Bloomberg Audio Studios, Podcasts, radio News.
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amerie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App.
Turning to the economy, investors are watching for signals from policymakers heading into a key year for the Federal Reserve, with a new chair expected to be announced soon. Cleveland Fed President Beth Hammock among those preferring to hold rates higher for longer, while our next guest is taking the other side, voting for a fifty basis point cut at the Fed's last meeting. Joining us now is Federal Reserve Governor Stephen Myron.
Very good morning to you, Steven, Thank you.
So much for joining us. Good morning, thanks for having me back.
So let's start with Beth Ham actually came out over the weekend, and we heard for Williams as well on Friday saying that potentially where we are right now, rates should be steady and they're looking at what's going on inflation. Even the Fed Shair was talking about, maybe you need to look at inflation the data we had with some grain of salt because of the government shutdown. How are you viewing that side of the Fed's mandate right now?
Yeah, So I gave a speech on the inflation netlook last week, and you know, and I still believe everything I said last week in light of this week's print. Last week's print, I mean, look, there were a couple of anomalies in last week's print related to consequences of the government shutdown, which have distorted and delayed economic data that we need to make policy. But you know, and those consequences I think are not huge.
There when you.
Sort of get to when you get to sort of the ultimate PC print, which is what the Fed, which is what the FED targets, it's probably ultimately going to be in the neighborhood of two tenths of a point, maybe a tenth of that is going to be sheltered and tenth of the other stuff is going to be you know, calendar stuff like prices, like data were collected in the second half the month, or and Black Friday stuff. But we'll have to sort of see when we get
the PC data. But it is true that the shelter stuff was somewhat distorted by some of the quirks of recovering from the shutdown.
But it's also true that.
The shelter data were distorted for most of the year because of really long lands with which shelter inflation is calculated. If you look at market rents, they've been running at about a one percent rate for about two years now, right. That's not indicative of any price pressures in housing whatsoever, but it takes a really long time for measured shelter inflation to catch up to that, just because of various quirks of the statistical measurement process that I got into
my speech last week. So I do think there was maybe some downward bias in last week's print. But at the same time, there's been tons of upward bias in data for the entire year, and it's inappropriate to say, Okay, well, we have to adjust for the downward bias, but we're going to accept the upward bias that itself is a deeply biased position.
We've got to be clear right about both.
Well, do you feel like yourself included? But do you feel like members of the FED are cherry picking what about inflation they like or dislike?
Well, I mean, you know, I think that for the last few months, we've had data come out in accordance with I think my view of the world. The inflation data has steadily come in cooler than expectations. The unemployment rate has poked up potentially above where people thought it was going to go, and so we've had data that
should push people into a duvish direction. And I think it's somewhat problematic if you see those data coming out and you don't adjust your policy prescriptions in a duvish direction. What does that say about the reactiveness of policy to the economy? You know, I think it looks very it reflects very poorly upon the institution.
At the end of that speech at Columbia, you nodded to the fact that recessions are inevitable. Fed's job, it's kind of forestall them as much as they can. Policymakers' jobs. For that, I'm very curious when you look at the labor market, in particularly the rise that we've seen in the unemployment rate. That's kind of rise we've seen customarily before recessions. How do you assess the risk of there being a recession here in the near term when you look at the labor market, for instance.
So I don't see a recession in the near term, in part because we are adjusting our policy rate, belowering it, which is appropriate.
You know.
My view, as I've described is that ietya of shocks that hit the economy, you know, including changes to the population growth rate due to changes in the border policy, have pushed what we call the neutral rate down, and that policy needs to adjust downward to reflect that downward shift and neutral. If we don't adjust policy down, then I think that we do run risks of rising recessions. I don't think it's too late to prevent that, and so I think it's important that we keep on adjusting
our policy rate down. But at the moment it's not my base case, in part because I think that we ultimately will end up continuing to adjust interestraights down.
I want to ask you about the utility of the myrone descent.
So we had the FED share asked that press conference about the increasing confractured nature of the FED Committee. We've talked about quiet descents as well. What are you achieving or so what's the reaction been to you dissenting as you have been kind of in the conversation among the committee.
Yeah, so, look, I mean there's not really any strategy here. I'm just transparent and say what I think and always have and that gets me in a lot of trouble.
And does it or is it a constructive So when you descend in the way in which you do, is it a constructive descent? Do you find that others are willing to engage with you and your perspective on inflation for instance?
Yeah, Well, my perspective on inflation is you know, look at my first speech, I talked about inflation a little bit, but I mostly was focused on neutral.
My speech last week.
I really drew out a lot about my outlook for inflation that was sort of implicit in the first speech and sort of just cursely, curse cursorily treated, and I really drew that out. So my views and inflation haven't been out there, fully fleshed out for the committee for so long, and now running into holiday season. But I have found that that people are constructive, they want to
discuss these things, and I think that's important. And you know, look, one positive benefit of me potentially dissenting like this is that it introduces more a wider variety of views. I think it's really really important to avoid group think. I think if you fall into group think, you stop questioning where you could be wrong, and then it just becomes much easier to be a complacent consensus that is in error.
I think we've seen that over and over this year. For example, on tariffs.
Let's talk potentially about tariffs. The President is pushing for this two thousand dollars tariff, give it in the Church Secretary talking about these tax refunds start of twenty twenty six, is there potential that more money in consumers pockets could goose inflation?
Yeah, so there is potential for some of these factors to boost economic growth. With respect to sort of tax refunds, you know, I think that sorry, with respect to terriffic refunds, I think we need to sort of wait and see what the policy looks like before getting into analyzing its consequences. If there does end up being a policy with respect to tax refunds that are results of the already legislated tax bill, the One Be Beautiful Bill Act from last year.
Those are already baked into the forecast and they will provide a little bit of demand stimulus. But there's so much other stuff going on as a result of policy, in O triple B, in deregulation, in other things that are going on in policy that ultimately push out the supply side of the economy too. And my view is that if you push out the demand side while you're putting the brakes in the supply side, you get inflation.
If you push out supply and demand at the same time, it doesn't really have an effect on priceis do you.
Think it was a mistake that when we had under the Biden administration the American Rescue Plan Inflation Reduction Act sending out checks to and consumers.
Was that an error?
Well, it's not appropriate for you know, for a member of the Federal Reserve described to man as an error or not. But I do think that if you if you hit if you hit the gas on demand while you're hitting the brakes on supply at the same time, it will result in higher prices.
That is that is, that is an economic.
When two thousand dollars checks do a similar reaction as we saw on by the other checks during the American Rescue plan.
Well it depends what's happening on the supply. So two things matter. One is the state of the demand, state of aggregate demand outside of those checks. And if you go back several years, the economy was recovering on its own from COVID. Right, What COVID was not like you know, the great the financial crisis which had lingering deleveraging effects for a decade plus, which meant that demand was was persistently depressed. After COVID, you know, we started getting vaccines,
we started getting at the virals. Places started opening back up. The economy started returning to normal on its own, and so demand was growing quite healthily, and jobs numbers were beating every month, and so throwing more economic support on top of that wound up sort of pushing and already expanding demand side to expand even further. Right now, you
see the unemployment rate is tilting up on its own. Right, So demand is in a separate is in a very different place than it was in twenty twenty one, But so is supply, and I think that if you're taking policy steps that are going to push out supply, or supply is moving out for reasons other than policy, for instance AI, which I find difficult to quantify, but a lot of people put a lot of faith in if supply is moving out for whatever reasons, it can accommodate
increasing demand, and so the effect on prices could be very different.
On higher goods inflation, there is a prevailing narrative that the terroist policy has a lot to do with what's been pushing that up, and you kind of push back against that. You did that in the speech that you delivered at Columbia as well. At the same time, you talk a lot about humility, how much uncertainty there is. I think you nodded to Mervin King in that speech and what he's written about uncertainty.
What's it going to take.
Do you feel like you have a grasp of the effect of the tarist policy thus far or are you still waiting to figure out sort of what that's going to mean for the economy broadly, And yes when it comes to goods inflation.
Yeah, So look in the speech I did discuss how there's this consensus has emerged that tariffs are a significant driver of inflation in the same way consensus emerged earlier in the year the tariffs are going to drive some sort of crazy recession, you know that was there. And I think that consensus is wrong, and I think and I think it's complacent. I described camera factuals, right. If you're describing a result in prices to tariffs, you need
to say what the world would have been like without tariffs. Now, what most people do is they look at what we call the pre trends, what were the trends of various items before tariffs?
Right?
And most people select pre trends from the two decades before the pandemic, right when the world was very, very different. I don't think that that's really appropriate. Instead, the counter factors that I want to look at that I describe in the speech and I include pictures for them, are two things. One what are imported goods imported core goods in the PC index doing relative to overall core goods? And two what are what's happening on an international basis?
And in both of those cases, I don't see anything that would indicate to me that tariffs are the are the driver of core goods inflation. When you look at imported goods versus overall core goods, they're inflating at similar rates. Importive goods don't stick out. We look at US core goods versus other countries. Again, US core goods are in the middle of the pack, and there hasn't been a change that would indicate to me that there's some sort
of very significant terror show. So I think it's actually quite complacent for people to ascribe all this inflation to tariffs. And indeed, if you look at CPI core goods, and CPI bottomed down in the middle of last year, right seven or eight months before tariffs were implemented.
I just want to get a sense before you leave us, how are you thinking about the next meeting, because it couldn't potentially be your last. Do you plan on dissenting in favor of fifty basis point cut again?
Look, I plan on pushing for the policy that I think is appropriate at the time. I will say, when I got to the FED, we hadn't cut rates at all this year, and so it was very important for us to move rates down quickly. Since then, we've pushed rates down three times seventy five basis points of cuts to the policy rate, so the need for me to dissent for fifty becomes a little bit less as we come down. I haven't yet decided whether I'm going to push for twenty five or fifty next meeting. I think
it depends on a variety of factors. So I could see voting for twenty five, but I do think it's important that we continue steadily reducing the policy rate.
So basically, you'll vote for twenty five with the rest of the committee's there. If they're not going to push through twenty five, you may alert everyone of your disfatisfaction with them by going for fifty.
Well, no, it depends. I think I want to see the data. You know, we're still witting on a lot of data because of the shutdown, right, so I want to see what the data do to my forecast going forward, and they and how they change my forecast going forward. But the truth is that I think that it was really important to vote to sorry to cut in bigger
clips when policy was very high. As we continue reducing policy, I think you sort of get into into territory where you can start micromanaging instead of big instead of big cuts and I don't know whether we're here yet or it would sort of still take a couple more cuts to get there. But at some point you sort of start to become okay with sort of steady twenty five business point cuts instead of fifty business point cuts.
Do you think it's going to be your last meeting?
Has the White House reached out about whether or not you were going to stay on at the FED?
I have no idea.
I mean, look, you know, if nobody is confirmed in my seat by January thirty, first I assume that I will stay.
I will stay in my seat.
You know, you can stay in a seat until a successor is confirmed, and then beyond beyond that, you know, it'll all depend on who the President ultimately nominates to be the next chairman of the FED, because it'll depend on, you know, what seats are available and who the President wants to fill them.
When it comes to the next chairman of the Federal Reserve. There are two individuals that you've worked closely with just this year alone, Kevin Hassett of course, and you were at the White House, and also Christopher Wallernent Waller of.
Course with you at the FED.
Can you just give us your evaluation of both those individuals, given the fact that you have a very good, I imagine relationship with both of them.
Yeah.
Look, they're both supremely talented economists and extremely effective individuals that I have the utmost respect for, and I think the country would be very lucky to have either of them.
A quick question just about what you've witnessed in terms of the chairman's role at the FED.
You've been there for a few months.
Is there anything that's surprised you about the way that fed Share Powell is able to kind of go to get people to galvanize themselves around any kind of unanimity. The way that he runs the committee. I think we think about the fed sharers this kind of principal position. The President kind of makes us think that way that this is going to be a highly persons have a lot of determinism himself, but the FED Chair's responsibility is
to try to get everybody on board with decisions. What if you wouldness about fed Share Powell's ability to do that, what would you say to the president down that facet a FED chair has to have to be effective.
Look, you know, I think that there's obviously a lot of people on the committee who are not comfortable with with three cuts. And I think that's the wrong economic position at the moment, given the data that we have available to us, and the forecast that we have available to us, and the very well known, very well understood upward biases that are that are affecting inflation measurement at this moment in time, I think that's the wrong the
wrong view, no question about it. Nevertheless, I think you have to give Chairman Powell, you know, a credit for having wrangled, you know, wrangled three cuts out of these guys in succession. And and it's a it's a it's a it's a it's a cat hurting task.
Uh.
And you know, and I think we have to, you know, we got to give a little.
Credit for that.
Stay with us, multiple IMPEX surveillance coming up off to.
This still with us as Governor Stephen Myron, he heard that Neil Dutta of Renmack was coming up. So we want to stay around for this discussion because you heard something in the green room. You liked what Neil had to say, and you were potentially going to include it maybe in some of your speeches or right.
Here on the program.
I did look, I think I think Neil said something very eloquently which which I think is a really fantastic way of framing it, which is Neil said that there are three drivers of inflation. There's shelter, there's labor, and there's energy, and neither of them is remotely flashing orange right now, let alone the red. When you look at those three drivers, it looks like cool all around. So as a result, you know, you got to make some conclusions about where inflation's going.
Over the next year or two. Yel what do you want me to say? I mean, it's true.
I mean, well, so, I think the one thing I would say is that everyone's kind of lamenting the fact that the BLS made these assumptions around the last inflation number. What if assuming zero for shelter inflation was the right assumption. You know, there's a lot of focus on non housing services as well, but as the labor markets continue to cool off, the prices for those things will also cool off.
I mean, the quits rate is actually at a cycle low in the private sector, so that tells me that workers don't really have the confidence to leave their jobs, which means that the balance of power in the jobs market I think has shifted towards employers, and so I think that's encouraging for the inflation outlook. And with respect to energy, I mean, look, retail gasoline prices are falling now.
Obviously that's sort of a one time thing, but it will take pressure off of household inflation expectations, which the FED says that they're concerned about. So I'm encouraged by the inflation outlook, and I think the balance of risks are such that the FED should be supporting growth.
But you're less encouraged by what's going on in the labor market.
Is that correct?
I mean, what's there to be encouraged about. All the jobs growth is basically coming from healthcare. I mean that was true in the last number as well. Cyclical industries are still slowing, and you have to look at you know, to me, it's important to kind of think about, you know, sort of an add up exercise looking at the underbelly of the jobs market and like where's the jobs growth coming from? You know, home build we talk about record high profit margins. A lot of that's driven by tech
that's not a big driver of employment. You look at the margins for home builders home builder profit margins have been eroding. I mean, it's very challenging to keep buying people down at you know, at these at the rates that they've been doing. That opens up risk for residential construction jobs. What about mining? Oil prices are down, you think oil riggs are going to hire mining workers or lumber?
Lumber prices are down too, right, So there's a lot of this sort of focus on how you know, I think tariffs are weighing on employment, But the truth is in things like oil and lumber and housing, I mean, prices are down and there's no there's no hiring going on. So I think by sort of putting it all the onus on the White House, I mean you're absolving the Fed in that regard, and I think that that's a mistake. I think there are things the Fed can do to support growth.
The economy is weak because of what's going on the labor market.
I mean, Neil's not exactly pointing out a rosy picture when it comes to jobs and employment.
No he's not.
And as I've said before, I think the Federal reserve is too tight. I think it's our job to balance prices in the labor market, and I think that we are not doing a great job of that at the moment. I think lower rates are appropriate, and I think, look, you know, one of the key factors here is that monetary policy hits the economy with lacks. Right, most people think those lags are about twelve to eighteen months. That means right now, we got to make policy for twenty twenty seven.
And I think there's an excessive data dependence at the Federal Reserve because that makes you very backward looking. There's a lot of people who say, I want to see it, and you know, I need to sort of see this ABC in the data, right, But the data are right now giving you information from July.
Right. It's very backward looking.
And in some cases because the lags and shelter that we talked about earlier, the data are giving information about twenty twenty three right, not now. So we need to be making policy for twenty twenty seven. We should not be making policy for twenty twenty three. In the rear view mirror, I think it's really important for us to be forward looking about what developments and inflation the labor
market are. And I think that's sort of paying attention to overly overly data dependent means your two rear view mirror.
Driving, and I think that's an accident for missing turns.
Do you think that there are things that FEED can do outside of red cuts to help revive labor market conditions? I mean, you know, we see this morning. You know JGB yields have exploded. I mean, I think you know there is an open question about how much red cuts would actually bring down longer term rates, right, So have you thought about balance sheet tools to kind of pull down longer term interest rates?
I mean not at present.
I still think we're in a relatively vanilla economic environment where lower front end rates will pull lower back end rates down over time.
All LSEQL. Now, of course all else is never equal.
But the type of regime you're describing where you cut the front end rate and that sort of causes the back end rate to sell off, that can occur. That tends to occur in places where there's uh, you know, worries about about about fiscal solvency and liquidity. And I don't really see any of that when you sort.
Of look around.
I think we're in a very in a very normal, uh normal environment where where lower lower front end rates would would support the bomb market.
Stay with us, mult Blemberg, Savannah's coming up off to this.
You are now joined by Marvin Low. Marvin, thank you so much for joining us this morning. You talk about while the low hanging fruit of the capital investment are falling, US rates has largely been priced and picked, there is some vegetation on the tree that to continue to support risk taking.
Talk us to this vegetation.
Yeah, I mean, I mean, ultimately, when we think about what investors absorbed this year, you know, it certainly is one where investors are willing to look through.
Some of the noise.
And you know, not to say that geopolitics are noise, but you know, generally speaking from a market perspective, asset values incorporate that uncertainty quite quickly. Is there anything that I see in the horizon that really kind of changes that positive ultimate environment?
And you know, we still haven't.
We still have a world where we're talking about lower rates from the FED, maybe.
Not necessarily around the world.
That's incredibly supportive, and the capital spend associated with what has been the driver for a lot of these equity value values are still out there.
We didn't touch on the ten year yield up. It's up to basis points this morning.
This is of course coming off across what's happening in Japan. Jgp's up six basis points. We still see Japanese yields rising. Is that a risk to the US story?
You know what it is?
Ultimately my view is that the Bank of Japan has the ability to some to cap that ultimately if they provide the market with some substance in terms of how high they're going.
To go and what they need to do to control inflation.
But until then, that uncertainty definitely pulls up US yields, definitely pulls up global yields, and from the perspective of what a lot of these economies want, which is lower long yields. Kind of given how important that long yield is to overall economic development, it's not a great thing. But we're also not at levels that create a massive amount of concern yet.
I'll stick with your vegetation metaphor the ripeness of some of what's on the tree here.
So the story here over the last.
Few weeks has been about AI concerns over capital spending. I'm curious of where you think we are in that narrative. So looking ahead to twenty twenty six, we have we turned a page in any sort of way. How much is that going to color the way that you're looking at the market.
So I think so, I think there are two things to think through here. One is just the AI process itself, and I think we're still an early in there. You know, there was a wonderful story in the Wall Street Journal about a vending machine and how AI was ultimately given the ability to figure out what to sell and what to buy and it didn't work. So we're still, you know, quite early in the process of it being integrated into our daily life. So from an investment perspective, that is
still I think a piece of this out there. When we talk about the hyperscalers and the amount of investment needed to kind of get that into the economy, if you will, there are there are you know, winners and losers that people are picking right now, and I think that's healthy. Just to say that I'm going to buy anything at whatever cost is where you wind up in trouble in financial markets. So the fact that we're starting to rationalize our capital is a good part of this evolutionary process.
How are you thinking about that rationalization? So what are you looking for? Is you kind of doesn't have to be the hyperscalers, but other kind of ancillary companies to AI. What are you looking at or what's giving you the most pauses you look at their kind of outlooks.
From I think you touched on correctly. It is the little side of things. It is the amount of debt that's out there, and it is the fact that the amount of capital and debt available is not unlimited. And we know that, and it does show to a certain degree maturation of where we are in the cycle. But large deals are still getting done. So if in fact these large deals can get done and they cost more, it's probably coming from somewhere else. So let's think through
kind of these knock on effects. Think about what parts of the market might be more effective.
And it might not necessarily be AI.
Right, it's a capital pool that finds an efficient investment. If it's all going to one place, that means that there's some rationalization elsewhere.
Marbred, how do you think about the FED next year? Money markets pricing in to cuts.
I think that's too much, you know, I personally I do, but I think it's too much by one If you will so in the grand scheme of how big this economy is. One rate cut here or there doesn't really make a difference. And really the fact that we haven't seen much movement in yields around this kind of one versus two type of discussion means that, you know, it's somewhat irrelevant. What winds up happening is that when you think about the reaction function, it's still to lower yields,
which is ultimately supportive. We're not talking about higher yields that asymmetric. That asymmetry associated with kind of that decision tree is supportive for risk assets ultimately.
You had Williams on Friday talking about distorted data. Beth Hammock, who's going to get a vote exactly this year to the Wall Street Journal, was talking about the fact that she is still concerned about inflation. What do you make of the underlying inflation data when we got Do you think it was distorted because of the collection issues we had with the government shutdown?
Yeah?
Yeah, I mean it was going to be a wonky number no matter what. You know, we didn't have collection throughout the month of October. We were quite short in terms of our surveys. In November and the amount of estimates that the bails needed to make was one where it really calls into question what you could do with it. The market didn't react to it, so the market looked
through it. We've got a lot of data between now and the next FED meeting, and that's going to really provide much better guidance on where the economy is going.
How much confidence do you have about your understanding how much inflation is out there at this point that Stephen Myron is going to come on later. One of his big criticisms is it's not just backward looking, it's too backward looking. We don't have a firm grasp sort of what the inflation.
Picture looks like. How about you? How much are we fumbling through this right now?
You know what?
There there have been a lot of concerns with just the collection process four years. The response rate has been going down since the pandemic, not only in the US but but ultimately globally. We've got a lot of all data out there also to kind of support it. So I think we get a decent picture and all of us are living through, you know, our anecdotal evidence, if you will, you know, just kind of walking around New York,
going to the supermarket. That all provides us with insights, so I think we will get a good picture of where ultimately inflation is. You know, it might take a little bit longer for the official data to get there, and then we can calibrate in our minds what policy is supposed to be. And that's where the FED discussion
becomes really really important. If you know, the havings of the world are correct and they say that we should wait to see this inflation evolve, and in fact we're on this kind of hold period at least for the next couple of quarters, you can have some comfort that the FED is doing the right thing from that perspective. If there's a push, you know, really to cut to cut rates, even with the data that's pushing against it, that's when.
We wind up with kind of concerns moving.
From policy to personnel.
Talking about Rick Reader, the two Kevin's, how are you watching all of this unfold?
How much does it matter?
You've seen that short list and there is so much in that ven diagram that these candidates share, these finalists share.
How much will it matter who he picks?
And you know what, I'm not that concerned with it. You know, I think that we're looking at qualified candidates. Certainly the administration has a view of where it thinks rates should be, and those candidates embrace that.
But you know, we've got the.
Federal Reserve Act, which has lasted decades in terms of really creating a strugg sure that's supposed to have, that's supposed to be able to keep the FED immune from you know, political if you will, interference into the process. I think that that's still out there, you know, Hammock and really the smidst of the world being vocal is
part of that process. And you know, so long as we have that structure out there, you know, I think that's the independence aspect of the FED becomes something that investors are still comfortable with.
Stay with us, Mault, Blomberg, Savannah's coming up after this.
Here's the latest the term administration intensifying it's blockade against Venezuela, the Coast Guard targeting and pursuing a third sanctioned oil tanker off the country's coast. Joining us to discuss is Patrick mckenry, former chair of the House Financial Services Committee and a Bloomberg contributor.
Thank you so much for joining us. Patrick. Really great to have you on this week.
I'd love to ask, how do you think your former colleagues in Congress view what the administration is doing when it comes to Latin America.
Well, the first question here is what does it do to prices? That's the most pertinent political issue here domestically number one. Number two, We've had roague regimes to our south for decades that have bucked US administrations. So in many respects, with the Trump administration saying they're pulling back from the world, there is still an expression and need for American politicians to show strength that our military might
does matter, it can be effective. And this is one expression, and it does have a wider support among Republicans and Democrats on Capitol Hill than is currently being expressed.
When it comes to price, Venezuela as at present not as important to the oil markets, say it was pre Hugo Chaves error. It's less than one percent of global supply. But at the same time, do you think that is the reason why the administration feels like they can intensify this pressure, Amadoro, No, this.
Is a decade in the making, Frankly, and Venezuela and Cuba are inextricly linked. One funds the other, and they each prop each other up. And so this is viewed by I think you would see Marco Rubio and his State Department group look at this as a long needed work and necessary work right in our own backyard.
I'm going to pick up on something that Ambria asked you, which is sort of about the broader South America strategy here, because I think that's something a lot of Americans probably haven't figured out or thought.
A lot about yet.
So we saw the US's commitment to Argentina earlier this year. We've seen the US embrace in Bolivia, another country in South America the US have kind of shunned for several recent years because it had a leftist leader in place. Do you have a holistic understanding what the US is trying to do here, not just in Venezuela, but but in the region overall. You talk about these rogue regimes. The plan is going forward now.
It's popular in connection with our closest neighbors and biggest trading allies. This is always complicated when we're talking about foreign affairs with the Trump administration.
What does it mean?
What are the layers to it?
And so on.
But what we've generally seen is this administration one of more Central and South America to us economically and militarily. That is a different approach than we've seen in decades in Washington, but long standing since someone Row doctrine that we want to understand our neighbors and be their greatest strength and ally, and long neglected in recent decades. So it is a long It's an expression of a longer term American strategy of more in our neighbors to us.
I imagine you have many former colleagues in the House.
We're eager for the President to talk more about domestic issues. He did delivered that speech last week where he talked about affordability. Seems to have come around and have been pushed to around to talking about it more.
What does that.
Message need to sound like to your ears going into twenty twenty six to kind of reclaim the narrative here going forward about this administration's efforts when it comes to sort of writing the economy in the country.
So Joe Biden tried the don't believe your lying eyes message to the American people what you feel is not really legitimate. That's not a good response from any politician, much less than president of the United States. So President Trump should not try to recreate that failed message Number one. Number two, he should acknowledge the reality, which is prices are higher now and that is putting a pinch on
the American people. And when prices outstrip waging increases, the rising prices outstripped wage increases, the American people feel terrible. And so you's got to acknowledge that and then forcefully land the administration's policies and communicate on landing those policies. We still have tariffs unresolved, in trading agreements unresolved. We still have the new tax cut to be implemented in
the coming year, in regulatory or relief. There's a lot that the President could talk about and needs to talk about of administration successes. But to tell the American people don't trust what they think they're experiencing isn't going to be a good wedding message.
A lot to talk about, indeed, a lot to taut And I was struck on the show last week talking to a lot of folks from Wall Street who said, look, this is a year in which, in light of what you've just mentioned, the benefits of this tax and spending bill coming into effect, that there were things that could
be quite advantageous for a lot of Americans. And yet we haven't heard a whole lot from the White House in terms of what they should be prioritizing, in terms of what they should be communicating to the American people. What has the most promises you've seen? Where should the White House be leaning in?
No, look, President Trump's political strength is his view his economic strength, sorry capacity in the first term to turn the administrative to turn the whole administration on renewing and reviving the economy became his strongest political attribute, and that brought him back to the White House. The facts that the fact that he fixed the economy and make people
feel better and get people on the right track. So he's got to fortunately communicate all of the things that they've done to make life better for the average American, and they've done a ton, but so much of that has to be realized, so the economic indicators start going in a positive direction for the average America and how families live, and he's got to talk about that on a repeated basis, in a sustained way.
A dozen or so House lawmakers have already announced that they will not run for reelection, the latest being a least staphonic who also decided she's not going to go for the New York governor's race. How challenging do you think this is going to be for Republican leadership in the House.
Well, the loss of Representative Stephanik is devastating. I mean, she's a highly talented, young, dynamic elected official, huge opportunity in her future, and for her to say she's stepping aside from politics is devastating for Republicans for sure, And that is the one announcements made me quite sad this year. But she's got a long life ahead and I think
we'll come back to politics at some point. The announcements of retirements from the House show that the House has not gotten done as much as they wanted to get done this year long dis government shutdown. Everything was jammed in the one big beautiful bill. Not much else got done legislatively. This is a bad sign about the workplace environment on Capitol Hill and how the electeds view it.
And the final piece is what Republicans view is their opportun tunerty to maintain control the US House next Congress.
Those are the facts.
We've had a year before I'm sorry, eleven months before the next election, so a lot can change in that time. But this at this end of year and going into the Christmas season, not a great time for House Republicans and a bad time as politicians are reassessing whether or not to run again.
This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, antient politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app.