Trump Directs Federal Job Cuts; Musk Defends Downsizing
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin in Washington where President Trump has directed federal agencies to comply with job cuts led by Elon Musk and his so-called Department of Government Efficiency. A White House fact sheet seen by Bloomberg shows agencies will be permitted to hire no more than one employee for every four that leave, and they'll have to limit hiring to essential positions.

As heard here on Bloomberg Radio, the president spoke to reporters in the Oval Office. I hope that the court system is going to allow us to do what we have to do. We got elected to, among other things, find all of this fraud, abuse, all of this horrible stuff going on. And we've already found billions of dollars, not like a little bit, billions, many billions of dollars.

And standing alongside President Trump in the Oval Office was the world's richest man. Elon Musk defended his cost-cutting approach, which did involve obtaining access to sensitive computer systems and employee data. Your tax dollars need to be spent wisely on things that matter to the people.

I mean, these things, it's just common sense. It's not draconian or radical, I think. It's really just saying, let's look at each of these expenditures and say, is this actually in the best interest of the people? And if it is, it's proved. If it's not, we should think about it.

Elon Musk also increased attacks on federal officials and judges who he says are stalling progress and cost-cutting. But he also says he expects resistance. I fully expect to be scrutinized and get a daily proctology exam, basically.

And Musk called for the impeachment of some officials. He says they're being corrupt and activist. And Karen, one of the world's most successful multi-strategy hedge fund founders, Ken Griffin, is praising Elon Musk's efforts. The Citadel CEO spoke at the UBS Financial Services Conference in Miami.

This is a man who slept on the floor of his factory to make sure Teslas got produced. He will do what it takes to win. We want people who are in Washington who will do what it takes to help the American taxpayer and the American people win. Citadel CEO Ken Griffin, though, did criticize President Trump's approach to tariffs. He says the trade plans dull the country's competitive edge and breed mistrust amongst allies.

Nathan, many on the Democratic side of the aisle have not been as supportive of the administration's efforts. Massachusetts Senator Elizabeth Warren tells Bloomberg Balance of Power that Elon Musk's move to shut down USAID is effectively a move to shut down the government. Donald Trump, through his co-president Elon Musk, is in the business of trying to shut down the government right now and doing so illegally.

Senator Elizabeth Warren also accused Trump and Musk of effectively sidelining the nation's financial cops by shutting down the Consumer Financial Protection Bureau. Here's Senator Warren's full conversation with Bloomberg's Joe Matthew and Kayleigh Lyons on the Bloomberg Talks podcast feed.

And Karen, Senator Warren's comments come as the Wall Street Journal reports the Trump administration is looking into plans to consolidate the power of banking regulators without congressional approval. The journal says administration officials are looking into whether they can collapse the Federal Deposit Insurance Corporation, the FDIC, into the Treasury Department. The report says staff inside the FDIC and the Office of the Comptroller of the Currency expect to hear from the Department of Government Efficiency soon.

Meanwhile, on Capitol Hill yesterday, Nathan, senators heard from a Federal Reserve Chair, Jerome Powell, who testified to the Senate Banking Committee. Powell told them he thinks the central bank does not need to rush to lower rates. As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer.

Bond yields climbed after Fed Chair Jay Powell's comments. Markets are pricing in around 33 basis points of cuts in 2025, with the next move not expected until September. Powell will testify in the House today. Stay with Bloomberg for full coverage of his remarks starting at 10 a.m. Wall Street time on Bloomberg Radio and the Bloomberg's

podcast page on YouTube. Well, ahead of all that, Karen, investors will have a key economic report to digest this morning. The Consumer Price Index is due out at 8.30 a.m. Wall Street time. Let's get a preview now from Bloomberg's John Tucker. So, John, what are we expecting? Well, inflation, Nathan, proving to be stubborn as a mule when you strip out more volatile components. Economists suspect it jumped three-tenths of a percent month over month.

at 3.1 percent on a yearly basis now remember the federal reserve's target is two percent if those turn out to be the numbers in this morning's report the fed will be in no rush to cut industry rates as chairman powell indicated january would mark the fifth month in the last six that the core cpi has advanced three tenths of a percent that is consistent with stalled

progress in reducing inflation. The overall CPI probably will be driven by higher prices for energy and food, most notably eggs. Keep in mind, too, that a lot of companies and service providers, they tend to hike prices and fees at the start of the year when consumers seem to be more willing to absorb the extra costs. In New York, I'm John Tucker, Bloomberg Radio.

All right, John, thank you. In addition to CPI, traders continue to follow Fed speak to get hints on the path of interest rates. Yesterday, New York Fed President John Williams said he expects inflation to slow toward 2 percent, but notes that policy-related uncertainty clouds the economic outlook. Williams added he'll closely watch prices to assess the impact on tariffs. Today, traders will hear from Atlanta Fed President Raphael Bostick and Fed Governor Christopher Waller.

On the geopolitical front, Karen, President Trump is hailing the release of American Mark Fogel, the schoolteacher who had been detained in Russia since 2021. Fogel was at the White House after his release. Superorganism of people that came to my support and the love that I was given.

sustained me for three and a half years. And Mark Fogel is calling President Trump a hero. The president says the terms of Fogel's release were very fair, but he didn't go into specifics. Trump says he hopes the move will allow Russia to work toward ending the war in Ukraine.

Well, Nathan, President Trump also backed off threats to withhold aid from Jordan after King Abdullah agreed to accept 2,000 ill children from Gaza. Trump had threatened to withhold aid from Jordan and Egypt ahead of the king's visit Tuesday should the countries not accept Palestinian refugees. President Trump reiterated plans for the U.S. to take ownership of Gaza and for Jordan and Egypt to absorb Palestinians, which Arab states are firmly against.

And Trump's warning that Israel break its ceasefire if Hamas delays the release of hostages by Saturday. Finally, Karen, Apple has renamed the Gulf of Mexico the Gulf of America on its Apple Maps app.

That follows the executive order that President Trump signed on his first day in office to change the name of the body of water. It comes after the U.S. government updated its official map to reflect a new name as well. Alphabet's Google has made a similar update to its Google Maps. So has Microsoft's Bing Maps.

Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. The morning commute could be a bit tricky after more winter weather. Accumulating snow will linger into this morning for New York City and central New Jersey. The snowfall began last night north and west of the city.

They barely got snow, if any. But in southern New Jersey, close to a half a foot fell where a winter storm warning was issued. Tonight, a new system. Light snow returns, changing the rain overnight and could cause some icing problems before the rain ends Thursday morning.

Meanwhile, in Washington, D.C., a winter storm warning remains in effect until 7 a.m. Heavy snow has also been falling in mid-Atlantic states. This first responder is with the fire department in the Potomac Mills area of Virginia.

If you don't need to drive, you should be off the roads. One of the biggest things that I've seen is that a lot of accidents happen from people not being properly prepared. He called it the most difficult 15 months of his life. New York Mayor Eric Adams denied that he broke the law in his first public remarks since the Justice Department instructed Manhattan federal prosecutors to drop the corruption case he faced. Adams also says he realizes many New Yorkers do not trust him.

I know that I must continue to regain your trust. I've learned a lot over the last year, and this experience has been humbling.

Mayor Adams went on to say, we can put this cruel episode behind us. President Trump's longtime confidant, Steve Bannon, pleaded guilty to a fraud charge relating to duping donors who gave money to a fundraiser to build a wall along the southern border. The plea deal means Bannon avoids jail time. After yesterday's court hearing, Bannon said New York's law enforcers should be investigated.

I'm calling on right now the Attorney General Pam Bondi to begin an immediate criminal investigation into Letitia James, Alvin Bragg, all of what they did to President Trump. Finally, a dog from the working group is named best in show at the Westminster Kennel Club Dog Show. For best in show at the 149th annual Westminster Kennel Club Dog Show, I choose the generalist.

The giant schnauzer. Monty, the giant schnauzer from New Jersey, won the award at New York's Madison Square Garden last night. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. Monty from New Jersey. I love it. Thank you, Michael Barr.

Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Thanks, Karen. Top team in college basketball, the Auburn Tigers coming off a loss to Florida but still ranked number one and now 22-2 with an 80-68 win at Vanderbilt. Saturday, Auburn visits our tribal Alabama who's ranked number two. Crimson Tide 21-3, blew out Texas 103-80.

Clayton Kershaw at age 36 will be back for an 18th season with the L.A. Dodgers. He had knee and toe injuries last season and only pitched seven games. That's your Bloomberg Sports Update.

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If you're going there, so are we. Book now on Emirates.com. Fly Emirates. Fly better. Okay, business leaders, are you playing defense or are you on the offense? Are you just, excuse me. Hey, I'm trying to talk business here.

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President Donald Trump is moving ahead with his push to slash the size of the federal government. He has signed an executive order for agencies to work with Elon Musk and his Department of Government Efficiency and to hire no more than one person for every four who leave the federal government. Elon Musk was in the Oval Office as the president issued that directive. The people voted for major government reform.

And that's what people are going to get. They're going to get what they voted for. And for more this morning, we are joined by Terry Haynes, the founder of Pangea Policy. It's great to speak with you this morning after we saw that rare appearance from Elon Musk defending the so-called Doge effort, but at the same time saying that with all the revelations that he's put online, there are going to be some mistakes, that he's going to need to be corrected. Is a...

Move fast and break things model the right approach when it comes to reining in the federal government. Terry, good morning. Good morning.

Good morning, Nathan. I think what they've concluded before the inauguration is that it's pretty much the only way. One of the older adages in Washington is never let process be the issue. And lots and lots of presidents have followed that in pursuit of bigger goals. Ronald Reagan, for example, came in in part on the expectation that

from his supporters that he'd do something broadly similar to what's happening today. But they concluded that that was going to actually break things. He didn't have the political support for it or the political environment for it with one House Democratic. And what ended up happening is he ended up focusing on big policy issues and kind of let the Democrats

the machinery of washington aside same thing right before nine eleven dot on rumsfeld wanted to to end the pentagon's uh... a lot of waste fraud abuse and uh... the next day uh... we had not eleven and that was the end of it but uh... here i think they've they've decided this is the only way to do things and if they end up with seventy five percent of what they have of what they propose and try to achieve uh... that'll be a good time for him

Is it really the only way, though, Terry? I mean, we've already seen the massive amount of lawsuits that have been put up against the Doge effort and lots of criticism from Democrats as well when it comes to these ideas that have been thrown out of, you know, shutting down certain agencies that have congressional approval and would presumably need Congress to say so to get rid of.

Well, these days there will always be lawsuits, and I would note for the audience that they're just injunctions. What will end up happening is these things will get fully litigated, and that's fine. They expected that. I think Trump now has said twice this week that he expects that, and he's pretty even-keeled about it. The...

The second thing is that the machinery of Washington today with the tiny Republican majorities is one where you can't get efficiencies done quickly and effectively, whether it be collapsing departments or agencies or anything else. When you need 60 votes in the Senate, it's just not going to happen. So there's that.

Finally, what they're looking at is a situation where the public has long since supported the idea of pursuing efficiencies in government. I think you and I talked a couple of months ago about this brewing Doge idea. I said, "Look, they want to get $2 trillion in efficiencies. I guarantee you they can find half of that right off the top." They're working on that.

But finally, I would also point out that they're not talking about ending entire programs. They're not talking about ending foreign aid, for example. What they're trying to do, I would look at, is essentially purifying the stream and making sure that the dollars that are going where they're supposed to go are going for proper things and not for the long laundry list parade of horribles that we've seen earlier.

There's still going to be a lot of question, isn't there, about whether Elon Musk should be leading this effort? He's been named a special government employee, but he hasn't been confirmed by the Senate. His position doesn't require Senate confirmation because there's a question still, isn't there, about what exactly that position is? We've got about a minute left.

Yeah, there are questions about that, and there are going to be questions about that. You know, I'd say that the – two things. One is that, you know, people that are focusing on Moscow, while Moscow are missing the point, it's – you know, you're not – we're not in a situation here where the

the president has been supplanted somehow or in a situation where the president very clearly is saying, you know, this is a guy who's doing this job for me and is subject to my approval. The other thing is, you know, there's a political dimension to this, and the political dimension hugely favors Republicans on this. So the Democratic Party is essentially split right down the middle on whether they ought to be spending time on nattering on about Musk or actually getting

getting around a series of issues that actually help average people. And the folks who are going on and on about Musk, like this is some great constitutional crisis, I think are missing a much bigger point.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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