Bloomberg Surveillance TV: June 22nd, 2026

Summary

Bloomberg Surveillance TV: June 22nd, 2026 – Detailed Summary

Episode Overview

This episode of Bloomberg Surveillance TV focuses on the latest shifts in global finance, monetary policy, geopolitics, and investment sentiment. Hosted by Jonathan Ferro, Lisa Abramowicz, and Annmarie Hordern, the show features discussions with Laurie Campers (Head of Equity Strategy, RBC Capital Markets), Jordan Rochester (Nomura, UK Political Strategist), and Senator Dave McCormick (Republican, Pennsylvania). The panel delves into US rate hikes, earnings versus valuation tension, the impact of commodity prices, major UK political turnover, Middle East diplomacy, Fed leadership changes, and the evolving narrative around AI’s economic implications.

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Market Outlook & Rate Hike Debate

With Laurie Campers of RBC
[01:34 – 08:45]

Main Topics

• US Stock Market Resilience & Fed Policy

  • Stocks remain little changed amid mixed economic data and two weeks of gains.
  • The debate: does the equity bull case hold up if the Fed raises rates?

• Historical Context

  • Markets have absorbed moderate hikes both recently (2022) and historically (since 1990).
  • Extreme moves in bond yields or rates can destabilize equities, but “everything in moderation” remains digestible.
  • Notably, a flat Fed (no hikes or cuts) tends to provide the best returns, but modest tightening or easing (under 100bp over 12 months) typically leads to 13–14% equity market returns.

    “As long as we stay... within say 2-ish hikes over the next 12 months of 25 basis points, I think stocks will ultimately be okay.” – Laurie Campers [02:52]

• Commodities, Energy & Inflation Uncertainty

  • Fluctuations in energy prices (harking back to the ‘70s) reshape interest rate expectations.
  • RBC does not anticipate imminent Fed rate changes; still, there’s a sense that any shift would more likely be a hike than a cut.
  • The Middle East situation injects commodity price uncertainty.

    “One of the things that came out in my meetings with investors last week is just a lot of uncertainty is in the air…” – Laurie Campers [03:58]

  • Question raised as to whether monetary policy is the best tool to address oil-driven inflation.

• Earnings vs. Valuation Compression

  • Key market focus: core PCE (Thursday) vs. Micron earnings (Wednesday).
  • Strong earnings are offsetting P/E ratio compression driven by higher inflation and interest rates.

    “In our modeling, it looks like the earnings story is strong enough to offset those headwinds…” – Laurie Campers [04:49]

• CapEx Cycle & Hyperscaler Dynamics

  • Most earnings growth is driven by companies with pricing power, especially in AI and hyperscalers.
  • Concerns about limits to this pricing power and possible market rotation beyond the top 10 S&P 500 names.
  • Early stages of a broader CapEx boom if more companies participate.

    "If you X out the top 10 names, we're in the very early stages of a CapEx recovery cycle..." – Laurie Campers [05:47]

Notable Quotes

• “Your best environment is when the Fed does absolutely nothing.” — Laurie Campers [02:42]
• “I think we just have to go through reporting season, right, and hear what the latest commentary is from companies.” — Laurie Campers [05:39]

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UK Political Shake-Up & Market Reaction

With Jordan Rochester of Nomura
[11:09 – 16:56]

Main Topics

• UK Prime Minister Resignation and Aftermath

  • PM Keir Starmer steps down, prompting a Labour leadership contest.
  • Andy Burnham, left-leaning and lacking granular policy detail, emerges as the front-runner with high-profile backers.
  • Market anxiety centers on the unknowns of the leadership replacement.

    “The nervousness in UK markets was less about Keir Starmer leaving. It was always about the worries about what would replace him.” – Jonathan Ferro [11:27]

• Timeline for New Leadership

  • If a 'coronation', new PM could be in place in 3–4 weeks; if contested, up to September.

• Chancellor Candidates

  • Names floated: Wes Streeting, Yvette Cooper, Shabana Mahmood, and “dark horse” Ed Miliband.
  • Market concern: more left-leaning policy means more fiscal spending and gilt sell-off risk.

• Gilt & UK Rates Market Reaction

  • Most price action occurred last week on expectations of a Burnham succession.
  • Supporting data: By-election victories boost Labour momentum.

    “The writing’s been on the wall for Keir Starmer… he was deemed to be the most unpopular prime minister in UK modern history.” – Jordan Rochester [13:34]

• Macro and Market Themes

  • UK politics now slots into a larger global context of increased fiscal spending (US, Japan, Germany), with implications for bonds and broader risk appetite.
  • Fiscal rules constrain radical moves for now.
  • If Ed Miliband becomes Chancellor, most anticipate a moderate (not dramatic) selloff in gilts.

Notable Quotes

• “If you want to take a bearish view in the UK, you need to do spread versus US or Europe...” – Jordan Rochester [14:49]
• “The sort of dramatic Liz Truss moves that you saw in 2022 – you’re not really going to get as long as all the candidates for Chancellor say they will respect the fiscal rules.” – Jordan Rochester [16:01]

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Middle East Diplomacy, Fed Transition & AI’s Economic Impact

With Senator Dave McCormick
[19:50 – 32:05]

Main Topics

• US-Iran Negotiations

  • Diplomatic momentum continues around a new nuclear agreement.
  • Senator McCormick emphasizes three critical goals: free access to the Strait of Hormuz, capping Iran's nuclear program (including uranium enrichment), and “pay for performance” on sanctions relief.

    “Each step along the way in terms of sanction relief has to be only coming when there's actual movement on the part of the Iranians.” – Senator McCormick [21:19]

  • Acknowledges Congressional role—for any MoU to be lasting, Congressional approval is essential.

• Ballistic Missiles & Iranian Proxies

  • Progress claimed on degrading Iran’s missile capacity.
  • Financial support for militant groups remains a challenge, but momentum seen on both fronts.

• Fed Chair Transition: Greenspan to Warsh

  • Kevin Warsh takes the helm at the Fed, ushering in a new era.
  • McCormick praises Warsh’s willingness to accommodate open debate, update data models, and approach the inflation/oil shock/A.I. productivity surge prudently.

    “It's going to be a different Fed than under Alan Greenspan, but one more suited for the moment.” – Senator McCormick [24:44]

• AI Boom: Disruption & Job Market Effects

  • Mixed public sentiment about AI is attributed partly to misinformation, some of which McCormick blames on China.
  • He cautions against “doomer” narratives and too much optimism, highlighting balanced, pragmatic guidance to maximize national benefit from AI.

    “It has huge risk. And it's our job to guide this incredible moment of change in a way that lifts all boats, make sure that we mitigate the downsides to it.” – Senator McCormick [25:10]

  • Observes tight labor markets for skilled trades and less-than-expected white-collar job losses.
  • Notes that technological revolutions tend to create new business models alongside disruption.

• Industrial Policy & Government Stake in AI

  • McCormick, a free markets advocate, backs prudent government intervention to ensure national security in critical sectors, while warning against government overreach.
  • Cites pandemic experience as a lesson in the need for domestic control over strategic resources like semiconductors.

    “There are certain industries... that we really do need to have control of, need to have at home. And so the government playing a role... makes sense, good common sense.” – Senator McCormick [29:46]

• Kevin Warsh’s Fed Tenure: What Are Markets Missing?

  • Warsh is portrayed as a reformer with a “big vision” and high political and strategic acumen, creating mechanisms (task forces) to map out the Fed’s future as a change agent.

Notable Quotes

• “I'm a markets person, I'm a free market person. But I think we sort of lost the narrative to some degree... there are certain industries... that we really do need to have control of...” — Senator McCormick [29:16–29:46]
• “I think a one-sided story about AI is really both misguided and really damaging to America's ability to lead and compete.” — Senator McCormick [28:08]

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Key Segment Timestamps

| Timestamp | Segment | Key Content | |-------------|-------------------------------------------|--------------------------------------------| | 01:34–03:51 | US Markets, Rate Hikes debate (Campers) | Bonds, Fed policy, rate-hike scenarios | | 03:51–06:24 | Commodities, Earnings, Hyperscaler Focus | Oil-driven inflation, CapEx cycle, AI | | 11:09–13:34 | UK Prime Minister Resignation (Rochester) | Leadership contest, market impact | | 19:50–22:00 | US-Iran Talks (McCormick) | Diplomatic red lines, MOU goals | | 23:30–24:57 | Fed Chair Transition (McCormick) | Greenspan legacy, Warsh vision | | 25:06–27:49 | AI, Disinformation, Labor Market | AI risk/reward, job disruption, China | | 29:09–31:15 | Industrial Strategy, Gov’t Role in AI | Markets vs. national interest |

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Memorable Moments & Quotes

• “Sometimes you just can't please some people and they'll say things like, this is as good as it gets, even if it is so good. Have we seen peak as good as it gets?” – Jonathan Ferro [07:25]
• “In Pennsylvania there's enormous growth in these skilled labor... and the white collar job loss has not materialized yet.” – Senator McCormick [25:51]

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Takeaways

• US equities can cope with modest rate hikes, especially if earnings momentum continues.
• Energy and commodity prices remain a significant wild card for inflation and monetary policy.
• Market rotation from hyperscalers and semiconductors to a broader CapEx cycle is possible, but not assured.
• UK political instability is being priced gradually; new leadership will test fiscal rules and bond market nerves.
• Middle East deals, while progressing, face Congressional scrutiny and unresolved red lines on missiles and proxies.
• A new, reform-minded Fed era begins with Kevin Warsh, signaling possible shifts in policy style and communication.
• The generational economic impact of AI is debated, with government seeking the balance between innovation and security.

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This thorough summary should equip you with a clear understanding of the June 22, 2026 episode’s major themes, expert insights, and market relevance, even if you missed tuning in live.

Transcript

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[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen to. And as always on the Bloomberg Terminal and the Bloomberg Business App. We begin this out with stocks little change following two weeks of gains heading into this week's inflation data. Laurie Campers of RBC writing the sentiment story has been one of mixed emotions with takeaways varying depending on which data set one is looking at. Laurie joins us now for more. Laurie, good morning. Good to see you.

[Laurie Campers]

Good morning.

[Jonathan Ferro]

Does the bull case stand up to the rate hike debate at the moment?

[Laurie Campers]

I think so as long as you have a moderate amount of rate hikes. We talked about this in our weekly a few weeks ago that whether you're looking at it from the perspective of the Fed taking rate, taking their interest rate up or 1010 year bond yields moving up, that when we go back and we look at the history both since 2022 on the bond yield side or if we look back to 1990 and look at sort of Fed moves Over the context of 12 month moves in the market, everything in moderation seems like something the equity market can handle. If you go back to 2021, 2022, we priced in an enormous amount of hikes. We had a massive move up in 10 year bond yields. It was a real regime change. We've been sort of stuck in this bond yield environment, environment on the 10 year yield side between sort of 3.3 to 5%. If we stay contained in that range, I think that we could have some short term indigestion in markets, but still have a fairly good outlook over the next 12 months. Similarly, if you go back and you look at how stocks perform in different hiking and cutting cycles, your best environment is when the Fed does absolutely nothing. So we can keep our fingers crossed for that scenario, but you tend to get like 13 to 14% returns on both the hiking side and the cutting side when you're seeing moves in the 0 to 100 basis point range. So as long as we stay, stay, you know, within say 2 ish hikes over the next 12 months of 25 basis points, I think stocks will ultimately be okay. They may not like it in the short term.

[Jonathan Ferro]

Lisa mentioned Deutsche bank looking for a call rate hikes later this year. Bank of America doing the same. That note just dropped earlier on this morning. This call, this conversation accelerated by this move in energy, but energy struck back to the 70s. When you speak to the team RBC, how dependent is the outlook for interest rates on what's happening in the commodity market?

[Laurie Campers]

So Blake Gwynne on our U.S. rate strategy team handles the Fed call for us. He's not currently looking for any Fed moves, so he has also written that his conviction in that has come down. And our Econ team has talked about how the next move may be a hike rather than a cut. I think there's a lot of fluidity in the situation right now. One of the things that came out in my meetings with investors last week is just a lot of uncertainty is in the air whether you're looking at the path of the Fed going forward, how the Fed is going to operate going forward, and frankly also the situation in the Middle east in terms of what that means for oil prices. What should your assumption be over the next 12 months? I don't think a lot of people know that, but that does have reverberations and headline inflation. One thing that Blake has really emphasized to us internally is that he hasn't really viewed the Fed policy rate as the appropriate path, are the appropriate tool really to combat any inflation emanating from oil prices. But we do know of course that we have inflation emanating from other sources as well.

[Emery]

What's more important for the equity market? Core PCE coming out on Thursday or micron earnings coming out on Wednesday?

[Laurie Campers]

I think that this is a situation in the equity market where we have very, very strong earnings tailwinds that are running up against very steady stiff headwinds on the P E side. And you tend to get compression in the P E Right. When you have higher inflation, higher interest rates. But so far in our modeling, it looks like the earnings story is strong enough to offset those headwinds from compression. So I would say right now earnings

[Emery]

matter more at this point. A lot of people keep talking about that and yet you take a look at some of the earnings, they've been driven by names that have pricing power. There is a bit of pushback on the pricing side in a significant way from hyperscalers and from other companies that are realizing that there are some limits we might be bumping up against. At what point is that a tension that needs to get resolved that could potentially be a risk factor?

[Laurie Campers]

So look, I think it is something that investors are already thinking about and digesting, which takes some of the edge off, frankly. I think we just have to go through reporting season, right, and hear what the latest commentary is from companies. One of the things we've talked about is the CapEx cycle and we're getting a lot of questions on this. Last week, a lot of that is hyperscaler driven, is AI driven? If you look at rates of change on S&P 500 capex, you're kind of hovering around peak like type levels. But if, if you X out the top 10 names, we're in the very early stages of a CapEx recovery cycle. So can you elongate the cycle as you get more companies participating in the capex boom? That's something we have to think about given the tax bill that we saw last year. So we're still sorting through a lot of these issues.

[Interviewer]

Are more companies going to be participating when it comes to doing better in the stock market, given they could put the Iran war behind them and energy prices are moving much lower.

[Laurie Campers]

So I'll tell you, Emery, last week the Business Roundtable put out the CEO confidence survey that they run and we actually saw that tick up and it was on the. The strength of capex expectations, sales expectations, hiring expectations were pretty neutral. But there's just really been a clear contrast between say, investor sentiment, which has been kind of weak or meh, it's got a little bit better recently, but hasn't been that fantastic. And then if you look at the corporate side, things are. I wouldn't say they're off to the races, but are still generally optimistic. So I think we have to take some comfort from that, especially as we head into this next reporting season.

[Jonathan Ferro]

Can I answer the question? Can I just say Micron?

[Emery]

Yeah.

[Jonathan Ferro]

Right, Micron, probably. Because I think most economists understand where PC will probably come in after seeing CPI and the last week.

[Laurie Campers]

Yeah.

[Emery]

And how high expectations are for Micron, given the fact that it's rallied like some 800% year. I mean, it's insane. You start wondering, can they keep having this transfer of wealth coming from hyperscalers to them? There was a chart showing the divergence of performance between the hyperscalers and the chip makers. And it's bonkers. I mean, it just shows what's going on right now. And it feels like maybe not totally sustainable in perpetuity.

[Jonathan Ferro]

Sometimes you just can't please some people and they'll say things like, this is as good as it gets, even if it is so good. Have we seen peak as good as it gets?

[Laurie Campers]

So if you look at the rate of upward revisions for either the semiconductor companies or the S&P 500 in general, it does look like we've sort of hit those peak levels of earnings enthusiasm. If we looked at the S&P 500, the rate of upward revisions, I think it got to around 89, 90% recently at the high. The high tends to be kind of in that 90 to 94% range. And in our latest update it ticked down to 87. So these are all very good numbers.

[Interviewer]

Right.

[Laurie Campers]

You're still generally seeing upgrades, just slightly, slightly slower pace. If you look at the semiconductors, we're still sort of sitting at peak levels of upward revisions. And so we've been talking a lot to clients about this because I've talked to a lot of people who have been in the semis, names who have been in the AI theme. You know, a fair number of people doing well with that, but they're saying maybe I should be looking around at other opportunities. So we look at that chart and I say, you know, this is a risk factor, but I can't just tell you to sit here and hold your nose and sell. Because if you go back and look in the past, sometimes you sit at these peak levels of upward revision for multiple years. So we have to watch how they move in time. And I know that's not a satisfactory answer. We're all supposed to have crystal balls in this business and predict what's going to happen six months down the road

[Jonathan Ferro]

with certainty and conviction.

[Laurie Campers]

But I do think in this parts, yeah, but I do think in this particular situation, we kind of have to take it day by day.

[Jonathan Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

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IBM support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public

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[Jonathan Ferro]

The UK Prime Minister Keir Starmer stepping down after two years place in the

[Senator Dave McCormick]

role the question my party is asking

[Jordan Rochester]

now is whether I am best placed

[Senator Dave McCormick]

to lead us into the next general election that is why I will resign as leader of the Labour Party.

[Jonathan Ferro]

Salma's exit opening the door for Britain's fifth prime minister since 2022. The former Manchester mayor Andy Burnham putting himself forward with the backing of former Health Secretary. We're stressing Jordan Rochester of Missouri writing the following Burnham wins either way. According to polling, his policy positions are clearly to the left of but lack detail on how they would be achieved. Jordan Rochester joins us now for more. Jordan, welcome to the program, sir. As you know, the nervousness in UK markets was less about secure Starmer leaving. It was always about the worries about what would replace him. Jordan, what comes next?

[Jordan Rochester]

Well, as you said John, earlier in your previous section, it was about the Chancellor choice too. I think Burnham's positions, the markets knows they're quite expensive, some of them, especially the full nationalization. But in terms of the next step, John, it's about how soon does this contest take place. We kind of get in the details of that and when will it finish and how quickly could a new PM be in place. And if it is a coronation, essentially it's going to be around three to four weeks. Similar timeline to when Theresa May took over from David Cameron. If there is a longer drawn out contest and you're talking the sort of August period into September and there's some commentary, commentary this morning suggesting that Andy Burnham hasn't yet got all of his plans in place, so doesn't really want to be a Prime Minister within three weeks. He'd rather it be a little bit longer, stronger and perhaps even in fruits of September. So those are the timelines, but let's just imagine it's in three weeks, then it's about who the cabinet choices are and we get that within a 24 to 40 hour whirlwind of news. And as Anne Marie suggested earlier, if Streeting has put, and he has, he's put his name behind Andy Burnham, does that make him more likely to be Chancellor? It could be Yvette Cooper as well, Shabbat Mahmoud, these are the names that were being considered as well as the sort of the dark horse, Ed Miliband, which is Ed Miliband was once considered for Prime Minister. So he's not the end of the world for UK rates markets. But that's kind of how the commentary kind of frames it. But he is definitely to the left of most of those other candidates. So that is the one which leads to that sort of outcome. A gilt sell off.

[Emery]

Jordan, what's priced in because ultimately it seems like there's not A lot of action on the heels of some pretty significant headlines this morning.

[Jordan Rochester]

Well, indeed. So essentially the price action took place towards the end of last week. We had UK rates started to sell off as it started to seem quite likely after the Makerfield result, which is a very strong result for Andy Banham. It was supposed to be a tight contest between him and reform and it was actually pretty gangbusters. Over 20% lead. That suggests that as a leader he could boost the Labour Party's fortunes because that's what politics is all about. It's about getting elected and the party is going behind that sort of burn and momentum that if you look back over the past few months, the writing has been on the wall for Keir Starmer. In the public opinion polls, he was deemed to be the most sort of unpopular prime minister in UK modern history. So the writing done on the wall just been a matter of time. And the main reason why Gilt's move last week was because of that lead that Andy Burnham had in the make field. But apart from that, the bigger picture is okay, that's the politics. But what about the data? What about the bank of England? Where's oil prices going and helping rates a little bit this morning? Is oil coming off the. Off the sort of recent levels slightly, thanks to progress being made in U.S. iran talks?

[Emery]

Well, Jordan to that point, how much is this story, a very specific story for a political sort in the UK versus a broader macro story that suggests something bigger about bond and affects markets?

[Jordan Rochester]

Well, the specific part is from all these policy details and how much gilts can sell off versus Treasuries versus bonds. So I think going forward, if you want to take a bearish view in the uk, you need to do spread versus US or Europe, because the broader picture is that yields have come down thanks to the US Iran war ending. But the broader picture the UK slots into actually something that's quite similar, which is fiscal spending is now potentially being entertained again. Even though the UK has been boxed in by these fiscal rules, could they be redefined? And the policy agenda that Andy Burnham has probably needs the fiscal rules to be tweaked in a way at least on capital expenditure. So that feeds in through to the bigger picture. US is spending on the one big beautiful bill. Japan's doing a consumption tax on food, potentially. You've got Germany's defense spending from just the previous year and an infrastructure feeding through to the UK thinking about public utility nationalization, better spending on NHS health care, etc. So more fiscal spending, it definitely slots into a broader theme.

[Interviewer]

The head of one of Britain's biggest trade unions had said that Ed Miliband would be a quote, noose around the neck of job creation if he became the Chancellor. Could we see some sort of market reaction to the downside in the United Kingdom if we were to see Miliband become Chancellor?

[Jordan Rochester]

It's definitely the scenario that most analysts would say that leads to a guilt sell off and it's because of its position on more fiscal spending. But he has also outlined that he would respect the fiscal rules. So I think the sort of dramatic Liz Truss moves that you've got in 2022 you're not really going to get as long as all the candidates on potential candidates for a chancellor say will respect the fiscal rules. So that kind of boxes them in. If they don't say that, then you do get the bigger moves and I don't believe Edmund has. So I think it's the scenario which leads to weaker performance of UK gilts. I'm not talking about a 2022 sell off, but the other points I'm guessing from the union leader I have to look at the quote exactly is because of the views of North Sea drilling and this is why Edmund maybe is a little bit less likely because the re industrialization plans that Andy Burnham has for the north of England kind of don't tie him the Net zero agenda and of course the North Sea drilling.

[Jonathan Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

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[Jonathan Ferro]

Negotiators for Tehran and Washington continue building the roadmap for reaching a final deal. The President faces some pushback from his own party.

[Senator Dave McCormick]

History demonstrates that giving billions of dollars

[Laurie Campers]

to theocratic lunatics who want to murder

[Senator Dave McCormick]

us is an exceptionally bad idea.

[CBOE Announcer]

And I think unfortunately the President is receiving some, some really bad advice on this deal.

[Jonathan Ferro]

The Republican and Senator Dave McCormick joins us now for more. Senator, good morning. Good to see you, sir. We're still in the negotiation phase so it's difficult to judge a deal that we haven't got yet. What are your thoughts, your assessment of the process and how this is coming together?

[Senator Dave McCormick]

Well, let me, let me start by just a word on Alan Greenspan, who I knew, I know his wife, Andrea Mitchell well. So I really, today we celebrate a great, a great life. And I introduced Kevin Warsh at his hearing and Kevin is a big admirer of Alan's as well. And he does, it'll be a different challenge but we have the right man for the job. He's, he's he's going to help lead the Fed. I think in a time of great change and uncertainty with regard to the Middle East. I think you have to start with the beginning of this, is that the President Trump took a series of actions which puts us in a position for a set of negotiations. So enormous progress taking the nuclear program way back under, reducing their missile capability, their launchers. So Iran is in economic difficult straits and militarily has been dramatically affected. Now, as we think about this MoU, there's three things that have to be achieved through this 60 day negotiation which I think are critical. And the President has more or less said this. Number one, the strait has to be open and unhindered by Iran. There can be no control. Second, they have to, to give up their enriched uranium and there has to be a path to no nuclear program. We may have a step forward on this with the nuclear inspectors. And the third thing, it needs to be paid for performance. In other words, each step along the way in terms of sanction relief has to be only coming when there's actual movement on the part of the Iranians. I think it's too early to tell whether that's happening or not, and we'll see as these negotiations proceed. But the President's goals were clear from the beginning and I think that's what we have to stay true to.

[Interviewer]

But there are two of President's goals that are not being addressed in this MoU, and that's the ballistic missile program and that's the money to Iranian proxies. Do you expect the President to somewhere address these red lines that he has had for years since going back to his first term?

[Senator Dave McCormick]

Well, the first one we've made a lot of progress on. So I mean, the, the, the missile attacks that we've done on and the, the, the air attacks we've done on their missile program, on their drones, on their manufacturing capacity, on their launchers have been extraordinarily successful. So their capability is a fraction of what it was. How far along we are, I think, remains to be seen, but there's been big progress. The second issue is whether they're going to actually stop the funding for Hezbollah and others. We've also made huge progress on taking, taking down Hezbollah and Hamas. If we move forward on this path, we'll see whether there can be a future commitment on financing of the terrorist groups. Right now, I think the focus is on the nuclear program.

[Interviewer]

What role do you see Congress playing in all of this, especially when it comes to the sanctions relief that the MOU addresses? For the regime?

[Senator Dave McCormick]

Well, it depends. It depends what the, what the agreement turns out to be. But I expect Congress will have a role and for this to be lasting, it's meaningful. Congresses need to be involved and hopefully have something that we can approve leading into the next administration. Part of the reason the Obama deal was ineffectual was that it was never a signed deal and was never passed by Congress.

[Emery]

I want to go back to Alan Greenspan for a minute because this is a really pivotal moment given that we're ushering in a Kevin Warsh era that potentially is going to be very different from what we've seen. Given where inflation is currently in Pennsylvania, given what you're seeing in markets markets, do you think it's appropriate to be hiking rates at this point? Do you think that this is something that even the President would welcome?

[Senator Dave McCormick]

Well, I think, I think Kevin was what was wise in a couple things. You have, you have two big forces coming at the economy at the same time. You have what's happening in Middle east. You have the oil shock and how that's affecting pricing, particularly in energy pricing. But it's affecting, it's affecting everything. We've seen a lot of relief on that recently, which is a huge deal for Pennsylvania's working families. Gas under four bucks makes, it makes a big difference. I was just a Pennsylvania for three days. They talked about it. The second thing is this enormous capital investment in AI and infrastructure, which can have a significant deflationary impact and a huge increase in productivity. So I think it's going to take a while to sort that through. And I think Kevin's being very wise and the Fed, I think, will wait until it has a little more insight into which way things are headed. You made the point about a single voice. I think Kevin will be an incredibly articulate voice, but he talked in his hearing about a family, family fights and the idea that there's going to be a real open exchange at the table with conflicting views on the table. He's got some very strong views on the data and the data models and how they need to be updated. So I think it's going to be a different Fed than under Alan Greenspan. But, but, but one more suited for

[Emery]

the moment is the narrative that is disinflationary. Does that work with voters? It might not be working with markets right now, but does it work with voters who are saying, well, listen, with

[Senator Dave McCormick]

the challenge, and I see this every day, is there's an enormous amount of misinformation. And make no mistake, the Chinese are Behind a lot of that. Look at the hearings that are being conducted in the House and the Senate. There's been a lot of reporting on this. AI and data centers in China have an 85% popularity. In America they have about a 20%. A lot of that's based on misinformation. So one of the responsibilities I think we have in the, in the public realm is to make sure people understand I offers enormous benefits, enormous opportunity. A lot of it still remains to be seen. And it has huge risk. And it's our job to guide this incredible moment of change in a way that lifts all boats, make sure that we mitigate the downsides to it. So it's too early to tell I think is the short answer. There was all these predictions about huge job losses. Certainly it'll be disruptive. But in Pennsylvania there's enormous growth in these skilled labor, electricians, welders, you can't get enough of them. And the white collar job loss has not materialized yet. So too early to tell in terms of what the impact is going to be. But I think because of the uncertainty that'll hopefully lead to, you know, careful decision making before we make any moves.

[Interviewer]

But Senator, the job, A couple, a couple of that, everyone was worried about apocalypse.

[Senator Dave McCormick]

Do you make that up?

[Interviewer]

Yeah. No, no. That came from AI companies themselves, not China. They were the ones that are saying that this is going to be more.

[Senator Dave McCormick]

I think, I think this go through every moment of profound change, technological change in history. There's a doomer narrative which I think is, is very misplaced. I think it's scared a lot of people. But I also think we shouldn't be too Pollyannish. This is a moment of a lot of change and we have to guide it. It has huge national security implications. We have to, we have to be in the lead. From a US perspective vis a vis China, it offers enormous opportunity in life sciences and health and on the productivity and job front. I think we're learning a lot as we go. Literally the job creation that I'm seeing on the ground from energy infrastructure, from data centers is just absolutely remarkable. And, and I lived through the Internet boom and what we saw there. There were some of the same predictions that wasn't quite as consequential, but there was predictions about how this would destroy certain business models. That was, that was true, but it also created all sorts of new business models. I suspect we're going to see that as people become more comfortable with all the power that comes with AI, there's going to be new businesses and new job creation that comes along with it, in addition to people that build things, because people that build things are in high demand. It's the great irony of, of this moment of technological change. It's putting more and more emphasis on people who can actually create the infrastructure of the future.

[Jonathan Ferro]

Point that this narrative has come from the likes of anthropic. What's in it for them? What do you think is in it for them?

[Senator Dave McCormick]

Well, I'm not going to speculate on, on motivations of any particular player, but

[Jonathan Ferro]

I think we need to interrogate the potential motivations though of these individuals that run very large companies that can have large consequences for this economy.

[Senator Dave McCormick]

Well, you could, you could imagine, you could imagine efforts to shape the regulatory landscape depending on what, what relative position someone's in. You could imagine that by positioning yourself as someone who's seeking to protect against the downside, there's benefit from a strategic perspective, from a marketing perspective. So I'm not going to pune anybody motives. I will say I think, I think a one sided story about AI is, is really both misguided and, and really damaging to America's ability to lead and compete. And that's not to say that we shouldn't have a fully rich and honest conversation about all the possibilities, but it's, it offers enormous potential. And in the history of humankind, these moments have created unbelievable prosperity. And I think this is not, this may be, you know, in all of our lifetime is certainly the most consequential thing that's happening, but it may be the most consequential thing that's happened in humankind. I mean, this is amazing, the pace of change.

[Interviewer]

I know you're a free market supporter. What do you make of this administration weighing, taking equity stakes in some of these companies?

[Senator Dave McCormick]

Well, I think the, you know, I'm, I'm a, I'm a markets person, I'm a free market market person. But, but I think we sort of lost the narrative to some degree. And I saw that particularly during COVID when we were dependent on others for semiconductors, for pharmaceuticals. We had let our, our commitment to markets essentially make us dependent. And so I think that there are certain industries, certain technologies, certain capabilities that we really do need to have control of, need to have at home.

[Interviewer]

Home.

[Senator Dave McCormick]

And so the government playing a role in ensuring that's the case is I think is good, makes sense, good common sense. I think the problem is the slippery slope. So you have to be very thoughtful about where those lines are. What really is, is a necessity from a national security perspective and what, what is ultimately can be, can be done and contributed just quickly.

[Interviewer]

They're talking about taking an equity stake with maybe anthropic, but the deal. DOD has it a supply chain risk. How does this make any sense?

[Senator Dave McCormick]

Well, you have a pace of change where new models are being created that pose, pose new challenges and new risks. So I think the government is quite rightly wrestling, and the Trump administration is wrestling with how to play a constructive role in the safeguards, at the same time not standing in the way of this remarkable innovation which is so critical to our future. So it's a balancing act. It's going to take us a little bit of while to get it right. The thing I always say is we shouldn't be setting precedents or putting any policies in place that we as Republicans or conservatives wouldn't be, wouldn't be comfortable with the next team if the next team isn't aligned ideologically. So we need to think about this in nonpartisan, apolitical terms. How should the government engage in such a way to maintain leadership, protect innovation, guard against the worst impulses with a healthy recognition that, that, you know, Ronald Reagan's line about the scariest words that you could ever hear is, I'm here from the government, I'm here to help you. We need to recognize the government's probably not equipped to get too actively engaged in some of these topics.

[Jonathan Ferro]

Senator, one final word, if you can. We brought up Kevin Walsh, new Fed chair. What do you think people are getting wrong about this guy? Because they're already drawing conclusions about what this Fed will deliver in the coming months. What do you think people are getting wrong?

[Senator Dave McCormick]

Well, you know, he is, he, he is a very gifted person and he understands markets, but understands the Fed. I think he has a reformer's heart, a reformer's instinct. So if you look at the ideas that he's put for, he's been talking about this for years. He's got a big vision, I think, for the future of the Fed, and he's also very astute politically. So, for example, the task forces that were set up, I think is a mechanism for creating a blueprint for the future, but also bringing people on board. So reformer, a change agent, but someone who's going to do it with a lot of political agility and success.

[Jonathan Ferro]

Would you like to run one of those task forces?

[Senator Dave McCormick]

I've got my hands full enough.

[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.

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