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- [00:00]
Bethenny Frankel
This is Bethenny Frankel from Just Be with Bethenny Frankel. Most dog food is marketing, not nutrition. That is why Biggie and Smalls eat just food for dogs. Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference. Better digestion, healthier skin, more energy, dogs that feel better. My babies, if you've been on the fence about switching, stop overthinking it. What's more important than your furry babies and their health? Go to justfood for dogs.com right now and get 50% off your first box. No code needed. Just try it.
- [00:39]
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 Bloomberg business app Listen on demand wherever you get your podcast or watch us live on YouTube.
- [01:02]
Joe
It's just after 1pm Eastern time and of course that means it is about eight hours from now that we expect to hear from President Trump speaking to the nation from the White House at 9pm Eastern on the war in Iran. A U.S. official, White House official telling Bloomberg that it is going to be an operational update on that war and that he will reiterate the timeline he outlined in the Oval Office when speaking with reporters yesterday that this will continue for two to three more weeks.
- [01:27]
President Donald Trump
I had one goal. They will have no nuclear weapon and that goal has been attained. They will not have nuclear weapons, but we're finishing the job and I think within maybe two weeks, maybe a couple of days longer to do the job. But we want to knock out every single thing they have now. It's possible that we'll make a deal
- [01:48]
Kayleigh
before that and maybe he will be speaking about a deal this evening. There's so much we don't know about this address that we will bring you live, of course, here on Bloomberg TV and radio. Again, it's at 9pm Eastern. So the president will be getting in living rooms across the country in a fairly rare primetime address. Will he talk about troops? Will he talk about withdrawal? Is the market optimism justified? Just some of the questions that we have for the former vice president, I'm glad to say. Mike Pence is with us, as promised, former vice president of the United States and founder of advancing American freedom. Mr. Vice President, welcome back. It's great to see.
- [02:24]
Mike Pence
Thank you. Good to be back.
- [02:25]
Kayleigh
What's your anticipation, your expectation for what the president might say this evening? And are you worried that the US could leave the region with the Strait of Hormuz still closed.
- [02:36]
Mike Pence
Well, first, let me say I think every American should be proud of the extraordinary work our men and women in uniform have done over the last month, taking the fight directly to the leading state sponsor of terrorism in the world. Iran has been a source of violence and mayhem, has claimed American lives, lives of our all, and sown its malign influence across the region for 47 years. So I'm proud of our troops. I'm also proud that President Trump pulled the trigger and made the decision to move against Iran. Simply cannot allow Iran to obtain a nuclear weapon. But to be able to hit the regime and simply say that the time of you sowing terror across the region are over, I think was action whose time has come. But I will tell you, I'm pleased the president's taking his message directly to the American people in primetime tonight. Not that the administration has been shy about, you know, explaining their rationale for the war. But I think sitting behind the desk in the Oval Office, as I was present for the President to do a number of times during our years together, I think sends a message to the American people about our resolve, our support for our troops. I expect he'll speak favorably about this mission. He'll update the American people on our progress. But I also, I also expect there'll be a call out to our allies around the world about the need to come alongside America and make sure that we finish this job and don't just open, open the Strait of Hormuz, but that we make clear that the free world will no longer tolerate the violence and terror that has flowed from Tehran for 47 years.
- [04:29]
Joe
Well, on that call out to our allies, Mr. Vice President, making the ask now versus giving them warning and making the ask before these operations began, why would they answer the call at this time?
- [04:42]
Mike Pence
Well, because they're our allies, Kayleigh. And I'm particularly disappointed in the United Kingdom. I mean, really, Since World War II, we've had what we, what we call a special relationship with the United Kingdom, which, as I saw firsthand during my years in Congress and then when I was vice president, that when we go, the UK Goes. But not this time. And I think Keir Starmer has fumbled in ways that are not reflective of the deep and abiding ties between the American people and the people of the UK that being said, you know, there have been other allies that have stood with us. The German Chancellor has spoken boldly about America and Israel taking the fight, which was also their fight, to Tehran. But to see allies like Spain and even Italy restricting access of U.S. air power to either their airspace or their bases. It's just unacceptable. I expect, knowing him as well as I do, I expect you'll hear the President speak out about that tonight. But look, at the end of the day, this was not a moment where America started a war a month ago. This was about a president and American military and courageous Israeli forces being willing to try and end a war that's been being waged against America, Israel and the west for all those decades.
- [06:13]
Kayleigh
Beyond reconsideration were the two words that jumped off the page in the Daily Telegraph of London. The president suggesting that, in fact, he would not only consider pulling out of NATO, but is beyond the point of consideration. Are we going to hear about a withdrawal from this alliance tonight?
- [06:31]
Mike Pence
Well, I don't expect so. And of course, that would take an act of Congress.
- [06:36]
Kayleigh
That's right.
- [06:36]
Mike Pence
To, to step out of it.
- [06:38]
Kayleigh
I think that stopped this president before.
- [06:40]
Mike Pence
But look, when during our years, the president spoke boldly about the fact that most of our NATO allies were not living up to their own commitment to spend 3% of their GDP on our common defense. I was proud of the fact that before we left office together, the overwhelming majority of our NATO allies had invested some $120 billion in our common defense. In fact, NATO's ability to support Ukraine against that unprovoked invasion by Russia four years ago is largely owing to the buildup that we facilitated. So I expect there'll be some tough talk tonight by the president to our allies. The NATO alliance has literally kept the peace now for three quarters of a century and sending a message to our allies that we're in this together. They need to be together with America and with Israel. And my deep conviction and my hope is that we'll hear the president say tonight that we're going to, we're going to finish this fight once and for all. We're going to. I think it's imperative that our forces, Israeli forces, continue to strike until two things happen. Number one is that the people of Iran are able to rise up and
- [07:56]
Joe
reclaim much about that notion in recent weeks.
- [07:59]
Mike Pence
Well, but it's, I can tell you I've had the opportunity to meet people in the Iranian diaspora across this country and across the world. There is, there are people hoping and praying that we will create enough space by striking at the internal security forces in Iran where the people can take to the streets as they did in January at great personal risk and as they did 15 years ago in the Green Revolution. Kayleigh. But the other thing is, I Think it's important, imperative that we finish the job once and for all to restore deterrence on the world stage. Look, Beijing and Moscow are watching this conflict very closely. And if we were to. If we were to stop short, if we were to take anything less than really a fundamental change in Iran and its ability to project force against others and its own people, I think that would only embolden authoritarian regimes around the world.
- [08:55]
Joe
Even if it necessitates ground troops?
- [08:58]
Mike Pence
Well, I don't believe it will. But at the end of the day, I think allowing this regime, a terrorist regime, to retain power, even with new faces, would imperil America's interest, imperil Israel, and. And I think ultimately be a disservice to the lives that have been lost in the last month and to all those that have been lost over the last 47 years. Look, I. As I said, I'm incredibly proud of our armed forces and the job that they've done. I'm proud of the president for pulling the trigger. But now I think it's essential that we finish the job once and for all. And I'm hoping to hear that from the commander in chief to tonight.
- [09:45]
Kayleigh
When you think back to the first term and the conversations you had with the president, I'm just wondering if this was one that you were actively having then.
- [09:54]
Mike Pence
Were there.
- [09:54]
Kayleigh
Were there battle plans to deal with Iran at that point? And if that's the case, why didn't you decide to go in so many years ago?
- [10:02]
Mike Pence
Well, it was. You know, obviously, your military is always developing contingency plans. But I can tell you what we did in the aftermath of eight years of appeasement by the Obama administration was we. We got out of the Iran nuclear deal. We isolated Iran economically and diplomatically as never before. We unleashed our armed forces to take down the ISIS caliphate that was supported and sponsored by the mullahs in Tehran. And, of course, the president made the decision in early 2020 to take out the head of the Iranian Revolutionary Guard, Qasem Soleimani. Iran was weaker and more isolated than ever before when we left office. Sadly, the Biden administration reversed all of that, went back to begging for another Iran nuclear deal. And so, you know, our hope was that by bringing economic and diplomatic pressure and by strategically striking Iran, particularly its leadership during our time, that we'd set the conditions for change, change in that country's posture. When this administration came in the threat of a nuclear Iran, the president struck with midnight hammer a year ago and then unleashed the greatest armed forces in the history of the world a month ago. But again, this battle has been going on for 47 years since Iran. The mullahs came to power and took American hostages and then they took 240 service members lives when they attacked the Marine Corps barracks in Beirut in 1983. This is, this is a fight we've got to finish. And I hope the President conveys to the world that we expect our allies to come. Allies to come alongside and we're going to finish this fight.
- [11:44]
Joe
But it seems that the finish you envision, Mr. Vice President, is a military one, not a diplomatic one. Do you see no real prospect for a deal, for a successful negotiation?
- [11:55]
Mike Pence
Well, I would tell you that I think the military makes the conditions possible for regime change. Look, we've.
- [12:06]
Joe
The President is arguing it is a new regime. Well, look, he says they're more reasonable.
- [12:10]
Mike Pence
I know the President's reflected on new and reasonable voices and I hope he's right, I pray he's right. But the search for more moderate mullahs in Tehran has been going on for decades. We can't seem to find any. But that's not true of the Iranian people. I want to say with the global reach of this network, I've had the privilege to come to know people who fled Iran, whose families are still there. This is a, this is a very modern country, very western oriented. It's a very young country. It has great aspirations and a great history and enormous potential. Potential. I think, I think if we continue to use our armed forces and Israel continues to strike, we can create the conditions where the Iranian people will be able to take back their country and the world will be better and safer and more secure. And again, restoring American credibility, particularly after that disastrous withdrawal from Afghanistan, I think has to be on the mind of policymakers as well.
- [13:14]
Kayleigh
$4.06 is the average price for a gallon of gas today, Mr. Vice President. And we've seen a huge increase, obviously in crude oil, natural gas prices since this all began. And it makes it very difficult for the President to prosecute this war and affect his affordability agenda at the same time. You've seen this balancing act before. How long can our economy, how long can the politics of this war survive this cost of gas?
- [13:39]
Mike Pence
Well, I think that's what underscores the importance of tonight's address to the nation.
- [13:42]
Kayleigh
Does he need to address this?
- [13:43]
Mike Pence
Is explaining to the American people what the stakes are and why it is in the interest of the security of the American people, of our cherished ally Israel, and frankly of, of peace and security in the world for us to finish this job in Iran.
- [14:00]
Kayleigh
And you think prices will drop precipitously when we leave?
- [14:03]
Mike Pence
As the President, President says, I would expect that if we secure with the aid of our allies, the Strait of Hormuz or if we use force. I think one of the ideas that is most intriguing to me is to make it clear to the Iranians that even if they let their ships pass through the state of Hormuz, that the US and our allied forces may, may consider taking possession of those ships and steering them into allies harbors instead. So make it clear to Iran that they cannot control this strait or there will be costs directly as well to them beyond every cost that they've paid. But look, there's, there's lots of options on the table. I just think at the end of the day, hearing from the President tonight, the American people are going to understand better the stakes, understand the incredible progress our military has made. And I hope they hear the resolve of a commander in chief that says that we will not rest, we will not relent until the people of Iran have an opportunity to reclaim what I believe is their birthright of freedom.
- [15:20]
Joe
Well, so that is how the president is going to end his day, addressing the American people from the West White House. But he began his day, sir, at the Supreme Court, attending in a historic first, arguments in the birthright citizenship case. He of course, would like to see that right that is in the United States Constitution revoked. It seems that the justices are skeptical of that. It seems even the president himself knows that he's likely to lose this specific fight. So why wage it in the first place?
- [15:48]
Mike Pence
Well, look, the, the Supreme Court of the United States has never ruled on whether people that are here illegally and have children, that those children become American citizens. The famous case from the 19th century had to do with an Asian family that was in the United States legally at the time as a permanent residence, if memory serves. And frankly, it was a case about an openly racist law against Asians in the country that the court rejected when they recognized birthright citizenship. But this was long before the global transportation that we have. It was long before modern immigration issues had emerged. And so I'm hopeful the Supreme Court will take a careful look at this. I believe at the end of the day that, that our immigration system is broken. This administration has done, as we did in our four years extraordinary work securing the southern border of the United States. But the rest of the work remains to be done is fixing a broken immigration system, but having the Supreme Court clarify that unless you are here in a legal status. And, and as the supreme, as the Constitution says in a way that makes you subject to the jurisdiction thereof, is the 14th amendment that there ought to be, there ought to be limitations on, on this principle of birthright citizenship. And I hope they give it, I hope they give it every consideration.
- [17:28]
Kayleigh
Well, it wouldn't be the first time if this court tells us that it's the purview of Congress, that we've heard that in a ruling as well. And I'm wondering what you think about the status of your former House of Representatives when the Department of Homeland Security remains closed today and the president taking to truth social right before you walked in the studio to suggest that the solution may just have to be reconciliation. Reconciliation 2.0 could bring funding for DHS, could be an attempt, an attempted vehicle for the Save America act and so many other things. Is that how this finally ends?
- [18:00]
Mike Pence
Well, I hope it does end. Honestly. I just think it's unconscionable at a time that America is at war that Democrats in Congress are withholding funding for the Department of Homeland Security. I was there when we set up the department after 9, 11. I know the work that they do, it's far beyond airport screening. And the very idea that, that we have people who work at the very heart of protecting the American people here at home, are not being paid is just unthinkable to me. And so first and foremost, I express that concern. But look, you make a great point about the role of the Congress here. As you know, I spent 12 years in the Congress of the United States before I was a governor and a vice president. And I believe that we, we deserve an energetic legislature. You talk about birthright citizenship, That's a constitutional 14th amendment issue. But when I was in Congress, I supported a legislation that amended birthright citizenship, likely expected it to go to the Supreme Court. But I think the American people are well served when we have a legislative process that is working that's functioning. I get it. That close. Small majorities make that difficult. I think Speaker Mike Johnson has done yeoman's work in extending the tax cuts last year and in a number of the measures they've been able to enact. But the American people really want to see us get back to a Congress that is, that is working their will, that's going through the legislative process and particularly when it comes to the safety and security of the American people. Congress just needs to get back to work.
- [19:49]
Bethenny Frankel
All right.
- [19:49]
Joe
Mr. Vice President, thank you so much for joining us today. Of course, the former vice President of the United States. Mike Pence.
- [19:54]
Kayleigh
Stay with us on Balance of Power. We'll have much more coming up after this.
- [20:01]
Bethenny Frankel
This is Bethenny Frankel from Just Be with Bethenny Frankel. Most dog food is marketing, not nutrition. That is why Biggie and Smalls eat just food for dogs. Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference. Better digestion, healthier skin, more energy, dogs that feel better. My babies, if you've been on the fence about switching, stop overthinking it. What's more important than your furry babies and their health? Go to justfoodfordogs.com right now and get 50% off your first box. No code needed, just try it.
- [20:38]
Bloomberg Announcer
You are 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.
- [20:57]
Kayleigh
This is one of those days and glad you're spending it with us here as the president opens the day by making history, marching up to the Supreme Court to attend oral arguments and we might just hear from him shortly. They're telling reporters to be ready if he wants to speak during his Easter lunch. Easter lunch at the White House today, just one of the stops on the road before a 9pm Eastern address to the nation. We don't have a lot of these from this president. We certainly have not in this second term prime time address. And it's possible he will not be in the Oval Office for the traditional speech behind the Resolute desk. The president likes to use different venues around the White House. And we're going to be bringing that to you live here on Bloomberg with some sense, some sense of what he might say. This is the market. You heard Charlie. We're tearing again. And at new highs for the session. S&P 500 up over 1%. The NASDAQ up almost 2% here, certainly more than 1 1/2 percent. 365 point advance for the Nasdaq with a lot of good feels on this thing winding down. Oil prices are lower. Even though we don't know what the president is going to say. We need to be honest about this with an official at the White House, a senior administration official talking with Bloomberg News that the president will give an operational update on Iran tonight as opposed to a withdrawal announcement. Right. He will tout success in achieving goals in Iran, presumably the degradation of its military capabilities when it comes to ballistic missiles and further when it comes to its nuclear capabilities, which of course the president said we obliterated last year. He's talked about this more, though, just in just recent rhetoric suggesting that we had eliminated the country's nuclear abilities, even though as far as we understand, at least we have not seized the highly enriched uranium that still exists in Iran. This might be the most important point. The president will reiterate what he said yesterday, a two to three week timeline for leaving Iran. Nowhere here does that say a reopened Strait of Hormuz. Nowhere does that say troops deployed on the ground seizing Carg island, getting our hands on the uranium. Now, this is all on background. The president could say something different this evening, we suppose. We're told he's going to Talk for about 20 minutes. Will the market care? We talked to Eric Weiner about this. Is that enough? Does that sound like we're winding it down or is it good enough to say that we're preparing to wind down and we're not committing troops tonight? It's not for me to decide. Let's assemble our political panel. Bloomberg Politics contributors Jeanne Shann Zaino and Rick Davis are with us. Jeannie is our Democratic Analyst democracy Visiting Fellow at Harvard Kennedy School's Ashe Center. Rick Davis, Republican strategist and partner at Stone Court Capitol. Rick, what does the market need to hear? I feel like we're having a couple of different conversations here. The American people might have their own questions. The market may have its own hopes. Are we projecting optimism here in the market? And does it make you nervous about the president saying something very different tonight?
- [24:08]
Rick Davis
Well, Joe, first let me correct you and I hardly ever do this, but the President, if he speaks from the Oval Office, will be speaking from behind the CNO desk, not the Resolute desk, which has been sent out.
- [24:22]
Kayleigh
I thought they brought that back in. Is that still out? I thought they finished it, Rick.
- [24:26]
Rick Davis
Well, I don't know. Last time I checked it was cno, but maybe you're right. It wouldn't surprise me that I've been corrected once again.
- [24:34]
Kayleigh
So
- [24:36]
Rick Davis
the reality is this may be the first war we've played out in modern history that is basically being orchestrated by the whims of the markets. I don't think you can separate the President's decision making from what he's seeing play out in either the oil markets or the capital markets. It's really been some head spinning activity that clearly has been influenced by the economic, global economic activity that has surrounded the war for these last six weeks. So, so Yes. I mean, is there an indication that there might be a brighter resolution of this now that capital markets are getting better? But of course, we've seen some of the highest gas prices that we've seen in the United States in quite some time. I think what today was $4.06 so, well, well above the $4 threshold that we've been anticipating seeing. So, yeah, I think it's, it's, it's, if you read the markets, then I think you can get a sense of what the President is going to do tonight. And I think that a lot of his strategy right now is being predicated by how fast can we move to untangle ourselves from this conflict in order for the economy to recover with enough time to have an impact before the
- [25:57]
Kayleigh
midterms, two to three weeks. Jeannie, does that need to include an open strait of Hormuz? We talked to the spokesman for the American Petroleum Institute last year evening. He said, yes, it's gotta happen. Which means ExxonMobil, Chevron and all the other members are saying that, too. Mick Mulvaney also made that point. He can't leave without reopening the straight. Is that what's about to happen?
- [26:22]
Jeanne Shann Zaino
Yeah. Joe, now you know how I feel being schooled by Rick Davis, which I get on a daily basis. So I'm glad you joining me. It is, it is unbelievably irresponsible for the United States to leave that strait closed. And the president has this idea that we can break it and presumably just walk away. I would be stunned if the markets are open to that idea because the impact of that economically would be devastating. I suspect there's a couple of things what the President, I think is going to do is he's going to do what he did yesterday, which is declare a victory, and he's going to talk about defeating the Iranian navy. Well, you know, that's a little bit like sending an NFL team into like the nearby high school and saying, whoa, they really, they really got the best of them. That was never a strong navy. Their powers are asymmetric. That's how they shut down the strait. He's going to talk about decapitating the regime. But of course, we've had regime change in the wrong direction. We have a more hardline regime in power. So what he's going to talk about is that kind of stuff, victory. But what he needs to talk about is how he is going to step back from this, how he is going to de escalate without leaving things worse than we found them. And in Order to do that, he needs to have that straight open, which is why he spent so much time berating our allies and threatening last night to leave NATO because he is so frustrated by the allies there who won't take up what he started and finish the job for us.
- [28:06]
Kayleigh
We've discussed evolving objectives here, Rick, and Jeannie and I find it interesting what we've settled on here in the past. What, I don't know, 48 hours, the most recent news cycle has, has brought this down to a crystallized four or five points. Destroying the ballistic missiles that I mentioned. Rick. Annihilating the Navy. Jeannie just referred to ensuring terrorist proxies can no longer destabilize the region and guarantee that Iran cannot get a nuclear. Your weapon. When did the strait fall off that list? Or was it never on there?
- [28:39]
Rick Davis
Well, I think you got to separate achieved objectives of this conflict versus the reasons we got into it.
- [28:49]
Kayleigh
Okay.
- [28:49]
Rick Davis
I think you can't leave out the fact that the president himself talked about the imminent threat of the Iranian government pursuing a nuclear weapon.
- [28:59]
Jeanne Shann Zaino
Right.
- [28:59]
Rick Davis
That was, that was out there. And it was a, it was almost a precondition for the, for the attack, too. I don't think this administration ever inoculated the public to the idea that the strait might get closed. I don't recall a single instance before the conflict started that they said, and by the way, if we do go to war with Iran, we'll make sure that the Strait of Hormuz stays open. We didn't hear that at all. And so now this is after the fact. We have an economic dislocation with the straight of Hormuz being shut by Iran, who can do it with very little capacity that they have left, effectively holding the entire world's oil supply or 20% of it, for ransom. And so this is a ransom demand, in my view, not a, not an accomplishment or, or a detriment to the, to the negotiations about settling this war.
- [29:56]
Kayleigh
You know, Jeannie, the president posted this morning a truth social. He won't accept the cease fire, which of course, Iran now says was never offered until the strait is reopened. Do we have to parse the words there? Because that doesn't mean we won't leave before the strait is reopened. It's about whether we actually codify a deal and, and react to what Rick said. Is this not what we should be expecting?
- [30:23]
Jeanne Shann Zaino
You know, CENTCOM warned, the President, warned the administration prior to this excursion, as he likes to call it, that they had the ability to close the strait. And the President based primarily, I Guess on what happened in Venezuela, said, oh no, they'll surrender before that. That has not happened. And you go through the list of those five new objectives or renewed objectives, and you have to really think about how many of those have really been met. Have we really dealt with the proxies? No, we have not. We still have the Houthis threatening to close the Red Sea. We haven't decapitated the regime. We haven't destroyed it. This is a regime that is undecapitated. That's a new word, Joe. You can't decapitate a regime as far as I know. You can't decapitate a regime because it's not built like a typical totalitarian regime. This is a deeply embedded regime. It's not going to be one like North Korea. You take off the head and the whole thing falls. Now we know that. So, you know, you go through the ballistic missiles, they still have that capability. The nuclear program, we are in worse condition today. They have half a ton of unenriched nuclear material sitting there. If we walk away, what happens to that? So even, even this five list of new objectives, pushing aside the straight, we haven't achieved them. And you know, it's hard to know what to make of the President's constantly changing ideas and thoughts that he seems to share with us on real time via Truth Social and in his conversations with reporters and elsewhere tonight. What I think the President needs to do is tell us, is he going to do something that's going to make the United States look incredibly weak, walk away with the straight closed and de escalate this thing, or does he have another path to de escalation that we don't know about? Or is he going to escalate and use these troops that are sitting there or on their way, thousands of them, to go in and then be sitting ducks in some of these islands and get us into like a Vietnam scenario where you're going to have Iran attacking our troops from the mainland. What do we do then? We slowly go into Iran and try to destroy a country with 93 million people. These are all bad options. And the President should not tonight, which I think he will do, tout about how he is winning and we have won. He should give us a realistic view as to how we get out of this very bad position that he's gotten us into in the Middle East.
- [32:53]
Kayleigh
I'm asking you guys questions that cannot be answered. We're all kind of asking rhetorical questions here in our conversation, Rick, and our remaining moment. Are you allowing for the possibility that President Trump says, you know, upon my order, troops are now moving into Iran or have already to seize the highly enriched uranium.
- [33:13]
Rick Davis
Yeah, I don't think you can discount it. Those, those troops, the special forces, the green berets, the 82nd Airborne, they're there for a reason. And if they're there, it's easier to use them if they're not. And so it creates the opportunity for the president and his general staff to mobilize at a moment's notice. And if that's the case, then you cannot discount the president making use of this very potent force for the nuclear material, for opening the strait, for many other objectives that they might have in this war.
- [33:47]
Kayleigh
We've got a lot to learn here yet today. And that speech is several hours from now, 9pm Eastern. Stay with us on balance of power. We'll have much more coming up after this.
- [34:00]
Bethenny Frankel
This is Bethany Frankel from Just Be with Bethenny Frankel. Most dog food is marketing, not nutrition. That is why Biggie and Smalls eat just food for dogs. Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference. Better digestion, healthier skin, more energy, dogs that feel better. My babies, if you've been on the fence about switching, stop overthinking it. What's more important than your furry babies and their health? Go to justfoodfordogs.com right now and get 50% off your first box. No code needed. Just try it.
- [34:37]
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.
- [34:56]
Joe
We haven't actually had to wait until 9pm to hear from the President today. He's been quite active on True Social. Most recently Joe posting about funding the Department of Homeland Security, ICE and CBP specifically. Looks like he's advocating for reconciliation. We've also of course heard from him regarding the war in Iran, that Iran has requested a ceasefire. He needs to see the Strait of Hormuz open first. But he too weighed in on the case that was being heard in the Supreme Court today around birthright citizenship. Posting on True Social a short time ago. We are the only country in the world stupid enough to allow birthright citizenship. It's not actually true. There's some 30 odd countries that also have laws like this. But it does seem that the President is reading the writing of the wall on how this court is going to rule on this one.
- [35:39]
Kayleigh
Yeah, I don't know how stupid this will seem once the court rules, but apparently there is some skepticism surrounding the president's case here and that is what we expected. Bloomberg's Tyler Kendall spent the morning at the Supreme Court as the president made history, attended the arguments in person, did not talk to reporters while he was there. But Tyler talked to a lot of other folks. It was a rambunctious, very loud, noisy crowd. A lot of protesters showed up just for the actual arguments. As the justices question whether this executive order issued by the president could be squared with the Constitution and federal law, Tyler's made her way back to the White House. Let's see how things are going right now with of course, the primetime address set for 9:00pm Eastern Time in that building right behind Tyler. Did the president have any other opportunities to weigh in here? Tyler, do we expect to hear him talk about this tonight when it comes
- [36:35]
Tyler Kendall
to the birthright citizenship ruling or Iran? Because of course, Joe. Well, birthright citizenship beyond what Kelly just read with the president's post on Truth Social there, that's really all that we've heard from him. We knew that he had an Easter lunch today at 12:30pm Eastern. He has a 3pm policy meeting perhaps that will open up to reporters. Other than that, our eyes are just absolutely trained on 9pm Eastern tonight. I can say at the moment it is a lot quieter here where I am now compared to when you and I spoke last hour outside of the Supreme Court. And we really saw President Trump make history here, becoming the first sitting US President to attend oral arguments in the modern era where these justices are deciding what really is a key policy and a hard line immigration tactic that this White House is doubling down on. So one to watch out for for sure. As you guys have mentioned on the program, though, today was just to get those signals from the justices on how they could be voting. Bloomberg News assessment is that those justices were skeptical of the arguments from the Trump administration when it comes to President Trump's executive order seeking to bar US Born children of undocumented immigrants from gaining citizenship. But at this point point that the case isn't decided. We're expecting that to happen, though, before the end of June when the court's term is ultimately up.
- [37:56]
Joe
All right. So the justices obviously have some decisions to make and some time to do so. The president, arguably Tyler also has some decisions to make on a shorter timeline when it comes to Iran. He told reporters last night two to three more weeks of this conflict, should we expect echoes of that in his address tonight.
- [38:12]
Tyler Kendall
Scaley at this point, a White House official tells us here at Bloomberg News that this is going to be an operational update, in their words, when it comes to what is happening on the ground in Iran. We are expecting this to be a tactical update as this White House has really been trying to tout the tactical successes in President Trump yesterday, reiterating that the US Main goal here is to ensure that Iran is unable to get a nuclear weapon. But the question about what a potential off ramp could look like has really been fueled hold over the last 24 hours because you had President Trump yesterday suggesting that he does not need an agreement to be in place in order to cease US Military operations in Iran. But then, of course, we heard from him earlier today demanding that the Strait of Hormuz be open before the US Agrees to any potential cease fire. Iran has pushed back that they have even offered that a cease fire could be on the table as we try to delineate where potential diplomatic talks stand now, as you both well, no, the White House maintains that negotiations are indeed ongoing. We heard from Secretary Pete Exif just yesterday saying that they were gaining strength, though at this point, Iran maintains that they are not in these formal Talks with the U.S.
- [39:18]
Joe
all right, Bloomberg's Tyler Kendall live at the White House, where we will be hearing from the president later. Thank you so much. And of course, a big question on the market's mind is how will the president if at all address the reopening of the Strait of Hormuz? This is an issue specifically that the oil market is fixated on, but of course has broader ramifications for the global economy. And it's something we discussed on Balance of Power last evening with the CEO of the American Petroleum Institute, Mike Summers, whose of course, member companies are in theory benefiting from higher oil prices, but who issued a warning about the necessity of reopening the strait.
- [39:50]
Mike Summers
The bottom line is we have to get the strait open and we have to get it open soon. If the Strait of Hormuz remains closed, prices are going to remain at an elevated level. The pain on consumers is just going to be too high. So the top priority has to be to get the strait open as quickly as possible.
- [40:08]
Joe
So for more on this, we turn to Tom Close, a chief energy advisor for Gulf Oil. He was here with us on Bloomberg TV and radio. Tom, I'm curious if you agree with Mike's assessment when we have the president saying things like as soon as the US Leaves the street will automatically Be open. What's the consequence if it is not?
- [40:27]
Tom Klose
I think the consequences, we go higher and oil prices become an abstraction. And I would probably counter some of the things that the President saying with the notion that, you know, we've seen a regime change and the regime change is not in Iran. The regime change is, is in the people that operate in the strait of hormones. And even if there is peace in our progress on peace, we're probably looking at weeks of that strait having at least some sort of modified traffic. So today is an interregnum. Today maybe look back as a day where, well, the President jawbone the market down, but I think the market's going higher.
- [41:11]
Kayleigh
Wow, interesting. Well, Tom, it's always great to talk with you because we have so many armchair quarterbacks when it comes to the energy market here. And you actually know what traders are saying, what the sentiment is in the oil pits. If the President simply reiterates two to three week timeline, for instance, and does not actually get more detailed on withdrawal or reopening of the strait, how disappointed might this market be?
- [41:38]
Tom Klose
I think, you know, I created a word earlier called hyper parabolic, you know, kind of hyperbole plus parabola. And I think that's what we might be looking at shortly because we've lost somewhere and you know, we're starting to see the barrel counters among the big banks and some of them are estimating that we've lost 500 million barrels of crude oil, refined products and petrochemicals. I mean, to say that's unprecedented is to say that night is unprecedented in daylight. I mean it's just an incredible, incredible loss. And that was the buffer. That was the buffer. And you could argue that that's why crude oil prices didn't really go parabolic. But if it looks as though we're going to have intermittent traffic or obstructed traffic in the month of April, we're in trouble.
- [42:30]
Joe
Well, the President would argue that the US can help with that. On True social Yesterday he was saying even when it comes to products like jet fuel, the US has plenty of it. Allies can either get it from us or go take it themselves in the Strait of Hormuz. To what extent is US production able to compensate here, Tom?
- [42:48]
Tom Klose
You know, Kelly, this is a three ring circus. And until now, two of the rings have just seen incredible price spikes, that being Asia and Africa and Europe. Now it looks as though the United States or North America may join the rings in the past couple of days. I can tell you that in the last three years, I Never saw any cargoes put together in New York Harbor. You know those big tanks you pass on the way to the city, they never load for export, but we've seen five or six cargoes loaded for export, a couple of them jet fuel and a few of them diesel. It's wonderful and it's great for capitalism to send it overseas where the prices are higher. But also ultimately it may end up biting us in the behind.
- [43:33]
Kayleigh
Really interesting. I want to get into the price of gas here, Tom. We're at $4.06. If you see another parabolic move in oil prices, what's the next stop for gas? And I realize this is a national average. The price being paid in California is a lot different than what I'm paying in Virginia, for instance. But how worried are you about this spike continuing even if crude oil does not?
- [44:00]
Tom Klose
I think that they have some levers they're going to pull, even though those levers may not make sense. For example, I do think that we would see a federal tax holiday and that's 18 cents of wherewithal. Then I don't think you'll see anything like the President asking for people to make sacrifices. Even though you can make a compelling argument that if you pay a little bit more for fuel now and you have a nuclear free Iran for the next 50 years, that's a pretty good swap. So it's, it's going to be really interesting. I can tell you, Joe, that one of the numbers that frightened me today came in the Energy Information Report and it showed gasoline imports on the east coast of less than 100,000 barrels a day. That number probably doesn't resonate with a lot of people, but it's, that's about 20% of what we're used to. And the east coast, which is of course houses the CME contract for RBA futures, is a market that we have to watch very, very closely. If we're not going to get European or foreign gasoline into the Northeast, we could see tighter supply here and that could really lead to higher prices throughout the continent.
- [45:12]
Jeanne Shann Zaino
That. Well.
- [45:14]
Joe
But then we get into the question as to whether or not at some point if higher prices are going to be the cure for higher prices. Tom, at what levels do you expect material demand destruction to kick in?
- [45:24]
Tom Klose
Somewhere between four and five. We're at the Ted Williams number now. 406, that's a dated reference, but I'm an old guy. I think somewhere between 450 and 495 or whatever you do get into demand destruction. Now, what one thing is going to help offset some of the gasoline demand destruction. And that's the price of jet fuel, the high fares and the nonsense that you have to go through when you go to airports. You could make a strong case that there might be a little bit more on the road travel this year than there will be in the airways. I don't know about you, but I'm not looking forward to the next time I go to an airport. Even though I booked it and got the fares a month or so ago.
- [46:05]
Joe
I'm supposed to go to the airport with a seven month old baby tomorrow. I cannot tell you how much I'm dreading it.
- [46:10]
Kayleigh
This is going to be fine. I just know he's going to be a great traveler. Tom, when you think about all of the derivatives though, which one do you worry about the most? Is it the doubling in jet fuel? Is it gasoline at $4 or should I be asking you about diesel or something else?
- [46:24]
Tom Klose
No, I think jet fuel is going to be okay. And I think, you know, one of the big helps there is that we've got got this huge new refinery in Nigeria that probably can't make gasoline for North America, but could make a lot of jet fuel. A typical refinery might make 9% of its yield on the jet fuel side. So I think that'll correct. It's just that that was a product that was so low in storage. We don't store jet fuel a lot. You store gas oil and heating oil and diesel and to a certain extent you store gasoline. Although you have the problem of the winter, gasoline is inappropriate for use in the spring and summer. And by the way, you're going to see that in the Northeast. If you think that prices in the Northeast are moving up a little bit higher than normal. That's because they are. And it's because we're switching from the winter blend where you have a lot of cheap components, into the summer blend where you don't.
- [47:17]
Joe
Tom, we have just about a minute left here. Just quickly, if, if for whatever reason the US isn't able to secure secure the reopening of the Strait of Hormuz, if Iran is successful in implementing fees to transit the strait of some $2 million, how would that translate into the actual price of the product on those vessels?
- [47:35]
Tom Klose
I think that if we have an impeded Strait of Hormuz in the month of April, we are looking at 130, 140 and then all sorts of numbers. There is some symmetry in the market that indicates a possibility of going down as high as 200 to 240 how they're going to implement that, I don't know. Do they have an easy pass in the Persian Gulf? Maybe they can do something like that, but it's likely to be wrought with corruption and problems or whatever. So we really need the strait to be reopened. I don't agree that often with Mike Summers from API, but I agree with him on that.
- [48:13]
Kayleigh
Says a lot from from Tom Klose. We learn a lot every time we talk to Tom and we thank you so much. 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
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