WEBVTT - Trump's DC Arraignment; Stocks Spooked by Fitch Downgrade

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 1>First, we have the latest on the legal entanglements of

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<v Speaker 1>Donald Trump. The former president is set to appear in

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<v Speaker 1>a Washington federal court today to face charges he conspired

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<v Speaker 1>to obstruct the twenty twenty presidential election. Bloomberg's Amy Morris

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<v Speaker 1>has details from our ninety nine one newsroom in Washington.

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<v Speaker 3>The hearing will likely be short, with Trump's attorneys doing

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<v Speaker 3>most of the talking. Trump is expected to be arraigned

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

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<v Speaker 3>US Marshall Service spokesman Drew Wade says Trump will be

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<v Speaker 3>processed first. He'll have his fingerprints taken digitally. He'll be

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<v Speaker 3>required to provide a Social Security number, date of birth, address,

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<v Speaker 3>and other personal information, but there will be no mugshot

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<v Speaker 3>since he is easily recognizable and there are many photographs

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<v Speaker 3>already available. He will not be placed under arrest, as

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<v Speaker 3>this was a summons for his appearance in court, not

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<v Speaker 3>an arrest warrant. Today's hearing is set for four pm

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<v Speaker 3>Eastern time in Washington. I maye more as Bloomberg Day

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<v Speaker 3>break all.

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<v Speaker 2>Right, Amy, thank you about the latest charges against former

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

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<v Speaker 2>hearing from someone with first hand knowledge of the subject.

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<v Speaker 2>John Dean served as White House counsel for President Nixon

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<v Speaker 2>during Watergate.

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<v Speaker 4>Nixon's Watergate was like a lightning bug. Trump's behavior is

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<v Speaker 4>like a lightning storm, and it it threatens the entire

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<v Speaker 4>structure of our democracy.

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<v Speaker 2>Former White House counsel John Dean was a guest on

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<v Speaker 2>Bloomberg's Sound on Catch the Show weekdays at one pm

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<v Speaker 2>Eastern on Bloomberg Radio or listen on demand wherever you

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<v Speaker 2>get your podcasts.

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<v Speaker 1>And with former President Trump's arraignment today, Karen us Capitol

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<v Speaker 1>police are preparing for large and possibly rowdy crowds. Bloomberg's

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<v Speaker 1>Ed Baxter has that part of the story.

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<v Speaker 5>The Capital, of course, is a bit on edge for

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<v Speaker 5>obvious reasons. Capitol Police had a report of an active

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<v Speaker 5>shooter yesterday and this time around. Police Chief Thomas Manger

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

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<v Speaker 5>about this for a couple of weeks now.

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<v Speaker 6>We've had a couple of phone calls today, so yeah,

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<v Speaker 6>we're prepared.

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<v Speaker 5>Trump will head into the courthouse through an underground entrance

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<v Speaker 5>and may not even be seen during the entire proceeding.

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<v Speaker 5>In San Francisco, I'm at Baxter Bloomberg Daybreak.

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

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<v Speaker 2>the proposed plea deal between Hunter Biden and prosecutors A

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<v Speaker 2>judge as unsealed the proposal. It shows Hunter Biden earned

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<v Speaker 2>more than four million dollars from a Ukrainian energy company,

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

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<v Speaker 2>the course of two years, where the agreement says he

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<v Speaker 2>descended deeper into substance abuse. A lawyer for Biden did

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<v Speaker 2>not immediately respond to our request for comment.

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<v Speaker 1>Let's turn back to the markets now, Karen, where much

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<v Speaker 1>of the commentary remains focused on this week's downgrade of

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<v Speaker 1>the US credit rating. Now, two former Treasury secretaries are

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<v Speaker 1>flagging concerns over the nation's long term fiscal challenges. Timothy

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<v Speaker 1>Geidner says the US has enormous capacity to deal with

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<v Speaker 1>its budget deficit. The man he succeeded, Hank Paulson, agrees,

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<v Speaker 1>but Paulson says the government needs to act.

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<v Speaker 4>We're a rich country and We've got time to deal

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<v Speaker 4>with it, but we need to do some things in

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<v Speaker 4>the next few years to change that trajectory.

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<v Speaker 1>Hank Paulson and Timothy Geidner spoke to our David Weston

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<v Speaker 1>on Bloomberg's Wall Street Week. You can catch the entire

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<v Speaker 1>conversation tomorrow at six pm Wall Street Time on Bloomberg Television,

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<v Speaker 1>or subscribe to the Bloomberg Wall Street Week podcast. It's

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<v Speaker 1>available on Apple, Spotify, or anywhere else you listen and.

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<v Speaker 2>Nathan, the news from Fitch Ratings appears to be putting

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<v Speaker 2>the brakes on this year's stock rally. Bloombergs John Tucker

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<v Speaker 2>joins us with the details. Good morning John, Good morning Careen.

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<v Speaker 7>The S and P five hundred racked up its worst

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<v Speaker 7>day since April, falling one point four percent. The high

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<v Speaker 7>flying Nasdaq one hundred registered a two percent sell off.

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<v Speaker 7>It was a confluence of events fueling the sell off.

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<v Speaker 7>There was the Fitch downgrading US debt, then a hotter

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<v Speaker 7>than expected jobs report from ADP that fueled inflation concerns,

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<v Speaker 7>and then the government announced it would have to sell

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<v Speaker 7>more debt to pay the cost of a ballooning deficit

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<v Speaker 7>that also had treasuries sell off push tenyure yields to

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

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<v Speaker 7>and the selloff comes just as a host of market

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<v Speaker 7>gurus we're upping through year round forecasts in New York.

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<v Speaker 7>I'm John Tucker, Bloomberg debreak.

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<v Speaker 6>All right, John, thank you.

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<v Speaker 1>Overseas today, we are following the latest policy decision from

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<v Speaker 1>the Bank of England. Economists anticipate at least a quarter

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<v Speaker 1>percentage point increase, with a strong chance the central Bank

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<v Speaker 1>hikes as much as fifty basis points. That decision comes

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<v Speaker 1>at seven am Wall Street time.

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<v Speaker 2>And we're also following earnings, Nathan. This afternoon, we get

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<v Speaker 2>results from Apple and Amazon. Apple is expected to report

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<v Speaker 2>its third consecutive year over year revenue decline, while traders

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<v Speaker 2>are watching Amazon for word on growth in its cloud

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<v Speaker 2>computing business.

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

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<v Speaker 1>Qualcomms forecasts disappointed, and the shares right now are down

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<v Speaker 1>eight and a half percent. We get the details from

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<v Speaker 1>Bloomberg's Charlie Pellett.

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<v Speaker 6>It indicates that demand for mobile devices remains weak even

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<v Speaker 6>as the industry emerges from a glot Qualcomm said sales

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<v Speaker 6>will be eight point one billion to eight point nine

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<v Speaker 6>billion dollars. The midpoint of that ranges well below the

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<v Speaker 6>eight point seventy nine billion dollar average estimate compiled by Bloomberg.

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<v Speaker 6>The outlook renews concerns about a smartphone industry contending with

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<v Speaker 6>its worst downturn in years. In New York. Charlie Pallet

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<v Speaker 6>Bloomberg Daybreak.

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<v Speaker 2>All right, Charlie, thanks well. Shares A robin Hood are

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<v Speaker 2>also feeling the pain this morning. They're down six percent

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<v Speaker 2>after monthly active users missed estimates. Robin Hood reported at

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<v Speaker 2>revenue that outperform, but also said that crypto revenue fell

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<v Speaker 2>forty seven percent from the prior year. Time Now for

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<v Speaker 2>a look at some of the other stories making news

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

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<v Speaker 2>Morris Saming. Good morning, Good morning, Karen.

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<v Speaker 3>The State Department has ordered non emergency US government employees

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<v Speaker 3>and eligible family members to leave the US embassy indies

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<v Speaker 3>after a coup in that country, and now comes word

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<v Speaker 3>the Wagner Mercenary Group is operating in nearby Molly. State

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<v Speaker 3>Department spokesman Matthew Miller.

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<v Speaker 8>We will know how he's being treated.

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<v Speaker 9>We will know if he's if he's eaten, we will

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<v Speaker 9>know if he's being tortured, We'll know if.

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<v Speaker 10>He's Any attempt by the military leaders in Niger to

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<v Speaker 10>bring the Wagner forces into Nizer would be a sign

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<v Speaker 10>yet another sign that they do not have the best

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<v Speaker 10>interests of the Nigerian people at heart.

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<v Speaker 3>State Department spokesman Matthew Miller says they are also advising

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<v Speaker 3>US citizens to not travel to Nizer. It's been more

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<v Speaker 3>than two weeks since twenty three year old US Army

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<v Speaker 3>Private second Class Travis King ran across the demilitarized Zone

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<v Speaker 3>into North Korea, his family speaking out. His uncle Myron

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<v Speaker 3>Gates telling ABC's Good Morning America that they are looking

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<v Speaker 3>for any information, but the UN Command says it's not

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<v Speaker 3>giving out any details about Pyongyang's response at this time

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<v Speaker 3>because it quote doesn't want to win fear with the

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<v Speaker 3>efforts to bring him home. New Jersey Governor Phil Murphy

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<v Speaker 3>is cutting his Italy vacation short following the death of

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

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<v Speaker 11>An aide says Governor Murphy is cutting short his Italy

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<v Speaker 11>vacation and will return to the state later this afternoon.

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<v Speaker 11>Lieutenant Governor Sheila Oliver died this week from an undisclosed

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<v Speaker 11>medical condition. She'd been serving as acting governor while Murphy

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<v Speaker 11>was away. She was the first black woman to hold

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<v Speaker 11>statewide elected office in New Jersey, winning the vote alongside

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<v Speaker 11>Murphy in twenty seventeen and again in twenty twenty one.

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<v Speaker 11>She was a well known figure in state government and

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<v Speaker 11>made history in twenty ten by becoming the first black

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<v Speaker 11>woman to lead the state Assembly. Murphy will have to

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<v Speaker 11>name a new Lieutenant governor within forty five days. Nancy

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<v Speaker 11>lyons Bloomberg Radio.

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<v Speaker 3>Some military veterans are suing to get access to infertility treatments.

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<v Speaker 3>The lawsuits claim the Defense Department and the Department of Veterans'

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<v Speaker 3>Affairs are making it close to impossible for veterans to

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<v Speaker 3>get infertility treatments. CBS reports the law suits seek to

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<v Speaker 3>obtain in vitro fertilization coverage for military service members and

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<v Speaker 3>veterans who don't fit the Veterans' Affairs definition of infertility

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<v Speaker 3>as pertaining to solely married heterosexual couples. Global News twenty

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<v Speaker 3>four hours a day powered by more than twenty seven

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<v Speaker 3>hundred journalists and analysts in more than one hundred twenty countries.

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<v Speaker 3>I'm Amy Morrison. This is Bloomberg.

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<v Speaker 2>Karen sor right, Amy, Thank you. It is five ht

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<v Speaker 2>nine on Wall Street.

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<v Speaker 5>Time.

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

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<v Speaker 2>John Hearin.

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<v Speaker 12>The Big Ten Conference used to have ten schools, then

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<v Speaker 12>they add at Penn State, then Nebraska next to join

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<v Speaker 12>Rutgers and Maryland, so the conference currently actually has fourteen

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<v Speaker 12>schools and USC and UCLA are set to join the

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<v Speaker 12>Big Ten next year, and now the Big Ten is

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<v Speaker 12>exploring further expansion talking to Washington and Oregon since the

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<v Speaker 12>PAC twelve seems to be on the verge of crumbling

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<v Speaker 12>with the departures of USC, ECLA, and now Colorado is

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<v Speaker 12>going to be leaving to rejoin the Big twelve. As

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<v Speaker 12>for Florida State looking to leave the ACC upset that

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<v Speaker 12>its conference is changing its revenue distribution model. Seven current

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<v Speaker 12>or former athletes at Iowa and Iowa State now facing

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<v Speaker 12>criminal gambling chargers. Who's going to be the new quarterback

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<v Speaker 12>for the Tampa Bay Bucks. Tom Brady is retired, Baker

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<v Speaker 12>Mayfield is in and currently the number one, but Kyle Traft,

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<v Speaker 12>the former Florida Gator who the Bucks drafted in twenty

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<v Speaker 12>twenty one, is said to be closing in on Mayfield

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<v Speaker 12>for the starting TV job. Baseball, the Red Sox lost

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<v Speaker 12>in Seattle six to three the Nationals with a walk

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<v Speaker 12>off win over Milwaukee three to two. Brewers are a

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<v Speaker 12>half game behind Cincinnati in the NL Central. The Reds

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<v Speaker 12>just lost twice to the Cubs, giving up a total

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<v Speaker 12>of thirty six runs in those two games. Toronto ended

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<v Speaker 12>a five game home losing streak with a four to

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<v Speaker 12>one win over Baltimore. The Blue Jays have the lead

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<v Speaker 12>for the second AL Wild Card. Giants bed Arizona four

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<v Speaker 12>to two. A's lost of the Dodgers in La kend

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<v Speaker 12>Josh Stasheward.

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<v Speaker 6>Bloomberg's ford.

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<v Speaker 13>From coast to coast, from New York to San Francisco,

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<v Speaker 13>Boston to Washington, d C. Nationwide on Syrias Exam, the

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<v Speaker 13>Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.

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<v Speaker 13>Good morning, I'm Nathan Hager.

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<v Speaker 1>Fitch has downgraded the US credit rating and it is

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<v Speaker 1>a move that rippled through markets yesterday and had many

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<v Speaker 1>commentators shaking their heads asking why. To get the answer

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<v Speaker 1>and the thinking behind the move, Let's hear from one

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<v Speaker 1>of the people who made the decision. Richard Francis is

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<v Speaker 1>co head of America's sovereign ratings at Fitch. He says

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<v Speaker 1>the downgrade was due to weakening US fiscal metrics and governance.

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<v Speaker 1>Richard Francis of Fitch sat down with Bloomberg Schinelli Bassic

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<v Speaker 1>to discuss the decision. Let's listen in to that conversation.

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<v Speaker 14>Now, it's worth talking a little bit about the criteria

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<v Speaker 14>you set out about a year ago about what it

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<v Speaker 14>would take to get to a downgrade, because some of

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<v Speaker 14>the things have changed in terms of the picture.

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<v Speaker 3>Let's start with.

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<v Speaker 14>The rise in debt to GDP ratio. The significant and

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<v Speaker 14>sustained rise did not be so significant or sustained, So

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<v Speaker 14>why is that not factored in here in terms of

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<v Speaker 14>the decision made More recently?

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<v Speaker 9>Well, the dept bubble has been rising quite significantly. If

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<v Speaker 9>you look at before the Great Financial Crisis in two

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<v Speaker 9>thousand and seven, debt to GDP was at below sixty percent.

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<v Speaker 9>Now it's one hundred and thirteen percent. The one hundred

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<v Speaker 9>and thirteen percent is almost three times higher than the

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

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<v Speaker 8>The double A median.

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<v Speaker 9>So you've had sustained, you know, deterioration over the years.

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<v Speaker 8>Yes, debt to G peaked after during the pandemic of one.

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<v Speaker 9>Hundred and twenty percent and has come down, and that's

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<v Speaker 9>because you know, inflation and high ennmal GDP growth and

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<v Speaker 9>also the you know, the withdrawal of the STEM lists,

0:12:00.720 --> 0:12:04.120
<v Speaker 9>especially last year. But now we're seeing that levels starting

0:12:04.120 --> 0:12:07.040
<v Speaker 9>to rise again, and we do not see them stabilizing

0:12:07.240 --> 0:12:10.440
<v Speaker 9>that we just see them continuing to rise in the

0:12:10.480 --> 0:12:13.199
<v Speaker 9>next three years and probably more of the medium term.

0:12:13.880 --> 0:12:17.280
<v Speaker 9>And that one hundred and thirteen percent is still thirteen

0:12:17.320 --> 0:12:20.880
<v Speaker 9>percentage points higher than where it was before the pandemic,

0:12:21.040 --> 0:12:23.800
<v Speaker 9>So you have quite a deterioration on the fiscal.

0:12:23.440 --> 0:12:24.359
<v Speaker 8>And debt side.

0:12:24.520 --> 0:12:26.960
<v Speaker 14>I'd love for you to respond here to Treasury Secretary

0:12:27.000 --> 0:12:30.560
<v Speaker 14>Janet Yellen who said that she disagrees with your decision

0:12:30.679 --> 0:12:34.640
<v Speaker 14>and that it is based on outdated and arbitrary based

0:12:34.679 --> 0:12:37.320
<v Speaker 14>on outdated data. I'm sorry. So, if it is indeed

0:12:37.320 --> 0:12:40.480
<v Speaker 14>base on outdated data, do you agree with that and

0:12:40.559 --> 0:12:42.360
<v Speaker 14>does that change the way that you look at the

0:12:42.360 --> 0:12:43.440
<v Speaker 14>picture moving forward.

0:12:44.880 --> 0:12:49.599
<v Speaker 9>I understand why she's not happy with it with a downgrade.

0:12:50.600 --> 0:12:53.559
<v Speaker 8>That makes sense. I think what she.

0:12:53.640 --> 0:12:57.079
<v Speaker 9>Is referring to, specifically, our governance indicators that we use

0:12:57.120 --> 0:12:57.920
<v Speaker 9>from the World Bank.

0:12:59.040 --> 0:13:01.040
<v Speaker 8>They come out once the year. They tend to be

0:13:01.120 --> 0:13:02.360
<v Speaker 8>a little bit backward looking.

0:13:02.840 --> 0:13:05.400
<v Speaker 9>We use it because it's we have that data for

0:13:05.480 --> 0:13:07.520
<v Speaker 9>every country in the world, and it comes out once

0:13:07.559 --> 0:13:11.000
<v Speaker 9>a year, and we're able to use it for comparison's sake,

0:13:11.040 --> 0:13:11.319
<v Speaker 9>and not.

0:13:11.360 --> 0:13:14.200
<v Speaker 8>Just say a finish coming up with us. You know,

0:13:14.240 --> 0:13:19.320
<v Speaker 8>this underlying governance. So yes, it's a little bit backward looking.

0:13:20.160 --> 0:13:24.360
<v Speaker 9>But I think more importantly, over the last two decades,

0:13:24.400 --> 0:13:28.600
<v Speaker 9>you've seen again a deterioration and even these indicators, you know,

0:13:28.880 --> 0:13:31.080
<v Speaker 9>the United States target started kind of at the top

0:13:31.160 --> 0:13:36.640
<v Speaker 9>of governance, toward the top at ninety one percentile, and

0:13:36.679 --> 0:13:40.040
<v Speaker 9>now it's down to seventy eight percentile. So again you've

0:13:40.080 --> 0:13:44.600
<v Speaker 9>seen a kind of continuous deterioration over the last two decades.

0:13:45.000 --> 0:13:47.839
<v Speaker 14>What does this mean for the risk free rate? Here's

0:13:47.920 --> 0:13:51.440
<v Speaker 14>the idea here is that treasuries are not as risk

0:13:51.480 --> 0:13:54.120
<v Speaker 14>free as they had been with a gold standard to

0:13:54.320 --> 0:13:57.840
<v Speaker 14>LA rating. Here, what does this mean for broader markets,

0:13:57.880 --> 0:14:01.480
<v Speaker 14>and do other countries do other security space for the

0:14:01.559 --> 0:14:04.559
<v Speaker 14>risk of downgrade given how much the treasury market had

0:14:04.679 --> 0:14:06.360
<v Speaker 14>underpinned the financial markets.

0:14:07.240 --> 0:14:09.280
<v Speaker 8>You know, I think one of the rating strengths of

0:14:09.320 --> 0:14:11.520
<v Speaker 8>the US, the other key rating strength.

0:14:11.200 --> 0:14:15.120
<v Speaker 9>In addition to the dynamic economy that I mentioned earlier,

0:14:15.280 --> 0:14:19.840
<v Speaker 9>is the the reserve currency status of the United States.

0:14:19.920 --> 0:14:20.280
<v Speaker 8>It's on.

0:14:21.080 --> 0:14:24.680
<v Speaker 9>It's unparalleled. There's no other there's not really much of

0:14:24.680 --> 0:14:29.200
<v Speaker 9>an alternative. The treasury markets teep and liquid, and this

0:14:29.280 --> 0:14:33.720
<v Speaker 9>gives the US government tremendous financing flexibility. And I think

0:14:33.720 --> 0:14:37.800
<v Speaker 9>that is a very key rating factor. And the other

0:14:37.800 --> 0:14:40.400
<v Speaker 9>thing I would have to mention is, you know, double

0:14:40.400 --> 0:14:42.600
<v Speaker 9>A plus is the second highest rating we have.

0:14:42.760 --> 0:14:45.080
<v Speaker 8>It's not it's not a low rating. It's not, you know,

0:14:45.120 --> 0:14:47.160
<v Speaker 8>it's still a very high rating. It's just me.

0:14:47.520 --> 0:14:49.800
<v Speaker 9>We're just saying that we do not think that the

0:14:50.360 --> 0:14:55.320
<v Speaker 9>underlying pistol story and the governance, uh, you know, it's

0:14:55.720 --> 0:14:58.480
<v Speaker 9>compatible with triple A anymore.

0:15:01.280 --> 0:15:04.360
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