Trumpcare Bill Doesn't Age Well, Nisen Says

So we were talking about that healthcare bill that was just released, and we want to bring in Max Niece and bloombergad Fly columnists covering all things healthcare and Max as Greg was just saying, healthcare shares are surging, Can you give us a sense of what in this bill that was just released caused this rally? Why is this being viewed as a positive for the healthcare industry? Um?

You know, so I'm just like everybody else, including a large number of Republican senator I'm still making my way through the bill yet, I I you know, i'd like to say I have, but but not quite yet. I'm kind of just jumping through looking for snippets. Um. So what it looks like is that this isn't kind of

a dramatic departure from what the House passed. There are some modest differences to the subsidies that low income people get, and um, some of the Medicaid cuts are deeper in the long run, but this doesn't diverge dramatically from what people know already. And I guess resolving some of that uncertainty might, um might be causing some of that jump in stock rise based on what you know, how likely is this to be reconciled with the House bill and

actually make it to the President's desk. Um, You know, I I think that the issue isn't gonna be reconciling it with the House bill in this case, it's whether it can get through the Senate, because I mean, the really kind of salient detail here is that the Republican senators who have to vote for have not seen it yet, most of them, so they're kind of grappling it in the same way that um, we are as reporters and and the country is right now, so there are there

are things that some you know, conservatives aren't gonna like parts of this bill, and moderates as well. It's the same problem that's been there for the start politically, so that's going to have to be worked throughing in a pretty short time period. If they want to vote on it next week. Well, and let's talk about the fact that U. S. Senate Majority Leader Mitch McConnell has said that he would like a vote to come next week.

And given the fact that it's just being released now, even to some Republican the Republicans own members in the Senate, UM, why do they want to rush this? Um? I think the kind of thing we've learned over the course of the process with the House polls that this bill doesn't or this particular effort, policy effort does not age well,

does not hold up to UM. Scrutineer right Eric, particularly well, it does some things that are are going to be very unpopular, including weakening protections for those with pre existing conditions in a different way than the House will, but but a heres to still do so, and cutting Medicaid really substantially, and that's not popular at all. Medicaid do doesn't just cover low income people, it also covers kids and a majority of people that are in nursing homes

in the United States. So, um, you know, they the point of kind of rushing the process is potentially getting less political backlash actually getting it done. For people. Senators go back to their districts and get uh and get another earful about the bill. Well that's the thing, right, because of the congressional recess. Yeah, exactly. So Congress is out after next week for a for a pretty long one, and then again in August. So they really want to get this done as quickly as they can. Just to

play devil's advocate. A lot of Republican Senate leaders have come out and said, look, uh, more money does not necessarily mean better healthcare, and they're trying to allocate cash and and and create the right incentives to create a better health care system. What's your response to that, Um, I think that's just kind of typical uh rhetoric that you hear. I mean, of course, government is not always the most efficient way of allocating money. That I don't

I don't think anyone would argue that. But when you cut in this case, Medicaid by more than eight hundred billion dollars, people lose a lot of healthcare. That that's just that's not an equation you can really contest or argue with. And the same goes for subsidies for health insurance. Let's get a little more detail from Max and Neeson are a Bloomberg Gadfly columnist. Listening to both a Senator Schumer and Senator McConnell, I wanted to begin by asking you.

Senator Schumer talked about affordable insurance, and I'm wondering he made certain claims about this will do away with affordable insurance for people. Is that accurate? I think it will definitely be accurate for for certain subsets of the population. And the ones that come to mind are people that get subsidies under the A C A that will get less generous subsidies under under they change the acronym. I

think it's the B C R A now UM. And the other thing one that comes to mind is people that lose coverage under the Medicaid Expansion or Medicaid in general,

and also people that have certain conditions. While the Senate bill appears to maintain a prohibition against charging people with pre existing conditions more which was states could wave that under the House version, it does maintain um, the ability for states to get rid of the requirement that states cut that ensures cover a certain essential health benefits like mental health care, for example, So you can't charge someone

with mental health care issues more. But you can offer a plan that doesn't have mental health care in it and make it much less expensive, and the plan with that kind of care much more expensive, so effectively with people, it's those sort of long term expensive issues. Health health care will become unaffordable potentially in some states. Maxim struck by the GOP's UH sent a proposal to include an additional fifty billion dollars over four years to stay abilize

insurance exchanges. This was exactly the provision the Republicans have criticized in the past, is a way to keep insurers in the marketplace. Why did they reverse course and include this? I think it was an effort to kind of build a broader consensus around the bill. Um, you know, some more near term stability and and more cynically, Um, it just means that going into the next couple of electoral

cycles you have a more stable market. A lot of the impact of this bill the kind of big shift from the households that it's pushed out further, so the big Medicaid cuts, the ending of the Medicaid expansion, it's pushed out a little bit further. The big changes to the A c A as well. UM, and that's kind of evidence by these these funds. So that might create a problem with the conservative wing of the party. They they especially hated these payments when they were part of

the A C. A. They won't like it. That something that could be described, I imagine as something of a bailout by by that wing of the party. It's now in this bill, so that might be a problem. Thank you so much for joining us Maxnis and Blueberg Gadfly columnists. UH you can follow his work at Bloomberg dot com slash gad fly, and I'm sure Max you will be

opining on this proposal. Center Republic Industry Itierate did release their healthcare proposals to replace Obamacare, providing an additional fifty billion dollars over four years to stabilize insurance exchanges. This is the plan that has been long awaited that Senate Majority Leader Mitch McConnell would like to have a vote on as soon as next week, and it will affect

a broad swath of the US economy. Right now, we are looking at oil prices that are finding some stability after a pretty significant swoon, after falling to the lowest levels UH in ten months. It is rising just a bit with the value of crude going to forty three a little over forty three dollars a barrel. To get a better sense of the direction of these prices, I want to bring in John killed Off. He has founding partner of again at Capital in New York. John, have

we seen the lows this year? Four crew? It's hard to tell at this moment not to uh cop out or avoid your question. Yesterday's sell off to two oh five a barrel with significant it matches up with the low from November. So there's a potential for technical traders to see that as a double bottom, and I'm having to abide that at the moment. But really I think the path of least resistance is still lower down into the upper thirties, upper thirties. How long would it stay there,

that's a good question, PIM. I think it would stay there um for a good amount of time. What the market is right now in the process of doing is is calling and taking OPEC to task for not doing enough, so they're challenging. The market gets into these modes where they challenge the producing community, sometimes on the upside. Right now it's on the downside to react and the statis apparently are scrambling right now to to find the way

to react to this and to get the prices back up. John, when I talk with bulls oil bulls, they say, look Saudio Saudi Arabia in particular has great incentive to prop up and give a floor to oil prices based on the fact that they're planning to do an initial public offering for Saudi Aramco in the near future. What do you say to those traders who still have faith that there will be a floor because of those political incentives. Well, I think that the sadis you know, bristle at having

to go with a loan. They've they've been carrying most of the load since the beginning, and now they're having to deal with potentially covering as the as the oil Minister put it, Libya and Nigeria, whose production in a surprise I think to the market and certainly to OPEC

and the non OPEC participants have come rowing back. They're back to really full output from being near zero for the better part of the year or two oh in the Historically, the Staudies reach a point where they won't do it, and they instead turned press the market by over supplying it. Now, this Stadio ramfil thing is a new wrinkle. And with the new Crown Prince and the new oil Minister, UH, they seem more committed to engineering

a higher price, potentially through more cutbacks. But boy, it's a bitter pill for them to swallow, and historically in my experience with them, they don't swallow it. Well, John, to bring into the equation the swing producer, the United States and its role in uh not only domestic energy markets, but now international energy markets as an exporter, well that and that is the big monkey wrench that has also

been thrown into this OPAC non OPEC agreement UM. And also to keep pointing out to everyone that while the shale players get all the glory and the headlines, you know, like a big wide receiver on a football team, we've had a lot of production increases from the Gulf of Mexico this year from projects that have been on in the works for years, and they're that production is not

going away no matter how low prices go. And a lot of the shale plates have hedged a lot of their production when prices got back up into the that production is going to be a lot more stickier this time around. And as you said, pim Uh China in particular has sought out the U S shale producer oil and we've been exporting increased the masts to China again in a battle from market share with the Saudis that they bristle at historically, that they don't accept and that

they end up fighting back on. So that's that's the issue I had with all of this, and I really think there's a potential, uh for the production war to breakout, not a price war. You know, John, just wanted to get your thoughts on some of these leveraged shale producers

in the US, UH. You know, they they are thought as the swing producer and having the upper hand frankly, but if you look at the debt markets, particularly energy junk bonds, they have dropped more than three and a half percent so far this month, and there's a lot of concern that we're going to see another wave of carnage. What's your what's your feeling in that space? We start seeing largely the washout of the weakest players. No, I think if we get down into the upper thirties, they'll

be more of that to come. Enough of their production. Any of these folks to get them through. I think another episode like that. Um, and all right, we're gonna John, we gotta break in, John Kildeff. I want to thank you breaking in. John Killoff is the founding partner of Again Capital. Let's get a little bit more detail about this potential deal. I want to bring in Dina Camel Middle East aviation reporter joining us from Dubai and Michael

Sasso airline reporter from Bloomberg News joining us from Atlanta. Dina, maybe you could speak a little bit about what Squtar bring to any kind of shareholding and what is the

connection between Cutar Airways and global air travel. Yes, high there, Um, Actually, this is not the first time that we're seeing Cutar Airways go into this type of venture, and already in in April, we saw the Cutar Airways CEO of Rebecca say that he was thinking of adding one more acquisition to his portfolio of you know, many many airlines and many previous purchases. Um. So today's announcement is actually one

in a series of acquisitions that the airline has already done. Um. The first one was, you know, gradually building up a stake in British Airways. Parents I g UH. They've also recently tooken up, taken up ten percent of latam um. So they've been pursuing an organic growth. And this latest interest in in American sort of completes the triangle of of trying to capture traffic from across the Atlantic. I want to bring in Michael here. So cut Our Airways

has been criticized by American airlines for unfair competition. What does this potential investment in American airlines do with respect to the rivalry here? Well, I think that's the big question. Um, there's some you know, I've heard some analysis that maybe Cutter is trying to get a foothold in this controversy

in the United States. You may be aware that all three of the US major US airlines, including American Delta, UH and UH and United Airways United Airlines all have trying to bring a trade case against Cutter and Emirates and ATA Airways, suggesting that they're unfairly flooding the US market with with cheap flights, that they're being subsidized by their home governments. I mean, there's a there's a thought out there that maybe this could be some attempt to

influence that process. Uh. Some could they have some influence in with the Trump administration or some influence with American maybe, Uh, but that's just kind of spot analysis. Well, and we're not exactly sure yet. Well, and you talk about the conflict between Cutter Air and some of the US airlines,

but the conflict with Cutter goes much beyond that. I mean, recently we've seen a lot of news coming out of the Middle East with respect to Saudi Arabia and it's worsening relationship with Cutter as well as with the U s Dina. Can you speak a little bit about how this type of investment complicates that or is uh perhaps despite that or as a result of that. I mean, just to remind people, cut Our Air is state owned. Yes, that's that's correct. It might be a little bit too

early to stay at at this point. Um, how this plays into the geopolitical tensions that that cuts are is

facing at the moment um. As you correctly pointed out, cut Our the nation is being isolated by four other neighboring Arab countries Saudi Arabia, Egypt, UM, Bahain and the United Arab Emirates UM for who accused Cutter, UM for supporting UM Islamic terrorism and financing extremists UM, which are allegations that that cut our denies UM and and and in the meantime, they've also closed down UM their airspace to all Cutari flights. So let's just put cutter airways.

UH in a very difficult situation. UH, it's it's had to face longer reroutes, very expensive reroutes around that airspace. UM. So the idea that it's now trying to UM solidify its partnerships, you know, with one World members UM and and basically trying to diversify its streams of of of revenue so that it's not reliant on any one part of the world too heavily UM for where it's earnings come from. UM AND. I think that move ties in with the political pressure that it's that it's facing here

in the region. Already, it's been denied access to eighteen destinations in those four countries that are imposing the ban, so there's a sense that it wants to diversify and and and spread itself across regions. Well, I want to thank you very much both of you for really giving us some detail about what is going on. Dina kamel is our Middle Eastern aviation reporter. She joins us from Dubai. Michael Sassau, our airline reporter, coming to us from Atlanta.

Let's turn our attention now to the big topic of asset price inflation. Brentan Brown is the chief economist and head of economic research for Mitsubishi u f J Securities. He is also the author of a Global Monetary Plague, Asset Price Inflation, and Federal Reserve Quantitative Easing. Good to have you with us here in our studio. Thanks for being here. Maybe you just can begin by talking about

this idea of bubbles and asset price inflation. How is it defined and how should we be applying those concepts to what we see in the stock and bond in commodity markets currently. So, asset price inflation is the unleashing of irrational forces in markets by monetary distortions. And what I mean by that is interest rates being pressed way

below natural neutral level and to expand. And why that's happening, I would say over the last twenty years and especially the last ten years, pressure of globalization China coming into world markets pushes prices down, which in general most people gain from In terms of our real living standards. The FED and other central banks have been trying trying to get to this two percent inflation standard. Goodness knows where it came from, and certain not in a Federal Reserve Act.

Nobody's ever mandated two percent inflation. But the Fed, somehow, out of its own wisdom, decided two percent inflation. But if you aim for two percent inflation when the natural rhythm of prices is actually downwards, you can only do that by by pushing rates way low, very low, and keeping them very low. And that's that creates a desperation for yield. And that desperation for yield shows up in all these areas of of of irrational forces gaining the

upper upper force. So Brendan, it's been about five years of people warning about as at price bubbles and the potential demise of the financial system when they collapse. And here we are twenty seventeen. The feed is starting to high rates, and you do see stock prices climbing higher. While there are some jitters in the high O bond market, for example, because of oil prices, we have not seen an implosion. Does that mean that it's not going to happen?

I would make two points here. I think, first of all, the monetary force or the monetary monetary distortions this equilibrium, I would say, have actually been growing UM in the last eighteen months. First, we had for yelling FED last year walking back from rate rises because of a China shock.

This year we've had the surprise for for Trump administration did nothing to change matters in the FED, whereas there were expectations that they may, and we've had the ECB and the b o J merrily going on with their QUI expansions and negative rates or though that had been some expectations that would all slow down. So if anything, we've had an increase in this monetary stimulus. As we listen to some of these policies in these House and the Senate hearings, how much do you pay attention as

an economist? How much does this way on your growth outlook and the way you assess you as economy well, the whether the fiscal plans and the tax cut move ahead is one of the factors go into the economic outlook. But I do tend to think that the importance of UM shouldn't be exaggerated. UM. At best, it looks as if what we're getting here is going to be some

sort of temporary tax cut rather than permanent. But haven't you've written that they've that the Trump administration as well as the Republicans in Congress, they've squandered an opportunity in another area. But maybe this is all conflated in some way. Yeah, I mean, if one looks at the trio of what's making up for Trump administration program now um of infrastructure, tax reform, health, the big gap in all of this is,

of course, anything on the monetary side. We have a tremendous as we were discussing earlier, monetary distortion going on at the FED, aiming for two percent inflation target, long term interest rate controls, and nothing is on foreseeable legender to change any of this. And that's you know, you only have to read Milton Freeland's Capitalism Freedom to to realize that any agenda of economic reform and unleashing forces in a capitalist economy has to start with monetary reform.

You know, I'm struck by what JP Morgats Bob Michael said earlier today on Bloomberg Television, which is, at some point some of some of President Trump's policies will get past and there will be an upside surprise with healthcare. For example, healthcare is almost eighteen per cent of the U S economy, and we do see healthcare share surging on the prospect that there will be some solidification of

what the outlook is for healthcare in the US. But you're saying any step they take will probably be incremental and won't necessarily have uh that material of it of an impact on the on the growth outlook in terms of overall growth outlook. Yes, I mean, I think the main growth positive aspect of the Trump fiscal agenda is the cut in corporation tax, which will bring some economic activity back from low tax jurisdictions abroad, whether it's Canada or other places in and that in the longer term

will boost economic activity in the United States. By the way, that will put some pressure upwards on wages. I mean, these these measures to boost production in the United States basically come to increased demand for US labor. It's not necessarily going to be as positive as maybe Wall Street imagines for earnings and equities. You know, I've heard so many people talk about what will or won't boost inflation,

and so many people have gotten this so wrong. Do you find yourself questioning what will actually lead to higher wages is given the frustration and lack of understanding of why they e remained so stagnant. I I don't know. I don't believe that wages are a key element to look for in an inflationary process. I think the inflationary process is in this cycle is asset prices. And I think also we have an inflationary dimension in goods and

services markets, but it's not immediately apparent. And what I mean by that is that if you measured inflation today in the United States, and say way as it was measured in the fifties and sixties or any time before that, without all this hedonic price adjustment, today's inflation rate would be three and a half to four percent UM. So

so there is an inflation there. If you have asset price inflation was always going to be good inflation alongside, because it's part of the same phenomenon, but it's it's not necessarily immediately apparent. Last question, Now we are awaiting comments from President Trump, who is meeting with a big technology company leaders in Washington. I just wanted to get your sense, Brennan, going forward, do you agree with guests on previously in this program that we have five more

years in this credit cycle. I I would never say anything like that. I think we're we I hate to say we're in a new, new era or new experiment. But the enormity of this particular monetary distortion, with every major central bank pursuing or having huge balance sheets and interest rates so low low, is something we haven't encountered before. We have encountered asset price inflation before, but for example, size of asset price inflations is small. It's probably eight

in the last hundred years. And to find one with this degree of a normality of of distortions, I can't find um. Moreover, this is happening in an era when there isn't much good economic news. You know, previous asset price inflations have mostly been accompanied by fantastic economic good news, whether it was the late nineteen nineties or with late

nineteen twenties. First time there isn't good news. So so with a lot of differences, but if you asked me for the bottom line, I think the new mare is going to be more within the next two years rather than five years. Thank you very much for joining us. A. Brendan Brown as chief economist and head of Economic Research for Mitsubishi u f J Securities. Thanks for listening to

the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can now plays Catch us worldwide on Bloomberg Radio