June 5, 2025 • 24 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
Tyler Kendall, Bloomberg Television Washington Correspondent discusses US President Donald Trump and Chinese President Xi Jinping agreeing to further trade talks and clearing up disputes surrounding rare earth exports.
Michael McKee, Bloomberg International Economics and Policy Correspondent, discusses U.S eco data. There was a Dovish shift in Fed-dated OIS seen in the aftermath of weekly jobless claims data, with markets now pricing in the first full quarter-point rate cut by the September policy meeting from October.
Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, discusses political news stories of the day. Donald Trump and Republican senators discussed scaling back the $40,000 state and local tax deduction cap in the House version of the president's tax-cut bill.
Michael Polsky, Founder and CEO of Invenergy, joins to discuss the fate of solar and wind in the U.S, and energy tax credits.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 2 (00:23):
We also want to figure out what's happening in DC.
Speaker 3 (00:25):
You had a social media post from President Trum talking
about his readout from the President g and President Trump's call.
Maybe I didn't say that right, but anyway, he talked
about the call that they had together. Tyler Kendall was
joining us outside the White House.
Speaker 2 (00:38):
What did he say? What do we know? Yeah, hey,
Alex Swell.
Speaker 4 (00:42):
President Trump said that the call lasted a little over
an hour and a half and said that it resulted
in a quote positive conclusion for both countries. Importantly, he
said that moving forward, he doesn't think there's going to
be any questions around rare earth products. As you all know,
the US had been accusing China of slow walking the
export licenses when it comes to critical and rare earth
(01:03):
minerals that really are essential to US supply chains, alleging
that China had violated the terms reached when they had
negotiated in Geneva. In fact, I actually caught up with
the Deputy Treasury Secretary Michael Falkender earlier this week, who
told me that this was the issue that he thought
would ultimately mean that these leaders were eventually going to
(01:23):
have to get on the phone and talk about. President
Trump also said that there would be another round of
in person talks like we saw in Geneva. He said
that Treasury Secretary Scott Besson and Ustr Jamis and Greer
would lead them, as well as Commerce Secretary Howard Lutnik.
That would be a new addition to the team. He
was not there at the talks in Geneva, but a
pretty remarkable development to think about how our reporting has
(01:45):
really indicated Paul and Alex that China would really much
prefer for key advisors to iron out the issues before
putting Jijiping on the phone call. And there were definitely
some key issues that they needed to talk about today.
Speaker 5 (01:58):
But as it relates to those rare earths, the US
President did not specify whether Beijing had agreed to speed
export licenses.
Speaker 6 (02:06):
Did he?
Speaker 5 (02:06):
Is that something that's just too complex at this point, So.
Speaker 4 (02:10):
We're still waiting further details, we act to put into
context that the truth social post was rather vague. But
President Trump himself said that he doesn't think that there
are going to be questions moving forward here. Of course,
it's a very complex process and has been something that
has been the top of mind for the United States
during these talks and really has become sort of a
pressure point moving forward, since we know our analysts at
(02:32):
Bloomberg Economics tell us that thirty out of fifty minerals
that are deemed critical to the US come primarily from China,
So they really do have such a big market share
when it comes to these critical minerals that the US
ends up relying on.
Speaker 6 (02:47):
All right, very good.
Speaker 5 (02:48):
We appreciate that we're just getting some latest more reporting
there from Washington, DC as it relates to some of
those talks, which I guess are inconclusive.
Speaker 3 (02:59):
But I guess it's just good that I think is
the fact that they literally are talking. Yes, it's probably
a good thing, right, Yeah, Mari Tyler, thanks a lot.
Tyler Kendall, Bloomberg Television watching correspondent, joining us on that call.
Speaker 1 (03:12):
You're listening to the Bloomberg Intelligence Podcast. Catch us Live
weekdays at ten am Eastern on Apple, Cocklay and Android
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Speaker 3 (03:26):
All right, we got a slew of economic data that
came out this morning in jobless claims not great, unit
labor costs, higher, productivity lower.
Speaker 2 (03:33):
It didn't feel really great.
Speaker 3 (03:35):
Let's get Michael mckei Boomb're going to National Economics and
Policy correspondent.
Speaker 2 (03:38):
How would you describe this data this morning? Not great?
C plus.
Speaker 7 (03:46):
You know, maybe I'd give it a B minus at
this point, and I'll explain why. But first I did
want to mention so you were right. You're right about
band aids. This is one of those facts to express anywhere.
But I know somebody who is in the business of
retailing things like that, and a lot of companies have
(04:10):
generic brand band aids, and the story is that they
cannot afford the Chinese made generic band aids anymore. They're
going to have to raise the price so much that
they lose the value of having their own brand. So
this could be a thing you may put your finger on.
The whole problem with tariffs is can't get generic band
(04:33):
aids anymore.
Speaker 2 (04:33):
Also, generic band aids are bad. That was my point.
I'm serious, Okay.
Speaker 7 (04:40):
Anyway, Java's claims are bad to forty seven, but it's
the highest eight months. But the problem is, and unfortunately
I have only a black and white chart, so we
can't show it on the color radio. But this is
the time of year when we start to get into
seasonal distortions that have gotten worse since COVID the non
(05:01):
seasonally adjusted job those claims went down and the seasonally
adjusted went up significantly. And this has been happening for
a couple of weeks. And then you look at the
last couple of years and you see the same pattern.
So is this a message about what's going to happen maybe?
Or Neil Dudda and I were talking about it and
(05:22):
he says yes. Or is it just sort of a headfake.
Maybe the auto companies have started retooling earlier because they
aren't selling as many cars, don't need to make any cars,
they have some space to do it. So that's something
to keep an eye on. At this point. We've had
a lot of announcements Disney, Procter, and Gamble today about layoffs.
(05:44):
Although Procter and Gamble said seven thousand over two years,
and they didn't say what country, So we're not sure yet,
which is part of the reason that you have to
take this not so much with a big, great assault,
but just say, okay, that's interesting. Let's see what happens
in the next couple of weeks. Other than that, the
trade balance is not a surprise. We saw that in
the advanced trade numbers. Because we stopped buying things from overseas.
(06:09):
Imports went down fifteen and a half percent, which is
the biggest fall on record, and the trade balance falls
by more than half, which is the biggest fall on record.
But I think back to the first quarter where we
had bad growth figures because we imported so much. This
is going to have the opposite effect. And then while
the unit labor costs that Alex mentioned our old news,
(06:33):
I mean this first quarter news, it does suggest that
there's higher pressure on prices for companies, and it's part
of that whole Are we seeing an inflation and stagnation
thing at the same.
Speaker 2 (06:46):
Time, which is kind of what you were talking about yesterday?
Speaker 5 (06:48):
Put yeah, I mean a lot of the notes I
got from Wall Street economists, I kept seeing stagflation in
the title, So that's coming back. But if I look
at today's data, Michael's, you're just explaining it as well
as yesterday's im data.
Speaker 6 (07:00):
I think these.
Speaker 5 (07:00):
Economists are kind of getting it right. They've been telling
us maybe not the tariffs themselves, but the uncertainty associated
with teriffs that could lead to slower economic growth of
that could lead to higher prices. I don't know, it
feels like that's coming to fruition right now.
Speaker 7 (07:14):
Well, that's one of the things that FED officials have
been talking about that companies have been sitting on the sidelines,
not sure what to do, but at some point they're
going to have to make a decision, and some of
them may be coming off the sidelines now and just
going ahead and raising prices in advance of tariffs. Some
things have gone up in price, but just betting that
(07:35):
something's going to happen. Part of it because they want
to protect their margins, and part of it is they're
probably testing the waters we saw in the last inflation.
When it started, people were raising prices more than their
costs were going up because they hadn't been able to
raise prices in years, and so they were taking advantage
of it and maybe that's a little bit of what
we're seeing now. There have been some studies out recently
(07:58):
that suggests that when Trump announced the tariffs, people raised
some prices. Then when he put the ninety day hold
on it, they didn't lower those prices. So businesses are
maybe not anxious to test whether they lose market share,
but they're willing to do it if they think that
(08:19):
things are going to continue in that direction.
Speaker 3 (08:21):
All right, Mike, thanks lot, really appreciate it. Michael mcke Boomer,
Economics and Policy correspond.
Speaker 1 (08:28):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am 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 3 (08:42):
Well, how speaker Mike Johnson earlier joined Bloomberg to discuss
key issues such as Elon Musk's vocal disagreement with the
Big Beautiful Bill and the speaker Johnson's fight to keep
the forty thousand dollars salt cap and more. Bloomberg asked
about the salt cap that he's fighting to maintain. Here's
part of that conversation, crossing the.
Speaker 8 (09:00):
Grand canyon on a piece of gentle flaws. Okay, the
equilibrium that we reached here, it took quite a bit
of time to get to where we are, and you
can't load me up on either side. And if you
go and slash the salt cap that we negotiated carefully
for over a year, it's going to make it very
difficult for me to deliver the necessary number of votes.
Speaker 6 (09:20):
All right.
Speaker 5 (09:20):
That was House a speaker Mike Johnson speaking with Bloomberg earlier.
Speaker 6 (09:23):
We're going to get the.
Speaker 5 (09:24):
Latest on this big, beautiful tax bill that again pasted
in House. It is now being negotiated in the Senate.
Speaker 6 (09:32):
A couple of sticking points, including that salting.
Speaker 5 (09:34):
I thought that was just a Matt Miller issue, but
apparently it's a big deal for a lot of senators
and a lot of representatives. Nathan Deane joints as senior
policy analyst for Bloomberg Intelligence. Nathan, what are the outstanding
issues that you believe the Senate is grappling with now
and do you expect them to be resolved?
Speaker 9 (09:52):
So, you know, I think the two big issues that
are actually going on at the moment in the Senate
is on the deficit, reduction side this idea, is it
going to increase the deficit as a result? Are the
elon musks? And for those members in the Senate Senator
Mike Lee and Senator Ram Paull and Senator Ron Johnson,
are they going to continue to push for a bill
that ultimately tries to decrease the deficit aka, you know,
(10:15):
probably not put out as much in terms of permanent
tax cuts. The other thing going on is, you know,
on the how to pay for it is the Medicaid
work requirements. Because those moderates in the Senate, and you know,
think of Senator Collins and Senator Murkowski are essentially trying
to push back some of what the House has already done.
Now we have two polarizing forces trying to push the
(10:36):
bill in a different direction, sort of challenging for Senator
John Thune here. So I think what happens is you
will see these negotiations continue to play out over the
next week, maybe the next week and a half or
two weeks, and then you'll get a clear picture of
where the Senate's going to go. But this bill does
have to change in order to get enough senators to
pass over and support it, and approval.
Speaker 3 (10:55):
Okay, so what does salt really look like? Is it
going to be forty thousand? Is it going to be
lower what we think?
Speaker 9 (11:00):
So I think it's going to be either forty thousand
or slightly lower than that, because I think what's going
to happen here is, Look, if I'm Representative Lawler, I
really enjoyed that interview this morning with Speaker Johnson because
he defended the cap and said, look, we negotiated this,
and it took a year, and the Salt Caucus in
the House does have a lot of power. They can say, look,
we're just not going to vote for it. If you
want to throw it back down to ten thousand, Senate,
(11:21):
feel free, I'm not going to vote for it, and
it's not going to pass. But this idea of it's
either going to be forty thousand or maybe slightly lower,
because then the Salt Caucus is in slightly a difficult
more difficult position because they did get something out of it.
So for those of you of you in New York
and New Jersey, I think you're going to get something.
It's going to be around forty thousand or maybe.
Speaker 6 (11:39):
Just slightly under that.
Speaker 5 (11:40):
Nathan, you mentioned Elon Musky has come out really harshly
against this bill and on another other topics. How much
influence does he have now there is he's no longer
technically part of the Washington story. So this is one
of those.
Speaker 9 (11:56):
Things where it's starting to brew into an issue. I
don't think it's an issue just yet. I mean, if
you looked at Speaker Johnson's interview, he defended what they
have been doing. And there's a lot of criticism on
the Congression the CBO at the moment in terms of
that two point four trillion dollar estimate of increase in
the deficit. So if you ask the politicians up on
Capitol Hill, I wouldn't say that there's really much there
(12:17):
there yet, but it could be coming because, like Elon
Musk said x yesterday, he's calling for individuals to call
their senator and call their congressman and say let's not
support this. And there is a little bit of a
group coming together. Senator Ran Paul Mike Lee, Ron Johnson.
You know, that's enough votes that potentially could derail this bill.
So if i'm Senator John Thune, I have to figure
(12:38):
out how to get some of those individuals on board
and the answer is, well, maybe these tax cuts are permanent,
maybe they just extended a certain amount of time, or
maybe this bill shrinks, or maybe the debt ceiling goes
from a five trillion dollar increase to a two trillion
dollar increase. There's areas of flexibility here for leadership, and
I think we're going to see that play out over
the next few weeks. So we still think this bill
is going to increase the deficit, but stay tuned because
(13:00):
it may not be what the CBO just scored yesterday.
Speaker 3 (13:03):
I think I asked you this before, but this is
obviously what I'm interested in. And that's what happens to
a lot of the energy tax credits, the ITC from
the IRA and all the companies are kind of waiting
on tenderhooks for what is going to happen. What's the
indication that Republican senators are going to step up and
try and fight for these tax credits.
Speaker 9 (13:22):
So we've heard through the grapevind that you know, there
are a lot of lobbyists uff on Capitol Hill right
now really pushing for this, and there are some receptive ears.
Senator Tom Tillis from North Carolina is one of those
individuals who's really focused on this now. I think you're
going to start seeing snippets of what the Senate is
thinking towards the end of this week, maybe the beginning
of next week in terms of those tax credits. And
(13:42):
we're telling our clients that, look, the House tax credits
were somewhat positive and then initially negative on the solar
industry in particular. And I think you are going to
see some moderate voices coming through when it comes to
the Inflation Reduction Act, because at the end of the day,
it's going to be very difficult for some of these Republicans,
say Senator Tom Till for example, that will vote to
gut the Inflation Reduction Act when the Inflation Reduction Act
(14:04):
is bring jobs and plants and you know, other types
of economic growth to their states. So I do think
you're going to see a modernization of what DAUS did,
and I think we'll see some of those details coming
out early next week.
Speaker 5 (14:16):
I got a red headline crossing the Bloomberg Terminal. NATO
adopts military build up plans as part of new spending goals.
I want some more reporting on that, so some movement
there across the pond Nathan. President Trump quite successfully kind
of work the phones in the House to get passage
of the deal. It's a little bit different in the Senate,
(14:36):
where you know, these folks have six year terms. Here,
what's the expectation of what kind of influenced President Trump
can plain in this negotiation?
Speaker 6 (14:44):
In the Senate, you hit it right.
Speaker 9 (14:46):
On the head. I mean, obviously, with the House of Representatives,
they run every two years, and so the idea of
a primary threat is much more serious to them.
Speaker 4 (14:52):
You know.
Speaker 9 (14:52):
But when it comes to the Senate, I will say
is is that their primary goal is to make sure
that the tax extensions or sorry, the tax increases don't
happen by the end of the year. Senators know they
have to pass something. The question on the Senate side
is is that what else are we going to do
with this? So I think that President Trump will have
to take a different type of approach in working with
the Senate. One of those things like, look, this is
(15:13):
America First policy, and even though only one third of
the Senate will be running approximately next year, the Republicans
do want to remain control of both the House and
the Senate, and failure to adopt something like that could
put that at risk. So I do think President Trump
will have a little bit more hands on approach with
the Senate. Obviously, he's going to have to manage both
those who want to see the deficit decreased along with
(15:35):
the moderates who want to see how these paid for
us decreased. And I think they will be able to
come up with a solution. It's just going to take
a lot more work and he's going to have to
roll up his sleeves to do it, all.
Speaker 2 (15:44):
Right, Nathan, really appreciate it. Thank you very much.
Speaker 3 (15:47):
Nathan Dean joins us from Bloomberg Intelligence. He covers all
of policy there for Bloomberg Intelligence, that senior policy analy.
Speaker 5 (15:54):
When we were down in DC, I did have a
little free time you were working. I saw some We
went to Lincoln. I'm one of all the cool stuff.
Speaker 6 (16:01):
I had no even thought of coming. I'm going to
go with Capitol Hill and see my representatives.
Speaker 5 (16:06):
Oh god, So I got much more inspiration from going
to the Lincoln Memorial. But you go to Lincoln Memorial,
you read the Gettysburg Address, and then you read his
speech for the second inauguration.
Speaker 6 (16:17):
It just takes your breath away.
Speaker 2 (16:18):
It really does.
Speaker 6 (16:20):
It's just amazing.
Speaker 1 (16:22):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am 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 3 (16:36):
So the news that came out on Tuesday was that
Meta and Constellation Energy met what they call a virtual
Purchase power agreement. So it's basically an investment to secure
clean energy from Constellation. But there are lots of different
nuances to that, but not the only one out there today.
We also learned that well back in December, Meta Platforms
also announced a deal to buy green credits from four
(17:00):
large US solar energy projects, and the owner of that
project joins US now. Michael Polski is founder and CEO
of Inventergy, and in Energy is one of the biggest
largest independent power producers in the United States, not gas plans, solar, onshore,
offshore wind storage as well as transmission. Really has his
(17:21):
pulse on the market right now. Good to see you, Michael,
thanks for coming in.
Speaker 10 (17:25):
Thank you. And we have to add natural guests as well.
Speaker 3 (17:27):
Yes, no, I said that, I said natural, gay I
did plant so you have all that clean stuff. How
hard is it to reach these agreements with the hyperscalers
right now?
Speaker 2 (17:36):
What are those conversations like?
Speaker 10 (17:40):
You know, obviously you know these are large scale agreements,
so it's not easy to just walk in and these
are those big deals. So first of all, we have
to make sure that both sides so that we agree
on that. You know, suppliers have sufficient supplies and buyer
satisfied by requirements is what is also important that certain
(18:04):
reliability standards are being mad and most importantly, the price
and has to be appropriate for a buyer to agree
to buy this.
Speaker 5 (18:13):
Another headline crossing the Bloomberg terminal, President g President Trump
agreed to start new round of talks ASAPTS. According to
CCTV will bring you continued reporting on that, Michael, is
the Trump administration making your business, the development of your business,
the expansion of your business easier, more difficult, no roled impact.
Speaker 6 (18:33):
Yet, what have you seen?
Speaker 10 (18:34):
Clearly the administration send very right sign. President announced energy emergency,
which I believe there is an energy emergency because we
have to build. There is an increased demand and we
have to build more supplies and more supplies. We have
to build if we build like we used to do
it, it would take too long. So it's really an emergency.
So we tried to In energy, we tried to build
(18:57):
as much supply as possible. What is also very important,
not just supply, but transmission. I mean, one of one
of our biggest developments right now and what we believe
is critical to meet sort of this emergency is to
build more transmission lines. I always like to say that,
(19:17):
you know, if we build more trucks without roads, we're
not going to deliver goods. So in order for electrons
to move, we need transmission lines. And if we have
transmission then we can shorten time to interconnect facility. We
have to be able to move power from where it's
produced to where it's used, and I think we can.
We can really build infrastructure a lot faster here and
(19:39):
with a lot more impact.
Speaker 3 (19:41):
I mean, to your point, go GOLDMN. Sachs had it
out today talking about how power is already tight in
the Northeast. There was a report out yesterday that said
the development of data centers to the largest US grid
and PGM is raising costs by almost ten billion because
we just can't build it out fast enough. What's the
biggest hurdle to reimagining transmission.
Speaker 10 (20:00):
I think, I think there are multiple. One is obviously
permitting because it takes forever permit and.
Speaker 2 (20:06):
Supposedly that's all going to be fixed. Now has that
all been fixed?
Speaker 10 (20:09):
I mean it's in a process. Obviously there are there
are good announcements. We have to see as a business,
we have to see how it's going to be im implemented,
because implementation is very important. But it's not just permitting.
I think transmission has to be appropriately paid for and
right now, particularly for a long distance transmission, we don't
have a methodology in this country how to pay for transmission.
(20:31):
So there is a lot of you know, intention to
build and the only really transmission being built the one
that recovered by utilities or rtos through the rate pay
You know, the moment you touch something that is not
typically normal and it's very difficult. So we have to
really come up with appropriate methodology to value transmission and
(20:53):
allocate the cost of transmission. I think, in my opinion
for this administration for Department of Energy, that should be
really one of the most important tasks to build our infrastructure.
Speaker 2 (21:04):
I did read the book here it is.
Speaker 5 (21:06):
I didn't read the book The Grid, So it took
me a whole summer to get through it, and it
was not an easy read.
Speaker 6 (21:11):
But I think I have some understanding of it.
Speaker 5 (21:13):
What's your sense overall of the power grid in the
United States?
Speaker 6 (21:19):
How good is it? How bad is it? How much
investment does it need?
Speaker 10 (21:23):
You know, obviously you know there are there are a
lot of discussions about grade right now the world being
used like antiquated or not reliable, which is which is
true in many ways because most of our grid has
been built thirty forty years ago, and there are a
lot of change since then. I mean, for example, we
(21:43):
used to have very centralized way of generator electricity from
very large coal nuclear you know, sometimes gas power plants.
Now we have a lot more decentralized generation. Number one.
Another issue is that we have our weather pattern has changed.
I mean, if now we have a lot more you
know in claiming weather, we have ice storms, what we've
(22:05):
seen in Texas, we have we have floods, we have
other weather events, which shows that generation itself is susceptible.
We cannot make one hundred percent sort of guaranteed generations.
So how to deal with this we have to create
connect like I like to call larger geography, so power
(22:30):
can move from here to there, just like corons. Right,
if we only go from here to there on one
road and that's something happened with that road and we
cannot avoid that, then all the traffic will be stopped
for days. We can avoid this, so we we have
to have transmissions.
Speaker 2 (22:45):
So it based on that. You said the sort of
financing this transmission is key. How would that work? I
get it for.
Speaker 3 (22:52):
The you know, regulated utilities, but if you want a
transmission line across multiple states, how could the financing work
to make sense for an dependent player like you?
Speaker 10 (23:01):
This is a fundamental problem here, right. We know we
in the United States we talk about the reliability, we
talk about national security. But for example, we develop in
large transmission line and which dramatically increase reliability. But then
you go to the rtos like MISO and ask them
to value reliability and they just don't value this because
(23:25):
neither they know how to do it or they simply
don't want to do it. So this is a fundamental
problem that you know when you have when you build transmission.
For example, in our case, Grain Belt Express, it's eleven
billion dollar project. We have to have revenues as in
order to finance this, and if nobody wants to pay
for anything, it's really hard. So I think it's it
(23:45):
should be a priority for the government to really establish
revenue streams for transmission.
Speaker 3 (23:51):
Well, it was really great to get this perspective. I
love this conversation. Please come back on. Michael Polski is
founder and CEO of in Energy, joining us on the
issues of here in the United States.
Speaker 1 (24:02):
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Speaker 2 (00:23):
We also want to figure out what's happening in DC.
Speaker 3 (00:25):
You had a social media post from President Trum talking
about his readout from the President g and President Trump's call.
Maybe I didn't say that right, but anyway, he talked
about the call that they had together. Tyler Kendall was
joining us outside the White House.
Speaker 2 (00:38):
What did he say? What do we know? Yeah, hey,
Alex Swell.
Speaker 4 (00:42):
President Trump said that the call lasted a little over
an hour and a half and said that it resulted
in a quote positive conclusion for both countries. Importantly, he
said that moving forward, he doesn't think there's going to
be any questions around rare earth products. As you all know,
the US had been accusing China of slow walking the
export licenses when it comes to critical and rare earth
(01:03):
minerals that really are essential to US supply chains, alleging
that China had violated the terms reached when they had
negotiated in Geneva. In fact, I actually caught up with
the Deputy Treasury Secretary Michael Falkender earlier this week, who
told me that this was the issue that he thought
would ultimately mean that these leaders were eventually going to
(01:23):
have to get on the phone and talk about. President
Trump also said that there would be another round of
in person talks like we saw in Geneva. He said
that Treasury Secretary Scott Besson and Ustr Jamis and Greer
would lead them, as well as Commerce Secretary Howard Lutnik.
That would be a new addition to the team. He
was not there at the talks in Geneva, but a
pretty remarkable development to think about how our reporting has
(01:45):
really indicated Paul and Alex that China would really much
prefer for key advisors to iron out the issues before
putting Jijiping on the phone call. And there were definitely
some key issues that they needed to talk about today.
Speaker 5 (01:58):
But as it relates to those rare earths, the US
President did not specify whether Beijing had agreed to speed
export licenses.
Speaker 6 (02:06):
Did he?
Speaker 5 (02:06):
Is that something that's just too complex at this point, So.
Speaker 4 (02:10):
We're still waiting further details, we act to put into
context that the truth social post was rather vague. But
President Trump himself said that he doesn't think that there
are going to be questions moving forward here. Of course,
it's a very complex process and has been something that
has been the top of mind for the United States
during these talks and really has become sort of a
pressure point moving forward, since we know our analysts at
(02:32):
Bloomberg Economics tell us that thirty out of fifty minerals
that are deemed critical to the US come primarily from China,
So they really do have such a big market share
when it comes to these critical minerals that the US
ends up relying on.
Speaker 6 (02:47):
All right, very good.
Speaker 5 (02:48):
We appreciate that we're just getting some latest more reporting
there from Washington, DC as it relates to some of
those talks, which I guess are inconclusive.
Speaker 3 (02:59):
But I guess it's just good that I think is
the fact that they literally are talking. Yes, it's probably
a good thing, right, Yeah, Mari Tyler, thanks a lot.
Tyler Kendall, Bloomberg Television watching correspondent, joining us on that call.
Speaker 1 (03:12):
You're listening to the Bloomberg Intelligence Podcast. Catch us Live
weekdays at ten am 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 3 (03:26):
All right, we got a slew of economic data that
came out this morning in jobless claims not great, unit
labor costs, higher, productivity lower.
Speaker 2 (03:33):
It didn't feel really great.
Speaker 3 (03:35):
Let's get Michael mckei Boomb're going to National Economics and
Policy correspondent.
Speaker 2 (03:38):
How would you describe this data this morning? Not great?
C plus.
Speaker 7 (03:46):
You know, maybe I'd give it a B minus at
this point, and I'll explain why. But first I did
want to mention so you were right. You're right about
band aids. This is one of those facts to express anywhere.
But I know somebody who is in the business of
retailing things like that, and a lot of companies have
(04:10):
generic brand band aids, and the story is that they
cannot afford the Chinese made generic band aids anymore. They're
going to have to raise the price so much that
they lose the value of having their own brand. So
this could be a thing you may put your finger on.
The whole problem with tariffs is can't get generic band
(04:33):
aids anymore.
Speaker 2 (04:33):
Also, generic band aids are bad. That was my point.
I'm serious, Okay.
Speaker 7 (04:40):
Anyway, Java's claims are bad to forty seven, but it's
the highest eight months. But the problem is, and unfortunately
I have only a black and white chart, so we
can't show it on the color radio. But this is
the time of year when we start to get into
seasonal distortions that have gotten worse since COVID the non
(05:01):
seasonally adjusted job those claims went down and the seasonally
adjusted went up significantly. And this has been happening for
a couple of weeks. And then you look at the
last couple of years and you see the same pattern.
So is this a message about what's going to happen maybe?
Or Neil Dudda and I were talking about it and
(05:22):
he says yes. Or is it just sort of a headfake.
Maybe the auto companies have started retooling earlier because they
aren't selling as many cars, don't need to make any cars,
they have some space to do it. So that's something
to keep an eye on. At this point. We've had
a lot of announcements Disney, Procter, and Gamble today about layoffs.
(05:44):
Although Procter and Gamble said seven thousand over two years,
and they didn't say what country, So we're not sure yet,
which is part of the reason that you have to
take this not so much with a big, great assault,
but just say, okay, that's interesting. Let's see what happens
in the next couple of weeks. Other than that, the
trade balance is not a surprise. We saw that in
the advanced trade numbers. Because we stopped buying things from overseas.
(06:09):
Imports went down fifteen and a half percent, which is
the biggest fall on record, and the trade balance falls
by more than half, which is the biggest fall on record.
But I think back to the first quarter where we
had bad growth figures because we imported so much. This
is going to have the opposite effect. And then while
the unit labor costs that Alex mentioned our old news,
(06:33):
I mean this first quarter news, it does suggest that
there's higher pressure on prices for companies, and it's part
of that whole Are we seeing an inflation and stagnation
thing at the same.
Speaker 2 (06:46):
Time, which is kind of what you were talking about yesterday?
Speaker 5 (06:48):
Put yeah, I mean a lot of the notes I
got from Wall Street economists, I kept seeing stagflation in
the title, So that's coming back. But if I look
at today's data, Michael's, you're just explaining it as well
as yesterday's im data.
Speaker 6 (07:00):
I think these.
Speaker 5 (07:00):
Economists are kind of getting it right. They've been telling
us maybe not the tariffs themselves, but the uncertainty associated
with teriffs that could lead to slower economic growth of
that could lead to higher prices. I don't know, it
feels like that's coming to fruition right now.
Speaker 7 (07:14):
Well, that's one of the things that FED officials have
been talking about that companies have been sitting on the sidelines,
not sure what to do, but at some point they're
going to have to make a decision, and some of
them may be coming off the sidelines now and just
going ahead and raising prices in advance of tariffs. Some
things have gone up in price, but just betting that
(07:35):
something's going to happen. Part of it because they want
to protect their margins, and part of it is they're
probably testing the waters we saw in the last inflation.
When it started, people were raising prices more than their
costs were going up because they hadn't been able to
raise prices in years, and so they were taking advantage
of it and maybe that's a little bit of what
we're seeing now. There have been some studies out recently
(07:58):
that suggests that when Trump announced the tariffs, people raised
some prices. Then when he put the ninety day hold
on it, they didn't lower those prices. So businesses are
maybe not anxious to test whether they lose market share,
but they're willing to do it if they think that
(08:19):
things are going to continue in that direction.
Speaker 3 (08:21):
All right, Mike, thanks lot, really appreciate it. Michael mcke Boomer,
Economics and Policy correspond.
Speaker 1 (08:28):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am 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 3 (08:42):
Well, how speaker Mike Johnson earlier joined Bloomberg to discuss
key issues such as Elon Musk's vocal disagreement with the
Big Beautiful Bill and the speaker Johnson's fight to keep
the forty thousand dollars salt cap and more. Bloomberg asked
about the salt cap that he's fighting to maintain. Here's
part of that conversation, crossing the.
Speaker 8 (09:00):
Grand canyon on a piece of gentle flaws. Okay, the
equilibrium that we reached here, it took quite a bit
of time to get to where we are, and you
can't load me up on either side. And if you
go and slash the salt cap that we negotiated carefully
for over a year, it's going to make it very
difficult for me to deliver the necessary number of votes.
Speaker 6 (09:20):
All right.
Speaker 5 (09:20):
That was House a speaker Mike Johnson speaking with Bloomberg earlier.
Speaker 6 (09:23):
We're going to get the.
Speaker 5 (09:24):
Latest on this big, beautiful tax bill that again pasted
in House. It is now being negotiated in the Senate.
Speaker 6 (09:32):
A couple of sticking points, including that salting.
Speaker 5 (09:34):
I thought that was just a Matt Miller issue, but
apparently it's a big deal for a lot of senators
and a lot of representatives. Nathan Deane joints as senior
policy analyst for Bloomberg Intelligence. Nathan, what are the outstanding
issues that you believe the Senate is grappling with now
and do you expect them to be resolved?
Speaker 9 (09:52):
So, you know, I think the two big issues that
are actually going on at the moment in the Senate
is on the deficit, reduction side this idea, is it
going to increase the deficit as a result? Are the
elon musks? And for those members in the Senate Senator
Mike Lee and Senator Ram Paull and Senator Ron Johnson,
are they going to continue to push for a bill
that ultimately tries to decrease the deficit aka, you know,
(10:15):
probably not put out as much in terms of permanent
tax cuts. The other thing going on is, you know,
on the how to pay for it is the Medicaid
work requirements. Because those moderates in the Senate, and you know,
think of Senator Collins and Senator Murkowski are essentially trying
to push back some of what the House has already done.
Now we have two polarizing forces trying to push the
(10:36):
bill in a different direction, sort of challenging for Senator
John Thune here. So I think what happens is you
will see these negotiations continue to play out over the
next week, maybe the next week and a half or
two weeks, and then you'll get a clear picture of
where the Senate's going to go. But this bill does
have to change in order to get enough senators to
pass over and support it, and approval.
Speaker 3 (10:55):
Okay, so what does salt really look like? Is it
going to be forty thousand? Is it going to be
lower what we think?
Speaker 9 (11:00):
So I think it's going to be either forty thousand
or slightly lower than that, because I think what's going
to happen here is, Look, if I'm Representative Lawler, I
really enjoyed that interview this morning with Speaker Johnson because
he defended the cap and said, look, we negotiated this,
and it took a year, and the Salt Caucus in
the House does have a lot of power. They can say, look,
we're just not going to vote for it. If you
want to throw it back down to ten thousand, Senate,
(11:21):
feel free, I'm not going to vote for it, and
it's not going to pass. But this idea of it's
either going to be forty thousand or maybe slightly lower,
because then the Salt Caucus is in slightly a difficult
more difficult position because they did get something out of it.
So for those of you of you in New York
and New Jersey, I think you're going to get something.
It's going to be around forty thousand or maybe.
Speaker 6 (11:39):
Just slightly under that.
Speaker 5 (11:40):
Nathan, you mentioned Elon Musky has come out really harshly
against this bill and on another other topics. How much
influence does he have now there is he's no longer
technically part of the Washington story. So this is one
of those.
Speaker 9 (11:56):
Things where it's starting to brew into an issue. I
don't think it's an issue just yet. I mean, if
you looked at Speaker Johnson's interview, he defended what they
have been doing. And there's a lot of criticism on
the Congression the CBO at the moment in terms of
that two point four trillion dollar estimate of increase in
the deficit. So if you ask the politicians up on
Capitol Hill, I wouldn't say that there's really much there
(12:17):
there yet, but it could be coming because, like Elon
Musk said x yesterday, he's calling for individuals to call
their senator and call their congressman and say let's not
support this. And there is a little bit of a
group coming together. Senator Ran Paul Mike Lee, Ron Johnson.
You know, that's enough votes that potentially could derail this bill.
So if i'm Senator John Thune, I have to figure
(12:38):
out how to get some of those individuals on board
and the answer is, well, maybe these tax cuts are permanent,
maybe they just extended a certain amount of time, or
maybe this bill shrinks, or maybe the debt ceiling goes
from a five trillion dollar increase to a two trillion
dollar increase. There's areas of flexibility here for leadership, and
I think we're going to see that play out over
the next few weeks. So we still think this bill
is going to increase the deficit, but stay tuned because
(13:00):
it may not be what the CBO just scored yesterday.
Speaker 3 (13:03):
I think I asked you this before, but this is
obviously what I'm interested in. And that's what happens to
a lot of the energy tax credits, the ITC from
the IRA and all the companies are kind of waiting
on tenderhooks for what is going to happen. What's the
indication that Republican senators are going to step up and
try and fight for these tax credits.
Speaker 9 (13:22):
So we've heard through the grapevind that you know, there
are a lot of lobbyists uff on Capitol Hill right
now really pushing for this, and there are some receptive ears.
Senator Tom Tillis from North Carolina is one of those
individuals who's really focused on this now. I think you're
going to start seeing snippets of what the Senate is
thinking towards the end of this week, maybe the beginning
of next week in terms of those tax credits. And
(13:42):
we're telling our clients that, look, the House tax credits
were somewhat positive and then initially negative on the solar
industry in particular. And I think you are going to
see some moderate voices coming through when it comes to
the Inflation Reduction Act, because at the end of the day,
it's going to be very difficult for some of these Republicans,
say Senator Tom Till for example, that will vote to
gut the Inflation Reduction Act when the Inflation Reduction Act
(14:04):
is bring jobs and plants and you know, other types
of economic growth to their states. So I do think
you're going to see a modernization of what DAUS did,
and I think we'll see some of those details coming
out early next week.
Speaker 5 (14:16):
I got a red headline crossing the Bloomberg Terminal. NATO
adopts military build up plans as part of new spending goals.
I want some more reporting on that, so some movement
there across the pond Nathan. President Trump quite successfully kind
of work the phones in the House to get passage
of the deal. It's a little bit different in the Senate,
(14:36):
where you know, these folks have six year terms. Here,
what's the expectation of what kind of influenced President Trump
can plain in this negotiation?
Speaker 6 (14:44):
In the Senate, you hit it right.
Speaker 9 (14:46):
On the head. I mean, obviously, with the House of Representatives,
they run every two years, and so the idea of
a primary threat is much more serious to them.
Speaker 4 (14:52):
You know.
Speaker 9 (14:52):
But when it comes to the Senate, I will say
is is that their primary goal is to make sure
that the tax extensions or sorry, the tax increases don't
happen by the end of the year. Senators know they
have to pass something. The question on the Senate side
is is that what else are we going to do
with this? So I think that President Trump will have
to take a different type of approach in working with
the Senate. One of those things like, look, this is
(15:13):
America First policy, and even though only one third of
the Senate will be running approximately next year, the Republicans
do want to remain control of both the House and
the Senate, and failure to adopt something like that could
put that at risk. So I do think President Trump
will have a little bit more hands on approach with
the Senate. Obviously, he's going to have to manage both
those who want to see the deficit decreased along with
(15:35):
the moderates who want to see how these paid for
us decreased. And I think they will be able to
come up with a solution. It's just going to take
a lot more work and he's going to have to
roll up his sleeves to do it, all.
Speaker 2 (15:44):
Right, Nathan, really appreciate it. Thank you very much.
Speaker 3 (15:47):
Nathan Dean joins us from Bloomberg Intelligence. He covers all
of policy there for Bloomberg Intelligence, that senior policy analy.
Speaker 5 (15:54):
When we were down in DC, I did have a
little free time you were working. I saw some We
went to Lincoln. I'm one of all the cool stuff.
Speaker 6 (16:01):
I had no even thought of coming. I'm going to
go with Capitol Hill and see my representatives.
Speaker 5 (16:06):
Oh god, So I got much more inspiration from going
to the Lincoln Memorial. But you go to Lincoln Memorial,
you read the Gettysburg Address, and then you read his
speech for the second inauguration.
Speaker 6 (16:17):
It just takes your breath away.
Speaker 2 (16:18):
It really does.
Speaker 6 (16:20):
It's just amazing.
Speaker 1 (16:22):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am 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 3 (16:36):
So the news that came out on Tuesday was that
Meta and Constellation Energy met what they call a virtual
Purchase power agreement. So it's basically an investment to secure
clean energy from Constellation. But there are lots of different
nuances to that, but not the only one out there today.
We also learned that well back in December, Meta Platforms
also announced a deal to buy green credits from four
(17:00):
large US solar energy projects, and the owner of that
project joins US now. Michael Polski is founder and CEO
of Inventergy, and in Energy is one of the biggest
largest independent power producers in the United States, not gas plans, solar, onshore,
offshore wind storage as well as transmission. Really has his
(17:21):
pulse on the market right now. Good to see you, Michael,
thanks for coming in.
Speaker 10 (17:25):
Thank you. And we have to add natural guests as well.
Speaker 3 (17:27):
Yes, no, I said that, I said natural, gay I
did plant so you have all that clean stuff. How
hard is it to reach these agreements with the hyperscalers
right now?
Speaker 2 (17:36):
What are those conversations like?
Speaker 10 (17:40):
You know, obviously you know these are large scale agreements,
so it's not easy to just walk in and these
are those big deals. So first of all, we have
to make sure that both sides so that we agree
on that. You know, suppliers have sufficient supplies and buyer
satisfied by requirements is what is also important that certain
(18:04):
reliability standards are being mad and most importantly, the price
and has to be appropriate for a buyer to agree
to buy this.
Speaker 5 (18:13):
Another headline crossing the Bloomberg terminal, President g President Trump
agreed to start new round of talks ASAPTS. According to
CCTV will bring you continued reporting on that, Michael, is
the Trump administration making your business, the development of your business,
the expansion of your business easier, more difficult, no roled impact.
Speaker 6 (18:33):
Yet, what have you seen?
Speaker 10 (18:34):
Clearly the administration send very right sign. President announced energy emergency,
which I believe there is an energy emergency because we
have to build. There is an increased demand and we
have to build more supplies and more supplies. We have
to build if we build like we used to do
it, it would take too long. So it's really an emergency.
So we tried to In energy, we tried to build
(18:57):
as much supply as possible. What is also very important,
not just supply, but transmission. I mean, one of one
of our biggest developments right now and what we believe
is critical to meet sort of this emergency is to
build more transmission lines. I always like to say that,
(19:17):
you know, if we build more trucks without roads, we're
not going to deliver goods. So in order for electrons
to move, we need transmission lines. And if we have
transmission then we can shorten time to interconnect facility. We
have to be able to move power from where it's
produced to where it's used, and I think we can.
We can really build infrastructure a lot faster here and
(19:39):
with a lot more impact.
Speaker 3 (19:41):
I mean, to your point, go GOLDMN. Sachs had it
out today talking about how power is already tight in
the Northeast. There was a report out yesterday that said
the development of data centers to the largest US grid
and PGM is raising costs by almost ten billion because
we just can't build it out fast enough. What's the
biggest hurdle to reimagining transmission.
Speaker 10 (20:00):
I think, I think there are multiple. One is obviously
permitting because it takes forever permit and.
Speaker 2 (20:06):
Supposedly that's all going to be fixed. Now has that
all been fixed?
Speaker 10 (20:09):
I mean it's in a process. Obviously there are there
are good announcements. We have to see as a business,
we have to see how it's going to be im implemented,
because implementation is very important. But it's not just permitting.
I think transmission has to be appropriately paid for and
right now, particularly for a long distance transmission, we don't
have a methodology in this country how to pay for transmission.
(20:31):
So there is a lot of you know, intention to
build and the only really transmission being built the one
that recovered by utilities or rtos through the rate pay
You know, the moment you touch something that is not
typically normal and it's very difficult. So we have to
really come up with appropriate methodology to value transmission and
(20:53):
allocate the cost of transmission. I think, in my opinion
for this administration for Department of Energy, that should be
really one of the most important tasks to build our infrastructure.
Speaker 2 (21:04):
I did read the book here it is.
Speaker 5 (21:06):
I didn't read the book The Grid, So it took
me a whole summer to get through it, and it
was not an easy read.
Speaker 6 (21:11):
But I think I have some understanding of it.
Speaker 5 (21:13):
What's your sense overall of the power grid in the
United States?
Speaker 6 (21:19):
How good is it? How bad is it? How much
investment does it need?
Speaker 10 (21:23):
You know, obviously you know there are there are a
lot of discussions about grade right now the world being
used like antiquated or not reliable, which is which is
true in many ways because most of our grid has
been built thirty forty years ago, and there are a
lot of change since then. I mean, for example, we
(21:43):
used to have very centralized way of generator electricity from
very large coal nuclear you know, sometimes gas power plants.
Now we have a lot more decentralized generation. Number one.
Another issue is that we have our weather pattern has changed.
I mean, if now we have a lot more you
know in claiming weather, we have ice storms, what we've
(22:05):
seen in Texas, we have we have floods, we have
other weather events, which shows that generation itself is susceptible.
We cannot make one hundred percent sort of guaranteed generations.
So how to deal with this we have to create
connect like I like to call larger geography, so power
(22:30):
can move from here to there, just like corons. Right,
if we only go from here to there on one
road and that's something happened with that road and we
cannot avoid that, then all the traffic will be stopped
for days. We can avoid this, so we we have
to have transmissions.
Speaker 2 (22:45):
So it based on that. You said the sort of
financing this transmission is key. How would that work? I
get it for.
Speaker 3 (22:52):
The you know, regulated utilities, but if you want a
transmission line across multiple states, how could the financing work
to make sense for an dependent player like you?
Speaker 10 (23:01):
This is a fundamental problem here, right. We know we
in the United States we talk about the reliability, we
talk about national security. But for example, we develop in
large transmission line and which dramatically increase reliability. But then
you go to the rtos like MISO and ask them
to value reliability and they just don't value this because
(23:25):
neither they know how to do it or they simply
don't want to do it. So this is a fundamental
problem that you know when you have when you build transmission.
For example, in our case, Grain Belt Express, it's eleven
billion dollar project. We have to have revenues as in
order to finance this, and if nobody wants to pay
for anything, it's really hard. So I think it's it
(23:45):
should be a priority for the government to really establish
revenue streams for transmission.
Speaker 3 (23:51):
Well, it was really great to get this perspective. I
love this conversation. Please come back on. Michael Polski is
founder and CEO of in Energy, joining us on the
issues of here in the United States.
Speaker 1 (24:02):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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weekday ten am to noon Eastern on Bloomberg dot Com,
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