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The Big Jobs Day, Yes, as Charlie refers, we started our day out on the patio at the Labor Department with the acting secretary and it was just a short time after the data were released, painting two different pictures exactly like Anna Wong told us what was going to happen. And the team at Bloomberg Economics, which survey do you
care about here? As we see a jump much hotter than expected in payrolls, but also an increase in the unemployment rate, and everyone's talking about what's really under the hood.
That's why we turned to Molly Smith, Bloomberg Economics editor, is with us live from New York, and Mally, I'd love your take because Molly's the person who gets the data the second that comes in and has to regurgitate this into a story that makes sense to everyone who's about to trade on Wall Street or whatever they're going to do with the news and Molly, you get two different stories here today, don't you which one is more important?
That's right, And you know, we were struggling with that at a thirty as to what direction we're going to go in with this story, because as you said, you know, this really does give a bit of a mixed picture depending on which survey you're taking the better cue from.
But if you're looking at payrolls, which certainly the market reaction was indicative of, you're just looking at a blowout jobs report and that payroll's number of two hundred and seventy two thousand coming in above all estimates, and that's about one hundred thousand more than the pace that was last month. So that's just really it's so tough to square these and the signals that you're getting from each
of the two surveys. I think, you know, parsing through these different economist reactions, it seems like most people are thinking that the true signal of the labor market is we're in between them, that payrolls growth is still strong but moderating, and that the job market overall is gradually, very gradually softening.
So when Bloomberg Economics says, we believe the household survey, pointing to the unemployment rate here currently offers a closer approximation of reality than non farm payrolls. What part of the survey does it bring us that's different?
Right?
So the household survey is it's a bit different from the business survey. So this one is much smaller, and this survey's actual household So if you, for example, get a letter in the mail or a call from the labor department and they will ask you where are you working last month or during this particular week last month versus the bigger survey that captures the headline non farm payrolls number that comes from a survey of hundreds of thousands of businesses. So very different.
Wel, it includes agriculture, right, which kind of paints a different view of the labor force all the way around. Is it more active?
Exactly?
Yeah, So the agriculture piece comes in on the house hold survey side. That's why the establishment survey is called non farm payrolls. So yeah, it's very different. And the household surveys what we look to for the unemployment data, and that's what was obviously the most concerning part of it.
Where you saw a big drop in employment this month, the fewer people working, and you also saw a newer people participating in the labor force, and that also contributed to a rise in the unemployment rate.
Yeah, what do you make of that? I asked the Labor Secretary about that this morning. I think it was four hundred thousand had dropped out of the workforce. Correct, we're currently not back to the participation rate pre COVID, And how do you square that?
Right?
You know, it's it's it's really challenging. I mean, I'm still what the report came out like three hours ago. I'm still wondering what it means. But I think you know.
The big here to interrogate you about it much.
I know you are.
You always put me on the spot show. It's what makes this show so great. So no, I mean that really is the challenge of because you want to see greater labor force participation and it has generally been coming back from the drop off in COVID, but still very slowly. But you know, something that was a positive that I'm sure that Biden administration would like to see is that we call it when we look at the prime age participation rate So this is looking at people ages twenty
five to fifty four. So when the so called prime working years, that actually increased to the highest in two decades, So that is positive, but when you factor in other age groups, it was slightly lower.
Can I ask you about this immigration effect. I don't know if you have time for this in your research or homework at this point, but there was a note out this week I think it was from Standard Charter that said the undocumented immigrants made up of something like half payroll growth since October and that we could be talking about one hundred and tow one hundred and nine thousand jobs a month as Joe Biden puts this executive order in place that would lower the th threshold for
the number of undocumented migrants coming across the border. Are we going to see a change in jobs data?
Yeah, it's This has been a really big debate in economic circles too, not just debating which survey is the better signal of the labor market, but also which survey better captures the impact of immigration. That there's a big debate circling around about that, and a lot of people seem to think that the Establishment survey does a better job of that, hence why you've seen that number be so robust like the two hundred and seventy two thousand today.
Others think the household survey is maybe more indicative of where immigration is going to be captured. You know, it's really tough to say it's you know, I think either way you can conclude economically that immigration is positive for the economy without waiting into politically which side you lean on.
Fascinating conversation as always as you're clearly still I love that the gears are still turning. At noontime, Wall Street Time, Molly Smith. Great to have you always, Bloomberg Economics editor. She doesn't only report on tennis, she covers them. Hope you have a great weekend. You know, that's right, that's her full time job, which is what we try to
keep her talking about here on Balance of Power. I'm Joe Matthew in Washington and glad you came along on the radio, on the satellite and on YouTube, where you can search Bloomberg Global News and find our live stream anytime we're on the air here from Washington. This is like one of the best deals going. We'll save a seat for you in the studio, see all of our guests, see the images that we're talking about on the interwebs. As we turn to speaking of which another important day
for Joe Biden in Normandy. Still the point to Hawk's speech as he delivered his message on protecting democracy standing up to authoritarianism, with the sea behind him, standing on the very cliffs that the Rangers climbed at point to Hawk on D Day, here's the President of the United States.
Walk away from you.
I apologize for the weeks of not knowing what's going to VAMA in terms of funding, because we had trouble getting a bill that we had to pass, had the money in it from some of our very conservative members holding it up.
All right.
Clearly not from the speech from his meeting with President Zelenski earlier today, which coincided with his address and his visit to Normandy to mark the eightieth anniversary of the D Day invasion, the President announcing a new two hundred and twenty five million dollar aid package for Ukraine during that conversation, as he spent time and even apologized to Zelenski, the word from the President, I'm not going to walk away from you, and it brings us to our conversation
that I've been looking forward to. Here today a special one from Ukraine. Ilia Pana Moreenko, the co founder of the Kiev Independent and the author of an important book called I Will Show You How It was the story of wartime Kiev. Ilia has been in the field in and around Kiev and in the fight since this started, since Russia's invasion of Ukraine, and brings a unique on the ground perspective here literally with what's going on. Ilia, thank you for taking the time to talk with us.
It's great to have you here on Bloomberg. I wonder your thoughts today when Joe Biden not only made that address but sat down with President Selenski. Do you believe Joe Biden's resolve when it comes to supporting this war.
I do believe him in terms of trusting in Ukraine, in terms of having a positive feeling about Ukraine. Joe Biden, since many years ago, has got the reputation of a vice president and then a President of the United States who truly Ukraine. He loves this country in many ways. This is why we were lucky to have him as the decision top decision maker Washington, d C. However, with
his good intentions. At the same time, we often see this in the picture that his into rush is overcautious about the steps, you know, this notorious concept of escalation management. He is definitely between the hammer and the anvil of domestic politics, with a lot of American fatigue about foreign wars and American interventions overseas. He's definitely under severe pressure not to meddle America into something else overseas that that Americans are tired off. So I would say that, yeah,
we truly believe him. We truly believe that he means that he really wants Scramee to be free, independent, But the same time his hands are tied in many ways by his own device.
Well, you know, there's a lot of debate here about whether the delay and approving funding for Ukraine the better part of six months set back the Ukrainian military or even turned the tide in Russia's favor. Can you tell us firsthand what that delay meant for Ukrainian forces in this stage of the war.
Well, I'm not sure that we have all one percent of the material to make complete conclusions about these months without US eight and the effect, but I think we can safely say that it has not traumatically turned the tide for the war, but at the same time it
played really strongly into the hands of Russian military. It gave them very wide and very dangerous window of opportunity, especially when it comes to attacking Ukrainian civilian infrastructure, which is in many ways our air defense was so weakened, and which is why in many ways our energy infrastructure and eragey supply is such a severe crisis right now. At the same time, it was an extremely dark time
on the front line. Lots of things lost, not only because of the lack of munitions, lack of weapons, but also because of a lot of mistakes from the Ukrainian side. Unfortunately, admittedly, but I'm gonna say that given the dire shortage that was precipitated by this delay, we are extremely lucky to
not have lost even more. In many ways, these that dark period was mitigated by the heroism and extreme inventions of the people on the ground, of soldiers of the Ukrainian military, so they used a lot of waste to bypass and mitigate this dire shortage. Without this, without this dedication extremely litigation, in so many cases, a situation could have been way way worse and we are lucky to have it.
As we spend time with Iliapanomarenko's the co founder of the Kiev Independent, we talk a lot about morale, or we hear reports about the state of morale among Ukrainian forces. Ilia, how about Ukrainian people. When you're in Kiev, people are trying to live their lives even as missile attacks are being aimed at apartment complexes. The lights are on and off, the power, the heat is on and off. What are the people of Ukraine think of the war at this stage?
What appetite do they have to keep fighting?
You know, Ukraine and Ukrainian society, it has pretty much everything of what could be expected from a society after more than two years of extremely bloody war. It's about the entire spectrum, the whole spectrum of so many emotions that could be found in a complex society in such a dark time. It's about despair. Some people are losing hope. Some people are still extremely motivated, military and civilians. Some people are more or less impassionate about this. Many try
to live their lives. Many are sort of a panicking on the internet, and which is why in many ways, it's not a very good idea to judge on the social discourse from social media. At the same time, that a lot of people who maintain the normal life maintain the motivation to go on to work, to donate to the military, to help to get mobilized, even though of course the stream of volunteers have dropped over these two years.
So it has everything that could happen to a nation that has lost such a lot and has suffered such a lot. But yes, you're absolutely right to say that no matter what happens, Essentially what happens is that people get adapt I just got back home from driving through the streets of Kiev and most of the city was in a blackout. Power cuts to control they severely dwindled energy capacity. And yeah, most of the restaurants they keep working.
Everybody uses power generators, diesel generators. How small power stations too. It's a very normal thing right now that even the large most in Kiev, outside Kiev, they also use really powerful electric station to absolutely go on working. And I must say that these things, this continuation of normalcy, it really works well for the public morale.
Really, I'm really glad that you could spend some time with us. You describe the war in Ukraine as quote, an idiotic war for the sake of just one delusional old man's monstrous act of megalomania. The book I will show you how it was the story of wartime Kiev Ilia Panomorenko joining us live from Kiev on Bloomberg. We do thank you for your time. Come back and talk
to us again. I'm Joe Matthew in Washington as we carry on the conversation coming up with the help of Bloomberg Economics Jenny Welch, our geoeconomics analyst on this latest batch of aid for Ukraine and the message from the President Today in Normandy, this is Bloomberg.
You're listening to the Bloomberg Balance of Power podcast. Can just live weekdays at noon Eastern on Applecarplay.
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With the reaction on Wall Street fascinating since eight thirty this morning. To listen to the analysis and the different takes on the same numbers here growth surging in May. You've been hearing about that if you've been with it since eight thirty this morning. Wages accelerating two hundred and seventy two thousand the number last month, blowing the doors off expectations once again. The unemployment rate though also up, hitting four percent from three point nine, just to tick
but not expected. And it brings us to the question of which survey we should be looking at. Bloomberg Economics points you to the household survey that includes agriculture, that which generates the unemployment rate. Payrolls stay hot, though, and that's the number of the White House is going to
seize on here. So we made our way down to the Labor Department to get the take of the Acting Secretary, Julie Sue and I started by asking her, as we got together on the patio of the Labor Department, overlooking the US capital, which survey better reflects reality.
Here's what she said, This is another very strong jobs report. I'm not going to get tired of coming here and telling you that we are continuing to experience very strong, stable and steady growth. So it's two hundred and seventy two thousand jobs created this month. The unemployment rate has remained at or below four percent for thirty months straight. That's still the longest since the nineteen sixties. And at the same time, real wages, you know, over the year
are up four point one percent. So workers are doing better in an economy in which the President has said, when we focus on workers and worker well being, we're going to do what's right for the economy and for the country.
When you look under the hood, you find that four hundred thousand, even more than four hundred thousand people left the labor force in May. The participation rate is not back where it was before COVID right now, how do you explain that?
Well, so let's say, you know, the prime age labor force participation rate remains very, very strong. And it's worth noting that again women's labor force participation rate hit another historic high. So last month we said it was the highest since nineteen forty eight when this data was begun to be collected. It's now a little bit higher than that. Even so women continue to power are economic recovery. At the same time, you know, we are seeing again strong participation.
People are in the job market, People have come off the sidelines. People are looking for jobs and they're finding them. Where there has been a little bit of a you know, of a very small uptick in the unemployment rate again still at or below four percent for the longest stretch in decades, but has to do with young people ages
twenty to twenty four, who are in a bit of transition. Really, if we think about May, right, May is a period of transition for all of us parents with kids who graduate and maybe move and you know, are looking for different jobs during that time.
You can tell a great story and put a great headline number on that unemployment story as you are right now. But when you look under the hood, you do see some elements of weakness compared to the payroll survey. And I wonder, while your happy word is now, if you worry about where we're going to be six months from now, if this is a slowing job market, well.
The payroll survey really is the gold standard when it comes to the unemployment rate. Right, this is the you know, it's the largest by far of any data set, including the household survey that is used. And so again, I don't think there's any way to paint this as other than continued, strong, stable and steady growth under President Biden's leadership. And proof of his theory that if we invest in America, we can create good jobs in communities and crowd in
private investment in order to do that. And you know, as I travel the country, I'm seeing the benefits of that.
We've talked a lot about the impacts that immigration has on our job market can be for better or worse, depending on the trend that you're looking at. And there's an analysis from Steve England Standard Chartered Bank that we looked at this week that estimates about half of the job growth since October can be attributed to undocumented migrants. That it's somewhere in the area of one hundred and
nine thousand a month. If the president's executive order put in place just days ago lowers the threshold, lowers the numbers of undocumented immigrants entering the country, what does that mean for the job market. Do you see numbers like that in your modeling.
I mean, I haven't seen that study. I would actually question those numbers based on what we see. This is a situation where one we're not talking about dividing a small pie into smaller pieces. We're talking about a much bigger pie overall, So more jobs, more people in the labor market, more opportunity for all. Since the President came into office, again, we've talked about this, you know, fifteen
million jobs created. That is a fifteen million families, fifteen million individuals who are having the benefits of a good job that might not have had that before. I would also say that it is true that there has been you know, immigration based growth also, and that has been true with throughout our nation's history, right that immigrants have helped to do jobs and help field the economy. But the majority of this job growth that we're talking about has gone to native born workers.
Well, talk to me about the other side of the story, and that's immigration reform one B H two B. We spend all day talking about border security in Washington. What does our job market need in terms of attracting talent from other countries legally?
I mean, it's such an important question, right. This is why since day one, President Biden has called for the kinds of comprehensive immigration reform that would address you know, some of the challenges that our system has created.
What job market look like with that help?
What what our job market look like.
With you got that reform?
Right?
Well, so we do administer you know, we have in this administration increase the number of H two B workers that have come in. We recently did a rule around H two A workers, making sure that when migrant workers come to this country through legal means, that they're also protected. Right that that that that they are protected for their own good but also so that they're being here doesn't
take away from you know, the good wages in those industries. So, you know, the but the bigger picture is that there does need to be comprehensive reform. The press and has called for that, and frankly Congress needs to do its job.
There's something that I don't want to get too deep in the weeds called the birth death model that our analysts set Bloomberg Economics are looking at that would suggest some of the companies that we've seen closing might not be reflected yet in the numbers that we saw in this monthly survey based on layoff announcements corporate closures. Where do we look in the middle of summer when these numbers start to emerge from.
Well, you know, we will come out every month to report the data that we have, but everything that we have seen this past month, this past year as well as you know, the last year since President Biden came to office is historic job growth, more jobs created during the same time period than any president in our history, and continued low levels of unemployment again historic lows, and
more opportunity to come right. The investments in the President's Investing in America agenda, many of them are still coming out. And that's why this summer I'm going across the country talking about Job Summer and focusing on the importance of what a good job.
Does, good job principles. Summer Tour. You're like Beyonce, You're launching a national tour and it's not a mistake. I see some of the states are going through, like Pennsylvania and Michigan. What is your message to voters in those states.
Well, my message to working people is that we see you, we have your back. We know that you have talent and desire, and we want to create the kinds of opportunities that will allow working people to have a good job where they can be paid a living wage and live a secure life. And our message generally is that when you build a workforce that is ready, that is trained, that is skilled, that pulls the full talent of the
American people. It's good for employers, it's good for economy, and we see that time and time again in these jobs numbers.
Getting back to the household survey, which is important to us and our viewers and listeners. The fact that it reflects agriculture, the fact that it reflects what's happening in people's households. Does that not raise the level of importance of the household survey at this point? When we look at that against payrolls, they get a sense of not as even as much where we are now, but where we're going.
I mean, I think the bigger you know, the answer is the payroll survey is the survey that tells us how many jobs have been created, what industries they've been created in. And again, this the growth we're talking about is not just single industry, right, it has been for the entire time, but certainly this last month is no different,
very very broad based. We saw growth in leisure and hospitality, we saw it in construction, we saw it in professional services, we saw it in healthcare, and so you know, there's really the numbers don't lie. It's really you know, broad based, solid continued growth, and I think that coveted soft landing that so many people bet against.
My conversation with Julie Sue, the Acting Secretary of Labor, a short time ago, was her first conversation coming off the data, actually really interesting to hear the way she framed some of the messaging coming out of the administration. Here we're going to get a different side of this now with Catherine Edwards. I've been looking forward to this conversation with us today at the Table, economic policy consultant adjunct economists at the Rand Corporation, also writes for Bloomberg Opinion.
So that means, Catherine, you get to say whatever you want. I can only imagine what it's like to be you. Soft landing is with the Acting Labor Secretary said, and we've been asking her that is this it? She seems to be saying it out loud. Now you know what this is it? What comes after a soft landing? Or in your view, are we going into a recession?
I looked at the jobs report this morning and couldn't help but think that we are on borrowed time. I don't know how much longer the labor market can stay strong with interest rates at the level that they're at now, and just the amount of pressure that most families are under to make ends meet prices.
Have you concerned what part of the economy, because we see some areas of worry in the household survey versus the establishment survey, which is where I started with her. They want to talk about a big hay Rolls number, but you see a lot of other evidence.
Under the hood.
I mean, I think what I'm worried about most is just the on some level, the dissatisfaction that Americans are expressing with their current economic situation, the amount of price increases that they've had to bear over the past two and a half years. But at the same time, the lack of relief for any of those price increases. You know, policy geared towards making it easier for families to get by. I mean, that's none of that's allowed right now, because we have to wait for prices to come down on
their own through falling consumer demand. So that means we don't really get to help consumers at all. I don't know how much longer that can last.
Well, then you wake up on a morning like this and you hear that expectations of an interest rate cut have been pushed back, and maybe nothing at all this year, even as President Biden predicts one. What do you make of that? Do you think it's true?
I mean, you have better people to forecast what the federal dude and me, I prefer to look at the labor market than the people down the street. But you know, I do wonder we know what needs to happen for the FED to cut rates because they think inflation has cooled sufficiently. Right, we have all the little ducks that have to come into a row and price. We get one kind of price report or one kind of jobs report.
You know, it either gets too bad in the labor market or we get good news from prices, and then they're going to drop rates. And we are all waiting for that to happen and have been for some time. I think what is not clear to me is when does the FED admit that maybe this policy isn't going to do anything else, that we are at the limit of what it can accomplish. You know, even Dallas President
Logan said it's not clear it's going to do anything else. Now, she was very careful to say that that doesn't mean she thinks that rates should be cut. But you know, when you're living in a moment real time. You don't have the ability to step back and say, our interest rates the best thing that we can do or the only thing that we can do to move the economy from basically this what we think is a soft landing where we've been for six months.
Well, what do you do coming out of clearly still noise from a pandemic. Do you how do you get to this apply side? If that's where you're going.
I think that expansion of the labor market is good at keeping certain prices low because we don't have to have wayes be bid up too quickly. And increasing labor supply is going to be challenging when the largest generation is retiring and we're coming off of a period of restricted immigration. But at the same time, the US has never pursued an active labor supply policy. It's not as if Congress has ever sat down and said, how do we maximize the number of workers in the United States today?
Well, there's a big argument about the impact of immigration. It's been going on for a long time. It gets louder with new research from Standard Charter that you may have seen, and the numbers were remarkable. If true that undocumented migrants made up for half the job growth in this country since October, that we could be looking at as many as one hundred to one hundred and nine thousand jobs a month, distorting payrolls. Do you see that falling?
First of all, do you believe that? And if you do, do you see that falling in the wake of this executive order from the President?
I hadn't seen it, but it doesn't I guess it doesn't necessarily surprise me. Immigration is a very big part of our labor market. Around one in five people who live in this country were not born here, and we tend to treat them as almost a separate segment that aren't as good or maybe aren't as important to labor market policy as native born workers. But they are here
and they are working. And to act as if they need a separate policy as opposed to our integrated into our labor market, you know, is really putting a demographic imposition on something the labor market wouldn't make a distinction between.
Interesting. But if so, if that is qualified here in the next couple of months, the Biden administration is acting to shrink the labor pool.
You could say, then yes, you know, no, and yes I mean, because directly the basis of the US economies that we have more people basically every month than we do the month before, and that the population is growing, and that you know, the immigration is just a thumb on the scale, right to change that growth be higher or faster, it is slower or faster. But I, you know, no,
I don't think it's necessarily good policy. I mean similar to how I didn't think it was good policy to let childcare subsidies expire when we knew that it was risking pushing more women out of the labor force. And we haven't seen that happen to the degree that it was predicted, but it's certainly not helping the US workforce. That childcare cost families, you know, on average a quarter of their income.
Yeah, it's interesting. You remember this exchange between Elizabeth Warren and J. Powell and one of their many standoffs in congressional hearings. We tune in just for these moments sometimes, and she was making the point, you keep hiking interest rates to keep them higher for longer, you're going to destroy the job market. And he clapped back and said, what is better to allow inflation to run out of control?
So families can afford nothing. What do you make of the balance that he's trying to find here?
All policies have trade offs, that is the reality. There's never one winner of all we have to do is this and everything is okay and it doesn't have any consequences. There's always a trade off to consider. And Powell's job is not to consider the trade off for how Americans feel about economy and society, whether or not they think that their struggles are important to their government. And that is Warren's job, and that is elected officials job. I mean, well, it's.
Also a fed's job. With a dual mandate, you could argue.
I mean, it's are they equal mandates?
Me?
I don't know. We have had unemployment below four percent for just over two years ending this month, and that's the second time it's happened in almost one hundred years, so it feels like maybe it's not quite equal of a mandate. I think it's there's a policy question that is very much. I write it down on a two dimensional graph. Prices are going one way, the labor market is going one way, and here's my interest rate policy,
and I just let it happen. But the world in which this takes place is a world in which families are struggling, and they hear news every day that corporations are not right, that we have record profits happening for companies, and that you know, we all have to make sacrifices for the economy, if you're a family, if you're a worker, if you're trying to buy a gallon of milk. But we don't see fortune five hundred companies making those same sacrifices.
And you know who builds economic recovery and who bears economic pain.
Those are still your few, Catherine, Thank you for joining Katherine Edwards from Rand Only on Bloomberg.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon Eastern on Applecarplay and then Roudoto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Welcome to the threshold of the weekend, the Friday edition of Balance of Power on Bloomberg TV and Radio. With
our eyes still on Normandy. A day after we mark the eightieth anniversary of the D Day invasion, President Biden was back today at Point the Hawk, the same spot as I read on the terminal etched in the nation's political memory in nineteen eighty four, that's when Ronald Reagan stood in that same spot delivering his famous Boys of Point to Hawk's speech, drawing common cause between their feet in the face of Nazi Germany's tyranny, to then the Cold War, and now today Joe Biden connecting the dots
to aggression from Vladimir Putin, referring as well to Donald Trump without mentioning his name. Over the past two days, we assemble our panel for their take on this. Genie Shanzeno is with us, Bloomberg Politics contributor of course, senior Democracy fellow at the Center for the Study of the Presidency and Congress. Mac Gorman is here too, Republican strategist and executive VP at Targeted Victory. Great to have you
both here, Matt. What's it like as a Republican to hear the Democratic president channel the former Republican president Ronald Reagan, who so many Republicans cite in their arguments and their justifications for policies. A lot of folks have seen the Republican Party move away from that establishment view to one closer to isolationism. What did you make of Joe Biden's speech today?
A couple of things.
I don't think it was a very smart political ploy to raise expectations galactically before the speech and say that you are Your speech today will evoke comparisons of I believe, one of the greatest speeches of one of the greatest communicators we've ever had in the presidency.
I think it did it bien a disservice to raise the bar that high. Number one, number two. Look, I revere Reagan. I do.
I think he was one of the greatest presidents, especially in the twentieth century. But I think what's tough, and we talked about this earlier when you're trying to peel younger voters invoking a president who gave a speech that is further away from present day than when he gave it to It was to D Day. It was a long time ago, and so it's tough to resonate when you're comparing yourself to a figure that many folks don't have that historical touch point.
For boy, that's incredible, great perspective on the timeline there, Genie. We talked about this a bit yesterday. There was more, of course than Ronald Reagan. You might have seen this, by the way, or heard this as a very different speech. Was the right the White House correct to kind of frame it that way to begin with? To Matt's point, raise expectations.
No, absolutely not. Listen, Joe, I may want to know, repeat Mary lou Wretn's vaults or something, but well, I couldn't do it either way. But why would you set yourself up for that? You know, Listen, Ronald Reagan's speech was given at a particular place in a particular time, and it was such a different media environment that a speech like that could raise your numbers and help you
win the presidency again, as it did with Ronald. But we're in a very different media environment, and you don't want to set yourself up for a repeat, because of course, all you can do is fall short in people's eyes. Was it a good speech, Absolutely, it was fine. The message is right, the time is incredibly different. So for that reason, I think, you know, the White House, I'm a bit surprised. I think some of the speech writers are so keen on getting their important words heard that
they raise these expectations. But it's problematic. The reality is if Joe Biden wants to win this election. He's gonna have to return to the issues people care about. He is trying. This is an important issue. Democracy around the world is under attack. We've known that for two decades. He's trying to make that case. But what is it at home? It's all about the economy, It's all about inflation, the things you just talked to Julie Sue about. That's what it's about. And he's gonna have to turn here
to win the election. So good speech. Absolutely, Is it going to change the ballgame? Absolutely?
Not.
Well, I don't know, Matt. I think that moment when he put the aviators on while he was still at the podium before walking away might have done more for young people than the words that he delivered in some cases. But how about the actions made two hundred and twenty five million dollars in eight announced for Ukraine in a bilateral meeting with President Zelenski. They appeared together, They got the footage of them talking and meeting. Joe Biden even
apologized to him for the delay in funding. Is that closer to what the commander in chief should be doing here as he's running for reelection.
In theory, Yes, I mean Look, he is governing right now. And look, there is certainly parts of the Republican base that do not want Ukraine funding. The worldview is very different, but also it is broadly popular with independence and a large segment of Republicans. My old Boston Scott was supportive of fund for Ukraine in order to degrade the Russian military. And look, I will say in his interview yesterday with David Muir of ABC News, Biden didn't make a good point.
He did point out how much the.
Russian military has been degraded and the casualties suffered upon the Russian military.
But I will say I.
Think, to Jenie's point, Ukraine and democracy writ large will not be winning issues for Biden on this election. If he wins this election, it's going to be because he was able to find a message on the economy and that abortion was able to at least match the salience that immigration does as a single issue, motivating kind of point for voters. That's I think it's going to come down to.
At the end of the day, It's interesting that we're still talking about money for Ukraine.
Genie.
After this massive supplemental request was passed, the President signed it into law. This two hundred and twenty five million dollar shipment is actually a draw down on US supplies as Ukraine waits for help. Here, it's going to take a long time to get some of that material to Ukraine. The meeting today important in helping that happen. Our European allies are also taking part in this now, and we're allowing Ukraine to use US made weapons at least in
some cases near Kharkiv across the border against Russia. How long do you give the administration to widen that scope, even as they had warned over escalating this conflict with Russia.
Yeah, it seems to be a pattern with this war for the last three years that there is an ask, there is a time, and then there is an approval. You know. I think the real challenge here for the White House and for all of us quite frankly, and for Ukraine is it is still very unclear, at least in my mind, what is the end game here? What is success? How do you define that? And of course Zelenski defines it in one way that the White House at least heretofore has not approved or agreed with.
And until we.
Know what the endgame is, we are down a path where this thing is just going to stretch out. So Joe Biden may revisit allowing us to arms to be used in Russia in a more concerted way, But is that going to make a difference. I don't think so, And I think as it pertains to this issue at home, the Biden team is better left or better off rather leaving this to people like McConnell and Sullivan. The Republicans in the Senate did approve finally the spending, and we
saw McConnell's editorial. I think that does more to speak to these middle moderate swing Republican voters who don't aren't that excited about Donald Trump in general, but specifically foreign policy wise, and the isolationism to bring them over. And so the Biden team has tried to reach out and they continue to do that. But they're far better having Republicans reach out to Republicans than trying to have Joe
Biden over there doing it. And I'm not saying that was the intent of the speech, but from a domestic standpoint, it's not going to have a lot of impact. You know, within twenty four to forty eight hours from where we.
Are now, Matt The Daily Mail is reporting that of all people, Steven Spielberg, who we saw in the crowd yesterday at the Normandy Commemoration, helped to prepare Joe Biden for his speech today at Point to Hawk. He was in the room at the Hotel Intercontinental in Paris on Friday morning when the President was doing his final run through, doing prep here for the speech on democracy. The White
House did not apparently respond to inquiries about this. But what does that tell you about the optics the President's trying to employ here?
You know, there's.
Always this fascination, mutual fascination Hollywood with politics, politics with Hollywood.
You know, Biden has done this before.
He's brought in John meetscham to kind of ghost right if you will, or at least advise a lot of his speeches. Look, I love you know what Steven Spielberg did with saving Private Ryan, producing Band of Brothers. She does bring a unique perspective to this. But I'm also he's not much of a writer, so he's a director, so he can maybe advising the cinematography, if you.
Will, the scene that they're going to set, But at the.
End of the day, it doesn't really out add much value to what Biden is doing. He's going to have to go up there and perform like he did today.
It's great to have both of you with us a great panel on a Friday. Jeanie Shan say no of course, Bloomberg Politics contributor and Republican strategist Matt Gorman from Targeted Victory. We thank you both. Have a great weekend. We'll pull them back together again on Monday. Here on the fastest show in politics.
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And welcome to the Friday edition of Ballance of Power. It's good to have you on Bloomberg TV and Radio. I'm Joe Matthew in Washington. As we digest the data, it's job's day here, of course, as Charlie reminds us, the markets reacting to what you can look at as a mixed report. We talked to Mollie Smith about it. We talked to the Acting Labor Secretary about it. What should we be looking at the jump in payrolls hotter than expected, or signs of deterioration possibly in the household survey.
Not that that's a new question. Just ask David Weston, the host of Bloomberg Wall Street Week, and our colleague in New York is with us right now, the everlasting question.
David.
I won't ask you about two percent, but I wonder which has your attention today.
Well, I must say politically, as I looked at those numbers, which actually did surprise me a bit, I think President Biden keeps getting the answer to the wrong question in the sense that, boy, people are getting jobs, which has got to be good. Wages are going up, which has got to be good.
Right.
The economis are strong, which's got to be good. But people are concerned about inflation, how much they're paying for things, and this doesn't help them on that score at all. I feel a little badly for them, because I say these should be good answers, but I'm not sure their answers to what people are really pressing about right now.
Yeah, and it's easy to write a statement, I suppose if you're in the White House Communications office talking about as stronger than expect. The jobs market just keep beating the drum. But the investment community, the markets look at this a lot differently. Are we wiping out chances for a rate cut this year?
Well about wiping out? I mean there are some who have been skeptical all around, certainly reducing reducing chances and reducing the number of rate cuts. And again coming back to the political side of it, which is your Baileywick Joe. I mean, if people are trying to get relief from higher interest rates, these numbers don't particularly point in that direction.
I mean, it's not only that they're paying more at the pump and paying more for groceries, but also they're paying more in their mortgages and by the way, on credit card debt and auto debt and things like that that a lot of working Americans are feeling day in and day out.
We've got an interesting conversation today that we're going to bring to our listeners and viewers now with a prominent voice in the financial markets and his view on this economy today, David.
Yeah, Scott Bessen, who actually was a Soros Chief investment officer at one point. Scott Besson has got his own fund. Now he's got his own company. But he's talked about a fair amount because he's a smart man, he knows things. But also he talks to Donald Trump quite frequently, and his name has been kicked around, as you know, Joe Well as a possible Treasury secretary. Who knows whether that might come to PSS or not. But that's people are paying a lot of attention to Scott Besson right now.
Joe.
Yeah, it's interesting. We talk about a shortlist for a lot of things for a potential Trump administration, but it's hard to pinpoint the Trump economic philosophy, David outside of well, I guess tariffs and extending making permanent the twenty seventeen tax cuts.
What else is there?
Yeah, I think also it's fair to say, and Scott Besson does talk about it. This President Trump, foreign Persident Trump, maybe future President Trump doesn't like regulation much. You remember when he was president the first time. Yes, he had that rule about taking away more regulations than you put in, and he's been pretty outspoken on that front, which I think you could expect. He also tends to like a weaker dollar and lower interest rates. That's been his pattern
in the past. Some people say it might have to do with his background as a prominent real estate developer, which is pretty common there. But you're right, Joe, the question is how do we anticipate what's coming around this time. I think it's fair to say from stuff you and I have both seen, Joe that that in fact, this Donald Trump has done a lot more work, at least had people around him do a lot more work on
their plans than the first time. There have been people working on these things, and they have some ideas.
I think.
So we did take us into this conversation. Yeah, sure, Well we did get to talk to Scott Beston earlier today and this is basically.
What he had to say.
He started out with sort of a zinger about Bidenomics.
Maybe a better alternative name is bidenitis, and it's like an acute disease. You never know when it's going to be fatal. But look, Bidenomics is a return to central planning that was discredited in the sixties and seventies. We got the same kind of inflation through that, and I think that it depends on this incredible level of government spending, state intervention, and kind of a disregard for markets it's going to be the opposite of what Trump one point
zero was, which was a private sector solutions. The other thing that it is part of Bidenomics is you have this massive wave of government spending, but it's met by increased regulation, So you're constricting the supply side, and that's why that's why you get.
Inflation on the spending side. There's a lot of talk about the growth of government and objections to growth government. At the same time, you may know, Rashir Sharma has actually been writing on the subject saying, you know what it has ever been thus, at least in modern history, even the days of Ronald Reagan. President Ronald Reagan, the government actually didn't shrink at all. It continued to grow during that period of time. Do you take a issue
with that? Do you think there was a time when the government actually was smaller and we had the results of it.
Well, David, I'm actually not an economist. I'm an economic historian, so I and I am boring enough that I could quote the size of government all the way back to Alexander Hamilton. So there was a time when the government was smaller, and with good reason. A lot of the programs have been increased, but traditionally in terms of revenues tax intake as a percent of GDP, in modern times, we've averaged about seventeen to nineteen and a half percent of GDP, and I think that it's a pretty.
Good baseline level.
But what's worrying here are the size of the deficits which are.
Being driven by spending.
And I think that somehow that this Biden promise that we will do better in twenty twenty five is pretty disingenuous. That you spent three four years spend, spend, spend, and then now there's no choice but to increase taxes. And I don't think they're going to cut back on spending, but in their ten year projection, the only thing they
do want to cut back on is defense spending. There's a twenty one percent decrease in defense spending, which I find alarming given the international environment that this administration has created, Given what any administration, Democrat or Republican it was faced with the challenge of China, Russia, Iran, North Korea. Now Venezuela is getting in on the act. So now I think decreasing defense spending is just the wrong.
Way to go.
And you know, I would note that because of these blowout deficits, the inflation, and the high interest rates, this will be the first year that interests service on the debt is higher than defense spending. And that tells me that this high debt is a national security issue.
As you say, Scut, we have something about normost a constant seventeen percent of GDP actually in receipts. At the same time expenditures, even during a Rod Reagan they were twenty percent. They went up actually twenty three or twenty four percent, they came back down close to twenty percent. The only time it's gone down as a percent of GDP was actually during Clinton. What do you think is
a realistic number for a Trump two point zero? If President Trump gets elected again, what do you think is a realistic number for government expenditure is a percentage of GDP?
Look, I think we got to stay right in that seventeen and a half to nineteen percent range. And I'm a big believer that for Trump two point zero, that we can control spending by freezing the discretionary component except for defense and moving toward a three percent deficit by twenty twenty eight. I think that would be music to the market's ears. I think the debt market would respond to that. I think rates would go down. I think
inflation would go down. So there's a chance here for a self reinforcing cycle.
You mentioned regulation as being the other force that we'll have to contend with, and obviously President Trump does not like regulation. You've said we should have less regulation. But let me ask you about one specific form of regulation that's an a trust regulation, because you've also expressed concerns about incumbency as it's called, and we do have growing in concentration pretty much as I understand it through the
US economy. Isn't anna trust a useful mechanism and is it something that perhaps Tresident Trump, a second President Trump would use to try to reduce concentration, which after all, would likely reduce costs.
Well, look, I think anti trust is a last resort. I think the real problem is we have too many barriers to intrigue. So once you cut regulation and there's more local finance available. You know, I'm a big proponent of local community banks, and Main Street can flourish along with Wall Street. And you know what really drives Main Street are these local banking institutions. But I think Once you cut regulation, then you get more entrance into the economy.
And I think the anti trust is a final solution. It's the draconian solution because you have priced out the startups. In my hometown of Charleston, South Carolina, we have a couple of new startup airlines and the rates, the prices are low, the destinations are new, and it's pretty exciting.
Scott, Let's talk about the FED independence, something that's really gotten talked about a lot. I know, if I'm talking to before, you have some question about how independent the FED is right now. But to President Trump of his returns, how important would FED independence be or is it important youth to him at all?
Should it be important?
So look, FED independence is always important. And I think the original sin here with the Biden administration that set off this great inflation play was politicizing the FED.
So J.
Powell's appointment was the latest appointment this century for a FED share. They did not announce his reappointment until November twenty twenty one. When in August of twenty twenty one, if you go back and read the notes of the Jackson Hole Meeting, his speech, he clearly knew that inflation was on the rise. He expressed concern about inflationary pressures. But because President Biden did not announce his reappointment until January, he was reluctant to do anything. And then you know,
the first hike wasn't until March. So look, FED independence is very important. I think it's a personnel issue. I think Donald Trump is always going to make his opinion known. And I will note in hindsight, when he was complaining about the high rates in December of twenty eighteen and the Jay Powell was making a mistake raising rates that he did a final rate hike in December, crashed the markets.
John Williams had to come out, the head of the New York Fed had to come out the next day and calm things down.
And then within.
Several months there were three rate hikes, I mean, excuse me, rate cuts. After that fall of twenty nineteen, when Donald Trump was complaining about how rates, we had the repo market blowout and the Fed had to put in a standing repo facility. So you know, President Biden mentioned rape cuts in the State of the Union. He's mentioned him twice since then, So you know, jaw boning is fine.
Senator Warren likes to jaw bone, and I think it's her right to talk about lower rates, and you know, I think as long as it's in a public forum that it's healthy.
Finally, Scott, you mentioned personnel are really important. Let's talk about personnel. Your name has been mentioned as a possible treasure secretary. You said you have a full time job. I know, although I don't think you've said you wouldn't take it. But apart from Indivis Jewels, in talking with President Trump, advising President Trump, what sorts of people would you advise he attracted for his economic team? And how important is it to send reassurance to the markets.
Well, i'll take the last question. First.
Reassurance to the market is going to be very important. And I think that he would like to contrast with the Biden cabinet because if you look at the Biden cabinet now, even the head of the Small Business Administration I think has been mostly in government work for the past decade or so. The Biden cabinet is lawyers, it's politicians, it's regulators, it's full time government people. Like there's this saying that they've never signed the front of the paycheck.
And you know, I would say, they've probably never gotten a paycheck that they've they've been in big government, and you know they just get it through direct deposits. So you know, I think a much better blend of private sector expertise coupled with people who have experienced in government would be an ideal cabinet.
Fascinating conversation with Scott Bessen, the CEO, chief investment officer at Keyscore Capital Management, talking with Bloomberg's David Weston. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com