From the Bloomberg Interactive Workers' studios. This is Bloomberg day Break for Friday, May twelfth.
Coming up today, Janet Yellen speaks out on the debt ceiling. We bring you our exclusive interview with the Treasury Secretary.
The US graces for a record migrant sir to the border as Title forty two comes to an.
End, signs the tensions between the US and China may be easy.
And Elon Musk is close to naming a new CEO at Twitter.
The man who prosecutors saying put in New York City subway writer in a choke hold will be charged today. Bluss Upstate New York and the city clash over bussing migrants. I'm Michael Barber Moore. Hey, I'm John Staves Swards.
Sports losses of the Mets and Yankees. The Devil season ended in overtime, the Knicks at Game six tonight in Miami.
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.
We begin in Washington, where today's debt ceiling meeting between the President and congressional leaders has been canceled. Amy Morris has details from our Bloomberg ninety nine one newsroom in Washington.
House Speaker Kevin McCarthy says leaders agreed it would be more productive to let the staff continue talks behind the scenes.
The White House.
Didn't cancel the meeting.
All the leaders decided it's probably the best of our interest to let the staff meet again before we get back together.
Republicans say they'll agree to raise the debt ceiling in exchange for budget cuts. The President says the cuts should be a separate negotiation and that the current GOP proposal is just too harsh.
He wants to cut twenty two percent of everything that isn't defense spending, Social Security, or Medicare.
The meeting has been tentatively rescheduled for early next week. The Treasury Department warns the US could default on payments as soon as June first. In Washington. I'm Amy Morris, Bloomberg Daybreak.
All right, Amy, thanks well. Plenty of talk this morning on the consequences of not reaching a debt deal. We spoke with Treasury Secretary Janet Yellen just moments ago.
There is no satisfactory solution for the United States, a solution that will be good for the economy and financial markets, other than Congress acting to raise the debt ceiling. There are potential different paths that could be taken if that doesn't happen, but there is not a single thing that can be done that will save the United States from considerable economic and financial damage.
Treasury Secretary Janet Yellen made the comments to Bloomberg's and Marie hor Dern at the G seven meetings in Japan. Stay tuned for the full exclusive interview coming up shortly on Bloomberg Daybreak. Well.
Karen Jamie Diamond is also weighing in on the debt limits stalemate. The CEO of JP, Morgan Chase, says a US default would be potentially catastrophic.
The closer you get to it, you will panic, and so the closes you get you have, markets get volatile. Maybe there's Doc mar go down the Treasury. Markets will have their own problems. It's amazing you already have certain T bills trading three percent and right next one five percent. This is not good and people just remember the American financial system is the foundation to the global economics system, and so in the closes we get more panic, we might get downgraded.
Jamie Diamond's also chiming in on the banking crisis, telling us it's time for regulators to help put an end to the turmoil.
Well, Nathan, we've heard from Janet Yellen and Jamie Diamond on the debt ceiling. Now we're learning they'll discuss the issue together. Politico is reporting Yellen, Diamonds, City Group CEO Jane Fraser, and other members of the Bank Policy Institute will meet next week to discuss the debt limited pass.
Outside the debt debate, Karen focus remains on the southern border, where the US is facing a record surge of migrants. Title forty two restrictions ended just before midnight. Already this week, illegal border crossings have top ten thousand. Her day, Republican Senator Ted Cruz says the situation is overwhelming.
This is deliberate.
This is a decision that was made by President Joe Biden and Kamala Harris and Congressional Democrats open up the border to what is nothing less than an invasion.
Senator Cruz spoke along the border in Brownsville, Texas. The White House says tens of thousands of border agents are enforcing a new policy to deter illegal crossings. Democratic Congressman Henry Quaar of Texas says the border may be little more than a speed bump for migrants.
I'm looking at the numbers that Border Patrol has in their facilities, and I can say this, on the average, they're like one hundred and thirty five percent over. I mean that is capacity.
Democrat Henry Quaar of Texas spoke with Joe Matthew and Kaylee Lines on Bloomberg's Sound on Catch the Show weekdays from one to three pm Eastern Non Bloomberg Radio.
Well, we turn to geopolitics now, Nathan Us China relations are in focus. There is a glimmer of hope that tensions may be easing a bit. And Bloomberg's Ed Baxter has the story.
The two day meetings in Vienna between National Security Advisor Jake Sullivan and China's Foreign Minister Wang Yi. The White House characterizes it as substantive and constructive. The White House statement says key issues in the US, China bilateral relationship, global and regional security issues, Russia's war against Ukraine, and the crosstraight issues China. Shinwa fram the meeting in a
similar way, saying the talks were constructive. The hope is they will set the stage for a Biden She summit in San Francisco. I'm at Baxter Bloomberg Daybreak.
Thank you, Ed.
Let's turn to some corporate news this morning. Twitter appears to be getting a management change at the very top.
Let's get the details live from Bloomberg. Steve Rappaport, Good morning.
Steve, Good morning, Nathan and Karen.
Elon.
Musk says the next CEO of Twitter will be a woman, Though he didn't name the successor, signs point to an NBC Universal executive. The Wall Street Journal reports Linda Yakarino is in talks for the job. Yakarino is chair of Global Advertising and Partnerships at NBCUniversal Media. She helped launch the streaming service Peacock and also oversaw high profile events like the Super Bowl and the Olympics. Back in December, Muskin and Twitter poll asked users if he should step down.
More than fifty seven percent said Yes Live in New York. I'm Steve Rappaport Bloomberg Daybreak Right.
Steve, thanks, and we have economic data out of Britain this morning. The UK economy grew slowly in the first quarter, even though strikes sharply curtailed activity. In March, GDP was up one tenth of one percent from the prior year, and that left the UK on track for anemic growth in the first half.
And this is Bloomberg, Tim.
And I to take 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 Michael Barr. Good morning, Michael.
Good morning. Nathan, a marine veteran, will be charged today with second degree manslaughter and the death of another subway writer. On May first. Prosecutors in New York say Daniel Penny used a chokehold on thirty year old Jordan Neely, who witnesses say was acting erratically on the New York City subway and threatening other passengers. Protesters have been in the streets of New York since Neely's death. They were out again last night. Activist Selena Trell.
We need accountability and that comes from the mayor and the governor.
Because his death is on their hands on agitimizing that type of murder.
Activist Selena trell says there was no reason to strangle somebody to death. New York City and officials upstated are red odds, especially now that Title forty two has ended two bus loads and migrants have moved to a hotel in Newburgh. It comes as city officials are busting asylum seekers. North Residents of Rockland and Orange Counties have vowed to do everything in their power to prevent New York City
Mayor Eric Adams from bussing the migrants. Adams sent them up states, saying the city's resources are strained at maximum capacity. Representative George Santos was back at work on Capitol Hill to vote on a bill he co sponsored that would helps states go after people who committed unemployment fraud during the pandemic. The Long Island Republican himself was arraigned this
week on COVID unemployment fraud. South Carolina Republican Representative Nancy Mace is one of at least twelve GOP Congress members calling for Santos to step down or be expelled.
I was actually said in January before he was indicted on these thirteen charges that he should resign, and I stand by that as one of the first Republicans. We have to police our own and hold our own accountable. And that's what that's what we need to be doing today.
Congressman Santos has denied any wrongdoing. Donald Trump is appealing the verdict of a New York jury that found him liable for sexually abusing and defaming New York author E Gene Carroll and awarded her five million dollars in damages. Yesterday, the former president's lawyer filed a notice of appeal in federal court in Manhattan, two days after a jury decided
against Trump. Global News twenty four hours a day, powered by more than twenty seven i have a one hundred journalists and analysts in over one hundred and twenty countries. I'm Michael Barr, and this is Bloomberg. Nathan.
Okay, Michael, thanks time now for our Bloomberg Sports updates.
For that, we bring in John stash Hour. Thanks Nathan.
The NBA and NHL playoffs began with all five New York area teams, the Nets, Rangers, and Islanders all went out in the first round. That left the Knicks and the Devils, who trailed three games to won Game five at Carolina. Devils never trailed until seven minutes in just sudden death.
Ack for drewy back to Gostas there at the left point.
Now Cooke Kenya he.
Top of the right circle. Yes, said the joy to the Todd Ference Finals, the Trains winning three two three over Time nine nine and Raleigh the co Also NHL Dallas beats Seattle for a three to two lead. NBA Denver won by twenty five at Phoenix, won the series in six. Boston state alive with the game six win at Philadelphia. As for the Knicks, they trailed Miami three one. Now it's three to two, but Ken they win tonight in Miami games three and four. There the Knicks led
for only thirty three seconds over two games. Yankees and raise first to fourth the stadium. In a good look at why Tampa Bay is thirty and nine. Seven scoreless sittings from Drew Rassmussen raised broke open what was a scoreless game in the fifth inning. They won eight to two. They pulled away with six runs off three Yankee relievers. The Rays are nine games ahead of the Yanks, who will start Garrett Cole tonight. His last time out was in Tampa and Cole couldn't hold a six run lead.
The Mets were shut out in Cincinnati five nothing. They've lost thirteen to the last seventeen. Mike Anderson, fired by Saint John's, has filed a lawsuits seeking forty five million dollars thirteen in back pay thirty four more impunitive damages. Anderson claims he was fired without cause and that Saint John's used his buyout money to pay his successor, Rick Pettino, John Stashellward.
Bloomberg's courts.
Live from coast to coast, from New York to San Francisco, Boston to Washington, dcationwide on Siriusxam, the Bloomberg Business Appen Bloomberg dot Com.
This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. The only good outcome is raising the debt ceiling. That is yet another warning from Treasury Secretary Janet Yellen, who is cautioning on the catastrophic effects of a potential US debt default. Yellen says congressional leaders are running out of time and options to set aside their differences and find common ground
so the government can pay its bills. Janet Yellen sat down for an exclusive interview with Bloomberg's and Marie Hoarder this morning at the G seven gathering in Japan to discuss the debt ceiling and other issues facing the US.
Let's bring you that discussion right now.
Unfortunately for you, in a way, what is looming over this G seven meeting is these concerns coming out of Washington, the debt ceiling negotiations, as well as still tremors in the banking industry.
I want to start with the debt ceiling.
Sure, of course Wall Street is very.
Concerned about this.
There is that X state approaching that you laid out potentially as soon as June first. But there's an assumption on Wall Street that if there's no negotiated deal after June first, Treasury will still maintain payments on securities. Is that assumption correct?
Look, you know, all I can say is that there is no satisfactory solution for the United States, a solution that will be good for the economy and financial markets. Other than Congress acting to raise the debt ceiling. There are potential different paths that could be taken if that doesn't happen. But there is not a single thing that can be done that will save the United States from considerable economic and financial damage.
But this planned was outlined back in twenty eleven, and you were there at the FMC meeting about it.
It's said that.
Treasury principles and securities would be paid. Is this something that at least for contingency plan has been discussed with the president.
So my understanding I was at the FED in twenty eleven is that this plan was never presented to the President and never approved.
And would you present it now?
Look, we would.
We were working full time to work with Congress to raise the debt ceiling. That's where our focus is. We know that the only good outcome is one in which Congress act acts, as it has many times, almost eighty times since nineteen sixty, to.
Raise the debt ceiling.
What global markets and American households and businesses need to see is that we have a Congress that's committed to paying the bills that we've incurred as a consequence of our legislation, that we're not a dead beat country. And if Congress fails to do that, it really impairs our credit rating. We have to default on some obligation, whether it's treasuries or payments to Social Security recipients. That's something America hasn't done since seventeen eighty nine, and we shouldn't
start now. So we've not discussed what to do if that doesn't occur with the President. Our focus is on getting it done.
Because, as you know, treasuries are the bedrock of a global financial system, and the asset managers I speak to the investors, they don't have the luxury of not contingency planning, So at this point should they assume that debt may not be serviced if there's no deal.
Look, if Congres raise the debt ceiling, we face economic and financial catastrophe.
One way or the other.
And that's why our focus is on making sure the Congress does raise the debt ceiling. I feel that that's something we're going to succeed at doing, and we're working hard to make sure that that gets done.
As we get closer to June first, will you alert Congress on a more precise date?
Yes, I will update Congress as we have available information.
But anything new now or still June first.
Well, what I've said is early June, and potentially as early as June one. As we get closer, I may be able to provide more refined guidance. But you know, there is a lot of uncertainty about the exact level of cash balances and payments that we have to make from day to day, and so there remains a level of uncertainty about precisely when we would run out of cash to be able to pay the government's bills.
Jamie Diamond was on Bloomberg TV yesterday and he said he set up a war room for contingency planning. Are you actively speaking to executives.
I have talked, not within the last few weeks, but earlier, around the time in January when I sent my first letter, I talked to a number of bank executives. More recently, I've talked to leaders of business businesses in different sectors of the economy, and I will be meeting with senior bankers next week when I get back. But I want to understand how they're thinking about the debt ceiling, and what I'm hearing is that it is a grave source of uncertainty. That is one of the things that businesses
are really concerned about. One of the biggest sources of uncertainty in terms of many big American businesses.
That's where we're hearing too at Bloomberg.
How frustrated are you potentially that these bank executives are speaking to are not putting pressure on Congress, particularly Republicans.
Well, you know, Wall Street executives and American business people have always spoken out about their concerns about the debt sealing, and I think it's appropriate for them to talk about how they see the debt sealing is impacting the American economy and the global economy. So those voices, you know, we want to hear voices of people who will be affected by this.
On top of all this, there's still some tremors in the banking system. In two months almost to the date, we've had four US lenders fail, But the administration continuously says that the banking sector is sound and resilient. Is that a fair assessment when you look at the regional banking sector, Well.
The regional banks have been under some stress, but I think the banks that have failed have had some very unique characteristics that have made them vulnerable. The banks that failed tended to have substantial losses marked to market losses on their whole to maturity portfolios. So although their regulatory capital wasn't impaired, their tangible equity was diminished. And they simultaneously had a very high proportion of uninsured deposits. And
that profile is not very common. But look, a lot of banks, particularly regional banks, are seeing their earnings come under pressure. The amount that they're having to pay for deposits is rising, and in many cases their investments are at lower interest and their stock prices are coming under pressure. But most banks now, even including the ones that are seeing pressure on their stock prices, have solid liquidity, would be able to manage paying off on insured depositors if they were to flee.
Are you confident no other regional or small lenders will fail?
Well, look, I don't want to talk about the situations of individual banks, but what I see is a banking system that overall is well capitalized, still has very solid earnings, and we've improved the available liquidity to the banking system and think that banks are going to be able to survive this. But you know, we're monitoring this situation very very carefully.
The other big elephant in the room at this G seven meeting is, of course China, and you spoke about this yesterday, how you're working with your peers to look out outbound investment potentially when it comes to China. This would add on to what the United States has already
done with export controls and sanctions. And you recently gave this speech about China and how the US views economic policy, and what you made clear is that national security concerns will be paramount even if it becomes to economic concerns. So I'm curious why the US still has tariffs on China if that is an economic benefit to many US consumers.
Well, look, you know there was a so called three oh one action that was filed against China for unfair trade practices, and China wis fan guilty of three oh one violations, and those tariffs were put on place as retaliation for unfair trade practices. The Trump administration arrived at an agreement with China that might have led to lowering them. China didn't carry out their part.
But are there any national security concerns about that's.
Upholster that's not a national security concern. That's unfair trade practices, so that's not national security related. We do have concerns with some of the practices that China has engaged in with respect to trade and investment, whether it's forced technology transfer, massive subsidies to industries that really distort patterns of international trade.
Yeah, and that'll be a big topic as well when President Biden meets with the leaders in Hiroshima, but also on China. I know that you're looking forward to potentially going to Beijing, you said at the appropriate time. We now have your counterpart in place, Holy Pong. He's been there for several weeks, so are there any plans in the works.
I expect to travel there. I can't tell you what the date is. We have a number of senior American officials that are likely to go. We need to sequence them appropriately.
And will you'll be there.
I don't know who will be the first, but we're working with the Chinese and discussing among ourselves with the.
Appropriate call yet though with Hulifong or you're just going to wait to seem in person.
I haven't had contact yet with my new counterpart.
And if I could ask one final question, Madame Secretary, I know you're staying on for the remainder of the Biden administration, but President Biden also announced he's running for twenty twenty four. Do you consider another four years at Treasury?
Well, look, I was really thrilled to be asked to serve. I've really enjoyed the position I have. I have a lot of work to do, and that's a topic I have not yet given any thought to. But I would like to stay until the end of his first term and continue on the important agenda of work that we have at Treasury.
And that was the Secretary of the US Department of Treasury, Janet Yellen, speaking with Bloomberg's and Marie Hordern from the sidelines of the G seven gathering in Japan, and Anne Marie joins us now with more on this really great interview with the Treasury secretary. Really cool to hear you,
Anne Marie. Try to press Janet Yellen on her future plans as well as her potential meetings with China, but of course the debt ceiling overrides it all, and it still seems like she's trying to keep those other options.
Close to her vest.
Is, even when you press her about the contingency plans that she was aware of in twenty eleven when she was at the FED. There was this meeting that was made public years later about what the FED new Treasury was willing to do. She does not want to speak about contingencies because she doesn't want some global marketplace. She doesn't want politicians in Washington to think that it would
be okay if they defaulted. The US government would have to make some very hard decisions on whether or not they pay the principles the coupons on bonds maturing, or if they were to pay bills like Social Security money that goes out to veterans. So politically, you'll be very fraught for them to have to make these decisions. But what we do know is that the assumption was in twenty eleven when we last had a massive debt sealing fight, that they were going to prioritize the payments on the debt.
But this is something that she did say their path forward, but they don't even want to discuss them out loud.
Yeah, we got confirmation from you as well that the Secretary is going to be meeting with bank executives next week.
What can we expect to come out of those discussions.
Well, I think one thing is she wants to make sure that anyone in the executive world, whether it's business or banks, is going to put pressure on politicians. She's probably not going to really open up what she plans on discussing with them, but what we do know is that bank executives are concerned. Jamie Diamond told Francine Lacroix yesterday that they've set up a war room at JP Morgan and right now it's maybe frequent in once a week. That will start to go down to once a day
and then potentially three times a day. So for banks that hold you know, billions of dollars in treasuries, the bedrock of the global financial system, they're looking at contingency planning and that is something I imagine they're going to press Madam's secretary on.
This is Bloomberg Daybreak Today, your morning brief on the story's making news from Wall Street to Washington and beyond.
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