --> 0:11:36.560 issue I had with all of this, and I really 0:11:36.600 --> 0:11:40.760 think there's a potential, uh for the production war to breakout, 0:11:40.840 --> 0:11:44.559 not a price war. You know, John, just wanted to 0:11:44.800 --> 0:11:48.000 get your thoughts on some of these leveraged shale producers 0:11:48.160 --> 0:11:50.880 in the US, UH. You know, they they are thought 0:11:51.000 --> 0:11:53.959 as the swing producer and having the upper hand frankly, 0:11:54.080 --> 0:11:57.199 but if you look at the debt markets, particularly energy 0:11:57.280 --> 0:11:59.160 junk bonds, they have dropped more than three and a 0:11:59.200 --> 0:12:01.160 half percent so far this month, and there's a lot 0:12:01.160 --> 0:12:03.720 of concern that we're going to see another wave of carnage. 0:12:03.840 --> 0:12:06.199 What's your what's your feeling in that space? We start 0:12:06.320 --> 0:12:10.760 seeing largely the washout of the weakest players. No, I 0:12:10.880 --> 0:12:13.400 think if we get down into the upper thirties, they'll 0:12:13.440 --> 0:12:17.880 be more of that to come. Enough of their production. 0:12:17.960 --> 0:12:20.560 Any of these folks to get them through. I think 0:12:20.600 --> 0:12:25.080 another episode like that. Um, and all right, we're gonna John, 0:12:25.200 --> 0:12:27.680 we gotta break in, John Kildeff. I want to thank 0:12:27.720 --> 0:12:30.400 you breaking in. John Killoff is the founding partner of 0:12:30.440 --> 0:12:45.240 Again Capital. Let's get a little bit more detail about 0:12:45.320 --> 0:12:48.560 this potential deal. I want to bring in Dina Camel 0:12:48.880 --> 0:12:53.319 Middle East aviation reporter joining us from Dubai and Michael 0:12:53.360 --> 0:12:57.880 Sasso airline reporter from Bloomberg News joining us from Atlanta. Dina, 0:12:57.960 --> 0:13:00.440 maybe you could speak a little bit about what Squtar 0:13:00.760 --> 0:13:04.760 bring to any kind of shareholding and what is the 0:13:04.840 --> 0:13:11.439 connection between Cutar Airways and global air travel. Yes, high there, Um, Actually, 0:13:11.520 --> 0:13:14.560 this is not the first time that we're seeing Cutar 0:13:14.600 --> 0:13:18.079 Airways go into this type of venture, and already in 0:13:18.320 --> 0:13:22.160 in April, we saw the Cutar Airways CEO of Rebecca 0:13:22.320 --> 0:13:26.439 say that he was thinking of adding one more acquisition 0:13:26.720 --> 0:13:31.079 to his portfolio of you know, many many airlines and 0:13:31.160 --> 0:13:35.560 many previous purchases. Um. So today's announcement is actually one 0:13:35.920 --> 0:13:40.199 in a series of acquisitions that the airline has already done. Um. 0:13:40.720 --> 0:13:44.240 The first one was, you know, gradually building up a 0:13:45.000 --> 0:13:49.080 stake in British Airways. Parents I g UH. They've also 0:13:49.200 --> 0:13:53.520 recently tooken up, taken up ten percent of latam um. 0:13:53.679 --> 0:13:57.960 So they've been pursuing an organic growth. And this latest 0:13:58.040 --> 0:14:02.679 interest in in American sort of completes the triangle of 0:14:02.840 --> 0:14:06.679 of trying to capture traffic from across the Atlantic. I 0:14:06.720 --> 0:14:09.520 want to bring in Michael here. So cut Our Airways 0:14:09.559 --> 0:14:14.240 has been criticized by American airlines for unfair competition. What 0:14:14.440 --> 0:14:18.360 does this potential investment in American airlines do with respect 0:14:18.480 --> 0:14:23.640 to the rivalry here? Well, I think that's the big question. Um, 0:14:24.440 --> 0:14:27.840 there's some you know, I've heard some analysis that maybe 0:14:28.400 --> 0:14:32.160 Cutter is trying to get a foothold in this controversy 0:14:32.240 --> 0:14:35.560 in the United States. You may be aware that all 0:14:35.680 --> 0:14:39.520 three of the US major US airlines, including American Delta, 0:14:40.080 --> 0:14:43.320 UH and UH and United Airways United Airlines all have 0:14:43.800 --> 0:14:47.880 trying to bring a trade case against Cutter and Emirates 0:14:48.040 --> 0:14:53.240 and ATA Airways, suggesting that they're unfairly flooding the US 0:14:53.320 --> 0:14:57.320 market with with cheap flights, that they're being subsidized by 0:14:57.400 --> 0:15:00.920 their home governments. I mean, there's a there's a thought 0:15:01.000 --> 0:15:04.080 out there that maybe this could be some attempt to 0:15:04.280 --> 0:15:08.360 influence that process. Uh. Some could they have some influence 0:15:08.440 --> 0:15:13.160 in with the Trump administration or some influence with American maybe, Uh, 0:15:13.640 --> 0:15:16.560 but that's just kind of spot analysis. Well, and we're 0:15:16.600 --> 0:15:19.280 not exactly sure yet. Well, and you talk about the 0:15:19.480 --> 0:15:23.640 conflict between Cutter Air and some of the US airlines, 0:15:23.760 --> 0:15:26.360 but the conflict with Cutter goes much beyond that. I mean, 0:15:26.440 --> 0:15:29.360 recently we've seen a lot of news coming out of 0:15:29.920 --> 0:15:32.680 the Middle East with respect to Saudi Arabia and it's 0:15:33.080 --> 0:15:35.960 worsening relationship with Cutter as well as with the U 0:15:36.200 --> 0:15:38.360 s Dina. Can you speak a little bit about how 0:15:38.680 --> 0:15:43.080 this type of investment complicates that or is uh perhaps 0:15:43.480 --> 0:15:45.480 despite that or as a result of that. I mean, 0:15:45.560 --> 0:15:50.080 just to remind people, cut Our Air is state owned. Yes, 0:15:50.200 --> 0:15:52.440 that's that's correct. It might be a little bit too 0:15:52.520 --> 0:15:55.480 early to stay at at this point. Um, how this 0:15:55.600 --> 0:16:00.240 plays into the geopolitical tensions that that cuts are is 0:16:00.280 --> 0:16:03.200 facing at the moment um. As you correctly pointed out, 0:16:04.400 --> 0:16:08.520 cut Our the nation is being isolated by four other 0:16:08.720 --> 0:16:13.400 neighboring Arab countries Saudi Arabia, Egypt, UM, Bahain and the 0:16:13.480 --> 0:16:18.240 United Arab Emirates UM for who accused Cutter, UM for 0:16:18.400 --> 0:16:23.840 supporting UM Islamic terrorism and financing extremists UM, which are 0:16:23.880 --> 0:16:27.200 allegations that that cut our denies UM and and and 0:16:27.480 --> 0:16:31.680 in the meantime, they've also closed down UM their airspace 0:16:31.760 --> 0:16:35.000 to all Cutari flights. So let's just put cutter airways. 0:16:35.440 --> 0:16:38.480 UH in a very difficult situation. UH, it's it's had 0:16:38.520 --> 0:16:44.080 to face longer reroutes, very expensive reroutes around that airspace. UM. 0:16:44.200 --> 0:16:48.600 So the idea that it's now trying to UM solidify 0:16:48.720 --> 0:16:52.000 its partnerships, you know, with one World members UM and 0:16:52.240 --> 0:16:56.800 and basically trying to diversify its streams of of of 0:16:56.920 --> 0:17:00.240 revenue so that it's not reliant on any one part 0:17:00.280 --> 0:17:03.680 of the world too heavily UM for where it's earnings 0:17:03.760 --> 0:17:06.359 come from. UM AND. I think that move ties in 0:17:06.560 --> 0:17:09.239 with the political pressure that it's that it's facing here 0:17:09.280 --> 0:17:14.199 in the region. Already, it's been denied access to eighteen 0:17:14.280 --> 0:17:17.800 destinations in those four countries that are imposing the ban, 0:17:18.240 --> 0:17:21.600 so there's a sense that it wants to diversify and 0:17:21.800 --> 0:17:25.680 and and spread itself across regions. Well, I want to 0:17:25.720 --> 0:17:27.960 thank you very much both of you for really giving 0:17:28.080 --> 0:17:30.720 us some detail about what is going on. Dina kamel 0:17:30.800 --> 0:17:33.960 is our Middle Eastern aviation reporter. She joins us from Dubai. 0:17:34.320 --> 0:17:38.679 Michael Sassau, our airline reporter, coming to us from Atlanta. 0:17:50.080 --> 0:17:52.280 Let's turn our attention now to the big topic of 0:17:52.400 --> 0:17:55.680 asset price inflation. Brentan Brown is the chief economist and 0:17:55.800 --> 0:18:00.520 head of economic research for Mitsubishi u f J Securities. 0:18:00.560 --> 0:18:04.600 He is also the author of a Global Monetary Plague, 0:18:04.680 --> 0:18:09.520 Asset Price Inflation, and Federal Reserve Quantitative Easing. Good to 0:18:09.560 --> 0:18:11.080 have you with us here in our studio. Thanks for 0:18:11.160 --> 0:18:14.520 being here. Maybe you just can begin by talking about 0:18:14.560 --> 0:18:18.119 this idea of bubbles and asset price inflation. How is 0:18:18.160 --> 0:18:21.320 it defined and how should we be applying those concepts 0:18:21.600 --> 0:18:23.760 to what we see in the stock and bond in 0:18:23.800 --> 0:18:28.639 commodity markets currently. So, asset price inflation is the unleashing 0:18:28.760 --> 0:18:34.800 of irrational forces in markets by monetary distortions. And what 0:18:34.920 --> 0:18:37.640 I mean by that is interest rates being pressed way 0:18:37.720 --> 0:18:42.959 below natural neutral level and to expand. And why that's happening, 0:18:43.480 --> 0:18:45.919 I would say over the last twenty years and especially 0:18:46.040 --> 0:18:49.720 the last ten years, pressure of globalization China coming into 0:18:49.800 --> 0:18:54.120 world markets pushes prices down, which in general most people 0:18:54.200 --> 0:18:56.920 gain from In terms of our real living standards. The 0:18:57.040 --> 0:19:00.359 FED and other central banks have been trying trying to 0:19:00.680 --> 0:19:03.560 get to this two percent inflation standard. Goodness knows where 0:19:03.560 --> 0:19:05.400 it came from, and certain not in a Federal Reserve Act. 0:19:05.520 --> 0:19:08.320 Nobody's ever mandated two percent inflation. But the Fed, somehow, 0:19:08.359 --> 0:19:11.119 out of its own wisdom, decided two percent inflation. But 0:19:11.200 --> 0:19:13.679 if you aim for two percent inflation when the natural 0:19:13.800 --> 0:19:16.560 rhythm of prices is actually downwards, you can only do 0:19:16.720 --> 0:19:20.000 that by by pushing rates way low, very low, and 0:19:20.119 --> 0:19:23.840 keeping them very low. And that's that creates a desperation 0:19:24.080 --> 0:19:28.639 for yield. And that desperation for yield shows up in 0:19:28.960 --> 0:19:32.720 all these areas of of of irrational forces gaining the 0:19:32.840 --> 0:19:36.040 upper upper force. So Brendan, it's been about five years 0:19:36.080 --> 0:19:38.480 of people warning about as at price bubbles and the 0:19:38.520 --> 0:19:42.760 potential demise of the financial system when they collapse. And 0:19:42.840 --> 0:19:45.040 here we are twenty seventeen. The feed is starting to 0:19:45.119 --> 0:19:48.040 high rates, and you do see stock prices climbing higher. 0:19:48.119 --> 0:19:50.240 While there are some jitters in the high O bond market, 0:19:50.280 --> 0:19:53.639 for example, because of oil prices, we have not seen 0:19:53.800 --> 0:19:56.320 an implosion. Does that mean that it's not going to happen? 0:19:56.720 --> 0:19:58.680 I would make two points here. I think, first of all, 0:19:59.080 --> 0:20:04.240 the monetary force or the monetary monetary distortions this equilibrium, 0:20:04.560 --> 0:20:07.520 I would say, have actually been growing UM in the 0:20:07.600 --> 0:20:10.480 last eighteen months. First, we had for yelling FED last 0:20:10.560 --> 0:20:13.240 year walking back from rate rises because of a China shock. 0:20:13.920 --> 0:20:17.840 This year we've had the surprise for for Trump administration 0:20:17.960 --> 0:20:20.679 did nothing to change matters in the FED, whereas there 0:20:20.720 --> 0:20:23.800 were expectations that they may, and we've had the ECB 0:20:23.920 --> 0:20:26.439 and the b o J merrily going on with their 0:20:27.000 --> 0:20:30.080 QUI expansions and negative rates or though that had been 0:20:30.119 --> 0:20:32.840 some expectations that would all slow down. So if anything, 0:20:32.880 --> 0:20:35.359 we've had an increase in this monetary stimulus. As we 0:20:35.560 --> 0:20:38.600 listen to some of these policies in these House and 0:20:38.680 --> 0:20:41.439 the Senate hearings, how much do you pay attention as 0:20:41.440 --> 0:20:45.359 an economist? How much does this way on your growth 0:20:45.480 --> 0:20:49.280 outlook and the way you assess you as economy well, 0:20:49.359 --> 0:20:52.840 the whether the fiscal plans and the tax cut move 0:20:52.880 --> 0:20:56.760 ahead is one of the factors go into the economic outlook. 0:20:56.880 --> 0:20:59.760 But I do tend to think that the importance of 0:21:00.480 --> 0:21:04.800 UM shouldn't be exaggerated. UM. At best, it looks as 0:21:04.840 --> 0:21:07.320 if what we're getting here is going to be some 0:21:07.400 --> 0:21:13.040 sort of temporary tax cut rather than permanent. But haven't 0:21:13.080 --> 0:21:16.719 you've written that they've that the Trump administration as well 0:21:16.760 --> 0:21:21.760 as the Republicans in Congress, they've squandered an opportunity in 0:21:21.840 --> 0:21:25.280 another area. But maybe this is all conflated in some way. Yeah, 0:21:25.320 --> 0:21:28.280 I mean, if one looks at the trio of what's 0:21:28.320 --> 0:21:33.399 making up for Trump administration program now um of infrastructure, 0:21:33.520 --> 0:21:36.480 tax reform, health, the big gap in all of this is, 0:21:36.920 --> 0:21:39.200 of course, anything on the monetary side. We have a 0:21:39.840 --> 0:21:43.760 tremendous as we were discussing earlier, monetary distortion going on 0:21:44.160 --> 0:21:48.440 at the FED, aiming for two percent inflation target, long 0:21:48.520 --> 0:21:53.119 term interest rate controls, and nothing is on foreseeable legender 0:21:53.160 --> 0:21:55.080 to change any of this. And that's you know, you 0:21:55.240 --> 0:21:58.200 only have to read Milton Freeland's Capitalism Freedom to to 0:21:58.560 --> 0:22:04.600 realize that any agenda of economic reform and unleashing forces 0:22:04.640 --> 0:22:06.800 in a capitalist economy has to start with monetary reform. 0:22:07.240 --> 0:22:09.920 You know, I'm struck by what JP Morgats Bob Michael 0:22:09.960 --> 0:22:13.159 said earlier today on Bloomberg Television, which is, at some 0:22:13.320 --> 0:22:16.080 point some of some of President Trump's policies will get 0:22:16.119 --> 0:22:19.080 past and there will be an upside surprise with healthcare. 0:22:19.160 --> 0:22:22.440 For example, healthcare is almost eighteen per cent of the 0:22:22.560 --> 0:22:25.480 U S economy, and we do see healthcare share surging 0:22:25.560 --> 0:22:28.399 on the prospect that there will be some solidification of 0:22:28.520 --> 0:22:31.560 what the outlook is for healthcare in the US. But 0:22:31.680 --> 0:22:34.760 you're saying any step they take will probably be incremental 0:22:34.800 --> 0:22:37.840 and won't necessarily have uh that material of it of 0:22:37.880 --> 0:22:40.920 an impact on the on the growth outlook in terms 0:22:40.960 --> 0:22:42.960 of overall growth outlook. Yes, I mean, I think the 0:22:43.920 --> 0:22:48.760 main growth positive aspect of the Trump fiscal agenda is 0:22:48.960 --> 0:22:54.480 the cut in corporation tax, which will bring some economic 0:22:54.520 --> 0:22:58.719 activity back from low tax jurisdictions abroad, whether it's Canada 0:22:58.920 --> 0:23:01.240 or other places in and that in the longer term 0:23:01.320 --> 0:23:04.720 will boost economic activity in the United States. By the way, 0:23:04.800 --> 0:23:07.719 that will put some pressure upwards on wages. I mean, 0:23:07.760 --> 0:23:10.639 these these measures to boost production in the United States 0:23:11.240 --> 0:23:14.840 basically come to increased demand for US labor. It's not 0:23:14.960 --> 0:23:18.640 necessarily going to be as positive as maybe Wall Street 0:23:18.680 --> 0:23:21.280 imagines for earnings and equities. You know, I've heard so 0:23:21.320 --> 0:23:24.640 many people talk about what will or won't boost inflation, 0:23:24.760 --> 0:23:26.840 and so many people have gotten this so wrong. Do 0:23:26.920 --> 0:23:30.080 you find yourself questioning what will actually lead to higher 0:23:30.160 --> 0:23:33.159