Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
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Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Well, the world's biggest bond market boosted bets at the
Speaker 2: Fed will indeed slash rates again next month after inline
Speaker 2: inflation data, shorter dated treasuries outperforming. You saw that yield
Speaker 2: on to your notes dropping from the highest since July.
Speaker 2: Swap traders boosted to about eighty percent, maybe even more.
Speaker 2: The probability that the Fed will cut rates again on
Speaker 2: December eighteenth. Bottom line, it's a different trade than it
Speaker 2: was a couple of days ago.
Speaker 3: Yeah, it certainly is. That's the backdrop for Bloomberg's conversation
Speaker 3: with feder Reserve at Bank of Minneapolis President Neil Cashcari
Speaker 3: leading that chat Bloomberg News International Economics and Policy correspondent
Speaker 3: Michael McKee, who joins us here in the Bloomberg at
Speaker 3: Business Week Studio. Mike first up the CPI print today
Speaker 3: in line, as Carol mentioned, with Wall Street estimates. As
Speaker 3: you dug into the details, anything in there that stood out.
Speaker 4: I think the fact that there were many categories that
Speaker 4: did see pricing increases, and some of the ones that
Speaker 4: have been problems before are problems again, like used cars
Speaker 4: and housing is still not going down. It actually went
Speaker 4: up in price. The one area is the two areas
Speaker 4: that we did see some improvement in were food up
Speaker 4: just a tenth of a percent the same as last month,
Speaker 4: and gasoline, which was down. And we all know that.
Speaker 4: The other thing that stood out to me was I'm
Speaker 4: sure Kamala Harris wishes this report had come out before
Speaker 4: the presidential election because the price of eggs went down
Speaker 4: six point seven percent, and she's been criticized heavily for
Speaker 4: the price of eggs.
Speaker 3: I don't know if that would have made a difference, Mike.
Speaker 5: I don't think the election.
Speaker 2: Came down to just that. But I see what you're doing. Well,
Speaker 2: wait a minute, So when it comes to inflation, I
Speaker 2: do feel like, you know, we're hearing some mixed messages
Speaker 2: or some you know, you've a lot of stories on
Speaker 2: the Bloomberg that there are people concerned about inflation reigniting,
Speaker 2: and especially thinking about a Trump administration and it's pro
Speaker 2: growth policies.
Speaker 4: Well, there's two things to watch. One is that what
Speaker 4: you're talking about there with the Trump administration and the
Speaker 4: tariffs and tax policies. Saint Louis FED President Alberto Muslim
Speaker 4: was just asked about those and he said, I can't
Speaker 4: comment on anything that the new administration is going to do.
Speaker 4: But if you look at a textbook, it will tell
Speaker 4: you that tariffs raise prices and can create inflation. And
Speaker 4: Neil cashcarri had roughly the same views today. So the
Speaker 4: FED is going to be watching that. But the thing
Speaker 4: that has really got for the moment Wall Street's attention
Speaker 4: and some economist's attention is we've been making progress on inflation,
Speaker 4: but are we going to be stuck where we are?
Speaker 4: With the headline inflation at about two point four percent,
Speaker 4: you know, not two percent, and certainly core inflation well
Speaker 4: above that right now on a CPI basis three point
Speaker 4: three percent. Now, those numbers are lower for the PCEE
Speaker 4: that the Fed uses for its target, but it's still
Speaker 4: a question of have we stalled out and would that
Speaker 4: keep the Fed from cutting rates further because they need
Speaker 4: to keep the pressure on to keep pushing inflation lower.
Speaker 3: Hey, we're going to talk about your conversation with the
Speaker 3: ol Kashkari a little more in just a few minutes,
Speaker 3: but I want you to weigh in on this Department
Speaker 3: of Government Efficiency that's getting a lot of attention right now.
Speaker 3: Elon Musk Vivek Ramaswami are going to be co heads
Speaker 3: of this department. Must coming out on the X platform
Speaker 3: saying he wants this like running counter of how your
Speaker 3: tax dollars are wasted. Although previous presidencies and previous administrations
Speaker 3: haven't called this doge, this has been.
Speaker 4: Those points didn't exist, they didn't exist earlier.
Speaker 1: And this is my suspect.
Speaker 4: I suspect this acronym comes from maybe a commercial point
Speaker 4: of view on Elon Musk's side, but this is it
Speaker 4: is definitely not new. You go back to Theodore Roosevelt
Speaker 4: had a commission proposing new authority, followed by William Howard Taft,
Speaker 4: who also had a Commission on Government Efficiency that actually
Speaker 4: proposed and was enacted the first presidential budget. Presidents didn't
Speaker 4: submit budgets before, and so presidents were kind of in
Speaker 4: the driver's seat until the nineteen seventy four Budget Act
Speaker 4: created Congress's responsibility to pass the budget, which they never do.
Speaker 4: So you know, you can put that on the list.
Speaker 4: But you go all the way up through basically the
Speaker 4: George H. W. Bush administration, and literally Dwight Eisenhower had one,
Speaker 4: Franklin Roosevelt had two, while he had one and a
Speaker 4: half because Harry Truman took over the other the other half.
Speaker 4: And there was a commission under Hoover, there was commission
Speaker 4: under Coolidge. There were these commissions just get appointed by
Speaker 4: presidents and they all promise the same thing. We're going
Speaker 4: to make government work better for the American people. We're
Speaker 4: going to cut regulations, we're going to streamline activity. And
Speaker 4: they all come up with, you know, several hundred ideas
Speaker 4: and many of them get adopted, and yet here we
Speaker 4: are again. So you wonder how much success they can
Speaker 4: actually have.
Speaker 2: Yeah, I guess so, right, Like it's I mean, it's
Speaker 2: a huge task. I think a lot of people talk
Speaker 2: about though inefficiencies and government.
Speaker 3: So you do one, but it's it's not just getting
Speaker 3: rid of you know, these so called bureaucrats. It's not
Speaker 3: just firing people because that's actually very small portion.
Speaker 4: Well, that's that's a different effort too on the part
Speaker 4: of the Trump administration. He wants to be able to
Speaker 4: fire government officials who aren't loyal to him, and so
Speaker 4: that's this whole schedule F issue that's going to come up,
Speaker 4: where he tries to move these people from protected civil
Speaker 4: service jobs into fire at will jobs.
Speaker 2: But you do wonder what programs ultimately get cut. And
Speaker 2: that's the thing, whether it's Medicare, whether Social Security.
Speaker 4: It's a recent barackobus.
Speaker 6: I think voters actually vot tried.
Speaker 4: To remake the Commerce Department and separate out some things
Speaker 4: from there, and Congress said no.
Speaker 2: All right, so TBD right, wait and see and see
Speaker 2: what happens here. Let's go back to Neil Kushcari, present
Speaker 2: of the Federal Reserve Bank of Minneapolis. You did talk
Speaker 2: to him earlier. Let's just share with everybody some of
Speaker 2: the information that came out of the interview that Mike
Speaker 2: did with the surveillance team earlier.
Speaker 1: Today.
Speaker 7: I'm not seeing a lot of upside risks yet, we
Speaker 7: don't know what's going to get enacted. I'm not seeing
Speaker 7: a lot of upside risk that inflation is going to
Speaker 7: take off from here. The bigger risk that i'd be
Speaker 7: concerned about in the inflation front, is just if we're
Speaker 7: landing at around the two and a half percent level
Speaker 7: instead of back down to two percent level. I think
Speaker 7: that those risks existed before the election, and I think
Speaker 7: that there continues to be uncertainty now and we need
Speaker 7: to just be take our time, let the data come
Speaker 7: to us, and let that guide us.
Speaker 6: All right.
Speaker 2: So Neil Kushkari speaking with Mike and the surveillance team
Speaker 2: earlier this morning on radio and TV. So there is
Speaker 2: more data before the next FED meeting, right, So a
Speaker 2: rate move not a guarantee, despite what traders are saying,
Speaker 2: we know this can bounce around a little bit.
Speaker 4: Yeah, I wouldn't put a lot of stock in what
Speaker 4: you're seeing in the futures markets right now, because we
Speaker 4: do get a lot of data. We get another CPI report,
Speaker 4: we get a PCE inflation report, we get a couple
Speaker 4: of retail sales reports, and we get the jobs report
Speaker 4: for the month of November, and all those things will
Speaker 4: weigh on the administration. But you see Kashkari saying what
Speaker 4: we were just talking.
Speaker 1: About, that.
Speaker 4: His worry is that we get stuck, and that might
Speaker 4: call for the FED to stay in one place. Mussalam,
Speaker 4: who was mentioned was just speaking said exactly the same thing.
Speaker 4: Gradual cuts if inflation keeps falling, is the way he
Speaker 4: put it. And Jeffrey Schmid from Kansas City also saying,
Speaker 4: there's uncertainty about how our rates should fall because there's
Speaker 4: uncertainty about where inflation is going. And I think you're
Speaker 4: going to hear this pretty much from every FED official
Speaker 4: this over the next couple of weeks. We don't know,
Speaker 4: but don't count on it one way or another. Don't
Speaker 4: rule it out, but don't count.
Speaker 2: On us the way it goes. All Right, Michael McKee,
Speaker 2: thank you so much. International Economics and Policy courseponding here
Speaker 2: at Bloomberg News. Catch his full conversation with Neil Kashgari
Speaker 2: check it out on the Bloomberg All right, everybody, so,
Speaker 2: from the economy and FED policy to those who will
Speaker 2: be helping to shape some of the new policy initiatives
Speaker 2: in the Trump administration, that's exactly where we go right now.
Speaker 3: This as the President elect continues to name names for
Speaker 3: top cabinet posts and other advisory roles, and as mister
Speaker 3: Trump goes to Washington meeting today with President Biden and
Speaker 3: top members of the GOP back with our Washington around.
Speaker 3: Bloomberg News political reporter Tyler Kendall live for us at
Speaker 3: the White House. Tyler, President Biden and President elect Trump
Speaker 3: meeting earlier today at the White House. That meeting wrapping up.
Speaker 3: What do we know about that? What they talked about,
Speaker 3: how it went down?
Speaker 8: Yeah, I hate him.
Speaker 9: So.
Speaker 8: White House Press Secretary kree Jiane Pierre coming out just
Speaker 8: moments ago calling this meeting substantive, saying that there was
Speaker 8: this exchange of ideas and that they hit on national security,
Speaker 8: domestic policies, as well as a to do list for
Speaker 8: Congers in the coming months, including averting a government shutdown
Speaker 8: when funding runs out on December twentieth, as well as
Speaker 8: passing some more supplemental disaster relief funding for Americans. But
Speaker 8: the Press secretary also honed in on this idea that
Speaker 8: the meeting was largely symbolic, right it was to ensure
Speaker 8: this peaceful transfer of power. Important to point out that
Speaker 8: four years ago, then President Trump did not extend the
Speaker 8: same tradition to then President elect Biden. However, the two
Speaker 8: did appear cordial today and brief remarks off the top,
Speaker 8: both committing to making this transition as smooth as possible.
Speaker 8: I'd also quickly add that as we are getting these
Speaker 8: headlines from the White House Press briefing, it does appear
Speaker 8: that the two did speak about Ukraine and supplemental assistance
Speaker 8: to Ukraine. This confirmed some of our earlier speculations as
Speaker 8: we were looking at clues on what the two could
Speaker 8: be talking about, because as we look at what President
Speaker 8: Biden is pushing for in these final months of his administration,
Speaker 8: we know that his National Security advisor, Jake Sullivan has
Speaker 8: said that they will push the Trump transition team to
Speaker 8: make sure that that security assistance for Ukraine plays out.
Speaker 8: But of course he has now Vice President elect jd Vance,
Speaker 8: one of the staunchest opponents of Ukraine aid, in his
Speaker 8: oval office. So that's one of the storylines that we're
Speaker 8: going to be covering closely.
Speaker 3: Yeah, I'm glad Tyler brought up the idea of what
Speaker 3: happened four years ago very different at the White House,
Speaker 3: extremely different. I mean, think about where we were just
Speaker 3: a week after the election four years ago that you
Speaker 3: actually never met at the White House four years ago Obama.
Speaker 3: President Obama did extend that same courtesy to then President
Speaker 3: elect Trump eight years ago and he visited the White House.
Speaker 2: Yeah, right, like, so it wasn't kind of business as
Speaker 2: usual certainly last time around. Hey, One thing we also
Speaker 2: want to ask you, Tyler, is Republicans, for the first
Speaker 2: time in eighteen years elected someone other than Mitch McConnell
Speaker 2: to lead them today. That person is South Dakota Senator
Speaker 2: John Thune. Tell us a little bit of us about
Speaker 2: those developments coming out of DC as well.
Speaker 8: Yeah, definitely, Carol, So not necessarily a surprise. Senator John
Speaker 8: Thune one of the top contenders for this race against
Speaker 8: another John, Senator John Cornyn, a Republican from Texas. Also
Speaker 8: Senator Rick Scott, a Republican from Florida, who appeared to
Speaker 8: be backed by some of the more conservative MAGA Republicans
Speaker 8: for that spot. Thune ultimately ended up winning in a
Speaker 8: second round ballot. He's been the number two in the Senate,
Speaker 8: a staunch ally of Senator Mitch McConnell, who, as you mentioned,
Speaker 8: is ending a historic eighteen run as the party's leadership,
Speaker 8: but he is going to be absolutely critical. In remarks
Speaker 8: after winning, he said that he will work with now
Speaker 8: President elect Donald Trump because, as you both know, working
Speaker 8: with the Senate is going to be so critical for
Speaker 8: this incoming president, both for his agenda but also for
Speaker 8: some of his cabinet confirmation. There are two areas I'm
Speaker 8: watching for when it comes to Senator Thune. One is
Speaker 8: his position on tariffs. He's previously criticized Trump's proposed tariff
Speaker 8: across the board policy, warning about inflationary effects. And the
Speaker 8: second is again to bring it back to this idea
Speaker 8: of Ukraine aid, considering this was a particular area of
Speaker 8: tension with McConnell and some of his more conservative members
Speaker 8: of the party. So those are two of the areas
Speaker 8: I'm watching to see how they'll shake out as his
Speaker 8: term begins.
Speaker 3: The President elect didn't really come out and endorse anybody
Speaker 3: for that leadership position in the Senate Tyler, but Elon
Speaker 3: Musk certainly did, and there were a lot of Trump
Speaker 3: allies who were saying Rick Scott is the person to choose.
Speaker 3: How should we look at the fact that Scott didn't
Speaker 3: get picked as sort of a rebuke of, or at
Speaker 3: least some resistance to what Trump wants in the new
Speaker 3: in the new Senate.
Speaker 8: Right, well, I would focus on Senator Thune's track record
Speaker 8: in the Senate. He has won the admiration and respect
Speaker 8: for many of his colleagues, particularly since he has served
Speaker 8: as this number two to McConnell for so long, and
Speaker 8: he had been campaigning for this early and often. Meanwhile,
Speaker 8: Senator Rick Scott hadn't launched this bit. So we knew,
Speaker 8: you know, for many months, that Fune was going to
Speaker 8: be vying for this position. But Rick Scott, for example,
Speaker 8: was in a tight Senate race down in Florida and
Speaker 8: then kind of launched this sort of bid. It's going
Speaker 8: to be absolutely critical for the Trump administration to try
Speaker 8: to keep a coalition together. We had Congressman Brendan Boyle
Speaker 8: on a Balance of Power yesterday. He's a Democrat from Pennsylvania.
Speaker 8: We asked him about the future of governing with this
Speaker 8: incoming White House. He said that he's watching for if
Speaker 8: the Republicans can keep their conference in order since the
Speaker 8: most recent iteration recent years have showed us that infighting
Speaker 8: in the Republican Party has really hurt getting Republican legislation through.
Speaker 8: I would just quickly add that this morning, when Trump
Speaker 8: did go to the Hill, did appear that he backed
Speaker 8: House Speaker Mike Johnson. That's going to be another critical
Speaker 8: ally for getting Republican legislation and agenda items over the
Speaker 8: finish line.
Speaker 2: You know. And then of course there is Elan and Vivek,
Speaker 2: which was I feel like when we read in this
Speaker 2: morning Tyler, that was the story that was kind of
Speaker 2: top of mind in terms of president like Trump's appointments
Speaker 2: or you know, additional Advisory Council, if you will. The
Speaker 2: President does seem to be moving, though, very fast and
Speaker 2: furious when it comes to these appointments in these nominees.
Speaker 8: Yep, definitely, and particularly on this Department of Government efficiency.
Speaker 8: I would just say quickly, there are two big outstanding
Speaker 8: questions here right One, how is this going to work
Speaker 8: in practice? Trump has said that it will be outside
Speaker 8: of the government, So would that be some sort of
Speaker 8: a panel that works with the OMB, the Office of
Speaker 8: Management and Budget to give its recommendations? And then second,
Speaker 8: how is it going to do its work? You were
Speaker 8: speaking about this earlier with Mike McKee. The federal government
Speaker 8: spent six point seventy five trillion dollars last fiscal year.
Speaker 8: Musk came out in that Madison Square Garden speech just
Speaker 8: ahead of the election saying that he wants to cut
Speaker 8: two trillion dollars, But the vast majority of government spending
Speaker 8: is healthcare, social security, defense, and veterans benefits. So there
Speaker 8: is this concern that some of those more popular but
Speaker 8: also politically fraud initiatives like social security, Medicare, and medicaid
Speaker 8: could be at risk. But also, as you mentioned, Musk
Speaker 8: has pledged to make this a more transparent process.
Speaker 2: I do have one last question thirty seconds, you know,
Speaker 2: going back to what Tim mentioned about John Thune. I mean,
Speaker 2: it does look like he is willing to go to
Speaker 2: back with Donald Trump. Is he there to carry out
Speaker 2: the president elex mandate or is he willing to kind
Speaker 2: of go to toe to toe with him? Just quickly?
Speaker 8: Right, right, So in his remarks afterwards, he did say
Speaker 8: that he was willing to work with him. I think
Speaker 8: you're referencing of prior rift after twenty twenty one, after
Speaker 8: January sixth, and making sure that that election was certified
Speaker 8: in the way that it should have been. But John
Speaker 8: Thune has said that he will be there for the
Speaker 8: rank and file, even adding some of Donald Trump's priorities
Speaker 8: in his speech afterwards, including border funding and immigration.
Speaker 2: All right, good stuff, Hey, listen, Tyler, thank you so much.
Speaker 2: In and around DC, Tyler Kendall, she is Bloomberg News
Speaker 2: political reporter, joining us there from the White House.
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Speaker 2: All right, folks are staying with news out of DC
Speaker 2: in the days after the election. Donald Trump and Elon Musk, Well,
Speaker 2: they seem to be riding the world's most intense contact. Hi,
Speaker 2: so writes our own Max Chaffkin. Musk is effectively camped
Speaker 2: out with Trump's inner circle at mar Lago. He shows
Speaker 2: up in family photos, He joins Trump's calls with world leaders.
Speaker 2: Perhaps that's what you get when you spend over one
Speaker 2: hundred million dollars one hundred and thirty two million at
Speaker 2: least into the President Alex campaign. So let's get to it.
Speaker 2: This is the Bloomberg Big Takes story, deemed by our
Speaker 2: editors as a must read story. It is reported out
Speaker 2: by Bloomberg's Max Chaffkin and Dana Hall. Max is Bloomberg
Speaker 2: businesswee correspondent contributor to the Elon Inc. Podcast. Max is
Speaker 2: also author of the contrarian Peter Teel and Silicon's Valley
Speaker 2: Silicon Valley's Pursuit of Power. Max joining us here in studio. Yeah,
Speaker 2: I mean we've all been asking kind of what is
Speaker 2: Elon going to do in this job? What can he
Speaker 2: do and what does it mean kind of as being
Speaker 2: part of this Trump inner circle.
Speaker 6: Well, I mean, you know, last night Trump announced something
Speaker 6: that he had teased repeatedly on a campaign trail, something
Speaker 6: that must get talked about, This idea that Musk would
Speaker 6: be an advisor in the streamlining of government. And there's
Speaker 6: even a catching name for this. This is the Department
Speaker 6: of Government Efficiency. It's not a department in the in
Speaker 6: the sort of normal sense, and and it's also unclear
Speaker 6: like how exactly how efficient they're going to be When
Speaker 6: Elon Musk has a co chair of Vek Ramaswami, that's say,
Speaker 6: do you know.
Speaker 3: What Tim's been saying, Hey, I've been saying that it's
Speaker 3: like it's supposed to be a fishing Why are there
Speaker 3: two of them?
Speaker 8: All?
Speaker 9: Right?
Speaker 6: This is and this is a joke that that that
Speaker 6: Democrats have pointed out and and critics are gonna are
Speaker 6: gonna seize on And I think that the challenge here
Speaker 6: is that many of the things that Elon Musk has
Speaker 6: talked about wanting to do, cutting two trillion dollars from
Speaker 6: UH from the federal budget, or even if you start
Speaker 6: talking about some of these very specific things that he
Speaker 6: personally thinks is kind of dumb or useless, all of
Speaker 6: that's going to be politically difficult. When you're talking about
Speaker 6: gigantic cuts UH two trillion dollars, that's going to mean Congress,
Speaker 6: it's going to mean hard choices about important federal programs
Speaker 6: like Social Security that lots and lots of Republicans. You know,
Speaker 6: that majority in the House is going to be very
Speaker 6: very narrow.
Speaker 2: The midterm is at the midterms.
Speaker 6: And so so again that's gonna be hard. But when
Speaker 6: you even talk about the the sort of smaller things
Speaker 6: like you know, some defense thing, you know, a lot
Speaker 6: of this stuff is politically charged.
Speaker 9: Right.
Speaker 6: You have senators, Congress people in various states who care
Speaker 6: about the jobs in those states. And Trump is going
Speaker 6: to need to govern and and he's going to need
Speaker 6: Republicans in the House and Senate to do that. Even
Speaker 6: though Republicans control those those branches. But what and you know,
Speaker 6: seeing the election of selection of John thune Is as
Speaker 6: Speaker again, that's kind of a bit of a rebuke
Speaker 6: to Elon and kind of the hard right part of
Speaker 6: this coalition. They had wanted Rick Scott. So there's gonna
Speaker 6: be a lot of challenges here. Of course, there are
Speaker 6: ways that Elon Musk can get paid.
Speaker 3: Even so one thing we should notice, Elon actually accompanied
Speaker 3: the President elect to Washington this morning. He was with
Speaker 3: lawmakers earlier too. They gave him a standing ovation in
Speaker 3: addition to giving the President elect a standing ovation, so
Speaker 3: certainly gives an idea how he's seen in the Republican
Speaker 3: Party right now.
Speaker 1: Max.
Speaker 3: The China part of Elon Musk's story I keep coming
Speaker 3: back to because he's got this very close relationship that
Speaker 3: I wonder if it could be, in the words of
Speaker 3: like Jeff Bezos, a complexifier when it comes to Elon
Speaker 3: Musk's relationship with Donald Trump. Because he wants to do
Speaker 3: business in China, and he wants to do business easily,
Speaker 3: and Jia, it's not just that.
Speaker 6: He wants to do business in China, he really needs
Speaker 6: to do business in China. Tesla unless there is a
Speaker 6: dramatic change in strategy. Tesla needs it's China business. There's
Speaker 6: a massive factory, it's the world's largest market for electric vehicles.
Speaker 6: Tesla is trying really hard to compete there, and Elon
Speaker 6: must have made that a big part of his strategy. Now,
Speaker 6: I think two things are possible. One is, if you know,
Speaker 6: tensions between the US and China were to heat up further,
Speaker 6: you know, there are are ways that Elon Musk could
Speaker 6: deemphasize his reliance on China. The biggest one would be,
Speaker 6: you know, focusing more on robotaxis, which he's starting to do.
Speaker 6: The other thing is, you know, Donald Trump ran as
Speaker 6: a peacemaker, a negotiator. Yes he wants to, Yes he's gonna,
Speaker 6: you know, put tariffs, he says, but remember the last time,
Speaker 6: lots of companies got carve outs, were able to negotiate
Speaker 6: their own their own you know, basically ways to to
Speaker 6: avoid paying those tariffs. So you could imagine Elon Musk
Speaker 6: trying to find, you know, get some exceptions carved out
Speaker 6: for important industrial companies such as you know, Tesla Motors,
Speaker 6: the company that he, uh, you know, owns a huge
Speaker 6: stake in uh. And the other thing is like, compared
Speaker 6: to Joe Biden, I think Trump is arguably not as
Speaker 6: despite the fact that the rhetoric is very hawkish. Biden
Speaker 6: was also quite hawkish on China. So I'm not sure
Speaker 6: that this represents such a huge complexifier. But though it
Speaker 6: is certainly gonna be, you know it challenge, And it's
Speaker 6: also of course an opportunity for political opponents of Donald
Speaker 6: Trump on both the right and the left to seize
Speaker 6: on because he can you can talk tough on China.
Speaker 6: But then when one of your partners, you know, has
Speaker 6: this enormous Chinese factory as a good close relationship with
Speaker 6: the Chinese Communist Party, like, that's gonna that's gonna lead
Speaker 6: to criticism.
Speaker 2: I keep thinking of a conflicts of interest in this administration.
Speaker 2: You know, here you have Elon advising Donald Trump in
Speaker 2: terms of efficiency of government. If a company that does
Speaker 2: a lot has business contracts right SpaceX with the government,
Speaker 2: you talked about, how you know Elon can get paid.
Speaker 2: I mean his stock is already up thirty percent from
Speaker 2: the election. I mean it just seems kind of complicated
Speaker 2: in terms of the connections here.
Speaker 6: Absolutely. I mean the thing is, if you were paying.
Speaker 6: If you were watching a campaign, what you understand is
Speaker 6: the conflicts of interests are the point. I mean, Trump
Speaker 6: talked about that as an advantage. That was sold as
Speaker 6: an advantage, and it's going to continue to be sold
Speaker 6: as an advantage. Elon Musk he's not just some egghead.
Speaker 6: He really understands business. In fact, he runs a couple
Speaker 6: of important businesses. Trump talked about, you know, on the
Speaker 6: campaign trail, just essentially like ordering up rockets from Elon Musk.
Speaker 6: So I think that they believe Donald Trump, his advisors
Speaker 6: Elon Musk, that basically voters and the Republican Party are
Speaker 6: not going to mind that he's that important. But I
Speaker 6: think that really remains to be seen.
Speaker 4: And you know what.
Speaker 6: Happened during the last Trump presidency is that the controversy
Speaker 6: started to bubble up, right, and then it became harder
Speaker 6: and harder for people who were kind of in Elon
Speaker 6: Musk's position to stay in that inner circles. And that's
Speaker 6: exactly what happened to Elon Musk, by the way, in
Speaker 6: twenty seventeen, amid all this controversy. It was after the
Speaker 6: sort of Muslim bands and Trump left the Paris Climate accords,
Speaker 6: Elon Musk backed away. He had been on another advisory panel,
Speaker 6: So I think that is one thing what's different this
Speaker 6: time around, and I think what's going to put pre
Speaker 6: pressure on Donald Trump and actually put pressure on moderating
Speaker 6: forces within the Republican Party is that Elon has all
Speaker 6: this money that he's going to spend on politics. Yesterday
Speaker 6: he was tweeting that he's going to play in the midterm,
Speaker 6: including the primaries, And if you look read between the
Speaker 6: lines with that, what he's saying is, if you don't
Speaker 6: go along with my agenda, Senate Republicans, congress people, I
Speaker 6: am ready to dump a huge quantity of money into
Speaker 6: a primary, like are you ready for a primary challenge?
Speaker 6: And I think that is going to be his leverage,
Speaker 6: and we we'll see if it actually works. And I
Speaker 6: think where it works partly depends on what John Donald
Speaker 6: Trump decides to do. Does he does he run as
Speaker 6: this kind of ultra maga guy that he presented, or
Speaker 6: does he try to move to the center.
Speaker 3: But I also wonder if Elon Musk lodes his interest
Speaker 3: in this in a few months or in a few years.
Speaker 6: I mean, you know, that is the I think there's
Speaker 6: a conventional wisdom that says.
Speaker 3: He's got a lot on his plate.
Speaker 6: He's got a tention span that that that drifts easily.
Speaker 6: You know, he's got all these companies, he spends hours
Speaker 6: a day playing video games. He's got a lot going on.
Speaker 6: So if this started to get a lot of kids, yeah,
Speaker 6: he's got a lot of kids, you know, many interests.
Speaker 6: But well, I'll say is though, what I'll say is though,
Speaker 6: this is a really great opportunity for him, as a
Speaker 6: government contractor, as somebody who does a lot of things
Speaker 6: having to do with the government, to have influence. So
Speaker 6: I think he's going to ride this train as long
Speaker 6: as it'll go. And I think he does have levers
Speaker 6: that he can pull that will make it harder for
Speaker 6: Donald Trump to push him away than say it was
Speaker 6: to be able to push away these other sort of
Speaker 6: business leaders who got close to Trump the last time around.
Speaker 6: He's not. You know, he has a lot more ways
Speaker 6: to influence Trump than say Anthony Scaramucci, you know, who
Speaker 6: famously lasted ten days as the Press secretary.
Speaker 2: MAXs One thing, I'm curious about all that spending that
Speaker 2: Elon must did on this campaign. I mean, it wasn't
Speaker 2: just a case of just throwing money. I mean he
Speaker 2: was involved in like creating, you know, hiring companies, getting
Speaker 2: people to do it. It was a whole new different way
Speaker 2: of campaigning for a candidate.
Speaker 6: Yes, super unusual. So you're talking about really big money.
Speaker 6: You said one hundred and thirty two million. I think
Speaker 6: when all said and done, is going to be closer
Speaker 6: to two hundred million. So kind of up there with
Speaker 6: the biggest contributions of any donor. And then this approach
Speaker 6: that is really different from any other mega donor. You
Speaker 6: know that Sheldon Edelson was just giving writing big checks
Speaker 6: and staying behind the scenes. That's kind of the model
Speaker 6: Elon Musk, as you said, front and center he's made.
Speaker 6: He made Donald Trump and sort of trump Ism, you know,
Speaker 6: the editorial focus of X, his social network. He was
Speaker 6: on the campaign trail, He's tweeting NonStop. He is he
Speaker 6: is some he brings things to this that are unquantifiable
Speaker 6: and that are probably worth more than the two hundred
Speaker 6: million he put in.
Speaker 3: Hey, one thing I want to talk about is the
Speaker 3: platform X. And you know we talked. In the two
Speaker 3: years that he's owned it, there have been valuation right
Speaker 3: downs by Fidelity for example, how should we be looking
Speaker 3: at the valuation of X, or how should we be
Speaker 3: looking at X as sort of a platform arm of
Speaker 3: the Republican or communications arm.
Speaker 6: Well, it's both a business and it's a loss leader
Speaker 6: media arm for the Elon Ink conglomerate, right, Like, those
Speaker 6: are the two things, those are two functions it serves
Speaker 6: as a business. It hasn't gone super well, as you said,
Speaker 6: Fidelity has written down the value massively. Elon Musk essentially
Speaker 6: taking it over, decided he didn't care about advertising. He
Speaker 6: decided that, you know, he was going to be okay
Speaker 6: with not having a vibrant advertising business. He literally told
Speaker 6: advertisers to f off, you know, from the stage of
Speaker 6: a major conference. And what he's done is sort of
Speaker 6: accepted that this is going to be a less successful business,
Speaker 6: but try to maintain its influence and maybe even intensified.
Speaker 6: And I'd argue in that way it's been a huge success.
Speaker 6: It's been a huge success of political play and even
Speaker 6: as a community like it may not be super vibrant
Speaker 6: in the way it was before. There are a lot
Speaker 6: of journalists who are you know, currently leaving to go
Speaker 6: to Blue Sky or Threads or these competing social networks.
Speaker 6: They're growing very quickly. But among conservatives, among that kind
Speaker 6: of like base that elected Donald Trump, they are on X.
Speaker 6: This is where they are getting their news right now.
Speaker 2: All right, good to leave with there. Hey, Max asoways,
Speaker 2: thank you. Max Chafkin, columnist at Bloomberg BusinessWeek.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Listen live
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Speaker 9: Yeah, let's see.
Speaker 3: Look at shares of Plug Power, the green hydrogen company.
Speaker 3: They're hired today at one point Caroll by nearly ten percent.
Speaker 3: This after shares fell yesterday after the company cut its
Speaker 3: revenue guidance for the full year and missed the average
Speaker 3: analyst estimate. We've got back with us. Andy Marsh, president
Speaker 3: and CEO over at Plug Power, joining us from Plug's
Speaker 3: annual symposium event just outside of Albany, New York. Andy,
Speaker 3: always get to check in with you. Welcome back to
Speaker 3: the program. First, we got to go there. Uh, I'm
Speaker 3: wondering how you're looking at the Trump administration, the second
Speaker 3: Trump administration, given that Elon Musk is so close to him,
Speaker 3: obviously a proponent of EVS. What is having Elon so
Speaker 3: close to Trump mean for hydrogen and for plug power?
Speaker 9: Oh, Tim, I don't get too excited about this, Timmy.
Speaker 9: I've been watching political elections since I was a kid
Speaker 9: in nineteen sixty eight, and you know, things are always
Speaker 9: extreme at the beginning. I think the real question is, uh,
Speaker 9: you know, think a little bit about what Exon CEO
Speaker 9: said yesterday where he said that, you know that Trump
Speaker 9: administration should be thoughtful about their clean climate, clean energy policies.
Speaker 9: And we had two analysts here are Plug Symposium today,
Speaker 9: one Republican, one Democrat. Uh, you know they'll tell you.
Speaker 9: I think the fueling across the board is that small
Speaker 9: nuclear hydrogen, sustainable aviation fuel with biofuel rules you know,
Speaker 9: are in pretty good shape compared to other technologies. And look,
Speaker 9: if you look at my electoralizer business, uh, ninety five
Speaker 9: percent of its outside the United States, and that's my
Speaker 9: biggest growth opportunity. I had one customer flow of forty
Speaker 9: five hours from Australia to present, today, so I'm not
Speaker 9: I don't get too excited about those things.
Speaker 2: I will say, though, Andy, there was some disappointment about
Speaker 2: your forecast, but I do believe you know, you guys
Speaker 2: came out and said, you know, you're still making progress.
Speaker 2: Kind accord atoms, they did lower their price target a
Speaker 2: little bit on the stock. What can you tell us
Speaker 2: about the outlook and give us a little bit more
Speaker 2: insight into how things are going well.
Speaker 9: I think that if you take a look at it
Speaker 9: around the world, I think there's a couple of drivers. One,
Speaker 9: we're working on deals, which are you know, overall for
Speaker 9: people five to seven billion dollar type projects, and we
Speaker 9: probably we're probably overly optimistic about how fast projects like
Speaker 9: that could come to fruition. That being said, they're actually
Speaker 9: paying us to do the work now to prepare to
Speaker 9: do those deployments. And look, you know, regulations haven't moved
Speaker 9: as fast anywhere around the world. It's tough to get
Speaker 9: regulations in place, but they're moving.
Speaker 1: You know.
Speaker 9: We see, as I mentioned, see great progress in Europe,
Speaker 9: actually see progress here in the United States. So we
Speaker 9: and we've also look, it's been a bit of a
Speaker 9: hall here, Carol, and we become a little bit more
Speaker 9: conservative in how we forecast the.
Speaker 2: Future, understood, understood, and respect. Andy, one thing about do
Speaker 2: you think a Trump administration and any expectations around the
Speaker 2: policies that impact your business will be positive or negative?
Speaker 9: That's really interesting question. I know one of the items
Speaker 9: which we've struggled with with the IRA is the production
Speaker 9: tax credit for hydrogen. And you know, we believe we've
Speaker 9: been pretty clear about we think that the regulations that
Speaker 9: were initially written included concepts of a three pillars for
Speaker 9: the hydrogen economy, which was nowhere in the legislation. We
Speaker 9: think the Trump administration will probably be more in gear
Speaker 9: with the recent Loper decision by the Supreme Court and
Speaker 9: where the rate where Congressional intent and how it's implementing
Speaker 9: regulations will be more aligned. Look, I'm not naive either too.
Speaker 9: I don't expect a lot of new programs for hydrogen,
Speaker 9: but we'll do quite well if the new O programs
Speaker 9: are implement the way Congress intended.
Speaker 3: Hey, Andy, I'm wondering the Inflation Reduction Act and what
Speaker 3: that's meant for your business and to what extent you
Speaker 3: could see it parts of it rolled back and how
Speaker 3: that would affect your business when Trump takes office in January.
Speaker 9: So you know, I have a lobbyist who spoke here
Speaker 9: today at the symposium, who sat on the Republicans houseways
Speaker 9: and means runs a tax plan he does not expect
Speaker 9: that he expects to roll back will be on things
Speaker 9: like offshore wind. Look, I think eighty percent of what
Speaker 9: I do is actually done in red districts, in red states.
Speaker 9: I have a large contingent of folks in Houston looking
Speaker 9: to build a large hydrogen plan in Texas. I have
Speaker 9: a hydrogen plan operating in Georgia and Tennessee. Most of
Speaker 9: my customers are in red states. And so you know,
Speaker 9: I think, you know, I think Congress still matters, and
Speaker 9: you know, I think John Thum being centate majority leader
Speaker 9: is you know, is a sign that you know, you know,
Speaker 9: activities won't be extreme one way or another. I think
Speaker 9: there'll be a balance approach. Look, you know, I think,
Speaker 9: as folks mentioned, I think the mantra is all the above,
Speaker 9: and what we do is all the above. And look,
Speaker 9: if we don't do it here in the United States,
Speaker 9: you're going to do it in China. And certainly a
Speaker 9: Trump administration doesn't want it done.
Speaker 2: In China, Andy, how much pressure are you feeling from
Speaker 2: the investment community. I mean, your stock's down about fifty
Speaker 2: six percent year to date, about twenty five almost a
Speaker 2: quarter percent of the float is shorted. It's a two
Speaker 2: dollars stock. I'm just curious what kind of pressure you
Speaker 2: are feeling from investors at this point.
Speaker 8: Yeah.
Speaker 9: So, I plug has thirty one analysts. I had twenty
Speaker 9: of them here today. Actually, the short position is probably
Speaker 9: larger than that, Carol, it's probably thirty seven percent. And
Speaker 9: I think a lot of folks believe that as we
Speaker 9: continue making progress, there's a large opportunity for you short squeeze.
Speaker 9: So you know, I think our investors want to see
Speaker 9: it happen. I spoke with a lot of them here today.
Speaker 2: But you want to be more than a short squeeze
Speaker 2: right to investors? Ye, to be to investors a fundamental play.
Speaker 9: No, yeah, I would say this, Carol. Uh. We do
Speaker 9: want to be a fundamental play. And I think the
Speaker 9: shorts have had a lot of control of the stock,
Speaker 9: and if we are a fundamental play, the stock will
Speaker 9: do just fine. All right, good question?
Speaker 1: Yess?
Speaker 3: Wait?
Speaker 6: Sorry?
Speaker 3: Can you can you god go ahead?
Speaker 5: No?
Speaker 9: Please go ahead.
Speaker 3: Hey, I want to know about production of hydrogen and
Speaker 3: how you're able to, uh you do it in a
Speaker 3: way that's not energy intensive, because that's one thing that
Speaker 3: we talk about a lot. When you're actually producing this,
Speaker 3: a lot of energy is used. So yes, it is
Speaker 3: sort of we you know, people call it a green solution,
Speaker 3: but it still uses a lot of energy.
Speaker 9: It uses a lot of energy, but it also creates
Speaker 9: a lot of energy too too. So let me tell
Speaker 9: you where I think hydrogen we'll really see and you're
Speaker 9: seeing already, is in applications today where hydrogen is used
Speaker 9: in oil refinery, in concrete manufacturing, in ammonia production. You
Speaker 9: know where it will be used at first is in substitution, okay,
Speaker 9: and ultimately and ultimately, you know, what we focus on
Speaker 9: is improving the efficiency of electrializers. And you can get
Speaker 9: to the point where you know, you're never going to
Speaker 9: be at the point where energy in equals energy out,
Speaker 9: but you can get to the you can get to
Speaker 9: a point where it's far superior to even today. It's
Speaker 9: you know, if you think about the full life cycle,
Speaker 9: it's superior to natural gas turbines. So I'm not you know,
Speaker 9: but that is a big, big focus of the company.
Speaker 3: All right, Andy Marsh, we're gonna leave it there. President
Speaker 3: and CEO over at Plug Power joining us just outside Albany,
Speaker 3: New York.
Speaker 5: Romco the journal.
Speaker 7: Now about you, let me drive?
Speaker 6: Oh no, no, no, no, all right, please, I'll do the gravel.
Speaker 2: I want to drive.
Speaker 7: It's a good question.
Speaker 1: This is the drive to the globe dot com. We'll
Speaker 1: each other down on Bloomberg Radio.
Speaker 2: All right, everybody, just about sixteen minutes left in today's
Speaker 2: trading session. Crouncing around a little bit, a little bit
Speaker 2: more of a muted trade, certainly on the equity side
Speaker 2: of things, but let's get to it. We did get
Speaker 2: an inflation read earlier this morning.
Speaker 1: With us.
Speaker 2: Back with us is Doug Cyoka, CEO and partner at
Speaker 2: Kavar Capital. They've got about one and a half billion
Speaker 2: in assets under management, joining us from his alma mater,
Speaker 2: Notre Dame.
Speaker 6: Doug.
Speaker 2: Good to have you back with us.
Speaker 5: How are you hey? I am great, Thank you for
Speaker 5: having me on and great to be back.
Speaker 2: Well, it's great to have you here. Nothing's going on,
Speaker 2: quiet as could be. The election, the outcome, I don't know,
Speaker 2: how does it change your thinking about the investment environment
Speaker 2: and what's to comers. It just really too soon to tell,
Speaker 2: but we are getting a lot on his cabinet, you know,
Speaker 2: nominees and key advisor nominee. So I don't know if
Speaker 2: that starts to paint a picture of maybe what's to come.
Speaker 5: Yeah, I mean, I think like the one thing that
Speaker 5: certainly helps is is we've had a four years of
Speaker 5: President Trump before, so you know, we're going through and
Speaker 5: experiencing kind of like the old expression of history may
Speaker 5: not repeat itself with it often rhymes. So we're having
Speaker 5: a lot of conversations about like the devilish impact of
Speaker 5: tariffs and trade war two point zero and what does
Speaker 5: this really mean for the yield curve? And I think
Speaker 5: it's it's early right. There are in politics promises versus policy,
Speaker 5: and somewhere between the two will actually lie to the
Speaker 5: outcome of what will transpire. So yeah, I think, look,
Speaker 5: the momentum that's in place that's celebrating what is purported
Speaker 5: to be very much a free trade emphasizing low regulation,
Speaker 5: low tax platform, it likely will be hard to stop
Speaker 5: that going to year into year end, which is seasonally
Speaker 5: pretty strong anyway. But I do think there are gonna
Speaker 5: be a lot of opportunities that emerge, without question.
Speaker 3: What kind of opportunities.
Speaker 5: So right now I think you know more than anything.
Speaker 5: Like we think that's happening in the fixed income markets
Speaker 5: is really fascinating. I mean, everyone's talking about the yield curve.
Speaker 5: Oh my god, how can it possibly see like at
Speaker 5: some some lift in the long end. After the Fed
Speaker 5: has now cut seventy five basis points and two consecutive meetings,
Speaker 5: you realize that this is the third time the last
Speaker 5: five cut undertakings that a month later the curve is
Speaker 5: either flat or a little higher. Right, And it makes
Speaker 5: a ton of sense to us to think about term
Speaker 5: premium steepens is to reflect the fact that there's an
Speaker 5: incipient risk of inflation because the Fed is cutting, GOP
Speaker 5: is still strong, Normalization is validating a labor market that
Speaker 5: is back in balance, Inflation is under control as we
Speaker 5: saw this morning, though not creating lower and the dollar
Speaker 5: is strong. So we think this is a very positive
Speaker 5: transformation away from some pretty steep in version of normalization
Speaker 5: where we can actually pick up yield to make a
Speaker 5: little longer loan. So we're really happy what's happening in
Speaker 5: the fixed income market, right.
Speaker 2: So what's the specific play then, right now?
Speaker 5: Yeah, excuse me. I think the play is in the
Speaker 5: belly of the curve, and I think the play is
Speaker 5: in credit, and I think the play is going to
Speaker 5: be because what happened right in the MEATI market, which
Speaker 5: is kept such a bid in those bonds throughout the
Speaker 5: year in spite of a really ho hun performance by
Speaker 5: the AD, is that this is going to be like
Speaker 5: this is a mind boggling idea. Right, Local governments and
Speaker 5: municipalities actually have to balance the budget. So there's a
Speaker 5: lot of terming out that had taken place. There's not
Speaker 5: a lot of paper that's come to market because some
Speaker 5: of these treasure of this municipalities exhibited very strong foresight
Speaker 5: and locking in little rates for a longer period of time.
Speaker 5: Corporation's not as much, government's not as much. So we're
Speaker 5: seeing that five to seven year period in the curve
Speaker 5: very attracted us. You clip a lot of coupons. Oh
Speaker 5: and if you do get a tailwind from consecutive FED cuts,
Speaker 5: even if they're not going to be as much or
Speaker 5: as big as people thought a year ago, that's going
Speaker 5: to actually give a nice contribution to the total return
Speaker 5: of yield plus appreciation.
Speaker 3: Any any inflationary risks. When it comes to Trump's agenda tariffs,
Speaker 3: we're gonna be speaking about those. We're going to speak
Speaker 3: about those a little later.
Speaker 5: Yeah, no question, right, And I think that that is
Speaker 5: an issue. And again you've got to go back and say, Okay,
Speaker 5: in Trade War one point zero, how much of an
Speaker 5: impact that I have on CPI forget PZ for a
Speaker 5: sec very little, Right, So really, if you go back
Speaker 5: twenty eighteen and nineteen during Trade War one point zero,
Speaker 5: you saw CPI remain pretty stable at almost exactly the
Speaker 5: FED targeted two percent. Now you have to take into
Speaker 5: consideration the backdrop is a little bit different than right.
Speaker 5: You had bubble demand for manufactured goods with a little
Speaker 5: bit weaker slowing trade had already be going to take place,
Speaker 5: which is not the case right now. But you've got
Speaker 5: to keep in mind the changing transformation and composition of
Speaker 5: the US economy. Spending on services right now is sixty
Speaker 5: six percent, in goods thirty three percent, So so much
Speaker 5: of the tariffs that people are fearful going to be
Speaker 5: passed down to a tax to the consumer, it's just
Speaker 5: not impacting as much as their pocketbook as it did three, five,
Speaker 5: seven years ago.
Speaker 3: What's good on It's crazy, It's nuts, I mean yeah,
Speaker 3: everything's coming fast and fear. It's Doug. Thanks for joining us.
Speaker 3: Always get to check in with you. Starts cut a
Speaker 3: little short. We had a lot of breaking news today.
Speaker 3: Definitely appreciate you taking the time. Doug Cioka, CEO and
Speaker 3: partner over at Kabar Capital Partners.
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