WEBVTT - Earnings Outlook, Government Shutdown Potential Impacts 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.000 --> 0:00:22.959 Peter Atwater, he's adjunct professor of economics at William and Mary, 0:00:23.200 --> 0:00:25.319 but before that worked in at financial services and with 0:00:25.400 --> 0:00:27.880 hedge funds. You might recall it he coined Carol, the 0:00:27.960 --> 0:00:29.640 term K shape recovery. 0:00:29.920 --> 0:00:30.400 Yeah, he did. 0:00:30.400 --> 0:00:32.400 Indeed, he was recently on to talk about his new book, 0:00:32.560 --> 0:00:36.159 The Confidence Map, which came out in July. So delighted 0:00:36.159 --> 0:00:39.000 to have you back. How are you. I'm doing great here. Well, 0:00:39.000 --> 0:00:41.440 it's great to have you here. How are you thinking 0:00:41.440 --> 0:00:43.360 about kind of the things that are coming at investors 0:00:43.400 --> 0:00:45.080 right now and just the world at large. 0:00:45.200 --> 0:00:47.839 Well, you know, there's a lot coming at investors. But 0:00:47.840 --> 0:00:51.200 what's been so striking to me about the past couple 0:00:51.280 --> 0:00:55.560 of weeks is the absence of emotion. We've watched the 0:00:55.880 --> 0:00:59.200 sell off in bonds, we've watched the sell off in stocks, 0:00:59.240 --> 0:01:04.479 we've watched oil prices rise, and there's this remarkable at 0:01:04.520 --> 0:01:08.600 ease that investors seem to have even though markets have 0:01:08.680 --> 0:01:11.520 gotten over sold or in the case of oil, over blought, 0:01:12.040 --> 0:01:17.759 and it's really inconsistent to me with what prices would suggest. 0:01:18.319 --> 0:01:22.280 So I'm perplexed that people are taking all of this 0:01:22.560 --> 0:01:25.360 as commonly as they are, particularly because it wasn't, you know, 0:01:25.400 --> 0:01:28.360 six months ago interest rates were at this level and 0:01:28.440 --> 0:01:31.680 people were panicking about the banks, and it's a big 0:01:31.720 --> 0:01:32.319 gone today. 0:01:32.880 --> 0:01:34.200 So what do you attribute that to. 0:01:35.080 --> 0:01:40.039 I'm a little worried about real complacence behavior on the 0:01:40.040 --> 0:01:47.040 part of investors, because there's there's no sense of that 0:01:47.120 --> 0:01:51.680 things could get worse, whether in terms of the economy 0:01:51.680 --> 0:01:56.120 itself or you know, higher interest rates or inflation. There's 0:01:56.480 --> 0:01:59.760 almost this sense of, Okay, this is what it is. 0:02:01.200 --> 0:02:05.520 Until the economy gives us signals that it's weakening, or 0:02:05.600 --> 0:02:09.720 until the consumer rolls over, we're going to count on 0:02:09.919 --> 0:02:13.080 some sort of miraculous landing of this. 0:02:13.560 --> 0:02:15.160 One thing that Caroly and I talked about this week 0:02:15.320 --> 0:02:17.640 was the depletion that we're seeing when it comes to 0:02:17.960 --> 0:02:21.360 the cash savings of Americans right Castle Bales, Castle balance sheets. 0:02:21.360 --> 0:02:23.840 I mean, pretty much everyone except the top twenty percent 0:02:24.240 --> 0:02:26.600 has run out of that excess cash savings that they 0:02:26.639 --> 0:02:29.000 had yeah, during the pandemic and post pandemic. 0:02:29.040 --> 0:02:31.000 I worry about those at the low end where the 0:02:31.040 --> 0:02:34.359 cash ran out a long time ago. I think it's 0:02:34.400 --> 0:02:37.040 interesting that folks are only taking note of it now, 0:02:37.520 --> 0:02:41.880 But for those at the bottom, this is a phenomenon 0:02:41.880 --> 0:02:45.560 that's now more than a year old, and so you're 0:02:45.600 --> 0:02:49.800 starting to see that roll into delinquency rates, particularly in 0:02:49.840 --> 0:02:53.119 automobile loans and credit card loans, and the automobile loan 0:02:53.160 --> 0:02:58.960 one worries me because, particularly for low income individuals, the 0:02:59.000 --> 0:03:02.080 car is the job, yeah, and they don't have the 0:03:02.160 --> 0:03:05.040 flexibility of work from home that many above do. 0:03:05.560 --> 0:03:07.160 Peter, what do you make of we were just talking 0:03:07.320 --> 0:03:10.160 about with Romain and Katie on our TV side about 0:03:10.160 --> 0:03:12.280 the ghost jobs that will never be filled. Do you 0:03:12.600 --> 0:03:14.400 are you comfortable with some of the data points that 0:03:14.440 --> 0:03:17.079 are out there, including the labor statistics here in the 0:03:17.200 --> 0:03:17.800 United States? 0:03:17.919 --> 0:03:22.079 You know, I'm comfortable with the statistics. But what is 0:03:22.280 --> 0:03:26.960 clear even with these statistics is that jobs are not 0:03:27.120 --> 0:03:34.320 equating to confidence, and that you've seen no material improvement 0:03:34.400 --> 0:03:37.720 in mood even though jobs have come back and people 0:03:37.720 --> 0:03:42.560 are working more. And so I think we do ourselves 0:03:42.600 --> 0:03:45.680 a disservice to think that having a job is going 0:03:45.720 --> 0:03:46.800 to boost confidence. 0:03:46.880 --> 0:03:48.320 I think it's funny because I think Tim and I 0:03:48.360 --> 0:03:50.320 talk a lot about like the things that we're paying 0:03:50.360 --> 0:03:55.160 for in life right now, whether it's homes or rates on. 0:03:55.920 --> 0:03:57.360 You know, buying a home. 0:03:57.200 --> 0:03:59.480 Right in assurance is super expensive now cool. 0:04:00.200 --> 0:04:03.160 Everything seems super expensive right now. Yeah, and then we 0:04:03.200 --> 0:04:05.160 have jobs and we feel pretty commion This. 0:04:05.200 --> 0:04:07.200 Is these are the things that are at the low 0:04:07.320 --> 0:04:10.720 end of the hierarchy of need. So we're not talking 0:04:10.720 --> 0:04:14.080 about luxury goods where you can do with or without. 0:04:14.440 --> 0:04:17.799 We're talking about essentials, and so that creates this sense 0:04:17.839 --> 0:04:22.480 of vulnerability where people feel hostage to either the price 0:04:22.520 --> 0:04:25.200 scarcity or the supply scarcy or the demand scarcity. 0:04:25.279 --> 0:04:28.039 Everything you're talking about we could have talked about six 0:04:28.080 --> 0:04:30.880 months ago. We could have talked about in January before 0:04:31.080 --> 0:04:32.719 the run up of close to twenty percent on the 0:04:32.760 --> 0:04:34.840 S and P five hundred this year, which by the way, 0:04:34.880 --> 0:04:38.000 has now been pretty much cut in half at this point. So, Peter, 0:04:38.080 --> 0:04:41.200 what were people ignoring and what does it portend for 0:04:41.279 --> 0:04:41.760 the future. 0:04:42.279 --> 0:04:44.800 So if I look at the markets over the last 0:04:44.839 --> 0:04:50.359 six months, I think the indices are masking what's really 0:04:50.360 --> 0:04:54.520 going on, which is this enormous stratification where the low 0:04:54.640 --> 0:04:59.080 end russells small cap stocks or barely I don't know 0:04:59.160 --> 0:05:00.200 this afternoon, if they're. 0:05:00.080 --> 0:05:01.719 Up for the years talk about all the time they 0:05:01.760 --> 0:05:02.839 talk about the small shops. 0:05:03.000 --> 0:05:05.599 So for me, and this is an indication of declining 0:05:05.600 --> 0:05:12.800 confidence and declining success for small businesses. And so I 0:05:12.960 --> 0:05:17.039 worry that investors, by pouring money into the thoroughbreds, into 0:05:17.080 --> 0:05:24.200 the Amazon and Apple and Google and Microsoft, are being 0:05:24.240 --> 0:05:29.000 misled by the fact that things are troublesome below the 0:05:29.040 --> 0:05:32.080 surface the other four hundred and ninety five companies. 0:05:32.120 --> 0:05:33.880 The other thing I guess I would go to is 0:05:33.880 --> 0:05:36.440 that when we talk about rates and we constantly keep going, well, 0:05:36.480 --> 0:05:40.640 you know, highest rates as seven or eight time, and 0:05:40.680 --> 0:05:43.120 that time really felt like the bottom was going to 0:05:43.120 --> 0:05:46.320 come out from under us. It doesn't necessarily feel like 0:05:46.440 --> 0:05:50.279 that time today that bad. But then again, is it 0:05:50.320 --> 0:05:53.080 because we're not necessarily really reading what's going on? 0:05:53.200 --> 0:05:54.200 Are we missing things? 0:05:54.640 --> 0:05:54.839 Yeah? 0:05:55.160 --> 0:05:59.200 And I think we're still in this unwind from negative 0:05:59.240 --> 0:06:03.880 interest rates two years ago, and so we tend to 0:06:03.920 --> 0:06:07.080 look at it on an absolute basis. But it's going 0:06:07.120 --> 0:06:09.960 to be interesting to see how balanced investors feel when 0:06:10.000 --> 0:06:12.440 they get their statements at the end of the quarter, 0:06:12.880 --> 0:06:14.760 where both their stock portfolios. 0:06:16.640 --> 0:06:18.039 I was going to say, a lot of people don't 0:06:18.080 --> 0:06:20.320 wait to get the statements. They you know, log in 0:06:20.360 --> 0:06:21.080 when they see red. 0:06:21.160 --> 0:06:24.320 I check periodically, but you're right, it's like a reality 0:06:24.400 --> 0:06:27.040 check of like, it's again a reminder not everything goes up, 0:06:28.160 --> 0:06:31.400 but when we do go like, is there something though 0:06:31.520 --> 0:06:34.120 significant when we do make those references back to two 0:06:34.120 --> 0:06:36.440 thousand and seven, two thousand and eight, which was such 0:06:36.440 --> 0:06:40.320 a significant time in this country as well as certainly 0:06:40.360 --> 0:06:44.719 within the financial market universe, is it are we setting 0:06:44.800 --> 0:06:47.960 up for a period another period that's as rough as 0:06:47.960 --> 0:06:49.599 some of the stuff we went through there in terms 0:06:49.640 --> 0:06:50.440 of the markets. 0:06:50.680 --> 0:06:55.000 So I think what's been so interesting in the past 0:06:55.000 --> 0:07:00.679 two years is we're seeing a concurrent unwind of extreme 0:07:00.760 --> 0:07:04.599 sentiment in both stocks and bonds. The trade isn't risk 0:07:04.680 --> 0:07:08.640 on versus risk off, it's risk one versus risk out, 0:07:09.400 --> 0:07:11.960 and you're seeing that in the growth in money market funds, 0:07:11.960 --> 0:07:16.120 where money is leaving the market outright, and that's a 0:07:16.200 --> 0:07:19.360 trend we need to keep a lot of attention on 0:07:20.000 --> 0:07:24.040 because you know, seven oh eight, other than a few 0:07:24.040 --> 0:07:28.240 weeks there was this rotation into bonds out of stocks, 0:07:29.200 --> 0:07:32.640 and that we're not seeing that, even though yields are 0:07:33.000 --> 0:07:35.560 significantly higher than they were recent one. 0:07:35.640 --> 0:07:36.480 So where's the money going. 0:07:36.560 --> 0:07:37.800 It's going into money market funds. 0:07:37.840 --> 0:07:39.680 Over five percent in a money market fund and you 0:07:39.800 --> 0:07:43.200 just said it there until you know you're earning. 0:07:42.880 --> 0:07:44.800 More than ten year yields today. I mean, so it's 0:07:44.960 --> 0:07:48.920 it's a really it's cash has become a viable alternative. 0:07:49.880 --> 0:07:54.160 And as I said, with stocks and bonds moving down 0:07:54.160 --> 0:07:58.240 in price together that it could start to feed upon it. 0:07:58.320 --> 0:08:01.280 Well state that way. 0:08:01.960 --> 0:08:03.680 Who knows, who knows. 0:08:04.200 --> 0:08:05.720 But I mean at a certain point, bonds are going 0:08:05.720 --> 0:08:07.679 to become attractive to some of these people, right. 0:08:08.200 --> 0:08:14.440 So that's the question. If bonds were a bubble, if 0:08:15.120 --> 0:08:22.080 negative interest rates were a sign of extreme sentiment, then 0:08:22.120 --> 0:08:26.800 we're likely to see that rising rates. Falling prices don't 0:08:26.880 --> 0:08:31.000 draw a crowd. That we've seen everybody who is going 0:08:31.000 --> 0:08:34.080 to buy a bond did, and much as you see 0:08:34.120 --> 0:08:39.040 when stock market bubbles, unwined, lower price doesn't draw anybody. 0:08:39.559 --> 0:08:44.720 You get the occasional bounces, but it's a perpetual unwinding machine. 0:08:44.840 --> 0:08:46.280 Is it safe to say we've got about forty five 0:08:46.280 --> 0:08:48.000 seconds and you're going to come back and stay with us, 0:08:48.000 --> 0:08:49.320 and we're going to talk some more. But is it 0:08:49.360 --> 0:08:52.160 safe to say, and I think you mentioned this earlier, 0:08:52.600 --> 0:08:55.240 we've never come out of a pandemic, We've never come 0:08:55.280 --> 0:08:57.400 out of a time period like this. We don't really 0:08:57.480 --> 0:09:00.000 ultimately know how it all settles. We don't. 0:09:00.559 --> 0:09:04.600 But let me create a bull case here. You talk 0:09:04.640 --> 0:09:09.400 out of both sides of my mouth. On Economis's we 0:09:09.559 --> 0:09:12.319 talked about all this cash going into all the money 0:09:12.320 --> 0:09:16.679 going into money markets, that then becomes a potential source 0:09:17.360 --> 0:09:22.079 for further enthusiasm. If sentiment were to bottom. 0:09:21.880 --> 0:09:23.480 The cash on the side of cash on the. 0:09:23.440 --> 0:09:26.080 Sideline, and there's a lot of it, I mean, there's 0:09:26.160 --> 0:09:29.800 an enormous amount of cash sitting there, and so you 0:09:29.800 --> 0:09:33.960 could have this powerful reversal where the crowd says that 0:09:34.120 --> 0:09:37.120 was it, that was as bad as it got, and 0:09:37.280 --> 0:09:38.320 we're back to the races. 0:09:38.400 --> 0:09:39.719 I mean, if you're saying that, like the S and 0:09:39.720 --> 0:09:41.959 P five hundred, at forty five hundred, you were regretting 0:09:42.000 --> 0:09:43.640 not putting some money in. Now it's at forty two 0:09:43.720 --> 0:09:46.319 hundred and you're like, Okay, maybe it's time, or there 0:09:46.320 --> 0:09:47.199 could be further to go. 0:09:47.720 --> 0:09:50.000 Well, and I can create a bull scenario, which is 0:09:50.400 --> 0:09:53.480 if the dollar is then going to fall, you start 0:09:53.520 --> 0:09:58.040 to see a declining dollar. That's a huge tailwind for 0:09:58.120 --> 0:09:59.000 these megacaps. 0:09:59.400 --> 0:10:02.200 With US as News Congressional reporter Eric Watson on the 0:10:02.240 --> 0:10:04.679 phone at the Capitol in Washington, DC, still with US, 0:10:04.679 --> 0:10:07.560 Peter Atwater as a professor of economics at William and 0:10:07.600 --> 0:10:10.800 Mary and author of the Confidence Matt and Eric, I 0:10:10.880 --> 0:10:13.440 want to start with you give us some color about 0:10:13.720 --> 0:10:15.920 what are you hearing. What's the environment in and around 0:10:15.960 --> 0:10:18.679 the Capitol as we count down to that possible shutdown. 0:10:19.760 --> 0:10:21.520 Well, you know, I think really the focus is on 0:10:21.600 --> 0:10:24.760 the House, where even longtime Republican aids and operators are saying, 0:10:24.760 --> 0:10:27.640 it's just a chaos. They haven't seen anything like it. 0:10:27.640 --> 0:10:29.920 It's just an inability really of the House Republicans to 0:10:29.960 --> 0:10:33.000 come together on even an offer. You know, they've proposed 0:10:33.040 --> 0:10:36.080 a stop gap spending bill of between thirty one days 0:10:36.120 --> 0:10:38.320 or forty five days, try to attach that to some 0:10:38.360 --> 0:10:42.680 border security position provisions that make the President come to 0:10:42.760 --> 0:10:45.520 terms on a border deal. But they can't even really 0:10:45.760 --> 0:10:47.760 get the votes to pass that, So they're not even 0:10:47.760 --> 0:10:51.280 off of first base here, and meanwhile, the Senate's moving 0:10:51.320 --> 0:10:55.200 forward with his bipartisan deal. You know, it's about six 0:10:55.240 --> 0:10:58.800 billion dollars in Ukraine aid six billions for disaster fund 0:10:58.880 --> 0:11:01.280 the government for forty seven days. Now, you know, if 0:11:01.280 --> 0:11:03.960 the Senate passes that, which it likely could do by Sunday, 0:11:04.080 --> 0:11:06.719 a government shutdown had already started. But there'd be a 0:11:06.760 --> 0:11:09.240 lot of pressure on McCarthy to bring that up, but 0:11:09.320 --> 0:11:11.240 he told his conference he's not going to bring that 0:11:11.360 --> 0:11:13.880 up today, and so we're really heading to a shutdown. 0:11:14.080 --> 0:11:16.000 Eric, you've seen this play out before, So just give 0:11:16.040 --> 0:11:17.800 us an idea of if the government does shut down, 0:11:17.880 --> 0:11:19.560 or maybe we say, at this point when the government 0:11:19.640 --> 0:11:23.520 does shut down, help us by looking into your crystal 0:11:23.520 --> 0:11:25.880 ball and giving us an idea of when things open 0:11:25.960 --> 0:11:27.440 up back open up again. 0:11:28.240 --> 0:11:31.760 Well, one intriguing possibility is that House Moderates conducted rebellion, 0:11:31.840 --> 0:11:33.559 put a couple of tours in the Boomberg about that. 0:11:33.640 --> 0:11:36.840 They have some procedural mechanisms once called the discharge petition, 0:11:37.000 --> 0:11:40.199 where they could within about nine legislative days, force a 0:11:40.280 --> 0:11:43.280 vote against speakers wishes on that Senate bill or on 0:11:43.320 --> 0:11:46.240 their own rival plan, which would actually extend government counting 0:11:46.280 --> 0:11:48.880 to January eleventh, you know, to be viewed as a 0:11:48.880 --> 0:11:51.040 betrayal of the party. But they are arguing, well, be 0:11:51.200 --> 0:11:54.079 a lot of the Conservatives that vote against the warty 0:11:54.559 --> 0:11:57.640 speaker candidate and vote against House rules and other things, 0:11:57.679 --> 0:12:01.160 so they've also shown disloyalty. You know. Mike Lawler of 0:12:01.200 --> 0:12:04.680 New York, one of the moderate Biden district Republicans beating 0:12:04.720 --> 0:12:07.480 that effort. He can probably bring along five other New 0:12:07.559 --> 0:12:09.839 York Republicans to help him, and that's all it's really 0:12:09.920 --> 0:12:11.839 needed to trigger this process. So it could be as 0:12:11.840 --> 0:12:14.320 little as nine days. There are ways the Speaker could 0:12:14.360 --> 0:12:17.480 try to support that, you know. On the other hand, 0:12:17.880 --> 0:12:20.720 I could see a resolution quicker. It just really depends 0:12:20.760 --> 0:12:24.240 on really on these moderates and whether the Speaker ultimately decides, 0:12:24.640 --> 0:12:26.640 you know, just the shut does it's not worth the pain, 0:12:27.200 --> 0:12:29.720 worth risking the House. He could face emotion now as 0:12:29.760 --> 0:12:31.840 to him at that point to be up to Democrats 0:12:31.840 --> 0:12:34.640 whether they bail him out. You know, there's probably enough 0:12:34.679 --> 0:12:37.840 conservatives that he would you know, be able to be 0:12:37.840 --> 0:12:39.240 oust and without democratic help. 0:12:39.559 --> 0:12:41.920 The political process. As we said earlier when we began 0:12:41.960 --> 0:12:44.600 talking with Peter Atwater at the top of the broadcast. Peter, 0:12:44.679 --> 0:12:46.600 one of the things that's on the minds of investors 0:12:46.679 --> 0:12:49.000 is his potential for a government shut down. There is 0:12:49.160 --> 0:12:54.760 potentially an impact when you don't have government programs, the 0:12:54.880 --> 0:12:58.600 expenditures going out, you don't have employees being paid. There's 0:12:58.640 --> 0:13:00.400 an impact. I mean, how do you think about it? 0:13:00.400 --> 0:13:01.840 I think about William and Marry. They spend a lot 0:13:01.840 --> 0:13:03.880 of time in terms of policy and the connection of 0:13:03.920 --> 0:13:05.720 policy and economic impacts. 0:13:05.960 --> 0:13:06.160 Yeah. 0:13:06.160 --> 0:13:09.559 So I often say that policy makers follow mood, and 0:13:09.720 --> 0:13:13.200 this is policy makers in me here now mode. The 0:13:13.200 --> 0:13:18.439 only thing they care about is their individual survival. And 0:13:18.800 --> 0:13:22.880 with mood falling is indicated by the markets, that's going 0:13:22.920 --> 0:13:28.760 to make getting a resolution together very difficult until there 0:13:28.880 --> 0:13:35.320 is ultimately capitulation where some group is led to believe 0:13:35.480 --> 0:13:39.560 that they're vulnerable in this process. And what we see 0:13:39.600 --> 0:13:44.480 today is a lot of between the gerrymandering and the 0:13:45.960 --> 0:13:49.640 heavy one statedness that we have in terms of political alignment, 0:13:50.760 --> 0:13:54.200 that vulnerability is not showing up anywhere anytime soon. 0:13:55.600 --> 0:13:58.120 So, Peter, your book is called the Confidence Map, Charting 0:13:58.160 --> 0:14:00.600 a Path from Chaos to Clarity. House is a word 0:14:00.600 --> 0:14:02.880 I think a lot of people would associate with what's 0:14:02.920 --> 0:14:04.800 going on, at least in Washington right now. Eric, you 0:14:04.880 --> 0:14:09.360 might agree or disagree. I don't know. Do Americans still 0:14:09.400 --> 0:14:12.079 look for confidence in the government or if we kind 0:14:12.120 --> 0:14:14.840 of said, you know what, it's not happening. 0:14:15.160 --> 0:14:17.400 The bond market would say they don't. I mean that 0:14:17.679 --> 0:14:24.560 the markets yawn over what's happening in Washington is remarkable 0:14:24.600 --> 0:14:28.440 to me. But that is the nature of the investing 0:14:28.480 --> 0:14:29.000 crowd to do. 0:14:29.240 --> 0:14:30.720 But is it yawning because they know it's going to 0:14:30.760 --> 0:14:33.000 get resolved and it's happened before. 0:14:33.080 --> 0:14:33.680 Yeah, yeah, I. 0:14:33.600 --> 0:14:37.040 Think we're numb to it. But therein lies the danger 0:14:37.760 --> 0:14:42.240 that that belief that ultimately Congress comes to its senses 0:14:43.800 --> 0:14:48.480 is based on the past and the environment. The mood environment, 0:14:48.520 --> 0:14:51.160 at least right now, suggests that that may not be 0:14:51.560 --> 0:14:52.320 the best assumption. 0:14:52.640 --> 0:14:54.400 Eric, come on back in here, because I do it 0:14:54.440 --> 0:14:56.080 was interesting what Peter said, Like, I do think that 0:14:56.080 --> 0:14:57.680 there is such a big yawn. I think if I 0:14:57.680 --> 0:14:59.360 brought this up with a lot of my family members, 0:14:59.400 --> 0:15:01.280 they'd be like, yeah, okay, tell me something I care about. 0:15:01.840 --> 0:15:05.600 But I do wonder Eric, in terms of do members 0:15:05.600 --> 0:15:08.680 of Congress are they getting calls from their constituents. I mean, 0:15:08.840 --> 0:15:11.200 I'm sure, corporate folks might be if they're not going 0:15:11.200 --> 0:15:14.040 to get some kind of you know, government contract payout 0:15:14.080 --> 0:15:17.440 or something. But I just wonder, do lawmakers here from 0:15:17.760 --> 0:15:20.320 the voting members of the US. 0:15:20.960 --> 0:15:22.600 Well, you know, some of them say that they aren't 0:15:22.640 --> 0:15:24.760 hearing some of them say they are. But I would say, 0:15:24.760 --> 0:15:26.040 we have a couple of really good things in the 0:15:26.120 --> 0:15:28.280 terminal right now. One is a great story which talks 0:15:28.320 --> 0:15:32.760 about which lawmakers have the most federal workers in their district, 0:15:32.880 --> 0:15:34.880 and one of them is Matt Gates is leading that 0:15:34.960 --> 0:15:38.720 the government shutdown charge. He has the third most number 0:15:38.760 --> 0:15:41.320 of federal workers in his district. So you know, these 0:15:41.360 --> 0:15:44.520 are people who are not necessarily acting in the interests 0:15:44.520 --> 0:15:47.000 of their constituents. I'd also point out another story I 0:15:47.000 --> 0:15:49.960 wrote on the terminal, which is about the economic impact. 0:15:50.000 --> 0:15:53.720 You know, we discovered big of the Bloomberg government data 0:15:54.000 --> 0:15:56.840 at one point nine billion dollars per day and lost 0:15:56.840 --> 0:15:59.720 their delayed revenue to federal contractors, and that is going 0:15:59.760 --> 0:16:02.640 to You're going to see service contractors laid off and 0:16:02.640 --> 0:16:05.800 never get back pay. You're going to see production lines disrupted. 0:16:06.240 --> 0:16:08.760 And who we talked to in that story, basically, you know, 0:16:08.840 --> 0:16:10.840 they said you know, this is the time with high inflation, 0:16:11.280 --> 0:16:13.240 high interest rates, You're going to see a cash flow 0:16:13.280 --> 0:16:15.560 crunch on these small contractors. You're going to see some 0:16:15.600 --> 0:16:18.320 companies even go bailly up in a six to seven 0:16:18.400 --> 0:16:20.720 week shutdown. So, you know, I think the longer it 0:16:20.720 --> 0:16:23.240 goes on, the longer the clamor the bigger the pain. 0:16:23.360 --> 0:16:26.560 As your guests said, you know, and someone's going to 0:16:26.560 --> 0:16:27.359 have to capitulate. 0:16:27.840 --> 0:16:29.680 Eric, you know that is such a really good point. 0:16:29.720 --> 0:16:31.880 I mean, Peter, I do think about that. Smaller companies, man, 0:16:31.920 --> 0:16:35.160 they live I feel like from money into money out, 0:16:35.240 --> 0:16:37.320 like they just live from day to day in terms 0:16:37.360 --> 0:16:40.120 of their you know, financial books, if you will. I mean, 0:16:40.240 --> 0:16:41.800 that is a possible cost to all of this. 0:16:42.200 --> 0:16:46.520 Yeah, And I think it's yet another moment where those 0:16:46.560 --> 0:16:50.200 on the left and the right fail to appreciate the 0:16:50.320 --> 0:16:54.520 vulnerability of those at the bottom and business and individually 0:16:55.320 --> 0:17:01.400 and ultimately the potential that those at the bottom say 0:17:01.600 --> 0:17:03.600 enough of both left and right. 0:17:04.000 --> 0:17:06.200 What happens when or if that happens? 0:17:06.240 --> 0:17:06.440 Peter. 0:17:06.960 --> 0:17:12.680 So, I think you start to see grassroots movements where 0:17:13.119 --> 0:17:20.199 you see pockets of both red and blue individuals and 0:17:20.240 --> 0:17:22.640 businesses that below ends say we've had enough. 0:17:22.880 --> 0:17:25.080 I feel like you need to occupy Wall Street or 0:17:25.080 --> 0:17:26.919 occupy corporate America, you know. 0:17:27.160 --> 0:17:28.760 But I mean maybe that was the Tea Party, or 0:17:28.760 --> 0:17:30.600 maybe it was the rise of Trump in twenty sixteen. 0:17:31.200 --> 0:17:34.960 But I think that and Eric may want to weigh 0:17:35.000 --> 0:17:41.320 in on this, is that the environment today is uniting, well, 0:17:42.400 --> 0:17:46.920 uniting everybody goes with similar vulnerabilities. 0:17:47.119 --> 0:17:48.280 Well, Eric, we've. 0:17:48.080 --> 0:17:50.320 Got only about twenty five seconds. What do you say 0:17:50.359 --> 0:17:52.200 to that about unifying people? 0:17:52.280 --> 0:17:54.160 Well, I think one of the interesting things is how 0:17:54.200 --> 0:17:56.879 split America is. You've got almost a fifty to fifty country. 0:17:56.920 --> 0:17:59.200 And that's why the House is the margin is so small, 0:17:59.240 --> 0:18:01.399 and that's what's really causing the problem here is that 0:18:01.440 --> 0:18:05.399 you McCarthy's majority. If he had twenty seat majority, this 0:18:05.440 --> 0:18:07.520 would be the issue we're seeing today. The fact is 0:18:07.520 --> 0:18:10.280 he's only was four and this is a very small 0:18:10.400 --> 0:18:13.040 number five to seven who are basically saying, you know, 0:18:13.119 --> 0:18:15.960 we won't vote for this starting position CR. So I 0:18:15.960 --> 0:18:18.280 think that's that's an element of it to the small 0:18:18.320 --> 0:18:21.480 House majority, right, and you know, his personal skills Nancy 0:18:21.520 --> 0:18:24.760 Pelosi had a small majority to get more through. You know, 0:18:24.800 --> 0:18:27.080 he just isn't able to get those last couple of votes. 0:18:26.840 --> 0:18:27.359 That he needs. 0:18:27.440 --> 0:18:29.200 Eric Watson, we know you're busy. Thank you so much, 0:18:29.200 --> 0:18:32.440 Congression reporter at Bloomberg News, Peter Atwater, President of Financial Insights, 0:18:32.440 --> 0:18:34.560 and check out his book, of course, The Confidence Map. 0:18:34.600 --> 0:18:35.560 Thank you so much. 0:18:35.800 --> 0:18:39.359 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:39.400 --> 0:18:42.760 live weekday afternoons from three to six Eastern Listen on 0:18:42.800 --> 0:18:46.840 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:18:47.119 --> 0:18:48.800 or watch us live on YouTube. 0:18:49.640 --> 0:18:52.880 D Cass chairman and CEO at his investment firm Revolution, 0:18:53.040 --> 0:18:55.600 co founder of course of AOL which at its peak 0:18:55.760 --> 0:18:58.560 nearly half of Internet users in the US used AOL, 0:18:58.840 --> 0:18:59.639 so really. 0:18:59.400 --> 0:18:59.800 Just a game. 0:19:00.359 --> 0:19:03.600 And he's back with us on zoom from Washington, DC. Steve, 0:19:03.640 --> 0:19:06.040 it is great to have you back here with Tim 0:19:06.080 --> 0:19:08.840 and myself on Bloomberg Business Week. You know, it's been 0:19:08.880 --> 0:19:11.520 a year since you published Rise of the Rest How 0:19:11.640 --> 0:19:14.800 entrepreneurs and surprising places are building the New American Dream. 0:19:15.119 --> 0:19:18.840 It's now out in paperback. How is the entrepreneurial spirit 0:19:18.920 --> 0:19:21.320 and the American dream doing in your view in the 0:19:21.320 --> 0:19:22.000 pursuit of it? 0:19:22.640 --> 0:19:25.240 Well, I think entrepreneurship continues to be alive, and well. 0:19:25.280 --> 0:19:27.320 And the message of the Rise of the Rest book 0:19:27.400 --> 0:19:29.800 is it just isn't alive and well just in places 0:19:29.800 --> 0:19:32.400 like Silicon Valley, it's placed all around the country. They're 0:19:32.440 --> 0:19:36.760 developing a strong startup ecosystems. And that's helpful because entrepreneurs 0:19:36.840 --> 0:19:39.920 who historically would would have to feel like they left 0:19:40.000 --> 0:19:41.679 and leave where they were from to go to the 0:19:41.720 --> 0:19:43.639 coast to be part of the innovation of come and 0:19:43.680 --> 0:19:46.280 now can stay and build and scale there and great 0:19:46.359 --> 0:19:49.120 jobs there. So it's been great to see the momentum 0:19:49.119 --> 0:19:51.240 over the last decade since we started Rise of the 0:19:51.320 --> 0:19:54.240 Rest the pandemic, it's certainly been an accelerant, almost a 0:19:54.280 --> 0:19:57.000 tipping point in terms of more people decided to move 0:19:57.040 --> 0:19:59.439 other places. So it's seen a dispersion of talent and 0:19:59.440 --> 0:20:01.840 the spurs of capital and a lot of great ideas 0:20:01.840 --> 0:20:04.159 that are really kind of reimagining healthcare and food and 0:20:04.160 --> 0:20:08.359 agriculture and financial services and transportation and education, some of 0:20:08.400 --> 0:20:10.280 the most important aspects of our lives and some of 0:20:10.280 --> 0:20:12.879 the biggest industries are really up for grabs in this 0:20:13.040 --> 0:20:14.359 next next phase. 0:20:14.840 --> 0:20:16.080 Rise of the Rest is the name of the book, 0:20:16.119 --> 0:20:17.800 it's the name of the seed fund as well. Steve, 0:20:18.520 --> 0:20:21.000