Welcome to "Balance of Power." I'm Joe Mathieu alongside Kriti Gupta. A day of fireworks on the Hill. The administration flexed, saying there is no detectable increase in price level as a result of tariffs.
You have made it clear you will do or say whatever Donald Trump wants you to do or say. It might work in a political position, but it will make life more expensive for American families.
The president's first big step in remaking the Federal Reserve, and the DOJ investigation into Fed Governor Lisa Cook over mortgage fraud allegations, and a report pointing to similar allegations involving members of President Trump's own team.
A tense scene playing out.
All over the country, Mr. Secretary, scientists and doctors are saying otherwise. They are all wrong too, lying according to you.
Scientists and doctors support me.
The public has seen leadership outbreaks, the leader of the National Institute of Health questioning mRNA vaccines. Americans don't know who to rely on.
You are a charlatan. You conflate chronic disease with the need for vaccines.
Aggressive back and forth between senators on both sides of the aisle and HHS Secretary RFK Jr., as questions swirled around his role in the chaos seen at the agency, the CDC, and the American public health system. Senators cross-examined both RFK Jr. and Miran today. Senator Mark Warner joins us ahead.
Mark Zuckerberg, Tim Cook, Satya Nadella — that AI event they attended with the president and the first lady, and their plans to meet with the president.
Stephen Miran seeks to serve out a month-long post at the central bank. There is concern over the long-term independence of the Fed.
The president nominated me because I have policy views he liked. If I am confirmed to the role, I will act independently, as the Federal Reserve always does, based on my personal analysis of economic data and the effects of economic policies upon the economy, and act upon my judgment of the best economic policy possible.
Joining us with the latest is Bloomberg's Mike McKean, who was on the Hill for Stephen Miran's hearing. That was one answer he had prepared for lawmakers, and there were a number of questions he chose not to answer today.
If you work for Donald Trump, there are certain questions you are not allowed to answer. Elizabeth Warren asked if he won the 2020 election, and he did not answer. He was chosen because his analysis matches what Donald Trump wants. He would be a reliable vote for a rate cut, and that is why the president is putting him in there. What might be more scandalous is he admitted today he will not resign as the chairman of the Council of Economic Advisers. He will take unpaid leave. That means for the months he is at the Fed, he is still an employee of Donald Trump. If he wants to go back to the CEA, he will have to be nice to Donald Trump if he wants his old job back. Is there really any independence here?
We also have one eye on Lisa Cook and the legal proceedings. Donald Trump is clear about accusations of mortgage fraud. A report from ProPublica in the last hour showing an investigation that three of his cabinet members might have mortgage fraud. What do we know?
According to ProPublica, they all have more than one primary residence mortgage, and that is the same thing they are accusing Lisa Cook of. We do not know, in any of these cases, and we don't know in Lisa Cook's case, whether any crime was committed, whether there was anything wrong. The White House offered as a defense to ProPublica that the banks can grant waivers for this and perhaps they did. These are all people that work in Washington and have to have a residence in their districts. It is natural they would have two houses, perhaps. The question is, did they get a benefit out of that and was there something illegal? The Department of Justice announced today it is starting a criminal investigation of Lisa Cook. They sent out subpoenas. It will probably take a while. We expected that would happen. We do not know if they will find anything they can criminally charge her with.
Mike McKean walking us through the latest with Stephen Miran and Lisa Cook. Let's bring in somebody familiar with the process we saw play out on Capitol Hill, Lael Brainard, former vice chair of the Federal Reserve. What is your reaction to the events of the day?
We learned something important today at the hearing. The idea that the Council of Economic Advisers' Stephen Miran would go to the Federal Reserve as a governor and remain on the payroll of the president, of the White House, is unprecedented. Of course, he has said many times that he vowed to be an independent voice. I think that members of the committee correctly pressed him on how could he be an independent voice if he is still working for the president and may, in fact, go back to his old job in several months. That was a very important piece of information. Of course, it comes in the context where the White House is mounting an unprecedented attack on the independence of the Federal Reserve more broadly, summarily firing a member of the board, pressuring the chair. That was an important hearing today.
The idea that he will still effectively be a White House employee in a political position even though he is not taking his pay. Stephen Miran said that was the advice of legal counsel. When asked if he would resign on his own, he did not answer. It looks like this is happening. If he is confirmed, what will the arrangement mean for the Fed?
It is a really important, unprecedented arrangement. We just have not seen this. Of course, why does it matter that the Federal Reserve takes decisions based on analysis in a way that is independent of the White House? Because when the Federal Reserve is not independent, as we saw in the 1970s, inflation goes up and long-term interest rates go up. Mortgage rates become more expensive. It is in the interest of American consumers and the American economy to make sure those members of the Federal Reserve can make their independent assessment. If you are on the payroll of the White House, it is hard to see.
Would you not trust his word?
The question is, more broadly, the credibility of the Fed as an inflation-fighting institution would be at stake here. Do the broader markets view the Fed as compromised?
We have seen snippets of that in the market, but not a full-out panic yet. Donald Trump used the term 'getting a majority' on the Federal Reserve in a cabinet meeting. Walk us through the impact that framing has on the institution.
The Federal Reserve Board has seven members. It requires four members to get a majority. Those votes taken on monetary policy help to determine interest rates. Of course, he said very clearly he would like to see lower interest rates. Loads of presidents want to see lower interest rates. Getting him in a majority gets him in a position to affect that. One of the things that I think has never been an issue before is that all other members of the monetary policy setting committee, all of the reserve bank presidents, are up for reappointment in February. Having a majority on the board could affect the composition of the broader monetary policy setting committee. That would be another really serious threat to independence.
You mentioned President Trump's efforts to fire Lisa Cook. We are awaiting a ruling from the court. Her lawyer says the questions over how Governor Cook described her properties, from time to time, which she has started to address the pending case and will continue to do so, are not fraud. But it takes nothing for this DOJ to undertake a new, politicized investigation. There is a criminal investigation today. That's an important headline today. ProPublica reports that at least three members of President Trump's cabinet also faced allegations of mortgage fraud, two primary residences. You have been in Washington for a minute. This isn't unusual around here, is it?
No. What is important is because of the independence of the Federal Reserve and the connection it has to having a strong economy with low inflation and low interest rates, what matters here is making sure there is a really good process. As you know, Federal Reserve Board members are not supposed to be fired except for cause. Since that has never happened before, it seems like it would be extremely important for any White House, if they wanted to show they cared about the Fed's credibility and fighting inflation, to go through a lengthy process before firing somebody and showing the cause. That has not happened here. It is the lack of due process, the urgency to fire a board member to secure the majority, that is so unusual. This should have markets a bit rattled about whether the Fed can be independent.
Why do you not think the markets are as rattled as they have been in previous iterations?
As we have seen in many examples around the world, often it takes a little while for market participants, investors to digest just how significant they consider these moves to be. But when markets move, they do tend to move. They might underreact for a while, but they can overreact at a point in time. It is not clear what it would take to see that kind of movement. Of course, when the initial announcement of the firing was made, we did see the directional pattern. The dollar weakened and long-term interest rates went up. It suggests investors are watching this set of developments very carefully. In the 1970s in the U.S., as we saw in the U.K., markets will force long-term interest rates up if they believe the central bank no longer has credibility fighting inflation.
Whether it is Lisa Cook, the Commissioner of BLS, or now President Trump asking the Supreme Court to let him fire the FTC commissioner, a headline from a couple hours ago this afternoon. What do you make of this broad attempt of the president to create government in his own likeness?
We have seen across the independent agencies a very aggressive executive branch asserting the prerogative of getting rid of people that have terms that extend well into this president's term in office, asserting executive authority to do that. It will be up to the Supreme Court to see exactly where they will draw the line. So far, they have been somewhat sympathetic to the president's overreach. And the other thing that will be important to see, if this does go to the Supreme Court, is if they again draw a distinction between other independent agencies and the Federal Reserve. That will tell us a little bit about how they are likely to view the current fight at the Federal Reserve.
Great to have you with us. Lael Brainard, former vice chair of the Federal Reserve. Coming up, fireworks on Capitol Hill today as Health and Human Services Secretary RFK Jr. defends his new vaccine policy during a Senate committee hearing on "Balance of Power" on Bloomberg TV and radio.
This is "Balance of Power" on Bloomberg TV and radio. We turn to Power Moves with Bloomberg's Romaine Bostic live in New York.
It was a powerful day. The S&P 500 in a tight trading range, closing at a record high, 6502. All seven of the Magnificent Seven stocks rising today, led by Amazon and Meta. That pushed the group to a record high as well. The Philadelphia Semiconductor Index rising 1%. It did not look like it would do that today. Earlier in the session, Texas Instruments was under a lot of pressure. It gave a presentation at a conference in New York that seemed to suggest the chips cycle was not recovering as fast as some people thought. Texas Instruments makes analog chips, not high-power chips like NVIDIA does. They are in everything: cars, appliances at home. There was a lot of concern. Other executives started to take the stage, including Intel and a few others, talking about continued spending when it comes to AI. Broadcom rising about 1% in the cash session and even more after hours. Earnings very encouraging about higher-end chips and demand and appetite for, and more importantly, the AI ecosystem overall, particularly in the U.S. Trump earlier today addressed that, saying he sees some of his policies, particularly tariffs, aiding that. Oracle, which has been a big beneficiary of the data center buildout, is now lining up $38 billion in financing led by J.P. Morgan to start building out data centers in Wisconsin and Texas.
That is the stock market. The bond market, the U.S. Treasury, the 10-year are breaking the trading range it has been in.
There is a lot of concern right now, not so much about what happened today with Stephen Miran or at the start of the week with the U.K. bond selloff, but what happens tomorrow. 8:30 AM, a jobs report. A lot of people see this as critical given evidence of cracks in the U.S. labor market. Jay Powell has made it clear based on the Jackson Hole speech that he is more concerned about the labor market than inflation. That means most people in the market are anticipating a rate cut in the September 16, September 17 meeting, about a week and a half away. The big question is whether the rate cut is the start of an easing cycle. A big determinant will be the health of the labor market. Based on preliminary data out of ADP and jobless claims, it suggests fraying around the edges, but we will find out for real tomorrow morning at 8:30.
Is Wall Street proven right? Romaine Bostic walking us through the market moves today. Great. Health and Human Services Secretary Robert F. Kennedy Jr. faced a Senate committee over the changes to his agency's vaccine policies.
On behalf of parents, schools, and teachers all over the United States of America who deserve so much better than your leadership, that is what this conversation is about.
They deserve the truth, and that is what we will give them for the first time in the history of the agency.
Approaching this as a doctor, not a senator. An email from a physician friend of mine. Bill, I'm not sure what I am asking you. We are concerned about who can get the COVID vaccine. We are having our attorney try to render an opinion. There is no firm guidance about liability if vaccines are given to a patient who requests it but is not currently on the CDC list. Pharmacists are requiring prescriptions, even for patients over 65, creating a huge headache. I think effectively, we are denying people vaccine.
The exchanges between Democratic Senator Bennet and Republican Senator Bill Cassidy. Our health reporter joins us live from Capitol Hill. Jessica, what stood out to you?
It was a lot. It was a very chaotic and contentious meeting between Secretary Robert F. Kennedy Jr. and all the senators on both sides of the aisle. We saw interesting back and forth between all of them. It was about a three-hour-long meeting. There were protesters escorted out in the beginning. The main thing that kept coming up from the Democratic side was all the chaotic stuff Kennedy has done to the CDC and also vaccine policy over the past few months. On the Republican side, there were a few Republicans that showed some fractures in terms of whether they still support Kennedy, especially around Operation Warp Speed, obviously one of President Trump's top crowning achievements from his first administration. Republican senators say they really supported Operation Warp Speed and they don't understand why Kennedy is no longer supporting mRNA vaccines. They are canceling research grants. They are pulling back on support and broad access for COVID vaccines.
What comes from today, Jessica? Was this just a therapeutic exercise for Democrats to make a point, get the poison out, shine a light? Or will something actually change when it comes to policy, if not RFK Jr.'s own job?
On the Democratic side, there were people calling for his resignation. Bernie Sanders, the senator from Vermont, has said before in an op-ed he wants Kennedy to resign. Raphael Warnock of Georgia also called for Kennedy to resign today. On the Democratic side, that is what they are asking for. On the Republican side, we don't know where things will go from here. Bill Cassidy from Louisiana has said he believes that Kennedy's recent actions on the CDC require oversight. But we don't have any answer on what that means.
Thank you for the reporting. Jessica, good to have you in Washington for this. We have more on the hearing coming up with somebody that was also in the room. After the break, joined by Democratic Senator Mark Warner of Virginia with much more to follow on a day that he in fact straddled multiple hearings. He had a chance to talk to Stephen Miran as well as RFK Jr. I am not sure which one was more productive for the senator. We will find out.
Not to mention a series of national security news to digest, and maybe act upon. He is the person closest to that story.
Yes. Since we started this conversation, I expect he will have ideas about that. The conversation surrounding Lisa Cook, the ruling we are hearing, took a different turn.
A new nominee or even the discussion about the nominee. A lot is going on there when it comes to where the conversation could go.
True. I know a lot of folks were at work when this was happening. Get a taste of this exchange between Stephen Miran and Democratic Senator Jack Reed of Rhode Island on Stephen Miran keeping his current job as chair at the Council of Economic Advisors, a different hearing that we are talking about. Let's watch and listen.
