Latest / Balance of Power / Warsh Says Inflation Isn’t Slowing, Vows to Reach 2% Target

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Warsh Says Inflation Isn’t Slowing, Vows to Reach 2% Target · Balance of Power

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Speaker 1: Bloomberg Audio Studios.
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Speaker 2: Podcasts. Radio.
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Speaker 3: News.
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Speaker 4: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 4: Listen on demand wherever you get your podcasts or watch
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Speaker 4: us live on YouTube.
0:25
Speaker 5: The bond market keying off the message from the boss today,
0:28
Speaker 5: Fed Chair Kevin Warsh at Jackson Hole, making it clear
0:31
Speaker 5: that that he is serious about inflation, which he says
0:35
Speaker 5: is not slowing, pointing to the last many months of
0:39
Speaker 5: watching the data.
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Speaker 1: Listen.
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Speaker 6: Now, there is one signal nobody can miss. Responsibility for
0:45
Speaker 6: 65 months of sustained elevated inflation sits squarely with the
0:51
Speaker 6: central bank, and that's where it belongs.
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Speaker 1: So here is my standard.
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Speaker 6: We must be confident that underlying inflation is moving to
1:01
Speaker 6: our objective clearly and at sufficient speed. Otherwise, we have
1:07
Speaker 6: work to do. That's our job, that's our mandate, and
1:11
Speaker 6: that's our charge to keep.
1:15
Speaker 3: The Fed chair, Kevin Warsh, on his 100th day as
1:18
Speaker 3: the head of the central bank, speaking from Jackson Hole earlier,
1:22
Speaker 3: which is where we now find our Bloomberg's Michael McKee,
1:25
Speaker 3: Bloomberg's international economics and policy correspondent. So, Mike, we've been
1:29
Speaker 3: talking all day about what the Fed chair said in
1:32
Speaker 3: terms of there maybe needing to be work done. that
1:35
Speaker 3: has to get done in order for inflation to fall.
1:37
Speaker 3: But what happens here next? Because now the question seems
1:40
Speaker 3: to be when. What are those data points that you're
1:42
Speaker 3: going to be watching ahead of that next FOMC meeting?
1:49
Speaker 2: Well, the next things we're going to watch, obviously, is
1:51
Speaker 2: next week's payrolls report.
1:52
Speaker 7: If that comes in neutral, in other words, not too
1:55
Speaker 7: many jobs lost or gained and the unemployment rate basically unchanged,
1:59
Speaker 7: then they can put that aside again as the Fed officials,
2:02
Speaker 7: including The chairman has said today the labor market is
2:06
Speaker 7: stable at this point. So they're worried about inflation, and
2:09
Speaker 7: we get on the 12th of September the CPI report,
2:13
Speaker 7: followed by the PPI report. And then those two numbers
2:16
Speaker 7: can be used to come up with the PCE index
2:19
Speaker 7: of inflation, which we won't get until the end of September,
2:23
Speaker 7: but they'll have a pretty good idea of what it is,
2:25
Speaker 7: so they will know whether inflation is going down, as
2:29
Speaker 7: they hope, or whether it is.
2:30
Speaker 2: Making no progress.
2:31
Speaker 7: And if it's making no progress after CPI and PPI,
2:35
Speaker 7: you can bet that the markets are going to be
2:36
Speaker 7: pricing in a Fed rate hike. Not because the chairman
2:39
Speaker 7: said it's definitely going to happen, but because he's told
2:43
Speaker 7: them enough now that they can infer that that's probably
2:46
Speaker 7: the path that the Fed will take.
2:49
Speaker 5: So did the mood music change after the speech? Mike,
2:52
Speaker 5: what's the mood there? Are people surprised that he took
2:56
Speaker 5: such a hard line?
3:01
Speaker 2: I think the markets pressured him into that.
3:02
Speaker 7: They basically told him that they were not happy with
3:06
Speaker 7: the way he had performed at the July.
3:08
Speaker 2: 29th press conference. And today he gave them what they wanted.
3:11
Speaker 7: He basically said at this point that inflation is a danger,
3:16
Speaker 7: which he said before. But then he added on to
3:18
Speaker 7: that and said the Fed will act if necessary.
3:21
Speaker 2: And he didn't, as I mentioned.
3:23
Speaker 7: Earlier, specifically talk about rate increases, but he did suggest
3:28
Speaker 7: enough to infer that's what he's talking about.
3:31
Speaker 2: And that's what the markets wanted to hear.
3:33
Speaker 7: They wanted to know not just that he doesn't like inflation,
3:36
Speaker 7: but that he's going to do something about it and
3:38
Speaker 7: how he's going to do something about it.
3:42
Speaker 3: Mike, all of this is factoring into the conversation about
3:45
Speaker 3: the Fed's credibility. We spoke earlier this week and you
3:48
Speaker 3: broke the news in terms of Lisa Cook sending this
3:51
Speaker 3: letter to the White House. Just wondering if we've gotten
3:53
Speaker 3: any update there and what you're watching for in terms
3:57
Speaker 3: of how the White House may be responding to everything
4:00
Speaker 3: that we're hearing today.
4:04
Speaker 7: Well, we're all kind of monitoring the Truth Social feed
4:07
Speaker 7: because we want to see if the president says anything
4:11
Speaker 7: about Lisa Cook, who is, by the way, here. But
4:15
Speaker 7: I have noticed in doing that that he's occupied by
4:17
Speaker 7: a whole lot of other subjects. So I don't think
4:20
Speaker 7: it's going to be top of mind for the White
4:22
Speaker 7: House today.
4:23
Speaker 2: And it would not benefit.
4:25
Speaker 7: The president a whole lot to come out and criticize
4:28
Speaker 7: this speech because, again, It's innuendo inferring and that sort
4:33
Speaker 7: of thing. So probably not going to hear anything from
4:37
Speaker 7: him until we get some sort of data point he
4:39
Speaker 7: can crow about or complain about.
4:41
Speaker 2: And then give him some advice going into the meeting.
4:46
Speaker 1: Okay, that's the model, I guess.
4:47
Speaker 5: Mike, just quickly, before we say goodbye for now, what
4:51
Speaker 5: happens if there's no hike in September?
4:53
Speaker 1: How would the bond market react?
4:59
Speaker 2: That's all totally going to depend on the data.
5:01
Speaker 7: Now, if we get a CPI that suggests that there
5:05
Speaker 7: is decreasing inflation pressure, then the market's not going to
5:09
Speaker 7: be unhappy, necessarily, if they don't get a hike.
5:13
Speaker 2: But also, remember in the speech.
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Speaker 7: Today that he laid out two criteria, not just whether
5:18
Speaker 7: inflation's going up or down, but the breadth of inflation,
5:20
Speaker 7: how many things in the inflation reports are going up
5:23
Speaker 7: or down. Fifty-four percent were going up, so a majority
5:27
Speaker 7: in the last report's So we've got to watch that
5:29
Speaker 7: as well.
5:31
Speaker 1: Great to have you with us, as always.
5:32
Speaker 5: Michael McKee with the vest that should have its own
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Speaker 5: social media account.
5:36
Speaker 1: We keep hearing about it, Mike. You look great out there.
5:38
Speaker 5: Live from Jackson Hole on this Fed. Chair Warsh, speech day.
5:44
Speaker 5: We finally survived it in keeping our eyes on the markets,
5:46
Speaker 5: as Charlie mentioned a little while ago. We are seeing
5:49
Speaker 5: an uptick here in bond yields with emphasis on the
5:53
Speaker 5: short end.
5:54
Speaker 1: The two-year up 12 ticks now to 434.
5:57
Speaker 5: The 10-year up 5 to 472. And the 30 sitting
6:01
Speaker 5: at 520 up just one tick today with a lower
6:04
Speaker 5: stock market. The S & P 500 is down 18 points.
6:08
Speaker 1: On the six-month mark, this is six months today.
6:11
Speaker 5: Since the start of the Iran war, which has come
6:14
Speaker 5: up repeatedly over the course of the past couple of
6:16
Speaker 5: hours here with so much focus on price pressure, the
6:20
Speaker 5: Strait of Hormuz being the focal point here, sending prices,
6:24
Speaker 5: of course, of energy higher, but also other things, other
6:27
Speaker 5: inputs like fertilizer. The president of the United States in
6:30
Speaker 5: the Oval Office asked about the war yesterday.
6:32
Speaker 2: Listen.
6:33
Speaker 8: Iran is right now, they're in deep trouble.
6:37
Speaker 1: They have very little capacity.
6:39
Speaker 3: It doesn't mean we're finished with the military, but the
6:41
Speaker 3: Strait of Hormuz is open.
6:44
Speaker 1: We have control and we have the blockade.
6:46
Speaker 8: We're taking a lot of boats.
6:48
Speaker 9: Millions and millions of barrels of oil are coming out
6:50
Speaker 9: of the Strait every day.
6:54
Speaker 5: There has been a question about the extent to which
6:56
Speaker 5: oil flows are resuming, depending on who you ask, to
6:59
Speaker 5: about a halfway point or two-thirds of where we were
7:02
Speaker 5: before the war effort. We frequently bring on military experts here,
7:05
Speaker 5: retired generals, to tell us about what's happening. And in
7:08
Speaker 5: this case, we speak with retired Army Brigadier General Lela Gray.
7:14
Speaker 5: who is also in the center of the political storm
7:16
Speaker 5: as a Democratic candidate for Florida's 13th Congressional District. It's
7:20
Speaker 5: great to have you, General. Thanks for joining us today
7:23
Speaker 5: on Bloomberg TV and radio. We'd like to get to
7:25
Speaker 5: the issues that are, of course, driving decisions in your campaign,
7:29
Speaker 5: and we'll be hopefully speaking with your opponent as well
7:33
Speaker 5: in the near future, Ana Paulina Luna.
7:36
Speaker 1: But I'd like to ask you about what your thought
7:38
Speaker 1: is six.
7:39
Speaker 5: Months into a war that the president initially said would
7:41
Speaker 5: last four to six weeks.
7:43
Speaker 1: Are we closer to the beginning or the end?
7:48
Speaker 10: This has been a heavy toll, I think, on certainly
7:51
Speaker 10: the military and their family members. We've lost 18 service members.
7:56
Speaker 10: We've had over 750 wounded.
7:59
Speaker 11: And this is a heavy toll for them.
8:01
Speaker 10: And if you assess where we were before we went
8:04
Speaker 10: into Iran, where we are today, I think you're going
8:06
Speaker 10: to see a stark contrast that has achieved nothing but
8:09
Speaker 10: a cost-of-living crisis. And right here in Florida, those choices,
8:14
Speaker 10: that reckless choice to go to war with Iran has
8:18
Speaker 10: created a situation for people that are unable to afford
8:22
Speaker 10: to live day to day. I just received information and
8:26
Speaker 10: found out that Floridians have paid almost $ 4 billion more
8:31
Speaker 10: for gas. Right here in my area, it's already still
8:34
Speaker 10: a dollar higher than it was before our war with Iran.
8:37
Speaker 10: And the cost of living crisis is very real here
8:39
Speaker 10: because we are a coastal economy. And the people that
8:42
Speaker 10: I'm talking to every single day, boots on the ground,
8:46
Speaker 10: they're telling me that they feel like they can't survive,
8:48
Speaker 10: that they feel like they've been forgotten. And this is
8:51
Speaker 10: exacerbated when we make a choice to go to war
8:55
Speaker 10: without the proper planning and certainly without a concrete strategic objective.
9:00
Speaker 3: At this point, though, the administration is trying to get
9:03
Speaker 3: diplomacy back on track. We heard from the U.S. Treasury
9:06
Speaker 3: Department earlier this week that there is going to be
9:09
Speaker 3: more economic pressure on Iran. At this point, do you
9:12
Speaker 3: agree with that approach from this White House that they
9:16
Speaker 3: should opt to use these other tools instead of, say,
9:19
Speaker 3: restarting kinetic action?
9:22
Speaker 10: Those tools should have been used on the front end.
9:24
Speaker 10: We should not have gone into the kinetic action. And
9:28
Speaker 10: the members that have been killed in action, I just
9:31
Speaker 10: want to let you know that I've been on the
9:34
Speaker 10: ground in many of those places. And where those service
9:36
Speaker 10: members were killed in Port Shwaiba in Kuwait, I had
9:39
Speaker 10: been in that building. And the fact that that building
9:42
Speaker 10: wasn't hardened enough or that they were removed before the
9:45
Speaker 10: attacks came in, I believe that's a dereliction of duty.
9:49
Speaker 10: Diplomacy should always come before using our military. That is
9:55
Speaker 10: our first weapon of choice, is diplomacy. And then along
9:59
Speaker 10: those lines are some of the economic sanctions and economic
10:02
Speaker 10: tools that we should be using.
10:03
Speaker 11: And that should have been used all along.
10:05
Speaker 5: I know that you've been deployed repeatedly throughout what was
10:11
Speaker 5: a 27-year Army career general, you also spent some time
10:16
Speaker 5: in a very different capacity, which I'd like to ask
10:19
Speaker 5: you about here. Having dealt with the cyber threat that's
10:22
Speaker 5: facing this country and something that we hear about quite
10:25
Speaker 5: a bit more recently because of this, you were an
10:29
Speaker 5: advisor to the U.S. Army Cyber Command after you left
10:32
Speaker 5: active duty. And there is a great concern that Iran's
10:35
Speaker 5: offensive capability could interfere with municipal water sources and any
10:40
Speaker 5: number of things that we take for granted. Do you
10:42
Speaker 5: worry about this escalating beyond the battlefield into an asymmetric
10:47
Speaker 5: space like cyber?
10:49
Speaker 11: We absolutely should take that very seriously.
10:51
Speaker 10: That's always on the table for our adversaries. And it's
10:55
Speaker 10: not just Iran, it's Russia and China and North Korea.
10:59
Speaker 10: We've got to be very clear-eyed about that, that.
11:01
Speaker 1: Cybersecurity is always- Are we capable of defending against it?
11:04
Speaker 11: I think we are.
11:05
Speaker 10: We have some of the most amazing capabilities out there.
11:08
Speaker 10: But there are new ways that are being created, particularly
11:11
Speaker 10: with artificial intelligence. So we have to keep our guard
11:14
Speaker 10: up at all times and keep advancing our own capability
11:16
Speaker 10: to not just defend ourselves, but to detect those threats
11:20
Speaker 10: as well.
11:20
Speaker 3: Well, part of this is that the Pentagon is asking
11:24
Speaker 3: for more resources to help bulk-up capabilities. When it comes
11:28
Speaker 3: to the conflict in Iran, the administration is asking for
11:31
Speaker 3: about $ 67 billion in supplemental funding. If you were elected
11:35
Speaker 3: to Congress, would you vote for that?
11:38
Speaker 11: I would take a hard look at the defense budget.
11:40
Speaker 10: We need to be modernizing in ways that are for
11:43
Speaker 10: future wars. And we've seen the future of warfare right now. Drones, cyber,
11:49
Speaker 10: and we need to be investing heavily in that, those
11:52
Speaker 10: particular lines of ability to attack or defend ourselves. And
11:57
Speaker 10: so I think that one of the areas that we
12:00
Speaker 10: need to make sure that we're doing is we're not
12:01
Speaker 10: overspending in legacy systems.
12:04
Speaker 11: That we need to.
12:05
Speaker 10: Make sure that our alignment of our dollars, because it's
12:08
Speaker 10: Congress's job, it's Congress's job to raise an army, it's
12:12
Speaker 10: Congress's job to tax and to spend, that we should
12:15
Speaker 10: have very strict oversight over every dollar that's expended, that's
12:19
Speaker 10: planned to be expended, and then doing follow-up with that.
12:22
Speaker 10: And that's actually not going on in my mind. When
12:24
Speaker 10: we give non-compete contracts to companies or that we're not
12:31
Speaker 10: tracking every dollar that's being spent out there. That's some
12:34
Speaker 10: due diligence that we need to make sure that we're
12:37
Speaker 10: adhering to every single day. And when you don't, it
12:40
Speaker 10: invites corruption. And we're seeing quite a bit of that
12:42
Speaker 10: going on every single day. In the administration, and my counterpart,
12:48
Speaker 10: the Congresswoman Luna, is part of that problem. She's invested
12:52
Speaker 10: in a donor's company, in one of her own donor's company.
12:55
Speaker 10: And in the military, we have some of the highest
12:58
Speaker 10: ethical standards out there. And I want to see those
13:00
Speaker 10: same high ethical standards applied to members of Congress, the
13:03
Speaker 10: Supreme Court, the administration, cabinet members across the board.
13:07
Speaker 11: Because we owe that to the American people.
13:09
Speaker 10: And part of our job of oversight of spending their
13:12
Speaker 10: tax dollars is making sure that we are adhering to
13:14
Speaker 10: the highest ethical standards.
13:17
Speaker 5: Well, we'd like to stay in touch with you as
13:19
Speaker 5: well as your opponent, Annapolina Luna, who we have invited
13:22
Speaker 5: the congresswoman to talk to us here on Balance of Power.
13:25
Speaker 5: Lila Gray, General, thank you for joining us today on Bloomberg.
13:28
Speaker 5: And we look forward to the next round with our
13:30
Speaker 5: eyes on the price of gas in the state of Florida, Tyler, $ 3. 94.
13:37
Speaker 5: which brings us back to the straight right where we
13:39
Speaker 5: started this out. Stay with us on Balance of Power.
13:41
Speaker 5: We'll have much more coming up after this.
13:46
Speaker 4: You're listening to the Bloomberg Balance of Power podcast. Catch
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14:05
Speaker 5: Keying off the comments of Fed Chair Kevin Warsh earlier
14:09
Speaker 5: today at Jackson Hole.
14:13
Speaker 1: We've generated a lot of headlines, and.
14:14
Speaker 5: The markets have been keying off of them with a
14:17
Speaker 5: serious take on inflation, saying it is not slowing, vowing
14:20
Speaker 5: to reach the 2% target. This feeds into conversations, Tyler Kendall,
14:26
Speaker 5: about the direction of the bond market, which was listening
14:28
Speaker 5: intently this morning, but also the future of the stock
14:31
Speaker 5: market as prices set the path forward.
14:34
Speaker 3: Right. Investors seeming to get what they wanted to hear.
14:37
Speaker 3: We got a much different reaction today in the bond
14:39
Speaker 3: market compared to the last time that Fed Chair Kevin
14:42
Speaker 3: Warsh spoke after that July FOMC meeting. And part of
14:46
Speaker 3: the reaction then factored into a conversation that David Weston
14:50
Speaker 3: just had on Wall Street Week this week. It's airing
14:53
Speaker 3: tonight with David Bianco, the DWS America's CIO.
14:57
Speaker 11: Here's a preview.
14:59
Speaker 12: We've noticed during the summer that yields, and especially real yields,
15:03
Speaker 12: have gotten to some of the highest levels they've been
15:05
Speaker 12: in nearly 25 years, since before the financial crisis of 2008-9.
15:10
Speaker 12: There are a bunch of causes to it. This has
15:13
Speaker 12: been playing out over some time. So you're saying, yes,
15:15
Speaker 12: it's been a gradual rise in yields, but we've gotten
15:18
Speaker 12: to the point where a lot of people turn around
15:19
Speaker 12: and say, what happened here? These are really high interest rates,
15:24
Speaker 12: high real interest rates.
15:26
Speaker 2: What's happened?
15:27
Speaker 12: What I think is interesting to note is that even
15:28
Speaker 12: though topics like inflation, which remains above the Fed's target
15:32
Speaker 12: for more than five years, that's important. And there's a
15:35
Speaker 12: lot of future inflation uncertainty. And we always talk about
15:38
Speaker 12: things like employment and growth. That, to me, is not
15:41
Speaker 12: the main reason why yields have climbed to these levels
15:44
Speaker 12: and to new highs in the past 25 years this summer.
15:47
Speaker 12: The main reason that real interest rates are so high
15:50
Speaker 12: is secular in nature. And it is the deficit is
15:54
Speaker 12: the government debt to GDP, the deficit above six percent
15:58
Speaker 12: of GDP likely to stay that way for a long time.
16:00
Speaker 12: And importantly, how that deficit needs to be funded. It
16:04
Speaker 12: needs to be funded more domestically. We have a new
16:08
Speaker 12: world trade order. We buy less of China's things. They
16:11
Speaker 12: buy far less of our bonds. But also Europe, Japan,
16:15
Speaker 12: they're running deficits. Japan has inflation. They'll probably be raising
16:19
Speaker 12: their interest rates further. And even in Germany, my colleagues
16:23
Speaker 12: at Deutsche Bank, you know, even the Germans are Keynesians now,
16:26
Speaker 12: a lot of fiscal deficit spending.
16:28
Speaker 13: When we think about the yield on treasuries, we tend
16:32
Speaker 13: to focus on the Fed, even as they meet in
16:35
Speaker 13: Jackson Hole this week. But we had the Secretary of Treasury,
16:38
Speaker 13: Scott Besant, last week sort of get in the game,
16:40
Speaker 13: it felt like.
16:41
Speaker 11: Got in the game.
16:42
Speaker 13: With his move that appeared to be directed toward the
16:44
Speaker 13: long end. What do you make of that? It's ironic
16:47
Speaker 13: to me, at least, that after we'd had Kevin Warsh say,
16:51
Speaker 13: pay attention to the ball, not the referee, we had
16:53
Speaker 13: the referee in the form of the Treasury Secretary jump
16:55
Speaker 13: in the game.
16:56
Speaker 11: Oh, you're reading my mind. I was thinking the same thing.
16:58
Speaker 3: Exactly.
16:59
Speaker 8: Exactly.
17:00
Speaker 12: Now, there are a lot of things that I admire
17:03
Speaker 12: and respect about Treasury Secretary Besant. Really energized Treasury Secretary.
17:08
Speaker 12: A lot of great ideas and targets. One of my
17:11
Speaker 12: favorite things is the 3-3-3. Let's get real GDP growth
17:14
Speaker 12: to 3%. Let's get the deficit down to 3%. That'll
17:16
Speaker 12: be hard from over 6%. Increase more oil production. Those
17:20
Speaker 12: are great ways to really bring this problem to control.
17:23
Speaker 12: But this particular idea, I don't like at all. I
17:26
Speaker 12: don't think it's going to work. Maybe our Treasury Secretary is,
17:30
Speaker 12: you know, taking inspired by our president to jawbone the
17:34
Speaker 12: market and tell the market what it wants to hear.
17:38
Speaker 12: But I don't think it would take a lot more
17:40
Speaker 12: money than they've talked about to drive longer term Treasury
17:42
Speaker 12: yields down. And it's inappropriate for the Treasury Department to
17:47
Speaker 12: do that when that's monetary policy.
17:49
Speaker 11: The Fed should be doing it.
17:52
Speaker 5: You can hear the full conversation with David Bianco on
17:55
Speaker 5: the Terminal. and online and tonight on Bloomberg's Wall Street
17:59
Speaker 5: Week with David Weston. That starts at 6 p.m. Eastern time,
18:02
Speaker 5: right after the late edition of Balance of Power. We
18:04
Speaker 5: are watching yields move today. I will note after that
18:07
Speaker 5: conversation about the 30-year where the yield was negative coming
18:11
Speaker 5: out of the speech this morning, it is now up
18:13
Speaker 5: a tick back to 5.20. 5.20 on the 30-year. Much
18:18
Speaker 5: more emphasis on the short end of the curve, though.
18:20
Speaker 5: The two-year is up 11%. ticks to 434, the 10
18:23
Speaker 5: years up 5 to 472.
18:27
Speaker 1: Stock market decidedly lower now.
18:29
Speaker 5: The S & P 500 is down 23 points, and
18:31
Speaker 5: the NASDAQ is losing 137. Tyler, the conversation about prices
18:36
Speaker 5: is a stubborn one, as is the credibility of the
18:39
Speaker 5: Fed and what the market believes might come at this
18:42
Speaker 5: next meeting. We see an increase in expectations for an
18:46
Speaker 5: interest rate hike. A lot of folks are asking, after
18:49
Speaker 5: the case that Warsh made this morning, why there might
18:51
Speaker 5: not have been a hike last meeting.
18:53
Speaker 3: And also questions here in Washington about the credibility in
18:56
Speaker 3: terms of bringing down a $ 40 trillion public debt. And
19:01
Speaker 3: as we still wait for more details from the Treasury Secretary,
19:04
Speaker 3: Scott Besson, who said that as soon as this week,
19:06
Speaker 3: we could have gotten what it's going to look like
19:09
Speaker 3: in terms of fiscal consolidation to help ease some of
19:12
Speaker 3: these concerns when it comes to yields.
19:14
Speaker 1: That's right. So we play it to the panel.
19:16
Speaker 5: Bloomberg Politics contributors Rick Davis and Jeanne Shanzano join us
19:19
Speaker 5: right now. Rick is our Republican strategist, a partner at
19:22
Speaker 5: Stonecourt Capital. Jeanne is our Democratic analyst and democracy visiting
19:25
Speaker 5: fellow at Harvard Kennedy School's Ash Center. What's your thought here,
19:30
Speaker 5: Rick Davis, when it comes to the job Kevin Warsh
19:33
Speaker 5: has of convincing the market that he is serious with
19:36
Speaker 5: somehow not crossing his boss?
19:39
Speaker 9: Yeah, the hawks have landed at the Fed, it sounds like.
19:42
Speaker 9: And look, I mean, he has been not the kind
19:46
Speaker 9: of Fed chair that wants to spend a lot of
19:49
Speaker 9: time communicating. And that means that we're going to have
19:52
Speaker 9: a little bit of a vacuum when it comes to
19:55
Speaker 9: reassuring consumers.
19:58
Speaker 1: And that is clear, too, in the mission consumer industry.
20:04
Speaker 9: Confidence index, sentiment index, where this latest numbers out of
20:10
Speaker 9: Michigan indicate that consumers are thinking long term that interest
20:14
Speaker 9: rates are going to be sustainable over three and a
20:17
Speaker 9: half to, in many cases, four percent. That's going to
20:21
Speaker 9: mean someone has to have a conversation with consumers even
20:25
Speaker 9: while monetary policy is being affected. I don't know if
20:31
Speaker 9: he can actually play the ref and convince Donald Trump
20:35
Speaker 9: of the merits of higher interest rates. Even this afternoon,
20:38
Speaker 9: Donald Trump was out flagging lower interest rates at a
20:41
Speaker 9: time when his Fed chief has done exactly the opposite.
20:45
Speaker 9: So I think he's got the same uphill slog on
20:48
Speaker 9: that case that the previous Fed chairman had.
20:55
Speaker 3: Well, so Jeannie, to Rick's point, what does an effective
20:57
Speaker 3: conversation with consumers actually look like for those that are
21:01
Speaker 3: running for office this year?
21:04
Speaker 14: Yeah, it's going to be really difficult because, Tyler, people
21:08
Speaker 14: are so unhappy with the state of the economy. I mean,
21:11
Speaker 14: you look at the latest CBS poll, 69 percent of
21:15
Speaker 14: Americans dissatisfied. For the first time in years, at least
21:20
Speaker 14: as long as I can almost remember, now more Americans
21:24
Speaker 14: are saying that they trust Democrats to manage the economy
21:28
Speaker 14: than they trust Republicans. And of course, you look at
21:32
Speaker 14: Donald Trump's own economic approval ratings and.
21:35
Speaker 11: Those have plummeted.
21:37
Speaker 14: So the kind of conversations that, you know, with like
21:40
Speaker 14: 60 days left till the midterm and even less than
21:43
Speaker 14: that when voting begins, it's going to be an uphill
21:47
Speaker 14: battle for Republicans to try to reclaim this position. And
21:51
Speaker 14: so I think what we're going to see in the election,
21:54
Speaker 14: at least, is to try to deviate to other issues.
21:58
Speaker 14: Like we listened to Ted Cruz talking about the Senate
22:01
Speaker 14: race in Texas. He's not gonna focus on the economy.
22:04
Speaker 14: He's focusing more on Tallarico and trying to paint him
22:09
Speaker 14: as extreme and red versus his counterpart there, Ken Paxton.
22:15
Speaker 14: So I think they're gonna try to deviate from it.
22:18
Speaker 11: And you mentioned.
22:19
Speaker 14: And I think it's so important, the $ 40 trillion in debt.
22:24
Speaker 14: That is an astonishing number. And even as we move
22:28
Speaker 14: away from the electoral aspect of this, what does this
22:31
Speaker 14: do as Congress comes back and tries to deal with
22:35
Speaker 14: a plan by the White House for more spending as
22:40
Speaker 14: we remain in this war with Iran and on the military?
22:43
Speaker 14: These are big policy questions going to be very hard
22:47
Speaker 14: to deal with.
22:48
Speaker 5: Does Kevin Warsh dare hike interest rates in September, Rick,
22:52
Speaker 5: when you start getting that close to an election, it
22:55
Speaker 5: becomes a question about the political implications of a move
22:58
Speaker 5: like that. And if he does, there will be a
23:01
Speaker 5: period of time in which we have high prices and
23:03
Speaker 5: even higher interest rates.
23:05
Speaker 1: What's the impact on the voter?
23:08
Speaker 9: Well, taking my Republican hat off and just wearing an
23:10
Speaker 9: American hat, I hope he pays no attention to the
23:13
Speaker 9: political machinations of midterm elections.
23:16
Speaker 1: That's not his job.
23:18
Speaker 9: And even though he worked for a president, he's supposed
23:20
Speaker 9: to be independent, which is why we need him to
23:23
Speaker 9: take a blind eye to the political realities of what's
23:28
Speaker 9: happening in the country. The advice I've always given independent
23:32
Speaker 9: agency directors is your day job is the thing you
23:37
Speaker 9: got to focus on, not the politics, not the White House,
23:40
Speaker 9: not all the other noise in the media that you
23:42
Speaker 9: have to deal with. If you do your day job,
23:44
Speaker 9: everything sort of settles in the right way. And so
23:47
Speaker 9: that's what the chairman has to do. He's got to
23:49
Speaker 9: do his day job. And if it requires a rate hike,
23:52
Speaker 9: then he's going to have to talk about.
23:53
Speaker 8: A rate hike.
23:54
Speaker 9: It would help if he prepared the public for those
23:57
Speaker 9: kinds of things. In other words, if you sort of
24:00
Speaker 9: know it's coming or your data-driven models are saying– that
24:05
Speaker 9: it looks like you're going to do it, then don't
24:07
Speaker 9: surprise anybody. I mean, try to lay the groundwork for it.
24:11
Speaker 9: But at the end of the day, pay no attention
24:14
Speaker 9: to the man behind the curtain. Politics will only screw
24:17
Speaker 9: you in the end.
24:19
Speaker 3: Well, actually, our Michael McKee had spoken to Jeff Schmidt yesterday,
24:22
Speaker 3: who said that the midterms wouldn't be a factor in
24:26
Speaker 3: any of their decisions as they maintain this institutional structure.
24:29
Speaker 11: Independence.
24:30
Speaker 3: Jeannie, I wanted to ask you about something that Kevin
24:32
Speaker 3: Warsh's speech actually didn't hit on, which is higher mortgage rates.
24:35
Speaker 3: This month, we're seeing them at their highest level since
24:38
Speaker 3: July of last year. What could the Democratic Party do
24:42
Speaker 3: at this point in time? We're talking a lot about
24:44
Speaker 3: Republicans playing defense, but as a Democratic strategist, how could
24:48
Speaker 3: a Democratic candidate go on the offense here as we
24:51
Speaker 3: get closer and closer to election day?
24:59
Speaker 14: You know, the housing issue is one that is so
25:02
Speaker 14: stunning because, of course, this was the bill that the
25:05
Speaker 14: president held up after a bipartisan passage. It doesn't address, obviously,
25:11
Speaker 14: interest rates directly, but it does address the cost of housing,
25:15
Speaker 14: which remains a critical challenge for Americans across the country.
25:19
Speaker 1: And even the.
25:20
Speaker 14: Other day, the other week, he was speaking ill about
25:23
Speaker 14: that particular bill. And it's something that Republicans would certainly
25:28
Speaker 14: want to run on. But for Democrats, I think what
25:30
Speaker 14: they need to do is highlight the fact that a
25:34
Speaker 14: lot of the economic pain we are feeling, in fact,
25:37
Speaker 14: most of it, which has led to these higher mortgage rates,
25:41
Speaker 14: and they are high, I can personally attest to, is
25:45
Speaker 14: the fact that This president has gotten into a tariff
25:50
Speaker 14: war with all of our allies and across the world.
25:54
Speaker 11: And he has gotten us into a war in Iran.
25:56
Speaker 14: All of that has helped spike these plots, and they
25:59
Speaker 14: have to be controlled.
26:02
Speaker 2: All right.
26:02
Speaker 3: Our political panel today, both Bloomberg Politics contributors Rick Davis
26:05
Speaker 3: and Jeanne Shanzano.
26:07
Speaker 1: Thank you both.
26:07
Speaker 5: Stay with us on Balance of Power. We'll have much
26:10
Speaker 5: more coming up after this.
26:15
Speaker 4: You're listening to the Bloomberg Balance of Power podcast. Catch
26:19
Speaker 4: us live weekdays at noon and 5 p.m. Eastern on
26:22
Speaker 4: Apple CarPlay and Android Auto with the Bloomberg Business app.
26:25
Speaker 4: Listen on demand wherever you get your podcasts or watch
26:28
Speaker 4: us live on YouTube.
26:31
Speaker 5: We connect the dots between Washington and Wall Street, and
26:34
Speaker 5: it's not just Washington and the markets on Wall Street.
26:37
Speaker 5: It is frequently Washington and the prices you're paying. Think
26:42
Speaker 5: of the economy as a whole being impacted by decisions
26:47
Speaker 5: made here. And one of the most recent examples, of course,
26:49
Speaker 5: is the president's call to lower tariffs on beef imports.
26:54
Speaker 5: We're not sure from where, which is why you're seeing
26:57
Speaker 5: all these mystery meat headlines.
26:58
Speaker 1: Where's the beef? But about two weeks.
27:02
Speaker 5: Worth is what they're talking about here in an effort.
27:04
Speaker 1: To lower prices. It was out last evening.
27:09
Speaker 5: Bobby Vanns. Man, the ribeyes looked good. It's like the
27:14
Speaker 5: best steak in the city. People are paying up for it.
27:17
Speaker 5: It was 70-something bucks, right, for a ribeye. Not that
27:20
Speaker 5: they have an opportunity to raise prices that much. On
27:23
Speaker 5: the consumer level, it's in many cases shrinking margins for
27:28
Speaker 5: our farmers and processors. So how did we get here?
27:32
Speaker 5: You've got a herd at a 75-year low. We've talked
27:36
Speaker 5: about this, and it has to do with any number
27:38
Speaker 5: of factors, including a restructuring by Tyson's massive Lexington, Nebraska facility.
27:44
Speaker 5: You had over 3,000 workers there, 5,000 cattle a day.
27:48
Speaker 5: Cutbacks at its Amarillo, Texas plant. I'll add to that
27:51
Speaker 5: now with JBS USA closing major beef production plants in Pennsylvania,
27:57
Speaker 5: another one near Memphis. It's about 1,700 workers there. And so, yeah,
28:01
Speaker 5: It starts to impact prices. Ground beef up 25% since
28:05
Speaker 5: the start of 2025. Beef prices year over year up 12%
28:11
Speaker 5: with a big jump in beef roasts. It's ground beef
28:15
Speaker 5: that the president's talking about in this case. We got
28:18
Speaker 5: into this with Sid Miller. I'll tell you what, you
28:20
Speaker 5: want to go viral? Talk to Sid. He's the agriculture
28:23
Speaker 5: commissioner in Texas. And he dialed us up yesterday on
28:27
Speaker 5: the late edition of Balance of Power from his car
28:29
Speaker 5: to wearing the 10-gallon hat. And you know, look, this
28:33
Speaker 5: guy is MAGA through and through. Donald Trump called him
28:37
Speaker 5: his Texas.
28:38
Speaker 1: Guy on the campaign.
28:40
Speaker 5: And he still, he said he loves everything that Donald Trump,
28:43
Speaker 5: the only time he has ever disagreed with him was
28:45
Speaker 5: on this one. And the point he was making was
28:48
Speaker 5: not only are you taking profits away from ranchers who
28:51
Speaker 5: cannot then reinvest in growing the herd. But beef prices
28:56
Speaker 5: are high along with everything else. So why are you
28:58
Speaker 5: picking on me? He actually had a grocery store flyer
29:01
Speaker 5: with him in the car.
29:02
Speaker 1: Listen to this.
29:03
Speaker 15: I don't think beef is all that high compared to
29:05
Speaker 15: everything else. I just went to the grocery store. I
29:08
Speaker 15: don't know if you can see this or not, but
29:10
Speaker 15: there's ground beef, 80-20, $ 4. 99 a pound. Chuck roast, $ 7. 99
29:16
Speaker 15: a pound. That seems fairly reasonable, especially when I am
29:20
Speaker 15: paying as a cattleman the highest prices for my three
29:23
Speaker 15: top inputs. High feed because of the drought. High diesel
29:27
Speaker 15: prices because of the Strait of Hormuz and the highest
29:29
Speaker 15: fertilizer prices I've ever paid, also because of the Strait
29:33
Speaker 15: of Hormuz. So we're not on easy times, and bringing
29:37
Speaker 15: in foreign beef is complicating the problem.
29:40
Speaker 1: A witch's brew.
29:42
Speaker 5: Three factors that may not be changing anytime soon, to
29:46
Speaker 5: the point where we started today with Kevin Warsh telling
29:49
Speaker 5: us at Jackson Hole that prices had to come down
29:52
Speaker 5: and that the Fed had work to do.
29:55
Speaker 1: Yes, Sam, triple witching.
29:59
Speaker 5: So after we talked to Sid, we heard about Will Harris.
30:02
Speaker 5: We thought we would bring him in for a conversation
30:04
Speaker 5: because he knows a lot more about this than we do.
30:07
Speaker 5: Will Harris, a sixth generation cattleman, author of the book,
30:11
Speaker 5: A Bold Return to Giving a Damn, One Farm, Six Generations,
30:18
Speaker 5: and the Future of Food. He joins us right now
30:22
Speaker 5: live from the great White Oaks Pastures in Georgia, where
30:27
Speaker 5: he is the owner. Will Harris, it's great to meet you.
30:30
Speaker 5: Thank you for coming on Bloomberg today. Is the president's
30:33
Speaker 5: move here making your profit margin shrink?
30:38
Speaker 8: I'm sorry. I was thanking you for having me on.
30:40
Speaker 8: What was the question?
30:42
Speaker 1: Well, I appreciate your being a gentleman.
30:44
Speaker 5: Does the president's move here shrink your profit margins at
30:48
Speaker 5: White Oaks Pastures?
30:51
Speaker 8: I suspect that it could. I'll say that....
30:56
Speaker 16: I am not opposed to opening the borders for importation
31:02
Speaker 16: of beef. I think that we need it. I think
31:04
Speaker 16: that beef is a wonderful health food that people are
31:09
Speaker 16: increasingly accepting and embracing. And I want to see wealthy
31:14
Speaker 16: people be able to eat beef, and I want to
31:16
Speaker 16: see poor people be able to eat beef.
31:19
Speaker 8: Beef, as you pointed out earlier, is as high as
31:23
Speaker 8: it's ever been.
31:25
Speaker 16: My family's been on this farm since 1866, and beef
31:28
Speaker 16: has never been as high relative to other prices as
31:32
Speaker 16: it is right now. It disturbs me that people who
31:37
Speaker 16: want beef, need beef, can't afford beef.
31:40
Speaker 8: Beef is very cheap to import.
31:48
Speaker 16: I think there could well be problems with imported beef,
31:54
Speaker 16: but it's cheap, and there are people that would like
31:57
Speaker 16: to buy it, and I'd like for them to. What
32:00
Speaker 16: I have a real problem with is the country of
32:04
Speaker 16: origin labeling. Until last January 1st, meat companies could bring
32:12
Speaker 16: in beef from many, many countries in the world, and
32:18
Speaker 16: label it product of the USA legally because that value
32:21
Speaker 16: was added in this country.
32:24
Speaker 8: That is wrong. That is so wrong in every sense
32:26
Speaker 8: of the word.
32:28
Speaker 16: I'm not opposed to the big four meat companies bringing
32:32
Speaker 16: in beef.
32:33
Speaker 8: I think it's good. I want people to be able
32:35
Speaker 8: to afford beef.
32:37
Speaker 16: I think it's horribly misleading to call product of the
32:41
Speaker 16: USA when the animal was born, raised, slaughtered, in South
32:47
Speaker 16: America or Australia or New Zealand or many, many other countries.
32:54
Speaker 1: You know, it's funny. Sid brought this up, too.
32:56
Speaker 5: When we talked to him last evening, he brought up
32:58
Speaker 5: this very same issue, and he made the point as well,
33:01
Speaker 5: not only about the country of origin, but he said
33:03
Speaker 5: when we're bringing in these imports, it's better to have
33:06
Speaker 5: them cross the border on the hoof than in the box.
33:10
Speaker 1: Why is that?
33:13
Speaker 16: Well, I think it would be because you're spared, depending
33:17
Speaker 16: upon other governments, for the manufacturing process of slaughter.
33:21
Speaker 8: But it's impractical.
33:23
Speaker 16: Beef is brought into the— cattle are brought into this country
33:26
Speaker 16: on the hoof, primarily from Canada or Mexico.
33:32
Speaker 8: I don't think it's.
33:32
Speaker 16: Wrong to bring in beef if it's USDA-inspected. But I
33:37
Speaker 16: do think that the consumer has the right to know where.
33:40
Speaker 8: It came from. It certainly has no right there for.
33:44
Speaker 16: Companies to lie to them saying product of USA when
33:48
Speaker 16: the animal never lived in the United States.
33:50
Speaker 8: That is so wrong.
33:52
Speaker 16: That was not true until 2015. In 2015, big meat
33:58
Speaker 16: companies lobbied for that change in labeling. Prior to that,
34:03
Speaker 16: to carry the product of USA label, the animal had
34:06
Speaker 16: to be born, raised, and slaughtered.
34:09
Speaker 8: In one of the 50 states.
34:11
Speaker 16: That changed, and it changed for marketing reasons for big beef. Yes, sir.
34:19
Speaker 5: I'm looking at diesel today at $ 5. 61 a gallon on
34:26
Speaker 5: average nationally. Sid also talked about fertilizer. What are your
34:30
Speaker 5: highest input costs? What's making this hurt the most for
34:33
Speaker 5: you and farmers like you?
34:37
Speaker 16: Well, of course, buying live cattle in today's market and
34:42
Speaker 16: turning it into beef is very, very expensive. My customers
34:50
Speaker 16: have made the decision to buy beef that comes from
34:54
Speaker 16: a farm like mine that was raised in the way
34:56
Speaker 16: that ours is raised. We spend a lot of time
35:01
Speaker 16: and effort and energy on our educational component of letting
35:04
Speaker 16: our customers know how we do it.
35:07
Speaker 8: And by the way, this is not an advertisement for
35:09
Speaker 8: White Oak Pastures.
35:10
Speaker 16: I own White Oak Pastures, but there are a number
35:14
Speaker 16: of really good beef cattle producers, beef producers in this
35:18
Speaker 16: country that.
35:18
Speaker 8: Are doing it the way we're doing it.
35:22
Speaker 16: Sadly, there's a big industry of commercial beef production that's
35:26
Speaker 16: not doing it the way that we do it. That's
35:29
Speaker 16: true in this country. It's true in Brazil, Australia, New Zealand, Uruguay.
35:37
Speaker 16: let's just tell the consumer the truth. Let's tell them
35:40
Speaker 16: exactly where it comes from and let them make the decision.
35:46
Speaker 16: Consumers can pay from as low as what you say earlier, $ 6, $ 7,
35:52
Speaker 16: $ 8 a pound for beef to as high as $ 13
35:54
Speaker 16: a pound for beef. If they do, it's because the
35:59
Speaker 16: higher beef has attributes that the customer has made the
36:02
Speaker 16: decision they're willing to pay for.
36:05
Speaker 8: Some consumers, the.
36:09
Speaker 16: Animal welfare of the production system is very, very important.
36:13
Speaker 16: Higher animal welfare has a great cost. So the beef
36:17
Speaker 16: costs more. There are customers that are willing to pay that.
36:20
Speaker 16: There are other beef consumers that can't afford that. They
36:25
Speaker 16: want the cheapest beef they can get. And I'm not
36:28
Speaker 16: trying to deprive those people of the opportunity to buy it.
36:33
Speaker 16: I'm not opposed to the importation of beef. I'm opposed
36:37
Speaker 16: to masking. The origin of a product so that the
36:43
Speaker 16: importer can get more thought. I'm vehemently opposed to that.
36:46
Speaker 5: You sound like a man of the people to me,
36:48
Speaker 5: Will Harris. You know, the president made a post online
36:51
Speaker 5: a little while ago, right before you came on. You
36:53
Speaker 5: mentioned the beef processors, and I'd love your thought on this.
36:57
Speaker 5: He says, for years I have heard that ranchers have
37:00
Speaker 5: a tremendous problem with the big processors, who many say
37:04
Speaker 5: are a nasty monopoly. He said, I can't let that
37:07
Speaker 5: happen in order to break this powerful monopoly. I am
37:10
Speaker 5: authorizing legal documents to be drawn in order to allow
37:13
Speaker 5: farmers and ranchers to be given the right to process
37:16
Speaker 5: their own food. Is this the right move right now?
37:21
Speaker 8: It is.
37:22
Speaker 16: And I was there when that document was signed, and
37:24
Speaker 16: I'm in favor of it. You know, 85% of the
37:29
Speaker 16: beef in this country comes from four major international companies.
37:35
Speaker 16: Beef packers, four, four control 85%. That level of market
37:41
Speaker 16: concentration is, I mean, that just hadn't happened much since
37:46
Speaker 16: the Depression.
37:47
Speaker 8: But it's what we've evolved into.
37:49
Speaker 16: And all beef is not created equal. There's currently 50%
37:53
Speaker 16: lean beef the value is $ 1. 31 a pound. When you
38:09
Speaker 16: slaughter the fat feedlot cattle, you wind up with a
38:14
Speaker 16: lot of product called 50% lean beef trim. It's 50% fat, 50% lean.
38:20
Speaker 16: That product sells for an average today of $ 1. 31 per pound.
38:25
Speaker 16: That's not edible. It's not edible, but it's legal to eat.
38:29
Speaker 16: It's just you wouldn't eat it. But what the big
38:33
Speaker 16: international packers do is bring in super lean beef, 90%
38:40
Speaker 16: lean beef, 95% lean beef.
38:42
Speaker 8: Which is about $ 4 a pound.
38:44
Speaker 16: Well, you can take a pound of 95% lean imported
38:48
Speaker 16: beef and a pound of this American product that's 50%
38:52
Speaker 16: from the feedlots.
38:54
Speaker 8: And come up with a product that is.
39:00
Speaker 16: Excuse me, 72% lean beef, and the cost is $ 2. 66
39:07
Speaker 16: per pound. $ 2. 66 per pound for the beef. Now, that
39:13
Speaker 16: doesn't include packaging and transportation, but it's a super cheap
39:18
Speaker 16: product that can be made by bringing this beef in,
39:23
Speaker 16: and there are people who will choose to buy it.
39:27
Speaker 16: And those people have the right to make that choice.
39:31
Speaker 16: My customers will not choose to buy that beef. It
39:34
Speaker 16: is not a competitive product for me. But I do
39:37
Speaker 16: want people who want good beef, can't afford our beef,
39:41
Speaker 16: I want them to have a product that they can
39:43
Speaker 16: afford that would be good for them.
39:45
Speaker 8: And I think this product is going to be good.
39:50
Speaker 8: All right.
39:52
Speaker 1: We might be having a little trouble with the Wi-Fi
39:55
Speaker 1: on the farm there, James. Let me know if we
39:56
Speaker 1: can still hear each other.
39:59
Speaker 5: I want to ask you about interest rates are a
40:01
Speaker 5: big story today, and they've been rising. This is something
40:03
Speaker 5: that everyone's feeling here. Have higher interest rates reduced the
40:08
Speaker 5: value of your farm, or has the emergence of data
40:11
Speaker 5: centers actually increased it?
40:15
Speaker 8: There's no doubt about that question.
40:17
Speaker 16: The The burgeoning of these things like data centers and,
40:28
Speaker 16: to a lesser extent, solar voltaic arrays and other non-agricultural
40:34
Speaker 16: uses has really caused land to not be affordable by
40:39
Speaker 16: farmers anymore. It's very disturbing to me. I am the
40:43
Speaker 16: fourth generation to own this farm. I have grown daughters
40:47
Speaker 16: with spouses and children who will be the fifth generation.
40:51
Speaker 8: The children will be the sixth. And that just doesn't
40:54
Speaker 8: happen much anymore.
40:56
Speaker 16: And it doesn't happen because land has become so expensive
40:59
Speaker 16: that even if you're farming the land yourself and doing
41:03
Speaker 16: a good job, it yields a very low return on investment.
41:08
Speaker 16: But it's a very attractive investment for very liquid entities,
41:15
Speaker 16: very wealthy people to buy. It's a non-depreciating asset. Land
41:23
Speaker 16: is a non-depreciating asset. There aren't many. Land, precious metals, gems,
41:31
Speaker 16: not much else. So when a very liquid entity, person,
41:37
Speaker 16: company wants to invest capital in a non-depreciating asset, land
41:45
Speaker 16: is the ultimate. There's a great demand for it. It
41:49
Speaker 16: makes it hard for farmers to be able to afford it.
41:53
Speaker 16: I worry a lot about that. a succession plan for
41:57
Speaker 16: most families. The old European way was the eldest son
42:03
Speaker 16: inherited the estate. And the eldest son part was very
42:08
Speaker 16: sexist and all that. But leaving the land to one
42:14
Speaker 16: sibling kept it from being divided up and ultimately liquidated.
42:22
Speaker 16: I'm 71 years old. I've got peers who are retiring
42:26
Speaker 16: or dying, and they leave their farms. I've got five children,
42:32
Speaker 16: and I love them all, so I leave one-fifth of
42:35
Speaker 16: each one. I find that to be so wrong. If
42:40
Speaker 16: you've got one child, male, female, oldest, youngest, doesn't matter,
42:44
Speaker 16: or two children who want to come back and operate
42:47
Speaker 16: the farm, I think that person should be the recipient
42:54
Speaker 16: of the inheritance.
42:55
Speaker 2: Yeah.
42:56
Speaker 5: This has been a fascinating conversation, Will Harris, and I
42:59
Speaker 5: was looking at your bio. It says your favorite place
43:01
Speaker 5: in the world to be is out in the pasture
43:03
Speaker 5: where you have a big coffee at sunrise and a
43:05
Speaker 5: 750-milliliter glass of wine at sunset.
43:09
Speaker 1: I love the sound of that. Do you work seven
43:11
Speaker 1: days a week?
43:14
Speaker 8: I'm between the coffee and wine right now.
43:19
Speaker 1: Do you work seven days a week?
43:21
Speaker 8: I'm 71 years old. I'll be 72 in December.
43:25
Speaker 1: Do you work seven days a week?
43:29
Speaker 8: I work seven days a week, if you want to
43:32
Speaker 8: call it work. I love what I do. I do
43:35
Speaker 8: what I want to do.
43:36
Speaker 16: I wear the same clothes seven days a week, and
43:40
Speaker 16: I do what I want to do seven days a week,
43:42
Speaker 16: which is run this farm or help my managers run
43:46
Speaker 16: this farm.
43:48
Speaker 1: Strip or ribeye, Will Harris?
43:54
Speaker 16: Well, we've got 150 or 160 employees, and they're good people,
43:59
Speaker 16: wonderful people. There's no one I'd rather be with than them.
44:04
Speaker 16: There's nothing I'd rather.
44:05
Speaker 8: Be doing than running this farm.
44:07
Speaker 16: So I've got a pretty good gig anywhere you want
44:10
Speaker 16: to look at it.
44:12
Speaker 5: Well, you look like a happy man and a man
44:14
Speaker 5: of the people. and I appreciate your being with us,
44:17
Speaker 5: Will Harris. Next time, let me know. Strip a ribeye.
44:19
Speaker 5: We have a lot to learn from Will Harris. He's
44:21
Speaker 5: a fourth-generation cattleman, White Oaks Pastures.
44:24
Speaker 8: Look him up.
44:24
Speaker 5: This man is an icon, as I said, in what
44:26
Speaker 5: they call the real food movement, and I was looking
44:29
Speaker 5: forward to that conversation. We've got to get him and
44:31
Speaker 5: Sid together at some point here, right? This is like,
44:33
Speaker 5: take this thing on the road. Many thanks, Will. Go
44:36
Speaker 5: take care of that dog. It wouldn't have been the
44:38
Speaker 5: same without him. Thanks for listening to the Balance of
44:44
Speaker 5: Power podcast. Make sure to subscribe, if you haven't already,
44:47
Speaker 5: at Apple, Spotify, or wherever you get your podcasts. And
44:51
Speaker 5: you can find us live every weekday from Washington, D.C.
44:54
Speaker 5: at noontime Eastern at Bloomberg.com.