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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie 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. Let's build on the conversation.
He's ten years younger without a tie. Alas Hogstein, the former Senior Advisor for Energy and Investment and Us. Welcome to the program.
Thank you. Its great to be here.
Good to see you're seem happy. We can get into that a little bit later. This came from Javier Blass just in the last week, and I have read the piece. What Ukraine has is scorched earth. What it doesn't have is rare earth. Surprisingly, many people, not least us President Donald Trump, seem convinced the country has a rich mineral endowment. It's aphoonic.
What's your view on all of this.
Well, first, I think Javier Uh has done a lot of research into this rare earth's. I've never seen any evidence of rare earths in Ukraine. There probably are critical minerals which are different from rare earths in Ukraine, but not at a at a stage where they've been identified Uh, and there's been any exploration drilling, not in any of
the commercial quantities that we are aware of. There may be, and there are, you know, I'm sure there's some data there behind some of this that suggested there is.
But to get from.
A green field, from a discovery to a production can take many, many years. It's not a This is not expanding existing deposits.
So I think this is.
A worthwhile conversation to have with Ukraine about how to develop their mineral resources. We should talk about how to redevelop their gas resources, how to develop their green power resources. Ukraine I believe can be a major supplier of power to Europe. Critical minerals, I think is going to be regardless of how this turns out, is going to be many years away.
When it comes to all these commodities. Wasn't a discussion like this on the table when you were working in government under Biden.
This has been under the discussion since I was working government in Obama administration, so this has been many, many years. We've always wanted to see Ukraine develop its resources because that will give them economic boost, that will allow them to be more independent from Russia and to grow their economy. The corruption was the issue, right, but the resources were there. The issue is we shouldn't be taking the revenue from it.
We should want them to have the revenue so that they can invest in the country, so that their Ukrainians across Europe that had to fleet can come back and they can rebuild a country, a military security apparatus, and a future for their people.
You mentioned corruption, so I'm reminded of an opinion piece you wrote in twenty twenty when you left the super board of NAFTA Gas. So you've done a lot of work in Ukraine when it comes to this sector. Do you think the corruption has gotten better since then? Tackling the corruption?
Not really.
I think there's a lot of corruption, predates Zelenski. It was a corrupt society before the Maydan Revolution. The idea was let's make it better. I think it did get better, and then some of those efforts stalled. There's been a tradition in government when there's a little bit of stress to go and use that moment to rob the kitty from state owned enterprises. That's a problem that sort of ebbs and flows. I think it continues with the state
control and during the war. It's hard to criticize during a war when you're having your city's bombed regularly, how you don't do that.
So there's a lot of temptation there.
But I think it's a systemic issue that the international community should tackle.
Just ignoring some of the more heated rhetoric around the Ukraine Russian War because of the lack of accountability of where funding is going. Do you think that there is validity in pushing back unjust how much the US and even European nations are contributing to the Ukrainians in this Ukraine Russian War.
You got to separate a couple of things. One is we need to support Ukraine because another country invaded. You can argue whether or not the words that Zelenski used before the invasion were smart or not.
Was it good or bad?
Nothing gives you the right to invade another country because you don't like what the leader said, you just can't do that. So they invaded another country and we should support it. And they invaded Georgia in two thousand and eight, and if we didn't intervene, they would control all of Georgia today and Ukraine. So you got to stop that then, I think one hundred percent. And we talked about this
already Biden administration. There's a lot of concern about where is this money going and who's in control of it? And this came up in many conversations with le with his top people about our concerns. So what you should do is tighten the controls on the money and put the oversight in place so that you know where the money is going. But you can't do it while also saying, well, because of that, we're going to allow the Russians to take a whole bunch of territory and win the war.
So it's a really tough balance. But you know, government's hard.
When you left the government, where was the Ukrainian situation in terms of how much territory Russia had taken and the sense of the balance of power at a time where it seemed like Russia was making some inroads.
So Russia was making some inroads, but largely the confanty had been frozen for a long time. Where Russia makes a little bit of inroads, then Ukraine makes some inroads somewhere else. You know, on a netnet basis, Russia was making more inroads than it was losing, but it wasn't massive amounts of territory, so it was largely frozen. But that was in order to get to a negotiation. I agree with the Drum administration that enough is enough, let's
get to a negotiation. I think you have to force both sides to come to the table, and you got to force some tough choices by both sides.
Need to make some tough choices.
Freezing the war place and saying okay, we're done, let's call this a border is really tough because hundreds of thousands of people have been killed to do what just to allow for the parts of the country to go away, and then what is there a disarmed rush on the other side, I don't think so. So they invade again
in two years, in four years. So you have to create a negotiation that has both sides of the table, that allows for some kind of resolution that both sides don't like, but that ends the war.
Some points that might the argument that the current president and President Trump is attempting to shock the Europeans into action. Can you walk us through your experience with the European allies? How frustrating was that?
I think for us, for the United States, it's always a bit frustrating. I think we like to go a little bit faster, and we want to do things more aggressively when it comes to areas of conflict and negotiations. On the other hand, on the economic policy, we tend to go a little bit slower.
In the environmental issues. We were as a green pro green.
Administration, were frustrated by how far sometimes the Europeans would go without thinking through the consequences of where they were going, and then they would suffer the consequences which affects us and they create high water marks that we then have to deal with our constituencies of why aren't you doing with the Europeans, And it's a bad answer. We say, well, wait two to five years, you'll see why we're not doing what the Europeans are doing. So I think there's
always been frustrations there. We tried to do trade policy with Europe in the Obama administration, the Biden administration, the Trump administration now again very frustrating, very difficult to do it. So it's built into the system. But at the end of the day, these are our allies and we have to recognize that the argument with them, this is the argument inside the family, versus the arguments with others, which is outside the family.
But don't almost sometimes need to maybe shake them up. You were part of the Obama administration telling Germany not to go ahead with Nordstream too, yet they did.
It, yes, And if they didn't do it, large parts of why their declining economy is now would have been avoided. They bought into to the argument of your heroin dealer, the first hit is free and after.
That you pay a big price, and telling that.
I went to Journey before the Ukraine War five months before and said, something's wrong. You're you're in trouble, and they insisted that they weren't. When the Russians were playing a game of filling their storage in the winter from their own storage instead of from Russia, I said, how is it possible your pipeline's empty but your storage is filling.
What took the Europeans so long to see the intelligence that the Biden administration was seeing, and that Jake Sullivan was openly telling the press from the podium.
We shared all the intelligence.
I think sometimes they had the exact same intelligence we had on the invasion. We knew we were saying the invasion's coming on this day, on this we on this day, at this hour. They refuse to see it.
No, this is just an exercise.
I think sometimes being the neighbor, you kind of can't see us.
Being an ocean away, we see it with clearer eyes.
We've missed plenty of intelligence, so I don't want to, you know, We've we had nine to eleven that people were training inside the United States and we didn't see it. So I think they were just too close to the Russians and always making the excuses for him, And that was the problem with Merko and others. They were making the excuses. No, he doesn't mean it, And I think we have to learn a lot of lessons, and Europe has to learn more lessons.
But I think they have learned a lesson.
They don't want this war to end this way because they're worried that this war it doesn't end here in five years from now.
He invades another country.
I wanted to finish on this because we could talk achieve oh day. I mentioned this a couple of times, and I was half joking but semi serious. Of course, ten years younger without the time. I've said this a few times. There are some really, really smart, intelligent people that work inside our administrations here in the United States. We spoke to one last week secretly, Best of the Treasury. I worry more and more as you has passed by that those kind of people want to go into US government.
I consider you part of that. The leaves sing another at am I really talented, intelligent individuals. You might disagree with them on their politics, but when it comes to policy, they've thought things through. Do you worry about that too.
I think it's getting harder and harder to come into government. I mean, obviously, the hours are terrible. The stress is why your family time is terrible. And I've seen so much damage to people's families just by making the choice, especially if you're at the White House or at.
Senior levels in the government.
And the problem is if you're not already wealthy, it's becoming even harder because the income is relatively lower.
And I get it.
It's higher than the average American salary, but it is lower relative to what the earning potential is for the people that are in those jobs. And the stress on it and the amount that it costs you to manage your life the government doesn't pay for, and the scrutiny. I mean, I have protesters outside my house yelling that I'm accusing me of genocide, going after my daughter and putting her on Instagram, my thirteen year old. That comes with the job. And it's not like the Secret Service
was there to help me or the cops. I mean they're just standing there watching. So what you get, the blowback that you get and is in to manage your life is.
Really really difficult.
The process for confirmation by the Senate is out of control, and for relatively low level positions. So to come and be an assistant secretary in some random agency, you are now supposed to hire lawyers and accountants and to do a forensics auditing of your life, of your personal life, of your financial I mean it's too much, and so I worry that outside of it being you know, I made a lot of money, so I'm going to go into government and play with that for a little bit,
and that happens at both parties. I worry that that it gets harder and harder to get good people.
To come in.
I think a lot of people share that worry. Almost it's good to see you. Hopefully we'll catch up again soon, I mustoxting there they form a senior advisor for Energy and Investment to President Bier At mos of RAMA, James joins us. Now we can extend this conversation and welcome to the program, sir. Hopefully we can hear you, because we didn't hear our last guest, so hopefully we can hear you. And there you are perfect, wonderful, and let's talk about the dojeffer over the weekend.
Sir.
That email that went out, what's in the consequence of all of this will ultimately be so.
John, I want you to send me an email by midnight tonight, and if you don't respond, I get a million dollars. I think that's one of the responses here in DC. The question I have with this is that if you go into the executive order that establishes DOGE, this is not within their charge, and so you are going to have a series of things and this is a real issue here in DAE as to who are you actually reporting to and if you don't report, are
there some legal consequences. Certainly, everyone who wants to keep their job is looking for guidance of exactly what they are supposed to do with this under the executive order. Those are supposed to be working on an upgrade to the IT system and sub support. The Chief of Staff to the President, Susie Wilde Those does not set this out in executive Order, but we keep on seeing expansion of that, and until we get some of the legal infrastructure around that, I think there's gonna be a lot
of quote unquote trauma and uncertainty here in DC. If you want to shrink the federal government, you can do that. We've seen that in the past. There are processes in place. Clearly they want to move fast, as you saw Treasury Secretary Vesant say with your interview. However, it is unclear on if you move fast, asked is it more effective or not ed.
We have several government agencies people that Trump put in place, people that everyone in a lot of mainstream media were calling serious loyalists, telling their employees to leave those emails on red At the same time that Trump is tweeting out memes, one of SpongeBob SquarePants saying, this is what I got done last week. Quote cried about Trump cried about Elon If you're an employee at one of these agencies and you want to secure your job, what do you do?
You listen to your manager because ultimately that is going to be what you kind of have to work with. But there is a lot of uncertainty, and you know, I think that when we look at kind of some of the you know, we've discussed the national security issues, the classified issues, it is very kind of appropriate to have the Director of National Intelligence, Chelsea Gabbert, come out and say to the entire intelligence community, do not respond.
There's just certain things that you can't When you hear from Elon Mo through his posts, some of this is are there government employees who are not on their email, are not responding to things. That's an appropriate thing to get a pulse check for individuals, whether or not they are engaged in their job. There have been individuals who've been told not to do their job. You look at the Consumer Financial Protection Bureau, there's been a number of
folks told stand down, don't work. So if you've in that position, how do you respond? But I'm also really looking amory at what's going to help happen here in DC. You know, we have a lot of to dos in Congress this week. We're going to see at the end of the week. Are they going to be able to fill out that five step thing? Did they pass the budget? Are we moving forward with the tax cris? Are we moving forward with that new defense and immigration spending?
Do you think the House will pass the budget this week?
I'm really skeptical. I think that, you know, we have a situation where one or two members can sync the entire thing. We already have one hard note out there. When we look at this bill, I don't know if there's enough of a crisis or a deadline to get this done just yet. So I wouldn't expect it to kind of go clean on the first start, but almost nothing happens clean on the first start. I am expecting that more attention is going to go to the Senate
passed budget. Maybe that provides a quick win for the president on immigration spending, on defense spending, if they need a backup plan, if the House just can't get everyone on the same page, just yet how.
Much spending that you see being cut from the US government is real versus just sort of theorized about. In other words, how much oxygen have they really saved by making some of these cuts in the federal workforce and announcing cuts to the Defense Department that haven't been approved yet, and our sort of discussions at.
This point, Yeah, at least at this point, it's very low. A lot of the savings that have been announced are contracts that have actually already been paid. So I want to see more kind of on a go forward basis much that is going to kind of take into account.
When we look at Congress.
We're not quite sure when they are coming up with some of their budget cuts, how much are those paper savings, how much of those are real savings. I do think though, there is a lot of momentum of making the tax cuts that passed in twenty seventeen permanent, and I don't think they're going to be able to get five trillion dollars worth of pay for US either through dose savings
or through some of the savings that Congress chooses. So having this conversation about how aggressive Doze is being, how aggressive we are going to be on tariff policy is providing political cover and groundwork to actually add to the debt and the deficit over the next ten years, even when you've had this narrative that there's such a significant reduction in staff and savings of the federal government.
Lisa ed, thank you, sir. We're going to leave it there at most of Raymond James joining us on the latest DOJ effort down in Washington, day sable. So here's the like sis you've mentioned. Sentiment showing consumer inflation expectations jumping to their highest level in almost three decades. Survey responses, mostly along party lines, showing new inflation reconcerns about President Trump's tariff policy. Joining us now to break it down. Nata Richardson of ABP NATA good morning. Got to start
with you missed on Friday. How reliable is that economic data? How much weight should we put on that?
I think it.
Gives you good situational awareness. Should you create monetary policy around it?
No?
I don't think so. But in terms of where the consumer is going, what they're thinking, and tracking that every single month, I think it gives you a benchmark or at least some context for how consumers are feeling. We can't interview every person on the street. If we could, we get you know, more real time data, but it's a survey. There's luckily other things from the FAD about consumer expectations from the New York Fad and other banks
that we can also use to support this data. But I think if we take from it that consumers are still feeling inflation and it's dampening their sentiment, I think that's a great piece of information to move forward to and think about the economy in a broader context.
We've been pretty parished. I've gotten a couple of emails people saying, really, this is coming back. And on the flip side, there's a lot of optimism along businesses. See I'm actually being positive here, And even though you have consumers that feel negative consumer the optimism among small businesses is skyrocketed. So which is more important to hiring and to the overall economy. If people have jobs, what they do and what they say are going to be different things.
What they do and what they say are different things. And I think it's a matter of timing because feelings do translate into action, and if consumers are feeling bearish about this economy, it matters for hiring because it's a consumer driven economy. Consumers are driving the industries that are being that are surviving and thriving right now, leisure and hospitality, healthcare which includes a lot of discretionary procedures as well, like dental work for example. So you know, we can't
discount the consumer mood and the consumer vibe. At the same time, it's encouraging to see small firms feeling optimistic because small firms are the engine of growth for the economy. So what are they optimistic about. I think they're optimistic about perhaps slower interest rates, slower financing costs, maybe an
easier hiring environment, viz. Are the larger firms who have outmanned them in recruitment and talent, And maybe there's a feeling of less regulation going into this new year, new administration that gives them some like tailwind to their spirits.
Statistic is there a sense that the negativity and consumer sentiment can persist for a very long time and it not be felt in the broader economy. And I say this because there was a data out of Moodies that said that the top ten percent of US earners now account for about half of all consumer spending that actually in the period in the year ended September twenty twenty four, they increase spending well, the rest of the earners decrease spending.
Can this continue for a while because people at the top are feeling pretty.
Good as long as asset prices hold up. So if you are a wealthier consumer, some of your optimism and your spending patterns are based on the fact that assets have been really strong over this time period. So while lower income consumers are feeling inflation in a very visceral way. I mean, I was in Louisiana where the price of eggs were over ten dollars because of the bird flu.
You're going to.
Feel that as a low income consumer. But if asset prices stay strong, you may not feel the same pinch as a high income consumer and can keep that fluidity and that spending. But yes, the fact that this is a lopsided consumption market is a very real thing. If asset prices turned sideways, that changes the dynamic for the economy.
That's a tough anecdote and something this administration or any administration Biden Trump, very challenging to do because it's going on. The bird flu Something else that struck me with the University of Michigan survey was that more than half of consumers expect the unemployment rate to rise over the next year. Do consumers think they might be out of a job?
We're seeing that in the turnover race. There is some anxiety perhaps on the worker side. I mean, everyone's seeing the headlines on the federal government and what's going on there, but we don't really talk about what that could mean for the private sector. And from what I'm hearing anecdotally and what I'm seeing in the ADP data and we've sell about before the new year and the new administration,
is that people and workers are staying put. There's a sense that the economic prospects, the job opportunities aren't as plentiful as they were two years ago. It's taking longer to get a job. It's taking longer to find a white collar job. We've seen business services retract their hiring. New college graduates are taking longer to get a job, and there's a sense that maybe I should stay with
the employer. I have also with the Great Resignation, a lot of people switched like two years ago, and they're not ready to move, so that turnover is having an effect on the labor market and it's leading to the stasis that we're seeing. It's like the quiet before the storm in some sense.
Andrew Honeholzer City talked about the same thing, this low churn dynamic in the labor market. They think is inconsistent with a healthy labor market.
If the market is strong, you should be able to quit your job, and that's why people are watching quits come down to some of the lowest levels since the pandemic, and that's the reason why some people are saying it could portend something less positive.
Focused on jobless claims as well. At the moment, aren't we every single Thursday at the index level, things are still okay. Beneath the index just focused on Virginia, Washington, d C certain places that things starting to break, and.
People put out reports over the weekend of the proportion of federal workers that work in the DC area it's about twenty percent. So people are going to be looking at specific counts in specific counties to try to understand how this is trickling into numbers, to get a broader sense of how to even frame this in conversation.
The estimates a Thursday morning, by the way, is two twenty one. The previous week was two nineteen. NEI look good to see you, as always, thank you, neither written than there of ADP. This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, angiot politics. You can watch the show live on Bloomberg TV weekday mornings
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