Kremlin Calls Russia-US Talks Constructive; Trump Sees Fed Chair Pick 'Early Next Year'

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

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1:02Bloomberg 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 the latest on the push to end the war in Ukraine. The Kremlin says Russian President Vladimir Putin held, quote, very useful talks with White House Envoy Steve Witkoff and President Trump's son-in-law Jared Kushner. But once again, those discussions ended without a breakthrough to end the fighting. Tony Halpin leads Bloomberg's Russia coverage. They said there were constructive discussions, very informative. They talked about receiving more detailed documents from the US that they need to study.

1:41But there was little actual substance on which they agreed. And Kremlin policy aide Yuri Ushakov basically told reporters that there were crucial areas such as the territorial question on which they didn't agree and that there would be much more work needed. Bloomberg's Tony Halpin reports attention now turns to a NATO foreign minister's meeting today in Brussels to discuss the alliance's support for Ukraine. Secretary of State Marco Rubio is not expected to attend. Well, back in Washington, Nathan, Defense Secretary Pete Hegseth is speaking for the first time about a suspected drug boat strike that has him facing accusations of possible war crimes.

2:17During a White House cabinet meeting heard live on Bloomberg Radio, Hegseth said he wasn't watching when a Navy admiral ordered a second strike on the vessel on September 2nd. As you can imagine, at the Department of War, we've got a lot of things to do. So I didn't stick around for the hour and two hours or whatever where all the sensitive site exploitation digitally occurs. So I moved on to my next meeting. Secretary Hankseth says he learned the full sequence of events a couple hours later. And he says Admiral Frank Bradley made the right call to sink the boat and eliminate the threat. Not all lawmakers are convinced.

2:50Ted Lieu is vice chair of the House Democratic Caucus. I served on active duty as a JAG for four years and then an additional 21 years in the reserves. And let me be very clear, killing shipwrecked survivors is a war crime. And Republican Senator Tom Tillis is calling the second strike a violation of ethical, moral and legal code. The top Republican and Democrat in the Senate Armed Services Committee plan to meet with Admiral Bradley tomorrow. Karen, we have some key election results this morning. Yes, it was an election day. A couple races that drew national attention. Let's bring in Bloomberg's John Tucker to get the details.

3:25John. And Nathan, a special election in Tennessee allows Republicans to keep their razor-thin majority in Congress. The winner, Matt Van Epps, had no apologies for being hardcore MAGA. This is President Trump's party. I'm proud to be a part of it and can't wait to get to work. Van Epps receiving 54 % of the vote to Democrat challenger Afton Baines, 45, a margin of nine points. Not as great as some would have thought for a region President Trump won by 22 points. For Bain, it signals a future of change. And we may not have won tonight, but we changed the story of what's possible here. And we're not done.

4:03Not by a long shot. Well, the special election was called to fill the vacant seat once held by now former Congressman Mark Green, a Republican who resigned in July. And in another race that gained national attention in New Jersey, a runoff election for mayor of Jersey City. City Council member James Solomon won the race, beating former Governor Jim McGreevy shortly after the polls closed. Solomon was leading with 69 percent of the vote, according to the AP, which called the race. Solomon pledging to make the city more affordable and to fight corruption. Similar promises to those made by New York City mayor elect Zoran Mamdani.

4:39I'm John Tucker, Bloomberg Radio. All right, John, thank you. Well, the Trump administration is poised to undo Biden-era fuel efficiency standards, which it blames for driving up the cost of new cars. And Bloomberg's Amy Morris reports from Washington. The administration is expected to propose standards that are less stringent than those finalized under former President Biden. The move is the latest in President Trump's push to dismantle policies he criticizes as an EV mandate. The Trump administration has argued that artificially high fuel economy requirements have pushed the price of a new car out of reach for many Americans.

5:13Still, easing fuel economy requirements is not likely to bring down car prices because car makers plan those lineups years in advance. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. We're expecting that announcement from the president later today, but President Trump says he plans to announce his selection to lead the Federal Reserve early next year. At that cabinet meeting at the White House yesterday, the president teased White House National Economic Council Director Kevin Hassett as his possible choice. I guess a potential Fed chair is here too. I don't know who's allowed to say that.

5:44Potential. He's a respected person that I can tell you. Thank you, Kevin. Now, the comments from President Trump offer a clearer timeline for that announcement, which he said would come after considering around 10 candidates. Well, Nathan, we turn to the markets where futures are higher again following yesterday's gains on Wall Street. The S &P 500 has rallied for more than a week on an expected rate cut one week from today. Laura Cooper is a global investment strategist at Nuveen. Historically, we do tend to see December as a strong month of outperformance for U.S. equities. And I think we're probably in for some modest upside, but I think there's limited scope for significant gains because a lot of the driver of recent price action has been that repricing of the Fed rate cut that's expected next week.

6:33New beans Laura Cooper says the Fed's outlook on future rate cuts will be key for the markets. In some company news this morning, Karen, we're watching shares of CrowdStrike. They're down about 2 % in early trading. The cybersecurity provider did top earnings estimates, but its outlook disappointed some investors. CrowdStrike was up 51 % this year before that earnings release. And looking at the flip side, Nathan shares a Marvell technology. They're up about 10 percent. The company announced plans to acquire startup Celestial AI for at least three and a quarter billion dollars. It's part of Marvell's push to capture more of the runaway spending on artificial intelligence computing.

7:11And Bitcoin's trading at a two week high this morning, Karen. Right now up about 1.6 percent at 93 ,000. cryptocurrency seeking a sustained recovery from a weeks-long sell-off that began in early October, days after Bitcoin hit a record of more than$126 ,000. Since then, more than a trillion dollars in crypto market value has been wiped out. We have a warning here, Nathan, from the SEC. It has issued a flurry of letters to firms including Direction, ProShares, and Tidal, blocking the introduction of products designed to deliver two or three times the daily returns of stocks, commodities, and cryptocurrencies.

7:48The SEC's concern is that the fund's risk exposures may exceed the agency's limits on how much risk a fund can take on relative to its assets. The regulator has directed the fund managers to either revise their investment strategies or formally withdraw their applications. And it is an unprecedented philanthropic effort, Karen. Dell Technologies founder Michael Dell and his wife Susan are giving 25 million American children,$250 each, to jumpstart investment accounts for their future. That adds up to$6.25 billion, a pledge that's part of the Invest America initiative, better known as Trump accounts, that were created earlier this year under the One Big Beautiful Bill Act.

8:29Michael Dell discussed the pledge in a Bloomberg interview. We do think that this will be catalytic and that more philanthropists and companies will will join us over time. And again, this is a platform for the future of these children. And you can watch our full interview with Dell Technologies founder and CEO Michael Dell at the Bloomberg Podcast channel on YouTube.

8:59Time 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 cleanup continues in the Midwest and Northeast from a snowstorm. In Nashua, New Hampshire, the city's street department has been working to keep the roads clear of snow. This man was out driving and found things a bit difficult. It was raining, so the roads were already wet and then the snow just came up on top of it. So you can't really see the black ice. New York City just got rain, but the central Hudson River Valley got about nine inches of snowfall.

9:33The Pennsylvania police officer who arrested accused CEO killer Luigi Mangione appeared in a New York City court. Officer Joseph Detweiler testified on day two of Mangione's hearing to bar New York prosecutors from using evidence they say links him to the murder of UnitedHealthcare CEO Brian Thompson on Manhattan Street. Officer Deadweiler testified he was skeptical about the tip about a male who looks like the shooter, but as soon as the man pulled down his mask, the officer said, I knew it was him immediately. Deadweiler said Mangione gave him a fake name, an ID, and claimed he was homeless.

10:11The Trump administration says it will withhold funds for administering SNAP food aid in most Democratic-controlled states starting next week unless they provide data about those receiving the assistance. Agriculture Secretary Brooke Rollins said that the action is looming because those states are refusing to provide requested information about the recipients, including their names and immigration status. But 21 states, including California, New York and Minnesota, blue states, continue to say no. Secretary Rollins says it's necessary that states comply to root out fraud in the program. Democratic states have sued to block the requirement.

10:52Global 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. On Sunday, we'll find out who's going to the college football playoff. The committee says that as of now, there'll be five SEC teams, three from the Big Ten, and the buys go to Ohio State, Indiana, Georgia, and Texas Tech. Kalani Satake decided to stay at BYU rather than take the job at Penn State. Oklahoma City Thunder with a 124-112 win at Golden State. Shea Gilgis-Alexander scored 38 points.

11:29The Thunder, the defending NBA champs, off to a 21-1 start. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. This is Scarlett Fu. And I'm Paul Sweeney, inviting you to join us for the Bloomberg Intelligence Podcast. Every day, we harness the power of Bloomberg Intelligence to bring you deep dives into the companies that are moving markets from publicly traded companies like Apple to those that are privately owned but known by everyone on earth like OpenAI. Now, I helped to build Bloomberg Intelligence to what it is today, Scarlett. And now our analysts are the best in the world, covering more than 2 ,000 global companies.

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12:39Coast 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. Very useful, very informative. Those are some of the words the Kremlin is using to describe the latest talks between Russian President Vladimir Putin and U.S. Envoys Steve Witkoff and Jared Kushner. Ukrainian President Vladimir Zelensky says he's waiting to hear the results. If I feel that we can count on real, specific dialogue, not just words, with some result, we will meet. That was Ukrainian President Volodymyr Zelensky speaking in Ireland ahead of the nearly five-hour talks in Moscow.

13:21Joining us for more is Bloomberg Opinion columnist Mark Champion. Mark, good morning. Did we hear real, specific action coming out of those talks? Good morning. Good morning. No, in essence, the message, all that we know about the talks so far has come from the Russian side. One of President Putin's advisers explained what went on, and his message essentially was, you know, this was good, we liked it, but there was no progress. We looked at the plan that the Americans had, the altered plan that's been, you know, made since. The Russian-American plan was initially put forward. We looked at the altered plan.

14:04But we were focused really on the kind of spirit of the deal. We didn't get into the nitty gritty. And, you know, and there's stuff in there. Some of it we might be able to accept some of the changes. But some of the some big key things that we are not and we see quite negatively. So, you know, it's pretty clear there won't be a big summit between Trump and Putin to announce a deal anytime soon. Whether this can actually move forward, it really depends on how the Americans play it and whether there was any sign of real movement from the Russians. because that initial deal with the 28 points that the Russians still like to sort of, you know, lean on, that one was really poison for the Ukrainian side and for their European allies.

14:55And we've heard from President Zelensky on X this morning saying his defense secretary, Rustem Umarov, is going to meet with national security advisors to European leaders in Brussels today following these discussions. Where is Europe in all this, Mark? Well, I mean, they are important in the sense that Ukraine, you know, they're only Ukraine's only true allies at this point. The U.S. is, you know, posed itself as a mediator between Russia and Ukraine, which means it's distanced itself from supporting Ukraine. And it also has its own interests. You can see that, you know, threaded through those 28 points.

15:40There are American profits to be made, American deals to be made. If you look at who is negotiating the deal on behalf of the Americans, it's a real estate developer, Steve Witkoff, and then Jared Kushner, who is a son-in-law to the president, but also primarily a businessman. And on the other side, for the Russian side, one of the key players in negotiating, key partner for Witkoff, has been Kirill Dmitriev, who runs the Russian Sovereign Wealth Fund. So this is, you know, the Americans are trying to negotiate a deal that resets relations in a way that's economically beneficial to the U.S. The Ukrainian issue for them is secondary.

16:25It needs to get dealt with, but it isn't actually the primary issue for the Americans. It remains the primary issue for Europe because Ukraine is a vital security interest for the Europeans just because of geography.

17:01in 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 and tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

17:44This is Special Agent Regal, Special Agent Bradley Hall. The time is approximately 11.15 a.m. about to start a consensual telephone call with Dr. Daiwa Zhang. China's Ministry of State Security is one of the most mysterious and powerful spy agencies in the world. But in 2017, the FBI got inside.

18:18Hey? Hello?

18:25I've never seen that much evidence in my entire career, and I don't think we'll ever see that much evidence again. I now have several terabytes of an MSS officer, no doubt, no question, of his life. And that's a unicorn. This is a story of the inner workings of the MSS and how one man's ambition and mistakes opened its vault of secrets. Listen to The Sixth Bureau from Bloomberg Podcasts starting on February 13th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.