August 6, 2025 • 38 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump highlighted “great progress made” in a meeting between his envoy and Russian President Vladimir Putin, while still leaving open the possibility of further penalties on Moscow’s oil revenues.
Earlier Wednesday, Trump doubled tariffs on Indian goods to 50% as punishment for its purchases of Russian energy. US officials are weighing additional actions to choke off energy sales that are a key source of funds for Russia’s war effort in Ukraine.
The Trump administration is considering new sanctions on Moscow’s covert fleet of oil tankers and several entities that enable them to operate, according to people familiar with the matter.
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 Washington Correspondent Tyler Kendall.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Bloomberg Tech Host Ed Ludlow.
- Joe Lavorgna, Counselor to Treasury Secretary Scott Bessent.
- S-3 Group Partner Ashley Davis.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
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Speaker 2 (00:25):
Joe Matthew in Washington, thanks for being here on Bloomberg
TV and radio with news coming from the White House
today on Russia. If you were with us a short
time ago, you heard the President on Truth Social talking
about the meeting that took place a short time ago
with Vladimir Putin. President Trump sent his Special ENVOYE. Steve
Whitkoff to Moscow. There was a three hour long conversation,
(00:49):
the President framing it as productive, but it's very difficult
to tell if anything significant will come from this session,
knowing that only two days from now will be the
deadline for secondary sanctions on RUSSI over its war against Ukraine.
We're going to have more with our political panel on this.
Bloomberg Politics contributors Rick Davis and Genie Shanzano are with us.
(01:09):
But let's start live at the White House, Bloomberg, Washington,
correspondent Tyler Kendall has the latest on this. Tyler, what
else are we learning and when could we hear an
announcement if there is one?
Speaker 3 (01:20):
Yeah, hey, Joe, Well, as you mentioned, we've really just
heard from President Trump moments ago saying that this meeting
did make progress, but we haven't really seen many tangible
deliverables beyond that, and that President Trump said that he
briefed our European allies on these discussions. As Steve Witkoff
wraps up, really what's his fifth round of negotiations with
Vladimir Putin in Moscow ahead of this Friday, August eighth
(01:42):
deadline for Russia to come to the negotiating table in
perhaps a more meaningful way or face further economic penalties.
And we did see the White House take at least
the first step in making good on that threat earlier
when President Trump imposed that twenty five percent additional tariff
on India over it It's imports of Russian energy supplies.
About thirty seven percent of Russian oil ends up getting
(02:05):
exported to India, so they are one of those top consumers.
And this was something that we had long heard from
President Trump, and it appears that he has taken this step,
though that additional tariff will not go into effect for
another twenty one days, and it appears that could really
just be the first blow in this pressure campaign, Joe,
because we have a headline crossing on the terminal earlier
(02:25):
this hour, people familiar are telling us that the White
House is considering new sanctions on Russia's covert fleet of
oil tankers. That appears to be the next target in
what has become this pressure campaign. Try to get some
more meaningful concessions from Vladimir Putin, and Joe. As you know,
we had some pretty incredible reporting this morning that Russia
might be willing to potentially suggest there be an air truce.
(02:48):
To be sure, Vladimir Putin, the understanding is he's not
going to go for a full cease fire, but perhaps
they would put on the table an air truce. So
think stopping missile strikes or drones strikes that happen in
the air to try to stave off some of these
economic penalties.
Speaker 2 (03:05):
Tell us about the Swiss tyler. The Swiss president got
on an airplane without a formal invitation to come to
Washington to renegotiate what the president deemed to be a
thirty nine percent tariff. The President did sit down with
the Secretary of State Marco Rubio, who put on social
media a picture that two of them discussing the importance
he says of a fair and balanced trade relationship between
(03:27):
the US and Switzerland, reaffirming our commitment to stronger bilateral
defense cooperation. But no lower tariff. It seems the Swiss
will go home empty handed, right and.
Speaker 3 (03:37):
Mark Rubio, the Secretary of State, has a lot of
roles in this administration, but he doesn't lead the bilateral
trade talks, right. So, I mean, our reporting indicates that
the Swiss president did come to Washington without a formal
invite from this White House. But that just really shows
the pressure that the government is under to try to
get a lower tariff right ahead of tomorrow's deadline of
this thirty nine percent rate ultimately going into effect. And
(04:01):
it's been really interesting to see how these talks really
did seem to go off the rails here, considering our
reporting had indicated that there had been positive momentum. Now
person familiar does tell Bloomberg News it appears the Swiss
president is leaving Washington without a deal, despite putting on
the table a new proposal for the US, but apparently
was not enough. There was a few different threads that
we were watching here a Joe but important context that
(04:25):
the Swiss really don't have tariffs on their imports, only
about five percent of their imports or tariffs, and that's
really around agricultural products, which does appear to be a
red line in those negotiations. We know the US would
like to, of course see greater market access for US
agricultural goods, but there were other places where we thought
perhaps there could be some agreements, such as boosting US
(04:46):
L and G purchases, boosting pharmaceutical purchases, something that we
know as top of mind for this administration. And then
one that I'll leave you with that we didn't hear
much of an update about. But we know that the
government is negotiating some purchases of some Lockey Martin fighter jets,
and some of the reporting indicated that perhaps there could
be a higher purchase price for that. But at this moment,
it doesn't appear that any of the efforts were enough
(05:07):
ultimately to get this White House to Budge.
Speaker 2 (05:10):
Tyler Kendall full of news today. Thank you so much, Tyler,
with the update live from the White House. As we
mentioned President Trump on Truth Social earlier talking about Steve
whitcoff meeting today with Vladimir Putin. He didn't have a
lot to say, but he did call it a highly
productive meeting. Great progress was made, says the President. Afterwards,
I updated some of our European allies. We want to
(05:32):
play it to our political panel. Rick Davis and Genie
Shanzano Bloomberg Politics contributors are with us Genius Senior Democracy
fellow with the Center for the Presidency, the Study of
the Presidency in Congress, Rick's partner at Stone Court Capital
or Republican Strategist. How does this feel to you this time, Genie,
There's been a lot of meetings and a lot of
hours spent with Steve Whitcoff and Vladimir Putin that have
(05:53):
resulted in absolutely nothing. With two days to go here, Well,
we hear about a deal, Marco Rubio telling Sea and
we could hear an announcement within days.
Speaker 4 (06:03):
Yeah, the White House is certainly heightening expectations, as you
and Tyler were just talking about, but you know, it's
hard to imagine. Hopefully there is a deal, but what
would this look like, I mean, Russia is winning on
the battlefield. They have the advantage in terms of population,
they have the advantage in terms of arms. You know,
(06:23):
the President is talking about these secondary, sanctioned secondary tariffs
and indeed putting them on India despite the fact that
the EU buys a substantial amount of energy from Russia
as well. So I'm not sure exactly what this will
look like. But it's hard to imagine that Vladimir Putin
changes what he has been asking for so far, because
(06:44):
one thing he has been is very, very consistent on
his demands.
Speaker 2 (06:50):
Rick, the language coming from the Kremlin is really something
on our part in particular, said a foreign policy aid
of Vladimir Putin. Some signals were conveyed on the Ukrainian issue.
Corresponding signals were also received from President Trump. How do
we read into this?
Speaker 5 (07:11):
Not a great meeting if you're looking for a ceasefire. Look,
I mean, Vladimir Putin sure has done exactly what Genie said.
He hasn't changed his tune since day one on this thing.
But the reality is it has thrust Donald Trump into
the waiting arms of President Zelensky.
Speaker 2 (07:28):
I mean, the difference now.
Speaker 5 (07:31):
Is that the UNUS and Zelensky are unified. The US
and Europe are unified. There are efforts now to re
arm Zelenski. There are efforts now to spend more of
US taxpayer dollars on Ukraine. Coming from the Hill. It's
a complete change of positions than when Donald Trump took
(07:54):
office in the first sixty days of his administration. And
so good job, Vlad. You've actually done something that nobody
thought could happen, and that is that Donald Trump is
now the biggest supporter of the Ukraine and with that
a unified Western approach, and he can't resist that.
Speaker 2 (08:13):
Ultimately, he will.
Speaker 5 (08:14):
Fail if the US, Europe and Ukraine are aligned.
Speaker 2 (08:20):
Well, it is something genie, the evolution that we've seen here.
Donald Trump now referring to the Russian war machine in
multiple social media posts, including his idea to add a
twenty five percent tariff on India. How long can we
assume Donald Trump will see the world this way?
Speaker 4 (08:40):
You know, it's hard to assume. I try not do
with Donald Trump, anything can happen. But you know, let's
just think this through. So he imposes this tariff on
India to fifty percent for buying Russian oil, which the
United States countenance not that long ago because it's capped,
and India sent a pretty fervent and strong message saying
(09:02):
the US and the Europeans are being hypocritical because the
Europeans are the second largest importer of LNG from Russia,
and they also are talking about looking to different partners,
and so what that does in terms of the bricks
and everything else is one question. The other thing is
what are we going to do getting a frozen conflict
(09:23):
with Russia at this point, because there's two ways to
end a war, you negotiated out or you arm. And
listening to Rick, I think he's right. We may see
the United States arming Ukraine, but the Ukraine has a big,
big problem, which is population. It simply doesn't have the
numbers to win. Now is Europe and the United States
going to go in with them? So I'm not sure
(09:45):
how this gets us anywhere further than a frozen conflict
with Russia while we need to be competing with China,
not to mention everything going on in the Middle East.
I think Donald Trump's was right instinctually when he came
to office, and now he is looking very much like
Joe Biden when it pertains to this conflict with the Ukraine.
Speaker 2 (10:05):
He spoke to Voladimir Zelensky today and the President of
Ukraine is speaking about that phone call. Apparently European leaders
were on the call with President Trump. Pretty remarkable. Right
on my way from our brigades here, I spoke with
President Trump' Zelenski rights on social media. This conversation happened
(10:27):
after President Trump's representative, Steve Witkoff visited Moscow. There's reporting
rick on the Bloomberg today that the US is now
also considering sanctions on Moscow's covert fleet of oil tankers,
this shadow fleet, as it's called, entities that enable them
to operate. How come none of this has happened until now.
(10:48):
We spent years in the Biden administration asking if we
had done everything possible, if there were more sanctions to find,
and it appears there were a lot more.
Speaker 5 (10:57):
Well, we talked about that at the time, and we
used to make a very clear statement that Joe Biden
was trying to eke out a win, and you don't
eke out a win when you're challenging Vladimir Putin. The
entire approach that Joe Biden's administration took was do as
little as you can for as long as you can,
and hope this all just goes away. And that includes
(11:19):
the readiness for that administration to give arms to Ukraine.
And also why you would not have hit Russia on
day one with massive tariffs and basically roadblock their ability
to sell hydrocarbons to the world. I mean, it's just
none of it made any sense. At the time. We
criticized the Biden administration for that, and honestly, I mean
(11:44):
Donald Trump is looking at others who are using Russian oil.
He's commanded the Secretary's of State, Commerce and Treasury to
give him a secondary sanctions list of people who are
currently aiding of betting the Russian war machine, as he
likes to put it now, and I think that will
(12:04):
include China, but that will include other users in Europe
and they're going to have to face those penalties.
Speaker 2 (12:10):
The deadline is Friday. As we walk our way towards
deadline day, Rick Davis and Jeanie Shanzano, great analysis, and
thank you both for the insights. Bloomberg Politics contributors.
Speaker 1 (12:22):
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 thirty.
Speaker 2 (12:41):
We keep our eyes on shares of Apple today. It's
going to be the big story in the second half
of the day. With an announcement schedule for this afternoon
at the White House. Tim Cook is expected to appear
alongside President Trump to make this massive investment announcement. We're
talking about one hundred billion dollars in domestic mania. You're
factoring when we talk Apple, we have to talk to
(13:02):
Ed Ludlow the coast of Bloomberg Tech with his eyes
on Washington. Once again, this is getting to be a habit. Ed,
is this new money that we're learning from Apple?
Speaker 6 (13:12):
Well, the one hundred billion dollars is new. It's in
addition to and on top of the five hundred billion
dollars that Apple had already announced or disclosed. They plan
to invest in the United States in the context of manufacturing,
but also direct investments into suppliers and training. But there's
a heavier emphasis show on already disclosed. So in aggregate
(13:35):
it's a bigger number, but you have to ask questions
of the what next, particularly around the president and the
administration's you know, motivation. This is a great win for them,
But Apple is not sort of saying, let's start building
the iPhone in America. They're absolutely not saying that. What
they're saying is, here's our existing supply base in America.
We're going to support those suppliers to do more, and
(13:57):
we're going to invest in training and ramp up on
some already announce projects.
Speaker 2 (14:03):
Okay, what does Apple make in America?
Speaker 6 (14:06):
Yeah, it's a really good question, because it's the only question.
The five hundred billion that came before this new one
hundred billion was targeted quite specifically at a facility, for example,
that made servers. You know, Apple, like most technology companies,
has its own big computer footprint. When when I say computer,
(14:26):
I mean data center on premises, and they make their
own servers, and that was part of it. They have
key supplies here, Glass is one of them. Some electronics
as well. They reinvest those and then they have a
workforce and so like a lot of that investment was
skilled workforce. They make Mac components here, but at Bloomberg's
reported like before all of this happened at the turn
(14:47):
of the year, with the new administration, Apple was also
looking at some of what it manufactures in America and
thinking can I do that in Asia? Ironically, paradoxically, this
is the thing. Will Apple manufact actually the iPhone in
the United States? There is absolutely no suggestion that the
news today indicates that at all.
Speaker 2 (15:07):
Really interesting, what do we know about Donald Trump's relationship
with Tim Cook these days? Are they getting along? Yeah?
Speaker 6 (15:13):
Don't laugh at me when I repeat this line, because
I know I've used it a bit on this program recently.
But President Trump's best buddy right now is in Nvidia
CEO Jensen Wang. He's kind of been the public post
the child of what's happening with technology in America and
the real on shoring of industry and videos there. With
Apple right around the same level five hundred million dollars,
(15:37):
the President has much more directly cooled out Tim Cook
in a negative with negative connotations. You know, the threat
has been if Apple does not shift specifically iPhone production,
but more manufacturing and assembling to this country, they will
face a specific, ad hoc heavier tariff. Now, I would
note there were other media outlets that after the White
(15:57):
House disclosed the Apple investment this morning reported that Apple
would be spared from this additional India tariff because remember
there is some final assembled component that comes out of
India for Apple, the iPhone in smaller volume than they
do in China. But yeah, the President has spoken in
the public domain about Tim Cook a lot more in
(16:19):
negative tones than any other CEO I would say this year.
Speaker 2 (16:25):
Well, elon, maybe really interesting. What does this mean for investors?
Is this an event that shareholders should be paying attention to?
Is it a stock mover or this is a Washington story.
Speaker 6 (16:35):
End, Absolutely a stock mover. You know, Apple shares are
up five point six percent, biggest jump since early May.
The stock in the first half of this year traded
very specifically with the psychology around tariff impact and also
the administration's friction. You know, we know that January through
(16:55):
at least June July. Actually, the stock narrative changed for
Apple after that and became much more like why aren't
you doing more in AI? But a move of almost
six percent in the session is very notable. This is
not a move that Apple stock makes regularly on a
news item like this, And you know, one standard deviation
is a two percent move. So yeah, it's notable, and
(17:17):
that's sorry to get technical with you, but I want
to fully answer.
Speaker 2 (17:20):
No, I love it. That's why we called you, Ed.
It's great to see you. This announcement set for just
what three or four hours from now. It'll coincide with
the late edition of Balance of Power here on Bloomberg
TV and radio. Watch for Ed Ludlow. Not only here
from time to time one Balance of Power when we're lucky,
but the host of Bloomberg Tech Here on Bloomberg Television.
I'm Jill, Matthew and Washington. Thanks for joining. We just
got an update from the Boss, President Trump on truth
(17:42):
social with his eyes of course, on the deadline for
Russia at the end of this week. The deadline for
secondary sanctions is Friday, President Trump writing, my Special ENVOYE.
Steve Whitcoff just had a highly productive meeting with Russian
President Vladimir Putin. Great progress was made, he says. Afterwards,
I have to some of our European allies. Everyone agrees,
he says, this war must come to a close and
(18:05):
we will work towards that in the days and weeks
to come. Thank you. For your attention to this matter.
Exclamation point. This follows a three hour meeting, as we
told you between Steve Witkoff and Vladimir Putin earlier today.
No real readout coming from either side in terms of
progress besides what I just read to you from Donald Trump,
but Marco Rubio, the Secretary of State, telling CNN a
(18:28):
short time ago that we should expect some announcements in
the days ahead. So the gears are turning on this story.
As we also understand the President is adding an additional
twenty five percent tariff on goods from India, which also
will have repercussions for Russia. Will have much more on
this as we work our way through the hour, and
(18:48):
it's a real pleasure as we anticipate the announcement from
Apple to bring Joela Warna into the conversation, of course,
economist and counselor to Treasury Secretary Scott Besson, Thanks for
coming over from the White House. Joe's good to see you,
my pleasure. One hundred billion dollars in domestic manufacturing is
a pretty big deal, and I'd like to just get
inside the process for a little bit with you, because
(19:10):
we've heard a lot of announcements from corporate officials coming
to the White House to tell stories like this. How
does it begin? Does the White House reach out to
a Tim Cook to talk about investments that could be made.
Does Apple call the White House and say, hey, we've
got a plan.
Speaker 7 (19:26):
What we first start with is that we have to
extend the Tax Cuts and Jobs Act of twenty seventeen,
and that was a priority of President Trump's and Secretary
Best and spearhead of that operation. And then I think
from there it's like, Okay, what can we do to
build upon the success of the first administration where President
Trump had very strong non inflationary growth. Growth was nearly
(19:48):
three percent for the first three years, almost three and
a half percent in the third year, right before the pandemic.
And then you sort of figure out, Okay, how do
you build the best economy possible with pro growth of
tax structures, cheap and abundant energy, and friendly business regulation.
Speaker 8 (20:04):
And you just see what happens.
Speaker 2 (20:05):
So the White House make the outreach company as well.
Speaker 7 (20:09):
That's not my innesting, No, I think it's one of
the things where let me see this from my own
advantage point. I know that I was when I'm lucky
enough to be in this position. People say can I help?
What can I do to help? And it could be
both sides of the aisle. People really they appreciate public
service and want to help out. That's probably what happens
at the corporate level is that Okay, how can we
(20:29):
make things better? And of course the incentive structure is
in place for companies to want to invest here. This
is like with all these trade deals that the Secretary
has helped broker. People want to bring foreign capital into
the US and they're incentivized to do it. When the
tax structure is friendly, the energy and business environment are friendly,
like it all, it all becomes very additive. So I
(20:49):
think it's it's probably a two way street. But the
point is that people are making the commitment Joe, and
that that's unprecedented.
Speaker 2 (20:56):
Well, we talk about reshoring. That could mean a lot
of different things. There was a point at which the
Commerce Secretary, Howard Lutnix, suggested that we start making iPhones
here in the United States, that that should in fact
be possible. We just talked to Ed Ludlow before you
sat down with us, and he said, that's not what
this is about. There's there're going to be different incentives.
When it comes to domestic manufacturing. How important is it
(21:17):
for the White House to have Tim Cook make iPhones
here in the US or is that never going to happen.
Speaker 7 (21:21):
What matters is high value added manufacturing jobs, whatever that
might be, evil technology phones, These technologies, Joe, are changing
so rapidly. But you know, the administration really wants to
have the best high growth, low inflation, high cost, a
high standard of living, low cost of high standard of living,
(21:43):
low cost of living society possible.
Speaker 8 (21:46):
And those jobs take.
Speaker 7 (21:47):
The automobile industry, very important industry, a lot of high tech,
high value added type of employment.
Speaker 8 (21:54):
Things related to that.
Speaker 7 (21:55):
That's what matters most, and that's what the administration cares about.
We talk about a blue collar wage boom. You want
those kind of good you want good paying jobs, whatever
they might be.
Speaker 8 (22:03):
As it comes to low end manifesturers, it's the low
end manue it's.
Speaker 2 (22:06):
Right making socks here in the US. Again, really interesting
the spend on AI that we're seeing a fascinating piece
of information that I saw research earlier that the capex
from AI is actually adding more to the economy than
consumer spending. Right at the moment, A lot of this
has been announced inside the White House, of course, Jensen Wong.
(22:28):
We think of the the Larry Ellison Open AI announcement.
I could just keep ongoing here the money from soft Bank.
Do you worry that CAPEX from AI is essentially single
handedly propping up the economy here that it's more narrow
investment than we.
Speaker 7 (22:45):
Know, because first of all, the AI has been very strong.
That shows up in information processing and related equipment within
the GDP accounts, But industrial equipment's been strong, Transportation equipment
has been strong. We're talking about a cop capex comeback
that's not just limited to AI. Having said that, when
you have an industry that's growing as rapidly and as
(23:06):
exponentially as it is, the math is going to be
more additive than say the consumer side.
Speaker 8 (23:11):
In other words, we're looking at second derivatives.
Speaker 7 (23:14):
If something is a small but growing, largely growing part
of the economy, it's incremental growth for a quarter or
two is going to be faster. But the point is,
if you get this cap X comeback tight end with
the blue collar boom we're seeing in wages, real wages expanding,
consumer spending.
Speaker 8 (23:28):
Is going to be strong. That's going to power the
economy upward.
Speaker 2 (23:31):
I want to ask you about the FED in fact
that the President was just talking about this last evening, James.
I don't know if we can spin that back right now,
but I want to ask you about the search because
it apparently it's a very short list based on what
the President was saying yesterday in his conversation with reporters.
Let's listen to President Trump from yesterday.
Speaker 9 (23:48):
Bed Governor, I'll be making that decision before the end
of the week and will either decide on one for
permanence or the four month period the term you know,
there's a term of about a number of months. We
have a couple of candidates. Everybody wants it. Okay, it's
not a couple, but we've narrowed it to a couple
of candidates. And we've also were looking at the FED
(24:11):
chair and that's down to four people right now.
Speaker 2 (24:18):
Down to four interesting as we spend time with Joela
warn you here on balance of power. It's a story
today on the Bloomberg about the idea of a temporary
FED governor filling the seat vacated by Governor Kugler. What
would be the benefit of doing that? Is that an
idea that you support instead of just going.
Speaker 7 (24:35):
For it right now, it would my understanding, Joe, would
be have to be Senate confirmed. So you have to
see what happens on that. And there's only so many months,
so we'll see what happens. But I don't I don't
you know the president. The President wants to do it,
that's great, but we'll have to see then if you
have to get the Senate on board. But in terms
of just general people, so you want to know, you
want to ask you that there's you know, a really
(24:56):
good crop of folks that could.
Speaker 2 (24:59):
Do the job, the Kevin's it sounds like. And the
nice thing, the boss is not on the list anymore.
Speaker 7 (25:04):
The nice thing Joe about where I sit right now,
unlike my prior role, is I have to I don't
have to say who who I think is good's going
to be.
Speaker 8 (25:10):
I just know whoever it will be. It'll be somebody
that will be you're.
Speaker 2 (25:12):
Telling me people, Trump's not going to ask you who
you think it will be.
Speaker 7 (25:15):
It will be somebody good, Joe, who will have a
very good relationship with the President.
Speaker 8 (25:19):
Yeah, and that's all.
Speaker 2 (25:20):
The name game aside. Why not just name the next
chair now and have them still.
Speaker 7 (25:25):
I guess, well, I guess the issue would be that
and Secretary Besston mentioned this before, and that is if
you have like a shadow person, yes, maybe that's not
the best way to go. Uh And by the way,
the person may not want to have that shadow role
because then you're sort of in competition with with who
the you know, with with Jay Powell at the moment.
Speaker 8 (25:44):
So we'll see how that plays out.
Speaker 7 (25:45):
But I think the key point is that you know,
you're seeing the Fed now talk about the need for
lower rates. You saw two governors descent that was kind
of an historic event hadn't happened over thirty years. You've
seen some of the bank presidents now come out and
think that rates need to be lowered.
Speaker 8 (26:00):
So I think pretty soon every would be on the
same page.
Speaker 2 (26:02):
Why lower rates now? If we still haven't gotten to
two percent that's the benchmark we talked about for the
entire Biden administration. Does it need to change? Should it
be three percent? If you start cutting them?
Speaker 7 (26:11):
So the reason, Joe a couplefold. Number one is that
inflation is a lagging indicator. So if you're waiting for
inflation to move lower, if you think the trajectories down
as we think it is, you're waiting too long.
Speaker 8 (26:21):
Number one.
Speaker 7 (26:22):
Number two, the tax bill is written to increase the
economy's supply potential, so that means you could have fast growth,
and actually as you increase productive capacity, inflation can drop.
And then the third piece is if you look at
interest sensitive areas of the economy, autos, housing, some pockets
within manufacturing, those areas are soft and would benefit from
lower rates. And besides, the Fed itself has rates well
(26:46):
above where the Committee believes that the neutral rate is.
So I don't think inflation is the fear. In fact,
if anything, as President Trump highlighted, the inflation was not
going to be present with the tariffs. That's not shown
up in the aggregate data, if any of the numbers
have been weaker, And therefore the Federal ought to take
that into consideration.
Speaker 2 (27:05):
When you're telling a growth story. Though, since you've been here,
you've talked about the way the economy is going to grow,
on the way wages are going to go up. So
why would it be a sin to keep interest rates
where they are for a minute to make sure that
inflation doesn't start moving highering.
Speaker 7 (27:17):
Because the fundamental issue is growth, growth does not cause inflation, Joe.
And there are too many people within the economics profession
that believe growth causes inflation.
Speaker 2 (27:27):
This is what every mainstream economists tells us.
Speaker 7 (27:30):
And they're completely wrong. That's why they've been wrong on
many things, including the tariffs. Is My old boss Larry
Kudlow would say that, you know, too many people working
does not cause inflation. Inflation is always in everywhere a
monetary phenomenon.
Speaker 8 (27:46):
No, not way, no, just no money and credit.
Speaker 7 (27:48):
Money and credit creation are what drive the inflation process,
not wages, especially wages that are tied to the economy's
productive capacity growing. In other words, you're starting a business,
you're building a plan, You're paying those workers to build
that plant, to create more of the goods and services
to be delivered to the populace. That's disinflationary. Just as
you saw again with President Trump's first term, very supply focused.
(28:12):
President Trump had very strong growth and low and falling inflation.
So this notion somehow you're gonna have very good growth,
you're gonna have a boom, and his boom somehow is inflationary,
is not at all consistent with the data.
Speaker 8 (28:22):
And amazing.
Speaker 2 (28:25):
It's not still Biden data.
Speaker 7 (28:27):
No, I don't know what you meant by that. Yeah, No,
I mean, look, here's the thing that the one big,
beautiful bill was passed July fourth. Nobody thought that that
could be done. The presidents that needed to get done.
Secretary Best worked hard with the people on the hill
to get that done, which is a great accomplishment. You've
got a numerous trade deals that are really making some
great progress that people didn't think was going to happen.
(28:49):
Equity markets are strong. The outlook is very, very positive.
So I think we're going to see a pretty strong
economy and people know, yeah, look at the cost of living,
how much it's come down already. Yes, it's president, it's
the president's economy.
Speaker 2 (29:01):
It's great to spend some time with you. Don't be
a stranger.
Speaker 8 (29:03):
Thank you.
Speaker 2 (29:03):
I can see as soon. That's Joela. Warney of course,
made his way over from the White House Counselor to
Treasury Secretary Scott Bessett.
Speaker 1 (29:12):
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 thirty.
Speaker 2 (29:31):
Watching Texas once again as always here, this has become
quite the story over the past couple of weeks. You've
heard it emerge right here on Balance of Power. The
redistricting effort endorsed by President Trump, pursued by Republicans in Texas,
now stalled by Democrats in the Lone Star state. Of course,
(29:52):
they have fled, and if you're familiar with this program,
you've probably heard from several of them, including James Tallerico
who joined us before this even began to give us
a sense of what we might be in for here.
Democrats decided to go for it, went to Chicago, went
to Albany, went to Boston, and this thing is held
up in the meantime because they have broken quorum. Right,
(30:14):
That's how this works. That's why the governor of Texas
has called for their arrest. And now the Feds here
by way of Senator Cornyan of Texas Republican senator, are
calling for the FBI to act and claw these Democrats
back to Texas. Probably unlikely, but President Trump did address
(30:36):
this possibility when he spoke to reporters last evening.
Speaker 9 (30:39):
Listen, well, I think they've abandoned the state. Nobody's seen
anything like it, even though they've done it twice before,
and in a certain way, it almost looks like they've
abandoned the state.
Speaker 2 (30:49):
Looks very bad. Yeah, go ahead, please get involved.
Speaker 8 (30:51):
Should the FBI get involved.
Speaker 9 (30:53):
Well, they may have to.
Speaker 10 (30:54):
They may have to.
Speaker 2 (30:56):
They may have to. That's where we start our conversation
with Ashley Davis, Republican strategist back with US partner at
S three Group. Ashley, it's great to see you. This
has become a national story, and we can pick away
at this from a couple of different angles, because I
want to ask you about what's happening in other states potentially,
like Indiana, even Missouri. But to begin with Texas. You
don't see the FBI going after democrats in other states,
(31:19):
do you?
Speaker 10 (31:20):
No?
Speaker 11 (31:21):
I do think though, that this is just a lot
of drama. And even though there is.
Speaker 10 (31:25):
A lot going on in August, August.
Speaker 11 (31:27):
Is usually a slow time, so this is even a
bigger story. But listen, I think the broader point to this, Joe,
is that there has been a political politicalization. Excuse me
on that word for the last over last decade in
regards to redistricting. It started out in let's just take
(31:50):
recent history twenty eighteen. In Pennsylvania, Republicans were blaming Democrats
of being too political. North Carolina twenty twenty, Democrats were
blaming publicans. Remember Eric Holder spent a decade of his
life and raised over a billion dollars on redistricting after
he left Barack Obama. So this is just something as
a broader point, has just been too political in regards
(32:13):
to in my opinion, in regards to Texas, obviously this
has happened before. I think that they left in twenty
twenty one was the most recent when Democrats did this. Listen,
when there's a super majority like there isn't in Texas
and a Republican governor that has a lot of power,
this is really their only way that they can fight back,
(32:34):
and it's by using this mechanism. But what it was, Joe,
I think this ends because of one major reason. It's
not just redistricting that they're not voting on. They're not
voting on the flood relief for the horrible situation that
happened there just a few weeks ago. And I think
at some point, after maybe a couple more days, a
(32:55):
couple more days of drama, a couple more days of
new news headlines, that they're going to have to come
back and vote on that alone, just because I think politically,
and you can see it kind of popping up in
the social media world right now. They're starting to get
a little bit of blowback because of the flood relief.
Speaker 2 (33:13):
Although I suppose Governor Abbott could isolate this special session
to flood relief and get to redistricting at another time,
but of course Democrats will probably just leave that anyway.
At some point they're going to have to get to this,
and we've seen this happen before. But I want to
ask you about other states. You know, everyone jumps to
California and what the Democrats might do here, what Gavin
Newsom might have up his sleeve, But Republicans aren't stopping
(33:34):
in Texas.
Speaker 7 (33:35):
Here.
Speaker 2 (33:35):
It seems the White House is pushing this idea on
other states, including Indiana, to the extent that jd Vance
is heading to Indianapolis to sit down with Governor Mike
Braun to talk about this idea. And granted he is
there for a fundraiser for the Republican National Committee. But
to what extent will Republican governors embrace this around the country, Well.
Speaker 11 (33:57):
It depends not just what the regovernors do, but also
just how much control the state legislatures or Special Commission
on Redistricting would have an in every state. So it
really does depend on state by state how it can happen.
Texas is just a little bit different because of the
power that the governor in the legislature has on the topic.
(34:17):
But yes, Indiana, Missouri, two states Republicans are looking at Democrats. Obviously,
I've heard it newsom New York and also in California
and New York, Illinois, Minnesota, I think is another one
that I'm hearing. So listen, all gloves are off. But
it's not going to be as easy in these other
(34:38):
states as it is. Yeah, in Texas, and you saw
what happened even today with Governor Brown saying, or maybe
it was actually yesterday where he said, listen, I'm going
to have a conversation. I don't know what can happen
because he doesn't have a super majority, So it's a
little bit different.
Speaker 2 (34:56):
Yeah, absolutely, each state has its own kind of fingerprint
when it comes to this story, Ashley, I want to
ask you while you're with us about what's happening on
Capitol Hill or what's about to happen, maybe what's not
about to happen, because you're so connected to lawmakers and
their staff on the Hill. We had a bit of
a breakdown between Democrats and Republicans over nominations last weekend.
(35:20):
Everybody left town angry. There was no deal between Schumer
and Thune on this, and it's leading many to believe
that a government shutdown will be even more likely when
lawmakers return after the August recess. Is that how you
see it?
Speaker 11 (35:33):
I feel that every year I hear there's going to
be a shutdown, and usually ninety five percent of the
time it doesn't happen.
Speaker 10 (35:41):
So, but there is I'm not ready.
Speaker 11 (35:43):
To say that for sure that we're going to have
a shutdown, and I'm definitely not. I think we're like
fifty percent maybe. And what I'm seeing though, is just
really really bad blood in regards to Democrats and Republicans
right now because of the Recision Package of Reconciliation.
Speaker 10 (36:01):
And by the way, this happens.
Speaker 11 (36:02):
Every time we were the Republicans and Democrats were fighting
when Biden did his big two reconciliation bills when he
was in when the Democrats had control, So this is
very normal. I'm not real worked up about it right now,
but I do think there's a broader issue. And the
broader issue is what Senator Rounds has actually been talking
about yesterday and today.
Speaker 10 (36:24):
And we have way too many.
Speaker 11 (36:27):
People that have to get Senate confirmed. I believe in
the institution of the Senate one hundred percent. I think
it's fantastic tradition. However, no matter what party it is,
you spend so much time trying to get some of
these positions through the House, excuse me, through the Senate floor,
and because of the rules of the Senate, as you know, Joe,
it just takes a long time. And when you have
(36:50):
eleven hundred positions that need confirmed, it probably is not necessary.
Speaker 10 (36:55):
So let's walk through this just very quick.
Speaker 11 (36:57):
We have the Supreme Court justices, we have majores, we
have Cabinet secretaries, maybe even the deputy secretary, and.
Speaker 10 (37:06):
Even I would go and give it to.
Speaker 11 (37:09):
The general counsel of each agency, but I'm not sure
if the assistant secretary of needs to be Senate confirmed,
or here's a perfect example, Joe. Last to last Trump administration,
I was put up for the board appointment for the
National and Downard of the Arts.
Speaker 10 (37:30):
It was a Senate confirmed position. There is no reason that.
Speaker 11 (37:33):
Composition needs to be confirmed and take up Senate four time.
Speaker 10 (37:37):
So that's what I'm saying. I think we could do
some selves.
Speaker 2 (37:39):
Like some procedures or maybe rules are going to be
changing here and maybe the way that they're even pasted
in the Senate. Actually, it's great to have you as always,
Ashley Davis s three group Republican strategists that we learn
a lot from on and off the air. Thanks for
listening to the Balance of Power podcast. Make sure to
subscribe you haven't already an Apple, Spotify, or wherever you
(38:02):
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
Bloomberg Balance of Power podcast. Catch us live weekdays at
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Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Joe Matthew in Washington, thanks for being here on Bloomberg
TV and radio with news coming from the White House
today on Russia. If you were with us a short
time ago, you heard the President on Truth Social talking
about the meeting that took place a short time ago
with Vladimir Putin. President Trump sent his Special ENVOYE. Steve
Whitkoff to Moscow. There was a three hour long conversation,
(00:49):
the President framing it as productive, but it's very difficult
to tell if anything significant will come from this session,
knowing that only two days from now will be the
deadline for secondary sanctions on RUSSI over its war against Ukraine.
We're going to have more with our political panel on this.
Bloomberg Politics contributors Rick Davis and Genie Shanzano are with us.
(01:09):
But let's start live at the White House, Bloomberg, Washington,
correspondent Tyler Kendall has the latest on this. Tyler, what
else are we learning and when could we hear an
announcement if there is one?
Speaker 3 (01:20):
Yeah, hey, Joe, Well, as you mentioned, we've really just
heard from President Trump moments ago saying that this meeting
did make progress, but we haven't really seen many tangible
deliverables beyond that, and that President Trump said that he
briefed our European allies on these discussions. As Steve Witkoff
wraps up, really what's his fifth round of negotiations with
Vladimir Putin in Moscow ahead of this Friday, August eighth
(01:42):
deadline for Russia to come to the negotiating table in
perhaps a more meaningful way or face further economic penalties.
And we did see the White House take at least
the first step in making good on that threat earlier
when President Trump imposed that twenty five percent additional tariff
on India over it It's imports of Russian energy supplies.
About thirty seven percent of Russian oil ends up getting
(02:05):
exported to India, so they are one of those top consumers.
And this was something that we had long heard from
President Trump, and it appears that he has taken this step,
though that additional tariff will not go into effect for
another twenty one days, and it appears that could really
just be the first blow in this pressure campaign, Joe,
because we have a headline crossing on the terminal earlier
(02:25):
this hour, people familiar are telling us that the White
House is considering new sanctions on Russia's covert fleet of
oil tankers. That appears to be the next target in
what has become this pressure campaign. Try to get some
more meaningful concessions from Vladimir Putin, and Joe. As you know,
we had some pretty incredible reporting this morning that Russia
might be willing to potentially suggest there be an air truce.
(02:48):
To be sure, Vladimir Putin, the understanding is he's not
going to go for a full cease fire, but perhaps
they would put on the table an air truce. So
think stopping missile strikes or drones strikes that happen in
the air to try to stave off some of these
economic penalties.
Speaker 2 (03:05):
Tell us about the Swiss tyler. The Swiss president got
on an airplane without a formal invitation to come to
Washington to renegotiate what the president deemed to be a
thirty nine percent tariff. The President did sit down with
the Secretary of State Marco Rubio, who put on social
media a picture that two of them discussing the importance
he says of a fair and balanced trade relationship between
(03:27):
the US and Switzerland, reaffirming our commitment to stronger bilateral
defense cooperation. But no lower tariff. It seems the Swiss
will go home empty handed, right and.
Speaker 3 (03:37):
Mark Rubio, the Secretary of State, has a lot of
roles in this administration, but he doesn't lead the bilateral
trade talks, right. So, I mean, our reporting indicates that
the Swiss president did come to Washington without a formal
invite from this White House. But that just really shows
the pressure that the government is under to try to
get a lower tariff right ahead of tomorrow's deadline of
this thirty nine percent rate ultimately going into effect. And
(04:01):
it's been really interesting to see how these talks really
did seem to go off the rails here, considering our
reporting had indicated that there had been positive momentum. Now
person familiar does tell Bloomberg News it appears the Swiss
president is leaving Washington without a deal, despite putting on
the table a new proposal for the US, but apparently
was not enough. There was a few different threads that
we were watching here a Joe but important context that
(04:25):
the Swiss really don't have tariffs on their imports, only
about five percent of their imports or tariffs, and that's
really around agricultural products, which does appear to be a
red line in those negotiations. We know the US would
like to, of course see greater market access for US
agricultural goods, but there were other places where we thought
perhaps there could be some agreements, such as boosting US
(04:46):
L and G purchases, boosting pharmaceutical purchases, something that we
know as top of mind for this administration. And then
one that I'll leave you with that we didn't hear
much of an update about. But we know that the
government is negotiating some purchases of some Lockey Martin fighter jets,
and some of the reporting indicated that perhaps there could
be a higher purchase price for that. But at this moment,
it doesn't appear that any of the efforts were enough
(05:07):
ultimately to get this White House to Budge.
Speaker 2 (05:10):
Tyler Kendall full of news today. Thank you so much, Tyler,
with the update live from the White House. As we
mentioned President Trump on Truth Social earlier talking about Steve
whitcoff meeting today with Vladimir Putin. He didn't have a
lot to say, but he did call it a highly
productive meeting. Great progress was made, says the President. Afterwards,
I updated some of our European allies. We want to
(05:32):
play it to our political panel. Rick Davis and Genie
Shanzano Bloomberg Politics contributors are with us Genius Senior Democracy
fellow with the Center for the Presidency, the Study of
the Presidency in Congress, Rick's partner at Stone Court Capital
or Republican Strategist. How does this feel to you this time, Genie,
There's been a lot of meetings and a lot of
hours spent with Steve Whitcoff and Vladimir Putin that have
(05:53):
resulted in absolutely nothing. With two days to go here, Well,
we hear about a deal, Marco Rubio telling Sea and
we could hear an announcement within days.
Speaker 4 (06:03):
Yeah, the White House is certainly heightening expectations, as you
and Tyler were just talking about, but you know, it's
hard to imagine. Hopefully there is a deal, but what
would this look like, I mean, Russia is winning on
the battlefield. They have the advantage in terms of population,
they have the advantage in terms of arms. You know,
(06:23):
the President is talking about these secondary, sanctioned secondary tariffs
and indeed putting them on India despite the fact that
the EU buys a substantial amount of energy from Russia
as well. So I'm not sure exactly what this will
look like. But it's hard to imagine that Vladimir Putin
changes what he has been asking for so far, because
(06:44):
one thing he has been is very, very consistent on
his demands.
Speaker 2 (06:50):
Rick, the language coming from the Kremlin is really something
on our part in particular, said a foreign policy aid
of Vladimir Putin. Some signals were conveyed on the Ukrainian issue.
Corresponding signals were also received from President Trump. How do
we read into this?
Speaker 5 (07:11):
Not a great meeting if you're looking for a ceasefire. Look,
I mean, Vladimir Putin sure has done exactly what Genie said.
He hasn't changed his tune since day one on this thing.
But the reality is it has thrust Donald Trump into
the waiting arms of President Zelensky.
Speaker 2 (07:28):
I mean, the difference now.
Speaker 5 (07:31):
Is that the UNUS and Zelensky are unified. The US
and Europe are unified. There are efforts now to re
arm Zelenski. There are efforts now to spend more of
US taxpayer dollars on Ukraine. Coming from the Hill. It's
a complete change of positions than when Donald Trump took
(07:54):
office in the first sixty days of his administration. And
so good job, Vlad. You've actually done something that nobody
thought could happen, and that is that Donald Trump is
now the biggest supporter of the Ukraine and with that
a unified Western approach, and he can't resist that.
Speaker 2 (08:13):
Ultimately, he will.
Speaker 5 (08:14):
Fail if the US, Europe and Ukraine are aligned.
Speaker 2 (08:20):
Well, it is something genie, the evolution that we've seen here.
Donald Trump now referring to the Russian war machine in
multiple social media posts, including his idea to add a
twenty five percent tariff on India. How long can we
assume Donald Trump will see the world this way?
Speaker 4 (08:40):
You know, it's hard to assume. I try not do
with Donald Trump, anything can happen. But you know, let's
just think this through. So he imposes this tariff on
India to fifty percent for buying Russian oil, which the
United States countenance not that long ago because it's capped,
and India sent a pretty fervent and strong message saying
(09:02):
the US and the Europeans are being hypocritical because the
Europeans are the second largest importer of LNG from Russia,
and they also are talking about looking to different partners,
and so what that does in terms of the bricks
and everything else is one question. The other thing is
what are we going to do getting a frozen conflict
(09:23):
with Russia at this point, because there's two ways to
end a war, you negotiated out or you arm. And
listening to Rick, I think he's right. We may see
the United States arming Ukraine, but the Ukraine has a big,
big problem, which is population. It simply doesn't have the
numbers to win. Now is Europe and the United States
going to go in with them? So I'm not sure
(09:45):
how this gets us anywhere further than a frozen conflict
with Russia while we need to be competing with China,
not to mention everything going on in the Middle East.
I think Donald Trump's was right instinctually when he came
to office, and now he is looking very much like
Joe Biden when it pertains to this conflict with the Ukraine.
Speaker 2 (10:05):
He spoke to Voladimir Zelensky today and the President of
Ukraine is speaking about that phone call. Apparently European leaders
were on the call with President Trump. Pretty remarkable. Right
on my way from our brigades here, I spoke with
President Trump' Zelenski rights on social media. This conversation happened
(10:27):
after President Trump's representative, Steve Witkoff visited Moscow. There's reporting
rick on the Bloomberg today that the US is now
also considering sanctions on Moscow's covert fleet of oil tankers,
this shadow fleet, as it's called, entities that enable them
to operate. How come none of this has happened until now.
(10:48):
We spent years in the Biden administration asking if we
had done everything possible, if there were more sanctions to find,
and it appears there were a lot more.
Speaker 5 (10:57):
Well, we talked about that at the time, and we
used to make a very clear statement that Joe Biden
was trying to eke out a win, and you don't
eke out a win when you're challenging Vladimir Putin. The
entire approach that Joe Biden's administration took was do as
little as you can for as long as you can,
and hope this all just goes away. And that includes
(11:19):
the readiness for that administration to give arms to Ukraine.
And also why you would not have hit Russia on
day one with massive tariffs and basically roadblock their ability
to sell hydrocarbons to the world. I mean, it's just
none of it made any sense. At the time. We
criticized the Biden administration for that, and honestly, I mean
(11:44):
Donald Trump is looking at others who are using Russian oil.
He's commanded the Secretary's of State, Commerce and Treasury to
give him a secondary sanctions list of people who are
currently aiding of betting the Russian war machine, as he
likes to put it now, and I think that will
(12:04):
include China, but that will include other users in Europe
and they're going to have to face those penalties.
Speaker 2 (12:10):
The deadline is Friday. As we walk our way towards
deadline day, Rick Davis and Jeanie Shanzano, great analysis, and
thank you both for the insights. Bloomberg Politics contributors.
Speaker 1 (12:22):
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 thirty.
Speaker 2 (12:41):
We keep our eyes on shares of Apple today. It's
going to be the big story in the second half
of the day. With an announcement schedule for this afternoon
at the White House. Tim Cook is expected to appear
alongside President Trump to make this massive investment announcement. We're
talking about one hundred billion dollars in domestic mania. You're
factoring when we talk Apple, we have to talk to
(13:02):
Ed Ludlow the coast of Bloomberg Tech with his eyes
on Washington. Once again, this is getting to be a habit. Ed,
is this new money that we're learning from Apple?
Speaker 6 (13:12):
Well, the one hundred billion dollars is new. It's in
addition to and on top of the five hundred billion
dollars that Apple had already announced or disclosed. They plan
to invest in the United States in the context of manufacturing,
but also direct investments into suppliers and training. But there's
a heavier emphasis show on already disclosed. So in aggregate
(13:35):
it's a bigger number, but you have to ask questions
of the what next, particularly around the president and the
administration's you know, motivation. This is a great win for them,
But Apple is not sort of saying, let's start building
the iPhone in America. They're absolutely not saying that. What
they're saying is, here's our existing supply base in America.
We're going to support those suppliers to do more, and
(13:57):
we're going to invest in training and ramp up on
some already announce projects.
Speaker 2 (14:03):
Okay, what does Apple make in America?
Speaker 6 (14:06):
Yeah, it's a really good question, because it's the only question.
The five hundred billion that came before this new one
hundred billion was targeted quite specifically at a facility, for example,
that made servers. You know, Apple, like most technology companies,
has its own big computer footprint. When when I say computer,
(14:26):
I mean data center on premises, and they make their
own servers, and that was part of it. They have
key supplies here, Glass is one of them. Some electronics
as well. They reinvest those and then they have a
workforce and so like a lot of that investment was
skilled workforce. They make Mac components here, but at Bloomberg's
reported like before all of this happened at the turn
(14:47):
of the year, with the new administration, Apple was also
looking at some of what it manufactures in America and
thinking can I do that in Asia? Ironically, paradoxically, this
is the thing. Will Apple manufact actually the iPhone in
the United States? There is absolutely no suggestion that the
news today indicates that at all.
Speaker 2 (15:07):
Really interesting, what do we know about Donald Trump's relationship
with Tim Cook these days? Are they getting along? Yeah?
Speaker 6 (15:13):
Don't laugh at me when I repeat this line, because
I know I've used it a bit on this program recently.
But President Trump's best buddy right now is in Nvidia
CEO Jensen Wang. He's kind of been the public post
the child of what's happening with technology in America and
the real on shoring of industry and videos there. With
Apple right around the same level five hundred million dollars,
(15:37):
the President has much more directly cooled out Tim Cook
in a negative with negative connotations. You know, the threat
has been if Apple does not shift specifically iPhone production,
but more manufacturing and assembling to this country, they will
face a specific, ad hoc heavier tariff. Now, I would
note there were other media outlets that after the White
(15:57):
House disclosed the Apple investment this morning reported that Apple
would be spared from this additional India tariff because remember
there is some final assembled component that comes out of
India for Apple, the iPhone in smaller volume than they
do in China. But yeah, the President has spoken in
the public domain about Tim Cook a lot more in
(16:19):
negative tones than any other CEO I would say this year.
Speaker 2 (16:25):
Well, elon, maybe really interesting. What does this mean for investors?
Is this an event that shareholders should be paying attention to?
Is it a stock mover or this is a Washington story.
Speaker 6 (16:35):
End, Absolutely a stock mover. You know, Apple shares are
up five point six percent, biggest jump since early May.
The stock in the first half of this year traded
very specifically with the psychology around tariff impact and also
the administration's friction. You know, we know that January through
(16:55):
at least June July. Actually, the stock narrative changed for
Apple after that and became much more like why aren't
you doing more in AI? But a move of almost
six percent in the session is very notable. This is
not a move that Apple stock makes regularly on a
news item like this, And you know, one standard deviation
is a two percent move. So yeah, it's notable, and
(17:17):
that's sorry to get technical with you, but I want
to fully answer.
Speaker 2 (17:20):
No, I love it. That's why we called you, Ed.
It's great to see you. This announcement set for just
what three or four hours from now. It'll coincide with
the late edition of Balance of Power here on Bloomberg
TV and radio. Watch for Ed Ludlow. Not only here
from time to time one Balance of Power when we're lucky,
but the host of Bloomberg Tech Here on Bloomberg Television.
I'm Jill, Matthew and Washington. Thanks for joining. We just
got an update from the Boss, President Trump on truth
(17:42):
social with his eyes of course, on the deadline for
Russia at the end of this week. The deadline for
secondary sanctions is Friday, President Trump writing, my Special ENVOYE.
Steve Whitcoff just had a highly productive meeting with Russian
President Vladimir Putin. Great progress was made, he says. Afterwards,
I have to some of our European allies. Everyone agrees,
he says, this war must come to a close and
(18:05):
we will work towards that in the days and weeks
to come. Thank you. For your attention to this matter.
Exclamation point. This follows a three hour meeting, as we
told you between Steve Witkoff and Vladimir Putin earlier today.
No real readout coming from either side in terms of
progress besides what I just read to you from Donald Trump,
but Marco Rubio, the Secretary of State, telling CNN a
(18:28):
short time ago that we should expect some announcements in
the days ahead. So the gears are turning on this story.
As we also understand the President is adding an additional
twenty five percent tariff on goods from India, which also
will have repercussions for Russia. Will have much more on
this as we work our way through the hour, and
(18:48):
it's a real pleasure as we anticipate the announcement from
Apple to bring Joela Warna into the conversation, of course,
economist and counselor to Treasury Secretary Scott Besson, Thanks for
coming over from the White House. Joe's good to see you,
my pleasure. One hundred billion dollars in domestic manufacturing is
a pretty big deal, and I'd like to just get
inside the process for a little bit with you, because
(19:10):
we've heard a lot of announcements from corporate officials coming
to the White House to tell stories like this. How
does it begin? Does the White House reach out to
a Tim Cook to talk about investments that could be made.
Does Apple call the White House and say, hey, we've
got a plan.
Speaker 7 (19:26):
What we first start with is that we have to
extend the Tax Cuts and Jobs Act of twenty seventeen,
and that was a priority of President Trump's and Secretary
Best and spearhead of that operation. And then I think
from there it's like, Okay, what can we do to
build upon the success of the first administration where President
Trump had very strong non inflationary growth. Growth was nearly
(19:48):
three percent for the first three years, almost three and
a half percent in the third year, right before the pandemic.
And then you sort of figure out, Okay, how do
you build the best economy possible with pro growth of
tax structures, cheap and abundant energy, and friendly business regulation.
Speaker 8 (20:04):
And you just see what happens.
Speaker 2 (20:05):
So the White House make the outreach company as well.
Speaker 7 (20:09):
That's not my innesting, No, I think it's one of
the things where let me see this from my own
advantage point. I know that I was when I'm lucky
enough to be in this position. People say can I help?
What can I do to help? And it could be
both sides of the aisle. People really they appreciate public
service and want to help out. That's probably what happens
at the corporate level is that Okay, how can we
(20:29):
make things better? And of course the incentive structure is
in place for companies to want to invest here. This
is like with all these trade deals that the Secretary
has helped broker. People want to bring foreign capital into
the US and they're incentivized to do it. When the
tax structure is friendly, the energy and business environment are friendly,
like it all, it all becomes very additive. So I
(20:49):
think it's it's probably a two way street. But the
point is that people are making the commitment Joe, and
that that's unprecedented.
Speaker 2 (20:56):
Well, we talk about reshoring. That could mean a lot
of different things. There was a point at which the
Commerce Secretary, Howard Lutnix, suggested that we start making iPhones
here in the United States, that that should in fact
be possible. We just talked to Ed Ludlow before you
sat down with us, and he said, that's not what
this is about. There's there're going to be different incentives.
When it comes to domestic manufacturing. How important is it
(21:17):
for the White House to have Tim Cook make iPhones
here in the US or is that never going to happen.
Speaker 7 (21:21):
What matters is high value added manufacturing jobs, whatever that
might be, evil technology phones, These technologies, Joe, are changing
so rapidly. But you know, the administration really wants to
have the best high growth, low inflation, high cost, a
high standard of living, low cost of high standard of living,
(21:43):
low cost of living society possible.
Speaker 8 (21:46):
And those jobs take.
Speaker 7 (21:47):
The automobile industry, very important industry, a lot of high tech,
high value added type of employment.
Speaker 8 (21:54):
Things related to that.
Speaker 7 (21:55):
That's what matters most, and that's what the administration cares about.
We talk about a blue collar wage boom. You want
those kind of good you want good paying jobs, whatever
they might be.
Speaker 8 (22:03):
As it comes to low end manifesturers, it's the low
end manue it's.
Speaker 2 (22:06):
Right making socks here in the US. Again, really interesting
the spend on AI that we're seeing a fascinating piece
of information that I saw research earlier that the capex
from AI is actually adding more to the economy than
consumer spending. Right at the moment, A lot of this
has been announced inside the White House, of course, Jensen Wong.
(22:28):
We think of the the Larry Ellison Open AI announcement.
I could just keep ongoing here the money from soft Bank.
Do you worry that CAPEX from AI is essentially single
handedly propping up the economy here that it's more narrow
investment than we.
Speaker 7 (22:45):
Know, because first of all, the AI has been very strong.
That shows up in information processing and related equipment within
the GDP accounts, But industrial equipment's been strong, Transportation equipment
has been strong. We're talking about a cop capex comeback
that's not just limited to AI. Having said that, when
you have an industry that's growing as rapidly and as
(23:06):
exponentially as it is, the math is going to be
more additive than say the consumer side.
Speaker 8 (23:11):
In other words, we're looking at second derivatives.
Speaker 7 (23:14):
If something is a small but growing, largely growing part
of the economy, it's incremental growth for a quarter or
two is going to be faster. But the point is,
if you get this cap X comeback tight end with
the blue collar boom we're seeing in wages, real wages expanding,
consumer spending.
Speaker 8 (23:28):
Is going to be strong. That's going to power the
economy upward.
Speaker 2 (23:31):
I want to ask you about the FED in fact
that the President was just talking about this last evening, James.
I don't know if we can spin that back right now,
but I want to ask you about the search because
it apparently it's a very short list based on what
the President was saying yesterday in his conversation with reporters.
Let's listen to President Trump from yesterday.
Speaker 9 (23:48):
Bed Governor, I'll be making that decision before the end
of the week and will either decide on one for
permanence or the four month period the term you know,
there's a term of about a number of months. We
have a couple of candidates. Everybody wants it. Okay, it's
not a couple, but we've narrowed it to a couple
of candidates. And we've also were looking at the FED
(24:11):
chair and that's down to four people right now.
Speaker 2 (24:18):
Down to four interesting as we spend time with Joela
warn you here on balance of power. It's a story
today on the Bloomberg about the idea of a temporary
FED governor filling the seat vacated by Governor Kugler. What
would be the benefit of doing that? Is that an
idea that you support instead of just going.
Speaker 7 (24:35):
For it right now, it would my understanding, Joe, would
be have to be Senate confirmed. So you have to
see what happens on that. And there's only so many months,
so we'll see what happens. But I don't I don't
you know the president. The President wants to do it,
that's great, but we'll have to see then if you
have to get the Senate on board. But in terms
of just general people, so you want to know, you
want to ask you that there's you know, a really
(24:56):
good crop of folks that could.
Speaker 2 (24:59):
Do the job, the Kevin's it sounds like. And the
nice thing, the boss is not on the list anymore.
Speaker 7 (25:04):
The nice thing Joe about where I sit right now,
unlike my prior role, is I have to I don't
have to say who who I think is good's going
to be.
Speaker 8 (25:10):
I just know whoever it will be. It'll be somebody
that will be you're.
Speaker 2 (25:12):
Telling me people, Trump's not going to ask you who
you think it will be.
Speaker 7 (25:15):
It will be somebody good, Joe, who will have a
very good relationship with the President.
Speaker 8 (25:19):
Yeah, and that's all.
Speaker 2 (25:20):
The name game aside. Why not just name the next
chair now and have them still.
Speaker 7 (25:25):
I guess, well, I guess the issue would be that
and Secretary Besston mentioned this before, and that is if
you have like a shadow person, yes, maybe that's not
the best way to go. Uh And by the way,
the person may not want to have that shadow role
because then you're sort of in competition with with who
the you know, with with Jay Powell at the moment.
Speaker 8 (25:44):
So we'll see how that plays out.
Speaker 7 (25:45):
But I think the key point is that you know,
you're seeing the Fed now talk about the need for
lower rates. You saw two governors descent that was kind
of an historic event hadn't happened over thirty years. You've
seen some of the bank presidents now come out and
think that rates need to be lowered.
Speaker 8 (26:00):
So I think pretty soon every would be on the
same page.
Speaker 2 (26:02):
Why lower rates now? If we still haven't gotten to
two percent that's the benchmark we talked about for the
entire Biden administration. Does it need to change? Should it
be three percent? If you start cutting them?
Speaker 7 (26:11):
So the reason, Joe a couplefold. Number one is that
inflation is a lagging indicator. So if you're waiting for
inflation to move lower, if you think the trajectories down
as we think it is, you're waiting too long.
Speaker 8 (26:21):
Number one.
Speaker 7 (26:22):
Number two, the tax bill is written to increase the
economy's supply potential, so that means you could have fast growth,
and actually as you increase productive capacity, inflation can drop.
And then the third piece is if you look at
interest sensitive areas of the economy, autos, housing, some pockets
within manufacturing, those areas are soft and would benefit from
lower rates. And besides, the Fed itself has rates well
(26:46):
above where the Committee believes that the neutral rate is.
So I don't think inflation is the fear. In fact,
if anything, as President Trump highlighted, the inflation was not
going to be present with the tariffs. That's not shown
up in the aggregate data, if any of the numbers
have been weaker, And therefore the Federal ought to take
that into consideration.
Speaker 2 (27:05):
When you're telling a growth story. Though, since you've been here,
you've talked about the way the economy is going to grow,
on the way wages are going to go up. So
why would it be a sin to keep interest rates
where they are for a minute to make sure that
inflation doesn't start moving highering.
Speaker 7 (27:17):
Because the fundamental issue is growth, growth does not cause inflation, Joe.
And there are too many people within the economics profession
that believe growth causes inflation.
Speaker 2 (27:27):
This is what every mainstream economists tells us.
Speaker 7 (27:30):
And they're completely wrong. That's why they've been wrong on
many things, including the tariffs. Is My old boss Larry
Kudlow would say that, you know, too many people working
does not cause inflation. Inflation is always in everywhere a
monetary phenomenon.
Speaker 8 (27:46):
No, not way, no, just no money and credit.
Speaker 7 (27:48):
Money and credit creation are what drive the inflation process,
not wages, especially wages that are tied to the economy's
productive capacity growing. In other words, you're starting a business,
you're building a plan, You're paying those workers to build
that plant, to create more of the goods and services
to be delivered to the populace. That's disinflationary. Just as
you saw again with President Trump's first term, very supply focused.
(28:12):
President Trump had very strong growth and low and falling inflation.
So this notion somehow you're gonna have very good growth,
you're gonna have a boom, and his boom somehow is inflationary,
is not at all consistent with the data.
Speaker 8 (28:22):
And amazing.
Speaker 2 (28:25):
It's not still Biden data.
Speaker 7 (28:27):
No, I don't know what you meant by that. Yeah, No,
I mean, look, here's the thing that the one big,
beautiful bill was passed July fourth. Nobody thought that that
could be done. The presidents that needed to get done.
Secretary Best worked hard with the people on the hill
to get that done, which is a great accomplishment. You've
got a numerous trade deals that are really making some
great progress that people didn't think was going to happen.
(28:49):
Equity markets are strong. The outlook is very, very positive.
So I think we're going to see a pretty strong
economy and people know, yeah, look at the cost of living,
how much it's come down already. Yes, it's president, it's
the president's economy.
Speaker 2 (29:01):
It's great to spend some time with you. Don't be
a stranger.
Speaker 8 (29:03):
Thank you.
Speaker 2 (29:03):
I can see as soon. That's Joela. Warney of course,
made his way over from the White House Counselor to
Treasury Secretary Scott Bessett.
Speaker 1 (29:12):
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 thirty.
Speaker 2 (29:31):
Watching Texas once again as always here, this has become
quite the story over the past couple of weeks. You've
heard it emerge right here on Balance of Power. The
redistricting effort endorsed by President Trump, pursued by Republicans in Texas,
now stalled by Democrats in the Lone Star state. Of course,
(29:52):
they have fled, and if you're familiar with this program,
you've probably heard from several of them, including James Tallerico
who joined us before this even began to give us
a sense of what we might be in for here.
Democrats decided to go for it, went to Chicago, went
to Albany, went to Boston, and this thing is held
up in the meantime because they have broken quorum. Right,
(30:14):
That's how this works. That's why the governor of Texas
has called for their arrest. And now the Feds here
by way of Senator Cornyan of Texas Republican senator, are
calling for the FBI to act and claw these Democrats
back to Texas. Probably unlikely, but President Trump did address
(30:36):
this possibility when he spoke to reporters last evening.
Speaker 9 (30:39):
Listen, well, I think they've abandoned the state. Nobody's seen
anything like it, even though they've done it twice before,
and in a certain way, it almost looks like they've
abandoned the state.
Speaker 2 (30:49):
Looks very bad. Yeah, go ahead, please get involved.
Speaker 8 (30:51):
Should the FBI get involved.
Speaker 9 (30:53):
Well, they may have to.
Speaker 10 (30:54):
They may have to.
Speaker 2 (30:56):
They may have to. That's where we start our conversation
with Ashley Davis, Republican strategist back with US partner at
S three Group. Ashley, it's great to see you. This
has become a national story, and we can pick away
at this from a couple of different angles, because I
want to ask you about what's happening in other states potentially,
like Indiana, even Missouri. But to begin with Texas. You
don't see the FBI going after democrats in other states,
(31:19):
do you?
Speaker 10 (31:20):
No?
Speaker 11 (31:21):
I do think though, that this is just a lot
of drama. And even though there is.
Speaker 10 (31:25):
A lot going on in August, August.
Speaker 11 (31:27):
Is usually a slow time, so this is even a
bigger story. But listen, I think the broader point to this, Joe,
is that there has been a political politicalization. Excuse me
on that word for the last over last decade in
regards to redistricting. It started out in let's just take
(31:50):
recent history twenty eighteen. In Pennsylvania, Republicans were blaming Democrats
of being too political. North Carolina twenty twenty, Democrats were
blaming publicans. Remember Eric Holder spent a decade of his
life and raised over a billion dollars on redistricting after
he left Barack Obama. So this is just something as
a broader point, has just been too political in regards
(32:13):
to in my opinion, in regards to Texas, obviously this
has happened before. I think that they left in twenty
twenty one was the most recent when Democrats did this. Listen,
when there's a super majority like there isn't in Texas
and a Republican governor that has a lot of power,
this is really their only way that they can fight back,
(32:34):
and it's by using this mechanism. But what it was, Joe,
I think this ends because of one major reason. It's
not just redistricting that they're not voting on. They're not
voting on the flood relief for the horrible situation that
happened there just a few weeks ago. And I think
at some point, after maybe a couple more days, a
(32:55):
couple more days of drama, a couple more days of
new news headlines, that they're going to have to come
back and vote on that alone, just because I think politically,
and you can see it kind of popping up in
the social media world right now. They're starting to get
a little bit of blowback because of the flood relief.
Speaker 2 (33:13):
Although I suppose Governor Abbott could isolate this special session
to flood relief and get to redistricting at another time,
but of course Democrats will probably just leave that anyway.
At some point they're going to have to get to this,
and we've seen this happen before. But I want to
ask you about other states. You know, everyone jumps to
California and what the Democrats might do here, what Gavin
Newsom might have up his sleeve, But Republicans aren't stopping
(33:34):
in Texas.
Speaker 7 (33:35):
Here.
Speaker 2 (33:35):
It seems the White House is pushing this idea on
other states, including Indiana, to the extent that jd Vance
is heading to Indianapolis to sit down with Governor Mike
Braun to talk about this idea. And granted he is
there for a fundraiser for the Republican National Committee. But
to what extent will Republican governors embrace this around the country, Well.
Speaker 11 (33:57):
It depends not just what the regovernors do, but also
just how much control the state legislatures or Special Commission
on Redistricting would have an in every state. So it
really does depend on state by state how it can happen.
Texas is just a little bit different because of the
power that the governor in the legislature has on the topic.
(34:17):
But yes, Indiana, Missouri, two states Republicans are looking at Democrats. Obviously,
I've heard it newsom New York and also in California
and New York, Illinois, Minnesota, I think is another one
that I'm hearing. So listen, all gloves are off. But
it's not going to be as easy in these other
(34:38):
states as it is. Yeah, in Texas, and you saw
what happened even today with Governor Brown saying, or maybe
it was actually yesterday where he said, listen, I'm going
to have a conversation. I don't know what can happen
because he doesn't have a super majority, So it's a
little bit different.
Speaker 2 (34:56):
Yeah, absolutely, each state has its own kind of fingerprint
when it comes to this story, Ashley, I want to
ask you while you're with us about what's happening on
Capitol Hill or what's about to happen, maybe what's not
about to happen, because you're so connected to lawmakers and
their staff on the Hill. We had a bit of
a breakdown between Democrats and Republicans over nominations last weekend.
(35:20):
Everybody left town angry. There was no deal between Schumer
and Thune on this, and it's leading many to believe
that a government shutdown will be even more likely when
lawmakers return after the August recess. Is that how you
see it?
Speaker 11 (35:33):
I feel that every year I hear there's going to
be a shutdown, and usually ninety five percent of the
time it doesn't happen.
Speaker 10 (35:41):
So, but there is I'm not ready.
Speaker 11 (35:43):
To say that for sure that we're going to have
a shutdown, and I'm definitely not. I think we're like
fifty percent maybe. And what I'm seeing though, is just
really really bad blood in regards to Democrats and Republicans
right now because of the Recision Package of Reconciliation.
Speaker 10 (36:01):
And by the way, this happens.
Speaker 11 (36:02):
Every time we were the Republicans and Democrats were fighting
when Biden did his big two reconciliation bills when he
was in when the Democrats had control, So this is
very normal. I'm not real worked up about it right now,
but I do think there's a broader issue. And the
broader issue is what Senator Rounds has actually been talking
about yesterday and today.
Speaker 10 (36:24):
And we have way too many.
Speaker 11 (36:27):
People that have to get Senate confirmed. I believe in
the institution of the Senate one hundred percent. I think
it's fantastic tradition. However, no matter what party it is,
you spend so much time trying to get some of
these positions through the House, excuse me, through the Senate floor,
and because of the rules of the Senate, as you know, Joe,
it just takes a long time. And when you have
(36:50):
eleven hundred positions that need confirmed, it probably is not necessary.
Speaker 10 (36:55):
So let's walk through this just very quick.
Speaker 11 (36:57):
We have the Supreme Court justices, we have majores, we
have Cabinet secretaries, maybe even the deputy secretary, and.
Speaker 10 (37:06):
Even I would go and give it to.
Speaker 11 (37:09):
The general counsel of each agency, but I'm not sure
if the assistant secretary of needs to be Senate confirmed,
or here's a perfect example, Joe. Last to last Trump administration,
I was put up for the board appointment for the
National and Downard of the Arts.
Speaker 10 (37:30):
It was a Senate confirmed position. There is no reason that.
Speaker 11 (37:33):
Composition needs to be confirmed and take up Senate four time.
Speaker 10 (37:37):
So that's what I'm saying. I think we could do
some selves.
Speaker 2 (37:39):
Like some procedures or maybe rules are going to be
changing here and maybe the way that they're even pasted
in the Senate. Actually, it's great to have you as always,
Ashley Davis s three group Republican strategists that we learn
a lot from on and off the air. Thanks for
listening to the Balance of Power podcast. Make sure to
subscribe you haven't already an Apple, Spotify, or wherever you
(38:02):
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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