Judge Rules on Fed's Lisa Cook; Fallout from Israel Attack in Qatar

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1:48With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg 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 this morning with a key court ruling involving Federal Reserve Governor Lisa Cook. The judge has temporarily blocked President Trump's effort to remove her from her position at the Fed. Bloomberg Markets reporter Valerie Teitel says the decision allows Cook to remain in her post while she challenges the White House's attempt to oust her over allegations of mortgage fraud, which Cook says are politically motivated.

2:38This is a really important case to follow because this is the first time a president has sought to remove someone at the Fed. And given the law written into the Federal Reserve Act, the president can remove somebody for cause. But it's very vague on what cause actually entails. And this ruling really can have lasting effects on clarifying what is justified as cause in this scenario. Bloomberg's Valerie Teitel says the judge concluded the alleged misconduct likely does not amount to cause for her removal. Let's turn to the Middle East now. Nathan, Israel conducted an unprecedented strike against senior Hamas leaders in the Qatari capital of Doha.

3:14escalating an already tense standoff between the country and Arab nations over the war in Gaza. The move drew criticism from the Trump administration, saying the bombing did not advance Israeli or American goals in trying to bring an end to the Middle East conflict. And the president says he was not given advance notice of the attack. I was very unhappy about it, very unhappy about every aspect. And we got to get the hostages back. But I was very unhappy about the way that went down. So you were caught by surprise, sir? I'm never surprised by anything, especially when it comes to the Middle East.

3:50President Trump added that he spoke with both Israel Prime Minister Benjamin Netanyahu and Qatari leaders after the strike and assured Qatar that such an attack would not happen again. Hamas said five of its members were killed in the attack, though its main negotiating delegation survived. And Karen, Qatar is condemning this strike, calling it a flagrant violation of international law. It says it will not tolerate this reckless Israeli behavior and its continued tampering with regional security. William Roebuck is executive vice president at the Arab Gulf States Institute. He says the attack threatens the ceasefire deal that President Trump proposed.

4:28I don't see prospects for the negotiations to start up again. And I also, on the Israeli side, just assessing the way they have responded to the negotiation proposal, I don't see a lot of strong interest on their side yet in that proposal from President Trump. William Roebuck of the Arab Gulf States Institute. Bloomberg Economics says while crude oil futures jumped after the attack, oil prices are unlikely to move persistently. Checking oil prices now, they are moving higher. West Texas Intermediates up 1%, trading at$63.28 per barrel. Brent is up 0.9 % of 1%, at$67.02. And Nathan, we have more geopolitical news this morning related to the war in Ukraine.

5:12Poland has shot down drones that crossed into its territory during a Russian airstrike on Ukraine. The Polish military calling it an act of aggression. And the country's premier is asking NATO allies for support. Bloomberg Daybreak Europe anchor Stephen Carroll is in Brussels and joins us live with the details. Good morning, Stephen. Good morning, Karen and Nathan. Poland's Prime Minister Donald Tusk says his country's airspace was violated by a huge number of Russian drones in the early hours of this morning. Airports were closed for several hours, while citizens in the east were told to stay indoors.

5:44It's the first time the NATO member has shot down military aircraft that have strayed into its airspace since the start of Russia's full-scale invasion of Ukraine. The EU's foreign affair chief, Kaya Kalas, says the incursion appears to be intentional. The Polish prime minister has asked NATO to invoke Article 4 of its treaty, which triggers consultations on a military response. In Brussels, Stephen Carroll, Bloomberg Radio. OK, Stephen, thank you. This news from Poland comes as President Trump has told European officials he's willing to impose new tariffs on India and China to pressure Russian President Vladimir Putin to negotiate with Ukraine, but only if EU nations do so as well.

6:20Other potential measures discussed include further sanctions on Russia's shadow fleet of oil tankers and restrictions on its banks and major oil companies. And there's more tariff news, Nathan. The Supreme Court will decide whether the bulk of President Trump's tariffs are legal, with arguments to be heard in the first week of November. The tariffs remain in place for now, but a decision striking down the tariffs could cut the current average U.S. effective tariff rate and force the U.S. to refund tens of billions of dollars and potentially upend preliminary trade deals. I want to turn now, Karen, to a major political race we're following in Boston.

6:55An expected one-on-one showdown for Boston Mayor Michelle Wu and challenger Josh Kraft is officially underway. Wu has notched a sweeping victory in the city's preliminary election. With 100 percent of precincts reporting, Wu has drawn 71.6 percent support to Josh Kraft's 23.3 percent. The remaining five percent of the vote went to activist Domingos DeRosa and former police officer Robert Capucci. The election is scheduled for Tuesday, November 4th. And looking at other elections across the country here, Nathan, Democrat James Walkinshaw won the special election for Virginia's 11th district, holding on to the Democratic-leaning seat in the suburbs of Washington, D.C.

7:41Walkinshaw will fill the seat vacated in May by the death of Representative Jerry Connolly. And Walkinshaw's win will narrow the Republican majority in the House, where Speaker Mike Johnson will now only be able to afford two defections from his party to still pass legislation. Back to Wall Street now. Karen, traders are going to get more economic data today. The producer price index for August is due out at 8.30 a.m. Wall Street time. We get a preview now from Bloomberg's Michael McKee. If anything could derail a Fed rate cut, it would be an August jump in inflation. That's not expected when the government releases the month's producer price index.

8:18The consensus monthly change is just a third the size of July's increase. On an annual basis, headline wholesale inflation is forecast unchanged, while the core rate actually drops. A surprise, of course, would increase market angst, although tomorrow's consumer price index will have greater impact. What's likely to matter most today is where we might see tariff-induced inflation and how much. Michael McKee, Bloomberg Radio. All right, Michael, thank you. We turn to big tech now and a look at Oracle, which is surging this morning with shares jumping to a record after the company gave an aggressive outlook for its cloud business, stunning Wall Street and galvanizing hopes that the post-chat GPT global AI infrastructure buildout is accelerating.

9:00Oracle's cloud infrastructure revenue increased 55 % to$3.3 billion, with the company signing four multi-billion dollar contracts with three different customers in the quarter, and it's expecting to sign up several additional customers in the coming months. And looking at Oracle shares this morning, up almost 29%. Karen, we're also keeping an eye on Apple shares this morning. They're down a half percent in the pre-market after that tech giant introduced a fresh range of products. including enhanced AirPods, watches, and the thinnest ever iPhone, along with new Pro versions of the smart device.

9:37Dan Ives, Global Head of Tech Research at Wedbush Security, says the updates should move the needle for Apple. There's nothing here that makes you think that this is going to be the game changer that everyone's been waiting for. But I do believe, given the install base, given some of the tweaks here, and ultimately on sort of the second half of this upgrade cycle, you will have an AI-driven ecosystem, I believe will be Google Gemini. This could be a sneaky upgrade cycle that I think surprises investors on the upside. And Wedbush's Dan Ives adds the iPhone 17 Air drew the loudest cheers at the product launch in Cupertino.

10:18Time 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. That's not my signature. That denial from President Trump Tuesday when he was asked about a letter he allegedly signed for Jeffrey Epstein's 50th birthday book in 2003. Democrats on the House Oversight Committee released an image of the message Monday. It includes a message, a signature at the bottom that looks like the president's and an outline of a woman's figure. President Trump spoke to the media before dinner in Washington.

10:51It's nonsense. And frankly, you're wasting your time. All you do is try to get off the great success of D.C. and about 200 other things we've done that are so successful. Meanwhile, President Trump also touted sending federal agents to another city. The National Guard and immigration authorities have started operations in Chicago. The Justice Department has charged a man with the fatal stabbing of a 23-year-old Ukrainian refugee on a North Carolina commuter train. The charge means that Carlos Brown Jr. could face the death penalty if convicted of first-degree murder. Brown Jr. has a lengthy arrest record with 14 prior criminal cases.

11:30An urgent manhunt in New York City today following a horrific fire and double homicide. Police say an elderly couple was set on fire in their queen's home Monday. Frank and Maureen Olton, both in their 70s, have been identified as the two victims. Commissioner Jessica Tisch says the victim's neighbors reported an unknown man knocking on doors. The suspect's M.O. is to go door to door asking for some kind of assistance until he can gain entry. So do not allow anyone you don't know or who you are not expecting into your home. NYPD Commissioner Tish says the suspect is 42-year-old Jamil McGriff, an armed and dangerous career criminal, out on parole for robbery.

12:13It is arraignment day for New Orleans Mayor Latoya Cantrell in federal court on felony charges that include alleged wire fraud, obstruction of justice, and lying to the FBI. Cantrell is still the city's mayor and is not running for re-election. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. Kyle Schwarber hadn't homered since his four-home run game almost two weeks ago. A three-run shot to help the Phillies beat the Mets 9-3, the 50th home run of the season for Schwarber.

12:53Aaron Judge hit his 44th, moved past Yogi Berend, and the fifth on the all-time Yankee list. But Detroit scored nine runs in the seventh inning, beat the Yankees 12-2. The Red Sox shut out the A's 6-0, quite a major league debut for Connelly early, went five innings, allowed no runs, struck out 11. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

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15:43Coast 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 legal fight between President Donald Trump and Federal Reserve Governor Lisa Cook Cook has taken a key turn ahead of the Fed's next rate decision one week from today. A federal judge is allowing Cook to stay in her job while she continues to challenge the president's effort to oust her for alleged mortgage fraud. Joining us for the latest is Bloomberg Markets reporter Valerie Teitel. So, Val, this case clearly isn't over, but I guess this is a bit of a reprieve for Governor Cook.

16:21Good morning. Good morning, Nathan. Well, I thought it was really interesting to look at why the judge decided to take this action, decided to let Cook remain in the seat while the court considers the case. And to her opinion on the case, she says that only Cook's conduct on the job could be grounds for removal. And given that this alleged mortgage fraud actually happened a few months, up to a year before she became a sitting governor, the judge is essentially saying that it's unlikely that Trump has cause to dismiss her. Now, remember, Nathan, this is the first time that a sitting U.S. president has tried to remove a Federal Reserve board governor.

17:00The law in the Federal Reserve Act does give the president power to fire Fed officials for cause, but the law does not specify what exactly that means. It leaves it very vague, but this ruling eventually, when we do get it, could have lasting effects on clarifying what is justified as cause in this scenario. Now, this case is likely to trigger a high stakes appeals battle. It's likely to quickly land at the Supreme Court, but questions still, you can essentially debate both sides on how the Supreme Court will handle this. On one side, they have upheld some of Trump's decisions to dismiss other agency heads.

17:40But the Supreme Court has had some precedents in the past where it has called the Fed a unique institution that has a special arrangement sanctioned by history. So it kind of is giving us early hints that they might treat the Fed differently from other independent agencies. So as this case goes forward, then, Valerie, is there a risk that Governor Cook could still be removed from her post before the next decision next week, since this is ostensibly going to appeal? We have about a minute left. Well, look, it's going to appeal. I mean, it's likely that she will be a voter next week. We never know how quickly these cases can be dealt with the courts, but she is likely to be a voter come next week's decision.

18:21The case, it just will probably make its way up to the Supreme Court's lap. But the Supreme Court has already fast tracked the Trump's case against his tariff. So it's likely they might do the same with this case, given that they want to weigh the merits of these two cases that are highly, highly political and have a huge effect on the market. 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.

18:56Wall 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. Plus, 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.

19:55We'll see you next time.

20:07the Wise app. Be smart. Get wise. T's and C's apply. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience.

20:44Learn more at the Hartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises. Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level.

21:19Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org.