Trump Budget and Gaza Strategy Fallout; Bessent Says Trump Wants Lower 10-Year Yields
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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 Washington where a split is building between Republicans on Capitol Hill over how to move forward on President Donald Trump's agenda. Senate Republicans have introduced a plan that would delay action on extending the president's 2017 tax cuts.

until Congress passes a second so-called budget reconciliation bill. That would prioritize Trump's effort to crack down on border security and unauthorized immigrants first. But House Speaker Mike Johnson has called for combining both priorities into one big bill. Republican Congressman Jason Smith says that's the right way to go.

The one big beautiful bill is the best and quickest approach to get as many of the president's priorities delivered to his desk as possible. The House is focused on one big beautiful bill. It's the Senate that continues to say that they're going to do two. But fellow House Republican Byron Donalds is getting behind the Senate approach to send more resources to President Trump's borders are. Tom.

Tom Holman needs money today in order to get the repatriation force that the president has said that the American people voted for up and running. We have to get debt ceiling through and we need to do it without Democrat votes because Chuck Schumer is going to use that as leverage. President Trump plans to meet with Republican lawmakers today. He has said repeatedly he would like, quote, one big, beautiful bill. But he's also said he'd be OK with more than one.

Well, Nathan, President Trump's proposal to take over Gaza and turn it into what he calls a Riviera continues to reverberate through Washington. Now some of the president's top aides are trying to tone down the idea. Here's White House Press Secretary Caroline Leavitt. The president has not committed to putting boots on the ground in Gaza. He has also said that the United States is not going to pay for the rebuilding of Gaza.

And White House spokesperson Caroline Leavitt says any relocation of Gaza's more than 2 million residents would be temporary. Secretary of State Marco Rubio says the president does not want the U.S. to own Gaza. The only thing President Trump has done very generously, in my view, is offer the United States...

to step in, clear the debris, clean the place up from all the destruction that's on the ground, clean it up of all these unexploded munitions. Israelis have welcomed President Trump's talk of a reborn Gaza, but the Palestinian Authority says it rejects all calls for displacement of the

Palestinian people from their homeland. Meanwhile, Karen, Secretary of State Rubio says he will not attend a Group of 20 summit in Johannesburg later this month. Among the reasons he cites is South Africa's efforts to address inequality. The move adds strain to U.S.-South Africa relations. They have been tense due to South Africa's close ties with China and its refusal to condemn Russia's invasion of Ukraine.

Well, Nathan, today is the last day for federal workers to decide if they want to take up President Trump on his offer to quit their jobs. And Bloomberg's John Tucker is here with the latest. And, John, what's the response been so far? Well, as of yesterday, Karen, more than 40,000 workers signed up. That's about 2% of the federal civilian workforce signed.

And the administration expressed a rush of applicants in the final hours. The deadline to apply the end of the day today, a government employee simply has to send the word resign from a government email account.

President Trump and Elon Musk told the federal workers they'd be paid through the end of September if they take the offer. But federal employee unions question its legality. The head of the American Federation of Government Employees said in a statement that federal employees shouldn't be misled by what he called slick talk from unelected diplomats.

billionaires and their lackeys. I'm John Tucker, Bloomberg Radio. All right, John, thank you. The White House says Elon Musk will police himself and determine if there are conflicts of interest between his work reviewing federal spending and his overlapping empire of six companies. Musk is CEO of SpaceX, which has significant government contracts with NASA and the U.S. military. He is also CEO of Tesla, the electric car maker that has been the subject of several federal probes. Well,

Well, we turn to the markets now, Nathan, and U.S. futures are higher following yesterday's gains on Wall Street. The 10-year Treasury yield is hovering near the lowest since mid-December after Treasury Secretary Scott Besson said his focus is bringing down yields rather than the Fed's benchmark short-term interest rate.

And a programming note, Bloomberg's Salah Mohsen speaks live with the Treasury Secretary today. Full coverage is at 1 p.m. Wall Street time on Bloomberg Radio and the Bloomberg podcast page on YouTube. And we're watching some stocks on the move this morning, Karen, including shares of Ford. They are down nearly 5%. The automaker is warning its profit could fall by $2 billion or more this year on lower vehicle prices and costly new model launches.

As heard here on Bloomberg Radio, Ford CEO Jim Farley says the forecast does not factor potential steep new tariffs on Canada and Mexico. I think longer term is the bigger concern. These kind of tariffs, especially in these two countries, are very significant. And if they persist...

Beyond months, you know, we could see billions and billions of dollars of pressure on the industry, lost jobs, lots of impacts to communities and our ecosystem in the industry. And that's what we're talking to the administration about and congressional leaders. CEO Jim Farley also says he's dialing back Ford's huge bet on electric vehicles that overshot consumer demand and fueled steep losses. You can get our full conversation with the Ford chief executive,

on the Bloomberg Talks podcast. Bloomberg Talks, available on Apple, Spotify, or anywhere you get your podcasts.

And Nathan shares a Qualcomm. They're down almost 5% this morning. The world's biggest seller of smartphone processors expects the overall smartphone market to be flat or increase in the low single digits in 2025. And Arm Holdings, Karen, those shares are down about 3.5%. The company gave a cautious revenue forecast, adding to recent concern that spending on artificial intelligence computing is slowing. Arm's designs and standards are fundamental to semiconductors that run most of the world's smartphones.

Well, Nathan, add Alphabet to the list of big tech companies changing hiring plans. The Google parent is scrapping some of its diversity, equity, and inclusion programs. The change marks the latest step in Silicon Valley's retreat from DEI initiatives, which have been rejected by President Trump's administration. It follows similar steps from tech rivals like Amazon, Meta, and Walmart. Speaking of Amazon, Karen, that company reports earnings this afternoon. We get a preview from Bloomberg's Tom Busby.

Forecast call for a 10% revenue surge last quarter fueled by strong holiday sales on its signature online shopping site, strong advertising businesses, and growth in its AWS cloud computing unit. Now, Rivals Alphabet and Microsoft both reported slowing growth in their respective cloud operations.

So results in AWS will be key for investors. Bloomberg Consensus calls for total revenue of $187.32 billion, earnings per share of $1.50. Tom Busby, Bloomberg Radio. All right, Tom, thanks. In Europe, the Bank of England is expected to cut interest rates for a third time later this morning. Economists expect the BOE to press ahead with a quarter point reduction in its benchmark rate to 4.5%.

And that's the lowest level since June 2023. And we have this red headline crossing the Bloomberg terminal. Karen, The Wall Street Journal is reporting Honeywell plans to break up into three independent companies, splitting off its aerospace from automation business and also spinning off its advanced materials business. Honeywell shares right now are higher by four and three quarters percent.

Time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Democratic senators held the Senate floor overnight to oppose the nomination of Russell Vogt, President Trump's pick for director of the Office on Management and Budget.

Vote is one of the authors of Project 2025, a set of conservative policy proposals that includes an expansion of executive power. Minnesota Senator Amy Klobuchar was among the senators speaking last night. According to reports, he was a driving force behind the administration's decision to freeze federal funding. Stephen Miller even credited, someone very close to Donald Trump, even publicly credited Vote with coming up with the idea.

It was votes planned that led the administration to take an action that hurt millions of Americans. Votes confirmation vote is scheduled to be held this evening. For those in the New York City and tri-state area, expect treacherous travel for the morning commute. A winter storm brings snow, ice, and rain. The storm is expected to peak during rush hour. The snow will change to sleet and freezing rain later today and then all rain.

The Trump administration is expected to present a plan to end Russia's war on Ukraine at the Munich Security Conference next week. According to people familiar with the matter, the proposal to be presented by Trump's special representative Keith Kellogg may include freezing the conflict, providing Ukraine with security guarantees, and potentially holding elections in Ukraine after a ceasefire.

A close call at Seattle's SeaTac Airport when the right wing of a taxiing Japan Airlines flight hit the tail of a parked Delta plane yesterday. No one was injured on either flight, but passengers had to deplane both aircraft.

Passengers, including this woman, were still left on edge by the encounter. I think everybody was just in disbelief of the whole thing just having happened, just with all the recent air issues. According to the FAA, both aircraft were in an area not under air traffic control. 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 Businessweek Minute brought to you by Amazon Business. I'm Carol Masser. 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. In

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 Businessweek Minute brought to you by Amazon Business, your partner for smart business buying.

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Time now for the Bloomberg Sports Update, and it's brought to you by Tri-State Audi. We bring in John Stashower. John, good morning. Good morning, Karen. Pete Alonzo's free agency had dragged on for months, but with spring training right around the corner, it ended last night with the outcome that most expected. He's staying with the Mets, although perhaps for not all that long. It's just a two-year deal, and he can opt out after the upcoming season when he'll make $30 million. He also gets $10 million as a signing bonus. Alonzo,

has been a fan favorite since his record-setting 53 home run rookie season in 2019, and Mets fans will never forget what he did last fall in Milwaukee. Here's the pitch. Swing and a fly ball to right field. Pretty well hit. Freelink back at the wall. He jumps. Did it. Pete Alonzo with the most memorable home. Pumps his fist as he rounds second. It's a three-run homer.

He's given the Mets a 3-2 lead. Yeah, Mets radio to call that home run hit when the Mets were two outs from their season ending. They ended up winning that series and the next. The NBA trade deadline, 3 o'clock today, and Jimmy Butler is on the move. No surprise. He had demanded a trade out of Miami. The Heat in recent weeks had suspended Butler three different times. He goes to Golden State, and the Warriors have given him a two-year contract extension. The Mets' three-game winning streak came to an end, beaten in Brooklyn by lowly Washington.

who's only won nine games all year. At the Garden, Rangers with two goals in the third period beat the Bruins 3-2. Chris Kreider, the game winner, shorthanded with eight minutes left. College Hoops, 20th win, 16th in a row for second-ranked Duke. At Syracuse, by 29, the Blue Devils are 12-0 in the ACC for the first time in almost 20 years. Seton Hall lost by 30. The Butler Rutgers knocked off 23rd-ranked Illinois. The NFL continues to play games.

In other countries, 2026, Melbourne, Australia, the Rams will be one of the teams going. John Stasch, Bloomberg Sports, Cameron Eppington.

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. Less than three weeks into President Donald Trump's second term, Congress is coming up on a deadline next month to pass a budget and push through some of the president's biggest priorities. But Republicans are now split on whether to do it in one bill or two. Republican Congressman Byron Donald says time is running out.

Knowing President Trump, what he wants to see is action and us to deliver, coming back to get an okay on every single step. I don't think that's what he's looking for. That was Congressman Brian Donald speaking on Bloomberg's balance of power this morning. We're joined by Bloomberg News senior editor.

Bill Ferrys. And Bill, it might feel like we're getting into the weeds a little bit when it comes to the process of getting a budget done on Capitol Hill. But the weeds matter. We see that President Trump is going to be calling Republican lawmakers to the White House today to talk strategy. Good morning.

Good morning. That's right. I mean, you mentioned that the deadline is coming up and I think patience is running out. The Senate and the House have been at odds, even though they're both controlled by Republicans, as you know, but they've been at odds over how to achieve some of President Trump's

Trump's budgetary and policy goals here. And it looks like that is breaking more out into the open today. And we'll have to see if President Trump can help make a decision. But essentially, the Senate is trying to strip things back a little bit and pass some quick budget, quicker budgetary measures

legislation that would give the president potentially about $150 billion in new spending over four years for border security and immigration. Obviously, one of his priorities, his borders are. Tom Homan has said he needs additional financial resources soon if he's going to keep up the pace of these deportation efforts.

And that's conflicting with the House's plan, Mike Johnson's plan, to basically have the budget and a whole bunch of other issues, including tax cuts, all thrown into one big bill. He's got a narrow majority. He's having a hard time getting unity on that effort. So what's the concern then on the House side about splitting up the two issues? Can't they get them both done in time?

Well, you know, President Trump has said a few times that he would prefer one big bill. I think there's some concern if you start to break this stuff up that you're going to have momentum building against some aspects of it. To Mike Johnson's view is that the more you can put in one package, the harder it is for

any one faction in his caucus to uh... to vote against it and deep six the whole the whole plan so if he can keep it all together uh... for one up or down vote to him that's that's an easier solution than having multiple votes that might

end up with some Republicans either not voting in support or voting against the proposal. Apart from the budget debate going on, Bill, there's still a lot of talk in Washington, I'm sure, about President Trump's proposal for the U.S. to essentially take over Gaza and redevelop it. But now it sounds like the White House and some of the president's aides are at least trying to temper some of that talk. Got about a minute left.

Yeah, I mean, it's a big debate in the U.S. and around the world, really. But you heard Secretary of State Marco Rubio just saying that the U.S. wants to play a big role in rebuilding Gaza, but that it doesn't want to own it. Defense Secretary Pete Hegseth saying the U.S. is, quote, a very long way.

away from deploying the military. So you're definitely seeing a walk back. The big pitch here, the big idea, I think, has been that, listen, President Trump was thinking outside the box here with that proposal, but it's really not where the U.S. is headed at this 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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