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Joe
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Kelly
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Joe
Product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Granger for the ones who get it done. Bloomberg Audio Studios Podcasts radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:55]
Kailey Leinz
It's exactly one week out from the State of the Union address that President Trump will give to a joint session of Congress. Yes, it's just one week from now. Happens to be the day after lawmakers return from their recess. And my question is, will he be addressing the room with part of the government still shut down, with Department of Homeland Security still not funded after midnight Friday came and went and no deal was made between Republicans and Democrats over ICE reforms.
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Joe Matthew
You know, he was asked about it on an Air Force One. He said, I think I would. Yeah, wouldn't bother me wondering exactly how he would play that. Some think it's a bad look to be up there with one agency closed. But he could also use that as a hook to castigate Republicans or Democrats rather, and blame them for not working with Republicans. So either way, we're going to be up there alive and this will likely be a doozy with a lot to talk about. We should mention that Democrats have come back with a counteroffer to the counter proposal. We just don't know, Kelly, what's inside.
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Kailey Leinz
Yeah, we never got the details of what the White House countered with. Usually here in Washington, if people are quiet about the details, it may mean that actual progress is being made. But we know that the Democrats had a long list of demands that they initially put forward. And the question is going to be how much will the Democratic base allow them to pull back on what they asked for and find some kind of compromise here? How much is the White House, on the other hand, willing to give in terms of compromise?
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Joe Matthew
Well, let's check in with Tyler Kendall for the latest on this. Bloomberg's Washington correspondent joins us now live in our Washington bureau with her eyes as well on the meetings underway in Geneva. Let's start with dhs, Tyler. Four days. We knew we would start this week with this agency closed. And I think we know we're going to start next week with it closed as well. The big sticking points remain the same. Nothing has changed. Demasking and judicial warrants are nonstarters on both sides of the aisle, it seems.
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Kelly
Right. Exactly. We haven't really gotten much insight into how either side is going to ultimately need to compromise to reopen the Department of Homeland Security, home to nearly 260,000 federal workers. But it almost feels eerily quiet here in Washington. I don't know if you guys feel that way, but Congress is on recess for at least the next week. So to your point, these are going to be negotiations that end up dragging on. Now, my inbox last night lit up late in the evening because we did hear from Senate Minority Leader Chuck Schumer who confirmed that Democrats have sent over their counter proposal. But to your point, we haven't really gotten momentum on what those nonstarters essentially for Republicans are ultimately going to shake out to be. Right. We know that the White House is in favor of body camera mandates, for example. We've already seen that put into place by dhs. But those other things like new warrant requirements and what, what's been called demasking, having federal agents remove their masks during immigration enforcement procedures doesn't seem to be something on the table. And Joe and Kelly, this goes to Republicans initial push that they really wanted to see this compromise be done through executive action, have President Trump put through some orders. But at the end of the day, Democrats are holding firm. They need to see some changes codified into law.
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Kailey Leinz
Yeah, they want to see legislation though. We know President Trump does not shy away from executive orders. In fact, it happens to be one of his favorite policy tools, if you will. President Trump, while focused on domestic issues like keeping all of the government agencies funded, also has had a great deal of focus on geopolitics, as we well know, in a variety of different theaters, Tyler. But the ones we're focused on today because they both happen to be centered in conversations taking place in Geneva, Switzerland, our talks with Iran and over ending the war between Ukraine and Russia. This is how President Trump characterized it yesterday.
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Joe Matthew
I'll be involved in those talks indirectly. That'll be very important. We'll see what can happen. It's been typically brands are very tough negotiate. They're good negotiators or bad. You go, I would say the abandonment, big talks. It's got to be Very easy. I mean, it's look so far, Ukraine better come to the table fast.
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Jeannie Shan Zaino
That's all I'm telling you.
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Kailey Leinz
So I'm not sure what we think about his indirect involvement, how direct that may be, Tyler. But knowing that Iran has said there is a general agreement here and in two more weeks we should have further details of a potential deal, what do we really know?
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Kelly
So we have to take this into the broader context that essentially what we heard out of Iran today is that they're agreeing to more talks. The talks didn't go off the rails, which is seen as a relatively positive development when it comes to the diplomatic option being pursued. And it appears that the biggest question on the table right now is what is going to be the future of Iran's domestic enrichment capacity related to its nuclear program. That seems to be the number one crux of the talks at the moment. The thing is, we have repeatedly heard from you U.S. officials, perhaps most notably the Secretary of State Marco Rubio, who says that these talks need to expand beyond that they want to see on the table Iran's ballistic missile program, also its support of regional proxy militia groups. And at the moment it doesn't seem like they're going to end up approaching those topics. And in fact, our own analysts at Bloomberg Economics have said the fact that this has been limited to what they are calling the nuclear file, that's probably not going to be enough of a concession for the Trump administration. So they are still keeping in their assessment the likelihood that we could see military strikes down the road. And as you both know, we've seen escalation just in recent days, this bolstering of military assets, another carrier strike group going into the region and Iran, of course, closing part of the Strait of Hormuz for pre planned military drills.
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Joe Matthew
So that's the first part of what he was talking about there with Iran when you move to the talks. Also in Geneva with Witkoff and Kushner, another meeting that has now concluded here. He said Ukraine better come to the table fast. That's all I'm telling you. Or what? It'll be occupied by Russia? Isn't that already happening?
- [06:42]
Kelly
Pretty interesting statement from President Trump.
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Joe Matthew
Perhaps we thought he was upset with Putin most recently.
- [06:47]
Kelly
Perhaps goes to that mounting frustration that we have seen from the White House that there hasn't been this breakthrough. Pretty remarkable just in and of itself that we're seeing these dual back to back negotiations in Geneva led by special envoy Steve Witkoff and the President's son in law Jared Kushner. I think it's fair to say that the consensus going into these talks was relatively low in terms of what sort of progress we would see because we saw strikes just last night, the Ukrainian president posting in a social media post that There was nearly 400 drones and 29 missile attacks. Earlier today, Ukraine did confirm that it had target targeted an energy infrastructure facility on the coast of the Black Sea. So we've really seen this escalation, sort of this pullback from what the White House had been touting as progress. We can say that in recent there had been progress in particular about security guarantees. That was one of the two biggest sticking points on the table that appears to be relatively resolved. The US has put forward really strong security guarantees, according to our reporting. But the issue of territory, and we heard from the Ukrainian President Zelensky earlier today, they're going to talk about this very important nuclear power plant in that eastern Donbas region. The issue of territory, it feels like we are just very far from any sort of agreement.
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Kailey Leinz
All right, Bloomberg Washington correspondent Tyler Kendall, thank you so much. And on both of these conflicts and their potential resolutions or lack thereof, we turn now to Evelyn Farkas, Executive director of the McCain Institute, also former Deputy Assistant Secretary of Defense for Russia, Ukraine and Eurasia, who's here with us now on Bloomberg TV and Radio. Evelyn, it's good to speak with you again. If we could just begin with Iran, given that was the set of talks that happened first with Jared Kushner and Steve Witkoff, this notion of there being a general agreement, an agreement to do another round of talks once we've exchanged some finer points of a potential deal here. How much should we be encouraged by that? Knowing all the while en route to the Middle east right now is another carrier strike group.
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Evelyn Farkas
Yeah, I mean, I don't think that I would put too much stock in it in the sense that when President Trump has two carriers off the coast or, you know, within striking range of Iran, it usually means he's going to use force, just based on past recent experience, a la Venezuela. So I think that President Trump is pretty much leaning towards using force. The Iranians don't want him to lose, you know, to use force. So, of course they've agreed to some kind of framework. But I'm not sure that we should be encouraged that the end is in sight, because the Iranians were pretty dug in about limiting the agenda to nuclear, whereas we were pretty adamant that the missiles should also be included. And of course, it has immediate implications for the potential use of force. You can see the Iranians saying, well, if you're going to strike us, we want to have a capability to defend ourselves.
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Joe Matthew
Is that why we need two more weeks? Evelyn Axios reporting that that is the word from Tehran. We will have detailed proposals in the next two weeks. What will they do at that time?
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Evelyn Farkas
Yeah, I mean, they're clearly trying to make sure that the carrier, you know, battle group can't be utilized or at least to try to put pressure on the White House not to use force before the two weeks are up. And we know that the second carrier will be in place at the end of this week. So President Trump is not going to want to wait two weeks. And so it just, again, it puts pressure on the White House. Now what is the White House going to do? Because use of force is not something that's widely, you know, popular inside the United States and certainly not inside of maga. And so I think if it's President Trump, you know, if he's seen as preemptively using force when the Iranians seem to be willing to negotiate, that's a little bit of a political problem potentially for the White House.
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Kailey Leinz
Well, but it may not be as much of a problem if you're Israel or Prime Minister Benjamin Netanyahu, who was here in Washington meeting with President Trump on the issue of Iran last week. Evelyn, how much do you think Trump's decision making will be influenced by what Netanyahu does or does not want when it comes to the ballistic missile program and other issues?
- [10:57]
Evelyn Farkas
Yeah, it's interesting. I'm not sure what the answer to that question is because we know that, you know, Prime Minister Netanyahu has been trying to, you know, put pressure on President Trump to use force, I think. And then at the same time, the Gulf allies have been pressuring President Trump not to use force. I think President Trump is probably taking his own counsel. I'm not sure that he feels beholden to Israel in any way. I think he does want to bring about political change in Iran and certainly he wants to eliminate the threat that's posed to Israel and others by Iran's nuclear and missile capability.
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Joe Matthew
Let's turn to Ukraine for a moment. Evelyn, are you encouraged by what you're hearing, or are you concerned that the president is turning on Volodymyr Zelenskyy once again?
- [11:45]
Evelyn Farkas
Yeah. I mean, this is the same dynamic, Joe, over and over again we see where President Trump is verbally pressuring Ukraine, and Ukraine has already compromised with itself. In effect, you know, through all the negotiations the White House has held, the meetings, the White House has held with Ukraine to get them to a position, you know, the most minimal position that they could accept. And at the same time, the White House has not put pressure on Russia. And of course, because of that, in part, you know, Russia has not compromised. So it's time for the White House and the president to put pressure on Vladimir Putin. I think, you know, once again, they will find that they have been disappointed by Russia at the negotiating table.
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Kailey Leinz
Pressure in what form, Evelyn? What would actually be effective in getting Putin to change his mind around a war that he has now been pursuing relentlessly for four years? Next.
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Evelyn Farkas
I mean, right. The first step is putting, you know, basically signing the sanctions legislation that I understand. I was in Munich at the security conference this past weekend with Senator, Senator Graham. He's feeling really good about his bill, the Graham Blumenthal sanctions bill, being put on the floor of the Senate for a vote. Obviously not. Obviously, we know that the House also would have to have a comparable bill. We know that there are the votes to get it passed, to get it on the desk of President Trump. And it's actually, it's so high on the Senate side that the president can't veto it. So that would give him a real, you know, card, if you will, that he can use against Putin to say, you know, we're now sanctioning your oil and gas and, you know, your. We're, we're putting secondary sanctions. We're putting sanctions on those countries that buy your oil and gas. And that will hurt Putin because he's already having to draw down his foreign reserves in order to keep this war going. That's one. And then providing more assistance to Ukraine, more military assistance, getting more of those shadow tankers off the high seas. You know, there are many things that we could be doing to put pressure on Russia.
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Joe Matthew
I'm sure this is part of your discussions in Munich. Evelyn, just back from the Munich Security Conference, where the Secretary of State, Marco Rubio, was looming large this year following Vice President J.D. vance's speech in Munich last year. That really rubbed our European allies the wrong way and kind of set the stage for some of the difficult conversations we've had with our European allies. John Micklethwait, our editor in chief here at Bloomberg, sat down with Secretary Rubio to talk about his approach. Here's what he said, the vice President.
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Jeannie Shan Zaino
Said last year very clearly, was that.
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Joe
Europe had made a series of decisions internally that were threatening to the alliance and ultimately to themselves, not because we hate Europe or we don't like Europeans, but because what is it that we fight for, what is it that binds us together? And ultimately, it's the fact that we are both heirs to the same civilization, and it's a great civilization and it's.
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Joe Matthew
One we should be proud of.
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Joe
It's one that's contributed extraordinarily to the world, and it's one, frankly, upon which America is built.
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Joe Matthew
So do some reporting for us here in our remaining moment. Evelyn what was the feel on the ground? Was Secretary Rubio looked at as the good cop to J.D. vance's bad cop, largely speaking?
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Evelyn Farkas
Joe Yes, I think people did take a sigh of relief because the tone was markedly different. And he did say, you know, we are going to be together, however, and that was kind of in the moment. However, subsequently, as you know, some of the coverage of what Europeans have said, when they took a look at the transcript, when they looked at what Secretary Rubio said a little more closely, they questioned, what does this mean, civilization? And I think if you interpret it as a shared adherence to the rule of law, you know, going back to Magna Carta and all of that, I think that the Europeans would feel good. If it means something more, you know, akin to a kind of white colonial interpretation of our history, then people feel a little less reassured. But overall, I would say the feeling was positive.
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Joe Matthew
Peter Farkas at the McCain Institute, thank you.
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Joe
This is Bloomberg.
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Joe Matthew
Stay with us on Balance of Power. We'll have much more coming up after this as markets move and headlines break. What matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis and powerful tools that help you connect the dots. Visit bloomberg.com podcast. Offer to learn more.
- [16:16]
Joe
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship York station. Just say Alexa.
- [16:32]
Joe Matthew
Play Bloomberg 11:30 on this Mardi Gras 2026. It is not only Fat Tuesday, it is also a big day in the world of politics with the first votes being cast in this primary season. This is it, right? This is day one. Early voting begins in Texas, 10 days worth as we work our way to the primary on the 3rd of March. And you know, we've talked this up and down. This could be one of the most expensive, if not the most expensive and certainly the most dramatic Senate race in the country this season. And it's good. Look, if you enjoy this kind of stuff, this is going to be high entertainment in some cases for all the wrong reasons. But the fact is we're going to be heading for a runoff, it looks like depending on what happens here with the primary itself, March 3rd again, the runoff would follow on May 26th if nobody clears 50%. And based on the polling we're seeing, that's probably not going to happen. So, Cornyn, Paxton, Hunt, that's your three way race and this is gonna be a doozy unless, of course, President Trump gets involved. And people keep asking if he's gonna endorse in this race and it sounds like, well, yeah, but he's gonna endorse everyone. You've seen this before. Here's the president on Air Force One. I just haven't made a decision in that race yet. He's got a ways to go and I haven't. He's a good man. John is a good. I like all three of them, actually. I like all three. Those are the toughness races. They've all supported me. They' and you're supposed to pick one.
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Jeannie Shan Zaino
So we'll see what happens.
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Joe Matthew
They're all good. Can't go wrong. John, of course, is John Cornyn, he's being asked, are you going to Support the incumbent, Mr. President, the longtime senior senator from Texas. He says, well, I like them all, like all three. So this is creating a bit of an issue here. Not that that's the only race in Texas, but this is the one that's going to take, take all of the attention, of course, Ken Paxton, of course, the attorney general here last night announcing an illegal voting tip line for the primary. So it's on as we assemble our political panel. Bloomberg Politics contributor Democratic analyst Jeannie Shan Zaino is with us, her Democracy visiting fellow at Harvard Kennedy School's Ash Center. And Republican strategist Ashley Davis is back, partner at S3 Group, former special assistant to the director of Homeland Security. It's going to be great to hear from both. We've got a great panel today. Great to see you both. Ashley, I want to start with you in Texas because I'm starting with the Republican primary today. Is Donald Trump going to pick one of these gentlemen because it looks like we're going to a runoff. Maybe he waits for May to start naming names. What do you think, Joe?
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Ashley Davis
That's what I'm thinking. He probably waits and sees what happens, you know, after March 3rd. Obviously, as you just said before we came on that it's, that's going to most likely go to a runoff. You have the polling showing that Paxton and Cornyn are within the margin of error. Paxton up to Cornyn up to depending on what poll you look at. But to me, which is really interesting is Wesley hunt's pulling like 20%, which is super strong for him. I would think though it's going to happen after March 3rd is that Paxton probably doesn't make the runoff. And then you have, I'm sorry, Hunt doesn't make the runoff. And then you just have Paxton versus Cornyn. And that will be going into March 26, and that will be a much clearer race. Lots of people that I talked to in Texas that are my former colleagues are, you know, Cornyn's great, he's been around for a long time. They think Paxton's not great and they like Wesley Hunt, but it's just absolutely no way to get him over the finish line at this point. So.
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Joe Matthew
Huh. Interesting. I think Corn and a statewide race though, Ashley. Oh, that's corny. Okay, interesting because you know, you play this statewide in Texas and Paxton is sounds a lot more like a MAGA candidate than John Cornyn. Right. I mean, you still go advantage Cornyn in a two way race.
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Ashley Davis
I do, but here's why I think people think that Paxton has a lot, a lot of baggage. And when, if you talk to any Democrat, they would much rather want to run against Paxton than Cornyn, obviously, for obvious reasons, but just like we would probably most likely run against Crockett. But I really think that people still look at Paxton's history and think of him as maybe not a really good person even though he is more maga. But if Trump listen, if it's a two way race and then Cornyn performs pretty well, maybe that's when Trump does end up endorsing. I mean, I can't predict. No one can.
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Joe Matthew
Sure. No, no, absolutely. It's going to be a heck of a truth social whenever that comes out. Jeannie, let's talk about the Democratic primary. And by the way, this Talarico story on CBS is wild. This is the night before Netflix suddenly has to wait to hear Paramount with it. But let's just focus on what we're talking about here. Stephen Colbert booked James Talrico, the Democratic candidate. He's a state lawmaker. We've had him on this program a couple of times to join him in New York at the desk. Apparently CBS told him he was not allowed to do that because of equal time laws at the fcc, which have been left on the side of the road years ago. But we'll acknowledge that. And so what they had to do, Jeannie, is just put it on YouTube. It didn't make the program. And as Colbert said, FCCU, Brendan Carr. But the fact is, you know how this works, Jeannie. That'll get way more views than some thing that was scheduled on CBS TV last night that may or may not have gone notice. Now it's the banned interview. Right. I can only imagine what will happen to the clicks. And as I read here in the Democratic primary, Jasmine Crockett, the congresswoman, is leading with 47% of the vote, 39%. Representative James Talarico, how are you viewing this contest?
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Joe
I'm smiling, Joe, because I'm so happy to talk about election season beginning. So thank you.
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Kelly
And as you.
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Joe
Yeah, it's been a doozy. This is one of the good things that has happened to Talarico. CBS should ban interviews more often, I'm sure as far as he's concerned, certainly this interview would not get nearly the looks that it will now that it's been been quote, unquote banned. And of course, this has been a really tough and personal race you guys were just talking about on the Republican side. But on the Democratic side, you've had charges online of racist statements made by Talarico. He says they weren't made. You had a former candidate and call an all red endorsing Crockett. You've had a lot of concern amongst moderate Democrats that if Crockett wins, she can't win. But I think, you know, just like when Ashley was talking about the Republican side where it's sort of this, you know, moderate center of the road versus maga, in the Democratic side, there can be surprises because, you know, Crockett, for all of the challenges people say that she has, she is running and saying I can bring out the vote, I can increase voter turnout among holds the base. She's like the Donald Trump of the campaign versus Talarico, who's saying, I will reach to the middle, I'll pull those independents and those moderates and maybe Democrats will for once in a century or something win Texas. It's all a very uphill battle for the Democrats. But it really depends, you know, on who wins on the Democratic side and who wins on the Republican because of course, Crockett versus somebody like Paxton is far better for the Democrats. Traditional thinking goes then it is going to be Talarico versus somebody like who's.
- [24:14]
Joe Matthew
A better candidate statewide in the primary. Is it Tell Rico.
- [24:19]
Joe
You know, in the general, that's the traditional thinking. But Joe, I'm so over traditional thinking at this point because every time we go there, it seems to blow up in its face. And I think you cannot deny what a really accomplished politician Crockett is. But again, a lot of that depends on can she get people out to vote and who can she run against. And of course, Talarico comes with his own baggage now. He's got a little support from Colbert in the cbs, so that's a good.
- [24:48]
Joe Matthew
Thing for him, I guess. So he's got Joe Rogan on his side a couple months ago. We'll see if that remains the case as we spend time with our panel. Jeannie Shan Zaino and Ashley Davis, the beginning of early voting. I'm psyched for campaign season as well. You two just spend too much time here in the bubble. But we have to talk about a major story that a lot of people woke up to this morning, and that is the passing of Jesse Jackson, 84 years old, surrounded by his family, of course, a prominent civil rights leader and somebody who ran for president a couple of times. Remembering this DNC speech in 1984, I'm more convinced than ever that we can win. We have fought up the rough side of the mountain.
- [25:32]
Joe
We can win. I just want young America to do me one favor, just one favor, exercise.
- [25:43]
Joe Matthew
The right to dream. You must face reality, that which is. But then dream of the reality that ought to be.
- [25:55]
Joe
That must be.
- [25:59]
Joe Matthew
Some two decades, even more before America elected its first black president. Jeanne, what are your thoughts on not just the legacy? You're going to hear a lot about that today. I don't even know what that means all the time when we talk about politicians, but the impact that he had on the Democratic base was what.
- [26:22]
Joe
Enormous. I mean, I think in the later part of the 20th, 20th century, there is nobody on the Democratic side who had a bigger, was a bigger force. He changed. You heard the beautiful oratory there. He ran for president twice. He was a civil rights icon working with Martin Luther King. He worked overseas. But what he did in terms of impacting black public officials running for office and seeing themselves as people capable of running for officers. So many of them say today that they were told as children to repeat the phrase that he made famous, I am somebody. And that was what helped them catapult into elected office or into leadership writ large. And he was not just a great orator, he was a great political mind. Without him changing the way that we manage and count delegates on the Democratic side and proportional representation, there would be no Barack Obama. So in all ways and every ways, he changed things. He wasn't perfect, but his impact is enormous, including two sons who have either been in or are running for Congress. That's quite a legacy.
- [27:28]
Joe Matthew
Yep, that's right. And Jonathan Jackson is still reporting for work on Capitol Hill. Ashley, he, of course, was a Democrat. There's no doubt there. But Jesse Jackson impacted politicians around the political spectrum as a black man in this country running for president, mounting a serious campaign before that was considered mainstream.
- [27:54]
Ashley Davis
Absolutely. And I also think, Joe, one of the things that Jeannie was talking about, about what he did for black individuals and public leaders across the country, but also remember in 84 and 88 when he ran, he also went and was able to bring in the poor white people as well. I mean, there's an iconic picture of him in Iowa with, you know, sitting on a tractor with a bunch of white farmers around him. But I think that something, and people have kind of been talking about this today as well, is kind of that economic populist message that actually, ironically, Trump taps into as well. But he did that. He was the first to do that. And he was a brilliant communicator. He was somebody that was, was able to really utilize, obviously his gift of being able to message. But also the media, if you think about 84, 88 and you know, thereforward, up until maybe Barack Obama, JFK, maybe early, you know, a little earlier, they were not. He, he was not he was able to get the populist message across differently than anybody else.
- [29:02]
Joe Matthew
Really interesting and appreciate both of your thoughts on that. Ashley Davis and Jeannie Shanzano, stay with us on Balance of Power. We'll have have much more coming up after this.
- [29:15]
Joe
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [29:31]
Kailey Leinz
I'm Kailey Leinz alongside Joe Matthew. This is Balance of Power on Bloomberg, Bloomberg TV and Radio, where we want to keep the focus on the markets for a minute longer because it surely has been a very volatile ride over the last few weeks. And it seems that the start of this trading week is no different. We were down, now we're up or flat. That could very well change in the next couple of minutes as we have this conversation with Christina Keynote. She's managing editor for the Bloomberg Markets Live blog and is joining us now from New York. So, Christine, obviously there's been a good deal of whiplash. A lot of it seems to be centered around the AI narrative specifically. Have we figured out yet if this is going to be the best thing ever that leads to all of these advances or potentially a worse thing that makes even the white collar folks lose their job and make some of these publicly traded companies obsolete.
- [30:13]
Joe
Well, Kelly, if we knew the answer to that, then we wouldn't be here, would we? But sadly, unfortunately, I mean, the jury is still very much out in terms of the impact of AI and how much it could disrupt certain industries and which industries even for that matter. I think what the price action is telling us today, of course, is that this is no longer a one way bet in terms of risk sentiment. Last week it was very much a risk off sort of environment tech, of course, leading the sell off there. But at this point we have seen about a 10% drawdown in infotech stocks on the S&P 500. And for a lot of buyers that's actually pretty attractive levels to buy back in. Because at the end of the day, I mean the tech sector in a way can function as a haven given that a lot of these companies have very, very large cash coffers, they still have a lot of ability to spend. And so, you know, when you're looking for a relative haven, especially within the equity markets, you'd probably want to turn into some of these biggest companies as a way of protecting your money as opposed to some of the more sensitive companies to say fluctuations in growth and consumer sentiment.
- [31:19]
Joe Matthew
You know, I heard the word sass apocalypse so many times over the weekend, Christine, that I thought maybe this thing is over. But then I look down at Salesforce and Microsoft and the rest and I see that software is still out of fashion. Everybody's trying to figure out if Anthropic and Claude are going to replace, I guess my Windows machine. But I'm also curious about cyber. We've talked about this before and we have earnings after the bell from Palo Alto. Could this be an inflection point where depending on what is said in this call, cyber is siloed off from the rest of application software?
- [31:55]
Joe
Yeah, I mean certainly a big, big question, especially for companies such Apollo Altojo. Right, because yeah, on the one hand, I mean the complex, it's changing now. It's really not just kind of a monolithic trade. The AI trade, right, is turning into winners and losers. And obviously the SaaS apocalypse, Philip's talk of last week, very much focusing in on some of the weaker spots of the AI complex. And so when you talk about cyber, of course, I mean they of course have something different to offer that is difficult for some AI to replicate, but not entirely Right. And so it really is a question of to what extent companies like Palo Alto and the services that they provide are seen as valuable enough for investors to pay up the premium them versus something that maybe could be done by AI maybe not now, but perhaps in a few years.
- [32:49]
Joe Matthew
You could just tell that Christine reads analyst notes all morning for breakfast.
- [32:53]
Joe
I love it. It's my favorite.
- [32:56]
Joe Matthew
Oh, I bet that's true. It's great to see you. Christina Kino as the NASDAQ turns positive again, up about a third of a percent or 84 points. Palo Alto, for what it's worth, just because we mentioned that, still trending lower. It's down, down about 1 1/2% ahead of earnings. And CrowdStrike is lower, for that matter. So we'll keep tabs on that with an important conversation. Kelly, after the bell on the late edition of Balance of Power with the CEO of Palo Alto, Ed Ludlow will bring us that conversation. And we're looking forward to it. On what is day four, if you haven't been reminded, it's certainly not on the front page in any major American newspaper. Day four of a partial government shutdown. Realizing, of course, that ICE is getting money from the big beautiful bill. This in a couple of weeks or even less once we get into March, could become a much more urgent feeling. Issue with fema, the tsa, the Coast Guard, all set to go without pay. And it's where we start our conversation with Congresswoman Dina Titus, the Democrat from Nevada's first District. Yes, our eyes are on Las Vegas and it's great to see you once again, Congresswoman, here on Bloomberg TV and radio. Lawmakers are gone for the rest of this week. I know that members of the House and Senate will be back next, but there does seem to be a path for a breakthrough on a deal here when it comes to demasking or warrantless raids. Unless you're hearing something differently, Congresswoman, what's going to happen here? How long could this last?
- [34:15]
Jeannie Shan Zaino
Well, I'm not. I understand maybe we've offered something else to the Republicans, but the Senate's gone. I mean, they're in Munich at the conference or some of them are at the Olympics. They need to get back here and make some plans. You know, this, it's the shutdown really hurts Nevada if you don't have tsa. Our tourism is already negatively impacted by this administration and this will just hurt more. And there's such an easy solution. Pull those out, pull out fema, pull out tsa, pull out Coast Guard, fund them and send them on their way and then deal with the safeguards that we can put in place with theme, with ice. You know, we can't cut off their money because they got all that money back in the big beautiful bill. So they're funded. They can do whatever they want. They've got the 16th largest military budget in the world. But we could put those guardrails in place.
- [35:09]
Kailey Leinz
Well, so what guardrails at the end of this, Congresswoman, do you expect will be put into place? Is the White House actually more flexible and Republicans more flexible than they're suggesting publicly at this time? Are you hearing that from your leadership?
- [35:22]
Jeannie Shan Zaino
Well, you would hope so. I can't speak for the White House. I never know what they're going to do. But the Republicans are saying no to mask now. You know, Matt, our police officers, our law enforcement, they don't wear masks. They wear name tags. You know who they are. They have to have help to go into a place. They don't just do these broad raids like ICE does. There are certain rules, rules of how they operate. We're not asking any more of them than we ask of our regular law enforcement. And I don't know what the problem is of why they can't agree to that.
- [36:01]
Joe Matthew
I know you're on the Transportation Committee in the House, Congresswoman. TSA is going to start missing paychecks, if I'm correct, the first week of March. Are there going to be any accommodations made for these workers or are they they going to start having some tough memories from the last shutdown?
- [36:21]
Jeannie Shan Zaino
Well, the last one remember, was a record 40 something days here at Karen Airport. We had food banks set up. I helped them get gas cards from the convention center so they could get back and forth to work. Private sector helped to make donations. So they were depending on the goodness of people's hearts because they weren't getting those paychecks for the from the federal government. Now they got them after the fact. But that doesn't help you pay the rent as you go along. So you know, morale is already low at tsa. They have to put up with a lot of grief from dissatisfied customers coming through who don't want to open up their suitcases. And now you're asking them to do it and keep us all safe while not even giving them the respect of a paycheck.
- [37:07]
Kailey Leinz
Well, so how long should they be expected to go without a paycheck? We know as we were alluding to the record shutdown that was more than 40 days at the tail end of last year. Congresswoman should we expect that this could take longer than that? If masks and other issues remain so firmly stuck with your side wanting one thing and the White House and Republicans wanting the other, could this last longer than that? Given that it is only one agency shut down and the pain is felt in a relatively small group of people?
- [37:36]
Jeannie Shan Zaino
Well, it shouldn't matter. This shouldn't last any longer than in one day. Now, hopefully we could get something done before this kicks in the 1st of March so they don't have to go without a paycheck. But if the Republicans refused any of these crackdowns on the way ICE is operating, it's going to be hard to come to a deal. Now, last time with the health care and with the short term cr, some Democrats who said they were going to stand for them peeled off and voted with the Republicans for some kind of accommodation. If they do that, the only accommodation I can imagine is another cr, maybe to the end of the fiscal year. This time it was two weeks and nobody thought they could get it solved in two weeks. But one thing that's really important to remember is the public is with the Democrats on this. All the polling shows that the public thinks that these ICE characters should follow the same rules as regular law enforcement. That's all that we're asking, asking, and the public agrees with that. They've seen the pictures of Minneapolis. They've said this is too much. This is not what we expected from an agency that was supposed to just be going after the bad guys.
- [38:49]
Joe Matthew
Congresswoman, talked to your friend Derek Stevens a couple weeks ago before the super bowl. We talked about your Fair Bet act. And we also got into the role that prediction markets have been playing and not playing. Depending on how you look at this, in the gambling business, you've got something called the Fair Markets and Sports Integrity act to stop prediction markets from skirting state gaming laws, which is a big deal for a guy like Derek Stevens because he runs circa and a couple of other. He owns and runs these casino resorts in Las Vegas. I want you to listen to what he said and get your reaction. They're not paying any state income tax. They're not paying anything into problem gambling. They're not paying a federal excise tax. You know, I realize there's a little bit of a surge of oh, let's support prediction markets, but I don't think that's necessarily the right, right long term path here. We think about it this way. If someone hijacked a truck that had nothing but big screen televisions and brought that truck into the parking lot of a Best Buy and was able to sell, sell these TVs at half price. Would we really be supporting these marauders the way, the way it seems like it is? I don't think so. And I think prediction markets have a great spot in America in our, in our, in our economy, in our ecosystem. But what they're doing with sports betting, it's a little bit crazy. He calls them marauders. Congresswoman, do you have support for that bill in Washington? Will you bring Derrick Stevens here to testify?
- [40:16]
Jeannie Shan Zaino
Well, Derek has been a great friend and an ally on my bill to allow 100% deduction from your losses for your income tax taxes. I'm a phantom money. So he has been a friend and I agree with him on these prediction markets. You know, for the last decade, state by state, tribe by tribe, have put in place regulations for sports betting. And some places have said, no, we don't want any sports betting in our state. Now to just throw that out and totally ignore it by Kalshee and polymarket because they want to do this without any of those, those guardrails, I don't think is right. Now I have the bill, as you mentioned, that would stop that. I'm not saying do away with those. If they want to do innovation and they want to offer which bet on which bird flew off the wire or Jesus is coming back or what's Swifty going to wear, that's all fine. But when you move into the sports betting market, then you have got to follow the rules. So if you want to offer sports bets, fine, but just follow the rules of the, the states where they're already established.
- [41:22]
Kailey Leinz
Well, Congresswoman, you refer to the state's rules here. And the new chair of the cftc, Mike Selig, suggested today that this should be the CFTC purview prediction markets. They should oversee it at the federal level, not do it state by state. What's your response to that?
- [41:34]
Jeannie Shan Zaino
Well, we've never had federal regulation of gaming. It's always been left to the states. And this agency is set up to oversee commodities markets, actually, usually pork bellies and corn, things like that. And they do a good job of that. But they are not equipped to regulate gaming. They don't have the expertise, they don't have the bandwidth. They don't have the resources to do it. Now, let's also remember that there's some in inside a little collaboration here, I guess might be the word for it because you've got the president's son sitting on the board of the two biggest prediction market companies, CalSHI and Polymarket. And this person has been appointed who's now kind of in his argument to the courts, not mentioning sports betting, but mentioning innovation and opportunity.
- [42:24]
Kailey Leinz
Yeah.
- [42:24]
Jeannie Shan Zaino
He also fails to mention the things that Derek Steven mentioned. No taxes, no protection for the gamer, no problems for problems.
- [42:34]
Kailey Leinz
We have to leave it there. But thank you so much for joining us. Democratic Congresswoman Dina Titus.
- [42:39]
Joe Matthew
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at noontime eastern@bloomberg.com.
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