Democrats Gird for Long Shutdown Fight | Balance of Power 10/15/2025
Summary
Market Insights: The S&P 500 and NASDAQ saw gains driven by positive bank earnings and trade hopes, while the Dow experienced fluctuations, highlighting a mixed market sentiment.
Bank Performance: Morgan Stanley and Bank of America exceeded earnings expectations, with Morgan Stanley's stock up 5.3% and Bank of America up 4%, indicating strong performance in investment banking and M&A activities.
Government Shutdown Impact: The ongoing government shutdown, now at day 15, is causing significant political tension, with potential mass layoffs and program cuts being discussed, affecting both federal employees and broader economic conditions.
Political Standoff: Democrats and Republicans remain entrenched in their positions on the shutdown, with Democrats focusing on maintaining Affordable Care Act subsidies, while Republicans aim to cut Democrat-favored programs.
International Relations: The U.S. is considering a $40 billion aid package to Argentina, contingent on political outcomes, reflecting strategic geopolitical interests and economic influence in Latin America.
Trade Uncertainty: Despite some optimism, U.S.-China trade relations remain uncertain, with potential tariff extensions and rare earth export restrictions posing risks to global supply chains.
Media and Military Access: The Pentagon's new press restrictions have led to a media walkout, raising concerns about transparency and press freedom in covering defense-related matters.
Transcript
Live from Washington, D.C. This is balance of power with Joe Matthew. The shutdown hits day 15. Welcome to the Wednesday edition. As the Senate winds up for another vote that is expected to fail today. It'll take place in the next couple of hours as leaders brace for a lot more of this on both ends of Pennsylvania Avenue. Coming up, we'll get the very latest from Mike Dawning in our Capital influence team. And we'll spend some time in discussion with Democratic Congressman Sam Liccardo of California. With the House at the moment still out of session. The Pentagon press corps is packing up and moving out today after refusing to accept coverage limits. We'll talk about the issue at hand with our political panel. Bloomberg Politics contributors Jeannie Shane Zaino and Rick Davis are with us. And we start all this after a look at Wall Street. Charlie Pellet has the latest on the markets from world headquarters in New York. Charlie, where do we start? Right now, we are higher across the board, lows of the day on the S&P 500 index, though I bought, as is often the case, a lot of moving parts to this market. Stocks today getting a lift from bank earnings and trade hopes. Right now we have got the S&P up 13 6657 where we stand. That is a gain of just about 2/10 of 1%. The Dow giving up earlier gains just about unchanged on the day, higher by seven right now at 46,275. NASDAQ, meanwhile, up 85. It is up by about 3/10 of 1%. The ten year yield, 4.03%, the two year 3.50%. The Dow just turning negative, down now by seven. We've got spot gold up $54. The ounce, 4197, up by 1.3%. Silver is a 5244 of the ounce, up 2%. And West Texas Intermediate crude down 2/10 of 1%. 5856 a barrel on WTI. I mentioned those bank earnings. Morgan Stanley up 5.3%. Morgan Stanley's stock traders soared past expectations in the third quarter. Bank of America after earnings up 4%. Its third quarter results beat estimates as investment banking activity increased amid a long awaited comeback in M&A. So again, the Dow, the S&P, NASDAQ trading mixed now with the Dow Jones Industrial Average lower by 22 points. Argentine bonds are jumping on news that the U.S. is lining up $40 billion in aid. And David Allison said to be preparing to submit an official merger bid for Warner Brothers Discovery. That's according to The New York Post citing sources. Warner Brothers Discovery up now by two and a half percent. Paramount's guidance unchanged on the day. Again, recapping here, S&P 500 index up 1/10 of 1%. Little change. The Dow just turning negative, down 1/10 of 1% for on demand news 24 hours a day. Subscribe to Bloomberg News now. Wherever you get your podcasts back, we go to Washington. Balance of power continues. Once again, your host here is Joe Matthew. All right, Charlie, many thanks. We'll have more on the markets from Charlie Powell about 20 minutes time as we connect the dots every day here between Washington and Wall Street. Thank you for being with us on the Wednesday edition. You remember the old saying the beatings will continue until morale improves. And that seems to be the message from the White House when it comes to the government shutdown now entering day 15 while we're halfway through it. There's going to be a vote a little while. It'll be the Republican passed in the House C.R. that continues to fail in the Senate. And unless there's some sort of Christmas miracle here ahead of Halloween, it will fail again. And that will likely be the case for the days ahead, as we told you yesterday. Leaders on both ends of Pennsylvania Avenue, whether it's President Trump, his budget director, Russ Vogt or Speaker Mike Johnson, suggesting that they are bracing for a protracted shutdown, one that could set records. Maybe we're talking about this in November, maybe over our turkey roll at Thanksgiving. We'll find out. And we're going to talk in a moment with Congressman Sam Liccardo, the Democrat from California, with his thoughts on this. Because as I mentioned, the president is promising more pain the longer this goes on. And he's looking at Democrats. Here's what he said yesterday from the White House. We'll see if we can get that spot for you in just a moment here, because I want you to hear what the president said about canceling as he referred to Democrat programs and Democrat agencies. Mike Dawning is with us from our capital influence team here in Washington. You know what I'm talking about. My first it was the layoffs, and I guess we got about 4000 last week. But the administration is promising much more. You know, they say that they're going to use this as an opportunity to go after what they call Democrat programs, programs the president doesn't like, and to lay off a lot more federal workers. And they feel like that way they're punishing Democrats for this and Democratic constituencies. So with that said, it's not helping to dislodge any Democratic votes, right, when this comes to a vote today. We expect the same result. We do expect the same result. The Democrats are dug in on the Affordable Care Act. They want the subsidies to continue. They feel like they have an important issue to stand on. The 20 million people will see their insurance premiums double that. They can message this, that it's something the party cares about and something that's an effective campaign message. So they feel like this is an important thing to take a stand on. And right now, both sides feel like this is a political opportunity for them or or presented as such. That's that's the toughest scenario you can be in when both sides think they have the moral high ground here. But an interesting turn in the rhetoric yesterday, as Speaker Mike Johnson suggested to the Associated Press that this could be the longest ever shutdown. And the White House very carefully picked off some important pain points from the calendar. This was supposed to be the day military troops went without pay. Yeah, they found a way around that. Federal law enforcement found a way around that funding the WICK program managed to find some money for that. So these potential deadlines, for lack of a better term, have been removed. Could this, in fact, go on right into next month? It certainly could. And the longest ever shutdown was under Trump and the first administration went five weeks. And part of, you know, Trump sort of views himself as someone who often tries to get the best of the other side in the deal. And part of that is through projecting strength, projecting that they're not going to give in and showing that they're not going to give in. And the way you show you're not going to give in is to remove these pain points, because in the polling at the moment, the Democrats are doing slightly better than the Republicans on this shutdown. So you can't use the polls to force the Democrats to fold, at least not right now. And so the the president is kind of fortifying himself and his party to at least show the Democrats that they can continue with this a long time. So he's trying to pressure them to cave or give in in some way rather than himself giving ground. A lot of the conversation until now has been about how how Democrats in the Senate resist the jail break. Can Republicans pick off four or five and get this done and then a deal is not needed. But I feel like at some point we need to start asking the questions about how long Republicans are willing to wait to address the issue of Obamacare subsidies, knowing that this is going to be a massive issue in many red districts. Just ask Marjorie Taylor. GREENE Yeah, no. And in fact, Texas, Florida and Georgia, including where Marjorie Taylor GREENE is from, are probably the three states that are going to hit that get hit the hardest by these buy these premium increases that start coming out November 1st. And it does disproportionately affect Republican areas, particularly Republican House districts. So they could start feeling pain. They're more likely to start feeling the pain when that open enrollment begins November 1st. I think the Republicans were hoping the Democrats would feel pain from the government being shut down and the and the Republicans saying, hey, this is a Democratic caused government shutdown. But that hasn't been the case. And in a weird way, Trump steps to kind of fortify himself have also reduced the pain for the Democrats because, hey, you know, the military are paid, you know, the weak benefits are going to go out. All these things that would be pain points have been ameliorated to some extent by President Trump's actions. And President Trump's efforts to punish Democrats by canceling these programs and laying people off have made it look more like a Trump shutdown. Even if it otherwise might look more like a Democratic shutdown like dawning on our Capital Influence team, the deputy team leader with us here in Washington. Mike, we appreciate the set up, as always, with someone who has spent some time covering Capitol Hill. And we want to talk to a Democrat now for his sense of things. Sam Liccardo is a Democrat representing 16th District of California, the former mayor of San Jose, back with us on Bloomberg TV and radio. And, Congressman, it's good to see you. Welcome back. I wonder your thoughts on what we're discussing here, because if the Democratic calculation is correct, do you wait long enough? Republicans will eventually have to address the Obamacare subsidy issue. With this year end deadline approaching, how long do you think that is? Well, we shouldn't need to wait that long. Speaker Mike Johnson said yesterday that there is no strategy moving forward. Well, there is a strategy. It's actually the oldest strategy on Capitol Hill. It's called negotiation. And I've been on the phone with a half dozen Republicans over the last day, and I can tell you that we can extend the Affordable Care Act tax credits for those 22 million Americans and many more. We can do so at a lower cost with income caps. But what we can't do is force the burden of higher costs on tens of millions of American families, including those 22 million Americans who are going to see their premiums double. We can't do that. And so I think many Republicans understand that. The question is whether they're going to have the courage to step up. We can do this through negotiation, but we need a speaker willing to negotiate. And we are here. More than 200 Democrats waiting for speaker to show up to negotiate with. He's not here yet. And, you know, I was mayor of a city of a million people. We passed eight balanced budgets and every single one of them I negotiated with people who disagree with me. That's leadership. That's what we all have to do. What do you think about the moves, Congressman, that the administration has made that we were discussing, finding a workaround for military pay, federal law enforcement help, helping to fund the program. Did the administration effectively extend this shutdown by doing this or take the glare off Democrats? In the meantime, I'm trying to figure out the political strategy. It's a good question, and I don't think I'm paid well enough to be a very good political consultant, to give you a good answer to that. But what I do know is that the focus now in the national debate is where it should be, which is health care, because we know it's not just these 22 million Americans are going to pay twice as much on their premiums, but all of us are going to pay much more for our premiums because another 4 million Americans will be pushed out of the insurance world into getting their care in emergency rooms and from ambulances, which is more expensive because we know that passes on the cost to all of us. So we're going to see all of our premiums rise if we don't get this solved. And we're out of time because we know November 1st is when all of us receive that information about what plans we can choose and at what price. So we've got to get it done quickly. What is it that has you in Washington? I understand that your leader, Hakeem Jeffries, has called the Democratic Conference back into town just to be present. Are you. Are you having conversations with anyone? Are you. Are you doing interviews, trying to spread the message? What's the purpose of being here when the house is not actually in session? Well, yes, we have had caucus meetings and certainly we're talking to media, as I am now. But frankly, my conversations with Republicans have been over the phone because they're not here. They're at home. Look, we're on duty. They're on vacation. We need everybody to be on duty because we need to do much more for the American people. They deserve better than this. And since the big, ugly bill passed, what, 104 days ago, Speaker Johnson has called us into session exactly 19 days. So that is not a record of hard work that's going to be required to get us to negotiate, to move forward. He's got to call the House back into session and he needs to get his team here so we can negotiate. Well, I know you have a unique view as a former mayor and as we say frequently on this program, mayors don't always have the luxury of lawmakers in Washington when it comes to playing partisan politics. What is going to happen when these notices start going out? Many of them, to your point, are out already. Open enrollment is set to begin on the 1st of November. Does your phone start ringing off the hook? Do you actually are you able to provide constituent services in the middle of a shutdown? And what would it mean? How many people would see their premiums rise in your districts? Well, we'll see 22,000, I'm sorry, 24,000 excuse me, 24,000 families see their premiums nearly double as a result. And in my district, that means about 30 $200 a year more that they'll be paying for their health insurance. But really, this is going to be a burden on the entire health system. We know it's going to force the closures of some clinics and hospitals and it's going to increase the costs for all of us, even if we're on private plans that we don't purchase on the exchange. And so everyone's going to feel the pain here. Yes. We're going to get the calls and yes, we will be there manning the phones and receiving the emails because our offices have been open. In fact, I even opened an additional office back at home in the last couple of weeks to ensure that we can handle what we know is a lot of pain for folks who've been meeting with federal employees and their unions and so forth to try to figure out how we can reduce the burden that so many Americans are feeling. I understand the Capitol Police have missed their first full paycheck now for the first time. They are not included in the military or the federal law enforcement coverage unless you can tell me otherwise, Congressman. We've had a big conversation about security in the Capitol recently with the uptick in political violence. How concerned are you about the Capitol Police not being compensated? What does that mean for your security? Well, I forget my security. I think it's a shame. And we should all feel shame because these are women and men who struggle to pay their rent to live in a very expensive Washington metro. They deserve to get paid just like everyone else does. Who's working hard? By the way, members of my team. I'm also not taking their paycheck during this time. We all need to get the government open. And we need to be we need to be able to treat all of our employees and the American people more fairly. Want to ask you about the rhetoric that we've been hearing from the White House, and I'm not sure what the president will say. He's going to have a news conference later on today and I suspect will add to this conversation. But in promising mass layoffs, as Russ vote has, has at least begun to announce the rifts with this shutdown. The president has also suggested that on Friday, he will have a list. Two days from now, a list of what he refers to as Democrat programs that will be cut. Let's play for our audience what he said yesterday. Congressman, we'll have you respond. Here's the president. The Democrats are getting killed and we're going to have a list of them on Friday, closing up some of the most egregious socialist, semi communist, probably not so communist. We're saving them for New York, but semi communist programs and we're closing them up. We're not closing up Republican programs because we think they work. Congressman, I remain confused on this one because obviously citizens who are who are members of both parties and independents all tend to make use of these federal programs. Which programs? Are you aware that he's talking about? I'm not sure. I really know. Is he saying Social Security is semi communist? I don't know. But nonetheless, I'm I'm confident, as you are, that many Republican and Democratic Americans depend on all of these programs. And we need to keep them up open and running for America. But let's keep in mind, this threat is no different than the threat that we have heard since January 20th. We have seen 55,000 federal employees fired 150,000 more pushed out the door. The most recent announcement was for another 4000. We know it's all illegal. Obviously, that's in litigation. We've had many federal judges weigh in on this and we've seen Republican appointed judges telling this administration it's a violation of the APA and other laws. This continues to be illegal. We'll continue to fight it. But this is just more of the same. Well, a really interesting wrinkle here. Do you take him at his word? Will there be more firings? Will programs be closed down? Oh, sure. He'll close them and then he'll reopen them when he realizes he made a mistake, just like he did a few days ago. Look, these folks are shooting from the hip and more importantly, shooting before they aim. And we've seen that constantly from the times of dodge to the rescissions. And now these decisions. We know what the framers of the Constitution decided, which was the power of the purse, lies with Congress. Obviously, everything that they're doing is illegal and they're going to find that some of these things they're doing illegally are probably not very well considered even for them, as we have seen them routinely back up. So, yes, we're going to see more of this. Then they'll back off. Then we'll have judges shut it down. We're going to continue to fight. Well, we'll find out if you're right on that, Congressman, because it all does seem to be headed to the courts here. Sam Liccardo, many thanks. California 16th District, the Democrat in Washington with us live on Bloomberg TV and radio will have more voices from both sides of the aisle as we make our way through this shutdown. And we'll assemble our panel next. It's move out day at the Pentagon for the press. This is Bloomberg. Interesting conversation with Congressman Liccardo as we make our way through day 15 of the government shutdown. Roughly one hour from now, senators will vote again on the continuing resolution that continues to fail. We'll let you know what happens. Or maybe we should just make a promise to let you know if anything changes because this has become quite the spin cycle Most recently here. The cycle at the Pentagon today is out the door. This is a fascinating story. And if you listen to this program, you heard this one coming after the secretary of war, as President Trump likes to call him, Pete Hegseth laid down a marker for the Pentagon press corps. Right up to and until signing off on a piece of paper. Mandating new regulations in the way the press cover the Pentagon here. It's not going over well with anyone. Well, maybe, except Owen. But let me speak about our own shop here. Bloomberg News, along with most every other national news shop, including Fox News, Newsmax, The Washington Times, some of the conservative outlets, along with all the others, the three letter networks, The Washington Post, New York Times and so on. The five major TV networks say they will refuse to sign the new reporting limits set up by the Defense secretary, and they've been given a couple of weeks to do so. We saw this coming in slow motion. A Bloomberg News statement reads The Pentagon's new policy on press access restricts the sort of standard newsgathering essential in any democracy. We will continue to uphold the values of an independent free press and rigorously report on the U.S. government, military and matters of public interest. Following The Hague. Seth. Criteria endorsed by President Trump. So what's going on right now at the Pentagon is a bunch of journalists and their support crew dismantling computer systems, breaking down furniture and getting out of the building. At some point, they'll have to turn in their credentials as well. Yeah. The process of covering the Pentagon is about to change dramatically, and I'll be very curious to see what happens to the leaks coming out of the Pentagon with one news organization. This own new. They're going to be the only ones in there acting almost like a state TV network. And this is where we start our conversation with our political panel. Bloomberg Politics contributors Jenny Shannon Zaino and Rick Davis are with us. Rick is our Republican strategist, partner at Stone Cord Capital and Genius, our Democratic analyst, Democracy visiting fellow at Harvard Kennedy School's Ash Center. What do you think about this, Jeannie? Not so much the protocol, but the response to see FOX News, The Washington Times and other conservative outlets, with the exception of Oann, getting in the same page as CNN, MSNBC and the others? Yes, including Bloomberg, to push back on this Pentagon policy. Does that give you hope for the state of the national news media? Yeah, I think it's very heartening that they have joined together to say that this is absolutely unacceptable. Let's not forget the Pentagon gets about $1,000,000,000,000 of U.S. taxpayer money. It sends our young men and women into war. It's happening at a time where shooting boats in Venezuela killing people. The president, just hours after he says there's a chance we could have to go in and disarm Hamas. And Pete Hanks flies off to Europe and says, oh, by the way, you can't enter the building until you agree to abide by these. Absolutely. You know, insane really is the way to put it. Restrictions on press freedom. So I do think it is very, very heartening. I also think that Pete Hegseth doesn't understand a lot about reporting. Is there doesn't anybody think reporters are just going to say, okay, no more coverage of the Pentagon? I think we're going to see Joe, and this is my guest. Even better reporting. They're going to talk to their sources and they're going to be harder on the Pentagon from the outside. So I think he's doing himself a disservice if he's trying to control the narrative. I do tend to agree with you on on what could be enhanced reporting. We're going to end up seeing stories now we would not have seen otherwise because of this challenge by the Pentagon. And we should be more specific. This is a 21 page document that the journalists were asked to sign last month. As we report, one of the most concerning elements is a line barring journalists. This is the heart of the policy, barring journalists from reporting classified and even some unclassified information without the permission of the Pentagon. That's what would change here. You'd have to get essentially the secretary to sign off on your story before it goes out. And the secretary doesn't work for any any newsroom. He did used to work, of course, for Fox News, which is, by the way, packing up its bags right now and getting out of the correspondents corridor, as it's called. This goes back to the years just after World War Two. The then defense secretary in 1972, Secretary Melvin Laird, renamed the Pentagon Hallway Correspondents Corridor and dedicated a memorial to reporters killed while fighting covering U.S. foreign wars. If you walk down the corridor, in fact, they have a memorial set up there invoking the likes of Walter Cronkite, Edward Murrow, Andy Rooney and others. What do you think about this, Rick? You've spent more time in the Pentagon than most civilians due to your career here in Washington. And I know you're very familiar with some of the top brass or you have very prepared them for confirmation hearings. The press corps is a pretty important element of what happens in that building. What happens now? Well, as you pointed out, it's going to be a new question on all the confirmation hearings that are coming up. So they better be prepared to defend the policy being made by the secretary of war in front of Congress, because this is going to this is going to be an issue. And, look, there's always been tension, you know, in reporting at the Pentagon. There are a lot of reasons to keep certain plans and and activities confidential. It's not an intelligence agency, so it doesn't have the protections that a lot of intelligence agencies have with the use of the press. And and Jean is right. I mean, it's the largest single use of taxpayer dollars that the government has. And so how do you manage the, you know, pushing the pull of the public disclosure of what goes on there with the need for some level of confidentiality on war plans, irrespective of who's tweeting them out on their signal accounts? And so long story short, you know, it's it's an unenforceable policy. The reporters I've talked to, you know, point out not only the point that you made, Joe, but also that is there's a bar from even soliciting sensitive information and could get you thrown out of the Pentagon press corps. So, one, you don't know what's sensitive and to you, if you don't solicit, you don't get you've got to ask the questions. And so so it's obviously an extreme situation. And I am not surprised that there's been a walk out because the Pentagon press corps has been heralded as one of the greatest institutions inside and outside of government. And and as you point out, people have given their lives for this coverage. So if Pete Hegseth thinks he's going to make some progress here, he'd better like look at revising this policy because these journalists know what they have and they're not going to lose it. Yeah, well, that was very well put. We remember what Pete Hegseth had to say to the media briefing following our strikes against Iran. Jeannie, that was a massive here's what you should be talking about kind of speech, as some reporters were questioning whether Iranian nuclear sites were totally obliterated as the secretary and as the president had said. But like what's going to happen in the Pentagon briefings? Now, I was talking to producer James about this earlier. Are you going to have one chair with Owen sitting in it? What's the point of even disseminating information? That's absolutely right. I really hope that we are able to see the pictures of this and get the feed, because it will be very, very good to watch. The reality is Pete Hegseth has missed the mark that Donald Trump understands. And I'm surprised Donald Trump isn't pulling him in. You know the old adage, keep your friends close and your enemies closer. If he really thinks the press corps are his enemies, keep them close like Donald Trump does. He has no trouble answering questions all day long and directing what is happening in terms of the narrative coming out. That is the way he needs to do it. Apparently, he is feeling like he doesn't have that skill, and so he's going to try to slam the door and this is going to not work to his advantage. So strategically, politically, and of course, legally and constitutionally, this makes no sense. And the irony is he keeps saying this is because of national security. And yet the only leak to Rick's point we've seen this year, or the biggest leak was from his own signal chat, where he put a reporter on that signal chat. So, you know, all of this is befuddling and I really wish Congress was working and the Senate could call him up soon to answer some questions about this nonsense. Well, we should note as well, the Atlantic was part of this group here of news agencies packing up bags, refusing to sign this boy. Maybe they regret saying anything about being added to the signal chat. That would be like a real time news feed coming out of the Pentagon at this point, Rick. Does this actually have to be altered or would the next secretary be the one to do this if if if Pete Hegseth finds himself surrounded by leakers and we've got stories on the front page every day and on the terminal about something that he doesn't want us to be talking about this, does he let them move back in? You know, they're going to have to arrange something to accommodate everybody. You know, he's he's made his mark. He's like I, you know, told the press that they can't wander around the halls asking people questions, which is what they've been doing since there was a Pentagon. And so now he's just got to he's got to sit down with a group and say, okay, what is it that I can do to meet my needs, you know, for confidentiality, which is an issue inside the Pentagon and and make it, you know, accessible to you and your First Amendment protections. And and there's a deal there to be done. It is the deal. Administration go cut a deal. That's right. And well, here we I think Donald Trump would appreciate that. You know, just yesterday he talked about moving the press corps out of the White House. Just hold that for a minute because we've heard that story before. To Rick Davis and Jeannie Shann, Zaino, Bloomberg Politics contributors, great insights. Thank you for the panel. Maybe this will change. Christopher Smart is on the way. And next, as we turn to the economy on Bloomberg headline this morning was stocks rise as Best Fuels US-China trade hopes. Now we're hearing about trade uncertainty all in the same trading session. I don't know what investors were listening to here, but it reminds us of how much has yet to be accomplished on the trade front, specifically when it comes to China. We're going to be digging into that with Christopher Smart in a moment. He's with us here in Washington from Arbroath Group. First, Christine Aquino joins us, managing editor for Bloomberg Markets Live blog, who has a little case of whiplash today watching things bounce around. Christine, we just wanted to get under the hood with you for a moment here to kind of extend what we just heard from Charlie Pellet. It's great to see you, by the way. This market is one that's been described as frothy, as toppy. And so any time somebody says the wrong thing in Washington, all of a sudden we see red arrows. But it has not been the beginning of a trend. Is this still a market that is owned by retail brokers who can't help but buy the dip? Good question, Joe. And my neck hurts watching these markets because that's exactly it. As you described. It does seem like it is a market caught between still wanting to buy that dip and still believing that this rally can keep going, but also very afraid of when the music will stop playing. And this is why we keep getting this back and forth between a rally and then suddenly a bit of a sell off, back to a rally again. And also the catalysts keep shifting, right when it comes to how it all relates to trade. I mean, it is very much to the fuel for a very volatile trading period because the situation and trade itself is very volatile. We don't really have a lot of clarity. All we've gotten this week is kind of headline trading between China and the U.S. in terms of what they're hoping to get out of this relationship, what are kind of their red lines and all of that. And it does feel like that's something that could continue until we get that sort of more clarity in terms of the relationship, how that's going to shake out, which probably were not going to get until November. Right. How many times have you heard the word bubble today? Because part of your job is reading through analyst notes. And this is the question, right? This is the this is the one politics show on Bloomberg. Every other show is asking whether we have an air bubble. You saw Jared Bernstein, one of the president, former president's chief economic advisers. The Biden campaign calling the bubble in i in an op ed earlier this week. But every time we hear from an executive, whether it's Jensen Huang, Lisa Sue, they tell us we're in the early stages of what could be a ten year spending cycle. How should the market be looking at this? Yeah, I mean, very interesting. The word bubble has really permeated the sentiment in markets and also here in the Bloomberg newsroom for the past week. I want to say at the very least, and you know, what we're hearing from executives is, of course, very expected because they want to be talking their book. They want investors to be buying into this air theme and convincing them that this is going on for much longer than anyone expects. And that may be true, but it's also true that in a longer term cycle, there will be pullbacks. And it's possible that, you know, when we get instances like this where valuations are near the top and there's a lot of kind of hope already priced into markets, that we do get pullbacks when the news is not always as positive as markets expect. And increasingly markets expect news to be more positive than their already very positive expectations. So it's a very high bar in terms of companies over kind of getting over those expectations. Yeah, well put, as always. Christine Aquino with us live from New York. Christine, thank you so much for your insights. You know, when it comes to the trade today, AMD is still cranking up for that massive rally the other day of $16, 8%, Micron still pushing higher. It's up 2%, up about $4, though. And video is sagging today, down just about a dollar, about a half percent. It will have. More on the markets coming up at the top of the hour. So, yeah, uncertainty maybe bubble is our first word of the day. Uncertainty is the other, at least in the second half of the session. Despite what Scott Best said earlier today, we might even extend our trade truce with China. Here's a bit of his news conference from this morning. Not only is China fueling Russia's war, but China's actions have once again demonstrated the risk of being dependent on them on rare earths and for that matter, anything. If China wants to be an unreliable partner to the world, then the world will have to decouple. Decouple. That was the word of the year in the last administration. But along with that tough talk, as I mentioned, the Treasury secretary proposing a longer pause on higher tariffs on Chinese goods in return for Beijing, putting off its plan to tight limits on rare earths for only a couple of weeks away from a big meeting between Trump and Xi. And so the drumbeats getting louder on both sides here, which is why it's great to be joined by Christopher Smart and he's with us in person today as well. The toast of Boston. With us here in the nation's capital, founder and managing partner, Arbroath Group, former special assistant to the president, National Economic Council during the Obama administration. It's great to see you. Christopher, great to be with you. So this conversation's apparently never going to end because I think we may have been talking about this last time you were on. What do you make of the bluster? And I'm assuming that's all it is on both sides here, whether it's an additional 100% tariff or cracking down on rare earth magnets if you're President Xi, or is this all posturing for a meeting or are we in bigger trouble than we think? I think it's a little bit of both. I think just to take a step back, you've got the two largest economies in the world deeply integrated with one another, deeply uncomfortable with the fact that they are so integrated with one another. And whether you call it decoupling or de-risking or slowly trying to pull that apart is very hard to do without creating a lot of waves and a lot of blowback elsewhere. That's I think what's what's really interesting right now is for all of the issues we have on the table with China, whether they're military, diplomatic, human rights, the president is focused very narrowly on an economic deal and then within the economic space, very narrowly on a tariff export control kind of deal. Yes. So it's almost going to be a tariff for rare earths or our technology exports for their rare earth exports. And all of the rest of it is going to be left unanswered for now, which has been the case with a lot of these framework deals that they are quite narrow and might need further negotiating. Is the market kidding itself, though, to think that this meeting is going to change something? I mean, we're right near all time highs as we've just established. Christopher, and I don't want to turn you into an investment strategist here, but sometimes it's hard to justify what we're seeing when we know how scared Wall Street is of this not working out. Well, I think they are scared. It's very hard, I think, for investors to price in tail risks. Yes. Right. So they're focused more on the good earnings that the banks delivered yesterday, the GDP numbers that we may or may not get anytime soon. Right. I story the deregulation story, the big, beautiful bill and the input impetus that's going to give a lot of CapEx next year. So that is what I think is driving markets right now. And that's sort of the base case that everybody has, but everybody's looking over their shoulder. On the one side, there's the China risk. On the other side there is the tariff blowback risk. And then they're just a whole lot of supply chains that have yet to work through all of these tariffs. And that's, I think, high on everybody's mind as well Stephen. Myron, speaking earlier today, self labeled as out of consensus, says the very uncertainty that the president is creating here with regard to tariffs is the reason why the Fed should cut interest rates. And that's been well, that's going against the grain of what Jay Powell has been saying this whole time. He's been holding off on cuts because of the uncertainty, not knowing what the impact would be to Stephen. Myron, end up being right here. Well, it's not anything I learned in my economics classes or in my investment career. I think the consensus, it's out of consensus. And I think, you know, Stephen, Myron is is staking staking the ground on the out of consensus trade in his earlier speeches about what our stars should be, what's a natural interest rate for the economy. And I think, you know, he's got a view. We'll see how he's able to convince any of his Fed colleagues, whether that if you make sense or not. But I'm not sure the market is buying it. Well, no, I think that's clear. And I wonder as well about what comes next with regard to the government shutdown. We're talking about mass layoffs. I just saw a headline role that it wasn't just 4000 that Russ vote saying just now on the radio that will probably be higher than 10,000. You add that to all of the early retirements and some of the buyouts, if I can even call them that, That amounted to about 250,000 federal workers. Add another layer with mass deportations, and we've got a job market that looks a lot different than it did even a couple of months ago. Christopher. Yeah, that would prompt interest rate cuts, presumably. How are you looking at that? I think that's right. I think, you know, everybody who is so excited about I and the CapEx story is also looking very closely at the weakness in the labor market and that continues to unfold right now. And these moves with the government shutdown, what is remarkable is that it's the largest government and the largest economy in the world, and it's not really a top news story anymore, which I think means that neither side is interested in getting this settled anytime soon. And I think if you're an investor, you have to not. Just sort of assume at one point or another Chuck Schumer will call President Trump or the other way around and we'll get a handshake and a deal. This could go on through the end of the year. And I'm not sure markets are thinking about that at all. You know, and I'm hearing that a lot more often now. Even the speaker of the House said this could be a record setter. And clearly President Trump is not looking to budge any time soon, which is all the more reason why there's confusion about Argentina. I want to ask you about this while you're here. And we'll start with what the president had to say in terms of America first and his agenda economically. Let's listen to President Trump. We're going to work very much with the president. We think he's going to win. He should win. And if he does win, we're going to be very helpful. And if he doesn't win, we're not going to waste our time because you have somebody whose philosophy has no chance of making Argentina great again. Okay. And he's sitting across from Javier Malay when he's saying this. I'm a little confused because apparently this money does not arrive if Melaye doesn't win the election, for starters. But $20 billion was the number yesterday. This is now, I think, up to 40. What was it, James? 40 or $60 billion, the headline. I think for that we just ran $40 billion. So twice what the president said, you know, saying openly that this really does not help America, that we're investing in good politics and a good friend in Argentina. What are you calling this? I don't know what the what the word for it is, frankly. But it's it's sort of interesting to see the president say, you know, we're going to bet on this guy if he wins. But if he doesn't, we're going to pull our money out. Right. Which may be too late. Conditional bailout is there are lots of questions about Argentina and this particular set of bailouts, because, first of all, Argentina is not a military ally. Argentina is certainly not systemic to the global financial system. We seem to be backing a horse in an ideological race for economic policy within Latin America. And it is frankly, the first time that a U.S. taxpayer dollars have been exposed to the Argentine peso directly. Now, the $20 billion, it seems to be a currency swap with the Argentine central bank, and that was announced today apparently from Secretary Bessant was another $20 billion of private banks and other investors willing to put money to work. I'd love to see what that list is and who is ready to sort of take that leap of faith about Argentine midterm election outcomes. Yeah. Let's So this is a head scratcher. Well, okay. This administration has been in many ways original. Is this a first? This? Well, it is. I mean, the last time we did anything close to this was with Mexico in the in the bailout with President Clinton. And those were we actually backed our loans to Mexico. We're backed by a mexican oil reserves. So there was a lot more going on there already, As you may know. As you do know, Argentina is to $40 billion in the hole to the IMF. So, you know, it's got a big hole to fill. If it's able to turn things right, some of the back room conversations at the IMF this week in Washington are focused on this quite deeply. There are a lot of a lot of head scratching here. And as you pointed out earlier, it's very off brand for a president who's putting America first. Yes, right. It's something that we've you know, we've always thought that IMF involvement to help emerging markets with good policies grow better, as always in the United States interest. This sort of back door approach and run around the IMF is is new and different. And as I say, off brand truly interesting times that we're living in here. And we'll let you know what happens to this and what the final number is, who might be behind that second tranche of $20 billion. You think FIFA is going to stay in Foxborough? That was the big story yesterday. That is where we've got our fingers crossed in the US. Yeah, well, the president should know that Boston Stadium is not in Boston. FIFA calls it that, but Foxborough is like an hour away. Christopher Smart, Arbroath, great to see you. Great to be with you as always. Thank you. Bloomberg.
Democrats Gird for Long Shutdown Fight | Balance of Power 10/15/2025
Summary
Transcript
Live from Washington, D.C. This is balance of power with Joe Matthew. The shutdown hits day 15. Welcome to the Wednesday edition. As the Senate winds up for another vote that is expected to fail today. It'll take place in the next couple of hours as leaders brace for a lot more of this on both ends of Pennsylvania Avenue. Coming up, we'll get the very latest from Mike Dawning in our Capital influence team. And we'll spend some time in discussion with Democratic Congressman Sam Liccardo of California. With the House at the moment still out of session. The Pentagon press corps is packing up and moving out today after refusing to accept coverage limits. We'll talk about the issue at hand with our political panel. Bloomberg Politics contributors Jeannie Shane Zaino and Rick Davis are with us. And we start all this after a look at Wall Street. Charlie Pellet has the latest on the markets from world headquarters in New York. Charlie, where do we start? Right now, we are higher across the board, lows of the day on the S&P 500 index, though I bought, as is often the case, a lot of moving parts to this market. Stocks today getting a lift from bank earnings and trade hopes. Right now we have got the S&P up 13 6657 where we stand. That is a gain of just about 2/10 of 1%. The Dow giving up earlier gains just about unchanged on the day, higher by seven right now at 46,275. NASDAQ, meanwhile, up 85. It is up by about 3/10 of 1%. The ten year yield, 4.03%, the two year 3.50%. The Dow just turning negative, down now by seven. We've got spot gold up $54. The ounce, 4197, up by 1.3%. Silver is a 5244 of the ounce, up 2%. And West Texas Intermediate crude down 2/10 of 1%. 5856 a barrel on WTI. I mentioned those bank earnings. Morgan Stanley up 5.3%. Morgan Stanley's stock traders soared past expectations in the third quarter. Bank of America after earnings up 4%. Its third quarter results beat estimates as investment banking activity increased amid a long awaited comeback in M&A. So again, the Dow, the S&P, NASDAQ trading mixed now with the Dow Jones Industrial Average lower by 22 points. Argentine bonds are jumping on news that the U.S. is lining up $40 billion in aid. And David Allison said to be preparing to submit an official merger bid for Warner Brothers Discovery. That's according to The New York Post citing sources. Warner Brothers Discovery up now by two and a half percent. Paramount's guidance unchanged on the day. Again, recapping here, S&P 500 index up 1/10 of 1%. Little change. The Dow just turning negative, down 1/10 of 1% for on demand news 24 hours a day. Subscribe to Bloomberg News now. Wherever you get your podcasts back, we go to Washington. Balance of power continues. Once again, your host here is Joe Matthew. All right, Charlie, many thanks. We'll have more on the markets from Charlie Powell about 20 minutes time as we connect the dots every day here between Washington and Wall Street. Thank you for being with us on the Wednesday edition. You remember the old saying the beatings will continue until morale improves. And that seems to be the message from the White House when it comes to the government shutdown now entering day 15 while we're halfway through it. There's going to be a vote a little while. It'll be the Republican passed in the House C.R. that continues to fail in the Senate. And unless there's some sort of Christmas miracle here ahead of Halloween, it will fail again. And that will likely be the case for the days ahead, as we told you yesterday. Leaders on both ends of Pennsylvania Avenue, whether it's President Trump, his budget director, Russ Vogt or Speaker Mike Johnson, suggesting that they are bracing for a protracted shutdown, one that could set records. Maybe we're talking about this in November, maybe over our turkey roll at Thanksgiving. We'll find out. And we're going to talk in a moment with Congressman Sam Liccardo, the Democrat from California, with his thoughts on this. Because as I mentioned, the president is promising more pain the longer this goes on. And he's looking at Democrats. Here's what he said yesterday from the White House. We'll see if we can get that spot for you in just a moment here, because I want you to hear what the president said about canceling as he referred to Democrat programs and Democrat agencies. Mike Dawning is with us from our capital influence team here in Washington. You know what I'm talking about. My first it was the layoffs, and I guess we got about 4000 last week. But the administration is promising much more. You know, they say that they're going to use this as an opportunity to go after what they call Democrat programs, programs the president doesn't like, and to lay off a lot more federal workers. And they feel like that way they're punishing Democrats for this and Democratic constituencies. So with that said, it's not helping to dislodge any Democratic votes, right, when this comes to a vote today. We expect the same result. We do expect the same result. The Democrats are dug in on the Affordable Care Act. They want the subsidies to continue. They feel like they have an important issue to stand on. The 20 million people will see their insurance premiums double that. They can message this, that it's something the party cares about and something that's an effective campaign message. So they feel like this is an important thing to take a stand on. And right now, both sides feel like this is a political opportunity for them or or presented as such. That's that's the toughest scenario you can be in when both sides think they have the moral high ground here. But an interesting turn in the rhetoric yesterday, as Speaker Mike Johnson suggested to the Associated Press that this could be the longest ever shutdown. And the White House very carefully picked off some important pain points from the calendar. This was supposed to be the day military troops went without pay. Yeah, they found a way around that. Federal law enforcement found a way around that funding the WICK program managed to find some money for that. So these potential deadlines, for lack of a better term, have been removed. Could this, in fact, go on right into next month? It certainly could. And the longest ever shutdown was under Trump and the first administration went five weeks. And part of, you know, Trump sort of views himself as someone who often tries to get the best of the other side in the deal. And part of that is through projecting strength, projecting that they're not going to give in and showing that they're not going to give in. And the way you show you're not going to give in is to remove these pain points, because in the polling at the moment, the Democrats are doing slightly better than the Republicans on this shutdown. So you can't use the polls to force the Democrats to fold, at least not right now. And so the the president is kind of fortifying himself and his party to at least show the Democrats that they can continue with this a long time. So he's trying to pressure them to cave or give in in some way rather than himself giving ground. A lot of the conversation until now has been about how how Democrats in the Senate resist the jail break. Can Republicans pick off four or five and get this done and then a deal is not needed. But I feel like at some point we need to start asking the questions about how long Republicans are willing to wait to address the issue of Obamacare subsidies, knowing that this is going to be a massive issue in many red districts. Just ask Marjorie Taylor. GREENE Yeah, no. And in fact, Texas, Florida and Georgia, including where Marjorie Taylor GREENE is from, are probably the three states that are going to hit that get hit the hardest by these buy these premium increases that start coming out November 1st. And it does disproportionately affect Republican areas, particularly Republican House districts. So they could start feeling pain. They're more likely to start feeling the pain when that open enrollment begins November 1st. I think the Republicans were hoping the Democrats would feel pain from the government being shut down and the and the Republicans saying, hey, this is a Democratic caused government shutdown. But that hasn't been the case. And in a weird way, Trump steps to kind of fortify himself have also reduced the pain for the Democrats because, hey, you know, the military are paid, you know, the weak benefits are going to go out. All these things that would be pain points have been ameliorated to some extent by President Trump's actions. And President Trump's efforts to punish Democrats by canceling these programs and laying people off have made it look more like a Trump shutdown. Even if it otherwise might look more like a Democratic shutdown like dawning on our Capital Influence team, the deputy team leader with us here in Washington. Mike, we appreciate the set up, as always, with someone who has spent some time covering Capitol Hill. And we want to talk to a Democrat now for his sense of things. Sam Liccardo is a Democrat representing 16th District of California, the former mayor of San Jose, back with us on Bloomberg TV and radio. And, Congressman, it's good to see you. Welcome back. I wonder your thoughts on what we're discussing here, because if the Democratic calculation is correct, do you wait long enough? Republicans will eventually have to address the Obamacare subsidy issue. With this year end deadline approaching, how long do you think that is? Well, we shouldn't need to wait that long. Speaker Mike Johnson said yesterday that there is no strategy moving forward. Well, there is a strategy. It's actually the oldest strategy on Capitol Hill. It's called negotiation. And I've been on the phone with a half dozen Republicans over the last day, and I can tell you that we can extend the Affordable Care Act tax credits for those 22 million Americans and many more. We can do so at a lower cost with income caps. But what we can't do is force the burden of higher costs on tens of millions of American families, including those 22 million Americans who are going to see their premiums double. We can't do that. And so I think many Republicans understand that. The question is whether they're going to have the courage to step up. We can do this through negotiation, but we need a speaker willing to negotiate. And we are here. More than 200 Democrats waiting for speaker to show up to negotiate with. He's not here yet. And, you know, I was mayor of a city of a million people. We passed eight balanced budgets and every single one of them I negotiated with people who disagree with me. That's leadership. That's what we all have to do. What do you think about the moves, Congressman, that the administration has made that we were discussing, finding a workaround for military pay, federal law enforcement help, helping to fund the program. Did the administration effectively extend this shutdown by doing this or take the glare off Democrats? In the meantime, I'm trying to figure out the political strategy. It's a good question, and I don't think I'm paid well enough to be a very good political consultant, to give you a good answer to that. But what I do know is that the focus now in the national debate is where it should be, which is health care, because we know it's not just these 22 million Americans are going to pay twice as much on their premiums, but all of us are going to pay much more for our premiums because another 4 million Americans will be pushed out of the insurance world into getting their care in emergency rooms and from ambulances, which is more expensive because we know that passes on the cost to all of us. So we're going to see all of our premiums rise if we don't get this solved. And we're out of time because we know November 1st is when all of us receive that information about what plans we can choose and at what price. So we've got to get it done quickly. What is it that has you in Washington? I understand that your leader, Hakeem Jeffries, has called the Democratic Conference back into town just to be present. Are you. Are you having conversations with anyone? Are you. Are you doing interviews, trying to spread the message? What's the purpose of being here when the house is not actually in session? Well, yes, we have had caucus meetings and certainly we're talking to media, as I am now. But frankly, my conversations with Republicans have been over the phone because they're not here. They're at home. Look, we're on duty. They're on vacation. We need everybody to be on duty because we need to do much more for the American people. They deserve better than this. And since the big, ugly bill passed, what, 104 days ago, Speaker Johnson has called us into session exactly 19 days. So that is not a record of hard work that's going to be required to get us to negotiate, to move forward. He's got to call the House back into session and he needs to get his team here so we can negotiate. Well, I know you have a unique view as a former mayor and as we say frequently on this program, mayors don't always have the luxury of lawmakers in Washington when it comes to playing partisan politics. What is going to happen when these notices start going out? Many of them, to your point, are out already. Open enrollment is set to begin on the 1st of November. Does your phone start ringing off the hook? Do you actually are you able to provide constituent services in the middle of a shutdown? And what would it mean? How many people would see their premiums rise in your districts? Well, we'll see 22,000, I'm sorry, 24,000 excuse me, 24,000 families see their premiums nearly double as a result. And in my district, that means about 30 $200 a year more that they'll be paying for their health insurance. But really, this is going to be a burden on the entire health system. We know it's going to force the closures of some clinics and hospitals and it's going to increase the costs for all of us, even if we're on private plans that we don't purchase on the exchange. And so everyone's going to feel the pain here. Yes. We're going to get the calls and yes, we will be there manning the phones and receiving the emails because our offices have been open. In fact, I even opened an additional office back at home in the last couple of weeks to ensure that we can handle what we know is a lot of pain for folks who've been meeting with federal employees and their unions and so forth to try to figure out how we can reduce the burden that so many Americans are feeling. I understand the Capitol Police have missed their first full paycheck now for the first time. They are not included in the military or the federal law enforcement coverage unless you can tell me otherwise, Congressman. We've had a big conversation about security in the Capitol recently with the uptick in political violence. How concerned are you about the Capitol Police not being compensated? What does that mean for your security? Well, I forget my security. I think it's a shame. And we should all feel shame because these are women and men who struggle to pay their rent to live in a very expensive Washington metro. They deserve to get paid just like everyone else does. Who's working hard? By the way, members of my team. I'm also not taking their paycheck during this time. We all need to get the government open. And we need to be we need to be able to treat all of our employees and the American people more fairly. Want to ask you about the rhetoric that we've been hearing from the White House, and I'm not sure what the president will say. He's going to have a news conference later on today and I suspect will add to this conversation. But in promising mass layoffs, as Russ vote has, has at least begun to announce the rifts with this shutdown. The president has also suggested that on Friday, he will have a list. Two days from now, a list of what he refers to as Democrat programs that will be cut. Let's play for our audience what he said yesterday. Congressman, we'll have you respond. Here's the president. The Democrats are getting killed and we're going to have a list of them on Friday, closing up some of the most egregious socialist, semi communist, probably not so communist. We're saving them for New York, but semi communist programs and we're closing them up. We're not closing up Republican programs because we think they work. Congressman, I remain confused on this one because obviously citizens who are who are members of both parties and independents all tend to make use of these federal programs. Which programs? Are you aware that he's talking about? I'm not sure. I really know. Is he saying Social Security is semi communist? I don't know. But nonetheless, I'm I'm confident, as you are, that many Republican and Democratic Americans depend on all of these programs. And we need to keep them up open and running for America. But let's keep in mind, this threat is no different than the threat that we have heard since January 20th. We have seen 55,000 federal employees fired 150,000 more pushed out the door. The most recent announcement was for another 4000. We know it's all illegal. Obviously, that's in litigation. We've had many federal judges weigh in on this and we've seen Republican appointed judges telling this administration it's a violation of the APA and other laws. This continues to be illegal. We'll continue to fight it. But this is just more of the same. Well, a really interesting wrinkle here. Do you take him at his word? Will there be more firings? Will programs be closed down? Oh, sure. He'll close them and then he'll reopen them when he realizes he made a mistake, just like he did a few days ago. Look, these folks are shooting from the hip and more importantly, shooting before they aim. And we've seen that constantly from the times of dodge to the rescissions. And now these decisions. We know what the framers of the Constitution decided, which was the power of the purse, lies with Congress. Obviously, everything that they're doing is illegal and they're going to find that some of these things they're doing illegally are probably not very well considered even for them, as we have seen them routinely back up. So, yes, we're going to see more of this. Then they'll back off. Then we'll have judges shut it down. We're going to continue to fight. Well, we'll find out if you're right on that, Congressman, because it all does seem to be headed to the courts here. Sam Liccardo, many thanks. California 16th District, the Democrat in Washington with us live on Bloomberg TV and radio will have more voices from both sides of the aisle as we make our way through this shutdown. And we'll assemble our panel next. It's move out day at the Pentagon for the press. This is Bloomberg. Interesting conversation with Congressman Liccardo as we make our way through day 15 of the government shutdown. Roughly one hour from now, senators will vote again on the continuing resolution that continues to fail. We'll let you know what happens. Or maybe we should just make a promise to let you know if anything changes because this has become quite the spin cycle Most recently here. The cycle at the Pentagon today is out the door. This is a fascinating story. And if you listen to this program, you heard this one coming after the secretary of war, as President Trump likes to call him, Pete Hegseth laid down a marker for the Pentagon press corps. Right up to and until signing off on a piece of paper. Mandating new regulations in the way the press cover the Pentagon here. It's not going over well with anyone. Well, maybe, except Owen. But let me speak about our own shop here. Bloomberg News, along with most every other national news shop, including Fox News, Newsmax, The Washington Times, some of the conservative outlets, along with all the others, the three letter networks, The Washington Post, New York Times and so on. The five major TV networks say they will refuse to sign the new reporting limits set up by the Defense secretary, and they've been given a couple of weeks to do so. We saw this coming in slow motion. A Bloomberg News statement reads The Pentagon's new policy on press access restricts the sort of standard newsgathering essential in any democracy. We will continue to uphold the values of an independent free press and rigorously report on the U.S. government, military and matters of public interest. Following The Hague. Seth. Criteria endorsed by President Trump. So what's going on right now at the Pentagon is a bunch of journalists and their support crew dismantling computer systems, breaking down furniture and getting out of the building. At some point, they'll have to turn in their credentials as well. Yeah. The process of covering the Pentagon is about to change dramatically, and I'll be very curious to see what happens to the leaks coming out of the Pentagon with one news organization. This own new. They're going to be the only ones in there acting almost like a state TV network. And this is where we start our conversation with our political panel. Bloomberg Politics contributors Jenny Shannon Zaino and Rick Davis are with us. Rick is our Republican strategist, partner at Stone Cord Capital and Genius, our Democratic analyst, Democracy visiting fellow at Harvard Kennedy School's Ash Center. What do you think about this, Jeannie? Not so much the protocol, but the response to see FOX News, The Washington Times and other conservative outlets, with the exception of Oann, getting in the same page as CNN, MSNBC and the others? Yes, including Bloomberg, to push back on this Pentagon policy. Does that give you hope for the state of the national news media? Yeah, I think it's very heartening that they have joined together to say that this is absolutely unacceptable. Let's not forget the Pentagon gets about $1,000,000,000,000 of U.S. taxpayer money. It sends our young men and women into war. It's happening at a time where shooting boats in Venezuela killing people. The president, just hours after he says there's a chance we could have to go in and disarm Hamas. And Pete Hanks flies off to Europe and says, oh, by the way, you can't enter the building until you agree to abide by these. Absolutely. You know, insane really is the way to put it. Restrictions on press freedom. So I do think it is very, very heartening. I also think that Pete Hegseth doesn't understand a lot about reporting. Is there doesn't anybody think reporters are just going to say, okay, no more coverage of the Pentagon? I think we're going to see Joe, and this is my guest. Even better reporting. They're going to talk to their sources and they're going to be harder on the Pentagon from the outside. So I think he's doing himself a disservice if he's trying to control the narrative. I do tend to agree with you on on what could be enhanced reporting. We're going to end up seeing stories now we would not have seen otherwise because of this challenge by the Pentagon. And we should be more specific. This is a 21 page document that the journalists were asked to sign last month. As we report, one of the most concerning elements is a line barring journalists. This is the heart of the policy, barring journalists from reporting classified and even some unclassified information without the permission of the Pentagon. That's what would change here. You'd have to get essentially the secretary to sign off on your story before it goes out. And the secretary doesn't work for any any newsroom. He did used to work, of course, for Fox News, which is, by the way, packing up its bags right now and getting out of the correspondents corridor, as it's called. This goes back to the years just after World War Two. The then defense secretary in 1972, Secretary Melvin Laird, renamed the Pentagon Hallway Correspondents Corridor and dedicated a memorial to reporters killed while fighting covering U.S. foreign wars. If you walk down the corridor, in fact, they have a memorial set up there invoking the likes of Walter Cronkite, Edward Murrow, Andy Rooney and others. What do you think about this, Rick? You've spent more time in the Pentagon than most civilians due to your career here in Washington. And I know you're very familiar with some of the top brass or you have very prepared them for confirmation hearings. The press corps is a pretty important element of what happens in that building. What happens now? Well, as you pointed out, it's going to be a new question on all the confirmation hearings that are coming up. So they better be prepared to defend the policy being made by the secretary of war in front of Congress, because this is going to this is going to be an issue. And, look, there's always been tension, you know, in reporting at the Pentagon. There are a lot of reasons to keep certain plans and and activities confidential. It's not an intelligence agency, so it doesn't have the protections that a lot of intelligence agencies have with the use of the press. And and Jean is right. I mean, it's the largest single use of taxpayer dollars that the government has. And so how do you manage the, you know, pushing the pull of the public disclosure of what goes on there with the need for some level of confidentiality on war plans, irrespective of who's tweeting them out on their signal accounts? And so long story short, you know, it's it's an unenforceable policy. The reporters I've talked to, you know, point out not only the point that you made, Joe, but also that is there's a bar from even soliciting sensitive information and could get you thrown out of the Pentagon press corps. So, one, you don't know what's sensitive and to you, if you don't solicit, you don't get you've got to ask the questions. And so so it's obviously an extreme situation. And I am not surprised that there's been a walk out because the Pentagon press corps has been heralded as one of the greatest institutions inside and outside of government. And and as you point out, people have given their lives for this coverage. So if Pete Hegseth thinks he's going to make some progress here, he'd better like look at revising this policy because these journalists know what they have and they're not going to lose it. Yeah, well, that was very well put. We remember what Pete Hegseth had to say to the media briefing following our strikes against Iran. Jeannie, that was a massive here's what you should be talking about kind of speech, as some reporters were questioning whether Iranian nuclear sites were totally obliterated as the secretary and as the president had said. But like what's going to happen in the Pentagon briefings? Now, I was talking to producer James about this earlier. Are you going to have one chair with Owen sitting in it? What's the point of even disseminating information? That's absolutely right. I really hope that we are able to see the pictures of this and get the feed, because it will be very, very good to watch. The reality is Pete Hegseth has missed the mark that Donald Trump understands. And I'm surprised Donald Trump isn't pulling him in. You know the old adage, keep your friends close and your enemies closer. If he really thinks the press corps are his enemies, keep them close like Donald Trump does. He has no trouble answering questions all day long and directing what is happening in terms of the narrative coming out. That is the way he needs to do it. Apparently, he is feeling like he doesn't have that skill, and so he's going to try to slam the door and this is going to not work to his advantage. So strategically, politically, and of course, legally and constitutionally, this makes no sense. And the irony is he keeps saying this is because of national security. And yet the only leak to Rick's point we've seen this year, or the biggest leak was from his own signal chat, where he put a reporter on that signal chat. So, you know, all of this is befuddling and I really wish Congress was working and the Senate could call him up soon to answer some questions about this nonsense. Well, we should note as well, the Atlantic was part of this group here of news agencies packing up bags, refusing to sign this boy. Maybe they regret saying anything about being added to the signal chat. That would be like a real time news feed coming out of the Pentagon at this point, Rick. Does this actually have to be altered or would the next secretary be the one to do this if if if Pete Hegseth finds himself surrounded by leakers and we've got stories on the front page every day and on the terminal about something that he doesn't want us to be talking about this, does he let them move back in? You know, they're going to have to arrange something to accommodate everybody. You know, he's he's made his mark. He's like I, you know, told the press that they can't wander around the halls asking people questions, which is what they've been doing since there was a Pentagon. And so now he's just got to he's got to sit down with a group and say, okay, what is it that I can do to meet my needs, you know, for confidentiality, which is an issue inside the Pentagon and and make it, you know, accessible to you and your First Amendment protections. And and there's a deal there to be done. It is the deal. Administration go cut a deal. That's right. And well, here we I think Donald Trump would appreciate that. You know, just yesterday he talked about moving the press corps out of the White House. Just hold that for a minute because we've heard that story before. To Rick Davis and Jeannie Shann, Zaino, Bloomberg Politics contributors, great insights. Thank you for the panel. Maybe this will change. Christopher Smart is on the way. And next, as we turn to the economy on Bloomberg headline this morning was stocks rise as Best Fuels US-China trade hopes. Now we're hearing about trade uncertainty all in the same trading session. I don't know what investors were listening to here, but it reminds us of how much has yet to be accomplished on the trade front, specifically when it comes to China. We're going to be digging into that with Christopher Smart in a moment. He's with us here in Washington from Arbroath Group. First, Christine Aquino joins us, managing editor for Bloomberg Markets Live blog, who has a little case of whiplash today watching things bounce around. Christine, we just wanted to get under the hood with you for a moment here to kind of extend what we just heard from Charlie Pellet. It's great to see you, by the way. This market is one that's been described as frothy, as toppy. And so any time somebody says the wrong thing in Washington, all of a sudden we see red arrows. But it has not been the beginning of a trend. Is this still a market that is owned by retail brokers who can't help but buy the dip? Good question, Joe. And my neck hurts watching these markets because that's exactly it. As you described. It does seem like it is a market caught between still wanting to buy that dip and still believing that this rally can keep going, but also very afraid of when the music will stop playing. And this is why we keep getting this back and forth between a rally and then suddenly a bit of a sell off, back to a rally again. And also the catalysts keep shifting, right when it comes to how it all relates to trade. I mean, it is very much to the fuel for a very volatile trading period because the situation and trade itself is very volatile. We don't really have a lot of clarity. All we've gotten this week is kind of headline trading between China and the U.S. in terms of what they're hoping to get out of this relationship, what are kind of their red lines and all of that. And it does feel like that's something that could continue until we get that sort of more clarity in terms of the relationship, how that's going to shake out, which probably were not going to get until November. Right. How many times have you heard the word bubble today? Because part of your job is reading through analyst notes. And this is the question, right? This is the this is the one politics show on Bloomberg. Every other show is asking whether we have an air bubble. You saw Jared Bernstein, one of the president, former president's chief economic advisers. The Biden campaign calling the bubble in i in an op ed earlier this week. But every time we hear from an executive, whether it's Jensen Huang, Lisa Sue, they tell us we're in the early stages of what could be a ten year spending cycle. How should the market be looking at this? Yeah, I mean, very interesting. The word bubble has really permeated the sentiment in markets and also here in the Bloomberg newsroom for the past week. I want to say at the very least, and you know, what we're hearing from executives is, of course, very expected because they want to be talking their book. They want investors to be buying into this air theme and convincing them that this is going on for much longer than anyone expects. And that may be true, but it's also true that in a longer term cycle, there will be pullbacks. And it's possible that, you know, when we get instances like this where valuations are near the top and there's a lot of kind of hope already priced into markets, that we do get pullbacks when the news is not always as positive as markets expect. And increasingly markets expect news to be more positive than their already very positive expectations. So it's a very high bar in terms of companies over kind of getting over those expectations. Yeah, well put, as always. Christine Aquino with us live from New York. Christine, thank you so much for your insights. You know, when it comes to the trade today, AMD is still cranking up for that massive rally the other day of $16, 8%, Micron still pushing higher. It's up 2%, up about $4, though. And video is sagging today, down just about a dollar, about a half percent. It will have. More on the markets coming up at the top of the hour. So, yeah, uncertainty maybe bubble is our first word of the day. Uncertainty is the other, at least in the second half of the session. Despite what Scott Best said earlier today, we might even extend our trade truce with China. Here's a bit of his news conference from this morning. Not only is China fueling Russia's war, but China's actions have once again demonstrated the risk of being dependent on them on rare earths and for that matter, anything. If China wants to be an unreliable partner to the world, then the world will have to decouple. Decouple. That was the word of the year in the last administration. But along with that tough talk, as I mentioned, the Treasury secretary proposing a longer pause on higher tariffs on Chinese goods in return for Beijing, putting off its plan to tight limits on rare earths for only a couple of weeks away from a big meeting between Trump and Xi. And so the drumbeats getting louder on both sides here, which is why it's great to be joined by Christopher Smart and he's with us in person today as well. The toast of Boston. With us here in the nation's capital, founder and managing partner, Arbroath Group, former special assistant to the president, National Economic Council during the Obama administration. It's great to see you. Christopher, great to be with you. So this conversation's apparently never going to end because I think we may have been talking about this last time you were on. What do you make of the bluster? And I'm assuming that's all it is on both sides here, whether it's an additional 100% tariff or cracking down on rare earth magnets if you're President Xi, or is this all posturing for a meeting or are we in bigger trouble than we think? I think it's a little bit of both. I think just to take a step back, you've got the two largest economies in the world deeply integrated with one another, deeply uncomfortable with the fact that they are so integrated with one another. And whether you call it decoupling or de-risking or slowly trying to pull that apart is very hard to do without creating a lot of waves and a lot of blowback elsewhere. That's I think what's what's really interesting right now is for all of the issues we have on the table with China, whether they're military, diplomatic, human rights, the president is focused very narrowly on an economic deal and then within the economic space, very narrowly on a tariff export control kind of deal. Yes. So it's almost going to be a tariff for rare earths or our technology exports for their rare earth exports. And all of the rest of it is going to be left unanswered for now, which has been the case with a lot of these framework deals that they are quite narrow and might need further negotiating. Is the market kidding itself, though, to think that this meeting is going to change something? I mean, we're right near all time highs as we've just established. Christopher, and I don't want to turn you into an investment strategist here, but sometimes it's hard to justify what we're seeing when we know how scared Wall Street is of this not working out. Well, I think they are scared. It's very hard, I think, for investors to price in tail risks. Yes. Right. So they're focused more on the good earnings that the banks delivered yesterday, the GDP numbers that we may or may not get anytime soon. Right. I story the deregulation story, the big, beautiful bill and the input impetus that's going to give a lot of CapEx next year. So that is what I think is driving markets right now. And that's sort of the base case that everybody has, but everybody's looking over their shoulder. On the one side, there's the China risk. On the other side there is the tariff blowback risk. And then they're just a whole lot of supply chains that have yet to work through all of these tariffs. And that's, I think, high on everybody's mind as well Stephen. Myron, speaking earlier today, self labeled as out of consensus, says the very uncertainty that the president is creating here with regard to tariffs is the reason why the Fed should cut interest rates. And that's been well, that's going against the grain of what Jay Powell has been saying this whole time. He's been holding off on cuts because of the uncertainty, not knowing what the impact would be to Stephen. Myron, end up being right here. Well, it's not anything I learned in my economics classes or in my investment career. I think the consensus, it's out of consensus. And I think, you know, Stephen, Myron is is staking staking the ground on the out of consensus trade in his earlier speeches about what our stars should be, what's a natural interest rate for the economy. And I think, you know, he's got a view. We'll see how he's able to convince any of his Fed colleagues, whether that if you make sense or not. But I'm not sure the market is buying it. Well, no, I think that's clear. And I wonder as well about what comes next with regard to the government shutdown. We're talking about mass layoffs. I just saw a headline role that it wasn't just 4000 that Russ vote saying just now on the radio that will probably be higher than 10,000. You add that to all of the early retirements and some of the buyouts, if I can even call them that, That amounted to about 250,000 federal workers. Add another layer with mass deportations, and we've got a job market that looks a lot different than it did even a couple of months ago. Christopher. Yeah, that would prompt interest rate cuts, presumably. How are you looking at that? I think that's right. I think, you know, everybody who is so excited about I and the CapEx story is also looking very closely at the weakness in the labor market and that continues to unfold right now. And these moves with the government shutdown, what is remarkable is that it's the largest government and the largest economy in the world, and it's not really a top news story anymore, which I think means that neither side is interested in getting this settled anytime soon. And I think if you're an investor, you have to not. Just sort of assume at one point or another Chuck Schumer will call President Trump or the other way around and we'll get a handshake and a deal. This could go on through the end of the year. And I'm not sure markets are thinking about that at all. You know, and I'm hearing that a lot more often now. Even the speaker of the House said this could be a record setter. And clearly President Trump is not looking to budge any time soon, which is all the more reason why there's confusion about Argentina. I want to ask you about this while you're here. And we'll start with what the president had to say in terms of America first and his agenda economically. Let's listen to President Trump. We're going to work very much with the president. We think he's going to win. He should win. And if he does win, we're going to be very helpful. And if he doesn't win, we're not going to waste our time because you have somebody whose philosophy has no chance of making Argentina great again. Okay. And he's sitting across from Javier Malay when he's saying this. I'm a little confused because apparently this money does not arrive if Melaye doesn't win the election, for starters. But $20 billion was the number yesterday. This is now, I think, up to 40. What was it, James? 40 or $60 billion, the headline. I think for that we just ran $40 billion. So twice what the president said, you know, saying openly that this really does not help America, that we're investing in good politics and a good friend in Argentina. What are you calling this? I don't know what the what the word for it is, frankly. But it's it's sort of interesting to see the president say, you know, we're going to bet on this guy if he wins. But if he doesn't, we're going to pull our money out. Right. Which may be too late. Conditional bailout is there are lots of questions about Argentina and this particular set of bailouts, because, first of all, Argentina is not a military ally. Argentina is certainly not systemic to the global financial system. We seem to be backing a horse in an ideological race for economic policy within Latin America. And it is frankly, the first time that a U.S. taxpayer dollars have been exposed to the Argentine peso directly. Now, the $20 billion, it seems to be a currency swap with the Argentine central bank, and that was announced today apparently from Secretary Bessant was another $20 billion of private banks and other investors willing to put money to work. I'd love to see what that list is and who is ready to sort of take that leap of faith about Argentine midterm election outcomes. Yeah. Let's So this is a head scratcher. Well, okay. This administration has been in many ways original. Is this a first? This? Well, it is. I mean, the last time we did anything close to this was with Mexico in the in the bailout with President Clinton. And those were we actually backed our loans to Mexico. We're backed by a mexican oil reserves. So there was a lot more going on there already, As you may know. As you do know, Argentina is to $40 billion in the hole to the IMF. So, you know, it's got a big hole to fill. If it's able to turn things right, some of the back room conversations at the IMF this week in Washington are focused on this quite deeply. There are a lot of a lot of head scratching here. And as you pointed out earlier, it's very off brand for a president who's putting America first. Yes, right. It's something that we've you know, we've always thought that IMF involvement to help emerging markets with good policies grow better, as always in the United States interest. This sort of back door approach and run around the IMF is is new and different. And as I say, off brand truly interesting times that we're living in here. And we'll let you know what happens to this and what the final number is, who might be behind that second tranche of $20 billion. You think FIFA is going to stay in Foxborough? That was the big story yesterday. That is where we've got our fingers crossed in the US. Yeah, well, the president should know that Boston Stadium is not in Boston. FIFA calls it that, but Foxborough is like an hour away. Christopher Smart, Arbroath, great to see you. Great to be with you as always. Thank you. Bloomberg.