October 2, 2025 • 35 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyOctober 2nd, 2025
Featuring:
1) Michael Darda, Chief Economist at Roth Capital Partners, joins for an extended discussion on the economic impact of the government shutdown and whether it will upend Fed easing. The shutdown could have significant economic impacts, with the Congressional Budget Office estimating a cost of $400 million per day in lost compensation, and some economists warning that mass firings could sap corporate confidence and reduce capital investments.
2) Ian Bremmer, founder at Eurasia Group, joins to discuss President Trump's peace plan for the Middle East and the latest on the war in Ukraine and Trump's approach to China. Arab and Muslim national leaders are pushing Hamas to accept the Gaza plan unveiled by President Trump, saying the need to end the fighting surpasses concern about the finer details.
3) Wendy Schiller, professor at Brown University, with the latest DC headlines and who will win out politically from the government shutdown. The US government shutdown has entered its second day, with the Trump administration raising the stakes by halting $18 billion in infrastructure funding and signaling a willingness to fire thousands of federal workers.
4) Lisa Mateo joins with the latest headlines in newspapers across the US, including a WSJ report on AI supremacy and the Financial Times' story on Universal and Warner Music nearing a landmark AI licensing deal.
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):
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple car Play or Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
(00:25):
or watch us live on YouTube.
Speaker 2 (00:27):
Joining us now.
Speaker 3 (00:27):
Michael Darta, Always on the Vineyard, forever looking north to Fenway.
Michael Darta, Chief Economists, Rough Capital Partners. Michael from a
GDP standpoint, does a shutdown?
Speaker 2 (00:41):
Is it Germaine?
Speaker 4 (00:42):
It really depends how long this goes on, Tom. You know,
hopefully calmer and cooler heads can prevail in Washington, so
we don't end up, you know, weeks and potentially months
on end, because the longer this goes on, the more
disruptive it will be to the economy into the macro data,
which we now don't have. Right, we're kind of flying
(01:04):
blind into the end of the week here, and we're
missing some pretty important necro reports.
Speaker 2 (01:09):
So what do you do?
Speaker 3 (01:12):
You know, then, start is so good at this folks
linking economics into investment. If you're blind, Michael, what do
you do with a trading strategy?
Speaker 4 (01:21):
Well, luckily we still do have some private sector reports
that are coming out. So we got some data from
ADP yesterday which was not very good. I've got some
data from the Institute of Supply Management, and so abstracting
from that, you know, we can still construct running forecast
(01:42):
estimates for how the economy's doing. And interestingly enough, I mean,
the Atlantic beed tracking data for the third quarter is
really still holding in there at pretty robust levels. For
real final sales to the private sector sector still running
pretty close to three percent for Q three. It would
be completely shocking if we were actually in an environment
(02:04):
of negative job growth with the real economy humming along
at three percent. So I would take all of this
and take a bit of a step back, and you know,
I think these jobs numbers are probably weak more in
a temporary way, unless the economy just goes off a
cliff in the fourth quarter.
Speaker 5 (02:24):
You know, Michael, you mentioned you referenced the ADP data yesterday.
I know people take that with a grain of salt,
but boy, that was kind of startling there. A negative
number there for the month and a negative revision for
the prior month. What'd you take away from that?
Speaker 4 (02:40):
Yeah, definitely was not good data. You know, at a
time when private payroll growth has slowed very sharply, with
quite significant downward revisions over the course of the last
year through March. I think there's a you know, there's
a bigger focus on these weak data points. And within
ADP we saw three down months, three negative job growth
(03:01):
months out of the last four, so that's not a positive.
And there was also some weakness that showed up in
the conference board data. You ask people about jobs being
hard to get or plentiful, that tends to correlate with
the unemployment rate pretty well. So that deteriorated again in
the most recent reading. So it does look like there
(03:21):
is some lingering softness in the labor market. The question
is is that going to intensify or is it more
temporary and likely to rebound. And Tom, I think that's
where you bring in the financial markets, which are quite optimistic.
And you know, you hear that old refrain all the
time that you know, the economy is not the stock market. Well,
actually the economy is the stock market. If you take
(03:43):
a look at the data. Equity markets are not perfect predictors,
but they do need growth rate of real and nominal
GDP by about one quarter, and so you know easy
financial conditions, the Fed continuing to eat He's monetary policy.
I think you want to be a little bit more
optimistic than pessimistic in terms of where the labor market
(04:06):
is as we move into next year.
Speaker 3 (04:08):
Acrastination. This morning, Michael Darty with this rough capital thrilled
he could.
Speaker 2 (04:12):
Be with us on YouTube.
Speaker 3 (04:13):
Subscribe to Bloomberg Podcasts, our new digital distribution. It is
Paul's in my future. Thank you so much for your
attention in your living room and in your office on YouTube,
just growing every day. Thank you so much for a
record September for us.
Speaker 2 (04:30):
Michael.
Speaker 3 (04:31):
I look at that then, and I look at the
fold over the green spanning. An idea that the equity
market really matters is the equity market is an expectation vehicle.
Speaker 2 (04:41):
How far out is expecting right now?
Speaker 6 (04:45):
Yeah?
Speaker 4 (04:46):
I mean the equity market. Look, Tom, you know it's volatile.
Equity investors are not always correct, and with any market
you can have a sudden, abrupt and unexpected turn of course. Right,
all of that said, investors are looking ahead. And if
you look at how the correlations tend to run from
(05:07):
markets into data, markets lead data lags and on average,
you know, the equity market leads by about three months.
If you bring the credit markets into the mix and
you look at overall financial conditions, you know, the lead
is maybe six or seven months at best. So you know,
we're not able to forecast really long horizon situations here
(05:30):
you're using these market based indicators, but at least over
the next one or two quarters, you know, I think,
especially now with the shutdown, these financial variables are pretty.
Speaker 6 (05:42):
Important, Michael.
Speaker 5 (05:44):
Looking at the consumer, the retail sales, other metrics like that,
the consumer seems to be more than hanging in there,
actually doing quite well.
Speaker 2 (05:52):
Does that surprise you at all?
Speaker 6 (05:56):
Yes?
Speaker 2 (05:56):
And no.
Speaker 4 (05:57):
I mean, you know, we're talking about the equity market,
and you know the fact that household net worth has
risen pretty dramatically. Now the worry is that, oh, that's
concentrated on the higher end, but the higher end is
driving a very large and growing share of total consumption.
And even with these weak jobs numbers, the unemployment rate
(06:18):
is only pushed up a little bit, you know, it
hasn't pushed up in a dramatic fashion, and so you
have still essentially a fully employed economy, very high asset prices,
so household balance sheets are in quite good shape, and
that's underpinning the you know, the consumer and you know,
the tracking estimates for Q three around three percent, So
(06:39):
that does not look like a recession.
Speaker 3 (06:42):
I look, Michael, at where we are, and it comes
back to something quaint. It's really falling. It's fallen off
the radar use of cash. Okay, I got nominal GDP.
They're going to deliver better than good revenue growth once again. Oh,
earnings are going to be terrible. Yeah, okay, Michael, earnings
will be okay. Let's say and margins. Do you see
(07:03):
a use of cash that just continues to drive this
bullmarket forward.
Speaker 4 (07:08):
Well, that's really the key, Tom. If top line growth
is you know, looks Q three looks like it's about
six percent. But even if we take that down by
a percentage point and top line is compounding at five
and companies are profitable, you know, and corporate profits have
been strong, that is not going to sustain itself for
any period unless you're getting positive hiring at the same time.
(07:31):
So companies will do different things. They can buy backstock,
they can invest. You know, we might see some lift
in capex, but they'll be hiring as well. So you know,
if you have top line growth, and you have corporate profits,
you're going to have employment as well.
Speaker 3 (07:46):
So this is something I think people have trouble with, Michael.
And let's not get into like nominal GDP, animal spirits.
Let's just say, is inflation good for Procter in gamble?
Is inflation good for you know, name another you know,
Church and Dwight, I mean, you know arm and Hammer
and all that. Is inflation good for basic companies?
Speaker 4 (08:11):
Well? Tom, you know it's a good question. I mean,
you do want some corporate pricing power, but the flip
side of that is costs. Right, So if you do
end up in an environment where inflation is high and volatile,
and then you have the central bank that has to
iron that out and restrain the economy, that's not good
for anyone.
Speaker 2 (08:29):
Okay, then carry it forward, Mike.
Speaker 3 (08:30):
I don't mean to interrupt, but this is this is
darta is central Carry it forward. If I go from
a FED moodeling two percent out to two point x percent,
what does it do to those companies? Do they see
wage lift?
Speaker 2 (08:44):
Yeah?
Speaker 4 (08:44):
And I think you are, you know you are seeing that.
You know, nominal wages and real wages are growing. So
that's consistent with the real economy expanding. Inflation is still
above the fedce target. But I think, you know, an
in an environment where inflation is trending at around three
you know, that can still be a very strong environment
for corporate profits if the economy is you know, staying
(09:07):
out of recession, and that's you know, I think that
is likely with the FED easing monetary policy. They've already
taken rates down one hundred and twenty five basis points
and with inflation expectations moving up forty to sixty basis
points over that period, real rates have fallen about two
hundred basis points. So the FED is definitely removed quite
(09:30):
a bit of restraint from its policy, so the top
line should hang there. I do think, you know, I
do worry about the FED getting back to two percent
inflation on a reasonable timeline. If we're still stuck at
three percent inflation over the course of the next two years,
and that's part of the Fed's forecasts, boy, that's a
long overshoot seven years, So I worry a little bit
(09:51):
that that bleeds into credibility. You know, the administration really
wants FED to ease because they want lower market interest rates,
but you know, you're not going to get lower market
interest rates of inflation expectations continue moving off, so the
FED needs to stay credible here. I think, you know,
four to five percent nominal, that's the sweet spot You'll
have corporate pricing power, Inflation won't be too high long
(10:14):
rates will be at reasonable levels.
Speaker 6 (10:17):
There you go.
Speaker 2 (10:17):
Bottle that, folks.
Speaker 3 (10:18):
Michael Darter, thanks so much, rough Capital.
Speaker 2 (10:20):
Stay with us.
Speaker 3 (10:21):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (10:32):
You're listening to the Bloomberg Surveillance podcast. Catch US Live
weekday afternoons from seven to ten am Eastern Listen on
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Speaker 3 (10:44):
Our next guest on short Notes, we are honored to
have with us Ian Bremmer. Of course, he has changed
the discussion of international relations at worldwide. We're going to
have an extended conversation here for all of you across
the nation. Good morning internationally on the Pacific rim on YouTube,
and your evening is well. Ian, Let's talk about the
(11:04):
international relations of a fractured America. What is the state
of our State Department right now?
Speaker 7 (11:12):
Well, the State Department, I mean, you know, at least
you have someone who's quite capable that's actually running it.
Having said that, USAID has been eviscerated, as you know,
and the biggest concern among the professional diplomats I know,
both in office now and also those that have left,
(11:34):
is that countries around the world no longer believe the
United States is reliable as an ally, that America's ward
is no longer something that you want to count on.
The US is incredibly powerful. It's not in decline, but
that what the US will do for you is not
necessarily what it will say. And that's true on trade,
(11:56):
it's true on collective security. It's true on the treatment
of your citizens living in the United States or traveling
to the United States.
Speaker 6 (12:02):
These things can.
Speaker 7 (12:03):
Change on a dime on the whims of the President
and his top advisors, and that worries these country is
a great deal.
Speaker 5 (12:13):
That level of disengagement Ian, do you think that is
reflective of this Republican Party?
Speaker 6 (12:18):
When you say disengagement, I'm sorry, what do you mean
by that?
Speaker 5 (12:21):
No, just in the America first, a type of feeling
within the Trump administration.
Speaker 7 (12:29):
I think the Republican Party is completely loyal to Trump,
and it doesn't really matter if a lot of them
feel differently about his doing a deal with China on
the Age twenty chips or coming to terms on TikTok.
It doesn't really matter if he says Ukraine's not that
(12:51):
important because it's an ocean away. Of course, a lot
of Republicans historically disagree with that, They disagree with Trump
opposing free trade, but the population has changed. So first
of all, there are a lot of people that really
oppose a lot of neocons in the Republican Party that
led to very expensive, very deadly failed wars, and there
(13:15):
are a lot of traditional free trade Republicans that no
longer have the support of the population in pushing for
globalization and for taking tariffs down.
Speaker 6 (13:26):
We're in a radically.
Speaker 7 (13:27):
Different environment, right We have tariffs at one hundred level,
historic highs, one hundred year highs, and we also have
a president that's doing his damndest to reduce American security
guarantees and commitments to other countries around the world, even
making big questions about whether the US would stand up
(13:48):
for Taiwan, for example, long term. So I mean, clearly
a lot of Republicans quietly uncomfortable with that.
Speaker 3 (13:53):
There's so many ways to go here, Ian Bremer, with
this for an extended conversation.
Speaker 2 (13:57):
With Eurasia Group. I know what people want to know.
When's the next book?
Speaker 6 (14:00):
Give me a date sometime next year.
Speaker 3 (14:02):
Sometime next year, Like, that's good enough. Ian, I want
to talk about Gaza. I want you to triangulate it
with Qatar, the president's relationship there, maybe with this desire
to win a peace prize and all that. How should
our listeners and viewers synthesize the cacophony of Gaza. I'm
looking at a video in the Washington Post this morning,
Greta Thunberg and others being the Israelis have taken over
(14:26):
flotilla whatever, how does the and Bremer translate the horror
of Gaza us through the American prism?
Speaker 7 (14:36):
The two combatants have very little consequence for.
Speaker 6 (14:44):
Continuing to engage in the fight.
Speaker 7 (14:47):
It's been extremely hard to convince Israel that they should
limit the warfare on the ground in Gaza or against
the Axis of Resistance more broadly, because there have been
no consequences for them doing so, and of course, because
they're militarily and technologically dominant in the entire region. It's
been extremely difficult to convince Hamas that they have to
(15:09):
actually let the hostages go, which was Trump's only applause
line in his fifty five minute speech at the UN
Nations General Assembly last week. Because they're terrorists, because there
are a bunch of dead enders, and because they recognize
that they face assassination kind of either way. And look,
(15:30):
it's hard to put yourself in the position of what
would create rationality among leadership of Hamas. But they're putting
their own people at risk every day, and they have
for years now. So in that regard, it's hard to
maneuver much, though I think that there has been success
in putting a few small constraints on Israeli behavior. Trump
(15:53):
had been indifferent to Israeli annexation of the West Bank,
and he came out last week and said that they
will not do that on the back of the UAE,
saying that they would leave the Abraham Accords if the
Israelis proceeded. Trump had been actively promoting the idea of removing.
Speaker 6 (16:13):
Palestinians from Gaza.
Speaker 7 (16:14):
In fact, he said as much when he was on
stage with the King of Jordan a few months ago,
and he's now shifted away from that to a plan
that has been approved by the golf Arabs and by
the Israeli Prime Minister that says that the Palestinians aren't
going to be forced to leave that rather, they're going
(16:35):
to be able to stay in Gaza. And so, I mean, look,
it's not stopping the war, and as long as Hamas
refuses to release the hostages, I don't expect the war
to end, even though I think it would be much
better for Israel and everyone else involved.
Speaker 6 (16:51):
If they would stop.
Speaker 7 (16:53):
But I do think that we have a few guardrails,
however limited today.
Speaker 6 (17:01):
That we didn't have a week ago.
Speaker 5 (17:04):
Ian Let's switch gears to another hot spot, which would
be Ukraine. Is there any reason to believe that there
is some type of peace process possible in the near
intermediate term here?
Speaker 6 (17:19):
I would say it's more likely that the.
Speaker 7 (17:25):
Completely stalled offensive that Russia has had, it's been this grinding,
virtually no territory being taken, massive casualties, particularly in terms
of the Russian soldiers, over a million casualties in this
war for Russia so far in three and a half years.
It's a staggering number. It's hard to even imagine what
(17:46):
that means for society, but Putin doesn't care. It's hard
to imagine that that's going to continue the way it
has for the next six to twelve months, in part
because it's going to be very difficult for Ukraine to
continue to defend their territory and field the soldiers to
do so over the coming year, but also in part
(18:06):
because Trump.
Speaker 6 (18:07):
Is angry about this.
Speaker 7 (18:09):
He thought that he was going to leverage his relationship
with you. However it existed into a ceasefire. He made
Putin a lot of offers, ending sanctions and the like,
and Putin said no, thank you, and has embarrassed Trump,
has angered Trump, and Trump Trump is bringing it up.
He never brings up his failures. He forgets about them.
It's one of his political skills, not on Russia. And
(18:33):
instead he's talking about providing extended range missiles to Ukraine
that could take out Russian energy capability. And he's privately
pushing the Hungarians, the Turks, the Indians saying, you know,
I want you to end your purchasing of Russian oil.
He wasn't willing to do that a month ago. So
that there is real movement here from President Trump himself
(18:57):
to try to not just offer putin a care ineffectually.
Speaker 6 (19:01):
It would also include some stick.
Speaker 2 (19:04):
Doctor Reimer, let's finish up with this.
Speaker 3 (19:05):
We had a riveting conversation with Edwinal Mullen at the
Bloomberg Global Forum the other day.
Speaker 2 (19:11):
He was just on the South China Sea.
Speaker 3 (19:13):
Extraordinary the submarine secrets there, the Heinan, the island off China.
I think Americans Ian are ignorant that Taiwan isn't one
monolithic island. Explain to us the strategic realities for Americans
of Kinmen and Matsu islands just off the coast of China.
(19:35):
What are the immediate risks to those frontline islands in Taiwan.
Speaker 7 (19:41):
Well, of course, China's ability if they wanted to engage
in warfare with less consequence, taking those over or blockading
those much easier, right and with very little ability for
the Americans to respond or its Asian allies to respond militarily.
Speaker 6 (19:58):
But nobody really believes near turn that's going.
Speaker 7 (20:01):
To happen, in part because the United States is oriented
to work with China on Taiwan. Look, Trump and Chizhinping
had a phone call much anticipated last Friday, and the
single thing that Trump most wanted, which he got was
a nod from Xijin Ping on the US taking over
(20:22):
TikTok with political loyalists installed in charge of it. And
that's the thing that matters most to Trump. It allows
him to undermine the free media, control the information space,
and better ensure that he and his.
Speaker 6 (20:38):
Advisors can control twenty twenty six and twenty twenty eight.
Speaker 7 (20:42):
What the Chinese want is for Trump to back away
and say that they oppose independence for Taiwan as Bush
had President Bush had once before, and I think that
Trump is oriented to provide that. Frankly, so, we're not
heading towards escalation right now with the Chinese. We're actually
(21:06):
heading towards both sides getting something that really matters to
the individual leaders.
Speaker 3 (21:12):
You mentioned. There was one final question. I got a
ways to go here. Folks with Ian Bremer are always
the case. You mentioned the collapse of US AID USAID.
I've got family members abroad that say it's been devastating
for Africa. Explain right now, at the beginning of this
fourth quarter the impact of the lack of us AID.
Speaker 7 (21:36):
The United States is the most powerful country in the world.
It's the strongest economy by far, and the US has
historically been doing the most in terms of providing aid
to other countries and to the people in those countries
that need it, whether they're suffering from malaria, whether they're
vulnerable to HIV AIDS, whether they're start whether they're facing
(22:01):
forced migration.
Speaker 6 (22:03):
The US has done that directly.
Speaker 7 (22:04):
It's also led the charge in doing that indirectly through
American support for the United Nations and the organizations that
it stands up, like the World Food Program, for example.
The United States has decided that those things should no
longer be priorities. That America first means that these other
countries should have to make their own way, They should
(22:24):
have to pay for themselves.
Speaker 6 (22:25):
Now, the Chinese see this is a great opportunity.
Speaker 7 (22:28):
In the same way that when the Americans cut back
on visas, the Chinese immediately say we're going to make
it easier for talented people to come. They won't be
as attractive in terms of their aid. But if they
are the lead power. I mean, they made up their dues,
many of which were in arrears at the UN the
Americans aren't paying. The Chinese said, okay, we'll pay some
(22:50):
of ours now, so that they can put forward that
they're the ones that are more accountable.
Speaker 6 (22:55):
Look, if you think that only American hard.
Speaker 7 (22:57):
Power matters, and maybe in the short term that's true,
and you don't care very much about non Americans and
don't think that they are as deserving or that we
should take care of any of them, we don't have accountability.
Speaker 6 (23:10):
Then it doesn't matter. But that's never been my view,
and I think it's a mistake long term.
Speaker 3 (23:16):
And thank you so much, doctor Bremmer, with you raise
your group, and we thank him for his years of
support of what we.
Speaker 2 (23:21):
Do at Surveillance. Stay with us.
Speaker 3 (23:23):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (23:34):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station, Just
say Alexa Play Bloomberg.
Speaker 8 (23:49):
Eleven thirty, nineteen.
Speaker 3 (23:51):
Eighty, all of a sudden, we had federal funding gaps,
and the Attorney General issued an opinion that the eighteen
eighty four Anti Deficiency EC required shutdown. Joining us now
Wendy Schuller, who knows all this from Brown university. So
we shut down in nineteen eighty one. What's different now
(24:14):
versus the early eighty one and nineteen eighty four shutdowns, Wendy,
good morning.
Speaker 9 (24:20):
Well, the biggest thing is the size and scope of
the federal government. In Ronald Reagan argued that it was
too big then, and we started the practice under Ronald
Reagan really of big crs continuing resolutions where you'd wrap
up all the separate appropriations bills and Reagan would have
to sign or vito them. He famously shut the government
(24:41):
down for a little while in eighty six eighty seven,
also because he got this, you know, two thousand page
bill and said, what's in this bill? So we've seen
that before, but the scope of the government was smaller,
from everything from regulation to benefits or relationships to the
individual voter in revital person in America. So the profound
(25:02):
impact of a shutdown is so much larger. And that's
why we have a partial shutdown. Tom, That's why you know,
you and Paul know this is partial. The whole government
isn't shutting down. They've learned to get around that by
designating essential services. You know, when New gaingers shut the
government down in nineteen ninety five ninety six, there wasn't
essential services.
Speaker 8 (25:23):
It was just everybody was furloughed. Now they carve.
Speaker 9 (25:27):
Out things like TSA, for example, a traffic controllers, the
federal court system. So it's not as big a wide
shutdown as it was forty years ago.
Speaker 8 (25:35):
But the government is much bigger.
Speaker 3 (25:36):
Quickly, or because Paul's got eight questions smarter than me
when they is to cut to the chase. The heart
of the matter is a political movement coming across the
twentieth century that the federal government is bad.
Speaker 2 (25:49):
Where did that come from?
Speaker 8 (25:53):
Well, I mean, you want me to do this quickly.
Speaker 9 (25:56):
You can go back to antipathy towards the federal government
all the way to the Civil War to FD are
the new deals, Southern resistance to civil rights. The bigger
it grew, the more regulation, environmental protection, all sorts of
regulation of people who believe that, like Jefferson and Madison,
that the federal government should be small, limited in scope
(26:17):
and purpose, grew to resent the power of the federal government.
And now we're seeing the flip side of that. The
Republican president is exercising enormous federal power over both.
Speaker 8 (26:28):
State governments, and individuals.
Speaker 9 (26:30):
That's the Republicans and the conservative movement has always been
the opposite, let's limit the government's power.
Speaker 8 (26:36):
So what's interesting is when.
Speaker 9 (26:37):
Jadevance talks about, you know, cutting jobs or furloughing or
shrinking the size of the federal government, at the very
same time, this federal government is exercising unprecedented power over
states and individuals.
Speaker 5 (26:50):
Wendy, President Trump is threatened to use this shutdown to
actually fire federal workers.
Speaker 2 (26:56):
Is that happening, Paul?
Speaker 9 (26:59):
I think we're seeing really the cracks and protection, even
though there's collective bargaining among unionized federal workers.
Speaker 8 (27:05):
The cracks and the protection going back all.
Speaker 9 (27:07):
The way to the Pendleton Act in eighteen eighty three,
which is supposed to protect federal workers and Jimmy Carter's
reforms in the seventies. But now we see that they
are not very well protected. And you know, it's a
big risk to fire.
Speaker 8 (27:20):
Who are going to fire? Are you going to fire
Park service workers?
Speaker 9 (27:22):
We've seen that the Republicans from the West are not
excited about that. That backfired on the Republicans in the
nineteen nineties.
Speaker 8 (27:29):
You know, who are you going to fire? Where do
they live?
Speaker 9 (27:32):
And what is the political disposition of the area that
they live in, and then the services that they provide
to people who voted for Donald Trump. So this is trickier,
I think, to do it in a mass way than
the Republicans right now.
Speaker 2 (27:45):
Are letting on Here in New York City.
Speaker 5 (27:47):
We got some news yesterday that's some funding for some
infrastructure here in the Greater New York City area. The
Gateway project in particular has been halted here. So what's
the strategy behind some of these targeted funding? I guess reductions.
Speaker 8 (28:04):
At the moment, the strategy looks fairly part of it.
Speaker 9 (28:07):
You'd have to say that, you know, the Republicans have
been saying that we spend too much money, So now
President Trump can say, well, look, eighteen billion dollars, do
you really need it?
Speaker 8 (28:15):
New York State has what.
Speaker 9 (28:16):
Almost a trillion dollar If not, if I'm not mistaken
budget as a state, why can't they pay for it themselves?
Speaker 8 (28:23):
But it looks like it's.
Speaker 9 (28:24):
Targeting blue states, but blue states also tend to spend
more on mass transit and infrastructure in in densely populated
areas than other states.
Speaker 8 (28:32):
So it's hard to figure out exactly how partisan. This is,
but that's where we are. But it can always be reversed.
Speaker 9 (28:39):
So you know, people say this is again Higee Jeffries
and Chuck Schumer, both from New York.
Speaker 8 (28:43):
But really it's a broader effort to tram.
Speaker 9 (28:47):
The reliance of these states on federal dollars for things
like mass transit and improving infrastructure bridges. I don't think
it works in the end because these states also generate
a lot of economic activity and tax revenue for the
federal government.
Speaker 5 (29:01):
Is there actually an on off ramp here for both
sides that maybe just find some common question, thank you,
thank you.
Speaker 9 (29:08):
I do think I think there's an off ramp where
the Republican leader John Thune, instead of saying, oh, we'll
talk to you later, just keep the government open for
seven weeks, which is what the Democrats used to do
when they were in charge, he should say, we will
vote on an extension of these tax subsidies for Obamacare premiums,
which expired December thirty first and affect millions of people.
(29:30):
We will give you a vote, a scheduled vote, and
if they if the Democrats can walk away with a
scheduled vote on this question, knowing that they'll have access
to pushing it on the floor of the Senate. Then
I think they have enough cover to go back to
the table and get the government back up.
Speaker 3 (29:44):
Well, I look at the politics of this, and of
course it's all finessing. Does a shutdown play into the
election coming up next November or is it just so
far distant in all of the.
Speaker 9 (29:54):
Ancient history, Tom, I think that this shutdown plays into
the elections we've got for governor in.
Speaker 8 (30:00):
New Jersey and for Virginia. Those polls are tightening. You know,
this is a way of mobilizing Democrats.
Speaker 9 (30:07):
You know, we've been complaining that their Washington based leadership
has done nothing to stop or fight or for Donald Trump.
This is a way of galvanizing and encouraging those voters
to get out to the polls for.
Speaker 8 (30:18):
The Democratic candidates.
Speaker 9 (30:20):
And it's a sort of a pseudo off, you know,
mitchrum cycle that Democrats should do better.
Speaker 8 (30:24):
So that's where the interest of the Democrats lie.
Speaker 9 (30:27):
How long they can keep this going without hurting other
parts of their constituency is the calculation that both Republicans
and Democrats are trying to make right now.
Speaker 3 (30:35):
Professor Shower hugely informative thank us so much. Learned a
lot there, Wendy Schulders at Brown University.
Speaker 2 (30:42):
Stay with us.
Speaker 3 (30:43):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (30:53):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Play and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 3 (31:08):
Away from Baseball, the newspapers are swarnings.
Speaker 10 (31:12):
All right, we're going to dive right into the tech
job market, and there's there's kind of like growing divide
in it. You have those with AI skills and those without.
And the Wall Street journals like really gets into this,
so they talk about the skills. Those at the highest
level of skills they can get multimillion dollar pay packages.
Those with okay MAAI savvy they can get about a
million dollars a year. Job seekers are saying they just
(31:34):
want someone to hire them and teach them on the job.
But what they're looking for is someone who can train
AI models to do these patterns and direct predict outcomes.
Right because some people have you know, AI experience. They
get certifications and they're saying well that's not enough. You know,
just because you know how to use chat GPT, it
doesn't certify you as an AI expert.
Speaker 5 (31:54):
I don't know what is an AI expert. This technology
happened like fifteen minutes ago.
Speaker 10 (31:58):
Yeah, yeah, yeah, they did. They need to train the
AI models and to know how to do it. And
it's a very intricate way that you have to know.
Speaker 2 (32:04):
But it's a.
Speaker 3 (32:05):
Small percentage of people with the gift of that current
I'm going to say coding is an a.
Speaker 8 (32:10):
It's a new technology.
Speaker 10 (32:11):
What you know.
Speaker 3 (32:12):
I hear from a lot of tech people. You know,
they're they're like way smarter than me, but they just
don't have employable skills.
Speaker 2 (32:20):
I don't understand it now. It's moving super super quick.
Speaker 5 (32:23):
So again, young people will figure it out.
Speaker 8 (32:27):
They're good at that.
Speaker 2 (32:28):
They're good at that.
Speaker 10 (32:29):
They are Okay, So I want to stick with AI
and see how it's impacting the music industry. Okay, this
is interesting source of telling the Financial Times. You have
Universal Music, Warner Warner Music, right, they know Taylor Swift,
Kendrick Lamar, Coldplay, like those are all their artists.
Speaker 8 (32:44):
They're nearing AI licensing deals.
Speaker 10 (32:46):
They reportedly involved startups like eleven lab Stability AI, but
even big companies like Google and Spotify. So they want
to know how the labels license their songs for creating
AI generated tracks, for training large language models.
Speaker 8 (33:00):
They want to get paid, that's the bottom line.
Speaker 10 (33:02):
So they want a payment structure that's similar to streaming,
where you know, you play a song and that triggers
this micro payment. So that's the whole battle in AI
in the music space, and it's a really really big battle,
and it's starting to come up a lot more nowadays,
especially on Spotify. You hear AI just AI generated music
pop up on Spotify nowadays.
Speaker 5 (33:20):
But it's is it attributed to anybody that like is it?
Speaker 6 (33:23):
It's saying here's a song by.
Speaker 10 (33:25):
X, No, that's not and that's the thing, and that's
the thing. So like YouTube has this thing that where
they can identify where music is being used, so they're saying,
maybe use something like that technology. But it's a long
ways to go.
Speaker 2 (33:37):
It's a lot tougher than just tracking radio. So it's
a big deal. I don't understand it, but it's a
big deal among music people.
Speaker 10 (33:43):
They're like, oh sure, They're like they're fired up, they're
very fired up.
Speaker 1 (33:46):
I got it.
Speaker 10 (33:48):
And then lastly, I want to talk about DC fans.
So those listening in DC, they may have to find
another way to watch Wizards Capitals games. There's an issue
Monumental Sports Network. They went dark on YouTube TV, dizzy
on Hulu plus Live TV distribution deals expired. You can
still get it through Direct TV because they carry Monumental
(34:08):
Sports Network. But I thought what was interesting is this
whole issue about regional sports networks and how the difficulty
that they're starting.
Speaker 2 (34:16):
To baseball next season.
Speaker 5 (34:18):
It's been a couple of seasons already with the regional sports,
think hockey, think baseball, not so much the NFL, which
is a national sport, but the regional sports really dependent
upon regional sports networks. We have Yes Network here in
New York. There's need send nessing up there in Boston.
That was the backbone of the media rights fees for
(34:40):
these teams, and that model is just it's broken permanently,
and so now you got to find a substitute.
Speaker 6 (34:48):
Its streaming going to be that substitute.
Speaker 5 (34:50):
I don't know.
Speaker 2 (34:51):
So there you go. Let's see is that it?
Speaker 3 (34:53):
I mean, you're not concentrated because you're worried about the
Yankees today.
Speaker 10 (34:56):
I know, I know, but I can't at eight o'clock pm.
Speaker 5 (34:59):
Yeah, that's yeah, I know.
Speaker 2 (35:01):
When are they gonna learn and the kids can't watch school?
Speaker 6 (35:06):
What?
Speaker 2 (35:08):
Okay?
Speaker 3 (35:09):
Six pm, I get it, it's clumsy. Yeah, seven, seven pm.
The kids get to see the starter Pitchers for.
Speaker 2 (35:15):
The fourth dting.
Speaker 5 (35:16):
Yeah, they don't care. They don't care because more and
would lease advertising dollars from the networks in that time.
Speaker 2 (35:22):
Lisa mt tell the newspapers thank you so much.
Speaker 1 (35:26):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday seven to ten am Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(35:46):
and always on the Bloomberg terminal.
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple car Play or Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
(00:25):
or watch us live on YouTube.
Speaker 2 (00:27):
Joining us now.
Speaker 3 (00:27):
Michael Darta, Always on the Vineyard, forever looking north to Fenway.
Michael Darta, Chief Economists, Rough Capital Partners. Michael from a
GDP standpoint, does a shutdown?
Speaker 2 (00:41):
Is it Germaine?
Speaker 4 (00:42):
It really depends how long this goes on, Tom. You know,
hopefully calmer and cooler heads can prevail in Washington, so
we don't end up, you know, weeks and potentially months
on end, because the longer this goes on, the more
disruptive it will be to the economy into the macro data,
which we now don't have. Right, we're kind of flying
(01:04):
blind into the end of the week here, and we're
missing some pretty important necro reports.
Speaker 2 (01:09):
So what do you do?
Speaker 3 (01:12):
You know, then, start is so good at this folks
linking economics into investment. If you're blind, Michael, what do
you do with a trading strategy?
Speaker 4 (01:21):
Well, luckily we still do have some private sector reports
that are coming out. So we got some data from
ADP yesterday which was not very good. I've got some
data from the Institute of Supply Management, and so abstracting
from that, you know, we can still construct running forecast
(01:42):
estimates for how the economy's doing. And interestingly enough, I mean,
the Atlantic beed tracking data for the third quarter is
really still holding in there at pretty robust levels. For
real final sales to the private sector sector still running
pretty close to three percent for Q three. It would
be completely shocking if we were actually in an environment
(02:04):
of negative job growth with the real economy humming along
at three percent. So I would take all of this
and take a bit of a step back, and you know,
I think these jobs numbers are probably weak more in
a temporary way, unless the economy just goes off a
cliff in the fourth quarter.
Speaker 5 (02:24):
You know, Michael, you mentioned you referenced the ADP data yesterday.
I know people take that with a grain of salt,
but boy, that was kind of startling there. A negative
number there for the month and a negative revision for
the prior month. What'd you take away from that?
Speaker 4 (02:40):
Yeah, definitely was not good data. You know, at a
time when private payroll growth has slowed very sharply, with
quite significant downward revisions over the course of the last
year through March. I think there's a you know, there's
a bigger focus on these weak data points. And within
ADP we saw three down months, three negative job growth
(03:01):
months out of the last four, so that's not a positive.
And there was also some weakness that showed up in
the conference board data. You ask people about jobs being
hard to get or plentiful, that tends to correlate with
the unemployment rate pretty well. So that deteriorated again in
the most recent reading. So it does look like there
(03:21):
is some lingering softness in the labor market. The question
is is that going to intensify or is it more
temporary and likely to rebound. And Tom, I think that's
where you bring in the financial markets, which are quite optimistic.
And you know, you hear that old refrain all the
time that you know, the economy is not the stock market. Well,
actually the economy is the stock market. If you take
(03:43):
a look at the data. Equity markets are not perfect predictors,
but they do need growth rate of real and nominal
GDP by about one quarter, and so you know easy
financial conditions, the Fed continuing to eat He's monetary policy.
I think you want to be a little bit more
optimistic than pessimistic in terms of where the labor market
(04:06):
is as we move into next year.
Speaker 3 (04:08):
Acrastination. This morning, Michael Darty with this rough capital thrilled
he could.
Speaker 2 (04:12):
Be with us on YouTube.
Speaker 3 (04:13):
Subscribe to Bloomberg Podcasts, our new digital distribution. It is
Paul's in my future. Thank you so much for your
attention in your living room and in your office on YouTube,
just growing every day. Thank you so much for a
record September for us.
Speaker 2 (04:30):
Michael.
Speaker 3 (04:31):
I look at that then, and I look at the
fold over the green spanning. An idea that the equity
market really matters is the equity market is an expectation vehicle.
Speaker 2 (04:41):
How far out is expecting right now?
Speaker 6 (04:45):
Yeah?
Speaker 4 (04:46):
I mean the equity market. Look, Tom, you know it's volatile.
Equity investors are not always correct, and with any market
you can have a sudden, abrupt and unexpected turn of course. Right,
all of that said, investors are looking ahead. And if
you look at how the correlations tend to run from
(05:07):
markets into data, markets lead data lags and on average,
you know, the equity market leads by about three months.
If you bring the credit markets into the mix and
you look at overall financial conditions, you know, the lead
is maybe six or seven months at best. So you know,
we're not able to forecast really long horizon situations here
(05:30):
you're using these market based indicators, but at least over
the next one or two quarters, you know, I think,
especially now with the shutdown, these financial variables are pretty.
Speaker 6 (05:42):
Important, Michael.
Speaker 5 (05:44):
Looking at the consumer, the retail sales, other metrics like that,
the consumer seems to be more than hanging in there,
actually doing quite well.
Speaker 2 (05:52):
Does that surprise you at all?
Speaker 6 (05:56):
Yes?
Speaker 2 (05:56):
And no.
Speaker 4 (05:57):
I mean, you know, we're talking about the equity market,
and you know the fact that household net worth has
risen pretty dramatically. Now the worry is that, oh, that's
concentrated on the higher end, but the higher end is
driving a very large and growing share of total consumption.
And even with these weak jobs numbers, the unemployment rate
(06:18):
is only pushed up a little bit, you know, it
hasn't pushed up in a dramatic fashion, and so you
have still essentially a fully employed economy, very high asset prices,
so household balance sheets are in quite good shape, and
that's underpinning the you know, the consumer and you know,
the tracking estimates for Q three around three percent, So
(06:39):
that does not look like a recession.
Speaker 3 (06:42):
I look, Michael, at where we are, and it comes
back to something quaint. It's really falling. It's fallen off
the radar use of cash. Okay, I got nominal GDP.
They're going to deliver better than good revenue growth once again. Oh,
earnings are going to be terrible. Yeah, okay, Michael, earnings
will be okay. Let's say and margins. Do you see
(07:03):
a use of cash that just continues to drive this
bullmarket forward.
Speaker 4 (07:08):
Well, that's really the key, Tom. If top line growth
is you know, looks Q three looks like it's about
six percent. But even if we take that down by
a percentage point and top line is compounding at five
and companies are profitable, you know, and corporate profits have
been strong, that is not going to sustain itself for
any period unless you're getting positive hiring at the same time.
(07:31):
So companies will do different things. They can buy backstock,
they can invest. You know, we might see some lift
in capex, but they'll be hiring as well. So you know,
if you have top line growth, and you have corporate profits,
you're going to have employment as well.
Speaker 3 (07:46):
So this is something I think people have trouble with, Michael.
And let's not get into like nominal GDP, animal spirits.
Let's just say, is inflation good for Procter in gamble?
Is inflation good for you know, name another you know,
Church and Dwight, I mean, you know arm and Hammer
and all that. Is inflation good for basic companies?
Speaker 4 (08:11):
Well? Tom, you know it's a good question. I mean,
you do want some corporate pricing power, but the flip
side of that is costs. Right, So if you do
end up in an environment where inflation is high and volatile,
and then you have the central bank that has to
iron that out and restrain the economy, that's not good
for anyone.
Speaker 2 (08:29):
Okay, then carry it forward, Mike.
Speaker 3 (08:30):
I don't mean to interrupt, but this is this is
darta is central Carry it forward. If I go from
a FED moodeling two percent out to two point x percent,
what does it do to those companies? Do they see
wage lift?
Speaker 2 (08:44):
Yeah?
Speaker 4 (08:44):
And I think you are, you know you are seeing that.
You know, nominal wages and real wages are growing. So
that's consistent with the real economy expanding. Inflation is still
above the fedce target. But I think, you know, an
in an environment where inflation is trending at around three
you know, that can still be a very strong environment
for corporate profits if the economy is you know, staying
(09:07):
out of recession, and that's you know, I think that
is likely with the FED easing monetary policy. They've already
taken rates down one hundred and twenty five basis points
and with inflation expectations moving up forty to sixty basis
points over that period, real rates have fallen about two
hundred basis points. So the FED is definitely removed quite
(09:30):
a bit of restraint from its policy, so the top
line should hang there. I do think, you know, I
do worry about the FED getting back to two percent
inflation on a reasonable timeline. If we're still stuck at
three percent inflation over the course of the next two years,
and that's part of the Fed's forecasts, boy, that's a
long overshoot seven years, So I worry a little bit
(09:51):
that that bleeds into credibility. You know, the administration really
wants FED to ease because they want lower market interest rates,
but you know, you're not going to get lower market
interest rates of inflation expectations continue moving off, so the
FED needs to stay credible here. I think, you know,
four to five percent nominal, that's the sweet spot You'll
have corporate pricing power, Inflation won't be too high long
(10:14):
rates will be at reasonable levels.
Speaker 6 (10:17):
There you go.
Speaker 2 (10:17):
Bottle that, folks.
Speaker 3 (10:18):
Michael Darter, thanks so much, rough Capital.
Speaker 2 (10:20):
Stay with us.
Speaker 3 (10:21):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (10:32):
You're listening to the Bloomberg Surveillance podcast. Catch US Live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Auto with the Bloomberg Business app, or
watch US live on YouTube.
Speaker 3 (10:44):
Our next guest on short Notes, we are honored to
have with us Ian Bremmer. Of course, he has changed
the discussion of international relations at worldwide. We're going to
have an extended conversation here for all of you across
the nation. Good morning internationally on the Pacific rim on YouTube,
and your evening is well. Ian, Let's talk about the
(11:04):
international relations of a fractured America. What is the state
of our State Department right now?
Speaker 7 (11:12):
Well, the State Department, I mean, you know, at least
you have someone who's quite capable that's actually running it.
Having said that, USAID has been eviscerated, as you know,
and the biggest concern among the professional diplomats I know,
both in office now and also those that have left,
(11:34):
is that countries around the world no longer believe the
United States is reliable as an ally, that America's ward
is no longer something that you want to count on.
The US is incredibly powerful. It's not in decline, but
that what the US will do for you is not
necessarily what it will say. And that's true on trade,
(11:56):
it's true on collective security. It's true on the treatment
of your citizens living in the United States or traveling
to the United States.
Speaker 6 (12:02):
These things can.
Speaker 7 (12:03):
Change on a dime on the whims of the President
and his top advisors, and that worries these country is
a great deal.
Speaker 5 (12:13):
That level of disengagement Ian, do you think that is
reflective of this Republican Party?
Speaker 6 (12:18):
When you say disengagement, I'm sorry, what do you mean
by that?
Speaker 5 (12:21):
No, just in the America first, a type of feeling
within the Trump administration.
Speaker 7 (12:29):
I think the Republican Party is completely loyal to Trump,
and it doesn't really matter if a lot of them
feel differently about his doing a deal with China on
the Age twenty chips or coming to terms on TikTok.
It doesn't really matter if he says Ukraine's not that
(12:51):
important because it's an ocean away. Of course, a lot
of Republicans historically disagree with that, They disagree with Trump
opposing free trade, but the population has changed. So first
of all, there are a lot of people that really
oppose a lot of neocons in the Republican Party that
led to very expensive, very deadly failed wars, and there
(13:15):
are a lot of traditional free trade Republicans that no
longer have the support of the population in pushing for
globalization and for taking tariffs down.
Speaker 6 (13:26):
We're in a radically.
Speaker 7 (13:27):
Different environment, right We have tariffs at one hundred level,
historic highs, one hundred year highs, and we also have
a president that's doing his damndest to reduce American security
guarantees and commitments to other countries around the world, even
making big questions about whether the US would stand up
(13:48):
for Taiwan, for example, long term. So I mean, clearly
a lot of Republicans quietly uncomfortable with that.
Speaker 3 (13:53):
There's so many ways to go here, Ian Bremer, with
this for an extended conversation.
Speaker 2 (13:57):
With Eurasia Group. I know what people want to know.
When's the next book?
Speaker 6 (14:00):
Give me a date sometime next year.
Speaker 3 (14:02):
Sometime next year, Like, that's good enough. Ian, I want
to talk about Gaza. I want you to triangulate it
with Qatar, the president's relationship there, maybe with this desire
to win a peace prize and all that. How should
our listeners and viewers synthesize the cacophony of Gaza. I'm
looking at a video in the Washington Post this morning,
Greta Thunberg and others being the Israelis have taken over
(14:26):
flotilla whatever, how does the and Bremer translate the horror
of Gaza us through the American prism?
Speaker 7 (14:36):
The two combatants have very little consequence for.
Speaker 6 (14:44):
Continuing to engage in the fight.
Speaker 7 (14:47):
It's been extremely hard to convince Israel that they should
limit the warfare on the ground in Gaza or against
the Axis of Resistance more broadly, because there have been
no consequences for them doing so, and of course, because
they're militarily and technologically dominant in the entire region. It's
been extremely difficult to convince Hamas that they have to
(15:09):
actually let the hostages go, which was Trump's only applause
line in his fifty five minute speech at the UN
Nations General Assembly last week. Because they're terrorists, because there
are a bunch of dead enders, and because they recognize
that they face assassination kind of either way. And look,
(15:30):
it's hard to put yourself in the position of what
would create rationality among leadership of Hamas. But they're putting
their own people at risk every day, and they have
for years now. So in that regard, it's hard to
maneuver much, though I think that there has been success
in putting a few small constraints on Israeli behavior. Trump
(15:53):
had been indifferent to Israeli annexation of the West Bank,
and he came out last week and said that they
will not do that on the back of the UAE,
saying that they would leave the Abraham Accords if the
Israelis proceeded. Trump had been actively promoting the idea of removing.
Speaker 6 (16:13):
Palestinians from Gaza.
Speaker 7 (16:14):
In fact, he said as much when he was on
stage with the King of Jordan a few months ago,
and he's now shifted away from that to a plan
that has been approved by the golf Arabs and by
the Israeli Prime Minister that says that the Palestinians aren't
going to be forced to leave that rather, they're going
(16:35):
to be able to stay in Gaza. And so, I mean, look,
it's not stopping the war, and as long as Hamas
refuses to release the hostages, I don't expect the war
to end, even though I think it would be much
better for Israel and everyone else involved.
Speaker 6 (16:51):
If they would stop.
Speaker 7 (16:53):
But I do think that we have a few guardrails,
however limited today.
Speaker 6 (17:01):
That we didn't have a week ago.
Speaker 5 (17:04):
Ian Let's switch gears to another hot spot, which would
be Ukraine. Is there any reason to believe that there
is some type of peace process possible in the near
intermediate term here?
Speaker 6 (17:19):
I would say it's more likely that the.
Speaker 7 (17:25):
Completely stalled offensive that Russia has had, it's been this grinding,
virtually no territory being taken, massive casualties, particularly in terms
of the Russian soldiers, over a million casualties in this
war for Russia so far in three and a half years.
It's a staggering number. It's hard to even imagine what
(17:46):
that means for society, but Putin doesn't care. It's hard
to imagine that that's going to continue the way it
has for the next six to twelve months, in part
because it's going to be very difficult for Ukraine to
continue to defend their territory and field the soldiers to
do so over the coming year, but also in part
(18:06):
because Trump.
Speaker 6 (18:07):
Is angry about this.
Speaker 7 (18:09):
He thought that he was going to leverage his relationship
with you. However it existed into a ceasefire. He made
Putin a lot of offers, ending sanctions and the like,
and Putin said no, thank you, and has embarrassed Trump,
has angered Trump, and Trump Trump is bringing it up.
He never brings up his failures. He forgets about them.
It's one of his political skills, not on Russia. And
(18:33):
instead he's talking about providing extended range missiles to Ukraine
that could take out Russian energy capability. And he's privately
pushing the Hungarians, the Turks, the Indians saying, you know,
I want you to end your purchasing of Russian oil.
He wasn't willing to do that a month ago. So
that there is real movement here from President Trump himself
(18:57):
to try to not just offer putin a care ineffectually.
Speaker 6 (19:01):
It would also include some stick.
Speaker 2 (19:04):
Doctor Reimer, let's finish up with this.
Speaker 3 (19:05):
We had a riveting conversation with Edwinal Mullen at the
Bloomberg Global Forum the other day.
Speaker 2 (19:11):
He was just on the South China Sea.
Speaker 3 (19:13):
Extraordinary the submarine secrets there, the Heinan, the island off China.
I think Americans Ian are ignorant that Taiwan isn't one
monolithic island. Explain to us the strategic realities for Americans
of Kinmen and Matsu islands just off the coast of China.
(19:35):
What are the immediate risks to those frontline islands in Taiwan.
Speaker 7 (19:41):
Well, of course, China's ability if they wanted to engage
in warfare with less consequence, taking those over or blockading
those much easier, right and with very little ability for
the Americans to respond or its Asian allies to respond militarily.
Speaker 6 (19:58):
But nobody really believes near turn that's going.
Speaker 7 (20:01):
To happen, in part because the United States is oriented
to work with China on Taiwan. Look, Trump and Chizhinping
had a phone call much anticipated last Friday, and the
single thing that Trump most wanted, which he got was
a nod from Xijin Ping on the US taking over
(20:22):
TikTok with political loyalists installed in charge of it. And
that's the thing that matters most to Trump. It allows
him to undermine the free media, control the information space,
and better ensure that he and his.
Speaker 6 (20:38):
Advisors can control twenty twenty six and twenty twenty eight.
Speaker 7 (20:42):
What the Chinese want is for Trump to back away
and say that they oppose independence for Taiwan as Bush
had President Bush had once before, and I think that
Trump is oriented to provide that. Frankly, so, we're not
heading towards escalation right now with the Chinese. We're actually
(21:06):
heading towards both sides getting something that really matters to
the individual leaders.
Speaker 3 (21:12):
You mentioned. There was one final question. I got a
ways to go here. Folks with Ian Bremer are always
the case. You mentioned the collapse of US AID USAID.
I've got family members abroad that say it's been devastating
for Africa. Explain right now, at the beginning of this
fourth quarter the impact of the lack of us AID.
Speaker 7 (21:36):
The United States is the most powerful country in the world.
It's the strongest economy by far, and the US has
historically been doing the most in terms of providing aid
to other countries and to the people in those countries
that need it, whether they're suffering from malaria, whether they're
vulnerable to HIV AIDS, whether they're start whether they're facing
(22:01):
forced migration.
Speaker 6 (22:03):
The US has done that directly.
Speaker 7 (22:04):
It's also led the charge in doing that indirectly through
American support for the United Nations and the organizations that
it stands up, like the World Food Program, for example.
The United States has decided that those things should no
longer be priorities. That America first means that these other
countries should have to make their own way, They should
(22:24):
have to pay for themselves.
Speaker 6 (22:25):
Now, the Chinese see this is a great opportunity.
Speaker 7 (22:28):
In the same way that when the Americans cut back
on visas, the Chinese immediately say we're going to make
it easier for talented people to come. They won't be
as attractive in terms of their aid. But if they
are the lead power. I mean, they made up their dues,
many of which were in arrears at the UN the
Americans aren't paying. The Chinese said, okay, we'll pay some
(22:50):
of ours now, so that they can put forward that
they're the ones that are more accountable.
Speaker 6 (22:55):
Look, if you think that only American hard.
Speaker 7 (22:57):
Power matters, and maybe in the short term that's true,
and you don't care very much about non Americans and
don't think that they are as deserving or that we
should take care of any of them, we don't have accountability.
Speaker 6 (23:10):
Then it doesn't matter. But that's never been my view,
and I think it's a mistake long term.
Speaker 3 (23:16):
And thank you so much, doctor Bremmer, with you raise
your group, and we thank him for his years of
support of what we.
Speaker 2 (23:21):
Do at Surveillance. Stay with us.
Speaker 3 (23:23):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (23:34):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station, Just
say Alexa Play Bloomberg.
Speaker 8 (23:49):
Eleven thirty, nineteen.
Speaker 3 (23:51):
Eighty, all of a sudden, we had federal funding gaps,
and the Attorney General issued an opinion that the eighteen
eighty four Anti Deficiency EC required shutdown. Joining us now
Wendy Schuller, who knows all this from Brown university. So
we shut down in nineteen eighty one. What's different now
(24:14):
versus the early eighty one and nineteen eighty four shutdowns, Wendy,
good morning.
Speaker 9 (24:20):
Well, the biggest thing is the size and scope of
the federal government. In Ronald Reagan argued that it was
too big then, and we started the practice under Ronald
Reagan really of big crs continuing resolutions where you'd wrap
up all the separate appropriations bills and Reagan would have
to sign or vito them. He famously shut the government
(24:41):
down for a little while in eighty six eighty seven,
also because he got this, you know, two thousand page
bill and said, what's in this bill? So we've seen
that before, but the scope of the government was smaller,
from everything from regulation to benefits or relationships to the
individual voter in revital person in America. So the profound
(25:02):
impact of a shutdown is so much larger. And that's
why we have a partial shutdown. Tom, That's why you know,
you and Paul know this is partial. The whole government
isn't shutting down. They've learned to get around that by
designating essential services. You know, when New gaingers shut the
government down in nineteen ninety five ninety six, there wasn't
essential services.
Speaker 8 (25:23):
It was just everybody was furloughed. Now they carve.
Speaker 9 (25:27):
Out things like TSA, for example, a traffic controllers, the
federal court system. So it's not as big a wide
shutdown as it was forty years ago.
Speaker 8 (25:35):
But the government is much bigger.
Speaker 3 (25:36):
Quickly, or because Paul's got eight questions smarter than me
when they is to cut to the chase. The heart
of the matter is a political movement coming across the
twentieth century that the federal government is bad.
Speaker 2 (25:49):
Where did that come from?
Speaker 8 (25:53):
Well, I mean, you want me to do this quickly.
Speaker 9 (25:56):
You can go back to antipathy towards the federal government
all the way to the Civil War to FD are
the new deals, Southern resistance to civil rights. The bigger
it grew, the more regulation, environmental protection, all sorts of
regulation of people who believe that, like Jefferson and Madison,
that the federal government should be small, limited in scope
(26:17):
and purpose, grew to resent the power of the federal government.
And now we're seeing the flip side of that. The
Republican president is exercising enormous federal power over both.
Speaker 8 (26:28):
State governments, and individuals.
Speaker 9 (26:30):
That's the Republicans and the conservative movement has always been
the opposite, let's limit the government's power.
Speaker 8 (26:36):
So what's interesting is when.
Speaker 9 (26:37):
Jadevance talks about, you know, cutting jobs or furloughing or
shrinking the size of the federal government, at the very
same time, this federal government is exercising unprecedented power over
states and individuals.
Speaker 5 (26:50):
Wendy, President Trump is threatened to use this shutdown to
actually fire federal workers.
Speaker 2 (26:56):
Is that happening, Paul?
Speaker 9 (26:59):
I think we're seeing really the cracks and protection, even
though there's collective bargaining among unionized federal workers.
Speaker 8 (27:05):
The cracks and the protection going back all.
Speaker 9 (27:07):
The way to the Pendleton Act in eighteen eighty three,
which is supposed to protect federal workers and Jimmy Carter's
reforms in the seventies. But now we see that they
are not very well protected. And you know, it's a
big risk to fire.
Speaker 8 (27:20):
Who are going to fire? Are you going to fire
Park service workers?
Speaker 9 (27:22):
We've seen that the Republicans from the West are not
excited about that. That backfired on the Republicans in the
nineteen nineties.
Speaker 8 (27:29):
You know, who are you going to fire? Where do
they live?
Speaker 9 (27:32):
And what is the political disposition of the area that
they live in, and then the services that they provide
to people who voted for Donald Trump. So this is trickier,
I think, to do it in a mass way than
the Republicans right now.
Speaker 2 (27:45):
Are letting on Here in New York City.
Speaker 5 (27:47):
We got some news yesterday that's some funding for some
infrastructure here in the Greater New York City area. The
Gateway project in particular has been halted here. So what's
the strategy behind some of these targeted funding? I guess reductions.
Speaker 8 (28:04):
At the moment, the strategy looks fairly part of it.
Speaker 9 (28:07):
You'd have to say that, you know, the Republicans have
been saying that we spend too much money, So now
President Trump can say, well, look, eighteen billion dollars, do
you really need it?
Speaker 8 (28:15):
New York State has what.
Speaker 9 (28:16):
Almost a trillion dollar If not, if I'm not mistaken
budget as a state, why can't they pay for it themselves?
Speaker 8 (28:23):
But it looks like it's.
Speaker 9 (28:24):
Targeting blue states, but blue states also tend to spend
more on mass transit and infrastructure in in densely populated
areas than other states.
Speaker 8 (28:32):
So it's hard to figure out exactly how partisan. This is,
but that's where we are. But it can always be reversed.
Speaker 9 (28:39):
So you know, people say this is again Higee Jeffries
and Chuck Schumer, both from New York.
Speaker 8 (28:43):
But really it's a broader effort to tram.
Speaker 9 (28:47):
The reliance of these states on federal dollars for things
like mass transit and improving infrastructure bridges. I don't think
it works in the end because these states also generate
a lot of economic activity and tax revenue for the
federal government.
Speaker 5 (29:01):
Is there actually an on off ramp here for both
sides that maybe just find some common question, thank you,
thank you.
Speaker 9 (29:08):
I do think I think there's an off ramp where
the Republican leader John Thune, instead of saying, oh, we'll
talk to you later, just keep the government open for
seven weeks, which is what the Democrats used to do
when they were in charge, he should say, we will
vote on an extension of these tax subsidies for Obamacare premiums,
which expired December thirty first and affect millions of people.
(29:30):
We will give you a vote, a scheduled vote, and
if they if the Democrats can walk away with a
scheduled vote on this question, knowing that they'll have access
to pushing it on the floor of the Senate. Then
I think they have enough cover to go back to
the table and get the government back up.
Speaker 3 (29:44):
Well, I look at the politics of this, and of
course it's all finessing. Does a shutdown play into the
election coming up next November or is it just so
far distant in all of the.
Speaker 9 (29:54):
Ancient history, Tom, I think that this shutdown plays into
the elections we've got for governor in.
Speaker 8 (30:00):
New Jersey and for Virginia. Those polls are tightening. You know,
this is a way of mobilizing Democrats.
Speaker 9 (30:07):
You know, we've been complaining that their Washington based leadership
has done nothing to stop or fight or for Donald Trump.
This is a way of galvanizing and encouraging those voters
to get out to the polls for.
Speaker 8 (30:18):
The Democratic candidates.
Speaker 9 (30:20):
And it's a sort of a pseudo off, you know,
mitchrum cycle that Democrats should do better.
Speaker 8 (30:24):
So that's where the interest of the Democrats lie.
Speaker 9 (30:27):
How long they can keep this going without hurting other
parts of their constituency is the calculation that both Republicans
and Democrats are trying to make right now.
Speaker 3 (30:35):
Professor Shower hugely informative thank us so much. Learned a
lot there, Wendy Schulders at Brown University.
Speaker 2 (30:42):
Stay with us.
Speaker 3 (30:43):
More from Bloomberg Surveillance coming up after this.
Speaker 1 (30:53):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Play and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 3 (31:08):
Away from Baseball, the newspapers are swarnings.
Speaker 10 (31:12):
All right, we're going to dive right into the tech
job market, and there's there's kind of like growing divide
in it. You have those with AI skills and those without.
And the Wall Street journals like really gets into this,
so they talk about the skills. Those at the highest
level of skills they can get multimillion dollar pay packages.
Those with okay MAAI savvy they can get about a
million dollars a year. Job seekers are saying they just
(31:34):
want someone to hire them and teach them on the job.
But what they're looking for is someone who can train
AI models to do these patterns and direct predict outcomes.
Right because some people have you know, AI experience. They
get certifications and they're saying well that's not enough. You know,
just because you know how to use chat GPT, it
doesn't certify you as an AI expert.
Speaker 5 (31:54):
I don't know what is an AI expert. This technology
happened like fifteen minutes ago.
Speaker 10 (31:58):
Yeah, yeah, yeah, they did. They need to train the
AI models and to know how to do it. And
it's a very intricate way that you have to know.
Speaker 2 (32:04):
But it's a.
Speaker 3 (32:05):
Small percentage of people with the gift of that current
I'm going to say coding is an a.
Speaker 8 (32:10):
It's a new technology.
Speaker 10 (32:11):
What you know.
Speaker 3 (32:12):
I hear from a lot of tech people. You know,
they're they're like way smarter than me, but they just
don't have employable skills.
Speaker 2 (32:20):
I don't understand it now. It's moving super super quick.
Speaker 5 (32:23):
So again, young people will figure it out.
Speaker 8 (32:27):
They're good at that.
Speaker 2 (32:28):
They're good at that.
Speaker 10 (32:29):
They are Okay, So I want to stick with AI
and see how it's impacting the music industry. Okay, this
is interesting source of telling the Financial Times. You have
Universal Music, Warner Warner Music, right, they know Taylor Swift,
Kendrick Lamar, Coldplay, like those are all their artists.
Speaker 8 (32:44):
They're nearing AI licensing deals.
Speaker 10 (32:46):
They reportedly involved startups like eleven lab Stability AI, but
even big companies like Google and Spotify. So they want
to know how the labels license their songs for creating
AI generated tracks, for training large language models.
Speaker 8 (33:00):
They want to get paid, that's the bottom line.
Speaker 10 (33:02):
So they want a payment structure that's similar to streaming,
where you know, you play a song and that triggers
this micro payment. So that's the whole battle in AI
in the music space, and it's a really really big battle,
and it's starting to come up a lot more nowadays,
especially on Spotify. You hear AI just AI generated music
pop up on Spotify nowadays.
Speaker 5 (33:20):
But it's is it attributed to anybody that like is it?
Speaker 6 (33:23):
It's saying here's a song by.
Speaker 10 (33:25):
X, No, that's not and that's the thing, and that's
the thing. So like YouTube has this thing that where
they can identify where music is being used, so they're saying,
maybe use something like that technology. But it's a long
ways to go.
Speaker 2 (33:37):
It's a lot tougher than just tracking radio. So it's
a big deal. I don't understand it, but it's a
big deal among music people.
Speaker 10 (33:43):
They're like, oh sure, They're like they're fired up, they're
very fired up.
Speaker 1 (33:46):
I got it.
Speaker 10 (33:48):
And then lastly, I want to talk about DC fans.
So those listening in DC, they may have to find
another way to watch Wizards Capitals games. There's an issue
Monumental Sports Network. They went dark on YouTube TV, dizzy
on Hulu plus Live TV distribution deals expired. You can
still get it through Direct TV because they carry Monumental
(34:08):
Sports Network. But I thought what was interesting is this
whole issue about regional sports networks and how the difficulty
that they're starting.
Speaker 2 (34:16):
To baseball next season.
Speaker 5 (34:18):
It's been a couple of seasons already with the regional sports,
think hockey, think baseball, not so much the NFL, which
is a national sport, but the regional sports really dependent
upon regional sports networks. We have Yes Network here in
New York. There's need send nessing up there in Boston.
That was the backbone of the media rights fees for
(34:40):
these teams, and that model is just it's broken permanently,
and so now you got to find a substitute.
Speaker 6 (34:48):
Its streaming going to be that substitute.
Speaker 5 (34:50):
I don't know.
Speaker 2 (34:51):
So there you go. Let's see is that it?
Speaker 3 (34:53):
I mean, you're not concentrated because you're worried about the
Yankees today.
Speaker 10 (34:56):
I know, I know, but I can't at eight o'clock pm.
Speaker 5 (34:59):
Yeah, that's yeah, I know.
Speaker 2 (35:01):
When are they gonna learn and the kids can't watch school?
Speaker 6 (35:06):
What?
Speaker 2 (35:08):
Okay?
Speaker 3 (35:09):
Six pm, I get it, it's clumsy. Yeah, seven, seven pm.
The kids get to see the starter Pitchers for.
Speaker 2 (35:15):
The fourth dting.
Speaker 5 (35:16):
Yeah, they don't care. They don't care because more and
would lease advertising dollars from the networks in that time.
Speaker 2 (35:22):
Lisa mt tell the newspapers thank you so much.
Speaker 1 (35:26):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday seven to ten am Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(35:46):
and always on the Bloomberg terminal.
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