Fed's Powell Speech at Jackson Hole; Meta Poaches Apple AI Executive

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1:51Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Lisa Mateo. Here are the top stories we're following today. Lisa, we are just hours away from the key event. Wall Street has been waiting for the speech from Fed Chair Jay Powell at Jackson Hole. The White House has been pressuring Powell to cut rates for months amid a weakening labor market. But questions remain about the impact tariffs will have on inflation. Bloomberg's Michael McKee is in Jackson Hole covering Powell and the annual Fed conference.

2:35Last year, Chairman Powell said that he thought it was time that interest rates started to go down. And then he delivered in September when they made a 50 basis point cut. He's not expected to say that here this year. He's expected to talk about the fact that the economy is slowing on the employment side, but there are some worrying signs of inflation. And since those would require two different ways of responding by monetary policy, the Fed would prefer to wait and get as much data and information as possible, which means they'll wait till after the next employment report and the next CPI report before settling on the best course of action.

3:13Bloomberg's Michael McKee, part of our special Jackson Hole coverage. He'll join Tom Keene and Lisa Abramowitz for a special edition of Bloomberg Surveillance this morning at 9 a.m. Eastern time. And they will bring you Fed Chair Jay Powell's speech live. That happens at 10 a.m. And you can catch it all on Bloomberg Radio, Bloomberg Television and the Bloomberg Podcast channel on YouTube. Well, Nathan, several former Fed officials are weighing in on the Fed's next move. Robert Kaplan is the former Dallas Fed president and vice chairman of Goldman Sachs. If the job market were stronger, I think it would be clear to be more be patient and wait to see how the inflation is going to unfold and be more patient to see a trend further down toward target.

3:58But I think with this weakening the labor market, it's going to push the Fed, I think, to be more forward leading and maybe do an adjustment in September. But the caution I would give if they do move in September, I don't think that's the start of a cycle. That was former Dallas Fed President Robert Kaplan. Now, the interest rate market shows about a 70 percent chance of a quarter point cut at the September meeting and close to 50 basis points of easing for the entire year. Well, while we wait to see whether those bets get refined, following Chairman Powell's speech, Lisa, pressure is building on one of the Fed's board members.

4:33Federal Housing Finance Agency Director Bill Pulte says he will make a new statement on new evidence against Fed Governor Lisa Cook this morning at 9.30 a.m. Wall Street time. Pulte announced that on X this morning, a day after the Justice Department urged Powell to remove Governor Cook from the board as it signals plans to investigate her for alleged mortgage fraud. Pulte tells Bloomberg he referred Cook's case to the DOJ as part of a broader crackdown on the issue. We refer people almost every day. I refer people every week on a minimum to the Department of Justice for mortgage fraud. This is literally what I am required to do underneath the Housing and Economic Recovery Act of 2008, which is to ensure the safety and soundness of the mortgage market.

5:20And you can watch our full conversation with FHFA Director Bill Pulte on the Bloomberg Podcast YouTube channel. Now, Bloomberg has reached out to Governor Cook. She has declined our requests for an interview. But in a statement, she says she won't be bullied into stepping down, but intends to take questions about her financial history seriously. Talks continue at the White House, Nathan, on taking a 10 percent stake in Intel to shore up the struggling U.S. chipmaker. Now, Bloomberg News has learned the Trump administration will not pursue equity stakes in other semiconductor manufacturers that are boosting investment in the U.S., like Micron Technology and Taiwan Semiconductor.

5:55Now, this follows moves in the White House to take a cut of Nvidia chip sales in China and to pursue a so-called golden share in U.S. steel. Former Vice President Mike Pence says President Trump should reconsider the whole strategy. State-owned enterprise is not the American way. Free enterprise is the American way. And a refereed private sector with less taxes and less regulation has created the most prosperous economy in the history of the world. And if we stay on that path, that'll always be true. Former Vice President Mike Pence was a guest on Bloomberg's Balance of Power. You can also get that full conversation on the Bloomberg Podcast YouTube channel.

6:36Well, staying in the chip techs are Lisa. NVIDIA reportedly told its component suppliers to halt production of its H20AI chip that's designed for the Chinese market. According to the information, NVIDIA issued that order this week after Beijing urged local firms to avoid using those NVIDIA chips. CEO Jensen Wang says his company is in talks with Beijing. U.S. government, the Trump administration, has approved the licensees for us to export H-20s to China. Recently, China asked some questions about some security backdoors in our chips. We have made very clear and put to rest that H-20 has no security backdoors.

7:19And that was NVIDIA CEO Jensen Wong. The H20 is a less powerful version of the company's cutting-edge AI accelerators. It was designed to comply with U.S. export controls. Well, Bloomberg News has learned two tech behemoths are hooking up on an artificial intelligence-related deal. Let's get the very latest from Bloomberg's John Tucker. Good morning, John. And Lisa, Meta Platforms has agreed to a deal with Alphabet's Google for cloud computing services. That's the first major cloud computing deal between Meta and Google. Meta CEO Mark Zuckerberg has pledged to spend hundreds of billions of dollars on AI and the infrastructure needed to support it.

7:57The Facebook and Instagram parent company will pay a minimum of$10 billion over six years to use Google's cloud servers and storage in an effort to quickly bring online more computing power as it competes in the race to offer users AI tools. Zuckerberg is seeking to amass the most computing power per AI researcher, and he wants to do it quickly. In New York, I'm John Tucker, Bloomberg Radio. Okay, John, thank you. Mark Zuckerberg was almost involved in another big deal. According to a court filing, Elon Musk tried to enlist the Meta CEO for his unsolicited bid for OpenAI this year. Zuckerberg was one of the people with whom Musk communicated about potentially financing a deal to purchase the maker of chat GPT.

8:39In the filing, OpenAI says neither Zuckerberg nor Meta signed the letter of intent or participated in the$97 billion bid. Well, more news out of Meta this morning, Nathan. The company is hiring another key Apple artificial intelligence executive. And this is even as the social networking company prepares to slow its recruitment. In a Bloomberg exclusive, sources say Frank Chu, who has led And Apple AI teams focused on cloud infrastructure will be joining Meta's super intelligence labs. The executive is following several of his colleagues to Meta, which also hire the head of Apple's AI models team.

9:14Meantime, Lisa, China is accusing the U.S. of, quote, threatening world peace before it hosts a gathering of global leaders. More than 20 of them are set to attend the annual summit of the Shanghai Cooperation Organization, which is a block of countries led by Russia and China. Chinese Assistant Foreign Minister Liu Bin framed the gathering as a break with the ethos of a, quote, certain country that, quote, seeks to put its national interest above the interest of others. The U.S. was never invited to be part of the group that was initially seen in the West as a China-backed Eastern counterweight to NATO.

9:51It is time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael. Good morning, Lisa. Governor Phil Murphy says a state of emergency remains for New Jersey as Hurricane Aaron battered coastal communities with strong winds, waves, and life-threatening rip currents. Governor Murphy says absolutely no one should be in the coastal waters today. Aaron flooded streets and eroded beaches in parts of the Jersey Shore and Long Island. High surf advisories for five to seven feet are in effect. Bloomberg meteorologist Craig Allen has more.

10:28Erin is now about 500 miles away from Halifax, Nova Scotia, but still has hurricane force winds 105 miles outside of the center and tropical storm force winds 320 miles from the center. And so the ocean continues to be very roughed up. And I would bet that there will continue to be red flags flying right through the day today, even though the weather itself is going to be pretty nice. Bloomberg meteorologist Craig Allen. One of the two Menendez brothers was denied parole on Thursday for murdering his parents 36 years ago in California. It is keeping Eric Menendez behind bars for at least another three years.

11:10Today, Lyle Menendez will appear before the parole board. President Trump visited with police and National Guard units that are patrolling Washington, D.C. Well, I just want to thank everybody very much for being here. I wanted to do this. We've had some incredible results. The results have come out, and it's like a different place. It's like a different city. It's the capital. It's going to be the best in the world. In a radio interview earlier Thursday, President Trump said he would be going out tonight with the law enforcement and military, but he returned to the White House after the visit to the facility.

11:47Global news 24 hours a day and whenever you want it. With Bloomberg News Now, I'm Michael Barr, and this is Bloomberg. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Nathan. Tour Championship Golf underway in Atlanta, and of the 30 players going for the$10 million first-place prize, nobody played like Russell Henley. Seven birdies, an eagle, no bogeys, a nine under 61, and a two-shot lead on Scotty Scheffler. Five others trailed by three. Rory McIlroy trails by five. Dodgers and Padres both won. L.A. at Colorado, Clayton Kershaw went to eight and two.

12:20San Diego beat the Giants. Justin Verlander fell to 1-10. Dodgers lead the NL West by one game. That's your Bloomberg Sports Update. 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. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday.

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15:10Coast to coast on Bloomberg Radio. 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 with the countdown on to Jay Powell's speech at the Fed Symposium in Jackson Hole, Wyoming. His chance to give clues on the policy path for his final nine months as chair to cement his legacy as he continues to face relentless criticism from the White House over interest rates. Ahead of the keynote address, We are very pleased to be joined this morning by Sarah House, senior economist at Wells Fargo. Sarah, it's great to have you with us on Jackson Hole Day.

15:47Do you expect Chairman Powell either to give more clues on the policy path or to address that pressure he's under? Good morning. Good morning, Nathan. So we're not expecting an explicit hint that what the Fed will do at the September meeting. So this is not like last year where I think there was pretty broad consensus that the Fed was needing to pivot. So the committee still remains very split, as we saw within the minutes, but also just some of the recent SPED speak. And then I think the recent data we had, even since the minutes, it didn't resolve that split. So, yes, you had the much weaker payroll numbers, but then you also had signs of inflation being more persistent just based on the mix of the recent inflation readings.

16:29So I think he's going to want to keep his options open where we still have another month's worth of data before that September meeting. Could there be some addressing of that split? As you say, we have seen a very divergent view starting to come out now on where the policy path should go. I'm not sure. I think you could see it in terms of him laying out just the difficulty of the moment. So you do have the Fed's mandates intention where the labor market is losing some momentum. But if you look at certain indicators like the unemployment rate, it's still looking like it's roughly imbalanced. But at the same time, you have inflation that's actually moving back up.

17:07So it's moving in the wrong direction when we've been above target for almost four and a half years now. So I think discussing those those dueling directions and the different risks that the Fed is facing, I think we'll get to just some of that split and why the committee is so divided at this particular moment. If we do see a chairman Powell sort of keep his cards close to his vest, how do you expect the market to react to that? Yeah, so it seems like markets were pretty much anticipating that we would get that clear-cut signal that September is likely. But I think those expectations have been paired back in recent days.

17:44Again, we've had some commentary from some of the various regional Fed presidents and even just some of the recent inflation data, which showed a lot of the recent strength driven by services, not necessarily it being all tariff-induced, which I think would have made it easier for the Fed to look through. So I think if he doesn't signal that clear hint in September, it'll still probably be viewed as hawkish. But I think markets have kind of shifted that way anyway, anticipating they won't get that clear green light for September. I think there is some anticipation that Chairman Powell is going to talk about changes to the Fed's framework for addressing inflation and weakness in the labor market.

18:24What do you expect there and the market reaction to that? We've got about a minute left. Sure. So we are expecting that they'll announce the new framework. And I think what we'll see is a more symmetric approach to that. So formally ditching FATE. So that was the flexible average inflation target where they said they would make up for past undershoot. So just returning to that simple 2 % target, but also taking a more symmetric approach to its maximum employment side. So not focusing on only shortfalls, but instead rather any deviation. So I think this could be interpreted as a more hawkish reaction function than the prior framework.

19:01But importantly, the Fed has already shifted to this. So even if it hasn't been formalized yet. So I don't think it changes the near-term course of policy, although I think it will shine a light on just how difficult it is for the Fed to cut in this moment where core PC inflation is likely to be 3 % in August. 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.

19:47Plus, 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 Nathan Hager. And I'm Lisa Mateo. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

20:31We'll see you next time.

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