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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 Minol and the Bloomberg Business App. And we're not going to turn this into a history lesson, but
to give you some perspective. And I thought the Washington Post captured brilliantly this morning with the word rebellion. There are different kinds of Southerners. Knut Gingrich with Sean Hannity last night was heated and on fire. The former speaker with the revolution of nineteen ninety four, and now we
have the immense honor speaking with french Hill. He's been a good friend of the program and far more important, folks, french Hill is linked to American finance through his banking and little Rock Frenchhill, how do you link this moment to confidence in our banking system?
Well, Tom, it's good to be with you, and I don't like the dysfunction in the House. Of course, I was very opposed to what happened yesterday because if we want to continue to build confidence in the US and the US and global capital markets, we've got to show
leadership on the fiscal side of the House. And right here in the midst of a appropriations fight and a fight over federal funding in less than now forty days to a government shut down, to be shut down in the House without a speaker for the next week is not contributing to that vote of confidence. So I think they are linked, and I would I really hate to say that, but this rebellion has come at a very poor time.
The rebellion has a tinge of geography. We had votes from Montana and the rest, and John, you know, I'm sorry. I look at this as a political context of the nation. It's not just about what we're doing at surveillance or the cable TV theater that we're seeing in Washington.
It's a real fitting that a Republican party shut it south in the foot Accompressman, the question I'd have to ask of you this morning is how can the American public have any confidence in your party's ability to govern?
Well?
I think under Kevin McCarthy in the past nine months we demonstrated that quite successfully.
And that's why I'm so disappointed.
In eight people, which represent about four percent of Republicans in Congress. Let me repeat that, about four percent of Republicans in Congress. They voted with all the Democrats yesterday to take down Kevin McCarthy's speakership. But under his speakership we passed in all the above energy strategy to make energy America energy independent once again. We passed border security that both reforms the immigration system that's failed and do
border security. And it was Kevin McCarthy, after waiting ninety days for President Biden to provide any kind of leadership, that crafted a historic debt sealing deal which resulted in two trillion dollars of spending reductions and a one percent
cap on discretionary spending. And then just last week pro offered a good stop gap spending measure so that we could finish our appropriations work, which also included a debt commission, which I think is so critically important if we want to get a handle on what really drives our deficit, which are our mandatory spending.
Program Congressman, as yields do continue to rise, and I do know that every day you do come in and you look at that ten year yield and watch it climb in tandem with the interest payments of the US government Goleman's access estimating that yields climbing where they are at about one hundred billion dollars to the deficit come
twenty twenty five versus expectations just in July alone. Do you think right now that other members of your party realize that the longer this dysfunction goes on, the more they contribute to that deficit, Lisa, such.
An important question, but I want to really turn it around and say yes, I think every day in the last few weeks We've talked about the impact on fiscal finance and rising interest rates with our House members, but this is a fundamental issue that goes back to both pre pandemic and certainly during the pandemic, when the Democratic House Budget Committee chairman at the time said, there's no limit to what America can borrow from the world and
spend it home. Deficits don't matter, and that went on steroids during the pandemic obstensively to help offset the output loss during the pandemic. But we did five or six times with that help point output loss was and we didn't take our foot off the accelerator and President Biden's compound of that. So it's a bipartisan second to do this.
But Congressman, I mean to be fair, the deficit did rise by about eight trillion dollars during Trump's time in office, and it actually accelerated during that period, and a lot of the aid was accelerated during that point. So isn't this both parties And the fact that there's complete dysfunction now just exacerbates the inability to really address any of these issues, which is a bar partisan issue.
Well, I just said that. I said during the pandemic. Well that's the Trump administration. Absolutely. We had spending out of control there with an eye towards trying to offset the output losses during the pandemic. The globe did that, but we over shot plus two. Lax monetary policy for too long, We've lost our way. I want to go back to when both parties said that zero deficits were the objective, not two trillion dollars, which is Joe Biden
is projecting. So sure, both parties bear full responsibility for this, but what I've seen in my forty years of being in private business and in and out of government, is there is no consensus that large deficits are bad in the Democratic Party and some in the Republican Party. And that's what's got a change.
I would suggest, Congressman Hill, that you and the former Speaker Gingrit are sort of on the same page. Well, this is embarrassing, let's fix it. The way to fix it is an anointed speaker of the House. How long is this going to take?
Well, I hope Tom.
I would have hoped that we could have started that process before we left this week, but we didn't, and so we're going to meet either Monday night or Tuesday morning early and start the process of selecting a new speaker, and I want to have that concluded next week. It's very important that we get on with our work in this midst of this appropriations fight that we have on our hands, with the government shut down looking us in the eye for November seventeen.
Congressman, this is a difficult question, might be somewhat emotional for you as your party left you behind. Do you get the feeling that this is not the Republican Party that you joined and it's moved away from you.
I think the Republican principles of balanced budgets, a strong defense, international leadership, the largest open market in the world that attracts people all over the world, these are core principles. Loyalty to the Bill of Rights in the Constitution, these are still fundamental tenets in the Republican Party. But I
think we've lost our way tactically. We're throwing overboard a successful speaker that shares those views, absolutely shares those views, and was guiding us through the stormy waters of a dysfunctional presidency led by Joe Biden in a Democratic control Senate.
Not easy to.
Do with no plan. Those eight people who voted to throw Kevin McCarthy out yesterday incorrectly, in my view, don't have a plan except they're complaining about the fiscal conditions of the country. Well, that's shared by all Republicans. So tactically, I think they've failed. Strategically, I think the individual principles and governance that's guided the Republican Party are still intact. We've just got to move forward and regroup and find a leader that we can get behind.
It's certainly shared by the Republicans, the majority of Republicans in Congress. The congressman is consistent with the views and the beliefs of the dominant leader in the presidential race for your party going into next year. I think overwhelming me the ads to that is no, isn't it?
Well?
I think President Trump believes certainly in a lot of those principles, and I've seen him do good work when he was president. But we need him to help rebuild this and not run counter to it. We need to have the Republican Party on the same page when it regards our role in the world and our role at home on how to do that. And you know, President Trump had challenges on the spending side too, and yet
he was good on some other things. So we've got to get together and focus on the House in the next few days and get a House leader that Republicans can back, so that we're back in this game of countering the Biden's failed agenda on the border internationally and fiscally.
Congressman, just find me in thirty seconds. Is he helping you? Were hurting you?
Now?
Who the former president?
I don't think he comes into play in this issue in the House. What we've seen is these eight people were not doing Trump's bidding. They're concerned about the fiscal affairs of the United States. I get that they did not trust Kevin McCarthy. I don't agree with that, but
I understand where they're coming from. This is an internal matter that we need to solve in the House, and we need to get a leader that we can get behind, as I say, in order to counter the mistakes and the direction of the Biden administration.
A Congressman, thanks for your opinion of view this morning. We appreciate it as always. French Congressman french Hill there on the latest in Washington.
Went in doubt, how'd we screw it up? In the thirties. We didn't look at the banks. BERNANKI one oh one. Michael Barr's a voting member as of today. Jean Sunuzzo could be a voting member someday, or governor Global had a fixed income a Columbia thread needle. He's surviving the wars gene. You know there's a point where it switches some yield analysis to price analysis.
Are we there?
It does feel like we're there, Tom, certainly. You know you're talking about it earlier. The sell off we've seen in the long end of the yield curve is equal to the amount of work that the Fed's done at the front end of.
The curve all year.
They've only raised interest rates by one percent through the course of this year, and maybe twenty five bases points more. But the risk premium that we've put into the long end of the curve is really what has.
Taken investors by surprise.
I think here because it doesn't seem to be driven by the fundamental data. We would argue that the most important fundamental data of the last couple of weeks for the bond market is the fact that core PCE inflation, the Fed's preferred gauge came in below expectations and is trending towards that two percent target. And yet we see this steepening and I think that should give investors pause and think that really there is a fiscal risk premium coming back into the treasury market.
Jane, Have you changed your mind on that in the last couple of months.
Well, I think what we've been doing, John is really trying to focus more on what we call the belly of the curve, or that five year point, where we think we've priced in more than a fair path for the FED funds rate and more than a fair higher
for longer situation. And you have yields basically from the three year point all the way out to the thirty year point sitting right around or just below five percent, And for that same yield, we rather put our money in the five year point, where you're more looking at what the Fed might do and less worried about that term premium or that risk premium, which we learned last year in the UK guilt crisis, that that can get away from you pretty quickly.
Jane, you think we've got the ingredients for that kind of outcome.
I really don't. I think it's a very different market.
The depth in the US treasury market is significantly greater than what we see in guilts. But you know, it's that time of year, and it was just a year ago we were looking at what was going on in the UK and that budget dynamic really did create scare across the market, and international investors.
Drove yield hire quite rapidly.
There are some similarities, but I do think the depth in the treasury market is very different.
Gene.
When we talk about the rest of the markets aside from treasuries, you can look at stocks which have been remarkably resilient in light of some of the recent moves. You can look at credit starting to maybe show a little concern but largely holding in. Does this indicate to you that the rest of the risk complex can actually sustain yields that a rising at this pace to these levels, or do you think that there is yet to be a wake up call that is coming.
No. I think the wake up calls coming lista quite honestly, and we're starting to see that in liquidity of credit. It's starting to deteriorate, and spreads our widening and bid offers are widening. So it's a little bit of that unfavorable dynamic we saw for a lot of twenty twenty two, and this week that started to re emerge. So I think that credit investors are getting nervous and frankly, they realized that lags of monetary policy may be long or variable,
but they do exist. And at the end of the day, companies and consumers are borrowing at much higher rates and that's going to cause cracks throughout the system.
Are you saying things actually break or for selling or anything that seems like a catalyst, or just a little bit more fear that causes a little bit more caution in investments.
I think it's more fear overall.
Fundamentally, investment grade companies, for example, are very cash rich, and their cash flow profile is stronger than it was in twenty nineteen before the pandemic. So I don't think there's anything that's going to disrupt that from yields going up a quarter or to a half percent in a short period of time.
When we think about highly levered.
Companies, and for example, look at the fact that Triple C those highly levered companies that have returned over twelve percent through the course of this year. Year to date, well they're going to be really susceptible to higher borrowing costs, and as we go forward, I think that rally is going to be hard to sustain.
Jane, let's go back to Minnesota Finance just a few years ago. There's a chapter there when it gets like this, look at the banks. You've got the advantage of Columbia thread needle that you're not representing a major bank directly in that, which is our advantage this morning. Are you stressed about the banks either too big to fail, those regionals below them, and critically the commercial real estate block below them?
I think most importantly, we feel really comfortable with the global systemically important banks, those the sort of the big issuers here in the US, and we've actually been adding exposure since March through now to to that complex, and we think that they're exceptionally cheap rather relative to their industrial peers. As you get down into the regionals and some of the tier below that do have more of that.
Commercial real estate exposure, I think you do have to be a bit nervous.
I think there, you know, there's a degree of capital raising that's going on in that in that next tier of bank, but that's Frankly, it's been orderly in terms of investors being able to lend that capital. But I don't think we should be so confident as to say we'll never revisit any of the volatility that we saw with SVB.
Jane, When you say you're adding, how are you doing that?
Yeah, I mean we're we're adding in the new issue market and in the secondary. I think, you know, looking at you know the big you know, JP Morgan and Bank of America type, you know capital structures where you know the capital profile has already been fortified post financial crisis, unlike the regional the super.
Regionals that are having to add that capital now.
So that these are names that you know, over the last six months we've been adding to portfolios, and frankly, I think that they're good alternative relative to potentially more cyclical corporate exposures.
Gens Jane, thank you for the insight. GININSA. They have Columbia Threatnaedo on credit at the end the banking stress we saw Earlie.
This year.
Andrew Hoddenhorse's city with this surrounded table. Andrew, your reaction to that, what would you expect on Friday now based on this? Does it change anything for you.
It doesn't change anything.
I think.
Just look at the scatter plot of ADP versus NFP. There's not a high correlation between the two. So it's a big if if we get this number. If we get this number though, like Mike McKee said, it's a big if. But if we get this number for payrolls on Friday, this is goldilocks. Right around one hundred thousand jobs per month. That's about what the population growth can sustain. That would be a very sustainable piece of job growth. So if we see this number, that would be a goldilockomy.
The heavyweight Janet Yellen was out yesterday with some select comments that I'm sure your team saw as well. There's another economist, Michael Tyson, who has a very famous quote about getting punched in the face. You know, everybody's got a plan here. How does the FED that? I mean, with the trauma that we've seen the last week in the bond market, I'm sorry, there's a point here where
the FED put comes back into place. Are we anywhere near where the Fed looks at the financial trauma and says we got to adapt?
So remember what the Fed is trying to do here is to raise interest rates and slow the economy. They've raised policy rates, but really what controls the economy mortgage rates, corporate borrowing rates. Those are going to depend be dependent on the tenure yield. So the fact that tenure yields are higher, I think is probably consistent with what the
FED is trying to achieve. Now, like John was talking about earlier, being in a fifteen basis point trading range over the course of an hour or so in the day is probably not the level of volatility the FED officials would like to see. So they're watching this, as you know, Fed officials, government officials always tell us they're watching, and they'll be watching for do we see signs of
liquidity stress that are emerging. If you saw those type of things, then yes, I think you could think about, you know, would the FED actually react to this you and first it would be with their rhetorics saying that, you know, maybe treasure yields have moved too far, but I think we're still away from that point. Treasure yield curve is still inverted. We still have ten yure yields below two year yields. They've come up a lot, We're
not as inverted as we were. If you're not imminently looking at a recession, you're not staring down a recession. It's not clear why that yield curve needs to be as inverted as it was.
A number of people have come on this show have said that a lot of the move in yields has not been fundamentally justified.
Do you disagree? Do you think that fundamentally where the yield is currently on the.
Ten year treasure and the thirty year treasury is completely justified and constant and compensating you for inflation.
I think it depends on what you mean by fundamentals. But if you're including in those fundamentals the fact that we're running large deficits, there's more treasury supply that's coming to the market. So some people would call that a technical but I would say that is a fundamental structural part of the US economic backdrop right now. And along with that, we're running higher inflation, and that you were
just talking about this earlier. If we're running inflation that's above four percent still by a lot of measures, it's not that surprising to see treasure yields above four percent. You need that yield just to be compensated for the inflation that we're running.
Do you think dysfunction in Washington helps the Fed's cause.
I would not say that it helps the Fed's cause. I don't know if it helps anyone's cause right now. You know the developments. It does raise questions about, you know, whether we're going to be in another shutdown November seventeenth, and you saw markets that we're trading that, you saw markets that priced out some of the probability of a FED hike in November. I think what the FED wants here is for the government to stay open, which would
allow them to respond to the economic data. And now what's going on.
In is a fantastic concert, well played, very diplomatic. You use my favorite phrase in the holy global financi and policymakers, we're watching this.
That's rue.
And we often ask on this program, what does that mean? What on earth does that mean? If they say we're watching.
This means they have a bloomberg?
Seriously, Andrew, stick.
Around, Andrew, Just a final thought here, is there an incoherence between the Joeld data that we got yesterday, the ism manufacturing read that we got the fact that in general things have been coming in horder than expected, and even just the direction of these ADP figures.
I think, especially seeing that manufacturing was down and the ADP figures is surprising. We've seen those manufacturing PMI ISM's bottom moving up, looks like they're going to move up through fifty and we're going to be expanding in the manufacturing sector. So I don't think that negative payroll growth for manufacturing really makes sense with where we are in the economy.
Look, Andrew, you got to go back. You got to write an eight page paper with your team. A guestment forward in the heart of the matter is the vector of inflation? I mean within the dual mandate. Do you agree that we've seen three monthly annualized disinflation and can you state that we've got a generalized vector that is disinflation.
I can't state that. I wish I could state that, but I can't state that. I think what we've seen is a soft patch in inflation. You had a lot of special factors that came together, autoprices moving down, airfares moving down. Some of those factors are going to go the other direction. We have a tight labor market.
This is a key inside John. This is the arch debate on surveillance.
Right now forty on Friday, still still a two forty on Friday. Unemployment at three point six three point six unemployment West.
Wages wages we think zero point three percent, and that's a big question. Ultimately, it does come back to wages. Do we see wages that are slowing down where we have them zero point three percent month one month? That's kind of holding steady.
How much weight would you put on job openings? Here's so many complaints about that data.
It is not the most high fidelity reading that we have on the job market at all. So you know, I'm watching the whole mosaic of jobs figures, and if you look at the mosaic, I think it's all telling you it's a tight labor market.
So it's talk an audition for the FM. Say that Andrew Honand hosts a.
City Christopher Merinak joins the sound director of at Research. You know the chart, Christopher, I'm going to bring it out. I brought it out before. If Sandy Wild God love Him, was here today, I'd bring it out for him. And it's the Wild Group, It's City Group and the train wreck known as their immense boom and financialization all that love in two thousand and eight ten to one reverse stock split and worth three dollars ninety cents a day.
When does the echals buildings stand up and go Houston, New York we have a problem.
Well, Tom, I don't think the credit losses at City are tough enough to get us there. They're still training at a discount the tangible book and have been for quite some time. I think it's been a confidence issue in both the management team as well as the game plan and executing. It may just be too far flung, which I think may have been the issue of the past thirty years, and bringing it back home is going
to be ultimately the answer. I don't think the credit losses there are wide enough, and I think that's the same issue for the domestic banks as well. We just don't have the credit problems to warrant that level of fear.
As looking at commercial real estate. Just as one of the fears that are out there on a Wednesday at morning LinkedIn here Chris confidence, liquidity, and solvency. Link those emotions of say nineteen ninety eight into where the financial system is right now.
So the banks, Tom have pre tax pre provisioned earnings.
That's PP and R.
It's the central feature of the FED stress test and really what we all look at as.
Investors and analysts.
That cash flow allows banks to build reserves, and we think reserve building is going to continue to happen. It's been strong year to date, will begetting again and next week with earnings for the big banks, we think reserves will rise for commercial real estate, for C and I loans, for everything. It's what has to happen during this part
of the cycle, and then charge offs will rise. Charge Offs are normalizing, but by the Santogan they're going to be much higher in twenty four than they were in twenty eighteen, nineteen, and even going back to the thirteen fourteen years, we're going to retrace.
All charge off levels and that's going to be healthy.
We have to recognize risk and we have to recognize loss. I don't think we have anything close to what we had in the Great Financial Crisis era. We just have higher losses, which banks have to provide for. The Fear of the unknown in the commercial real estate is to my opinion, somewhat overblown.
We still have to reserve for that, and Citygroup has their share of that.
And so do all the other banks at all sizes of the spectrum.
Chris, can we talk about the policy response to the banking stress. Earlier this year there was a big focus on unrealized losses in the treasury market. Based on the most we've seen, those losses are even bigger. Do you believe that these banks are well insulated with the policy response of spring even with these bigger moves in the treasury market?
Now?
Sure?
I mean, the banks can still contribute to the BTFP a bank term funding program. They really have not done much in the last several months, but still around one hundred and eight billion dollars. It's twenty five percent of the incremental borrowing that the industry has done here to date. I think that the liquidity is perfectly fine. The challenge is, to your point, John, is that the losses continue to
go up. We think there's another two to two and a half percent mark on every bank portfolio at the end of September, so that still is going to make a net negative to tangible book We estimate today that book values will probably fall about one and a half percent for the industry, using the KRE or the NASTAC Bank index as our benchmark, but that's still somewhat at a nuisance.
The banks are still going to be profitable in the quarter.
They're just the profits will not outweigh the mark they have at the end of September. We may find that that starts to reverse as we head into year end and next year, only because we've had such a big move in treasuries, it could.
Simply quiet down.
We don't have to have the Fed making a rate policy cut to see those marks start to reverse. Fact I actually think they're going to start reversing surely, because banks have a lot of four and five year securities they acquired in twenty twenty and twenty one that are starting to off. There's a portion that will begin to burn off, particularly in the next six.
To twelve months.
But still there is a point here underlying this.
The risk is really in some of the reserves, the safety assets, the things they are supposed to be really liquid. At a certain point, you have to think these banks are incredibly constrained when it comes to new loans with new business if they have such a huge book of treasuries that they're trying to cordon off and sort of keep from any kind of active trading absolutely correct.
I think you will see the loan growth slow.
Down a fair amount in the third quarter and slow again in the fourth.
We don't see loans going negative this point, but for some companies that will.
Some companies are on a risk weighted asset diet, as you've heard a lot of that is simply machinations about what they're going to keep on their balance sheet. Do a little bit less commercial real estate, a little bit different mortgage lending, or other loans that have better risk weights. We've seen some companies like Sonova sell medical office portfolios because it's a better way for them to risk adjust
their returns and enhance their risk weighted assets. I think you'll see Fifth Third the same, and many other regional banks. Those are just a few examples that have announced moves to limit their asset growth.
So, Chris, you're saying that we've seen all the bank failures that we're not going to see anymore, especially in light of some of the very big moves and the constraints on lending.
I definitely agree with that, Lisa, and I think if we have a bank failure, it's going to be a small, family run bank that you never heard of. It's unfortunate for any bank that fails. But we don't see anything big happening this year. We think all of that noise and drama.
Is behind us. The deposits are stabilizing in the industry.
The banks are simply struggling with net interest margin, and more than anything else, a perception issue about how bad credit is or is not.
I think it's a lot more tamer.
We simply have an increase in credit losses, which have been next to zero, and now they're coming off the floor and becoming normal.
And Chris, we've been here before. We're going to get a marked down, We're gonna get a rework or redo or restructuring, and then new money is going to step in at a distress price. Who are those guys? Who is the new money that's going to step in? Or are we going to see foreign money step in? Sovereign wealth money step in. Private equity has appolled and own every sky scraper in America.
So Tom, I think there's incremental dollars in family offices who actually have a fair amount of cash. You know, family offices becoming very, very powerful. A lot of advisors who used to be at the old first Republic are now at family offices that have reconstituted, and they're competing head to head with JP Morgan and those folks, in addition to private debt funds and other private equity funds
are the new players. We think some of the institutional investors who are on the sidelines will change their minds and come back in, but they'll be followers. The leaders are going to be those family offices and other private equity and private funds.
It'll be domestic, but I imagine.
It will also be foreign as well. I don't think it's just a US trade in the moment, but the interest is there, and I think they're looking for better prices and opportunities, and clearly where the kre is you know below forty certainly attracts them.
Now A much more constructive from Chris Marnak if gentny Montgongrisco, Chris, thank you said.
This is really special, and we thank Invesco for letting him speak this morning to the head of US Government Affairs, because yesterday afternoon, in that history making moment, the bow tide one got up at the house and said we will continue forward. His name is mckenry. He's from the Carolinas. He's a really interesting guy working in the trenches of political operation for George Bush the younger and on through
Carolina politics. Jennifer Flinton is with Invesco, Head of US Government Affairs, but has worked for Congressman McHenry over the number of years in chief of staff positions. Jennifer, thank you so much. Who is this guy? It was like Butch Cassidy last night. We know these faces, and to be honest, most of our audience, particularly our international audience, who is the Southerner McHenry?
Yeah, Well, he's the chairman of the Financial Services Committee and he has been in Congress for almost two decades now. He is an institutionalist, and he is a policy wonk, and he's politically savvy. And it's not shocking that Speaker McCarthy chose him on that short list of members to succeed in time of emergency.
Jennifer in the Washington Post this morning, Marianna Soda Mayor. They lead with the word rebellion that has a heritage, a tenor a tone south of the Mason Dixon line. Part the distinction of Southern Republicans like French Hill of Little Rock or mister McHenry of the Carolinas parse their distinction from eight or nine people that have rebelled.
These are fairly new members, right. I Mean, you look at these eight and these are members who mostly came in after twenty eighteen, and they really represent a different thinking within the Republican Party that was made very clear
after the election of Donald Trump. And it really is a small number, right, I mean, the vast majority of the Republican Conference stood behind Kevin McCarthy, but due to such small margins in the House a vote, basically five eight members were able to unseat the speaker for the first time in history.
Jennifer I was reading a story interviewing some of the supporters of Congressman Gates in Florida, and they were very supportive of what he was doing, and they were saying, basically, the system hasn't worked for us. Throw it all down, basically, take it apart. Why are there so many voters who essentially want to disrupt the whole system. What's the galvanizing force behind that?
There's a frustration, right, and Washington is but a reflection of a lot of that frustration.
These are four.
Hundred and thirty five members of Congress of the House who come to Washington to reflect their constituencies. There is a frustration, There is sort of a distrust in Washington, and yes, Matt Gates has decided to come in front of that and in his expression to try to lead that.
But it does actually reflect.
A concern over a thirty three trillion dollars debt, a one billion dollars of interest being paid every year. Right, I mean, so that frustration is real. Whether Matt Gates is necessarily the best to be the voice and the leader of that, I think is an open question.
But the irony of this, Jennifer, is that the longer the government doesn't make a resolution, the more bond deals are going up, and the greater the interest expense and the debt profile of this country. So at what point, from a political standpoint, can you bridge that gap to try to communicate that Sometimes dealing with the frustrations and the inefficiencies of the system are maybe a more efficient way of getting to the same end.
I mean, how do you communicate that politically well?
And I think we're going to see exactly that as they negotiate this appropriations process over the next forty two days, Right, because they had until November seventeenth to either pass another stop gap resolution or to come to an agreement with the Senate on appropriations, and right now they're still very divided.
Whoever is the next speaker is going to have to, as you say, bridge that divide, and I think it's a it's an open question, and over the next week, these Republican members of this conference, from the.
Center to the far right, are going to have to grapple with that question.
Jennifer, do you have a base case and where will be November seventeenth.
I'm concerned, right, I mean, last night was very concerning, and I think there's an understanding within the conference that there needs to be unity among the Republicans if they're going to move forward and have any leeway with the Senate going forward. But it is clearly going to be difficult for any new Speaker to work with the Senate,
which quite frankly has a bipartisan position on appropriations. So at this point, at this date, I'm rather concerned how we're going to move forward, and I think a government shutdown is probable in the near term.
Jennifer, thank you your insident, your opinion. Jennifer flibb I, Ben Bestcaug.
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