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And good afternoon everyone. Happy
Friday to you all live on Bloomberg TV
radio streaming on YouTube and Bloomberg
Originals. I'm Katie Grife alongside
Billy Lip Scholes. We are in for Carol
Masser and Tim Stenovvic. It's Friday.
It's the final trading day of the month.
And 24 hours ago, Bailey, you and I were
sitting here. We were looking at
all-time highs on the S&P 500. A
different picture today.
>> No more NASDAQ 100 down more than 1% but
volumes are still light. Yeah, still
light of course. Uh things get back to
normal on Tuesday of this week, but we
have a great show coming up for you on
this Friday, August 29th. We start with
a mixed consumer picture as the Fed's
preferred inflation measure remains
sticky. Consumer spending hits a new
high. We'll break it all down with
Claudia Sam of New Century Adviserss and
Jat of TD joining to discuss
that dollar weakness.
>> Plus, Katie, we will have the latest out
of DC as Fed Governor Lisa Cook sues
President Trump. Bloomberg's Jordan
Fabian has all the details after this
morning's emergency court hearing.
>> And later today, it's day two of
Bloomberg Business Week at the US Open.
We'll check in with Tim Cenovic and
Molly Smith. All of that and more coming
up. But first, a check on the day's
trade and top business stories. Let's
say hello to Charlie.
>> Hi, thank you very much, Katie Grfeld.
Here's what's going on. Keeping an eye
on shares of Craft Hind right now. The
stock is advancing by 2.3%. Craft
turning positive as the Wall Street
Journal says that the company is nearing
a breakup announcement. We're monitoring
the story. We'll have more details as
they become available. But right now, we
got Craft Hinds up by just about 2.3%.
The Dow, the S&P, NASDAQ all in the red
right now. Traders driving stocks lower
amid a sell-off in tech shares. As
Bailey mentioned, the Nasdaq 100 index
down 1.3%.
S&P is lower by 44 down 6/10 of 1%
trading at 6457. Keep in mind yesterday
we had that record close above 6500. The
Dow down 113 down 210 of 1%. NASDAQ the
composite index down 1.2%.
10-year at 4.21% with a 2-year 3.62%.
Gold up $27 a ounce up 8/10en of 1%
while West Texas Intermediate crude just
above $64 a barrel down 9/10 of 1%. A
major move to the downside for Bitcoin.
108,362
on Bitcoin. That is a drop right now of
just about 3.2%.
Dell after earnings lower. The company
booked fewer sales of AI servers. And in
the previous 3 months, Dell tumbling by
9.6%.
Also after earnings, Marll Technologies
results featured a disappointing read on
its data center business. Marll plunging
now by 18.2%. 2% for on demand news 24
hours a day. Subscribe to Bloomberg News
now wherever you get your podcasts. I'm
Charlie Pellet and that is a Bloomberg
business flash.
>> All right, thank you for that update.
Charlie Pellet, let's get back to one of
today's top story and that is the US
consumer still spending even in the face
of higher prices. We're joined now by
Claudia S. She is chief economist over
at New Century Advisors. And Claudia, I
mean, the word that I keep hearing to
describe the PCE report that we got at
8:30 this morning is sticky. You think
about core PCE on an annualized basis
coming in at 2.9%. You think about core
PCE on a monthly basis at.3%. It feels
like that 2% target that the Fed wants
to get to, it just remains elusive.
>> Absolutely. You know, we we are no
longer making progress towards the Fed's
2% target. I mean, earlier in this year,
you could still point to some progress.
Right now, I say it's more that we we've
stalled out and there has been a really
robust conversation about tariffs and
how this could be a temporary factor. I
think that's what's you do see that in
the goods inflation. I think it's going
to take a long time for that to work its
way out. That'll be a lift to inflation.
To me, the part of the PC inflation in
July that was really disconcerting was
on the services side and particularly
the non-housing core services, what the
Fed refers to as super core. We had
start we really look like we were making
some progress earlier this year and it
is just not we're we're back up at a
pace of inflation those categories. is
just not comfortable uh and and you know
isn't is not pointed in the right
direction and it's a lot harder there to
point to tariffs.
>> Claudia not going in the right
direction. Is the environment ripe for a
rate cut at next month's meeting then?
>> So I thought chair Powell did a really
good job last Friday at Jackson Hole
outlining the risks to the economy and
this is a challenging economic
environment. The dual mandate is in
tension. There are reasons to expect
inflation to go even higher from where
it is right now. It's already elevated.
And there are reasons to be worried
about employment really going lower and
having some deterioration in the labor
market. And so it is a matter of sifting
through every bit of data and trying to
get a sense of where those what that
balance of risks is because you there's
no there's no path for the Fed that will
check both boxes. like they are
intention. So I I agree with the
assessment uh that you know doing maybe
an insurance cut in September kind of
trying to stay ahead of the labor market
weakness makes sense given where the Fed
funds rate is. But I don't see the case
to be signaling like Fed Governor Waller
did last night that we're like lining up
a whole sequence of cuts. I have a
feeling we're going to be like in this
back and forth push and pull of the
inflation employment data um probably
through the end of this year. Well, you
make a great point. I mean, you consider
the fact that you have the dual mandate,
the two sides in conflict. We haven't
been in a dynamic like this in a while,
Claudia, and that was going to be my
question to you. If we do enter a
situation where, okay, you have the
labor market weakening, but you have
core inflation stuck uh maybe closer to
three than it is to 2%. I mean,
realistically, how much room does the
Federal Reserve have to cut rates? And
if they're stuck in a stopand go
situation when it comes to rate cuts, I
mean, how much are these kind of oneoff
25 basis point cuts actually going to
matter in this economy?
>> Right. Well, as as Paul mentioned last
week, with the unemployment rate as low
as it is and in particular as stable as
it's been over the last year, they can
they can proceed carefully, right? So,
and that and at 25 basis point cut at
one meeting, maybe we cut again soon,
maybe we don't like that. That's what
carefully looks like in in Fed Fed world
right now. They they absolutely have the
space if things in the labor market were
to really start to gain downward
momentum.
You know, the federal funds rate's above
4%. There's a lot of room to cut.
There's a lot of room to respond if they
need to and they'll switch gears if but
the data do not they're not there yet.
We're talking about risk. We're not
talking about it's happening. And so I
think they're in a good place, but my
goodness, it is it is so hard to catch
the economy when it's turning. I mean,
it could be, you know, we talk a lot
about the labor market as a potential
turn, but you could have inflation take
off and, you know, like these these kind
of moments where you're trying to get
that right. You know, that's that's very
tough. And, you know, they they may get
it wrong, but I think that's where like
being careful and deliberate is going to
be the strategy that works for them. And
Claudia, we have a kind of pretty strong
set of data that we're going to get
before that September Fed meeting. What
are you keeping an eye on? What can kind
of vindicate vindicate the push to do a
quarter point uh basis or quarter point
cut in September? Or what could actually
kind of throw those plans astray,
>> right? Well, the the logic of the setup
for the the September cut is more in an
insurance space, right? It's about
risks. So are you know we've got one
inflation print one uh employment print
is that going to like totally change the
picture of risk probably not like what
the employment report last month was a
gamecher but that is a very rare
occurrence and we shouldn't expect
getting that kind of like news in one
release. So I think you know they're on
a path to be able to do a cut in
September. I fully expect we're going to
see descents. Like this is a tough one.
Like I'm, you know, I can see reasons to
be concerned about on the inflation side
we're going to get stuck at 3%. You
know, so I think we'll see some
differences of opinion and differences
in votes and that's a healthy thing and
it just underscores like this is a tough
uh environment for them to decide. I
think of the two reports probably the
employment report is going to give more
kind of signal to what's the right thing
to do. in all likelihood, you know,
we're going to get another inflation
report that's that's firming up and and
they're going to have to be able to make
the case we are cutting as inflation is
rising. And I think they can, but that
is that is a not a typical moment for
the Fed to cut.
>> And of course, all eyes on the Fed at
that uh FOMC meeting next month, not
just for the rate decision, but also uh
for the politicized nature of what's
going on at the Federal Reserve right
now, Claudia, and you think about what's
unfolding right now in DC. We know that
Fed Governor uh Lisa Cook has sued
President Trump over his attempt to oust
her from uh her position right now. And
Claudia, I mean, we've been discussing
with each other what's going on when it
comes to this administration, the
pressure that it's trying to exert on
the central bank. What sticks out to me
is the apparent non-reaction that we're
seeing in markets right now. I keep
hearing that the worst case scenario is
we end up in a situation that pressures
the long end higher. But Claudia, we're
just not seeing that kind of stress come
through,
>> right? It's we are in uncharted
territory. It is hard for investors,
particularly kind of a a mass of
investors to kind of really see where
this could go, right? Like this is just
a level of creativity that maybe
financial markets don't typically uh you
know and foresight that they don't
typically have. I think this this is a
real risk. what what has happened this
week with uh Fed Governor Lisa Cook. To
me, that's just the latest in a series
of efforts by the White House to gain
more control over monetary policy. And
they've been very clear what they want
if they get more control. And that is
ultra low Fed funds rate. And I think at
this point, you know, this is something
that the Fed itself when it talks about
what are the inflation risks, a Fed that
is no longer independent, like that is
in the mix now. And you know, which is
just really shocking. But you know, if
control is lost well and interest rates
go very low, then we are talking about
an inflationary episode. And so, you
know, if we get there, I fully expect
markets to react uh strongly, but it's
just, you know, it's it's a risk that's
out there and it just still feels maybe
to investors like just not possible. But
unfortunately, I think it's it's a real
risk. The risk is rising.
>> Yeah. Claudia, just quickly here, if
that does happen, where do you think
investors are going to shift their
assets to?
Yeah, I think this, you know, this would
be this will be a very messy adjustment
if we get there. And it also, you know,
the expectations of inflation taking
off, I mean, should build in very
quickly, but it's as with the tariffs,
it's not like it shows up the next day,
right? It's a process like it would, you
know, we could have in the macroeconomic
effects of it could be pretty subtle in
the beginning. It's more that you know
the
in in the US and around the world when
politicians take control of monetary
policy on average usually it goes to a
bad place in terms of higher inflation
and more financial and economic
instability. So exactly what that would
look like I don't know but I really
don't want to see it happen. Um but you
know like I said it's a risk but I think
it's actually we're at a point now where
like it it's a real risk. A lot of risks
to digest. Thank you so much to Claudia
S. She is the chief economist for New
Century Advisors. Want to pivot to uh
someone a guest here in studio with us
that is Jat Bardwage, director of FX
strategy at TD securities. JT, just to
start on that, how does the ongoing Lisa
Cook saga impact the haven status of the
US dollar and expectations around what
that could mean if we lose a truly
independent Fed?
Uh I think it's definitely a very
important question because there there
have been a lot of indications of the
increased political interference into
the workings of the Fed and I think the
question you asked to the guest before
me was also very relevant like why
haven't markets reacted intermittently
to this. I think it's because a lot of
the implications of that would be on the
path for the 2026 Fed cuts. A lot of the
new appointees which Trump and his
adviserss can potentially get in will
impact a lot the 2026 path. For now, we
are solely focused on the September Fed
meeting. Will the Fed cut? How much will
that be? Will that be a series of cuts?
And that's why market reaction has been
relatively contained. But on our end, we
are preparing for the worst case. Let's
say, you know, let's say if this
increased interference does proceed. We
have actually recently been back testing
what that scenario would mean for the
dollar and it does not look as
optimistic.
>> Well, talk to us a little bit more about
that because that's what I've been
asking in advent investors. How do you
start to blueprint where this could go
and in the currency market? I mean,
Bailey asks a good question. Is the
dollar still a haven in that worst case
scenario?
>> Uh, so when we are actually now laying
out the blueprint for what that could
be, we're analyzing two scenarios. What
does first of all, it would be
definitely linked to more Fed cuts to
front-end rates come down. But what what
would be more interesting would be also
the reaction of long end rates because
it would either be a bull steepening or
a twist deepening kind of a regime. But
irrespective of that thankfully it's
both of those regimes are very bearish
for the dollar because in the twist
deepening regime you will have risk
premia you know accumulated in the long
end because of inflation expectations.
people thinking that the Fed will have
to cut a lot more than what is actually
needed for the economy especially when
there are concerns around inflation pass
through or even if it's not that like
both of them are very bearish for the
dollar and as you correctly mentioned
like a lot of people are asking is that
really a safe haven that's something
that we've been flagging since the start
of the year that the dollar safe haven
status is at risk a lot of people have
questioned that oh maybe it's just
oneoff but that has been true for a good
you know eight months of the year where
the dollar's safe haven status has
deteriorated and It's not been behaving
like one for quite some time.
>> Well, I was in Japan when we had the
tariff tantrum, if you will, and we saw
a lot of questions about selling
America, and that was a big conversation
in Asia. Where do you reallocate assets
to if the dollar is not a safe haven? If
US treasuries are not as sturdy as we
would like to think, where do investors
position in the currency market? So
since the start of the year there's
definitely been repatriation and
reallocation towards the euro area which
started when in February you had the
announcement on the local fiscal
platform that has plateaued a little bit
but what you have seen increasing signs
of is definitely investors looking for
opportunities outside that's something
which has not been true true for the
last 5 years where the gap between the
US and the rest of the world was so wide
that everyone was only investing in the
US. I'm not saying that the gap between
both of those ends has completely
shrunk. The US still has a relative
advantage to the rest of the world, you
could say, but you know, it's definitely
slowed down, whereas the rest of the
world is still holding up. So that gap
has sharply converged and that's
encouraging people to look elsewhere.
Europe has been the first one, but
eventually you know there are still a
lot of countries in, you know, other
developed markets. Japan, you know,
Australia, you know, all of them still
look primed for, you know, seeing
inflows. Japan saw a bit of uncertainty
with the elections and everything but
that's now passed us. Similarly, we're
all waiting for the trade deal with
China to be announced which will start
bringing in capital allocation back to
Asia, even Australia and that should
also uplift that region. But that's
definitely something which we see
playing out you know in the next few
quarters.
>> It's interesting because it's a similar
story in the equity market as well.
Investors have been looking outside just
the US option. We know that European
equity markets have been on a tear as
well. It's slightly different in FX
because it truly is a zero- sum game
when you're talking about the different
currency pairs. I want to talk about
what could possibly replace the US
dollar as a reserve currency though
because I started here as a currency
reporter back in 2016 and this was an
article you wrote I don't know once a
year you know are we seeing truly the
end of the dollar being the reserve
currency the answer was always no but
>> the reason why was because what is the
alternative what truly could be the
alternative to the US dollar when it
comes to reserve currency status is
because you look at some of the options
and there's just a lot of reasons that
point back to the greenback.
>> I think that's definitely the question
of the year I would say. Uh and you know
very topical and absolutely when
whenever people have tried to answer
that question what they have done is
looked at the dollar's holdings at the
central banks around the world that
actually has been shrinking and falling
lower for the last decade and in fact
more than a decade. But that to me was
never the sign of the dollar's
overvaluation or strength. It was always
the you know the strength and resilience
of US assets and the massive investment
of the global investors and money
managers of the world purely in US
equities. The dollar's overvaluation and
safe haven status has you know I think
gone one and one with US equity
dominance a lot more than just you know
central banks holding dollar reserves
especially in the last few years and
that all is definitely starting to see
you know meaningful cracks. You're
absolutely right in saying that, you
know, you cannot definitely point to one
candidate currency. Euro comes close,
right? But it's not a resounding yes
that you can come go out and declare
that Euro will be the next safe haven.
It's definitely the next prime
candidate, but at least you will bring
everyone to a level playing field. It
will be a much more level playing field
than it has been. All right, JT, great
to get some time with you. That is J
Bwage of T. She is director of FX over
at TD Securities. We're just getting
started. This is Bloomberg.
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Coming up on Bloomberg Business Week,
we're talking all things DC. A lot going
on with Lisa Cook and uncertainty around
the economic picture. After some eco
data, this is Bloomberg.
It's 2:21 on Wall Street. We do check
markets all day long here at Bloomberg.
We are looking at a down Friday. But
despite today's losses, S&P 500 is set
for its fourth straight month of gains.
Also, expectations do remain that the
Fed will cut rates twice this year,
beginning as soon as next month,
September. Traditionally a rocky month
for the US equity market right around
the corner. Right now we have got the
S&P 500 index lower. Tech leading the
way down. S&P down 46 at 6455. Now keep
in mind this time yesterday we had the
S&P trading above 6500 at a record but a
pullback today down 7/10en of 1%. Dow
industrials at 45,502
down 3/10en of 1% and NASDAQ down 1.2%.
The NASDAQ 100 index down 1.3% and the
MAG 7 index down 1.3%. I mentioned that
because Nvidia is down now by 3.7%.
10-year 4.22% with a 2-year 3.61%.
Gold is up 8/10 of 1% 3443
the ounce and West Texas Intermediate
crude down 1% 63.97 for a barrel of WTI.
Bitcoin now at 108,225.
Bitcoin now down by 3.3%.
Caterpillar shares, they are trading
lower today by 4.2% only weeks after its
last quarterly report. Caterpillar is
warning investors it now expects tariffs
to have an even greater impact on its
business. Caterpillar down by 4.2%. For
on demand news 24 hours a day, subscribe
to Bloomberg News now wherever you get
your podcast. I'm Charlie Palatin. That
is a Bloomberg business flash.
>> Thank you, Charlie. I'm Bailey Lip
Schultz alongside Katie Grifeld filling
in for Carol Masser and Tim Stenc.
Katie, a slow summer trading Friday.
We've got markets lower, but volumes
much depressed relative to where they
have been in the last call it 100 days,
but there is a lot going on in DC. So,
right now we are joined by Bloomberg
News White House editor Jordan Fabian
joining us from from the DC bureau.
Jordan, we had an emergency court
hearing around uh the kind of back and
forth between Federal Reserve Governor
Lisa Cook and President Donald Trump
trying to fire her. Uh what did we learn
from that? It lasted more than 90
minutes, but we didn't have a ruling.
What happened? What's going on? What's
next?
>> That's right. No decision made in that
hearing. Uh the judge in that case wants
filings again by Tuesday, so after Labor
Day, and presumably they would want a
decision on her job status uh after that
given uh we're in this period of limbo.
Uh both sides, both the government and
Lisa Cook's attorneys argued viferously
about the case. What's interesting was
that they didn't really say that the
veracity of the allegations mattered.
You had Lisa Cook's uh attorney saying
that uh whatever the allegations might
be, they occurred before she was
nominated to be on the Federal Reserve
Board and thus should not uh be seen as
the the cause uh to remove her from
office. And then you had the government
arguing uh well, Donald Trump can decide
uh whatever the cause is, and that's not
up for judicial review. And so, uh, in
his view, a simple allegation, uh, could
be grounds to fire her, and that that
should not be for the court to decide.
And so, we'll see what the judge has to
say about all of that.
>> Jordan, what I really want to know is
what is going to happen on September
17th. That's when we get the next FOMC
decision. We know that uh, as a member
of the board of governors that Lisa Cook
is a voting member, of course, of the
Federal Open Markets Committee. Will she
be able to do her job at next month's
meeting?
That's the big question. And today they
uh talked about whether there would be a
temporary restraining order on on this
move by President Trump or would there
sort of be consideration of a longer
injunction. And and I think they tended
toward the latter uh given that that
longer injunction uh would provide more
certainty over the course of months
while this uh this case plays out. uh
Katie and and I think that you know they
would want some sort of decision uh by
the 17th uh given that timing uh for the
FOMC meeting.
>> Yeah. So that's a lot of uncertainty
Jordan. One thing that adds to the
uncertainty and ongoing conversations
happening in DC and their impact kind of
around the world, we have a report that
Samsung and SKH now have 120 days until
a waiver expires as the administration
pushes to revoke their ability to ship
equipment to China. uh what's the latest
on that? Is this just another headline
that kind of causes a bit of confusion
and uncertainty but still has quite a
bit of ways to play out?
>> Yeah, I think that's right, Bailey. You
know, this is not going to have the
biggest material impact on those company
companies given they don't have huge
manufacturing presences in China, but it
is another lever for the Trump
administration to use in this longer
trade battle they've been in uh with
Beijing. If you'll remember, ahead of
that trade truce, they were ratcheting
up tariff on each other. They were uh
imposing export controls and some of
those controls that were imposed were
lifted in exchange for tariff reduction.
So, this could be, you know, the the
next point of leverage uh for President
Trump uh ahead of another meeting uh
between the US and Chinese delegations.
Now, we don't know when that will be,
but the 90-day truce comes up in
November. Um, so we're not, you know,
the the administration says this is
about leveling the playing field field
for American companies compared to
foreign competitors, but of course
there's geopolitics at play as well.
>> Well, Jordan, this story caught my eye
because it's just another example of the
fact that it seems like the
semiconductor industry is the arena
where you see a lot of these US China
trade tensions are actually being played
out. You have this story today. you
think about uh what's going on with
Nvidia, the question marks over whether
or not it can sell its chips in China
and then the US stake in Intel. It just
seems like a lot of this is being
funneled through these chip companies.
>> Absolutely. A lot of uncertainty there
and you know for good reason. uh the
administration, you know, views the
semiconductor industry as perhaps the uh
crucial, you know, national security uh
relevant industry, you know, given uh
the the US ambition on AI and their
their uh desire to out compete China in
that area. So, they want to do
everything they can to uh you know, wall
that off in Chinese competition, but it
is creating all this uncertainty. And I
will also mention in addition to all
those things you mentioned Katie, there
is the upcoming semiconductor uh section
232 tariff that is yet to be announced.
You know, Trump has said there would be
some kind of exemptions uh for companies
that are manufacturing in the United
States, but we don't know yet what
that's going to look like. So that's
more uncertainty on top of all those
other things that these executives have
to contend with.
>> All right, Jordan, really appreciate
that update. That of course is Jordan
Fabian. He is a Bloomberg News White
House editor bringing us the latest from
DC. Let's talk about these markets a
little bit more because you take a look
at the S&P 500. As we mentioned 24 hours
ago, we were feeling pretty great at
all-time highs. Even with Nvidia lower,
it's a different story today, Bailey. Of
course, uh selling off into the month
end close. It's interesting to see this
draw down given that we didn't get bad
news on inflation this morning. Bang in
line across most measures.
>> No. and it wasn't terrible, but we still
KDR in a market that we hit an all-time
high yesterday. So, the question comes
to traders on the desk who are actually
kind of operating in skeleton cruise. No
reason to be long through the holiday
weekend. So, why not take some chips off
the table? But, as you mentioned,
looking at those factors to watch,
momentum and growth underperforming
quite a bit while dividend yield and
lowvall stocks outperforming.
>> Yeah, certainly a riskoff picture then.
Uh th those are your outperformers
today. But as Bailey notes, you take a
look at trading volume right now. We are
21%
the 30-day average for trading volume
when it comes to the S&P 500. But one
area that we're paying attention to is
what's going on with shares of Fanny May
and Freddy Mack. So let's bring in Nora
Melinda right now. She is a Bloomberg
News equity reporter. And it was
interesting, Nora, to see Senate Senate
Democrats, including Elizabeth Warren,
Chuck Schumer, and Cy Booker, trying to
pause the Trump administration's plan to
IPO uh these companies, but how much
weight do they actually have in this
process?
>> Absolutely, Katie. I mean, of course, we
know this has been a very closely
watched story for Fanny and Freddy, who
we know were taken into government
conservatorship back in about 2008 after
they were taking on way too much debt,
riskier uh assets there in particular.
But what's really interesting today is,
as you pointed out, the letter that we
did see from Senate Democrats uh
Elizabeth Warner, Chuck Schumer, Corey
Booker, they're all sending a letter to
Bill Py, who we know is the head of the
FHFA. They're the ones that control and
oversee Fanny and Freddy. They sent a
letter to Bill Py essentially saying
that we need to hit a pause. We need to
halt this idea of pushing these
companies toward an IPO and returning to
public markets instead of trading
particularly as over-the-counter stocks.
Here they're saying that PY and the
Trump administration more broadly should
actually be focusing on other different
initiatives to bringing down uh the cost
of houses in the United States. They're
saying that the administration is really
distracted with attacks on the Federal
Reserve and all these other things where
they should really be thinking about
what we could be doing with what we have
access to do right now instead of
spending too much time on the idea of an
initial public offering for these
companies.
>> And Nor, you keep a close eye on these
stocks. They started out in the red at
the open, but right now they're a little
bit higher. What does that mean in your
view for kind of the projection that
this could be an IPO that really does
move pretty quickly this fall?
>> Right. And as you well know, Billy, I
know you cover IPOs very closely on our
team as well. I mean, these are super
volatile socks. So, as you mentioned, we
did see them earlier in the red right
off of the news about the letter being
sent to PY, but now we're seeing them
popping into the green. And if you look
on a larger scale here, looking year to
date, Fanny May shares are up about 244%
year to date. Freddy Mack up about 192%
so far this year. So, I mean, we really
have seen a rally off of the idea that
after Trump was elected, you know, maybe
under a Republican administration, we
could see some progress here as it
relates to taking uh Fanny and Freddy uh
through an IPO here. But, I mean, it
tends to be a very volatile trade here,
especially with some heavy hitters uh
particularly Bill Aman here on the
trade. Yeah, Nora, when you talk to your
sources, what's their view on the
legitimacy of an IPO of Fanny and Freddy
potentially combined and how does that
impact the entire real estate sector
that you cover closely?
>> I think that's part of what is also
getting a lot of the attention. I mean,
as I've been speaking to sources, this
is a really complicated process here,
especially because we know that these
were companies that used to trade on uh
major exchange, you know, and of course,
now they're trading under Pink Sheets
here. But as we bring them back into
this idea of potentially uh bringing
them in as an IPO, it's really a
complicated process. I mean, there's a
lot of intricacies that are needed. It
sounds that, you know, Trump's approval
is actually going to be something that's
super essential in getting this done.
But we did see PIMCO even warning that a
potential Fanny and Freddy IPO here
could essentially uh royal the MBS
market. Uh also just lifting mortgage
rates. That's really been a concern that
I've hear been hearing from my sources
uh more broadly. All right, Nora, really
appreciate your reporting here as we
continue to follow this story. That is
Bloomberg News equities reporter Nora
Melinda and Bailey, I have to put on my
Matt Miller hat because I can hear him
in my head saying, "Why are we calling
this an IPO? These are already listed
companies. This is a secondary offering,
isn't it?"
>> Well, this is an these are already
listed companies, but they trade over
the counter. They trade kind of more as
a call option, if you will, to
oversimplify the matter. So, if there
were to be a real listing of these
companies potentially combined, that
would be a firsttime share sale. That's
why we'd call it an IPO.
>> All right. Well, I'm not actually Matt
Miller, so I'm going to accept that
explanation and say fine, that makes
perfect sense. I will continue to call
it an IPO. And uh I'm glad you asked
about the effect this would have on the
housing market because there are
concerns that if we did see this IPO
that we could see some pressure on
mortgage rates actually which would have
the opposite effect effect of what I
believe the Trump administration is
trying to do and that is lower the cost
of home ownership in this country.
>> Well they want to do a lot to kind of
juice the wheels if you will of getting
people to buy and sell homes. As a new
homeowner myself I can say that the
interest rates are pretty eyepopping and
hurt the wallet. The big thing though,
Katie, is what does this actually mean?
If you do take these companies public,
will the kind of benefit of publicly
operated companies actually care about
profit over people? And that's a big
question. And obviously the Trump
administration's been pushing this, but
the uncertainty around how this comes to
be is top of mind.
>> Yeah. How you actually execute this, uh,
there's a lot of urgent questions there.
So, we'll continue to follow that on
Bloomberg Business Week. And coming up,
we're going to head down to Florida. The
National Bank of Florida vice chairman
and CEO George Gonzalez joins us. And
then we're also going to check in at
Arthur Ash Stadium with Tim Stenick and
Molly Smith. All that and more coming
up. Don't go anywhere. This is Bloomberg
Business Week.
It's 240 on Wall Street. We do check
1 hour 20 minutes to go until we wrap up
the trading month of August. It is on to
the often rocky month of September. We
have got stocks lower across the board
right now. Tech shares selling off.
Let's get begin with NASDAQ and the
NASDAQ 100 index right now. The NASDAQ
composite index down 1.2% down 265. The
NASDAQ 100 index down 1.3%. Keeping it
all in context, we got the S&P down 45
yesterday. You recall we were trading
above indeed we closed above 6,500 6457
right now on the S&P that is a drop of
7/10 of 1%. The Dow down 117 down 3/10en
of 1%. The Russell 2000 index of small
cap shares is down 7/10en of 1%. Our MAG
7 index down 1.4%. Nvidia big part of
that index down 3.5%. 10-year 4.22% with
a 2-year 3.61%.
Gold is up $27 the ounce at 34.444 up
now by 8/10en of 1%. A retreat for crude
just above $64 a barrel down 9/10 of 1%
and a sell off for Bitcoin down 3.4% now
at 108,152
on Bitcoin earnings news. Petco Health
and Wellness surging after raising its
earnings target for the year as the
company's turnaround start showing signs
of progress. Shares of Petco which uses
the ticker WF woof up 22% right now. Gap
after earnings higher by 1.1% after
earnings Alta Beauty down by 6.7%.
For on demand news 24 hours a day
subscribe to Bloomberg News now wherever
you get your podcast. I'm Charlie
Pellet. That is a Bloomberg Business
Flash.
>> Thank you very much Charlie Pellet. I'm
Bailey Lip Schultz alongside Katie
Griffeld filling in for Carol Masser and
Tim Stenc. We had some economic data
this morning which painted a mixed
picture for the consumer. Inflation
remaining sticky but consumers just keep
on spending. To discuss that from a
state level, we're now joined from Miami
by George Gonzalez. He is the City
and CEO. George, I always find that
banks have some of the best reads into
the state of the consumer. What are you
seeing from your customers in Florida?
Is spending still continuing to go
strong? Are people dipping into their
savings accounts? what's going on?
>> Well, first of all, thanks for having me
today and happy Friday. Uh, listen, what
we're seeing from our clients is just a,
you know, a complete commitment to to
investment in in in the state of Florida
for for long term. Uh, we're continuing
to see a lot of migration into the state
of Florida. Uh, new business starts
continue to trend upward. So, spending
is is something that the consumer
continues to to be positive and
optimistic about, and we're not seeing
any pullbacks.
>> Yeah. No, that's interesting. And you
could say the same about the economic
data as well. So interesting uh to hear
the read from where you're sitting as
well. It's interesting when you think
about the financial sector, particularly
the regional banks. There's a lot of
talk about consolidation there. And we
have seen some pickup in M&A, but
certainly not to the degree that maybe
some were calling for. Is that something
that you would expect potentially in
your future as well?
You know, there's been a lot of
consolidation in the state of Florida
from a banking standpoint. Over the last
20 years or so, we've gone from over 300
banks to under 100 banks and probably
under 80 banks today. I think as the new
administration takes a new look at
regulation and uh and overall the
economy continues to settle down, you'll
probably see uh a lot more M&A activity.
And uh and for now though, we we haven't
seen a lot. I mean, there's been a lot
of conversations, been a lot of
discussion. We've done two transactions
in the last five or six years. We're
always opportunistically looking for
something that makes strategic sense. Uh
but for right now, I think everybody's
just kind of waiting to see how the
economy, how this soft landing plays
out, how asset quality continues to
perform and how rates go before anybody
makes any real significant decisions on
the M&A front.
>> Well, to follow up on a point you made,
I mean, you think about Florida, you
think about Miami in particular. I mean,
it is hot. you've seen a lot of I mean
literally when it comes to temperature
but also in terms of people moving to
Florida a lot of folks uh relocating
there as well as companies. I know that
you've spoken in past earnings calls
about the increased competition that
you're seeing when it comes to deposits.
Give us an update on that.
>> So, you know, Florida continues to be
one of the best performing economies in
the entire state of Florida. Our GDP is
up about 26% since 2019. I think there's
been over 3.6 6 million new businesses
have been launched over the last four or
five years. I think the really main
driver to what's happening uh that's
really different than what's happened in
the past is that in addition to a lot of
international capital coming into the
state of Florida, we've seen a
significant amount of domestic flow of
investment that's not coming here from a
transient standpoint, it's coming here
from a long-term perspective and that's
really changed the economic foundation
of the state of Florida for the long
run. Um, so from that standpoint, what
you would expect to see since there's
been so much capital and investment
flowing into the state, you're also
seeing increased competition from other
banks following those clients into the
state of Florida. So I I think the the
pie is bigger for everybody. Uh, but
certainly the economy is really has seen
a very nice ramp up and and really
created a new foundation for the future
that we're very optimistic about.
>> And George, we talked a lot about Wall
Street South over the last few years.
How is that continuing to play out? Are
we still seeing commercial real estate
performing strong or is that slowing
down?
>> Listen, commercial real estate has been
a uh a peak and valley business in the
state of Florida for a long time and I
think because of the changing foundation
of the econ economic landscape. I think
what you're going to see is the peaks
and valleys are going to be much more
subdued. Um we're seeing a lot less
leverage into a lot of the commercial
real estate asset classes. Um so across
every asset class whether it's office uh
multif family retail industrial you name
it what you're seeing is uh really
long-term capital that's been deployed
and therefore there's a lot of stability
in the marketplace. Uh so when you when
you couple the migration the very pro
business uh government that we have in
the state of Florida the immigration of
of of capital from the deployment of
capital from international and domestic
sources and immigration of of many
hundreds of thousands of people. really
it's helped stabilize the the real
estate market across the across the
board and prices are holding, rents are
holding, even the office sector, which
has been weak across the country, has
performed relatively well in the state
of Florida and certainly in South
Florida.
>> I'm also curious, George, to get your
perspective on what a weakened dollar
would mean for you. We were having a
great conversation earlier with JD
Bardage of TD Securities. Their
expectation, their house view is that
we're going to see continued weakness
when it comes to the dollar. I know that
you see a lot of crossborder activity uh
from where you're sitting. What would
that mean for you?
>> Listen, a weaker dollar I think also
tends to spur more investment into the
state of Florida as asset as as assets
become a little bit more um you know
price uh uh prices become a little bit
more attainable for outside investment.
So from that standpoint I I think the
weak dollar is not going to have a
significant impact to the Florida
economy. I I think the other thing to
talk about too is um you know what's
happening relative to the overall global
visibility of this market and and and
the reason we're seeing so much global
visibility in all honesty is what's
what's happening in in the world of
sports in in the state of Florida. Um
you know I was thinking about this
before the before the conversation
before this interview you know when I
was growing up you know South Florida
state of Florida basically had a it was
a one sport state really around
football. When you think about what's
going on in Miami today, we got five
professional franchises. We have uh
Formula 1 Grand Prix. We have the Miami
Open Tennis Tournament. We have FIFA
World Cup, which is generating probably
about a billion dollars worth of of of
investment into the state of Florida. We
have the Orange Ball game. We have the
National Championship game. And then we
have a Super Bowl in 27. Sports is big
business. And and sports is a big
economic driver to our economy. I think
it's going to represent about 10% of our
GDP for uh 25 and 26. So, not only is it
a big economic driver, but it's a big
driver to branding and visibility for
the state and for the economy. So, when
you couple that with what's happened in
the last five years and what's happening
in the world of sports, I think the
combination that really bodess very well
for continued growth, continued
immigration. People want to be here uh
because they like what's happening, not
just from an economic standpoint, from a
government standpoint, but also from a
sports standpoint.
>> Yeah, George, you go straight to sports.
You've got the University of Miami logo
behind you. Mario Crystal Ballal talking
about spending big in NIL. Miami goes
out and gets Carson Beck from the
University of Georgia. We got a big game
tomorrow. Notre Dame coming.
>> This is a big uh this is a big football
weekend. I love college football. This
is uh we got three big weekend three big
games this weekend with uh basically you
got Texas, Ohio State, you got Florida,
you got Clemson and and LSU and you got
Miami Notre Dame kind of tapping off the
weekend on Sunday night. two top 10
teams. Uh, a lot of history there
between these two franchises. And, you
know, we are the official bank of the
University of Miami. We're obviously
rooting for the Canes, but it's good for
sports all the way around. This is a
high visibility game with a high level
of impact. Uh, and uh, and we think it's
just a just a kickoff to a great season
relative to what is in store for us
relative to all of our professional
franchises. and we decided to partner up
with the University of Miami because
this is an institution that has been
around for over a hundred years. It's
one of the it's really the civic pillar
of our community. It's one of the
economic drivers of this community. Uh
we've been around for 80 years. They've
been around for 100 years. We have the
same core values of giving back to the
community, supporting, you know, the
next generation of leaders and
innovators and making sure that this
this community continues to be robust
relative to all of the important pillars
that are needed to to have a healthy
community. So, we decided to become the
official bank of the university and and
support not just the the the athletic
but support the the health system, the
law school, uh the the faculty, the
students, the alumni. And it's really
been off it started out to be a great
partnership. And we're doing the same
thing in Orlando, one of our key
markets. We're also the official market,
the official bank of the Orlando Magic
uh Magic. And that's that's a an
organization that really is one of the
marquee brands in the city of Orlando.
great front office, great ownership, uh
great players, great fan base, and we've
realized that when we partner up with
organizations like the U and like and
like the Orlando Magic, it really does
great things for our brand, our
visibility, and it allows us to activate
those part those partnerships in a way
that we provide our clients access to
things that they can't buy with just
money. Uh and it's really proven to be
very uh successful partnerships on both
on both ends.
>> All right, George. Well, we really
appreciate you taking some time for us.
Enjoy the game this weekend. That is
George Gonzalez. He is City National
Bank of Florida vice chairman and CEO.
I'm Katie Grford along with Bailey Lip
Schultz, of course, keeping the studio
warm because Business Week's Tim Cynic
and Bloomberg News economics editor
Molly Smith are on the ground in the
shadow of Arthur Ash Stadium. They join
us now for a preview of what's ahead for
the Bloomberg audience this afternoon at
the US Open. Guys, what do you have
coming up?
Oh, we got a great program. Day two for
us here at the US Open. It's the third
round for the men and women. And
actually today, Molly and I got a little
bit of a chance to go see some tennis.
You know, we got to do the prep work in
order to be ready for this program. I
went and saw a great match, four setter
between Benjamin Bonsi and Arthur
Reindder. Both French guys. They battled
it out in four sets on court 17. A
really strong baseline game from both of
them. Um, some incredible rallies. What'
you watch?
>> Yeah, that was a good one to watch. You
picked a good court there, Tim. I was
really into the doubles today, so I went
out to watch the top seated doubles team
on the men's side. Uh that draw started
today. They actually lost. This was a
pretty big upset uh with the team
featuring an American guy. So, the crowd
was really loud. It was super fun. Uh
just great to see doubles. That's what I
play year round. And it's uh it was a
good learning lesson for me. A lot of
lessons.
>> Maybe next year you'll be on the court.
Maybe next year.
>> Maybe. Yeah.
>> Well, it's us. We're back here today
with 70,000 of our closest friends at
the US Open. And we got a great program
coming up over the next couple of hours,
too. Kirsten Coro is going to be joining
us. She's chief commercial officer at
the US Tennis Association, the USA. It's
the owner and operator of the US Open.
So, we're talking everything with her
from just how the whole tournament is
doing to increasing visibility, taking
it on the road, perhaps extending the
tournament. Uh all that and more uh
coming up. Also, a little later, we're
going to make sure we stick with
everything happening over in Manhattan
and also down in Washington DC. Mike
McKe is going to be joining us for the
latest on everything eco and of course
everything happening with Fed Governor
Lisa Cook with uh that uh with that
hearing today wrapping up with no
decision at this point. So, we're doing
tennis, we're doing economic data, we're
doing it all from the US Open, guys.
>> All right, you're also watching tennis.
Uh so, I hope you have a wonderful
Friday. looking forward to the program.
That of course is Tim Stenic and Molly
Smith. Uh you can catch them in just a
couple of minutes. But Bailey, you
actually have to scadaddle off because
coming up on Bloomberg TV at 3 p.m.
you're going to be live with Scarlet Fu.
>> Someone's letting me hang out with
Scarlet and it's going to be fun. We're
going to talk about the markets
underperforming. Obviously, a lot going
on in DC as as Tim CVC uh mentioned and
have an interview with the Celsius CEO.
So, a lot of exciting times.
>> All right. Make sure you drink a Celsius
beforehand. Uh but you know there's a
lot more to cover here on Bloomberg M
Business Week. Let's take a look now at
some stocks on the move today. I'm Katie
Griffel and we're joined by managing
editor for Bloomberg Markets live blog
Christine Aino. Christine, what do you
have an eye on?
>> Well Katie, I'm taking a look at
CraftHines this afternoon. We did have
some breaking news from the Wall Street
Journal. So Craftiness, ticker KHC,
we're seeing those shares actually
picking up some momentum up 1.2% 2% at
the moment and that is because Wall
Street Journal reported that it is
closing in on a plan to break itself up
according to sources. So remember we did
get reports earlier in July. Bloomer
News reported that there was a plan uh
being put into place to break up the
company and they were weighing whether
to spin off a large part of its grocery
business into a new entity. So the
latest from the journal is that that
transaction could be finalized and
announced as early as next week. But of
course with any M&A deal, we know that
it's could still be subject to change
and timing could still be different at
the last minute, but that is the
reporting at the moment. And investors
seeming to like this because year to
date that share is down 9% nearly 9%. So
it's really been having a hard time.
>> Yeah. And it's an interesting uh space
right now. So you have craft hinds
trying to break themselves up. Then you
think about uh some of the other deals
that we learned about this week here.
Dr. Pepper going to buy JDE Pete. So
companies breaking themselves apart and
also combining. So a little update there
on what's going on with Craft Hind.
What's going on with shares of Dell
though? Dell is not doing well today,
guys. It's down more than 9%. So ticker
DL
really extending those declines heading
into the close here before Labor Day
weekend. And that is because we did get
its earnings report. The latest there is
that the AI server orders slowed down in
the second quarter. Did see a 5.6
billion figure there versus 12.1 billion
in a previous period. So that's quite
the slowdown. Operating margin also
under shooting estimates. Analysts were
expecting 10.3%. They only reported
8.8%.
The silver lining though is that it did
boost its annual outlook and quarterly
sales and profits topped estimates. So
JP Morgan taking a look at those AI
server revenues. They're thinking that
you know there's a more robust outlook
for the fiscal 2026 and that could raise
expectations for growth medium-term, but
in a short term shares are down and
investors are not happy.
>> Yeah, down 9%. Really brutal reaction
there from Wall Street, especially
considering that this is a company that
raised its annual sales projections, but
of course that is not where the focus is
today, just judging by the shares. So
that's the story with Dell. Bring us
home. Talk to us about Caterpillar.
>> Caterpillar tick with cat. Allen doing
well. Shares on more than 4% and looks
like it's going to close down for the
first time in three sessions today. Now,
Caterpillar warning, of course, all
about tariffs and they're saying that
tariffs are going to cost them as much
as$ 1.8 billion for the full year and
then the incremental impact for the
third quarter. They're estimating at
around 500 to $600 million. And so, that
does not sound like a good thing,
especially for a company that was once
considered a bell weather for the
American economy, right? Yeah.
>> Uh and you know, Bloomberg intelligence
uh saying though that they are still
optimistic that earnings will bottom
this year and that obviously the drag
from tariffs is bigger than anticipated
previously. But they did revise their
this revised outlook will impact
operating margin and they're now
expecting that to be near the bottom of
its target range.
>> All right, so uh an ugly finish to the
week to the month for Caterpillar. And
for more conversations like this, listen
to our new stock movers podcast.
Subscribe for five minute episodes on
the biggest winners and losers in the
stock market. You can listen to stock
movers on Apple, Spotify, or anywhere
you get your podcasts. Meanwhile,
outside of just the individual stock
level, Christine, before I let you leave
this studio, let's just talk about
what's going on today. I'm sure you've
been all over it on the markets live
blog. The fact that you are seeing quite
a riskoff day in markets, even though I
mean the inflation figures we got this
morning would suggest that we're on
track for a rate cut next month. Yeah,
absolutely, Katie. But it seems like the
data is kind of plays that can fiddle to
other factors in the markets, right? I
mean, this week was the week where we
did get those big and video results.
That was also one main event for markets
and some disappointment there just over
the pace of growth that they're seeing
over the next few years. I mean, it
seems like the reality check really that
uh gave a lot of investors that, you
know, the AI boom is starting to slow.
It's entering its uh more mature stages
here and that's really hit Nvidia. It's
also hit a big chunk of the tech stock
complex here and really taking us into
quite a dow finish into the Labor Day
weekend here. Yeah, it does look like
we're going to close out August with
gains, but certainly uh quite an ugly
finish though. A lot can happen in the
next hour with those month end window
dressings. That is Christina Kino. She
is managing editor for our markets live
blog. If you're watching us on YouTube
or listening to us on radio, Bloomberg
Business Week Daily continues live from
the US Open with Tim Stenic and Molly
Smith. If you're with us on Bloomberg
television, the close is up next with
Scarlet Fu and Bailey Lip Schultz. This
is Bloomberg.