1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,120 Speaker 2: Terminal and the Bloomberg Business App. If I came back 10 00:00:37,159 --> 00:00:38,960 Speaker 2: from a year off, never mind a month, and you 11 00:00:39,000 --> 00:00:41,000 Speaker 2: showed me one data point and it was sharpless claims, 12 00:00:41,040 --> 00:00:42,600 Speaker 2: and I looked at that, I'd be like, everything's okay, 13 00:00:42,640 --> 00:00:45,440 Speaker 2: there's nothing wrong here. Labor markets from rock solid. That's 14 00:00:45,600 --> 00:00:47,479 Speaker 2: very very impressive. And to your point, yards up at 15 00:00:47,479 --> 00:00:49,600 Speaker 2: the front end are by three basis points on a 16 00:00:49,640 --> 00:00:52,080 Speaker 2: two year on tens up by two still very very 17 00:00:52,200 --> 00:00:54,440 Speaker 2: range band on a ten year maturity that yield at 18 00:00:54,440 --> 00:00:57,800 Speaker 2: the moment about four fifteen four sixteen. Nila Richardson of 19 00:00:57,800 --> 00:00:59,840 Speaker 2: ADP needs to explain what's going on here. Nil can 20 00:01:00,160 --> 00:01:02,240 Speaker 2: good to see you kid morning, How do you explain 21 00:01:03,120 --> 00:01:05,400 Speaker 2: how we're sitting here word about labor market? If has 22 00:01:05,480 --> 00:01:07,800 Speaker 2: just cut rights by what's seventy five basis points over 23 00:01:08,160 --> 00:01:10,280 Speaker 2: the period of six months or so, and yet we've 24 00:01:10,280 --> 00:01:11,720 Speaker 2: got job as claims at one ninety eight. 25 00:01:12,080 --> 00:01:14,840 Speaker 3: Well I wrote on Tuesday that the labor market is 26 00:01:14,880 --> 00:01:17,800 Speaker 3: tighter than we think, and that's how you explain it. 27 00:01:18,640 --> 00:01:22,080 Speaker 3: What we're seeing is that it's a labor market where 28 00:01:22,120 --> 00:01:26,280 Speaker 3: there's has been said before, little hiring, little layoffs, but 29 00:01:26,360 --> 00:01:30,119 Speaker 3: also pay growth has been robust throughout twenty twenty five. 30 00:01:30,200 --> 00:01:32,280 Speaker 3: And let me tell you what that means. Let me 31 00:01:32,400 --> 00:01:34,800 Speaker 3: unpack that. Because we spend a lot of attention on 32 00:01:34,840 --> 00:01:37,600 Speaker 3: the monthly jobs numbers, we need to spend more attention 33 00:01:37,800 --> 00:01:40,680 Speaker 3: on the wage numbers because they tell the complete story. 34 00:01:40,840 --> 00:01:43,920 Speaker 3: And that story is that workers are largely staying put. 35 00:01:44,200 --> 00:01:47,240 Speaker 3: They have very little desire to rush out and quit 36 00:01:47,280 --> 00:01:50,400 Speaker 3: their jobs, but employers are having to pay them more 37 00:01:50,720 --> 00:01:53,000 Speaker 3: to stay in place. So when you look at the 38 00:01:53,040 --> 00:01:57,760 Speaker 3: wage premium between a job stare and a job changer, 39 00:01:58,040 --> 00:02:00,840 Speaker 3: it is very low. We calculate it. We clock that 40 00:02:01,280 --> 00:02:04,160 Speaker 3: at less than three percent going back over the course 41 00:02:04,160 --> 00:02:07,080 Speaker 3: of the year. But the pay levels. The growth levels 42 00:02:07,320 --> 00:02:10,720 Speaker 3: are high four point four percent for job stairs, six 43 00:02:10,760 --> 00:02:14,080 Speaker 3: point six percent for job changers who are sensitive to 44 00:02:14,120 --> 00:02:17,880 Speaker 3: this labor market. It's taking more pay growth to keep 45 00:02:17,880 --> 00:02:20,079 Speaker 3: a worker, and that's adding to costs. 46 00:02:20,160 --> 00:02:20,320 Speaker 4: Now. 47 00:02:20,360 --> 00:02:23,200 Speaker 2: Typically that's what you say in an expanded economy. Typically 48 00:02:23,400 --> 00:02:25,680 Speaker 2: it's what you say in a very tight labor market. 49 00:02:26,639 --> 00:02:28,640 Speaker 2: I still don't understand why the Fed's counting in that 50 00:02:28,720 --> 00:02:30,880 Speaker 2: kind of environment. What's gone wrong here? What's happened? 51 00:02:30,960 --> 00:02:35,640 Speaker 3: The theme of twenty twenty six is perception versus reality explained. 52 00:02:35,880 --> 00:02:39,040 Speaker 3: When I look across the board at all the economic indicators, 53 00:02:39,200 --> 00:02:42,600 Speaker 3: they are so strong. I mean, wage growth is strong. 54 00:02:43,040 --> 00:02:46,919 Speaker 3: You look at GDP growth is strong, Retail sales is strong. 55 00:02:47,120 --> 00:02:49,799 Speaker 3: The only thing that seems leak to me other than 56 00:02:49,919 --> 00:02:54,640 Speaker 3: these pretty modest job games is consumer sentiment. Why is 57 00:02:54,840 --> 00:02:58,400 Speaker 3: sentiment so sour when everything it looks so great? Even 58 00:02:58,440 --> 00:03:02,080 Speaker 3: our infrastructure graters, the civil Engineers recently put out a 59 00:03:02,120 --> 00:03:06,240 Speaker 3: report that America's infrastructure is getting a solid c engineers 60 00:03:06,280 --> 00:03:09,079 Speaker 3: are the hardest graders in the world. Everyone knows that 61 00:03:09,400 --> 00:03:13,280 Speaker 3: my son is finding it out this year, but they're 62 00:03:13,320 --> 00:03:17,280 Speaker 3: still grading at higher grade levels than they have historically. 63 00:03:17,360 --> 00:03:20,880 Speaker 3: So America looks strong, but sentiment looks bad, and there's 64 00:03:20,919 --> 00:03:24,000 Speaker 3: a reason for that. Perception is different than reality. 65 00:03:24,080 --> 00:03:26,840 Speaker 1: Well, how much is this also that we're talking about 66 00:03:26,880 --> 00:03:30,440 Speaker 1: averages and not necessarily the different tiers of earners. And 67 00:03:30,520 --> 00:03:32,680 Speaker 1: it could be that, say, the top tiers of earners 68 00:03:32,880 --> 00:03:35,920 Speaker 1: are doing really well or seeing their productivity increase, and 69 00:03:35,960 --> 00:03:38,119 Speaker 1: are seeing their pay weight and their wages or take 70 00:03:38,120 --> 00:03:41,480 Speaker 1: home pay increase substantially, and the people at the lower end, 71 00:03:41,640 --> 00:03:44,560 Speaker 1: who are employed in low wage work are not seeing 72 00:03:44,560 --> 00:03:46,800 Speaker 1: those increases and are seeing the inflation that are coming 73 00:03:46,800 --> 00:03:48,400 Speaker 1: on the heels what's happening at the top tier. 74 00:03:48,480 --> 00:03:52,000 Speaker 3: Lisa, you just hit the point right, underscoring that perception 75 00:03:52,160 --> 00:03:55,200 Speaker 3: versus reality. Another way to say that is micro versus macro. 76 00:03:55,440 --> 00:03:58,000 Speaker 3: And when you look at the granularity of job changes, 77 00:03:58,040 --> 00:04:00,160 Speaker 3: what you're seeing is it is not equal work. Where 78 00:04:00,160 --> 00:04:02,520 Speaker 3: we're seeing the highest page growth is not where we're 79 00:04:02,520 --> 00:04:06,280 Speaker 3: seeing the most job growth, and that is key. You're 80 00:04:06,280 --> 00:04:09,640 Speaker 3: seeing high k growth and in trades like construction tied 81 00:04:09,680 --> 00:04:12,200 Speaker 3: to data centers, for example, but you're not seeing a 82 00:04:12,200 --> 00:04:15,240 Speaker 3: lot of job growth there. And there are demographic and 83 00:04:15,320 --> 00:04:19,000 Speaker 3: structural reasons to that. And even if you unpack this 84 00:04:19,680 --> 00:04:23,119 Speaker 3: wage distribution over time, what you're seeing is that low 85 00:04:23,200 --> 00:04:27,039 Speaker 3: income workers are not keeping pace with inflation, and that 86 00:04:27,160 --> 00:04:30,120 Speaker 3: is very different than three years ago when they were 87 00:04:30,240 --> 00:04:33,599 Speaker 3: out pacing in terms of income gains. So, yes, there 88 00:04:33,680 --> 00:04:36,560 Speaker 3: is a lot of action going on underneath the service 89 00:04:36,680 --> 00:04:40,240 Speaker 3: of the macro indicators that point to a widening and 90 00:04:40,320 --> 00:04:42,839 Speaker 3: widening of the top learners in the bottom. 91 00:04:42,600 --> 00:04:45,400 Speaker 1: And just adding to the sentiment that is very reality based, 92 00:04:45,640 --> 00:04:47,359 Speaker 1: which is that people who are making a lot of 93 00:04:47,360 --> 00:04:49,680 Speaker 1: money are also seeing the use case for their jobs 94 00:04:49,720 --> 00:04:51,840 Speaker 1: go down. I'm looking at some of the earnings that 95 00:04:51,880 --> 00:04:53,960 Speaker 1: we saw Bank of America coming out saying that they're 96 00:04:53,960 --> 00:04:56,280 Speaker 1: going to let their head count shrink as they deploy 97 00:04:56,400 --> 00:04:59,520 Speaker 1: more artificial intelligence, City Group saying that they are going 98 00:04:59,560 --> 00:05:03,080 Speaker 1: to over the time use automation and expect automation and 99 00:05:03,160 --> 00:05:06,359 Speaker 1: AI to potentially reduce some of that headcount and also 100 00:05:06,480 --> 00:05:09,760 Speaker 1: just increase efficiency. I mean, how much is that also 101 00:05:09,880 --> 00:05:11,920 Speaker 1: hanging over sentiment in a way that these numbers don't 102 00:05:11,960 --> 00:05:12,839 Speaker 1: pick up, right. 103 00:05:12,920 --> 00:05:15,680 Speaker 3: So that's the structural change that no one saw coming 104 00:05:16,120 --> 00:05:18,080 Speaker 3: maybe four years ago. I shouldn't say no one, but 105 00:05:18,240 --> 00:05:21,120 Speaker 3: very few workers saw coming. And it's now part of 106 00:05:21,160 --> 00:05:24,719 Speaker 3: the conversation. It's part of the hiring strategy in a 107 00:05:24,760 --> 00:05:28,479 Speaker 3: way that hasn't been before, and it's hitting professional, white 108 00:05:28,480 --> 00:05:31,000 Speaker 3: collar jobs which you thought would be immune to this 109 00:05:31,080 --> 00:05:34,360 Speaker 3: kind of stuff, this immune to this kind of automation consideration. 110 00:05:34,760 --> 00:05:37,880 Speaker 3: But AI has changed all that. And so I do 111 00:05:37,960 --> 00:05:40,400 Speaker 3: think that that harkens back to the sentiment and to 112 00:05:40,440 --> 00:05:43,720 Speaker 3: the company long term strategy. But this is a transition 113 00:05:44,160 --> 00:05:46,880 Speaker 3: that's not the end of the story. I think that 114 00:05:46,960 --> 00:05:50,440 Speaker 3: this will be a short lived transition because the productivity 115 00:05:50,480 --> 00:05:53,359 Speaker 3: around AI is so vast that it is yet to 116 00:05:53,400 --> 00:05:53,960 Speaker 3: hit the worker. 117 00:05:54,320 --> 00:05:57,840 Speaker 5: How does the FED think of this moment so challenging. 118 00:05:58,920 --> 00:06:02,200 Speaker 3: I think what they they're very focused on is the 119 00:06:02,320 --> 00:06:06,599 Speaker 3: data point that drives a decision. This is a data 120 00:06:06,680 --> 00:06:10,760 Speaker 3: driven FED. But the problem is the data doesn't stack 121 00:06:10,880 --> 00:06:13,560 Speaker 3: up to the decision in the way that it has 122 00:06:13,640 --> 00:06:14,680 Speaker 3: been in the past. 123 00:06:15,040 --> 00:06:15,920 Speaker 4: The data is. 124 00:06:15,839 --> 00:06:19,919 Speaker 3: Pointing to a pretty strong economy, the data is pointing 125 00:06:20,040 --> 00:06:23,200 Speaker 3: to a pretty low unemployment rate, and the data is 126 00:06:23,240 --> 00:06:27,480 Speaker 3: pointing to a structural, not cyclical change in monthly job gains. 127 00:06:27,880 --> 00:06:30,400 Speaker 3: And so it does put them on the back foot 128 00:06:30,560 --> 00:06:33,200 Speaker 3: when you're trying to interpret data and use that data 129 00:06:33,200 --> 00:06:34,560 Speaker 3: to make a decision. 130 00:06:35,000 --> 00:06:38,520 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this 131 00:06:48,040 --> 00:06:51,119 Speaker 2: A Center Washington. President Trump reaching across the alp asking 132 00:06:51,160 --> 00:06:55,000 Speaker 2: Democratic Senator Elizabeth Warren to support his efforts to credit 133 00:06:55,040 --> 00:06:58,120 Speaker 2: card interest rates are ten percent after facing opposition from 134 00:06:58,160 --> 00:07:01,360 Speaker 2: his own party. The Republican can Wressman French Hill, Chairman 135 00:07:01,400 --> 00:07:03,680 Speaker 2: of the House Financial Service Committee, join us now from 136 00:07:03,720 --> 00:07:06,919 Speaker 2: Capital Hill to respond to that and a whole lot more. Congressman, 137 00:07:06,920 --> 00:07:10,280 Speaker 2: it's good to see history is littered with examples, full 138 00:07:10,320 --> 00:07:13,640 Speaker 2: of examples that when you introduce price controls, you end 139 00:07:13,720 --> 00:07:17,040 Speaker 2: up with restricted supply. Congressman, is this proposal going to 140 00:07:17,120 --> 00:07:17,960 Speaker 2: end up any differently? 141 00:07:20,200 --> 00:07:21,280 Speaker 4: Have you new year? Jonathan? 142 00:07:21,360 --> 00:07:24,119 Speaker 6: Great to be with you, Congratulations on becoming a dad. 143 00:07:24,240 --> 00:07:28,760 Speaker 6: So happy for you and your family. Look, this proposal 144 00:07:29,000 --> 00:07:31,840 Speaker 6: is a price control, and I think I've heard from 145 00:07:32,240 --> 00:07:36,040 Speaker 6: Republicans and House that they have concerns about it. What 146 00:07:36,080 --> 00:07:38,320 Speaker 6: we are in agreement with President Trump on is that 147 00:07:38,360 --> 00:07:42,880 Speaker 6: we want to reverse the curse of the Biden years 148 00:07:43,080 --> 00:07:49,560 Speaker 6: and taxation, regulatory and government policies. So we want to 149 00:07:49,600 --> 00:07:53,480 Speaker 6: work to pass my twenty first Century Housing Act, which 150 00:07:53,480 --> 00:07:56,360 Speaker 6: would lower home construction costs. We want to pass the 151 00:07:56,400 --> 00:08:01,360 Speaker 6: Main Street Capital Access Act, which would compliance cost and 152 00:08:01,440 --> 00:08:06,800 Speaker 6: refocus the bank regulators on safety and soundness, tailoring regulations 153 00:08:06,840 --> 00:08:10,120 Speaker 6: to bank complexity. And when you think about the regional 154 00:08:10,160 --> 00:08:13,600 Speaker 6: banks you just talked about and the community banks, particularly 155 00:08:13,600 --> 00:08:17,280 Speaker 6: those banks under ten billion dollars, they make sixty percent 156 00:08:17,320 --> 00:08:19,920 Speaker 6: of the one to four family home loans in this country. 157 00:08:20,200 --> 00:08:22,520 Speaker 6: So we believe that with the tax benefits from the 158 00:08:22,560 --> 00:08:27,960 Speaker 6: one Big Beautiful Bill, lowering compliance costs, focusing and tailoring regulations, 159 00:08:28,840 --> 00:08:33,160 Speaker 6: and focusing on dropping the regulatory burdens, and trying to 160 00:08:33,200 --> 00:08:36,160 Speaker 6: build homes in this country, these are bullish signs for 161 00:08:36,320 --> 00:08:38,360 Speaker 6: the GDP for the nation. 162 00:08:38,440 --> 00:08:39,520 Speaker 4: We don't want to do anything. 163 00:08:39,320 --> 00:08:42,520 Speaker 6: That throws off that gross domestic product. And one of 164 00:08:42,520 --> 00:08:45,640 Speaker 6: the things I heard from colleagues is two thirds of 165 00:08:45,679 --> 00:08:48,560 Speaker 6: GDP and the US is consumption. And so if credit 166 00:08:49,000 --> 00:08:53,040 Speaker 6: availability is denied or reduced, that could impact growth for 167 00:08:53,080 --> 00:08:53,960 Speaker 6: twenty twenty six. 168 00:08:54,000 --> 00:08:56,000 Speaker 2: The congressman, do you think they proposal as it stands 169 00:08:56,000 --> 00:08:58,360 Speaker 2: could have a chilling effect on credit? 170 00:09:00,040 --> 00:09:01,120 Speaker 4: Well, I think this is what. 171 00:09:01,080 --> 00:09:04,280 Speaker 6: People that I've heard from in the House Republican Conference 172 00:09:04,360 --> 00:09:06,680 Speaker 6: have said to me, is they think, gosh, this could 173 00:09:06,679 --> 00:09:11,520 Speaker 6: mean that those Americans with lower credit scores had their 174 00:09:11,559 --> 00:09:17,400 Speaker 6: credit curtailed in some way, even by temporary and proposal 175 00:09:17,600 --> 00:09:21,040 Speaker 6: like this. And you know we've campaigned against the government 176 00:09:21,080 --> 00:09:24,320 Speaker 6: price controls in the twenty twenty four election in Kamala 177 00:09:24,360 --> 00:09:29,240 Speaker 6: Harris's efforts to put in nationwide rent control, for example, Congressman. 178 00:09:29,280 --> 00:09:31,640 Speaker 5: Which is why it's so curious the President is getting 179 00:09:31,640 --> 00:09:33,960 Speaker 5: on the phone with the likes of Senator Elizabeth Warren 180 00:09:34,000 --> 00:09:37,680 Speaker 5: and continuously has this tex exchange we've learned through axios 181 00:09:38,000 --> 00:09:41,800 Speaker 5: with Zorammmdani. Do you think he is moving two far 182 00:09:41,920 --> 00:09:44,480 Speaker 5: to the left and almost out of where your party is. 183 00:09:46,000 --> 00:09:49,240 Speaker 6: Well, I just think that Republicans want to work with 184 00:09:49,320 --> 00:09:52,320 Speaker 6: President Trump to accomplish his goal reverse the curse of 185 00:09:52,360 --> 00:09:58,280 Speaker 6: the Biden policies and regulation, taxation, open up the economy. 186 00:09:58,440 --> 00:10:01,480 Speaker 6: Besides our tax policy, the Big Beautiful Bill, I really 187 00:10:01,520 --> 00:10:05,920 Speaker 6: believe that our mainStreet Capital Access Act will make capital 188 00:10:06,000 --> 00:10:10,400 Speaker 6: more available for small businesses all across the nation, produce 189 00:10:10,480 --> 00:10:14,280 Speaker 6: economic growth, particularly in the home building area. Mike Flood's 190 00:10:14,320 --> 00:10:17,800 Speaker 6: twenty first century housing build that we put together lower's 191 00:10:17,840 --> 00:10:22,360 Speaker 6: regulatory costs on building new homes, opens up things like 192 00:10:22,440 --> 00:10:26,880 Speaker 6: the Home Program and the CDBG program to private sector 193 00:10:27,200 --> 00:10:30,880 Speaker 6: partnerships to build more housing. We want more housing available, 194 00:10:30,920 --> 00:10:33,680 Speaker 6: we want better at better prices, and that's the tact 195 00:10:33,720 --> 00:10:35,760 Speaker 6: that we're taking. I think these are the priorities of 196 00:10:35,800 --> 00:10:36,319 Speaker 6: the President. 197 00:10:36,880 --> 00:10:39,600 Speaker 5: Congressman, as the chair of the Financial Services Committee, have 198 00:10:39,720 --> 00:10:43,280 Speaker 5: you spoken to Chair J. Powell since the subpoena was 199 00:10:43,320 --> 00:10:44,720 Speaker 5: delivered to him from the DOJ? 200 00:10:46,559 --> 00:10:48,800 Speaker 6: I have Chairman Powell called and told me that this 201 00:10:48,880 --> 00:10:50,880 Speaker 6: process was taking. 202 00:10:50,600 --> 00:10:53,520 Speaker 5: Place, and does he have plans to come to the 203 00:10:53,600 --> 00:10:54,600 Speaker 5: Hill to testify. 204 00:10:55,960 --> 00:10:59,440 Speaker 6: Well, we've invited the Chairman to testify for his semi 205 00:10:59,480 --> 00:11:02,319 Speaker 6: annual Humphrey Hawkins testimony and we're working out. 206 00:11:02,120 --> 00:11:02,920 Speaker 4: The date now. 207 00:11:03,440 --> 00:11:05,880 Speaker 6: We'll do that typically in coordination both with the FED 208 00:11:05,920 --> 00:11:07,880 Speaker 6: and with the Senate Banking Committee, so that we can 209 00:11:07,920 --> 00:11:12,359 Speaker 6: get the FED chairman up for his semi annual testimony 210 00:11:12,360 --> 00:11:12,800 Speaker 6: on the Hill. 211 00:11:13,080 --> 00:11:15,520 Speaker 1: Congressman, do you agree with the efforts put forward by 212 00:11:15,520 --> 00:11:20,319 Speaker 1: Senator Tillis talking about potentially stiming any of the candidates 213 00:11:20,640 --> 00:11:23,120 Speaker 1: that President Trump is putting forward or will put forward 214 00:11:23,240 --> 00:11:27,080 Speaker 1: for the Federal Reserve until the subpoena is removed or 215 00:11:27,200 --> 00:11:28,400 Speaker 1: this issue is resolved. 216 00:11:29,880 --> 00:11:32,920 Speaker 6: Well, you know, my attitude about this is really simple, 217 00:11:33,000 --> 00:11:37,000 Speaker 6: which is FED independence doesn't mean the Fed's immune from 218 00:11:37,000 --> 00:11:40,520 Speaker 6: criticism or governors at the FED or immune from criticism. 219 00:11:40,920 --> 00:11:43,960 Speaker 6: And if people have questions and concerns about the construction 220 00:11:44,120 --> 00:11:47,200 Speaker 6: project down there about how expensive it is to build 221 00:11:47,240 --> 00:11:50,000 Speaker 6: something in Washington, d C. How expensive it is to 222 00:11:50,000 --> 00:11:53,680 Speaker 6: build something after a forty year high in inflation from 223 00:11:53,720 --> 00:11:56,720 Speaker 6: the FED and fiscal policy mistakes made at the end 224 00:11:56,760 --> 00:12:00,440 Speaker 6: of the pandemic, those are legitimate questions. I try to 225 00:12:00,520 --> 00:12:06,800 Speaker 6: criminalize it and threaten people with a grand jury over disputes. 226 00:12:06,280 --> 00:12:07,439 Speaker 4: About that construction. 227 00:12:07,840 --> 00:12:11,840 Speaker 6: I don't agree with that, and I think the Congress 228 00:12:11,880 --> 00:12:14,920 Speaker 6: can do oversight about the construction project. And I think, 229 00:12:14,960 --> 00:12:16,760 Speaker 6: as I said in my statement, I think this is 230 00:12:16,760 --> 00:12:20,880 Speaker 6: a distraction from our partnership with President Trump in lowering 231 00:12:21,440 --> 00:12:25,520 Speaker 6: cost of living for our citizens through access to increasing 232 00:12:25,559 --> 00:12:28,400 Speaker 6: access to capital, lowering the cost of building a home 233 00:12:28,440 --> 00:12:32,640 Speaker 6: in this country, getting the economy growing along with all 234 00:12:32,720 --> 00:12:35,880 Speaker 6: the improvements, the tremendous improvements we've had for working families 235 00:12:35,920 --> 00:12:39,240 Speaker 6: that we passed in the One Big Beautiful Bill last year. 236 00:12:39,600 --> 00:12:43,120 Speaker 1: Do you think that it's actually illegitimate this particular subpoena. 237 00:12:44,640 --> 00:12:46,960 Speaker 6: Well, I don't know that it's illegitimate. Because I'm not 238 00:12:47,040 --> 00:12:49,960 Speaker 6: at the Justice Department and I'm not the US Attorney 239 00:12:50,040 --> 00:12:52,559 Speaker 6: for the District of Columbia, I'd say it is, in 240 00:12:52,640 --> 00:12:58,320 Speaker 6: my personal opinion, an over reaction to concerns about the 241 00:12:58,360 --> 00:12:59,560 Speaker 6: construction at the FED. 242 00:13:00,080 --> 00:13:01,520 Speaker 4: Don't agree with that approach. 243 00:13:01,840 --> 00:13:04,200 Speaker 5: You've been friends with him for decades. Do you think 244 00:13:04,200 --> 00:13:06,640 Speaker 5: he added to this distraction by coming out with a 245 00:13:06,720 --> 00:13:09,360 Speaker 5: rare video as the markets were opening up an Asia 246 00:13:09,360 --> 00:13:11,280 Speaker 5: instead of just replying to the subpoena. 247 00:13:13,400 --> 00:13:16,480 Speaker 6: Yeah, I think we'll always second guess whenever we make 248 00:13:16,520 --> 00:13:20,120 Speaker 6: a public statement as a public figure. I won't second 249 00:13:20,240 --> 00:13:23,520 Speaker 6: guess the decision that he took about that. 250 00:13:24,640 --> 00:13:26,920 Speaker 4: I'll just let it play out the way it is. 251 00:13:26,960 --> 00:13:30,800 Speaker 6: But I do believe that trying to criminalize that kind 252 00:13:30,840 --> 00:13:32,439 Speaker 6: of behavior, I just don't agree with that. 253 00:13:32,720 --> 00:13:35,960 Speaker 5: How delayed do you think this could make going through 254 00:13:35,960 --> 00:13:37,520 Speaker 5: the process of the next FED chair? 255 00:13:39,640 --> 00:13:41,280 Speaker 4: Well, I think it could throw it off track. 256 00:13:41,360 --> 00:13:45,360 Speaker 6: I think it's a distraction to Treasury Secretary Bessence very 257 00:13:45,400 --> 00:13:50,040 Speaker 6: able partnership with the President to identify a new FED chair, 258 00:13:50,200 --> 00:13:53,360 Speaker 6: something they've worked on for months, and the President has 259 00:13:53,400 --> 00:13:56,320 Speaker 6: had interviews consistently over the last few weeks, and he's 260 00:13:56,360 --> 00:14:00,800 Speaker 6: close to taking a decision and that this decision. Whoever 261 00:14:00,840 --> 00:14:04,480 Speaker 6: made the recommendation to do this, I think was a 262 00:14:04,520 --> 00:14:07,040 Speaker 6: mistake because I think, as I've said, it distracts from 263 00:14:07,280 --> 00:14:10,960 Speaker 6: economic agenda benefiting working families with lower cost and more 264 00:14:11,520 --> 00:14:15,480 Speaker 6: accessibility to capital and housing. And it's a distraction to 265 00:14:15,720 --> 00:14:20,760 Speaker 6: Treasury Secretary Vesset and President Trump's excellent work to identify 266 00:14:20,760 --> 00:14:23,120 Speaker 6: a new leader for the Federal Reserve, something that we 267 00:14:23,160 --> 00:14:26,520 Speaker 6: want and we want clarity on on Capitol Hills. So 268 00:14:26,880 --> 00:14:29,040 Speaker 6: that's why I think whoever made a recommendation like this 269 00:14:29,240 --> 00:14:29,840 Speaker 6: was not wise. 270 00:14:29,960 --> 00:14:32,400 Speaker 5: It hasn't been a distraction from markets, though they pretty 271 00:14:32,440 --> 00:14:35,160 Speaker 5: much shrugged it off. Do you think the markets don't 272 00:14:35,280 --> 00:14:37,440 Speaker 5: view this as real threat to independence? 273 00:14:39,720 --> 00:14:40,480 Speaker 4: That's possible. 274 00:14:40,920 --> 00:14:43,320 Speaker 6: I don't know that it's a threat to independence. I 275 00:14:43,360 --> 00:14:46,080 Speaker 6: think it's a distraction to the work we're trying to 276 00:14:46,160 --> 00:14:50,280 Speaker 6: do here to move the economy forward. To complement the 277 00:14:50,320 --> 00:14:53,720 Speaker 6: big tax changes we made to benefit working families last year, 278 00:14:53,760 --> 00:14:56,400 Speaker 6: we want to do the same thing this year, to 279 00:14:56,560 --> 00:14:59,320 Speaker 6: open up regulatory policy, make it easy, not only just 280 00:14:59,360 --> 00:15:02,240 Speaker 6: to permit the growth of the energy industry in the 281 00:15:02,280 --> 00:15:05,000 Speaker 6: country and the critical minerals. These are goals of the President, 282 00:15:05,040 --> 00:15:07,840 Speaker 6: but we also want to reduce that regulatory burden on 283 00:15:08,000 --> 00:15:11,600 Speaker 6: how's it construction and capital access for the American economy. 284 00:15:11,920 --> 00:15:15,160 Speaker 6: And if we don't have a nominated and confirmed for 285 00:15:15,280 --> 00:15:17,840 Speaker 6: a Reserve chair, that's a distraction to getting that done 286 00:15:17,840 --> 00:15:19,600 Speaker 6: in the right way, and I think it throws the 287 00:15:19,640 --> 00:15:21,600 Speaker 6: President's mission off track. 288 00:15:21,680 --> 00:15:24,480 Speaker 4: That's why I called it a distraction. I'm sticking with it. 289 00:15:25,520 --> 00:15:38,720 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this, John, 290 00:15:38,720 --> 00:15:41,600 Speaker 2: I guess not to discuss as Terry Hayes of Pancheepolicy. Terry, 291 00:15:41,760 --> 00:15:44,240 Speaker 2: it goes with us saying that Iran's non Venezuela. The 292 00:15:44,280 --> 00:15:46,400 Speaker 2: population is three times the size. I think the population 293 00:15:46,480 --> 00:15:48,760 Speaker 2: of Tehran is equal to New York City. It has 294 00:15:48,920 --> 00:15:52,360 Speaker 2: very very complicated power structures. How difficult is it going 295 00:15:52,440 --> 00:15:54,880 Speaker 2: to be if the President chooses to intervene. 296 00:15:56,360 --> 00:15:58,720 Speaker 7: It's going to be very difficult, John, and good morning. 297 00:15:59,480 --> 00:16:02,200 Speaker 7: But what you have to look at here is a 298 00:16:02,280 --> 00:16:06,040 Speaker 7: very different geopolitical situation and Iran than in Venezuela. What 299 00:16:06,080 --> 00:16:08,960 Speaker 7: I mean by that is kind of what I think 300 00:16:09,000 --> 00:16:12,240 Speaker 7: of as the concert of nations in the Middle East, 301 00:16:12,760 --> 00:16:17,200 Speaker 7: most of which want not only want a more peaceful region, 302 00:16:17,720 --> 00:16:21,800 Speaker 7: but they want and want Ran marginalized, but they want 303 00:16:21,840 --> 00:16:25,960 Speaker 7: that done without dramatically escalating tensions in the region. 304 00:16:26,640 --> 00:16:28,000 Speaker 4: That's a difficult locked pick. 305 00:16:28,520 --> 00:16:31,800 Speaker 7: But the President needs to bring those folks along, just 306 00:16:31,840 --> 00:16:35,360 Speaker 7: as he has in the Israeli Gaza matter over the 307 00:16:35,400 --> 00:16:39,240 Speaker 7: past few years. And you know, just contrasts that with 308 00:16:39,280 --> 00:16:41,480 Speaker 7: the Venezuelan situation, which is very different. 309 00:16:41,760 --> 00:16:43,560 Speaker 5: Terry, will he have the support of Congress if he 310 00:16:43,640 --> 00:16:44,760 Speaker 5: were to intervene in Iran? 311 00:16:46,480 --> 00:16:47,640 Speaker 4: That's a very good question. 312 00:16:47,760 --> 00:16:51,040 Speaker 7: It's a bit and it's a better question, uh, after 313 00:16:51,240 --> 00:16:55,960 Speaker 7: the after the Venezuelan vote earlier this week. All White 314 00:16:56,000 --> 00:16:59,000 Speaker 7: Houses do things well or badly at any given time. 315 00:16:59,320 --> 00:17:01,200 Speaker 7: One of the things that this White House is doing 316 00:17:01,240 --> 00:17:05,159 Speaker 7: badly right now is bringing Congress along with it on 317 00:17:05,240 --> 00:17:08,479 Speaker 7: a lot of different fronts. And you know, the warning 318 00:17:08,520 --> 00:17:12,600 Speaker 7: shot on Venezuela really is I think a confirmation of 319 00:17:12,640 --> 00:17:15,280 Speaker 7: my view there. You know, they need to do a 320 00:17:15,320 --> 00:17:21,439 Speaker 7: lot more spade work with Iran and geopolitically overall before 321 00:17:21,480 --> 00:17:24,200 Speaker 7: they make a move here to try to either have 322 00:17:24,280 --> 00:17:27,240 Speaker 7: the active support of Congress or of neutralized opposition. 323 00:17:27,600 --> 00:17:29,640 Speaker 5: This is just the second week into twenty twenty six. 324 00:17:29,680 --> 00:17:32,720 Speaker 5: We've already seen the President take action in Venezuela. How 325 00:17:32,720 --> 00:17:35,879 Speaker 5: does he convey these moves to the American public in 326 00:17:35,880 --> 00:17:38,320 Speaker 5: a midterm election year. How does he go out and 327 00:17:38,359 --> 00:17:40,560 Speaker 5: say this is part of quote America. 328 00:17:40,640 --> 00:17:44,480 Speaker 7: First, well, he should and you know, and then the 329 00:17:44,520 --> 00:17:49,040 Speaker 7: easiest messaging there is something along the lines of, you know, 330 00:17:49,119 --> 00:17:52,959 Speaker 7: the you know, we're keeping national securities, economic security, we're 331 00:17:53,000 --> 00:17:56,080 Speaker 7: trying to keep America safe abroad in order to make 332 00:17:56,119 --> 00:18:00,480 Speaker 7: America safer at home, that sort of thing. And but 333 00:18:00,640 --> 00:18:04,040 Speaker 7: beyond that, you know, he needs he needs to get 334 00:18:04,240 --> 00:18:07,720 Speaker 7: much more contextual with the American public and start really 335 00:18:07,760 --> 00:18:11,040 Speaker 7: explaining the stakes of a lot of things a lot more. 336 00:18:11,280 --> 00:18:14,920 Speaker 7: He's got a lot of division in his coalition right now. 337 00:18:15,600 --> 00:18:18,480 Speaker 7: I wouldn't say a lot of them are actively opposing him, 338 00:18:18,520 --> 00:18:21,080 Speaker 7: but there's a lot of people who have colder feet 339 00:18:21,080 --> 00:18:23,080 Speaker 7: than they did a few months ago. He's going to 340 00:18:23,119 --> 00:18:26,640 Speaker 7: need to warm that up. The same, of course, exists 341 00:18:26,680 --> 00:18:29,440 Speaker 7: with domestic policy, but he's really going to need to 342 00:18:30,320 --> 00:18:34,480 Speaker 7: start having people understand what the stakes are of his 343 00:18:34,720 --> 00:18:37,359 Speaker 7: part of his base gets that, part of it doesn't terry. 344 00:18:37,480 --> 00:18:40,000 Speaker 1: What the stakes are includes who the friends are and 345 00:18:40,040 --> 00:18:43,240 Speaker 1: who the enemies are. Do you think that it's clear 346 00:18:43,760 --> 00:18:47,680 Speaker 1: which international allies have the loudest voice when it comes 347 00:18:47,720 --> 00:18:49,680 Speaker 1: to talking with the President right now. 348 00:18:51,000 --> 00:18:51,800 Speaker 4: Do I think it's clear? 349 00:18:51,880 --> 00:18:51,920 Speaker 6: No. 350 00:18:52,119 --> 00:18:54,320 Speaker 7: I think there's there's an awful lot of folks who 351 00:18:54,359 --> 00:18:58,439 Speaker 7: are who are jockeying for attention, and you know, just 352 00:18:58,480 --> 00:19:00,679 Speaker 7: some extent, that's the way the president likes it. I mean, 353 00:19:00,720 --> 00:19:05,840 Speaker 7: if you've got people swirling around you, kind of spoken 354 00:19:05,920 --> 00:19:10,920 Speaker 7: wheel style, it increases your freedom of maneuver, and that 355 00:19:11,240 --> 00:19:13,760 Speaker 7: fundamentally is what Trump wants. He doesn't want just the 356 00:19:13,800 --> 00:19:17,240 Speaker 7: ability to act. The ability to act implies the freedom 357 00:19:17,280 --> 00:19:20,600 Speaker 7: to maneuver. So a lot of his strategic ambiguity, as 358 00:19:20,640 --> 00:19:25,399 Speaker 7: Tyler put it, is designed to achieve exactly that. So, 359 00:19:25,640 --> 00:19:28,480 Speaker 7: you know, the more he's got competition for his ear, 360 00:19:29,080 --> 00:19:32,560 Speaker 7: and the more he's got competition for potential geopolitical goals. 361 00:19:32,880 --> 00:19:34,040 Speaker 4: I think that bit frankly, the. 362 00:19:33,960 --> 00:19:36,639 Speaker 7: Better he likes it, that makes it more difficult to 363 00:19:36,640 --> 00:19:42,280 Speaker 7: translate into into clarity for the American public. But that's 364 00:19:42,320 --> 00:19:44,439 Speaker 7: a chance he's willing to take right now, judging by 365 00:19:44,720 --> 00:19:45,520 Speaker 7: how he operates. 366 00:19:45,760 --> 00:19:47,640 Speaker 1: Terry, something we've been talking about over the past couple 367 00:19:47,680 --> 00:19:49,560 Speaker 1: of weeks, and i'd love your thoughts on that. How 368 00:19:49,560 --> 00:19:52,560 Speaker 1: do you understand sort of the flurry of different orders 369 00:19:52,600 --> 00:19:56,320 Speaker 1: coming out of the White House, the different folk focuses, 370 00:19:56,480 --> 00:20:00,240 Speaker 1: whether it's geopolitical or whether it's domestic. That to be 371 00:20:00,240 --> 00:20:04,000 Speaker 1: whip sawing markets and whipsawing Capital Hill. 372 00:20:04,119 --> 00:20:06,200 Speaker 4: Well, I think he I think what. 373 00:20:06,080 --> 00:20:10,440 Speaker 7: Markets see is a lot of different a lot of 374 00:20:10,480 --> 00:20:13,000 Speaker 7: different smoke being thrown up for a lot of different reasons. 375 00:20:13,040 --> 00:20:16,879 Speaker 7: I mean, there's the strategic ambiguity on Iran we've already 376 00:20:16,920 --> 00:20:20,240 Speaker 7: talked about, for example, same thing applies on a lot 377 00:20:20,280 --> 00:20:21,840 Speaker 7: of domestic things. 378 00:20:22,520 --> 00:20:22,680 Speaker 4: You know. 379 00:20:22,720 --> 00:20:26,520 Speaker 7: The credit card matter is a perfect example of this. 380 00:20:26,600 --> 00:20:29,480 Speaker 7: I feel like I've been talking about swipe fees literally forever. 381 00:20:29,560 --> 00:20:31,200 Speaker 7: I think the first time it came up was twenty 382 00:20:31,280 --> 00:20:36,280 Speaker 7: years ago. But a lot of that's being put up, frankly, 383 00:20:36,520 --> 00:20:39,879 Speaker 7: as part of the affordability pitch to appeal to his 384 00:20:40,440 --> 00:20:43,600 Speaker 7: independent base, the one that helped him get elected in 385 00:20:43,640 --> 00:20:46,440 Speaker 7: twenty twenty four. I'm not pooh poohing this by saying 386 00:20:46,480 --> 00:20:49,840 Speaker 7: it's just about politics. Trump Trump has a history of 387 00:20:49,880 --> 00:20:53,840 Speaker 7: following through, but people need to understand that. You know, 388 00:20:54,160 --> 00:20:57,200 Speaker 7: he's going to do everything he can do to goose 389 00:20:57,240 --> 00:21:02,879 Speaker 7: his own coalition to keep Republicans in the majority in 390 00:21:02,920 --> 00:21:05,879 Speaker 7: the House in the Senate next year. Part of that 391 00:21:06,080 --> 00:21:09,720 Speaker 7: is making sure that he's flooding the zone and we're 392 00:21:09,920 --> 00:21:12,920 Speaker 7: kind of even stealing ideas from the other side and 393 00:21:13,000 --> 00:21:18,080 Speaker 7: kind of relegating that to niche stuff, whereas everything else 394 00:21:18,119 --> 00:21:20,520 Speaker 7: sought to be about him and ought to be about 395 00:21:20,600 --> 00:21:22,760 Speaker 7: goosing his vote. I hope that helps. 396 00:21:23,320 --> 00:21:26,880 Speaker 2: This is the Bloomberg SURVANAHS podcast, bringing you the best 397 00:21:26,920 --> 00:21:30,000 Speaker 2: in markets, economics, an gio politics. You can watch the 398 00:21:30,000 --> 00:21:32,960 Speaker 2: show live on Bloomberg TV weekday mornings from six am 399 00:21:33,160 --> 00:21:36,320 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 400 00:21:36,600 --> 00:21:39,439 Speaker 2: Spotify or anywhere else you listen, and as always, on 401 00:21:39,480 --> 00:21:41,960 Speaker 2: the Bloomberg terminal and the Bloomberg Business app.