Balance of Power – “Soft Inflation Spurs Fed Cuts”

Bloomberg | October 24, 2025
Host: Joe Mathieu
Co-Host: Tyler Kendall

Episode Overview

This episode spotlights the recent Consumer Price Index (CPI) report released amid an ongoing government shutdown, its implications for the Federal Reserve, and cascading effects on U.S. economic and trade policy. Hosts Joe Mathieu and Tyler Kendall bring in Bloomberg’s Michael McKee for economic analysis and interview Congressman Mark Alford (R-MO) on the shutdown’s impact and U.S.-China agricultural trade. The discussion then pivots to American military operations in the Caribbean and Russia’s wartime posture, with insights from Dr. Rebecca Grant of the Lexington Institute. The roundtable concludes with debate over a controversial Canadian ad invoking Ronald Reagan to critique U.S. tariff policy.

Key Discussion Points & Insights

1. Release of CPI Data During a Government Shutdown

• [01:07 - 02:09]
  The shutdown, now at 24 days, has impeded the timely release of critical government data—except for the inflation numbers. Economic observers, including the show’s hosts, note that while inflation data was deemed essential (due to its use for Social Security cost-of-living adjustments), the jobs report remains withheld.

  • Joe Mathieu remarks on the awkwardness of essential work without pay:

    “How’d you like to be called into work as an essential employee and not paid for that?” – Joe Mathieu [01:34]

• [02:27 - 03:30]
  Bloomberg’s Michael McKee analyzes the CPI report, cautioning against overstating its positive signals:

  • Core goods prices are rising due in part to tariff-related cost pressures.

  • Apparel and furniture prices have seen abnormally high jumps.

  • Potential “statistical noise” in the shelter component led to an artificial dip.

  • Memorable line cutting through political spin:

    “The White House has a good political case... but if you take out used cars, goods prices rose significantly again because we’re starting to see tariffs leak into goods prices.” – Michael McKee [02:27]

2. Implications for the Federal Reserve & Data Gaps

• [03:31 - 05:31]
  Discussion centers on how incomplete data due to the shutdown complicates monetary policy planning:

  • December’s FOMC meeting could lack comprehensive data.

  • The Fed relies on data trends, not single reports—raising uncertainty for forthcoming decisions.

  • Michael McKee on the Fed’s workaround:

    “What they'll do is... call all the realtors in their districts and they will ask them how it’s going and what prices are.” [04:37]

3. Congressman Mark Alford on the Shutdown and Funding Stalemate

• [05:31 - 12:37]
  Rep. Alford (R-MO) offers a partisan critique of the shutdown, emphasizing:

  • The negative impacts on agriculture, military pay, and social programs.

  • His chamber’s preference for “regular order”—passing individual appropriations bills instead of continuous omnibus spending packages.

  • Senate Democrats are accused of using the shutdown as leverage, while Alford pushes for a stopgap funding bill until Nov 21st.

  • Blame attribution:

    “This is just another effect, a negative effect on our great nation because of the Schumer shutdown. America held hostage.” – Rep. Mark Alford [06:08]

• On long-term continuing resolutions:

  • Alford opposes a “full year CR” as a last resort, arguing it stifles defense procurement and new military programs.

  • Praises House progress on appropriations but indicts Senate interference.

  • Alford on CRs:

    “We cannot continue to operate America under continuing resolutions... Our military can’t move forward with new programs to deter thugs like Xi Jinping and Vladimir Putin.” [11:38]

4. China Trade, Soybean Exports & Tariffs

• [12:37 - 15:10]
  Alford underscores the importance of agricultural trade with China for his Missouri district’s soy farmers, noting:

  • Collapse of Chinese soy imports is forcing local farmers to store crops and wait for price rebounds.

  • Trump’s tariffs, Alford claims, are generating revenue to offset farmers’ losses, funneled via the Commodity Credit Corporation.

  • On the urgency of striking a deal with China:

    “It is incumbent on the President to reach a deal with Xi Jinping to get this trade back going with our soybeans going to China.” – Rep. Mark Alford [13:41]

  • Defending Trump’s negotiation skills:

    “I would much rather have him as our negotiator than Joe Biden.” [14:49]

5. Beef Prices & Argentine Imports

• [15:10 - 16:04]

  • Alford comments on U.S. cattle market disruption and policy proposals to import more Argentine beef as a price-relief measure.

    • Argues for “local control” over ranch processing to manage costs.
    • Lightheartedly touts Missouri pork as an alternative.

  • “The other white meat” quip:

    “It’s the other white meat, you know, pork. I love pork. I’m a carnitarian... But...prices are extremely high. The ranchers are enjoying higher prices...” – Rep. Mark Alford [15:10]

6. Military Operations: Strike in the Caribbean, Russia and Ukraine

A. U.S. Drug Interdiction Strikes

• [19:41 - 24:15]
  Joe Mathieu covers breaking news: a U.S. strike on a suspected drug-smuggling vessel in the Caribbean, with Dr. Rebecca Grant (Lexington Institute) providing context:

  • High-precision strikes use a mix of drones, satellites, and maritime surveillance developed for tracking great-power navies.

  • U.S. intelligence is “exquisite,” often tracking smuggling from dock to destination.

  • Dr. Grant describing operational certainty:

    “Our maritime surveillance is excellent. It’s exquisite... The administration and Secretary Rubio especially, is so confident that they know they are striking drug boats for sure.” – Dr. Rebecca Grant [21:51]

B. U.S. Military Posture and Power Projection

• [23:16 - 27:36]
  Mathieu and Grant discuss media reports of B-1/B-52 bombers flying near Venezuelan waters:

  • Even a low pass from such bombers can assert U.S. power and create psychological effect.

  • The Ford Carrier Strike Group is now deployed to the Caribbean for further presence and operational capability.

  • Projection of power explained:

    “If a B1 flies over you at 2,000ft...that’ll scare the living daylights out of you. But we’re really trying to show power projection to Venezuela and Venezuela’s friends, the Russians.” – Dr. Rebecca Grant [23:35]

• On the Gerald R. Ford Carrier deployment:

  “It’s another fantastic use of aircraft carriers by President Trump... showing American presence in the Western Hemisphere.” – Dr. Rebecca Grant [27:36]

C. Russian Mobilization & Ukraine

• [24:15 - 26:53]
  Analysis of Russia calling up reserves in response to drone attacks and Ukraine’s request for Tomahawk cruise missiles:

  • Tomahawks would allow Ukraine to strike deep within Russian territory; the U.S. holds off transferring them pending further deliberations.

  • Dr. Grant on the missile issue:

    “Tomahawks would let Ukraine attack Russian energy infrastructure... The goal is...to push Putin to the table. We have plenty of missiles.” [26:14]

7. Reagan, Tariffs, and Canadian-American Trade Tension

• [30:32 - 43:35]
  The show’s back half features a lively panel with Rick Davis and Jeannie Shan Zaino dissecting a Canadian ad that used Ronald Reagan’s words to advocate free trade and criticize Trump-era tariffs.

  • Trump claims the ad distorts Reagan’s intent; panelists argue it accurately portrays Reagan’s trade philosophy.

  • Rick Davis (former Reagan White House, Republican strategist):

    “Ronald Reagan did not love tariffs. Ronald Reagan was a free trader... He didn’t go out and announce an economic state of emergency... Ontario got what they wanted: publicity.” [34:14]

  • Jeannie Shan Zaino (Harvard Kennedy School):

    “If there was a good, sound reason the president could offer for the policy, it would...make sense...But [Trump’s] policy is confused...No way to set sound policy.” [40:17]

• The group discusses the effectiveness of the ad, noting its “free media” impact and role in highlighting the evolution—and politicization—of U.S. tariff policy, just as Trump heads to Asia for a high-stakes meeting with Xi Jinping.

Notable Quotes

• Michael McKee (on data noise):
  “Services prices still rising... but were held down by a significant drop in home prices... That was probably statistical noise and would not be repeated next month.” [02:27]

• Rep. Mark Alford (on the shutdown):
  “America held hostage. We’re now in the 24th day of this and we’re held hostage on these numbers.” [06:08]

• Dr. Rebecca Grant (on naval surveillance):
  “You can just see everything. So that’s why the administration...is so confident...they are striking drug boats for sure.” [21:51]

• Rick Davis (on Reagan’s legacy):
  “Ronald Reagan was a free trader... I think Premier Carney appreciates the intervention of Doug Ford in the negotiation.” [34:14, 38:35]

• Jeannie Shan Zaino (on long-term consequence):
  “What all this broad spread tariff policy has done... is alienate the United States from its closest allies.” [40:17]

Key Timestamps

• 01:07: CPI Release Context Amid Shutdown
• 02:27: Michael McKee on CPI & White House Spin
• 03:43: CPI’s Implications for the Fed
• 05:31: Congressman Alford: Shutdown’s Economic Impacts
• 12:37: China, Soybeans & Missouri Ag Market
• 15:10: U.S. Cattle Markets, Beef & Pork Prices
• 19:41: U.S. Military Operation: Drug Boat Strike
• 23:35: B1 Bombers, Power Projection Over Venezuela
• 24:55: Russia, Ukraine, and Tomahawk Missiles
• 27:36: Gerald R. Ford Carrier Deployment
• 30:32: Debate: Reagan Ad, Tariff Policy & U.S.-Canada Trade
• 34:14: Rick Davis on Reagan, Free Trade, and Ad Effectiveness
• 40:17: Jeannie Zaino on Strategic Consequences of Tariffs

Conclusion

This episode weaves urgent developments in macroeconomic reporting, government paralysis, and U.S. global policy. Panelists and guests add texture on the mechanics of Fed decision-making with incomplete data, the partisan battle over government spending, the strain on American farmers from disrupted China trade, and the optics and reality of U.S. military assertiveness in the Western Hemisphere and Eastern Europe. Finally, the debate over a Canadian ad using Reagan’s voice to lecture Trump on tariffs becomes a microcosm of the wider U.S.-led shift toward protectionism—at home and on the world stage.