Cook Hearing Ends With No Judge Ruling; Live from US Open Day 2

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2:02That's Molly Smith. She's Bloomberg News Economics editor. She's in for Carol Masser. We're live from the U.S. Open. I'm Tim Stenevek. It is Bloomberg Businessweek Daily. We start with the latest from our nation's capital and the emergency hearing about Lisa Cook. This is Friday's hearing on Federal Reserve Governor Lisa Cook's motion for a temporary restraining order blocking her firing by President Trump. I want to bring in Michael McKee. He's Bloomberg News Economics and Policy Correspondent. He joins us in the Bloomberg Interactive Brokers Studio. Mike, Judge Cobb grilled both sides but ended the hearing without a ruling on Cook's request for an emergency ruling.

2:38What's the latest? Well, we're probably not going to hear anything until Tuesday at the earliest. What happened was the Cook people basically applied for a temporary restraining order to keep her in her job until the matter could be heard as far as whether she should keep her job or not. The next step would be an injunction to keep her in her job if that were the case. And the judge sort of collapsed those two ideas with the assent of both sides. So there was a longer hearing than we expected as she questioned both sides on what's going to happen, but then gave the lawyers until Tuesday to file their next motions.

3:20So it was a signal we're not going to get anything over the weekend. Okay, so maybe we can enjoy the holiday weekend or perhaps try to, at least maybe Lisa Cook can try to. Yes, especially people who are at the U.S. Open. Oh, well, I mean, it's nice here, but we're also very focused on what's going on back in Manhattan. And so tell us, Mike, this was with a district court judge. Everyone's talking about how this is going to be a Supreme Court matter. What are the steps between now and getting to the Supreme Court? Well, this judge is going to have to rule on whether or not to put a temporary hold on the president's firing of Lisa Cook at some point, whether it's Tuesday or later next week.

4:03And then if she says that the president can fire her, that changes the narration because then the president would probably move to replace her fairly quickly. And you create a whole new set of legal problems there because the ultimate case has not been decided. But if he if she does allow Cook to stay on the job, then what we would see is the administration go to the court of appeals. the court of appeals this is what's happened in previous attempts by trump to fire people has basically let the president proceed now we know that this is a little bit of a different situation because the supreme court carved out an exception for the fed saying that somebody has to be fired for cause and so that would that decision would turn on what is the definition of for cause which is what they spend an awful lot of time on today.

4:56And then if both sides, whichever side loses at the appeals court, takes it to the Supreme Court, I think that would be the basic question. What does it mean to say the president can fire someone for cause? According to the Cook side, the president is using just allegations, nothing proven, and that doesn't rise to the level of a cause to fire somebody. And the Trump side says, well, Trump is the president and basically he can do whatever he wants. It's up to him to decide what for cause means. So it's a fundamental question that is probably going to end up at the Supreme Court. Is that is that the Justice Department attorney Yaakov Roth's argument essentially here?

5:42It's whether or not to include something that happened or could have happened before she became a governor on the Federal Reserve. Does the timing of this matter? Does the intent of this matter? None of that matters, according to Mr. Roth. The president has the absolute right, according to the administration, to determine what for cause means. Now, that opens up a can of worms that the cook people are trying to spread around on this fishing expedition by the president. Because if that's the case, then the law is somewhat moot. There's no point in saying for cause because the president could fire somebody whenever he wants because he can make up whatever he wants to be for cause.

6:27And so that's going to be kind of the decision the judge has to make. That is does this rise to the level of for cause? Does the president have that right? Now, it's a tough situation for Judge Cobb, except that she's not going to be the last word on this by any means. well this is what i wanted to actually come back to you on mike because i can see a situation in which a ruling comes out it's not to trump's liking and giaqob was appointed by and i wonder how much more this gets politicized potentially than if the ruling does not go his way is that something that's coming up in your reporting at all well the question kind of molly is could it be any more politicized?

7:12They spent quite a bit of time today talking about how many tweets that Bill Pulte, the Federal Housing Agency administrator, has put out on this, something over 30 tweets accusing Cook of doing something illegal without offering any proof. So it has become quite politicized already. I think that the biggest question is going to be whether the president is able to get rid of her. And that would raise questions on Wall Street of politicization that haven't quite hit the markets yet, because I think the traders are basically thinking that the president will lose if he wins. That's going to raise an awful lot of questions about how policy is going to be made going forward.

7:58I do want to talk a little bit about the economic data that we got earlier today. Before we do that, I just want to bring everybody some flavor and color about where we are at the U.S. Open right now. You might hear a little bit of a ruckus and see behind us a lot of fans. It's because Carlos Alcaraz, who just won in straight sets, is sitting just a couple of feet from us doing interviews with the media here. So you have a ton of people right behind us trying to get Carlos' attention. And, you know, we just want to talk about economic data. That's what we're trying to do. Do you think Carlos wants to come on to talk about the PCE report this morning?

8:33I don't think he was paying any attention to the PCE report before his match, Molly. You don't think so? No. You were, though. That's what I would want to know. I want to know exactly what happened to inflation in the month of July before I take to Arthur Ashe Stadium. Okay, well, let's bring in Mike McKee on that in the last two minutes that we have, Mike. The data that we got, bang in line with expectations today. Any surprises in there? The surprises came on the income and spending side. On the price side, It's not really any kind of surprise anymore for the PCE because the data come in in other releases, and economists can pull them out and put them together before we even get the numbers.

9:09Bit of an increase in the core number on a year-over-year basis to 2.9 percent. But whether that leads the Fed to do one thing or another kind of depends on whether you already think the Fed should be cutting rates or on hold. It's certainly not near 2 percent. But the month over month number went down a tenth. And so if you're thinking you can cut, you're saying, well, maybe we're seeing a little bit of restraint in inflation. The income numbers came in strong, though, on in terms of wages and salaries. They were up six tenths of a percent after a one tenth rise in June. So Americans had more money and they did spend.

9:47And you can also parse that by saying a lot of that was on automobiles as people try to buy cars ahead of the price increases the automakers have promised for the new models coming out soon. So it doesn't really lead us anywhere. I haven't looked deep enough into the PCE inflation numbers, though, to see what the price of haircuts did. Maybe you can ask Carlos that. I was going to say that was the time we were looking for. He always brings it home. Mike McKee, Bloomberg News International Economics and Policy Correspondent. He is on top of it all, whether it's everything from the Fed or what they are talking about here at the US Open, which, yes, does include Carlos Alcaraz's new haircut, which, by the way, we learned earlier this week, it was sort of a mistake.

10:33Yeah, I need to still read up fully on this. It was something that, like, did his brother end up doing it? I don't know who did it, but, you know, he said sometimes you just have to start fresh, and that's what he did here. And Tiafoe gave him a pretty hard time about it. Yeah, all good friends there. I mean, the hilarious part, if you've seen anything in Carlos's matches, he kind of puts his hand through his head. It's like, oh, wait, I don't have a hand. It's kind of funny. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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11:45Hockey. Sex. Of bugs. Regardless of whether we're looking at science or not science, we bring a rigorous curiosity to get you the answers. And hopefully make you see the world anew. Radiolab, adventures on the edge of what we think we know. Wherever you get your podcasts. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. or watch us live on YouTube. On this last trading day of September. Can you believe it? August, excuse me. Right, yeah, it's not September yet.

12:23It feels like September with the decline that we're seeing today. Oh my God, yeah, rough. I mean, we just hit a record yesterday. Vibes today, not as good. Yeah, tech really getting hit. I mean, you think it was the PCE data? No, I don't think it was. I mean, because it wasn't, yeah, it was in line with expectations. Just, I don't know, maybe I had to give up some gains after yesterday's rally. But, I mean, our next guest is going to tell us all about us. We're going to bring her in right now. We have Jillian Wolfe coming in to join us. She's Global Equity Strategist with Bloomberg Intelligence in the Interactive Broker Studio.

12:53Hey, Jillian, thanks for joining us today. Thank you. I hope you guys are enjoying the time at the U.S. Open today. I'm a bit jealous. We are having a lot of fun, but we had to come back to talk to you because we have the close coming up. Tell us about how the trade evolved today and what we're looking into going into 4 o 'clock. Sure. I mean, we're officially at the end of the 2Q earnings season right now with NVIDIA having reported. I think what was a lot of providing a lot of fuel for this rally was that earnings expectations going into the second quarter were actually quite low. And it provided a really easy environment for companies to beat because the brunt of the tariff impact was expected to start hitting now.

13:35But in reality, what we saw was that tariffs were not actually that influential on these 2Q earnings reports. So what we saw were massive beats, which really helped drive the equity rally. But I think now investors are starting to look forward to how tariffs might start to hurt those 3Q and 4Q earnings. We might not get as much fuel from those easy beats that we've been getting over the past few weeks. So a little bit of lowering momentum on that side. We've also just seen a lot of profit taking in the mega cap stocks. Like you said, NVIDIA down still quite a bit today. Tech broadly still looks strong for us.

14:08We posted a note last week that on median, tech was holding up. But because the indices are so heavily concentrated in these large names, it distorts the picture a little bit. If you have a few names going down, particularly NVIDIA being one of them, you're going to start to think, oh, tech must be collapsing everywhere because it's driving all of these indices so heavily. Gillian, on the tariff side of things, why is it taking, in your view, relatively in what I would consider a long time to hit earnings or to at least hit the stock prices of these companies? I thought the market looked forward and, you know, there's nothing clearer ahead of us than having to pay tariffs.

14:50It's a great question. And I have a twofold answer. The first is that a lot of companies did stock up on inventories bracing for these tariffs. So there is a little bit of a stockpile now where they're not necessarily going to have to pay tariffs on imports that are going to hit. We did have this 90-day pause on what the worst of the tariffs were going to be. I think what we're seeing in the market is a little bit of relief that what was supposed to play out on Liberation Day doesn't appear to be happening. Even though the tariff situation were worse off right now than we were, let's say, in September, because we aren't as bad as analysts had originally expected in April, they're ultimately seeing this as good news and positive upside.

15:30The fact that company margins didn't just collapse in 2Q, which is what some of the concerns going into this quarter were. But we definitely have to keep an eye out on 3Q and 4Q. There's definitely notes coming out on earnings calls, and companies are still not entirely sure. I just think we avoided the worst-case scenario. so markets are breathing a little bit of a sigh of relief, but definitely on trepidatious terms right now. So, Jillian, you're saying here that tariffs haven't been that impactful to earnings so far. 99 % of the year I write about the U.S. economy, 1 % I write about tennis, but when we're talking about the economy, it hasn't really impacted inflation that much either.

16:08We got the PCE data for July this morning. goods prices were actually down in the month, and services kind of mirroring what we saw in the CPI earlier in August, that's where it seems like inflation is really picking back up again. And if I were a stock investor, I feel like that has got to be a much scarier omen for me. You know, this isn't the tariff-driven goods inflation that we had the luxury of thinking the Fed might look through. This is something that is perhaps more persistent. It's persistent in its supply side. We published a note, and I had mentioned it last week, that we're already seeing producer prices accelerate faster than consumer prices.

16:46And that's really a red flag for us, because it means that companies are struggling to push these costs onto the consumer. And it also begs the question of how much rate cuts could actually help at this point. If the inflation is coming from the supply side of things, rate cuts can't really do as much. They can help release the burden on consumers. But if things just become more expensive for companies themselves to purchase, they're going to have to pass that on to the consumer ultimately. And they may get some relief from those cuts. They may pay less interest on their car payments or their credit card payments, which could allow them to pay more for goods.

17:21But the idea that we're not going to see inflation flow through eventually, I think, is a little bit misguided. We're just starting to see companies start to pay more for these inputs, and it is going to take some time to gradually flow through. Remember, we were on a 90-day tariff pause that technically did restart just this month. So we're only going to start to see this data really hit the economy in the coming weeks and months now. Hey, Jillian, before we let you go, you and the team out with a note overnight about value having a banner year in Europe. What's the outlook in your view on value stocks over in Europe?

17:57It's interesting because we haven't seen that same thesis play out in the U.S. Value stocks in Europe are really beat up. They've been beat up for a long time, and a lot of this is now just people buying what they think could be a solid deal because it's just so cheap. In the U.S., even the cheapest stocks aren't that cheap by comparison. They may be cheaper compared to some of the highest MAG7 stocks, but cheap in the U.S. doesn't actually mean cheap relative to the globe. So we're definitely seeing investors maybe moving a little bit more towards safety, trying to pick up on some of these beat up stocks in Europe, and we're seeing value do quite well as a result.

18:34Jillian Wolf on the Bloomberg Intelligence Team. Thank you. Equity strategist over there. Have a great weekend. Have a great long weekend. Appreciate you joining us from the Bloomberg Interactive Brokers Studio. This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. We are at the U.S. Open just outside of Arthur Ashe Stadium in Flushing, New York. We're surrounded by about 70 ,000 of our closest friends and also by somebody who joins us on site every year during our U.S.

19:16Open broadcast. Kirsten Corio is back with us. She's chief commercial officer of the USTA, the owner and operator of the U.S. Open. What does she do? Well, it has to do with money and bringing it in. That's what she does. think, of course, ticket sales, hospitality, global media rights, sponsorships, digital strategy, business intelligence, and more. Kirsten, how are you? Good to see you. Thanks. It's like once a year we get to see you. It's great to see you. It's the busiest time of the year for you. It's the most wonderful time of the year for us. Well, it's the time truly where you guys all live in a hotel right near here because you are here 24-7 actually not watching any tennis because you're working the whole time.

19:54That's right. So let's talk a little bit about how the revenue generation is looking for the year. I mean, three years in a row of record-breaking attendance. What can you tell us about just the business this year going into the U.S. Open? Well, I can tell you said three years in a row of record-breaking attendance. This should be a fourth year in a row of record-breaking not just attendance, but over lots of different areas that we measure. So attendance, yes. Viewership across through the first round. We're up 36 % on our domestic ESPN, ABC ESPN2 coverage, which is amazing. We actually had the second highest viewership in Italy's history of tennis through the first round.

20:34Amazing. A lot of great Italian players. Merchandise is up double-digit percentages. Ticket sales up double-digit percentages. And with the opening Sunday start to the men's and women's main draw singles play and men's and women's doubles main draw play, we're up double digit percentages and going to break records in ticket sales and all the per caps related to that as well. So it sounds like things are obviously moving in the right direction. On the attendance side of things, I'm curious about the balance between the criticisms last year about there were too many people here because everybody wanted to be here.

21:09How did you balance that this year with a different strategy when it came to ticket sales in terms of like capping certain ticket sales at different times to make it so people could actually get around here? Yeah, it's interesting. I mean, we never want to restrict people that want to come from being able to come. But at the same time, we want to ensure that the people who are here on site and have bought their tickets and paid good money and look forward to planning to being here on site have a phenomenal fan experience. So we did make the hard decision to reduce the amount of tickets that we would sell over this very busy Labor Day weekend.

21:40So yesterday was the first day of that implementation. We did start to implement some changes to better manage crowds through the thoroughfares, better manage how we're spreading out competition and content across the different courts, practice courts and competition courts, so that people have more options around the site to experience the different content and enjoy it in a more free-flowing way and not in a crushed way alongside 70 ,000 of their friends. Well, just to recognize what you had said before, Kirsten, about spreading out the tennis and also to make sure that people are getting good value for their money because it is expensive to come here.

22:16Something I think that a lot of people who I've talked to have said is about having that Sunday start, having the first round played now over three days instead of two. It is technically diluting the value of the ticket now. No, I don't know how much tennis you can watch simultaneously, but it's not usually more than one match. Actually spreading out the first round over three days has really helped spread the content out in a way that's actually offered more content to more people so that they can see more. It's been easier on the athletes in many ways. It's hard to spread out the main draw of singles in first round in two days.

22:52Three days is what you find at other Grand Slams as well. It's quite common. So in our case, it gave more content across the courts in a way that didn't crush the courts across two days. Now you can spread it across three days and 70 ,000 more people can experience it. How should we think about the revenue breakdown of the U.S. Open? Ticket sales versus concessions versus sponsorships. I mean, on the sponsorship side, everybody's here. And it's also all the familiar names that have been with the U.S. Open for decades at this point. What's the revenue breakdown? on? So it's traditional in the way that every other live event property, whether it's sports or entertainment, is ticket sales, hospitality, sponsorship.

23:32Media rights is a huge portion of how this event is fueled. So not every event gets to sell their media rights and is responsible for that. We are like the other Grand Slams. And you do the negotiations for it, we should know. We do. And we work with our partners at IMG to help us worldwide. Sorry, I just want to push on this a little bit. In terms of revenue, if we think about it from the perspective of, okay, ticket sales bring in this much revenue, is that the most in terms of overall revenue for the U.S. Open, or do sponsorships bring in this much? It is. Ticket sales and premium leads. Okay.

24:08So that's still the majority of where the revenue comes from. Okay. Right. And keeping with it on the ticket sales, I mean, this is something that, you know, as we've said, it is an expensive experience. It is a premium experience. You are getting certainly, I would say, a lot for what you pay for to come here. But it is something that people do talk about that they get frustrated with how quickly the sales go over to the resale market. Is that something that is in your control whatsoever? I mean, to be able to sell more tickets at face value before the resale market takes over and jacks them up to however many multiples of the face value price.

24:43Well, there's two key factors at work here. One is the overwhelming demand that we experience for the event. Two is the fact that we are in New York State and resale cannot be restricted legally. So we are unable to restrict how many tickets are resold, at what price points they're resold, and how people choose to resell tickets that they've purchased. So on the demand side, we renew the equivalent of full season tickets at about 98%, 99 % every year. and we did work hard to make more volume of tickets available both through the sunday start as well as for just ensuring that we had as much inventory as possible for the american express individual ticket presale again sold out of that inventory within a couple of hours and again in the uh the public on sale same thing sold out of the inventory within a couple of hours and at which point in time people can choose to resell tickets if that's their if that's their desire.

25:40I think it's important to note that our individual ticket price, average sales price point across all the events, all of the sessions, all of the venues is$190. The average resale ticket price is over$500 that it's sold for. So when people may say, oh, it's an expensive ticket, unfortunately for us, we have to bear the brunt of that perception, but it's not the ticket price that we set. Yeah. If you guys are just joining us here, we've got Kirsten Corio with us. She's chief commercial officer at the USTA, talking all things about revenue, ticket generation, all of that that's going on here at the US Open.