New Charges Against Trump; SEC Commissioner Talks Crypto

Good morning.

I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.

We begin with politics this morning, because former President Donald Trump is now facing new obstruction charges in the criminal case over how he handled classified documents. Amy Morris begins our team coverage from our Bloomberg ninety nine one newsroom in Washington.

These are new charges in the classified documents case, allegations that Trump and two employees tried to delete surveillance video footage at his Mara A Lago estate last year. In this latest indictment, prosecutors accused Trump of directing workers to erase footage of a storage room where the documents were kept, days after his lawyers received a subpoena for the footage. It also includes one additional count, accusing Trump of willful

All right, Amy, thank you. All these new charges has put even more legal pressure on the former president. We continue our team cover to this story with Bloomberg Justice Department reporter Chris Strom.

This most likely will extend the timeline for the Trump case. It's very possible that what Jack Smith is trying to do here is get Deolavera to flip on Trump, and by bringing these charges, he's looking to put pressure on Dale Lavera and have him break off from Trump. They're all lumped together now in the indictment, Trump, Walt Not and Dale Leavera. And at this point the Special Council is going forward with the prosecution.

And Bloomberg's Chris Strom says there's still more legal trouble on the horizon for former President Trump, paways of potential third indictment over efforts to overturn the twenty twenty election where on that could come any day now.

Now, there are new developments in geopolitics. This morning, Karen new tensions between the US and China, and this time they come by way of Hong Kong. The Washington Post is reporting that the White House is barring Hong Kong's leader John Lee from a major economic summit this fall. Bloomberg Daybreak Asia anchor Brian Curtis has more from Hong Kong.

John Lee is sanctioned by the US for his role in Hong Kong's crackdown on civil liberties. The Post cited three unidentified US officials as saying Lee would be barred. Hong Kong government issued a statement saying the APEC meeting does not belong to any one country and the US should fulfill its responsibilities as a host. Now blacklisting Lee will surely raise tensions. The US recently condemned Hong Kong after it put bounties on eight democracy activists activists wanted

Daybreak, Hi, Brian, thanks well.

Turning to the markets now, we've seen bond and currency markets jolted overnight by the Bank of Japan. Global bonds fell after the BOJ announced more flexibility in its yield curve control policy, and that spurs speculation of more changes to come. Bloomberg macro strategist Mark Hudmore says letting long term interest rates rise above their cap was a surprisingly hawkish move.

Effectively, what they've raised the hard cap to one percent, and even then they haven't said it's going to be unlimited purchases of jgb's out of one percent yield. It's just going to be daily purchases, so that's basically move the hard cup up from point five percent to one percent. That's a point five percent move there in that cap.

And Bloomber's Mark Cudmore says loosening a yield curve control marks the first surprise move from the Bank of Japan's a new governor. It could make the yen a more volatile trade. In checking the yen right now, it's at one thirty nine point five to two against the dollar.

And back here in the US, Karen earning season continues to rumble on with key guidance from Intel. The chip maker issued a bullish revenue forecast, indicating demand for computer components is improving. The outlook follows a slow start to the year and makes good on a promise from Intel management that the second half of twenty twenty three will show improvement and checking shares of Intel right now they are higher by nearly seven percent.

And Nathan, we also got earnings from master Card, the company saying cardvolume rows more than expected to one point eight trillion dollars that beat estimates. MasterCard says overseas travel and other entertainment is primarily driving the increase. Earlier this week, Visa also noted that spending on its cards jumped and also cited hire volumes tied to travel.

Okay, so while travel spending a peers healthy care and commercial real estate that's a different story. Now we're learning US office data are on track to set records, but for the wrong reason. Bloomberg's John Tucker explains.

The amount of office space in the US is declining for what's likely the first time in history. The real estate services company Jones Langlessal. Says less than five million square feet of new offices broke round in the US so far this year, while fourteen point seven billion square feet has been removed as good mark what is believed to be the first net decline ever. The closest we came to negative inventory historically would have been during the

All right, John, Thanks. We also have an important note from the airline industry. American Airlines and negotiators for its Pinelists union reached a preliminary agreement on a proposed contract. It'll include higher pay and benefits more closely aligned with a labor agreement at United Airlines.

And if you've been feeling extra hot this July, it's not just in your head. This month is set to become the world's hottest on record, the first twenty one days of this month for the hottest three week period, with July six seeing its highest ever global average temperature. And now it's time to take a look at some of the other stories making news in New York and around the world with Bloomberg's Michael Barr. Happy Friday, Michael.

Happy Friday to you, Nathan, and more. On the heat that you just mentioned, Excessive heat warnings remain in place for New York City and a lot of the Tri state area. Today, New York Mayor Eric Adams and we need to be clear when we talk about hot weather. Heat kills more New Yorkers every year than any other kind of extreme weather event, and access to cooling is a matter of life and death. Mayor Adam says the

Growing cascade of damage and disruption, all because one senator from Alabama and forty eight Republicans refused to stand up to them to lift the blockade over the Pentagon policy offering servicemen and women their families access to reproductive healthcare rights they deserve if their station in states to deny it.

Tubberville is protesting the Defense Department policy put in place that provides paid leave and reimburses costs for troops who travel to another state to get an abortion. The Biden administration is set to tighten fuel efficiency standards of alltomakers. Bloomberg's at Baxter reports.

The proposed rule is expected to be applicable to years twenty twenty seven and beyond. The move comes as gasoline prices are rising again. Details have not been announced, but previous proposals have it an averaging fuel economy by brand at forty nine miles per gallon. It also will push for half of all vehicles sold in the US to be electric or emissions free by the end of the decade. It could be issued as early as today. In San Francisco, I'm at Baxter Bloomberg Daybreak.

A founding member of the Eagles has died. Randy Meisner added high harmonies to some of the Eagles' favorites.

To the Minute, along.

With take It to the Limit. Meisner also gave us take It Easy and the best of my love. The band says. Meisner died of complications from COPD. Randy Meisner was seventy seven global news twenty four hours a day, powered by more than twenty seven hundred journalist and analysts over one hundred and twenty countries. How Michael Barr, this is Bloomberg.

Nathan, Thanks Michael.

Time now for the Bloomberg Sports update. Here's John Stashauer.

All right, Nathan, we have an answer to the question surrounding the Mets the past several weeks. Will they be buyers or sellers at the trade deadline? They are sellers. They just traded their best reliever, David Robertson had the lowest era have any picture on the staff sent to Miami for two rookie minor leaguers.

The Marlins are in it for.

A wildcard playoff spot, and the Mets really are not. Although they didn't win last night at City Field, they scored twice in the eighth inning to top Washington two to one. The Yankees flates to let in Baltimore, and it said to me likely that Aaron Judge will be in the lineup out Since early June, with the injured toe of the Yanks two and a half game out of a playoff spot, the Angels are just behind the Yankees.

Some people may agree or disagree with this and you know, sit out or sit in, and I feel like for it this year specifically, the best thing that I can do for myself would be coming back, going out there and play the game that I love, playing for my teammates, doing something I want to do.

So this little kid, Barkley called it in Epiff and A Giants did sweeten the deal to entice and from college football Colorado now coach by Dilon Sanders left the Big Twelve, joined the Fact Twelve. Now going back to the Big Twelve. Lebron James and son Brownie out of the hospital in LA after suffering that probacter rest Johns stashedward bloom Sports.

From coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias exam the Bloomberg Business app in Bloomberg dot com. This is Bloomberg Daybreak.

Good morning.

I'm Nathan Hager. Every aspect of finance is affected by the artificial intelligence. Boom and Wall Street's main regulator is taking notice. The securities and Exchange Commission is proposing restrictions for brokerages and money managers that use AI to interact with clients. Chair Gary Gensler says it's about firms putting client interests ahead of their own. Gensler talked about that and his moves to further regulate the crypto industry in

I'd like to begin with your newest rules that you just unveiled yesterday, putting restrictions on brokerages and money managers and their use of AI to interact with clients. What is your primary concern with the adoption of this technology that you're trying to address?

First, Kayley, it's good to be with you.

But talking about this, I think that predictive data analytics, including artificial intelligence, is the transformative technology of our times, and every bit is transformatives to the Internet or mass production of the automobile one hundred years ago.

Now, what are we trying to address?

When an investment advisor or a broker works with you as an investor, they're not supposed to put their interest the advisor's interest ahead of yours, Kayley, as an investor. And so what we're trying to do is make sure that the technology aligns with that standard, that the technology that can predict about each and every one of us so much about how we might react to a little behavioral prompt or a little knowledge how we might react.

And of course the AI move wasn't the only one you made yesterday. You also just approved a plan to require companies to disclose cyber breaches within a four business day timeline.

Why is that the appropriate time break.

Well, if I could just give a little bit more, it's about material.

Incidents.

So if a company lost a factory and that factory is wiped out, and that factory is material to its operations, let's say, because it's lost to a hurricane, investors need to know when they're buying and selling the stock. In a similar way, if you had a cyber incident that management determines as material, you know, hundreds of millions of files lost or something or compromised, investors benefit from that disclosure.

But giving business is just four days to disclose that.

That's what we have in our rules today currently for businesusiness days if you have, like if that factory was wiped out by a hurricane, to put out the material information.

And so that's consistent with rules on the books. And by the.

Way, many companies have been making such disclosures, some haven't. It's been fragmented and we thought it was important to bring some consistency to it around these material events.

Mister chaired Danny Berger here in London, really wonderful to speak with you today now now on some of your proposals when it comes to equity market structural reforms. You joined Bloomberg TV back in March. You said, of market participants, give us your best advice, tell us what you think.

What did you get?

What was the best advice you got?

Well, we got in terms of equity market structure, thousands of comments.

So I would say that.

We're about at the SEC is trying to drive greater efficiency and competition in those markets. So when you send an order into a broker, that you feel that you're getting best execution in that order, and also that the markets themselves are competitive.

So one of our rules was about sort of.

Leveling the playing field between the lit markets, the so called New York Stock Exchange and NASDAK and so forth, and the wholesalers are dark market, which at times the dark part of the markets are between a third and a half of the market. So it's trying to bring some level the playing field and ensure that investors are getting best execution in these markets.

What about in terms of the feedback you got, are you taking any of that on board? Would you change anything considering what you've heard so far?

Well, we do that as a regular basis.

When we make a proposal, we put it out to public comment and get feedback, and we put out four separate proposals for different aspects in the markets, and I think we've gotten four to six thousand comments on each of them.

So and we naturally consider.

It and the staff makes recommendations about adjustments.

Okay, I'd like to discuss another proposed rulemaking that has received a certain.

Degree of feedback, your climate risk.

Disclosures, specifically as it relates to Scope three emissions. What conversations are you having around Scope three in particular.

Well, we've heard a lot from the public on this, but to set the stage companies today are making disclosures around climate risk. In fact, well over half of the top thousand or so companies currently make climate risk disclosures, including greenhouse gas emission disclosure. So we're trying to bring consistency to that and yes for investors that they can compare comparability for that. You asked about one part of greenhouse gas missions, so called Scope three, which is about the supply.

Chain and where a lot of the concern lines.

And so we've heard from a lot of commenters about that, both from issuers and investors. We understood when we made a proposal that this was not as well developed so called disclosures around supply chain emissions, and so we're taking that into consideration. And as I just chatted with your colleague, the staff considers what to recommend upon adoption and whether to make adjustments, so.

We could see you change there potentially.

Well, just as in the equity markets that I talked about, we do take these comments seriously, Kayley. It's a really rigorous exercise in climate. We got sixteen thousand comments, so it's a lot.

To sort of sort through. But the Scope III issue is one that we've heard.

Significant comments Interestingly, we've heard from I think forty eight or forty nine of the state farm bureaus literally about well what is this effect?

And we only.

Oversee the public companies, these six or seven thousand public companies.

That's it.

We are a disclosure based agency. I often say we're merit neutral.

We are not. You know, we're not.

This disclosure is about something already happening between investors and issuers, and it's an important thing to bring consistency. It's not about those, you know, those farmers and ranchers who thoughtfully wrote us.

So we've heard.

Okay, I'd like to move to a different topic which has gotten a lot of attention lately, Crypto, specifically a ruling that was made in the Ripple case that x R is only a security when sold to institutional investors, not so with retail investors. I know you've previously said you were disappointed by that ruling. The SEC has also said that it intends to seek further review. So does that mean you are going to appeal it? Can you elaborate on your thoughts around that ruling?

Kaylee? Great question, But the Commission, I'm one of five commissioners.

The Commission has not.

Acted on that, and if the staff makes a recommendation, we'll have a discussion of it and we'll take it up then.

But I don't really have anything more on you for you for that.

In the meantime, as we wait for this, what does it mean for your efforts around crypto, for your efforts to try to protect the consumer in these areas? Does it complicate it?

Look this field of crypto investing, a lot of investors should be aware. It's not only a highly speculative asset class, it's also one that they currently should not assume that they're getting the protections of the securities laws, even though the securities laws apply to many of those tokens without prejudging anyone, but you as investors are not getting.

The full, fair and truthful disclosure.

And the platforms, the intermediaries are doing things that we would never in a day allow or think the New York Stock Exchange or NASDAQ would do. The platforms often are co mingling and trading against you and have market makers that are on the other side of your trades, and we don't allow that in the rest of our securities markets and the securities laws are there to protect you.

And that's right now.

This is a field rife with fraud, rife with hucksters, and they're good faith actors as well, but there are far too many that aren't.

And of course you've brought cases against crypto exchanges on this point. But do you need to change tactic? Does it change anything for those cases? Again this XRP ruling.

Again, I'm not going to go into any one ruling, but I think that the securities laws are clear, and if you're if the public is investing in your project because they're anticipating profits based upon the efforts of that project, or there's entrepreneurs Congress painted with a broad brush, and I would ask you this, It's like when you look at a token, you can find a website, you can find a CEO, you can find a Twitter or x feed, whatever it's called these days, and there are entrepreneurs behind

Elsewhere in the crypto space, I'd like to discuss the spot ETF because we have seen a wave of filings recently recently from Blackrock and others trying to finally achieve this one has never been approved in the US, just a futures etf it seems like everyone thinks there has been a tone shift, that something is different this time around. What do you make of that wave of recent filings? Has anything actually changed for the.

Sec Kayleye, Probably won't surprise you. Those filings do ultimately come up to a five member commission, so I can't prejudge any filing. But back to your colleague, as I said, this is a field that there's a lot of non compliance in this field, and that the platforms themselves where trading is occurring of various crypto tokens. Though some of it comes under the securities laws, currently they're not necessarily compliant with those time test of protections against fraud and manipulation.

Okay, on the subject of securities laws, which obviously is your purview at the SEC. Just yesterday House Financial Services Committee passed through committee legislation on crypto market structure that would actually give more authority in regulating this space to the CFTC still has a long way to go if it were to become law.

But what is your thought on that legislation.

I sort of share my thoughts directly with members on the way I told them, I understand your question, Kayley, But I think that those members on the Hill would appreciate if I continue to share my thoughts directly with them.

Not too dissimilar. Mister Tara, I wonder if there's some degree that you would want a wider scope when it comes handing down fines to batter actors.

Do you think it would be helpful.

To have higher finds again in order to discourage certain behaviors.

I would say this, we have good tools at the SEC around not just penalties, but also what's called discoragement, to give back ill gotten gains and so forth. But if you're asking whether we could use more authorities, I would say, we need more cops on the beat, we need more resources. Our agency is just the size we were in twenty sixteen. We actually shrank, we've kind of come back, and yet the markets have grown so significantly in those seven years.

And finally, as you say you need more resources, I wonder how you feel about the ability of you to get those things from this Congress, in particular when you have certain members of Congress who have said things like introducing legislation to remove you as chair, referring to tyrannical chairmen, including the current one, does it mean it more difficult to do your job when there's that kind of political rhetoric out there in your efforts to protect investors.

We work closely with Congress and individual members, and I look forward to.

Those public debates. I think that.

We're really an important agency. The capital markets really wouldn't work without cops on the beat and rules of the road. Just think if you're watching soccer matches, if there were no refs on the field, what would that soccer match look like? It would look first more like rugby, and then after a while it would really look worse and fans wouldn't come to the field anymore or well most so, I really do think that it's important to have this agency, and we're part of these well regulated markets.

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 Nathan Hager.

And I'm Karen Moscow.

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