US Dollar Climbs Ahead of Warsh; Anthropic Restrictions Lifted — Bloomberg Brief 7/1/2026

[00:00:00] Speaker ?: IT IS 5:00 AM IN NEW YORK CITY, 10:00 AM IN LONDON. [00:00:10] Bonnie Quinn: GOOD MORNING, I'M BONNIE QUINN WITH YOUR BLOOMBERG BRIEF. STOCKS DRAG, THE DOLLAR CLIMBS, AHEAD OF FED CHAIR WASHES REMARKS AT THE CINTA FORUM. ANTHROPIC'S FABUL 5 AI MODEL GETS CLEARANCE FOR GLOBAL DISTRIBUTION FROM THE U.S. GOVERNMENT. WARNINGS OF AN OIL GLUT PILE UP AS INDIRECT TALKS RESUME BETWEEN THE U.S. AND IRAN IN DOHA. LET'S GET A CHECK ON MARKETS AROUND THE WORLD STARTING WITH ASIA WHERE WE SAW DATA COME IN STRONG. THE PMI'S CROSS MANY OF THE ASIAN COUNTRIES COMING IN ABOVE 50 FOR THE FIRST TIME SINCE MARCH. WE ALSO HAD THE TANKAN SURVEY COMING IN MUCH STRONGER IN TAKING A HALF OF THE COUNTRIES. IT'S ALL PUSHING STOCKS HIGHER IN JAPAN AND SOUTHEAST ASIA. NOT SO MUCH FOR THE COSPI, DOWN ABOUT 2%. IT DID START OFF IN THE GREEN. WE HAVE HAD A 99% GAIN IN THE FIRST HALF FOR THE COSPI. THAT TRADE IS BROADENING OUT JUST A LITTLE BIT, WHICH MAY BE POSITIVE OVERALL. IT CERTAINLY IS FOR TAIWAN, WHERE THE TAI-X IS REPRESENTED 42% BY TSMC. SO BROADENING OUT OF THAT TRADE AND STILL SEEING THE TAI-X STRONGER AND HIGHER TODAY IS A GOOD THING. WE'RE ALSO SEEING IT IN THE UNITED STATES, BY THE WAY. WE'RE GOING TO LOOK AT THE YEN BECAUSE WE'RE CONTINUING TO SEE THAT WEAKEN AS WELL. WE'RE WELL ABOVE 162. IN FACT, WE REACHED 162.85 A LITTLE BIT EARLIER ON. THE FX CHIEF IN JAPAN TALKING ABOUT THE CURRENCY AND SAYING THAT THE AUTHORITIES WERE IN MUCH CLOSER CONTACT WITH WASHINGTON THAN PERHAPS THE MARKETS BELIEVED. THAT PERHAPS SCARED THE MARKETS BECAUSE THE MARKETS WERE THINKING THEN MAYBE THE BAR IS HIGHER FOR COORDINATIVE RESPONSE TO THIS YEN WEAKENING FROM WASHINGTON. AS LONG AS WE HAVE DOLLAR MOMENTUM CONTINUING, WHICH SEEMS TO BE THE CASE, THEN IT LOOKS LIKE WE ARE IN POTENTIAL INTERVENTION TERRITORY. WE'RE LOOKING FOR 164, 165 ON THE YEN, BUT ALSO FRIDAY AS A HOLIDAY IN THE UNITED STATES, WHICH COULD BE A MOMENT FOR INTERVENTION IF ANY IS TO COME ANYTIME SOON. LET'S GET A CHECK ON MARKETS IN EUROPE NOW. [00:02:21] Justina Lee: FOR THAT, WE'LL GO ACROSS TO LONDON AND JUSTINA LEE. GOOD MORNING, BONNIE. moves are all in the bond market. Now when it comes to long end bond yields we're seeing some pretty big moves you know from kind of the euro area to the UK. And I think a lot of that is reflecting a slum in treasuries overnight. But what I find interesting is that we can see the UK 30 year yield up five basis points so quite a bit more than Germany. Could that be reflecting some of the fiscal angst with the UK kind of unveiling more defense spending. But of course when it comes to bonds it's all about inflation. And so we flip the board here. We just got the latest CPI figures out of the euro area and it showed like a slight dip kind of for the month of June. So that would be good news for the ECB. And of course when it comes to where interest rates are going we're all kind of watching what the superstar central bankers gathered in central Portugal today are going to speak. You know we have Christine Lagarde Andrew Bailey from the B.O.E. and of course Kevin Warsh and all eyes will be on that for Bonnie. Exactly. Just you know we'll be going there in just a few minutes. That's Justina Lee in [00:03:28] Bonnie Quinn: Now we're starting off the second half in the United States perhaps in the red but very slightly. And again we're just consolidating some of those gains that we saw. The Russell 2000 for example another record yesterday. And the socks the Philly socks index up almost 4 percent yesterday. Not mainly on the memory chip makers. In fact some of them didn't do so well though Sandisk was up more than 10 percent. But it is a broadening out of that memory chip trade here in the United States. And the Nasdaq itself did gain yesterday. Didn't hit a record though. So as you can see we are a little lower just in the pre-market. We'll see if we can make up some of those gains as we head into July strong. Let's take a look at bond yields because again we're waiting on that jobs data tomorrow. The nonfarm payrolls report coming out Thursday this week. No movement really across the curve. We're also waiting to see if Kevin Warsh gives anything new away at Sintra in Portugal on a panel again on productivity and AI in just a little bit. And then if you just take a look at the dollar index. It continues to strengthen this as there's some pressure on precious metals and Bitcoin as well which is trading at a 58,000 handle as you can see. Brent crude continues its leg lower. We're turning over the contract on Brent today. So there'll be a little bit of a discrepancy between the two grades. All right. Let's get to some individual pre-market movers now. And for that we'll go back over to London and Chloe Malley. [00:04:46] Chloe Malley: Good morning Vonnie. Nike is a little bit weaker this morning after giving quite a cautious outlook and warning that consumers were under a lot of pressure. And so this is really adding to this existing investor anxiety around the company and some investor frustration as well because this is an ongoing turnaround that is taking maybe quite a while to pay off. And so we're down almost 4 percent this morning. Shares are plunging as well for Shutterstock after Getty Images said that it would terminate its merger agreement. Analysts have said this is quite a surprising development given that Getty was very committed to this merger. And so we are seeing shares really, really plunging this morning down more than 28 percent. And finally, Galderma over in Switzerland is down after the FDA turned down its rival Botox treatment. This is not the first time the company has faced some delays and some pushback from the FDA when it comes to approving one of its treatments. And we are seeing that really weighing on that stock this morning down almost 6 percent for Galderma. [00:05:46] Bonnie Quinn: All right, Chloe, thank you so much. Chloe Mele will be back later in the hour. Also coming up this hour, Challenger job cut data expected later in the hour. And of course, the nonfarm payrolls report will discuss all of the labour market dynamics as well as what Kevin Warsh might give away with Colin Martin of Charles Schwab. Let's head over to Portugal now, where Fed Chair Kevin Warsh, ECB President Christine Lagarde, BOE Governor Andrew Bailey and Bank of Canada Governor Tiff Macklin are all slated to speak at 9:00 a.m. Eastern today on a policy panel at the annual Cintra Forum. Bloomberg's Francine Lacroix is on site and joins us now. All eyes will be on Kevin Warsh, Francine, to see if he gives any more away as to his current thinking on monetary policy. In terms of who you're speaking to, what's their biggest question for Fed Chair Warsh? [00:06:34] Speaker 4: Well, all eyes definitely on Kevin Warsh, of course, Vonnie. He's been here for two days. He's met with a number of governors. And look, they just all want to know what he's thinking in terms of dot plot, what he's thinking in terms of inflation and what that means for interest rates. Now, I have to say, I spoke to the chief economist of Morgan Stanley just a couple of minutes ago, and he was saying, if you look at the way that, you know, chair Warsh conducted his press conference, his first and only press conference so far as Fed chair, it was really a master class in open to interpretation. He was a little bit like a politician. He went through some of the data without saying whether it meant it was a hike or a, you know, or a hold. And this is what we're trying to figure out, of course, in this panel that will be moderated a little bit later on. Does he want to give clues or is he, as Fed chair, just really starting to give an idea that he wants to not please everyone, but he's very data dependent. Again, if you look at the FOMC, there's a fraction in the FOMC that may be pushing for a hike, not only because of inflation expectations and second round effects of energy prices going up, but just to show the president that they're independent. At the same time, if you look at the forward curve, looking at what AI could do to disinflation, you could see it soon, but you could see some kind of cut into next year. So I think he'll be, again, you know, he'll have to skilfully manage this, this, this not press conference, but this panel to give an idea and a flavor what he's thinking without possibly giving too much away. [00:08:06] Bonnie Quinn: Yes. I cannot wait to hear what emerges from that panel. Now, the Martins of the ECB have been talking as well. What have they been saying? Because there are similar questions when it comes to the ECB's next move. [00:08:21] Speaker 4: Yes, so what I'm surprised that was speaking to ECB governing council members is that they've always been each a little bit different, given the countries are different, given some are hawks and doves. And actually, for the first time, they're all telling me the same thing. It's their data dependent and it's meeting my meeting. So markets are pricing in, you know, at least one more rate high, from the ECB after the June rate hike. Again, they need to make sure that the markets are still pricing in a hike, because that helps tighten financial conditions. But, you know, all of them, whether it be Netherlands, Germany, but also Finland, are very reluctant in saying which way they will vote for in July or September. Now, does it really make a difference if both meetings are live? Are they just waiting for more data inflation? The point of agreement is that, look, they don't want to give forward guidance. They are looking at scenario planning to see how bad it is at the moment and whether it warrants a kind of move from the ECB. But what they are in agreement is that we haven't seen the end of the second round effects from energy prices, even if we have a ceasefire in the Middle East. Again, question marks about the memorandum of understanding, question marks about whether the ceasefire holds. But even if we were to have a stop of hostilities tomorrow, there are questions about how long and how much this plays out in wages, but also in inflation of food, for example, Vani. [00:09:43] Bonnie Quinn: Absolutely. So many questions. Francine, thank you. Francine Acqua in Sintra, Portugal. Turning to tech now, the U.S. government lifting export restrictions on Anthropic's Fable 5 AI model. U.S. Commerce Secretary Howard Lutnik posting on X, quote, "Over the past two weeks, we have worked closely with Anthropic to analyze and approve Fable 5 to ensure alignment across the U.S. government and strengthen America's leadership in AI." Bloomberg Tech Europe host Tom McKenzie joins us now. What secured the reversal of the decision for Anthropic, Tom? [00:10:15] Speaker 5: They were able, it seems, to be able to persuade not just Howard Lutnik, but the broader U.S. administration that they could address the concerns that this model, Fable 5, would be able to get through the guardrails that Anthropic had put in place. And the post there from Lutnik really points to the central tension of this when it comes to the U.S. administration and how it handles these frontier models, which is it wants to be at the cutting edge. It wants to make sure it can compete and have that lead with China. But also it needs to ensure that these are safe and secure and they can be deployed. So this is a major hurdle that's been cleared now for Anthropic, a company, of course, that is potentially looking to IPO as soon as October. What it doesn't do is remove the questions for those who are using these frontier models outside of the U.S., questions about sovereignty, questions about how vulnerable they are if the U.S. is willing to use these export controls. It also raises questions about what comes forward. Because this is a Trump administration that's been quite laissez-faire on AI regulation. But in this letter to Anthropic and in the removal of these restrictions, Howard Lutnik saying that Anthropic had agreed to work on protocols and standards in terms of future model releases with the U.S. administration, that is really interesting. What does that mean in practice? Is this a U.S. administration that's looking to put in place more hard lines around how these models are built out and then released to the public? So I think that's a question that needs to be answered going forward. But for now, at least, there will be relief from Anthropic and within the team there that they can get back to the business of shipping this model as soon as today. [00:11:39] Bonnie Quinn: Yeah, lots more distribution in store. On a separate note, the Abu Dhabi firm MGX has raised a whopping amount for an AI fund, $49 billion. What does it mean for the Emirates and AI in general, Tom? [00:11:53] Speaker 5: Yeah, I mean, as we talk about IPOs, Anthropic and potentially open AI as well, it's a reminder that there is a lot of liquidity still ready to be put to play in terms of AI from infrastructure chips, data centers. And that is where MGX is going to be turning its firepower and already has. So yes, a huge number, $49 billion U.S. dollars have been targeting $45 billion from investors in the Middle East, in Europe and in Asia. And this is also a part of the story around the UAE trying to leverage its energy wealth and pivot into AI. They've already invested MGX in companies like open AI, like XAI. They partnered with the likes of BlackRock and Microsoft as well on projects. It shows that there's a lot more firepower and a lot of it is going to be coming from the Middle East, $49 billion just in this one fund alone. Yeah, curious to see where it will all go. [00:12:39] Bonnie Quinn: Bloomberg Tech Europe host Tom McKenzie, thank you. Yeah. Now, two other top stories trending on the terminal this morning. President Trump reportedly earning at least $1.4 billion from crypto and meme coin related businesses in 2025. According to his latest financial disclosure, he made nearly $600 million from sales by World Liberty Financial, the crypto firm he co-founded with his sons and his special envoy to the Middle East, Steve Witkoff. Hedge fund Millennium Management is preparing to raise at least $10 billion in new cash this year. Bloomberg sources say the capital will be callable, letting Millennium draw on client commitments over time. Millennium declined to comment. Japan's top currency official says intervention has been effective as the yen hovers near a four-decade low. He also said Tokyo and Washington remain in close communication over foreign exchange. Coming up, Goldman Sachs joining Morgan Stanley in warning of a potential oil glut. More on that and the latest on U.S.-Iran talks next. This is Bloomberg. China. [00:14:10] Speaker 6: Once we have a normalization of flows through the strait, the expectation is that we go into an oversupply. We do expect next year to average with a surplus of just over 3 million [00:14:22] Bonnie Quinn: barrels a day. Goldman Sachs sounding the alarm on a potential oil glut even as prices remain steady for now. This after a similar warning from Morgan Stanley just yesterday. It all comes as a senior U.S. administration official says negotiators Jared Kushner and Steve Witkoff had positive discussions with regional leaders in Qatar. Joining us now is Bloomberg's Abir Abu Omar. What else are we hearing about these discussions? Assuming they were indirect discussions, Abir, but there was a question mark over whether they would even take place, right? [00:14:52] Speaker 7: Good morning, Vani. You are right. Yes. All we know about it from the American side is that it went on a positive trajectory. And now, as you mentioned, Jared Kushner, Steve Witkoff took part in those indirect negotiations. They're not official. They're happening in Doha, Qatar. The day before these talks were supposed to happen, which is today, the Iranian side came out and actually said that it is not taking part in it. But what we know is that through some delegations and mediations, the talks did happen and they were headed towards a positive trajectory. That's all we know from the American side. From the Iranian side, however, through the top negotiator there and the Speaker of the Parliament, Khalibov, he came out and said that there were three things that were achieved. One, $12 billion in frozen assets were in the process of getting unlocked and that Iran was able to sell its oil at a premium after those oil sanctions were lifted. Now, we don't have clarification on the actual validity of those comments from the American side. But that is what we heard from the Iranian side. But, Vani, what remains a contentious point in all of these discussions is obviously the nuclear component. We haven't heard a lot of clarity on whether that was discussed or not. But then the other main issue that is tangible that we're seeing repercussions of is the Strait of Hormuz. And Iran has maintained over the past few days or so that it will start charging the Strait of Hormuz once the negotiation period of 60 days is over. Just a few moments ago, about an hour ago, actually, we heard reports that Iran had run aground a container ship in the Strait of Hormuz because it did not stick to the route that Iran had laid out. So you're seeing some tangible difficulties in the Strait of Hormuz oil prices are really reacting to this. And you mentioned also in the in the intro and we heard from Goldman Sachs, but also Morgan Stanley that we could see an oversupply in the market by the end of the year. A return to fundamentals there. Morgan Stanley estimating $75 a barrel on average for the third quarter and the fourth quarter. And the AFP reported earlier again a few moments ago that the talks are supposed to continue into today citing their own sources. Steve Whitcoff and Jared Kushner are not expected to take part in those further talks. So we're not exactly sure on how they will be held, but that is the reporting that we have so far. [00:17:23] Bonnie Quinn: Yes, I thought that was fascinating. Iran State TV quoting the IRGC Navy saying that captains owners and officials of global shipping companies should know that any entry or exit routes via any other than the authorized one could lead to irreparable incidents. I thought that was a very fascinating statement. A beer. Thank you so much. Bloomberg's A beer Abu Omar over in the America is now U.S. Mexico and Canada set to hold a virtual meeting today amid the waiting process for the deadline for the USMCA renewal. Joining us now is Bloomberg's Brendan Murray. What are the betting odds, Brendan? Will it be renewed? It's down to the wire. [00:18:00] Speaker 8: Well, it doesn't look like renewal is going to be likely. What is going to be likely, though, is a review of the agreement over the next six to 12 months. What we think the three sides are going to come away with after this virtual call is an agreement to review the agreement -- to review USMCA. President Trump, although he signed it and negotiated it six or seven years ago, isn't happy with it and wants to see changes. And so the question is, will Mexico oblige to some of those changes, those rules of origin, some of the auto content rules that President Trump wants Mexico to make? And will Canada make some concessions on its side as well? And so what we're going to see is a period of uncertainty about the rules over USMCA play out. And a lot of companies that do business across North America are going to wonder, you know, what are the rules going forward? So we'll have to see whether the Trump administration can walk that line between renegotiating USMCA ahead of its 2036 expiration and creating certainty so businesses can set up their supply chains and operate them efficiently. [00:19:15] Bonnie Quinn: And if there are changes to be made, that's not an easy process. It takes time. So what would happen in the meantime if countries were to go back to some kind [00:19:24] Speaker 8: of drawing board? Yes. So USMCA will stay in effect. The and much of President Trump's tariffs that he put on a lot of other countries do not apply to goods that move across the US, Mexico and Canadian borders under USMCA. So in that sense, very little will change. But if you are an auto company or if you're in agriculture, you know, you're going to be wondering whether the same tariff breaks that that your inputs and your products get are going to apply under at the end of these negotiations. [00:19:56] Bonnie Quinn: Brendan, thank you so much. Bloomberg's Brendan Murray there. Coming up, an election upset in Colorado. More on that and a look at what else is making headlines in your front page news. This is Bloomberg. I'm Bonnie Quinn in New York. It's time now for your front page news. The Washington Post. The Washington Post. The move comes after a GOP rebellion over an elections overhaul championed by President Trump. Stalled action on the floor. This included consideration of an annual must-pass defense policy bill. And finally, the Financial Times is reporting Germany is pressing the US to allow more American weapons be built on German soil. The strategy is twofold. Plug Europe's military gaps and give President Trump a reason to remain invested in Europe's defense. Coming up, we'll push ahead to Fed chair Warsh's remarks and, of course, the nonfarm payrolls report with Colin Martin of Charles Schwab. This is Bloomberg. It's 5:30 a.m. in New York City, 10:30 a.m. in London. Good morning. I'm Bonnie Quinn with your Bloomberg Brief. Let's get you set up for the day. Stocks lower, the dollar climbing ahead of Fed chair Warsh's remarks at the Cintra Forum in Portugal. Anthropic's stable 5 AI model gets clearance for global distribution from the U.S. government. And warnings of an oil glut pile up as indirect talks resume between the U.S. and Iran in Doha. Let's take a quick look at markets then. A little weakness when it comes to futures as we kick off the second half of the year, July and also the third quarter. But that's not to say that this is just a little consolidation after yesterday when the S&P rose 0.8%. The Nasdaq, in fact, was up 1.7%. The Nasdaq 100, that is. The Sox, the Philly Sox index, up nearly 4%. And that move broadening out, not just the memory chip makers, in fact, maybe not even the memory chip makers, but the broader chip names, KLA, Credo, Marvell, they all led that index higher. The Russell 2000 also hit another record. It was up 0.5% at the close. In terms of yields, not seeing much movement, waiting on Kevin Warsh on potential yen intervention at some point, maybe even. And also, of course, on the jobs data. And in fact, on that note, let me just let you know that U.S. challenger job cuts in June fell 4.5% year over year. So that number, the challenger job cuts number, showing cuts were down 4.5% year over year. We were expecting that number to be up 3.4%. So job cuts were down. All right, let's get to some individual movers for that. We will go across to London and Chloe Mellie. [00:23:03] Chloe Malley: Good morning, Bonnie. Nike is seeing a bit of weakness today after providing quite a cautious outlook and saying that consumers were under a lot of pressure. And so this is adding to some investor frustration with the company because it has not been able to deliver on that turn around just yet. And we actually have even seen some read across over to Adidas and Puma here in Europe because of this weak outlook from Nike. Moving on to Bloom Energy, which is rising this morning after agreeing on a partnership, expanding a partnership on AI with Brookfield from $5 billion to $25 billion. And so this will really help the partnership to scale globally. And of course, that's very beneficial there for Bloom Energy. We're up about 7%. And finally, Alcoa is also in focus today after buying the aluminum assets from South 32. And this is something that will really cement it as a top producer of that metro all the time of really growing demand and some supply constraints, of course, because of the Iran war. But we are seeing this actually feed through into a little bit of weakness for Alcoa. We're down about 4% this morning on the back of that deal. [00:24:11] Bonnie Quinn: All right, Chloe. Thank you so much. I just want to reiterate the challenger jobs data dropping just a few moments ago. Total job cuts coming in at 45,849. Now, that's down 4.5% year over year. We were expecting that number to increase. And if you look into the industries, we saw fewer cuts in electronics. We saw more cuts in things like government and entertainment. And we will get you more details as the day goes ahead. But of course, this is all ahead of tomorrow's payrolls report coming a day early because of the holiday shortened trading week. Joining us now, Colin Martin, Chief Fixed Income Strategist for Charles Schwab. What do you make of this? Collins, one data point. But there's absolutely no weakness coming through as of yet in the labor market as far [00:24:55] Speaker 9: as I can see. It's not, in our view, the most important labor market data point. But it is one piece of the puzzle. And it's one more thing that shows that the labor market stabilization that we've seen recently has shifted to strength. And if we pivot more to what we're looking forward to tomorrow, we've had three straight months of pretty strong non-farm payrolls. We've seen a very steady unemployment rate. So add all these pieces together, you know, the drop in layoffs, yesterday's JOLTS report, which was on the stronger side, at least from a job openings front, we're seeing this momentum turn a little bit. And I think tomorrow will be very important as we get that release to see if this is indeed a trend. Because I think the outlook will change a little bit if that's the case, especially if you're a Fed official. Because how does a now strong, stronger and strengthening labor market tie into the strong inflation that we've been seeing lately? Absolutely. Especially when you're [00:25:54] Bonnie Quinn: seeing wage gains, but perhaps not fully keeping up with inflation. So what happens? There are many economists out there and even several people on the Fed that are not fully convinced that this labor market is going to hold up. What should we be looking out for beyond tomorrow's jobs report as an indication that perhaps there is more weakness there under the surface? [00:26:14] Speaker 9: There's no shortage of things we look at. No, we kind of have to squint lately these days to see what pockets of weakness are. For yesterday's JOLTS report, look at the quits rate. The quits rate has been declining, kind of holding at that 2% or sub 2% level for a little while now. To us, that's an indication of what current workers, how they're viewing their job prospects. And if the quits rate is declining, that means maybe the prospects aren't so great. We can also look at wage gains. As you alluded to, Vani, they've been coming down. And in addition to what we're seeing kind of with the broadening out, strengthening. And that could be important because the Fed's going to think about it that way. A rising trend in non-fund payroll gains and low unemployment rate, if they're matched and coupled with, you know, relatively steady or maybe even slightly declining wage gains, maybe that isn't necessarily the inflationary impulse that you might expect from the surface when you're looking at those wage gains. And I remember a handful of years back hearing from former Fed Chair Powell, now just Governor Powell, about how they're viewing wage gains. And if you look at average hourly earnings right now in a year-over-year basis near, say, 3.5%. I remember him saying that that's an area that they're comfortable with in terms of steady inflation at target inflation. So, yes, we're seeing some some things that show that the labor market is strengthening. But if we're seeing those wage gains continue to decline, it might not be as inflationary as some might think. [00:27:46] Bonnie Quinn: Collin, we're just going to show viewers something from one of your more recent notes, saying that more factors can keep yields elevated. Now, you actually say that the drop in 10-year yields is unlikely to be sustained. I presume you mean also 30 years, so the back end of the curve. What would lift those yields again, Colin, given that traders don't seem to be as worried about inflation further out, given that the Fed chair is now Kevin Walsh and not Jerome Powell? [00:28:17] Speaker 9: Inflation is certainly something that maybe pulled them down a little bit recently, but there's no shortage of factors we see that can keep them elevated. The general level of global bond yields, even though they might, you know, be at their peak a little bit or maybe reverse a little bit some of their gains, given some encouraging inflation data overseas, that might put somewhat of a floor there. Fiscal concerns aren't really going away. That's been a problem for years, and they're likely to stay here. But even on the inflation front, it's not just the recent or expected decline that we'll probably see with the drop in oil prices. It's inflation uncertainty. And the idea that we've been in this environment for, you know, six years now, where we've seen a number of supply shocks. And is that something that maybe keeps the inflation rate above levels we've seen in the past? But more importantly, does it keep uncertainty elevated? And then, therefore, should there be a higher term premium to compensate for that for that risk? So I think there's a number of factors that should keep them near four and a half percent, even [00:29:18] Bonnie Quinn: if we start to see some encouraging readings of inflation, Colin. What are you looking for the Fed chair to give away in Sintra and beyond? He's already talked about productivity. He's already talked about, you know, how he thinks the Fed needs to change a little bit. But what would be the one or two details you would be hoping for? Well, I don't hear much from Kevin [00:29:40] Speaker 9: he didn't say much at his press conference. And given that this is overseas, international, I don't think he's expected to give away anything he didn't give away a few weeks ago. I think I'll probably focus on the test task forces that are most likely underway or getting started. I think productivity is something that he'll talk about and how that dynamic was playing in with potential inflation, the idea that maybe we can see strong growth and low inflation of productivity is, in fact, picking up. I think he might talk about the inflation framework and maybe other other measures that he's looking at, like that trend that he's thrown out there. So I think he's going to talk very, you know, big picture. I think he'll be very tight left about forward guidance. So if we're looking for his conversation to give us clues about what we might expect over the next month or two or three, I wouldn't expect much. Colin, I do want to [00:30:35] Bonnie Quinn: briefly ask you about inflation data. We just got out of the eurozone just a few minutes ago. Consumer prices up 2.8% in June from last June and down 3.2% from the previous month. So can we say that the ECB is firmly on hold and didn't matter that they hiked. [00:30:51] Speaker 9: It might not matter that they hiked and firmly on hold. I say we're close to that. I think that's very similar to how we're thinking about it here in the U.S. Because if you look at what expectations for the ECB over the past few months, they've fluctuated a lot. Well, if we look back two months or so, expectations were for not just one hike, but maybe two or three. Already that's been pared back following the hike. And even officials said kind of slow down. Let's see how the situation evolves. That's kind of how we're thinking about it here in the U.S. We've seen expectations fluctuate wildly from cuts to holds to hikes. And seeing what we're seeing on the inflation front in Europe, that's something that we might begin to see here in the U.S. And if we look ahead a month or two and suddenly inflation readings are lower, maybe Fed officials see what the move up in short-term yields that we've seen over the past few months. And maybe they think, you know what, the worst could be behind us and maybe we don't need to hide. [00:31:51] Bonnie Quinn: Well, Colin Martin, I'm sure Kevin Warr should be very happy to see inflation come down. Thanks to you. That is Colin Martin of Charles Schwab. Now to other top stories trending on the terminal this morning. The U.S. says negotiators Jared Kushner and Steve Witkoff held positive discussions with regional leaders in Qatar and that technical talks with Iran are moving ahead. Kushner and Witkoff were in Doha as part of indirect talks between the U.S. and Iran aimed at reaching a longer term peace deal. Microsoft is said to be planning thousands of job cuts as it ramps up and it's Xbox division. The source told Business Insider that less than two and a half percent of Microsoft's workforce, though, will be affected. Bitcoin down to a 21 month low as hawkish Fed signals and worries about demand from one of its biggest buyers, Michael Saylor's strategy, weighed on sentiment. Investors pulled more than $4 billion from U.S. listed Bitcoin ETFs in June, the most since it launched some of those ETFs two years ago. Coming up, President Trump's wins and losses from the Supreme Court decisions, we'll discuss. This is Bloomberg. This is Bloomberg Brief. I'm Bonnie Quinn in New York. The Supreme Court has handed Republicans a series of major victories, including expanding executive power and eliminating campaign spending restrictions. However, the justices did show restraint when it came to President Trump's bigger ambitions like global tariffs and eliminating automatic birthright citizenship. Bloomberg Government's Kate Ackley joins us from Washington. Can we spot a theme, Kate, or is there a sort of a consensus on the Supreme Court as to how far executive power should go after these decisions? [00:33:48] Speaker 10: Great. Well, I mean, they've certainly given Trump victory in terms of who he's able to, you know, hire and fire and whatnot. But I think if you're looking ahead at the midterm races, one of the things that wasn't necessarily a victory specifically for a presidential power for President Trump, but in a political money case, it's really given Republicans sort of an advantage in the immediate term. What they did is basically allow the political parties to get favorable ad rates, allow them to coordinate with their candidates. So this really affects, you know, both sides of the aisle. But because Republican coffers right now are just vastly bigger than the Democratic Party coffers, it's seen as an advantage for Republicans heading into these midterm races. [00:34:42] Bonnie Quinn: Yeah, it could make a massive difference, though. We have had some upsets, notably in Colorado, which is notable, I guess, because it isn't one of the bigger metropolitan and coastal cities and towns, right? [00:34:55] Speaker 10: Right. Well, that was there was a pretty, I guess, seismic news coming out of Colorado elections last night in the primaries where you saw one of these Democratic Socialist kind of insurgent candidates topple a longstanding 15-term Democratic Congresswoman from Denver, Diana DeGette. She lost her seat in the primaries. She will not be in Congress next year. So it's moving westward, if you will, this maybe trend of having these Democratic Socialists, these more left-wing candidates winning in the primaries in the deep blue districts. It's sort of an anti-establishment, if you will, trend happening in some of these races. And it'll be interesting to see how the Democrats as an establishment embrace this, if at all. [00:35:50] Bonnie Quinn: Now, I want to ask you about President Trump and the financial disclosures. It turns out he's pulled in at least $2 billion after returning from the White House. [00:35:57] Speaker 10: Will it make a difference to anyone in Washington, Kate? Yeah, I mean, so a couple of things here that I think are takeaways from the president's financial disclosure, which showed, I think, $2.2 billion, at least, in terms of revenue in 2025 for the president, up from where he was before he returned to the White House. It's really reignited some of those criticisms that Trump is profiting from the presidency, because you'll recall, unlike other presidents, he did not divest of his business holdings. And, you know, he's got big, big business in the crypto industry, as well as real estate deals sort of far-flung throughout the world. On the crypto stuff, there really is a policy implication there, because right now lawmakers on Capitol Hill are still wrangling over this big -- they call it the Clarity Act. It's a big cryptocurrency regulatory bill, a piece of legislation that is a huge priority for the industry. And Democrats are generally on board -- many Democrats are generally on board in the Senate on this legislation, but they want to put guardrails on what presidents can have in terms of crypto holdings. And so that has been a sort of stumbling block for this legislation, and the president's financial disclosure kind of feeds into what Democrats are saying. [00:37:25] Bonnie Quinn: Kate, thank you so much. As always, Bloomberg government's Kate Ackley setting us up for the day from Washington, D.C. The U.S. Energy Department has declared a power emergency as the East Coast braces for a heatwave. Bloomberg's weather reporter Joe Wirtz joins us now for more. Joe, what can we expect in terms of how the grid will hold up and where there might be difficulties? [00:37:45] Speaker 11: Yeah, so the hottest readings are expected to be, you know, triple digits spreading from Washington up to Boston. And really, the most intense sort of market-relevant heat is going to be in that mid-Atlantic region. And that's where PJM, you know, the biggest utility there, is under the most pressure. You know, timing-wise, we're looking at the heat building up, you know, today and tomorrow. And in this critical window, PJM is forecasting record demand. You know, we're just seeing everybody switch on their air conditioning and the demand for that cooling and that power demand increasing rapidly. Now, we've been seeing LNG natural gas prices rise, [00:38:25] Bonnie Quinn: but the U.S. has plenty of it, right, Joe? Is there any difficulty here, or will consumers notice rise in prices? [00:38:35] Speaker 11: Well, yeah, that's right. LNG, you know, exports, terminal flows rose by nearly, you know, a billion cubic feet per day from Monday. And, yeah, more gas fire generation coming on to meet that cooling demand. You know, gas prices are obviously very sensitive to any changes right now, especially these, you know, weather changes now and the forecast for more increased heat. So we're starting to see those flows increase to meet that demand. And I think that'll be something to watch in the days to come. Yeah. And as you can see, the front month contract up a little bit, [00:39:06] Bonnie Quinn: but nowhere near where we were in January. That's right. Joe, thank you so much. Stay cool. Bloomberg's Joe Wirtz. Turning to tech. The U.S. government lifting foreign access restrictions on Anthropics. The Fable 5 AI model saying the firm resolved the Trump administration's safety concerns. Bloomberg's Shona Gauche joins us now. Shona, how did Anthropics do that? How did it meet the bar? [00:39:30] Speaker 12: Well, we're lacking in details, but the concerns from the Trump administration had been that, you know, if you're a hacker or some sort of other bad actor in tech, that you could, quote unquote, jailbreak the Fable 5 model. So what that means is Fable 5 is is one of the most up to date Anthropic models, but it lacks some of the advanced cybersecurity capabilities of Anthropics. Other model mythos. And that's due to safety mechanisms set up by Anthropic. The concern had been that Fable, which was more widely released than Mythos, could be tampered with effectively by outside people to have some of those cybersecurity, quite scary cybersecurity capabilities. Anthropic has clearly demonstrated that, you know, maybe this is impossible in a very, this is possible only in a very narrow way, or that their safeguards are strong enough to sort of prevent external hackers. So it's obviously met some sort of external bar in that way and has managed to convince the commerce department, but they've kind of not given us too much technical detail as yet. [00:40:32] Bonnie Quinn: So obviously there'll be more distribution. Presumably it's going to impact valuation as Anthropic heads at some point for an IPO. So where will it actually export these models to now? Presumably China will be one big center of gravity. [00:40:47] Speaker 12: So China already has a pretty good set of open source models itself and something that Anthropic is very concerned about is, is the Chinese AI companies lifting their technology. So I think there'll be, there'll be some wariness about enabling access in China, but it's more, you know, partners in the EU sort of other developed economies, which are adopting these, these models very quickly, where there'll be some relief that Anthropic can enable access to Fable. There's also ripple effects to open AI who temporarily restricted access to one of their own models as a result of the Trump administration's access. So this idea that maybe there'll be fewer export controls will be a bit of a relief, but in some ways the damage is already done. International governments, partners know that the Trump administration could crack down on advanced AI tech at any time and will be wanting to build their own versions potentially to avoid future sort of geopolitical problems like this. [00:41:43] Bonnie Quinn: All right, Shona, thank you so much. Great clarity there from Shona Ghosh. Coming up, Fed chair Kevin Warsh's remarks. That's in your day ahead. That's next, and this is Bloomberg. Reef time Bonnie Quinn in New York. Now look at what's ahead today. First up, we got ADP employment numbers at 8:15 Eastern time. That's after challengers showed a drop, in fact, in job cuts. Then we get Fed chair Kevin Warsh, along with ECB president Christine Lagarde, the OE Governor Bailey and BOC Governor Macklem, all speaking in central Portugal at 9:00 a.m. Eastern. And then we get more data at 10:00 ISM manufacturing coming out. Let's take a look at the macro picture as we head into the second half of the year. Can you believe it already? It's also obviously the third quarter and the beginning of the month. The dollar index continues to show strength. That's to the chagrin of the yen at the moment, which is really weakening. But the dollar index, once again, continuing to show strength ahead of non-farm payrolls tomorrow. We're not seeing any movement in yields across the curve. Of course, it's a holiday short and trading week as well. And then rent crude, the contracts roll over today, but we are seeing it at 72, holding around there as talks indirect seem to be continuing in Doha. Iran, though, State TV also reporting that a container ship ran aground and the IRGC Navy said it had used an unauthorized route. It was warning people they should use authorized routes. That's it for Bloomberg Grief. Surveillance continues the conversation. This is Bloomberg. And we'll see you next week. [00:43:22] Speaker ?: We'll see you next week. We'll see you next week.