Fed Served With DOJ Subpoenas; Iran Says Protests Quelled After Hundreds Reported Killed

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1:02Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moskow. Here are the stories we're following today. Karen, we begin with an escalation in the feud between President Donald Trump and Fed Chair Jay Powell. This time, the Justice Department is involved. Bloomberg's John Tucker joins us with the very latest. John. And Nathan, Federal Reserve Chair Jerome Powell says the U.S. Central Bank has been served grand jury subpoenas from the Justice Department threatening a criminal indictment. Powell made the announcement in an extraordinary video statement released last night.

1:41This unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure. The Trump administration last summer ramped up scrutiny of the Fed's renovation of two buildings and rising costs associated with the projects, but Powell says this is just pretext to end Fed independence. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president. In an interview with NBC News on Sunday, President Trump denied having any knowledge of the DOJ's investigation into the central bank.

2:18The president has repeatedly called for aggressive rate cuts and has repeatedly mused about firing Powell. At the end of last year, Trump said he was considering what he called a gross incompetence lawsuit against Powell. In another extraordinary step, he sought to fire Fed Governor Lisa Cook. The Supreme Court is set to take up the Cook case later this month. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. Well, Bloomberg News has learned Federal Housing Finance Agency Director Bill Pulte was a driving force behind the Trump administration's decision to subpoena the Federal Reserve.

2:52Pulte has been a vocal force within the administration investigating Trump's foes for mortgage fraud. He also submitted a criminal referral to the DOJ about Fed Governor Lisa Cook that is at the root of Trump's push to fire her. The latest Fed subpoena has drawn criticism from Democrats like Massachusetts Senator Elizabeth Warren and Republican Senator Tom Tillis of North Carolina. Tillis says he will oppose the confirmation of any nominee for the Fed until the legal matter is fully resolved. Well, Nathan, Sell America sentiment is sweeping through markets today after the Trump administration escalated its attacks on the Federal Reserve.

3:26The dollar, treasuries, and U.S. equity futures are all sliding in early trading. The sell-off revives debate over just how far the president can and should influence the nation's rate stance, which in recent decades has been insulated from political interference so as to ensure price stability. Gold and silver, in turn, are trading at record highs this morning. There's some geopolitical tensions to follow this morning as well, Karen. Iran's foreign minister says security forces have, quote, full control of the country after two weeks of ongoing upheaval. Activists say at least 540 people have been killed so far in the latest waves of protests in Iran.

4:04President Trump says he is closely monitoring the protests and considering potential military options. We're looking at it very seriously. The military is looking at it and we're looking at some very strong options. The president added the regime's leaders have contacted the U.S. for negotiations. Iran's parliament speaker, Mohammed Bagar Kalibov, had this warning for the U.S. if it chooses to strike. Given your explicit admissions regarding your intention to carry out military aggression against Iran, within the framework of legitimate self-defense, we do not consider ourselves limited to reacting only after an attack occurs, and we will act based on concrete indications of threat.

4:44That was Iran's parliament speaker speaking through an interpreter. Communications in Iran remain largely cut off, and that has made it difficult to track the full scope of the protest movement. Well, Nathan, we want to turn now to new developments involving Greenland. Danish broadcaster TV Chu says top diplomats from Denmark and Greenland will meet Secretary of State Marco Rubio in Washington on Wednesday. Denmark is banking on the meeting to defuse President Trump's renewed push on Greenland. The president insists ownership of the island is a key issue. Look, if we don't take Greenland, Russia or China will.

5:19And I'm not letting that happen. If we don't take Greenland, Russia or China will take Greenland. And I am not going to let that happen. Is there any deal they can offer you? Yeah, sure. I'd love to make a deal with them. It's easier. But one way or the other, we're going to have Greenland. Meanwhile, Bloomberg News has learned a group of European countries led by the UK and Germany is discussing plans for a military presence in Greenland. Meanwhile, Karen, President Trump is signaling he is leaning toward excluding ExxonMobil from his push for U.S. oil majors to rebuild Venezuela's petroleum industry.

5:55The president says he's displeased with the company's response to his initiative. Reviving oil and undoing years of underinvestment and mismanagement in Venezuela would, by some estimates, require$100 billion and take a decade. Well, back here, Nathan, tensions are made high in Minneapolis days after an Immigration and Customs Enforcement officer shot and killed a woman during a tense confrontation in her car. Now, Homeland Security Secretary Kristi Noem says even more federal agents are headed to the city. We're sending more officers today and tomorrow. They'll arrive. There'll be hundreds more in order to allow our ICE and our Border Patrol individuals that are working in Minneapolis to do so safely.

6:37Homeland Security Secretary Kristi Noem appeared on the Fox News program Sunday Morning Futures. But the debate continues over whether ICE agent Jonathan Ross was justified in shooting Renee Good with multiple videos of the incident adding to the furor. Democratic Senator Tina Smith of Minnesota is saying that federal investigators need to work with state and local law enforcement. We need to have a fair and unbiased investigation so we can gather all of the evidence and all of the information and we can know exactly what's happening. And what I think is going on here is the administration does not want that to happen.

7:11And that looks to me like a cover up. Minnesota Democrat Tina Smith appeared on ABC's This Week, heard every Sunday on Bloomberg Radio. Turning back to markets now, Karen, besides Fed pressure, investors have another thing to focus on this week, bank earnings. Let's get a preview of that from Bloomberg's Charlie Pellett. The results from the nation's biggest banks will give us the first glimpse into how Wall Street navigated the last months of 2025 amid President Trump's trade wars and ongoing geopolitical tensions. Betsy Grasic is global head of banks at Morgan Stanley. Our setup is a positive for Tuesday kickoff.

7:47And what I think matters is both the outlook here for earnings as well as the pent-up backlog building in the capital markets. JPMorgan Chase reports Tuesday. Citigroup, Bank of America, and Wells Fargo all report on Wednesday. In New York, Charlie Pellett, Bloomberg Radio. All right, Charlie, thank you. Credit card companies falling in early trading. The drop comes after President Trump said that credit card lenders would be in violation of the law if they do not heed his call to cap interest rates at 10 % for one year. Right now, Capital One and Synchrony Financial are both down about 9%, and American Express is down more than 4%.

8:30Walmart, Karen, is up more than 3.5%. The retail giant is getting ready to join the NASDAQ 100 index, replacing AstraZeneca. The change takes effect before the market opens January 20th. Walmart's addition follows its move last year to shift its stock listing from the New York Stock Exchange to the NASDAQ. And in Europe, Nathan Heinegan looking for a new boss. CEO Dolph Vandenbrink is stepping down after six years at the helm of the brewer. The move comes months after the company warned on profit over falling beer sales.

9:03Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. About 16 ,000 nurses at New York City hospitals are set to strike any moment now if the union does not reach a contract agreement with private hospitals soon. It would be considered the largest nurses' strike in city history. Their contract expired December 31st. The union, the New York State Nurses Association, is still in talks with those private hospitals. They want higher pay and safer working conditions.

9:38It comes as flu cases are spiking in New York. Governor Kathy Hochul has declared a state of emergency ahead of the potential strike, pleading with both sides to stay at the table. This could jeopardize the lives of thousands of New Yorkers and patients. Forty-two states, including New York, are seeing high or very high levels of flu activity. A planned protest in Westwood, California, by Los Angeles' Iranian community, was disrupted Sunday afternoon when a U-Haul truck drove into the crowd. After running to get out of the way, people went after the driver, dragging him out of the cab of the box truck.

10:16LAPD Captain Richard Galbadon was asked about charges against the driver. It's an open traffic investigation. We're looking at a possible assault with a deadly weapon, the deadly weapon being the vehicle being used, but that's ongoing right now. Captain Galbadon says the driver's identity has not been released and is being treated at a local hospital for injuries. Paul Thomas Anderson's ragtag revolutionary saga, One Battle After Another, and the Shakespeare drama Hamnet took top honors at Sunday's 83rd Golden Globes. Anderson became just the second filmmaker in Golden Globes history to ever sweep best film, best director, and best screenplay.

10:56Only Oliver Stone, for Born on the 4th of July, managed the same feat. Timothee Chalamet won his first Golden Globe for Marty Supreme. My dad instilled in me a spirit of gratitude growing up. Always be grateful for what you have. It's allowed me to leave this ceremony in the past empty-handed. My head held high, grateful just to be here. But I'd be lying if I didn't say those moments didn't make this moment that much sweeter. Sinners won for best score in cinematic and box office achievement. The ceremony was broadcast on CBS. Global News 24 hours a day and whenever you want it. With Bloomberg News Now, I'm Michael Barr, and this is Bloomberg, Karen.

11:33Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. The NFL playoff triple-header began in Jacksonville. The Bills and Jaguars, six lead changes, four in the fourth quarter. Josh Allen's touchdown run with just over a minute to play gave Buffalo a 27-24 victory. It's the Bills' first playoff road win since 1992. Next stop, Philadelphia, the 49ers, a trick play touchdown, first play of the fourth quarter, and then with five minutes to go, Christian McCaffrey scored on a pass from Brock Purdy. Niners dethroned the Eagles 23-19. Last night, the Patriots beat the Chargers 16-3.

12:08That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller.

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13:19Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. The Federal Reserve is facing even more political and legal pressure now with Chair Jay Powell saying the Justice Department has served subpoenas against the central bank over his testimony about the Fed's building renovations, but Powell is vowing to stand firm. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do with integrity and a commitment to serving the American people.

13:58That was Chair Powell in a video statement last night. And this morning, we're joined by Bloomberg's D.C. breaking news editor Alexander Pierce. And Alex, to say there's new pressure on the Fed may be a real understatement. Now, what do we know more about these subpoenas that the chairman announced last night? Good morning. Good morning, Nathan. Yes, this was really quite an escalatory move by the Trump administration yesterday. And so far, we've actually heard very little from the administration. We got this announcement from Chairman Powell about the subpoenas, but we've not yet heard from the Department of Justice or Attorney General Pam Bondi yet.

14:38We did get some comments from President Trump yesterday as he was traveling saying that he was not aware of the subpoenas. But he thought that they had nothing to do with interest rates, as Chairman Powell contended that the move was about. Well, we are getting some information, though, aren't we, about who may be behind these subpoenas? I mean, there has been an ongoing pressure campaign, as you say, against the Federal Reserve coming out of the Trump administration. Absolutely. So we do have – this has not been confirmed yet officially, but we have our own reporting indicating that the housing finance director, Bill Pulte, was really a driving force behind the subpoenas.

15:23He's long been a very vehement critic of Jay Powell and also the Federal Reserve's pace of cutting rates last year. and we have it that he has been sort of pushing this, but he obviously has in Trump someone who is also very much believing that the Federal Reserve has not been cutting rates aggressively enough and it's now escalated to this point where actually there's a threat of a criminal indictment. And we know that Chairman Pulte has also been a driving force behind the pressure campaign on Fed Governor Lisa Cook, the accusations of mortgage fraud that continue to play themselves out in the courts.

16:04Put this in that context as well. I mean, it really does seem like there is just unrelenting pressure on the Fed at this moment. Yeah, absolutely. It really just keeps escalating. And as you say, another federal board member, Lisa Cook, is also under investigation for alleged mortgage fraud. That's now going to go to the Supreme Court. and this is all basically at its most simple level. It's really just the Trump administration's frustration with the Federal Reserve as it is constituted right now in its caution with cutting interest rates. Jay Powell and other Federal Reserve board members are still a bit cautious about elevated inflation, about inflationary pressures from tariffs and so they have been cutting but cutting at a relatively cautious pace sort of pace.

16:56And Trump and his allies have repeatedly, ever since taking office last year, called for far more aggressive stance on interest rates. And what could this mean for some of the other aspects of this that we're watching going forward? I mean, we're expecting that President Trump at any moment really is going to be announcing his replacement for Chair Powell. What kind of pressure does that potentially put on who that next pick could be. That's right. So currently, President Trump is considering a number of names to replace Chairman Powell when his term as chairman ends in May. And really, these moves against Chairman Powell and other members of the Federal Reserve is also seen as a signal to whoever succeeds Jay Powell in that position, obviously, with the intention of making sure that they somewhat toe the line of the administration when it comes to setting monetary policy.

17:53And we've also heard from at least one Republican senator, Tom Tillis, saying that with this kind of pressure on Chairman Powell, he may be reticent to cast any vote in favor of confirmation for the next Fed chair. I mean, it puts a signal out there as well, doesn't it, that whoever comes out there is going to face a pretty tough road for confirmation while this continues to play out. Absolutely. And it's notable given that Tom Tillis is also a Republican senator. And, you know, that that that is also just emblematic of really quite a lot of anxiety, not just within government, within Congress, but also in the wider markets as to Trump's campaign here.

18:36There is a sort of sense that he won't really go too far in threatening Fed independence, But, you know, each move that he makes has been quite escalatory. And that's probably led people like Senator Tillis to come out and really quite vehemently oppose what's being done and to threaten the nomination of any future nominee to the Federal Reserve Board. And while we continue to watch this pressure on the Fed, we're monitoring developments as well in Iran, where the regime there appears to be under the kind of pressure that it hasn't seen in many years with these street protests that have been underway since late last year.

19:14What's the latest there, Alex? Yeah, so it's now entering its third week of quite violent protests in Iran with hundreds of people who have been killed. Thousands have been arrested, and President Trump has, ever since they erupted, voiced very strong support for the protesters without really elaborating what kind of support he might offer them. Last night, he did say that he was considering military options, and there was a report from the Wall Street Journal yesterday or earlier, sorry, that said that he would meet with some of his senior advisors to discuss those options. It's not really clear what exactly he might choose.

19:53There are a number of things he could do. There could be a direct military strike. There could be some sort of cyber attack. There could be maybe a tightening of sanctions on Iran. So right now, we don't really know where the administration is leaning, but they're certainly considering an action that could be quite severe for Iran should these protests continue. And it's kind of difficult at this point to gauge just how serious a threat these protests are to the regime, given that the Internet is blocked in much of the country. But what is the sense that we're hearing from some activist groups and other observers as to where this could go from here with these protests continuing, Alex?

20:32Got about a minute left. Yeah, I mean, really, it's the most sort of these protests are the biggest challenge for the Islamic Republic since really 1979, according to many observers, given that they that that the economy is not doing well. There is a currency crisis right now, and that actually sparked these protests a couple of weeks ago. And going forward, they're not really showing any signs of abating. And so if they continue, it could become a threat for the regime there. And as you say, we don't really know with crystal clarity what's going on on the ground. But Trump himself actually did say yesterday that he would potentially contact Elon Musk to try and get a Starlink connection, to try and get more information about what's happening there, just given that we can't, given that the internet's been cut off in the country, know all of the facts.

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