Warsh At Jackson Hole; Iran Says Diplomacy Not Impossible

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1:42Bloomberg Audio Studios. Podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm John Tucker. Here are the stories we're following today. John, we begin in Wyoming and the Federal Reserve's annual Jackson Hole Economic Symposium. Federal Reserve Chairman Kevin Warsh is set to deliver his much-awaited keynote address. Markets are trying to anticipate what, if anything, Warsh will have to say. We begin team coverage with Bloomberg Economics Chief U.S. Economist Anna Wong. Warsh has a simple message that he needs to deliver if he wants to strengthen his credibility with market. which is he just needs to answer a couple of questions.

2:27Number one, affirm that PCE inflation is the sole metric for judging the Fed's 2 % inflation target. The second question he needs to provide is to provide a framework for markets to understand how he's going to react to inflation data that is going to be coming in in the next couple of months and also unemployment rate. In other words, his reaction function. All in all, we don't think he's going to be providing the specificity that the market is looking for to get any reassurance. At Bloomberg Economics Chief U.S. Economist Anna Wong, Tom Keen is in Jackson Hole covering it for Bloomberg Radio and Television.

3:04It is not a normal Jackson Hole. There's no question about that. I remember in 07, right after LIBOR OIS went out, four standard deviations, the beginning of the financial crisis, the tension here. But that was a tension of the system. That was a tension of our finance. This is a tension of a newly minted chairman who even, as ardent supporters suggest, has stumbled into this meeting. How does he do a reset? No, there's eight opinions. I got 28 flavors. But the answer is the 28 flavors will know much more at 10 o 'clock when those headlines come across the Bloomberg. Michael McKee will be in the room with the assembled academics.

3:42It will be dry. It'll be interesting to see. Do they applaud? Do they clap? Do they cheer? Will there be a lead in silence? I don't know. John, we continue to update you on a tragic story overseas. Rescuers are racing to find hundreds missing two days after flash floods struck the Himalayan border between Nepal and China. The Associated Press reports the death toll is past 470 now, with more than 1 ,500 still missing. The State Department says 90 Americans may have been affected by the flooding. Three have already been rescued. At the White House, President Trump says the U.S. is offering help.

4:19We've called Nepal and we've offered any help that they need. They don't have a very good relationship with Nepal. That was brutal. That was mud and water as a mixture. Nobody's ever seen anything quite like that. We're very powerful, strong, well-built buildings where we're wiped out like they were toothpicks. That's a terrible thing. No, we are sending aid, and we've spoken to the leadership, and we let them know anything they want will happen. President Trump speaking from the Oval Office says the State Department says the U.S. is sending$500 ,000 in aid through a Catholic charity. And now to the latest from the Middle East.

4:58Today marks six months since the U.S. and Israel launched their war with Iran, and now the U.S. is claiming a milestone. The head of U.S. Central Command Admiral Brad Cooper says the Strait of Hormuz is clear of Iranian mines. These are the long-standing lanes international shipping has historically used to transit the Strait of Hormuz. And over the past few months, our forces meticulously and quietly cleared them of sea mine threats using a combination of Navy divers, Navy SEALs, and U.S. air power from the Army, Navy, Air Force, and Marine Corps. CENTCOM Commander Brad Cooper, he posted that report in a video on Axe.

5:36A Bloomberg Middle East correspondent, Abir Abu Omar, reports shipping through the strait is increasing. Goldman put out a report suggesting that we are back to two-thirds of the amount of shipments from the Persian Gulf that were there before the war had started. That amounts to about 15 to 16 million barrels of oil on a daily basis in crude products. And I was speaking to our energy colleagues earlier, and they noted that that kind of falls in line with some of Bloomberg's own estimates. Still, Bloomberg's Abir Omar reports U.S. allies have warned privately the strait may still be mined. U.S.

6:12officials say that assessment, though, is outdated. Meanwhile, Iran's foreign minister says he's had creative discussions with Qatar's prime minister. He posted on Acts that putting diplomacy back on track isn't impossible, but he says it hinges on the U.S. understanding that pressure doesn't work. Well, John, the U.S. trade war with Canada has sparked a battle now over a name. President Trump has signed an executive order renaming Lake Ontario Lake America. The president says Canada has treated the U.S. unfairly on trade for too long. People oftentimes, they'll ask me, who's the worst to deal with on trade?

6:48And I said, that's easy, Canada. They are the worst. And they feel entitled. And just we can't have that. President Trump spoke from the Oval Office after trade talks broke down last week. Commerce Secretary Howard Ludnick puts the blame on the northern side of the border. Canada walked away. We had a deal. We shook hands. The president announced it. Right. Everybody was positive. Canada made the decision for political purposes. They wanted to walk away. Sources say Commerce Secretary Howard Ludnick saw the deal as too generous to Canada. He's been accused of pushing for last minute changes. As for the change to the name of the Great Lake, Canadian Prime Minister Mark Carney says Ontario has indigenous roots that predate both countries.

7:27He says Canadians will always call it Lake Ontario. And a setback for Donald Trump, a federal judge once again blocking the president's executive order that seeks to limit mail-in voting in the midterm elections. U.S. District Judge put a new 14-day hold on the plan following a fresh round of lawsuits just days before the mail ballots begin to go out. The case could be headed back to the Supreme Court, which sided with President Trump earlier this week. And John, a federal judge has ruled that the Trump administration has to lift its ban on Anthropik's artificial intelligence technology for federal agencies.

8:00A district judge in San Francisco ruled that ban is not justified and was put in place partly because Anthropik criticized the government. The ruling is a key victory for the AI giant. And it's been locked in a high-stakes dispute with the administration since the negotiations with the Pentagon over the use of its AI technology by the military fell apart earlier this year. And in Washington, the Kennedy Center board has agreed to postpone plans to add Donald Trump's name back onto the arts venue. This move comes after a hearing where a federal judge expressed skepticism over the board's push to return the president's name to the building.

8:34Let's get more from the nation's capital and Bloomberg's Amy Morris. Commerce Secretary Howard Lutnick says they're not renaming the institution. The board decided it wanted to acknowledge President Trump by saying underneath the name of the building, renovated and restored by President Donald J. Trump. The board also once endowed by the Trump-Kennedy Center fund on the building, but no money has been raised yet. The plaza in front of the Kennedy Center would also be renamed for Trump. Hanging over that hearing was the prospect that the administration could try to tear it down if they don't raise the money for renovations, which they say they can't do without adding the Trump name.

9:11In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. Ahead of Kevin Warsh's speech at Jackson Hole, futures are mixed a day after tech-led gains on Wall Street. The catalyst was NVIDIA. The AI chip giant added$442 billion to its market value for the second biggest one-day gain in stock history. Bloomberg Markets reporter Anthony Stevens has more on NVIDIA. At the moment, what NVIDIA is saying is we are making so much cash that you should be looking at our valuations. And we had investors of the kind of diversity of Bank of America all the way to Michael Burry say that NVIDIA might be the new way to play the AI boom in a safe manner and a risk-adjusted manner in the second half.

9:51And that sucked the wind out of the rest of the tech space. Bloomberg's Anthony Stevens says NVIDIA's$442 billion gain trails only Microsoft's$450 billion surge less than a month ago. And this morning, shares of Marvell Technology falling 8 % in early trading. The chip designer reported earnings above estimates and gave an outlook above consensus. But apparently that's not good enough for investors who've seen the stock soar more than 180 % this year. And John, we're watching shares of PayPal as well. They're down 12.75%. Bloomberg News has learned a consortium of buyout firm Advent and payment processor Stripe has decided to abandon its pursuit of PayPal.

10:32It had previously offered more than$50 billion for the company.

10:39And it brings us to 510 on Wall Street. Time 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, John. In Massachusetts, jury deliberations will resume this morning in the trial of Lindsay Clancy, who was charged with killing her three children in 2023. Clancy's attorneys argue she is not guilty because she suffered from postpartum psychosis worsened by a mix of more than a dozen psychiatric medications. Clancy's lawyer, Kevin Reddington. One of the azazepam, quidapine, diazepam, diazepam, quidapine.

11:15and it goes, all right, all right, all right. Prosecutors acknowledge Clancy's mental illness, but argue that she wanted out of her life and was deliberate in committing a horrific act. Prosecutor Jennifer Sprague. It was what she had to do to end her misery, but it was a choice. If found guilty, Clancy will spend life in prison. The FAA is taking steps to fire two air traffic controllers who left their shifts early before an Air Canada Express plane collided with a fire truck at New York's LaGuardia Airport five months ago. The two pilots were killed. The FAA said it is committed to holding employees accountable and will not compromise the safety or efficiency of the national airspace system.

11:58The National Air Traffic Controllers Association is actively discussing the allegations with FAA leadership. The 25th anniversary of the September 11th terror attacks, where nearly 3 ,000 Americans lost their lives, is just days away. And this week, a military judge set a June 2028 trial date for Khalid Sheikh Mohammed, who allegedly plotted the attacks. He was captured in 2003 and transferred to Guantanamo Bay in 2006, where he has been held since. Former DHS official John Cohen says that he will face a military tribunal because he can't be tried in a U.S. court for several reasons. Prosecuting Khalid Sheikh Mohammed in a U.S.

12:40federal court today would be virtually impossible. He and others were declared as enemy combatants early on in the Bush administration after the 9-11 attacks. John Cohen spoke to ABC. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Thanks, Michael. Time now for a Bloomberg Sports Update. For that, we bring in John Stashauer. National League division leaders met in Atlanta. And it was a great pitching matchup between the Braves' Chris Sale and the Dodgers' Yashinobu Yamamoto. His first pitch was a home run hit by Drake Baldwin, and that was the only run of the game.

13:15The Braves won 1-0. Sale went the distance. Atlanta sweeps the series. Round one of the Tour Championship in Atlanta, and the leader is Min Woo Lee, a bogey-free 8-under 62. He leads by two. Scotty Scheffler, four shots behind. Rory McIlroy trails by six. 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.

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14:45The investment is aimed at accelerating the commercialization of clean aviation fuel. The recipient is Boston-based Lydian, which is developing lower carbon jet fuel made from hydrogen and carbon dioxide and is one of a growing number of companies developing next generation clean jet fuel technology. technology. Lydian says it can reduce capital expenses by more than 50 percent compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market.

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16:14Coast 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. As we count the hours now to Fed Chair Kevin Warsh's debut at the Jackson Hole Economic Symposium. Investors are waiting to hear if the chairman will give more clarity on the central bank's commitment to bring down inflation. But we're already hearing from several key Fed speakers. The last Q3, Q4 data for me last year was I thought we were if we certainly weren't restrictive and maybe a little accommodative.

16:52I need evidence that this inflation shock is not going to be persistent. That was Kansas City Fed President Jeff Schmidt and Chicago Fed Chief Austin Goolsbee speaking with Bloomberg on the Jackson Hole sidelines. And this morning we are joined by Jeffrey Yu, Senior Strategist at BNY Mellon. Good to get you on this day as we wait for Chairman Warsh's remarks here, Jeff. Do you think we're going to get a similar level of clarity from the chairman as we're hearing from some of the other Fed speakers in Wyoming? Good morning. Good morning. Well, let's put it this way. Expectations are extremely managed.

17:30So the bar to surpass expectations for guidance and clarity, to use your phrases, I think is relatively low. So at this point, any information on his thinking beyond what was already provided would be a plus. So right now, markets need some direction, not saying that we're heading down a wrong path or a bad path at this point, but more clarity, more direction in how monetary policy interacts with developments on the fiscal side, the treasury market and broader inflation. That definitely is important. Depending on which way Chairman Warsh goes on that side of the bar, where could markets be headed here?

18:08What kind of moves could we see today? So it's always about balance, right? So if he, let's say, pushes on the need to manage inflation a bit, let's just say more so compared to the FMC of decision at the end of July, that stabilizes the credibility aspect, so to speak, but not to the extent which, again, significantly tightens financial conditions to worry equity markets. And we've already seen some improvements in the long end of the yield curve already. So getting that balance, I think, is essential. I don't think it's as hard as people are making it out to be right now. Data's still relatively robust.

18:42We know the corporate earnings story. We just need a little bit more reassurance from his side. So the fact that this is an opportunity to provide that direction, I think is a good one. And let's see where we go from here. All right. So could this be a pivot point then for the stock market as opposed to the bond market, depending on what the chairman has to say? I think if we're talking about pivots, So it's less about asset markets right now. So we're still trying to establish the style, how he communicates to market, and what fashion. I know the task forces are still in play as well. But if there is going to be a pivot point, potentially in terms of strengthening the guidance, strengthening the communication, and that's a big if, of course, then that will allow markets to pivot in a more confident direction.

19:26But for the time being, going back to fundamentals, I don't think we need a pivot point at this point because, again, data is manageable right now. We're not seeing a massive inflation surge. Yield curve is behaving better. And crucially, earnings are still performing. Talk a little bit more with me about the earnings trajectory going forward here. Obviously, we saw that big outlook positivity from NVIDIA this week. Where do you see the earnings picture headed for stocks in the months to come? So I always believe in a rising tide lifts all boats, right? So we need to see increased breadth in terms of earnings.

20:02right now, the concentration effect of tech, semiconductors, AI, not just in earnings, but the US economy, that is still very, very high. So, if we can start to move, and let's see if it shows up in the macro data or on the micro data on the earnings side first, right? And that's something I'm really interested in, because if the micro data earnings start to show border breadth in other sectors, especially those related to the consumer, if households are showing more confidence Again, then I think we can get a much more balanced U.S. economic picture. I'd rather see slightly lower growth but well-distributed growth in the U.S.

20:36rather than a high growth number but concentrated in one sector. And the same goes for earnings as well. 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 at Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

21:13And 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 John Tucker. 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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