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- [00:00]
Public.com Announcer
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.
- [00:50]
Joe Matthew
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc.
- [00:58]
Public.com Announcer
SEC Registered Advisor Generated Assets is an interactive analysis tool.
- [01:01]
Joe Matthew
Output is for informational purposes only and.
- [01:04]
Public.com Announcer
Is not an investment recommendation or advice.
- [01:06]
Joe Matthew
Complete Disclosures available at public.comDisclosures.
- [01:12]
Bloomberg Balance of Power 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 podcast, podcasts or watch us live on YouTube.
- [01:34]
Joe Matthew
All of this against the backdrop of a debate surrounding affordability here in Washington, dc. It drew the President out of the bubble yesterday as he spent some time on the road in Iowa, specifically a speech in Des Moines as part of his affordability tour, and this morning spending time celebrating what they call the Trump accounts. This is of course the investment accounts for newborns drawing financial contributions from around the corporate sphere. We saw the likes of JP Morgan and others here in town today to be part of that celebration. But of course we've also got an eye right now with regard to affordability and the fallout from Minnesota, a very large lack of trust on Capitol Hill and one that could in fact lead to a government shutdown in just a couple of days. We are ever closer to the Friday night deadline and Tyler Kendall has been combing the hallways of the Capitol, talking with lawmakers today to get a sense of whether there could be any deal when it comes to DHS funding. That's the matter that has held this up following the second fatal ICE shooting in Minneapolis last weekend. Tyler, what are you hearing and are we expecting a partial shutdown no matter what at this point?
- [02:42]
Tyler Kendall
Well, Joe, I can say that there is this sense that at least the sides are talking together and they are having negotiations, which feels in stark contrast to what happened during the last government shutdown where it felt like the sides weren't even going to engage. The only thing is we are not, it appears, any closer to a deal as we careen towards Friday's deadline. The thing is is that we heard from the Senate Majority Leader, John Thune, earlier today speaking to reporters in the hallway and he said that Democrats really have to be engaging with the White House. It appears Republicans are really putting on the table here that there can be some non legislative solutions, perhaps something done through executive action that could put some curbs on ice. Except for that Democrats don't really want to see that. They have repeatedly said that there needs to be something tangible tacked on a bill that would include some of the things that they are asking for, including mandatory body camera mandate or warrant requirements, something a little bit more firm that could impact ISIS operations on the ground. The issue with that though is that if there's going to be a legislative solution, it's going to take a little bit of work and it's going to get complicated. Even if we see them strip out DHS funding, decide to push forward and approve the five other bills that are in this package, you're going to have to bring the House back into town. That is one logistics difficult at the moment because they're out of Washington until February 3rd. But it is also going to be difficult politically since we know that it's going to be hard to get any such changes, particularly related to immigration enforcement, through the lower chamber. Joe, the last option here is maybe we'll see some sort of standalone legislation emerge. But at this point there haven't really been concrete discussions around if that is going to be a viable option. But we are definitely up against the clock. So at this point we'll see if something comes from it.
- [04:29]
Joe Matthew
All the discord around the Department of Homeland Security is palpable here, even on the Republican side. Tyler, when you see the likes of Thom Tillis, Lisa Murkowski calling for Kristi Noem, the secretary, to step down over what happened in Minneapolis and the reaction, the language that we heard from the likes of Noem and Gregory Bovino, there's we've got articles of impeachment on the House side, but also these Republican senators who are standing up to oppose the administration on this front. Is all of this slowing down the opportunity to find a deal on funding?
- [05:05]
Tyler Kendall
Well, it definitely could because we have to remember that is really what is at the heart of this, at point, at this point, a policy debate. In fact, President Trump had weighed in within the last hour in an interview with ABC News, criticizing Thom Tillis and Senator Lisa Murkowski over their opposition. And we actually just heard from Thom Tillis speaking to reporters here, basically pushing back against the president's criticism, saying that he's not going to be deterred in his opposition, that he wants to see Kristi Noam removed from her post. Now, you mentioned there is some movement around an impeachment resolution in the House. By last count, I believe it has about 160 Democratic signatures on it. We have to keep in mind a simple majority is needed for impeachment. So if we do the math, that would mean at least three House Republicans would have to get on board in order to approve any articles of impeachment. And right now, it's hard to see where they would actually find those numbers in the House. So instead, Joe, you're going to hear a lot about this focus on investigations. We've heard a lot more senators, Republican senators, more comfortable with that idea that they are going to hold full investigations. As of now, the next date that we are expecting the DHS secretary to be up here on Capitol Hill is March 3rd. That was for a previously scheduled oversight hearing in front of the Senate Judiciary Committee. But no doubt this is going to be the focus.
- [06:22]
Joe Matthew
Yeah, that's for sure. Dick Durbin even suggesting she may or may not have the job by March 3rd. Tyler, thank you. With us live from Capitol Hill. And what's going to be another busy one here as they try to find a solution. Bloomberg's Washington correspondent. We're just hearing from some of our reporters down the corridor from where Tyler is standing in the rotunda speaking with Jeanne Shaheen. Of course, the Democratic senator from New Hampshire has been key as a negotiator in bridging the gap across the aisle on any number of issues. She was just asked if she would vote to open up the government this time. She said what we need are reforms for ice. She went on to say, we have not yet also seen a formal proposal on Obamacare tax credits. It's not getting any easier as we assemble our political panel. Bloomberg Politics contributors Rick Davis and Jeannie Shanzano are with us. Rick is our Republican strategist, of course, partner at Stone Court Capitol. Joining us if you're with us on Bloomberg TV from a warm and sunny Phoenix, Arizona, Jeanne, with the rest of us on the east coast, our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ashe Center. Rick, what do you make of this rhetoric from the likes of Jeanne Shaheen? If she's not convinced, I'm guessing most of the rank and file are not either on the Democratic side.
- [07:41]
Rick Davis
That's right. I don't think they want to take any promises to from the administration to do better. They've been down that road before. I go back to the rescissions battle in the first budget, it really set the wrong tone. Right. I mean, when the administration says no matter what you give us, we're going to rescind it, that then hearkens into their minds today that says we could cut a deal with these guys tomorrow and they just decide to go back on it a week from now. So there's a lack of trust. And without the trust, those kinds of promises are going to not be taken. So they're looking for statutory changes. Statutory meaning in law. The agencies in this case DHS has to do the things that they direct them to do and it's hard to blame them. They've not been in on any of the decision making when it came to the big beautiful bill that added huge amounts of funding to dhs. So they're skeptical. And I think that reflects where we are today with these negotiations. Certainly Jeanne Shaheen indicates that in her comments today. And so look, I mean what that probably means is we're headed toward a shutdown at least for a little while until the House can approve whatever deal.
- [08:58]
Joe Matthew
The Senate strikes 12:01am on Saturday. Jeanne, we heard from Jeanne Shaheen. As noted, add Senator Chris Murphy, the Democrat from Connecticut who rarely holds back. He says the things we care most about are getting an independent investigation. That's one. And ending these roving patrols terrorizing Minneapolis. He says solving these problems with secret police and getting some identification of body cams. If all of these items were in a separate standalone piece of legislation, would Democrats go along, vote for the funding bill and then vote on this separately?
- [09:37]
Bloomberg Balance of Power Host
I think they might. They certainly would seriously consider it. But I think from the Democratic perspective, Democrats rather perspective, and from the perspective of so many Americans, the problem here is that what we've seen with the President Donald Trump is a change in rhetoric, but not changes in policy on the ground. Yet obviously that may be coming and that, you know, the shifting of Tom Holman in there may help bring that about. But until people see those kinds of operational changes, those kinds of policy changes, they are going to remain very concerned and unwilling to support the budget that was previously put into place. Given the fact that we've seen two Americans shot dead on the streets of Minneapolis. And it doesn't help, by the way, that the president, just about an hour ago, and I think Tyler was referencing this, called Thom Tillis a loser because he is questioning what the administration is doing with ice. And of course, last night, in a speech that's supposed to be about affordability, went on the attack once again against Ilhan Omar, who just minutes later was attacked as she was holding a town hall with constituents. So, you know, the president trying to soften the rhetoric potentially a little bit on what happened out in Minneapolis doesn't assuage people at all, given the lack of a change in policy and the lack of a change in rhetoric in so many other ways. And so I think for anyone in Congress on the Republican side to suggest that the Democrats should be negotiating with the White House, where are the Republicans? And I give Tillis and Murkowski and others credit, standing up and saying, enough is enough. We don't shoot people dead on the streets of our cities. American citizens.
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Joe Matthew
Well, they've got numbers on their sides, Rick. You probably saw this new poll from the Searchlight Institute, 1500 people. It was conducted after the shooting of Renee Gooden, before the shooting of Alex Preddy. In the immediate aftermath, 58% strong public support for reining ICE in. The memo states bipartisan majorities of voters oppose ICE's lawless tactics, including detaining U.S. citizens. 73% entering people's homes without warrants, 79% failing to wear clearly identifying uniforms. 70%. Do numbers like these embolden Republicans on Capitol Hill?
- [12:15]
Rick Davis
Well, I don't know if they emboldened Republicans. I mean, these are pretty stark numbers to look at. And any time you have numbers like this that are, you know, the political people look at things that spike people's interest over 60, 65%. These are well in excess of that in some cases. And so, yeah, change is coming. This was a set of issues around immigration, both the border and the implementation of deportations that were wildly popular for President Trump when he ran for election only a year ago. And now they've completely turned upside down to the point where Republicans are really starting to question, especially House Republicans, what do they say when they go back to their constituencies and for the midterm elections? They used to be able to talk about and even demagogue the immigration issue because it was so egregious. The open border policy of Biden gave them something that they could really talk about all the time. Now that's off the table, talking about Immigration now is going to lose your votes if you're a Republican, not get your votes. And this coalition that Donald Trump put together, especially young men and, and minorities, when you dig into that poll, you find that it's even worse in those categories. And so they're not going to be reliable voters for the Republican caucus come midterms.
- [13:43]
Joe Matthew
Boy, what a reversal. And when I say embolden, I mean in terms of opposing the administration on this one. Jeannie I was struck last evening on the late edition of Balance of Power. Megan Hayes, the Democratic strategist, was with us and stopped herself when she almost said, abolish ice. She said, we cannot use that word and went out of her way to say we need to reform ice, because for a lot of Democrats, this sounds a heck of a lot like defund the police. In this same poll, Democratic messaging, more voters preferred reforming ICE than abolishing the agency, 30% to 19%. How careful do progressives need to be with that messaging?
- [14:25]
Bloomberg Balance of Power Host
They should be very careful with it. But it's more than just the messaging. The reality is we do need a secure border that is clear. Any thinking person knows that. And had Donald Trump stopped at securing the border, which he has done a very good job at, and not sent masked gunmen onto the streets of the cities, his numbers would be absolutely reversed from what they are. So it's not just a rhetoric issue. I think it is the reality. We need sound border policy and patrols. And, you know, I was talking to a group of young people yesterday, and one thing that struck them as so egregious, it sounded silly to them. But just to show people how the, in the insanity of what has happened here with ICE, the idea that you would train ICE agents for 47 days because Donald Trump is the 47th president of the United States, sounds like it's from an SNL skit. And yet that's what we are told the training amounted to. So we need serious immigration reform. We need serious border security. We don't need rhetoric. We do need patrols, but you have to be serious about it and execution matters. And Donald Trump should know that because he has consistently called Joe Biden to the, to the carpet for what happened with us leaving Afghanistan. And yet that was all about execution. Execution matters here, too. And they have done that very badly. They need to rethink the policies, the operations, the procedures, and not just shift the people at the top. And the buck stops with Donald Trump. He is the president. It doesn't stop with, I don't believe Kristi Noemi.
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Joe Matthew
Well, we'll see if Kristi Noem is even impacted by that. We've only got a minute left here, Rick. We spoke last evening with the author of articles of impeachment against Kristi Noem in the House of Representatives. I think at last check she had 160something Democrats on board. Would there ever be a world in which Republicans would join that effort? Or is this up to the President?
- [16:35]
Rick Davis
It's interesting question, Joe, because this coalition in support of the President's agenda with deportations is fraying at the edges. Phyllis isn't the only one who is speaking out about it. In fact, even the corporate community starting to distance themselves from the Trump administration. So look, you never want to see another thing happen like what's been happening in Minneapolis. But at the end of the day, anything else that the ICE or border agency do that puts civilians in harm's way is going to be a fire inside this administration and could result in Republicans voting for impeachment.
- [17:16]
Joe Matthew
Rick Davis and Jeanne Shanzano stay with us on Balance of Power. We'll have much more coming up after this.
- [17:25]
Public.com Announcer
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.
- [18:15]
Joe Matthew
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc.
- [18:23]
Public.com Announcer
SEC Registered Advisor Generated Assets is an interactive analysis tool.
- [18:26]
Joe Matthew
Output is for informational purposes only and.
- [18:29]
Public.com Announcer
Is not an investment recommendation or advice.
- [18:31]
Joe Matthew
Complete disclosures available@public.com disclosures.
- [18:35]
Bloomberg Balance of Power 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.
- [18:54]
Joe Matthew
We wait on news about Iran. This is the story nobody's talking about because there's so much to talk about whether it's Minneapolis, whether it's the economy. The president today out with Trump accounts. Last evening it was affordability. We could talk about Venezuela, Greenland. How about Iran? A massive armada he says is headed to Iran on Truth Social. It is moving quickly with great power, enthusiasm and purpose. Do we think he wrote this one? It is a larger fleet, he says, headed by the great aircraft carrier Abraham Lincoln, then that sent to Venezuela. Like with Venezuela, he writes, it is ready, willing and able to rapidly fulfill its mission with speed and violence if necessary. I mean, look, if this is pretty good writing, if you're just hopefully Iran will quickly come to the table and negotiate a fair and equitable deal. No nuclear weapons, one that is good for all parties. We're still trying to figure out, though, what it is he's looking for. Is this just a nuclear deal? Because originally this was about protecting protesters. Remember, help is on its way. I discussed this whole drive, whether this ends in regime change with Jennifer Gavito at the Cohen Group yesterday here on balance of power. Here's what she said. You're talking about a millennia old empire.
- [20:17]
Michael Regan
And so, you know, toppling the top.
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Joe Matthew
Level of leadership doesn't necessarily bring the.
- [20:21]
Michael Regan
Type of change I think that people.
- [20:23]
Joe Matthew
Are thinking of when they speculate about helping protesters. In fact, you know, every simulation that.
- [20:31]
Bloomberg Balance of Power Host
The US Government or military has run in recent years demonstrates that if in.
- [20:35]
Joe Matthew
Fact you did take out, for example.
- [20:36]
Bloomberg Balance of Power Host
The Supreme Leader, the beneficiary of that would be the irgc.
- [20:40]
Joe Matthew
Hardly a better situation for protesters. We add the voice of Nick Wadhams. For the latest on this, the leader of our national security team is not with me today in Washington, but at our foreign desk in London. Nick, it's great to have you with us here. And I'm curious your thoughts on what the President's talking about. He went on to write, as I told Iran once before, make a deal. They didn't. And there was Operation Midnight Hammer, a major destruction of Iran. The next attack will be far worse. What's about to happen?
- [21:12]
Nick Wadhams
Well, Joe, that is a fantastic question. I mean, there is so much we learn from this tweet, because you're right, as you said, essentially all the threats that Trump had made in the last couple of weeks against Iran and his whole stated reason for sending this armada to the region was to protect those protesters and prevent the regime from cracking down even further on them. But now he's suggesting that he's shifting back to the nuclear element and pushing for a permanent nuclear deal. So what that tells me is that there is a lot of credence we should be giving to these reports and indications we have that there's a lot of diplomacy going on in the region. We know Iran wanted to resume some of the negotiations and restart talks with the United States after those June attacks, basically suspended any talks on its nuclear program. So it does seem like there's some sort of tentative thing happening here where there is a potential for a new round of conversations. And then you have Trump falling back into his very familiar role of carrots and sticks. Obviously, you can't get a much bigger stick than the threat of another US Military attack. So whether something is imminent, I mean, that certainly is the suggestion. Wouldn't be surprised after Venezuela. But at this point, we're just still very much in a wait and see mode.
- [22:32]
Joe Matthew
You know, it's interesting because after those initial strikes, or the initial strike on Iran in which we brought the B2 bombers over there, attacking Fordeau and the other underground installations, the President said that Iran's nuclear capability had been completely and totally obliterated. Why would we need a nuclear deal if that was the case?
- [22:51]
Nick Wadhams
Well, it's a great question that the Iranians are also asking because of course, they say they never intended to have a nuclear weapon and this nuclear program was for peaceful purposes only. Obviously a lot of skepticism about that, though. US Intelligence had also determined that Iran was not making a breakout for the bomb. But what we do know is that despite those strikes by the US Last June, Iran's stockpile of enriched uranium remains essentially intact. And we had the UN Nuclear watchdog, the iea, essentially saying a few days ago in an interview with Bloomberg, actually, that they could restart their program. It might take a little while, but, you know, the ability to do that had not been totally taken off the table. So. So obviously take the President's argument that the nuclear program had been completely obliterated with. With a grain of salt. But it seems in some ways, like maybe there's some tentative conversations happening and the President's looking to head off another confrontation, another potential need to attack the nuclear sites that would essentially put paid to his claim that that program had basically been wiped out.
- [24:01]
Joe Matthew
Got it. Fascinating. In a remaining moment, Nick, President says this armada is bigger than the one we had off the coast of Venezuela. Should we expect a blockade of oil tankers? Is it actually larger? The Jerry Ford's the biggest aircraft carrier in the world.
- [24:16]
Nick Wadhams
Well, Pentagon has not actually disclosed numbers, so we can't really say whether this flotilla is actually bigger. But, you know, the thing with this administration is they have so pushed beyond the bounds of what we would have normally expected. I mean, that attack on Venezuela, capturing Maduro essentially rewrote the rules of the game in a lot of ways. So with that in mind, it's hard to rule anything out, whether it's an attack or a potential blockade to really put the squeeze on Iran's oil trade, particularly with China, where they gain a great deal of revenue.
- [24:49]
Joe Matthew
Yeah, Nick, it's great to see you. Be safe over there and thanks for the update as always. Nick Wadhams live from London, reporting for Bloomberg here. And when we learn more, of course, we'll bring more to you. A big good day to Bloomberg's Matt Miller, who's joining us on his lunch hour, not on the air, but he's always in the background of our conversation. We appreciate the insights, Matt, because about to turn to the markets here, it's Fed day and we are flat right now. And I guess that's the idea, right? Everyone's waiting to hear what happens at 2 o' clock and more importantly maybe 230 when the news conference begins. But hey, we had s&p7000 a little earlier. This is an historic day of the markets. Right? Well, the S, P and AND P is now down eight points. But Michael Regan is with us, Bloomberg News managing editor for U.S. equities, live from the shop in New York with his read on the markets. Michael, I wanted to compare notes with you for a couple of minutes. Just about what we're hearing here, what the sentiment is in the market as we get rolling for real in the earnings reporting season. We had some pretty good results today. Breadth has been quite strong. There was a nice pop at the open and we're going to start rolling out the Mag 7 later. How are you feeling about the market here, especially with your eyes on what's happening geopolitically and in Washington?
- [26:02]
Michael Regan
Yeah, Joe, as you pointed out, we did hit that 7,000 mark. Now sometimes you can run into what's known as resistance at a big round number like that. For whatever reason, there are a lot of sell orders that just tend to cluster at those levels. So that could be a temporary resistance or a more medium term one want to see. But I do think the earnings on deck for the rest of the day and into next week are really enough to put any sort of technical considerations like that round number aside. Especially today we'll have Microsoft and Metta platforms, the owner, Facebook and Instagram reporting. Next week we'll have Alphabet and Microsoft. So we'll really get to the heart of the AI trade, Joe. And I think that, you know, geopolitics aside, I mean obviously the Iran tensions and the President's social media post earlier this morning did give a lot of people pause, perhaps contributed to why we backed off of that 7,000 level and are trading flat to a little bit down right now. But these earnings reports are so important and I think really will determine the state of play and the direction of travel going forward.
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Joe Matthew
Makes a lot of sense. ASML blew the doors off today, right. We're seeing lots of love for the storage companies. At what point will investors become sort of reconvinced on this trade? Is it when in video reports who rings the bell on this? Where it's safe to go back in the water?
- [27:26]
Michael Regan
Yeah, you know, it's a, it's a very interesting question. I mean the first reports we'll hear are from of the, some of the big spenders, not the, you know, companies really earning yet on the AI trade, not the chip makers. The Micron. We will hear from SanDisk memory maker tomorrow night. So that'll be a big one. But you know, I think the question is, you know, between Microsoft, Amazon, Metta and Alphabet, we're talking about half a trillion dollars in planned capex from those four companies alone this year. Now last year, early in the year, the market really rewarded these big aggressive capex plans to really invest in AI technology Towards the later quarters that they reported it was more of a kind of show me, you know, show me the return on investment from all the spending. So I think that's, you know, the market will be first looking for any updates to that capex to any of these companies actually plan to spend more or perhaps cut some of those CapEx plans. And I think what will be crucial will be how the market reacts to that. Obviously any upgrade to the spending would be good for your chip makers. Your Nvidia is, your SanDisk, your microns, anyone really that stands to be a beneficiary of that. I think the biggest question is will the market reward aggressive plans by the spenders? You know, some of them, you know, obviously Amazon has a big cloud business. Microsoft and, and Alphabet, Google do as well matter not so much. So it's really turning into a sort of stock by stock and sort of a lot of discernment going on as far as, you know, are these wise investments these companies are making? Obviously spending is going to be good for, you know, the company selling the chips, building the data centers and all that sort of thing. But I think for the spenders. Investors are really going to start to look for what the potential ROI is on all this.
- [29:15]
Joe Matthew
Joe well, and it all starts this evening for the Mag 7. I'll tell you what I mean, the rotation, or at least the breadth has been fascinating for every Seagate. Have you seen Seagate up 20% today? You get a GM and I guess that's the way this is supposed to work. Mike Regan, thank you so much. Happy earnings season. Let's stay close with a lot more companies to report here in the days and couple of weeks ahead. I'm Joe Matthew in Washington. We'll assemble our panel next. Stay with us on Balance of Power. We'll have much more coming up after this.
- [29:46]
Public.com Announcer
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.
- [30:36]
Joe Matthew
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor.
- [30:45]
Public.com Announcer
Generated Assets is an interactive analysis tool.
- [30:47]
Joe Matthew
Output is for informational purposes only and.
- [30:49]
Public.com Announcer
Is not an investment recommendation or advice.
- [30:51]
Joe Matthew
Complete disclosures available@public.com disclosures.
- [30:55]
Bloomberg Balance of Power 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.
- [31:14]
Joe Matthew
Did you just see TK walk by Charlie? Is he in the house past the studio in makeup? All set to go and again coming coverage begins at 1:30 and we'll take it right through the very last question. Of course our Mike Michael McKee, always among those asking the bright questions. He's the last guy I'd want to call on if I was Jay Powell. And I mean that in the best way. Charlie, thank you. Say hi to Tom Keene for us. That means we're getting close to Tom Keene. Sighting in the wild after lunch means it's fed day. And of course, our special coverage starts with Tom Keene and the family at 1 1:30pm Eastern time, a little bit less than one hour from right now. Great to have you with us here at the lunch hour. I'm pretty sure Tom Keene is good for an extra value. Meal number two. If I and I listen to the program, I think that's he's a cheeseburger guy and I get that maybe in a splurge he'll go for a quarter pounder. Enter the burrito barometer. Because we talk a lot about food prices around here, especially, you know, on balance of power. We're all getting hungry at this time. And it's been a real dog for the president to deal with. He talked about it in his affordability address last evening. Grocery, as he says, an old fashioned word, grocery. And it takes a lot of grocery to make a California burrito. Axios this morning, crunching the numbers here as an economic indicator. Okay, so we'll make this officially our burrito barometer. Carne asada fries, cheese, sour cream and salsa now cost 20% more to make. And it's not the beef, it's not the carne asada that is the problem here. Salsa. How about this? Had the biggest increase at more than 37%. The salsa is the problem. Tortillas follow that up 34%. Sour cream at 29%. The cheddar and the beef barely in the double digits. Potato prices, the one thing that went down 6%. Affordability is not just the president's issue. It is also the issue for New York's new mayor. They both got elected on the same issue, right? The conservative Republican as framed by the MAGA movement and the self described Democratic socialist in New York, who today is out with news, calling on Kathy Hochul to hike taxes, calling on the legislature to act and increase taxes on the rich to address what he calls a fiscal crisis in New York City. This should not be a surprise to you. Here's Mamdani on Inauguration Day. Just a few hours ago today I celebrated with tens of thousands of New Yorkers. Many of them left our ceremony to return to houses and apartments that do not feel like homes, where bad landlords.
- [34:01]
Rick Davis
Do not make repairs, where rents constantly.
- [34:04]
Joe Matthew
Rise, where roaches crawl in the hallways in heat and the chill of winter comes rarely if ever. These New Yorkers voted for a new day for our city because the past one is clouded by housing insecurity and Instability where they cannot afford a life of dignity in the city that they love. He says that's about to change in New York for everyone, not just the rich, and not only here for the poor. He says he wants to expand the pool of people living in New York, not shrink it, even as conservatives predict an exodus. You've heard this whole story before, and it's one we've had with our political panel. They're with us right now. Rick Davis and Jeanne Shanzano, Bloomberg Politics contributors. Jeannie is our Democratic analyst and democracy visiting fellow at Harvard Kennedy Schools Action center. And Rick Davis, our Republican strategist and partner at Stone Court Capital. Hey, Jeannie, we should have known, actually, and I didn't think about it until right now. But that tortilla, you remember the president's Depression meal? It was a piece of chicken, piece of broccoli, a corn tortilla and something else. Sure enough, the tortilla. Put the burrito through the roof here. Can Zoran Mamdani convince New Yorkers that soaking the rich will help?
- [35:18]
Bloomberg Balance of Power Host
Yeah, I guess you're not supposed to add salsa. Is that something else, Joe? Is that what I'm understanding?
- [35:23]
Joe Matthew
It's correct.
- [35:25]
Bloomberg Balance of Power Host
More potatoes? Yeah. You know, it's fascinating because of course, Mandani made big, big campaign promises. You're just listening to him talk. One of the constant themes at his speeches during the campaign on Inauguration Day was the crowds chanting tax the rich. And then just the other day, the new comptroller comes out and says, oh, by the way, We've got a $12 billion gap here, the largest we've seen since 2008, 2009 over this year and last and next year, rather. And you've got to close that. And the only way to close that is either to make deep cuts, it's to grow the economy, or it is to tax. And of course, that's coupled on top of all of the expensive programs that Mamdani has said he promised to introduce. And he is really doubling down. We'd seen the first sort of sniff of a maybe rift between the governor, Kathy Hochul, and Mamdani. She's saying she's not going to raise taxes. She's up for election. And he's saying, yeah, we need to raise taxes. But of course, he needs Albany to go ahead with that. So it's going to be potentially, it's going to get a lot more difficult in the next month as he releases his budget and begins negotiations with city council. And then Albany.
- [36:45]
Joe Matthew
Interesting. He's launching a new ad campaign. Rick to lobby Albany for more annual aid, emphasizing that New York generates $21 billion more in revenue for the state than it receives. You've heard this whole conversation before. What is he about to learn in this drive for higher taxes on the wealthy? Does. Does he run into a wall in his first month in office?
- [37:10]
Rick Davis
Yeah, I think that there are a lot of walls that Mayor Mandani is going to run into, but the one that is everyone expected was with Donald Trump. And after the love fest in the Oval Office post election, we're not going to see the fight with on a national scale, but definitely we're going to see that fight between the city and the state. And by the way, a fight that happens every budget cycle. You know, Jeannie talked about the $12 billion budget deficit. The city's got, well, receipts this year because it was a good year for taxes. People got paid a lot of money in Wall street are up $17 billion at the state level. So they got 17 billion more than they were expecting to get this year. And the city has 12 billion less. Well, there's going to be a rub there. And I have, I have a funny feeling Mandani is not going to back down. So Hochul wants to run for reelection. She's got a decent challenger and Brad Blakeman on the GOP side. And like she's already said, no new taxes. So who's going to cave first? Is it the mayor, the Democratic socialists, you know, in office for a couple of months, or a governor looking for a second term who really controls the power in Albany right now?
- [38:24]
Joe Matthew
Wow. Really interesting, Jeannie. So the mayor could find himself at odds with the governor and the President of the United States. Is the honeymoon with Trump officially over?
- [38:34]
Bloomberg Balance of Power Host
Not yet. And it's interesting, Joe. He's taking a page out of Donald Trump's playbook. He is blaming the previous administration, and I think there is some, some truth to this. But he is blaming Adams, Mayor Eric Adams administration for the budget shortfall. But he has been a little bit tougher with his language vis a vis the governor, because if we remember back in the campaign, in the first few weeks, he said, you know, as long as I can do what I need to do well, I just need the money and I'll do it. Maybe we don't need taxes. Now he is starting to say we do need these taxes. And he's saying something all New York City mayors say, which is that we're giving about 55% of the tax revenue for the state. And as you talked about getting back, only about 44%. And this puts Kathy Hochul in a really difficult position because of course, if she is primaried Mamdani, if he pushes this and pushes for a primary challenge for her and he doesn't get what he wants, that's a big problem for her. Of course, she's running in a pretty good environment for Democrats this year. But it's going to be challenging because let's not forget, you know, he's pushing for things like free buses. Well, she runs the whole state. And people in the other parts of the state are going to be saying, wait, why are New York City residents getting free buses and billions of dollars and we're not? So it's a little bit more difficult for Kathy Hochul to, you know, circle this square.
- [40:01]
Joe Matthew
Hey, Rick, I heard, I heard Mayor Mamdani on Brand X this morning talking about the fact that he was going to do something different than the last administration. Yes, Eric Adams, but also those who came before him by being honest with the people of New York about the budget shortfall. Does he deserve some credit for that?
- [40:22]
Rick Davis
I think that he's going to do a little straight talk and that's a good thing, that people in New York deserve it. He's not going to make any friends upstate, as Jeannie just said. But at the end of the day, it is the New York City, the five boroughs is the economic engine in the entire state and they haven't gotten the respect that they probably deserve. And previous mayors have said the same thing. So there's nothing new there but coming to grips with the current fiscal problems of the city, with the residents. Because without a, without a lifeline from Albany, we're talking cutbacks. We're not talking about a lot of new programs that the mayor is going to be doing. He's got to go find $12 billion. And that's not an easy thing in a bike it like New York's. So, you know, the only thing less popular than telling children on a snow day that they got to go to school virtually is to then pay the people. You've just generated the biggest tax windfall in modern history in the state. But you're going to have to make cutbacks in the city because we can't afford things.
- [41:22]
Joe Matthew
Sounds like this January is going great so far. Jeannie, does the governor need to say something if, if the mayor up with an ad campaign over this?
- [41:31]
Bloomberg Balance of Power Host
Yeah. And she is. She did her state of the state. She put out her budget. She is walking this fine line. They came out seven days into the administration and said they were piloting a new program in terms of child care. I think they took a little bit of a big win there where that may not be deserved. But she is trying to walk this fine line. But this is going to be tough for her because she doesn't have the energy in the moderate wing of the Democratic Party in this state that Mamdani has in the left blank. And that's going to be the problem for her. And of course, there's problems for him as well. And Democrats writ large. This is moderate's worst nightmare. This is why Donald Trump wants the Republicans to run against Gavin Newsom. Is this idea that you're going to drive corporations and the wealthiest out of your city and out of your city state. I mean, the irony here is that the very people he's talking about taxing high, the top 2% of the earners in New York City, they pay 50% of New York City's taxes. So what does that do to the working class and, and the middle class? If those people do flee, and I'm not saying they will, but if they do, that creates the kind of problem that is a nightmare for Democrats. And so, you know, it is a tough time for both of them. But surely this budget shortfall that the new comptroller talking about is a big problem for Mandani just balancing the budget, let alone getting all his big promises put in place.
- [43:02]
Joe Matthew
Rick, we've got just one minute left. The mayor came into office with predictions of an exodus that if this Social Democrat in fact won the mayor's office, that wealthy people would simply leave New York if this happened. Is this what would actually cause it?
- [43:19]
Rick Davis
Well, we've seen similar tax programs in California that have required, required, encouraged major taxpayers to leave the state. In fact, Mandani has said previously that he'd consider the 5% tax on billionaires. You know, paying a $50 million tax on your $1 billion in the bank is, is even to a billionaire, a lot of bite.
- [43:48]
Joe Matthew
Rick Davis and Jeannie Shan Zaino, thank you both so much for the insights. 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 noon time 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 this is Julian Edelman.
- [44:41]
Public.com Announcer
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Joe Matthew
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Joe Matthew
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Public.com Announcer
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Joe Matthew
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Public.com Announcer
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Joe Matthew
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