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Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch us

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Speaker 1: live weekdays at one Eastern on Bloomberg dot com, the

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Speaker 1: iHeartRadio app and the Bloomberg Business app, or listen on

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Speaker 1: demand wherever you get your podcasts.

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Speaker 2: We welcome to the Wednesday edition of Sound On. I

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Speaker 2: know it feels maybe like it should be Friday by now.

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Speaker 2: We've packed a lot into this week. They actually passed

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Speaker 2: a bill, it really happened in the House of Representatives

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Speaker 2: late yesterday, a stopgap measure to keep the government from

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Speaker 2: shutting down this week.

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Speaker 3: On this vote, the asi A three thirty six.

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Speaker 2: Then as are ninety five two thirds being in the Affirmative,

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Speaker 2: the rules are suspended.

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Speaker 3: The bill is passed, and without objection the motion to reconsider,

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Speaker 3: so lay it on the table.

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Speaker 2: Yes, dare to dream this will keep the government running,

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Speaker 2: by the way, for well weeks in the next year.

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Speaker 2: This is the lattered cr we talked about. And by

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Speaker 2: the way, I'm assuming this gets passed by the Senate.

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Speaker 2: That does appear to be the case. Senator Chuck Schumer

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Speaker 2: just a short time ago, filing kloture on the Senate floor.

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Speaker 4: I moved to proceed Calendar two forty eight HR sixty

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Speaker 4: three sixty three Clark.

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Speaker 5: Mission to proceed to HR sixty three sixty three and

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Speaker 5: Act making further continuing appropriations for fiscal year twenty twenty

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Speaker 5: four and for other purposes.

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Speaker 4: I send a quote your motion to the desk.

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Speaker 2: Ah, So, I guess this is really going to happen.

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Speaker 2: The Senate signing off on what the House did. Remember,

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Speaker 2: they had their own cr in the Senate didn't look

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Speaker 2: exactly like the one in the House. But there's something

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Speaker 2: called reality here in the calendar, and this is the

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Speaker 2: one way to get it done in time for Friday.

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Speaker 2: We talked about this late yesterday on Bloomberg TV with

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Speaker 2: Senator Mark Warner, the Democrat from Virginia. Not a fan

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Speaker 2: of the process, not a fan of the ladder.

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Speaker 3: Remember the ladder. You get four bills.

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Speaker 2: Expiring in January and then the other eight in February.

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Speaker 2: But he says, you know, the grown ups need to

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Speaker 2: do something here.

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Speaker 6: The process being crummy. Does that mean I'm going to,

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Speaker 6: you know, vote to shut down the government over No.

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Speaker 6: I think I got to, you know, we got to

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Speaker 6: be adults. I'm unlike some of the crowd in the House.

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Speaker 6: And if it comes over and it longs. It's clean

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Speaker 6: and there's not any other you know, add ons, poison pills,

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Speaker 6: funny business. I think the overwhelming majority of us will support.

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Speaker 2: This funny business. We'll see about that. In a conversation

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Speaker 2: right now with Jonathan Tamari from Bloomberg Government Congress reporter.

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Speaker 2: This is interesting, Jonathan, welcome back. It sounds to me

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Speaker 2: like the lawmakers all left town and left you up

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Speaker 2: there alone.

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Speaker 3: Is the Senate going to move on this today?

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Speaker 1: Yeah?

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Speaker 7: I mean you mentioned that it feels like Friday, and

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Speaker 7: it certainly does feel like Friday and Congress because everybody

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Speaker 7: is getting out of town and trying to wrap things up.

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Speaker 7: The Senate is looking likely like they're going to try

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Speaker 7: to move this today and basically wrap up their work,

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Speaker 7: fund the government and every send everybody home until after Thanksgiving.

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Speaker 2: How quickly can they get this done? This talk about

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Speaker 2: a vote today, Jonathan?

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Speaker 3: Is that real?

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Speaker 1: There is?

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Speaker 7: There's definitely an effort underway to get that. Senators on

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Speaker 7: both parties sound pretty optimistic that they'll get there. As

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Speaker 7: you know, with the Senate, everything by design moves very

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Speaker 7: slowly unless you get unanimous consent, in which case things

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Speaker 7: can suddenly move very fast. So my impression is that

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Speaker 7: they're working on getting that consent right now. Typically senators

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Speaker 7: don't like to, you know, install each other's holiday plans,

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Speaker 7: so odds are history says they'll get there eventually and

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Speaker 7: get this vote and everybody can get home and out

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Speaker 7: of Washington later today. It's not tomorrow, but it looks

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Speaker 7: likely like today they'll.

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Speaker 3: Get it done.

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Speaker 2: Well, you mentioned the holidays. Uh, it does seem that

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Speaker 2: this was just an effort to save the holidays, save Thanksgiving, Christmas,

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Speaker 2: and Hanukah for the lawmakers because everyone's talking about a

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Speaker 2: shutdown again in January. We simply prolonged the inevitable here, right, we.

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Speaker 7: Do prolong the inevitable, But I think it lowers the

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Speaker 7: political stakes a little bit by moving it. As you

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Speaker 7: point out, there's a holiday coming up next week, everybody's

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Speaker 7: going to be traveling. Nobody wants to deal with a

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Speaker 7: shutdown in the middle of all of that, And no

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Speaker 7: matter who is blamed for a shutdown, I think everybody

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Speaker 7: would end up absorbing some negative impressions from that. Joe Biden,

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Speaker 7: Republicans in the House, Democrats in the Senate could disrupt

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Speaker 7: the economy at a time when people are supposedly going

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Speaker 7: out shopping for the holiday season. Just nobody wanted to

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Speaker 7: deal with that, and just on a human level, I

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Speaker 7: don't think lawmakers want their holidays basically held hostage by this,

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Speaker 7: So they push it to January and February. They're still

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Speaker 7: going to have the same confrontation, but it'll at least

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Speaker 7: be without this holiday pressure. That kind of often leaves people,

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Speaker 7: I think, to accept some deals that they might not

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Speaker 7: under other circumstances.

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Speaker 2: Jonathan TOMORRII with us from Bloomberg Government. Is there a

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Speaker 2: foregone thought then? I mean, am I projecting here that

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Speaker 2: the government is likely to shut down?

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Speaker 3: Stakes?

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Speaker 2: Maybe lower here, but we're nowhere near agreement, Jonathan. A

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Speaker 2: little while ago they couldn't even get a procedural vote

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Speaker 2: on a spending bill on the floor of the House.

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Speaker 2: Once again, do we have any reason believe that we

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Speaker 2: will avoid a shut down next year?

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Speaker 7: Well, there's gonna be, yeah, as you point out, there's

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Speaker 7: still a lot of work to be done. They have

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Speaker 7: to Eventually, they keep passing these short term bills, Eventually

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Speaker 7: they've got to pass a long term spending bill, and

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Speaker 7: both chambers are struggling to get that done. In the House,

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Speaker 7: you've got Republicans fighting Republicans over what those spending bills

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Speaker 7: should look like from the center and from the far right.

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Speaker 7: In the Senate, you know, everything's got to be bipartisan,

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Speaker 7: and so far it's been a bipartisan process, but a

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Speaker 7: very slow moving process. So we'll see them both. I

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Speaker 7: think after Thanksgiving, try to advance those spending bills and

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Speaker 7: keee up those January negotiations. Each side will kind of

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Speaker 7: lay down a marker in December, they hope, and then

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Speaker 7: negotiate in January. But if they can't pass anything, they

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Speaker 7: don't have anything to negotiate over. We'll see if the

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Speaker 7: politics change at that point in time. There's a lot

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Speaker 7: of conservatives very angry with the new speaker over this

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Speaker 7: short term spending bill, and we'll see if that means

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Speaker 7: that he draws drives a harder bargain next time around.

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Speaker 2: I want to ask you lastly, Jonathan, about the work

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Speaker 2: left to be done here, and it includes funding for

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Speaker 2: Israel and Ukraine. I know the House pass to standalone

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Speaker 2: Israel funding bill, but that apparently is not going to

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Speaker 2: be taken up in the Senate, and the President's supplemental

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Speaker 2: request including both plus Taiwan and border security appears to

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Speaker 2: be on ice. Are we going to be talking about

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Speaker 2: this next year when Ukraine tells us that it's out

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Speaker 2: of money.

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Speaker 7: There's a hope among Senators at least that they'll be

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Speaker 7: able to put all these things together by the end

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Speaker 7: of the year. Border Security, Israel, Ukraine. You know, there's

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Speaker 7: bipartisan support for Israel Ukraine. There's some skepticism from Republicans,

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Speaker 7: border security, there's some skepticism from Democrats. But the idea

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Speaker 7: is that there's a critical mass that if you put

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Speaker 7: them all together, you can get a critical mass in

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Speaker 7: both chambers to support it. It's one where it feels

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Speaker 7: like there's a pathway to get it done, and we

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Speaker 7: just need to find out kind of the right balance

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Speaker 7: of all the pieces. So that's something they hope to

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Speaker 7: get done. Later this year. They have to pass the

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Speaker 7: Defence Authorization Bill. It could possibly be attached to that,

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Speaker 7: but that I think will be one of the big

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Speaker 7: things to watch when they're back from Thanksgiving.

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Speaker 2: True enough, Jonathan, thank you so much for the up day.

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Speaker 2: Good luck getting everybody out of here on top. Jonathan

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Speaker 2: to Mario Bloomberg, government. To his point, House members are

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Speaker 2: already bailing. There's a line to get to the airport.

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Speaker 2: I bet that exit off three ninety five looking pretty

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Speaker 2: ugly right now, can.

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Speaker 3: We get over the bridge? The Senate will be next.

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Speaker 2: We'll see if they get this done today, but even

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Speaker 2: if they do, Israel and Ukraine are still left up

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Speaker 2: in the air. And that's where we begin our conversation

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Speaker 2: with the ambassador. He's chair of the Middle East Program

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Speaker 2: at the Wilson Center, James Jeffrey, former Ambassador to Iraq

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Speaker 2: and Turkey. It's great to have you back with us, sir,

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Speaker 2: and I appreciate your joining us here in the throes

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Speaker 2: of debate in Washington. How important is it going to

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Speaker 2: be to start with this matter of funding for the

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Speaker 2: Senate to move on Israel and Ukraine before the end

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Speaker 2: of this year, so this does not slip away.

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Speaker 8: It's very, very critical for both countries, and they're both

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Speaker 8: part of the same fight, two democratic states being attacked

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Speaker 8: by the enemies of if you will, the Global Uta.

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Speaker 8: So I see them as the same package. Many in

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Speaker 8: the Senate see that there are some in the House

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Speaker 8: of both on the left and the right, that are

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Speaker 8: doing nitpicking about this, but I'm very confident this is

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Speaker 8: going to work. We should be all encouraged by what

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Speaker 8: the House of Representatives has done this week, a little

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Speaker 8: bit of a return to sanity. I think this is

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Speaker 8: going to carry over into these other things as well.

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Speaker 8: I'm pretty upbeat.

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Speaker 2: You're upbeat just to see something move, and so this

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Speaker 2: is a story of momentum.

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Speaker 8: Is that what you mean exactly, and recognition that you

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Speaker 8: have to do deals and that if you're the scene

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Speaker 8: as the one who's blocking the deal, it's going to

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Speaker 8: hurt you on election day. And I think some of

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Speaker 8: the Republicans felt that that may be the one explanation

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Speaker 8: for why they didn't do as well as they had

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Speaker 8: thought in the November elections.

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Speaker 2: We have a fascinating story on the Bloomberg terminal today

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Speaker 2: from our Pentagon reporter Tony Capasi is going to join

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Speaker 2: us a little bit later, Ambassador about the Pentagon not

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Speaker 2: waiting for a funding measure to pass. In fact, it

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Speaker 2: appears the Pentagon has quite a bit to work with

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Speaker 2: here when it comes specifically to Israel ramping up aid,

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Speaker 2: delivering on requests that include more laser guided missiles for

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Speaker 2: apache gunships as well as one hundred and fifty five

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Speaker 2: millimeters shells, night vision devices, bunker buster munitions, new army vehicles,

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Speaker 2: the new hum v's, even some drones, the Switchblade drones

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Speaker 2: that we apparently don't even have. Is this just coming

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Speaker 2: out of our inventories. In another case, Ukraine is returning

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Speaker 2: weapons that were donated to Israel. It sounds like they're

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Speaker 2: getting a lot already.

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Speaker 3: Is what Israel?

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Speaker 8: It is what Israel needs, particularly the bunker busters and

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Speaker 8: the drones. Some of it's coming out of inventories. Some

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Speaker 8: of it is the stuff that we have in the

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Speaker 8: pipeline that will be replaced. This is risk, but it

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Speaker 8: is low risk at this time. The point is we

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Speaker 8: are defending and Americans need to know this. We are

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Speaker 8: defending these United States, We're defending Taiwan, We're defending the

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Speaker 8: whole global UTA by helping the Israelis in the Ukrainians

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Speaker 8: fight this fight. This is money well spent. We'll find

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Speaker 8: the weapons, we'll find the ways to fund it. If necessary.

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Speaker 8: With Ukraine, we can get the Europeans to buy our

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Speaker 8: stuff and give it to them. We're going to continue

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Speaker 8: doing this. I'm absolutely convinced.

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Speaker 2: Spending time with former ambassador James Jeffrey here on Bloomberg

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Speaker 2: sound On. You might have seen this letter, Ambassador. I

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Speaker 2: want to your thoughts about this. More than thirty relief

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Speaker 2: organizations sent a letter to the Secretary of Defense, Lloyd Austin,

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Speaker 2: urging him not to send one of the items that

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Speaker 2: I just mentioned. And it's not the high tech drones

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Speaker 2: or the laser guided missiles. It's the it's the the

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Speaker 2: one hundred and fifty five millimeters shells. It's the rounds

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Speaker 2: that are indiscriminate and might result in more civilian loss

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Speaker 2: of life.

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Speaker 3: How do you respond to that?

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Speaker 8: In the hands of the Israelis who know how to

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Speaker 8: call in artillery, it's not indiscriminate. It has a circular

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Speaker 8: era probability of the more modern ones of just a

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Speaker 8: handful of meters. Now the blast radius can be over

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Speaker 8: fifty meters. That's true, you get strattenal flying around, but

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Speaker 8: this isn't going to inadvertently kill hundreds of people and

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Speaker 8: the Israelis needed and those aid agencies obviously are doing

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Speaker 8: heroic work under very difficult circumstances in Gaza, but they

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Speaker 8: cannot have a veto over a military operation that is

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Speaker 8: critical for our ally Israel and frankly critical for US.

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Speaker 2: It appears that the IDF Israeli military is moving into

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Speaker 2: the hospital that we've been hearing so much about in Gaza.

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Speaker 2: It's been suggested by some that there might in fact

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Speaker 2: be Hamas militants below the hospital. How dangerous is this

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Speaker 2: going to get? As israel Is urged to slow this

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Speaker 2: down by the White House to show restraint, to look

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Speaker 2: out for civilians when you've got potentially militants working underneath

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Speaker 2: a hospital, Ambassador.

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Speaker 8: Everything is dangerous in Gaza for both It'sraeli troops, for

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Speaker 8: civilians and fortunately for hamasris taking heavy losses. The Israelis

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Speaker 8: know what they are doing. They will simultaneously clean out

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Speaker 8: the hospital and stop moving underneath it while delivering, as

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Speaker 8: we've already seen, incubators, water, other medical supplies to the hospitale.

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Speaker 8: They're not going to shoot innocent people in the hospital.

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Speaker 8: They haven't done that deliberately at any point in this campaign.

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Speaker 2: I have to ask you about what's happening in Ukraine,

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Speaker 2: as we obviously are walking into winter here soon. As

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Speaker 2: this debate floats in Washington about funding Ukraine, and you

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Speaker 2: hear more Republican voices specifically in the House say not

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Speaker 2: another dollar. Does that in bolden Vladimir Putin to do

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Speaker 2: something stupid, to do something, for instance, around the holidays,

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Speaker 2: maybe to target civilians, maybe to start sending missiles into

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Speaker 2: Kiev again, to try to wear down Americans view of

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Speaker 2: Ukraine's potential to win.

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Speaker 8: No, for two reasons. First of all, he knows that

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Speaker 8: if he starts doing that, he's going to create more resistance,

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Speaker 8: including among Republicans in the US House. Secondly, Vladimir Putin's

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Speaker 8: doing about everything he can shout of nuclear weapons, and

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Speaker 8: he's not going to use those in this fight. For him,

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Speaker 8: it's all out. Nonetheless, he will be encouraged psychologically by

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Speaker 8: this action if we don't get the weapons and the funding,

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Speaker 8: and he'll be encouraged by the presidential campaign.

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Speaker 2: Ambassador, I know you stopped a very busy day for us,

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Speaker 2: and I want to thank you for coming back to

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Speaker 2: see us once again. James Jeffrey with us live on

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Speaker 2: Bloomberg Radio Now Share the Middle East Program at the

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Speaker 2: Wilson Center. Of course, he's spent a career doing this,

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Speaker 2: not only in his work as an ambassador, has worked

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Speaker 2: through the States Department. He was also the Special Presidential

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Speaker 2: Envoy for the Global Coalition to defeat isis.

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Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch the

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Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the

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Speaker 2: I'm Jill Matthew in Washington with Kaylee. And if you

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Speaker 2: were on YouTube a little while ago, you already know

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Speaker 2: that you never know what you're going to see on

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Speaker 2: the interwebs here on sound On, and you can join

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Speaker 2: us now by searching Bloomberg Global News.

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Speaker 9: I'm here.

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Speaker 3: There she is now, Kaylee. Lin's nice to see you.

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Speaker 2: Kaylee joined us every day for the second hour of

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Speaker 2: this conversation. And we've got a lot to talk about.

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Speaker 2: You're John Tucker talking about GM. Yeah.

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Speaker 3: Are we worried about this contract?

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Speaker 9: Yeah? Well, when we think about the deal that was signed,

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Speaker 9: which of course includes the big wage increases a lot

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Speaker 9: of other concessions to the union that the union wanted,

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Speaker 9: it was ever a guarantee that the union was going

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Speaker 9: to ratify it. It was a deal in principle, essentially

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Speaker 9: a tentative deal, and we know that at least some

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Speaker 9: workers at some of these specific gm plants don't seem

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Speaker 9: to be as forward as maybe you would have thought.

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Speaker 3: Yeah, this is interesting.

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Speaker 2: I thought Sean Fain had a sense of the Yeah,

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Speaker 2: rank and file here, but maybe this is more complicated

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Speaker 2: than we thought. It's something we talked a lot about though,

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Speaker 2: during the strike, and I don't want to drop this bead.

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Speaker 2: As long as this is still a story, We'll keep

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Speaker 2: you posted on that use here in Washington. I was

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Speaker 2: joking earlier you can't get off the exit on three

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Speaker 2: ninety five to National Airport because the entire House of

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Speaker 2: Representatives is already in line getting out of town in

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Speaker 2: front of you. The Senate still has some work to do.

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Speaker 2: It looks like the Senate will pass this bill that

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Speaker 2: cleared the House late yesterday that'll fund the government into January.

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Speaker 3: Do you hear Chuck Schumer this morning? He's going for it.

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Speaker 2: This is the Senate Majority Leader filing kloture on the floor,

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Speaker 2: the procedural vote that would bring us to the actual funding.

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Speaker 4: We moved to proceed to calendar two forty eight HR

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Speaker 4: sixty three sixty three Clarkport.

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Speaker 5: Motion to proceed to HR sixty three sixty three and

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Speaker 5: Act making further Continuing Appropriations for Fiscal Year twenty twenty

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Speaker 5: four and for other purposes.

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Speaker 4: I send a quote your motion to the desk.

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Speaker 2: Send it to the desk, Kaylee lines. That means it

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Speaker 2: could happen as soon as today, by the way, Yeah,

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Speaker 2: well he could be like another line at the airport tonight.

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Speaker 8: Yeah.

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Speaker 9: They want to get this done asap. And something tells

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Speaker 9: me the House getting to go home until November twenty

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Speaker 9: eighth might fire up some senator who also would like

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Speaker 9: to get on their own airplanes, trains, automobiles. However it

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Speaker 9: is they're getting home for the holiday.

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Speaker 2: It's Wednesday today, Yes, a week from today, still won't

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Speaker 2: even be Thanksgiving.

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Speaker 9: Yeah, well you know how this works.

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Speaker 3: Congress gets Yeah, I want.

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Speaker 9: That place extended holiday weeks. I want that would be

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Speaker 9: nice if we could do that too.

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Speaker 3: But Mark Warner told us last night he's on board.

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Speaker 2: They don't want to shut down the government even though

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Speaker 2: they don't like the process. So then, of course we're

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Speaker 2: not sure exactly what's going to happen in terms of

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Speaker 2: the vote count.

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Speaker 3: But Wall Street seems.

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Speaker 2: I guess pleased, not that they were ever freaked out

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Speaker 2: to begin with. I think this is like boy who

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Speaker 2: cried wolf from Washington to Wall Street.

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Speaker 9: Yeah, I mean Wall Street has lived through government shutdowns before.

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Speaker 9: I think, by and large, the lesson we have learned

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Speaker 9: is financial markets are more concerned about debt sealing fights

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Speaker 9: and potential. That's cool on the US debt versus government shutdowns,

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Speaker 9: which have a relatively limited economic impact. Though the economic

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Speaker 9: impact is still there, necessarily something markets get overly concerned about.

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Speaker 9: And at the very least, the market probably is looking

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Speaker 9: at what happened in the last twenty four hours and saying, Okay,

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Speaker 9: we can at least breathe until January nineteenth. Maybe we'll

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Speaker 9: start getting freaked out a little bit before that.

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Speaker 2: We will, because three days before that is I yeah,

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Speaker 2: the Iowa. You better rest up over the holidays. I'll

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Speaker 2: bet you. Libby is I told you Libby Cantrell was

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Speaker 2: coming in. She's with us now, the head of US

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Speaker 2: public policy at PIMCO. On the line, Libby, I saw

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Speaker 2: your note to clients, and I guess we're feeling pretty

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Speaker 2: good about things here. But nothing's changed, has it? Don't

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Speaker 2: we just shut down in January?

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Speaker 10: Yeah? Good asking you in Joe. It basically this is

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Speaker 10: Congress has done what they are very good at, which

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Speaker 10: is just kicking the can down the road. As you know,

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Speaker 10: there are now two deadlines. Lead it to Congress to

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Speaker 10: overcomplicate something that should be more simple. Two funding deadlines

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Speaker 10: January nineteenth, as you just mentioned, and that I'll so

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Speaker 10: February second, which happens to be Groundhog Day. Maybe wittingly

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Speaker 10: or not, they made that deadline, and it just sounds like.

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Speaker 2: From why is that real February second is did they

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Speaker 2: do that on purpose?

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Speaker 10: I don't know. I mean maybe maybe it's a wink

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Speaker 10: and a nod, But I think the most important thing here,

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Speaker 10: and you're right, I mean markets, markets have sort of

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Speaker 10: shaken this off for the most part. I think there

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Speaker 10: was more focus at the end of September, I think

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Speaker 10: than there was just the assumption that this would get

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Speaker 10: resolved this week, which of course it looks very likely too.

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Speaker 10: You know, we would be surprised if we didn't see

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Speaker 10: a big bipartisan vote in the Senate and then President

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Speaker 10: Biden quickly signing this into law, but in a big

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Speaker 10: butt here. We will have to revisit this come January nineteenth.

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Speaker 10: And it looks like while the House Freedom Caucus, the

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Speaker 10: right flank of the House Republican Conference, is giving Secer

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Speaker 10: Johnson a break for now, they will not come January,

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Speaker 10: they are insisting that there will there there there has

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Speaker 10: to be spending cuts or else. You know, ship Roy

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Speaker 10: has indicated. Representative Ship Roy, who is part of the

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Speaker 10: House Freedom CROCSSES, has has indicated this is strike one

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Speaker 10: and strike two for Speaker Johnson. And so so it

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Speaker 10: does seem that the stakes will be much higher as

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Speaker 10: we go into January. And in terms of the markets,

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Speaker 10: I mean, again, the markets haven't really been focused on us. However,

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Speaker 10: you could, you know, you could argue that some of

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Speaker 10: this increase in the term premium, basically the premium that

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Speaker 10: investors have to pay as sorry, that the US government

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Speaker 10: has to pay investors in order to take on their debt,

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Speaker 10: maybe has something to do with just questions around just

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Speaker 10: you know, functioning and governance in Washington. But it's difficult

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Speaker 10: to know to sort of disentangle all the reasons for

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Speaker 10: why the term premium had increased over over the last

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Speaker 10: six weeks or so.

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Speaker 9: Yeah, well, if you ask Treasury Secretary Jennet Yellen, she

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Speaker 9: doesn't think that has anything to do with the debt

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Speaker 9: and deafest. It's just the idea that the economy is

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Speaker 9: really strong and rates are going to stay higher for longer.

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Speaker 9: So I guess, Libby, it depends on who you ask.

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Speaker 9: To the point you were just making though about maybe

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Speaker 9: the House Freedom Caucus, some of these ultra hardline conservatives

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Speaker 9: aren't going to be giving Mike Johnson as much of

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Speaker 9: a break come early next year. We also heard from

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Speaker 9: Congressman Bob Good of Virginia. He was speaking to reporters

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Speaker 9: earlier and he said, the Speaker has said he wouldn't

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Speaker 9: do another CR. We're going to hold him to that. So, Libby,

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Speaker 9: with the passage of a clean CR, now, does it

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Speaker 9: only intensify the idea that there will be a shutdown

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Speaker 9: next year because Speaker Johnson is going to have played

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Speaker 9: that card already and not going to have an option

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Speaker 9: between shutdown or spending cuts that Democrats won't go for.

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Speaker 10: Yeah, I think that's exactly right, Kaylee. I think that

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Speaker 10: you know the release valve that both Speaker McCarthy and

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Speaker 10: now Speaker Johnson have used and it will not be

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Speaker 10: available to Speaker Johnson if it sounds like if he

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Speaker 10: wants to keep his speakership that it sounds like that

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Speaker 10: is what is the sort of implicit you know threat

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Speaker 10: here that come January nineteenth, if the funding bills for

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Speaker 10: those that sort of that part of the government that

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Speaker 10: that deadline applies to, if that hasn't passed, then folks,

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Speaker 10: you know, Will Will will threaten his speakership if he

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Speaker 10: has to use another cr. The thing is that practically speaking,

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Speaker 10: you already just saw this today in the House, and

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Speaker 10: this is sort of noise, I think, to investors, but

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Speaker 10: it's sort of important in Washington is that the appropriations

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Speaker 10: bills have not been able to pass, even on a

439
00:22:34,119 --> 00:22:36,760
Speaker 10: partisan basis. I think this is kind of the big

440
00:22:36,800 --> 00:22:39,440
Speaker 10: takeaway and sort of revealing in terms of the Republican

441
00:22:39,440 --> 00:22:43,000
Speaker 10: caucuss that that there are obviously lots of different factions

442
00:22:43,119 --> 00:22:46,040
Speaker 10: they've called the Five Families on the Hill within the

443
00:22:46,080 --> 00:22:49,000
Speaker 10: Republican Conference, and they're not necessarily getting along very well

444
00:22:49,080 --> 00:22:52,639
Speaker 10: right now, and that does not necessarily pretend well to

445
00:22:52,800 --> 00:22:58,040
Speaker 10: meeting that January nineteenth deadline of passing appropriations bills, even

446
00:22:58,080 --> 00:23:00,879
Speaker 10: if it's just relying on Republicans. So I think the

447
00:23:00,880 --> 00:23:04,440
Speaker 10: bottom line here is the stakes seem higher going into January.

448
00:23:04,680 --> 00:23:08,399
Speaker 10: The chances seem higher of a shutdown honestly in January.

449
00:23:08,720 --> 00:23:11,040
Speaker 10: But as we've just been talking about, does this really

450
00:23:11,040 --> 00:23:15,359
Speaker 10: matter to the market. Probably not unless it's sustained shutdown

451
00:23:15,480 --> 00:23:18,600
Speaker 10: and then there's another shutdown deadline on February second, So

452
00:23:18,640 --> 00:23:20,800
Speaker 10: the flill government shutdown, then then I do think it

453
00:23:20,840 --> 00:23:23,000
Speaker 10: could your markets will be taking notice.

454
00:23:24,040 --> 00:23:27,480
Speaker 2: We're talking with Libby Cantrell at Pimco on Bloomberg as

455
00:23:27,520 --> 00:23:32,320
Speaker 2: the president. Today, Libby sits down with Shijimping, the president

456
00:23:32,440 --> 00:23:34,880
Speaker 2: of China here in the US, for the first time

457
00:23:34,880 --> 00:23:38,359
Speaker 2: in six years. They're sitting down in San Francisco for

458
00:23:38,480 --> 00:23:43,280
Speaker 2: what is described as a high stakes meeting based entirely

459
00:23:43,520 --> 00:23:47,159
Speaker 2: on our lack of relationship over the last nine to

460
00:23:47,200 --> 00:23:51,240
Speaker 2: twelve months here. Then again, expectations are pretty low, and

461
00:23:51,760 --> 00:23:54,160
Speaker 2: we keep hearing that this is a market positive.

462
00:23:54,240 --> 00:23:55,960
Speaker 3: Just the fact that they're sitting down together. Is that

463
00:23:56,000 --> 00:23:56,640
Speaker 3: how you see it?

464
00:23:57,240 --> 00:23:58,679
Speaker 10: I think that's exactly how we see it.

465
00:23:58,760 --> 00:23:59,000
Speaker 8: Joe.

466
00:23:59,040 --> 00:24:01,600
Speaker 10: This is the first time that you president, she has

467
00:24:02,040 --> 00:24:05,879
Speaker 10: met with a US president on US soil since twenty seventeen,

468
00:24:06,520 --> 00:24:09,560
Speaker 10: and this is, you know, the first time where both

469
00:24:09,640 --> 00:24:13,399
Speaker 10: leaders are coming together with I think, you know, at

470
00:24:13,480 --> 00:24:17,200
Speaker 10: least their hands open a bit more than what they

471
00:24:17,280 --> 00:24:21,119
Speaker 10: have during during Biden Biden's administration. So I think the

472
00:24:21,160 --> 00:24:25,800
Speaker 10: meeting in itself is the deliverable. The meeting is what

473
00:24:26,680 --> 00:24:29,399
Speaker 10: you know, folks on both sides were trying to deliver.

474
00:24:29,920 --> 00:24:33,000
Speaker 10: I think outside of that, we don't expect there to

475
00:24:33,080 --> 00:24:36,560
Speaker 10: certainly be any kind of grand bargain on sort of

476
00:24:36,600 --> 00:24:40,359
Speaker 10: the economic tool state craft, if you will, in terms

477
00:24:40,400 --> 00:24:45,080
Speaker 10: of rolling back tariffs or anything announced on expert controls

478
00:24:45,119 --> 00:24:47,280
Speaker 10: or what have you from the US side. I do

479
00:24:47,400 --> 00:24:51,959
Speaker 10: think though, that we know one area of potential agreement

480
00:24:52,160 --> 00:24:54,680
Speaker 10: and that could come out in an announcement could be

481
00:24:54,720 --> 00:24:58,359
Speaker 10: the reinstatement of military to military communications, and that is

482
00:24:58,400 --> 00:25:02,440
Speaker 10: something that certainly the US administration is prioritizing. I mean,

483
00:25:02,480 --> 00:25:06,880
Speaker 10: just remember that even during the Cold War, the US

484
00:25:07,000 --> 00:25:11,119
Speaker 10: had principles of principal level channels of communication open with

485
00:25:11,800 --> 00:25:14,760
Speaker 10: military folks and with the USSR. So during the Cold War,

486
00:25:14,800 --> 00:25:18,320
Speaker 10: so the fact that we haven't had that with China

487
00:25:18,400 --> 00:25:20,880
Speaker 10: since August of twenty twenty two. Of course, that's when

488
00:25:20,880 --> 00:25:24,800
Speaker 10: Speaker Pelosi went over to Taiwan and then the China

489
00:25:24,880 --> 00:25:27,840
Speaker 10: kind of cut us off practically for all intensive purposes.

490
00:25:28,240 --> 00:25:29,800
Speaker 10: So I do think that is that I know that

491
00:25:29,880 --> 00:25:32,600
Speaker 10: the priority of the US administration, I think for good

492
00:25:32,640 --> 00:25:35,640
Speaker 10: reason from a national security perspective, and so I would

493
00:25:35,680 --> 00:25:38,880
Speaker 10: not be surprised if we saw an announcement around that.

494
00:25:38,920 --> 00:25:42,560
Speaker 10: But outside of that, I doubt we know we see

495
00:25:42,640 --> 00:25:45,680
Speaker 10: much coming out of this meeting. Again, the meeting itself is.

496
00:25:45,800 --> 00:25:50,320
Speaker 9: Deliverable, and of course Libby, the meeting with Biden isn't

497
00:25:50,320 --> 00:25:52,680
Speaker 9: the only meeting that Chijin Ping is going to have.

498
00:25:52,760 --> 00:25:56,480
Speaker 9: He's dining tonight with a bunch of executives of big companies.

499
00:25:56,520 --> 00:25:59,400
Speaker 9: We don't know exactly who is on that invitation list

500
00:25:59,440 --> 00:26:01,680
Speaker 9: for dinner, but you know, the likes of Jane Frasier,

501
00:26:01,800 --> 00:26:04,359
Speaker 9: Elon Musk, Satya Nadella. They're all going to be at

502
00:26:04,400 --> 00:26:07,400
Speaker 9: the CEO summit that's happening on the sidelines of APEX.

503
00:26:07,400 --> 00:26:10,000
Speaker 9: So it'll be interesting to see what the business oriented

504
00:26:10,040 --> 00:26:13,719
Speaker 9: conversation is. Because we were having a conversation with Gerard

505
00:26:13,760 --> 00:26:17,080
Speaker 9: de Pippo, who's one of our geoeconomics analysts here at

506
00:26:17,080 --> 00:26:20,040
Speaker 9: Bloomberg Economics last night, and he basically told us, Look,

507
00:26:20,040 --> 00:26:22,679
Speaker 9: whatever the messaging from the bidy of administration is about

508
00:26:22,920 --> 00:26:26,760
Speaker 9: whether or not there is decoupling they're pushing for with China, Ultimately,

509
00:26:26,800 --> 00:26:29,360
Speaker 9: these decisions, a lot of them come down to private actors,

510
00:26:29,400 --> 00:26:32,199
Speaker 9: what businesses, and what people do, and Lippy, aren't we

511
00:26:32,440 --> 00:26:33,719
Speaker 9: already kind of seeing that?

512
00:26:35,080 --> 00:26:37,920
Speaker 10: Yeah, that's an excellent point. I do think it is.

513
00:26:38,040 --> 00:26:41,199
Speaker 10: It's quite a tell the President she is meeting with

514
00:26:41,280 --> 00:26:44,880
Speaker 10: these US based CEOs, and I think if you look

515
00:26:44,920 --> 00:26:49,679
Speaker 10: at the most recent FDI, the foreign direct Investment data

516
00:26:50,280 --> 00:26:52,919
Speaker 10: in China, it is sort of dropped off a cliff

517
00:26:53,600 --> 00:26:56,520
Speaker 10: in many ways, and so I think that it makes

518
00:26:56,560 --> 00:27:00,880
Speaker 10: sense that President She is trying to, you know, reaffirm

519
00:27:01,160 --> 00:27:05,639
Speaker 10: or reassure in many ways that China is still open

520
00:27:06,359 --> 00:27:10,040
Speaker 10: for business, that it is still open to US investment.

521
00:27:10,160 --> 00:27:12,280
Speaker 10: But you make an excellent point that regardless of what

522
00:27:12,320 --> 00:27:15,200
Speaker 10: the public policy is around here, you know that the

523
00:27:15,440 --> 00:27:18,439
Speaker 10: sort of the political risk of investing in China has

524
00:27:18,480 --> 00:27:21,600
Speaker 10: certainly increased from the US's perspective. We see that with

525
00:27:21,640 --> 00:27:24,760
Speaker 10: some of our clients, you know, based in the US.

526
00:27:24,840 --> 00:27:27,520
Speaker 10: And then of course there's some economic headwinds, as we

527
00:27:27,560 --> 00:27:31,280
Speaker 10: all know in China. So it's dovetailing at a time

528
00:27:31,400 --> 00:27:34,600
Speaker 10: where investment may not be even that attractive, you know,

529
00:27:34,640 --> 00:27:38,000
Speaker 10: going in into China. But again, I think this is

530
00:27:38,000 --> 00:27:42,119
Speaker 10: is this is sort of a revealed preference, if you will,

531
00:27:42,520 --> 00:27:45,520
Speaker 10: on President Sheese part where he is you know, showing

532
00:27:45,600 --> 00:27:49,640
Speaker 10: that he does want to reassure us and US business

533
00:27:49,720 --> 00:27:52,480
Speaker 10: that you know, China is still is still an attractive

534
00:27:52,480 --> 00:27:55,199
Speaker 10: place to invest. Whether it resonates, you know, it's a.

535
00:27:55,280 --> 00:27:58,800
Speaker 3: Question, sure, what do you do? You do you have

536
00:27:58,880 --> 00:28:00,960
Speaker 3: a feel for that, Libby.

537
00:28:01,040 --> 00:28:03,000
Speaker 2: I just wonder if this is the new normal here,

538
00:28:03,080 --> 00:28:05,399
Speaker 2: if there's going to be some thaw or you know,

539
00:28:06,160 --> 00:28:09,080
Speaker 2: a motivator to start investing in China again after so

540
00:28:09,119 --> 00:28:10,280
Speaker 2: many people got burned.

541
00:28:11,320 --> 00:28:13,840
Speaker 10: Yeah, and you saw you know today that the Federal

542
00:28:13,880 --> 00:28:18,399
Speaker 10: Thrift Retirement Plan is going to be moving away from

543
00:28:18,440 --> 00:28:21,480
Speaker 10: some of their Chinese investments. Again, there have been lots

544
00:28:21,480 --> 00:28:26,240
Speaker 10: of you know, US space pension plans, the big allocators

545
00:28:25,920 --> 00:28:30,760
Speaker 10: of money that are not necessarily divesting, but they are

546
00:28:30,760 --> 00:28:35,840
Speaker 10: not necessarily making new investments in in China. And I

547
00:28:35,880 --> 00:28:37,760
Speaker 10: do think this is sort of the where the intersection

548
00:28:37,880 --> 00:28:41,360
Speaker 10: of you know, investing and policy is very acute or

549
00:28:41,520 --> 00:28:44,200
Speaker 10: policy or political risk. You know, a lot of those folks,

550
00:28:44,200 --> 00:28:47,120
Speaker 10: a lot of those allocators just think that, you know,

551
00:28:47,240 --> 00:28:49,960
Speaker 10: the question about obviously the economic attractiveness of China, but

552
00:28:49,960 --> 00:28:53,800
Speaker 10: then also the destination, but also again just the domestic

553
00:28:53,920 --> 00:28:56,920
Speaker 10: political risk and what we've seen on the Hill that

554
00:28:57,040 --> 00:29:01,680
Speaker 10: the House Select Committee on China, they very much are

555
00:29:01,720 --> 00:29:05,760
Speaker 10: scrutinizing capital flows from the US to China. We also

556
00:29:05,840 --> 00:29:09,040
Speaker 10: have seen the Biden administration put out an executive order

557
00:29:09,480 --> 00:29:15,000
Speaker 10: in August, you know, basically looking at capital flows into

558
00:29:15,080 --> 00:29:17,320
Speaker 10: very specific sectors. They try to be very targeted and

559
00:29:17,440 --> 00:29:20,360
Speaker 10: very surgical, but still so I just think in general,

560
00:29:20,920 --> 00:29:23,480
Speaker 10: the kind of the threshold for investing if you're a

561
00:29:23,600 --> 00:29:27,480
Speaker 10: US based investor, especially a big one with the headline

562
00:29:27,520 --> 00:29:28,960
Speaker 10: risk has increased.

563
00:29:29,040 --> 00:29:30,840
Speaker 2: We're just about out of time here, Libby, but I

564
00:29:30,880 --> 00:29:33,880
Speaker 2: do appreciate your taking a swing at that question.

565
00:29:33,920 --> 00:29:35,360
Speaker 3: I'm Joe Matthew and Washington.

566
00:29:36,480 --> 00:29:38,800
Speaker 2: Thanks for listening to the Sound On podcast. Make sure

567
00:29:38,800 --> 00:29:41,680
Speaker 2: to subscribe if you haven't already, at Apple, Spotify and

568
00:29:41,760 --> 00:29:44,280
Speaker 2: anywhere else you get your podcasts, and you can find

569
00:29:44,360 --> 00:29:47,440
Speaker 2: us live every weekday from Washington, DC at one pm

570
00:29:47,480 --> 00:29:51,560
Speaker 2: Eastern time at Bloomberg dot com