Zelenskiy and EU Leaders Hold Key Call with Trump; Markets in Record Territory

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1:16Wasabi, driving innovation in data storage for up to 80 % less than market competition. Try for free at wasabi.com. Wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network. 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 with the latest on the effort to end the war in Ukraine. President Vladimir Zelensky and European leaders will hold a call with President Donald Trump later today, ahead of the President's Friday summit with Vladimir Putin in Alaska. Here's Zelensky speaking through an interpreter.

1:59It's impossible to talk about Ukraine without Ukraine, and no one will accept that. But they cannot agree on anything about Ukraine without us. That was Ukrainian President Volodymyr Zelensky ahead of his call today with President Trump and European leaders. For more, let's bring in Bloomberg's Ewan Potts in London. Ewan, what's the latest? Nathan and Karen, President Putin is demanding that Ukraine give up the two regions that form the Donbass as a precondition to a ceasefire. That would mean Ukrainian forces withdrawing from nearly three and a half thousand square miles of territory. Ukraine's Volodymyr Zelensky, who's in Berlin today, says he won't do that.

2:36European leaders who hold a call with President Trump later today say that any peace agreement must respect international law and that international borders must not be changed by force. As Friday's Trump-Putin summit gets ever closer, there are few signs of agreement between the warring parties. In London, I'm Ewan Potts, Bloomberg Radio. All right, Ewan, thank you. We turn now to the markets, where stocks begin the day in record territory. Yesterday, the S &P 500 rose 1.1 percent, while the tech-heavy Nasdaq 100 gained 1.3 percent. The rally came after the latest Consumer Price Index report stoked bets that the Fed is virtually certain to resume cutting interest rates next month.

3:14Jay Barry is J.P. Morgan's head of global rates strategy. We know the Fed has an asymmetric reaction function and seems to be more concerned about labor market weakness than inflation being above its target. And with the slowing we've seen in private payroll growth, it kind of gives the green light to go back and think about the Fed cutting in September, even with inflation very far away from the Fed's target. J.P. Morgan's Jay Barry, Fed Fund futures are pricing in a 90 percent chance of a rate cut in September. While most traders think a quarter point cut is all but a lock, Karen, Treasury Secretary Scott Besson says he's open to a 50 basis point cut.

3:48He spoke with Fox Business after the CPI report. If we'd had the original numbers, Fed could have been cutting in June, July. So I think the real thing now to think about is should we get a 50 basis point rate cut in September to make up for the delay and the lack of data. As for the nominee to succeed Fed Chair Jay Powell, Treasury Secretary Scott Besson says there's a very wide net being cast and that President Trump has a very open mind. Well, Nathan, the White House pressure on the Fed is not stopping there. President Trump said he's considering a lawsuit against Fed Chair Jay Powell over cost overruns at the central bank's headquarters renovation.

4:28The president made the comment on social media. We asked White House trade advisor Peter Navarro whether the threat is serious. Heck yes. Yeah. Yeah. I mean, look, you get your attention. It's like, what is he doing there? He's spending the taxpayers' money on just why he's not watching costs. It's beautiful. You contrast with him the way Donald Trump does things in the White House. He's undergoing a major renovation. He watches every penny. White House Trade Advisor Peter Navarro spoke with Joe Matthew on Bloomberg's balance of power. President Trump has repeatedly called on Powell to resign, but he's backed off threats to fire the chairman while Secretary Besant leads the search for his replacement.

5:08Well, Karen, tariff revenue in this country did hit a record last month, but it wasn't enough to prevent a widening in the monthly budget deficit. Customs duties climbed to$28 billion in July, a 273 % surge over the same month last year. But the monthly budget deficit came in at$291 billion, or 10 percent more than the same month the year before, after accounting for calendar differences. A political fight in Texas could come to a head this weekend, Nathan. Democratic lawmakers who left the state to block a vote on a new congressional map now say they're considering their options. ABC News is reporting they're planning to return to Austin as soon as this weekend.

5:50The Texas statehouse failed to reach a quorum again yesterday. Speaker Dustin Burroughs says that's keeping lawmakers from addressing other pressing issues. We cannot take up the critical flood response legislation scheduled for our floor today. Texas House Speaker Dustin Burroughs, the Democrats could try to demand that the legislature prioritize the flood response over redistricting, but they hold little power in the GOP-controlled House. The special session ends on Friday. If lawmakers can't reach a quorum by then, Governor Greg Abbott has said he'll keep calling special sessions until the Democrats return.

6:25Well, Karen, Elon Musk has suffered a legal setback. A federal judge has ruled the world's richest man must face claims by OpenAI that his attacks on the startup in court and the media amount to a, quote, years-long harassment campaign. This is the latest twist in a court fight that's played out since last year when Musk accused OpenAI of abandoning its founding purpose as a charity by accepting billions of dollars in funding from Microsoft starting in 2019, the year after Musk left OpenAI's board. He launched XAI, a competitor to OpenAI, in 2023. Let's take a look at some stocks on the move this morning, Nathan.

7:01Shares of Kava plunging 23%. The fast-casual Mediterranean chain trimmed its annual sales outlook after a sharp deceleration in the second quarter. CoreWeave shares are down 9%. The New Jersey-based company delivered a disappointing earnings outlook reflecting margin pressures from a rapid AI data center expansion. And venture global shares are up 5%. The natural gas exporter won a major arbitration case over oil giant Shell.

7:30Time 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. Some of the 800 National Guard members deployed by the Trump administration to assist with law enforcement arrived in Washington, D.C. President Donald Trump called D.C. without substantiation a lawless city. Mayor Muriel Bowser pledged to work alongside the federal officials Mr. Trump has tasked with overseeing the capital city's law enforcement. The executive order is pretty clear and so is the law. The president has the authority by virtue of the statute to request services.

8:10Mayor Bowser insists the police chief will remain in charge of the department and its officers. The mayor also points to official statistics showing violent crime down 26 percent since last year, now at a 30-year low. New York City Mayor Eric Adams rejected President Trump's suggestion that the federal government could take over the city's police department. Adams says crime in New York City is under control. We don't need anyone to come in and take over our law enforcement apparatus. We have the finest police department on the globe. Mayor Adams says crime in the city is at the lowest this year outside of the two years of the pandemic.

8:48Harvard University has signaled it is willing to pay$500 million for workforce training programs as part of a settlement with the White House. A deal between Harvard and the Trump administration would bring the university closer to ending a month-long standoff that began over accusations that Harvard failed to confront campus anti-Semitism. United Launch Alliance launched its first national security mission Tuesday with the newly developed Vulcan rocket to put satellites into high orbits above the Earth. ULA launched two military satellites into space. ULA is one of just three companies allowed to launch the most difficult and most sensitive missions for the Defense Department.

9:32Global 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.

9:46Time now for the Bloomberg Sports Update. It's brought to you by Flushing Bank, and here's John Stashauer. John, good morning. Good morning, Karen. It was nine years ago that the Mets in the second round drafted Pete Alonzo out of the University of Florida, and three years later, a 53-home-run rookie season, still the most ever. He's been slugging home runs ever since to the point where Alonzo came to the plate at Citi Field tied with Daryl Strawberry. A ripple of anticipation moves through the ballpark with every Alonzo at bat. We're going to see some history. And Pete drives one to deep right center field, headed back toward the wall.

10:21It's out of here, out of here. Pete Alonzo stands alone. The polar bear on his own private iceberg. Pete Alonzo, the most prolific home run hitter in New York Mets history. That's Gary Cohen on SNY. home run number 253. He later hit another home run in a 13-5 Mets round of Atlanta that ended their seven-game losing streak. Alonzo then reacted to his big night. As a kid, you don't really think that it's in the realm of the possibility to be a franchise home run leader. You just don't. You just want to get to the big leagues and give it your best. Aaron Judge is sixth in Yankee history and moving closer to both Yogi Berra and Joe DiMaggio at the stadium.

11:08Judge homered first inning. Anthony Volpe had a three-run shot. Giancarlo Stanton homered had a two-run single. Yanks all over the Twins. 9-1. Team staying hot. Milwaukee, 11 wins in a row, and it was 14-0 over Pittsburgh. Eight straight for Seattle. A run on the first inning. A 1-0 win at Baltimore. Cleveland on a Jose Ramirez homer. Beat Miami. The Guardians have won 10 of the last 12. Red Sox won 14-1 at Houston. The Nationals lost. 8-5 at Kansas City. The NBA schedule is out opening night October 21st with a doubleheader on NBC. Knicks open the next night at the Garden against Cleveland. They'll also host the Cavs on Christmas.

11:46John Stash, Bloomberg Sports, Karen, Nathan. 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. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Extend your trading day and trade global securities in U.S. dollars through a FINRA-licensed broker-dealer.

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13:46Coast 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. President Donald Trump is preparing to head to his Alaska summit with Vladimir Putin with the Russian leader, sounding confident that he is dominating on the battlefield against Ukraine. But before the president speaks with Putin on Friday, he's due to hold a call with Ukrainian President Vladimir Zelensky and European leaders today. Ukrainian lawmaker Kira Rudik is looking ahead to Friday. The best outcome would be that President Trump wouldn't take yet another public humiliation from Russian President Putin and that he will get finally annoyed and will impose sanctions that he has promised.

14:35Ukrainian Parliament Member Kira Rudik spoke on Bloomberg surveillance this morning. We're joined by Bloomberg News chief Asia correspondent Rosalind Matheson. Roz, good morning. We know that Ukrainian President Zelensky has said his constitution does not allow him to concede territory to Russia. What can we expect when it comes to his call today with President Trump? Good morning. Good morning. Well, it's interesting that Zelensky is actually seemingly going to be in Germany alongside the German chancellor for this call today, as you say, with U.S. President Donald Trump and Vice President J.D.

15:12Vance. And this is really the last opportunity for these European leaders alongside Zelensky, so this is Germany, the UK, Italy and more, to really press Donald Trump to make the case before he goes into this meeting with Vladimir Putin to not overcommit or pre-commit to too many things in the absence of Ukraine at that meeting and saying that there needs to be a very slow and careful move towards any agreements or understandings around land that preliminarily this just needs to be an initial conversation to perhaps feel each other out face-to-face and to get a stronger sense of where the red lines are for Russia, but also for Donald Trump not to rush in in that minute and agree to whatever Vladimir Putin may put on the table.

15:59And particularly the concern there is that is there going to be an early-stage agreement between the two of them, which requires Ukraine indeed to cede that land. That mirrors some of the rhetoric we've heard from President Trump in recent days. He's been sort of downplaying expectations for the summit on Friday, saying that he wants to feel out President Putin. Could it be that Europe and the president could be on the same page heading into Friday? Well, certainly Donald Trump probably is aware that given the last time he met with Vladimir Putin, it didn't necessarily end up being so successful for him, for Trump, that he maybe needs to be a bit more careful going into this conversation.

16:40And he's shown some frustration with Vladimir Putin in recent weeks, said that despite all their phone calls and their conversations, that he felt in a way that he was getting played a bit by Putin dragging the chain on agreeing to a ceasefire. But that's one thing. It's very different for the two of them to be sitting down together And in the minute, you know, Vladimir Putin is quite an astute operator. And who knows how that meeting might go. And that, again, is the concern. And that is why you're seeing these phone calls today, that, yes, Donald Trump is casting this now as more of a feeling out exercise.

17:15But there is still risk in the minute that he does go ahead and agree to things that Ukraine says that they cannot accept. Some of that concern has been sounded out with President Zelensky even saying that Russia has made some surprise advances on the ground in recent days and pushing deeper into Ukrainian territory. How could that set up what we get on Friday? What do we know about the situation on the ground in eastern Ukraine at this moment? Well, that's right. Zelensky is casting this as Russia trying to get into a positive position, the most advantageous position for itself going into this meeting and basically saying to Donald Trump, this is Russia, you know, saying to Donald Trump, well, we'd have this territory anyway, so you may as well hand it over to us rather than having us fight for it for a few more months and getting there.

18:03And certainly Russia has been making some gains on the ground. Again, this is primarily in the Donbass region and, you know, pushing forward, but not pushing forward massively. It's been a real grinding war now for quite some time. they are making pockets of advances and certainly they seem to have the advantage but they're not gaining large amounts of territory. Ukraine obviously is having very little success pushing them back but it seems to be that Ukraine sees this as an effort by Russia to say we do have the advantage, we would get this territory eventually and better just to agree to hand it to us now versus having months and months of fighting to get there.

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19:26Search 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.

20:13Thank you. at business.optum.com.

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