Live on Bloomberg TV

00:00From the world of politics to the world of business, this is balance of power with David Westin. From Bloomberg World Headquarters in New York to our television and radio audiences worldwide, welcome to Balance of Power. We're going to pick up where we left off yesterday with the Federal Reserve's decision and that news coverage from Jay Powell, which we had yesterday. We're also gonna look forward to the jobs numbers which are getting tomorrow to take us through all of that. We welcome now Bloomberg International economics and policy correspondent Mike McKee. So it was quite a day yesterday. I think it's fair to say, Mike, and the markets certainly had a reaction. It's continuing today. I mean, as I look at this, the NASDAQ right now is up all 2.8 percent, believe it or not. So my question is, whatever Jay Powell, the chairman of the Fed, thought he was communicating, do you think he communicated it in his wake up this morning to say, yeah, I did what I wanted to do? Well, I think he would say he did what he wanted to do, the reaction may not be exactly what he wanted because there's a lot of argument on Wall Street between people who think he went one way and people who think he went another. He was too dovish or too hawkish. But I think the message that he wanted to deliver was that markets can adjust on a daily basis to what they think is going to happen in the economy. And every time we get a new indicator, they're going to change their view of what it means for the Fed. Whereas the Fed only meets every six weeks and they when they get together, they have to decide among 19 people what they think the best course of action is. So they're going to be slower. And as he said, we have a different job. Our job is to bring down inflation. The markets, he implied. Job is to make money. And so they're not necessarily going to be the same thing. Now, today, you do have great market rallies around the world, particularly in bonds. You have the ECB and the Bank of England with enough ambiguity, not very much, but enough that the markets could sort of take the same message that maybe we're making progress on inflation and that means that central banks will be able to back off. I think the biggest thing people have to remember is back off does not mean they're going to cut rates. You could see there that we have had some good news today, terms of inflation as well. Productivity was up by 3 percent in the fourth quarter and unit labor costs fell. So right now, we're looking at an economy that is not only getting better, but in the right ways. So a push we have jobs numbers tomorrow. What is a good number, in your opinion, tomorrow? Well, I think the consensus is for 190 and that would be a reasonably good number, we're seeing a smaller and smaller gain every month. That's still way ahead of what we need. And the unemployment rate doesn't look to tick up. It's going to be the average hourly earnings that people care about because of course, the Fed is worried about earnings rising as companies have to pay more to attract workers. So if that can continue its moderation, the Fed will be happy and we can get back to debating what they're going to do on March 22nd. Okay. Mike, thank you so much for all your great reporting. That's Bloomberg's Michael McKee. Well, the economy is also a little concerned about what happens with our debt responsibilities from the United States government that's pending still with the debt ceiling. We had some meetings yesterday between the president, the speaker of the House to bring us up to speed on whether we should be worried about the possibility defaulting. We welcome now Republican Congressman Chuck Fleischmann of Tennessee, or Senator Fleischmann serves on the Appropriations Committee, where he chairs the Energy and Water Development Subcommittee. Congressman, thank you so much for being back with us. Always enjoy having you with us. How worried should we should the economy, should business be about the possibility default? Really, not at all. The reality is we're not going to default on our debt. I think the larger conversation, the conversation that needs to be had with the president of the United States and that's why I praise Kevin McCarthy for having that is what do we do to put in place some fiscal constraints so that we don't continue down this slippery slope. We've had a situation under Democratic control where we have spent trillions and trillions of dollars irresponsibly and now that that payday has come due. So we're going to have to deal with that. However, I do think it is critically important and my friends on the far right are correct that we've got to get something in place to make sure that we ultimately curb the runaway spending. We've got to stop it if we don't put something in place. It's going to continue into the future. So will we default? No. Will we get something in place that will appease all of us, hopefully, that we can get some financial common sense restored to our fiscal plan? Well, President Biden, yes, he did say we need to have what he called a separate conversation, but he agreed we need to have that conversation on spending. But I guess my question is somebody who doesn't serve in the Congress and not in the White House. Can you get something that's really enforceable that works? Because we've tried this before and typically we get to blow right past it. You're absolutely right again, David. Well, we've tried it before, but when I went to Congress, the national debt was 15 trillion dollars. That was a little over 12 years ago. It's now approaching 32 trillion and with no end in sight. So we're going to have to not only have this discourse, have this discussion, but we're going to have to start seeing some results. If we do not, ultimately financial markets, our economy, our currency will respond to that. We're going to have to deal with it. The time to deal with it is now. But we've got to deal with it and we will deal with it in a fiscally responsible manner. Default is never a responsible manner, as far as I can tell, to deal with it, as you say. And a lot of people say we need to deal with it. It's going to require spending less money and or raising more in taxes. Is there a political issue with that for basically all 435 members of Congress because somebody likes somebody else's budget get cut up, not their own? Well, I think we need to make a very, very strict delineation between where we are spending our money. Earlier, Mike was talking about the interest rates going up, interest on the national debt is on. Then on the mandatory side of the spending equation that is going to continue to go up. Money is more expensive. If you're a borrower, whether you're a business or a government, it's going to cost you more money. We've got to get our fiscal house in order. That's on the mandatory side. A lot of folks talk about and I do as well as an appropriator, cutting our spending or reining in some of our wasteful spending on the discretionary side of the budget. There's room to do that. What I think we've got to curb is what we've seen in the last two years under Joe Biden, Nancy Pelosi and Chuck Schumer, this runaway spending without any constraints whatsoever. And then they present that tab to the American people. Sadly, that's on credit. That is not good. Can't return to a quite different subject. That is nuclear fusion, as you know better than I. There was a report recently that, in fact, a breakthrough. It happened where actually they had a nuclear fusion experimentally that actually generated more energy than it consumes. We talked actually when this announcement was made with former Energy Secretary Ernest Moniz about the significance of that. This is part of what he had to say. The prize is that we would have an essentially limitless amount of carbon free electricity without any danger of long lived nuclear waste as we have with today's nuclear power. So the prize is incredible. So, Congressman, I am taking advantage of that, that you probably know more about nuclear fusion than anybody else in the United States Congress. What are the prospects here for nuclear fusion and how can we bring them about? They are excellent. And I agree with the former secretary. He knows more about it than me with his scientific background. But yes, I am the lead Republican on fusion in the House for our viewer is very important. One of the big stumbling block blocks with fusion has always been putting energy in and getting less out. The best we had was for one put in point seven return. We just recently, a couple of months ago got a yield of one point five percent that is large. It has basically removed one of the greatest impediments to the fusion equation. What we're seeing is private equity dollars now flowing to fusion. We're going to see the federal government invest in fusion funding. And yes, fusion is clean, but we're probably a decade or two decades away, to be candid. But let me say this. The fusion part of the equation, unlike vision and I'm a big vision fan, but the fusion part of the equation does have limitless fuel. It is hydrogen based. So we'll have deuterium and tritium, hydrogen based sources, which are basically inexhaustible. It is clean. So I think fusion has tremendous potential. We've overcome this hurdle. We've got a lot more to do. My lab at Oak Ridge, Oak Ridge National Lab is probably the leading lab in fusion research, in fairness. Lawrence Livermore did have this discovery actually on the weapons side of the program, which shows us why we need to keep our weapons programs up. You never know what's going to come out of an experiment, something that will help both the civil and the weapons program. But, oh, Grinnell continues to lead in Fusion. The United States is going to lead in Fusion. Someday we're going to get there. In the interim, though, I do think we need to focus on fission and all of the wonderful modalities that we've got out there in traditional nuclear energy. A little help build healthy competition there between Lawrence Livermore and Oak Ridge, I suspect. But give us a sense, you just mentioned public funds as well as private funds. You talk about private equity. There's investment going in to it. Actually, we talk to her husband's about that specifically. Also, government money. Is there more we should be doing as a government to try to affect those attract those private funds? Well, the public private partnerships that we have seen really across the DLC spectrum generally have worked very well. We've had some miscues. But in order to continue to attract private capital, this was very important in the early phases of the modular nuclear reactors. We saw some companies have their private equity side dry up and they came to us and said, you might as well not fund us because we can't raise any money in the private sector. That's not going to be the case in Fusion. We're seeing money, excuse the pun, infused into fusion into those portfolios because of the promise of fusion. And I can't speak for this president, but I believe his budget will probably have a very, very healthy market for Fusion. As chairman of the Energy and Water Subcommittee on Appropriations, I will have a say in that. So I think we're going to see some robust funding on the federal side for that. But we want to make sure that we get private equity flowing in there as well. Congressman, you mentioned vision as well as fusion. What are the obstacles? I think we've heard was vision is some of the regulatory issues, some of the insurance issues. There's been a lot of difficulty, a lot of expense incurred, even though a lot of the most environmentally conscious people say we've got to have nuclear power to really get to zero emissions. Are we going to avoid those sorts of problems with fusion? We're going to have to have vision in the short term if we're gonna get to our clean energy goals. That's not only me speaking, that's the secretary of energy. Republicans and Democrats, by and large, agree wholeheartedly on that. The challenge is, yes, regulation is one of the big challenges. I had dinner just this past week with the head of the Nuclear Regulatory Commission. They are largely a fee based entity. So they have slowed down in time. We may have to look to give them resources so they can start to get some of these new technologies approved. We want to make sure that these new technologies are safe. They are that they're effective in that they work. Most of them do. Some of them will not. But certainly the NRC as well as other regulatory agencies have got to expedite that. Why? Because the rest of the world is moving forward. And it's not, David, just our foes like China and Russia. Yes, they're moving forward. Our allies are moving forward. The Canadians are moving forward. The South Koreans are moving forward. We've got to get the regulatory piece of the puzzle. The investments are there. The technology is there. I've looked at some of these new designs. They are incredible. Many, many countries like Canada are going to start deploying some of these models. There are several of them out there. They're smaller. They're easier to build. They produce less, less power, but they do work. Carson, thank you so much. Always a pleasure to talk to you. That is Republican Representative Chuck Fleischmann from Tennessee. Coming up, we get an update on implementation of the infrastructure plan from President Biden's infrastructure coordinator. He's Mitch Landrieu. This is bound to power on Bloomberg Television and radio. For too long, we've talked about asserting American leadership once again, building the best economy in the world. But to have the best economy in the world, you have to have the best infrastructure in the world. People don't build factories or not rail stations where they're not ports, not access to highways. They don't attract businesses unless you have the best infrastructure to get products to market to create thousands of good paying jobs. That, of course, is President Biden speaking about infrastructure in New York earlier this week. We turn now to the man who is a coordinator for the president, the infrastructure. He's Mitch Landrieu. He was the mayor of New Orleans. And he accompanied the president to New York ruins wig. Mitch, thank you so much. You're at the White House now. I see today. So give us a sense of where we are in implementing this. It was called the bipartisan infrastructure bill. Now it's actually an act. How far along are we in implementing it? Well, first of all, Joe Biden's been talking about this for 30 years. And when he became president, he said then what he said yesterday was, you cannot have the greatest economy in the world if you don't have the greatest infrastructure. And so one point two trillion dollars, it's the largest investment in infrastructure rebuild that we've seen in the history of the country. We've hit the ground running in the last year. We've pushed out two hundred billion dollars. We have about 7000 projects that are in some level of formation. As you can see, just in the last couple of weeks, we announced major funding for things like the Brent Spence Bridge at the Golden Gate Bridge yesterday. We had nine mega awards this week. We were in Baltimore. We're really talking about the northeast corridor. We were in New York talking about the Gateway program. So we're really getting the money out there. And as the president said, this is about creating good paying union jobs. It's about lifting the economy from the bottom up in the middle out and positioning in America to lead the world economically. That's what this is all about. We were making great headway and we've got a lot of great partners. But the president's leadership here has been unbelievable. Mr. Linder, I know that there's a sense of urgency getting these projects underway and getting them completed at the same time. There are very serious permitting requirements, environmental requirements. How do you strike the right balance between the one on one hand, having all deliberate speed to get moving on it, but also observing some of the things that you need to observe with local permitting, state permitting, things like that? Well, actually, it's so funny because the president every time he sees me as it's a hurry up and get the job done. And of course. Yes. Yes. For example, this week, one of these bridges, 150 years old. So we're finally getting to where we have the funding in place. It's also important that we get the money out fast, but we do so with great value. So we're working on permitting reform. We're working on specific projects and making sure we get the information that we need to get stuff done quickly. The Fern Hollow Bridge in Pittsburgh fell last year. We rebuilt in an 11 month. So we're very aware of how fast that we have to go, but we also have to build with great value. We have to be smart. We have to lift people up, not leave people out. We've got to build with climate in mind because we don't want to make sure that we build in a way that's not resilient for all the challenges that we have coming our way. So we'll continue to do that, continue to press, continue to get the money out and really lift this country up. So we're we're leading the world. We tend to think about things like highways and bridges and tunnels. But there's other kinds of infrastructure as well. For example, supporting electric vehicles, which is a priority of the president of the United States. I know that you must pay you a visit in Washington recently. Are you talking about infrastructure? Reavis, where are we on that? Well, there's no question. I mean, we have to electrify the economy. I mean, part of this is creating a clean energy economy that's going to create really hundreds of thousands of high paying jobs. And as we move from vehicles that are running off of a combustion engine into electric vehicles, we have to talk to all the manufacturers in the country that have any part of this or Tesla's got a part of a GM Ford. All of the other companies, we talked to them all the time. In order to do that, we have to have places for people to plug in. Now, many people that have money in their pocket are going to be able to do this in their home, but otherwise we have to have electric vehicle charging stations across the interstates and other places as well. So Tesla and GM and Ford, all these folks are part of helping us figure out how to do that and how to do it well. And we're in the process of getting that done as we speak. Let me turn, if I could, to a very sad story. And that's Tyree Nichols. I know you were at the funeral yesterday with the vice president, Kamala Harris, but I'm also mindful that you served as a mayor for a good long time in New Orleans. You've dealt with some drums of crime and supervising police. What advice do you have as a mayor when you've actually done it? What should we do and survivability so they still can protect us and keep us safe, but also they don't go too far. Well, first of all, the funeral yesterday was heartbreaking and sad to be with Terry Nichols family, particularly his mother, and to see the pain in this woman, to think about actually being able to watch your son being beat to death and kicked to death for being pulled over for a traffic stop, a kid that really liked taking pictures and viewing sunsets was almost too painful to bear. This should never happen in the United States of America. There is a way for police departments in this country to keep us safe. And but but to but to deal with a justly. And when you think about protecting and serving, it shouldn't be about seeking out and destroying. This should not happen in the United States of America. And what happened yesterday, it repeats itself too many times in this country. And we all collectively have to come together. That's why the president did what he wanted to do, was really supporting the George FOI Act. We continue to talk about that as well. We have a lot of work to do in this country to make sure that we protect and serve people who deserve it. As a mayor with a federal law have helped you or hindered you as a practitioner, because a lot of policing is local, is it not? Well, it is, but it is. But this is about the culture of policing. It's about not shooting first, but shooting last, if ever at all. It's not about the overuse of force, is about the appropriate development and the relationship that police have with their community. So there's no doubt about the federal, state or local community involvement. Just a complete culture change in how we impact create the relationship between folks that are supposed to protect doesn't serve us because that is exactly what it's supposed to be. And so we did this in New Orleans. We had a massive consent decree. We read. We started reworking the training programs. We had something called EPIC, which is called ethical policing. With them is is important, which which allowed lower level officers to actually intervene when other officers were doing the wrong thing. We can make a lot of headway here. But, you know, hopefully the country will begin to use terrible situations like this to get a lot better, because in America we deserve a lot more and a lot better. Lisa Abramowicz. Mr. Hunter, thank you so much for being with us and for pushing through that competition we're getting there on the front lawn of the White House for hour last noisy out here. That's okay. I still get it exact. You sure do. Thank you so much. As Mitch Landrieu, he's senior adviser to president and infrastructure coordinator. Still to come, we're going to go over the economy and the Fed with economist Lauren Goodwin of New York Life Insurance. This is balance of power on Bloomberg television and on radio. Will the slowing economy finally hit the U.S. job market? A real test for the banks? Seems to be telling us we need wages to come down pretty significantly. And I'm just not sure that's going to happen this Friday. Tom, Jonathan, Lisa and Mike, we'll bring you crucial data and expert analysis at terminal speed. We returned to pre pandemic labor force, could see jobs go down to, say, 700000 in the next couple of months. That'll get their attention on Wall Street, the January jobs report Friday on Bloomberg Television and Radio. This balance of power on Bloomberg Television radio. I'm David Westin well, we continue to have something of a post Fed rally going on in the markets and take us through it. Welcome to our critic Gupta. So what is going on with the NASDAQ? Yeah, it's a rarity lately. Of course, after Fed meetings, you do tend to see that sell off and it's pretty natural. Look, we went into the Fed decision yesterday talking about a hawkish 25 are going to have that downshift, but they are going to try to talk the market down because ultimately the financial conditions index that you've seen, the loosening of those financial conditions has been something that's kind of spooked the Fed. Interestingly enough, at the meeting with Chairman Paul, kind of dodged the question. Spook. Jay Powell, it didn't help at all to the market's surprise. And to them, that was kind of interpreted as a dovish take. And that is why you're seeing the market rally. Look, it was expected once again that it would fall after that decision. Now, part of that is going to be that post Fed boom, if you will. The other part of it is going to be what's happening across the Atlantic, because the Fed is no longer the most hawkish central bank there, as you now have the ECB and the BNP, both of which are hiking 50 basis points saying, look, we are still not done what the Fed is ramping down. So that takes some of the pressure off the Fed does it as it takes some of the pressure, not just off the Fed, but off the stock market as well. And that's a really important piece of the equation, because it means that now as you have higher interest rates across the Atlantic, the pressure is more on, say, European equities rather than American equities. But you and I always talk on the Fed and on earnings. We have to go to the earnings matter. Yes, we have to keep the tradition alive. So many shares are rallying in a really big way today. Of course, this comes from just a complete turnaround story when it comes to Facebook. At least that's how it's being interpreted. This idea that Mark Zuckerberg said this is the year of efficiency for metal platforms, they said, look, we have had a few quarters where we were really focusing on Metta, the metaverse, but now we're really going to invest in our A.I.. They're also talking about cost efficiency. They're going to eliminate some middle management. The key question here for tech earnings after the Bell alphabet, Apple and Amazon is what kind of precedent has met a set? Are we now expecting a lot of green on the screen after the bell? Yeah, it's a really good point. High expectations for other big tech coming. That's a good point. Thank you so much. Always great to have critical to report on the markets. And you can catch her anchoring again at 1:00 p.m. Eastern Time on Bloomberg Markets. Coming up, it's not clear that Fed Chair Powell got what he wanted from his news conference. We'll find out from economist Loren Goodwin of New York Life Insurance. This is balance of power and we are on Bloomberg Television and on Bloomberg Radio. This is balance of power on Bloomberg television and radio. I'm David Westin, I keep you up to date with news from all around the world. For that, we turn to listen the tale here with the first word, Lisa. Thank you, David. Russia's offensive is intensifying with the approach of the one year mark since a debate in Ukraine. That's according to President Vladimir Zelinsky, who said earlier in the week that a new phase of the conflict has started. The top U.S. and Ukrainian officials spoke by phone about the situation from the frontlines and Russia's possible next steps. Secretary of State Anthony Blinken is expected to meet with Chinese President Xi Jinping in Beijing next week. That's according to the Financial Times. And it would make him the first U.S. secretary of state to meet the Chinese leader in nearly six years. And the first of President Biden's cabinet secretaries to visit China. It would mark yet another step toward stabilizing turbulent U.S. China relations. After President Biden and G. Met in Indonesia last November, House Speaker Kevin McCarthy called it a, quote, good first meeting after his one on one with President Biden on the debt limit. The president responded today at the National Prayer Breakfast. Start treating each other with respect to Kevin and do no job. We had a good meeting yesterday. I think we got to do it across the board. The president has resisted tying spending talks to raising the debt ceiling, but Republicans want steep budget cuts. And Texas is facing a fourth day of an ice storm that has caused power outages, grounded flights and triggered deadly accidents. The latest cold snap comes almost two years after a storm in the state caused the electrical system to fail, leaving millions without power for days. State officials have made a number of reforms to the grid since then. Texas Governor Greg Abbott has said there is plenty of electricity in the state's grid and blamed outages on falling trees. Global news power by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg. David, thank you so much. Lisa. Well, in some ways, today is the day after and the day before, the day after the Federal Reserve issued its decision. And Jay Powell gave his news conference the day before those U.S. jobs numbers come out tomorrow morning to bring us up to speed on where we think we are at the moment. Welcome now, Lauren Goodwin. She is multi asset strategist and economist for New York Life Insurance. Always great to have you, Lauren. Thank you for going back. Let's start looking backwards. What did we learn, if anything, from Jay Powell yesterday about where he thinks the economy is? Oh, gosh. If we've seen anything out of sheer power over the past couple of months, couple of meetings, it's remarkable consistency. Have actually been not surprised. But I disagree with the market reaction over the past 24 hours, which has been one of, you know, expecting this transition and line of sight on the terminal rate. All that is true. And it's great news, but it's not it's not new. It's not news, in fact, because a two additional 25 basis point hikes about five to five and a quarter percent terminal rate. That's what the Fed has been saying for quite some time. And as long as the economy evolves the way that the Fed expects, which, of course, we'll have to see, they don't expect rate cuts this year. So let me ask you about what I would call the self-referential part of this. And this is should the Jay Powell, an economist, be concerned about the markets and what their other reacting? Because one of the questions to Powell actually was, are you worried about the markets because you're worried about loose flange of the dishes you want need to tighten them. Is that something we should be worried about? You know, the Fed pays attention to financial market conditions to the extent that they are a really important way in which policy transmits into the real economy. And we see that when we think about the way that an economic cycle tends to evolve in interest rate sensitive sectors of the economy, like housing, for example, typically being the first to roll over as the Fed begins to hike. But when it comes to, you know, exactly where the S & P 500 or where bond markets are on a given day, that's not a major concern of the Fed. It's not something that market participants like to hear. But it's not a policy objective. One of things I think the markets are reacting is there was Jay Powell saying that we are beginning to see some of the indications of disinflation and that is likely to continue on. What does that say about a soft landing? Is a chance going up? No soft landing, do you think? You know, I'm not convinced that a soft landing is is actually the best case scenario for the economy. It's framed that way. And, of course, you know, recession is often described as the worst case scenario for the economy. But recession provides a really important service to the economic cycle and the long term trajectory of the economy, which is that it helps to really eliminate imbalances. Now, in the past couple of recessions in this economy, we've seen those imbalances in the form of leverage, corporate leverage, household and housing leverage in this economic cycle. That imbalance is inflation. And I'm just not convinced that avoiding a recession is the best way to eliminate the. Imbalance, I mean, if you think about let's say that that there is a soft landing, that growth slows, but it doesn't move into negative territory. We still have stickiness and inflation. That's that feels like stagflation. And that's exactly why Chappelle Paul has said that unless they're able to bring inflation fully under control, the economy doesn't work for anybody. And so, again, I'm not sure that soft landing is actually the best case scenario at this point. So we've been talking about looking backwards. What the Fed did yesterday is look forward to tomorrow the jobs numbers and how what inference should we draw for what those jobs numbers tell us about whether, in fact, we are starting to cool the economy down enough so that we don't have to go further with rates? Well, because the jobs market has been across not only non-farm payrolls, but all kinds of different indicators, including new claims today. There's just been very little sign that there's any cracking in the labor market. And so I doubt that tomorrow, well, we'll walk away with convincing evidence that the labor market is slowing. But as we do, let's say, over the next few months, few quarters, the labor market is typically the last phase of the economic cycle to turn the last domino, let's say, in the lineup of economic dominoes to turn before recession, actually. We recently did some analysis and found that in nine out of the last 10 recessions, non-farm payrolls were actually still moving higher as recession began. And so it's it's a lagging indicator. It doesn't tell us much about the state of what the economy will be because again, of those long and variable lags that the Fed's always talking about. I've done a bit of a disservice to the audience in talking about the day between, because there was a day today for the ECB, the European Central Bank, as well as the Bank of England. What did we learn from what they did? They both rose 50 basis points, indicate they're going to keep going. What's going on with their economies? Well, what we see in really globally is different reasons for concern about inflation. Here in the U.S., it's been a policy driven and domestically driven wage price dynamic in Europe. It's an energy supply driven dynamic. And even if you look to other global central banks like the Bank of Japan, a slower move in monetary policy has resulted in a weaker yen and import price inflation. So different reasons for concern about inflation, but concern about inflation globally nonetheless. And so these other central banks are beginning to sort of ramp up a bit just as the Fed is slowing. Now, the way that I expect that to manifest in the global markets in the global economy is essentially through the dollar. The dollar's been weakening as again, the Fed gets closer to its terminal rate. Other central banks ramp up as the U.S. economy rolls over. That tends to be a dollar strengthened, earned. So we expect considerable dollar volatility over the course of the year. One last one, we talk a lot about the debt ceiling on this program because we cover Washington policy in Washington. Is that having any effect at this point on the economy that you can discern? Is that down the road? Two things that I think are really important to think about with respect to the debt ceiling. The first is the debt ceiling battle itself, which is political. And while we do expect a resolution ultimately to be met, their cost to eleventh hour brinkmanship, the impact that we've seen time and time again to household and business confidence is meaningful. And as the economy is already slowing, it's not great timing. And so there is a consequence there as we get closer to that May or June timeline. The second thing, though, that is so important to consider is not the debt ceiling itself, which again, is a political battle, but rather the economic issue, which is U.S. debt sustainability. Over the last 10 or 15 years. This has been something that I've not been concerned about. But as interest rates have risen and the cost of the U.S. debt, therefore, has risen as well. And as demand, global demand for treasuries on the margin, because other central banks are now and there are other government bonds are now yielding positive debt. For example, some central banks are looking for other stores of long term wealth besides just treasuries that on the margin may suggest lower demand for it for treasuries in the medium term. So that issue, I think will become more important, difficult to position around now. But it's a it's an underlying economic issue that we'll be paying attention to. It's always a treat to have you in. Thank you so much for joining us, Lauren Goodwin. She is multifaceted strategist and economist for New York Life Insurance. Coming up, we're gonna look forward to the State of the Union address next week and the political stakes for both sides with Bloomberg political contributor Julianne Zeno and former RNC director of communications Lisa Kommersant. Miller, this is balance of power on Bloomberg television and on radio. This is balance of power on Bloomberg Television Radio. I'm David Westin. It's that time of year again. No, I'm not talking about Groundhog Day. I'm telling you what the State of the Union address, which is coming up next Tuesday evening to take us through exactly what is likely to come out and what's at stake now. Lisa Musso with Miller. She's former communications director for the Republican National Committee. And now at Reset Public Affairs and Bloomberg political contributor Jenny Shen Zeno of the university. Thank you both for being with us. Jenny, I'll start with you. If you were really mapping this out for President Biden, what would the number one priority be for the president in this remarks, in these remarks? You know, I think to speak to the American public about what he accomplished in the last two years, he's had a large number of legislative accomplishments across the aisle, bipartisan and by camera. And I think he needs to take a victory lap on those. We're hearing inklings of a theme for 2020 for America reborn. So I think, you know, give a nod to that. These are big bipartisan bills like infrastructure, which he's been talking about for the last few days. And then I also think to look forward to the next two years and what he hopes to accomplish and to hit on, obviously, how he has progressed with the economy, with jobs, with getting the inflation under some control. He's got to be careful not to over speak on that. So those are some of the big things. I also have been long been a proponent that he's got to talk about the issue of security, safety and crime in this country. I don't think Democrats have done that enough. And we saw that in the midterm in places like New York. So I think those are the big things that I would tell him to do and to assure the American public that the Biden administration that his goal over the next two years is to move forward and in a constructive manner on everything from the debt ceiling to the economy to crime. Lisa, while we've been on the air here, BOVESPA, we learned officially that Sarah Huckabee Sanders will be delivering the response further. Probably she's the governor now of Arkansas. So what's her response likely to be? Well, at least she's going to talk about the economy. I mean, she is in a country and a part of the country that has seen tremendous impact from the last few years. I mean, the impact of the pandemic, of the closing down, of the shutting down, the loss of jobs. Kentucky has a remarkable story to tell. And a lot of industries are actually investing there and doing great things. So I think that for her point of view, she will talk about the fact that this administration has not necessarily done what needs to be done in order to continue to inspire and encourage that kind of growth and that kind of economic impact. It's still something that we see. We've seen it in the polls. We're seeing it even now as folks are talking about what they're most concerned about. They're talking about the bottom line. They want to make sure that the prices of eggs are coming down. They want to make sure that they have access to the groceries and that and the needs that they have in their homes. So if you're Sarah Huckabee Sanders and you're talking about what just happened in the State of the Union, if the president doesn't address domestic issues and how to take on the economy in a way that needs to inspire growth, then I think that that's probably what you're most likely to hear from her from the state. So there's a lot of talk about so-called bipartisanship and wash. I'm not sure how much doing of it. There is was a lot of talk about it and we had yet another, I would say, partisan act. Just a few moments before we started talking, which is they've now the House officially voted to kick off on Goma from the Foreign Affairs Committee. She's the Democrat. She was nominated by the Democrats, but they can vote them off by majority of the House, the majority of Republicans. What is this going to do, the spirit in that chamber? You know, this is something that follows the Democrats taking similar actions against people like Marjorie Taylor Green, and so, you know, what comes around goes around and they you know, both Republicans and Democrats have to be very, very careful. This to me is an enormous break with norms to take these steps. And again, it's happened now on both sides of the aisle. Of course, Kevin McCarthy removed Adam Schiff and Eric Swalwell just a few days ago. He could do that unilaterally because it was a select committee for Omar. They had to take a vote. It was a party line vote. So, again, you know, I do think this is a troubling development on both sides. I think we need a real concerted conversation in the House about what the sort of parameters are for removing people from these committees. Is it purely political, purely ideological? In this case, they accuse both sides of accused Omar of making anti-Semitic remarks and 2019 posting those on Twitter. She has apologized for those. Does that rise to the level of removal? These are conversations that have to be had and unfortunately, we don't see those moving forward. So I suspect when Democrats get the House back, at some point there will be some form of retribution. Least a lot of us say there needs to be more bipartisanship, more reasonable things like that. Is there any political incentive for that? I mean, I really wonder, as Ginny described, it's a little bit the Hatfields and McCoys, both sides do it the other side. But when it comes time to vote, do candidates worry about getting voted out because they haven't been nice enough to the other side? Well, I think they worry about not getting enough done for the constituents and for the people that are voting them in, and this kind of nonsense is a distraction, David. The fact that this is going on now, when we should be focused in on funding the government, getting people back to work, figuring out how to get the economy where it needs to be so that the American people feel like they are absolutely having the support that they need. They want their elected officials to do the work that they were that they were hired to do. And so, yes, I absolutely think that the difficulty in Washington is that partisanship has absolutely reached an all time high. And it makes it almost impossible to get anything done. But these kinds of tactics that we're using in order to vote others off of committees is absolutely a distraction and not the work the people want us to do. So I'm delighted. Say Genius Manzano and Lisa. Lisa MILLAR, we'll be staying with us as we turn to those debt ceiling talks and what got accomplished and didn't. Yesterday at the White House. This is balance of power on Bloomberg television and on radio. My role right now is to make sure we have a sensible, responsible ability to raise the debt ceiling but not continue this runaway spending. This is a moment in time for all American households. Every family does this, every business does this. Every state government, every county government. That was Speaker McCarthy speaking yesterday after meeting with President Biden at the White House. Jenny Shan Zeno and Lisa Lisa MILLAR have stayed with us. So, Lisa, let me start with you. That sounds eminently reasonable, least to me. But I really wonder, as I watch the speaker talking, he he's got to negotiate on the one hand with President Biden. He also, I think, has to negotiate with some of his own caucus, which is the tougher negotiation for speaker. MCCARTHY Well, he's walking on a tightrope. There's no question about it, David. But I do think that the thing about what the speaker said yesterday was encouraging. He wants to find common ground. He wants to wait. Find a way to work together to get that work done. And nobody stands to benefit more from that happening than the speaker, because if it does not go well, there is a very good chance that the conference itself, the Republican conference, will call for a vote to remove the speaker. So it really is incumbent on him to find a way to work together with both sides. But it is absolutely. And it's on a razor's edge for him, I believe. So what about it? How does President Biden, Jeannie, negotiate with the speaker when it's not clear the speaker can close the deal? Well, that that is a massive problem for the speaker and for this White House and what the White House has said repeatedly is, number one. We are not going to couple the debt ceiling raising of the debt ceiling with cuts in spending. You've got to agree to raise the debt ceiling. Then we talk about spending. And, of course, Kevin McCarthy and the Republicans that keep coming back and saying they want to strike a deal, they want to talk and negotiate on those. So that is the first sticking point in my mind. Those have got to be decoupled. And then, of course, there is the reality that Kevin McCarthy and I give him credit is saying publicly now that he wants to raise the debt ceiling. The problem is the reality that he doesn't have the numbers in the House in his own caucus to do that. And he is facing the reality that he agreed to terms for his speakership at which one member of his caucus can call for his removal. So if he starts to negotiate with the White House and if he moves forward with things like raising the debt ceiling, will he be risking his speakership? Can he really deliver? And there is no you know, there's no assurance he can. So these are big problems for Kevin McCarthy, for the White House, but also for all of us, because as assuring as his words were after he left the White House, there is no assurance that what he's saying can get passed even through his own caucus. Lisa, for Speaker McCarthy, how do you evaluate the possible risk of President Biden sort of going over his head to some of the more moderate members in the Senate and the House on the Republican side and getting them to come along with him, whatever he wants to get done? Well, I think the president is really focused on getting this done the right way for his own benefit. I mean, we're going into an election cycle. It seems to me unlikely that he would do something like that. But I do know that there's going to have to be some very, very strong negotiations in order to get this debt limit projects and done in a time where we don't default, where we don't do more harm to the American economy than is necessary. And so that alone, to me seems like an opportunity. It seems like a way Kevin McCarthy can find some compromise between the Freedom Caucus and the other members to to find some agreement on budget reforms that can then be offset to to reach the agreement to raise that debt ceiling and not alone. I think while I don't think the White House would take that tack, I think everybody right now thinks that everything is on the table because it has to get done. It has to be raised. Jenny, I have a question for you. Are we going to close out with this? I think I know the answer, but it's a good question. Can you raise the debt ceiling and not fund certain programs? I suspect you could do that. But the premise, which is which programs are you not funding? That's the problem with cutting expenses at all, right? That's absolutely right. And who is going to first be the first one to say, I am proposing to cut Social Security, Medicare or defense? And so that is the real challenge. Nobody wants to be the first out and face the criticism that's going to come back for proposing to cut a popular program. And that's what's on the table at this point. Great to have you both with us. Thank you so much as Lisa. Lisa MILLAR of Reset Public Affairs and Bloomberg, a contributor, Genius Manzano of Iona University. Check out the Balance Power newsletter on the terminal and online. Coming up, Balance of Power continues on Bloomberg Radio. In our second hour, we'll talk to the Raymond James chief economist and Eugenio Ellerman about tomorrow's jobs numbers. And this is Bloomberg.

No schedule data available.

Balance of Power Full Show (02/02/2023)

"Bloomberg: Balance of Power" focuses on the intersection of politics and global business. On today's show: Rep. Chuck Fleischmann, (R) Tennessee. Mitch Landrieu, White House senior advisor & Infrastructure coordinator. Lauren Goodwin, New York Life Investments economist & director. (Source: Bloomberg)

The David Rubenstein Show
The David Rubenstein Show: Peer-to-Peer Conversations" explores successful leadership through the personal and professional choices of the most influential people in business.
More episodes and clips