Speaker 1: Now from our nation's capital. This is Floomberg's Sound on
Speaker 1: great a report today, the GDP report. Things are looking good.
Speaker 1: If we were to get under the hood, what we
Speaker 1: saw is that there is continued resilience in consumer spending,
Speaker 1: but it didn't eat. The problem is the fourth quarter
Speaker 1: and into two thousand twenty three. Bloomberg Sound on Politics,
Speaker 1: Policy and perspective from DC's top name. Maybe I'm a
Speaker 1: little fashion but I think the marriage I ought to
Speaker 1: be between a man and a woman. It's and Governor
Speaker 1: McMaster wants a banned same sex marriage. You just heard
Speaker 1: that tonight called Floomberg Sound On with Joe Matthew on
Speaker 1: Bloomberg Radio. The Economy strikes back. Welcome to the fastest
Speaker 1: hour in politics. As the White House cheers today's GDP
Speaker 1: reports showing the economy back to growth. But what does
Speaker 1: it mean for interest rates, for the prospect of a recession,
Speaker 1: and for the mid term elections. We'll talk about it
Speaker 1: with Marks Andy, chief economist at Moody's Analytics. Later, Walt
Speaker 1: Street votes with donations, of course, ahead of election day,
Speaker 1: we follow the money with Bloomberg's Shinali Bass. Vladimir Putin
Speaker 1: denies he's planning to use nuclear weapons, just as the
Speaker 1: Pentagon rejects a ban on using nukes for conventional threats.
Speaker 1: We're gonna talk about it all with our signature panel
Speaker 1: Bloomberg Politics contributors Jeannie Chanzano and Rick Davis here for
Speaker 1: the hour the big news this morning before tech earning
Speaker 1: stole the market's attention. Gross domestic product rising by two
Speaker 1: point six percent, rebounding from a negative number. Great news
Speaker 1: for the White House. You heard President Biden as he
Speaker 1: came out the door on his way to the chopper,
Speaker 1: flying today to Syracuse, where he's been upstate New York
Speaker 1: to look at Microns new plant that they're building there
Speaker 1: for computer chips. He was all smiling. Report today, the
Speaker 1: GDP report, Things are looking good. Yeah, as I read
Speaker 1: in the terminal, though economy shows worst yet to come
Speaker 1: as cooling is just starting. The recent rebound is looking
Speaker 1: like a high watermark for the expansion. So what does
Speaker 1: that mean for the economic message coming out of the
Speaker 1: White House? With less than two weeks to go? Mark
Speaker 1: Dandy joins us now for his insights, of course, the
Speaker 1: chief economist at Moody's Analytics, Mark, welcome back. It's good
Speaker 1: to be with you, Joe, thanks for having me. So
Speaker 1: President Biden is calling out the doomsayers. He says, this
Speaker 1: is further evidence today that the recovery is continuing. To
Speaker 1: quote power forward, is he right? Well, it's moving forward.
Speaker 1: I don't know I'd use the word power, but it
Speaker 1: definitely is, uh, moving forward. You know, it does dispel
Speaker 1: I think the concern that the economy is in recession
Speaker 1: nor hasn't been up at this point in time, but
Speaker 1: you know it's struggling to grow. We spoke today with
Speaker 1: Cecilia Rouse, of course heads the White House Council of
Speaker 1: Economic Advisors. Her job today was to make all of
Speaker 1: this sound orderly. Listen to how sheep would it if
Speaker 1: we were to get under the hood. What we saw
Speaker 1: is that there is continued resilience and consumers think but
Speaker 1: it did ease. So that is consistent with what the
Speaker 1: FETE is trying to do. We also so that saw
Speaker 1: that businesses continue to invest, but again that is slowing
Speaker 1: as the FED as we would hope. She seems to
Speaker 1: be pointing to a soft landing mark without using those words. Uh,
Speaker 1: and we know the President still thinks one is possible.
Speaker 1: Do you yeah, I do and she makes a good point.
Speaker 1: I mean, consumers and businesses remain uh in the game.
Speaker 1: They're they're not spending with gusto, they're not investing aggressively,
Speaker 1: but they're doing their part. As long as that continues,
Speaker 1: I think the economy has a fighting chance of getting
Speaker 1: through without a recession. So yeah, I think the soft
Speaker 1: planning is still a real possibility. But you know, obviously,
Speaker 1: having said that, as the feed is raising interest rates
Speaker 1: here aggressively trying to quell inflation, recession risks are going
Speaker 1: to be awfully high over the next year or so. Yeah.
Speaker 1: So if I asked you that question in reverse, you know,
Speaker 1: as a recession still possibly, you would say, yeah, that too,
Speaker 1: good point, that's yes, exactly right. You know, my base case,
Speaker 1: my most likely to area is we make our way through.
Speaker 1: But I wouldn't argue with anyone too strongly they said, no,
Speaker 1: we're going into recession. The biggest contributor to growth here
Speaker 1: was net exports. Mark. Is that is that sustainable? No,
Speaker 1: especially if you're going into a global recession and you're
Speaker 1: counting on other partners to contribute to growth. Yeah, exactly.
Speaker 1: I I think the deficit will continue to wide. We
Speaker 1: got a bit of a repriet here in the third quarter.
Speaker 1: I think that's more timing technical matters. But the trade
Speaker 1: deficit is going to continue to wide now, so that's
Speaker 1: not going to be a source of growth. That'll continue
Speaker 1: to be a headwind going forward. Residential investment was pretty tough.
Speaker 1: I mean, it fell off a cliff here, down over
Speaker 1: continuing a trend. How worried are you about a real
Speaker 1: crash in the housing market in the next year. I
Speaker 1: don't think a crash. I mean, obviously it's correcting. Prices
Speaker 1: are down and i'll continue to fall. I mean, affordability
Speaker 1: has been hammered by the brought up in mortgage race
Speaker 1: from north to seven percent of the a year fixed
Speaker 1: that's more than double what it was just a little
Speaker 1: over a year ago. And that combines with the previously
Speaker 1: a high house prices of people just can't afford that
Speaker 1: the demands falling in. Prices are weakening. But I don't
Speaker 1: expect to crash, primarily because I don't expect a lot
Speaker 1: of foreclosures and distress sales. I mean, borrowers in recent
Speaker 1: years have been a good quality, high credit scores, and
Speaker 1: they're they're taking on plane Vanilla thirty year, fifteen year
Speaker 1: rate mortgages. So I just don't expect a lot of ceclosures.
Speaker 1: And if we don't get a lot of foreclosures, I
Speaker 1: don't I don't think we'll get a crash. A lot
Speaker 1: different than where we were in two thousand seven. Yeah,
Speaker 1: there's no comparison. You know, back then, the quality of
Speaker 1: the borrowers very low. It's prime obviously, and the mortgage
Speaker 1: products were just bizarre, you know, two year exploding arms,
Speaker 1: uh a gam loans, I mean, just a lot of
Speaker 1: weird stuff that didn't perform well when it came under
Speaker 1: a lot of stress. But a thirty year mortgage, the
Speaker 1: fifteen year mortgage, you know, the race took a state
Speaker 1: low for these borrowers, and so I think that takes
Speaker 1: a lot of pressure off. Well, Mark, Andy, what do
Speaker 1: we have to look forward to between now in the
Speaker 1: midterms we talked so much about I guess the White
Speaker 1: House and Democrats will We'll try to turn this GDP
Speaker 1: reported to a good story today and say no, by
Speaker 1: the way, we were not in a recession, as you
Speaker 1: made clear. The next couple of weeks though, we're creeping
Speaker 1: up on another FED meeting. What will happen that day
Speaker 1: as people are prepared to vote, Well, they're gonna raise rates.
Speaker 1: They's called us pretty clearly that they're going to raise
Speaker 1: three quarters or percentage point that Yeah, I don't know
Speaker 1: anything that would change that does a hurdle for changing
Speaker 1: that is awfully high. And then we get one more
Speaker 1: data point tomorrow, the Employment cost Index, which is important
Speaker 1: because that's the best measure of wage growth and the
Speaker 1: FED is trying to slow the job market. Slow that
Speaker 1: get inflation back in. So that's that's an important number,
Speaker 1: but it's hard to envisage any number that would just
Speaker 1: waged the Fed from not raising great three quarters from
Speaker 1: a point when they beat in the week next week.
Speaker 1: Considerating everything we hear from the White House about the
Speaker 1: strength of the economy, historically strong job market, historically low unemployment.
Speaker 1: Then you hear from Republicans this is the worst economy.
Speaker 1: Inflation is through the roof, and it's become the biggest
Speaker 1: issue on the campaign trail. A lot of people cite
Speaker 1: the economy as their biggest concern when they talk about
Speaker 1: preparing to vote in November. Who's right, Well, they're both right, Yeah,
Speaker 1: it spends much you know, your prism I mean, the
Speaker 1: Democrats are right that the job markets very strong, everyone
Speaker 1: has a job. Unapployment is very low. Layoffs are about
Speaker 1: as low as they've ever been, so that's all good.
Speaker 1: But if people can't afford to live, and that doesn't matter, right, Yeah,
Speaker 1: well that's the point. I mean, Republicans are right, and
Speaker 1: inflation is just painfully high, and you know that that
Speaker 1: we can't stand that for very long. Instead, the fetch
Speaker 1: raising industrates very aggressively to quell it. So, you know,
Speaker 1: I think it spends on you know, your your perspective
Speaker 1: and your prism, which part of the economic telephonpor touching, um,
Speaker 1: you know, But you know, I think it's fair to
Speaker 1: say over the next twelve eighteen months is going to
Speaker 1: feel a lot more uncomfortable that you know, more and
Speaker 1: more people are going to think this is a bad
Speaker 1: economy rather than a good one because the FED has
Speaker 1: to slow growth, has to get inflation down, and that's
Speaker 1: going to take some some pain and suffering. I think
Speaker 1: financially we're strapping in Mark Sandy, chief economist Boody's Analytics.
Speaker 1: Many thanks for jumping on the line with us. As
Speaker 1: always on Bloomberd anytime, Joe, Thanks for the opportunity. So
Speaker 1: some of the panel just to get a quick take
Speaker 1: from Rick Davis and Jeanie Schanzano Bloomberg Politics contributors of course,
Speaker 1: our signature panel here on sound On. It sure looks
Speaker 1: like the White House is trying to keep the ball
Speaker 1: in the air here. You know, everyone's onto Amazon and
Speaker 1: Apple earnings. But I mentioned that tweet from the President Rick.
Speaker 1: For months, doomsayers have been arguing the economy is in
Speaker 1: a recession, indicating that this proves it is not, and
Speaker 1: he's they're they're calling out Republicans in a news release
Speaker 1: in fact checking some of them, including Kevin Brady, who
Speaker 1: called the g d P report uh the claiming it
Speaker 1: was about ghost growth. The politics behind this are running
Speaker 1: pretty thick. Here is this good news? Are bad news? Rick?
Speaker 1: You know? Look, I mean I think this is gonna
Speaker 1: be a good news day for him for the President.
Speaker 1: He obviously jumped on it and tried to drive it
Speaker 1: first thing this morning, which was smart to get out
Speaker 1: there and define the numbers the way you want them, because,
Speaker 1: as Marks Andy pointed out, I mean it's just in
Speaker 1: the eye of the beholder, right, I mean, if you're Democrats,
Speaker 1: you can crow about and and spending, and if you're
Speaker 1: Republicans you can talk about the pain and inflation. Um.
Speaker 1: The reality is people have gotten used to the pain
Speaker 1: of inflation, right, no matter what happens. If you still
Speaker 1: see those grocery prices up, if you see gas prices
Speaker 1: start taking up, um, you know you feel pinching your wallet.
Speaker 1: You're not taking that vacation this winter. You know, you're
Speaker 1: gotta put on those skis. That's that's what you're feeling
Speaker 1: at home. And all this just becomes noise, a noise.
Speaker 1: We're not talking about g d P over dinner tonight.
Speaker 1: I'm assuming, uh, Genie. And the fact of the matter is,
Speaker 1: if the White House has to celebrate it not being
Speaker 1: a recession, you've sort of lost that war already, haven't you.
Speaker 1: You have And this is a really difficult sell for
Speaker 1: the White House. Obviously, the g d P up growth
Speaker 1: is good. But you know, the reality is this is
Speaker 1: the old tale of two realities, macro versus micro. The
Speaker 1: macro numbers are good, look at the micro. Look at
Speaker 1: the US Census household servit that Bloomberg reported on just
Speaker 1: the other day overt of households feel it somewhat are
Speaker 1: very difficult to cover their expenses. That is the highest
Speaker 1: number we've seen in to almost three years. That's the
Speaker 1: reality people are feeling on the ground. Mortgage rates topping
Speaker 1: seven percent, and the White House is, you know, required
Speaker 1: now to go out and celebrate these good numbers. So
Speaker 1: how you do that is a very difficult dance. And
Speaker 1: you know it's the reality. The difference between an economist
Speaker 1: and a political scientist, or or somebody looking at these numbers,
Speaker 1: They're looking at very different numbers which tell two very
Speaker 1: different tales. The presidents on his way to Pennsylvania, Rick
Speaker 1: is telling this story make him sound tone deaf? Uh
Speaker 1: it could? I mean, if he doesn't, If he starts saying, oh,
Speaker 1: you're so much better off today because of GDP growth,
Speaker 1: people are gonna scratch their heads. Well that'll be the
Speaker 1: conversation tomorrow. Genie and Rick with us. Our signature panel
Speaker 1: is back with more from here in Washington. I'm Joe
Speaker 1: Matthew check traffic and markets on the way. This is Bloomberg.
Speaker 1: You're listening to Bloomberg. You sound on with Joe Matthew
Speaker 1: on Bloomberg Radio. The White House trying trying to tell
Speaker 1: a good story about the economy, pointing to strong numbers
Speaker 1: in the job market. Today's g d P report trying
Speaker 1: to fan those flames a little bit before the election.
Speaker 1: Knowing us we're all reading here on the terminal, this
Speaker 1: GDP report today shows well, the worst is yet to come.
Speaker 1: This is the high water mark for the expansion right here,
Speaker 1: right now. A lot of people are predicting a recession
Speaker 1: next year, including some very smart people here at Bloomberg
Speaker 1: in our economics department. It's pretty grim. The President today
Speaker 1: taking the road on the word on the road, I
Speaker 1: should say to Syracuse, that's where Microns building, that big
Speaker 1: chip plant is up there, trying to again get the
Speaker 1: story told. Just as we learned that House Republicans are
Speaker 1: launching an investigation in what they are calling potential misuse
Speaker 1: of the Strategic Petroleum Reserve, one of the other levels
Speaker 1: that the White House has been pulling here to try
Speaker 1: to create a better economic environment before everyone votes. This
Speaker 1: is just the beginning, right The Oversight Committee is gonna
Speaker 1: be busy. Let's reassemble the panel. Rick Davis and Jennie
Speaker 1: Chanzaniol Boomberg Politics contributors UH the White House knows this
Speaker 1: kind of stuff is coming here, right, Genie, it's just
Speaker 1: a matter of getting through the mid terms, and it's
Speaker 1: going to be investigation heaven. Yeah, and Joe you just
Speaker 1: said it as good as it gets, both economically and
Speaker 1: you know, it's hard to imagine, but maybe even politically
Speaker 1: for this White House because as we expect the House
Speaker 1: to move Republican, we are going to be looking at
Speaker 1: these kinds of investigations, this kind of oversight of we're seeing,
Speaker 1: you know, reported about the spr but also we're hearing
Speaker 1: talk about a potential Biden impeachment. That's you know, there's
Speaker 1: already been calls for that we know before. But the
Speaker 1: minute they have the numbers to do that, it's going
Speaker 1: to be very hard for Kevin McCarthy to resist that call.
Speaker 1: So the administration is facing real headwinds visa VI the House,
Speaker 1: and that's going to be true whether the Democrats are
Speaker 1: able to narrowly retain the Senate or not the House
Speaker 1: can go forward with this oversight. Is this a real
Speaker 1: investigation or would it be rick or is this just
Speaker 1: the type of messaging that will we should expect from
Speaker 1: a Republican House. You know, it just depends upon the
Speaker 1: leadership of the committee and whether or not they at
Speaker 1: this as a biparson opportunity to try and get to
Speaker 1: the bottom of I mean, like, there are a lot
Speaker 1: of people on both sides of the aisle who are
Speaker 1: concerned about these repeated releases of the Strategic Patrollum reserve,
Speaker 1: not for the stated reason of the reserve, which is
Speaker 1: to ensure that we have a ready supply of gas
Speaker 1: in case of shortages, but to manipulate price. And so
Speaker 1: their Republicans on that committee aren't the only one asking
Speaker 1: questions is whether or not we're supposed to be using
Speaker 1: this pro for this House Committee on Oversight and Reform.
Speaker 1: I mean, they would have subpoena power because it is
Speaker 1: it worth using that power in this particular case. We're talking,
Speaker 1: as Genie said, all the way up to the idea
Speaker 1: of impeachment. You know, look, I mean you only have
Speaker 1: to use the subpoena if people aren't willing to cooperate.
Speaker 1: I mean, no indication at this stage at Jennifer Granholm,
Speaker 1: for instance, Secretary of Energy is going to like uh
Speaker 1: avoid uh testifying to Congress. So I think it's you
Speaker 1: gotta wait and see what people's reactions are to this.
Speaker 1: But uh, look, Republicans aren't the only ones who've got
Speaker 1: concerns about it. I mean, you know, even the folks
Speaker 1: running O pick of said, Hey, you guys are trying
Speaker 1: to do price manipulation. Say problem you have with us,
Speaker 1: now you're trying to do the same thing. Well, Jenny,
Speaker 1: I don't know if we're gonna be talking so much
Speaker 1: about impeaching Joe Biden. Marjorie Taylor Green would tell you that,
Speaker 1: but there are serious conversations about an impeachment beginning with
Speaker 1: the Secretary of Homeland Security. Right, make this a border issue.
Speaker 1: I just wonder why spending time on the spr when
Speaker 1: the Biden administration is already out with a plan to
Speaker 1: start refilling it. Well, you know, there has been by
Speaker 1: partisan rather bickering on the stockpile for a long time,
Speaker 1: so this is nothing new. It's always been a politicized issue.
Speaker 1: We heard John Barosso from Wyoming come out when when
Speaker 1: the Biden administrations first announced what it was doing, and
Speaker 1: he said something to the effect of this is not
Speaker 1: for a Democrat election crisis. And so these are questions
Speaker 1: that they're going to ask. But what they haven't addressed
Speaker 1: is the fact that presidents from both parties have ordered
Speaker 1: sales from this. That's after the First Gulf War, Hurricane Katrina, Libya,
Speaker 1: and so on. And so this is a long time
Speaker 1: issue that has you know, erupted many times over the
Speaker 1: last several decades, and we'll continue to But to your point,
Speaker 1: this type of investigation at all levels is going to continue.
Speaker 1: You mentioned Alejandro Majorchis. People talk about an Anthony B Lincoln,
Speaker 1: Marrick Garland certainly is going to get hit, Kamala Harris,
Speaker 1: and of course Joe Biden. Those are probably the top five.
Speaker 1: We're going to see investigations, talk of impeachment for the
Speaker 1: next two years if the Republicans take the House. And
Speaker 1: that's the reality. And you know, there was a time
Speaker 1: we all lived through no impeachments. We're going to be
Speaker 1: living through impeachment. Heaven or heaven talk of impeachment for
Speaker 1: a long time. Rick, The national average gallon of gas
Speaker 1: today triple a three dollars seventy six cents. The White
Speaker 1: House will tell you what is that that's down a
Speaker 1: dollar in fifteen or something like that. Where where does
Speaker 1: that factor into people's decision making? It's it's obviously not
Speaker 1: as low as people wanted, but it has come down
Speaker 1: quite a bit. Yeah, it's come down quite a bit.
Speaker 1: People got stung over the summer when it was so high.
Speaker 1: I think that obviously is better above five in June. Yeah,
Speaker 1: above five, And it was painful. I mean we saw
Speaker 1: people's reaction. I mean it was coming out in the surveys.
Speaker 1: Two people were angry. Uh, and so uh, this is
Speaker 1: an improvement to that. But then the offset to that
Speaker 1: or food prices where they have skyrocketed, and so you
Speaker 1: know what you're saving now for a gallon of gas,
Speaker 1: you're spending on malk and and bread. So the tradeoff
Speaker 1: isn't good. Well, you know we've we've just found that
Speaker 1: direct correlation with gas prices and the president's approval rating,
Speaker 1: both of which are going to factor in to the
Speaker 1: results on election night, whenever those are going to be complete.
Speaker 1: We could be talking about it for weeks. A lot
Speaker 1: more to follow as we turned to Wall Street votes
Speaker 1: and follow the money with Shinali next, I'm Joe Matthew.
Speaker 1: This is Bloomberg. So you know, everyone wants to pick
Speaker 1: a winner here in Wall Street is no exception. As
Speaker 1: we look ahead to election night. Even if sometimes the
Speaker 1: politics don't agree, everyone wants to be in good favor
Speaker 1: once the winner are chosen. So where's the money going
Speaker 1: this time? Bloomberg's Shanali Bossik has been doing great reporting
Speaker 1: on this. She has the cell phone numbers of the
Speaker 1: biggest bankers on Wall Street and she joins us now, Shanalie, welcome.
Speaker 1: What issues are Wall Street focused on? What's most important
Speaker 1: right now? It's so interesting because there are so many
Speaker 1: mixed feelings on Wall Street between personal interests and professional ones.
Speaker 1: And when you look at it, the first two years
Speaker 1: of the Biden administration has really been defined on Wall
Speaker 1: Street by tough regulation, a historic amount of rulemaking by
Speaker 1: SEC Chair Gary Gensler, as the House Republicans really like
Speaker 1: to point out with some regularity, And so what does
Speaker 1: that mean for the second half when there's kind of
Speaker 1: potentially more control in Congress from the Republican side of
Speaker 1: the party. Does that mean that some of these regulators
Speaker 1: particular can be reined in? Can that mean their budgets
Speaker 1: can be constrained? And those are certainly things that a
Speaker 1: lot of Wall Street is looking out for and in
Speaker 1: some cases pressing for. So that seems to fulfill the
Speaker 1: stereotype a bit at Wall Streets at least views Republicans
Speaker 1: as more business friendly certainly when it comes to regulations.
Speaker 1: To your point, is it is it fair to say
Speaker 1: that out loud? Absolutely? And listen what does this mean.
Speaker 1: It means the eyes are all on the SEC and
Speaker 1: who controls the budget there and who regulates them. The
Speaker 1: eyes are all on the FED, of course, and what
Speaker 1: kind of pressure there is on the Fed to control
Speaker 1: the inflation story versus the direction of rates and you
Speaker 1: know what, what levers do they actually have at the
Speaker 1: end of the day. And I had to push this
Speaker 1: right to the lawmakers to watch. How can you not
Speaker 1: because sometimes if not about just what seats are up,
Speaker 1: sometimes it's about who is gaining more power as some
Speaker 1: of these seats start to change. And one of the
Speaker 1: person people that comes up in a lot of my
Speaker 1: conversations as Senator Susan Collins because of her place as
Speaker 1: taking over as the top Republican on the Appropriations Committee. Meanwhile,
Speaker 1: Patrick mckenry on the House Financial Service Committee is also
Speaker 1: very highly watched. And Jason Smith, who serves on Budget
Speaker 1: and Ways and Means, and so of course you know,
Speaker 1: let's see how the tides turn after the mid terms.
Speaker 1: But these are certainly folks that are considered allies, if
Speaker 1: you will, of a lot of the agenda on Wall Street,
Speaker 1: does chelig does Wall Street care as much as we
Speaker 1: like to think about crypto regulations or or or just
Speaker 1: just so much other stuff to be focused on right now. Well,
Speaker 1: what's interesting is some of the biggest donors this cycle
Speaker 1: are coming from the crypto industry. Think Sam Bankman Freed.
Speaker 1: Although a lot of the giving had gone to primaries,
Speaker 1: you have Sam big Madrid emerging as this massive political donor,
Speaker 1: mostly known in the democratic sphere. Some of the money
Speaker 1: goes to crypto interests, but a lot of it is
Speaker 1: said to go to pandemic preparedness. But his number two
Speaker 1: guys or you know, one of his deputies rather Ryan Salem,
Speaker 1: who works at the Bohemian subsidiary. But you know also
Speaker 1: in American himself, he is one of the top Republican
Speaker 1: donors in the United States now. And so you have
Speaker 1: two folks in the same kind of kind of world
Speaker 1: here who are fighting for two different things. This is
Speaker 1: fascinating and I love I of that You're dropping names
Speaker 1: on the air here. What are they What are you
Speaker 1: hearing over the clinking of cocktails when comes up? What
Speaker 1: does Wall Street think about another Donald Trump run or
Speaker 1: or is that not part of the conversation right now? Well,
Speaker 1: I think it's very, very very much a part of
Speaker 1: the conversation. And I thought it was going to be
Speaker 1: more of the conversation than the mid terms, but a
Speaker 1: lot of government affairs offices tell me that the midterms
Speaker 1: matter more. And the reason being is because the lawmakers,
Speaker 1: at the end of the day have the control over
Speaker 1: the policy, but the president has control over the over
Speaker 1: the national discourse and rhetoric, and the question of Trump
Speaker 1: is very polarizing, even on Wall Street. And that's the
Speaker 1: reality we're hearing that people are giving more, for example,
Speaker 1: quietly than they used to, more quietly than they used
Speaker 1: to because of the polarization even among their peers on
Speaker 1: Wall Street. Well, that makes a lot of sense. She'll
Speaker 1: be with us on election and I can't wait to
Speaker 1: have you with us. Chanali Bassik from Bloomberg Finance correspondent
Speaker 1: talking a lot about politics these days, and Shanali, thank you,
Speaker 1: one of the hardest working people in the newsroom. As
Speaker 1: we reassemble the panel. Rick Davis has a good sense
Speaker 1: of this with his role as a partner at Stone
Speaker 1: Court Capital. Jeanie Schanzano is with us as well Bloomberg
Speaker 1: Politics contributors. Where do you see the money going? Rick?
Speaker 1: It's interesting, you know, is this more about influencing the
Speaker 1: outcome of a race or investing in the in the
Speaker 1: potential good graces of a potential winner. You know, that's
Speaker 1: a it's a really good point. Uh. A lot of
Speaker 1: people give money because I just want to be friends
Speaker 1: long term. You know, let's let's let's get together. I'm
Speaker 1: gonna write a check to your committee. But like those
Speaker 1: checks are small here and that kind of thing regulated
Speaker 1: money that goes straight to the member, uh, the super
Speaker 1: PACs or where the big money go. And they're conceptually
Speaker 1: not even supposed to be associated with the campaign anyway.
Speaker 1: But your name gets out there, uh, and you look
Speaker 1: like you're being supportive. The really big money tends to
Speaker 1: hide in the five oh one c fours where there's
Speaker 1: no identification. They just want the right person to pull
Speaker 1: the levers of power, like Sonny suddenly said, whether or
Speaker 1: not it's ripping off regulations that are currently on uh.
Speaker 1: Because of this current administration or or the opposite, and
Speaker 1: and so there are a lot of places to play,
Speaker 1: and a lot of these guys who are really putting
Speaker 1: to work big money, uh tend to do it behind
Speaker 1: the scenes. There are more places to play. I guess
Speaker 1: you could say than ever, Genie, how dangerous is that
Speaker 1: for politics? It is that. And I was so glad
Speaker 1: Sinali mentioned of Pat mckenry because he's been telegraphing, i
Speaker 1: should say, more than telegraphing, talking about what he would do.
Speaker 1: And he's talking about allowing fin techs to grow, clarifying
Speaker 1: rules for crypto companies, and of course, much to the
Speaker 1: dismay of many Democrats, cracking down on the CFP bureau.
Speaker 1: So you know, you have a clear sense as to
Speaker 1: what he would do. And Democrats in contrast, saying they
Speaker 1: would focus more on the issues they've been focused on already,
Speaker 1: like housing in consumer protection, and you know the CFP
Speaker 1: a part of their discussions as well, but certainly not
Speaker 1: in terms of a crackdown on its director. So you
Speaker 1: really do have a very good set if you listen
Speaker 1: carefully to some of these folks who will potentially be
Speaker 1: be handling these committees where they're going to go, and
Speaker 1: that tells people where to put their money and what
Speaker 1: they hope to see and how to influence the conversation policy.
Speaker 1: Why is going forward? Regulation and taxes? This is what
Speaker 1: we're talking about on Wall Street and who has a
Speaker 1: better story to tell? Great panel will be back with
Speaker 1: Rick and Jeanie. And thanks to Chinali for setting us
Speaker 1: straight as Wall Street votes on the fastest hour in politics.
Speaker 1: I'm Joe Matthew. This is Bloomberg. You're listening to Bloomberg.
Speaker 1: You sound on with Joe Matthew on Bloomberg Radio. Vladimir
Speaker 1: Putin has no idea what you are talking about. Days
Speaker 1: of talk about a dirty bomb and shocker, Vladimir Putin
Speaker 1: says there's no need for Russia to launch a nuke
Speaker 1: strike on Ukraine. Who brought that up? What's the assutment?
Speaker 1: The Western recent years and a special in recent months
Speaker 1: has taken a number of steps to escalate. Well, as
Speaker 1: a matter of fact, they always played for escalation. There
Speaker 1: is nothing new here. This is the incitement of war
Speaker 1: in Ukraine. These are provocations around Taiwan. The destabilization of
Speaker 1: the global food and energy markets is your fault. It
Speaker 1: turns out interesting as this speech is being delivered here,
Speaker 1: big speech by Vladimir Putin, uh speaking to a room
Speaker 1: full as I read on the terminal of foreign policy experts,
Speaker 1: with the West wing trying to influence Moscow's friends and
Speaker 1: allies by showing quote how terrible Russia is unquote really
Speaker 1: sore all the time, you know. But as this is happening,
Speaker 1: Lloyd Austin, the Secretary of Defense, acknowledges, as Vladimir Putin mentions, Taiwan.
Speaker 1: Yet China actually is the great long term threat. But
Speaker 1: right now we're looking at you. Russian aggression does pose
Speaker 1: any mediate and sharp threat to our interests and values.
Speaker 1: And Putin's reckless of reckless war of choice against Ukraine
Speaker 1: the worst threat to European security since the end of
Speaker 1: World War Two, has made that very clear for the
Speaker 1: whole world. And now from the Bloomberg Pentagon Bureau, Pentagon
Speaker 1: rejects ban on using nukes for conventional threats. This is interesting,
Speaker 1: the new national Defense strategy rejecting limits on using nuclear
Speaker 1: weapons in the face of a conventional military threat. A
Speaker 1: lot of messaging going on here as we reassemble the
Speaker 1: panel with Rick Davis and Jeannie Chanzano Bloomberg Politics contributors
Speaker 1: getting a lot out of you guys today. I hope
Speaker 1: everyone ate their wheaties. This is pretty important stuff here, though, Rick,
Speaker 1: does this actually tamp down talk of nukes? Though, well,
Speaker 1: it certainly changes in the conversation. I mean, we entered
Speaker 1: the Obama or the Biden administration with conversations about no
Speaker 1: first strike capability, right, this is what he talked about
Speaker 1: on a campaign trail. And this is a complete reversal
Speaker 1: of that. And not only is it an opportunity to
Speaker 1: nuclear weapons, but in a conventional fashion. And and that
Speaker 1: of course plays right into the conversation that we've been
Speaker 1: having for the last month about the saber rattling with
Speaker 1: nuclear weapons by Moscow. So, uh, this is gonna be
Speaker 1: a hot topic all summer. I think the microcosm you
Speaker 1: talked about was it's all under the under the rubric
Speaker 1: of the fact that, you know, the biggest build up
Speaker 1: in the world's happening right now around nuclear weapons is
Speaker 1: with China. I find this fascinating. Genie the Defense Department
Speaker 1: saying in this document that quote, by the twenty thirties,
Speaker 1: the U s will for the first time in its
Speaker 1: history faced two major nuclear powers as strategic competitors and
Speaker 1: potential adversaries. In response, the US will maintain a very
Speaker 1: high bar for nuclear employment without ruling out using the
Speaker 1: weapons and retaliation to a non nuclear strategic threat to
Speaker 1: the homeland that doesn't include NATO nations, doesn't, you know,
Speaker 1: it doesn't. And this is quite a difference from what
Speaker 1: we heard originally. Um. You know, for many people listening
Speaker 1: to and watching Joe Biden on the campaign trail, he
Speaker 1: was talking about a sole purpose in terms of nukes,
Speaker 1: and that was deterrence, and all of a sudden, we
Speaker 1: are seeing him move away from that. Now, we have
Speaker 1: to be clear, a lot of that movement from this
Speaker 1: sole purpose language, and there was a great foreign affairs
Speaker 1: piece he wrote about this all of that, not all,
Speaker 1: but a lot of that movement is because of pressure
Speaker 1: from our allies. And you also see this all over
Speaker 1: the document you're referencing, which is that our European and
Speaker 1: Asian allies have said that that language puts them in danger.
Speaker 1: And that is probably a good explanation as to why
Speaker 1: we're seeing this movement, because one thing Joe Biden has
Speaker 1: been committed to is building alliances or as he thinks
Speaker 1: about it, rebuilding alliances that Donald Trump you know, started
Speaker 1: to that he caused to deteriorate during his administration. But
Speaker 1: it has also angered a lot of people who are
Speaker 1: concerned about nuclear control and they are saying that this
Speaker 1: is the wrong message to send because it is really
Speaker 1: raising the specter of a nuclear war at some point
Speaker 1: in the future. Well that's the of a statement where Rickett,
Speaker 1: is this really about the homeland or does this also
Speaker 1: apply to an Article five attack on a NATO country
Speaker 1: with this standoff right now in Europe? You know, look,
Speaker 1: all those UM rules already apply, right, I mean, there's
Speaker 1: nothing new when it but for a nuclear response to
Speaker 1: a conventional front specific again, I mean, it was never
Speaker 1: taken off the table. Uh. It was just in this
Speaker 1: case because we've got an updated National Defense UM Report strategy,
Speaker 1: UH that they put a lot of thought around it.
Speaker 1: And my suspicion is from everything I've heard and read
Speaker 1: that they've put out of the Defense Department the last
Speaker 1: two years, Uh, this is really more to address UM,
Speaker 1: the growing threat that China has. I mean, China had
Speaker 1: virtually no nuclear weapons, uh, and just a few years
Speaker 1: ago and they are now looking at having a thousand
Speaker 1: nuclear weapons before the end of the decade. Uh, this
Speaker 1: is the most advanced build up we've ever seen. Well,
Speaker 1: what could be causing that? Right, you'd ask yourself. And
Speaker 1: then you overlay that with a much more aggressive approach
Speaker 1: towards China that both the Trump administration and the Biden
Speaker 1: administration have been pursuing. And you've got a lexer for
Speaker 1: a new strategy when it comes to conventional warfare, that
Speaker 1: you might use tactical nuclear weapons. How much of a
Speaker 1: problem is this going to be for progressive Democrats, Genie,
Speaker 1: knowing that President Biden pledged Candidate Biden pledged to declare
Speaker 1: the US nuclear arsenal used only to deter or retaliate
Speaker 1: against a nuclear attack, not a conventional one. Yeah, I mean,
Speaker 1: we are already hearing from that group and others who
Speaker 1: are saying that this is, you know, diametrically opposed to
Speaker 1: your commitment to a sole purpose of deterrence. Because, of course,
Speaker 1: what this does it leaves over the possibility that the
Speaker 1: United States could strike first, and that is a real concern.
Speaker 1: And you know, to Rick's point, the document is very clear,
Speaker 1: we're talking about twin threats from China and Russia. And
Speaker 1: for those of us who lived through nine eleven and
Speaker 1: the Obama years, this is a stark difference from the
Speaker 1: focus on say, terrorist groups like the Al Qaeda and
Speaker 1: Islamic State. While we still are hearing talk about that,
Speaker 1: there is a you know, a real focus in this
Speaker 1: document on China and Russia as the threat and no
Speaker 1: longer are we talking just about nukes at least from
Speaker 1: the U. S perspective as deterrence only. And politically, the
Speaker 1: President is going to have to answer to that. He's
Speaker 1: going to be relying a good deal on Russia's incursion
Speaker 1: or attack against Ukraine to justify what he's saying here,
Speaker 1: or what at least what the Pentagon is saying here. Well,
Speaker 1: with all this talk of using nuclear weapons, it's worth
Speaker 1: sharing the story of Vasily Archipov. I hope I'm pronouncing
Speaker 1: it right. You just mentioned in this morning's Daybreak column, which,
Speaker 1: by the way, I highly recommend you wake up, you
Speaker 1: look at the app go to Daybreak. D A. Y b.
Speaker 1: A Soviet naval officer credit with single handedly preventing a
Speaker 1: nuclear war. His story was the inspiration for the movie
Speaker 1: Crimson Tide. You guys for this, right, Denzel Washington Gene Hackman,
Speaker 1: the two officers fighting over whether to follow orders to
Speaker 1: war after the message from Washington was interrupted. We cannot
Speaker 1: launch our missiles unless both you and I agree. How
Speaker 1: do sir? This is expressly why your command must be repeated.
Speaker 1: It requires my assent. I do not give it in
Speaker 1: for them. That's great movie. The real story, by the way,
Speaker 1: hang on, let's do this right. Let's dive first. Excellent. Yeah,
Speaker 1: you with me, Rick, This is okay. Here we go.
Speaker 1: Hold your breath, everybody. Nineteen sixty two. Here we go.
Speaker 1: We're going deep. The Cuban Missile Crisis. Alarkapov was second
Speaker 1: in command of the diesel powered submarine B fifty nine.
Speaker 1: They were off the coast of Cuba when a U. S.
Speaker 1: Navy battle group spotted them and started dropping depths charges.
Speaker 1: The Soviet crew just leave the movie, lost contact with Moscow,
Speaker 1: thought war was breaking out, and the captain wanted to
Speaker 1: launch a nuke, a nuclear torpedo the sky I'm telling
Speaker 1: you about. Officer Arkipov disagreed. He refused to second the
Speaker 1: order and averted a nuclear war that certainly would have followed.
Speaker 1: They have made a documentary. This is the man who
Speaker 1: saved the world. It was called and it happened on
Speaker 1: this day in history in nineteen sixty two. My question
Speaker 1: for the panel here is what would happen today? The
Speaker 1: moral of the story here right is sort of personal integrity,
Speaker 1: personal principle in a time of war. What would happened today,
Speaker 1: Rick in the war in Ukraine, for instance, if something
Speaker 1: like this came about or a different Russian military than
Speaker 1: was around in the Soviet times. Now, uh yeah, I
Speaker 1: mean you would hope that they would actually be more
Speaker 1: cautious about the use of a nuclear weapon. But we
Speaker 1: had a little bit of this, uh scenes center in
Speaker 1: the United States just a few years ago under the
Speaker 1: Trump administration, where there was some concern about nuclear weapons
Speaker 1: being used and what safeguards do we have in place,
Speaker 1: and what are the rules that attached to it? And
Speaker 1: and I think we the good news is we learned
Speaker 1: that President United States just can't press a button and
Speaker 1: launch nuclear weapons, and so there's a much more elaborate
Speaker 1: process that that has safeguards. And so, look, these are
Speaker 1: incredibly powerful weapons that can cause you know, enormous destruction
Speaker 1: and start wars that have no end. And and so
Speaker 1: you're it's good to find out that today we don't
Speaker 1: have as many um uh chances of having that kind
Speaker 1: of mistake made, if you want to call it that.
Speaker 1: But in this case you also have to feel good
Speaker 1: about the fact that there are people in and around
Speaker 1: these weapons systems that have a moral compass. That's where
Speaker 1: let them be used unless they absolutely have to, and
Speaker 1: you do wonder if they would be there. I'm assuming
Speaker 1: that these redundancies exists for the Russian military, is well, Genie, Yeah,
Speaker 1: let's hope so. And and Joe, I'm happy to talk
Speaker 1: about this movie happier than Talladega Nights, which you mentioned yesterday.
Speaker 1: So the movies are improving, Joe mant you back. Just
Speaker 1: stick with me. I'll tell you what. Apologies and thanks
Speaker 1: to our panel, Rick and Genie. That's one ping only fleas.
Speaker 1: We'll meet you back here tomorrow on the fastest hour
Speaker 1: in politics. This is Bloomberg