From the Bloomberg Interactive Burgers Studios. This is Bloomberg day Break for Tuesday, May sixteenth.
Coming up today, doubts on the dead Speaker McCarthy says he's nowhere near a deal with President Biden.
The US prepares to buy more oil to replenish the strategic reserves.
A top FED official favors pausing great hikes, and.
Sources say a megadeal in the biotech industry will be challenged by regulators.
Former New York Mayor Rudy Giuliani deni as sexual assault allegations. Plus a gunman kills three people while randomly shooting in the New Mexico neighborhood. I'm Michael Barr. More ahead from.
John Stas showering towards the Yankees one in Toronto, the Mets lost in Washington. It's down of the final four in the Stanley Cup playoff.
That's all straight ahead on Bloomberg day Break, The Business News You need to starn your day in just one fifteen minute podcast each morning on Apples, Spotify, the Bloomberg Business app, and everywhere you get your podcasts.
Good morning, I'm Nathan.
Hager and I'm Karen Moscow. Here are the stories we're following today.
All eyes are back on Washington today for a second round of talks on the debt ceiling, with the clock ticking toward a potential government default. House Speaker Kevin McCarthy says he is nowhere close to a deal with President Biden.
We only have so.
Many days left.
The President decided to wait one hundred.
Days before he would negotiate.
He treated this the same way he treated the border. He wanted to ignore the problem. Speaker McCarthy says staff level talks have not been productive. The President is insisting on a clean debt ceiling increase and leaving talks on spending to the budget process. But former White House Budget Director Mick mulvaney says it seems there's never a right time to talk about spending in Washington.
Apparently, it's not when we do a budget, because that leads to a government shutdown. We can't do that. We can't do it when i'm debt ceiling because that leads to default on the day. But when it is a good time. It doesn't seem as ever a good time in Washington, DC for some people, at least to talk about spending. Less a lot of folks never want to have that discuss and that's where I think frustrates a
lot of Republicans. Just look, we get it. We'd rather not talk about it here, We'd rather talk about it on a regular day, but no one talks about it with us.
Former White House Budget Director mc mulvaney spoke with our Washington correspondent Joe Matthew on Bloomberg's Sound on Catch the show weekdays at one pm Eastern on Bloomberg Radio or on demand wherever you get your podcasts.
Well, Nathan, the US is already paying a price for its failure to raise the dead limit. That's the word from Treasury Secretary Jenety Yellen and a letter can congressional leaders. Yellen said, quote, We've already seen Treasury's borrowing costs increase substantially for securities maturing in early June. Yellen says that's the time when the Treasury risks running out of cash for its obligations.
Well, the debt sailing negotiations continue, Karen, the US is buying more oil. The Energy Department's preparing to purchase up to three million barrels of crude to refill its strategic petroleum Reserve the country's emergency stockpiles at its lowest level since nineteen eighty three, after releasing more than two hundred million barrels to curb high energy prices last year and checking prices right now now NYMXED crewed is up twelve cents.
It's seventy one dollars twenty three cents a barrel.
Well, turning to the economy now, Nathan, there are more signs the Fed may hold off on more rate hikes to be caught up with Atlanta FED President Rafael Bostik.
In today's environment where there's so much uncertainty in the economy, I don't think we can really rule out anything. If I had to have a vote right now, i'd probably vote to hold. But we've got two more inflation readings, we have a jobs report that's got to come out. There's a lot more information we're going to have as to what's going on.
And Atlanta FED President Rafael Bostik made the comments in an interview with Bloombergy, So Michael McKee stay tuned for more of that conversation coming up shortly on Bloombergy Daybreak.
Now, Under the equity markets, Karen where we're finding out what some of the biggest names on Wall Street have been doing with their money. Bloomberg's John Tucker joins us with details.
John Yeah Nathan required Quarterly reports filed with regulators show Warren Buffett's Berkshire Hathaway made a bet on Capital One Financial during the regional bank turmoil. It may have paid off if Capital One surged as much is nine point six percent. Overall, Buffett was a net seller of stocks in the first quarter and pocket at ten point four billion dollars. Michael Burry, the money manager made famous in The Big Short, now has a big long when it
comes to China. He boosted bullish bets on e commerce giantsjad dot Com and to Ali bomba group. He made those bets even as other hedge funds cool on China, and the filings also show activists investor Nelson Peltz recently adding to his stake in Walt Disney after calling off a proxy fight earlier this year in New York. I'm John Tucker, Bloomberg day break.
All right, John? Thanks Meantime, the mood among global fund managers appears to be souring, According to Bank of America's latest survey investors are flogging to cash amid concerns at a recession and credit cruncher looming. The sentiment among fund managers and may deteriorated to the most bearish this year. Sixty five percent of survey participants say they now expect a weaker economy.
Well this morning, Karen Omega deal in the biotech in my history is in jeopardy. Amgen's twenty seven billion dollar agreement to buy Horizon Therapeutics will be challenged by federal regulators. Sources say the Federal Trade Commissions expected to file a lawsuit today to block the purchase. It'll argue the tie up with hamper innovation and slow the pace of drug development. Shares of Horizon are down eighteen percent in early trading.
On another corporate news, Nathan Wells Fargo has agreed to pay one billion dollars to settle a shareholder lawsuit. Plaintiff's accuse the bank of making misleading statements about its compliance with federal consent orders that was in the wake of the twenty sixteen scandal over opening unauthorized accounts.
Also are in the banking industry, Care and more job cuts maybe on the way. Bloomberg News has learned Morgan Stanley's considering a seven percent cut to its Asia Pacific investment bank. Deal making slowed in China due to weaker economic growth and worsening US relations. The cuts are part of Morgan's plan to reduce about three thousand jobs globally by the end of this quarter.
And finally, Nathan Elon Musk is being tied up in controversy surrounding Jeffrey Epstein. The Tesla CEO is being issued a subpoenas JP Morgan's lawsuit over Epstein, and Bloomberg's Ed Baxter has the story.
This comes from the US Virgin Islands, where the US claims JP Morgan Chase knowingly benefited from Jeffrey Epstein's sex trafficking operation. The core papers say the government had reasonab believe Epstein may have referred or attempted to refer Musk as a client. Several other billionaires, including Google co founders Larry Page and Sergei Brinn, have also been issued subpoenas. The paperwork asks for any documents regarding Epstein's involvement in
human trafficking in San Francisco. I'm at Baxter Bloomberg Daybreak straight ahead.
Your latest local headlines in the check of sports. This is Bloomberg Time Now to take a look at some of the other stories making news in New York and around the world, with Bloomberg's Michael Vaar.
Good morning, Michael, Good morning Nathan. Parents and school children in New York City are expressing their concerns about the city's plan to temporarily house some asylum seekers at school gyms as bus loads of Mike griants keep arriving in the city. While some parents say the migrants need help, they are concerned about safety. This woman lives near PS one eighty eight in Coney Island.
Why don't we put them in Gracie Mansion. You look at some place to put them, Put them into people who are elected who put this in place, put them in their backyards, because you've dumped on us long enough.
About seventy five adult migrants are staying in the gym that is not connected to the school. Attorneys from marine veteran Daniel Penny are defending his decision to put Jordan Neely in a chokehold on a New York subway train earlier this month. Neely, who was homeless was later pronounced dead. Penny's defense says Neely had been threatening passengers, but prosecutors
say there was no indication Neely was violent. Meanwhile, a legal defense fund for Penny has surpassed two million dollars with donations from kid Rock and endorsement from Florida Governor Ron Dessentis. Police in Farmington, New Mexico, say it appears an eighteen year old gunman who shot and killed three people and wounded six others, fired to add random as he roamed the neighborhood. Authorities say it appears the suspect fired at least three weapons, including an ar style rifle,
shooting at homes and cars. Farmington, New Mexico, Police Chief Steve Hebby.
It's difficult to understand how something like this happens, but we are doing the best that we can.
He's through and talk with family members of the suspect. Chief Hebby says the gunman was shot and killed. Rudy Giuliani is denying sexual assault allegations and a new ten million dollar lawsuit. The former mayor of New York City is also accused of harassing a former employee, Noelle Dunfee claims she has audio recordings to back up her claims. Two staffers for Virginia Democratic Congressman Jerry Connolly were attacked by a man with a baseball bat in Connolly's district office.
Sergeant Lisa Gardner of the Fairfax Police.
We found two victims. They sustained non life threatening, non life threatening injuries, and they were both transported to local hospitals.
Sergeant Gardner says the suspect is in custody. Global News twenty four hours a day, powered by more than twenty seven hundred journalist nanalysts and over one hundred and twenty countries. I'm Michael Barr. This is Bloomberg, Nathan.
Thanks Michael. Time now for our Bloomberg Sports update, brought to you by Tri State Outy. Good morning, John stash.
Hour, Good morning, Nathan. The Yankees went to Toronto the record of just three and nine in series openers, first of four with the Blue Jays second batter of the game.
Two swing at a high drive.
It's right field and pretty deep for Springer. He's gonna turn and watch it. It's gone a home run into the elevated Yankee bullpenning straightaway right Aaron Judge is gone yard here in the top of the first off, Alex manoah it is home run number nine and the Yankees are in front one on Wfan.
Three batters later, a Willie Calhoun two run shot Judge it another solo shot eighth in, and that one went four hundred and sixty two feet to straightaway centers for four homers in the last three games for the American League's all time single season leader. The Yanks led seven nothing held on to win seven to four. Mets lost
in Washington ten three. David Peterson's now one in six with an eight ERA, and the Mets have lost fifteen of their last twenty one, haven't won a series in a month, and this next series won't be easy, hosting Tampa Bay, who comes in with a record of thirty one and eleven. Justin Erlander on the mound tonight, his first city field start as the met NBA and NHL playoffs both down to the final four. The NBA's West Finals start tonight in Denver Nuggets and Lakers. Nuggets have
never played in the NBA Finals. They are zero to four in this round, and three of those losses have been against La the East Finals start tomorrow in Boston.
Celtics and Hey.
Dallas Stars into the Stanley Cup West Final, beat Seattle in game seven two to one, will now take on Vegas. NFL broadcasting news Matt Ryan said he's not necessarily retiring after fifteen seasons, but he is joining the CBS as an analyst, and the NFL says one of the wild card playoff games will be aired on Peacock, NBC's streaming service, so it won't be on free TV. John Stashedward Bloomberg Sports.
Live from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on SIRISXAM, the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.
Good morning. I'm Nathan Hager. There is no sign of rate cuts in the near term. That's the word from Atlanta FED President Rafael Bostik, speaking with Bloomberg's Michael mckeeb about monetary policy, inflation, and the recent banking crisis. Bostik says there's still ways to go to tame price pressures, and he hinted at what the Fed's next move might be at next month's FOMC meeting. Let's listen in to that conversation.
Now, headline CPI and core CPI have come down from their peaks, but they seem to have kind of stalled out. The Atlanta Fed has an underlying inflation dashboard that shows a bunch of other measures of inflation, and a lot of those are worse now than they were a year ago. So has the Fed done enough?
Well, First of all, thanks for being here. It's really good to have Bloomberg is an attendee at our conference. This is a really good group and your team really contributes a lot to that. And when I think about the trajectory of inflation, I think that we've made a really good progress on it. If you think about where the economy was and where inflation was last summer compared to where it is today, we've seen really positive things happen. We're not the nine and ten percent levels. We're in
four and a half to five range. Now, look that's still twice two times what our target is, so there's still a ways to go. But I do think that we've seen a lot of some of the frost really
come out of the inflation measure. Now, one of the things I look at one of the measures I try to keep track of is the number of goods in the basket of that's used to calculate the CPI that are showing inflation above five percent Right now, in the latest report, that came under fifty percent, less than half no hour in that range from one point it was seventy or eighty percent. So I think we're seeing that
breath narrow and that's a really positive sign. So I think we are starting to see our policies really work.
But do you rule out any more additional rate increases?
No?
Oh no. Look in today's environment, where there's so much uncertainty in the economy, I don't think we can really rule out anything. Look, I think we are in a place now where we've been in restrictive territory for something like six to eight months. That's about the time you'd expect to see our policies start to bind on the economy. And when I talk to businesses, they tell me they're starting to feel that bind, and that's a really positive thing.
But as you know, we've had surprise after surprise after surprise over the last few years, and most of them have been to the negative. When it comes to getting closer to our inflation target. So I've got to keep that on the table for sure. But right now I'm feeling like, let's see how our restrictive policy is working and that'll give me a sense of what our next move needs to be.
Well, you still have a PC inflation report and a CPI.
We got two more exactly for your next meeting.
What are you thinking now though for the June meeting?
Well, if you if I had to have a vote right now, I'd probably vote to hold. But as you noted, we've got two more inflation readings. We have a job's number, a jobs report that's going to come out. There's a lot more information we're going to have as to what's
going on. But again, the folks, I'm talking to the businesses across the sixth district and even in our survey responses, they're all telling us that there is a lot of slow down that is that is on the way, and that really gives me some comfort that we're kind of in a place where we can let that play out and then we'll see where what we need to do at that point.
We are speaking with Rafael Bostics, the president of the Atlanta Federal Reserve. You're talking about what the businesses are telling you. What are they saying about their pricing power and their plans to use it or not be able to.
So, you know what's really interesting. Through most of the pandemic, our business contacts have said, if we needed to raise prices because our costs are for input, we're going up, they could just pass that through, and the consumers were
accepting that. I'm hearing much much less of that now, and many of the businesses and the people in the marketplace are telling me they're pretty much at the limit, and their ability to continue to raise price and pass through those higher costs is far degraded, in part because consumers have become a lot more price sensitive, which again is I think these are the things that we'd want to see if we were getting to a place where the economy was moving back to balance, which then would
get us to that two percent target. So pricing power is not nearly as clear and as ruthless as it has been. I think that's really positive development.
What about on the employment side, FED forecast at five basis points of tightening should be raising the unemployment rate. Instead it's gone down. What are they saying about their plans for labor.
Well, I would say two things on this. So first, everyone is telling me that their labor market experiences, their ability to hire, and their turnover internal to their business is far better than it was last summer. Now it is not still elevated and tougher than it was before, but there has been progress made. The second piece to this, though, is that we just came through a pandemic where many
families are thinking about how they're going to work. Many many employees are thinking what is my connection to the labor market. We had all these retirements, so there's a lot of churn that's happening. I think that's contributed to some of the historically low unemployment numbers that we've seen.
If I could use a phrase you're not allowed to use in economics, is this time different in the sense that it was so hard for companies to hire coming out of the pandemic, that this time they're going to hoard labor and we may not see the kind of unemployment rates that you forecast.
Well, I am hearing that businesses are saying, we don't want to let some of our best people go because it may be very difficult to get them back. I am definitely hearing that, but I'm mindful for how you started this. Every time there's a declaration that this time is totally different, it winds up not being totally different. So we're going to just keep our eyes open, my eyes open, and our team. We're going to be out
there really trying to understand where things stand. I do think when the pandemic is triggering some real structural changes that it's going to take a while for us to understand those things. But we're going to have to understand those before I'll be willing to make any declaration that the old laws of labor markets don't apply.
I want to follow up on that in a second, but first let me ask you about banks, because there's been a lot of talk about that. Thanks all, we titan credit standards. When the Fed is raising interest rates and loan demand always falls. So the real question is are you seeing anything or do you anticipate anything that would be worse than normal in terms of credit.
That's a good question. So look, as you noted, when we raise interest rates at the Federal serve, we expect loan conditions of learning conditions to tighten. That has happened that I usually don't want it to happen as in such as volatile a way as it has with the Silicon Valley bank challenge and other things. But a lot of this is going as expected as I expected it would. Now the question is is it going to accelerate, is it going to stay where it is, or is it
going to slow down. The bankers that I talked to tell me that the rise of liquidity risk as something that's really on their radar screen has caused them to want to be more conservative in terms of their willingness and desire to lend. But I'm not hearing right now that they've gone into hyper mode where we really have something that I would characterize as a credit crunch. We're not there today, and I'll be monitoring to see if we get closer to something like that.
The fit is sketched out a sort of backward looking monetary policy framework, and that you're looking at inflation numbers for quote, a clear and convincing evidence that the price level is coming down? Is it time to switch to you more forward looking kind of policy to find indicators that tell you what's going to happen rather than what has well I would.
Say we've always done both right, So we definitely want to see what the official numbers are saying. But through our Regional Economic Information Network, we are talking to businesses
all the time through our surveys. We have a pretty robust survey shop, and we're talking to businesses and we get feedback from businesses in those cases, and some of the questions we ask are, as you're setting wages moving forward, are you doing that as a catchup because your workers feel like they're falling behind, or are you doing that because you think that pricing is going to be where you need to do that Today, what businesses are telling
us is that they're in catchup mode. Their employees know that they've been their wages have fallen behind inflation, and to keep them they feel like they've got to allow that catchup to happen. But we are also and that to me, that's a very positive thing because it says it's reactive and not proactive, and as long as we stay in that environment, I think the probability that we get inflation to continue to recede is very positive.
Now, you've said, and most of your colleagues have said, that you anticipate keeping rates where they are at least through the end of this year, possibly into next year. Is there any circumstance under which you think you would change that view if inflation came down quickly or if the economy sort of fell apart.
Well, of those two scenarios, I would be more inclined to change if inflation came down quickly. Look, inflation is high, is too high. We've got to get this back to our two percent target. If we do not do that, inflation expectations change and you might get into this cycle where it becomes very, very difficult to get back down to a reasonable level, and that has all kinds of bad implications for families, for investment, for businesses, and for
the country. So we've got to get that under control. The scenario for me of a rate cut, which I don't think is what's going to happen, is that inflation really starts to come down robustly through the course of this year. You know, my models and my team and my outlook really tell me that we're I'm expecting to be in the high the mid to high threes by the end of this year, and that's still quite a ways from two percent. If I was wrong and inflation was much lower than that, then there would be a
conversation on it. But I think right now, if you had to tip the skills, the next move is going to be an increase or a cut. It's pretty heavily weighted to the end for me at the current moment.
I have a leftfield question for you because this just came up in the last twenty four to forty eight hours, the State of Florida banning the use of a central bank digital currency as the monetary overseer for the state of Florida from your Atlanta office. Does that make any sense to you?
I have not been in any conversation, so Noah's motivated that. You know, we at the federals A have done some study of this. We had a white paper, lots of questions. It's something we're mouling. I don't think something like that is imminent, but I don't know. Maybe they know something I don't, But yeah, I'm not really having a lot of conversation on that.
This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak