Trump's Fed Worker Buyout Plan on Hold; Amazon Can't Keep Up with AI Demand
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Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin in our nation's capital. That's after a federal judge blocked President Donald Trump's plan to eliminate up to 10% of the federal workforce through a so-called buyout.

Bloomberg's Amy Morris reports from Washington. It isn't really a buyout. It's called a deferred resignation. But hours before the midnight deadline for workers to apply, the judge sided with several labor unions that had requested a temporary restraining order until Monday. Democratic Senator Mark Warner of Virginia applauds the delay. I don't believe it's been funded. I don't believe Donald Trump has any history of ever paying his bills. And I fear that federal employees may be marked for riffing, potentially without

Any compensation. The administration says as many as 60,000 government workers have accepted the offer to resign with the promise of being paid their regular salary through September. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. Well, Treasury Secretary Scott Besson says he personally vetted the Treasury employees on Elon Musk's government efficiency team with read-only access to federal payment data.

Besson added that there has been no tinkering with the department's payment system. We spoke exclusively with Besson on Doge. There's a lot of misinformation out there. First of all, when you say the Doge team,

These are Treasury employees, two Treasury employees, one of whom I personally interviewed in his final round. There is no tinkering with the system. They are on read-only. They are looking. They can make no changes. It is an operational program to suggest improvements.

And that's Treasury Secretary Scott Besson speaking with Bloomberg's Celaya Mosen. You can catch the full interview on the Bloomberg Big Take podcast. Get it on Apple, Spotify, and always on the Bloomberg Terminal. Well, Karen, President Trump's laying out more of his tax priorities. He met with congressional Republicans at the White House to discuss what he wants to see in a tax bill this year. White House Press Secretary Caroline Leavitt says the president wants to make good on his promises from the campaign. No tax on tips, which is obviously a very public campaign promise.

that the president made. No tax on seniors' social security, no tax on overtime pay, renewing President Trump's 2017 middle class tax cuts.

White House spokeswoman Caroline Leavitt also highlighted two items that weren't discussed during the campaign, ending the carried interest tax break that lets private equity managers pay lower rates on their investments and ending tax breaks for sports team owners. The White House says the president also wants to expand the deduction for state and local taxes. That's a priority for Republicans from high tax states.

One of President Trump's latest efforts to reshape the federal government is facing high-profile resistance. The head of the Federal Election Commission, Ellen Weintraub, says she was fired in a letter from the president, but she's not leaving. Weintraub posted a copy of the letter on X and wrote, quote, there's a legal way to replace FEC commissioners. This isn't it.

Weintraub was appointed to a six-year term more than 20 years ago. Under federal law, commissioners are allowed to stay past their terms until a replacement is named. Well, Karen, for the third time in just two weeks, there may be another deadly disaster.

over u.s skies bloomberg's john tucker is here now with what we know john all right nathan a bearing air flight has been reported missing as it was headed to nome alaska with nine passengers and a pilot on board this happened at about 4 p.m local time yesterday the rescue crews are scouring the ground for any sign of the wreckage of the cessna jet if no survivors are found the tragedy would mark one of the worst concentrated periods in aviation history in the u.s

Americans are still coming to terms with the death of 67 people in Washington after that regional jet in a military helicopter collided midair on January 29th. Just days later, a medevac plane crashed soon after takeoff in Philadelphia with a sick child and five others on board. Meantime, at that Washington, D.C. crash, investigators say it was likely the pilots of the military helicopter were wearing night vision goggles, which can limit their peripheral vision.

I'm John Tucker, Bloomberg Radio. All right, John, thank you. Well, we now turn to the markets where Mag7 is in focus once again. Shares of Amazon are down more than 3% in early trading. The company is warning investors that it could face capacity constraints in its cloud computing division. Now, despite plans to invest about $100 billion this year, with most of the money going toward data centers,

homegrown chips and other equipment to provide artificial intelligence services. Here's CEO Andy Jassy on the company conference call. AI represents for sure the biggest opportunity since cloud and probably the biggest technology shift.

and opportunity in business since the internet. And so I think that both our business, our customers, and shareholders will be happy medium to long term that we're pursuing the capital opportunity and the business opportunity in AI.

And Amazon CEO Andy Jass, he says the AI race will likely weigh down profits. Operating income will be $14 billion to $18 billion, and that's below analysts' estimates. Well, soon the focus is going to turn to the economy, Karen. Investors are waiting for the January jobs report. Economists are looking for an addition of 175,000 jobs. Let's get a preview from Bloomberg's Michael McKee.

Perhaps it's reversion to the mean. Economists anticipate we had much slower job growth in January after December's blowout report. January also a month when holiday help leaves payrolls. And this year, there are also likely significant job losses from the fires in Los Angeles. Unemployment, however, is forecast to be reassuring. No change.

indicating that while companies may not be hiring, they aren't letting workers go. If the labor market remains solid, it will help the Fed make the case for leaving interest rates unchanged for longer to keep the pressure on inflation. Michael McKee, Bloomberg Radio.

All right, Mike, thanks. As we await that report, Dallas Fed President Lori Logan is skeptical that more rate cuts are necessary. She spoke at an event in Mexico City. What if inflation comes in close to 2% in coming months? Well, that would be good news. It wouldn't necessarily allow the FOMC to cut rates soon, in my view. And Dallas Fed President Lori Logan did say the Fed would likely lower rates if the labor market deteriorated.

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. Get ready for another round of winter weather this weekend. Bloomberg meteorologist Rob Carolin has the latest. Michael, yet another winter storm headed towards the mid-Atlantic and northeast for this weekend. Winter storm watches are up for the New York City area and for Boston Saturday night and into Sunday.

We'll see snow, sleet and rain developing in the district tomorrow afternoon. It changes to rain there. Not a big deal. But we could see three to five inches of snow in the city during Saturday night and into Sunday and more of the same in Boston. I'm Rob Carlin, Bloomberg Radio. Thanks, Rob. Panama's president is calling a statement by the U.S. State Department an absolute falsehood. The department writing American vessels would no longer have to pay charge fees at the Panama Canal.

The dispute comes days after Secretary of State Marco Rubio's first overseas trip to the Central American country. Rubio says he's not confused about the situation. I respect very much that Panama has a process. They're a democratically elected government. They have rules. They have laws. They're going to follow their process, but our expectations remain the same. Panama's President Jose Raul Molino says that he will speak with President Trump today.

Iran's supreme leader says that negotiations with America are not intelligent, wise, or honorable after President Trump floated nuclear talks with Tehran. Ayatollah Ali Khamenei also suggested that there should be no negotiations with such a government, but stop short of issuing a direct order not to engage with Washington.

Bird flu has sent the price of eggs skyrocketing, impacting everything from big chain grocery stores and restaurants to the local sandwich shops. At Benny's Deli in Queens, the $5.50 bacon egg and cheese sandwich has been the mainstay of morning business. However, owner Anthony Bonavita says soon he may be forced to raise prices. I'm trying to hold on.

know, the most I will go up is a dollar, but I don't even want to do that. Bonavita says an average case of eggs used to be 60 to 70 dollars. Now he's paying over 220 dollars. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you. This is the Bloomberg Business Week Minute brought to you by Amazon Business. I'm Carol Masser. Greens

Green stocks have had a rough few years as the industry has struggled due to high interest rates, which made it more costly for green companies to get financing, homeowners to buy solar panels and drivers to buy EVs. And on top of that, pandemic lockdowns and supply chain issues. And the S&P Global Clean Energy Index is down by almost two thirds since 2021.

And yet some green investors are finding a silver lining in the presidency of Donald Trump, despite his anti-green policies. And that's because of low market valuations and improving earnings outlook. Investors single out battery producers as more electric grids install them to manage loads and store power when solar or wind installations are idle. Others say check out clean energy companies outside the U.S., noting China's strong support for green tech.

That's the Bloomberg Business Week Minute brought to you by Amazon Business, your partner for smart business buying.

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Time now for the Bloomberg Sports Update, brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. For the first time ever, brothers will be members of the Pro Football Hall of Fame, but not the Mannings. Many Giants fans were hoping Eli would join Peyton, but Eli did not get in. Not on the first ballot, anyway. Former Green Bay Whiteout Sterling Sharp was named, and he joins his brother Shannon, also named production manager.

Former Chargers tight end Antonio Gates, an eight-time Pro Bowler, six-time Pro Bowl cornerback Eric Allen, and pass rusher Jared Allen, the four-player class, the smallest in 20 years. Also in New Orleans, ahead of the Super Bowl, Josh Allen, named NFL MVP in the closest vote since 2003. He edged out Lamar Jackson. The same voters had named Jackson as the first-team All-Pro quarterback. Saquon Barkley, one offensive player of the year. He's getting ready for his first Super Bowl game.

in his six years with the Giants, Barkley only once even went to the playoffs. His season in Philly, of course, has far surpassed all he went through in New York. Losing or the adversities and the injuries that I went through, you know, the reason why I'm able to be at the age I am and after all those injuries, I never gave up. I never lost hope. Uh,

You know, I just thought that I always saw this moment coming. I always saw this success coming at the time. I thought it was going to be still in the New York giant uniform. The chiefs, the one point favorite with the Eagles. So Superbowl 59 expected to be a close one. Kansas city's won 17 straight one score games and his three recent Superbowl wins.

Chiefs trailed in the fourth quarter every time. Devils lost at home to Vegas 3-1. The Capitals won 4-3 at Philadelphia. The Celtics lost at home to Dallas 127-120. Anthony Davis yet to play for the Mavs. And Luka Donson's yet to play for the Lakers. He's expected to play Monday. Lakers beat Golden State 120-112. 40-year-old LeBron James scored 42 points. St. John's tonight brings its nine-game winning streak to UConn, taking on the two-time defending national champs. John Stachauer, Bloomberg Sports, Karen and Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager bringing you now our extended conversation with Treasury Secretary Scott Besson. Speaking with Bloomberg's Salaya Mohsen from the cashroom of the Treasury Department in Washington, D.C.,

They talked about Besson's plans for the dollar, tariffs, trade, and more, but they began by addressing Elon Musk and the government efficiency team's involvement with the Treasury's federal payment system. Let's go now to that conversation. Right now, there is widespread concern about the Doge team's access to sensitive payment systems.

Are you worried at all that that access and that tinkering of the payment systems could affect the Treasury's market or cause any disruption? Good. Well, Soleil, thank you for asking me about that because there's a lot of misinformation out there. First of all, when you say the Doge team,

These are Treasury employees, two Treasury employees, one of whom I personally interviewed in his final round. There is no tinkering with the system. They are on read-only. They are looking. They can make no changes. It is an operational program to suggest improvement. So we make $1.3 billion payments a year.

And this is two employees who are working with a group of longstanding employees.

The letter that the Treasury Department sent earlier this week talked about how the team currently does not have access to change the system. Have they at any point this year had the ability to make changes? Absolutely not. This is no different than you would have at a private company. And by the way, the ability to change the system sits over at the Federal Reserve. So it doesn't even lie in this building.

So they could make suggestions on how to change the system, but we don't even run the system. And if they request the ability to change the system, would you grant that? No, again, they have no ability to change the system. I have no ability to grant that change. That they can make suggestions, then it would go to the Federal Reserve. And just like any large ERP system,

There will be tests, there will be this, there will be that. And then the Fed will determine whether these changes are robust or not. As the Secretary of Treasury, you also oversee the IRS. Do you know what...

what kind of access the team has to IRS data or individual taxpayer data? Well, I'm glad you asked that too, because look, the IRS, the privacy issue is one of the biggest issues. And under, over the past four years, we've seen a lot of leaks out of there. The IRS systems are quite poor. When I started in college in 1980, I learned the program in COBOL.

I think there are 12 different systems at the IRS that still run on COBOL. But as of now, there is no engagement at the IRS. And if they request that access, would you sign off on that request? They haven't. So we'll take that when it comes to it. I think there is a lot to do there. But the president was elected with a big agenda. And to the extent that

Getting the IRS in better shape is part of that, sure. Because look, with the IRS, what am I concerned about? I am concerned about collections. I'm concerned about privacy. And I'm concerned that the system is robust and customer service.

But do you think that if they ask for access, that is something you would consider signing off on? There are a lot of things I would consider. But look, we're in the middle of the tax filing season right now. We even, with the government buyouts that expire at midnight tonight, we have been mandated that the IRS...

customer facing employees, that they're not eligible for that until May 15th. So I don't imagine anything's going to go on at the IRS until then or beyond. Elon Musk just a few half an hour ago tweeted out that Treasury needs to stop approving certain payments. Has your staff tried to block any payments here at Treasury? We have not. And I'm glad you asked that too. And

And just to put it in perspective, Ilan and I are completely aligned in terms of cutting waste and increasing accountability and transparency for the American people. I believe that this Doge program in my adult life is one of the most important audits of government or changes to government structure we have seen.

that when I was in my 20s, we had the Grace Report, and there's some great suggestions that came out of that, never implemented. Under Clinton and Gore, I think it was to government efficiency or reduce government efficiency.

Nothing happened. So President Trump came in, there's a big agenda, and I think that there are gigantic cost savings for the American people here. And I think it's unfortunate the way the media wants to lampoon what is going on. These are highly trained professionals. This is not some roving band going around doing things. This is methodical, and it is going to yield big savings.

At any point, would you heed what Musk just tweeted and stop payments from coming through Treasury?

Most of that happens above us, that it comes from the departments and the agencies. We are doing a complete review. And I want to emphasize to you and everyone watching that it is an operational review. It is not an ideological review. We want to make sure that the American people are getting the best practices. And I don't think that's happening right now.

The systems here at Treasury, they're known to be a little antiquated, but very, very sensitive, but also they're working. I'm hearing, you know, at Bloomberg we hear a lot about investors being concerned that this could hit markets in some way or start to cause a loss of confidence. As a longtime hedge fund investor, do you have a response to those concerns? People shouldn't be concerned that

At Treasury, we move deliberately and we fix things. That's the way we work. So everyone should know that all the payments are going to be made. They're going to be in good order. And at the end of this review, there are going to be substantial savings for the American taxpayer.

Mr. Secretary, you have experience in currency markets, and now as in your new role, you oversee U.S. currency policy. I'd like to ask you, what does a strong dollar mean to you? Well, first of all, the strong dollar policy is completely intact with President Trump. And I was very happy at his speech.

Economic Club of New York speech in August when he reemphasized the importance of maintaining the dollar reserve currency status. But let's think about what does a strong dollar mean? It really means four things. One,

that when we think about a fiat currency, a piece of paper is credibility. So a strong dollar is credibility and a rule of law that is backing it up. Two, it means a composite price on the screen, the Bloomberg Currency Index.

that is the dollar moving up against that. Three, it is a bilateral price. So what's important to remember is the dollar is either weak or strong versus something else. So we want the dollar to be strong

What we don't want is other countries to weaken their currencies to manipulate their trade. And then fourth, that we want to have the best policies that create the environment for a strong dollar. Let's talk about other nations and how they manage their currencies. The president has asked for a tariff study from several of his cabinet officers or incoming cabinet officers.

due April 1st. And the Treasury piece of that is to assess how to handle when foreign nations manipulate their currencies. Do you see any evidence of manipulation in foreign exchange rate markets right now? Well...

We'll wait till the study comes out, but I think just intuitively you and I could agree that when you see the accumulation of these large surpluses, that there is not a free-form trading system that's going. It could be due to the level of the currency. It could be due to trade restrictions. It could be due to some interest rate repression policy. So it could be any of those.

Are there any countries that you're monitoring or watching specifically right now? I know the president in the past has labeled China as a currency manipulator. Do you see any other nations that need to be closely watched? Well, I think we'll see on April 1st. And as you know, that China is the most imbalanced, unbalanced economy in the history of the world. And they are in.

a deep recession right now. They're experiencing deflation and they're trying to export their way out of that. And we can't allow that. We want fair trade. And part of that is taking a strong position on the currency and the terms of trade.

Mr. Secretary, you said yesterday in an interview that the Trump administration is more focused on long-term yields than what the Federal Reserve is doing, which is a bold statement. I want to ask, how do you plan to keep a lid on yields, considering the deluge of debt issuance that is coming down the pike and also some of the inflationary risks that are ahead? Well, one of the things I wanted to emphasize is that we are not focused on the

whether the Fed is going to cut, not cut. What we are focused on is lowering rates. So we are less focused on the specific rate cuts and how do we get the whole curve down. I mentioned that the 10-year, I believe, is the

important price to focus on its mortgages its long-term capital formation so and look i i think with the president's policies of energy dominance deregulation and non-inflationary growth i i think that the the tenure is going to naturally come down and then look on top of it

What if we do get some big savings on the spending side from the Doge programs? Like, let's think of a naive formula. Government equals spending minus taxes. For my entire career and beyond, maybe even back to pre-1990s,

FDR, government equals spending minus taxes. The S, the Republicans, we like spending. We just wanted to raise it less. The Democrats want to raise it more. Taxes, Democrats want tax increases. We want tax cuts. What nobody's thinking about is what if the S actually went down? What if it actually goes down because of everything we're doing right now?

But what about the inflation concerns that are stemming from the tariffs and tariff threats? Look, I'm not sure where this narrative, the tariffs, for the country putting on the tariffs is inflationary.

that we could have a small one-time price adjustment that as we saw in Trump 1.0, that the deregulation and the other policies, we stayed right around the Fed's target level. So I'm unconcerned about that. I think especially that China now, given all their excess capacity, will, no matter the level of the tariffs, will end up eating quite a bit.

There's a lot of uncertainty around tariffs. We see them threatened or signaled and then they're taken back. It appears as if this administration might be unfriendly to businesses. Is that right? I thought really, I think it's just the opposite. I think this is the most pro business administration in history. And everything we're doing is going to

increase the after-tax return on capital, and as a result, working Americans will have very high real wage growth. What we've seen over the past four years is the government and government-adjacent sectors providing the employment growth. And why have we experienced this affordability crisis? First, there was a massive spending met by increased regulation, which caused inflation.

And then government and government-adjacent jobs do not call real wage growth because they move up at CPI. So I think that we are going to not only be business-friendly, but very, very friendly for working Americans. We're seeing companies already under some stress from the tariff threats. China is investigating Googles.

And also, as you know, are well aware that businesses like to be able to plan ahead. But with so much policy uncertainty, that predictability factor is gone. That all points to a little bit of a tougher environment. Well, look, I think the best thing we can do for predictability is make the Tax Cuts and Job Act permanent.

That would be the single best thing we could do for predictability. We can go back to the 100% expensing and add some new features that I think business is going to be very happy with. But again, the most important thing is that it filters down to working wages, which is what we saw in President Trump's first administration.

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.

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