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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 2: Welcome to the Monday edition of Bloomberg Sound On. We're

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Speaker 2: back in Washington. I'm Joe Matthew and glad you joined us.

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Speaker 2: It's been an important couple of days here over the

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Speaker 2: course of the weekend. I want to bring you up

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Speaker 2: to date for starters on what is happening in Israel.

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Speaker 2: Our top story today on the Fastest Show in Politics,

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Speaker 2: as Israel widens the offensive in Gaza, remembering, of course,

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Speaker 2: the truce fell apart last week and they've had a

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Speaker 2: couple of days to plan what everyone's calling the next

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Speaker 2: phase here the IDF expanding operations across Gaza and looking

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Speaker 2: to the south now with the expectation of a ground

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Speaker 2: invasion of southern Gaza imminently as many of the territors,

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Speaker 2: the territories two point two million people being urged to evacuate,

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Speaker 2: and in many cases it's again which is starting to

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Speaker 2: create a lot of confusion, remembering the first evacuation was

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Speaker 2: to the south, but of course in many cases Hamas

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Speaker 2: followed the civilians there, and the IDF is now following them.

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Speaker 2: They've been dropping leaflets, they've been issuing maps now marking

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Speaker 2: zones that have been broken into more than two thousand blocks,

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Speaker 2: to try to give people a sense of where they

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Speaker 2: should be going. And it's all coming against the call

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Speaker 2: for restraint here in the US from the administration, from

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Speaker 2: members of Congress as well as the Pentagon. Here we

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Speaker 2: heard from the Secretary of Defense, Lloyd Austin, who is

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Speaker 2: speaking at an event here, the Secretary at a keynote

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Speaker 2: speech the Reagan National Defense Forum in Simi Valley. This

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Speaker 2: is from over the weekend, the sec def Floyd Austin.

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Speaker 3: Here, that's kind of a fight. The center of gravity

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Speaker 3: is the civilian population, and if you drive them into

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Speaker 3: the arms of the enemy, you replace a technical victory

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Speaker 3: with a strategic defeat. So I have repeatedly made clear

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Speaker 3: to Israel's leaders that protecting Palestinian civilians and Gaza is

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Speaker 3: both a moral responsibility and a strategic imperative.

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Speaker 4: That's where we start our conversation with Brett Bruin.

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Speaker 2: I'm glad to say he's with US today, A longtime

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Speaker 2: diplomat now President of the Global Situation Room here in Washington,

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Speaker 2: D C. Brett, What are your thoughts as we appear

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Speaker 2: to be walking into phase two now and it could

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Speaker 2: be one that is even more deadly for civilians living

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Speaker 2: in the Palestinian area here, specifically Gaza.

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Speaker 5: Well, I think it's important, Joe, to account for what

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Speaker 5: Israel sees as their top priority, and that is to reduce,

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Speaker 5: if not eliminate, Hamas's capability for attacking them. And important

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Speaker 5: to bear in mind that those attacks continue. In fact,

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Speaker 5: they were what broke the ceasefire between Israel and Hamas.

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Speaker 5: So Israel sees this very much through the lens of

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Speaker 5: we have to to protect our population, we have to

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Speaker 5: protect civilians. And at the same time, you know Secretary

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Speaker 5: Austin's admonishment or advice to Israel, I don't know that

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Speaker 5: it goes very far, because on the one hand, yes,

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Speaker 5: is repeating the obvious, but on the other Israel would

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Speaker 5: look to the US, look to the UK, to others

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Speaker 5: who had operations in Iraq, Afghanistan and contented with many

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Speaker 5: of the same issues. And yet we would not necessarily

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Speaker 5: have taken kindly to the Israelies telling us how we

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Speaker 5: should carry out those attacks.

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Speaker 4: I really get it.

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Speaker 2: But to the Secretary's point, it might not really matter

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Speaker 2: what the US has to say here if the math

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Speaker 2: is correct that we've heard from any number of analysts

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Speaker 2: here in.

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Speaker 4: Congressman Seth Molton mentioned himself, you.

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Speaker 2: Know, for every member of hamas you kill is not

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Speaker 2: as important as how many civilians you kill and how

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Speaker 2: many terrorists you create.

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Speaker 5: Bread without question, and you know, having served on a

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Speaker 5: contingency operating base in a rock outside of to create

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Speaker 5: very far in that military operation and how heavy you

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Speaker 5: go into those military operations has a direct link to

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Speaker 5: the support that you enjoy from the local population. And yet,

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Speaker 5: at the same time, and this is where I think

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Speaker 5: it's really important for listeners of sent on, many of

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Speaker 5: whom are policy makers, and work up on the hill,

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Speaker 5: what is the alternative? What is the solution or the

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Speaker 5: strategy that you're proposing, Because we've seen a number of

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Speaker 5: members of Congress saying, well, they simply should create a

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Speaker 5: coalition of allies and they should establish a two state solution.

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Speaker 5: But it's the question of how you get there. And

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Speaker 5: I haven't heard anyone yet articulate that in a cogent way.

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Speaker 3: Game.

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Speaker 2: I do understand that as we spend time with Brett Bruin,

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Speaker 2: I also wonder about our own assets in the region. Here, Brett,

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Speaker 2: it was quite a wild weekend for the US Navy,

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Speaker 2: shooting down three drones during an extended attack in the

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Speaker 2: Red Sea, the Pentagon saying that US forces are considering

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Speaker 2: all appropriate responses to the attacks, a string of attacks

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Speaker 2: on commercial vessels, they say, representing a direct threat to

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Speaker 2: international commerce and maritime security.

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Speaker 4: Is this not a new front?

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Speaker 5: It is, without question and perhaps the most clear and

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Speaker 5: present danger that American forces in the region have faced

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Speaker 5: in recent years. And Joe I think it raises a

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Speaker 5: critical question for Congress, which still has to resolve the

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Speaker 5: longer term budget implications, as well as obviously the appointment

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Speaker 5: of several senior military positions. Why are we handicapping ourselves

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Speaker 5: we engaged in some of these other distractions when the

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Speaker 5: focus ought to be on the safety of our soldiers,

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Speaker 5: our naval forces, which at the moment clearly are facing

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Speaker 5: significant threats.

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Speaker 2: Significant threats from Iran backed militants. We should be specific

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Speaker 2: about this, and we've seen this come from Houthi rebels

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Speaker 2: in Yemen, for instance, repeatedly, how much more concerned are

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Speaker 2: you about the situation there as we have two carrier

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Speaker 2: strike groups in the region.

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Speaker 4: Bred about what we might see next.

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Speaker 5: I think that Iran is taking advantage of this moment

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Speaker 5: to engage and in fact, to accelerate some of its activities.

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Speaker 5: Let's not forget they're obviously still quite frustrated with the

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Speaker 5: fact that they were not able to achieve sanctions relief

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Speaker 5: under the Bided administration. They're cognizant of the fact we're

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Speaker 5: heading into another presidential as well as congressional cycle. These factors,

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Speaker 5: I fear Joe are going to lead us to seeing

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Speaker 5: more efforts not only within the region, but more broadly

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Speaker 5: from Iran as they're trying to increase the pressure on

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Speaker 5: Washington to provide them with some sort of sanctions relief.

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Speaker 2: Bredi's great to have you, Global Situation Room, President, a

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Speaker 2: former diplomat with us again here on Bloomberg Sound on

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Speaker 2: a voice we frequently rely on at times like these,

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Speaker 2: trying to feel our way through what the next steps

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Speaker 2: might be.

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Speaker 3: Here.

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Speaker 2: US Central Command says those attacks on the US vessel

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Speaker 2: in the Red Sea were quote fully enabled by Iran

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Speaker 2: unquote in response to the Israel Hamas war, and they

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Speaker 2: don't even necessarily think that the warship was targeted. They

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Speaker 2: may have been going after commercial vessels, but that is still,

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Speaker 2: of course not going to be workable. Here as we

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Speaker 2: assemble our panel for their thoughts on an important weekend,

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Speaker 2: Rick Davis and Genie Shanzano join now Bloomberg Politics con Try, Rick,

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Speaker 2: how concerned are you with is continued attack. We'll get

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Speaker 2: to the situation on the ground in Gaza, but the

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Speaker 2: continued attacks on US warships in that area, in some

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Speaker 2: cases with sophisticated weaponry, well, I think.

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Speaker 6: That it undermines or underlines a lot of the discussion

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Speaker 6: we've been having about the current concerns you mentioned about

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Speaker 6: opening up multiple fronts, you know, whether it's through Lebanon

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Speaker 6: in the West Bank, or through the Hoodies or directly

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Speaker 6: with others from Syria that are all part of a

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Speaker 6: terror ring supplied by Iran. And the fact that we

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Speaker 6: are leaning in on this attack and saying that the

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Speaker 6: Hoodies were directly coordinating with Iran Is I think raises

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Speaker 6: the bar quite a bit on us response. Our job,

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Speaker 6: our Navy's job is to keep sea lanes open in

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Speaker 6: that part of the world. So whether they're attacking our

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Speaker 6: ships in a military way or commercial vessels, it makes

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Speaker 6: no difference to the US Navy that they're there to

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Speaker 6: protect both commercial vessels and civilian lives and they're going

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Speaker 6: to do that. And as I understand too, there were

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Speaker 6: a number of drones coming too close to the naval vessels.

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Speaker 6: Whether they were monitoring, attacking, or what, we don't know,

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Speaker 6: but my understanding is that the Navy responded as if

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Speaker 6: it was a lethal attack, and as well they should.

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Speaker 6: The Hoodies have been known to take on much bigger

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Speaker 6: foes in these kind of hit and run episodes.

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Speaker 4: They've been trying to board tankers in the area.

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Speaker 2: They've attacked US ships before, Genie, should we be more

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Speaker 2: focused on what's happening here in the tertiary zone around Israel.

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Speaker 4: We're talking a lot about.

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Speaker 2: What's happening on the ground right now in Gaza, But

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Speaker 2: our ships are being attacked, that's right.

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Speaker 7: And the who Thi's taken public responsibility for these attacks,

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Speaker 7: and the USS Carnee involved it all day Sunday, they say,

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Speaker 7: over seven hour hours addressing these attacks. And you know

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Speaker 7: whether or not the USS corney or the United States was,

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Speaker 7: you know, the focus or the target. The reality is

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Speaker 7: they were under attack and defending, as Rick said, these

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Speaker 7: ship lanes, and so we have no choice and let's

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Speaker 7: just go back to when this all started. Right after

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Speaker 7: October seventh, the administration said, in addition to getting our

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Speaker 7: American hostages back and doing what we can for civilians

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Speaker 7: and non humanitarian grounds, our number one focus has got

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Speaker 7: to be containment. We cannot get dragged into this any further.

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Speaker 7: So while that happens Sunday, what is Bloomberg reporting today,

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Speaker 7: Vladimir putin coming to Saudia Ragia a very rare trip

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Speaker 7: for somebody in the midst of a war. So you

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Speaker 7: couple that all together in this issue of containment, very

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Speaker 7: very concerning as it looks like we are getting dragged

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Speaker 7: and pulled potentially into this further, and that is something

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Speaker 7: that is not in the United States interest.

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Speaker 2: As far as what's happening in Gaza, Rick, should we

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Speaker 2: be asking about another truce? This is the first thing

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Speaker 2: that most folks ask when they talk to administration officials.

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Speaker 2: It's coming up obviously with lawmakers here because it appears

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Speaker 2: that everybody's gone home negotiators have left the table, they've

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Speaker 2: left cutter, or we beyond the point of a truce

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Speaker 2: or a pause being rebuilt to get the rest of

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Speaker 2: these hostages out.

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Speaker 8: I don't think so.

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Speaker 6: I mean it required pretty significant hostilities, the Israeli army

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Speaker 6: moving into Gaza in order to facilitate the first discussion

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Speaker 6: of a hostage release, and maybe that's what it'll take

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Speaker 6: this time too. I would say that all the discussion

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Speaker 6: this weekend about civilian casualties. Of course there should be

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Speaker 6: a moral imperative to say civilian lives, but these are

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Speaker 6: also civilians who have fostered a relationship with with Hamas,

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Speaker 6: who have been trained since they we're in school as

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Speaker 6: young children to hate and want to kill Israel and

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Speaker 6: to hate the United States. So it's not like we're

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Speaker 6: in a benign environment where these people are victims of Hamas.

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Speaker 6: They have been supporting Hamas as long as Hamas has

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Speaker 6: been their government, and it's just a very unusual situation

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Speaker 6: where a terrorist organization is running a country.

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Speaker 2: It is a pretty remarkable genie, and we haven't figured

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Speaker 2: out the funding situation here. We'll get into this a

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Speaker 2: little bit more coming up later in the hour.

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Speaker 3: Here.

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Speaker 2: But if Congress can't get out of its own way

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Speaker 2: to figure out a funding package for Israel, will this

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Speaker 2: conversation move on to something else? Does Tel Aviv actually

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Speaker 2: need the money that we've been talking about here? I'm

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Speaker 2: trying to get a sense of the urgency because the

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Speaker 2: White House says time is running out in Ukraine. I

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Speaker 2: don't hear that claim about Israel.

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Speaker 7: We don't hear it. But it is critically important that

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Speaker 7: the United States Congress step up and not step on

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Speaker 7: its own foot as you were talking about, and get

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Speaker 7: this funding done. You know, it may not be as

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Speaker 7: critical right this moment. They will be able to proceed

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Speaker 7: without it, but it is important that we give the

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Speaker 7: funding and we do it, but it's got to be

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Speaker 7: done properly, and that means the United States policy has

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Speaker 7: got to be clear, and that is you know what

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Speaker 7: you hear so much feedback on in New York just

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Speaker 7: over the weekend, more and more demonstrations and people need

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Speaker 7: to be heard on this. The administration has to be

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Speaker 7: clear before that funding goes out as to what we expect,

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Speaker 7: and that means the funding has to be given in

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Speaker 7: line with our priorities and policies. There can't be a

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Speaker 7: blank check with there never should be when it comes

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Speaker 7: to giving public money to another country.

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Speaker 2: Sure, as we're reminded, that is typically the case when

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Speaker 2: we're giving funding to a country like Israel or Ukraine,

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Speaker 2: and we're going to talk ahead about exactly what the

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Speaker 2: path might be here, not just strings attached, but what

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Speaker 2: a border deal could happen. I guess those might be

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Speaker 2: considered strings and if Israel and Ukraine can move at once,

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Speaker 2: because we've got a new message from the White House.

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Speaker 2: The Budget Director has sent a letter up to the

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Speaker 2: Hill saying Ukraine is out of time and if it's

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Speaker 2: not handled now, we'll be out of money. We'll talk

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Speaker 2: about that next with Rick Davis and Jeanie Shanzano on

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Speaker 2: the Monday edition of Sound On.

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Speaker 4: I'm Joe Matthew. This is Bloomberg.

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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 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 1: You can also listen live on Amazon Alexa from our

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Speaker 1: flagship New York station, Just Say Alexa play Bloomberg eleven thirty.

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Speaker 2: The Budget Director at the White House has sent a

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Speaker 2: letter up to Capitol Hill about Ukraine, and it's not great.

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Speaker 2: Shilanda Young writes, without congressional action, by the end of

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Speaker 2: the year, we will run out of rec sources to

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Speaker 2: procure more weapons and equipment for Ukraine. The very simple

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Speaker 2: line quote, we are out of money to support Ukraine,

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Speaker 2: and she points in this letter interestingly to specific defense

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Speaker 2: systems that are being made in key states. Hello Republicans, Alabama, Georgia, Texas.

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Speaker 2: That's where a lot of this money would go, of course,

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Speaker 2: to American defense contractors. But if it all hinges on

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Speaker 2: a deal surrounding the border. We didn't have a good weekend.

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Speaker 2: Talks apparently fell apart on Friday, and we just crossed

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Speaker 2: a headline on the terminal here sent a GOP moving

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Speaker 2: in wrong direction on border. So let's reassemble the panel

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Speaker 2: for their take. Rick Davis and Genie Shanzano joint of

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Speaker 2: course Bloomberg Politics contributors. Shilanda Young, the budget director. Genie

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Speaker 2: is pretty serious in this note. She says there is

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Speaker 2: no magical pot of funding available to meet this moment.

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Speaker 2: We are out of money and nearly out of time.

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Speaker 2: Will it have an impact?

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Speaker 7: On the debate, it should and I think it will.

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Speaker 7: And she makes a critically important point about where this

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Speaker 7: money is coming from and going to rather, and it's

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Speaker 7: a point that the President has been trying to stress.

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Speaker 7: He tried to stress it in his oval or in

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Speaker 7: his Oval Office address. The administration has been trying to

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Speaker 7: make it. I'm glad Sholan Dejung is making it now

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Speaker 7: because it is critically important. This money is not just

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Speaker 7: going out of the United States to another country with

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Speaker 7: no positive impact on the United States beyond the issue

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Speaker 7: of autocracy, which is critical enough and defending democracy, it

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Speaker 7: also is a boon to our economy. So they're trying

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Speaker 7: to make that important, important argument. And of course now

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Speaker 7: they are facing in the House a speaker who has

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Speaker 7: twice voted against funding but as now publicly said he

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Speaker 7: will support it provided we get something on border. So

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Speaker 7: you know, the message has reached somebody who has been

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Speaker 7: on the fence on this in the past, and they

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Speaker 7: know that. But they're trying to reach over even the

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Speaker 7: heads of the leaders, to the representatives from the Red

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Speaker 7: States and make this case and also obviously to people

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Speaker 7: living in the Red States who depend on these jobs

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Speaker 7: in the defense industry and others. It's a really important

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Speaker 7: argument for them to be making vociferously at this point

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Speaker 7: because time is running out.

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Speaker 2: As they say, we'll get into the border potential at

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Speaker 2: least for a border deal here in just a second, Rick,

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Speaker 2: But I wonder your thoughts on the message. There's another

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Speaker 2: line that jumps out here. By the end of the year,

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Speaker 2: we will run out of resources to procure more weapons

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Speaker 2: and equipment for Ukraine and to provide equipment from US

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Speaker 2: military stocks.

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Speaker 4: So we now know we've drawn down.

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Speaker 2: Our supplies as far as we can here. There does

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Speaker 2: seem to be more information here than we've heard recently. Basically,

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Speaker 2: by the end of the year, we are out will

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Speaker 2: that motivates skeptical Republicans.

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Speaker 6: You know, look, I mean, it helps put pressure on

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Speaker 6: skeptical Republicans. It helps also support Ukraine itself in the

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Speaker 6: sense that you know, we're trying to get this through

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Speaker 6: before the end of the year, and it sends a

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Speaker 6: message to the Europeans that you know, if in fact

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Speaker 6: you can't count on us, you need to be prepared

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Speaker 6: to fill the vacuum. Europe's done a good job of

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Speaker 6: supporting Ukraine. There are issues with Ukraine funding in Europe,

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Speaker 6: just like there are here. And I think the White

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Speaker 6: House is doing the right thing by putting everybody on

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Speaker 6: notice that the war's going to continue whether or not

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Speaker 6: we get this package passed before the end of the year.

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Speaker 6: I'm hopeful that Langford center Langford is right. On a

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Speaker 6: Sunday show, he said he could get it done before

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Speaker 6: the end of the year, and that would make I

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Speaker 6: think a big impact.

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Speaker 4: Here is Senator James Langford.

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Speaker 2: As Rick mentioned his take on talks, He's been at

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Speaker 2: the center of these negotiations.

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Speaker 9: A reason that this hasn't been done in decades because

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Speaker 9: it's hard, it's very technical work, and there's a lot

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Speaker 9: of challenges that are in it, and anytime you deal

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Speaker 9: with border security, there are a lot of complicating features

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Speaker 9: in this.

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Speaker 5: So we're going through very, very detailed work.

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Speaker 2: Speaking on ABC this week, Genie, it's his job, I guess,

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Speaker 2: to sound optimistic here as one of the lead negotiators.

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Speaker 7: Are you you know he did. I was stunned by

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Speaker 7: how optimistic he sounded, pleasantly surprised, and of course then

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Speaker 7: we hear democrats walked away. The reality is, you know,

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Speaker 7: obviously as usual in the Senate, as hard as this is,

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Speaker 7: you can imagine them coming to an agreement, But it

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Speaker 7: is this push in my mind from the House for

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Speaker 7: Hr Two that is going to make this a non

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Speaker 7: starter in the Senate. And I think that's where we

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Speaker 7: have to see movement. You know, things always look worse

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Speaker 7: before they get better in Congress, so hopefully that's the

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Speaker 7: case here. But to Langford's point and the history, we know,

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Speaker 7: we have been talking about Congress moving forward on immigration

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Speaker 7: for decades to no avail. If they can do this

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Speaker 7: with on the books eight days left in the House

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Speaker 7: session before they end in December, I will be stunned

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Speaker 7: and happy beyond. But I am not as optimistic as Langford,

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Speaker 7: and I do hope I'm wrong, But how do you

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Speaker 7: do this? And if they don't do it now, how

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Speaker 7: they do it in an election year? You know, it's

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Speaker 7: almost unthinkable in my mind.

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Speaker 2: We're spending time with Rick and Jeanie on Bloomberg Sound

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Speaker 2: On It's the Monday edition, and we're glad you're with

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Speaker 2: us here on the radio, on the satellite, or on YouTube.

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Speaker 2: Of course, the Republican majority in the House, Rick is

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Speaker 2: dealing with a slightly smaller majority here, and I have

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Speaker 2: to ask you both about George Santos's exit last week,

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Speaker 2: because one of the first things he did was retweet

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Speaker 2: a video from this program from sound On, and I

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Speaker 2: want to bring you back to the interview we had.

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Speaker 2: I guess it was Thursday, the day he was expelled,

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Speaker 2: with Nicole Malia Takis, his colleague from New York who

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Speaker 2: called for his removal. Here she is just to jog

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Speaker 2: the memory the Republican from New York.

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Speaker 10: We have to take action and remove him now. He

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Speaker 10: will have his day in court as it relates to

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Speaker 10: the criminal charges, but in terms of being able to

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Speaker 10: continue his service in Congress, we believe we have seen

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Speaker 10: enough and that he does not merit to continue serving

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Speaker 10: in this body, and his constituents do deserve better.

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Speaker 4: Well. Lo and behold.

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Speaker 2: That was posted to Twitter, and George Santos reposted it

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Speaker 2: with quite the message. He writes, let's talk about hypocrisy.

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Speaker 2: Can someone ask to call Molly as stock tips? When

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Speaker 2: did she become a savant in stock trading? He goes

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Speaker 2: on to accuse her of insider trading and more. It

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Speaker 2: gets very personal to the extent that I wouldn't be

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Speaker 2: comfortable reading this on the air and he hasn't stopped there.

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Speaker 2: He's in a back and forth now with Representative Brandon Williams,

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Speaker 2: who he refers to as drunken Brandon Williams and refers

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Speaker 2: to assault charges.

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Speaker 4: Here on Twitter.

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Speaker 2: I'm not even sure what to ask what you think

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Speaker 2: about this, Rick, But you've got an arsonist here. It

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Speaker 2: looks like who's going to try to out lawmakers as

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Speaker 2: long as he can. Could this be a problem for

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Speaker 2: the Republican conference?

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Speaker 6: I love that phrase, he's a political arsonist and so yeah,

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Speaker 6: I mean, will he be a problem for Republican lawmakers? No,

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Speaker 6: they've turned the page. No one's going to pay any

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Speaker 6: attention to this guy. Is he full of fabrications, lies,

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Speaker 6: and innuendo. Absolutely, That's how he got into this trouble.

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Speaker 6: So I don't think anybody's going to take seriously much

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Speaker 6: of what he says. And frankly, I suspect he probably

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Speaker 6: has to turn his attention to his legal problems, you know,

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Speaker 6: which is the only thing you know that keeps him

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Speaker 6: from right now wearing an orange jumpsuit for the rest

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Speaker 6: of his life. So we'll see how it all ends

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Speaker 6: with the fabulous. But no, I don't think anybody on

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Speaker 6: Capitol Hill is spending ten minutes on this one today.

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Speaker 2: Well, Genie, I'm just glad to know he's watching you

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Speaker 2: and Rick on YouTube here, and I guess he's got

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Speaker 2: a lot of time to do that now to the

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Speaker 2: former congressman, we're on one to three every day. The

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Speaker 2: media might care though, if you keep lobbing Molotov cocktails

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Speaker 2: like this, they're going.

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Speaker 4: To follow up on some of them.

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Speaker 2: Genie, Well, that could be uncomfortable for a few members

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Speaker 2: of Congress, couldn't it.

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Speaker 7: Absolutely, And that's what he promised when he was leaving.

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Speaker 7: And I urge everybody to go back and listen to

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Speaker 7: what Nicole Maliatak has told you. She had a lot

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Speaker 7: of courage to say it. She is absolutely right. We

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Speaker 7: know why he is lobbing these absolutely unsubstantiated claims against her.

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Speaker 7: I only wish her own leadership had the fortitude and

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Speaker 7: the strength to vote with her to throw him out,

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Speaker 7: because that's absolutely the right decision in this case. Although

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Speaker 7: I should say now that he's out here right, he

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Speaker 7: has more time to listen to and watch sound on

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Speaker 7: so there's always a benefit here, you know.

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Speaker 2: I guess that's good for anybody. Rick Davis We'll keep

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Speaker 2: you posted on where this goes. But is one less

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Speaker 2: seat rick an actual game changer for Speaker Johnson when

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Speaker 2: it's already that tight, does it matter?

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Speaker 6: You know, Look, if he's going to try and pass

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Speaker 6: legislation on party line votes, sure that really makes it tough.

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Speaker 6: We'll see that coming up. If he decides to go

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Speaker 6: forward with impeachment against the President and the Secretary of

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Speaker 6: Homeland Security, that can be a party line vote where

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Speaker 6: only a couple of members could scuttle the efforts that

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Speaker 6: he have to put that on the agenda. So sure

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Speaker 6: it doesn't help in one single bit.

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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 listening on

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00:24:39,800 --> 00:24:42,920
Speaker 1: demand wherever you get your podcasts, and.

442
00:24:42,880 --> 00:24:44,720
Speaker 4: If you're with us on the radio on the satellite.

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00:24:44,800 --> 00:24:46,960
Speaker 2: We welcome you to the Monday edition with a very

444
00:24:47,680 --> 00:24:50,719
Speaker 2: direct message coming from the White House today on funding

445
00:24:50,760 --> 00:24:53,239
Speaker 2: for Ukraine. We're going to talk to Jack Fitzpatrick about this.

446
00:24:53,680 --> 00:24:56,840
Speaker 2: As budget Director Salanda Young sends a letter under knowing

447
00:24:56,880 --> 00:24:59,679
Speaker 2: certain terms here it reads, we are out of money

448
00:24:59,720 --> 00:25:02,679
Speaker 2: to Ukraine. You can't get much more direct than that

449
00:25:02,680 --> 00:25:04,840
Speaker 2: without congressional action, She writes, by the end of the

450
00:25:04,920 --> 00:25:07,520
Speaker 2: year will be out of resources to brook here more

451
00:25:07,560 --> 00:25:09,879
Speaker 2: weapons and equipment for Ukraine, and to provide equipment from

452
00:25:09,960 --> 00:25:12,679
Speaker 2: US military stocks, which we've been doing for both Ukraine

453
00:25:12,760 --> 00:25:16,120
Speaker 2: and Israel. Let's bring Jack Fitzpatrick into the conversation from

454
00:25:16,160 --> 00:25:19,400
Speaker 2: Bloomberg Government, He joins, sort of at this time every week,

455
00:25:19,400 --> 00:25:21,879
Speaker 2: It's nice to see you, Happy Monday. We've got a

456
00:25:21,920 --> 00:25:23,120
Speaker 2: lot of things I want to talk to you about

457
00:25:23,119 --> 00:25:25,640
Speaker 2: the border situation as well, but of course it all.

458
00:25:25,640 --> 00:25:29,920
Speaker 4: Ties into Ukraine. Who's that letter for?

459
00:25:30,600 --> 00:25:31,560
Speaker 8: That is for Congress.

460
00:25:31,680 --> 00:25:34,480
Speaker 11: That is a legislative deadline to the speaker, though, who's

461
00:25:34,520 --> 00:25:37,800
Speaker 11: the audience? Yeah, to the speaker, to anybody who could

462
00:25:37,800 --> 00:25:41,480
Speaker 11: be pressured, and it maybe effectively it's more to senators

463
00:25:41,520 --> 00:25:44,600
Speaker 11: because they are taking the lead in negotiations, but they

464
00:25:44,640 --> 00:25:47,000
Speaker 11: have to go back and forth between Senate Republicans and

465
00:25:47,040 --> 00:25:50,639
Speaker 11: House Republicans. Our colleagues who have covered this very closely,

466
00:25:50,680 --> 00:25:53,479
Speaker 11: have heard from people close to the situation that since

467
00:25:53,960 --> 00:25:58,439
Speaker 11: last week when Speaker Johnson spoke to Senate Republicans, things

468
00:25:58,480 --> 00:26:00,879
Speaker 11: have not moved in the right direction. And so it's

469
00:26:00,920 --> 00:26:06,200
Speaker 11: a combination of Senate Republicans, the Speaker to Congress because

470
00:26:06,200 --> 00:26:09,800
Speaker 11: they didn't have a deadline yet. And I don't say

471
00:26:09,800 --> 00:26:12,879
Speaker 11: that to undermine you know, I'm not pushing back that

472
00:26:12,920 --> 00:26:16,600
Speaker 11: it's an actual deadline, but in terms of legislation, Congress

473
00:26:16,600 --> 00:26:19,600
Speaker 11: needs an end date, and they didn't have one until now.

474
00:26:19,640 --> 00:26:21,760
Speaker 11: They're being told by the White House if this doesn't

475
00:26:21,760 --> 00:26:23,640
Speaker 11: happen by the it's not happened, I.

476
00:26:23,520 --> 00:26:25,040
Speaker 2: Fill in the blank. Seems like they could have done

477
00:26:25,040 --> 00:26:27,359
Speaker 2: that earlier. But we've been asking a lot of folks,

478
00:26:27,520 --> 00:26:29,760
Speaker 2: even on this program. There is no magical pot of funding.

479
00:26:29,800 --> 00:26:31,600
Speaker 2: She your rights available to meet this moment. We're out

480
00:26:31,640 --> 00:26:34,679
Speaker 2: of money and nearly out of time. But if that

481
00:26:34,800 --> 00:26:38,600
Speaker 2: hinges on a deal over the border and it's tied

482
00:26:38,680 --> 00:26:44,200
Speaker 2: somehow to funding for Israel. To your point, Ukraine's timeline

483
00:26:44,280 --> 00:26:46,200
Speaker 2: is not Congress's timeline here, right.

484
00:26:46,680 --> 00:26:49,280
Speaker 11: I mean, this letter from the White House seeks to

485
00:26:49,400 --> 00:26:52,639
Speaker 11: align them and say, Congress, you need to get something

486
00:26:52,720 --> 00:26:57,160
Speaker 11: done in time to actually be useful to Ukraine. Now,

487
00:26:57,320 --> 00:26:59,320
Speaker 11: it's important to keep in mind that if this really

488
00:26:59,359 --> 00:27:01,360
Speaker 11: melts down and it does not seem to be going

489
00:27:01,480 --> 00:27:04,919
Speaker 11: very well, right now, these negotiations and the border talks

490
00:27:04,920 --> 00:27:08,560
Speaker 11: include everything because the Ukraine hinges on the border talks.

491
00:27:08,720 --> 00:27:12,479
Speaker 11: Currently leadership is planning to tie Israel funding into that.

492
00:27:13,280 --> 00:27:16,720
Speaker 11: If the border talks don't strike a deal, there will

493
00:27:16,760 --> 00:27:21,040
Speaker 11: have to be conversations about what alternatives are there. Does

494
00:27:21,160 --> 00:27:26,240
Speaker 11: Israel move alone? Is there any way to help Ukraine

495
00:27:26,400 --> 00:27:29,199
Speaker 11: in a more scaled back way other than the request

496
00:27:29,240 --> 00:27:33,640
Speaker 11: from the White House. We haven't gotten to those alternate paths,

497
00:27:33,960 --> 00:27:37,040
Speaker 11: so right now they are just saying the pressure's on

498
00:27:37,240 --> 00:27:40,960
Speaker 11: for all of this, which hinges on a border deal

499
00:27:41,240 --> 00:27:42,800
Speaker 11: to happen in the next few weeks.

500
00:27:42,920 --> 00:27:46,320
Speaker 2: James Langford was on the Sunday Shows ABC this week.

501
00:27:46,359 --> 00:27:48,840
Speaker 2: He was asked about it sounded we talked about this

502
00:27:48,880 --> 00:27:52,000
Speaker 2: with Rick and Genie a while ago, surprisingly optimistic considering

503
00:27:52,000 --> 00:27:54,720
Speaker 2: what everyone's hearing, the headlines that are even crossing the

504
00:27:54,760 --> 00:27:57,120
Speaker 2: terminal today. Granted this is twenty four hours ago. Here's

505
00:27:57,119 --> 00:27:57,440
Speaker 2: what he said.

506
00:27:57,480 --> 00:27:59,640
Speaker 9: There's a reason that this hasn't been done in decades

507
00:27:59,720 --> 00:28:02,639
Speaker 9: because it's hard, it's very technical work, and there's a

508
00:28:02,640 --> 00:28:05,000
Speaker 9: lot of challenges that are in it, and anytime you

509
00:28:05,040 --> 00:28:07,480
Speaker 9: deal with border security there are a lot of complicating

510
00:28:07,560 --> 00:28:10,120
Speaker 9: features in this So we're going through very, very detailed

511
00:28:10,119 --> 00:28:11,480
Speaker 9: work and.

512
00:28:11,440 --> 00:28:13,600
Speaker 2: It wasn't just border security where we're talking about Jack.

513
00:28:13,600 --> 00:28:16,879
Speaker 2: We're talking about, you know, actually changing asylum law along

514
00:28:16,920 --> 00:28:21,000
Speaker 2: with some other very controversial proposals. Is it changing form

515
00:28:21,400 --> 00:28:23,120
Speaker 2: as we're going here, or have they walked away from

516
00:28:23,119 --> 00:28:23,560
Speaker 2: the table.

517
00:28:23,680 --> 00:28:27,639
Speaker 11: Well, there's a lot that is still moving. The core

518
00:28:27,840 --> 00:28:33,080
Speaker 11: issue that they're not just discussing funds for border security

519
00:28:33,119 --> 00:28:36,240
Speaker 11: measure per se has not changed. And that's the major

520
00:28:36,520 --> 00:28:40,080
Speaker 11: challenge is if you get into asylum policy and then

521
00:28:40,560 --> 00:28:45,480
Speaker 11: a disagreement over that has led to what about parole opportunities?

522
00:28:45,520 --> 00:28:48,280
Speaker 11: And is parole used to undermine any of these changes?

523
00:28:48,400 --> 00:28:49,560
Speaker 11: It's very complex.

524
00:28:49,640 --> 00:28:50,800
Speaker 4: Role was a big sticking point.

525
00:28:50,880 --> 00:28:54,120
Speaker 11: This is much more complex and difficult then you know,

526
00:28:54,120 --> 00:28:56,600
Speaker 11: if you remember the shutdown over border wall funding, that

527
00:28:56,680 --> 00:28:58,840
Speaker 11: was a fight over how much money. This is way

528
00:28:58,880 --> 00:29:03,600
Speaker 11: more complex than aure and that fundamentally has not changed.

529
00:29:03,680 --> 00:29:04,920
Speaker 11: That's been the big issue here.

530
00:29:04,880 --> 00:29:07,680
Speaker 2: And we have how many legislative days to figure this out?

531
00:29:07,720 --> 00:29:11,160
Speaker 2: I mean, is his optimism shared by the leadership that

532
00:29:11,200 --> 00:29:11,960
Speaker 2: this is done by the end.

533
00:29:11,880 --> 00:29:12,240
Speaker 5: Of the year.

534
00:29:12,400 --> 00:29:15,760
Speaker 11: Langford seems a lot more optimistic than other people, and

535
00:29:15,800 --> 00:29:18,520
Speaker 11: that played out even on Twitter or x. Today he

536
00:29:18,960 --> 00:29:22,160
Speaker 11: posted again that talks are continuing. If you compare and

537
00:29:22,200 --> 00:29:26,600
Speaker 11: contrast that post to Mike Johnson's post about the White

538
00:29:26,640 --> 00:29:31,120
Speaker 11: House not making significant concessions, Langford is the optimistic one.

539
00:29:31,600 --> 00:29:35,920
Speaker 11: They're supposed to be in session until December fifteenth. Congress

540
00:29:35,920 --> 00:29:38,400
Speaker 11: has a way of pushing that back and missing one

541
00:29:38,520 --> 00:29:41,720
Speaker 11: mini deadline and making another deadline. So you know, the

542
00:29:41,840 --> 00:29:44,640
Speaker 11: end of the calendar year is the real deadline. Before Christmas,

543
00:29:44,680 --> 00:29:46,600
Speaker 11: I guess is functionally the deadline.

544
00:29:46,160 --> 00:29:49,720
Speaker 2: When do we start talking about another cr.

545
00:29:49,000 --> 00:29:53,000
Speaker 11: While they fund the government. Yes, they have the supplemental

546
00:29:53,560 --> 00:29:57,200
Speaker 11: They have until January nineteenth for four bills, February second

547
00:29:57,280 --> 00:30:00,800
Speaker 11: for eight bills. They they are not making a lot

548
00:30:00,800 --> 00:30:03,880
Speaker 11: of progress on funding the government. They need to agree

549
00:30:03,920 --> 00:30:06,120
Speaker 11: to top line levels, at least the basics of how

550
00:30:06,160 --> 00:30:07,600
Speaker 11: much they're going to spend for each of the twelve

551
00:30:07,640 --> 00:30:10,240
Speaker 11: bills between the House and Senate. I've asked a number

552
00:30:10,240 --> 00:30:12,560
Speaker 11: of times. They have not made progress on that. The

553
00:30:12,640 --> 00:30:16,960
Speaker 11: more emergency issue is still Ukraine funding, because if the

554
00:30:17,040 --> 00:30:19,200
Speaker 11: deadline effectively is the end of the year, that's a

555
00:30:19,240 --> 00:30:22,719
Speaker 11: lot way before January nineteenth. If not for that, they

556
00:30:22,720 --> 00:30:25,160
Speaker 11: could have tied them together. But apparently that's not the case.

557
00:30:25,560 --> 00:30:25,840
Speaker 4: Boy.

558
00:30:26,000 --> 00:30:30,600
Speaker 2: Okay, cr call Kevin McCarthy, right, see how that's going

559
00:30:30,680 --> 00:30:32,640
Speaker 2: to go. Great to talk to you, Jack. Good luck

560
00:30:32,680 --> 00:30:35,560
Speaker 2: this week. I know everyone's flying back into town. Jack Fitzpatrick.

561
00:30:35,880 --> 00:30:38,160
Speaker 2: Of course, I have Bloomberg Government with us here on

562
00:30:38,200 --> 00:30:41,120
Speaker 2: Bloomberg Sound on, and I want to pull you back

563
00:30:41,160 --> 00:30:44,239
Speaker 2: now as we cast our eyes to the other end

564
00:30:44,240 --> 00:30:46,320
Speaker 2: of Pennsylvania Avenue, the White House and the talk of

565
00:30:46,400 --> 00:30:51,360
Speaker 2: recession that hasn't materialized yet. Remember Bloomberg Economics said one

566
00:30:51,440 --> 00:30:55,600
Speaker 2: hundred percent chance we go into a recession this year.

567
00:30:55,720 --> 00:30:58,840
Speaker 2: The anniversary of that call, I believe, just passed, and

568
00:30:58,880 --> 00:31:00,360
Speaker 2: so now they you know, it's easy to say, hey,

569
00:31:00,400 --> 00:31:04,600
Speaker 2: well what never happened, guys, unless it started already. We're

570
00:31:04,600 --> 00:31:06,640
Speaker 2: going to bring in Tom Orley from Bloomberg Economics to

571
00:31:06,640 --> 00:31:07,560
Speaker 2: talk about this in a moment.

572
00:31:07,600 --> 00:31:08,840
Speaker 4: Remember, let's go back through time.

573
00:31:08,880 --> 00:31:09,000
Speaker 3: Here.

574
00:31:09,040 --> 00:31:11,840
Speaker 4: Here's Joe Biden in June. This is the twentieth.

575
00:31:12,040 --> 00:31:16,120
Speaker 5: Every month is going to be a recession. Next Monthenxus,

576
00:31:16,160 --> 00:31:16,880
Speaker 5: there's two.

577
00:31:16,640 --> 00:31:19,320
Speaker 10: Thirds of the economists and the major leaders in the

578
00:31:19,360 --> 00:31:20,800
Speaker 10: bags think we're not.

579
00:31:20,760 --> 00:31:21,720
Speaker 5: Going to have a recession.

580
00:31:22,640 --> 00:31:25,680
Speaker 2: Okay, let's fast forward a month. This is mid July

581
00:31:25,800 --> 00:31:28,800
Speaker 2: now and the Treasury Secretary Janet Yellen, talking about this call,

582
00:31:29,840 --> 00:31:31,920
Speaker 2: the constant questions about the recession.

583
00:31:32,000 --> 00:31:35,960
Speaker 12: Growth is slowed, but our labor market continues to be

584
00:31:36,120 --> 00:31:41,959
Speaker 12: quite strong. I don't expect a recession. I think that

585
00:31:42,000 --> 00:31:46,479
Speaker 12: we're on a good path to bringing inflation down. The

586
00:31:46,480 --> 00:31:52,479
Speaker 12: most recent inflation data, we're quite encouraging that we're making

587
00:31:52,600 --> 00:31:58,800
Speaker 12: progress on getting inflation down. But as I'd hoped and expected,

588
00:31:59,200 --> 00:32:03,440
Speaker 12: that would occur in the context of a strong labor market,

589
00:32:03,680 --> 00:32:05,360
Speaker 12: and we continue to see that.

590
00:32:06,880 --> 00:32:13,280
Speaker 2: Yeah, Goldilock's economy right, steady, sustainable growth, as we've discussed

591
00:32:14,160 --> 00:32:17,720
Speaker 2: with members of the administration and with the economists who

592
00:32:17,760 --> 00:32:20,920
Speaker 2: support that view. But then I read the writings of

593
00:32:20,960 --> 00:32:24,240
Speaker 2: Anna Wong this morning at Bloomberg Economics. We have long

594
00:32:24,360 --> 00:32:26,720
Speaker 2: argued a recession will begin toward the end of this year,

595
00:32:27,120 --> 00:32:29,960
Speaker 2: and the reason data corroborate that view. So are we

596
00:32:30,040 --> 00:32:32,120
Speaker 2: in when already? Is the question for Tom Orlick, who

597
00:32:32,160 --> 00:32:34,520
Speaker 2: joins us at the table now from Bloomberg Economics.

598
00:32:34,520 --> 00:32:36,120
Speaker 4: Tom, it's great to see you.

599
00:32:36,120 --> 00:32:38,360
Speaker 2: You've put a lot of time into this research and

600
00:32:38,400 --> 00:32:40,680
Speaker 2: you're feeling pretty good about your call. Did a recession

601
00:32:40,720 --> 00:32:42,040
Speaker 2: begin in October.

602
00:32:42,600 --> 00:32:46,240
Speaker 13: So I think it's important to stay take a step

603
00:32:46,280 --> 00:32:48,360
Speaker 13: back on this, Joe, you can pull the in off

604
00:32:48,360 --> 00:32:52,440
Speaker 13: the ledge. Let's not forget that it wasn't so long

605
00:32:52,480 --> 00:32:56,479
Speaker 13: ago that the United States was suffering from ten percent

606
00:32:56,680 --> 00:33:01,320
Speaker 13: close to ten percent inflation. Now, how does the Federal

607
00:33:01,400 --> 00:33:07,640
Speaker 13: Reserve deal with inflation? Well, it deals with inflation by squeezing.

608
00:33:07,160 --> 00:33:09,600
Speaker 8: Demand in the economy.

609
00:33:09,800 --> 00:33:13,080
Speaker 13: And when you squeeze demand in the economy, what happens

610
00:33:13,880 --> 00:33:17,600
Speaker 13: You raise unemployment and the economy goes into a recession.

611
00:33:18,520 --> 00:33:22,160
Speaker 13: So our expectation, our forecast, the call, long standing call

612
00:33:22,200 --> 00:33:25,080
Speaker 13: from Anna and her team, which you mentioned, is for

613
00:33:25,120 --> 00:33:28,800
Speaker 13: the US to go into a mild recession starting around

614
00:33:28,840 --> 00:33:33,120
Speaker 13: now and stretching into the first part of next year. Now,

615
00:33:33,640 --> 00:33:38,440
Speaker 13: if that's what happens, that would be an extraordinarily lucky

616
00:33:38,640 --> 00:33:42,480
Speaker 13: escape for the US economy. If you told economists back

617
00:33:42,480 --> 00:33:45,960
Speaker 13: when inflation was pushing towards double digits, you can get

618
00:33:45,960 --> 00:33:50,160
Speaker 13: out of this with just the mildest of downturns. I

619
00:33:50,200 --> 00:33:54,480
Speaker 13: think pretty much anyone, including Janet Yellen, probably would have

620
00:33:54,560 --> 00:33:58,479
Speaker 13: taken that offer. That's our expectation, and when we look

621
00:33:58,520 --> 00:34:01,560
Speaker 13: at the unemployment data, which has already edged up from

622
00:34:01,600 --> 00:34:04,240
Speaker 13: its trough of I think three point five percent up

623
00:34:04,280 --> 00:34:07,200
Speaker 13: to three point nine percent. What we're seeing is labor

624
00:34:07,240 --> 00:34:10,600
Speaker 13: market signals which are pretty firmly aligning with that view.

625
00:34:11,400 --> 00:34:14,960
Speaker 2: Last time we had two months of contraction, we were

626
00:34:15,000 --> 00:34:16,600
Speaker 2: told that it was not a recession. I think a

627
00:34:16,600 --> 00:34:18,839
Speaker 2: lot of people actually learned a lot about economics over

628
00:34:18,880 --> 00:34:21,920
Speaker 2: the course of those weeks. Many were politically motivated to

629
00:34:21,960 --> 00:34:25,360
Speaker 2: say that that's crazy, but most economists agreed that the

630
00:34:25,360 --> 00:34:27,719
Speaker 2: stars did not align to show a recession, even with

631
00:34:28,520 --> 00:34:32,560
Speaker 2: the contraction that we saw. How would you qualify it

632
00:34:32,600 --> 00:34:35,479
Speaker 2: then give us an advanced view of what that would

633
00:34:35,480 --> 00:34:35,880
Speaker 2: look like.

634
00:34:36,040 --> 00:34:39,719
Speaker 13: So I think that the layman's understanding of a recession

635
00:34:40,120 --> 00:34:42,400
Speaker 13: is its two sequential quarters.

636
00:34:42,520 --> 00:34:44,760
Speaker 8: Solves forgiving contraction in the economy.

637
00:34:44,840 --> 00:34:49,320
Speaker 13: Right, So two negative GDP prints in a row. Frankly,

638
00:34:49,880 --> 00:34:53,399
Speaker 13: that's not a bad definition of a recession, but it's

639
00:34:53,400 --> 00:34:56,520
Speaker 13: not the definition which the US follows. The US has

640
00:34:56,560 --> 00:35:00,440
Speaker 13: a group of sort of very very senior econom missed

641
00:35:00,440 --> 00:35:04,080
Speaker 13: at the NBER, and their job is to look at

642
00:35:04,200 --> 00:35:07,400
Speaker 13: a bunch of different data. How much spending is going on,

643
00:35:07,560 --> 00:35:09,920
Speaker 13: how much investment is going on, what's happening in labor

644
00:35:10,000 --> 00:35:13,640
Speaker 13: markets and make a judgment about whether the US economy

645
00:35:13,840 --> 00:35:18,120
Speaker 13: is in recession or not posthumously exactly. They don't do

646
00:35:18,160 --> 00:35:21,000
Speaker 13: it in real time. Now, that brings us to the

647
00:35:21,080 --> 00:35:25,040
Speaker 13: question of these recession rules, right, Probably the most famous

648
00:35:25,040 --> 00:35:29,080
Speaker 13: of them the Psalm rule, named for Claudia sam formerly

649
00:35:29,120 --> 00:35:31,680
Speaker 13: a FED economist now I think one of the contributors

650
00:35:31,719 --> 00:35:36,399
Speaker 13: to Bloomberg opinion. And what Claudiusalm noticed is well, if

651
00:35:36,400 --> 00:35:40,919
Speaker 13: there's an increase in unemployment from its trough by about

652
00:35:41,000 --> 00:35:45,160
Speaker 13: zero point five percentage points, then almost always that's a

653
00:35:45,200 --> 00:35:48,239
Speaker 13: signal that the US economy isn't about to go into

654
00:35:48,280 --> 00:35:53,040
Speaker 13: a recession, it's already in a recession. Where are we now, Well,

655
00:35:53,239 --> 00:35:56,920
Speaker 13: the unemployment rate hasn't quite increased zero point five percentage points,

656
00:35:57,360 --> 00:36:00,239
Speaker 13: but it's already increased zero point four percentage points, and

657
00:36:00,280 --> 00:36:03,120
Speaker 13: we expect it to make up that remaining distance in

658
00:36:03,160 --> 00:36:04,920
Speaker 13: the payrolls print this Friday.

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00:36:05,360 --> 00:36:08,439
Speaker 2: It's interesting that we talk about soft landing. Nobody's really

660
00:36:08,480 --> 00:36:11,560
Speaker 2: qualified what that would look like either. Is it possible

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00:36:11,600 --> 00:36:14,279
Speaker 2: that a mild recession you're describing is a bit of

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00:36:14,280 --> 00:36:15,000
Speaker 2: a soft landing.

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00:36:15,440 --> 00:36:17,440
Speaker 13: So it's interesting, Joe, I mean if you follow the

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00:36:17,520 --> 00:36:22,320
Speaker 13: kind of macroeconomic debate on Twitter, it's kind of knives

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00:36:22,360 --> 00:36:27,080
Speaker 13: out right, and the soft landing optimists have got their

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00:36:27,160 --> 00:36:30,439
Speaker 13: knives out, the hard landing pessimists have got their knives out.

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00:36:31,000 --> 00:36:33,560
Speaker 13: But if you look at what actually the soft landing

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00:36:33,600 --> 00:36:37,680
Speaker 13: optimists and the hard landing pessimists are forecasting, there's not

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00:36:37,840 --> 00:36:42,160
Speaker 13: a vast gulf between them, right, The soft landing optimists

670
00:36:42,239 --> 00:36:45,960
Speaker 13: would concede that the economy is going to slow and

671
00:36:46,000 --> 00:36:49,160
Speaker 13: the unemployment, which has already drifted up a bit, will

672
00:36:49,160 --> 00:36:52,799
Speaker 13: probably drift up a little bit higher. The hard landing pessimists,

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00:36:53,000 --> 00:36:55,759
Speaker 13: and that's the camp we're in, say, yeah, it's going

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00:36:55,800 --> 00:36:58,080
Speaker 13: to slow and there's going to be a mild contraction.

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00:36:58,719 --> 00:36:59,399
Speaker 8: And guess what.

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00:37:00,000 --> 00:37:02,319
Speaker 13: Employment isn't going to drift up to four point twenty

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00:37:02,320 --> 00:37:04,600
Speaker 13: four point three, it's going to drift up all the

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00:37:04,600 --> 00:37:05,560
Speaker 13: way to five percent.

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00:37:05,680 --> 00:37:09,640
Speaker 2: Okay, So maybe there's not that much difference between the two,

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00:37:09,760 --> 00:37:13,160
Speaker 2: is what you're suggesting. So there's a fine line between

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00:37:13,160 --> 00:37:15,279
Speaker 2: a horror and a soft landing the way you're describing them.

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00:37:15,719 --> 00:37:18,480
Speaker 13: Yeah, I think if we let's imagine we were in

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00:37:18,520 --> 00:37:22,640
Speaker 13: a world where let's imagine we were in a world

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00:37:22,640 --> 00:37:25,480
Speaker 13: where the economy was growing at a steady two percent

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00:37:25,560 --> 00:37:30,520
Speaker 13: pace and there was a zero point five percent variation

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00:37:30,640 --> 00:37:34,760
Speaker 13: from one quarter to the next. Right, I think most people,

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00:37:34,840 --> 00:37:37,719
Speaker 13: most people in the markets, would not regard that as

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00:37:37,719 --> 00:37:41,719
Speaker 13: an incredibly consequential move. It's the fact of where we

689
00:37:41,800 --> 00:37:44,200
Speaker 13: are in the cycle, right, It's where we are in

690
00:37:44,239 --> 00:37:47,759
Speaker 13: the cycle as the fared approaches the end of its tightening,

691
00:37:48,080 --> 00:37:51,839
Speaker 13: as unemployment starts to drift up, which means that that

692
00:37:52,000 --> 00:37:54,919
Speaker 13: margin of difference between the optimists and the pessimists right

693
00:37:54,960 --> 00:37:59,120
Speaker 13: now also happens to be the margin of difference between

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00:37:59,120 --> 00:38:01,040
Speaker 13: a soft landing at a mild recess.

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00:38:01,080 --> 00:38:01,440
Speaker 1: Credible.

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00:38:01,760 --> 00:38:03,920
Speaker 2: You know, this is good news for Joe Biden. It

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00:38:04,000 --> 00:38:07,000
Speaker 2: might sound contrarian, but that means the recession's done before

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00:38:07,200 --> 00:38:09,799
Speaker 2: the campaign gets real the general election in the middle

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00:38:09,800 --> 00:38:10,319
Speaker 2: of next year.

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00:38:10,640 --> 00:38:13,799
Speaker 13: So I think folks who think deeply about the relationship

701
00:38:13,840 --> 00:38:19,040
Speaker 13: between politics and the economy and the elections, what they

702
00:38:19,080 --> 00:38:21,799
Speaker 13: tend to say is that views on the economy get

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00:38:21,880 --> 00:38:23,600
Speaker 13: baked in about.

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00:38:23,320 --> 00:38:24,720
Speaker 8: Six months before the vote.

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00:38:24,719 --> 00:38:28,160
Speaker 13: There you go, right, So, from Biden's perspective, what's happening

706
00:38:28,239 --> 00:38:30,400
Speaker 13: right now is important, yes, But what is going to

707
00:38:30,440 --> 00:38:34,040
Speaker 13: be really important is what's happening in May, June, July

708
00:38:34,239 --> 00:38:37,279
Speaker 13: next year. Now, if our call plays out, what could

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00:38:37,320 --> 00:38:39,319
Speaker 13: be happening is the beginning.

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00:38:38,960 --> 00:38:39,680
Speaker 8: Of a recovery?

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00:38:39,960 --> 00:38:42,680
Speaker 2: Yes, and that's something. Don't be a stranger, Tom Orloker.

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00:38:42,719 --> 00:38:45,080
Speaker 2: We always love talking to Tom from Bloomberg Economics.

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00:38:45,080 --> 00:38:45,880
Speaker 4: The call us out.

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00:38:46,000 --> 00:38:48,080
Speaker 2: What do you think we're in a recession right now?

715
00:38:48,640 --> 00:38:51,000
Speaker 2: Ask your neighbor. You might be surprised by the answer.

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Speaker 2: I'm Joe, Matthew and Washington. This is sound On.

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00:38:54,680 --> 00:38:58,400
Speaker 4: Only on Bloomberg. Thanks for listening to the sound On podcast.

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00:38:58,440 --> 00:39:02,120
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00:39:01,640 --> 00:39:03,319
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Speaker 2: And you can find us live every weekday from Washington,

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00:39:06,440 --> 00:39:11,640
Speaker 2: DC at one pm Eastern Time at Bloomberg dot com.