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Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
Karen, we begin with deadlock in DC. Congress has blown past a midnight funding deadline to trigger the first government shutdown in nearly seven years. Democrats and Republicans remain in a spending standoff. The Democrats want to attach healthcare and other policy changes to a stopgap spending bill. Senate Minority Leader Chuck Schumer is blaming the majority party.
Republicans once again rejected democrats proposals to avoid a shutdown, fixed healthcare premiums and spare Americans the calamity of skyrocketing through the roof healthcare costs.
Senate Minority Leader Chuck Schumer says unless Congress act Obamacare, tax credits will expire at the end of the year, in premiums will spike. Majority Leader John Thune says Democrats are to blame.
Democrats may have chosen to shut down the government tonight, but we can reopen it tomorrow. All it takes is a handful of Democrats to join Republicans to pass the clean, non partisan funding bill that in front.
Of US Senate Majority Leader John Thune and his fellow Republicans needed at least eight Democrats to support the funding bill. Only three voted, with all but one Republican in favor of it last night.
Nathan, the government shutdown means key services for Americans and pay for federal workers are suspended. President Trump is tying the healthcare funding stand off to immigration.
They wanted to be able to take care of people that have come into our country illegally, and no system can handle that. And so we're totally opposed on that. But we can't take care.
We just can't do it.
I'd love to do everybody, I'd love to do.
The whole world, but.
Our country can't handle people that come into our country illegally.
President Trump spoke to reporters from the White House a lawn. He's suggesting his administration will use this shutdown to conduct mass lay offs of federal workers beyond temporary furloughs. The Congressional Budget Office estimates about seven hundred and fifty thousand federal employees will be sidelined each day the government is shut down.
And Karen Bloomberg Economics estimates the shutdown could send the unemployment rate from four point three to four point seven percent. That's if it lasts for three weeks, and those furloughed workers count as temporarily unemployed. Historically, much of the economic impact from shutdowns has been recouped after it ends, but during the last one, the Congressional Budget Office estimated the US economy failed to recover three billion of the eleven billion dollars at lost in overall output.
Well Nathan us Dock Index futures are slipping with the start of the first government shutdown in nearly seven years. We get more with Bloomberg's John Tucker John Good Morning, Hey.
Good morning, Karen.
Traders say if the shutdown stretches from days to weeks and could intensify concern over an economic slowdown and drive treasury yields and stocks lower. Well, the shutdown also means that key economic reports they're on hold, that includes Friday's critical jobs report, and traders fear that the loss of visibilities is going to lead markets in the dark and the outlook for monetary policy from the Fed. Daniel Polliot oh Tree Capital Management sees it this way.
In the past, shutdowns have had a limited effect on bonds and stocks, but with valuations so stretched in equities today, this time potentially could be different.
Well, non essential fedal workers will be furlough. The Trump administration has said they're looking to make some of those cuts permanent, and that could create a shock, just as FED policy makers are focusing on the labor market in New York, John Tucker, Bloomberg.
Radio, Okay, John, thank you, speaking of the labor market. The White House has withdrawn the nomination of EJ. And Tony to lead the Bureau of Labor Statistics. His nomination was seen as an attempt by the President to gain control over the agency responsible for that key economic data, including the monthly jobs report and the Consumer Price indexis is used to measure inflation. Bloomberg's Miles Miller has more on the surprise reversal.
E j.
Antonio was just to partisan from the Heritage Foundation, which has a lot of connections to the current Trump White House, and surely that he was just to partisan, and in addition to that that they did not feel he would have a smooth sailing on Capitol Hill.
Bloomberg's Miles Miller ads the Senate had not yet set a date for a confirmation hearing.
Nathan as traders remain in the dark with economic data. Should the shut down carry on, they may rely more heavily on fed's speak. And we heard from Chicago Fed President Austin Goulsby yesterday discussing the impact of tariffs on interest rates.
I thought rates are going to come down in that environment, and I was saying I thought they had a fair bit of ways to go when they announced the tariffs at those kind of rates, especially in manufacturing, also in agriculture. It was the hair on fire kind of moment where a lot of folks in the in various manufacturing industries were saying, we can't if these are the rates, we're not going to survive. We're going to see a real closing out.
Austin Golesby spoke at an agricultural conference hosted by the Chicago Fed. He also expressed concern about some government official supporting the idea of giving the Trump administration the power to influence interest rates.
While the standoff continues on Capitol Hill, Karen, President Trump says his administration is close to ending a standoff with Harvard and finalizing a five hundred million dollar deal. Speaking in the Oval Office, alongside Education Secretary Linda McMahon. The President explained what Harvard plans to do once that agreement is reached.
Well in the process of getting very close, and Linda's finishing up the final details, and they'd be paying about five hundred million dollars and they'll be operating trade schools. They're going to be teaching people how to do AI and lots of other things.
President Trump's deal with Harvard would end one of his highest profile class with American universities. It's not clear if the settlement would include an independent monitor at something Columbia University accepted in its own agreement.
And finally, Nathan and Company news Pfizer has agreed to cut some prices by up to eighty five percent and sell directly to the public in the US. The move allows Pfizer to avoid tariffs on the pharmaceutical industry for three years and addresses President Trump's argument that Americans are paying more for medicines and remarks heard here on Bloomberg. Swiser CEO Albert Borla talked about the deal at the White House.
For years, other rich nations refused to pay the first serve for the medical innovation, and as a result, Americans had to assume this proportional cost on their soldiers. This situation we all knew is not sustainable.
Heiser CEO Albert Borlow is speaking alongside President Trump. Other major drug makers are expected to follow the move. Time now for 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 Modica Rigs Monica, Good morning, Hey.
Good morning, Karen.
A federal judge says the Trump administration unconstitutionally targeted non citizens for deportation over pro Palestinian protests. Bloomberg's Amy Morris has that story from Washington.
A federal judge in Boston ruled a US policy that targets international students for removal on idiological grounds is unconstitutional, violating the First Amendment. The judge says the policy was arbitrary and capricious, and accused Homeland Security Secretary Christy Nome and Secretary of State Marco Rubio of misusing their powers. US District Judge William Young also ruled the administration violated the Administrative Procedure Act, so a hearing on that is
to be scheduled later in Washington. Amy Morris Bloomberg Radio.
President Trump says Hamas has a few days to accept a peace proposal.
He says, Israel's already agreed to.
We're going to do about three or four days.
We'll see how it is.
All of the Arab country signed up, the Muslim country is all signed up, zeels all signed up. We're just waiting for Amas, and Amas is either going to be doing it or not. And if it's not, it's going to be a very set and.
He says the deal would include the release of Palestinian prisoners in exchange for hostages. Rescuers are scrambling now to find survivors after a powerful magnitude six point nine earthquake at the Philippines last night.
At least sixty nine people have died.
Meantime, forecasters watching two big storms in the Atlantic. Here's Bloomberg's meteorologist Craig Allen.
Hurricane Umberto is still in the Atlantic, a category one with eighty mile per hour winds less than three hundred miles away from Bermuda, but will ride up and over Bermuda and stay away from the island except for the
rough surf and dangerous speech erosion and rip currents. Meanwhile, Hurricane of Melda has become the more important storm with eighty five mile per hour winds and is on a track right now to directly hit the island of Bermuda with winds that could exceed one hundred miles per hour. May very well be a Category two.
Global news twenty four hours a day and whenever you want it with Bloomberg News.
Now.
I'm Monica Rix, and this is Bloomberg Karen Nathan, Thanks Monica.
Time now for our Bloomberg Sports update, and for that we bring in John stash Hour.
Thanks Karon.
The start of the baseball postseason three low scoring games, and then the Dodgers beat the Reds ten to five in LA. They hit five home runs, two by show Heo Tony. The Red Sox beat the Yankees three to one. Garrett Crochet at one point retired seventeen banners in a row Detroit one two one in Cleveland, Derek scugelstruck at fourteen. That comes with back to back home runs in the fifth inning, beat San Diego three to one. The Angels, another team that will need a new manager next season.
Ron Washington will not return. He didn't manage the second half this past season after heart surgery. That's your Bloomberg Sports update.
Stay with us more from Bloomberg day Break coming up after this.
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Good morning, I'm Nathan Hageren. For the first time in nearly seven years, a government shutdown is underway in Washington. But even before the funds lapsed just after midnight, the finger pointing had been well underway in the Senate.
The Democrat caucus here in town in the Senate has chosen to shut down the government over a clean, non partisan funding bill.
Republicans are plunging America into a shutdown, rejecting by partisan talks, pushing a partisan bill and risking America's healthcare.
And that was Senate Majority Leader John Thune and Minority Leader Chuck Schumer hours before this latest shutdown took effect. Joining us this morning, Terry Haynes, the founder of Pangaea Policy. Terry, good morning. This is the first shutdown in nearly seven years, but certainly not the first government shutdown ever. Will this one be any different.
Good morning, Hi, Good morning, Nathan. I think it will not be a lot different in the sense that it won't be very long, and in two weeks everybody will have forgotten what the fight was about, and there was very unlikely to be much economic impact. One major bank came out with a very good study that showed that of the fourteen shutdowns that happened since Reagan became president so forty five years ago, in ten of them, the S and P was up from the time that the
shutdowns started to the time it ended. So I think it's unlikely to have any lasting economic impact or markets impact, that's for sure.
Well, how do you see this playing out, because in the moments leading up to this, both sides seemed pretty dug in, particularly the Democrats when it comes to their demands for healthcare spending in a stopgap.
I think a couple of things. I think that firstly, you know I've said to you before. I think both alreadys want to shut down for political reasons and for different political reasons. Democrats need to show some fight and some resistance to the bad Orange Man, so they're doing that. I also think it's not going to be a long one for a couple of reasons. One is that, uh, you know, all all Democrats need. Democrats are the ones doing the asking, so I'm not being partisan here. They
have the more complicated position. Republicans just want to keep things open. Democrats want stuff. They say they want the healthcare stuff. All they need to do is to declare victory is get negotiations with the Republicans. Republicans have already indicated they're interested in doing that, just not on this bill. So that's a fairly easy win. Beyond that, you know, you can already see the cracks in Schumer's side. You had three defections yesterday Fetterman, Cortes, Mastow, and King, who's
independent but caucuses with Democrats. And the longer this goes on, the more pressure there will be from public employee unions, who are big supporters of Democrats to want to bring those folks back. So there's going to be a lot of pressure on the Maryland and Virginia senators who represent hundreds of thousands of those folks, and they'll be pushing for some sort of resolution. After that, you only need one more vote in order to keep the government open.
So you know, I think the tide goes out pretty quickly on Senator shum Or, unless unless he tries to declare victory here.
You mentioned the Maryland and Republican senators obviously constituents of a large number of federal employees there. Do you think this indication from President Trump that he could use this shutdown to enact mass federal layoffs could lead to some cracks here? Is that what you're getting at?
Oh?
Oh, exactly? So, yes, I mean there is a threat to government employees, you know, employment status that hasn't existed before. So far, the administration has not kind of pulled the ultimate trigger on this, instead talking about furloughing people instead of riffing or you know, completely getting rid of positions. But you know, that's a distinction without much difference to
people who are very concerned about their jobs. You know, I don't anticipate that there's you're going to have a situation where the four Democratic senators from those two states are going to you know, publicly break with Schumer or anything like that. But there's going to be an awful lot of pressure brought to bear to try to figure out something that helps and improves the status of those those public workers.
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