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- [00:01]
Hakeem Jeffries
The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand.
- [00:09]
Joe Matthew
But by embedding AI across hr, IT and procurement processes, we've reduced costs by
- [00:15]
Hakeem Jeffries
millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by
- [00:23]
Joe Matthew
putting AI where it actually pays off, deep in the work that moves the business.
- [00:27]
Hakeem Jeffries
Let's create smarter business. IBM,
- [00:33]
Joe Matthew
Bloomberg Audio Studios Podcasts Radio news.
- [00:39]
Jeannie Shan Zaino
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:55]
Joe Matthew
The Monday Trade not looking quite as strong as it was this morning despite the downturn in oil prices, this pause in strikes against Iran pulling oil sharply lower today, as Charlie mentions, we're looking at losses of more than 7% WTI, almost 8% for Brent back below $90 a barrel. Gas prices are a different matter as they continue to rise. And that's not a big shock, the way these Things work with $4.11 averaging nationally today, according to AAA in the state of Michigan, it's $4.21. And I mentioned that because that's where the President is about affordability. He's going to be at a GM facility in Michigan, not in Detroit this time, but speaking to GM workers who are acutely aware of the President's tariff regime and of course the gas prices that they and GM's customers are all paying. Affordability was also the issue for Hakeem Jeffries, the Democratic leader in the House, as he marked 100 days to the midterms yesterday in the Lehigh Valley in Pennsylvania, joined by Governor Josh Shapiro and others beating the drum once again, the issue of affordability. And with now 99 days to go to the election. I spent some time a short time ago today talking with Congressman Jeffries about the affordability issue, about Democratic strategies, about the money trail in this election cycle, and started by asking him about this very message and the one that the President will be speaking to prices and what Democrats have tried to do to bring them lower.
- [02:33]
Hakeem Jeffries
Listen well, life has gotten far too expensive under Donald Trump and the Republican controlled Congress. Donald Trump promised to lower the high cost of living on day one, but what we've seen is that costs haven't gone down. Of course, in America, costs have gone up. Democrats have been focused on doing a variety of different things to push back aggressively against the policies that Republicans have jammed down our throats, which is making life more expensive. For instance, we're pushing back against the Trump tariffs, which have increased costs on everyday Americans by thousands of dollars per year in terms of increased groceries and goods and other household items. At the same period of time, Democrats are focused on ending Donald Trump's reckless war of choice in Iran, which has skyrocketed gas prices of all across the country, while actually putting Iran in a stronger position than they were in prior to the war starting.
- [03:36]
Joe Matthew
I want to get specific. If you, in fact win the House, if you're the majority party in the House, what you might be able to do to address prices. And you talked about some ideas yesterday, including repealing what the President calls his one big beautiful bill. Is that the answer here? Is there, is there more that Democrats have in mind?
- [03:56]
Hakeem Jeffries
Well, we want to make sure that health care is affordable to every single American. And there are several steps that we need to take, including repealing the Affordable Care act tax, making sure that the Affordable Care act tax credits actually are extended, and repealing, I should say, the Medicaid cuts in the one big ugly bill, which have created a situation where the health care of more than 14 million Americans is at risk.
- [04:28]
Joe Matthew
How do you do that? Do you need to see the Senate turn Democratic as well to actually repeal what's been already put in place?
- [04:36]
Hakeem Jeffries
Well, here's the thing. We saw a couple of weeks ago, the Congress be able to move a bipartisan bill forward on housing affordability that is designed to alleviate some of the cost pressures that exist from the housing market. And we got that bill into law over the objection of Donald Trump. So what is clear is that even in a context where Republicans have complete control of government, we've been able to move some things forward. Certainly, if we have the House and the House plus the Senate, we'll be in a stronger position that to drive the affordability agenda forward.
- [05:17]
Joe Matthew
You mentioned the President's war with Iran. We've already seen the House and the Senate pass war powers legislation. Leader Jefferies, presuming you take the gavel, knowing that the President has blown right through these War Powers Acts, is there anything else that you can do to put collars on this effort?
- [05:37]
Hakeem Jeffries
Well, we're going to continue to aggressively push the effort to push back against this reckless war of choice. It's deeply unpopular with the American people, and we have to sustain the intensity. Donald Trump has unfortunately got us involved in this situation without any plan, any objective, any clear exit strategy. And now the American people are clearly paying the price. One of the things we have to take a look at is the amount of taxpayer dollars that are being spent to fund Donald Trump's reckless war machine and effort in the Middle East. It's clear to us that the American people would much rather their taxpayer dollars being spent to make their life more affordable. That's why we're committed to lowering the cost of groceries, lowering the cost of gas, lowering the cost of housing, and making sure that health care is affordable for every single American.
- [06:40]
Joe Matthew
How do you lower the cost of gas without ending the war, though? We're at $4.11, Mr. Leader, that it's been suggested even by the president we eliminate the federal gas tax. Is that something that you would support?
- [06:52]
Hakeem Jeffries
The most significant thing that could be done right now to lower the price of gas for everyday Americans who are suffocating at the pump is to end Donald Trump's reckless war of choice in the Middle East. And we're going to continue to relentlessly make the case that that needs to happen.
- [07:14]
Joe Matthew
Where are you on the gas tax then? Is that something that should be removed at least temporarily?
- [07:19]
Hakeem Jeffries
Well, the gas tax, of course, is something that's in place to help fund our desperately needed infrastructure on highways and beyond. And so I think, you know, it's something that the Republicans put it on the table. We'll have to evaluate it. But clearly the most significant thing that could be done at this moment, as opposed to a temporary measure, is to end the war in Iran.
- [07:47]
Joe Matthew
You know, we start talking about affordability. Mr. Leader. It creeps into all kinds of other stories, including now data centers, which have become a massive political issue. And we've been struck by, by how often it comes up when we talk to voters around the country. And of course, the state of New York, where you're right now sitting, has become an important guidepost here, at least for some who believe that there should be restrictions on data centers. As you well know, the governor has put a one year moratorium on new data centers in the state. There are a lot of different ways to get to this. We spoke with Byron Donalds the other day, the Republican from Florida who has a bill that wouldn't put on a moratorium, but would take data centers off the grid and would compel them to have their own water supply. How do you get to this in a way that makes voters happy?
- [08:36]
Hakeem Jeffries
Well, House Democrats have launched a permission on artificial intelligence and the innovation economy to thoughtfully engage with community based organizations and groups, advocacy organizations, as well as industry stakeholders to try to evaluate the best possible path forward. But what is clear is that we have to put at the center of any effort making sure we're not doing anything to exacerbate the affordability crisis that everyday Americans are experiencing in every area of life. And that, of course, is includes figuring out how to drive down utility costs and the cost of water, for instance, bills, as opposed to, you know, increasing the strain on the system in ways that would actually drive up costs. And so I think this has been a state by state effort up until this point, with states landing in a variety of different places in terms of approach. I do think in the new Congress, we're going to have to come together and think about how we can address many of these issues nationally.
- [09:50]
Joe Matthew
Well, I'll tell you what, I'd love to ask you about some of the strokes behind this midterm cycle, which is what we're talking about. With 99 days to go and I can't walk into a room in Washington without hearing about the Save America Act. That's, of course, because of the amount of attention the president has paid to it. Leader Jeffries, were Republicans successful in salvaging this? Will it cost Democrats votes if it becomes law? Where are you on this? Have you talked to John Thune about it?
- [10:16]
Hakeem Jeffries
I haven't talked to John Thune, but he's made clear repeatedly that the so called Save America act, which is really all about voter suppression, is actually dead on arrival in the Senate and there's nothing that Donald Trump can do about it. What's extraordinary to me is is that he continues to actually waste time trying to rig the midterm election in a variety of different ways as opposed to actually solving problems for everyday Americans, including the problems that he promised to address, like lowering the high cost of living on day one. And instead, of course, has done the opposite. He's made clear he thinks the affordability crisis is a hoax. Donald Trump has said very publicly he doesn't think about the personal financial situation of the American people. It's all very extraordinary. He's even said he loves the inflation. Now, our focus is going to be quite different because it's clear people are paying too much at the gas pump, people are paying too much for food. People can't afford their rent or their mortgage. And that shouldn't be the case in America, the wealthiest country in the history of the world. We want to work.
- [11:25]
Joe Matthew
Do you expect troops at polling places? Leader Jeffries, I'm sorry to interrupt, but are we going to see ICE agents at polling places if Save America does not go into effect?
- [11:36]
Hakeem Jeffries
Certainly think The American people would outright reject that. And we are going to put together the largest voter protection effort in the history of the country. We know we won't see troops at polling places because the supreme court, in a 6, 3 decision in December, has ripped away Donald Trump's efforts to try to actually federalize the National Guard. He does not have the power to do that. In terms of ICE agents, we're continuing to push for a ban on ICE agents showing up at sensitive locations. That includes polling sites, but it also includes schools, it includes hospitals, and it certainly includes houses of worship. The American people want to see immigration enforcement in this country that's fair, just and humane.
- [12:25]
Joe Matthew
I'm wondering where you're looking here as we consider the money in this midterm election cycle. There's been some tough reporting about the dnc. And you probably saw the write up in the New York Times with a frustrated chair, Ken Martin, throwing his phone. In one scene, it was described as dysfunction and despair. Leader Jefferies, when you talk to the dccc, though, they've got a lot of candidates who are outraising their Republican rivals. But the fact is, on the party level, there's a great disparity. And I'm wondering if, if you care if history is at your back to a point where the money will not make a difference.
- [13:00]
Hakeem Jeffries
Well, we certainly need to continue to raise the resources necessary to both reelect all of our incredible frontline incumbents who are in the battleground districts across the nation, while making sure that our candidates who are trying to flip red seats blue, have the ability to communicate their message. We're all fighting for an affordable America. That's what unites us. That is a very powerful narrative that we'll have available to us as we communicate with voters over the next 100 or so days. Now, as you pointed out, from a DCCC standpoint, we just recently reported outraising Republicans, our House counterparts. We've been competitive with them all cycle. And of course, some of the outside groups that work in support of House Democratic candidates have posted record breaking numbers. Mm.
- [13:59]
Joe Matthew
If you take the House, does Ken Martin keep his job?
- [14:03]
Hakeem Jeffries
Well, listen, I'm focused right now. I think we all are. Including ken Martin on November 3rd. And under the DNC partnership, what we have seen, Ken Martin's leadership is Democrats winning races all across the country for the last 18 plus months. And the DNC has quietly been involved in a lot of those races where we have seen success. And so let's all, you know, keep the main thing. The main thing I know that's what Ken Martin is doing. And he's focused on helping Democrats win elections all across America, and then all of us will figure out the path forward. But I think Ken Martin's term is four years, and there's no reason to believe at this point that he's going anywhere.
- [14:53]
Joe Matthew
Okay, I appreciate your answering that. And I guess I'd wrap by asking you about some of those candidates who won in those races you point to were Democratic socialists. And there's been a big question about Big Tent leader Jeffries. You don't need me to tell you that. And I'm wondering if you see that as being part of the recipe to take the House in the midterm elections or if a more moderate approach is the long term success story for Democrats.
- [15:19]
Hakeem Jeffries
Our success is going to hinge on convincing the American people that as Democrats, we're fighting for an affordable America. We recognize the cost of living is way too high. Far too many people are working hard, they're playing by the rules, but they can't thrive. They can barely survive. People are drowning in this failed Trump economy. And we're committed to making a difference in all of the areas that matter. That's lowering grocery costs, lowering gas prices, lowering housing costs, and of course, making sure health care is affordable to every single American. Let me make sure as well to point out, look, I believe that the Democratic Party is at its strongest and America is at its strongest when we are a country focused on having a strong floor and no ceiling. Because in this country, you work very hard, right? You play by the rules. There should be no ceiling to the success that you can achieve for yourself, for your family, for your community at the same period of time. America, the wealthiest country in the history of the world, should always have a strong floor. And we know what that looks like. That's Social Security. That's Medicare. That's Medicaid. That's the Affordable Care Act. That's veterans benefits. That's nutritional assistance. By the way, every single one of these things brought to you by your friendly neighborhood Democratic Party, designed to ensure that there's a strong floor for working class Americans, for middle class Americans and for everyday Americans. And I think that at its core is what the Democratic Party has been about, is about, and will continue to be about into the future.
- [17:02]
Joe Matthew
And the DSA helps to reinforce that floor.
- [17:07]
Hakeem Jeffries
Well, I mean, the DSA can speak for themselves. I'm not a part of the DSA. I'm not a member of the DSA. The DSA can speak to their particular platform we've got 215 plus Democrats in the House of Representatives. And what I can tell you is that what unites all of us and our candidates out throughout the country who are working hard is that we're committed to actually making life more affordable for the American people.
- [17:34]
Joe Matthew
Hakeem Jeffries, the Democratic leader in the US House of Representatives, speaking with us exclusively today on Bloomberg TV and radio. With 99 days to go until the midterm elections as we assemble our political panel for their take on everything we just heard. Bloomberg Politics contributor Jeannie Shan Zaino is with us. Our Democratic analyst and Democracy visiting fellow at Harvard Kennedy School's Ash center alongside Republican strategist Greta joins policy director at Brownstein Hyatt. Great to have you both with us here. And I'd love to get your insights on the money. To start here, Jeannie, we talked about the disparity between the committee level and the party level, where the DCCC can't seem to send out enough news releases to crow about individual candidates and campaigns raising money as opposed to the dnc. With reporting over the weekend that I'm sure you saw in the New York Times, Ken Martin throwing his phone in anger. Morale is heading lower. How do we rationalize these two?
- [18:33]
Jeannie Shan Zaino
Yeah, and I'm glad you talked about the disparity as it pertains to the difference between the party and the committees. A lot of this goes back to the decision by the Supreme Court in Citizen Republicans United. And so every time we hear about the Democratic Party not fundraising to the level it should be having, financial issues, all of which are true, that story in the New York Times was, you know, right on point and utterly, you know, just frustrating. But the reality is those comparisons we're hearing are not to the Republican Party, but we're hearing to Donald Trump's own committee, which has about $401 million, an astonishing number. But when you compare, as we heard Hakeem Jeffries do, the DC Triple C to the Republican counterpart, they have outraged them. I agree. These issues in the Democratic Party become much more important in the presidential term in the midterm. They're not a great look, but they're not critically important because of so many structural changes in the way we run elections in this country, particularly as it pertains to money. So right now, I think Hakeem Jeffries is right to say the focus has to be on winning these. And then the the DNC has to work its stuff out. It's not a good situation there, but it won't change what happens in the midterm.
- [19:57]
Joe Matthew
From a campaign strategy standpoint, Greta, I'm wondering if you would choose between the fundamentals or the technicals. The RNC is swimming in cash. Do you go with the money or do you wish you had the historical advantage in this midterm cycle that Democrats enjoy?
- [20:14]
Greta Joins
I mean, I certainly would love some of the historical nature of this and sort of where we've seen trend lines over the years, I do think fundraising is part of it. But given that so many campaigns are moving off of the traditionally more expensive, expensive broadcast news as their means by which to connect to voters and really focusing on more targeted online ads and streaming ads, money is not the be all, end all that it was. So I do think that, you know, this is all about using money effectively and appropriately. I mean, Kamala Harris spent God knows how much money and it really and really came up short. So. So Republicans can't assume that this is a lock because of fundraising numbers.
- [21:02]
Joe Matthew
And I think we can all argue that President Trump has done a pretty good job not spending his money as the master of free or earned media. Jeannie, what do you think of the to do list here, some of which we talked about with Hakeem Jeffries? If Democrats actually take the House, never mind possibly the Senate, repealing the president's big, beautiful bill, as it's called, would be a tall order. Do you think that's within the realm?
- [21:30]
Jeannie Shan Zaino
I think it's within the realm. I think it would be very, very difficult. One thing we know about United States legislation is once it passes, it's very, very tough to pull back on. I mean, Republicans learned that when it came to Obamacare. So I don't think that talk of repeal is necessarily something that's going to be in the offing. And I think this is a challenge that Democrats have because if they just take the House, or even if they take the Senate and the House, they still are facing a Republican control of the White House, which makes doing things beyond investigations that much more difficult for them. And that's where they're going to have to temper what they promise they should not over promise and under deliver. And so that's where the Democratic socialists come in, because they have been talking about things that might be more plausible in some ways as a positive step that can be taken, particularly at the state and local level.
- [22:32]
Joe Matthew
Well, you know, one thing that did ring true to me, Greta, you can give me your thoughts on this. The idea of extending Affordable Care act tax credits at the time when that was a hot and live issue in the advancing of the president's big beautiful bill. There were Republican members who joined us, many of them frontliners from states like Pennsylvania or New York, who were concerned about this. And you wonder if there'd be enough to band together with Democrats to get that done.
- [23:01]
Greta Joins
I mean, I think it's certainly possible. You know, I think there was a lot of talk when, you know, that was all, you know, very timely, you know, where it was, the sky is falling. I think that the impacted number of, of individuals was smaller than initially anticipated. But I do think there is a desire to make the Affordable Care act work as intended. And I think Republicans would certainly partner with Democrats to look at holistically the problems that exist and why health care costs since the passage of it have only gone up. They have not gotten any more affordable for Americans.
- [23:42]
Joe Matthew
Yeah. I'll ask you quickly, was we're just about out of time here. The same question, Jeannie, do you think that Republicans can keep the House as long as the war in Iran is underway?
- [23:54]
Jeannie Shan Zaino
I think it's going to be very difficult. It's historically very difficult. It's very difficult in the context with Donald Trump's low approval ratings, the issue of the economy, he is underwater. I mentioned before that CBSU gov poll, 6 out of 10Americans say things are getting worse. And of course, the war, as you mentioned, which is weighing heavily, so, so if those things stay the same and we are less than 100 days now, almost August, Joe, this becomes that much tougher. And you were probably just speaking to the next speaker of the House of the U.S. representatives, the third in line to the presidency likely come January 20th, 27th, if all things remain the same and history is any guide.
- [24:34]
Joe Matthew
What's your thought, Greta, with 30 seconds left, that's the one way you know that you're going to get gas prices down is for this war to come to an end. Does that change Republicans fortunes?
- [24:44]
Greta Joins
I mean, I think it certainly would. But I also think that it's really important to look, when you compare contrast this cycle to others, is that the universe of congressional districts that is in play is very small. And a lot of those districts now after we're past redistricting are much more close in numbers to where Republicans want to be than some of the previous cycles. So I do think it's possible for Republicans to keep the House, but staying on message and working with their popular party leaders will be important.
- [25:21]
Joe Matthew
Great conversation and thanks to both of you. Great panel. Greta joins and Jeannie, Shan Zaino, thanks as well to Democratic leader Hakeem Jeffries for getting us started here with a great and exclusive conversation on Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.
- [25:39]
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Joe Matthew
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- [26:42]
Joe Matthew
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- [26:50]
Jeannie Shan Zaino
the Bloomberg Balance of Power podcast.
- [26:52]
Joe Matthew
Catch us live weekdays at noon and
- [26:54]
Jeannie Shan Zaino
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 A
- [27:08]
Joe Matthew
doozy of a week for earnings. We're talking Apple, Amazon, Metta. We came off, of course, a very difficult reaction to Alphabet earnings last week and with so much sensitivity over the capex having to do with I will be listening very closely and a lot of the late edition of Balance of Power, we'll be focused on just that. We're focused on affordability. Right now as the President makes his way to Michigan, he's going to be speaking to GM workers and others at a GM vehicle testing facility a little bit later on in the day. And as we mentioned, if you're just joining us, we were speaking with Hakeem Jeffries, who was on the trail yesterday in Pennsylvania to talk about the same issue, affordability. With 100 days to go until the Election Day, we want to give you the view of the President and the administration on this. Having just explored Leader Jeffrey's Points of View with Jeff Mason, Bloomberg White House Correspondent is with us in studio right now as the President flies to Michigan. It's great to see you, Jeff. Affordability is an issue this president has struggled with, not only in the literal sense, but rhetorically. He frequently calls it a Democrat hoax. He has also said that we've won the war on affordability. What will be his message today?
- [28:19]
Jeff Mason
I think just the fact that he's going out at all to talk about affordability is. It's a reminder to me, anyway, that this was the tour that he was going to do all spring.
- [28:28]
Joe Matthew
That's right.
- [28:29]
Jeff Mason
Which didn't happen because of the war. And it is a vulnerability for him. Absolutely. Going into the midterms. I think his advisors want him to talk about it more so. But you're right. Like, even rhetorically, he hasn't been able to sell his message. And this is someone who's pretty good at messaging Donald Trump because he uses. He gets defensive about it and says affordability is a hoax, as you just said. Well, the truth is, polls show that Americans are concerned about high prices.
- [28:55]
Joe Matthew
Sure.
- [28:56]
Jeff Mason
And it's also a year and a half into his term, and you've got the tariffs, you've got the war that are directly tied to his policies. It's pretty hard for him to make the argument that this is just a hangover from Biden.
- [29:08]
Joe Matthew
Yeah. He was a very effective messenger on this issue when he was on the campaign trail. Of course.
- [29:13]
Greta Joins
Right.
- [29:14]
Joe Matthew
And promised at the time, people say, how are you going to. What's your plan to get prices down? You were at all these rallies. He said, lower the price of gas and everything else will follow.
- [29:23]
Jeff Mason
Yeah.
- [29:24]
Joe Matthew
Gas is back up to 411 today. It's $4.21 in the state of Michigan. And I think we've said pretty clearly the only way around this. You can suspend the federal gas tax or do any number of things, drill. But knowing our refining capacity and our limitations there, the only real way to bring this down is to see an end of the war.
- [29:42]
Jeannie Shan Zaino
Yeah.
- [29:43]
Joe Matthew
So is it about changing the messaging on the war, then?
- [29:45]
Jeff Mason
Good question. I mean, he has been asked directly by me and my colleagues about whether or not how concerned he is about the price of fuel, and he's dismissive of that. He's also suggested that he doesn't care that much about the midterm elections, which of course, his party does. But he has painted the war as a broader, more important goal, and that's a historical one for him. He wants to see himself as someone who's taken on the Iranians in a way that previous presidents have not. But that said, he has also, and he cited this before the last time the latest ceasefire started. He has also said he doesn't want to be a president who presides over a Great Depression. So he's clearly aware of the economic impacts and the political impacts related to that.
- [30:31]
Joe Matthew
Probably encouraged by lower oil prices. This market still is hinging on what they think he is about to do every day, which is amazing. We're down sharply 7,8% crude oil. Nothing really actually has changed. It's just been a pause, as we're calling.
- [30:44]
Jeff Mason
It's been a pause and he foreshadowed that a little bit on Friday when I was talking to him in the Oval Office about whether or not he wanted to. He had made a decision to. To go forward with another massive strike. And he said he hadn't.
- [30:57]
Joe Matthew
He seemed to want to turn you away from. From that idea almost.
- [31:00]
Jeff Mason
I think he did and I think he also. And that was the first time at least that I had heard him say talks have started again and now we don't have a whole lot of details about those talks. But certainly the fact that he did not not only launch another round of massive strikes over the weekend, he didn't even do any minor ones or smaller ones. There is in fact a pause. There may be multiple reasons for that. Munitions may be one of them and another one of them may be that he wants to give a cease fire or a peace agreement another try.
- [31:33]
Joe Matthew
So what's today? We're going to Michigan. I've been reading about this amazing facility that GM has out there. This is where the first crash rollover tests were done. It's a proving ground, as it's called, 150 miles of track. This is where they test new technologies and so forth. They can simulate extreme weather conditions. And he's going to be watching a drag race.
- [31:54]
Jeff Mason
Yeah.
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Joe Matthew
What's that all about? What are the optics that are helping the President today?
- [31:59]
Jeff Mason
To be clear, drag race in this case is referring to cars.
- [32:01]
Joe Matthew
Okay, fine.
- [32:02]
Jeff Mason
And cars. It's ahead of a race that he's bringing to Washington next month.
- [32:09]
Joe Matthew
Next month is August, right?
- [32:11]
Jeff Mason
For part of the 250th anniversary celebration.
- [32:14]
Joe Matthew
Is there a tie in to this thing today?
- [32:16]
Jeff Mason
I don't know if it's a specific tie in, but it's at least it's
- [32:19]
Joe Matthew
not unrelated gearhead sort of afternoon. Fast and Furious was the headline that jumped into my brain this morning.
- [32:25]
Jeff Mason
I think that works.
- [32:27]
Joe Matthew
He's not been real happy lately, has he? Well, I think his demeanor when you guys go into the Oval Office has been different over the past couple of weeks is you can kind of see the impact of the war on him and the barrage of, of negative questions that he's hearing every day. Do you feel that or see that
- [32:48]
Jeff Mason
he's, I mean, our reporting certainly shows that he's boxed in by this war. And that is got to be frustrating to him. And you're seeing some of that frustration for sure. On the other hand, you're not seeing him, you know, outlining a clear exit plan for this, which is something that we were asking all spring as well.
- [33:06]
Joe Matthew
Yeah.
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Jeff Mason
So, and that's, that's sort of the interesting contrast between now and even the last, you know, month or so ago, which is he'll say this war doesn't last, isn't lasting very long compared to other wars historically. And yet he's not saying this is how we're going to get out of it. We've achieved our goals.
- [33:23]
Joe Matthew
Well, of course, we can never get into his head. The fact of the matter is he says deep talks are underway and maybe next time you join us, we'll have some real news on this. Yeah, it's great to see you as always. Jeff Mason, of course, getting us started here on the Monday edition of Balance of Power. We'll be tracking the president's moves in Michigan. Of course, the along let you know how things go at the drag race. Those are still acceptable around here. I'm Joe Matthew in Washington. More on the war with Heather Connelly from AEI coming up next. Stay with us on Balance OF power. We'll have much more coming up after this.
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Joe Matthew
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Joe Matthew
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- [35:06]
Jeannie Shan Zaino
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [35:22]
Joe Matthew
Interesting to see oil down so sharply, but stocks really aren't keying off of that, at least that not on an index level. With the broad market trading lower today, we thought that there might be a bid under this market with some optimistic headlines involving Iran. Deep talks, the words the president used when he spoke on the phone with Axios. But indeed, we've got an S&P 500 down fractionally here, 20 points. The Nasdaq is off about a half percent even with WTI down to $82 today. And Brent back below 89. Interesting moment we're in as the president approaches his destination in Michigan where he's going to be talking about affordability today. And lower oil prices would certainly fulfill this idea and this concern. But gas prices keep rising. We're at $4.11. The reason why we're watching the markets respond is because of the pause. There's been no strikes since Friday. An interesting reporting from Axios. Aforementioned, it was Admiral Cooper, the top US Military commander in the Middle East, Brad Cooper, who recommended stopping what had been 13 straight nights of bombing around the Strait of Hormuz because it's reached the limit of its effectiveness, which calls into question exactly what options we have right now. And that's where we begin our conversation with Heather Connelly, who's back with us from the American Enterprise Institute, senior fellow, former deputy assistant secretary of State for the Bureau of European and Eurasian affairs in the George W. Bush administration. Great to see you. Welcome back. As you consider that conversation with the admiral, what does the president see as options we have right now if not diplomacy?
- [37:08]
Heather Connelly
So the president does not have great options moving forward militarily. Joe, you have reports of the chairman of the Joint Staff, General Kane, being very concerned about stockpiles. Now the president just said, I think on Air Force One, he counteracted that. He said mid, mid range munitions are fine. I'd like more you have Admiral Cooper saying we, we can go back and keep hitting these things over and over again. It's not working. We need a new strategy. The air campaign is just not going to produce those results. But the president has really bad choices. He doesn't want to do a ground campaign. He, he doesn't want to introduce Land forces, ammunition stocks are critical. And the diplomacy part, you're certainly hearing the President talk about talks, you're hearing the Iranians saying there are no talks, there are exchanges of messages. But I think the Iranians are going to hold out and wait for that price of energy to go up to make those options more unappealing and then forcing the President to acquiesce to additional Iranian demands. I hate that we're in that position, but that's where it feels like we're heading.
- [38:14]
Joe Matthew
Well, is it because Iran is simply so effective at hiding its missile stockpiles, for instance, and its drones were repeatedly hitting the same targets because they're digging them out and pulling launchers back out from underground. Is that the essence of this?
- [38:27]
Heather Connelly
I think there's two parts, definitely the underground. And these are fast boats, these are small things, are very hard to target. I think the other thing is the Iranians are able to reconstruct these cheaper, faster, effective drones and missiles. And this is the problem that we're facing. Our reconstitution times, particularly with our high end munitions, they can take two to four years, five to seven years. This is why there's sort of panic in the ranks here. The air defense capabilities, the Patriot missiles, the Thaad, that long range, it takes so long to replace them. There's now a global shortage. And that really puts to question, you know, could we put protect against attack in the Pacific theater, in the European theater, now in the Middle East? So this is why this is such a bad position strategically.
- [39:15]
Joe Matthew
Enter Ukraine. I don't know what to make of this. I know that President Zelensky will be in town for Lindsey Graham's funeral tomorrow. But to learn that Ukraine fired on an Iranian commercial vessel in the Caspian Sea is quite remarkable. Iran says this killed a sailor. Iran has summoned a Ukrainian diplomat to register protest here. Did Ukraine just get involved in the war with Iran or where was this boat going?
- [39:44]
Heather Connelly
Well, Iran has been involved in the Ukraine war for many, many years, supplying Russia 100%. So and this is where first of all, I think this attack, a couple of things. It continues to demonstrate Ukraine is really developing impressive military capabilities. It can reach there on its own. So huge, huge gains there. I think on the, on the eve before President Zelensky does come to Washington, he'll meet with President Trump, attend Senator Graham's funeral. You know, President Zelensky saying, I have some cards to play here, I can be of assistance to you. And then the third is honestly as what Zelensky has been saying all along the conflict in Ukraine is the demonstration of this Axis of evil we were talking about before we came online. You have now suggestions that North Korea is going to introduce 30,000 troops on the Russian side to fight in the war in Ukraine. This vessel allegedly was carrying components and parts to go to Russia to help Russia build additional ballistic missiles to be used in Ukraine. You have China providing intelligence components potentially to Russia. So all of these are interconnected. You cannot separate one thing. Theater out. So this was a really, I think, hit all of those themes of Ukraine's really producing some serious weaponry that we, I think hopefully can gain access to. Mentioning that this is. This is a part of Ukraine helping the United States out with this alignment. Yeah.
- [41:15]
Joe Matthew
Were you in the Bush administration for the Axis of Evil speech?
- [41:18]
Heather Connelly
I think I was in the first term.
- [41:19]
Joe Matthew
Wow. History is. Is rhyming or something for you here?
- [41:23]
Heather Connelly
That.
- [41:24]
Joe Matthew
Okay, this is brilliant politics on Zelensky's part. Right. He can come here and say, NATO's not helping you out, but I am. Does the president say thank you?
- [41:34]
Heather Connelly
Will he ask the president to say thank you back to that infamous Oval Office? I think what President Zelensky is doing. And you had, of course, this extraordinary moment over the weekend with Laura Loomer, influencer for the sat down Republican. She's just transformed her view on Ukraine. You have, you know, the US army co production of Ukrainian drones, the license for the Patriot missiles, the meeting that happened at the NATO summit. You are seeing a change. We are shifting into a much more supportive role. And I think, again, President Zelensky is here to honor Senator Graham, who was a huge advocate for Ukraine fighting Russia, the Graham Blumenthal bill. So in some ways, it is absolutely fitting that President Zelensky honor that. But this relationship is changing, and I hope the White House really gets on that on the side of Ukraine to support.
- [42:26]
Joe Matthew
Are you about to tell me the war in Ukraine is going to end before the war with Iran?
- [42:31]
Heather Connelly
No, both. Both are going to continue to endure. And they're similar because both sides are in really first survival mode. I mean, this is. We have to watch Russia's escalation. Putin, you're starting to now see that Putin is feeling the effects of both. The Ukrainian strikes. If the sanction bill goes into place, it's more of a tariff bill than a sanctions bill, but that could add additional pressure. There's some. There's some movement there that I think we need to watch. And Russia and Iran are similar. They also want to press huge advantage right now and are helping each other do that so I think, unfortunately, I think both are going to continue on for the foreseeable future. Hope not, but that's the way.
- [43:18]
Joe Matthew
It feels pretty interesting to see the President's posts on Truth Social from over the weekend to your point. He indicated that we were in deep talks with Iran. They've suggested otherwise. The imagery he's posting on social media would not indicate someone who's advancing to the peace table. There was one AI generated image, one that portrayed a strike on Kharg, as it said. A different image showed the President on the helm of a naval ship wearing a hat that says fafo. Another, he's on board an Iranian oil tanker with the American flag and it says it's our oil tanker. Now does this stuff resonate that the bravado resonate in Tehran?
- [44:01]
Heather Connelly
No, I don't believe it does. I think they interpret this as continuing. Their actions are continuing to get under the President's skin.
- [44:09]
Joe Matthew
Okay, so they think they're winning when
- [44:10]
Heather Connelly
they say, well I think they're going to continue to press their advantage. Look, they, they too, the inflation is running very high in Iran. It's not that they aren't feeling the effects of a five month conflict, but they feel that they have the leverage. They still control the Straits of Hormuz. Now their proxy in Yemen, the Houthis are squeezing the Red Sea. This is putting massive pressure on Saudi Arabia. Even though we've had this two day pause which we're thankful for, that pause. You have Iranian proxies in Iraq now attacking Saudi Arabia, Jordan, and so this isn't stopping. And they're targeting energy infrastructure. So they know the pain point is the price of energy. They know the pain point. They can, if they can hang on longer, they believe that they can, you know, get more concessions from the U.S. it's just we're not in a good strategic place and Iran's going to continue to press advantage.
- [45:04]
Joe Matthew
So what does this new front in the Red Sea mean? You made reference here. We've, we've got Iranian proxies bombing Saudi Arabia.
- [45:12]
Heather Connelly
Now
- [45:14]
Joe Matthew
this is escalation. And if we have another choke point, where does it leave the US So
- [45:19]
Heather Connelly
this is where really the last five months when the strait really closed, closed down, you saw a diversification of trying to ship out by land, pipe it across to get to the Red Sea, even northern pipelines up through the Mediterranean. And it's, it has helped. But the Saudis by diverting to the Red Sea created another pinch point and the conflict in Yemen for many years. And if you Recall, even in the Biden administration, the Houthis were taking action in the red Sea. From 2324, our naval we couldn't stop them. We reached a pause. But this is now the Saudis are getting this on both sides and it will continue to really challenge. What I'm worried about is some of the drone attacks on some of these major refineries and points. Its product, it's diesel, it's jet fuel that's going to really feel the pinch. So this squeeze play is ratcheting up the price for the United States, States and our allies.
- [46:18]
Greta Joins
Yeah.
- [46:18]
Joe Matthew
President Trump has made his way to Michigan to a GM vehicle testing facility where he's just shaken some hands and talking. But looks like Mary Barra from at least where I'm sitting from across the room be speaking to the issue of affordability with some GM workers a little bit later on here. Indeed spending some time with the CEO of General Motors which had a stronger than expected beat and raised quarter last week and the stock has been chugging higher. This attention from the president today might well help the president in his effort to convince folks that affordability is the issue on his mind as we consider the impact here. You know, you're talking about the pipelines, Heather Connelly across Saudi Arabia. I think it was Javier Blass who tweeted over the weekend they need a bypass for the bypass now. I don't know if you can pipe around now. Two choke points. And so as we look at $4.11 sense, these prices could keep going higher.
- [47:14]
Heather Connelly
Absolutely. And again, China and Javier has been doing amazing reporting. China still pretty off the market. They have, I mean they, if they could, if they begin to increase, that's really going to drive price up, I think, Joe, we also want to keep our eye on the future as Europe, United States drains its strategic petroleum reserves. Europe is going to be at an all time low in their storage capacity before they enter winter. You're watching obviously these wildfires in Europe, drought, hydropower now is gone. I mean, this could really set up a huge challenge in the fall. Food insecurity, water insecurity, energy at Lowe's. We just, we better buckle in. This is going to be a massive change.
- [48:00]
Joe Matthew
Sounds like the start of a Mad Max movie.
- [48:02]
Jeannie Shan Zaino
It does.
- [48:02]
Joe Matthew
I don't know how we're going to get out of this, but at least she's still smiling, right? American Enterprise Institute, Heather Connelly is with us every week here on Balance of Power to help us understand what's taking place. And on Mondays, it's always a job picking through everything from the weekend, right, the truth, social posts, all the rhetoric, and we're going to get a lot more when the President speaks a short time from now. Heather, thank you for being with us. Great to be with you with us live on Bloomberg TV and Radio, live from Washington, and I'll meet you back here on the late edition of Balance of Power with much more to follow. Thanks to Hakeem Jeffries for joining us, our great panel, and Heather Conley as well. 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 eastern@bloomberg.com
- [48:50]
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