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Democratic Socialist Advance Hits Wall in Wisconsin · Balance of Power

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Speaker 2: She'll bring you the latest. Now from President Trump's True
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Speaker 2: social feed, as we alluded to, he once again is
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Speaker 2: saying that the United States is controlling the street of
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Speaker 2: hor Moose. He says, in fact, and this is a quote,
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Speaker 2: the US has total control over the straight of hor Mows.
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Speaker 2: I think we will keep it. This part is written
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Speaker 2: in all caps. I think we will keep it. He says.
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Speaker 2: Our naval blockade is being called by everyone a wall
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Speaker 2: of steel, and there is nothing Aron can do about it.
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Speaker 2: Of course, this isn't the first time in recent days
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Speaker 2: that we have heard the President echo these claims around
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Speaker 2: total control of the street. We also heard it yesterday
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Speaker 2: as he was landing at Joint Bass Andrews, where he
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Speaker 2: also was touting not just what's happening with the Roan,
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Speaker 2: but also what we're seeing in the stock market.
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Speaker 3: The country's doing well, the sock markets fantastic record. We
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Speaker 3: have seventy nine records so far in a short period
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Speaker 3: of time.
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Speaker 4: Four people are working right.
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Speaker 3: Now in the United States than ever before, and prices
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Speaker 3: are dropping fast. Iran is going fine, going just absolutely fine.
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Speaker 4: We totally control.
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Speaker 5: The Strait of Hormoes.
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Speaker 4: We have control over it.
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Speaker 3: Nobody else, only US our Navy is unbelievable.
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Speaker 6: Adding we own it with regard to the Strait, and
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Speaker 6: that Iran's actions will be met with Forrest Bloomberg's Washington correspondent,
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Speaker 6: Tyler Kendall, is at the White House right now to
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Speaker 6: bring us up to date on things. Tyler, it does
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Speaker 6: seem like we are far beyond negotiations right now. Is
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Speaker 6: the President accurate that we have total control over the Strait?
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Speaker 7: Well, Joe.
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Speaker 8: At this point, it's very evident that both sides are
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Speaker 8: trying to dig in to their positions when it comes
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Speaker 8: to the Strait of Removes. But there's very little sign
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Speaker 8: that Iran is going to give up the leverage it
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Speaker 8: has when it comes to the waterway, not just in
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Speaker 8: terms of its grip on shipping in her moves, but
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Speaker 8: also importantly, we should point out the other disruptions to
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Speaker 8: global shipping as Earlier today, Yemen's government confirmed that at
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Speaker 8: least six people died in a Houthi attack in the
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Speaker 8: Red Sea, marking the first such fatalities of a Houthi
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Speaker 8: attack since this specific conflict has started. President Trump touting
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Speaker 8: the US's naval blockade, which just yesterday we saw in
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Speaker 8: full effect as the US military targeted a Panama linked
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Speaker 8: vessel that appeared to try to get through toward an
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Speaker 8: Iranian port. We're getting different sorts of information, the US
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Speaker 8: Energy Secretary, as we spoke about yesterday, saying that about
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Speaker 8: nine million barrels per average are moving through the straight
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Speaker 8: per day over the last week. That is, though higher
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Speaker 8: than most trader's estimates. A few different things that we
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Speaker 8: have to watch here, including the risk for escalation. As
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Speaker 8: now Iran is demanding that as part of any deal
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Speaker 8: to reopen the strait there needs to be compensation for
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Speaker 8: war damages, keeping in mind that was a precondition when
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Speaker 8: we were talking about talks about potential curves on Iran's
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Speaker 8: nuclear program, not to ensure the safe passage of vessels.
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Speaker 2: Well, of course, whether or not the passage of vessels
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Speaker 2: can be guaranteed and energy can keep flowing does have
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Speaker 2: implications for costs here at home. We did see that
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Speaker 2: cooler CPI today's energy costs come down, but there is
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Speaker 2: still a major question of whether or not more inflation
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Speaker 2: pressure and relief when it comes to prices will be
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Speaker 2: coming for the American consumer and voter ahead of the
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Speaker 2: midterms November. And our latest reporting indicates that the President
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Speaker 2: may be looking for other ways to find consumers relief,
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Speaker 2: including looking at potentially some tax relief. What can you
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Speaker 2: tell us about that? Yeah, Kaylie.
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Speaker 8: This came last night after his NEC director, Kevin Hassett,
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Speaker 8: was in conversation with Fox businesses Larry Cudlow.
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Speaker 2: Who of course had worked for the first.
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Speaker 8: Trump administration, and it was Cudlow who had suggested that
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Speaker 8: he's spoken directly with President Trump about some potential ideas
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Speaker 8: that perhaps Congress could get through, but likely only after
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Speaker 8: the midterms. And that's, you know, depending on what ultimately
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Speaker 8: happens with those elections. That includes potentially indexing capital gains,
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Speaker 8: meaning taxes would be applied on gains adjusted for inflation,
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Speaker 8: as well as exemptions for sales of homes worth two
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Speaker 8: million dollars or less from capital gains taxes. This administration,
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Speaker 8: as you mentioned, has previewed that they're going to start
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Speaker 8: to roll out some additional measures that perhaps they can
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Speaker 8: entice the American public with as they do play defense
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Speaker 8: on the economy. Kaylee, I'd point you to a new
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Speaker 8: Fox News poll out last month that shows, for the
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Speaker 8: first time since twenty ten, Democrats are leading Republicans when
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Speaker 8: it comes to voter confidence on handling the economy. This
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Speaker 8: is an issue historically that the GOP has pulled better on,
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Speaker 8: but according to their July polling, Democrats are leading Republicans
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Speaker 8: on this issue by nine percentage points. We did see
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Speaker 8: President Trump take action earlier this week, as Bloomberg News
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Speaker 8: confirmed that he ended that Jones Act waiver by ninety days, which,
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Speaker 8: as you both know, is a bid to make it
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Speaker 8: cheaper to transport some of these critical goods like energy
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Speaker 8: supplies like diesel, death fuel, and gas across the United States.
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Speaker 2: All right, Bloomberg's Tyler Kendall live on the North lawn
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Speaker 2: of the White House, Thank you so much. And on
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Speaker 2: this notion of calling on Congress for capital gains tax
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Speaker 2: relief and on other issues, including the results of the
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Speaker 2: primary in his state of Wisconsin yesterday, I'm pleased to
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Speaker 2: say that joining us now is Republican Congressman Brian's style
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Speaker 2: of Wisconsin's first district. He's also chair of the House
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Speaker 2: Administration Committee. Congressman, welcome back to Bloomberg TV and Radio.
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Speaker 2: It's always good to have you, sir, and we do
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Speaker 2: want to talk about what happened in your state last
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Speaker 2: night and what it means for what will happen in
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Speaker 2: Wisconsin moving forward. But just quickly, this idea of capital
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Speaker 2: gains tax relief. Do you think that's something that actually
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Speaker 2: could be delivered on by you in your colleagues, if
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Speaker 2: not ahead of the midterms, perhaps in the lame duck session.
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Speaker 9: Well, I think there's a lot of folks in making
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Speaker 9: sure that we're reducing the et on hardworking families. There's
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Speaker 9: been a lot of conversation for a long time about
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Speaker 9: indexing capital gains to inflation. We saw a massive brought
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Speaker 9: up inflation in particular on the backside of the pandemic.
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Speaker 9: So a lot of people who saved up for life events,
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Speaker 9: whether or not that's retirement, a child's education, a wedding
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Speaker 9: in your family are being hit by capital gains on
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Speaker 9: the backside of that. And so part of the broader
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Speaker 9: package of making sure we're providing relief to hardworking families,
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Speaker 9: I think is to look at indexing capital gains in
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Speaker 9: that regard. Whether or not that can get done before
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Speaker 9: the election, I'm not sure, but it is something that
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Speaker 9: should be part of the broader conversation because a lot
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Speaker 9: of hardworking families that are making savings inside the markets
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Speaker 9: shouldn't be punished for the fact that inflation ran rampant,
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Speaker 9: in particular as we came out of the pandemic.
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Speaker 6: Looks like you have a lot of room there for
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Speaker 6: family on Thanksgiving. Mister chairman, I need to ask you
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Speaker 6: about some of the results of the contest last evening.
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Speaker 6: Here you were at the Tom Tiffany Party. Understand were
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Speaker 6: you disappointed when the race was called for David Crowley.
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Speaker 6: I'm making the Thanksgiving reference because, of course Francesca Hong
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Speaker 6: And had to recant her idea of canceling the holiday,
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Speaker 6: and it did not help her last night. While she
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Speaker 6: came close, she did not win, and I know a
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Speaker 6: lot of Republicans were hoping she would well.
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Speaker 9: In many ways, Wisconsin elections are almost always close, in
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Speaker 9: this case in the Democratic primary. But I think what
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Speaker 9: Wisconsin voters will see in the near future. Is actually
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Speaker 9: that David Crowley and Francesco Hong are in many ways
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Speaker 9: two sides of the same coin.
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Speaker 4: Is the brights became lighter.
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Speaker 9: Is the lights became brighter, and people started to understand
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Speaker 9: what Francesco Hong stands for, she became less popular. I
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Speaker 9: think now people are going to focus in on David
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Speaker 9: Crowley and actually recognize that they share many of the
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Speaker 9: same policy goals. David Crowley raised taxes as he was
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Speaker 9: county executive, in particular on the sales tax. He had
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Speaker 9: Francesco Hong who wanted to make Wisconsin the highest tax
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Speaker 9: state in the country. You have a series of mismanaged
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Speaker 9: to Milwaukee County by David Crowley. We can't allow that
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Speaker 9: type of mismanagement in Washington.
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Speaker 4: And so he.
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Speaker 9: Opened up his speech today by saying, let me introduce myself.
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Speaker 9: That tells you Wisconsin voters don't really know who David
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Speaker 9: Crowley is. Many of them, I think, voted against Francesco
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Speaker 9: Hang and rejected the radical socialist policies that actually David
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Speaker 9: Crowley supports himself. And so I feel good that at
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Speaker 9: the end of this election in eighty three days, Tom
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Speaker 9: Tiffany will be elected governor of the state of Wisconsin.
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Speaker 4: I think voters writ large are done with.
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Speaker 9: The radical policies of the left, are looking for common
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Speaker 9: sense reforms, and I think that's what Tom Tiffan will
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Speaker 9: bring to our state.
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Speaker 8: Well.
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Speaker 2: Tom Tiffany, by one metric, has been called the most
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Speaker 2: conservative congressman in the Wisconsin delegation. He also denied the
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Speaker 2: results of the twenty twenty election. Is that not radical?
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Speaker 9: I think what people are going to look at in
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Speaker 9: particular is kitchen table issues or Thanksgiving table issues, if
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Speaker 9: you will, in look at the record of bringing down costs.
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Speaker 9: We're going to look at what Tom Tivy and I
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Speaker 9: supported about reducing taxes, for example, on overtime, on social security,
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Speaker 9: making life more affordable. Our work to unleash American energy
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Speaker 9: all the more important during this time of international turbulence.
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Speaker 4: So there's going to be a lot of back and forth.
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Speaker 9: Wisconsin campaigns are always heated, always competitive. This will be
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Speaker 9: a close race, But I think as people learn more
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Speaker 9: about David Crowley, they'll recognize that his positions are extreme
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Speaker 9: and that Tom Timmany's bringing common sense reforms for our
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Speaker 9: state that are needed at a period of time where
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Speaker 9: families are struggling to make ends meet.
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Speaker 6: Well, it is not lost on us that Tiffany would
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Speaker 6: be the first person who voted to overturn the twenty
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Speaker 6: twenty election in Congress to become governor of a state
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Speaker 6: likee Wisconsin. Congressman, have you chosen to look through that
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Speaker 6: for the sake of his other policy positions or does
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Speaker 6: it just not matter anymore?
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Speaker 9: Well, I think there's opportunities here to enhance our election integrity.
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Speaker 9: I think broadly speaking, the country recognizes and knows That's
9:59
Speaker 9: why I bet our front leader and making sure that
10:02
Speaker 9: we are verifying citizenship and that we're also using photo ID,
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Speaker 9: and so I think what voters want to see is
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Speaker 9: what policy is moving us forward. I don't think there's
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Speaker 9: going to be a massive look back back into twenty twenty.
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Speaker 4: I think voters want to know.
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Speaker 9: What are you doing for us today to bring costs
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Speaker 9: down and make life more affordable? In the contrast between
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Speaker 9: Tom Tiffany and Republicans against the radical Democrats and David
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Speaker 9: Crowley could not be more stark in the state of Wisconsin.
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Speaker 2: Well, Congressman, I'd like to ask you as well about
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Speaker 2: the business that will be before you and your colleagues
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Speaker 2: when you return from recess or what may not be
10:39
Speaker 2: before you, which is a Senate pass version of the
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Speaker 2: Clarity Act, which obviously you and your colleagues already got
10:45
Speaker 2: through the House some time ago. That Senate did not
10:48
Speaker 2: action take any action on that before they broke for
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Speaker 2: five weeks. And I wonder if you expect that this
10:54
Speaker 2: digital Asset Market Structure bill actually is going to be
10:59
Speaker 2: able to find if post recess before the midterms, or
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Speaker 2: whether it can in the lame Duck once the elections
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Speaker 2: are over. If this is just an effort that's going
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Speaker 2: to be put to bed until the next Congress comes around.
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Speaker 9: The currency of the Senate is floor time, and so
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Speaker 9: I thought it was actually a really positive move that
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Speaker 9: Senate Majority leader soon has called that the Clarity Market
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Speaker 9: Structure legislation and digital assets will have time on the floor.
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Speaker 9: This is the chance for the Senate to address the
11:26
Speaker 9: bill head on. It's so important that this legislation passes.
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Speaker 9: The US needs to remain the world leader in the
11:32
Speaker 9: financial markets, in particular in the digital assets space. The
11:36
Speaker 9: United States has been the innovator in financial services for
11:39
Speaker 9: now over one hundred years. In our economy, across the
11:42
Speaker 9: board has benefited from this. Consumers deserve to have protection
11:45
Speaker 9: in the space. We need to make sure innovation is
11:47
Speaker 9: happening in the United States.
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Speaker 4: There were out.
11:49
Speaker 9: Competing countries like China, and it's a positive move that
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Speaker 9: the Senate is bringing us up for floor time. Floor
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Speaker 9: time is the limited currency in the Senate. Putting the
11:58
Speaker 9: focus on this into the home stretch before we hit
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Speaker 9: the election, I.
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Speaker 4: Think is a really big win.
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Speaker 9: I'm optimistic the Senate gets this done and the House
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Speaker 9: is able to pass the Senate version that comes out interesting.
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Speaker 6: How about your stock trading band, mister chairman. That's what
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Speaker 6: we were talking about. I think last time you were
12:15
Speaker 6: on Bloomberg and there were big congrats for you when
12:18
Speaker 6: it passed the House. The Senate pushed this to the
12:22
Speaker 6: side for now at least. Are you disappointed and do
12:25
Speaker 6: you have any assurances that they'll take this.
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Speaker 5: Up as well?
12:28
Speaker 10: Well?
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Speaker 9: It was really positive the House passed my bill to
12:30
Speaker 9: stop insider trading and act to prevent members of Congress
12:33
Speaker 9: from meeting even in the position to benefit off of
12:36
Speaker 9: any inside information they may gain while serving in Congress.
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Speaker 9: The Republicans in the Senate brought this up for unanimous consent.
12:43
Speaker 9: This should be a no brainer piece of legislation. I
12:46
Speaker 9: was frustrated when Democrats objected to passing that legislation outright
12:52
Speaker 9: again time and the Senate is all driven by floor time,
12:55
Speaker 9: and so I'm hopeful that this bill makes it to
12:57
Speaker 9: the floor, that it is considered, and that it passed.
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Speaker 9: These are the types of common sense reforms. I think
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Speaker 9: the American people deserve as proud to see it pass
13:05
Speaker 9: the House, but the job is not done until we
13:07
Speaker 9: get it across the line in the Senate.
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Speaker 2: Finally, mister Chairman, given your chairmanship of the Administration Committee,
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Speaker 2: you also see issues like security not just for members,
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Speaker 2: but pertaining to the Secret Service as well. And I
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Speaker 2: wonder what your reaction was to the Washington Post reporting
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Speaker 2: in the last twenty four to forty eight hours or
13:24
Speaker 2: so about the President getting off of Air Force one,
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Speaker 2: the old Air Force one, onto a catering truck and
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Speaker 2: alternate aircraft to leave Turkey after the NATO summit, leaving
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Speaker 2: Air Force one and the many press and administration officials
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Speaker 2: on it as decoys. What do you find that that
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Speaker 2: maneuver is appropriate? Do we not need to know where
13:45
Speaker 2: the president is? What if one of those aircraft had
13:47
Speaker 2: gone down.
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Speaker 9: Well, I think it's important that elected leaders are following
13:51
Speaker 9: the advice of security professionals.
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Speaker 4: In this case, the President United States appears to have.
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Speaker 9: Been following the suggestion and advice of the Secret Service
13:59
Speaker 9: base on a credible threat. Of course, Turkey shares a
14:03
Speaker 9: border with Iran, roughly two hundred miles of border. There
14:06
Speaker 9: was apparently information provided by our Israeli allies that there
14:11
Speaker 9: was a direct threat on the president of the United States.
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Speaker 9: The President of United States, I think correctly, is relying
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Speaker 9: on his security advisors to make sure that he's protecting him.
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Speaker 9: We want to make sure the commander in chief is
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Speaker 9: safe and secure. The positive news is this plot, to
14:26
Speaker 9: the extent that it existed, did not materialize.
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Speaker 4: That's a good thing. But often our elected leaders.
14:32
Speaker 9: Are left to rely on security professionals, and here the
14:35
Speaker 9: Secret Service was doing their job to keep the commander
14:37
Speaker 9: in chief safe.
14:38
Speaker 6: Yeah, pushing them into a catering truck. Congressman, it's great
14:41
Speaker 6: to see you. Thank you for coming on as always.
14:43
Speaker 6: Brian Style, the Republican from Wisconsin's first District, shares the
14:47
Speaker 6: House Admin Committee. We'll assemble our political panel next more
14:50
Speaker 6: results to pick through from an important night on the
14:52
Speaker 6: primary trail, alongside Kaylee Lions, I'm Joe Matthew.
14:55
Speaker 5: Stay with us on Balance of Power. We'll have much
14:57
Speaker 5: more coming up after this.
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15:20
Speaker 2: I wanted to check on prediction markets as well as
15:22
Speaker 2: we work our three our way through the aftermath of
15:25
Speaker 2: yesterday's primaries, because, of course there's a lot of political
15:29
Speaker 2: bets that take place on forums like Calshi and polymarket
15:32
Speaker 2: these days, and they got a lot wrong yesterday, it seems,
15:36
Speaker 2: specifically in the Wisconsin gubernatorial race. As at eleven pm
15:42
Speaker 2: on August tenth, the day before the primary, Francesca Hong
15:46
Speaker 2: had ninety five point five percent odds on call she
15:49
Speaker 2: of winning that nomination. David Crowley only had four point six.
15:53
Speaker 2: David Crowley, of course one.
15:57
Speaker 5: Wagering over there you are.
15:59
Speaker 2: I don't place myself on politics or anything else. But
16:03
Speaker 2: someone lost a lot of money. And I guess anyone
16:05
Speaker 2: who was in that four point six percent camp probably
16:08
Speaker 2: came away with it no doubt.
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Speaker 6: So it's not just the polsters, is what you're saying.
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Speaker 6: No prediction marketing, it follows it do We're pretty far off.
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Speaker 6: Amazing by the way that not only she lost, but
16:18
Speaker 6: by only three thousand.
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Speaker 2: Votes a couple times of a percent.
16:22
Speaker 6: Yeah, there's a lot to talk about from these contests
16:25
Speaker 6: last evening, and it's kind of hard to draw trends
16:28
Speaker 6: because there were progressives who had a great night. Maybe
16:33
Speaker 6: it was an anti incumbency kind of evening that we
16:36
Speaker 6: could draw that trend. But let's get into it with
16:38
Speaker 6: our panel. Bloomberg Politics contributor Rick Davis is whether it's
16:41
Speaker 6: our Republican strategist and partner at Stone Court Capital, alongside
16:45
Speaker 6: Laura Fink, a founder CEO Rebel Communications, Democratic strategist, Rick,
16:49
Speaker 6: what is your thought on another busy primary? And I
16:52
Speaker 6: would like to tick through some of the states here
16:55
Speaker 6: and the races more specifically, and I want your take
16:58
Speaker 6: on South Carolinas, which is.
17:00
Speaker 5: Going to resolve into a runoff.
17:02
Speaker 6: Were there any trends that you could pick up off
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Speaker 6: the board, other than the pollsters having a bad night.
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Speaker 11: Yeah, well, first of all, I don't think the polsters
17:11
Speaker 11: had that bad at night. I mean, one of the
17:13
Speaker 11: things that was very obvious, you know, in that Wisconsin
17:15
Speaker 11: race was that Han had a very high floor. You know,
17:20
Speaker 11: polling had her at like forty five percent, but she
17:22
Speaker 11: had a very low ceiling. I mean, in other words,
17:25
Speaker 11: they had posters had a hard time finding other voters
17:28
Speaker 11: who were left to make up their mind who wanted
17:30
Speaker 11: to have her as the nominee. And Crowley had a
17:33
Speaker 11: very low floor, right, I mean like in the thirties,
17:36
Speaker 11: and yet he had.
17:38
Speaker 10: Very high ceiling.
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Speaker 11: In other words, there were a lot of voters who
17:41
Speaker 11: hadn't decided or either would choose ultimately to vote for him.
17:46
Speaker 5: And so what do you want.
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Speaker 11: You want a high ceiling, You don't want to high floor.
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Speaker 11: And that's exactly how the thing was determined. It was
17:53
Speaker 11: a close race, but he was able to grow when
17:56
Speaker 11: Han was not. And so that's what the polling told us. Now,
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Speaker 11: it's not a predictive model, it's a snapshot in time.
18:03
Speaker 11: I can't speak to predictive models. I think the trends,
18:06
Speaker 11: you know, older incumbents. I mean, as you pointed out,
18:09
Speaker 11: a couple of times seven have already lost their elections
18:13
Speaker 11: in the Democratic Party.
18:14
Speaker 10: I mean like that's a lot of.
18:15
Speaker 11: Incumbency turnover in a pro Democratic year. And so in
18:21
Speaker 11: with the old or out with the old, in with
18:23
Speaker 11: the news seems to be part of the theme of
18:25
Speaker 11: this thing. UH And I would say too, Trump still
18:28
Speaker 11: is having a lot of control over the outcome of
18:31
Speaker 11: the Republican primary. I mean, obviously his support for UH
18:37
Speaker 11: South Carolina Darlene Graham put her into the lead spot.
18:44
Speaker 10: Still got a still got a task.
18:45
Speaker 11: Of beating Ralph Norman in a couple of weeks. But
18:49
Speaker 11: you know you wouldn't You wouldn't bet against Donald Trump in.
18:52
Speaker 10: This cycle.
18:55
Speaker 2: Unless you were betting on the MyPillow guy. Because Mike
18:59
Speaker 2: Lindell did not win the gubernatorial Republican race in the
19:02
Speaker 2: state of Minnesota. I'll leave that one on the side.
19:04
Speaker 2: If we could just talk about Francesca Hong for a
19:07
Speaker 2: minute longer at Laura as Rick talked about how she
19:10
Speaker 2: had a low ceiling. I wonder if you think that
19:13
Speaker 2: the outcome of this, which again was only a few
19:15
Speaker 2: tents of one percent, might have been different if she
19:17
Speaker 2: had actually won the backing of some of the king
19:20
Speaker 2: makers of the left, if Bernie Sanders or AOC had
19:23
Speaker 2: come out for her as they did Abdul, I'll say
19:25
Speaker 2: it would that have changed this outcome?
19:28
Speaker 9: You know.
19:28
Speaker 7: I think she got every vote from that side of
19:30
Speaker 7: the party. And I think she also did a tremendous
19:32
Speaker 7: job organizing voters in far flying areas in the rural counties,
19:36
Speaker 7: and I think that showed in her total. I think
19:39
Speaker 7: I agree with Rick that there is a ceiling on support.
19:42
Speaker 7: And I think that voters in Milwaukee County had a choice.
19:44
Speaker 7: They had a guy who was their county executive, who
19:46
Speaker 7: they knew and who looked like he could win, and
19:49
Speaker 7: she failed to penetrate that vote. I think, in particular,
19:52
Speaker 7: that urban Milwaukee vote in a way the sort of
19:55
Speaker 7: and I wouldn't even call the moderate voters. I would
19:57
Speaker 7: say sort of the kind of out people outside of
20:01
Speaker 7: that progressive that strong progressive wing of the party. And
20:04
Speaker 7: we know that the progressive wing drives party turnout, et cetera.
20:08
Speaker 7: But there is a large block of voters that she
20:11
Speaker 7: did not really penetrate. But I think she ran a
20:13
Speaker 7: campaign that you could follow the playbook of in that
20:17
Speaker 7: she was organizing, she was an underdog, she was underfunded,
20:21
Speaker 7: and she managed to almost eke out a victory. So
20:24
Speaker 7: a lot to be learned here from a real solid
20:27
Speaker 7: effort by Francesca hank Well.
20:29
Speaker 6: Okay, so what did Petty Flanagan Peggy Flanagan do right
20:32
Speaker 6: then to get those important endorsements from the likes of
20:35
Speaker 6: Bernie Sanders lieutenant governor here won by some twenty points
20:41
Speaker 6: in Minnesota, beating Congresswoman Angie Craig.
20:46
Speaker 5: What's the difference in the playbook?
20:47
Speaker 6: You've got an anti establishment platform universal healthcare? Was it
20:51
Speaker 6: the lack of the social media posts or some of
20:55
Speaker 6: the more wild things that Hangs said.
20:58
Speaker 7: I mean, electability is definitely an argue, and AOC and
21:01
Speaker 7: Bernie want to see victories across the board, not just
21:04
Speaker 7: in primaries but also in general, so I would imagine
21:07
Speaker 7: they're responsive to that. But Peggy Flanagan is just an
21:10
Speaker 7: entirely different case. She is establishment in the sense that
21:12
Speaker 7: she is the lieutenant governor and where she won her
21:15
Speaker 7: race was really drilling down on the crisis that was
21:17
Speaker 7: ice in Minnesota, and so by making making sure that
21:21
Speaker 7: Angie Craig was seen as on the wrong side of history.
21:24
Speaker 7: There she really galvanized Minnesotan's who were and when I
21:27
Speaker 7: talked to my friends from Minnesota who were deeply, deeply
21:30
Speaker 7: damaged by the work of Ice and by the prospect
21:35
Speaker 7: of government intervening in their communities and the way that
21:38
Speaker 7: it did, And I think Peggy Flanagan was able to
21:41
Speaker 7: capitalize on that and really make it unwinnable for Angie Craig.
21:47
Speaker 2: Well, Rick, as we consider what is not going to
21:51
Speaker 2: be winnable, let's talk a little bit more about the
21:53
Speaker 2: runoff that's now going to take place in South Carolina
21:56
Speaker 2: in two weeks. You alluded earlier to how Trump is
21:59
Speaker 2: backing Senator Darlene Graham as he thinks it's the best
22:02
Speaker 2: way to honor her late brother. She only beat out
22:07
Speaker 2: Ralph Norman, who also is advancing to the runoff by
22:09
Speaker 2: what eight percentage points? Ultimately. Ralph Norman, of course, also
22:14
Speaker 2: has the backing of Nicky Haley, the former governor of
22:17
Speaker 2: the state. And I wonder how you think the Trump
22:19
Speaker 2: pushing for one candidate, Haley pushing for another might ultimately
22:22
Speaker 2: shake out just what less than two weeks from now?
22:26
Speaker 11: Yeah, can I just say too, Peggy Flanning and maybe
22:29
Speaker 11: had the best tagline of the entire campaign so far,
22:33
Speaker 11: the many versus the Money.
22:35
Speaker 10: I mean, I could go all day. But South Carolina, yeah, look.
22:40
Speaker 11: I mean it's a rock rib Republican state. Ralph Norman
22:46
Speaker 11: supported Nicky Haley over Donald Trump. That started a lot
22:49
Speaker 11: of his problems with the president during the primary in
22:53
Speaker 11: twenty twenty four, and so it's not a surprise that
22:56
Speaker 11: she would be out campaigning for him, and he'll do
22:58
Speaker 11: well in the Low Country as a result of that,
23:01
Speaker 11: because she's still wildly popular. Lindsey Graham, you know, he
23:05
Speaker 11: was from the center of the state, in the hill country,
23:08
Speaker 11: and that's where the conservative base of the state is,
23:11
Speaker 11: and likely that turns out strong for his sister, and
23:15
Speaker 11: and and and and behind that, you know.
23:18
Speaker 10: The President's organization and money.
23:20
Speaker 11: So look, it's it's it's it's always a mystery to
23:25
Speaker 11: me how Republicans vote in South Carolina.
23:27
Speaker 10: I've won some and I've lost some, and I've never
23:29
Speaker 10: been right.
23:31
Speaker 11: And so the reality of it is is it could
23:35
Speaker 11: be a close race. But I really can't imagine a
23:39
Speaker 11: scenario in South Carolina where the party doesn't turned to Trump.
23:43
Speaker 11: Uh uh and and and therefore support Darling.
23:48
Speaker 6: Rick Davis had some wild times in South Carolina with
23:52
Speaker 6: John McCain.
23:53
Speaker 5: Google it. Uh yeah, Laura, go ahead.
23:55
Speaker 7: I was just going to add one thing. There's also
23:57
Speaker 7: what I would call the widow effect here. And we
23:59
Speaker 7: know that Darlene is a sister and not a wife,
24:02
Speaker 7: but the empathy for Senator Graham is really in play here. Widows, daughters,
24:07
Speaker 7: relatives of elected officials who pass in office often have
24:10
Speaker 7: that advantage, and particularly in the truncated campaign, in addition
24:14
Speaker 7: to the Trump endorsement, is very powerful. I'd be surprised
24:17
Speaker 7: if she lost.
24:19
Speaker 6: So let's talk about anti incumbency. Read the names Green, Johnson, Goldman,
24:26
Speaker 6: Espiat to get Thanadar Seventh now becomes Larsen Rick Davis,
24:33
Speaker 6: seventy eight years old, in office since nineteen ninety nine,
24:38
Speaker 6: loses the seat last evening to a forty seven year
24:41
Speaker 6: old former mayor of Hartford. And again it wasn't close
24:44
Speaker 6: twenty two point spread.
24:46
Speaker 5: What's the message?
24:49
Speaker 4: You know, Look, I.
24:50
Speaker 11: Think that voters in general are getting worn out on
24:56
Speaker 11: sort of geriatric politics of our country. I mean, we've
25:01
Speaker 11: seen it in leadership in the House and Senate. And
25:03
Speaker 11: the presidency. And it's been happening for a long time.
25:06
Speaker 11: This is not a new issue. And it used to
25:09
Speaker 11: be that you got credit for time in office, you know,
25:13
Speaker 11: for being a senior member of the leadership, for being
25:16
Speaker 11: a committee chairman.
25:17
Speaker 10: And those days are gone.
25:19
Speaker 11: I've not seen a single poll that actually says, hey,
25:23
Speaker 11: great stuff for our state.
25:25
Speaker 10: You're doing a great job for us.
25:28
Speaker 11: You know, stay in as long as you possibly can,
25:30
Speaker 11: because your seniority is what really matters to us. And
25:34
Speaker 11: that has turned its head upside down. And so anybody
25:38
Speaker 11: who's been in office for in the House, you know,
25:41
Speaker 11: six seven terms, or in the Senate, the equivalent of
25:45
Speaker 11: that these days, I think is a target and we're
25:49
Speaker 11: seeing it in the primaries and I think you'll see
25:51
Speaker 11: it in the general election.
25:53
Speaker 2: Well, and most of those names that Joe just ran
25:58
Speaker 2: through Laura were Democrats. Why is this mostly happening on
26:03
Speaker 2: that side of the aisle.
26:06
Speaker 4: Well, let's start.
26:07
Speaker 7: With the fact that Joe Biden's age was such a
26:09
Speaker 7: significant drag on the party. And really a lot of
26:12
Speaker 7: people blame his age and his unwillingness to stand down
26:15
Speaker 7: for our loss in twenty twenty four. And I think
26:18
Speaker 7: the idea that having a continued generation of politics where
26:23
Speaker 7: we respect people for their level of power while watching
26:27
Speaker 7: Congress get absolutely nothing done. Particularly the younger wing of
26:33
Speaker 7: the party is wildly dissatisfied with that because so many
26:36
Speaker 7: of them have seen that they've only grown up with
26:39
Speaker 7: the politics of gridlock, and so the fact that individual
26:43
Speaker 7: Congress members can't make the case that they're bringing home
26:46
Speaker 7: the bacon to the district is a real.
26:47
Speaker 2: Drag, all right, Laura Fink and Rick Davis our political panel,
26:51
Speaker 2: thanks for joining us on Balance of Power on Bloomberg.
26:54
Speaker 5: Teak and stay with us on Balance of Power.
26:56
Speaker 10: We'll have much more coming up after this.
27:02
Speaker 1: You're listening to the Bloomberg Balance of Power podcast Kettas
27:06
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27:09
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27:19
Speaker 5: We're keying off CPI.
27:20
Speaker 6: That's been a big factor in the decisions being made
27:24
Speaker 6: on Wall Street and here in Washington, although strangely, Kaylie,
27:28
Speaker 6: we haven't seen a statement from the White House or
27:31
Speaker 6: a post on truth celebrating what was the lowest pace
27:35
Speaker 6: for inflation since March of twenty twenty one.
27:38
Speaker 2: Yeah, the day is still relatively young, I suppose, so
27:41
Speaker 2: keep an eye on the true social feed. But yeah,
27:43
Speaker 2: there's no declarations of victory over inflation at this point yet.
27:47
Speaker 2: And it makes you wonder as well what the Fed
27:49
Speaker 2: is thinking is we're not hearing directly from Fed policy
27:52
Speaker 2: makers on this today either ahead of their meeting mid
27:56
Speaker 2: next month. We're just a few weeks away that they
27:59
Speaker 2: may or may not feel pressure to high at given
28:01
Speaker 2: today's relatively tame print, as Charlie characterized it. But let's
28:05
Speaker 2: get more insight and analysis now, as we turn to
28:09
Speaker 2: Christopher Smart for more. He's ob Group, our Growth group
28:12
Speaker 2: founder and managing partner, former Special Assistant to the President
28:15
Speaker 2: at the National Economic Council during the Obama administration, former
28:18
Speaker 2: Treasury official as well. Christopher, welcome back to Balance of Power.
28:24
Speaker 2: How would you characterize the inflation report today and how
28:27
Speaker 2: do you expect the feed is reading it.
28:30
Speaker 12: I think there really wasn't much news in it, unfortunately,
28:33
Speaker 12: because I think it was more or less in line
28:35
Speaker 12: with expectations, both at the core level and at the
28:37
Speaker 12: headline level. I think, you know, on the one hand,
28:41
Speaker 12: everybody is sort of watching what's going on in the
28:43
Speaker 12: Gulf and whether that might give some relief to energy prices.
28:47
Speaker 12: On the other hand, they are seeing core numbers slowing down.
28:52
Speaker 13: Ever so gradually.
28:54
Speaker 12: But I think we're still stuck with the same structural
28:57
Speaker 12: problem that we've had going back five years, which is
28:59
Speaker 12: that the Fed's preferred gauge on inflation it is still
29:04
Speaker 12: not meeting its target of two percent. And I think
29:07
Speaker 12: it was Christopher Waller who said recently, you know, we
29:11
Speaker 12: can't now expect it just to go away by looking
29:13
Speaker 12: at it. We may have to do something here, and
29:16
Speaker 12: I think that's going to sharpen the debate regardless of
29:18
Speaker 12: today's data. When they convene again, I guess first to
29:21
Speaker 12: Jackson Hole, but really at their.
29:23
Speaker 6: September meeting, you do get a sense, Christopher, AND's great
29:26
Speaker 6: to see you, of exhaustion. You look at the bond market,
29:30
Speaker 6: I mean, yields are barely moving on this. Stocks are
29:34
Speaker 6: kind of floundering, and we've had a big move. When
29:37
Speaker 6: you look at what happened in the markets last week.
29:40
Speaker 6: Are we in a world where a single indicator like
29:44
Speaker 6: this is unlikely to move the markets.
29:49
Speaker 13: It's a weird time.
29:50
Speaker 12: I mean, I don't mean to use technical economic jargon
29:53
Speaker 12: with you, but it's a weird docs thing. I think
29:56
Speaker 12: we're seeing a jobs market for if you just look
30:01
Speaker 12: at the numbers, right, we're growing at two percent, We've
30:03
Speaker 12: got three percent inflation, we've got four percent unemployment. We
30:06
Speaker 12: should all go home and feel good about the world.
30:08
Speaker 12: But I think we're all looking through these numbers to
30:10
Speaker 12: seeing maybe some weakness on the growth side, some very
30:13
Speaker 12: unevenness in the sources of growth, a lot of it
30:16
Speaker 12: going into AI and corporate spending, weakening job market, we
30:21
Speaker 12: caning corporate consumer spending. And then on top of it all,
30:25
Speaker 12: this is the geopolitics and some sense that I think
30:28
Speaker 12: you know that we all have when you talk about
30:33
Speaker 12: being exhausted by it all, is this this conflict in
30:36
Speaker 12: the Gulf that continues on and on and on, and frankly,
30:40
Speaker 12: even if there is a deal that is struck, it's
30:42
Speaker 12: not going away.
30:43
Speaker 13: The uncertainty is not going to go away.
30:45
Speaker 12: And I think increasingly markets are starting to look through
30:48
Speaker 12: you know, we're going to be living with this uncertain
30:52
Speaker 12: supply of oil, gas, aluminum, other key commodities for a
30:58
Speaker 12: long time.
31:00
Speaker 2: Well, this is actually something we spoke about with Wendy Sherman,
31:04
Speaker 2: the former architect, the chief architect on the US side
31:07
Speaker 2: of the twenty fifteen Iran nuclear deal. She didn't suggest
31:11
Speaker 2: just a long time that this may be the status
31:14
Speaker 2: quo in the Strait of four News. She actually went
31:16
Speaker 2: as far, Christopher as to say this could last forever.
31:19
Speaker 14: Listen, I think unless the United States is ready to
31:22
Speaker 14: either allow Iran and perhaps Aman to have voluntary tolls,
31:28
Speaker 14: or to give Ran so much relief from sanctions and
31:32
Speaker 14: frozen assets that it's worth their while, I don't think
31:36
Speaker 14: we'll get it open for any sustainable period of time.
31:39
Speaker 14: And I think the reality is for the foreseeable future,
31:42
Speaker 14: if not forever, Iran will control the Strait of her moves.
31:49
Speaker 2: Is this market right now positioned for that forever scenario, Christopher, Well.
31:54
Speaker 13: As you know, forever is a long time. But I
31:56
Speaker 13: think it's not positioned.
31:57
Speaker 12: I think it is looking very much for or some
32:01
Speaker 12: news of some kind of a deal and some ships
32:04
Speaker 12: starting to sail both out of the Gulf and into
32:06
Speaker 12: the Gulf. And I think Wendy, who has more experienced
32:09
Speaker 12: negotiating with Iran than I think most people in the
32:13
Speaker 12: State Department or elsewhere in Washington understands that not only
32:18
Speaker 12: is Iran now holding on to this new leverage on
32:23
Speaker 12: the Gulf, but we haven't even begun to talk about
32:26
Speaker 12: the other issues underlying this conflict, whether it is the
32:29
Speaker 12: proxy militias that Iron continues to support, or indeed the
32:32
Speaker 12: nuclear path of its programs. So I think there are
32:36
Speaker 12: a lot of questions on the table, and we are
32:38
Speaker 12: realizing increasingly that we have very few levels to solve
32:44
Speaker 12: these problems.
32:45
Speaker 6: Yeah, I want to point into the Beies book which
32:48
Speaker 6: I read in my free time, Christopher Smart, as I
32:51
Speaker 6: know you do in the first district, which is where
32:54
Speaker 6: you are in Boston, and that includes the northeast.
32:57
Speaker 5: Here.
32:58
Speaker 6: Community perspectives, this is really something to read. Usually people
33:03
Speaker 6: tick through consumer spending, they look at manufacturing and see
33:06
Speaker 6: what some of the contacts are saying. All the way
33:08
Speaker 6: at the bottom community perspectives, contacts serving low and moderate
33:13
Speaker 6: income households report increased demand for assistance along several dimensions
33:18
Speaker 6: as families struggle with persistently high prices of food, housing,
33:22
Speaker 6: and transportation reliance on food pantries. Christopher is up nonprofits
33:28
Speaker 6: are getting more requests for help with housing payments healthcare supplies,
33:32
Speaker 6: and lower income consumers are adding credit card debt to
33:36
Speaker 6: pay for essential goods. This is the definition of the
33:40
Speaker 6: K shaped economy. What does it mean for the political
33:44
Speaker 6: dynamic going into these midterm elections?
33:49
Speaker 12: Well, you know, I was reading my Beige book at
33:51
Speaker 12: the beach last week and unfortunately a shark good job
33:53
Speaker 12: grabbed that out of my hands.
33:54
Speaker 13: Before I got to that second.
33:56
Speaker 2: Hate it when that's I think.
33:57
Speaker 13: What's your highlighting?
33:58
Speaker 12: What you're highlighting is a problem we've been seeing in
34:02
Speaker 12: the macro data for the past couple of years, as
34:05
Speaker 12: both household balance sheets at the lower quintiles of households
34:10
Speaker 12: have been building up, wage gains have been increasingly eroded
34:15
Speaker 12: by inflation, and then you just sort of see it.
34:17
Speaker 12: I think when you go to some large cities, you
34:19
Speaker 12: know the number of homeless people, you hear more stories
34:21
Speaker 12: about people being evicted from their homes, and as you
34:24
Speaker 12: point out, or as the basebook points out, you know
34:26
Speaker 12: the increasing draw on.
34:29
Speaker 13: Food banks, charitable institutions and the like.
34:32
Speaker 12: I think it's one of those things where we for
34:35
Speaker 12: a long long time have not had a very robust
34:37
Speaker 12: safety net when things start to weaken. The problem in
34:42
Speaker 12: many ways, is that we are living in an economy
34:46
Speaker 12: that may be overheating. On the other side with this
34:49
Speaker 12: massive investment, with these stock market gains, and so if
34:52
Speaker 12: you're the Fed and you're trying to adjust, it's a
34:54
Speaker 12: really hard balance to strike. And that's where you really
34:56
Speaker 12: need fiscal policy to step in and say, maybe we're
34:59
Speaker 12: going to tax li but more here where things are overheating,
35:02
Speaker 12: and inject money over there where.
35:03
Speaker 2: They're starting to weaken overheating. You say, Christopher, you're in
35:07
Speaker 2: the camp that we may be overdoing it on all
35:09
Speaker 2: of this investment.
35:12
Speaker 13: I just don't know, you know, hundreds of billions of
35:14
Speaker 13: dollars data centers just feels in my bones, like shouldn't
35:21
Speaker 13: we slow down a little bit?
35:23
Speaker 2: Does it feel in your bones like I've been through
35:25
Speaker 2: this before dot Com?
35:27
Speaker 3: Ye?
35:29
Speaker 12: Well, yeah, you know, and I wasn't around for the
35:32
Speaker 12: great railway boom. But it's it's one of those things
35:35
Speaker 12: where everybody is racing to build out more capacity.
35:38
Speaker 13: At some point we'll need it.
35:41
Speaker 12: But making sure that the revenue lines and any hint
35:44
Speaker 12: of a profit, a wisp of a breath of something
35:47
Speaker 12: that looks like profit, looks like it's increasingly being pushed
35:52
Speaker 12: off into the future.
35:53
Speaker 13: So I do worry about that. Well, it's interesting, I say,
35:58
Speaker 13: and I'm sorry I should say.
36:00
Speaker 12: I think the other piece of this is that AI
36:02
Speaker 12: has now become such a central portion of a central
36:06
Speaker 12: pillar of national security policy that no government in Washington,
36:12
Speaker 12: whether it's a Republican or Democratic one, is going to
36:15
Speaker 12: allow the train to slow down anytime soon. And in fact,
36:18
Speaker 12: if there's going to be any kind of hiccup along
36:19
Speaker 12: the way, we're probably going to get government money coming
36:22
Speaker 12: in at some point or other.
36:24
Speaker 6: Well, maybe you just answered my question, because it is
36:27
Speaker 6: interesting the extent to wish the administration and at least
36:31
Speaker 6: Republican politicians are pushing the AI race and kind of
36:36
Speaker 6: holding off the idea of regulating this very quickly developing technology.
36:43
Speaker 6: And I know that there are political dynamics here to
36:46
Speaker 6: the extent, A lot of Democratic lawmakers see it very differently.
36:50
Speaker 6: Bernie Sanders is calling for a pause in AI development.
36:53
Speaker 5: You've seen.
36:55
Speaker 6: A mixed sort of political dynamic when it comes to
36:58
Speaker 6: data centers. But do you think that this AI spend
37:01
Speaker 6: outlives this administration, particularly if there's a Democrat.
37:05
Speaker 5: In the White House.
37:07
Speaker 8: Oh?
37:07
Speaker 13: Absolutely, I think it will.
37:09
Speaker 12: Well, I think it will, you know, even with this pushback,
37:13
Speaker 12: And I think people don't like the electricity prices, they
37:17
Speaker 12: don't like data centers, but they kind of like AI,
37:20
Speaker 12: and the economic gains.
37:22
Speaker 13: From it, I think are going to be irresistible.
37:24
Speaker 12: I mean, there are a lot of things in this
37:25
Speaker 12: world that I'd love to pause also, but I think
37:27
Speaker 12: it's just unrealistic to expect them to happen, even within
37:30
Speaker 12: the US. What I think is also interesting is the
37:36
Speaker 12: dichotomy between how we are approaching things here in America,
37:39
Speaker 12: which is, we need to build the biggest, best, fastest
37:42
Speaker 12: model possible and approach whatever that artificial general intelligence.
37:48
Speaker 13: Line is called.
37:50
Speaker 12: Whereas in China it's a much more you know, how
37:53
Speaker 12: do we get these tools that are pretty good, even
37:56
Speaker 12: if they're not the best, out into the economy, so
37:58
Speaker 12: that manufacturing, education, healthcare, transportation that become immediately useful, even
38:05
Speaker 12: if they're not at their finished stages yet. So I
38:07
Speaker 12: think that's a very interesting difference between how two countries
38:10
Speaker 12: are approaching this so called race and how we're really
38:14
Speaker 12: never going to declare a winner.
38:15
Speaker 13: It's really a.
38:16
Speaker 12: Question of how these tools, as they develop, become incorporated
38:20
Speaker 12: into people's lives, companies, business models, and investment returns.
38:26
Speaker 2: Well, let's talk about how two countries are throwing money
38:29
Speaker 2: at something else, which is the United States in Japan
38:31
Speaker 2: throwing a lot of money at trying to shore up
38:33
Speaker 2: the yen. Obviously, Christopher, we're not too far off. What
38:37
Speaker 2: was the first joint intervention we'd seen in decades? And
38:40
Speaker 2: yet the effects seem like they were short lived, dollar
38:42
Speaker 2: yen climbing back toward that one sixty level. Are they
38:46
Speaker 2: going to have to intervene again? Was this ineffective? Ultimately?
38:51
Speaker 12: My goodness, haven't we learned some lessons over the past
38:56
Speaker 12: almost every single intervention and currency markets that if the
39:00
Speaker 12: the fundamentals aren't there, if the interest rate differentials remain,
39:05
Speaker 12: you can you can intervene for a couple of days.
39:07
Speaker 13: And it feels good. And my goodness, if somebody should
39:10
Speaker 13: know this, it should be good. Best bessent.
39:14
Speaker 12: And so I think what we have accomplished, what he
39:18
Speaker 12: has accomplished, is to flush out a lot of the
39:21
Speaker 12: shorts who had been driving the end lower.
39:25
Speaker 13: But as you point out, the exchange rate is sort.
39:27
Speaker 12: Of back to where it is, and there has been
39:31
Speaker 12: very little progress in narrowing the differential between US rates
39:37
Speaker 12: and Japanese rates. So you would expect those shorts to
39:40
Speaker 12: start picking up, picking up the pieces where they where
39:43
Speaker 12: they left off. And I just don't know what the
39:46
Speaker 12: next step is if you're the Treasury Secretary. And then
39:50
Speaker 12: this of course leads to the risk that you know
39:53
Speaker 12: others have pointed out, which is that the real reason
39:56
Speaker 12: we're intervening with Japan is not because the President likes
39:59
Speaker 12: the Prime Minister or Japan is a great ally, but
40:01
Speaker 12: it's because Japan is the largest investor in US treasuries,
40:04
Speaker 12: and if there is a sell off of US treasuries
40:07
Speaker 12: in Japan, that makes America's interest rate costs that much
40:12
Speaker 12: higher and just all of those kinds of nefarious things
40:16
Speaker 12: that higher interest rates do to the US. So I
40:18
Speaker 12: think that's that's that's the Treasury secretary's near term gain.
40:22
Speaker 12: But I don't know what his next step is now
40:24
Speaker 12: that he has sort of fired this first bullet without
40:26
Speaker 12: a lot of return.
40:28
Speaker 6: It's always a pleasure to cover the waterfront with Christopher Smart,
40:31
Speaker 6: our Growth Group beige book in hand.
40:35
Speaker 5: It's great to see.
40:37
Speaker 6: Absolutely right alongside Kaylee Lines, I have Joe Matthew, this
40:41
Speaker 6: is Bloomberg. Thanks for listening to the Balance of Power podcast.
40:49
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