Market Doubts Hassett Can Deliver in Fed; Bessent Under Discussion to Also Lead NEC

Bloomberg Audio Studios, Podcasts, Radio News.
Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the
stories we're following today.
Karen, we begin with the latest on the next chairman
of the Federal Reserve. President Trump has not announced his
choice yet, but a top institutional investor says even if
front runner Kevin Hassett is appointed, he might not be
able to deliver the rapid pace of interest rate cuts
that the president would like. Gregory Peters, co Chief investment
officer at p JIM Fixed and Come told Bloomberg has
It wouldn't have the power to deliver cuts on his own.
Does he have the credibility within the committee to drive consensus.
I don't think he has that credibility. I think that's
what the bond mark is telling you. But it's important
to remember that it's a full committee and you have
to have the confidence of the committee to drive consensus,
and I don't know if he.
Has it Jims.
Greg Peters also says if Hasse gets the job, questions
about the Fed's independence will remain a major concern.
Well Nathan Ihasset does become the next FED chair, Bloomberg
News has learned President Trump's aids and allies are discussing
the possibility of making Treasury Secretary Scot Bessant the top
White House economic advisor. That would be in addition to
his current job. If Bessant is also named to the
National Economic Council, he would become the chief arbiter of
the administration's economic portfolio, spanning both the Treasury Department and
White House. It would also give Bessend a West Wing office,
granting him even more physical proximity to the President.
Now, Karen, let's get to the latest on efforts to
end the war in Ukraine. President Donald Trump is reacting
to the latest talks in Moscow with US on voice.
He's describing them as reasonably good.
President Putin had a very good meeting yesterday with Jared
Kushner and with Steve Whitcoff.
What comes out of that.
Meeting, I can't tell you, because it does take two
to tanger.
President Trump spoke yesterday from the Oval Office after the
Kremlin described the talks as very useful, but without breakthroughs
on some of its demands around territory and Ukraine's bid
to join NATO. We get more from Bloomberg's Greg Sullivan.
He did seem to moderate his tone a bit more
and express a little less confidence that a deal is
at hand. That's hardly surprising, given that there have been
several rounds of talks recently, all of which have ended inconclusively. Moscow,
throughout this process has stuck to hardline demands that Kiev
will not accept, and has shown little sign of backing
away from those demands, begging the question, how do the
two sides reach a consensus?
Bloomberg's Greg Sullivan reports, us EN voice Steve whit Coffin
Jared Kushner will continue the discussions today with a Ukrainian
negotiator in Miami.
Well Back in Washington, Nathan Defense Secretary Pete Hegseth is
facing new pressure of our controversy from earlier this year.
Depentagon's Acting Inspector General has concluded that Hegseth risked endangering
American troops when he shared attack plans against Hoo. They
rebels on this signal messaging app The watchdog's're pored was
delivered to the Senate Armed Services Committee yesterday. Jack Reid
is the committee's top democrat.
I think the most compelling thing I've heard is a
conclusion that he jeopardized the lives of pilots that were
going into action by releasing critical data. How all of
this adds up to very very poor judgment.
Democratic Senator Jack Reid Haigseth says he only texted updates
that did not put anyone at risk, and he was
authorized to declassify any material in the chat. The IG's
report disagrees with that claim, but Dependinggon spokesman says the
report is quote total exoneration and it proves no classified
information was shared. The new attention on the signal chat
comes as Haygseth is already under scrutiny over a second
strike order that killed survivors on board a suspected drug
vote in the Caribbean.
Turning from the Caribbean now to Asia, Karen A new
poll says the majority of Americans back the US military
defending Taiwan against the potential invasion from mainland China. The survey,
conducted by the nonprofit Ronald Reagan Institute, found sixty percent
of Americans would support committing US forces to Taiwan's defense.
Meanwhile, Nathan Chinese leader Shi Jinping met with French President
Emmanuel mccron in Beijing at a time when relations between
the EU and China have been under strained. The two
leaders have discussed issues including economic ties, trade tensions, Taiwan,
and the war in Ukraine. She, speaking through an interpreter,
describe their tax as frank, fruitful and friendly.
Thank you, Jaswig. Today the world is undergoing profound changes
unseen in a century at an accelerated pace, and humanity
once again stands at a crossroads. China and France should
demonstrate their sense of responsibility, uphold the banner of multilateralism,
c through the fog of uncertainty, and firmly stand on
the right side of history.
On the issue Ukraine, she said that China hopes a fair,
binding agreement acceptable to all parties can be reached. Those
comments came as Macron renewed his call for Shee to
back europe stance on Ukraine and warned against the disaggregation
of the world order.
Well, let's look at some stocks on the move this morning.
Karen shares of Salesforce re up almost two percent. The
software company's revenue outlook topped analyst estimates, but on the
flip side, shares of Snowflake are flurring lower by nearly
nine percent. Company makes software that helps organize, analyze, and
store corporate data in the cloud. It gave an operating
margin outlook that fell short of analyst testaments.
Now Nathan the latest on the battle for Warner Brothers Discovery.
Bloomberg News has learned Paramount sky Dance has more than
doubled the proposed breakup fee and its offered to acquire
the parent of HBO and CNN to five billion dollars.
The breakup fee would be paid to Warner Brothers if
a deal is agreed to but not consummated, and it's assigned.
Paramount is as confidence it's proposed merger would pass muster
with regulators. Warner Brothers is waging offers from three media companies, Paramount, Netflix,
and Comcast. Time Now for a look at some of
the o their stories making news in New York and
around the world, and for that were joined by Bloomberg's
Michael Barr Michael, Good Morning, Good.
Morning, Karen. President Trump unleashed another round of attacks on
Somemali immigrants during an event in the Oval Office yesterday.
President Trump said that Somali immigrants have destroyed Minnesota. He
also lashed out at Democratic Congresswoman Ilhan Omar, who is
an immigrant from Somalia, saying she should be thrown out
of the country.
All she does is complain about this country. Without this country,
she would not be in very good shape, probably wouldn't
be alive right now. So Somalia is considered by many
to be the worst country on Earth. I don't know.
I haven't been there. I won't be there anytime soon.
Minneapolis Mayor Jacob Fry dismissed President Trump as a quote.
Democrats on the House Oversight Committee have released new images
of the private island owned by convicted sex offender Jeffrey Epstein.
The videos and pictures were taken by local authorities, showing
where multiple accusers say they were trafficked and abused. Video
of the secluded hideaway shows the grounds, along with interior
images of a bedroom and bathroom, a room with a
dental chair, and face masks of men tacked to the wall.
President Trump has granted another pardon, this time to a
Democratic member of Congress. The president's pardon means Congressman Henry
Quahar of Texas and his wife won't go to trial
in April on federal bribery and corruption charges.
He's a respected person. He was treated very badly because
he said that people should not be allowed to pour
into our country.
Congressman Quay are thanks the President.
Now we can get back to work.
Nothing has changed.
We will continue working hard.
President Trump alleged without evidence, that the Biden administrator went
after Quayer because he criticized border policy. The annual lighting
of the Rockefeller Center Christmas Tree took place last night
in Manhattan. The seventy five foot tall Norway Spuce is
decked out in more than fifty thousand multi colored led lights.
Global News twenty four hours a day and whenever you
want it with Bloomberg News Now. I'm Michael Barr, and
this is Bloomberg Club.
Thanks Michael. A time now for our Bloomberg Sports updating.
For that, we bring in John Stashauer.
Thanks. Karain Giannis unto the compo in the news with
reports that he's unhappy with the Bucks sub five hundred
record and he's in talks with the team about getting
trained in His first desire is to go to the Knicks.
The Bucks then hosted the Pistons and Yannites. Three minutes
into the game hurt, his cash headed for an MRI.
The Bucks still won the game. Chris Paul released by
the Clippers, said to be friction with coach Tylu. The
game tonight in the NFL is Dallas at Detroit, a
big one in the NFC. That's your Bloomberg Sports update.
With us more from Bloomberg Daybreak coming up after this.
Coast to coast on Bloomberg Radio, nationwide on Sirius XM.
And around the world on Bloomberg dot com and the
Bloomberg Business App.
This is Bloomberg Daybreak.
Meta platforms has been hit by a full scale European
Union antitrust investigation over how it's artificial intelligence features in
WhatsApp may be harming competition. This is the latest EU
probe into big text dominance on the continent, and for
more we get details from Bloomberg Stephen Carroll in Brussels. Stephen,
what is this probe over?
This is Overmatt's new AI policy, which was announced in October,
which prohibits AI providers from using tools outland to communicate
with businesses via WhatsApp. This is specifically due due to
the sorts of services where AI is the main business
it's not automated customer support that many companies offered through WhatsApp.
It's and it's a specific AI product. What the Commission
is concerned about is that this new policy could prevent
these third party providers from offering their services through the
messaging service, and that could be anti competitive. The statement
from the Commission announcing this investigation says that as a
result of this new policy, competitors to Meta in Ai
could be blocked from reaching their customers, but Meta's own
AI service would remain accessible and Meta will be now
forced to submit solutions to try and appease the regulator's concerns.
But if this first of all investigation finds wrongdoing, and
if it is successfully upheld by the courts, it could
lead to a fine as high as ten percent of
global and you wal revenue. WhatsApp, in response to this,
have said the claims are unfounded, that they're API, the
technology underpinning WhatsApp was not designed to be used for
AI chatbots, and it would play severe strain on their services.
They say that's why this policy has come into force,
but the investigation will now proceed at force. It's, of course,
the latest strand of the EU investigations targeting big tech companies,
and we know that that's been particularly politically sensitive issue
when it comes to the Trump administration.
Now we understand Stephen, that this is coming under the
European Union's traditional antitrust law, not necessarily under the digital
services laws that have come under so much criticism from
the Trump administration.
Yeah, that's right. This is the old set of rules
as opposed to the new ones that Meta is being
hit by. The Digital Markets Act in particular, is the
one that has caused a lot of hand ringing among
technology companies, and a final already issued under the Digital
Markets Act against Meta for two hundred million euros was
issued in April of this year, and it also had
to pay a seven hundred and ninety eight million euro
fine for tying its Facebook marketplace service to its social
network that was an abuse of dominance question as well.
This is the multi layered regulations that tech companies have
to face in the European Union. That's part of the
contract for doing business in this area. But this is
a more traditional sort of case that we've seen, and
of course Meta will be building its response to this
investigation now.
So given that it is more of a traditional antitrust probe.
What's the potential timeline for how this all could play out?
The Roping Commission hasn't given a timeline and how long
it takes. It can technically take years to get through
the full process because you come to a conclusion and
then there can be an appeal that goes through several
levels of the European courts here as well. So this
could be something that we're talking about in a couple
of years time, but it is something that both the
EU and the companies take very seriously because of the
potential fins involved. I've talked about you know, over a
billion euros already being levied against Meta over previous cases.
Ten percent of global annual revenue is what can be
imposed if wrongdoing is found at these sorts of investigations,
even and that is something that can often be reduced
to below that level, particularly if we're talking about short
lived wrongdoing, And given that this is an investigation about
a policy that's only coming into effect in the coming
weeks and months, it might act actually be something that
META puts a pause on that while this investigation is underway,
we'll be watching closely to see how they react to
it and.
Just quickly given the fact that this is yet another
antitrust effort by the European Union over big tech, it
kind of stands in contrast what we've seen from Meta
platforms here in the US, where just recently Meta was
found not to be a monopoly.
Indeed, and of course you have to remember these are
sprawling tech companies and each of these investigations is looking
at a different aspect of what a company like Meta does.
The overlapping rules do mean that you have investigations. I
mentioned what about Facebook marketplace. We know that Google has
faced cases over the years as well, because you're looking
at both a competition issue, but then the additional regulation
coming under the Digital Markets and Digital Services Acts as
well means it's a very complex legal network for these
companies to try and negotiate. If we're saying that Meta
shares and pre market are only up slightly this morning,
up seven tens of one percent, Investors don't seemed terribly
concerned by this latest announcement coming out of Brussels, and.
It certainly looks that way in the pre market trading.
Thank you for this, Steven really appreciated that is a
Bloomberg Daybreak. Europe Banker Stephen Carroll with us this morning
from Brussels.
Karen, Nathan Less repeat some of our top stories this morning.
President Trump says he thinks talks went reasonably well between
Russian President Vladimir Putin and US envoys Steve Witkoff and
Jared Kushner, but he says he does not know the
outcome with Ukraine, saying it takes two to tango. A
Pentagon watchdog report says Defense Secretary Pete Hagseth could have
endangered American lives by sharing who the attack plans on
a signal group chat. Hag Seth is already under scrutiny
over a second strike order that left no survivors on
a suspected drug boat, and French President Emanuel mccron is
pushing for a more Chinese investment during a state visit
with Chinese leader Shijinping. France is looking to rebalance its
economic ties with Beijing and narrow up persistent trade gap,
and we have more in those stories coming up on
Bloomberg Daybreak.
Nathan, all right, Karen, thank you. Let's turn back to
our top story. Now, doubts that maybe building in the
bond market on whether Kevin Hassett could deliver the rapid
interest rate cuts the President Trump wants, even if the
President gives his top economic advisor the nod to be
the next chairman of the Federal Reserve. For more on this,
we're joined by Bloomberg Markets reporter Valerie Titel and Valary.
Of course, that's a concern we heard live from Pjim's
Greg Peters on Bloomberg Television in the overnight hours. Is
that what we're seeing in the bond market, It looks,
at least in this morning's action, that things are kind
of seguine.
Well, look, there's a few facets to this discussion, one
of which is being that, yes, the FED chair is
only one vote. He really has to get the whole
committee behind him in order to make these policy decisions.
So just because there is a new Trump pick as
FED chair doesn't necessarily mean that that FED Chair gets
to decide what goes on forward. The second thing is
that we need to keep mentioning here, Nathan, is that
the labor market is continuing to show weakness, and so
the market is already pricing in the fact that we
are going to have a FED cutting next year. We're
pricing in a FED cutting all the way down to
some three percent over the course of the next twelve months.
So that does kind of chime in with what these
more dubvish FED chair candidates have been calling for. We
know that Hasset has been a key part of Trump's
economic agenda, and he has always stood by quite adamantly
that Trump's policies are disinflationary in nature. He's not worried
about tariff induced inflation. If anything, he thinks that Trump's
policies around deregulation, this pro growth is going to be
something that is going to get inflation back to target
without the FED having to do anything, leaving the door
open for them to be cutting interest rates. The real
problem comes, Nathan, if, for instance, we get a reacceleration
of the US labor force. If early next year we
start to get a reacceleration of inflation, and then you have,
as the FED Chair in May, calling for FED cuts
when the market is pricing in perhaps a FED on hold.
That is when the situation gets hairy. But we are
not there yet.
And it does raise the question that we heard as
well from Greg Peters of pigeum about Federal Reserve independence.
But if there is a question about whether Hassett can
build the kind of consensus around rate cuts, wouldn't that
sort of obviate some of those concerns.
Well, look, you have to think that Kevin Hassett is
a respected economist. Paul is a lawyer by trade, but
he has done a very good job in getting a
consensus together on the committee. The question really is is
whether Hassett is going to have the view of an
economist or is he going to have the view of
the Trump administration when he sits down. So that's kind
of the concerns that some investors have. Even the Ft
was reporting that some senior bond investors have told them
that they would have been at least more comfortable with
someone who wasn't as close to the president as Kevin Hassett.
We had other candidates like black Rocks or Reader, also
current FED Governor Christopher Waller. We know that they were
part of the interview process for the FED chair as well,
who are dubvish in nature, but not necessarily people who
are very close to the Trump administration. So perhaps it's
the closeness to the Trump administration which is worrying people.
But again, we just don't know when Kevin Hassett, if
he does get the seat and accept the nomination, when
he sits down in May, what kind of hat is
he going to be wearing. Is it going to be
one of a conservative economist that supports Trump's policies or
one of pushing adamantly for rate cuts that Trump has
been very vocal and asking for.
That is an if, because President Trump hasn't formally made
the announcement yet. He says he's going to make it
earlier next year. But we are getting some reporting that
there's discussion within the White House that if Hassett gets
the nod, maybe Treasury Secretary Scott Bessant could be the
National Economic Council director, the top economic advisor. Does that
make us more of a signal that Hassett could be
a done deal here?
Yeah, Well, I think this is another hint that they
are seriously considering Kevin Hassett for the Fed shairt because
there looks like to be seriously considering what to do
with his open position once Kevin Hassett moves on. Now,
the director of the National Economic Council, as you mentioned,
is essentially the top White House economic advisor. If it
goes to Scott Bessant and he wears that hat alongside
Treasury Secretary, it would really allow him to consolidate oversight
of Trump's economic policies from the White House to the Treasury.
Would also give him more proximity to the President. He
would get a West Wing office in the White House.
So this is just telling us perhaps that at least
within the Trump administration, Bessent is playing such a key
role that he is being considered for a second one.
This is Bloomberg Daybreak, your morning podcast on the stories
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