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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: noon and five pm Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: You're now six and a half weeks into the Trump administration.

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Speaker 2: Keeping in mind, this is a president who, during the

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Speaker 2: first term of his presidency liked to use the stock

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Speaker 2: market as a barometer of how he's doing. The barometer

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Speaker 2: right now probably isn't sending ultra positive signals, though, and

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Speaker 2: this is actually something that was asked of the Press

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Speaker 2: Secretary Caroline Levitt during a briefing yesterday.

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Speaker 3: President Trump has made clear, Caroline, but he loves tariffs,

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Speaker 3: but the stock market does not.

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Speaker 4: How does he factor that into his decision making.

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Speaker 5: I think for folks on Wall Street who may be concerned,

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Speaker 5: look at what this president did for you in his

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Speaker 5: first term. Wall Street boomed, stock market boomed. The president

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Speaker 5: expects that to happen again. But most importantly, Main Street

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Speaker 5: is going to boom. And that's why the president has

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Speaker 5: this whole of government economic approach, which includes tax cuts, tariffs,

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Speaker 5: regulation cuts in an energy industry that will bring down

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Speaker 5: costs for American consumers.

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Speaker 4: Well, it just isn't happening yet.

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Speaker 3: Markets have taken us on quite a round trip back

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Speaker 3: in time to before the election. And that's where we

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Speaker 3: start our conversation with Michael McKee, Bloomberg's International Economics and

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Speaker 3: Policy correspondence with us from World Headquarters in New York. Michael,

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Speaker 3: of course, you're forte is the economy. You can speak

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Speaker 3: to the data today, whether it's the trade gap, whether

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Speaker 3: it's challenger jobs. You know, the federal workers are going

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Speaker 3: to start showing up in the jobs reports at some point,

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Speaker 3: even if it's not in the monthly reading tomorrow. But

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Speaker 3: what happened to animal spirits? I thought Wall Street was

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Speaker 3: excited for this.

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Speaker 4: That's a good question.

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Speaker 6: I think basically where we are now is that the

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Speaker 6: market got way ahead of itself and pe ratio went

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Speaker 6: way up, and people started getting nervous about the possibility

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Speaker 6: of something that would send the market lower. We had

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Speaker 6: some disappointing earnings numbers from some of the biggest tech companies,

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Speaker 6: and then you start to pile on all this other stuff,

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Speaker 6: and people who are looking for black clouds are finding

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Speaker 6: them on the horizon, and we certainly got some today

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Speaker 6: With the economy. You mentioned the Challenger numbers. One hundred

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Speaker 6: and twenty two thousand extra job cuts announced. Doesn't mean

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Speaker 6: they'll all take place, but it caught Wall Street's attention,

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Speaker 6: and we've had some other slow economic numbers this week,

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Speaker 6: especially on the labor market front. So there's kind of

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Speaker 6: a feeling out there that maybe this is a time

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Speaker 6: when the economy is going to slow and that will

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Speaker 6: push the markets down.

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Speaker 2: But to Joe's point about when the reference date actually

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Speaker 2: is for the jobs report, we're going to get tomorrow.

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Speaker 2: Despite what we've seen in the Challenger figures, I believe

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Speaker 2: that was up one hundred and three percent from the

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Speaker 2: same levels last year. The DOGE cuts to the federal

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Speaker 2: workforce are not going to really be evident in tomorrow's data, right, Mike.

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Speaker 6: Now, if you remember, Kaylee, the Valentine's Day president that

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Speaker 6: a lot of people in the federal government got from

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Speaker 6: the administration was a notice that they were being fired.

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Speaker 6: But that was the fourteenth, and that was the last

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Speaker 6: day of the data survey period for the BLS in

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Speaker 6: the month of February, So we're not going to really

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Speaker 6: see a huge impact from what's happened since then you'll

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Speaker 6: get a much bigger impact in the March numbers when

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Speaker 6: we get to April. So tomorrow could be sort of

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Speaker 6: a headfake in the sense that we may get relatively

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Speaker 6: solid growth. And historically February is a reasonably strong month,

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Speaker 6: seasonal month for job growth. So if that is the case,

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Speaker 6: then maybe we see the markets rebound a little bit tomorrow.

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Speaker 6: But as you mentioned at the top of the show,

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Speaker 6: it's all the back and forth that's really making people

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Speaker 6: crazy this point.

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Speaker 3: So what is the thought at the moment here among

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Speaker 3: economists on tariffs? And I'll I guess i'lask again in

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Speaker 3: five minutes maybe when this changes.

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Speaker 4: But we woke up to a.

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Speaker 3: World this morning where there maybe wouldn't be all that

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Speaker 3: many terriffs.

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Speaker 4: The USMCA was there for a reason.

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Speaker 3: I guess we'll acknowledge that with Mexico, we've already got

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Speaker 3: autos carved out.

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Speaker 4: With Canada. Is this getting better.

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Speaker 7: Better?

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Speaker 6: Being a relative term, it is fair enough getting a

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Speaker 6: little lighter, put it that way. And now you know

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Speaker 6: he said he told President Sheenbauma Mexico that they're not

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Speaker 6: going to tear off anything that is covered under US

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Speaker 6: MCA because Mexico doesn't tear of US under that and

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Speaker 6: the same would be true for Canada. Although he hasn't

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Speaker 6: announced it yet, there seems to be some sort of

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Speaker 6: additional animus with the with the Canadians. But the problem

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Speaker 6: is he's still talking about and his spokesmen are still

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Speaker 6: talking about the idea of major tariffs coming on in

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Speaker 6: the future, particularly this April second date. Howard Lutnik was

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Speaker 6: out today talking about these are what we have now

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Speaker 6: is just teentanyl related and the big tariffs are coming

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Speaker 6: on April second. Scott Bessant the short time ago saying

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Speaker 6: we're looking for the tariffs on April second to raise

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Speaker 6: a lot of revenue. And so you can't plan. You

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Speaker 6: just have to assume that something's going to happen and

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Speaker 6: you don't know what.

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Speaker 2: Well, you might not be able to plan, but maybe

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Speaker 2: importers are able to hedge. I think that's what's evident

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Speaker 2: in the trade balance data we got today. As I

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Speaker 2: mentioned the deficit widening to a record, is the value

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Speaker 2: of imports in January mic rows ten percent. What does

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Speaker 2: that indicate about where inventories will be. Assuming these tariffs

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Speaker 2: are ultimately implemented, and if they stick around for some time,

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Speaker 2: how long will it be until companies actually have to

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Speaker 2: start eating the costs of those imported goods given everything

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Speaker 2: they tried to buy in advance, Well, most.

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Speaker 6: Of the buying in advance seems to have been in

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Speaker 6: industrial supplies, things that go into making other things, and

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Speaker 6: so it maybe a little while. Metal products were a

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Speaker 6: big category there, and that could imply metal products coming

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Speaker 6: in from Canada that go into cars, and so maybe

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Speaker 6: some of these dire predictions of how high car prices

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Speaker 6: could go will be held off for a while. But

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Speaker 6: they're also there was also a rise in consumer goods.

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Speaker 6: Now it's not clear which kind yet, we don't know

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Speaker 6: whether they meant bringing in clothing or toys or just

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Speaker 6: what Those are lower dollar dollar values, so they may

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Speaker 6: not have as much of an impact, but you're right

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Speaker 6: it may postpone some of the pain for some time.

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Speaker 6: Although when you talk to FED officials, as we talked

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Speaker 6: to John Williams from the New York Fed earlier this week,

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Speaker 6: so companies are saying they're prepared to take advantage of

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Speaker 6: this if prices for their inputs go up, they're going

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Speaker 6: to raise prices on American consumers.

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Speaker 2: So we have that to look forward to, going to

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Speaker 2: try to flex that pricing power. Bloomberg's Michael McKee, thank

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Speaker 2: you so much. Of course, we'll be hearing more from

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Speaker 2: the fedis in the aftermath of tomorrow's jobs report too.

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Speaker 2: When Jerome Pale speaks tomorrow, certainly a conversation will all

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Speaker 2: be listening for, and we'll have it on Bloomberg TV

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Speaker 2: and radio. But joining us right now on Bloomberg, I'm

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Speaker 2: pleased to stay on balance of power. From Capitol Hills,

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Speaker 2: Republican Congressman Ryan Mackenzie, who represents Pennsylvania's seventh district congressman,

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Speaker 2: thank you for joining Joe Matthew and myself. I would

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Speaker 2: love to know your reaction to the pullback. It seems

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Speaker 2: we're already getting to tariffs that were implemented just days ago.

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Speaker 2: What good does this chaos serve for American companies and

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Speaker 2: American consumers?

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Speaker 8: Yeah, well, I think it's important that we shouldn't take

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Speaker 8: tariffs off the table. They are an important tool in

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Speaker 8: our toolbox of economic policy across the country. For far

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Speaker 8: too long, they've actually been ruled out, and so I

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Speaker 8: think it's appropriate that you put them on the table.

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Speaker 9: Now.

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Speaker 8: We are going through the negotiation process, which there always

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Speaker 8: will be ups and downs. We've seen the reaction from

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Speaker 8: the Mexican gut president recently saying that she appreciates the

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Speaker 8: pull back in the tariffs because they're going to continue

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Speaker 8: to work on things. Ultimately, the goal is to make

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Speaker 8: sure that we actually do bring down these barriers that

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Speaker 8: are impeding the flow of goods out of America, hurting

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Speaker 8: American manufacturers, bring down those barriers for everybody across the board,

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Speaker 8: and if we can get that reciprocal agreement, that'll actually

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Speaker 8: be something that will be long term more beneficial for

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Speaker 8: American consumers.

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Speaker 3: In the meantime, Congressman, and welcome to Bloomberg. What should

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Speaker 3: be the message to the markets here we're dealing with

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Speaker 3: massive uncertainty in a stock market that has round tripped.

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Speaker 3: We're all the way back now to where we were

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Speaker 3: before the election. Is the message just hang on a

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Speaker 3: little while better times are coming.

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Speaker 10: Yeah.

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Speaker 8: I think the message is that we do have to

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Speaker 8: show some caution and restraint when we're making these wild moves.

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Speaker 8: I think it's a little premature, and so you know,

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Speaker 8: I heard recently talk about a potential recession. I was

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Speaker 8: asked a question about that. That is a long term

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Speaker 8: two quarters of negative GDP growth. We haven't even seen

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Speaker 8: that yet happening in one quarter. So I think people

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Speaker 8: just need to slow down. I think there are fluctuations,

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Speaker 8: a lot of that we know is driven by uncertainty.

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Speaker 8: We understand that, and so in Congress we're looking to

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Speaker 8: take swift action. We have a budget that is going

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Speaker 8: to start moving next week to meet the March fourteenth deadline.

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Speaker 8: Also with reconciliation, we took that critical first step recently

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Speaker 8: here in Congress, and we want to make sure that

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Speaker 8: we get these things done as quickly as possible so

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Speaker 8: that we can bring back certainty to the markets, show

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Speaker 8: them that Congress can operate on these critical issues that

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Speaker 8: are important for the American economy, American workers and actually

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Speaker 8: get some results and help our entire country. So we

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Speaker 8: want to make sure that we're doing that as quickly

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Speaker 8: as possible. You've seen that action here in Congress from

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Speaker 8: Speaker Johnson. When people said it was not going to

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Speaker 8: be possible to get that first piece of legislation through

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Speaker 8: the House, we were able to do it now it's

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Speaker 8: in the Senate, and those negotiations are going to happen.

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Speaker 8: So I think urging and so showing restraint, saying don't

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Speaker 8: move too quickly one direction or the other. Continue forward.

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Speaker 8: There are a lot of positive economic indicators out there,

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Speaker 8: and when I talk anecdotally to businesses all across our economy,

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Speaker 8: people are saying that they're still very optimistic about America's future,

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Speaker 8: and so they want to move forward. I think the

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Speaker 8: presidency with Donald Trump was a huge boon to business

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Speaker 8: because they were concerned that if Kamala Harris was in there,

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Speaker 8: they were going to have significant pressure coming from the

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Speaker 8: government in all kinds of areas. So that optimism is

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Speaker 8: still out there. I'm not discouraged at all. So I

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Speaker 8: think we just need to wait for tomorrow's job numbers

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Speaker 8: and continue to hold tight on the tariffs.

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Speaker 2: On the steel industry, in particular in your state of Pennsylvania.

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Speaker 2: What are you hearing from them, because we are expecting

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Speaker 2: tariffs on steel and aluminum to go into effect next week.

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Speaker 8: Absolutely, So look what we're hearing is that people actually

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Speaker 8: do tout and credit some past terrrifaction for maintaining that

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Speaker 8: activity here in Pennsylvania, and so that is rightfully, so,

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Speaker 8: we've seen China dumping their products into the market for years,

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Speaker 8: and this was one way to guard against that. Obviously,

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Speaker 8: they've taken routes to get around some of those tariffs,

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Speaker 8: and we want to make sure that we are continuing

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Speaker 8: to protect not only industries that are critical to America's economy,

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Speaker 8: but also to our national security. And steel and aluminum

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Speaker 8: are two of those industries. We cannot have people like

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Speaker 8: China dumping products in purely not just undercut the wages,

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Speaker 8: but actually to discourage American activity in an American investment

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Speaker 8: in national security related industries. So again, we need to

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Speaker 8: make sure that we have that protection in place we're

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Speaker 8: appropriate so that we can actually have a strong American economy.

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Speaker 3: Well, Congressman, our viewers and listeners should know you represent

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Speaker 3: the seventh Congressional district of Pennsylvania that's home to Allentown, Bethlehem.

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Speaker 3: Bethlehem Steel closed a lot of years ago. Well, tariffs

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Speaker 3: like these help to preserve the industry in your district.

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Speaker 4: Is that your point?

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Speaker 8: Well, what I would say is, again there are reasonable

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Speaker 8: applications of tariffs again to protect industries when somebody is

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Speaker 8: dumping a product I think is a reasonable approach when

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Speaker 8: somebody is doing something to impact negatively our national security

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Speaker 8: also appropriate. And so what we are looking for ultimately

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Speaker 8: is long term not only free trade, but we want

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Speaker 8: fair trade. And so many of these instances with our allies,

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Speaker 8: they have been imposing tariffs on us, hurting American producers

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Speaker 8: for many years, stopping the flow of our goods going

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Speaker 8: into their country. And so what we want to see

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Speaker 8: is we want to see these barriers come down across

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Speaker 8: the markets for all of our allies, and ultimately that

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Speaker 8: will help American producers. So I think it's a little

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Speaker 8: bit of a red flag or red herring that is

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Speaker 8: put out there when people say that this is directly

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Speaker 8: going to hurt Americans by putting these tariffs on. I question,

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Speaker 8: why then, does somebody like Justin Trudeau in Canada say

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Speaker 8: that they're going to take reciprocal action by increasing tariffs.

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Speaker 8: That defies logic that they would be doing something in

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Speaker 8: response that would be a negative impact in hurting their

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Speaker 8: home consumers as well. But what this is about is

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Speaker 8: a negotiation that we are going through right now. I

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Speaker 8: think it is long overdue that we have this discussion

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Speaker 8: in conversation, because ultimately, we want our goods to go

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Speaker 8: into other markets without those kind of barriers. We want

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Speaker 8: there to be low tariffs that would help American producers,

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Speaker 8: would create American jobs, which would raise American wages as well.

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Speaker 8: So ultimately we're going to get there, but this process

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Speaker 8: is a negotiation.

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Speaker 2: And Congressmen, on a separate note, given your seat on

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Speaker 2: the Committee on Education and the Workforce, there had been

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Speaker 2: reporting today that the President this afternoon could sign an

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Speaker 2: executive order for the dismantling of the Department of Education.

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Speaker 2: The White House has pushed back on that notion a bit,

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Speaker 2: but fundamentally, is that a job for the President of

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Speaker 2: the United States or should that be left to you

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Speaker 2: and your colleagues.

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Speaker 8: In Yeah, so that would be something that should come

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Speaker 8: through Congress. So we've heard the same reports, haven't seen

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Speaker 8: the actual language on something like that if it's even

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Speaker 8: going to happen. So again, ultimately that should reside in Congress,

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Speaker 8: and we're going to make sure that on education in

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Speaker 8: the workforce, we do everything that we possibly can to

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Speaker 8: protect American workers, promote education, skills, trainings, workforce development. We

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Speaker 8: need all of that in this era because as markets

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Speaker 8: are transitioning. We want to make sure that our workers

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Speaker 8: and our economy is best suited to compete globally.

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Speaker 3: Congressman, we've only got a minute left. I don't want

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Speaker 3: to set you up to have to cut you off,

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Speaker 3: but we're nine days out. Will we avoid a government shutdown?

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Speaker 3: Will you have the cooperation of your full conference and

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Speaker 3: maybe a couple Democrats to keep the lights on.

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Speaker 8: I'm confident that we are going to avoid a shutdown,

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Speaker 8: And the reason for that is because I think, as

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Speaker 8: we just talked, when changes are being made via executive

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Speaker 8: action in executive order, in many instances, those are things

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Speaker 8: that actually need to be put into LEDGIS. So right

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Speaker 8: now where we are as a conference is that we

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Speaker 8: believe any of these changes that need to be done legislatively,

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Speaker 8: that takes a lot of time. So we need to

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Speaker 8: slow down on some of those things and ultimately give

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Speaker 8: ourselves the breathing room the ability to put that into

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Speaker 8: a budget if we choose to do that in September

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Speaker 8: or the end of the year, and so a continuing

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Speaker 8: resolution would bridge that gap get us to that point

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Speaker 8: later in the year where we could make those decisions.

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Speaker 8: So again, I think We're going to avoid the shutdown

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Speaker 8: now and then consider Thomas Horn.

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Speaker 3: Ryan mackenzie, Republican from Pennsylvania. Come see us again. This

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Speaker 3: is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch

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Speaker 1: us live weekdays at noon and five pm Eastern on

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Speaker 1: Apple Cockley and Android Auto with the Bloomberg Business App.

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Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven

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Speaker 1: thirty over.

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Speaker 2: We are live in Washington, where things are changing fast,

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Speaker 2: at least when it comes to the narrative around tariffs.

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Speaker 2: As yes, President Trump has said at least until April second,

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Speaker 2: Mexico and goods under the USMCA agreement will be exempt

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Speaker 2: from the twenty five percent tariff that was just implemented

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Speaker 2: on Tuesday, as he talked about Tuesday night. But he

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Speaker 2: also on Tuesday night reiterated that April second is still

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Speaker 2: the date that reciprocal tariffs will go into place, which

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Speaker 2: is why Mexico's reprieve could end up being short lived.

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Speaker 2: And who knows at this point about Canada. But on

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Speaker 2: the subject of what we heard from the President Tuesday night,

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Speaker 2: his voice. Of course, Joe was not the only one

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Speaker 2: that was heard in the House chamber during that addressed

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Speaker 2: to a joint session of Congress. At times there were

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Speaker 2: boos and shouts of lives from Democrats, but none more

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Speaker 2: vocal than Democratic Congressman Al Green of Texas, who actually

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Speaker 2: had to be escorted from the House floor.

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Speaker 3: Yeah, he was thrown out of the House and now

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Speaker 3: censured formally, which is a pretty remarkable moment. Going back

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Speaker 3: to Joe, Wilson was not formally censured. There was a

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Speaker 3: reprimand following the ulied moment, but people were really upset

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Speaker 3: about this. And the part that's got my attention is

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Speaker 3: less the outcome of the vote, more the fact that

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Speaker 3: ten Democrats.

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Speaker 4: Voted for censure.

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Speaker 3: Here now Democrats, or some of them, are at least

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Speaker 3: just singing we shall overcome in the well of the

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Speaker 3: Senate while Tom Swazi, Marie Glusen Camp, several others.

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Speaker 4: Here, Jim Himes, Jim Heins.

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Speaker 3: Tommy Barras surprised me a little bit, but in some cases,

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Speaker 3: looking to make a point, Kaylee, they thought the protest

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Speaker 3: was inappropriate.

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Speaker 2: Yeah, keeping in mind the Democratic leadership had signaled to

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Speaker 2: members in advance of Trump's address that they needed to

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Speaker 2: keep their cool. Remained stoic as the President spoke clearly

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Speaker 2: that is not actually the outcome that we saw.

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Speaker 3: Well, we're not going to do the whole panel on this,

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Speaker 3: but we do want to get our panelist view here

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Speaker 3: because it just happened. John Seaton, a Republican strategist, is

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Speaker 3: back with us today CEO founder Echo Canyon Consulting, alongside

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Speaker 3: Brad Howard, the force behind the Corcoran Street Group here

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Speaker 3: are democratic strategist.

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Speaker 4: Great to have both of you, gentlemen with us here.

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Speaker 3: Brad talked to me ten Democrats, what were they thinking

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Speaker 3: when they voted to CenTra al Did this need to happen?

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Speaker 7: No? No, the cincher did not need to happen.

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Speaker 11: I mean, it's ridiculous because of what we saw when

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Speaker 11: Biden was president. Uh and you know, between Marjorie Taylor

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Speaker 11: Green and Lauren Bobert and going on all the way

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Speaker 11: back to Joe Wilson, you know, uh, he's just outrageous

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Speaker 11: and Marie and uh, Marjorie Taylor Green did it several

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Speaker 11: times throughout Biden's speech, and the last one. It wasn't

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Speaker 11: just like a one off thing. So No, the center

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Speaker 11: did not need to happen. But however, if I were

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Speaker 11: a chieve of staff to a moderate blue dog member

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Speaker 11: of Congress or a new DIM, I would have said, yes,

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Speaker 11: vote to censure, like because you shouldn't do that, and

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Speaker 11: like the Democrats have got to have a reconcilt, Like

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Speaker 11: we've got to reconcile if we're gonna be the party

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Speaker 11: that's consistently defending kind of like the not morallity, but

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Speaker 11: like the kind of good behavior, the professionalism and being

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Speaker 11: members of Congress of you know, what the Republicans are

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Speaker 11: doing is shredding decency and et cetera.

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Speaker 7: Then we've got to call out things like this.

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Speaker 11: And when you look at it in a vacuum, did

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Speaker 11: he do something he shouldn't have done?

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Speaker 7: Yes?

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Speaker 11: Did he stop when they asked him to do? No,

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Speaker 11: Therefore he was removed and should be censured. And Mike,

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Speaker 11: I get that that's unpopular thing on the left because

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Speaker 11: of the hypocrisy, but like you've got to take these

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Speaker 11: things at the moment in time.

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Speaker 7: It's a political game, like it's you know, and like,

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Speaker 7: don't do that again. M hmm.

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Speaker 2: Happen well, And regardless of the reason though John our

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Speaker 2: censure is getting a little too popular in the modern

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Speaker 2: day House of Representatives.

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Speaker 12: You know, I I do think that it loses its

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Speaker 12: its impact or its import after after it's kind of

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Speaker 12: used as a tool so much. And and the one

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Speaker 12: thing I think maybe some people myself included forgot about

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Speaker 12: a President Trump is that things move so fast. I'm

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Speaker 12: guessing that Congressman Green, this censure, et cetera will be

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Speaker 12: will be forgotten in in in very short course. Having

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Speaker 12: said that, I mean, I do believe the bread. I

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Speaker 12: agree with Brad that it's it's difficult. Democrats are in

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Speaker 12: a difficult position. And look, I've been on the other

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Speaker 12: side of a trifectus, so it can be very very

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Speaker 12: challenging when you're the minority party to kind of figure

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Speaker 12: out the right way to respond to policies and actions

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Speaker 12: that you strongly disagree with. But if Democrats really do

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Speaker 12: want to be the party that is at the kind

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Speaker 12: of the party of norms and of governance, I think

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Speaker 12: they really do need to do what they can to

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Speaker 12: kind of shut down the kind of behavior that we

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Speaker 12: saw on Tuesday night.

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Speaker 3: Well, the fact of the matter is they'll probably be

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Speaker 3: raising money on it, probably already is because that's what

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Speaker 3: Center does.

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Speaker 4: For you now, it makes you money.

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Speaker 3: I want to ask you both about the budgeting process

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Speaker 3: that's underway right now in the presence of Elon Musk.

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Speaker 3: He was on the Hill to meet with members of

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Speaker 3: both chambers yesterday and we spoke with a Senator Capito,

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Speaker 3: Shelley Moore, Capito, Republican from West Virginia. Following her luncheon

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Speaker 3: on the Senate side with Elon Musk, he then had

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Speaker 3: dinner with House members.

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Speaker 4: Here's what she said.

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Speaker 13: We just had lunch and Elon Musk was there, and

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Speaker 13: if you listen to him, logically talk about some of

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Speaker 13: the waste, fraud, and abuse that they found in systems

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Speaker 13: such to Social Security, where fifteen people are getting paid

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Speaker 13: off the same number, or fifteen checks are being sent

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Speaker 13: off the same number, things that are make total common sense.

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Speaker 13: This is where I think DOGE has been extremely helpful

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Speaker 13: and will continue to be and even more so.

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Speaker 3: Brand I'll tell you though, you look at the wall

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Speaker 3: of receipts and the trophies keep coming down, and I

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Speaker 3: wonder if they've found enough money to save to make

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Speaker 3: a difference in legislation. We don't even have to debate

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Speaker 3: the doge or the authority of Elon Musk or the

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Speaker 3: rest of it. Will they have the goods to help

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Speaker 3: save money this budget season?

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Speaker 11: Well, look, let's be clear why they want to save

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Speaker 11: money here. They want to save money so they can

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Speaker 11: cut federal services for that people depend on to give

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Speaker 11: tax cuts two billionaires. That's the whole point. We're trying

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Speaker 11: to find these savings. But keep in mind, like the

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Speaker 11: issue here is not I think what a lot of

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Speaker 11: Democrats are frustrated by, and I'd say a lot of

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Speaker 11: you're starting to see it at town halls from the

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Speaker 11: average Americans too. It's not that they're cutting spending though

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Speaker 11: I think there are some Democrats that oppose that, don't

440
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Speaker 11: get me wrong, But I think a bulk of the

441
00:22:04,280 --> 00:22:06,320
Speaker 11: bulk of Americans that were said about it, how they're

442
00:22:06,359 --> 00:22:09,720
Speaker 11: doing it when you're gutting things like closing Social Security

443
00:22:09,720 --> 00:22:13,560
Speaker 11: offices and gutting VA benefits. Uh. You know, the people

444
00:22:13,560 --> 00:22:16,080
Speaker 11: that benefited the most from DEI hiring policy in the

445
00:22:16,160 --> 00:22:18,879
Speaker 11: federal government were veterans. If you're a veteran, you bumped

446
00:22:18,920 --> 00:22:22,080
Speaker 11: to the front bury top of the pack of the

447
00:22:22,119 --> 00:22:25,879
Speaker 11: pole of resumes because you have you come with the

448
00:22:25,880 --> 00:22:26,600
Speaker 11: security clearance.

449
00:22:26,640 --> 00:22:28,040
Speaker 7: Typically you've been had of review.

450
00:22:28,080 --> 00:22:29,919
Speaker 11: You you know, they have a lot about your information

451
00:22:29,920 --> 00:22:32,160
Speaker 11: about you already, and you come with a specific skill

452
00:22:32,200 --> 00:22:34,400
Speaker 11: set and you understand government, so you're a great hire.

453
00:22:34,720 --> 00:22:37,199
Speaker 11: A ton of veterans got laid off and is that

454
00:22:37,240 --> 00:22:38,840
Speaker 11: really the people we want to And even.

455
00:22:38,680 --> 00:22:41,120
Speaker 7: The White House advisor she said.

456
00:22:40,880 --> 00:22:43,600
Speaker 11: That they're questioning whether or not they even have the

457
00:22:43,640 --> 00:22:46,399
Speaker 11: capability or capacity to have a job at this moment,

458
00:22:46,440 --> 00:22:49,919
Speaker 11: which was incredibly insulting for veterans across the country. And

459
00:22:49,920 --> 00:22:53,000
Speaker 11: by the way, veterans come from their service with this

460
00:22:53,119 --> 00:22:56,520
Speaker 11: stigma that they're not quite adjusting to the private sector,

461
00:22:56,560 --> 00:22:59,320
Speaker 11: which is part of the hurls they have in getting jobs,

462
00:22:59,320 --> 00:23:02,000
Speaker 11: which is why the federal government said, if the private

463
00:23:02,000 --> 00:23:02,960
Speaker 11: sector won't hire, you.

464
00:23:02,880 --> 00:23:03,560
Speaker 7: Come to us.

465
00:23:03,960 --> 00:23:07,120
Speaker 11: And so you've got it's a mess there how you're

466
00:23:07,160 --> 00:23:09,239
Speaker 11: supposed to respond to these doze emails and job things.

467
00:23:09,280 --> 00:23:11,239
Speaker 11: I got a buddy that works with FBI. He's like,

468
00:23:11,440 --> 00:23:13,440
Speaker 11: it's so funny to watch. We'll get the elon Musk

469
00:23:13,440 --> 00:23:15,639
Speaker 11: email and then next we'll get the cash Betel email

470
00:23:15,840 --> 00:23:17,920
Speaker 11: and then like it's just a mess. I don't think

471
00:23:17,960 --> 00:23:21,080
Speaker 11: anyone thinks this process has been efficient. I get they're

472
00:23:21,080 --> 00:23:23,760
Speaker 11: trying to get efficiencies, but we haven't seen it yet.

473
00:23:23,800 --> 00:23:25,280
Speaker 11: And by the way, you can't trust the numbers they're

474
00:23:25,320 --> 00:23:27,800
Speaker 11: putting out. They're claiming eight billion when it was eight million.

475
00:23:28,000 --> 00:23:31,440
Speaker 11: They're claiming people were on the payroll getting Social Security

476
00:23:31,560 --> 00:23:33,679
Speaker 11: when they were two hundred, even though they were in

477
00:23:33,720 --> 00:23:36,320
Speaker 11: the row rosters. There's an automatic cutoff at one hundred

478
00:23:36,320 --> 00:23:39,000
Speaker 11: and twenty five. So like, they're kind of misrepresenting a

479
00:23:39,000 --> 00:23:40,399
Speaker 11: lot of stuff here. And when you don't have an

480
00:23:40,400 --> 00:23:44,280
Speaker 11: independent or other branch of government confirming this information, which

481
00:23:44,320 --> 00:23:48,119
Speaker 11: is what Congress typically does, or to inspector general or GAO,

482
00:23:48,440 --> 00:23:50,240
Speaker 11: then we're just having to take their word for it.

483
00:23:50,280 --> 00:23:53,720
Speaker 11: And already they're full of inaccuracies and misstatements and lies.

484
00:23:54,040 --> 00:23:56,200
Speaker 7: So, you know, I don't know what to think here.

485
00:23:56,240 --> 00:23:59,760
Speaker 11: I welcome efficiencies, obviously, but this process has been anything

486
00:23:59,760 --> 00:24:00,440
Speaker 11: but efficient.

487
00:24:01,800 --> 00:24:03,920
Speaker 2: Well in the process, John is running into a little

488
00:24:03,920 --> 00:24:07,080
Speaker 2: bit of a headwind. Headwind in our judicial system. You

489
00:24:07,119 --> 00:24:10,040
Speaker 2: look at the Supreme Court ruling on usaid from yesterday,

490
00:24:10,080 --> 00:24:13,160
Speaker 2: in which Chief Justice John Roberts and Conservative Justice Amy

491
00:24:13,160 --> 00:24:16,679
Speaker 2: Coney Barrett ruled against the administration. We're seeing plenty of

492
00:24:17,200 --> 00:24:21,840
Speaker 2: DOGE oriented or forcing DOGE pauses or rulings that it's

493
00:24:21,880 --> 00:24:24,560
Speaker 2: not following the law in the lower courts as well.

494
00:24:24,560 --> 00:24:26,120
Speaker 2: And we know that one of the things that senators

495
00:24:26,119 --> 00:24:28,199
Speaker 2: shared in the room with Elon Musk yesterday is that

496
00:24:28,240 --> 00:24:31,520
Speaker 2: he needs Congress to implement some of these cuts. He

497
00:24:31,560 --> 00:24:33,720
Speaker 2: cannot do it alone or he's going to run into

498
00:24:33,760 --> 00:24:35,399
Speaker 2: court challenges. Do you think there's going to be a

499
00:24:35,440 --> 00:24:38,879
Speaker 2: recognition of that in the administration moving forward. Are they

500
00:24:39,160 --> 00:24:41,159
Speaker 2: just going to keep plowing ahead and leaving it up

501
00:24:41,200 --> 00:24:42,400
Speaker 2: to the judges to decide.

502
00:24:43,240 --> 00:24:43,280
Speaker 10: No.

503
00:24:43,400 --> 00:24:45,840
Speaker 12: Look, I think the ultimate goal is going to stay

504
00:24:45,840 --> 00:24:49,040
Speaker 12: the same, which is to find efficiencies to remove waste,

505
00:24:49,080 --> 00:24:52,840
Speaker 12: fraud and abuse to ultimately save American taxpayers money in

506
00:24:52,920 --> 00:24:55,200
Speaker 12: areas where there is perceived to be an overreach, there

507
00:24:55,240 --> 00:24:58,040
Speaker 12: is a judicial system in place, there is a Republican

508
00:24:58,040 --> 00:25:00,920
Speaker 12: majority in Congress. So I do think that progress will

509
00:25:00,960 --> 00:25:04,600
Speaker 12: continue to be made to find some of these kind

510
00:25:04,600 --> 00:25:08,680
Speaker 12: of egregious examples of waste fraud and brute abuse.

511
00:25:09,000 --> 00:25:10,120
Speaker 11: And listening to.

512
00:25:10,960 --> 00:25:15,360
Speaker 12: You know, democratic members of Congress and senators talk negatively

513
00:25:15,400 --> 00:25:17,359
Speaker 12: about this and say, at the same time, while we

514
00:25:17,400 --> 00:25:20,400
Speaker 12: all want efficiency, that's fine, but when there was a

515
00:25:20,440 --> 00:25:24,159
Speaker 12: democratic trifecta not that long ago. I don't recall a

516
00:25:24,160 --> 00:25:26,439
Speaker 12: whole lot of actions being taken to look for some

517
00:25:26,480 --> 00:25:28,760
Speaker 12: of these inefficiencies to look for some of this waste,

518
00:25:28,800 --> 00:25:31,960
Speaker 12: frauden abuse, and so yeah, Elon Musk is very very aggressive.

519
00:25:31,960 --> 00:25:32,840
Speaker 14: He's a very very.

520
00:25:32,680 --> 00:25:35,359
Speaker 12: Smart guy, and he is going to you know, push

521
00:25:35,400 --> 00:25:38,080
Speaker 12: as far as he possibly can. Where checks are needed,

522
00:25:38,119 --> 00:25:40,280
Speaker 12: those will come into you know, will come into place.

523
00:25:40,480 --> 00:25:42,000
Speaker 12: But I think the goal is ultimately going to stay

524
00:25:42,000 --> 00:25:43,640
Speaker 12: the same, and I don't think DOGE as a concept

525
00:25:43,680 --> 00:25:45,840
Speaker 12: is going anywhere as long as President Trump is in office.

526
00:25:47,080 --> 00:25:52,880
Speaker 3: Remarkable headline here is the the GSA brad pulls more

527
00:25:52,920 --> 00:25:55,919
Speaker 3: than four hundred and forty real estate sites off the

528
00:25:55,960 --> 00:25:58,639
Speaker 3: market that had been put up for sale, some of

529
00:25:58,680 --> 00:26:01,639
Speaker 3: them clearly should not have been on the list, as

530
00:26:01,720 --> 00:26:02,680
Speaker 3: Bloomberg reports.

531
00:26:02,720 --> 00:26:03,640
Speaker 4: The inventory of.

532
00:26:03,600 --> 00:26:09,400
Speaker 3: Properties included a specialized satellite facility for Noah, a three

533
00:26:09,480 --> 00:26:12,199
Speaker 3: million square foot FDI research lab and this is a

534
00:26:12,240 --> 00:26:14,359
Speaker 3: new one in Northern Virginia campus. I don't know if

535
00:26:14,400 --> 00:26:18,120
Speaker 3: you saw this, Kayley that does not appear in federal

536
00:26:18,160 --> 00:26:23,040
Speaker 3: property records because of its association and use by the CIA.

537
00:26:23,560 --> 00:26:28,439
Speaker 3: They apparently outed a black op site in northern Virginia. Brad,

538
00:26:28,480 --> 00:26:30,520
Speaker 3: what should be the fallout from this?

539
00:26:32,640 --> 00:26:35,000
Speaker 11: Well, I mean, this is my point, right, just like

540
00:26:35,359 --> 00:26:37,600
Speaker 11: it's sloppy, it's the best. The The reason and the

541
00:26:37,640 --> 00:26:41,280
Speaker 11: two reasons are going this fast, right is because number one,

542
00:26:41,520 --> 00:26:44,040
Speaker 11: they've got to get the savings ahead of the end

543
00:26:44,040 --> 00:26:45,760
Speaker 11: of the fiscal year so they can give them, they

544
00:26:45,800 --> 00:26:49,080
Speaker 11: can pull these services and give them to billionaires. And

545
00:26:49,119 --> 00:26:50,960
Speaker 11: they've got to do that by September thirtieth, that's the

546
00:26:51,040 --> 00:26:56,439
Speaker 11: end of the fiscal year. And conversely, his special Elon

547
00:26:56,520 --> 00:26:59,240
Speaker 11: Musk's special employment designation runs out I think in like

548
00:26:59,240 --> 00:27:01,600
Speaker 11: one hundred and third and twenty days, so he's got

549
00:27:01,600 --> 00:27:02,600
Speaker 11: to finish it before that.

550
00:27:03,119 --> 00:27:05,080
Speaker 7: But this, look, this.

551
00:27:05,160 --> 00:27:09,320
Speaker 11: Is why there are processes in place to review these things.

552
00:27:09,400 --> 00:27:11,920
Speaker 7: This is why the cuts typically take a long time.

553
00:27:12,280 --> 00:27:16,000
Speaker 11: Is because there's so many sensitivities to Americans personal and

554
00:27:16,040 --> 00:27:21,160
Speaker 11: private data, to our nation's secrets, to all this stuff.

555
00:27:21,200 --> 00:27:23,040
Speaker 11: We've got to keep in mind that when you rush

556
00:27:23,080 --> 00:27:25,640
Speaker 11: through and you're letting twenty two year olds run the thing,

557
00:27:26,000 --> 00:27:28,800
Speaker 11: they don't have the capacity to understand that and take

558
00:27:28,840 --> 00:27:31,200
Speaker 11: it all into account, all.

559
00:27:31,160 --> 00:27:34,120
Speaker 2: Right, Brad Howard and John Seaton, our political panel today.

560
00:27:34,160 --> 00:27:36,359
Speaker 2: Thank you both so much for joining us on this

561
00:27:36,440 --> 00:27:38,560
Speaker 2: Thursday in which we're seeing a deep cell off in

562
00:27:38,600 --> 00:27:41,000
Speaker 2: the equity market. Stocks now at the lowest level since

563
00:27:41,040 --> 00:27:44,320
Speaker 2: before election Day. We'll have more on that ahead on Bloomberg.

564
00:27:47,680 --> 00:27:51,160
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

565
00:27:51,200 --> 00:27:54,240
Speaker 1: us live weekdays at noon and five pm Eastern on

566
00:27:54,359 --> 00:27:57,600
Speaker 1: almal Cockley and Android Otto with the Bloomberg Business app.

567
00:27:57,800 --> 00:28:01,000
Speaker 1: Listen on demand wherever you get your podcast, or watch

568
00:28:01,119 --> 00:28:02,280
Speaker 1: us live on YouTube.

569
00:28:03,760 --> 00:28:06,520
Speaker 2: I am, indeed Kaylee lines alongside Joe Matthew in Washington

570
00:28:06,560 --> 00:28:09,480
Speaker 2: where we are closely following the story on tariffs, the

571
00:28:09,480 --> 00:28:11,840
Speaker 2: story on Department of Government efficiency, how all of it

572
00:28:11,880 --> 00:28:14,800
Speaker 2: is translating into the economic data we're seeing, and how

573
00:28:14,800 --> 00:28:17,040
Speaker 2: that's feeding through to what Charlie was just talking about.

574
00:28:17,359 --> 00:28:19,760
Speaker 2: The markets today, the equity markets certainly not having a

575
00:28:19,800 --> 00:28:22,879
Speaker 2: good one. And as Charlie promised, Nora me, Linda is

576
00:28:22,880 --> 00:28:25,040
Speaker 2: here with us for more. She covers the stock market

577
00:28:25,080 --> 00:28:27,399
Speaker 2: for Bloomberg. So, Nora, do we assign this to the

578
00:28:27,480 --> 00:28:31,359
Speaker 2: data we're getting to the uncertainty around tariff policy, which

579
00:28:31,440 --> 00:28:35,520
Speaker 2: arguably actually improved today with the at least delay of

580
00:28:35,600 --> 00:28:39,360
Speaker 2: tariffs or over pri from tariffs on Mexico until April. Second,

581
00:28:39,440 --> 00:28:40,560
Speaker 2: what actually is up here?

582
00:28:41,000 --> 00:28:44,040
Speaker 9: Well, Kaylee, this has truly been a very dizzying news cycle.

583
00:28:44,080 --> 00:28:46,640
Speaker 9: As you clearly laid out here, we've got traders looking

584
00:28:46,680 --> 00:28:49,840
Speaker 9: at not only economic data, but also they're monitoring these

585
00:28:49,840 --> 00:28:52,600
Speaker 9: headlines that we're getting throughout the day about what the

586
00:28:52,640 --> 00:28:55,080
Speaker 9: outlook for terrorifts might be and what the outlook could

587
00:28:55,120 --> 00:28:57,959
Speaker 9: be for a potential global trade war. Here in some

588
00:28:58,000 --> 00:29:00,880
Speaker 9: ways it feels like the federal reserves passed path forward

589
00:29:01,040 --> 00:29:04,000
Speaker 9: is the last thing on trader's minds. We've got volatility

590
00:29:04,040 --> 00:29:06,160
Speaker 9: really being the name of the game. We have analysts

591
00:29:06,200 --> 00:29:09,360
Speaker 9: that are really pointing toward this idea that volatility seems

592
00:29:09,360 --> 00:29:11,680
Speaker 9: to be the only certainty right now as we look

593
00:29:11,720 --> 00:29:14,160
Speaker 9: at what things could look forward. If we look at

594
00:29:14,200 --> 00:29:18,200
Speaker 9: the volatility index, the VIX index, that's Wall Street's fear gauge,

595
00:29:18,240 --> 00:29:20,640
Speaker 9: it's sitting above the twenty handle at about twenty five

596
00:29:20,720 --> 00:29:23,080
Speaker 9: right now. So that really tells you what investors are

597
00:29:23,120 --> 00:29:23,760
Speaker 9: thinking right now.

598
00:29:25,320 --> 00:29:27,960
Speaker 3: What are the analysts saying looking at the vics. It's

599
00:29:28,000 --> 00:29:31,160
Speaker 3: the one green spot on my screen here of fifteen

600
00:29:31,960 --> 00:29:35,480
Speaker 3: percent here, Norah back above twenty five. Are analysts telling

601
00:29:35,520 --> 00:29:39,520
Speaker 3: clients to cool their heels, just wait or sell.

602
00:29:39,880 --> 00:29:42,000
Speaker 9: Well, Joe, I mean, that's really the question here. When

603
00:29:42,040 --> 00:29:44,200
Speaker 9: you look at so many different areas of the market,

604
00:29:44,200 --> 00:29:45,960
Speaker 9: there is a lot going on, But if we take

605
00:29:46,000 --> 00:29:48,760
Speaker 9: a look under the hood, what's really been the uncertain

606
00:29:48,800 --> 00:29:51,600
Speaker 9: point has been the tech sector. So we are seeing

607
00:29:51,600 --> 00:29:53,800
Speaker 9: a pretty strong sell off in tech stocks today, and

608
00:29:53,800 --> 00:29:57,040
Speaker 9: that's all kind of couch in this idea that what

609
00:29:57,160 --> 00:29:59,960
Speaker 9: is the AI intelligence boom going to look like moving forward,

610
00:30:00,040 --> 00:30:02,000
Speaker 9: especially as we think about deep seek of the news

611
00:30:02,000 --> 00:30:05,000
Speaker 9: that came weeks ago, and then now as we're thinking

612
00:30:05,040 --> 00:30:07,360
Speaker 9: about what the outlook could look like in terms of

613
00:30:07,400 --> 00:30:11,200
Speaker 9: how Chinese companies are really boosting their AI and whether

614
00:30:11,280 --> 00:30:13,720
Speaker 9: or not a lot of these US companies can stay

615
00:30:14,120 --> 00:30:15,400
Speaker 9: afloat and stay in play.

616
00:30:15,440 --> 00:30:15,640
Speaker 11: Here.

617
00:30:18,040 --> 00:30:19,840
Speaker 2: I want to ask you as well, Nora, because I

618
00:30:19,880 --> 00:30:22,719
Speaker 2: know you cover home builders specifically, about what we've been

619
00:30:22,760 --> 00:30:25,760
Speaker 2: seeing in rates which have actually moved lower, and you're

620
00:30:25,800 --> 00:30:31,360
Speaker 2: seeing a pickup in mortgage applications. Mortgage rates themselves have

621
00:30:31,480 --> 00:30:34,600
Speaker 2: moved down substantially. Is that translating into some positivity at

622
00:30:34,680 --> 00:30:36,960
Speaker 2: least in the home oriented sectors of the market, And

623
00:30:37,040 --> 00:30:38,760
Speaker 2: is that expected to continue.

624
00:30:38,760 --> 00:30:41,719
Speaker 9: Frankly, well, Kelly, it's really mixed. I mean, as you mentioned,

625
00:30:41,720 --> 00:30:43,840
Speaker 9: we do have some data that is a bit positive,

626
00:30:43,840 --> 00:30:46,000
Speaker 9: if you can call it positive. When I last look

627
00:30:46,040 --> 00:30:49,040
Speaker 9: more stiggage rates, we're sitting at about six point eight percent.

628
00:30:49,160 --> 00:30:52,120
Speaker 9: But funnily enough, it's actually one of the more recent

629
00:30:52,200 --> 00:30:54,760
Speaker 9: lows that we've seen when you think about mortgage rates.

630
00:30:54,920 --> 00:30:57,440
Speaker 9: But as we think about the home building industry more broadly,

631
00:30:57,480 --> 00:31:00,600
Speaker 9: we actually had Seaport Global Research at least a report

632
00:31:00,600 --> 00:31:03,680
Speaker 9: where they actually upgraded home builders are seeing a twenty

633
00:31:03,760 --> 00:31:06,320
Speaker 9: seven percent upside when we think about the outlook for

634
00:31:06,400 --> 00:31:08,320
Speaker 9: the industry. But I mean, if you ask the average

635
00:31:08,360 --> 00:31:10,800
Speaker 9: person and whether or not they're really interested in taking

636
00:31:10,800 --> 00:31:12,880
Speaker 9: on a thirty year mortgage rate right now with the

637
00:31:12,960 --> 00:31:16,000
Speaker 9: high rates, of course, the answer is a bit uncertain.

638
00:31:17,240 --> 00:31:18,520
Speaker 4: All right, Nora, thank you so much.

639
00:31:18,520 --> 00:31:21,480
Speaker 3: From world headquarters in New York, Normal Linda, Bloomberg Stock

640
00:31:21,520 --> 00:31:24,600
Speaker 3: Market Reporter really helps to set the baseline for us

641
00:31:24,600 --> 00:31:27,320
Speaker 3: for the conversation we're going to have next with Nathan

642
00:31:27,360 --> 00:31:30,280
Speaker 3: Dean from Bloomberg Intelligence. Because tariffs are in the air today,

643
00:31:30,320 --> 00:31:32,160
Speaker 3: we don't know exactly how this is going to land.

644
00:31:32,200 --> 00:31:35,720
Speaker 3: With Canada, but Mexico's got the exemption. Canada has a

645
00:31:35,720 --> 00:31:39,840
Speaker 3: partial exemption, at least with regard to auto's. Scott Besson,

646
00:31:39,960 --> 00:31:42,520
Speaker 3: the Treasury Secretary, talked about it this morning at the

647
00:31:42,520 --> 00:31:43,760
Speaker 3: Economic Club of New York.

648
00:31:44,600 --> 00:31:48,320
Speaker 10: People say, oh, tariffs are very are a regressive tax?

649
00:31:49,000 --> 00:31:51,920
Speaker 10: That well, are they a regressive tax if you then

650
00:31:52,160 --> 00:31:55,360
Speaker 10: use the income from tariffs to no tax on tips,

651
00:31:55,600 --> 00:31:59,400
Speaker 10: no tax on social Security, no tax on overtime, making

652
00:31:59,520 --> 00:32:04,600
Speaker 10: auto own tax deductible. Those four policies with President Trump

653
00:32:05,440 --> 00:32:09,680
Speaker 10: put forward during the campaign, all a crew to the

654
00:32:09,720 --> 00:32:14,200
Speaker 10: bottom fifty percent of wage earners and working Americans.

655
00:32:16,000 --> 00:32:18,719
Speaker 3: As we turn to the senior US policy analyst at

656
00:32:18,720 --> 00:32:22,600
Speaker 3: Bloomberg Intelligence, Nathan Dean, whose phone has been ringing clients

657
00:32:23,160 --> 00:32:26,160
Speaker 3: who have terminal subscriptions want to know what to do next.

658
00:32:26,200 --> 00:32:28,239
Speaker 4: And boy, Nathan, great to see you again. You were

659
00:32:28,280 --> 00:32:29,240
Speaker 4: here just yesterday.

660
00:32:29,480 --> 00:32:32,720
Speaker 3: Because this keeps changing, you obviously can't make plans. The

661
00:32:32,800 --> 00:32:35,240
Speaker 3: question is do you throw it all out because this

662
00:32:35,640 --> 00:32:37,800
Speaker 3: market is back to where we were before the election.

663
00:32:38,080 --> 00:32:40,360
Speaker 15: You know, we've been actually been coined this the Shokonhaf

664
00:32:40,400 --> 00:32:42,560
Speaker 15: strategy for tariffs. I mean President Trump did this with

665
00:32:42,600 --> 00:32:44,800
Speaker 15: his executive orders, and it looks like he's doing this

666
00:32:44,840 --> 00:32:45,600
Speaker 15: with tariff's as well.

667
00:32:45,640 --> 00:32:47,880
Speaker 14: He makes a statement, he makes a you.

668
00:32:47,840 --> 00:32:49,959
Speaker 15: Know, we're going to put tariffs on Canada, Mexico. We're

669
00:32:49,960 --> 00:32:51,960
Speaker 15: going to go twenty five percent. Well, then we delay

670
00:32:52,000 --> 00:32:53,680
Speaker 15: it for thirty days. Well, then we're actually going to

671
00:32:53,720 --> 00:32:55,160
Speaker 15: put it forth, and then now we're going to have

672
00:32:55,160 --> 00:32:58,560
Speaker 15: an exemption for USMCA goods, like Award Lutnik was saying today,

673
00:32:58,720 --> 00:33:01,320
Speaker 15: Mexico's now delayed till April second. So what we're telling

674
00:33:01,320 --> 00:33:04,280
Speaker 15: our clients is that you have to prepare for these tariffs,

675
00:33:04,560 --> 00:33:06,560
Speaker 15: but you also have to prepare for the scenario that

676
00:33:06,640 --> 00:33:09,080
Speaker 15: they maybe a day or two later, you get this

677
00:33:09,320 --> 00:33:11,920
Speaker 15: headline that says that, nah, maybe we're going to pare

678
00:33:11,960 --> 00:33:13,760
Speaker 15: it down a little bit. But you know, there's a

679
00:33:13,760 --> 00:33:16,200
Speaker 15: lot of uncertainty that's still coming with this. But what

680
00:33:16,200 --> 00:33:18,120
Speaker 15: we do think is going to happen is April second,

681
00:33:18,320 --> 00:33:20,880
Speaker 15: reciprocal tariffs are going to come. But then within the

682
00:33:20,960 --> 00:33:24,000
Speaker 15: days after April second, then you'll see whatever negotiations take

683
00:33:24,040 --> 00:33:26,800
Speaker 15: place and something that could potentially get into the White

684
00:33:26,840 --> 00:33:27,840
Speaker 15: House to scale that back.

685
00:33:28,240 --> 00:33:30,280
Speaker 2: Well, so I feel like we've asked this question of

686
00:33:30,440 --> 00:33:33,400
Speaker 2: political strategists this idea that do we run into a

687
00:33:33,440 --> 00:33:36,360
Speaker 2: boy who cried wolf scenario eventually where it stops working

688
00:33:36,400 --> 00:33:39,120
Speaker 2: as a negotiating tactic when everybody sees that you're willing

689
00:33:39,160 --> 00:33:41,960
Speaker 2: to pull tariffs back and the threat doesn't last very long.

690
00:33:42,000 --> 00:33:43,560
Speaker 2: And I wonder if it could be true for market

691
00:33:43,560 --> 00:33:46,280
Speaker 2: participants as well, that they just stopped taking him at

692
00:33:46,280 --> 00:33:48,520
Speaker 2: his word on tariff threats until they actually see it

693
00:33:48,560 --> 00:33:50,640
Speaker 2: in action. They no longer try to discount that.

694
00:33:50,880 --> 00:33:52,600
Speaker 15: Yeah, and absolutely, I mean I think I think there

695
00:33:52,600 --> 00:33:54,800
Speaker 15: are several people and then look, I know I've talked

696
00:33:54,840 --> 00:33:56,760
Speaker 15: to several people in the last week that are taking

697
00:33:56,760 --> 00:33:58,880
Speaker 15: that view as well, that look, these tariffs are never

698
00:33:58,920 --> 00:34:02,480
Speaker 15: going to happen. We have this debate within BI, you know,

699
00:34:02,800 --> 00:34:05,320
Speaker 15: just whether or not on odds, But you know, you

700
00:34:05,440 --> 00:34:08,400
Speaker 15: have to prepare for him because there's only one person

701
00:34:08,400 --> 00:34:10,440
Speaker 15: in this world that decides whether or not these tariffs

702
00:34:10,440 --> 00:34:13,279
Speaker 15: go forward, and it's President Trump. And we have yet

703
00:34:13,280 --> 00:34:15,839
Speaker 15: to meet a Trump whisper that can predict at one

704
00:34:15,880 --> 00:34:18,600
Speaker 15: hundred percent certainty what is going to happen here. So

705
00:34:18,640 --> 00:34:21,279
Speaker 15: you have to prepare scenario analysis, and that starts with

706
00:34:21,360 --> 00:34:24,480
Speaker 15: preparing for these tariffs with the idea that potentially could

707
00:34:24,520 --> 00:34:27,000
Speaker 15: come back, because look, we may do this on April first,

708
00:34:27,239 --> 00:34:29,040
Speaker 15: and we may now have an extension of May first.

709
00:34:29,080 --> 00:34:30,759
Speaker 14: We just don't know, but you still have to prepare.

710
00:34:30,840 --> 00:34:30,960
Speaker 10: Well.

711
00:34:30,960 --> 00:34:32,959
Speaker 3: We're seeing a lot of front running ahead of any

712
00:34:33,040 --> 00:34:35,640
Speaker 3: potential tariffs taking effect. And I don't want to try

713
00:34:35,680 --> 00:34:38,560
Speaker 3: to fold you into being an economist here, but are

714
00:34:38,600 --> 00:34:41,960
Speaker 3: you getting questions about this the increasing potential say for

715
00:34:42,000 --> 00:34:45,040
Speaker 3: a week second half, because so much business was done

716
00:34:45,080 --> 00:34:46,480
Speaker 3: to try to get ahead of the tariffs.

717
00:34:46,560 --> 00:34:48,319
Speaker 15: You know, at the tail end of twenty twenty four,

718
00:34:48,400 --> 00:34:52,000
Speaker 15: the number one question I got, whether it was New York, London, Berlin, wherever,

719
00:34:52,520 --> 00:34:54,239
Speaker 15: was when is the United States going to deal with

720
00:34:54,280 --> 00:34:58,200
Speaker 15: the deficit? And that question remains today, and the question

721
00:34:58,440 --> 00:35:01,520
Speaker 15: is said, are this year? I mean, but the question

722
00:35:01,800 --> 00:35:04,399
Speaker 15: is you have Doge, you have tariffs, and you also

723
00:35:04,400 --> 00:35:06,759
Speaker 15: have the House Republican plans to extend tax reform, which

724
00:35:06,880 --> 00:35:09,480
Speaker 15: you know, assuming they use the baseline, could cost somewhere

725
00:35:09,480 --> 00:35:12,440
Speaker 15: between four point five and even potentially higher. And so

726
00:35:12,560 --> 00:35:14,799
Speaker 15: I think traders are looking at this holistically and they're

727
00:35:14,800 --> 00:35:17,600
Speaker 15: trying to figure out, Okay, when is Washington going to

728
00:35:17,600 --> 00:35:18,880
Speaker 15: get serious about the deficit?

729
00:35:19,280 --> 00:35:20,359
Speaker 14: My response always back.

730
00:35:20,280 --> 00:35:22,439
Speaker 15: To the trader, is you tell me when you get

731
00:35:22,520 --> 00:35:25,560
Speaker 15: you know, get worried, and we begin to see market moves.

732
00:35:25,400 --> 00:35:27,040
Speaker 2: So the vigilantes need to come out.

733
00:35:27,239 --> 00:35:29,600
Speaker 15: Well, we just haven't seen anything yet, and Washington is

734
00:35:29,640 --> 00:35:31,880
Speaker 15: still going to proceed down this path. So you know,

735
00:35:31,960 --> 00:35:34,560
Speaker 15: tariffs is a catalyst that's happening right now. You have

736
00:35:34,600 --> 00:35:37,000
Speaker 15: the debt ceiling coming this summer that potentially could change

737
00:35:37,200 --> 00:35:38,279
Speaker 15: the fixed income debate a.

738
00:35:38,280 --> 00:35:40,319
Speaker 14: Little bit, and then you have the House Republican tax

739
00:35:40,360 --> 00:35:41,120
Speaker 14: reform at the end.

740
00:35:41,239 --> 00:35:43,160
Speaker 15: But at the end of the year, I'm still not

741
00:35:43,200 --> 00:35:45,919
Speaker 15: one hundred percent confident that the deficits can be resolved well.

742
00:35:45,800 --> 00:35:47,560
Speaker 2: And before we even get to the debt ceiling or

743
00:35:47,600 --> 00:35:51,720
Speaker 2: budget reconciliation, there's a shutdown looming potentially in just over

744
00:35:51,960 --> 00:35:54,200
Speaker 2: a week, and no clear sign yet that they have

745
00:35:54,480 --> 00:35:57,960
Speaker 2: a definitive plan that they know can pass to avert

746
00:35:57,960 --> 00:35:59,359
Speaker 2: at Nathan, where are your odds right now?

747
00:35:59,400 --> 00:36:01,040
Speaker 15: So I don't think that definitive plan is going to

748
00:36:01,080 --> 00:36:03,319
Speaker 15: come until maybe March thirteenth, that like you know, ten

749
00:36:03,400 --> 00:36:06,239
Speaker 15: pas etalent. But what we are telling our clients is

750
00:36:06,239 --> 00:36:08,200
Speaker 15: we are at a forty percent chance of a shutdown

751
00:36:08,680 --> 00:36:12,480
Speaker 15: assuming the Republicans push forward a clean CR. I don't

752
00:36:12,480 --> 00:36:15,080
Speaker 15: think the Democrats are going to be able to stomach

753
00:36:15,080 --> 00:36:17,640
Speaker 15: a shutdown if the Republicans push forward this clean CR.

754
00:36:18,120 --> 00:36:20,840
Speaker 15: If the Republicans push forward a plan that codifies DOGE

755
00:36:20,920 --> 00:36:23,600
Speaker 15: cuts or includes policy writers, then the odds.

756
00:36:23,400 --> 00:36:25,000
Speaker 14: Of that shutdown go up to sixty percent.

757
00:36:25,280 --> 00:36:27,319
Speaker 15: I just don't think that there's really much in the

758
00:36:27,360 --> 00:36:31,160
Speaker 15: way that like shutdowns are usually caused because both parties

759
00:36:31,200 --> 00:36:33,600
Speaker 15: go into that debate thinking that their position is the

760
00:36:33,600 --> 00:36:37,040
Speaker 15: one that's politically advantageous. I'm not exactly sure the Democrats

761
00:36:37,040 --> 00:36:38,960
Speaker 15: are in that position right now, So I wouldn't be

762
00:36:38,960 --> 00:36:41,200
Speaker 15: surprised if this kid's kick the can down a month

763
00:36:41,640 --> 00:36:42,799
Speaker 15: or maybe a little bit later.

764
00:36:43,080 --> 00:36:44,600
Speaker 14: I do think there is going to be.

765
00:36:44,640 --> 00:36:46,960
Speaker 15: A long shutdown sometime in the first two years of

766
00:36:47,000 --> 00:36:47,880
Speaker 15: the Trump presidency.

767
00:36:48,040 --> 00:36:49,279
Speaker 14: I'm just not sure it's going to be March.

768
00:36:49,400 --> 00:36:51,040
Speaker 4: That's interesting, I guess encouraging.

769
00:36:51,160 --> 00:36:54,000
Speaker 3: That's not something the market would probably respond to very

770
00:36:54,000 --> 00:36:57,560
Speaker 3: well right now. The uncertainty over tariffs, the uncertainty over

771
00:36:57,600 --> 00:36:59,880
Speaker 3: debt ceiling, now you can't even keep the lights on.

772
00:37:00,360 --> 00:37:01,720
Speaker 4: What would be the market reaction.

773
00:37:02,000 --> 00:37:04,440
Speaker 15: Well, you have to remember from government shutdowns from the

774
00:37:04,440 --> 00:37:07,080
Speaker 15: market perspective, there really isn't any We put the same

775
00:37:07,160 --> 00:37:09,839
Speaker 15: note out that says, look, there's really no impact even

776
00:37:09,880 --> 00:37:13,280
Speaker 15: for defense contractors psychologically. Well, that's where the dead ceiling

777
00:37:13,320 --> 00:37:15,680
Speaker 15: comes into play. I mean, going back to this mom

778
00:37:15,800 --> 00:37:18,040
Speaker 15: versus Dad thing that we've talked about in this program

779
00:37:18,040 --> 00:37:22,080
Speaker 15: a long time ago. Traders want Washington to remember that

780
00:37:22,280 --> 00:37:24,319
Speaker 15: they want to get things done. Traders in New York

781
00:37:24,400 --> 00:37:26,480
Speaker 15: want Washington to be able to get things done. And

782
00:37:26,560 --> 00:37:28,520
Speaker 15: if you have a shutdown that goes a couple of weeks,

783
00:37:28,680 --> 00:37:30,320
Speaker 15: that's not going to bode well for the dead sealing

784
00:37:30,320 --> 00:37:32,120
Speaker 15: crisis because the debt I don't want to call it

785
00:37:32,239 --> 00:37:35,440
Speaker 15: crisis the debt ceiling issue, because if Republicans pull it

786
00:37:35,560 --> 00:37:38,960
Speaker 15: out of the reconciliation plans, as we suspect, the debt

787
00:37:39,000 --> 00:37:41,080
Speaker 15: ceiling is going to require seven Democrats to go along

788
00:37:41,080 --> 00:37:42,960
Speaker 15: with it. It's going to have to be a bipartisan affair.

789
00:37:43,200 --> 00:37:45,720
Speaker 15: I don't think you're going to see a dead ceiling breach.

790
00:37:45,880 --> 00:37:48,560
Speaker 15: We have an eighty percent chance that the issue has

791
00:37:48,600 --> 00:37:49,880
Speaker 15: resolved before.

792
00:37:49,640 --> 00:37:50,279
Speaker 14: That X date.

793
00:37:50,600 --> 00:37:54,080
Speaker 15: But Washington needs to provide, in the eyes of the traders,

794
00:37:54,360 --> 00:37:57,160
Speaker 15: a little bit of maturity, and you know, even though

795
00:37:57,160 --> 00:38:00,640
Speaker 15: there's no impact from the shutdown, if there is discord,

796
00:38:00,680 --> 00:38:03,520
Speaker 15: that potentially could bleed into the fixed income issues this summer.

797
00:38:03,840 --> 00:38:06,640
Speaker 2: Well, and I would imagine breeding agencies take note as well.

798
00:38:06,680 --> 00:38:09,759
Speaker 2: If we all recall, while we didn't actually breach the

799
00:38:09,800 --> 00:38:13,080
Speaker 2: dead ceiling last time, the United States still got downgraded.

800
00:38:13,120 --> 00:38:15,640
Speaker 2: It's just not seen as credit worthy given the political

801
00:38:15,719 --> 00:38:17,120
Speaker 2: drama around this.

802
00:38:17,560 --> 00:38:20,320
Speaker 14: Yeah, absolutely, I mean, and look, I mean they're.

803
00:38:20,200 --> 00:38:23,080
Speaker 2: As credit worthy. I should stay still credit worthy, like

804
00:38:23,320 --> 00:38:24,560
Speaker 2: entirely full faith and credit.

805
00:38:25,080 --> 00:38:26,799
Speaker 15: But I mean that's an excellent point. There's a lot

806
00:38:26,840 --> 00:38:28,920
Speaker 15: of questions, and especially we see this. You know, I

807
00:38:28,960 --> 00:38:31,960
Speaker 15: was talking to our FX chief rates strategists this morning

808
00:38:32,360 --> 00:38:34,759
Speaker 15: and we were talking about how are Americans and how

809
00:38:34,800 --> 00:38:37,200
Speaker 15: are non Americans across the world viewing the dollar and

810
00:38:37,360 --> 00:38:40,800
Speaker 15: very viewing the euro and the pace on the Canadian dollar,

811
00:38:41,000 --> 00:38:43,440
Speaker 15: and a lot of this credibility goes into the currency argument.

812
00:38:43,600 --> 00:38:46,279
Speaker 15: So you know, I certainly don't want to downplay that.

813
00:38:46,360 --> 00:38:49,200
Speaker 15: We don't think anything's going to happen. Headline risk is

814
00:38:49,480 --> 00:38:52,520
Speaker 15: headline risk for a reason. But I would just say

815
00:38:52,719 --> 00:38:55,719
Speaker 15: is that, you know, it's just more angst and anxiety

816
00:38:55,800 --> 00:38:57,399
Speaker 15: rather than an actual catalyst that we.

817
00:38:57,320 --> 00:38:57,799
Speaker 14: Can point to.

818
00:38:58,040 --> 00:39:00,840
Speaker 3: We've got a crypto summit at the White House tomorrow,

819
00:39:01,680 --> 00:39:05,040
Speaker 3: not just David Sachs, but a number of other CEOs

820
00:39:05,080 --> 00:39:09,279
Speaker 3: and investors' stakeholders, and I guess the optics that will

821
00:39:09,280 --> 00:39:12,800
Speaker 3: make good on this administration's pledge to lean into crypto.

822
00:39:12,960 --> 00:39:14,960
Speaker 3: Last time we spoke was about this idea of a

823
00:39:15,040 --> 00:39:17,880
Speaker 3: national reserve, after the President put forth any number of

824
00:39:17,960 --> 00:39:21,200
Speaker 3: potential tokens that could be involved here, not just bitcoin.

825
00:39:21,239 --> 00:39:23,400
Speaker 4: Will that be reinforced tomorrow?

826
00:39:23,640 --> 00:39:24,040
Speaker 7: I think so.

827
00:39:24,160 --> 00:39:25,960
Speaker 15: I think I actually don't think you're going to see

828
00:39:25,960 --> 00:39:27,359
Speaker 15: a lot come from the White House tomorrow. I think

829
00:39:27,360 --> 00:39:29,880
Speaker 15: it's gonna be more driven by the industry participants, and

830
00:39:29,960 --> 00:39:31,440
Speaker 15: I think they're just going to air a lot of

831
00:39:31,480 --> 00:39:33,759
Speaker 15: the talking points that we've seen before. You know, one

832
00:39:33,800 --> 00:39:36,000
Speaker 15: of the biggest questions when it comes to this bitcoin reserve,

833
00:39:36,280 --> 00:39:39,000
Speaker 15: is it a bitcoin reserve or is it a crypto reserve?

834
00:39:39,400 --> 00:39:41,640
Speaker 14: Is Solana in there is XRP and there he answer

835
00:39:41,760 --> 00:39:43,759
Speaker 14: that though, well, I mean President Trump.

836
00:39:43,520 --> 00:39:46,280
Speaker 15: Said that he wants to view it as a currency,

837
00:39:46,480 --> 00:39:49,880
Speaker 15: you know, market capitalization fund with all these different currencies

838
00:39:49,880 --> 00:39:52,360
Speaker 15: in there. But that's not exactly what a lot of

839
00:39:52,400 --> 00:39:54,239
Speaker 15: folks in the crypto world want they want it to

840
00:39:54,239 --> 00:39:57,160
Speaker 15: be bitcoin because bitcoin is the one that's most decentralized,

841
00:39:57,440 --> 00:39:59,840
Speaker 15: and bitcoin is the one that's most you know, available

842
00:39:59,880 --> 00:40:01,560
Speaker 15: for or institutional usage.

843
00:40:01,640 --> 00:40:03,239
Speaker 14: And so I think you're gonna see these talking points

844
00:40:03,320 --> 00:40:04,200
Speaker 14: coming out tomorrow.

845
00:40:04,320 --> 00:40:06,000
Speaker 15: I'm not exactly sure the White House is going to

846
00:40:06,040 --> 00:40:08,160
Speaker 15: offer much a because they don't want to correct President

847
00:40:08,200 --> 00:40:09,320
Speaker 15: Trump if they feel differently.

848
00:40:09,680 --> 00:40:12,879
Speaker 14: And B again, there's one person driving this at the moment,

849
00:40:12,880 --> 00:40:13,840
Speaker 14: and it's President Trump.

850
00:40:14,400 --> 00:40:16,759
Speaker 2: Really quickly before we let you go, Nathan, stable coin

851
00:40:16,880 --> 00:40:20,520
Speaker 2: legislation obviously in both chambers, it's moving forward. I believe

852
00:40:20,560 --> 00:40:23,440
Speaker 2: markups could happen as soon as next week. How quickly

853
00:40:23,480 --> 00:40:25,800
Speaker 2: do you think that ultimately could get done as it will?

854
00:40:26,000 --> 00:40:29,080
Speaker 15: I think it's probably some between May and July. I think,

855
00:40:29,200 --> 00:40:31,560
Speaker 15: you know, look, we have favorable odds on this seventy percent.

856
00:40:31,840 --> 00:40:33,879
Speaker 15: The problem with the stable coin language, if you can

857
00:40:33,880 --> 00:40:36,640
Speaker 15: call it a problem, is that it sometimes gets sucked

858
00:40:36,640 --> 00:40:39,560
Speaker 15: into this bigger idea of crypto legislation. And if people

859
00:40:39,600 --> 00:40:41,600
Speaker 15: start trying to boil the ocean as opposed to that

860
00:40:41,600 --> 00:40:45,560
Speaker 15: one lake, then the stable coin, this legislation could get pushed.

861
00:40:45,239 --> 00:40:48,520
Speaker 2: Off, all right, Nathan Dean of Bloomberg Intelligence, thank you

862
00:40:48,560 --> 00:40:51,040
Speaker 2: so much as always for joining us. It's going to

863
00:40:51,080 --> 00:40:52,919
Speaker 2: be a big datamorrow, not just for the White House

864
00:40:52,960 --> 00:40:55,439
Speaker 2: Crypto Summit, but no doubt also you know the little

865
00:40:55,480 --> 00:40:57,200
Speaker 2: thing called the Non farm Payrolls Report.

866
00:40:57,239 --> 00:40:59,600
Speaker 3: It will be jobs Day actually, yes, indeed, and I'll

867
00:40:59,600 --> 00:41:02,680
Speaker 3: be curious to see how the White House spins the numbers.

868
00:41:02,760 --> 00:41:04,600
Speaker 3: Were not expecting, as we told you earlier in our

869
00:41:04,640 --> 00:41:07,080
Speaker 3: conversation with Michael McKee, much of an impact from the

870
00:41:07,080 --> 00:41:11,040
Speaker 3: federal layoffs. The federal worker layoffs challenger makes it pretty

871
00:41:11,040 --> 00:41:13,239
Speaker 3: clear today though they're coming, it just might be another month.

872
00:41:13,320 --> 00:41:15,120
Speaker 3: By the way, how's Malania coin doing. We didn't ask

873
00:41:15,200 --> 00:41:17,879
Speaker 3: Nathan Dean about that. That have to check seventy seven

874
00:41:17,960 --> 00:41:20,160
Speaker 3: cents we're at top out about nine dollars.

875
00:41:20,600 --> 00:41:21,919
Speaker 4: That won't be in the National leser.

876
00:41:22,840 --> 00:41:25,479
Speaker 2: No, probably there might be some concerns about having that.

877
00:41:26,239 --> 00:41:33,440
Speaker 4: That wasn't on the list. Thanks for listening to the

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Speaker 4: Balance of Power podcast.

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Speaker 3: Make sure to subscribe if you haven't already, at Apple, Spotify,

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Speaker 3: us live every weekday from Washington, DC at noontime Eastern

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Speaker 3: at Bloomberg dot com.