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Speaker 3: Our live stream awaits you with news from the campaign
Speaker 3: trail today and from Chicago. We were just talking to
Speaker 3: Nathan Dean about what's going to take place next week
Speaker 3: at the DNC, and we do have news on the
Speaker 3: lineup this morning. Pretty interesting to think about the way
Speaker 3: this is all going to work. Knowing of course Tim
Speaker 3: Walls will be speaking on Wednesday night, and Kamala Harris
Speaker 3: we'll speak on Thursday. We're filling in the blanks. Joe
Speaker 3: Biden is going to open this thing on Monday. Talked
Speaker 3: about that with Rick and Jenie already. They're kind of
Speaker 3: ripping off the band aid check the box. Get Joe
Speaker 3: Biden done Monday night so we can look to the future.
Speaker 3: Former Secretary of State Hillary Clinton. It turns out as
Speaker 3: also being held on Monday Night, gets more interesting from
Speaker 3: there Tuesday Barack Obama. It is his hometown after all,
Speaker 3: and a big reason, big part of the reason why
Speaker 3: Joe Biden is not in this race anymore. Then it's
Speaker 3: Bill Clinton. Isn't this interesting? On Wednesday Night? Introducing Tim Walls,
Speaker 3: not Hillary Clinton. They're going to the former president for
Speaker 3: this one, presumably for some kind of a folksy presentation.
Speaker 3: And this is where we start with our panel today.
Speaker 3: They're both back with us. Bloomberg Politics contributor Genie Shanzano,
Speaker 3: a political science professor iona University and senior Democracy Fellow
Speaker 3: at the Center for the Study of the Presidency in Congress,
Speaker 3: Rick Davis partner Stone Court Capital, of course, and longtime
Speaker 3: Republican strategists. What do you make of the lineup here, Genie?
Speaker 3: I know I'm probably reading into all this stuff, but
Speaker 3: you get Hillary and Joe Biden out of the way
Speaker 3: on Monday nights so you can feature Bill Clinton on
Speaker 3: what will be a very well watched night on Wednesday
Speaker 3: with the Vice President. Why these decisions?
Speaker 4: I do think it makes sense. You know, obviously, both
Speaker 4: Joe Biden and Hillary Clinton have run, and of course
Speaker 4: he won. She did not. They serve together in Obama's administration,
Speaker 4: So I do think that makes sense.
Speaker 1: And then to your.
Speaker 4: Point, you have Barack Obama, a great speaker, and it's
Speaker 4: its home, his hometown and still widely beloved. I'm curious
Speaker 4: to see if we hear anything from Michelle Obama. Haven't
Speaker 4: heard her name yet. And Bill Clinton, he's known as
Speaker 4: one of the people who really does a great job
Speaker 4: introducing somebody like Walt I keep wondering, does he pull
Speaker 4: out the old saxophone?
Speaker 1: Who knows what happened? But they do have.
Speaker 4: A similar sort of background in terms of being from
Speaker 4: the Midwest and you know, having served as governors and
Speaker 4: that kind of thing. So I do think that makes sense.
Speaker 4: And then of course the question becomes who introduces Kamala Harris.
Speaker 4: I am curious to see as well. I don't think we.
Speaker 3: Know that yet, No, we don't. And Rick, you've run
Speaker 3: a convention, so talk to me about the process that
Speaker 3: goes into decisions like these when you're figuring out the
Speaker 3: speaking schedule and how to best capture the media coverage
Speaker 3: that'll come with it.
Speaker 5: Yeah, you can imagine the monkey runch. It was thrown
Speaker 5: into this three weeks ago when the top of the
Speaker 5: ticket flipped and all the focus, all the agenda was
Speaker 5: built around showcasing Joe Biden's accomplishments as president and his
Speaker 5: vision for the next presidency. And that includes the kinds
Speaker 5: of people who are speaking the stories of Joe Biden's
Speaker 5: you know, growing up and you know his uh sort
Speaker 5: of you know, middle class roots and you know, working
Speaker 5: hard for the working man. And now all that has
Speaker 5: been turned upside down. So there's a lot of rewriting
Speaker 5: that's going on and a lot of new recruitment of
Speaker 5: new faces. And as you've described, you know, these are
Speaker 5: the standards, right when you've got former presidents and former
Speaker 5: nominees a plenty who were willing actually to come to
Speaker 5: the convention, unlike the Republican convention where George W. Bush
Speaker 5: wasn't willing to be anywhere near that zip code when
Speaker 5: Donald Trump was doing his victory lap. You have ready
Speaker 5: and willing participants, and so how do you then juggle
Speaker 5: them around? And I do think that that part of
Speaker 5: the Biden burden for the convention managers was talking about
Speaker 5: his legacy without standing like he's been around forever, right
Speaker 5: and playing to the age issue here you don't have
Speaker 5: that problem. It's all going to be new, almost as if, uh,
Speaker 5: you know, Harris wasn't even part of the Biden administration.
Speaker 5: You know, we'll get credit for that to Joe Biden
Speaker 5: and all the accomplishments, and then she'll peel off and say,
Speaker 5: and for the future, here's my act, and that's where
Speaker 5: the new economic policy comes in. That's where the new
Speaker 5: optics come in with my new Vice president Walls, and
Speaker 5: so I think that will be the handoff. You know
Speaker 5: that Bill Clinton gives the Walls and then they peel
Speaker 5: into it. You know on Thursday, Wednesday and Thursday Night, Genie.
Speaker 3: Bill Clinton is seventy seven years old. He's one year
Speaker 3: younger than Donald Trump. This is who's been chosen now
Speaker 3: to introduce Tim Walls on Wednesday Night. This is an
Speaker 3: individual who was almost canceled. I don't think that's possible
Speaker 3: with a former president. Certainly. Donald Trump has proven that,
Speaker 3: but was not seen as a helping hand to the
Speaker 3: Democratic Party during the Me Too movement. It looked like
Speaker 3: he was being moved to the sidelines. Here Are you
Speaker 3: surprised to see him with such a prominent role in
Speaker 3: twenty twenty four.
Speaker 4: I'm not. You know, he is a former president who
Speaker 4: is living healthy, able to speak to your point. Obviously,
Speaker 4: there is a lot there and we saw that in
Speaker 4: the Me Too movement rightly so, and I think that
Speaker 4: may be one of the many reasons why you don't
Speaker 4: see him on a Thursday Night introducing Kamala Harris. But again,
Speaker 4: he's proven to be over several decades, really really good
Speaker 4: at getting out there speaking to Democrats, particularly the kind
Speaker 4: of Democrats that Hillar, sorry, Kamala Harris and Tim Waltz
Speaker 4: want to appeal to, which are from the Midwest, from
Speaker 4: these Rusta Belt states. I mean, after all, that's how
Speaker 4: Bill Clinton made his name as a very very moderate
Speaker 4: Democrat who went out there and showed that the Democrats
Speaker 4: were not so liberal that they should, you know, just
Speaker 4: be washed away in an election that he ended up winning.
Speaker 4: So you know, he does have that appeal on so
Speaker 4: andly obviously it comes with downsides, and I think again
Speaker 4: in my mind, one of the big questions is what
Speaker 4: do they do in terms of a direction on the
Speaker 4: Thursday Night for Kamala Harris. I think there's a lot
Speaker 4: of really really attractive possibilities. I'm going to put my
Speaker 4: vote in for Michelle Obama and Beyonce charity as well.
Speaker 4: But there's a lot of others.
Speaker 1: There's a lot of others.
Speaker 4: But I do think it showcases that difference from that
Speaker 4: Wednesday to Thursday night in terms of generation big time.
Speaker 3: It's a big turning of the page here, unless, of course,
Speaker 3: the uncommitteds cause a problem. Rick. I don't think they'll
Speaker 3: disrupt the whole flow here, but it could be part
Speaker 3: of the story. They're calling them cease fire delegates up
Speaker 3: in Boston this morning, Rick. According to Politico, they're about
Speaker 3: thirty uncommitted delegates representing the Democratic primary voters who opposed
Speaker 3: Joe Biden. This of course brings us to the matter
Speaker 3: of Israel and the many uncommitted votes that we saw
Speaker 3: in some of the swing states during the primaries that
Speaker 3: we talked about, Rick, if you were running this convention,
Speaker 3: as you have done in your career, what would you
Speaker 3: be doing right now to try to meet with these
Speaker 3: people to try to diffuse the situation before everybody shows
Speaker 3: up in Chicago.
Speaker 5: Yeah, I mean we talked about this the other day,
Speaker 5: Joe and I suggested that, you know, you'd want to
Speaker 5: put a group together that would start literally handholding these folks,
Speaker 5: trying to resolve issues and you know, find things of
Speaker 5: interest that they have in the platform and other options
Speaker 5: future administration points of view, and also you know, work
Speaker 5: them over hard on the fact that you know, Donald
Speaker 5: Trump's not their kind of person. They shouldn't do anything
Speaker 5: to enhance his appeal. And then I would make sure
Speaker 5: that I surrounded them with my best political operatives when
Speaker 5: they're inside the convention, so that at least I got
Speaker 5: a heads up. But for sure, I mean most of
Speaker 5: them are in Michigan delegation, and that Michigan delegation would
Speaker 5: probab I'd be sitting in the rafters, you know, where
Speaker 5: there would be literally no ability for a camera crew
Speaker 5: to take a picture of them.
Speaker 3: All. Right now, we're getting warmer, Genie, how do you
Speaker 3: think Kamala Harris and her campaign handle this. We talked
Speaker 3: yesterday about the potential for thousands of protesters outside. What
Speaker 3: about the couple a dozen inside?
Speaker 4: Yeah, and those couple a dozen are arguably even more
Speaker 4: potentially problematic for the DNC and the Democrats then the
Speaker 4: thousands outside. In addition to Michigan, we've also got some
Speaker 4: from Minnesota, and that creates a dilemma in terms of
Speaker 4: what Rick's talking about. I don't know if you can
Speaker 4: put the Minnesota delegates in the rafters because they have
Speaker 4: a vice presidential nominee there and so that I think
Speaker 4: is where the issue is. But I do think the
Speaker 4: Democrats are exercising good risk management here. They have, you know,
Speaker 4: been meeting with these folks. They've been talking to them.
Speaker 4: They have a list of demands. Certainly some of the
Speaker 4: they're never going to meet. But if they can start
Speaker 4: to meet these people halfway or a quarter of the way,
Speaker 4: if you will, they may be able to get them
Speaker 4: to hold off on doing anything with shows dissension and
Speaker 4: does what none of them want, which is showing support
Speaker 4: for Donald Trump. So I do think this is the
Speaker 4: way to proceed. But of course this is going to
Speaker 4: be one of the big things that the media are
Speaker 4: watching for the entire week.
Speaker 3: To what extent should Democrats be leveraging celebrity in this convention? Rick,
Speaker 3: you just heard Genie mentioned Beyonce. That's the caliber we
Speaker 3: could be talking about here. Everything we hear coming out
Speaker 3: of the DNC is big surprises, lots of entertainment. We've
Speaker 3: seen a lot of musicians and entertainers showing up for
Speaker 3: Kamala Harris on the campaign trail. Is there a point
Speaker 3: of diminishing returns for Democrats on this, Yeah? I think so.
Speaker 5: I mean, look, I mean, voters are going to look
Speaker 5: in and they want to see something that they can
Speaker 5: vote on, right, and it's not an a down boat
Speaker 5: on Beyonce and her latest outfit.
Speaker 4: Uh.
Speaker 5: That stuff is entertaining to the delegates, it's entertaining to
Speaker 5: the media. We'll have a blast watching and listening to
Speaker 5: it when we're there. Most of it does not get
Speaker 5: broadcasts on network television or on cable, So it's the
Speaker 5: kind of thing that has a diminishing return. But at
Speaker 5: the end of the day, you know, uh, Donald Trump
Speaker 5: brought the world wrestling championship types to his convention. You
Speaker 5: can expect Hollywood to show up at the Democratic convention
Speaker 5: and you know, pick your poison.
Speaker 3: One of the highlights of Milwaukee for me was the
Speaker 3: split screen with Rick, Genie and Kid Rock as part
Speaker 3: of our live coverage. Genie, how do you counter Kid Rock?
Speaker 3: Is it's Beyonce that you just said it? Right?
Speaker 4: It could be Beyonce, it could be Charlie X. What
Speaker 4: is it, Joe CSXXCX you correct.
Speaker 3: Whatever you say.
Speaker 4: Sure, And well, one thing we do know is they
Speaker 4: have a they have a really really at the Democratic side,
Speaker 4: well developed streaming output that's going to go out. They
Speaker 4: have been targeting gen Z like no tomorrow. And also
Speaker 4: we're hearing that they are moving away, as the Republicans did,
Speaker 4: from a list celebrities to more targeted folks, so you know,
Speaker 4: people who can really target those groups that they want
Speaker 4: to get out. So, you know, as much as we
Speaker 4: all love Beyonce, she may just be too a list
Speaker 4: this kind of voter targeting activities. So it's a really
Speaker 4: way in which they're doing. Yeah, she's too mainstream Joe.
Speaker 4: So you know, Donald Trump wants gamers. You know, the
Speaker 4: Democrats want somebody else. So I think we're going to
Speaker 4: see some targeted names that have you know, can really
Speaker 4: move the needle with this group and Joe. The vibe
Speaker 4: very very important this year, so happy good vibes is
Speaker 4: what they're going for.
Speaker 3: Yeah, I listen, I know how brat you are, Genie
Speaker 3: and X see X from producer James. They're listening to
Speaker 3: Brat in the control room right now making fun of us.
Speaker 3: Rick you're saved by the bell. I'm not going to
Speaker 3: ask you about any of the performers in Chicago. That's
Speaker 3: a no comment from Rick Davis. It's quite all right.
Speaker 3: They're going to be back with us in our second hour,
Speaker 3: the best panel in the business, Rick Davis and Genie
Speaker 3: Shanzeo here on Balance of Power on Bloomberg Radio. We'll
Speaker 3: invite our global television audience to our little talk here
Speaker 3: coming up. Aren't we lucky we get to do this
Speaker 3: every day in the midst of one of the most
Speaker 3: historic presidential campaign cycles of our lives. Coming up next hour,
Speaker 3: Kayley's back from New York too. She'll be here with
Speaker 3: us on Balance of Power and a conversation coming up
Speaker 3: with Michael Allen from Beacon Global Strategies and the news
Speaker 3: that we haven't even had a chance to touch yet
Speaker 3: from Israel today and from Ukraine. We've got a lot cooking.
Speaker 3: You want to stay with us here on Bloomberg.
Speaker 2: You're listening to the Bloomberg Balance of Power podcast. Can
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Speaker 6: Right here on Bloomberg TV and radio, where you can
Speaker 6: find us every day at this time without fail. We
Speaker 6: always will start at one pm.
Speaker 3: Stog, I know where you're going.
Speaker 6: Wasn't necessarily the case with the promised eight pm start.
Speaker 6: Last night of the X Space between Elon Musk and
Speaker 6: Donald Trump started a little bit behind schedule, and we're
Speaker 6: blaming technical difficulties or if Elon Muskus to be believed
Speaker 6: a denial of service.
Speaker 3: Yeah right, that's correct. It was forty minutes late, just
Speaker 3: to bring everyone in for one second, because we're always honest.
Speaker 3: It's just us here. Kayley and I were on the
Speaker 3: train back from New York, so we were the captive audience.
Speaker 3: We had nothing left, nothing else to do, and you
Speaker 3: got in pretty quick.
Speaker 7: I pad it day about a half now.
Speaker 6: No one else could. I couldn't tell if I was honored.
Speaker 3: Or well, I don't know. I felt like you had
Speaker 3: an invitation, but you got to listen to that great
Speaker 3: music for forty minutes while finally got in, and then
Speaker 3: we sat there for two hours listening to what sounded
Speaker 3: like a couple of guys talking on the phone.
Speaker 6: Yeah. Oh, it was just a and it was, as promised,
Speaker 6: an unscripted conversation Elon Musk said it would be, and
Speaker 6: that there were no limits to the subject matter. But frankly,
Speaker 6: the subject matter did stray often back to what we
Speaker 6: hear repeatedly from Donald Trump, who true spoke a lot
Speaker 6: and not all of it attacks aimed at his opponent com.
Speaker 3: You know, Stephanie Laie, it was her job to listen
Speaker 3: to it as well. She was listening, so you don't
Speaker 3: have too Bloomberg, White House and a politics reporter with
Speaker 3: us now at the table. Stephanie, thank you for being
Speaker 3: here as always. I'm sure you're still recovering from this
Speaker 3: whole episode as well. How do we refer to this?
Speaker 3: It was essentially a two hour live political advertisement, and
Speaker 3: the Trump campaign was actually running ads on it was
Speaker 3: sponsoring the space. So was this basically a Trump campaign
Speaker 3: ad by?
Speaker 8: I mean, we have to remember that this was a conversation,
Speaker 8: you know. I think at some points during the day
Speaker 8: before some media outlets were naming it an interview with
Speaker 8: Elon Musk, and that really wasn't the case. You know,
Speaker 8: it was very much Elon Musk giving his opinion on
Speaker 8: some topic and asking Trump, you know, how do you
Speaker 8: feel about this? Or you know, is this what you
Speaker 8: think as well? And so, you know, this entire event
Speaker 8: felt like a rally, but there was some you know,
Speaker 8: some conversation between.
Speaker 6: Yeah, a digital one perhaps. I have to say when
Speaker 6: I was taking part in the space, I was one
Speaker 6: of the what I saw at maximum a one point
Speaker 6: three million that were tuned in at that time. But
Speaker 6: I know Donald Trump on it last night said something
Speaker 6: closer to sixty million. Ex itself said the engagement levels
Speaker 6: beyond that, we're far higher. So I guess the question,
Speaker 6: Stephanie is is that all they were trying to achieve
Speaker 6: To point out as Donald Trump has been very concerned
Speaker 6: with the crowd size that Kamala Harris has been drawing
Speaker 6: in that he has the ability to get that many
Speaker 6: people to listen to him on whatever elon Musk and
Speaker 6: he decided to talk about.
Speaker 8: Yeah, I mean they were looking for some sort of
Speaker 8: splashy event to make headlines, to bring the attention back
Speaker 8: to the campaign. Because the last three weeks we've really
Speaker 8: seen the focus on Kamala Harris and Tim Walls. There's
Speaker 8: been so much momentum behind them, just given the fact
Speaker 8: that we're in this news cycle where we're figuring out
Speaker 8: what the Democratic ticket is going to look like, what
Speaker 8: the agenda is going to look like. And so this
Speaker 8: was really the moment for the Trump campaign to regain
Speaker 8: the narrative and to maybe make some news. But from
Speaker 8: what I was hearing, there was no newsmade. It was
Speaker 8: very much just Trump rehashing what he said in his
Speaker 8: past proposals. I think one thing that stuck out to
Speaker 8: me was that he mentioned that he was worried of
Speaker 8: nuclear warming, which was not a phrase that I had
Speaker 8: heard before. But essentially the idea is, you know, we
Speaker 8: have to be worried about our national security. A lot
Speaker 8: of countries have access to nuclear weapons. But that wasn't
Speaker 8: anything that I quite heard of, or that term specific.
Speaker 3: Different version on a refrain from Donald Trump. By the way,
Speaker 3: you know, it was Elon Musco I think first called
Speaker 3: it an interview, and then the Trump campaign called it,
Speaker 3: I think think the most important interview of all time.
Speaker 3: As it was getting ready to get started. But so
Speaker 3: you know, picture us there, we're clacking down the tracks
Speaker 3: on It's forty minutes into this and we've got the
Speaker 3: earbuds in and then the music stops and we hear this.
Speaker 9: We unfortunately had a massive Distributednihledge service attack against our servers.
Speaker 9: As this massive attack illustrates, there's a lot of opposition
Speaker 9: to people just hearing what President Trump has to say.
Speaker 3: There was a question about whether this invitation would be
Speaker 3: extended to Kamala Harris. Elon Musk has suggested as much.
Speaker 3: He referred to her as Kamala as opposed to President
Speaker 3: Trump in his tweet, Well, the Harris campaign indulge such
Speaker 3: an invitation.
Speaker 8: I've not seen any signals just yet, but you know,
Speaker 8: even last week when Trump was interviewed by a video gamer,
Speaker 8: Aiden Ross also extended an invitation to the Vice president Harris.
Speaker 8: And so it's not entirely clear if that's really the
Speaker 8: audience that they're looking.
Speaker 3: Does she get a cyber truck too?
Speaker 8: If she does it, maybe see yeah, that's the question
Speaker 8: in a watch, right, Yeah, yeah.
Speaker 6: Fancy watch at that. It is worth noting that you
Speaker 6: obviously are on the campaign trail a lot. Donald Trump
Speaker 6: is going to be in North Carolina this week outlining
Speaker 6: his economic policy. We expect now that Kamala Harris will
Speaker 6: also be in North Carolina on Friday to outline hers
Speaker 6: This is after we heard her float the idea of
Speaker 6: no taxes on tips, which Donald Trump had floated. Jadie
Speaker 6: Vance is talking about an expanded child tax credit, something
Speaker 6: that Democrats like Harris have long been in favor of.
Speaker 6: So when we get these economic policies fully outlined, are
Speaker 6: we going to come to find that there's actually not
Speaker 6: that much difference between them?
Speaker 8: I mean, I think that's the most interesting thing about
Speaker 8: this election cycle so far. There's been so many areas
Speaker 8: where it actually seems like Democrats and Republicans agree. You know,
Speaker 8: even just looking at the last year, Democrats in the
Speaker 8: House and Senate decided to up an immigration bill, right,
Speaker 8: and obviously it didn't go through. But just the fact
Speaker 8: that these issues are things that everyone is talking about,
Speaker 8: everyone cares about, shows a lot more agreement than disagreement
Speaker 8: among the two parties.
Speaker 5: Yeah.
Speaker 6: Absolutely, Stephanie Lai, thank you so much as always covering
Speaker 6: politics for us here at Bloomberg. We appreciate it. And
Speaker 6: as Stephanie brings up that border agreement that obviously did
Speaker 6: not make it through Congress. Donald Trump also pointed out
Speaker 6: on the call last night that she seems to be
Speaker 6: trying to be Trump when it comes to stricter border measures.
Speaker 6: At least that was his suggestion. She too, has started
Speaker 6: singing a different tune than she was when she ran
Speaker 6: for president of the first time around in twenty nine.
Speaker 3: We talked a little bit yesterday about some of the
Speaker 3: overlap on other issues. Expanded child tax credit promoted by
Speaker 3: j d Vance, no taxes on tips promoted by Kamala Harris.
Speaker 3: Maybe things get a little mushy on some of these issues.
Speaker 3: Then there's the matter, of course of geopolitics. Knowing that
Speaker 3: we could have a significant number of protesters and even
Speaker 3: uncommitted delegates at the Chicago convention next week. Kaylee, We're
Speaker 3: still waiting to find out what Iran will do to
Speaker 3: retaliate against Israel.
Speaker 6: And this is actually something that came up on this
Speaker 6: X space between Donald Trump and Elon Musk last night.
Speaker 6: Here's what the former president had to say on this matter.
Speaker 3: They're all waiting for an attack from Iran. Iran would
Speaker 3: not be attacking believe me, you know what. I was there,
Speaker 3: and I say it with respect because I think we
Speaker 3: would have been good with Iran. I don't want to
Speaker 3: do anything bad to Iran, but they knew not to
Speaker 3: mess around.
Speaker 6: So for more on what's happening in the Middle East,
Speaker 6: and I guess what would have happened if there were
Speaker 6: a different president in the office or not. Michael Allen
Speaker 6: is with us now. He is former special assistant to
Speaker 6: the President during the Bush administration, now managing director and
Speaker 6: partner at Beacon Global Strategies. Mike, always good to see
Speaker 6: you here in studio on Bloomberg TV and Radio. Appreciate
Speaker 6: you joining us. So Donald Trump has said this about
Speaker 6: a number of hot geopolitical conflicts in the world, that
Speaker 6: Russia never would have gone into Ukraine, that what's happening
Speaker 6: in the Middle East October seventh wouldn't have happened. Obviously
Speaker 6: they both happened now. I don't know if you really
Speaker 6: believe that to be true. But his suggestion that Aron
Speaker 6: wouldn't be going after Israel, considering the contentious nature of
Speaker 6: Israel's role in the Middle East that has been there
Speaker 6: pretty much perpetually, is this being intellectually honest.
Speaker 7: It's hard to just throw out a counterfactual and make
Speaker 7: an assertion. There's no way to test it. Of course,
Speaker 7: I think what he's trying to do is premise everything
Speaker 7: on what most people agree was a bad call from
Speaker 7: President Biden, and that was the way that he got
Speaker 7: out of Afghanistan. And the narrative starts there, which is
Speaker 7: that because of the way you did it, you were
Speaker 7: weak and perceived it is weak, and therefore everybody moved
Speaker 7: against you. I think that's a fair criticism that people
Speaker 7: can make. But I mean, can we discern either way
Speaker 7: these counterfactuals. It's too hard to do. But it's politics.
Speaker 7: We're in a presidential election year, and I understand people
Speaker 7: are going to make those arguments.
Speaker 3: It's been almost two weeks. Tomorrow is two weeks since
Speaker 3: the killing of the political leader of Hamas in Tehran.
Speaker 3: What is Iran waiting for or is this part of
Speaker 3: the retaliation as has been suggested the weight.
Speaker 7: Yeah, I've seen a little bit about that. Maybe they're
Speaker 7: trying to do psychological mind games on the Israelis, but
Speaker 7: I don't really think so. I think it's one like
Speaker 7: we've talked about, they need to land a punch this time,
Speaker 7: so they need to figure out the combination of cruise
Speaker 7: missiles and or ballistic missiles and drones, some of which
Speaker 7: need to get through. But the hard part. The other
Speaker 7: thing they need to balance is is that they don't
Speaker 7: want to be extraordinarily successful, and they don't want to
Speaker 7: kill too many civilians because then that might risk a
Speaker 7: total war with the Israelis, and I don't think the
Speaker 7: Iranians really want to get into a complete and total war.
Speaker 7: They benefit by having their proxies operate. And that leads
Speaker 7: to the sort of the second thing that they're weighing,
Speaker 7: which is Hesbeal is going to take some shots. But
Speaker 7: are they going to go at them in a total
Speaker 7: war type fashion or is it going to be just
Speaker 7: enough to make them look credible, to make them look strong,
Speaker 7: but not provoke a multi week contest with the stronger Israelis.
Speaker 6: Well, surely they're also weighing the fact that currently another proxy,
Speaker 6: Hamas and Israel and other mediators are at least talking
Speaker 6: about talking again when it comes to a ceasefire. I
Speaker 6: believe Hamas still hasn't firmly committed to joining those talks
Speaker 6: that have been suggested for Thursday. How did the ceasefire
Speaker 6: negotiations factor into this calculation? Can both of these things
Speaker 6: happen around retaliates and a proxy find some kind of
Speaker 6: deal with Israel.
Speaker 7: I think you're onto something. I didn't think it made
Speaker 7: sense to put all these things and try and cram
Speaker 7: them together. I understand the Biden administration is trying to
Speaker 7: do all that they can to get a ceasefire, but
Speaker 7: more importantly to get these hostages home, especially since at
Speaker 7: least five of them are Americans. But I didn't think
Speaker 7: it just sort of suited what was on the international
Speaker 7: agenda for the week, which is Esplas trying to take
Speaker 7: a shot it Israel Iran, the so called head of
Speaker 7: the octopus, and I didn't think that Hamas was going
Speaker 7: to just step up and say, hey, you know what,
Speaker 7: it's time for us to make this deal now. I
Speaker 7: think it would look weak if Sinwar were to make
Speaker 7: it now, because it would have made them seem afraid
Speaker 7: of what the Israelis were about to do. So I
Speaker 7: know how badly everybody wants it, but it didn't seem
Speaker 7: like the week to advance the ball on it.
Speaker 3: Yeah. Well, in the meantime, the Pentagon's busy sending a
Speaker 3: guided missile submarine to the theater the USS Georgia. One
Speaker 3: hundred and fifty Tomahawks on board the USS Abraham Lincoln
Speaker 3: Aircraft Carrier Strike Group is speeding its way there. Now
Speaker 3: there's a question about whether this is deterrence or whether
Speaker 3: we're girding for something more substantive than what we saw
Speaker 3: in April.
Speaker 7: So I totally agree it's to terrence. But there's another factor,
Speaker 7: and that is what is the status of the Iranian
Speaker 7: nuclear program. I don't put this at a high probability,
Speaker 7: but a couple of things have happened lately, and that one,
Speaker 7: the US intelligence community has backed away from its pronouncement
Speaker 7: that Iran is no longer working on the weaponization of
Speaker 7: a nuclear weapon. By that, they mean putting the fissile
Speaker 7: material together and putting it on a ballistic missile or something.
Speaker 7: So that's significant. People have noticed that, And at the
Speaker 7: same time, the Iranians are thinking to themselves, if we
Speaker 7: go into a total war situation, what's to stop these Raelies?
Speaker 7: And maybe the United States. I wouldn't put it over
Speaker 7: fifty percent, but you've got to think about it. What
Speaker 7: if the United States says, you know what, I didn't
Speaker 7: really want Iran to go nuclear on my watch anyway,
Speaker 7: says President Biden. So maybe we'll go for it now.
Speaker 7: Don't think that's it, but you have to consider it
Speaker 7: when you think about how much progress Iran has made
Speaker 7: on fissile material and now perhaps have restarted the weaponization
Speaker 7: part of a bomb.
Speaker 6: Well, you allude to this side that Biden maybe going
Speaker 6: for things he once was not. Can we also call
Speaker 6: that true now in the conflict in Ukraine? Considering the
Speaker 6: US policy for a very long time in this war
Speaker 6: was not to support offensive action against Russia, and now
Speaker 6: Ukraine has seized one thousand kilometers of territory in the
Speaker 6: Curse region in Russia, and you're seeing one hundred thousand
Speaker 6: more of Russian's fleet there. What is your read on
Speaker 6: what's happening there? Is this something that the US is
Speaker 6: really behind?
Speaker 7: I think that the US probably wasn't consulted because they
Speaker 7: didn't want to know what the answer would be. I
Speaker 7: think the Ukrainians kept it a big secret. It sounded
Speaker 7: like many of the top figures in Ukraine didn't even
Speaker 7: know what they were doing, even those that were in
Speaker 7: the officer corps that got moved into the line of fire.
Speaker 7: I do, however, believe that this is great that the A.
Speaker 7: Biden administration is apparently not fighting it. I think that
Speaker 7: they are allowing it to happen. Allowing it to happen,
Speaker 7: not hectoring the Ukrainians about what they're up to to me,
Speaker 7: and we'll have to see how it works out. It's
Speaker 7: inn a genious move. It's put Putin on the defensive.
Speaker 7: It's caused apparently. We're starting to see news reports that
Speaker 7: the Russians are moving troops out of the south of
Speaker 7: Ukraine to reinforce where the Ukrainians are running and making
Speaker 7: incursions into Kursks. So that's good news. I'm not ready
Speaker 7: to declare this a victory or that the course of
Speaker 7: the war has changed, but I'm really glad to see
Speaker 7: that Ukrainians are mixing it up well.
Speaker 3: You're seeing tens of thousands of Russians also as civilians,
Speaker 3: be evacuated from that area. Could we be talking days
Speaker 3: from now about something awful that Vladimir Putin is going
Speaker 3: to do to the troops in that region. He's clearing
Speaker 3: out civilians to do something.
Speaker 7: I think it's very, very possible. It's you almost can't
Speaker 7: put anything past what Putin might be up to. I
Speaker 7: think he is absolutely trying his best to think of
Speaker 7: something new to penalize the Ukrainians with and they better
Speaker 7: look out. Something's coming at them. But I think they're
Speaker 7: largely fearless. I think they're glad that they're on the
Speaker 7: offensive for once, that their military has come up with
Speaker 7: something ingenious and new, so that they're not always sitting
Speaker 7: in a trench having positional warfare with the Russian the
Speaker 7: Russian troops coming across.
Speaker 3: It's good to have you back with us, Michael. Thank you.
Speaker 3: Michael Allent with insights from Beacon Global Strategies, his perch
Speaker 3: now former Special Assistant to the President in the Bush administration.
Speaker 3: I'm Joe Matthew alongside Kaylee Lines in Washington, where we
Speaker 3: have a lot more to cover. We start today with geopolitics.
Speaker 3: We turned back to the campaign trail ahead with our
Speaker 3: signature panel. Rick Davis and Jeanie Shanzano are on board.
Speaker 3: Tim Walls making his big solo debut on the campaign
Speaker 3: trail today. We'll have a lot more next. This is
Speaker 3: Bloomberg TV and Radio.
Speaker 2: You're listening to the Bloomberg Balance of Power podcast. Catch
Speaker 2: Just Live weekdays at noon Eastern on applecar Play and
Speaker 2: then oh with the Bloomberg Business app. Listen on demand
Speaker 2: wherever you get your podcasts, or watch us live on YouTube.
Speaker 6: This is Balance of Power on Bloomberg TV and Radio.
Speaker 6: Or of course, we bring you all of the political
Speaker 6: coverage you need to know, and we do it as
Speaker 6: a team. And Tim Walls and Kamala Harris are a
Speaker 6: pretty new team now. We just learned officially that they
Speaker 6: have become a team on the Democratic ticket as of
Speaker 6: last week, and to this point we've seen them on
Speaker 6: the campaign trail together. That changes today though for Tim Walls,
Speaker 6: who will be making his first solo campaign stop in
Speaker 6: Los Angeles, and of all things, Joe, this is happening
Speaker 6: with a union. He is speaking at the diennial convention
Speaker 6: of the American Federation of State, County and Municipal Employees.
Speaker 6: And of course we know that the selection of Walls
Speaker 6: was welcomed by many unions, considering he is seen to
Speaker 6: be a very pro labor governor.
Speaker 3: Especially Yeah, unions snapped to attention as soon as Kamala
Speaker 3: Harris got to the top of the ticket, and they
Speaker 3: loved the idea. I think we can argue had quite
Speaker 3: a bit to do with the election of Tim Walls
Speaker 3: over Josh Shapiro, remembering the concern over school vouchers and
Speaker 3: so forth for the governor of Pennsylvania. So yeah, this
Speaker 3: has asked me and he's going to be going to
Speaker 3: a fundraiser afterwards in Newport Beach, California, which is where
Speaker 3: we start with our signature panel. Rick Davis and Genie
Speaker 3: Shanzano are with A. S. Bloomberg Politics contributors. Rick of
Speaker 3: course partner at Stone Court Capital, and Genie political science
Speaker 3: professor at Iona University. It's great to see you both.
Speaker 3: Welcome aboard here, Genie. The battle for organized labor is pronounced.
Speaker 3: And I wonder how well Tim Walls has to perform
Speaker 3: on his first outing, his first solo outing on the
Speaker 3: campaign trail, or if that vote is already built in
Speaker 3: for this campaign.
Speaker 4: No, you know, he has to perform well. He also
Speaker 4: has the advantage of being a former union member himself,
Speaker 4: famously as a teacher. He also has a really strong
Speaker 4: union record. As governor in Minnesota, when the Democrats took
Speaker 4: over the state legislature, he signed into law legislation that
Speaker 4: protected some of the most vulnerable workers there. So these
Speaker 4: would be like nursing home workers and others. They also
Speaker 4: get to earn paid sick leave, which is not something
Speaker 4: that is common across the country, and there will be
Speaker 4: a time in the future where they will get family
Speaker 4: and medical leaves. So he's got a really solid record himself.
Speaker 4: And what he needs to do today, obviously, is he
Speaker 4: needs to get them riled up to support Kamala Harris
Speaker 4: by talking about what the Biden Harris administration has done
Speaker 4: for workers and what she wants to do next when
Speaker 4: she is elected, hopefully from their perspective president.
Speaker 5: Well.
Speaker 6: As we consider the appeal to labor and unions, of course,
Speaker 6: we've seen a lot of this on the Republican side too,
Speaker 6: as JD. Vance especially has talked about the working man.
Speaker 6: Donald Trump, we know himself, has courted unions too, maybe
Speaker 6: more so members than actual union leadership. But on the
Speaker 6: subject of unions, it is worth pointing out the United
Speaker 6: Autoworkers Union filed an unfair labor practice charge against former
Speaker 6: President Trump and Elon Musk after their X spaces last night,
Speaker 6: Wrick accusing them of illegally intimidating workers after Trump was
Speaker 6: talking about how employers could fire workers for going on
Speaker 6: strike with Elon Musk, how does this play with the unions.
Speaker 6: The kind of conversation we saw between these two yesterday evening.
Speaker 5: Yeah, I think it's mutually exclusive. I mean, the Musk
Speaker 5: interview was just a rally around the MAGA world. Musk
Speaker 5: is well known for his anti union views. Didn't take
Speaker 5: a interview with Donald Trump to know that. And of
Speaker 5: course Donald Trump never saw a union and he didn't
Speaker 5: want to break even though he has some decent relationships
Speaker 5: with a few notable union executives. The bottom line is,
Speaker 5: you know, the table is set on that as far
Speaker 5: as who's best for the unions, and this clash I
Speaker 5: think is just sort of electioneering another way to sort
Speaker 5: show the difference. But I think the mistake Democrats tend
Speaker 5: to make is that they they basically try to lump
Speaker 5: every working class individual in the United States as a
Speaker 5: union worker. And sure, you can love unions as they do,
Speaker 5: but it leaves out the vast majority of working people
Speaker 5: in America. If that's all you talk about, and so
Speaker 5: great that you know the vice presidential nominee Walls is
Speaker 5: doing this in California, and you know these are obviously
Speaker 5: unions that he worked with directly, you know, as governor.
Speaker 5: But like, if they don't expand that class in that
Speaker 5: conversation to non union working class voters. Then they're not
Speaker 5: talking to the right people, especially in the sun Belt.
Speaker 3: I want to just listen to what Donald Trump and
Speaker 3: Elon Musk were saying in that moment where he talked
Speaker 3: about this idea. Will continue our conversation. This is from
Speaker 3: the X space's convo between Elon Musk, who you will
Speaker 3: hear as well as Donald Trump.
Speaker 9: I think it would be great to just have a
Speaker 9: government efficiency commission that takes a look at these things
Speaker 9: and just ensures that the taxpayer money, the taxpayers are
Speaker 9: harder money is spent in a good way. And I'd
Speaker 9: be happy to help out on such a commission.
Speaker 3: I well, you you're the greatest cutter. Okay, so Elon
Speaker 3: Musk pitching himself for a possible role somehow there it
Speaker 3: sounded like a in a potential Trump administration, a two
Speaker 3: point zero. But Donald Trump went on after you're the
Speaker 3: greatest cutter. He said, I won't mention the name of
Speaker 3: the company. But they go on strike, and you say,
Speaker 3: that's okay, you're all gone. You're all gone, So every
Speaker 3: one of you is gone. You want to quit, They
Speaker 3: go on strike and he gets rid of them. Genie,
Speaker 3: we keep talking about the fact that EA W rank
Speaker 3: and file I've been voting for Trump over the Democrats
Speaker 3: in the last two elections, depending on which state you're
Speaker 3: looking at. How could that be the case with a conversation.
Speaker 4: Like this, Yeah, I mean, I think when people start
Speaker 4: to focus on these kinds of statements, and that's what
Speaker 4: the Democrats are trying to do, is to say, great,
Speaker 4: you have two you know, million billionaires talking to each other,
Speaker 4: and this is where they come down. Fire workers. That's
Speaker 4: what Democrats are going to be saying. Another thing they're
Speaker 4: going to be saying is, look at what Project twenty
Speaker 4: twenty five says about firing civil servants, the very union
Speaker 4: that Kim Wats is going to be talking to, placing them,
Speaker 4: potentially replacing them with political appointees, maybe banning public employee
Speaker 4: unions altogether, which is in keeping with some kind of
Speaker 4: commission I guess that Elon Musk wants to join. But
Speaker 4: not just for public employee unions, I guess, but for unions,
Speaker 4: particularly in the automobile sector. This is a disaster for
Speaker 4: Republicans if this is the message. Donald Trump was much
Speaker 4: better off when he was appealing to white blue collar workers,
Speaker 4: both union and to Rich' point, nonunion talking about firing people,
Speaker 4: and particularly billionaires firing people is not a message you
Speaker 4: want to send out right now, and I think this
Speaker 4: works to the Democrats' advantage.
Speaker 6: I want to go back to this whole notion that
Speaker 6: it kind of felt like Elon Musk was asking Donald
Speaker 6: Trump for a job last night.
Speaker 2: Rick.
Speaker 6: I'm not sure if that was kind of the point
Speaker 6: of this whole exercise for Elon, but I wonder what
Speaker 6: the point of the exercise really was for the Trump campaign.
Speaker 6: Was this just about getting attention or was this about
Speaker 6: trying to reset the messaging? And if so, considering he
Speaker 6: didn't even really seem to be able to recall the
Speaker 6: name of the vice presidential nominee on the Democratic ticket,
Speaker 6: Tim Wall specifically, was this a success for Donald Trump
Speaker 6: last night?
Speaker 5: Yeah, Anything that's not been an abject failure would be
Speaker 5: considered a success for Donald Trump.
Speaker 3: In this last month, most.
Speaker 5: Of his outings have been a an epic failure. Here
Speaker 5: he could sit at his desk and read notes, He
Speaker 5: could you know, be organized around some of the themes
Speaker 5: his campaign has been begging him to please return to
Speaker 5: some level of normalcy with his talking points. You know,
Speaker 5: there is an argument for you know, what he did
Speaker 5: for you know, in his administration economically, and of course
Speaker 5: that's the appeal. What the platform at X gives him
Speaker 5: is a whole lot more people than the sort of
Speaker 5: quiet little crowd that has been assembled around you know,
Speaker 5: his own social media outlet truth you know it's I
Speaker 5: think last night was over a million people who tuned
Speaker 5: in that That is significantly more than he's ever going
Speaker 5: to get, you know, on true social So so that
Speaker 5: was a success to be able to expand his group,
Speaker 5: find listeners who are interested in him. My guess is
Speaker 5: the people who made up that audience were the media
Speaker 5: and his own hardcore supporters, so reassuring them that he's
Speaker 5: on a track to win, reassuring that he's got a plan,
Speaker 5: not going off the rails on a lot of conspiracy theories,
Speaker 5: and frankly, I think Musk kept him from doing that.
Speaker 5: He sort of kept it along a chatty way. So
Speaker 5: I'd have to say they're probably all thankful that it
Speaker 5: went as well as it did, but I don't think
Speaker 5: it moves the numbers at all. I think these are
Speaker 5: people who are already supporting Donald Trump. He's not communicating
Speaker 5: with swing voters on X.
Speaker 3: Interesting response from the Harris campaign on this, referring to
Speaker 3: the fact that these two rich guys cannot actually serve
Speaker 3: a live stream in the year twenty twenty four. Genny,
Speaker 3: I don't know if Elon Musk actually wants a role
Speaker 3: in another Trump White House if Donald Trump wins this election.
Speaker 3: Does this have more to do with working with the
Speaker 3: government as the leader of SpaceX, dealing with regulations, maybe
Speaker 3: getting a foot in the door for evs in a
Speaker 3: Trump administration.
Speaker 4: Yeah, I think all of the above, I think. And
Speaker 4: he would also, as an aside, like to keep energizing
Speaker 4: the X platform. You know, advertisements are still way down.
Speaker 4: He has been able to play with some of the
Speaker 4: reporting on the election so far. I mean, Joe Biden
Speaker 4: announced him that he was leaving the race on X,
Speaker 4: so I think he would like to attract more people
Speaker 4: to X as well. But you know, to the point
Speaker 4: about these two, you know, you're sitting there listening and
Speaker 4: I did after the elevator music for forty five minutes,
Speaker 4: and when Donald Trump is talking about the biggest threat
Speaker 4: is not from global warming and we don't really have
Speaker 4: to worry about that because we're going to have more
Speaker 4: ocean front property. I mean, this is the kind of
Speaker 4: statement he's sending out to people. You've got to be
Speaker 4: an extremely wealthy person to be thinking that global warming
Speaker 4: is not a threat because we're going to have more
Speaker 4: ocean front property. I mean, it was my numbing to
Speaker 4: listen to. It was not disciplined, and he was pretty
Speaker 4: much all over the map. So I don't think this
Speaker 4: was the win his team wanted. He needs to be disciplined.
Speaker 4: On Kamala Harris and what she will do to the economy, immigration,
Speaker 4: and security. That did not happen, you know, to borrow
Speaker 4: a used phrase, It was a very weird conversation between
Speaker 4: these two for two hours.
Speaker 6: All right, we'll leave it on that note. Jeanie Schanzeno
Speaker 6: and Rick Davis, Gloomberg Politics contributors, thank you both so much.
Speaker 6: As always, it was certainly a long conversation. I think
Speaker 6: we can call it that. And of course, the first
Speaker 6: portion of it, Joe was really dominated by Trump's recounting
Speaker 6: of the assassination attempt in Pennsylvania last month, which he
Speaker 6: said in his RNC speech when he was accepting the
Speaker 6: nomination he was only going to tell that story once. Yeah,
Speaker 6: but we heard it several times.
Speaker 3: It seemed last night, so it wasn't very nice, and
Speaker 3: Elon Musk suggested that he was inspired by what he
Speaker 3: saw that that's why hed the statement from the Harris
Speaker 3: campaign that I refer to Trump's entire campaign is in
Speaker 3: service of people like Elon Musk and himself, what they
Speaker 3: describe as self obsessed, rich guys who can't run a
Speaker 3: live stream. In twenty twenty four.
Speaker 2: You're listening to the Bloomberg Balance of Power podcast kens
Speaker 2: just live weekdays at noon Eastern on Applecarplay and then
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Speaker 2: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 3: So much happening in the world of politics. This is
Speaker 3: Balance of Power Live from Washington on Bloomberg TV and Radio.
Speaker 3: I'm Joe Matthew alongside Kaylee Lines in Washington. An important
Speaker 3: day and important week when it comes to the economy.
Speaker 3: Kaylee PPI, today we're going to look ahead to CPI
Speaker 3: in a moment with breaking news now that has to
Speaker 3: do with the conversation we were having earlier this hour,
Speaker 3: the wait for a possible cease fire deal in Israel
Speaker 3: or a possible retaliatory strike by Iran against Israel, both
Speaker 3: up in the air right now, Kaylee. And news from
Speaker 3: Axios that the Secretary of State is changing his way
Speaker 3: travel plans.
Speaker 9: Yeah.
Speaker 6: Of course, Axios had reported that Blinken was going to
Speaker 6: be heading to the Middle East this week as we
Speaker 6: await both news on Iran retaliation and also news on
Speaker 6: a ceasefire agreement. Now Axios is reporting that BLNCN has
Speaker 6: postponed that trip will not be traveling to the region
Speaker 6: tonight due to uncertainty around the situation. Axios here citing
Speaker 6: two sources, and it just speaks to the very uncertain
Speaker 6: nature of what's happening in the Middle East right now,
Speaker 6: which of course does factor into the markets. Amy they're
Speaker 6: talking about impact potentially on oil prices, and what we
Speaker 6: do know is that geopolitical conflict in the Middle East
Speaker 6: could actually have economic ramifications for that very reason. If
Speaker 6: it did lead to the disruption of the way crude
Speaker 6: oil starts to move throughout the world.
Speaker 3: Well, that's for sure. It's been pretty resilience so far,
Speaker 3: but of course, with so many questions about what would
Speaker 3: happen next imagine if in fact Iran does land a
Speaker 3: punch with the words that Michael Allen used on Israel,
Speaker 3: we could be having a really different conversation.
Speaker 6: Certainly, and it may lead to a different conversation than
Speaker 6: the one we're having now on the subject of inflation. Ultimately,
Speaker 6: of course, there is no predicting at this point that
Speaker 6: actually a war of that size and scale is going
Speaker 6: to erupt, just that the risk is out there. Should
Speaker 6: Ron not calibrate this properly or Israel not calibrate its
Speaker 6: response accordingly. But the narrative right now is that inflation
Speaker 6: is on the way down, and that was born out
Speaker 6: once again today in the PPI data. We got softer
Speaker 6: than expected. If you look at PPI X food and
Speaker 6: energy month over month, flat zero percent is what we're
Speaker 6: talking about, and of course this tease up the CPI
Speaker 6: report we're going to get tomorrow. So here to talk
Speaker 6: about all of this is Laura Raim, who is with
Speaker 6: US now. She's Chief US Economists over at FS Investments.
Speaker 6: Welcome to Balance of Power, Laur here on Bloomberg TV
Speaker 6: and Radio. Great to have you. We obviously have been
Speaker 6: seeing now what to me feels like we could maybe
Speaker 6: call a trend in softer than expected inflation data. I'm
Speaker 6: not sure the Fed is going to feel quite ready
Speaker 6: to call it that yet, unless you think differently, or
Speaker 6: do we have to wait until CPI tomorrow to say
Speaker 6: that for sure?
Speaker 1: We do to wait for CPI tomorrow simply because you know,
Speaker 1: the household is really the big engine both driving the economy,
Speaker 1: and that's the biggest sector when we think of inflation
Speaker 1: and that sort of loop to wages and then again
Speaker 1: back to inflation. So when we look at the trend,
Speaker 1: it certainly has been really positive and moving in the
Speaker 1: right direction. Over the last two months. We saw after
Speaker 1: four really tough months where inflation spiked January to April,
Speaker 1: then two months where we really got a much more
Speaker 1: benign reading. And I think everyone's looking to tomorrow's data
Speaker 1: to reinforce that trend, and I think to open the
Speaker 1: door wide for the FED ratout that everyone's expecting on
Speaker 1: September eighteen.
Speaker 3: Well, how about reinforcing the idea that the Fed might
Speaker 3: have waited too long here, Laura, the Personal consumption Expenditures
Speaker 3: price index, which we all obsess over the PCE said
Speaker 3: to be the Fed's preferred inflation measure. All the components
Speaker 3: from PPI that feed the PCE were tame. Should the
Speaker 3: FED have cut in July when it had the chance.
Speaker 1: You know, I'm not terribly worried that the FED is
Speaker 1: meaningfully behind the curve. The reality is that the economy
Speaker 1: remains healthy and on solid footing. My forecast is really
Speaker 1: for an incremental slowdown. The reality is the pace of
Speaker 1: growth has been so strong one might argue it has
Speaker 1: been unsustainably strong. Moving from two and a half percent
Speaker 1: growth to two percent is a slowdown, and I think
Speaker 1: markets were just really caught wrong footed because expectations had
Speaker 1: been really i would say, at volume eleven maximum optimism.
Speaker 1: So I think it's a mistake to read an incremental
Speaker 1: slowdown is weakness. And let me put it in another way,
Speaker 1: if the FED is behind the curve, they have room
Speaker 1: to cut rates more significantly. But I'm going to look
Speaker 1: beyond the ism manufacturing data for that.
Speaker 6: Well. Just as we're having this conversation, Laura, Raphael Bostic
Speaker 6: of the Atlanta FED is participating in a moderated Q
Speaker 6: and A. He says he's hopeful in the next several
Speaker 6: months of normalized economy. He also says a rate cut
Speaker 6: is coming, but he wants to see a little more data. Obviously,
Speaker 6: we're going to get more of that data this week,
Speaker 6: and if a rate cut comes, the expectation is it
Speaker 6: won't be until September, when we're going to be just
Speaker 6: around the corner from a presidential election, Laura, which Joe
Speaker 6: and I spend the great chunk of our time, the
Speaker 6: biggest chunk of our time covering, and we're hearing more
Speaker 6: and more about the economic policies that each of these candidates,
Speaker 6: Donald Trump and Kamala Harris may put forward. We'll hear
Speaker 6: even more from Harris later on this week. She's expected
Speaker 6: to outline it in North Carolina. But it does seem
Speaker 6: like we're getting similar things, be it related to the
Speaker 6: child tax credit or this notion of perhaps no taxes
Speaker 6: on tipped income. From your views an economists, we've heard
Speaker 6: a lot about what that would do to the actual
Speaker 6: US balance sheet, if you will, the kind of revenue
Speaker 6: laps that may result from that. But what would that
Speaker 6: actually do to a labor market that is maybe just
Speaker 6: now starting to feel the effects of tighter policy. What
Speaker 6: would that do to wages and the way that things
Speaker 6: literally just work in the US labor market.
Speaker 1: I think that particular policy may be more popular because
Speaker 1: it's a way of helping that lower cohort of workers
Speaker 1: without putting the burden on the employer, because you know,
Speaker 1: things like the minimum wage increases I think, you know,
Speaker 1: have been mixed in popularity because the employers feel that
Speaker 1: burden in a more pronounced way. And I think maybe
Speaker 1: underlying this there is another issue, which is that we're
Speaker 1: starting to see delinquency rates from you know, creep up
Speaker 1: and credit card loans and auto loans. That is that
Speaker 1: sort of lower cohort of income that has obviously also
Speaker 1: felt inflation most acutely. So you know, it's a question
Speaker 1: of paying for these tax cuts. I think, unfortunately, that's
Speaker 1: what it always comes down to. And we'll see as
Speaker 1: these policies develop. Certainly, I think it's something that hopefully
Speaker 1: will be you know, I would expect to be popular
Speaker 1: across the board, and I think this is an area
Speaker 1: that we're watching closely because cracks are forming in the
Speaker 1: balance sheet of that cohort of employee.
Speaker 3: Well, as we speak now, Laura, we still don't have
Speaker 3: plans from either campaign, detailed plans on how they would
Speaker 3: work to lower prices both are promising to do, so
Speaker 3: we just don't know how. In the case of Vice
Speaker 3: President Harris, we've been reporting that she's going to be
Speaker 3: fleshing out her whole economic plan in Raleigh on Friday.
Speaker 3: What does she need to say to be different than
Speaker 3: so called Bidenomics. Is there such a thing as kamalonomics.
Speaker 1: So we're going to find that out together. But I
Speaker 1: think when it comes to the FED and the way
Speaker 1: that they think about their policy changes, they really wait
Speaker 1: until actual policy has been enacted or announced. They're definitely
Speaker 1: not making policy changes based on campaign rhetoric. So I
Speaker 1: think it's something to keep in mind as we move
Speaker 1: into twenty twenty five, because on the one hand, you
Speaker 1: have some policy proposals to lower costs and lower prices,
Speaker 1: and on the other hand, things like tariffs are inflationary,
Speaker 1: so we need to really, I think keep in mind
Speaker 1: that different policy proposals impact both sides of the inflation equation,
Speaker 1: and when we look at in particular, as the campaign
Speaker 1: rhetoric heats up, the FED is really going to keep
Speaker 1: its eye on the ball of the data that it's
Speaker 1: right in front of them, and not think too far
Speaker 1: ahead about what inflation could do in coming quarters.
Speaker 6: Well, yeah, we consistently hear the FED is data dependent.
Speaker 6: It is not going to operate with political factors in mind.
Speaker 6: Hen's why we could see them cut in September, despite
Speaker 6: perhaps some Republicans suggesting that that would be perceived politically.
Speaker 6: We've also heard from both of these candidates about the
Speaker 6: independence of the FED just within the last week. Donald Trump,
Speaker 6: at a news conference in mar A Lago last Thursday,
Speaker 6: was talking about this notion that he actually thinks the
Speaker 6: president should have input into monetary policy. Kamala Harris bikes
Speaker 6: to differ on that. We heard her say so this
Speaker 6: past weekend. When we actually think about that notion of
Speaker 6: FED independence, though, what mechanisms are realistically in place to
Speaker 6: prevent that kind of political interference? Is this literally entirely
Speaker 6: up to the given FED chair and whether or not
Speaker 6: he is he or she is willing to consider what
Speaker 6: the president wants in policy decisions.
Speaker 1: I think we have now four and a half five
Speaker 1: decades of evidence that it really does work well when
Speaker 1: the FED is truly independent. And let's face it, higher
Speaker 1: interest rates rate hikes have never been popular with the
Speaker 1: sitting administration. We saw that under Clinton. We just didn't
Speaker 1: have you know, Twitter at that time, and we let
Speaker 1: sort of a more back channel pressure get applied by
Speaker 1: maybe the Treasury Secretary Robert Rubin at the time sort
Speaker 1: of you know, saying some rhetoric to that effect. But
Speaker 1: at the end of the day, you know, it's never
Speaker 1: popular when rate hikes happen, and the reality is we
Speaker 1: do often need them as a policy response. The FED
Speaker 1: needs to have that latitude. I think there is another
Speaker 1: layer to this as well, where we may see and
Speaker 1: the reality is it would probably take Congress to make
Speaker 1: some of these changes to the Federal Reserve Act. There
Speaker 1: is another layer to this, which is in emergency situations,
Speaker 1: the FED has come through in very heavy handed terms
Speaker 1: with some of their you know, financial market provisions and facilities.
Speaker 1: That may be an area where also politicians over time
Speaker 1: try to claw back some FED independence, But I think
Speaker 1: that that is very low on the list of priorities,
Speaker 1: and certainly, you know, when we look at the way
Speaker 1: the FEDS handle policy over five decades, it's hard to
Speaker 1: point to independence as being a problem.
Speaker 3: Well, in our last moment here, I asked you abou
Speaker 3: Kamala Harris's plan to lower prices or I guess plan
Speaker 3: to be unveiled. So I should ask you about Donald
Speaker 3: Trump's He says, drill, baby, drill. If you increase production
Speaker 3: enough to unlock lower oil and gas prices, that filters
Speaker 3: through the system and does the job. Is that a plan.
Speaker 1: I clearly oil and gas is going to be central
Speaker 1: to both parties economic plans in terms of, you know,
Speaker 1: keeping prices lower, and I think, you know, keeping gasoline
Speaker 1: prices lower, because this is a huge psychological pain point
Speaker 1: for households when gas prices get above five percent five
Speaker 1: dollars a gallon, households really find that psychologically challenging. However,
Speaker 1: that has not been a key source of inflation. And
Speaker 1: really I think we see spikes in gas, but they
Speaker 1: come back down again. The US energy industry today is
Speaker 1: much more mature, and I think much more rational about
Speaker 1: their ability and their productivity to create and supply gas.
Speaker 1: I don't think that necessarily more drilling is actually a
Speaker 1: magic bullet for other problems that may be more related
Speaker 1: to distribution, refinery, and other areas which may at the
Speaker 1: end of the day, impact inflation for households.
Speaker 10: More specifically, as we continue producing at record levels here
Speaker 10: in the US, Laura Raim, Thanks for joining a great
Speaker 10: conversation with the chief US economist managing director on the
Speaker 10: investment research team.
Speaker 3: At FS Investment. Thanks for listening to the Balance of
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