Fed's Cook Defies Trump Pressure; Jackson Hole Conference Starts

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1:57Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with ramped up political pressure on the Federal Reserve. President Trump is calling on Fed Governor Lisa Cook to resign. That's after the president's head of housing finance, Bill Pulte, urged the Justice Department to investigate Cook for alleged mortgage fraud. Well, now Cook is pushing back. She has issued a statement reading, quote, I have no intention of being bullied to step down from my position because of some questions raised in a tweet, end quote.

2:37But Pulte says the president has reason to fire Cook for cause. I mean, this is supposed to be somebody who's entrusted with the public good, who's supposed to be looking after interest rates. And I believe it's blatant and massive mortgage fraud. I believe that there will be a criminal investigation. Federal Housing Finance Agency Chief Bill Pulte spoke on Fox News. Now, it's unclear whether Attorney General Pam Bondi will investigate Cook, but if she were to step down, it would pave the way for President Trump to secure a majority on the seven-member Fed Board of Governors. Well, Nathan, the Cook controversy comes as the Fed's annual economic policy symposium kicks off in Jackson Hole.

3:14The highlight comes tomorrow when Fed Chair Jay Powell gives remarks, and Tom Keene is leading our coverage in Jackson Hole. You look at the weather in Jackson Hole, you see the temperature variation in the 40s at night and then up into the 80s during that perfect August day. What we know is the sun rises on Jackson Hole, a two-day meeting here in Wyoming. But then for Chairman Powell, is this where the sun sets? It's an interesting body language here. I love what Jana Randall and all did in Europe where they talked about the other central bankers rallying for Chairman Powell. Christine Lagarde will be there from the ECB and from the Bank of England.

3:53The governor, Bailey, will be there as well. There'll be the academics, but maybe more than in 15 years, this will be less about the academics and the papers and much more about the future of the Fed. And Tom Keene will head Bloomberg Radio's Jackson Hole coverage. It all finishes up with a special edition of Bloomberg Surveillance tomorrow at 9 a.m. Eastern with Tom, Mike McKee, and Lisa Abramowitz. Plus, watch for special episodes of the Odd Lots podcast. Joe Weisenthal and Tracy Alloway will be taping several conversations from the event as well. Well, Karen, most Fed officials highlighted the risk to inflation as outweighing concerns over the labor market at their latest meeting last month.

4:36Here's Bloomberg U.S. economist Stuart Paul. As we read through the minutes and as we think about the data that we've seen, everything basically points to an incremental move toward monetary policy getting a little bit less restrictive and a little bit of additional comfort in the balance of risk shifting towards cooling employment. And I think that Powell is going to need to acknowledge that. That is Bloomberg U.S. economist Stuart Paul. Of course, the Fed kept rates unchanged last month. Fed governors Christopher Waller and Michelle Bowman voted against that decision. Well, Nathan, let's turn to the equity markets now, where futures are lower after another day of losses on Wall Street.

5:15And once again, it was tech stocks leading the way lower. And Bloomberg's John Tucker joins us with the latest. John, good morning. Yeah, good morning, Karen. The Nasdaq fell for a second consecutive session. The S &P 500 stretch hits pull back to a fourth straight day from record highs, a renewed slide in big tech. and also signs inflation remains the predominant concern of the Federal Reserve. Wait on trading yesterday. And Oaktree Capital Management co-founder Howard Marks says stocks may be in the early days of a bubble. No reason to think there'll be a correction soon. But the point is that things are expensive.

5:48They may go on to become more expensive, but the fact that they're expensive should not be lost. But near the end of yesterday's session, stocks did rebound from session lows. The S &P 500 closed just to two-tenths of a percent lower, with most major groups advancing. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. One of the hardest-hit stocks during the recent tech sell-off has been Palantir. Its six-session losing streak has wiped out$73 billion in market value. That's handed a rare win to short sellers, more than$1.6 billion in profits for them, according to data from S3 Partners.

6:23That barely dents the$4.5 billion in paper losses the traders have put up betting against Palantir this year. Despite recent losses, Palantir remains the best performer on the S &P 500 after soaring 106%. Well, Nathan, earnings are going to be in focus this morning as retailers continue to report their latest quarterly results. Later this morning, we hear from Walmart and Bloomberg's Tom Busby has a preview. you. Investors expect good news from Walmart thanks to continued strength in the grocery aisle and given its size, pricing advantage, and inventory management, it should be well positioned to manage the impact of the Trump tariffs.

7:00Comp sales in the U.S. expected to be up 4.21 percent ahead of estimates thanks to robust U.S. retail spending. Bloomberg Consensus calls for revenue of$176.05 billion on adjusted earnings per share of 74 cents. Tom Busby, Bloomberg Radio. Okay, Tom, thank you. Let's turn from earnings to Aaron. Hurricane Aaron. It is triggering dangerous beach conditions across much of the East Coast that will likely last into the weekend. Bloomberg meteorologist Craig Allen has the latest. Hurricane Aaron is pounding the North Carolina coastline, especially the Outer Banks. With tropical storm force winds, a few outer bands of rain occurring around the area, and there are swells translating into waves of about 10 to 20 feet or more.

7:46Now, even though Erin is going to be veering northeast out to sea, Erin is a huge storm, and therefore these same conditions may make their way on up into the New York City area, the tri-state region, and over towards the lower sections of New England through the day today and into Friday. And Bloomberg meteorologist Craig Allen notes high surf and rip current advisories are in place through tomorrow afternoon. Well, Nathan, we get the latest now on efforts to end the war in Ukraine, President Volodymyr Zelensky said he will hold intensive meetings in the coming days to understand the kinds of security guarantees his allies are willing to provide.

8:21But the Ukrainian leader is pushing back against a Russian idea to add China as part of a peacekeeping force. In his words, we don't need guarantors who don't help Ukraine. Vice President J.D. Vance says the negotiations are focused on security guarantees for Ukraine and territorial claims from Russia, but he says the U.S. has made a lot of progress. You can never say with certainty what the outcome in this situation is going to be, but we now have the Russians talking to the Ukrainians. They're talking details about what would be necessary on each side to stop the fighting and stop the killing.

8:55We've made more progress in three months than the country had made in three years in stopping this conflict, and I think it's because sometimes you just need a president who will pick up the phone and call somebody. Vice President J.D. Vance spoke on Fox News. Meantime, Ukraine says Russia launched one of its heaviest attacks yet overnight with 40 missiles and close to 600 drones launched across the country. Officials say at least one person was killed and more than a dozen wounded in the city of Lviv. And back here in the U.S., Karen, a federal judge has ruled that Elon Musk will have to face allegations that he defrauded voters when he promised them a chance to win a million dollars for signing a petition.

9:31The judge says a woman in Arizona can proceed with her claims that she thought the winners would be picked at random, even though they were actually carefully selected to be spokespeople for Musk's political action committee. Musk spent hundreds of millions of dollars to elect President Trump and Republicans in 2024. Well, Nathan, the Federal Trade Commission is suing LA Fitness over its cancellation practices. The FTC's director of the Bureau of Consumer Protection says tens of thousands of LA Fitness customers reported difficulties with canceling their membership. and that allowed the 600 gym chain to continue collecting hundreds of millions of dollars from customers who would have otherwise left.

10:11An L.A. fitness official says the allegations are without merit.

10:17Time 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. The Republican-led Texas House has signed off on redrawn congressional maps that will give the GOP a bigger edge in 2026. President Trump pushed for the redistricting. Texas House Democrats left the state for two weeks in protest but were assigned around-the-clock police monitoring when they returned so they would not leave the state again. Democratic State Representative Nicole Collier, who refused the monitoring and slept in the state capitol, vows to keep fighting.

10:52The fact that I'm still mad, angry and furious means that I still want to fight. Republican State Representative Katrina Pearson says Democrats lost and they have to get over it. So you're upset and I get it. You're losing at the ballot box, but you will not silence the majority in the state of Texas. The Texas Senate and Governor Abbott still need to sign off on the redrawn maps. California Democrats are looking to redraw their own congressional maps in an effort to counteract Texas. California Governor Gavin Newsom says these maps would be temporary for three election cycles and subject to voter approval.

11:32Lieutenant Governor Eleni Kunalakis. What MAGA has been trying to do now for really a generation is have majority power with minority votes. And that's really what this fight is all about. Lieutenant Governor Kunalakis says California is just fighting back, saying enough is enough. A federal judge in New York who presided over the sex trafficking case against Jeffrey Epstein has rejected the government's request to unseal grand jury transcripts. Wednesday's ruling by Judge Richard Berman came after the judge presiding over the case against Epstein's ex-girlfriend, Ghislaine Maxwell, also turned down the government's request.

12:13According to the Israel Defense Forces, the first stages of Israel's attack on Gaza City got underway yesterday. Israel plans to call up as many as 60 ,000 reservists for the new offensive despite opposition from the international community. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you.

12:41time now for the bloomberg sports update here's john stash hour john good morning good morning the night after the yankees hit nine home runs in tampa they hit five more they came up in the 10th inning after blowing a three nothing lead the rays tying the game scoring twice with two outs of the bottom of the ninth john carlos stanton hit two of those nine on monday was not in the lineup but came up with a man on as a pinch hitter drill deep to left field simpson turning looking, see ya! A pinch hit! 2-1 home run for Stent. Amazing! And the Yankees lead by two. Michael, he's done it again. I just, man, he is so hot and so locked in.

13:20Pretty special. Joe Girardi comments on yes, Yanks beat the Rays 6-4 for their fifth win in a row. The 14 home runs in a two-game series, tied for the most ever. The Reds did it in 1999. Aaron Boone hit one of those Cincinnati homers. Five different Yankees had a two-home run game in the series last night. Trent Grisham and Austin Wells. Yankees and Red Sox begin a four-game series tonight in the Bronx. Mets will finish the series this afternoon in Washington. Nationals blew most of a four-run lead but held on. Beat the Mets 5-4. Phillies with 20 hits. Finished a sweep of Seattle 11-2. Kyle Schwarber, his 45th home run.

13:55He drove in five. The Mets trailed the fields by six and a half. Colorado roughed up Shohei Ohtani. Beat the Dodgers 8-3. Ohtani gave up five runs, nine hits. The Dodger lead over the Padres down to one game. San Diego beat the Giants 8-1. WNBA LA, a one-point win over Dallas whose rookie Paige Beckers in the loss scored 44 points on 17 of 21 shooting. Giants and Patriots tonight at MetLife where the Jets tomorrow will play the Eagles. The Jets bolstered their defensive line with two trades sending late round draft picks to Minnesota and Cleveland for Harrison Phillips and Jawan Briggs. Tour Championship golf tees off today.

14:31Eastlake in Atlanta where Scotty Scheffler won last year. He'll play today with Rory McIlroy. Fairfield, Connecticut won again at the Little League World Series will play Saturday for the U.S. Championship. John Stash, now we're Bloomberg Sports, Karen Nathan. Stay with us. More from Bloomberg Daybreak coming up after this. Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group. Thinking about joining the exploding overnight market space but unsure where to start? Designed to meet the needs of a growing international investor base, OTC Markets' overnight platform for exchange-listed securities, Moon ATS, provides access to global securities in U.S.

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18:00Good morning. I'm Nathan Hager. President Donald Trump's pressure campaign on the Federal Reserve has reached a new level, with the president now calling on Fed Governor Lisa Cook to resign over allegations of mortgage fraud. Now, Cook says she won't be bullied into stepping down, But Federal Housing Finance Agency Chief Bill Pulte says she could be fired for cause. I would anticipate seeing her be prosecuted and criminally charged for mortgage fraud, just based on what I've seen. That was FHFA head Bill Pulte appearing on Fox News. This morning, we were joined by Bloomberg's Jill Deesis. And of course, Jill, we've seen the pressure for months from this president just over interest rates for one, then over the Fed building renovation for another.

18:44what to make of this latest pressure, focused in particular on this member of the Fed Board of Governors. Good morning. Good morning, Nathan. Well, just as you said, this certainly represents an escalation in this ongoing pressure campaign that Trump has really mounted against the Federal Reserve. In this particular case, we've heard from Lisa Cook. She says the way that she described it was saying, you know, I have no intention of being bullied to step down from my position. That's the way that she certainly characterizes these allegations of fraud. Obviously, we'll have to see how far the Trump administration is ultimately willing to push this.

19:21But if you think about this in terms of the context of how much influence Trump could potentially have over the board, if he's successful in ousting Lisa Cook, that would give him the opportunity to potentially appoint four of the seven slots on the Fed's board of governors. So that's essentially what Trump may be looking to secure long term here. Even if that were to take place, that doesn't necessarily guarantee, though, does it, that the board would have that much sway over rate policy from the Federal Reserve? It is, after all, a 13-member open market committee, isn't it? No, you're right.

20:01And I think the other thing to remember as well is that just because an appointee comes from Donald Trump, it doesn't necessarily mean that that person is willing to do the White House's bidding. Right. I mean, when you're looking at, say, Trump's first term appointees, right, Governor Michelle Bowman, Christopher Waller, I mean, they did dissent against the FOMC's decision in July to hold that rate steady in favor of cutting rates. Obviously, Trump is saying repeatedly that he thinks the Fed has been slow to cut rates. But when you look at some of these other comments that some of these Trump appointees have made, let's take Waller, for example.

20:35He's considered a top candidate to replace Powell as chair of the Federal Reserve. He's spoken recently in favor of the importance of central bank independence. So I do think that at the end of the day, some of these appointees are certainly individuals to be judged on their own merits. And so just because you do have that level of influence that Trump is trying to exert, obviously doesn't necessarily guarantee an outcome that maybe he is specifically looking for. If this pressure campaign were to succeed and Governor Cook were to step aside, what could that mean for Chairman Powell's decision, as he still hasn't told us whether he plans to step out aside from the board when that term expires in 2028?

21:19Yeah, I mean, you know, I think that, you know, we'd ultimately have to see what happens, you know, when we get to that point. I mean, Powell, I think, so far has, you know, certainly been trying to stress the importance of central bank independence. I mean, look at the fact that, you know, Powell has faced a pressure campaign already on, you know, stepping aside as chairman before his term expires next year, right? You know, you mentioned earlier, you know, some of those concerns around the Fed sort of building renovations. That's been a controversy that the Trump administration has certainly tried to kick up as reason for Powell to potentially step aside.

21:55Powell has been, you know, defended some of those decisions or tried to explain them and such. And so, you know, I think we'd have to see once we ultimately get there. But, you know, I mean, he's still very much the chairman of the Federal Reserve until his term expires in 2026 for that particular position. And you have to think all of this is going to at least color somewhat the confab that's getting ready to start within hours in Jackson Hole, Wyoming. Yes, certainly. And I think, you know, there's two things to really kind of look out for as we prepare for Jackson Hole. First of all, you know, obviously that Powell speech that we're expecting on Friday, he's really used that speech in prior years as an opportunity to kind of hint at where Fed policy may be going.

22:37I'm thinking particularly of last year when we did get that hint of some of that cutting cycle or 2022, when more hawkish comments certainly stirred up markets and the Fed was beginning its hiking cycle. So, that is an opportunity for him to kind of telegraph some of those decisions. Whether we get something similar this time around, I'm not sure. But the other thing that I would point out about Jackson Hole is this is also an opportunity for other sort of central bank colleagues from around the world to kind of rally around the idea of enforcing or encouraging central bank independence. Remember, you've got Lagarde from the ECB attending.

23:11You've got Bailey from the BOE, Ueda from the BOJ. So it could be that, you know, we also kind of see that sort of show of support around the Federal Reserve's independence from some of these other central bankers as well. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

23:50Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.