Soft Inflation Boosts Case for Fed Cuts | Balance of Power 10/24/2025
Summary
Market Outlook: The podcast discusses the impact of softer than expected inflation data, which has led to a relief rally on Wall Street, with major indexes reaching record highs as investors anticipate potential Federal Reserve rate cuts.
Economic Insights: The release of the Consumer Price Index (CPI) data, despite the government shutdown, is crucial for the Social Security Administration's cost of living adjustments and influences market expectations for the Federal Reserve's upcoming meeting.
Federal Reserve Policy: The softer inflation data strengthens the case for the Federal Reserve to cut interest rates, with a quarter-point cut anticipated at the next week's meeting, although future data releases remain uncertain due to the shutdown.
Company Performance: Procter & Gamble, Intel, and Ford reported better-than-expected sales and revenue growth, with Ford's shares surging 11% due to strong sales performance.
Commodity Markets: Gold prices increased slightly, while oil continued its rally, reflecting ongoing market dynamics and investor sentiment.
Political Context: The ongoing government shutdown and its implications on economic data releases are discussed, highlighting the challenges faced by policymakers and the potential impact on economic decision-making.
International Relations: President Trump's upcoming trip to Asia, including a meeting with Chinese President Xi Jinping, is noted, with agricultural trade, particularly soybeans, expected to be a key topic of discussion.
Investment Takeaway: The combination of softer inflation data and potential Fed rate cuts presents a positive short-term outlook for investors, although uncertainties remain due to the government shutdown and geopolitical factors.
Transcript
Live from Washington, D.C. This is balance of power with Jo Matthew and Kaylee Lyons. Day 24. Welcome to the Friday edition. As the government shutdown continues with no progress in solving it, the president, meantime, setting his sights abroad, canceling talks with Canada today and flying to Asia for a meeting next week with President Xi. Thanks for joining us on the Friday edition. I'm Joe Matthew alongside Tyler Kendall, who's in for Kayleigh today in Washington, D.C.. Tyler, it's great to have you. We're going to talk with another stakeholder here. The House is not in session, but lawmakers are still talking. And Mark Alford of Missouri will give us the Republican point of view here with day 24. And you know, you're going on the president's trip to Asia. This likely will not be resolved before he comes back. No, because President Trump is considered to be a key stakeholder here, of course, Joe. And our upcoming Congressman Mike Alford, interesting guest as well, represents Missouri, a top soybean producing state. And we know soybeans are going to be top of the agenda when President Trump sits down with Chinese President Xi Jinping next week. That's true. Our other big story that we're following here at home, at least, is inflation data. We've got a rare Friday dose of CPI news here, and it's showing some soft inflation numbers, at least enough to make the markets happy here and kind of solidifying the idea that there could be rate cuts beyond next week. There is a Fed meeting next week. So the timing here is pretty important. We're going to talk to Michael McKee about that coming up as well. Right. Pretty remarkable release today because the backdrop here is that the BLS had to recall staff because this was considered to be essential for the Social Security Administration's annual cost of living adjustment. It has to deal with these inflation numbers. So essentially the long way around, we ended up getting this data even though we weren't expecting to. And now the White House is saying that we might not get it again next month. So for a check on how the markets is watching all of this, we go now to Alexis Christopher's world headquarters in New York for the Friday train. Hey, Alexis. Hi, Tyler and Joe. We're calling it a relief rally on Wall Street this Friday as investors bet that cooler than expected inflation report will keep the Federal Reserve on track to cut interest rates by a quarter point at next week's meeting. So we've got stocks extending their October advance. The Dow Jones Industrial Average powering ahead more than 500 points a game there, a better than 1%. The S&P 500 up 63 points now in record territory and crossing 6800 for the first time. NASDAQ composite now up nearly 300 points, a gain there of 1.2%. Actually, all three major stock indexes in record territory right now. The reaction in treasuries is more subdued. We've got the yield on the ten year at 3.99%, the two year yield at 3.47%. Checking commodities, gold up fractionally right now at 4133 the ounce and oil continuing its recent rally. WTI crude up about 1/10 of a percent. And the global benchmark, Brent crude up 6/10 of 1%. In stock news, Procter and Gamble reporting better than expected sales for its first quarter as consumers bought its Gillette razors and secret deodorant. Despite price increases, the company cut its projected impact from tariffs in half and reported organic revenue growth above estimates. We've got shares of P&G now up one and a third percent. Intel, the chipmaker reporting sales growth in its core product line of PC processors and shrinking costs. Wall Street likes it. Intel up one and a quarter percent. And Ford reporting strong sales, helping to push the automaker's revenue and operating income well past estimates. Shares of Ford racing ahead 11% for on demand news 24 hours a day. Subscribe to Bloomberg News now wherever you get your podcasts. I'm Alexis Christopher. That's a Bloomberg business. Flash back to balance of power now and Tyler and Joe. All right, Alexis, thanks so much. As Alexis mentioned, I'm Tyler Kendall here in Washington alongside Joe Matthew. And we are tracking closely after this consumer price index report. Highly anticipated because, Joe, we weren't expecting to get it because as we've been reminding you on this program, the government is shut down and has been for the last 24 days. And some of the data releases are not deemed essential. It takes time to collect the data, put together the reports and ultimately release it. Yeah. How'd you like to be called in to work as an essential employee and not paid for that? The question is why we didn't get the last jobs report because that actually had been compiled and we still haven't seen that, noting that there's of course a dual mandate of the Fed and they need to see both the inflation numbers and the jobs data. But you already mentioned it. It's a cost of living adjustment that forced this CPI to be released. That's why we're talking about inflation data on a Friday. Right. And even more interesting hearing the White House weigh in earlier when it comes to this inflation data, but also when we could get the next inflation data saying that they are not expecting the October CPI report that's been released. So if you're Michael McKee, you must feel like a Wednesday or something. Bloomberg International economics and policy correspondent joins us now from world headquarters in New York. Mike, is this softer than expected reading? Says what to you? Is this vindication for the White House that tells us tariffs simply are not inflationary? No, it is not. And I would say that the White House has a good political case to make for people who don't follow the data. And it will look good for the president. And I'm sure we will hear many times about it how he's brought down inflation, yadda, yadda, yadda. But if you take out used cars, goods prices rose significantly again, because we're starting to see tariffs leak into goods prices. And we saw some increases that were out of line with what would be normal, like apparel prices up 7/10 and furniture prices up 9/10. Services prices still rising at about the same rate. They were held down by a significant drop in home prices the way the government calculate it with the owners equivalent rent. And there's a general feeling among the economists I've seen the reactions I've seen it was probably statistical noise and would not be repeated next month. But as Tyler adroitly points out, there may not be a next month. Well, to build off of that. While we likely know what today's report means for next week's Fed meeting. Mike, how are you watching this? How are policymakers watching this as we close out the year? And of course, we have another FOMC meeting down the line? Yeah, we have a meeting on December 10th, and I don't think they're going to do anything this week that would give a hint as to what the December plan would be, because we don't have data. It looks like we're going to have a hole in the data, but then we might get some data before that December meeting. And anything you say now could be as Larry speaks and Joe will remember this as Larry Speaks once said that low is a runarsson I'm sorry, Runarsson said That's inoperative. And I knew you'd remember that, Joe. But we're dating ourselves now. I'll tell you what I don't know. Services prices, excluding energy up 2/10, are in part reflecting a slower advance in airfares. Shelter prices making the difference here. Mike, if there was another CPI a month from now, what would it tell us? Well, the question would be in terms of services, especially whether house prices continued to rise at that very, very subdued pace, because up until this month they were rising at almost 3/10 a month and sometimes more than that, they'd been coming down gradually. But this is a very quick fall. So was there a reason for that or is this just kind of a random number and that's why you want a series of reports and the Fed is looking at series of reports and always says, you know, one one number doesn't make a difference, but they may not get it. So that could add some confusion into what they what they are doing now. What they'll do is they will call all the realtors in their districts and they will ask them how it's going and what prices are. And there are a lot of private price providers in real estate. So I think they'll have a pretty good idea even if the number is not there. All right. Michael McKee Blumberg, International economics and policy correspondent, thank you so much as always. And we want to extend the conversation because we're joined now by Congressman Mike Alford, Republican representing Missouri's 44th District. Congressman, thanks so much for joining us here on Bloomberg. And I want to pick up on where we were just talking about with Michael McKee, because this government data was released today, but it was delayed because of this shutdown as policymakers, lawmakers try to make the best decisions about the economy. Do you think economic data like this should be deemed. Essential so that we get it in real time? Well, I think it should be. This is just another effect, a negative effect on our great nation because of the Schumer shut down America held hostage. We're now in the 24th day of this and we're held hostage on these numbers, which are so important to get a real good gauge, I think, of where our economy is and where we're to go with our economy and what decisions that Secretary Bessant and President Trump need to make to right the ship that President Biden in the past administration has really run us into a reef of despair. Well, okay, that said, we've got a Federal Reserve that's set to make a decision next week. Congressman, it it's good to have you back. Congressman Alford. I would just wonder what the Fed is supposed to do with this dearth of data. There's obviously enough to work with for next week, but there are questions about what happens after that if we're in for some kind of record shutdown. Here is somebody who serves on the Financial Services Committee. What's the Fed to do? Well, look, I think the Fed's in a tough spot. I think Powell needs this information to make a wise decision, as do the board of governors, including one here in Kansas City. They need this information. That's why President Trump has made changes in the past to the person who actually puts this information together. But yeah, you've got to have the right information. And in Chuck Schumer standing in the way by by not voting with other Democrats in the Senate to vote for this simple extension of current government funding, this is just one of the repercussions. We're seeing it all over our district. The other repercussions, people not going to have food stamps next month, money running out for women, infants and children, money running out for our military. We found the money President Trump did to pay our military, but come next pay period. The Democrats in the Senate just voted yesterday not to pay them, not to pay other essential employees in the U.S. government. I think that's despicable. And Democrats, of course, also floated their own bill when it came to some other essential employee funds. They just wanted money. They didn't want we we want to for the entirety of the shutdown and they are trying to use that as leverage. Katherine Clarke was very clear with her interview with Chad Pergram on Fox that they needed this leverage of pain in America so that people would get on their side. We're not negotiating. There's nothing to negotiate. Well, Congressman, I do want to ask you about one point that you just made about this idea of a simple extension. Right now, the stopgap measure that lawmakers are voting on would fund the government until November 21st. We did hear from the Senate majority leader, John Thune, earlier this week actually saying maybe it is time for the House to start thinking about coming back into session because you're going to need a little bit more runway potentially. Do you think that your chamber should come back into into session for this is a November 21st stopgap? Is that date really still viable? I think it's very reasonable. And I think our chairman, Tom Cole, came out with a statement earlier this week saying that we can get this work done, look against a lot of odds. We got all 12 appropriation bills out of committee this year. Some of the Democrats were offering 40 some odd amendments to these individual bills. We had 12, 14 hour days of hearings and debate. We debated all these spending bills. We came up with about 7.3% in cuts. Overall. We cut nine of the 12 subcommittees we gave plus UPS to Homeland security, our defense, as well as military construction, VA. We got three off the House floor and we all we were asking is three or is seven more weeks to get our job done? The Democrats don't want us to return to regular order. They want a big omnibus bill at the end of the year, and we're not doing that. Congressman, your colleague from Missouri who chairs the Ways and Means Committee was with us yesterday. Jason Smith made some news suggesting that he was behind the idea of a full year C.R. that had been floated by John Thune and even the White House a couple of months ago. I just want you to listen to what he told us and we'll have you respond. Here's the chairman. December 21st, 2026, is what I've been hearing up here as a suggestion, as an opportunity of of a continuing resolution. As as we know, we're operating under a yearlong resolution from last year. We're looking at what was appropriated when Biden was president. I know we're basically living under a perpetual C.R., as I know it sounds like it. Congressman, all 20, 24 numbers, you're talking about regular order, which would be a pretty amazing thing to see take place. But if that is the solution, would you back it a full year C.R.? Well, look, if leadership was behind this, I don't think they will. But I have the utmost respect for Jason. He is one of my dearest friends and mentors, and he loves Missouri and loves the United States of America and done a great. Job as Ways and Means. He was really instrumental in getting the one big beautiful bill reconciliation through the House and also helped in the Senate with his influence there. But I also trust in Chairman Tom Cole. If he says that we can get this done, I have complete confidence that we can get this done. We just need a little time to get these nine bills. They may not all be separate bills. We may have to do many buses where we group two or three together, but we can get this done. The time has come for us not to operate Congress on continuing resolutions. We have are still on 2024 budget numbers that Biden came up with. And and our military can't move forward with new programs that they need to deter thugs around the world like Xi Jinping and Vladimir Putin. These programs that are vital to our national defense, we cannot continue to operate America under continuing resolutions. And so while I understand where Chairman Smith is coming from, that's got to be a last ditch effort, in my opinion. We've got we have made tremendous strides in getting these appropriation bills done, getting three off the House floor. Let's move forward. We had momentum until the Democrats stuck a stick in our spokes and they're trying to wreck the American people. We they've got to get out of the way. They've got to quit digging the hole that they have dug and let us move forward and fund the government. Congressman, you did bring up Xi Jinping there. And I want to quickly ask you about China, because that's another story that we're following very closely here at Bloomberg as President Trump heads overseas for this highly anticipated meeting with Chinese President Xi Jinping. I've learned that Missouri is one of the top three soybean producing states. Yes. In this country. What is going to happen if China doesn't agree to these agricultural commitments purchases, since we know that they have not imported any U.S. supplies so far this harvest season? Yeah, I'm in a very ag rich district just south of Kansas City, over to Lake of the Ozarks and almost down to the Arkansas border. Our our district borders Jason Smith's district, and he has a lot of AG there as well. We have 87,000 farms in the great state of Missouri. We are down from 95,000 farms just two and a half years ago. Many of those farmers are soybean farmers and they are about halfway through their harvest right now. We're getting a little rain right now and that's delayed that. But they're having to put these beans in, in storage right now until the prices come back up. It is not helping, not having a deal with the Xi Jinping. I know that they love buying our protein. They love buying our pork, which we also have a lot of that here in Missouri. But they also love our soybeans. And so I think it's incumbent on the president to reach a deal with Xi Jinping to get this trade back going with our soybeans going over to China. I know the president has made some inroads in helping offset mitigate some of the losses that our farmers and ranchers are seeing here in Missouri and across the United States of America. Thank God that we have this tariff money that's coming in, almost $400 billion right now. He is going to use 30 to 50 billion of that to replenish the Commodity Credit Corp, which is overseen by Secretary Rollins in the U.S. Department of Agriculture. And that is going to help offset some of the losses in the short term. I think downturn for our farmers, this is short term. I think in the long term, our farmers and ranchers are going to be much better off with the trade deals that President Trump is making. I would much rather have him as our negotiator than Joe Biden. But with that said, in our remaining moment, Congressman, there's been a lot of talk about Argentine beef around here lately. And you've probably heard this the president looking to do some more extra importing to try to lower prices, and that's got a lot of cattlemen and ranchers upset. Did you just give us the answer? Is the answer to eat more pork from Missouri? Hey, it's the other white meat. You know, pork I love for it. I heard that ball. I'm a Carter Terry. And I love chicken, beef and pork. But look, I was just at a cattle auction barn in our district yesterday. Prices are extremely high. The ranchers are enjoying the higher prices because they have had such losses over the last couple of years. We have been under a level four drought in parts of my district for the last two or three years. They and that has caused the price of beef to go up. A lot of ranchers have had to sell off their herd because they didn't have the grazing grounds, they didn't have the hay, and so a lot of the beef was sold off. We've got to get the five packing house companies under control. We've got to get back to local control, local ranchers and local processors. That's going to bring the price down. Mark. Alford of Missouri with us and Republican on Bloomberg. We just took you through the latest on the domestic policy front as the government shutdown is now in its 24th day with no sign of easing. And part of that is because President Trump is heading overseas. He's set to visit three countries next week, including Malaysia, Japan and South Korea. And he, of course, is key to any such talks, Joe, when it comes to reopening the government. But there are a lot of important things on his agenda as he makes his way over to Asia, that's for sure. It's going to obviously culminate with a meeting on Thursday with President Xi, as we learned yesterday, right around this time actually, from the press. Secretary Tyler is going to be on that trip and will be reporting from South Korea next week, knowing that the president's got some hot spots around the world to deal with. Beyond what he's going to be discussing in Asia, look no further than the Caribbean, where we just knocked out another boat. Right. Getting confirmation on this. We're still awaiting some perhaps further details. But this really does continue what we've seen from the administration when it comes to targeting these alleged shipments of of narcotics from Venezuela. I was pretty struck that we actually heard from the Brazilian president Lula, who says that he wants to meet with President Trump. They're both set to be in Asia this week and that he's willing to talk about Venezuela. Well, this one was just announced or I guess confirmed by Secretary Pete Hegseth a short time ago, the first night strike that we've seen against a vessel. He says that the direction of the president, Department of War, carried out a lethal kinetic strike on a vessel operated by Trend Arugula, a designated terrorist organization. Now, as we have heard from the president, they're promising more where this came from. And to that end, with our questions about what exactly is happening off the coast of Venezuela, where a naval flotilla has been assembled for some time now. We just heard from Sean Parnell at the Pentagon that the Jerry Ford Carrier Strike Group is now on its way. This is straight from the statement the secretary of war has directed the Gerry R Ford Carrier Strike Group and embarked carrier air wing to the U.S. Supreme Command area of responsibility, referring to the enhanced U.S. force presence in the US SOUTHCOM, bolstering our capacity to detect, monitor, disrupt illicit actors, knowing as well that there was a covert CIA operation on the ground in Venezuela that the president himself confirmed. Right. There's a lot that we could dig into. And just for the statistic that I was trying to find before, this is this latest action marks the 10th strike since September 1st against a vessel allegedly ferrying drugs and brings the death toll to 43. Let's bring in our panel for more on this. Rick Davis and Jeannie San Zeno are with us here on the Friday edition of Balance of Power, both Bloomberg Politics contributor. Rick is a Republican strategist and partner at Stone Court Capital and Jeannie is democracy visiting fellow at Harvard Kennedy School's Ash Center. Jeannie, considering what the president said yesterday, that at some point, once all of these options on the water are exhausted, he calls them water, drugs and C, drugs, he said the land is going to be next. Quote, I think we are going to kill people that are bringing drugs into our country. Okay. We're going to kill them. He said they are going to be like dead, unquote. What's the point of the carrier strike group and how far is this going to go? Yeah, I mean, it was a pretty stark reminder when the president was asked yesterday, to your point about whether he needed to go to Congress to get approval for a declaration of war in Latin America, he said probably not. But don't be surprised if we move this from the water to the land. And that to your point, in doing so, they would kill many people. But, you know, you look at and already two towers, point ten strikes and over 40 people killed. The problem is something that Senator Rand Paul and many others have talked about. We don't know who is on those boats. Nor is Congress apparently getting information. And we don't in the United States, because we are a democracy, abide by strike first and think about it later. We have the Coast Guard go in. We have them get on those boats. We have them deal with who was ever on there because we need to make mistakes. And so all of this is a violation of U.S. law, international law. And the president, from his comments yesterday, seems not at all concerned about what is happening there on the water and promising more on the land. Well, Rick, what's your take here? And what's been your assessment of how the administration has been telegraphing these strikes and and the questions that as Genie or Zeus, raining is freezing still remain? Yeah, look, it's been a very provocative series of actions by this administration toward the Venezuela regime and the drug cartels resident in it. But I would remind everybody to repeated opposition groups inside Venezuela have referred to the Maduro regime as a narco trafficking regime that they are not. Administering justice and and and running a government. They're running a criminal organization bent on lining their pockets with drug profits. And so this is not the first time we've dealt with Maduro as an individual who is basically created a drug cartel out of a government. Now, that being said, also moving the carrier strike group into the region is, again, a even more provocative measure because these are seen as some of our most lethal capacity that we have and a incredible show of force that we would do typically in a shooting war in the Middle East, not necessarily something in our own hemisphere. And so clearly the message the administration is sending to the Maduro regime is we are not going to put up with any other misbehavior on your part. And it goes well beyond these seaborne drug runners who have been doing this. And look, I have confidence in our intelligence community and in our military and in our ability to gain information from various sources that the administration is likely confident of the people who are being attacked as violating various laws governing our resistance to drug cartels and their pernicious effect, pernicious effects not only on our country, but all those around them. So I think it's a little bit too hot to say we don't have a clue who they are. I suspect we know exactly who they are. And I think that then it's a matter of policy of this administration to decide what they're going to do about it. Yeah, that just in our last hour, we heard from Dr. Rebecca Grant, Jeannie, who said that the military is looking at these ships as they're being loaded on the docks and they have a very good sense of the material where it's coming from and who is on the boat. I don't know why that means we need to shoot them just off the coast of Venezuela. It takes a long time to get here. We presumably could wait to intercept them as they approached. U.S. Waters, I think might be part of your point involving the Coast Guard, but I'm curious about the congressional response. The Senate next week is expected to vote on a bill that would bar the U.S. from engaging in hostilities inside Venezuela without the explicit authorization of Congress. Could that even pass? You know, it's unclear. I think there is a possibility, but it is important that they are taking it up. They are debating this because for too long they have allowed this administration to sort of run roughshod in so many areas. But to the point that Rick was making. Number one, it's not an issue of whether we trusted the intelligence. What the statistics show us is a quarter of the time that the Coast Guard boards these boats. They are wrong. They have made mistakes, number one. Number two, again, we're a democracy. We don't kill people because they are suspected drug runners. We stopped the boat. We bought the boat. We take them into custody. Number three, there are 2000 miles away. So they're not a direct threat to the United States. They have to stop several times in these small boats to get an oil, to get more oil to continue. So, so much of that doesn't ring true. What does ring true is that the the administration, like the Biden administration before, is intent on regime change in Latin America. And we've been there before. It does not bode well or worked out well for the United States. But if that is the case and we are intent on regime change, then the administration should be as explicit about that as they were about the back or the president was that the CIA is on the ground engaging in covert operations. So there's a lot here. And history doesn't suggest that these policies are workable for the United States in the long term. And regime change is it? We should know and the Congress should support any act of war. We do want to bring you some breaking news over at the Bloomberg terminal. Hakeem Jeffries, the Democratic leader in the House, has given a zero on Mamdani, the Democratic nominee to be the next mayor of New York. His endorsement, Joe, this is seen as a last minute endorsement. He, of course, was asked by Bloomberg's David Gura just yesterday. And and we got sort of a noncommittal answer. Yeah, he said he would make the announcement before early voting started, which is in a day. So I guess we did wait until the end here. And we did mention last hour a report by Politico saying the same thing. Now, we had The New York Times, so we've got a couple of sources. Here is Jeffries, of course, the Democratic leader in the House finally endorses the Democratic nominee in his own town. We've only got a couple of minutes here, Rick. This was inevitable. Yeah, I think so. I mean, there was a lot of pressure on Hakeem Jeffries to do this endorsement, but I don't think it is really worth the time of the announcement. I don't think he's going to have any impact on the outcome of the race. I think this race has been baked for a while. And unless he can get courteously out of the race with this endorsement, it's not going to really benefit anybody else. Your thought on that, Jimi. He obviously didn't need Hakeem Jeffries to win the nomination. And based on the polls we're seeing, he didn't probably need him to win the race. He does not need him. But of course, for Democrats, this is a big deal because they are scratching their heads as to why he stayed out, What we know, why he stayed out. And by the way, where is Chuck Schumer around this? Also in New York. Or it's because they are deeply concerned that the president's communist socialist message is going to resonate across the country and it's going to impact them negatively in the midterms. So they are trying to maintain as much of a distance as they can from Mamdani, who is set to win this election in a couple of weeks. All right, our political panel today, Jan Zaino and Rick Davis, both Bloomberg politics contributor, thank you so much as always. And Joe, according to this New York Times reporting, people familiar with Hakeem Jeffries thinking, saying that he had planned to announce an endorsement earlier, but that he delayed it because of the government shutdown. Well, there's always reason, I suspect. But he's come off the fence now and not a big shocker here. Obviously, we're going to be, by the way, in New York to provide special coverage with the help of Rick and Jeanie on Election Day. We'll be watching New York and, of course, gubernatorial races in both New Jersey and in Virginia. Big thanks to our panel and thank you for spending part of your Friday with us here on balance of power on Bloomberg TV and radio. We've got a lot more ahead as the president prepares to fly to Asia will be joined. Coming up on this rare CPI Friday by Heather Bouchet, former Biden economic adviser. She's straight up next on balance of power of Bloomberg. We received the first major data release since the government shutdown, which, as we've been reminding you on this program, happened 24 days ago on an annual basis. Consumer prices rose 3% from a year earlier, according to the Labor Department. But, Joe, inflation is a sticky issue and price increases are above where policy makers really do want them. Well, that's for sure, although it's not going to keep the Fed from cutting next week or maybe even beyond, which is why the market's having a party right now. You listen to these numbers were at new highs, it seems, as we continue our conversation here on balance of power. We heard from Michael McKee a little earlier this hour. He's got some concerns about what's under the hood with with home prices offsetting some of the noise that might have shown up otherwise or. Would be in next month's report if there was one. But we don't know when the next batch of data will emerge. Right. Exactly. As the White House suggested today, that we're not going to get the October CPI numbers. Now, next week would be considered a relatively exciting week by our standards. I think because there's a Fed meeting, there's supposed to be third quarter GDP, they're supposed to be PCE inflation. But those latter two, those data reports we're not expecting because at the moment, again, there are no signs that the government's reopening. Well, remembering to there was a jobs report that could have been released. In fact, Senator Elizabeth Warren was calling for its release when she joined us a couple of weeks back. That was compiled right before the government closed. And there was a decision made, I guess, to not bring somebody in to press the button on that release. But we're deeply curious to know what was in there, because we could have a couple of dark months by the time we're looking back on this closure that could set a record. That's why we wanted to talk to Heather Bouchard, the former White House Council of Economic Advisors, deputy director in the Biden administration, joins us now with her take on things. Heather, it's great to see you. Welcome back to Bloomberg TV and Radio. The question here about this CPI data, knowing it's softer than expected, is really whether it's showing finally the emergence of tariffs in inflationary data. The administration has told us that's never going to happen. What do you see when you look under the hood? Well, I mean, it is inflation data that is lower than expected, but it's still higher than where the Fed wants it to be. And it's still high for families all across the country. You look at some basics like, you know, meat and eggs and other things that, you know, people buy at the grocery store all the time. I've seen the kind of relief that families need to see. And that is, of course, on top of the kinds of increases that families are facing in costs around health care. That's, you know, likely to come is already coming for families because of, you know, the the cutbacks to the Affordable Care Act premiums. So the consequences for families remain pretty distressing. And you can see that in the consumer sentiment data and the like, where people are are anxious about the economy, the economy right now. But, you know, and it is certainly better than than, I guess, economists expected, given the fact that we don't have a lot of data to look at right now because of the shutdown. So to that point about this lack of data and I made sort of the joke earlier with Joe that next week it would have been a jam packed week when it comes to economic projections. And what we do know about the current state of the economy, I'm wondering what you are watching, what you are looking for amid this lack of economic data, particularly as we're talking about economic growth, because as of now, it doesn't look like we're going to get third quarter GDP data. How is all of that factoring into what you perceive as the state of the U.S. economy? Well, I think, you know, we are flying blind right now. It's you know, there's no there's no ifs, ands or buts about it. We don't have access to the kind of data that we need to understand the economy. We think that this is especially important right now because if the economy is at what economists would call an inflection point, if we're moving from growth to maybe growth slowing or paring back, these are, of course, the reasons that the Fed would lower interest rates next week to make sure that we don't see us move towards recession or don't see more job troubles in the labor market without access to that data. We just don't we don't know. We, of course, have all the other kinds of private sector data and other things that we can look at, but I don't think we should kid ourselves that we know as much as we would if we had this really important government data. And I want to stress because I think that can kind of get lost in the details, that it is about helping us all understand what kinds of outcomes we're seeing across the country. Without that national data, we're left with anecdotes. We love the individual stories, but of course we live in a country with, what, 340 million people? We can't know all of that unless we have access to this data. So it's important for families that we all understand what inflation is, what jobs are, so that policymakers can make sound decisions, and so that we as citizens can hold them accountable. Whether you helped to run the White House Council of Economic Advisors. So you have been able to see behind the scenes the way this works, how the sausage is made in a way that most Americans never will. When we hear that the BLS has compiled jobs data in this case, I guess this would go back to August or September now, but chose not to release that data because of the government shutdown. What would be involved in making that public, and do you think that should be a priority? Well, I find it very concerning that they chose not to release it. You know, one of the things that you always try to do if you're trying to run the government within based on facts and evidence, because whether or not people are employed is a fact. Right. And you want to gather those facts so you can make good policy decisions. It really has been straight. The extent to which this administration has made it harder for the Federal Reserve to do its job and made it harder for the American people to hold it accountable. So in prior administrations, they were focused on making sure that the unemployment insurance data was still released on a timely basis. You know, I think they could have made a different decision. And on the labor data that would have come out in early October. And I think that that speaks to a lack of transparency. Or does it speak to the fact that the data wasn't good and they didn't want us to know what it said? I mean, it leads to this sort of conspiracy thinking, which is which is not helpful when you're talking about an economy as important as the United States. And with data indicators so important to American families who get up and want to know, hey, should I be worried about keeping my job? Is the labor market good or bad? Giving people that information is really helpful for their kitchen table conversations, especially because all of the data we're seeing on again, consumer confidence, Consumer sentiment says that people are anxious about the job situation right now. So it seems odd that they would have made that choice from my perspective, and it's very distressing that they did that. It was good, of course. I think that we saw the data come out today on prices, and I think that will help inform a better decision coming out of the Federal Reserve meeting next week. And Heather, just more broadly speaking, what sort of economic impacts are you expecting when it comes to a longer term government shutdown? We know, of course, that furloughed employees are going to be counted as temporarily unemployed. But when we get to that labor market data and the government reopens, then that could have an impact on the unemployment rate. What are you just watching for here as we really haven't gotten any signs that this is abating anytime soon? Well, I think we're looking for signs of economic distress. You know, we're already seeing that the number of folks that are having trouble making their car payments is shot up. It's been going up. And that's as high as it was, you know, back in 2009. So that's very disconcerting. You know, if someone doesn't get a paycheck, even if they're likely to get that money back because of laws passed by Congress that say that furloughed workers will get their paychecks eventually, you know, that can mean that they missed their mortgage or they missed paying other things. It's going to slow down the economy and it's going to slow down the economy in particular places, and it's going to affect the decisions that people make. So I think we are looking for this this stress and how that is playing its way out across the economy. But let's look at the other side of the equation. Of course, you know, one of the reasons that we have this shutdown is because the Trump administration and the Republicans want to cut back on the amount of subsidies for people's health care premiums. This is a really big ticket budget item for millions of American families who are struggling to be able to afford the cost of health care. And the cutbacks were already made as a part of the Republican budget bill that that one big, beautiful bill that passed back in the spring. These are going to make the costs for health care more expensive around the country, and that's going to crowd out other kinds of spending. So I think for millions of families right now, they're looking at what can they cut back on? And that's never a good starting place for economic growth. All right. Heather Boucher, former White House Council of Economic Advisers, deputy director under President Joe Biden. And thanks so much for joining us here on Bloomberg. And Joe, the markets are also watching Argentina ahead of a key midterm election vote in the country this weekend. The Argentinean president, Javier Milla, trying to restore investor confidence but also notched some political wins for his party. Because it's my understanding that nearly half of the seats in Argentina's Congress are up for election this weekend. For more, we're joined now by Patrick Gillespie, Bloomberg Buenos Aires bureau chief. He joins us live from Argentina. Now, Patrick, can you just give us the top lines here? What is at stake for Javier Melaye? Hi, Tyler. A lot is at stake for Harvey Milk and for Argentina right now. Beyond malaise, relatively low profile candidates in this midterm election, you really could say that voters will be casting ballots for malaise, harsh economic policies that have delivered a fiscal surplus, his pro-market agenda and the reforms that he wants to pass after this. And, of course, a $40 billion rescue package from the United States that President Trump himself has conditioned on Melaye's party winning this election. So what was a relatively normal midterm race a few weeks ago has now turned into a make or break moment for Harvey Melaye and his radical economic experiment. Experiment? Excuse me? Well, the bailout that the administration is working on and some would check me with the use of that term has been very controversial here in Washington. Even Republicans like Marjorie Taylor GREENE are crying foul, as she calls it, one of the grossest things she's ever seen and of. Course, beef ranchers here, cattle ranchers in the United States are concerned about Argentinean beef imports. Patrick this money is supposed to ride on the outcome of this election, right? What if he loses? That's a great question, Joe. And you're right to point out that this has caused ripple effects both in Democrat and Republican circles in Washington and beyond, because some of the measures regarding beef and soy have been sort of tied or related to this rescue package. But there's three pillars. Basically, there's a $20 billion currency swap line that's directly between U.S. Treasury and Argentina Central Bank. The Treasury is also trying to line up private financing from Wall Street banks of the same amount, another $20 billion formula. And then most recently, the US Treasury has been buying Argentine pesos, which is a bit ironic because Miller campaign is a president who would dollarized Argentina and now he has the US buying pesos. But all of this really relies on the what has been so far unprecedented U.S. support for Argentina and its pro-business agenda. But of course, Miller's root problem is a lack of political strength. The reason why the U.S. stepped in was that six weeks ago, his party lost a key local election that was seen as a bellwether for the national race. So he really needs a comeback on Sunday and both for his agenda and for this rescue package. In the final minute we have with you. Patrick, can you just give us some local context here? We have this headline on the Bloomberg terminal this morning that MELAYE'S approval rating hit a new low before the midterms, according to a new poll. Why don't we know what that led up up to this from from those in Argentina? Sure. Well, Art Melaye two years ago inherited a full blown economic crisis and he has brought Argentina back from the brink. Inflation was nearly 300% annually during the early months of his presidency. It's now down to about 30%. Poverty. Similar story. It's come down significantly. But the reason why voters are increasingly disapproving of Melaye's government is that he's significantly increased the cost of living when it comes to utilities. Those have quadrupled during his time. Economic momentum has also slowed. The job market is well below levels it was before Melaye took office. So there's a lot of hardship as a result of Melaye's austerity policies, which he symbolizes via the chainsaw. So voters are running out of patience and they want to see some changes in policy and direction from life. With apologies to The Golden Chainsaw. Patrick Gillespie, many thanks, Patrick. It's great to have you. He's our bureau chief, Buenos Aires. We've got to do the show down there soon. Alongside Tyler Kendal and Joe. Matthew will meet you on the Late edition of Balance of Power, only here on Bloomberg.
Soft Inflation Boosts Case for Fed Cuts | Balance of Power 10/24/2025
Summary
Transcript
Live from Washington, D.C. This is balance of power with Jo Matthew and Kaylee Lyons. Day 24. Welcome to the Friday edition. As the government shutdown continues with no progress in solving it, the president, meantime, setting his sights abroad, canceling talks with Canada today and flying to Asia for a meeting next week with President Xi. Thanks for joining us on the Friday edition. I'm Joe Matthew alongside Tyler Kendall, who's in for Kayleigh today in Washington, D.C.. Tyler, it's great to have you. We're going to talk with another stakeholder here. The House is not in session, but lawmakers are still talking. And Mark Alford of Missouri will give us the Republican point of view here with day 24. And you know, you're going on the president's trip to Asia. This likely will not be resolved before he comes back. No, because President Trump is considered to be a key stakeholder here, of course, Joe. And our upcoming Congressman Mike Alford, interesting guest as well, represents Missouri, a top soybean producing state. And we know soybeans are going to be top of the agenda when President Trump sits down with Chinese President Xi Jinping next week. That's true. Our other big story that we're following here at home, at least, is inflation data. We've got a rare Friday dose of CPI news here, and it's showing some soft inflation numbers, at least enough to make the markets happy here and kind of solidifying the idea that there could be rate cuts beyond next week. There is a Fed meeting next week. So the timing here is pretty important. We're going to talk to Michael McKee about that coming up as well. Right. Pretty remarkable release today because the backdrop here is that the BLS had to recall staff because this was considered to be essential for the Social Security Administration's annual cost of living adjustment. It has to deal with these inflation numbers. So essentially the long way around, we ended up getting this data even though we weren't expecting to. And now the White House is saying that we might not get it again next month. So for a check on how the markets is watching all of this, we go now to Alexis Christopher's world headquarters in New York for the Friday train. Hey, Alexis. Hi, Tyler and Joe. We're calling it a relief rally on Wall Street this Friday as investors bet that cooler than expected inflation report will keep the Federal Reserve on track to cut interest rates by a quarter point at next week's meeting. So we've got stocks extending their October advance. The Dow Jones Industrial Average powering ahead more than 500 points a game there, a better than 1%. The S&P 500 up 63 points now in record territory and crossing 6800 for the first time. NASDAQ composite now up nearly 300 points, a gain there of 1.2%. Actually, all three major stock indexes in record territory right now. The reaction in treasuries is more subdued. We've got the yield on the ten year at 3.99%, the two year yield at 3.47%. Checking commodities, gold up fractionally right now at 4133 the ounce and oil continuing its recent rally. WTI crude up about 1/10 of a percent. And the global benchmark, Brent crude up 6/10 of 1%. In stock news, Procter and Gamble reporting better than expected sales for its first quarter as consumers bought its Gillette razors and secret deodorant. Despite price increases, the company cut its projected impact from tariffs in half and reported organic revenue growth above estimates. We've got shares of P&G now up one and a third percent. Intel, the chipmaker reporting sales growth in its core product line of PC processors and shrinking costs. Wall Street likes it. Intel up one and a quarter percent. And Ford reporting strong sales, helping to push the automaker's revenue and operating income well past estimates. Shares of Ford racing ahead 11% for on demand news 24 hours a day. Subscribe to Bloomberg News now wherever you get your podcasts. I'm Alexis Christopher. That's a Bloomberg business. Flash back to balance of power now and Tyler and Joe. All right, Alexis, thanks so much. As Alexis mentioned, I'm Tyler Kendall here in Washington alongside Joe Matthew. And we are tracking closely after this consumer price index report. Highly anticipated because, Joe, we weren't expecting to get it because as we've been reminding you on this program, the government is shut down and has been for the last 24 days. And some of the data releases are not deemed essential. It takes time to collect the data, put together the reports and ultimately release it. Yeah. How'd you like to be called in to work as an essential employee and not paid for that? The question is why we didn't get the last jobs report because that actually had been compiled and we still haven't seen that, noting that there's of course a dual mandate of the Fed and they need to see both the inflation numbers and the jobs data. But you already mentioned it. It's a cost of living adjustment that forced this CPI to be released. That's why we're talking about inflation data on a Friday. Right. And even more interesting hearing the White House weigh in earlier when it comes to this inflation data, but also when we could get the next inflation data saying that they are not expecting the October CPI report that's been released. So if you're Michael McKee, you must feel like a Wednesday or something. Bloomberg International economics and policy correspondent joins us now from world headquarters in New York. Mike, is this softer than expected reading? Says what to you? Is this vindication for the White House that tells us tariffs simply are not inflationary? No, it is not. And I would say that the White House has a good political case to make for people who don't follow the data. And it will look good for the president. And I'm sure we will hear many times about it how he's brought down inflation, yadda, yadda, yadda. But if you take out used cars, goods prices rose significantly again, because we're starting to see tariffs leak into goods prices. And we saw some increases that were out of line with what would be normal, like apparel prices up 7/10 and furniture prices up 9/10. Services prices still rising at about the same rate. They were held down by a significant drop in home prices the way the government calculate it with the owners equivalent rent. And there's a general feeling among the economists I've seen the reactions I've seen it was probably statistical noise and would not be repeated next month. But as Tyler adroitly points out, there may not be a next month. Well, to build off of that. While we likely know what today's report means for next week's Fed meeting. Mike, how are you watching this? How are policymakers watching this as we close out the year? And of course, we have another FOMC meeting down the line? Yeah, we have a meeting on December 10th, and I don't think they're going to do anything this week that would give a hint as to what the December plan would be, because we don't have data. It looks like we're going to have a hole in the data, but then we might get some data before that December meeting. And anything you say now could be as Larry speaks and Joe will remember this as Larry Speaks once said that low is a runarsson I'm sorry, Runarsson said That's inoperative. And I knew you'd remember that, Joe. But we're dating ourselves now. I'll tell you what I don't know. Services prices, excluding energy up 2/10, are in part reflecting a slower advance in airfares. Shelter prices making the difference here. Mike, if there was another CPI a month from now, what would it tell us? Well, the question would be in terms of services, especially whether house prices continued to rise at that very, very subdued pace, because up until this month they were rising at almost 3/10 a month and sometimes more than that, they'd been coming down gradually. But this is a very quick fall. So was there a reason for that or is this just kind of a random number and that's why you want a series of reports and the Fed is looking at series of reports and always says, you know, one one number doesn't make a difference, but they may not get it. So that could add some confusion into what they what they are doing now. What they'll do is they will call all the realtors in their districts and they will ask them how it's going and what prices are. And there are a lot of private price providers in real estate. So I think they'll have a pretty good idea even if the number is not there. All right. Michael McKee Blumberg, International economics and policy correspondent, thank you so much as always. And we want to extend the conversation because we're joined now by Congressman Mike Alford, Republican representing Missouri's 44th District. Congressman, thanks so much for joining us here on Bloomberg. And I want to pick up on where we were just talking about with Michael McKee, because this government data was released today, but it was delayed because of this shutdown as policymakers, lawmakers try to make the best decisions about the economy. Do you think economic data like this should be deemed. Essential so that we get it in real time? Well, I think it should be. This is just another effect, a negative effect on our great nation because of the Schumer shut down America held hostage. We're now in the 24th day of this and we're held hostage on these numbers, which are so important to get a real good gauge, I think, of where our economy is and where we're to go with our economy and what decisions that Secretary Bessant and President Trump need to make to right the ship that President Biden in the past administration has really run us into a reef of despair. Well, okay, that said, we've got a Federal Reserve that's set to make a decision next week. Congressman, it it's good to have you back. Congressman Alford. I would just wonder what the Fed is supposed to do with this dearth of data. There's obviously enough to work with for next week, but there are questions about what happens after that if we're in for some kind of record shutdown. Here is somebody who serves on the Financial Services Committee. What's the Fed to do? Well, look, I think the Fed's in a tough spot. I think Powell needs this information to make a wise decision, as do the board of governors, including one here in Kansas City. They need this information. That's why President Trump has made changes in the past to the person who actually puts this information together. But yeah, you've got to have the right information. And in Chuck Schumer standing in the way by by not voting with other Democrats in the Senate to vote for this simple extension of current government funding, this is just one of the repercussions. We're seeing it all over our district. The other repercussions, people not going to have food stamps next month, money running out for women, infants and children, money running out for our military. We found the money President Trump did to pay our military, but come next pay period. The Democrats in the Senate just voted yesterday not to pay them, not to pay other essential employees in the U.S. government. I think that's despicable. And Democrats, of course, also floated their own bill when it came to some other essential employee funds. They just wanted money. They didn't want we we want to for the entirety of the shutdown and they are trying to use that as leverage. Katherine Clarke was very clear with her interview with Chad Pergram on Fox that they needed this leverage of pain in America so that people would get on their side. We're not negotiating. There's nothing to negotiate. Well, Congressman, I do want to ask you about one point that you just made about this idea of a simple extension. Right now, the stopgap measure that lawmakers are voting on would fund the government until November 21st. We did hear from the Senate majority leader, John Thune, earlier this week actually saying maybe it is time for the House to start thinking about coming back into session because you're going to need a little bit more runway potentially. Do you think that your chamber should come back into into session for this is a November 21st stopgap? Is that date really still viable? I think it's very reasonable. And I think our chairman, Tom Cole, came out with a statement earlier this week saying that we can get this work done, look against a lot of odds. We got all 12 appropriation bills out of committee this year. Some of the Democrats were offering 40 some odd amendments to these individual bills. We had 12, 14 hour days of hearings and debate. We debated all these spending bills. We came up with about 7.3% in cuts. Overall. We cut nine of the 12 subcommittees we gave plus UPS to Homeland security, our defense, as well as military construction, VA. We got three off the House floor and we all we were asking is three or is seven more weeks to get our job done? The Democrats don't want us to return to regular order. They want a big omnibus bill at the end of the year, and we're not doing that. Congressman, your colleague from Missouri who chairs the Ways and Means Committee was with us yesterday. Jason Smith made some news suggesting that he was behind the idea of a full year C.R. that had been floated by John Thune and even the White House a couple of months ago. I just want you to listen to what he told us and we'll have you respond. Here's the chairman. December 21st, 2026, is what I've been hearing up here as a suggestion, as an opportunity of of a continuing resolution. As as we know, we're operating under a yearlong resolution from last year. We're looking at what was appropriated when Biden was president. I know we're basically living under a perpetual C.R., as I know it sounds like it. Congressman, all 20, 24 numbers, you're talking about regular order, which would be a pretty amazing thing to see take place. But if that is the solution, would you back it a full year C.R.? Well, look, if leadership was behind this, I don't think they will. But I have the utmost respect for Jason. He is one of my dearest friends and mentors, and he loves Missouri and loves the United States of America and done a great. Job as Ways and Means. He was really instrumental in getting the one big beautiful bill reconciliation through the House and also helped in the Senate with his influence there. But I also trust in Chairman Tom Cole. If he says that we can get this done, I have complete confidence that we can get this done. We just need a little time to get these nine bills. They may not all be separate bills. We may have to do many buses where we group two or three together, but we can get this done. The time has come for us not to operate Congress on continuing resolutions. We have are still on 2024 budget numbers that Biden came up with. And and our military can't move forward with new programs that they need to deter thugs around the world like Xi Jinping and Vladimir Putin. These programs that are vital to our national defense, we cannot continue to operate America under continuing resolutions. And so while I understand where Chairman Smith is coming from, that's got to be a last ditch effort, in my opinion. We've got we have made tremendous strides in getting these appropriation bills done, getting three off the House floor. Let's move forward. We had momentum until the Democrats stuck a stick in our spokes and they're trying to wreck the American people. We they've got to get out of the way. They've got to quit digging the hole that they have dug and let us move forward and fund the government. Congressman, you did bring up Xi Jinping there. And I want to quickly ask you about China, because that's another story that we're following very closely here at Bloomberg as President Trump heads overseas for this highly anticipated meeting with Chinese President Xi Jinping. I've learned that Missouri is one of the top three soybean producing states. Yes. In this country. What is going to happen if China doesn't agree to these agricultural commitments purchases, since we know that they have not imported any U.S. supplies so far this harvest season? Yeah, I'm in a very ag rich district just south of Kansas City, over to Lake of the Ozarks and almost down to the Arkansas border. Our our district borders Jason Smith's district, and he has a lot of AG there as well. We have 87,000 farms in the great state of Missouri. We are down from 95,000 farms just two and a half years ago. Many of those farmers are soybean farmers and they are about halfway through their harvest right now. We're getting a little rain right now and that's delayed that. But they're having to put these beans in, in storage right now until the prices come back up. It is not helping, not having a deal with the Xi Jinping. I know that they love buying our protein. They love buying our pork, which we also have a lot of that here in Missouri. But they also love our soybeans. And so I think it's incumbent on the president to reach a deal with Xi Jinping to get this trade back going with our soybeans going over to China. I know the president has made some inroads in helping offset mitigate some of the losses that our farmers and ranchers are seeing here in Missouri and across the United States of America. Thank God that we have this tariff money that's coming in, almost $400 billion right now. He is going to use 30 to 50 billion of that to replenish the Commodity Credit Corp, which is overseen by Secretary Rollins in the U.S. Department of Agriculture. And that is going to help offset some of the losses in the short term. I think downturn for our farmers, this is short term. I think in the long term, our farmers and ranchers are going to be much better off with the trade deals that President Trump is making. I would much rather have him as our negotiator than Joe Biden. But with that said, in our remaining moment, Congressman, there's been a lot of talk about Argentine beef around here lately. And you've probably heard this the president looking to do some more extra importing to try to lower prices, and that's got a lot of cattlemen and ranchers upset. Did you just give us the answer? Is the answer to eat more pork from Missouri? Hey, it's the other white meat. You know, pork I love for it. I heard that ball. I'm a Carter Terry. And I love chicken, beef and pork. But look, I was just at a cattle auction barn in our district yesterday. Prices are extremely high. The ranchers are enjoying the higher prices because they have had such losses over the last couple of years. We have been under a level four drought in parts of my district for the last two or three years. They and that has caused the price of beef to go up. A lot of ranchers have had to sell off their herd because they didn't have the grazing grounds, they didn't have the hay, and so a lot of the beef was sold off. We've got to get the five packing house companies under control. We've got to get back to local control, local ranchers and local processors. That's going to bring the price down. Mark. Alford of Missouri with us and Republican on Bloomberg. We just took you through the latest on the domestic policy front as the government shutdown is now in its 24th day with no sign of easing. And part of that is because President Trump is heading overseas. He's set to visit three countries next week, including Malaysia, Japan and South Korea. And he, of course, is key to any such talks, Joe, when it comes to reopening the government. But there are a lot of important things on his agenda as he makes his way over to Asia, that's for sure. It's going to obviously culminate with a meeting on Thursday with President Xi, as we learned yesterday, right around this time actually, from the press. Secretary Tyler is going to be on that trip and will be reporting from South Korea next week, knowing that the president's got some hot spots around the world to deal with. Beyond what he's going to be discussing in Asia, look no further than the Caribbean, where we just knocked out another boat. Right. Getting confirmation on this. We're still awaiting some perhaps further details. But this really does continue what we've seen from the administration when it comes to targeting these alleged shipments of of narcotics from Venezuela. I was pretty struck that we actually heard from the Brazilian president Lula, who says that he wants to meet with President Trump. They're both set to be in Asia this week and that he's willing to talk about Venezuela. Well, this one was just announced or I guess confirmed by Secretary Pete Hegseth a short time ago, the first night strike that we've seen against a vessel. He says that the direction of the president, Department of War, carried out a lethal kinetic strike on a vessel operated by Trend Arugula, a designated terrorist organization. Now, as we have heard from the president, they're promising more where this came from. And to that end, with our questions about what exactly is happening off the coast of Venezuela, where a naval flotilla has been assembled for some time now. We just heard from Sean Parnell at the Pentagon that the Jerry Ford Carrier Strike Group is now on its way. This is straight from the statement the secretary of war has directed the Gerry R Ford Carrier Strike Group and embarked carrier air wing to the U.S. Supreme Command area of responsibility, referring to the enhanced U.S. force presence in the US SOUTHCOM, bolstering our capacity to detect, monitor, disrupt illicit actors, knowing as well that there was a covert CIA operation on the ground in Venezuela that the president himself confirmed. Right. There's a lot that we could dig into. And just for the statistic that I was trying to find before, this is this latest action marks the 10th strike since September 1st against a vessel allegedly ferrying drugs and brings the death toll to 43. Let's bring in our panel for more on this. Rick Davis and Jeannie San Zeno are with us here on the Friday edition of Balance of Power, both Bloomberg Politics contributor. Rick is a Republican strategist and partner at Stone Court Capital and Jeannie is democracy visiting fellow at Harvard Kennedy School's Ash Center. Jeannie, considering what the president said yesterday, that at some point, once all of these options on the water are exhausted, he calls them water, drugs and C, drugs, he said the land is going to be next. Quote, I think we are going to kill people that are bringing drugs into our country. Okay. We're going to kill them. He said they are going to be like dead, unquote. What's the point of the carrier strike group and how far is this going to go? Yeah, I mean, it was a pretty stark reminder when the president was asked yesterday, to your point about whether he needed to go to Congress to get approval for a declaration of war in Latin America, he said probably not. But don't be surprised if we move this from the water to the land. And that to your point, in doing so, they would kill many people. But, you know, you look at and already two towers, point ten strikes and over 40 people killed. The problem is something that Senator Rand Paul and many others have talked about. We don't know who is on those boats. Nor is Congress apparently getting information. And we don't in the United States, because we are a democracy, abide by strike first and think about it later. We have the Coast Guard go in. We have them get on those boats. We have them deal with who was ever on there because we need to make mistakes. And so all of this is a violation of U.S. law, international law. And the president, from his comments yesterday, seems not at all concerned about what is happening there on the water and promising more on the land. Well, Rick, what's your take here? And what's been your assessment of how the administration has been telegraphing these strikes and and the questions that as Genie or Zeus, raining is freezing still remain? Yeah, look, it's been a very provocative series of actions by this administration toward the Venezuela regime and the drug cartels resident in it. But I would remind everybody to repeated opposition groups inside Venezuela have referred to the Maduro regime as a narco trafficking regime that they are not. Administering justice and and and running a government. They're running a criminal organization bent on lining their pockets with drug profits. And so this is not the first time we've dealt with Maduro as an individual who is basically created a drug cartel out of a government. Now, that being said, also moving the carrier strike group into the region is, again, a even more provocative measure because these are seen as some of our most lethal capacity that we have and a incredible show of force that we would do typically in a shooting war in the Middle East, not necessarily something in our own hemisphere. And so clearly the message the administration is sending to the Maduro regime is we are not going to put up with any other misbehavior on your part. And it goes well beyond these seaborne drug runners who have been doing this. And look, I have confidence in our intelligence community and in our military and in our ability to gain information from various sources that the administration is likely confident of the people who are being attacked as violating various laws governing our resistance to drug cartels and their pernicious effect, pernicious effects not only on our country, but all those around them. So I think it's a little bit too hot to say we don't have a clue who they are. I suspect we know exactly who they are. And I think that then it's a matter of policy of this administration to decide what they're going to do about it. Yeah, that just in our last hour, we heard from Dr. Rebecca Grant, Jeannie, who said that the military is looking at these ships as they're being loaded on the docks and they have a very good sense of the material where it's coming from and who is on the boat. I don't know why that means we need to shoot them just off the coast of Venezuela. It takes a long time to get here. We presumably could wait to intercept them as they approached. U.S. Waters, I think might be part of your point involving the Coast Guard, but I'm curious about the congressional response. The Senate next week is expected to vote on a bill that would bar the U.S. from engaging in hostilities inside Venezuela without the explicit authorization of Congress. Could that even pass? You know, it's unclear. I think there is a possibility, but it is important that they are taking it up. They are debating this because for too long they have allowed this administration to sort of run roughshod in so many areas. But to the point that Rick was making. Number one, it's not an issue of whether we trusted the intelligence. What the statistics show us is a quarter of the time that the Coast Guard boards these boats. They are wrong. They have made mistakes, number one. Number two, again, we're a democracy. We don't kill people because they are suspected drug runners. We stopped the boat. We bought the boat. We take them into custody. Number three, there are 2000 miles away. So they're not a direct threat to the United States. They have to stop several times in these small boats to get an oil, to get more oil to continue. So, so much of that doesn't ring true. What does ring true is that the the administration, like the Biden administration before, is intent on regime change in Latin America. And we've been there before. It does not bode well or worked out well for the United States. But if that is the case and we are intent on regime change, then the administration should be as explicit about that as they were about the back or the president was that the CIA is on the ground engaging in covert operations. So there's a lot here. And history doesn't suggest that these policies are workable for the United States in the long term. And regime change is it? We should know and the Congress should support any act of war. We do want to bring you some breaking news over at the Bloomberg terminal. Hakeem Jeffries, the Democratic leader in the House, has given a zero on Mamdani, the Democratic nominee to be the next mayor of New York. His endorsement, Joe, this is seen as a last minute endorsement. He, of course, was asked by Bloomberg's David Gura just yesterday. And and we got sort of a noncommittal answer. Yeah, he said he would make the announcement before early voting started, which is in a day. So I guess we did wait until the end here. And we did mention last hour a report by Politico saying the same thing. Now, we had The New York Times, so we've got a couple of sources. Here is Jeffries, of course, the Democratic leader in the House finally endorses the Democratic nominee in his own town. We've only got a couple of minutes here, Rick. This was inevitable. Yeah, I think so. I mean, there was a lot of pressure on Hakeem Jeffries to do this endorsement, but I don't think it is really worth the time of the announcement. I don't think he's going to have any impact on the outcome of the race. I think this race has been baked for a while. And unless he can get courteously out of the race with this endorsement, it's not going to really benefit anybody else. Your thought on that, Jimi. He obviously didn't need Hakeem Jeffries to win the nomination. And based on the polls we're seeing, he didn't probably need him to win the race. He does not need him. But of course, for Democrats, this is a big deal because they are scratching their heads as to why he stayed out, What we know, why he stayed out. And by the way, where is Chuck Schumer around this? Also in New York. Or it's because they are deeply concerned that the president's communist socialist message is going to resonate across the country and it's going to impact them negatively in the midterms. So they are trying to maintain as much of a distance as they can from Mamdani, who is set to win this election in a couple of weeks. All right, our political panel today, Jan Zaino and Rick Davis, both Bloomberg politics contributor, thank you so much as always. And Joe, according to this New York Times reporting, people familiar with Hakeem Jeffries thinking, saying that he had planned to announce an endorsement earlier, but that he delayed it because of the government shutdown. Well, there's always reason, I suspect. But he's come off the fence now and not a big shocker here. Obviously, we're going to be, by the way, in New York to provide special coverage with the help of Rick and Jeanie on Election Day. We'll be watching New York and, of course, gubernatorial races in both New Jersey and in Virginia. Big thanks to our panel and thank you for spending part of your Friday with us here on balance of power on Bloomberg TV and radio. We've got a lot more ahead as the president prepares to fly to Asia will be joined. Coming up on this rare CPI Friday by Heather Bouchet, former Biden economic adviser. She's straight up next on balance of power of Bloomberg. We received the first major data release since the government shutdown, which, as we've been reminding you on this program, happened 24 days ago on an annual basis. Consumer prices rose 3% from a year earlier, according to the Labor Department. But, Joe, inflation is a sticky issue and price increases are above where policy makers really do want them. Well, that's for sure, although it's not going to keep the Fed from cutting next week or maybe even beyond, which is why the market's having a party right now. You listen to these numbers were at new highs, it seems, as we continue our conversation here on balance of power. We heard from Michael McKee a little earlier this hour. He's got some concerns about what's under the hood with with home prices offsetting some of the noise that might have shown up otherwise or. Would be in next month's report if there was one. But we don't know when the next batch of data will emerge. Right. Exactly. As the White House suggested today, that we're not going to get the October CPI numbers. Now, next week would be considered a relatively exciting week by our standards. I think because there's a Fed meeting, there's supposed to be third quarter GDP, they're supposed to be PCE inflation. But those latter two, those data reports we're not expecting because at the moment, again, there are no signs that the government's reopening. Well, remembering to there was a jobs report that could have been released. In fact, Senator Elizabeth Warren was calling for its release when she joined us a couple of weeks back. That was compiled right before the government closed. And there was a decision made, I guess, to not bring somebody in to press the button on that release. But we're deeply curious to know what was in there, because we could have a couple of dark months by the time we're looking back on this closure that could set a record. That's why we wanted to talk to Heather Bouchard, the former White House Council of Economic Advisors, deputy director in the Biden administration, joins us now with her take on things. Heather, it's great to see you. Welcome back to Bloomberg TV and Radio. The question here about this CPI data, knowing it's softer than expected, is really whether it's showing finally the emergence of tariffs in inflationary data. The administration has told us that's never going to happen. What do you see when you look under the hood? Well, I mean, it is inflation data that is lower than expected, but it's still higher than where the Fed wants it to be. And it's still high for families all across the country. You look at some basics like, you know, meat and eggs and other things that, you know, people buy at the grocery store all the time. I've seen the kind of relief that families need to see. And that is, of course, on top of the kinds of increases that families are facing in costs around health care. That's, you know, likely to come is already coming for families because of, you know, the the cutbacks to the Affordable Care Act premiums. So the consequences for families remain pretty distressing. And you can see that in the consumer sentiment data and the like, where people are are anxious about the economy, the economy right now. But, you know, and it is certainly better than than, I guess, economists expected, given the fact that we don't have a lot of data to look at right now because of the shutdown. So to that point about this lack of data and I made sort of the joke earlier with Joe that next week it would have been a jam packed week when it comes to economic projections. And what we do know about the current state of the economy, I'm wondering what you are watching, what you are looking for amid this lack of economic data, particularly as we're talking about economic growth, because as of now, it doesn't look like we're going to get third quarter GDP data. How is all of that factoring into what you perceive as the state of the U.S. economy? Well, I think, you know, we are flying blind right now. It's you know, there's no there's no ifs, ands or buts about it. We don't have access to the kind of data that we need to understand the economy. We think that this is especially important right now because if the economy is at what economists would call an inflection point, if we're moving from growth to maybe growth slowing or paring back, these are, of course, the reasons that the Fed would lower interest rates next week to make sure that we don't see us move towards recession or don't see more job troubles in the labor market without access to that data. We just don't we don't know. We, of course, have all the other kinds of private sector data and other things that we can look at, but I don't think we should kid ourselves that we know as much as we would if we had this really important government data. And I want to stress because I think that can kind of get lost in the details, that it is about helping us all understand what kinds of outcomes we're seeing across the country. Without that national data, we're left with anecdotes. We love the individual stories, but of course we live in a country with, what, 340 million people? We can't know all of that unless we have access to this data. So it's important for families that we all understand what inflation is, what jobs are, so that policymakers can make sound decisions, and so that we as citizens can hold them accountable. Whether you helped to run the White House Council of Economic Advisors. So you have been able to see behind the scenes the way this works, how the sausage is made in a way that most Americans never will. When we hear that the BLS has compiled jobs data in this case, I guess this would go back to August or September now, but chose not to release that data because of the government shutdown. What would be involved in making that public, and do you think that should be a priority? Well, I find it very concerning that they chose not to release it. You know, one of the things that you always try to do if you're trying to run the government within based on facts and evidence, because whether or not people are employed is a fact. Right. And you want to gather those facts so you can make good policy decisions. It really has been straight. The extent to which this administration has made it harder for the Federal Reserve to do its job and made it harder for the American people to hold it accountable. So in prior administrations, they were focused on making sure that the unemployment insurance data was still released on a timely basis. You know, I think they could have made a different decision. And on the labor data that would have come out in early October. And I think that that speaks to a lack of transparency. Or does it speak to the fact that the data wasn't good and they didn't want us to know what it said? I mean, it leads to this sort of conspiracy thinking, which is which is not helpful when you're talking about an economy as important as the United States. And with data indicators so important to American families who get up and want to know, hey, should I be worried about keeping my job? Is the labor market good or bad? Giving people that information is really helpful for their kitchen table conversations, especially because all of the data we're seeing on again, consumer confidence, Consumer sentiment says that people are anxious about the job situation right now. So it seems odd that they would have made that choice from my perspective, and it's very distressing that they did that. It was good, of course. I think that we saw the data come out today on prices, and I think that will help inform a better decision coming out of the Federal Reserve meeting next week. And Heather, just more broadly speaking, what sort of economic impacts are you expecting when it comes to a longer term government shutdown? We know, of course, that furloughed employees are going to be counted as temporarily unemployed. But when we get to that labor market data and the government reopens, then that could have an impact on the unemployment rate. What are you just watching for here as we really haven't gotten any signs that this is abating anytime soon? Well, I think we're looking for signs of economic distress. You know, we're already seeing that the number of folks that are having trouble making their car payments is shot up. It's been going up. And that's as high as it was, you know, back in 2009. So that's very disconcerting. You know, if someone doesn't get a paycheck, even if they're likely to get that money back because of laws passed by Congress that say that furloughed workers will get their paychecks eventually, you know, that can mean that they missed their mortgage or they missed paying other things. It's going to slow down the economy and it's going to slow down the economy in particular places, and it's going to affect the decisions that people make. So I think we are looking for this this stress and how that is playing its way out across the economy. But let's look at the other side of the equation. Of course, you know, one of the reasons that we have this shutdown is because the Trump administration and the Republicans want to cut back on the amount of subsidies for people's health care premiums. This is a really big ticket budget item for millions of American families who are struggling to be able to afford the cost of health care. And the cutbacks were already made as a part of the Republican budget bill that that one big, beautiful bill that passed back in the spring. These are going to make the costs for health care more expensive around the country, and that's going to crowd out other kinds of spending. So I think for millions of families right now, they're looking at what can they cut back on? And that's never a good starting place for economic growth. All right. Heather Boucher, former White House Council of Economic Advisers, deputy director under President Joe Biden. And thanks so much for joining us here on Bloomberg. And Joe, the markets are also watching Argentina ahead of a key midterm election vote in the country this weekend. The Argentinean president, Javier Milla, trying to restore investor confidence but also notched some political wins for his party. Because it's my understanding that nearly half of the seats in Argentina's Congress are up for election this weekend. For more, we're joined now by Patrick Gillespie, Bloomberg Buenos Aires bureau chief. He joins us live from Argentina. Now, Patrick, can you just give us the top lines here? What is at stake for Javier Melaye? Hi, Tyler. A lot is at stake for Harvey Milk and for Argentina right now. Beyond malaise, relatively low profile candidates in this midterm election, you really could say that voters will be casting ballots for malaise, harsh economic policies that have delivered a fiscal surplus, his pro-market agenda and the reforms that he wants to pass after this. And, of course, a $40 billion rescue package from the United States that President Trump himself has conditioned on Melaye's party winning this election. So what was a relatively normal midterm race a few weeks ago has now turned into a make or break moment for Harvey Melaye and his radical economic experiment. Experiment? Excuse me? Well, the bailout that the administration is working on and some would check me with the use of that term has been very controversial here in Washington. Even Republicans like Marjorie Taylor GREENE are crying foul, as she calls it, one of the grossest things she's ever seen and of. Course, beef ranchers here, cattle ranchers in the United States are concerned about Argentinean beef imports. Patrick this money is supposed to ride on the outcome of this election, right? What if he loses? That's a great question, Joe. And you're right to point out that this has caused ripple effects both in Democrat and Republican circles in Washington and beyond, because some of the measures regarding beef and soy have been sort of tied or related to this rescue package. But there's three pillars. Basically, there's a $20 billion currency swap line that's directly between U.S. Treasury and Argentina Central Bank. The Treasury is also trying to line up private financing from Wall Street banks of the same amount, another $20 billion formula. And then most recently, the US Treasury has been buying Argentine pesos, which is a bit ironic because Miller campaign is a president who would dollarized Argentina and now he has the US buying pesos. But all of this really relies on the what has been so far unprecedented U.S. support for Argentina and its pro-business agenda. But of course, Miller's root problem is a lack of political strength. The reason why the U.S. stepped in was that six weeks ago, his party lost a key local election that was seen as a bellwether for the national race. So he really needs a comeback on Sunday and both for his agenda and for this rescue package. In the final minute we have with you. Patrick, can you just give us some local context here? We have this headline on the Bloomberg terminal this morning that MELAYE'S approval rating hit a new low before the midterms, according to a new poll. Why don't we know what that led up up to this from from those in Argentina? Sure. Well, Art Melaye two years ago inherited a full blown economic crisis and he has brought Argentina back from the brink. Inflation was nearly 300% annually during the early months of his presidency. It's now down to about 30%. Poverty. Similar story. It's come down significantly. But the reason why voters are increasingly disapproving of Melaye's government is that he's significantly increased the cost of living when it comes to utilities. Those have quadrupled during his time. Economic momentum has also slowed. The job market is well below levels it was before Melaye took office. So there's a lot of hardship as a result of Melaye's austerity policies, which he symbolizes via the chainsaw. So voters are running out of patience and they want to see some changes in policy and direction from life. With apologies to The Golden Chainsaw. Patrick Gillespie, many thanks, Patrick. It's great to have you. He's our bureau chief, Buenos Aires. We've got to do the show down there soon. Alongside Tyler Kendal and Joe. Matthew will meet you on the Late edition of Balance of Power, only here on Bloomberg.