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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 2: On the way.

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Speaker 3: Our conversation with Joe Lavornia, counselor to Treasury Secretary Scott Besstt.

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Speaker 3: As President Trump prepares to follow through with his plans

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Speaker 3: to have Federal Reserve Governor Lisa Cook fired, not so fast,

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Speaker 3: she says, of course, planning now to file suit to

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Speaker 3: keep her job, her lawyer Abby Lowell, suggesting that that

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Speaker 3: could come as soon as today. We want to bring

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Speaker 3: you to the White House here for the latest from

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Speaker 3: Bloomberg's Tyler Kendall. We did hear from Kevin Hassett this morning.

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Speaker 3: He was speaking outside the White houseanomic advisor to the President,

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Speaker 3: about this effort to fire the FED governor, with questions

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Speaker 3: about whether the President in fact has the authority to

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Speaker 3: carry this out.

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Speaker 4: Here's what he said, authority to fire a Fed governor

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Speaker 4: for cause. And I think the accusations are serious, and

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Speaker 4: I look forward to seeing the outcome. If I were

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Speaker 4: her in her circumstance, I would did leave right now.

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Speaker 4: I think it's the honorable thing to do.

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Speaker 3: Would take leave right now, he says, even though she

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Speaker 3: has actually not been charged with anything. There is a

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Speaker 3: criminal investigation at the Department of Justice underway that had

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Speaker 3: been referred from the administration. But let's get the latest

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Speaker 3: now from the White House. Bloomberg's Tyler Kendall is on

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Speaker 3: the North Lawn. What do we know about this lawsuit?

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Speaker 5: Tyler?

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Speaker 6: Yeah, hey, Joe. Well, as you outline there, we've heard

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Speaker 6: so far from at least two administration officials today. One

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Speaker 6: was THENEC director Kevin Hassett. The second was the Treasury

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Speaker 6: Secretary Scott Besson too, in an interview earlier this morning,

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Speaker 6: urged the Federal Reserve to conduct an internal review that

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Speaker 6: would include these allegations of Morgan to occupancy fraud before

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Speaker 6: an external review, something that the Treasury Secretary has actually

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Speaker 6: long called for when it comes to the Central Bank.

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Speaker 6: All of this to say that at this point, the

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Speaker 6: messaging out of the White House when it comes to

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Speaker 6: this legal challenge is that they're not going to back down.

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Speaker 6: In fact, you had President Trump yesterday saying that he

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Speaker 6: is prepared to fight this in court, and when pressed

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Speaker 6: by our very own Amory Herder and he did say

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Speaker 6: that he would abide by any court decision because at

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Speaker 6: this point we are waiting for this court challenge to

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Speaker 6: be officially filed by Lisa Cook. We got confirmation from

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Speaker 6: her attorney as such earlier today, and we're going to

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Speaker 6: be watching closely if that does include at this injunction,

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Speaker 6: which would essentially reinstate Cook in her position for the

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Speaker 6: time being while this case makes its way through the

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Speaker 6: legal process. We should also just flag here that it

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Speaker 6: is very likely that whoever wins or rather loses the

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Speaker 6: injunction is going to file and appeal to that as well.

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Speaker 6: So this is something to watch really closely on because

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Speaker 6: how the court ultimately weighs on that injunction could have

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Speaker 6: pretty a broad bearing impacts on what the makeup of

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Speaker 6: the FED Board is going to look like come the

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Speaker 6: September FOMC meeting. Joe, as you well know, I don't

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Speaker 6: need to tell you, there was a very high legal

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Speaker 6: bar here for the President to fire a FED official.

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Speaker 6: He's going to have.

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Speaker 7: To prove cause.

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Speaker 6: The issue with causes that has not explicitly defined, though

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Speaker 6: the President does say that he has sufficient evidence for

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Speaker 6: a cause. As you mentioned, these are just allegations at

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Speaker 6: this point, and we have seen experts point to this

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Speaker 6: idea that the Supreme Court has actually bolstered protections earlier

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Speaker 6: this year when it came comes to protecting Federal Reserve

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Speaker 6: officials from being fired.

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Speaker 3: Joining us from a beautiful day on the North Flaunt,

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Speaker 3: Tyler Candall, thank you so much for the update.

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Speaker 2: We want to get a little bit.

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Speaker 3: More on this Lisa Cook matter, and Tyler mentions Anne

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Speaker 3: Marie hor Durn actually was the one to ask President

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Speaker 3: Trump about this during the cabinet meeting yesterday.

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Speaker 2: Let's bring you back and listen.

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Speaker 8: Ericed just for a statement saying that Lisa Cook has

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Speaker 8: indicated to a personal torm attorney that she'll properly challenge

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Speaker 8: his action. Court see a judicial decision that would confirm

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Speaker 8: our ability to continue.

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Speaker 9: That's all right, whatever is court, Thank you very much.

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Speaker 2: Sure, I abide by the court. Yeah, I abide by it,

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Speaker 2: he says he abides by the court.

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Speaker 3: But if Tyler mentioned, there are still big questions about

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Speaker 3: the way this is going to pan out, and we

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Speaker 3: turned to Joel Griffith for Insights on the Seior Fellow

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Speaker 3: at Advancing American Freedom. Joel, it's good to have you

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Speaker 3: on Bloomberg TV and Radio. Well the president managed to

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Speaker 3: fire Lisa Cook or not?

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Speaker 7: Well, I believe the.

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Speaker 10: Odds are against the president in this situation. You know,

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Speaker 10: it's the Congress. When the Congress formed the Funder Reserve

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Speaker 10: more than one hund years ago, made it very clear

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Speaker 10: that Futter Reserve officials were to be secure in their appointments.

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Speaker 10: And as I was mentioned a second ago, they can

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Speaker 10: only be fired with cause, and that is a very

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Speaker 10: high legal bar. A mere accusation is not sufficient cause

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Speaker 10: for a president to terminate that board up ointment. This

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Speaker 10: underscores a deeper problem here. We have a president who

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Speaker 10: continues to try to cajole the Federal Reserve into enacting

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Speaker 10: his preferred monetary policy. The way our central bank is

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Speaker 10: structured rightfully so is that it operates independent of politics.

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Speaker 10: We don't want a federal Reserve that will be manipulating

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Speaker 10: interest rates to satisfy the desires of any one particular politician,

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Speaker 10: And we certainly don't want a federal Reserve that is

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Speaker 10: going to continually empower Congress to overspend. If we look

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Speaker 10: at this situation, if the President is successful in terminating

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Speaker 10: Miss Cook, that's going to of course allow him to

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Speaker 10: appoint someone to replace her. We've got another appointment coming

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Speaker 10: up once chairpal leaves. I think we're in some dangerously

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Speaker 10: unchartered waters here. I believe the court will decide in

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Speaker 10: favor of Miss Cook. Could be wrong on a prognostication,

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Speaker 10: but from what I can see with past president, her

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Speaker 10: case looks rock solid.

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Speaker 3: Well, okay, all of that's maybe it's not about actually

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Speaker 3: firing anybody, Joel.

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Speaker 2: Is that possible.

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Speaker 3: The President doesn't care necessarily if Lisa Cook gets fired,

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Speaker 3: but it puts a chill across the rest of the board,

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Speaker 3: and it puts people in check when it comes to

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Speaker 3: making decisions on interest rates. This is the concern about

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Speaker 3: credibility when it comes to the FED.

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Speaker 10: Right, Well, that's correct, because the investigation has been launched

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Speaker 10: into her private real estate transactions. That investigation was launched

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Speaker 10: by President Trump's own Department of Justice. And that's where

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Speaker 10: this becomes doubly troubling. We just have an accusation at

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Speaker 10: this point, there's been no charges filed, there's been no conviction,

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Speaker 10: We have a president who we know wants to nudge

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Speaker 10: the FED, or even force the FED into lowering interest

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Speaker 10: rates into possibly monetizing more of the federal debt. If

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Speaker 10: the President were to succeed on this, interminating her based

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Speaker 10: on an accusation launched by his own Department of Justice,

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Speaker 10: the president will now be set for future presidents to

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Speaker 10: do the same, to launch investigations for future board members

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Speaker 10: in order to give them a sensible reason to fire them.

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Speaker 10: This is quite dangerous. We know what happens when a

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Speaker 10: central bank becomes politicized. We saw this happen, probably most

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Speaker 10: recently with Turkey, where Urdigon was able to effectually commandeer

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Speaker 10: control of the Turkish central bank and the Turkish people.

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Speaker 10: Now we're seeing inflation rates of twenty and thirty percent

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Speaker 10: a year. We don't want that to happen here. FED

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Speaker 10: needs to remain politically independent. The Senate, of course, has

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Speaker 10: a vital role to play. The President has a vital

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Speaker 10: role to play in nominating FED board members, but once

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Speaker 10: they're appointed, they need to have the ability to operate

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Speaker 10: independent of the political wins of the day.

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Speaker 3: Yeah, Jill, we just laid on another twenty five percent

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Speaker 3: tariff on India, which brings it up to fifty. This

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Speaker 3: is the other big story we're talking about today. India,

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Speaker 3: of course, was supposed to be a trading partner with

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Speaker 3: warming relations, not cooling relations here with the US. But

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Speaker 3: things seem to have fallen apart with attempts to make

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Speaker 3: a deal. Now this extra twenty five percent is effectively

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Speaker 3: punishing India for buying Russian oil.

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Speaker 2: Is it the smart thing to do?

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Speaker 9: No.

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Speaker 10: Levying more tariffs on India is not a smart thing

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Speaker 10: to do, and it hurts an important ally. It also

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Speaker 10: hurts our own families, our own businesses and manufactures here

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Speaker 10: in the United States. So they're exporting the tariffs have

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Speaker 10: been living in India are in two parts. You've got

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Speaker 10: the twenty five percent so called reciprocal tariff. Just let's

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Speaker 10: just dismantle that one for a second. The tariffs that

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Speaker 10: India have been levying on our exports have been around

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Speaker 10: weight an average of six percent. If we were to

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Speaker 10: impose a reciprocal tariff on India, that would mean a

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Speaker 10: tariff on Indian imports of only six percent. So the

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Speaker 10: reciprocal tariff that we're imposing on them is four times

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Speaker 10: the rate that they're imposing on us. It makes no sense.

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Speaker 10: Second of all, the additional twenty five percent tariff that

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Speaker 10: we're levying on them, supposedly because they're interesting Russian products,

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Speaker 10: that is only going to serve to drive India into

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Speaker 10: closer economic relationships with our adversaries Russia and also China.

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Speaker 9: This is not a wise move.

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Speaker 10: And the total costs on families of all the tariffs

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Speaker 10: on India are approaching four hundred dollars a year annually

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Speaker 10: per family. This is just another tax site. We've seen

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Speaker 10: a series of these tax sites via tears, and sadly,

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Speaker 10: the total combined impact now of the tarifs that have

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Speaker 10: been imposed by President Trump for most families outweighs the

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Speaker 10: benefits of the tax cuts that we just saw to

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Speaker 10: the so called one big beautiful bill.

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Speaker 3: Nik Juel, it's great to have you, Joel Griffith, Senior

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Speaker 3: Fellow at Advancing American Freedom. We appreciate the insights as

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Speaker 3: we keep our arms around the India tariff story and

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Speaker 3: add the voice of Sema Sirohi, columnists for The Economic

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Speaker 3: Times of India and author of the book Friends with

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Speaker 3: Benefits the India US Story. Seema, welcome to Bloomberg. It's

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Speaker 3: great to see you and thanks for joining here in

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Speaker 3: studio today. Friends with benefits is something that has been

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Speaker 3: underway for decades, the warming of relations economic ties between

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Speaker 3: the US and India. Does this fifty percent tariff undo

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Speaker 3: all of that work.

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Speaker 11: To some extent? Yes, the shock in India has been tremendous.

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Speaker 11: It was not expected because trade talks were going quite

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Speaker 11: well and the Commerce Secretary led us to believe that.

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Speaker 7: A deal would come through.

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Speaker 11: But President Trump apparently decided not if India wasn't giving

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Speaker 11: enough market access. And then there were a couple of

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Speaker 11: other reasons, Russian oil being the latest problem. Now, if

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Speaker 11: you remember, under the Biden administration, India was kind of

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Speaker 11: encouraged to buy Russian oil so that the price of

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Speaker 11: oil wouldn't go up too much, that Saudi oil and

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Speaker 11: Iraqi oil would be available for the Europeans because India

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Speaker 11: is a very large buyer of oiel. Yes, so now

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Speaker 11: suddenly there's a turnaround, and as the Indian Foreign Minister said,

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Speaker 11: India is quite perplexed at the turn of events. Some

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Speaker 11: people think that President Trump has taken umbradge and it's

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Speaker 11: like a personal issue with him. Now that India did

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Speaker 11: not accept his role in the mediation between India and

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Speaker 11: Pakistan during the Four Day war in May. So is

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Speaker 11: a whole lot of things that have come together to

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Speaker 11: undo twenty five years of really hard work.

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Speaker 2: Yeah.

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Speaker 3: Interesting, knowing that Prime Minister Moti was the first foreign

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Speaker 3: leader to visit this White House, things were said to

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Speaker 3: be on the right track. To your point, but if

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Speaker 3: this does cut off funding for what the President now

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Speaker 3: refers to as Russia's war machine, is this additional twenty

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Speaker 3: five percent in fact worth it.

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Speaker 11: That's for the Americans to decide whether they want to

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Speaker 11: pay higher price at the gas pump.

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Speaker 2: But if it means ending the killing in Ukraine, I

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Speaker 2: guess is the other way of asking.

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Speaker 11: I'm not sure because President Putin has his own agenda

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Speaker 11: vis a vis the United States. So it's not as

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Speaker 11: if India's stopping to buy oil is going to stop the.

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Speaker 2: War he has.

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Speaker 11: I mean, as we learned in Alaska, he wants certain

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Speaker 11: things from Ukraine. He has continued with this war at

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Speaker 11: great cost to his country, his people, and everything. You

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Speaker 11: think he's going to give up because India stops buying oil. Besides,

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Speaker 11: India has said it's going to buy oil from wherever

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Speaker 11: it can get it, wherever the best deal is, because

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Speaker 11: the government of India says it's the responsibilities to the

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Speaker 11: one point four billion people of India. I think what's

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Speaker 11: the tragedy is that Indian exporters who export items like

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Speaker 11: gems and jewelry, leather products, they are going to hurt

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Speaker 11: very badly because the US is a very large market

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Speaker 11: for them and it's going to play out economically.

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Speaker 3: If I'm hearing you correctly, then instead of helping to

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Speaker 3: end the war in Ukraine make life more difficult for Russia,

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Speaker 3: we are in fact pushing India further into the arms

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Speaker 3: of Russia and China.

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Speaker 2: Is that how you see it?

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Speaker 11: In a manner of speaking, Yes, because the relationship India

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Speaker 11: had with the United States it took years to build,

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Speaker 11: and the whole idea, one of the underpinnings was that India,

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Speaker 11: being a large Asian country, would be a counterbalance to China. Yes,

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Speaker 11: and three four administrations in Washington work towards that.

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Speaker 7: Now suddenly he's appended that.

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Speaker 11: So people in India are asking, what is President Trump's

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Speaker 11: real game?

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Speaker 7: Is he just cutting India.

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Speaker 11: Out of everything? Is he wanting to make a deal

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Speaker 11: with China so badly that he's ready to append an

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Speaker 11: entire strategic partnership with India. Is he looking towards what

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Speaker 11: many call the G two, which is a group of

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Speaker 11: two in US and China?

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Speaker 2: Is that how India sees this.

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Speaker 11: India's worried about it because even President Obama floated the idea,

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Speaker 11: So Indians are very jittery about it, and yes they

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Speaker 11: are thinking about it. What is the endgame? Is it

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Speaker 11: to divide the world between the US, China in Russia?

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Speaker 11: If he makes a deal with Putin as well on

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Speaker 11: the side, and then India gets left out?

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Speaker 2: So how do you have both?

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Speaker 6: Though?

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Speaker 3: If this helps us reach a deal with China and

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Speaker 3: we're also pushing India into the arms of China, how

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Speaker 3: do you have both?

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Speaker 11: China is the only country that gains net net in.

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Speaker 2: This situations like it under this contruct.

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Speaker 11: Absolutely, because China is already you know, on the ascendant.

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Speaker 11: It wants to displace the United States as the number

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Speaker 11: one power, and it has leverage over the US.

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Speaker 9: India does not.

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Speaker 11: So when President Trump put tariffs in China, they stopped

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Speaker 11: critical minerals and the president.

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Speaker 2: Backed off, so they have leverage.

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Speaker 11: They are in a situation where India's trying to reach

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Speaker 11: an accommodation with China, the u US is trying to

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Speaker 11: reach an accommodation with China. So Shi Jinping has every

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Speaker 11: reason to be extremely happy.

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Speaker 2: We have less than a minute left.

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Speaker 3: How would you describe in a couple of words, President

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Speaker 3: Trump's relationship with Prime Minister Modi.

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Speaker 11: I would have said that they were good friends, that

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Speaker 11: there was some sort of, you know, friendship between them.

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Speaker 11: I no longer think so. Besides, I hesitate to describe us,

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Speaker 11: you know, attribute personal relations to relations between countries, because leaders,

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Speaker 11: at the end of the day, are looking after their

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Speaker 11: own national interests.

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Speaker 3: That's right, although this is a president that seems to

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Speaker 3: pivot entirely on relationships.

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Speaker 2: It's great to have you with us.

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Speaker 3: Seema Sirohi live in Washington with us here on Bloomberg.

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Speaker 3: We appreciate the insights. We're going to turn the conversation

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Speaker 3: back to Lisa Cook and the president's attempt to fire

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Speaker 3: the Federal Reserve governor. We'll get into India tariffs as

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Speaker 3: well when we spend time coming up with Joelavorn just

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Speaker 3: arrives here in our studios in Washington, straight ahead on Bloomberg.

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Speaker 3: Stay with us on Balance of Power. We'll have much

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Speaker 3: more coming up after this.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

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Speaker 1: us live weekdays at noon and five pm Eastern on

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Speaker 1: Alma Coarcley and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 3: We're also tracking this story surrounding Lisa Cook, with reporting

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Speaker 3: today that the Fed governor's lawyer could file a lawsuit

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Speaker 3: against the administration after President Trump moved to have her fired.

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Speaker 3: This is just one of the stories that we're going

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Speaker 3: to be talking about with Joela Vorgnia told you he

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Speaker 3: was coming end. Counselor of the Treasury Secretary Scott Best

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Speaker 3: and former economic advisor to President Trump in the first administration,

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Speaker 3: just walked over on a beautiful day in Washington. It

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Speaker 3: doesn't get any nicer than this. Thanks for coming by.

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Speaker 3: It's always a pleasure to see you. This is pretty

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Speaker 3: interesting the moment that we're in here involving Lisa Cook,

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Speaker 3: because there are a lot of questions about process. This

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Speaker 3: is going to go to court apparently, now what about

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Speaker 3: due process? Why are we moving to fire someone who's

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Speaker 3: not been charged with anything.

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Speaker 12: If you look at the Fill Reserve Act, that does

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Speaker 12: say by you for cause, and it looks like those

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Speaker 12: forms are not filled out accurately that they were, They're

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Speaker 12: filled out improperly. And this is why Secretary Bessett highlighted

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Speaker 12: why he believes the FED should do an internal probe.

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Speaker 12: The law may not be clear where it dots everything

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Speaker 12: out where there has to be a specific process. It

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Speaker 12: says for cause the president believes he has cause. Certainly

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Speaker 12: you have to take these things very seriously, given the

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Speaker 12: fact the FED is a regulator, and we'll see where

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Speaker 12: it goes.

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Speaker 2: Don't you want to know if he has cause?

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Speaker 3: Though?

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Speaker 2: I mean, is it up to the president to say that.

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Speaker 7: Yes, I do. I think so.

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Speaker 12: Joe and a Secretary best and alluded to Governor Cook

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Speaker 12: has not said she didn't do it, and that's maybe

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Speaker 12: perhaps is quite important.

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Speaker 7: The FED.

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Speaker 12: Look, we need trust in government, and the President came

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Speaker 12: in he wanted to efficient eye you make things more efficient, streamline,

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Speaker 12: get rid of the bloat of bureaucracy. We're seeing that.

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Speaker 12: We're seeing government spending slow pretty significantly. We've seen a

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Speaker 12: lot of excess federal jobs with us go by the

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Speaker 12: wayside much he actually wants to bring trust back to institutions.

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Speaker 12: We've had other episodes in the past where FED governors

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Speaker 12: have had to resign because of alleged improprieties, and this

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Speaker 12: one certainly could be quite serious. And it's the president's paraga,

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Speaker 12: and I believe he has the ability because again it's

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Speaker 12: for cause and it looks like these things are pretty

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Speaker 12: serious to basically do what he's doing.

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Speaker 2: The administration willing to go to the Supreme Court on this.

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Speaker 12: Well, we'll see what happens, how the law plays itself

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Speaker 12: out and going through that process.

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Speaker 2: I don't know.

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Speaker 12: I'm not being a lawyer, not knowing how it's showing

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Speaker 12: to work. But the President certainly, I think, has a

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Speaker 12: good reason to be concerned about what's happened. And this

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Speaker 12: notion somehow about FED independence. Remember, whoever is ultimately confirmed

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Speaker 12: for the FED chair for or Adriana Cooler's position and

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Speaker 12: possibly Miss Cook's position, has to go through Senate approval.

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Speaker 12: So this notion somehow that there's a hit to FED

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Speaker 12: independence is a bit misleading and out of contacts, because

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Speaker 12: whoever is chosen will have to be vetted properly.

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Speaker 3: And I guess Stephen Myron will have a confirmation hearing

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Speaker 3: next week.

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Speaker 12: Is that what you reach, Yeah, it's supposed to be

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Speaker 12: moved up, So fingers crossed hopefully that happens soon.

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Speaker 3: Did that conversation just get a little more difficult for him?

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Speaker 3: Democrats are going to come out swinging on this, aren't they.

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Speaker 12: Well, the problem is that Democrats have not supported any

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Speaker 12: of the President's picks to begin with, So I'm not

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Speaker 12: sure that really.

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Speaker 2: Matters the same prep if you're Steven Myer.

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Speaker 12: I would think so, Yeah, he's got a very good record,

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Speaker 12: and he's already confirmed just back in March, so I

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Speaker 12: you know, it's like what's changed. So I would hope

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Speaker 12: that goes through smoothly and that Steven gets it.

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Speaker 7: He'd be a great governor.

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Speaker 3: Bloomberg News reporting late yesterday in Bloomberg Scoop that the

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Speaker 3: President wants to go further and actually start to affect

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Speaker 3: the makeup of the twelve regional banks. Is that the

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Speaker 3: next layer here, because that will bring up a whole

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Speaker 3: other conversation.

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Speaker 7: Yeah, well possibly.

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Speaker 12: I mean, the thing you want to reshape the FED,

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Speaker 12: I think film likes to be I mean, the FED

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Speaker 12: probably needs some serious overhaul and reshaping. I mean the

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Speaker 12: fact that you know, the governors have have have basically

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Speaker 12: agreed to every president I think in the history with

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Speaker 12: which they've been you know, Actually the ability to not

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Speaker 12: have a president get that position just shows the fact

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Speaker 12: that everything has been rubber stamped and the presidents really

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Speaker 12: aren't really going through a democratic process in that sense. Right,

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Speaker 12: It's a private, sort of quasi private entity elects these

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Speaker 12: people to the reserve banks, and then the Board of

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Speaker 12: Governors then kind of approves it. I like what the

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Speaker 12: president's trying to do, He's trying to have a very populist,

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Speaker 12: very uh you know, every day America and every every

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Speaker 12: man approach, so to speak, to policymaking, where he wants

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Speaker 12: to lift up Main Street, and the FED oftentimes is

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Speaker 12: perceived to be, you know, a globalist, elitist institution. That's

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Speaker 12: that's the perception that the institution has. And I think

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Speaker 12: even the FED itself would would probably admit that there's

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Speaker 12: been some overreach, and Secretary best And has said that,

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Speaker 12: and they want to Fed to go back to kind

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Speaker 12: of its core core mission of low and stable inflation,

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Speaker 12: full employment, and moderately moderate and low interest rates.

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Speaker 3: We're going to get interest rate cut or cuts starting

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Speaker 3: in September, recording at least to market expectations. There's a

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Speaker 3: worry though, that if the President puts a chill across

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Speaker 3: the Fed, that the Board of Governors may not always

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Speaker 3: be acting on data, that it may be influenced by

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Speaker 3: the President.

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Speaker 7: Why do you doubt that, Well, a couple of reasons, Joe.

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Speaker 12: One is your two governors descent, and they dissented before

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Speaker 12: we had that employment report, which should massive timeward revision.

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Speaker 12: So there were very strong cases to be made why

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Speaker 12: rate should be lower before that meeting. And then of

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Speaker 12: course those governors Bowman and wall are certainly their case

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Speaker 12: I think is more strong to the Chair himself has said, Look,

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Speaker 12: interest rates are high relative to the neutral rate, even

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Speaker 12: though very high, even relative to the highest dot on

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Speaker 12: the dot plot. So the Fed has put itself in

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Speaker 12: a position or needs to be accountable before its forecasts

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Speaker 12: and for what it's saying. Factually, their inflation forecasts have

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Speaker 12: gone up from March to June as inflation dipped slightly lower,

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Speaker 12: so their forecast era got wider. The bond market is

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Speaker 12: telling you that there's not an inflation problem.

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Speaker 7: Break even.

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Speaker 12: Inflation is well contained. The ten year note is well contained.

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Speaker 12: So there's nothing in the markets who are forwardlooking that's worried.

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Speaker 7: At all about FED independence.

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Speaker 12: I think the President and Secretary Vestent has been echoing this,

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Speaker 12: really want to bring accountability, get rid of the mission

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Speaker 12: creep and reevaluate, you know, sort of the.

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Speaker 7: Get back to the basics of what the FED is

443
00:23:36,960 --> 00:23:37,399
Speaker 7: supposed to do.

444
00:23:37,520 --> 00:23:39,600
Speaker 12: I don't look at that as being at all an

445
00:23:39,600 --> 00:23:43,040
Speaker 12: attack on independence, but rather, okay, let's fix this situation

446
00:23:43,160 --> 00:23:45,159
Speaker 12: which had gotten a bit broken over the.

447
00:23:45,160 --> 00:23:47,360
Speaker 2: Past and a half years. You mentioned inflation.

448
00:23:47,560 --> 00:23:49,520
Speaker 3: There are still questions about when this is going to

449
00:23:49,520 --> 00:23:53,160
Speaker 3: start showing up in consumer data. The market did get

450
00:23:53,160 --> 00:23:55,879
Speaker 3: a bit spooked by the PPI, suggesting that, oh, maybe

451
00:23:55,880 --> 00:23:58,359
Speaker 3: it's actually finally here. This is the threshold before it

452
00:23:58,400 --> 00:24:01,520
Speaker 3: spills over on the retail side.

453
00:24:01,760 --> 00:24:04,040
Speaker 2: Is that going to happen? And if not, who's eaten?

454
00:24:04,160 --> 00:24:07,040
Speaker 12: So the PPI was a bit higher than expected. That

455
00:24:07,080 --> 00:24:09,639
Speaker 12: was after five months of very weak readings. Some of

456
00:24:09,680 --> 00:24:15,240
Speaker 12: that was in things like retail services, which actually are margins.

457
00:24:14,040 --> 00:24:15,320
Speaker 7: From company to company.

458
00:24:15,560 --> 00:24:18,600
Speaker 12: The CPI has not shown that inflation goods prices since

459
00:24:18,600 --> 00:24:22,000
Speaker 12: the President took officeerer down four tenths of a percent

460
00:24:22,119 --> 00:24:26,760
Speaker 12: annualized since April, and all the tariff actually accelerated, Inflation

461
00:24:26,880 --> 00:24:30,960
Speaker 12: is still barely positive. So I don't think, Joe, we're

462
00:24:30,960 --> 00:24:34,000
Speaker 12: seeing any of the teriff effect yet. Maybe it shows

463
00:24:34,040 --> 00:24:36,240
Speaker 12: up at some point, but are you given the fact

464
00:24:36,320 --> 00:24:39,439
Speaker 12: that we're debating whether there is a tariff effect, is

465
00:24:39,520 --> 00:24:42,320
Speaker 12: proof positive that clearly it was not anywhere near as

466
00:24:42,359 --> 00:24:44,880
Speaker 12: bad as all the experts and pundits thought. The President

467
00:24:44,960 --> 00:24:48,240
Speaker 12: said that we've got the leverage that our trading partners

468
00:24:48,320 --> 00:24:50,479
Speaker 12: are largely going to eat those tariffs, and I think

469
00:24:50,520 --> 00:24:51,679
Speaker 12: that's exactly what's happened.

470
00:24:51,720 --> 00:24:53,159
Speaker 3: Before you leave, I have to ask you about in

471
00:24:53,200 --> 00:24:55,560
Speaker 3: Nvidio because it's an Vidia day. We've got the earnings coming,

472
00:24:55,560 --> 00:24:58,080
Speaker 3: and your boss was talking about it earlier today. Knowing

473
00:24:58,119 --> 00:25:00,160
Speaker 3: that the government is taking a ten percent star take

474
00:25:00,200 --> 00:25:03,880
Speaker 3: an Intel, should we have a stake in the world's

475
00:25:04,040 --> 00:25:07,680
Speaker 3: most valuable chip maker in video? Scott Besstt was asked

476
00:25:07,680 --> 00:25:08,800
Speaker 3: about it on Fox earlier.

477
00:25:08,800 --> 00:25:13,840
Speaker 5: Listen, I don't think in Nvidia needs financial support, so

478
00:25:14,800 --> 00:25:19,040
Speaker 5: you know that seems not on the table right now.

479
00:25:19,240 --> 00:25:20,960
Speaker 5: I don't know if we need to take stakes in

480
00:25:21,080 --> 00:25:25,760
Speaker 5: defense companies we'll see whether the defense companies are fulfilling

481
00:25:25,760 --> 00:25:33,280
Speaker 5: their mission in terms of providing adequate and timely deliveries

482
00:25:33,640 --> 00:25:35,880
Speaker 5: for the US military.

483
00:25:37,320 --> 00:25:40,119
Speaker 3: How does the in our remaining moment, the conservative Republican

484
00:25:40,200 --> 00:25:44,040
Speaker 3: inside of you feel about government stakes and publicly traded companies.

485
00:25:44,200 --> 00:25:47,720
Speaker 12: The Intel is a unique situation because the Science and

486
00:25:47,760 --> 00:25:51,160
Speaker 12: Chips Actor the prior administration gave significant amount.

487
00:25:51,119 --> 00:25:52,760
Speaker 2: I feel like mine that steak already.

488
00:25:52,840 --> 00:25:54,879
Speaker 12: Yeah, that's steak. And that's why so I look at

489
00:25:54,920 --> 00:25:57,440
Speaker 12: Intel as being about a lock keet or something else.

490
00:25:57,800 --> 00:25:59,959
Speaker 7: Well, the Secretary said, look, we'll see what happens.

491
00:26:00,000 --> 00:26:02,120
Speaker 12: I mean, he's had not made any type of commitment

492
00:26:02,200 --> 00:26:04,760
Speaker 12: to do that. I think people are conflating Intel or

493
00:26:04,800 --> 00:26:05,760
Speaker 12: you're thinking that's going to.

494
00:26:05,680 --> 00:26:07,560
Speaker 7: Be a blueprint for other places.

495
00:26:07,680 --> 00:26:10,159
Speaker 12: I think in this case, Intel is unique because of

496
00:26:10,200 --> 00:26:13,800
Speaker 12: the grants they were getting, and the administration properly thought that, look,

497
00:26:13,960 --> 00:26:17,080
Speaker 12: the taxpayer could benefit much more with the upside if

498
00:26:17,080 --> 00:26:19,240
Speaker 12: actually converted to a non voting equity stake.

499
00:26:19,280 --> 00:26:20,600
Speaker 2: Fascinating. It's always great to spend.

500
00:26:20,600 --> 00:26:21,320
Speaker 7: So thank you, Joe.

501
00:26:21,520 --> 00:26:23,680
Speaker 3: Enjoy the walk back back to the Treasury Department. It's

502
00:26:23,680 --> 00:26:25,080
Speaker 3: only a couple of blocks from here. Jilli Varni, a

503
00:26:25,160 --> 00:26:28,520
Speaker 3: councilor to Treasury Secretary Scott Besson. We'll keep our arms

504
00:26:28,520 --> 00:26:31,280
Speaker 3: around the nvidious story right now. What a pleasure to

505
00:26:31,320 --> 00:26:33,280
Speaker 3: have Caroline Hyde with us, of course, the host of

506
00:26:33,280 --> 00:26:36,920
Speaker 3: Bloomberg Tech Live on Bloomberg TV and Radio a little

507
00:26:37,000 --> 00:26:39,639
Speaker 3: later than usual. Caroline, what are we in for after

508
00:26:39,680 --> 00:26:43,199
Speaker 3: four o'clock? And is it enough to meet expectations as

509
00:26:43,240 --> 00:26:44,359
Speaker 3: opposed to beaten raise?

510
00:26:45,119 --> 00:26:48,520
Speaker 13: Joe Treasure is all mine and well, there has been

511
00:26:48,560 --> 00:26:51,040
Speaker 13: a lot of optimism going into these numbers. This is

512
00:26:51,040 --> 00:26:54,480
Speaker 13: a company that has the most valuable company in the world.

513
00:26:54,480 --> 00:26:56,840
Speaker 13: It is four point four trillion dollars. It is one

514
00:26:56,880 --> 00:27:00,280
Speaker 13: percent off a record high, and the expectations are for

515
00:27:00,280 --> 00:27:03,560
Speaker 13: at least fifty percent increase in revenue, and we're seeing

516
00:27:03,840 --> 00:27:06,160
Speaker 13: more than fifty percent increase in earnings per share.

517
00:27:06,200 --> 00:27:06,560
Speaker 7: Two.

518
00:27:07,000 --> 00:27:09,960
Speaker 13: The question, though, is more about its forecast and will

519
00:27:10,000 --> 00:27:13,040
Speaker 13: that live up to the hype and more broadly, the

520
00:27:13,119 --> 00:27:16,520
Speaker 13: confusion because here are a load of analysts. I would

521
00:27:16,520 --> 00:27:19,239
Speaker 13: say there's only one cell recommendation on this stock, more

522
00:27:19,320 --> 00:27:22,600
Speaker 13: than seventy buys. But among all of those analysts, there

523
00:27:22,640 --> 00:27:27,480
Speaker 13: is a fifteen billion dollar discrepancy between the highest expectations

524
00:27:27,480 --> 00:27:30,000
Speaker 13: for the forecast and revenue and the lowest. And why

525
00:27:30,080 --> 00:27:32,399
Speaker 13: is that so broad Because people don't know whether Jensen

526
00:27:32,480 --> 00:27:34,919
Speaker 13: is going to be factoring in Chinese revenue into the

527
00:27:34,920 --> 00:27:37,159
Speaker 13: next fiscal quarter, into their fiscal third quarter.

528
00:27:37,480 --> 00:27:39,119
Speaker 9: And so that is where the discrepancy light.

529
00:27:39,240 --> 00:27:41,520
Speaker 13: And that comes at the very heart of what you

530
00:27:41,560 --> 00:27:43,840
Speaker 13: talk about day and day out, Joe, which is geopolitics.

531
00:27:44,880 --> 00:27:47,439
Speaker 3: God knows that we're going to be listening for news

532
00:27:47,520 --> 00:27:50,679
Speaker 3: on China. I'm looking at the stock Caroline. It's not

533
00:27:50,800 --> 00:27:54,760
Speaker 3: moving a lot today, It's just up fractionally, but just

534
00:27:54,920 --> 00:27:57,639
Speaker 3: below it's all time high. This thing is looking pretty

535
00:27:57,720 --> 00:28:00,760
Speaker 3: rich going into earnings. How will the technicals factor into

536
00:28:00,760 --> 00:28:01,240
Speaker 3: the reaction.

537
00:28:01,400 --> 00:28:03,480
Speaker 13: Well, what's interesting is, yes, it it's a record high,

538
00:28:03,560 --> 00:28:07,640
Speaker 13: but because revenues have grown so much last quart last

539
00:28:07,720 --> 00:28:10,119
Speaker 13: year they were growing at more than two hundred percent

540
00:28:10,200 --> 00:28:13,639
Speaker 13: per quarter. Now they slowed down to only just fifty percent.

541
00:28:13,720 --> 00:28:16,879
Speaker 13: But because revenue has been scaling so fast, because earnings

542
00:28:16,880 --> 00:28:21,080
Speaker 13: have been scaling so fast, Joe, actually, on a pe ratio,

543
00:28:21,400 --> 00:28:23,760
Speaker 13: this thing looks pretty appetizing. I mean, it's nowhere nearly

544
00:28:23,800 --> 00:28:26,960
Speaker 13: one hundred and ninety times forward profit that we see

545
00:28:26,960 --> 00:28:29,520
Speaker 13: on a like a pal and teer instead, it's training

546
00:28:29,520 --> 00:28:33,320
Speaker 13: at about thirty times. So actually, from an expense perspective,

547
00:28:33,640 --> 00:28:35,760
Speaker 13: not all that much. But there is so many high

548
00:28:35,800 --> 00:28:38,720
Speaker 13: hopes they are going to have to beat expectations because

549
00:28:38,720 --> 00:28:39,960
Speaker 13: we've already factored in a meet.

550
00:28:41,520 --> 00:28:43,960
Speaker 3: I love the fact that we're just calling them Jensen now, yeah,

551
00:28:44,000 --> 00:28:47,640
Speaker 3: first names Na good for World, right, Caroline, thank you

552
00:28:47,680 --> 00:28:49,960
Speaker 3: so much, the great Caroline Hide Life from World Headquarters

553
00:28:50,240 --> 00:28:52,200
Speaker 3: in New York. This is going to be obviously an

554
00:28:52,440 --> 00:28:56,160
Speaker 3: enormous topic on Bloomberg Tech on the next program here.

555
00:28:56,200 --> 00:28:58,920
Speaker 3: It'll happen after four o'clock. The conference call will take place.

556
00:28:58,920 --> 00:29:01,320
Speaker 3: By the time we take air at five pm on

557
00:29:01,360 --> 00:29:03,400
Speaker 3: the late edition of Balance of Power, we should have

558
00:29:03,400 --> 00:29:06,640
Speaker 3: a pretty good idea of where things stand, and Romaine

559
00:29:06,640 --> 00:29:08,800
Speaker 3: Bostik will have more for us on that later this

560
00:29:08,920 --> 00:29:11,200
Speaker 3: evening straight ahead on Balance of Power. You do want

561
00:29:11,200 --> 00:29:13,200
Speaker 3: to stay with us, we'll spend some time with the Colonel.

562
00:29:13,200 --> 00:29:16,160
Speaker 3: Colonel Sanders is coming in from Bloomberg Intelligence to talk

563
00:29:16,200 --> 00:29:20,040
Speaker 3: about this idea of potentially taking a steak in defense contractors.

564
00:29:20,080 --> 00:29:22,840
Speaker 3: Will also turn to Gaza in Israel. In our conversation

565
00:29:22,920 --> 00:29:25,480
Speaker 3: with Hagar Shamali. It's all ahead on Bloomberg. Stay with

566
00:29:25,600 --> 00:29:27,800
Speaker 3: us on Balance of Power. We'll have much more coming

567
00:29:27,880 --> 00:29:28,479
Speaker 3: up after this.

568
00:29:32,720 --> 00:29:36,200
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

569
00:29:36,280 --> 00:29:39,720
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

570
00:29:39,800 --> 00:29:42,800
Speaker 1: Cocklay and Android Auto with the Bloomberg Business app. You

571
00:29:42,840 --> 00:29:46,320
Speaker 1: can also listen live on Amazon Alexa from our flagship

572
00:29:46,400 --> 00:29:50,320
Speaker 1: New York station. Just say Alexa, play Bloomberg eleven thirty.

573
00:29:51,600 --> 00:29:53,920
Speaker 2: As we carry on here on Bloomberg TV and Radio.

574
00:29:54,400 --> 00:29:56,680
Speaker 3: One of the issues we just discussed with Joela Warna

575
00:29:56,800 --> 00:30:00,520
Speaker 3: was the idea of a potential government stake in one

576
00:30:00,680 --> 00:30:03,720
Speaker 3: or more of our defense contractors, of course, remembering that

577
00:30:04,520 --> 00:30:07,760
Speaker 3: government's taking a ten percent stake in Intel. Scott Bessett

578
00:30:07,760 --> 00:30:10,840
Speaker 3: this morning on Fox Business ruled out the idea of

579
00:30:10,880 --> 00:30:13,880
Speaker 3: a stake in Nvidia, But just a day earlier, Howard

580
00:30:13,960 --> 00:30:18,720
Speaker 3: Lutnick had floated the prospects of this happening with other companies,

581
00:30:19,360 --> 00:30:23,080
Speaker 3: say maybe a Lockheed Martin. That's all you have to

582
00:30:23,120 --> 00:30:24,920
Speaker 3: do is say that on TV, and all of a sudden,

583
00:30:24,960 --> 00:30:26,640
Speaker 3: the stocks start to move, and we did see a

584
00:30:26,680 --> 00:30:29,040
Speaker 3: little bit of a rally in shares of the big

585
00:30:29,080 --> 00:30:32,600
Speaker 3: defense contractors. Yesterday, Joel of Orney seemed to just now

586
00:30:32,640 --> 00:30:35,440
Speaker 3: pour cold water on this idea, suggesting that Nvidia is

587
00:30:35,480 --> 00:30:38,720
Speaker 3: a story of its own and should not be considered

588
00:30:39,560 --> 00:30:42,440
Speaker 3: the same as a defense contractor or even in Vidia.

589
00:30:42,520 --> 00:30:44,440
Speaker 3: They certainly aren't the same, and it's something we wanted

590
00:30:44,480 --> 00:30:48,040
Speaker 3: to talk about with an expert. Wayne Sanders, Colonel Sanders

591
00:30:48,160 --> 00:30:51,240
Speaker 3: is with US Bloomberg Intelligence, Senior Defense Research Joannalyst, Yes,

592
00:30:51,760 --> 00:30:54,360
Speaker 3: retired Army colonel. Great to see you, welcome back, Thank

593
00:30:54,400 --> 00:30:58,640
Speaker 3: you always. Lockheed Martin would like this idea or not? Well,

594
00:30:58,640 --> 00:31:01,160
Speaker 3: I think Lockheed would like it. I don't think that.

595
00:31:01,360 --> 00:31:04,040
Speaker 14: I don't think that raytheon North of Grumman General Dynamics

596
00:31:04,040 --> 00:31:04,720
Speaker 14: some of the other problem.

597
00:31:04,760 --> 00:31:06,880
Speaker 2: What would it mean for competition, I guess is the question.

598
00:31:07,200 --> 00:31:08,800
Speaker 14: I mean, you're looking at that point in time, You're

599
00:31:08,800 --> 00:31:11,920
Speaker 14: not looking at affair shake when you're coming through a

600
00:31:11,920 --> 00:31:15,240
Speaker 14: lot of conflict of interest discussions normally come into this

601
00:31:15,360 --> 00:31:18,400
Speaker 14: from the federal acquisition regulations that normally put in that

602
00:31:18,480 --> 00:31:20,640
Speaker 14: so that you don't have these kinds of conflicts of interest.

603
00:31:21,120 --> 00:31:24,000
Speaker 14: Even the under secretaries themselves normally have to sign something

604
00:31:24,040 --> 00:31:27,200
Speaker 14: if they have connections to a specific company and then

605
00:31:27,240 --> 00:31:29,000
Speaker 14: have to deal with those so they have to actually be.

606
00:31:29,040 --> 00:31:29,720
Speaker 2: Removed from it.

607
00:31:29,760 --> 00:31:32,160
Speaker 14: And now you're saying I'm going to give somebody a

608
00:31:32,200 --> 00:31:35,360
Speaker 14: potential stake into it, and then saying, okay, yeah, well,

609
00:31:35,400 --> 00:31:38,400
Speaker 14: now how do I ensure that it's been fair when

610
00:31:38,400 --> 00:31:41,000
Speaker 14: it was fairly competed? And then if you award that

611
00:31:41,040 --> 00:31:43,320
Speaker 14: contract to that company that you have a government stake in,

612
00:31:43,760 --> 00:31:46,040
Speaker 14: what happens if it's not going well and you want

613
00:31:46,080 --> 00:31:48,240
Speaker 14: to be able to pull out of that contract. Look

614
00:31:48,280 --> 00:31:54,040
Speaker 14: at the future aviation future attack reconnaissance aircraft. The Army

615
00:31:54,120 --> 00:31:55,840
Speaker 14: was able to pull out of that because of the

616
00:31:55,880 --> 00:31:58,520
Speaker 14: stipulations that are in place. But would they do that

617
00:31:58,560 --> 00:32:00,360
Speaker 14: if they add a ten percent company in the company

618
00:32:00,480 --> 00:32:01,600
Speaker 14: or ten percent.

619
00:32:01,560 --> 00:32:05,800
Speaker 3: Then you have weapons programs to nowhere and money that's.

620
00:32:05,240 --> 00:32:06,200
Speaker 2: Difficult to justify.

621
00:32:06,360 --> 00:32:09,840
Speaker 3: How's this different than MP materials, for instance, which the

622
00:32:09,840 --> 00:32:12,360
Speaker 3: government took a stake in to try to harvest more

623
00:32:12,480 --> 00:32:12,920
Speaker 3: rare earths.

624
00:32:12,960 --> 00:32:15,520
Speaker 2: This is clearly a national security interest. Absolutely.

625
00:32:15,720 --> 00:32:17,320
Speaker 14: I think that when you look at MP minerals the

626
00:32:17,320 --> 00:32:20,160
Speaker 14: way that this is done, it's done from an industry perspective.

627
00:32:20,520 --> 00:32:22,320
Speaker 14: MP minerals are the only one that can actually do

628
00:32:22,400 --> 00:32:25,000
Speaker 14: a lot of the rare Earth's mining is already active

629
00:32:25,480 --> 00:32:27,320
Speaker 14: to be able to meet some national security needs that

630
00:32:27,360 --> 00:32:30,520
Speaker 14: are there. And they've also they created the floor in

631
00:32:30,640 --> 00:32:32,680
Speaker 14: order to make it sure that that China couldn't come

632
00:32:32,680 --> 00:32:35,800
Speaker 14: in and undercut. So from that perspective, that was addressing

633
00:32:35,880 --> 00:32:38,520
Speaker 14: something that there wasn't enough competition in. It was a

634
00:32:38,520 --> 00:32:42,560
Speaker 14: part of the defense industrial base that needed support. When

635
00:32:42,600 --> 00:32:44,920
Speaker 14: you throw it at a specific company versus an industry.

636
00:32:45,320 --> 00:32:48,000
Speaker 14: If you look at shipbuilding, another one. Shipbuilding is another

637
00:32:48,040 --> 00:32:50,760
Speaker 14: one that needs that help. And you see maritime prosperity

638
00:32:50,840 --> 00:32:53,280
Speaker 14: zones being put out in executive orders, different things that

639
00:32:53,320 --> 00:32:57,920
Speaker 14: are incentivizing people to come in and compete within that environment. Interesting,

640
00:32:58,000 --> 00:33:00,000
Speaker 14: but you're not giving the money directly to one specif

641
00:33:00,040 --> 00:33:01,480
Speaker 14: of a company and giving them an edjeb.

642
00:33:01,560 --> 00:33:03,520
Speaker 3: You know, we've talked a lot about the div the

643
00:33:03,640 --> 00:33:07,920
Speaker 3: defense industrial base and the need for some very not

644
00:33:08,120 --> 00:33:13,360
Speaker 3: high tech things like just shells. Never mind the missiles

645
00:33:13,360 --> 00:33:17,280
Speaker 3: that are used to intercept missiles from Russia, the Patriot

646
00:33:17,320 --> 00:33:20,120
Speaker 3: missiles and so forth, but the old fashioned stuff bullets.

647
00:33:20,160 --> 00:33:26,320
Speaker 3: Even if these companies aren't incentivized to make them, would

648
00:33:26,440 --> 00:33:29,240
Speaker 3: nationalizing part of these programs help?

649
00:33:29,920 --> 00:33:30,200
Speaker 2: It could?

650
00:33:30,240 --> 00:33:32,200
Speaker 14: It's one of the ones that I you know, I

651
00:33:32,240 --> 00:33:35,080
Speaker 14: thought munitions, I thought shipbuilding. Those are some of those

652
00:33:35,120 --> 00:33:35,800
Speaker 14: areas that are in there.

653
00:33:35,840 --> 00:33:36,160
Speaker 2: Perfect.

654
00:33:36,200 --> 00:33:38,640
Speaker 14: Yeah, but you look at the way it's government owned,

655
00:33:38,800 --> 00:33:40,920
Speaker 14: contract operated. Is the way that a lot of the

656
00:33:41,040 --> 00:33:44,560
Speaker 14: army depots and the plants actually create these munitions, right.

657
00:33:44,600 --> 00:33:48,960
Speaker 14: So you look at like General Dynamics Ordnance ots as

658
00:33:48,960 --> 00:33:52,440
Speaker 14: they're known. They partner with the government in order to

659
00:33:52,480 --> 00:33:54,720
Speaker 14: be able to do that, but it's owned through that process.

660
00:33:54,960 --> 00:33:57,120
Speaker 14: You look at propellants and accelerants, some of those are

661
00:33:57,160 --> 00:34:00,560
Speaker 14: classified capabilities to mix the right things for energetic to

662
00:34:00,640 --> 00:34:04,040
Speaker 14: be able to go out. So that partnership does become key,

663
00:34:04,120 --> 00:34:05,880
Speaker 14: but they just have to make sure that they're doing

664
00:34:05,880 --> 00:34:07,120
Speaker 14: it an in affair way.

665
00:34:07,160 --> 00:34:09,200
Speaker 3: You're so good at this. Thank you for shedding some light.

666
00:34:09,320 --> 00:34:12,560
Speaker 3: Wayne Sanders, Bloomberg Intelligence Colonel. Thank you as always for

667
00:34:12,640 --> 00:34:14,399
Speaker 3: being with us here on balance of power. I thought

668
00:34:14,400 --> 00:34:17,400
Speaker 3: we'd learned something there along the way. We'll keep tabs

669
00:34:17,440 --> 00:34:19,919
Speaker 3: on this story if it's going anywhere, and we may

670
00:34:19,920 --> 00:34:21,960
Speaker 3: not talk about it again. It's hard to tell if

671
00:34:22,000 --> 00:34:25,400
Speaker 3: that was something that Howard Lutnik even planned to say

672
00:34:25,719 --> 00:34:29,600
Speaker 3: on TV yesterday. Turning to the situation, that's underway in

673
00:34:29,719 --> 00:34:32,960
Speaker 3: Gaza right now, and some pretty fascinating reporting that the

674
00:34:33,000 --> 00:34:36,040
Speaker 3: President is planning to lead a large meeting. This is

675
00:34:36,040 --> 00:34:39,520
Speaker 3: coming from Fox News earlier conversation with Steve Whitkoff, his

676
00:34:39,640 --> 00:34:42,799
Speaker 3: special envoy set to lead a large meeting on a

677
00:34:42,880 --> 00:34:46,239
Speaker 3: day after plan for Gaza once the conflict ends.

678
00:34:46,280 --> 00:34:47,640
Speaker 2: This is the first time.

679
00:34:47,880 --> 00:34:51,800
Speaker 3: That we've even heard a reference to such a plan existing,

680
00:34:51,920 --> 00:34:54,520
Speaker 3: and we wanted to talk about it with Higar Shamali.

681
00:34:55,719 --> 00:34:57,560
Speaker 3: This a story that we need to spend a little

682
00:34:57,560 --> 00:35:00,000
Speaker 3: bit of time on here, former director for Syria and Lebanon,

683
00:35:00,120 --> 00:35:04,920
Speaker 3: the National Security Council, Founder CEO Greenwich Media Strategies, Hagar,

684
00:35:05,000 --> 00:35:06,880
Speaker 3: it's great to see you. I want to ask you

685
00:35:06,920 --> 00:35:08,640
Speaker 3: about a lot of things that are happening on the

686
00:35:08,640 --> 00:35:11,040
Speaker 3: ground in Gaza and in Israel. But with regard to

687
00:35:11,080 --> 00:35:16,879
Speaker 3: this day after plan, what will it include and why

688
00:35:16,880 --> 00:35:18,400
Speaker 3: haven't we heard about it until now?

689
00:35:19,320 --> 00:35:19,600
Speaker 9: Yeah?

690
00:35:19,680 --> 00:35:22,640
Speaker 15: You know, by the way, Joe, it's not uncommon for

691
00:35:22,680 --> 00:35:25,160
Speaker 15: the US government to plan day after plans when you

692
00:35:25,200 --> 00:35:27,359
Speaker 15: have a war. When I handle the first few years

693
00:35:27,360 --> 00:35:30,840
Speaker 15: of the serior crisis of the NSC, when things become

694
00:35:31,360 --> 00:35:33,440
Speaker 15: especially when things become very tenuous, and you feel like

695
00:35:33,440 --> 00:35:37,080
Speaker 15: there's no way ahead. Often the government pivots to day

696
00:35:37,120 --> 00:35:39,719
Speaker 15: after planning, and there could be a million reasons for that.

697
00:35:39,880 --> 00:35:42,200
Speaker 15: Some of it could just be turn some of it

698
00:35:42,239 --> 00:35:43,560
Speaker 15: could be a make work exercise.

699
00:35:43,719 --> 00:35:47,520
Speaker 9: Some of it is because when you envision the day after, it.

700
00:35:47,400 --> 00:35:49,839
Speaker 15: Can help walk you backwards and say like, well, okay,

701
00:35:49,840 --> 00:35:51,719
Speaker 15: if that's what we want the day after, then we

702
00:35:51,760 --> 00:35:53,840
Speaker 15: have to set things up accordingly. We have to set

703
00:35:54,040 --> 00:35:56,040
Speaker 15: find these allies, we have to get this investment, we

704
00:35:56,080 --> 00:35:58,240
Speaker 15: have to set up this security arrangement.

705
00:35:58,280 --> 00:35:59,160
Speaker 9: I mean, whatever it might be.

706
00:35:59,239 --> 00:36:01,879
Speaker 15: So, but in my experience, I find that often when

707
00:36:01,920 --> 00:36:04,680
Speaker 15: the US government focuses on the day after, it's because

708
00:36:04,719 --> 00:36:07,919
Speaker 15: they're struggling with the present, and especially in the war,

709
00:36:07,960 --> 00:36:11,600
Speaker 15: and I experienced it myself with Syria, it was turn

710
00:36:11,640 --> 00:36:16,440
Speaker 15: hours of day after planning that never ended up materializing.

711
00:36:16,480 --> 00:36:18,839
Speaker 15: I will say this war is different, though, because there

712
00:36:18,920 --> 00:36:20,440
Speaker 15: is a feeling and I get this from a lot

713
00:36:20,440 --> 00:36:22,759
Speaker 15: of my Israeli friends and Israeli sources, many of whom

714
00:36:22,760 --> 00:36:25,360
Speaker 15: are close to the government, and there's a general feeling

715
00:36:25,480 --> 00:36:28,839
Speaker 15: that regardless of how difficult things are right now, there's

716
00:36:28,880 --> 00:36:31,600
Speaker 15: a sentiment that it's going to end soon, hopefully by

717
00:36:31,600 --> 00:36:33,600
Speaker 15: the end of the year, within a few months, so

718
00:36:33,880 --> 00:36:36,400
Speaker 15: there is at least an opportunity with the day after

719
00:36:36,480 --> 00:36:36,880
Speaker 15: in this.

720
00:36:36,760 --> 00:36:41,120
Speaker 3: One interesting, it's noteworthy I think for some people because

721
00:36:41,160 --> 00:36:44,120
Speaker 3: the extent to which the President has talked about leveling Gaza,

722
00:36:44,520 --> 00:36:47,600
Speaker 3: not that there's much left, removing everyone who lives there

723
00:36:47,640 --> 00:36:53,040
Speaker 3: and building condos making it a waterfront resort area. Is

724
00:36:53,080 --> 00:36:54,520
Speaker 3: that going to be in the day after plan?

725
00:36:55,440 --> 00:36:56,319
Speaker 9: I highly doubt it.

726
00:36:56,719 --> 00:36:59,520
Speaker 15: I don't think that that's I don't expect Amara Gaza.

727
00:36:59,560 --> 00:37:02,640
Speaker 15: I think take a significant amount of investment to get there.

728
00:37:02,719 --> 00:37:05,560
Speaker 15: Unless it's private investment, I just don't see it happening.

729
00:37:06,360 --> 00:37:08,360
Speaker 9: I think it's anytime again.

730
00:37:08,360 --> 00:37:11,000
Speaker 15: You're doing day after, you're thinking about who's going to

731
00:37:11,000 --> 00:37:13,279
Speaker 15: pick up the trash the next day. If Hamas is

732
00:37:13,280 --> 00:37:15,879
Speaker 15: not governing, which is we've all seen and the US

733
00:37:15,920 --> 00:37:19,040
Speaker 15: agrees with this, Israel is certainly pushing for this. It

734
00:37:19,120 --> 00:37:21,359
Speaker 15: is not an option to have Hamas governed. So if

735
00:37:21,360 --> 00:37:23,600
Speaker 15: Hamas is not governing, who is governing that would have

736
00:37:23,640 --> 00:37:27,120
Speaker 15: the legitimacy and support from the people. How are you

737
00:37:27,160 --> 00:37:30,600
Speaker 15: going to have functioning schools, water, hospitals, all that stuff,

738
00:37:30,640 --> 00:37:33,840
Speaker 15: And what is the role of the United States in that,

739
00:37:34,040 --> 00:37:36,920
Speaker 15: especially when you have an administration that is never looking

740
00:37:37,400 --> 00:37:41,120
Speaker 15: to fund these operations themselves, right, whether they rather look

741
00:37:41,200 --> 00:37:45,040
Speaker 15: toward other countries or mechanisms or private investment to make

742
00:37:45,080 --> 00:37:47,440
Speaker 15: something like that happen. So if they say, for example,

743
00:37:47,480 --> 00:37:50,120
Speaker 15: the goal is the long term stability of Israel and

744
00:37:50,160 --> 00:37:53,600
Speaker 15: not to have Hamas govern Gaza, then how can we

745
00:37:53,719 --> 00:37:55,759
Speaker 15: the United States Since the Israeli government, by the way,

746
00:37:55,800 --> 00:37:57,440
Speaker 15: is not doing this kind of planning at all, and

747
00:37:57,480 --> 00:37:59,920
Speaker 15: that is many of my Israeli friends tell me that

748
00:38:00,640 --> 00:38:02,120
Speaker 15: if they're not doing this kind of planning, then the

749
00:38:02,200 --> 00:38:04,200
Speaker 15: US can at least try and help do that so

750
00:38:04,239 --> 00:38:07,200
Speaker 15: that they can figure out the policies from now.

751
00:38:08,360 --> 00:38:11,160
Speaker 3: Yeah, incredible images that we're looking at right now on

752
00:38:11,160 --> 00:38:14,200
Speaker 3: Bloomberg TV of Gaza, much of which looks like the

753
00:38:14,239 --> 00:38:16,759
Speaker 3: surface of the moon. Hgar, I want to ask you

754
00:38:16,760 --> 00:38:21,120
Speaker 3: about the outrage surrounding these attacks that were a double strike,

755
00:38:21,160 --> 00:38:24,360
Speaker 3: if you will, by Israel against Gaza, killed twenty people

756
00:38:24,360 --> 00:38:28,640
Speaker 3: at a hospital there, including multiple journalists. The Israeli military

757
00:38:28,760 --> 00:38:31,920
Speaker 3: now says it was going after a Hamas surveillance camera

758
00:38:32,400 --> 00:38:36,160
Speaker 3: and that six of those killed were members of Hamas.

759
00:38:36,600 --> 00:38:39,080
Speaker 3: But there are a lot of accusations out there that

760
00:38:39,120 --> 00:38:40,120
Speaker 3: this was intentional.

761
00:38:40,280 --> 00:38:41,040
Speaker 2: How do you see it?

762
00:38:42,440 --> 00:38:44,680
Speaker 15: Well, I don't see it as intentional for a few reasons.

763
00:38:44,719 --> 00:38:47,120
Speaker 15: The reason let's start, let's we have a big back

764
00:38:47,239 --> 00:38:47,760
Speaker 15: for a second.

765
00:38:47,760 --> 00:38:48,719
Speaker 9: About this hospital.

766
00:38:49,239 --> 00:38:52,640
Speaker 15: Nasar Hospital, which is under permanent evacuation orders meaning nobody

767
00:38:52,640 --> 00:38:55,400
Speaker 15: should be there, was taken over by the Kasam Brigades,

768
00:38:55,400 --> 00:38:58,040
Speaker 15: which is the military wing of Hamas, and they use

769
00:38:58,120 --> 00:38:59,840
Speaker 15: this hospital to operate out of it. And this is

770
00:39:00,200 --> 00:39:03,560
Speaker 15: documented already. We know that Hamas took hostages and kept

771
00:39:03,600 --> 00:39:06,520
Speaker 15: them there, for example, and it's now been months that

772
00:39:06,600 --> 00:39:10,719
Speaker 15: it's been that it's under permanent evacuation orders.

773
00:39:10,880 --> 00:39:12,120
Speaker 9: We also do know.

774
00:39:12,200 --> 00:39:15,400
Speaker 15: That there was that the Israeli say, the Israeli government

775
00:39:15,440 --> 00:39:19,040
Speaker 15: says that they were targeting a Hamas outpost and CCTV

776
00:39:19,120 --> 00:39:21,800
Speaker 15: camera that was placed on the corner of the roof

777
00:39:22,239 --> 00:39:26,000
Speaker 15: of this hospital, and video shows that the first strike

778
00:39:26,040 --> 00:39:28,080
Speaker 15: and as you mentioned, there were two, that the first

779
00:39:28,120 --> 00:39:31,000
Speaker 15: shell struck the corner of that roof, So I'm inclined

780
00:39:31,000 --> 00:39:34,360
Speaker 15: to believe that also because it's not it is known

781
00:39:34,440 --> 00:39:38,080
Speaker 15: that Hamas looks and monitors IDF movements from the rooftop

782
00:39:38,120 --> 00:39:38,840
Speaker 15: of that hospital.

783
00:39:38,880 --> 00:39:40,840
Speaker 9: So this is already established.

784
00:39:41,200 --> 00:39:44,919
Speaker 15: Why the second shell happened that and it happened seven

785
00:39:44,960 --> 00:39:49,520
Speaker 15: minutes later after the first, when you had civilians and

786
00:39:49,680 --> 00:39:52,319
Speaker 15: a handful of reporters, as you said, go up the

787
00:39:52,480 --> 00:39:55,319
Speaker 15: side staircase, And why you had that second shell that

788
00:39:55,480 --> 00:39:57,840
Speaker 15: ended up striking them and killing as you said, I

789
00:39:57,880 --> 00:40:00,120
Speaker 15: think twenty is still.

790
00:40:00,000 --> 00:40:02,720
Speaker 9: We don't know yet. The investigation is still happening.

791
00:40:02,760 --> 00:40:05,440
Speaker 15: The reason I'm inclined to believe that it wasn't deliberately

792
00:40:05,440 --> 00:40:08,759
Speaker 15: targeted is because you saw the IDF and the Prime

793
00:40:08,760 --> 00:40:12,200
Speaker 15: Minister come out very quickly to say that they deeply

794
00:40:12,239 --> 00:40:15,360
Speaker 15: regret that there were non combatants included and so on,

795
00:40:15,400 --> 00:40:18,440
Speaker 15: and they don't do that often. They do that historically,

796
00:40:18,440 --> 00:40:19,880
Speaker 15: and you see it over and over again when a

797
00:40:19,920 --> 00:40:22,319
Speaker 15: mistake happens. When a mistake happens, that's what's said.

798
00:40:22,400 --> 00:40:22,560
Speaker 12: Now.

799
00:40:22,760 --> 00:40:25,480
Speaker 9: I'm not trying to justify this attack altogether.

800
00:40:25,960 --> 00:40:30,200
Speaker 15: Unfortunately, it is emblematic of what happens when you have

801
00:40:30,239 --> 00:40:33,080
Speaker 15: a collapse of ceasefire talks and you have the Israeli

802
00:40:33,080 --> 00:40:35,680
Speaker 15: government that said they intend to expand the war in Gaza,

803
00:40:35,719 --> 00:40:39,520
Speaker 15: as they decided two weeks ago that operation to fully

804
00:40:39,560 --> 00:40:41,600
Speaker 15: expand into Gaza actually hasn't really started.

805
00:40:41,640 --> 00:40:42,720
Speaker 9: It starts in two to three.

806
00:40:42,600 --> 00:40:44,960
Speaker 15: Weeks, and so this is a very tenuous moment. And

807
00:40:45,000 --> 00:40:47,560
Speaker 15: it's also why that Trump meeting is so important. But

808
00:40:48,040 --> 00:40:49,759
Speaker 15: it doesn't serve the.

809
00:40:49,840 --> 00:40:51,160
Speaker 9: Israeli government's interest right now.

810
00:40:51,160 --> 00:40:53,360
Speaker 15: That's another reason I don't think it was likely targeted,

811
00:40:53,400 --> 00:40:56,680
Speaker 15: because this is a government that's currently facing a significant

812
00:40:56,719 --> 00:40:59,280
Speaker 15: amount of pressure because of the humanitarian crisis in Gaza

813
00:40:59,600 --> 00:41:01,239
Speaker 15: from the hostage families as well.

814
00:41:01,480 --> 00:41:03,560
Speaker 9: So the last thing they're going to want is Trump

815
00:41:03,920 --> 00:41:05,480
Speaker 9: to shift his position.

816
00:41:05,200 --> 00:41:07,360
Speaker 15: And say that he's not happy about it, which he

817
00:41:07,440 --> 00:41:11,240
Speaker 15: said that publicly, and to then pressure it in Yahoo

818
00:41:11,239 --> 00:41:12,960
Speaker 15: to reach an end of the war, which.

819
00:41:12,840 --> 00:41:14,680
Speaker 9: Is what Trump said he would do that.

820
00:41:14,760 --> 00:41:17,240
Speaker 15: He said he doesn't think a temporary ceasefire is possible,

821
00:41:17,239 --> 00:41:19,480
Speaker 15: but he wants to push him toward a permanent end.

822
00:41:19,800 --> 00:41:23,400
Speaker 15: So that's why I don't think this was deliberately targeted.

823
00:41:23,600 --> 00:41:27,120
Speaker 15: It is an unfortunate and tragic and awful situation that

824
00:41:27,280 --> 00:41:30,680
Speaker 15: has come out of where we are now, and you know,

825
00:41:30,800 --> 00:41:34,239
Speaker 15: hopefully the administration can push toward something a temporary cease fire,

826
00:41:34,320 --> 00:41:37,319
Speaker 15: but I just Trump Trump himself said he doesn't think

827
00:41:37,360 --> 00:41:39,640
Speaker 15: that's possible, and that they're trying to push toward a

828
00:41:39,680 --> 00:41:41,280
Speaker 15: permanent end instead, which would.

829
00:41:41,120 --> 00:41:41,760
Speaker 9: Take some time.

830
00:41:42,800 --> 00:41:44,919
Speaker 3: Well, the ranking member, the top Democrat on the House

831
00:41:45,000 --> 00:41:50,480
Speaker 3: Armed Services Committee, Adam Smith, is now calling for certain

832
00:41:50,520 --> 00:41:56,280
Speaker 3: weapons to be withheld from Israel as leverage to affect

833
00:41:56,320 --> 00:41:59,800
Speaker 3: outcomes here, leverage over Benjamin Nett and Yahoo. This is

834
00:41:59,800 --> 00:42:02,040
Speaker 3: a bait that we were having toward the end of

835
00:42:02,040 --> 00:42:05,719
Speaker 3: the Biden administration. Hagar, we talked about it at the time. Rokanna,

836
00:42:05,920 --> 00:42:10,040
Speaker 3: the congressman from California, calls this the defining issue for

837
00:42:10,120 --> 00:42:11,520
Speaker 3: the Democratic.

838
00:42:10,920 --> 00:42:13,439
Speaker 2: Party and our remaining moment. What's going to happen here?

839
00:42:14,360 --> 00:42:15,720
Speaker 9: Yeah, I don't see that happening.

840
00:42:16,360 --> 00:42:18,600
Speaker 15: First of all, the senators of the of the arm Serves,

841
00:42:19,400 --> 00:42:21,759
Speaker 15: the armsers is on the Senate side, they're not saying this.

842
00:42:22,360 --> 00:42:25,360
Speaker 15: The fact is that it's a minority of congressional members,

843
00:42:25,440 --> 00:42:27,440
Speaker 15: both in the House and the Senate, that believe in

844
00:42:27,480 --> 00:42:32,080
Speaker 15: withholding aid to Israel in terms of to affect an outcome.

845
00:42:32,360 --> 00:42:33,759
Speaker 15: And at the end of the day, you have an

846
00:42:33,760 --> 00:42:36,640
Speaker 15: administration that has stated over and over again that they

847
00:42:36,680 --> 00:42:40,400
Speaker 15: will never put Israel in a position where it feels

848
00:42:40,440 --> 00:42:42,840
Speaker 15: less secure, or that they push them toward a policy

849
00:42:42,880 --> 00:42:46,680
Speaker 15: that makes them feel less secure. It is, it is,

850
00:42:46,880 --> 00:42:49,440
Speaker 15: it's difficult what I do. What I will say is

851
00:42:49,480 --> 00:42:52,000
Speaker 15: that so I don't see that policy playing out whatsoever.

852
00:42:52,040 --> 00:42:52,560
Speaker 9: And frankly, I.

853
00:42:52,520 --> 00:42:54,920
Speaker 15: Think that the Democrats have much bigger problems on their

854
00:42:54,920 --> 00:42:58,240
Speaker 15: hands that they need to focus on a huge chasm

855
00:42:58,320 --> 00:43:00,879
Speaker 15: in their own party played hours, we can see playing

856
00:43:00,880 --> 00:43:02,960
Speaker 15: played out in New York City right now, and so.

857
00:43:03,440 --> 00:43:05,640
Speaker 3: Well, that's the truth, Higari. I wish we had more time,

858
00:43:05,680 --> 00:43:07,960
Speaker 3: but we have to end our conversation there. From Greenwich

859
00:43:08,040 --> 00:43:11,560
Speaker 3: Media strategy Tigar Shamali, thanks for listening to the Balance

860
00:43:11,560 --> 00:43:15,200
Speaker 3: of Power podcast. Make sure to subscribe if you haven't already,

861
00:43:15,200 --> 00:43:18,520
Speaker 3: at Apple, Spotify, or wherever you get your podcasts, and

862
00:43:18,600 --> 00:43:21,200
Speaker 3: you can find us live every weekday from Washington, DC

863
00:43:21,360 --> 00:43:24,160
Speaker 3: at noontime Eastern at Bloomberg dot com.