Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Here in New York City, Mack Show the film A
Speaker 2: chief of staff to the foam of Vice President of
Speaker 2: my Pench joins us now for Mo MO, good morning,
Speaker 2: good morning, Thanks for having me. Thank you for big
Speaker 2: kay a much more interventionist white House over the past week,
Speaker 2: and I've maybe the last number of months as well. Yeah,
Speaker 2: can you just weigh in how you framing things at
Speaker 2: the moment well on.
Speaker 1: This pretty quod topic. I actually think there is probably
Speaker 1: broader support among a lot of small government people who say,
Speaker 1: you know what, the notion of a FED truly being
Speaker 1: independent was a nice notion, went before it had seven
Speaker 1: trillion dollars of assets on its books, and so you
Speaker 1: have a lot of unlike to people with fourteen year
Speaker 1: terms have enormous influence over the economy. Having said that,
Speaker 1: I think there's probably a desire also that if there
Speaker 1: was actually effort to change it, it'd be more above
Speaker 1: board than coming up with sort of these fraudulent charges
Speaker 1: against the board governor, because there's probably plenty of political
Speaker 1: pointees administration of multiple mortgages too, said they're both their
Speaker 1: primary residents, so I'm sure there's a double standard here,
Speaker 1: and I wish there is a more intellectual appeal about
Speaker 1: the fed's role as a postcon with bogus chargers.
Speaker 2: I just want to pick up on the language a
Speaker 2: difference between challenges of fraud and fortullent challenges. Which one
Speaker 2: do you think it is?
Speaker 1: I think these are bogus charges. I mean, what makes
Speaker 1: you believe that, Well, I don't know how many how
Speaker 1: many homes she has or if she listed both as
Speaker 1: private resident, is that really a reason you're going to
Speaker 1: remove somebody as a board governor? And once again, I
Speaker 1: believe there's probably plenty of people in the indministration have
Speaker 1: done the same on their mortgage file.
Speaker 3: Well, lots of reporting over this summer about Ken Paxton,
Speaker 3: who's the Attorney General of Texas, who's running to be
Speaker 3: the senator. Point and do you think this litmus test
Speaker 3: now for the president. He's going to decide whether or
Speaker 3: not he's going to back Ken Paxton because he has
Speaker 3: three residences listen as a primary more you know memory, he's.
Speaker 1: Very flexible in these things. I think this is this
Speaker 1: is more about his effort to exert control over the
Speaker 1: FED because I think they're concerned that their trade agenda
Speaker 1: is causing great weakness in the labor market, and they
Speaker 1: want rates lower, and to be fair, this is what
Speaker 1: the President has always one of his lower rates. Even
Speaker 1: when he had the option to appoint Jerome Powell in
Speaker 1: the first administration, there were three options between Kevin Warsh,
Speaker 1: John Taylor, and Jerome Powell, and the President asked who's
Speaker 1: going to make rates lower? And that's one of the
Speaker 1: ironies is that he chose the person who Steve Nuchen
Speaker 1: told him is going to keep rates lower, but obviously
Speaker 1: he wants even lower.
Speaker 3: They are Now, how difficult is next week going to be?
Speaker 3: If the Senate Banking Committee begins their hearing of Steve
Speaker 3: Myron and you look at some of the Republicans on
Speaker 3: that committee. Are we going to see pushback not just
Speaker 3: from the likes of Elizabeth Warren but also like Tom
Speaker 3: tell Us.
Speaker 1: We haven't seen it yet, Henry. He said, I'm not
Speaker 1: so confident that it's going to be significant pushback on
Speaker 1: his appointment. And I look, again, I think this is
Speaker 1: about effort, exert control, want to have a majority so
Speaker 1: he can lower rates faster. But again I think it's
Speaker 1: reflective of a concern about where the labor market's going.
Speaker 2: I remember Stephen Mall nominated for a seat on the
Speaker 2: Federal sev The Senate was Republican at the time, and
Speaker 2: he didn't make it, and that was pushback. What's the
Speaker 2: difference between that first time for the president and this second?
Speaker 1: Yeah, yeah, great question, because think this is much brought
Speaker 1: than the Federal Reserve. I think it's about all of
Speaker 1: his nominations. I think that you know, you go to
Speaker 1: his cabinet, and I think it'd be hard to envision
Speaker 1: that RFK would have gotten confirmed in a previous Republican
Speaker 1: controlled Senate. I think this is basically a reflection that
Speaker 1: Republicans are very worried about the president primary. He has
Speaker 1: shown his ability to engage in primaries and exert that control,
Speaker 1: and there's just an enormous fear factor, and he's using
Speaker 1: that with great leverage amongst Senate Republicans. Has the ponce
Speaker 1: he changed, the party's absolutely changed. I mean, I think
Speaker 1: the party has certainly become far more populous. I think,
Speaker 1: you know, when you see basically the federal government looking
Speaker 1: to seize means of production and the biggest cheerleaders are
Speaker 1: Elizabeth Warren and Bernie Sanders, and there's not a Republican
Speaker 1: speaking out about the government taking over ten percent of Intel.
Speaker 1: On the heels of saying, you know, in selling we
Speaker 1: have export controls, we don't want to sell these chips
Speaker 1: to China. Oh, but if you allow us to take
Speaker 1: fifteen percent of the profits of a vidiot, it's okay.
Speaker 1: And on the heels of say we're gonna take golden
Speaker 1: shares of Nippon Steel, US Steel. It's like this is
Speaker 1: clearly moving a direction where the populism and the progressive merge,
Speaker 1: and there's been total silence among center Republicans.
Speaker 3: And centered Republicans with their silence, you say, potentially though,
Speaker 3: they're interested in revamping the Federal Reserve because they're in
Speaker 3: favor of small government. Nothing you just listed in terms
Speaker 3: of taking shares of companies is small government, imriy.
Speaker 1: That's I think one of the shocking parts is that
Speaker 1: I do believe that the first Trump administration was predominantly
Speaker 1: small government. It was deregulatory, it reduced taxes, and I
Speaker 1: feel like the second administration is exerted its influence in
Speaker 1: all sectors of the economy and looking to exert its muscle.
Speaker 1: And I think it's a very different agenda.
Speaker 3: To be more constructive about what they're doing in terms
Speaker 3: of say Intel, there's been a lot of criticism that
Speaker 3: they're mirroring what China does, or this is state capitalism
Speaker 3: like Europeans did in the nineteen sixties. What do you
Speaker 3: actually think Trump is thinking? Is this about building a
Speaker 3: sovereign wealth fund? What is actually the strategy?
Speaker 1: I think that he kind of rejected the sovereign wealth
Speaker 1: fund the other day, but I do think it's concerning
Speaker 1: that the projectory there is basically Saudi Arabia, China, Iran, Russia.
Speaker 1: Those are the ones with sovereign well funds. I certainly
Speaker 1: hope that's not where we're going. I do think it's
Speaker 1: more for in his mind simply about leverage and where
Speaker 1: he can have leverage. But again, the basis of it
Speaker 1: was two weeks before he more or lessens anyway the
Speaker 1: Intel CEOs and Chinese spy and then basically allowing that,
Speaker 1: basically saying Okay, well, we're not so worried about the
Speaker 1: national security and more as long as we can have
Speaker 1: ten percent. It's like, what's the justification. I feel like
Speaker 1: when you do this, you crowd out private investors. I
Speaker 1: don't think this would be good for either side. I
Speaker 1: think you can see intel shock. Intel stock probably declined
Speaker 1: because what private investor wants to engage If they feel
Speaker 1: like the federal government can just come in and take
Speaker 1: ten percent or more.
Speaker 2: They suffering well fenced, the ships ACKed, that's the investment vehicle.
Speaker 2: I didn't see that coming, but that's why this is
Speaker 2: coming apparently.
Speaker 3: Well, yeah, potentially, I mean. And it's also not just
Speaker 3: the examples Mark Short brought up. You also had the
Speaker 3: DoD recently take a stake in a company as well,
Speaker 3: and Howard Ludnik is basically saying that this might be
Speaker 3: potentially direction or travel for other defense companies.
Speaker 2: Mark, this was great. It's going to see you.
Speaker 1: Thanks for breaking it down.
Speaker 2: The traditional Republican view of was playing out down in Washington,
Speaker 2: d C.