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00:00♪ > > SO THERE IS AN ENORMOUS AMOUNT OF PRESSURE ON THE FED RIGHT NOW THAT CANNOT BE IGNORED. > > THIS IS THE TOUGHEST POSITION THE FED HAS BASICALLY EVER BEEN IN. > > THIS IS A FED SET OUT TO LOOK FOR MULTIPLE MONTHS OF INFLATION DATA. > > THERE'S A BIG STORY ON INFLATION THAT NEEDS TO BE SPELLED OUT. > > WE'VE GOT A LOT OF DATA STILL TO COME. ANNOUNCER: THIS IS "BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: GOOD MORNING, GOOD MORNING. "BLOOMBERG SURVEILLANCE" STARTS NOW. GOING IN DETER'S DAY, TURMOIL AT THE FED. EQUITY MARKETS INCHING LOWER AND LONG BOND YIELDS INCHING HIGHER AS PRESIDENT DONALD TRUMP ATTEMPTS TO GOVERNOR LISA COOK. GOVERNOR COOK IS FIRING BACK INSISTING THE PRESIDENT DOESN'T HAVE THE AUTHORITY. THE PRESSURE KEEPS ON BUILDING. LISA: I THINK IT IS SO NOTABLE THAT IT IS TURMOIL AT THE FED BUT NOT TURMOIL IN THESE MARKETS. THE LANGUAGE USED, INCHING. FOR NOW IT IS A MARKET AND THE WORDS OF MAN GROUP I'VE SPOKEN TO EARLIER THIS JUST BASICALLY TRADING THIS AS IF THE FED IS GOING TO BE MORE DOVISH. THAT HAS ALREADY TURNED MORE DOVISH. POWELL SEEMS TO HAVE PIVOTED. COOK HERSELF IS LEANING MORE DOVISH. THEY HAVE STEPHEN MYRON. WHAT IF THIS IS ABOUT MORE THAN JUST GETTING CUTS FROM THE FED? JONATHAN: THE PRESIDENT BELIEVES HE'S GOT THE AUTHORITY. GOVERNOR COOK BELIEVE THAT HE DOESN'T. AS A PROCESS THAT'S GOT TO PLAY OUT HERE. THIS IS GOING TO TAKE POTENTIALLY A LONG, LONG TIME. IN THE MEANTIME WE GOT TO THINK ABOUT INSTITUTIONAL CREDIBILITY AND RESILIENCE. NOMINATED FOR A POSITION ON THE FEDERAL RESERVE BOARD, REPUBLICAN SENATE, HAD TO WITHDRAW THE NOMINATION. YOU'VE GOT TO REMEMBER HERE THAT THE LIST WE'VE GOT FOR THE FEDERAL RESERVE CHAIR AT THE MOMENT IS QUITE CREDIBLE. FROM THE PRESIDENT OF THE U.S. AND SECRETARY BESSENT AND IF WE DO GET FURTHER DOWN THE LINE AND WE DO HAVE TO REPLACE GOVERNOR COOK, WHO IS TO SAY IT'S GOING TO BE SOMEONE THAT SCARES THIS MARKET? DANI: I THINK THAT IS INCREDIBLY VALID AND POTENTIALLY PART OF THE REASON WHY THE MARKET HASN'T BEEN MOVING. STILL, THERE'S BEEN A LOT OF COMMENTARY OUT THERE THAT SOME OF THE AUTHORITY OF THE FED IS BEING BEND. CERTAINLY NOT BROKEN, BUT IF YOU JUST GET THOSE INCHING AWAY AT THE MARGINS, DO WE ALL BECOME BOILING FROGS IN THE POT? TO BECOME BLIND TO WEN YU DO HAVE A FED THAT HAS BEEN REMADE, IS MORE WILLING TO DO THINGS LIKE POTENTIALLY TRY TO TWEAK AT THE MARGIN WITH THE LONG END OF THE CURVE TO GET MORTGAGE RATES DONE? IS THAT DISASTER FOR THIS MARKET? MAYBE NOT, BUT IT IS SMALL THINGS STACKED ON TOP OF EACH OTHER. JONATHAN: WE ARE TESTING THE LIMITS OF INSTITUTIONAL RESILIENCE, THAT'S FOR SURE. BOND YIELDS ARE A LITTLE BIT HIGHER THIS MORNING BUT IT'S JUST HOW THIS CURVE CONTINUES TO EVOLVE. STEEPER. DANI: IT'S NOTABLE THAT THIS MORNING IT'S ALSO HAPPENING WITH A FRONT END THAT IS RALLYING. A MARKET THAT IS ASSUMING YOU ARE GOING TO GET A MORE DOVISH FED WITH THE RECENT CHANGES. BUT WHAT HAPPENS IF YOU GET A DOVISH FED AND A LONG AND THAT SELLS OFF? AFTER THE SPEECH AT JACKSON HOLE, THE LONG AND WASN'T TOO BOTHERED. SO YOU GET A CHANGE THIS TIME AROUND, AND THE QUESTION BECOMES WILL TRUMP ACTUALLY GET WHAT HE WANTS EVEN IF HE MAKES THE FED MORE DOVISH? THIS MARKET WOULD SUGGEST NOT. JONATHAN: DRAMATIC HEADLINES, VERY MUTED PRICE ACTION SO FAR. EQUITY FUTURES DOWN BY NOT EVEN 1/10 OF 1%. WE WILL CATCH UP WITH PETER OF ACADEMY OF THE PRESIDENT SAYS HE'S FIRING LISA COOK. THE FUTURE OF FED INDEPENDENCE, AND MARISSA ADAMS ON THIS WEEK'S TRADE HEADLINES. PRESIDENT DONALD TRUMP MAKING THE MOVE TO FIRE FED GOVERNOR LISA COOK. ANNE-MARIE JOINS US NOW FROM WASHINGTON WITH MORE. MORNING. > > A SIGNIFICANT DEVELOPMENT OVERNIGHT AS WE’'VE SEEN THE PRESIDENT NOT JUST TALK ABOUT THAT HE WANTS TO OUST GOVERNOR COOK, BUT PUTTING OUT A LETTER THAT HE SAYS HE HAS CAUSED TO REMOVE HER. WHEN IT COMES TO BECAUSE IN THE FEDERAL RESERVE ACT, THIS WOULD BE MALFEASANCE, DERELICTION OF DUTY, I'M SURE YOU SEE THE STATEMENT FROM GOVERNOR COOK. SHE SAYS SHE IS GOING TO FIGHT THIS, SHE SAYS NO CAUSE EXISTS AND HE HAS NO AUTHORITY TO DO SO. SO AS YOU CORRECTLY SAID AT THE TOP OF THE PROGRAM, THERE IS A PROCESS THAT NOW NEEDS TO TAKE PLACE. I WOULD GO BACK TO THE SIGNAL WE RECEIVED FROM THE SUPREME COURT IN MAY. IT BASICALLY SIGNAL THAT OFFICIALS AT AN INSTITUTION LIKE THE FEDERAL RESERVE HAVE MORE COVER. THIS IS THE KEY QUOTE FROM THAT SUPREME COURT. A UNIQUE STRUCTURED ENTITY THAT FOLLOWS THE DISTINCT HISTORICAL TRADITION OF THE FIRST AND SECOND BANKS OF THE UNITED STATES SAYING THAT WHEN IT COMES TO OFFICIALS OF THE FEDERAL RESERVE, WHEN IT COMES TO THIS PRESIDENCY, THEY ARE GOING TO BE POTENTIALLY OUT OF REACH. ANNE-MARIE, WE WILL HAVE MORE THROUGHOUT THE NIGHT. GOOD TO SEE YOU. WE'VE GOT SOME VERY DRAMATIC HEADLINES, SOME VERY MUTED PRICE ACTION. WHAT EXPLAINS THE DIFFERENCE? > > WHERE THIS CHANGES MUCH, I DON'T KNOW, BUT WE SHOULD STOP FIXATING ON RATE CUTS. WHAT IS THIS GOING TO DO FOR THE LONGER END OF THE CURVE AND WHAT IS THE FED, TREASURY DEPARTMENT GOING TO DO TO PREVENT A REPEAT OF LAST SEPTEMBER? EVERYONE IS WELL AWARE THAT LAST SEPTEMBER, THE CUT RATES. THE FED IS NOT SILLY. THEY'VE GOT TO BE LOOKING AT THIS. I EXPECT TO SEE A LITTLE BIT MORE DONE TO CONTROL THE LONG END OF THE YIELD CURVE AND MAYBE EVEN THE MORTGAGE MARKET. WE HAVEN'T MADE A LOT OF PROGRESS. I THINK THAT IS NEXT ON THE AGENDA. JONATHAN: WHAT DOES CORRECTIVE ACTION LOOK LIKE? > > I THINK PEOPLE ARE CONCERNED ABOUT A FED THAT DOESN'T BEHAVE AS WE THOUGHT. I THINK A LOT IS GOING TO BE DONE. WEATHERBY GET CHATTER ABOUT BUYING MORTGAGES OR SWITCHING SOME OF THEIR PORTFOLIO AROUND, I THINK IS GOING TO BE A LOT DONE TO TRY TO CONTROL THAT. I DO THINK WE GET BACK BELOW 4%. DANI: IS THAT GOING TO BE A WILLING FED THAT DOES SOMETHING LIKE THAT OR HOW DOES A CHANGE TO ALLOW THAT PROCESS TO TAKE PLACE? > > THE MORE CHANGES THAT OCCUR, THE MORE WILLING YOU WILL BE TO DO THAT. SCOTT BESSENT HAS A BUNCH OF CONTROL, SO I DO THINK IT'S GOING TO BE A MORE INTERTWINED FED AND TREASURY WHERE THEY DO WORK A LITTLE BIT TOGETHER. WE SAW DURING THE GFCI, CONTROLLING YIELDS THROUGH THE SHORT AND IS KIND OF A VERY INEFFICIENT WAY TO GET ANYTHING DONE. IT DOESN'T TRANSLATE WELL TO THE MARKET. EVERYTHING DURING COVID WENT LONG-TERM EXCEPT FOR THE U.S. GOVERNMENT. CORPORATIONS DID, INDIVIDUALS DID. > > SO ALL OF THIS IS HAPPENING AND YOU SAY THE WRONG CONCENTRATION IS ABOUT WHETHER THE FED WILL CUT, BUT WHAT DOES THIS DO TO THE DATA WE ARE ABOUT TO GET OVER THE NEXT MONTH, JUST HOW CRUCIAL DOES THE DATA RELEASE BECOME FOR CPI AND UNEMPLOYMENT ESPECIALLY IF BOTH THINGS COMING HOT? > > I HAVE NO IDEA WHAT THOSE JOB NUMBERS ARE GOING TO COME IN. I THOUGHT JUNE DATE IT WAS GOING TO BE WEAK, IT TURNED OUT STRONG. I THINK THERE'S THIS DEGREE OF RANDOMNESS SHOWING UP IN ALL THE DATA. I'M NOT EVEN SURE ANYMORE WEATHERBY GET A STRONG JOBS REPORT IN SEPTEMBER. YOU WOULD THINK A MONTH AGO WE HAD SOLD OFF HARD ON YIELDS BECAUSE NOW THE FED CAN'T CUT. I DON'T KNOW THAT IT'S GOING TO HAPPEN. THE DATA IS GOING TO BE NOISY AND WE ARE GOING TO FORGET IT WITHIN HOURS. THIS FED IS PROBABLY GOING TO BE CUTTING BECAUSE THIS IS THE PATH WE ARE ON. JONATHAN: PUT EVERYTHING YOU'VE JUST SAID TOGETHER. FOR ME, LISTENING TO YOU SCREAMS WEAKER DOLLAR. > > I AM EXACTLY THERE. IF YOU'RE PUSHING ON ALL THESE OTHER THINGS, THE BUBBLE HAS GOT TO GO SOMEWHERE. I THINK IT'S GOING TO BE CONTINUED WEAKNESS IN THE DOLLAR. I THINK THAT CONTINUES LOWER AND LOWER BECAUSE WITH ALL THESE THINGS THAT WE WOULD DO, I THINK WE WILL BE ANTI-DOLLAR, ANTI-WANTING PEOPLE TO TRULY INVEST HERE. JONATHAN: WHERE DOES THAT LEAVE STOCKS? I THINK WE MEANDER > > ALONG RIGHT NOW. > > BUT I'M STARTING TO LOOK TO IS I WANT TO OWN THESE SMALL CAPS. I THINK THEY SHOULD BENEFIT FROM SOME OF THIS AND FEEL WE'VE HAD THIS HUGE RUN ON THE DATA IN THE AI AND WE ARE GOING TO CONTINUE TO GROW ON DATA. IT'S WEIRD BUT IT IS STARTING TO FEEL TO ME LIKE WE ARE PAYING 20, -- 2030 PRICES FOR 2025 TECHNOLOGY. IT REMINDS ME A LOT OF WHEN WE WENT TO THE BROADBAND AND FIBER BUILDOUT. THE COMPANIES WERE ALL SUPERSTARS DOING GREAT. THEY ALL GOT IN TROUBLE BECAUSE THERE WAS A BIT OF OVERBUILD. I FEEL LIKE WE MIGHT BE AT A TIPPING POINT WHERE YOU MENTIONED EARLIER, IF YOU SPEND $10 BILLION YOUR STOCK GOES UP BY $20 BILLION, SO WHY WOULDN'T YOU JUST SPEND. I STILL WIND UP LIKING CHINESE STOCKS. FX I HAS OUTPERFORMED THE NASDAQ 100 THIS YEAR WHICH SEEMS BIZARRE, AND I THINK THEY CAN CONTINUE AS CHINA CONTINUES TO TRY TO WADE THROUGH THIS TARIFF POLICY AND THEY'VE BEEN CONSISTENT WITH THE MESSAGE. DANI: JUST ON THE IDEA OF STOCKS AND ANY SERVER ROTATION WE MIGHT HAVE, WHY BE ANYTHING OTHER THAN COMPLETELY BULLISH ON THE ENTIRETY OF THE MARKET IF WE ARE GETTING CUTS? > > IT FEELS LIKE WE HAD THIS RUN-UP ALREADY IN STOCKS. WE'VE BEEN RUNNING UP A LITTLE BIT IN ANTICIPATION OF ALL THESE CUTS, AND TO ME, THE AI SPEND HAS BEEN THE BIGGEST SURPRISE OF THE ECONOMY THIS YEAR. WE CAN TALK ABOUT TARIFF PAUSES, ALL THOSE THINGS. BUT TO ME, THE BIG THING WAS JUST HOW CONSISTENT THE AI SPENDING WAS, THAT THE STATE OF THE ECONOMY WE WANT TO BE IN THE AI, BECAUSE WE WANT TO BE MORE EFFICIENT. AND I THINK THAT IS GOING TO BE THE DRAG ON STOCKS. THE TARIFF STUFF, THIS IS GOING TO TAKE MONTHS OR QUARTERS TO PLAY OUT. I THINK HE FINALLY START SEEING SOME OF THE NEGATIVES COME THROUGH IN THE NEXT FEW MONTHS. DANI: EVEN WITH ALL THE HYPE AROUND AI, IT'S PROBABLY WORTH TAKING A STEP BACK AND REALIZING THAT THE NASDAQ HAS UNDERPERFORMED EUROPEAN STOCKS STILL THIS YEAR. THERE HAS BEEN SOMEWHAT SLIGHTLY OF A ROTATION TO INTERNATIONAL STOCKS THAT DOMINATED THE START OF THE YEAR. THAT NOISE HAS QUIETED DOWN, BUT TO WHAT DEGREE IS THAT TRADE STILL ALIVE? > > EUROPE TO ME SEEMS A BIT OVERPLAYED. I DON'T THINK THEY'RE GOING TO BE MASSIVE BENEFICIARIES FROM PEACE WITH RUSSIA AND UKRAINE. IT'S NOT GOING TO TURN THE ECONOMY AROUND. IT SEEMS BIZARRE TO ME THAT THINK -- DO THINK THE CHINESE STOCKS PER OUTPERFORM, BUT I THINK THAT IS WHERE WE ARE LEADING. EUROPE TO ME, THEY COALESCED A LITTLE BIT WITH NITTA SPENDING, BUT TO ME THAT SEEMS TO BE BREAKING A LITTLE BIT APART AGAIN. I THINK THE U.S. WILL PROBABLY OUTPERFORM EUROPE FOR THE REST OF THE YEAR. HAVING SAID THAT, THE DOLLAR IS THE PROBLEM. JONATHAN: EUROPE IS SUPER MESSY. WE ALWAYS TALK ABOUT EUROPE AS ONE THING, ONE MONOLITH, BUT EUROPE IS A MESS. GERMANY, THE U.K., FRANCE. IN FRANCE AT THE EPICENTER THIS MORNING. DANI: IF ANYTHING, IT REALLY HIGHLIGHTS THAT IT FEELS LIKE THE BACK HALF OF THIS YEAR THAT FISCAL DOMINANCE IS THE STORY. YOU HAVE FRANCE TRYING TO CUT THE BUDGET, UNABLE TO DO SO. YOU HAVE ALSO JAPAN FACING HIGHER YIELDS, AND BY THE WAY THESE ARE ALL COUNTRIES IN CENTRAL BANKS STARTED QT AT THE END OF LAST YEAR. THE ARE REALLY COMING UNDER PRESSURE. JONATHAN: LOTS OF DRAMA STATESIDE. EQUITY FUTURES NEGATIVE. > > WE START WITH PRESIDENT TRUMP MOVING TO OUST FED GOVERNOR LISA COOK OVER CLAIMED THAT SHE FALSIFIED MORTGAGE DOCUMENTS. COOK RESPONDED SAYING FROM HAS NO AUTHORITY TO FIRE HER AND THAT SHE WON'T STEP DOWN. THE MOVE REPRESENTS A SIGNIFICANT ESCALATION OF THE PRESIDENT'S BATTLE AGAINST THE FED WHICH HE SAYS IS TAKING TOO LONG TO LOWER INTEREST RATES. MEANWHILE CHINA IS SENDING A TOP TRADE NEGOTIATOR TO WASHINGTON THIS WEEK. THE COMMERCE MINISTER WILL MEET WITH TRADE AND TREASURY REPRESENTED THURSDAY AND FRIDAY. THE MOVE COMES AFTER BOTH SIDES EXTENDED A PAUSE ON HIGHER TARIFFS IN EARLY NOVEMBER. AND ELON MUSK IS SUING APPLE AND OPENAI, ACCUSING THEM OF COLLUDING TO BLOCK RIVALS IN THE ARTIFICIAL INTELLIGENCE MARKET. THE FEDERAL LAWSUIT, HE CLAIMS APPLE'S OF CHATGPT INTO IPHONES GIVES IT AN UNFAIR MONOPOLY AND DEPRIVES CONSUMERS OF CHOICE. OPENAI DISMISSED THE CASE. JONATHAN: APPRECIATE IT. MORE A LITTLE BIT LATER THIS HOUR. UP NEXT, TRUMP AND KIRK FACING OFF. > > I CAN FIRE HER IF SHE DOESN'T RESIGN. WHAT SHE DID WAS BAD SO I WILL FIRE HER IF SHE DOESN'T RESIGN. JONATHAN:JONATHAN: AND THAT'S EXACTLY WHAT HE DID. LIVE FROM NEW YORK CITY, YOU ARE BLOOMBERG TV. ♪ ♪ JONATHAN: WELCOME TO THE PROGRAM. NO DRAMA WHATSOEVER SO FAR THIS MORNING IN THE MARKET. DOWN JUST 0.05% ON THE S & P. THE NASDAQ TOTALLY UNCHANGED. WE TURN THE BOND MARKET AND THIS IS HOW THINGS ARE SHAPING UP. DOWN AT THE FRONT END OF THE CURVE, THE DISTANCE BETWEEN THE TWO GETTING LONGER. THE CURVE GETTING STEEPER. THAT IS THE THEME SO FAR. DANI: IT IS WORTH POINTING OUT THAT THIS HAS BEEN A MOVE OCCURRING FOR SOME TIME NOW. IF ANYTHING, THIS SPEEDS IT UP. WHAT IF WE DO GET A FED THAT MORE CLOSELY WORKS TOGETHER WITH THE TREASURY, THE TRIES TO CHANGE THE STEEPNESS OF THIS YIELD CURVE IF YOU DO HAVE CUTS THAT ARE MET BY HIGHER RATES, ESPECIALLY IF THERE ARE QUESTIONS OF INDEPENDENCE. IT UNDERSCORES A MOVE THAT HAS BEEN UNDERGOING. JONATHAN: JUST A LITTLE BIT MORE FUEL FOR THAT TRADE THIS MORNING. TRUMP AND COOK FACING OFF. > > ARE YOU GOING TO FIRED FED GOVERNOR? FROM: IF SHE DOESN'T RESIGN. WHAT SHE DID WAS BAD SO I WILL FIRE HER IF SHE DOESN'T RESIGN. JONATHAN: THAT WAS FRIDAY. PRESIDENT TRUMP ANNOUNCING HE IS SEEKING TO REMOVE LISA COOK FROM HER POSITION DUE TO ALLEGATIONS SHE COMMITTED MORTGAGE FRAUD. SHE RESPONDED SAYING THE PRESIDENT HAS NO CAUSE TO DO SO AND THAT SHE WOULD NOT BE RESIGNING. ANNE-MARIE JOINS US NOW FROM D.C. WITH MORE. ANNMARIE: SIGNIFICANT ESCALATION WHEN IT COMES TO THE PRESIDENT AND THE PRESIDENT AND THIS STANDOFF WITH GOVERNOR LISA COOK. THIS REALLY STEMS FROM DIRECTOR BILL PULTE TALKING ABOUT THE FACT THAT THEY THINK SHE COMMITTED MORTGAGE FRAUD. THESE ARE ALLEGATIONS. THE PRESIDENT LAST NIGHT SAID THE AMERICAN PEOPLE MUST BE ABLE TO HAVE FULL CONFIDENCE IN THE HONESTY OF THE MEMBERS INTERESTED IN SETTING POLICY AND OVERSEEING THE FEDERAL RESERVE. WE ARE NOW JOINED BY SCOTT LINTHICUM OF THE CATO INSTITUTE. HE WORKS IN GENERAL ECONOMICS AND TRADE. THANK YOU SO MUCH FOR JOINING US THIS MORNING. JUST YOUR REACTION TO THIS HEADLINE OVERNIGHT? > > I CAN'T SAY I'M SURPRISED, GIVEN THE RUN-UP AND SOME OF THE STATEMENTS FROM THE TRUMP ADMINISTRATION ALREADY, BUT LOOK, THAT DOESN'T MEAN THAT THIS ISN'T A SIGNIFICANT MOVE. THE INDEPENDENCE OF THE FED IS EXTREMELY IMPORTANT FOR U.S. MONETARY POLICY AND THE U.S. ECONOMY. WE AT CATO AND ELSEWHERE HAVE ALWAYS BEEN CONCERNED ABOUT POLARIZATION OF THE FED, BUT THIS IS NOW GOING IN THE WRONG DIRECTION. IT IS PUSHING US MORE TOWARD POLITICIZED MONETARY POLICY AND QUITE FRANKLY, IT'S NOT SOMETHING THAT APPEARS JUSTIFIED BY THE NUMBERS IN TERMS OF ABSOLUTELY SOME SORT OF RATE CUT. WHEN YOU LOOK AT CORE CPI STILL ABOVE THREE, FLASH PMI SHOWING SIGNIFICANT PRICE PRESSURES, THE IDEA THAT THIS IS JUST A FED FIGHTING THE PRESIDENT'S WHIMS OR NEEDS IS NOT REALLY HELD UP IN THE DATA. DOES THE DANI: MARKET ACTUALLY BELIEVE IT YET? HOW DO YOU SEE THIS PLAYING OUT? > > SOME OF THE COLUMNIST IN THE MARKET PROBABLY STEMS FROM THE FACT THAT IT'S NOT 100% CLEAR THAT THEY CAN DO THIS. COOK AND HER LEGAL TEAM SAYING THEY ARE GOING TO FIGHT IT AND THAT APPEARS TO BE GIVING SOME PEOPLE SOME THOUGHTS THAT MAY BE THE INDEPENDENCE OF THE FED IS STILL INTACT, BUT THAT BEING SAID, TRUMP IS A PERSISTENT GUY, WE KNOW THIS. I DON'T THINK WE SHOULD BE TOO CONFIDENT THAT THIS IS GOING AWAY ANYTIME SOON REGARDLESS OF HOW THIS PARTICULAR SPAT TURNS OUT. DANI: WHETHER IT IS THE FED OR TRADE WE WOULD LIKE TO SEE THE PRESIDENT OF UNITED STATES PUT HIS THUMB ON THE SCALE. HE TAKES INTERVENTIONIST APPROACH. YOU WROTE ABOUT THAT WHEN IT COMES TO INTEL. WHAT KIND OF PRESENT -- PRECEDENT DO YOU SEE TRUMP SETTING FOR FUTURE ADMINISTRATIONS? > > A LOT OF TROUBLING PRECEDENT. BEYOND THE PRESSURE IN THE FED, YOU HAVE THE STATE TAKING A STAKE IN PRIVATE COMPANIES LIKE INTEL. NOT DURING THE GREAT RECESSION OR WARTIME, BUT IN PEACE TIME, UNDER A PRETTY CLEAR PRESSURE AND COERCION FROM THE OVAL OFFICE. OF COURSE YOU HAVE ALL THE IMPORT SUBSTITUTION IN TARIFFS AND UNCERTAINTY IN TRADE DEALS WHICH IS ALSO ALL EXECUTIVE POWER AS WELL. IT MAKES YOU WONDER WHERE THE HECK CONGRESS IS IN ALL OF THIS, BUT IT ALSO MAKES YOU THINK WHAT THE NEXT PRESIDENT IS GOING TO BE ABLE TO DO. BERNIE SANDERS WAS CHEERING THE INTEL MOVE AND YOU COULD VERY WELL HAVE A DEMOCRATIC PRESIDENT THAT PICKS UP THESE VERY SAME PRECEDENTS AND PUSHES EVEN FURTHER INTO AN INTERVENTIONIST EXECUTIVE BRANCH ACTING UNILATERALLY, AND THAT IS OF COURSE GOING TO RAISE SERIOUS PROBLEMS FOR THE HELP OF U.S. ECONOMY. DANI: THE PRESIDENT ALSO SAID HE WOULD BE INTERESTED IN MAYBE STRIKING MORE DEALS LIKE THIS. ARE THERE COMPANIES THAT YOU WERE LOOKING AT THAT POTENTIALLY WE COULD SEE A SIMILAR APPROACH FROM THIS WHITE HOUSE? > > AS A ROAD IN THE POST, ANY COMPANY THAT HAS TAKEN SUBSIDIES IN THE U.S. GOVERNMENT AND HAPPENS TO BE LOCATED IN A STRATEGIC INDUSTRY BY THE EXECUTIVE BRANCH'S DEFINITION SHOULD BE A LITTLE BIT CONCERNED. THE FACT IS THAT WE NOW HAVE NATIONAL SECURITY INVESTIGATIONS IN THE TRADE SPACE ON A WHOLE LOT OF PRODUCTS, NOT JUST CHIPS AND STEEL AND ALUMINUM AND OTHERS. WE'VE ALREADY SEEN A GOLDEN SHARE FOR U.S. STEEL, INVESTMENTS IN MATERIALS WHICH IS IN THE RARE EARTH SPACE. SO I THINK THERE'S NO QUESTION THAT COMPANIES THAT HAVE SOME SORT OF DEALINGS WITH THE U.S. GOVERNMENT IN THESE STRATEGIC INDUSTRIES MAY BE THE NEXT TO GET A CALL FROM THE OVAL OFFICE. DANI: TRUMP HAS TALKED ABOUT BUILDING U.S. SOVEREIGN WEALTH FUND. IS THAT WHAT ALL OF THIS IS LEADING TOWARDS? > > KEVIN HASSETT BASICALLY SAID AS MUCH YESTERDAY, THAT THEY ARE USING A LOT OF THE INDUSTRIAL POLICY THAT WAS IMPLANTED DURING THE BIDEN YEARS THROUGH THE INFLATION REDUCTION ACT, THE CHIPS ACT, THE INFRASTRUCTURE BILL AND SOME OTHER EXECUTIVE AUTHORITIES TO BASICALLY REVERSE ENGINEER A SOVEREIGN WEALTH FUND WHICH TRUMP HAS LONG WANTED. THIS AGAIN I THINK IS A CONCERN FOR COMPANIES THAT HAVE TAKEN TRILLIONS OF DOLLARS IN GOVERNMENT SUBSIDIES, BUT IT'S ALSO I THINK A CAUTIONARY TALE ABOUT U.S. INDUSTRIAL POLICY GENERALLY, HOW THIS STUFF MAY STARTS TARGETED, BUT TENDS TO HAVE A WAY TO SPIRAL OUT OF CONTROL. > > I JUST WANTED TO END ON ANOTHER TWEET LAST NIGHT FROM THE PRESIDENT. HE SAID HE'S GOING TO STAND UP THE COUNTRIES THAT ATTACK U.S. TECH BECAUSE OF THINGS LIKE DIGITAL SERVICES. WHAT DOES THIS MEAN FOR THE EUROPEAN UNION GIVEN THE FACT THAT THE PRESIDENT HAS ALREADY STRUCK A TREE DEAL WITH THEM? > > I THINK IT SHOULD TELL THE EUROPEAN UNION, JAPAN AND ANYBODY ELSE THAT THESE TRADE DEALS THAT THEY SIGNED OVER THE LAST COUPLE MONTHS ARE NEVER REALLY FINISHED. DIGITAL SERVICES TAXES WERE SUPPOSED TO BE AN ISSUE IN THE E.U. NEGOTIATIONS. THE EUROPEANS RESISTED ANY CHANGES. THEY SIGNED THIS BIG DEAL WHICH MOST PEOPLE SAW AS A PRETTY HUGE CAVE BY THE EUROPEANS, AND HERE WE ARE JUST A COUPLE WEEKS LATER AND TRUMP IS ASKING FOR MORE. ESPECIALLY IN THE MARKET, FOR THOSE WHO THINK THESE TRADE DEALS HAVE SETTLED DOWN IN THE TARIFF SPACE, THINK AGAIN. DANI: THAT IS CERTAINLY RIGHT. DOESN'T FEEL LIKE THE TARIFF STORY IS GOING TO BE ENDING ANYTIME SOON. ANOTHER 3.5 YEARS OF MAYBE SOME TIT FOR TAT ON THE TRADE FRONT. THANK YOU SO MUCH FOR JOINING US. THAT WAS SCOTLAND TO COME, AND HE MAKES THE POINT REALLY WHAT THE PRESIDENT IS DOING WHETHER OR NOT IT IS THE FED OR TRADE, TAKING A STAKE IN INTEL, IT IS THE PRESIDENT -- DECEDENT THAT THIS SET FOR POTENTIALLY FUTURE ADMINISTRATIONS. SCOTT WAS POINTING TO SENATOR BERNIE SANDERS ACTUALLY WELCOMING WHAT THIS WHITE HOUSE DID WHEN IT COMES TO INTEL. JONATHAN: ANNE-MARIE, THANK YOU. TURNING THE CHIPS ACT INTO AN INVESTMENT VEHICLE, WE GOT A VERY ACTIVIST INVESTOR IN THE WHITE HOUSE SAME WE ARE TAKING A PASSIVE STATE. I'M NOT SO SURE ABOUT THAT. DANI: HOW CAN IT BE WHEN HE'S SUMMONED THE CEO OF INTEL TO THE WHITE HOUSE JUST BEFORE THIS HAPPENED? WHAT DOES THAT MEAN FOR OTHER COMPANIES IN THE U.S., THIS INTEL SUDDENLY GET FAVORITE ABOVE THEM? IT RAISES A LOT OF QUESTIONS, NOT LEAST OF WHICH IT TAKES MORE THAN FOUR YEARS OFTEN TO BUILD OUT THESE TYPES OF BUSINESSES AND FOUNDRIES, SO WHAT HAPPENS WHEN DOES A DIFFERENT PRESIDENT IN THE WHITE HOUSE? JONATHAN: I IMAGINE THAT WORRY HAS GOT SOME EXTRA FUEL OVER THE LAST FEW WEEKS OR SO. WHAT A MONTH WE'VE SEEN FOR THE MONTH OF AUGUST. EQUITY FUTURES AT THE MOMENT DOWN BY ABOUT 1/10 OF 1%. COMING UP ON THE PROGRAM, WE WILL CATCH UP ON PRESIDENT TRUMP'S PUSH TO RESHAPE THE FEDERAL RESERVE. PLUS, WE WILL TOUCH BASE WITH YAHAIRA AGAIN AND GET YOU SOME MORNING MOVERS. BOEING LANDING A MULTIBILLION-DOLLAR DEAL BY KOREAN AIR. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. ♪ JONATHAN: IT'S A BIT OF A SLEEPY TUESDAY. LOTS OF HEADLINES TO GET THROUGH, BUT WE ARE GOING NOWHERE ON THE NASDAQ. LIKEWISE ON THE S & P. THE S & P NEGATIVE BY NOT EVEN .1%. HE WANTS A PRICE ACTION, GET TO THE BOND MARKET. BOND YIELDS HIGHER AT THE LONG END, LOWER AT THE FRONT END. THIS CURVE IS STEEPER. WE ARE UP FOUR ON 30'S, 4.93%. IT WAS THE THING I WAS LOOKING AT THIS MORNING, THIS CURVE GETTING STEEPER. DANI: THE DOLLAR IS NOT REACTING. GOOD SHIPPING PUTTING ON A NOTE THIS MORNING SAYING, THEY CAN SEE NO REASON WHY THE RISK WOULD NOT BE PRICED IN. IT IS BEING EXECUTED THROUGH BOND MARKET. THE NERVES OF WHAT IT MEANS GOING FORWARD IF YOU GET A FED CUTTING. PERHAPS IT IS REFLECTING FEARS OF INFLATION. PERHAPS IT IS REFLECTING FEARS OF INDEPENDENCE. PERHAPS IT IS REFLECTING AN IDEA THAT YOU COULD GET ACTION FROM THE FED TO TRY TO CHANGE THE SHAPE OF THE BOND CURVE. THIS IS A FED THAT HAS DONE QE BEFORE. NOTHING WOULD STOP THEM FROM DOING IT AGAIN. JONATHAN: WE WILL COME BACK TO THAT. WE ARE THREE HOURS UNTIL THE OPENING BELL. 6:30 EASTERN TIME. IF YOU'RE MORNING MOVERS, HERE IS YOU HIRE A -- YAHIRA. YAHAIRA: BOEING HAS EMERGED AS ONE OF THE WINNERS OF PRESIDENT TRUMP'S TRADE WARS. SOUTH KOREA ANNOUNCED $50 BILLION IN DEALS WITH U.S. FIRMS AS PART OF ITS TRADE DEAL AND INCLUDED IN THAT IS A 36 BILLION DOLLARS ORDER FOR MORE THAN 100 BOEING JETS. WE MOVE ON TO SHALES OF RETAIL TRADING PLATFORM INTERACTIVE BROKERS. THEY ARE RISING NEARLY 4% ON NEWS IT IS JOINING THE S & P 500, WHICH OF COURSE USUALLY MEANS A RUSH OF DEMAND BY INDEX FUNDS. THE CHANGES ARE SET TO HAPPEN ON THURSDAY BEFORE THE MARKET OPENS. IT IS SAID -- SET TO REPLACE WALGREENS, WHICH IS GOING PRIVATE. WE END ON VF CORP. SHARES ARISING 2.4% ON SOME SELL SIDE ACTION. BAIRD IS UPGRADING IT TO OUTPERFORM AND LIFTING ITS PRICE TARGET THE $20, SAYING THEIR SHOE BRAND, VANS, IS TURNING A CORNER, AND THE COST CUTS ARE STARTING TO KICK IN. BUT TARIFFS ARE STILL A MAJOR OVERHANG ON THIS COMPANY. IT IS SAID THAT TARIFFS COULD SHAVE OFF ABOUT $70 MILLION OFF OF ITS PROFITS THIS YEAR. JONATHAN: THAT STOCK IS UP BY 2.4%. MORE IN JUST A MOMENT. ON OUR RADAR THIS MORNING, PRESIDENT DONALD TRUMP MOVING TO FIRE LISA COOK AFTER CLAIMING SHE FALSIFIED MORTGAGE DOCUMENTS. COOK RESPONDING, TRUMP HAS NO AUTHORITY TO FIRE HER AND SHE WILL NOT STEP DOWN. DANI: THERE ARE SOME NERVES ABOUT THE LATEST DEVELOPMENTS, BUT NOT FREAKING OUT YET, PRESUMABLY ON THIS ASSUMPTION THAT THE FIRING WILL NOT STICK. SHE HAS NOT FORMALLY BEEN CHARGED WITH ANYTHING. I THINK PART OF THE INTERESTING THING WOULD BE HOW THE FED, THE FOMC STARTS TO REACT. THIS IS A POWELL THAT DID NOT STAND IN THE WAY OF ETHICAL CONCERNS ABOUT KAPLAN WHEN HE DECIDED TO RESIGN. THE KEY IS, WHAT DID THEY DO NOW? DO THEY TREAT COOK AS A NORMAL MEMBER OF THE BOARD? WHAT HAPPENS IF A LAWSUIT IS CLOUDING OVER THIS FED AS THEY CONTINUE TO MAKE GREAT DECISIONS? THERE HAS BEEN TALK ABOUT THIS BEING A MAKE OR BREAK MOMENT FOR THE FED. HOW DID THEY REACT? JONATHAN: AMERICA IS NOT TURKEY. IF YOU GO BACK TO WHEN ERDOGAN OUSTED THE CENTRAL BANK GOVERNOR YEARS AGO, WHEN WE SAW THAT HAPPEN IT WAS IMMEDIATE. THERE WAS NO PUSHBACK. IT WAS NO PROCESS AND WE SAW THE REACTION IN FOREIGN EXCHANGE. THE PROCESS HERE IS DIFFERENT. THIS IS GOING TO TAKE A LONG TIME TO PLANT. ALSO THE LEGAL PROCESS OVER THESE MORTGAGE FRAUD ALLEGATIONS. THAT HAS NOT OFFICIALLY OPENED. DANI: EVEN IF COOK IS GONE THE LIST OF CANDIDATES WE HAVE SEEN FOR FED CHAIR HAVE BEEN VERY CREDIBLE. THERE IS NO REASON TO SUGGEST IT WOULD NOT BE THE SAME. THE ISSUE COMES EVEN IF YOU HAVE SOME INCREDIBLE LEAVING THE FED, LET'S SAY YOU HAVE WALLER, WHICH HAS CLEAR AND ARTICULATE REASONS FOR CUTTING, IS IT A MARKET THAT LOOKS PAST THAT AND SAYS, THIS IS AN FOMC THAT IS MOSTLY TRUMP APPOINTEES? WE THINK IT IS FOR POLITICAL REASONS AND THEREFORE THE LONG END AS UNATTRACTIVE. JONATHAN: MIKE MCKEE IS STANDING BY. WANT TO GET YOU UP TO SPEED ON THE TERM MARVEL -- ON THE TURMOIL IN EUROPE. IT COULD TOPPLE FRANCE'S GOVERNMENT AS SOON AS NEXT MONTH. PARTIES SAYING THEY WOULD VOTE AGAINST THE MEASURE, WHICH COULD FORCE HIS RESIGNATION. DANI: ANOTHER FRENCH GOVERNMENT POTENTIALLY COLLAPSING ONLY EIGHT MONTHS AFTER IT HAPPENED, WITH MOECHELLA BARNIER ONLY SERVING FOR 90 DAYS. IT IS IMPORTANT TO KNOW WHY THIS BOAT IS HAPPENING. IT IS BECAUSE HE WANTED FISCAL TIGHTENING. HE WANTED CUTS IN TAX INCREASES. 44 BILLION EUROS. IT IS THE REST OF THE GOVERNMENT THAT FINDS THAT SOMEONE SAVORY. BUT IT IS A LOT OF PLACES THAT ARE STRUGGLING WITH THIS, THAT THEY NEED TO FIND FISCAL HEADSPACE BUT ARE GETTING PUSHBACK FROM OTHER PEOPLE IN POWER AND POPULATIONS TOO. IT HAPPENS? THERE COMES BACK TO THE STORY WE HAVE BEEN DISCUSSING. IT IS A BOND MARKET LOOKING INCREASINGLY UNSAVORY IF THEY CANNOT FIND THAT. JONATHAN: WHAT WOULD MAKE IT POLITICALLY PALATABLE? WHAT WOULD MAKE IT PALATABLE NOT JUST FOR THE FRENCH, BUT THE BRITS AS WELL? WHAT WOULD IT TAKE FOR THEM TO VOTE FOR THIS? THEY ARE NOT GOING TO VOTE FOR THIS UNTIL THE ALTERNATIVE IS WORTH -- IS WORSE. THAT MEANS IT IS NOT BOND YIELDS WHERE THEY ARE AT RIGHT NOW. IT IS A WHOLE LOT HIGHER FROM HERE. I'M NOT GOING TO BE HELPFUL FROM HERE BECAUSE I'M GOING TO SAY I HAVE NO IDEA WHEN THAT IS GOING TO HAPPEN. BUT THAT IS HOW THE STAGE IS SET HERE. WITH LIMITED PHYSICAL SPACE YOU ARE NOT GOING TO GET POLITICIANS TO VOTE FOR WHAT IS GOOD FOR THE HEALTH OF THE FISK -- THE FISCAL BALANCE SHEET UNTIL THE ALTERNATIVE IS VIEWED AS WORSE. DANI: I THINK IT IS HELPFUL TO LOOK AT HISTORICAL EXAMPLES WHERE THIS HAS HAPPENED. THE MOST RECENT ONE IS THE U.K. AND THE TURMOIL OVER LIZ TRUSS'S BUDGET. BUT IT IS IMPORTANT TO UNDERSCORE, FOR ALL OF THE CRYING THAT BOND VIGILANTES ARE THE ONES THAT CAN CHANGE POLICY, IT WAS NOT BOND VIGILANTES, IT WAS A BREAK FOR A MECHANICAL REASON HAVING TO DO WITH THE PENSIONS IN THE U.K. IT WAS NOT INVESTORS PUSHING BACK, SAYING THE ALTERNATIVE IS WORSE. THE ALTERNATIVE HAS NOT PRESENTED ITSELF OF A BOND MARKET THAT HAS SHOWN THE ABILITY TO DO THAT. UNLESS IT IS A MECHANICAL THING. JONATHAN: SOMETHING, SOMEWHERE HAS TO BREAK AND RIGHT NOW HAS NOT BROKEN. IF YOU ARE WORRIED ABOUT WHAT THAT MIGHT LOOK LIKE, SO AM I. THEY KEEP PUSHING IT, AND THE FRENCH ARE NOT THE ONLY ONES. LET'S TURN TO CHINA. SENDING A NEGOTIATOR TO WASHINGTON LATER ON THIS WEEK. THE DISCUSSIONS SIGNAL PROGRESS FOLLOWING PRESIDENT TRUMP'S EXTENSION OF THE TERROR OF TRUTH BEHIND THE TWO COUNTRIES. THE TREASURY, PLAYING THIS TOWN. DANI: THEY ARE REALLY PLAYING IT DOWN, SAYING THE CONVERSATIONS WILL NOT BE HAPPENING AT THE HIGHEST LEVEL, THAT THE U.S. DID NOT ASK FOR THIS MEETING EITHER. IT DOES UNDERSCORE THE TROUBLE WITH CAN-KICKING. IT LEADS TO THREATS OF ESCALATION. IT SEEMS THIS CONVERSATION MIGHT SURROUND SOYBEANS. THE PRESIDENT SAID THAT THE -- THAT CHINA WASN'T BUYING UP. YOU COULD TO HUNDRED PERCENT TARIFFS ON CHINA IF WE DON'T GET THAT. THE ISSUES WE THOUGHT WERE BEHIND US, THE FACT THAT THERE HAS BEEN NO RESOLUTION WITH CHINA AND IT IS EXTENSION AFTER EXTENSION DOES LEAVE ESCALATION AS A THREAT. JONATHAN: PRESIDENT DONALD TRUMP, MOVING TO FIRE FED GOVERNOR LISA COOK. MIKE MCKEE, BACK FROM JACKSON HOLE, JOINS US NOW FOR MORE. YOU WERE EXPECTING THIS, AND HERE IT IS. MIKE: HERE IT IS. THE INTERESTING QUESTION IS, DONALD TRUMP SAYS LISA COOK IS FIRE. LISA COOK SAYS, NO I'M NOT. IS SHE FIRE? WE DON'T KNOW AT THIS POINT, AND WE DON'T KNOW WHETHER THIS WILL GO TO COURT OR HOW IT WILL COME OTHER THAN IF LISA COOK DOES HAVE TO GO TO COURT SHE WILL DO IT ON HER OWN. BECAUSE THIS IS A PERSONAL ISSUE OF THE MORTGAGES. THE FED CANNOT REALLY BE INVOLVED. UNLESS THEY SEE IT AS A THREAT TO THE FED ITSELF, WHICH YOU COULD MAKE THAT ARGUMENT, IN WHICH CASE THEY CAN SORT OF FILE A FRIEND OF THE COURT BRIEF TO STOP THIS. JONATHAN: WERE IN JACKSON HOLE. HOW IS THIS STORY -- HOW WAS THIS STORY PLAYING OUT A FEW DAYS AGO? MIKE: THERE WERE A LOT OF PEOPLE TALKING ABOUT THIS. THIS WAS ALL OF THE TALK OUTSIDE OF THE MEETING ROOM. EVERYBODY CONCERNED WITH WHAT IT MIGHT MEAN FOR THEM. I TALKED TO A NUMBER OF FED OFFICIALS WHO SAID, I BELIEVE THEY COULD BE COMING AFTER ME TOO. AUSTIN GOOLSBY HAD THE BEST RESPONSE, THE CHICAGO FED PRESIDENT. I'VE LIVED HERE FOR 30 YEARS AND I PAID OFF MY MORTGAGE, SO I'M NOT WORRIED. THEN YOU HAVE THE TINFOIL HAT THEORY ABOUT TRUMP-CONTROLLED BOARD FIRING ALL OF THE REGIONAL FED BANK PRESIDENTS. SOME SAY THEY WOULD NOT PUT IT PAST THE PRESIDENT TO TRY THAT. IT IS A MATTER OF CONCERN TO EVERYONE THERE. JONATHAN: I THINK THERE HAS TO BE PUSHED BACK THERE ON THE MAJORITY OF THE GOVERNORS FIRING REGIONAL FED PRESIDENTS. YOU KNOW GOVERNOR WATER, GOVERNOR MICKEY BOWMAN WELL. DID THEY SOUND LIKE POLITICAL PUPPETS THAT WOULD PURSUE THOSE THINGS? MIKE: I DON'T THINK THAT IS THE CASE, PARTICULARLY WITH WALLER, BUT I DID TALK TO SOME PEOPLE THAT BOUGHT THE PRESSURE ON THEM MIGHT GET THEM TO DO SOMETHING LIKE THAT. BUT I THINK THAT WOULD BE A LONG SHOT. JONATHAN: STAY CLOSE, MIKE. GOOD TO HAVE HIM BACK IN NEW YORK CITY. THE GOVERNOR OF ABERDEEN WARNING THE PRESIDENT'S PUSH TO FIRE LISA COOK COULD LEAD TO HIGHER PREMIUMS IN U.S. TREASURIES. GOOD MORNING. ARE YOU SEEING SOME LIMITED SIGNS OF THAT THIS MORNING? SREE: I THINK SO. WE ARE SEEING OVER THE LAST FEW DAYS ACTUALLY WE HAVE SEEN THIS TREND TOWARD STEEPER CURVES. WHAT WE SAW ON FRIDAY WAS A RESPONSE TO JACKSON HOLE. NOW TODAY WE ARE STARTING TO SEE THE IMPACT OF THIS ANNOUNCEMENT BY PRESIDENT TRUMP. THAT IS SET TO BE A LONG, ONGOING PROCESS. THIS IS NOT AN OVERNIGHT ISSUE. THIS IS SOMETHING WE HAVE SEEN IS QUITE A PIVOTAL MOMENT WHERE PRESIDENT TRUMP BEEN TALKING ABOUT FIRING OFFICIALS AND TAKING CONTROL OVER THE FED. NOW HE IS ACTUALLY TRYING TO DO THAT. HE IS ATTEMPTING TO DO THAT. AS WE HAVE ALREADY HEARD, THIS WOULD BE A LONG PROCESS THAT GOES TO THE COURTS. THIS IS A LOT OF PRESSURE ON GOVERNOR COOK OVER THE COMING WEEKS, OBVIOUSLY. NOW, WHAT ARE ALSO SEEING IS THAT IF GOVERNOR COOK IS PRESSURED TO RESIGN OR EVENTUALLY FIRED, WHAT DOES THAT MEAN FOR THE FED? IT TIPS THE BALANCE FROM A FAIRLY BALANCED AND NUANCED FED TOWARD A DOVISH MAJORITY. IT IS MOST LIKELY THAT THE REPLACEMENT FOR GOVERNOR COOK IS GOING TO BE ANOTHER [INDISCERNIBLE] WE HAVE SEEN THIS PRESSURE ON THE FED, WHETHER IT IS TREASURY SECRETARY BESSENT CALLING FOR A 50 BASIS POINT CUT OR THIS PUSH FOR GETTING STEFAN MORAN IN PLACE VERY QUICKLY, PUSHING THAT THROUGH THE SENATE. SO, THERE IS A LOT OF MOVING PARTS HERE THAT ARE STARTING TO SUGGEST THE FED IS UNDER A LOT OF PRESSURE IN TERMS OF THE FUTURE POLICY PATH. NOW, THERE IS NO WAY THAT THE BOND MARKET WILL COMPLETELY IGNORE THIS. I THINK AT THE MOMENT IT IS A CASE OF WHAT IS ACTUALLY HAPPENING IS THIS POSSIBLE IN THE COURTS? THERE ARE CHECKS AND BALANCES IN TERMS OF THE FED. THIS IS VERY DIFFERENT TO CABINET MEMBERS. THERE ARE CHECKS AND BALANCES HERE AND IT IS AN ONGOING PROCESS. AT THE MOMENT IT COULD BE A CASE OF, LET'S SEE WHAT IS HAPPENING HERE. BUT LONGER-TERM THIS DOES SIGNAL HIGHER RISK PREMIUM IF THERE IS A THREAT TO FED INDEPENDENCE AND FED CREDIBILITY. THAT COULD BE A PROBLEM AT THE LONGER END OF THE YIELD CURVE. DANI: IF WE DO HAVE A GOVERNOR COOK THAT LEAVES AND IS REPLACED WITH SOMEONE WHO IS DOVISH, WHAT DIFFERENCE WOULD THAT ACTUALLY MAKE? IN FACT, IT WAS GOVERNOR COOK WHO BEFORE THIS KICKED OFF HAD BEEN EXPRESSING CONCERNS ABOUT THE LABOR MARKET AND HERSELF LEANING MORE DOVISH. SREE: THAT IS TRUE. WHAT HAS BEEN INTERESTING IS THIS SHIFT FROM CHAIR POWELL HIMSELF. PRIOR TO JACKSON HOLE ON FRIDAY WE HAD BEEN SEEING GREATER EMPHASIS ON THE INFLATIONARY PRESSURES COMING THROUGH TARIFFS. THERE WAS A DISTINCT SHIFT FROM POWELL. WE ARE SEEING THAT THERE IS SOME WEAKNESS IN THE DATA BEING SIGNALED IN PAYROLLS, BUT THAT WAS A SUDDEN SHIFT IN HIS TONE, IN HIS COMMUNICATION. SO, WHAT WE ARE SEEING IS THAT IN THE NEXT FEW WEEKS I THINK IT COULD BE QUITE CRITICAL TO WATCH THE KEY DATA COMING OUT. WE HAVE PAYROLLS, OBVIOUSLY, IN A WEEK'S TIME. WE HAVE BENCHMARK NFP REVISIONS AS WELL TAKING THE PRELIMINARY REVISIONS FOR MARCH 2025. FINAL REVISIONS FOR THE YEAR BEFORE. THESE WILL BE QUITE IMPORTANT, ALONGSIDE THE CPI PRINT. THIS IS STILL, FROM THE MESSAGING ON FRIDAY WE STILL SAW DATA DEPENDENCE, ALTHOUGH THE NUANCE HAS SHIFTED QUITE QUICKLY TOWARDS THE LABOR MARKET DYNAMIC. NOW THE LABOR MARKET IS THE SWING FACTOR RATHER THAN INFLATION. I HAVE NOT COMPLETELY CLOSED THE DOOR ON A WHOLE. THEY HAVE HIGHLIGHTED THAT CHAIR POWELL DID CONTINUE TO HIGHLIGHT THE TARIFF IMPACT WILL FILTER THROUGH TO INFLATION. BUT NOW THE EMPHASIS IS THAT IT WILL BE OVER TIME. ALSO THAT IT IS MORE OF A PRICE LEVEL SHIFT. OBVIOUSLY FOR THE FED IF THIS FILTERS THROUGH INTO INFLATION EXPECTATIONS THEN THAT TAKES ON A DIFFERENT TONE. BUT THEY ARE NOT MENTIONING THAT. THEY ARE NOT TALKING ABOUT THAT MUCH. IT IS A -- IT IS MORE OF A FOCUS ON THE LABOR MARKET. I THINK THAT SHIFT IN TONE IS INTERESTING TO WATCH AS WELL. JONATHAN: THANKS FOR MAKING TIME FOR US. SREE KOCHUGOVINDAN OF ABERDEEN ON THIS BOND MARKET AND MORE. WITH AN UPDATE ON STORES WORLDWIDE, WITH YOUR BLOOMBERG BRIEF, HERE IS YAHAIRA ANAND. YAHAIRA: TRUMP SAYS VLADIMIR PUTIN'S DISLIKE OF VOLODYMYR ZELENSKYY IS INSTALLING A MEETING BETWEEN THE TWO LEADERS. THE WHITE HOUSE PREVIOUSLY SAID PUTIN AGREED TO A MEETING WITH THE UKRAINIAN PRESIDENT, AND THAT PLANNING WAS UNDERWAY. THE KREMLIN NEVER CONFIRMED THEIR COMMITMENT. NO SUMMIT HAS BEEN SCHEDULED. IN THE U.S. THE PRESIDENT HAS CALLED CHICAGO A MESS AND THREATENED TO USE THE NATIONAL GUARD TO TACKLE CRIME IN THE CITY. CHICAGO'S MAYOR SAID TRUMP'S PLAN IS UNCONSTITUTIONAL AND A THREAT TO DEMOCRACY, AND NOTED THAT MURDERS IN THE CITY HAVE FALLEN TO THE LOWEST IN MORE THAN A DECADE. I MENTIONED THIS STORY EARLY. KOREAN AIRLINES PLANS TO ORDER MORE THAN 100 BOEING JETS WORTH MORE THAN $36 BILLION. THAT IS IN ADDITION TO A $13 BILLION DEAL WITH GE AEROSPACE. KOREAN AIR'S CEO IS HAILING THE DEAL. THE ANNOUNCEMENT FOLLOWS THE SOUTH KOREAN PRESIDENT'S VISIT TO THE WHITE HOUSE YESTERDAY. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: MORE IN ABOUT 30 MINUTES' TIME. UP NEXT, MORE TRADE TALKS ON THE WAY. PRES. TRUMP: I SPOKE TO PRESIDENT XI FAIRLY RECENTLY. AT SOME POINT THIS YEAR OR SHORTLY THEREAFTER WE WILL GO TO CHINA. IN TERMS OF PLAYING THE CARDS, WE HAVE MUCH BIGGER AND BETTER CARDS THAN THEY DO. WITH THAT BEING SAID I THINK WE HAVE A GREAT RELATIONSHIP. JONATHAN: THAT CONVERSATION UP NEXT WITH MARISSA ADAMS OF HSBC. ♪ JONATHAN: EQUITIES AT THE MOMENT LITTLE CHANGED ON THE S & P. AND ON THE NASDAQ. IN THE BOND MARKET, A LITTLE BIT OF CHANGE. LONG -- YIELDS ARE HIGHER AT THE LONG END OF THE CURVE. PRESIDENT SAYS GOVERNOR COOK IS FIRED AND GOVERNOR COOK SAYS SHE IS NOT. WHERE DOES THAT LEAVE THINGS? DANI: IN A LIMBO. WE HAVE THIS WHOLE JACKSON HOLE SPEEDS -- SPEECH WHERE INDEPENDENCE WAS NOT MUCH OF IT ALL AND THREE DAYS LATER YOU HAVE THE PRESIDENT ATTEMPTING TO FIRE A FEDERAL RESERVE GOVERNOR. JONATHAN: ANNMARIE IS ON THE GROUND IN WASHINGTON. PLUS, DON'T MISS THIS. THE FORMER FED GUYS -- FED VICE CHAIR LAEL BRAINARD JOINING US. MORE TRADE TALKS ON THE WAY. PRES. TRUMP: I SPOKE TO PRESIDENT XI FAIRLY RECENTLY. AT SOME POINT PROBABLY THIS YEAR OR SHORTLY THEREAFTER WE WILL GO TO CHINA. I THINK YOU ARE GOING TO SEE A MAGNIFICENT SIGHT. IT IS A GREAT COUNTRY. IN TERMS OF PLAYING THE CARDS, WE HAVE MUCH BIGGER AND BETTER CARDS THAN THEY DO. WITH THAT BEING SAID, I THINK WE HAVE A GREAT RELATIONSHIP. JONATHAN: CHINA IS SENDING IS SENIOR TRADE NEGOTIATOR TO WASHINGTON FOR TALKS THIS WEEK. HE TRADE DEADLINES ALSO LOOMING. TO DISCUSS IS MARISSA ADAMS OF HSBC. WELCOME BACK TO THE PROGRAM. THIS IS WHERE THINGS STAND. OR DEADLINES FOR TRADE NEGOTIATIONS. WE ALSO HAVE TO FIND OUT WHETHER THESE TARIFFS STAND UP TO LEGAL SCRUTINY. WE ARE WONDERING, WHAT IS THE APPROACH FROM CORPORATIONS? ARE THEY DOING SHORT-TERM FIXES OR BEGINNING TO IMPLEMENT LONG-TERM STRATEGIES? MARISSA: THANKS FOR HAVING ME AGAIN THIS MORNING. WE CONTINUE TO HAVE CONVERSATIONS WITH OUR CLIENTS AND CORPORATE'S HERE IN EUROPE AND ACROSS THE AMERICAS IN PARTICULAR IN THE UNITED STATES. CORPORATE'S ARE STILL VERY MUCH IN A WAIT AND WATCH MOMENT IN TERMS OF LONG-TERM INVESTMENT. WE THINK THERE IS ONLY SO MUCH LONGER THEY CAN HOLD OFF ON THOSE INVESTMENTS. WHAT THEY CONTINUE TO DO IS BRING SHIPMENTS FORWARD, PARTICULARLY IN THE CONSUMER GOODS SECTOR. SAW A LOT OF INDUSTRIAL SEGMENTS COME FORWARD EARLIER. BUT THE PORT OF LOS ANGELES, ONE OF THE LARGEST PORTS FOR IMPORTS INTO THE UNITED STATES, HAD ITS RECORD MONTH EVER IN JULY. REALLY, THEY ARE CONTINUING TO TAKE THOSE SHORT-TERM MOVES, BUT THEY WILL NEED TO START LOOKING AT LONGER-TERM INVESTMENTS. THEY ARE ALSO STARTING TO LOOK AT BOTH NEW DEMAND MARKETS, BUT ALSO TAKING A LOOK AT THEIR SUPPLY CHAIN MAPPING TO SEE WHERE THOSE OPPORTUNITIES TO GROW EVEN IN AN UNCERTAIN ENVIRONMENT BEFORE THE TARIFFS ARE FINALIZED. DANI: AS THEY MOVE TO DO THAT THEY FACE AN INCREASED LEVEL OF BUREAUCRACY. OR PAPERWORK. TRYING TO FIGURE OUT WHAT CUSTOM CHARGES LOOK LIKE. BEYOND JUST HIGHER PRICES FOR THINGS WHAT LEVEL OF FRICTION HAS BEEN INTRODUCED TO THE SYSTEM, AND HOW OUR COMPANIES COPING WITH THAT? MARISSA: I'M SO EXCITED YOU MENTIONED THE WORD FRICTION, BECAUSE WE LOOK AT THE DIMINISHES RULES -- THE DE MINIMIS RULES. AS A REMINDER, 800 DOLLARS IS WHAT THE U.S. HAS SAID YOU PREVIOUSLY DON'T HAVE TO GO THROUGH CUSTOMS DUTIES. SIMILAR COUNTRIES HAVE BEEN LOWER. THAT ACCOUNTS FOR ALMOST ONE POINT 4 TRILLION PACKAGES A DAY COMING INTO DIRECT CONSUMERS. ALSO THROUGH CORPORATE'S. ABOUT 4 MILLION PACKAGES EACH DAY. IF YOU HAVE TO PUT ALL OF THOSE THROUGH A PROCESS, FIRST, CAN U.S. CUSTOMS AND BORDER PROTECTION PROCESS THAT? PLUS, A LOT OF THESE BUSINESSES, PARTICULARLY UNDER THAT VOLUME, HAVE NEVER HAD TO GO THROUGH A CUSTOMS PROCESS. IT IS LIKELY TO INTRODUCE FRICTION AND ALSO A LESSER CUSTOMER EXPERIENCE. BUT FOR A LOT OF THESE BUSINESSES THAT ARE LOW-MARGIN ANY SORT OF CHANGE IN BOTH THE FRICTION IN TERMS OF TIME OF PROCESSING BUT ALSO THE ADDITIONAL COST CAN REALLY MEAN THE SUCCESS OR PIVOTING OF THOSE BUSINESSES GOING FORWARD. WHAT WE ARE SEEING IS THAT BUSINESSES IN THE U.S. -- AND WE DID OUR SURVEY OF CUSTOMERS GLOBALLY. ABOUT 1000 MEMBER THE UNITED STATES ABOUT A MONTH AGO. WE SEE THAT 75% OF THEM ARE LOOKING AT INNOVATIONS. MUCH OF THAT PIVOT IS TOWARD SERVICES, WHICH I THINK IS SOMETHING THAT IF THIS STAGE HAS NOT REALLY BEEN IMPACTED BY THE TARIFFS. DANI: WHAT DOES THAT LOOK LIKE? WHAT IS THE DISTINGUISHING FACTOR BETWEEN A COMPANY WHO CAN INNOVATE, WHO CAN FIND WAYS TO DEAL WITH FRICTION AND THOSE THAT CAN'T? MARISSA: SCALE, REALLY. IF WE LOOK AT LARGER CORPORATE'S THEY CLEARLY HAVE THAT OPTIONALITY. I THINK THE OTHER INTERESTING THING IS THAT ANY CORPORATE'S THAT WERE AROUND IN COVID HAVE ALREADY GONE THROUGH A SHOCK TO THE SYSTEM. YOU HAVE NEW COMPANIES THAT HAVE NOT HAD THAT SHOCK THAT WILL ALSO BE A CHALLENGE AS WELL. JONATHAN: MARISSA ADAMS OF HSBC, ONE OF THE REGIONAL HEADS OVERSEEING TRADE SOLUTIONS THAT HSBC. BREAKING DOWN THE DIFFICULTY OF BEING A CORPORATION TRYING TO OPERATE ACROSS SEVERAL MARKETS AT THE MOMENT. DANI: I THINK THAT'S WHY WALMART EARNINGS WERE SO INSTRUCTIVE. YOU NEED SCALE. WHO IS A BETTER EXAMPLE OF SCALE THAN WALMART? YET IT WAS A COMPANY THAT SAID THEY AREN'T GREAT -- THEY ARE FACING INCREASED COSTS EVERY DAY. JONATHAN: YOU AND I TALKED ABOUT THIS LAST WEEK. EVEN FOR THE WALMARTS, HOW LONG CAN THEY HOLD OFF BEFORE THEY START DOING SOMETHING ON THE COST SIDE OR PASSING THOSE HIGH COST ON? DANI: AT SOME POINT THEY ARE GOING TO RUN OUT OF THE INVENTORY THEY HAVE STOCK UP. WE SAW THAT HAPPENING. THEY BROUGHT A LOT OF GOODS FORWARD. AT THIS POINT DO THEY START TO RUN LOW? DO THEY NEED TO START PUT -- PURCHASING THING AT POST-TARIFF PRICES? IT IS NOT CLEAR WHAT SOME OF THOSE MIGHT BE IF YOU HAVE NEGOTIATIONS ON GOING WITH CHINA, REPRESENTATIVES COMING TO THE U.S. THERE IS A LOT OF SHIFTING SANDS. GEORGE SCHER OF A'S SAYS THOSE ARE NOT PRESSED INTO THIS MARKET. JONATHAN: REALLY SNOOZING PRICE ACTION GIVEN THE DISCUSSIONS WE ARE HAVING AT THE MOMENT. FUTURES GOING NOWHERE. BONDS A BIT HIGHER. STILL A LOT TO DISCUSS THIS MORNING. WE WILL CATCH UP WITH MATT MISKIN OF JOHN HANCOCK, MICHAEL TOWNSEND OF CHARLES SCHWAB, BILL DUDLEY, AND JIM BIANCO OF BIANCO RESEARCH. WITH EQUITIES GOING NOWHERE THE BOND MARKET GOING SOMEWHERE, WITH YIELDS HIGHER BY FOUR BASIS POINTS ON 30'S AND DOWN TWO ON TWO YEAR BOND YIELDS, THE PRESIDENT SAYS LISA COOK IS FIRED, AND LISA COOK SAYS SHE IS NOT. THE DEBATE CONTINUES. FROM NEW YORK, YOU ARE WATCHING BLOOMBERG TV. ♪ > > THE MARKET WILL HAVE TO DIGEST THE FACT THAT THE ECONOMY IS COOLING QUITE A BIT. > > WE EXPECT TO SEE A GROWTH SLOWED DOWN THE BEGINNING OF NEXT YEAR. > > STOCKS HAVE DONE SO MUCH BETTER THAN BONDS OVER THE PAST SEVERAL YEARS. THAT GAP IS GOING TO CLOSE. > > THIS IS "BLOOMBERG SURVEILLANCE." WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING, GOOD MORNING. THE SECOND HOUR OF BLOOMBERG SURVEILLANCE STARTS NOW. EQUITY FUTURES GOING ABSOLUTELY NOWHERE. FUTURES UNCHANGED ON THE S & P. ON THE NASDAQ, AS THIS RALLY STALLS OVER THE PAST 24 HOURS. ON THE BOND MARKET THIS CURVE IS STEEPER. 30 YEAR BOND YIELDS ARE UP BY FOUR. THE PRESSURE CONTINUES TO BUILD ON THE FEDERAL RESERVE. DANI: THIS IS A STORY THAT IS NOT GOING ANYWHERE, WITH TRUMP ATTEMPTING TO FIRE LISA COOK. LISA COOK SAYING HE DOES NOT HAVE THE AUTHORITY TO DO SO. IT IS GOING TO BE AN ONGOING COURT CASE. A CLOUD THAT HANGS OVER THE FEDERAL RESERVE. MAY BE THAT IS WHY YOU ARE NOT SEEING AS MUCH OF A REACTION IN THE DOLLAR. BECAUSE SHE HAS NOT BEEN FORMALLY CHARGED WITH ANYTHING. IT IS NOT CLEAR SHE WILL BE EXITING. WHAT IT DOES DO IS, AT THE MARGINS, PLAY WITH ENTRENCHED EXPECTATIONS OF THINGS LIKE NORMS AND INSTITUTIONAL INTEGRITY. THAT IS JUST HAPPENING AT THE MARGINS. IT IS NOT ENOUGH FOR THE MARKET TO SEE THIS AS AN EVENT THAT IS BREAKING IT. JONATHAN: I'M PLEASED WE KEEP GOING BACK TO THIS. STILL NO FORMAL PROCESS HAS STARTED. CAN THE PRESIDENT FIRE A SITTING FED GOVERNOR? AND WILL WE GET OFFICIAL LEGAL PROCEEDINGS OVER THE ALLEGATIONS OF MORTGAGE FRAUD? IF YOU ARE IN THE MARKET RIGHT NOW YOU ARE THINKING, ADDITIONAL PRESSURE. THIS COULD GO ON FOR MONTHS AND MONTHS. LISA COOK'S TERM GOES UNTIL WHEN? THE 20 30'S? DANI: 2038? . DOES THAT CHANGE HOW WE VIEW POTENTIAL RATE CUTS IF YOU GET SHIFTS MORE DOVISH FROM VARIOUS FED OFFICIALS? OF COURSE THIS IS A BODY AND VERY CREDIBLE PEOPLE IN THE FOMC WHO LIKELY WOULD NOT BE SUCCUMBING TO THE POLITICS. IT DOES NOT JUST CHANGE HOW WE VIEW IT. COULD YOU IMAGINE IF WE GET A HOT CPI PRINT IN THE NEXT MONTH WHAT THAT WOULD DO? AND IF YOU MAY BEGET FED OFFICIALS WHO CUT ANYWAY BECAUSE OF THE ISSUES IN THE LABOR MARKET? DO WE WORRY ABOUT INDEPENDENCE? IF IT IS HOT AND THEY DON'T CUT? I THINK IT MAKES THE DATA ALL THE MORE IMPORTANT. JONATHAN: THE OPTICS MATTER, BUT FOR US LOOKING AT THE DATA AND RECENT COMMUNICATION, THIS IS THE DIRECTION OF TRAVEL FOR THE COMMITTEE. IT HAS HAD A DOVISH BIAS FOR A WHILE. THE FED CHAIR SPOKE ON FRIDAY, SAID THIS IS WHERE WE ARE GOING INTO SEPTEMBER. DANI: I DO HAVE JP MORGAN WE SPOKE LAST WEEK -- WE SPOKE TO LAST WEEK PLAYING IN MY HEAD. THERE ARE PLENTY OF HER -- OF LEGITIMATE REASONS TO CUT. BUT IF YOU ADD THE GOVERNMENT PRESSURE AND CONCERNS ABOUT INDEPENDENCE, WHY WOULDN'T YOU MOVE IN THAT DIRECTION? POWELL JUST HELPING THIS FOMC TO HELP FACE LESS PRESSURE FROM THE WHITE HOUSE. THE SAD THING IS, IF THAT WAS PART OF THE REASONS THEY PIVOTED IT DID NOT HELP. JONATHAN: EQUITY FUTURES ON THE S & P, NEGATIVE BY JUST .1%. COMING UP THIS HOUR WE WILL CATCH UP WITH MATT MISKIN ON GROWING TURMOIL AT THE FEDERAL RESERVE, BILL DUDLEY ON CHALLENGES TO THE CENTRAL BANKS INDEPENDENCE, AND JIM BIANCO WITH REACTION FROM THE BOND MARKET. BEGIN WITH OUR TOP STORY. THE PRESIDENT WRAPPING UP THE ATTACKS ON THE FEDERAL RESERVE. WITH THE LATEST IN WASHINGTON, HERE IS ANNEMARIE. ANNMARIE: GOOD MORNING. WE ARE SEEING THE ESCALATION, BUT AS YOU HAVE RIGHTLY -- RIGHTFULLY BEEN SAYING WE DON'T KNOW WHERE THIS STORY STANDS THIS MORNING. THE PRESIDENT SAYS HE HAS CAUSED THE FIRE GOVERNOR COOK. SHE SAYS SHE IS MAINTAINING HER POSITION AND NOT RESIGNING. THERE IS TWO PATHS THIS IS GOING TO GO DOWN LIKELY. ONE IS THE LEGAL PATH. WE HAVE ALREADY SEEN GOVERNOR COOK RETAINED A LAWYER, AND IF IT GOES DOWN TO AS HIGH AS POTENTIALLY THE SUPREME COURT I WOULD REMIND OUR VIEWERS WHAT THE SUPREME COURT SAID IN MAY, WHICH IS THAT BASICALLY THE FEDERAL RESERVE IS INOCULATED. IT IS UNIQUELY STRUCTURED, QUASI-PRIVATE ENTITY. MEANING IF THERE WAS NO CAUSE WHILE SHE WAS IN HER POSITION AND ACTED WITH MALFEASANCE AND THEIR ELECTION OF DUTY, THEN POTENTIALLY YOU COULD SEE GOVERNOR COOK KEEP HER JOB. THEN THERE IS THE SECOND PATH, WHICH YOU BROUGHT UP THIS MORNING. THERE IS NO CHARGE. THERE IS NO CONVICTION WHEN IT COMES TO THIS ALLEGED MORTGAGE FRAUD. WE DID HERE LAST WEEK FROM A DOJ OFFICIAL, SAYING THEY PLAN TO POTENTIALLY INVESTIGATE GOVERNOR COOK WHAT HAPPENS WITH THIS INVESTIGATION IS GOING TO BE KEY. IS THERE EVIDENCE FOR THESE ALLEGATIONS? IF SO AND IF SHE IS CONVICTED OR CHARGED, POTENTIALLY FOR THE GOVERNOR IT MIGHT BECOME UNTENABLE FOR HER TO KEEP THAT POSITION, AND THEN YOU ARE LOOKING AT THE PRESIDENT, WHO HAS SEEK TO FILL ON THE FEDERAL RESERVE FOR A BOARD MEMBER THAT THAT TERM GOES TO 2038. JONATHAN: ANNMARIE, THANK YOU. HE WAS THE VIEW ON WALL STREET THIS MORNING. STOCKS INCHING LOWER FOLLOWING THE LATEST TURMOIL AT THE FEDERAL RESERVE. MATT MISKIN IS FOLLOWING THE SITUATION AS WELL AND JOINS US FOR MORE. LOVE YOUR REACTION AS YOU WAKE UP TO THIS NEWS THIS MORNING. WHAT IS IT? MATT: YOU ARE SEEING THE DOLLAR TAKE ANOTHER BOW DOWN TO THE EURO AND REALLY THE DOLLAR HAS JUST GOTTEN DOMINATED BY THE EURO ALL YEAR. IT IS REALLY A LOT OF THIS. IT IS GETTING ANCHORED BY ALL OF THIS GEOPOLITICAL UNCERTAINTY. THIS FED INDEPENDENCE UNCERTAINTY. EVERY TIME THE DOLLAR STARTS GETTING A BID IT THEN FINDS THIS WEAKNESS. AS A GLOBAL INVESTOR IT IS HELPING NON-U.S. EQUITIES. ONE OF THE BEST YEARS EVER, FRANKLY. ALL OF THESE TARIFFS AND GEOPOLITICAL THINGS YOU WOULD THINK WOULD WEIGH ON NON-U.S. STOCKS, IT IS ABSOLUTELY BOOSTING THEM. CHINA'S NEAR TOM HIGHS ARE BREAKING OUT AT LEAST. EUROPEAN SHARES ARE RALLYING ON THIS. WE DO HAVE SOME GEOPOLITICAL UNCERTAINTY DEVELOPING IN EUROPEAN, BUT AT THE END OF THE DAY THAT HAS BEEN THE TRADE AS A RESULT OF THIS. DANI: THE DOLLAR IS FALLING, BUT BARELY AGAINST THE EURO. DOWN JUST .2% VERSUS THE EURO THIS MORNING. ARE YOU SURPRISED THAT MORE IS NOT BEING PRICED IN WITH THE CONCERNS ONGOING? MATT: IT WAS DOWN 13% YEAR-TO-DATE, AND NOW IT HAS COME BACK A LITTLE BIT, AND TODAY THE EURO IS RALLYING AGAIN. I THINK THIS IS IN THE PRICE TO SOME DEGREE. WE DID NOT LOOK -- WE DID NOT WAKE UP THIS MORNING AND FIND OUT THERE IS A LOT OF UNCERTAINTY AS IT RELATES TO GEOPOLITICAL BACKDROP HERE. THIS HAS BEEN SOMETHING HAPPENING ALL YEAR LONG. WE ARE GOING BACK TO SCHOOL HERE. I HAVE DAUGHTERS, 12 AND NINE, AND WE ARE TALKING ABOUT CLASS PARTICIPATION IS AN IMPORTANT THING. UNITED STATES IS FAILING CLASS BECAUSE A PATIENT. OTHER PARTS OF THE WORLD ARE DOING VERY WELL. IN TERMS OF GRADES, ON TESTS AND QUIZZES, WHICH IS WHERE A LOT OF THE FINAL RESULTS ARE COMING, THE U.S. IS DOING WELL. WE HAD THE PMI'S WHICH JUST BLEW OUT. YET U.S. EQUITIES ARE MASSIVELY UNDERPERFORMING ON A U.S. DOLLAR BASIS. EUROPEAN EQUITIES ARE UP 30. CHINESE EQUITIES ARE UP NEARLY 30. THAT IS WHERE IT IS SHOWING UP, AND AGAIN, IT HAS BEEN A HUGELY POLITICAL MARKET THIS YEAR. THE MOST POLITICALLY-DRIVEN MARKET IN HISTORY IF YOU LOOK AT THE FINGERPRINTS ALL OVER THE MARKETS. YOU WANT TO FADE THAT. WE ARE PROBABLY AMIDST AN OUTLIER HISTORICALLY AND THAT IS GOING TO MODERATE OVER TIME. WE DO THINK IT ENDS UP MODERATING. DANI: TO THAT POINT, POLITICS DOMINATING IN EUROPE TOO. FRENCH EQUITIES DOWN ON THE PROSPECT YOU COULD HAVE ANOTHER GOVERNMENT THAT FALLS APART JUST EIGHT MONTHS AFTER THE LAST ONE DID. IT IS HAPPENING THROUGH MANY PLACES IN EUROPE, THIS CONCERN ABOUT FISCAL HEADROOM. DOES THAT AT THE MARGINS MAKE EUROPEAN EQUITIES LESS ATTRACTIVE, DESPITE THE OUTPERFORMANCE YOU TODAY? MATT: THAT IS A GOOD POINT. IT HAS BEEN MULTIPLE EXPANSIONS. EARNINGS ARE GROWING AT ABOUT 3%. THEY WERE UP ABOUT 2% LAST YEAR. YOU ARE GETTING 2% TO 3% EARNINGS GROWTH OUT OF EUROPEAN STOCKS. TO US THAT IS NOT THAT COMPELLING, BUT THE MULTIPLE, THE VALUATION OF THOSE BUSINESSES HAS JUMPED MASSIVELY. ALMOST ALL OF YOUR RETURN HAS BEEN CURRENCY AND MULTIPLE EXPANSION. THAT IS A SENTIMENT CALL. WHAT IS DRIVING SENTIMENT? GEOPOLITICAL BACKDROP. WHILE THE FRENCH EQUITIES ARE STRUGGLING THIS MORNING, THEY ARE PULLING BACK, THEY WERE NEVER REALLY LEADERS AS MUCH AS GERMANY AND SPAIN. EUROPEAN FINANCIALS ARE UP OVER 50% THIS YEAR. THE EARNINGS ARE BARELY GROWING, AND THEY ARE UP OVER 50%. SO, REALLY, TO US, THERE IS A LOT OF GOOD NEWS BAKE INTO EUROPE MORE BROADLY IN TERMS OF GEOPOLITICAL BACKDROP. THERE IS A LOT OF NEGATIVITY PRICED INTO THE UNITED STATES AS IT RELATES TO GEOPOLITICAL BACKDROP. THAT TUG-OF-WAR MAY DIMINISH SOME, BUT THIS MORNING IT HASN'T. JONATHAN: ARE YOU SAYING SELL EUROPE AND BY THE U.S. OR NOT? MATT: WE ARE ACTUALLY FADING THAT. BECAUSE IT IS THE FUNDAMENTALS. IF YOU ARE AN EARNINGS PERSON LIKE THIS OR A BUSINESS CYCLE PERSON, AUGUST PMI'S THE U.S. BLEW IT OUT COMPARED TO THE REST OF THE WORLD. GROUP DID IMPROVE, BUT AROUND 50, STAGNATION GROWTH IN EUROPE IS THE NEW BULL MARKET. WHEREAS IN THE UNITED STATES WE ARE SEEING BOOMING EARNINGS GROWTH AND IMPROVING ACCELERATING ECONOMY. I THINK THE BACK-TO-SCHOOL SHOPPING WE HAVE HELPED ACCELERATE HERE IN AUGUST, AND THAT IS WHAT WE ARE STICKING WITH. WE ARE STICKING WITH HIGHER QUALITY. WE ARE TRYING TO MINIMIZE THE GEOPOLITICAL INPUT. AS A MARKET OBSERVER YOU HAVE TO SEE WHAT IT IS, AND THAT IS WHAT IS DRIVING THESE MARKETS. JONATHAN: MATT MISKIN OF JOHN HANCOCK. JUST THE PROSPECT OF RE-ACCELERATION IN AMERICA. MIZUHO, JORDAN ROCHESTER HAS TALKED ABOUT IT. BANK OF AMERICA HAS TALKED ABOUT IT. THE PROSPECT THAT GROWTH STARTS TO PICK UP INTO 2026. DANI: IF YOU THINK ABOUT THE SET UP FOR EARLY 2026 WE ARE LIKELY TO GET FED CUTS, AND THEN YOU HAVE THE ONE BIG, BEAUTIFUL BILL. IT IS SO FRONTLOADED FOR THE FIRST HALF OF 2020 SIX. THEY COULD REALLY PROVIDE A TAILWIND. ANY OF THOSE RECESSION CALLS, THEY HAVE BEEN PUT TO THE SIDE COMPLETELY. I HAVE SEEN THEM START TO CROP UP TO SAY, WHAT HAPPENS WHEN THAT FISCAL FUEL FROM THIS FIRST HALF OF 2026 STARTS TO RUN OUT? JONATHAN: THIS MARKET HAS BEEN WELL SUPPORTED. EQUITY FUTURES NEGATIVE BY NOT EVEN .1%. WITH AN UPDATE, HERE IS YAHAIRA ANAND. YAHAIRA: PRESIDENT TRUMP IS MOVING TO OUST FED GOVERNOR LISA COOK OVER CLAIMS SHE FALSIFIED MORTGAGE DOCUMENTS. COOK RESPONDED, SAYING TRUMP HAS NO AUTHORITY TO FIRE HER AND SHE WILL NOT STEP DOWN. ELI LILLY'S EXPERIMENTAL OBESITY PILL HELPED PATIENTS LOSE 9.6% OF THEIR BODY WEIGHT IN A SECOND TRIAL THAT COULD HELP MOVE THE COMPANY ONE STEP CLOSER TO A POTENTIAL APPROVAL. THE SUCCESS COMES AFTER INVESTORS WERE DISAPPOINTED BY THE FIRST TRIAL THIS MONTH, AS LILY PLANS TO FILE FOR APPROVAL AT SOME POINT IN 2025. VENUS WILLIAMS, GETTING LOTS OF SUPPORT FROM THE U.S. OPEN CROWD, DESPITE LOSING HER MATCH IN THREE SETS YESTERDAY. THE 45-YEAR-OLD TENNIS LEGEND HAD NOT PLAYED IN A GRAND SLAM FOR TWO YEARS BUT HAD SOME BIG SERVES AND POWERFUL STROKES AGAINST KAROLINA MUCHOVA., THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: THANK YOU. UP NEXT, TRUMP ESCALATING HIS FIGHT WITH THE FED. > > WE HAVEN'T SEEN PRESSURE LIKE THIS SINCE JOHNSON AND NIXON. IT IS VERY SIGNIFICANT. IT PUTS THE FED IN PLAY IN A LOT OF WAYS. MOHAMED: UP NEXT, -- JONATHAN:UP NEXT, WE WILL CATCH UP WITH MIKE TOWNSEND OF CHARLES SCHWAB. YOU ARE WATCHING BLOOMBERG TV. ♪ JONATHAN: MORGAN STANLEY HAVE CHANGED THEIR VIEW ON THE FEDERAL RESERVE. THEY WERE NOT LOOKING FOR ANY CUTS IN 2025. NOW LOOKING FOR A CUT IN SEPTEMBER. THIS WAS PUBLISHED YESTERDAY EVENING. NOW LOOKING FOR 50 BASIS POINTS OF INTEREST RATE CUTS BY YEAR END. JONATHAN: IT WAS A POWELL THAT BLEW THE DOOR OPEN INTO A SEPTEMBER RATE CUT. ONCE YOU DO THAT AND THE MARKET PRICES IT IN IT IS INCREDIBLY HARD TO DO. THERE HAS BEEN COMMENTARY THAT REGARDLESS OF THE DATA WE ARE STILL GOING TO GET A CUT. MAYBE THE DATA IN THE NEXT MONTH IS MORE IMPORTANT FOR WHAT HAPPENS LATER. WHETHER WE GET 25, 1 AND DONE, OR WHETHER WE GET SUCCESS OF RATE CUTS. JONATHAN: IT SOUNDS LIKE WE ARE MUCH MORE SENSITIVE TO THE JOBS DATA THAN THE INFLATION DATA. DANI: THAT FEELS LIKE A CHANGE. IT DID SEEM LIKE A POWELL THAT WAS PUTTING MORE EMPHASIS ON THE INFLATION DATA. BUT POWELL REALLY UNDERSCORED THAT THE THING ABOUT THIS LABOR MARKET IS THERE IS STILL SO MUCH UNKNOWN ABOUT IT AND IT IS INCREDIBLY DIFFICULT. THAT IS WHY THE BIAS NEEDS TO SHIFT TO THAT. JONATHAN: SERIOUS BIAS SHIFT FROM THE CHAIRMAN OF THE FEDERAL RESERVE. IN WASHINGTON AS WELL. EQUITY FUTURES NEGATIVE BY .1% ON THE S & P. BOND YIELDS, KEEPING AN EYE ON THE LONG END OF THE CURVE. UNDER SURVEILLANCE THIS MORNING, PRESIDENT TRUMP ESCALATING HIS FIGHT WITH THE FED. > > WE HAVEN'T SEEN PRESSURE LIKE THIS SINCE JOHNSON AND NIXON. IT IS VERY SIGNIFICANT. IT IS MORE DIRECT. IT IS MORE PUBLIC. IT PUTS THE FED AND PLAY IN A LOT OF WAYS. SO, I'M VERY WORRIED. JONATHAN: HERE THE LATEST THIS MORNING. PRESIDENT WRAPPING UP HIS TALKS ON THE FEDERAL RESERVE BY ANNOUNCING HE WILL FIRE LISA COOK, BASED ON ALLEGATIONS SHE COMMITTED MORTGAGE FRAUD. WITH THE LATEST, HERE IS ANNEMARIE. ANNMARIE: GOOD MORNING. A SICKLY, YOU HAVE A LOT MORE ESCALATION COMING FROM THIS OVAL OFFICE AND WHITE HOUSE WHEN IT COMES TO THE FED. WE WAKE UP THIS MORNING NOT REALLY SURE IF ANYTHING HAS CHANGED. THE PRESIDENT SAYS GOVERNOR COOK HAS BEEN OUSTED AND FIRED, AND GOVERNOR COOK SAYS, NO SHE IS NOT. HAS NO PLANS TO RESIGN AND WANTS TO CONTINUE TO DO HER JOB. WHERE DOES THIS LEAVE THIS STORY? WE ARE NOW BEING JOINED BY MICHAEL TOWNSEND OF CHARLES SCHWAB. HE WORKS ON REGULATORY AND LEGISLATIVE AFFAIRS. MICHAEL, VERY GOOD MORNING TO YOU. CAN WE GET YOUR REACTION ON WHAT COMES NEXT, GIVEN THE PRECARIOUS SITUATION WE ARE IN RIGHT NOW? REALLY NOT KNOWING WHETHER OR NOT GOVERNOR COOK COULD BE FIRED? MICHAEL: THANKS FOR HAVING ME. OBVIOUSLY AN EXTRAORDINARY SITUATION HERE WITH THE PRESIDENT'S ANNOUNCEMENT LAST NIGHT. AND AS WE POINTED OUT, COOK SAYING SHE IS NOT GOING ANYWHERE. I THINK THE REALITY IS WE ARE LOOKING AT A LENGTHY COURT CASE THAT IS GOING TO UNFOLD HERE. I THINK THAT IS WHY THE MARKET REACTION OVERNIGHT HAS BEEN PRETTY MUTED. I THINK THE MARKET IS RECOGNIZING THIS IS AN EXTENDED FIGHT. I DO THINK IT ADDS TO THE ONGOING FOCUS ON PERSONNEL AT THE FED, BECAUSE NOT ONLY DO YOU HAVE A VACANCY WITH STEPHEN MYRON, WHO IS GOING TO BE NOMINATED TO FILL THAT VACANCY, THAT CONFIRMATION PROCESS IS GOING TO PLAY OUT IN SEPTEMBER. YOU HAVE THE ONGOING CHATTER ABOUT WHO WILL REPLACE POWELL WHEN HIS TERM COMES UP NEXT YEAR. AND THEN YOU HAVE GOT ANOTHER PERSONNEL SITUATION. I FEEL LIKE THAT IS TAKING AWAY FROM THE FOCUS ON THE POSSIBILITY OF A RATE CUT AT THE NEXT MEETING. THERE IS GOING TO BE A LOT MORE TO PLAY OUT, AND I THINK THE MARKET IS RECOGNIZING THIS IS GOING TO TAKE A LONG TIME. ANNMARIE: YOU THINK THE MARKET IS FOCUSING ON THIS AND THINKING THIS IS A GOOD THING IN TERMS OF FED OVERSIGHT, OR LOOKING AT THIS AND CONCERNED THIS IS AN INFRINGEMENT ON FED INDEPENDENCE? MICHAEL: I THINK THE MARKET IS CONCERNED. THE MARKET RECOGNIZES THIS IS A -- THIS IS A STORY THAT WILL HAVE TO PLAY OUT THE COURTS. I THINK THE MARKET IS GOING TO WATCH AS THAT UNFOLDS, BUT I THINK THE MARKET IS KEENLY INTERESTED IN THE POTENTIAL FOR RATE CUT AND THEN WHETHER THERE WILL BE FURTHER RATE CUTS IN THE FURTHER MEETINGS THIS YEAR. IN SOME WAYS I DON'T WANT TO MAKE LIGHT OF IT THAT IT IS A DISTRACTION, BUT I THINK IT IS A STORY THAT IS GOING TO TAKE A WHILE TO PLAY OUT AND THE MARKET IS GOING TO KEEP ITS EYE ON OTHER THINGS, ALONG WITH THE UNFOLDING STORY. ANNMARIE: ARE YOU SURPRISED THAT THE FEDERAL RESERVE HAS YET TO PUT OUT A STATEMENT OR RESPOND TO THESE ALLEGATIONS AND -- IN THE PRESIDENT'S LETTER LAST NIGHT? MICHAEL: COOK IS RESPONDING. I EXPECT THE FED WILL PUT OUT SOMETHING AT SOME POINT THAT IS BACKING HER. POWELL HAS SAID MANY TIMES THAT HE DOES NOT THINK THERE IS A LEGAL BASIS FOR FIRING HIM, WHEN THAT WAS A POTENTIAL WORRY. AND I THINK THAT IS GOING TO HAVE TO PLAY OUT. WE WILL SEE IF THE FED PUTS OUT A STATEMENT, BUT I THINK THEY ARE GOING TO CONTINUE ON THE MISSION, WATCHING THE DATA AND TRYING TO DETERMINE THE DIRECTION FOR A POTENTIAL RATE CUT AND TIMING FOR RATE CUTS AS WE MOVE THROUGH THE FINAL MONTHS OF THE YEAR. ANNMARIE: YOU ARE RIGHT THAT THIS MAY BE A LENGTHY PROCESS AND THE MARKET IS TAKING THIS AS, THIS COULD TAKE MONTHS. BUT WHAT IF SHE IS FIRED FOR CAUSE? OR SITUATION BECOMES UNTENABLE AND SHE DECIDES TO RESIGN? WHAT DOES THE PRESIDENT DO WITH A GOVERNOR SEAT THAT HAS UNTIL 2038 IN TERMS OF ITS EXPIRATION? MICHAEL: OBVIOUSLY THE PRESIDENT CAN FILL A VACANCY. WE ARE SEEING THAT PLAY OUT NOW WITH THE NOMINATION OF STEPHEN MYRON. THAT IS A PROCESS THAT TAKES A LITTLE WHILE IN THE SENATE, SO THE IDEA THAT THE SENATE IS GOING TO COME BACK IN SEPTEMBER AND CONFIRM MYRON IN THE TWO WEEKS BEFORE THE SEPTEMBER MEETING, I FIND THAT A STRETCH, JUST KNOWING HOW THE SENATE TENDS TO WORK AT A RELATIVELY SLOW PACE. IF DOWN THE ROAD AT SOME POINT THERE IS A SECOND VACANCY, THEN THE SENATE IS GOING TO HAVE TO TAKE WHOEVER IS NOMINATED FOR THAT AND GO THROUGH THE PROCESS. NOTHING HAPPENS FAST AS THIS UNFOLDS, AND I THINK, AGAIN, THE MARKET IS RECOGNIZING THERE ARE A LOT OF STEPS HERE THAT ARE GOING TO HAVE TO HAPPEN, AND WE WILL SEE HOW IT PLAYS OUT. LIKE EVERYONE ELSE, WE ARE GOING TO WATCH AND SEE WHAT HAPPENS. ANNMARIE: DOES IT EVEN MATTER, GIVEN THE FACT THAT THE FED IS LINING UP TO CUT RATES POTENTIALLY IN SEPTEMBER? MICHAEL: I THINK IT MATTERS. THERE IS NO QUESTION. WHO IS ON THE FED BOARD MATTERS. THE CHANGE IN THE MAKEUP OF THE BOARD COULD ALSO ULTIMATELY AFFECT WHO ARE CHOSEN AS THE FED BANK PRESIDENTS. AND POTENTIALLY THE NUMBERS AND HOW MANY VOTES IN THE DOVISH VERSUS HAWKISH CAMP ARE ON THERE. BUT AGAIN, I THINK SPECULATING ABOUT WHO IS GOING TO BE WHERE AND WHEN IS JUST SO DIFFICULT IN THE SITUATION BECAUSE WE ARE IN UNPRECEDENTED WATERS, SO, YOU KNOW, I DON'T KNOW WHETHER THIS IS GOING TO PLAY OUT OVER TWO MONTHS OR SIX MONTHS, OR LONGER THAN THAT. WE DON'T KNOW WHEN THERE WILL BE ANOTHER VACANCY, AND SO I THINK THAT IS WHY THE MARKET IS TRYING TO REACT CALMLY TO THIS AND SEE HOW IT PLAYS. ANNMARIE: THE MARKET IS OBVIOUSLY LOOKING FOR CLARITY. WHEN IT COMES TO THE INDIVIDUALS AND THAT DOZEN OR SO NAMES THE TREASURY SECRETARY HAS BEEN FLOATING FOR NAMES THAT COULD REPLACE JAY POWELL, DO YOU FIND THAT LIST CREDIBLE? MICHAEL: I CERTAINLY THINK IT HAS BEEN AN INTERESTING EVOLUTION. AT ONE POINT IT SEEMED LIKE WE WERE DOWN TWO OR THREE NAMES. MORE RECENTLY THEY SAID THERE IS CLOSE TO A DOZEN NAMES. I CERTAINLY THINK SOME OF THE NAMES ON THAT LIST, WHETHER IT IS KEVIN HASSETT, ARE PEOPLE WHO HAVE THE REQUISITE EXPERIENCE AND COMMUNAL, WILL TAKE THAT JOB SERIOUSLY. WE DON'T KNOW WHICH WAY THE PRESIDENT IS GOING TO GO. IT SOUNDS MORE RECENTLY LIKE THERE COULD BE MULTIPLE MONTHS BEFORE WE KNOW, AS THE INTERVIEW PROCESS BEING RUN BY SECRETARY BESSENT UNFOLDS. WE WILL SEE WHO HE TAPS, BUT THE FED HAS A LONG HISTORY, AND DEEP EXPERTISE. SO COMMUNAL, HAVING ONE PERSON COME IN AND COMPLETELY UP END THE FED IS HARD. THERE ARE SEVEN GOVERNORS AND 12 VOTING MEMBERS OF THE FOMC. YOU KNOW, AGAIN, THIS IS A VERY LONG GAME THAT I THINK WE ARE GOING TO SEE HERE. WE'RE JUST GOING TO HAVE TO KEEP WATCHING. ANNMARIE: I JUST WANT TO END ON CONGRESS RETURNS. THEY ARE BACK IN SESSION NEXT WEEK. WHAT IS THE TOP OF THE AGENDA? MICHAEL: THE FIRST THING WE ARE WATCHING IS THE APPROPRIATIONS PROCESS AND THE POTENTIAL FOR A GOVERNMENT SHUTDOWN. THE FISCAL YEAR BEGINS ON OCTOBER 1. CONGRESS IS SUPPOSED TO PASS THE APPROPRIATIONS BILLS. THEY HAVE MADE VERY LITTLE PROGRESS ON THAT SO FAR. THERE IS SO MUCH TENSION BETWEEN DEMOCRATS AND REPUBLICANS THAT IT IS HARD TO SEE THAT PROCESS RESOLVING ITSELF NEATLY IN THE NEXT MONTHS OF -- MONTH OR SO. I THINK WE ARE LOOKING AT A POTENTIAL RISK FOR A GOVERNMENT SHUTDOWN. CERTAINLY A LIKELIHOOD OF SOME SORT OF CONTINUING RESOLUTION, CONTEMPORARY MEASURE THAT AVOIDS A SHUTDOWN. I THINK A SHUTDOWN IS VERY MUCH ON THE POSSIBILITY LIST HERE, JUST GIVEN THE LEVEL OF HOSTILITY BETWEEN THE TWO PARTIES. I THINK THAT IS GOING TO DOMINATE. I ALSO THINK THERE IS A CRYPTOCURRENCY BILL, THE CLARITY ACT, THAT WAS PASSED BY THE HOUSE IN JULY. THAT IS COMING THROUGH THE SENATE NOW. AND THE SENATE BANKING COMMITTEE CHAIRMAN HAS SAID THEY WANT TO MOVE FORWARD WITH THEIR VERSION IN SEPTEMBER. THAT IS SOMETHING THE CRYPTO INDUSTRY IS INTERESTED IN. I THINK THERE IS A LOT ON THE AGENDA THAT WE WILL BE KEEPING TRACK OF. ANNMARIE: ANOTHER ISSUE OF UNCERTAINTY, POTENTIALLY A GOVERNMENT SHUTDOWN. MICHAEL TOWNSEND, THANK YOU FOR JOINING US. ONE THING MICHAEL SAID, DIFFERENT THEN HENRIETTA TREYZ SAID, HE ACTUALLY DOES NOT STEPHEN MYRON IS GOING TO GET THAT SENATE CONFIRMATION AND TIME TO JOIN THE NEXT FED MEETING. HENRIETTA TREYZ THINKS THE SENATE -- THINKS THE SENATE IS GOING TO MOVE QUICKLY AND GET HIM ON THE BOARD. JONATHAN: THIS IS GOING TO TAKE SOME TIME. I THINK THAT GENTLEMAN DID A DECENT JOB OF EXPLAINING THESE THINGS. THESE ARE SERIOUS ALLEGATIONS. IT IS A SILLY -- SERIOUS ESCALATION. ULTIMATELY THERE HAS TO BE SPACE FOR DUE PROCESS, AND THIS COULD TAKE MONTHS AND MONTHS. DANI: THERE DOES NEED TO BE SPACE FOR DUE PROCESS. IT GETS DRAGGED OUT AND WE HAVE TO UNDERSCORE IF THERE ARE ETHICAL CONCERNS THAT TURN OUT TO BE TRUE IT BECOMES MUCH HARDER TO HAVE THAT PERSON ON THE FOMC. JONATHAN: AT THE MOMENT, NO IMMEDIATE CONSEQUENCES. ON THE MARKET WE ARE DOWN BY ABOUT .1% ON THE S & P. IN THE BOND MARKET, YIELDS ARE HIGHER AT THE LONG END OF THE CURVE. WE WILL CATCH UP WITH BILL DUDLEY, PLUS YAHAIRA ANAND HAS YOUR MORNING MOVERS. ECHOSTAR SURGING ON A DEAL ANNOUNCEMENT. ♪ JONATHAN: THE EQUITY MARKET RALLY STALLING OVER THE PAST FEW DAYS. A SLOW START TO A BRAND-NEW TRADING WEEK. THE FINAL TRADING WEEK FOR THE MONTH OF AUGUST. EQUITY FUTURES ON THE S & P DOWN BY ABOUT .1%. THE NASDAQ DOWN BY .13%. IN THE BOND MARKET, LOTS OF CHANGES AT THE FRONT END OF THE CURVE FOLLOWING A VERY WEAK PAYROLLS REPORT. SOME VERY NEGATIVE REVISIONS AND A LOT OF CHANGES, INCLUDING FROM CHAIRMAN POWELL, SETTING UP CHANGES ON WALL STREET TOO. WHICH A BANK, MORGAN STANLEY ALL EXPECTING A RATE CUT IN SEPTEMBER. DANI: THAT IS WHY YOU ARE SEEING THE YIELD CURVE DO WHAT IT IS. A FRONT END COMING DOWN AND A LONGER END RISING. I THINK IT IS NOTABLE THAT WAY YOU ARE SEEING THE PAIN IS NOT REALLY THE 10 YEAR. IT IS THE 30 YEAR. IF YOU EXPECTED THIS TO BE ABOUT INFLATION AND GROWING DEBT YOU WOULD EXPECT 10-YEAR TO BE GROWING WORSE. THAT CURVE IS THE STEEPEST SINCE 2020 ONE. IT IS A GROWING PERCEPTION THAT THIS IS PERHAPS A WHITE HOUSE THAT WILL DO WHATEVER IT TAKES TO GET MORTGAGE RATES DOWN. JONATHAN: WE SPOKE TO THE TREASURY SECRETARY ABOUT THIS. THE PROBLEM THEY HAVE GOT IS, THIS IS A GLOBAL STORY. IT IS FRANCE, THE U.K.'S, JAPAN. IT IS THE U.S. AS WELL. DANI: IN YOUR PART OF THE STORY IS NOT EVEN ABOUT FUNDAMENTALS. WHAT DO YOU DO ABOUT SOMETHING LIKE THAT? WHAT DO YOU DO WHEN WHAT IS BEING DRIVEN LONG-TERM IS NOT ABOUT INTEREST RATES, IS NOT ABOUT THAT, BUT IS A MECHANICAL ISSUE? IT IS AN INCREASINGLY DIFFICULT LONG END TO GET A HOLD OF. JONATHAN: THE LONG END OF THE CURVE UP BY THREE BASIS POINTS THIS MORNING. TWO HOURS AWAY FROM THE CASH OPEN ON THE EQUITY SIDE OF THINGS. IT'S GET YOU SOME MORNING MOVERS. YAHAIRA: DEAL ACTION KEEPS ROLLING, AND THIS TIME IT IS IN THE TELECOM SPACE. AT & T IS SCOOPING UP SPECTRUM FROM ECHOSTAR. AS A RESULT, WE ARE SEEING ECHOSTAR SHARES SOARING OR THAN 60%. THE MOVE, ACCORDING TO AT & T, IT IS MEANT TO STRENGTHEN ITS PORTFOLIO ACROSS NEARLY EVERY U.S. MARKET. IT SAYS THIS SUPPORTS ITS LONG-TERM STRATEGY TO GROW ITS BASE OF CUSTOMERS THAT USE ITS HOME INTERNET AND 5G WIRELESS SERVICE. IF ALL GOES WELL WITH REGULATORS THEY SAY THE DEAL IS EXPECTED TO CLOSE BY MID-2026. PIERCING SHARES OF INTERACTIVE BROKERS RISING 4% ON NEWS IT WILL BE JOINING THE S & P. THE CHANGES ARE SET TO HAPPEN THIS WEEK ON THURSDAY BEFORE THE MARKET OPENS. IT WILL REPLACE WALGREENS, WHICH IS SET TO GO PRIVATE. THE END ON ELI LILLY. SHARES ARE RISING NEARLY 2.5% HERE AFTER STRONG RESULTS FROM ITS EXPERIMENTAL OBESITY PILL. PATIENTS WITH OBESITY AND TYPE TWO DIABETES WHO HAVE A HARDER TIME SHEDDING WEIGHT LOSS NEARLY 9.6% OF THEIR BODY WEIGHT AND SAW BETTER BLOOD SUGAR. THESE RESULTS ARE SOME OF THE MOST CLOSELY-WATCHED IN THE PHARMACEUTICAL INDUSTRY BECAUSE OF THE POTENTIAL OF THE PILL TO REACH NEW PATIENTS, THOSE WHO WANT TO BE ON GLP-1'S, BUT ARE AFRAID OF NEEDLES. THIS MEANS LILY IS ON TRACK TO FILE FOR REGULATORY APPROVAL BY THE END OF THIS YEAR. AND IF APPROVED THE DRUG COULD HIT PHARMA SHE SHELVES 2026. JONATHAN: THANK YOU. MORE LATER ON THIS HOUR. ON OUR RADAR THIS MORNING, PRESIDENT DONALD TRUMP ATTEMPTING TO FIRE FED GOVERNOR LISA COOK HIM ACCLAIMING SHE FALSIFIED MORTGAGE DOCUMENTS. ELSEWHERE, PRESIDENT TRUMP THREATENING TO IMPOSE NEW TARIFFS ON ADVANCED TECHNOLOGY IN RESPONSE TO OTHER NATION'S TAXES ON DIGITAL SERVICES. SAYING THE TAXES ARE DESIGNED TO HARM AMERICAN TECHNOLOGY. IT SETS UP ANOTHER FIGHT WITH THE EUROPEANS. DANI: IF YOU HAVE A PRESIDENT WHOSE AIM IS TO CHAMPION AMERICA, HOW CAN YOU DO THAT WITHOUT CHAMP MEANING -- CHAMPIONING OUR LARGEST COMPANIES, WHICH ARE TECH? EUROPEANS INSIST THIS IS A MATTER OF SOVEREIGNTY. THEY FIND THESE DIGITAL TAXES SO IMPORTANT THAT IT IS UNLIKELY TO HAVE THE CASE OF CANADA, FOR EXAMPLE, WHICH BASED THE SAME SCRUTINY FROM THE TRUMP ADMINISTRATION AND BACKTRACKED ON SOME OF THESE DIGITAL SERVICE TAXES. YOU HAVE A DEAL IN PLACE. DOESN'T MEAN THAT DISCUSSIONS ARE OVER. JONATHAN: JUST HOW RESOLVED IS THAT DEAL? IT IS ONGOING. DANI: IT IS CONSTANTLY ONGOING. IT IS ALSO CHINA HAVING REPRESENTATIVES IN THE U.S. CONCERNS ABOUT SOYBEANS, CONCERNS ABOUT MAGNETS. EVERYONE OF THESE DEALS THAT HAS BEEN REACHED YOU CONSTANTLY SEE A BACK-AND-FORTH THAT DOES NOT GO AWAY. IT IS CONTINUED CONCERNS. FOR COMPANIES, MAY BE CONTINUED CONFUSION ON HOW TO DEAL WITH THAT. JONATHAN: ANNMARIE SAID IT. THIS IS A FEATURE OF THIS ADMINISTRATION, AND IT WILL CONTINUE THROUGH THE NEXT SEVERAL YEARS AND MAYBE -- AND MAYBE BEYOND. ELON MUSK IS SUING APPLE AND OPENAI, CLAIMING THEY UNFAIRLY FAVOR OPENAI ACROSS PHONES. MUSK SEEKING BILLIONS OF DOLLARS IN DAMAGES. DANI: THIS WILL BE SO INTERESTING TO SEE WHERE THIS GOES. A LOT OF PEOPLE SAY, ELON MUSK IS LITIGIOUS. I THINK THAT IS UNFAIR, CONSIDERING THE JUSTICE DEPARTMENT SUED GOOGLE OVER WHAT THEY SAID WERE ILLEGAL PAYMENTS TO APPLE TO HAVE GOOGLE AS THE DOMINANT SEARCH ON SAFARI. IT IS KIND OF A SIMILAR THING. WHAT HAS REPLACED SEARCH? IT IS INCREASINGLY BECOMING THESE CHATBOTS. IF A JUDGE DECIDED GOOGLE CANNOT MAKE IT SEARCH THE MAIN THING ON VARIOUS PLATFORMS, THEN WHY SHOULD APPLE, FOR EXAMPLE, BE ALLOWED TO FORCE PEOPLE TO USE CHATGPT FOR THEIR AI CHATBOTS? IT IS A QUESTION THAT HAS BEEN FACED BEFORE IN THE PRIOR TYPES OF TECHNOLOGY AS IT IS ADVANCING. THE QUESTIONS DON'T GO AWAY. JONATHAN: LET'S TURN BACK TO OUR TOP STORY. PRESIDENT DONALD TRUMP MOVING TO FIRE LISA COOK. THE LATEST ESCALATION IN WASHINGTON, D.C. BLOOMBERG'S MIKE MCKEE JOINS US FOR MORE. I WANT TO BUILD ON WHAT YOU ARE TALKING ABOUT THIS MORNING. THE PRESIDENT HAS SAID LISA COOK IS FIRED AND THE FED GOVERNOR SAYS, NO SHE'S NOT. IS SHE FIRED OR ISN'T SHE? MIKE: WE DON'T KNOW. IT IS THE INTERESTING QUESTION THIS MORNING. IF SHE SHOWS UP TO WORK WHAT HAPPENS? DOES THE FED KEEPER OUT? DOES THE PRESIDENT SEND U.S. MARSHALS TO TAKE HER OUT OF THE FED? HOW DOES THIS PLAY OUT? AND WHO TAKES IT TO COURT? WE ASSUME IT WILL ALL END UP IN COURT. THE ISSUE WILL BE THE FOR CAUSE CLAUSE. DOES WHATEVER SHE DID RISE TO THE LEVEL OF FOR CAUSE? COURTS HAVE GENERALLY HELD THAT IT INVOLVES WHAT YOU DO OFFICIALLY ON THE JOB. MALFEASANCE OR NEGLECT OF THE JOB. THINGS LIKE THAT RATHER THAN PERSONAL THINGS THAT TOOK PLACE BEFORE YOU WERE NOMINATED TO THE FED. BUT THAT IS A QUESTION FOR ANOTHER DAY. FIRST WE HAVE TO FIND OUT WHAT HER STATUS IS. JONATHAN: THERE IS SOME WAY THINGS GOING ON HERE. THERE IS POTENTIALLY TWO DIFFERENT TRACKS. WHEN YOU HAVE LEGAL PROCEEDINGS THAT HAVE NOT OPENED UP YET AND MAY NOT OVER SERIOUS ALLEGATIONS OF MORTGAGE FRAUD. THE OTHER ONE IS WHETHER THE PRESIDENT CAN FIRE A SITTING FED GOVERNOR. HOW ARE YOU TRACKING BOTH AT THE SAME TIME? MIKE: WE ARE WATCHING TO SEE WHAT THE FED CAN SAY. THEY DON'T HAVE THE FACTS ON WHAT LISA COOK'S MORTGAGE SITUATION WAS, SO THEY ARE NOT GOING TO BE ABLE TO PUBLICLY DEFEND HER UNTIL AND IF SHE CAN SHOW SHE IS INNOCENT. IF SHE IS NOT, IF SHE DID DO SOMETHING WRONG THERE IS A GOOD CHANCE THE FED MAY ASK HER TO STEP DOWN. THEY DON'T KNOW THAT YET, SO THEY ARE KEEPING THEIR DISTANCE FROM ALL OF THIS. THE ADMINISTRATION HAS NOT SAID ANYTHING SINCE THE PRESIDENT PUT OUT HIS STATEMENT LAST NIGHT, BUT WE HAVE TO WATCH AND SEE HOW THEY FOLLOW UP ON THAT. OBVIOUSLY MR. TRUMP HAS A NUMBER OF APPEARANCES TODAY, AND HE WILL DO SOME SELF BEFORE THE CAMERAS AND WE MIGHT FIND OUT MORE. JONATHAN: THANK YOU. JOINING US NOW, THE FORMER NEW YORK FED PRESIDENT BILL DUDLEY. WELCOME TO THE PROGRAM. EXTENSIVE EXPERIENCE AT THE FEDERAL RESERVE. HOW DO YOU THINK THEY WILL BE RESPONDING TO THIS THIS MORNING? BILL: THEY ARE GOING TO BE UNHAPPY, BECAUSE THIS -- THIS IS A REAL ASSAULT ON THE FEDERAL RESERVE'S INDEPENDENCE. AT CENTRAL BANK'S INDEPENDENCE IS IMPORTANT FOR GOOD ECONOMIC OUTCOMES. THERE HAS BEEN A REASON WHY WE HAVE BEEN MOVING TOWARD GREATER INDEPENDENCE FOR THE LAST FOUR DECADES ACROSS THE WORLD. BECAUSE FEDERAL BANK THAT HAVE INDEPENDENCE TO ACHIEVE THE OBJECTIVES SET FOR THEM BY CONGRESS IN THE MINISTRATIONS DO A BETTER JOB IN CONTROLLING INFLATION AND KEEPING AN ECONOMY ON A STABLE PATH. THIS IS AN ASSAULT ON THAT. I'M SURPRISED MARKETS ARE SO RELAXED ABOUT THIS. BE THAT IS BECAUSE WE DON'T KNOW WHERE THIS IS GOING TO GO. WE DON'T KNOW WHETHER LISA COOK IS GOING TO BE ABLE TO STAY IN OFFICE. IT LOOKS LIKE THE BAR TO GETTING HER OUT IS QUITE HIGH, BECAUSE IT DOES NOT SEEM THAT FOR CAUSE WOULD EXTEND TO THE ALLEGATIONS AGAINST HER. BUT SHE AT A MINIMUM DESERVES HER DAY IN COURT. DANI: IT SEEMS LIKE THAT IS THE SYSTEM THAT IS EMERGING. WE ARE UNDERSTANDING THE CONTOURS OF FED INDEPENDENCE FROM THE COURTS. BE AT THE MOST RECENT RULING THAT SAID INDEPENDENT AGENCIES COULD HAVE THEIR HEADS FIRED BY TRUMP BUT NOT NECESSARILY THE FED WITHOUT CAUSE. THIS MAY BE DEFINING HOW THE COURTS DEFINE WHAT CAUSE IS. IF YOU HAVE A SYSTEM THAT IS NOT ENCODED IN LAW BUT BEING INTERPRETED BY THE COURTS, WHAT DOES THAT SAY ABOUT THE FRAGILITY OR STABILITY OF FED INDEPENDENCE? BILL: IT HAS TO BE INTERPRETED BY THE COURTS, BECAUSE THERE IS NO PRECEDENT FOR THIS. WE DON'T KNOW WHAT THE LAW IS UNLESS THE COURTS RULE ON IT. THE COURTS HAVE TO DECIDE, WHAT IS THE LAW INTENDED TO DO? I THINK MOST PEOPLE THINK THAT, YOU KNOW, WHAT LISA COOK DID DOES NOT REPRESENT FOR CAUSE DISMISSAL FROM HER GOVERNORSHIP. BUT IT IS UP FOR THE COURTS TO ADJUDICATE THAT. DANI: IF WE ARE IN A SCENARIO WHERE THIS IS A FED THAT WANTS TO EASE POLICY, THAT IT WANTS TO CUT BECAUSE OF THESE PROCEEDINGS AND THE BACKGROUND YOU GET SOME REAL TENSION ON THE LONG END OF THE CURVE, WHAT WOULD THE FED DO? IT WANTS TO CUT, BUT THE MARKETS DO SOMETHING DIFFERENT? BILL: I THINK THE FED WILL DO WHAT IT THINKS IS HIM -- IS APPROPRIATE HE IS WORRIED ABOUT THE DOWNSIDE RISK TO THE LABOR MARKET MORE THAN THE UPSIDE RISK TO INFLATION. HIS VIEW THAT MONETARY POLICY IS RESTRICTIVE, HE BASICALLY SEND A SIGNAL THAT IT IS LIKELY THE FED IS GOING TO CUT RATES IN SEPTEMBER. I DON'T THINK THIS CHANGES ANY OF THAT. WHAT IT DOES CHANGES, DOWN THE ROAD WHEN THE FEDERAL RESERVE ACTS, AND THEY CUT RATES, IS THAT BECAUSE THEY THINK THAT IS AN APPROPRIATE THING TO DO FOR THE ECONOMY OR BECAUSE THEY ARE UNDER PRESSURE FROM THE TRUMP ADMINISTRATION? PUTTING A LOT OF PRESSURE ON A CENTRAL BANK IS, IN MY MIND, COUNTERPRODUCTIVE. IT BASICALLY CAUSES PEOPLE TO WONDER, IS THE CENTRAL BANK DOING WHAT IS APPROPRIATE TO ACHIEVE ITS OBJECTIVES, OR IS IT CAVING INTO PRESSURE FROM THE ADMINISTRATION? JONATHAN: DO YOU SENSE THAT SHIFT IS ALREADY UNDERWAY? BILL: I DON'T THINK SO. I THINK THERE IS A CASE TO CUT RATES IN SEPTEMBER. I'M NOT SURE I WOULD BE IN THE CAMP. I'M NOT AS CONVINCED THAT MONETARY POLICY IS RESTRICTIVE TODAY. AND I AM MORE WORRIED ABOUT THE RISE IN INFLATION CAUSED BY THE TARIFFS COULD END UP BEING MORE PERSISTENT THAN POWELL DOES. THAT IS A REASONABLE POINT OF DISAGREEMENT. I THINK THAT IF THE FED CUTS RATES IN SEPTEMBER IT IS NOT A BIG EVENT. THE MARKET CERTAINLY ANTICIPATES RATE CUTS OVER THE NEXT YEAR. THEY EXPECT THE FED EVENTUALLY TO CUT RATES BACK DOWN TO WHAT THEY VIEW AS A NEUTRAL FEDERAL FUNDS RATE IN -- AROUND THREE, 3.5%. JONATHAN: WHY ARE YOU MORE CONCERNED ABOUT INFLATION? FED CHAIR HAS SAID HE IS NOT WORRIED ABOUT UPSIDE RISK BECAUSE OF THE DOWNSIDE RISKS TO EMPLOYMENT. WHAT MAKES YOU MORE CONCERNED? BILL: FOUR YEARS OF BEING ABOVE YOUR INFLATION OBJECTIVE. EVERY YEAR THAT INCREASES THE RISK THAT PEOPLE START TO VIEW THIS AS THE STEADY STATE. AND THEN THAT STARTS TO FLOW INTO WAGE SETTLEMENTS AND THEN IT BECOMES VERY DIFFICULT TO GET RID OF THE INFLATION THAT HAS BEEN EMBEDDED IN THE SYSTEM. JONATHAN: BILL DUDLEY. APPRECIATE THE REACTION THIS MORNING. THE FORMER NEW YORK FED PRESIDENT. REMINDS ME OF SOMETHING THAT LISA SHALETT SAID RECENTLY. ONE OF THE PROBLEM -- ONE OF THE PROBLEMS WE ARE TRYING TO SOLVE? FINANCIAL CONDITIONS ARE LOOSE. CORPORATE CREDIT IS FLOWING. DANI: KEVIN GORDON POINTED THIS OUT. THAT THE CITY ECONOMIC SURPRISE INDEX HAS RISEN TO THE HIGHEST LEVEL SINCE FEBRUARY. THE ECONOMIC DATA COMING IN HAS BEEN GOOD. I ALSO THINK THAT JACKSON HOLE IS INTERESTING. UEDA GAVE A SPEECH THAT WAS CONSEQUENTIAL. HE TALKED ABOUT AN AGING POPULATION IN JAPAN KEEPING RATES AND INFLATION HIGHER. YOUNG WILLIAMS WAS OUT RECENTLY SAYING MAYBE WHAT IS HAPPENING IN JAPAN IF THIS IS WHERE THE U.S. IS HEADED SUGGESTS THE STRUCTURAL FORCES WILL MEAN INFLATION IS HIGHER, AND MAYBE CONTINUES TO BE ABOVE TARGET. IT ALREADY HAS FOR 4.5 YEARS. JONATHAN: THE COMMENTS FROM JON WILLIAMS BEING BURIED ON THE NEWS FROM LISA COOK. AS MIKE MCKEE SAID, WE DON'T KNOW WHAT THE CURRENT CIRCUMSTANCES ALL RIGHT NOW. WHERE ARE WE? I CAN TELL YOU WHERE WE ARE IN THE BOND MARKET. WE ARE FADING SOME OF THIS MOVE. WITH AN UPDATE ON STORIES ELSEWHERE THIS MORNING, WITH YOUR BLOOMBERG BRIEF, YET -- LET'S CHECK IN WITH YAHAIRA ANAND. YAHAIRA: CHINA IS SENDING A TOP TRADE NEGOTIATOR THIS WEEK. THE VICE COMMERCE MINISTER WILL MEET WITH TRADE AND TREASURY REPRESENTATIVES THURSDAY AND FRIDAY. THE MOVE COMES AFTER BOTH SIDES EXTENDED THEIR PAWS ON HIGHER TARIFFS THROUGH EARLY NOVEMBER. PRESIDENT DONALD TRUMP HAS CALLED CHICAGO A MASS AND THREATENED TO TAP THE NATIONAL GUARD TO TACKLE CRIME IN THE CITY. CHICAGO'S MAYOR SAID TRUMP'S PLAN WAS UNCONSTITUTIONAL AND A THREAT TO DEMOCRACY. HE NOTED THAT MURDERS IN THE CITY HAVE FALLEN TO THE LOWEST IN MORE THAN A DECADE. AND HOUSTON, WE MAY HAVE A PROBLEM. SPACEX DELAYED A CRITICAL TEST OF ITS STARSHIP ROCKET JUST A FEW MINUTES BEFORE LEFT OFF YESTERDAY, CITING UNFAVORABLE WEATHER CONDITIONS A LAUNCH COMMENTATOR SAID THE COMPANY COULD TRY AGAIN TODAY AS STARSHIP IS SET TO TAKE OFF ON ITS 10TH MAJOR MISSION FROM SPACEX'S SOUTH TEXAS LAUNCH FACILITY CALLED STARBASE. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: MORE IN THE NEXT HOUR. NEXT, TURMOIL AT THE FED. > > WHETHER THIS CHANGES MUCH I DON'T KNOW, BUT I THINK THE MARKET BE GETTING [INDISCERNIBLE] I THINK, WHAT IS THIS GOING TO DO FOR THE LONGER END OF THE CURVE, AND WHAT IS THE FED GOING TO DO TO PREVENT A REPEAT OF LAST SEPTEMBER? JONATHAN: THAT CONVERSATION UP NEXT WITH JIM BEYONCA OF BIANCO RESEARCH. LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. ♪ JONATHAN: BILL DUDLEY SAYING HE IS SURPRISED BY HOW CALM THIS MARKET IS IN THE FACE OF THE PRESIDENT FIRING A SITTING FED GOVERNOR. IT IS PRETTY CALM. WE ARE DOWN BY .2% ON THE S & P. WE ARE DOWN BY POINT HUNDRED. THIS MORNING, TURMOIL AT THE FED. > > DID THIS CHANGES MUCH I DON'T KNOW, BUT I THINK THE MARKET MIGHT BE GETTING LARGE. WHAT THIS MEANS FOR RATE CUTS, WHAT IS THIS GOING TO DO FOR THE LONGER END OF THE CURVE AND WHAT IS THE FED AND TREASURY DEPARTMENT GOING TO DO TO AVOID A REPEAT OF LAST SEPTEMBER. I'M NOT SURE WHETHER THE MARKET IS GOING TO TRUST IF WE GET A STRONG JOBS REPORT IN SEPTEMBER. I DON'T KNOW THAT THAT IS GOING TO HAPPEN. I FEEL THE DATA IS GOING TO BE NOISY. JONATHAN: INVESTORS WEIGHING POTENTIAL CHANGES TO THE FED BOARD AS PRESIDENT TRUMP MOVES TO FIRE LISA COOK AHEAD OF NEXT MONTH'S POLICY MEETING. JIM BIANCO JOINS US NOW FOR MORE. LOOKING TO THE PROGRAM. IT HAS BEEN TOO LONG. DO YOU THINK THIS MARKET IS UNDERPLAYING THE SERIOUSNESS OF WHAT IS GOING ON IN WASHINGTON. -- WASHINGTON? JIM: OVER THE NEAR TERM, NO. I DON'T THINK WHAT HAPPENS WITH GOVERNOR COOK IS GOING TO CHANGE THE OUTCOME OF THE SEPTEMBER MEETING, WHATEVER THE FED DECIDES TO DO. IT LOOKS LIKE THEY'RE GOING TO CUT RATES AT THAT MEETING. AS YOU GET INTO NEXT YEAR AND YOU GET A NEW REPLACEMENT FOR HER AND THE PRESIDENT NOW HAS FOUR GOVERNORS, THAT COULD PLAY OUT IN THE MARKETS, BUT THAT IS PROBABLY A 2026 TOWARD RIGHT NOW. JONATHAN: CAN WE SIT ON THE 2026 STORY? HOW DO YOU THINK THIS MIGHT PLAY OUT RELATIVE TO WHAT IS PRICED? JIM: WE HAVE TO REMEMBER THAT ALL OF THE FEDERAL RESERVE BANK PRESIDENTS, THEIR TERMS EXPIRE IN FEBRUARY 2026. THE BOARDS REAPPOINT THEM AND THE FEDERAL RESERVE GOVERNORS HAVE TO APPROVE ALL OF THAT. IF PRESIDENT TRUMP HAS FOUR GOVERNORS IN PLACE BY FEBRUARY OF NEXT YEAR HE COULD HAVE THE ABILITY TO HAVE THEM VETO ANY FED PRESIDENT HE WANTS, AND BASICALLY KICKED THEM OUT. SO, WE COULD SEE THEM START TO CHANGE THE MAKEUP OF THOSE DISTRICT PRESIDENTS AND WHO IS IN AND WHO IS OUT STARTING AS EARLY AS NEXT YEAR. THAT IS A SCENARIO THAT COULD PLAY OUT, BUT THAT IS NOT FOR SURE. DANI: I WAS GOING TO SAY, JON HAS MADE THE POINT THIS MORNING THAT THE LIST OF CANDIDATES WE HAVE HAD FOR FED CHAIR HAVE BEEN CREDIBLE. THOSE APPOINTED BY TRUMP, VERY CREDIBLE. HOW BIG OF A RISK IS THAT? JIM: THAT IS THE QUESTION. IF WE GET A CREDIBLE CANDIDATE THAT LOOKS LIKE THEY COULD BE INDEPENDENT AND JUDGE WHERE THE ECONOMY IS AND WHAT IS THE APPROPRIATE LEVEL OF POLICY, THEN IT WON'T BE A BIG ISSUE. IF WE GET A CANDIDATE THAT BINS TO POLITICAL WISHES AND TRIES TO CHANGE THE BOARD MIX TO ACCOMMODATE AN EASIER FED POLICY, THAT COULD BE A PROBLEM. IT IS ALL KIND OF INFLUX, BUT YOU ARE RIGHT. MOST LIKELY CANDIDATE THAT WILL REPLACE LISA COOK WILL BE THE NEXT FED CHAIR, AND ALL OF THE CANDIDATES WE HAVE, AT LEAST WE ARE TALKING ABOUT, SEEM TO BE CREDIBLE. DANI: YOU'RE DEALING RIGHT NOW WITH A DEFICIT THAT IS AT WARTIME LEVELS. THE HIGHEST SINCE WORLD WAR II. YOU CONTINUE TO SEE BORROWING COSTS MOVE HIGHER BECAUSE OF THE MOVEMENTS IN THIS BOND MARKET. WHY NOT HAVE A FED AND THE TREASURY THAT WORKS MORE CLOSELY TOGETHER? WHY NOT ALLOW THE FED TO NOT NECESSARILY GET RID OF INDEPENDENCE, BUT WORK MORE CLOSELY WITH OTHER PARTS OF THIS GOVERNMENT, JUST CONSIDERING THE SCENARIO WE FIND OURSELVES IN? JIM: THAT IS REFERRED TO AS FISCAL DOMINANCE. WHAT THAT MEANS IS WHAT YOU SAID. WHY DOESN'T THE FED MAKE IT EASIER TO PAY FOR GOVERNMENT BY LOWERING INTEREST COSTS SO WE COULD HAVE MORE GOVERNMENT? AND IF YOU FOLLOW THROUGH WITH THAT THE FED COULD NEVER RAISE RATES EVER AGAIN, EVEN IF WE WERE TO GET INFLATION. AND THAT WOULD BE A REAL PROBLEM. IT WOULD WORK FOR A WHILE, AS LONG AS YOU DON'T HAVE INFLATION. BUT WHEN YOU HAVE INFLATION THE ARGUMENT WOULD BE, YOU CANNOT RAISE RATES TO FIGHT INFLATION BECAUSE IT WILL RAISE THE BORROWING COSTS OF THE GOVERNMENT. THAT IS HOW YOU GET SPIRALING, OUT-OF-CONTROL INFLATION. SUCH A MOVE WOULD BE SOMETHING THAT WOULD END BADLY. IT WOULD ONLY BE A QUESTION OF WHEN. JONATHAN: IT DOESN'T HAVE TO BE THAT DRASTIC. I WANT TO PICK UP ON THE LINE OF THINKING DANI INTRODUCED LAST WEEK. IF THEY THINK ABOUT THE EFFICACY OF THEIR POLICY AT THE MOMENT, IF THEY BEGIN TO DROP INTEREST RATES AND USE THE LONG END RATES STAY HIGHER OR CREEP HIGHER BECAUSE OF WHAT IS HAPPENING WORLDWIDE, DON'T THEY HAVE SOMETHING TO THINK ABOUT THEIR ANYWAY? DON'T THEY HAVE TO THINK ABOUT WHAT TO DO IT THE LONGER END OF THE CURVE? JIM: I THINK THEY DO, AND I THINK THEY SHOULD. RECENT EXAMPLES SHOW THAT. WHEN THEY CUT RATES THE LONG END OF THE YIELD CURVE ROSE. YOU CAN ALSO LOOK AT THE ECB. THEY ARE CUTTING RATES ALL THE TIME AND WE ARE NOT. THE LONG END OF THE GERMAN BUND MARKET IS GOING UP WHILE THEY ARE CUTTING RATES. THE SAME THING IS HAPPENING IN THE U.K. SINCE AUGUST 1, ONE MINUTE BEFORE THE PAIR REPORT, THE 30 YEAR YIELD WAS 3.91 PERCENT. IT IS 4.92% RIGHT NOW. THE BOND MARKETS HAD A MONTH TO THINK ABOUT IT AND IT IS UP ONE BASIS POINT. IT IS TRYING TO SIGNAL HERE THAT MAYBE IT DOES NOT WANT THESE RATE CUTS, BUT IS PROBABLY GOING TO GET THEM ANYWAY. THE FED SHOULD BE LOOKING AT ALL OF THE SIGNALS FROM ABROAD, FROM LAST YEAR, AND WHAT THE CURRENT LONG END OF THE YIELD CURVE IS DOING AND QUESTION WHETHER OR NOT IT IS THE POLICY. THE BOND MARKET DOES NOT SEEM TO BE ON BOARD WITH THAT. JONATHAN: ARE YOU QUESTIONING WHETHER IT IS THE RIGHT POLICY? JIM: YES, I AM. I THINK WE ARE GOING TO SEE INFLATION FROM BOTH GOODS PRICES, FROM TARIFFS, AND THE POPULATION GROWTH SLOWING BECAUSE OF THE SLOWDOWN IN IMMIGRATION IS GOING TO PUT WAGE PRESSURE ON THE EXISTING JOBS WE HAVE RIGHT NOW. THAT COMBINATION IS GOING TO PUSH INFLATION HIGHER. MAYBE BECAUSE THE BORDER IS CLOSED AND IMMIGRATION IS DOWN YOU WILL SEE SOME SLOWING IN THE ECONOMY. BUT YOU MIGHT OFFSET THAT WITH HIGHER INFLATION, AND THAT IS WHERE I THINK THE FED IS GOING TO HAVE TO THINK TWICE ABOUT WHETHER THEY SHOULD BE CUTTING RATES. DANI: WE WERE JUST TALKING WITH BILL DUDLEY, WHO WOULD AGREE THAT INFLATION IS A BIGGER PROBLEM BUT MADE THE ARGUMENT, 25 BASIS POINTS OF A CUT IN SEPTEMBER, THAT IS NOT NECESSARILY AN ISSUE. DO YOU THINK IT IS AN ISSUE IF THEY CUT IN SEPTEMBER? JIM: IT IS AN ISSUE IF THE ARGUMENT IS, HE WAS 25 TO GET PRESIDENT TRUMP THEIR BACK. THAT IS A POLITICAL MOVE. BUT IF THEY CUT IN SEPTEMBER 2025 YOU WOULD HAVE TO PRESUME WHAT CHAIRMAN POWELL HAS SAID. THAT THEY ARE RESTRICTED. THAT THE FED DOT PLOT SAYS THE NEUTRAL RATE IS SOMEWHERE AROUND WE PERCENT, AND THIS IS THE SECOND LEG DOWN IN INTEREST RATES TO EVENTUALLY GET THEM TO NEUTRAL AND THEY ARE GOING TO KEEP GOING. OTHERWISE, LIKE I SAID, IF THE ARGUMENT WANTS TO BE, IT WILL BE A ONE AND DONE THING FOR POLITICAL PURPOSES, I DON'T EVEN THINK THAT IS A GOOD ARGUMENT AS WELL. JONATHAN: I REMEMBER WHEN YOUR NAME WAS IN THE MIX TO BE A FED GOVERNOR, AND YOU ARE A CREDIBLE GUY. JIM BIANCO OF BIANCO RESEARCH. WE PREFER JIM WHERE HE HAS AND WE GET MORE ACCESS. DANI: IT WOULD HAVE BEEN NICE TO HAVE GOVERNOR BEYONCA. JONATHAN: WHEN THAT BEEN NICE? MIX IT UP A LITTLE BIT? GET LIVE COLLINS AFTER THE DECISION. JUST REALLY SHAKE THINGS UP. NOT THAT THEY ARE ALLOWED TO DO THAT, BUT WE CAN CHANGE THE RULES. UP NEXT, BARRY BANNISTER, LAEL BRAINARD, TORSTEN SLOK OF APOLLO, DAVID RUBENSTEIN OF CARLISLE. ALL OF THAT AND MORE IN THE THIRD HOUR OF "BLOOMBERG SURVEILLANCE." ♪ > > SO THERE IS AN ENORMOUS AMOUNT OF PRESSURE ON THE FED RIGHT NOW THAT CANNOT BE IGNORED. > > THE TOUGHEST POSITION THE FED HAS BASICALLY EVER BEEN IN. > > THIS IS A FED SETTING UP TO LOOK THROUGH MONTHS OF STRONGER INFLATION DATA. > > THERE IS INFLATION THAT NEEDS TO BE SPELLED OUT. > > WE ARE GETTING EXCITED ABOUT A CUT IN SEPTEMBER WHEN WE STILL HAVE A LOT OF DATA TO COME. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING, GOOD MORNING. THE THIRD HOUR OF "BLOOMBERG SURVEILLANCE" STARTS RIGHT NOW. EQUITY FUTURES ON THE S & P 500 NEGATIVE BY AROUND 0.1%. LIKEWISE ON THE NASDAQ 100. IN THE FACE OF A STORM BREWING IN THE FEDERAL RESERVE, THIS MARKET IS PRETTY CALM. THE TWO-YEAR, 10 YEAR, AND 30 YEAR BOND YIELDS. WE ARE LOWER BY TWO BASIS POINTS, THREE AT THE FRONT END, HIGHER BY TWO AT THE LONG END. DANI: AND THE REACTION IS GETTING MORE MUTED AS WE GET CLOSER TO THE U.S. OPEN. THE WAY THE MARKET IS INTERPRETING THIS IS MORE CUTS ARE COMING, AND THAT IS A GOOD THING. MARGINALLY HIGHER IN THE FUTURE SESSION, BUT AGAIN WE ARE STARTING TO HEAR FROM JIM BEYONCA AND BILL DUDLEY THE FED MIGHT FACE THE PRESSURE OF OPTICS. IF THERE IS AN ISSUE WHERE IT IS SEEN FOR A POLITICAL REASON, MAYBE SOME OF THAT WEARS THIN. JONATHAN: DO YOU SEE THE SHIFT ALREADY HAPPENING? WE ASKED BILL AND HE SAID NO. I HAVE SPOKEN TO A FEW PEOPLE IN THE PAST WEEK OR SO THAT SAID THE SHIFT OF THE CHAIR OF THE FEDERAL RESERVE IS UNDERPINNED BY THE POLITICAL PRESSURE OF THE LAST MONTH. DANI: THAT CERTAINLY WAS THE ARGUMENT FROM JP MORGAN'S BRUCE WHEN WE SPOKE WITH HIM ON FRIDAY BECAUSE YOU SAW A SHIFT FROM JAY POWELL. HE SAID IT WAS NOT CLEAR FISCAL CONDITIONS WERE OVERLY TIGHT, THAT THEY NEEDED TO BE MORE ACCOMMODATING. WE HEARD SOMETHING DIFFERENT OFF OF DATA THAT WAS VERY UNCLEAR, SO YOU COULD MAKE THE ARGUMENT THAT THERE IS A CREDIBLE REASON TO BE CUTTING BUT IT WAS A BIG SHIFT FROM POWELL, WHICH IS WHERE THE QUESTIONS COME UP. JONATHAN: WE ARE WAITING FOR MORE DATA, AND ARGUE WE THE BIGGEST DATA COMES FROM THE TWO-YEAR AFTER THE CLOSE TOMORROW AFTERNOON. FUTURES, NO REAL DRAMA, DOWN BY 0.1% ON THE S & P. COMING UP THIS ERA, WE WILL CATCH UP WITH BARRY BANNISTER LOOKING FOR A STOCK MARKET CORRECTION. WE WILL SPEAK WITH LAEL BRAINARD AS PRESIDENT TRUMP LOOKS TO FIRE THE FED LISA COOK. WE BEGIN THIS HOUR WITH STOCKS FALLING. BARRY BANNISTER WRITING, WE EXPECT THE S & P 500 TO CORRECT 10% TO 14% IN THE SECOND HALF OF 2025 AS A PORTION OF THE STAGFLATION INVESTORS FEARED IN THE FIRST HALF BECOMES A REALITY. BARRY JOINS US FOR MORE. IT HAS BEEN TOO LONG. WELCOME BACK TO THE PROGRAM. YOU ARE UNCOMFORTABLE WITH THE RALLY AND THE ALL-TIME HIGHS WE PRINTED RECENTLY. EXTEND YOUR THINKING ON THE MATTER. WHY DO YOU THINK WE END UP WITH THE STAGFLATION PEOPLE FEARED. BARRY: GOOD TO SEE YOU. THIS HAS BEEN THE BULL MARKET THAT BROKE MACRO, RIGHT? FOR EXAMPLE, IN THE FIRST HALF OF 2025, REAL OR AFTER INFLATION, PERSONAL EXPENDITURE, 60% OF GDP WITH NEGATIVE ON A YEAR-OVER-YEAR BASIS. THAT NEVER HAPPENS WITHOUT A RECESSION, HAS EVER HAPPENED WITHOUT A RECESSION, SO WE ARE A BIT TAKEN ABACK BY THE THEMATIC APPROACH RATHER THAN VIEWING STOCK INVESTING AS BUYING COMPANIES. IT SEEMS TO BE MORE BASED ON PURELY THEME AND HOPES AND DREAMS, BUT WE ARE AWARE OF THE RISKS AND CAN DISCUSS THEM IF YOU WOULD LIKE. JONATHAN: LET'S DISCUSS THEM NOW. ULTIMATELY, YOU THINK WE END UP IN A STATE OF STAGFLATION, WHICH SAYS THAT FED'S DOVISH BIAS IS SOMEWHAT CONSTRAINED. WE ARE TRYING TO FIGURE OUT WHERE WE END UP BECAUSE THIS THEN HAS A DOVISH BIAS. BARRY: IT DOES HAVE A DOVISH BIAS, BUT CONSIDER THIS. USING ALL AVAILABLE DATA, USING THE FED RATE THAT EXISTED AS WELL AS THE CORE PERSONAL CONSUMPTION EXPENDITURE DEFLATOR FOR INFLATION, THE REAL RATE, THERE MEDIA SINCE 1946 HAS AVERAGED 80 BASIS POINTS, 0.8. ALSO IN THE MODERN FED SINCE 19 ANY FIVE, IT HAS BEEN 0.85. ANSWER ME THIS, IF WE ARE GOING TO HAVE THE CORE PCE RIGHT UP UNTIL THE FED CHAIR CHANGEOVER IN MAY OF 2026, EXPLAIN WHY THE FED SHOULD CUT MORE THAN TWICE. BECAUSE AT THAT POINT, THEY WOULD BE AT ABOUT A 0.7, 0.8 REAL RATE, SO ALL OF THIS TALK OF NEUTRAL RATES, THAT IS I GUESS, BUT INFLATION ON THE PCE, THAT IS REALITY, AND SO I THINK THE MARKET IS A LITTLE BULLED UP ON THE FED STEEPENING THE CURVE. DANI: ON THE GROWTH SIDE OF THINGS, HOW DO YOU LOOK AT GROWTH SLOWING WHEN YOU HAVE THE AI COMPANIES SPENDING HUNDREDS OF BILLIONS OF DOLLARS EVERY YEAR ON THEIR DATA CENTER AND ENERGY BUILD OUTS? BARRY: YEAH, THAT IS A GOOD QUESTION. IF YOU LOOK AT THE ACTUAL EXPENDITURES BESIDES A LOT OF THE FACT THAT IT IS IMPORTANT ELECTRONICS AND TARIFF FRONT RUNNING TO AN EXTENT, BUT IT IS ABOUT 1% OF GDP. ON A YEAR-OVER-YEAR BASIS, IT WILL FOLLOW THE FREE CASH FLOW OF BIG TECH AND LOOKS TO US LIKE IT WILL ACTUALLY ON A YEAR-OVER-YEAR BASIS SLOWDOWN. SINCE YOU KNOW THE MARKET JUST OPERATES ON THE CHANGE IN THE RATE AND GROWTH, IT IS A SPENT STORY AS FAR AS THE INCREMENTAL IMPACT ON THE MARKET GOES. DANI: SO IF WE GET THE CORRECTION, THE 10% TO 14%, WHERE CAN YOU FIND OUT -- HIDE OUT? BARRY: WHEN YOU THINK ABOUT WE ARE INVOLVED IN, WE ARE DOING A COMPLETE REVAMP OF THE WORLD FLOWS WITH A RED-HOT ADMINISTRATION. AII DON'T THINK IS AS SCALABLE AS THINGS LIKE SOFTWARE. AS A CONSEQUENCE OF ALL OF THAT, SOME OF THE HEIGHT IN THE MARKET WOULD PROBABLY GRAVITATE BACK INTO THINGS LIKE BEATEN-DOWN HEALTH CARE, CONSUMER STAPLES, WASTE MANAGEMENT COMPANIES, UTILITIES. THERE ARE A LOT OF PLACES TO HIDE. HOWEVER , THERE ISN'T ONE OF INTEREST IN NOT HIDING. THERE IS A LOT OF RISK-TAKING. JONATHAN: WE SAW THE SPECULATIVE BEHAVIOR ON FRIDAY AFTER THE SPEECH FROM JACKSON HOLE. I LOVE YOUR VIEW ON HOW YOU DESCRIBED THIS REGIME IN WASHINGTON, D.C. THEY HAVE JUST TURNED THE CHIPS ACT ESSENTIALLY INTO AN INVESTMENT VEHICLE, AND WE HAVE A VERY ACTIVIST PRESIDENT INVESTORS SITTING IN THE WHITE HOUSE. HOW DOES THAT CHANGE THINGS FOR YOU AND THE TEAM AND THE WAY YOU ENGAGE IN MARKETS AND THINK ABOUT THE U.S. ECONOMY? BARRY: IT IS NOT A KNOCK ON THE ADMINISTRATION, BUT THERE IS A LITTLE BIT OF WHAT I WOULD CALL AN EGO TRIP GOING ON. THEY ARE NOT GOING TO RUN. THEY ALREADY HAVE A HEDGE FUND CALLED THE TREASURY MARKET AND THE FEDERAL RESERVE, BUT THEY ARE NOT GOING TO INSTITUTE A DRAMATIC INCREASE IN INDUSTRIAL POLICY. THIS WAS PROBABLY MORE OF A ONE OFF. I THINK THERE WOULD BE SOME RESISTANCE TO THE GOVERNMENT BEING OVERLY INVOLVED IN STAKES AND RUNNING U.S. COMPANIES. JONATHAN: NOT A TON OF NOW AT LEAST. APPRECIATE YOUR PERSPECTIVE ON THE MARKET. BARRY BANNISTER LOOKING FOR A 10% TO 14% CORRECTION IN THE FIRST HALF. HIS POINTS ARE VERY VALID. YOU HAVE A SEPTEMBER ISSUE FOR THE FEDERAL RESERVE. YOU HAVE THE LONGER-TERM ISSUE FOR THE FEDERAL RESERVE. THINK ABOUT THAT LITTLE BIT MORE. IF WE ARE GETTING PRINTS ON INFLATION AROUND 3%, IT IS DIFFICULT TO KEEP CUTTING INTEREST RATES UNTIL POWELL'S END OF TERM IN MAY OF 2026. DANI: WE HAVE BEEN TALKING BUT THE LONG END OF THE CURVE. WHAT HAPPENS IF YOU GET HOT PRINTS AND THEY ARE CUTTING AT THE SAME TIME? THAT EXACERBATES THE PROBLEM WE ARE ALREADY UNDERGOING. IT SEEMS LIKE THE PRINTS WE ARE ABOUT TO GET SPEECH TO WHAT WILL HAPPEN IN OCTOBER BECAUSE MANY SAY IT IS A LOCK. THE DATA IS BECOMING INCREASINGLY IMPORTANT FOR THE LONGER-TERM OUTLOOK. JONATHAN: THINGS HAVE THERE HAS NOT BEEN MUCH DRAMA THROUGHOUT THIS MORNING. BOND YIELDS AT THE VERY LONG END OF THE CURVE UP BY A SINGLE BASIS POINTS. 3.69%, WHICH IS AROUND THE POST PAYROLL SLOW, THE MONDAY AFTER PAYROLL WAS A LOW. DANI: SO MUCH HAS HAPPENED, BUT VOLATILITY IS GONE. BONDS ARE TRADING IN A REALLY TIGHT RANGE. EQUITIES ARE GOING NOWHERE FAST AROUND ALL-TIME HIGHS. IT MAYBE SPEAKS TO THE FRAGILITY OF THE MOMENT, BUT WHAT IF IT ACTUALLY RUPTURES? IT IS NOT THE PRESIDENT TRYING TO FIRE A FEDERAL RESERVE GOVERNOR. JONATHAN: 3.69% ON TWOS AT THE FRONT END OF THE CURRENT. LET'S CROSSOVER FOR THE BLOOMBERG BRIEF. YAHAIRA: PRESIDENT TRUMP IS MOVING TO OUST FED GOVERNOR LISA COOK OVER CLAIMS SHE FALSIFIED DOCUMENTS. COOK RESPONDED SAYING TRUMP HAS NO AUTHORITY TO FIRE HER, AND SHE WILL NOT STEP DOWN. IT REPRESENTS A SIGNIFICANT ESCALATION OF THE PRESIDENT'S BATTLE AGAINST THE FED, WHICH HE SAYS IS TAKING TOO LONG TO LOWER INTEREST RATES. MEANWHILE, ELON MUSK IS SUING APPLE AND OPENAI. IN A FEDERAL LAWSUIT, AND CLAIMS APPLE'S INTEGRATION OF CHATGPT INTO IPHONES GIVES IT AN UNFAIR MONOPOLY AND IT DEPRIVES CONSUMERS OF CHOICE. A NEW RESEARCH REPORT FOUND AI IS MAKING IT HARDER FOR ENTRY-LEVEL WORKERS IN THE U.S. TO FIND JOBS IN FIELDS LIKE SOFTWARE DEVELOPMENT AND CUSTOMER SERVICE. STANFORD UNIVERSITY RESEARCHERS SAY THEY FOUND THAT OVER THE LAST THREE YEARS, EMPLOYMENT HAS DROPPED 13% FOR PEOPLE WHO ARE JUST STARTING OUT IN FIELDS DETERMINED TO BE THE MOST EXPOSED TO AI. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: THANKS FOR THE UPDATE. UP NEXT ON THE PROGRAM, THE MORNING CALLS AND WE WILL CATCH UP WITH THE FORMER FED VICE CHAIR LAEL BRAINARD AS PRESIDENT TRUMP LOOKS TO FIRE FED GOVERNOR LISA COOK. FROM NEW YORK CITY THIS IS BLOOMBERG -- FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ > > THIS IS A REAL ASSAULT ON THE FEDERAL RESERVE'S INDEPENDENCE. SURPRISED THE MARKETS ARE SO RELAXED ABOUT THIS. MAYBE BECAUSE THAT IS WE DON'T KNOW WHERE THIS IS GOING TO GO. WE DON'T KNOW WHETHER OR NOT LISA COOK WILL BE ABLE TO STAY IN OFFICE. IT CERTAINLY LOOKS LIKE THE BAR TO GETTING HER OUT IS QUITE HIGH. THERE IS NO PRECEDENCE TO THIS SO WE DO NOT KNOW UNTIL THERE IS A RULE ON IT. JONATHAN: THAT WAS BILL DUDLEY. THIS MARKET STILL LOOKS RELAXED IN SPITE OF WHAT HAS TAKEN PLACE IN WASHINGTON. EQUITY FUTURES DOWN BY 0.1% ON THE NASDAQ. GET YOU SOME MORNING CALLS. MORGAN STANLEY LOWERING ITS PRICE TARGET ON LULULEMON COME EXPECTING THE COMPANY TO LOWER FISCAL YEAR EPS GUIDANCE ON HIGHER TARIFFS. SALESFORCE LOWERED, EXPECTING IN-LINE Q2 RESULTS NOT LIKELY TO BE A CATALYST. FINALLY, TRUEST GREETING AMD TO BUY. TESTING THIS ACKNOWLEDGE AS A PRICE CHECK TO NVIDIA. THE STOCK IS UP BY 2.3%. PRESIDENT TRUMP'S EFFORTS TO OUST FED GOVERNOR LISA COOK INTENSIFY CONCERNS OVER THE CENTRAL BANK'S INDEPENDENCE. HERE I ANNMARIE HORDER -- HERE IS ANNMARIE HORDERN. ANNMARIE: I AM WITH SO MANY WHO UNDERSTANDS THE FED WAS THERE FOR 10 YEARS AND WAS THE VICE CHAIR UNDER JAY POWELL STILL NOW THAT'S CHAIR -- STILL NOW THE CHAIR, AND THAT IS LAEL BRAINARD . AS WE SEE THE STANDOFF BETWEEN PRESIDENT TRUMP AND GOVERNOR COOK, WE HAVE YET TO HEAR FROM THE FED ITSELF. WHAT KIND OF RESPONSE DO YOU THINK WE CAN EXPECT FROM THE INSTITUTION? LAEL: I THINK THE FEDERAL RESERVE IS IN AN INCREDIBLY DIFFICULT POSITION, BUT YOU HAVE TO REMEMBER THIS IS NOT ABOUT AN INDIVIDUAL GOVERNOR. THIS IS REALLY AN UNPRECEDENTED ATTACK ON THE INDEPENDENCE OF THE FEDERAL RESERVE AN INSTITUTION. THERE IS NOBODY IN THE FEDERAL OPEN MARKET COMMITTEE, THE MONETARY POLICY SETTING COMMITTEE THAT CAN'T BE THINKING, WELL, WHAT DOES THIS MEAN FOR ME? SO ANY MEMBER OF THE BOARD PRESUMABLY IS GOING TO WORRY THAT THEY ALSO COULD BE SUBJECT TO THIS KIND OF POLITICAL PRESSURE, AND THAT FUNDAMENTALLY UNDERMINES THE INSTITUTIONAL INDEPENDENCE OF THE FED, WHICH MEANS HIGHER INFLATION POTENTIALLY, LESS CREDIBILITY, EVEN HIGHER LONG-TERM INTEREST RATES. BAD FOR THE ECONOMY. ANNMARIE: DO YOU THINK THIS COULD ACTUALLY IMPACT HOW MEMBERS ARE THINKING ABOUT MONETARY POLICY? LAEL: I JUST THINK THE IMPLICATION IF ANY MEMBER OF THAT BOARD COULD COME UNDER THIS KIND OF POLITICAL PRESSURE FROM THE WHITE HOUSE, AND OF COURSE WE SAW THAT KIND OF PRESSURE ON THE CHAIR EARLIER THIS YEAR, I THINK THAT DOES REALLY PUT A HIGHER PREMIUM ON WHETHER THEY ARE GOING TO BE WILLING TO SPEAK THEIR MINDS, TO DISSENT ON KEY VOTES IF NECESSARY. I THINK IT REALLY DOES CREATE UNPRECEDENTED RISKS. ANNMARIE: THE PRESIDENT TALKED ABOUT THIS MORTGAGE ALLEGATION OF FRAUD IN THE MORTGAGE WORLD FOR GOVERNOR COOK. WHAT IF SHE WAS CHARGED OR CONVICTED? LAEL: I THINK WHAT IS IMPORTANT HERE IS DUE PROCESS AND UNDERTAKING A REAL INVESTIGATION AND HAVING THE FACTS ON THE TABLE AND THE ABILITY FOR HER TO DEFEND HERSELF LEGALLY. NONE OF THAT HAS TAKEN PLACE HERE. THE WHITE HOUSE HAS PREEMPTED THE PROCESS, AND SO THAT IS WHY IT IS REALLY UNPRECEDENTED. IT IS VERY, VERY THREATENING TO THE VERY INDEPENDENCE OF THE FEDERAL RESERVE, AND IT SHOULD CAUSE CONCERNS I THINK AMONG INVESTORS AND MORE BROADLY ABOUT THE FUNDAMENTAL UNDERPINNING OF OUR ECONOMY AND MARKETS. ANNMARIE: GIVEN THAT THIS IS ABOUT ONE INDIVIDUAL, DOES THE FED COME OUT AND SAY SOMETHING, OR DO THEY NEED TO WAIT UNTIL THE DUE PROCESS TAKES PLACE? LAEL: THE FEDERAL RESERVE AS AN INSTITUTION IS ALL ABOUT DUE PROCESS, AND THERE HAVE BEEN INDIVIDUALS WHO HAVE HAD INVESTIGATIONS PREVIOUSLY. THERE IS A GOOD PROCESS FOR DOING THAT. THAT IS NOT WHAT IS TAKING PLACE HERE. THIS IS REALLY ABOUT TRYING TO OVERTURN THE MAJORITY OF THE BOARD OF GOVERNORS LONG BEFORE ANY OF THESE GOVERNORS' TERMS A RE UP BY THREATENING THEM WITH THESE KINDS OF INVESTIGATIONS AND FIRING WITHOUT REAL DUE PROCESS AND CAUSE. AGAIN, THE FEDERAL RESERVE'S INDEPENDENCE IS AT STAKE HERE, AND THAT MEANS MONETARY POLICY WILL INCREASINGLY BE OVERSHADOWED BY CONCERNS THERE IS POLITICAL INTERFERENCE WHETHER OR NOT THAT IS ACTUALLY THE CASE. IF YOU THINK ABOUT IT, JAY POWELL OPENED THE DOOR FOR AN INTEREST RATE CUT IN SEPTEMBER VERY CLEARLY. THAT IS EXACTLY WHAT THE PRESIDENT WANTS, SO MONETARY POLICY IS ACTUALLY MOVING HIS WAY, AND YET THIS IS A VERY, VERY AGGRESSIVE ATTACK ON THE FEDERAL RESERVE WHEN MONETARY POLICY IS DOING EXACTLY WHAT HE HAS BEEN CALLING FOR. ANNMARIE: THAT SPEECH THE FED CHAIR GAVE AT JACKSON HOLE FRIDAY IS VERY DIFFERENT FROM HOW JAY POWELL SOUNDED FOUR WEEKS AGO. DO YOU THINK THE SPEECH WAS POLITICAL? LAEL: I THINK THE CHAIR WAS VERY CAREFUL IN LAYING OUT THE BALANCE OF RISKS HAD SHIFTED. HE POINTED SPECIFICALLY TO THE POSSIBILITY THE LABOR MARKET IS WEAKENING FASTER THAN THE MEMBERS OF THE FOMC HAD BELIEVED IN THEIR LAST MEETING BECAUSE OF THE REVISIONS TO THREE MONTHS WORTH OF HIRING DATA, SO HE LAID OUT A VERY THINK STRONG CASE BASED ON DATA AND THE FACTS WHY THEY WERE NOW GOING TO BE MORE ATTENTIVE TO THE LABOR MARKET WEAKENING WHILE ACKNOWLEDGING THAT INFLATION IS STILL LIKELY TO GO UP BECAUSE OF THE VERY HIGH TARIFFS THAT HAVE BEEN PUT IN PLACE. ANNMARIE: KNOWING THE DATA AND ALL THE PERSONNEL THAT WILL GET TOGETHER AT THE NEXT FED MEETING SEPTEMBER 17, DO YOU EXPECT THEM ALL TO WALK THROUGH THE DOOR THAT THE FED CHAIR OPENED UP FOR A CUT? LAEL: I DON'T KNOW IF ALL MEMBERS OF THE FOMC WILL BE IN THE SAME PLACE, AND OF COURSE WHAT WE SHOULD HOPE FOR IS A REALLY GOOD DEBATE AND AN AIRING OF DIFFERENT VIEWS, BUT BARRING SOMETHING REALLY SURPRISING IN THE UPCOMING EMPLOYMENT PRINT AND CPI PRINT, IT IS MORE LIKELY THAT NOT THAT IS ABLE TO VOTE FOR A 25 BASIS POINT REDUCTION IN THE FEDERAL FUNDS RATE. ANNMARIE: DO YOU THINK THERE IS BIAS IN THE LABOR MARKET TO THIS FEDERAL RESERVE? LAEL: UP UNTIL THIS POINT, WHAT WE HEARD IS A LOT OF DISCUSSION ABOUT THE POTENTIAL RISKS TO INFLATION. INFLATION IS STILL HIGH. IT IS BETWEEN 2.5 TO 3%. THIS TIME LAST YEAR IT WAS GOING IN THE RIGHT DIRECTION MOVING DOWN TO THE 2% TARGET. THIS YEAR, IT ACTUALLY MOVING UP, SO WE HAVE HEARD A LOT OF ATTENTION TO INFLATION, APPROPRIATELY SO, BUT THE CHAIR ACKNOWLEDGED THEY ARE BALANCING RISKS, RISKS OF HIGHER INFLATION, RISK OF LOWER EMPLOYMENT, AND THAT IS EXACTLY WHAT YOU EXPECT FROM TARIFFS, THE STAGFLATIONARY STOCK. ANNMARIE: TALKING ABOUT THE CHANGE, IT WILL NOT ALL COME AT ONCE. WHAT ABOUT POTENTIAL HOT CPI PRINTS BETWEEN NOW AND THE NEXT 12 MONTHS? LAEL: MY INTERPRETATION OF THAT DISCUSSION IS SIMPLY TO KNOWLEDGE THAT WHEN THE LABOR MARKET STARTS TO TURN DOWN, UNEMPLOYMENT OFTEN DOES NOT GENTLY MOVE UP AND THE FEDERAL RESERVE DOES NOT HAVE A LOT OF TIME TO REACT. UNEMPLOYMENT OFTEN JUMPS HIGHER. WHEREAS BECAUSE THE TARIFFS HAVE CHANGED A NUMBER OF TIMES AND STILL DO NOT SEEM TO BE SETTLED, BECAUSE BUSINESSES WERE SO GOOD AT GETTING INVENTORIES IN MOST I THINK IT WAS AN ACKNOWLEDGMENT OF DIFFERENT POTENTIAL TIMING ON THE TWO LEGS OF THE DUAL MANDATE. ANNMARIE: IF IT LIKE FED POWELL WAS COMING AROUND TO HOW TO GOVERNORS THINK. BUT THE PRESIDENT'S TERMS NEED TO BE RENEWED IN FEBRUARY. WOULD YOU SEE A SITUATION WHERE THE FED BOARD WOULD NIX MULTIPLE PRESIDENTS AT THE BIDDING OF THE PRESIDENT OF THE UNITED STATES? LAEL: I THINK THAT IS EXACTLY THE RISK THAT WE ARE SEEING PLAY OUT RIGHT NOW. SO BY MOVING PREEMPTIVELY TO REMOVE A GOVERNOR FROM THE FEDERAL RESERVE WITHOUT GOING THROUGH THE PROCESS, WITHOUT THERE BEING ANY YOUR EVIDENCE, THE PRESIDENT ESSENTIALLY IS MOVING TO SHIFT THE MAJORITY OF THE BOARD OF GOVERNORS WELL BEFORE WHAT WAS CONTEMPLATED IN TERMS OF THE INSTITUTIONAL STRUCTURE IN THEIR TERMS, AND THAT OPENS THE DOOR WHEN RENEWALS OF ALL OF THE RESERVE BANK PRESIDENT COME UP INS PRESENT -- PRESIDENTS COME UP IN FEBRUARY. AND TO POTENTIALLY NOT REDUCE ABOVE THEM IN ORDER TO SHIFT THE OVERALL VOTING MAJORITY ON THE FOMC, THAT IS AN UNPRECEDENTED ATTACK ON THE INDEPENDENCE OF THE FEDERAL RESERVE, AND IT SHOULD REALLY CONCERN US ABOUT THEIR ABILITY TO CONTINUE TO BE CREDIBLE AND FIGHTING INFLATION AND KEEPING OUR ECONOMY ON A STRONG COURSE. ANNMARIE: QUICKLY, YOU KNOW GOVERNOR BOWMAN AND WALLER. DO YOU THINK THEY WOULD BE UP FOR THAT LEVEL OF REVAMPING? LAEL: THIS IS NOT ABOUT INDIVIDUAL MEMBERS OF THE BOARD OR THE FOMC. THIS IS ABOUT WHETHER POLITICAL PRESSURE WILL CONTINUE TO BE EXERTED ON ALL MEMBERS OF THE FOMC IN A WAY THAT PUTS THEM IN JEOPARDY AND POTENTIALLY MAKES THEM LESS WILLING TO SHARE THEIR VIEWS ABOUT THE ECONOMY AND APPROPRIATE MONETARY POLICY WITH THE PUBLIC AND ALSO TO VOTE THEIR MIND ON MONETARY POLICY DECISIONS. THAT IS WHAT IS AT STAKE HERE. I THINK IT IS VERY CONCERNING. ANNMARIE: THANK YOU SO MUCH FOR YOUR TIME THIS MORNING. OF COURSE, THAT WAS THE FORMER FED VICE CHAIR LAEL BRAINARD WHO WENT ON TO WORK UNDER THE BIDEN ADMINISTRATION AS PRESIDENT JOE BIDEN'S NEC DIRECTOR. WHICH SHE IS SAYING IS THIS IS NOT AN ATTACK ON AN INDIVIDUAL BUT AN ATTACK ON THE INSTITUTION. JONATHAN: WITH THE LATEST IN WASHINGTON, THANK YOU. THE CONVERSATION WILL CONTINUE. FANTASTIC LINEUP TO CLOSE OUT THE PROGRAM. IN A MOMENT, WE WILL CATCH UP WITH TORSTEN SLOK WITH THE LATEST REACTION FROM THE BOND MARKET. PLUS, WE WILL GET YOUR MORNING MOVIES. ELI LILLY SHARES MOVING AS THE WEIGHT LOSS PILL MOVES AHEAD. THE STOCK IS UP BY 2.5%. EQUITY FUTURES ON THE S & P 500 IS UP BY 0.1%. NVIDIA EARNINGS AFTER THE CLOSING BELL. 8% OF THE S & P 500 IS WAITING ON THE NASDAQ 100. IN THE BOND MARKET, TWO-YEAR, 10 YEAR, 30 YEAR AS FOLLOWS. YIELDS DOWN AT THE FRONT END, UP AT THE LONG END. ♪ JONATHAN: HERE IS THE STATE OF PLAY SIX MINUTES -- 60 MINUTES OUT FROM THE OPENING BELL. ON THE NASDAQ 100, DOWN BY 0.14%. IN THE BOND MARKET, TWO-YEAR BOND YIELDS ARE LOWER, 30 YEAR BOND YIELDS ARE HIGHER. 3.6958% AT THE FRONT END. 4.91% AT THE LONG END. THIS DEBATE AT THE FRONT END OF THE CURVE, CHAIRMAN POWELL SOLIDIFYING WE ARE THE FED IS HEADING IN SEPTEMBER, CERTAINLY NOT CHANGING THE DIRECTION OF TRAVEL. DANI: IT IS NOT CHANGING THE DIRECTION OF TRAVEL BECAUSE ONE OF THE MARKET'S BIG TAKEAWAYS IS YOU -- IS THE FED IS MOVING IN A MORE DOVISH DIRECTION. EVERYTHING ELSE WILL TAKE SO LONG TO PLAY OUT. IT WILL TAKE A LONG TIME TO UNDERSTAND WHAT GOVERNOR LISA COOK'S STANDING IS ON THE FED, WHETHER SHE WILL HAVE A BOOK GOING FORWARD, WHETHER THERE IS A THREAT TO INDEPENDENCE. THE ONE THING COULD HOLD ONTO HIS IT IS A FED THAT WILL CUT. JONATHAN: THIS WILL TAKE SOME TIME, WHICH IS WHY THE MARKET IS SOMEWHAT RELAXED ABOUT THE ISSUES AT THE MOMENT. 60 MINUTES UNTIL THE CASH OPEN. LET'S GET YOUR MORNING MOVES. YAHAIRA: WE START WITH CHIPMAKER AMD. SHEARS RISING 2.7% AFTER ANNOUNCING A PARTNERSHIP WITH IBM ON QUANTUM COMPUTING. THIS IS AN AREA IBM HAS BEEN FOCUSED ON, AND NOW AMD WILL SUPPLY THE CHIPS TO HELP MAKE IT HAPPEN WITH THE COMPANIES PLANNING ON A DEMO FOR LATER THIS YEAR. IT IS ALSO GETTING AN EXTRA BOOST AFTER AN ANALYST GAVE IT A GOOD. MEANWHILE, WE ARE SEEING SHARES OF ELI LILLY ALSO RISING 2.5% AFTER STRONG RESULTS FROM ITS EXPERIMENTAL OBESITY PILL. PATIENTS THAT TOOK THE DRUG LOST NEARLY 9.6% OF THEIR BODY WEIGHT AND SAW A BETTER BLOOD SUGAR AS A RESULT. THESE RESULTS ARE SOME OF THE MOST CLOSELY WATCHED IN THE PHARMACEUTICAL INDUSTRY BECAUSE OF THE POTENTIAL OF THE PILL TO ADD NEW PATIENTS WHO WANT TO BE ON THEM BUT ARE AFRAID OF NEEDLES. THIS MEANS ELI LILLY IS ON TRACK TO FILE FOR REGULATORY APPROVAL THIS YEAR AND WE CAN SEE THESE ON PHARMACY SHELVES BY NEXT YEAR. IN THE DEALS KEEP ROLLING THIS TIME INVOLVING OLA PLEX. SHARES ARE UP TO PERCENT. THIS IS A HAIRCARE COMPANY THAT MAKES SHAMPOOS, AND IT IS MAKING ITS FIRST EVER ACQUISITION, ANNOUNCING IT IS BUYING A U.S. BEAUTY FOCUSED BIOTECH FIRM TO BOOST R & D. THIS ADDING TO THE DEAL NEWS WE HEARD EARLIER FROM AT & T IN A FLURRY OF ACTION YESTERDAY. JONATHAN: WE HAVE SEEN A LOT OF DEALMAKING OVER THE LAST WEEK FOR SURE. THANK YOU. LET'S TURN BACK TO OUR TOP STORY, PRESIDENT TRUMP MOVING TO FIRE FED GOVERNOR LISA COOK. WE STILL DON'T KNOW IF YOU CAN ENTER THE BUILDING THIS MORNING. WHAT IS THE LATEST? MICHAEL: WE DON'T KNOW IF SHE IS IN TOWN IN WASHINGTON AND TRYING TO ENTER THE BUILDING BUT IT IS AN OPEN QUESTION RIGHT NOW. WE ARE WAITING TO FIND OUT WHETHER OR NOT SOMEBODY GOES TO COURT. WITH THE PRESIDENT GO TO COURT TO GET HER OUT OF THE BUILDING IF SHE GOES IN? WOULD SHE SEEK AN INJUNCTION TO PREVENT HERSELF FROM GETTING FIRED? ALL OF THAT IS UP IN THE AIR AS IS WHAT HAPPENS GOING FORWARD WHEN THE COURT TO DECIDE THE ISSUE. DOES THE FED HAVE A CARVEOUT ON THE FRONT BECAUSE AND WOULD SHE MEET THE FOUR CAUSE LABEL? YOU HAVE TO FED ON TRACK TO CUT RATES IN SEPTEMBER. PEOPLE KEEPING AN EYE ON THAT. THAT IN THEORY WOULD NOT CHANGE ONE WAY OR ANOTHER WITH LISA COOK IN OR OUT. SHE WOULD PROBABLY VOTE WITH THE CHAIR, WHO SUGGESTED IT MAY BE TIME TO CUT RATES. WE HAD DURABLE GOODS ORDERS COME IN REASONABLY STRONG, DOWN 2.8 PERCENT, BUT LARGELY AND DROP IN BOEING AIRCRAFT ORDERS, 32% DROP THERE. CAPITAL GOODS ORDERS, NONDEFENSE UP A FAIRLY STRONG 1.1%, SO THERE IS STILL SOME STRENGTH IN THE ECONOMY. THE FED WILL HAVE TO FIGURE OUT IF THAT IS ENOUGH TO PREVENT THE RATE CUT ON SEPTEMBER 17. JONATHAN: IF WE DON'T GET A RATE CUTS A COVER 17, I FIREWORKS AND NOT THE RIGHT KIND TAKING PLACE IN WASHINGTON, D.C. IN THE LAST HOUR, WE SPOKE TO THE FORMER FED PRESIDENT BILL DUDLEY. HE WAS RELAXED WITH HOW RELAXED THE MARKET IS THIS MORNING. I WOULD LOVE YOUR REACTION TO THINGS. MICHAEL: WE ARE SURPRISED BY THAT AND LITTLE BIT, BUT THE MARKETS ARE NOT THINKING THAT TRUMP CAN GET AWAY WITH IT RIGHT NOW, AND THEY ARE CONCENTRATING ON THE IDEA THAT THE FED WILL CUT RATES. SO THEY ARE GETTING WHAT THEY WANT GOING FORWARD. THE YIELD CURVE HAS STEEPENED AS DANI HAS BEEN TALKING ABOUT. THAT IS A SIGN ON THE BOND SIDE, THE FIXED INCOME SIDE IS CONCERNED ABOUT WHAT COULD HAPPEN HERE. JONATHAN: MICHAEL MCKEE WITH THE LATEST. JOINING US ON THE TABLE, TORSTEN SLOK OF APOLLO. GOOD MORNING. YOUR REACTION TO THIS ONE? TORSTEN: OBVIOUSLY, THE MARKET REACTION IS A LITTLE SURPRISING IN THE SENSE THAT THE STOCK MARKET IS UNCHANGED AT LEAST BEFORE THE OPEN, BUT WHAT YOU ARE SEEING IN THE LONG END IS SOMEWHAT WORRISOME. THE YIELD COULD BE STEEPENING, TELLING YOU RATE CUTS ARE COMING BECAUSE THAT SEEMS MORE LIKELY GIVEN RECENT DISCUSSIONS INCLUDING JAY POWELL ON FRIDAY, BUT ALSO AT THE LONG END, MOVING HIGHER. MAYBE THERE IS A RISK THAT INFLATION IS GOING TO BE A PROBLEM FOR A LONGER PERIOD THAN PEOPLE THOUGHT. THE CONCLUSION IS AUGUST LEAH DISCUSSION AROUND MAYBE WE SHOULD BEGIN TO THINK ABOUT WHAT WE SAY RATES ARE HIGHER FOR LONGER THAT IT IS LONG RATES BUT ONLY FOR FISCAL REASONS BUT ALSO NOW BECAUSE OF THIS EMERGING DEBATE NOT ONLY BECAUSE OF WHAT POWELL SAID LAST FRIDAY AT JACKSON HOLE ABOUT THE FRAMEWORK BUT ALSO ABOUT THE ISSUE OF WHAT THE COMPOSITION OF THE FOMC WILL LOOK LIKE. ARE THEY GOING TO ALLOW THE INFLATION TARGET TO BE HIGHER THAN WHAT HAS BEEN FOR THE LAST SEVERAL YEARS. DANI: ZEROING IN ON THE SHAPE OF THE YIELD CURVE, TALKING ABOUT DURATION GETTING HIT, IT IS THE 30 YEAR YIELD. IT IS A 10 YEAR YIELD THAT HAS NOT MOVED MUCH. IF THE ISSUE IS MORE PERSISTENT AND FORTUNE, THE 10 YEAR YIELD WOULD BE MOVING HIGHER ALSO. THE STEEPEST SINCE 2021. WHY IS THE 30 YEAR YIELD WORKING AS A RELEASE VALVE? TORSTEN: 10 YEAR RATES ARE NOT DOWN AS MUCH AS THE TWO-YEAR RATES ARE SO IT IS THE WHOLE YIELD CURVE THAT IS STEEPER, AND YOU ARE RIGHT, THE 10 YEAR BEING DOWN TELLS US IT IS THE VERY LONG DURATION EXPOSURE MATCHING THE LONG-DURATION LIABILITIES REACTING TO THIS, MAINLY WORRYING ABOUT THE 30 YEAR WHERE MOST OF THE ACTION HAS BEEN, BUT YOU ARE RIGHT, IT IS A LITTLE PECULIAR. WHAT IS THE 30? IT IS A REDUCTION OF THE YIELD CURVE STEEPENING AND IT WILL TAKE A WHILE TO DIGEST. WHAT WILL BE THE SCENARIO WE HAVE AHEAD OF US? WILL THIS CHANGE THE COMPOSITION OF THE FOMC? WHAT WILL THE FOMC LOOK LIKE FEBRUARY NEXT YEAR? DANI: IF WE GET MORE JOBS APPOINTED TO THE FOMC -- DOVES APPOINTED TO THE MC, MORE THAT LISTEN TO THE WHITE HOUSE, IT IS THE INFLATION TARGET? TORSTEN: WE SHOULD THINK ABOUT THIS AS A CHANGE IN THE INFLATION TARGET. WE HAVE FOR 30 OR 40 YEARS BE USED TO THE INFLATION TARGET IS TO PERCENT. IF I OWNED TREASURIES, MY FIXED INCOME PORTFOLIO WILL BE ERODED BY 2% EVERY YEAR. JAY POWELL ON FRIDAY SAID THE CHANGE IN FRAMEWORK ALSO WILL ALLOW INFLATION TO BE HIGHER FOR LONGER. THAT MEANS BOND INVESTORS SHOULD BEGIN TO THINK ABOUT THAT IT IS SIMPLY THE SAME AS SAYING THE INFLATION TARGET WILL ALSO BE HIGHER, NOT NECESSARILY SIGNIFICANTLY HIGHER THAN 2% BUT EVEN IF WE GO UP TO 2.5% OR 3%, OVER TIME THAT IS A FAIRLY SIGNIFICANT EROSION, ESPECIALLY IN PUBLIC MARKETS. JONATHAN: THESE ARE IMPORTANT, CRITICAL, SERIOUS POINTS, BUT THIS HAS HAPPENED INDEPENDENT OF THE PRESSURE ON CENTRAL-BANK INDEPENDENCE. THE WHOLE POINT IS TO MAKE THE TOUGH DECISIONS DIVORCED FROM THE POLITICAL CYCLE TO MAKE SURE YOU HIT YOUR 2% TARGET, SO WHAT IS THE EXCUSE FOR CHAIRMAN POWELL AND THE FEDERAL RESERVE TO MISS THIS TARGET FOR SO MANY YEARS? TORSTEN: THE ISSUE OF COURSE AT THE MOMENT IS NORMALLY THE DUAL MANDATE MEETING INFLATION AND UNEMPLOYMENT NORMALLY POINTS IN THE SAME DIRECTION. IF YOU HAVE A WEAK ECONOMY, INFLATION GOES DOWN GROWTH GOES DOWN, YOU SHOULD BE CUTTING RATES. NOW THERE IS THIS TENSION IN THE DUAL MANDATE AND THAT IS WHAT BRINGS THE DISCUSSION TO THE TABLE. MAYBE NOW THE DUAL MANDATE IS PULLING IN DIFFERENT DIRECTIONS. INFLATION IS SAYING THE FED SHOULD BE HIKING. THE CONSENSUS EXPECTS CONFLICTION FOR THE NEXT 12 MONTHS TO BE 3% FOR THE NEXT FOUR QUARTERS. THAT IS A VERY HIGH LEVEL OF INFLATION WHEN THE TARGET IS TO PERCENT. AT THE SAME TIME OF APOLLO VERY CLEARLY LAST FRIDAY SAID WE WILL NOT PUT MUCH MORE WEIGHT ON THE DAY SLOWING DOWN LABOR MARKET. MAYBE WE DON'T NEED TO WORRY SO MUCH ON INFLATION AND CAN FOCUS ON THE LABOR MARKET SO THE ANSWER IS IT IS BECAUSE OF THE TENSION IN THE DUAL MANDATE THAT ONE PERSON'S YOU SHOULD BE HIKING AT THE OTHER SAYS YOU SHOULD BE CUTTING. THAT IS WHAT BRINGS THE DISCUSSION TO THE TABLE AT THE MOMENT ABOUT WHAT IS THE BEST DECISION. JONATHAN: THE WAY THEY ARE ADDRESSING THAT IS SAYING THIS FROM THE FED CHAIR. THE LABOR MARKET IS NOT TIGHT ENOUGH TO WORRY ABOUT SECOND ROUND EFFECTS. THIS INFLECTION STORY IS TRANSITORY. WOULD YOU PUSH BACK AGAINST THAT? TORSTEN: WE DON'T KNOW IF THAT IS THE CASE, BUT THE CLEVELAND FED HAS BEEN PUTTING OUT THAT COMPANIES ARE RAISING PRICES, EVEN THOSE NOT IMPACTED BY TARIFFS, SO THE RISK IS IN SERVICES INFLATION WHICH MAKES TWO THIRDS OF THE S & P. EVEN THE SERVICE PART OF THE CPI INDEX COULD BEGIN TO SHOW UP PRESSURE, SO WE DON'T QUITE KNOW IF WE ARE OUT OF THE WOODS ON THE INFLATION FRONT. THAT IS WHAT INFLATION SWAPS IN 12 MONTHS ARE PRICING THAT INFLATION WILL BE 3.4%. THAT IS DRAMATICALLY HIGHER THAN THE FED'S 2% TARGET, AND IT IS THE FEAR SOME HAVE, THAT INFLATION WILL BE NOT ONLY TRANSITORY HIGHER BUT PERMANENTLY HIGHER. THAT IS A RISK THAT WE COULD HAVE A POLICY MISTAKE BY FOCUSING TOO MUCH ON THE LABOR MARKET. JONATHAN: LET'S TALK ABOUT HOW POLICY MIGHT EVOLVE. THERE ARE THREE TIME FRAMES. DANI TALKED ABOUT TWO OF THEM. SEPTEMBER, EVERYTHING ELSE, AND LIFE AFTER POWELL FROM MAY ONWARDS. THERE IS STILL A LOT TO PLAY FOR. TORSTEN: I THINK IT IS A GOOD IDEA TO TAKE A DEEP BREATH AND WALK IN A GREEN PARK. JONATHAN: TOUCH GRASS. TORSTEN: THERE IS A LOT GOING ON AT THE MOMENT WHICH IS UNUSUAL, INCLUDING THE TOPIC OF THE DAY. WE HAVE A LOT OF DATA POINTS BEFORE WE GET TO THE DECEMBER MEETING SO THE MARKET IS ONLY PRESENT A CUT IN SEPTEMBER AND DECEMBER, BUT NEXT YEAR, THE ECONOMY COULD BE IN A DIFFERENT PLACE. WE COULD HAVE A SCENARIO WHERE INFLATION IS A LOT HIGHER AND WE HAVE A DIFFERENT DISCUSSION ABOUT WE COULD HAVE GROWTH SLOWDOWN THAT IS WEAKER AND THE FED WILL BE CUTTING A LOT MORE, SO LET'S TAKE THE DATA AS IT COMES IN AND WHAT EXACTLY HAPPENED PLAYS OUT RELATIVE TO THE DUAL MANDATE FOR THE FED. JONATHAN: IF YOU ARE IN THE THREES GOING INTO 2026, THIS GETS HARDER AND HARDER TO CUT. ANNMARIE: IT DOES -- DANI: IT DOES BUT ON THURSDAY THEY WILL BE ECONOMY SPEECH. I THINK THAT IS GOING TO DETERMINE THE MEDIUM PLUS LONGER-TERM TRAJECTORY OF THE FED. JONATHAN: CAVIL CAN USE THE SAME NOTES AT THE NEWS CONFERENCE, WHICH IS BASICALLY WHAT THE SPEECH WAS ON FRIDAY. I WANT TO FINISH WITH WHERE YOU THINK THIS IS ULTIMATELY HEADING. DO YOU BELIEVE WE END UP IN A SITUATION WHERE WE ARE FACING STAGFLATION AT THIS FEDERAL RESERVE IS ULTIMATELY PARALYZED AND THE DOVISH BIAS IS CONSTRAINED? AT THE MOMENT, WE HEAR THE DOVISH BIAS IS NOT CONSTRAINED. DO YOU THINK THAT IS THE ULTIMATE DESTINATION? TORSTEN: I ABSOLUTELY DO BELIEVE IT IS THE ULTIMATE DESTINATION BECAUSE NORMALLY FED POLICY IS STRAIGHTFORWARD BECAUSE BOTH PARTS OF THE DUAL MANDATE ARE DESIGNED TO POINT IN THE SAME DIRECTION WITH AN IS THE CYCLE. WHEN THE ECONOMY IS GOOD COMING SHOULD BE HIKING. WHEN THE ECONOMY IS BAD, YOU SHOULD BE CUTTING. BUT BECAUSE OF THIS FROM TARIFFS, IMMIGRATION RESTRICTIONS, DEPORTATIONS, PUTTING PRESSURE ON WAGES WHERE GOODS ARE WORKING, THAT IMPULSE IS CREATING THIS VERY COMPLEX SITUATION FOR THE FED WHERE IT BECOMES A MATTER OF, DO YOU LIKE APPLES OR ORANGES, INFLATION OR THE SLOWDOWN IN GROWTH? WHERE DO YOU PUT YOUR WE IGHT? JONATHAN: GOOD TO SEE YOU AS ALWAYS. TORSTEN SLOK BREAKING DOWN THE LATEST SITUATION. FUTURES JUST A LITTLE SOFT. WITH AN UPDATE ON ELSEWHERE, HERE IS YOUR BLOOMBERG BRIEF. YAHAIRA: WILDFIRES IN CALIFORNIA AND OREGON PROMPT THOUSANDS OF EVACUATIONS. IN OREGON, THE FIRE IS ABOUT 5% CONTAINED. THE PICKET FIRE IN NORTHERN CALIFORNIA IS 15% CONTAINED. IT HAS BURNED NEARLY 7000 ACRES SINCE IT STARTED LAST WEEK. MEANWHILE, SHARES OF ECHOSTAR SOARING MORE THAN 70% AFTER AT & T AGREED TO PURCHASE WIRELESS SPECTRUM LICENSES FOR $23 BILLION. AND TO HAVE AGREED TO ENHANCE THEIR LONG-TERM NETWORK SERVICES AGREEMENT, ENABLING ECHOSTAR TO OPERATE AS A HYBRID MOBILE NETWORK OPERATOR, PROVIDING WIRELESS SERVICE UNDER THE BOOST MOBILE BRAND. IN SPORTS, TOP-RANKED PLAYERS CONTINUE TO DOMINATE IN THE FIRST ROUND OF THE U.S. OPEN WITH CARLOS ALCARAZ AND FRANCIS T OPPO BOTH WINNING IN STRAIGHT SETS. SINNER TAKES THE COURT LATER TODAY. FOR THE WOMEN'S TOURNAMENT, AMERICAN MEDICINE KEYS FELL IN THE FIRST ROUND. COCOA GOLF PLEASE LATER THIS EVENING. JONATHAN: CARLOS ALCARAZ IS LIKE A UFC FIGHTER NOW. DANI: I THOUGHT YOU WERE SAYING BECAUSE HE PRACTICES WITHOUT HIS TOP. JONATHAN: HE LOOKS SHREDDED AS WELL BUT NOW WITH A SHAVED HEAD, TAKING AN EXTRA STEP. GOOD LUCK TO HIM LATER ON. UP NEXT ON THE PROGRAM, WE WILL SET YOU UP FOR THE DAY AHEAD. PLUS, DAVID RUBENSTEIN AS PRESIDENT TRUMP MOVES TO FIRE THE FED'S LISA COOK. ♪ > > I THINK THE FEDERAL RESERVE IS IN AN INCREDIBLY DIFFICULT POSITION HERE. YOU HAVE TO REMEMBER THIS IS NOT ABOUT AN INDIVIDUAL GOVERNOR. THIS IS REALLY AN UNPRECEDENTED ATTACK ON THE INDEPENDENCE OF THE FEDERAL RESERVE AS AN INSTITUTION, WHICH MEANS HIGHER INFLATION POTENTIALLY, LESS CREDIBILITY, EVEN HIGHER LONG-TERM INTEREST RATES. BAD FOR THE ECONOMY. JONATHAN: JUST MOMENTS AGO, THE FORMER FED VICE CHAIR LAEL BRAINARD JOINING "BLOOMBERG SURVEILLANCE" IN THE LAST HOUR. IT IS OUR TOP STORY THIS MORNING. PRESIDENT DONALD TRUMP ATTEMPTING TO FIRE FED GOVERNOR LISA COOK. JOINING US, DAVID STEINBERG WELCOME BACK TO THE PROGRAM. WHAT A MOMENT FOR WASHINGTON, D.C. THIS PRESIDENT IS NOT SCARED TO INTERVENE WHETHER TAKING AN EQUITY STAKE IN INTEL OR FIRING A SITTING FED GOVERNOR. YOU HAVE SEEN IT ALL IN YOUR TIME IN WASHINGTON AND ON WALL STREET. HOW WOULD YOU DESCRIBE THIS MOMENT IN THE NATION'S CAPITAL? DAVID: OBVIOUSLY, THIS IS A TIME OF FIRST IMPRESSION. WE HAVE NOT SEEN THIS BEFORE. THE FEDERAL RESERVE HAS NEVER HAD SO MANY FIRED BY A PRESIDENT OF THE UNITED STATES BEFORE AS FAR AS I KNOW. THE FEDERAL RESERVE WAS SET UP IN 1913, SO THIS IS A VERY DIFFICULT SITUATION. WE DON'T KNOW WHAT THE OUTCOME WILL BE. LISA COOK HAS SAID SHE HAS HIRED A LAWYER, A WELL KNOWN LAWYER IN WASHINGTON, D.C., AND WILL RESUME OF THE FIGHT THIS SO IT WILL BE RESOLVED IN THE COURTS. DANI: IT IS A MARKET THAT IS LITTLE REACTING TO THAT. MAYBE SOME IN YIELDS, LITTLE IN EQUITY. YOU HAVE WORKED WITH COUNTLESS COMPANIES IN YOUR CAREER. THERE IS THIS LEVEL OF UNCERTAINTY IN WASHINGTON, D.C., BEGET TARIFFS, D.C. BEING ACTIVE AND TAKING STAKES IN COMPANIES, WHAT IS THE PLAYBOOK? DAVID: OBVIOUSLY, MARKETS LIKE CERTAINTY. THEY DON'T LIKE UNPREDICTABILITY, BUT MANY OF THE THINGS PRESIDENT TRUMP HAS BEEN DOING ARE THINGS HE HAS SAID HE WILL DO MY AND MANY OF THESE THINGS ARE RELATIVELY PRETTY PEOPLE IN THE SENSE THAT HE SAID HE WANTS TO MAKE CHANGES IN THE FEDERAL RESERVE. SO I THINK THE MARKETS ARE NOT AS UPSET ABOUT IT AS SOME OTHER PRESIDENT DOING IT IN THE MARKETS WILL ABSORB IT. WE DON'T KNOW HOW THIS WILL GET RESOLVED BUT WHAT IS GOING ON IS THE EFFORT TO LOWER INTEREST RATES ON THE PART OF THE PRESIDENT, AND HE BELIEVES STRONGLY THAT IS A DESIRABLE OUTCOME AND HAS TOLD THAT TO JAY POWELL. I SUSPECT WE WILL SEE A LOWERING OF INTEREST RATES AT THE NEXT BOARD MEETING. JAY POWELL MORE OR LESS TELEGRAPHED THAT WHEN HE WAS OUT LAST RECENTLY AT THE FEDERAL RESERVE MEETING OUT WEST. I THINK THE MARKETS ARE ANTICIPATING A 25 BASIS POINT CUT. JAY POWELL IS PRETTY GOOD ABOUT TELEGRAPHING WHAT HE IS GOING TO DO AND FOLLOWING THROUGH ON IT, SO I WOULD BE SURPRISED IF WE DON'T GET A 25 BASIS POINT CUT AND VERY SURPRISED IF WE GET A MUCH BIGGER CUT. DANI: FAIR ENOUGH. WHAT IS YOUR READ ON THE THREAT OF CREDIBILITY OF THIS INSTITUTION AND THE INDEPENDENCE OF THIS INSTITUTION? HOW FRAGILE OR NOT IS IT? DAVID: THE FEDERAL RESERVE IS ONE OF THE MOST RESPECTED INSTITUTIONS IN WASHINGTON. I WOULD SAY PERHAPS THE TWO MOST RESPECTED INSTITUTIONS OVERALL IN WASHINGTON MIGHT BE THE SUPREME COURT OVER MANY YEARS AND THE FEDERAL RESERVE SINCE 1913. BOTH INSTITUTIONS HAVE THEIR CHALLENGES FROM TIME TO TIME, BUT THEIR STRENGTH AND REPUTATION OVER TIME WILL STAND THEM IN GOOD STEAD SO I DO THINK THE FEDERAL RESERVE WILL FALL APART OVER THIS. THE FEDERAL RESERVE IS IMPORTANT AND ITS INDEPENDENCE IS IMPORTANT. THIS WILL GET RESOLVED IN SOME TYPE OF SETTLEMENT OR OUT-OF-COURT PROCESS, SO I DON'T THINK IT WILL BE A SURPRISE HOW THIS GETS RESOLVED. IN THE END WHEN THE PRESIDENT MAKES A DECISION ON WHO THE NEW FED CHAIR WILL BECOME OF THE MARKETS WILL BE RELIEVED TO SEE WHO HE IS PICKING. I SUSPECT HE WILL MAKE SOME ANNOUNCEMENT IN THE NOT-TOO-DISTANT FUTURE AND THAT PERSON PRESUMABLY WILL LOWER INTEREST RATES AS THE PRESIDENT INDICATED HE WANTS THE NEXT PRESIDENT TO DO. JONATHAN: THE LIST OF CANDIDATES IS CREDIBLE SO FAR AT LEAST. MARKETS DO NOT SEEM TO HAVE SHIFTED MUCH. MARKETS CLOSE TO ALL-TIME HIGHS. CREDIT SPREADS STILL INCREDIBLE TYPE. FOR THIS PEOPLE -- FOR THE PEOPLE YOU SPEAK TO OUTSIDE LOOKING IN, HAVE YOU NOTICED A SHIFT IN ATTITUDES AT ALL OR HAS IT SETTLED DOWN? DAVID: AROUND THE WORLD, THEY UNDERSTAND THE PRESIDENT WAS TO SHAKE THINGS UP AND WILL DO UNCONVENTIONAL THINGS AND THE MARKETS ARE USED TO THAT. THE MARKETS ARE VERY HIGH RIGHT NOW AND NOT THAT UPSET ABOUT WHAT THE PRESIDENT IS DOING BECAUSE THEY UNDERSTAND THAT IS HIS MODUS OPERANDI. THE FACT THAT THE MARKETS ARE SO HIGH SHOWS PEOPLE ARE NOT AFRAID OF WHAT THE PRESIDENT IS DOING AND IN MANY CASES, PEOPLE THINK WHAT HE IS DOING IS A GOOD IDEA. IN MANY CASES, PEOPLE DON'T, BUT I DON'T THINK THE MARKETS ARE RUNNING AWAY FROM HIM OR FALLING APART BECAUSE OF WHAT HE IS NOW DOING LIKE THE INTEL MATTER OR THE LISA COOK MATTER. THEY WILL GET RESOLVED IN SOME MANNER THAT I DON'T THINK WILL BE TOO DESTRUCTIVE FOR THE MARKETS. JONATHAN: WE ARE LOOKING FORWARD TO THE NEXT EPISODE OF "BLUEBIRD WEALTH" TONIGHT -- "BLUEBIRD WEALTH" TONIGHT -- BLOOOF "BLOOMBERG TONIGHT." CAN YOU WALK US THROUGH THE DISCUSSION YOU HAD? DAVID: SURE, MY GUEST ROOMS T. ROWE PRICE WHICH IS AN ASSET MANAGEMENT COMPANY BASICALLY MORE ACTIVELY MANAGED THAN PASSIVELY MANAGED, AND THEY HAVE DONE QUITE WELL OVER THE YEARS. HE IS A SPONSOR OF THE BALTIMORE ORIOLES, WHICH I AM A PARTIAL OWNER OF SO I HAVE A FEELING TOWARDS HIS COMPANY AND I SHOULD DISCLOSE THAT BUT HE HAS DONE A GOOD JOB WORKING HIS WAY UP FROM BEING AN ANALYST AND A FUND MANAGER TO BEING THE CEO, AND THE COMPANY HAS DONE PRETTY WELL UNDER HIS MANAGEMENT, SO I THINK IT IS A COMPANY THAT MANY PEOPLE PUT THEIR 401(K) MONEY IN AND OTHER TYPES OF MONEY INTO THEIR FUNDS. THEY HAVE BEEN RECENTLY WELL -- THEY HAVE DONE REASONABLY WELL. JONATHAN: WHERE ARE THE BASEBALL TICKETS? WHAT HAPPENED? WE WOULD HAVE A BIG GET TOGETHER WITH "BLOOMBERG SURVEILLANCE" ON THE ROAD AND YOU WOULD HOST US. WHAT HAPPENED? DAVID: I AM WAITING FOR NEXT SEASON. THIS SEASON DID NOT WORK OUT QUITE AS WELL AS I PREDICTED. INJURIES ARE A BIGGER PROBLEM THAN I ANTICIPATED, BUT I WILL TRY TO GET PEOPLE TO NOT BE SO INJURED NEXT YEAR. MAYBE I WILL SHOW THEM BATTING TIPS OR PITCHING TIPS MYSELF. JONATHAN: I AM SURE THEY ARE LOOKING FORWARD TO THAT. DAVID RUBENSTEIN THERE OF THE CARLYLE GROUP. YOU CAN WATCH THE SHOW AT 9:00 P.M. EASTERN TIME. DANI: I JUST IMAGINED DAVID BECOMING A PERSONAL TRAINER HOPING THEY DON'T GET INJURED. JONATHAN: THEY PLAY TOO MANY GAMES. DANI: SO MANY GAMES. JONATHAN: IT IS RIDICULOUS. DANI: THE SCHEDULE DEMANDS IT. I DON'T KNOW IF THAT IS CHANGING. JONATHAN: THE SAME WITH FOOTBALL. LET'S ROUND UP THE PRICE ACTION. THINGS HAVE BEEN OK. WE ARE DOWN 0.1% IN EQUITIES. I KNOW PEOPLE ARE CONCERNED ABOUT THE FUTURE OF THE FEDERAL RESERVE. WE CAN ALL AGREE CENTRAL-BANK INDEPENDENCE IS VITAL. IT CONTRIBUTES TO LOWER INTEREST RATES. AT THE MOMENT, THINGS ARE OK. NO DRAMA ON WALL STREET EVEN WITH THE DRAMA IN WASHINGTON. DANI: THINGS ARE OK BECAUSE WE FRANKLY DON'T KNOW HOW THIS WILL PLAY OUT. THIS IS LIKELY GOING TO BE A COURT CASE. IT WILL LIKELY TAKE A LONG TIME, MONTHS IF NOT MORE THAN YEARS. THERE IS SO MUCH UNCERTAINTY AND WE HAVE SEEN WHAT HAPPENS WHEN THIS MARKET TRADES ON WHAT IT THINKS WILL HAPPEN WITH THE WHITE HOUSE. A GOOD EXAMPLE OF THAT, THEY COME ROARING BACK. WHY MAKE THAT MISTAKE TWICE? JONATHAN: APPRECIATE YOUR TIME. DANI: THANK YOU FOR HAVING ME. JONATHAN: COMING UP TOMORROW, J.P. MORGAN, THE FORMER CHIEF OF STAFF TO MIKE PENCE. FROM NEW YORK, THANK YOU FOR CHOOSING BLOOMBERG TV. THIS WAS "BLOOMBERG SURVEILLANCE ." ♪

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Bloomberg Surveillance 8/26/2025

Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern speak daily with leaders and decision makers from Wall Street to Washington and beyond. No other program better positions investors and executives for the trading day. (Source: Bloomberg)

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