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Speaker 2: Heley lines alongside Joe Matthew here on Bloomberg TV and
Speaker 2: Radio on this Friday, Jobs Friday at that and what
Speaker 2: a coincidence that the Jobs Day actually coincides with pretty
Speaker 2: lengthy remarks from the FED chair Jay Powell before the
Speaker 2: FED enters its blackout period its March meeting. Of course,
Speaker 2: week after next, the FED is not expected to do
Speaker 2: anything at that meeting, and the Chairman basically confirmed it,
Speaker 2: as he suggested once again, there's no hurry to make
Speaker 2: further policy adjustments. And it was interesting to hear from
Speaker 2: the Chairman Joe this notion that the path to returning
Speaker 2: to their inflation target has been bumpy. He expects that
Speaker 2: to continue and perhaps further bumpiness. Assessment is required when
Speaker 2: you're considering whether or not there is going to be
Speaker 2: tariffs that would have an inflationary impact. As we heard
Speaker 2: President Trump in the Oval Office just in the last
Speaker 2: hour after giving some reprieve to Canada just yesterday saying
Speaker 2: reciprocal tariffs on Canadian lumber and darry could go into
Speaker 2: effect as soon as today.
Speaker 3: Today or not or not, which seems to be the problem.
Speaker 3: Although watching the markets lift off their lows, I guess
Speaker 3: was encouraging after the Nasdaq fell into correction territory earlier today.
Speaker 3: Michael McKee is actually there. He was in the room
Speaker 3: for j. Powell's remarks and joins us from the US
Speaker 3: Monetary Policy Forum. This sponsored again by the University of
Speaker 3: Chicago Booth School of Business. Michael, it's great to see you.
Speaker 3: Thanks for coming on. As Kayleie mentioned that the big
Speaker 3: takeaways here, the big headlines, the Fed doesn't need to hurry.
Speaker 3: You could wait for greater clarity the path to two percent, Michael,
Speaker 3: gonna be bumpy. So nothing's new, is it.
Speaker 4: No, there's really not a whole lot new here. I
Speaker 4: think maybe what fed the market reaction, the brief recovery
Speaker 4: that you had in the markets, was just a sense
Speaker 4: of calm that the chairman exhibited, the idea that the
Speaker 4: FED doesn't have to do anything right away because the
Speaker 4: economy's in good shape. He talked about how the labor
Speaker 4: market was in good shape. Inflation is coming down, still
Speaker 4: too high, as you mentioned, it could be bumpy, but
Speaker 4: he wasn't giving a lot of warning signals that there
Speaker 4: is something wrong at this point that the FED would
Speaker 4: have to react to. Now, obviously he said tariffs could
Speaker 4: be inflationary. They're anticipating that prices will go up. But
Speaker 4: because we have no idea exactly what the President is
Speaker 4: going to do, the FED at this moment has no
Speaker 4: idea what it's going to do. And that's kind of
Speaker 4: where everybody else on the FED is at the moment.
Speaker 2: Well, and is it the Fed's biggest potential problem right now, Mike,
Speaker 2: is that the consumer has no idea where things are
Speaker 2: going either, and we're starting to see consumer inflation expectations
Speaker 2: pick up. He did call that out today, although he
Speaker 2: noted it's not necessarily in longer term expect to expectations
Speaker 2: and that's really what they care most about.
Speaker 4: Well, we did see the University of Michigan's five year
Speaker 4: inflation expectations move up in the last month. We'll get
Speaker 4: another report from Michigan next week and we'll see where
Speaker 4: they are also the New York Fed does its own
Speaker 4: survey of expectations comes out next week, so we'll have
Speaker 4: a better idea. Of course, the FED won't be talking
Speaker 4: at that point, but they are worried that if we
Speaker 4: see a continual series of tariffs, as the President sort
Speaker 4: of continues to threaten, that that might drive consumer expectations higher.
Speaker 4: And we did see expectations rise both on the short
Speaker 4: end significantly and the longer end a little bit, just
Speaker 4: on the headlines that you were getting from the President
Speaker 4: on tariffs after he came into office. So people are
Speaker 4: very sensitive to that. And JPOB made the point that
Speaker 4: this is not the pre COVID era. People are used
Speaker 4: to inflation now, and so they're perhaps more sensitive to
Speaker 4: the fact that it could jump up again.
Speaker 3: And by considering the Fed's dual mandate, some of the
Speaker 3: concerns surrounding the job market not in this report so
Speaker 3: much today, but concerns that thousands of fired federal workers
Speaker 3: could really change the trajectory of growth in the labor market.
Speaker 3: How would that change the Fed's view when it comes
Speaker 3: to interest rates, Well.
Speaker 4: It would be an interesting question because it would depend
Speaker 4: on how serious it is Federal workers all of them,
Speaker 4: about two million of them make up about one and
Speaker 4: a half percent of the total labor force. So if
Speaker 4: several hundred thousand lose their job, it isn't going to
Speaker 4: make a big difference. It could bleed over into other
Speaker 4: sectors though, as whose jobs are built around these federal
Speaker 4: government workers, restaurants or stores or things like that. If
Speaker 4: people lose their jobs, we could see an expansion. And
Speaker 4: obviously the contractors, the civilian contractors who do work for
Speaker 4: the federal government lose their jobs. Now, if that starts
Speaker 4: to spread, then you get perhaps a psychological effect on
Speaker 4: the rest of consumers who start to worry about their
Speaker 4: jobs and then they pull back on spending, and that's
Speaker 4: the classic way of recession starts.
Speaker 2: Well, And wouldn't that suggest, Mike that while everybody's to
Speaker 2: Joe's point on the dual mandate, trying to focus on
Speaker 2: the inflationary side, and that's preliminary or primarily what the
Speaker 2: FED has been keying off of two, that actually the
Speaker 2: growth risks might be greater or just as great as
Speaker 2: the inflation risks right now as we are seeing that
Speaker 2: consumer pull back potentially that you're talking about, that could
Speaker 2: be further fueled.
Speaker 5: Well.
Speaker 4: The problem for the FED is they're caught in the
Speaker 4: middle here, and they're very happy with the fact that
Speaker 4: right now inflation's coming down, slowly but coming down, and
Speaker 4: the labor market is solid. The problem is if the
Speaker 4: labor market deteriorates a lot, that's a suggestion that we're
Speaker 4: going to see growth fall off, and then you start
Speaker 4: to worry about recession, and then you start thinking about
Speaker 4: cutting in interest rates. If inflation rises, then they would
Speaker 4: have to start thinking about raising in play, raising interest rates,
Speaker 4: which would also probably lead you into recession. So they'd
Speaker 4: be caught between a rock and a hard place. So
Speaker 4: they don't have a lot of good policy choices. If
Speaker 4: this all goes pear shape and there is a genuine
Speaker 4: consensus I think at the FED and among people on
Speaker 4: Wall Street that President Trump has a very very narrow
Speaker 4: path to make this work.
Speaker 3: Looking at a rising stock market at this point, Mike,
Speaker 3: the S and P's up ten points. We were sharply
Speaker 3: lower earlier, the Nasdaq and correction territory this morning, now
Speaker 3: eighteen points. I realized it isn't rally time, but the
Speaker 3: turnaround was significant. You credited that to the calumn that
Speaker 3: j Powell spoke to the markets, he's got to be
Speaker 3: quiet for a little while. Now. How damaging could that
Speaker 3: be for a nervous s Wall Street.
Speaker 4: Well, it depends on the psychology of markets, which I
Speaker 4: can't claim to know at this point. If there was
Speaker 4: a feeling and an ongoing feeling that a sell off
Speaker 4: was due, which I think there was, and you're looking
Speaker 4: for reasons to sell, then you have to ask where
Speaker 4: are we in that cycle. Next week we get the
Speaker 4: inflation numbers from the CPI and then we'll get those
Speaker 4: Michigan numbers. Will those contribute to a negative feeling that's
Speaker 4: enough to keep markets going down? Or have we gotten
Speaker 4: back to a little bit more of proper valuation and
Speaker 4: people will either hold and wait and see what happens
Speaker 4: with the tariffs or start to go back up again.
Speaker 2: All right, Bloomberg's Michael McKee live on the scene where
Speaker 2: we just heard from Chairman Powell. Thank you so much.
Speaker 2: As we consider what Mike was just talking about tariffs.
Speaker 2: This is actually something that our colleague Jonathan Farrow had
Speaker 2: the chance to speak with the National Economic Council Director
Speaker 2: Kevin Hassett about earlier this morning. As once again we're
Speaker 2: getting new headlines from President Trump around tariffs he may
Speaker 2: or may not impose on partners like Canada. This is
Speaker 2: how director has It spoke about it.
Speaker 5: I think in some sense that you've got quite a
Speaker 5: bit of clarity already. There's no uncertainty. There's going to
Speaker 5: be some tariff. It's going to be reciprocal. If you
Speaker 5: don't like teriffs very much, then reciprocal could be a
Speaker 5: great thing for you, because then countries around the world
Speaker 5: will be lowering their tariffs. But the President believes that
Speaker 5: if we replace income tax revenue with tariff revenue, we
Speaker 5: can make everybody better off.
Speaker 2: Make everybody better off, Joe. Of course, not all economists
Speaker 2: are privy to that safety.
Speaker 3: No, And it brings us back to this idea of
Speaker 3: short term pain, this adjustment that the market may or
Speaker 3: the economy itself may or may not be going through.
Speaker 3: Here what this could mean longer term for tariffs with China.
Speaker 3: Markets don't have a lot of tolerance for that kind
Speaker 3: of talk right now, although I guess we are seeing
Speaker 3: a better vibe in stock since j Pollis spoke. But
Speaker 3: this idea of a short term correction has yet to
Speaker 3: be quantified.
Speaker 2: Well, yeah, certainly, and we talk about better vibes today.
Speaker 2: Better vibe just means we're roughly even on the major
Speaker 2: benchmarks after they have fallen to below the levels where
Speaker 2: they were on election day, after we found out that
Speaker 2: it was President Trump who was the victor in that
Speaker 2: the Nasdaq one hundred earlier today, as you mentioned, Joe
Speaker 2: fell into correction territory, though it's not clear whether or
Speaker 2: not we're going to end the trading the day there.
Speaker 2: So obviously, the stock market is not the economy, but
Speaker 2: the economy is feeding into what we're seeing in the
Speaker 2: stock market, and on this Job's Day, we want to
Speaker 2: reflect more on just how healthy the economy is and
Speaker 2: turned to Kitty Richer. She's strategic advisor and senior fellow
Speaker 2: at the Groundwork Collaborative. Welcome back to Balance of Power, Kitty,
Speaker 2: if we could just begin with the data we do
Speaker 2: have in hand today, a jobs report that showed a
Speaker 2: little bit higher unemployment of four point one percent, but
Speaker 2: stronger than expected manufacturing payrolls. Specifically, what read does it
Speaker 2: provide you on the labor market right now? Knowing that
Speaker 2: everything that's happening with cuts in the federal government is
Speaker 2: not yet yet reflected in these figures.
Speaker 6: Thank you, Kaylee. Yeah, I think it's really important to
Speaker 6: understand that the chaos that the Trump administration is sowing
Speaker 6: in the markets and among consumers has not yet had
Speaker 6: a chance to really filter through to the broad economic indicators.
Speaker 6: Things like the BLS Jobs Day and the cuts that
Speaker 6: are being made to the federal government workforce are really
Speaker 6: going to start to hit home, not just in the
Speaker 6: labor market, where we're going to see laid off workers
Speaker 6: trying to find new jobs, unable to make rent payments,
Speaker 6: mortgage payments. This could cause real problems in local economies
Speaker 6: across the country because federal workers are not just in
Speaker 6: the DC area, but also the services that those government
Speaker 6: workers are providing are going to start degrading rapidly. And
Speaker 6: you know, we're hearing that the Trump administration is looking
Speaker 6: for a short term correction for long term benefits, but
Speaker 6: it's really clear who's going to benefit from these policies,
Speaker 6: if anyone, and that's Elon Musk and the other billionaires
Speaker 6: that are currently running the government. Workers are going to
Speaker 6: see the CFPB has been gutted, and they're going to
Speaker 6: see financial institutions taking advantage of them and their families
Speaker 6: with no watchdog to stop it. They're going to struggle
Speaker 6: with the Social Security Administration, where the Trump administration ousted
Speaker 6: the head of SSA so that they could get their
Speaker 6: hands on sensitive data and are now threatening deeper cuts
Speaker 6: to services while also lying about non existent fraud in
Speaker 6: the State of the Union. All of these things are
Speaker 6: going to start to show up in the labor market,
Speaker 6: and they're already showing up in the lives of workers
Speaker 6: and families.
Speaker 3: Well, I'll tell you, I don't know to what extent
Speaker 3: there was lying about fraud, but we were just talking
Speaker 3: to Michael McKee about the impact of federal worker layoffs.
Speaker 3: As you talk about this yourself, Kitty, could we be
Speaker 3: in a world in which this effort by the Trump
Speaker 3: administration and the ancillary impact that you're describing is what
Speaker 3: prompts the Federal Reserve to start cutting rights again.
Speaker 6: I think that the Fed is in a really difficult
Speaker 6: position because the Trump administration is simultaneously engaging in these
Speaker 6: federal worker cuts that absolutely could ripple through the economy
Speaker 6: and cause contraction, while also sewing chaos in the markets
Speaker 6: and threatening things that might drive up inflation. And so
Speaker 6: it's a really difficult situation. I will say that I
Speaker 6: believe that the FED should have cut interest rates more
Speaker 6: quickly than they did, and we are still seeing persistent
Speaker 6: inflation problems in the housing sector, but that's not going
Speaker 6: to be aided by the FED holding mortgage interest rates
Speaker 6: and other interest rates higher. Those interest rates are really
Speaker 6: harming American families as they go out into the world
Speaker 6: and try to purchase homes, try to pay their rent,
Speaker 6: try to make ends meet in the current environment. But
Speaker 6: it is really difficult to do monetary policy when there's
Speaker 6: this much chaos.
Speaker 2: Well, to your point on mortgage rates, we have seen
Speaker 2: them come down as we've seen bond yields falling, specifically
Speaker 2: in this administration has contended Kitty that they don't necessarily
Speaker 2: need the FED to be cutting interest rates, that there
Speaker 2: are mechanisms through which they can actually bring rates down
Speaker 2: on their own and still have that relief provided to
Speaker 2: want to be home buyers or people who need to
Speaker 2: borrow money that you're alluding to. Are there actual fiscal
Speaker 2: means with which they can do that in your mind, I.
Speaker 6: Mean, the government has a lot of power to make
Speaker 6: homes more affordable, but I don't think anything that Trump
Speaker 6: administration is planning gets at that core issue for the
Speaker 6: American people. There are lots of things that the government
Speaker 6: can do to bring down the prices of healthcare and
Speaker 6: grow and the things that Americans rely on, and the
Speaker 6: Trump administration is moving in the opposite direction. So I
Speaker 6: wouldn't take those promises at face value.
Speaker 3: We had a conversation with Larry Summers just this week
Speaker 3: getting back to this idea of short term pain for
Speaker 3: long term gain. I think as you described it, Kitty,
Speaker 3: Larry Summers, the former Treasury secretary, says that's the new transitory.
Speaker 3: It sounds like you agree.
Speaker 6: If we're talking about the Trump administration's promises that somehow,
Speaker 6: this chaotic approach to managing the economy and allowing the
Speaker 6: wealthiest man on earth to loot the federal government is
Speaker 6: going to somehow eventually trickle down to workers. I think
Speaker 6: that that is preposterous, and we're not seeing any evidence
Speaker 6: of that. I don't think that we can take these
Speaker 6: claims at face value at this point, and.
Speaker 7: So I.
Speaker 6: Agree that it would be silly to take the Trump
Speaker 6: administration's claims about their policies and evaluate them without reference
Speaker 6: to all of the other wild claims that they have
Speaker 6: made and none of it is playing out in the data.
Speaker 6: We know what is going to happen when you have
Speaker 6: a government that is having sweetheart deals with Tesla, rampaging
Speaker 6: through the federal workforce, cutting services to people, all in
Speaker 6: the service of tax cuts for the very wealthiest and corporations,
Speaker 6: which is what the Republicans and Congress are currently working toward.
Speaker 6: We have fifty years of evidence that that kind of
Speaker 6: behavior arms American workers in the short, medium and long term.
Speaker 2: Well, if you just consider then the administration's objectives, if
Speaker 2: you don't agree with their policy that they've said just
Speaker 2: as a means of getting their kitty. If the objective
Speaker 2: is to juice American growth, to incentivize American manufacturing, what
Speaker 2: is the popular or proper way to go about that
Speaker 2: if it isn't raising tariffs on trading partners, in cutting
Speaker 2: taxes as they have outlined.
Speaker 6: I mean, the Inflation Reduction Act, investments in manufacturing and
Speaker 6: resharing are beginning to bear fruit now, and this administration
Speaker 6: is trying to roll all of those back. I think
Speaker 6: the way that we invest in American manufacturing American workers
Speaker 6: is by investing in American manufacturing and American workers, not
Speaker 6: by capriciously threatening our closest trading partners with tariffs that
Speaker 6: do nothing but royal the markets, while also by the
Speaker 6: way behind the scenes, walking back things like promises to
Speaker 6: close loopholes that allow China to ship goods into the
Speaker 6: United States without inspection. This policy is just really incoherent,
Speaker 6: and so it's difficult to evaluate it on the merits.
Speaker 6: But I do think that we have ample evidence that
Speaker 6: an investment led strategy can be really helpful. And we
Speaker 6: saw business investment, private investment go up near the end
Speaker 6: of the Biden administration, and that was the fruits of
Speaker 6: the investments that the administration made over the course of
Speaker 6: the pandemic and the recovery from the pandemic.
Speaker 3: Kitty, it's great to have you back, Kitty Richard, Senior
Speaker 3: Strategic Advisor, Senior fellow the Groundwork Collaborative. In the wake
Speaker 3: of j. Powell's comments and on this job's day, we
Speaker 3: are typically higher on Wall Street after a very negative
Speaker 3: start to trading. Here Kayley the S and P five
Speaker 3: hundred up six points. Nasdaq is up eight after touching
Speaker 3: correction territory that DAWs up over one hundred points. Big
Speaker 3: jump in McDonald's today, which might speak to this whole
Speaker 3: theme that we're touching on.
Speaker 2: Yeah, and this theme obviously doesn't just apply to markets.
Speaker 2: We're looking at the bond market as well. Interestingly, while
Speaker 2: yels were lower in the aftermath of today's jobs data,
Speaker 2: once we heard from Chairman Pow, they ticked up a bit.
Speaker 2: We're up two basis points on the ten year, two
Speaker 2: basis points on the two year as well. Those yields
Speaker 2: four point two nine and three point nine seven percent, respectively.
Speaker 2: In bitcoin eighty eight thousand. As the White House Crypto Summit.
Speaker 3: Kicks off today, you wouldn't think that was happening based
Speaker 3: on the price action. But there's some concern about using
Speaker 3: seized coins not buying new ones. We'll talk about that
Speaker 3: coming up next right here. On Balance of Power. This
Speaker 3: is Bloomberg.
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Speaker 2: Meantime in Washington We're particularly interested in the price action
Speaker 2: in bitcoin today because if I were to tell you
Speaker 2: it would actually be down the day after a long
Speaker 2: awaited Exact of Order to establish a strategic Bitcoin Reserve
Speaker 2: from President Trump was signed, you might not necessarily believe it.
Speaker 2: Of course, he talked about this on the campaign trail.
Speaker 2: He said he would do it. It just finally came
Speaker 2: part of the whole promises made, promises kept thing, I guess, Joe,
Speaker 2: but those who invest in crypto specifically may have been
Speaker 2: hoping that this promise was going to be kept a
Speaker 2: little bit differently, as in this would mean the government
Speaker 2: was going to start buying bitcoin rather than just taking
Speaker 2: what the government had already seized and putting it into
Speaker 2: this reserve.
Speaker 3: That was the dream, which I guess could still be realized.
Speaker 3: But they're going to start this way. Scott Bessett was
Speaker 3: talking about this earlier today in an interview, suggesting that
Speaker 3: at least they're going to stop selling bitcoin, create the
Speaker 3: reserve and then maybe move on from there. But there's
Speaker 3: been a lot of disappointment around this lately. The post
Speaker 3: Untruth social a couple of days ago that suggested, you know,
Speaker 3: investing in a series of different tokens sent bitcoin lower
Speaker 3: and now here we are again today, although it's coming
Speaker 3: off its lows of the session.
Speaker 7: Yeah.
Speaker 2: And I would point out that David Sachs, the White
Speaker 2: House Crypto and Aizar did join Blue earlier today and
Speaker 2: talked a little bit about this. This is what he said.
Speaker 8: The reason why we need a bitcoin reserve is that
Speaker 8: the federal government already owns some. In fact, it obtained
Speaker 8: around four hundred thousand bitcoin over the past decade through
Speaker 8: criminal and civil forfeitures and seizures, and so the government
Speaker 8: has to have a strategy for how it deals with this.
Speaker 3: Our conversation with Kristin Smith, the Blockchain Association CEO, is
Speaker 3: with us at the table as the Crypto Summit gets
Speaker 3: underway down the street at the White House, Christen, it's
Speaker 3: great to see you. Welcome back to Bloomberg TV and Radio.
Speaker 9: Great to be here.
Speaker 3: What do you make of this frustration? Do you share it?
Speaker 3: Were you hoping that the White House was going to
Speaker 3: start buying No?
Speaker 10: I think what happened last night with the executive order
Speaker 10: that created a Bitcoin Strategic Reserve and a digital asset stockpile, I.
Speaker 9: Think it hit the nail on the head.
Speaker 10: This is exactly the type of signal that we need
Speaker 10: to show that the United States is serious about keeping
Speaker 10: the capital or making the US the crypto capital of
Speaker 10: the world, but doesn't doesn't go so far that we
Speaker 10: have the US government going out there into the market
Speaker 10: and buying digital assets. I think as the AI and
Speaker 10: cryptos are David Sachs pointed out earlier on Bloomberg Today,
Speaker 10: you know that the US already has a lot of
Speaker 10: these assets.
Speaker 9: We need to take an inventory put it in one place.
Speaker 10: But you know, I do think that there was some
Speaker 10: around the world that don't fully understand the limits of
Speaker 10: executive power.
Speaker 9: I think if you want to have the government going
Speaker 9: out and spending money to buy crypto, that is something.
Speaker 10: That Congress needs to do and that is not within
Speaker 10: the scope of the executive order. So I think there's
Speaker 10: maybe just a misunderstanding of the powers that are out there.
Speaker 10: But you know, I'm excited to see this established because
Speaker 10: I think we're really ready to move the conversation onto
Speaker 10: what can we do to establish a regulatory framework that
Speaker 10: keeps US competitive for generations to come. And a lot
Speaker 10: of that work right now is happening on Capitol Hill
Speaker 10: with negotiations around stable coin bill market structure and some
Speaker 10: of these other issues, and so I'm excited to see
Speaker 10: this issue so hopefully put to the side for now
Speaker 10: so we can focus on the really difficult work of
Speaker 10: finding the right regulatory framework.
Speaker 2: Well to your point, Kristen on Congress having to play
Speaker 2: a role here, we did get a statement from the
Speaker 2: Chair of the House Financial Services Committee French Hill today
Speaker 2: which in part right, I encourage the administration to collaborate
Speaker 2: with Congress, particularly in regard to the structure and any
Speaker 2: funding related to the Strategic Bitcoin Reserve. Are all parties
Speaker 2: aligned on not just this but the other things you
Speaker 2: were talking about. The way in which to pursue a
Speaker 2: strategy around market structure and stable coins. Is David Sach's
Speaker 2: going to be saying in the same tune as Chairman
Speaker 2: Hill or Chairman Scott.
Speaker 10: For them, Yeah, I mean, I think everybody is aligned
Speaker 10: with the goal, and there are a lot of different
Speaker 10: ways I think to get to the same goal. And
Speaker 10: I think a healthy policymaking process is the one we're
Speaker 10: having now, where we allow different ideas to be vetted, debated, suggested,
Speaker 10: and to.
Speaker 9: Allow this collaboration. But I think the fact that we have.
Speaker 10: The White House that is convening industry to hear from them.
Speaker 10: They've invited representatives from Capitol Hill to join. We've had
Speaker 10: David Sachs go to the Hill and be part of
Speaker 10: press conference.
Speaker 9: Is there.
Speaker 10: I think the type of collaboration going on between the agencies,
Speaker 10: between the White House and between Congress is very important
Speaker 10: to making sure that all of the considerations are in place.
Speaker 10: I think what we saw over the last four years
Speaker 10: is we weren't having that kind of dialogue. We were
Speaker 10: in send instead of seeing enforcement actions a lot of litigation,
Speaker 10: and that wasn't the right approach. This open dialogue, discussion
Speaker 10: and debate is exactly what we need, and I'm really
Speaker 10: confident that we could build on the legislative work that
Speaker 10: Congress did last year and get these items in place
Speaker 10: as we move further along into the year.
Speaker 3: So clearly you see this as a legitimizing action to
Speaker 3: executive order. When you look at the language though that
Speaker 3: David Sachs has been using. Any acquisitions would require budget
Speaker 3: neutral strategies. Yeah, this is Washington. How long do you
Speaker 3: need to wait for that?
Speaker 9: Yeah?
Speaker 10: Well, I mean listen, I think that there's going to
Speaker 10: be a brainstorm as to how potentially we could add
Speaker 10: more bitcoin. I mean, one idea I have I do
Speaker 10: think this would also require an Act of Congress is
Speaker 10: let people pay their taxes in bitcoin, or let people
Speaker 10: let's collect all these tariffs in bitcoin. And I think
Speaker 10: there's a lot of way that we can bring bitcoin exactly. So,
Speaker 10: you know, there's ideas out there, and I think, you know,
Speaker 10: the key is that the White House doesn't have the
Speaker 10: authority to spend taxpayer dollars that Congress hasn't given them,
Speaker 10: and so this is I think a really smart way.
Speaker 10: I think they've thread the needle and I think it
Speaker 10: sends a strong statement. I think there may be some
Speaker 10: disappointment in the markets today, but you know, I think
Speaker 10: as we move forward, this is a really stable policy
Speaker 10: and not something that would just be undone with another,
Speaker 10: you know, stroke of the pen in a future administration.
Speaker 2: So to Joe's point on it lending legitimacy to the industry,
Speaker 2: is that also what today's summit is about? Or are
Speaker 2: you expecting that there's going to be tangible outcomes from
Speaker 2: all of these executives meeting at the White House?
Speaker 9: Yeah, I mean, this is an absolutely historic day.
Speaker 10: I think sixteen years ago when Satoshi you know, issued
Speaker 10: the white paper and then you know, bitcoin was running,
Speaker 10: I don't think anyone could have imagined something like this
Speaker 10: happening at the White House. I mean, this is this
Speaker 10: is absolutely historic. I think it really sends a strong
Speaker 10: signal that you know, crypto is valued here in the US,
Speaker 10: this is an important industry and that we want to lead.
Speaker 10: And I do think we could see some further announcements today.
Speaker 10: I mean I think that that we are looking at
Speaker 10: things in sort of two steps. The first step is
Speaker 10: we need to undo the damage of the last administration.
Speaker 10: The second step is we need to put the regulatory
Speaker 10: and framework in place that allows the US to be
Speaker 10: competitive for generations. And so I do think we can
Speaker 10: see a lot of discussion today about you know, what
Speaker 10: are the outstanding remaining items that we need to change
Speaker 10: from the last administration.
Speaker 9: There's a lot of.
Speaker 10: Guidance out there, there's a lot of proposed rulemakings that
Speaker 10: could be very damaging.
Speaker 9: We need to wipe that away so we can.
Speaker 10: Get roll of our sleeves and do the real work
Speaker 10: to get the regulatory frameworktplace.
Speaker 3: Ho Thik is the tent with the Blockchain Association. When
Speaker 3: it comes to meme coins, this White House, this White
Speaker 3: House has cranked a few hours argument about whether this
Speaker 3: actually helps or hurts the industry.
Speaker 9: Yeah, I know, you know, it's interesting.
Speaker 10: I mean, I think meme coins are I think, a
Speaker 10: perfectly legitimate.
Speaker 9: And wonderful technology.
Speaker 7: Right.
Speaker 10: People are allowed to enjoy novelties, They're allowed to have fun,
Speaker 10: and that's what that's what meme coins do. You know,
Speaker 10: I think, you know, there is a little bit of
Speaker 10: anxiety when you have the president playing in this space.
Speaker 9: And I don't think he's doing anything wrong. I think
Speaker 9: he's he's doing everything that is allowed under the law.
Speaker 10: You know, there has been legislation that a Congressman Lecardo
Speaker 10: introduced that would prevent elected officials from issuing.
Speaker 9: Their own meme poins.
Speaker 10: And I think that's an important debate for Congress to have.
Speaker 10: But I mean, listen, we went from a president who
Speaker 10: you know, did every his administration, did everything within their
Speaker 10: power to try to stop this industry, to a president
Speaker 10: who is all in, who is very enthusiastic, and who's participating.
Speaker 10: And so you know, I will take the challenges of
Speaker 10: an overly enthusiastic president any day compared to having to
Speaker 10: deal with Gary Gensler in the lastdministration.
Speaker 2: Well, and so that brings me back to your point
Speaker 2: about there's kind of two phases here. One the unwinding
Speaker 2: of before, and then we get to the after. If
Speaker 2: the after has to include to create a regulatory framework
Speaker 2: market structure, legislation emanating from Congress, which we got in
Speaker 2: the last one didn't ultimately cross the finish line, I
Speaker 2: would imagine it's going to look pretty different now that
Speaker 2: Republicans have full control. What timeline are you expecting there?
Speaker 2: If there's still all this kind of backward looking work
Speaker 2: that needs to be done, when does that forward progress?
Speaker 10: Yeah, Well, I think there's a lot of momentum building
Speaker 10: in Congress. So we just last or just this week, gosh,
Speaker 10: it was only this week.
Speaker 9: Now we had a Congressional Review Act resolution.
Speaker 10: In the Senate that got eighteen Democrats and one independent
Speaker 10: that joined. We have a same resolution voted on in
Speaker 10: the House next week. I think that that is starting
Speaker 10: to build very bipartisan momentum that undoes the work of
Speaker 10: the past. We're seeing work on stable coin bills, new
Speaker 10: drafts introduced, we have markups and hearings, next week. I
Speaker 10: think that will continue to build that momentum, and we
Speaker 10: could see that as early as this and then I
Speaker 10: think it's very likely that we could get market structure
Speaker 10: done by the end of the year. I think that
Speaker 10: there are a lot of discussions going on there, especially
Speaker 10: between the House and the Senate. I have never seen
Speaker 10: so much collaboration at a staff level and on a
Speaker 10: member level between the House and the Senate. So I
Speaker 10: think they're serious about getting this done. And we're really
Speaker 10: excited at the Blockchain Association for the unique moment we
Speaker 10: find ourselves in, and we're ready to be a partner
Speaker 10: as policymakers are exploring ideas.
Speaker 3: Dance cards pretty full on Capitol Hill right now, as
Speaker 3: we stare down the pipe of a potential government shut down,
Speaker 3: this massive reconciliation project. They're talking about Trump tax cuts
Speaker 3: and so forth. What can Donald Trump say today? He's
Speaker 3: going to speak, Well, he's scheduled to an hour and
Speaker 3: a half from now at the Crypto Summit to hasten
Speaker 3: and put some urgency underneath this effort on Capitol Hill.
Speaker 5: Yeah.
Speaker 10: Well, I mean, I think highlighting it as a priority
Speaker 10: is really sends a signal to Congress that this is
Speaker 10: something he wants to get done. I'm hopeful that who
Speaker 10: will speak to a partisan audience, because whatever regulatory framework
Speaker 10: gets put in place, we want it to be lasting.
Speaker 10: We don't want it to be something that changes every
Speaker 10: time there's a change in power. And so I'm hoping
Speaker 10: that he will speak to a bipartisan audience. And I
Speaker 10: think that, you know, with his leadership and with the
Speaker 10: folks in the industry around the room being helpful in
Speaker 10: the process, like, I think we can get there. And
Speaker 10: so this is in you know, the US interest. I
Speaker 10: don't think innovation is something that is a more Republican
Speaker 10: and more democrat, and so I'm hoping he shows some
Speaker 10: leadership and tries to bring people together. I think that
Speaker 10: you know, stands in contrast to some of the other
Speaker 10: issues and debates going on, and so I think it's
Speaker 10: nice to have something where everyone can be on the
Speaker 10: same team.
Speaker 2: Well, it was great to have you here on our
Speaker 2: team for at least yeah today. Thank you so much
Speaker 2: for joining us in the studio. Kristen Smith, CEO of
Speaker 2: the Blockchain Association with us on Bloomberg TV and radios,
Speaker 2: Thank you so much. Of course, a lot of the
Speaker 2: members of the Blockchain Association are at the White House
Speaker 2: right now as we speak. The gathering was slated to
Speaker 2: begin around one thirty today. Whole host of CEOs there
Speaker 2: at the White House to plead their case. You know,
Speaker 2: he's not going to be there, though former CEO used
Speaker 2: to be the emissary to Washington, Sam Bankman Free he's
Speaker 2: still looking for a pardon from President Trump. I wonder
Speaker 2: if we don't hear anything come on in this speech today.
Speaker 3: I wouldn't think that would be a headline, and we're
Speaker 3: used to that around here. We'll be listening, of course,
Speaker 3: when Donald Trump speaks three pm Eastern. They tell us
Speaker 3: we'll let you know right here on the Fastest Show
Speaker 3: in Politics with Kaylee Lines. I'm Joe Matthew. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Balance of Power Podcast. Catch
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Speaker 8: Hello.
Speaker 3: We say that every Friday. What a week. We're doing
Speaker 3: it again, and thank you for meeting us here at
Speaker 3: the threshold of the weekend Jobs Day, showing some signs
Speaker 3: of softening more people permanently out of work. Payrolls came
Speaker 3: in a bit light one hundred and fifty one thousand
Speaker 3: the s. It was for one hundred and sixty unemployment
Speaker 3: four point one percent. We heard earlier today from one
Speaker 3: of the President's closest economic advisors, Kevin Hassett, director of
Speaker 3: the National Economic Council, on Bloomberg Surveillance, speaking with John Ferroll.
Speaker 5: Here's what he said, We're preparing you for news like
Speaker 5: today the great Jobs Report. I think one of the
Speaker 5: things that you see if you look at it is
Speaker 5: exactly the objectives of the Trump administration, of the fact
Speaker 5: that even though we got a lot of work to do,
Speaker 5: we got to pass the tax cuts and get this
Speaker 5: deregulation train rolling, is that we're going to be reducing
Speaker 5: government employment and reducing government spending and increasing manufacturing employment.
Speaker 5: And as you can see in the Jobs report today,
Speaker 5: you're already seeing a pivot in that direction. That's a
Speaker 5: huge one. So last year, one hundred and eleven thousand
Speaker 5: manufacturing jobs are destroyed by the Biden administration's policies, and
Speaker 5: in this month alone, in February, we got ten thousand
Speaker 5: manufacturing jobs and nine thousand auto jobs. And as you know,
Speaker 5: those auto jobs are here, they're going to be paid well,
Speaker 5: and they're here for a good long time. And that's
Speaker 5: really just sort of a down payment on the Trump
Speaker 5: policies that get a skyrocket into a golden ages as
Speaker 5: we get the tax cuts passed.
Speaker 11: So, Kevin, I hope you're right. But what I've heard
Speaker 11: over the last week or so regarded the economic data,
Speaker 11: when I spoke to the COMMAS secretary Howard Lutnik, Secretary
Speaker 11: Lutnik said that this was Biden data over the last month,
Speaker 11: that this was not Trump data. So if it's good,
Speaker 11: if it's is it Trump data? And if it's bad,
Speaker 11: is it Biden data? How does this work?
Speaker 5: Let's go into the specifics. So what specifically has happened
Speaker 5: is President Trump has made a big effort, along with
Speaker 5: Elon Musk, to find workers that are unproductive and to
Speaker 5: get them off the payrolls. And so we see government
Speaker 5: spending going down. So is that a Trump effect? Yes, Manufacturing, well, manufacturing,
Speaker 5: a job creation in the auto sector is happening because
Speaker 5: people are anxious about future tariffs and they're already on
Speaker 5: shoring production. Is that a Trump effect? Yes, but it's
Speaker 5: true that we've inherited a lot of terrible Biden policies.
Speaker 5: They want to get expensing gone and so on, and
Speaker 5: that's bad for capital formation. We're going to fix that.
Speaker 5: So we haven't fixed everything, but already the thing that
Speaker 5: we're fixing you can see in the data, and I
Speaker 5: think it's really quite remarkable.
Speaker 11: Well, let's talk about the manufacturing data as well. We
Speaker 11: hand that over the past few weeks. You're familiar with
Speaker 11: ICM manufacturing. You're familiar, I'm sure with the respondents in
Speaker 11: the surveys, and this is what they had to say.
Speaker 11: The uncertainty about tariff keeps us cautious on spending. Customers
Speaker 11: are pausing on new orders as a result of uncertainty
Speaker 11: regarding tariffs. The incoming tarifts are causing our products to
Speaker 11: increase in price. Are you hearing the same message from businesses?
Speaker 11: Are you hearing something different?
Speaker 6: Yeah?
Speaker 5: What I'm hearing is a massive amount of onshoing. We've
Speaker 5: got more than what a trillion and a half dollars
Speaker 5: of commitments for new factories, and you're already seeing it
Speaker 5: in the auto data. I've mean, think about it, how
Speaker 5: hard it is to create a job in the auto sector.
Speaker 5: To have ten thousand in a month means that the
Speaker 5: attempt to ensure activity, to make it so that the
Speaker 5: jobs are created here and the money isn't just you know,
Speaker 5: fritter away to foreign countries, is exactly what President Trump's
Speaker 5: objective is. And it's right there in the data.
Speaker 4: Now.
Speaker 5: I know that it's one month and the data could
Speaker 5: blip around, but I was really really stunned. And the
Speaker 5: other thing I was stunned about, which I know you
Speaker 5: guys follow this a lot. In fact, Anna Wong at
Speaker 5: Bloomberg is one of the best young economists I know
Speaker 5: it looking at the numbers is that it was a
Speaker 5: really bad flu season. And so when I adjusted for
Speaker 5: the flu, what I thought this number was going to be,
Speaker 5: it was way below the number that we got, and
Speaker 5: so I was very positively surprised by this number once
Speaker 5: you adjust for flu, and then you see that all
Speaker 5: the jobs, all these jobs that are created in manufacturing.
Speaker 5: And finally, if you go back and look at the
Speaker 5: Biden job record mid flow, the fact that they revised
Speaker 5: it down a million jobs last year. Don't forget that
Speaker 5: a lot of the job creation was government workers. It
Speaker 5: was government workers. About a quarter of the job creation
Speaker 5: over the last two years was an increase in government workers.
Speaker 5: And so if you take those out and then still
Speaker 5: have a strong job's number, that's a great, great economic outcome.
Speaker 3: Kevin Hassett at the White House earlier today on Bloomberg
Speaker 3: TV and Radio. I'm Joe Matthew alongside Kaylee Lines in
Speaker 3: Washington watching Wall Street off. The job's news didn't start well, Kaylee,
Speaker 3: but we have turned higher after the Chair of the
Speaker 3: Fed spoke earlier, j Powell seemed to soothe the markets
Speaker 3: into changing course here though bitcoin is still lower on
Speaker 3: this crypto summit thing.
Speaker 2: Yeah, we're expecting to hear from President Trump at the
Speaker 2: crypto summit at three pm Eastern at least that's when
Speaker 2: it's scheduled, though he's also scheduled to sign executive orders
Speaker 2: just half an hour before that at two thirty pm
Speaker 2: Eastern time, And we already actually heard from him in
Speaker 2: the Oval Office today, so he spoke to reporters suggesting
Speaker 2: one of those executive orders he will be signing will
Speaker 2: restrict eligibility for government run student loan forgiveness for individuals
Speaker 2: who work for nonprofits that clash with the administration's immigration policies.
Speaker 2: This is not necessarily, though, the education oriented executive order
Speaker 2: we thought we might be getting from the President this week,
Speaker 2: as there had been reporting that he could be signing
Speaker 2: an EO to dismantle the Department of Education. The White
Speaker 2: House has suggested though, that at least on timing, that
Speaker 2: is fake news for now.
Speaker 3: Yeah, that was the tweet or the ex post I
Speaker 3: guess from the Press secretary yesterday. Some folks do again
Speaker 3: to your point, though, think it's just a matter of
Speaker 3: when that happens. President's been pretty clear about his intentions.
Speaker 2: Yeah, including the new Secretary, Linda mcmahonson that her job
Speaker 2: basically is to get herself out of a job eventually.
Speaker 2: But we want to go to someone who used to
Speaker 2: hold that job now, who I'm pleased to say is
Speaker 2: joining us here on Bloomberg TV and Radio. Former Education
Speaker 2: Secretary Margaret Spellings during the Bush administration, who is now
Speaker 2: president and CEO of the Bipartisan Policy Center. Madame Secretary,
Speaker 2: thank you so much for your time. If we could
Speaker 2: just begin with what has been a very clear effort
Speaker 2: on the part of Donald Trump to work toward getting
Speaker 2: rid of the Department of Education. We've already seen Linda McMahon,
Speaker 2: for example, offering buyouts to employees, some of which have
Speaker 2: been accepted. What would the immediate impact be, even if
Speaker 2: this is a slow unraveling on education in America.
Speaker 12: Well, and I'm glad this is a segment that comes
Speaker 12: right after a discussion of jobs and the job's numbers,
Speaker 12: because we can't talk about jobs and good jobs without
Speaker 12: getting quickly to education and the quality of the American worker.
Speaker 12: And that's what we're focused on at the Bipartisan Policy Center.
Speaker 12: And you know what I'm hearing is, yes, there's a
Speaker 12: discussion around how federal programs should be deployed, but not
Speaker 12: a question about many of those federal programs. Obviously, there's
Speaker 12: still strong support for the title programs on the K
Speaker 12: twelve side that support low income and special ed students.
Speaker 12: They're still support for financial aid for higher ed students,
Speaker 12: although we ought to be smarter about how we do
Speaker 12: that in connecting it to the needs of the workforce.
Speaker 12: But it's basically, how are we going to organize and
Speaker 12: oversee the federal role? And so are there efficiencies to
Speaker 12: be gained. Heck yes, and I'm looking forward to working
Speaker 12: with Secretary McMahon and her team to talk about the
Speaker 12: best ways to do that. It has grown a good
Speaker 12: bit over time the federal workforces has been said, and
Speaker 12: how are we smarter about how to do that?
Speaker 3: We heard from Donald Trump on this secretary, and we've
Speaker 3: heard him speak a couple of times. I'd like to
Speaker 3: just go back, if we could, to the fourth of February.
Speaker 3: This is Donald Trump in the Oval Office when he
Speaker 3: was asked about his intentions here to basically eliminate the
Speaker 3: Department of Education. Lenda McMahon had not yet been confirmed.
Speaker 3: Here's what that exchange sounded like.
Speaker 7: I told Linda, I hope you do a great job
Speaker 7: and put yourself out of a job. I want her
Speaker 7: to put herself out of a job. We're ranked at
Speaker 7: the bottom of the list. We're ranked very badly.
Speaker 13: And what I want to do is let the States
Speaker 13: run schools. I believe strongly in school choice, but in
Speaker 13: addition to that, I want the States to run schools,
Speaker 13: and I want Linda to put herself out of a job.
Speaker 3: Put herself out of a job. Margaret Spellings does that
Speaker 3: sound like somebody you can work with.
Speaker 12: Well, you know, states do run schools. Most of the
Speaker 12: money obviously comes from states and local school districts. I
Speaker 12: think Americans and President Trump obviously are rightly frustrated with
Speaker 12: the quality of education in America today, and so what
Speaker 12: we need to decide is, you know, where is the
Speaker 12: role around accountability and transparency for achievement for federal funding
Speaker 12: for the investments we do make and the outcomes that
Speaker 12: states and local school districts are getting. And we can
Speaker 12: certainly do a better job of doing that. There's been
Speaker 12: a lot of discussion around authority for governors to being
Speaker 12: more involved in some of those funding decisions about the
Speaker 12: use of federal aid. But sure, I mean, are there
Speaker 12: parts of the Department of Education that might go elsewhere,
Speaker 12: might be managed better elsewhere. Possibly does it make a
Speaker 12: lot of sense for school districts and universities to interface
Speaker 12: with a multitude of federal agencies or just one. I mean,
Speaker 12: I think she is an experienced businesswoman, she has experience
Speaker 12: in the federal government, and I think she's going to
Speaker 12: do President Trump some yesterday a good scalpel job on
Speaker 12: looking at what can be approved over there. We don't
Speaker 12: want to ship fat programs just around the federal government.
Speaker 12: We need to have them run efficiently wherever they end up.
Speaker 12: And obviously the Congress is going to have the last
Speaker 12: onl on much of this.
Speaker 2: Well, that's exactly where I wanted to go next. We
Speaker 2: actually spoke with a Congressman, Ryan mackenzie, who sits on
Speaker 2: the Education Committee, yesterday, who told us this has to
Speaker 2: go through Congress. This can't be up to the executive
Speaker 2: branch alone, whether it is drastic changes potentially to the
Speaker 2: Department of Education or other agencies that we have seen
Speaker 2: the Department of Government efficiency trying to pursue an end
Speaker 2: to USAID, the CFPB, for example. Do you see Congressional
Speaker 2: appetite to actually partake in that activity or would you
Speaker 2: anticipate in them asking you to put that Bipartisan Policy
Speaker 2: Center hat on right now that there might be some pushback.
Speaker 12: Oh, I think there'll absolutely be pushed back on this
Speaker 12: and everything else. I mean that modified that can describe anything,
Speaker 12: but yeah, absolutely, the Congress is going to have their
Speaker 12: say over this, and I think Secretary McMahon is eager
Speaker 12: to engage with them. That's certainly what she told them
Speaker 12: during her confirmation hearing and do that in a smart way.
Speaker 12: You know, my hope is that we have to keep
Speaker 12: the main thing the main thing, and the main thing
Speaker 12: that we are all concerned about is the quality of
Speaker 12: reading and math education in our country. We got the
Speaker 12: report card a few weeks ago, and it's shocking. It's
Speaker 12: something we all ought to be up in arms about.
Speaker 12: And so rather than talk about, you know, the movement
Speaker 12: of the deck chairs as the dominant matter, and we
Speaker 12: need to be talking about how we best teach children
Speaker 12: to read and do math so that they're prepared to
Speaker 12: enter the workforce and be successful.
Speaker 3: Secretary, you run the Bipartisan Policy Center, bipartisan being the
Speaker 3: key word in this political climate, this partisan climate that
Speaker 3: we're living in right now in Washington, d C. Is
Speaker 3: this mission impossible?
Speaker 12: No, it is not. And there's lots of bipartisan energy
Speaker 12: that's going on and will go on and must go
Speaker 12: on before deals are done. At the end of the day,
Speaker 12: we as you know, we have very close margins in
Speaker 12: the House and the Senate. You know, it'll take sixty
Speaker 12: votes to abolish the Department of Education. I don't necessarily
Speaker 12: see that happening. And so being smart about giving a
Speaker 12: plan about how to run the thing better. Nobody that
Speaker 12: I engage with is in supportive waste, fraud, and abuse.
Speaker 12: So yeah, you bet. We're not going to extend the
Speaker 12: tax cuts, We're not going to raise the debt ceiling.
Speaker 12: We're not going to keep the government open, you know,
Speaker 12: over time without bipartisan support for those things.
Speaker 2: Well, it's not just a question of the government being
Speaker 2: open over time. It's a question of if the government's
Speaker 2: going to stay open beyond a week from today, when
Speaker 2: the deadline is for funding to come through Congress. Are
Speaker 2: you are you ultimately expecting that there will be bipartisanship
Speaker 2: in that effort, because right now Democrats are signaling, at
Speaker 2: least in the House, they are not willing at this
Speaker 2: time to participate in that.
Speaker 12: Effort, and we may well have a shutdown. I certainly
Speaker 12: wouldn't want to make any wagers about that either way.
Speaker 12: What I'm saying is, over the long haul, these big
Speaker 12: policies of closing the Department of Education or extending the
Speaker 12: tax cuts will ultimately come down to bipartisan agreements.
Speaker 3: Secretary, it's great to have you on. Margaret Spellings, President's
Speaker 3: CEO Bipartisan Policy Center, We appreciate the conversation. Come back
Speaker 3: and talk to us again. Thanks for listening to the
Speaker 3: Balance of Power podcast. Make sure to subscribe if you
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Speaker 3: and you can find us live every weekday from Washington,
Speaker 3: DC at noontime Eastern at Bloomberg dot com.