July 30, 2025 • 25 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street pros are staring down a pivotal week that will likely set the tone for the rest of the year in markets and the economy.
First and foremost is the conclusion of the Federal Reserve’s meeting on Wednesday, and although it isn’t expected to cut interest rates, traders and investors will be poring over commentary for clues about the path ahead. Then there’s a string of Big Tech earnings with Amazon.com Inc., Apple Inc., Meta Platforms Inc. and Microsoft Corp. all reporting. And sprinkled throughout are some key indicators on the state of the economy, from gross domestic product to nonfarm payrolls.
In other words, if there ever was a five-day stretch that would define the second half of the year, this is it.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg Senior Editor for US and Canada Equities Michael Regan.
- Bloomberg Politics Contributor Jeanne Sheehan Zaino and Bluestack Strategies Founder Maura Gillespie.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Balance of Power podcast. Catch us live weekdays at
noon and five pm Eastern on Apple Coarclay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Check what you're drinking with your lunch. This has got
to be the more interesting story of the day. Producer
James just put this in front of me. It takes
America's producer to find news like this. High Noon is
recalling it's vodka Seltzer's mislabeled as Celsius the FDA, right,
(00:46):
so you think you're buying an energy drink. You're going
to get the Celsius and there's alcohol inside. Hi Noon
announcing the recall of its vodka Seltzer beach pack. You
went for the beach, didn't you. That's the twelve fact
due to inclusion. I'm reading off the news release now
(01:07):
of Celsius Astro Vibe energy drink cans that were inadvertently
filled with vodka Seltzer. Is my kid drinking that stuff
at home right now? Consumption of the liquid? It says
in these cans will result in unintentional alcohol ingestion. Oh Kaylee,
(01:30):
we're gonna have to talk about that too. I think
they were drinking Celsius' is in the line's house. All right,
let's get to what we're talking about here, and that's
earning's reporting season. Look, maybe more people are gonna buy
it because they've rite everyone's gonna buy this stuff to
try to get the can with the vodka in it
flying off the shelves. Maybe it'll be a collector's item.
(01:50):
We've been hearing earnings reports from companies that are making
us wonder here about the impact of tariffs and maybe
the fact that they're actually finally take hold. Really interesting
series of stories here from some major consumer facing brands,
the likeness of Procter and Gamble now saying that it's
(02:10):
cutting its outlook for the year and is increasing prices
on a good number of goods about a quarter of
its products in the US, to help offset the cost
of new tariffs, which, by the way, are going to
be likely going up again on Friday, that's the date
for reciprocal tariffs, at least with regard to companies that
haven't cut so called deals yet. This is really interesting.
(02:31):
Bill George, former chair CEO of Medtronic. He's now Executive
Education Fellow at the Harvard Business School. Bill George, You're
going to see companies like Walmart, Amazon, and Best Buy
forced to pass price increases to consumers. Main Street this
is important has yet to see the fallout from increased tariffs.
George says, they're going to go higher. Add Stanley Black
(02:54):
and Decker. Add the meltdown in Whirlpool yesterday what ups
was also saying, it starts to paint a pretty scary
picture about where we might be heading in the second
half of the year. You remember, Molly Smith just told
us that when you look at GDP growth for the
first half of the year, not just this quarterly number
that was impressive today, stronger than expected, but we're seeing
a real slowdown in the economy when you take a
(03:16):
longer view. Now match that against the stock market that
keeps hitting all time highs. The S and P five
hundred is right below thirty I'm sorry, sixty four hundred
right now, up another fourteen points today, and we've got
a big pile of earnings news coming. So we thought
this would be a really good moment to take Stock
with Michael Reagan, Bloomberg's managing editor for the US here
(03:37):
and his eyes on not just the markets, but the
way they're looking at these issues that we're talking about
now in Washington. President Trump just today announcing a new
tariff on India. This is again ahead of the August
first deadline that he says will not move twenty five
percent on India's exports heading into the US. Michael Reagan
(04:00):
is with us from World Headquarters in New York, and
I'm wondering, if you're starting to feel like we're in
nosebleed territory here Micro, if the earnings reports that we're
going to get in the days ahead will actually justify
these levels.
Speaker 3 (04:10):
Yeah, Joe, I mean, I think the big tech earnings
obviously are the main show for the week. Meta platforms
the operator Facebook and Instagram after the bell, and Microsoft
after the bell, because you know, obviously the tariffs aren't
starting to bite as you as you point out, you know,
Whirlpool is a great example. They actually were in trouble
(04:35):
because so many Asian competitors or exported to the US
a lot of competing appliances. So even though Whirlpool is
you know, has a lot of domestic manufacturing. They still
got hit because of that sort of trying to front
run the tariffs. But really, you know, the market, these
megacap tech stocks are just so heavily weighted in the
(04:58):
major indexes, your Nasdaq hundreds and S and P five hundreds,
that that's the real story for the week as far
as earnings go. And the real thing that a lot
of people are zeroing in is actually something you don't
usually look at for these companies, and that's capital expenditures
because they really are just writing giant checks for AI
(05:21):
chips and data centers and trying to ramp up their
AI offerings either to meet demand from customers or to
really improve their own businesses. So if you look at
a company like met I believe they're expected to double
their CAPEX spending to about sixteen point four billion. Microsoft
(05:42):
expected increase it by about thirty percent to eighteen billion.
Now it's interesting because oftentimes, you know, before the AI boom,
a big ramp up in CAPEX would not be exactly
something that investors would be happy to hear about. This
scenario is a little bit more nuanced. We saw Alpha
Bet a week or so ago announced that they expect
(06:06):
to spend eighty five billion on CAPEX this year, and
the initial sort of knee jerk reaction in the market
was a drop in the stock after hours, but then
the executives got on the call and explained, like, no,
we're responding to demand here from clients and that's why
we're spending so much. So it's you know, a lot
of nuanced as far as how these companies explain this
(06:29):
giant expenditures on capex. If they can sort of illustrate
that they are able to reduce costs or improve sales,
fatten out those margins a little bit because of what
they spent or expect to spend, then they're going to
get rewarded. If it looks like they're just kind of
gambling and taking a bet that AI will help them,
(06:50):
then you know the market's going to be a little
bit skeptical about that. But you're absolutely right that with
these valuations, especially among those big magnificent seven tech stocks
as they call them, and the market at large, that
we really are at a point where any bad news
could be taken sort of in a worse fashion than
(07:12):
it might have otherwise, just because of this ferocious rally
we've seen since the low's in April.
Speaker 2 (07:18):
Well, that was a great readout, Michael. And that massive
capital expenditure you're talking about is the reason why we
have yet another all time high for Nvidia today because
that's where so much of that money is going. Look
at this thing above one hundred and seventy eight dollars.
Now it's up another two percent today, Absolutely remarkable. As
we wait to hear from these companies. Those we're hearing
(07:38):
from tonight will put Apple aside with all the talk
of where it's going to assemble the iPhone and so forth.
The President likes to talk about, Michael Reagan, if you're
Microsoft or a Meta, are you tariff proof? I mean,
if you're selling software and selling ads, isn't that about
as good as it gets right now?
Speaker 4 (07:53):
Yeah?
Speaker 3 (07:53):
I don't know if you're one hundred percent tariff proof, Joe,
but you're pretty well inoculated compared to say you're importers
of you know, your retailers especially. We'll hear from most
of them towards the end of the reporting season. The
banks as well, who we heard from at the beginning
of the season, relatively tariff proof. And not only that,
(08:14):
all the commotion in the markets. The volatility and the
heavy volumes were really a boon to your Goldmans and
your Morgan Stanley's, and your JP Morgan's, any big bank
with a trading desk, So that sort of front loaded
a lot of growth into the earnings season and a
lot of better than expected reports. Now we really do
get into the nitty gritty of you know, big tech obviously,
(08:35):
as we said, but also these industrials, the retailers, the
more consumer facing names coming later in the season that
are more exposed to the tariffs. I'll give you one
example of PayPal came out and said, you know, you
wouldn't think this company is very exposed to tariffs, but
they said the tariff effect has really just affected overall
(08:56):
consumer spending. So lower volumes, you know, not good for
a company like PayPal, So really kind of sending an
interesting macro signal from a stock like that. We also
heard from Harley Davidson that stocks up big, as Charlie mentioned,
on its plans to take some investments in its financing arm.
But if you look under the hood of their earnings,
(09:17):
they also pointed out to one hundred and twenty five
basis pointer one point twenty five percentage point hit to
their margins. So the anecdotes are starting to pile up.
And remember, there's going to be a delayed reaction to
these tariffs. I think, as Molly alluded to earlier, the
quarter we're talking about now was that March to June quarter,
So you know, it didn't encompass really a lot of
(09:41):
the tariffs that we're looking at going forward.
Speaker 5 (09:43):
So it's a.
Speaker 3 (09:44):
Story Joe that's going to remain with us for the
rest of the earning seasons this year and beyond.
Speaker 4 (09:49):
For sure.
Speaker 2 (09:51):
We've only got about a minute left here, Michael, walk
me up to Friday. We get through the Fed today,
We've got GDP important data tomorrow. But Friday we have
a jobs report, and we have the August first deadline.
So presumably Donald Trump's going to have an event where
he holds up a big board or he goes on
truth social and puts up a whole bunch of new
(10:11):
reciprocal tariffs. If that Job's report doesn't impress the tariffs
freak out investors, maybe we have some shaky earnings in
the next two days. What happens to the market.
Speaker 3 (10:21):
Yeah, I mean, I go back to your point again,
these you know, record after record, and these really very
richly valued valuations from the index side. Really the market
is priced to perfection. As I've heard several investors say, now,
I'm not sure the August one tariff announcements will have
the potential to be too big of a shock because
(10:42):
we already know what to expect with Europe, Japan and China,
back and forth. But we have a pretty good sense
of what the major major trading partners are going to be.
So on the payrolls report, I almost think an upside
surprise will be more problematic for the market because of that.
A lot of hope that the Fed will raise or
(11:03):
pardon me, lower interest rates this year.
Speaker 2 (11:06):
Fascinating to spend time always with Michael Reagan, Bloomberg Managing
editor for the US Watch the Celsius. When you open
the can, Michael, you don't know what's inside that thing. Today,
I'm gonna go grab one myself and see what happens.
We'll assemble our panel coming up. Genie is with US
Genie Shanzino alongside Marrig Gillespie from Bluestack. We're going to
talk about what's happening today in Texas. Maybe the most
(11:29):
important underreported story today. They're redrawing the congressional map and
we'll have our panel with it next.
Speaker 1 (11:35):
Only on Bloomberg, you're listening to the Bloomberg Balance of
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Speaker 2 (11:55):
Thirty doing some on the ground reporting here in Washington,
DC with the big story you're about high noon. This
is like the third most red story on the terminal
today high noon announcing a recall of Vodka Seltzer drinks.
It says we're mislabeled as Celsius Energy Drinks. We know
(12:16):
of this because the FDA posted something on its website.
We've got a full on recall here. The company says
consumption of the liquid in these cans will result in
unintentional alcohol ingestion. This is something made for Charlie and
the chocolate factory. As people head out to convenience stores
(12:37):
around the country looking for a drink with the Golden ticket,
and you know, the crack team here at Bloomberg and
Washington is all over this. Brendan went running for us here,
just gonna play a little Celsius roulette. We got a
couple of them, tropical vibe. I think this one's going
(13:02):
to be okay. We'll test a few more of these Kansas.
We make our way through the program. Why is Hockey
Jeffreys in Texas today? You ask? It has to do
with the redistricting that we've been talking about for days.
We actually might see the map today. Republicans in Texas
want to redraw the congressional map. Donald Trump says he
wants five new seats in Texas, and it started a
(13:25):
big conversation because it's off the clock. It's obviously in
an effort to keep the Republican majority in the House.
In some Democratic led states like California say well, they
might get in the game too if this actually happens.
Something we talked about with James Tallerico. Did you hear
our interview with Taala Rico. He's the Texas state rapid
Democrat who's also a pastor who's gone viral recently and
(13:47):
might end up running for Senate in the state. He's
taking a stand on Texas redistricting. Here's what he said.
Speaker 6 (13:53):
The President has asked our governor Greg Abbott to find
him five more congressional seats. He wants to redraw the
political maps in the middle of the decade to try
to protect his majority in the next election, regardless of
how we all vote. And I just I think this
is politics that it's worst, you know, politicians picking their
voters instead of voters picking their politicians. And so I'm
(14:15):
doing everything I possibly can to stop this, this jerry
mander from going through, to stop this power grab.
Speaker 2 (14:23):
Politics at its worst, or using the system to maintain
a Republican majority in the House by planned, by the rules.
Let's bring it to our panel for their take on this.
I know Genie has had a chance to weigh in,
and with the new information, we have be awfully curious
to hear from the Democrat onn oor A panel. Janie
Shanzano is a Bloomberg Politics contributor and Senior Democracy Fellow
(14:45):
with the Center for the Study of the Presidency and Congress.
Joined today by Morigi eSPI, Republican strategist, founder of Bluestack Strategies,
and a veteran of John Bayner's Speaker's office, and there's
a thing or two about maintaining Republican majorities in the House.
It's great to see both of you, ladies. Thank you
so much for joining us. Genie, it looks like this
is actually happening in Texas, and a lot of people
(15:07):
have very simple questions about this because Congress is supposed
to actually be a mathematical equation here, right, you have
the number of seats based on your population. So how
can Texas actually pull this off? Or should this not
be happening right now?
Speaker 4 (15:22):
First of all, Joe On behalf of Maura and myself,
I cry Powell on you opening these great drinks and
we're listening to them and we get nothing right, Maura,
so please send me birthday.
Speaker 2 (15:35):
I have. I'm going to just keep doing this as
we make our way through this. Yeah, no, this one's
clean as well. Go ahead, Jeanie.
Speaker 4 (15:45):
You know, this is I think, just a fascinating story
because it speaks to volumes as to how focused Donald
Trump is on the midterm. For anybody who thought he
was going to go out as a lame duck you know,
doesn't have to run again, doesn't care. This is anything
but evidence of that. You know, the last time this
(16:08):
was done with Tom Delay, it wasn't driven by the
White House, this sort of mid term redistricting in a state.
But this is unusual because the call is coming from
the White House, the Justice Department messaging Texas legislature and saying, hey,
you guys may be in violation of the Voting Rights Act.
You had to redistricts. So that's one fascinating element of this.
(16:30):
I think it speaks to how difficult it would be
for Trump if the Democrats take the House and or
the Senate, but the House in particular, and how much
he is investing in making sure that doesn't happen.
Speaker 5 (16:43):
And this is.
Speaker 4 (16:44):
Texas's, you know, attempt, and I think we'll see others
attempt to try to stave that off, and if they're successful,
this would be I think a sort of laying the
groundwork for what we're going to see going forward for
these mid term redistrictings.
Speaker 2 (17:00):
HACKEM Jeffrey says, this is a moment that requires a forceful,
on the ground response and that is why I am
traveling to Texas to convene with members of the Texas
House and Senate delegations as well as our Democratic members
representing Texas. He's going to be holding a news conference
there and then he goes to California later in the week.
What's your thought on this, Mora and can Texas pull
(17:23):
this off? Donald Trump says this would be enough to
keep a very thin majority in the House.
Speaker 5 (17:30):
You know, I think it's interesting.
Speaker 7 (17:32):
We see this happen every now and again, as far
as states that legislatures that decide to redistrict to put
their party at an advantage. My former boss, I'm Pinsinger,
he got distracted out. You know, they paired up to
Republicans together. It's not uncommon, It's something that we've seen
happen before, but this particular situation because he as you
mentioned the president's involvement, as Ni pointed out the heavy
(17:54):
hand that he's playing in this in order to protect
the House majority raised within as it may be to me,
signals that they're worried about their ability to message effectively
of what they've done to the people, you know, to
the American people, and you know, keep the votes they
need to keep the seats that they need to keep.
And so to me, as a Republican strateger, that's a
(18:15):
red flag for me, that they're already getting ahead of
this as far as we need to, you know, grab
the seats, not necessarily earn the vote. And it harkens
me back to thinking about January sixth and during the
committee when we you know, President Trump asked Brian Roethlisberger
from Georgia just to find him, you know, twelve thousand votes,
just find him these five seats. And so I think
(18:36):
that that's going to sit a bit of a sour
taste in the mouth of the American people as they
remember that as well, because it does feel as though
they're worried about their ability to effectively say you should
want to re elect us because here's what we've done
to make your life better.
Speaker 5 (18:50):
And instead of doing that and.
Speaker 7 (18:51):
Going out on the road and having a robust August
campaign schedule and really hitting the ground running here now
and also throughout the next year as you lead into
twenty twenty sixth, they're kind of screwed it by trying
to take over these seats now. Again, Also, Gavinusm's trying
to do the same thing, right, he said he's going
to come back fight fire with fire and do the
same thing in California.
Speaker 5 (19:07):
Where does that leave people right, Where does it leave us?
Speaker 2 (19:10):
Well, look, Democrats have two paths here. It seems, Genie,
you can take the Hakeim Jeffrey's path. Maybe there are
three paths you could do, Gavin Newsom, fight fire with fire,
actually change the state constitution, redraw California, or you could
take a legal route. That's what Senator Alex Paedia is doing.
The Democrat from California you last heard about rolling on
(19:31):
the ground with security guards at a Christy Nome event,
is pushing for an investigation, Genie into Hatch Act violations.
Politico says, this Hatch active because the little White House
involvement that we've discussed, suggesting that appointees in the White
House and DOJ broke the law by prevailing on Texas
(19:52):
along with other states to redraw congressional maps. Which route
should Democrats take?
Speaker 4 (20:00):
I think they're going to pursue all of the above.
I'm never a fan of trying to resolve political questions
in the courts, but we have done that is a
time immemorial, as Tokville told us, and we will continue
to do that. And he has a good point about
the Hatch Act, I mean the DOJ, the Trump administration.
(20:21):
The White House is actively involved in this effort, and
so it may be a violation. I think the sounder
move for me would be the political avenue.
Speaker 5 (20:31):
You know.
Speaker 4 (20:32):
I know that California, as you mentioned Newsom, they're trying
to think about redrawing, Kathy Hochel, and my home state
of New York trying to think about redrawing, although it
is a violation of the state constitution. I think for me,
one of the things is what maur talked about, the
messaging component here is that Democrats have to couple this
(20:53):
with a message, which is that when Donald Trump can't
win on his policies, which polls show in many cases
putting the economy aside, are not particularly popular at this moment,
including immigration, they try to find these votes. And so
I think Democrats are going to use an all of
the above strategy and trying to combat this.
Speaker 5 (21:16):
You know.
Speaker 4 (21:17):
I also think there is a conversation that should be
had but probably won't, that we need to figure out
about redistricting and jerrymandering in this country. It has not
been something that has been addressed at the federal level,
and very well should be because what it does is
it has really thrown a monkey wrench into our politics
(21:39):
for a long time.
Speaker 2 (21:40):
Now, well, look, this is a conversation, You're right that
we need to have, and a lot of people believe,
we've talked about this before, that it's one of the
root causes of the extreme partisanship in this country and
the gridlock on Capitol Hill and Mara. I'm sure that
you have thought about this a lot too. If you
look at the way some districts have been redrawn even
(22:00):
since you were in the House with John Bayner, you
can't even recognize these Frankenstein districts. They don't make sense anymore.
Speaker 5 (22:07):
In some cases, it really doesn't.
Speaker 7 (22:09):
I got a quick look at the proposed Texas map
that I saw, you know out on Twitter and twenty
like district twenty four and twenty and twelve our overlapping
each other, where a chunk of twenty four is in
the middle of twelve.
Speaker 5 (22:21):
I mean, that is just I mean, and I know.
I mean.
Speaker 7 (22:24):
When Kinzinger was a congressman, we had from the very
top of the state of Illinois to the very bottom,
you know, we touched it was really hard to get
anywhere from one point year district to the bottom point
ye district, you know, to in one day. You couldn't
do it driving wise, and so it's just it's really
it's tough. And I it's based on the fact that
they're trying to skirt these districts to get their most
advantageous numbers for what they think will be a win.
(22:47):
But I think that what it shows me as far
as Texas and California goes, Texas has turned, you know,
more purple, California has turned more purple. And to counteract that,
this is what you're seeing we're on you have a
Republican governor, and so they're trying to take it out,
you know, take out those five extracies to push the
Democrats together and then you know, potentially the same thing
happening in California.
Speaker 5 (23:08):
But as I said before, is like, where does that
leave us as a country?
Speaker 7 (23:10):
Where does that leave us as the citizens who get
showed into these little districts that are so wonky that
you're not even sure your next door neighbor could be
in a different district for all you know.
Speaker 5 (23:18):
And it's very confusing.
Speaker 7 (23:20):
Yes, it's very confusing, and it just it doesn't I'll
say another banierism here, It doesn't pass the smell test.
Speaker 5 (23:27):
It just feels snicky.
Speaker 2 (23:29):
Well yeah, look at it. And it happens all over
the place to both parties.
Speaker 4 (23:33):
Genia.
Speaker 2 (23:33):
Remember when Barney Frank got redistricted, he couldn't win his
own district in Massachusett. It's along comes Joe Kennedy and
he's got to balance a district from Brookline to Fall
River constituents who have nothing in common with themselves. Which
really upends the candidacies and the campaigns in these districts,
doesn't it.
Speaker 4 (23:52):
It absolutely does, And I'm glad you mentioned that because
it is on both sides of the Aisle. It is
usually every ten years. Now we're more and more at
these midterm points during this ten year period, and it
is really really made it very difficult for us to
have competitive elections in some of these districts. The number
of competitive elections in these districts has gone down dramatically,
(24:16):
and so what that means is we have people running
for Congress who are running to the far left and
the far right to win these very funky districts. Has
more a called them, and they absolutely are, and that
of a disservice to all of us. And so it's
one of these structural challenges we've long faced that has
a huge impact on our day to day lives and
(24:37):
politics and should be addressed by either Congress arguably or
the courts, but has not. And now we see what's
going to happen, and I think likely will happen in
Texas and potentially elsewhere as we move to the midterm.
Speaker 2 (24:51):
What a great conversation, see what we can get done
around here when we're not trained on the Oval office
for three hours a day. Thanks for listening to The
Bolence of Power podcast. Make sure to subscribe if you
haven't already, at Apple, Spotify, or wherever you get your podcasts,
and you can find us live every weekday from Washington,
DC at noontime Eastern at Bloomberg dot com.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Auto with the Bloomberg Business App. Listen on demand wherever
(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Check what you're drinking with your lunch. This has got
to be the more interesting story of the day. Producer
James just put this in front of me. It takes
America's producer to find news like this. High Noon is
recalling it's vodka Seltzer's mislabeled as Celsius the FDA, right,
(00:46):
so you think you're buying an energy drink. You're going
to get the Celsius and there's alcohol inside. Hi Noon
announcing the recall of its vodka Seltzer beach pack. You
went for the beach, didn't you. That's the twelve fact
due to inclusion. I'm reading off the news release now
(01:07):
of Celsius Astro Vibe energy drink cans that were inadvertently
filled with vodka Seltzer. Is my kid drinking that stuff
at home right now? Consumption of the liquid? It says
in these cans will result in unintentional alcohol ingestion. Oh Kaylee,
(01:30):
we're gonna have to talk about that too. I think
they were drinking Celsius' is in the line's house. All right,
let's get to what we're talking about here, and that's
earning's reporting season. Look, maybe more people are gonna buy
it because they've rite everyone's gonna buy this stuff to
try to get the can with the vodka in it
flying off the shelves. Maybe it'll be a collector's item.
(01:50):
We've been hearing earnings reports from companies that are making
us wonder here about the impact of tariffs and maybe
the fact that they're actually finally take hold. Really interesting
series of stories here from some major consumer facing brands,
the likeness of Procter and Gamble now saying that it's
(02:10):
cutting its outlook for the year and is increasing prices
on a good number of goods about a quarter of
its products in the US, to help offset the cost
of new tariffs, which, by the way, are going to
be likely going up again on Friday, that's the date
for reciprocal tariffs, at least with regard to companies that
haven't cut so called deals yet. This is really interesting.
(02:31):
Bill George, former chair CEO of Medtronic. He's now Executive
Education Fellow at the Harvard Business School. Bill George, You're
going to see companies like Walmart, Amazon, and Best Buy
forced to pass price increases to consumers. Main Street this
is important has yet to see the fallout from increased tariffs.
George says, they're going to go higher. Add Stanley Black
(02:54):
and Decker. Add the meltdown in Whirlpool yesterday what ups
was also saying, it starts to paint a pretty scary
picture about where we might be heading in the second
half of the year. You remember, Molly Smith just told
us that when you look at GDP growth for the
first half of the year, not just this quarterly number
that was impressive today, stronger than expected, but we're seeing
a real slowdown in the economy when you take a
(03:16):
longer view. Now match that against the stock market that
keeps hitting all time highs. The S and P five
hundred is right below thirty I'm sorry, sixty four hundred
right now, up another fourteen points today, and we've got
a big pile of earnings news coming. So we thought
this would be a really good moment to take Stock
with Michael Reagan, Bloomberg's managing editor for the US here
(03:37):
and his eyes on not just the markets, but the
way they're looking at these issues that we're talking about
now in Washington. President Trump just today announcing a new
tariff on India. This is again ahead of the August
first deadline that he says will not move twenty five
percent on India's exports heading into the US. Michael Reagan
(04:00):
is with us from World Headquarters in New York, and
I'm wondering, if you're starting to feel like we're in
nosebleed territory here Micro, if the earnings reports that we're
going to get in the days ahead will actually justify
these levels.
Speaker 3 (04:10):
Yeah, Joe, I mean, I think the big tech earnings
obviously are the main show for the week. Meta platforms
the operator Facebook and Instagram after the bell, and Microsoft
after the bell, because you know, obviously the tariffs aren't
starting to bite as you as you point out, you know,
Whirlpool is a great example. They actually were in trouble
(04:35):
because so many Asian competitors or exported to the US
a lot of competing appliances. So even though Whirlpool is
you know, has a lot of domestic manufacturing. They still
got hit because of that sort of trying to front
run the tariffs. But really, you know, the market, these
megacap tech stocks are just so heavily weighted in the
(04:58):
major indexes, your Nasdaq hundreds and S and P five hundreds,
that that's the real story for the week as far
as earnings go. And the real thing that a lot
of people are zeroing in is actually something you don't
usually look at for these companies, and that's capital expenditures
because they really are just writing giant checks for AI
(05:21):
chips and data centers and trying to ramp up their
AI offerings either to meet demand from customers or to
really improve their own businesses. So if you look at
a company like met I believe they're expected to double
their CAPEX spending to about sixteen point four billion. Microsoft
(05:42):
expected increase it by about thirty percent to eighteen billion.
Now it's interesting because oftentimes, you know, before the AI boom,
a big ramp up in CAPEX would not be exactly
something that investors would be happy to hear about. This
scenario is a little bit more nuanced. We saw Alpha
Bet a week or so ago announced that they expect
(06:06):
to spend eighty five billion on CAPEX this year, and
the initial sort of knee jerk reaction in the market
was a drop in the stock after hours, but then
the executives got on the call and explained, like, no,
we're responding to demand here from clients and that's why
we're spending so much. So it's you know, a lot
of nuanced as far as how these companies explain this
(06:29):
giant expenditures on capex. If they can sort of illustrate
that they are able to reduce costs or improve sales,
fatten out those margins a little bit because of what
they spent or expect to spend, then they're going to
get rewarded. If it looks like they're just kind of
gambling and taking a bet that AI will help them,
(06:50):
then you know the market's going to be a little
bit skeptical about that. But you're absolutely right that with
these valuations, especially among those big magnificent seven tech stocks
as they call them, and the market at large, that
we really are at a point where any bad news
could be taken sort of in a worse fashion than
(07:12):
it might have otherwise, just because of this ferocious rally
we've seen since the low's in April.
Speaker 2 (07:18):
Well, that was a great readout, Michael. And that massive
capital expenditure you're talking about is the reason why we
have yet another all time high for Nvidia today because
that's where so much of that money is going. Look
at this thing above one hundred and seventy eight dollars.
Now it's up another two percent today, Absolutely remarkable. As
we wait to hear from these companies. Those we're hearing
(07:38):
from tonight will put Apple aside with all the talk
of where it's going to assemble the iPhone and so forth.
The President likes to talk about, Michael Reagan, if you're
Microsoft or a Meta, are you tariff proof? I mean,
if you're selling software and selling ads, isn't that about
as good as it gets right now?
Speaker 4 (07:53):
Yeah?
Speaker 3 (07:53):
I don't know if you're one hundred percent tariff proof, Joe,
but you're pretty well inoculated compared to say you're importers
of you know, your retailers especially. We'll hear from most
of them towards the end of the reporting season. The
banks as well, who we heard from at the beginning
of the season, relatively tariff proof. And not only that,
(08:14):
all the commotion in the markets. The volatility and the
heavy volumes were really a boon to your Goldmans and
your Morgan Stanley's, and your JP Morgan's, any big bank
with a trading desk, So that sort of front loaded
a lot of growth into the earnings season and a
lot of better than expected reports. Now we really do
get into the nitty gritty of you know, big tech obviously,
(08:35):
as we said, but also these industrials, the retailers, the
more consumer facing names coming later in the season that
are more exposed to the tariffs. I'll give you one
example of PayPal came out and said, you know, you
wouldn't think this company is very exposed to tariffs, but
they said the tariff effect has really just affected overall
(08:56):
consumer spending. So lower volumes, you know, not good for
a company like PayPal, So really kind of sending an
interesting macro signal from a stock like that. We also
heard from Harley Davidson that stocks up big, as Charlie mentioned,
on its plans to take some investments in its financing arm.
But if you look under the hood of their earnings,
(09:17):
they also pointed out to one hundred and twenty five
basis pointer one point twenty five percentage point hit to
their margins. So the anecdotes are starting to pile up.
And remember, there's going to be a delayed reaction to
these tariffs. I think, as Molly alluded to earlier, the
quarter we're talking about now was that March to June quarter,
So you know, it didn't encompass really a lot of
(09:41):
the tariffs that we're looking at going forward.
Speaker 5 (09:43):
So it's a.
Speaker 3 (09:44):
Story Joe that's going to remain with us for the
rest of the earning seasons this year and beyond.
Speaker 4 (09:49):
For sure.
Speaker 2 (09:51):
We've only got about a minute left here, Michael, walk
me up to Friday. We get through the Fed today,
We've got GDP important data tomorrow. But Friday we have
a jobs report, and we have the August first deadline.
So presumably Donald Trump's going to have an event where
he holds up a big board or he goes on
truth social and puts up a whole bunch of new
(10:11):
reciprocal tariffs. If that Job's report doesn't impress the tariffs
freak out investors, maybe we have some shaky earnings in
the next two days. What happens to the market.
Speaker 3 (10:21):
Yeah, I mean, I go back to your point again,
these you know, record after record, and these really very
richly valued valuations from the index side. Really the market
is priced to perfection. As I've heard several investors say, now,
I'm not sure the August one tariff announcements will have
the potential to be too big of a shock because
(10:42):
we already know what to expect with Europe, Japan and China,
back and forth. But we have a pretty good sense
of what the major major trading partners are going to be.
So on the payrolls report, I almost think an upside
surprise will be more problematic for the market because of that.
A lot of hope that the Fed will raise or
(11:03):
pardon me, lower interest rates this year.
Speaker 2 (11:06):
Fascinating to spend time always with Michael Reagan, Bloomberg Managing
editor for the US Watch the Celsius. When you open
the can, Michael, you don't know what's inside that thing. Today,
I'm gonna go grab one myself and see what happens.
We'll assemble our panel coming up. Genie is with US
Genie Shanzino alongside Marrig Gillespie from Bluestack. We're going to
talk about what's happening today in Texas. Maybe the most
(11:29):
important underreported story today. They're redrawing the congressional map and
we'll have our panel with it next.
Speaker 1 (11:35):
Only on Bloomberg, you're listening to the Bloomberg Balance of
Power podcast. Catch us live weekdays at noon and five
pm Eastern on Apple Cocklay and Android Auto with the
Bloomberg Business App. You can also listen live on Amazon
Alexa from our flagship New York station, Just say Alexa
play Bloomberg eleven.
Speaker 2 (11:55):
Thirty doing some on the ground reporting here in Washington,
DC with the big story you're about high noon. This
is like the third most red story on the terminal
today high noon announcing a recall of Vodka Seltzer drinks.
It says we're mislabeled as Celsius Energy Drinks. We know
(12:16):
of this because the FDA posted something on its website.
We've got a full on recall here. The company says
consumption of the liquid in these cans will result in
unintentional alcohol ingestion. This is something made for Charlie and
the chocolate factory. As people head out to convenience stores
(12:37):
around the country looking for a drink with the Golden ticket,
and you know, the crack team here at Bloomberg and
Washington is all over this. Brendan went running for us here,
just gonna play a little Celsius roulette. We got a
couple of them, tropical vibe. I think this one's going
(13:02):
to be okay. We'll test a few more of these Kansas.
We make our way through the program. Why is Hockey
Jeffreys in Texas today? You ask? It has to do
with the redistricting that we've been talking about for days.
We actually might see the map today. Republicans in Texas
want to redraw the congressional map. Donald Trump says he
wants five new seats in Texas, and it started a
(13:25):
big conversation because it's off the clock. It's obviously in
an effort to keep the Republican majority in the House.
In some Democratic led states like California say well, they
might get in the game too if this actually happens.
Something we talked about with James Tallerico. Did you hear
our interview with Taala Rico. He's the Texas state rapid
Democrat who's also a pastor who's gone viral recently and
(13:47):
might end up running for Senate in the state. He's
taking a stand on Texas redistricting. Here's what he said.
Speaker 6 (13:53):
The President has asked our governor Greg Abbott to find
him five more congressional seats. He wants to redraw the
political maps in the middle of the decade to try
to protect his majority in the next election, regardless of
how we all vote. And I just I think this
is politics that it's worst, you know, politicians picking their
voters instead of voters picking their politicians. And so I'm
(14:15):
doing everything I possibly can to stop this, this jerry
mander from going through, to stop this power grab.
Speaker 2 (14:23):
Politics at its worst, or using the system to maintain
a Republican majority in the House by planned, by the rules.
Let's bring it to our panel for their take on this.
I know Genie has had a chance to weigh in,
and with the new information, we have be awfully curious
to hear from the Democrat onn oor A panel. Janie
Shanzano is a Bloomberg Politics contributor and Senior Democracy Fellow
(14:45):
with the Center for the Study of the Presidency and Congress.
Joined today by Morigi eSPI, Republican strategist, founder of Bluestack Strategies,
and a veteran of John Bayner's Speaker's office, and there's
a thing or two about maintaining Republican majorities in the House.
It's great to see both of you, ladies. Thank you
so much for joining us. Genie, it looks like this
is actually happening in Texas, and a lot of people
(15:07):
have very simple questions about this because Congress is supposed
to actually be a mathematical equation here, right, you have
the number of seats based on your population. So how
can Texas actually pull this off? Or should this not
be happening right now?
Speaker 4 (15:22):
First of all, Joe On behalf of Maura and myself,
I cry Powell on you opening these great drinks and
we're listening to them and we get nothing right, Maura,
so please send me birthday.
Speaker 2 (15:35):
I have. I'm going to just keep doing this as
we make our way through this. Yeah, no, this one's
clean as well. Go ahead, Jeanie.
Speaker 4 (15:45):
You know, this is I think, just a fascinating story
because it speaks to volumes as to how focused Donald
Trump is on the midterm. For anybody who thought he
was going to go out as a lame duck you know,
doesn't have to run again, doesn't care. This is anything
but evidence of that. You know, the last time this
(16:08):
was done with Tom Delay, it wasn't driven by the
White House, this sort of mid term redistricting in a state.
But this is unusual because the call is coming from
the White House, the Justice Department messaging Texas legislature and saying, hey,
you guys may be in violation of the Voting Rights Act.
You had to redistricts. So that's one fascinating element of this.
(16:30):
I think it speaks to how difficult it would be
for Trump if the Democrats take the House and or
the Senate, but the House in particular, and how much
he is investing in making sure that doesn't happen.
Speaker 5 (16:43):
And this is.
Speaker 4 (16:44):
Texas's, you know, attempt, and I think we'll see others
attempt to try to stave that off, and if they're successful,
this would be I think a sort of laying the
groundwork for what we're going to see going forward for
these mid term redistrictings.
Speaker 2 (17:00):
HACKEM Jeffrey says, this is a moment that requires a forceful,
on the ground response and that is why I am
traveling to Texas to convene with members of the Texas
House and Senate delegations as well as our Democratic members
representing Texas. He's going to be holding a news conference
there and then he goes to California later in the week.
What's your thought on this, Mora and can Texas pull
(17:23):
this off? Donald Trump says this would be enough to
keep a very thin majority in the House.
Speaker 5 (17:30):
You know, I think it's interesting.
Speaker 7 (17:32):
We see this happen every now and again, as far
as states that legislatures that decide to redistrict to put
their party at an advantage. My former boss, I'm Pinsinger,
he got distracted out. You know, they paired up to
Republicans together. It's not uncommon, It's something that we've seen
happen before, but this particular situation because he as you
mentioned the president's involvement, as Ni pointed out the heavy
(17:54):
hand that he's playing in this in order to protect
the House majority raised within as it may be to me,
signals that they're worried about their ability to message effectively
of what they've done to the people, you know, to
the American people, and you know, keep the votes they
need to keep the seats that they need to keep.
And so to me, as a Republican strateger, that's a
(18:15):
red flag for me, that they're already getting ahead of
this as far as we need to, you know, grab
the seats, not necessarily earn the vote. And it harkens
me back to thinking about January sixth and during the
committee when we you know, President Trump asked Brian Roethlisberger
from Georgia just to find him, you know, twelve thousand votes,
just find him these five seats. And so I think
(18:36):
that that's going to sit a bit of a sour
taste in the mouth of the American people as they
remember that as well, because it does feel as though
they're worried about their ability to effectively say you should
want to re elect us because here's what we've done
to make your life better.
Speaker 5 (18:50):
And instead of doing that and.
Speaker 7 (18:51):
Going out on the road and having a robust August
campaign schedule and really hitting the ground running here now
and also throughout the next year as you lead into
twenty twenty sixth, they're kind of screwed it by trying
to take over these seats now. Again, Also, Gavinusm's trying
to do the same thing, right, he said he's going
to come back fight fire with fire and do the
same thing in California.
Speaker 5 (19:07):
Where does that leave people right, Where does it leave us?
Speaker 2 (19:10):
Well, look, Democrats have two paths here. It seems, Genie,
you can take the Hakeim Jeffrey's path. Maybe there are
three paths you could do, Gavin Newsom, fight fire with fire,
actually change the state constitution, redraw California, or you could
take a legal route. That's what Senator Alex Paedia is doing.
The Democrat from California you last heard about rolling on
(19:31):
the ground with security guards at a Christy Nome event,
is pushing for an investigation, Genie into Hatch Act violations.
Politico says, this Hatch active because the little White House
involvement that we've discussed, suggesting that appointees in the White
House and DOJ broke the law by prevailing on Texas
(19:52):
along with other states to redraw congressional maps. Which route
should Democrats take?
Speaker 4 (20:00):
I think they're going to pursue all of the above.
I'm never a fan of trying to resolve political questions
in the courts, but we have done that is a
time immemorial, as Tokville told us, and we will continue
to do that. And he has a good point about
the Hatch Act, I mean the DOJ, the Trump administration.
(20:21):
The White House is actively involved in this effort, and
so it may be a violation. I think the sounder
move for me would be the political avenue.
Speaker 5 (20:31):
You know.
Speaker 4 (20:32):
I know that California, as you mentioned Newsom, they're trying
to think about redrawing, Kathy Hochel, and my home state
of New York trying to think about redrawing, although it
is a violation of the state constitution. I think for me,
one of the things is what maur talked about, the
messaging component here is that Democrats have to couple this
(20:53):
with a message, which is that when Donald Trump can't
win on his policies, which polls show in many cases
putting the economy aside, are not particularly popular at this moment,
including immigration, they try to find these votes. And so
I think Democrats are going to use an all of
the above strategy and trying to combat this.
Speaker 5 (21:16):
You know.
Speaker 4 (21:17):
I also think there is a conversation that should be
had but probably won't, that we need to figure out
about redistricting and jerrymandering in this country. It has not
been something that has been addressed at the federal level,
and very well should be because what it does is
it has really thrown a monkey wrench into our politics
(21:39):
for a long time.
Speaker 2 (21:40):
Now, well, look, this is a conversation, You're right that
we need to have, and a lot of people believe,
we've talked about this before, that it's one of the
root causes of the extreme partisanship in this country and
the gridlock on Capitol Hill and Mara. I'm sure that
you have thought about this a lot too. If you
look at the way some districts have been redrawn even
(22:00):
since you were in the House with John Bayner, you
can't even recognize these Frankenstein districts. They don't make sense anymore.
Speaker 5 (22:07):
In some cases, it really doesn't.
Speaker 7 (22:09):
I got a quick look at the proposed Texas map
that I saw, you know out on Twitter and twenty
like district twenty four and twenty and twelve our overlapping
each other, where a chunk of twenty four is in
the middle of twelve.
Speaker 5 (22:21):
I mean, that is just I mean, and I know.
I mean.
Speaker 7 (22:24):
When Kinzinger was a congressman, we had from the very
top of the state of Illinois to the very bottom,
you know, we touched it was really hard to get
anywhere from one point year district to the bottom point
ye district, you know, to in one day. You couldn't
do it driving wise, and so it's just it's really
it's tough. And I it's based on the fact that
they're trying to skirt these districts to get their most
advantageous numbers for what they think will be a win.
(22:47):
But I think that what it shows me as far
as Texas and California goes, Texas has turned, you know,
more purple, California has turned more purple. And to counteract that,
this is what you're seeing we're on you have a
Republican governor, and so they're trying to take it out,
you know, take out those five extracies to push the
Democrats together and then you know, potentially the same thing
happening in California.
Speaker 5 (23:08):
But as I said before, is like, where does that
leave us as a country?
Speaker 7 (23:10):
Where does that leave us as the citizens who get
showed into these little districts that are so wonky that
you're not even sure your next door neighbor could be
in a different district for all you know.
Speaker 5 (23:18):
And it's very confusing.
Speaker 7 (23:20):
Yes, it's very confusing, and it just it doesn't I'll
say another banierism here, It doesn't pass the smell test.
Speaker 5 (23:27):
It just feels snicky.
Speaker 2 (23:29):
Well yeah, look at it. And it happens all over
the place to both parties.
Speaker 4 (23:33):
Genia.
Speaker 2 (23:33):
Remember when Barney Frank got redistricted, he couldn't win his
own district in Massachusett. It's along comes Joe Kennedy and
he's got to balance a district from Brookline to Fall
River constituents who have nothing in common with themselves. Which
really upends the candidacies and the campaigns in these districts,
doesn't it.
Speaker 4 (23:52):
It absolutely does, And I'm glad you mentioned that because
it is on both sides of the Aisle. It is
usually every ten years. Now we're more and more at
these midterm points during this ten year period, and it
is really really made it very difficult for us to
have competitive elections in some of these districts. The number
of competitive elections in these districts has gone down dramatically,
(24:16):
and so what that means is we have people running
for Congress who are running to the far left and
the far right to win these very funky districts. Has
more a called them, and they absolutely are, and that
of a disservice to all of us. And so it's
one of these structural challenges we've long faced that has
a huge impact on our day to day lives and
(24:37):
politics and should be addressed by either Congress arguably or
the courts, but has not. And now we see what's
going to happen, and I think likely will happen in
Texas and potentially elsewhere as we move to the midterm.
Speaker 2 (24:51):
What a great conversation, see what we can get done
around here when we're not trained on the Oval office
for three hours a day. Thanks for listening to The
Bolence of Power podcast. Make sure to subscribe if you
haven't already, at Apple, Spotify, or wherever you get your podcasts,
and you can find us live every weekday from Washington,
DC at noontime Eastern at Bloomberg dot com.
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