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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Day

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Speaker 1: Bake You podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Tuesday, the sixteenth of July in London.

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Speaker 1: I'm Caroline Hepcare and.

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Speaker 2: I'm Stephen Carroll. Coming up today. Donald Trump appears at

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Speaker 2: the Republican National Convention and selects Ohio Senator JD Vance

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Speaker 2: as his running mate.

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Speaker 1: President Biden seeks to justify his rhetoric if he looks

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Speaker 1: to stabilize his increasingly beleagued reelection campaign.

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Speaker 2: Plus, Jerome Powells has recent data is raising the Fed's

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Speaker 2: confidence that inflation is now on a path to two percent.

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Speaker 1: Let's start with a round up of our top stories.

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Speaker 2: Donald Trump has made his first public appearance after a

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Speaker 2: failed assassination attempt upended the US presidential contest. Walking on

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Speaker 2: stage to the Republican National Convention in Milwaukee with the

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Speaker 2: bandage over his right ear, Trump was greeted by chanting supporters.

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Speaker 2: The appearance came as Donald Trump named JD. Vance as

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Speaker 2: his running mate. The venture capitalist turned Ohio Senator's embrace

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Speaker 2: of populist politics has made him a rising star in

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Speaker 2: the party. Speaking to Fox News after the announcement, with

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Speaker 2: loud music in the background, Vance weighed in on the

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Speaker 2: pair's foreign policy objectives.

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Speaker 3: I think what President.

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Speaker 4: Trump has promised to do is go in there, negotiate

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Speaker 4: with the Russians Ukrainians, bring this thing to a rapid

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Speaker 4: close so that America can focus on the real issue,

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Speaker 4: which is China.

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Speaker 3: That's the biggest.

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Speaker 4: Record country, and we're completely distracted.

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Speaker 5: From the time.

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Speaker 6: JD.

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Speaker 2: Vance also told Fox that he believes the US can

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Speaker 2: be the main source of energy in the world. Vance

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Speaker 2: is nearly four decades younger than Trump, and the party

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Speaker 2: will hope his pick bolsters their appeal to white, working

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Speaker 2: class voters in swing States.

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Speaker 1: Research from the UBS shows that Donald Trump's full proposed

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Speaker 1: tariffs on Chinese imports could cut China's growth rate in half.

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Speaker 1: Bloomberg's team Adebayo has more.

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Speaker 6: Donald Trump is said to be considering a sixty percent

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Speaker 6: tariff on Chinese imports if he's elected in November. Economists

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Speaker 6: at UBS say that would slize two point five percentage

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Speaker 6: points from China's annual growth rate. That drag would come

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Speaker 6: from a drop in exports, but also a hit to

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Speaker 6: consumption and investment. The forecast is based on an assumption

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Speaker 6: that some trade would go to other countries, that China

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Speaker 6: doesn't retaliate, and that other countries don't join the US position.

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Speaker 6: Exports have been a strong driver of Chinese growth so

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Speaker 6: far this year, with the trade surplus hitting a record

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Speaker 6: last month, but that strength has also prompted complaints from

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Speaker 6: other countries who are considering how to respond. In London,

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Speaker 6: Tea at a Bayo Bloomberg.

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Speaker 2: Radio Elon Musks badging to give forty five million dollars

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Speaker 2: a month to a pro Trump political group. That's after

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Speaker 2: the Tesla owner publicly endorsed the former president in a

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Speaker 2: post on X last Saturday evening. The donation would flood

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Speaker 2: the Trump campaign with cash until November's election. But Bloomberg

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Speaker 2: BusinessWeek columnist Max Chafkin says the relationship benefits Musk too.

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Speaker 7: So Ewon Musk is I mean, of course, he is

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Speaker 7: known as an innovator, but he's also been a very

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Speaker 7: successful government contractor. You know, many of his businesses. Most

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Speaker 7: of much of his business depends on relationships with the government,

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Speaker 7: either in terms of direct contracts with SpaceX or Tesla.

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Speaker 7: Of course depends on these text credits and has for

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Speaker 7: the entirety of its existence, so you can sort of

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Speaker 7: see why he has an interest.

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Speaker 2: Bloomberg's Max Chaffkins speaking there. Crypto billionaires Cameron and Tyler

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Speaker 2: Winkelwasser also among the donors to America Pack, which is

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Speaker 2: working to get voters to the polls in November. According

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Speaker 2: to its most recent filing with the Federal Election Commissioned,

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Speaker 2: the group started July with less than a million dollars

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Speaker 2: in cash.

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Speaker 1: With the focus now on a resurgent Republican bid for

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Speaker 1: the White House, President Biden has been forced to respond

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Speaker 1: to Republican accusations over his role in raising the political rhetoric.

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Speaker 1: In a primetime NBC interview, Biden defended his suggestion that

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Speaker 1: Donald Trump should be quote put in the bullseye.

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Speaker 8: The truth of the matter was, well, I guess I

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Speaker 8: was talking about as a time was there's very little

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Speaker 8: focus on Trumps.

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Speaker 3: Yeah, the term bullseye was.

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Speaker 8: A mistake to I didn't say cross here is bullse

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Speaker 8: I know, focus on him, focus on what he's doing,

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Speaker 8: focus on on as policies, focus on the number of

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Speaker 8: lies he told no debate.

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Speaker 1: Biden also told NBC's Lester Holt that he has no

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Speaker 1: plans to blunt his criticism of Trump, considering the stakes

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Speaker 1: in the November election. The interview was Biden's latest attempt

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Speaker 1: to stabilize his beleaguered re election bid at a pivotal

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Speaker 1: moment in the campaign. Democrats remain deeply split over Biden,

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Speaker 1: almost three weeks after his poor debate performance triggered panic

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Speaker 1: about his ability to fulfill another four year term.

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Speaker 2: One of the most beleaguered bond trades of the past

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Speaker 2: two years is getting new life thanks to the momentum

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Speaker 2: behind Donald Trump's presidential bid. Long term yields have come

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Speaker 2: under pressure because of Trump's plans for tax cuts and

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Speaker 2: higher tariffs, which traders calculate wild ignite inflation and worsen

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Speaker 2: US finances. The side effect of this is to reward

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Speaker 2: investors who've wagered that the bond market will return to

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Speaker 2: normal after an unusual stretch. When short term yields exceeded

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Speaker 2: those on longer term debt on Monday, in the wake

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Speaker 2: of the weekend's assassination attempt on Trump, the yield on

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Speaker 2: thirty year treasuries surpassed the rate on two year notes

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Speaker 2: for the first time since the end of January.

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Speaker 1: Jerome Powell says that recent data has provided policymakers with

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Speaker 1: more confidence that inflation is heading towards the fed's two

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Speaker 1: percent goal. The Federal Reserve chair highlighted the last three

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Speaker 1: inflation readings while speaking at the Economic Club of Washington.

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Speaker 9: On inflation in the first quarter, we didn't make any

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Speaker 9: more progress. The second quarter, actually we did make some

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Speaker 9: more progress. We've had now three better readings, and if

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Speaker 9: you average them, that's a pretty good piece.

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Speaker 1: Jerome Powell also insisted that he wasn't sending a message

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Speaker 1: about rate cut timing in the conversation with the Carlisle

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Speaker 1: co chairman David Rubinstein. The FED has held boring costs

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Speaker 1: at the highest level in more than two decades for

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Speaker 1: roughly a year now. The next FRMC meeting starts on

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Speaker 1: the thirtieth of July, when central bankers are expected to

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Speaker 1: hold rape steady once again. Now, in a moment, we

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Speaker 1: are going to get more on Donald Trump picking JD

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Speaker 1: Vance as his vice presidential candidate, and also bring you

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Speaker 1: more of our interview with the FED Chair Jerome Powell.

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Speaker 1: But firstly, just a word on the imagery of the

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Speaker 1: Republican National Convention. You heard some of the chanting.

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Speaker 6: There.

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Speaker 1: Donald Trump came into the hall with the bandage on

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Speaker 1: his right ear, to a standing ovation with all that chanting,

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Speaker 1: but he actually didn't speak.

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Speaker 2: No, of course, not yet as the moment because that

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Speaker 2: will be the culmination of the RNC event in Milwaukee,

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Speaker 2: but a hugely powerful image for his supporters. He mouthed

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Speaker 2: thank you at people as they chanted towards and pointed

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Speaker 2: a few people that he obviously knew in the crowd

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Speaker 2: as well. This while the audience heard from speakers who

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Speaker 2: ranged from business executives to the head of the Teamsters Union,

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Speaker 2: of course, an important voice in the US as well.

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Speaker 2: That parade of speakers at the first day of the RNC,

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Speaker 2: though depicting in America in which they the speakers said

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Speaker 2: working class families were struggling because of Joe Biden's agenda,

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Speaker 2: seeking to tap into polls showing unease with the incumbent's

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Speaker 2: economic policies. All part of the political theater, of course,

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Speaker 2: heightened massively by the events over the weekend, and those

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Speaker 2: chants I think will be another moment from this, I suppose,

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Speaker 2: particularly heightened moment in the campaign. Let's bring in though

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Speaker 2: our US government. Editor John Harney in Washington for more.

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Speaker 2: Of course, the big news from Monday was the selection

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Speaker 2: of J. D Vance, the Ohio Senator, as the vice

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Speaker 2: presidential pick. John What signal is Donald Trump sending by

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Speaker 2: picking jd Vance, someone perhaps best known elsewhere for his

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Speaker 2: book Hillbilly Llergy.

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Speaker 5: Well, that's right, He's picked in Dvance, a ardent, passionate

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Speaker 5: royalist who, if anything, perhaps embraces the populous cause even

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Speaker 5: more than Trump himself. And that's true why he's best

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Speaker 5: known for Hillbilly Elergy about his heart scrabble background origins

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Speaker 5: at Ohio. He also is an enture capitalist with connections

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Speaker 5: to Silicon Valley, where a lot of very wealthy donors

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Speaker 5: to both parties are operated. That may well have been

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Speaker 5: among the Trump's considerations. But what the former president did

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Speaker 5: not do was pick someone who was sort of outside

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Speaker 5: his circle, like say Nikki Heely or someone like that,

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Speaker 5: who could have perhaps appeal to independent voters, say, or

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Speaker 5: Republicans who might have misgivings about him.

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Speaker 1: Indeed, so then what about his positions on key policy issues,

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Speaker 1: for example, on China, on Ukraine. Who had a little

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Speaker 1: snippet of him speaking to reporters in the US. What

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Speaker 1: do we know about JD. Vance's political positions.

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Speaker 5: Well, I mean, for one thing, on abortion, he's supported

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Speaker 5: very strong restrictions that don't include exceptions for incests or

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Speaker 5: much of anything else. And on Ukraine he opposes any

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Speaker 5: further aid, which would likely disappoint some members of the

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Speaker 5: Republican foreign policy established, but that opposition will likely be whispered,

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Speaker 5: if anything, because this is dow on Trump's party, and

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Speaker 5: anyone he picked would be applauded, as of course Vance

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Speaker 5: was today, and oddly enough, Mitch McConnell, the Senate Minority leader,

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Speaker 5: who's very much part of the Republican old guard unfeigned

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Speaker 5: policy and other issues, was booed at the convention today

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Speaker 5: or yesterday.

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Speaker 1: And also given his age, I think that's another significant issue.

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Speaker 1: You know, there's also been perhaps an issue in this

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Speaker 1: campaign around the generational argument. At thirty nine, Vance is

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Speaker 1: half of Trump's age. Does this cement the sort of

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Speaker 1: populist future of the Republican Party?

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Speaker 5: Who knows what the Republican Party will look like in say,

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Speaker 5: eight years, but certainly for the seeable, and that question

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Speaker 5: about what foreseeable means here, Yes, this certainly establishes the

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Speaker 5: populist dominance of this party, which has changed considerably since

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Speaker 5: Donald Trump came down that escalator in twenty fifteen.

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Speaker 2: What does all of this mean for Joe Biden's campaign.

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Speaker 2: We did hear from the President yesterday as well.

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Speaker 5: Well. He spent much of this interview with Lester Holt

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Speaker 5: of NBC News One deflecting the criticism over the bullseye

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Speaker 5: comment that the course was made before this horrific and

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Speaker 5: shocking assassination attempt on Saturday, but that many Republicans immediately

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Speaker 5: accused Biden and the Democrats of provocation and created an

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Speaker 5: atmosphere that could lead to violence. And so he kept

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Speaker 5: trying to emphasize that, you know, Donald Trump himself has

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Speaker 5: made provocative remarks, you know, throughout his political career, and

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Speaker 5: you know he's but he was on the defensive even

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Speaker 5: though he tried to get the conversation back onto Donald Trump.

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Speaker 1: Yeah, indeed, John, thank you so much for with us.

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Speaker 1: Are US Government editor John Harney there in Washington to

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Speaker 1: discuss well, Trump's a pick for vice president? Also, I

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Speaker 1: think really fascinating On the Bloomberg terminal this morning, Bloomberg

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Speaker 1: Opinion columnist Patricia Lopez has been writing about JD. Vance,

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Speaker 1: the ultra conservative senator from Ohio. She talks about him

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Speaker 1: being the opposite of a unifor. I mean, this is

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Speaker 1: also what we were discussing only yesterday about whether you know,

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Speaker 1: Trump wanting to be a UNIFI. She calls JD. Vance

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Speaker 1: an acid tongue senator, young and vigorous inheritor of the

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Speaker 1: MAGA movement. You know that he's got, you know, a

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Speaker 1: lot of political ambition, but not so much political experience.

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Speaker 1: But the piece is very interesting.

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Speaker 2: Yeah, of course, I'm talking about JD. Vance's journey as

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Speaker 2: being someone who described himself as a never trumper and

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Speaker 2: then now to this position that he is as vice

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Speaker 2: presidential picks. Definitely worth your time Bloomberg dot com for

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Speaker 2: a Slash opinion to find that piece this morning. But

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Speaker 2: let's turn to another one of our key interviews on

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Speaker 2: the program this morning, the Federal Reserve Charge your own Powell,

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Speaker 2: saying recent economic data giving policymakers greater confidence that inflation

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Speaker 2: is coming down to their two percent goal. His comments

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Speaker 2: potentially paved the way for interest rate cuts. Markets of

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Speaker 2: priced in a first move for September. The PO began

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Speaker 2: by addressing the attempted assassination of former President Donald Trump.

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Speaker 2: He was speaking to Bloomberg host and Carla co founder

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Speaker 2: and co chairman David Rubinstein at the Economic Club of Washington, DC.

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Speaker 3: It was a really very sad day for our country.

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Speaker 9: Political violence has no place in our society, and I

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Speaker 9: condemn it in the strongest terms I know we all do.

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Speaker 3: A man died at a.

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Speaker 9: Political rally, to other people were critically injured. So just

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Speaker 9: a sad day, and I'll say that I'm grateful that

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Speaker 9: the injuries to the former president were not more serious.

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Speaker 9: I really not comment on the markets. It's too okay.

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Speaker 10: So let's get another answer that you don't want to

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Speaker 10: give four play.

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Speaker 3: Huh.

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Speaker 10: So there are a few billion people in the world

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Speaker 10: are waiting to see what interest rates are going to

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Speaker 10: be doing. Do you have any insights on where interest rates.

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Speaker 3: Might be going?

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Speaker 9: So I'm going to take that as a great opportunity

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Speaker 9: to talk a little bit about the economy and then

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Speaker 9: talk about where that leaves us with policy. So I

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Speaker 9: would just start by saying that the US economy has

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Speaker 9: performed really remarkably well over the last couple of years.

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Speaker 3: Twenty twenty three.

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Speaker 9: Last year was a year in which the economy grew

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Speaker 9: well above three percent. The labor market remained very strong,

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Speaker 9: unemployment remained very low, and inflation came down at quite

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Speaker 9: a sharp pace, particularly in the second half of the year,

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Speaker 9: by a very large amount. And that forecast was almost

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Speaker 9: unheard of. It was unheard of before twenty twenty three,

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Speaker 9: so big upside surprise that year. This year, we had

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Speaker 9: expected the economy to slow a bit gradually, the labor

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Speaker 9: market to continue to gradually cool off after being overheated

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Speaker 9: a couple of years ago, and inflation to continue to

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Speaker 9: make progress, and something like that is basically what has happened.

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Speaker 9: The economy is growing now at about one and a

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Speaker 9: half percent in the first half of the year. Most

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Speaker 9: forecasters have about a two percent growth great for the

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Speaker 9: full year. The labor market again has moved into better

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Speaker 9: and better balance, to the point where I think you

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Speaker 9: can now say it's essentially no tighter than it was

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Speaker 9: in twenty nineteen before the pandemic. Remember that the labor

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Speaker 9: market of twenty nineteen was a very strong labor market,

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Speaker 9: so we're back to that place, no longer overheated on inflation.

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Speaker 9: In the first quarter, we didn't make any more progress.

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Speaker 9: The second quarter actually we did make some more progress.

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Speaker 9: We've had now three better readings, and if you average them,

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Speaker 9: that's a pretty good pace. So turning to policy your question,

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Speaker 9: what we said is that we didn't think it would

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Speaker 9: be appropriate to begin to loosen policy until we were

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Speaker 9: more we had greater confidence that inflation was moving sustainably

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Speaker 9: down to two percent. We've been waiting on that, and

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Speaker 9: I would say we didn't gain any additional confidence in

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Speaker 9: the first quarter, but the three readings in the second quarter,

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Speaker 9: including the one from last week, do add somewhat in confidence.

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Speaker 9: We've also said that, you know, we're a dual mandate bank.

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Speaker 9: For a long time, since inflation arrived, it's been appropriate

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Speaker 9: to focus mainly on inflation. But now that inflation has

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Speaker 9: come down and the labor market has indeed cooled off,

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Speaker 9: we're going to be looking at both mandates. They're much better,

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Speaker 9: in much better balance, and that means that if we

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Speaker 9: were to see an unexpected weakening in the labor market,

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Speaker 9: then that might also be a reason for reaction by US.

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Speaker 10: Okay, I think I understand, So to put it in terms,

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Speaker 10: I can for sure understand, the markets are suggesting the

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Speaker 10: future's markets that there's a ninety percent chance that the

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Speaker 10: FED will lower its discount rate in September. Do you

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Speaker 10: think the markets know what they're talking about?

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Speaker 9: So, I'm so today I'm not going to be sending

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Speaker 9: any signals one way or the other on any particular meeting.

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Speaker 3: So just to ruin the fund right the beginning, I.

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Speaker 9: Simply you know, we're going to make these decisions meeting

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Speaker 9: by meeting, and we're going to make them on the

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Speaker 9: basis of the data as they come in, the evolving data,

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Speaker 9: the evolving outlook, and also the balance of risks. Now

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Speaker 9: that the two mandates are basically close to being a balance.

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Speaker 10: Right, there are some people who say that the FED

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Speaker 10: would not like the lower interest rates in a presidential

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Speaker 10: campaign period because you could be criticized for helping one

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Speaker 10: party or another. Do you have any comment on whether

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Speaker 10: that's an accurate view.

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Speaker 3: I do so.

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Speaker 9: Our undertaking at all times is that we'll make our

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Speaker 9: decisions based on the incoming data, the evolving outlook, balance

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Speaker 9: of risks, and only on that. We don't take political

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Speaker 9: considerations into account. We don't put up a political filter

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Speaker 9: on our decisions. That would It's hard enough to make

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Speaker 9: these decisions based on the appropriate factors. If you're going

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Speaker 9: to add a whole different filter in an area where

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Speaker 9: we're not experts, that's not going to improve the quality

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Speaker 9: of our decisions. And it's also not the orders we

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Speaker 9: have from Congress or orders from Congress. Ver use our

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Speaker 9: tools to foster maximum employment and stability, and to do

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Speaker 9: so without political considerations.

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Speaker 3: That's what we're always going to do.

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Speaker 9: If you look at the modern record, that is what

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Speaker 9: we do, and we don't think about election cycles or

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Speaker 9: anything that's political.

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Speaker 10: The FED set its target for inflation to two percent.

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Speaker 10: Now can you clarify does that mean that the inflation

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Speaker 10: rate has to be at two percent before you're ready

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Speaker 10: to move if you are ready to move, or does

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Speaker 10: it have to be within sight?

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Speaker 3: And what does it mean to be within sight?

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Speaker 9: So when we change interest rates, that tightens financial conditions,

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Speaker 9: and that in turn affects economic outcomes, you know, growth,

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Speaker 9: labor markets, and ultimately inflation.

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Speaker 3: But with lags that can be long and variable, as

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Speaker 3: Milton Freeman famously said, And the implication of that is.

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Speaker 9: That if you wait until inflation gets all the way

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Speaker 9: down to two percent, you've probably waited too long because

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Speaker 9: you know the tightening that you're doing with a level

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Speaker 9: of tightness that you have is still having effects which

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Speaker 9: will probably drive inflation below two percent. So we've been

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Speaker 9: very clear that you wouldn't wait for inflation to get

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Speaker 9: all the way down to two percent. Our test has

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Speaker 9: been for the past quite some time that we wanted

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Speaker 9: to be to have greater confidence than inflation was moving

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Speaker 9: sustainably down toward our two percent target.

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Speaker 3: And what increases confidence in.

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Speaker 9: That is more good inflation data, and lately here we

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Speaker 9: have been getting some of that.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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