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This is your weekly Washington Policy Pulse on the Balance of Power podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence senior policy analyst and friend of the show, Nathan Dean shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most recent and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.

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Welcome to the Washington Policy Pulse. My name is Nathan Dean. I'm a Senior Policy Analyst with Bloomberg Intelligence. And welcome all of you who are coming to us via the Balance of Power podcast. We always appreciate you listening. We're recording this on October 13th and so we do have fairly amount to talk about a lot talk about in terms of the government shutdown recently. Over the weekend, we saw President Trump say and vow that he was going to pay military members on October 15th. As you recall, October 10th this past Friday was the first paid paycheck that government workers were going to miss. And we'd always said we think about the shutdown now that we're in the shutdown in terms of pressure points and the next major pressure point was going to be October 15th. Now if President Trump goes ahead and pays the military, that removes a pressure point and honestly, it removes Congress from the situation and actually doesn't give Congress much in the way of an incentive to come together and negotiate. Also over the weekend we saw some polling data and it really essentially is just the status quo. If you're a Democrat, you're feeling pretty good about your situation right now. Senator Chuck Schumer even said every day this gets better for us. I don't think he meant to say it that much, just in terms of how the Republicans used it against him. But you know, if you're a Democrat and you're looking at the polling data, that suggests that about two thirds of the independents out there blame the Republicans for this. You're thinking you're in a pretty good situation. If you're a Republican, you're looking at the polling data and it suggests that about 85, 90% of your base is still with you. You're looking at the polling data and you're still in a good situation. So nothing has really changed. And as a result, this shutdown may last for a while. There's been some thoughts that this could go all the way into November. In fact, according to Polymarket and some of the other prediction markets, you know, this was originally going to be around 11 days, then it turned 18 days. And now there's a lot of, quite a bit of folks who think this may go 35 days or longer, which would be the longest shutdown in US History. So, again, keep that in mind. There's no real pressure point here right now for this week. President Trump is in Israel, in Egypt. He's returning tonight, should be landing around just after midnight Eastern time. But you know, the House Republicans are still not here. The Senate isn't really seeing much negotiations going on. And I'm not really thinking that we're going to see much happening within the next two to three days, especially if those trips are paid. We also saw about 4,000 government workers over the weekend or starting on Friday afternoon receive reduction in force notices. That really doesn't change the calculation either. If the Democrats, you know, from the Democratic perspective, they look at this and they say, you know what, this just proves our point why we shouldn't negotiate. So I do think that if there is going to be a solution, it's going to come from a bipartisan group of senators. They will actually create the solution on their own. They will then present it to management or, sorry, to leadership. I was looking at some running calls. That's why I said management. They'll present it to leadership and then ultimately that's where the deal would come from. But I'm not seeing where the next pressure point is anytime soon. If there is one, it's going to be towards the end of the month when snap benefits run out or snap benefits, you know, there's some discussion of whether or not they'll actually be there from November. This is the Supplemental Nutritional Assistance Program, also known as food stamps. This has been allocated for October. It has not been allocated for November. In fact, the White House and the executive branch put out some notices last week that this could be at risk. And so if we get into a situation where later in the month this government shutdown hasn't been resolved, you could see some headline risk associated to those grocery stores. So again, that's, I think, the next major pressure point because as of my last count, there's about 42 million Americans that rely upon food stamps for their consumer goods purchases. So we'll just see what happens let's talk about tariffs, tariffs for a little bit now. President Trump just last week threatened 100% tariffs or more on China in relation to rare earth minerals. This would go into effect in November. We view this essentially as a let's wait and see what actually happens here. Because after over the weekend, President Trump and the Executive branch and treasury specifically made a couple of comments that would be opening the door to China for further negotiations. We had a little quick huddle in terms of how should we respond in terms of Bloomberg Intelligence. Should we look at this in greater detail? And we essentially just said, you know what, let's wait for more information before we get excited about this. Because as you've seen many, many times in the past, President Trump makes a statement, there's a headline reaction to it. And then subsequently, President Trump either in further negotiates or something's pulled back. You know, there was a question that we had from a client on whether or not this would be an IPA tariff or this would be a section 232 tariff. Our general thought at the point is, is that because it's rare earth minerals, there was an investigation launched in April on that the most likely this would be considered a section 232 or maybe a section 301 tariff. I can't remember off the top of my head, but it's one of the section tariffs, which it's an investigation as opposed to ipa, which means that it's not going to be, you know, deemed by, it's not going to come up in this court case that's going on through the courts in terms of challenging ipa. Another tariff that you should be aware of. This one goes into effect at 12:01 tomorrow morning. This is on furniture and cabinets. So just real quickly, in terms of softwood lumber, you're looking at a 10% tariff. In terms of upholstered wooden products, you're looking at a 25% tariff today or, sorry, tomorrow, and then a 30% tariff on January 1st. And then in terms of kitchen and bath cabinets, which is great, cause I have to remodel my kitchen next year, you're looking at 25% tariff today, up to a 50% tariff on January 1st. So again, keep those minds. Most likely, our colleague Drew Renning is looking at this. We have a couple of other analysts who are looking at it. So if you have any specific questions in that space, just let me know. I'll put you in touch with them. A couple of others, just things to keep in mind. Keep your eyes on this week. Treasury Secretary SCOTT Besant last week said that he made a comment about deposit insurance. We've talked about this in the past on this call. There is this idea that deposit assurance, which is currently at $250,000, would be increased for business transaction accounts, aka small businesses. Now there is legislation that's coming forth from Senator Hagerty and Senator also Brooks, so bipartisan Republican and a Democrat that would raise it to $20 million for business transaction accounts. Now there was some bipartisan agreement or bipartisan warmth to this idea in a recent Senate Banking Committee hearing. And Treasury Secretary Scott Besant, you know, joke I've gotten in trouble before when I'll just say unlike media. So it's like Scott Besant or at be. So that's why I always say Treasury Secretary Scott Besant. So anyway, that's why the label always comes up first because I want to make sure that I'm adhering to the proper protocol. So Treasury Secretary Scott Besant said that essentially that he wants to see a markup and he thinks that the Senate Banking Committee is going to have a markup on this bill fairly soon. Obviously you'd have to wait until after I think a lot of the shutdown politics are at play. But this is something to keep an eye on because who pays the increase in deposit insurance? It's the big banks. JP Morgan, bank of America, Citigroup. So let's just keep that in mind. I'm going to put that back in my pocket and we're going to keep an eye on that. Also sticking around in the banking sector, I put out a small note last week looking at the fifth third Comerica merger, essentially. Long story short here is that I don't see any reason why the federal regulators would actually oppose this. From an asset perspective, you're looking at $289 billion in assets, which is well below the G SIB threshold of 750 billion. Doesn't even put it close to like PNC or Capital One. So that's not really any issue. And if there is any specific issue related to deposit bases or branches, I think Fifth Grid can easily resolve that just by changing a couple of things. Also things to keep an eye on. This is IMF World Bank Week. So you're going to see a lot of speeches from various policymakers and central bankers across the globe. Vice Chair Michelle Beaumont, for those of us who care about the regulatory space, actually has two speeches this week. One is at the IMF World Bank. I don't think that's going to have ton of regulations on it, but she's also giving a speech later this week in terms of stress testing. So if you're interested in bank stress testing, and we've been waiting for a second stress testing proposal, it was originally supposed to be out by September 30th. So we're waiting for this other proposal to come out. So I'm curious to see what she's going to say about that. So I'm going to put that in my calendar to watch. And then this is also DC fintech Week. This is actually a really great conference in terms of financial technology and crypto. A lot of policymakers are going to be talking about that. I actually have my state of play on stablecoins. What would happen, you know, the implementation of the GENIUS act, if you will, that's coming out tomorrow. So if you do want to see a copy of that, please let me know. But look for a little bit of crypto news this week. There are a couple of folks saying that Mike Selig is going to be nominated for the next Commodity Futures Trading Commission chair. Mike is a senior advisor over at the SEC at the moment. He knows crypto. He knows crypto. He knows how the CFTC and the SEC work. So I think he actually would be a very effective pick for the crypto sector. So, again, keep that in mind. And then the last thing I want to talk about is this idea of farmer aid. Now, last week we were anticipating the Treasury Secretary, Scott Bessant, again with the title, was going to release somewhere between 10 to 13 billion dollars in aid for farmers. Now, I had a conversation on Friday with our ag analyst, Alexis Maxwell. And this is one of the things we've been doing is every Friday I put out a conversation with an analyst that I think is writing about Washington. It's writing about something that's fun about Washington and important. And I put it on the terminal. Now, it's only on the terminal for now, but in this past Friday, I took Alexis through this scenario of, okay, what happens if we get 10 to 13 billion dollars in terms of farmer aid? Some Republicans said we can even go up to 50 billion. But if we get 10 to 13 billion, essentially, what happens if she said, look, it's mostly going to be buying things like fertilizer, not any capital spend, but more of just products and goods that will assist with the harvest. So most of that money will be spent in the fourth quarter, and then by this time next year, we'll be in a situation where probably nothing has really changed. So if you're in the ag space, just please let me know. I'll give you a copy of that presentation to you. So with that, I'm going to say thank you very much for your time. We really appreciate you joining us. As always, have a wonderful week and we'll talk soon.