Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays
Speaker 2: at seven am Eastern on Apple car Player, Android Auto
Speaker 2: with the Bloomberg Business App. Listen on demand wherever you
Speaker 2: get your podcasts, or watch us live on YouTube.
Speaker 3: Francis Donald joins is.
Speaker 4: She's a chief economist at RBC, that's Royal Bank of Canada. Francis,
Speaker 4: what did you make of the FED statement yesterday, maybe
Speaker 4: the chairman's comments and then the market's reaction.
Speaker 3: What did you take away from them?
Speaker 5: Well?
Speaker 6: Interesting, almost no change to the statement and actually not
Speaker 6: a material change to the forecasts for growth and for
Speaker 6: the unemployment rate. But of course the big focus now
Speaker 6: moving towards inflation, and it just struck me as very
Speaker 6: interesting that, yes, we've had some minor surprises to the
Speaker 6: upside with inflation in the past few months, but that was.
Speaker 7: A really big move and a big.
Speaker 6: Change in policy outlook off of the data that we've seen.
Speaker 6: I could have maybe seen a slight change in tone
Speaker 6: or maybe taking out one of those cuts for next year,
Speaker 6: but this is really a federal reserve that, even though
Speaker 6: they say they're not incorporating the effect of Trump policies,
Speaker 6: or some of them are, but some of them are not.
Speaker 6: Is absolutely internalizing what they expect to come next. It
Speaker 6: is in their psyche, in their biases. They are afraid
Speaker 6: of inflation. And Powell, while trying to speak out of
Speaker 6: both sides of his mouth, really gave the impression that
Speaker 6: the Fed is focused on what those CPI PC numbers
Speaker 6: are going to look like, and therefore that's what the
Speaker 6: market will be focused on.
Speaker 5: And you're hinting at how Powell was talking about during
Speaker 5: the press conference, how there were some officials, not all
Speaker 5: of them would identify that, but that there was policy uncertainty,
Speaker 5: especially when they're thinking about the trajectory of when it
Speaker 5: came to inflation, starting to incorporate that in their dots
Speaker 5: and their outlooks for twenty twenty five in the years ahead.
Speaker 5: And obviously pal isn't going to address kind of the
Speaker 5: elephant in the room when you're thinking about the plans
Speaker 5: for fiscal side of that, but they're going to focus
Speaker 5: on what's going on with the economy and inflation. So
Speaker 5: how do you think the FED moves forward? Because when
Speaker 5: you think back to even the last minute time Trump
Speaker 5: was in an office, it's not really the same type
Speaker 5: of playbook because the Fed's trajectory with rates was in
Speaker 5: a very different spot as the economy was, and that
Speaker 5: was well ahead of what happened with COVID.
Speaker 6: Well back in twenty eighteen, a scary inflation would be
Speaker 6: like three percent. That would have been for many folks.
Speaker 6: That would have been some of the highest inflation that
Speaker 6: they had seen. That would be enough to spook bond markets. Now,
Speaker 6: of course we're old had a three percent it's not
Speaker 6: so terrifying. But the American people have gone through, for
Speaker 6: many of them, the largest price level shock that they've
Speaker 6: experienced in their entire lives, and prices are over thirty
Speaker 6: percent higher than they were when Trump first took office,
Speaker 6: so that the ability to withstand and take higher prices
Speaker 6: is going to be much lower for households, for businesses,
Speaker 6: and also for the federal Reserve. You mentioned fiscal I
Speaker 6: think this is really key, you know, I think we're
Speaker 6: still consensus economists and Marcus underappreciated how massive fiscal spending
Speaker 6: has been in the United States and how much it
Speaker 6: has complicated the federal reserves job. So they talked a
Speaker 6: lot about what neutral is Yesterday but then they talked
Speaker 6: about maybe short.
Speaker 5: Term neutral and long term neutral.
Speaker 6: And to me that was a nod to just how
Speaker 6: big fiscal spending has supported growth, and we've seen it
Speaker 6: today in some upward revisions. If we get a pullback
Speaker 6: in fiscal spending or an acceleration in fiscal spending, that
Speaker 6: is a huge input into the federal reserve, probably more
Speaker 6: important than just tariffs alone, which they've said they can
Speaker 6: look through to a certain extent.
Speaker 4: So can you just define for me how you define
Speaker 4: neutral rate and how do you think how's that changing
Speaker 4: over time?
Speaker 6: So generally, you know, the textbook definition is the rate
Speaker 6: that is neither tightening nor easing on the economy. We
Speaker 6: don't know what it is, and actually we have even
Speaker 6: less visibility into it right now because of a few factors.
Speaker 6: One of course, is how big government spending is and
Speaker 6: countercyclical government spending. The other is that we know there's
Speaker 6: tremendous unevenness that exists underlying this economy. So even though
Speaker 6: on the surface the economy looks good, it's actually doing
Speaker 6: real bad for manufacturers, housing is really struggling in low
Speaker 6: income Americans, so their neutral rate is going to be
Speaker 6: different than the neutral rate for the whole economy, and
Speaker 6: then underlying the surface, we have this AI and productivity boom,
Speaker 6: which is probably meaning that the economy can grow sustainably
Speaker 6: higher from where it was.
Speaker 3: So there's short.
Speaker 6: Term factors and long term factors. How has my thinking
Speaker 6: changed on that, Well, the uncertainty around neutral is much larger,
Speaker 6: and what that effectively means is that if you can't
Speaker 6: see in front of you, you don't know where the
Speaker 6: cliff is, the odds that you fall off of it
Speaker 6: are much larger than if all the lights are on
Speaker 6: our it's sunny outside. So my concern with neutral is
Speaker 6: that this is a FED that's very wetted to the
Speaker 6: idea of getting to neutral and then staying at neutral.
Speaker 6: But given that we have very little understanding of what
Speaker 6: it is, the odds of a policy mistake on either
Speaker 6: side of it is much higher now than it would
Speaker 6: have been even two years ago.
Speaker 5: And you were bringing up sort of the dynamic BG
Speaker 5: because when we're looking at say data that's coming out,
Speaker 5: I mean, we just got an update on third quarter
Speaker 5: GDP coming in revised hire at three point one percent.
Speaker 5: Obviously we'll have another update on the Fed's preferred gage
Speaker 5: for inflation tomorrow with PCE. But we think a lot
Speaker 5: about the rate of change when you're looking at the
Speaker 5: month of a month or year of a year figures.
Speaker 5: But when you're going to the grocery store, a lot
Speaker 5: of people obviously you're thinking about price levels, what they
Speaker 5: were spending and paying for things before COVID obviously versus
Speaker 5: now those kind of psychological impacts. How long do you
Speaker 5: think it'll take before How many years could it take
Speaker 5: before that kind of shakes out because there's a very
Speaker 5: disconnect there for people.
Speaker 6: I think this is generational inflation trauma. I think when
Speaker 6: we hear, you know, when I work with folks who
Speaker 6: talked to me about the nineteen seventies and how that
Speaker 6: framed their entire perspective on markets. I mean, prices are
Speaker 6: up twenty percent in just four years. It is phenomenal
Speaker 6: inflation that we never expected to see and many didn't
Speaker 6: believe could occur. But more problematically, it's coming from sources
Speaker 6: that are not interesst rate sensitive to the same extent,
Speaker 6: and that complicates the Fed's job because they can hike
Speaker 6: interest rates all they want, it's not going to solve
Speaker 6: geopolitical fragility. It's not going to make it Rain and
Speaker 6: Brazil when there's droughts that occur. So it isn't just inflation.
Speaker 6: It isn't just the price level shock. It's the nature
Speaker 6: of how inflation is changing that I think is particularly problematic.
Speaker 6: But share Powell did mention this, and I think this
Speaker 6: is really important, that there's a difference between high prices
Speaker 6: and high inflation. The side point to that too, is
Speaker 6: inflation is problematic when it doesn't come with wage growth.
Speaker 6: So if prices are more, if things cost more, but
Speaker 6: you're making a lot more money, it's not going to
Speaker 6: bother you as much. So inflation really started to be
Speaker 6: something we're talking about a lot more, really much more
Speaker 6: in the last twelve to twenty four months when wage
Speaker 6: growth started to decline versus in the first stage, when
Speaker 6: we had checks going out and wage growth was accelerating,
Speaker 6: the labor market was tight. So when I think about inflation,
Speaker 6: when I think about the neutral rates, I'm also also
Speaker 6: bringing into the perspective of what is wage growth doing
Speaker 6: in this environment.
Speaker 5: Well, I want to ask you too, because the incoming
Speaker 5: administration has made promises to lower prices, But when were
Speaker 5: thinking about the fiscal side, of things versus the monetary side.
Speaker 5: I mean, what real are options does an administration have
Speaker 5: in order to do that? And is that even possible?
Speaker 6: Well, lower prices would mean deflation, that means CPI, that's negative,
Speaker 6: and we're struggling to get there right now. That might
Speaker 6: be something that can be achieved in pockets, but just
Speaker 6: getting down to two percent is really the challenge. Fiscal
Speaker 6: is going to be such an important component to this story.
Speaker 6: I've been on this show I think it's here last
Speaker 6: month and talking about how important immigration will be, how
Speaker 6: immigration actually weighs on our outlook and our concerns about
Speaker 6: the US economy more than teriffs, which tend to be
Speaker 6: one off shocks and we know how to use them.
Speaker 6: But this is a government, the US government. If they
Speaker 6: pull back on spending, they'll be able to create disinflation
Speaker 6: and help bring it back and allow the FED to
Speaker 6: ease more. But it's also going to pull back on growth.
Speaker 6: So in my mind, it's going to be difficult for
Speaker 6: the fiscal arm to create disinflation or deflation without also
Speaker 6: materially raining in GDP.
Speaker 8: So pick your poison, yep, exactly.
Speaker 4: Francis, Thank you so much for joining US Francis Donald.
Speaker 4: She's a chief economist at RBC based in Montreal, Canada.
Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 2: weekday afternoons from seven to ten am. Easter Listen on
Speaker 2: Apple car Play and Android Auto with a Bloomberg Business app,
Speaker 2: or watch US live on YouTube.
Speaker 4: Daniel d Martino Booth. She's a CEO on Chief Strategiste
Speaker 4: QI Research. Danielle, what did you take from yesterday's meeting,
Speaker 4: press conference, all.
Speaker 3: That kind of stuff.
Speaker 9: I don't think the market likes surprises, and I think
Speaker 9: you should stay past noon today right for the greater good? Okay, please, no,
Speaker 9: you know, I don't know if yesterday was about legacy.
Speaker 9: You know, we've got sixteen seventeen months left in J.
Speaker 3: Powell's term.
Speaker 8: I think he.
Speaker 9: Is going to be one hundred percent about optionality. If
Speaker 9: he was an economist yesterday, he was an economist with
Speaker 9: three arms on the one hand, on the other hand,
Speaker 9: and on the other other hand. You know, when you
Speaker 9: look at the largest input to inflation, it's running about
Speaker 9: two point six percent on an annualized basis the lowest
Speaker 9: twenty twenty one, So that large, huge driver of inflation
Speaker 9: these last few years is coming down. Ivy Zellman just
Speaker 9: came out with her apartment operators surveyed this morning. She's
Speaker 9: showing the same kinds of downside because occupancy right now
Speaker 9: is at the lowest in records that she's got back
Speaker 9: to two thousand and one. So there's a supply overhang
Speaker 9: that's going to continue to be kind of an anchor
Speaker 9: on rental inflation. That's ironically something that Beth Haddock might
Speaker 9: have communicated from the Cleveland Fed, since they're running the
Speaker 9: Fed's only real time rent index. And yet there she
Speaker 9: was the dissenter she was.
Speaker 5: And obviously there's two crucial debates when it comes to
Speaker 5: the direction of federals or policy. And we've talked so
Speaker 5: much about this what's the neutral rate for the post
Speaker 5: pandemic economy? And then also when you're thinking about policy changes,
Speaker 5: whether it's tax, immigration, regulation, trade, tariffs, and obviously the
Speaker 5: inflation forecast. So how do you view those two issues
Speaker 5: going into twenty twenty five.
Speaker 9: Well, and you know, I mean there's a huge unknown.
Speaker 9: Let's just say that the tariffs have double the effect
Speaker 9: that they had in twenty eighteen, twenty nineteen, You're starting
Speaker 9: off with goods at negative zero point six goods, you're
Speaker 9: starting off at a point of goods deflation.
Speaker 3: Even if you get double.
Speaker 9: The effect of twenty eighteen twenty nineteen, because of the
Speaker 9: anchor that I just mentioned to you, which is rent
Speaker 9: disinflationary pressures, the Fed's still going to come in below
Speaker 9: where their end of the year inflation forecast is. So again,
Speaker 9: I think right now that they are there, they're playing
Speaker 9: out scenarios, and they're playing out what ifs, and they're saying,
Speaker 9: if the peanut butter hits the fan, we want to
Speaker 9: be ready to be in less of an aggressive easing stance.
Speaker 9: I don't see much beyond that. January tends to be
Speaker 9: a throw the baby out with the bathwater type of month.
Speaker 9: You tend to see layoff announcements spike, you tend to
Speaker 9: see bankruptcies lift off of where their current run rate is,
Speaker 9: which according to bcy GO, you're at about twenty for
Speaker 9: the month for the month of December on a run
Speaker 9: rate basis. You hit twenty two in the month of November.
Speaker 9: That was the second highest in post pandemic era. So
Speaker 9: if we continued to just see more of the same
Speaker 9: and again January tends to be a very ugly seasonal
Speaker 9: month because anything that you've been holding off of, if
Speaker 9: the holidays didn't lift you up and pull you through,
Speaker 9: then whether you're at the container store or big lots,
Speaker 9: you're going to liquidation pretty soon here. So I appreciate
Speaker 9: the optionality. I was surprised at the magnitude of the
Speaker 9: surprise to the markets. But maybe he's saying, I'm not
Speaker 9: going to be the next Arthur Burns.
Speaker 5: Come with May.
Speaker 3: Yeah.
Speaker 4: Well, you always remind us of this bcy go function,
Speaker 4: the turbol, and I always forget it. But it's a
Speaker 4: great function to show you bankruptcies and the companies and
Speaker 4: the industries they're in the assets the liabilities, a great,
Speaker 4: great function. So the dots and dots another cool function
Speaker 4: on the blood of terminist I guess we're kind of
Speaker 4: going from fourish to two in terms of rake.
Speaker 3: Cuts for next year. Yeah, is that reasonable from your.
Speaker 9: Perspective according to the terminal end of the dot plot,
Speaker 9: which you could have driven a mac truck through. No,
Speaker 9: I mean the disparity two point four percent to three
Speaker 9: point nine percent, one hundred and fifty basis points of disagreement.
Speaker 9: Let me tell you I was inside for nine years.
Speaker 3: That's a lot of Dallas fed at the Dallas, Yes.
Speaker 8: But we would were.
Speaker 9: I was there for the pre briefs, I was there
Speaker 9: for the debriefs. One hundred and fifty basis points of
Speaker 9: disparity with seventeen members of the Federal up Market Committee
Speaker 9: is a lot. And that's that's how far apart views
Speaker 9: are on what the terminal rate's going to be.
Speaker 5: And we saw another descent obviously at this meeting. How
Speaker 5: do you view the debate amongst officials at the FED
Speaker 5: as they get closer to where they think the neutral
Speaker 5: rate is.
Speaker 9: I think they're wondering about this new kid on the block,
Speaker 9: Bell Hammock Can Company.
Speaker 5: Usually you get your sea legs.
Speaker 9: As as a district president. But she came out swinging
Speaker 9: and swinging hard. And what was curious to me, though,
Speaker 9: was if there was one person among the seventeen who
Speaker 9: was saying, no, I'm voting for a pause, why wasn't
Speaker 9: she joined by Michelle Bowman, who was equally hawkish. A
Speaker 9: few meetings ago from her, we saw the first federserve
Speaker 9: governor descent since Mark Olsen had done that in two
Speaker 9: thousand and five. So I was surprised if there was
Speaker 9: that robust of a debate that there weren't two Hawks
Speaker 9: and a double descent yesterday, because usually.
Speaker 5: Think Chris Waller cho's kind of on the Hawks spectrum
Speaker 5: as well, in addition to Mickey Bowman.
Speaker 9: Well, but but Chris Waller is also Jay Powell's first lieutenant,
Speaker 9: closest confidante, never going to vote against the boss man.
Speaker 5: I said it out loud, Yeah, Beth had Mica.
Speaker 4: I was just looking up her bio in the Bloomberg triminal.
Speaker 4: I forgot she's the Goldman Sachs person.
Speaker 3: So indeed, no surprise. I guess that she would feel
Speaker 3: comfortable outside the loop a little bit, and there's nothing
Speaker 3: wrong with that. No, No, we have to have descent
Speaker 3: on the board.
Speaker 9: And I think the public, I think the investing public
Speaker 9: needs to know that it's not just one great, big
Speaker 9: oval table in the Echos buildings surrounded by yes men
Speaker 9: and yes women.
Speaker 5: Yep.
Speaker 4: So, I mean, where do we go in next year?
Speaker 4: What are you telling your clients about twenty twenty five?
Speaker 3: Is there a theme you're talking about.
Speaker 9: I'm telling my clients that either Trump lands in office
Speaker 9: and the private sector wakes up and says we're finished
Speaker 9: firing people, We're finished cutting costs, despite the fact that
Speaker 9: in earning season we've been hearing one company after and
Speaker 9: they're not miss on their bottom line, but miss on
Speaker 9: their top line. So ConAgra again, we're not seeing the
Speaker 9: consumer consume. Yesterday that General Mills that Knagor was echoing
Speaker 9: General Mills yesterday saying, thank Heavens, we sell food that
Speaker 9: people eat at home because they ain't eating out, which
Speaker 9: is something we saw in the retail sales right with
Speaker 9: a negative print for restaurants.
Speaker 3: So we're going to have to.
Speaker 9: See a turnaround in the consumer. I'm not so sure
Speaker 9: that that's going to be the case, because the credit
Speaker 9: reporting bureaus in January they get to hear about fifty
Speaker 9: percent or so over the forty two million Americans who
Speaker 9: still have student loans who haven't made a payment since
Speaker 9: March of twenty twenty. That to me signals that there's
Speaker 9: going to be a little bit more underwriting strictness going
Speaker 9: in to the new year, because you're going to see
Speaker 9: the consumer finally take their lumps after not having paid
Speaker 9: for nearly four years on these student loans. Nothing's been
Speaker 9: reported since then January if you were not paying as
Speaker 9: of October the first, twenty twenty four, you finally get
Speaker 9: reported to the experience and trans unions of the world.
Speaker 4: All right, Danielle, thank you so much for joining us again.
Speaker 4: Daniel Dee Martinezroll. She's based on in Dallas, but we
Speaker 4: appreciate when she comes to New York she gives usumm
Speaker 4: of her time here in our studio.
Speaker 3: We really appreciate that.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 2: starting at seven am Eastern on applecar Play and Android
Speaker 2: Auto with the Bloomberg Business app. You can also listen
Speaker 2: live on Amazon Alexa from our flagship New York station,
Speaker 2: Just say Alexa Bloomberg eleven.
Speaker 4: Wendy Schuller joins us right now, Professor Brown University. Just
Speaker 4: get some thoughts here on what's happening to you political Wendy.
Speaker 3: I know you.
Speaker 4: Listened to that interview as we did. Secretary of Blincoln
Speaker 4: again voicing some optimism that maybe some progress can be
Speaker 4: made there in the Middle East over the coming weeks.
Speaker 7: Well, I'm good morning.
Speaker 10: I'm sure that the Biden administration, particularly Sectary of Lincoln,
Speaker 10: would like to see the release of the hostages and
Speaker 10: some sort of more permanent ceasefire reached in Gaza before
Speaker 10: January twentieth. You know, Biden's had a pretty rough ending
Speaker 10: to his presidency, and I think the world would like
Speaker 10: to see this conflict come to a close and have
Speaker 10: the hostages released. It's a little reminiscent, although many of
Speaker 10: us might have been quite young at the time, but
Speaker 10: for the hostage release in Iran and Ronald Reagan's presidency
Speaker 10: in nineteen eighty one. But you have to think this
Speaker 10: is a complex world, and what Blincoln's trying to say
Speaker 10: is we are leaving it in the best shape we can,
Speaker 10: and we are communicating with incoming Secretary of State Marc
Speaker 10: or Rubio's team, and that there is stability in US
Speaker 10: foreign policy. And I think that's something very important that
Speaker 10: at least the Biden administration wants to project for the
Speaker 10: incoming Trump administration.
Speaker 5: In speaking of the Trump administration, Wendy, I wanted to
Speaker 5: point out a flash that we have on the terminal.
Speaker 5: Here is Trump talking actually to Fox News here seeing
Speaker 5: that Johnson to remain speaker if he acts tough enough. Here.
Speaker 5: What's your reaction to this as far as when you
Speaker 5: have the president, like, obviously we still have less than
Speaker 5: a month before the inauguration. We actually have actually just
Speaker 5: a little bit because it'll be on January twentieth. But
Speaker 5: your expectations here where he's talking tough ahead of this.
Speaker 10: Well, I mean, I think this is a really I
Speaker 10: don't think it's a well advised strategy on part of
Speaker 10: the Trump administration and coming Trump administration.
Speaker 7: This is Elon Musk.
Speaker 10: This is people who really want to not just roll
Speaker 10: back the federal government.
Speaker 7: But completely undermine its foundations.
Speaker 10: We have seen in this movie before, not only in
Speaker 10: the Trump administration, way back to Gagrich and Clinton Gangbridge
Speaker 10: shut the gu government down going into Christmas also, by
Speaker 10: the way, and Clinton ended up winning the election in
Speaker 10: ninety six quite easily and may ging Ridge the scapegoat.
Speaker 10: So it's really just it's not a winning strategy in
Speaker 10: the longer term. It doesn't set the right tone for Trump,
Speaker 10: who said he would come in and fix things, and
Speaker 10: then he's sort of encouraging the Congress to break it
Speaker 10: because he thinks he wants the dead ceiling. I think
Speaker 10: this is all about getting the debt ceiling because he
Speaker 10: doesn't want to deal with his braakmanship six months from
Speaker 10: now when he's president of the United States.
Speaker 7: So I think that if he got assurance, they would.
Speaker 10: Do the dead ceiling now, which the Democrats probably have
Speaker 10: no interest in making easy for incoming President Trump.
Speaker 7: He would relent.
Speaker 10: So this could be just one big gambuting opening a
Speaker 10: gambling bit, just to get the dead ceiling off the
Speaker 10: table so it doesn't interfere with his first year of
Speaker 10: the presidency.
Speaker 4: Can you explain, Wendy, for our listeners, our viewers and me,
Speaker 4: what the death ceialing issue is.
Speaker 7: Well, basically, I mean this is just the amount of money.
Speaker 10: As many of your listeners already know that the government
Speaker 10: can quote unquote borrow That's a complicated set of activities
Speaker 10: that borrowing, but one of them is to issue treasury bonds,
Speaker 10: right so, and interest rates are falling, so it's a
Speaker 10: little bit cheaper, although treasury rates obviously vary in some
Speaker 10: ways that are separate from this, a little bit cheaper
Speaker 10: to do that if the interest rates are coming down,
Speaker 10: so it's easier to borrow money, and that's what the
Speaker 10: government would be doing. The problem is, when the government
Speaker 10: runs out of money, it literally cannot operate, so it's
Speaker 10: similar to a shutdown, but the legal implications are quite different.
Speaker 7: So it's really something you don't want to deal with.
Speaker 10: And the renegade Republicans have made this a difficult task.
Speaker 7: Even under Trump.
Speaker 10: They sort of grumbled a lot for a long time,
Speaker 10: and the debt is growing and Trump is somehow we're
Speaker 10: going to have to face that. So you know, it's
Speaker 10: just that he doesn't want to deal with it in
Speaker 10: the first year because it empowers some of his members.
Speaker 7: With a very slim majority.
Speaker 10: In the House, if Mike Johnson has to shut the
Speaker 10: government down, then that's sits on Trump, not Biden.
Speaker 7: And that's why I.
Speaker 10: Feel like this is a very curious strategy going into
Speaker 10: an inauguration and the start of the second term of Trump.
Speaker 5: So what do you think are the scenarios that could
Speaker 5: avoid as shut down this week? And based on what
Speaker 5: we've seen in the past, well.
Speaker 10: In some ways, I mean, you know, there is a
Speaker 10: lot of spending in this bill that, as there always is,
Speaker 10: that you could argue is not vital or necessary. And
Speaker 10: I think if there's some concession on some of that spending,
Speaker 10: that gives Trump the opportunity to say he was influential
Speaker 10: in save face, but ideally he liked the debt ceiling extended,
Speaker 10: so he doesn't want to deal with it. So I
Speaker 10: don't know if they're willing to do that in twenty
Speaker 10: four hours, but going into the holiday, you know, as
Speaker 10: it goes along, unless they exempt things, which sometimes they do,
Speaker 10: like fundamental services the FAA for example, for all these
Speaker 10: people going on vacation national parks where people might be
Speaker 10: planning trips to. We've seen this movie, as I said before,
Speaker 10: and it doesn't end well for the party that's blamed
Speaker 10: for the shutdown. So I think that's the negotiation. And
Speaker 10: Trump has put himself out there and maybe now he
Speaker 10: feels like, oh now I have to backtrack, or maybe
Speaker 10: things people go on Christmas break and they won't even notice,
Speaker 10: and I'll get it done for the new year. But
Speaker 10: this is, you know, this is not the way you
Speaker 10: want to start your new administration.
Speaker 4: When are you surprised that we have two civilians here,
Speaker 4: Donald Trump and Elon Musk having such an influence over
Speaker 4: these types of matters, And quite frankly, I have not
Speaker 4: really heard, or I don't think we've really heard from
Speaker 4: our President Biden about how he viewsed this negotiation is
Speaker 4: this How odd is this scenario here?
Speaker 7: Well, I mean it's actually Trump did this before with
Speaker 7: the immigration bill.
Speaker 10: The conference is ready to pass a border security with
Speaker 10: some immigration reform, and he killed it. He killed it
Speaker 10: by saying I don't want it, and I'm going to
Speaker 10: primary you. I'm going to get people to run against
Speaker 10: you in primaries, and the Republicans folded the last minute.
Speaker 10: This is just wholesale the capture of the Congressional Republican
Speaker 10: Party by Donald Trump.
Speaker 7: The key is it's.
Speaker 10: Captured in the House, but it may not be as
Speaker 10: holy capped in the Senate. So if Republican senators don't
Speaker 10: want to shut the government down, they'll go to Donald
Speaker 10: Trump and say, well, we're reconsidering your nominees. I mean,
Speaker 10: I don't know who in the party will do that
Speaker 10: for an incoming president who's so popular, but that popularity
Speaker 10: could be fleeting if people find their inconvenience by Donald
Speaker 10: Trump and Elon Musk.
Speaker 7: So this again is a gamble by the incoming president.
Speaker 10: And like we've seen before with Donald Trump, it's not
Speaker 10: always a rational explanation for it.
Speaker 7: But if they come to the table with the.
Speaker 10: Debt ceiling extension, you can see Donald Trump flipping the
Speaker 10: script and saying, Okay, you know, don't shut the government down,
Speaker 10: and Congress can stay in session on Monday and Tuesday
Speaker 10: next week. It's not a popular thing to do for
Speaker 10: the members, but they could certainly be in session Monday
Speaker 10: and Tuesday to work this out right before Christmas.
Speaker 5: Talk to us about Elon Musk and how he's starting
Speaker 5: to staff up his Department of Government efficiency, because there's
Speaker 5: still a question of how exactly it would operate. Because
Speaker 5: leading a commission outside of government, Elon Musk doesn't have
Speaker 5: to divest his personal financial heals when making recommendations to
Speaker 5: the White House.
Speaker 10: Well, this is not a cabinet department, right, we have
Speaker 10: cabinet departments.
Speaker 7: They're created by Acts of Congress.
Speaker 10: So I don't know what the legal authority would be,
Speaker 10: as you suggest us, like what actual legal authority would
Speaker 10: they have?
Speaker 7: So it'll be a commission.
Speaker 10: Remember when Trump came in the first time, he formed
Speaker 10: a voting commission. He put Chris Kobac in charge of
Speaker 10: that and demanded information from states about voting records, and
Speaker 10: state said, yeah, no, we're not going to do that.
Speaker 10: So it's unclear how effected these recommendations will be without
Speaker 10: any legal implementation authority.
Speaker 7: And how long will Donald Trump share the spotlight with
Speaker 7: Elon Musk. We all have to ask ourselves that it's
Speaker 7: Musk Musk Musk. You know, Trump likes it to be
Speaker 7: Trump Trump, Trump.
Speaker 10: So it's unclear how long this friendship lasts and how
Speaker 10: far and how far reaching Elon Musk can be.
Speaker 7: It is hard to move the needle in the federal government.
Speaker 10: It's hard to change things and cut people, and it
Speaker 10: will take a while for anything to come to fruition.
Speaker 10: And we just have to figure out whether the relationship
Speaker 10: between Trump and Musk with stands that timeline.
Speaker 3: Wennie, thank you so much for joining us.
Speaker 4: We always appreciate getting your perspective when you Schuller, Professor
Speaker 4: at Brown University.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 2: starting at seven am Eastern on applecar Play and Android
Speaker 2: Auto with the Bloomberg Business app. You can also watch
Speaker 2: us live every weekday on YouTube and always on the
Speaker 2: Bloomberg terminal.
Speaker 4: All right, folks, you're daily look at the front pages
Speaker 4: around the world with our newspapers in New York City.
Speaker 3: Lisa Matey, Lisa, what do you got for us.
Speaker 1: All right, since you love drones so much, Polems, I'm
Speaker 1: starting there.
Speaker 8: This is in Business Insider.
Speaker 1: You know, with all these mysterious sightings, Wing and Door
Speaker 1: Dasher actually launching delivery drones. Boy, drum mall, this is
Speaker 1: happening over in Texas. Wing He's here we go because
Speaker 1: they are actually sightings in Texas too. So now with
Speaker 1: this whole launch, deliveries can be made in those little
Speaker 1: fifteen minutes from some of your store favorite stores.
Speaker 8: In the malls there.
Speaker 1: This is in the I think it's the Dallas Fort
Speaker 1: Worth area, but it's making these commercial deliveries worldwide since
Speaker 1: twenty nineteen. But now with everything going on, it's kind
Speaker 1: of like, wow, is this like bad timing?
Speaker 8: But they can fly.
Speaker 1: They're pretty quick, sixty five miles an hour, about one
Speaker 1: hundred and fifty feet up in the air. But yeah,
Speaker 1: the reports keep coming in about all the drones.
Speaker 8: We hear John Tucker talking about it all the time.
Speaker 3: Won't there be more and more and more drones?
Speaker 6: Right?
Speaker 3: I mean, are we going to see more and more
Speaker 3: of these things? If Amazon?
Speaker 8: Amazon's right in air?
Speaker 5: I mean it kind of makes sense. So, but are
Speaker 5: y'all big on the wing or in door dash at all.
Speaker 8: No, I don't have to wait the DoorDash yet.
Speaker 4: Space and again we've already had discussion. But my youngest
Speaker 4: actually put a like a door dash or something on
Speaker 4: my credit card and that stopped right away.
Speaker 8: Oh no, shut it down, get out of.
Speaker 3: Your get off your bed, and go ahead and kick
Speaker 3: up your mconde.
Speaker 5: Sweet offspring though cut off, although.
Speaker 3: Its power right now, so that's another whole thing. I
Speaker 3: should live his life.
Speaker 8: But it's still pretty good. Do you guys have those
Speaker 8: rewards cards? Right? Do you use the rewards?
Speaker 3: I do?
Speaker 1: Do you'd use them for hotels or use them for
Speaker 1: cash back and gift cards?
Speaker 3: Hotels and air Fair?
Speaker 5: Yeah? So you do, yes, I definitely, especially Airfair.
Speaker 8: I used it a lot.
Speaker 5: I was actually in New Orleans last week, so I
Speaker 5: definitely use some of that for that series I did see.
Speaker 1: Okay, So that's the thing. So this is interesting because
Speaker 1: this is a bank great study. It says almost one
Speaker 1: in four rewards card holders don't redeem their rewards and
Speaker 1: they by the year they say they're missing out on
Speaker 1: the free money.
Speaker 8: That's if you pay, you know, in full, every mind.
Speaker 1: But the problem is that if you don't use them,
Speaker 1: they lose value because if inflation program changes things like that,
Speaker 1: and then you have on the flip side, three and
Speaker 1: five sixty one percent use their rewards for cash back,
Speaker 1: so they like the cash back better.
Speaker 3: You get it. You can get cash back from your
Speaker 3: redem points for cash.
Speaker 1: Yeah, cash back or gift cards give Okay, I do
Speaker 1: have cash back on one of my cards, so that's uh.
Speaker 5: I feel like that money into some of my retirements.
Speaker 4: I listened to my kids and they're very aggressively managed
Speaker 4: their points, which I never did.
Speaker 8: Yeah.
Speaker 5: Well, also, I feel like it's because of the way
Speaker 5: I can see it in the apps for the baking
Speaker 5: apps and the credit card apps, so I can just
Speaker 5: every day I'm like, all right, this is what I'm
Speaker 5: gonna do with that money.
Speaker 1: But a lot of my friends use it, especially at
Speaker 1: holiday time, to get all gift cards for everybody. Yes,
Speaker 1: you got to think about that next year.
Speaker 5: His kids, he knows what he's getting his stuck and stuffers.
Speaker 4: They get a pat on the back for Christmas, all
Speaker 4: right near your post.
Speaker 8: Yeah, this was in the post. So a retail thefts.
Speaker 1: They're continuing to climb, but the problem is that they're
Speaker 1: getting a little bit more violent.
Speaker 8: This study was out.
Speaker 1: Yeah, the National Retail Federation came out with their Impact
Speaker 1: of Retail Theft and Violence.
Speaker 8: Twenty twenty four.
Speaker 1: The average number of shoplifting incidents jumped ninety three percent
Speaker 1: in twenty twenty three. That was compared to a pre
Speaker 1: pandemic monetary losses for retailers where's in ninety percent? And
Speaker 1: this is despite different efforts, right, you heard of them
Speaker 1: locking up their different items. You've heard of a number
Speaker 1: of states kind of updating laws to prosecute organize retail
Speaker 1: crime as felonies. But the NRF vice president telling Fox
Speaker 1: that a big part of it is because of the
Speaker 1: organized retail crime groups and that's why it's getting bigger.
Speaker 8: But also it's getting more violent aggressive.
Speaker 1: Stores are trying to increase protection for their workers.
Speaker 8: For customers too.
Speaker 1: On the same time, remember we heard the bodycam story
Speaker 1: about Walmart workers body cams even TJ Max, you know,
Speaker 1: workers having to wear body cams. So it's it's an
Speaker 1: interesting topic, but it's starting to get a little bit
Speaker 1: worse now.
Speaker 3: Yeah, I don't know.
Speaker 4: I mean, it's just I just noted from the local
Speaker 4: retailers here around our office, like the CBS or.
Speaker 3: Everything like tooth So I.
Speaker 5: Found myself having to order a lot more things online
Speaker 5: because then I know, even just trying to track somebody
Speaker 5: down to try to open it up, I'm like, Okay,
Speaker 5: it's going to take me a half hours.
Speaker 1: So that's a good point that I push more people
Speaker 1: to shop online.
Speaker 3: Yeah, I think about that, but I guess I have
Speaker 3: to high security.
Speaker 8: I guess I don't know, right and had security.
Speaker 1: So they're besting even employee training, teaching them how to
Speaker 1: handle workplace violence.
Speaker 8: It's crazy how things are getting. So here's a new
Speaker 8: side hustle for you.
Speaker 1: If you live in Utah and you happen to look
Speaker 1: like Jesus.
Speaker 8: Is this from the journal.
Speaker 1: Apparently a growing number of people in the state want
Speaker 1: Jesus in their pictures, so hiring lookalikes. They're doing it
Speaker 1: for family portraits, for wedding announcements, for yes, the Christmas
Speaker 1: cards of course, but how much do they charge. You
Speaker 1: can make one hundred to two hundred dollars an hour
Speaker 1: if you look the part and families and couples.
Speaker 8: They're doing it.
Speaker 1: They're they're going throughout different locations Utah taking these pictures.
Speaker 1: The funny part is that there are some tips from
Speaker 1: professional photographers who say, if you're doing this with your kids,
Speaker 1: just keep in mind if they don't like taking pictures
Speaker 1: on Santa's lap, but they're not going to like any
Speaker 1: on Jesus's lap. And just the interesting one that I
Speaker 1: found is that finding a model can be tough in
Speaker 1: Utah because they have high concentrations of Mormons where the
Speaker 1: men actually have to keep their hair short and they
Speaker 1: have to shave all the time. So finding someone with
Speaker 1: the long hair and the beard is kind of tough.
Speaker 1: But if you do have it, you can make some
Speaker 1: ex Okay.
Speaker 3: So if you're part of if you're part of the
Speaker 3: Church of Latter.
Speaker 4: Day Saints, which is one of the state's largest employers,
Speaker 4: you're required to shave every day and keep their hair short.
Speaker 3: Okay. I didn't know that. So that's tough for the
Speaker 3: Jesus look right.
Speaker 1: Okay, But apparently it's going to be a thing, and
Speaker 1: people are saying, like when they post pictures, people are always.
Speaker 8: Asking, hey, where did you get this guy?
Speaker 5: Like?
Speaker 8: And so then there that's world word of mauclage.
Speaker 5: I could see the blowing up on Instagram and social media.
Speaker 1: This one guy said, he's been doing it for like
Speaker 1: a couple of years now. It's just how we make it.
Speaker 5: Every year ago, when I was a freshading weddings. Yes,
Speaker 5: hard time about that. Y'all thought it was a side hustle.
Speaker 5: I was just doing different friends. But here's another option for.
Speaker 3: People can do it all right, very good. That is
Speaker 3: our newspaper segment with Lisa Miteo. Thank you so much.
Speaker 3: We appreciate that.
Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 2: seven to ten am Eastern on Bloomberg dot com, the
Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You
Speaker 2: can also watch us live every weekday on YouTube and
Speaker 2: always on the Bloomberg terminal