WEBVTT - Debt-Limit Talks to Intensify; Musk's Advertising Shift 0:00:03.800 --> 0:00:07.000 From the Bloomberg Interactive Brokers Studios. This is Bloomberg day 0:00:07.000 --> 0:00:08.799 Break for Wednesday, May seventeen. 0:00:09.000 --> 0:00:12.119 Coming up today, Debt ceiling talks could get more intense. 0:00:12.160 --> 0:00:14.720 With just fifteen days till potential defaults. 0:00:14.760 --> 0:00:19.600 President Biden cuts short his overseas trip to focus on negotiations. 0:00:18.840 --> 0:00:21.360 The Fed pause, debate heats up, and. 0:00:21.320 --> 0:00:25.599 Elon Musk may turn to advertising to sell more Tesla's New. 0:00:25.560 --> 0:00:29.360 York City is looking at standalone school gyms to house migrants. 0:00:29.400 --> 0:00:32.440 Plus a major ruling in North Carolina on an abortion band. 0:00:32.640 --> 0:00:33.519 I'm Michael Barr. 0:00:33.560 --> 0:00:37.640 More ahead, I'm John Stanshdaron Sports Another Aaron Judge, Homer 0:00:37.680 --> 0:00:38.319 to Yankee Wain. 0:00:38.360 --> 0:00:40.879 Another loss for the Mets. The Nuggets took Game one 0:00:40.920 --> 0:00:41.640 from the Lakers. 0:00:43.720 --> 0:00:47.120 That's all straight ahead on Bloomberg day Break, The Business 0:00:47.159 --> 0:00:49.640 News You need to sturn your day in just one 0:00:49.720 --> 0:00:54.200 fifteen minute podcast each morning on Apples, Spotify, the Bloomberg 0:00:54.240 --> 0:00:56.920 Business app, and everywhere you get your podcasts. 0:01:00.000 --> 0:01:01.320 Good morning, I'm Nathan. 0:01:01.040 --> 0:01:04.000 Hager and I'm Karen Moscow. Here are the stories we're 0:01:04.040 --> 0:01:05.559 following today, Karen. 0:01:05.640 --> 0:01:08.800 Debt ceiling talks in Washington are about to get more intense. 0:01:08.880 --> 0:01:11.960 The earliest state for a possible government default is now 0:01:12.040 --> 0:01:14.920 just fifteen days away, and President Biden and House Speaker 0:01:15.000 --> 0:01:18.240 Kevin McCarthy have agreed to keep talking. They'll have a 0:01:18.319 --> 0:01:20.800 smaller group of negotiators in the room to try to 0:01:20.840 --> 0:01:24.199 reach a deal. The President is sounding cautiously optimistic. 0:01:24.560 --> 0:01:26.600 Well, there's still work to do, but I made it 0:01:26.640 --> 0:01:29.640 clear to the Speaker and others that will speak regularly 0:01:29.680 --> 0:01:31.640 over the next several days, and the staff's going to 0:01:31.680 --> 0:01:36.520 continue meeting daily to make sure we do not default. 0:01:36.640 --> 0:01:39.160 And Speaker McCarthy says it is possible a deal can 0:01:39.200 --> 0:01:40.559 get done by the end of the week. 0:01:40.840 --> 0:01:41.440 It's not that. 0:01:41.560 --> 0:01:47.240 Difficult to get to an agreement when you think about limits. 0:01:47.240 --> 0:01:50.960 Save grow the bill we passed, We raise the debt ceiling, 0:01:52.160 --> 0:01:55.960 we cap future spendings. 0:01:56.120 --> 0:01:58.520 So far, there's one thing both sides agree on. They 0:01:58.520 --> 0:02:00.960 say default is not well. 0:02:01.000 --> 0:02:03.960 As talks drag on, Nathan, the President is shortening his 0:02:04.080 --> 0:02:06.840 trip Overseas to focus on negotiations. 0:02:07.120 --> 0:02:11.320 I'm cutting my trip short. I'm postponing the Australia Portional trip, 0:02:11.360 --> 0:02:14.960 and I've tripped my stop in Papua New Guinea in 0:02:15.040 --> 0:02:18.360 order to be back for the final negotiations with congressional leaders. 0:02:18.600 --> 0:02:21.080 President Biden had hoped to use those stops to counter 0:02:21.120 --> 0:02:24.280 Shounas influence in the Asia Pacific region. The White House 0:02:24.320 --> 0:02:27.640 says it looks forward to finding another way to engage 0:02:27.639 --> 0:02:29.160 with those countries in the coming year. 0:02:29.320 --> 0:02:29.440 Well. 0:02:29.480 --> 0:02:33.160 Meantime, Karen, a potential GOP presidential contenders, weighing in on 0:02:33.240 --> 0:02:36.840 monetary policy. Former Vice President Mike Pence is calling for 0:02:36.880 --> 0:02:39.560 an end to the Fed's dual mandate. He says the 0:02:39.560 --> 0:02:42.200 central Bank should focus only on fighting inflation and leave 0:02:42.280 --> 0:02:45.480 job creation to Congress and the President. Pence tells Bloomberg 0:02:45.520 --> 0:02:47.960 the FED should return to its historic mission of ensuring 0:02:48.080 --> 0:02:49.440 sound monetary policy. 0:02:49.919 --> 0:02:51.960 Meantime, Nathan, the debate on what the FED should do 0:02:52.080 --> 0:02:53.920 right now appears to be heating up, and we get 0:02:53.919 --> 0:02:55.720 the details from Bloomberg's John Tucker. 0:02:55.840 --> 0:02:59.280 John and Karen. Investors bet the FED will pause their 0:02:59.320 --> 0:03:02.399 cycle of inter straight hikes next month, but the officials 0:03:02.400 --> 0:03:05.240 who make the decision sound more on the fence. We 0:03:05.320 --> 0:03:07.959 spoke with Richmond FED President Tom Barkin. 0:03:08.040 --> 0:03:11.440 Put me down as tracking the information, tracking the death sailing, 0:03:11.480 --> 0:03:14.079 tracking credit tightening, and we'll make a call when we get. 0:03:13.919 --> 0:03:16.280 Closer to the meeting at the same time, the Chicago 0:03:16.320 --> 0:03:19.919 Fed President, Austin Gulesby says it's too premature to talk 0:03:19.960 --> 0:03:23.639 about cutting rates. He tells Bloomberg decision makers need more 0:03:23.760 --> 0:03:25.040 data and more time. 0:03:25.560 --> 0:03:29.280 Inflation is down and continues to make progress. It's not 0:03:29.360 --> 0:03:31.919 as fast as we wanted it to or we expected 0:03:31.960 --> 0:03:36.560 it to be, and therein lies the that's the note 0:03:36.560 --> 0:03:39.320 of the of the issue of can you get it 0:03:39.400 --> 0:03:42.240 down more without starting a recession? 0:03:42.480 --> 0:03:45.400 Gulesby says, when you have financial stress like the bank 0:03:45.480 --> 0:03:48.400 turmoil plus big rate increases that take a while to 0:03:48.440 --> 0:03:50.720 have their full impact, you want to take those into 0:03:50.720 --> 0:03:53.640 account when you're looking to land the plane. Barking and 0:03:53.640 --> 0:03:57.240 Gulesby spoke to Bloomberg at a Fence symposium in Florida. 0:03:57.320 --> 0:03:59.040 I'm John Tucker, Bloomberg Daybreak. 0:03:59.080 --> 0:04:01.800 Okay, John, thanks and stay tuned for more from Austin Golesby. 0:04:01.800 --> 0:04:04.320 Will bring you our interview with the Chicago Fed president 0:04:04.320 --> 0:04:06.040 coming up shortly on Bloomberg Day Break. 0:04:06.280 --> 0:04:08.400 Well, we moved to corporate news now. Nathan and Elon 0:04:08.520 --> 0:04:11.440 Musk is poised to make another strategy shift at Tesla, 0:04:11.480 --> 0:04:14.280 and now he's eying an advertising strategy to sell more cars, 0:04:14.320 --> 0:04:16.240 and Bloomberg's Ed Baxter has the details. 0:04:16.760 --> 0:04:20.120 Musk says Tesla will dabble in some advertisements. This is 0:04:20.120 --> 0:04:23.120 a major departure for the twenty year old company. At 0:04:23.120 --> 0:04:26.440 the annual shareholders meeting, he said, quote, we'll try a 0:04:26.480 --> 0:04:30.440 little advertising and see how it goes. Tesla has prided 0:04:30.480 --> 0:04:32.839 itself on word of mouth and not needed the cost 0:04:32.880 --> 0:04:36.560 of advertising, Musk says, now it is worth a try. 0:04:37.000 --> 0:04:39.040 He says he's already tipped a toe in the water 0:04:39.160 --> 0:04:43.479 on Twitter, and also the move is not fully formed strategy, 0:04:44.000 --> 0:04:46.600 but a bit of a foot on the accelerator, if 0:04:46.600 --> 0:04:50.279 you will. In San Francisco, I'm at Baxter Bloomberg day Break. 0:04:50.360 --> 0:04:51.200 Okay, Ed, Thanks so. 0:04:51.240 --> 0:04:53.279 Wal Musk may change the way he sells cars, he 0:04:53.360 --> 0:04:55.800 is not changing stands when it comes to working from 0:04:55.839 --> 0:04:56.760 home and Bloomberg. 0:04:56.800 --> 0:04:58.760 Steve Rappaport joins us with more on that. 0:04:58.920 --> 0:05:02.080 Steve, Good morning, Nathan. In Karen Elon, Musk continues his 0:05:02.160 --> 0:05:05.479 crusade against the virtual commute, telling CNBC it's not just 0:05:05.520 --> 0:05:08.039 bad for productivity, it's also morally wrong. 0:05:08.240 --> 0:05:10.239 You're going to make the people who make your food 0:05:10.279 --> 0:05:12.360 that gets delivered that they can't work from home. 0:05:13.120 --> 0:05:15.679 You know, for the people that come fix your house, 0:05:15.960 --> 0:05:17.839 they can't work from home, but you can. 0:05:18.640 --> 0:05:20.280 Does that seem Marley Wright. 0:05:20.120 --> 0:05:23.960 Musk, speaking after Tesla's annual shareholder meeting, also lambasted tech 0:05:24.000 --> 0:05:27.200 workers as the laptop class living in La La Land, 0:05:27.400 --> 0:05:30.000 live in New York. I'm Steve Rappaport Bloomberg Daybreak. 0:05:30.040 --> 0:05:32.360 All right, Steve, thanks well. In banking news this morning, 0:05:32.400 --> 0:05:35.279 we're seeing the former CEO of First Republic Bank blaming 0:05:35.360 --> 0:05:38.479 others for his company's collapse and prepared testimony to be 0:05:38.520 --> 0:05:41.880 delivered to a House committee hearing. Michael Roefler said his 0:05:42.000 --> 0:05:45.640 bank's collapse was due to contagion from other regional bank failures. 0:05:45.920 --> 0:05:48.960 Jpmoregan agreed to buy First Republic earlier this month, after 0:05:49.000 --> 0:05:52.360 it became the second largest bank failure in US history. 0:05:52.200 --> 0:05:52.719 And in Europe. 0:05:52.800 --> 0:05:56.080 Karen UBS estimates the nearly thirty five billion dollar gain 0:05:56.240 --> 0:05:59.160 as a result of its emergency takeover of Credit Suisse. 0:05:59.320 --> 0:06:01.640 At the same time, the Swiss bank warns it faces 0:06:01.680 --> 0:06:05.040 billions in potential legal and regulatory costs from the acquisition. 0:06:05.600 --> 0:06:09.440 UBS stands to benefit from the combined firm's negative goodwill. 0:06:09.400 --> 0:06:10.320 And straight ahead. 0:06:10.400 --> 0:06:14.320 We have your latest local headlines, plus a check of sports. 0:06:14.720 --> 0:06:16.560 And this is Bloomberg. 0:06:21.200 --> 0:06:22.400 I'm how to take a look at some of the 0:06:22.440 --> 0:06:24.960 other stories making news in New York and around the world. 0:06:24.960 --> 0:06:27.719 For that, we are joined by Bloomberg's Michael Barr. Good morning, Michael, 0:06:27.800 --> 0:06:28.679 Good morning, Nathan. 0:06:28.720 --> 0:06:31.160 New York City is looking it up to twenty schools 0:06:31.200 --> 0:06:35.480 with standalone gyms to house migrants. Mayor Eric Adams told 0:06:35.480 --> 0:06:39.640 Fox five about sixty five thousand asylum seekers have come 0:06:39.880 --> 0:06:43.680 through the city so far, including forty two hundred last 0:06:43.720 --> 0:06:44.520 week alone. 0:06:44.640 --> 0:06:47.480 I'm really calling on all of us who take notice 0:06:47.480 --> 0:06:50.760 that this is going to impact every city service that 0:06:50.839 --> 0:06:52.760 we deliver to the people of this city. 0:06:52.839 --> 0:06:53.640 And it's just wrong. 0:06:53.960 --> 0:06:56.360 A New York City should not be carrying a burden 0:06:56.400 --> 0:06:57.480 of a national problem. 0:06:57.600 --> 0:07:00.760 Mayor Adams and the city expects as may the fifteen 0:07:00.839 --> 0:07:04.440 buses this weekend. Today is sentencing day for the ices 0:07:04.560 --> 0:07:07.520 inspired terrorists who carried out a deadly attack with the 0:07:07.560 --> 0:07:10.640 truck in New York City. The jury deadlocked on the 0:07:10.680 --> 0:07:14.560 death penalty, so Saifulu Saipov will be sentenced to life 0:07:14.640 --> 0:07:17.080 in prison for killing eight people when he sped down 0:07:17.120 --> 0:07:20.600 a bike path in a rented truck. North Carolina enacted 0:07:20.640 --> 0:07:24.480 a twelve week abortion ban last night. Republicans banded together 0:07:24.520 --> 0:07:27.840 to override Democratic Governor Roy Cooper's veto of the legislation. 0:07:28.480 --> 0:07:32.760 GOP North Carolina Representative Kirsten Baker is a medical doctor. 0:07:33.240 --> 0:07:38.800 This bill represents consensus position of North Carolina's citizens, the 0:07:39.000 --> 0:07:44.800 vast majority of whom support limitations to abortion after twelve weeks. 0:07:45.320 --> 0:07:47.680 This abortion right supporter was also in a rally. 0:07:47.960 --> 0:07:57.640 These legislators are arrogant, shortsighted, ignorant, oh unkind. 0:07:58.720 --> 0:07:59.400 Infuriates. 0:08:00.280 --> 0:08:04.160 The new ban from twenty weeks has exceptions like medical emergencies, 0:08:04.440 --> 0:08:07.960 cases of rape and incest. Tuesday was primary day in 0:08:08.000 --> 0:08:11.640 some states. Voters in Philadelphia have chosen Scherrell Parker as 0:08:11.680 --> 0:08:14.720 the Democratic nominee for mayor. Parker, who got the most 0:08:14.800 --> 0:08:17.800 votes at thirty three percent, will go up against Republican 0:08:17.880 --> 0:08:21.600 David Ow in the November seventh general election. Democrats maintain 0:08:21.680 --> 0:08:24.960 their narrow Pennsylvania House majority by winning a special election, 0:08:25.520 --> 0:08:28.400 and along with it, continue control over how the Chamber 0:08:28.440 --> 0:08:32.600 will handle abortion, gun rights, and election law legislation. Hither 0:08:32.720 --> 0:08:35.360 Boyd won a seat in the Philadelphia suburbs with more 0:08:35.400 --> 0:08:39.880 than sixty percent. Democrat Dan McCaffrey with sixty percent and 0:08:40.000 --> 0:08:44.160 Republican Carolyn Kurt Carluccio with fifty four percent won their 0:08:44.200 --> 0:08:47.880 party's primaries for a vacant seat on the Pennsylvania Supreme Court. 0:08:48.280 --> 0:08:52.480 Attorney General Daniel Cameron has won the Republican primary for 0:08:52.640 --> 0:08:56.199 Kentucky governor with forty eight percent and will face Democratic 0:08:56.200 --> 0:08:59.520 Governor Andy Basheer with over ninety one percent. In November, 0:09:00.000 --> 0:09:02.480 Global News twenty four hours a day, powered by more 0:09:02.520 --> 0:09:05.280 than twenty seven hundred journalist and analysts in over one 0:09:05.360 --> 0:09:07.959 hundred and twenty countries. I'm Michael Barr, and this is 0:09:08.000 --> 0:09:08.720 Bloomberg ninth. 0:09:08.800 --> 0:09:15.440 Thanks Michael, I'm now for the Bloomberg Sports Up Day, 0:09:15.480 --> 0:09:16.679 brought to you by Tri State Outy. 0:09:16.679 --> 0:09:17.880 Good morning, John's stashout. 0:09:17.920 --> 0:09:18.720 Good morning Nathan. 0:09:18.760 --> 0:09:21.439 There was much discussion about Aaron Judge's eighth inning home 0:09:21.520 --> 0:09:24.959 run Monday in Toronto. Cameras caught his eye drifting to 0:09:25.000 --> 0:09:28.000 the Yankee dugout during the at bat, speculation that the 0:09:28.080 --> 0:09:31.280 Yanks may have been relaying signs to him. Judge clearly 0:09:31.360 --> 0:09:34.080 unhappy with the accusation. He came up last night. This 0:09:34.240 --> 0:09:35.520 was also eighth inning. 0:09:35.520 --> 0:09:38.800 Swinging a high drive center field. It is deep here 0:09:38.840 --> 0:09:42.000 by are looking back looking up it. He's got a 0:09:42.120 --> 0:09:46.760 home run off the batter's eye. Aaron Judge is gone yard. 0:09:47.080 --> 0:09:50.199 He says, hey, look at me now, two run shut. 0:09:50.559 --> 0:09:53.360 Yankees take the lead. They're in front five to three, 0:09:53.400 --> 0:09:53.679 and they. 0:09:53.640 --> 0:09:54.920 Beat the Blue Jays six to three. 0:09:54.920 --> 0:09:57.480 Call on wfan Judge is hitting now five home runs 0:09:57.480 --> 0:09:59.920 the last four games. The win went to Ryan Weber's 0:10:00.440 --> 0:10:02.839 getting seven outs out of the bullpen. Yanks had to 0:10:02.920 --> 0:10:07.679 replace Domingo Herman starting the fourth inning because umpires injected him. 0:10:07.720 --> 0:10:11.120 The ump later said Herman's hand was so sticky he 0:10:11.200 --> 0:10:14.160 had trouble removing it from his own palm. Herman likely 0:10:14.240 --> 0:10:16.560 hit it for a ten game suspension for the Mets, 0:10:16.559 --> 0:10:19.000 their sixteenth lost the last twenty two games Tampa Bay one, 0:10:19.040 --> 0:10:22.160 eight to five. Justin Verlanders first city field start as 0:10:22.160 --> 0:10:23.280 a Met did not go well. 0:10:23.320 --> 0:10:25.120 Gave up six runs in five innings. 0:10:25.360 --> 0:10:27.839 NBA Playoffs, Denver won Game one for the Lakers, one 0:10:27.960 --> 0:10:29.680 thirty two one twenty. 0:10:29.360 --> 0:10:31.360 Six for Nikoliokuds thirty four. 0:10:31.160 --> 0:10:35.199 Points, twenty one rebounds, fourteen assists. The San Antonios first 0:10:35.200 --> 0:10:38.280 won the draft lottery and the prize that comes with it. 0:10:38.440 --> 0:10:41.480 Victor wembin Yama, the seven foot four inch nineteen year 0:10:41.480 --> 0:10:45.079 old Frenchman, the best NBA prospect since Lebron James, two 0:10:45.160 --> 0:10:47.640 days after he lost a Game seven for the tenth time. 0:10:47.800 --> 0:10:51.320 Doc Rivers fired by the Philadelphia seventy six ers. John 0:10:51.360 --> 0:10:52.960 Stash Edward Bloomberg. 0:10:52.520 --> 0:10:58.080 Sports Live from coast to coast, from New York to 0:10:58.120 --> 0:11:03.600 San Francisco, Boston to one nationwide on Siriusxam, the Bloomberg 0:11:03.640 --> 0:11:05.640 Business Appen Bloomberg dot Com. 0:11:05.800 --> 0:11:10.600 This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Starting 0:11:10.600 --> 0:11:12.800 to feel like crunch time in Washington, d C. With 0:11:12.840 --> 0:11:15.680 the possible default deadline for the US government now as soon. 0:11:15.559 --> 0:11:17.120 As fifteen days away. 0:11:17.559 --> 0:11:20.240 House Speaker Kevin McCarthy has said past meetings but the 0:11:20.240 --> 0:11:21.600 White House haven't gone anywhere. 0:11:21.640 --> 0:11:24.319 Now, he says, he sees a hint of progress. 0:11:24.760 --> 0:11:27.400 This one was a little more productive. We're a long 0:11:27.440 --> 0:11:30.760 way apart, but what changed in this meeting was the 0:11:30.800 --> 0:11:35.440 President has now selected two people from his administration to 0:11:35.880 --> 0:11:37.560 directly negotiate with us. 0:11:38.000 --> 0:11:40.560 That was Speaker McCarthy after yesterday's White House talks with 0:11:40.600 --> 0:11:43.320 President Biden and other congressional leaders for more. We were 0:11:43.400 --> 0:11:45.800 joined once again by Julie Norman, co director of the 0:11:45.840 --> 0:11:49.120 Center for US Politics at University College London. 0:11:49.240 --> 0:11:50.680 Juliet's great to speak with you. 0:11:50.760 --> 0:11:54.240 As always, it seemed like both sides made it seem 0:11:54.280 --> 0:11:56.200 like it was a pretty big deal that they've got 0:11:56.200 --> 0:11:59.640 a narrower set of negotiators for the debt sealing talks. 0:12:00.160 --> 0:12:01.040 Is this a big deal? 0:12:02.280 --> 0:12:04.559 Well, there was definitely more of a sense of optimism 0:12:04.640 --> 0:12:07.959 coming out of yesterday's meeting from the congressional leaders who 0:12:07.960 --> 0:12:10.600 are part of that, and that is a definite change 0:12:10.600 --> 0:12:13.880 in tone from where things started over a week ago, 0:12:14.320 --> 0:12:16.559 where I think things are going to start getting difficult. 0:12:16.600 --> 0:12:20.280 Now is the deal that's starting to take shape that 0:12:20.280 --> 0:12:22.560 we're getting some hints of how that is going to 0:12:22.600 --> 0:12:25.120 be received by members of both parties who are going 0:12:25.160 --> 0:12:27.480 to act to vote on this in both the Senate 0:12:27.520 --> 0:12:30.840 and the House. We've already heard some grumbling, some pushbacks 0:12:30.880 --> 0:12:33.160 to some of the measures that are involved in terms 0:12:33.200 --> 0:12:36.160 of actually getting over the line. But the good news 0:12:36.160 --> 0:12:38.760 is things are moving forward. The uncertainty is if it's 0:12:38.800 --> 0:12:40.120 going to be enough to get the votes. 0:12:40.480 --> 0:12:42.440 What provisions are you looking at that might have the 0:12:42.480 --> 0:12:44.040 most difficulty on Capitol Hill. 0:12:45.160 --> 0:12:48.840 Yeah, so the main sticking point will likely be increasing 0:12:48.920 --> 0:12:53.160 work requirements for different kinds of aid, for a medicaid 0:12:53.400 --> 0:12:57.000 for snaps sometimes known as food stamps, and for other 0:12:57.040 --> 0:13:00.520 assistance to needy family. So this is an area that 0:13:00.559 --> 0:13:05.160 Republicans really want to see a budget decrease and to 0:13:05.160 --> 0:13:08.960 see stricter requirements. Many progressive Democrats are digging in and 0:13:09.000 --> 0:13:11.360 saying this is something they will not vote for. So 0:13:11.600 --> 0:13:14.040 I think this is where the compromises are going to 0:13:14.520 --> 0:13:16.760 need to be hashed out over the next couple of days, 0:13:16.800 --> 0:13:20.160 and where we probably will see some Democrats at least 0:13:20.160 --> 0:13:22.760 pushing back against this deal because of that provision, but 0:13:23.080 --> 0:13:25.280 they will probably Yeah. 0:13:24.880 --> 0:13:27.400 Sure, are they the kind of Are they the kind 0:13:27.520 --> 0:13:31.520 of negotiations that could lead to the possibility that we 0:13:31.600 --> 0:13:34.719 get something like a short term debt seiling increase to 0:13:35.320 --> 0:13:38.439 allow for those differences to be hashed out later. I mean, 0:13:38.440 --> 0:13:42.040 that's something that both McCarthy and Biden have said they 0:13:42.080 --> 0:13:46.079 don't want to have a short term debt sailing increase exactly. 0:13:46.200 --> 0:13:48.480 And so this is one of the tricky things right 0:13:48.520 --> 0:13:50.680 now is that some of the budget talks that are 0:13:50.720 --> 0:13:53.440 being discussed, I think in good faith by both sides, 0:13:53.880 --> 0:13:56.240 would usually need more time to actually figure out the 0:13:56.240 --> 0:13:58.400 details of what they would look like, especially these things 0:13:58.400 --> 0:14:00.839 that are going to have direct impacts on a lot 0:14:00.880 --> 0:14:03.360 of Americans. So one option would be to have a 0:14:03.400 --> 0:14:05.560 sort of pact that there would be a limit on 0:14:05.600 --> 0:14:08.760 domestic spending with maybe some short term things that do 0:14:08.880 --> 0:14:13.560 go through immediately, such as using unspent COVID funds, maybe 0:14:13.600 --> 0:14:16.600 speeding up permit processes, things where there's already some agreement, 0:14:16.640 --> 0:14:18.360 if you can get those on the table, get the 0:14:18.400 --> 0:14:20.400 debt ceiling passed, and work out some of these budget 0:14:20.400 --> 0:14:23.960 details in the future, that's one option. Again unclear if 0:14:23.960 --> 0:14:25.800 both parties would go for that in the Congress. 0:14:26.440 --> 0:14:29.560 It's pretty notable as well that President Biden is going 0:14:29.600 --> 0:14:32.520 to be cutting the Australia and Papua New Guinea portion 0:14:32.640 --> 0:14:36.320 of his seven day overseas trip short to focus on 0:14:36.360 --> 0:14:41.720 these negotiations. What's the potential geopolitical impact there for not 0:14:42.120 --> 0:14:43.560 visiting those countries. 0:14:44.440 --> 0:14:47.360 Yeah, so it's definitely unfortunate. I mean, it is notable 0:14:47.640 --> 0:14:49.720 and right I think that Biden is still attending the 0:14:49.760 --> 0:14:53.280 G seven, which is in Japan, notably this year Obviously, 0:14:53.320 --> 0:14:55.840 one of the big long term foreign policy challenges for 0:14:55.960 --> 0:14:58.640 the US and for Biden is the Pacific is China 0:14:58.640 --> 0:15:00.400 in particular, and that's going to be a big part 0:15:00.480 --> 0:15:04.040 of these G seven discussions. He had hoped to continue 0:15:04.040 --> 0:15:06.880 that with a high profile visit to both Australia, a 0:15:06.920 --> 0:15:10.040 meeting of the Quad, and then also importantly engaging with 0:15:10.240 --> 0:15:12.600 Pacific island groups with this first time visit to Papua 0:15:12.600 --> 0:15:15.080 New Guinea. So it's definitely a loss for Australia, definitely 0:15:15.080 --> 0:15:17.440 a loss for Papua New Guinea, and it does I think, 0:15:18.200 --> 0:15:20.960 you know, it's not great for Biden administration trying to 0:15:20.960 --> 0:15:23.360 get traction in the Pacific, But those allies, I think 0:15:23.720 --> 0:15:26.000 know that the commitment is there. They'll try and reschedule 0:15:26.040 --> 0:15:28.600 when they can. And the reality is that if the 0:15:28.720 --> 0:15:31.680 US doesn't get this debt sealing thing resolve, the whole 0:15:31.680 --> 0:15:33.200 world's going to be affected by it. So at the 0:15:33.320 --> 0:15:34.880 end of the day, it's sort of an everyone's interest 0:15:35.040 --> 0:15:36.920 to have the attention where it needs to be. Most 0:15:36.960 --> 0:15:38.280 pragmatically at the moment. 0:15:38.440 --> 0:15:41.440 You said it's a loss for Australia and Papua New Guinea, 0:15:41.520 --> 0:15:46.040 is it a gain for China. 0:15:44.360 --> 0:15:47.720 Potentially, Yes, I mean I think China and as well 0:15:47.720 --> 0:15:49.720 as Russia. I mean, they would probably like nothing more 0:15:49.760 --> 0:15:52.160 than to see this debts somethly thing blow up for 0:15:52.280 --> 0:15:55.640 the US to have a default. I think they will 0:15:55.680 --> 0:15:58.040 paint it as look, how much the US is in trouble. 0:15:58.120 --> 0:16:01.400 They can't even keep their own you know, government going 0:16:01.400 --> 0:16:04.960 their own budget together, so they will usually likely pounce 0:16:05.000 --> 0:16:07.320 on things like this and make a story out of it. 0:16:07.440 --> 0:16:09.840 So that's unfortunate. But again, at the end of the day, 0:16:10.160 --> 0:16:11.800 Biden probably does need to be here to get this 0:16:11.840 --> 0:16:13.880 thing over the line, and that's just the way it 0:16:13.880 --> 0:16:14.840 has to be at the moment. 0:16:15.240 --> 0:16:17.640 Yeah, it looks like we could potentially see the President 0:16:17.960 --> 0:16:20.920 with his mind on both sides of the Pacific as 0:16:20.960 --> 0:16:23.880 the debt ceiling fight goes on, and of course building 0:16:23.960 --> 0:16:26.440 up these relationships at the G seven in Japan. 0:16:26.560 --> 0:16:29.000 As always great to get your thoughts. Thanks again for 0:16:29.040 --> 0:16:29.520 being with us. 0:16:29.600 --> 0:16:33.119 Julie Norman, co director of the Center for US Politics 0:16:33.400 --> 0:16:37.000 at University College London with us this morning. Now let's 0:16:37.000 --> 0:16:40.680 turn our attention from the debt limit to monetary policy. 0:16:40.840 --> 0:16:44.920 In Washington at the Federal Reserve, some officials are signaling 0:16:44.960 --> 0:16:47.400 they'll take a pause when it comes to rate hikes, 0:16:47.440 --> 0:16:51.200 but they're not committing to one. Chicago Fed President Austin 0:16:51.240 --> 0:16:54.920 Goldsby discussed inflation and the impact of rates with Bloomberg's 0:16:54.960 --> 0:16:56.400 Michael McKee late yesterday. 0:16:56.760 --> 0:16:58.080 Let's listen to that conversation. 0:16:58.200 --> 0:17:02.520 Now, you've told people that you're a little nervous about 0:17:02.520 --> 0:17:05.880 where we are after five hundred basis points of increases, 0:17:05.960 --> 0:17:08.440 and you'd like to see how the economy is going 0:17:08.440 --> 0:17:11.000 to evolve, which everybody is sort of taking. As you're 0:17:11.040 --> 0:17:15.080 suggesting a pause in June, what would it take to 0:17:15.119 --> 0:17:18.200 get you to go the other way? Inflation is still high? 0:17:18.359 --> 0:17:21.520 Would it take much to convince you to vote for 0:17:21.600 --> 0:17:22.560 another rate increase. 0:17:23.800 --> 0:17:27.879 I don't get into the hypothetical, and I haven't committed 0:17:28.119 --> 0:17:32.440 or decided anything. I think it's a mistake for us 0:17:32.440 --> 0:17:36.280 to commit our our decisions weeks before the meeting when 0:17:36.320 --> 0:17:39.200 we're still going to get a lot more information. As 0:17:39.240 --> 0:17:41.960 I say it, I'm just like an old fashioned data dog, 0:17:42.160 --> 0:17:47.960 and the past evidence in the data has been that 0:17:48.040 --> 0:17:51.920 when you have financial stresses like the bank stresses we're 0:17:51.920 --> 0:17:56.760 going through now, and when you have big rate increases, 0:17:57.359 --> 0:18:02.080 that take a while to have their full impact, you 0:18:02.320 --> 0:18:05.760 at least want to take those into account when you're 0:18:06.920 --> 0:18:08.879 looking at landing the plane. 0:18:09.760 --> 0:18:13.520 I think the good news is you've seen some. 0:18:13.400 --> 0:18:17.080 Of the froth taken. The froth off in the labor markets. 0:18:18.119 --> 0:18:21.879 We've so far been doing pretty well that job vacancies 0:18:21.880 --> 0:18:26.560 are coming down without the unemployment rate going up. And 0:18:26.680 --> 0:18:31.760 the overriding goal is let's get the inflation back to 0:18:31.920 --> 0:18:35.720 target without generating recession. That's what I want, and that's 0:18:35.840 --> 0:18:37.240 kind of the FED mission. 0:18:37.520 --> 0:18:41.560 Well, you said that you almost dissented at the last meeting, 0:18:41.600 --> 0:18:43.439 but you were persuaded to go along. 0:18:43.760 --> 0:18:46.159 Was it a close call? I didn't say that I 0:18:46.200 --> 0:18:47.119 almost dissented. 0:18:47.840 --> 0:18:51.240 They someone asked me, was it a close call? 0:18:51.320 --> 0:18:52.040 And I said yes. 0:18:52.160 --> 0:18:55.000 I think I can't speak for anybody else, but for me, 0:18:55.280 --> 0:18:58.280 I felt it was a close call. Two meetings ago, 0:18:59.119 --> 0:19:01.840 the data had come in was looking pretty hot. We 0:19:01.880 --> 0:19:08.320 hadn't had any financial stresses, and the argument for the 0:19:09.000 --> 0:19:12.480 improved let's call it the improved economic outlook in the 0:19:12.640 --> 0:19:17.320 SEP was making people a little anxious on the side 0:19:17.520 --> 0:19:21.440 of how much inflation might might still be stored in there. 0:19:21.960 --> 0:19:26.240 Then one meeting ago before this past meeting, we got 0:19:26.280 --> 0:19:30.720 the bank stresses and incorporated that into our plan. So 0:19:30.920 --> 0:19:34.399 at the last meeting, you had not seen yet in 0:19:34.480 --> 0:19:38.440 the data, and in my conversations with financial market and 0:19:38.640 --> 0:19:44.679 bank participants, you had not yet seen credit crunch taking 0:19:44.720 --> 0:19:47.960 place in the data. So I felt that at the 0:19:48.080 --> 0:19:50.720 end of the day, staying on the plan that we 0:19:50.880 --> 0:19:53.840 had outlined, knowing that there was going to be some 0:19:53.920 --> 0:19:55.439 bank stress did make sense. 0:19:56.080 --> 0:20:00.800 Now you've seen more slowing coming in. 0:20:01.320 --> 0:20:06.560 You've seen even numbers that were relatively strong, like retail sales, 0:20:07.040 --> 0:20:11.679 they were lower than expected. And if in nominal terms, 0:20:11.720 --> 0:20:14.359 retail sales were up for tenths of a percent, but 0:20:14.480 --> 0:20:18.440 inflation was up four tenths of a percent, it's worth remembering, 0:20:18.640 --> 0:20:21.200 you know that what actually matters is the real economy. 0:20:21.320 --> 0:20:24.959 When the FED raises interest rates, banks always tighten their 0:20:25.000 --> 0:20:28.320 credit standards and loan demand goes down. So are you 0:20:28.480 --> 0:20:32.480