Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Every Monday, Bloomberg Intelligence senior analyst Nathan Dean gives his insights into what’s been happening and what’s coming up in the nooks and crannies of government and markets. Sign up here and follow us at @bpolitics. Email our editors here.

Sliding Into August

I saw my first pumpkin spice item for sale this past weekend. Not sure about you, but even I – a fan all things fall – think July is too early. We haven’t even hit the August congressional recess – assuming there is one. I’m sure some who are set to hit the Outer Banks had a small heart attack when they heard President Donald Trump call for the Senate to stick around. But put me in the camp that still thinks August is going to be a sleepy time for Washington policy impacts on markets.

Except for two things: Tariffs and Federal Reserve Chairman Jerome Powell.

On the tariffs, a big question we get is what to expect ahead of the White House’s Aug. 1 deadline for other nations to cut trade deals. Trump’s advisers suggest he’s going to hold firm to that date – and maybe launch sector tariffs/taxes on pharma and semiconductors. History suggests an extension.

Yet expect more fireworks as we get closer to the date. I recommend Alberto Nardelli’s piece “EU Is Racing to Secure US Trade Deal and Preparing for Worst,” Daniel Carvalho’s “Brazil’s Top Court Defies Trump, Signals No Retreat on Bolsonaro” and Shawn Donnan “Gaming Out How the World Might React to Trump’s Tariffs.”

Powell Photographer: Al Drago/Bloomberg

On Powell’s future, as markets are looking for the perfect Trump/Powell hedge, my colleague Elliott Stein writes on the Bloomberg Terminal “Trump has Legal Hurdles to Fire Powell With or Without Cause.” I’ll summarize: Firing Powell won’t be easy. And let’s not forget that the Federal Open Market Committee — which votes on interest rate decisions — determines its own organization. It’s only by tradition that they elect the chair of the Fed as chair of the FOMC.

Finally, for you bank investors, a lot of us are going to be watching the Fed’s conference on bank capital requirements tomorrow. I’m highlighting this because I’ve been telling clients there’s a lot of deregulation sentiment in the markets, and after August recess expect a flurry of moves to cut regulations as agencies move forward with rulemaking.

Tidbits

With the news that Apple has reportedly outbid ESPN for the rights to Formula 1, Adam Minter of Bloomberg Opinion has “F1’s Growing Pains With Apple TV+ Would Be Worth It.” I’m not sure. With Apple having the rights to Major League Soccer, I saw Messi play more when he was abroad instead with Inter Miami. But I’ll probably pay for F1.
This is the first year I’ve noticed spotted lanternflies – those larger bugs with the red backs – over the District. Fairfax County even has a guide on how to squash them. — Nathan R. Dean

Don’t Miss

Trump’s recently enacted tax and spending law will add $3.4 trillion to US deficits over a decade and leave millions without health care coverage, according to a new estimate from the Congressional Budget Office.

A federal judge cast doubt on the legality of the Trump administration’s termination of more than $2 billion in federal research funding for Harvard University.

The Trump administration will send more immigration agents to New York, blaming the city’s policies for a shooting by an undocumented migrant that left an off-duty customs officer seriously wounded.

Republican Representative Anna Paulina Luna has asked the Justice Department to consider investigating and prosecuting Powell for allegedly lying under oath about work on the Fed’s headquarters.

Construction on the Fed building in Washington today. Photographer: Al Drago/Bloomberg

Trump and his allies are attacking Powell over the $2.5 billion Fed renovation project — but the price tag has little to do with alleged “ostentatious” features.

There’s one big flaw in Trump’s threat to hold up a deal for the NFL’s Washington Commanders to build a new stadium unless the team changes its name. The deal’s already done.

A US orange juice distributor is suing over Trump’s move to impose a 50% tariff on Brazil, arguing that the president’s reasons for the levy increase don't present "unusual and extraordinary" threats.

An environmental challenge to Trump’s border wall has the potential to be the vehicle for the Supreme Court to take a hard look at Congress’ ability to delegate its powers to executive agencies.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., host Joe Mathieu interviewed Kyle Kondik, managing editor of Sabato's Crystal Ball at the University of Virginia’s Center for Politics, about efforts to redraw congressional districts for partisan advantage in Texas and California.

On the program at 5 p.m., Joe and Tyler Kendall talk with Jared Bernstein, chair of the White House Council of Economic Advisers in the Biden administration, about the latest CBO estimate for the deficit impact of Trump’s tax and spending law.

On the Big Take podcast, Bloomberg’s Amanda Mull takes host Sarah Holder through the causes and consequences of all those locked plexiglass cases in retail stores and how it’s changed the way we shop. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

The number of houses for sale in the US hit a five-year high last month, creating woes for sellers and tipping the advantage toward buyers. More than 1.36 million homes were on the market in June, up 17.2% from a year ago and the most since November 2019, according to data from Zillow. Overall, though, the inventory is still below pre-pandemic levels. In eight large markets in the Sun Belt and Mountain West inventories are now at record levels. Still, affordability remains a major challenge, as high prices and high mortgage interest rates create barriers to entry, especially for first-time buyers. Sun Belt and Mountain West markets witnessed massive appreciation during the pandemic and now price cuts are common. For example, in Denver 38% of sellers cut their price to try to entice a sale. — Alex Tanzi

What’s Next

Philippine President Ferdinand Marcos Jr. Is scheduled to meet with Trump tomorrow.

Sales of existing homes during June will be reported Wednesday.

New home sales in June will be reported Thursday.

Initial jobless claims for the week ending July 19 will be reported Thursday.

Durable goods orders for June will be released Friday.

Trump is scheduled to travel to Scotland on Friday.

The Fed’s monetary policy committee will meet July 29-30.

Trump’s latest round of tariffs are due to take effect on Aug. 1.

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