US Seeks to Control Ukraine Investment; Hegseth Faces Signal Breach Questions
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Good morning, I'm Nathan Hager. And I'm John Tucker. Here are the stories we're following today. John, we begin with the latest developments in the war in Ukraine. The U.S. is pushing to control all major future infrastructure and mineral investments in the country. We get more from Bloomberg's Tony Halpin. It would give the U.S. control over very large areas of investments in Ukraine's economy. They're demanding essentially a right of first offer.

in this agreement that they're drawing up with Kyiv. That would allow them to control investments into projects such as roads, railways, ports, mines, oil and gas, critical minerals extraction. So it's a pretty enormously extensive list of things. And it would also give the U.S. first claim on profits that were transferred into this special investment plan that's being proposed by Washington.

and they would get the profits until it was considered that Ukraine had basically repaid all of the U.S. military and economic support that had been provided since the beginning of the war. Bloomberg's Tony Halpin says the deal could undermine Ukraine's bid for European Union membership and give the U.S. effective control over investment decisions covering large areas of Ukraine's economy.

And meanwhile, Nathan, Russian President Vladimir Putin is proposing a UN-led transitional administration in Ukraine. Here's Putin speaking through an interpreter. We could discuss under the auspices of the UN with the US, with European countries.

and of course with our partners and friends, the possibility of conducting temporary governance in Ukraine in order to hold democratic elections, in order to bring to power a viable government that enjoys the trust of the people and then begin negotiations with them on a peace treaty. Putin also said Russia is worried about NATO's activities in the Arctic.

John Defense Secretary Pete Hegseth is in Asia, specifically the Philippines, for his first trip to the region as head of the Pentagon. But he's facing questions about that group chat on Signal, where he shared an attack timeline for Yemen with top U.S. officials and, inadvertently, the Atlantic Magazine's editor. I'm quite proud, quite proud of what our forces in CENTCOM did on that initial series of very effective and devastating strikes and the ongoing campaign that we are undertaking.

Because that is a, again, on the backs of four years of deferred maintenance and failure and weakness of the Biden administration, we are reestablishing deterrence.

Defense Secretary Pete Hegseth is facing calls to resign for sharing the attack plans over a commercially available app. A federal judge has ordered Hegseth and other officials to preserve their signal communications over the five days that included the Yemen chat. And Elon Musk says he's planning to slash $1 trillion in U.S. government spending by the end of May. Musk spoke with Fox News. Our goal is to reduce the deficit by a trillion dollars.

So from a nominal deficit of $2 trillion to try to cut the deficit in half to $1 trillion, or looked at it in total federal spending to drop the federal spending from $7 trillion to $6 trillion. And figures from Elon Musk's own team show they are still far from the $1 trillion mark. The Doge website lists about $22 billion in contract savings. The cost-cutting efforts have faced a series of legal setbacks.

as judges have halted some of their decisions. - And John, the Trump administration's making a big move in its bid to lay off government workers. Multiple agencies, including the Justice and Defense Departments, have filed a lawsuit to invalidate union contracts with federal employees. The suit says the collective bargaining agreements are impeding President Trump's government reform efforts

and threaten national security. The American Federation of Government Employees Union is calling the case a bullying tactic against, quote, hundreds of thousands of patriotic American civil servants. And while Donald Trump intensifies his global trade war, China's president is meeting with business leaders. Xi Jinping met with more than 40 leaders of companies.

spanning finance, manufacturing and technology, and vowed to improve market access and boost investor sentiment amidst rising tariffs and economic uncertainty. John's Secretary of State Marco Rubio is defending the Trump administration's push to expel foreign citizens who've protested against Israel. Speaking to reporters during a visit to Guyana, Rubio said the U.S. may have revoked more than 300 visas so far. I think it's crazy. I think it's stupid.

For any country in the world to welcome people into their country, they're going to go to your universities as visitors. They're visitors. And say, I'm going to your universities to start a riot. I'm going to your universities to take over a library and harass people. I don't care what movement you're involved in. And Secretary of State Marco Rubio, now lawyers for the detained visa holders, say the actions violate their constitutional rights to free speech and due process.

And let's turn to the markets. Futures lower right now as we close out another volatile trading week. Gold hit another record as concerns about U.S. tariffs and a widening trade war weigh on investors. Adam Coons is the chief investment officer at Winthrop Capital Management. I think we all know that Wall Street obviously

Like, it's nothing less than uncertainty. You can get bad news, and if it's expected, you know, it doesn't really do much. But uncertainty will drive, you know, this higher volatility, higher risk premiums. Winthrop Capital Management's Adam Kuhns.

Well, the S&P 500 is on pace for its worst quarter since 2023. It's down 3.2% so far this year. Today, John, investors are waiting for another key economic report. It's the Fed's preferred inflation gauge, the PCE deflator. Ahead of that, the head of the Boston Fed says it looks inevitable. The tariffs will boost inflation, at least in the near term. Susan Collins says it is appropriate to keep interest rates steady for longer.

It's inevitable that tariffs are going to increase inflation in the near term. And my kind of modal outlook would be that that could be short-lived with a continuation of some, you know, disinflation, but further in the future than I might have expected before. Boston Fed President Susan Collins and other central bankers left interest rates unchanged last week for a second straight meeting.

And that brings us to 507 on Wall Street. It is 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, John. A strong 7.7 magnitude earthquake has rocked Myanmar, causing buildings to sway. It caused evacuations in Thailand and Vietnam. Witnesses in Bangkok said the shaking continued for more than a minute with people fleeing onto the streets.

There were no immediate reports of casualties. The Greater Bangkok area is home to more than 17 million people, many of whom live in high-rise apartments.

You're not welcome here. That's the chilly message that some residents of Greenland are sending to Vice President J.D. Vance and Second Lady Usha Vance. The two are coming as President Trump once again vows to take over Greenland. This man says Greenland is not for sale and neither are its people. He's not welcome to Greenland and his administration because he wants to buy us. If he says I don't want to buy you, then he's welcome.

Greenland is an autonomous territory but is also a part of the Kingdom of Denmark.

President Donald Trump says he will withdraw Representative Elise Stefanik's nomination to serve as the U.S. ambassador to the United Nations, citing Republicans' narrow hold on the House. In a post on social media, Trump says, "...with a very tight majority, I don't want to take a chance on anyone else running for Elise's seat." He went on to say there are others that can do a good job at the United Nations.

Wildfires that have been raging in the Carolinas have prompted both evacuations and emergency orders. There are three wildfires burning in North Carolina, including the Black Cove, which is 17% contained. Governor Josh Stein.

There's not enough containment yet, but they are working tirelessly. And what's encouraging is it's the state Forest Service. It's the National Forest Service. It's the Bureau of Indian Affairs. It's local police fire departments. Everybody coming together. Another wildfire, the Deep Woods, is 30% contained.

Rain and cooler temperatures are helping South Korean firefighters as they battle the country's worst ever wildfires. The chief of the Korea Forest Service says the wildfires in the southeast were 85% contained. The fires have killed 28 people and destroyed thousands of houses, factories, vehicles, and other structures. Global News 24 hours a day and whenever you want it. With the Bloomberg News Now, I'm Michael Barr and this is Bloomberg. John. All right, Michael, thank you.

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And the Berns is to 5-10 on Wall Street. Time now for the Bloomberg Sports Update, brought to you by your tri-state Audi dealers. And for that, here's Dan Schwartzman. Good morning, John and Nathan. Opening day of the Major League Baseball season saw the Yankees win their fourth trade opener as history was made in the Bronx. Austin Wells is the first Yankee catcher to hit leadoff in a lineup in their franchise history. That is ripped into right, back at the wall. See ya! Home run!

What a start. Yankees on top one zip.

That's courtesy of ESPN. Wells also becoming the first catcher in baseball history to an opening day leadoff homer. Yankees also getting a homer from Anthony Volpe to beat the Brewers 4-2. Mets follow the Astros in Houston 3-1. Newest met Juan Soto striking out the tying runs on base in the ninth inning to end the game. Soto, though, gets a single and two walks in his debut after signing a record 15-year, $765 million contract in the offseason.

Elsewhere, Red Sox knock off the Rangers 5-2. Garrett Crotchett picking up a no decision in his Sox debut, while William Abreu goes 3-3 with a walk and two homers. Nationals dominate the Blue Jays 12-2, while the Orioles dominate the Blue Jays 12-2, while the Nationals lose to the Phillies 7-3 in 10 innings.

All the higher seeds moving on to the Elite Eight at the Men's NCAA Tournament as Duke beats Arizona. Texas Tech gets past Arkansas in overtime. Florida knocks off Maryland while Alabama sets a tournament record with 25 three-pointers to dominate BYU. NBA action. Pacers setting a franchise record. They score 162 points and a win over the Wizards. Cavaliers win their 59th game of the season by knocking off the Spurs in Cleveland. The Lakers fall to the Bulls by two in Chicago.

And for our listeners in New York, you can catch the Rangers on the ice tonight as they take on the Anaheim Ducks. Puck drops at 10 right here on Bloomberg 1130. That's your Bloomberg Sports Update. I'm Dan Schwartzman, John 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. As President Donald Trump continues to push for a full ceasefire between Russia and Ukraine, he has also been looking to assert more U.S. economic control over the war-torn country. It is something the president has been discussing a lot in recent weeks.

One of the things we are doing is signing a deal very shortly with respect to rare earths with Ukraine, which they have tremendous value in rare earth, and we appreciate that. Now Bloomberg News has seen a document that shows the U.S. may want more than just Ukraine's rare earths, looking to control all

major investments in infrastructure and natural resources under a revised partnership deal. For more on this and other news coming out of the nation's capital, we are joined by Greg Valliere this morning, Chief U.S. Policy Strategist at AGF Investments. Greg, it's good to speak with you once again. From the reporting that has been put out there now, this sounds like a major expansion of what the president has been talking about when it comes to what he wants out of Ukraine. How do you see it? Well,

It sure is. I agree, Nathan. I think it's going to be very controversial to expand U.S. economic activity to that level. I'm not sure Zelensky can buy this. This has been something that has tested the relationship between the U.S. and Ukraine. We saw the blowup in the Oval Office last month. What makes you think that President Zelensky could have some difficulty with this?

I think his own people, I think the Ukrainian people are going to see that Trump wants to make Ukraine the 51st state. Forget about Canada. It could be Ukraine. And I think this type of economic activity is going to be viewed as too harsh, too extensive.

And we've seen also Russian President Vladimir Putin pushing this idea of a U.N.-sponsored force taking a transitional administration over Ukraine. Early reports that the White House is kind of dismissing that. Where do you see this going now, Greg?

I think it's going to last for a while before resolution. I'm not convinced this is going to get wrapped up anytime soon. The Bloomberg story this morning, I think, complicates the prospects for getting anything done. So we've got a ways to go.

And this comes, of course, after more than 30 leaders met just yesterday in Paris trying to put out their position on what to do about Ukraine. And it seems like Europe has been on the sidelines. Can Europe sort of reassert itself, given what we're learning about what the president is trying to do in Ukraine?

I think a bit. I think Macron and others could be intermediaries. But I think, again, this proposal that we're seeing this morning is way too vast for most all of the European leaders.

I want to get to the other major story that's been dominating Washington over the last several days. Of course, this signal chat about Yemen war plans or attack plans as it's been characterized. Now, Defense Secretary Pete Hegseth has continued to face questions about that, even as he's been overseas in Asia. How do you see this playing out in the days to come? Yeah.

Well, I think Hegseth is probably going to hang on. I don't think he's going to be dismissed, although there are a surprisingly large number of Republicans here in Washington who are using the phrase amateur hour, a feeling that Hegseth may be over his head.

How do you view the disclosures that came out of this signal chat? I mean, the White House has said nothing classified was revealed, but we did see a pretty detailed timeline of how these attacks were going to go down.

Well, you're right, Nathan. And I think an awful lot of people here feel that this sets a very bad precedent. I'd also add really quickly that there have been some extraordinary moves by Trump to consolidate his power, going after law firms. There's a story this morning going after he.

Going after automakers in the U.S. who try to raise prices. So Trump's going for it this week. This will be remembered as a week where Trump really dramatically increased his power. Do you think these efforts to increase power, as you put it, are going to have a lasting impact? Got about 30 seconds left.

I think the key, as usual, is going to be twofold. Number one, public opinion. And Trump's numbers aren't bad. They're not great, but they're not bad. And secondly, Republicans. I think a lot of Republicans in private are the wild card. They're beginning to think Trump is overdoing it. I think there may be an effort to try to curb him.

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 Bloomberg 99.1 in Washington.

and nationwide at SiriusXM 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 John Tucker. 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.

Thank you.

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