Soft Inflation Spurs Fed Cuts

Summary

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.

Transcript

[Chase Sapphire Reserve Advertiser]

When you own your own business, you own every decision. Now own the card that rewards you for it. Chase Sapphire Reserve for Business is a painful card that elevates your travel experience and offers premium benefits that can take your business to the next level. Sapphire Reserve for business offers 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, airport lounge access, and more. With over $2,500 in annual value, it's the card that gives back all you put in. Learn [e-mail] ReserveBusiness Chase for Business make more of what's yours Accounts subject to credit approval restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank NA member FDIC.

[Bloomberg Announcer]

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 Bloomb Burke business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Tyler Kendall]

I'm Tyler Kendall here in Washington alongside Joe Matthew and we are tracking closely after this Consumer Price Index report. Highly anticipated because, Joe, we weren't expecting to get it because as we've been reminding you on this program, the government is shut down and has been for the last 24 days and some of the data releases are not deemed essential. It takes time to collect the data, put together the reports and ultimately release it.

[Joe Matthew]

Yeah, how'd you like to be called into work as an essential employee and not paid for that? The question is why we didn't get the last jobs report because that actually had been compiled and we still haven't seen that. Noting that there's of course a dual mandate at the Fed and they need to see both the inflation numbers and the jobs data. But you already mentioned it. It's a cost of living adjustment that forced this CPI to be released. That's why we're talking about inflation data on a Friday.

[Tyler Kendall]

Right? And even more interesting, hearing the White House weigh in earlier when it comes to this inflation data, but also when we could get the next inflation data saying that they are not expecting the October CPI report that's released.

[Joe Matthew]

So if you're Michael McKee must feel like a Wednesday or something. Bloomberg International economics and policy correspondent joins us now from world headquarters in New York. Mike, this softer than expected reading says what to you is this vindication for the White House that tells us tariffs simply are not inflationary?

[Michael McKee]

No, it is not. And I would say that the White House has a good political case to make for people who don't follow the data and it will look good for the president and I'm sure we will hear many times about it how he's brought down inflation, yada yada, yada. But if you take out used cars, goods prices rose significantly again because we're starting to see tariffs leak into goods prices. And we saw some increases that were out of line with what would be normal, like apparel prices up 710 and furniture prices up 9 10. Services prices still rising at about the same rate. They were held down by a significant drop in home prices the way the government calculated with the owner's equivalent rent. And there's a general feeling among the economists, I've seen the reactions. I've seen that that was probably statistical noise and would not be repeated next month. But as Tyler adroitly points out, there may not be a next month.

[Rick Davis]

Hmm.

[Tyler Kendall]

Well, to build off of that, while we likely know what today's report means for next week's Fed meeting, Mike, how are you watching this? How are policymakers watching this as we close out the year? And of course we have another FOMC meeting down the line.

[Michael McKee]

Yeah, we have a meeting on December 10th and I don't think they're going to do anything this week that would give a hint as to what the December plan would be because we don't have data. It looks like we're going to have a hole in the data. But then we might get some data before that December meeting. And anything you say now could be as Larry speaks and Joe will remember this, as Larry speaks once said, that's no as a Rod Nessen. I'm sorry, Rod Nessen said, that's inoperative and I knew you'd remember that, Joe.

[Congressman Mark Alford]

But.

[Joe Matthew]

We'Re dating ourselves now. I'll tell you what I don't know. Services prices excluding energy, up 2:10 in part reflecting a slower advance in airfares. Shelter prices making the difference here. Mike, if there was another CPI a month from now, what would it tell us?

[Michael McKee]

Well, the question would be in terms of services, especially whether house prices continued to rise at that very, very subdued pace because up until this month they were rising at almost 3:10amonth and sometimes more than that. They'd been coming down gradually, but this is a very quick fall. So was there a reason for that or is this just kind of a rand a number and that's why you want a series of reports and the Fed is looking at series of reports and always says, you know, one, one number doesn't make a difference. But they may not get it. So that could add some confusion into what they what they are doing now. What they'll do is they will call all the realtors in their districts and they will ask them how it's going and what prices are. And there are a lot of private price providers in real estate. So I think they'll have a pretty good idea even if the number is not there.

[Tyler Kendall]

All right. Michael McKee, Bloomberg International Economics and policy correspondent, thank you so much as always. And we want to extend the conversation because we're joined now by Congressman Mike alford, Republican representing Missouri's 4th district. Congressman, thanks so much for joining us here on Bloomberg. And I want to pick up on where we were just talking about with Michael McKee because this government data was released today, but it was delayed because of this shutdown. As policymakers, lawmakers try to make the best decisions about the economy, do you think economic data like this should be deemed essential so that we get it in real time?

[Congressman Mark Alford]

Well, I think it should be. This is just another effect, a negative effect on our great nation because of the Schumer shutdown. America held hostage. We're now in the 24th day of this and we're held hostage on these numbers which are so important to get a real good gauge, I think, of where our economy is and where we're to go with our economy and what decisions that Secretary Bessant and President Trump need to make to right the ship that President Biden in the past administration has really run us into a reef of despair.

[Joe Matthew]

Well, okay, that said, we've got a Federal Reserve that's set to make a decision next week, Congressman, and it's good to have you back. Congressman Alfred I would just wonder what the Fed is supposed to do with this dearth of data. Obviously enough to work with for next week, but there are questions about what happens after that if we're in for some kind of record shutdown here. As somebody who serves on Financial Services Committee, what's the Fed to do?

[Congressman Mark Alford]

Well, look, I think the Fed's in a tough spot. I think Powell needs this information to make a wise decision, as do the board of governors, including one here in Kansas City. They need this information. That's why President Trump has made changes in the past to the person who actually puts this information together. But yeah, you've got to have the right information. And Chuck Schumer standing in the way by not voting with other Democrats in the Senate to vote for this simple extension of current government funding. This is just one of the repercussions we're seeing it all over our district. The other repercussions, people not going to have food stamps next month, money running out for women, infants and children, money running out for our military. We found the money President Trump did to pay our military. But come next pay period. The Democrats in the Senate just voted yesterday not to pay them, not to pay other essential employees in the US Government. I think that's despicable.

[Tyler Kendall]

And Democrats, of course, also floated their own bill when it came to some other essential employee fund.

[Congressman Mark Alford]

They just wanted one they didn't want. We we wanted for the entirety of the shutdown and they're trying to use that as leverage. Catherine Clark was very clear with her interview with Chad Pergrim on FOX that they needed this leverage of pain in America so that people would get on their side. We're not negotiating. There's nothing to negotiate.

[Tyler Kendall]

Well, Congressman, I do want to ask you about one point that you just made about this idea of a simple extension. Right now, the stopgap measure that lawmakers are voting on would fund the government until November 21st. We did hear from the Senate Majority Leader, John Thune earlier this week actually saying maybe it is time for the House to start thinking about coming back into session because you're going to need a little bit more Runway potentially. Do you think that your chamber should come back into into session for this is a November 21st stopgap. Is that date really still viable?

[Congressman Mark Alford]

I think it's very reasonable. And I think our chairman, Tom Cole came out with a statement earlier this week saying that we can get this work done. Look, against a lot of odds, we got all 12 appropriation bills out of committee this year. Some of the democrats were offering 40 and some odd amendments to these individual bills. We had 1214 hour days of hearings and debate. We debated all these spending bills. We came up with about 7.3% in cuts. Overall. We cut nine of the 12 subcommittees. We gave plus ups to Homeland Security, our defense as well as military construction Va we got three off the House floor and we all we were asking is three or seven more weeks to get our job done. The Democrats don't want us to return to regular order. They want a big omnibus bill at the end of the year and we're not doing that.

[Joe Matthew]

Congressman, your colleague from Missouri who chairs the Ways and Means Committee was with us yesterday. Jason Smith made some news suggesting that he was behind the idea of a full year CR that had been floated by John Thune and even the White House a couple of months ago. I just want you to listen to what he told us and we'll have you respond. Here's the chairman.

[Congressman Mark Alford]

December 21, 2026 is what I've been hearing up here as a suggestion, as an opportunity of, of a continuing resolution. As as we know, we're operating under a year long resolution from last year. We're looking at what was appropriated when Biden was president.

[Joe Matthew]

I know we're basically living under perpetual CR as I know it sounds like it. Congressman, 2024 numbers, you're talking about regular order, which would be a pretty amazing thing to see take place. But if that is the solution, would you back it a full year?

[Congressman Mark Alford]

CR well, look, if leadership was behind this, I don't think they will be. I have the utmost respect for Jason. He is one of my dearest friends and mentors and he loves Missouri and loves the United States. America done a great job as Ways and Means. He was really instrumental in getting the one big beautiful bill, reconciliation through the House and also helped in the Senate with his influence there. But I also trust in Chairman Tom Cole. If he says that we can get this done, I have complete confidence that we can get this done. We just need a little time to get these nine bills. They may not all be separate bills. We may have to do minibuses where we group two or three together. But we can get this done. The time has come for us not to operate Congress on continuing resolutions we have are still on 2024 budget numbers that Biden came up with. And our military can't move forward with new programs that they need to deter thugs around the world like Xi Jinping and Vladimir Putin. These programs that are vital to our national defense. We cannot continue to operate America under continuing resolutions. And so while I understand where Chairman Smith is coming from, that's got to be a last ditch effort in my opinion. We've got, we have made tremendous strides in getting these appropriation bills done, getting three off the House floor. Let's move forward. We had momentum until the Democrats stuck a stick in our spokes and are trying to wreck the American people. We, they've got to get out of the way. They've got to quit digging the hole that they have dug and let us move forward and fund the government.

[Tyler Kendall]

Congressman, you did bring up Xi Jinping there. And I want to quickly ask you about China because that's another story that we're following very closely here at Bloomberg as President Trump heads overseas for this highly anticipated meeting with Chinese President Xi Jinping. I've learned that Missouri is one of the top three soybean producing states in this country. What is going to happen if China doesn't agree to these agricultural commitments purchases since we know that they have not imported any US Supplies so far this harvest season?

[Congressman Mark Alford]

Yeah, I'm in a very ag rich district just south of Kansas City, over to Lake of the Ozarks and almost down to the Arkansas border. Our district borders Jason Smith's district and he has a lot of ag there as well. We have 87,000 farms in the great state of Missouri. We are down from 95,000 farms just two and a half years ago. Many of those farmers are soybean farmers and they are about halfway through their harvest right now. We are getting a little rain right now and that has delayed that. But they are having to put these beans in, in storage right now until the prices come back up. It is not helping, not having a deal with Xi Jinping. I know that they love buying our protein, they love buying our pork, which we also have a lot of that here in Missouri, but they also love our soybeans. And so I think it's incumbent on the President to reach a deal with Xi Jinping to get this trade back going with our soybeans going over to China. I know the President has made some inroads in helping offset, mitigate some of the losses that our farmers and ranchers are seeing here in Missouri and across the United States of America. Thank God that we have this tariff money that's coming in almost $400 billion right now. He is going to use 30 to 50 billion of that to replenish the Commodity Credit Corporation, which is overseen by Secretary rollins in the U.S. department of Agriculture. And that is going to help offset some of the losses in the short term, I think downturn for our farmers. This is short term. I think in the long term our farmers and ranchers are going to be much better off. With the trade deals that President Trump is making. I would much rather have him as our negotiator than Joe Biden.

[Joe Matthew]

Well, with that said in our remaining moment, Congressman, there's been a lot of talk about Argentine beef around here lately and you've probably heard this, the President looking to do some more extra importing to try to lower prices. And that's got a lot of cattlemen and ranchers upset. Did you just give us the answer? Is the answer to eat more pork from Missouri?

[Congressman Mark Alford]

It's the other white meat, you know, pork. I love pork. I heard that all. I'm a carnitarian. I love chicken, beef and pork. But look, I was just at a cattle auction barn in our district yesterday. Prices are extremely high. The ranchers are enjoying the higher prices because they have had such losses over the last couple of years. We have been under a level four drought in parts of Miami district for the last two or three years. They and that has caused the price of beef to go up. A lot of ranchers have had to sell off their herd because they didn't have the grazing grounds, they didn't have the hay and so a lot of the beef was sold off. We've got to get the five packing house companies under control. We've got to get back to local control, local ranchers and local processors. That's going to bring the price down.

[Joe Matthew]

Mark Alford of Missouri with us and Republican on Bloomberg. Stay with us on balance of power. We'll have much more coming up after this.

[Chase Sapphire Reserve Advertiser]

When you own your own business, you own every decision. Now own the car that rewards you for it. The Chase Sapphire Reserve for Business card brings the best Sapphire Reserve benefits to business owners who expect hard working rewards. Designed to meet the needs of business owners at scale, this painful card elevates your travel experience and and offers premium benefits and value toward business services that can take your business to the next level. Sapphire Reserve for business provides over $2,500 in annual value. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges. Whether you're looking for pre flight productivity or time to rest and rech, Chase Sapphire Reserve for business with over $2,500 in annual value, it's the card that gives back all you put in. Learn [e-mail] ReserveBusiness Chase for Business make more of what's yours. Accounts subject to credit approval restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank NA member FDIC.

[Bloomberg Announcer]

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 listen live on Amazon Alexa from our flagship New York station. Just say Alexa.

[Joe Matthew]

Play Bloomberg 11:30 Got a breaking news story that I'd like to share with you and it will not be a surprise as Politico reports that Hakeem Jeffries is at last on board. We talked about this up and down yesterday following David Gur's conversation with Democratic leader in the House. He will endorse Zoran Mamdani for mayor of New York, according to two people with knowledge of the situation. Talking to Politico. The nod coming after months of pressure and just before early voting begins Saturday. Did you hear that? That's what he told David. He couldn't answer it yesterday because he was waiting until early voting started in two days. But now we know that the Democratic leader is going to support the Democratic nominee in his own town. Also breaking overnight, unless you were up late. We blew up another boat that the direction of President Trump. The Defense Secretary Pete Hegseth says Department of War carried out a lethal kinetic strike on a vessel operated by Trende Aragua, a designated terrorist organization trafficking narcotics in the Caribbean Sea. This is, you know, how we do this. Now you got the video, the boat bouncing around until the thing blows up. This one looks a little grainier than usual. Presumably a satellite photograph or maybe it's drone video, I don't know. I've got a lot of questions for Dr. Rebecca Grant about the way all of these things are working out. The B1 bomber is nicknamed the Bone. That's what it looks like. Kind of this long flying bone that when you look up and see this thing, it's menacing. Knowing as well that it can carry some of the heaviest firepower of any aircraft of its kind. Sweep wings, the B1 that we reportedly flew over Venezuela or near Venezuela in international waters. That was the Wall Street Journal story we told you about yesterday. As the United States continues to bear down on this country with a flotilla off the coast. President Trump was asked about that report yesterday. He said no bone.

[Jeannie Shan Zaino]

Listen, there's reporting the US just sent.

[Tyler Kendall]

B1 bombers near Venezuela to ramp up some military pressure there.

[Dr. Rebecca Grant]

Is that accurate? And can you tell us more about that mission?

[Congressman Mark Alford]

No, it's not accurate. No, it's false. But we're, we're not happy with Venezuela for a lot of reasons, drugs being one of them.

[Rick Davis]

But also they've been sending their prisoners into our country for years under the Biden administration.

[Joe Matthew]

Not anymore. We have a closed border. We had actually nobody for the last four months. So we have a lot of questions, as I mentioned, about what's going on down there as well as what's going on in Russia where they're just now calling up reserves to help protect the motherland from Ukrainian drones. We look no further than Dr. Rebecca Grant, Vice president at the Lexington Institute, joins us once again here on Bloomberg. And doctor, it's really great to have you. Welcome back. And Happy Friday. Can I just start by asking, what are we shooting these boats with? Are these drones or some other kind of military hardware?

[Dr. Rebecca Grant]

They're not going to tell us because it's still an active operation, and that's why you don't hear any real details. The intel sources are still active. It looks to me a lot like, you know, what you're seeing is kind of a. An infrared white hot designation. So there's obviously a missile. It could be, for example, Hellfire, but it could be any one of a number of other types of missiles as well. What we do know is they're extremely precise. And, you know, Joe, we track the movement of these boats. Our military. Our military watches a lot of ships. We watch Russia in the Baltics, we watch China in the Pacific, and we can watch the Venezuelan. They see when the cargo gets to the dock. They see when the crew pulls up to the pier. And these boats use long established routes. That's why we have such precise intelligence and are carrying out these strikes in international waters.

[Joe Matthew]

Well, that's fascinating. So we can see them loading, presumably loading, the drugs on the boat, which gives the administration or the Pentagon the confidence that it has that these are, in fact, drug smugglers.

[Dr. Rebecca Grant]

Oh, absolutely. No, this is technology that was developed to track, you know, the Soviets and the Russians and the Chinese. Our maritime surveillance is excellent. It's exquisite. So you shifted over to the drug boats, number of different resources, drones, satellites, patrol aircraft, everything is all set. Maritime sensors are kind of a different group, and they're all tuned to do this. And, yes, you can. You can just see everything. So that's why the administration and Secretary Rubio especially, is so confident that they know they are striking drug boats for sure. And, of course, Venezuela is directly tied to it.

[Joe Matthew]

All right, Sisi showing us now the unclassified footage here on YouTube of this thing blowing up. Sisi has got all kinds of video. Doctor, it's kind of amazing. What we're looking at right now, is that from a satellite or is that from a drone or an aircraft at high altitude?

[Dr. Rebecca Grant]

Any of the above, you know. Okay, yeah, it's hard. It's deliberately difficult to tell. But aircraft drones all have this. You know, there's a lot of systems. All the ones you named have the ability to give some pretty good resolution stuff, or it could be indeed a targeting pod also showing that.

[Michael McKee]

Sure.

[Joe Matthew]

Got it.

[Dr. Rebecca Grant]

So anytime a target's attacked, they've really carefully considered the weapons parameters and made sure there's not another boat nearby or any chance for unintended Collateral damage.

[Joe Matthew]

Okay, got it. This idea of us flying B ones around, we had reported as well that we had B52s flying nearby Venezuela. Is this just. If true, the President says we weren't flying B1s. I don't know if you have a take on that, Doctor, but what would be the point of this? It's not reconnaissance. Is it just a projection of power?

[Dr. Rebecca Grant]

Oh, well. And the B52s do have, again, an excellent overwater reconnaissance capability to go out and find and target ships. That's for the B1. You know that bone acronym that stands for B O N E bone B1. The museums call it the Lancer, but the crews call it the bone. And remember, it did a lot of this work in Afghanistan, sometimes doing just a low pass. If a B1 flies over you at 2,000ft, as they often did in Afghanistan, that'll scare the living daylights out of you. But we're really trying to show power projection to Venezuela and to Venezuela's friends, the Russians, of course.

[Joe Matthew]

Guessing it seems like it's within the realm of possibility that we were flying B1s over there. Dr. Grant, I want to ask you about what's happening in Russia as well. As the President heads to Asia, there are a number of hotspots that he needs to worry about that may play into some of the talks he's having with President Xi, assuming that that meeting takes place. Vladimir Putin today says it's time to call up the reserves. They need thousands more troops, not to go into Ukraine to do shooting, but to stay in Russia to deal with attacks from Ukrainian drones. This happening at the same time that Volodymyr Zelensky is asking for Tomahawk cruise missiles. What do you make of Russia's posture in this war right now?

[Dr. Rebecca Grant]

Well, inside Putin's head, he is really worried about those Tomahawks. President Trump hasn't given permission yet, but if they decided to send Tomahawks to Ukraine, they can be put on an Air Force C17 cargo plane, and they'd be there in about 24 hours. The Tomahawks and Ukraine's drone attacks present an almost insoluble problem for Putin of trying to defend air bases. There are 60 Russian air bases within Tomahawk range from Ukraine and also to defend that oil and gas pipeline and energy infrastructure targets, a lot of it out in remote areas, areas they literally cannot put air defenses around every potential drone or Tomahawk target. And so we're seeing this partial Russian mobilization to try to beef up air defenses Remember, Ukraine has very successfully hit some Russian bombers and warplanes on the ground with drone attacks, as well as really swacking the energy infrastructure in the last couple of months.

[Joe Matthew]

I know that they're getting some cruise missiles from European partners. But if in fact, Vladimir Zelinsky got the Tomahawks he was looking for, what would that mean for the trajectory of the war? And is Donald Trump right that we only have enough maybe for ourselves tactically.

[Dr. Rebecca Grant]

Tomahawks would let Ukraine attack Russian energy infrastructure, the goal there being to push Putin to the table? We have a lot of Tomahawks. We've just sold some to the Japanese and to the Netherlands. And don't forget the army has some new hypersonic missiles like Dark Eagle coming along. We have the SM6. We have plenty of missiles. There are enough there. So Trump doesn't have to decide right away. The goal of all of this, of course, is with the economic and the oil sanctions and military pressure from Ukraine on legit Russian targets to try to push Putin to at least agree to a ceasefire.

[Joe Matthew]

I do find it interesting that we're hearing from Maduro now that they have 5,000 surface to air missiles that are ready for us. And I mentioned this Dr. Grant, with a breaking story that just dropped here from Sean Parnell at the Pentagon. You may have known this was coming because I know you have great sources in the DoD. In support of the President's directive, it says to dismantle transnational criminal organizations, encounter narco terror. The Secretary of War has directed that the Jerry Ford Carrier Strike Group, an embarked carrier air wing to the U.S. southern Command area of responsibility. We're sending a carrier strike group down to the Caribbean. What does that tell us about what happens?

[Dr. Rebecca Grant]

Yeah, and the Gerald R. Ford is our newest aircraft carrier. They've just been in Europe. It's another fantastic use of aircraft carriers by President Trump. That means that they can have the most sophisticated aircraft there. And hey, you saw. Saw what? Aircraft carriers participated in hitting the Houthis in the Red Sea area. And I think Maduro needs to be very worried. Hey, don't forget, Secretary Rubio has a $50 million bounty on Maduro's head following an indictment by the Southern District of New York. I'm delighted to see the aircraft carrier forward down there and really showing American presence in the Western Hemisphere.

[Joe Matthew]

Well, is that it, though? Is why are you delighted? Is it a projection, once again of force? Are we going to use this thing?

[Dr. Rebecca Grant]

Oh, all of the above. Right. It greatly extends the options, but I think what the administration wants to see is they want these drug boats to stop making these drug runs and the Ford is going to give them much greater ability to do overwater surveillance. They can intensify the attacks if they want to. That's plenty of shooters in the area. Or maybe Maduro will come to his senses. The Ford can strike, it can carry out presence. Excellent platform for this doctor.

[Joe Matthew]

It's great to have you back. I always appreciate your insights. Rebecca Grant knows this stuff inside and out. Clearly the Vice president at the Lexington Institute. Stay with us on balance of power. We'll have much more coming up after this.

[Chase Sapphire Reserve Advertiser]

When you own your own business, you own every decision. Now own the car that rewards you for it. The Chase Sapphire Reserve for Business Card brings the best Sapphire Reserve benefits to business owners who expect hardworking rewards designed to meet the needs of business owners at scale. This painful card elevates your travel experience and offers premium benefits and value toward business services that can take your business to the next level. Sapphire Reserve for business provides over $2,500 in annual value. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges. Whether you're looking for pre flight productivity or time to rest and recharge. Chase Sapphire Reserve for business with over $2,500 in annual value, it's the card that gives back all you put in. Learn [e-mail] ReserveBusiness Chase for Business make more of what's yours Accounts subject to credit approval restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank NA member FDIC.

[Bloomberg Announcer]

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 welcome.

[Joe Matthew]

You to the threshold of the weekend on Bloomberg Radio satellite radio, channel121 streaming live on YouTube as well, with a slight update on the White House demolition, the now former East Wing with walls built up around the area so you can't see it in person. And as you've been hearing in the newscasts, staffers of the Treasury Department have been told to stop taking pictures and people on tours the same. Enter Charles and Judith Voorhees taking the matter to court, filing a motion in Washington Federal court just yesterday asking a judge to halt any further damage to the White House while the legality of the project is assessed, knowing, of course, the administration says, that they're well within their rights to do this. The motion seeking a temporary restraining order against the demolition, arguing that it's taking place, quote, without legally required approvals or reviews, unquote. I don't know if the Voorhees have seen the White House lately, but you might be a little late, unless, of course, they're planning to take down the West Wing. Now, the president, of course, is heading abroad, as I mentioned, casting his his gaze beyond our borders here. Number one, on his way to Asia, where he's going to meet next week with President Xi. And two, canceling talks with Canada because of a television commercial. And it's not new. You might have seen it in the ball game a week ago. It's going to be back on TV tonight. This is an ad from Ontario and an invoice invokes the voice of Ronald Reagan, which already got everybody upset about this, certainly with the trade spat that's being had right now. It takes lines from a Ronald Reagan speech that was delivered on the radio. And if you haven't seen it yet, here's a taste. Throughout the world, there's a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition. America's jobs and growth are at stake. Donald Trump on truth Social Canada cheated and got caught, he writes they fraudulently took a big buy ad saying Ronald Reagan did not like tariffs, when actually he loved tariffs for our country and its national security. He says Canada is trying to illegally influence the US Supreme Court with this ad, in one of the most important rulings he says in the history of our country, saying that Canada has long cheated on tariffs, charging our farmers as much as 400%. Thank you to the Ronald Reagan foundation, he says, for exposing this fraud, when in fact those are Ronald Reagan's words here. The ad, however, misrepresents, according to the statement, presidential radio address and the government of Ontario did not seek or receive permission to use and edit the remarks. Indeed, they grabbed a couple of lines from the speech and stitched them together. But if you read that whole speech, you realize what he was actually doing was explaining his decision to add duties to semiconductors from Japan as a last resort and explained why he did not like tariffs as opposed to loving them. Let's assemble our political panel and get their thoughts. I have a feeling that they'll have a few Bloomberg Politics contributors Rick Davis with me here in Washington. Jeannie Shan Zaino in New York. Rick is Republican strategist and partner at Stone Court Capital. Jeannie is Democracy Visiting Fellow at Harvard Kennedy Schools Ash Center. Happy Friday. Great to see you. Both people should know if they don't already, Rick Davis actually worked in the Ronald Reagan White House. And as a Republican, I think we can start with Rick here because I'm pretty sure that the word tariff was considered a swear word in Republican politics until Donald Trump came along. Rick, did Ronald Reagan love tariffs?

[Rick Davis]

Ronald Reagan did not love tariffs. Ronald Reagan was a free trader. He was someone who really espoused the sort of power of open markets and free trade. And I think that it's really important for people to know that this, in the case of this radio address which he used to announce, you know, certain kinds of policies or describe the ones that his administration was giving kind of the Internet at the time, he was announcing a very sensitive issue that the administration spent a year working on. And that was a 301 case, an anti dumping case against Japan. And he used existing laws to do that. He didn't go out and, you know, announce an economic state of emergency in order to sort of, you know, bootstrap the congressional efforts. And by the way, and he had to work very hard with the Republicans on Capitol Hill to do this because they were free traders and they didn't want us going into a trade war with Japan. But long story short, I mean, I think, you know, Ontario got what they really wanted to, which was an enormous amount of publicity around this, you know, sort of very inexpensive 30 second AD.

[Joe Matthew]

That's the truth. You know, I heard a couple of people mention it just in the wild after it appeared in the ball game about a week ago. So, Jeannie, if that hadn't taken place today, to Rick's point, if the president hadn't been truthing about it, I don't suspect it would have been on front pages. We should also note that Ontario's Premier Doug Ford posted Reagan's full remarks saying that Reagan knew that we are stronger together. Mark Carney said negotiators actually were making progress until this happened. So I'm wondering your thoughts on this, Jeannie. And if the editing in this ad did anything to change the meaning of Reagan's speech?

[Jeannie Shan Zaino]

No, it didn't. And I'll tell you who I'm most concerned about is the Ronald Reagan foundation because to me their statement read like sort of like a hostage video, like, oh, we're going to look into whether we can press charges and pursue this legally. But wink, Wink, look at YouTube and see the actual speech and you'll know that it doesn't destroy it doesn't mean, you know, it doesn't mess up any anything that he said. Because Ronald Reagan's point was like most Republicans at the time and quite frankly, many today, which is that after the 1930s and the smoot Hawley tariffs and the destruction that did not just to the economy but to the Republican Party politically, they have not been in favor of widespread tariffs. Ronald Reagan, like many Democrats and Republicans, support targeted tariffs tariffs for a specific reason at a specific point in time. But these broad widespread tariffs that Donald Trump and William McKinley before him have pursued and were pursued with those protectionist acts in the early 1930s have been disastrous for the US economy. So I think somebody needs to make sure that they go to the Ronald Reagan foundation and make sure they're all okay because it feels like there was some arm twisting there. You have out and make a statement and then they nod into what's on YouTube, which is the reality that Donald Trump, like most Republicans, doesn't favor broad tariffs like the Democrat, like Donald Trump does.

[Joe Matthew]

Jason Kenney, former Premier of Alberta on X, calls it, quote, a direct replay of his radio address formatted for a 1 minute ad. Rick, what do you think about the editing here? President Trump has a history with this type of thing, calling out cbs, for instance, for editing remarks and trying to suggest that Canada was cheating here. Does it betray the spirit of what Reagan was trying to say?

[Rick Davis]

I think a vast amount of advertising that's in the public policy or political domain does exactly what Doug Ford, the Premier of Ontario, did, which is he took the meaning of the speech. He knows that Donald Trump or Ronald Reagan was a free trader and he pulled the pieces out that that enunciated that. And so I think again, a lot of smoke, no fire. Right. I'm not sure Premier Carney appreciates the intervention of Doug Ford in the negotiation.

[Joe Matthew]

That's a whole other side of the story with the White House.

[Rick Davis]

But, you know, Doug Ford's a very, I think, boisterous leader and has gotten into a tip with Donald Trump on more than one occasion. And I think this is a good example of how you can live inside of Donald Trump's head in a cheap 30 second. I shouldn't say cheap. It is baseball. But I think this is a lesson to other leaders.

[Joe Matthew]

Well, you know, let's just stick on that for a minute because you made a lot of political ads. Is this an effective 30 second ad?

[Rick Davis]

Well, yes, because of the fact that it's probably, they probably spent $100,000 to make and put it on and it's now had $50 million worth of publicity. So I would say that is a very effective ad.

[Joe Matthew]

Free media. Yeah, let's do that. We've got sound of Carney here talking this morning about our trade relationship. Let's listen.

[Congressman Mark Alford]

We can't control the trade policy of the United States.

[Joe Matthew]

We recognize that that policy has fundamentally.

[Congressman Mark Alford]

Changed from the policy in the 1980s, 1990s, 2000s.

[Joe Matthew]

And it's a situation where the United States has tariffs against every one of their trading partners to different degrees. A lot of progress has been made and we stand ready to pick up on that progress and build on that progress when the Americans are ready to have those discussions. I don't know when the Americans are going to be ready, Jeanne. He's going to be in Asia. He'll be at the APEC and ASEAN summits next week. Does Donald Trump have a little pull aside here? Does Carney have to demand the ad come off the air?

[Jeannie Shan Zaino]

You know, I don't know if they will speak. I wouldn't be surprised if they do. But what, what Carney is saying is absolutely right. They can't do anything to change Donald Trump's mind on this. They can't do anything to change US Policy. But what they can do is what so many allies are doing, which is working in the long term to protect themselves economically from the United States, and that is good for them and bad for the United States security economy long term. We have allies for a reason. We need their support and we need it both economically and we need it from a security perspective. And all this broad spread, broad spread tariff policy has done since it was announced against is alienate the United States from its closest allies. And if there was a good, sound reason the president could offer for the policy, it would maybe it would make sense, you know, but he for Canada goes from everything from fentanyl to immigration to raising money to returning manufacturing home. And so it is a confused policy. It is a president who apparently is up in the middle of the night triggered by ads that are a week old. And this is no way to set sound policy and doing it at a time he said it over to Asia. And also the Supreme Court is hearing a case on whether he has this power to set this policy to begin with. So it's a fraught time for the tariff policy. And the president is making decisions that are not in the long term best interest of the United States. That's clear. Ronald Reagan knew it. And Donald Trump should swallow that and learn the lesson.

[Joe Matthew]

Boy, a lot there as the president prepares to board the jet here, Rick. He's going to be flying out late tonight after 10pm on his way to this summit. The point has been made that he won't get the carpet rolled out quite the way that he did on recent trips to Europe, for instance, that this is going to be maybe a more difficult trip as he works up to the meeting with President Xi. How will his reception be impacted by everything we're talking about here?

[Rick Davis]

It's hard to tell. Certainly puts his back up before he boards the train. You know, he is an emotional animal.

[Congressman Mark Alford]

Right.

[Rick Davis]

So if he's in a bad mood when he lands, either, you know, a lousy breakfast on landing or, you know, somebody has announced a trade sanction against him, those things affect his demeanor and his, in his relationships with other heads of state. And different from Europe, where he's really gotten to know these guys particularly well, I think it's still a growth plan in Asia to sort of develop these relationships, develop the bilateral relationships between the US and some of these countries. And so it's much harder work than hanging around the guys from Europe who you've gotten to know quite a bit. And, and frankly, outside of trade, the issues are much more intractable. In other words, yes, you have a shooting war in Europe, but you have the, you know, potential for an existential war in Asia with China. And, and, and, and so all of that sort of clouds the proceedings here. And, and so I think that this is going to be a much harder work for the president. And it will appear more like a working trip. It's not just a big party where everyone's going to take a picture and carpet.

[Joe Matthew]

Exactly. We're not always used to those and we're going to be covering that, of course, over the course of the weekend. Tyler Kendall will be wheels up to Asia as well, bringing us reporting throughout next week here on Bloomberg. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime [e-mail].

[Amazon Business Advertiser]

How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. From fast free shipping to in depth buying insights and automated purchase approvals, they deliver everything you need to achieve your goals. It's not easy to stand out from the crowd. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support. Hiscock Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online [e-mail]. that's his C O X com. There's no business like small business. Hiscox Small Business Insurance.