Waller Calls for Multiple Rate Cuts; Kennedy Deputy Named CDC Head

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1:03Radio News. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we are less than three weeks from the Federal Reserve's next interest rate decision, and one of the leading candidates to replace Jay Powell as Fed chair next year is calling for a quarter point rate cut, not a half point. Fed Governor Christopher Waller spoke at a conference hosted by the Economic Club of Miami. While I judge that the FOMC should have begun this process in July based on the data in hand, I don't believe that a cut of larger than 25 basis points is needed in September.

1:41Now that view, of course, could change if the employment report for August due out a week from tomorrow points to a substantially weakening economy and inflation remains well contained. Fed Governor Chris Waller voted against this month's decision to hold the Fed's benchmark rate steady. He says he anticipates more cuts over the next three to six months. Waller's remarks are the first by a top Fed official since President Trump moved this week to fire Lisa Cook. And now, Nathan, that move to fire Governor Cook is headed for a showdown in court. A federal judge has set a hearing for 10 this morning, Wall Street Time, on Cook's request for a restraining order to keep her on the Fed's board of governors.

2:22And now Cook is offering an explanation for the mortgage dispute at the center of the case in her lawsuit against the president. We get more from Bloomberg legal reporter Eric Larson. She did not explicitly deny the allegations, but clearly at this stage in the case, they're signaling a potential defense here, which is that not only could this be a clerical error, but that it wasn't material to any decisions that were made on these mortgages, that no one was harmed by it. And really that regardless, it's not a cause to fire her because these mortgages were done a year before she joined the board.

2:56It has nothing to do with her job. And that's Bloomberg legal reporter Eric Larson. Meanwhile, the Trump administration is putting even more pressure on Cook. Federal Housing Finance Agency director Bill Pulte has sent a new criminal referral over a third property in Massachusetts. Pulte says Cook originally claimed it was a second home, but later listed it as an investment property. Meanwhile, Karen, it looks like the Trump administration's plans to fast track Stephen Myron's confirmation to the Fed board is working out. We get more on that from Bloomberg's Denise Pellegrini. The Senate Banking Committee will hold a hearing September 4th on Myron's confirmation as Fed governor to replace Adriana Kugler after she resigned.

3:38Myron will likely be grilled over President Trump's economic policies and efforts to influence the Fed. But Democrats also say privately they can't block Myron's ascension on their own. And under the rules, they can only hold things up briefly in committee and then only for a few days on the Senate floor. Also remember, no Republicans voted against Myron as chair of the Council of Economic Advisors earlier this year, meaning Myron could well be confirmed as Fed governor before the bank's two-day rate-setting meeting in mid-September. Denise Pellegrini, Bloomberg Radio. All right, Denise, thank you.

4:09Well, The shakeup at the Centers for Disease Control continues. Health and Human Services Secretary Robert F. Kennedy Jr. has named his top deputy, Jim O 'Neill, as acting CDC director. This is after the White House fired the previous director, Susan Menares, less than a month into the job after she confronted Kennedy over his vaccine stance. Kennedy says the agency needs an overhaul. There's a lot of trouble at CDC, and it's going to require getting rid of some people over the long term in order for us to change the institutional culture and bring back pride and self-esteem and make that agency the stellar agency that it's always been.

4:48House Secretary Robert F. Kennedy Jr. spoke at an event in Texas. Some Senate Republicans have expressed alarm over Menardez's firing. The Wall Street Journal reports Senator Bill Cassidy has called on HHS to postpone a meeting of its vaccine advisory committee next month due to questions about its membership. Turning to the economy now, Karen. Inflation is in focus this morning with the Fed with the release of the Fed's preferred price gauge. Bloomberg's Michael McKee reports July's PCE print is likely to show quicker inflation. The Fed's 2 % inflation target is based on the PCE index, but today's reading likely won't sway any votes at the Fed's September 17th meeting.

5:30PCE is put together from data collected in other inflation surveys. After the consumer and producer price indexes are released, economists can calculate a close approximation of what PCE will be. The forecast is for a slight decline in month-over-month inflation and no change in the annual figure. Any significant deviation might generate a market reaction, but more likely, look to the September 11th release of the CPI for guidance on the Fed. Michael McKee, Bloomberg Radio. All right, Mike, thank you. Well, futures are lower ahead of that key inflation report. Yesterday, the S &P 500 closed above 6 ,500 for the first time.

6:08Keith Lerner, the chief market strategist at Truist Advisory Services, remains bullish on tech. From the lows in April, the S &P is up 30%. The tech sector is up about 50%. Longer term, we're still bullish on technology. We're still bullish on the AI theme. And Truist Advisory Services' Keith Lerner, this is the last trading day of August. Over the last 75 years, the S &P 500 has posted an average drop of 0.7 % in September, making it the worst performing month for stocks. Let's see how some individual stocks are performing this morning, Karen. Shares of Dell are down more than 6%. The computer maker reported fewer sales of artificial intelligence servers and lower profit margins than analyst estimates.

6:54Shares of Marvell are down 13%. Data center revenue missed. On the flip side, shares of Petco are surging 18.5%. The pet retailer raised its earnings targets for the year. And now to the latest on the war in Ukraine. Hey, Nathan. German Chancellor Frederick Mertz says a meeting between Ukrainian President Volodymyr Zelensky and Russia's Vladimir Putin is unlikely to materialize. The news comes as Russia unleashed a new wave of drone and missile strikes on Kiev and defiance of U.S. calls for an end to the fighting. White House Press Secretary Caroline Levitt says President Trump is not happy or surprised.

7:34This killing, unfortunately, will continue as long as the war continues, which is why the president wants it to end. And that's why he's worked harder than anyone to end this war. But perhaps both sides of this war are not ready to end it themselves. White House Press Secretary Caroline Levitt, later today, senior Ukrainian officials are expected to travel to the U.S. to exchange ideas on post-war security with members of the Trump administration.

8:03Time 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. Police in Minneapolis say they are looking for a clear motive in Wednesday's shooting at a Minneapolis Catholic church that left two children dead and 17 others injured. The shooter, 23-year-old Robin Westman, died of an apparent self-inflicted gunshot wound at the scene. Police characterized Westman as full of hate. Authorities say they recovered 116 rifle rounds at the scene along with three shotgun shells.

8:35Meanwhile, the father of one of the two children killed in the shooting is asking for his son to be remembered for who he was and not as the victim of a mass shooting. Jesse Merkel's son, 8-year-old Fletcher Merkel, was killed inside an Unciation Catholic Church. While the hole in our hearts and lives will never be filled, I hope that in time our family can find healing. I pray that the other victim's family can find some semblance of the same. Also killed, 10-year-old Harper Moiske. Reverend Al Sharpton led a protest march on Wall Street, urging corporations to resist the Trump administration's push to roll back DEI initiatives.

9:18Sharpton was joined by thousands of people, including leaders of church unions and organizations. Reverend Sharpton called President Trump and anti-Dreamers who want to cut Medicaid and SNAP to pay for tax breaks for the rich. Why do we come to Wall Street? Since you have benefited from Trump, we come to tell you your benefit days are numbered. We're not going back. Among those who participated in the march include New York Democratic mayoral candidate Zoran Mamdani. Many Americans are traveling this holiday weekend. Triple A's Aixa Diaz has a pro tip on when you should leave if you're driving.

10:02Preferably any time before lunchtime and on Saturday before 10 a.m. Because Saturday we are expecting between 10 a.m. and 6 p.m. to be extra busy because people don't want to take off work on Friday. Gas prices are at a five-year low. 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 Stashow. Thanks, Karen. A blockbuster trade in the NFL. Dallas has passed Russia. Micah Parsons wanted a new contract, demanded a trade, and he got one.

10:37He's going to the Green Bay Packers. The Cowboys in return get defensive tackle Kenny Clark and first-round draft picks the next two years. Parsons has already agreed to a new deal with the Packers for four years and$188 million. A U.S. Open match that ended just before 2 a.m. It lasted four and a half hours. Tommy Paul won in five cents. 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?

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11:56A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. 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. I'm Nathan Hager, and President Donald Trump's push for more influence on the Federal Reserve is headed for a showdown in federal court this morning. A hearing is set for 10 a.m. Wall Street time on Federal Reserve Governor Lisa Cook's request for a restraining order against the president's move to fire her for cause over her mortgages.

12:39White House Press Secretary Caroline Levitt says the president is ready. He has the cause that he needs to fire this individual. He laid it out in the letter that he provided to her and to the public as well. And so we'll continue to fight this battle. That was White House spokeswoman Caroline Levitt. And joining us now is Terry Haynes, the founder of Pangea Policy. Great to speak with you this morning, Terry. But that really is the question, isn't it? Whether the president has the cause. Good morning. Good morning, Nathan. You know, I'll give you a threshold. The threshold is really factual. You know, those of us with a certain hair color will remember Jack Webb and Dragnet talking about just the facts.

13:18Well, this is just the facts. Whether or not the president can do what the president says he intends to do depends on the facts surrounding the Cook situation. So far, we don't have any of those facts. And I would urge people not to assume that they understand what's going on. It's a developing situation still, as recent headlines show. So I'd hold off on that. And that also matters in court for standing purposes. If you're asking somebody in court not to remove you and you haven't been removed, that's another level of complexity. Well, we've seen from the lawsuit that Governor Cook has filed against this move.

13:59she's saying that it could amount to a clerical error and that the president's attempt to fire her is a power grab that could do irreparable harm to the U.S. economy. What do you make of Governor Cook's defense here? As it's developing, I think she's ultimately going to need to prove that. She's not going to have to prove that today in court, of course, firstly. Secondly, I think the president's ability to fire for cause here depends entirely on what those facts are. If there's a lot more and the behavior was a lot worse than has already been reported, then the president's case gets stronger. But if the case is weak or the case is non-existent, then the president really doesn't have the ability.

14:45Thirdly, I think it's a mistake for folks to think that this is about Trump versus the Fed or Trump versus Cook on two regards. One, the Fed is a congressional agency, exercises congressional power, so Congress is going to have a lot to say about that. And secondly, you're in a situation here where I don't think Fed independence today is presented as kind of the existential question. You're wrapping up the removal of one governor with Fed independence. I think you're barking up the wrong tree, and I think your virtue is signaling more than a little bit, frankly. Well, there has been some reporting from Bloomberg News this week that the president is considering pulling levers on vetting of Fed bank presidents as well.

15:30What could this continued scrutiny of the Fed mean for markets? Well, I think the I understand people are reporting those things and wouldn't surprise me if they're the administration is looking at all kinds of alternatives. But at the same time, what you've seen with the governor so far, you know, in the midst of all the of all the Powell attacks is that they haven't changed their position. You know, and even even Waller today, as you report, suggests a quarter point rather than a half point is appropriate, something which I'm sure doesn't please the White House. Although he notes that there are more more data will come in next week that may change his view.

16:10But these folks have not shown there that they're that they're cowed. number one. So I expect them to continue not to be cowed. Secondly, Trump can nominate anybody he wants to the Fed, but it's the Senate. It's up to the Senate to approve them. And the Senate has shown even the Democratic Senate Biden days has shown they're not rubber stamps as the kerfuffle around Bloom Raskin will show who ultimately had to withdraw. 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.

16:49You 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. 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.

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