Miran Touts Fed Independence at Confirmation Hearing | Bloomberg Businessweek Daily 9/4/2025

This is Bloomberg Businessweek Daily. Reporting with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. Bloomberg Businessweek Daily with Carol Massar and Tim Stenovec on Bloomberg Radio, television, YouTube, and Bloomberg Originals.

Carol Massar and Tim Stenovec here at Bloomberg headquarters in New York City. It is all about keeping score, whether it has to do with the U.S. economy and the jobs market, what is going on in terms of the composition of the U.S. Federal Reserve, and we have our own keeping score here courtesy of Power Players New York.

On the program, we have the co-founder and CEO of the buy now, pay later firm joining us in a few minutes. We are going to hear from John Malone, chairman of Liberty Media and a legend when it comes to the media industry.

Scott Cutler... we are going to talk about that, the health space, I'm working with a lot of employers, and then we are going to tee up the Bloomberg Power Players New York underway going on a couple floors above us, and it's all about the multibillion-dollar world of sports, the business people, the players, the team, and owners.

First up, a check on the trade today. The latest pleadings have pointed to a cooling labor market, and that is writing stocks and bonds higher. Applications for U.S. unemployment benefits rose to the highest since June. Private sector payrolls increased by 54,000, materially below estimates, and it all comes ahead of tomorrow's jobs report. The Nasdaq up about 0.5%, S&P 500 up half a percent, and we have the Dow up 0.7%. The yield on the 10-year is at 4.18%, down about three basis points.

We have Salesforce. It was on the latter end of expectations. Their shares are down 18%. They posted a double-digit rise in quarterly revenue, but here's the thing: profit missed expectations. On the upside, American Eagle Outfitters, their shares up 32%. They said to expect a sales boost from marketing campaigns featuring Sydney Sweeney but also Travis Kelce. And since we mentioned retailers, Gap plans to test a broader range of beauty products and accessories. Subscribe to Bloomberg News Now wherever you get your podcasts. That is a Bloomberg Business Flash.

It is all about massive margins. Are you saying I need them? What about Tim?

I am wearing a healthy dose of makeup right now. I don't know. Application. I don't know. Help me out, Carol, please.

Lisa, thanks so much. We got a big drop of economic news on the U.S. economy today. Applications for U.S. unemployment benefits rising to the highest since June, adding to evidence that the labor market in the U.S. is cooling. The weakest level for any August on record, going all the way back to 2009, while intended job cuts rose. And then we got a read on the service side of the U.S. sector. Providers provided expansion in August at the fastest pace in six months, on the sharpest acceleration in nearly a year. And that was not the only thing going on.

Stephen Miran up on Capitol Hill today taking questions from members of Congress, including when it comes to Fed independence.

That was Stephen Miran up on Capitol Hill today. Michael McKee is also in the nation's capital for the hearing. He's Bloomberg TV and Radio International Economics and Policy Correspondent, joining us from that news bureau by Bloomberg News in D.C. I have got to ask you, at a moment where it feels like there is a lot that feels so important for the economist in the year, for the monetary policy person anew, we got readings on the labor market, on the U.S. economy, the hearing of Stephen Miran, pressure on Lisa Cook continuing over at the Fed. What is really so important right now when it comes to the kind of economy and the monetary policy outlook?

Well, it depends on whether you are talking short-term or long-term. The question is what is the Fed going to do on September 17th? Today's ADP number, 54,000, lower than anticipated, is a suggestion that the Fed is going to be on track to cut rates because they have been concerned that low employment and any rising unemployment would be a sign the economy is slowing down, that they want to get ahead of by cutting rates. ADP has not always been completely reliable, but several Fed officials have said they are looking at that more closely these days because of the questions about the revisions to the prior NFP reports. So on a short-term basis, I would say that and the fact that in the ISM Services number, the employment numbers were still very weak. Longer-term, it is the Lisa Cook situation that worries people because if the judge in her effort to try to stay on the Fed says she can be fired, or if an appeals court says she can be fired and Trump immediately moves to replace her even though her case has not been adjudicated yet, then there's going to be some concern on Wall Street. So we got the latest filing from the government in the case today. The judge could decide tonight or tomorrow, and that will be the next important step for the longer run.

Is she working right now at the Federal Reserve, Mike? I know there was some confusion about this last weekend, this week.

Until the judge rules otherwise, she is still employed by the Fed and she is still working, although working from home, we understand, but she has not had her job or her electronics taken away, so she can still participate. And if the judge lets her, she would be attending the September 17 meeting.

If she does not attend it, can she still vote for a policy that day?

No, you have to be there to vote. And the thing about the Fed governors is there is no alternate. If a voting regional Fed president cannot make it, then there is an alternate voted for them, but that would just be one fewer vote. And the question is, is Stephen Miran going to be confirmed? That would be one fewer vote as well if he is not confirmed in time.

Let's go there. What will that mean in terms of the composition of the Fed?

He will be confirmed. Senate Republicans generally do what the president wants. The only question is sort of technical: can they get him through on the floor given the calendar that they have? They have a lot of nominations backed up and they have to move some things around, but it probably is going to happen. The question is what kind of reception would he receive and what impact would he have? He was not well received at all by Democrats today, who pointed out the contradictions in his testimony: that he said he's going to stay on this CEA even though he said nobody should go back to the government job for four years after leaving the Fed, and after he criticized Austan Goolsbee for going from a Democratic administration to the Fed, calling that sinister. On the Democratic side, he has not got any friends. And in his report on reforms that should be made to the Fed, he not only criticized Brainard but Mary Daly and Austan Goolsbee. So will they be very friendly when he shows up?

Cannot wait for Thanksgiving dinner when they all get together on the table. It should be warm and cozy.

I want to talk more about this hearing, Mike, and the idea of the independence of the Federal Reserve. It was certainly dominant in the hearing today, and I'm wondering what the contradiction is, or maybe can explain the contradiction in saying that, you know, like being independent on a body while retaining a job at the White House. How is that actually possible?

I think that it's a question that answers itself, Tim. There is no real way to separate the two things, and I don't think anybody, even if he did not say he was going to keep the job, was going to think that he would be an independent voice. As he noted, the president picked him because he has views that he likes, and while he will be independent in making his decisions, his views are in line with the president. So he's going to be a reliable vote for a rate cut. And it's really just the idea that he would stay on even in an unpaid role as an employee of Donald Trump while he is on the Fed, it is a blatant hypocrisy. That is kind of the way Washington has been working lately.

What did you make of the question and answer portion that focused on the former Federal Reserve chair, Arthur Burns, and the idea of said independence and stagflation and presidential involvement during Arthur Burns's tenure? The way he handled that line of questioning?

They were trying to trap him into admitting that because the Fed was influenced by Richard Nixon in 1972 and they kept rates too low for too long, that that would happen again. And of course after '72, we got the Great Inflation of the 1970s. He tried to tap dance around it. I wonder how much relevance it has anymore. A lot of the people who were on that Senate committee meeting probably were not born then and don't remember it. It is a cautionary history that Fed officials are aware of, but I'm not sure it scores a lot of political points.

Michael, thank you so much. I really appreciate it as we get ready for the monthly jobs report tomorrow. Mike of course will be all over it with the team. He is the International Economics and Policy Correspondent for Bloomberg TV and Radio. President John Williams has said his forecast is that it will become appropriate to cut the interest rate over time, without clarifying the time nor the pace of such moves. That voice is certainly an important one. Let's get to a Bloomberg exclusive.

David caught up in an exclusive interview with the chairman of Liberty Global earlier today to talk about his new book, 'Born to Be Wired.' It was released on Tuesday, September 2. Here to tell us more about that conversation, we have team leader Chris Palmeri joining us from L.A. John Malone, an icon for anyone who has followed the cable industry, the development and growth of it, and also the decline of it in recent years. Known for his outsized role in creative deal structures, just give a quick overview for people who might not be familiar with the impact he has had.

So John took this tiny struggling Denver TV company, Telecommunications, in 1972, 1973 I think, and this is even before all the cable channels that we know as household names existed. He helped launch CNN, Fox News, PEG, you name it. He sold it for $40 billion to AT&T, and in a way kind of brought it back again later. And now it still controls Charter, the largest cable company in the U.S., Liberty Global, the largest in Europe. He architectured the merger of Warner Bros. and Discovery, which they are now splitting up. So a huge player in the business for 50 years now.

He does have a new book out as we mentioned, 'Born to Be Wired,' which is like a perfect title for him. Let's get to some of the conversations that John Malone had with David Gura about his to remain in the world of media.

I had a great mentor early. Schapiro was the chairman, and he was a tough old bird, but he would teach me about the talent. And he said one of the things the talent teaches you is ask yourself the question 'if not.' If not. If your plan works great, but ask yourself the question, well, what if it doesn't? What if your assumptions are wrong? What if this doesn't work or that doesn't work? What is the downside? How much risk are you really taking? You are looking at risk very hard in terms of how you finance something. The government is always your partner from a tax perspective, so don't forget you can deduct your failures from your successes. Don't ever get to where you can't. You are going to have mentors. If they have risk, they are going to help you make sure you are not taking too much risk, so they become good partners in assessing risk. And if you structure it properly, if you do get in trouble... kind of an attitude. You know, don't ever count on anything being for sure. So that has colored the structure of the organization I have put together over time. So a typical thing for me would be subsidiaries would be leveraged rationally but substantially, particularly if there's tax or other advantages, so the parent was always in a position to rescue the subsidiary but never in jeopardy of a single thing taking it all down. So risk avoidance, coming out of TCI, survival I think was the number one lesson that I learned. Diversify, never cross-guarantee, never consolidate liabilities unless you are really, really comfortable just to get an eighth of a point better deal on your financing. Do not go there. You know, try and isolate your risk. We even came up with a strategy called the outhouse theory. If you are going to do what you regard as an uncertain acquisition, buy it into a standalone capital structure. Be willing to pay whatever the debt risk represents. Make sure you can refinance it timely if it works, and if it doesn't work, structure it so it does not poison the whole barrel of apples.

That is John Malone of Liberty Global. He is there with Bloomberg's David Gura, and it is the subject of a new Bloomberg Big Take podcast, 'Born to Be Wired.' I feel like we are talking with Chris Palmeri, who follows the media and entertainment space. There is so much going on in terms of content, but the world has changed so much since John came into it. What about this conversation caught your attention?

Plus the conversation in the book, it's very interesting. He's very hands-on, describing how he built the company using all these partnerships and divisions with the parent company. That's fascinating stuff from a business standpoint. But you know, when he gets into the macro picture about how the TV industry raised prices so much and did not let customers choose which channels they wanted to watch, and how he engineered the Warner Bros. Discovery merger that is by all accounts a disappointment and they are now splitting up, all these things he takes as an observer, as if he wasn't really in the thick of it then, orchestrating these deals and running the largest cable operator in the country and continuing to do so. So it is a fascinating view of the world. At least he agrees that the cable industry cooked its own goose and did not adapt to the times to give people the streaming options that they now choose from others.

It feels like there was a moment in time that nothing could be done in the media space without kind of a blessing from John Malone. There was not any media conversation without him touching on it at all.

For many years, it was the idea that live sports would keep the cable bundle bundled. If you can buy ESPN direct to consumer, you can bypass your cable system to do that. That is a very big deal.

Times have changed. Thank you so much for walking us through all of that. He is Bloomberg News team leader Chris Palmeri. Check out the entire interview on the Big Take podcast. Coming up next, a double dose of the C-suite: co-founder and CEO of the firm, Scott Cutler. That is all coming your way on Bloomberg Businessweek.

It is 2:21 on Wall Street. I am Alisa. Stocks are advancing as President Trump seeks greater influence over the Federal Reserve. Wall Street strategists are starting to weigh in. They are warning of greater concerns over the Fed's independence with the president's push for rate cuts. In the meantime, the Justice Department opened a criminal investigation into whether Lisa Cook committed mortgage fraud. The Nasdaq up half a percent, the S&P 500 up half a percent as well, and the Dow rising 0.7%. The yield on the 10-year, 4.18%, down about four basis points. The S&P up about 0.1%. They are attending an AI event hosted by Melania Trump in Washington. That will be followed by a reception at the Rose Garden with the president and leaders of Microsoft. Those are some of the big names, as well as Microsoft co-founder Bill Gates. DeepSeek is stepping up the competition against rivals like OpenAI. Sources say it's building an AI model with advanced agent features, with a release planned before the end of the year. I got that from Tim. Samsung Electronics unveiled a $650 version of its premium smartphone and a pair of new tablets. Subscribe to Bloomberg News Now wherever you get your podcasts. That is your Bloomberg Business Flash.

We are making it stick. Mark Gurman said it's OK.

It's a thing. We can run with it. People running with 'Techtember.' Companies including a firm have all brought installment payments into everyday life, while big banks and tech firms are now racing into the space. It's getting a little crowded. With the market growing so rapidly, there are concerns over whether BNPL is adding a new layer of indebtedness to the economy, giving online shoppers an alternative to more traditional financing such as credit cards and bank loans. Those firms have so far resisted sharing a lot of information, but we wanted to know more, and this person, our next guest, knows a lot about the space. Here to talk about all of this, the founder and chief executive officer of the $29 billion market cap company, joining us today I believe from San Francisco. How are you?

I am great, enjoying this nice warm Techtember.

It's a thing. It's a thing. Talk to us big and broad, especially on a day where we are waiting for the monthly jobs report, trying to figure out what is next in terms of the U.S. economy. You see a lot when it comes to what consumers are up to. How would you describe the consumer today?

The folks that we approve for transactions, each transaction... we do have a very discerning eye as we write these loans, they are doing great. Demand for product is accelerating, and we posted another accelerating quarter of sales. They are doing really well. Credit is steady. So you know, we lend to a huge percentage of the U.S. population. The U.S. consumer writ large is doing well as well. So I think rumors of the American demise are greatly exaggerated. That said, we continue to watch every metric we can all the time, because that is what our job is.

Are those metrics stronger now than they were a year ago?

From a first point of view, we really are firing on all pistons. Our ability to serve folks has improved 20% year-over-year, measured in transaction frequency. Our user base grew north of 20% as well. So consumers are enjoying using us. Our user active acquisition has accelerated for the sixth quarter in a row. There is a shift from credit cards. So I think within our ecosystem, every metric looks very good and better than last year.

Can you talk a little bit about what transactions customers are using the system for? Are they using it like they would use a credit card right now? What is the typical transaction size?

Great question. It's a little bit different between players, so I can only speak to us. The average for us is just under $300, and that should tell you a lot. So everything from a truly considered purchase like a nice bicycle, maybe a couple hundred dollars, all the way down to a large party supply, a couple hundred dollars, those are the bookends. We tend to believe that really low ticket items, you know, $20, is just too small to finance with a firm. So we have a notion of where we start trying to tell our consumers this seems like a good idea to be a cash transaction. But generally speaking, because the product we offer is just so much better than credit cards for the end borrower, we are pro that a firm should be used in place of credit cards. If you think of it quickly, it is an obvious idea. We don't compound interest. We don't do any of the gimmicky things that look too good to be true. So it's an honest financial product that really helps the end borrower get a full grip on their finances and not get into trouble and not get over their skis. So directionally, the more... I think the better off the consumer is going to be. That said, the current average is $297, I think.

How often is somebody late, and then what happens as a result? I am not a huge user. Have you ever used it?

I think I have used one of them. I was curious about it, and I set it up so things got paid, and it was like three payments or something, because we talk about it on the time here. I grew up where you could put stuff away on layaway, so it is interesting to see the evolution. But I'm curious, Max, how often is it that somebody is late, and then the terms start to change? This is a business.

Let me try to make... if there's one thing I can make clear in this conversation, I just want to hammer this point home. Nothing will change. Terms will not change, fees will not appear. No dollar amounts will change if something happens and you cannot pay your bill on time. The fundamental premise of a firm is what you see is what you get, whether you are borrowing $500, committed to paying another $25 of interest. If you cannot make it on time, there will not be a penny more. If you prepay early, the interest amount will come down. So it is a profoundly pro-consumer product. I wanted to make that very clear. About 98% of our consumers are never late, so it's fundamentally extremely, extremely high probability that none of that will ever happen to you in our ecosystem. When folks are delinquent, we will reach out to them to get in touch and remind them. The vast majority of folks that are late are sloppy payers in the industry where they say, 'Oh my god, I forgot to set the auto pay. Thank you for using that feature.' So it goes. The reason we do not charge late fees is because for folks where they really cannot... something happened and they lost their job, they are not going to pay you any faster if they have no means to pay you back. The ones that just stumbled somehow, I forgot, the reminder is the most they need. You don't want to penalize them for being forgetful.

What is the default rate?

That is remarkable.

It is meaningfully lower. By the way, our lower ticket items too, and that trends below 1%. So just to give you... the rumors of this being a bad financial product is bad math and ridiculousness.

Push back on that a little bit about the explanation of the business model, because a lot of people approach this product with being informed about how credit cards work and the idea that high interest if you miss a payment, fees if you miss a payment. In a sense, the risk is somehow put on a different party here, Max, and also buy-in from the retailer who partners with the firm. Just explain how this whole transaction works.

Very simple. You typically find a firm at the point of sale on any online and progressively more offline merchants. You will ask to use the product, so it's always an explicit request to borrow. And we take great pride and put a lot of technical emphasis on underwriting every transaction individually, so we have the discretion to say you are overextending yourself.

2.5% default rate doesn't come from nothing. We do an enormous amount of work so as you get approved through your real-time application. What happens is we pay the merchant and you commit to paying us back over time, and we always give you a menu of choices: anything as short as four payments every two weeks, up to 36 months once every month. The rest happens more or less automatically if you opt into auto-pay. If you don't, we'll send you a reminder, and then you arrange for repayment from your bank account typically. And that's it. In our case, there is no compounding. The interest is the interest expressed in dollars, and it will not go up independent of any modifications to the schedule. There are no late fees. This is unique at this point in the industry; Branch is not charging at all. So this really is the product where the value is transparency. We are entirely transparent. Everyone knows what they are getting into. You get your rational challenge today, you pay for it over time, and you know exactly when the payment plan stops, and then you are no longer in debt. When you use credit cards, you don't have this extra approval step; you just drop the plastic and go. You are adding to this giant bucket that sits there and revolves. The interest compounds into principal every month, every week. Whatever it is you have accrued interest becomes part of the base that accrues interest on interest on interest, and that's why credit cards are so expensive. The recent APR matters as a measure because it doesn't just measure interest yield payout of principal. The model we invented, and the reason people are coming to us frankly, is they do not have to understand exponential mathematics to figure out what is the true endpoint. Whatever you promise them, that is exactly what they pay.

He is president and CEO of a fintech company. He keeps talking about bikes. He is a big cyclist, spends a lot of time on the bike. We follow each other.

One of the things I want to ask you, your stock is on a tear, up 50% year-to-date and surged as much as 25% in response to your earnings. What you have been talking about came out late August. You had analysts raising price targets on the stock. What is the path to sustainable profitability? What do you need to see happen to keep the momentum going?

We need to keep doing exactly what we have been doing. The joke I make all the time is we are an overnight success 15 years in the making. Profitability is not an accident. I said exactly a year ago, look, 12 months from now we will be profitable. Two years ago we said 24 months from now… We have been on a journey that we planned years ago to deliver on all these milestones. So the celebration isn't of some clever overnight idea we have had and finally just poked our head from the unprofitable side of the fence. We delivered on this plan. We said publicly that we intend to be profitable from this point on. That is not a thing you can decide last week and deliver tomorrow. It is something you build over a long period of time. It takes discipline, it takes a great team which I am lucky to have, so I am not worried about that whatsoever. But whatever we commit to, we tend to deliver.

It has been a long time coming, and does it plan that here in the United States? The competition space is picking up, and they are specifically rapidly expanding here in the U.S. And you have got that stock up 7000% less than two years. There is a lot going on. So how are you seeing the competitive landscape evolve, and what does it mean for you guys specifically at a firm?

You know, we are very happy doing our thing as I just extolled for a little while. We are different. We do our thing a little bit differently than the rest of the industry. We have a very strong point of view on what is and isn't moral. It has paid great dividends for us, and in that sense, we intend to change nothing. Part of why we spend less time looking at the competition – and this one is certainly very competitive – is in aggregate, buy now pay later is still just under 1% of U.S. retail. And it is a worldwide phenomenon, and the U.S. is quite kind if you look at markets like Australia and the Nordics. They have penetration into e-commerce at 25%. In the U.S., it is a much more polite 7%. And if you expand it into offline – which there is no reason why it doesn't work offline – better than 100% year-over-year in the last quarter's report. We are a fraction of a fraction, so the opportunity to provide more honest financial products – I said in my shareholder letter, it rounds up to infinity. So for now, we are not really running into each other in the hallways fighting for that last customer or merchant. I'm sure one day we will get to a point where it is so significant as part of the U.S. economy that it becomes a zero-sum game. For now, I think we are all just experiencing really good growth, and frankly the fact that the market now – a couple of large publicly traded companies is probably a good thing and gives shareholders a sense for the business.

Just 30 seconds on crypto and stablecoins. An opinion piece this week – he wrote that stablecoin is an opportunity for merchants and airlines to recover costs from big banks and networks like Visa and Mastercard. Is there a use for digital assets at a firm?

You know, I think that there are interesting opportunities around urgent settlements, which is what this piece is saying. I am not yet seeing consumers spending stablecoins they have acquired in droves. As a backend mechanism, they are interesting, and we are looking at the opportunities there. On the consumer side, folks are thinking in dollars.

Thanks for carving out some time for us. Founder and chief executive officer of a firm – just a great choice when it comes to the fintech space. Of PayPal fame as well. We are going to have more from the C-suite in just a moment. That is coming your way in just a moment.