Trump-Powell Firing Drama Rattles Markets; Senate Passes DOGE Cuts

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1:41Bloomberg 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 the story that has had markets in a headspin, the White House pressure campaign on Federal Reserve Chairman Jerome Powell. President Trump reportedly floated the idea of firing the Fed chair in a room of congressional Republicans this week. The president says he does not intend to fire Powell, but in Oval Office comments heard live on Bloomberg Radio, he did have a caveat. I don't rule out anything, but I think it's highly unlikely unless he has to leave fraud.

2:21I mean, it's possible there's fraud involved with the$2.5,$2.7 billion renovation. President Trump has said the renovation of the Fed's two main buildings is over budget and too lavish. Well, Nathan Bloomberg's Anne-Marie Hordern was in the Oval Office for the president's remarks. She asked about reports that he waved a draft letter firing Powell before congressional Republicans. So you didn't show a letter to Republican lawmakers last night? No, I talked about the concept of firing. I said, what do you think? Almost every one of them said I should. But I'm more conservative than they are. And it's unclear whether the president has the power to remove the Fed's share, but the pressure might not let up.

3:04Several of the president's aides, including White House Budget Director Russell Vogt and Federal Housing Finance Chief Bill Pulte, are pushing to inspect the Fed's renovation. Of course, Karen, you can expect that plenty of reaction will continue to pour into the possibility of firing the Fed chair. Bloomberg's David Weston caught up with Bank of America CEO Brian Moynihan. The Fed is an independent agency, and they're meant to be outside the purview of the executive and the Congress. They are called to task, and they're monitored, and they're reviewed, and all the things. But the reality was it was set up to be independent, so our central bank in America was independent.

3:38Bank of America CEO Brian Moynihan's thoughts were echoed by Massachusetts Senator and frequent Powell critic Elizabeth Warren. She tells Bloomberg the Fed needs to remain independent. People in the cabinet, people who are serving in the administration serve at the pleasure of the president. That is the structure. That is fine. Donald Trump wants to get mad at one of them and fire him. Have at it, baby. But it's different for the Fed chair. And that is why that office needs to be held by someone who is independent. For the full conversations with Elizabeth Warren and Brian Moynihan, head over to the Bloomberg Podcast channel on YouTube.

4:17Well, Nathan, a few hours ago, the Senate passed about$9 billion in federal spending cuts requested by President Trump, including deep reductions to public broadcasting and foreign aid. And we get the latest with Bloomberg's Monica Ricks. The 51 to 48 vote wraps up a 13-hour votarama on the Senate floor, passing President Trump's request to cut about$8 billion in global aid programs, including USAID, and another billion for the Corporation for Public Broadcasting, which supports public radio and television stations like NPR and PBS. Republicans Lisa Murkowski of Alaska and Susan Collins of Maine joined all Democrats in opposing the package.

4:55It now heads to the House for approval ahead of a deadline tomorrow before Trump can sign it into law. Monica Ricks, Bloomberg Radio. All right, Monica, thank you. Now to the latest on the trade front. President Trump says he'll send letters to more than 150 countries notifying them their tariff rates could be 10 or 15 percent. In recent In days, the president's unleashed a barrage of tariff demands informing other economies of new duties that will kick in August 1st if they cannot negotiate better terms with the U.S. Nathan, a new survey suggests a record share of American firms froze investments in China as trade ties worsened earlier this year.

5:30Fewer than half of the companies surveyed by the U.S.-China Business Council between March and May said they plan to invest in China in 2025. That's a drop from 80 percent last year and a record low since the group began asking a similar question in 2006. Karen, a major gathering of foreign policy professionals is underway in Colorado. But as Bloomberg's David Gura reports, the Trump administration decided at the last minute not to allow senior Pentagon officials to participate. The Defense Department made the announcement one day before the Aspen Security Forum was scheduled to start, saying its values were not aligned with the administration's.

6:06Organizers had to cancel onstage interviews with combatant commanders at a conference that has traditionally hosted officials from Democratic and Republican administrations. Former Ambassador Nicholas Burns, who helps run the forum, addressed the Pentagon's decision in his opening remarks. We regret it very much, but here's our response. And we put out a statement, you can all read it. Our door is open, obviously, to the Trump administration. We want our government to succeed. Speakers will include officials from President Trump's first term alongside advisors to Presidents Obama and Biden. In Aspen, Colorado, I'm David Gurra, Bloomberg Radio.

6:43All right, David, thank you. President Trump also continues to face questions about his administration's handling of the Jeffrey Epstein case. But he says the focus on the late sex offender is a distraction. It's all been a big hoax. It's perpetrated by the Democrats. And some stupid Republicans and foolish Republicans fall into the net. And the president says Attorney General Pam Bondi should release credible evidence in the case, but he says he knows it's a hoax. Other Republicans are still pushing for transparency, including Florida's Anna Paulina Luna. I've always advocated for transparency, but I do think it's also probable, which is why we'd like to see the information.

7:19Why I think the American people deserve to see the information is that there was some tampering of evidence under previous deputy directors authorities. And Republicans have not given evidence of tampering or fraud in the case. Meantime, Bloomberg News has learned former FBI Director James Comey's daughter has been removed from her job as a federal prosecutor in New York. Maureen Comey worked on the Epstein case as well as the sex trafficking trial of Sean Diddy Combs. The circumstances around her departure are not immediately clear. Turning to markets now, Karen, the S &P 500 enters the day near all-time highs after whipsawing yesterday on the Fed News.

7:56Earnings continue today. A dozen companies in the S &P 500 will be reporting, including Netflix. We get a preview from Bloomberg's Tom Busby. Thanks to the breadth of its content, its pricing power, its advertising-supported tier and password-sharing crackdown, Netflix now has over 300 million global subscribers. And new seasons of hits like Squid Games, Wednesday, Stranger Things, and more will surely keep those subscribers paying up. But Netflix no longer reports subscriber numbers, so investors will have to look at advertising revenue. from its push into live sports programming like WWE Raw and UFC events.

8:30Bloomberg Consensus calls for revenue of$11.06 billion, earnings per share of$7.09. Tom Busby, Bloomberg Radio. All right, Tom, thank you. Well, shares of Archer Daniels Midland, they're down more than 5 % this morning. The drop for the corn syrup maker comes after President Trump said Coca-Cola has agreed to use real cane sugar in Coke in the U.S.

8:56Time 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. We're hoping the heavy rains from earlier this week won't repeat itself today in the Northeast. Bloomberg meteorologist Rob Carolyn has the latest. While we do have a frontal system headed our way, it doesn't look like we're going to have the right combination to produce flash flooding across a wide section of the New York City area or in southern New England like we had last week. There was some isolated flooding outside the District of Columbia last night, but just don't have the right ingredients.

9:28That's not to say that some of the thunderstorms will pass through the region today won't be able to produce heavy rain and localized flooding. It's just I don't expect as many wide areas as we saw outside of Boston last week or around the tri-state area as we had earlier this week. I'm Rob Carroll in Bloomberg Radio. Thank you, Rob. Israel is launching strikes on portions of Syria's capital, Damascus. The strikes on government facilities come after the IDF said it is protecting the Druze community, a minority population in Syria that also resides in parts of Israel. At the White House, Secretary of State Marco Rubio says the U.S.

10:04is intervening. We think we're on our way towards a real de-escalation and then hopefully get back on track in helping Syria build a country and arriving at a situation there in the Middle East is far more stable. Drew's leaders say the Syrian government violated the terms of a ceasefire, but Syrian officials refute that. A former commissioner for the NYPD has sued current mayor Eric Adams and three of his associates, accusing the group of running the police force like a criminal enterprise. Thomas Donlan briefly led the NYPD as interim commissioner. Adams calls the accusations baseless and absurd.

10:44Global 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. 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. Extend your trading day and trade global securities in U.S.

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12:00So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode available on plus and pro plans. You already know how AI is changing how everyday work gets done, how much ground you can cover and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move it on match speed and scale.

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13:27Time now for the Bloomberg Sports Update, brought to you by Flushing Bank. And here's John Stashauer. John, good morning. Good morning, Karen. 153rd Open Championship. underway this morning in the early leaderboard. 55-year-old Phil Mickelson is tied for the lead. He's 2-under through 9. Defending champs Andrew Schauffele just teed off. He's playing with Jon Rahm and the surprise U.S. Open winner J.J. Spahn. Next group has world number one Scotty Scheffler with Colin Morikawa and Ireland's Shane Lowry who won the Open the last time it was held at Royal Port Rush in 2019. The only other time it was held there was 1951.

14:01It's a homecoming for Northern Ireland native Rory McElroy. Be here to see a lot of familiar faces and you know even some of the you know every you know hole on the course has a different team of marshals from different golf clubs and then just to see people that you know I've met throughout the years out there this morning was really nice but yeah it's um it's really nice to be back and obviously very very excited for the week. Rory played this course when he was 16 years old he shot a course record 61 they have made it more difficult since then. His tee time today just after 10 o 'clock. WNBA it was to be a Kaitlyn Clark appearance in Brooklyn but she missed her 11th game of the season a recurrence of her groin injury.

14:43Liberty beat the Fever easily. Breonna Stewart scored 24. NBA Bradley Beal a star in Washington. Not so much in his two seasons in Phoenix and the Suns bought out his contract. Beal is headed to now play for the LA Clippers. Headed to Washington to play for the Commanders veteran edge rusher Von Miller now 36. Not the flair he was while in Denver. He got released by Buffalo. John Stash, Dan, we're Bloomberg Sports. Karen Nathan. Coast 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.

15:20I'm Nathan Hager. Turning attention now to our conversation with Bank of America chairman and CEO Brian Moynihan following the big bank's beat on earnings. Moynihan joined Bloomberg's David Weston to discuss the results, small business health and independence of the Federal Reserve. Brian Moynihan also offered his long-term economic outlook. Let's listen in. Conservatives are pretty good. When you go to small businesses, that's more the question, small, medium-sized businesses, because the interest rate environment hits them harder because they borrow on lines of credit short-term for a lot of their activities, and that rate went up substantially.

15:53And then you think about the, if I'm a$100 million company, a$50 million company here in North Carolina, and I'm engaging in the world finance. I'm importing goods and manufacturing them, further manufacturing and selling them. It got pretty interesting here trying to figure out all the trade and tariffs. So I think the certainty on the tax rate helps them, meaning the big beautiful bill passing and the tax rate. That's a very good thing. The alternative would not have been good if their tax rates would change. A satisfactory resolution to the trade so that they could learn the rules of the road over the next 30, 60, 90 days and get their plans for next year put together.

16:28And I think ultimately, we're going to have to satisfactory resolution on immigration and population growth. Because at the end of the day, what I'm hearing more from the construction companies, farming companies, and travel entertainment type companies is I'm starting to struggle with labor availability at any price. And that we got to make sure they have the workers because they will supply a great service economy and continue to grow. One of the things you reported today was net interest income, which is really important to all banks, but particularly Bank of America. And it's a steady growth that you're showing in that.

17:01How sensitive are you to the rates set by the Fed? If that comes down substantially, does that affect Bank of America much? So embedded in our estimates, so we've told the world that this quarter we had$14.8 billion in net interest income. And that is the fourth straight quarter of growth and came off the floor last year this quarter when I was talking to you was the lowest it's been. This quarter was a record in the company's history. And we're saying we're gonna grow from that record to 15.5 to 15.7 in two more quarters, the third quarter and the fourth quarter. That embeds in it the rate cuts in the market that are expected by market.

17:38We only show it that way. If you have rate cuts over above that, that would hurt that number, but it would still grow frankly. And so the good thing about that is because a great loan deposit growth, 7 % loan growth, 4 % deposit growth over the last year, that's in the system. That's capitalized. I mean, that's here. It doesn't go away. And as that continues to stay and we add to it, what you're starting to see is that sets us up great for next year for further NII growth and further EPS growth. So this quarter was the trickiest quarter to get through because year over year, we finally got some NII growth.

18:10But year over year, the market's business doing strong because the expense growth was a little more robust. that'll get in line and then you'll see NI drop the bottom line and it will set up for 2026 with even more growth. When you talk about 2026, one of the things we're going to have is in all likelihood a new Fed chair. There's been a lot of talk even today in Washington about the Fed chair. And you said you believe in an independent Fed. But if in fact President Trump gets his wish as his right under law to appoint a new chair who will be more in line with his views, he said he thinks the interest rate really should be at 1 % or even below that.

18:42But is that good for Bank of America? Is that good for the economy? Well, let me make two things. One is you're absolutely right. In May of next year, the term of the current Fed chair ends after being reappointed. And it's the right of the elected president to appoint the next successor and go through Congress. And I think in that dialogue around that, there'll be a lot of dialogue about, okay, how do you set interest rates? What do you think about interest rates? Because the Fed is an independent agency, and they're meant to be outside the purview of the executive and the Congress. They are called to task and are monitored and they're reviewed and all the things.

19:16But the reality was it's set up to be independent so that our central bank in America was independent. So I think no matter who gets in, they're going to look at it and have to look at the facts and make a decision. Because if you drop rates too far, inflation may kick up, and then you're going to have to raise them back quickly. On the other hand, if you think the prior Fed has been slow to lower rates, you might lower them faster. Our team believes that the Fed will lower rates in the second half of next year by 100 basis points. It's no change until then because inflation is still going through the system.

19:42That brings the Fed funds rate down closer to three, which they think is probably more of a long term rate and frankly is more similar to what we had for most of American history. What's been unusual is the period after global financial crisis, a very low interest rate structure. That is really not a good place to be, honestly. We rather have a higher interest rate structure, a little more inflation, a little more robust economic growth. So I think everybody has to be a little careful about keeping that engine going because if If this engine fails, the whole world fails. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

20:17Look 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. 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.

20:55I'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.

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