Loading summary
LPL Financial Advertiser
With LPL Financial, we provide the services to help push you forward when it comes to your finances, your business, your future. The only question should be what if you could Paid Advertisement Anna Kendrick is
Podcast Announcer
not a client of LPL Financial, LLC
Joe
and receives compensation to promote lpl.
Podcast Announcer
Investing involves risk, including potential loss of principal.
Host
LPL Financial LLC Member Finras IPC
Podcast Announcer
Bloomberg Audio Studios Podcasts Radio News. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5:00pm p.m. 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.
Joe
So I hope you've had a good week and thank you for meeting us here at the threshold of the weekend. We do join you with news the President is in the Sit room right now. We don't know who he is with, but he did write on Truth Social Media that we apparently have some progress here. I must agree, sorry, Iran must agree, he writes, that they will never have a nuclear weapon or bomb. That's not new. He says the strait must reopen, mines come out of the water. And then he goes on to write, ships caught in the strait due to our amazing and unprecedented naval blockade, which will now be lifted, may start the process of heading home. Say hello to your wives, husbands, parents and families from me, your favorite president. He talks about the nuclear dust. The enriched uranium buried deep underground will be unearthed, he writes, by the US in close coordination in conjunction with the Islamic Republic of Iran, plus the International Atomic Energy Agency and destroyed. No money will be exchanged, he says, until further notice. Other items of far less importance have already been agreed to. I will be meeting now in the Situation Room to make a final determination. Well, how about that, just in time for the lunch hour. Wall street reaches new highs and we have two smart voices to help us understand exactly what the President is talking about here today. Of course, Tyler Kendall is back, Bloomberg's Washington correspondent. And we're joined as well by Adam Farrer, Bloomberg Economics Senior Geo Economics Analyst, back with us in our D.C. bureau as well. Great to have you both here. Tyler, you cover the White House, so let me start by asking you, do we know anything else about this meeting and who he is meeting with?
Tyler Kendall
Well, it felt like President Trump kind of buried the lead there.
Joe
It was the last line, a very long missing.
Tyler Kendall
Considering that we could soon get some sort of decision. At this point it's unclear what timeline we're really looking at. We do know that earlier this week President Trump himself said that he wasn't satisfied yet with where negotiations stood. And we're getting some mixed reports out of Iranian state media, too, for what it's worth. Seeming to indicate that Iran isn't fully on board with what Western media outlets have been reporting is in this potential memorandum of understanding, which, as you outlined, would see first this prioritizing of reopening the Strait of Hormuz, which means no tolls, no harassment, and that Iran has to clear those mines within 30 days. Then the US would lift its naval blockade, and then only once those components are in place, we would expect those more formalized discussions around any potential curbs on Iran's nuclear program. What happens to that stockpile of highly enriched uranium? To start, there's a lot that the US Wants to see in a deal. But at this point, we also know, Joe, that the White House wants to pursue diplomacy and maybe that's going to push the administration, get this deal over the finish line.
Joe
Let's pull an oil prices lower. New York crude, $87 a barrel. Brent is just shy of $92. And Adam, I'll tell you, it's kind of hard to tell if there's anything new here. We heard from Mohammed Galloba, the Speaker of Iran's parliament, who's always ready with a bucket of cold water. We have no trust in guarantees or words. The only criterion is action. No action will be taken before the other side acts. Tyler just outlined how long it would take if this all ended today. And we don't have a sense of whether Iran is on board with this note, do we?
Adam Farrer
No, not at all. And I think, you know, we have to take a step back and think about what we, what we know and what we're kind of inferring. Right. It is, it does appear clear from the messages and the tone and both sides in Iran and in Washington that we're moving closer towards some form of agreement. And it does look like some sort of temporary step or interim agreement that leads to the actual negotiations. Right. We've separated these negotiations, but at the same time, we've also been here before. In fact, just last Friday when we, the President was talking about a deal imminently coming, and yet here we are a week later and we still don't have that. And the core issues that were that that the President theoretically went to war over don't seem any closer to resolution. Right. This question of Iranian enrichment and the disposition of this highly enriched uranium, which if the deal moves forward, as we're seeing right now, would actually push that negotiation off further and raise further questions on whether they can actually reach a prolonged, prolonged deal that limits the chances of a return to conflict, which is really what markets and the region are looking for, is some form of stability and certainty for the movement of goods through the strait and general security in the region.
Joe
Really interesting that we also have Pakistan in town. Tyler, of course, the mediator here, the foreign minister from Pakistan in Washington to meet with the secretary of state, Marco Rubio. I'm guessing that's not a coincidence if the president's feeling better about things.
Tyler Kendall
Probably not. And this administration has been very nice in their words and crediting of Pakistan in being a key mediator in this. It has been pretty remarkable how much our regional partners have really lunched their voices to urging this administration to find a diplomatic solution. Also pretty remarkable how we also heard the president seem to suggest, and then perhaps walk it back a little, that we would need to see some of these regional partners like Saudi Arabia and Qatar sign on to the Abraham Accords to be part of any finalized agreement. It's definitely something to watch. I was also going to add amid questions about what is in this memorandum of understanding, we should also just note the administration is also keeping up that economic pressure campaign. Joe, we had the treasury secretary yesterday say that it has a warning to another regional partner, and that's Oman again, saying Oman, they are going to sanction any actor that is even remotely involved in facilitating tolls in the Strait of Hormuz with some really harsh sanctions. So the regional dynamic, of course, always would play into any potential final deal
Joe
day after the president said in the cabinet meeting will blow him up. I mean, is, is Oman still an ally? I'm asking seriously.
Adam Farrer
Yes. I mean, Oman is an important partner for the United States and played a key facilitation role in talks prior to this war is still an important role. I think here what we're seeing is the Omanis being very quiet as the Iranians speak to the question of tolls in the strait. And you know, certainly I think it caught folks off guard when the president, you know, directly threatened Oman. And that is certainly goes into a long list of complaints from the Gulf countries about how they've been treated throughout and before this conflict. One thing I just think it's important to to add here though, as well is that the president clearly is also worried about his internal domestic audience and not only the public, but, you know, hawks in the Republican Party that have pushed back really hard against, you know, what they saw as the initial outlines of the deal presented last weekend. And, you know, you've seen some reporting now specifically highlighting the president is just looking for a deal that can't be construed as the same as or worse than the Iran deal that the Obama administration negotiated or jcpoa. And the sad reality, though, is right now, many of the issues that are on the table, and at least what we've heard would put in similar ground to JCPOA in this question of not actually ending enrichment for, you know, in perpetuity and this disposition of highly enriched uranium in the long run. So we don't have details, so we shouldn't judge that as of this time, but it's clear the president has that in the back of his mind, having railed against JCPOA and actually pull the
Joe
US out of it, and having heard from the likes of Roger Wicker, Lindsey Graham and the rest, it's an interesting bind that he finds himself. And I'm just looking at the schedule for the president today. Tyler, I know you're going to be back over there later on. He's got a bunch of closed events. There's nothing open right straight through the day, policy meeting, executive orders, executive time. And he's staying in town this weekend. Should we read into that at this point?
Tyler Kendall
We'll have to see. I mean, the president has been already posting on Truth Social, so it's not like we haven't heard from him today that we likely wouldn't.
Joe
Later today, I guess we invaded Venezuela from He was down in Florida for that, right? So he can do this from anywhere.
Tyler Kendall
Yeah, he was at Mar a Lago. That seems like so long.
Joe
Well, it was pipe and drape while we started attacking. He says seven hours or seven minutes, whatever. We took him over. But we have found Iran to be a very different situation. Whether or not the oil from Venezuela helps to make up the gap here is another question. But I appreciate both of your insights today. Adam Farrer and Tyler Kendall getting us started here on the Friday edition of Balance of Power. Find Adam's analysis on the terminal and online. You find Tyler right here on Bloomberg Radio and of course on Bloomberg tv. Stay with us on Balance of Power. We'll have much more coming up after this.
IBM Advertiser
The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the Work that moves the business. Let's create smarter business. IBM.
Podcast 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.
Joe
The speaker of Iran's Parliament, Mohammed Galloba, quote, we have no trust in guarantees or words. The only criterion is action. No action will be taken before the other side acts, unquote. So the ultimate game of chicken continues. And we're joined now on Bloomberg by Jane Harmon, the former congresswoman from California, Democratic congresswoman, former ranking member the House Intel Committee, and author of Insanity Defense. Why our failure to confront front hard national security Problems Makes us Less Safe. Jane, it's always great to have you. Is there anything different today? I know the market is keying off these headlines every day and hoping for the best. When you hear a post like this or read a post like this from President Trump, does it make you optimistic for a breakthrough?
Jane Harmon
No.
Jane Harmon (continued)
I think we've been hearing things like this over the long period since this war of choice commenced in late February. And I don't think anything much is new. I think the, to use the metaphor that President Trump uses, Iran has a lot of cards and so does Israel. And both of them have to be in a place where it's to their advantage to end this or at least slow this down. It's to our advantage to do that, but I don't really think to theirs at this point. I also don't think we have any really good military options because if we now bomb the energy facilities of Iran, which would be the next logical target, they're going to attack the energy facilities of the entire region. And that will probably shut down even more oil and other resources from reaching the world and make the markets even more closed. So when you're in a hole, stop digging. I am for some way to work this out. I was not for this war, nor was anybody else that I really know of other than the administration or maybe just the president. But I would like this to have a happy ending, but I don't see it yet.
Host
Well, and as you talk about the idea that if the US Were to pursue a military option, that it would spur Iranian retaliation, are we to believe, Jane, that Iran still does have the capacity to conduct such operations? When we continually hear from the administration how most of their military apparatus has been destroyed?
Jane Harmon (continued)
I know they don't have a navy, they don't have Missiles, et cetera. And that is true, that we have degraded their capacity, but they do have drones and they're manufacturing more drones right now. And we've learned that modern warfare can be enormously effective using these small autonomous vehicles. And Iran has. Ukraine has taught us that. So I. They're still in the game. Plus the regime has not been replaced. Their third level, as Trump calls it, is very hard line and. And playing this game of cards pretty well.
Joe
Interestingly, today, Pakistan is in town. Jane, of course, an important mediator here in negotiations, and the president has been speaking very affectionately toward Pakistan and the role that it's played in this entire saga. The foreign Minister in Washington to meet with the Secretary of State, Marco Rubio. Across town, Israeli and Lebanese officials in D.C. today for talks on their cease fire. Could we look back on these meetings as an important inflection point?
Jane Harmon (continued)
I would like to look back at them or forward to them as an important inflection point. But again, I don't see it. Israel has shown no real signs of backing down from this massive bombing and clearing space in southern Lebanon. And it's to Israel's advantage or Bibi Netanyahu's advantage to keep this war, that particular war going. There's no real progress in Gaza that I can see. Again, these are ceasefires, but they don't really cease. Same thing in the Strait of Hormuz. I would point out that it's reported that Pakistan was asked to join the Abraham Accord. This is another thing in play, and it really was a good initiative of the Trump administration, but Pakistan apparently has turned that down. And let's also understand that Pakistan has nukes. So this is very complex. Something I would suggest is that we get some very experienced, technically experienced, negotiators in the room, which I don't see. And I just point out one more thing. It's not just that the JCPOA, the Iran nuke deal from 2015 was negotiated by experienced people over two years, but it's also that it was called the JCPOA joint. The five countries, the P5 permanent members of the UN Security Council, plus Germany, were all partners to this deal. That would make another deal, if we ever make one, much more effective, to bring back partners and allies. I know that's not a popular thing to say in this administration, but it was a mistake to me to push allies and partners away.
Host
Jane, I want to go back to the point you were making on an expansion of the Abraham Accords, because as you were outlining the conduct, Israel is still engaged in Obviously is a very steep hurdle for some Gulf countries who want a two state solution before they're willing to sign on to the accords. I noticed in the true social post the President put out today, despite earlier this week suggesting an expansion of the Abraham Accords would need to be part of any deal. He wasn't sure a deal would be worth it if that was not included. He didn't make mention of it today and I wonder if we should read
Jane Harmon (continued)
into, well, see what he says tomorrow. But I actually think that's a very good idea to expand the Abraham Accord. Unfortunately, this President doesn't take yes for an answer. Let's just kind of look at it. The JCPOA could have been mended, not ended, and be a stronger deal now for which he could take credit. The Abraham Accord, which only has two signatories to my knowledge, could be much bigger if he had not offended all of our partners and allies in the region. And the 12 day bombing with Israel of Iran last year achieved some real results and that should have led immediately to, I think, very aggressive negotiations with an experienced negotiating team and we'd be much farther along than we are now.
Joe
Jane. There's an expectation that the next time a War Powers Resolution hits the floor of the House, it's going to pass. The speaker in fact pulled the last one before recess because it looked like it was on the march to actually have the votes to pass. There are questions about what will happen if indeed there are the votes for a war powers vote and authorization for the use of military force, depending on what form this takes, whether the White House in fact will abide by this or set up a grand debate before the Supreme Court. What do you think?
Jane Harmon (continued)
Well, I applaud Congress. You know my acronym now, Joe, is Cacao. Congress always chickens out if they actually do this. I mean, some Republicans are now defecting. But it's not just invoking the War Powers act, it's then what will Congress do to put guardrails around this war, including ending it? What will Congress do about this metastasizing budget for this war? And you're right. Will Trump abide by anything Congress says or buck this up to the Supreme Court? There is some claim that the War Powers act is not constitutional.
Jane Harmon
See.
Jane Harmon (continued)
But you know, to be celebrating the 250th anniversary of our country, which has had three robust branches of government with Congress basically inactive, the President very active and the Supreme Court apparently quite partisan, is a real disappointment when you think about what the founding Fathers would have dreamed for us
Jane Harmon
all right.
Host
We will leave it on that note. Former Democratic Congresswoman Jane Harmon of California, of course, ranking member of the House Intelligence Committee and also author of Insanity Defense, why Our Failure to Confront hard national security Problems Makes Us Less Safe.
Podcast 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 and staff. Listen on demand wherever you get your podcasts or watch us live on YouTube.
Host
Yes, there's the question about the budget reconciliation bill Republicans are trying to get across on partisan lines that's being derailed by the anti weaponization fund of the Trump administrations. There's also questions around a war powers resolution. But they also are going to have to deal in relatively short order with questions around appropriations because, of course, the fiscal year is over on September 30th. There's an August recess and a campaign season that they have to take into account. And we know the Pentagon wants a lot of money, more money, in fact, 50% more than the trillion dollar budget they already have. One and a half trillion dollars is the defense budget that has been requested by President Trump. And that's even in addition to a potential supplemental request that could be put forward to Congress because of the costs related to the conflict in Iran. So that's a really big price tag. It's actually something we got into on this program yesterday with Democratic Congressman Mark Pocan of Wisconsin. And this is what he told us about this proposition.
Mark Pocan
And the president wants a trillion and a half dollars for essentially defense contractors. This isn't really money that's going to the military. A small part of it is, but most of this is going to defense contractors. We need to get a better grasp on how much we're spending on defense, period. I don't think they have a game plan of what they're doing. And I think everyone is actually seeing that happen in real time.
Joe
Well, let's break this open a little bit because starting next week we're going to be hearing a lot more about it. With lawmakers back in town, the markup of these bills and the debate that will follow. As Kaylee mentioned, we're talking about a trillion and a half dollars. Most of that would come through a piece of legislation and the rest a separate piece. Wayne Sanders is Bloomberg Intelligence senior defense research analyst, retired army colonel. And with us now ahead of our conversation with Zach Shore, who runs a defense contractor called Hermeus. And they're going to be an important part of this conversation at the Pentagon. Let's start with the colonel. Right now, as you understand it, Wayne, a trillion and a half dollars will buy us what in terms of ongoing operations versus replenishment?
Wayne Sanders
I would say it's really looking at both. Right. For a very long time, we've always had a large amount of stockpiles that have prepared us for future near peer engagements. And so when we think about a potential adversarial consideration for 2027 against China or others, you have to really start looking at that from that stockpile perspective and go, hey, we have what we need. Now over the last few years, obviously with the Ukraine conflict with Russia as well as Iran and then a focus on the Indo Pacific, you really have to start looking at that and saying here is, here is what we've used up specifically, especially when you start looking at some of these exquisite munitions. But you also have to keep up with the technological advancements based off of it's always going to be a security game. As China gets better at defenses, we have to get better at offense defense. As we get better at our defenses, an adversary has to be able to get better on their offense. So it continues to be a game and right now things continue to get more expensive and the scalability becomes an issue.
Host
Well, on that scalability, it's also a question of speed. White Right, Wayne. I mean just in the last few months we've been expending munitions far faster than we can replenish them. How do you accelerate that cycle?
Wayne Sanders
No, they have, they've actually done a very good job. The Trump administration as well as the, at the end of the Biden administration's really identified and said the defense contractors need to be able to step up their game and they need to be able to provide additional scalability for, for their manufacturers. So look at Lockheed, lockheed for the PAC 3 interceptors, which is the main interceptor for the Patriot system, which has been so successful all over the world, they produce about 650 interceptors a year. And so part of it is that the government has to produce a demand signal that is enough to allow these companies to be able to invest in their, in their own programs. You're seeing a lot of that come out of Congress now. You're seeing a lot of it come from the administration in these framework agreements. And so the demand signal is actually pushing out enough so that they go, okay, I know that I'm going to have five to seven years worth of demand so that I will actually do irad. I will actually bring some of these things things in. And Lockheed's example I'm going to stick with that one $9.8 billion specifically to grow their capacity to 2,000 interceptors over the next seven years. Now, when you start looking at that, that's 14,000 interceptors, that's about 56 to 60 billion dollars of sales over time. Why is that important? Obviously, if they only need to invest 6 billion into that, into their infrastructure to be able to gain an additional 50 to 60 billion in in sales, the math is going to add up. And in the past, there hasn't been enough of that demand forward out for them to do this. And now you're actually seeing that both with Congress and with the Trump administration.
Host
All right, Colonel, thank you so much as always. Colonel Wayne Sanders, senior defense analyst for us at Bloomberg Intelligence. Thank you so much. And as we consider where all of this defense spending is going and the technologies that it's going to yes, we talk often about the big, big government and defense contractors, but there are new entrants in the market as well, worthy of conversation, I'm pleased to say. Joining us now in our Washington, D.C. studio is one of them the president of Hermeus. Zach Shore is with us on set here on Bloomberg TV and Radio. Hermeus is a high speed aircraft manufacturer, including hypersonic aircraft. And you're joining us, Zach, just a few days after your quarter horse model successfully completed its first supersonic flight. This is the first time a privately developed unmanned supersonic jet has had that kind of success. What can you do with it? What would it enable the US Military to do that we don't currently have the capacity?
Zach Shore
Well, first off, thank you so much for having me. There's a lot of missions that a vehicle like this can unlock. You know, we've certainly heard the chief of staff of the Air Force and other leaders testify on the use of F15s and MQ9s in the Epic Fury operation. So having an unmanned aircraft that can carry significant payloads long distances at high speeds starts to get you into the munitions conversation that you were just having a moment ago. As an example, an aircraft like ours, if it's hitting speeds up to Mach 3, which is what this aircraft will ultimately do at those out at those speeds at high altitude, you can effectively double the range of any munition that's on the aircraft's wings. And so what you start to get is the ability to stand off your systems. And this is really important because the further your standoff, the less likely you are to attrit that system and the more survivable you you Are we certainly saw with Epicuria again some of the system trades that we had to make in losing aircraft that were within that, within that sort of exchange window. So a vehicle like this gives us that, that long arm and that low cost.
Joe
Our audience should know that you're a warrior, you're a Marine, you served in Iraq and Afghanistan. You also used to work at Angela, which I find really interesting. And I'm wondering how you view the landscape here. We had an executive from Lockheed talk to us about expanding the capacity of missile manufacturing a couple of days ago. But a lot of folks think that you are the future. Are the old line defense contractors like Lockheed and Raytheon your competitors or are you in your own space?
Zach Shore
It's both. And I mean there's enough room for everybody here and there's a lot of expertise in the primes that, you know, Hermeus doesn't have. We have a great relationship as an example with Pratt Whitney, given that Raytheon's an investor. We were closely with, closely with Northrop Grumman and others.
Joe
And you're using a GE engine in this.
Zach Shore
We're using a Pratt and Whitney engine.
Joe
Got it.
Zach Shore
Pratt Whitney engine. So there's a lot of different expertise in this ecosystem and it's only going to work in scale if we all kind of work together. And the real key is creating enough operating space economically in particular to allow companies like Andrew Hermeus, you know, Castilian, to enter that space and to provide new solutions. And so I think again, as your previous guest spoke, you're seeing the, this administration and Congress give you some breathing room here to see new entrants. And certainly, you know, Andrew, I was very proud of my time there, have great relationships. There was one of the sort of flag bearers of this new approach to defense tech.
Host
Well, and so on, this idea of trying to expand the competition basically and widen the pool. Is there more you would like to see the Pentagon do to facilitate that?
Zach Shore
Yeah, absolutely. I mean, it's not a very original thought. My old boss at Andrew, Chris Bros, talks about this a lot, which is it comes down to contracts. We also just talked about the example of, you know, Lockheed spending $6 billion because they now have certainty about $60 billion. The math is simple. The challenge has always been that the defense ecosystem is a monopsony. It is not sort of a traditional market where supply and demand kind of come together in a natural way. And so, you know, I think one of the things this administration has done very well is with Dep. Sec. Feinberg and his team understanding what long lead commitment looks like and giving that certainty, you know, if Hermes gets a large contract, our ability to create private capital to continue to develop and build upfront and alongside the government is of no question. It ends up in this really unfortunate chicken egg problem that we're starting to see crack. So I think, you know, I would continue to encourage the department to invest in new entrants. I would push them to say, look a little bit more closely at hardware participants. We've seen them do incredible work on the AI side, but I do think sometimes we get a little caught up in the hardware side and giving the incumbents sort of all the opportunity there.
Joe
Well, let's talk about your hardware for a moment. The Quarter horse. Is it remotely piloted? Is. Is it piloted by AI? What's the payload? Can it dog fight?
Zach Shore
Yeah, great questions, all the above. Right? So to start, you know, we take a very iterative approach. Think Kelly Johnson. Skunk Works. Elon is certainly kind of the king of iteration these days, for good reason. So the first version was remotely piloted. However, the vehicle is designed and we're getting into the basic autonomy of the aircraft. It should not be flown by a human being. We're beyond that now for testing purposes and getting into flight quickly and understand the aircraft. We started with the vehicle itself. Now we're starting to layer in the autonomy. I will say from a mission autonomy standard. We don't build the mission autonomy. Companies like Anduril, Northrop Shield, they all have mission autonomy packages. We are not interested in that part of the market. We are agnostic to that, and we will adopt sort of whatever the customer wants. But we have the basic autonomy on the aircraft from a payload perspective. Our new DiU contract gets us into now releasing weapons, integrating other payloads. I can't really speak in detail about it. You can probably imagine to take this aircraft and start adding value to the warfighting community in a real way. Started as a test asset, and now you're like, well, hold on a second. What if we put insert payload on board? How does this start scaling so that DIU contract allows us to do it? The dog fighting question is interesting. I mean, the CCA gets to that, but dog fighting is really not the remit of this. You have large, long ranges and sensors. And so we just want to be a truck that can bring systems to the fight.
Joe
I see.
Host
Well, so when we consider all of the different components that will go into this effort, are there supply chains challenges that you are agreeing with? I mean, we talk about the defense industrial base in this country that obviously is in need of a great deal. Where are you seeing it most acutely?
Zach Shore
Yeah, I mean, I think there are components certainly that. That we struggle with that I don't want to necessarily flag on television, but I think one of the things we've done that's been useful is in our design processes. We have fitted our aircraft to integrate into, like, the F16 chain as much as possible. It's F16 landing gear. It's the F16 engine with Pratt Whitney's F100. And so making a vehicle that fits into current supply chains, standard jet fuel is adoptable and deployable by the current joint force. The other thing is standard steel. It's the 304L steel that Elon uses, laser welding, things like that, to make this as manufacturable as a Sherman tank. That is a key sort of part of way in which we design and prototype these systems.
Joe
I want to ask you to weigh in on the concept of autonomous. Beyond what you just said. There should be no man or woman in the cockpit of an airplane that's being shot at, I think is your point. I had the thrill and the honor to fly in an Air Force F16 once. And the pilot who brought me over the test firing range in Nevada said it'll never happen. Because what a human being brings to combat is the hair standing up on the back of your neck. That instant reaction, fear as a motivator could never be duplicated by a computer. This is before the big AI wave began that we're in now. Has that simply changed?
Zach Shore
I mean, look, there's. There's feelings around this, as you can imagine.
Joe
What are your feelings?
Zach Shore
My feelings is anytime we have certainty, we should be uncertain. The idea of a declaration like that should immediately give you pause. I don't think you have to look much further than the trenches of Ukraine to say this. The hairs on the back of your neck have now in Ukraine, been replaced with autonomous systems that are eating the Russians alive. And so it's all true until it's not true. And so I would challenge the assumption. I don't think it's a binary in an immediate sense, but over time, there's no reason why we can't at least continue to put more distance between a human being in that end system. I can virtually put somebody in the cockpit for certain.
Joe
Yes.
Zach Shore
And ultimately I want to be able to attract those systems without being able to trick human beings. And so these are some of the decisions we're gonna have to make as a nation.
Joe
This has been a fascinating conversation. How much time do you spend at the plant versus at the Pentagon talking to.
Zach Shore
I mean I somehow figured out how to create 48 hours in a day so I'm every on that trick.
Joe
Yeah, no doubt. After the show we'll get your insights on that. Zach Shore, it's great to meet you and thank you so much for coming in. The company is called Hermes. He's the president, a Marine who is now putting his experience to bear in the private sector. Pretty fascinating. Stay with us On Balance of Power. We'll have much more coming up after this.
LPL Financial Advertiser
What if you could have even more and more and more help to pursue your goals? At LPL Financial we offer more ways for advisors and their clients to to thrive. So what if you could Paid Advertisement
Podcast Announcer
Investing involves risk including potential asset principal LPL Financial LLC Member FINRA sipc 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.
Joe
I keep getting into traffic jams in the morning. They're rerouting traffic when I try to get across the mall. I bet Steve knows what I'm talking about. It's hard to look they're building this is going to be a massive June 25 to July 10. There will be a massive Ferris wheel on the National Mall. Can we get like Kaylee up there with a camera? And the thing is, not only are you going to have the fun and games, but there's a bunch of big concerts going on. You probably heard about this. They just announced the the lineup 48 hours ago. Here's the thing, they're dropping like flies. Did you see the original lineup? There's almost nothing left. As I read in Variety this morning, five out of the nine artists announced for Freedom 250 concerts have already backed out 48 hours after it was announced. Bret Michaels, the latest out with by the way, an endearing letter to his fans explaining that the atmosphere around the show had been poisoned. You can't make that up. This is a weeks long event. But Michaels joins Morris Day Young MC, the Commodores and Martina McBride, the force behind the song Independence Day, pulling out of the gig here. Only two of the nine acts have publicly declared intent to go through with the gigs. Are you ready? This is what we have lined up for you. The Great American State Fair, Vanilla Ice and Milli Vanilli's Fab Morven. That leaves only Flo Rida out of the nine who has still not addressed the issue at all, according to Variety. You know you want to come for this. We've got a lot of. That's you add the UFC fight, the F1 race. I don't know how anything is going to get done this summer. This is not what I had in mind for our political panel, although I. I tend to think that Jeannie Shan Zaino and Sarah Chamberlain will have front row seats at that UFC fight if they want them. That's the hottest ticket in town. Right. Sarah is, of course, a Republican strategist and the force behind the Republican Main Street Partnership here in Washington. The president and CEO, Jeannie is of course, our Democratic analyst, Bloomberg Politics contributor, and Democracy visiting fellow at Harvard Kennedy School's Ash Center. You must have members asking you to get into these things, right?
Sarah Chamberlain
Oh, my.
Joe
This is part of the game.
Sarah Chamberlain
It is just a nightmare. Well, it really is.
Joe
Not just anybody gets in the front row for these.
Sarah Chamberlain
That's true. And UFC actually is a member of the Republican Main Street Partnership.
IBM Advertiser
Okay.
Sarah Chamberlain
So I will not be going to this particular.
Joe
You're not going to be attending.
Sarah Chamberlain
I will be going to others in the very near future.
Joe
All right, excellent. Good to know. See, Sarah gets invited to all of them. These things. Jeannie, I don't know about you. Would you come down for the concert or the UFC fight Genie if you had the chance? Which one would it be?
Jane Harmon
Well, I am fascinated by the whole Milli Vanilli thing, Joe, because you and Sarah must remember in the 80s they were a cover band. Well, yeah, the statement now 1/2 of the duo is ceased to exist. Is dead, I guess is the way to say it. And so that leaves the one. And they put out a statement. And so it's really unclear because the statement sort of suggested that they booked a cover band for Milli Vanilli, but Milli Vanilli itself is a cover band. So the whole thing is for those of us from the 80s. Right, Sarah? It's fascinating.
Sarah Chamberlain
That is true. It is.
Joe
I have the panel on the air right now.
Sarah Chamberlain
Oh, it was crazy. I actually saw him at the Grammys last year. Obviously, he did not perform this here. He's never really.
Joe
No, I don't believe that's happened before. Exactly.
Sarah Chamberlain
So we did.
Joe
So we did get a statement, because I'm confused and I can't believe we're doing this right now. Vanilla member Fab Morven told the Associated Press, the wire of Record, that He would be performing all the band's vocalists said elsewhere that they would not appear, describing Morven shows as a Milli Vanilli tribute band. Genie, you got us right to the heart of the matter today. And I think we need some more investigative reporting on this.
Jane Harmon
Yeah, Joe, this, this is really for those of us from the 80s, it's like very confusing. It's a cover band of a cover band. I'm fascinated.
Sarah Chamberlain
Oh, God.
Joe
All right. We've blown the lid off of this story. The question, the question I will ask though is what happens when lawmakers come back to town. We weren't only here to, to talk about the concert, although I feel like we should do a whole program on this. Yeah, CeCe is going to get some good music for us here. At some point today, lawmakers are going to come back to difficult set of circumstances. And Sarah, I'm sure would be the first to tell us this, whether it's war powers pulled off the floor a couple of weeks ago because it almost passed reconciliation. Now we might not have the votes because of the president's anti weaponization fund. This could be a long, hot summer.
Sarah Chamberlain
Well, they've already delayed him coming back. The House doesn't come back until Wednesday. And I think you're going to see some interesting votes because Massie now has no reason to vote with the Republicans. One of our own is, is still missing in getting some medical treatment. Tom Kane. So it's going to be interesting that
Joe
almost passed that war powers vote because in part because of Republican absences.
Sarah Chamberlain
I think it might pass this week.
Joe
Would it pass even without.
Sarah Chamberlain
I think it may.
Joe
Interesting.
Sarah Chamberlain
Yeah. So it's going to be a very interesting time again. The speaker has got the toughest job in Washington, God bless him. I see his chief of staff is leaving. I would not want his job.
Joe
Imagine the phone call he gets when that passes.
Sarah Chamberlain
I cannot imagine.
Joe
Jeannie, is this as good as done then? And should we believe the president would abide by a war powers bill if it reached his desk?
Jane Harmon
At this point, I wouldn't believe that. But you know, the fact is every time Mike Johnson keeps them from coming back, sends them out early as he did with the Epstein files, as Sarah just mentioned, he's keeping them back this week because he knows that this thing has a good chance of passing. It is an indication that they've got a lot of work to do. But let's not forget what's happening. These members are home. I'm not sure, Holmes, where he wants to keep them because their voters, their Supporters are telling them, wait a minute, we are spending how many billions of dollars in this war? And gas is this high, groceries are this high, inflation is going up. Austan Goolsbee is warning about stagflation coming down the pike. And you are keeping us in this war, which is keeping these prices high. And oh, you also want to paint the floor of the waterway blue. You want to ufc. I can't even think of the words. It's so maddening. Joe, you have UFC fights that are going on. What is happening? And so they're hearing from members who want them to focus on what concerns them. And certainly what the president talks about is not a number one concern, like gold plated, you know, horses, you know, sites in D.C. okay, well, so to
Joe
pick up on this, Sarah, because the cost of the war is becoming an issue for some lawmakers and I wonder what the breaking point is here. If a War Powers act does pass, will Republicans follow up with a conversation about spending or do they expect the president to abide by would he sign a bill like that?
Sarah Chamberlain
Well, the president will take it to the Supreme Court, I'm sure.
Joe
Yeah.
Sarah Chamberlain
Okay. So I don't know what will happen.
Joe
He wants to challenge that.
Sarah Chamberlain
He's going to challenge that. He's going to challenge it. Yeah.
Joe
He says it's unconstitutional.
Sarah Chamberlain
He does say that. It's been challenged before, so we'll see what happens this time. But the Republican Main Street Partnership members who are in tough, tough reelects, they want to start talking about saving money and really, you know, inflation and what's going on and what we're going to do to address the concerns of the American people. Affordability is what they're talking about back home. They're not talking about all this other stuff. They're really driving the affordability.
Joe
Use of taxpayer dollars is obviously something that is key in any political debate. And I've seen a number of Republicans, including Mike Flood, who chairs the Main Street Committee, say no to this idea of the anti weaponization fund. Not without guardrails, not without a set of rules. And I'm wondering how you see this finishing if it's going to be in the bill at all. And this would land in a reconciliation bill, presumably, which is.
Sarah Chamberlain
Well, it won't pass if it's in a reconciliation bill. Obviously a judge today has kind of blocked it for the time being. There's not a Main street member that supports this. There's not one, especially for the January six. They do not want to see money going to individuals who attacked police officers. And many of them were in the building when this took place. So this is a huge issue. It's not just Congressman Fitzpatrick that's pushing the anti, there's a lot of them. So you will not see this pass.
Joe
That's really fascinating to hear you say that so definitively, Jeannie. Is it as good as dead, this whole idea?
Jane Harmon
It should be. It should have never been alive. And so hopefully it is as good as dead. And hopefully the idea of Donald Trump's face on the $250bill is equally as dead. I mean, this is what we're talking about is the fact that the President, the administration is focused on things that do not help the American public. And so those things have to be dead. You know, if you think about if he hadn't pushed forward this anti weaponization fund, if he hadn't pushed forward the $1 billion for the ballroom, we could be talking about reconciliation three, not two at this point. But he keeps stepping on his own members concerns and that leaves us where we are and leaves Mike Johnson scrambling to try to get in line with what the President wants. And his members are facing voters who are seeing them move in another direction.
Joe
Yeah. Well, Jeannie leads us like children to the other story that we wanted to talk about. $250 bill with the President's face on it. Now, no living person has ever appeared on a piece of US currency since the 1800s when it was outlawed. You might have read about this. This some treasury staffer got his face on a five cent note. So they passed a law. No living person. They might have to go back in and make a new law to allow Donald Trump to get this done. The director of the printing bureau said staff repeatedly explained there were no legal or there were legal and procedural obstacles to producing the note. So it's going to have to go to Capitol Hill. Does this get.
Sarah Chamberlain
This one's going to be interesting because it is a kind of a one time. It is the 250th anniversary of our country. However, he now has some senators that are not happy with him. I mean, two of them have lost their primaries.
Joe
That's right.
Sarah Chamberlain
So he's got a Senate problem. They're probably not going to accept this. So we'll have to see what happens in the Senate. I always say the speaker has a tough job. I now think Leader Thune has a very tough job. I mean there's at least one, three of them Republican senators who have no reason to curry favor.
Joe
John is suddenly a Ken Paxton fan. That's political reality. The nominee.
Sarah Chamberlain
Yeah, because without Paxton coming to the, to the Senate, we do not have the majority. Right. That's a problem.
Joe
Jeannie, is this going to happen with $250bill? And by the way, if it does, you're buying one, right? That's a collector's item. Immediately.
Jane Harmon
Of course, you know, we're talking about celebrating 250 50th year, 50 years of America's birthday. George Washington said he didn't want to be featured on any currency during his lifetime because he wanted to avoid looking like a king, like a European monarch. He believed that if you were alive and you were reflected on currency that it would be self aggrandizing. And he declined that. We need leaders in the White House and elsewhere who decline for the same reasons. And politically this doesn't make any sense. As we've seen, no Kings marches across the country with millions of people over the last year. So they would be smart to avoid this. They would be smart not to even think about it. And yet here we go. We are thinking about Trump on the 250.
Joe
There is legislation, by the way. It was introduced last year in Congress. It hasn't gone anywhere. I don't know if this gets more
Sarah Chamberlain
people and it doesn't have that many copies sponsors.
Joe
Yeah, that's what I guess probably won't change here. Right. Just think though, I mean, if you're filling up the tank. 250 bill.
Sarah Chamberlain
Wow.
Joe
You're paying cash. Might come in handy.
Sarah Chamberlain
I mean, it cost me a hundred dollars to fill up my car.
Joe
Now tell me that was an suv.
Sarah Chamberlain
It is, but still a.
Joe
A triple digit.
Sarah Chamberlain
Yes.
Joe
Tank up. Amazing. That's the summer of 2026. My God. Here's something you're not going to hear at the big concert on the mall. 250. Martina McBride's got other plans. Happy Independence Day. 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
Cincinnati Insurance Advertiser
if you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day, a fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned. It's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise and personal attention together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow through and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built and is ready to help you move forward. The Cincinnati Insurance companies Let them make your bad day better. Find an independent agent@cin fin.com okay tech
Joe
leaders, word on the street is security
Zach Shore
incidents are dropping way down with Windows
Joe
11 PCs built in. Security for the win. Upgrade to Windows 11 Pro@WindowsmeansBusiness.com.
Episode: Trump Signals 'Final Determination' Coming on Iran Deal
Host: Joe Mathieu (Bloomberg)
Date: May 29, 2026
This episode focuses on breaking news and analysis regarding President Trump's statements on the Iran deal, developments in the Middle East, and consequential policy and political dynamics in Washington. The discussion covers Trump’s social media post hinting at a coming “final determination” on Iran, the status of negotiations, regional diplomatic efforts (notably Pakistan’s mediating role), defense spending, the evolving defense industry, and the domestic political struggles around war powers and the budget. Key insights come from Bloomberg correspondents, outside policy and defense experts, and a roundtable of political strategists.
[00:42–03:33]
“It does appear clear...we're moving closer towards some form of agreement...some sort of interim agreement that leads to the actual negotiations. But...we've also been here before.” — Adam Farrer [04:09]
[05:15–06:45]
Notable Quote:
“...the administration is also keeping up that economic pressure campaign...they are going to sanction any actor that is even remotely involved in facilitating tolls in the Strait of Hormuz with some really harsh sanctions.” — Tyler Kendall [05:31]
[10:14–18:34]
Notable Quotes:
“If we now bomb the energy facilities of Iran...they're going to attack the energy facilities of the entire region.” — Jane Harman [11:27]
“...it was a mistake to me to push allies and partners away.” — Jane Harman [14:41]
“...the President very active and the Supreme Court apparently quite partisan, is a real disappointment when you think about what the founding Fathers would have dreamed for us.” — Jane Harman [18:09]
[19:06–24:02]
“…a trillion and a half dollars...isn't really money that's going to the military. A small part of it is, but most of this is going to defense contractors.” [20:02]
[24:02–31:34]
“There should be no man or woman in the cockpit of an airplane that's being shot at, I think is your point.” — Joe Mathieu [30:14] “The hairs on the back of your neck have now in Ukraine, been replaced with autonomous systems that are eating the Russians alive…” — Zach Shore [30:59]
[34:59–45:22]
“I think it might pass this week.” — Sarah Chamberlain [37:55] “At this point, I wouldn't believe [that Trump would abide by a war powers vote].” — Jeannie Shan Zaino [38:25]
“We need leaders...who decline for the same reasons [as Washington].” — Jeannie Shan Zaino [44:09]
“Iran must agree... they will never have a nuclear weapon... the strait must reopen, mines come out of the water... Ships caught in the strait...may start the process of heading home. Say hello to your wives, husbands, parents and families from me, your favorite president.” [00:42]
“At this point it’s unclear what timeline we’re really looking at... We also know the White House wants to pursue diplomacy.” [02:29]
“It does look like some sort of temporary step... that leads to the actual negotiations... but we’ve also been here before.” [04:09]
“When you’re in a hole, stop digging. I am for some way to work this out. I was not for this war, nor was anybody else that I really know of other than the administration or maybe just the president.” [11:27]
“It was a mistake to me to push allies and partners away.” [14:41]
“The president wants a trillion and a half dollars for essentially defense contractors. This isn’t really money that’s going to the military.” [20:02]
“We just want to be a truck that can bring systems to the fight.” [28:11]
“There’s no reason why we can’t at least continue to put more distance between a human being in that end system.” [30:59]
“We need leaders in the White House and elsewhere who decline [self-aggrandizement] for the same reasons.” [44:09]
This summary covers the episode's main developments, contextualizes the news for listeners, and offers key takeaways from expert voices without the need for background ad content or non-content segments.