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- [00:01]
Congressman Chip Roy
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- [00:33]
Joe Matthew
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
President Trump, of course, is not here in Washington at the moment. He's actually en route now to Georgia. Well, he will be speaking at a school later this afternoon, having attended earlier the dignified transfer of three fallen service members who died this past weekend in the Middle east amid the ongoing conflict with Iran at Dover Air Force Base in Delaware. Even as he was making his way there, of course, the president has been weighing in on the escalating nature of this conflict with Iran on true social threatening to essentially go tit for tat if Iran were to try to attack ships in the Strait of Hormuz. He says the US Will go after a bridge over or a power plant, bomb or destroy them, essentially saying that this war will go further. And the president suggested that the American people may not be against the war itself, even if they don't like the prices that they are seeing at the pump.
- [01:45]
Joe Matthew
Americans aren't against the war. The poll, a poll just came out. Americans don't want high gasoline prices, but
- [01:52]
Dr. Noel Hasegaba
they're not against the war.
- [01:53]
Joe Matthew
That just came out loud and clear in a poll. Nobody wants Iran to have a nuclear weapon. Let's get to Tyler Kendall, Bloomberg's Washington correspondent, ahead of our conversation with Congressman Chip Roy. She's on the North Lawn of the White House right now as the president makes his way from Dover to Georgia. And Tyler, you heard, of course, Kaylee reference the president's post on truth Social. Will he be escalating, as they say, to de escalate once again?
- [02:20]
Tyler Kendall
Well, Joe, at this point, despite efforts by mediators to try to avoid further escalation, the tensions appear pointed there as the US Expands the scopes of its targets. You had this post that you guys were talking about from President Trump saying that the US Will go after either a bridge or a power plant in exchange for every commercial vessel that Iran targets in the Strait of Hormuz as we have gotten very little indication that Iran is willing to let up its leverage when it comes to disrupting global oil flows. In fact, President Trump, as you well know, yesterday said that Iran desperately wants to make a deal, but that the US Isn't even interested in coming to the negotiating table unless Iran does in what he called a meaningful way. But we heard from one of Iran's top top negotiators earlier today seeming to downplay reports that there was this meeting yesterday in Pakistan, instead saying that there are not negotiations, just messages being exchanged between the two sides. And Joe and Kelly, as you well know, the disruptions extend beyond the Strait of Hormuz, which is just adding to the urgency of the moment. We got new satellite imagery overnight appearing to show that at least two tankers loaded up with Saudi crude made U turns as they headed toward the Red Sea, seeming to indicate that from the Iranian backed proxy group the Houthis to institute a maritime blockade is already working.
- [03:42]
Kailey Leinz
All right, Bloomberg's Tyler Kendall live on the North Lawn of the White House. Thank you so much. And for more on this, we go now to the other end of Pennsylvania Avenue live on Capitol Hill where we're joined by Republican Congressman Chip Roy of Texas who is joining us live now on Bloomberg TV and Radio. Congressman, welcome back. It's great to have you on balance of power as we consider this ongoing war. And we want to get to other matters before you and your colleagues in the today as well. But given the escalating nature, we are seeing the Defense secretary having testified yesterday that it's already cost $37.5 billion with the Pentagon obviously asking for billions more than that in this supplemental request that's going through the reconciliation process. For how long can you can Congress continue to authorize funding without offsets for this war to continue to be prosecuted?
- [04:31]
Congressman Chip Roy
Well, great to be on. Obviously we're trying to move forward this week to get a reconciliation package done, frankly, because we have no real partners with our democr Democrat colleagues to figure out how to move things through. We had to do it to fund ICE and Border Patrol. Now we're trying to figure out how to make sure our military has the resources it needs as well as ensuring we can get the SAVE act through the Senate so we can protect our elections. But to your point, I am a fiscal hawk. I am concerned about spending and I am concerned the extent to which this is not being paid for and that we need to have a full throated debate here in the halls of Congress about the war. I happen to be one who supports Israel, supports our national security interests and wants to check Iran and make sure that we're stopping Iran from gaining, whether it's conventional or nuclear capabilities. But we need to make sure we have a full throated support by Congress or we shouldn't be doing it. And we haven't had that debate fully. And I think that's a part of the discussions today on the ndaa, the National Defense Authorization act, as well as the reconciliation package. We're going to want to move forward this week to get that budget process stepped forward. I think that will pass, but we're going to have to continue to debate whether we're going to get a full save act and whether we're going to have anything that I'm demanding, which is in any future negotiations on a fourth reconciliation package that we pay for the $90 billion of this that is unpaid for. We cannot keep racking up debt and we need to have a conversation about the war.
- [05:50]
Joe Matthew
Well, we hear you, Congressman. I'm just curious if you could act as our reporter here. The extent that you're hearing a vote count, will, will this budget resolution passed as the speaker, have the votes? We'll ask you about the CR as well, because obviously you've got $67 billion, I believe here for the Pentagon and what many say is badly needed on the other side of the river.
- [06:13]
Congressman Chip Roy
Yeah, for sure. I do believe the Pentagon needs additional funding and I'm happy to try to provide that and support it. But I do want to make sure we're paying for it. All right. There ain't no free lunch and too many people in this town think there is. I do think that the first step of the reconciliation, reconciliation process, the budget will move forward this week. That's my, that's my bet. We'll see. We still have some votes that we're working on on the floor. We need to move forward to try to get saved act on. And we do need to try to support our military while, while we're engaged. But I think the NDAA might be in trouble and I think that's in part because we haven't had the full throated conversation on the war that we need to have and have a unified approach to how we're going to make sure our military is strong as it needs to be, not just to deal with Iran, but to deal with China, a real threat on the horizon. We need to make sure that we have a transformation of our military for generations to come so that we are still the global superpower and we can defend our country and our interests. Right now, we got to get through this step this week, but my message has got to be clear. We got to pay for this stuff, and we need to have Congress in the conversation on war. That's what the Constitution contemplates. That's what it says, and we need to be a part of that.
- [07:20]
Kailey Leinz
Well, if there's no guarantee, Congressman, that there will be a fourth reconciliation package that may include pay fors for this one, why vote for it without the pay fors now today?
- [07:31]
Congressman Chip Roy
Yeah. I'm not a fan, as you know, of voting for anything that's unpaid for right now. I am being a team player to move something through this week so that we can try to get the Save America act passed through a recalcitrant Senate and against Democrats who refuse to work with us. But I am being very clear that we've got to pay for it in our future conversations. And by the way, we have multiple steps to go on this one. I need to know that the Save America act is real. I need to know that we have a real plan on how we're dealing with the war. I need to know that we're going to be serious about paying for this $90 billion in the next phase. You're right. We may not get a fourth reconciliation. But I'm willing to roll the dice this week, as of right now, based on the information in front of me, to try to give us a shot to secure American elections and get the Save America act passed and try to backfill our munitions that our military needs because our men and women in uniform deserve to have the tools to carry out their job when they're being asked to do it. But Congress is going to have to work with the President to make sure we've got a real plan for our military going forward. This is all complicated stuff. The Constitution requires separation of powers. Congress has to have a voice. But our men and women in uniform deserve the tools to do their job. So I'm trying to balance those interests and send the messages that need to be sent both to the White House and to my Democratic colleagues that we need to have adults sit down and get this done the right way.
- [08:51]
Joe Matthew
Well, I'm sure that you're sending that message to the speaker and Congressman. I appreciate the fact that we can acknowledge that this is complex stuff. There are a lot of nuances here that are difficult to put on a bumper sticker. I'd like to bring our audience to your Stock Trading Act Your Restore Trust in Congress Act. This is a big issue. The House plans to vote on the Stop Insider Trading act, which does not require divestment. Yours does. Can both pass.
- [09:17]
Congressman Chip Roy
Well, thanks for the question. First of all, thanks for you all getting the facts right. I do a lot of interviews where people get it all confused. You laid it out beautifully. That's exactly right. Six years ago, I worked on a bipartisan basis to try to move forward and say we should ban all congressional stock trading, including divestiture. Like you said, we worked out a deal to get Republicans united, or at least close to united behind a deal that's going to say you can't buy equities, but you can maintain the equities you come in with. But you'll have to have the kind of transparency that we require of the executives, the CEOs and so forth of publicly traded companies under the SEC rules. So I think that's a giant step forward, if you think about it, to say that members of Congress cannot purchase any equities. That would be a big deal. So I'll support it, comma, however. I always have a however. My problem is they added the SAVE act, of which I'm the author and I support loudly to the stock trading bill. Now, the purpose of that is to make it partisan. The purpose of that is to score political points. I don't like that way of doing things like, look, I'm happy we're in election. You got to go win the election. But I want to have a straight up or down vote on stock trading. I want everybody to have to go in front of the American people on a one subject bill and tell them what they think is right and if they want to amend it, offer an amendment. If they don't, then vote up or down. That's what I think we ought to do. But at least we're getting a vote today for the first time, which I'm aware on this issue and I've been trying for six years to get it. So I'll take this as a step forward. Hopefully we will see it pass. But then we're going to need to get a straight up or down vote on it pretty soon, if I can have anything to do with it.
- [10:53]
Kailey Leinz
Okay, so one step forward. What another step forward for this to extend beyond the legislative branch. Should this reach the White House too? Why should the president or those working on his behalf be able to trade stocks?
- [11:05]
Congressman Chip Roy
Yeah, I agree. It should apply to the entirety of the federal government across all branches. Separation of powers also means that we should all Kind of treat ourselves the same way in terms of both transparency and the rules by which we operate. So it should apply to the President on down in the executive branch, everybody, legislative branch and all judges, including the Supreme Court. This bill obviously is targeted to Congress. Again, baby steps in the sausage making legislative process. If we get our House in order in Congress, then I think we can then point the finger at the courts and the executive branch and make them adhere to the same rules. That would be my goal and my preference and I'm not going to stop fighting for it. Today is a giant step forward. Again, I think Congress is poised today to state that members of Congress should not be buying equities. That's a very powerful statement to say that. And by the way, that's not insider trading. If you have insider trading, you can go get convicted of that right now. It's about trust. It's about believing that your members of Congress are actually making decisions in their committees and on the floor that are in their interest, the people's interest, not the interest of their financial interests. Right. So if you're voting on health care, you're doing it for the people. You're not doing it because you own stock in an insurance company or a pharma company. Right. If you're voting on defense, you're not doing it because you own Palantir or Lockheed, you're doing it for the people. That's what I think is important.
- [12:22]
Joe Matthew
It's wild for people who are not in Washington circles to hear this conversation, Congressman, and why it took so long for this to be addressed. I don't know if this passes, if that'll be the end of the Nats etf? Maybe that's a separate issue. But I do wonder from your view why it's taken so long. Are there members you talk to in the cloakroom who say, hey Chip, I'm sorry, I'm trading intel this weekend, you don't have my vote. Who wants to keep trading?
- [12:53]
Congressman Chip Roy
Well, you know, look, I don't want to talk about private conversations I have with people, but I'll tell you broadly, there are two forces at play. One, you've got people who they just want to trade because they want more money. I'm just going to be blunt. And number two, you've got people who believe they've got the right to do it. Right. As a member, you know, as a citizen, they have the right to trade stocks that. We can't limit that. I disagree. It is a privilege to serve in the United States Congress. We limit salary we limit what you can do in terms of being employed at the same time. And there's a lot of conflicts there. People own car dealerships, people own farms. I get it. But we need to start cabining that in so that people can trust Congress again to be here for their interest. By the way, especially when you don't have term limits, especially when people are here endlessly. You should come here for two or three or four terms, and if that's no longer good for you personally, then go home. But it's a sacrifice. It's supposed to be a sacrifice. So that's my message to my colleagues. You know, suck it up, Gus. You get to be a member of the United States Congress. Let's go do this so that people can believe in us again.
- [13:58]
Kailey Leinz
Well, and you are a member of the United States Congress. You are a member of the Budget Committee. So just finally on reconciliation 4.0, which I know you want to include pay fors for what is going through the process now, but what else would be on your wish list for an unprecedented fourth budget reconciliation package in one Congress?
- [14:14]
Congressman Chip Roy
Yeah, look, if we're able to get to a fourth reconciliation package, whether it's before election day or on a lame duck or next year, I think we need to make sure our military is transformed to beat China and to make sure we're the global superpower, I think we need to restore health care freedom for the American people with fully empowered health savings accounts that allow us to have a doctor patient relationship restored so you're not dependent on insurance companies and bureaucrats and government bureaucrats telling you what to do. Thirdly, I think we need to have actual deficit reduction, not made up nonsense, not 10 fear spending, not stuff you hope to get. Oh, trust me, we'll get the fraud stuff coming in. I want straight up mathematical deficit reduction, a strong defense, health care freedom. We can do some other things in there, but those are my big three. And it's got to be actual deficit reduction. $40 trillion in debt. We are spending more on interest every year than we do defending our country. Our kids and grandkids depend on us getting this done, right? Reconciliation. We're having to use it for things like border patrol, ice, and now trying to deal with the SAVE Act. I get it. It's a weird political climate and we got to go win. But we need to do our job, reduce deficits. And that's really, at the end of the day, what reconciliation is for, is to deal with debt, deficits, and, and spending. So making sure we're reducing spending. So that's my goal.
- [15:31]
Joe Matthew
I just sense freedom. I feel freedom when you're talking Congressman in your last months in Congress, and I hope that we can stay in touch for the rest of this one. Thank you for being with us for an honest conversation today about a wild day on Capitol Hill. Great to see you as well. Stay with us on Balance of Power. We'll have much more coming up after this.
- [15:53]
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- [16:49]
Congressman Chip Roy
Investing Brokerage Services by Open to the Public Investing Inc.
- [16:52]
Dr. Noel Hasegaba
Member FINRA and SIPC Advisory Services by
- [16:55]
Joe Matthew
Public Advisors, LLC, SEC registered advisor. Complete disclosures available@public.com disclosures 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 New York station. Just say Alexa play Bloomberg 11:30. I'm Joe Matthew in Washington alongside Kailey Leinz. We have news on Clarity that might sound strange, but that is the name of the crypto bill that we have seen debate up and down for months. Should I say years, Caylee and we actually have the text we're about to walk out with none other than Patrick McHenry because John Thune says he's planning a vote for next week. The updated bill text this is the important part, and this is what has been shaken loose here would prevent federal officials and their spouses from issuing digital assets. This is the ethics language Democrats have been asking for with their eyes on the Trump family. Will it be enough? Patrick McHenry, the former Republican congressman, used to chair the House Financial Services Committee, which would be managing this. He also held the gavel for some time. As you remember, Speaker Pro Tem. He's all ours now and it's great to see you. Mr. Chairman. Welcome back. I don't know if you've had a chance to crank through the text. I know that you're a supporter of this bill and the need for a framework. Will this pass
- [18:25]
Patrick McHenry
eventually? Yes. It's a question of timing. It's, it's sort of when, not if. The debate right now on Capitol Hill is a lot of if. The Democratic Party, particularly the pro crypto Democratic senators that are part of the coalition working on the bill, have raised real concern about so called ethics language and that pertains directly to the President and his family's financial holdings of crypto assets. What they fail to realize, and the debate right now on Capitol Hill fails to realize, is that we don't have any federal law dictating what is a digital asset, what is a means of exchange and the legal parameters around those things. So there is currently no law on this. The best ethics language we have is actually passing the Clarity Act. So you have a clear definition, clear rules of the road and consumer protections that come from that, as well as the ability to deploy capital here and have innovation. So the big thing here is to get the bill done. It's a question of whether or not the current politics will permit that to happen or we have to wait longer for the Senate to come to terms with this.
- [19:34]
Kailey Leinz
Your point is well taken, Mr. Chairman, that you actually need the market structure portion of this to be able to define what it is that you want to restrict the president, his family from doing. But on the ethics provision, because it is obviously part of this 616 page bill, I think it is, it would stop any elected official, president included, and their spouses from issuing a digital asset. It says nothing of other members of the family, like say children of a president. It would be enforced as well by the Attorney General, by the Department of Justice, and the whole thing sunsets on inauguration day in 2029. Does that really have teeth in your mind?
- [20:14]
Patrick McHenry
Well, it does because ethics rules are still ethics rules. When you outsource this to another. Who do we outsource our federal government to? Elections and the people. But in order to hold federal election federal officials accountable, you have to have rules within that regime. What Democratic senators want to do is hand this over to Democratic state attorney generals, to states attorney general to sue the President, enforce this law. That is a recipe for disaster. And I think their own party should recognize what Republican states attorneys general would have done to a President Biden under those circumstances, this is a recipe for complete chaos. The question now is whether or not you could have enforceable ethics language and what would be sufficient to get pro crypto senators on board right now. Senator, also Brooks has said that under no circumstances is this enough. But we have to step, we have to recognize the president coming to even this language is a major concession for not just the president, the White House and the executive branch generally.
- [21:24]
Joe Matthew
Well, this is the part of the interview where you feel happy to not be in Congress anymore. Patrick McHenry, what's about to what's about to happen at 330 we're going to vote on the NDAA. Democrats don't want any part of it. A budget resolution for reconciliation that many folks we talked to Chip Roy earlier this hour, even Republicans are concerned that it's not paid for in some cases. We've got a stock trading ban. Is all this going to pass?
- [21:55]
Patrick McHenry
Lions and tigers and bears. Oh, my. This is a real mashup before the House leaves for August recess. Look, I wanted to say this for a while. Newt Gingrich always said the House is like riding a bicycle. The only way is to actually move forward. I would say it a little differently. In this environment. You have the Senate in the nature of the Senate, you have old bulls sitting, chewing grass and content to sit in the sunshine. That's what the Senate does on a sort of a daily basis. In the House, the House is a lot like a border collie or a Labrador or some young pup. If they're fully exercised, they're fine to have inside your house. If they're not fully exercised, they can be quite destructive, quite destructive. And that's what's happened with the House Republican Conference right now. For the speaker and the leadership, this is where coups and palace intrigue persist when there's no action in the House. And so they had to put together an aggressive agenda in order to get aggressively out of town to save, to save the House Republican Conference. That's really what we're doing right now, now is just running as fast. That House Republican leadership is running as fast as possible so they can get out the door and save themselves until we come back for September for more chaos with House Republicans. And again, I just have to say, friend of House Republicans, having said my adult life, working in and around it and loving these folks, but it is what it is.
- [23:38]
Kailey Leinz
And I raised a Labrador from puppyhood and this analogy is really, it's working for me, Mr. Chairman, I understand what
- [23:45]
Patrick McHenry
it is A lot of exercise. Well, another way to say it.
- [23:49]
Kailey Leinz
Yes, that is. It's very true.
- [23:51]
Patrick McHenry
House Republicans are also like Marines in that if there's a mission and something critical, they're on the prize. But if they're on leave and it's a Saturday night, things can get rough.
- [24:06]
Kailey Leinz
Wow.
- [24:06]
Joe Matthew
We got to email McHenry on that conversation.
- [24:10]
Patrick McHenry
Not the God.
- [24:12]
Kailey Leinz
Okay, well, what about on the idea of something mission critical? I think a lot of people would argue that funding the government falls into that category. The speaker decided that he would just try to make sure we don't shut down in September by punting until after the midterms, until early December. It's unclear what's going to happen in the Senate. The Senate Majority Leader is suggesting that if Democrats don't negotiate on. On a CR, he's just going to attach it to budget reconciliation. Mr. Chairman, is that effectively killing the filibuster?
- [24:42]
Patrick McHenry
That's one mechanism to kill part of the filibuster which has been eroded over the years, but it's also more of a forcing mechanism. Get Chuck Schumer to the table. Look, we went through the largest, longest government shutdown in American history, and it was because Chuck Schumer and Senate Democrats wouldn't give the necessary votes to pass a Canadian resolution. And so I think that's where we're headed September 30th this year unless leaders soon can entice Leader Schumer to. To pass a continuing resolution. That's really what the messaging is about. And this will come to the fore as September goes on, but not until then.
- [25:20]
Joe Matthew
So is this how we do it now? And I guess every other year. If there's an election coming in November, you guys better get a CR before August recess because this whole government's going to shut down. We simply can't function otherwise.
- [25:31]
Patrick McHenry
That's basically where we are. That the budget resolution, the 1974 budget resolution resolution which was asked in Senate Democrats response to Nixon's impoundment. That's why we have. This budget process has been broken. It's been broken for 30 years. Congress has not passed all 12 appropriations bills by September 30th and well since the 1990s. So we have a broken legislative process that is further broken because we don't have great muscle memory for policymakers on how to do this basic piece of governance. And so that means that we're in for more chaos, not less. More needless senseless political violence. Not, not less.
- [26:15]
Kailey Leinz
Well, it's. Sorry state of affairs to be sure, Mr. Chairman. When we consider the notion of regular order being something difficult to come by these days, hence why we're talking about a third budget regular reconciliation package. Now, I wonder how realistic you think the prospect is for a fourth because that's what your former colleague Congressman Chip Roy was talking to us about. He hopes he'll get his pay force. He's just going to wait to see those pay fors until in his mind, budget reconciliation 4.0, is there a real chance of that?
- [26:46]
Patrick McHenry
Again, again, this is about the House staying in motion. And as long as you stay in motion, you can stave off palace intriguing coups. And that is what this reconciliation 4.0 or whatever we're going to call it. But also when you hear policymakers talk about a fourth iteration when they can't get the third iteration done, it makes me question what medicines they are on and whether or not the psychedelics are in fact now close to FDA approval, whether or not they are already in pre drug trial here. It's absurd to talk talk about this especially in an election year this late in an election year. It's one of the more bizarre things I've heard out of a really bizarre political year we've had in Washington.
- [27:31]
Joe Matthew
Wow, this is the best I'm saying
- [27:33]
Patrick McHenry
there is ever no chance of a reconciliation 4.0. Not even the slim.
- [27:38]
Kailey Leinz
Understood.
- [27:39]
Joe Matthew
All right. Putting the psychedelics down. I thought of you when I did. You see this Gallup poll this morning? We can talk about the vote all day long, but this is we're getting right down to it here. Americans are the most likely to name politics as a threat to their safety. Mr. Chairman, the latest polling by Gallup identifies 1 in 10Americans saying politics is the greatest source of risk to their personal safety. More than half of American adults believe the government does not care about them. A record high. Aren't we seeing a reflection of this?
- [28:11]
Patrick McHenry
We're seeing a in our House of Representatives, we are. Yet these American people that have this feeling vote in these people. This tells me that populism is not some sort of President Trump phenomenon, that populism is going to continue to rise in American politics because of these very because of that very explanation you just gave. When you look at the elected officials and say they don't care about me and they're a source of my problem, not a part of my solution. You're going to see unrest that'll be vividly displayed in not just the primaries that we have continued throughout this election year, but in the midterms and then going into the nomination process for both parties. The presidential nomination process will start next year.
- [29:03]
Kailey Leinz
Can't wait for that. Just to end the interview on a more, more optimistic note, perhaps for yourself, Mr. Chairman, if market structure finally happens, if of clarity can get through, ethics provisions included, what else does the crypto industry need in terms of legislation they fought for, the stablecoin legislation they've long fought for market structure. What's next?
- [29:28]
Patrick McHenry
Tax provisions. We have to have clarity on our tax law, what these digital assets are and what the holding periods are. We had to define these things for commodities and for securities and likewise what to do that for digital assets in the nature of a stablecoin, for instance, it should be treated in a similar fashion you have for your bank deposits and an interest derived from bank deposits as a, as a tax measure. And so then we have to define what are what's the holding period for these digital assets and what a capital gain structure would look like. So there's a lot of work to do on that front and then the regulatory process will be ongoing as a result of the Clarity act as well for the next year or two.
- [30:11]
Kailey Leinz
All right, the former chair of the House Financial Services Committee and now, of course, Bloomberg Politics contributor Patrick McHenry.
- [30:17]
Joe Matthew
Stay with us. On Balance of Power. We'll have much more coming up after this.
- [30:23]
Public.com Announcer
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [31:20]
Congressman Chip Roy
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- [31:23]
Dr. Noel Hasegaba
Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor.
- [31:29]
Joe Matthew
Complete disclosures available@public.com disclosures. 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. Glad you joined us. It's the Wednesday edition and we're live on Bloomberg Radio on satellite radio, channel 121 and watching us always on YouTube. Search Bloomberg Business News Live with our eyes on the markets and the price of a barrel of oil ever higher, up over 2% for WTI and Brent today, we're looking at 86 and 93, respectively. And as we were just discussing with the lawmakers, really fascinating series of interviews in the Senate last evening. By the way, we're going back up there tonight. Can we get Alyssa Slotkin on the line? We're going to keep doing this as often as we can as we figure out these votes. We've got the cross in the House today. We've also got reconciliation. And so when you factor in the supplemental budget requests for Iran, things start to get pretty complicated. The price for a gallon of gasoline, where I was going here, $4.06. How about diesel, $5.18. They say the economy runs on diesel. Right. And if you run the port of Long beach, that's a pretty important part of the equation because once the goods come in, they need diesel to go out. And this is going to be part of our conversation with the man who runs the port of Long Beach. Dr. Noel Hasegaba is with us in studio right now. And Doctor, it's great to see you. Welcome to Bloomberg TV and Radio.
- [33:05]
Dr. Noel Hasegaba
Thanks for having me. Pleasure to join you, Joe.
- [33:07]
Joe Matthew
I want to talk about a lot of things, including price pressures, including your port, as a barometer of our economy, which is fascinating to talk to the likes of yourself or Gene Soroka, frequently more accurate anecdotal evidence than we ever get out of a data set. But I want to start with something that you're introducing. This is a new idea and the reason why you're in town here. I believe you just came from the Department of Transportation.
- [33:31]
Dr. Noel Hasegaba
That's correct.
- [33:32]
Joe Matthew
To talk about as we look at the cost of diesel jet fuel, the price that it costs to take goods from Asia to your port, there's a new idea as we look for alternatives, and it's nuclear, small modular reactors on a boat. How close to reality is this?
- [33:49]
Dr. Noel Hasegaba
Well, we took the first step today. This memorandum of cooperation with the Maritime Administration is really the first of its kind. And what it does, Joe, is it establishes a framework for the proper agencies at the federal level to start having conversations with a port like ours, a major national asset, and our partners in the private sector to look at ways to introduce SMR technology in a safe and reliable fashion. Look, you described it very well. Everything that's going on in the energy market, the cost of fuel and the uncertainty surrounding that is strengthening the case for energy diversification. Now's the right time for us to explore nuclear energy.
- [34:32]
Joe Matthew
We talk about these small reactors pretty frequently when it comes to data center. Right? That's the future of AI, how you get them off the grid. You put a little reactor right there at the plant and everybody's happy. We've heard about the US Navy for years, for generations, using nuclear and its aircraft carriers and submarines. Putting this on commercial vessels raises a lot of questions. Who's responsible for. It's not a military operation any longer. What if a boat sinks? Could this be a target? How do you answer those questions?
- [35:02]
Dr. Noel Hasegaba
These are all great questions and they are questions that need to be asked and answered. And one of the reasons why we decided to join this memorandum of cooperation now is because there are a lot of questions that need to be answered. And safety is at the top of the list. Right? When it comes to safety, there's no calendar. And so we thought it was important to start the conversation, bring in the agencies and the partners in the private sector to start thinking through some of these scenarios. The reality is when you look at nuclear here, it's a carbon free energy source. It's already being used in different sectors, industries around the globe. What we're trying to answer through this MOC with Maerad is how do we introduce it in a safe, reliable fashion? And let's not forget the port of Long beach is one of 18 commercial strategic seaports. So we're already an asset for the US Government in the event of any military activity. So it just makes perfect sense for us, a leading port port, a major gateway and a commercial strategic seaport to be the first port to enter into this type of cooperation.
- [36:05]
Joe Matthew
Well, that's, it's interesting that it's coming from, from you, the port. Not a commercial shipping line, not a ship builder. This is a pretty entrepreneurial move for you, is it not?
- [36:14]
Dr. Noel Hasegaba
Well, you know, the port of Long beach has been around for about 115 years, but in order for us to stay competitive, we have to think like a startup. That's exactly what we're doing. What got us here isn't going to get us there. And this is why in January I launched our new 2050 vision. And our plan, Joe, is very simple. We want to double our container throughput to 10 million to 20 million container units. And Build a port of the future in the process, a port that's going to be clean. And we're also leveraging partnerships. For example, Bluecore, which is a startup that just entered into a lease with the Port of Long Beach. They're the ones who are doing the R and D behind this technology and they're the ones who are going to be working with the port with merit and the other federal agencies to make sure that we do this reliably and safely.
- [36:56]
Joe Matthew
When you look around the world right now and consider what's happening in the Strait of Hormuz, what might be happening in the Red Sea, it raises so many questions about technology like this. Could you take a nuclear powered ship through the Strait?
- [37:08]
Dr. Noel Hasegaba
Well, it's, it's a great question. I wouldn't do that right now.
- [37:11]
Joe Matthew
Yeah.
- [37:11]
Dr. Noel Hasegaba
But when you consider the advantages of what this energy source offers, it's worth exploring. That's what this MOC is all about. Now it's asking those questions, bringing in the experts, bringing in the agencies, making sure that's introduced in a safe and reliable fashion.
- [37:26]
Joe Matthew
I want to hear where this goes. I think our audience will be fascinated to learn as well. There are massive economic implications here, just like the ones we're dealing with now. The reason we're having this conversation as we started out is because of the price pressures that we're feeling from overseas. And I'm wondering to what extent, if any, that is impacting business in terms of traffic, traffic at the port. And just the conversations you're having with shippers right now who are enduring this.
- [37:51]
Dr. Noel Hasegaba
Well, it's interesting. The impact is felt and it's, it's felt first at the pump, but it cascades across the transportation network because so much of the cost involved in transporting goods from port to port, and once it arrives at destination, from, from endpoint to end point, it requires that fuel. But surprisingly, Joe, the resilience of the American consumer, the resilience of the supply chain. Here we are in the middle of these soaring fuel costs, and yet at the port of Long beach, we're ahead of a record run last year through the first half of 2026. We're actually 2 percentage points ahead of last year. And last year was a record year for us.
- [38:29]
Joe Matthew
Wow.
- [38:30]
Dr. Noel Hasegaba
And a lot of it is because shippers are trying to hedge their bets. They're trying to mitigate the uncertainty of additional, additional tariffs or, or additional soaring fuel costs. And they're advancing their shipments. And like you said a moment ago, traditionally ports like ours have been pretty good barometers of what's going to happen to the rest across the economy in the months ahead.
- [38:50]
Joe Matthew
Well, that's encouraging considering new tariffs are coming. And this is the time when the holiday season is set. Right. What happens in July and August will pay off in November and December. What kind of a holiday season and will we have? Based on the currents that you're seeing now?
- [39:07]
Dr. Noel Hasegaba
We've already begun to see holiday gifts arrive into our port.
- [39:11]
Joe Matthew
That's something.
- [39:12]
Dr. Noel Hasegaba
It's, it's, it's. I mean, we're not going to miss the season.
- [39:15]
Joe Matthew
Yeah.
- [39:16]
Dr. Noel Hasegaba
In past years, there was concern whether or not folks were going to have access to the hottest toys. They're already here. Right. And that's the remarkable thing about these. You know this. Whether it's fuel costs or whether it's some of the uncertainty surrounding trade policy. Policy, it's enticed everyone to advance their shipments.
- [39:33]
Joe Matthew
It's really encouraging, I think, for a lot of people who are listening right now. Talk to me about the other end of things. When you have trucks lining up and they're paying over $5 a gallon for diesel, does that impact business or are these businesses swallowing that cost right now? Are they passing it on?
- [39:48]
Dr. Noel Hasegaba
It's a mix. Most businesses absorb, some of it pass on to some of the consumers.
- [39:53]
Joe Matthew
Look at the transportation like JB Hunt. I mean, these stocks were at all time highs. They're printing money, it looks like.
- [39:57]
Dr. Noel Hasegaba
Well, they are. But affordability continues to be a key issue, not just for policymakers, but for operators like us. And it's important for us to keep an eye on that because at a certain point, that resilience, that resilience muscle is not going to be able to stretch to that degree. So this is why, again, I say what is happening right now in the energy market is strengthening the case for energy diversification. This is why this historic memorandum of cooperation with the Maritime Administration makes a ton of sense.
- [40:25]
Joe Matthew
How's your labor force in terms of the port itself and drivers? This was a real concern coming out of COVID How do we get enough drivers, even if the goods make it to port, to get them around the country?
- [40:35]
Dr. Noel Hasegaba
Our workforce are the true heroes. They're the ones who move the containers, are the ones who power our port. And right now we have a very healthy and robust workforce. They show up during COVID they masked up and we never had a close a single shift. So it's a testament to the resilience of our workforce as well.
- [40:53]
Joe Matthew
What's the timeline getting back to where we started on small nuclear reactors Getting on ships. Do you have one or is it impossible to tell right now? Is this five years, 10 years away?
- [41:02]
Dr. Noel Hasegaba
You know, I can't tell you exactly when it's going to happen, but what I can tell you is this MOC sets the path forward for us to have those conversations that need to be had. We have willing partners in the practice, private sector who are going through the R D right now. We're bringing in the experts and again, we're going to do this safely and reliably.
- [41:21]
Joe Matthew
Is this administration the reason why this is happening now? You know, there seems to have been an embrace of nuclear that didn't exist before.
- [41:27]
Dr. Noel Hasegaba
SMR has been around for the last 10 years. Nuclear power has been around. As you mentioned, the U.S. navy. As a matter of fact, a fun fact. The very first war craft vessel to use nuclear power was the USS Long beach in the 1960s.
- [41:43]
Joe Matthew
That right?
- [41:43]
Dr. Noel Hasegaba
Yes, it's been around for a while. But again, it's the application and the adoption. If we can introduce this technology in a safe and reliable fashion, I think there will be a lot of advantages.
- [41:53]
Joe Matthew
Would this be like an aircraft carrier or a submarine where you'd have, in this case, Maersk would put a cargo vessel on the water and be out there for a year?
- [42:01]
Dr. Noel Hasegaba
Well, right now our partner Blucor is looking at how we could leverage SMR to power commercial vessels. Yeah, that's the beginning phase. Where it goes from there will depend largely on how we develop the safety protocols, the operational standards, and make sure that this technology is adopted and implemented safely and reliably.
- [42:21]
Joe Matthew
Well, we'd love to stay in touch with you on this as you get closer. Next time you're in Washington, come and see us. Dr. It's great to be happy on a number of issues from the economy to the future of nuclear on the open seas. Really fascinating conversation as we promised with the doctor, he's the Port of Long Beach CEO Noel Hasegaba with us here exclusively on Bloomberg TV and Radio. 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. noontime eastern@bloomberg.com healthcare
- [42:59]
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- [43:29]
Joe Matthew
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