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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: First, we have the latest on the legal entanglements of

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Speaker 1: Donald Trump. The former president is set to appear in

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Speaker 1: a Washington federal court today to face charges he conspired

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Speaker 1: to obstruct the twenty twenty presidential election. Bloomberg's Amy Morris

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Speaker 1: has details from our ninety nine one newsroom in Washington.

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Speaker 3: The hearing will likely be short, with Trump's attorneys doing

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Speaker 3: most of the talking. Trump is expected to be arraigned

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Speaker 3: in person. That means he'll have to enter an initial plea.

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Speaker 3: US Marshall Service spokesman Drew Wade says Trump will be

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Speaker 3: processed first. He'll have his fingerprints taken digitally. He'll be

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Speaker 3: required to provide a Social Security number, date of birth, address,

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Speaker 3: and other personal information, but there will be no mugshot

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Speaker 3: since he is easily recognizable and there are many photographs

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Speaker 3: already available. He will not be placed under arrest, as

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Speaker 3: this was a summons for his appearance in court, not

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Speaker 3: an arrest warrant. Today's hearing is set for four pm

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Speaker 3: Eastern time in Washington. I maye more as Bloomberg Day

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Speaker 3: break all.

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Speaker 2: Right, Amy, thank you about the latest charges against former

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Speaker 2: President Trump may be worse than Watergate. That's what we're

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Speaker 2: hearing from someone with first hand knowledge of the subject.

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Speaker 2: John Dean served as White House counsel for President Nixon

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Speaker 2: during Watergate.

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Speaker 4: Nixon's Watergate was like a lightning bug. Trump's behavior is

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Speaker 4: like a lightning storm, and it it threatens the entire

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Speaker 4: structure of our democracy.

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Speaker 2: Former White House counsel John Dean was a guest on

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Speaker 2: Bloomberg's Sound on Catch the Show weekdays at one pm

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Speaker 2: Eastern on Bloomberg Radio or listen on demand wherever you

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Speaker 2: get your podcasts.

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Speaker 1: And with former President Trump's arraignment today, Karen us Capitol

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Speaker 1: police are preparing for large and possibly rowdy crowds. Bloomberg's

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Speaker 1: Ed Baxter has that part of the story.

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Speaker 5: The Capital, of course, is a bit on edge for

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Speaker 5: obvious reasons. Capitol Police had a report of an active

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Speaker 5: shooter yesterday and this time around. Police Chief Thomas Manger

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Speaker 5: says they're in coordination with their partners. We've been talking

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Speaker 5: about this for a couple of weeks now.

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Speaker 6: We've had a couple of phone calls today, so yeah,

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Speaker 6: we're prepared.

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Speaker 5: Trump will head into the courthouse through an underground entrance

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Speaker 5: and may not even be seen during the entire proceeding.

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Speaker 5: In San Francisco, I'm at Baxter Bloomberg Daybreak.

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Speaker 2: All right, ed, thank you. Meanwhile, we're learning more about

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Speaker 2: the proposed plea deal between Hunter Biden and prosecutors A

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Speaker 2: judge as unsealed the proposal. It shows Hunter Biden earned

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Speaker 2: more than four million dollars from a Ukrainian energy company,

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Speaker 2: a Chinese private equity firm, and other sources. That's over

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Speaker 2: the course of two years, where the agreement says he

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Speaker 2: descended deeper into substance abuse. A lawyer for Biden did

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Speaker 2: not immediately respond to our request for comment.

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Speaker 1: Let's turn back to the markets now, Karen, where much

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Speaker 1: of the commentary remains focused on this week's downgrade of

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Speaker 1: the US credit rating. Now, two former Treasury secretaries are

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Speaker 1: flagging concerns over the nation's long term fiscal challenges. Timothy

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Speaker 1: Geidner says the US has enormous capacity to deal with

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Speaker 1: its budget deficit. The man he succeeded, Hank Paulson, agrees,

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Speaker 1: but Paulson says the government needs to act.

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Speaker 4: We're a rich country and We've got time to deal

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Speaker 4: with it, but we need to do some things in

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Speaker 4: the next few years to change that trajectory.

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Speaker 1: Hank Paulson and Timothy Geidner spoke to our David Weston

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Speaker 1: on Bloomberg's Wall Street Week. You can catch the entire

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Speaker 1: conversation tomorrow at six pm Wall Street Time on Bloomberg Television,

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Speaker 1: or subscribe to the Bloomberg Wall Street Week podcast. It's

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Speaker 1: available on Apple, Spotify, or anywhere else you listen and.

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Speaker 2: Nathan, the news from Fitch Ratings appears to be putting

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Speaker 2: the brakes on this year's stock rally. Bloombergs John Tucker

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Speaker 2: joins us with the details. Good morning John, Good morning Careen.

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Speaker 7: The S and P five hundred racked up its worst

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Speaker 7: day since April, falling one point four percent. The high

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Speaker 7: flying Nasdaq one hundred registered a two percent sell off.

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Speaker 7: It was a confluence of events fueling the sell off.

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Speaker 7: There was the Fitch downgrading US debt, then a hotter

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Speaker 7: than expected jobs report from ADP that fueled inflation concerns,

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Speaker 7: and then the government announced it would have to sell

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Speaker 7: more debt to pay the cost of a ballooning deficit

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Speaker 7: that also had treasuries sell off push tenyure yields to

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Speaker 7: around four point one five percent. That's the highest this year,

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Speaker 7: and the selloff comes just as a host of market

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Speaker 7: gurus we're upping through year round forecasts in New York.

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Speaker 7: I'm John Tucker, Bloomberg debreak.

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Speaker 6: All right, John, thank you.

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Speaker 1: Overseas today, we are following the latest policy decision from

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Speaker 1: the Bank of England. Economists anticipate at least a quarter

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Speaker 1: percentage point increase, with a strong chance the central Bank

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Speaker 1: hikes as much as fifty basis points. That decision comes

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Speaker 1: at seven am Wall Street time.

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Speaker 2: And we're also following earnings, Nathan. This afternoon, we get

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Speaker 2: results from Apple and Amazon. Apple is expected to report

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Speaker 2: its third consecutive year over year revenue decline, while traders

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Speaker 2: are watching Amazon for word on growth in its cloud

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Speaker 2: computing business.

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Speaker 1: Well, we've already got earnings, Karen. From one big tech heavyweight,

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Speaker 1: Qualcomms forecasts disappointed, and the shares right now are down

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Speaker 1: eight and a half percent. We get the details from

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Speaker 1: Bloomberg's Charlie Pellett.

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Speaker 6: It indicates that demand for mobile devices remains weak even

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Speaker 6: as the industry emerges from a glot Qualcomm said sales

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Speaker 6: will be eight point one billion to eight point nine

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Speaker 6: billion dollars. The midpoint of that ranges well below the

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Speaker 6: eight point seventy nine billion dollar average estimate compiled by Bloomberg.

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Speaker 6: The outlook renews concerns about a smartphone industry contending with

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Speaker 6: its worst downturn in years. In New York. Charlie Pallet

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Speaker 6: Bloomberg Daybreak.

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Speaker 2: All right, Charlie, thanks well. Shares A robin Hood are

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Speaker 2: also feeling the pain this morning. They're down six percent

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Speaker 2: after monthly active users missed estimates. Robin Hood reported at

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Speaker 2: revenue that outperform, but also said that crypto revenue fell

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Speaker 2: forty seven percent from the prior year. Time Now for

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Speaker 2: a look at some of the other stories making news

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Speaker 2: around the world. For that, we're joined by Bloomberg's Amy

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Speaker 2: Morris Saming. Good morning, Good morning, Karen.

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Speaker 3: The State Department has ordered non emergency US government employees

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Speaker 3: and eligible family members to leave the US embassy indies

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Speaker 3: after a coup in that country, and now comes word

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Speaker 3: the Wagner Mercenary Group is operating in nearby Molly. State

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Speaker 3: Department spokesman Matthew Miller.

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Speaker 8: We will know how he's being treated.

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Speaker 9: We will know if he's if he's eaten, we will

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Speaker 9: know if he's being tortured, We'll know if.

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Speaker 10: He's Any attempt by the military leaders in Niger to

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Speaker 10: bring the Wagner forces into Nizer would be a sign

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Speaker 10: yet another sign that they do not have the best

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Speaker 10: interests of the Nigerian people at heart.

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Speaker 3: State Department spokesman Matthew Miller says they are also advising

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Speaker 3: US citizens to not travel to Nizer. It's been more

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Speaker 3: than two weeks since twenty three year old US Army

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Speaker 3: Private second Class Travis King ran across the demilitarized Zone

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Speaker 3: into North Korea, his family speaking out. His uncle Myron

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Speaker 3: Gates telling ABC's Good Morning America that they are looking

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Speaker 3: for any information, but the UN Command says it's not

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Speaker 3: giving out any details about Pyongyang's response at this time

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Speaker 3: because it quote doesn't want to win fear with the

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Speaker 3: efforts to bring him home. New Jersey Governor Phil Murphy

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Speaker 3: is cutting his Italy vacation short following the death of

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Speaker 3: Lieutenant Governor Sheila Oliver. Bloomberg's Nancy Lyons has the very latest.

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Speaker 11: An aide says Governor Murphy is cutting short his Italy

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Speaker 11: vacation and will return to the state later this afternoon.

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Speaker 11: Lieutenant Governor Sheila Oliver died this week from an undisclosed

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Speaker 11: medical condition. She'd been serving as acting governor while Murphy

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Speaker 11: was away. She was the first black woman to hold

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Speaker 11: statewide elected office in New Jersey, winning the vote alongside

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Speaker 11: Murphy in twenty seventeen and again in twenty twenty one.

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Speaker 11: She was a well known figure in state government and

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Speaker 11: made history in twenty ten by becoming the first black

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Speaker 11: woman to lead the state Assembly. Murphy will have to

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Speaker 11: name a new Lieutenant governor within forty five days. Nancy

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Speaker 11: lyons Bloomberg Radio.

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Speaker 3: Some military veterans are suing to get access to infertility treatments.

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Speaker 3: The lawsuits claim the Defense Department and the Department of Veterans'

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Speaker 3: Affairs are making it close to impossible for veterans to

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Speaker 3: get infertility treatments. CBS reports the law suits seek to

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Speaker 3: obtain in vitro fertilization coverage for military service members and

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Speaker 3: veterans who don't fit the Veterans' Affairs definition of infertility

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Speaker 3: as pertaining to solely married heterosexual couples. Global News twenty

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Speaker 3: four hours a day powered by more than twenty seven

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Speaker 3: hundred journalists and analysts in more than one hundred twenty countries.

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Speaker 3: I'm Amy Morrison. This is Bloomberg.

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Speaker 2: Karen sor right, Amy, Thank you. It is five ht

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Speaker 2: nine on Wall Street.

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Speaker 5: Time.

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Speaker 2: Now for the Bloomberg Sports Update. Here's John stash Hour,

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Speaker 2: John Hearin.

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Speaker 12: The Big Ten Conference used to have ten schools, then

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Speaker 12: they add at Penn State, then Nebraska next to join

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Speaker 12: Rutgers and Maryland, so the conference currently actually has fourteen

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Speaker 12: schools and USC and UCLA are set to join the

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Speaker 12: Big Ten next year, and now the Big Ten is

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Speaker 12: exploring further expansion talking to Washington and Oregon since the

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Speaker 12: PAC twelve seems to be on the verge of crumbling

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Speaker 12: with the departures of USC, ECLA, and now Colorado is

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Speaker 12: going to be leaving to rejoin the Big twelve. As

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Speaker 12: for Florida State looking to leave the ACC upset that

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Speaker 12: its conference is changing its revenue distribution model. Seven current

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Speaker 12: or former athletes at Iowa and Iowa State now facing

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Speaker 12: criminal gambling chargers. Who's going to be the new quarterback

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Speaker 12: for the Tampa Bay Bucks. Tom Brady is retired, Baker

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Speaker 12: Mayfield is in and currently the number one, but Kyle Traft,

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Speaker 12: the former Florida Gator who the Bucks drafted in twenty

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Speaker 12: twenty one, is said to be closing in on Mayfield

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Speaker 12: for the starting TV job. Baseball, the Red Sox lost

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Speaker 12: in Seattle six to three the Nationals with a walk

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Speaker 12: off win over Milwaukee three to two. Brewers are a

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Speaker 12: half game behind Cincinnati in the NL Central. The Reds

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Speaker 12: just lost twice to the Cubs, giving up a total

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Speaker 12: of thirty six runs in those two games. Toronto ended

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Speaker 12: a five game home losing streak with a four to

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Speaker 12: one win over Baltimore. The Blue Jays have the lead

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Speaker 12: for the second AL Wild Card. Giants bed Arizona four

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Speaker 12: to two. A's lost of the Dodgers in La kend

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Speaker 12: Josh Stasheward.

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Speaker 6: Bloomberg's ford.

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Speaker 13: From coast to coast, from New York to San Francisco,

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Speaker 13: Boston to Washington, d C. Nationwide on Syrias Exam, the

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Speaker 13: Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.

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Speaker 13: Good morning, I'm Nathan Hager.

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Speaker 1: Fitch has downgraded the US credit rating and it is

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Speaker 1: a move that rippled through markets yesterday and had many

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Speaker 1: commentators shaking their heads asking why. To get the answer

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Speaker 1: and the thinking behind the move, Let's hear from one

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Speaker 1: of the people who made the decision. Richard Francis is

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Speaker 1: co head of America's sovereign ratings at Fitch. He says

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Speaker 1: the downgrade was due to weakening US fiscal metrics and governance.

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Speaker 1: Richard Francis of Fitch sat down with Bloomberg Schinelli Bassic

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Speaker 1: to discuss the decision. Let's listen in to that conversation.

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Speaker 14: Now, it's worth talking a little bit about the criteria

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Speaker 14: you set out about a year ago about what it

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Speaker 14: would take to get to a downgrade, because some of

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Speaker 14: the things have changed in terms of the picture.

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Speaker 3: Let's start with.

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Speaker 14: The rise in debt to GDP ratio. The significant and

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Speaker 14: sustained rise did not be so significant or sustained, So

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Speaker 14: why is that not factored in here in terms of

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Speaker 14: the decision made More recently?

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Speaker 9: Well, the dept bubble has been rising quite significantly. If

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Speaker 9: you look at before the Great Financial Crisis in two

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Speaker 9: thousand and seven, debt to GDP was at below sixty percent.

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Speaker 9: Now it's one hundred and thirteen percent. The one hundred

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Speaker 9: and thirteen percent is almost three times higher than the

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Speaker 9: triple A median, and it's more than twice as high as.

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Speaker 8: The double A median.

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Speaker 9: So you've had sustained, you know, deterioration over the years.

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Speaker 8: Yes, debt to G peaked after during the pandemic of one.

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Speaker 9: Hundred and twenty percent and has come down, and that's

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Speaker 9: because you know, inflation and high ennmal GDP growth and

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Speaker 9: also the you know, the withdrawal of the STEM lists,

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Speaker 9: especially last year. But now we're seeing that levels starting

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Speaker 9: to rise again, and we do not see them stabilizing

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Speaker 9: that we just see them continuing to rise in the

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Speaker 9: next three years and probably more of the medium term.

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Speaker 9: And that one hundred and thirteen percent is still thirteen

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Speaker 9: percentage points higher than where it was before the pandemic,

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Speaker 9: So you have quite a deterioration on the fiscal.

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Speaker 8: And debt side.

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Speaker 14: I'd love for you to respond here to Treasury Secretary

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Speaker 14: Janet Yellen who said that she disagrees with your decision

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Speaker 14: and that it is based on outdated and arbitrary based

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Speaker 14: on outdated data. I'm sorry. So, if it is indeed

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Speaker 14: base on outdated data, do you agree with that and

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Speaker 14: does that change the way that you look at the

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Speaker 14: picture moving forward.

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Speaker 9: I understand why she's not happy with it with a downgrade.

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Speaker 8: That makes sense. I think what she.

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Speaker 9: Is referring to, specifically, our governance indicators that we use

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Speaker 9: from the World Bank.

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Speaker 8: They come out once the year. They tend to be

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Speaker 8: a little bit backward looking.

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Speaker 9: We use it because it's we have that data for

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Speaker 9: every country in the world, and it comes out once

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Speaker 9: a year, and we're able to use it for comparison's sake,

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Speaker 9: and not.

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Speaker 8: Just say a finish coming up with us. You know,

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Speaker 8: this underlying governance. So yes, it's a little bit backward looking.

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Speaker 9: But I think more importantly, over the last two decades,

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Speaker 9: you've seen again a deterioration and even these indicators, you know,

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Speaker 9: the United States target started kind of at the top

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Speaker 9: of governance, toward the top at ninety one percentile, and

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Speaker 9: now it's down to seventy eight percentile. So again you've

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Speaker 9: seen a kind of continuous deterioration over the last two decades.

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Speaker 14: What does this mean for the risk free rate? Here's

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Speaker 14: the idea here is that treasuries are not as risk

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Speaker 14: free as they had been with a gold standard to

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Speaker 14: LA rating. Here, what does this mean for broader markets,

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Speaker 14: and do other countries do other security space for the

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Speaker 14: risk of downgrade given how much the treasury market had

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Speaker 14: underpinned the financial markets.

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Speaker 8: You know, I think one of the rating strengths of

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Speaker 8: the US, the other key rating strength.

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Speaker 9: In addition to the dynamic economy that I mentioned earlier,

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Speaker 9: is the the reserve currency status of the United States.

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Speaker 8: It's on.

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Speaker 9: It's unparalleled. There's no other there's not really much of

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Speaker 9: an alternative. The treasury markets teep and liquid, and this

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Speaker 9: gives the US government tremendous financing flexibility. And I think

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Speaker 9: that is a very key rating factor. And the other

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Speaker 9: thing I would have to mention is, you know, double

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Speaker 9: A plus is the second highest rating we have.

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Speaker 8: It's not it's not a low rating. It's not, you know,

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Speaker 8: it's still a very high rating. It's just me.

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Speaker 9: We're just saying that we do not think that the

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Speaker 9: underlying pistol story and the governance, uh, you know, it's

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Speaker 9: compatible with triple A anymore.

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