Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Terminal and the Bloomberg Business app. David Rosenberg, President of
Speaker 2: Rosenberg Research, writing quote, there is nothing in the CPI
Speaker 2: report to get the FED in a position to be
Speaker 2: cutting raids anytime soon. I'm pleased to say that David
Speaker 2: joined us now for more. David, great to catch up
Speaker 2: with you, sir, It's been too long. I just think
Speaker 2: you're perfectly positioned to run through this for us in detail,
Speaker 2: the pieces of this that will spill over to PCEE,
Speaker 2: the bits that matter to the FED, and ultimately the
Speaker 2: parts that won't right.
Speaker 3: Well. Look, I think that the bottom line is that
Speaker 3: the FED does not target the CPI or the core CPI.
Speaker 3: It targets the PC to flavor and the core PC
Speaker 3: to flavor, and I think that one of the I
Speaker 3: think more welcoming elements in yesterday's CPI data was the
Speaker 3: fact that medical care goods and services were flat as
Speaker 3: a pancake, and that features much larger in the PC
Speaker 3: to flavor, And I wouldn't be surprised when you rewate
Speaker 3: the components of the CPI to the PC to flavor
Speaker 3: that the core ends up coming in closer to point
Speaker 3: three or point two than the point four we saw
Speaker 3: on the core CPI. So my view was that yesterday's
Speaker 3: consumer Price report is going to be a distant memory
Speaker 3: within the next three to four weeks, So I'm not
Speaker 3: as fussed about it as a lot of the other
Speaker 3: commentators you had on your show.
Speaker 4: It seems like, David, that the markets agree with you.
Speaker 4: Are the markets responding appropriately to report that you think
Speaker 4: is maybe a bit misleading?
Speaker 3: Well, look, the stock market is really operating on a
Speaker 3: set of momentum and technical factors and not really I
Speaker 3: don't think paying attention much to what's happening in the economy.
Speaker 3: I mean, you have a stock market up thirty percent
Speaker 3: in the past year thereabouts and earnings are up four percent,
Speaker 3: so it's really been a multiple driven market. The bottom
Speaker 3: market sold off moderately, as you would have expected on
Speaker 3: a higher and expected especially core CPI print. But in
Speaker 3: the overall scheme of things, I mean, you have people
Speaker 3: on your show saying that, you know, inflation is taking
Speaker 3: its time coming down, and inflation usually does that. It's
Speaker 3: like a race between watching grass grow and pain dry.
Speaker 3: It's not you know, Inflation isn't bitcoin or the CRB
Speaker 3: index or Nvidia stock. It usually is glacial.
Speaker 1: But the bigger picture is this.
Speaker 3: You know, when we strip out the shelter components of
Speaker 3: the CPI, which we all know are flawed in their
Speaker 3: treatment that and their legged headline, inflation x shelter is
Speaker 3: running at one point eight percent year of year. It's
Speaker 3: already below target. This time last year it was running
Speaker 3: at five percent. So I would just suggest let's move
Speaker 3: away from focusing exclusively on the monthly wiggles on the
Speaker 3: data and look at the bigger picture, because the broader
Speaker 3: trends at inflation and core are moving down, and I
Speaker 3: think moving down in a rather impressive fashion, notwithstanding yesterday's
Speaker 3: data point.
Speaker 4: I guess what strikes me David, it seems like the
Speaker 4: balance of risks is perhaps a little bit more skewed
Speaker 4: to higher inflation after this report, especially because it doesn't
Speaker 4: seem like rates where they are now are particularly restrictive
Speaker 4: when it comes to capital markets and when it comes
Speaker 4: to risk asset valuations. So why should the Fed go
Speaker 4: ahead with cutting rates at a time where it doesn't
Speaker 4: seem like their higher rates are really affecting the economy
Speaker 4: or markets And it seems like there still our questions
Speaker 4: around inflation.
Speaker 3: Well, there's no doubt that financial conditions have eased rather
Speaker 3: dramatically in the course of the past few months, but
Speaker 3: I don't think that's why the economy did as well
Speaker 3: as it did last year and then of the fourth quarter.
Speaker 3: It was really a lot of fiscal juice. It wasn't
Speaker 3: really about financial conditions. You got a rapid decline in
Speaker 3: the equity cost of capital, high yield spreads are super tight.
Speaker 3: But where's the cap X boom coming out of that?
Speaker 3: We're not really seeing it last year's story. I mean,
Speaker 3: two thirds of the growth in the economy last year
Speaker 3: came from the direct and indirect impact of fiscal stimulus, which,
Speaker 3: frankly I wasn't expecting. I don't know if you were
Speaker 3: expecting it. I wasn't expecting that the deficit was going
Speaker 3: to expand twenty five percent last year the context of
Speaker 3: a sub four percent on employment rate that's never happened before. Sides,
Speaker 3: so a lot of the growth was really fiscal financial
Speaker 3: conditions have eased, but I'm not really seeing dramatic impulse
Speaker 3: on economic activity from the easy and financial conditions. And
Speaker 3: the one thing I'm going to point out is, you know,
Speaker 3: the FED is telling us increasingly that it is, you know,
Speaker 3: shifting its focus from the month to month gyrations and
Speaker 3: the data of course that grab the headlines until the
Speaker 3: next month's data come out, and they're focused on what
Speaker 3: business contacts are telling them. And quite frankly, when you
Speaker 3: look at the swathe of comments coming out of the
Speaker 3: base book, the latest facebook out of the FED, what
Speaker 3: did it say? It said that businesses found it harder
Speaker 3: to pass through higher cost to their consumers, who became
Speaker 3: increasingly sensitive to price changes. So that's what's happening in
Speaker 3: the real world and in the CPI world. We have
Speaker 3: over forty percent of the items in that index are
Speaker 3: imputed guesswork by bls statisticians as the proteins to services.
Speaker 3: So when you look at the real world, what did
Speaker 3: the Walmart CFO tell us a couple of weeks ago
Speaker 3: about pricing trends at Walmart, the world's largest retailer, is
Speaker 3: that their pricing momentum is actually dissipating. So I'm not
Speaker 3: getting too fussed by one monthly CPI number, that's for sure.
Speaker 2: Devi Loo got about forty five seconds left with you
Speaker 2: when it's to squeeze this in. There's a phrase I
Speaker 2: see a lot from research at the moment, and it's
Speaker 2: not nineteen ninety nine. And I just wonder, from your perspective,
Speaker 2: what is the value of benchmarking to such an extreme
Speaker 2: time in the equity market?
Speaker 5: Is there any value in that at all.
Speaker 3: I don't think that it's useful to compare it to today's world,
Speaker 3: to any other world, anymore than inn seven people comparing
Speaker 3: it to previous cycles. Every cycle has its unique characteristics,
Speaker 3: Every cycle has its similar patterns. No, I'm not saying
Speaker 3: this is like nineteen ninety nine or the dot com bubble,
Speaker 3: because most of those companies didn't have a business model
Speaker 3: and didn't have earnings. However, However, we do have a
Speaker 3: situation where the forward multiple now in the SMP is
Speaker 3: twenty one, and it is in the top ten percent
Speaker 3: to the top death style evaluations in history. So it
Speaker 3: doesn't detract I mean people like to say it's not
Speaker 3: nineteen ninety nine. We'll go go knock yourself out on
Speaker 3: that comparison. But whether you're taking a look at corporate credit,
Speaker 3: you're taking a look at the equity market, it's a
Speaker 3: noseblee territory in terms of valuations, and so that's where
Speaker 3: I come out of it. That is still a very
Speaker 3: expensive set of circumstances in across most awnset classes.
Speaker 5: It's David, We're going to continue this conversations.
Speaker 3: Wasn't ninety nine, but it's.
Speaker 5: It's a little time.
Speaker 2: David Rosenberg of Rosenberg Research, David appreciate it set. Former
Speaker 2: New York Fed President Bill Dudley warning the next goal
Speaker 2: is reducing QT writing this in Bloomberg Opinion, a final
Speaker 2: plan should be in place by the middle of the year.
Speaker 2: Whatever happens, the destination matches a lot more than the
Speaker 2: speed and places say that Bill Dudley joined us. Now
Speaker 2: for more, Bill, let's talk about this. What kind of
Speaker 2: considerations go into making a decision like this one.
Speaker 6: They want to behave in a way that does not
Speaker 6: risk causing turbulence and financial markets. So the reason to
Speaker 6: do the taper is you're not really sure what the
Speaker 6: desired level or reserves is in the banking system, so
Speaker 6: you want to approach the runway very very shallowly, steeply,
Speaker 6: especially when you don't know where that runway exactly is.
Speaker 6: So I think the taper is proven course of action.
Speaker 6: It doesn't really matter if you get to the desired
Speaker 6: level reserves in two years versus one year. It's just
Speaker 6: the fact that you get there. So I think that
Speaker 6: they're going to discuss it at the March meeting. That
Speaker 6: was made clear by Paul's press conflext press conference, and
Speaker 6: then the fem C minutes, and then they'll talk about
Speaker 6: the staffs proposal, and I think we'll see a final
Speaker 6: plan by midyear.
Speaker 2: Bill, you've said the Central Bank needs to strengthen the
Speaker 2: balance sheet enough to rebuild the stimulus arsenal. I just
Speaker 2: want to get into that a little bit more. I've
Speaker 2: said this to you before. I feel like this is
Speaker 2: some kind of Jedi mind trick at the Federal reserve.
Speaker 2: They want you to simultaneously believe that QE stimulates and
Speaker 2: QT does nothing.
Speaker 5: What does QT actually do?
Speaker 7: QT does withdraw restraint that they've put into the system previously.
Speaker 7: But economics economist who have looked at QE versus QT
Speaker 7: find big effects when there's QE announcements, very little effects
Speaker 7: when there's QT announcements.
Speaker 6: And the reason is sort of obvious. You don't ever
Speaker 6: know when q E u Q program is going to
Speaker 6: be implemented. Kanye has to really really falling apart.
Speaker 8: Interest rates have to be at the.
Speaker 6: Zero lore bound, So QE is usually a surprise QT
Speaker 6: that once you've done QE, you know QT is going
Speaker 6: to fall at some point that the FED is going
Speaker 6: to ultimately unwind the Q that they did earlier. So
Speaker 6: when QT happens, it's really a question of timing and
Speaker 6: magnitude duration, not whether it's going to happen or not,
Speaker 6: So it has pretty much more milder effects.
Speaker 4: There's also a Jedi mind trick going on Bill when
Speaker 4: it comes to financial just in general conditions. The fact
Speaker 4: that we've seen dramatic easing in financial conditions and that
Speaker 4: doesn't seem to be weighing on the FED in terms
Speaker 4: of how that affects their ability to get to two percent.
Speaker 4: But when you saw a sell off that was and
Speaker 4: some sort of restriction, does that concern you that the
Speaker 4: easing and financial conditions doesn't seem to be anywhere on
Speaker 4: the radar of FED officials.
Speaker 6: Well, I think it's in the radar in the sense
Speaker 6: that the reason why financial conditions have eased is because
Speaker 6: people expect the FED to cut rates this year, but
Speaker 6: the Fed actually actually has to cut those rates to
Speaker 6: keep financial conditions where they are today.
Speaker 1: I think at this point we know that March is
Speaker 1: off the table. May is probably off the table too.
Speaker 6: We're really talking about what you know, FED cutting rates
Speaker 6: probably sometimes this summer.
Speaker 8: The focus at the meeting, as I said, is going
Speaker 8: to be Paul's.
Speaker 6: Gonna get a lot of questions about the QT taper,
Speaker 6: since that people know that's on the table.
Speaker 1: But the other thing that's going to.
Speaker 6: Get a lot of attention is the summary of economic
Speaker 6: rejections and how many rate cuts do FIT officials pencil
Speaker 6: in in their forecast.
Speaker 8: Last time, the medium was three. I would guess the
Speaker 8: medium will be three again this time, but there's some
Speaker 8: possibility given the firmness and the inflation data that maybe
Speaker 8: maybe those are only the meet The meeting is going
Speaker 8: to shrink to two, but I bet they keep where
Speaker 8: they were last time.
Speaker 7: There's still plenty of time and still plenty.
Speaker 6: Of meetings this year to cut rays three times.
Speaker 4: But this goes back to the question that we've been
Speaker 4: asking all morning. Has the balance of risks, arguably on
Speaker 4: a minor way, shifted just a bit after the CPI
Speaker 4: print to the fact that maybe it makes sense for
Speaker 4: them to hold rates higher for a bit longer because
Speaker 4: it doesn't seem like it's dampening some of the economic
Speaker 4: activity are materially harming the US economy.
Speaker 6: I think it has, but I think that's that's been
Speaker 6: their strategy how long. I think the market got way
Speaker 6: ahead of the Fed earlier this year, when the market
Speaker 6: is pricing in six to seven rate cuts this year,
Speaker 6: and the Fed was saying, no, we're going to do
Speaker 6: quite a bit less than that, for the very reason
Speaker 6: that you said that the FED wants to be sure
Speaker 6: that they're actually be successful in getting inflation all the
Speaker 6: way down to two percent, and you know, the not
Speaker 6: so good inflation prints that we saw recently just reinforce that.
Speaker 6: So I think the world is started going the way
Speaker 6: the Fed Reserve was expecting rather than the way markets
Speaker 6: were expecting. And I think that, you know, I think
Speaker 6: there's plenty of time to see how the balance between
Speaker 6: growth and inflation plays out. As you know, these are
Speaker 6: balancing acts. Now the Fed is focused on both sides.
Speaker 6: That it's still mandate not just inflation, but also what's
Speaker 6: happening to the economy. While the Knoye is held up
Speaker 6: quite well, there are signs that it is slowing, and
Speaker 6: so the FET is trying to get balance right between
Speaker 6: these two risks.
Speaker 5: Bill.
Speaker 2: This is the total opposite of the conversation we had
Speaker 2: post GFC. I was talking about this a little bit
Speaker 2: earlier in the program. I want to do it again
Speaker 2: with you. I think it's important coming out of the
Speaker 2: Great Financial Crisis I seven and eaight nine, we always
Speaker 2: had these charts that came out and it was basically
Speaker 2: Wall Street looking for lift offf at the federal serve
Speaker 2: and then you had Fed funds just doing nothing for years,
Speaker 2: and every single year was lift off liftoffs coming. It
Speaker 2: was full storm, full storm, full storm, and were looking
Speaker 2: at a situation that could be the total reverse of that,
Speaker 2: where we have again and again just to full storm
Speaker 2: looking for cuts that never come because the suspancsion just
Speaker 2: looks so much better than people thought it would be.
Speaker 6: Well, that really depends on how tape monitor policy is,
Speaker 6: and that's one thing we don't really know. Every time
Speaker 6: the economy turns out to be stronger than expected, people
Speaker 6: start to talk about, well, maybe monitor posse is not
Speaker 6: as restricted as we thought. This is coming back to
Speaker 6: the discussion of our star the neutral federal fund rate.
Speaker 6: Other thing that's going to be interesting in the upcoming
Speaker 6: meeting is whether FED officials raise their estimate of what
Speaker 6: a neutral maitre policy looks like. If you look at
Speaker 6: the current projections, they think that at two percent inflation,
Speaker 6: the federal fund rate to be neutral should be two
Speaker 6: and a half percent. And it's very possible, given the
Speaker 6: strength of the economy that we've seen over the last year,
Speaker 6: that they're going to start to push up those estimates.
Speaker 5: Well, that's exactly where I wanted to go.
Speaker 4: Kati Kamiski earlier was saying, there's a real signal from
Speaker 4: the fact the financial conditions have eased so much in
Speaker 4: the face of rates that have remained so high. Do
Speaker 4: you take that signal? Do you think that the Fed
Speaker 4: should be lifting there are star rate their neutral rate expectations, Yes,
Speaker 4: I do.
Speaker 6: I think there's lots of reason to think that our
Speaker 6: star is higher than it was in the path. In
Speaker 6: the recent past, fiscal policy has been very expansive. The
Speaker 6: government has put in place a number of new investment
Speaker 6: programs Chips Act, infrastructure spending, climate finance. So all those
Speaker 6: things are increasing investment relative to a diminished say, I
Speaker 6: think it's bull that we should raise our star over
Speaker 6: the longer run. I also think that financial conditions are
Speaker 6: the right way to think about major policy, and so
Speaker 6: to your point, if financial conditions are easier, then there's
Speaker 6: less easy for the.
Speaker 5: FED to do bill. Just a final question from me.
Speaker 2: You've alluded to this, but just to speak a little
Speaker 2: bit more clearly on the topic, how uncomfortable should they be?
Speaker 2: Will they be with yesterday CPI print?
Speaker 6: I don't think the FED takes a lot of signal
Speaker 6: from one or two inflation prints after a series of
Speaker 6: very good inflation prints. But I think you know the
Speaker 6: fact that it's now too rather than one is getting
Speaker 6: it's now on their raiders.
Speaker 2: Screen Bill Dudley if Bloomberg opinion, Bill appreciate it. Thank you, sir,
Speaker 2: FCC Commission of Brendon Katjo and just now for more, Commissioner,
Speaker 2: been looking forward to this conversation. I've got your comments
Speaker 2: in front of me on TikTok. You've called it before
Speaker 2: a clear and present danger to national security. I'm sure
Speaker 2: TikTok would disagree with that characterization as well. Can you
Speaker 2: give some concrete examples of why you think that's the case.
Speaker 9: Yeah, the track record with TikTok's malign conduct is very
Speaker 9: clear at this point. For years they told us lawmakers,
Speaker 9: don't worry us. User data isn't even existing inside China,
Speaker 9: and then a blockbuster report came out in twenty twenty
Speaker 9: two that showed no, in fact, quote, everything is seen.
Speaker 1: Inside of China based on leak materials.
Speaker 9: That's key struck patterns, biometrics, search and browsing history location. Then,
Speaker 9: second of all, what the CCP are doing with that
Speaker 9: data is very nefarious. They use access that did data
Speaker 9: personnel in Beijing did to surveil the locations of specific
Speaker 9: Americans journalists that were writing negative stories about TikTok. Third,
Speaker 9: TikTok said, Okay, you caught us red handed. We're going
Speaker 9: to wall off US user data. But lo and behold,
Speaker 9: the Wall Street Journal report came out and found that
Speaker 9: personnel in Beijing are still getting access to that data
Speaker 9: sensitive US user data after agreeing to walllet off. And
Speaker 9: the record goes on from there, including TikTok's parent Bike
Speaker 9: Dance having a CCP sell embedded in its leadership. So
Speaker 9: this is about the malign conduct that an entity that
Speaker 9: it is beholden to the CCP has been engaged in.
Speaker 10: When you talk about walling off that data, you're talking
Speaker 10: about Project Texas. Has it not worked at all?
Speaker 1: No, not at all.
Speaker 9: So one of the leak materials had TikTok Trust and
Speaker 9: safety officials themselves saying that it remains to be seen
Speaker 9: whether product and engineering meaning Beijing can still get access
Speaker 9: to US user data after mitigations like Project Texas are
Speaker 9: put in place. Second of all, that walling off of
Speaker 9: data that we just talked about was part of Project Texas,
Speaker 9: and again Beijing still got access to it. And even
Speaker 9: TikTok's CEO has said, Project Texas will keep data from
Speaker 9: going to Beijing except when we allow it pursued to
Speaker 9: what they claim are new control. So Project Texas is
Speaker 9: about as secure as a SIEV at the end of
Speaker 9: the day.
Speaker 10: In a day of interesting and odd political bedfellows that
Speaker 10: we saw yesterday in Kapa Hill's a lot of individuals
Speaker 10: come out and talk about free speech on the progressive
Speaker 10: left and the right, Ron Paul saying he's going to
Speaker 10: block anything that's contrary to the Constitution.
Speaker 5: Do you agree?
Speaker 10: Is there a free speech issue at play here?
Speaker 1: Yok?
Speaker 9: Grandpa's been great on these liberty issues. This particular bill
Speaker 9: does not trigger a First Amendment concern for one main reason.
Speaker 9: The Supreme Court has drawing a clear line between regulations
Speaker 9: based on content of speech on the one hand, and
Speaker 9: regulation of conduct on the other. And this plainly is
Speaker 9: a conduct law, meaning we're acting because of the demonstrated
Speaker 9: malign national security threat of TikTok, not because of the
Speaker 9: content of anybody's speech. And the bill is narrowly tailored,
Speaker 9: which is key for First Amendment analysis, because it simply
Speaker 9: requires divestment, meaning the millions of Americans that love TikTok,
Speaker 9: I'm not one of them, but they can continue to
Speaker 9: use the application, but just in a more secure way.
Speaker 9: So because of the conduct at issue here, the Constitution
Speaker 9: does not compel us to require a national security threat
Speaker 9: to continue to persist.
Speaker 10: Well, there's one politician in DCU certainly likes TikTok, and
Speaker 10: that's President Biden. The sense of his campaign, they feel
Speaker 10: like they're able to reach the youth by using TikTok.
Speaker 10: So if TikTok is divested, there's a sale, would that
Speaker 10: mean that the Biden campaign can.
Speaker 5: Continue using it? But do you think it'll be safer?
Speaker 1: Yeah, that's right.
Speaker 9: You know a lot of people will raise that concern
Speaker 9: about the Biden administration being on TikTok, but Biden adminstration
Speaker 9: officials have been very clear that there's a national security
Speaker 9: threat here. That's why passed this bill actually squares the
Speaker 9: circle because then the campaign or anybody's campaign could continue
Speaker 9: or start to be on TikTok, but without that serious
Speaker 9: national security risk that's present today.
Speaker 4: Commissioner, given the fact that we've heard that from President Biden,
Speaker 4: I'm curious about your comments from the former President Trump,
Speaker 4: who seems to be, I don't know less clear about
Speaker 4: what he thinks of this bill, saying you know that.
Speaker 5: There's a lot of good there's a lot.
Speaker 4: Of bad with TikTok, talking about how it increases the
Speaker 4: prevalence of meta. What do you make of his comments?
Speaker 9: I think, first of all, President Trump, you know, fundamentally
Speaker 9: reshaped washing DC to understand the serious threat posed by
Speaker 9: the CCP.
Speaker 1: He's also raised concerns.
Speaker 9: As I have, with the conduct of big tech companies
Speaker 9: that are based right here in Silicon Valley, and those
Speaker 9: are real concerns. He pushed for Section two thirty reform,
Speaker 9: which I supported and had hope we would have gotten
Speaker 9: across the.
Speaker 1: Finish line at the SEC by now, and we had it.
Speaker 9: But TikTok presents obviously sort of a threat that's fundamentally
Speaker 9: different than US big tech companies. For all of my
Speaker 9: concerns with their conduct, and I have many, once we
Speaker 9: deal with the national security threat from TikTok, once you break.
Speaker 1: That tie back to the CCP, then.
Speaker 9: We should move very quickly, as President Trump has outlined
Speaker 9: on Section two thirty reform and in my view, a
Speaker 9: firmative anti discrimination obligation that would apply across the board.
Speaker 9: But until you break that link to the CCP, a
Speaker 9: lot of other reforms just aren't going to work out.
Speaker 10: But it does feel like he flip flopped on this
Speaker 10: in a sense that he wanted to band it under
Speaker 10: Hinds administration. It then got held up in court, and
Speaker 10: now he's saying he's really not so sure about it.
Speaker 10: Do you think we could see a different if he
Speaker 10: was to become president of the United States, a different
Speaker 10: view on TikTok because of his concerns of how big
Speaker 10: Meta is.
Speaker 9: Well again, I think the reason why this bill is
Speaker 9: such a smart approach is because it's not a ban bill.
Speaker 9: It's a divestment and so you would have TikTok go
Speaker 9: to a different doesn't he need to be a US company,
Speaker 9: can be any company that's not tied to China, Russia
Speaker 9: and North Korea or Iran. So you can continue to
Speaker 9: have TikTok in the marketplace as a counterweight to Facebook,
Speaker 9: as a counterweight to others, but it can be there
Speaker 9: in a way that doesn't present the national security threats
Speaker 9: what keeps that competition?
Speaker 2: High Commissioner, we seem to be ill equipped to deal
Speaker 2: with these issues. It's been four years, about four years
Speaker 2: since we've been talking about this and Harby. Anything has happened,
Speaker 2: just in terms of actually passing proper policy, So do
Speaker 2: something about these national security concerns. I think back to China.
Speaker 2: It's easy, it's straightforward. She comes out and says no,
Speaker 2: and then that's it. It's banned. It's old, banned twits
Speaker 2: of Facebook, YouTube access. Why are we so ill equipped
Speaker 2: in the West to deal with these threats?
Speaker 5: And how do we goot change in that?
Speaker 9: Yeah, we certainly have a very different system obviously than
Speaker 9: they do in China. And some people raise concerns about
Speaker 9: will China engage in some sort of reciprocal action based
Speaker 9: on that our mind people, Facebook and other US technology.
Speaker 1: Comans are already banned in China.
Speaker 9: So yes, we move more slowly, we move in a
Speaker 9: much more considered way. And obviously don't underestimate the fact
Speaker 9: that you know, Byke Dance has put every single amount
Speaker 9: of lobbyist dollar possible to slow roll this. And people
Speaker 9: look at the one hundred and eighteenth Congress and they say,
Speaker 9: you know, they have a hard time getting things done
Speaker 9: as a general matter, but this is one where the
Speaker 9: one hundred and eighteen and Speaker Johnson can land a
Speaker 9: significant legislative win, not just on a tough issue, but
Speaker 9: as you know, on a technology issue where it's sometimes
Speaker 9: difficult for Congress to act, and that's why the Commerce Committee,
Speaker 9: with Chair Rogers holding that blockbuster hearing last March.
Speaker 1: I think that really stepped things in motion.
Speaker 9: Do people wish it would have gone faster, sure, undoubtedly,
Speaker 9: But arriving here today where there's a vote in the
Speaker 9: House is a significant moment.
Speaker 10: Significant moment in the House, but what happens next in
Speaker 10: the Senate?
Speaker 5: Commissioner, Yeah, I feel.
Speaker 9: Pretty good about the odds in the Senate as well.
Speaker 9: If you look back, Actually people sort of forgotten this,
Speaker 9: but Senator Schumer joined in a letter with Senator Cotton
Speaker 9: back in twenty nineteen raising serious concerns about TikTok's national
Speaker 9: security threat. So this is an issue that is a
Speaker 9: long standing issue for Senator Schumer over there in many
Speaker 9: many Republicans as well, So a lot of the focus
Speaker 9: that's been in the House obviously up to now they
Speaker 9: will now shift to the Senate. I think the odds
Speaker 9: are very good there as well, and I'm looking forward
Speaker 9: hopefully to the bill passing today in the House and
Speaker 9: then things moving over there.
Speaker 2: Commis Sir, I want to finish on conduct versus content.
Speaker 2: You talked about this being a conduct issue, Do you
Speaker 2: believe there is a content issue in any way, shape
Speaker 2: or form as well?
Speaker 1: No, not at all.
Speaker 9: I mean, look, sometimes we focus on the way the
Speaker 9: algorithm with TikTok performs, and people have focused on that.
Speaker 9: How it just shows content that is drastically different than
Speaker 9: any other social media content that happens to align with
Speaker 9: the CCP.
Speaker 1: Again, it's not that content the concern for me.
Speaker 9: It's that that content shows there's such a drastically different
Speaker 9: operation of the algorithm that it goes fundamentally to conduct
Speaker 9: into CCP controls. When we talk about that again, it's
Speaker 9: just further evidence of CCP control. It's not about the
Speaker 9: government acting based on content. Again, I'll give you one
Speaker 9: last analogy. Someone can take a pen and they can
Speaker 9: write the most salacious anti American propaganda.
Speaker 1: They won there's nothing rightfully the government can do.
Speaker 9: But if you take that pen and you use it
Speaker 9: to pick a lock and break into a building, well
Speaker 9: that's illegal conduct. We can take the pen, and it's
Speaker 9: no defense for you to say that you are using
Speaker 9: it to write.
Speaker 1: Previously, Commissioner A.
Speaker 2: Fraschiut, you'll here this morning, thank you for joining us.
Speaker 2: We'll catch up soon, SAC Commissioner.
Speaker 5: Friend and Carr.
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