Trump Demands Iran Surrender as War Upends Global Markets

0:00Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances from banking to payments to credit cards all in one place with Chase's digital tools. Plus, access online resources designed to help your business thrive. Learn more at Chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JP Morgan Chase Bank NA. Member FDIC. Copyright 2026. JP Morgan Chase & Company. Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Balance of Power Podcast. Catch us live weekdays at noon and 5 p.m. Eastern. On Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts. Or watch us live on YouTube.

1:01Oil's an issue, guys. We're at $90 in barrel. If you're just tuning in, you're firing up the terminal. This is not Brent. This is West Texas Intermediate. You heard Charlie. We're up about 12% right now. We're not fooling around. This is a big deal. We went red when it crossed 70 the other day. That's where we are now at 90. And of course, the White House is acutely aware of this issue. There have been talks about potentially tapping the SPR. President has said he's not worried. As soon as this is done in Iran, the price is going to come back down. Kevin Hassett didn't seem too worried either when he appeared this morning on Bloomberg TV and radio. Listen to what he said about the impact on energy prices. We know that sometimes soon we're going to have a much more stable Venezuela with high stable energy output, a much more stable Iran with high and stable energy output, which is going to be very good not only for energy markets but for risk premia around the world. Don't forget that this move against Iran is happening because they've promised to destroy us all.

2:06Like if that's not something that affects risk premia, I don't know what it is. And so I think with an ion horizon, then you can see that this is a huge positive for global economy and global markets. The question is when will the current near-term disruption end? And that's something that'll be decided by the military. And of course, we'll be some uncertainty about when they decide to move in part because the uncertainty protects the lives of American soldiers. And Kevin, in the meantime, we expect that it'll be resolved quite soon. As you see, we're starting to see a hit to production. Because we can't move the oil, we're breaching storage capacity and select producers right now. You saw some of that with Iraq earlier this week. The general reporting moments ago, we're seeing the same thing in Q8 and UAE and Saudi Arabia might follow. That's obviously a bigger, more acute issue for the Asian refiners right now, which is why the Treasury Secretary came out and issued a waiver for the Indians to buy from Russia, the Russian crew, there's offshore intankers right now. But Kevin, I wonder what else the White House has gone and store?

3:07Not just to tell people to wait because in the future will be better. But what are the remedies that you can produce right now? Oh, sure. The sanction waiver that Secretary Bussard came out with is just one of many, many tools that we have ready. We've got a whole flow chart of tools to use, depending on this or that. And we're ready to move them as soon as we have to. But we're also very optimistic that we're going to be able to get this near-term problem resolved relatively quickly. The Biden administration, as you know, burnt through the SPR, took it down quite dramatically. It's their space left in the SPR to deploy some of that, to bring down prices just a bit for consumers. You know, there is no conversation right now to dip into that. But we've got something like 400 million barrels ready to go if needed. But there is, I re-emphasize, there has not been a conversation to dip into that yet. Because our expectation is that this effort in Iran is way ahead of schedule.

4:10And we understand that they're near-term market fluctuations. But we have our eyes on the horizon. And we think that's where people should be looking to. Kevin, you say I had a schedule. Is there a schedule? Yes, but obviously we're not going to go through the schedule on DV. Well, we'd love to hear it even off TV, because there have been so many questions about timeline here. I will add another log on the fire here as Cutter Halt's production of liquefied natural gas, LNG. Cutter expects all Gulf energy producers to shut down exports within weeks. If this continues, potentially driving oil to $150 a barrel according to the country's energy minister. Now, we've got a couple tough headlines here, of course, on the terminal. I already talked about crude at 90. It's coming through the other end, though, and gas prices. Now looking at the highest gas prices ever under a President Trump. Not great, as we get above the $3 level on a national average.

5:11It's not great considering the midterm campaign cycle that we're entering. That's the political side of things. We want to stick with the energy side of things and bring in Tom Closer. This is one of the first phone calls that we made when missiles started flying last weekend. Tom's been in this space for a long time, and I've had the pleasure of talking to him for the better part of 20 years as an oil trader, as an analyst. He is now Chief Oil Advisor at Gulf Oil. And Tom, it's great to see you. How high could we go here and how worried are you? Well, I think that we're talking about an abstraction when we're talking about the price crude oil right now. I went ahead and looked at what one might expect for gasoline prices with crude at $90. I thought I had some time. I did that this morning, and we're already above $90. But we're going to see it manifest itself at the pump. I think we're going to see $350 to $375 almost immediately, certainly before St. Patrick's Day.

6:15And if we stick around or we move higher and we've been moving higher by like 6% and 12% every day, we're going to see a return of $4 in a bunch of different markets. You know, the one thing, Joe, is that we're talking about $90 for crude and that's really exciting. Gasoline is costing on a spot basis without taxes anywhere from like $125 to $134 a barrel now. Diesel's about $150 a barrel, no tax. And jet fuel, that's about $185. And that may be the first product that hits $200 a barrel, which I don't think. Well, no, we didn't see some of those numbers back in the 2022 Russia Ukraine war. Remember the spike we saw at that very time. This was of course inspired by Russia's invasion of Ukraine. Now it's the United States that's initiating conflict here. Do you expect similar

7:18levels? Will Donald Trump have a similar experience that Joe Biden had? Well, it's possible when I heard Kevin has been talking about flow charts. That may, you're not worried about me a little bit. This isn't going to be soft with flow charts and Excel spreadsheets. I mean, the straight up hormones needs to be reopened. And how they do that is questionable at this moment. But we're talking 15 or 16 million barrels a day of crude oil and then five or six million barrels of dairy refined products. We've seen it manifest itself more on the refined product side. And particularly for products like diesel, heating oil, jet fuel, marine gas oil that were very, very tight despite the glutton crude and the glutton gasoline. So it's changing very quickly. I do think that a month from now, we're going to be looking at something different because I just don't believe that this can be allowed to happen for weeks upon weeks. Wow. Okay. To what extent can any of this be rerouted by Vessel or by pipeline, Tom?

8:27They are rerouting some things. Saudi Arabia has the most where with all to do that, they can move things to the Red Sea port of Yambu, Kuwait, not so much the Emirates, not so much. So you really do need the straight reopen. I mean, I'm guilty like most people of thinking they couldn't possibly shut down the straighter foremost. But when you think about it and you think about the technology now, the technology of $10 or $20,000 drones that can knock out billions of dollars of infrastructure and certainly couldn't knock out some of these expensive vessels. That's the big game changer. You know, back in 1985 or 1986, you did have escorts take vessels through the region, but you didn't have drones and you didn't have a lot of the missiles that you have out there right now in that capability. Yeah. I've always been fascinated by the hats that oil analysts, energy analysts and traders need to wear. You have to be a geopolitical expert to work in this space,

9:29which is why it's always fascinating to talk to you guys. Now Chris Wright knows a lot about this too. He's not projecting it so much in interviews. He showed up on Fox earlier to talk about, I guess we could frame his lack of concern about this issue. Here's the Secretary of Energy. Yeah, I think it's a week of order weeks. I would say in the worst case, but it's weeks not months. And look, Iran has been an escalator of energy prices 47 years, the whole history of their regime. We've got a little bit of an interruption right now to finally put an end to their ability to wreak havoc, to kill Americans and to terrorize their neighbors. A little interruption right now, Tom, it doesn't sound like that's how you're characterizing this. Yeah, but let me tell you where they're coming from. You know, you've heard this administration talk a lot about energy dominance and energy dominance really started with the high prices in the Arab Spring 15 or 16 years ago and with the Shell revolution. If you were having a Olympics for continents, the North American continent is so superior to

10:34every other continent right now. We've got cheap natural gas. We've got cheap crude oil, much cheaper than the rest of the world. We've got world-class refineries, the world-class technology. And you know, we're producing just between the United States and Canada about 17 or 18 million barrels a day of crude. So I understand that compared to the rest of the world, North America and particularly the United States is in great shape, dominant shape. We only got a minute left, Tom. Do you agree with the administration that the long-term story here is a more stable energy market? Well, you would agree with that. Yeah, I think you never know when these things happen, how long it's going to take to play out, but 2026 was shaping up as a very, very sloppy year for crude oil. And if they get straight reopened, it'll at some point go back to that sloppy nature, probably in the second half of the year. There's a reason why banks who are predicting 90

11:37or 100 or even 120 dollars right now that they're predicting something in the 60s fruit, you know, the back half of the year. And I think that, unless it really blows up in the region, we can get there. Tom, I'm glad you're still at it. Tom, close with Gulf oil. If you didn't get the hint on YouTube, Tom, thank you so much. $90 a barrel, our reality today. This is Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this. So there's a lot of noise about AI, but times too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smart to business, IBM. You're listening to the Bloomberg Balance

12:41of Power podcast. Catch us live weekdays at noon and 5 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa played Bloomberg 1130. It's the day after for Kristi Nome, I guess for Mark Wayne Mullin as well, two pretty different scenarios here and two pretty different politicians as the president of the United States reassigns Secretary Nome to a new role. What is this? The shield of the America's James? Was that the nobody's ever heard of this? It'll be introduced this weekend. Something that presumably came out of a Marvel movie. Mark Wayne Mullin on the other hand, he's going to hang it up as the senator from Oklahoma and run DHS. It's been amazing reading about Mark Wayne Mullin because everyone reaches for the same line. Mullin, Kamma, known to be a fighter, Kamma. I actually put it in Google and it turns out that he is not just a fighter,

13:47he's a black belt. He's like an MMA guy. Did you guys know this? Brazilian Jiu-Jitsu, he has a Brazilian Jiu-Jitsu black belt, so he could kill you with his bare hands. By the way, has a five and a record and was in fact inducted into the Oklahoma Wrestling Hall of Fame in 2016. I wonder if Sean O'Brien knew that when they almost came to blows in the hearing room. I'll tell you what, you want to talk about Mark Wayne Mullin, the fighter. He even took his ring off. Do you remember this? The head of the teamsters was up there testifying Sean O'Brien and he had been kind of trolling Mullin online on social media talking about him. Well, Mullin had just about heard enough as Bernie Sanders, the chair of that committee realized a bit too late. Remember this? This is just a couple of years ago. Sir, this is a time, this is a place. You want to run your mouth? We can be too consenting adults. We can finish it here. Okay, that's fine. Perfect. You want it now? I'd love to do it right now. We'll stain your butt up then. You'll stain your

14:50butt up. Oh, hold on. Oh, stop it. Say you're solution every time. He's a sit down. He's a sit down. Okay. You know, you're a United States senator. You're an embarrassing person. They quit signings after an embarrassment to the state. It's hearing about the addition of the working class in America. You caught up with this. You're the biggest thug here. Listen, if you're with us on 92.9, you know well, you don't pick a fight with a kid from Thor Chester, but Mullin did. And we assemble our political panel to talk about well, the political fallout. Genie Chansano is with us, of course, Bloomberg politics contributor and democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick Davis, so World Headquarters in New York, Republican strategist and partner at Stone Court Capitol. Rick, I wouldn't, I guess, want to meet Mark Wayne Mullin in a dark alley. This all developed while we were on the air yesterday, by the way, and Rick has weighed in a bit here. I'm just wondering what comes next for him. If this is going to be an accelerated confirmation process,

15:53if he's as good as got the job brick. Yeah, I think the accelerated process is important because you don't want any laps of leadership at an important agency like this, especially one that's been shut down for almost 20 days. And the reality, too, is that he should be able to get a senatorial courtesy and fast track through the nomination process. That would be typical. Obviously, he's a bit of a firebrand as you're sought just indicated. And Democrats should probably put up a pretty of a ciferous opposition to him. But at the end of the day, this is a done deal. And I think you probably see this move pretty quickly. You might have heard he's a fighter, Genie. What will Democrats do in that confirmation hearing? Joe, my head is still reeling from that intro you just gave. You know, let's just say about his confirmation hearing. It goes through the Department of Homeland Security, chaired by a one senator Rand Paul, who Mark Wayne Mullen recently called a freaking snake. And so there should be fireworks

16:58not only from the Democrats, but we may see some from the Republicans as well. To your point, that is how most of us around the country outside of Oklahoma first got to know him was in this very odd Bernie Sanders refereed fight with with O'Brien that didn't come to blow. But good news, Joe, they made up Donald Trump, the peacemaker. He has brought them together as we remember because we all were there. Brian spoke at the Republican convention, not at the Democratic. So all's well, I hear even O'Brien yesterday made a statement mildly supporting Mullen. So I think from that perspective, it was just two guys in a Senate committee having a brawl. And I think that Democrats are going, Democrats are going to, you know, they will, they will put up a fight. But I think it's there's he's likely to get through this. But I don't know that it's going to change much in terms of the shutdown it on the in terms of DHS. Well, you know, these guys are fast friends now,

17:58as CC said, he respects a worthy opponent. There's no way to, no better way than to make friends with a fighter than to get to fight with him, right? So here we have the teamsters leader actually endorsing this idea, which is fantastic. Sean O'Brien offering unexpected praise for Mark Wayne Mullen's nomination to lead the Department of Homeland Security. They're fast friends now. They had like a beer summit or something. There are big questions about what happens to the seat. And this is really what I'd like to get into with the two of you. What happens to Mullen's seat and what happens to Christy? No, because we understand that the governor, Kevin Stitt will appoint an interim senator and per state law, Rick, that person must pledge not to run for a full term in November. How is this all going to shake out? Yeah, you're going to have a group of people probably flying to on both the Republican and the Democratic side to jump into this race. There's still time to get into the primaries in Oklahoma. So, you know, the timing is good. None of these campaigns will have raised any money or positioned themselves with the voters yet. So it'll be a fast

18:59track to a primary. But somebody will be a caretaker that'll sit through that seat until January 2027 and you'll have a knockdown dragout fight. Highly likely, a Republican will prevail because Oklahoma is a solid red state. But the primary may not be that interesting unless Donald Trump doesn't endorse. But likely he'll find someone he wants, he'll endorse him, and that person will win the primary. Interesting. Speaker Johnson, Jeannie told reporters yesterday that governor Stitt promised him not to tap a House Republican. We can't lose anyone right now was the quote. And I'm curious to be honest with you as to why he would want this job. He's the United States Senator. He seems to be very well regarded on Capitol Hill as not only a team member for Republicans, but a negotiator, Jeannie. He's been negotiating between the two chambers and between Republicans

20:00and Democrats. He talked about during the shutdown, sitting down at Democrats kitchen tables and having fruitful conversations with them. But when I heard him talk about the challenges that Christine Ome faced in the job, it made me think, well, why would he want this? Listen to Mark Wayne Mullen on the steps of the Capitol yesterday. She was tasked with a very different job. And I think she has performed the best she can do in underneath the circumstances. Is there always lessons to be learned? You know, listen, my wife and I, we have over the years, we have been fortunate to purchase companies and draw our companies. And every day there's something you can do better. And so I think there's there's an opportunities to build off successes. And there's also opportunities to build off things that maybe didn't go quite as planned. Well, there's going to be a lot that comes with this job. Jeannie, is this a promotion? I mean, I guess he's joining the cabinet, but why do you leave a Senate seat for this? Yeah, and let's just underscore what Johnson said literally, he can't afford to lose one seat. That is quite literal for Johnson. And, you know, Mullen

21:04is very close by all accounts to Donald Trump. And here is a guy who went from being an MMA fighter and a plumber owning his own plumbing company into politics about 15 years ago. And just this stratospheric rise and in the political realm, finding himself as a senator of the United States, I think it's very, very tough for anybody to say no to the president when called on. So absolutely, I have no question that he, when the president called, he was there and willing to do what he what he can and what he's asked to do. I think there is a little bit of him. It's a little bit ingenuous of the White House to suggest that, for instance, on this $220 million, you know, Yellowstone Taylor Sheridan style campaign that that Christy Nome had that they just didn't know about it. This thing had been out for a year. The president is featured prominently in it. So I think a lot of this has to do with discomfort with Christy Nome and not just coming from Donald

22:07Trump personally, but from Steven Miller, who late last year was making that clear in terms of her spending. And so they want somebody to do their bidding. And I think that is what's most troubling about this. It has very little to do with change of ice tactics or ice strategies or the killing of Renee Good and the killing of Freddie. It has to do with a replacement of somebody who blamed her boss publicly for wasteful spending and has done other things. And they want her out. But Mark Wayne Mullin is going to find himself having to execute on the same really unpopular ice tactics that she was with absolutely no, you know, willingness on the part of the White House beyond the body cameras to pull back on that. Hey, Rick, Senator John Kennedy of Louisiana, who played a big role in leading us to this moment following his questioning of Christy Nome in the hearing earlier this week said Donald Trump called him after the hearing.

23:08The president was not a happy cowboy, the senator said. I remember thinking this is such classic John Kennedy. I remember thinking the secretary quote pretty much as dead as fried chicken, unquote. What's going to happen to Christy Nome? Is this new job real or is this a way of sunsetting her as a member of the administration? Yeah, I'm sure some, you know, interesting person in the White House said, oh, we can't just fire. We've got to give her an exit plan so they concocted this scenario for the Western Summit shield. Who knows what that's going to be? And it probably doesn't really matter that much. Maybe she's going to wind up running Venezuela. Who knows? But at the end of the day, all eyes are on Mark Wayne Mullin. And look, I mean, this is an agency that's in dire need of help, right? They need new leadership. They need new direction. They need new funding. I mean, this is a severe test of leadership that he's going to face. And I don't know if his appointment will break the log jam of funding for an agency like this that has been,

24:13you know, frozen in time. But we can hope that this is the kind of thing that'll get everything back on track and create some kind of an outcome where people can get paid and new policies can be pursued, not just to meet Donald Trump's administration's agenda, but also to build confidence with the American public that the agency's not against American citizens. Sounds kind of painful to be honest. Genie Democrats say that this doesn't change anything for them when it comes to DHS funding that he needs to still make good on a de-masking and judicial warrants. He's not about to change his tune on that, is he? He's not. We've seen no sign of that. And I think that is what troubling, although Senator Blumenthal prior to the firing said, well, if she was removed, it might be easier for us to negotiate. So maybe there's something there, but I still think it's going to have to be a substantial. And Joe, by the way, can we just agree that this was some redemption for little cricket, the puppy, that Christy Known killed

25:1314 months old. And, you know, cricket, cricket needed to see his day and thank goodness for Donald Trump and Steven Miller, a bit of redemption for the little puppy. Say his name, Genie. Say it out loud with apologies to little cricket. Stay with us on balance of power. We'll have much more coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smart to business, IBM. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and

26:145 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. I'm Tyler Kendall alongside Joe Matthew here in Washington and we've had our eyes on the foreign policy front. But we've also seen some major headlines related to domestic policies in the Trump administration this week. As you well know by now, we saw President Trump nominate a new DHS secretary, ousting, gnome, the current one, and announcing Joe Matthew that it's going to be Senator Mark Wayne Mullen, a Republican from Oklahoma, who's known to be in some sense a negotiator on Capitol Hill because we have to keep in mind DHS, the Department of Homeland Security, is still amid a partial, well, the DHS is fully closed, but we are still amid a partial government shutdown. That's the truth. This is quite a time to be taking the helm at DHS. And of course, you've got a senator who probably could have kept that job for the balance of his career, leaving the Senate to lead this department at a very chaotic time. We have big questions,

27:18of course, what happens to Christie gnome from here. This shield of the Americas is unknown to us. I guess the president will be unveiling this coming weekend. But it of course also sets off a fight to fill that Senate seat in Oklahoma. And that's where we start our conversation with Mark Short. Don't worry. We will get to foreign policy with the former chief of staff to a former vice president. Mike Pence, former White House director of legislative affairs, Mark it's great to see you. Happy Friday and thanks for joining us. Why would Mark Wayne Mullen want to do this? This is a seat he could have held for right, the balance of his career. Why jump on DHS at a moment of chaos if only you don't say no to the boss? Well, you know, perhaps the Senate isn't as much fun as some people think this and people want it out. But yeah, I think it could be, but I think it's a really good question that you because the reality is that I think the policies that are really guiding the part of Homeland Security are going to be driven by the White House and particularly by Stephen. And so, you know, what do yes? So to what

28:19extent are you having an operational control as secretary? I think you've seen over the last there were four secretaries in first administration and now one at second administration. This is really, it's not like he's going to have a chance to really direct this himself. So I think it's a fair question to ask. And I think it's also, I mean, Oklahoma is a safe Republican seat. Sure, but you know, a lot of focus has been on the likelihood of the House flipping. There's a big risk to the Senate flipping too. And I think a lot of people, some 53, 47, the MAPs favorable to Republicans. But we start going through the states of the Democrats recruiting who they want to hire against a freshman who they wanted in Alaska. You know, what's happened in North Carolina? Texas variable. It's like the last thing we need right now is more open seats. And I think you know, the situation waiting in Montana also is ruffled feathers too. So it this creates a lot more consternation the Senate as well. So I do want to stick with domestic policy, but I am going to mention a foreign policy adjacent headline that's crossing the Bloomberg terminal right now causing Boeing shares to jump more than three percent reportedly Boeing is closing in on one of the largest sales in its

29:24history of 500 aircraft order for seven 37 max jets to be unveiled when President Trump travels to Beijing. This is going to be a deal with China as we know that that trade deal right now is currently up in the air as we just saw the Supreme Court strike down some of President Trump's broad-based tariffs. So that's going to be a headline that we're tracking. That's a three percent. That's a big deal. You know, they were hoping the Biden administration was hoping for a deal like this coming out of COVID and never happened. Right. And it's raising questions to about leverage for President Trump going into this meeting after it was largely seen that he had been offset from the Supreme Court's ruling. So something that I'm sure we'll talk more about later this hour. But Mark, I do want to bring it back to this conversation. We can keep with the midterms and maybe this kind of threads into it. But I'm wondering if Senator Mullin's selection is more about style versus substance. Are we going to see it? You didn't think there's a lot of substance in the previous segment, right? No, no, no, no, no, no. More, more along the lines of a question. Are we actually going to see policy change here when we know Democrats are demanding some changes when it comes to DHS? And maybe they're just needed to be a different type of

30:26messenger amid what had been bipartisan push back to the last DHS Secretary. Well, Senators like their own. And so unlike his name, doubt the Senate will confirm Mark, Wayne Mullin. So that's a plus as far as who the replacement pick is. But again, I think that the policy is not going to change. The policy is still being driven by the White House and by Stephen Miller on Homeland Security issues. And so, yes, you might have a different face for them, but you're not really going to have a change in the policies. But I really think this is at this time when we're at worth Iran, it's a real opportunity for Republicans to be pushing the fact that Democrats are refusing to fund Homeland Security when you know their sleeper cells in this country. And instead, there's so much chaos that you're actually not allowed to get on offense and prosecute the case against Democrats are not funding it. Instead, you're sitting here having news interviews every day about the chaos with the outgoing secretary and what are the chances for the new secretary. And so really, Republicans are really missing an opportunity here politically to be scoring points about Democrats keeping DHS shut down. Speak to us about the significance of this change. You saw a lot

31:27of cabinet secretaries come and go in the first term. The president has been very careful to not give anyone the opportunity to use the word fired. And I think a number of folks reached for that line of first to be fired. Well, then there was Michael Walls, but he didn't get fired either. Do we just reassign people now? You sent them to another parish in this second term? I think that there's probably been too much sensitivity to that. And yes, I think I'm not offering a vote of confidence when you're having a constant turnover. But frankly, I think Americans sent Donald Trump in part because of the role he played on apprentice. Apart, they wanted somebody to go to Washington DC and fire them all and basically take a wrecking ball to Washington DC. And so how much I really hurt him, I don't know. And I've questioned a lot of this picks in the second administration. And I think probably would have benefited from replacing some of them sooner. Wow. We did promise that we would ask you about foreign policy. And you already brought it up in some ways too. There's reporting that congressional Republicans are bracing for this White House to

32:27ask them for a supplemental funding request for the Pentagon to help bolster our own defenses as the Iran campaign continues. I'm wondering if you have any sense of how much money we're potentially talking about here and what the appetite right now is on Capitol Hill, but the pressure to make sure that we are adequately funding as the military operation continues. I would imagine you see a pretty large ask. And I think the reality is that in the time of war, that those are generally approved by Congress. And it's precise if you're voting against our troops if you're opposed to it. And the reality is that I think that truly this is a transformation opportunity for President Trump. I applaud his decisions. I think after 47 years of all the attacks, whether it's our embassy or whether the tax in Beirut or funding Hamas and Hezbollah, the fact that Iran for 47 years has been prosecuting a war against the West and demanding death to American death to Israel, it's about time that we actually had this action. So I applaud him for it.

33:28But Tyler, I think the concern that I would have if I'm in Congress elected Republican is that I think the President lowering energy prices for the first 15 months massed a lot of his trade policy implications. Now that you have energy prices spiking, I think you can see the real downside of these tariff policies and you see inflation coming back as you're heading into the midterms. And so I think it's applaud the foreign policy move, but I think they're really significant implications ahead in the midterms as you continue to see inflation like this. You would have been walking over this supplemental request right in the old days as the head of Fletcher Affairs in the White House. Democrats are going to say, whoa, I thought we had the first trillion dollar budget in history for the Pentagon. And it just went up by 50 percent. Why do we need more? Well, you know, the reality is that our deficits are so far out of control that actually we're now at 3 percent of GDP is being is going toward defense spending, which is the lowest has been since World War II. So we've actually been underfunded. So this is about catching up. I think it is. Now, and now to be fair, there are plenty of people inside this administration who argued for more cuts initially to the Pentagon. That's right. But I think it was wrong.

34:30But I think we have an underfunding and it's so, but I think at times, I think typically when you're going to see something like this, as you'll see other stuff put in the bill, because because again, there's a notion that Congress is not going to vote against on its perceived as going against our troops when there were. And so you can attach a lot of things to a bill like that. Yes, the memories whether that's from coming from the White House where it's playing from Congress. Understood. They'll either see the both of you want some Democrats on board. Yes, they'll see this thing for decoration. Yes, let me jump on board. Thank you, Mark. All right, Mark. Sure. Former Chief of Staff Device President Mike Pence and former White House Director of Ledge Affairs. I'll echo Joe. It's always nice to see you. In person, we want to continue this conversation and bring in Christina Rufini. Bloomberg this weekend co-host. She always has one eye on geopolitics. So Christina, the big news today, President Trump calling for unconditional surrender, but then also nodding at the fact that the US wants to have a say when it comes to the next leader of Iran. Can you just give us the latest? What do we know about the administrations thinking here when President Trump said earlier this week that a lot

35:31of the contenders they've been eyeing have been killed in the air strikes? I think that's a pretty startling admission. I'm not sure that was something. Most people would recommend you say out loud. But I also think it's very the odds are slim that the United States is going to have a real say into who the next leader of Iran is, right? This is a very entrenched regime that has been there since the revolution. They do still have some support on the ground. And there are layers and layers and layers of these loyalists, all of whom have going to be and will be vying for this top spot. It also, the US found this out the hard way when they put who they wanted in charge of Iran. And then there was this thing called the Iranian Revolution. And that's how we got the guys we had until very recently. So there is a longstanding issue with puppet governments, especially in the region, especially in Iran. And if the US is looking for a more durable solution and a more US friendly solution, people in Iran do not like this regime. People in Iran, the average person is, I've talked to some Iranian friends, are grateful that the Ayatollah is gone, but they also

36:35don't want to be a puppet state of the United States. And finding something in the middle there is probably the best solution now, whether or not that's going to happen. I think there's no way we can tell at this point. Christina, US intelligence seeing no signs of uprisings or defections as we approach the one week mark here. What does that tell you? Is that a sign of stability in what's left of the regime or the fact that as we just established, we've taken so many people off the board? I think it's that. I think it's a couple of things. It's also fear. People are hunkering down. I mean, I talked to a woman who said she doesn't even know where her family is. Because last time they bombed, they left Tehran and went out into the mountains to try to be safe. People are not home. People are not organized. People can't communicate. It's really hard to organize a protest against the repressive regime. If you can't even talk to one another, what's up? These messaging signals have been shut down for the most part by the regime. And it's also the IRGC, it has been significantly degraded by the United States and by Israel. But it does still exist.

37:36You know, the president openly offered amnesty to IRGC members, to people who would defect and and be willing to come into the fold. And to your point, we haven't seen a lot of that. I think the president was trying to export the Venezuela model here. These are very different countries with very different political systems. And it may not go as quickly as he had hoped. Well, I'll tell you something. It's it's a pretty good situation when one of the best analysts you have on this also is hosting her own program. And that's Miss Rufini along with David Gurr. It's Bloomberg this week. And we just started a week ago. Tomorrow morning at 7 AM, you'll have the very latest on this. And I'll remind you that it was Miss Rufini who walked you through the initial stages of these strikes one week ago, minus one day. Rufini and Gurr are only on Bloomberg. Thank you, Christina. I'm Joe Matthew alongside Tyler Kendall. We're live in Washington. Stay with us on Balance of Power. We'll have much more coming up after this. So there's a lot of noise about AI, but times too tight for more promises.

38:39So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smart to business. IBM. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5 PM Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa played Bloomberg 1130. We want to dive deeper into the economy because today, of course, we got the jobs report. US employers unexpectedly cut jobs last month and the unemployment rate rose to discuss. We're joined now by Liz Pancati. She's the managing director of policy and advocacy at the ground work collaborative. Liz, it's good to see you.

39:41The figures today seem to be calling into question whether or not the labor market is actually steadying our own analysts at Bloomberg economics, right? That the decline was partly due to a combination of temporary disruptions. I'm wondering if you can take us through this and what you're gleaning from the data we got today. Yes. So this morning, the labor department reported that jobs were down about $100,000. $100,000. $100,000 jobs last month. That cut was primarily driven by a temporary work stoppage of some doctors and physicians. A couple of healthcare strengths going on last month. The issue with that is that over the last year, the only sector driving the vast majority of job growth has been the healthcare one. And so the precarity of that was really shown over the past month that a temporary strike of really not that many workers in the grand scheme of things was able to tip our labor market into the negative. We saw declines and transportation and warehousing and manufacturing and construction across the board. Things are really clearing up that the picture in the labor market is not good. So what was the weather?

40:44We're actually hearing that that was part of the blame is the weather obviously being sort of cute here. So take the weather and we were we had what snowcreat and everybody was locked in their house for a couple of weeks. Remove the storm, remove the strikes. What would this number look like? You know, I think what we have seen is really a stagnating labor market. But I will note that you know, the labor department revised down the December number considerably such that that went into the negative. The January revision wasn't as extreme, but I think if you look at the kind of three months, six month picture, that's a little less noisy. We are seeing at best stagnation and it worse a tip into the red that is here to stay. So we did hear from the administration on these numbers earlier today. The NEC, a director, Kevin Hasid, joined Bloomberg television and radio with Jonathan Farrow earlier. And he said at this point, the administration isn't concerned by the data. Let's take a listen and get your reaction on the other side. But on net, it's almost like a wash number. There's a new procedure birth death model at the BLS, which we believe is going to make the number more volatile. And so I think more and more we're going to have to average through

41:46the months. And remember, we had a really surprisingly positive number last month. And I think if you average the two, then it's about at the rate of job growth that's consistent with the three or four percent GDP growth. So is this more a math problem when you're hearing the NEC director that are talking about maybe some of the broader contexts that we should be taking into account? In my opinion, no. If you take the last three months of job growth and you average them, you get about zero. And so I'm not sure that's what you're looking for. And an overroaring economy is job growth of zero. We also saw pretty concerning ticks down based on some population adjustments to labor force, labor force participation rate and to the employment population ratio that I'm keeping an eye on over the next few months to see if those are sustained. But reports from this morning are that we wiped out about four years of gains in both of those, which from a broader picture perspective is really not great. We age growth is slowing. And as we know, looking at prices,

42:47we saw a big beat on PCE the week before last. And as the Fed heads into meetings here in the next couple of weeks, they are looking at rising prices, oil above 90 this morning, commodity pressures, given the war on Iran, plus a real big bust this morning on jobs. It's not a great picture. Well, that's what I wanted to add. So what the heck do you do if you're the Fed here? You look over the course of a year, zero job growth. And what else is new today is $90 a barrel oil? Yeah, it's not just oil. I mean, the number of commodities that come through the straight of our moves. You've got fertilizer, which has already been affected over the last year by President Trump's tariffs. You got rare earth minerals affecting clean energy and other imports. I just think that commodity picture is really likely to show more of what we saw in PCE. How about $4 a gallon gas? We talked to Tom Closer earlier from Gulf. He made that prediction. I mean, that could be on our tour step any minute. I think what we saw out of Centcom yesterday is that they're expecting this war will not end until September at the earliest. Jet fuel is up massively. I mean, summer airfare is going to be a problem. And so we'll

43:51prices at the pump. Well, to that point, we're not at $4 yet. The AAA this morning, saying the national average is at about $3.32 a gallon. How does this impact the broader consumer spending picture when you have Americans paying more for their everyday essentials or does a lot of that have to depend on the timeline, just how long they will be willing to pay for those things that they need to get along in their lives? We have seen over the past year, we're about a year out from Liberation Day and those tariffs that have ticked on and ticked off obviously with the Supreme Court IEPA ruling last, or the week before last, and then President Trump imposing section 122 tariffs at 10 and now at 15% according to Treasury Secretary Besant. Those that pass through takes about six to nine months, just given what's on the shelves and when it hits. These other supply shocks driven by the war in Iran and these commodity prices, those will show up considerably faster. And now consumers are going to be really taking it from both sides and they were already

44:52struggling to say above board with what we were seeing with the tariff picture. So I'm really worried about pressures, especially on those lower and middle income consumers. Are you, Liz at groundwork, are you factoring in or is it even possible to quantify the impact of AI? Is there a chance that we look back at this last year and say, oh wow, it's very obvious what happened? AI changed the job market permanently and brought efficiencies that we never could have forecasted. You know, I think we're seeing some evidence of some productivity gains in some concentrated sectors, but across the board, we are not seeing that bear out. You know, I've seen the estimates from Goldman and Brookings and from others. I think what we are what we are looking at it at groundwork is, are we seeing job quality declines? We are really not seeing differences in hours or in pay show up in the job market yet. We are seeing in some of those earlier career workers, less hiring in those industries that drive young adult labor market outcomes, but so far we're not seeing a ton in AI productivity gains. What I will say is that a lot of companies are using AI-enabled pricing techniques, which

45:55are actually allowing them to grow margins and grow productivity in by way of increasing prices, and that of course will trickle down to consumers in unfortunate ways. So I'm not sure we've seen an entire redo of our economy yet to be determined, I think, but from my perspective, we are not seeing evidence of that, and that is not driving what we're seeing in the picture of economic growth or the labor market. In the final minute, we have you. I wanted to go back to tariff since you did mention it, and we hear the administration talk a lot about how tariff revenue is an offset to those tax cuts in the one big beautiful bill, and we didn't get to it today on the program, but there is this murmuring that we could see a reconciliation package 2.0. I'm wondering what you're gaming out here when it comes to the fiscal health and the balance sheet of the country. If we've seen the Supreme Court strike down those broad-based tariffs, but the administration still using other authorities? Yeah, that Section 122 Authority can be in place for about six months, and so we'll see that play out here over the next six months. There are obviously other

46:56authorities. The administration has announced a number of Section 301 investigations, which just take time to play out, and you could see Congress kind of reassert their role in trade and tariff policy. I haven't seen appetite for that on Capitol Hill in my conversations on either side of the aisle, so I wouldn't hold our breath for that reconciliation package, but from the administrative authorities that the president has, he seems to have no, he's not holding back on using those, so I think it'll be mostly driven by those actions. We only have about 30 seconds, Liz. Could we be in the second half of the year talking about the benefits of massive tax returns that the president has been predicting? Not in my opinion, but I think really I'm not sure if folks will have their tax returns by the end of the year given the cuts to the IRS. I mean, there are really slowing down customer service and processing returns over there. It's great to have you back. Liz Pencotti, it's been too long. Groundwork collaborative. Many thanks for your insights as always, Liz, and being part of our conversation.

47:58Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already an Apple Spotify or wherever you get your podcasts. And you can find us live every week day from Washington, D.C. at NewtimeEastern at Bloomberg.com. Bloomberg Daybreak is your best way to get informed first thing in the morning right in your podcast feed. Hi, I'm Karen Moscow. And I'm Nathan Hager. Each morning we're up early putting together the latest episode of Bloomberg Daybreak US Edition. It's your daily 15-minute podcast on the latest and global news, politics, and international relations. Listen to the Bloomberg Daybreak US edition podcast each morning for the stories that matter with the context you need. Find us on Apple, Spotify, or anywhere you listen.