Trump Warns Iran of Escalation as US Troops Arrive in Region

Summary

Balance of Power Podcast (Bloomberg):
"Trump Warns Iran of Escalation as US Troops Arrive in Region"
March 30, 2026

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Episode Overview

In this timely episode, hosts Joe Mathieu and Kailey Leinz, along with a series of expert guests, break down the latest developments in the ongoing Iran conflict, now entering its fifth week. With President Trump’s shifting rhetoric, rising US troop presence, threats of escalation, and deepening economic effects, particularly on oil and global markets, the show examines political, diplomatic, market, and public opinion dynamics shaping the crisis. The episode includes expert analysis from Michael Allen (former Bush administration official), political reactions from Rick Davis and Jeannie Shan Zaino, market insights from Christine Aquino, and public opinion polling from Cliff Young of Ipsos.

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Key Discussion Points & Insights

1. Evolving Conflict: US-Iran Tensions and Trump’s Strategy

• The war in Iran has no clear end despite Trump’s initial 4–6 week timeline. The US and Israel have conducted numerous strikes, and more US troops—including Marines, paratroopers, Navy SEALs—have arrived in the region. (00:55–08:05)
• Trump pursues an unsettled mix of threats and diplomacy, presenting what hosts call a “good cop, bad cop” approach—sometimes in the same statement.
• Notable Trump Quote (via reporters/Air Force One, paraphrased):

  “If the strait is not immediately open, we will conclude our lovely stay in Iran by blowing up and completely obliterating all of their Electric generating plants, oil wells and Carg Island, and... possibly all desalinization plants.” (01:35)

2. Mixed Messaging: Rhetoric vs. Reality

• President Trump’s communications have been contradictory, vacillating between timelines, threats, and claims of negotiation with a “reasonable” new Iranian regime.
  • Jeff Mason (Bloomberg White House Correspondent):

    "You've heard him come out and say, ah, the war is not going to last very long... But then... he issues another threat. And if you're in the market, it's hard to interpret that other than to say it's a little bit of Jekyll and Hyde." (03:16)

• The lack of clarity poses challenges for allies, markets, and diplomatic partners.

3. Operational Goals and Escalation Risks

• Military analyst Michael Allen doubts that a deal is imminent and suggests actions like seizing Iran’s Carg Island serve as leverage—economic hostages to force Iran’s hand. (07:10–08:30)
• Major risks include direct operations to seize enriched uranium or hold Iranian territory, which would likely turn into a “quagmire.” (10:14–11:37)
  • Michael Allen:

    "I could see Carg Island happening sooner than I could really say to you, although... I’ve heard generals say that if we've planned it well enough we can do it, but it does seem a little bit daunting." (10:32)

4. Regional Ramifications: Allies, Proxies, and Oil

• Even though the US relies less on oil from the Strait of Hormuz, allies are deeply affected, which in turn impacts the US and global economy.
  • Iran and its proxies—Hezbollah and Houthis—pose risks for escalation in the region; the threat to shipping and infrastructure remains acute. (13:17–13:58)
• Michael Allen:

  “The ayatollah is ... back is against the wall and everything for them is on the table.” (12:41)

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5. Domestic Political Fallout

a) Potential War Crimes & International Law

• Political panelist Jeannie Shan Zaino bluntly frames Trump’s threats against civilian infrastructure as “absolutely war crimes” under international law, likening such threats to Russia’s conduct in Ukraine. (18:28)
  • Zaino:

    “For the President of the United States to sort of cavalierly put this on Truth Social with these threats is jarring... They [Iran] don’t trust us to negotiate, nor should they, because the last two times we did, we bombed them afterwards... They are holding all the cards right now.” (18:28)

b) Congressional Dysfunction & National Security

• Amid the Iran crisis, the Department of Homeland Security remains shut down due to Congressional inaction—creating vulnerabilities at a time of heightened risk. (17:02, 26:33)
• TSA agents get paid via executive order, but FEMA and Coast Guard remain unfunded. The hosts and panelists lay blame especially on Congressional Republicans. (26:33–27:50)

c) Trump's Free Hand in War—Minimal Congressional Oversight

• Rick Davis:

  “I think the President has a free hand here when it comes to being able to do what he wants to do with the war effort in Iran without Congress putting any shackles on his power.” (24:36)

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6. Markets Shake as Uncertainty Grows

a) Investor Anxiety and “Two-Track” Messaging

• Market confusion reigns owing to Trump’s conflicting public statements. Caroline Levitt (White House) reiterates 4–6 week timeline, claims “Arab states may pay for the war.”
• Christine Aquino (Bloomberg Markets Live) calls it a “holding pattern”—no clear moves toward ceasefire or escalation. Investor “fatigue” is setting in. (29:10–33:01)
• Markets are whipsawed by policy uncertainty. Investors are selling aggressively, but retail inflows provide some two-way movement.
• Christine Aquino:

  “We have seen just an overwhelming impulse to sell by investors. But very interestingly ... retail investors actually turning a little bit more optimistic when it comes to flows into ETFs.” (32:22)

b) Fed Response—Inflation & Growth Fears

• Fed Chair Powell reassures that the oil price shock is seen as temporary—markets recalibrate toward possible rate cuts. The bigger concern is that persistent oil spikes will strangle consumer spending. (31:04–31:54)

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7. Public Opinion: War Fatigue and Domestic Pain

a) Americans Overwhelmingly Oppose Escalation

• Cliff Young (Ipsos pollster):

  "Americans are not in favor of that in a general sense, not just specifically with Iran, but in general... Only 7% of Americans would be in favor of strong intervention with lots of troops on the ground." (33:48)

• Disapproval of Trump’s handling of the conflict: 61% disapprove; only 35% approve. Trump’s approval is eroding, mainly due to gas prices. (34:23–34:46)

b) Top Concerns: Affordability and Lack of Clarity

• 65% expect gas prices to worsen (currently $3.99); 66% say Trump hasn’t outlined clear goals; just 29% believe US involvement will improve security.
• Cliff Young:

  “The number one issue is affordability. That will always weigh more in people's mind than security.” (36:51)

c) Political Implications

• The war and high costs put Republicans at risk in November’s midterms. If the conflict lingers into summer, a major Democratic wave is possible (possible 30–40 seat swing).
• The “America First”/MAGA base is losing patience with “forever wars”—Trump’s interventionist policy is alienating key supporters.
  • Cliff Young:

    “It's an agenda that's misaligned with what people here in the United States want. Indeed, I would even double down and say misaligned with his base.” (37:35)

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Memorable Moments & Notable Quotes (with Timestamps)

• Trump on Iran Negotiations/Escalation:

  “We always have to blow them up... if the strait is not immediately open, we will conclude our lovely stay in Iran by blowing up and completely obliterating all of their electric generating plants, oil wells and Carg Island... and possibly all desalinization plants.” (01:35)

• Jeff Mason on Mixed Messaging:

  “It's a little bit of Jekyll and Hyde.” (03:16)

• Michael Allen on Prospects of a Deal:

  “I definitely don't think there's a deal in the offing.” (08:30)

• Jeannie Shan Zaino on Threats to Civilian Infrastructure:

  “They are absolutely war crimes. They are a violation of international law. It's not unlike what Russia has done in Ukraine...” (18:28)

• Rick Davis on Political Consequences:

  “The public is coming in hard against this war... Now the war in Iran is second only to the cost of living and there are some crucial connections between the two.” (20:38)

• Cliff Young on Support for Ground Troops:

  “Only 7% of Americans would be in favor of strong intervention with lots of troops on the ground.” (33:48)

• Public Pessimism:

  “65% say gas prices will get worse... 66% say the president has not clearly explained goals... 29% believe U.S. involvement in Iran will improve U.S. security. That's the trifecta. The trifecta. Problems, indeed.” (36:00–36:42)

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Segment Timestamps for Reference

• 00:55–06:38: Setting the scene, Trump’s rhetoric, mixed messages, press reaction, market fears.
• 06:57–11:32: Michael Allen on military prospects, timeframe, scenarios for escalation/grounds for quagmire.
• 12:13–13:58: Iranian proxies and threats to energy/shipping, strategic dynamics.
• 17:02–27:50: Political panel on legal/ethical/moral dimensions, Congressional dysfunction, presidential autonomy.
• 29:10–33:01: Market response, investor mood, Fed reaction, economic fears.
• 33:48–38:13: Polling: public opposition to escalation, impact on Trump’s approval, midterm election risk.

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Conclusion

This episode provides a comprehensive, multi-angle discussion of the rapidly evolving US–Iran crisis, highlighting the dangers of mixed presidential messaging, the fragility of the military and diplomatic situation, the tangible pain at the pump, and the significant political risks for Trump and the GOP. With expert insight into national security, markets, and public sentiment, the show underscores the urgent need for clarity, a plausible diplomatic off ramp, and better communication with both allies and the American people.

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Transcript

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[Joe]

markets, of course, try to make sense of conflicting narratives when it comes to the war in Iran, which, as Joe mentioned, is now in its fifth knowing that President Trump initially suggested this could be a four to six week operation, and yet as of right now, there is no clear end in sight. A headline just crossing the terminal that Israel says it has struck 170 Iranian targets in just the past 24 hours. And of course we saw over the weekend more US Service members, including an amphibious assault ship with sailors and Marines, thousands of them on board, arriving in the theater with more on the way. All of that's to say, though, that there is still potentially a diplomatic off ramp being pursued by President Trump as he gave a status update to reporters aboard Air Force One last night.

[Host/Interviewer]

They've agreed to send eight boats two days ago and then they added another two. So it was 10 boats. And now today they gave us, as a tribute. I don't know, I can't define it exactly, but they gave us, I think, out of a sign of respect, 20 boats of oil. Big, big boats of oil going through the Hormone Strait. We're doing extremely well in that negotiation, but you never know with Brand because we negotiate with them and then we always have to blow them up. We always have to blow them up, the president says stark rhetoric that would match the tone of his Truth Social post this morning. Following his post last week on a Monday in the 7am hour, he did the same thing today, with of course, eyes on the markets. This didn't really make a lot of people feel good, though, as he did talk about serious discussions with a new and more reasonable regime. Unclear exactly what he's referring to, but without a deal, he says. And if the strait is not immediately open, we will conclude our lovely stay in Iran, the president writes, by blowing up and completely obliterating all of their Electric generating plants, oil wells and carg island and he says, and possibly all desalinization plants, which we have purposely not yet touched. Jeff Mason is Bloomberg's White House correspondent and joins us live here in our Washington bureau. Jeff, it's great to see you. I can't imagine another president issuing rhetoric like this, but it's difficult to tell as Kaylee framed this perfectly. At the top of the hour, we've got a good cop, bad cop and it's the same guy. So who are you listening to?

[Jeff Mason]

Well, indeed. I mean, I think that's the question. It's you. You guys also mentioned the fact that there have been mixed messages on the war and there have been mixed messages on the war from the very beginning when the president first announced it. And I think there are different motivations behind that. One of them is clearly his sensitivity to the markets and the way the market is responding. You've heard him come out and say, ah, the war is not going to last very long or it's going to end quickly when he is upset about the oil prices going up. But then in the same breath or the next day, in this case the next day he issues another threat. And if you're in the market, it's hard to interpret that other than to say he's, it's, it's a little bit of Jekyll and Hyde.

[Joe]

Well, but you should point out we are expecting this hour a briefing from the White House press secretary, Caroline Levitt. We'll see if we can get any more clarity from her either way. But when we consider that the President himself, it's not just what he's in media gaggles like what we saw aboard Air Force One or on social media. He's also doing some singular interviews. He spoke with our colleague Annmarie Hordern briefly on the phone today. He also spoke with the Financial Times talking about how he wants to take Iran's oil. What do you understand that to mean, Jeff?

[Jeff Mason]

The president is someone who obviously has a real estate background. He speaks in the language and I think he has a paradigm of gifts. This is something good for me. He talked about Iran was making a tribute perhaps to the United States with the boats. I don't cover Iran as a full time job, but I'm pretty sure that wasn't a tribute, but that I guess I say all of that in terms of like this is just the psychology of the president. And when he uses language like that, that's the paradigm that he sees it or the framework through which he sees these things.

[Host/Interviewer]

Out of a sign of respect, he said, I can't define it exactly, but they let 10 boats through. He says big, big boats of oil. Those are not American interests, to be clear.

[Jeff Mason]

And it's interesting that, too, because the president has liked to emphasize that the United States does not rely on oil coming through the Strait of Hormuz as much as other countries do, which has been a sticking point for him in terms of feeling that NATO allies should be stepping up more, should be helping the United States more. That said, I think it's also really important to notice or to point out that even if that is true, that the US has so many other oil sources, the US Is connected to the rest of the world via the global economy. So if our allies, if US Allies are suffering because of a war that the United States and Israel started with Iran and that is leading to oil prices or the strait being closed or mostly closed, even if the US doesn't rely on as much oil or natural gas coming through there, others do. And that has an impact as well.

[Joe]

Yeah, even our energy that we produce here at home hasn't been able to prevent $4 gallon of gas.

[Host/Interviewer]

That's right.

[Joe]

In much of the country. Jeff Mason, covering the White House for us here at Bloomberg, thank you so much. And of course, as we consider what is driving those oil prices up, largely it is because the Strait of Hormuz remains ineffective, closed, if not just controlled by Iran, which is why President Trump is issuing this ultimatum, open the strait or else get your energy infrastructure and potentially water infrastructure as well, attacked. In addition to the many attacks and strikes that have been carried out on military targets already in Iran, a military operation which the president does maintain is still ahead of schedule. Here's something else he told reporters aboard Air Force One last night with Iran.

[Host/Interviewer]

We're weeks ahead of schedule. If you would have said that in three days we were going to knock out 158 ships, their entire navy, which we did. We knocked out their entire Air Force force. We knocked out most of their missiles. That's why you see missile attacks. But they're down to their sputtering.

[Joe]

So let's get more on this now as we turn Joe to Michael Allen, managing director of Beacon Global Strategies, also former special assistant to President George W. Bush in the national security sector. He's here with us in our Washington, D.C. studio. Michael, welcome back to Bloomberg TV.

[Michael Allen]

Thank you so much for having me.

[Joe]

Always good to see you. The president, of course, says we're still ahead of schedule, though by my calculation, we don't have that much more time to be ahead of schedule. If this was only supposed to be a max six week operation in place and we're in week five, do you expect that it is going to end at six weeks with the signals we are seeing both from the troop presence that is getting even larger in the Middle east and the rhetoric from the President?

[Michael Allen]

I don't think so. I think that we still have work to do to sort of set the conditions around the Strait of Hormuz for us to even begin to move to an escort mission. We're of course have been in an attack mission, we've been in a missile defense mission. But to shift they have to finish degrading the coastal defenses of Iran. They probably need to degrade their drones more and of course fast boats. So we're bringing the equipment over. It's going to take time, but I think it's going to be a little bit longer than forecast.

[Host/Interviewer]

That's the narrative in the major papers this morning. The New York Times talking about several hundred U.S. special Operations forces, Rangers and Navy SEALs joining thousands of of Marines and Army paratroopers in deployment. The Post talking about a Pentagon preparing for weeks of ground operations in Iran. Does that feel to you like where we're going or is this a deal that's about to be struck as the President suggests?

[Michael Allen]

I definitely don't think there's a deal in the offing. I don't even know that we've met indirectly, so to speak. What I think might be happening is that the president is serious or he's seriously thinking about taking Cargillen right now. That's not my base case. I'm not sure or certain that he would. It might be just something that gives him options, gives him leverage, allows him to take an economic hostage if the Iranians continue not to cooperate when it comes time to reopen the Strait. But yeah, I think he's making sure he's got the tools in place to do that if he feels like he needs to.

[Joe]

Well, when we think about the Iranian regime which President Trump described on True Social Today as new and also as more reasonable, I wonder if that matches your assessment, Mike, is this really a new regime or is it a just a cast of characters that has changed at the top of the same regime?

[Michael Allen]

Well, it seems like the new boss is the same as the old boss. It's a hardcore element of the Iran is people that are good with the Islamic Revolutionary Guard that are in good standing with the clerics. Maybe some of these new newer people have some ability to compromise more, or maybe they're more pragmatic than others. But I think they're all hardliners over there. I think that they're as mad as a hornet right now as well. And so I don't know that the conditions are really set for anyone to earnestly put forward positions other than the ones so far which have been totally maximalist. Get the United States out of the Middle east and you cease everything. Iran, including your ballistic missile program.

[Host/Interviewer]

How important is it to you? And it does seem to be to the administration, whether part of a deal or we go in and get the thousand pounds of enriched uranium that's sitting somewhere, likely underground.

[Michael Allen]

This would be one of the biggest operations, I think, in American history.

[Host/Interviewer]

It would be a scale or importance scale.

[Michael Allen]

It would be. It's not just the special operations raid. Think of Sama bin Laden or against Maduro. I think it would take, let's just guess here, 1,000 troops set up perimeter for more than a day at least to use, yeah, Earth moving equipment and who knows what else to dig it out under fire and then put it on an airplane to ship out again. I could see Carg island happening sooner than I could really say to you, although, one, you can't rule it out with President Trump. And I've heard generals say that if we've planned it well enough that we can do it, but it does seem a little bit daunting. And it's important and it's critical to do, but maybe there's other ways for us to neutralize it over time. People say, well, you know, what if we just stared at it over satellites and if Iran ever comes close to where we think it's buried, we'll just hit them again. But, you know, it's another big question mark on how we might use ground troops.

[Joe]

But is that where we stumble into quagmire risk more substantially?

[Michael Allen]

I think we're only in a total quagmire with ground troops, as if we invade and try to hold territory like island for. For an extended period of time. And so I don't think we would be around Esfahan retrieving the HEU for an extended period of time. But, yeah, I think if you're holding Carg Island, I have been persuaded by a lot of sort of the export expert testimony that, yeah, you know what it would be, they would hold us in harm because of the drones, proximity to drones and the rest. So I think there's a lot to that.

[Host/Interviewer]

You've talked to us about the taco trade before. Which doesn't seem to be working for investors in quite the same way. John authors writing on the Bloomberg about a different acronym. It's not Taco, it's wacko. Will the ayatollahs chicken out? And he says traders are concluding they almost certainly will not. And so prices enter Holy Week under the worst pressure of this now month old conflict. Nobody's going to want to go long into this long weekend for fear of what happens. Michael?

[Michael Allen]

Well, yeah, I agree. I mean the, the ayatollah is the regime is this is obviously an existential threat. I mean targeting alone. But of course, you add what Israel's doing there. They feel like they can use any tool in their toolkit. That's why they're taking shots at the Gulf Arabs. That's why they're taking shots earlier in the campaign at their energy infrastructure. That's of course why they feel so liberated to have threatened ships going through the strait. And so I feel like they are going to fight. Their back is against the wall and everything for them is on the table.

[Joe]

Well, and then there's the proxies to consider. You already have the front that has opened up on the border with Lebanon and Israel as they go after Hezbollah. Now the Houthis also are launching drones and missiles at Israel. We all remember what they were able to do with commercial shipping, effectively cutting it off in the Red sea back in 2023. How high is the risk that we could see that scenario repeating?

[Michael Allen]

Oh, I think it's very high. I mean people have been trying to figure out for the last few weeks why the Houthi was the dog, the didn't bark. But you know, they've started to engage a little bit more here. If they start not just targeting Israel, as you say, but beginning to target again, ships transiting, you know, Katie, bar the door. I don't know. Oil prices are going higher and higher

[Host/Interviewer]

and higher markets are turning lower before our eyes here. By the way, I just want to mention the S and P is down 5 now. The Nasdaq is down 89 points after early gains in our remaining moment. You spent time on national security, as we've already established. And whenever you visit in the George W. Bush administration, you were certainly gaming out any number of possibilities involving Iran. Are these, these options we're talking about for President Trump, things that you had your eyes on, Carg island, etc.

[Michael Allen]

Carg Island I think has been on everyone's list for some period of time when we were thinking about sanctions and maximum pressure because it was it was always how do you get to the Iranian oil? And here's their choke point, if you will. By the way, the world's choke point, of course, is the Strait of Hormuz. This is their. What's that?

[Host/Interviewer]

Straight.

[Michael Allen]

Yes.

[Host/Interviewer]

You had these maps, you had these battle plans in front of you.

[Michael Allen]

Oh, no, I had a sort of a different role more along the putting pressure on Iran in that particular office and less the military plans. But no, I know that this, these two items have been part of military planning for some period of time. And I think this is something that we've got to figure out how to deal with or else we've given the Iranians a lot more leverage than they had before this thing began.

[Host/Interviewer]

Well, I know this is something that you've been very close to for some time. We'd like to stay close to you on this. Michael, thank you for coming in. Michael Allen, Managing Director, Beacon Global Strategies. We'll assemble our political panel next for their take on this. Rick Davis and Jeannie Shan Zain are on the way here. Stay with us on balance of power. We'll have much more coming up after this.

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[Joe]

Just say Alexa played Bloomberg 1130 here in Washington. It's fairly quiet in town except for all of the spring breakers who have traveled here to see the cherry blossoms, visit the museums and the monuments. On what a spring break for many across the country, it is also not spring break but two week recess time for those who are not here in Washington. Members of Congress, both the House and Senate out for two weeks. Joe having left town without funding the Department of Homeland Security which is now in a shutdown that is record long. Yeah, in length. We thought the Senate had reached a compromise. The House said no thank you and we will see no progress until members return two weeks from now. Yeah, the storyline the White House calls him back sooner.

[Host/Interviewer]

Well, I guess that could happen. This week or next. The storyline late Thursday was we got a deal. Tsa, hang on, the paychecks are coming. And that part still happened because the president, of course, signed an executive order to pay TSA agents. We're told they're going to start getting paid today. Kaylee, whether that helps to kind of unwind some of the issues at the airports. It still leaves FEMA and the Coast Guard and I'm not sure why no one's talking about that. But of course, the President of the United States has his focus today on Iran and the latest here with this war that is now entering its fifth week. And we want to bring in our political panel for the latest on all of this with a new threat from the president on truth social media that will conclude our lovely stay in Iran by blowing up and completely obliterating all of their electric generating plants. He even threatens desalinization plants. Bloomberg Politics contributors Rick Davis and Jeannie Shan Zaino are with us. Jeannie is of course our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick is our Republican strategist and partner at Stone Court Capital. Jeannie, the president says a lot of stuff and it's not always factored in on a serious level when you start threatening power plants, desalinization plants, he says oil wells in Iran. Many have noted that these would be war crimes if the president followed through on them. How should we interpret this rhetoric?

[Jeannie Shan Zaino]

Yeah, I mean, they are absolutely war crimes. They are a violation of international law. These targets are civilian targets. This is not unlike what Russia has done in Ukraine that we have spoken out viscerally against, rightly so. So for the President of the United States to sort of cavalierly put this on truth social with these threats is jarring. The reality is, and I think the president is well aware of, well aware of this, is he is in a very tough bind, as are we as the United States because at this point, Iran holds all the cards. There is no way for us to de escalate at this point. They don't trust us to negotiate, nor should they because the last two times we did, we bombed them afterwards. They have a threat to their entire nation state, is under threat by Israel and the United States because we not only want regime change, we want to wipe them out. So they have very little incentive and they're holding all the cards right now. The longer this drags on, the more desperate the United States and the world economy gets and the more leverage they have. So it's a very tough situation. We need to find an exit. And the president and I think his bluster and sort of bravado shows this is searching desperately for one. But he hasn't come up with a game plan yet. And that's where we stand today with oil prices shooting up, fertilizer prices shooting up and the world economy literally on the brink unless he is able to figure out an off ramp here.

[Joe]

Well, and Rick, as we consider the market forces here, what we're seeing in oil and commodities prices, what we've seen in stock markets, many are pointing to the timing of the statements we've gotten from President Trump and how he may be wary of that as well. Even the speaker of Iran's parliament posted on Twitter on X yesterday, heads up, pre market, so called news or truth is often just a setup for profit taking. Basically it's a reverse indicator. And what do we get a couple hours before the bell rings this morning? Rick, President Trump out on true social talking both about great progress in negotiations and threatening Iranian energy and infrastructure. Is that timing coincidence?

[Rick Davis]

Well, you know, if it were just one message that I'd say it wasn't coincidental because you'd be trying to bolster the price, you know, take down the price of oil or bolster the stock market. But when you deliver both those messages, it's like trying to figure out what the net effect on the markets are. It just, you know, I think just slumps everything. So look, one of the things the president is desperately in need to do and the polling data now that we've been in this over a month is starting to really firm up strongly, is that he's got to convince the American public that this escapade is worth its effort. You know, the public is coming in hard against this war. They're coming in hard against ground troops. They're unhappy that the price of gasoline has gone up to almost $4. I think it's 399 today. And so this, now the war in Iran is second only to the cost of living and there's some crucial connections between the two. And so I think the president has to start spending less time on the back of airplanes or true social taking potshots at the Iranian public or the Iranian leadership and spend more time having a conversation with the American public as to why this is important to them. What does this mean for national security? What does this mean for their economic security? What does it, what does this mean for inflation? These are all questions that the public are raising and they're not getting any discussion with the administration on this with

[Host/Interviewer]

still no formal address from the president. So we rely on the posts on Truth Social. Jeannie, what do you make of the first line of this post? The president clearly trying to convince people that regime change has occurred. He says the US Is in serious discussions with a new and more reasonable regime to end our military operations in Iran. Will this be a consistent talking point, you think, Jeannie? Because if you read this post, it sounds like objectives are being met.

[Jeannie Shan Zaino]

Yeah, and that's absolutely what he's trying to say. Of course, when Marco Rubio was pressed on this over the weekend, he could not give a name as to who the new regime is. And what we do know is that the new regime is a son, the family member of the old regime, who is more hardlined than his father, whose wife, child, father and family members were all killed and himself may have been severely wounded in that attack. So there is no sign here. And anybody who's familiar with Iran knows that this is a very deep regime. The fact is, is that if we go back to January, the Iranian nation, the Iranian regime is in far better straits today, and excuse the pun, than they were in January. They are economically in better shape. They no longer have sanctions because while we are bombing them, we have removed the sanctions to get the oil out in the market, which makes sense. They are more hardlined. They don't have protests going on in their country the way they did. So this is a very, very difficult regime to destroy. That's why all the presidents before Donald Trump didn't take this, this view of Iran. And so this is where we are today. The United States is in worse shape and Iran is in better shape. The world economy is in worse shape. Iran is in better shape. That is not winning in anybody's estimation or definition.

[Joe]

Well, so when we consider what it might take to win if indeed ultimately regime change or seizing the uranium or spend, seizing Carl island are things that the US Might want to pursue here. Rick, that could very well involve ground forces. How do you think it makes a difference in the president's mind to make the decision to send ground troops in or not knowing Congress is gone for two weeks and any kind of effort to exercise war powers authority would be on break, presumably until then.

[Rick Davis]

Yeah, I think the president's pretty satisfied that after his initial attacks on Iran, that the Republicans blinked on war powers, that leadership in the House and leadership of the Senate basically fouled it off, saying that not necessary. They're the same leadership. So I can imagine they take the heat for the president if he put a ground invasion into Iran, basically saying that, that, that no, no resolution was necessary. It runs afoul of everything that's happened historically around these kinds of incursions. But this is a patent pending Trump Congress. They do what he wants to do, when he wants to do it. There's very little leeway, frankly. You could argue that the President wanted to scramble the deck a bit on the DHS side and that's exactly what he got. At one point he supported the Senate and then he supported the House. And you can't have it both ways. So at the end of the day, I think the President has a free hand here when it comes to being able to do what he wants to do with the war effort in Iran without Congress putting any shackles on his power.

[Host/Interviewer]

Caroline Levitt, Jeannie is talking about the TSA right now. She's just started at the White House briefing, which was a late add to the schedule. She says the President's found a way to make sure they get paid. He was honored to do it, but it should be be an eye opening moment for the American people. There she is. Now for those of you with us here on Bloomberg tv, Jeannie, what do you make of this move? The President gets TSA agents paid, takes away the pressure point to potentially reopen the department. I don't know what it means for FEMA or the Coast Guard, but could we be in a world now where DHS goes unfunded for months or the rest of the year?

[Jeannie Shan Zaino]

We absolutely could. You know, it is just if any American needed another reminder how disappointed functional DC is. I mean, this is it. They jet off for a two week vacation. We're in the longest partial shutdown of a US Department. And we're doing this at a time of war. I mean, let's not forget DHS was created post 911 to address terrorist threats. We are in a war with the Iranian regime. They are very good at using terrorist soft targets and others to attack. And we have let DHS go unfunded it. It makes no sense. If the President could have paid TSA agents before he's doing it now, he should have done it before, he's doing it now. But we need a Congress that functions and this is quite literally a pox on both of their houses. Although Republicans in their infinite wisdom took something that Democrats may have been a little bit blamed for and they hoisted it on themselves by making it now, you know, Republican on Republican violence as we saw over the weekend as the House Republicans and Senate Republicans traded barbs. So this is a bad situation and it's at a dangerous time for this to happen and they could go unfunded if Congress doesn't act.

[Joe]

All right, Jeannie, Shan Zaino and Rick Davis, our political panel today, Bloomberg Politics contributors, the both of them, thank you so much. And I'm bum Joe that we ran out of time there and we didn't get to talk about the fact that Senate Lindsey Graham of South Carolina spotted at Disney World over the Mickey goes unfunded.

[Host/Interviewer]

Yeah, I guess he was eating the Tater tots with Mickey at Disney World. He said he was there for meetings, though. He was working. Yeah, so are we. This is Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.

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[Host/Interviewer]

We want to dig a bit deeper with Christine Aquino, Bloomberg's managing editor for the Markets Live blog. She's got her eyes on all the corners of the markets here with a lot of confusion, Christine, that we've been talking about politically. And of course, that goes for the the market as well, with the president speaking on two different tracks when it comes to Iran. If Washington can't figure out always what he's saying, how about Wall Street? What is the sentiment today as markets fluctuate from positive to negative and investors just looking for some indication? Caroline Levitt at the White House, I'll just mention now she's at the podium in the briefing room, says that the Pentagon estimate remains the case. She's reiterating the timeline estimate of four to six weeks for the Iran war, saying that President Trump may be interested in Arab states paying for the war. Is any of this helping to soothe investors?

[Bloomberg Announcer]

Well, Joe, I think we have reached this point in terms of markets grappling with the impact of the Iran war, where, you know, it's a little bit of a holding pattern. There aren't really any Concrete developments either way, either toward a ceasefire or a major escalation. And so we are reaching this point where you do get a sense that there is a little bit of investor fatigue when it comes to investors pricing in the risks from the conflict. But today, of course, markets seem to be paying more attention to Fed Chair Jerome Powell, who did weigh in a little bit on the impact of that, primarily through the channel of inflation. And as you can see from both green and the screen for stocks and bonds, Powell has managed to soothe at least some of the inflation concerns that have been lingering for markets. Rates.

[Joe]

Well, yeah, looking at the 10 year yield down 9 basis points on the day. Christine, is this now a bond market that seems to be thinking that it's just an inflationary shock that the Fed will look to or act or look through rather, or that this is going to turn more into a growth shock, hence yield lower?

[Bloomberg Announcer]

Yeah, there's probably a little bit of both of those elements that you mentioned, Kelly. I mean, in terms of the immediate reaction, it does seem like Fed Chair Powell very much emphasizing that they are treating the oil shock as an inflationary, a temporary inflationary impulse and therefore not necessarily something that they're going to be responding to. And so accordingly, we have seen markets kind of put bets back on potential rate cuts. Not a lot, but they have shifted their tune from pricing rate hikes as recently as last week. And then of course that all feeds into their perspective perception of the impact of higher energy costs on consumption and growth. As you mentioned, that is kind of the second order impact of higher oil prices eventually is that it will just be difficult for households and consumers to afford energy and therefore something that could crimp the rest of their ability to consume.

[Host/Interviewer]

Just in general, Christine, Goldman Sachs sees capitulation here based on the number of heavy short sales by hedge funds. And I'm wondering what you make of this note, with hedge funds cutting global equity holdings for a six straight week driven by short sales in Europe, short exposure in macro products that trade broad economic themes is now at 11%, a 10 year high. Does that guarantee a snapback when this whole thing ends?

[Bloomberg Announcer]

Yeah, I mean potentially we could see a squeeze, Joe, because we have seen just an overwhelming impulse to sell by investors. But very interestingly so hedge funds, of course one part of the market we have seen retail investors actually turning a little bit more optimistic when it comes to flows into ETFs. And so you do have a market that is functioning a little bit more in a two way basis at the moment. And that's probably why even though we have spoken about that level break last week, that was very key support for the S&P 500. It's, it hasn't necessarily been a straight line decline just because you are seeing these two way flows from retail investors as well as institutional investors at the moment.

[Jeannie Shan Zaino]

Joe.

[Joe]

All right, Christina Keynote, managing editor of the Bloomberg Markets Live blog, thank you so much. Now we're continuing to keep an eye on the briefing from the White House press secretary Caroline Levitt, who just told reporters that President Trump has declined to rule out Iran ground operation. Of course, we know that, that the president has not been ruling out actually using ground forces, but she is just reiterating this and we want to get into how popular or not that idea may be with the American electorate as we turn to Cliff Young of Ipsos, where he is U.S. public Affairs Chair. He's also professor of Texas A and M University's Bush School of Government and Public Service and is here with us in our Washington, D.C. studio. Welcome back to Bloomberg TV and Radio. If we indeed do see ground forces at some point in some reform, how is that likely to sit with the American people based on your polling?

[Cliff Young]

You know, first and foremost, Americans are not in favor of that in a general sense, not just specifically with Iran, but in general, they've been against strong muscular interventions for they have the, you know, the idea of forever wars in their head. And so they're not in favor. More specifically, a majority of Americans would be would be against forever interventions of that kind. And only 7% of Americans would be in favor of strong intervention with lots of troops on the ground. And so there's not a lot of support overall for such interventions.

[Host/Interviewer]

Really interesting to put numbers on this, Cliff. It's great to have you back. More than a month into the conflict, you find at Ipsos, more people disapprove than approve, 61% disapprove, 35% approve. But I'm curious about the trajectory that you've seen in the last five weeks. You point out President Trump's approval rating has declined three points since the strikes began at 40%. What does that mean?

[Cliff Young]

He's bleeding support ever so slowly. Trump and his administration haven't fallen off a cliff, but overall, Americans are beginning to feel it. I would say it's less to do with the abstract notion of intervention and much more specific, specifically about price at the gas pump. Americans feel that people feel that in general and that's what's really eroding support in the short term.

[Joe]

So it's about the economics here at home, essentially, is what you're saying. We've known for a long time that affordability is the issue that seems to be top of mind for voters. Is it fair to say that this war is actually exacerbating the affordability concerns that were preexisting?

[Cliff Young]

Yes. And typically foreign intervention tensions don't affect the home front, don't affect domestic issues. One thing is one thing, another thing is another, we often say. But in this specific case, obviously the price of oil is critical for everyone and for Americans, household budgets, and they're feeling it right now. And it goes against the primary issue of the midterms, which is affordability. And indeed, going into this conflict, we were saying that the Republicans are going to have a challenging year. Trump's party will have a challenging year. I think we could say even more so given what we're seeing today.

[Host/Interviewer]

Interesting. There are three numbers that you put on one page that say everything you need to know. Cliff, based on your findings, Americans unclear on goals, pessimistic about gas prices and security. The White House has been working overtime to try to delineate clear objectives here, but people still aren't always feeling it. 65% say gas prices will get worse. We're at 399 today, so welcome to $4 a gallon. 66% say the president has not clearly explained goals. This number is a problem for the White House. 29% believe U.S. involvement in Iran will improve U.S. security. How difficult will this be for the president if he can't get that number higher?

[Cliff Young]

That's the trifecta. The trifecta. Problems, indeed.

[Host/Interviewer]

We might be able to swallow high gas prices if we think this is making us safer, but we don't.

[Cliff Young]

Even then. Even then.

[Rick Davis]

True.

[Cliff Young]

Even then. The number one issue is affordability. That will always weigh more in people's mind than security. And so it really comes down. Obviously, all three are important. Most importantly is, how much am I paying at the gas pump? Can I make ends meet? Can I afford things to make my family go well?

[Joe]

So when we consider that those are the domestic concerns, this has been a president that has been much more internationally focused than you might have thought. Listening to his campaign speeches and his messaging initially, when he came to office a second time, it's not just Iran. It's also been Venezuela. He's talked a big game about Greenland, even Cuba. What are any of those initiatives popular? You were talking about how this isn't just Iran, it's interventionism as a whole that Americans are disapproving of.

[Cliff Young]

Yeah, it's an agenda that's misaligned with what people here in the United States want. Indeed, I would even double down and say misaligned with his base. The MAGA Republicans, the America First Republicans don't want forever wars. And we're beginning to see on the margins a winning away of that support. Indeed, he still has strong support among Republicans in general. But there are cracks and fissures in the foundation.

[Host/Interviewer]

Biggest drops are on cost of living and the economy. It's almost as if we're not talking about a war. But you did ask about moral leadership in the world. What, what did you learn?

[Cliff Young]

Well, Americans are highly critical of what we're doing once again, going back to forever wars. There's, there's a high level of critique of what was done. There was a desire to change things in the last few electoral cycles that change America's position vis a vis the rest of the world when it comes to our military might. And today, many Americans, a majority of Americans, believe that we're not the same moral leader that we once were. And Trump is confronting that today and we see it in his numbers.

[Joe]

Well, and we talk about this as President Trump confronting this kind of grim reality in terms of public sentiment. But you were speaking a moment ago, Cliff, about how this was reflective of his party as a whole and Republicans who were going to have to stand for reelection in November. Looking at the midterms picture right now, how, how has this war changed in your mind, the midterm outcome or potentially exacerbated how extreme those outcomes could look like when we're talking about seats flipping?

[Cliff Young]

Yeah, we already thought that the Dems were most probably going to take the House. Now the question is by how much and if this sort of scenario persists, it doesn't have to persist until election day, but well into this year, that difference could be large. The victory gap could be large indeed. We are already, not just us at Ipsos, but in general, the market abundance and forecasters are already reassessing the Senate. I think it's in play where it wasn't maybe a few months ago, maybe 50, 50. We can debate that a bit. The specific proof, specific point estimate. But ultimately the administration and the party, the Republican Party are in a bad place today.

[Host/Interviewer]

You look at history and your research, White House typically loses seats in the midterms. Everyone knows that. And you put a number on it. The average is a 25 seat swing. We talked to Susan Del Bennett last week who chairs the D triple C. They're going after Trump +13 seats around the country. They think that number could be in the 30s or 40s, Cliff. And obviously a Democrat's going to speak that way at this stage of the race. Will the price of gas determine whether that's true?

[Cliff Young]

Yeah, the price of gas and the sense of affordability. So it's not just gas, but that's a big driver. But how do people feel, how Americans feel in general, Are they able to make ends meet? And ultimately, I would not be surprised. We would, you know, if we had a 30 or 40 seat swing, I wouldn't. We haven't redone our models at Ipsos yet. But the indicators, everything, approval ratings, generic ballot, they all are pointing in that direction.

[Joe]

Well, of course, we're talking about an election that is still just over seven months away. Cliff, you said a moment ago that it's not necessarily about November. But if this goes on for much further, what is the, when's the crunch point where there's not going to be recovery? If you were someone, an incumbent in the Republican Party who was trying to stay in power in November, where does, where is there kind of no room for recovery?

[Cliff Young]

I think June or July. That's sort of the point of no return. That said, it's much easier to go down in the point polls and come back up. That goes to sort of approval ratings as well as a generic ballot. So anything they lose now, they might recuperate a little bit, but they won't get back to Sasquatch. So overall, sort of the conditions are set. It looks like it's going to be a difficult year for Republicans.

[Host/Interviewer]

You know, the president talks about the golden age and how this is the greatest economy in the world. It certainly was before we started striking Iran. You find out 68% of Americans do not believe the economy is booming. Only 30% believe that. That runs against every message that's coming out of the White House.

[Cliff Young]

And that's an earlier poll, by the way, and we specifically put that in there now. Things were not good going into Iran. Things were not going into this moment already for Republicans. Americans do not feel like things are going well again. They have, they see themselves as having difficulty is making ends meet. It's about affordability. It's not about the inflation rate. Inflation rates have come down, but how much they have to spend to make the family go. That has not improved in their minds. And, and obviously, you know, you know, high, high prices at the gas pump do not help.

[Host/Interviewer]

I'm sure there's going to be something good we can talk about. One of these days, Cliff. I just know it. Cliff Young with IPSOS and Texas A&M University's Bush School of Government. Great conversation, fascinating numbers, Kelly. It's not getting better for this White House.

[Joe]

No. And of course, we're hearing from the White House right now. The press secretary, Caroline Levitt, says the US Is trying to figure out who's in charge of Iran. We'll see if we have an answer by 5pm when we're back on Bloomberg TV and radio.

[Host/Interviewer]

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