McCarthy Debt Ceiling Battle with Biden; Amazon Falls on Cloud Forecast

From the Bloomberg Interactive Burgers Studios. This is Bloomberg day Break for Friday, April twenty eighth.

Coming up today, Kevin McCarthy turns up the heat on President Biden to avoid a debt sealing crisis. Will bring you our interview with.

The House Speaker, a whipsaw session for Amazon following its earnings report and cloud forecast, and US officials are reportedly coordinating talks to rescue First Republic Bank.

Your governor, Hocles sends, A conceptual agreement has been reached in a budget with a state legislature. Was a deadly runching attack on Kiev. I'm John Tucker. More ahead, I'm.

John Stashdaron Sports. The Jets and Giants both drafted defensive players. Wins for the Mets and Yankees. The Devil shut out the Rangers in Game five.

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 Appen everywhere you get your podcasts.

Good morning, I'm Amy Morris and I'm Karen Moscow. Here are the stories we're following.

Today. First House Speaker Kevin McCarthy is escalating demands for President Biden to avoid a debt seialing crisis. He tells Bloomberg he thinks the Senate and President are ignoring the issue while a Republicans want to raise the debt ceiling and cut spending.

We help the supply chain.

We we pill eighty seven thousand IRS agents, We make America energy independent. We cut the red tape so we can build things again in America. I don't think that's radical. They haven't done anything on the debt ceiling, and the President has ignored this problem. He's actually putting the economy of America in jeopardy.

Senate Democrats have declared McCarthy's bill dead on arrival. President Biden and Congressional Democrats oppose the measure because it attaches sweeping spending cuts as a condition for raising the debt ceiling. Stay tuned for our complete extended interview with Speaker McCarthy coming up shortly on Bloomberg Daybreak.

Meantime, maybe there's concern among Democrats that President Biden's reelection announcement is not exciting voters. The President's campaign reports not raising much money following the Tuesday announcement, and Bloombery Scott Carr has more from Washington.

Sources close to the campaign say the sluggish fundraising comes primarily from a lack of outreach to major donors who can boost early totals by making large contributions to the Democratic Party. They say ultimately Biden will have no trouble raising money, but that the campaign had planned to release fundraising totals after forty eight hours with the hope of

Thank you, Scott, speaking of Donald Trump. As former Vice president Mike penns has now testified before the federal grand jury investigating the plot to overturn the election. We get that story from Bloomberg's Ed Baxter.

Pence is the highest profile person to do so, and it is significant because he has inside in for at the highest level of Trump's activities to try and undermine the process. Penn spent several hours before the grand jury being used by Special Counsel Jack Smith. Also of significance is the swiftness in which it took place, so fast after Trump lost his bid to have Pen's appearance blocked and before his team had the chance to file for the Supreme Court. The details of testimony, of course, our

All righted, thanks, We'll turning to the markets now. Regional bank turmoil remains in focus. We have new developments on First Republic and we get the details from Bloomberry. Steve Rapoboard, Good morning, Steve.

Good morning, Karen and Amy. Officials from the FDIC, the Treasury Department, and the Federal Reserve are huddling with companies to discuss a possible bailout for First Republic. That's according to Reuter's, which also says the government is recruiting more parties for the effort, including banks and equity firms, but

Thanks Steve. Amazon's also seeing volatility this morning. Initially earnings boosted at Amazon stock around twelve percent. Now it is down one point three percent in early trading. On the company conference call, Amazon warned that growth in its cloud business is cooling. Here's chief financial Officer Brian Olsovski.

As expected customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter, and we are seeing these optimizations continue into the second quarter, with April revenue growth rates about five hundred basis points lower than what we saw in Q one.

CFO Brian Olsovski says Amazon's most profitable division saw a sixteen percent gain in revenue, the slowest growth rates since Amazon began breaking out the unit sales.

Well, let's check some other stocks on the move this morning, Amy shares of Intel at more than four percent, the ship maker promising a recovery in the second half, leading investors to look past a disappointing profit margin forecast for the current quarter.

And shares of snap are plunging more than nineteen percent. This morning, the snapchat maker reported its first ever decline in quarterly revenue after making major changes to its advertising tools, and.

In Asia overnight amy the major focus was on monetary policy. The Bank of Japan announced plans to scrap its guidance on future interest rates at its first meeting under new governor Kazuo Uweita. At the same time, the BOJ is keeping stimulus measures unchanged as it seeks stronger inflation, and Bloomberg's Kathleen Hayes is in Japan to cover the policy decision.

A little longer term, their view of inflation could change, and they're still very concerned that they are going to end policy eating too soon. They're going to make the same mistake they made back in the early two thousand when governor with a dissensive against a policy vote to raise rech what had to later be turned around had to cut. Many people remember that the BOJ I've heard that over and over and that's why they are so reluctant, and it surprises people. But the place's rising.

This here is way of up target, and that's Bloomberg Kathleen Hayes well inflation may be above target. The BOJA projects price increases will be below two percent again in three years time. The Central Bank is also calling for a long term review of its policies. And this is Bloomberg.

Thank you, Karen, five oh seven on Wall Street. Fifty one degrees in cloudy in New York this morning, rain moving in this afternoon. We're going up to sixty degrees today, windy and rainy tonight, down to fifty. Time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's John Tucker. Good morning, John and Amy.

It took several weeks past the April first deadline, but New York Kemnaccathy Hockel finally announced a tentative deal on a two hundred and twenty nine billion dollars state budget. Hockel says that would provide major changes to New York bail laws.

The agreement removes what is known as the least Restrictive Means standard, which many judges have said tied their hands. It gives judges discretion they need to hold island criminals accountable, while still upholding our commitment to a justice system that is fair and accessible to all.

The governor also says the budget includes an increase in the minimum wage from fifteen dollars to seventeen dollars in New York City, Westchester County, and Long Island by twenty twenty six, and in the rest of the state a year later. It also provides funding for New York City's transit system. The woman accusing Donald Trump of rape went through an intense cross examination at the rape and defamation lawsuit against the former president. For hours, defense attorney Joe

The Air Force has initiated an investigation, as you know, the Air Force Inspector General is investigating the wing as you highlight my understanding, as they have suspended, temporarily suspended two leaders within that unit.

Meanwhile, the judge presided over to SHARE's detention hearing put off an immediate decision whether the twenty one year old should be kept in custody until his trial and a tri state icon is gone. Stu Leonards Senior has died. Leonard founded a dairy store in nineteen sixty nine that became a regional grocery powerhouse. Under his name, Stu Leonard Senior was ninety three global news twenty four hours a day power blymore than twenty seven hundred journalist and analyst

All right, thank you, John. It's five to ten on Wall Street time now for our Bloomberg Sports update. For that, we bring in John stashaer.

Thanks Amy first round of the NFL Draft in Kansas City. Most felt the Jets to try to take a player to help out Aaron Rodgers. Their defense last season was very strong, yet they took a linebacker with the fifteenth pick, Will McDonald fourth from Ihowa State. Giants in recent years tried to improve their offense. This time they also went defense.

Live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on SiriusXM, the Bloomberg Business Appen Bloomberg dot com. This is Bloomberg Daybreak.

Good morning, I Amy Morris. Let's get more of that interview now. With Kevin McCarthy facing a fractured caucus, the House Speaker secured a successful vote on his debt sealing proposal. Its passage puts pressure on President Biden and Democrats to get a deal done and avoid a US default, And now McCarthy's accusing President Biden of purposefully putting the economy at risk. The President, for his part, says he would veto with the Republican bill.

Happy to me with McCarthy, but not on whether or not the debt limit gets extended.

More of them, that's not negotiable.

President Biden is calling for negotiations, but McCarthy says the President and Democrats can avoid a debt sealing crisis by embracing the Republican plan. The House Speaker sat down with Bloomberg's and Marie Hordern to discuss this all late yesterday. He says the Democrat controlled Senate has nothing, has done nothing to avoid a debt sealing crisis, and accuses the President of ignoring the problem. Let's bring you that conversation right now.

Many people doubted you were going to be able to get this bill passed through the floor.

You prove them wrong.

You successfully got it through the floor two hundred and seventeen voting in favor of you. President Biden, though, says he's only going to meet with you if you separate the fiscal spending cuts the budget with the debt ceiling.

So what comes next, Well, I.

Don't know because it was eighty five days ago. I sat down with the President February first, talking about finding a sensible, responsible way to raise the debt limit and make us less dependent on China, curve inflation, and bring growth to this economy. And that's exactly what we just did. The President then said he wasn't going to meet with me until we showed him a plan. So then I

And we did it with ideas that he has voted for work requirements. He voted for that as a Senator.

But more importantly, just a couple months ago in Wisconsin it passed with eighty two percent of the vote to limit our growth in the future so government doesn't get out of control. Well, that's an idea from Joe Manchin. We help the supply chain, We pill eighty seven thousand IRS agents, We make America energy independent, We cut the red tape so we could build things again in America.

I don't think that's radical.

And the words that are coming out of the White House that we are going to melt children's bones, we're going to create asthma.

There's nothing in the bill that does that.

It actually protects veterans, protects our military, makes his cur of inflation, but keeps us a stronger pace for the future.

So Biden didn't say, though, show me a plan. He said, show me a budget. This is just a proposal, but it's not exactly a budget. But he is signaling an openness if these two were separated. So why not just pass a debt ceilings? This is what Congress is scheduled to do and has to do for the full faith and credit of the United States.

And then at the same time have.

Those negotiations regarding a budget for.

The fiscal year.

Okay, well, let me just clarify to your viewers so they don't get mixed up like you did. A budget has nothing to do with the debt ceiling. And so you said we should pass a debt increasing a debt ceiling.

That's what we did yesterday.

We increase the debt ceiling by one point five trillion that goes into the next year. We also helped grow the economy, curve inflation, and make savings. So we did everything everybody requested of And what people really need to look to is the president has done nothing. He's ignored it for eighty five days. And if you wonder, has this ever been combined together?

Yeah? Has the president ever voted for that? Yeah?

He voted for it for four times. And the four times he voted against the debt ceiling, you know why he said he did because he wanted to see more fiscal changes without he didn't want to vote for clean debt ceiling. Every single time we move forward on the debt ceiling, last time, Nancy Pelosi said she wouldn't raise the debt ceiling without the economics the spending decided upon. We watched Chuck Schumer say the leverage all he has is to deal with the debt ceiling. So I don't

Called the Biden talks.

Biden ridiculed anybody who wouldn't sit down to negotiate. So I'm not sure if he can't remember what he did in the past or what he said in the past.

But the one thing I do know for history is we have never defaulted.

And the House is the only place that has taken in action to already raise the debt ceiling through the House and actually put an economic plan that has savings. We're at thirty two trillion dollars in debt. That's bigger than our entire economy, twenty percent bigger. The current Congressional Budget Office says we're going to pay ten point five trillion dollars just an interest in the next ten years. But compare that to what we paid since nineteen.

Forty till today, eighty three.

Years, only nine trillion if we continue down this path for the first time in the history of a ten year window of any president, Transportation, Medicare.

And Social Security go in solve it.

So he's actually cutting those programs and just sitting there ignoring it, treating it like he treats the border, ignoring it.

Think it'll go away. It will not go away.

So you want these two issues to be congruent with each other, and you want budget talks to go alongside raising the debt ceiling with the White House wants a

You know what I'm taking exactly what Nancy Pelosi said as the last speaker, that the just a debt sealing vote cannot pass the floor without dealing with the budget. We are at a thirty two trillion dollar deficit. When are we ever going to take this up? The Democrats had added six trillion dollars. The President wants to spend more money than he spent during COVID.

So let me ask you this.

To the American public, more than seventy percent believe we should sit down to negotiate. That's the design of government. But should we actually save money too? Is there nowhere in government that you could save money? What about the billions of dollars that have already been appropriated for the pandemic. The President signed a bill this year that the pandemic has ended. If this money has dormant for two years and not spent during the pandemic, why should we spend

Why don't we protect so we don't.

Have inflation in the future and actually curve how much government can grow by It grew by thirty percent under the Democrat control, so we cap it at one percent. That's an idea of Joe Manchin, a Senator and a Democrat. Did you see what Joe Manchin said today? He said, if the President does not sit down and negotiate with the speaker myself, that the American public will blame him for the first historical default.

In American history.

And that's exactly what has the last eighty five days.

Yes, and he also talked about a common sense compromise. So your question to you, if there was a compromise, do you think you're going to have the unity in your caucus that you were able to receive last night.

You know, that's a great question because that's the same question I had all week whether I could pass this bill. You know what happens with a compromise. We can get something together. It's what I sat down with the president the very beginning in February.

First, I said, mister.

President, why don't we sit down and work through it. There's two things that I will not do, mister President. I will not raise taxes and we will not pass a clean debt sealing. But we can talk about everything else. We could spend less money, we could secure our border. We can make ourselves energy independence so we make more jobs. We could do work requirements, we could claw back COVID money. All of that could save, and we could try to

Show me what yours is.

The Senate has done nothing, the President has done nothing, So tell me where is their compromise.

We're the only people.

That have passed a bill that will raise the debt limit so we won't have economic and a default.

The President has not, so I'm not quite sure what he's doing.

Well, the President did put out a budget, and he has said that he was waiting for the Republican budget. But I do agree with you in the sense that this is an opening salvo of these negotiations, since you were able to pass this plan. I'm guessing the White but understand reaching out because I saw their statements. I just want to quickly ask you, though, because at some point the Senate, well they're not going to they say it's debt on arrival. But what do you make of

Okay, but before I answer that, we have to clarify. You have said something twice about a budget. Okay, you have to understand this is not a state capital. When we pass a budget in the House, it never goes to the president. A budget resolution is not binding. You can pass a budget, but it doesn't raise the debt limit. So don't confuse a budget with a debt. We are coming up on a debt limit here in June or July. That's where the default raises. So what the House did

You mentioned medicaid. I know that this bill also accelerates some provisions to next year instead of twenty twenty five in access to medicaid. And I'm sure you've seen the ads the former President Trump is running now against Ron de Santis. President Donald Trump is saying that he wants to keep Medicare and social Security and he's going after Ron DeSantis and what he said in the past on that.

Okay, again, I don't want to correct you, but you said two different things here. Okay, you talked about medicaid, Medicare and Social Security.

Those are three different things in our bill.

It doesn't It only protects Medicare and Social Security. Currently, the President would cut it by doing nothing medicaid.

All we do is in Medicaid.

If you are able body and you have no dependence, it could as a work requirement. Now, what does that actually mean? Twenty hours? That means you could go to school for twenty hours. That just means you're looking for a job. It helps you that we find every satistical point in the past.

It puts more people to work.

This is the exact same thing that Wisconsin just a month ago had an election statewide where the Democrats were very successful. They overtook the Supreme Court, and on the ballot there was a work requirement for Medicaid. It's paid half by the state and half by the federal government. You have an f map not exactly equal there. But what it does is it passed by eighty two percent of the vote. So you know what's interesting here is this is what passed and was signed in the law

Those were the two.

Things that President Trump was talking about, and so our plan actually strengthens those What President Biden is doing is automatically cutting those because they come in solvent if his budget is put in place.

I want to quickly ask you about something else that's circulating today. Russia TV has been airing this video of the Fed Chair Jay Powell, who he thinks in the moment he's talking to President Zelenski, but it's actually his Russian pranksters. There's been a long list of foreign officials and politicians that these pranksters have gone after. You are the Speaker of the House. I'm curious, have you ever

Now I haven't sat down with real Zelenski, but I have had the pranksters try to get me, and they did not. My staff actually did the backwork and found out they were pranksters.

But there's a long history here. We had Adam Schift fell.

For this and said some really stupid things, and he did that as the chairman of the Intel Committee.

Which was shocking to me that he would do that or the things.

But he was so driven to go after President Trump at the time, he would talk to anyone and believe anything they would say. Now did this to Colon to J Powell with the Federal Reserve, which elected officials need to be warned and need to do double checking before they.

Take these calls so they have a clear understanding.

You are listening to 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