Speaker 1: You're listening to the Bloomberg Opinion podcast count US Saturdays
Speaker 1: at one and seven pm Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app and the Bloomberg Business App, or listen
Speaker 1: on demand wherever you get your podcasts.
Speaker 2: Welcome to Bloomberg Opinion. I'm Amy Morris. This week we
Speaker 2: look at military training in the northernmost points of the
Speaker 2: world and how geopolitics and climate change are impacting military strategy.
Speaker 2: We're also taking a second look at those new obesity drugs,
Speaker 2: which can be expensive, so should the government step in?
Speaker 2: And the travel industry is making a comeback, except for
Speaker 2: corporate travel no matter. Companies are finding ways around that.
Speaker 2: Let's get started now. With the latest FED decision described
Speaker 2: as a hawkish pause, Federal Reserve Chairman J Powell's comments
Speaker 2: after the FED meeting indicated that more rate hikes may
Speaker 2: be to come.
Speaker 3: It will be appropriate to cut rates at such time
Speaker 3: as inflation is coming down really significantly, and again we're
Speaker 3: talking about a couple of years out. I think, as
Speaker 3: anyone can see, not a single person on the committee
Speaker 3: wrote down a rate cut this year, nor do I
Speaker 3: think it is at all likely to be appropriate. If
Speaker 3: you think about it, inflation has not really moved down
Speaker 3: that Chara.
Speaker 2: Powell went on to say that they're going to have
Speaker 2: to quote keep at it. Let's talk this over with
Speaker 2: Bloomberg opinion columnist Jonathan Levin covering finance, markets and M
Speaker 2: and A. Jonathan, I would like to get your reaction
Speaker 2: to Chair Powell's comments.
Speaker 4: Yeah, well, I mean, basically, I thought he was tasked
Speaker 4: with an impossible dance and he did an okay job
Speaker 4: of it right Effectively, what I think Chair Powell is
Speaker 4: trying to do is something like what green Span did
Speaker 4: in the nineties, and of course that's the ultimate model.
Speaker 4: It's basically the only recent model of a soft landing.
Speaker 4: And what Greenspan did was he started getting concerned about
Speaker 4: inflation potentially at taking off, and he said, let's take
Speaker 4: this slowly and monitor the data. So they actually went
Speaker 4: to a skip model, which they executed on for about
Speaker 4: half a year in the mid nineteen nineties. So that
Speaker 4: seems to be what he's trying to do. But his
Speaker 4: task here again was to slow down, go to this
Speaker 4: sort of potentially every other meeting model without letting financial
Speaker 4: conditions get too loose. So you know, he went straight
Speaker 4: to the classic jaw Booning textbook, you know, and you
Speaker 4: see some of that in the summary of economic projections,
Speaker 4: and you saw a reasonable helping of it as well
Speaker 4: at the press conference. But he sort of failed in
Speaker 4: his I think objective to be hawkish when he ultimately
Speaker 4: decided that he couldn't indicate anything about what was going
Speaker 4: to happen about in the next meeting in July, and
Speaker 4: in sort of failing to commit to doing something were
Speaker 4: in July and saying that July is effectively a live meeting.
Speaker 4: You know, people said, well, you know this could still
Speaker 4: this could still really be the end.
Speaker 2: Okay, So you kind of answered it, But I want
Speaker 2: to get a little bit deeper into it about why pausing. Now.
Speaker 2: I understand about the signals that he's trying to send,
Speaker 2: but if there's an expectation that more hikes are coming,
Speaker 2: why do this at all?
Speaker 4: Yeah, And so again, I think it's basically two things.
Speaker 4: I think Number one, monthly data is extremely volatile. Central
Speaker 4: bankers don't like to make policy decisions off of a
Speaker 4: single month's data. So you extend out your timeframe, and
Speaker 4: you know, going forward, you now have potentially a couple
Speaker 4: of months of data to a sort of rolling average
Speaker 4: that you can make your policy decisions off of number two.
Speaker 4: It's about it's about speed, it's about velocity. Right, So
Speaker 4: we went from seventy five hikes to fifty hikes to
Speaker 4: twenty five hikes. And now if they end up going
Speaker 4: every other meeting for a while, you're effectively putting in
Speaker 4: a pace of twelve point five, right, So it allows
Speaker 4: you to sort of ease into your destination at a
Speaker 4: little bit slower of a pace and in their minds,
Speaker 4: prevent from overdoing it.
Speaker 2: Are these plans set in stone? Is there anything that
Speaker 2: could derail them? I'm thinking of the collapse of the
Speaker 2: regional banks or some other X factor that we should
Speaker 2: be watching for between now and then.
Speaker 4: Yeah, I mean, it could be any number of things.
Speaker 4: I wrote a column not too long ago about how
Speaker 4: the list of the sort of tail events that we
Speaker 4: all have at the top of our mind is getting shorter.
Speaker 4: But there, you know, in circumstances like this, there are
Speaker 4: always going to be things that nobody has thought of.
Speaker 4: The simple fact is it's sort of orthodoxy in the
Speaker 4: economics profession to believe in this notion of the long
Speaker 4: and variable legs. But in practice, that's always changing with
Speaker 4: the sort of broader characteristics of the US economy, and
Speaker 4: nobody can say with any precision whether or not those
Speaker 4: lags are six months now, are they twelve months? Are
Speaker 4: there eighteen months? If you take just sort of the
Speaker 4: main core CPI or in the Fed's case, core PCEE,
Speaker 4: which is their preference, the trend is really just moving sideways,
Speaker 4: and they're really, you know, before they make a meaningful
Speaker 4: change in their policy, certainly in the Duvish direction, they're
Speaker 4: going to want to see you know, two, three, four
Speaker 4: reports that show that inflation is meaningfully coming down, not
Speaker 4: just sort of flattening out at this moderately bad level.
Speaker 2: And we are talking with Bloomberg opinion columnist Jonathan Levin
Speaker 2: about the federal reserves hawkish pause for lack of a
Speaker 2: better term.
Speaker 4: Do you like that term, Jonathan, That's what the Fed
Speaker 4: speaker is would would like us to think it was.
Speaker 4: You know, again, there there was sort of this reluctance
Speaker 4: on Powell's part to define what's really going on here.
Speaker 4: There was this quintessential moment in the in the press
Speaker 4: conference where Powell referred to the thing as a skip.
Speaker 4: But then he doubled back because he didn't really want
Speaker 4: to show his cards. And part of the reason that
Speaker 4: he doesn't want to show his cards is because, you know,
Speaker 4: just like the rest of us, FED policy makers, really
Speaker 4: can't see the future. I talked a moment ago about
Speaker 4: how core PC and core CPI as they're traditionally conceived,
Speaker 4: are moving sideways. But there are some interesting things potentially
Speaker 4: going on under the surface that could be excellent sort
Speaker 4: of drags on the inflation picture, including what's going on
Speaker 4: in used used cars. Right, So a lot of the
Speaker 4: data nerds like to like to look at these wholesale
Speaker 4: indices of what's going on with used car prices there,
Speaker 4: and based on those, you know, we should really expect
Speaker 4: used cars, which are a big chunk of that CORE index,
Speaker 4: to start going the other way in these in these
Speaker 4: summer months. And so when you think about it, you know,
Speaker 4: by the time we get to that July decision, and
Speaker 4: certainly by the time we get into the fall, you
Speaker 4: could potentially be dealing with a different story. So this
Speaker 4: is a this is a FED that again is trying
Speaker 4: to convey a certain level of hawkishness so that financial
Speaker 4: conditions don't run away. But I think under the surface,
Speaker 4: they're also kind of hopeful that we could be dealing
Speaker 4: with a different set of numbers in one, two, three
Speaker 4: months time.
Speaker 2: What does this mean then for market volatility?
Speaker 4: Well, I think it means again that we're sort of
Speaker 4: beholding to the numbers. I think, you know, when when
Speaker 4: Powell says that the next meeting is a live meeting,
Speaker 4: he actually kind of kind of means it that. You know,
Speaker 4: data dependency at some points in the fed's history has
Speaker 4: been just sort of like a phrase in the FED
Speaker 4: lexicon that they just sort of say, but I really
Speaker 4: truly believe it right now, and I think the market
Speaker 4: ought to believe it too. So that creates this this
Speaker 4: environment where you know, we could potentially be getting whiplashed
Speaker 4: again by every CPI report. You know, retail sales this
Speaker 4: week coming in a little bit warmer than than people
Speaker 4: might have expected. That could be seen as a little
Speaker 4: bit hawkish for the direction of this this FED. Generally speaking,
Speaker 4: it is probably an error to read too much into
Speaker 4: any one month's a data. But I think that the
Speaker 4: way this market works nowadays, with the and so forth,
Speaker 4: that's the market that we're going to get.
Speaker 2: What are you expecting to see in the next meeting.
Speaker 2: What are you going to be looking for?
Speaker 4: First of all, the big question is what does the
Speaker 4: CPI look like that comes out before the next meeting.
Speaker 4: If we get that reversal of used cars, that's going
Speaker 4: to make that's going to make a big difference, right
Speaker 4: because used car prices seasonally adjusted, we're a month on
Speaker 4: month more than four percent this time around. If that
Speaker 4: flips around and then becomes a sizable drag, it changes
Speaker 4: the whole discussion, at least in the near term about
Speaker 4: core CPI. You're also going to have some favorable base
Speaker 4: effects coming into play, which potentially makes the year on
Speaker 4: year headline figure look somewhere in the range of three percent.
Speaker 4: That isn't the main thing that like economists and analysts
Speaker 4: are are looking at, but it does have a big
Speaker 4: impact for the sort of inflation expectations, and so that
Speaker 4: helps the FED in a way. So, you know, if
Speaker 4: the FED gets those two things to go to go
Speaker 4: in their favor, maybe there is still a possibility that
Speaker 4: they stay on hold here. Maybe it's really just another
Speaker 4: skip and they see what happens thereafter. If they do
Speaker 4: end up going back to a twenty five will Chair
Speaker 4: pal you know, signal that that then is the last one,
Speaker 4: or will he signal that no, this is the new pattern. Right,
Speaker 4: We're gonna We're gonna do twenty fives every other meeting
Speaker 4: to effectively put in place a piece of tightening of
Speaker 4: like twelve point five basis points per meeting. Those are
Speaker 4: the big questions to me.
Speaker 2: All right, we're gonna watch it with you. Jonathan. Thank
Speaker 2: you as always, We really appreciate your time. Bloomberg Opinion
Speaker 2: columnist Jonathan Levin covers finance, markets and m and A.
Speaker 2: Coming up, we're gonna look at how to hide an
Speaker 2: army on top of the world. Why you're listening to
Speaker 2: Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion podcast Contest Saturdays at
Speaker 1: one in seven pm Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or listen on
Speaker 1: demand wherever you get your podcasts.
Speaker 2: You're listening to Bloomberg Opinion. I'm Amy Morrison. We're going
Speaker 2: to take you now to a snowy mountain side in
Speaker 2: Alaska where military personnel are training with the Army's Northern
Speaker 2: Warfare Training Center, learning about the art of tomorrow's potential
Speaker 2: war at the top of the world. Joining us now
Speaker 2: is Bloomberg opinion columnist Liam Denning, who also covers energy
Speaker 2: and commodities. Liam, let's just start from the beginning. Take
Speaker 2: us there. What was your experience.
Speaker 5: It's quite unlike any place I've ever been, so, you know,
Speaker 5: it's journey just to get there. From the East coast,
Speaker 5: we landed at Fairbanks. The Army picked us up and
Speaker 5: drove us south to Black Rapids, which is basically, you know,
Speaker 5: out in the wilderness in the Alaskan interior, and when
Speaker 5: you first pull up, it's the only way I can
Speaker 5: really describe it. This was early March, by the way,
Speaker 5: so it's very still very cold. The Delta River running
Speaker 5: alongside the highway was completely frozen. So yeah, when you
Speaker 5: get there, it kind of looks like a very basic
Speaker 5: ski resort. There's an army base at the base of
Speaker 5: a hill, and then you trudge up the slopes and
Speaker 5: you've got you know, bunny slopes, drag lifts, camp sites,
Speaker 5: backcountry trails, that sort of thing. And we spent five
Speaker 5: days with them on what they call a cold weather
Speaker 5: leader's course, where they learned to survive and fight in
Speaker 5: these very harsh cold conditions.
Speaker 2: Bring us up to speed about the anxiety connected with
Speaker 2: Alaska and why all of a sudden, the government the
Speaker 2: military is spending so much time and so much focus there, right.
Speaker 5: Yeah, this is kind of a long running theme with Alaska.
Speaker 5: You know, if you go back to when Alaska became
Speaker 5: a state in nineteen fifty nine, A big reason why
Speaker 5: it became a state was the experience of the Second
Speaker 5: World War where Alaska was actually invaded Japanese forces occupied
Speaker 5: a couple of the Aleutian Islands and had to be ejected.
Speaker 5: And then immediately after that the onset of the Cold
Speaker 5: War where suddenly planners in Washington woke up to the
Speaker 5: fact that you could have missiles and bombers flying over
Speaker 5: the North Pole down to the lower forty eight. So
Speaker 5: Alaska became a frontline state. We built the distant Early
Speaker 5: Warning radar line, various strategic bases, and so Alaska really
Speaker 5: has come into focus when the US, I would say broadly,
Speaker 5: is feeling kind of panicked about something. You could say
Speaker 5: something similar about Alaska's oil boom in the nineteen seventies,
Speaker 5: which which really got going after the experience of the
Speaker 5: first oil shock in nineteen seventy three. Today there is
Speaker 5: concern that as climate change changes, the topography of the
Speaker 5: Arctic potentially opens more access to its resources, to its
Speaker 5: shipping lanes. The US is waking up to the fact
Speaker 5: that Russia is reasserting its identity in the Arctic and
Speaker 5: its military and commercial presence. China, although it's not an
Speaker 5: Arctic country, is also asserting its presence there and is
Speaker 5: taking a claim certainly to maritime roots. And so I
Speaker 5: think the US, really, after a couple of decades where
Speaker 5: it had its tension focused elsewhere the Middle East Afghanistan,
Speaker 5: is now refocusing on the need to both have a
Speaker 5: credible deterrent in Alaska, but also be prepared for what
Speaker 5: may or may not happen in the future as we
Speaker 5: start to get more powers kind of vying for a
Speaker 5: position in that region of the world.
Speaker 2: I always thought, and I think you even said this
Speaker 2: in your column, that the Arctic was sort of hands
Speaker 2: off a neutral zone.
Speaker 5: No, yeah, it was. It was sort of that way
Speaker 5: for about thirty years or so. That a famous speech
Speaker 5: that Mikhail Gorbachev gave at the end of the eighties
Speaker 5: where he called it, I think a zone of peace
Speaker 5: and there was this general understanding that because it was
Speaker 5: environmentally sensitive, bodies like the Arctic Council, which was formed
Speaker 5: in the late nineties worked cooperatively around it. But that
Speaker 5: is changing for various reasons. I think, you know, the
Speaker 5: parallel I draw is with climate change itself. You know,
Speaker 5: the carbon emissions that lead to climate change, they don't
Speaker 5: originate in the Arctic, but they certainly find their way
Speaker 5: there and their effects find their way there. And I
Speaker 5: think something similar is happening with geopolitics.
Speaker 2: You've talked about China and Russia, and it makes me
Speaker 2: wonder what Russia's intentions might be if that's a genuine
Speaker 2: concern that seems unbelievable.
Speaker 5: It's tricky, right, because you do have to recognize the
Speaker 5: fact that Russia is, by definition, the biggest power in
Speaker 5: the Arctic. It has the most land, the most people,
Speaker 5: the biggest economic activity, the most energy production. So on
Speaker 5: one level, Russia's you know, Russia's efforts to stake out
Speaker 5: in the Arctic are perfectly legitimate. On the other, it
Speaker 5: has taken certain provocative measures. You know, one of the
Speaker 5: more famous ones was where a Russian submersible planted a
Speaker 5: flag on the seabed below the north at the North Pole,
Speaker 5: which was which was seen as really a kind of
Speaker 5: a provocation to the other Arctic powers, and there is
Speaker 5: an ongoing dispute about who owns which bits of the
Speaker 5: Arctic seabed, although that is to be fair, you know,
Speaker 5: being being handled by by a UN court, So it's
Speaker 5: not necessarily a huge flash point. However, I think we
Speaker 5: have to come back to events like the Ukraine War,
Speaker 5: and we have to recognize that Arctic development is a
Speaker 5: is a central part of Vladimir Putin's strategy for Russian
Speaker 5: economic development and great power projection. It's almost a personal
Speaker 5: obsession for him. And I think if you're a power
Speaker 5: like the US, you can't really separate those things because
Speaker 5: you know, at a very straightforward level, if Russia realizes
Speaker 5: it's upic ambitions, if it becomes a giant exporter of
Speaker 5: energy there, if it becomes a more dominant holder of
Speaker 5: territory there, it will use that to realize its ambitions elsewhere,
Speaker 5: and that includes it's overtly anti Western policy, its intention
Speaker 5: to crush Ukraine. So I just think, you know, on
Speaker 5: reasonable grounds, it just can't be separated.
Speaker 2: Is it a reasonable thing to think that they would
Speaker 2: actually try to cross that rubicon. And I don't want
Speaker 2: to say attack Alaska, but encroach upon Alaska in such
Speaker 2: a way that it would become a flashpoint. That again,
Speaker 2: that just seems so far fetched, but I guess it isn't.
Speaker 5: I think it's one of those things where, you know,
Speaker 5: and this really came home to me when I was
Speaker 5: talking to people at the at the Northern Wall for
Speaker 5: Training Center. It does seem, it does seem ludicrous to
Speaker 5: think that, you know, similar to what happened in the
Speaker 5: Aleutian Islands in the Second World War, that someone would
Speaker 5: actually try to invade, you know, a place like Alaska,
Speaker 5: and that does seem highly unlikely. However, we live in
Speaker 5: an era of hybrid warfare of unmanned drones balloons. To
Speaker 5: raise a more topical issue, and I think the sense
Speaker 5: I get from what the eleventh Airborne Division is doing,
Speaker 5: and that's the dedicated division in Alaska. I think they
Speaker 5: take it as being a situation where they don't really
Speaker 5: know exactly what the mission might be, what they might
Speaker 5: have to prepare for, whether you know, whether it's sabotage,
Speaker 5: whether it's dealing with you know, small special operations, forces
Speaker 5: that sort of thing. But what they do have to
Speaker 5: focus on is making sure that if something happens, they
Speaker 5: all prepared to deal with it.
Speaker 2: Lian, this is fascinating. I cannot recommend this column enough
Speaker 2: to anyone with the Bloomberg terminal. Liam Denning, a Bloomberg
Speaker 2: Opinion columnist who covers energy and commodities. Thank you for
Speaker 2: taking the time with us today. Do appreciate it.
Speaker 5: Thank you.
Speaker 2: Coming up, we'll take a closer look at obesity, drugs
Speaker 2: and concerns about access that they won't work if you
Speaker 2: can't afford them, and don't forget. We're available as a
Speaker 2: podcast on Apple, Spotify, or your favorite podcast platform. This
Speaker 2: is Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion podcast conchst Saturdays at
Speaker 1: one and seven pm Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or listen on
Speaker 1: demand wherever you get your podcasts.
Speaker 2: This is Bloomberg Opinion. I Mamy Morris. More than forty
Speaker 2: percent of American adults are OBEs, and the cost to
Speaker 2: the healthcare system is one hundred and seventy three billion
Speaker 2: dollars a year. The cost to our health far greater.
Speaker 2: So why is it so hard to get access to
Speaker 2: these new effective medications for weight loss? Bloomberg Opiion editor
Speaker 2: Rachel Rosenthal covers healthcare and joins as now heart disease, stroke,
Speaker 2: type two diabetes, some cancers, all related to obesity. They're
Speaker 2: among some of the leading causes of preventable deaths in
Speaker 2: the US. One might think that doctors would be prescribing
Speaker 2: these drugs handover fist, and then insurance companies would be
Speaker 2: scrambling to cover the cost. And that's not happening. What
Speaker 2: is the hang up?
Speaker 6: Yeah, it's so much more complicated when finally we have
Speaker 6: a solution to this huge problem. You know, there's a
Speaker 6: couple of issues here. One and I think the major
Speaker 6: one is cost. These these drugs are quite pricey, upwards
Speaker 6: of you know, nine hundred two one thousand dollars a month.
Speaker 6: So I think insurers and employers are understandably a little
Speaker 6: bit worried about covering this because if they, you know,
Speaker 6: as you mentioned, with forty percent of the population you know,
Speaker 6: qualifying for these drugs, I mean, this could raise costs
Speaker 6: astronomically for employers, which are providers of what most people
Speaker 6: have health insurance through through their jobs, right, and so
Speaker 6: that's I think the big question for the commercial market.
Speaker 6: I think the other side of the market is medicare,
Speaker 6: and here it gets complicated too because not only do
Speaker 6: you have cost, but you have safety questions because it's
Speaker 6: just not quite known yet whether these drugs are safe
Speaker 6: long term for an older population.
Speaker 2: Is there a concern about how long you can take
Speaker 2: these drugs and what happens when you stop taking these drugs?
Speaker 2: Will there be a rebound effect? Do we have that
Speaker 2: data yet?
Speaker 6: I think this is really what a lot of doctors
Speaker 6: are focusing on right now. It is a lifelong medication.
Speaker 6: And that doesn't mean that you know, there are folks
Speaker 6: do take medication, you know, for long periods of time,
Speaker 6: so that shouldn't you know, people take statins. You know.
Speaker 6: There's all kinds of other parallels that we can think of,
Speaker 6: but it's just not tested and we do need a
Speaker 6: lot more research. I think also a lot more research
Speaker 6: needs to go into what happens if you go on
Speaker 6: and off, because you know, some folks are just taking
Speaker 6: it for a wedding, you know, and this is you know,
Speaker 6: people who may not really qualify as medically obese are
Speaker 6: trying to get access to these drugs. Just one other
Speaker 6: point on the safety issue too, is a lot of
Speaker 6: the studies have been focusing on a younger age group,
Speaker 6: whereas medicare you know, you're looking at a sixty five
Speaker 6: and up population. What these drugs do is suppress the appetite,
Speaker 6: so you are sort of eating less and taking in
Speaker 6: more calories. So there's there are questions about what that
Speaker 6: can do to you know, whether you lose muscle mass
Speaker 6: or bone bone density, and you know, if that increases
Speaker 6: what happens when you fall. So I think there are
Speaker 6: serious questions I would you know, I think some of
Speaker 6: these drugs, like some aglutide, which is you know, wigovy
Speaker 6: and nozebic are the same ingredient, have been used for diabetes.
Speaker 6: So we do have some sense that, you know, folks
Speaker 6: can take these medications, but it's still a lot more
Speaker 6: research needs.
Speaker 7: To be done.
Speaker 2: You talked about some people who maybe go on and off.
Speaker 2: Maybe they just take it for a while so they
Speaker 2: can slim down for their wedding or to because they're
Speaker 2: going on vacation or something. Okay, I get that, but
Speaker 2: then do they really qualify like what sort of criteria
Speaker 2: must you meet to qualify for these drugs?
Speaker 6: Most of these folks are paying out of pocket. So
Speaker 6: if you want access to these drugs and you want
Speaker 6: your willing to shell out one thousand dollars a month
Speaker 6: by and large, or you know, maybe you are one
Speaker 6: of the lucky folks who whose employer does cover it,
Speaker 6: and that does exist, you know, there may be more
Speaker 6: flexibility there. But medicare as a rule, does not cover
Speaker 6: weight loss drugs, so you're not even qualifying for coverage
Speaker 6: if you're in that age group.
Speaker 2: We are talking with Bloomberg Opinion editor Rachel Rosenthal about
Speaker 2: the availability of these effective weight loss drugs and what
Speaker 2: the government's role should be. Rachel, what should the government's
Speaker 2: role be in this well?
Speaker 6: I think given all of the concerns, there's a good
Speaker 6: reason for caution. However, I think given how grave the
Speaker 6: effects are not only of obesity, but all the second
Speaker 6: order issues heart disease, stroke, diabetes, I think I think
Speaker 6: some coverage is inevitable and does make sense, but it
Speaker 6: makes sense to proceed cautiously, and I think what that
Speaker 6: would involve would be starting with perhaps a smaller subset
Speaker 6: of the Medicare population, and so you know, the Biden
Speaker 6: administration does have certain tools in its toolkit to test
Speaker 6: out innovative delivery methods, innovative payment methods for new drugs
Speaker 6: or drugs that have not been tested in certain populations,
Speaker 6: and then they can extrapolate and see. But I think
Speaker 6: that we are moving in a direction where this will
Speaker 6: make sense. The government will have some role. Given the
Speaker 6: enormous population and the enormous costs, it does make sense
Speaker 6: to think really carefully. You know, we just sort of
Speaker 6: cross the rubicon with the budget, and you know, I
Speaker 6: think we're you know, we're not exactly looking for you know,
Speaker 6: some of the estimates have it at two hundred and
Speaker 6: sixty billion dollars a year. If Medicaid we're if meant
Speaker 6: excuse me, medicare, We're to cover every eligible beneficiary.
Speaker 2: But let's drill down a little bit and talk about Congress.
Speaker 2: You know, Congress is facing some pressures when it comes
Speaker 2: to this, whether it's their constituents who are dealing with
Speaker 2: heart disease or that they themselves are going to run
Speaker 2: for re election and would like to slim down and
Speaker 2: look good. They're human too, They're going to want to
Speaker 2: get their hands on these drugs too. What sort of
Speaker 2: pressures do you see lawmakers facing.
Speaker 7: Yeah, it's a great point.
Speaker 6: You know, I've also heard a lot of these folks
Speaker 6: in Congress are on these drugs themselves, and you know
Speaker 6: that certainly plays a role. People have consistuent, but also
Speaker 6: family members who are dealing with obesity, and maybe not
Speaker 6: just the medical there's all the other disorders that we've discussed,
Speaker 6: but even the mental health issues that go along with that.
Speaker 4: So I think this is.
Speaker 6: A real issue, and red or Blue, I think Congress
Speaker 6: is facing a lot of pressure. So I think there
Speaker 6: are you know, there are bills up for consideration to
Speaker 6: amend medicares laws. I think it will be a careful
Speaker 6: calculation given the budgetary concerns, but I think it's real
Speaker 6: and I think the Ministum does feel to be moving
Speaker 6: in that.
Speaker 2: Direction talking about those budgetary concerns. As we said at
Speaker 2: the top, the cost of the healthcare system for the
Speaker 2: forty percent of American adults who are obese is one
Speaker 2: hundred and seventy three billion dollars a year. That's just
Speaker 2: for the obesity factor that goes along with the type
Speaker 2: two diabetes and the heart disease and stuff. Does this
Speaker 2: cost more than that? Is there not an economical way
Speaker 2: to look at that.
Speaker 6: I think the offset question is a good one, but
Speaker 6: it's a little bit comple because we can look at
Speaker 6: it system wide and say, oh, you know, obesity and
Speaker 6: all the other issues you know cost X, but it
Speaker 6: depends on the savings of preventing those depends on who's paying.
Speaker 6: So it's very possible that commercial insurers and employers will
Speaker 6: pay for these obesity drugs. But because people change jobs,
Speaker 6: they might not have some of these effects until much
Speaker 6: later in life. They're not going to be the ones
Speaker 6: who saved, you know, So so you know, it could
Speaker 6: be that medicare ends up seeing a lot of savings
Speaker 6: if fewer people have all these other issues, but they're
Speaker 6: not the ones who are paying the costs, so and
Speaker 6: that will be borne by you know, healthy folks with
Speaker 6: higher premium. So, you know, I think like we can
Speaker 6: look at system system wide savings when we look at
Speaker 6: American health care spending in total, But the question is
Speaker 6: to you know, does this make sense? Depends on who's
Speaker 6: paying that bill, and that changes as people move through
Speaker 6: the healthcare system at different stages in their life.
Speaker 2: You may have just answered this question, but I'm going
Speaker 2: to ask it anyway. You think there'd be a time
Speaker 2: when these drugs will be so commonplace, So maybe maybe
Speaker 2: generic more affordable, when it becomes just sort of a
Speaker 2: standard operating procedure, like if you have high cholesterol, you
Speaker 2: take a statin. If you are overweight, you'll take one
Speaker 2: of these drugs. Will it get to that point.
Speaker 6: I don't want to underemphasize the importance of obesity prevention here,
Speaker 6: you know. I think that those principles of healthy exercise,
Speaker 6: a healthy eating and exercise need to remain core to prevention,
Speaker 6: and a lot of those things work. I think what
Speaker 6: happens is once you become obese, you know things you know,
Speaker 6: and there's a lot of research going into this right
Speaker 6: now and a lot of doctor You know, we don't
Speaker 6: have definitive answers as to what the cause of obesity is,
Speaker 6: but there are changes that are happening in the brain
Speaker 6: of an obese person in terms of understanding signals. So
Speaker 6: I think that you know, they're you know, we're a
Speaker 6: long way. I think we're moving in the right direction
Speaker 6: in terms of thinking about taking these drugs and thinking
Speaker 6: of them as a solution. They're not the end all,
Speaker 6: be all, but I do. The other really important thing
Speaker 6: is as these drugs get cheaper, which you know, smaglutide
Speaker 6: will be up for IRA negotiations as part of the
Speaker 6: Medicare drug price negotiations in the coming years, oral pills
Speaker 6: instead of injectibles, all these things. You know, market the
Speaker 6: market might move to meet to push some of these
Speaker 6: prices down, So that could seriously change the calculus.
Speaker 2: Rachel Rosenthal, Bloomberg Opinion editor. She covers healthcare. We are
Speaker 2: taking a look at the rebound of the travel industry.
Speaker 2: United CEO Scott Kirby tells Bloomberg that travel is making
Speaker 2: a comeback, especially leisure travel.
Speaker 8: Demand was very strong and operations were really strong. You know,
Speaker 8: Memorial Day week and both for United and for the
Speaker 8: industry at large, was one of the if not the
Speaker 8: best ever Memorial Day weekend. And as an industry we're
Speaker 8: off to strong start.
Speaker 2: That's United CEO Scott Kirby. As more people are taking
Speaker 2: to the skies, but corporate travel, especially one off trips,
Speaker 2: remain sluggish. Still, there are alternatives for the business traveler.
Speaker 2: Bloomberg Opinion columnists Brooks Sutherland covers deals and industrial companies,
Speaker 2: and she joins us now Brook, what can we learn
Speaker 2: about the travel industry as we take a closer look
Speaker 2: at corporate travel.
Speaker 7: So on the one hand, you have the CEO of
Speaker 7: United Airlines talking about a business recession that they think
Speaker 7: that business travel demand is about twenty to twenty five
Speaker 7: percent below where it could and should be post pandemic
Speaker 7: as we recover. On the other hand, you know the
Speaker 7: group events companies having you know, training gatherings or other
Speaker 7: sort of culture building activities or the conferences trade group
Speaker 7: associations that business is booming and doing really really well.
Speaker 7: In the hotel industry is really benefiting from that, And
Speaker 7: not only are companies hosting these gatherings, but they are
Speaker 7: splurging and upgrading. They are having shrimp bars than just
Speaker 7: the crue de tae and fruit and cheese platters. So
Speaker 7: it's a really interesting divergence in terms of how that
Speaker 7: corporate travel trend is playing out.
Speaker 2: Do we know why, especially with the group events, why
Speaker 2: they would be the ones to bounce back faster?
Speaker 7: Sure? So if you think about it, I mean it's
Speaker 7: sort of funny because you know, during the early days
Speaker 7: of the pandemic. We were all most concerned about group
Speaker 7: events and being around large gatherings of people. But that
Speaker 7: is one of the hardest types of corporate travel to
Speaker 7: replace with Zoom calls. So sort of the one off
Speaker 7: where maybe you're just checking in on a client, or
Speaker 7: you need to sign some sort of paperwork, or you know,
Speaker 7: you're doing sort of internal touch base type meetings that
Speaker 7: can easily be done virtually, whether that's Zoom or Microsoft
Speaker 7: Teams or whatever it might be. You can't really replicate
Speaker 7: the experience of a conference in a virtual room. I'm
Speaker 7: sure we all remember the early days of the pandemic
Speaker 7: when you had sort of these video calls with twenty
Speaker 7: thirty people on them and nobody could hear about they're speaking,
Speaker 7: and it was, you know, sort of impossible to get
Speaker 7: anything done, let alone have sort of those organic networking
Speaker 7: opportunities that come from group gatherings. So it's been really
Speaker 7: interesting to see that that category of corporate travel has
Speaker 7: actually bounced back much more quickly and much more robustly
Speaker 7: than sort of the one off corporate travel.
Speaker 2: What are some of the perks you found. You mentioned
Speaker 2: a couple like shrimp bars, which still blows my mind,
Speaker 2: But what are some of the other perks that you
Speaker 2: may have run across.
Speaker 7: The shrimp indicator? Yes, I mean so, I interviewed the
Speaker 7: CEO of Omni Hotels the other week and he was
Speaker 7: saying that that is one of the metrics that he
Speaker 7: uses to judge the health of the economy, that when
Speaker 7: businesses are splurting on shrimp, that you know, things cannot
Speaker 7: be that bad. But you know there are other upgrades
Speaker 7: that you can do in terms of just the sheer
Speaker 7: size of the gathering, because that means obviously, you know,
Speaker 7: you're sort of spending more money overall on the event
Speaker 7: that they He also talks about upgrades that they're doing
Speaker 7: in terms of audio, video technologies and things like that,
Speaker 7: which is really interesting.
Speaker 2: Is this how it's going to be now? Is this
Speaker 2: a whole new model or is this just for now
Speaker 2: with is just part of the rebound?
Speaker 7: I think that some of it likely sticks, especially if
Speaker 7: you believe that remote work is going to be part
Speaker 7: of our new normal, because if you think about it,
Speaker 7: you know, when we were all in the office five
Speaker 7: days a week, a lot of these sort of culture
Speaker 7: building training exercises happened more organically, and now if companies
Speaker 7: have workers working, you know, whether full time, remote or
Speaker 7: on a hybrid model, you need to be a lot
Speaker 7: more deliberate about how you get people together, whether that's
Speaker 7: internally or at some of these industry events and things
Speaker 7: like that. And so, you know, I think as long
Speaker 7: as the economy remains healthy, this will continue to be
Speaker 7: an important avenue for businesses. Now, you know, bottom line,
Speaker 7: when things do get tough, people probably will spend less
Speaker 7: on the shrinp bars, and you know, things like culture
Speaker 7: building become less important when you really need to start
Speaker 7: cutting costs.
Speaker 2: Brook Sutherland is at Bloomberg opinion columnist who covers deals
Speaker 2: and industrial companies, and that does it for this week's
Speaker 2: Bloomberg Opinion. We're produced by Eric Molo, and you can
Speaker 2: find all of these columns on the Bloomberg Terminal. We're
Speaker 2: available as a podcast on Apple, Spotify or your favorite
Speaker 2: podcast platform. Stay with us. Today's top stories in global
Speaker 2: business headlines are just ahead. I Ami Morris, this is
Speaker 2: Bloomberg