April 4, 2025 • 41 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
Chief White House economist Stephen Miran dismissed the deepening fears of a recession on Wall Street, saying that President Donald Trump’s plans for deregulation and tax cuts will more than offset any hit from tariff hikes.
“The president acted with historic scope and speed to address what was a decades-long festering problem that had been eroding our competitiveness and eroding our prosperity and eroding our economy,” Miran said in an interview with Bloomberg Television Friday. “So of course there’s going to be some market volatility on the back of that.”
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:
- Chair of the White House Council of Economic Advisers Stephen Miran.
- Bloomberg's Romaine Bostick.
- Republican Congressman French Hill of Arkansas, Chair of the House Financial Services Committee.
- Democratic Congressman Glenn Ivey of Maryland and IonQ CEO Niccolo De Masi.
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 (00:02):
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Speaker 2 (00:25):
This is a difficult period of time for financial markets,
in a perfect time for us to be speaking with
President Trump's economic advisor in the Council of Economic Advisors
where he works as Chairman. Stephen Myron joins from the
north lawn of the White House on Jobs Day. As
a matter of fact, mister chairman, welcome back to Bloomberg
TV and Radio.
Speaker 3 (00:45):
It's great to see you.
Speaker 2 (00:45):
As we mentioned earlier, this Job's report would be our
lead story on any other day with payrolls blowing the
doors off. But after everything we have seen in the
financial markets, and knowing that President Trump has now put
forth his plans for tariffs taking effect tomorrow and next week,
are these data already old? No?
Speaker 4 (01:04):
I don't think that data are already old. I mean, look,
you know, we're very pleased with the Job's report that
we got the economy created two hundred and twenty eight
thousand jobs in March. That's roughly twice the amount of
jobs that have created in either January or February. In fact,
it was such a good month that it was in
fact the fourth best month in the last two years
for job creation. That's pretty spectacular. And you know, in
(01:24):
spite of some headwinds that folks thought would be material headwinds,
the President has acted very swiftly and forcefully to close
the border and to prevent the surge of and to
stem the surge of illegal aliens coming into this country.
And lots of folks said, oh, that'll be bad for
job growth, right, that'll be bad for job creation. Well,
this report proves that that might not necessarily be the case.
And so what the report shows is the economy is
(01:46):
continuing to grow in spite of the President's variety of policies,
and it's a good sign.
Speaker 5 (01:52):
Well, but this report, mister Chairman, is by nature backward looking.
I think the concerned financial markets have today is about
the forward looking picture and what the economy is actually
going to look like in light of the severe tariffs
that are being implemented starting tomorrow, the layoffs of federal
workers that the Department of Government efficiency is pursuing. How
can you guarantee the labor market will hold up in
(02:15):
the face of those challenges.
Speaker 4 (02:17):
Yeah, thanks, So look, you know, the President acted with
historic scope and speed to address what was a decades long,
festering problem that had been eroding our competitiveness and eroding
our prosperity and eroding our economy. And so, of course
there's going to be some market volatility on the back
of that. Of course there's going to be some adjustments
on the back of that. But on the end of it,
you know, things are things are going to be materially better.
(02:39):
And I'll tell you why. Not only will the tariffs
incent reindustrialization in America and companies coming back to build
in America, but there's also two other legs to the
stool that are of significant importance. There's the deregulatory agenda,
and then there's the tax agenda, and both of those
are profoundly stimulative for the economy. And one point that
I like to make is that imports are only fourteen
percent of the economy. The other eighty six percent of
(03:00):
the economy is affected by the entire of the entirety
of the agenda. And so that's tax and regulation, and
both of us are going to be very important.
Speaker 2 (03:09):
I'd like to ask you, Stephen, about the comments that
we heard from J.
Speaker 3 (03:12):
Powell a bit earlier today.
Speaker 2 (03:14):
The Fed chair had this to say about the impact
the potential impact of President Trump's tariff regime.
Speaker 6 (03:20):
Listen well uncertain. He remains elevated. It is now becoming
clear that tariff increases will be significantly larger than expected,
and the same is likely to be true of the
economic effects, which will include higher inflation and slower growth.
The size and duration of these effects remains uncertain.
Speaker 3 (03:40):
Stephen R.
Speaker 2 (03:41):
Edward Harrison writes that unless the labor market data deteriorate precipitously,
the bond market is going to have to reverse some
of its post Liberation Day rally, taking stocks down further
in the process. The jobs report today is bad news
for stocks and bonds, he says, because we're not going
to see lower interest rates anytime soon. Chairman today, suggesting
(04:01):
that he is in no hurry even as President Trump
puts on truth social that this would be the perfect
time to cut interest rates. What is your message to
investors when it comes to rates here? Against the backdrop
of tariffs.
Speaker 4 (04:15):
Sure, So first let me be clear that you know,
I'm not going to tell the what to do, but
I will point out that we lived in experience of
tariffs in twenty eighteen twenty nineteen during the president's first term,
and there was zero macroeconomic evidence whatsoever that tariffs had
any material inflationary impact. In fact, the FED wound up
cutting rates on that event. So I think it's important
to understand.
Speaker 5 (04:35):
So we're talking a different scope and scale now, mister Chairman.
The tariffs from the last administration are nothing like what
we're seeing now.
Speaker 4 (04:43):
Yeah, the President has acted with historic scope and speed.
I agree with that, but we also have to appreciate
what's going to be happening on the tax and regulatory front.
And I think that one of the most powerful things
for determining the supply side of the economy is the
regulatory environment. If prices are high and increasing because there's
not enough stuff, best way to address that is to
make more stuff. That means getting government out of the way,
(05:04):
letting firms invest, letting firms build, letting firms produce, and
if you make more stuff, you can address not only
inflationary pressures, but actually bring some prices down, and I
think that that's powerful and arguably much more powerful than
any effects of tariffs.
Speaker 5 (05:18):
But what is the actual lag time between seeing a
lesser regulatory burden, seeing tariffs that maybe would incentivize us
manufacturing to invest in that capacity, the lag time between
the decision to do that and the actual capacity coming
online and whatever employment or what have you will come
with it. This isn't going to be an automatic thing,
right mister chairman.
Speaker 7 (05:40):
Yeah. Thanks.
Speaker 4 (05:40):
So that's a great point, which is that you know,
the regulatory process and taking away those regulations is a
legal process, and that takes some time. And the President
has made historic progress in the first two months peeling
back regulations, but there's still so much work to do
and it'll take some time for us to get that through.
And so that's you know, maybe this is part of
why there's market volatility because implementing the totality of our
(06:02):
plans will take some time. Congress is working on the
tax package as we speak. It will take some time
to pass it, it will take some time to implement it.
Speaker 2 (06:11):
We're hearing a lot of concerns about recession. Money managers
are pointing their trades toward a recessionary environment, and JP
Morgan today increased odds for its recession forecast to sixty percent,
up from forty steven.
Speaker 3 (06:25):
What are yours?
Speaker 4 (06:28):
Yeah, you know, you know, I'm not a professional forecaster,
so I don't necessarily have odds. But what I will
say is what I said a moment ago, which is
that imports are only fourteen percent of the economy, so
you really have to think of, you know, really really huge,
really enormous changes, sort of shaking through those things to
get to the place where you think a recession is
likely as a result of something like this. And as
(06:50):
I said before, I think that the president's pro growth
policies in the regulatory front, providing further tax relief to
American families, extending the tax relief of his twenty seventeen
Tax Cuts Jobs Act, I think all of that is
profoundly supportive of growth. And I think there's maybe a
little bit too much focus on risks from what's going
on right now and not enough focus on the pro growth,
the pro growth policies that are that are.
Speaker 3 (07:11):
Receiving on Wall Street. I understood.
Speaker 2 (07:15):
Don't mean to interrupt sir, but there's a there's a
great worry about the negative wealth effect. This market is
in free fall right now. We could continue this next
week unless there is some change here in the news
cycle as we hear about additional retaliatory tariffs. At what
point does this drag consumer spending with it?
Speaker 4 (07:33):
Yeah, so look, you know, you're right, there can be
some wealth effects there. There will be some wealth effects.
There will be you know, there will be ramifications of
that stuff. But like I said before, we have to
balance that out against the fatality of other stuff going
on in the policy agenda, the toutality of the other
strong drivers of economic growth.
Speaker 7 (07:49):
You know.
Speaker 4 (07:49):
One point that I've made a lot is that the
Biden administration's last two years, almost three quarters of jobs
that were created were in government and government adjacent sectors.
And that's profoundly unsustainable to have the government a train
driving the economy. In the March job support that number
came down from almost seventy five in the last two
years of the bindminstration to just about forty, right. So
that's a very material decline. And this is part of
(08:10):
reconfiguring the economy from a government driven growth engine to
a sustainable, durable, private sector growth engine. And this is
going to continue.
Speaker 5 (08:20):
As we consider the growth outlook, keeping in mind that
you did just tell us, mister Chairman, that some of
this will take time to materialize in terms of the
stimulative efforts of this administration, whether legislatively or otherwise. If
the Federal Reserve were to decide that it has to
prioritize inflation, and if inflation persists and they don't want
to cut rates, but we do see a material downward
(08:42):
shift in growth or in the labor market, is there
a lever that the White House is going to be
able to pull more immediately to try to offset those
effects if the Fed can't do both at the same time.
Speaker 3 (08:52):
Yeah.
Speaker 4 (08:53):
So again, I I point you to the forthcoming tax
legislation that's being worked at that's being worked out in
the Hill, and I think that that will that will
allow the President to provide a profound tax relief that
will be excellent for American American families, American workers, American firms.
Speaker 2 (09:10):
Well, going forward, mister Chairman, I wonder what's going to
happen in terms of messaging to this market. Are we
going to hear more from the administration, from the President
of the United States, from yourself when it comes to
the dollar. When it comes to investing in the stock
market in the United States, I know that frequently the
refrain is, we're seeing companies invest in America. But how
(09:31):
about in our financial markets, where we've seen I believe
a half dozen IPOs today delayed, some of.
Speaker 3 (09:37):
Them pretty large.
Speaker 2 (09:37):
We're hearing from some major firms planning to go public
as soon as next week that are putting those plans
on the shelf. What does the administration tell them?
Speaker 4 (09:47):
Yeah, so I'm going to I'm not going to comment
on specific companies and IPOs, but I will say what
I said before, which is that, of course there's going
to be some market volatility on the back of the
present's historic actions. But I also want to redirect you
again to what we can do, and so you know
the look, the tariffs are designed to redress the emergency
of trade deficits, but there is a nice side effect,
(10:07):
which is they raise a lot of revenue, and if
you use that revenue not only to extend the historic
tax cuts from twenty seventeen, but to provide further tax
relief for American families while deregulaing in economy and making
it easier to invest, build higher in America, you have
the recipe to create an economic boom wherein America is
much more competitive because of the tariffs. It's much more
(10:27):
competitive because lower taxes, households, firms, workers keep more of
the money they earn every week, and they spend more
of it, they save more of it, they invest more
of it, and you get the government out of the waist.
They can build and invest and make factories. And that
is the recipe for an economic boom. And if we
keep at it, we can create a really great environment
for firms to invest in higher and that will in
(10:48):
the end, in the long run, drive the financial markets.
Speaker 5 (10:52):
The other thing that tariffs, you would think, at least
traditional economic theory would tell you, would lead to, is
a stronger dollar. And yet that's not what we've seen
in the immediate aftermath of the announcement of these mister chairmen.
How concerned are you about a period of sustained dollar weakness?
Speaker 4 (11:09):
Thanks? So, Look, you know, my view, as I've expressed before,
is that classic economic analysis would say that the burden
of any economic policy, whether it's a tax of subsidy,
no matter what it is, falls on what economists would
call the more inelastic party, but I think as easier
for other folks to understand as the more inflexible party.
And the example that I keep given is if you're
looking to buy a house and the town that you're
(11:31):
looking in raises its property tax rates, and you're flexible,
you can just look at the next town over. You
can change your behavior to avoid the burden of the tax.
The person who's selling the tax can't move his house
across town lines, so he's got to eat the property
tax and lower his selling price. And in that way,
the burden of the tax fell and the person who
couldn't move his house, And the same is going to
be true in international trade. American consumers are flexible. We
(11:53):
can make stuff here at home. We can change the
countries from which we import. We can stop importing from
a country with a high tariff rate and start importing
from a country with a low tariff rate that treats
us better, that is a better trading partner with us.
And that ability to change our consumption patterns, whether to
move it home into home production or among different countries,
makes us more flexible. By contrast, installed factories in China,
(12:14):
though they've already spent the capital. The factories are stuck
on the ground. The workforce is already trained to build
products aimed squarely at the US consumer markets. Those cannot move.
So in the long run, other countries, the tariff countries
will end up bearing the burden of the tax of
the tariff. Now, there's a couple ways that can happen.
In twenty eighteen, twenty nineteen, it happened through the currency,
but it need not happen that way. Again, it could
(12:35):
happen that way. It doesn't necessarily happen to have to
happen that way. There are plenty of other ways they
can end up bearing the burden of the tax. It
could happen through reduced selling prices.
Speaker 5 (12:45):
All right, mister chairman, we appreciate you joining us here
on Bloomberg TV and Radio. Stephen Meyer in the chair
of the Council of Economic Advisors at the White House,
thank you so much for joining us on this job's day.
But of course, while we did get a strong payrulls report,
we are not seeing strength at least in risk assets today.
We're right around the session lows on the major equity benchmarks.
The S and P now down five point two percent.
(13:06):
The NASDAQ one hundred down five point four percent. We
want to get more on these markets now with Bloomberg's
Romain Bostik, who is joining us from New York. Romain,
I gotta say, I'm kind of feeling flashbacks to March
twenty twenty here.
Speaker 8 (13:17):
Yeah, not just a round session lows. We are at
ed session lows. And just to put this into perspective,
Klee five hundred socks roughly in the SMB five hundred.
Only fourteen of those stocks right now are in the green.
We're headed towards what is going to be more or
less an unprecedented day. The superlatives pretty much stack up
like this. More or less, we're having the worst days
since at least twenty twenty two for certain sectors, the
(13:38):
worst day since the onset of the pandemic, And if
you take the pandemic out of the equation as sort
of a one off outlier, this is quite frankly shaping
up to be one of the worst days since the
late nineteen seventies. This is a market that is a
completely shut down, not just in equities, Kaylee. We've had
several IPOs that have been put on pause. That includes
names like Klarna stub hub chime. Several deals that were
(14:01):
in the works have also been paused. Not a single
corporation has been brave enough to try to sell new
debt today or yesterday. And right now you have the
sense of paralysis amongst economists. Despite the comments that we
just heard from the CECH chair just a few minutes ago,
most economists say right now they have no idea how
to chart a path forward.
Speaker 2 (14:22):
You know, you talk about the fundamentals in this market,
Romayne kind of falling apart. What about the technicals? We
have so many broken charts. Even if the news improves,
would that help to lift stocks from where they are now?
Speaker 8 (14:35):
Well, keep in mind, you know, a couple of days ago, Joe,
the support line on the S and P five hundred
was supposed to be fifty five hundred. Then when we
got broke below that, people said fifty four hundred. Right now,
we're trading right around the fifty one hundred level. That
is the low of the day, fifty one four and change.
And so whatever support levels were there, they've been broken.
Even when you look at other sort of lines such
(14:55):
as moving averages, Joe, the fact that the S and
P five hundred right now is in oversold condition. That's
where that fourteen day RSI dips below thirty. Traditionally, these
are all lines in the sand where typically you'll start
to see a rebound in socks that dip buyers come in.
You're just not seeing it there right now. The technicals
are working against them. The fundamentals, potentially because of economic conditions,
(15:16):
are working against them. So the big question now right now, Joe,
is if you do want to stay in this market,
what actually do you buy? What are you brave enough
to buy?
Speaker 3 (15:26):
Not the truth the analysts aren't exactly telling us, Romaine.
It's great to see you.
Speaker 2 (15:30):
It's been great having Romain Bostic with us. A feeling
we're going to talk against very bumpy days this week.
I think that might happen. What are you doing at
five with me and Washington, Kaylee? Lines of course here
on the fastest show in politics, as we try to
bridge here what's happening in Washington with what is happening
on Wall Street? And you can't remove the two here, Kayley,
as we reach ever lower, having heard from not only
(15:52):
the President but the.
Speaker 5 (15:53):
Fed share Yeah, the Fed shair signaling they're still not
in a rush to cut rates, though it is warning
of the inflationary risks of these tariffs. And it's interesting
to note after we heard from the Chairman, you saw
even more buy and coming into the bond market. Maybe
that's the only thing anyone wants to buy a ten
year yield right now down eleven basis points at three
ninety two. This is Bloomberg.
Speaker 1 (16:14):
You're listening to the Bloomberg Balance of Power podcasts. Catch
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Speaker 5 (16:33):
The worst two day stretch since March of twenty twenty.
Is what we're heading for right now, with a bid
coming into the bond market as investors are looking for
safety somewhere. Keeping in mind they all just heard from
the Chairman of the Fed. While there may be some
persistent inflationary risk due to the tariff policies announced by
President Trump this week, the Fed is still not in
any rush to lower interest rates, despite perhaps Joe the
(16:54):
desire of President Trump for them to do so. He
actually said on True Social today, it would be the
perfect time, would have been.
Speaker 3 (17:00):
Right before that meeting.
Speaker 2 (17:01):
Maybe in fact that was coincided or time to coincide
with his remarks. It wasn't until Jay Powell started talking
that we saw these new lows on Wall Street because
now the fear is, of course, we're not going to
see lower interest rates anytime soon. Fascinating conversation with Stephen
Myron at the White House coming off the jobs data today.
He continued to point us to Trump tax cuts. They're
(17:23):
just getting the ball rolling on that on Capitol Hill.
In fact, we're going to have some votamas over the
weekend that could be pretty interesting. We'll be talking about
that likely on Monday. But what a treat to have
the chairman of the House Financial Services Committee with us.
We remember when he was just a congressman. We remember
when he was just a community banker. But that's why
this is an important conversation because of the unique perspective
(17:45):
that french Hill brings to us. From Arkansas, It's great
to see you. It's been too long.
Speaker 3 (17:49):
Thanks for being great to both of you. Thank you.
Speaker 2 (17:52):
So what do you think of this? I know you're
sensitive to the markets. You don't like what you're seeing
here on Wall Street. I'm sure the line from Stephen
Myron was just hang on. We're working on extending the
Trump tax cuts along with a number of other tax
points of tax relief that will help to make this better.
Does one offset the other?
Speaker 7 (18:10):
Well, I think it's such an important question, and I'm
concerned that we cover up the strategy of right sizing regulation,
tailoring regulations, getting balanced back in the regulatory system, which
President Trump was so successful on in his first term.
We want to do that in this term. And as
you noted, the Senate will be voting on the House
Budget Reconciliation Bill this weekend that will lead and unlock
(18:33):
the ability to block a major tax increase for business
and for American households. Those are big, certain issues that
I think we can get done, I believe strongly, and
I don't want to see a tariff strategy offset that,
which is why I believe in trade diplomacy. I think
President Trump's right to engage in trade diplomacy, but I
(18:55):
believe sincerely that you should target sectors in a very
isolated way and achieve results and do the same thing
in reciprocity with countries you think are bad actors that
are not open to American products. And then finally, as
it relates to Canada and Mexico, I really think the
President should advance the negotiations on the USMCA reauthorization of
(19:17):
that treaty, that trade arrangement, and let's make some changes.
Let's make sure that Chinese component parts are not dumped
into Mexico or Canada and go into the supply chain.
Speaker 5 (19:28):
So why not have Congress take the lead on that.
It is your Article one authority to do so. And
yet this is being driven out of the White House,
not by your chamber or by the Senate. Does that
need to change to calibrate this policy in a better
way for.
Speaker 7 (19:41):
The economy Another good question. Since the late nineteen twenties,
Congress had been in the tariff setting business and they
were so frustrated by it and so bad at it
that they delegated it to the executive branch under Trade
Promotion Authority. But I think Article one's job there is
to make sure we try to get it right, work
with the administration to get it right. In the Senate's case,
(20:04):
ratifying treaties where necessary. So that's what we need to do.
Trade Promotion Authority, which was reauthorized in President Trump's first term,
has expired. President Trump, President Biden did nothing about it.
I think that would be a good step for the
Congress to consider reauthorizing that.
Speaker 2 (20:20):
What is the banker inside you, never mind the chairman
of financial services, think about when you hear companies say,
why are we being unfairly targeted? All we have done
is play by the rules. We came out of China,
we went to Mexico, we went to Vietnam. Now we're
being penalized for that. Aren't they correct in making that point?
Speaker 7 (20:39):
Well? I think it speaks to the uncertainty nature of this.
I hear it from my own constituents at home, who
are manufacturers who make something, but some of the component
parts and what they make comes from outside the US.
They're concerned about the cost, will their product be competitive?
And the same is true for Arkansas, big agricultural state.
Much of what we produce goes to Canada or Mexico.
(21:01):
So these are important issues, and that's why I think
the strategy has to be right. Using trade diplomacy to
open new markets, using trade diplomacy to lower rates in
certain product categories like auto and the European Union, for example,
and using trade diplomacy to punish bad actors. Those are
all important elements of it, and I think that gives
(21:23):
some certainty. When you use them across the board approach,
you get that uncertainty that my constituents are reflecting. So
I hope we can work on clarifying that in the
weeks ahead.
Speaker 5 (21:35):
Well, and in the weeks and months ahead. The White
House is Joe mentioned earlier, and you were alluding to
the White House is pushing toward tax cuts that have
to happen at some point if TCJ is not going
to expire. I do wonder, though, the argument around that
tax package in twenty seventeen was it was going to
juice the economy. It was going to put more money
into people's wallets, It was going to give businesses more
(21:55):
money to make capital investments. Is it going to have
the same effects this time around, though, If it's just
an extension of what already exists, and those people and
businesses may be feeling a bit more of a pinch
in terms of the margin they actually have to work
with to spend that additional capital.
Speaker 7 (22:10):
Well, the expensing has been being phased out, and so
the renewal of that I think will spur a capital investment.
Of the R and D tax credit the same, it
will spur new investment. You're right, at the corporate marginal
rate or at the household marginal rate, people would just
feel relief good. I mean, I can count on that
going forward. So I think it will unlock some activity
(22:34):
in the economy and it will produce faster economic growth,
even if the marginal rates don't change dramatically.
Speaker 2 (22:42):
There was a time when revenue from tariffs was pitched
as a way to help pay for extending or making
permanent the Trump tax cuts. Is that part of the
conversation any longer, or are the tax cuts going to
be extended in lieu of the tariffs?
Speaker 7 (22:57):
Well, in our discussions in the House, I can't speak
for the government at large, but in our discussions with
our colleagues in the House, we've been thinking about the
importance of extending the President Trump's tax cuts, cutting spending,
trying to write size government so that we don't have
two trillion dollar deficits. This is a major goal of
our House Budget Committee, and we're not counting on tariff revenue,
(23:21):
because tariff revenue is very difficult to predict. You have
countervailing duties, you have people will change their buying pattern.
So to automatically assume that you can count on that
I think is not significantly and significant or smart. So
we have not per se counted on that, and OMB
(23:44):
does not count tariff revenue in their scoring. So as
we get closer to that final vote, we'll look and
see where this Trump tariff plan settles, and that may
give us some indication, But in the meantime we're working
independent of that.
Speaker 5 (24:02):
We were just listening for our colleague Charlie Pellett, looking
at the markets, specifically at bank stock, some of the
big investment banks that we're counting on a revival in
companies coming to the public markets and re engaging in
M and A activity. This gets back to the kind
of regulatory burden you were referring to earlier. You concerned
that some of this wider economic impact companies now deciding
perhaps is not the best time to enter the public markets,
(24:24):
that that regulatory burden being eased may be for not
if they can't actually take advantage of it.
Speaker 7 (24:30):
Right well, certainly, I hope that the competition focus of
a Trump FTC Federal Trade Commission is open towards business, entrepreneurship,
business combination, where it produces more competition. And I would
hope that we are able in our regulatory focus on
capital formation to encourage more public companies because we lower
(24:52):
the cost quarterly of being public. That's a goal of
mine as chairman of the committee. But anytime you have
wide market uncertainty in equity prices, you're going to have
people pull back from a scheduled IPO because they need
market certainty. And so I hope this settles down soon
because I know there's a lot of interest in advancing
that equity market through the IPOs.
Speaker 2 (25:16):
We've been talking, mister Chairman, for the better part of
ten minutes, and somehow Kailey Lines has not asked you
about crypto.
Speaker 5 (25:21):
I was saving it for less about the stable acts.
Speaker 2 (25:24):
Well, my gosh, we only have a couple of minutes
left here. You had an important week when it comes
to this. It's something that gets lost in a very
noisy news cycle. But this is important, something you've been
pursuing for months and months.
Speaker 7 (25:35):
This is a real effort for the past four years,
really working with former Chairman Patrick McHenry, ranking Member Maxine
Waters to craft a dollar back stable coin under US
law inside the largest capital market, the most important economic
country in the world, that we would have our own
dollar back stable coin where we could have a tokenized
dollar payment on a blockchain. We had a successful markup
(25:58):
bipartisan result. And this is a companion to just a
few weeks ago, Bill Haggerty, Cynthia A. Lummis, Tim Scott
Guyan Jillibrand got a Senate dollar back stable coin bill
out of the Senate Banking Committee. This is the first
time we're demonstrating, I think to the markets that we
can make progress on this. I think we can get
(26:20):
that passed this year, and I think we can also
get the market structure bill passed. You've got to link them,
because a doll our back stable coin, but without market structure,
how would you custody it, how would you exchange it,
how would it be used? So they're important that we
try to keep them working together. President Trump's asked us
to complete that work by the August recess.
Speaker 5 (26:41):
Okay, So in terms of sequencing, when we see a
full floor vote on the stable coin legislation before market
structure efforts. Beginner is that already I think House.
Speaker 7 (26:49):
And Senate leadership have the best strategy under discussion. Tim Scott,
Bill Haggerty, Cynthia Aleumas. They're outstanding leaders. They know this
issue well, and we know it well in the House.
So we're going to craft the best legislative strategy.
Speaker 5 (27:02):
How different will it be to fit twenty one?
Speaker 7 (27:05):
We're gonna have our first hearing next week. Brian Style
of Wisconsin will convene his first market structure hearing in
the House. I we're excited about that and we hope
to get that text ready in the next few weeks.
Speaker 3 (27:15):
We need a Style Hill panel. Yes, oh, yes, when
the time comes, can we do that?
Speaker 7 (27:20):
We can do it, all right?
Speaker 5 (27:21):
All right, well, we'll look forward to it. And we're
so excited to have you in studio today, mister chairman.
That is the Chair of the House Financial Services Committee,
Congressman Front Show of Arkansas here with us on Bloomberg
TV and Radio. Interestingly, Crypto won Bright Spot today. I
would note, Joe, if you're looking for haven, maybe you're
finding in treasuries, but maybe a little bit of marginal
byd coming into bitcoin as well. Can't say the same
(27:41):
for other risk assets though, as we're just off session
lows but still down about five percentage points on the
S and P five hundred and Nasdaq.
Speaker 2 (27:47):
Little bit of a bid under bitcoin, but this is
a risk off market.
Speaker 3 (27:51):
My goodness.
Speaker 2 (27:52):
We're still trading near the lows of the session, and
we'll have a lot more coming up here on the
fastest show in politics. You can't remove Washington from Wall Street.
That's why I were here on Bloomberg TV and radio
alongside Kaylee Lines. I'm Joe Matthew. Thanks again to Chairman
french Hill. We'll have much more ahead on Bloomberg.
Speaker 1 (28:11):
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.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (28:27):
So a new date to circle on the calendar, Kaylee,
seventy five days not a big shock, obviously, we were
creeping up on a deadline in the next twenty four
hours without a deal in place. It's unclear though whether
it's still I ask would China sign off on such
a deal, because that would be required for this to happen,
and they just put retaliatory tariffs on us today.
Speaker 5 (28:47):
Yeah well, and the President does make reference to that
in his post on True Social He says, we continue,
we hope to continue working in good faith with China,
who I understand are not very happy about our reciprocal tariffs.
He goes on to say, this proves that tariffs are
the most powerful economic tool and very important to our
national security. Keeping in mind the President has floated multiple
times over the last week lessening the tariff burden on
(29:08):
China if it means they agree to a TikTok divestiture.
Speaker 2 (29:11):
Tariff's the most powerful economic tool, though, I guess in
generating reciprocal tariffs sid in sending the stock market lower,
because that is what they have achieved today.
Speaker 3 (29:20):
Commentary from J. Powill seemed to only make it worse.
Speaker 5 (29:22):
Yeah well, and we want to get some more commentary
of our own here on this program. As we bridge
Wall Street in Washington and turned to Democratic Congressman Glenn
Ivy of Maryland, who was here with us in our Washington,
d C studio, we have much we want to discuss
with you, sir, and welcome back to Bloomberg TV and Radio. First, though,
as I know, you did vote for the legislation that
included this divest or ban law for TikTok another seventy
(29:45):
five day extension. Does this go against the nature of
what that law was actually supposed to achieve.
Speaker 3 (29:50):
Yeah, it does.
Speaker 9 (29:51):
And if you look at what they did over the
previous extension that the President gave them as far as
seeking a business solution, I didn't see really any effort
to do that. So extending him seventy five more days
to do what is the question that I have. If
they're not really going to be trying to figure out
a way to resolve this from a business perspective, then
they're just playing a stall game, and the president's falling
(30:13):
for it.
Speaker 3 (30:14):
So I hope he'll get out of the way of that.
Speaker 9 (30:16):
I don't think he really has the statutory authority to
do what he's doing here, but you know.
Speaker 3 (30:21):
We'll see how it plays out.
Speaker 2 (30:22):
Well, in the time that you were preparing to vote
on that bill, the bipartisan case was established that this
was a national security threat.
Speaker 3 (30:29):
Has any of that changed? I don't think so.
Speaker 9 (30:31):
And if you look at the ads that they run,
which never mentioned byte dance. But you know all these
nice people in Middle America who are making money using TikTok,
and we all know that that's the case. But the
fact that they're continuing to push it and act like
this is only about TikTok and has nothing to do
with byte dance, I think indicates how, you know, the
potential for misinformation and disinformation can be spread through this,
(30:56):
and they're doing that very aggressively and apparently pretty well well.
Speaker 5 (31:00):
So there's the national security element of TikTok. I guess
there's also the national security element of something that the
President is now tying to TikTok, which is his tariff policy,
maybe using it as leverage in this particular instance, but overall,
as we consider the tariff regime that was announced by
the administration this week, I'm wondering what you're hearing behind
the scenes from your colleagues in the House, not just
(31:20):
from your fellow Democrats, who were obviously making their feelings
well known, but from Republicans. Are they saying things to
you in private that they're not willing to in public
about this?
Speaker 9 (31:28):
Yeah, but I mean you're starting to actually see them
say things in public too. I mean, you know, the
loud screams you hear in the background are not just
Democrats and average Americans. They're Republicans who see this as
maybe one of the biggest political blunders that I can
recall in recent memory. This is a total unforced air.
You know, the economy was moving in a relatively good direction,
(31:51):
whether you like what Biden did or not. When he left,
you know, the US economy was pretty much the envy
of the Western world. Trump inherited a good economy. The
jobs report that just came out indicates that things were
moving in the right direction. Probably all he had to
do is kind of not get in the way, and
this is driving the truck off the cliff. I've never
(32:13):
imagined that he would do this and then to do
across the board tariffs on every product for almost every
country at the same time, and then act like you're
going to negotiate with all of these at the same
It's ridiculous. I'm not sure what he was thinking when
he did this, But I don't know what the exit
ramp is. I don't really see one. He's mad at
Powell for not giving him one, but Powell did. I
(32:35):
think what people were expecting. The Fed to do under
these circumstances.
Speaker 3 (32:39):
Well, the impact locally for you is very real.
Speaker 2 (32:42):
It's not just the tariffs here, and that's obviously hitting
people across the board. The market reaction hits people across
the board. The Doge cuts, though, hit you directly with
federal workers who live in your district who are being
shown the door. Then you add what to place with
some of the budget cutting. I know that the House
(33:02):
has yet to reverse the budget cuts for the District
of Columbia, but people are starting to sit back around here.
We're on global television and radio right now. People are
listening to you as well on ninety nine point one
FM in Washington, saying, hey, wait a minute. The Washington,
DC area, the DMV used to be recession proof because
of the fact that the federal government was here. At
(33:22):
least there was a shock absorber Congressman. Does that exist anymore?
Speaker 3 (33:27):
Maybe not.
Speaker 9 (33:28):
You know, what he's done in the attack on federal
employees has been extremely damaging. I mean, he's thrown people's
lives up in the air. And I know there's a
lot of people that don't have sympathy for so called bureaucrats,
but people are now starting to feel the impact of
the services that they're not getting because these people have
been fired, and some of these things are going to
be very long reaching and far reaching. So, you know,
(33:51):
cutting the clinical trials for Alzheimer's cancer, you know, Parkinson's.
My father died from Alzheimer's in Parkinson's, a combination of those.
So to see the clinical trials derailed just kind of
you know by happenstance is astonishing.
Speaker 3 (34:08):
And then the.
Speaker 9 (34:08):
Impact on you know, people who are seeking their PhDs
or starting their research careers.
Speaker 3 (34:14):
We're gonna have ion q on.
Speaker 9 (34:15):
Here in a minute, but yeah, you know, China is
throwing money at AI quantum computing and the like. They're
trying to grow as many of these scientists and engineers
as possible. Trump's cutting the money fraud for that, and
that's that's just scratching the surface. I mean, you know,
we could go through you know, the impact medicaid cuts
impacts on elementary schools, uh, you know, the impact on
(34:38):
local hospitals.
Speaker 3 (34:39):
In rural and urban areas.
Speaker 9 (34:40):
I mean, it's it's astonishing, its far reach, and it's
extremely damaging. And I think when you combine that with
the tariffs that he's put in place now. You're certainly
looking at a recession in the Washington metropolitan area, but
I think you're probably looking at one nationally as well.
Speaker 2 (34:56):
You mentioned ion Q. This is a quantum computing company
that you introduced us to some months back, and you
were joined on the air here by the then CEO,
Nicolo Demassi, the president's CEO of ion Q, now in
charge of the company, joins us now as part of
our conversation. Nicolo, we want to add your voice to
what we're talking about here and welcome you to the
conversation with a lot of questions we have about quantum
(35:19):
computing and the charge that you have at ion Q.
Been pretty remarkable hearing you called out by Jensen Wang recently.
But there are great concerns now about a company like
yours seeing innovation stifled and having more difficulty accessing capital
because of what's happening in the financial markets.
Speaker 3 (35:35):
Driven by the tariffs. What do you think, well, first of.
Speaker 10 (35:40):
All, I want to thank the Congressman for including me
in this and thank the Congressman for all the support
that he's given to ion Q. You know, we were
born on the University of Maryland campus thirty years ago.
With doctor Chris Monroe, and we of course do a
lot with the University of the ecosystem with the DMV
and of course with all the associated ecosystem of agencies
(36:02):
in the area. You know you mentioned China. I mean absolutely,
they are investing, you know, probably fifteen billion dollars officially
in quantum computing, and I bet it's more unofficially given
how things work over there. And I would concur that
quantum computing and quantum networking, which is the other half
of our business, so it's faith making and safe breaking,
(36:23):
really are not just a paramount for the national security
of our country, but they're fundamental to the economic growth
prospects of our economy. And so you know, we we
work of course, you know, across the Aisle. We work
with the administration, every administration, and it has been a
bipartisan issue, which we're grateful for. I mean, our our
machines are made in America. Our quantum networking also is
(36:46):
rolling out in America in places like Tennessee for example.
And ultimately, you know, we believe that you know, you know,
tariffs will be a far bigger issue for companies that
are structured diffinerentely than I in Q. But nevertheless, you know,
we look forward to continue support in the state and
of course federally as we continue to grow this vital
(37:07):
technology for our country.
Speaker 5 (37:10):
But what about the notion that, at least in terms
of China's retaliation against the US policy announced this week,
it's not just tariff measures but also restricting access to
critical minerals. Is that something given the role that those
play in quantum computing, that could affect your company.
Speaker 10 (37:26):
Well, it can affect some companies in the quantum computing space.
Speaker 3 (37:29):
Fortunately it doesn't impact I n Q.
Speaker 10 (37:32):
Just yesterday, DARPA in fact awarded US the first stage
of their own journey towards building you know, let's call
it encryption, cracking and encryption protection. So, you know, the
basis of modern civilization relies on secure communications. You know,
battlefield the future relies on secure battlefield of today relies
(37:52):
on secure communications. And ultimately, you know, quantum computing helps
you both optimize that and quantum networking helps you ensure
that e commerce banking you know, you name it as
we know it today goes on you know, perpetually, right,
So this is an issue that you know, we fortunately
are well funded, our stock of course has not had
a great day to day, but our stock has had
(38:14):
a better day than than than everybody else who's exposed,
you know, fully to these to these measures. For sure,
we're heartened by the fact that we've got such strong
support in Maryland and many other states, as well as
in the federal government. They all recognize the criticality of information,
the criticality of optimization, the criticality of computing. You know,
(38:37):
Jensen Huang will we'll see us as a competitor some day,
but at the moment, we're just expanding the compute market
with quantum processing units. And our technology that you can
see behind me is actually what's called an ion trap
quantum computer, and we don't have to import any minerals
for this.
Speaker 2 (38:52):
Fortunately, this is really impressive stuff, Congressman, which is why,
of course you introduced us to ion Q No that
they're working at the University of Maryland. How concerned are
you about federal grants being withdrawn or being challenged by
this administration and testing the innovation of a company like this.
Speaker 9 (39:12):
It's extremely problematic. And we've got other entities. Johns Hopkins
is Baltimore. They're outside of my district, but you know,
they just had to lay off two thousand employees based
on what the administration had done as far as cuts.
And if we're looking at growing the field of scientists
and engineers, they're coming up out of college, out of
(39:32):
graduate school and getting into these professions. Now he's wiping
out the grants that they used to do their research.
He's wiping out the indirect cost payments so that allowed
these universities to do it. He's wiping out the grants
in some instances, contracts to go to the federal agencies
like NASA where they research is done. So we've got
(39:53):
this crop coming up with no place to go here
in the United States, while by contrast with China, you know,
they're not only are they you know, growing more of
these people faster, but they're they're throwing dollars or you know,
the Chinese equivalent of that into funding it so they
can expand it quickly. We're still in the lead, but
you know, the president's walking us off the field right now,
(40:15):
and when we should be competing and maintaining the lead
that we have.
Speaker 5 (40:18):
Well, Nikola, we only have a minute left. But can
the private sector make up for anything that are the
lack i guess of investment or a pullback and investment
from the public sector.
Speaker 10 (40:29):
We're we're we're doing our best, Congressman, for sure. You know,
we're trying to grow the job, the job, the job market.
Our Quantum Center that we have in partnership with of
course Maryland and U m D. And we're very much
part of and and I think a central tenet of
the of the Quantum Initiative and expansion of our headquarters
to create those research opportunities, create companies and incubation and
(40:51):
entrepreneurship around our technology. So uh, you know, we're well
capitalized and we'll do all we you know, all we
can every day.
Speaker 3 (40:58):
Needless to say that we rely on and.
Speaker 10 (41:00):
Partnerships with Maryland, the university, federal government to ensure that
our technology makes it into the commercial sector, the public sector,
onto the battlefield, into drug discovery, into uh, you know,
let's just call it aerospace the future and optimization opportunities
of the future every day of the week. So let's
let's let's hope that this is a this is a
(41:21):
moment in time and then all up from here.
Speaker 5 (41:23):
For both of us, all right. Nicoloa Demasi, President and
CEO of IONQ, joined by Democratic Congressman Blent Ivy of
Maryland here with us on Balance of Power today. Thank
you both so much.
Speaker 2 (41:37):
Thanks for listening to the Balance 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
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Speaker 2 (00:25):
This is a difficult period of time for financial markets,
in a perfect time for us to be speaking with
President Trump's economic advisor in the Council of Economic Advisors
where he works as Chairman. Stephen Myron joins from the
north lawn of the White House on Jobs Day. As
a matter of fact, mister chairman, welcome back to Bloomberg
TV and Radio.
Speaker 3 (00:45):
It's great to see you.
Speaker 2 (00:45):
As we mentioned earlier, this Job's report would be our
lead story on any other day with payrolls blowing the
doors off. But after everything we have seen in the
financial markets, and knowing that President Trump has now put
forth his plans for tariffs taking effect tomorrow and next week,
are these data already old? No?
Speaker 4 (01:04):
I don't think that data are already old. I mean, look,
you know, we're very pleased with the Job's report that
we got the economy created two hundred and twenty eight
thousand jobs in March. That's roughly twice the amount of
jobs that have created in either January or February. In fact,
it was such a good month that it was in
fact the fourth best month in the last two years
for job creation. That's pretty spectacular. And you know, in
(01:24):
spite of some headwinds that folks thought would be material headwinds,
the President has acted very swiftly and forcefully to close
the border and to prevent the surge of and to
stem the surge of illegal aliens coming into this country.
And lots of folks said, oh, that'll be bad for
job growth, right, that'll be bad for job creation. Well,
this report proves that that might not necessarily be the case.
And so what the report shows is the economy is
(01:46):
continuing to grow in spite of the President's variety of policies,
and it's a good sign.
Speaker 5 (01:52):
Well, but this report, mister Chairman, is by nature backward looking.
I think the concerned financial markets have today is about
the forward looking picture and what the economy is actually
going to look like in light of the severe tariffs
that are being implemented starting tomorrow, the layoffs of federal
workers that the Department of Government efficiency is pursuing. How
can you guarantee the labor market will hold up in
(02:15):
the face of those challenges.
Speaker 4 (02:17):
Yeah, thanks, So look, you know, the President acted with
historic scope and speed to address what was a decades long,
festering problem that had been eroding our competitiveness and eroding
our prosperity and eroding our economy. And so, of course
there's going to be some market volatility on the back
of that. Of course there's going to be some adjustments
on the back of that. But on the end of it,
you know, things are things are going to be materially better.
(02:39):
And I'll tell you why. Not only will the tariffs
incent reindustrialization in America and companies coming back to build
in America, but there's also two other legs to the
stool that are of significant importance. There's the deregulatory agenda,
and then there's the tax agenda, and both of those
are profoundly stimulative for the economy. And one point that
I like to make is that imports are only fourteen
percent of the economy. The other eighty six percent of
(03:00):
the economy is affected by the entire of the entirety
of the agenda. And so that's tax and regulation, and
both of us are going to be very important.
Speaker 2 (03:09):
I'd like to ask you, Stephen, about the comments that
we heard from J.
Speaker 3 (03:12):
Powell a bit earlier today.
Speaker 2 (03:14):
The Fed chair had this to say about the impact
the potential impact of President Trump's tariff regime.
Speaker 6 (03:20):
Listen well uncertain. He remains elevated. It is now becoming
clear that tariff increases will be significantly larger than expected,
and the same is likely to be true of the
economic effects, which will include higher inflation and slower growth.
The size and duration of these effects remains uncertain.
Speaker 3 (03:40):
Stephen R.
Speaker 2 (03:41):
Edward Harrison writes that unless the labor market data deteriorate precipitously,
the bond market is going to have to reverse some
of its post Liberation Day rally, taking stocks down further
in the process. The jobs report today is bad news
for stocks and bonds, he says, because we're not going
to see lower interest rates anytime soon. Chairman today, suggesting
(04:01):
that he is in no hurry even as President Trump
puts on truth social that this would be the perfect
time to cut interest rates. What is your message to
investors when it comes to rates here? Against the backdrop
of tariffs.
Speaker 4 (04:15):
Sure, So first let me be clear that you know,
I'm not going to tell the what to do, but
I will point out that we lived in experience of
tariffs in twenty eighteen twenty nineteen during the president's first term,
and there was zero macroeconomic evidence whatsoever that tariffs had
any material inflationary impact. In fact, the FED wound up
cutting rates on that event. So I think it's important
to understand.
Speaker 5 (04:35):
So we're talking a different scope and scale now, mister Chairman.
The tariffs from the last administration are nothing like what
we're seeing now.
Speaker 4 (04:43):
Yeah, the President has acted with historic scope and speed.
I agree with that, but we also have to appreciate
what's going to be happening on the tax and regulatory front.
And I think that one of the most powerful things
for determining the supply side of the economy is the
regulatory environment. If prices are high and increasing because there's
not enough stuff, best way to address that is to
make more stuff. That means getting government out of the way,
(05:04):
letting firms invest, letting firms build, letting firms produce, and
if you make more stuff, you can address not only
inflationary pressures, but actually bring some prices down, and I
think that that's powerful and arguably much more powerful than
any effects of tariffs.
Speaker 5 (05:18):
But what is the actual lag time between seeing a
lesser regulatory burden, seeing tariffs that maybe would incentivize us
manufacturing to invest in that capacity, the lag time between
the decision to do that and the actual capacity coming
online and whatever employment or what have you will come
with it. This isn't going to be an automatic thing,
right mister chairman.
Speaker 7 (05:40):
Yeah. Thanks.
Speaker 4 (05:40):
So that's a great point, which is that you know,
the regulatory process and taking away those regulations is a
legal process, and that takes some time. And the President
has made historic progress in the first two months peeling
back regulations, but there's still so much work to do
and it'll take some time for us to get that through.
And so that's you know, maybe this is part of
why there's market volatility because implementing the totality of our
(06:02):
plans will take some time. Congress is working on the
tax package as we speak. It will take some time
to pass it, it will take some time to implement it.
Speaker 2 (06:11):
We're hearing a lot of concerns about recession. Money managers
are pointing their trades toward a recessionary environment, and JP
Morgan today increased odds for its recession forecast to sixty percent,
up from forty steven.
Speaker 3 (06:25):
What are yours?
Speaker 4 (06:28):
Yeah, you know, you know, I'm not a professional forecaster,
so I don't necessarily have odds. But what I will
say is what I said a moment ago, which is
that imports are only fourteen percent of the economy, so
you really have to think of, you know, really really huge,
really enormous changes, sort of shaking through those things to
get to the place where you think a recession is
likely as a result of something like this. And as
(06:50):
I said before, I think that the president's pro growth
policies in the regulatory front, providing further tax relief to
American families, extending the tax relief of his twenty seventeen
Tax Cuts Jobs Act, I think all of that is
profoundly supportive of growth. And I think there's maybe a
little bit too much focus on risks from what's going
on right now and not enough focus on the pro growth,
the pro growth policies that are that are.
Speaker 3 (07:11):
Receiving on Wall Street. I understood.
Speaker 2 (07:15):
Don't mean to interrupt sir, but there's a there's a
great worry about the negative wealth effect. This market is
in free fall right now. We could continue this next
week unless there is some change here in the news
cycle as we hear about additional retaliatory tariffs. At what
point does this drag consumer spending with it?
Speaker 4 (07:33):
Yeah, so look, you know, you're right, there can be
some wealth effects there. There will be some wealth effects.
There will be you know, there will be ramifications of
that stuff. But like I said before, we have to
balance that out against the fatality of other stuff going
on in the policy agenda, the toutality of the other
strong drivers of economic growth.
Speaker 7 (07:49):
You know.
Speaker 4 (07:49):
One point that I've made a lot is that the
Biden administration's last two years, almost three quarters of jobs
that were created were in government and government adjacent sectors.
And that's profoundly unsustainable to have the government a train
driving the economy. In the March job support that number
came down from almost seventy five in the last two
years of the bindminstration to just about forty, right. So
that's a very material decline. And this is part of
(08:10):
reconfiguring the economy from a government driven growth engine to
a sustainable, durable, private sector growth engine. And this is
going to continue.
Speaker 5 (08:20):
As we consider the growth outlook, keeping in mind that
you did just tell us, mister Chairman, that some of
this will take time to materialize in terms of the
stimulative efforts of this administration, whether legislatively or otherwise. If
the Federal Reserve were to decide that it has to
prioritize inflation, and if inflation persists and they don't want
to cut rates, but we do see a material downward
(08:42):
shift in growth or in the labor market, is there
a lever that the White House is going to be
able to pull more immediately to try to offset those
effects if the Fed can't do both at the same time.
Speaker 3 (08:52):
Yeah.
Speaker 4 (08:53):
So again, I I point you to the forthcoming tax
legislation that's being worked at that's being worked out in
the Hill, and I think that that will that will
allow the President to provide a profound tax relief that
will be excellent for American American families, American workers, American firms.
Speaker 2 (09:10):
Well, going forward, mister Chairman, I wonder what's going to
happen in terms of messaging to this market. Are we
going to hear more from the administration, from the President
of the United States, from yourself when it comes to
the dollar. When it comes to investing in the stock
market in the United States, I know that frequently the
refrain is, we're seeing companies invest in America. But how
(09:31):
about in our financial markets, where we've seen I believe
a half dozen IPOs today delayed, some of.
Speaker 3 (09:37):
Them pretty large.
Speaker 2 (09:37):
We're hearing from some major firms planning to go public
as soon as next week that are putting those plans
on the shelf. What does the administration tell them?
Speaker 4 (09:47):
Yeah, so I'm going to I'm not going to comment
on specific companies and IPOs, but I will say what
I said before, which is that, of course there's going
to be some market volatility on the back of the
present's historic actions. But I also want to redirect you
again to what we can do, and so you know
the look, the tariffs are designed to redress the emergency
of trade deficits, but there is a nice side effect,
(10:07):
which is they raise a lot of revenue, and if
you use that revenue not only to extend the historic
tax cuts from twenty seventeen, but to provide further tax
relief for American families while deregulaing in economy and making
it easier to invest, build higher in America, you have
the recipe to create an economic boom wherein America is
much more competitive because of the tariffs. It's much more
(10:27):
competitive because lower taxes, households, firms, workers keep more of
the money they earn every week, and they spend more
of it, they save more of it, they invest more
of it, and you get the government out of the waist.
They can build and invest and make factories. And that
is the recipe for an economic boom. And if we
keep at it, we can create a really great environment
for firms to invest in higher and that will in
(10:48):
the end, in the long run, drive the financial markets.
Speaker 5 (10:52):
The other thing that tariffs, you would think, at least
traditional economic theory would tell you, would lead to, is
a stronger dollar. And yet that's not what we've seen
in the immediate aftermath of the announcement of these mister chairmen.
How concerned are you about a period of sustained dollar weakness?
Speaker 4 (11:09):
Thanks? So, Look, you know, my view, as I've expressed before,
is that classic economic analysis would say that the burden
of any economic policy, whether it's a tax of subsidy,
no matter what it is, falls on what economists would
call the more inelastic party, but I think as easier
for other folks to understand as the more inflexible party.
And the example that I keep given is if you're
looking to buy a house and the town that you're
(11:31):
looking in raises its property tax rates, and you're flexible,
you can just look at the next town over. You
can change your behavior to avoid the burden of the tax.
The person who's selling the tax can't move his house
across town lines, so he's got to eat the property
tax and lower his selling price. And in that way,
the burden of the tax fell and the person who
couldn't move his house, And the same is going to
be true in international trade. American consumers are flexible. We
(11:53):
can make stuff here at home. We can change the
countries from which we import. We can stop importing from
a country with a high tariff rate and start importing
from a country with a low tariff rate that treats
us better, that is a better trading partner with us.
And that ability to change our consumption patterns, whether to
move it home into home production or among different countries,
makes us more flexible. By contrast, installed factories in China,
(12:14):
though they've already spent the capital. The factories are stuck
on the ground. The workforce is already trained to build
products aimed squarely at the US consumer markets. Those cannot move.
So in the long run, other countries, the tariff countries
will end up bearing the burden of the tax of
the tariff. Now, there's a couple ways that can happen.
In twenty eighteen, twenty nineteen, it happened through the currency,
but it need not happen that way. Again, it could
(12:35):
happen that way. It doesn't necessarily happen to have to
happen that way. There are plenty of other ways they
can end up bearing the burden of the tax. It
could happen through reduced selling prices.
Speaker 5 (12:45):
All right, mister chairman, we appreciate you joining us here
on Bloomberg TV and Radio. Stephen Meyer in the chair
of the Council of Economic Advisors at the White House,
thank you so much for joining us on this job's day.
But of course, while we did get a strong payrulls report,
we are not seeing strength at least in risk assets today.
We're right around the session lows on the major equity benchmarks.
The S and P now down five point two percent.
(13:06):
The NASDAQ one hundred down five point four percent. We
want to get more on these markets now with Bloomberg's
Romain Bostik, who is joining us from New York. Romain,
I gotta say, I'm kind of feeling flashbacks to March
twenty twenty here.
Speaker 8 (13:17):
Yeah, not just a round session lows. We are at
ed session lows. And just to put this into perspective,
Klee five hundred socks roughly in the SMB five hundred.
Only fourteen of those stocks right now are in the green.
We're headed towards what is going to be more or
less an unprecedented day. The superlatives pretty much stack up
like this. More or less, we're having the worst days
since at least twenty twenty two for certain sectors, the
(13:38):
worst day since the onset of the pandemic, And if
you take the pandemic out of the equation as sort
of a one off outlier, this is quite frankly shaping
up to be one of the worst days since the
late nineteen seventies. This is a market that is a
completely shut down, not just in equities, Kaylee. We've had
several IPOs that have been put on pause. That includes
names like Klarna stub hub chime. Several deals that were
(14:01):
in the works have also been paused. Not a single
corporation has been brave enough to try to sell new
debt today or yesterday. And right now you have the
sense of paralysis amongst economists. Despite the comments that we
just heard from the CECH chair just a few minutes ago,
most economists say right now they have no idea how
to chart a path forward.
Speaker 2 (14:22):
You know, you talk about the fundamentals in this market,
Romayne kind of falling apart. What about the technicals? We
have so many broken charts. Even if the news improves,
would that help to lift stocks from where they are now?
Speaker 8 (14:35):
Well, keep in mind, you know, a couple of days ago, Joe,
the support line on the S and P five hundred
was supposed to be fifty five hundred. Then when we
got broke below that, people said fifty four hundred. Right now,
we're trading right around the fifty one hundred level. That
is the low of the day, fifty one four and change.
And so whatever support levels were there, they've been broken.
Even when you look at other sort of lines such
(14:55):
as moving averages, Joe, the fact that the S and
P five hundred right now is in oversold condition. That's
where that fourteen day RSI dips below thirty. Traditionally, these
are all lines in the sand where typically you'll start
to see a rebound in socks that dip buyers come in.
You're just not seeing it there right now. The technicals
are working against them. The fundamentals, potentially because of economic conditions,
(15:16):
are working against them. So the big question now right now, Joe,
is if you do want to stay in this market,
what actually do you buy? What are you brave enough
to buy?
Speaker 3 (15:26):
Not the truth the analysts aren't exactly telling us, Romaine.
It's great to see you.
Speaker 2 (15:30):
It's been great having Romain Bostic with us. A feeling
we're going to talk against very bumpy days this week.
I think that might happen. What are you doing at
five with me and Washington, Kaylee? Lines of course here
on the fastest show in politics, as we try to
bridge here what's happening in Washington with what is happening
on Wall Street? And you can't remove the two here, Kayley,
as we reach ever lower, having heard from not only
(15:52):
the President but the.
Speaker 5 (15:53):
Fed share Yeah, the Fed shair signaling they're still not
in a rush to cut rates, though it is warning
of the inflationary risks of these tariffs. And it's interesting
to note after we heard from the Chairman, you saw
even more buy and coming into the bond market. Maybe
that's the only thing anyone wants to buy a ten
year yield right now down eleven basis points at three
ninety two. This is Bloomberg.
Speaker 1 (16:14):
You're listening to the Bloomberg Balance of Power podcasts. Catch
us live weekdays at noon and five pm. E's durn
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 played Bloomberg eleven thirty.
Speaker 5 (16:33):
The worst two day stretch since March of twenty twenty.
Is what we're heading for right now, with a bid
coming into the bond market as investors are looking for
safety somewhere. Keeping in mind they all just heard from
the Chairman of the Fed. While there may be some
persistent inflationary risk due to the tariff policies announced by
President Trump this week, the Fed is still not in
any rush to lower interest rates, despite perhaps Joe the
(16:54):
desire of President Trump for them to do so. He
actually said on True Social today, it would be the
perfect time, would have been.
Speaker 3 (17:00):
Right before that meeting.
Speaker 2 (17:01):
Maybe in fact that was coincided or time to coincide
with his remarks. It wasn't until Jay Powell started talking
that we saw these new lows on Wall Street because
now the fear is, of course, we're not going to
see lower interest rates anytime soon. Fascinating conversation with Stephen
Myron at the White House coming off the jobs data today.
He continued to point us to Trump tax cuts. They're
(17:23):
just getting the ball rolling on that on Capitol Hill.
In fact, we're going to have some votamas over the
weekend that could be pretty interesting. We'll be talking about
that likely on Monday. But what a treat to have
the chairman of the House Financial Services Committee with us.
We remember when he was just a congressman. We remember
when he was just a community banker. But that's why
this is an important conversation because of the unique perspective
(17:45):
that french Hill brings to us. From Arkansas, It's great
to see you. It's been too long.
Speaker 3 (17:49):
Thanks for being great to both of you. Thank you.
Speaker 2 (17:52):
So what do you think of this? I know you're
sensitive to the markets. You don't like what you're seeing
here on Wall Street. I'm sure the line from Stephen
Myron was just hang on. We're working on extending the
Trump tax cuts along with a number of other tax
points of tax relief that will help to make this better.
Does one offset the other?
Speaker 7 (18:10):
Well, I think it's such an important question, and I'm
concerned that we cover up the strategy of right sizing regulation,
tailoring regulations, getting balanced back in the regulatory system, which
President Trump was so successful on in his first term.
We want to do that in this term. And as
you noted, the Senate will be voting on the House
Budget Reconciliation Bill this weekend that will lead and unlock
(18:33):
the ability to block a major tax increase for business
and for American households. Those are big, certain issues that
I think we can get done, I believe strongly, and
I don't want to see a tariff strategy offset that,
which is why I believe in trade diplomacy. I think
President Trump's right to engage in trade diplomacy, but I
(18:55):
believe sincerely that you should target sectors in a very
isolated way and achieve results and do the same thing
in reciprocity with countries you think are bad actors that
are not open to American products. And then finally, as
it relates to Canada and Mexico, I really think the
President should advance the negotiations on the USMCA reauthorization of
(19:17):
that treaty, that trade arrangement, and let's make some changes.
Let's make sure that Chinese component parts are not dumped
into Mexico or Canada and go into the supply chain.
Speaker 5 (19:28):
So why not have Congress take the lead on that.
It is your Article one authority to do so. And
yet this is being driven out of the White House,
not by your chamber or by the Senate. Does that
need to change to calibrate this policy in a better
way for.
Speaker 7 (19:41):
The economy Another good question. Since the late nineteen twenties,
Congress had been in the tariff setting business and they
were so frustrated by it and so bad at it
that they delegated it to the executive branch under Trade
Promotion Authority. But I think Article one's job there is
to make sure we try to get it right, work
with the administration to get it right. In the Senate's case,
(20:04):
ratifying treaties where necessary. So that's what we need to do.
Trade Promotion Authority, which was reauthorized in President Trump's first term,
has expired. President Trump, President Biden did nothing about it.
I think that would be a good step for the
Congress to consider reauthorizing that.
Speaker 2 (20:20):
What is the banker inside you, never mind the chairman
of financial services, think about when you hear companies say,
why are we being unfairly targeted? All we have done
is play by the rules. We came out of China,
we went to Mexico, we went to Vietnam. Now we're
being penalized for that. Aren't they correct in making that point?
Speaker 7 (20:39):
Well? I think it speaks to the uncertainty nature of this.
I hear it from my own constituents at home, who
are manufacturers who make something, but some of the component
parts and what they make comes from outside the US.
They're concerned about the cost, will their product be competitive?
And the same is true for Arkansas, big agricultural state.
Much of what we produce goes to Canada or Mexico.
(21:01):
So these are important issues, and that's why I think
the strategy has to be right. Using trade diplomacy to
open new markets, using trade diplomacy to lower rates in
certain product categories like auto and the European Union, for example,
and using trade diplomacy to punish bad actors. Those are
all important elements of it, and I think that gives
(21:23):
some certainty. When you use them across the board approach,
you get that uncertainty that my constituents are reflecting. So
I hope we can work on clarifying that in the
weeks ahead.
Speaker 5 (21:35):
Well, and in the weeks and months ahead. The White
House is Joe mentioned earlier, and you were alluding to
the White House is pushing toward tax cuts that have
to happen at some point if TCJ is not going
to expire. I do wonder, though, the argument around that
tax package in twenty seventeen was it was going to
juice the economy. It was going to put more money
into people's wallets, It was going to give businesses more
(21:55):
money to make capital investments. Is it going to have
the same effects this time around, though, If it's just
an extension of what already exists, and those people and
businesses may be feeling a bit more of a pinch
in terms of the margin they actually have to work
with to spend that additional capital.
Speaker 7 (22:10):
Well, the expensing has been being phased out, and so
the renewal of that I think will spur a capital investment.
Of the R and D tax credit the same, it
will spur new investment. You're right, at the corporate marginal
rate or at the household marginal rate, people would just
feel relief good. I mean, I can count on that
going forward. So I think it will unlock some activity
(22:34):
in the economy and it will produce faster economic growth,
even if the marginal rates don't change dramatically.
Speaker 2 (22:42):
There was a time when revenue from tariffs was pitched
as a way to help pay for extending or making
permanent the Trump tax cuts. Is that part of the
conversation any longer, or are the tax cuts going to
be extended in lieu of the tariffs?
Speaker 7 (22:57):
Well, in our discussions in the House, I can't speak
for the government at large, but in our discussions with
our colleagues in the House, we've been thinking about the
importance of extending the President Trump's tax cuts, cutting spending,
trying to write size government so that we don't have
two trillion dollar deficits. This is a major goal of
our House Budget Committee, and we're not counting on tariff revenue,
(23:21):
because tariff revenue is very difficult to predict. You have
countervailing duties, you have people will change their buying pattern.
So to automatically assume that you can count on that
I think is not significantly and significant or smart. So
we have not per se counted on that, and OMB
(23:44):
does not count tariff revenue in their scoring. So as
we get closer to that final vote, we'll look and
see where this Trump tariff plan settles, and that may
give us some indication, But in the meantime we're working
independent of that.
Speaker 5 (24:02):
We were just listening for our colleague Charlie Pellett, looking
at the markets, specifically at bank stock, some of the
big investment banks that we're counting on a revival in
companies coming to the public markets and re engaging in
M and A activity. This gets back to the kind
of regulatory burden you were referring to earlier. You concerned
that some of this wider economic impact companies now deciding
perhaps is not the best time to enter the public markets,
(24:24):
that that regulatory burden being eased may be for not
if they can't actually take advantage of it.
Speaker 7 (24:30):
Right well, certainly, I hope that the competition focus of
a Trump FTC Federal Trade Commission is open towards business, entrepreneurship,
business combination, where it produces more competition. And I would
hope that we are able in our regulatory focus on
capital formation to encourage more public companies because we lower
(24:52):
the cost quarterly of being public. That's a goal of
mine as chairman of the committee. But anytime you have
wide market uncertainty in equity prices, you're going to have
people pull back from a scheduled IPO because they need
market certainty. And so I hope this settles down soon
because I know there's a lot of interest in advancing
that equity market through the IPOs.
Speaker 2 (25:16):
We've been talking, mister Chairman, for the better part of
ten minutes, and somehow Kailey Lines has not asked you
about crypto.
Speaker 5 (25:21):
I was saving it for less about the stable acts.
Speaker 2 (25:24):
Well, my gosh, we only have a couple of minutes
left here. You had an important week when it comes
to this. It's something that gets lost in a very
noisy news cycle. But this is important, something you've been
pursuing for months and months.
Speaker 7 (25:35):
This is a real effort for the past four years,
really working with former Chairman Patrick McHenry, ranking Member Maxine
Waters to craft a dollar back stable coin under US
law inside the largest capital market, the most important economic
country in the world, that we would have our own
dollar back stable coin where we could have a tokenized
dollar payment on a blockchain. We had a successful markup
(25:58):
bipartisan result. And this is a companion to just a
few weeks ago, Bill Haggerty, Cynthia A. Lummis, Tim Scott
Guyan Jillibrand got a Senate dollar back stable coin bill
out of the Senate Banking Committee. This is the first
time we're demonstrating, I think to the markets that we
can make progress on this. I think we can get
(26:20):
that passed this year, and I think we can also
get the market structure bill passed. You've got to link them,
because a doll our back stable coin, but without market structure,
how would you custody it, how would you exchange it,
how would it be used? So they're important that we
try to keep them working together. President Trump's asked us
to complete that work by the August recess.
Speaker 5 (26:41):
Okay, So in terms of sequencing, when we see a
full floor vote on the stable coin legislation before market
structure efforts. Beginner is that already I think House.
Speaker 7 (26:49):
And Senate leadership have the best strategy under discussion. Tim Scott,
Bill Haggerty, Cynthia Aleumas. They're outstanding leaders. They know this
issue well, and we know it well in the House.
So we're going to craft the best legislative strategy.
Speaker 5 (27:02):
How different will it be to fit twenty one?
Speaker 7 (27:05):
We're gonna have our first hearing next week. Brian Style
of Wisconsin will convene his first market structure hearing in
the House. I we're excited about that and we hope
to get that text ready in the next few weeks.
Speaker 3 (27:15):
We need a Style Hill panel. Yes, oh, yes, when
the time comes, can we do that?
Speaker 7 (27:20):
We can do it, all right?
Speaker 5 (27:21):
All right, well, we'll look forward to it. And we're
so excited to have you in studio today, mister chairman.
That is the Chair of the House Financial Services Committee,
Congressman Front Show of Arkansas here with us on Bloomberg
TV and Radio. Interestingly, Crypto won Bright Spot today. I
would note, Joe, if you're looking for haven, maybe you're
finding in treasuries, but maybe a little bit of marginal
byd coming into bitcoin as well. Can't say the same
(27:41):
for other risk assets though, as we're just off session
lows but still down about five percentage points on the
S and P five hundred and Nasdaq.
Speaker 2 (27:47):
Little bit of a bid under bitcoin, but this is
a risk off market.
Speaker 3 (27:51):
My goodness.
Speaker 2 (27:52):
We're still trading near the lows of the session, and
we'll have a lot more coming up here on the
fastest show in politics. You can't remove Washington from Wall Street.
That's why I were here on Bloomberg TV and radio
alongside Kaylee Lines. I'm Joe Matthew. Thanks again to Chairman
french Hill. We'll have much more ahead on Bloomberg.
Speaker 1 (28:11):
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.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (28:27):
So a new date to circle on the calendar, Kaylee,
seventy five days not a big shock, obviously, we were
creeping up on a deadline in the next twenty four
hours without a deal in place. It's unclear though whether
it's still I ask would China sign off on such
a deal, because that would be required for this to happen,
and they just put retaliatory tariffs on us today.
Speaker 5 (28:47):
Yeah well, and the President does make reference to that
in his post on True Social He says, we continue,
we hope to continue working in good faith with China,
who I understand are not very happy about our reciprocal tariffs.
He goes on to say, this proves that tariffs are
the most powerful economic tool and very important to our
national security. Keeping in mind the President has floated multiple
times over the last week lessening the tariff burden on
(29:08):
China if it means they agree to a TikTok divestiture.
Speaker 2 (29:11):
Tariff's the most powerful economic tool, though, I guess in
generating reciprocal tariffs sid in sending the stock market lower,
because that is what they have achieved today.
Speaker 3 (29:20):
Commentary from J. Powill seemed to only make it worse.
Speaker 5 (29:22):
Yeah well, and we want to get some more commentary
of our own here on this program. As we bridge
Wall Street in Washington and turned to Democratic Congressman Glenn
Ivy of Maryland, who was here with us in our Washington,
d C studio, we have much we want to discuss
with you, sir, and welcome back to Bloomberg TV and Radio. First, though,
as I know, you did vote for the legislation that
included this divest or ban law for TikTok another seventy
(29:45):
five day extension. Does this go against the nature of
what that law was actually supposed to achieve.
Speaker 3 (29:50):
Yeah, it does.
Speaker 9 (29:51):
And if you look at what they did over the
previous extension that the President gave them as far as
seeking a business solution, I didn't see really any effort
to do that. So extending him seventy five more days
to do what is the question that I have. If
they're not really going to be trying to figure out
a way to resolve this from a business perspective, then
they're just playing a stall game, and the president's falling
(30:13):
for it.
Speaker 3 (30:14):
So I hope he'll get out of the way of that.
Speaker 9 (30:16):
I don't think he really has the statutory authority to
do what he's doing here, but you know.
Speaker 3 (30:21):
We'll see how it plays out.
Speaker 2 (30:22):
Well, in the time that you were preparing to vote
on that bill, the bipartisan case was established that this
was a national security threat.
Speaker 3 (30:29):
Has any of that changed? I don't think so.
Speaker 9 (30:31):
And if you look at the ads that they run,
which never mentioned byte dance. But you know all these
nice people in Middle America who are making money using TikTok,
and we all know that that's the case. But the
fact that they're continuing to push it and act like
this is only about TikTok and has nothing to do
with byte dance, I think indicates how, you know, the
potential for misinformation and disinformation can be spread through this,
(30:56):
and they're doing that very aggressively and apparently pretty well well.
Speaker 5 (31:00):
So there's the national security element of TikTok. I guess
there's also the national security element of something that the
President is now tying to TikTok, which is his tariff policy,
maybe using it as leverage in this particular instance, but overall,
as we consider the tariff regime that was announced by
the administration this week, I'm wondering what you're hearing behind
the scenes from your colleagues in the House, not just
(31:20):
from your fellow Democrats, who were obviously making their feelings
well known, but from Republicans. Are they saying things to
you in private that they're not willing to in public
about this?
Speaker 9 (31:28):
Yeah, but I mean you're starting to actually see them
say things in public too. I mean, you know, the
loud screams you hear in the background are not just
Democrats and average Americans. They're Republicans who see this as
maybe one of the biggest political blunders that I can
recall in recent memory. This is a total unforced air.
You know, the economy was moving in a relatively good direction,
(31:51):
whether you like what Biden did or not. When he left,
you know, the US economy was pretty much the envy
of the Western world. Trump inherited a good economy. The
jobs report that just came out indicates that things were
moving in the right direction. Probably all he had to
do is kind of not get in the way, and
this is driving the truck off the cliff. I've never
(32:13):
imagined that he would do this and then to do
across the board tariffs on every product for almost every
country at the same time, and then act like you're
going to negotiate with all of these at the same
It's ridiculous. I'm not sure what he was thinking when
he did this, But I don't know what the exit
ramp is. I don't really see one. He's mad at
Powell for not giving him one, but Powell did. I
(32:35):
think what people were expecting. The Fed to do under
these circumstances.
Speaker 3 (32:39):
Well, the impact locally for you is very real.
Speaker 2 (32:42):
It's not just the tariffs here, and that's obviously hitting
people across the board. The market reaction hits people across
the board. The Doge cuts, though, hit you directly with
federal workers who live in your district who are being
shown the door. Then you add what to place with
some of the budget cutting. I know that the House
(33:02):
has yet to reverse the budget cuts for the District
of Columbia, but people are starting to sit back around here.
We're on global television and radio right now. People are
listening to you as well on ninety nine point one
FM in Washington, saying, hey, wait a minute. The Washington,
DC area, the DMV used to be recession proof because
of the fact that the federal government was here. At
(33:22):
least there was a shock absorber Congressman. Does that exist anymore?
Speaker 3 (33:27):
Maybe not.
Speaker 9 (33:28):
You know, what he's done in the attack on federal
employees has been extremely damaging. I mean, he's thrown people's
lives up in the air. And I know there's a
lot of people that don't have sympathy for so called bureaucrats,
but people are now starting to feel the impact of
the services that they're not getting because these people have
been fired, and some of these things are going to
be very long reaching and far reaching. So, you know,
(33:51):
cutting the clinical trials for Alzheimer's cancer, you know, Parkinson's.
My father died from Alzheimer's in Parkinson's, a combination of those.
So to see the clinical trials derailed just kind of
you know by happenstance is astonishing.
Speaker 3 (34:08):
And then the.
Speaker 9 (34:08):
Impact on you know, people who are seeking their PhDs
or starting their research careers.
Speaker 3 (34:14):
We're gonna have ion q on.
Speaker 9 (34:15):
Here in a minute, but yeah, you know, China is
throwing money at AI quantum computing and the like. They're
trying to grow as many of these scientists and engineers
as possible. Trump's cutting the money fraud for that, and
that's that's just scratching the surface. I mean, you know,
we could go through you know, the impact medicaid cuts
impacts on elementary schools, uh, you know, the impact on
(34:38):
local hospitals.
Speaker 3 (34:39):
In rural and urban areas.
Speaker 9 (34:40):
I mean, it's it's astonishing, its far reach, and it's
extremely damaging. And I think when you combine that with
the tariffs that he's put in place now. You're certainly
looking at a recession in the Washington metropolitan area, but
I think you're probably looking at one nationally as well.
Speaker 2 (34:56):
You mentioned ion Q. This is a quantum computing company
that you introduced us to some months back, and you
were joined on the air here by the then CEO,
Nicolo Demassi, the president's CEO of ion Q, now in
charge of the company, joins us now as part of
our conversation. Nicolo, we want to add your voice to
what we're talking about here and welcome you to the
conversation with a lot of questions we have about quantum
(35:19):
computing and the charge that you have at ion Q.
Been pretty remarkable hearing you called out by Jensen Wang recently.
But there are great concerns now about a company like
yours seeing innovation stifled and having more difficulty accessing capital
because of what's happening in the financial markets.
Speaker 3 (35:35):
Driven by the tariffs. What do you think, well, first of.
Speaker 10 (35:40):
All, I want to thank the Congressman for including me
in this and thank the Congressman for all the support
that he's given to ion Q. You know, we were
born on the University of Maryland campus thirty years ago.
With doctor Chris Monroe, and we of course do a
lot with the University of the ecosystem with the DMV
and of course with all the associated ecosystem of agencies
(36:02):
in the area. You know you mentioned China. I mean absolutely,
they are investing, you know, probably fifteen billion dollars officially
in quantum computing, and I bet it's more unofficially given
how things work over there. And I would concur that
quantum computing and quantum networking, which is the other half
of our business, so it's faith making and safe breaking,
(36:23):
really are not just a paramount for the national security
of our country, but they're fundamental to the economic growth
prospects of our economy. And so you know, we we
work of course, you know, across the Aisle. We work
with the administration, every administration, and it has been a
bipartisan issue, which we're grateful for. I mean, our our
machines are made in America. Our quantum networking also is
(36:46):
rolling out in America in places like Tennessee for example.
And ultimately, you know, we believe that you know, you know,
tariffs will be a far bigger issue for companies that
are structured diffinerentely than I in Q. But nevertheless, you know,
we look forward to continue support in the state and
of course federally as we continue to grow this vital
(37:07):
technology for our country.
Speaker 5 (37:10):
But what about the notion that, at least in terms
of China's retaliation against the US policy announced this week,
it's not just tariff measures but also restricting access to
critical minerals. Is that something given the role that those
play in quantum computing, that could affect your company.
Speaker 10 (37:26):
Well, it can affect some companies in the quantum computing space.
Speaker 3 (37:29):
Fortunately it doesn't impact I n Q.
Speaker 10 (37:32):
Just yesterday, DARPA in fact awarded US the first stage
of their own journey towards building you know, let's call
it encryption, cracking and encryption protection. So, you know, the
basis of modern civilization relies on secure communications. You know,
battlefield the future relies on secure battlefield of today relies
(37:52):
on secure communications. And ultimately, you know, quantum computing helps
you both optimize that and quantum networking helps you ensure
that e commerce banking you know, you name it as
we know it today goes on you know, perpetually, right,
So this is an issue that you know, we fortunately
are well funded, our stock of course has not had
a great day to day, but our stock has had
(38:14):
a better day than than than everybody else who's exposed,
you know, fully to these to these measures. For sure,
we're heartened by the fact that we've got such strong
support in Maryland and many other states, as well as
in the federal government. They all recognize the criticality of information,
the criticality of optimization, the criticality of computing. You know,
(38:37):
Jensen Huang will we'll see us as a competitor some day,
but at the moment, we're just expanding the compute market
with quantum processing units. And our technology that you can
see behind me is actually what's called an ion trap
quantum computer, and we don't have to import any minerals
for this.
Speaker 2 (38:52):
Fortunately, this is really impressive stuff, Congressman, which is why,
of course you introduced us to ion Q No that
they're working at the University of Maryland. How concerned are
you about federal grants being withdrawn or being challenged by
this administration and testing the innovation of a company like this.
Speaker 9 (39:12):
It's extremely problematic. And we've got other entities. Johns Hopkins
is Baltimore. They're outside of my district, but you know,
they just had to lay off two thousand employees based
on what the administration had done as far as cuts.
And if we're looking at growing the field of scientists
and engineers, they're coming up out of college, out of
(39:32):
graduate school and getting into these professions. Now he's wiping
out the grants that they used to do their research.
He's wiping out the indirect cost payments so that allowed
these universities to do it. He's wiping out the grants
in some instances, contracts to go to the federal agencies
like NASA where they research is done. So we've got
(39:53):
this crop coming up with no place to go here
in the United States, while by contrast with China, you know,
they're not only are they you know, growing more of
these people faster, but they're they're throwing dollars or you know,
the Chinese equivalent of that into funding it so they
can expand it quickly. We're still in the lead, but
you know, the president's walking us off the field right now,
(40:15):
and when we should be competing and maintaining the lead
that we have.
Speaker 5 (40:18):
Well, Nikola, we only have a minute left. But can
the private sector make up for anything that are the
lack i guess of investment or a pullback and investment
from the public sector.
Speaker 10 (40:29):
We're we're we're doing our best, Congressman, for sure. You know,
we're trying to grow the job, the job, the job market.
Our Quantum Center that we have in partnership with of
course Maryland and U m D. And we're very much
part of and and I think a central tenet of
the of the Quantum Initiative and expansion of our headquarters
to create those research opportunities, create companies and incubation and
(40:51):
entrepreneurship around our technology. So uh, you know, we're well
capitalized and we'll do all we you know, all we
can every day.
Speaker 3 (40:58):
Needless to say that we rely on and.
Speaker 10 (41:00):
Partnerships with Maryland, the university, federal government to ensure that
our technology makes it into the commercial sector, the public sector,
onto the battlefield, into drug discovery, into uh, you know,
let's just call it aerospace the future and optimization opportunities
of the future every day of the week. So let's
let's let's hope that this is a this is a
(41:21):
moment in time and then all up from here.
Speaker 5 (41:23):
For both of us, all right. Nicoloa Demasi, President and
CEO of IONQ, joined by Democratic Congressman Blent Ivy of
Maryland here with us on Balance of Power today. Thank
you both so much.
Speaker 2 (41:37):
Thanks for listening to the Balance 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, d C. At noontime
Eastern at Bloomberg dot com.
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