1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,240 Speaker 1: on Apple car Play or Android Auto with the Bloomberg 4 00:00:21,320 --> 00:00:24,880 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:26,960 Speaker 1: or watch us live on YouTube. 6 00:00:27,200 --> 00:00:27,800 Speaker 2: Joining us now. 7 00:00:27,920 --> 00:00:33,040 Speaker 3: Michael Darta, Always on the Vineyard, forever looking north to Fenway. 8 00:00:33,200 --> 00:00:37,960 Speaker 3: Michael Darta, Chief Economists, Rough Capital Partners. Michael from a 9 00:00:39,159 --> 00:00:41,520 Speaker 3: GDP standpoint, does a shutdown? 10 00:00:41,600 --> 00:00:42,480 Speaker 2: Is it Germaine? 11 00:00:42,920 --> 00:00:46,559 Speaker 4: It really depends how long this goes on, Tom. You know, 12 00:00:46,720 --> 00:00:51,360 Speaker 4: hopefully calmer and cooler heads can prevail in Washington, so 13 00:00:51,440 --> 00:00:54,680 Speaker 4: we don't end up, you know, weeks and potentially months 14 00:00:54,680 --> 00:00:57,120 Speaker 4: on end, because the longer this goes on, the more 15 00:00:57,160 --> 00:01:02,080 Speaker 4: disruptive it will be to the economy into the macro data, 16 00:01:02,120 --> 00:01:04,200 Speaker 4: which we now don't have. Right, we're kind of flying 17 00:01:04,280 --> 00:01:06,480 Speaker 4: blind into the end of the week here, and we're 18 00:01:06,520 --> 00:01:09,240 Speaker 4: missing some pretty important necro reports. 19 00:01:09,680 --> 00:01:10,959 Speaker 2: So what do you do? 20 00:01:12,080 --> 00:01:13,800 Speaker 3: You know, then, start is so good at this folks 21 00:01:13,800 --> 00:01:17,959 Speaker 3: linking economics into investment. If you're blind, Michael, what do 22 00:01:18,000 --> 00:01:19,600 Speaker 3: you do with a trading strategy? 23 00:01:21,000 --> 00:01:25,960 Speaker 4: Well, luckily we still do have some private sector reports 24 00:01:26,040 --> 00:01:28,720 Speaker 4: that are coming out. So we got some data from 25 00:01:28,840 --> 00:01:32,440 Speaker 4: ADP yesterday which was not very good. I've got some 26 00:01:32,680 --> 00:01:37,320 Speaker 4: data from the Institute of Supply Management, and so abstracting 27 00:01:37,400 --> 00:01:42,760 Speaker 4: from that, you know, we can still construct running forecast 28 00:01:42,959 --> 00:01:46,000 Speaker 4: estimates for how the economy's doing. And interestingly enough, I mean, 29 00:01:46,040 --> 00:01:49,960 Speaker 4: the Atlantic beed tracking data for the third quarter is 30 00:01:50,000 --> 00:01:53,280 Speaker 4: really still holding in there at pretty robust levels. For 31 00:01:53,560 --> 00:01:56,800 Speaker 4: real final sales to the private sector sector still running 32 00:01:56,840 --> 00:02:00,400 Speaker 4: pretty close to three percent for Q three. It would 33 00:02:00,400 --> 00:02:04,360 Speaker 4: be completely shocking if we were actually in an environment 34 00:02:04,560 --> 00:02:07,919 Speaker 4: of negative job growth with the real economy humming along 35 00:02:08,520 --> 00:02:12,440 Speaker 4: at three percent. So I would take all of this 36 00:02:12,560 --> 00:02:14,720 Speaker 4: and take a bit of a step back, and you know, 37 00:02:14,919 --> 00:02:18,880 Speaker 4: I think these jobs numbers are probably weak more in 38 00:02:18,919 --> 00:02:21,840 Speaker 4: a temporary way, unless the economy just goes off a 39 00:02:21,840 --> 00:02:23,080 Speaker 4: cliff in the fourth quarter. 40 00:02:24,040 --> 00:02:27,440 Speaker 5: You know, Michael, you mentioned you referenced the ADP data yesterday. 41 00:02:27,560 --> 00:02:29,320 Speaker 5: I know people take that with a grain of salt, 42 00:02:29,320 --> 00:02:32,320 Speaker 5: but boy, that was kind of startling there. A negative 43 00:02:32,600 --> 00:02:36,600 Speaker 5: number there for the month and a negative revision for 44 00:02:36,680 --> 00:02:39,000 Speaker 5: the prior month. What'd you take away from that? 45 00:02:40,320 --> 00:02:43,600 Speaker 4: Yeah, definitely was not good data. You know, at a 46 00:02:43,639 --> 00:02:47,800 Speaker 4: time when private payroll growth has slowed very sharply, with 47 00:02:48,200 --> 00:02:51,320 Speaker 4: quite significant downward revisions over the course of the last 48 00:02:51,400 --> 00:02:54,560 Speaker 4: year through March. I think there's a you know, there's 49 00:02:54,600 --> 00:02:57,200 Speaker 4: a bigger focus on these weak data points. And within 50 00:02:57,400 --> 00:03:01,320 Speaker 4: ADP we saw three down months, three negative job growth 51 00:03:01,400 --> 00:03:04,880 Speaker 4: months out of the last four, so that's not a positive. 52 00:03:04,919 --> 00:03:07,959 Speaker 4: And there was also some weakness that showed up in 53 00:03:08,000 --> 00:03:11,880 Speaker 4: the conference board data. You ask people about jobs being 54 00:03:11,880 --> 00:03:14,840 Speaker 4: hard to get or plentiful, that tends to correlate with 55 00:03:14,880 --> 00:03:18,640 Speaker 4: the unemployment rate pretty well. So that deteriorated again in 56 00:03:18,680 --> 00:03:21,560 Speaker 4: the most recent reading. So it does look like there 57 00:03:21,800 --> 00:03:25,079 Speaker 4: is some lingering softness in the labor market. The question 58 00:03:25,280 --> 00:03:27,600 Speaker 4: is is that going to intensify or is it more 59 00:03:27,639 --> 00:03:30,519 Speaker 4: temporary and likely to rebound. And Tom, I think that's 60 00:03:30,520 --> 00:03:34,640 Speaker 4: where you bring in the financial markets, which are quite optimistic. 61 00:03:35,000 --> 00:03:37,080 Speaker 4: And you know, you hear that old refrain all the 62 00:03:37,120 --> 00:03:40,720 Speaker 4: time that you know, the economy is not the stock market. Well, 63 00:03:40,840 --> 00:03:43,800 Speaker 4: actually the economy is the stock market. If you take 64 00:03:43,840 --> 00:03:48,240 Speaker 4: a look at the data. Equity markets are not perfect predictors, 65 00:03:48,320 --> 00:03:52,640 Speaker 4: but they do need growth rate of real and nominal 66 00:03:52,680 --> 00:03:56,800 Speaker 4: GDP by about one quarter, and so you know easy 67 00:03:56,840 --> 00:04:01,240 Speaker 4: financial conditions, the Fed continuing to eat He's monetary policy. 68 00:04:01,320 --> 00:04:02,960 Speaker 4: I think you want to be a little bit more 69 00:04:02,960 --> 00:04:06,920 Speaker 4: optimistic than pessimistic in terms of where the labor market 70 00:04:06,960 --> 00:04:08,600 Speaker 4: is as we move into next year. 71 00:04:08,720 --> 00:04:11,840 Speaker 3: Acrastination. This morning, Michael Darty with this rough capital thrilled 72 00:04:11,840 --> 00:04:12,320 Speaker 3: he could. 73 00:04:12,160 --> 00:04:13,920 Speaker 2: Be with us on YouTube. 74 00:04:13,960 --> 00:04:18,440 Speaker 3: Subscribe to Bloomberg Podcasts, our new digital distribution. It is 75 00:04:18,680 --> 00:04:21,200 Speaker 3: Paul's in my future. Thank you so much for your 76 00:04:21,200 --> 00:04:25,560 Speaker 3: attention in your living room and in your office on YouTube, 77 00:04:25,960 --> 00:04:28,280 Speaker 3: just growing every day. Thank you so much for a 78 00:04:28,360 --> 00:04:30,480 Speaker 3: record September for us. 79 00:04:30,760 --> 00:04:31,080 Speaker 2: Michael. 80 00:04:31,120 --> 00:04:33,320 Speaker 3: I look at that then, and I look at the 81 00:04:33,320 --> 00:04:36,080 Speaker 3: fold over the green spanning. An idea that the equity 82 00:04:36,120 --> 00:04:41,080 Speaker 3: market really matters is the equity market is an expectation vehicle. 83 00:04:41,640 --> 00:04:44,360 Speaker 2: How far out is expecting right now? 84 00:04:45,839 --> 00:04:46,039 Speaker 6: Yeah? 85 00:04:46,040 --> 00:04:49,599 Speaker 4: I mean the equity market. Look, Tom, you know it's volatile. 86 00:04:49,960 --> 00:04:53,960 Speaker 4: Equity investors are not always correct, and with any market 87 00:04:54,080 --> 00:05:00,000 Speaker 4: you can have a sudden, abrupt and unexpected turn of course. Right, 88 00:05:01,080 --> 00:05:04,880 Speaker 4: all of that said, investors are looking ahead. And if 89 00:05:04,920 --> 00:05:07,719 Speaker 4: you look at how the correlations tend to run from 90 00:05:07,760 --> 00:05:12,120 Speaker 4: markets into data, markets lead data lags and on average, 91 00:05:12,200 --> 00:05:15,880 Speaker 4: you know, the equity market leads by about three months. 92 00:05:16,000 --> 00:05:18,840 Speaker 4: If you bring the credit markets into the mix and 93 00:05:18,880 --> 00:05:22,160 Speaker 4: you look at overall financial conditions, you know, the lead 94 00:05:22,320 --> 00:05:25,400 Speaker 4: is maybe six or seven months at best. So you know, 95 00:05:25,400 --> 00:05:30,440 Speaker 4: we're not able to forecast really long horizon situations here 96 00:05:30,880 --> 00:05:34,279 Speaker 4: you're using these market based indicators, but at least over 97 00:05:34,320 --> 00:05:37,040 Speaker 4: the next one or two quarters, you know, I think, 98 00:05:37,400 --> 00:05:42,880 Speaker 4: especially now with the shutdown, these financial variables are pretty. 99 00:05:42,560 --> 00:05:44,360 Speaker 6: Important, Michael. 100 00:05:44,360 --> 00:05:47,760 Speaker 5: Looking at the consumer, the retail sales, other metrics like that, 101 00:05:47,800 --> 00:05:51,039 Speaker 5: the consumer seems to be more than hanging in there, 102 00:05:51,080 --> 00:05:52,799 Speaker 5: actually doing quite well. 103 00:05:52,880 --> 00:05:54,640 Speaker 2: Does that surprise you at all? 104 00:05:56,360 --> 00:05:56,640 Speaker 6: Yes? 105 00:05:56,680 --> 00:05:57,040 Speaker 2: And no. 106 00:05:57,200 --> 00:05:59,800 Speaker 4: I mean, you know, we're talking about the equity market, 107 00:05:59,839 --> 00:06:03,600 Speaker 4: and you know the fact that household net worth has 108 00:06:03,760 --> 00:06:07,839 Speaker 4: risen pretty dramatically. Now the worry is that, oh, that's 109 00:06:07,880 --> 00:06:10,560 Speaker 4: concentrated on the higher end, but the higher end is 110 00:06:10,640 --> 00:06:14,600 Speaker 4: driving a very large and growing share of total consumption. 111 00:06:15,600 --> 00:06:18,760 Speaker 4: And even with these weak jobs numbers, the unemployment rate 112 00:06:18,839 --> 00:06:20,760 Speaker 4: is only pushed up a little bit, you know, it 113 00:06:20,800 --> 00:06:23,839 Speaker 4: hasn't pushed up in a dramatic fashion, and so you 114 00:06:23,960 --> 00:06:29,680 Speaker 4: have still essentially a fully employed economy, very high asset prices, 115 00:06:29,720 --> 00:06:33,240 Speaker 4: so household balance sheets are in quite good shape, and 116 00:06:33,279 --> 00:06:36,000 Speaker 4: that's underpinning the you know, the consumer and you know, 117 00:06:36,040 --> 00:06:39,640 Speaker 4: the tracking estimates for Q three around three percent, So 118 00:06:39,720 --> 00:06:41,279 Speaker 4: that does not look like a recession. 119 00:06:42,400 --> 00:06:44,440 Speaker 3: I look, Michael, at where we are, and it comes 120 00:06:44,480 --> 00:06:47,560 Speaker 3: back to something quaint. It's really falling. It's fallen off 121 00:06:47,600 --> 00:06:51,640 Speaker 3: the radar use of cash. Okay, I got nominal GDP. 122 00:06:51,800 --> 00:06:55,560 Speaker 3: They're going to deliver better than good revenue growth once again. Oh, 123 00:06:55,680 --> 00:06:59,760 Speaker 3: earnings are going to be terrible. Yeah, okay, Michael, earnings 124 00:06:59,760 --> 00:07:03,000 Speaker 3: will be okay. Let's say and margins. Do you see 125 00:07:03,000 --> 00:07:06,280 Speaker 3: a use of cash that just continues to drive this 126 00:07:06,360 --> 00:07:07,400 Speaker 3: bullmarket forward. 127 00:07:08,600 --> 00:07:11,920 Speaker 4: Well, that's really the key, Tom. If top line growth 128 00:07:12,320 --> 00:07:14,679 Speaker 4: is you know, looks Q three looks like it's about 129 00:07:14,720 --> 00:07:17,640 Speaker 4: six percent. But even if we take that down by 130 00:07:17,640 --> 00:07:21,240 Speaker 4: a percentage point and top line is compounding at five 131 00:07:22,000 --> 00:07:25,480 Speaker 4: and companies are profitable, you know, and corporate profits have 132 00:07:25,520 --> 00:07:28,480 Speaker 4: been strong, that is not going to sustain itself for 133 00:07:28,560 --> 00:07:31,800 Speaker 4: any period unless you're getting positive hiring at the same time. 134 00:07:31,960 --> 00:07:34,600 Speaker 4: So companies will do different things. They can buy backstock, 135 00:07:34,680 --> 00:07:37,120 Speaker 4: they can invest. You know, we might see some lift 136 00:07:37,160 --> 00:07:41,240 Speaker 4: in capex, but they'll be hiring as well. So you know, 137 00:07:41,680 --> 00:07:44,680 Speaker 4: if you have top line growth, and you have corporate profits, 138 00:07:44,680 --> 00:07:46,520 Speaker 4: you're going to have employment as well. 139 00:07:46,920 --> 00:07:49,880 Speaker 3: So this is something I think people have trouble with, Michael. 140 00:07:49,920 --> 00:07:52,880 Speaker 3: And let's not get into like nominal GDP, animal spirits. 141 00:07:53,320 --> 00:07:57,480 Speaker 3: Let's just say, is inflation good for Procter in gamble? 142 00:07:58,120 --> 00:08:02,560 Speaker 3: Is inflation good for you know, name another you know, 143 00:08:03,800 --> 00:08:06,360 Speaker 3: Church and Dwight, I mean, you know arm and Hammer 144 00:08:06,400 --> 00:08:09,480 Speaker 3: and all that. Is inflation good for basic companies? 145 00:08:11,120 --> 00:08:13,040 Speaker 4: Well? Tom, you know it's a good question. I mean, 146 00:08:13,080 --> 00:08:15,840 Speaker 4: you do want some corporate pricing power, but the flip 147 00:08:15,880 --> 00:08:18,480 Speaker 4: side of that is costs. Right, So if you do 148 00:08:18,640 --> 00:08:22,680 Speaker 4: end up in an environment where inflation is high and volatile, 149 00:08:23,440 --> 00:08:25,560 Speaker 4: and then you have the central bank that has to 150 00:08:25,640 --> 00:08:28,920 Speaker 4: iron that out and restrain the economy, that's not good 151 00:08:28,960 --> 00:08:29,360 Speaker 4: for anyone. 152 00:08:29,400 --> 00:08:30,920 Speaker 2: Okay, then carry it forward, Mike. 153 00:08:30,960 --> 00:08:32,480 Speaker 3: I don't mean to interrupt, but this is this is 154 00:08:32,600 --> 00:08:35,880 Speaker 3: darta is central Carry it forward. If I go from 155 00:08:35,880 --> 00:08:39,640 Speaker 3: a FED moodeling two percent out to two point x percent, 156 00:08:40,080 --> 00:08:42,200 Speaker 3: what does it do to those companies? Do they see 157 00:08:42,240 --> 00:08:42,880 Speaker 3: wage lift? 158 00:08:44,520 --> 00:08:44,720 Speaker 2: Yeah? 159 00:08:44,760 --> 00:08:46,960 Speaker 4: And I think you are, you know you are seeing that. 160 00:08:47,080 --> 00:08:50,319 Speaker 4: You know, nominal wages and real wages are growing. So 161 00:08:50,440 --> 00:08:54,800 Speaker 4: that's consistent with the real economy expanding. Inflation is still 162 00:08:54,800 --> 00:08:57,280 Speaker 4: above the fedce target. But I think, you know, an 163 00:08:57,600 --> 00:09:00,880 Speaker 4: in an environment where inflation is trending at around three 164 00:09:01,880 --> 00:09:04,120 Speaker 4: you know, that can still be a very strong environment 165 00:09:04,240 --> 00:09:07,160 Speaker 4: for corporate profits if the economy is you know, staying 166 00:09:07,200 --> 00:09:09,679 Speaker 4: out of recession, and that's you know, I think that 167 00:09:09,800 --> 00:09:12,960 Speaker 4: is likely with the FED easing monetary policy. They've already 168 00:09:13,000 --> 00:09:15,880 Speaker 4: taken rates down one hundred and twenty five basis points 169 00:09:16,840 --> 00:09:21,040 Speaker 4: and with inflation expectations moving up forty to sixty basis 170 00:09:21,080 --> 00:09:24,679 Speaker 4: points over that period, real rates have fallen about two 171 00:09:24,760 --> 00:09:29,960 Speaker 4: hundred basis points. So the FED is definitely removed quite 172 00:09:30,000 --> 00:09:33,079 Speaker 4: a bit of restraint from its policy, so the top 173 00:09:33,120 --> 00:09:35,640 Speaker 4: line should hang there. I do think, you know, I 174 00:09:35,720 --> 00:09:38,200 Speaker 4: do worry about the FED getting back to two percent 175 00:09:38,240 --> 00:09:41,320 Speaker 4: inflation on a reasonable timeline. If we're still stuck at 176 00:09:41,320 --> 00:09:45,000 Speaker 4: three percent inflation over the course of the next two years, 177 00:09:45,080 --> 00:09:48,280 Speaker 4: and that's part of the Fed's forecasts, boy, that's a 178 00:09:48,320 --> 00:09:51,760 Speaker 4: long overshoot seven years, So I worry a little bit 179 00:09:51,800 --> 00:09:55,600 Speaker 4: that that bleeds into credibility. You know, the administration really 180 00:09:55,640 --> 00:09:59,080 Speaker 4: wants FED to ease because they want lower market interest rates, 181 00:09:59,120 --> 00:10:01,520 Speaker 4: but you know, you're not going to get lower market 182 00:10:01,559 --> 00:10:05,080 Speaker 4: interest rates of inflation expectations continue moving off, so the 183 00:10:05,120 --> 00:10:08,360 Speaker 4: FED needs to stay credible here. I think, you know, 184 00:10:08,400 --> 00:10:11,600 Speaker 4: four to five percent nominal, that's the sweet spot You'll 185 00:10:11,640 --> 00:10:14,760 Speaker 4: have corporate pricing power, Inflation won't be too high long 186 00:10:14,880 --> 00:10:17,040 Speaker 4: rates will be at reasonable levels. 187 00:10:17,120 --> 00:10:17,439 Speaker 6: There you go. 188 00:10:17,559 --> 00:10:18,360 Speaker 2: Bottle that, folks. 189 00:10:18,440 --> 00:10:20,360 Speaker 3: Michael Darter, thanks so much, rough Capital. 190 00:10:20,600 --> 00:10:21,320 Speaker 2: Stay with us. 191 00:10:21,559 --> 00:10:24,800 Speaker 3: More from Bloomberg Surveillance coming up after this. 192 00:10:32,040 --> 00:10:35,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live 193 00:10:35,679 --> 00:10:38,880 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 194 00:10:38,920 --> 00:10:42,600 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 195 00:10:42,760 --> 00:10:44,160 Speaker 1: watch US live on YouTube. 196 00:10:44,320 --> 00:10:46,880 Speaker 3: Our next guest on short Notes, we are honored to 197 00:10:46,920 --> 00:10:50,080 Speaker 3: have with us Ian Bremmer. Of course, he has changed 198 00:10:50,120 --> 00:10:53,520 Speaker 3: the discussion of international relations at worldwide. We're going to 199 00:10:53,520 --> 00:10:56,760 Speaker 3: have an extended conversation here for all of you across 200 00:10:56,800 --> 00:11:00,800 Speaker 3: the nation. Good morning internationally on the Pacific rim on YouTube, 201 00:11:00,840 --> 00:11:04,840 Speaker 3: and your evening is well. Ian, Let's talk about the 202 00:11:04,840 --> 00:11:09,360 Speaker 3: international relations of a fractured America. What is the state 203 00:11:09,480 --> 00:11:11,480 Speaker 3: of our State Department right now? 204 00:11:12,960 --> 00:11:15,800 Speaker 7: Well, the State Department, I mean, you know, at least 205 00:11:15,840 --> 00:11:18,720 Speaker 7: you have someone who's quite capable that's actually running it. 206 00:11:19,440 --> 00:11:24,120 Speaker 7: Having said that, USAID has been eviscerated, as you know, 207 00:11:25,400 --> 00:11:29,520 Speaker 7: and the biggest concern among the professional diplomats I know, 208 00:11:29,640 --> 00:11:33,320 Speaker 7: both in office now and also those that have left, 209 00:11:34,240 --> 00:11:39,280 Speaker 7: is that countries around the world no longer believe the 210 00:11:39,400 --> 00:11:44,160 Speaker 7: United States is reliable as an ally, that America's ward 211 00:11:45,360 --> 00:11:48,040 Speaker 7: is no longer something that you want to count on. 212 00:11:48,320 --> 00:11:51,600 Speaker 7: The US is incredibly powerful. It's not in decline, but 213 00:11:51,640 --> 00:11:53,840 Speaker 7: that what the US will do for you is not 214 00:11:53,880 --> 00:11:56,040 Speaker 7: necessarily what it will say. And that's true on trade, 215 00:11:56,480 --> 00:11:58,880 Speaker 7: it's true on collective security. It's true on the treatment 216 00:11:58,920 --> 00:12:02,120 Speaker 7: of your citizens living in the United States or traveling 217 00:12:02,120 --> 00:12:02,960 Speaker 7: to the United States. 218 00:12:02,960 --> 00:12:03,640 Speaker 6: These things can. 219 00:12:03,600 --> 00:12:07,800 Speaker 7: Change on a dime on the whims of the President 220 00:12:08,120 --> 00:12:11,800 Speaker 7: and his top advisors, and that worries these country is 221 00:12:11,840 --> 00:12:12,360 Speaker 7: a great deal. 222 00:12:13,000 --> 00:12:15,720 Speaker 5: That level of disengagement Ian, do you think that is 223 00:12:15,760 --> 00:12:18,319 Speaker 5: reflective of this Republican Party? 224 00:12:18,679 --> 00:12:20,679 Speaker 6: When you say disengagement, I'm sorry, what do you mean 225 00:12:20,720 --> 00:12:21,000 Speaker 6: by that? 226 00:12:21,240 --> 00:12:25,000 Speaker 5: No, just in the America first, a type of feeling 227 00:12:25,080 --> 00:12:26,160 Speaker 5: within the Trump administration. 228 00:12:29,080 --> 00:12:34,000 Speaker 7: I think the Republican Party is completely loyal to Trump, 229 00:12:34,000 --> 00:12:37,320 Speaker 7: and it doesn't really matter if a lot of them 230 00:12:37,360 --> 00:12:43,280 Speaker 7: feel differently about his doing a deal with China on 231 00:12:43,400 --> 00:12:47,080 Speaker 7: the Age twenty chips or coming to terms on TikTok. 232 00:12:47,960 --> 00:12:51,400 Speaker 7: It doesn't really matter if he says Ukraine's not that 233 00:12:51,480 --> 00:12:53,640 Speaker 7: important because it's an ocean away. Of course, a lot 234 00:12:53,679 --> 00:12:58,199 Speaker 7: of Republicans historically disagree with that, They disagree with Trump 235 00:12:58,200 --> 00:13:03,400 Speaker 7: opposing free trade, but the population has changed. So first 236 00:13:03,400 --> 00:13:05,200 Speaker 7: of all, there are a lot of people that really 237 00:13:05,200 --> 00:13:10,360 Speaker 7: oppose a lot of neocons in the Republican Party that 238 00:13:10,800 --> 00:13:15,160 Speaker 7: led to very expensive, very deadly failed wars, and there 239 00:13:15,160 --> 00:13:19,800 Speaker 7: are a lot of traditional free trade Republicans that no 240 00:13:19,840 --> 00:13:23,480 Speaker 7: longer have the support of the population in pushing for 241 00:13:23,600 --> 00:13:26,400 Speaker 7: globalization and for taking tariffs down. 242 00:13:26,480 --> 00:13:28,200 Speaker 6: We're in a radically. 243 00:13:27,840 --> 00:13:30,839 Speaker 7: Different environment, right We have tariffs at one hundred level, 244 00:13:31,080 --> 00:13:35,200 Speaker 7: historic highs, one hundred year highs, and we also have 245 00:13:35,640 --> 00:13:40,760 Speaker 7: a president that's doing his damndest to reduce American security 246 00:13:41,400 --> 00:13:45,000 Speaker 7: guarantees and commitments to other countries around the world, even 247 00:13:46,040 --> 00:13:48,480 Speaker 7: making big questions about whether the US would stand up 248 00:13:48,520 --> 00:13:51,280 Speaker 7: for Taiwan, for example, long term. So I mean, clearly 249 00:13:51,320 --> 00:13:53,760 Speaker 7: a lot of Republicans quietly uncomfortable with that. 250 00:13:53,920 --> 00:13:55,600 Speaker 3: There's so many ways to go here, Ian Bremer, with 251 00:13:55,640 --> 00:13:57,520 Speaker 3: this for an extended conversation. 252 00:13:57,000 --> 00:13:59,240 Speaker 2: With Eurasia Group. I know what people want to know. 253 00:13:59,280 --> 00:13:59,960 Speaker 2: When's the next book? 254 00:14:00,640 --> 00:14:02,640 Speaker 6: Give me a date sometime next year. 255 00:14:02,720 --> 00:14:05,280 Speaker 3: Sometime next year, Like, that's good enough. Ian, I want 256 00:14:05,280 --> 00:14:07,480 Speaker 3: to talk about Gaza. I want you to triangulate it 257 00:14:07,520 --> 00:14:11,120 Speaker 3: with Qatar, the president's relationship there, maybe with this desire 258 00:14:11,160 --> 00:14:13,760 Speaker 3: to win a peace prize and all that. How should 259 00:14:13,760 --> 00:14:19,600 Speaker 3: our listeners and viewers synthesize the cacophony of Gaza. I'm 260 00:14:19,640 --> 00:14:22,080 Speaker 3: looking at a video in the Washington Post this morning, 261 00:14:22,320 --> 00:14:26,160 Speaker 3: Greta Thunberg and others being the Israelis have taken over 262 00:14:26,320 --> 00:14:31,680 Speaker 3: flotilla whatever, how does the and Bremer translate the horror 263 00:14:31,760 --> 00:14:35,880 Speaker 3: of Gaza us through the American prism? 264 00:14:36,320 --> 00:14:44,360 Speaker 7: The two combatants have very little consequence for. 265 00:14:44,480 --> 00:14:46,760 Speaker 6: Continuing to engage in the fight. 266 00:14:47,400 --> 00:14:52,360 Speaker 7: It's been extremely hard to convince Israel that they should 267 00:14:52,440 --> 00:14:56,120 Speaker 7: limit the warfare on the ground in Gaza or against 268 00:14:56,120 --> 00:14:59,040 Speaker 7: the Axis of Resistance more broadly, because there have been 269 00:14:59,040 --> 00:15:02,560 Speaker 7: no consequences for them doing so, and of course, because 270 00:15:02,600 --> 00:15:07,120 Speaker 7: they're militarily and technologically dominant in the entire region. It's 271 00:15:07,120 --> 00:15:09,880 Speaker 7: been extremely difficult to convince Hamas that they have to 272 00:15:09,920 --> 00:15:14,600 Speaker 7: actually let the hostages go, which was Trump's only applause 273 00:15:14,640 --> 00:15:17,080 Speaker 7: line in his fifty five minute speech at the UN 274 00:15:17,280 --> 00:15:22,000 Speaker 7: Nations General Assembly last week. Because they're terrorists, because there 275 00:15:22,000 --> 00:15:24,320 Speaker 7: are a bunch of dead enders, and because they recognize 276 00:15:24,360 --> 00:15:30,560 Speaker 7: that they face assassination kind of either way. And look, 277 00:15:30,600 --> 00:15:33,240 Speaker 7: it's hard to put yourself in the position of what 278 00:15:33,280 --> 00:15:36,480 Speaker 7: would create rationality among leadership of Hamas. But they're putting 279 00:15:36,480 --> 00:15:39,240 Speaker 7: their own people at risk every day, and they have 280 00:15:39,360 --> 00:15:43,400 Speaker 7: for years now. So in that regard, it's hard to 281 00:15:43,520 --> 00:15:47,840 Speaker 7: maneuver much, though I think that there has been success 282 00:15:48,400 --> 00:15:52,920 Speaker 7: in putting a few small constraints on Israeli behavior. Trump 283 00:15:53,560 --> 00:15:57,760 Speaker 7: had been indifferent to Israeli annexation of the West Bank, 284 00:15:57,800 --> 00:15:59,520 Speaker 7: and he came out last week and said that they 285 00:15:59,560 --> 00:16:02,440 Speaker 7: will not do that on the back of the UAE, 286 00:16:02,960 --> 00:16:06,160 Speaker 7: saying that they would leave the Abraham Accords if the 287 00:16:06,240 --> 00:16:13,560 Speaker 7: Israelis proceeded. Trump had been actively promoting the idea of removing. 288 00:16:13,080 --> 00:16:14,800 Speaker 6: Palestinians from Gaza. 289 00:16:14,920 --> 00:16:17,480 Speaker 7: In fact, he said as much when he was on 290 00:16:17,560 --> 00:16:20,680 Speaker 7: stage with the King of Jordan a few months ago, 291 00:16:20,760 --> 00:16:24,360 Speaker 7: and he's now shifted away from that to a plan 292 00:16:24,960 --> 00:16:28,680 Speaker 7: that has been approved by the golf Arabs and by 293 00:16:28,720 --> 00:16:32,480 Speaker 7: the Israeli Prime Minister that says that the Palestinians aren't 294 00:16:32,480 --> 00:16:35,640 Speaker 7: going to be forced to leave that rather, they're going 295 00:16:35,720 --> 00:16:38,600 Speaker 7: to be able to stay in Gaza. And so, I mean, look, 296 00:16:38,880 --> 00:16:42,680 Speaker 7: it's not stopping the war, and as long as Hamas 297 00:16:42,680 --> 00:16:46,120 Speaker 7: refuses to release the hostages, I don't expect the war 298 00:16:46,200 --> 00:16:48,440 Speaker 7: to end, even though I think it would be much 299 00:16:48,440 --> 00:16:52,160 Speaker 7: better for Israel and everyone else involved. 300 00:16:51,560 --> 00:16:52,680 Speaker 6: If they would stop. 301 00:16:53,880 --> 00:16:58,040 Speaker 7: But I do think that we have a few guardrails, 302 00:16:58,600 --> 00:17:01,640 Speaker 7: however limited today. 303 00:17:01,600 --> 00:17:03,119 Speaker 6: That we didn't have a week ago. 304 00:17:04,000 --> 00:17:06,880 Speaker 5: Ian Let's switch gears to another hot spot, which would 305 00:17:06,920 --> 00:17:11,200 Speaker 5: be Ukraine. Is there any reason to believe that there 306 00:17:11,280 --> 00:17:16,080 Speaker 5: is some type of peace process possible in the near 307 00:17:16,359 --> 00:17:17,360 Speaker 5: intermediate term here? 308 00:17:19,680 --> 00:17:23,720 Speaker 6: I would say it's more likely that the. 309 00:17:25,240 --> 00:17:32,320 Speaker 7: Completely stalled offensive that Russia has had, it's been this grinding, 310 00:17:33,040 --> 00:17:37,960 Speaker 7: virtually no territory being taken, massive casualties, particularly in terms 311 00:17:37,960 --> 00:17:41,000 Speaker 7: of the Russian soldiers, over a million casualties in this 312 00:17:41,080 --> 00:17:43,240 Speaker 7: war for Russia so far in three and a half years. 313 00:17:43,480 --> 00:17:46,199 Speaker 7: It's a staggering number. It's hard to even imagine what 314 00:17:46,240 --> 00:17:49,600 Speaker 7: that means for society, but Putin doesn't care. It's hard 315 00:17:49,640 --> 00:17:51,800 Speaker 7: to imagine that that's going to continue the way it 316 00:17:51,880 --> 00:17:56,080 Speaker 7: has for the next six to twelve months, in part 317 00:17:56,160 --> 00:17:58,439 Speaker 7: because it's going to be very difficult for Ukraine to 318 00:17:58,480 --> 00:18:02,760 Speaker 7: continue to defend their territory and field the soldiers to 319 00:18:02,840 --> 00:18:06,359 Speaker 7: do so over the coming year, but also in part 320 00:18:06,440 --> 00:18:07,840 Speaker 7: because Trump. 321 00:18:07,600 --> 00:18:08,680 Speaker 6: Is angry about this. 322 00:18:09,440 --> 00:18:12,600 Speaker 7: He thought that he was going to leverage his relationship 323 00:18:12,640 --> 00:18:17,240 Speaker 7: with you. However it existed into a ceasefire. He made 324 00:18:17,240 --> 00:18:20,280 Speaker 7: Putin a lot of offers, ending sanctions and the like, 325 00:18:20,960 --> 00:18:24,120 Speaker 7: and Putin said no, thank you, and has embarrassed Trump, 326 00:18:24,200 --> 00:18:26,760 Speaker 7: has angered Trump, and Trump Trump is bringing it up. 327 00:18:26,800 --> 00:18:29,320 Speaker 7: He never brings up his failures. He forgets about them. 328 00:18:29,320 --> 00:18:32,959 Speaker 7: It's one of his political skills, not on Russia. And 329 00:18:33,080 --> 00:18:37,680 Speaker 7: instead he's talking about providing extended range missiles to Ukraine 330 00:18:37,720 --> 00:18:41,720 Speaker 7: that could take out Russian energy capability. And he's privately 331 00:18:41,760 --> 00:18:46,199 Speaker 7: pushing the Hungarians, the Turks, the Indians saying, you know, 332 00:18:46,440 --> 00:18:50,320 Speaker 7: I want you to end your purchasing of Russian oil. 333 00:18:50,400 --> 00:18:52,479 Speaker 7: He wasn't willing to do that a month ago. So 334 00:18:52,520 --> 00:18:56,800 Speaker 7: that there is real movement here from President Trump himself 335 00:18:57,440 --> 00:19:01,320 Speaker 7: to try to not just offer putin a care ineffectually. 336 00:19:01,840 --> 00:19:04,080 Speaker 6: It would also include some stick. 337 00:19:04,040 --> 00:19:05,600 Speaker 2: Doctor Reimer, let's finish up with this. 338 00:19:05,800 --> 00:19:09,320 Speaker 3: We had a riveting conversation with Edwinal Mullen at the 339 00:19:09,359 --> 00:19:11,120 Speaker 3: Bloomberg Global Forum the other day. 340 00:19:11,160 --> 00:19:12,960 Speaker 2: He was just on the South China Sea. 341 00:19:13,520 --> 00:19:19,040 Speaker 3: Extraordinary the submarine secrets there, the Heinan, the island off China. 342 00:19:19,560 --> 00:19:24,120 Speaker 3: I think Americans Ian are ignorant that Taiwan isn't one 343 00:19:24,160 --> 00:19:30,640 Speaker 3: monolithic island. Explain to us the strategic realities for Americans 344 00:19:31,160 --> 00:19:35,840 Speaker 3: of Kinmen and Matsu islands just off the coast of China. 345 00:19:35,920 --> 00:19:40,720 Speaker 3: What are the immediate risks to those frontline islands in Taiwan. 346 00:19:41,280 --> 00:19:44,480 Speaker 7: Well, of course, China's ability if they wanted to engage 347 00:19:44,640 --> 00:19:50,000 Speaker 7: in warfare with less consequence, taking those over or blockading 348 00:19:50,080 --> 00:19:54,159 Speaker 7: those much easier, right and with very little ability for 349 00:19:54,200 --> 00:19:58,440 Speaker 7: the Americans to respond or its Asian allies to respond militarily. 350 00:19:58,480 --> 00:20:01,400 Speaker 6: But nobody really believes near turn that's going. 351 00:20:01,320 --> 00:20:07,680 Speaker 7: To happen, in part because the United States is oriented 352 00:20:07,720 --> 00:20:11,320 Speaker 7: to work with China on Taiwan. Look, Trump and Chizhinping 353 00:20:11,440 --> 00:20:15,280 Speaker 7: had a phone call much anticipated last Friday, and the 354 00:20:15,359 --> 00:20:18,959 Speaker 7: single thing that Trump most wanted, which he got was 355 00:20:19,160 --> 00:20:22,280 Speaker 7: a nod from Xijin Ping on the US taking over 356 00:20:22,359 --> 00:20:27,560 Speaker 7: TikTok with political loyalists installed in charge of it. And 357 00:20:27,560 --> 00:20:30,240 Speaker 7: that's the thing that matters most to Trump. It allows 358 00:20:30,320 --> 00:20:33,720 Speaker 7: him to undermine the free media, control the information space, 359 00:20:34,280 --> 00:20:37,240 Speaker 7: and better ensure that he and his. 360 00:20:38,720 --> 00:20:42,320 Speaker 6: Advisors can control twenty twenty six and twenty twenty eight. 361 00:20:42,880 --> 00:20:47,320 Speaker 7: What the Chinese want is for Trump to back away 362 00:20:48,000 --> 00:20:53,480 Speaker 7: and say that they oppose independence for Taiwan as Bush 363 00:20:53,520 --> 00:20:57,159 Speaker 7: had President Bush had once before, and I think that 364 00:20:57,240 --> 00:21:02,520 Speaker 7: Trump is oriented to provide that. Frankly, so, we're not 365 00:21:02,720 --> 00:21:06,760 Speaker 7: heading towards escalation right now with the Chinese. We're actually 366 00:21:06,800 --> 00:21:10,639 Speaker 7: heading towards both sides getting something that really matters to 367 00:21:10,720 --> 00:21:11,880 Speaker 7: the individual leaders. 368 00:21:12,200 --> 00:21:14,399 Speaker 3: You mentioned. There was one final question. I got a 369 00:21:14,520 --> 00:21:16,800 Speaker 3: ways to go here. Folks with Ian Bremer are always 370 00:21:16,840 --> 00:21:22,080 Speaker 3: the case. You mentioned the collapse of US AID USAID. 371 00:21:22,560 --> 00:21:25,760 Speaker 3: I've got family members abroad that say it's been devastating 372 00:21:25,800 --> 00:21:29,679 Speaker 3: for Africa. Explain right now, at the beginning of this 373 00:21:29,800 --> 00:21:34,640 Speaker 3: fourth quarter the impact of the lack of us AID. 374 00:21:36,760 --> 00:21:39,520 Speaker 7: The United States is the most powerful country in the world. 375 00:21:39,600 --> 00:21:44,680 Speaker 7: It's the strongest economy by far, and the US has 376 00:21:44,840 --> 00:21:48,560 Speaker 7: historically been doing the most in terms of providing aid 377 00:21:49,280 --> 00:21:52,600 Speaker 7: to other countries and to the people in those countries 378 00:21:52,640 --> 00:21:56,359 Speaker 7: that need it, whether they're suffering from malaria, whether they're 379 00:21:56,440 --> 00:22:01,880 Speaker 7: vulnerable to HIV AIDS, whether they're start whether they're facing 380 00:22:01,920 --> 00:22:02,800 Speaker 7: forced migration. 381 00:22:03,000 --> 00:22:04,320 Speaker 6: The US has done that directly. 382 00:22:04,359 --> 00:22:07,160 Speaker 7: It's also led the charge in doing that indirectly through 383 00:22:07,200 --> 00:22:11,399 Speaker 7: American support for the United Nations and the organizations that 384 00:22:11,440 --> 00:22:14,119 Speaker 7: it stands up, like the World Food Program, for example. 385 00:22:14,880 --> 00:22:17,600 Speaker 7: The United States has decided that those things should no 386 00:22:17,640 --> 00:22:22,240 Speaker 7: longer be priorities. That America first means that these other 387 00:22:22,320 --> 00:22:24,879 Speaker 7: countries should have to make their own way, They should 388 00:22:24,920 --> 00:22:25,840 Speaker 7: have to pay for themselves. 389 00:22:25,920 --> 00:22:28,080 Speaker 6: Now, the Chinese see this is a great opportunity. 390 00:22:28,760 --> 00:22:31,560 Speaker 7: In the same way that when the Americans cut back 391 00:22:31,600 --> 00:22:33,800 Speaker 7: on visas, the Chinese immediately say we're going to make 392 00:22:33,800 --> 00:22:37,159 Speaker 7: it easier for talented people to come. They won't be 393 00:22:37,200 --> 00:22:40,240 Speaker 7: as attractive in terms of their aid. But if they 394 00:22:40,280 --> 00:22:45,000 Speaker 7: are the lead power. I mean, they made up their dues, 395 00:22:45,760 --> 00:22:47,960 Speaker 7: many of which were in arrears at the UN the 396 00:22:47,960 --> 00:22:50,199 Speaker 7: Americans aren't paying. The Chinese said, okay, we'll pay some 397 00:22:50,280 --> 00:22:53,119 Speaker 7: of ours now, so that they can put forward that 398 00:22:53,160 --> 00:22:54,800 Speaker 7: they're the ones that are more accountable. 399 00:22:55,280 --> 00:22:57,360 Speaker 6: Look, if you think that only American hard. 400 00:22:57,200 --> 00:23:02,240 Speaker 7: Power matters, and maybe in the short term that's true, 401 00:23:02,720 --> 00:23:05,560 Speaker 7: and you don't care very much about non Americans and 402 00:23:05,680 --> 00:23:07,920 Speaker 7: don't think that they are as deserving or that we 403 00:23:07,960 --> 00:23:11,120 Speaker 7: should take care of any of them, we don't have accountability. 404 00:23:10,320 --> 00:23:13,119 Speaker 6: Then it doesn't matter. But that's never been my view, 405 00:23:13,400 --> 00:23:15,720 Speaker 6: and I think it's a mistake long term. 406 00:23:16,000 --> 00:23:18,720 Speaker 3: And thank you so much, doctor Bremmer, with you raise 407 00:23:18,760 --> 00:23:20,440 Speaker 3: your group, and we thank him for his years of 408 00:23:20,520 --> 00:23:21,880 Speaker 3: support of what we. 409 00:23:21,880 --> 00:23:23,520 Speaker 2: Do at Surveillance. Stay with us. 410 00:23:23,760 --> 00:23:34,080 Speaker 3: More from Bloomberg Surveillance coming up after this. 411 00:23:34,080 --> 00:23:37,959 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 412 00:23:38,000 --> 00:23:41,320 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 413 00:23:41,440 --> 00:23:44,400 Speaker 1: with the Bloomberg Business app. You can also listen live 414 00:23:44,480 --> 00:23:48,040 Speaker 1: on Amazon Alexa from our flagship New York station, Just 415 00:23:48,080 --> 00:23:49,919 Speaker 1: say Alexa Play Bloomberg. 416 00:23:49,920 --> 00:23:51,800 Speaker 8: Eleven thirty, nineteen. 417 00:23:51,520 --> 00:23:55,160 Speaker 3: Eighty, all of a sudden, we had federal funding gaps, 418 00:23:56,160 --> 00:24:00,840 Speaker 3: and the Attorney General issued an opinion that the eighteen 419 00:24:00,920 --> 00:24:05,640 Speaker 3: eighty four Anti Deficiency EC required shutdown. Joining us now 420 00:24:05,680 --> 00:24:10,359 Speaker 3: Wendy Schuller, who knows all this from Brown university. So 421 00:24:10,480 --> 00:24:14,360 Speaker 3: we shut down in nineteen eighty one. What's different now 422 00:24:14,800 --> 00:24:18,920 Speaker 3: versus the early eighty one and nineteen eighty four shutdowns, Wendy, 423 00:24:20,320 --> 00:24:20,800 Speaker 3: good morning. 424 00:24:20,840 --> 00:24:23,399 Speaker 9: Well, the biggest thing is the size and scope of 425 00:24:23,440 --> 00:24:26,679 Speaker 9: the federal government. In Ronald Reagan argued that it was 426 00:24:26,800 --> 00:24:31,240 Speaker 9: too big then, and we started the practice under Ronald 427 00:24:31,240 --> 00:24:35,720 Speaker 9: Reagan really of big crs continuing resolutions where you'd wrap 428 00:24:35,840 --> 00:24:39,280 Speaker 9: up all the separate appropriations bills and Reagan would have 429 00:24:39,320 --> 00:24:41,600 Speaker 9: to sign or vito them. He famously shut the government 430 00:24:41,640 --> 00:24:44,560 Speaker 9: down for a little while in eighty six eighty seven, 431 00:24:44,640 --> 00:24:47,040 Speaker 9: also because he got this, you know, two thousand page 432 00:24:47,040 --> 00:24:49,320 Speaker 9: bill and said, what's in this bill? So we've seen 433 00:24:49,359 --> 00:24:53,399 Speaker 9: that before, but the scope of the government was smaller, 434 00:24:53,760 --> 00:24:57,080 Speaker 9: from everything from regulation to benefits or relationships to the 435 00:24:57,080 --> 00:25:02,720 Speaker 9: individual voter in revital person in America. So the profound 436 00:25:02,760 --> 00:25:06,520 Speaker 9: impact of a shutdown is so much larger. And that's 437 00:25:06,560 --> 00:25:09,840 Speaker 9: why we have a partial shutdown. Tom, That's why you know, 438 00:25:09,960 --> 00:25:13,560 Speaker 9: you and Paul know this is partial. The whole government 439 00:25:13,640 --> 00:25:16,520 Speaker 9: isn't shutting down. They've learned to get around that by 440 00:25:16,560 --> 00:25:19,480 Speaker 9: designating essential services. You know, when New gaingers shut the 441 00:25:19,480 --> 00:25:22,600 Speaker 9: government down in nineteen ninety five ninety six, there wasn't 442 00:25:22,720 --> 00:25:23,600 Speaker 9: essential services. 443 00:25:23,640 --> 00:25:27,280 Speaker 8: It was just everybody was furloughed. Now they carve. 444 00:25:27,000 --> 00:25:30,600 Speaker 9: Out things like TSA, for example, a traffic controllers, the 445 00:25:30,600 --> 00:25:34,240 Speaker 9: federal court system. So it's not as big a wide 446 00:25:34,280 --> 00:25:35,720 Speaker 9: shutdown as it was forty years ago. 447 00:25:35,760 --> 00:25:37,240 Speaker 8: But the government is much bigger. 448 00:25:36,960 --> 00:25:39,480 Speaker 3: Quickly, or because Paul's got eight questions smarter than me 449 00:25:39,760 --> 00:25:41,880 Speaker 3: when they is to cut to the chase. The heart 450 00:25:41,920 --> 00:25:45,280 Speaker 3: of the matter is a political movement coming across the 451 00:25:45,320 --> 00:25:49,080 Speaker 3: twentieth century that the federal government is bad. 452 00:25:49,680 --> 00:25:52,400 Speaker 2: Where did that come from? 453 00:25:53,040 --> 00:25:55,720 Speaker 8: Well, I mean, you want me to do this quickly. 454 00:25:56,240 --> 00:25:59,119 Speaker 9: You can go back to antipathy towards the federal government 455 00:25:59,160 --> 00:26:02,000 Speaker 9: all the way to the Civil War to FD are 456 00:26:02,119 --> 00:26:05,840 Speaker 9: the new deals, Southern resistance to civil rights. The bigger 457 00:26:05,880 --> 00:26:10,280 Speaker 9: it grew, the more regulation, environmental protection, all sorts of 458 00:26:10,359 --> 00:26:14,920 Speaker 9: regulation of people who believe that, like Jefferson and Madison, 459 00:26:15,240 --> 00:26:17,560 Speaker 9: that the federal government should be small, limited in scope 460 00:26:17,600 --> 00:26:21,480 Speaker 9: and purpose, grew to resent the power of the federal government. 461 00:26:21,520 --> 00:26:23,720 Speaker 9: And now we're seeing the flip side of that. The 462 00:26:23,840 --> 00:26:28,560 Speaker 9: Republican president is exercising enormous federal power over both. 463 00:26:28,359 --> 00:26:30,160 Speaker 8: State governments, and individuals. 464 00:26:30,760 --> 00:26:33,520 Speaker 9: That's the Republicans and the conservative movement has always been 465 00:26:33,560 --> 00:26:36,240 Speaker 9: the opposite, let's limit the government's power. 466 00:26:36,560 --> 00:26:37,600 Speaker 8: So what's interesting is when. 467 00:26:37,560 --> 00:26:40,800 Speaker 9: Jadevance talks about, you know, cutting jobs or furloughing or 468 00:26:40,880 --> 00:26:43,040 Speaker 9: shrinking the size of the federal government, at the very 469 00:26:43,080 --> 00:26:48,600 Speaker 9: same time, this federal government is exercising unprecedented power over 470 00:26:48,720 --> 00:26:50,040 Speaker 9: states and individuals. 471 00:26:50,960 --> 00:26:54,000 Speaker 5: Wendy, President Trump is threatened to use this shutdown to 472 00:26:54,080 --> 00:26:56,160 Speaker 5: actually fire federal workers. 473 00:26:56,400 --> 00:26:58,960 Speaker 2: Is that happening, Paul? 474 00:26:59,000 --> 00:27:01,720 Speaker 9: I think we're seeing really the cracks and protection, even 475 00:27:01,720 --> 00:27:05,040 Speaker 9: though there's collective bargaining among unionized federal workers. 476 00:27:05,280 --> 00:27:07,480 Speaker 8: The cracks and the protection going back all. 477 00:27:07,400 --> 00:27:09,280 Speaker 9: The way to the Pendleton Act in eighteen eighty three, 478 00:27:09,280 --> 00:27:12,440 Speaker 9: which is supposed to protect federal workers and Jimmy Carter's 479 00:27:12,440 --> 00:27:15,040 Speaker 9: reforms in the seventies. But now we see that they 480 00:27:15,080 --> 00:27:18,399 Speaker 9: are not very well protected. And you know, it's a 481 00:27:18,400 --> 00:27:19,920 Speaker 9: big risk to fire. 482 00:27:20,040 --> 00:27:21,520 Speaker 8: Who are going to fire? Are you going to fire 483 00:27:21,720 --> 00:27:22,680 Speaker 8: Park service workers? 484 00:27:22,760 --> 00:27:25,480 Speaker 9: We've seen that the Republicans from the West are not 485 00:27:25,640 --> 00:27:28,800 Speaker 9: excited about that. That backfired on the Republicans in the 486 00:27:28,840 --> 00:27:29,640 Speaker 9: nineteen nineties. 487 00:27:29,880 --> 00:27:31,639 Speaker 8: You know, who are you going to fire? Where do 488 00:27:31,640 --> 00:27:32,040 Speaker 8: they live? 489 00:27:32,800 --> 00:27:34,720 Speaker 9: And what is the political disposition of the area that 490 00:27:34,760 --> 00:27:37,800 Speaker 9: they live in, and then the services that they provide 491 00:27:37,920 --> 00:27:41,280 Speaker 9: to people who voted for Donald Trump. So this is trickier, 492 00:27:41,359 --> 00:27:44,159 Speaker 9: I think, to do it in a mass way than 493 00:27:44,200 --> 00:27:45,440 Speaker 9: the Republicans right now. 494 00:27:45,320 --> 00:27:47,680 Speaker 2: Are letting on Here in New York City. 495 00:27:47,680 --> 00:27:50,800 Speaker 5: We got some news yesterday that's some funding for some 496 00:27:50,880 --> 00:27:52,920 Speaker 5: infrastructure here in the Greater New York City area. The 497 00:27:53,160 --> 00:27:58,480 Speaker 5: Gateway project in particular has been halted here. So what's 498 00:27:58,520 --> 00:28:04,760 Speaker 5: the strategy behind some of these targeted funding? I guess reductions. 499 00:28:04,720 --> 00:28:07,040 Speaker 8: At the moment, the strategy looks fairly part of it. 500 00:28:07,520 --> 00:28:10,080 Speaker 9: You'd have to say that, you know, the Republicans have 501 00:28:10,119 --> 00:28:12,760 Speaker 9: been saying that we spend too much money, So now 502 00:28:12,800 --> 00:28:15,280 Speaker 9: President Trump can say, well, look, eighteen billion dollars, do 503 00:28:15,320 --> 00:28:15,919 Speaker 9: you really need it? 504 00:28:15,920 --> 00:28:16,760 Speaker 8: New York State has what. 505 00:28:16,760 --> 00:28:19,240 Speaker 9: Almost a trillion dollar If not, if I'm not mistaken 506 00:28:19,359 --> 00:28:22,560 Speaker 9: budget as a state, why can't they pay for it themselves? 507 00:28:23,320 --> 00:28:24,680 Speaker 8: But it looks like it's. 508 00:28:24,520 --> 00:28:27,560 Speaker 9: Targeting blue states, but blue states also tend to spend 509 00:28:27,640 --> 00:28:31,520 Speaker 9: more on mass transit and infrastructure in in densely populated 510 00:28:31,560 --> 00:28:32,800 Speaker 9: areas than other states. 511 00:28:32,840 --> 00:28:35,520 Speaker 8: So it's hard to figure out exactly how partisan. This is, 512 00:28:35,960 --> 00:28:38,320 Speaker 8: but that's where we are. But it can always be reversed. 513 00:28:39,000 --> 00:28:41,520 Speaker 9: So you know, people say this is again Higee Jeffries 514 00:28:41,560 --> 00:28:43,000 Speaker 9: and Chuck Schumer, both from New York. 515 00:28:43,280 --> 00:28:47,560 Speaker 8: But really it's a broader effort to tram. 516 00:28:47,240 --> 00:28:50,600 Speaker 9: The reliance of these states on federal dollars for things 517 00:28:50,640 --> 00:28:53,960 Speaker 9: like mass transit and improving infrastructure bridges. I don't think 518 00:28:53,960 --> 00:28:56,480 Speaker 9: it works in the end because these states also generate 519 00:28:56,600 --> 00:28:59,080 Speaker 9: a lot of economic activity and tax revenue for the 520 00:28:59,080 --> 00:28:59,760 Speaker 9: federal government. 521 00:29:01,040 --> 00:29:04,480 Speaker 5: Is there actually an on off ramp here for both 522 00:29:04,520 --> 00:29:07,200 Speaker 5: sides that maybe just find some common question, thank you, 523 00:29:07,720 --> 00:29:09,120 Speaker 5: thank you. 524 00:29:08,840 --> 00:29:12,080 Speaker 9: I do think I think there's an off ramp where 525 00:29:12,120 --> 00:29:14,560 Speaker 9: the Republican leader John Thune, instead of saying, oh, we'll 526 00:29:14,600 --> 00:29:16,560 Speaker 9: talk to you later, just keep the government open for 527 00:29:16,560 --> 00:29:18,360 Speaker 9: seven weeks, which is what the Democrats used to do 528 00:29:18,520 --> 00:29:21,280 Speaker 9: when they were in charge, he should say, we will 529 00:29:21,400 --> 00:29:26,040 Speaker 9: vote on an extension of these tax subsidies for Obamacare premiums, 530 00:29:26,280 --> 00:29:29,680 Speaker 9: which expired December thirty first and affect millions of people. 531 00:29:30,040 --> 00:29:33,040 Speaker 9: We will give you a vote, a scheduled vote, and 532 00:29:33,120 --> 00:29:34,840 Speaker 9: if they if the Democrats can walk away with a 533 00:29:34,840 --> 00:29:38,240 Speaker 9: scheduled vote on this question, knowing that they'll have access 534 00:29:38,280 --> 00:29:40,320 Speaker 9: to pushing it on the floor of the Senate. Then 535 00:29:40,360 --> 00:29:42,400 Speaker 9: I think they have enough cover to go back to 536 00:29:42,440 --> 00:29:44,000 Speaker 9: the table and get the government back up. 537 00:29:44,600 --> 00:29:47,280 Speaker 3: Well, I look at the politics of this, and of 538 00:29:47,320 --> 00:29:50,600 Speaker 3: course it's all finessing. Does a shutdown play into the 539 00:29:50,640 --> 00:29:53,720 Speaker 3: election coming up next November or is it just so 540 00:29:53,840 --> 00:29:54,880 Speaker 3: far distant in all of the. 541 00:29:54,920 --> 00:29:59,240 Speaker 9: Ancient history, Tom, I think that this shutdown plays into 542 00:29:59,280 --> 00:30:00,920 Speaker 9: the elections we've got for governor in. 543 00:30:00,840 --> 00:30:04,959 Speaker 8: New Jersey and for Virginia. Those polls are tightening. You know, 544 00:30:05,040 --> 00:30:07,320 Speaker 8: this is a way of mobilizing Democrats. 545 00:30:07,560 --> 00:30:10,320 Speaker 9: You know, we've been complaining that their Washington based leadership 546 00:30:10,360 --> 00:30:13,520 Speaker 9: has done nothing to stop or fight or for Donald Trump. 547 00:30:14,000 --> 00:30:16,920 Speaker 9: This is a way of galvanizing and encouraging those voters 548 00:30:16,920 --> 00:30:18,360 Speaker 9: to get out to the polls for. 549 00:30:18,400 --> 00:30:19,640 Speaker 8: The Democratic candidates. 550 00:30:20,000 --> 00:30:22,080 Speaker 9: And it's a sort of a pseudo off, you know, 551 00:30:22,200 --> 00:30:24,280 Speaker 9: mitchrum cycle that Democrats should do better. 552 00:30:24,640 --> 00:30:27,120 Speaker 8: So that's where the interest of the Democrats lie. 553 00:30:27,520 --> 00:30:30,360 Speaker 9: How long they can keep this going without hurting other 554 00:30:30,400 --> 00:30:33,560 Speaker 9: parts of their constituency is the calculation that both Republicans 555 00:30:33,600 --> 00:30:35,400 Speaker 9: and Democrats are trying to make right now. 556 00:30:35,760 --> 00:30:38,840 Speaker 3: Professor Shower hugely informative thank us so much. Learned a 557 00:30:38,840 --> 00:30:41,960 Speaker 3: lot there, Wendy Schulders at Brown University. 558 00:30:42,320 --> 00:30:43,080 Speaker 2: Stay with us. 559 00:30:43,280 --> 00:30:53,959 Speaker 3: More from Bloomberg Surveillance coming up after this. 560 00:30:53,960 --> 00:30:57,840 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 561 00:30:57,880 --> 00:31:00,920 Speaker 1: starting at seven am Eastern on Apple Play and Android 562 00:31:00,920 --> 00:31:03,960 Speaker 1: Auto with the Bloomberg Business app. You can also watch 563 00:31:04,000 --> 00:31:06,960 Speaker 1: us live every weekday on YouTube and always on the 564 00:31:06,960 --> 00:31:08,000 Speaker 1: Bloomberg terminal. 565 00:31:08,320 --> 00:31:11,880 Speaker 3: Away from Baseball, the newspapers are swarnings. 566 00:31:12,040 --> 00:31:14,520 Speaker 10: All right, we're going to dive right into the tech 567 00:31:14,760 --> 00:31:17,240 Speaker 10: job market, and there's there's kind of like growing divide 568 00:31:17,240 --> 00:31:20,160 Speaker 10: in it. You have those with AI skills and those without. 569 00:31:20,240 --> 00:31:22,680 Speaker 10: And the Wall Street journals like really gets into this, 570 00:31:22,760 --> 00:31:25,160 Speaker 10: so they talk about the skills. Those at the highest 571 00:31:25,240 --> 00:31:27,960 Speaker 10: level of skills they can get multimillion dollar pay packages. 572 00:31:28,000 --> 00:31:31,080 Speaker 10: Those with okay MAAI savvy they can get about a 573 00:31:31,080 --> 00:31:34,520 Speaker 10: million dollars a year. Job seekers are saying they just 574 00:31:34,560 --> 00:31:37,480 Speaker 10: want someone to hire them and teach them on the job. 575 00:31:38,000 --> 00:31:40,680 Speaker 10: But what they're looking for is someone who can train 576 00:31:40,840 --> 00:31:44,560 Speaker 10: AI models to do these patterns and direct predict outcomes. 577 00:31:44,640 --> 00:31:46,640 Speaker 10: Right because some people have you know, AI experience. They 578 00:31:46,680 --> 00:31:50,200 Speaker 10: get certifications and they're saying well that's not enough. You know, 579 00:31:50,400 --> 00:31:52,360 Speaker 10: just because you know how to use chat GPT, it 580 00:31:52,400 --> 00:31:54,480 Speaker 10: doesn't certify you as an AI expert. 581 00:31:54,600 --> 00:31:57,240 Speaker 5: I don't know what is an AI expert. This technology 582 00:31:57,240 --> 00:31:58,480 Speaker 5: happened like fifteen minutes ago. 583 00:31:58,600 --> 00:32:00,560 Speaker 10: Yeah, yeah, yeah, they did. They need to train the 584 00:32:00,560 --> 00:32:02,480 Speaker 10: AI models and to know how to do it. And 585 00:32:02,520 --> 00:32:04,600 Speaker 10: it's a very intricate way that you have to know. 586 00:32:04,680 --> 00:32:05,400 Speaker 2: But it's a. 587 00:32:05,360 --> 00:32:08,600 Speaker 3: Small percentage of people with the gift of that current 588 00:32:08,680 --> 00:32:09,880 Speaker 3: I'm going to say coding is an a. 589 00:32:10,120 --> 00:32:11,080 Speaker 8: It's a new technology. 590 00:32:11,200 --> 00:32:11,719 Speaker 10: What you know. 591 00:32:12,360 --> 00:32:15,560 Speaker 3: I hear from a lot of tech people. You know, 592 00:32:15,600 --> 00:32:18,560 Speaker 3: they're they're like way smarter than me, but they just 593 00:32:18,600 --> 00:32:20,040 Speaker 3: don't have employable skills. 594 00:32:20,480 --> 00:32:23,840 Speaker 2: I don't understand it now. It's moving super super quick. 595 00:32:23,920 --> 00:32:26,680 Speaker 5: So again, young people will figure it out. 596 00:32:27,080 --> 00:32:27,800 Speaker 8: They're good at that. 597 00:32:28,240 --> 00:32:29,040 Speaker 2: They're good at that. 598 00:32:29,080 --> 00:32:31,320 Speaker 10: They are Okay, So I want to stick with AI 599 00:32:31,360 --> 00:32:34,840 Speaker 10: and see how it's impacting the music industry. Okay, this 600 00:32:35,040 --> 00:32:37,320 Speaker 10: is interesting source of telling the Financial Times. You have 601 00:32:37,720 --> 00:32:41,400 Speaker 10: Universal Music, Warner Warner Music, right, they know Taylor Swift, 602 00:32:41,480 --> 00:32:43,800 Speaker 10: Kendrick Lamar, Coldplay, like those are all their artists. 603 00:32:44,160 --> 00:32:46,280 Speaker 8: They're nearing AI licensing deals. 604 00:32:46,800 --> 00:32:50,680 Speaker 10: They reportedly involved startups like eleven lab Stability AI, but 605 00:32:50,800 --> 00:32:54,600 Speaker 10: even big companies like Google and Spotify. So they want 606 00:32:54,640 --> 00:32:57,280 Speaker 10: to know how the labels license their songs for creating 607 00:32:57,360 --> 00:33:00,000 Speaker 10: AI generated tracks, for training large language models. 608 00:33:00,080 --> 00:33:01,680 Speaker 8: They want to get paid, that's the bottom line. 609 00:33:02,280 --> 00:33:04,560 Speaker 10: So they want a payment structure that's similar to streaming, 610 00:33:04,600 --> 00:33:06,600 Speaker 10: where you know, you play a song and that triggers 611 00:33:06,680 --> 00:33:09,640 Speaker 10: this micro payment. So that's the whole battle in AI 612 00:33:09,840 --> 00:33:12,280 Speaker 10: in the music space, and it's a really really big battle, 613 00:33:12,280 --> 00:33:14,760 Speaker 10: and it's starting to come up a lot more nowadays, 614 00:33:14,880 --> 00:33:18,240 Speaker 10: especially on Spotify. You hear AI just AI generated music 615 00:33:18,360 --> 00:33:20,000 Speaker 10: pop up on Spotify nowadays. 616 00:33:20,240 --> 00:33:23,760 Speaker 5: But it's is it attributed to anybody that like is it? 617 00:33:23,840 --> 00:33:25,200 Speaker 6: It's saying here's a song by. 618 00:33:25,920 --> 00:33:28,800 Speaker 10: X, No, that's not and that's the thing, and that's 619 00:33:28,840 --> 00:33:31,320 Speaker 10: the thing. So like YouTube has this thing that where 620 00:33:31,320 --> 00:33:33,880 Speaker 10: they can identify where music is being used, so they're saying, 621 00:33:33,920 --> 00:33:36,800 Speaker 10: maybe use something like that technology. But it's a long 622 00:33:36,840 --> 00:33:37,240 Speaker 10: ways to go. 623 00:33:37,600 --> 00:33:39,880 Speaker 2: It's a lot tougher than just tracking radio. So it's 624 00:33:39,880 --> 00:33:42,200 Speaker 2: a big deal. I don't understand it, but it's a 625 00:33:42,240 --> 00:33:43,480 Speaker 2: big deal among music people. 626 00:33:43,520 --> 00:33:46,200 Speaker 10: They're like, oh sure, They're like they're fired up, they're 627 00:33:46,280 --> 00:33:46,800 Speaker 10: very fired up. 628 00:33:46,800 --> 00:33:47,120 Speaker 1: I got it. 629 00:33:48,200 --> 00:33:51,640 Speaker 10: And then lastly, I want to talk about DC fans. 630 00:33:51,680 --> 00:33:53,400 Speaker 10: So those listening in DC, they may have to find 631 00:33:53,400 --> 00:33:56,480 Speaker 10: another way to watch Wizards Capitals games. There's an issue 632 00:33:56,640 --> 00:34:00,760 Speaker 10: Monumental Sports Network. They went dark on YouTube TV, dizzy 633 00:34:00,840 --> 00:34:05,000 Speaker 10: on Hulu plus Live TV distribution deals expired. You can 634 00:34:05,240 --> 00:34:08,360 Speaker 10: still get it through Direct TV because they carry Monumental 635 00:34:08,400 --> 00:34:10,440 Speaker 10: Sports Network. But I thought what was interesting is this 636 00:34:10,520 --> 00:34:15,840 Speaker 10: whole issue about regional sports networks and how the difficulty 637 00:34:15,920 --> 00:34:16,759 Speaker 10: that they're starting. 638 00:34:16,480 --> 00:34:18,400 Speaker 2: To baseball next season. 639 00:34:18,960 --> 00:34:22,440 Speaker 5: It's been a couple of seasons already with the regional sports, 640 00:34:22,560 --> 00:34:26,200 Speaker 5: think hockey, think baseball, not so much the NFL, which 641 00:34:26,239 --> 00:34:29,480 Speaker 5: is a national sport, but the regional sports really dependent 642 00:34:29,560 --> 00:34:32,960 Speaker 5: upon regional sports networks. We have Yes Network here in 643 00:34:33,000 --> 00:34:35,400 Speaker 5: New York. There's need send nessing up there in Boston. 644 00:34:36,080 --> 00:34:39,960 Speaker 5: That was the backbone of the media rights fees for 645 00:34:40,320 --> 00:34:45,840 Speaker 5: these teams, and that model is just it's broken permanently, 646 00:34:46,200 --> 00:34:48,000 Speaker 5: and so now you got to find a substitute. 647 00:34:48,600 --> 00:34:50,120 Speaker 6: Its streaming going to be that substitute. 648 00:34:50,120 --> 00:34:50,440 Speaker 5: I don't know. 649 00:34:51,160 --> 00:34:53,360 Speaker 2: So there you go. Let's see is that it? 650 00:34:53,640 --> 00:34:55,640 Speaker 3: I mean, you're not concentrated because you're worried about the 651 00:34:55,760 --> 00:34:56,440 Speaker 3: Yankees today. 652 00:34:56,680 --> 00:34:59,280 Speaker 10: I know, I know, but I can't at eight o'clock pm. 653 00:34:59,520 --> 00:35:00,960 Speaker 5: Yeah, that's yeah, I know. 654 00:35:01,920 --> 00:35:05,880 Speaker 2: When are they gonna learn and the kids can't watch school? 655 00:35:06,560 --> 00:35:06,600 Speaker 6: What? 656 00:35:08,640 --> 00:35:08,879 Speaker 2: Okay? 657 00:35:09,040 --> 00:35:13,080 Speaker 3: Six pm, I get it, it's clumsy. Yeah, seven, seven pm. 658 00:35:13,640 --> 00:35:15,640 Speaker 3: The kids get to see the starter Pitchers for. 659 00:35:15,719 --> 00:35:16,399 Speaker 2: The fourth dting. 660 00:35:16,719 --> 00:35:19,360 Speaker 5: Yeah, they don't care. They don't care because more and 661 00:35:19,440 --> 00:35:22,160 Speaker 5: would lease advertising dollars from the networks in that time. 662 00:35:22,480 --> 00:35:26,120 Speaker 2: Lisa mt tell the newspapers thank you so much. 663 00:35:26,360 --> 00:35:31,160 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 664 00:35:31,320 --> 00:35:35,040 Speaker 1: and anywhere else you get your podcasts. Listen live each 665 00:35:35,120 --> 00:35:38,680 Speaker 1: weekday seven to ten am Eastern on Bloomberg dot com, 666 00:35:39,080 --> 00:35:42,839 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 667 00:35:43,200 --> 00:35:46,280 Speaker 1: You can also watch us live every weekday on YouTube 668 00:35:46,600 --> 00:35:48,600 Speaker 1: and always on the Bloomberg terminal.