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Speaker 2: My colleague Kaylee Lines, is back for a second day now,
Speaker 2: having heard briefings from authorities. Let's get the latest right
Speaker 2: now on this recovery mission. It's a rainy day in Baltimore, Kaylee,
Speaker 2: what can.
Speaker 3: You tell us.
Speaker 4: Rainy indeed, which is complicating the recovery efforts that are underway.
Speaker 4: That together with the wind, the choppiness of the water,
Speaker 4: the low visibility, and of course the massive amounts of
Speaker 4: debris that workers are dealing with and trying to recover
Speaker 4: the six individuals construction workers who are on the bridge
Speaker 4: when it collapsed to our presumed dead at this time. Now,
Speaker 4: as you say, we have a number of press gatherings
Speaker 4: happening here over the course of the last day and
Speaker 4: a half. We heard earlier today from the Maryland Governor
Speaker 4: Wes Moore, who was talking about how recovery is his
Speaker 4: number one priority and when asked questions about the investigation, said,
Speaker 4: right now, it's still is simply too early to know
Speaker 4: many things. He also, though, did point that he will
Speaker 4: be working together with officials here in the state of Maryland,
Speaker 4: as well as the Congressional delegation in Washington and federal
Speaker 4: authorities to make sure funding is secured, not just for
Speaker 4: the rebuilding of the bridge, which of course President Biden
Speaker 4: said will be paid for federally. Yesterday, he promised that
Speaker 4: although Congress will need to sign on, but also locally,
Speaker 4: the Maryland State Legislature does have efforts underway as of
Speaker 4: today for income replacement for the thousands of individuals who
Speaker 4: will be affected by the closure of the Port of Baltimore,
Speaker 4: which of course cannot operate as normal at this time
Speaker 4: and won't be able to do so until all the
Speaker 4: debris and the Dolly, the vessel itself has actually cleared
Speaker 4: the waterway.
Speaker 2: We don't have a sense of when they can get
Speaker 2: that boat out of the way. Dewey Kyley, I know
Speaker 2: there are twins two other ships stranded blocked essentially inside
Speaker 2: the port. I presume they can't leave until the Dolly does.
Speaker 4: They can't leave, no one else can get in it
Speaker 4: really is frozen until all of the waterway can be
Speaker 4: declared safe for vessels to transit once again. And as
Speaker 4: for time, Joe, all officials we have spoken with us
Speaker 4: far have been very reluctant to put a firm time
Speaker 4: estimate on the reopening of the port, or, of course,
Speaker 4: the reconstruction of the bridge for that matter, which is
Speaker 4: likely to be a much longer term project. I know
Speaker 4: you'll be speaking with Secretary Buddha Judge later on today,
Speaker 4: and I'm sure he will reiterate some of what we
Speaker 4: heard from him yesterday about how this is not going
Speaker 4: to be quick, it's not going to be easy. He
Speaker 4: also said it's not going to be inexpensive. We are
Speaker 4: talking months, if not years, in terms of reconstruction, and
Speaker 4: it could potentially be months until the Port of Baltimore
Speaker 4: is flowing and importing and exporting is happening out of
Speaker 4: here once again. At this point, it's just really difficult
Speaker 4: to know for certain.
Speaker 2: Do you see boats out toward the Dolly Kaylee that
Speaker 2: the NTSB managed to board the ship last night they
Speaker 2: got the equivalent of the black box from the Dolly.
Speaker 2: Are they out there now or was that kind of
Speaker 2: a one time mission.
Speaker 4: No, they will continue to work aboard the vessel. I
Speaker 4: actually did speak with an official from the NTSB earlier
Speaker 4: this morning who said they do plan to board today.
Speaker 4: There is a twenty four person team who will be
Speaker 4: part of this investigation, and it's not just about getting
Speaker 4: the data recorders, which of course, as you say, they
Speaker 4: have obtained one, but also about conducting interviews on those
Speaker 4: of board, really trying to get an understanding of what
Speaker 4: exactly was happening on the vessel in the moments up
Speaker 4: to it losing power, losing propulsion and ultimately colliding with
Speaker 4: the bridge. Working with counterparts in Singapore as well, considering
Speaker 4: this was a Singapore flagged vessel and the owners and
Speaker 4: operators have to be considered here as well. So that's
Speaker 4: an investigation that likely too, is going to play out
Speaker 4: over the course of some period of time. As for
Speaker 4: what is actually happening on the water, we do know
Speaker 4: that there are sonar operations underw The Coast Guard is
Speaker 4: working actively with the Maryland State Police, The FBI is
Speaker 4: here as well. The Army Corps of Engineers will be
Speaker 4: involved in this. Really, you are talking about a cross
Speaker 4: agency kind of cooperation that is happening at the state
Speaker 4: and federal level here Joe and all of these workers
Speaker 4: that have been working essentially since six am this morning
Speaker 4: when I got here, that is when this recovery effort
Speaker 4: officially started today.
Speaker 2: Well, you're really bringing that to life for us, Kayleie,
Speaker 2: thank you so much for the reporting. Get yourself back
Speaker 2: to Washington safely. Kaylee Lines, who would normally be in
Speaker 2: the share next to me here on this broadcast, with
Speaker 2: a lot of really important information there. And I'll add
Speaker 2: the fact that this still being a recovery effort, divers
Speaker 2: expected back in the water today. We still have six
Speaker 2: people missing and presumed dead, which is something that we
Speaker 2: still need to remember. Even as we talk about the
Speaker 2: logistics behind this massive project and the economic impact of
Speaker 2: this bridge collapse. We talked about the funding mechanism and
Speaker 2: whether the federal government will be able to handle this.
Speaker 2: In a conversation Kaylee had yesterday with Senator Chris van Holland,
Speaker 2: the Democrat from Maryland, have this to say.
Speaker 5: There are some funds in what's called the Emergency Relief Fund.
Speaker 5: This is a fund within the Federal Highway Administration that
Speaker 5: is there specifically for this kind of emergency so once
Speaker 5: the state makes it submission, which I think they're going
Speaker 5: to do very shortly, some of those funds can beginning
Speaker 5: to be drawn down now for the larger, longer term costs. Yes,
Speaker 5: we're going to call upon our colleagues in Congress.
Speaker 2: Chris van Holland speaking yesterday, his colleague in the House,
Speaker 2: Glen Ivy, joins us now. The Democrat from Maryland's fourth
Speaker 2: districts with us live on Bloomberg TV and Radio.
Speaker 3: Congressman, it's great.
Speaker 2: To have you your thoughts today on a funding debate that's
Speaker 2: about to begin. Can the federal government get this done.
Speaker 6: Well?
Speaker 7: First, I just want to extend my condolences to the families.
Speaker 7: You know, the hearts are with them, and you know
Speaker 7: the prayers continue to go out for the six who
Speaker 7: are they're still seeking to recover. With respect to the
Speaker 7: funding issues, Center, van Holland's absolutely right, and he was
Speaker 7: very aggressive and quick to get an outreach going to
Speaker 7: the Department of Transportation for the emergency funds, and we
Speaker 7: appreciate Secretary buddhaj Edge making some.
Speaker 6: Of those available.
Speaker 7: We'll see how much I think in the very near future,
Speaker 7: and certainly President Biden's commitment to get federal funding for
Speaker 7: the rebuilding of the bridge.
Speaker 6: The congressional debate.
Speaker 7: You know, we're in recess right now, so it hasn't
Speaker 7: really started back yet, but I think there's already outreach
Speaker 7: efforts going on. As you know, we've had challenges in
Speaker 7: the House, in particular with respect to just passing basic legislation,
Speaker 7: but we've been able to get some things done when necessary.
Speaker 7: The last week had just pass the build one point
Speaker 7: trillion dollar funding bill for keeping the government open. And
Speaker 7: I'm hoping that this will be the type of tragedy
Speaker 7: that brings people together instead of pushing, you know, people
Speaker 7: into partisan corners. And I'm hoping we can get something
Speaker 7: done here relatively quickly.
Speaker 2: Well, we keep hearing it's different than it was Congressman
Speaker 2: in two thousand and seven following the bridge collapse in Minnesota,
Speaker 2: And I think I understand what people mean by that,
Speaker 2: But do you believe it in this case or can
Speaker 2: people come together on this?
Speaker 7: Well?
Speaker 6: I hope so.
Speaker 7: I mean I think, you know, there was some instances
Speaker 7: in the past where we've had politicians who've you know,
Speaker 7: made political stands on these kinds of issues. But as
Speaker 7: my mother used to say, what goes around, comes around,
Speaker 7: and I remember one or two of them having to
Speaker 7: come back hat in hand when they were you know,
Speaker 7: disasters in their states and they needed help, and President
Speaker 7: Biden stepped up to help them, even though they were
Speaker 7: Republicans in red states. So I think we can find
Speaker 7: a way to do it. And you know, certainly there's
Speaker 7: an economic need that's beneficial to the entire country.
Speaker 6: I mean, you're talking fifteen million dollars a day, fifteen
Speaker 6: thousand and jobs.
Speaker 7: This is the port that had been I think a
Speaker 7: quarter of coal exports for the country had been going
Speaker 7: in and going out of this port. So I think
Speaker 7: it's important for us, you know, regionally and nationally to
Speaker 7: get this thing done well.
Speaker 2: So Congressman, what does this mean in the interim for
Speaker 2: your state of Maryland, for your district? Even if this
Speaker 2: money was approved tonight, we are told this is not
Speaker 2: a month's but years long project you just talked about.
Speaker 2: We're the potential six week outage for coal. At least
Speaker 2: we understand the number of autos that come through the
Speaker 2: Baltimore Harbor. The port could be redistributed to a lot
Speaker 2: of places. So I know there's a long term concern
Speaker 2: about permanent displacement. But what do you do if this
Speaker 2: is two or three years the number of jobs that
Speaker 2: are relying on this.
Speaker 6: Yeah, I think that's the question of the hour.
Speaker 7: I mean, I think we've got the short, medium, and
Speaker 7: long term issues that we have to address. In the
Speaker 7: short term, it's clear in the harbor, getting the packages
Speaker 7: and the containers off the ship that's stuck there so
Speaker 7: we can move that and the ships that are also
Speaker 7: stuck in the harbor can move out. I think we
Speaker 7: want to try and get shipping back up as soon
Speaker 7: as possible. I think in the interim, I think we've
Speaker 7: got to figure out, you know, what it's actually going
Speaker 7: to take to rebuild the bridge. I don't know if
Speaker 7: it's going to be a new bridge it's next to it,
Speaker 7: or if they're going to try and repair the one
Speaker 7: that's there. I don't know if those decisions have been
Speaker 7: made yet. And I think the long term piece, you know,
Speaker 7: it took five years to build that bridge, as I
Speaker 7: understand it, and you know that's almost fifty years ago,
Speaker 7: and you know, there may have been some technological advances,
Speaker 7: but it's still going to take a long time to
Speaker 7: get it done. So I think we have to figure
Speaker 7: out how to work around that. We've got commuters who
Speaker 7: travel in and out of there are work every day
Speaker 7: in and out of Baltimore. We've got people who truckers
Speaker 7: in particular, have been using that route. They're going to
Speaker 7: have to find new ways to move their products. And
Speaker 7: we've got just you know, people traveling up and down
Speaker 7: the Eastern Seaboard.
Speaker 6: So all of that's going to be challenged.
Speaker 7: I think we're gonna have to look at some sort
Speaker 7: of intermediate impact assistance to try and help especially businesses
Speaker 7: and employees.
Speaker 6: Who are getting hammered by this in the near future.
Speaker 7: And you know, we'll see what we can do on
Speaker 7: that front, but I think it's going to be important
Speaker 7: to see what we can do well.
Speaker 2: I wonder if that might be included in an emergency
Speaker 2: relief package. Congressman, is there anything the Delegation can do
Speaker 2: to make permanent the business that exists now in the
Speaker 2: port of Baltimore. If these cars go to Newark or
Speaker 2: New York, or they go down south, what says they
Speaker 2: come back?
Speaker 7: Yeah, I think that's an interesting question. We're gonna have
Speaker 7: to play it by ear a little bit. I think
Speaker 7: in the short term, you know, we might be able
Speaker 7: to provide some sort of subsidies to help these businesses
Speaker 7: deal with an immediate economic impact, but I think that
Speaker 7: a reality of this is that they're going to have
Speaker 7: to try and you know, relocate their businesses to some extent,
Speaker 7: at least for the period while the port's being restored.
Speaker 7: Hopefully we can get that done relatively quickly, though, so
Speaker 7: there won't.
Speaker 6: Have to be any long term changes. I think the
Speaker 6: bridge is a different question.
Speaker 7: Businesses that rely on using that bridge for shipping and transporting.
Speaker 7: That's going to be tougher because that's going to take you,
Speaker 7: I would think at least several years to make that
Speaker 7: a reality. So but the hope is we can get
Speaker 7: the port back up and running quickly enough so businesses
Speaker 7: don't have to take any long term, you know, steps
Speaker 7: to revamp or relocate their businesses.
Speaker 2: We're spending time with Congressman Glenn Ivy of Maryland this
Speaker 2: day after the bridge collapse. I know this is a
Speaker 2: big deal locally, Congressman. We're talking about regional and national
Speaker 2: impact here, but for a lot of folks who live
Speaker 2: in Baltimore, it was not only a landmark, not only.
Speaker 3: A way to get to work.
Speaker 2: It was just part of their day to day life here,
Speaker 2: supporting businesses that we have been describing. There are six
Speaker 2: people still unaccounted for. Can you talk to us about
Speaker 2: the emotional impact that this is having on Maryland?
Speaker 7: Yeah, yeah, I think it's really been devastating. I think
Speaker 7: there's a people have really been per you know, it's
Speaker 7: cut to the heart I think on this, and you know,
Speaker 7: people who feel for the families who are grieving, people
Speaker 7: who feel for the community which relies so extensively on
Speaker 7: the economic impact that's going to be had by this
Speaker 7: because they work in or around the ports. And I think,
Speaker 7: as you mentioned, the sort of the symbolism of the bridge,
Speaker 7: just to see it down in the water like that,
Speaker 7: I think is you know, it's heartbreaking for sure. So
Speaker 7: there's a symbolic piece of this that's going to be challenging.
Speaker 7: I think Governor Moore has done an outstanding job of
Speaker 7: being the healer in charge and taking a strong leadership
Speaker 7: role and trying to help us recover certainly economically but
Speaker 7: also psychologically and emotionally to the loss that we've sustained here.
Speaker 2: You want to see Joe Biden pay a personal visit.
Speaker 2: I know Pete Boodagic has already been there, but would
Speaker 2: a presidential visit be in order.
Speaker 7: You know, we'd love to have the president come, But frankly,
Speaker 7: I mean, the most important piece of this so far,
Speaker 7: everything that's happened since the bridge collapsed, was the President's
Speaker 7: commitment to make sure that we get the bridge back
Speaker 7: up and the Fed's going to take the lead and
Speaker 7: restoring it and making sure that the funding is taken
Speaker 7: care of. The Other thing you said that I liked
Speaker 7: was we're not going to wait for, you know, litigation
Speaker 7: to sort all of this stuff out. You know, if
Speaker 7: there's restitution down the road, that's great, but we want
Speaker 7: to take the lead and getting the bridge up immediately
Speaker 7: and not have to wait for the courts to work
Speaker 7: work out who may or may not be liable. And
Speaker 7: I really appreciate at the President's position on that and
Speaker 7: also has message to the people of the community. I thought,
Speaker 7: I really appreciated what he's done and since already, and
Speaker 7: you know, we look forward to working with him to
Speaker 7: make sure that Congress can get its piece of this
Speaker 7: done as well.
Speaker 3: Glad you could be with us this day after the collapse.
Speaker 2: Congressman, Thank you Glenn Ivy, Democrat from Maryland, with us
Speaker 2: on Balance of Power. As we carry on with our panel, next,
Speaker 2: Rick Davis and Jeanie Shanzano are on the way on
Speaker 2: the fastest show in politics, This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast ken
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Speaker 2: It's a similar panel to spend some time on this
Speaker 2: Wednesday with Rick Davis and Jeanie Shanzano Bloomberg Politics contributors.
Speaker 2: With this debate underway, now, you've already got Genie Pete
Speaker 2: booda judge out on TV today making the case for
Speaker 2: federal funding. This White House knows that it probably won't
Speaker 2: go the way it did in.
Speaker 3: Two thousand and seven.
Speaker 2: We keep hearing about this the Bridge of Minneapolis, followed
Speaker 2: quickly by a unanimous approval of funding.
Speaker 3: We're told it's different. Now do you believe that?
Speaker 1: Yeah?
Speaker 8: I mean, I hope not, but all signs are that
Speaker 8: is it is different. But I applaud the President, obviously,
Speaker 8: the Governor of Maryland who Killey was just talking about,
Speaker 8: and of course Pete Boudha Judge so for getting out
Speaker 8: there so quickly, and the President for making the case
Speaker 8: that the United States the Congress needs to move quickly
Speaker 8: to rebuild this really important bridge and waterway, which obviously
Speaker 8: is critical to shipping in our nation's capital and on
Speaker 8: the East Coast and around the world.
Speaker 2: What's going to happen, Rick Davis, when Joe Biden drops
Speaker 2: a supplemental emergency funding request for this bridge. He's already
Speaker 2: got one hanging out there for Ukraine, Israel in Taiwan
Speaker 2: that has been very controversial on Capitol Hill. Will it
Speaker 2: feel different when it's put on paper?
Speaker 1: Will it feel different?
Speaker 6: Yeah, it'll feel.
Speaker 9: Heavier and more likely to sink to the bottom of
Speaker 9: the bay, just like this bridge has. Look, I mean,
Speaker 9: there's nothing's going to pass this House of Representatives between
Speaker 9: now and election day other than potentially the Ukraine supplemental it.
Speaker 9: And that's only because the gravity of it all. With
Speaker 9: all due respect to the people of Baltimore, it's going
Speaker 9: to be a while before they even know what the
Speaker 9: costs are going to be to reconstruct this bridge, and
Speaker 9: I think, frankly, Joe Biden would be much better off
Speaker 9: making this. A part of why he needs to be
Speaker 9: re elected is because he's got a track record on infrastructure,
Speaker 9: He's been successful in getting a trillion dollars dedicated to
Speaker 9: US infrastructure, and that he can get this job done
Speaker 9: for the people of Baltimore if he's real. And so,
Speaker 9: I can't imagine a scenario where you're going to see
Speaker 9: between now and November of this year a substantial funding
Speaker 9: package of billions of dollars go through for this specific project.
Speaker 2: Well, that's a reality check, Jeanie. Does this bridge become
Speaker 2: a campaign issue?
Speaker 8: Yeah? I think it is going to be a campaign issue.
Speaker 8: You know, it is Republicans who have been talking about
Speaker 8: the fact that they don't want to invest abroad, they
Speaker 8: want to make America great, they want to invest at home. Well,
Speaker 8: here's your opportunity, and Joe Biden will say that, and
Speaker 8: you know, there is a scenario in which we get
Speaker 8: a vote on this. Although I agree with Rick it
Speaker 8: may not come to pass. But how about if the
Speaker 8: Democrats do a deal with Mike Johnson to keep his
Speaker 8: seat in return for votes on these supplementals, It would
Speaker 8: be really important to see which Republicans are going to
Speaker 8: vote against fixing this critically important bill, particular literally, given
Speaker 8: their mantra has been help the United States spend money
Speaker 8: at home. Well, here's a chance to do it.
Speaker 2: Here's a chance to do it. But it just doesn't
Speaker 2: always come that easily. Rick, I know you are more
Speaker 2: optimistic about Ukraine, and i'd like to ask you about that.
Speaker 2: With the idea of this no interest loan that a
Speaker 2: lot of people scoffed at a couple of weeks ago
Speaker 2: when Lindsey Graham brought it forth. Donald Trump has mentioned it,
Speaker 2: but I keep hearing about it. Is there going to
Speaker 2: be legislative language at some point that reflects it.
Speaker 9: Well, there's only one person more important than the Speaker
Speaker 9: of the House for determining what goes in this bill,
Speaker 9: and that's Donald Trump. And he's already made the view
Speaker 9: that maybe it ought to be alone. And so that's
Speaker 9: one of the reasons why you're hearing so much of it.
Speaker 9: I mean, he is the mouthpiece of the Republican Party,
Speaker 9: the Congressional Republican Party, the gubernatorial Republican Party, you name it.
Speaker 9: So you're going to hear that more and more because
Speaker 9: Donald Trump wants that to be the talking point. That's
Speaker 9: why lindsays making a point of doing it.
Speaker 3: He went to.
Speaker 9: Keev recently and told them that he would support funding
Speaker 9: for them if it came in form of alone. My
Speaker 9: guess is, the folks fight in the war on the
Speaker 9: front line don't care if it's a loan or cash
Speaker 9: on hand. They don't care how they get it. They
Speaker 9: just want it because they need the equipment to be
Speaker 9: able to fight Russians. And so my guess is it'll
Speaker 9: be part of the conversation. But that means that we're
Speaker 9: making progress by actually having a vote in the House,
Speaker 9: and all that could get ironed out in a conference
Speaker 9: with the Senate because obviously the Senate bill wouldn't have
Speaker 9: that loan provision in it.
Speaker 2: We'll have a chance to talk more about the campaign
Speaker 2: next hour, Genie. But Joe Biden's got a lot of
Speaker 2: water to carry right now. We're talking about funding a bridge.
Speaker 2: He's trying to make the case for Ukraine. Last evening
Speaker 2: made quite a bit of news talking about abortion in
Speaker 2: North Carolina. He's got to deal with the economy, dealing
Speaker 2: with inflation at some point, do all of these messages
Speaker 2: just drown each other out.
Speaker 8: No, I don't think so, you know, I think the
Speaker 8: President can make all of these important statements on the
Speaker 8: campaign trail. Last night was critically important in North Carolina,
Speaker 8: the first real joint appearance between Harris and Biden in
Speaker 8: a long time on the campaign trail, even though it
Speaker 8: was a White House event technically, And it just shows
Speaker 8: you how much import they're putting into this issue of healthcare,
Speaker 8: particularly reproductive rights, which is so much on the minds
Speaker 8: of so many of us given what's happening around the country.
Speaker 8: And of course they see North Carolina as a state
Speaker 8: where they can go on the offensive as opposed to
Speaker 8: the defense they're playing in so many of these battleground states.
Speaker 8: So North Carolina critically important, as is this issue of
Speaker 8: health care for women and people across the country and
Speaker 8: our ability as Americans to make our choices about what
Speaker 8: we do with our bodies, ourselves and with our doctors
Speaker 8: and not have the heavy hand of the state involved
Speaker 8: in that. And of course you are seeing Donald Trump
Speaker 8: grapple with this as he thinks about potentially finally saying okay,
Speaker 8: we get fifteen or sixteen weeks on abortion, So you know,
Speaker 8: he knows that the writing is on the wall for
Speaker 8: this reproductive issue. It is not a winning campaign strategy
Speaker 8: for Republicans, as we saw in Alabama with this special election.
Speaker 2: I look forward to talking with you both about that
Speaker 2: because it is important. Although to see the nation obsess
Speaker 2: over a state rep in Alabama is pretty remarkable and
Speaker 2: tells us a lot about where we are. What's Donald
Speaker 2: Trump's message going to be on Ukraine if not the
Speaker 2: same one we've been hearing Rick, that I can solve
Speaker 2: this in the first twenty four hours if I'm re elected.
Speaker 9: Oh, I don't think he ever gets into any more detail,
Speaker 9: because there is no more detail than that, Right, it's
Speaker 9: just the power of his personalities somehow going to part
Speaker 9: the season and settle the conflict that's now been going
Speaker 9: on into his third year. And some would say since
Speaker 9: two thousand fourteen. It's not just it's just irrational that
Speaker 9: anybody can snap their fingers and repair that bridge. But look,
Speaker 9: he's not going to back off of that consideration. He
Speaker 9: will be even handed because he loves Putin and so
Speaker 9: whatever is good for Putin's good for Donald Trump. And
Speaker 9: so I think we've already heard from Zelenski that he
Speaker 9: would be very nervous about any kind of deal that
Speaker 9: Donald Trump would do because it would likely leave the
Speaker 9: Russians in control of large Swasa territory in Ukraine, which
Speaker 9: the Ukraine people would find completely unacceptable.
Speaker 2: Rick Davis and Genie Shanzeno are Signature Panel back together today.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 2: The number of vessels sailing through the Southern Red Sea
Speaker 2: is down still seventy percent compared with the start of December.
Speaker 2: Container shipping has dropped ninety percent. Gas tankers have also
Speaker 2: all but ceased transit. Peter, it's great to see you.
Speaker 2: I really appreciate your coming in. What an adventure you
Speaker 2: had to see all of this up close. These numbers
Speaker 2: are stark that would suggest that we haven't made a
Speaker 2: dent in this problem.
Speaker 10: You know, the Huthis have a lot of material which
Speaker 10: the US says is supplied by Iran. They have missiles
Speaker 10: which continue to come in on these small boats across
Speaker 10: the Red Sea, across routes supplied by land, and so
Speaker 10: they're able to keep going for quite some time.
Speaker 2: It's kind of amazing that we haven't, based on some
Speaker 2: of the reporting we've heard from the Pentagon, made a
Speaker 2: bigger difference.
Speaker 3: We've expended quite a bit of.
Speaker 2: Firepower going after targets, in some cases mobile targets. Preemptive
Speaker 2: strikes were told in Yemen. Have we at least slowed
Speaker 2: down the attack?
Speaker 10: So Pentagon officials do say that they've seen the pace
Speaker 10: of the attacks slow, and they've also seen a shift
Speaker 10: in the kind of tactics that the houthis are using.
Speaker 10: So for example, early on they were flying drones high
Speaker 10: up than using them for surveillance and reconnaissance. Now they're
Speaker 10: flying drones straight at targets in the Red Sea on
Speaker 10: one way missions to disrupt and the Pentagon sees that
Speaker 10: kind of adaptation as a sign that maybe they're running
Speaker 10: low on some of the missile stocks.
Speaker 2: They're still just as aggressive in posture, though, what are
Speaker 2: they getting at, by the way, or what's the aim
Speaker 2: is it the sinkership? Is it to get us out
Speaker 2: of the region. Obviously, that's not going to happen.
Speaker 10: So the houthies say that their aim is to act
Speaker 10: as the voice of the people of Gaza, and they
Speaker 10: say that their attacks will stop once the war between
Speaker 10: Israel and Hamas stops. The truth is, I think though,
Speaker 10: that they have a lot to gain politically from this.
Speaker 10: If you look back to before the October seventh attacks,
Speaker 10: there were anti hoathy protests and and that the parts
Speaker 10: of the country they can control were not being especially
Speaker 10: well run, certainly not doing well economically. But these you know,
Speaker 10: October seventh kind of gave them a cause. It gave
Speaker 10: them a chance to step up and say they were
Speaker 10: the voice of the Arab street. And that's worked out
Speaker 10: pretty well.
Speaker 3: This is a big pr campaign.
Speaker 2: In the end, they don't care about sinking a ship
Speaker 2: just as long as they're in the headlines.
Speaker 10: Well if they exactly if they can get headlines by
Speaker 10: sinking shit, sure and score some points against the US two,
Speaker 10: all for the good for them.
Speaker 2: How has our strategy evolved? If at all you were
Speaker 2: on board an aircraft carrier and so you're seeing a
Speaker 2: number of different platforms. They can shoot cruise missiles from ships,
Speaker 2: from destroyers. They can obviously launch fighter jets like you
Speaker 2: saw with air to ground attacks. Does it remain all
Speaker 2: of the above, because the criticism has been, you know,
Speaker 2: we're lobbing million dollar missiles at these very cheap drones
Speaker 2: that at some point is going to be a problem
Speaker 2: for the Navy.
Speaker 10: Is very expensive. The price tag goes up every day.
Speaker 10: I did ask on board the ship about whether cost
Speaker 10: is ever a consideration, and they said no, They're focused
Speaker 10: on mission. Until Washington tells them to spend less money
Speaker 10: by using cheaper systems, They're going to focus on what
Speaker 10: accomplishes the mission best. And you know, US officials say
Speaker 10: that freedom of navigation, freedom of commerce is a core
Speaker 10: US interest and they're going to keep fighting to defend
Speaker 10: that even though the price tag is pretty high.
Speaker 2: Does that battle group stay in the region until the
Speaker 2: Houthi problem is solved, until the Gaza problem is solved.
Speaker 3: Or both.
Speaker 10: I think it's all of the ABUVE.
Speaker 3: The first went there because of October seventh, right.
Speaker 6: That's right.
Speaker 10: They I mean they they left Virginia thinking that they
Speaker 10: were going to do a bunch of Mediterranean port goals,
Speaker 10: which has not worked out the way that they the
Speaker 10: way that they hoped and they're going to need to
Speaker 10: stay there until the huthis either run out of missiles,
Speaker 10: change their mind about what they want to do, or
Speaker 10: there's peace in the Middle East. And anyone who has
Speaker 10: watched the region for a long time, those they could
Speaker 10: be waiting for a while.
Speaker 2: Having spent a minute on an aircraft carrier, it's a
Speaker 2: remarkable experience to be in this floating city. Right We've
Speaker 2: got five thousand people living on that ship, Peter.
Speaker 3: What was morale like?
Speaker 10: I would say morale was pretty good. People are tired,
Speaker 10: a lot of people working twelve hour shifts day in,
Speaker 10: day out. They have a leadership team on board which
Speaker 10: is very dedicated to improving morale, stressing the mission that
Speaker 10: they're going after, stressing why it's important, why it matters.
Speaker 10: So it seems to be holding up for now, but
Speaker 10: I do think that they know it can't be held.
Speaker 3: Up forever at this pace, and they have no sense
Speaker 3: of when they're.
Speaker 2: Not just yet the no fail mission as you call
Speaker 2: it in your great reporting, Peter, thank you for coming
Speaker 2: to talk to us, and welcome back home, Peter Martin
Speaker 2: in a great piece that I encourage you to check
Speaker 2: out on the terminal or at Bloomberg dot Com. It's
Speaker 2: not just great reporting, but also loaded with images from
Speaker 2: Peter's visit to the US Eisenhower, which is just a
Speaker 2: remarkable thing to witness. All of this, of course, comes
Speaker 2: down again to shipping. It's not just the conflicts in Gaza,
Speaker 2: it's the flow of shipping. It's trade, and it comes
Speaker 2: down to prices because as they continue to steer around
Speaker 2: the Red Sea, and we've got a lot of them here.
Speaker 2: As I mentioned, container shipping has dropped ninety percent. Gas
Speaker 2: tankers have ceased transit. They've got to go somewhere. It
Speaker 2: adds time and money, and it ends up being inflationary.
Speaker 2: As we've discussed before with Molly Smith, it's just yet
Speaker 2: another problem for the Biden administration when they think about
Speaker 2: unwinding supply chains and something like this happens at a
Speaker 2: bridge collapse in Baltimore, and we can keep talking.
Speaker 3: About this now.
Speaker 2: I mentioned this in part because Molly Smith is in
Speaker 2: Washington typically covering the indicators and the data from New York.
Speaker 2: She's with us here in the Bloomberg DC Bureau and
Speaker 2: it's wonderful to see you.
Speaker 3: Well, what a tree. It's a balance of power on
Speaker 3: the desk. Well, yes, here at the desk, great to
Speaker 3: see you.
Speaker 2: We're talking about inflation with kind of a reference to
Speaker 2: every possible story, whether it's geopolitics, whether it's supply chains,
Speaker 2: whether it's supply and demand, or a FED conversation. And
Speaker 2: you've been helping with some reporting here that people are
Speaker 2: going to read about that. Disinflation is the word of
Speaker 2: the quarter. In retail. They actually so they say they've
Speaker 2: seen some goods prices come down, they're keeping their retail
Speaker 2: prices even so. Fatter margins for retailers bad news for
Speaker 2: Joe Biden because when you go to the store, you
Speaker 2: don't see a difference.
Speaker 11: Well, that's exactly the issue that Biden and many Democrats
Speaker 11: have been arguing really for years now, this concept called
Speaker 11: greedflationed inflation. Yes, well, they actually were arguing at more
Speaker 11: when prices were going up, that companies would then charge
Speaker 11: even more so than needed to offset those rising cost
Speaker 11: pressures and taking advantage of inflation that way. Now it's
Speaker 11: moving in the reverse that even though prices are easing
Speaker 11: for some of these key input costs, they're still keeping
Speaker 11: the prices charged to consumers high, so keeping the margins
Speaker 11: margins elevated in that way. So economists will kind of
Speaker 11: go back and forth as to like whether this argument
Speaker 11: is valid as to whether is this a really main
Speaker 11: driver of the overall inflation we're experiencing. Probably not, But
Speaker 11: is it contributing at the margins?
Speaker 12: Yeah? Maybe so.
Speaker 2: Yeah, it's kind of like what we experience at the
Speaker 2: gas station, right, The prices tend to go up real
Speaker 2: quick and take a long time to come back down.
Speaker 2: The problem is, folks like you who look into the
Speaker 2: future here a little bit and study the data don't
Speaker 2: see that as a continuing trend necessarily. That's why we've
Speaker 2: got interest rates higher for longer.
Speaker 12: Right, exactly, right.
Speaker 11: So if you look at the disinflation that we've seen
Speaker 11: in the last almost two years, it's pretty much entirely
Speaker 11: come from goods, like you know, things that you buy,
Speaker 11: like stuff like furniture, like clothing, things that you can
Speaker 11: actually pick up and touch, like this keyboard, et cetera versus.
Speaker 11: And so it's a good side and one and energy
Speaker 11: on the other. But those two things aren't really falling
Speaker 11: as much anymore the way that they had.
Speaker 12: Been for the last eighteen or so months.
Speaker 11: So that's the concern now looking forward, and FED officials,
Speaker 11: including Chair Powell, have flagged this as well that they're
Speaker 11: wondering how much more room there is to run on
Speaker 11: this goods disinflation story.
Speaker 3: Right, So, you know, you hear a lot about last mile.
Speaker 3: Do you roll your eyes at that? Is that like
Speaker 3: an easy cliche? How come the last mile is so hard?
Speaker 7: No?
Speaker 11: I think that's really valid, And that's what we've been
Speaker 11: talking about, really, this whole disinflationary journey, getting from you know,
Speaker 11: nine percent up in June twenty twenty two down to
Speaker 11: hopefully what will be two percent.
Speaker 12: In the next year.
Speaker 11: But that's it's really hard to cut it in half
Speaker 11: and then in half again. So coming down from you
Speaker 11: know that area and eight to nine percent down to
Speaker 11: four that was what was called the easy part. That
Speaker 11: was what we saw with a lot of the supply
Speaker 11: chains healing, helping out, doing a lot of the work
Speaker 11: for the FED on the energy side as well, with
Speaker 11: those prices coming down. The harder part now is the
Speaker 11: sickier parts of flat like services with all of us
Speaker 11: still wanting to travel and go out. I was just
Speaker 11: at the Miami Open last weekend to support it, watching
Speaker 11: a tennis event.
Speaker 12: Lots of people there spending on entertainment. Yeah, people still
Speaker 12: want to live their lives.
Speaker 3: So what is that part?
Speaker 2: You can't get a table at a restaurant, and at
Speaker 2: least in a place like Washington or New York, you
Speaker 2: know where the elitists experiencing. I guess the benefits of
Speaker 2: this economy that won't seem to quit. But it's not
Speaker 2: just here, Like you said, book a ticket on an airplane?
Speaker 3: Is that still COVID savings? Is it just the fact
Speaker 3: that the job market's doing well?
Speaker 12: I mean, I think it's a bit of both.
Speaker 11: Granted, the COVID savings are certainly waning, you think, so,
Speaker 11: oh yeah, yeah, that's.
Speaker 12: Certainly been a big there.
Speaker 11: I mean, I feel like you can talk to five
Speaker 11: different economists on where where excess savings at and they'll
Speaker 11: give you ten different answers.
Speaker 6: That's true.
Speaker 2: We've heard some ring the bell to say, you know
Speaker 2: what we spent at all, there's none left, and then
Speaker 2: years later you hear that it's still in fact driving
Speaker 2: some behavior. But we've also seen wages go up quite
Speaker 2: a bit too, so I wonder how that plays into it.
Speaker 2: The fact is that this revenge travel thing think is real,
Speaker 2: Whether we have the money to.
Speaker 3: Do it or not.
Speaker 2: People are still i think, responding to that pandemic in
Speaker 2: some ways. When they have the opportunity to do something,
Speaker 2: they take it.
Speaker 11: Yeah, a lot of these plans were you know, that
Speaker 11: we put off during COVID, were longer term things that
Speaker 11: still could be playing out now, like you know, two
Speaker 11: or three years later, you know, like booking a trip
Speaker 11: to go away for a long weekend or longer than that.
Speaker 12: You know, people still catching.
Speaker 11: Up on weddings that didn't happen then, on other kinds
Speaker 11: of you know, big life events, buying homes, so a
Speaker 11: lot of this is still probably playing catch up to
Speaker 11: some degree, and as well that people are moving on.
Speaker 11: I mean this whole concept of like, you know, maybe
Speaker 11: the economy we're not having a hard landing. It seems
Speaker 11: like there's really no sign of a recession. Maybe we're
Speaker 11: not having a soft landing either. It's more this concept
Speaker 11: of a no landing where the economy just reaccelerates and
Speaker 11: moves on. And I think that's a lot of people
Speaker 11: more are conjuring around that idea.
Speaker 2: Now reaccelerates makes me think that second half of the
Speaker 2: year be a different world for the Fed. Then if
Speaker 2: this is what we're looking at, maybe interest rate cuts
Speaker 2: are just further away than anyone believes.
Speaker 11: Probably more that could be one idea. I mean, certainly
Speaker 11: the Fed wants you to believe that they don't want
Speaker 11: the market to get ahead of itself. But there's also
Speaker 11: a big difference between the economy reaccelerating and inflation reaccelerating.
Speaker 11: So it is possible, and this is what the Fed
Speaker 11: is hoping for, that growth can be sustained without a
Speaker 11: pickup in inflation, and a lot of that comes from
Speaker 11: the supply side being back in order to support the
Speaker 11: demand that's obviously still here.
Speaker 2: I know there's a term for it, but Joe Biden's
Speaker 2: made a big deal about the smaller portion sizes. You know,
Speaker 2: you buy a traculation shrinkflation thank you, So I knew
Speaker 2: you would say, got it. He's made that part of
Speaker 2: his stump speech, he talked about it at the State
Speaker 2: of the Union. He had a video on social media
Speaker 2: with a bag of potato chips. Is does that get
Speaker 2: worse as retailers are pressured to follow prices lower.
Speaker 12: I mean, I'm not a retailer, but they don't want that.
Speaker 12: Arguments market no of course not.
Speaker 11: I mean there's also like the idea as well that
Speaker 11: you kind of to see this in housing a little
Speaker 11: bit too, that I think we've seen data that average
Speaker 11: new homes are actually being built with less square footage.
Speaker 12: So yeah, it kind of like can go in multiple ways.
Speaker 2: That drink inflation not gonna be a square footage with shrink,
Speaker 2: which is a whole other problem that retailers are facing.
Speaker 2: I love the jargon. I have to ask you about
Speaker 2: PCE is on Friday. Yes, that's actually a pretty big
Speaker 2: deal for the Fed.
Speaker 12: Yes, so some of us will not have Friday off,
Speaker 12: a lot of them we will be working. Yes, we
Speaker 12: will give you all the news straw.
Speaker 11: Yeah, but you know, hey, when it comes to big
Speaker 11: inflation report, that's kind of our series.
Speaker 2: What are we looking at, what's the what's the expectations,
Speaker 2: you know, off the top of your head.
Speaker 11: Yeah, I mean it's gonna be like it's going to
Speaker 11: be a reading that probably will make the Fed a
Speaker 11: little uncomfortable. But I'm they are obviously well aware of
Speaker 11: a lot of the inputs that go into PCE. We've
Speaker 11: already seen so far, so a lot of economists have
Speaker 11: really already firmed up their forecast and have a good
Speaker 11: idea of what's coming. So we've already seen a lot
Speaker 11: of the other data point to strong price pressures in
Speaker 11: February that will probably still continue. This report is for February,
Speaker 11: which seems like ages ago now, yes, right, but I
Speaker 11: think they will probably be prepared to look through that
Speaker 11: and just you be more prepared for once to come.
Speaker 2: You'll hear about it here of course, on Bloomberg we
Speaker 2: will actually have live special coverage PCA data eight thirty am.
Speaker 2: Wall Street Time again at eleven thirty with remarks from
Speaker 2: j Powell, So join Nathan Hager and Michael McKee here
Speaker 2: for that.
Speaker 3: Big thanks to Molly Smith. Get home safely. It's great
Speaker 3: to see you in Washington. Thanks for listening to the
Speaker 3: Balance of Power podcast.
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