This is Balance of Power live from
Washington DC.
From Bloomberg's Washington DC studios
to our TV and radio audiences worldwide.
Welcome to Balance of Power. I'm Joe
Matthew. Tonight, an emergency hearing
with tough questions, but no ruling.
After more than two hours of questions
and statements, the federal court
hearing on Federal Reserve Governor Lisa
Cook's expulsion ends without decision.
The major takeaways today after Cook
sought to block the president's firing
and what we can expect in the coming
days as attorneys for both sides dig in
their heels. We'll have fresh reaction
to the story when former chair of the
Council of Economic Advisors Jared
Bernstein joins us. Plus, after almost
90 years, the tariff-free treatment of
dimminimous merchandise comes to an end.
what that means for US consumers now
facing the prospect of higher prices and
a longer wait for their orders as we
dive into the details of the latest
consumer sentiment data out today and
developments in the war in Ukraine as
the UN security council convenes under
an emergency session following another
Russian attack on Keev. We'll speak with
Ukraine's economic minister about the
conflict, a potential peace deal, and
how the country is already looking to
rebuild. But we begin this evening with
developing news from here in Washington
after attorneys for the president and
Federal Reserve Governor Lisa Cook went
head-to-head arguing before a federal
judge for two hours on the president's
decision to terminate Cook as a member
of the Fed board. Bloomberg's Tyler
Kendall was staked out at the federal
courthouse all day files this report
with the details.
Well, Joe, the hearing lasted about two
hours and we saw the judge push both
sides with her questioning, but it ended
with no ruling. Now, today was really
about Lisa Cook seeking what's known as
a temporary restraining order, a TTRO
that would essentially reinstate her
into her position as the broader issue
around her firing plays out in the court
system. And a broader issue it is. This
is a historic legal battle that we are
gearing up for as President Trump
becomes the first president in US
history to move to fire a Federal
Reserve governor. And while this hearing
wasn't about that broader issue, we did
get key insights into the arguments on
both sides. Cook is suing President
Trump alleging he violated a federal
law, the Federal Reserve Act, which
protects Fed officials from being fired
without cause. Now, the administration
argued in court today there is
sufficient cause, citing these
allegations of mortgage fraud and
arguing the courts should defer to the
president to define the standard. No
charges have been filed against Cook. In
court documents, Cook's lawyers said the
allegations were not true, but if there
were discrepancies in her mortgage
applications, it might be due to
clerical errors, saying that Cook did
not intend to deceive anyone. Cook's
legal team also points out that these
allegations have nothing to do with her
time as a Federal Reserve governor. The
mortgage applications in question are
from 2021, and Cook wasn't appointed
until 2022. Now, Joe, another big
question in this case has to do with the
idea of due process, which Cook's
lawyers say she was not given. However,
we heard the administration push back on
that, saying that she did get adequate
time to respond to the allegations
between President Trump posting for her
to resign on Truth Social and then
posting her termination.
>> Okay, Tyler, thank you. Our thanks to
Bloomberg's Tyler Kendall at the
courthouse. For more on the impact of
today's hearing as we understand it,
Bloomberg's Michael McKe, who joins us
from world headquarters in New York.
Michael's been at it since before dawn,
much like Tyler. I'm just curious if we
even know the the employment status of
Governor Cook. Michael, does she need to
stay away from the office until the
court rules?
>> Well, nobody has made that absolutely
clear. There are reports that she can go
in and she has kept her electronics. But
in court today, neither side insisted
that she wouldn't be able to walk out
the door and not be a Fed governor
anymore. There was much talk about uh
the propriety of giving the TTRO that
Tyler was talking about or whether they
should move to an injunction or whether
they could agree at least until next
week when the judge could rule that the
status quo will be preserved. And that
was the way it seemed to be left.
>> Well, if we can't answer these basic
questions, Michael, what does it mean
for the credibility of the Fed in the
meantime? How are the markets looking at
this?
>> Well, the markets were down today. It's
hard to separate that out from earnings,
Nvidia, that sort of thing. But it may
be that they're starting to show some
signs of concern over what might happen
to the Fed. But really, uh, the markets
have this week shown no inclination to
believe that Trump is going to win this
case. One would think they might panic,
might go down significantly if they
thought that the Fed's decisions were
going to be politicized, but for right
now, uh, they seem to be relatively
sanguin about it. And we are a long way
from a final decision. As Tyler pointed
out, this was just a hearing on whether
or not she could temporarily keep her
job while the legal case is argued. And
this is a case that's probably on the
merits going to go all the way to the
Supreme Court.
>> That is the idea. In the meantime,
Steven Meyer is preparing for his
confirmation hearing next week before
the Senate Finance Committee. Michael,
how will this whole affair inform his
dialogue with lawmakers?
>> Well, I would imagine that it's not
going to matter a whole lot to his
confirmation hearing in the sense that
he would say to questioners that he is
the chairman of the Council of Economic
Advisors right now. He has nothing to do
with the Fed yet and he didn't have
anything to do with president's decision
to get rid of Lisa Cook. So, he wouldn't
want to answer any questions about that.
However, I would expect that he would
say independent Fed is important. Now,
the definition of an independent Fed
might differ between he and others. And
then, of course, the Democrats will ask
him about some of the positions he's
taken in the past, including his paper
last year, which suggested that state
governors should appoint the boards of
directors of regional Fed banks, and
then they would be able to control who
those directors chose as presidents of
those regional Fed banks. So that would
politicize the Fed and that would be
something of a red flag for Democrats
although they don't have the votes to
stop his nomination.
>> Michael, thank you. Bloomberg's Michael
McKe live from world headquarters in New
York for more on the legal implications
of today's hearing, the Cook matter, as
well as the spate of firings that we've
seen on agencies like the CDC, the
Surface Transportation Board as well. We
turn now to David Super, professor at
Georgetown Law. Professor Super, welcome
to Bloomberg TV and Radio. It's great to
see you. As Michael McKe mentioned, and
many seem to assume, this Lisa Cook
matter is going to end in the Supreme
Court, but there was something called
Trump versus Wilcox that we thought gave
us a pretty good idea of where the court
would land on this. What do you think?
>> Um, the court is clearly very
uncomfortable with a politicized Fed.
Uh, the court's presidents say that
Congress can insulate specialized
economic agencies from presidential
firings. Um the Supreme Court in the
Willox case made pretty clear that they
don't agree with that precedent. But
they also indicated that the Fed was
different and the court now is going to
have to decide whether they meant it and
they are going to prevent the president
from taking full control of the Fed or
whether they're going to go all the way
down the road with a unified executive.
>> Who will define cause in this case? that
was argued uh for the better part of two
hours. The president says there is
cause. Peter Navaro sat in this chair
the other night saying that she had 5
days to respond. We didn't hear from her
and the documents speak for themselves.
>> Well, I don't think due process by Truth
Social is quite what the founders had in
mind when they wrote the Constitution.
Uh if they think she did something
wrong, the standard approach is to bring
charges against her. Yes. make specific
charges, say what the documents uh you
think in in them is inappropriate and
let her respond to that. Uh that that
she's not engaging in a social media
battle, I think, speaks well of her and
her trying to stay out of politics.
>> So what the president is actually asking
for is the ability to fire without
cause.
>> That's what he's asking for and he has
that according to the Supreme Court with
most other agencies. But the evidence
that politicized central banks hurt
count's economies around the world is
pretty compelling and I don't think the
Supreme Court wants to take
responsibility for that.
>> Let's look at a slightly bigger picture
here because it's more than the Fed
we're talking about. Of course, David,
on the early edition of Balance of Power
today, I spoke with Natasha Serin,
president and co-founder of the Yale
Budget Lab and had some things to say
about the bigger risks surrounding this
focus, specifically on Governor Lisa
Cook. Listen.
It's such a bigger issue than anything
about Lisa Cook or anything about
mortgages in that you're in a situation
where one of the fundamental
institutions and sort of causes of
American economic strength is the fact
that we have an independent central
bank. What you're seeing here play out
is really a sort of potentially quite
damaging conversation around whether
that type of institution should actually
be free from political influence.
>> Cook's lawsuit, David, characterizes
this move as unprecedented and illegal.
The first one is true. Apparently, a
president has never fired a Federal
Reserve governor. What about the second?
>> Uh, I think it is illegal. The Supreme
Court has made pretty clear the
president doesn't have this power with
respect to the Federal Reserve. Their
precedents say that and I don't think
that this is going to be allowed.
>> So this goes to the Supreme Court. Is
that
>> conventional wisdom? Absolutely.
>> Something that you accept.
>> Uh absolutely. Uh the administration
would not accept an answer from any
lower court. And I think the
administration here is hoping that the
Supreme Court will back down. They've
warned the administration not to fire
fed governors. The administration is
ignoring them and they're hoping the
Supreme Court will buckle.
>> When you look at the big picture here,
add the CDC, add BLS, uh the
Transportation Board, what is President
Trump doing to government and these
independent agencies as he tries to
reshape Washington in his image?
>> Well, he doesn't believe in independent
agencies. He believes that all power and
all responsibility should go to the
president. He and Vice President Vance
are the only ones that were elected and
he wants complete control. That's not
the way we've done things in this
country for a very long time, but he
thinks we need to make a change.
>> Got it. Many, thanks for being with us
today as we figure this out. It's going
to take some time. Uh, and I'll I'll ask
you lastly what you think for timeline
because this is a Supreme Court that
could be motivated to move pretty
quickly here.
>> I think the Supreme Court's going to
move very quickly on this because of the
danger of economic uncertainty. months.
>> Um, several weeks, but no more.
>> Got it. There you have it from David
Super, professor Georgetown Law. We
thank you for coming over, David. It's
good to see you on Balance of Power.
Coming up, German Chancellor MS and
French President Mcronone pushing for
secondary sanctions on Russian backers.
We'll discuss the impact on the war in
Ukraine with Ukraine's economy minister
coming up. But first, consumer sentiment
declining to a three-month low due to
worries about tariffs among other
things. will discuss the larger
implications of the economy with Jared
Bernstein, the former chair of the White
House Council of Economic Adviserss.
He'll be with us next on Balance of
Power on Bloomberg TV and Radio.
[Music]
There's still considerable uncertainty
about how much more and how quickly
tariffs will pass through to consumer
prices. I have seen estimates that vary
wildly in the share of tariffs borne by
exporters, importers and consumers. And
that tells me that one must be very
careful not to presume that some will
bear a lot more than others. Most
forecast are for 12-month inflation to
continue to increase for a couple more
months with monthly tariff effects
dissipating by early 2026.
>> This is Balance of Power on Bloomberg TV
and radio. I'm Joe Matthew in
Washington. That was Fed Governor
Christopher Waller last night speaking
at an event hosted by the Economic Club
of Miami talking about what he expects
to see with inflation and tariffs. This
says today's consumer spending data
showed resilience even as many
economists do anticipate higher prices
in the coming months. Joining us to walk
through some of the data, talk about
this a little more, is Stuart Paul from
Bloomberg Economics. It's great to see
you, Stuart. We've talked so much about
anecdotal data versus hard data.
Yesterday, Caterpillar brought us the
latest anecdote, warning for a second
time about the impact of tariffs on its
business. Is it starting to show up?
What did you think of the PCE today? And
will it emerge in the hard data?
>> We're seeing exceptional price
sensitivity. That's really what today's
PCE personal spending data showed.
Consumers did spend more, yes, on goods,
things like autos, recreational
vehicles, uh, furniture, a lot of the
things that are heavily tariffed. But
this was also the month where there was
considerably slower pass through of
tariffs to consumers. So consumers are
really biting their time. They're
hunting online for bargains and when
they sniff out an opportunity to get
something on the cheap because tariff
pass through slowed just slightly,
they're chomping at the bit to do it.
Now, when we look at the consumer
sentiment data, we could see consumers
are still very tentative about spending.
Buying plans for household durables
weakened considerably. The same thing
for vehicles. So, we do see consumers
tightening their belts. They're being
very cautious in their spending. They're
pulling back in discretionary categories
where they can and they're going to uh
search out those bargains when they can
find them because they are feeling the
pinch of tariffs. That's evident in the
data at this point.
>> The dimminimous exemption ended this
morning, 12:01 a.m. Stuart, this impacts
anything that you're buying from abroad
worth less than $800. This used to be a
loophole or an exemption. It is no
longer. Other than fewer packages
landing on my front step, what does it
mean for consumers?
>> Relatively little. Um, I think the thing
that's that's most front of mind for me
is what it means for broader economic
activity. And we're already seeing firms
and consumers throttling their behavior
according to quickly evolving tariff
policy as we saw in the advanced trade
data just today. But also again for the
month of July uh when firms feel like
they can uh strike quickly and they feel
like they can get industrial supplies
for example or business equipment uh
during a window where tariff policy is
just slightly uh less restrictive.
they're doing it. Uh, fiddling around
the edges for minor exemptions and
eliminating exemptions for who knows how
long is going to, I think, do actually
relatively a little for the broader
macroeconomic landscape or for the
consumer's larger and longer trajectory.
>> Stuart, thank you as always. Stuart Paul
from Bloomberg Economics. I hope you
have a long weekend. Joining us right
now with his insights on today's
consumer data, tariffs, and what's
happening at the Federal Reserve is
Jared Bernstein, the former chair of the
White House Council of Economic
Adviserss in the Biden administration.
He's now senior fellow at the Center for
American Progress. It's always a
pleasure to see you and happy Friday,
Jared. Thanks for coming over. My
pleasure. Um, we've got a lot I want to
ask you about and I want to get to Lisa
Cook pretty quickly because that was the
big news of the day. This dimminimous uh
uh exemption is something that you
looked at and actually got rolling in
the Biden administration. Are you
worried about what it means for consumer
prices
>> at this juncture in time? I'm a little
bit worried because it will raise prices
and one thing we found is that the
incidence of the diminish dimminimous
rule falls largely on middle and lower
income households and they're the very
ones who disproportionately have imports
in their market basket. If you look at
who buys more imports as a share of
their income, it's folks in the bottom
half. And that's why the incidence of
this tax we call tariffs is really a
very uh regressive one. Uh it hits
middle and lower income people. That
said, I considered it a loophole and I
think loopholes should generally be
closed.
>> Fascinating. Well, I guess it's over
now. And I wonder what your thoughts
were today when you saw this emergency
hearing uh scheduled and conducted. It
finished with no decision. You've got a
Federal Reserve governor going into this
long weekend of Labor Day wondering
what's going to happen to her job status
and a president who believes that she
should already be fired. How is this
going to end?
>> It's just a remarkable set of events and
the threat to the Federal Reserve is uh
higher than I've ever seen it in terms
of their independence. Putting aside uh
the pretext around uh the documents that
are in question here, there is a no one
should at all question that this is
anything more than a power grab by the
president to take over the uh interest
rate in particular machinations of the
Federal Reserve. And that just couldn't
be more dangerous. It's uh going to be
terrible for uh households and consumers
who are going to face higher inflation
and higher interest rates. But
internationally, uh, when, um, creditors
to the United States start to recognize
that there's been political interference
in this really, uh, here to for
protected institution, that's going to
end badly for us as well. So, very
serious problem.
>> When you were at the White House, uh,
which was not that long ago, you
wouldn't even answer questions when we
would ask you your thoughts on
surrounding the Fed. We tried every time
we talked to you. uh we're in a
different world now and I'm wondering to
the extent that you know these
individuals and have worked with the Fed
over the years what this means
internally the culture of the Fed it's
not just Lisa Cook it's the visit to the
Eckles building it's the demands that
Jay Powell stepped down the nickname too
late Powell there's been a denigration
at least
>> in terms of the rhetoric coming from
this administration what are they
talking about in the building
>> it's a really important question I I'm
not in the building but but I can tell
you that when I was when I was back in
the White House and interacting with the
Federal Reserve
That firewall between politics and
monetary policy was something that we
both deeply deeply respected both sides.
And the reason is because we know the
history of what occurs when central bank
independence is compromised. I mean I
could point you to 80% inflation at
Turkey when Erdogan got up to his funing
games there. Uh but it's been repeated
throughout history including our own
with Arthur Burns and Nixon. So it was
always very clear that that political
firewall was not a cultural thing. It
was an economic thing and the history
the history of federal indep federal
reserve independence central bank
independence is very very clear
particularly through the inflation
channel. You compromise fed federal
independence um and uh higher inflation
walks in uh very quickly.
>> There's there's independence of course
the market's concerned about that. Then
there's the matter of public trust. And
to come at this from the other way, if
if we find out, and I know you're not a
lawyer, I'm not going to try to make you
our legal analyst, but there's
apparently a third mortgage application
according to the administration, it's
not going to make her case any easier.
At what point does this become damaging
to a public wondering what these Federal
Reserve governors are doing?
>> I think we have to leave that uh to play
out in the courts. I take it's it's a
totally fair question. And look, we may
have to have two thoughts that we hold
in our head simultaneously. one is that
there were problems there and if that's
what the records show then they should
be uh worked out uh in in in court
accordingly and they should be treated
uh very much in keeping with the culture
of the Fed to be very pristine in this
area of financial oversight. The much
bigger issue is Trump trying to
compromise central bank independence,
trying to put his own people on the
board, trying to get a majority there in
time to perhaps act against regional Fed
presidents to take over the Fed in ways
that'll be massively damaging uh to not
just the US economy, but the global
economy. And that is a much bigger deal
than Lisa Cook's paperwork. Well, you
know, we've got a confirmation hearing
set for next week for Steven Myron, and
apparently he's going to be at this next
meeting in September, which is light
speeded. Yeah.
>> Uh around here, will she?
>> I I I really can't answer that. That's a
good that's that's a question for the
lawyers, and it's it's what they were
tangling with today. Look, one thing I
will say listening to the legal
discussion as a non-awyer is that none
of this sounds like it was for cause in
the type of fore cause that I believe
the drafters of the Federal Reserve Act
were thinking of the idea of malfeence
of uh of you know doing your job on
monetary policy badly. Um uh making
mistakes on your mortgage paperwork
intentional or otherwise. I'm not going
to trivial trivialize that. I'm not
going to speak to it. I don't know the
extent of the the problem there. That
all happened before she was on the Fed.
And the for cause uh to me sounds a lot
like what the for cause uh criteria
sounds a lot like what you were doing
when you were a Federal Reserve governor
and there she's been exemplary.
>> Interesting. Wow. So the uh the
expectation is that we get a quarter
point cut in September. You think it's
justified?
>> Uh at this point I do and that's because
of the job market. So I I actually ke uh
looked at the data the price data this
morning and thought it militated a bit
against that in the sense that um we
just have some really sticky
inflationary problems that just remain
in this economy and some of that's the
tariffs but we also saw uh inflationary
pressures in services in a way that's
pretty hard to connect to the tariffs.
So I I understand some I don't think a
rate cut in September is a slam dunk.
However, if it's true that the
underlying pace of job growth I in
payrolls is 35k a month, that's way too
low to keep the unemployment rate from
rising. And so, I would give that more
weight if I were thinking about
September at this point.
>> Okay, we only got about a minute left.
The president thinks we should cut by
150 to I believe 175 basis points. He
may have actually suggested 300 basis
points at at one point. If that actually
happened, what would be the impact not
on the market but on the economy?
I think you'd really see an unleashing
of inflation and I also think you'd see
uh uh just an absolute conclusion that
the president has taken over the Federal
Reserve.
>> Well, okay. Because the Fed would never
>> I mean that would be an alternate
universe to say.
>> It'd be an alternate the Fed would never
uh endorse a cut of that magnitude given
the conditions that we have now. So, it
would be in the near term it'd be pretty
destructive. And again, there's lots of
uh historical examples of inflation
going through the roof when uh
politicians take over. But the bigger
problem, the longer term problem would
be that would be just a sign. Surrender,
white flag, it's over. The president
took over.
>> Not that we're expecting this or
predicting it. Jared, really glad you
could come see us today. Jared
Bernstein, former chair of the White
House Council of Economic Advisors and
the Biden administration. He's now at
the Center for American Progress where
he is senior fellow. Coming up, my
conversation with the Ukrainian Minister
of the Economy following another round
of deadly Russian air strikes in Kev.
We'll bring you that conversation up
ahead. But first, Iowa Senator Joanie
Ernst is expected to announce she will
not seek re-election. We'll discuss with
our political panel next on Balance of
Power on Bloomberg TV and radio.
This is Balance of Power on Bloomberg TV
and Radio. I'm Joe Matthew. Thanks for
joining us. Much more on the
developments from Lisa Cook's emergency
hearing in federal court here in
Washington this morning coming up with
our political panel. But first, the
stories we're watching in today's Power
Brief. The TSA is on the verge of
changing some airport rules that have
been in place since 9/11 with
regulations around the removal of shoes.
Even the size of your shampoo, all
potentially changing soon after
officials signaled their intention to
ease regulations. It's unclear whether
these rule changes would apply to all
passengers and airports or if the TSA
would select a few to start, but the
news does not uh it does rather come on
the precipice of one of the busiest
travel weekends of the year as summer
winds down. Yes, it's Labor Day.
Starting Monday, former Vice President
Kla Harris will be without Secret
Service protection after President Trump
signed a memo ordering the termination
of Harris's detail. Typically,
protection for a former VP lasts 6
months after leaving office, but when
former President Joe Biden left office.
He extended Harris's protection until
June of 2026. Trump's memo reverses that
extension. Harris's Secret Service
protection was taken away just a few
weeks before she's set to begin a 15
city tour to promote her new memoir that
details her campaign against Trump. And
reports circulating now that Iowa
Senator Joanie Ernst will not seek
re-election in next year's midterms.
Republican has been floated as a
potential Trump cabinet member in the
past, so this may not be the end of her
political career. But Ernst has faced a
series of critical headlines the last
several months as she worked to support
President Trump's one big beautiful bill
leading to one marquee moment that may
have precipitated her decision. Remember
this.
>> People are not well. We all are going to
die.
[Applause]
heaven.
>> And just moments ago, we got word from a
US appeals court. This is breaking. The
court found the president's global
tariffs were found to be illegal. The
court finding Trump exceeded his
authority in imposing the tariffs,
upholding an earlier ruling by the Court
of International Trade that ruled Trump
wrongfully invoked an emergency law to
issue the tariffs. This is a major
development. At 5:30 p.m. Eastern time,
with us now to discuss that and more,
this evening's political panel.
Bloomberg politics contributors Rick
Davis, partner at Stone Court Capital, a
Republican strategist, alongside
Democratic analyst Jeannie Shanzeno.
Democracy visiting fellow at Harvard's
Kennedy School's Ash Center. Rick,
Jeanie didn't know we'd be talking about
this, but that's the way it goes around
here. The tariffs are illegal. Does
Donald Trump care?
>> Uh, I think Donald Trump will care. I
mean, abide by the courts. He he likes
to show force, right? And the emergency
powers gave him that. But he does have
other mechanisms to uh implement some
portion of those tariffs. He might not
be able to do all of them with every
country that he had under a tariff
regime. Yes.
>> But programs like, you know, section 301
and others give him the ability alone,
you know, the power uh of the executive
branch to implement some of those
tariffs. There'll probably be a, you
know, new regime put into place while
they appeal this decision.
>> Fair enough. So over the weekend, Jeie,
uh, these tariffs may be lift, but but
in the coming hours, the administration
finds an alternative, a different
argument because it's the emergency that
the court is ruling on here.
>> That That's right. And and that was
always suspect. you know, reading the
statute, it was very very hard to
imagine that the court would that
support a declaration of an emergency.
Um, you know, he talked about an
emergency for things like the federal de
the trade deficit for instance, but yet
that has been going on for decades and
decades hardly constituting an
emergency. So, it was always an uphill
battle for the administration. They will
certainly appeal and of course this is
part of what the administration's going
to have to contend with and consumers
and businesses around the world,
countries around the world, this
uncertainty as it pertains to tariffs.
This is what the president took on when
he announced this regime and we'll have
to see what the courts say as this moves
forward.
>> So Jeannie points us back to uncertainty
and that's really what this represents,
right? even if the president finds
another way to implement these very same
levels of tariffs against countries. We
go into a long weekend now with
investors wondering what the heck's
going to happen next week.
>> Well, but that's what these tariffs have
been like since the day he started the
tariff regime, right? I mean, like
nobody has really known how long these
tariffs would last. We've had delay
after delay. We've had changes in tariff
rates.
>> So, this is just more the same, you
know, with this this tariff program. And
you you really other than the period of
time uh when Donald Trump issued the
reciprocal tariffs that were really
punitive and the market, you know, sort
of showed him their displeasure. Yeah.
You really haven't seen much of a market
reaction since then.
>> Well, this is true, Genie. I wonder what
the reaction is with our trading
partners. Why would Xihinping cut a deal
with the United States if the court just
did his work for him?
>> That's absolutely right. and and you
look at both uh our competitors like
China, our allies, all of whom have been
impacted by this. There's very little
incentive now to strike a deal with the
court decision. And you know my friend
Rick Davis, he loves to talk about the
consu consumer sentiment and that came
out and one thing we learned was that
consumers are very very concerned about
the impact of these tariffs much more so
than you know you look at some of the
other things that Donald Trump has been
doing in the last few months or first
eight months of his administration.
These tariffs they are deadly afraid
that they're going to impact inflation
and that they're going to impact
employment. So these have had enormous
repercussions around the world right
here at home and nobody to your point
now Xihinping in particular has a reason
to deal until this is resolved.
>> Headline on consumer sentiment and that
by the way is your preferred index Rick
Davis your preferred political index
I'll add sliding in August as Americans
express heightened concerns about high
prices. How long can this go on for
before we actually see it in the data?
Well, we're down below 60 uh on the uh
Michigan consumer sentiment index, and
that's pretty low. Okay. Uh and and it
doesn't surprise me that you now see
polling data also showing that
presidential approval rating starting to
dip. Uh the consumer sentiment index is
a precursor to political popularity. And
I would say this has got to be alarming
to the White House uh in advance of the
midterm elections.
>> Boy, that's uh got to be true, Jeanie.
Um, you connect the dots on this pretty
easily here. And if the president's
tariff regime is overturned in court, if
the tariffs go away, do consumers
respond in the other direction? Because
we've been talking about fear and
uncertainty all year. At what point does
this become definitive?
>> Yeah, I mean, it depends on what the
president does next. Does he use some of
those other options that Rick was
talking about to pursue the same tariff
regime? Does he pull back? hard to
believe he does because as we've talked
about, he's been committed to tariffs
almost his entire adult and certainly
political life. But this is overall, I
believe, very good news because the
tariff regime was being put in place for
reasons that were never clarified by the
White House and they were against not
just our competitors, but our allies and
the impacts have been tremendous, not to
mention the uncertainty. So, I think the
courts are doing Donald Trump a favor. I
doubt the White House is going to see it
that way.
>> You've made that point before uh when
the courts have challenged him, Jeanie.
And in this case, again, this is an
appeals court upholding a ruling by the
Court of International Trade. Does this
go to the Supreme Court like everything
else?
>> Oh, I don't think the president will
even bat an eye to elevate this to a
Supreme Court that has really handed him
success after success in appeals that
he's made to the high court. So, uh,
absolutely. I don't think they're going
to waste a minute to have the Department
of Justice appeal this to the highest
court in the land.
>> Would Republicans maybe take this up to
cottify the president's tariffs and
legislation? That would change the
picture here too when they come back.
>> Well, again, I mean, you know, there
already is uh a set of uh rules in place
in the executive branch that he has
options to be able to exert pretty much
uh uh the basic tariffs of 15% across
the board would be something he could
probably put in place uh alone. So
whether or not he needs additional uh
support, I would say there are a lot of
Republicans who've been pretty grumpy
about this tariff regime. I mean, even
though Jeanie points out accurately that
Donald Trump likes it, there are a lot
of Republicans who are not fans of the
tariffs.
>> And maybe, like you say, Jeie, the
court's done a favor for him. But if
Donald Trump brings this to the Supreme
Court, he could have a more favorable
bench, right? How does this end?
>> He absolutely could. He certainly has
the majority on the court. Although I
have very much difficulty understanding
how they could take what he has said is
the emergency and say that it is truly
an emergency. A trade deficit going on
for 50 years is not an emergency. So you
look at all of his public statements
once again can work against him. Had he
had an emergency to point to to justify
this, it may be different. But I think
even a very conservative Supreme Court
is going to have trouble overturning
these appellet court this appellet court
decision.
>> It's interesting. This comes just hours
after the dimminimous uh exemption ended
here. So people are potentially going to
be feeling although even Jared Bernstein
himself thought that that was a loophole
that should be closed here. Uh I don't
know that people who are waiting for
their packages from Sheen are going to
see it that way though. Are they?
>> Yeah. No, I think they're going to, you
know, be expecting the worst and they've
gotten it already. So, I don't think
there's an appeal within the process
that anybody's going to think is going
to matter to them. And so, I think
certainly those people who have been
under these regimes are going to be
feeling like let's just wait, see what
this comes out. I mean, uh, Jeanie's
right. I don't think anybody's going to
come to the table and say, hey, let's
renegotiate right now.
>> Sure.
>> Uh, because, uh, they want to see
whether or not the president even has
this authority going forward.
>> So, Jeie, trade talks are on ice then,
right?
>> They are. I mean I mean you can't
imagine who would be going to the table
to talk until some of this is resolved.
And again this is in our national
interest that this is on ICE and
hopefully in my view the Supreme Court
keeps it that way if this case does get
there. Limited targeted tariffs make
sense in certain situations. Blanket
tariffs against our allies when we are
supposed to be confronting and competing
with China make very little sense. And
let's just look at what Xihinping is
hosting with North Korea, with Russia.
As we go into next week, we have a
competition on our hands. This regime,
as much as the president likes to talk
about tariffs, doesn't benefit us when
it comes to our long-term national
security interests.
>> Well, we'll find out where we're going
on this one, and it might take some time
here. We've got another potential
Supreme Court case on our hands, but
we'll go through it with the help of
Rick Davis and Jeannie Shanzeno. Thank
you both so much for being with us here
in a great panel. I hope you both have a
long weekend. Coming up, my conversation
with the Ukrainian Minister of the
Economy and what he hopes is next for
the war in Ukraine. We'll have that
conversation next on Balance of Power on
Bloomberg TV and Radio.
and radio. I'm Joe Matthew. Back in New
York, the UN Security Council just a
short time ago convened an emergency
meeting following a missile strike on
Keev that took place this week.
According to Ukraine officials, at least
18 people were killed, another 48
injured after Russia fired missiles into
the capital. We're showing you images of
that now on Bloomberg TV and on YouTube.
Today's session coming two weeks after
Trump and Vladimir Putin met in Alaska
and just days after European leaders
went to the White House. Now, without a
ceasefire in hand, Germany and France
are calling for secondary sanctions
aimed at Russia, something President
Trump himself proposed at one time. I
spoke earlier today with Ukrainian
Economy Minister Alexi Solovv and asked
him about that UN Security Council
session as well meetings between
Ukrainian leaders that they had planned
today and officials from the Trump
administration. Let's listen.
>> We're here for uh for the launch
ceremony of the first ever Ukrainian
company to be listed on NASDAQ which is
KStar, our prime Ukrainian digital
operator. But at the same time uh the uh
the teams from the ministry of uh
foreign affairs are meeting and the
office of the president are meeting with
the uh Trump representatives to discuss
the next steps on peace negotiations.
>> Well, let's talk next steps. There are
reports today about a plan by the
European Commission to transfer some€200
billion euros in Russian assets to
rebuild Ukraine at the end of the war.
We're not even at the stage of a
ceasefire yet, Minister. Is it time
already to speak about rebuilding?
>> Uh we we always say that uh there's no
need to wait uh because like all the
processes that take time and even if
there are like uh investors that are
interested in Ukraine, it is uh very
wise right now to go to Ukraine to look
at the country to understand what's
actually happening on the ground to look
at the sectors. So for example uh back
to this KF star, it makes more money
right now than pre-invasion. So this is
the reality and not myth. So that's how
we need to look forward on uh and
understand what needs to be done and
design some instruments that going to
derisk some investments. Uh but it takes
time. So uh regarding Russian assets,
it's it has been our position of Ukraine
always that these assets will ultimately
be working in Ukraine and for Ukraine.
So this is just the next step in
discussion with the European Commission
on to how uh to uh actually use them and
deploy them. So right now they're just
used in uh overnight rates, right? And
with active management they they can
produce much more revenue that could
also be working right now for the
strengthening of Ukraine um fighting
Russian aggression.
You know, reports suggest that Vladimir
Zilinski is nowhere near reaching an
actual uh negotiating table with
Vladimir Putin. That talks have not been
scheduled and Putin has no intention of
scheduling them. Does that make it
difficult for you to talk about post-war
planning?
>> Well, we don't talk about postwar
planning. So, like the listing happens
now, right? So I I don't think that
anyone would have believed uh like a
couple of years ago if we were going to
saying that the first ever NASDAQ
listing of Ukrainian company is going to
be happen during the full-scale Russian
invasion but it is true. So this is the
nature of Ukrainian reality. The economy
is resilient, right? Uh but then uh on
the peace talks position, it has been
always positioned. We agree was what was
suggested by the President Trump that
there should be a ceasefire immediately.
We supported that. Then uh there was the
discussion with uh second uh oval office
meeting with European leaders that there
should be a uh bilateral or trilateral
meeting with uh President uh Putin and
we actually accepted that and uh it is
coming to the end this twoe period where
Russia should indicate that it actually
is ready to negotiate. Ukraine is always
ready as has been stressed by our
president multiple times. So, uh,
probably everyone sees right now that
it's Russia that's not ready to
negotiate and all the signals that they
sending is that they're not ready and
like Ukraine is ready to negotiate and
we're ready for peace and we're saying
to that there should be ceasefire
immediately. Uh, so this is the state
we're in. Uh, but also on the
battlefield you can see that the Russia
is not advancing. Um, it is kind of
barely gaining any ground. So it is
harder and harder for Russia to explain
its supporters. It's global south
countries. Why is it doing that? And uh
what for?
>> Well, tell me more then about this stock
listing at the NASDAQ today, Minister,
and how crucial private business will be
in Ukraine.
>> So, if you look at the rapid damage
disassessment uh done by the World Bank
uh with Ke School of Economics, it says
that the recovery needs for Ukraine will
be more than $500 billion. So, no way
public money going to fit this bill,
right? So uh we understand that the bulk
majority of the funding to recover
Ukraine and actually to grow the economy
and to do it even now will come from the
private sector. Uh which means that why
this listing right now is so important.
It's very important for us to access the
US investors and Ukraine has been uh one
of the prime countries to reach a major
deal with Trump administration the
minerals deal or the deal about US
Ukraine investment fund to actually get
more investments from US into Ukraine.
So um we we just say look at the results
and Ukraine has been progressing
steadily across the last couple of years
to attracting new investment and um
preparing for for reconstruction and uh
we see right now also through this
listing that the interest in the
investors uh during the uh opening
ceremony during the launch ceremony uh
was higher than we anticipated. So uh
people also maybe want to do a display
uh to have Ukrainian exposure and I
think this uh Kefar listing is is a
great tool to do that. But also uh look
at the fundamentals of this Kefar as a
digital operator, a big company that uh
um that servicing more than 23 million
Ukrainians. It just shows how big the
market are and how sometimes like the
margins of Keystar are really one of the
top in the world in this segment. So, it
shows that you can actually do a lot of
business in Ukraine.
>> You mentioned the minerals deal. Uh,
Minister, I'd love to hear a status
update. This was signed the beginning of
May uh and aimed to establish a joint
investment fund as well for the
reconstruction of Ukraine. How far along
are you in getting this off the ground
and when when will minerals start being
processed by Americans in Ukraine?
>> Yeah, so there are several tracks that
we are um developing in this fund. Next
week we're going to have the first ever
board meeting of the fund to actually
adopt a lot of the uh charters and the
documents needed to uh start operations
of the fund and we're also uh at the
same time we're uh doing um uh the
pipeline for the fund. So there's going
to be a big delegation from uh from US
coming to Ukraine in September to
actually do site visits uh to look for
the companies that could be uh serve as
the first several investments uh from
the fund and we uh also agree on the
volume of the seed capital of the fund
together with us. So the the fund is
progressing very nicely. The other big
thing that we're doing is we need to put
more licenses for auctions from Ukraine.
So uh companies from US or other parts
of the world that u can uh can mine
these minerals can access these licenses
and then the fund could invest in them.
So basically uh this week we announced a
decision from the cabinet of ministers
to put a big lithium deposit for uh for
competition and this is one of the areas
that we think would be interested for US
companies and for the fund to invest in
them.
I saw that lithium deposit, but you're
telling me that Ukraine will help to be
involved in that bidding process to help
select the American companies, not
exclusively the Trump administration.
>> I'm I'm saying that we're uh we
announced the competition and uh
competition is is free for uh based on
the uh terms of uh competition. It is
according to the processes that were
developed uh within the laws. And yeah,
we hope that US companies going to be
bidding and we do know that several of
them are very interested in this in
exploring and bidding for this lithium
deposit.
We'd love to talk to you more about that
when the time comes and when you know
more. Minister, we spent most of our
conversation talking about rebuilding
rebuilding Ukraine post war. Do you
believe that Vladimir Putin has any
intention, any interest in ending this
conflict?
Well,
should it actually matter like what what
we hear the President Trump is saying is
the peace through strength, right? So,
uh how how the development was before we
see that Russia's probably is not very
interested in in doing that. uh but then
there are some pressure points through
sanctions and there's uh law in the
parliament and we also see like how
sanctions actually work and we see that
Russia is afraid of uh President Trump
and Russia is a friend afraid of
secondary sanctions. So this is kind of
the final beat and the peace would come
through strength and then uh after the
peace comes we need to have a security
guarantees and as also President Trump
agreed during the last meeting uh of the
in the oval office that this should this
should not be peace for just one year or
10 years. It should be something long
and sustainable that the companies um
looking at us right now would be uh
ready to invest in Ukraine would believe
that this piece is actually sustainable.
So uh it only can come through strength
and through uh some guarantees and
guarantees could come uh in the means of
um boots on the ground and something
similar to NATO article 5 but also
Ukraine's EU integration which would
also kind of fix Ukraine's geopolitical
position. So this should be all
discussed during uh peace negotiations
in complex but we think that the um the
outcome of war would go as a piece
through strengths and then really uh
like practical um practical long-term uh
guarantees security guarantees that will
uh enforce this peace in Ukraine.
>> That was Alexi Soil of Ukraine's economy
minister talking with us today on
Bloomberg. And we want to leave you on
this Friday evening underlining one
major development that's taken place
since we came to air after a federal
appeals court issued an important ruling
that could have a big impact on the
president's tariff plans. The court
finding President Trump exceeded his
authority in imposing the tariffs.
Upholding an earlier ruling by the Court
of International Trade that said Trump
issue the tariffs. The president's
tariff regime, to be clear, can continue
as this case proceeds. Meanwhile,
Bloomberg News out with some important
reporting this evening as well that
coincides. The administration today
filed statements by Treasury Secretary
Scott Bessant, Commerce Secretary Howard
Lutnik, and Secretary of State Marco
Rubio together urging the court to put
any ruling against the administration on
hold until the Supreme Court issues a
final decision. Secretary Lutnik says
failing to do so would have devastating
and dire consequences. Besset warning of
a dangerous diplomatic embarrassment.
Those are direct quotes. We'll keep tabs
on this and you can read more about it
in the Washington edition newsletter on
the terminal and online. Thank you for
joining us. Happy Labor Day. This is
Bloomberg.