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Bloomberg Host
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, we connect the.
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Joe Matthew
Dots as always between Washington and Wal Street. Thank you for being with us on the Monday edition. It is quite a connection today as we consider the future of the Federal Reserve chair and ahead of our conversation with Congresswoman Debbie Dingell, we want to bring you up to date on what we know here with the Department of Justice. As we've been reporting, delivering subpoenas to Jay Powell, threatening a criminal indictment over his testimony on Capitol Hill about the building renovations that President Trump put a hard hat on to go visit the chair to talk about a couple of months ago, generating the headline on the terminal Fed Served DOJ Subpoenas, Powell Vows to Stand Firm. Indeed, the chair, in an extraordinary move, jumped in front of a camera yesterday to put up a video rebuttal. Here's what he said. No one, certainly not the chair of the Federal Reserve, is above the law.
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Bob McNally
But this unprecedented action should be seen in the broader context of the administration's.
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Joe Matthew
Threats and and ongoing pressure. The threat of criminal charges is a.
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Bob McNally
Consequence of the Federal Reserve setting interest rates based on our best assessment of.
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Joe Matthew
What will serve the public, rather than following the preferences of the president and thus, he says, being punished for in fact, doing his job. He did, yes, invoke the president who says he did not know this was coming. He was surprised by the news and learned about it just like you did. That's where we start with Tyler Kendall. We want to get an update from the White House before we talk to the Congresswoman. Bloomberg Washington correspondent Tyler the president has not spoken publicly about this, has he?
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Tyler Kendall
No, not yet. Though, Joe, as you mentioned, he did tell NBC News in an interview overnight that he did not have knowledge of this investigation. It is worth pointing out that it's our understanding that the investigation was greenlit by the US Attorney General for the District of Columbia, Jeanine Pirro, a longtime ally of this White House and people familiar with the matter. Tell us here at Bloomberg News that FHF A director, Bill Pulte, was a driving force in getting the Department of Justice to issue these subpoenas. Now, he did dispute that reporting and denied knowledge of the investigation in an interview with Bloomberg Television earlier today. But we do know that he was on Air Force One with President Trump over the weekend. There's a lot of different threads that we can pull on here, but if we focus on the Washington reaction, Joe, we are hearing from more and more lawmakers as the day goes by. Of course, last night, in a stunning statement, Senator Thom Tillis, a retiring Republican from North Carolina, says that he will block any of President Trump's Federal Reserve nominees until the legal, legal matter is resolved. And he really could. He sits on the Senate Banking Committee, where there is a 1311 majority for Republicans, so he could stall a nomination from going to the full floor. We mentioned this earlier on the program, but it does appear that Powell is talking with these senators in real time. Senator Lisa Murkowski, a Republican from Alaska, confirmed she spoke with him earlier this morning, and she's now suggesting that Congress could launch its own investigation into the Department of Justice's investigation. And, Joe, I'll leave you with this one. The House Financial Services Chair, French Hill, saying that this is an unnecessary distraction, in his words, appearing to take the side of the Fed Chair at this point. We're going to have to see how this goes from here, because as you all know, there is a very high legal bar to remove a Federal Reserve official from their position, a protection that was bolstered by the Supreme Court just last year.
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Joe Matthew
Yeah, I'm looking at the guidance for today, the schedule, Tyler. He does have multiple events. If they wanted to open them to press, I suppose we could hear from him today. So let us know what you learned so far. There's nothing public on the schedule, right?
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Tyler Kendall
No, nothing yet. He's missing. He's meeting with an archbishop. He also has something on the schedule known as signing time. We're waiting to see how that's going to evolve. So, yes, he could open up some of these events as we get some more details. But as of now, we have, we haven't heard from him so far yet today, Joe. But we have to keep in mind, it appears that the attention is really shifting towards Congress. What these lawmakers could potentially do against this investigation and the fact that this investigation rests on testimony that Powell gave to Congress and allegations that he misled lawmakers, of course, an accusation that Powell himself denies.
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Joe Matthew
Yeah. Tyler, thank you so much. Bloomberg's Tyler Kendall on the North Lawn at the White House. Yes. Signing time that's set for 3:30pm Sounds like that might be an opportunity. We promised Congresswoman Dingell would join us. And she's with us now live from Capitol Hill, the Democrat representing Michigan's 6th district, chair of the House Democratic Policy and Communications Committee. It's great to see you, Congresswoman. Thank you for standing by for us as we set things up this hour. It's great to have you back on Bloomberg TV and Radio. Is this a story of Fed independence on or retribution or both?
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Congresswoman Debbie Dingell
Both. Hi, Joe. It's good to be with you. I obviously don't have all of the details. I'm probably learning things from you and from other people. But I deeply believe in the independence of the Federal Reserve, the independence of the chair. And we know that the president is someone who believes in retribution. So I suspect the story is both. And I am committed to a system of checks and balances that our foref fathers established when they wrote the Constitution. And what we're hearing is not something that should make anybody in America feel good. We need an independent Federal Reserve to protect our economy.
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Joe Matthew
Well, it seems that you're on the same page as French Hill and even Thom Tillis next door in the Senate. Do you take heart in the chairman of Financial Services calling this an unnecessary distraction? He's obviously not in the president's corner on this. Did Donald Trump find the line in the Republican led House?
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Congresswoman Debbie Dingell
Well, I think you've been seeing cracks over the last couple of weeks in both the health care bill that happened in the House last week and in the War Powers Act. I think people are home. They are hearing from people that they are unhappy, that they are scared. I mean, there are a lot of different issues here. You know, on health care. Millions of Americans have lost their health insurance and can't afford it. And they're speaking up to whoever their senator or their congressman is. I think a lot of people are not only worried about what happened in Venezuela, but when you talk about invading Greenland or bombing Mexico or going into Cuba or we've this man, President Trump, campaigned on ending wars, not on starting wars. When I'm home, people's heads are spinning. There's so many issues that they care about. And I don't care if you're a Republican or a Democrat, a Lot of Americans have questions and are worried.
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Joe Matthew
Well, I'd love to hear more about the drive to address health care premiums. Congresswoman, we were on Capitol Hill last week on Thursday evening when I believe it was 17 Republicans crossed the aisle to vote for the discharge petition to revive enhanced Obamacare subsidies that expired at the end of last year. It's on the Senate now. And it looks like there is a bill, the Bernie Moreno bill is coming together in a way that might bring Republicans and Democrats together. If that passes, would that then lead to a conference committee? How does that, how does this become a piece of legislation that both chambers can address?
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Congresswoman Debbie Dingell
So it obviously is on the Senate next. I met with those, the Republican and Democratic senators last week, had very candid discussions. We understand that there has been agreement that there would be a two year extension in the health care tax credits. There are a number of other issues that are being worked on. We're going to have to see what the text of that bill is. But, you know, I'm in this because I have the University of Michigan Hospital. I have so many people that I've met and talked with over the last few months. The human stories that are there, people are crying, people are scared. People really are living in a world that they can't afford insurance. They're looking at the choice between food on their table and whether they can get health insurance. I, for one, am somebody that believes that, you know, we in America spend twice as much as any other industrialized nation in the world and have worse health outcomes. If you're sick, you should be able to go to the doctor when you need to go to the doctor and get the medicine you need. How we work that out. I'm willing to work with everybody and anybody. But our healthcare system is broken right now. And I know there are members on both sides that want to work together on it. And I don't want to wait till November. We need to be doing it now.
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Joe Matthew
Looks like that might be the case. Bernie Moreno says he intends to get 35 Republican votes for an eventual bill. Congresswoman, that would be very convincing. The president would have to sign that.
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Congresswoman Debbie Dingell
No, I think that the health care, I think that the president understands that this is a major issue for him. Was not there. But I had reports that occurred that were reported from the Republican retreat last week. And my understanding is the president told them to be flexible. Anybody who's out there, anybody who, like, doesn't hide from their constituents knows there is a problem with the health care system in America right now.
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Joe Matthew
Well, I Tell you what, there's also the matter of funding the government, Congresswoman, and I don't know if you see a connection between these two, if there, if, if there needs to be a deal on health care. But I get the sense in every conversation we have with lawmakers that there's really no appetite for a shutdown, save a few outliers. That doesn't eliminate the idea, though, of sleepwalking into a shutdown. And based on what we're seeing in Minneapolis now, the administration doubling down with ICE agents following the fatal shooting that took place last week, there is a new concern that funding for Homeland, for instance, might be bogged down in debate over what took place involving ICE and similar deployments around the country, and that we slide into a shutdown. Where's your head on this today?
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Congresswoman Debbie Dingell
So I would like to say that you're probably accurate in what you're reporting, but want to put that in further context. There have been many deep discussions about how we keep the government running. And we voted on appropriation bills last week in the House and we will be voting on other bills this week. So they are reaching agreement that Republicans are backing off in some of the deep cuts that they wanted. We are finding consensus. So I think most appropriation bills are likely to get passed by January 30th, but that I would take Homeland Security and ICE as a separate issue. I think people are looking for answers about what happened in Minneapolis. When you have a senseless loss of life, you become concerned what's happening on the training. When the last words you hear a woman say is, it's okay, I'm not mad at you, and she's dead 30 seconds to a minute later. That bothers a lot of people. So I think a lot of questions are being asked. I don't know what's going to happen. I think all other bills will get passed. If I had to make a prediction. There isn't the appetite. But I think it is legitimate for questions to be asked, and we'll have to see how this all plays off. But those questions cannot not be asked.
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Joe Matthew
What do you make of. You've been in this business and around this business for a minute, Congresswoman. This Rorschach test that we're seeing now, not only the rush to judgment, but the predictability based on people's political affiliations on what they're concluding from these videos. How dangerous is this?
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Congresswoman Debbie Dingell
You know, I want to say that Tom Homan, who is seasoned, I probably don't agree with him on many of the things he has said. The first thing he said is we need a transparent and deep investigation. He didn't rush to clear anybody. He didn't rush to call someone a domestic terrorist. We need the facts. And we have got to start getting back to facts. We have to. And we need that transparency. You know, I want to. Everybody wants to be safe, okay? And the immigration discussion's a separate discussion, but it isn't. I mean, being safe also depends upon public trust and those that have the responsibility to keep you safe. So it's not contrary to say thank you to those that are keeping us safe, but ask questions when someone has been senseless. Well, senseless is a judgmental issue. But when someone's been shot and killed, you need to ask questions. And people saw those videos. And I quite frankly had wished that the Secretary of Homeland Security hadn't rushed out there and called this woman a domestic terrorist. She didn't have any more facts than I had. Like jumping and not getting. Not getting the facts are deeply, deeply disturbing. And there have been a lot of people that have analyzed the tapes and raised a lot of fear questions.
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Joe Matthew
It's all amplified by social media. And you really do worry about this trend accelerating, that the rush to judgment seems to get faster each time. Congresswoman, I need to ask you about the President's trip to Michigan tomorrow. He's bringing the affordability message back on the road and there's going to be a speech that I'm sure we'll all be listening to and watching in Detroit. I don't know if you're going to be there for the speech or if you plan to watch it, but he's also going to be touring a Ford factory tomorrow, according to the press secretary. What would be your message to Donald Trump before he lands in your state to talk affordability?
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Congresswoman Debbie Dingell
Well, I want to say to people, I have been at the last two Detroit Economic Club speeches that he spoke at. I, at 2:00 o'clock tomorrow, will be in a hearing on the auto industry on 12 bills, three of which are mine, including autonomous vehicles. So I'm doing what I'm supposed to do, which is to protect the industry that I represent. I will watch the speech, but if I were to say anything to the President, I would say you need to help keep this domestic auto industry strong. We have been a global leader. They can't constantly be a ping pong ball. Every business in this country needs certainty. Cars are becoming too expensive. I agree with the President on tariffs against China. We need a level playing field in. We're not playing on a level playing field against China. They're manipulating their currency, subsidizing their products, losing slave labor. But this industry needs certainty and they haven't had it. And I want to work together with my colleagues on both sides of the aisle with the president to have a stable environment to keep our domestic auto industry affordable and a global leader.
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Joe Matthew
Well, I want to hear more about your bill on autonomous vehicles. I'd love to have you back to talk about this, Congresswoman. I know that's the bill that you're at least one of them that you'll be addressing tomorrow. Safeguards for autonomous vehicles could be one of the biggest stories of this new year. And it's great to have you back. Congresswoman Debbie Dingell, the Democrat from Michigan, with us live from Capitol Hill. It's good to see you And I hope 2026 is treating you well so far. I'm Joe Matthew in Washington. This is BALANCE of Power as we bring you voices from both sides of the aisle every day here on this program. We drive forward with help from our political panel coming up next. Lonnie Chen is with us, the Republican strategist and Jeannie Shan Zaino, our Democratic analyst and Bloomberg Politics contributor, as we find our way forward on a day that has eyes on Jay Powell and the Department of Justice. Stay with us on Balance of Power. We'll have much more coming up after this.
- [17:16]
Public Ad Narrator
Support for the show comes from Public. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [18:06]
Bob McNally
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory services by Public Advisors llc, SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures.
- [18:26]
Bloomberg Host
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.
- [18:45]
Joe Matthew
Thank you for spending part of your Monday with us as we turn our attention to the Arsenal of Freedom tour and its next stop. That's what they're calling it at the Pentagon. The Department of Defense and Secretary Pete Hegseth up with his own trailer of sorts this morning, climbing the stairs on the jet to say next stop Texas. And the reason why we're following this is not only because of Pentagon policy. And the Pentagon is framing this as the third major speech when he visits SpaceX today of his tenure and a direct follow up to his speech at Fort McNair last fall. You remember the speech about the Beardos and the fatties. We don't expect the same speech this time. In fact, it's going to be a very different crowd as he speaks to the rank and file at one of the most important defense contractors in the country. And it's created a whole new conversation here in Washington about Elon the political operative. Remembering, of course, he had gone back to Tesla. He was done with politics following Doge, and was going to focus on the business at hand. He's been spending a lot more time with Donald Trump recently and is again appearing with the Secretary of War today, making us consider the on again, off again relationship between Elon Musk and the administration.
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Secretary Pete Hegseth
And Elon, because he's not very busy, has agreed to head that task force. Be interesting if he has the time, that would be a good one to do it. President Trump has ceded the presidency to Elon Musk. No, no, that's not happening. But Elon's done an amazing job. Elon can't do and won't do anything without our approval. And we'll give him the approval where appropriate if there's a conflict that we won't let him get near it. But he does have a good natural instinct.
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Joe Matthew
I expect to continue to provide advice whenever the President would like advice.
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Secretary Pete Hegseth
I hope so.
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Adobe Acrobat Announcer
I mean, yeah, it's extreme. I expect to remain a friend and an advisor.
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Joe Matthew
And certainly if there's anything the President wants me to do, I'm at the president's service.
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Secretary Pete Hegseth
I was very surprised. You saw the words he had for me. The words. And he hasn't said anything about me that's bad. I'd rather have him criticize me than the bill because the bill is incredible.
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Joe Matthew
That was so long ago. Kailey Lyons was sitting next to me. But of course they slowly got back together and now they're in fact working together again by way of the defense secretary and maybe even more. Speaking on Air Force One last night, the president going even further to say that he may call on Elon Musk to deploy Starlink in Iran to help antigovernment protesters there. This is where we start with our political panel, the re emergence of one of the most significant political operatives in the last campaign. Bloomberg Politics contributor Jeannie Shan Zaino is with U.S. democracy Visiting Fellow at Harvard Kennedy School's Ash center alongside Republican strategist Lonnie Chen, Fellow in American Policy, Public Policy Studies at the Hoover Institution at Stanford University. It's great to have both of you with us here, Jeannie. We went through a lot in the life and times of Trump and Musk. Is he back?
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Jeannie Shan Zaino
He is. This is actually, I understand, Joe, the first time he's appearing publicly on stage with a senior member of the admin administration. So you remember the old song the Boys Are Back in Town that has been ringing through my head all day. It's truly they are reunited. And I think the poor American party that he was talking about starting may have seen it's the death knell of that. But, you know, the Pentagon announced that he was going to be talking about how he can improve the manufacturing base in the defense sector and about how the bureaucracy of the Pentagon has really gotten in the way of that. And I am so interested to hear that because, of course, what are the details there? This is on the heels of the president asking for $1.5 trillion of 50% rage in the defense budget for a department that has never, never been able to pass a really simple audit. So, you know, what are the specifics there? And the reality is, is that he's right. It is a disaster over there, particularly the procurement process. So I'm hoping that the defense secretary or war secretary is going to be speaking about how he is going to improve that.
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Joe Matthew
Well, that's right, Lonnie. It's an address on how Pentagon bureaucracy is holding back the nation and hurting firms like Space X. So is Elon Musk maybe not back in the administration, but back in the family?
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Lonnie Chen
Well, I don't know that he ever left the family, to be honest with you. I mean, I think that he's someone whose influence extends. I mean, he was characterized as a political operative. I think his influence and his impact goes well beyond any operative would ever have. I mean, this is someone who brings a lot of economic Success. Clearly someone who President Trump respects from the perspective of having been an economic success story. And I think it's interesting the topic of the conversation that the secretary is going to approach today in Texas has more to do with the continuing expansion, in a lot of ways, of the American defense industrial base and the ways in which America is going to try and be a leader, not just in technology necessary for kinetic warfare, but also potentially for the warfare of the 21st century, technological warfare, etc. And I think we're going to see some of that conversation happening in Texas and over the next several months. So this is an interesting move, not so much because of Elon Musk's re emergence, in my mind, as it is because it does signal, I think, where the Defense Department or War Department is going to be directing its attention over the next several months and years in terms of procurement, in terms of where the defense industrial base is headed.
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Joe Matthew
Jeannie, I don't know what Elon Musk thinks about the president's post. Last week, maybe he asked him to do it. About the defense contractors. SpaceX is, of course, more than a defense contractor. They're involved in any number of civilian operations, working with NASA and so forth. But it is one of the most important companies to fulfill Pentagon contracts in. And you remember last week President Trump said it's no longer appropriate for defense companies to issue dividends or buy back their own stocks when they're basically working with taxpayer funding. SpaceX is private, but only for now. It's supposed to be one of the biggest IPOs of the year. Zelon must be the one to hold back the president on this.
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Jeannie Shan Zaino
He could very well be. I am sure the president will hear from him, if he hasn't already on that, and other people similarly impacted. And of course, this is what becomes problematic about having so much reliance, sort of a monopoly. And it's not anything against Elon Musk. I mean, he has done so tremendous in so many areas. The United States is reliant on him in so many ways, as are other countries. I mean, just look at what is happening in Iran. So that is what becomes problematic because then you see what confronts what may be good policy in the interest of the American public. You're going to get pushback from people like Elon Musk who are negatively impacted. So I think absolutely, the president will hear from him and we may see the president change his mind or not pursue that fully.
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Joe Matthew
Yeah. As a Republican strategist, Lonnie, do you hope or do you worry that Elon Musk will open the pocketbook, will open the wallet for candidates and maybe stump for candidates in this midterm cycle. Do you want him in front of Americans?
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Lonnie Chen
Well, I think certainly he decides to get involved with his personal finances and, and ends up supporting, for example, Republican congressional candidates. I think that's gotta be a net positive in terms of the resources he brings to the table. This is gonna be a very competitive election cycle. It's gonna be closely watched. There are very few seats that are going to determine majorities in the House and the Senate, and it's gonna be expensive. And he was such a significant part of the 2024 cycle in terms of his contribution in that way. I would think that Republicans around the country are going to be watching carefully to see how he gets involved. And I do think ultimately that involvement will be seen as a net positive by Republican strategists as well as by Republican candidates across the country.
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Joe Matthew
Really interesting, Jeanne. We're having this conversation as Senator Elizabeth Warren delivers a speech today at the National Press Club ahead of her interview here on Bloomberg TV and Radio on the late edition of Balance of Power. She's going to be with us at five o'. Clock. A message for her own party and its big tent. Democrats are doomed to fail, she said, In 2026, 2028 and beyond, if they don't stop tiptoeing around donors and corporations and embrace a populist economic platform. Is she right?
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Jeannie Shan Zaino
She has a point. I mean, the energy on the Democratic side has been there. We've seen that repeatedly. I don't know if I. You have to fully embrace that, but what I think you do have to fully embrace is the issue of affordability, because no matter how much money. And Lonnie was just talking about this, that Elon Musk may put into the races in this midterm cycle, it will be won or lost. On the issue of affordability and the economy, populist responses to that are not the only solutions. But you've got to be talking about that and cannot be distracted by so many other things going on in the world. And that's where I think the biggest challenge for Democrats is. So I'm very anxious to hear her on that. And also, of course, on the Jerome Powell issue. She'll have a lot to say on that, I'm sure.
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Joe Matthew
Yeah. Well, in our remaining moment here, Lonnie Chen as President Trump calls for a cap on credit card interest rates, goes after defense contractors for dividends and stock buybacks, and calls on institutional investors to be banned from buying single family homes. Do you worry that people might have trouble telling Democrats and Republicans apart from.
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Lonnie Chen
Well, this is the thing about populism, right, is that there is a point at which the left and the right meet. And I think you're seeing some of that in some of the recent policy pronouncements. But look, ultimately I think for the President it is going to come down to what is the affordability agenda. Is that something Republicans are going to embrace? And I think Republicans are going to have to distinguish themselves on that metric, on demonstrating some commitment to those issues. And on some of these policies, Joe, you are going to see right and left come together in potentially bipartisan consensus.
- [30:06]
Joe Matthew
It's like a political science class every day here, I tell you with the help of Lonnie Chen and Jeannie Shan Zaino. Great panel. Thank you both. We've got much more ahead. On Balance of Power, the Monday edition only on Bloomberg TV Main Radio. Stay with us On Balance of Power. We'll have much more coming up after this.
- [30:26]
Public Ad Narrator
Support for the show comes from public. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [31:16]
Bob McNally
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures.
- [31:37]
Bloomberg Host
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple, Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [31:52]
Joe Matthew
It was on Friday that we were talking oil here with regard to Venezuela. Remembering the big meeting that took place at the White house with the CEOs from all the oil majors. There were, I believe 17 major oil CEOs in the East Room with President Trump, the vice president, Secretary of State, and this man, the Secretary of Energy, Chris Wright, who joined us first after that meeting to talk about the massive investment that would be required to stand up Venezuela's oil industry all over again. Here's what he told us. We're going to have teams on the ground investigating following what's happening with production in the facilities, seeing what the safety and security situation is like and how that progresses. But I have, I have no doubt at all we will see massive increases in investment from many companies into the oil and gas industry in Venezuela. And the production profile will reflect that. We'll see growing production later this year, hopefully by this summer. But of course, we talked about some of the pushback that we heard, or at least the concerns from a lot of the oil majors who were there, because they know this better than anybody, having already been in Venezuela. And of course, Chevron remains in country, but Exxon Mobil, for instance, pulled out of Venezuela having seen its assets seized twice. And you remember this line from Darren woods on Friday on Investable was how he described Venezuela. President Trump, not happy about that, saying he was displeased with the company's response and told reporters on Air Force One he'd be inclined to keep Exxon out because of that line. We heard a lot of differences narratives in the room. Harold Ham had nothing but compliments for the President. But there was still this concern about how long it would take, how much it would cost and what it would mean for the oil industry at large. I'm really glad to say that Bob McNally is with us to help us get our heads around this project. The former founder, I should say, and President, Rapidan Energy Group, former special Assistant Senior Director for International energy on the National Security Council and the President George W. Bush administration. Welcome to Back Back, Bob. It's great to be with you. I hope your year is starting off well.
- [34:01]
Bob McNally
You bet.
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Joe Matthew
We need you. At times like these, you say it's always about the barrels, and in this case, it's going to take a lot to get these barrels out of the ground here. But of course, you have been talking about Venezuela for years. Right. Chevron's been there for 100 years. I think the President said, what would it take for all of these companies to come back into the country and would it be worth it for them? Remains the big question is the return there.
- [34:27]
Bob McNally
Yeah, you know, I think what they're all waiting and looking for and Chevron, which toughed it out, is Hoping for that. We're going to see a stable, workable, decent regime that's going to have favorable commercial terms, good relations with the United States and not be sanctioned. But Joe, if we could just step back for a second because I think there's really, there's sort of three buckets of oil we're talking about. Okay, there's the 30 million barrels that's been produced. Produced, it's stored. President Trump has a lot of say about what happens to that and they're working about marketing that, but that's easy. Then there's the oil that might be produced in the next few years if Chevron gets a license and some diluent to do that and so forth. Let's call that the low hanging fruit. And President Trump has a lot of say over that as well. Mainly can he help deliver that stable government we need. But then there's the third bucket and that's where I think Exxon was talking about. That's, that's the millions of barrels a day more that Venezuela could produce. That is well beyond the Trump administration. That's going to be measured in years to five year increments to decades and tens of billions of dollars. So there's really three buckets of oil. I think the President's relevant for the first two. But that third one is what Exxon was speaking about. And right now it's probably not investable for that long term and hopefully it will be soon.
- [35:43]
Joe Matthew
We hear about heavy sour crude. Does Exxon want this kind of oil when it's got the access that it has to other parts of the world?
- [35:52]
Bob McNally
It sure does.
- [35:53]
Joe Matthew
I don't mean to make this about companies. Any of them?
- [35:55]
Bob McNally
No. Any of them? No. Look, so the one question would be, look, if we were speaking here a year ago or two years ago, you'd say, Bob, everyone says demand is going to peak by 2030. This is like a horse and buggy factory opening up in 1902. Who wants that? Okay, but that narrative is collapsing. The IAEA and others are realizing we're going to need a lot more oil, especially in 2035. We got plenty in next year, plenty this year. Not, not in 2035. So we need that extra project, extra oil from Venezuela. Then there's a type of oil like you said, Joe, not oil is the same. Venezuela's oil is like molasses, right? It barely moves. It's got to be upgraded and treated. US Companies have the logistical, engineering, planning, financial wherewithal to turn that molasses into the gasoline and diesel that you and I use. And so you almost need those kind of companies to really get Venezuela back in the game. So it's just what the doctor ordered. But not till 2035.
- [36:44]
Joe Matthew
What our refiners need to retool to handle that kind of crude?
- [36:48]
Bob McNally
Not really. We built our refiners to run that kind of crude. We get the similar types. Similar, not exactly the same from Mexico, from Canada. So our, what we call complex refineries on the Gulf, big thing, they integrate heat, catalysts, pressure. They know how to crack that gunk into gasoline.
- [37:06]
Joe Matthew
Okay, so we've got this massive oil reserve in Venezuela. Everyone's drooling over it. Or we'll just say that for now and assume that that's true. What if you made a massive investment in the Permian. What does that do to your domestic investment as an oil company?
- [37:20]
Bob McNally
Well, you want to have a portfolio. There's a role for Permian shale oil, which if I can extend my, you know, analogy is sort of like champagne. Not full of gunk, not full of. Of as a high quality oil. You want to have some of that? Yeah, but the Permian has matured for the stance to the time period. It's going to. It's going to flatline a little bit. We're looking into 2035, Joe. And these companies have a long outlook. They're looking well beyond the Trump administration. And they're saying, when we lose 4 to 6 to 7 million barrels a day of production a year just from depletion, where are the new barrels? They're going to come to offset those declines and add new oil, which we now realize will need. So you need light sweet from the Permian. You need heavy from Canada, Mexico and Venezuela. Okay.
- [38:02]
Joe Matthew
Fascinating. 10 years, $100 billion is what they're saying. That would outlive this administration by a lot. And I think that was the point that you were getting to. Does this project then go unserved or do these companies need to do their own exploration? How do they come to these decisions?
- [38:18]
Bob McNally
Well, I think, and Darren woods spoke to this. Assuming we have basic safety and security.
- [38:23]
Joe Matthew
Yes, right.
- [38:24]
Bob McNally
That's important. I say to folks other than the airlines, Joe, I don't know of an industrial sector that takes safety more seriously than oil companies. And so they want to be. They're going to get technical teams in there. Imagine a mansion in a house that's been dilapidated for 25 years and no one's been inside. You want the architect or the guy to go in and take a look at the plumbing, the Carpets. Has there been water damage? It's the same type of thing, only on a much bigger scale. So. So technical teams need to get in there and look around and see. And it's not just oil things. Pipelines and upgraders and submersible pumps. How about electricity? How about roads? How about port capacity? We're talking about a country, really. And this needs to be assessed because it's been in looney land for 25 years.
- [39:06]
Joe Matthew
Really interesting. With all of that said, we're told that there are roving bands of militias, there are motorcycle gangs that are looking for American executives. Would be quite a great target. Or American contractors. That gets back to that first bucket you talked about. Is the administration capable of tamping down that risk?
- [39:28]
Bob McNally
Well, and with the State Department urging Americans to get out and be careful. Okay.
- [39:32]
Joe Matthew
Oil companies know how to operate in dangerous places. How does this compare?
- [39:35]
Bob McNally
Well, so those two buckets, first of all, that oil that's stored, it's either on boats or it's in tanks on land. If they can talk to some commodity houses and arrange some transactions, they can probably arrange for that to be shipped out. It was going to go to China to pay back debt. Now it's going to go to the highest bidder with the revenue going to some treasury account. It's that second bucket. Can Chevron and Repsol achieve those promises, those goals or those targets they gave to the President on Friday? Can we get 20, 30, 40, 50% higher production in the next year? A bare minimum is you need safety and security and then you need those sanctions to be eased. Need to get that dilument. You know, we bring in liquids to cut the molasses with to make it move. Do you need to get more of that in? So if conditions are right. I think Secretary Wright is a great interview he gave with you guys. He's right. We could see big percentage increases off of the 240 that Exxon's doing now, 1,000 barrels a day in the next year or two if things go well. But you got to have basic safety.
- [40:31]
Joe Matthew
Wow. Fascinating as always. We learn every time we talk to Bob McNally. I really appreciate your coming in, Bob. Rapidan Energy, of course, and a friend of the program. We thank you so much. With our eyes also on Iran and this is going to factor in, of course, to oil prices as well. The President has been talking about Iran and posting about Iran quite a bit with protests entering a second week now. Pretty remarkable here with the President talking about this as recently as yesterday. Here's the latest from Donald Trump, There.
- [40:59]
Secretary Pete Hegseth
Seem to be some people killed that aren't supposed to be killed. These are violent. If you call them leaders, I don't know if they're leaders or just they rule through violence. But we're looking at it very seriously. We may meet with them. I mean, a meeting is being set up, but we may have to act because of what's happening before the meeting. But a meeting is being set up. Iran call. They want to negotiate.
- [41:27]
Joe Matthew
Iran called. They want to negotiate. We wanted to talk about this with Becca Wasser, Bloomberg Economics Defense Geo Economics team leader. Becca, you still have the best title in the room. It's great to see you. Are we sure Iran called? What do we think the overtures from Tehran include?
- [41:43]
Adobe Acrobat Announcer
Well, I think here they're trying to have an open dialogue and trying to make it so that we don't potentially see the use of strikes against them, as President Trump has said.
- [41:53]
Joe Matthew
So they're taking him at his word.
- [41:55]
Adobe Acrobat Announcer
They're taking him at his word. And I mean, at this point, track record shows that they probably should. Last few times that he said that he's going to strike a country, he's followed through on it. But also Iran has fresh wounds. There have been US And Israeli strikes on their soil in very recent memory. So I think there it's trying to have a conversation, but also so in doing so, even if they make it so that there isn't strikes, it at least prolongs the timeline.
- [42:21]
Joe Matthew
Yeah, we're being told, Becca, that it's different this time when it comes to the protest. The fact that it's gone on for this long and the regime has not been able to essentially scare people back into their homes is remarkable. We're told some 500 protesters are dead, 11,000 have been arrested and are being held. How does this end?
- [42:44]
Adobe Acrobat Announcer
Well, I can't tell you how it ends necessarily, but I do think there is something to be said about the size of these protests, the spread across the geography, and the fact that this is not the first time in recent years where we've seen Iranian people take to the streets. So there's clearly something internally that they need to be trying to move the needle forward on. It's just whether what the US does in response actually helps the protesters rather than potentially hinders what they're trying to do.
- [43:15]
Joe Matthew
That could include Internet access by way of Starlink. The president says he is thinking about asking Elon Musk to do that as the regime has cut out all Internet connectivity and power in some cases. Would that make a difference?
- [43:28]
Adobe Acrobat Announcer
That would definitely make a difference in terms of the communication and the ability of the people to get the word out there to tell everyone what's actually happening on the on soil, because we don't truly know at this point. So being able to have increased access would definitely be one of it. But as we've heard, there's a range of options that are going to be put forward to President Trump tomorrow. And so that ranges from things like providing more Internet access to military strikes to the potential for even cyber attacks, attacks or some type of maybe even targeted assassination. Even so, it's a wide range of options that kind of go from helping protesters to the more kinetic options that we usually tend to see.
- [44:13]
Joe Matthew
Your president talked about having a menu of options before him, and I'm glad you mentioned that. This will be an important briefing tomorrow. Are you watching oil as a potential fallout for any sort of kinetic action the military might take?
- [44:26]
Adobe Acrobat Announcer
Well, we're always looking at oil when it comes down to any conflict in the Middle east, but I think one of the things that we've seen is there's been a great deal of resilience from international oil markets whenever it relates to conflict, just because conflict is the price of doing business. Unfortunately, in the Middle east, that's quite a statement.
- [44:44]
Joe Matthew
And of course, we did go through this already with Iran last year. Becca Wasser, we thank you so much for the insight. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, 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 these days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI. Well, the holidays have come and gone once again. But if you've forgotten to get that special someone in your life a gift, well, Mint Mobile is extending their holiday offer of half off unlimited wireless. So here's the idea. You get it now, you call it an early present for next year. What do you have to lose? Give it a try@mintmobile.com switch limited time.
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