1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:38,200 Speaker 2: Terminal and the Bloomberg Business App. Israel's Prime Minister Benjaminette 10 00:00:38,200 --> 00:00:41,280 Speaker 2: and Yahoo warning the country's military may shift this attention 11 00:00:41,320 --> 00:00:44,760 Speaker 2: to Hesbala in Lebanon, risking a wider conflict in the region. 12 00:00:44,920 --> 00:00:48,160 Speaker 2: US officials maintaining I am clad support for Israel while 13 00:00:48,159 --> 00:00:50,960 Speaker 2: looking to de escalate tensions in an area crucial for 14 00:00:51,000 --> 00:00:54,280 Speaker 2: trade and energy supplies. The Deputy Assistant to the President, 15 00:00:54,440 --> 00:00:56,360 Speaker 2: Alice Hogstein, joins us a round a table here in 16 00:00:56,360 --> 00:00:57,120 Speaker 2: New York Ours. 17 00:00:57,160 --> 00:00:57,680 Speaker 3: Good morning to you. 18 00:00:57,760 --> 00:00:58,440 Speaker 2: It's great to see you. 19 00:00:58,600 --> 00:00:59,240 Speaker 4: Goodnes see you too. 20 00:00:59,320 --> 00:01:01,280 Speaker 2: I know you have the resident sayah, You've been a 21 00:01:01,360 --> 00:01:04,280 Speaker 2: key voice in the Middle East conflict as well, particularly 22 00:01:04,319 --> 00:01:07,120 Speaker 2: through the Gaza strip and now it involves Lebanon, and 23 00:01:07,160 --> 00:01:08,880 Speaker 2: I know you've been part of those discussions too. Can 24 00:01:08,920 --> 00:01:11,039 Speaker 2: we start that How connected are the two issues, the 25 00:01:11,120 --> 00:01:14,680 Speaker 2: tension we see in Gaza and the tension potentially on 26 00:01:14,720 --> 00:01:16,040 Speaker 2: the horizon with Lebanon. 27 00:01:16,800 --> 00:01:18,319 Speaker 1: Well, first, thank you for having me, it's great to 28 00:01:18,319 --> 00:01:21,880 Speaker 1: be back. Look on October seven, after the horrific attack 29 00:01:21,920 --> 00:01:27,759 Speaker 1: by Hamas Hasbala decided to enter the conflict on October 30 00:01:27,800 --> 00:01:31,440 Speaker 1: eighth that night with an attack on is Israel responding, 31 00:01:31,440 --> 00:01:35,400 Speaker 1: and we've been in this load to mid range conflict 32 00:01:35,440 --> 00:01:39,760 Speaker 1: ever since, of a back and forth of attacks between 33 00:01:39,840 --> 00:01:44,360 Speaker 1: rocket attacks. It has resulted in a significant amount of 34 00:01:44,400 --> 00:01:47,680 Speaker 1: Israelis being essentially evacuated from their homes in the north 35 00:01:48,000 --> 00:01:49,920 Speaker 1: not being able to go back there because of the 36 00:01:50,160 --> 00:01:54,600 Speaker 1: fire from Isabella, and an equal number of Lebanese who 37 00:01:54,600 --> 00:01:57,880 Speaker 1: are now evacuated from their homes in South Lebanon. So 38 00:01:58,000 --> 00:02:00,400 Speaker 1: this has been a terrible low range conflict. And while 39 00:02:00,400 --> 00:02:03,160 Speaker 1: the attention has all been in Gaza for a very 40 00:02:03,200 --> 00:02:07,720 Speaker 1: good reason, this has been on a simmer So clearly 41 00:02:07,760 --> 00:02:10,919 Speaker 1: we have been trying to work hard with both parties 42 00:02:10,960 --> 00:02:13,359 Speaker 1: to keep it at that level from escalating into a 43 00:02:14,760 --> 00:02:18,079 Speaker 1: sort of larger conflict and a more intense conflict. We've 44 00:02:18,080 --> 00:02:22,000 Speaker 1: been able to do that with some escalation periods then 45 00:02:22,040 --> 00:02:24,080 Speaker 1: bringing it back down a little bit. We're going to 46 00:02:24,080 --> 00:02:26,040 Speaker 1: continue to try to do two things. Want is to 47 00:02:26,040 --> 00:02:30,080 Speaker 1: de escalate the current conditions and then find a solution 48 00:02:30,520 --> 00:02:32,880 Speaker 1: that will enable people to go back to their homes. 49 00:02:32,639 --> 00:02:33,560 Speaker 4: That's the charge. 50 00:02:33,639 --> 00:02:35,360 Speaker 2: What do you think that solution looks like? What are 51 00:02:35,400 --> 00:02:36,720 Speaker 2: both sides asking for? 52 00:02:37,680 --> 00:02:38,800 Speaker 4: Well, at the end of the day, we. 53 00:02:38,919 --> 00:02:42,280 Speaker 1: Have to get kase Well away from the border because 54 00:02:42,520 --> 00:02:46,799 Speaker 1: the status quo of October sixth is not possible anymore. 55 00:02:47,040 --> 00:02:48,600 Speaker 1: So we have to take their number of measures that 56 00:02:48,639 --> 00:02:51,560 Speaker 1: we've been discussing with both sides that can be taken 57 00:02:52,200 --> 00:02:55,160 Speaker 1: by both sides in order to be able to bring 58 00:02:55,200 --> 00:02:57,360 Speaker 1: that comeback. I can't go into details of what that 59 00:02:57,400 --> 00:02:59,560 Speaker 1: would look like, but I do believe that it is 60 00:02:59,600 --> 00:03:04,639 Speaker 1: possible now. Gazabella has said that they are attaching their 61 00:03:04,680 --> 00:03:09,359 Speaker 1: actions to what happens in Gaza. We understand that that's 62 00:03:09,400 --> 00:03:12,280 Speaker 1: the reality, and we have to work within those parameters 63 00:03:12,280 --> 00:03:14,840 Speaker 1: to see what we can do as things shift. 64 00:03:14,880 --> 00:03:17,320 Speaker 4: And of course we are working very hard. 65 00:03:17,400 --> 00:03:19,400 Speaker 1: The President has been working NonStop to try to get 66 00:03:19,400 --> 00:03:22,840 Speaker 1: a ceasefire that allows all the hostages to come home, 67 00:03:23,400 --> 00:03:25,880 Speaker 1: and that would practically end this war in Gaza. That 68 00:03:25,960 --> 00:03:28,680 Speaker 1: of course would make things a lot easier to reach 69 00:03:28,720 --> 00:03:29,560 Speaker 1: a settlement. 70 00:03:29,720 --> 00:03:30,760 Speaker 4: But it's not an automatic. 71 00:03:30,840 --> 00:03:32,440 Speaker 1: It's not you get a ceasefire in Gaza and you 72 00:03:32,480 --> 00:03:34,200 Speaker 1: get a ceasefire in Lebanon. 73 00:03:34,240 --> 00:03:35,080 Speaker 4: It doesn't work that way. 74 00:03:35,320 --> 00:03:38,840 Speaker 1: We have to have its own solution in Lebanon, but 75 00:03:38,960 --> 00:03:44,119 Speaker 1: it is enabled considerably by a ceasefire in Gaza. 76 00:03:44,200 --> 00:03:46,520 Speaker 5: When it comes to Lebanon. The concern everyone has is 77 00:03:46,560 --> 00:03:48,760 Speaker 5: what this means for the wider region, more so than 78 00:03:48,760 --> 00:03:51,760 Speaker 5: what's happening in Gaza. Lloyd Austin yesterday, the Defense Secretary 79 00:03:51,840 --> 00:03:54,560 Speaker 5: said it could easily become a regional wall of terrible 80 00:03:54,600 --> 00:03:57,120 Speaker 5: constants for the Middle East. Is that something this administration 81 00:03:57,240 --> 00:03:58,480 Speaker 5: is really worried about? 82 00:03:58,480 --> 00:04:02,720 Speaker 4: A regional war? Well, I think we are worried. 83 00:04:02,400 --> 00:04:05,400 Speaker 1: And concerned about any escalation of violence between the Zel 84 00:04:05,400 --> 00:04:07,320 Speaker 1: and Lebanon. And these are conflicts that you know how 85 00:04:07,360 --> 00:04:10,280 Speaker 1: they start and you don't know how they end. The 86 00:04:10,320 --> 00:04:13,240 Speaker 1: most important piece right now is the effort to get 87 00:04:13,240 --> 00:04:17,120 Speaker 1: a to get the hostages back from Gaza and a 88 00:04:17,120 --> 00:04:22,200 Speaker 1: ceasefire that ends the conflict over time. That is how 89 00:04:22,240 --> 00:04:26,200 Speaker 1: we prevent both the current conditions and the escalation that 90 00:04:26,200 --> 00:04:26,839 Speaker 1: you're referring to. 91 00:04:27,120 --> 00:04:30,400 Speaker 5: A big vulnerability for a wider regional conflict is, of 92 00:04:30,440 --> 00:04:32,960 Speaker 5: course the Red Sea. Even this morning there's reports that 93 00:04:33,000 --> 00:04:35,839 Speaker 5: a ship traveling through the Red Sea was attacked by Houthis. 94 00:04:36,560 --> 00:04:39,800 Speaker 5: When you look at you have this big portfolio of 95 00:04:40,080 --> 00:04:42,039 Speaker 5: just what's going on national security wise in the Middle East, 96 00:04:42,080 --> 00:04:44,440 Speaker 5: but the energy market, how concerned are you about a 97 00:04:44,480 --> 00:04:47,200 Speaker 5: spike in energy prices because what we're seeing in the Gulf. 98 00:04:47,720 --> 00:04:50,479 Speaker 1: Well, look, I think the Huthis, who are a proxy 99 00:04:50,520 --> 00:04:54,920 Speaker 1: of Iran, have been attacking the international commercial affleets. 100 00:04:55,760 --> 00:04:56,560 Speaker 4: They are not there. 101 00:04:56,920 --> 00:05:01,240 Speaker 1: There's really no apparent reason why we're accepting the fact 102 00:05:01,279 --> 00:05:04,919 Speaker 1: that who these backed by Iran are nfire missiles into 103 00:05:05,360 --> 00:05:10,440 Speaker 1: the Red Sea and affecting global shipping rates, global shipping routes, 104 00:05:11,120 --> 00:05:14,599 Speaker 1: and the availability of ships themselves. So that is something 105 00:05:14,640 --> 00:05:18,320 Speaker 1: that we are going to continue to do what we 106 00:05:18,400 --> 00:05:21,240 Speaker 1: can to bring a stop to that. As far as 107 00:05:21,279 --> 00:05:24,280 Speaker 1: the energy markets look, I think that clearly the Middle 108 00:05:24,320 --> 00:05:27,240 Speaker 1: East is the most important, one of the most important 109 00:05:27,400 --> 00:05:30,640 Speaker 1: energy regions, and we have to make sure that there 110 00:05:30,680 --> 00:05:33,160 Speaker 1: is a free supply of energy that has been done. 111 00:05:33,240 --> 00:05:35,600 Speaker 1: There are other routes that can avoid the Red Sea, 112 00:05:35,920 --> 00:05:39,480 Speaker 1: and clearly we've seen the supply non disrupted, even if 113 00:05:39,480 --> 00:05:42,320 Speaker 1: it ticks up the price of shipping rates a little 114 00:05:42,320 --> 00:05:44,479 Speaker 1: bit by the fact that they have to go alonger route, 115 00:05:44,880 --> 00:05:47,880 Speaker 1: but by and large that is it has not affected 116 00:05:47,920 --> 00:05:49,040 Speaker 1: d energy markets. 117 00:05:49,760 --> 00:05:53,200 Speaker 5: There's one story as well circulating about you mentioned Iran, 118 00:05:53,279 --> 00:05:56,000 Speaker 5: about sanctions when it comes to administration, how tough they're 119 00:05:56,040 --> 00:05:58,560 Speaker 5: being on their adversaries when it comes to energy sanctions. 120 00:05:59,080 --> 00:06:00,840 Speaker 5: Many people will say the sanctions on the books, but 121 00:06:00,880 --> 00:06:03,000 Speaker 5: they're not always enforced, and there seems to be some 122 00:06:03,080 --> 00:06:05,960 Speaker 5: tension between the White House and people at OPHAK who 123 00:06:06,120 --> 00:06:09,120 Speaker 5: enforcing those sanctions. About how because it's an election year. 124 00:06:09,240 --> 00:06:11,159 Speaker 5: This is some of the reporting the Wallster Journal has. 125 00:06:11,240 --> 00:06:13,840 Speaker 5: Because it's an election year, the administration is not going 126 00:06:13,839 --> 00:06:15,880 Speaker 5: to be as tough on say Russia or run because 127 00:06:15,920 --> 00:06:18,000 Speaker 5: they want to keep prices low. 128 00:06:18,680 --> 00:06:22,920 Speaker 1: Would you say that's accurate, No, that is completely false. Look, 129 00:06:24,279 --> 00:06:27,240 Speaker 1: we have been as tough as can be on both 130 00:06:27,320 --> 00:06:30,160 Speaker 1: Russia and Iran when it comes to a broad range 131 00:06:30,160 --> 00:06:33,200 Speaker 1: of sanctions, not just energy sanction but including energy. Now, 132 00:06:33,200 --> 00:06:35,800 Speaker 1: when you do energy sanctions or any sanctions for that matter. 133 00:06:35,880 --> 00:06:37,600 Speaker 1: You've got to be smart about it. You don't want 134 00:06:37,640 --> 00:06:39,400 Speaker 1: to do when you do the sanctions, you want to 135 00:06:39,440 --> 00:06:41,440 Speaker 1: make sure that the bad actor is the one that 136 00:06:41,520 --> 00:06:44,120 Speaker 1: is affected. So if you do the kinds of sanctions 137 00:06:44,279 --> 00:06:47,960 Speaker 1: to cause a major spike in price, what does that do. 138 00:06:48,160 --> 00:06:51,280 Speaker 1: It just increases the revenues to the regime that you're 139 00:06:51,320 --> 00:06:53,680 Speaker 1: trying to affect. So you have to this is not 140 00:06:53,760 --> 00:06:56,279 Speaker 1: about putting down a hammer. You got to do this 141 00:06:56,320 --> 00:07:00,359 Speaker 1: in a smart way that reduces their revenues. That's the 142 00:07:00,480 --> 00:07:03,800 Speaker 1: ultimate goal here, is to reduce their revenues. Now, is 143 00:07:03,800 --> 00:07:05,800 Speaker 1: there an alignment between the fact that we would like 144 00:07:05,880 --> 00:07:08,440 Speaker 1: to see domestically in the United States lower prices. President 145 00:07:08,480 --> 00:07:11,200 Speaker 1: has said many times he'd like to see lower gasoline 146 00:07:11,200 --> 00:07:15,080 Speaker 1: prices for consumers at home at the pump, and that 147 00:07:15,600 --> 00:07:17,680 Speaker 1: so we want to prevent a spike in energy prices. 148 00:07:17,880 --> 00:07:20,680 Speaker 1: But there's a total alignment between what we want on 149 00:07:20,720 --> 00:07:23,360 Speaker 1: the domestic side to reduce prices, which we have done. 150 00:07:23,520 --> 00:07:25,720 Speaker 1: Gasline prices are down about twenty cents over the last 151 00:07:25,760 --> 00:07:29,680 Speaker 1: couple of months, and our national security goals because when 152 00:07:29,680 --> 00:07:32,760 Speaker 1: prices rise, they don't only affect American consumers. They also 153 00:07:32,920 --> 00:07:35,840 Speaker 1: increase revenues to the bad regimes we're trying to affect. 154 00:07:35,960 --> 00:07:38,040 Speaker 6: So you talk about gasoline prices right now, I'm looking 155 00:07:38,120 --> 00:07:40,960 Speaker 6: at just under three dollars and fifty cents a gallon 156 00:07:41,120 --> 00:07:43,640 Speaker 6: on an average basis around the United States. 157 00:07:43,840 --> 00:07:44,520 Speaker 3: That's down from a. 158 00:07:44,560 --> 00:07:46,520 Speaker 6: High of more than five dollars back in June of 159 00:07:46,520 --> 00:07:48,720 Speaker 6: twenty twenty two, and the average over the past five 160 00:07:48,800 --> 00:07:51,880 Speaker 6: years is north of three dollars. So is this an 161 00:07:51,880 --> 00:07:53,720 Speaker 6: appropriate price where it is right now? 162 00:07:54,360 --> 00:07:56,640 Speaker 1: No, we'd like to see it significantly lower than this. 163 00:07:57,720 --> 00:08:01,320 Speaker 1: But we have a growing economy, we have a conflict 164 00:08:01,320 --> 00:08:03,240 Speaker 1: in Russia, we have a conflict. 165 00:08:02,840 --> 00:08:03,880 Speaker 4: In the Middle East. 166 00:08:04,160 --> 00:08:06,240 Speaker 1: And that's why the President has pursued a policy of 167 00:08:06,280 --> 00:08:09,400 Speaker 1: doing two things at the same time. One is to 168 00:08:09,480 --> 00:08:11,600 Speaker 1: make sure that we have enough production in the United 169 00:08:11,640 --> 00:08:15,680 Speaker 1: States and that the energy markets are supplied. Second is 170 00:08:15,720 --> 00:08:18,360 Speaker 1: to accelerate the energy transition. And we've done both. The 171 00:08:18,360 --> 00:08:20,680 Speaker 1: passage of the IRA, the Build Act, the Chips Act 172 00:08:20,880 --> 00:08:23,960 Speaker 1: is all about investing into the future. But he recognizes 173 00:08:23,960 --> 00:08:25,720 Speaker 1: that you can't do that as a flip of a switch. 174 00:08:26,080 --> 00:08:26,760 Speaker 4: And that's why I look. 175 00:08:26,800 --> 00:08:29,120 Speaker 1: The United States today is at the highest level of 176 00:08:29,200 --> 00:08:33,760 Speaker 1: energy production that we've ever had, so he has done 177 00:08:33,840 --> 00:08:36,560 Speaker 1: everything he can to make sure that we are at 178 00:08:36,840 --> 00:08:40,800 Speaker 1: maximum supplies to reduce prices and inflation while making sure 179 00:08:40,840 --> 00:08:44,319 Speaker 1: we have a pathway to not having this dependence on 180 00:08:44,400 --> 00:08:47,640 Speaker 1: oil producers, either at home or from adversarial countries. 181 00:08:47,800 --> 00:08:49,960 Speaker 6: How much will Listener treat of Petroleum Reserve Act as 182 00:08:49,960 --> 00:08:53,560 Speaker 6: a buffer potentially with additional releases in the next couple 183 00:08:53,600 --> 00:08:57,240 Speaker 6: of months in response to the price is not going 184 00:08:57,280 --> 00:08:57,920 Speaker 6: down on their own? 185 00:08:58,760 --> 00:09:02,000 Speaker 1: Well, look, I think is a critical tool for the 186 00:09:02,080 --> 00:09:05,880 Speaker 1: United States. We've used it over the decades to address 187 00:09:05,920 --> 00:09:11,320 Speaker 1: emergencies and conflicts and natural disasters. The President had an 188 00:09:11,400 --> 00:09:14,160 Speaker 1: unprecedented use of the SPR with a release of over 189 00:09:14,160 --> 00:09:17,319 Speaker 1: one hundred and eighty million barrels because of the Russian 190 00:09:17,960 --> 00:09:20,560 Speaker 1: conflict when prices soord over one hundred and twenty dollars 191 00:09:20,600 --> 00:09:23,640 Speaker 1: a barrow and five dollars of gasoline. As you said, 192 00:09:24,400 --> 00:09:26,840 Speaker 1: and we will continue to use any tools we have 193 00:09:27,120 --> 00:09:30,600 Speaker 1: if there is a need for it. We are going 194 00:09:30,640 --> 00:09:34,480 Speaker 1: into hurricane season, we have conflicts around the world. We 195 00:09:34,559 --> 00:09:37,080 Speaker 1: have to make sure we have that tool. Since releasing 196 00:09:37,320 --> 00:09:40,600 Speaker 1: from the SPR, the Department of Energy has been buying 197 00:09:40,640 --> 00:09:42,520 Speaker 1: back and as a reminder for this show, for a 198 00:09:42,520 --> 00:09:45,360 Speaker 1: audience of Bloomberg, we sold it about ninety five dollars 199 00:09:45,400 --> 00:09:47,400 Speaker 1: flop one hundred and eighty million barls at about ninety 200 00:09:47,400 --> 00:09:49,720 Speaker 1: five dollars. We're buying it back at about seventy seven 201 00:09:49,800 --> 00:09:50,440 Speaker 1: seventy eight. 202 00:09:50,600 --> 00:09:52,120 Speaker 4: That's a really damn good trade. 203 00:09:52,200 --> 00:09:54,600 Speaker 5: So you're a good trader for the West Wing noted. 204 00:09:55,000 --> 00:09:57,640 Speaker 5: But it's not just the five dollars a gallon. When 205 00:09:57,640 --> 00:10:00,200 Speaker 5: the SPR came into effect. The first time by an 206 00:10:00,200 --> 00:10:03,480 Speaker 5: administration tapped the SPR was November twenty three, twenty twenty one, 207 00:10:03,520 --> 00:10:06,200 Speaker 5: and gasoline was at three dollars and thirty nine cents. 208 00:10:06,440 --> 00:10:09,040 Speaker 5: Today is at three dollars and fifty cents, So why 209 00:10:09,080 --> 00:10:10,160 Speaker 5: not tap it today? 210 00:10:10,720 --> 00:10:12,000 Speaker 4: Well, we were at that point in time. 211 00:10:12,040 --> 00:10:14,120 Speaker 1: First of all, it was a very small release and 212 00:10:14,559 --> 00:10:18,520 Speaker 1: core it was coordinated together with our European allies, European 213 00:10:18,559 --> 00:10:22,200 Speaker 1: and Asian allies, so it was a global action that 214 00:10:22,240 --> 00:10:24,880 Speaker 1: we took. And that was around the run up for 215 00:10:25,000 --> 00:10:27,000 Speaker 1: this war. I mean, people forget that we kind of 216 00:10:27,160 --> 00:10:29,040 Speaker 1: the president of the United States saw this war coming 217 00:10:29,080 --> 00:10:32,920 Speaker 1: in Russia and called it in advance. So it's about 218 00:10:32,920 --> 00:10:36,080 Speaker 1: the surrounding environment of what is happening in the markets, 219 00:10:36,320 --> 00:10:39,360 Speaker 1: what's generating the increase in price. We would like to 220 00:10:39,400 --> 00:10:42,360 Speaker 1: see the prices go down. We've called on the oil 221 00:10:42,400 --> 00:10:47,360 Speaker 1: companies to address that. We have They're producing more than 222 00:10:47,360 --> 00:10:49,959 Speaker 1: they ever have, both in the United States and around 223 00:10:49,960 --> 00:10:52,480 Speaker 1: the world, and I think they can do a little 224 00:10:52,520 --> 00:10:55,520 Speaker 1: bit more to make sure that Americans are not suffering 225 00:10:56,080 --> 00:10:59,360 Speaker 1: at the pump and that the effects on inflation are reduced. 226 00:10:59,440 --> 00:11:01,480 Speaker 2: Can I just say, you haven't closed that trade yet. 227 00:11:01,480 --> 00:11:03,680 Speaker 2: You've got to refill the SPR first. 228 00:11:03,880 --> 00:11:05,280 Speaker 4: We are refilled. 229 00:11:05,360 --> 00:11:08,800 Speaker 2: You're like doing it, but haven't done it. Are relative 230 00:11:08,840 --> 00:11:09,840 Speaker 2: to where we were, it's. 231 00:11:09,760 --> 00:11:11,480 Speaker 4: Quite I disagree. 232 00:11:11,840 --> 00:11:13,880 Speaker 1: We've purchased back about forty million. 233 00:11:13,640 --> 00:11:16,520 Speaker 4: Barrels we were on. We were required. 234 00:11:16,040 --> 00:11:19,200 Speaker 1: By Congress to sell one hundred and forty million, which 235 00:11:19,240 --> 00:11:22,880 Speaker 1: we worked with Congress to cancel that sale. So net, 236 00:11:22,920 --> 00:11:25,120 Speaker 1: we are basically back to where we would have been 237 00:11:25,160 --> 00:11:28,679 Speaker 1: had we not sold from the SPR. So, but we 238 00:11:29,080 --> 00:11:31,200 Speaker 1: take that point we have enough in the SPR to 239 00:11:31,240 --> 00:11:34,040 Speaker 1: address the concerns that we may face in the future. 240 00:11:34,320 --> 00:11:36,520 Speaker 1: That is something that every American should know. We have 241 00:11:36,640 --> 00:11:40,520 Speaker 1: enough to address any security or natural disaster. 242 00:11:40,760 --> 00:11:43,559 Speaker 4: We will continue to buy those barrels. 243 00:11:43,200 --> 00:11:45,440 Speaker 1: Back to refill the spr because the President believes that 244 00:11:45,480 --> 00:11:46,760 Speaker 1: it's an important tool. 245 00:11:46,920 --> 00:11:49,640 Speaker 2: You said, we're doing two things simultaneously. You said, one 246 00:11:49,679 --> 00:11:52,280 Speaker 2: is where making sure we're fully supplied when it comes 247 00:11:52,280 --> 00:11:55,480 Speaker 2: to energy. Two is to accelerate the transition. I'd argue 248 00:11:55,520 --> 00:11:58,280 Speaker 2: you're doing three. You're also putting up the wolves to 249 00:11:58,640 --> 00:12:02,079 Speaker 2: China and Chinese y. Can you help me square that circle? 250 00:12:02,320 --> 00:12:05,640 Speaker 2: Why shouldn't American consumers be able to buy cheap Chinese 251 00:12:05,679 --> 00:12:08,440 Speaker 2: evs and to ensure they can do the kind of 252 00:12:08,480 --> 00:12:10,600 Speaker 2: things that you're talking about doing anyway. 253 00:12:10,679 --> 00:12:12,200 Speaker 1: Well, what we want to make sure is that we 254 00:12:12,240 --> 00:12:15,400 Speaker 1: have energy security and economic security, and so those are 255 00:12:15,440 --> 00:12:17,760 Speaker 1: always challenges that you have to look at where we'd 256 00:12:17,800 --> 00:12:19,080 Speaker 1: like to see a lot of lower prices. 257 00:12:19,120 --> 00:12:20,040 Speaker 4: We put sanctions on. 258 00:12:20,200 --> 00:12:23,200 Speaker 1: Russia and Iran because that's the right now security call. 259 00:12:24,640 --> 00:12:27,319 Speaker 1: The way that the Chinese have acted in the market, 260 00:12:27,360 --> 00:12:29,480 Speaker 1: it is not a free market, and we have to 261 00:12:29,520 --> 00:12:31,920 Speaker 1: make sure that we are securing the American economy for 262 00:12:31,960 --> 00:12:34,240 Speaker 1: the future. And if you allow somebody to come into 263 00:12:34,240 --> 00:12:39,720 Speaker 1: your market flood it with below cost products, then you'll 264 00:12:39,760 --> 00:12:43,640 Speaker 1: lose your Ultimately you'll lose your economy, and we've seen 265 00:12:43,679 --> 00:12:46,280 Speaker 1: it with product after product, and I think people who 266 00:12:46,320 --> 00:12:49,400 Speaker 1: watch this show care about financial markets should be very 267 00:12:49,400 --> 00:12:50,080 Speaker 1: worried about that. 268 00:12:50,160 --> 00:12:51,120 Speaker 4: And look around the world. 269 00:12:51,440 --> 00:12:53,719 Speaker 1: Every place they've gone and they've done the same thing. 270 00:12:53,880 --> 00:12:58,000 Speaker 1: They dump on the market, They eliminate the local competition 271 00:12:58,120 --> 00:13:00,400 Speaker 1: and the local markets. Look what happened in the solar 272 00:13:00,440 --> 00:13:05,000 Speaker 1: industry fifteen years ago, and then they dominate, and those 273 00:13:05,040 --> 00:13:07,319 Speaker 1: prices are not going to stay low forever, just until 274 00:13:07,320 --> 00:13:09,120 Speaker 1: they kick you out, and then they're going to raise 275 00:13:09,160 --> 00:13:09,800 Speaker 1: those prices. 276 00:13:10,080 --> 00:13:10,880 Speaker 4: So if you want to. 277 00:13:10,880 --> 00:13:12,920 Speaker 1: Have a strong American economy, we have to take the 278 00:13:13,000 --> 00:13:14,760 Speaker 1: kind of strong action the President has been taken. 279 00:13:14,880 --> 00:13:17,200 Speaker 6: There is, though a conflict here, and to John's point, 280 00:13:17,280 --> 00:13:20,240 Speaker 6: if people could get much cheaper electric vehicles, the transition 281 00:13:20,320 --> 00:13:23,920 Speaker 6: might happen faster. The fact that they are more expensive 282 00:13:24,440 --> 00:13:26,360 Speaker 6: and that it might be a slower transition. 283 00:13:26,960 --> 00:13:29,320 Speaker 3: How much more do you expect the. 284 00:13:29,440 --> 00:13:32,840 Speaker 6: United States to depend on fossil fuels? How much longer 285 00:13:33,320 --> 00:13:35,680 Speaker 6: as a result to prolong the transition. 286 00:13:35,480 --> 00:13:36,880 Speaker 3: In the name of national security. 287 00:13:37,240 --> 00:13:38,640 Speaker 4: It's not just about national security. 288 00:13:38,679 --> 00:13:41,440 Speaker 1: I don't want to have a boom in evs that 289 00:13:41,600 --> 00:13:45,480 Speaker 1: is also on the backs of slave labor, child labor, 290 00:13:46,880 --> 00:13:53,679 Speaker 1: coal power plants that are energizing a EV car manufacturing. 291 00:13:54,000 --> 00:13:56,920 Speaker 1: We want to have a transition to a green economy, 292 00:13:56,960 --> 00:13:59,400 Speaker 1: a clean economy that actually has the standards and the 293 00:13:59,440 --> 00:14:02,439 Speaker 1: values of the Unite States. There is a livable wage 294 00:14:02,480 --> 00:14:07,520 Speaker 1: that workers should have. Hiring children and certain minority communities 295 00:14:07,600 --> 00:14:10,439 Speaker 1: just because you can and pay them nothing and then 296 00:14:10,440 --> 00:14:11,679 Speaker 1: say I have a cheap product. 297 00:14:11,960 --> 00:14:12,640 Speaker 4: That's not what. 298 00:14:12,640 --> 00:14:15,640 Speaker 1: We're going to build the clean energy economy on. I 299 00:14:15,640 --> 00:14:18,200 Speaker 1: think the innovation is in the United States. We have 300 00:14:18,280 --> 00:14:20,560 Speaker 1: the workers and the skills in the United States, and 301 00:14:20,560 --> 00:14:22,360 Speaker 1: we should build as much as we can. And the 302 00:14:22,400 --> 00:14:24,400 Speaker 1: fact is that our partners agree if you look at 303 00:14:24,440 --> 00:14:26,680 Speaker 1: what we're discussing in the G seven, that is what 304 00:14:26,760 --> 00:14:29,080 Speaker 1: everybody wants. They want to be able to have a 305 00:14:29,120 --> 00:14:31,920 Speaker 1: clean economy that is competitive, and then we should have 306 00:14:31,960 --> 00:14:34,480 Speaker 1: this around the world. People should countries should have their 307 00:14:34,520 --> 00:14:37,600 Speaker 1: own manufacturing basis, but they should be done based on 308 00:14:37,640 --> 00:14:40,520 Speaker 1: a free economy. What the Chinese are doing is not 309 00:14:40,680 --> 00:14:44,560 Speaker 1: a free economy. It is based on loans, zero percent 310 00:14:44,640 --> 00:14:47,680 Speaker 1: loans from the Central Bank. That says, and we have 311 00:14:47,760 --> 00:14:50,760 Speaker 1: company CEOs coming out, whether it's in chips, in AI 312 00:14:51,040 --> 00:14:54,400 Speaker 1: or in evs who say I don't plan to make 313 00:14:54,440 --> 00:14:56,480 Speaker 1: a profit for several years. 314 00:14:57,200 --> 00:15:00,720 Speaker 4: Well, you don't take a genius to say here's a cash, 315 00:15:00,840 --> 00:15:02,960 Speaker 4: go build a business. Don't worry about a return. 316 00:15:03,200 --> 00:15:05,200 Speaker 1: I think what you discuss around this table every day 317 00:15:05,280 --> 00:15:09,200 Speaker 1: is getting returns. That's not a free market. So yes, 318 00:15:09,280 --> 00:15:12,240 Speaker 1: we want to have a clean, clean energy economy. We're 319 00:15:12,240 --> 00:15:14,600 Speaker 1: going to accelerate it by doing it in a fair 320 00:15:14,640 --> 00:15:18,440 Speaker 1: way that produces more jobs. And look, manufacturing is back 321 00:15:18,480 --> 00:15:24,160 Speaker 1: at America and that's because we have these infusion of UH, 322 00:15:24,240 --> 00:15:27,760 Speaker 1: the laws that we pass, the the again the ira UH, 323 00:15:27,840 --> 00:15:30,280 Speaker 1: the Inflation Reduction Act as well as the Build Act 324 00:15:30,520 --> 00:15:33,040 Speaker 1: UH and and the Chips Act. That is how you 325 00:15:33,120 --> 00:15:35,360 Speaker 1: do it, making it competitive and better. 326 00:15:35,640 --> 00:15:38,200 Speaker 2: It's been too long, need to this against anytime, it's 327 00:15:38,240 --> 00:15:40,040 Speaker 2: going to say thank you, Sir Amas Huxtein. Then the 328 00:15:40,080 --> 00:15:53,280 Speaker 2: Deputy Assistant to the President with us around the typo. 329 00:15:53,640 --> 00:15:56,400 Speaker 2: One of the very best ever course. Ed Heyman joined 330 00:15:56,400 --> 00:15:58,000 Speaker 2: a s in person Ed Gond morning to you, sir, 331 00:15:58,360 --> 00:16:01,280 Speaker 2: Good morning John Fence Times. They can brilliant to see you. 332 00:16:01,360 --> 00:16:02,840 Speaker 2: I want to pick up on what Lisa was talking 333 00:16:02,840 --> 00:16:05,200 Speaker 2: about with Neil Dunsa and the Nuns twenty four round 334 00:16:05,240 --> 00:16:09,160 Speaker 2: was if unemployment stign's a climb, inflation's folding, Why won't 335 00:16:09,160 --> 00:16:10,160 Speaker 2: the fight just get on with it? 336 00:16:10,880 --> 00:16:11,560 Speaker 3: Well, they will. 337 00:16:12,240 --> 00:16:16,160 Speaker 7: You got to be patient, and people like Mike pretty 338 00:16:16,200 --> 00:16:19,480 Speaker 7: much put me out of business. The quality of I 339 00:16:19,480 --> 00:16:23,000 Speaker 7: couldn't do that well. The quality of what you do 340 00:16:23,080 --> 00:16:28,680 Speaker 7: seriously is so good. Uh, but is just big patient 341 00:16:29,160 --> 00:16:33,240 Speaker 7: and you can't fall from for that. I can feel 342 00:16:33,720 --> 00:16:36,960 Speaker 7: I know and m I have a strong view about 343 00:16:36,960 --> 00:16:40,040 Speaker 7: what's happening, But I can feel that they're not making 344 00:16:40,080 --> 00:16:45,120 Speaker 7: a mistake by being patient right now waiting, I'm not 345 00:16:45,240 --> 00:16:49,040 Speaker 7: for sure what whether it's an unemployment claims number or 346 00:16:49,080 --> 00:16:53,400 Speaker 7: another increase in the unemployment rate by tenth, or. 347 00:16:53,320 --> 00:16:54,800 Speaker 3: Some anecdotal. 348 00:16:56,360 --> 00:17:01,920 Speaker 7: Like swimming pool sales weekend or something that suddenly say yeah, 349 00:17:02,280 --> 00:17:06,399 Speaker 7: we have to go. The thing like that we should 350 00:17:06,480 --> 00:17:08,240 Speaker 7: keep in mind is that they do have a view 351 00:17:08,560 --> 00:17:11,399 Speaker 7: that once they start, this is a march. 352 00:17:12,000 --> 00:17:14,080 Speaker 3: They don't take a step. 353 00:17:14,840 --> 00:17:18,080 Speaker 7: Once they start, they are telling you and me that 354 00:17:18,119 --> 00:17:20,919 Speaker 7: they're going to have a program of rate cuts. So 355 00:17:20,920 --> 00:17:23,680 Speaker 7: that's why they have a little more resistance to starting out. 356 00:17:23,920 --> 00:17:26,560 Speaker 6: It's controversial to say that they're not making a mistake 357 00:17:26,600 --> 00:17:29,800 Speaker 6: by being patient. There is a growing school of thought, 358 00:17:29,840 --> 00:17:32,440 Speaker 6: and frankly a fissure in a growing number of analysts 359 00:17:32,480 --> 00:17:35,840 Speaker 6: where some people say, actually, this is the tipping point, 360 00:17:35,880 --> 00:17:39,200 Speaker 6: and we heard Mary Daily address this just on the margins. 361 00:17:39,480 --> 00:17:42,359 Speaker 6: We're seeing a tipping point in the labor market in particular, 362 00:17:42,480 --> 00:17:44,199 Speaker 6: and we're not going to be able to address it 363 00:17:44,280 --> 00:17:46,120 Speaker 6: until it's too late unless you get ahead of it. 364 00:17:46,480 --> 00:17:47,800 Speaker 6: What do you make of those arguments? 365 00:17:48,480 --> 00:17:51,919 Speaker 7: So I'm very sympathetic to them. I'm very sympathetic to it. 366 00:17:51,920 --> 00:17:55,159 Speaker 7: So I'm not in the everything's great, and you know 367 00:17:55,200 --> 00:18:01,800 Speaker 7: they should, but I thought what she did was very important. 368 00:18:02,800 --> 00:18:06,360 Speaker 7: And that's why John the claims numbers are so critical. 369 00:18:06,440 --> 00:18:09,679 Speaker 7: You know, you get another increase or two and suddenly 370 00:18:09,800 --> 00:18:15,720 Speaker 7: say we're going there. But I think I have almost 371 00:18:15,920 --> 00:18:20,600 Speaker 7: perfect knowledge of the economy today. 372 00:18:20,920 --> 00:18:25,480 Speaker 3: Don't hit me. But it's not flowing off a cliff, 373 00:18:25,560 --> 00:18:26,200 Speaker 3: like Mike says. 374 00:18:27,240 --> 00:18:28,679 Speaker 7: I talked to a couple of friends of mine this 375 00:18:28,760 --> 00:18:33,000 Speaker 7: morning in Atlanta because of the debate coming up and Atlanta. 376 00:18:33,119 --> 00:18:35,000 Speaker 3: They say it's a little bit cooler. 377 00:18:35,760 --> 00:18:39,439 Speaker 7: Atlanta is a real estate based placed, if you know, 378 00:18:39,480 --> 00:18:43,560 Speaker 7: the real estate, real estate, real estate, and it's cooled 379 00:18:43,600 --> 00:18:49,280 Speaker 7: off a little bit. But we do a set of 380 00:18:49,359 --> 00:18:52,960 Speaker 7: surveys of companies which is very you know of CEOs, 381 00:18:53,000 --> 00:18:54,800 Speaker 7: if you will, very systematic. 382 00:18:55,480 --> 00:18:57,840 Speaker 3: And it was sixty zero two. 383 00:18:57,680 --> 00:19:00,960 Speaker 7: One hundred, now it's fifty. And it was up a 384 00:19:00,960 --> 00:19:05,640 Speaker 7: point yeh last week to fifty. It's not forty five, 385 00:19:05,720 --> 00:19:08,480 Speaker 7: which is recession like. But I think your point is 386 00:19:08,520 --> 00:19:13,399 Speaker 7: well taken. They could be criticized for not acting a 387 00:19:13,400 --> 00:19:15,800 Speaker 7: little bit more, but I can see where they want 388 00:19:15,840 --> 00:19:19,560 Speaker 7: to look over there and see around the core again, 389 00:19:19,800 --> 00:19:22,440 Speaker 7: one more data point or two more data points. But 390 00:19:22,520 --> 00:19:25,280 Speaker 7: I thought the daily comments were important. 391 00:19:25,800 --> 00:19:27,159 Speaker 6: When you say you have a very good sense of 392 00:19:27,200 --> 00:19:29,400 Speaker 6: where the economy is right now, I want to dig 393 00:19:29,440 --> 00:19:31,719 Speaker 6: into that because we've been talking about how difficult it 394 00:19:31,760 --> 00:19:34,919 Speaker 6: is to get sort of a consistent story from all 395 00:19:34,920 --> 00:19:38,000 Speaker 6: of the anecdotes that tell very different tales depending on 396 00:19:38,200 --> 00:19:40,600 Speaker 6: the socioeconomic bracket. 397 00:19:40,640 --> 00:19:43,880 Speaker 3: In particular, how much more fragile is. 398 00:19:43,840 --> 00:19:46,120 Speaker 6: The strength that we're seeing, given that it is hinged 399 00:19:46,400 --> 00:19:50,440 Speaker 6: entirely to the top tier of income providers of income 400 00:19:50,760 --> 00:19:54,000 Speaker 6: earners in this country, and you are seeing real signs 401 00:19:54,040 --> 00:19:57,880 Speaker 6: of softening anywhere either in the middle or lower income brackets. 402 00:19:58,440 --> 00:20:03,240 Speaker 7: So again, we survey about two hundred companies a week, 403 00:20:03,800 --> 00:20:07,119 Speaker 7: the same companies, the same person at the company. We 404 00:20:07,160 --> 00:20:12,199 Speaker 7: found if we switch people, the results which go up 405 00:20:12,200 --> 00:20:13,000 Speaker 7: and down on. 406 00:20:13,000 --> 00:20:18,359 Speaker 3: The same company for just a week, and it varies. 407 00:20:18,720 --> 00:20:23,960 Speaker 7: We cover all socioeconomic strata. For example, we have a 408 00:20:24,000 --> 00:20:26,960 Speaker 7: survey of wine and spirit wholesalers and of those people 409 00:20:26,960 --> 00:20:29,960 Speaker 7: we ask them about whether they're trading up or down 410 00:20:29,960 --> 00:20:32,720 Speaker 7: in terms of quality. And we do a survey of 411 00:20:32,880 --> 00:20:36,760 Speaker 7: shopping guide companies. When you go to a supermarket and 412 00:20:36,800 --> 00:20:40,480 Speaker 7: you get a little free flyer, this is definitely the 413 00:20:40,640 --> 00:20:46,960 Speaker 7: low income shoppers. And on balance it's okay, and there's 414 00:20:46,960 --> 00:20:50,800 Speaker 7: some places that are just booming. I mean, it just 415 00:20:50,840 --> 00:20:52,240 Speaker 7: sort of pins your ears back. 416 00:20:52,520 --> 00:20:53,280 Speaker 3: It's so strong. 417 00:20:53,800 --> 00:20:57,240 Speaker 7: But it is at the top, and so the economy 418 00:20:57,280 --> 00:21:01,360 Speaker 7: is overall, and housing starts a little bit that way. 419 00:21:01,520 --> 00:21:05,080 Speaker 7: The small builders are having a tough time and the 420 00:21:05,119 --> 00:21:10,440 Speaker 7: big national builders are doing much better because they can 421 00:21:10,480 --> 00:21:15,520 Speaker 7: finance their own of building and help the client buy 422 00:21:15,560 --> 00:21:16,199 Speaker 7: a place. 423 00:21:17,200 --> 00:21:19,320 Speaker 3: It's very but I'm not right now. 424 00:21:19,359 --> 00:21:22,920 Speaker 7: I'm not stressed out that I'm missing it, which sometimes 425 00:21:23,119 --> 00:21:26,840 Speaker 7: I am stressed out, but it definitely is upstairs downstairs. 426 00:21:27,359 --> 00:21:30,240 Speaker 5: And you mentioned you were calling some people in Atlanta 427 00:21:30,320 --> 00:21:33,080 Speaker 5: because of the debate, so obviously I want to ask 428 00:21:33,119 --> 00:21:34,919 Speaker 5: you about if you think the Fed, I want to 429 00:21:34,920 --> 00:21:36,560 Speaker 5: put this together. If you think the FED is going 430 00:21:36,600 --> 00:21:39,919 Speaker 5: to be on a marching cycle to the downside, how 431 00:21:40,000 --> 00:21:42,160 Speaker 5: do they plan for twenty twenty five to potentially cut 432 00:21:42,240 --> 00:21:45,719 Speaker 5: rates when we can get more inflation depending on the 433 00:21:45,720 --> 00:21:47,800 Speaker 5: policy of who's going to be in the White House. 434 00:21:48,040 --> 00:21:54,200 Speaker 3: Well, that's the talk to Lisa, that's the issue. I have. 435 00:21:55,640 --> 00:22:01,440 Speaker 7: A strong view that the monetary tightening has been significant. 436 00:22:03,080 --> 00:22:03,199 Speaker 1: UH. 437 00:22:03,480 --> 00:22:06,960 Speaker 7: You know, we have rates, quantitative tightening inverted your curve. 438 00:22:07,800 --> 00:22:07,879 Speaker 6: UH. 439 00:22:07,960 --> 00:22:10,400 Speaker 7: Money supplies slow dramatically, So it's not. 440 00:22:10,359 --> 00:22:11,680 Speaker 3: Just one thing. 441 00:22:12,359 --> 00:22:17,880 Speaker 7: And that's my uh, over arching view of what's happening. 442 00:22:18,320 --> 00:22:22,400 Speaker 7: And so when I get a strong data point UH, 443 00:22:22,520 --> 00:22:24,960 Speaker 7: I say, well, it's just a outlier. 444 00:22:25,320 --> 00:22:26,639 Speaker 3: Doesn't fit with my view anyway. 445 00:22:26,840 --> 00:22:29,800 Speaker 7: And when I get a soft data point, I think that's, 446 00:22:30,320 --> 00:22:34,480 Speaker 7: you know, part of the trend. And so to get 447 00:22:34,520 --> 00:22:37,800 Speaker 7: to your point, I don't I really don't think inflation 448 00:22:37,960 --> 00:22:41,040 Speaker 7: is gonna pick back up. I think that it's slowing. 449 00:22:41,119 --> 00:22:44,359 Speaker 7: It gonna keep slowing. Say like on the UH core 450 00:22:44,400 --> 00:22:47,320 Speaker 7: PC comes out tomorrow, it was five and a half 451 00:22:47,440 --> 00:22:49,520 Speaker 7: and it's gonna be something like two and a half. 452 00:22:51,040 --> 00:22:56,240 Speaker 7: I'm a to a pretty good extent. I try to 453 00:22:56,480 --> 00:22:59,840 Speaker 7: establish what the trend is. Sometimes you can, sometimes you can, 454 00:23:00,160 --> 00:23:02,440 Speaker 7: but it seems to like the trended inflation is slowing. 455 00:23:02,880 --> 00:23:05,359 Speaker 7: It as a bumps early in the year, but on 456 00:23:05,560 --> 00:23:08,440 Speaker 7: balance it's still slowing. So I really don't think it's 457 00:23:08,440 --> 00:23:10,040 Speaker 7: going to pick back up. But it's the fair has 458 00:23:10,040 --> 00:23:10,760 Speaker 7: to worry about that. 459 00:23:10,800 --> 00:23:12,680 Speaker 4: Some can you ignore. 460 00:23:12,480 --> 00:23:20,200 Speaker 8: Politics not my wheelhouse, but the political economy is where 461 00:23:20,240 --> 00:23:23,840 Speaker 8: a lot of policies being made, tariffs, immigration, all of 462 00:23:23,880 --> 00:23:26,400 Speaker 8: this is potentially going to affect the real economy. 463 00:23:26,520 --> 00:23:32,560 Speaker 7: Right, So again my north star is that monetary tightening 464 00:23:33,160 --> 00:23:37,840 Speaker 7: is the dominant force. And so for example, you know, 465 00:23:37,960 --> 00:23:42,240 Speaker 7: life is in economics is always more complicated than what 466 00:23:42,320 --> 00:23:43,119 Speaker 7: I view it to be. 467 00:23:43,280 --> 00:23:45,399 Speaker 3: So for example, if. 468 00:23:46,840 --> 00:23:51,280 Speaker 7: They put on tariffs, then as you've reported here, frankly, 469 00:23:52,200 --> 00:23:55,960 Speaker 7: the dollar goes up, and that's the gates you know, 470 00:23:56,040 --> 00:23:58,480 Speaker 7: some of the inflationary impact. But you know, I don't 471 00:23:58,520 --> 00:24:01,560 Speaker 7: like it at all, and that is an inflation risk. 472 00:24:02,119 --> 00:24:04,480 Speaker 7: And we'll find out a little bit more tonight, you 473 00:24:04,520 --> 00:24:05,399 Speaker 7: know where that goes. 474 00:24:07,040 --> 00:24:09,880 Speaker 3: But you know, my team, who. 475 00:24:09,760 --> 00:24:15,000 Speaker 7: Covers the topic we're discussing, does not believe that either 476 00:24:15,800 --> 00:24:17,439 Speaker 7: candidate will have a knockout punch. 477 00:24:18,640 --> 00:24:21,000 Speaker 3: I'm still gonna watch it the way. 478 00:24:20,840 --> 00:24:22,440 Speaker 2: You pick up on your North Style. Just to wrap 479 00:24:22,480 --> 00:24:25,679 Speaker 2: it up the tines of monetary policy. How tight do 480 00:24:25,680 --> 00:24:28,359 Speaker 2: you think monetary policy is right now? And how did 481 00:24:28,359 --> 00:24:28,879 Speaker 2: you gauge that? 482 00:24:29,080 --> 00:24:33,240 Speaker 7: I'll let you know in a year. So, like I mentioned, 483 00:24:34,400 --> 00:24:37,479 Speaker 7: you'll curve has been inverted. It's now been inverted for 484 00:24:37,520 --> 00:24:41,240 Speaker 7: like four hundred and fifty days. I mean maybe Mike's county, 485 00:24:41,280 --> 00:24:44,919 Speaker 7: but who's counting. I mean it's the most ever and 486 00:24:44,960 --> 00:24:49,679 Speaker 7: it's my fair amount. We're just getting into where it's 487 00:24:49,880 --> 00:24:54,200 Speaker 7: longer than average impact, but not a lot. I mean, 488 00:24:54,880 --> 00:24:57,240 Speaker 7: I think the community has been too aggressive. But anyway, 489 00:24:57,240 --> 00:25:02,240 Speaker 7: theyll Kirk is one. I'm probably older than anybody else 490 00:25:02,280 --> 00:25:04,160 Speaker 7: you have on your show. Uh. 491 00:25:04,200 --> 00:25:06,480 Speaker 3: But this is my uh. 492 00:25:06,920 --> 00:25:09,800 Speaker 7: Thirteenth in version. They've all a very seventh in version. 493 00:25:09,840 --> 00:25:11,200 Speaker 7: They've all led to tour recession. 494 00:25:12,280 --> 00:25:12,440 Speaker 4: Uh. 495 00:25:12,480 --> 00:25:16,199 Speaker 7: And then uh, you have the money supply UH and 496 00:25:16,240 --> 00:25:19,600 Speaker 7: I buy the Milton Freeman. It was thirty percent now 497 00:25:19,640 --> 00:25:23,320 Speaker 7: it's like two percent, and that's a a second aspect. 498 00:25:23,359 --> 00:25:24,879 Speaker 7: And then they've done quantity of tightening. 499 00:25:26,040 --> 00:25:26,760 Speaker 3: Uh. 500 00:25:26,800 --> 00:25:29,000 Speaker 7: And the San Francisco FED, I actually, come to think 501 00:25:29,040 --> 00:25:32,400 Speaker 7: of it, where Mary Daily is. Uh, they haven't had 502 00:25:32,440 --> 00:25:36,120 Speaker 7: a new estimate, but their latest estimate of three weeks 503 00:25:36,160 --> 00:25:40,359 Speaker 7: ago had the proxy funds rate funds rate adjusted for 504 00:25:40,600 --> 00:25:45,160 Speaker 7: QT at the six and a quarter percent and six 505 00:25:45,200 --> 00:25:47,280 Speaker 7: and a quarter. I mean the inflation is not six 506 00:25:47,320 --> 00:25:49,640 Speaker 7: and a quarter. And maybe it's five and a quarter 507 00:25:49,720 --> 00:25:52,639 Speaker 7: or four a quarter, but it's not. And so hover 508 00:25:52,720 --> 00:25:55,600 Speaker 7: I look at I think monetary tightening. But you know, 509 00:25:55,680 --> 00:25:59,639 Speaker 7: people are tired of this. I can tell my my team, 510 00:26:00,040 --> 00:26:02,879 Speaker 7: you know when you have this thing, Mike Row, but 511 00:26:03,080 --> 00:26:04,560 Speaker 7: sometimes you have a viewer just say it over and 512 00:26:04,560 --> 00:26:05,000 Speaker 7: over again. 513 00:26:05,200 --> 00:26:09,040 Speaker 3: Yeah, people go like, never. 514 00:26:11,080 --> 00:26:12,720 Speaker 2: Can I ask? And they push him back when you 515 00:26:12,760 --> 00:26:15,160 Speaker 2: say your team is that because they're of a certain age. 516 00:26:15,520 --> 00:26:17,639 Speaker 2: Are they in their early thirties? And they think that 517 00:26:17,680 --> 00:26:19,880 Speaker 2: maybe that they say it's different this time, and you say, 518 00:26:19,880 --> 00:26:22,320 Speaker 2: now I've seen this movie before. What does that interaction 519 00:26:22,359 --> 00:26:23,240 Speaker 2: look like on the floor. 520 00:26:23,320 --> 00:26:26,720 Speaker 7: No, it's not that so much, because you know, my 521 00:26:26,920 --> 00:26:33,159 Speaker 7: team is then intergalactic investment community. I talk to people constantly, 522 00:26:33,920 --> 00:26:37,679 Speaker 7: and not many, but I have a number of them 523 00:26:37,880 --> 00:26:46,280 Speaker 7: that are older than I am and sharper but. 524 00:26:44,320 --> 00:26:47,400 Speaker 3: But I think about that I'm over the hill. 525 00:26:47,960 --> 00:26:49,720 Speaker 2: Well, I don't think you are right and hopefully we 526 00:26:49,760 --> 00:26:51,800 Speaker 2: done wear another twelve minutes to do this. I'd like 527 00:26:51,840 --> 00:26:53,840 Speaker 2: to do it again soon, my pleasure. Thank you, sir, 528 00:26:53,880 --> 00:26:55,919 Speaker 2: Always appreciate your time. One of the very best at 529 00:26:55,960 --> 00:27:08,000 Speaker 2: Heimen I've ever court. The US debt level is set 530 00:27:08,000 --> 00:27:10,919 Speaker 2: to be one topic at tonight's CNN presidential debate. A 531 00:27:10,960 --> 00:27:14,600 Speaker 2: recent Congressional Budget Officer report warning US federal debt will 532 00:27:14,680 --> 00:27:17,000 Speaker 2: jump from ninety nine percent of GDP this year to 533 00:27:17,080 --> 00:27:20,640 Speaker 2: one hundred and twenty two in twenty thirty four. Mamagannis 534 00:27:20,640 --> 00:27:23,480 Speaker 2: of the Committee for a Responsible Federal Budget writing this 535 00:27:23,640 --> 00:27:26,600 Speaker 2: twenty twenty five will be a consequential year for fiscal policy. 536 00:27:26,880 --> 00:27:30,080 Speaker 2: Neither candidate has offered plans for addressing the important fiscal 537 00:27:30,119 --> 00:27:33,240 Speaker 2: deadlines they will face within the first year of the 538 00:27:33,280 --> 00:27:35,720 Speaker 2: next term. Myron Police to say, is with us now 539 00:27:35,720 --> 00:27:37,520 Speaker 2: for more Mike, great to catch up with you. Can 540 00:27:37,520 --> 00:27:40,080 Speaker 2: we start there the important deadlines that they will have 541 00:27:40,160 --> 00:27:43,280 Speaker 2: to face whoever it is within the next twelve months. 542 00:27:43,520 --> 00:27:46,040 Speaker 9: Yeah, twenty twenty five is going to be an absolutely 543 00:27:46,280 --> 00:27:49,199 Speaker 9: crucial year when it comes to fiscal policy. So as 544 00:27:49,240 --> 00:27:52,360 Speaker 9: soon as we're swearing in the next president, the debt 545 00:27:52,400 --> 00:27:54,680 Speaker 9: ceiling is going to be on. It is going to 546 00:27:54,720 --> 00:27:57,399 Speaker 9: be returning, so that will start in January, but we 547 00:27:57,440 --> 00:27:59,639 Speaker 9: will have a number of months where they're extraordinary measures. 548 00:27:59,680 --> 00:28:01,920 Speaker 9: But we know that's something the next president is going 549 00:28:01,960 --> 00:28:03,760 Speaker 9: to have to deal with. That's been a struggle in 550 00:28:03,800 --> 00:28:07,200 Speaker 9: the past. Opportunity to save a lot of money, opportunity 551 00:28:07,280 --> 00:28:09,480 Speaker 9: to add a lot of debt. We've seen both. But 552 00:28:09,560 --> 00:28:12,480 Speaker 9: they also have the huge expiration of the Trump tax 553 00:28:12,520 --> 00:28:15,800 Speaker 9: cuts and extending those, which is something both candidates have 554 00:28:15,840 --> 00:28:17,840 Speaker 9: said they want to do in one form or another, 555 00:28:18,280 --> 00:28:22,040 Speaker 9: could cost upwards of four even five trillion dollars. You 556 00:28:22,119 --> 00:28:24,000 Speaker 9: may see people trying to expand them. 557 00:28:24,040 --> 00:28:25,240 Speaker 3: We've heard about that as well. 558 00:28:25,520 --> 00:28:27,520 Speaker 9: We also have the end of the spending gaps that 559 00:28:27,520 --> 00:28:30,920 Speaker 9: were part of the Fiscal Responsibility Act, and so we'll 560 00:28:30,920 --> 00:28:32,320 Speaker 9: have to figure out what we're doing there. 561 00:28:32,800 --> 00:28:33,840 Speaker 3: And I'm pretty. 562 00:28:33,520 --> 00:28:35,359 Speaker 9: Certain that whoever's president is going to have made a 563 00:28:35,440 --> 00:28:37,560 Speaker 9: number of promises for more things. They're going to do 564 00:28:37,720 --> 00:28:39,600 Speaker 9: more borrowing. So it is going to be a year 565 00:28:39,640 --> 00:28:43,320 Speaker 9: where there's the potential for editions of trillions of dollars 566 00:28:43,360 --> 00:28:45,560 Speaker 9: being added to the debt. Just at a time where 567 00:28:45,600 --> 00:28:48,160 Speaker 9: the Congressional Budget Office has been warning us we are 568 00:28:48,200 --> 00:28:49,880 Speaker 9: in deep trouble right now and we do have to 569 00:28:49,960 --> 00:28:52,360 Speaker 9: change course. We're not hearing very much about how we 570 00:28:52,360 --> 00:28:53,760 Speaker 9: would change course, Maya. 571 00:28:53,800 --> 00:28:55,760 Speaker 6: There are a lot of people who are listening, including 572 00:28:55,800 --> 00:28:58,560 Speaker 6: probably some politicians who had shrug off the idea that 573 00:28:58,840 --> 00:29:02,920 Speaker 6: spending ending increases, in tax cuts in and of themselves 574 00:29:03,040 --> 00:29:05,280 Speaker 6: will increase the deficit. They would argue there are certain 575 00:29:05,320 --> 00:29:07,720 Speaker 6: tax cuts that would expand the economy, and that there 576 00:29:07,760 --> 00:29:10,800 Speaker 6: are certain spending plans that would also expand the economy 577 00:29:10,800 --> 00:29:11,760 Speaker 6: pretty significantly. 578 00:29:12,320 --> 00:29:13,640 Speaker 3: Where is the truth in that? 579 00:29:14,040 --> 00:29:14,960 Speaker 6: And where is the fiction? 580 00:29:15,960 --> 00:29:18,760 Speaker 9: Yeah, there are fiscal myths everywhere, because everybody wants an 581 00:29:18,800 --> 00:29:21,160 Speaker 9: excuse not to have to pay for the things that 582 00:29:21,200 --> 00:29:22,840 Speaker 9: they do in the budget, because the greatest thing a 583 00:29:22,880 --> 00:29:26,320 Speaker 9: politician can do is promise and give away tax cuts 584 00:29:26,440 --> 00:29:29,080 Speaker 9: or spending increases without any plan for how oft to 585 00:29:29,120 --> 00:29:32,360 Speaker 9: offset those costs. Frankly, none of it's true when it 586 00:29:32,400 --> 00:29:36,320 Speaker 9: comes to policies, tax cuts or spending increases paying for themselves. 587 00:29:36,600 --> 00:29:39,360 Speaker 9: The Trump tax cuts appear to have paid for about 588 00:29:39,400 --> 00:29:42,800 Speaker 9: twenty percent of their cost, and if you look forward, 589 00:29:43,120 --> 00:29:45,160 Speaker 9: it looks like from the estimates that are out there, 590 00:29:45,200 --> 00:29:47,040 Speaker 9: it would cover even less because there have been a 591 00:29:47,040 --> 00:29:49,520 Speaker 9: lot of ways that there have been workarounds within those 592 00:29:49,560 --> 00:29:51,560 Speaker 9: tax cuts, and they've ended up draining more from the 593 00:29:51,600 --> 00:29:56,040 Speaker 9: revenue from revenue sources than we might have anticipated. Spending side, 594 00:29:56,040 --> 00:29:58,680 Speaker 9: it's probably even more difficult to offset the costs. Those 595 00:29:58,680 --> 00:30:00,880 Speaker 9: aren't the only myths we hear. To hear people saying, 596 00:30:01,000 --> 00:30:04,280 Speaker 9: don't worry print money, right. I hope that inflation is 597 00:30:04,280 --> 00:30:08,320 Speaker 9: a reminder that that is a very serious misstep. And 598 00:30:08,680 --> 00:30:11,680 Speaker 9: there are regularly times when people say, let's the deficit 599 00:30:11,720 --> 00:30:14,000 Speaker 9: doesn't matter. But what we are seeing is that the 600 00:30:14,040 --> 00:30:16,680 Speaker 9: deficit in our huge debt levels right now has led 601 00:30:16,720 --> 00:30:20,760 Speaker 9: to slower economic growth, higher inflation, higher interest rates, not 602 00:30:20,800 --> 00:30:23,920 Speaker 9: being as prepared for the next emergency, recession or otherwise, 603 00:30:24,320 --> 00:30:27,160 Speaker 9: and probably at this point is a real drag and 604 00:30:27,560 --> 00:30:30,920 Speaker 9: threat to our national security. So this underpinning of a 605 00:30:30,920 --> 00:30:34,120 Speaker 9: weak fiscal foundation is hurting the entire rest of the country. 606 00:30:34,520 --> 00:30:37,360 Speaker 9: And yet you still have politicians, because it's good politics, 607 00:30:37,640 --> 00:30:40,240 Speaker 9: making promises not to fix it and not to pay 608 00:30:40,240 --> 00:30:41,880 Speaker 9: for the new things they want, trying to come up 609 00:30:41,880 --> 00:30:43,959 Speaker 9: with fairy tales for why they shouldn't have to. 610 00:30:44,400 --> 00:30:46,680 Speaker 6: MAYA, you talk about borrowing costs and some people would 611 00:30:46,680 --> 00:30:48,680 Speaker 6: say the FED can fix that. They could just cut rates, 612 00:30:48,720 --> 00:30:52,400 Speaker 6: and they can cut rates pretty dramatically to offset the deficit, 613 00:30:52,520 --> 00:30:56,000 Speaker 6: and it could actually de facto decrease the deficit dramatically, 614 00:30:56,040 --> 00:30:59,000 Speaker 6: at least the borrowing costs that the US will have 615 00:30:59,080 --> 00:30:59,520 Speaker 6: to pay. 616 00:31:00,040 --> 00:31:01,960 Speaker 3: How much do you understand. 617 00:31:01,600 --> 00:31:05,600 Speaker 6: Different yield levels as being sustainable and completely unsustainable in 618 00:31:05,640 --> 00:31:07,600 Speaker 6: the near term. Is there sort of a pivot point 619 00:31:07,720 --> 00:31:10,160 Speaker 6: within the yield space where you say this is going. 620 00:31:10,160 --> 00:31:11,080 Speaker 3: To have alarm bells? 621 00:31:11,840 --> 00:31:14,080 Speaker 9: That is a great question, because the big question in 622 00:31:14,160 --> 00:31:15,960 Speaker 9: all of this is what is the timing of when 623 00:31:15,960 --> 00:31:18,720 Speaker 9: markets would say we're not tolerating this. When might there 624 00:31:18,760 --> 00:31:21,480 Speaker 9: be a treasury market that didn't go well, When might 625 00:31:21,480 --> 00:31:24,000 Speaker 9: there be a situation where rates start to not respond. 626 00:31:24,480 --> 00:31:26,320 Speaker 9: All I can say we don't know the timing. Of course, 627 00:31:26,560 --> 00:31:28,640 Speaker 9: all we know is that the fiscal policies of this 628 00:31:28,720 --> 00:31:32,680 Speaker 9: country are making monetary policy for our monetary policy makers 629 00:31:33,000 --> 00:31:36,240 Speaker 9: much more challenging, because when they're trying to control a 630 00:31:36,280 --> 00:31:39,520 Speaker 9: situation of inflation, we've got fiscal policy makers who are 631 00:31:39,560 --> 00:31:43,520 Speaker 9: borrowing more, pushing inflation up more, and making the ramifications 632 00:31:43,560 --> 00:31:45,680 Speaker 9: of changes and rates. If you want to control that 633 00:31:45,720 --> 00:31:48,760 Speaker 9: inflation even more threatening to our fiscal position. 634 00:31:49,320 --> 00:31:49,600 Speaker 3: Maya. 635 00:31:49,680 --> 00:31:52,880 Speaker 5: This evening's debate is so interesting because it's basically two 636 00:31:52,920 --> 00:31:55,320 Speaker 5: incumbents and they're going to be asked about their record. 637 00:31:55,600 --> 00:31:59,760 Speaker 5: Who is worse for the federal deficit? Trump or Biden. 638 00:32:00,680 --> 00:32:03,240 Speaker 9: Yeah, we have recently just looked at a record of 639 00:32:03,480 --> 00:32:05,680 Speaker 9: what they did in terms of the borrowing that they 640 00:32:05,720 --> 00:32:08,440 Speaker 9: approved while they were in office. All the numbers that 641 00:32:08,480 --> 00:32:11,720 Speaker 9: we look at are over the coming ten years. And admittedly, 642 00:32:11,960 --> 00:32:15,280 Speaker 9: no president owns their economy or the fiscal situation. And 643 00:32:15,360 --> 00:32:18,520 Speaker 9: COVID was a huge, huge, sort of unexpected thing that 644 00:32:18,560 --> 00:32:21,760 Speaker 9: affected both presidents. But what we saw was that with COVID, 645 00:32:21,960 --> 00:32:25,520 Speaker 9: the present President Trump added as much as eight point 646 00:32:25,520 --> 00:32:28,880 Speaker 9: four trillion dollars to the debt over ten years. Without COVID, 647 00:32:28,880 --> 00:32:31,320 Speaker 9: it was about four point eight trillion. That is an 648 00:32:31,360 --> 00:32:34,479 Speaker 9: astronomical amount of money, particularly that so much of it 649 00:32:34,560 --> 00:32:37,560 Speaker 9: was put in place when the economy was incredibly strong. 650 00:32:38,560 --> 00:32:41,120 Speaker 9: So far, and President Biden's term is not over, and 651 00:32:41,160 --> 00:32:43,479 Speaker 9: there's still chance that he's going to add more to it, 652 00:32:44,360 --> 00:32:48,640 Speaker 9: but he added four point three trillion dollars without counting COVID. 653 00:32:48,840 --> 00:32:51,800 Speaker 9: Some and his COVID wasn't bipartisan the way the present 654 00:32:51,800 --> 00:32:54,600 Speaker 9: President Trump's was, those numbers would be two point two 655 00:32:54,640 --> 00:32:58,080 Speaker 9: trillion dollars. There is a huge takeaway here, and that 656 00:32:58,200 --> 00:33:01,240 Speaker 9: is that neither of these presidents the economy was strong 657 00:33:01,360 --> 00:33:04,760 Speaker 9: and needed less borrowing, not more. Neither of them have 658 00:33:04,800 --> 00:33:08,080 Speaker 9: heeded that warning. They both have engaged in borrowing when 659 00:33:08,080 --> 00:33:11,360 Speaker 9: there was no economic reason to do so, and that 660 00:33:11,440 --> 00:33:15,000 Speaker 9: raises real warning signs for what would happen when either 661 00:33:15,000 --> 00:33:17,680 Speaker 9: of them were in the office in twenty twenty five, which, 662 00:33:17,680 --> 00:33:20,920 Speaker 9: as we just covered, is a huge years for fiscal policies. 663 00:33:21,480 --> 00:33:23,920 Speaker 5: The other big problem, of course, is entitlements. That's the 664 00:33:23,960 --> 00:33:27,280 Speaker 5: biggest chunk of this budget and defense. When it comes 665 00:33:27,320 --> 00:33:30,360 Speaker 5: to entitlements, have you heard anything from either party that 666 00:33:30,400 --> 00:33:32,040 Speaker 5: they're looking at shoring this up? 667 00:33:32,920 --> 00:33:35,040 Speaker 9: I could say, yeah, I've heard they don't plan to 668 00:33:35,080 --> 00:33:38,400 Speaker 9: fix it, which is just the biggest, frankly pander that 669 00:33:38,440 --> 00:33:41,600 Speaker 9: you could have. Both of them are trying to scare 670 00:33:41,680 --> 00:33:44,719 Speaker 9: American seniors that the other party would do something to 671 00:33:44,720 --> 00:33:47,600 Speaker 9: harm their benefits and reassure people that they won't do 672 00:33:47,640 --> 00:33:50,560 Speaker 9: anything to fix the program by calling it protecting it. 673 00:33:50,600 --> 00:33:55,440 Speaker 9: To be clear, social Security and medicare are both facing insolvency. 674 00:33:55,800 --> 00:33:58,320 Speaker 9: If we don't make changes in roughly a decade, there 675 00:33:58,360 --> 00:34:02,960 Speaker 9: will be across the board automatic cuts for providers and retirees. 676 00:34:03,200 --> 00:34:06,240 Speaker 9: This is a terrible policy, and what we need to 677 00:34:06,240 --> 00:34:08,719 Speaker 9: hear from the candidates is how they would shore up 678 00:34:08,719 --> 00:34:09,520 Speaker 9: those programs. 679 00:34:09,760 --> 00:34:10,800 Speaker 3: Whether it's looking at. 680 00:34:10,640 --> 00:34:16,319 Speaker 9: Retirement ages, means testing, raising revenues. They're hard choices. That's 681 00:34:16,320 --> 00:34:18,680 Speaker 9: what the budget is, but that's also what leadership is, 682 00:34:18,760 --> 00:34:20,520 Speaker 9: and we need to hear from them how they would 683 00:34:20,520 --> 00:34:23,799 Speaker 9: fix entitlements. Be aware of anyone promising not to touch 684 00:34:23,800 --> 00:34:26,560 Speaker 9: the program, because that is what threatens seniors and all 685 00:34:26,640 --> 00:34:28,600 Speaker 9: the people who are paying into the program. 686 00:34:28,760 --> 00:34:31,000 Speaker 2: You were the perfect guest for this conversation. Thanks for 687 00:34:31,040 --> 00:34:33,040 Speaker 2: being with us. Mamacainnis there of the Committee for a 688 00:34:33,120 --> 00:34:37,960 Speaker 2: Responsible Federal Budget. This is the Bloomberg Surveillance Podcast, bringing 689 00:34:38,040 --> 00:34:41,480 Speaker 2: you the best in markets, economics, an gient politics. You 690 00:34:41,520 --> 00:34:44,320 Speaker 2: can watch the show live on Bloomberg TV weekday mornings 691 00:34:44,320 --> 00:34:47,239 Speaker 2: from six am to nine am Eastern. Subscribe to the 692 00:34:47,280 --> 00:34:50,759 Speaker 2: podcast on Apple, Spotify or anywhere else you listen, and 693 00:34:50,840 --> 00:34:53,919 Speaker 2: as always on the Bloomberg Terminal and the Bloomberg Business app.