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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is your weekly

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Speaker 1: Washington Policy Pulse on the Balance of Power Podcasts. I'm

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Speaker 1: Joe Matthew. Every Monday, Bloomberg Intelligence, senior policy analyst and

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Speaker 1: friend of the show, Nathan Dean shares his weekly call

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Speaker 1: on upcoming catalysts in the nation's capital. Listen for the

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Speaker 1: most recent and relevant policy research from our team at

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Speaker 1: Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.

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Speaker 2: Welcome to the Washington Policy Pulse. My name is Nathan Dean.

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Speaker 2: I'm a senior policy analyst with Bloomberg Intelligence. We want

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Speaker 2: to say very much thank you for attending this call.

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Speaker 2: We also want to say thank you to those of

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Speaker 2: you who are coming to us via the Balance Power podcast.

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Speaker 2: We always welcome your comments and your suggestions. Now we're

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Speaker 2: recording this on September twenty ninth, at approximately ten two am.

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Speaker 2: And the reason why I bring up that data is

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Speaker 2: that the US government is scheduled to shut down at

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Speaker 2: twelve oh one on October first, So this is Tuesday

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Speaker 2: night going into Wednesday morning. Last Friday, I was at

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Speaker 2: a forty percent chance of a shutdown and where I

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Speaker 2: am this morning is a forty percent of a chance

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Speaker 2: of a shutdown. But I may be wrong on this one,

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Speaker 2: and that's my tongue in cheek way of saying that, Look,

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Speaker 2: things are getting tight and the odds of a shutdown

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Speaker 2: are increasing. Now, the reason why you would not have

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Speaker 2: a government shutdown is because the Republicans have offered a

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Speaker 2: clean CR, a seven week extension that goes us through

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Speaker 2: November twentieth. And generally the party that offers the clean

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Speaker 2: CR is the one that usually has the high ground

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Speaker 2: and doesn't pay the political price of a shutdown. But then,

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Speaker 2: on the other hand, you have the Democrats, and we

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Speaker 2: talked about this case in our last week hall where

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Speaker 2: the Democrats need to be seen fighting President Trump. The

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Speaker 2: approval ratings aren't the best already, and there is plenty

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Speaker 2: of time before now in the November twenty twenty six

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Speaker 2: elections to be able to fix anything if there was

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Speaker 2: any negative impact from the shutdown. Now, what do the

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Speaker 2: Democrats want in this? Most likely it's an extension of

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Speaker 2: the ACA subsidies that are doomed that are actually destined

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Speaker 2: to roll out in the next few weeks.

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Speaker 3: What are the Republicans want?

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Speaker 2: Essentially just continuing to keep the government open or at

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Speaker 2: least via this clean cr puts us through very close

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Speaker 2: to Thanksgiving, and then additional negotiations can take place over

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Speaker 2: the next few weeks. Now, ultimately, I think what it's

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Speaker 2: going to come down to is figuring out what tomorrow brings.

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Speaker 3: So tonight we are sorry not tonight.

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Speaker 2: This afternoon, at three pm Eastern, President Trump is scheduled

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Speaker 2: to meet with both Republican and House leadership at the

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Speaker 2: White House. I don't anticipate much positive news coming out

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Speaker 2: of that meeting. For one thing, I think President Trump's

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Speaker 2: going to make a statement that the Democrats are going

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Speaker 2: to cause a shutdown. I think the Democrats are going

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Speaker 2: to make a stay with their President Trump is ultimately

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Speaker 2: not negotiating, and I think this is anticipated.

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Speaker 3: For me.

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Speaker 2: It really comes down to what does Senator Thune give

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Speaker 2: and what does Senator Schumer give tomorrow morning. If they

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Speaker 2: are talking, then potentially you could see a scenario where

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Speaker 2: you have one week continuing resolution. And the way that

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Speaker 2: would work is that the Senate would pass it and

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Speaker 2: then the House would have to pass it via unanimous consent.

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Speaker 3: The House is not here.

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Speaker 2: House Democrats are, but Republicans have remained out of town

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Speaker 2: because of Speaker Johnson's ability to put pressure on the

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Speaker 2: Senate to accept the already House past resolution. Now, I

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Speaker 2: think if we see tomorrow morning and both sides aren't talking,

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Speaker 2: then most likely you are going to see a shutdown.

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Speaker 3: Now, what happens in a shutdown.

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Speaker 2: Well, for one thing, the contingency plans for the agencies

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Speaker 2: should start trickling out between now and most likely tomorrow,

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Speaker 2: So each agency has already gotten their guidance from the

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Speaker 2: Office of Management and Budget, and then each agency has

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Speaker 2: to put our contingency plan and what is essential and

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Speaker 2: what is not essential. And for a lot of the

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Speaker 2: folks who are looking at this from the market perspective,

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Speaker 2: we've got a lot of questions about the Bureau and

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Speaker 2: Labor Statistics jobs number that's coming out on Friday. We'll

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Speaker 2: have to see whether it a the BLS determins and

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Speaker 2: that's essential or not. But most often that is not essential,

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Speaker 2: and so that report actually wouldn't be made public. And

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Speaker 2: one of my colleagues over in London, even picking me

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Speaker 2: this morning, said well, what about the Federal Reserve meeting?

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Speaker 2: You know, the Federal Reserve, they need to have this data. Well,

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Speaker 2: they may not, So we'll have to see what the

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Speaker 2: BLS says tomorrow. But those contingency plans should be coming

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Speaker 2: out tomorrow, and at least if they're not made public,

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Speaker 2: they should be distributed to the employees. So then ultimately

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Speaker 2: the folks over Bloomberger who should get a good decent

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Speaker 2: idea of what's going on with the contingency plans.

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Speaker 3: So, you know, again we're going to wait and see.

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Speaker 2: But the other thing I would keep in mind is

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Speaker 2: is that and then one of the reasons why I

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Speaker 2: think there's a local political angle to this is because

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Speaker 2: of Director Russell Vote, who is the Director of Office and

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Speaker 2: Management and Budget. Now, just last week, Russ Vote has

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Speaker 2: hinted that he was going to start wide scale layoffs

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Speaker 2: amongst the government workers.

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Speaker 3: We've talked about this in the past.

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Speaker 2: If eighty five percent of the US governments are deemed

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Speaker 2: not essential, maybe there's a scenario where they don't come back. Well,

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Speaker 2: you know, I think there's a local political argument to

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Speaker 2: be made here of why the Virginia Maryland senators may

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Speaker 2: vote ultimately for a deal to keep the government open

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Speaker 2: is because the bulk of the government workers that would

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Speaker 2: be impacted are here. In the Washington, DC area, and

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Speaker 2: there are four Democratic senators who may not win their

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Speaker 2: constituencies impacted like that. Now, if there is a to

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Speaker 2: be made, this ultimately would negate a lot of this

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Speaker 2: is central non essential stuff. But again keep that in mind,

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Speaker 2: blasting just again, we always repeat this, We don't see

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Speaker 2: much market impact to this, even amongst defense contractors.

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Speaker 3: Their contracts are usually two years three years in length.

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Speaker 2: But also keep in mind if you're trying to forecast

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Speaker 2: this out for a longer term economic perspective, most government

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Speaker 2: workers are paid on every other week's cycle, and the

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Speaker 2: paycheck I think would start this Friday, so you're talking

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Speaker 2: about essentially ten to fifteen days before the paychecks start

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Speaker 2: to not come forth. Every government shutdown in the past,

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Speaker 2: Congress has retroactively paid those workers. Contractors who get furload

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Speaker 2: are not, but for the government workers or retro they're

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Speaker 2: retroactively paid. Again, we're not sure if that's going to

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Speaker 2: happen in this scenario. If it was up to Congress,

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Speaker 2: and most likely would happen, but again we'll see. So

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Speaker 2: that's where we are in terms of the shutdown. I'm

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Speaker 2: going to be having a lot more discussions with clients

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Speaker 2: this later today. If you want to have a check

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Speaker 2: in with me, just feel free to send me a

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Speaker 2: message or email me and check in with me tomorrow

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Speaker 2: and we'll be happy to give you an update on

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Speaker 2: what happened with that three pm meeting. Other things to

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Speaker 2: keep in mind. Last week we had the United Nations

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Speaker 2: General Assembly. President Trump gave a speech to the United Nations.

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Speaker 2: I was curious by this speech, so I went over

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Speaker 2: to Bloomberg Economics, who sits behind me, and I asked

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Speaker 2: their senior geo economic analyst, Adam Ferrer, on what he

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Speaker 2: thought of this meeting was and depending on based off

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Speaker 2: his comments, I was like, you know what, why don't

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Speaker 2: we record this and put it out on the terminal.

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Speaker 2: So if you're a terminal subscriber ping me, I'll send

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Speaker 2: you a link to that discussion. But essentially Adam's key

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Speaker 2: points was that it was kind of interesting that he

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Speaker 2: didn't mention China in this speech. He previewed what President

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Speaker 2: Trump could be doing at South Korea Asia Summit at

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Speaker 2: the end of October. He also talked about whether or

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Speaker 2: not there was actually some teeth there in terms of

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Speaker 2: President Trump's statements of allowing Ukraine to go back and

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Speaker 2: win the Lane or Ukra could win this war. And

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Speaker 2: so if you're interested, definitely let me know and I'll

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Speaker 2: send you a copy of that conversation. Other things that

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Speaker 2: we're keeping an eye on. There was a lot of

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Speaker 2: chatter last week about farmer aid. You know, the Department

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Speaker 2: of Agriculture. The Secretary made some comments about how there's

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Speaker 2: going to be new aid for farmers. President Trump even

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Speaker 2: went far further enough to say that we're going to

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Speaker 2: use tariff revenue to pay for farmers. So there's this

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Speaker 2: general anticipation here in Washington that you're going to see

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Speaker 2: another round of farmer aid. As you recall, we saw

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Speaker 2: some of this in the first Trump administration, where twenty

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Speaker 2: three billion dollars was distributed out to farmers. I am

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Speaker 2: going to think that we're going to potentially see something

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Speaker 2: similar to that, but I'm going to have a much

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Speaker 2: more in depth note talking about the timing of that,

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Speaker 2: probably later this week or the beginning of next week.

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Speaker 3: And just four heads up.

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Speaker 2: We've talked about the farm bill in the past, the

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Speaker 2: skinny idea of a skinny bar farm bill. It's not

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Speaker 2: going anywhere. Nobody's working on it right now. Just because

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Speaker 2: of the government shutdown issues. I also wanted to give

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Speaker 2: a crypto updates. The Senate Banking Committee had originally tried

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Speaker 2: to get their crypto markup. Remember they had the Responsible

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Speaker 2: Financial Innovation Act. This was the Senate counterpart to the

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Speaker 2: Clarity Act. Remember this is only the Senate Banking portion,

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Speaker 2: not the Senate Agricultural portion, So this is the security

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Speaker 2: side of crypto, not the commodity side of crypto. Well,

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Speaker 2: the Senate Banking Committee had wanted all of this wrapped

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Speaker 2: up by September thirtieth. As you can note, it's September

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Speaker 2: twenty ninth and they haven't worked on this. This is

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Speaker 2: well within lines of our anticipation, in our expectations, and

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Speaker 2: actually I think this actually made both better for the

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Speaker 2: bill if the Senate Banking Committee and the Senate ad

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Speaker 2: Committee is actually tied up on the same timeline, So,

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Speaker 2: you know, just I think that actually helps somewhat as well.

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Speaker 2: And then also in the crypto space, you're going to

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Speaker 2: see the SEC and the CFTC come together for a

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Speaker 2: roundtable later this week about harmonization. There's actually some very

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Speaker 2: powerful panelists on here. We're talking about CEOs of you know,

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Speaker 2: Terry Duffy at CME. You know, you know Nasdaq CEO.

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Speaker 2: There's a lot of folks who are coming to this roundtable,

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Speaker 2: and this is really just a good way I think

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Speaker 2: in the SEC and cfdc's perspective is they air out

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Speaker 2: some of the areas of the potentially could be more

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Speaker 2: friction going on in the crypto space, for example, just

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Speaker 2: as remember a CFTC owns commodities, the SEC owned securities,

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Speaker 2: and both sides sort of want to be able to

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Speaker 2: just play in their space, but also potentially could draw

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Speaker 2: some space from the other side. Where I'm going at

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Speaker 2: is that this meeting could potentially actually, potentially actually this

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Speaker 2: meeting could potentially stave off some jurisdiction grabbing fights later

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Speaker 2: this year. Also wanted to give an update on what

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Speaker 2: we're seeing with bank capital just because again September thirtieth,

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Speaker 2: we anticipated a stress testing proposal coming out from the

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Speaker 2: Federal Reserve. We're in the hearing that that's proposal still

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Speaker 2: in the timeline, that this is going to be more

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Speaker 2: robust proposal than the one that came out in April,

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Speaker 2: which just dealt with the timing of stress tests. We're

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Speaker 2: also hearing that again there is another purpole out there,

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Speaker 2: maybe potentially tied to the g SIPs surcharge, So keep

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Speaker 2: that in mind. Governor Bowman Vice Chairbowman actually gave a

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Speaker 2: speech just last week where she pushed the Bosle three

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Speaker 2: timeline from late early next year to potentially the end

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Speaker 2: of this year early next year. I still think the

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Speaker 2: Basle three end game is going to be early next year,

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Speaker 2: and I still think it's going to be one of

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Speaker 2: the more later proposals that comes out from the FED.

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Speaker 3: So we're still waiting on that. The last three things

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Speaker 3: I want to talk about.

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Speaker 2: You're going to see some news this week related to

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Speaker 2: a meeting over the Department of Defense. Slash war generals

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Speaker 2: and animals have been flying in from across the globe

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Speaker 2: to have this meeting. I've done non analysis on this whatsoever.

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Speaker 2: I'm just telling you what Bloomberg News is reporting. But

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Speaker 2: Bloomberg News is reporting is that this meeting is essentially

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Speaker 2: a PEP rally for those of views.

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Speaker 3: You know.

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Speaker 2: I don't know if PEP rally is or something that

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Speaker 2: they have outside of the United States, but this is

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Speaker 2: something to fire up the troops. It's going to be recorded,

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Speaker 2: it's going to be distributed out to the rest of

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Speaker 2: the nation and allso so to the rest of the military.

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Speaker 2: So again we'll see what happens with this meeting. But

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Speaker 2: that's what Bloomberg News is saying. Also I will just

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Speaker 2: point out is that even though I've highlighted the meeting

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Speaker 2: with the Democratic and Republican leadership over the White House

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Speaker 2: today a three o'clock, we also have a meeting between

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Speaker 2: President Trump and Prime Minister Benjamin yet and Yahoo, so

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Speaker 2: I anticipate some headlines on that. Again I have not

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Speaker 2: done any analysis on this, nor I would, but again

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Speaker 2: Bloomberg News has some great reporting on that. The last

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Speaker 2: thing I want to leave you with is just this

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Speaker 2: morning we saw two truth social posts from President Trump

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Speaker 2: on tariffs. One was directing one percent tariff on movies

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Speaker 2: made outside the United States. My first thought, because my

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Speaker 2: wife loves Hallmark movies and they're pretty much made in Vancouver,

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Speaker 2: is okay, does that mean there's no more Hallmark movies?

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Speaker 3: But this isn't new.

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Speaker 2: President Trump actually floated this idea back in May, and

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Speaker 2: my colleague calling from actually looked at it at the

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Speaker 2: time and she essentially said weak legal grounds for a

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Speaker 2: tariff of this nature We don't know if this would

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Speaker 2: be under AIPA or something else, but just her high

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Speaker 2: level reading from the Truth social posts back in May

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Speaker 2: is that it's on weak legal grounds. We even don't

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Speaker 2: know operationally how it worked because a lot of times

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Speaker 2: movies are filmed outside the United States and then post

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Speaker 2: production is in Los Angeles and vice versa. So again,

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Speaker 2: a lot more theories on that. And then finally he

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Speaker 2: made a post about furniture and calling for tariffs on

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Speaker 2: countries that don't buy furniture in the United States. I

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Speaker 2: think what President Trump's meant to say is is that

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Speaker 2: he would put tariffs on any type of furniture that

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Speaker 2: has been imported from outside the United States. There's already

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Speaker 2: tariffs on furniture that are being imported from outside the

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Speaker 2: United States. So I think this is one of those

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Speaker 2: posts where it's sort of just like, I think he

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Speaker 2: meant something else and it just didn't come out that way.

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Speaker 2: But again we'll see. So with that, I'm going to

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Speaker 2: say thank you very much, We really appreciate your time. Again,

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Speaker 2: feel free to ib me is the headlines come in

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Speaker 2: this week If you have any questions or even just

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Speaker 2: send me emails and We'll be sure to get you

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Speaker 2: all the information to need.

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Speaker 1: Our thanks to Nathan Dean, Bloomber Intelligence Senior policy analyst,

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Speaker 1: bringing you the latest installment of his weekly Washington Policy Pulse.

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Speaker 1: For more from BI, or to join this call live

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Speaker 1: each week, you can email Nathan at ndan at Bloomberg

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Speaker 1: dot net. That's n D e A n at Bloomberg

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Speaker 1: dot net and come back to the podcast later today

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Speaker 1: for the latest edition of Balance of Power