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This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts and always on Bloomberg dot Com, the Bloomberg Criminal and the Bloomberg Business App. Kelsey Barrel is probably gonna walk off the stage. Why don't you
got something to read here? John? I'm sorry I lost the scriptures last night so hard. We're going to go into this and right now for Global Wall Street, We're gonna freeze time. We're gonna get through this for Bob Michael and Kelsey Barrow, because they're the real deal. They're JP Morgan Asset Management, And we're going to ask a really delicate inside baseball question. So she can go back to the new skyscraper on Park Avenue explain without addressing
your bank, your business. Mister Diamond would say, that's appropriate. The decisions being made right now of my bond losses, I have to mark to market versus I can hide them somewhere else.
Go right, So we've been talking about the losses in the bond market. I think it is important to put into context though the majority of the pain was last year, right, the US AD was down thirteen percent last year, down two percent this year, But more recently we have seen this backup in yields and this pain that's coming now.
I think the reason why the.
Stress in the banks has been a little bit less acute this time around than in March is because of the BTFP program. So the Bank Term Funding Program close not exactly though, so BTFP. The Fed put that in place in March, and I think if there's one thing that really was crucial to turning the markets around at a point where we were very stressed, We were very uncertain.
About how things would go in the future.
That BTFP program was important because banks can now pledge those treasury securities and even though they have a price in the marketplace of seventy or eighty dollars, they can be pledged at par So there's been this stabilization factor that was not there back during the March crisis.
So we're saying, is these unrealized losses get greater, they matter less.
They are mattering less right now.
I think there is still stress though.
This is not the end of the story.
Right even though this facility is in place, people are using it, there's one hundred and eight billion in the facility, there still is going to be pressure on margins. You know, it's not only about the mark to market losses, but it's about the fact that net interest margins are under pressure.
So you know, as an investor in financials, you do need to be very cautious about where you're investing, understanding the portfolios and the balance sheets of the banks that you are investing in, and being aware of the game changer.
That was the way the FED reacted back in March.
The bank's ability to finance, the economy curtailed by the dynamics we're talking about. Are they constrained?
Yeah.
So if you look at the H eight data, and I love to look at this every single week on Fridays, I'm looking at Lisa because I know she looks at it too, what you're going to see is that credit has been contracting in the economy. If you look at CNI lending over the last three and six months, it's negative. If you look at the Senior Loan Officer Survey, it's showing that there is tightness in credit conditions. And like you mentioned, Lisa, this is exactly what the FED wanted, right,
They want to engineer tighter financial conditions. So I disagree with the quote from Goulesby that he doesn't know where this is coming from. I really do think that the stems from the September FOMC meeting and the dot plot. Sure, they shill still showed cuts next year, but what they showed is a real policy rate that actually goes up by fifty basis points next year. That is a very HAWKUS message and the market is still trying to digest that right now.
So if we're talking game theory, this is basically the idea. From your perspective, it sounds like that the FED is trying to signal hawkishness they can engineer the landing so that then they can reverse course and cut rates. How do you respond then to people, including what we heard from Delip saying over at PGYM, there is a structural change in the bond market where some of the long standing price and sensitive buyers are no longer there.
So there has been a big repricing. And I think this is why you need to look at this not just from an emotional perspective, not just from you know, the ping pong narrative, but also from a logical perspective. You know, what do valuations look right like right now? And what are the guardrails to those valuations. Look at the five year five year real yield right now, it's
around two point three percent. That is the same or the average rate that the five year five year real yield was from two thousand and three to two thousand and seven. So we've already repriced not just to the pre COVID levels, but to the pre GFC levels.
So regime shift has really already happened.
In our view, it's actually an overshoot it, but it's already happened.
Although I will just push back and I know that you've been bullish on treasuries and talking about going back down to three percent. Have you reconsidered that call at all, especially in light of some of these structural changes. Yes, we can talk about inflation, but towards the slock of apologies putting out treasury auction sizes will increase on average twenty three percent in twenty twenty four. We have evidence that a lot of the central banks around the world
traditional buyers are no longer buying. Doesn't this change your outlook more materially?
So the technicals do matter, particularly in the shorter term horizons, but we do think ultimately the fundamentals and the valuations are going to weigh over those technicals.
Over the medium term. Inflation.
Right now, the three month runrate on core PC is two point one six percent.
I mean, we're at the FEDS target.
We're not in the nineteen seventies in the nineteen eighties here in terms of the economic growth environment or the inflation environment. I think that there has been a buyer strike cut.
To the chase they're fighting. The last war is that what you're saying. You're having coffee with Mike Feroli over at JP Morgan. Can you guys agree Goolesby and the rest of them are fighting the last war.
Yeah, they're fighting inflation that I think is already clearly coming down. And I understand why they're going to wait until it's painfully obvious. But in my mind that only just reinforces the risk that hard landing should be much more of a higher probability than soft landing, because the FED is telling you, they're telling you we're not going to stop until it's painfully obvious that the economy can't
handle it, and the housing market. You look at the mortgage application data from yesterday, it clearly.
Can't handle it.
We think that the economy is not going to be able to handle these rates, but the FED is going to be the last to admit that.
Cassie Power that f Jpmokan Asset Managements Sarah Hunt joined just now. Chief Market is trying to just to Aupine sexon Woods. Sarah, good morning, good I always got to energy with you at the end of the interview. We should go there at the stop. Crude was dreadful yesterday down almost six percent. I know that things at Cushing looking a little bit better on the stock past side of things. Gasoline demand really softest well, based on a recent read. What do you make of the recent moves?
Well, I think I mean we talked about this last time. If crude prices rise really quickly, then gasoline prices come up commensurately, and then all of a sudden you do have a backing down and demand. And I think part of it was the demand numbers on gasoline. I think part of it is also sort of the parallel to the bond market, which is, all of a sudden, the market's going well, if we do have a recession or if the world is slowing down, then crude prices may
be too high. And part of the reason they're highest because the statutis have taken some off the market. It's not just a problem of higher demand and not enough supply. But I think the supply side is going to stay somewhat restricted, and I think that's really going to ultimately be the longer term story. But you are going to have these convulsive moves, and the stacks haven't caught up,
not all of them anyway. To the higher prices and crude anyway, So I think that there is still some room in there, but it is going to be a volatile trade.
I'm calling this never ever Thursday because I'm looking at bond charts that I've never ever thought about or imagined or visualized mathematically. Folks, this is truly without ache. This is truly original territory. How do equity participants react never ever thing's in the bond market.
Well, I think it's problematic for the equity markets that you're having such convulsive moves in the bond markets. And I think that part of the issue with equities has always been if rates do stay higher, what are we discounting those cash flows at I don't disagree that technology is one of the places that will actually do well even in a higher rate environment, because you've got that stability of earnings and they've also got a lot of
cash on their balance sheets. But I think that the question of what everybody else is going to do and how that's going to impact people's balance sheets. Corporations in Europe. I read a story this morning on Bloomberg that said the corporations in Europe are finally back breaking down and issuing bonds at higher rates than they would have a year ago. So are people starting to accept that? And if so, that's going to take some of the money out of the income statement because they're going to be
paying higher price. So I think that some of that is going to impact the earnings for next year. And that's still what I don't think is really reflected through next year.
The heart and soul of this is Q four into next year. Do you go with a diversified virtual index fund tight our squared approach or are you active and take a less diversification approach, which is I got my own opinion, But which do you think?
I think active? I mean that's also active, more narrow, more narrow, and also looking at where you think there might be some vulnerability, which indexes can't really do right because they are going to rebalance the way they rebalance, and I think that there are some places that are going to continue to be vulnerable.
Do you think the Pond sell off has been coherent with the other moves that we've seen in the markets.
You know, it's so hard on these very short term moves to figure out is this a technical problem? Is this a quant problem? Is where is this coming from? Or where are these moves coming from and I think it's very difficult to parse that out and say how it interacts. But I do think that there are large positioning changes, and when those happen, it's not always easy to see. I mean, there's questions about whether or not the boj was intervening right because the yen went through,
and was what did that happen? Or was that just a technical level that everybody said, oh, one fifty, we're getting.
So close, we have to do something. So I'm not.
Really sure on those very short term moves go together, but longer term they will start to make more sense. Although you know, you've had correlations that are very different over the last couple of years than normal, so make more sense as a relative term.
The reason why I ask that is because if yields stay at levels that we're seeing right now, if there is something fundamental behind this or even structural when it comes to price sensitive buyers newly priced sensitive buyers, how much does that change the equation for you in the equity sphere, I mean, aside from oil, aside from some of these specific bets, is there a rethink about the value proposition with some of the overweights you've had to equities.
Well, I think that you've been seeing that for the last two years, right since or the last year and a half, since the FED started raising rates. The question has been with their bonds. Right, where am I going with that? Because I'm now putting them back in a portfolio. When you talk about the big price erosion from the lows when the tenure was sitting at basically twenty basis points the fact that we're now up at levels that.
Are over four.
I think people have been looking at that the whole time, But the problem is that as they've been adding the whole time, the prices have been coming down. So there's a little bit of scorched earth on the bond side too, because people have lost money in bonds and in ways that they hadn't in the last couple in the last several decades. So I think that there is absolutely room
for fixed income in people's portfolios. They are putting it back, but that was traditionally where you had some participation anyway, and I think that higher rates make that something that people look at more seriously, especially as duration starts to look a little higher priced than it was because you.
Were sitting high.
Rates on the low end, but on the short end, but not on the long end, and that's starting to change a little bit, not necessarily for the best for everyone.
Just pulled up a quick shart average FED funds going back to the seventies averages four ninety three. I know that's skewed by decade of zero, but the average is four ninety three. Is anything on a long bond close to five percent just to screaming buy based on history? Or can you tell me that things are going to be markedly different over the next couple of decades.
Well, I think if governments hadn't indebted themselves to the extent that they have, then you could look at some of those numbers and say we should have higher rates on the long end, because that was also more historic. But if I think about what that's going to cost governments, I have to wonder whether or not they can keep we can keep collectively keep rates that high. And I'm not sure that we can control the long end as much.
But I do think that going back to what we used to think of as more normalized, it's a little bit difficult given the fact that we've got this massive amount of government balance sheet that we didn't have twenty years sgo.
This is a big question. It's difficult to answer, but what is normal the last ten years, the ten years before that? When we say things like normal, what is normal that's going to be?
I think one of the biggest issues playing out going forward is the more normal what happened after the Great Financial Crisis and now that we've gotten this level of balance sheets for governments, do we just stay here and every time we have a problem we just keep adding to them. And does that break something eventually or do
we go back to something that was before that? And I don't know what the answer is, And I think that that tension is part of what's going to be playing out going forward in both the bond and the equity markets, because it definitely had an effect on the equity markets as well. You can't say that it didn't with multiples where they are right now.
You can feel that tension at the moment because you get these yields that people have been wanting for a long long time lease and there is just that refusal to jump in. Sara Hunt, chief Market Strategies to Alpine sexon book.
Joining us hugely qualified. Peter Scheer had a macro Strategy Academy Securities. He's enjoyed these kind of moves before Bank of America before they blew it up. Bob Sinch in Foreign Exchange really experienced. And a guy Ryan heard, a guy named David Goldman who was in my book. David Goldman told me, once look at the tranches, and you nail this in your note, and everybody's looking at worry read distress South African ran blah blah blah, and the
David Goldman tranch is the quality stuff up here? You write about previously deemed safe assets. How close are we are we to those better tranches of credit being previously deemed safe assets?
Yes? And you know, I've always looked at this world of you know, you've got high yield than IG and treasure has always been that safe asset, super safe, And it feels like something's cracking. I think this time we're going to be okay. I think we're going to get the ten year back below four forty because we're going to see kind of a really quick gap lower in yields as data comes up weak. But I do think
something is cracked. And for the first time in my lifetime, people are actually questioning the trajectory of where treasuries are going to be. And that is very concerning to me because every financial bubble that we've ever had has always come when it's a safe asset that breaks. It's never the risky assets. It's when a safe asset breaks. And we had a whiff of that in the past kind of week or two.
It was a test yesterday, though, and I think the test is always for developed markets, when bad things happen to we buy treasuries. Something negative happened, We've got a soft ADP report for whatever that's worth. We bought treasuries. Isn't that a decent stress test just to understand that if things do go south in the economy, this still works.
You know.
I think there's a lot of ebbs and flows. So everyone got so barish on treasuries. People were piling into it. People have tried to buy treasures. I've liked them since four to twenty five, four forty so people were very reluctant. So we finally had a bit of that capitulation trade. Right now. I think as weak data comes out, we're going to see treasure yields go lower, and then we're going to get back to thinking, Okay, what is really
the long term trade? And I think that's probably now higher yields.
You think there's a limit to how much bonds can rally, yields can fall on negative data?
I think right now, Yes, I think this overlying fear that DC no longer cares about our debt trajectory is problematic. I think if you look at the US as a creditor, we don't seem to care about the debt. We don't seem to even necessarily want to pay the debt. There's all these kind of weird messages coming out of DC, and I think that's going to weigh on the market.
When you said that the longer term trade is higher yields, how much higher?
Right?
And what are we talking about at a time when you say that something has cracked, that the sell off that we've seen so far has something sort of damaging inherent in it.
So I think you're right. When we were talking about no one could figure out why we kept moving wider every day, right, Yields kept going higher and higher. So there is I think a lot of things at motion. You have China no longer buying treasuries. I think you've got our supply issue. The only thing I think that it's really going to prevent treasuries from next year breaking about five percent or higher is DC kind of getting its act together, starting to put forward budgets, starting to
put forward something that resembles, you know, fiscal responsibility. If we don't get that, I think people are losing faith in that, and that's really problematic.
But when you say that basically we're going to get a drift lower and then when people start to understand that they're going to go higher again, isn't there sort of a self limiting feature to this? You said, you know, something cracked in terms of where we were going, the speed we were moving. Aren't we going to get some sort of bigger financial accident like everyone's been saying, if we lead to you know, yields of five percent on the tenure on a persistent basis.
I don't think we get a financial accident necessarily. It depends on how rapid it is. So one I think we get back to that four forty. I don't think we get back to four percent because, like you say, we've had this experience. I think it's a six month to a year long experiment where we start seeing what happens with the election, what the trajectory of the debt is. If people lose faith in that, then I think you go rapidly above five point fifty. You start testing that,
and that's where you get the force selling. The reason I'm always concerned about safe assets is twofold one people own them in huge size and their portfolios because they were never worried about losses. If you start worrying about losses, that causes force selling. And the other part is what does the banking system own a lot of And if the banking system, which is always levered, owns a lot of treasuries and you see this never ending push to yields higher, I think you see some force selling and
risk management there. So I don't think we're there yet, but I think that's the trigger that we've kind of got just a sniff of this time around. And go back even with housing, right, we had housing bubble. You know, it's broke a little bit in early two thousand and seven, late two thousand and seven. The ultimate prom didn't hit until two thousand and eight.
Pete, you're making me want to just go and hide under a rock. What on Earth do I own? If that's your round book.
So for now I'm actually bullish early enough, right, I do think we're going to get this weak economic data. I think oil is way overdone. I think we're going to get this relief trade. Okay, there's not this inflation pressure, you'll start drifting back to four forty. We send stocks hire, everyone's underweight again, so we have to suck out that kind of pessimism. Then once everyone gets bullish again, I can get really very.
Position in struct Kay, what are you talking about? Are you basically saying that there is a bubble in treasuries it's going to burst with catastrophic implications to build on what John was talking about.
I don't know if it will or not, but that's all of a sudden became awareness of everyone and DC can fix this, right, DC can get its act together. I just think everyone's kind of grimacing because no one really believes DC is going to get its act together. But I think that's really the hope is something comes through and DC starts going back to the days where you run a budget deficit when times are torough, but when times are good you try and cut it back.
Let's finish it. What does this mean for portfolio construction? A lot of people listening might sit down with a financial advisor and they've given the same old spiel. What we're going to do is split up this portfolio sixty forty and they're going to go on to explain why doesn't that all go out the window.
I think you have to be very careful and you're looking for constantly risk management. Right what looks overdone? What doesn't look overdone? You the two year seems safe, But I think there's no value in the two year. At four ninety, there was a lot of value in the tenure. I think down at four forty you want to expose that. But as YO start shrinking and getting to these narrow ends of the range, take them off, take some bets there.
I think you want to expose yourself to equity risk right now, you know you really start making sure those exposures. Where do you want to be in the world, And I think outside the US could be interested. I continue to look at emerging markets. I think you see a lot of trends there that are beneficial for emerging markets over US.
There is acclaimed and he wrote a great one volume on financial history. Chris Whalen, our Christopher Whalen, and he had a note last night which goes to the heart of the bid walking away and fixed income. It's the Whalen's silence, and that is you've got a piece to sell and you get on the phone and there's nobody on the other side of the transaction. How close are we to the Whalen silence?
I think we had again whiffs of that right the treasury market perfect, and that's all we've had so far. And I think though across all assets, you look at what's going on with oil, we've gone to this electronic algo driven trading. So I think there's this perception of
liquidity and there's no depth of liquidity. So the ability for Marcus to move very quickly is very high because we have this fake or full equidity where everyone's scrambling around trying to make their penny or eighth of a point, and the reality is big moves push us very quickly.
Bottle it clinic a big what if, A lot of worries for a lot of people who might be listening to some of this fada, but ultimately buying risk in the short term right.
By risking shortload the boot.
But I would say this does remind me a bit when I was trading the credit to rib of indices back in two thousand and seven, where you would just gap. You would go from sixty basis points to sexty eight basis points, knowing you why, and then you look and you traded around sixty eight. And that's the sort of moves I think we've been getting in these markets. Whether it's oil, whether it's trades, you get these gap moves, you air pocket. Everyone tries to make some semblance of it, but it's.
Just one day option. Thing is that the new portfolio insurance.
You know, people are definitely pushing on that, and I think it's the opposite of portfolio insurance. I think it's used heavily to drive markets, push gamma trades, and I think everyone forgets that it can be used on the downside just as easily as is in the upside. This isn't like some of the other trades which for bullies so only like we saw with the ape stocks. This is really the ability to push direction, and I think they can lean on markets down as easily as.
Up pay This was great. Always walk away from our conversations with tons to think about. Put a share of accountomy securities.
Kevin Tyne, enjoin us here, what's important about our senior automobiles and analysts for Bloomberg Intelligence? And he's kept count He's got a woodmark in his garage, folks of the number of times he's put the screw down the Chrysler distributor when he's changing the plugs. Kevin Tyne and the real thing in the auto, Kevin, I've been dying to ask you, and it's in the zeitgeist. When are we done buying one hundred thousand dollars Evy vehicles that weigh
the size of a Hummer H two. When does that party end?
I think very soon. Well, I looked at it, and you know, look, the production launch and the new EV's coming out are set through twenty twenty four and probably beyond. But I think what you're going to get as an inflection point is if you don't or if the automakers don't start to see, you know, real demand and real profitability in that drive train type. I think you're going to start to see by twenty twenty five, twenty six,
and plans beyond that start to shift. To something a little bit more practical, and we've been saying that might be the plug in hybrid makes a re emergence, you know, with battery technology. Maybe that's a fifty to one hundred mile range in electric with the you know, range extending
internal combustion or hybrid engine on top of it. You know, so you're talking about four hundred miles of range which out without the anxiety of where to charge or the you know this charging infrastructure that isn't quite ready.
Yeah, I got any more questions on this, but I believe there's a Lisa help me here. There's a strike still going on. Yes, it's just been buried by the news. I mean, there's no other way to put it. What's the new new on the UAW strike.
Yeah. Look, from my view, I think what you're going to get is a big number for the UAW, but not a whole lot else. And I think that's probably
what the issues are. The artomakers can't hide their profitability over the past ten years, and this mixshift to truck from car has been very profitable for them, you know, and everybody sees it, right, But at the same time they've done that with fewer units so I think on the one hand, the manufacturers are saying, Okay, we can give you a share of those profits, but we can't
guarantee that we're going to be growing in size. And I think what a big number does, whether it's a thirty percent or somewhere in that ballpark, what it does. It also enables the union to go and show that contract to some of the non union, whether it's pure PLAYEV manufacturers or transplants in the US that are operating with non union labor, to say, look what we did for our membership. Because at the end of the day, if the UAW wants to increase its member base, they
can't keep going back to GM, Ford and Stillantis. They're not growing in that way, right, So if this is about increasing your membership for the UAW, you're going to have to go knock on some other doors. And I think a backhanded way that the legacy automakers, the domestic for GM and STILLANTIS brands can do it is to say, here's your big number, but we got to have the
flexibility to get out of some capacity going forward. But go show this to some of those other plants and see what they say, Kevin.
We're getting some sense from the auto manufacturers of just how much the strikes have been costing them. General Motors came out yesterday and said it already has cost them about two hundred million dollars since the strike began. We've heard from Ford talking about the f one fifty deliveries and how much they've been plunging on the heels of
a number of shuttering factories. I'm just wondering at what point we can expect this to precede price rises in some of the cars that they deliver with the justification really they've got to compensate for these costs.
Yeah, and look that production is not necessarily all lost. It'll shift to the next quarter or into twenty twenty four. But it's exactly that. And this is what we've seen and it didn't really start just with production disruptions during the pandemic. You know, the automakers have been moving to this smaller model, you know, more trucks, higher transaction prices, fewer units, so it isn't so much about scale anymore.
And this is another part of that where there's inventory on the ground, probably not quite enough, but ultimately all it does is firm up prices and the increased cost although you know, maybe the labor portion of cost of goods going forward is minimal after the contract, but at the end of the day, it's going to remove affordability from the consumer, right because automakers are going to have to continue to keep supply and demand tight and move
up market to be profitable on the operations. So that's really going to hurt the consumer at the end.
Of the day.
Kevin I was reading about bid which is becoming the biggest electric vehicle maker in China, and I was reading about how they grew up out of first imitating Toyota and then becoming so efficient that even Toyota was trying to understand exactly how they were doing it.
How does the US.
Compete with China, all things being equal, without tariffs, without some other guards between the two industries, if there's a very different playing field.
Yeah, it's going to be it's going to be very difficult. Look though, the macroeconomic the government influence varies region by region. You know, so the subsidies that you had and bid, you know, back in the day that's a company that was you know, direct subsidy from the government was well over a billion dollars probably over forty thousand dollars per vehicle. We won't do that here, so you know, it's it'll
be difficult to keep them out. And the other thing I think that's going to happen is if we're going to get a rush of Chinese built evs in this country, they're going to go directly to the dealer network, where we have this sort of perception now that the direct sales model what Tesla does or Revine and Lucid is
the way to go. I think those companies are going to achieve immediate distribution sale scale by going to the dealer base and saying like, will you sell our product, as opposed to trying to deliver it directly to the consumer, which has issues with when you get paid for those vehicles. Right, you can't book that revenue till you deliver them, But if you deliver them to the dealership, you can, right, so your gross margin stays firm and you have instant
scale in terms of distribution. So it could happen very quickly, although there's still a lot of hurdles to get over for really China small manufacturers or EV manufacturers to get into this country.
Hey, Kevin. Just to wrap things up, and I've touched on this briefly, but what are the odds that some of these manufacturers just don't get this transition done. They look into the future and they throw them in the town and say this isn't going to happen.
Yeah, And look, I don't know that that's not a binary bet of bankruptcy or not bankruptcy, or you exist or you don't exist.
Oh.
Absolutely, there's certainly a scenario where you know, legacy automakers or global automakers leave that drive train business to the niche manufacturers, to Tesla to and it's a smaller part of the market, you know, certainly here but maybe in other countries. And what you can get is to say, like, and Toyota has been saying this the whole time, is like, there needs to be options, right, So internal combustion will
work in some regions or for some people. So will plug in hybrids, So will gas hybrid, so will electric. Maybe hydrogen is an option too, you know, So I think that if it's about climate, right, there needs to be options. If it's about capitalism, you know, that gets.
A little bitcisely that Kevin. You know where I'm going with this. If it's about climate, it's not about massive SUVs that just happen to be electric. Let's you know, let's face it, so it's not about climate precisely, Kevin sign it, thank you, sir.
Limpegan Tenochens, a gentleman from western Michigan outside Green Rapids on the fields of Michigan, joins us snow Bill heisig and Bill, you know the last the thing that we've seen.
For the last thirty six hours. I actually thought of you, and yet people of nuke. Gingrich has identified it as four percent of GDP. We went from Lincoln Southwest of your family's heritage to ninety six percent of the GOP in crisis. How do you people get back control of the party, How do you get back control of the narrative.
That's a great question. In fact, I happened to see former Speaker Gingridge last night at a dinner. But it is it is interesting. I do have to comment. You know, you played Senator Blumenthal's quote, and yes, the house is
a bit of a mess right now. But I would just point out those who live in glass sentence shouldn't throw stones, all right, because they have not done anything anything when it comes to the appropriations bills until this year, and it was only when the House threatened and really pushed this whole notion that we needed to pass those swellove appropriations bills that they actually passed anything out of committee.
So I'm glad to see that people are realizing that these massive Christmas tree omnibus bills are a horrible way of moving forward. But yes, we've got a mess in the House. We can't do anything until we pick a speaker, and hopefully that that's going to come sooner rather than later. But I'm not sure that we're there yet.
I look, Congressman at the joy that America has it. Maybe we ought to have some successful small business people in Congress. You're one of them. You're the gravel of Michigan, run and gravel, moving it out, building things in that How do we take advantage in this crisis of a beleaguered small business. I think it's been ignored here for weeks and weeks.
First of all, you got to stop crushing them. And whether it's at local level, state level. You know, I'm a former state legislator. I know what can happen on the regulatory side as well as the tax side, and certainly here at the federal level that that is writ large. But we also know the inflation impact has been massive, and I was interested in hearing I think it was Kathy who is on just prior to me, talking about
this soft landing hard landing situation. A lot of us would argue that the FED was late to the table in starting to move those interest rates up, and now we've been paying. We've been paying a massive price literally for that on the way down. But we've got to stop. We got to stop this tax and regulatory crushing, plus the rhetoric, right, I mean, it's you know, small business drives the economy in so many places, and place like Michigan.
All right, we're watching the UAW strikes and those kinds of things, but we've got to make sure the small businesses listen.
The news flow we've had. I think this has been way under reported my anecdotes in New York City, a small business is getting absolutely crushed. There's no other way to put it.
There is a real concern here being pushed and pulled on both the side of inflation, a tight labor market and also higher rates so you can't borrow cheaply. But Congressman, I would love your sense just to build on what you're talking about. Kelsey Barrow was on. She was talking about how a hard landing looks more likely a lot of people, and I would guess that that actually, perversely might be a benefit to the US fiscal profile because
that will lead to lower interest expenses. Right now, people are looking at the fact that there is no leader in the House and attributing part of the move and the treasury market to that, saying that dysfunction in Congress is allowing yields to keep climbing as the fiscal profile of this nation gets called into question. Important is it to you to make sure that there is at least a functioning, at least a cross a discussion among representatives.
Yeah, we have to have that. And look, I believe a number of my colleagues, some of them were chasing cameras, others of them had actual policy issues, and they erroneously, in my opinion, thought they would be able to move this process along more effectively and faster by shutting down the government. My experience both in twenty thirteen, with the Obama administration twenty eighteen, going into twenty nineteen with the Trump administration, that isn't the case. So that was bad
tactics on that part. But how do we restore confidence? That's a key thing. We've got to get unified and quit the circular firing squad in the House of Representatives. But we do have long term issues that we have to have to address. I have a bill that would call for a debt commission, a fiscal commission that is going to look at all of the various trust funds.
It would be something that couldn't be amended, it would be forced to be taken out of a vote taken both in the House and Senate, and it allows us to address that seventy percent of all the federal spending that happens on autopilot. I don't touch it as a House member of the House. The Senators don't touch it. The White House doesn't do anything with it. It's just
on autopilot. And if we don't wrestle that dragging down to the ground and have an open and honest conversation with the American people, then we're going to be in real trouble if we see any of those bond rates continue to go up because we're knocking on the door of eight hundred billion dollars in interest alone right now.
Congrisspannon, how much of an obstacle is the former President Trump to getting some sort of real discussion like this put forward, considering the fact that he was one of the people pushing for a shutdown, pushing for basically just make it not happen, don't pay the bills until you get what you want.
Yeah, well, it's not helpful at the end of the day. Like I said, I think that is that's an erroneous strategy. It doesn't work. What getting back though to that long term issue. You know, both President Biden and President Trump had said you can't look at some of those massive drivers of our automatic spending. That's a mistake as well. And I'm glad to see we've actually had this bipartisan bill.
It was seven Republicans, seven Democrats who are the original co sponsors of me as author to to set up this commission, you know, and that ultimately it doesn't matter what the politics is trying to dictate out there on either side of the aisle. The realities are what we have to deal with here as policymakers. And I hope my colleagues will step up and actually be policymakers and honest brokers.
Congressman, thanks for your inside this morning, your perspective. Thank you, Sir, Congressman Bill Haisanga that of Michigan.
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