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tv   Bloomberg Markets European Close  Bloomberg  June 22, 2017 11:00am-11:58am EDT

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and vonnie quinn in new york. nejra: i'm nejra cehic in london. let's see how investors are digesting the news with a look at the markets here's julia chatterley. julie. julie: thanks so much, nejra. we are watching some of the hospital stocks in particular here. this is an index of health care facilities and hospitals. the h.c.a., excuse me, not the some .a., lifepoint and of the various health care chains and some of them with exposure to geographically areas that have a lot of medicaid patients. if those patients had lost their coverage, that would then put the onus on the hospitals. because if someone comes through the door and needs coverage, the hospitals ethically are required to cover them. and so these are seeing a spike here as this latest version of the bill on the senate side does show perhaps a slower winddown of medicaid expansion. so you see here this group is up by 2.8% and many of the vivid components also spiked on this latest version of the
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bill. the other group that we are seeing have the biggest reaction is perhaps the medicaid exposed insurers. so we're seeing here molina is up by 2.4%. centin, wellcare, a couple of other insurers that are trading higher. there's something else from the bill and i'm looking here as we are all trying to piece through the bill and look at the various pieces of it, apparently this latest proposal will provide an additional $50 billion over four years to stabilize the insurance exchanges. so even some of the larger insurers have been reacting, not as dramatically as this. but they are higher today. in fact, if you take a look at the groups that are moving in the s&p 500 on the bloomberg, on the imap you'll see that health care is in the top spot. and in fact has been rising all week. and has been outperforming the s&p 500 all year. health care in the top spot here, up 1.25%. as we see these gains here as we get these details of the bill. again, with the caveat that we
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don't know if this is what's actually passing. this is just the latest version here of -- nonetheless it looks like there's some relief being expressed on the part of health care. if you -- back out and look at the overall markets today we are not seeing much movement. it's really just on more on the microlevel in the major averages. you can see actually we're earlier slightly lower. now there's very slightly higher in part because of the strength of those health care stocks. vonnie: julie hyman, thank you for that. much preached. i do want to give the senate minority reaction because house speaker -- house minority leader nancy pelosi has actually been speaking and a couple of the headlines, here they are, democratic leader nancy pelosi important to stop the health care bill without a heart. that's a direct quote. the senate bill is still mean and heartless and it will inflict suffering on veterans and on seniors and many rural hospitals will have to close
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after changes. she also says she fears the g.o.p. will rush the health debate in order to get to taxes. and that's exactly what we heard earlier on. that this is what the market is looking at. the market is anticipating that if this does happen next week, then the tax debate shortly after. let's get to the senate majority leader mitch mcconnell. senator mcconnell: next year obama premiums will go up across the country once again potentially by as much as 43% in iowa, 59% in maryland and even a staggering 80% in new mexico. does it sound like obamacare is working? they said it wouldn't increase choice. they said it would increase choice. they said it would increase choice but of course it didn't. this year, 70% of american counties have had little or no choice of insurers under obamacare.
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next year, at least 44 counties are projected to have no choice at all. meaning yet again americans could be thrown off their plans in states like missouri and ohio and wisconsin. does it sound like obamacare is working? now democrats tell us it would be wrong for the senate to actually address these problems in a serious way while the law they've defended for seven years, teeters, literally teeters on the edge of total collapse. they were wrong before. they're wrong again now. because obamacare isn't working by nearly any measure. it has failed. and no amount of 11th hour reality-denying or buck passing by democrats is going to change the fact that more americans are going to get hurt unless we do something. i regret that our democratic friends made clear early on that they did not want to work
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with us in a serious bipartisan way to address the obamacare status quo. but republicans believe we have a responsibility to act. and we are. for our constituents, for our states, and for our country. we've long called for a better way forward. and we've been engaged in intensive talks on how to get there. through dozens of meetings open to each and every member of the conference, we've had the opportunity to offer and consider many ideas for confronting the obamacare status kuo. we debated many policy proposals. we considered many different vupets. -- viewpoints. in the end we found we shear many ideas of what needs to be achieved and how we can achieve it. these shared policy objectives and the solutions to help achieve them are what made up the health care discussion draft that we finished talking through this morning. we agreed on the need to free americans from obamacare's
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mandates. and policies contained in the discussion draft will repeal the individual mandate so americans are no longer forced to buy insurance they don't need or can't afford, will repeal the employer mandate, so americans no longer see their hours and take home pay cut by employers because of it. we agreed on the need to improve the affordability of health insurance and policies contained in the discussion draft will do that. it will eliminate costly obamacare taxes that are passed on to consumers so we can put downward pressure on premiums. expand tax-free health savings accounts and deploy targeted tax credits so we can help defray out-of-pocket costs and shift power from washington to the states so they have more flexibility to provide more americans with the kind of affordable insurance options they actually want. we agree on the need to stabilize the insurance markets
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that are collapsing under obamacare as well. and policies contained in the discussion draft will implement stabilization policies so we can bring financial certainty to insurance markets and hope to americans who face the possibility of limited or zero options next year under obamacare. and ultimately transition away from obamacare's collapsing system entirely so more americans will not be hurt. we also agree on the need to strengthen medicaid, preserve access to care for patients with pre-existing conditions and allow children to stay on their parents' health insurance through the age of 26. i'm pleased that we were able to arrive at a draft that incorporates input from so many different members who represent so many different constituents who are facing so many different challenges. the draft containing the solutions i mentioned along with many others is posted
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online. and i encourage everyone to carefully review it. there will be ample time to analyze, discuss, and provide thoughts before legislation comes to the floor. and i hope every senator takes that tunalt. next week, we expect the budget -- the congressional budget office to release the score. after that we will proceed with a robust debate and an open amendment process here on the senate floor, a process that i would encourage each of our 100 senators to participate in. when legislation does come to the floor, it will present the senate democrats with another opportunity to do what's right for the american people. they can choose to keep standing by as their failing law continues to collapse and hurt more americans. but i hope they will join us instead to bring relief to the families who've struggled under obamacare for far too long. either way, either way, it's time to act. because obamacare is a direct attack on the middle class and american families deserve
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better than its failing status quo. they deserve better care. that's just what we're going to ontinue to work to bring them. >> under the previous order, the leadership time is reserved:morning business is closed. under the previous order, the senate will proceed to the executive -- vonnie: you've been listening to senate majority leader mitch mcconnell speaking on the senate floor after the republicans released their bill to repeal and replace obamacare and had been in conference for the last hour or so. and we knew that senator america connell had been pulingt this together with aides in a little bit of scressy even senators within his own party hadn't seen the details until this morning. according to many sources. joining us now, to parise through what we know and don't sahil kapur on the hill and i want to mention that senator
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america connell did say we get a c.b.o. score next week. and he's also planning to have a vote next week as well. the next week will be tight for health care. let's begin with sahil kapur on the hill. to give us an idea of how this bill is any different from what we've seen in the past from the senate on a republican version of health care. >> this is the first time we're seeing senate republicans in the seven years they've been campaigning on repeal of obamacare put pout legislation that reflects their vision on what to do about health care. this replacement bill includes more similarities than differences to the house republican legislation that they've taken up and passed. the basic features of it are the same. it's a cut to medicaid. it unwinds it and over the years, there's a phasedown that's a little bit different than the house bill. it begins in 2020 over three years and unwinds the tax subsidies, the refundable tax credits in the affordable care act and repeals the various tax
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hikes primarily on upper income earners in various health industries that were also in obamacare. so a lot of similarities. there are differences, though. some of the regulatory aspects are being dealt with differently here. there is not an option for states to waive provisions like community rating which is a provision that health insurance companies can charge people different amounts off plans based on their health status. this bill does reflect the house bill in that it allows states to waif other pieces of regulation in the affordable care act like essential health benefits. so some similarities. some key differences that i'm sure we will be hearing a lot about. 142-page bill. so senator chuck schumer the democratic leader in that chamber is now speaking. giving his reaction. we'll bring you any quotations that he might make and then we also have a reaction from president donald trump as well. he says it will be negotiated. and being potentially a
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negotiation between the house and senate. let's turn to drew armstrong who has been following the reaction from stocks such as insurers and so forth. one of the key things is that the senate wants to hand over complete sort of responsibility to the states, drew. >> yeah. hospitals are actually up quite significantly this morning. they are probably one of the most -- one of the most vulnerable when it comes to -- when it comes to what the republicans have been doing. they get a ton of money both from medicaid, which is part of a cut as well as from, you know, people who gained coverage under the law. when we look at the rollback of medicaid under the senate bill a little bit slower than what the house had. even though there's some punitive aspects further out. in the shorter term this is better news for hospitals here. you're seeing names like community health, h.c.a. and ten r tenet up this morning. vonnie: drew, some lines from chuck schumer who we can see speaking there right now. he's saying the republican bill will kick millions off medicaid.
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he's saying that the republican health bill will roll back medicaid and will strip away protections. in terms of other stocks that we've been looking at as well, we've been seeing some movement in those insurers as well. just talk us through some of the moves we've seen and perhaps some. key stocks to look at. drew: yeah. the insurers are very important to look at. obviously they are the ones providing coverage in the exchange here. and so one of the aspects that we have is that we need to see, ok, are they going to be able to stick around and is this a viable business for them? they have a lot easier ability to go ahead and adjust their business to whatever subsidies end up getting provided. they can go ahead and live with them. what they're looking for is stability and certainty about what this health care program looks like. there's also been some threats about withholding subsidies, that help poor people use their health plans. they wanted to see if those are going to get resofield. insurers, the issue for them is they will react well to this as long as it seems like there's going to be firm ground for them to operate their business. they can turn the dials up and
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down and make a program work for themselves. vonnie: capitol hill. significant revisions according to the senate majority leader. what kind of amendments would you anticipate? not that much time if he wants to vote next week. >> there will definitely be strong objections from democrats. this is what they view as their signature achievement over the last generation. and i think democrats are going to be blasting this bill as a savage cut to health insurance for low income -- people who need it the most in order to give a big tax break to rich people. that's what you're going to hear over and over again from democrats. in terms of amendments it all depends on where republicans come down. mitch mcconnell has to get 50 out of 52 republican votes. that is not going to be easy. i spoke to one republican member of congress this morning who said that it's not clear that republicans are going to get there. there are a lot of concerns that republicans have about this bill. but at the end. once it's time to make a decision and up or down decision to vote no on a bill
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after you spent seven years campaigning on it, how do you go back to your constituents and explain that? so i think amendments may happen. if mcconnell needs -- if he's short of 50 and needs to get there between now and the vote. look, it's going to be a tough slog. because he's got members on the right who want to go further and chopping some of these regulations and who want to unwind more of the subsidies and moderates, people like susan collins and lisa murkowski and leaders in medicaid states and robert portman and not comfortable with the nature of these cuts. it's going to be a tough balancing act and probably going to be the toughest fight of mitch mcconnell's tenure as majority leader. vonnie: going to be a fight for the democrats, too, sahil. nancy pelosi, in the house but already expressing concerns that this is going to be rushed through. because the republicans and the g.o.p. want to get on to fiscal matters and taxes. and she does have a point, right? they definitely want to get
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this done before the july 4 recess. because they have to go home to their constituencies. what happens? does it get done and what do they say to their constituents? many of whom really don't want this to happen? >> it's true. it's been a very secretive process. remarkably so, especially when you compare it to the affordable care act and dozens of hearings and markups and draft legislation and votes and revotes and setbacks and more votes after that. this is -- this has been written pretty much behind closed doors. it's not been through any committees. and senator america connell has centralized the process a lot. remarkable when you consider the fact that republicans were so critical of the affordable care act process back in 2009 and 2010. mcconnell has said they cannot take forever on this and republicans want to get to other things primarily tax cuts and tax reform. and the longer they let this hang, the tougher this gets for them because the senator i spoke to earlier today, mentioned that the left is very energized and they know that the left is energized and their hometown editorials are going to be against this bill.
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and it polls very badly when you ask about the specific provisions and ask straight up whether you like the house bill or not. so senators realize that this is -- republican senators realize this is something they have to do because they campaigned on it but not a popular thing for them. vonnie: thanks. drew, the market has had a few minutes to digest this. what are we seeing mostly mark movement wise? drew: it continues to be the hospital stocks that have reacted. if you look across the board. that's where the index is. and they have been sensitive to this throughout:there's going to be some benefit in here for medical device makers and pharma companies but the taxes they face repealed in the senate bill would be repealed by the senate bill are at the margins for them. and continue to think that the hospital stocks are where we're going to see the biggest action on this bill and going forward as we see this bill negotiated and changed. they try to get something together with the house. vonnie: we're not done speaking about this. that's for sure. but for the moment our thanks to drew armstrong who covers our health care coverage. and also sahil kapur on capitol
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hill. we'll get to market reaction next. this is bloomberg. ♪ nejra: let's take a look at the broader markets. investors watching the path to interest rate normalization from the bank of england giving mixed signals on rate hikes while the yield curve continues to flatten in spite of the fed's decision to raise its benchmark interest rate. to break it all down is intellectus partners chief economist ben emons. great to have you on the program. and we talked there about the yield curve flattening even while the fed is hiking. historically that does tend to happen. so that's not necessarily surprising. but we were talking earlier about the curve as well. and how you trade around it prima tezura -- the rate
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lowest since october. what's your take on how the market is looking at inflation expectations and interpreting it? ben: thank you very much for having me. so there's some dynamic on this curve you're seeing. really what's going on is that on the very short part of the curve is where the -- falling the most and that's related to energy. that's where i think downward inflation pressure is priced in. and the low end of the curve there's very much of a feel that yes, inflation is under control. it's below target. and priced out 30 years below target but not necessarily the deflation risk that's priced there. long-term real interest rates are actually lower than since the start of the year. despite the fed has tightened three times. that's the dynamic. long term tips investors are probably long-term real interest rates are somewhat mor optimistic that inflation remains relatively stable and under control. nejra: right. and you've talked about the impact of the oil markets on
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this as well. when you sort of look at that feeding into the broader pick fewer, does it concern you that we're in a bear market now in terms of how this might fit into sort of corporate high yield and the energy sector and then the impact that can have more broadly? ben: right. so there is obviously a point there. the oil markets carefully watch and a lot of supply-demand dynamics happening. in the broad term if we go back to 2015-16, when the oil market is really breaking down, the high yield energy market has a significant amount of leverage and there has been defaults have happened there and restructuring of debt has happened there. and those markets have recovered. but we're somewhat revisiting that episode and still very marginal of spreads there unlike the 2015-2016 episode but to be watched. if we do break down in oil, then that sector will get pressure in -- and could spill over to the broader investment grade market. nejra: ben, if the market -- is the market mispricing the
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federal reserve's intentions at the moment as pria said earlier? ben: the market is taking on two views. one, currently priced into the market, and been signaling lately that we're going to see a pause in the tightening cycle for the next few months. it looks like they want to start normalization by september. at the same time, the market has priced in further out that the fed funds rate can normalize somewhat further. i don't think the market has mispriced it and the market has taken onboard the fed is taking this optimistic approach to tightening over the next two years. and this explains why the flattening is happening. if you were to go faster than we who get much more steepening. the market is pretty much on par of where the fed wants to be going. vonnie: if the balance sheets, normalization starts, that process starts this year, early next year, and then we get a change at the leadership of the federal reserve, what happens then? does that process stop immediately or does it
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accelerate? ben: i'm not sure if it immediately happens. but there's one thing to know in some of the fed board -- potential fed board appointees there's more of a thought about the policy is something really of the past. they want to focus on interest rates. one of those prospective arguing s to the board for negative rates in the u.s. in the future. and so clearly there's a different line of thinking there in that potential future leadership in regard to interest rates is an important shift because toward more interest rate policy the policy plays less of a role and take a couple years and not like immediately. i think for the moment we're going to continue with seeing this very gradual tightening cycle with this normalization under way and done in moderate fashion because they built in these caps to not have interest rates get too volatile. nejra: speaking of volatility, ben, so first of all, what the
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bond market really has been showing is that it's really not convinced by the fed's tightening path as we've just been talking about. the treasury, 10-year yield. the yield falling. so we've seen the dollar underperform this year. the euro meanwhile, one of the best performing g-10 currencies sterling also you've been keeping a close eye on, particularly after the various news we've had out of the bank of england this week from policymakers. when you look at volatility, what sterling also you've been keeping do you see versus euro volatility? ben: that's an interesting point. what's been happening is since yesterday, one of the b.o.e. members came out that the bank of england may have to start rarings rates sooner and volatility has picked up a lot. this has a lot to do with the bank of england is in a bit of a dilemma situation and could keep rates on hold to support sluggish growth or raise rates to keep inflation under control. and i think the pound gets more
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volatility and will get pretty choppy in that 123 or 128 range and we're seeing particularly volatility in longer maturity, three to six months from now, is higher than shorter maturity and also rising relative to euro. that has a lot to do that there's a fair amount of uncertainty about when the bank of england could potentially hike. i do think historically the bank of england has followed the fed first before the e.c.b. did. so if inflation continues to rise, and we'll see this report on july 18, and flarings continues to rise in the u.k., it's not unlikely the market is -- and pricing 50% to 80% probability of a first hike by later this year into next year. nejra: we've seen some of that repricing for a hike in 2017. so looking at the dollar then, against sort of the euro and the yen, what's your outlook for how the euro and the yen are going to perform versus the dollar for the rest of the year? because we've seen some changes in strategists' outlook for
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that. ben: i would think though that the euro has somewhat more scope to rally from here. one, the economic momentum, europe is being good. it's actually continuing not to show any kind of like change there. in addition, there isn't -- there is anticipation the e.c.b. will pay for its q.e. program starting as of next year. so all kind of helps the euro to strengthen. the yen on the other hand is a bit of a -- also catch-22 currency i would call it that way meaning the bank of japan has signaled that it doesn't want to make any changes but yet it too is facing at some point -- will have to do something about control. i think the yen has upward bias to weaken versus the dollar because the bank of japan is still very stuck with a 10-year rate at zero in order to have much stimulus to keep inflation not falling back into deflation. nejra: thank you so much. ben emons of intellectus partners there joining us on the program. thank you again. vonnie: just wanted to recap
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some of the health care news and we have the g.o.p. health bill. senator mcconnell speaking on the floor having had a conference with republican members. whom we're seeing -- who are seeing the text of the bill for the first time. it tree lice on subsidies which is something republicans have faulted in order to keep some insurers in the exchanges. and it also whom we're has more the states. we have more analysis coming up. lots of market reaction as well. and the european clothes. this is bloomberg. ♪ [ noises inside can ]
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[ laughing ] it's driving me crazy come on. [ spitting from tongue ] time for my secret weapon. sports, movies, tv, ah, show me music to distract a minion. [ voice remote click ] oh! [ pharrell starts to play ] [ minion so happy to see screen ] ahh! i'm pretty smart. ahhh! [ lots of minions ] [ mooing sound ] show me unicorns. [ click noise for tv ] ahhh! that works too. find your awesome with the xfinity x1 voice remote. see despicable me 3. in theaters in june. nejra: live from london and new york this is the european close and i'm nejra cehic with vonnie quinn. equities finishing up the day in european trading and all of the market action today. here on the g.m.m. you have equities here on the left. and we are seeing losses across quite a few of the indices, italy's ftse 100 down by .6%.
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greiss' exchange down more than 1%. overall, looking like we're seeing a third day of losses for the stoxx 600. europe's equity benchmark. and a little weak on the euro off by almost .2%. 111.52. the pound steady after whipsawing yesterday and initially weaker and then spiked on hawkish comments from b.o.e. policymaker andy holliday. a little bit of a mixed picture if we look at the fixed income space. almost 2% above $45 a barrel. 45.68 and metals, industrial metals on the london metal exchange bid as well. looking at the stoxx 600, so i can refresh this for you but it does look like we were actually heading for the worst three-day drop in a month on the stoxx 600 but we finished up pretty much flat. so it seems to have recouped some of its losses. you can see a lot of these industry groups heading lower, consumer staples leading the
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losses. with energy still down by .2%. health care outperforming on the upside, though. this seems to be what is largely lifted the stoxx 600 out of the doldrums today. and of course we're seeing those health care stocks in europe move on the news out of the u.s. and out of those health care stocks, some of the best performers have been novartis, and sanofi, train day. both of those companies have large exposure to the u.s. the u.s. i believe, the biggest markets. novartis also moving on some specific news to it. on a drug trial. now, moving on to the energy stocks, i did say they're still lower today. worst performing industry group this year. and we can see there on the oil and gas index, the stoxx 600 index it has broken a key support level. the 38.2% fibonacci and on the u.s. if we look at the stoxx 600 versus the s&p 500, we're seeing a correlation breakdown.
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vonnie: we're going to get through this fast because a lot happening in washington, d.c. and we want to get back to that. but taking a look very quickly at the yen which is still bid. 11-41. analysts are looking for a 25 basis point increase and augustus karstens at the helm for the decision. and meredith winter will have an interview and mexico finance minister. the spread widening just a teeny little bit. crude oil as low as it was. let's take a quick look at g.m.m. we'll see many indices are gaining today after having lost some yesterday. the ruble as well is stronger. at 59.83. let's move on because there are other stories not just capitol hill. bank stocks are moving. the results of the fed stress test or at least the first part. abigail doolittle has more. abigail: we are looking at mainly declines for the banks heading into the release of the
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fred stress test. we have bank of america, citigroup and wells fargo all trading lower. j.p. morgan has flipped higher but the second worst sector for the s&p 500 down three days in a row today in sympathy with yields. let's break down what it looks like. the fed stress test release. now, it does come in two parts. today we have the quantitative part. basically playing out different scenarios on hypothetical scenarios on each back's capital. did i speak to charles peabody an analyst over at compass point financial. he says today is not significant. what could prove to be significant is next week the qualitative part. this will include risk management, plus data collection and pore processes. now, it is expected for the first time or the last seven years, that the 34 banks to be tested are going to pass. the one exception could be wells fargo. both u.b.s. and morgan stanley have said that on that qualitative part next week, wells fargo could have issues around that whole fake account scandal. something else to take note of. banks may return $121 billion
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to sharleds. and a great chart what's expected to be returned this year as opposed to last year. and if we quickly take a look at this chart in the bloomberg, this is -- takes a look at the barvings out of the election in yellow. tying the top spot with tech. both up about 20%. the banks had been the runaway winner. but with yields falling to some extent we have had the banks again join tech as that top spot. both beating the s&p 500 out of the election, vonnie. vonnie: be a dale doolittle -- abigail doolittle, thank you for that breakdown. the g.o.p. releasing its health care plan and we have bloomberg's sahil kapur with more analysis. there were some differences and a lot of similarities, too. sahil: that's right. there are a lot of similarities. the basic shape of the senate republican health care bill is
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-- is very similar to the house bill. and it includes steep cuts in medicaid. it caps that spending over the long haul. it ratchets down the obamacare tax subsidies and kind diminishes the eligibility for that and includes a series of tax cuts on health industry groups and upper earners. things like a net investment tax and medical surtax that affected the highest earners. unlike the house bill -- vonnie: back to senate -- sahil, i'm so sorry. we have to go and listen now to paul ryan. >> last thing i want to do is be disrespectful of their process. they have a lengthy process ahead of them. the bottom line is i want them to pass the bill so we can all get down with keeping our promise. you got to remember the system is collapsing. it's -- anthem, blue cross pulled out of wisconsin. that's one of the most flagship health insurers we've had for many, many years. this system is in a tailspin. we made a promise we will
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repeal and replace this law. i'm very happy that the senate has gone through the work of putting together a bill that keeps that process. and so yeah. i'm eager for them to pass but i'm not going to opine on the deails as they go along. reporter: you referenced the process. they have done this behind closed doors. and in you a recent interview talked about the fact your process was open and very proud of that. are you comfortable with the way that -- >> you release after -- this is a talking point in search of a problem. you don't release a bill before you finish writing the bill. you write the bill and then you release the bill. that's what the senate's done. reporter: they want to vote next week. the american public to digest it and debate it? reporter: do you think this increases in discretionary spending appropriations should be matched by spending cuts elsewhere in the budget? >> yeah. if you're asking for -- if we have a cap adjustment, should we have offsets mandatory, i think the answer is yes. the question is quality and
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quantity. reporter: you said that health care bill in the senate does track so closely with the house bill. do you anticipate that the house would take up the senate bill? >> it's premature to say what -- we haven't made that decision yet. they're just beginning their process. and we're not at that point of making that kind of decision yet. reporter: can you address the senate bill? there's the -- >> how many of you know what the blue ship problem is? so this is a very technical issue. but it's the constitution. so we take that very seriously. my understanding is the ways and means is giving the technical assistance, the senate needs to make sure that they can form -- the origination clause and the blue ship. ed royce, chairman of the foreign affairs committee, has indicated these -- he's very eager to move this bill. we want to get this bill cleaned up. we need foreign affairs to do their scrub of this legislation which is what we do on every time a bill comes over from the senate. but chairman royce is indicating wants to get moving
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on this quickly and we want to honor that. >> is that going to be a formal committee where they will mark up that bill -- >> don't know the answer to that. we want to get moving on it. but we got to honor the blue ship which is a constitutional origination clause issue. that's why we asked ways and means which is in charge of this to make sure that they give senate foreign affairs or foreign relations the technical work they need so they can get this right. reporter: can you support the -- >> i support sanctionings. i've always supported sanctions. i'm going to let hvac foreign affairs do their scrub to make sure that the bill is written the right way. that it's in good shape and wants to get moving on this bill and important to do that. reporter: so president trump -- >> who are you with? >> i'm c.n.s. nution. -- news. president trump 2018 budget calls for eliminating the federal funding for the corporation for public broadcasting. do you support that proposal and will you follow the funding elimination of the c.d.t. outlined in the president's
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budget? >> i'll refer you to the appropriators. they are getting ready -- they're getting started on their bill. so i don't get too deep into the microdetails like that. i refer you to the appropriators. reporter: a budget question for you. diane black, the budget chairwoman is supportive of the idea that mandatory cuts some of your other chairmen not comfortable with the idea with knows savings. and i know you're still having your discussion. but how do you envision going through this? a halfway point or -- >> deja vu all over again. i served as budget chair or ranking member for eight years. i had niece kinds of conversations each and every year. with the other authorizing chairs. she is doing a fantastic job of getting consensus on the kinds of instructions we need to make sure that we get some savings out of the budget. every budget should have savings. and diane black is doing that. just like any other other
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budget chair should and she's going through and talking to each authorizer about the kind of targets they can hit. that's the way the budget process works. so i'm kst she'll get that done. that she will find consensus with our other chairs and that's how you put a budget together. reporter: do you think it might be appropriate for the senate judiciary committee to obtain a former attorney general loretta lynch? >> i'm not going to comment on what they're doing. that's not even in our bailiwick. reporter: i was just going to ask you, knowing how hard it was for you to pass the house bill, the health care plan, was there any red flags when you were briefed on the bill that came to your attention when you thought hey, my members, i'm going to lose 15 or 20 -- >> i don't see any of that yet. because like i said, i know how hard this is to pass a bill like this. what was helpful to us that we didn't have senate leadership playing arm chair quarterback with us. the last thing i want to do is play arm chair quarterback with them. i want to respect their process and not opine on the
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microdetails. i haven't read through all of the bill myself. i've just been briefed on its basic contents. but what's important is that they pass their bill. that we get this process going. so that we can keep our process. >> last question. >> one more time. reporter: can you tell us more about -- >> i'll let the doctors -- yeah. what we have decided is we're not going to be the ones commenting on it. prognosis or more progress other than to say i had a great meeting with steve this morning. and he's bright. he's alert. he just wanted to go through the agenda and wanted to go through the latest whip and what's coming on the floor next week. he just wanted to brief on work. and he was just so thankful for also by the way, we're doing blood drives here. he's very thankful for that. he's very thankful for the outpouring of support that he's received from friends and colleagues and people from louisiana. and so he was just very, very taken and moved. and just to hear him talk about bailey and crystal and his
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affection for them, and his thankfulness for them it's really something. but he seemed like he was doing real well. thanks. bye. vonnie: you've been listening to house speaker paul ryan give his news conference and this of course following senate majority leader mitch mcconnell unveiling that health care bill. and now paul ryan says he hasn't seen the senate bill. but he has been briefed on it. he says the senate has lengthy process ahead. and he says he understands that it tracks in many ways the newhouse bill. we're going to return to capitol hill now and our national political reporter sahil kapur. sahil, at first listen it doesn't sound like paul ryan is too excited about this bill. he says he hasn't even read it but understands it's similar in some ways to the house bill. how much will power is there to come to a compromise? sahil: it is similar in many ways to the house bill and speaker ryan has been asked repeatedly about the process by which this bill has come together. very secretive. even the senators whose votes are needed on this have not
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known at many stages what's going to happen. speaker ryan said as he has said before he refuses to arm chair quarterback the process and doesn't want to criticize what they're doing. this is ultimately going to come down to a matter of substance and to your point about the negotiations, there's an enormous amount of will between house and senate republican leaders to come to a resolution on this and to send the bill to president trump's desk just to get this out of the way if nothing else. some of them want to do this and some not and some members are not keen on the policies but something they have to get out of the way. so the will is absolutely there. the differences are very important on the margins. more generous tax subsidies in the senate bill for older and poorer people. this is something that a number of senators have wanted. and a longer medicaid expansion phaseout which they deal with by cutting off more funds later on. so there is a will to get to a resolution but negotiating the fine points is probably going to be a very, very tough slog if they manage to get it through the senate to begin with. vonnie: we will be returning to this not too long from right now. but for the moment, our
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national political reporter sahil kapur there on capitol hill. thank you. nejra: the news is not slowing down today. warren bufmente's berkshire hathaway providing a lifeline to home capital group, the embattled canadian alternative lender. joe weisenthal is joined by a member of home capital board. joe. joe: i'm joined by alan hiben, h.c.g. board member. thank you very much for joining us. so let's start with the basics. how did this deal with warren baoust and berkshire hathaway come about? >> well, we've had a process undergoing for about six weeks. and we've been out there. we announced that we were seeking strategic alternatives. and that process has been pretty robust. both in terms of strategic partners as well as financing alternatives and asset sale alternatives. so berkshire hathaway emerged out of that process.
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and that's how we got together. joe: did the provincial government play any role in bringing you together or was this purely in the private sector realm? >> this was 100% in the private sector. the gofments of any stripe had nothing to do with it. joe: let's talk about some of the aspects of the deal itself. these are better terms than the company previously had from the hoop line of credit. how does this -- how does the ultimate numbers compare to what you're ultimately going for here? >> well, when we entered into the agreement with berkshire hathaway, we were really focused on what would be the stand-by fee here as you're aware in the hoop facility, there was a stand-by fee of 2.5% and a drawn interest rate of 10%. in this facility as after we execute under the first traverage a 9% interest rate. and very importantly for us only a 1% stand-by fee.
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and that was particularly important as we expect to be able to pay down the facility to zero over the course of the next 45 consolidation. joe: let's talk about h.g.c.aries brand right now. berkshire hathaway or warren baoust specifically talks a lot about the importance of brand value and how you can spend years building it up and destroy it in a few minutes. what is the brand value of h.c.g. given the recent troubles? >> well, i think there's no question that the brand value has been negatively affected by this and the brand value actually of the canadian alternative mortgage market has been negatively affected by this. it remains to be seen whether we can recover the brand value. but what i can tell you is that even before we did the deal with berkshire hathaway, we were seeing a very strong return to our deposit flows.
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and we expect that with this stamp on us, that that should improve dramatically from there. in the long run, are we going to be an h.c.g. brand? i can't speculate on that. but for now it seems to be working. joe: and then the model of h.c.g. going forward. first of all, do you have more liquidation plan to reduce the balance sheet and improve liquidity or at this point, have you done enough on that front? >> well, i think we have a number of transactions that are in process. as i said, we're definitely looking over the course of the next 45 days to execute on a couple of transactions that would in addition to the mortgage sale transaction, we announced with kingset earlier this week, would reduce the amount under the new credit facility to zero. i think after that, we're kind of done. we're not planning on shrinking the balance sheet any more. and we're actually hoping that if the deposits come back, that
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we'll get a positive bump. and the balance sheet will grow again. joe: this basically anticipated my next question -- sorry. we have to wrap right now. i believe we have some video we have to take. one moment. vonnie: we are absolutely going to take some video. thanks for that, joe. let's listen to the president of the united states. president trump: little negotiation but it's going to be great. k. i'll go over. vonnie: that was the president. we didn't see the full tape play jark but he was reacting to a question about the senate releasing the text of its version of the health care overall earlier on today. we heard earlier from mitch mcconnell on the senate floor a reaction from the senate minority leader chuck schumer as well and many others weighing in including the house speaker and house minority leader, nancy pelosi.
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we're going to return to joe wiesenthal. joe: back with alan hibben, h.c.g. board member and news out about warren buffett's berkshire hathaway making an investment in the challenged canadian lender. i want to go back to the future business model. you talked about if the deposits continue to grow, then in theory the -- expand the balance sheet again. in the future, do you see h.c.g. as a balance sheet business primarily or more on the origination and fee front? >> well, i think we -- we are hoping to grow the balance sheet. i think, though, there has been somewhat of a permanent change in the market for alternative mortgages in canada because of this. and other matters around both government policy and regulation. so i would say yes, we're going to continue to be dominated by being a balance sheet lender. but i think there will be a strong push that we're going to
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have into what we call the capital markets business. which is really an originate to sell and originate to securitize business. and that we hope to start moving on through the fall and try to introduce that in the early part of next year. joe: so it will be a sort of hybrid, won't be quite at the same level as it was before. but there will be -- there still will be a balance sheet aspect to the business. what specific on the regulatory front are you dealing with that's going to shape the nature of what h.c.g. looks like? >> well, we have nothing specific on the regulatory front at the moment. but everyone will have read the policy statements coming out of the bank of canada. coming out of the department of finance that they're looking to continue to cool the housing market in canada. and one of the levers that they have in order to cool the housing market in canada is the mortgage business. and so while we have nothing
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specific that we are worried about, we have a general concern that those sorts of policy levers will be pulled. joe: beg picture, the state of the canadian housing market. because obviously that's become a subject of fascination around the world. people in the u.s. are paying attention to it. wondering where it's going. what's your assessment of things right now? from a macro perspective? >> well, why don't i start with the microperspective. which is that we have portfolios of alternative mortgages which are by definition different than the prime mortgage business where we have nonperforming loans of 24 basis points and writeoffs of three basis points so that is a very attractive business here. and in a marketplace that has already been cooled to some extent by government policy and as i said, may be cooling a bit more. so while obviously we're very
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interested and looking very closely at home values, particularly in toronto and the greater vancouver area, we are not seeing this to be as dire as some commentators might be, particularly those from outside canada. joe: alan hibban of h.c.g. thank you very much and really appreciate you giving us context on the big news today about the investment from erkshire hathaway. vonnie: joe wiesenthal. let's get back to capitol hill. kevin crirli is very close to the senate majority leader's office and hearing some protests happening outside that office. we're going to continue to cover that and see what emanates from there. because we have been getting those headlines for a little bit now that there has been some protests. this all of course after the g.o.p. finally brought out the text of its health care bill. we've been waiting for it for a
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long time. we knew that the senate majority leader was in secret talks with his aides and putting together the secretly many, many g.o.p. senators have said that they hadn't heard or seen anything that was coming out and frutched with the secrecy of the process. well, it was unveiled 142 pages. many similarities with the house version of the overhaul. so now let's get to capitol hill. and the senate majority leader's office, kevin cirilli is outside. kevin, what can you tell us about the protesters? kevin: i'm outside isn't that right majority leader mitch mcconnell's personal office. in a building across from the capitol part of the capitol compound. you'll see the protesters behind me as well as the heavy presence of reporters and authorities. they've cleared the scene of several of these protesters who had staged what they're calling a "die-in" to protest the senate majority leader's health care bill. i spoke to a source connected with the senate majority
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leader's office and told me some of the protesters entered into the senate majority leader's personal office without consent. and that the 24-year-old staffer, the staph assistant who was sitting in the front office, was cornered according to this source and entrances were blocked. this staffer had pressed the duress but -- button in order to alert authorities. so clearly a lot of activity here as protesters are being escorted out by police. in protest of the bill. vonnie: do we know where these protesters are from, any particular group or groups or any particular state or states? kevin: as of now, it is unknown just who organized these protests. but i can tell you that i had to leave a senate banking committee hearing where the police -- the regular police that are accompanying these types of hearings actually were called in to help with this scene that is going on behind me, vonnie. vonnie: all right.
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kevin, how would they have been allowed in? is it open access, free for all and can anybody get to the senator's personal office? kevin: well, outside of the public rooms in dirkson and hart these are public buildings. and so really anyone after 10:00 a.m. is allowed to enter through public entrances with security measures. and frequently folks from all throughout the country gather in these offices to meet with their senators and to sometimes even stage protests. but this type of protest is very rare. very uncommon. and we haven't seen anything like this in quite some time. a mafe police force of the capitol police outside senate majority leader mitch mcconnell's office. vonnie: could you put a number on how many you've seen so far? kevin: several dozen. at least two dozen protesters. i saw police officers carrying out one protester as a result
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as well. vonnie: so a peaceful protesters we can see so far of several dozen people outside. senator mcconnell's personal office. do want to mention that president trump has taken questions on the health care rollout from the republicans. he said the bill is going to be negotiated and it will have heart. he was speaking of course at a technology event that's taking place at the white house today. we're going to continue our coverage of the g.o.p. health care bill and much, much more right here on bloomberg markets. this is bloomberg.
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vonnie: it's noon in new york, 5:00 in in london and hong kong. iseman vonnie quinn. elcome to bloomberg markets. world headquarters the top
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stories on the bloomberg and around the world that we are following. the senate releasing its proposal to replace obamacare. senate majority leader mitch mcconnell has said he wants to vote on the bill by next week. a major stake in the airline after president trump accused qatar the country of funding terrorism. and we look at how moves to overhaul banking rules can affect regional strikes. we'll speak to the c.e.o. of the largest lender bill rogers of we do want to get to the markets and halfway into the trading day and we have had some major market-moving news today. nejra: we have indeed. and that major market moving news. that news you're talking about is the release of the g.o.p. and the senate, the health care bill, the discussion drafflet


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