Affordability, Messaging in Focus as US Midterms Approach

0:02 Bloomberg Audio Studios. Podcasts. Radio. News.

0:08 You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio.

0:15 We are very, very curious to see what our next guest has to say about all of this. Great to have back with us Henrietta Trays, Director of Economic Policy Research at Veda Partners. It's an investment advisory and consultancy firm. At the intersection of financial markets and the quarters of the nation's capital, who would be a better voice? No, none other than Henrietta. She joins us from New Orleans, Louisiana. Henrietta, we did just get this news a short while ago.

0:40 We want to talk about a lot of stuff, the midterms.

0:42 It does feel a little messy.

0:44 This is not what you want happening before the midterms.

0:46 Is it? It's not, especially when you want the message to be really clear. And I think it's a good example of muddled messages that we've gotten basically for the last eight months at least. You know, what's the point of the war with Iran? What is the strategy for reopening the Strait? How are we bringing gas prices down?

1:06 What are we doing about affordability? You know, those are questions that Republicans have been grappling with all year. and that Democrats have just been hammering the Republican Party with. So now, if you don't have a spokesman to get those messages across, it makes it even more difficult to convey to voters what you want to see in the last 18 days before the election.

1:25 Politico is reporting that there's, quote, zero chance, the president said zero chance, that Susie Wiles will take her place. But is there somebody, in your view, within the president's orbit right now who could, ahead of the midterms, bring things together and try to clean some of this up in the next couple of weeks.

1:47 You know, I feel like the Republican Party has some excellent conduits and excellent message relayers that they could get across. I mean, we see them on live TV every night, you know, without naming names, I'd say that's where I would go. You want somebody with a proven ability to take hard questions. The press secretary role is extraordinarily taxing.

2:07 And whether you support the president of this term or the last term, you know that that job is going to get hammered with hard-hitting questions from all around the room for however many hours they're in there. So it's a thankless job. I want somebody that I know already could do it and has experience. I mean, the president is going to be in the office for another two years.

2:28 There's a long way to go. A lot of messaging to telegraph 18 days before the election, but two years before the 2028 presidential. That's a critical role for the party and the White House to have filled.

2:40 Well, great that you went there, because I want to go there too. I mean, I'm curious, how much, how important is this story with midterms just around the corner? And then we've got some great reporting by our Ted Mann and Joshua Green, Josh Green, about congressional Democrats, Henrietta, expected to gain subpoena power after the midterm elections and are likely to investigate companies that cooperated with the Trump administration.

3:04 So we're talking about companies like Palantir, Apple, Microsoft, hiring Democratic Party insiders and getting ready for potential subpoenas and public testimony. It sounds like a lot of, certainly the people that we talk about, that we talk to, are getting ready for life after the midterms. How do you see it? What's the reality of what you think the midterm outlook will be or the outcome will be?

3:27 Well, I think they absolutely should be getting ready for that. What we see from the campaign donations and where they're pulling funding from the campaigns across New Jersey, Florida, and Texas just this week makes me pretty comfortable saying that the Democrats are going to control the House next year.

3:42 I don't think it's much of a question anymore. So right there, that's enough to make sure that investigations are exactly where the Democrats start. When I speak with leadership, they tell me that it's going to start with the Trump family. It's going to start with crypto, predictive markets, the Trump family's exposure to or investment in those sectors.

4:00 And it'll expand out to areas in which the Trump family or any cabinet secretaries have taken a stake, or even the White House has taken a stake in a critical minerals company, a defense contractor, not to mention IBM, Intel, all those. But the exposés that are coming out about the donors to the presidential ballroom, It's just fodder across the board. You're going to need a clear message. And one of the things that I find fascinating, I went to a campaign event last night just to see what the fuss was about and what Democrats were talking about.

4:31 The corruption angle was very prominent, more than I would have expected. So we know that affordability is the main narrative, but corruption is definitely seeping in. And that's because the Democratic polling is showing that that not just Democrats get galvanized by that, but independents are also galvanized. And that's how you win an election.

4:49 So you're sort of answering my question, but I want to push you a little bit more on this. Do voters, like, should this actually be the priority of incoming lawmakers if the focus from the polls has really shown us that people care about affordability, you know, front and center? That's what they care about.

5:11 Yeah, they absolutely do. So, Tim, specifically, I would say there's two things. Number one, all these investigations are going to stem from a narrative of affordability. That's what they've relayed to me. And then so, you know, the Trump family gets very wealthy off of their exposure to crypto. And what have you gotten? That kind of a thing is what they relay. The second reality that we're dealing with is that under no circumstances, you know, everybody wants to play the parlor game of will the Republicans hold on to the Senate or not? I think they will with 60 percent odds, which puts me in the minority for sure. But it doesn't really matter if you don't have 60 votes to cut off a filibuster or 67

5:51 to override a presidential veto, no legislation is passing next year anyway. So I think for investors, our core focus needs to be on the fourth quarter of this year when Republicans still have control of the House and the Senate and the White House. They can pass the reconciliation bill. They can provide funding to the Pentagon to perpetuate the war with Iran. They can do a farmer's bailout. They can raise the debt ceiling. They need to.

6:13 You just said that you think the Republicans will hold on to the Senate?

6:16 Yeah.

6:17 Yeah, that's my forecast.

6:18 Your forecast. So what are you seeing? Do you see the Republicans holding on to Texas? Do you see them holding on to Maine? Do you see them holding on to Ohio? Because, yeah, say, I mean.

6:28 Listen, Tim is always, Henrietta, checking the prediction markets, as he should, because all of a sudden we know that they can be pretty reliable. They say Democrats have a 63% chance, this is Kalishi, to control the Senate.

6:41 Yep. So you've got to get really granular and you've got to look at the individual races. And in my opinion and my experience, these states that Democrats are competing in are simply too red to fail. When we're talking about states that Trump won by 14, 16, even 22 points, you're not talking about a blue wave, which I agree we're going to get this year. You're talking about a blue tsunami.

7:05 Is it possible?

7:06 Sure. But with 60 percent odds, I think it won't happen. What you'd want to see and why, you know, to tie it back into the press secretary and disarray in the White House here, the way the Democrats are going to win a state like Texas or a state that Trump carried like Alaska for 14 points or even a state like Maine that's got a tremendous incumbency advantage. You know, a Senate incumbent gets reelected 88 percent of the time.

7:30 In a wave election cycle, it's 50% of the time. So you're dealing with, I know everybody likes to talk about this being a change election. The reality is these are extraordinarily red states. Kansas and Nebraska, Louisiana, Alabama. Come on, you're going to need more than D plus eight to get there. You need a D plus 11 situation.

7:50 I know. Texas is an interesting one.

7:53 60-40 on Cal State for Tallarico over Paxton.

7:57 All right.

7:58 Anyway, good stuff. Henrietta, thank you. Have a great weekend. Henrietta Trey, she's Director of Economic Policy Research at Beta Partners. Speaking of affordability.

8:05 Yes, affordability. Can we get there?

8:08 Well, I don't know. Brent futures rising to 110 a barrel for the first time since May of 20. We touched it. We backed off. But again, energy prices still way up from where they were before the U.S.

8:21 War on Iran.