1 00:00:02,520 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,440 Speaker 1: noon and five pm Eastern on Applecarckley and Android Auto 4 00:00:17,520 --> 00:00:20,680 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 5 00:00:20,720 --> 00:00:24,240 Speaker 1: get your podcasts, or watch us live on YouTube. 6 00:00:25,280 --> 00:00:28,520 Speaker 2: Here in a post Powell speech, world is feeling a 7 00:00:28,520 --> 00:00:30,960 Speaker 2: lot better than it did this morning, although our realities 8 00:00:31,080 --> 00:00:34,640 Speaker 2: regarding China trade and government shutdown have not changed. It 9 00:00:34,720 --> 00:00:37,680 Speaker 2: is day fourteen of the shutdown here in Washington, and 10 00:00:37,720 --> 00:00:39,640 Speaker 2: we thank you for joining us on the Tuesday edition 11 00:00:39,680 --> 00:00:42,200 Speaker 2: of Balance of Power here on Bloomberg TV and Radio, 12 00:00:42,600 --> 00:00:45,600 Speaker 2: as we welcome our global television audience to the conversation. 13 00:00:45,720 --> 00:00:47,879 Speaker 2: I've got my eyes on the President's schedule today and 14 00:00:47,920 --> 00:00:50,559 Speaker 2: I just want to mention quickly that we do expect 15 00:00:50,600 --> 00:00:54,120 Speaker 2: to bring you into the Cabinet Room, if not the 16 00:00:55,160 --> 00:00:57,440 Speaker 2: East Room, where the President is going to be spending 17 00:00:57,440 --> 00:00:59,120 Speaker 2: some time a little bit later on. There's a Metal 18 00:00:59,160 --> 00:01:01,800 Speaker 2: of Freedom ceremony set for this afternoon, but more immediately, 19 00:01:01,880 --> 00:01:06,160 Speaker 2: Javier Malay, the President of Argentina, is at the White House, 20 00:01:06,200 --> 00:01:09,080 Speaker 2: and we are standing by for his arrival here with 21 00:01:09,160 --> 00:01:12,480 Speaker 2: the President planning a bilateral lunch in the cabinet room. 22 00:01:12,520 --> 00:01:15,480 Speaker 2: He may be spending some time talking before reporters. This 23 00:01:15,640 --> 00:01:17,760 Speaker 2: was expected to open up to press. If it does, 24 00:01:18,160 --> 00:01:21,160 Speaker 2: we'll bring you there for more with big questions about 25 00:01:21,160 --> 00:01:24,440 Speaker 2: what's being framed as a credit swap, if you will, 26 00:01:24,520 --> 00:01:28,240 Speaker 2: or a currency swap by the administration, others calling it 27 00:01:28,560 --> 00:01:32,119 Speaker 2: a plain old bailout of Argentina, and we'll be hearing 28 00:01:32,200 --> 00:01:35,520 Speaker 2: much more about that coming up later on. Right now, though, 29 00:01:35,520 --> 00:01:37,320 Speaker 2: we do want to parse some of the words of 30 00:01:37,360 --> 00:01:40,160 Speaker 2: the FED chair making investors feel better here on Wall Street, 31 00:01:40,200 --> 00:01:45,440 Speaker 2: clearly lifting spirits with regard to his view speaking a 32 00:01:45,480 --> 00:01:48,200 Speaker 2: bit earlier at the NABE conference. When it comes to 33 00:01:48,480 --> 00:01:51,720 Speaker 2: balance sheet run off, listen to what Powell said on Bloomberg. 34 00:01:53,240 --> 00:01:55,760 Speaker 3: Our long stated plan is to stop balance sheet runoff 35 00:01:55,760 --> 00:01:58,400 Speaker 3: when reserves are somewhat above the level we judge consistent 36 00:01:58,400 --> 00:02:02,240 Speaker 3: with ample reserves conditions. We may approach that point in 37 00:02:02,320 --> 00:02:05,480 Speaker 3: coming months, and we are closely monitoring a wide range 38 00:02:05,480 --> 00:02:09,320 Speaker 3: of indicators to inform this decision. Some signs have begun 39 00:02:09,360 --> 00:02:12,919 Speaker 3: to emerge that liquidity conditions are gradually tightening, including a 40 00:02:13,000 --> 00:02:16,360 Speaker 3: general firming of repo rates along with more noticeable but 41 00:02:16,400 --> 00:02:18,960 Speaker 3: temporary pressures on selected. 42 00:02:18,600 --> 00:02:23,320 Speaker 2: Dates, generating the headline on the terminal, Pal says FED 43 00:02:23,360 --> 00:02:26,800 Speaker 2: may stop shrinking balance sheet in months ahead, editing that 44 00:02:26,880 --> 00:02:29,760 Speaker 2: for US. Molly Smith, Bloomberg Economics editor, joins US now 45 00:02:29,880 --> 00:02:31,800 Speaker 2: live from New York. Molly, it's great to have you. 46 00:02:31,919 --> 00:02:35,400 Speaker 2: The economic signs are looming large here, and it's interesting 47 00:02:35,440 --> 00:02:39,280 Speaker 2: to watch the markets shake losses from earlier in term 48 00:02:39,320 --> 00:02:41,160 Speaker 2: positive at least the S and P five hundred now 49 00:02:41,240 --> 00:02:43,720 Speaker 2: up sixteen points, That DAW is positive, and maybe the 50 00:02:43,800 --> 00:02:46,200 Speaker 2: Nasdaq chips away at some of its losses as well. 51 00:02:46,200 --> 00:02:47,640 Speaker 2: How should investors be reading this? 52 00:02:48,120 --> 00:02:50,320 Speaker 4: I mean, clearly, the sign here is that they're taking 53 00:02:50,360 --> 00:02:53,680 Speaker 4: all this to mean that Powell still sees signs of 54 00:02:53,720 --> 00:02:55,720 Speaker 4: weakening in the labor market and that's going to lend 55 00:02:55,800 --> 00:02:57,040 Speaker 4: itself to another cut. 56 00:02:56,880 --> 00:02:57,680 Speaker 5: Later this month. 57 00:02:57,760 --> 00:03:00,239 Speaker 4: Is at least seems to be what the re through 58 00:03:00,360 --> 00:03:03,480 Speaker 4: is coming through the markets here, and especially in the 59 00:03:03,520 --> 00:03:06,880 Speaker 4: absence of really any other tangible government data to work 60 00:03:06,919 --> 00:03:10,120 Speaker 4: with in this time. That's the biggest thing that you 61 00:03:10,160 --> 00:03:11,840 Speaker 4: can hinge your hat on right now, if that's when 62 00:03:11,840 --> 00:03:14,600 Speaker 4: you're trying to make these calls. And Powell did touch 63 00:03:14,639 --> 00:03:17,720 Speaker 4: on that on the lack of government data in the shutdown, 64 00:03:17,760 --> 00:03:20,760 Speaker 4: and talking about the abundance of labor market data but 65 00:03:20,800 --> 00:03:23,560 Speaker 4: not so much on the inflation side. So and how 66 00:03:23,560 --> 00:03:26,000 Speaker 4: we're all really looking at all the same private sector 67 00:03:26,040 --> 00:03:29,959 Speaker 4: indicators right now while the government shutdown persists. 68 00:03:30,639 --> 00:03:33,400 Speaker 2: And that's probably not enough right Indeed, he said, we're 69 00:03:33,400 --> 00:03:35,400 Speaker 2: all looking at the same stuff, and there are less 70 00:03:35,400 --> 00:03:39,600 Speaker 2: good substitutes for government inflation data. We know BLS is 71 00:03:39,640 --> 00:03:42,720 Speaker 2: bringing workers back into crank out a CPI report before 72 00:03:42,800 --> 00:03:44,560 Speaker 2: the next Fed meeting, But is that enough? 73 00:03:44,600 --> 00:03:44,880 Speaker 6: Molly? 74 00:03:44,880 --> 00:03:48,320 Speaker 2: What else does Powell need to get a clearer view? 75 00:03:48,960 --> 00:03:51,440 Speaker 4: I mean, that's going to be It'll have to be 76 00:03:51,560 --> 00:03:55,000 Speaker 4: enough obviously for the October meeting, and that doesn't change 77 00:03:55,040 --> 00:03:57,440 Speaker 4: what would have otherwise been on the calendar for the 78 00:03:57,480 --> 00:04:02,480 Speaker 4: October meeting. The real risk, though, for the inflation data 79 00:04:02,480 --> 00:04:05,560 Speaker 4: that should be collected right now, is that that isn't happening. 80 00:04:06,120 --> 00:04:08,920 Speaker 4: The BLS workers that were called back were just to 81 00:04:09,480 --> 00:04:12,280 Speaker 4: work on the September CPI data, so all of that 82 00:04:12,400 --> 00:04:15,120 Speaker 4: had been collected by the time the government shut down, 83 00:04:15,480 --> 00:04:18,080 Speaker 4: just hadn't been assembled in the form of the report 84 00:04:18,120 --> 00:04:20,640 Speaker 4: that we usually see about two weeks later. So that's 85 00:04:20,680 --> 00:04:23,680 Speaker 4: all they're working on right now. But otherwise, all of 86 00:04:23,720 --> 00:04:26,279 Speaker 4: the data collection that would be happening right now, with 87 00:04:26,720 --> 00:04:30,200 Speaker 4: hundreds of price collectors sent around the country collecting tens 88 00:04:30,200 --> 00:04:33,320 Speaker 4: of thousands of quotes on prices for all these goods 89 00:04:33,320 --> 00:04:35,760 Speaker 4: and services that we spend money on every day, that 90 00:04:35,920 --> 00:04:39,320 Speaker 4: isn't happening. So that's the real risk for the October 91 00:04:39,360 --> 00:04:41,039 Speaker 4: CPI that would be due next month. 92 00:04:42,160 --> 00:04:44,240 Speaker 2: Well, and you've got a Speaker of the House here, 93 00:04:44,279 --> 00:04:46,839 Speaker 2: Molly who says we could be heading for a record 94 00:04:47,480 --> 00:04:51,560 Speaker 2: the budget chief at the White House russ vote on 95 00:04:51,640 --> 00:04:56,160 Speaker 2: social media earlier basically saying that we're ready for anything 96 00:04:56,360 --> 00:05:00,440 Speaker 2: omb making every preparation to batten down the hatches and 97 00:05:00,480 --> 00:05:04,279 Speaker 2: write out the Democrats in proceedings. If this in fact 98 00:05:04,360 --> 00:05:09,600 Speaker 2: goes on for weeks or months, do they retroactively accumulate 99 00:05:09,640 --> 00:05:12,159 Speaker 2: that data or do we just have a gap in 100 00:05:12,200 --> 00:05:12,760 Speaker 2: the story. 101 00:05:13,200 --> 00:05:15,680 Speaker 4: There is a risk of there not being a report. 102 00:05:15,800 --> 00:05:19,640 Speaker 4: That is very real risk right now. There's some data 103 00:05:19,680 --> 00:05:25,120 Speaker 4: that comes from other sources that the BLS does compile 104 00:05:25,640 --> 00:05:28,200 Speaker 4: every month, so they get you know, prices on new 105 00:05:28,200 --> 00:05:31,760 Speaker 4: and used cars from JD Power. There are other measures 106 00:05:31,760 --> 00:05:36,880 Speaker 4: for gas prices, for prescription drugs, but otherwise. But the 107 00:05:36,960 --> 00:05:40,720 Speaker 4: vast majority of this is coming from either personal visits 108 00:05:40,760 --> 00:05:43,800 Speaker 4: to brick and mortar stores or calling these businesses on 109 00:05:43,839 --> 00:05:46,680 Speaker 4: the phone, visiting their prices online. 110 00:05:47,080 --> 00:05:49,400 Speaker 5: But it's happening by BLS staff. 111 00:05:49,480 --> 00:05:52,520 Speaker 4: So that's where you know, almost two thirds of the 112 00:05:52,520 --> 00:05:54,720 Speaker 4: price collection just isn't happening right now. 113 00:05:54,760 --> 00:05:56,000 Speaker 5: And that's really a risk. 114 00:05:57,160 --> 00:05:59,640 Speaker 2: Do we get to a point where we're missing enough 115 00:05:59,760 --> 00:06:04,719 Speaker 2: data that the FED has to delay a meeting or 116 00:06:04,800 --> 00:06:08,200 Speaker 2: issue a statement saying there are not enough data to 117 00:06:08,200 --> 00:06:11,480 Speaker 2: make a credible decision moving forward here on interest rates 118 00:06:11,560 --> 00:06:12,400 Speaker 2: or on the economy. 119 00:06:13,040 --> 00:06:15,560 Speaker 4: You know, that's a risk I haven't heard brought up before, 120 00:06:15,600 --> 00:06:18,280 Speaker 4: and I'm honestly not even sure if the FED, you know, 121 00:06:18,400 --> 00:06:22,800 Speaker 4: legally or in their statutory powers, can even do that. 122 00:06:23,279 --> 00:06:25,760 Speaker 5: You know, they are set up to have eight meetings 123 00:06:25,800 --> 00:06:26,120 Speaker 5: a year. 124 00:06:26,240 --> 00:06:29,960 Speaker 4: They're spaced out roughly six weeks apart, so I think 125 00:06:30,040 --> 00:06:31,880 Speaker 4: in that case it would just be, you know, they 126 00:06:32,000 --> 00:06:34,279 Speaker 4: have to work with what they've got. But that is 127 00:06:34,320 --> 00:06:36,120 Speaker 4: a good question to look further into. 128 00:06:37,240 --> 00:06:39,320 Speaker 2: You go to war with the army you have. When 129 00:06:39,320 --> 00:06:43,120 Speaker 2: you heard Jay Powell talking about the job market, Molly, 130 00:06:43,200 --> 00:06:45,000 Speaker 2: I wonder your thoughts on the next couple of months, 131 00:06:45,040 --> 00:06:47,680 Speaker 2: because the shutdown could change this dynamic where you've got 132 00:06:47,680 --> 00:06:51,440 Speaker 2: federal workers who are furloughed at best, furloughed not getting 133 00:06:51,520 --> 00:06:55,120 Speaker 2: paid until they're made whole later again at best. The 134 00:06:55,120 --> 00:06:58,560 Speaker 2: presidents suggested that maybe all civilian federal workers not be 135 00:06:59,560 --> 00:07:01,680 Speaker 2: repaid at the end of this. We just don't know. 136 00:07:02,240 --> 00:07:04,800 Speaker 2: But also the layoffs. Now we had four thousand last 137 00:07:04,800 --> 00:07:07,039 Speaker 2: week on top of the two hundred and fifty thousand 138 00:07:07,080 --> 00:07:09,240 Speaker 2: retirements that are taking hold, and there could be other 139 00:07:09,320 --> 00:07:13,160 Speaker 2: layoffs against the backdrop of mass deportations. You know, all 140 00:07:13,200 --> 00:07:16,320 Speaker 2: these factors, Molly, could we end up putting these together 141 00:07:16,360 --> 00:07:18,840 Speaker 2: in a couple of months. If this is a protracted shutdown, 142 00:07:18,880 --> 00:07:22,560 Speaker 2: we're really showing up in the numbers here, with Powell saying, 143 00:07:22,600 --> 00:07:25,400 Speaker 2: I'm kind of amazed I haven't seen it already. What 144 00:07:25,440 --> 00:07:27,600 Speaker 2: if it does start to show up, what state could 145 00:07:27,640 --> 00:07:28,520 Speaker 2: the job market be in? 146 00:07:28,880 --> 00:07:31,520 Speaker 4: I think, you know, immigration is going to be the 147 00:07:31,600 --> 00:07:34,600 Speaker 4: much bigger factor here for the labor market than what 148 00:07:34,800 --> 00:07:36,560 Speaker 4: happens in federal government employment. 149 00:07:36,600 --> 00:07:37,840 Speaker 5: It's just naturally a much. 150 00:07:37,720 --> 00:07:42,160 Speaker 4: Smaller slice of workers in the US. And this is 151 00:07:42,320 --> 00:07:44,200 Speaker 4: just really a key debate, right Now, there was a 152 00:07:44,240 --> 00:07:48,720 Speaker 4: really interesting blog from an economist at the Dallas FED 153 00:07:48,800 --> 00:07:52,880 Speaker 4: recently that was just arguing that the slower rate of 154 00:07:52,960 --> 00:07:56,080 Speaker 4: job with that we're seeing isn't reason for concern. This 155 00:07:56,200 --> 00:07:58,800 Speaker 4: is just the labor market adjusting to the fact that 156 00:07:59,080 --> 00:08:01,720 Speaker 4: we don't have this same supply of immigrants that we 157 00:08:01,880 --> 00:08:05,120 Speaker 4: used to and that naturally then the pace of job 158 00:08:05,160 --> 00:08:08,040 Speaker 4: growth to keep the unemployment rate stable should be lower 159 00:08:08,160 --> 00:08:11,200 Speaker 4: and that shouldn't be concerning. So that's one view, But 160 00:08:11,760 --> 00:08:14,000 Speaker 4: a lot of what you hear from FED speakers is 161 00:08:14,160 --> 00:08:17,320 Speaker 4: there's trying to balance that with what actually is real 162 00:08:17,360 --> 00:08:20,840 Speaker 4: softness in the labor market, and that's the distinction I 163 00:08:20,840 --> 00:08:22,680 Speaker 4: think that we're still kind of wrestling with. 164 00:08:23,960 --> 00:08:26,280 Speaker 2: You start to wonder if the FED, which of course 165 00:08:27,360 --> 00:08:31,960 Speaker 2: has its own funding, could start to perform its own 166 00:08:32,000 --> 00:08:35,160 Speaker 2: research or is private data the only way that they'll 167 00:08:35,160 --> 00:08:35,920 Speaker 2: get a hold on this. 168 00:08:36,520 --> 00:08:38,839 Speaker 4: Well, the FED already yeah, as you mentioned, they do 169 00:08:38,920 --> 00:08:42,240 Speaker 4: their own research already through the Reserve banks, through the 170 00:08:42,240 --> 00:08:44,760 Speaker 4: Board of Governors. I mean, Powell did mention, you know, 171 00:08:44,760 --> 00:08:47,680 Speaker 4: we're going to be looking for the Beige Book tomorrow, 172 00:08:48,200 --> 00:08:51,880 Speaker 4: which generally has taken on more significance looking at some 173 00:08:52,000 --> 00:08:54,640 Speaker 4: of the anecdotal evidence in the economy in that page. 174 00:08:54,640 --> 00:08:55,480 Speaker 2: Book is the Bible. 175 00:08:55,559 --> 00:08:58,800 Speaker 5: Now your words here, Joe. I mean, I like that, 176 00:08:59,000 --> 00:09:00,960 Speaker 5: But it is a fun read, you know. 177 00:09:01,040 --> 00:09:03,920 Speaker 4: Sometimes there are really fun little snippets in there if 178 00:09:03,920 --> 00:09:06,080 Speaker 4: you have the patients to go through all the different 179 00:09:06,080 --> 00:09:10,200 Speaker 4: twelve reserve banks and what's happening around the country. But yeah, 180 00:09:10,240 --> 00:09:12,360 Speaker 4: that'll be I guess the next data point at least 181 00:09:12,400 --> 00:09:14,040 Speaker 4: from the FED that we'll have to look. 182 00:09:13,880 --> 00:09:17,480 Speaker 2: Forward to so exciting. We call it the Beige Book. 183 00:09:17,520 --> 00:09:21,880 Speaker 2: Indeed the cover is beige. Someone like yourself, though, has 184 00:09:21,920 --> 00:09:25,000 Speaker 2: to cover the data. That's your job, Mollie Smith. You 185 00:09:25,160 --> 00:09:27,800 Speaker 2: edit this data. You're up at a thirty every morning 186 00:09:27,840 --> 00:09:30,120 Speaker 2: waiting for this to hit it. In the meantime, what 187 00:09:30,280 --> 00:09:32,840 Speaker 2: do you get your arms around if it's not the 188 00:09:32,880 --> 00:09:34,680 Speaker 2: same stuff that Jay Powell's talking about. 189 00:09:34,840 --> 00:09:36,920 Speaker 4: Yeah, I promise I'm not just sitting here twiddling my 190 00:09:36,960 --> 00:09:38,240 Speaker 4: thumbs in the absence of. 191 00:09:38,280 --> 00:09:40,560 Speaker 5: Something coming out at eight thirty in the morning. 192 00:09:41,480 --> 00:09:43,000 Speaker 7: We had a story out. 193 00:09:42,840 --> 00:09:46,040 Speaker 4: Today that I edited that was talking about these risks 194 00:09:46,080 --> 00:09:49,200 Speaker 4: to the October CPI and what that report might look 195 00:09:49,240 --> 00:09:51,480 Speaker 4: like if we even get one, just because of all 196 00:09:51,520 --> 00:09:55,240 Speaker 4: the data collection that hasn't been happening so far. We're 197 00:09:55,320 --> 00:09:58,920 Speaker 4: looking at alternative measures of inflation, which Powell said there 198 00:09:58,960 --> 00:10:01,439 Speaker 4: aren't a lot of them, compared to the labor market, 199 00:10:01,480 --> 00:10:05,880 Speaker 4: where there seemed to be measures of job openings, of hiring, 200 00:10:06,000 --> 00:10:09,440 Speaker 4: of all the of wage growth tracked by so many 201 00:10:09,480 --> 00:10:11,920 Speaker 4: other companies. So that's great for the Fed to have 202 00:10:11,960 --> 00:10:13,920 Speaker 4: all that on the labor market, it's just not the 203 00:10:13,920 --> 00:10:16,720 Speaker 4: same on the inflation side. We get some other private 204 00:10:16,720 --> 00:10:19,760 Speaker 4: sector looks at consumer spending too, but again it's just 205 00:10:19,800 --> 00:10:21,440 Speaker 4: not the same as the labor market data. 206 00:10:22,440 --> 00:10:25,480 Speaker 2: Well, she's our economic guru, with or without the data 207 00:10:25,520 --> 00:10:27,720 Speaker 2: on any given morning, Molly Smith. It's great to see 208 00:10:27,720 --> 00:10:31,160 Speaker 2: and great to talk this out. Bloomberg Economics Editor with 209 00:10:31,240 --> 00:10:33,640 Speaker 2: us live from world headquarters in New York. We'll assemble 210 00:10:33,679 --> 00:10:36,559 Speaker 2: our panel next as we wait for the President at 211 00:10:36,600 --> 00:10:38,920 Speaker 2: the White House with President Mila. It's all I had 212 00:10:39,000 --> 00:10:41,600 Speaker 2: right here on Bloomberg. Stay with us on Balance of Power. 213 00:10:41,640 --> 00:10:43,400 Speaker 2: We'll have much more coming up after this. 214 00:10:47,720 --> 00:10:51,240 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 215 00:10:51,280 --> 00:10:54,120 Speaker 1: us live weekdays at noon and five pm. E's durn 216 00:10:54,280 --> 00:10:57,680 Speaker 1: on Apple, Cocklay and Android Auto with the Bloomberg Business app. 217 00:10:57,760 --> 00:11:00,760 Speaker 1: You can also listen live on amazonal Life from our 218 00:11:00,800 --> 00:11:05,520 Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty. 219 00:11:06,840 --> 00:11:09,760 Speaker 2: Day fourteen of the shutdown. There will be voting later 220 00:11:09,840 --> 00:11:12,079 Speaker 2: on today. It's going to happen, likely in the late 221 00:11:12,200 --> 00:11:14,120 Speaker 2: edition of Balance of Power, but only on one of 222 00:11:14,120 --> 00:11:17,120 Speaker 2: the crs, the Republican version that which passed the House. 223 00:11:17,160 --> 00:11:21,000 Speaker 2: The Democratic version is apparently now officially on ice, having 224 00:11:21,440 --> 00:11:24,040 Speaker 2: failed in voting as well repeatedly in the Senate. Thanks 225 00:11:24,040 --> 00:11:25,840 Speaker 2: for being with us here on the Tuesday edition of 226 00:11:25,880 --> 00:11:29,640 Speaker 2: Balance of Power on Bloomberg TV and Radio. Still in 227 00:11:29,679 --> 00:11:32,480 Speaker 2: town while the House is out of session. Speaker Mike 228 00:11:32,559 --> 00:11:35,120 Speaker 2: Johnson speaking earlier about some of the new levers that 229 00:11:35,160 --> 00:11:38,640 Speaker 2: the administration is trying to pull to get pay to 230 00:11:39,200 --> 00:11:43,240 Speaker 2: the military in some others, the Trump administration saying it's 231 00:11:43,320 --> 00:11:47,280 Speaker 2: working on ways to get paychecks to federal law enforcement 232 00:11:47,280 --> 00:11:50,719 Speaker 2: officers as well, similar to what the President ordered over 233 00:11:50,760 --> 00:11:53,199 Speaker 2: the weekend for active duty military. But there's still a 234 00:11:53,240 --> 00:11:54,840 Speaker 2: lot of gray on how this is going to work 235 00:11:54,880 --> 00:11:57,120 Speaker 2: and whether it's in fact legal for the President to 236 00:11:57,240 --> 00:12:01,439 Speaker 2: get that pay to the troops using unobligated funds, as 237 00:12:01,480 --> 00:12:04,640 Speaker 2: they said, from the last fiscal year. Here's Speaker Johnson 238 00:12:04,800 --> 00:12:06,280 Speaker 2: speaking to this and earlier today. 239 00:12:07,320 --> 00:12:09,559 Speaker 8: If the Democrats want to go to court and challenge 240 00:12:09,559 --> 00:12:12,280 Speaker 8: truth being paid, bring it, okay. I'm grateful for a 241 00:12:12,280 --> 00:12:14,800 Speaker 8: commander in chief who understands the priorities of the country, 242 00:12:15,080 --> 00:12:18,000 Speaker 8: the necessity of national defense, and the urgency that we 243 00:12:18,080 --> 00:12:20,840 Speaker 8: all feel and voted for eight times. Republicans have voted 244 00:12:20,880 --> 00:12:23,520 Speaker 8: in Congress eight times now between House and Senate, to 245 00:12:23,760 --> 00:12:26,199 Speaker 8: fund the troops and pay federal workers in all these 246 00:12:26,320 --> 00:12:29,280 Speaker 8: essential jobs and agencies, because we understand. 247 00:12:28,880 --> 00:12:29,719 Speaker 2: The necessity of that. 248 00:12:29,960 --> 00:12:33,840 Speaker 8: Meanwhile, the Democrats voted eight times to block their paychecks. 249 00:12:34,040 --> 00:12:36,320 Speaker 8: I'm grateful we have a president who is willing to 250 00:12:36,320 --> 00:12:37,439 Speaker 8: step up and do the right thing. 251 00:12:38,840 --> 00:12:42,600 Speaker 2: Speaker Johnson now floating the prospect as I read in 252 00:12:42,640 --> 00:12:46,200 Speaker 2: the Associated Press of the longest ever shut down. Quote, 253 00:12:46,200 --> 00:12:49,000 Speaker 2: we're barreling toward one of the longest shutdowns in American 254 00:12:49,080 --> 00:12:52,720 Speaker 2: history unquote the Associated Press quoting him to say that 255 00:12:52,800 --> 00:12:55,959 Speaker 2: he will not negotiate with Democrats until they hit pause 256 00:12:56,000 --> 00:12:59,080 Speaker 2: on their health demands and reopen the government. Now, that 257 00:12:59,320 --> 00:13:03,120 Speaker 2: shift in rhetoric, the longest ever being matched by the 258 00:13:03,160 --> 00:13:09,040 Speaker 2: White House with Russ vote, suggesting on social media that 259 00:13:09,080 --> 00:13:12,800 Speaker 2: the OMB is making every preparation to batten down the hatches, 260 00:13:12,880 --> 00:13:16,840 Speaker 2: the cliche that he grabs and ride out the Democrats' introceedents. 261 00:13:16,880 --> 00:13:19,640 Speaker 2: Pay the troops, he says, pay law enforcement, continue the riffs, 262 00:13:20,080 --> 00:13:25,200 Speaker 2: and wait. OMB making every preparation to bat down the 263 00:13:25,200 --> 00:13:29,600 Speaker 2: hatches and write out the Democrats. As I mentioned, now, 264 00:13:29,600 --> 00:13:32,559 Speaker 2: we're in our third full work week today here with 265 00:13:32,679 --> 00:13:36,839 Speaker 2: no end in sight, and as I mentioned, there'll be 266 00:13:36,920 --> 00:13:40,600 Speaker 2: an eighth vote on the Republican led stopgap funding bill. 267 00:13:40,640 --> 00:13:43,600 Speaker 2: If you're with us on Bloomberg TV or on YouTube, 268 00:13:43,640 --> 00:13:48,200 Speaker 2: you see the tweet there, the post from the Office 269 00:13:48,480 --> 00:13:51,160 Speaker 2: of Management and Budget. We assemble our panel for their 270 00:13:51,160 --> 00:13:52,920 Speaker 2: take on this, and I will add that we do 271 00:13:53,040 --> 00:13:55,320 Speaker 2: expect to hear from the President a bit later on today. 272 00:13:55,360 --> 00:13:57,679 Speaker 2: He's going to be hosting President Javier Malay. If he 273 00:13:57,720 --> 00:14:00,000 Speaker 2: does arrive at the White House. He's late at this point, 274 00:14:00,000 --> 00:14:03,240 Speaker 2: and there's also an event schedule for later on in 275 00:14:03,559 --> 00:14:07,920 Speaker 2: a ceremony honoring the late Charlie Kirk. Bloomberg Politics contributors 276 00:14:08,000 --> 00:14:10,600 Speaker 2: Geenie Shanzano and Rick Davis are with us Genie as 277 00:14:10,640 --> 00:14:14,199 Speaker 2: Democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick 278 00:14:14,320 --> 00:14:17,880 Speaker 2: is our Republican strategist and partner at Stone Court Capital. 279 00:14:18,120 --> 00:14:20,080 Speaker 2: What do you make, Genie, of the shift? And I 280 00:14:20,120 --> 00:14:24,400 Speaker 2: realize it's a nuance, But the shift in Republican rhetoric 281 00:14:24,480 --> 00:14:28,400 Speaker 2: not only will we not negotiate with Democrats until the 282 00:14:28,440 --> 00:14:33,280 Speaker 2: government is reopened, but we're prepared for the longest ever 283 00:14:33,360 --> 00:14:37,320 Speaker 2: shut down time to batten down the hatches at the administration. 284 00:14:38,000 --> 00:14:40,840 Speaker 2: Will Democrats be able to wait them out? 285 00:14:42,720 --> 00:14:42,960 Speaker 7: Yeah? 286 00:14:43,000 --> 00:14:45,560 Speaker 9: I think we're going to have to wait and see. 287 00:14:45,640 --> 00:14:49,040 Speaker 9: The reality is it isn't a really important shift that 288 00:14:49,080 --> 00:14:51,680 Speaker 9: you're talking about, because we've heard it from both the 289 00:14:51,720 --> 00:14:53,920 Speaker 9: Speaker and we've heard it from the White House, and 290 00:14:53,960 --> 00:14:56,640 Speaker 9: we've heard it from the OMB director, and they are 291 00:14:56,680 --> 00:15:01,480 Speaker 9: taking active steps to remove all the that could get 292 00:15:01,480 --> 00:15:05,240 Speaker 9: these sides together and talking by paying the troop, paying 293 00:15:05,320 --> 00:15:09,800 Speaker 9: law enforcement, keeping wikiploat and so what then are the 294 00:15:09,840 --> 00:15:13,120 Speaker 9: pain points that will actually bring these two sides together. 295 00:15:13,520 --> 00:15:17,040 Speaker 9: It's hard to see them coming down the pike anytime soon. 296 00:15:17,600 --> 00:15:21,280 Speaker 9: That's distressing, and it's also distressing to listen to the 297 00:15:21,360 --> 00:15:25,000 Speaker 9: Speaker talk about the fact, you know, we welcome seeing 298 00:15:25,040 --> 00:15:27,520 Speaker 9: you in court. If you're going to be fighting against 299 00:15:27,560 --> 00:15:30,720 Speaker 9: paying the troops. Nobody that I know of on the 300 00:15:30,720 --> 00:15:34,160 Speaker 9: democratic order Republican side, is fighting about paying the troops. 301 00:15:34,600 --> 00:15:37,400 Speaker 9: What we should be fighting about is the fact that 302 00:15:37,880 --> 00:15:41,040 Speaker 9: the branch of government that you speak are run is 303 00:15:41,200 --> 00:15:45,520 Speaker 9: completely abandoned its role as the first and most important 304 00:15:45,520 --> 00:15:47,400 Speaker 9: branch of the greatest country in the world. 305 00:15:47,800 --> 00:15:49,440 Speaker 7: That is something worth fighting for. 306 00:15:49,800 --> 00:15:52,400 Speaker 9: This money that we give in taxes goes to the 307 00:15:52,400 --> 00:15:56,160 Speaker 9: first branch. They are the ones responsible for the power 308 00:15:56,200 --> 00:15:59,120 Speaker 9: of the purses, Alexander Hamilton like to say, and they 309 00:15:59,120 --> 00:16:02,040 Speaker 9: are the ones that alex the funds. So that is 310 00:16:02,080 --> 00:16:04,400 Speaker 9: where we should be focusing our attention. 311 00:16:04,600 --> 00:16:05,760 Speaker 7: Yes, pay the troops. 312 00:16:05,840 --> 00:16:10,200 Speaker 9: But Speaker Johnson, get your branch of government open for 313 00:16:10,240 --> 00:16:11,240 Speaker 9: gosh sakes. 314 00:16:11,880 --> 00:16:14,400 Speaker 2: Well, I think that remains a strategy too, to keep 315 00:16:14,400 --> 00:16:16,480 Speaker 2: the House out of session even though there are a 316 00:16:16,480 --> 00:16:18,760 Speaker 2: lot of makers while a lot of lawmakers still walking 317 00:16:18,800 --> 00:16:21,320 Speaker 2: around town will be joined by one on the late 318 00:16:21,480 --> 00:16:24,040 Speaker 2: edition of Balance of Power. But you mentioned Wick, Genie. 319 00:16:24,040 --> 00:16:26,480 Speaker 2: I'm glad you said that because this is the other 320 00:16:26,520 --> 00:16:29,240 Speaker 2: way that the White House is preparing for the long term, 321 00:16:29,760 --> 00:16:32,320 Speaker 2: the long haul, and as Genie said, removing a pain 322 00:16:32,360 --> 00:16:34,880 Speaker 2: point while we're at it the administration ensuring the Special 323 00:16:34,920 --> 00:16:38,600 Speaker 2: Supplemental Nutrition Program for women, infants, and children known as 324 00:16:38,640 --> 00:16:43,120 Speaker 2: WICK will continue to operate for the foreseeable future. Rick Davis, 325 00:16:43,160 --> 00:16:47,400 Speaker 2: what do you make of this strategy taking pressure points, 326 00:16:47,440 --> 00:16:51,440 Speaker 2: pain points off the calendar and daring Democrats to go along. 327 00:16:53,280 --> 00:16:57,119 Speaker 10: Look, I mean this administration and the Republican leadership in Congress, 328 00:16:57,920 --> 00:17:02,240 Speaker 10: they're not trying to punish the viduals who were you know, 329 00:17:02,440 --> 00:17:06,680 Speaker 10: a government agencies working in government agencies, you know, supplying 330 00:17:06,680 --> 00:17:09,280 Speaker 10: these important uh services. 331 00:17:09,400 --> 00:17:12,080 Speaker 6: I mean they they they do become part of the 332 00:17:12,119 --> 00:17:13,199 Speaker 6: fodder and the debate. 333 00:17:13,359 --> 00:17:15,879 Speaker 10: But what they're trying to do is get Democratic leader 334 00:17:16,040 --> 00:17:18,760 Speaker 10: in the Senate. That's it's really a target of one 335 00:17:19,200 --> 00:17:23,359 Speaker 10: Chuck Schumer too, to come to the table and pass 336 00:17:23,400 --> 00:17:25,360 Speaker 10: a CR and frankly. 337 00:17:25,320 --> 00:17:26,600 Speaker 6: De escalate this whole thing. 338 00:17:26,640 --> 00:17:29,160 Speaker 10: I mean, Genie talks about like all these big issues 339 00:17:29,200 --> 00:17:32,119 Speaker 10: about you know, being the rightful place to you know, 340 00:17:32,200 --> 00:17:36,199 Speaker 10: initiate uh uh, you know funding for the government in 341 00:17:36,240 --> 00:17:38,440 Speaker 10: the House. House has done their job. They've passed a 342 00:17:38,520 --> 00:17:41,600 Speaker 10: clean CR. It's exactly what we've done one hundred times 343 00:17:41,640 --> 00:17:44,200 Speaker 10: before when we've had to do a CR. In fact, 344 00:17:44,240 --> 00:17:47,040 Speaker 10: it's even easier than it's been in the past, because 345 00:17:47,040 --> 00:17:50,359 Speaker 10: we you know, Republicans and Democrats like boys attached writers 346 00:17:50,359 --> 00:17:53,440 Speaker 10: to make a point, and and the reality is it's 347 00:17:53,480 --> 00:17:55,560 Speaker 10: just the wrong fight for Schumer to fight. 348 00:17:56,359 --> 00:17:58,040 Speaker 6: This administration's kg. 349 00:17:58,000 --> 00:18:01,000 Speaker 10: All right, they're gonna they're gonna, you know, make sure 350 00:18:01,119 --> 00:18:04,320 Speaker 10: that the wheel gets oiled so that it doesn't squeak 351 00:18:04,400 --> 00:18:04,919 Speaker 10: too loudly. 352 00:18:05,880 --> 00:18:07,520 Speaker 6: They can't afford. 353 00:18:07,880 --> 00:18:10,439 Speaker 10: The one thing that could really upset the apple cart 354 00:18:10,760 --> 00:18:14,040 Speaker 10: are tsa people not shown up for jobs, you know, 355 00:18:14,200 --> 00:18:19,080 Speaker 10: saying that they're sick, walk outs by air traffic controllers. 356 00:18:19,160 --> 00:18:24,000 Speaker 10: We've seen already Austin's airport shut down because they didn't 357 00:18:24,000 --> 00:18:25,320 Speaker 10: have enough air traffic controllers. 358 00:18:25,680 --> 00:18:27,840 Speaker 6: I mean, those kinds of things are unavoidable. 359 00:18:27,840 --> 00:18:30,359 Speaker 10: There's nothing the administration can do to patch that together. 360 00:18:30,800 --> 00:18:33,080 Speaker 10: But they're not trying to make the military suffer. They're 361 00:18:33,160 --> 00:18:35,720 Speaker 10: not trying to make law enforcement suffer. They don't want 362 00:18:35,720 --> 00:18:38,399 Speaker 10: the WICK program to go out of business, and so 363 00:18:38,480 --> 00:18:41,280 Speaker 10: they're using extraordinary measures to try and make sure that 364 00:18:41,280 --> 00:18:44,119 Speaker 10: doesn't happen. While we wait around for Chuck Schumer to 365 00:18:44,200 --> 00:18:47,280 Speaker 10: realize that trillion dollars of additional spending is not. 366 00:18:47,280 --> 00:18:47,919 Speaker 6: Going to happen. 367 00:18:49,520 --> 00:18:53,160 Speaker 2: Genie The CDC has now rescinded the majority of its 368 00:18:53,200 --> 00:18:58,040 Speaker 2: layoffs that were announced on Friday, remembering russ vote went 369 00:18:58,200 --> 00:19:01,600 Speaker 2: forward with about four thousand and riffs. At least we 370 00:19:01,680 --> 00:19:04,040 Speaker 2: heard the number four thousand. It's really hard to know 371 00:19:04,040 --> 00:19:07,399 Speaker 2: of four thousand people. In fact, we're contacted and dismissed. 372 00:19:08,200 --> 00:19:11,639 Speaker 2: The CDC says they were errors, had to rehire people. 373 00:19:11,680 --> 00:19:15,680 Speaker 2: The Administration for Strategic Preparedness and Response, however, is still 374 00:19:15,720 --> 00:19:19,320 Speaker 2: seriously affected. According to The Washington Post, The APIE says 375 00:19:19,440 --> 00:19:24,600 Speaker 2: layoffs decimated the Education Department. Offices hit by reductions of 376 00:19:24,640 --> 00:19:27,879 Speaker 2: force this weekend include those that oversee civil rights, grant 377 00:19:27,920 --> 00:19:31,440 Speaker 2: funding and special education. Are Democrats sure they want to 378 00:19:31,520 --> 00:19:32,119 Speaker 2: keep doing this? 379 00:19:34,359 --> 00:19:36,159 Speaker 7: So far they are sticking with it. 380 00:19:36,680 --> 00:19:39,119 Speaker 9: And you know, we have a president who has just 381 00:19:39,280 --> 00:19:42,240 Speaker 9: come back from the Middle East, where he has prided 382 00:19:42,320 --> 00:19:45,560 Speaker 9: himself on being the great deal maker and that he 383 00:19:45,640 --> 00:19:47,359 Speaker 9: did make a great deal over there. 384 00:19:47,640 --> 00:19:50,800 Speaker 7: At least so far we have a ceasefire. He should be. 385 00:19:50,800 --> 00:19:54,400 Speaker 9: Able to use those skills at home and instead. 386 00:19:54,000 --> 00:19:55,359 Speaker 7: Today what is he doing. 387 00:19:55,680 --> 00:19:59,280 Speaker 9: He is greeting his dear friend, the president of Argentina. 388 00:19:59,560 --> 00:20:03,480 Speaker 9: So United States can give twenty billion dollars of taxpayer 389 00:20:03,480 --> 00:20:07,040 Speaker 9: money to Argentina, and now Rick is talking about the 390 00:20:07,080 --> 00:20:09,760 Speaker 9: fact they want to get Chuck Schumer back. Well, what 391 00:20:09,960 --> 00:20:13,720 Speaker 9: about helping the people in the United States who are 392 00:20:13,720 --> 00:20:17,160 Speaker 9: both been laid off both under Doge and during the shutdown, 393 00:20:17,200 --> 00:20:20,040 Speaker 9: which is an excuse for more federal layoffs. And also 394 00:20:20,520 --> 00:20:23,840 Speaker 9: all of the people who are millions by any estimation, 395 00:20:24,280 --> 00:20:26,960 Speaker 9: just as Marjorie Taylor Green, who are going to lose 396 00:20:27,200 --> 00:20:28,400 Speaker 9: their healthcare. 397 00:20:28,080 --> 00:20:28,800 Speaker 7: As a result. 398 00:20:28,920 --> 00:20:32,600 Speaker 9: Instead, this person who ran for office promising to make 399 00:20:32,640 --> 00:20:37,640 Speaker 9: America great and America first is giving his dear libertarian 400 00:20:37,720 --> 00:20:43,480 Speaker 9: conservative president of Argentina a twenty billion dollar investment from 401 00:20:43,560 --> 00:20:47,959 Speaker 9: US funds, even though Brook Rollins and others from you know, 402 00:20:48,000 --> 00:20:51,040 Speaker 9: looking at the soybean issue have said this is a mistake. 403 00:20:51,440 --> 00:20:54,480 Speaker 9: And so I'm not sure this is about, you know, 404 00:20:54,640 --> 00:20:56,639 Speaker 9: wanting to pay the troops. I don't know anybody in 405 00:20:56,680 --> 00:20:58,680 Speaker 9: the Democratic side who doesn't want to pay the troops 406 00:20:58,880 --> 00:21:01,800 Speaker 9: or keep wit going. But we should be investing in 407 00:21:01,840 --> 00:21:04,800 Speaker 9: the American people. The government should be open, and they 408 00:21:04,800 --> 00:21:06,640 Speaker 9: should be doing the work they have to do. 409 00:21:07,720 --> 00:21:09,800 Speaker 2: Well, I'll bite on this because I've certainly heard this 410 00:21:09,840 --> 00:21:11,720 Speaker 2: from a number of Democrats, and Rick I don't know 411 00:21:11,760 --> 00:21:14,560 Speaker 2: your thoughts on the optics here, President, with a twenty 412 00:21:14,600 --> 00:21:19,920 Speaker 2: billion dollar bailout contingent upon the election result in Argentina. 413 00:21:20,359 --> 00:21:22,639 Speaker 2: I'm using the word bailout because that's what the smart 414 00:21:22,680 --> 00:21:27,000 Speaker 2: analysis has called this. How do you justify writing a 415 00:21:27,080 --> 00:21:30,920 Speaker 2: check like that with the government closed, snap benefits set 416 00:21:30,960 --> 00:21:31,440 Speaker 2: to run out. 417 00:21:33,040 --> 00:21:35,800 Speaker 10: Yeah, it's a bailout if it looks like a duck 418 00:21:35,840 --> 00:21:38,280 Speaker 10: and a walls like a duck at the duck and 419 00:21:39,800 --> 00:21:43,840 Speaker 10: so like, this is counterprogramming like none I've ever seen. Right, 420 00:21:44,000 --> 00:21:46,440 Speaker 10: you're trying to talk about how you're tightening your belt 421 00:21:46,440 --> 00:21:48,040 Speaker 10: and you're using taxpayer. 422 00:21:47,520 --> 00:21:49,680 Speaker 6: Funds to do this kind of stuff. 423 00:21:49,680 --> 00:21:53,119 Speaker 10: Twenty billion dollars will pay those military guides for another 424 00:21:53,200 --> 00:21:58,520 Speaker 10: month and a half. So there's no rational explanation as 425 00:21:58,520 --> 00:22:03,840 Speaker 10: to why this administration is taken this time to bail 426 00:22:03,840 --> 00:22:06,480 Speaker 10: out Argentina. It's never worked in the past, It's not 427 00:22:06,520 --> 00:22:09,560 Speaker 10: going to work this time. I get that, you know, 428 00:22:10,040 --> 00:22:13,439 Speaker 10: Secretary bess And has friends who are involved in the 429 00:22:13,640 --> 00:22:18,080 Speaker 10: economy there, and you know they want to see Malay 430 00:22:18,240 --> 00:22:20,919 Speaker 10: get reelected and that's coming up, and you know he 431 00:22:21,040 --> 00:22:25,000 Speaker 10: just got waxed in the Wenosoires province by the per Nistas, 432 00:22:25,080 --> 00:22:28,119 Speaker 10: so bad counter programming. 433 00:22:29,000 --> 00:22:34,000 Speaker 2: Bad counter programming, says Republican Rick Davis. Of course, Democrat 434 00:22:34,080 --> 00:22:36,879 Speaker 2: Genie Shanzano, with great analysis, is well. Many thanks to 435 00:22:36,920 --> 00:22:38,919 Speaker 2: both of you for our panel. Stay with us on 436 00:22:39,000 --> 00:22:41,560 Speaker 2: Balance of Power. We'll have much more coming up after this. 437 00:22:45,800 --> 00:22:49,280 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 438 00:22:49,359 --> 00:22:52,399 Speaker 1: us live weekdays at noon and five pm Eastern on 439 00:22:52,520 --> 00:22:55,760 Speaker 1: Apple Cockway and Android Auto with the Blueberg Business app. 440 00:22:55,800 --> 00:22:58,800 Speaker 1: You can also listen live on Amazon Alexa from our 441 00:22:58,840 --> 00:23:01,240 Speaker 1: flagship New York State and Just Say. 442 00:23:01,200 --> 00:23:05,639 Speaker 2: Alexa played Bloomberg eleven thirty Back to you, are careful 443 00:23:05,680 --> 00:23:09,280 Speaker 2: what you ask for? Market here with Jay Powell speaking earlier, 444 00:23:09,320 --> 00:23:12,679 Speaker 2: we brought you the conversation live from Philadelphia at the 445 00:23:12,760 --> 00:23:16,439 Speaker 2: National Association of Business Economics, generating a heck of a 446 00:23:16,440 --> 00:23:19,399 Speaker 2: lot of headlines, including just what the market wants to 447 00:23:19,480 --> 00:23:21,680 Speaker 2: hear when it comes to interest rate cuts. But when 448 00:23:21,680 --> 00:23:23,880 Speaker 2: you add it up, it's not a very good narrative. 449 00:23:24,560 --> 00:23:28,640 Speaker 2: Labor market perceptions remain on a downward trajectory, he said. Therefore, 450 00:23:28,760 --> 00:23:32,320 Speaker 2: we have the idea of an economy that will allow 451 00:23:32,400 --> 00:23:35,920 Speaker 2: lower interest rates, if not demand them, ending balance sheet 452 00:23:36,000 --> 00:23:38,359 Speaker 2: run off in the coming months, Labor markets showing pretty 453 00:23:38,359 --> 00:23:45,520 Speaker 2: significant downside risks, not exactly an economy that's booming. Michael 454 00:23:45,600 --> 00:23:47,680 Speaker 2: McKee is actually there. He was in the room for 455 00:23:47,800 --> 00:23:51,240 Speaker 2: this Nave conversation and joins us now live on Bloomberg 456 00:23:51,280 --> 00:23:55,119 Speaker 2: TV and radio. Should we be careful what we're asking 457 00:23:55,160 --> 00:23:57,639 Speaker 2: for here, Michael? What happens after you got a couple 458 00:23:57,640 --> 00:23:59,679 Speaker 2: of interest rate cuts? Where will the economy be? 459 00:23:59,720 --> 00:23:59,880 Speaker 6: Then? 460 00:24:02,119 --> 00:24:05,560 Speaker 11: Well, as the old saying is, Joe, what do you mean? 461 00:24:05,680 --> 00:24:07,160 Speaker 11: Wes all? 462 00:24:07,359 --> 00:24:08,600 Speaker 2: Done? Where you sit? 463 00:24:08,960 --> 00:24:11,359 Speaker 11: If you're the president of the United States? Yes, you 464 00:24:11,440 --> 00:24:13,920 Speaker 11: want interest rate cuts, But do you want them because 465 00:24:13,920 --> 00:24:15,640 Speaker 11: the economy is failing? 466 00:24:16,000 --> 00:24:18,119 Speaker 2: No, you probably don't want that either. 467 00:24:19,119 --> 00:24:21,640 Speaker 11: Really, what happened today is j Powell gave his version 468 00:24:21,680 --> 00:24:24,600 Speaker 11: of the hippocratic Oh first, do no harm. The FED 469 00:24:24,680 --> 00:24:27,440 Speaker 11: blackout starts this weekend. They're not going to be talking 470 00:24:27,520 --> 00:24:29,639 Speaker 11: until the next meeting. It was his last chance to 471 00:24:29,720 --> 00:24:32,560 Speaker 11: let markets know what they're going to do, and without 472 00:24:32,640 --> 00:24:35,240 Speaker 11: saying we're going to cut, he used the same arguments 473 00:24:35,280 --> 00:24:39,240 Speaker 11: that he made after the last cut to suggest that 474 00:24:39,240 --> 00:24:41,720 Speaker 11: that's what's coming. The markets have priced in a twenty 475 00:24:41,720 --> 00:24:44,760 Speaker 11: five basis point cut, and he did nothing to dissuade 476 00:24:44,840 --> 00:24:47,399 Speaker 11: them from that by talking about the fact that the 477 00:24:47,520 --> 00:24:50,679 Speaker 11: labor market seems to be more of a danger to 478 00:24:50,760 --> 00:24:54,880 Speaker 11: the economy at this point than the rising inflation rate, 479 00:24:54,920 --> 00:24:57,600 Speaker 11: although he did say tariffs are pushing up inflation. 480 00:24:57,720 --> 00:25:02,560 Speaker 2: S We heard from the FED here on the lack 481 00:25:02,640 --> 00:25:05,320 Speaker 2: of data in Washington right now it's day fourteen of 482 00:25:05,320 --> 00:25:08,359 Speaker 2: our shutdown. Michael McKee says, we're all looking at the 483 00:25:08,359 --> 00:25:11,840 Speaker 2: same non government labor data, so it's your guess is 484 00:25:11,880 --> 00:25:13,960 Speaker 2: as good as his, apparently, and there are less good 485 00:25:14,000 --> 00:25:18,600 Speaker 2: substitutes for government inflation data. How hungry are they for 486 00:25:18,680 --> 00:25:19,960 Speaker 2: news at the FED. 487 00:25:22,160 --> 00:25:24,800 Speaker 11: Well, they're definitely hungry for news, especially for something to 488 00:25:24,880 --> 00:25:27,639 Speaker 11: hang a decision on. I mean, they have five hundred 489 00:25:27,640 --> 00:25:30,600 Speaker 11: PhD economists working there with an awful lot of data 490 00:25:30,680 --> 00:25:33,480 Speaker 11: that comes in from all over and they're able to 491 00:25:33,520 --> 00:25:35,800 Speaker 11: put together a pretty good view of what's going on 492 00:25:35,920 --> 00:25:38,600 Speaker 11: in the economy. But the American public and the people 493 00:25:38,640 --> 00:25:40,960 Speaker 11: on Wall Street don't see all that data. So it's 494 00:25:41,080 --> 00:25:43,760 Speaker 11: very helpful to them. If they have the Jobs Report, 495 00:25:43,800 --> 00:25:45,560 Speaker 11: which they're not going to have, if they have the 496 00:25:45,560 --> 00:25:48,359 Speaker 11: CPI Report, which they are going to have, to be 497 00:25:48,400 --> 00:25:51,840 Speaker 11: able to use those to talk about what's going on now. 498 00:25:51,880 --> 00:25:55,680 Speaker 11: The thing that is capturing a lot more attention at 499 00:25:55,720 --> 00:25:58,480 Speaker 11: the FED than perhaps it has on Wall Street yet 500 00:25:58,600 --> 00:26:02,240 Speaker 11: is we're half way through almost the month of October, 501 00:26:02,280 --> 00:26:07,080 Speaker 11: and they collect the data for the CPI through the 502 00:26:07,280 --> 00:26:11,639 Speaker 11: entire month, So the percentage of responses they're going to 503 00:26:11,680 --> 00:26:14,320 Speaker 11: get in terms of all the CPI categories for October 504 00:26:14,400 --> 00:26:16,320 Speaker 11: is going to be much lower. So when we get 505 00:26:16,359 --> 00:26:18,200 Speaker 11: to the middle of November and they're trying to figure 506 00:26:18,240 --> 00:26:20,440 Speaker 11: out what to do at the December meeting, are they 507 00:26:20,480 --> 00:26:24,439 Speaker 11: going to have an inflation report to rely on? And 508 00:26:24,480 --> 00:26:27,920 Speaker 11: of course their PCE report uses inputs from the CPI 509 00:26:27,960 --> 00:26:31,160 Speaker 11: and PPI which aren't being collected right now, so they 510 00:26:31,200 --> 00:26:33,720 Speaker 11: may be flying a little bit more blind when they 511 00:26:33,760 --> 00:26:35,159 Speaker 11: get past this next meeting. 512 00:26:36,520 --> 00:26:39,960 Speaker 2: Remarkable moment that we're in once again, Michael McKee, Great 513 00:26:40,000 --> 00:26:42,440 Speaker 2: to have you with us. Michael at the NADE conference 514 00:26:42,640 --> 00:26:45,720 Speaker 2: in Philadelphia, where we heard from J. Powell a bit 515 00:26:45,760 --> 00:26:48,439 Speaker 2: earlier today, and we're balancing a couple of stories if 516 00:26:48,480 --> 00:26:51,879 Speaker 2: you're just joining us on Bloomberg. President of Argentina has 517 00:26:52,000 --> 00:26:54,280 Speaker 2: arrived at the White House, and it does appear that 518 00:26:54,320 --> 00:26:57,200 Speaker 2: we're going to be hearing from Javier Mila and President Trump. 519 00:26:57,280 --> 00:26:59,960 Speaker 2: At some point they have taken what was a close 520 00:27:00,240 --> 00:27:02,639 Speaker 2: press event and apparently opened it. And I'm mentioning that 521 00:27:02,680 --> 00:27:04,359 Speaker 2: because we are looking at a shot coming from the 522 00:27:04,359 --> 00:27:06,600 Speaker 2: White House. Now, if they bring you into the room, 523 00:27:06,680 --> 00:27:09,800 Speaker 2: we'll bring you with the cameras. As I'm joined now 524 00:27:09,840 --> 00:27:12,840 Speaker 2: by Ian Marlow, Bloomberg's National Security editor, with a couple 525 00:27:12,840 --> 00:27:15,399 Speaker 2: of important stories to talk about. It's not just Argentina, 526 00:27:15,680 --> 00:27:19,440 Speaker 2: it's China that is moving stocks, at least was moving 527 00:27:19,480 --> 00:27:22,960 Speaker 2: stocks before J. Powell gave investors a reason to start 528 00:27:23,040 --> 00:27:26,600 Speaker 2: buying the dip here with big concerns about trade and 529 00:27:26,640 --> 00:27:29,000 Speaker 2: the tit for tat that will apparently walk us right 530 00:27:29,080 --> 00:27:32,240 Speaker 2: up to the meeting between President Trump and Shijin Ping 531 00:27:32,640 --> 00:27:35,320 Speaker 2: a couple of weeks from now. I will mention as well, 532 00:27:35,320 --> 00:27:37,400 Speaker 2: we've just heard from the President. It's a good thing 533 00:27:37,440 --> 00:27:39,399 Speaker 2: that Ian is with us. They have blown up another 534 00:27:39,480 --> 00:27:42,160 Speaker 2: boat off the coast of Venezuela. This just hit truth 535 00:27:42,200 --> 00:27:45,320 Speaker 2: social As I was speaking, Donald Trump writing under my 536 00:27:45,440 --> 00:27:48,359 Speaker 2: standing authorities as Commander in chief. This morning, the Secretary 537 00:27:48,400 --> 00:27:51,879 Speaker 2: of War ordered a lethal kinetic strike on a vessel 538 00:27:51,920 --> 00:27:57,359 Speaker 2: affiliated with a designated terrorist organization conducting neo trafficking in 539 00:27:57,440 --> 00:28:00,840 Speaker 2: the US southcom Area of Responsibility, just off the coast 540 00:28:00,840 --> 00:28:04,320 Speaker 2: of Venezuela. He says, intelligence confirmed that the vessel was 541 00:28:04,359 --> 00:28:09,919 Speaker 2: trafficking narcotics, was transitting along a known route. The strike 542 00:28:10,080 --> 00:28:13,760 Speaker 2: was conducted in international waters. Six male narco terrorists, he says, 543 00:28:13,800 --> 00:28:16,960 Speaker 2: aboard the vessel were killed. No US force is harmed, 544 00:28:17,240 --> 00:28:19,720 Speaker 2: and there is a video attached. As we have seen 545 00:28:19,960 --> 00:28:23,520 Speaker 2: the first four now five times, Ian Marlow is with us, 546 00:28:23,800 --> 00:28:25,879 Speaker 2: and we have plenty to talk about. As it turns 547 00:28:25,880 --> 00:28:29,000 Speaker 2: out today we can pick our areas and I'll start 548 00:28:29,040 --> 00:28:31,200 Speaker 2: off the coast of Venezuela. There are big questions about 549 00:28:31,200 --> 00:28:34,560 Speaker 2: whether these strikes are legal and whether Congress will move ahead. 550 00:28:34,600 --> 00:28:37,080 Speaker 2: It's been a failed effort so far with a War 551 00:28:37,200 --> 00:28:41,000 Speaker 2: Powers Act. What authority does the President have to blow 552 00:28:41,080 --> 00:28:42,840 Speaker 2: up these ships in international waters? 553 00:28:43,440 --> 00:28:45,640 Speaker 12: Yeah, according to him, all the power he wants. Then, 554 00:28:45,680 --> 00:28:49,080 Speaker 12: according to quite a lot of other people, he's acting 555 00:28:49,160 --> 00:28:53,480 Speaker 12: illegally against people who are not armed combatants of a 556 00:28:53,560 --> 00:28:55,920 Speaker 12: state with which the US is at war. And I 557 00:28:55,920 --> 00:28:57,760 Speaker 12: think that's one of the main things here. That's why 558 00:28:57,760 --> 00:29:00,480 Speaker 12: you've seen Congress move I think there's also being a 559 00:29:00,560 --> 00:29:04,920 Speaker 12: lot in the air about whether he will go beyond 560 00:29:05,120 --> 00:29:10,200 Speaker 12: these right, strikes on boats change exactly to something like that, 561 00:29:10,480 --> 00:29:14,080 Speaker 12: or to strikes on the Venezuelan mainland as well. I mean, 562 00:29:14,120 --> 00:29:18,840 Speaker 12: he's long alleged Marco Rubio has long alleged that Maduro 563 00:29:19,120 --> 00:29:22,840 Speaker 12: is part of this you know narco terrorist network. Yes, 564 00:29:22,920 --> 00:29:27,000 Speaker 12: and you know drug traffickers, terrorists, They're one and the same. 565 00:29:27,280 --> 00:29:30,040 Speaker 12: They all deserve to be taken out. So we're seeing 566 00:29:30,040 --> 00:29:32,520 Speaker 12: this in international waters. Now are we going to see 567 00:29:32,560 --> 00:29:36,240 Speaker 12: it on the Venezuelan mainland with attacks that might bring 568 00:29:36,760 --> 00:29:41,200 Speaker 12: you know, US Air Force in contact with Venezuelan Air Force. 569 00:29:41,280 --> 00:29:44,040 Speaker 12: We have no idea what we are, but that's something 570 00:29:44,040 --> 00:29:45,880 Speaker 12: that I think a lot of people are looking for, 571 00:29:46,200 --> 00:29:48,520 Speaker 12: whether they're going to expand this based on things Trump 572 00:29:48,640 --> 00:29:50,640 Speaker 12: himself and people in his administration have said. 573 00:29:50,680 --> 00:29:52,600 Speaker 2: We did see them scramble jets at one point to 574 00:29:52,600 --> 00:29:54,720 Speaker 2: buzz some of our ships. We've still got a flotilla 575 00:29:54,760 --> 00:29:57,560 Speaker 2: off the course of the coast of Venezuela. Essentially, so 576 00:29:57,600 --> 00:30:00,960 Speaker 2: big questions that would require technical an Act of Congress 577 00:30:00,960 --> 00:30:05,520 Speaker 2: to be attacking cartels on the ground in another sovereign nation, right, Yeah, I. 578 00:30:05,520 --> 00:30:08,480 Speaker 12: Mean, we've seen airstrikes, say, for example, in Iran, where 579 00:30:08,480 --> 00:30:11,600 Speaker 12: we back where the US backed Israel's attacks there with 580 00:30:11,720 --> 00:30:15,640 Speaker 12: the big bunker buster bombs. You know, I think people 581 00:30:15,640 --> 00:30:18,640 Speaker 12: in Congress would certainly say Democrats would certainly say, you 582 00:30:18,720 --> 00:30:21,640 Speaker 12: need some authorization from Congress. Trump has shown he's willing 583 00:30:21,680 --> 00:30:24,440 Speaker 12: to go forward with a lot of things without Congress, 584 00:30:24,520 --> 00:30:27,920 Speaker 12: and Congress is not always willing to, you know, come 585 00:30:27,960 --> 00:30:30,160 Speaker 12: back and formally kind of reprimand and ask that they 586 00:30:30,240 --> 00:30:33,640 Speaker 12: be taken into considerations. So we'll see, I think, and 587 00:30:34,640 --> 00:30:39,240 Speaker 12: it'll be interesting to see if Venezuelan strikes continue. I mean, 588 00:30:39,240 --> 00:30:42,960 Speaker 12: it's interesting that they're continuing but still with boats because 589 00:30:42,960 --> 00:30:47,800 Speaker 12: that's something that he's already done numerous times before. We'll 590 00:30:47,840 --> 00:30:49,480 Speaker 12: see whether it kind of escalates from there. 591 00:30:50,040 --> 00:30:52,680 Speaker 2: We heard from the President on Truth Social as well 592 00:30:52,760 --> 00:30:54,880 Speaker 2: about his trip to the Middle East yesterday and the 593 00:30:54,880 --> 00:30:58,920 Speaker 2: release of hostages, writing in mostly caps, all twenty hostages 594 00:30:58,920 --> 00:31:01,640 Speaker 2: are back and feeling good as can be expected, he writes, 595 00:31:01,640 --> 00:31:04,040 Speaker 2: A big burden has been lifted, but the job is 596 00:31:04,120 --> 00:31:07,760 Speaker 2: not done. The dead have not been returned as promised. 597 00:31:08,280 --> 00:31:12,240 Speaker 2: Phase two begins right now. President DJT presumably he wrote 598 00:31:12,280 --> 00:31:15,600 Speaker 2: that if he signed it, what happens if remains or 599 00:31:15,640 --> 00:31:19,520 Speaker 2: not return. Hamas has said they cannot locate them all. 600 00:31:19,720 --> 00:31:22,720 Speaker 12: We're seeing that already today there was some breaking news 601 00:31:22,760 --> 00:31:27,320 Speaker 12: moving suggesting that Israel is having the amount of aid 602 00:31:27,440 --> 00:31:31,440 Speaker 12: it's putting into the Palestinian enclave right now because of 603 00:31:31,480 --> 00:31:33,160 Speaker 12: the delay in returning the. 604 00:31:33,080 --> 00:31:34,040 Speaker 6: Bodies of the hostages. 605 00:31:34,080 --> 00:31:38,600 Speaker 12: Obviously, this is a highly emotive issue in Israel, and 606 00:31:39,280 --> 00:31:42,520 Speaker 12: this is a sign of exactly how complicated this deal was. 607 00:31:42,880 --> 00:31:46,200 Speaker 12: I think a lot of people were surprised that the 608 00:31:46,200 --> 00:31:48,560 Speaker 12: deal came together kind of as quickly as it did 609 00:31:48,600 --> 00:31:51,520 Speaker 12: in the end, and that Hamas agreed to release the 610 00:31:51,560 --> 00:31:52,360 Speaker 12: living hostages. 611 00:31:53,080 --> 00:31:54,200 Speaker 2: I think there's a lot of people. 612 00:31:54,240 --> 00:31:56,720 Speaker 12: We have some stories now on the wire from correspondents 613 00:31:56,760 --> 00:31:59,400 Speaker 12: suggesting that this is the moment that a lot of 614 00:31:59,400 --> 00:32:03,200 Speaker 12: countries in the region are viewing with anxiety. 615 00:32:03,240 --> 00:32:04,680 Speaker 2: They don't want this deal to fall apart. 616 00:32:04,720 --> 00:32:07,680 Speaker 12: They don't want another cycle of violence beginning again in 617 00:32:07,720 --> 00:32:12,040 Speaker 12: Gaza as Israel and Hamas start to feud and bicker 618 00:32:12,200 --> 00:32:16,200 Speaker 12: over the details here, you know, the number of bodies, 619 00:32:16,560 --> 00:32:20,520 Speaker 12: exactly where Israeli troops retreat to, and things like that. 620 00:32:20,560 --> 00:32:22,280 Speaker 2: Well, this is a pretty delicate moment. We're and we 621 00:32:22,280 --> 00:32:25,080 Speaker 2: were discussing yesterday what will be required in terms of 622 00:32:25,080 --> 00:32:29,920 Speaker 2: dismantling the tunnel network underneath Gaza, and if Hamas police 623 00:32:30,000 --> 00:32:33,080 Speaker 2: are on the streets, you're going to have idea forces 624 00:32:33,240 --> 00:32:36,720 Speaker 2: sharing blocks with them, how does that remain a ceasefire? 625 00:32:36,920 --> 00:32:42,160 Speaker 12: This is everything you're talking about, our potential flash points 626 00:32:42,560 --> 00:32:46,560 Speaker 12: that have long be deviled any attempt to get one 627 00:32:46,680 --> 00:32:49,479 Speaker 12: type of fire. These were the deals, I think to 628 00:32:49,520 --> 00:32:54,160 Speaker 12: some degree that the Biden administration was trying to hash 629 00:32:54,200 --> 00:32:57,280 Speaker 12: out in advance, and it was so difficult to get 630 00:32:57,680 --> 00:32:59,880 Speaker 12: buy in on some of those that there was no 631 00:33:00,240 --> 00:33:03,600 Speaker 12: any deal, right, and so the Trump administration is pushed 632 00:33:03,600 --> 00:33:06,720 Speaker 12: forward very quickly to the hostage part, which was always 633 00:33:06,720 --> 00:33:10,320 Speaker 12: the main part. But now come the details. Well, these 634 00:33:10,320 --> 00:33:12,040 Speaker 12: were the things that you know where there's a lot 635 00:33:12,040 --> 00:33:12,720 Speaker 12: of disagreement on. 636 00:33:12,800 --> 00:33:15,719 Speaker 2: As we move, assuming we move into phase two in 637 00:33:15,760 --> 00:33:18,600 Speaker 2: any concerted form, there's going to be a real conversation 638 00:33:18,760 --> 00:33:25,040 Speaker 2: about who governs Gaza. Now there's this temporary authority, of course, 639 00:33:25,080 --> 00:33:27,160 Speaker 2: and that has yet to be fulfilled as Board of 640 00:33:27,200 --> 00:33:30,040 Speaker 2: Peace has yet to be named. From what I understand, 641 00:33:30,080 --> 00:33:32,680 Speaker 2: but the idea of a two state solution is not 642 00:33:32,800 --> 00:33:34,960 Speaker 2: embraced by all the parties who signed off on this 643 00:33:35,080 --> 00:33:37,120 Speaker 2: is it no, And that's putting it mildly. 644 00:33:37,160 --> 00:33:41,560 Speaker 12: I mean, the Israeli Parliament condemned any attempt to go 645 00:33:41,640 --> 00:33:45,200 Speaker 12: forward with this. They view it as rewarding Hamas for October. 646 00:33:45,240 --> 00:33:47,480 Speaker 2: So we heard LCC on a microphone in front of 647 00:33:47,480 --> 00:33:49,800 Speaker 2: the President endorsed that idea yesterday. How do we get 648 00:33:49,800 --> 00:33:50,200 Speaker 2: around that? 649 00:33:50,400 --> 00:33:54,120 Speaker 12: I think you've got That is what the region views 650 00:33:54,280 --> 00:33:57,239 Speaker 12: as a solution to this, and historically the US has 651 00:33:57,280 --> 00:34:00,640 Speaker 12: also viewed that as a solution. But you know, historically 652 00:34:00,640 --> 00:34:03,840 Speaker 12: also the US and Israel have been very fast close allies, 653 00:34:03,880 --> 00:34:08,839 Speaker 12: and so it is a difficult thing to bridge, and 654 00:34:08,880 --> 00:34:11,719 Speaker 12: I think probably an attempt will be to bridge it 655 00:34:11,840 --> 00:34:17,680 Speaker 12: with vague enough language, a vague enough timeline that you 656 00:34:17,719 --> 00:34:22,480 Speaker 12: can appease regional actors and potentially the Palestinians, with a 657 00:34:22,560 --> 00:34:26,840 Speaker 12: process that moves it forward, but in Israel's view, probably 658 00:34:26,920 --> 00:34:30,360 Speaker 12: doesn't move it forward enough, or moves it forward in 659 00:34:30,400 --> 00:34:33,040 Speaker 12: a way where Israel can maybe pull the plug on 660 00:34:33,080 --> 00:34:34,680 Speaker 12: it they don't want it. 661 00:34:34,719 --> 00:34:37,359 Speaker 2: You've been covering this for years by way of your 662 00:34:37,360 --> 00:34:40,279 Speaker 2: beat on diplomacy on the State Department. You've traveled with 663 00:34:40,360 --> 00:34:44,160 Speaker 2: multiple secretaries of state into the region. Is the narrative 664 00:34:44,239 --> 00:34:47,839 Speaker 2: correct that Israel's neighbors want to do business, that there 665 00:34:47,880 --> 00:34:52,560 Speaker 2: is an economic incentive to normalize trade ties with Israel, 666 00:34:52,600 --> 00:34:55,239 Speaker 2: that there is in fact opportunity there, or is that 667 00:34:55,280 --> 00:34:57,160 Speaker 2: being overblown here in the United States. 668 00:34:58,239 --> 00:35:00,759 Speaker 12: I think it's It's true in that there is an 669 00:35:00,880 --> 00:35:05,799 Speaker 12: undercurrent of a lot of regional leaders wanting to do 670 00:35:05,880 --> 00:35:09,520 Speaker 12: business with a dynamic economy, but there are these long 671 00:35:09,520 --> 00:35:12,759 Speaker 12: standing cultural issues that for them with their own population, 672 00:35:13,239 --> 00:35:15,160 Speaker 12: gets in the way of them signing those kind of deals. 673 00:35:15,280 --> 00:35:17,399 Speaker 2: We need to keep talking about this with the help 674 00:35:17,400 --> 00:35:19,240 Speaker 2: of Ian Marlowe, I thank you Ian for the insights. 675 00:35:19,320 --> 00:35:22,040 Speaker 2: As always, I'm Jill Matthew in Washington. Thanks for listening 676 00:35:22,040 --> 00:35:25,360 Speaker 2: to the Balance of Power podcast. Make sure to subscribe 677 00:35:25,400 --> 00:35:28,080 Speaker 2: if you haven't already, at Apple, Spotify, or wherever you 678 00:35:28,160 --> 00:35:30,919 Speaker 2: get your podcasts, and you can find us live every 679 00:35:30,920 --> 00:35:35,200 Speaker 2: weekday from Washington, DC at noontime Eastern at Bloomberg dot com.