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Why Intrepid's Travis Likes Leucadia · Bloomberg Intelligence

0:05
Speaker 1: Welcome to the Bloomberg pm L podcast. I'm Pim Fox.
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Speaker 1: Along with my co host Lisa Bramowitz. Each day we
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Speaker 1: bring you the most important, noteworthy, and useful interviews for
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Speaker 1: you and your money, whether you're at the grocery store
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Speaker 1: or the trading floor. Find the Bloomberg p m L
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Speaker 1: podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. We
0:32
Speaker 1: have been talking a lot about how this year has
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Speaker 1: been better for stock pickers because there is more divergence
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Speaker 1: between shares and it's less of a macro story and
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Speaker 1: moving more towards specific company stories. Mark Travis knows this
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Speaker 1: as well as anyone President chief executive officer of Intrepid
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Speaker 1: Capital Funds with nearly one billion dollars under management based
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Speaker 1: in Jacksonville, Florida, and Mark, you know I'm wondering. I
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Speaker 1: was looking through some of your top picks and the
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Speaker 1: one that really caught my eye was Leucadia because this
1:03
Speaker 1: firm is an interesting bet on the boutique Jeffreys, which
1:10
Speaker 1: is at the heart of trading and a lot of
1:13
Speaker 1: people think of as a bell weather for the rest
1:15
Speaker 1: of Wall Street. Since the report earlier, given the fact
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Speaker 1: that we are seeing lower trading results out of some
1:21
Speaker 1: of the banks. Does that weigh on your decision to
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Speaker 1: sell or buy Lucadia, Well, Lisa, it's a great example
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Speaker 1: of value lating security for us and in trepic capital.
1:33
Speaker 1: When we bought it in the high teens, it was
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Speaker 1: at a discount to tangible book and as you're aware,
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Speaker 1: UM Jeffreys is a material part of that of it,
1:43
Speaker 1: and it had been knocked down by fixed income trading
1:46
Speaker 1: at Jeffreys and UM also National Beef. The spreads were
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Speaker 1: tight between UM, you know, cost of cattle and what
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Speaker 1: they could sell them for. That's since widened out, and
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Speaker 1: and UM Jeffreys is also reported improved fixed income trading UM.
2:01
Speaker 1: So you know we've done well in the time we've
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Speaker 1: had it. I've followed Lukatia frankly since it was run
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Speaker 1: by UM Mr Cummings and Steinberg back in the day.
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Speaker 1: And it's really a kind of as some people refer
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Speaker 1: to as a mini Berkshire Hathaway, which I've also been
2:17
Speaker 1: a shareholder, fortunately for a long period of time. So
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Speaker 1: UM they used to own a winery too, I believe,
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Speaker 1: and you used to get a discount. I believe you
2:25
Speaker 1: were a stockholder. I mean, if the more you appeel
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Speaker 1: the onion PIM, the more you find it. Lucadia owns
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Speaker 1: um as. You know, it's got oil and gas, it's
2:36
Speaker 1: got timber, it's got auto dealerships, It's got you know,
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Speaker 1: on and on. So UM, I think in a in
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Speaker 1: a world where there's very few miss priced securities, I
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Speaker 1: think it's not unreasonably priced, even at this point in
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Speaker 1: the you know, twenty six or seven dollar range. And um,
2:54
Speaker 1: you know, I think if if Mr Hadler continues to
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Speaker 1: work as magic at Jeffreys, I think we'll improved share price,
3:01
Speaker 1: not to mention the other subcomponent parts, it will hopefully
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Speaker 1: do well in addition to that. So Mark, I want
3:09
Speaker 1: to ask you about one particular company that you want
3:11
Speaker 1: to focus on. This is Sintel. And the reason I
3:14
Speaker 1: want to do this is because I don't know whether
3:16
Speaker 1: you've obviously I'm sure paid attention to the back and
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Speaker 1: forth between financial technology and the ability to test certain
3:23
Speaker 1: systems and so on. They've got a big market in
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Speaker 1: banking capital markets as well as cards and payments. I
3:30
Speaker 1: also note that there's the new chief executive coming into
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Speaker 1: Bank of New York, Mellon, who was formerly the chief
3:35
Speaker 1: executive at Visa. So these kinds of industries are no
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Speaker 1: longer strictly banks or or strictly payment systems. What if
3:45
Speaker 1: you could talk about sintell and how that caught your attention. Well,
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Speaker 1: I think that there are three biggest customers are m X,
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Speaker 1: State Street, and UM that acts and the way we
3:57
Speaker 1: became involved, I believe of him is a pre announced
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Speaker 1: revenue decline. They pre announced maybe fifty million dollars off
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Speaker 1: the top, and it knocked the shares down, But I
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Speaker 1: think it was really driven by costco firing m X
4:13
Speaker 1: and MX pulling back the throttle on discretionary I T spending.
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Speaker 1: UM management has bought a big sluck of slug of shares.
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Speaker 1: They owned a significant part of it already. I think
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Speaker 1: the h one Visa issue with Trump now and the
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Speaker 1: executive office is somewhat of a problematic for them, and
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Speaker 1: UM some of the other parts of the you know,
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Speaker 1: technology space. UM uh, there's concerned that they haven't adapted
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Speaker 1: to social media and whatever. But in the verticals where
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Speaker 1: they are, I think they have very good margins, a
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Speaker 1: lot of free cash flow, and UM, you know that's
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Speaker 1: that's the position we're comfortable to wait until that cash
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Speaker 1: bubbles forth and you get a price in the mid
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Speaker 1: twenties versus six seventeen dollars today. Mark what's your time
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Speaker 1: horizon when you're investing forever? All right? I wish we
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Speaker 1: all had forever? No, this is important because I feel
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Speaker 1: like right now people are saying things are very highly valued.
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Speaker 1: Perhaps they are, but you can't invest in nothing if
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Speaker 1: your time horizons forever. Well. Our our premise, Lisa and
5:18
Speaker 1: Intrepid Capital Funds has always been somewhat different, as Pim
5:21
Speaker 1: can not has head or shake his head one way
5:23
Speaker 1: or the other. But our our premises we want to
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Speaker 1: find a material discount to a private market value using
5:29
Speaker 1: pretty high discount rates in our cash flow, and or
5:33
Speaker 1: we want to do an asset valuation break up again
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Speaker 1: not making aggressive of assumptions about the current market values,
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Speaker 1: and can we find a discount and if we can't
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Speaker 1: find one, will default to cash. So the analogy I
5:46
Speaker 1: use for people is when prices are high, cash is high.
5:48
Speaker 1: When prices are low, cash is low. Alright, So how
5:51
Speaker 1: high is your cash holding right now? It's about how
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Speaker 1: is that compared to say a year ago. Well, I've
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Speaker 1: had some inflows, I've had some bonds uh old and
6:00
Speaker 1: I've had some securities bought out. Um it's higher though,
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Speaker 1: I'm guessing it's six eight percent higher than it was
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Speaker 1: this time last year. And how is the distribution between
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Speaker 1: bonds and stocks changed? Stocks have come down, bonds have
6:15
Speaker 1: held about the same. Really, is it? Is it government
6:18
Speaker 1: or is it? It's always been kind of crossover paper alright,
6:22
Speaker 1: to like the double and triple B kind of Yeah,
6:25
Speaker 1: we dig around. The most interesting piece of paper on
6:27
Speaker 1: right now is a Primaro mining convert um. It trades
6:31
Speaker 1: about fifty eight since on the dollar. They have a
6:33
Speaker 1: single mind in Mexico and the Mexicans going strike until
6:37
Speaker 1: their wives tell them they have to go back to
6:39
Speaker 1: work and then the bondle rally and or whatever happens
6:42
Speaker 1: to goal prices. What's the biggest challenge right now to
6:46
Speaker 1: get people interested in stocks? We keep hearing about e
6:49
Speaker 1: t FS, index funds, low cost so on. People still
6:55
Speaker 1: interested in actual companies, like investing in businesses. You know,
6:59
Speaker 1: it's interesting and you mentioned that PIM we helped sponsor,
7:02
Speaker 1: in fact, we sponsor Bloomberg machine. At the University of
7:05
Speaker 1: North Florida, they have what they call the Osprey investment group,
7:09
Speaker 1: and I go every year and listen to these kids
7:11
Speaker 1: talk and they talk about the portfolio, and basically they
7:13
Speaker 1: bring him in in September October and they manage the
7:16
Speaker 1: money until April May and then they report he did
7:19
Speaker 1: air quotes, go on. Manage the money, yeah, and they
7:24
Speaker 1: you know, but it's a very trading centric philosophy and
7:27
Speaker 1: a lot of e t f s and what have you.
7:30
Speaker 1: And I made a comment to somebody recently, I said,
7:32
Speaker 1: I think they're probably bright kids, but I'd have to
7:34
Speaker 1: detrain them before they could work for me. So I
7:37
Speaker 1: wish it was a free lunch in the capital markets.
7:40
Speaker 1: I haven't been able to find one, and I don't
7:42
Speaker 1: think e t s are not necessarily a free lunch. Um.
7:45
Speaker 1: I want to find a good business at a good
7:47
Speaker 1: price and hang onto it as long as I can.
7:50
Speaker 1: I want of thanks very much for coming in and
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Speaker 1: spending time with us. As always, Mark Travisy is the
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Speaker 1: president chief executive of Intrepid Capital, based in Jacksonville, Florida.
8:13
Speaker 1: I want to turn our attention now to a topic
8:16
Speaker 1: of private equity and joining us as Eric Hershey is
8:19
Speaker 1: the vice chairman and the head of Strategic initiatives for
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Speaker 1: Hamilton's Lane assets under management about forty billion dollars based
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Speaker 1: in Philadelphia, Eric, thank you for being with us here
8:28
Speaker 1: in the studio. I just want to cast your mind
8:31
Speaker 1: back to March one of this year. There were two
8:33
Speaker 1: I p O s that kind of priced on the
8:35
Speaker 1: same day. Right. One was Hamilton's Lane and the other
8:39
Speaker 1: was Snap. The shares of Hamilton's Lane are up thirty
8:43
Speaker 1: nine percent since the I p O and the shares
8:48
Speaker 1: of Snap are down twelve How did you guys do this? Well?
8:54
Speaker 1: I think this certly shows the interest in the alternative side,
8:57
Speaker 1: that it's perhaps not as disappearing as an asset classes
9:01
Speaker 1: as I think perhaps other businesses. But it was funny
9:04
Speaker 1: we were kind of watching them along the way, and
9:07
Speaker 1: businesses have nothing to do with each other, and yet
9:09
Speaker 1: we were being kind of compared all the time because
9:12
Speaker 1: it's where investors same day. Well, I have to wonder,
9:16
Speaker 1: you know, last night Cowper's Board California Pension, the biggest
9:22
Speaker 1: pension plan public pension in the country, said that it
9:25
Speaker 1: was exploring direct investing in order to get around paying
9:29
Speaker 1: private equity firm such high fees. Uh. Do you hear
9:33
Speaker 1: a lot about investors, clients hoping to reduce their fees,
9:37
Speaker 1: and do you expect this to be an ongoing pressure?
9:39
Speaker 1: I think, Look, we live in a world where everyone
9:41
Speaker 1: wants to get more for less, and it's whether it's
9:44
Speaker 1: in the restaurant business, or whether it's in the investment business,
9:47
Speaker 1: whether it's in the retail space. Every client consumer is
9:51
Speaker 1: focused on trying to get the most value for their dollar.
9:54
Speaker 1: And the pension funds are not any different. Nobody loves
9:57
Speaker 1: to pay fees. But you gotta step back and ask
10:01
Speaker 1: the question of just because you don't like to pay fees,
10:03
Speaker 1: can you actually replicate the returns yourself with the resources
10:07
Speaker 1: you have at your disposal. That I think is the dilemma.
10:10
Speaker 1: I think we see it. We certainly hear a lot
10:11
Speaker 1: of institutions talking about trying to bypass this and bypass that.
10:16
Speaker 1: But then you sort of nod and say, okay, well
10:18
Speaker 1: what does that mean for your own infrastructure, your own resources,
10:22
Speaker 1: and can you actually attract and get the people necessary
10:25
Speaker 1: to generate the performance that you're seeing across the asset class? Eric,
10:29
Speaker 1: you're recently closed a fund. This is the Hamilton Lanes
10:33
Speaker 1: Strategic Opportunities Fund designed to target private credit investments around
10:38
Speaker 1: the globe. Just tell us quickly about the fund and
10:41
Speaker 1: how much you raised and what was the target. Maybe
10:43
Speaker 1: that tells people something about demand. Yeah, so we raised
10:46
Speaker 1: a significant amount over the target. And I think what
10:49
Speaker 1: it reflects is the fact that private credit is really
10:51
Speaker 1: the booming part of our overall industry. I think when
10:55
Speaker 1: you see as a kind of a yield starved overall environment,
10:58
Speaker 1: you're seeing investors just rapidly you kind of redeploy public
11:01
Speaker 1: fixed income assets into private fixed income assets, and so
11:06
Speaker 1: the market on the private side much more inefficient. Frankly,
11:09
Speaker 1: it's growing in scale. A lot of the practitioners the
11:12
Speaker 1: banks have been kind of knocked out of the business,
11:14
Speaker 1: and so you're seeing more of the kind of the
11:16
Speaker 1: private market GPS kind of stepping in to fill that void.
11:19
Speaker 1: And so again, returns have been very good. The spreads
11:22
Speaker 1: against the public market have been very, very wide, and
11:25
Speaker 1: you're seeing people who are happy to trade liquidity today
11:28
Speaker 1: for higher returns, and I think that's been a real shift.
11:31
Speaker 1: So the investment grade corporate on market in the US
11:33
Speaker 1: is about five point nine trillion dollars. The high yield
11:36
Speaker 1: public I'm talking about is one point three trillion dollars.
11:39
Speaker 1: How big in context? Just putting that into context, how
11:42
Speaker 1: big is this private debt market and how big has
11:46
Speaker 1: it grown? So it's tiny in context of that tiny,
11:49
Speaker 1: just like the entire private markets are tiny. We're looking
11:51
Speaker 1: at fundraising statistics last year and total dollars deployed. If
11:55
Speaker 1: you look at the total dollars invested across the entire
11:58
Speaker 1: private equity landscape, it wasn't enough money deployed last year
12:01
Speaker 1: to go buy Apple. I mean, that's the thing that
12:03
Speaker 1: I think when you step back and put it in
12:05
Speaker 1: context of the private markets are small in any metric
12:10
Speaker 1: in comparison to the public markets, but they're growing. But
12:13
Speaker 1: they're growing, and there's a lot of money chasing them.
12:15
Speaker 1: How concerned are you about these UH securities becoming overvalued
12:19
Speaker 1: at this point? Yeah? So I think the private markets
12:21
Speaker 1: have gotten expensive like the rest of the markets have
12:23
Speaker 1: gotten expensive. I think if you put the private markets
12:25
Speaker 1: in context of the public side, there you actually see
12:28
Speaker 1: that the private is still trading at a material discount
12:31
Speaker 1: to the public markets, and it should. Again a real
12:33
Speaker 1: lack of liquidity, and so again investors are kind of
12:36
Speaker 1: weighing that. I go back to my earlier comment. I
12:39
Speaker 1: think one of the things that's changing so much among
12:41
Speaker 1: the institutional investors how they think and value and price liquidity.
12:46
Speaker 1: I think, going into the financial crisis, most of them
12:48
Speaker 1: frankly overvalued liquidity. I think coming out of this, many
12:52
Speaker 1: of them are beginning to shift and say, we're pension
12:54
Speaker 1: We're gonna be around for decades, if not hundreds of years.
12:58
Speaker 1: We can probably start to take the chan ants of
13:00
Speaker 1: putting a lot more assets in an ill liquid bucket
13:03
Speaker 1: and take the better longer term returns for that. So
13:05
Speaker 1: the pendulum is swinging back to h accepting a liquidity.
13:09
Speaker 1: Eric Hush, thank you so much for joining us. Eric
13:11
Speaker 1: Kush's vice chairman and head of strategic Initiatives at Hamilton Lane,
13:15
Speaker 1: which oversees about forty billion dollars and it's based in Philadelphia. Well,
13:32
Speaker 1: Netflix shares are soaring, everyone's back in love with this
13:36
Speaker 1: video streaming service, and yet that cash burn just always
13:42
Speaker 1: is amazing. To Shara Ovid, who joins us now. Shara
13:45
Speaker 1: Ovida is a Bloomberg gad Fly columnist who has been
13:48
Speaker 1: talking a lot about this over the past two days,
13:50
Speaker 1: and I've been participating, so I thought, why don't we
13:53
Speaker 1: just talk to each other. Let's talk to each other.
13:54
Speaker 1: We need Yeah, we have the same conversation over and
13:57
Speaker 1: over again, Shira. So what's going on here and why
14:01
Speaker 1: are stock investors dismissing the fact that this company just
14:05
Speaker 1: can't seem to make money? Well, look, everything is a
14:07
Speaker 1: trade off right in in how you run a company.
14:10
Speaker 1: And Netflix has made a concerted strategy to try to
14:13
Speaker 1: grow its subscriber base as quickly as it possibly can
14:16
Speaker 1: in the US and outside, and as a result of that,
14:19
Speaker 1: it is hemorrhaging cash that haven't been free cash flow
14:23
Speaker 1: positive for three years. In the last twelve months, the
14:27
Speaker 1: free cash flow is negative two point one billion dollars, which,
14:32
Speaker 1: as I pointed out in my Gatfly column yesterday's bigger
14:35
Speaker 1: than the negative free cash flow at Tesla, which is
14:38
Speaker 1: sort of notorious for burning cash like there's no tomorrow. Sure,
14:43
Speaker 1: you know we've heard this kind of story before. When
14:46
Speaker 1: you talk about subscriber growth, my mind turns back to
14:50
Speaker 1: a O L and the idea that every month you
14:54
Speaker 1: would wait for those subscriber numbers, and if they were
14:57
Speaker 1: positive or exceeded estimates, then stock moved higher, if not lower,
15:02
Speaker 1: and then eventually of course you sell the company to
15:05
Speaker 1: Time Warner. Uh. This has got a market cap of
15:07
Speaker 1: about seventy eight billion dollars, which I think equals maybe
15:12
Speaker 1: what cash Apple has on its balance sheet. This is
15:16
Speaker 1: sticky money, though, this is different than this is like
15:19
Speaker 1: its own cable system, isn't it. Yeah, it's pretty sticky.
15:22
Speaker 1: I mean, look, you can. Yeah, it's not very expensive
15:27
Speaker 1: at least if you you know, for most households in
15:30
Speaker 1: the US, that's not very expensive. And it is pretty sticky.
15:32
Speaker 1: Although you can cancel Netflix at any time, right, It's
15:35
Speaker 1: it's not exactly a good luck trying to do that
15:39
Speaker 1: if you've got a family, Yes, exactly. I mean, look,
15:41
Speaker 1: the fact is that a lot of Netflix subscribers really
15:44
Speaker 1: like it and feel like they get a lot of
15:46
Speaker 1: value out of that ten bucks a month. Well, they
15:48
Speaker 1: got all the content to they get. The House of Cards.
15:50
Speaker 1: Aren't just the new black, right, I mean, these are
15:52
Speaker 1: all hit programs that you're not going to watch anywhere
15:53
Speaker 1: else I'm not. I mean, look, Netflix has a hunt
15:56
Speaker 1: more than a hundred million subscribers globally, in fifty million
16:01
Speaker 1: in the United States. That's roughly half of the households
16:04
Speaker 1: in the United States. With the broadband internet access. So
16:08
Speaker 1: by any measure, what they have done to build this
16:10
Speaker 1: company is incredibly impressive. They've changed the nature of entertainment. So, uh,
16:15
Speaker 1: you know, him was saying that they have a market
16:17
Speaker 1: cap of about seventy eight billion dollars, which makes them
16:20
Speaker 1: a very expensive takeover target if someone were interested in that. However,
16:25
Speaker 1: you do have to wonder if a conglomerate like Amazon
16:31
Speaker 1: that has perhaps broader distribution and more diversified streams of
16:36
Speaker 1: revenue might do well to own a company like this
16:39
Speaker 1: rather than trying to go it alone and compete in
16:42
Speaker 1: the content game. Is there any talk of that? Over
16:45
Speaker 1: the years, Netflix has definitely been the subject of takeover speculation, rumors,
16:51
Speaker 1: wish for thinking whatever you want to call it. A
16:53
Speaker 1: Disney and Apple or among the companies that are often
16:56
Speaker 1: mentioned as potential acquirers of Netflix. But yeah, it is
17:00
Speaker 1: a billion dollar plus company, so with a takeover premium,
17:03
Speaker 1: that's a hundred billion dollars even for Apple, that's a
17:07
Speaker 1: very large acquisition, so it's no easy feet And also, look,
17:10
Speaker 1: if you look at Amazon, that's a company that has
17:13
Speaker 1: sort of built a mini Netflix on its own without
17:16
Speaker 1: having to buy Netflix, and um, Apple and Facebook both
17:20
Speaker 1: have uh web video ambitions of their own that they're
17:24
Speaker 1: doing in how so, it's not impossible to sort of
17:27
Speaker 1: replicate Netflix or get close to replicating Netflix without buying Netflix.
17:31
Speaker 1: So Netflix expects to keep burning cash. What could they
17:34
Speaker 1: do that would change your mind about how damaging our not? Uh? Well,
17:40
Speaker 1: I I guess sustained subscriber growth would be helpful. And
17:45
Speaker 1: at some point, right and I don't know when that is, UM,
17:49
Speaker 1: they're gonna have to start showing that operating leverage right
17:52
Speaker 1: that where that that switch flips and they start they
17:57
Speaker 1: go from burning cash to generating cash. But until I
18:01
Speaker 1: see that actually happening, I think it's just worthwhile to
18:04
Speaker 1: keep reminding people this is not a strategy without risks.
18:07
Speaker 1: And if you look at the stock market, it's pricing
18:10
Speaker 1: in that Netflix is going to be totally fine. And
18:14
Speaker 1: I'm just saying, look, this is a this is a
18:17
Speaker 1: risky strategy where they're burning cash in order to grow
18:20
Speaker 1: and maybe that'll turn out great or maybe it won't.
18:23
Speaker 1: I want to thank you very much, Sharra Overday Bloomberg
18:26
Speaker 1: Gadfly columnists when it comes to all things technology and uh,
18:29
Speaker 1: I encourage you to read her latest column at Bloomberg
18:33
Speaker 1: dot com. All right, let's visit them with our congressional reporter,
18:49
Speaker 1: Laura lit Then she joins us from Washington, and Laura,
18:53
Speaker 1: thanks very much for being with us. A long night
18:55
Speaker 1: or a short night for Senate Republicans, Well, last night
18:59
Speaker 1: was the long night for reporters trying to cover them.
19:02
Speaker 1: But I don't expect tonight will be a late night now.
19:05
Speaker 1: I think they're trying to regroup. And the first thing
19:07
Speaker 1: that will happen today in the big moment, will be
19:09
Speaker 1: when Senate Republicans have a caucus meeting at two pm
19:12
Speaker 1: and try to figure out what they're going to do next.
19:14
Speaker 1: And um, yeah, you know there's gonna be a lot
19:17
Speaker 1: of feedback from McConnell from his rank and file. I'm
19:20
Speaker 1: sure that there will be. I mean, this is a
19:22
Speaker 1: huge loss for him. This is really this is the
19:24
Speaker 1: first time ever that he's the leader of the Republicans
19:27
Speaker 1: while they're in a majority. And how much does this
19:31
Speaker 1: set back his agenda? It potentially causes some loss of
19:37
Speaker 1: momentum for other issues they really have in the Senate
19:41
Speaker 1: other than confirming Neil Gorssh which was an a plus
19:44
Speaker 1: accomplishment for the Republicans of our President Trump. They have
19:47
Speaker 1: largely been simply doing confirmations of agencies and assistant secretaries
19:53
Speaker 1: and all kinds of positions after they moved from the
19:55
Speaker 1: cabinet and have not really been moving very much in
19:57
Speaker 1: policy wise. And this is a this is what they
20:01
Speaker 1: spent half a year on in the House, in the Senate.
20:03
Speaker 1: Uh And now they're going to have to try to
20:06
Speaker 1: see if they have lost momentum on other issues like
20:11
Speaker 1: the spending bills for next fiscal year, where they will
20:14
Speaker 1: need some bipartisan support. It might give Democrats a little
20:17
Speaker 1: more edge and those kind of talks over agency funding.
20:20
Speaker 1: And there's also an effort by the Republicans to push
20:23
Speaker 1: through a big overhaul of the tax code. Now, is
20:27
Speaker 1: there some procedural issues that are affected by the fact
20:32
Speaker 1: that this does not look like it will pass Because
20:35
Speaker 1: I understand that the president has sixty days from the
20:39
Speaker 1: time that he takes office. I believe in order to
20:43
Speaker 1: let's say, undo legislation or executive orders that were passed
20:47
Speaker 1: by a previous administration. That's not unusual. Well, that that
20:52
Speaker 1: time period, if you're talking about the Congressional Review Act,
20:55
Speaker 1: that that time perade passed us in May. That's what
20:58
Speaker 1: I mean. In other words, now they're going to have
20:59
Speaker 1: to put something together. Yes, and this is UH, you know,
21:05
Speaker 1: turning away from the regulatory agenda which that related to UM.
21:10
Speaker 1: They what will happen with healthcare is this vote is
21:13
Speaker 1: likely to UM to fail. To the vote they're going
21:18
Speaker 1: to turn to now as an alternative, which is simply
21:20
Speaker 1: to repeal Obamacare and then replace it in two years.
21:23
Speaker 1: And then what we end to pay will happen with
21:25
Speaker 1: healthcare is that we will move into kind of like
21:27
Speaker 1: bipartisan mode, UH with Democrats to talk about things like
21:32
Speaker 1: hasse sharing, subsidies for insurers on the Obamacare exchanges, and
21:37
Speaker 1: other things that can get support in both parties. Laura,
21:40
Speaker 1: how did this develop so quickly? Because there was a
21:43
Speaker 1: lot of back and forth and a lot of game
21:46
Speaker 1: playing and moving the needle in different directions, and and UH,
21:49
Speaker 1: Mitch McConnell had quite a bit of money he could
21:52
Speaker 1: kind of play with trying to get UH senators on
21:55
Speaker 1: board with him. And then all of a sudden overnight
21:57
Speaker 1: boom to senators parted way together with McConnell giving him
22:02
Speaker 1: UH to making it two votes short. Of the majority
22:05
Speaker 1: that he needed to pass this bill. How did this
22:07
Speaker 1: develop so quickly? It was a big surprise. In fact,
22:10
Speaker 1: the President had just finished a meeting, probably about an
22:14
Speaker 1: hour before the two senators Mike Lee and Um Jerry
22:20
Speaker 1: Moran came out against the bill. Uh. He was meeting
22:23
Speaker 1: to talk with seven senators, including two members of the leadership,
22:26
Speaker 1: about strategy on the bill and about a path forward.
22:29
Speaker 1: Lindsey Graham had just told me and other reporters that
22:32
Speaker 1: he got off a cell phone with John McCain UM
22:35
Speaker 1: heading into a Senate vote where McCain, whose surgery had
22:39
Speaker 1: had deprived McConnell of the votes to proceed right away
22:43
Speaker 1: over the weekend. H McCain was telling Graham. He said
22:46
Speaker 1: that he was just itching to get back to Washington
22:49
Speaker 1: and be back here next week to resume things. No
22:50
Speaker 1: one was really expecting this, and what happened with the
22:53
Speaker 1: two senators they announced right at the same time, and
22:56
Speaker 1: it had the feeling of what we would call a
22:58
Speaker 1: pairing where the two of them had need to do this,
23:00
Speaker 1: then neither of them had to be the bad guy
23:02
Speaker 1: who is the final death Knell and Um big surprise
23:05
Speaker 1: enough so that at Bloomberg. We have people who monitor
23:08
Speaker 1: social media. We had someone in Sydney, Australia who is
23:11
Speaker 1: on duty who noticed their pair of tweets go out
23:14
Speaker 1: at the same time and alerted us right away, and
23:15
Speaker 1: we were uh writing stories for many hours after that. Now,
23:20
Speaker 1: in the in the prospect of just repealing the Affordable
23:25
Speaker 1: Care Act, what happens to it, Well, what what will
23:31
Speaker 1: happen is they will fail to get the votes to
23:34
Speaker 1: repeal it. We'll widely expected only a small number will
23:38
Speaker 1: get the votes, so that after all this, they're not
23:40
Speaker 1: even going to get some kind of uh pyr pyrate victory. Uh,
23:45
Speaker 1: it would appear on that front. No, Uh, we don't
23:48
Speaker 1: expect something to pass in the Senate. Uh. Paul Ryan,
23:52
Speaker 1: I think if he put a vote like that to
23:54
Speaker 1: the House, there's some question. Maybe something like that could
23:57
Speaker 1: go through, but it will it will effectively die. I
24:00
Speaker 1: believe after this voted, let's everybody be on record, um,
24:04
Speaker 1: and then they will move on to something else, which
24:07
Speaker 1: will be something that might get some more democratic support.
24:12
Speaker 1: Laura Livin, thank you so much for joining us, and
24:14
Speaker 1: I hope you get some sleep tonight. Laura Litvin, Congressional
24:17
Speaker 1: reporter for Bloomberg who has been hard at work of
24:20
Speaker 1: burning the midnight oil to follow the quickly developing uh,
24:25
Speaker 1: I mean demise of this bill. Truly UH surprising. I
24:30
Speaker 1: woke up and was not um, I was not expecting this.
24:36
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
24:39
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
24:43
Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm
24:46
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
24:50
Speaker 1: It's one before the podcast. You can always catch us
24:53
Speaker 1: worldwide on Bloomberg Radio