In short
The episode is a Bloomberg Businessweek Daily segment focused on markets and the macro backdrop around a record-length U.S. government shutdown, plus follow-on political and corporate implications.
Guests
Eddie Gabor, co-founder/CEO of Key Advisors Wealth Management (>$900M AUM), and Neil Dutta, partner/head of economics at Renaissance Macro Research.
Key claims
Gabor says the shutdown is “bullish” because it raises the odds of a December rate cut (~60%), supporting a potential Santa Claus rally; he argues the Fed may effectively abandon the 2% inflation target next year (new “normal” 3–3%). He also warns of a “K-shaped” economy and a future equity “bubble” pop driven by debt and AI spending, with tactical (not buy-and-hold) investor positioning. Dutta says labor weakness is likely already near the Fed’s year-end unemployment estimate (~4.5%), with downside growth risk outweighing upside inflation risk.
Notable examples
Walgreens ending paid holiday vacation time; consumer sentiment near lows; SNAP/food-stamp strain during shutdown; political focus on ACA premium subsidies.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Overview and Trends
1:00 to 1:31
Analysis of current market conditions and investor sentiment.
“When you're running a business, the best days are the ones where priorities stay on track.”
Market Overview and Trends
1:57 to 2:56
Analysis of current market conditions and investor sentiment.
Economic Impacts of Government Shutdown
2:56 to 6:02
Discussion on the implications of the government shutdown on equity markets and interest rates.
“Just by 18, 19 minutes to go until we wrap up the trade on this Tuesday, November 11th.”
Fed's Inflation Strategy and Its Consequences
6:02 to 7:30
Examination of the Federal Reserve's inflation targets and their impact on the economy.
“They're going to be forced to because we're not going to get the 2 % inflation.”
Debate on Economic Growth and Worker Welfare
7:30 to 9:58
Conversation on the disconnect between Wall Street successes and worker challenges.
“So from the stable prices perspective, what is the new 2 %?”
Debt's Role in Market Stability
9:58 to 13:06
Insights on how national debt influences market stability and equity performance.
“And that's ultimately what's going to break the back of this market is the bond market at some point in time is going to say, you know what, I don't care what you do monetarily wise, the 10 years going to go through 5%.”
Debt's Role in Market Stability
13:12 to 13:30
Insights on how national debt influences market stability and equity performance.
“Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC.”
Impact of Government Data Delays
13:30 to 14:00
Discussion on the effects of government data delays due to the shutdown on market analysis.
“So while others are busy talking, we're busy building.”
Labor Market Insights Amid Shutdown
14:00 to 14:48
Discussion on the impact of the government shutdown on labor market data.
“We did get one piece of private data today.”
Analyzing Unemployment and Inflation
14:48 to 18:13
Exploration of unemployment rate projections and inflation trends.
“Neil, good to have you back on the program.”
Show all 24 chapters
Economic Disparities and Consumer Behavior
18:13 to 21:06
Examination of the K-shaped economy and consumer sentiment in light of economic conditions.
“What if the Supreme Court comes back and says the tariffs are not legal as they're implemented?”
The Complex State of Today's Economy
21:06 to 22:32
Discussion of the imbalanced economy and its various segments.
“the pushback that I get is kind of what you were describing, right?”
The Complex State of Today's Economy
23:02 to 23:47
Discussion of the imbalanced economy and its various segments.
“On public, you can now create AI agents that handle all these tasks on your behalf.”
The Complex State of Today's Economy
23:53 to 24:09
Discussion of the imbalanced economy and its various segments.
“Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC.”
Political Dynamics and the Government Shutdown
25:33 to 28:00
Analysis of political strategies and public sentiment regarding the government shutdown.
“Catch us live weekday afternoons from 2 to 5 Eastern.”
Government Shutdown Dynamics
28:00 to 29:26
Discussing the public perception of blame during the government shutdown.
“And I was thinking about this when I was on a TSA line, I mean, the government shut down and I look up at those screen screens and who do I see?”
Political Ramifications of Government Actions
29:26 to 31:06
Exploring how President Trump's focus affected political dynamics during the shutdown.
“showing off a new marble bathroom at the White House that the president has, having a great Gatsby party for Halloween.”
Impact of Rising Obamacare Premiums
31:06 to 32:38
Analyzing how the government shutdown brought attention to rising healthcare costs.
“They thought it was hurting their opponents.”
Congressional Vote Dynamics
32:38 to 33:38
Examining the potential outcomes of upcoming congressional votes on healthcare.
“if and when those premiums do rise, the American people are largely going to blame Trump and Republicans.”
Closing Remarks with Josh Green
33:38 to 35:22
Joshua Green discusses the implications of politics on the economy.
“that could put pressure on Republicans and Trump to finally have to do something about it.”
Media Company of the Future
37:08 to 42:00
Discussing the future landscape of media companies and their adaptability.
“But without identity, you can't trust they'll serve your business instead of jeopardizing it.”
The Future of Media Companies
42:00 to 45:30
Explore how media companies can adapt and thrive in a changing landscape.
“Look at the news business, how much that has changed.”
Paramount Skydance Performance
45:30 to 45:56
Discussing the latest trends in Paramount Skydance's stock performance.
“Geetha Ranganathan, she's Senior Media Analyst at Bloomberg Intelligence, joining us from BI headquarters out there in Princeton, New Jersey.”
Paramount Skydance Performance
46:28 to 48:26
Discussing the latest trends in Paramount Skydance's stock performance.
“From game day crowds to memorable meals, Genius by Global Payments keeps your kitchen and floor perfectly in sync.”
Transcript
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2:26Radio. Come on, let's take a drive. A drive? Yeah, a drive. Can you just focus on driving? Focus on the road. Why would I drive fast? Because I'm asking you to. Just drive, baby. This is the drive to the close. But we're going, we don't need roads. On Bloomberg Radio.
2:55Carol Massar:All right, everybody. Just by 18, 19 minutes to go until we wrap up the trade on this Tuesday, November 11th. Carol Messer, Tim Stanovic live here in our Bloomberg Interactive Broker Studio. I mean, you look at the charts and we're definitely well off our worst levels of the session. But just up a hair, Tim, on the S &P 500. We just heard from Bill and Alexis. And you still have the NASDAQ 100 slightly lower. But again, it's much more upbeat than where it was earlier in the session. I want to see what Eddie Gabor has to say about this. He's the co-founder and CEO of Key Advisors Wealth Management.
3:24The firm has more than$900 million in assets under management. Eddie joins us here in the Bloomberg Interactive Brokers Studio. It's good to see you. Thank you for having me. Welcome back. So the macro outlook here, Carol and I have been talking a lot about whether or not the government shutdown actually matters to equity investors. Jan Van Eck, right before the government shutdown was on our program, and he said, it doesn't matter. It doesn't affect the Federal Reserve, and it doesn't affect earnings. Do you agree? I do. And a matter of fact, I think the shutdown is a real bullish catalyst because I think the probability of a rate cut in December has gone up tremendously now.
4:03Because prior to the government shutdown, there was talk that the bond market wasn't really pricing in a December rate cut. And now the rate cut is about 60 percent because it is going to be a drag on economic data when it comes out. And so I think the Fed is going to kind of err on the side of caution and go ahead and cut rates just because of the fears of a slowdown getting worse going into 2026. They don't want that on their watch. So I don't think it had big impact in regards to stocks. But what it does indirectly is increase that probability of the Santa Claus rally, because the one thing I think that could end that would be if the Fed does not cut in December.
4:38Carol Massar:Having said that, Treasury Secretary Scott Bessent has been out and about, and he has said that he's going to be out and about over the next few weeks as he talks about the big, beautiful tax bill that was passed by Congress. What I'm curious about, Eddie, is he kind of deflected when it comes to inflation concerns, and he talked about better times in 2026. So why would we need a rate cut? So I think the rate cut is because we have this dynamic. And especially if there's inflationary concerns and still pressures. Because they're going to pick the labor market and the economic slowdown over where we are right now from an inflationary perspective.
5:12You're talking about the Fed? That's correct, the Fed. Because inflation, I think the new normal has to be 3%. If the Fed tries to get us down to 2%, it's going to be too late. We're not going to get there without a recession. But the Fed hasn't conceded on that yet. They have not. However, I think last time when Fed chairman spoke, he talked about it being transitory, the tariff concerns in regards to inflation. And I think the new normal, they're going to be forced to pivot. I believe next year they will pivot and go away from that 2 % number. Because at the end of the day, as long as we continue to grow economically, if you focus more on growth, the inflation is not going to have a big of an impact.
5:45But if you just focus on inflation and cause growth to go down, you're going to have a double whammy where inflation is going to stay sticky and then potentially take us into a recession. So you think under Fed Chair Jay Powell, the Fed will abandon the 2 % goal? I do. I think that'll happen next year. Wow. Okay. They're going to be forced to because we're not going to get the 2 % inflation. And if they stay tight with monetary policy, right, this K-shaped economy we have, they're killing small businesses and the bottom of the K. The lower earners in this country are the ones that are getting hurt by this tighter monetary policy.
6:22Carol Massar:Well, is the Fed killing the lower rung? Or, you know, as we had a great conversation with Henrietta Trey's VEDA partners yesterday and getting to this point that you have records on Wall Street, yet you have, you know, one in eight Americans on food stamps. That is not a Republican or Democratic policy that is cumulative over the years. So her point was that there are a lot of companies out there and she named names that aren't really paying workers a living wage. So, you know, to put the blame on the Fed doesn't seem to make sense to me. Well, in regards to the Fed, when I look at it from an entrepreneurial perspective, these small businesses, they don't go out and issue bonds to raise capital like the large companies have the luxury of doing.
7:04They have to go to their local bank to raise capital to get money from those for loans. And when you talk to them, the increase in interest rates have really hurt them. So they don't have the capital that the other companies do. So when we talk about the Fed keeping monetary policy tight and hurting the smaller businesses, that's what we're talking about. Are they solely the blame? Of course not. I'm not putting all the blame on the Fed. But that's a big component is being able to get capital. But the Fed still will have a dual mandate, stable prices and maximum employment. So from the stable prices perspective, what is the new 2 %?
7:37So I think where we are right now, 2.5 % to 3 % on core, I think they can live with that. Because they've already been cutting rates when we are not down the 2%. They did a 50 basis point rate cut last year. They're doing rate cuts again now. So you can make the argument that they've already abandoned that because why would they be cutting rates if they're not abandoning the 2 % mandate?
8:00Carol Massar:I don't know. To be preemptive? I think what there's— I mean, some might say— Maybe they're concerned about the labor market. That's it. And this is why I say they're in a really tough spot because now they have to pick. Are they going to pick inflation? Or slowing growth that they were concerned about. So doing something to kind of juice it a little bit. So that's why I think they don't want to abandon the 2%, but they're going to be forced to because I think they're going to pick the labor market. And I think that's wise. I'd rather than pick the labor market and try to help it from slowing to a point where we go into a recession.
8:29So that way we can grow economically and hopefully continue to prosper here.
8:33Carol Massar:But how do you grow when you have, you know, I'm kind of obsessed with this story and we're going to talk about it a little bit later on. But Walgreens no longer giving many of its retail workers paid vacation time for Thanksgiving, Christmas and other major holidays. Company looking to cut costs under their new owners. Like it does seem like there is still a squeeze on workers. and wages. The unfortunate reality is, and this is a problem in this country, we recognize this, we talk about it all the time when it goes back to the K-shaped economy, that the wealthy, the top 50 % in this country, are continuing to do really well.
9:05And they're going to do well whether the Fed cuts or doesn't cut. So I think the focus on the Fed and companies and businesses is the bottom part of the K. We're going to prosper more if the entire economy is doing well.
9:18Carol Massar:But doesn't policy have a responsibility, too, in terms of helping out the economy? We talk about the Treasury Secretary kind of on a tour to talk about the big, beautiful bill. I mean, what is there for Americans at large? I think this stems— Or small business, or there's lots of tax breaks, but it seems like for bigger corporations. So I think this stems from years in the making of the massive debt that our country has put ourselves into. That's ultimately what causes inflation. is you overstimulate. But this spending bill creates more debt too, right? It does. I mean, every administration one ups the other.
9:54I mean, the amount, we have 30 plus trillion dollars of debt that did not happen overnight. And so we have a real fiscal problem. And that's ultimately what's going to break the back of this market is the bond market at some point in time is going to say, you know what, I don't care what you do monetarily wise, the 10 years going to go through 5%.
10:13Carol Massar:So what does that break in the market look like? So what does it mean for equities and just got about 30, 35 seconds here. This is an amazing bull run. It's not far. It's far from over. But when it does pop, this is a bubble. It's going to be ugly and you need to be able to sell and pivot. We are not in a buy and hold strategy. And I don't think individual investors should. Large institutions are tactical. Every family, hardworking American family should have a tactical strategy as a way to protect against when this bubble does pop. And the bubble is going to pop because of debt or because of the AI spend or all of it?
10:45It's going to be all of it. All of it's going to be a combination of it all. And then the bond market will speak very loudly.
10:51Carol Massar:So then administration policies are supportive or no? I think they're supportive of economic growth going into 2026. You know, they are. That is our opinion. And look, as a business owner myself, we pay our teams very well. Okay. Well, that's good to know. Eddie Gabor, co-founder and CEO of Key Advisors Wealth Management. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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14:23Carol Massar:world that really lacks U.S. government data. We did get one piece of private data today. ADP research suggested that the labor market slowed in the second half of last month. Traders now we know have relied on private data as the government closure, Tim, has delayed the release of official statistics. Meantime, the government now and it's well known to the Bloomberg audience who is with us right now, Neil Dutta, partner and head of economics at Renaissance Macro Research. He joins us from New Jersey. Neil, good to have you back on the program. I want to start exactly there. And with regard to the shutdown where we are, longest shutdown on record, but also the lack of data, the picture that we're kind of piecing together from various disparate parts show that a labor market is weakening.
15:04In your view, how weak is it? You know, I tend to concern myself more with the direction as opposed to the magnitude, to be honest. But I think I think we're probably at the Fed's estimate for the unemployment rate for year end already. So a couple of months ahead of schedule. So that's not necessarily a good thing. So my sense is that the speed of the weakness has, you know, maybe picked up a little bit. But I think we're probably at four and a half percent already on the unemployment rate. If it were to come out. And, you know, I think, you know, what people need to kind of answer is, why do you think that stops and what gets it to stop?
15:47Because I think when you look at it bottoms up, like which, you know, if you kind of go industry by industry, it's really hard to see where the growth in employment is coming from at the moment.
16:01Carol Massar:Well, and on that, you know, I'm thinking about, Neil, great to be talking with you again, the dual mandate, right? And so I'm just wondering if we continue to see weakness, you know, in the labor market. And then we just talked about Treasury Secretary Scott Besson kind of deflecting when it came to inflation as he's out and about talking about the administration's policies. I mean, we've heard from Fed Chair Jay Powell about the struggles on both of those mandates. Do you think it's going to be a bit of a squeeze for the Fed, for the U.S. economy, for all of us in terms of weaker labor market staying that way and inflationary pressures kind of staying that way?
16:38Well, I don't I mean, my own view of it is that I don't view the tradeoffs as nearly as onerous as as the Fed does. I mean, I think there's more downside risk to the labor market than there is upside risk to inflation. You know, at the end of the day, inflation is three percent this year. It was three percent last year. The difference between this year and last year is tariffs. So that would tell me what that underlying inflation is probably slowing. And, you know, the fact that it's really hard to make a case for why tariffs are anything more than a one off lends support to the idea that the Fed should continue to cut interest rates here in terms of.
17:20And remember, you know, to me, the big story is that. Employment tends to evolve potentially in nonlinear ways, it kind of, you know, once it gets once like a increase in the unemployment rate really gets going, it tends to keep on going. And that's why you have this sort of, you know, it's episodic, right? I mean, you see big spikes in the unemployment rate at times, right? Yeah. That's not really the case with inflation. And so, in other words, inflation tends to move in a more linear way and, you know, particularly outside of commodities and unemployment. that's not necessarily the case. It tends to be more nonlinear in fashion.
18:01And I think that's what, you know, frankly, the Fed and, you know, the markets might be missing is the sort of downside kind of growth tail risks associated with the labor markets. What if the Supreme Court comes back and says the tariffs are not legal as they're implemented? Does that change your view? No. I mean, I think if you if you think that the Supreme Court is going to be the institution in Washington, D.C., with the last word on tariffs, I think you're I mean, I'd like to have some of what you're smoking. Well, is that is that because you think there are other there are other avenues for the Trump administration to enact these tariffs apart from the IEPA?
18:45Absolutely. The Congress. I mean, this is really about Congress and Congress is, frankly, a lazy bunch. OK, and they've delegated a lot of their tariff authority. To the White House, and there's a vast legal architecture from which the president can draw from to prosecute a trade war. And, you know, I think immediately he could probably do a temporary 15 percent baseline tariff and he can do that for six months. And that will, you know, sort of act as a bridge, you know, to get towards national security tariffs. So I don't think we're out of the woods on tariffs because the SCOTUS rules it one way or the other.
19:29I mean, it's yeah, I think that's that's sort of wishful thinking, in my opinion.
19:32Carol Massar:Hey, a couple of stories I just want to bring in. One was from last week, Neil, and it was about U.S. consumer sentiment tumbling to near the lowest on record. And part of it was the government shutdown weighing on the economic outlook, but also high prices, souring views about personal finances. There were also concerns about the labor market continuing to weaken in the future. We got that from that report. And then we just had a story that our Alexis Christoffers mentioned about Walgreens no longer giving many of its retail workers paid vacation time for Thanksgiving, Christmas and other major holidays.
20:02Carol Massar:The company looking to cut costs under new owners. Like, I just keep thinking about this K-shaped economy and there's just so many people. And I think about the SNAP benefits. How many people are on food stamps and getting assistance? Like, this economy doesn't feel great. And yet we have records on Wall Street and we have earnings that seem to be OK. And the AI spend is out there still in a big way, even if there's been some questions over the last week or so. So I don't know. From an economic perspective, are we in a good economy or no? I mean, I think we're in a very in a deeply imbalanced economy, Carol.
20:38And it's been that way for a while. You know, I've and I recently wrote a piece for your colleague Joe Weisenthal on odd lots, you know, just sort of characterizing the the economy is really three different things. Right. It's you have the housing market, which I think is in recession. And you have the consumer, which is kind of what say in the mid middle. And then you have AI, which is, you know, booming. And when I go to client meetings and I give my sort of outlook on the economy, you know, the pushback that I get is kind of what you were describing, right? It's, you know, AI, it's stocks, it's, you know, the high end consumer.
21:16And people talk about that, frankly, as if those are three separate things, but they're really derivatives of the same thing. And I think that's something to keep in mind here. The other thing I would say is that, you know, we talk a lot about the resilient consumer. We hear a lot about, you know, never bet against the U.S. consumer. The truth is the consumer never actually gives you a signal ahead of an economic slump, right? Right. If you go back historically, consumer spending has never, ever declined in the quarters leading up to a broader economic downturn. Sometimes in an economic downturn, consumer spending actually expands.
21:56Right. Like go back to 2001. Right. Like so that's not unusual either. So if you're waiting on the consumer to give you a tell, you've probably waited too long. Right. I mean, consumption has a way of amplifying downturns. But I would just say, you know, what's been interesting to me is just how.
Read the full transcript
22:13Carol Massar:Yeah. Like the labor markets have evolved the way you've expected. Right. It's come. It's come for the young first. And I think it's going to come for the affluent next. Interesting stuff out. Well, this is something we talked about, the three A's in that Trump economy story. Neil Dada, good to connect again. Come back soon. Partner and head of economics at Renaissance Macro Research. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
23:02We'll see you next time.
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25:40Carol Massar:Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Well, a record-setting 42-day U.S. government shutdown on a path to end. As soon as today, we're thinking about that, But what's really on our minds is the functionality of U.S. political parties, in particular, what is happening with Democrats who some or many have said struggle with a single message, especially after some of those moderates broke away. Yeah, it's like some folks scratching their heads. This is after they broke away. They dropped their demand to renew expiring Affordable Care Act subsidies, ACA, and instead secured a Republican promise to vote on extending Obamacare insurance premium credits by mid-December.
26:20Josh Green is Bloomberg Businessweek national correspondent. And he's the author of several books, including the number one New York Times bestseller, Devil's Bargain, Steve Bannon, Donald Trump and the Storming of the Presidency. He joins us from our Washington, D.C. Bureau Democrats. Josh, crossing the aisle to end the shutdown. Was it a, quote, terrible mistake? A Senator Elizabeth Warren told reporters. Governor Gavin Newsom called it, quote, pathetic. Or is this smart ahead of the midterms? This is kind of a narrative that's emerging now. Republicans will own the ACA premiums going up. That'll affect a lot of their constituents.
26:51What's the chatter? Well, I think the overwhelming sentiment of the Democrat grassroots is anger and confusion that, you know, Democrats who've just come off the sweeping election victory, who polls showed were not being blamed for a shutdown that they, in fact, had caused. why they would suddenly decide to throw in the towel without really much, much warning, I think has upset an awful lot of people, mostly at the grassroots level, but also from a lot of the politicians, especially ones like Gavin Newsom, who maybe have their eye on the White House and are especially attuned to grassroots sentiment.
27:26But I think that there's another kind of quieter, realist wing of the party that looked in the mirror and said, look, there's really no clear winning exit strategy. We've got to pull the plug at some time. So let's do it now before things get really bad for federal workers, before the entire U.S. airline industry grinds to a halt, maybe on Thanksgiving weekend, and just turn around and decide to kind of rip off the band-aid. Now, that's caused a lot of anger, but it's not necessarily clear that long-term that this is going to be the wrong move.
27:55Carol Massar:What's that like thinking or strategizing about like, okay, what party gets blamed? And I was thinking about this when I was on a TSA line, I mean, the government shut down and I look up at those screen screens and who do I see? Kristi Noem, you know, playing over and over on a loop. And I just wonder the general public, like, who do they blame? And so was it was there a feeling that it was the Republican shutdown? Was it both the parties? How did how was it playing out? I mean, it's interesting dynamic over the last like three or four government shutdowns. What's happened in pretty short order is that services start shutting down.
28:28National parks start shutting down. You have a problem with airlines. everybody says well gee who's to blame and it's pretty clear whichever party shut down the government gets blamed by the other party because everybody in that party is on the same page they can kind of point to the same bad guy I think that the tricky thing this time around was that President Trump didn't really seem to be all that interested in the shutdown for like the first two or three weeks he was much more interested in knocking down the East Wing the White House building up his new ballroom and so you had this kind of mixed message from Republicans, where some Republicans in Congress were trying to run the ordinary playbook of blaming Democrats.
29:06But Trump wasn't really on that page, wasn't really doing that. And it's a much more interesting, exciting story to write about this grand new ballroom that's apparently going up in the White House. And so nobody really focused on who was to blame. And when things started going wrong, they just kind of naturally blamed the president and the party that controls Congress.
29:25Carol Massar:You know, Josh, I do wonder, like, did things like, you know, tearing down the ballroom, showing off a new marble bathroom at the White House that the president has, having a great Gatsby party for Halloween. Exactly. That was really over the top, if you saw some of the images. And I don't want to be political, but I do wonder, this is a president who said, like, I am here for you, and I'm going to take actions that are here for more Americans. At the same time, we're talking about one in eight who aren't going to get food stamps because of the government shutdown. So I'm just curious how that plays politically.
30:03Carol Massar:Was that getting noticed, that kind of gap? It definitely was. I think it does two things. I mean, going back to sort of that, you know, how a party deals with a shutdown, if all Republicans had been unified from day one, including President Trump, saying, look, the Democrats did this. It's their fault. Blame them. I think things would have ended much earlier. But as we said, that didn't happen. Trump was more concerned with other things. And when he did begin to get upset about the shutdown, instead of blaming Democrats, he started getting angry at Republicans and told them they ought to eliminate the filibuster, which would be another way to open the government, but it's not something that Republicans wanted to do.
30:37And so as this fight was going on, you do see these images on TV, on social media, of the redecorations in the White House, of these glitzy parties at Mar-a-Lago. Meanwhile, you know, food stamps are being frozen. The White House is out saying, no, we don't want to pay these during the government shutdown. Democrats and states are having to take them to court. So it really did create a political problem that polls show pretty clearly was hurting President Trump's approval rating and hurting Republicans in Congress. And that's one reason why Democratic kind of grassroots and a lot of lawmakers were so upset that moderates in their caucus decided to pull the plug and end the shutdown early because they didn't think it was hurting Democrats.
31:16They thought it was hurting their opponents. I think it was Mike Allen and Axios over the weekend who wrote a commentary about how it could be a challenge for the Trump administration to present themselves as fighting for the little guy or fighting for the middle class or the working class if they're not focused on the ACA subsidies or on funding SNAP during this time. I wonder if that message will resonate with voters going into the midterms in 26. Yeah, I think that's a really smart point. I think it might resonate even sooner. I did a Business Week newsletter yesterday, just kind of my gloss on the shutdown and what was and what was not accomplished.
31:55And I do think that one of the things that Democrats accomplished, even though so many of them are unhappy about the way things ended, are they've added real salience to this issue of rising Obamacare premiums. Originally, Democrats said we're only going to reopen the government if Trump and Republicans agree to fund these provisions that will help extend subsidies, keep insurance affordable. Republicans don't want to do that. They didn't do that. So even though Republicans or Democrats weren't able to win that as a concession to reopen the government, it's been on the front pages of newspapers.
32:27It's been in the news. I think the American public is very aware that these premiums are about to rise. And I think partly because of the spotlight that the shutdown shown on this issue, if and when those premiums do rise, the American people are largely going to blame Trump and Republicans. And essentially, it's going to be up to them to kind of find the solution, which isn't exactly how Democrats wanted things to end. But it could turn out to be that public pressure in the event of these rising premiums actually does produce some sort of solution that Democrats could get behind.
33:00Carol Massar:So, you know, Josh, when the Republicans and the Democrats that went over to the other side or basically, you know, broke away and got this Republican promise to vote on extending Obamacare insurance premium credits by mid-December. So politically, it will happen? Or could Republicans back out? Just got about 40 seconds here. I think it's very unlikely to happen. I mean, Republicans have been adamant that they're not going to vote to support these things. So you can have a vote. The vote will lose. And that will probably be the end of it, at least in the short term. If the vote were to win in the Senate, it would go to the House.
33:34House is controlled by Republicans. And they've said they might not even take it up. But eventually, if insurance premiums do go up and just ordinary people begin to react badly to that, including Republican districts, that could put pressure on Republicans and Trump to finally have to do something about it.
33:48Carol Massar:And there's a record, right, of people of how they voted. Absolutely. Yeah. And ultimately, look, Republicans control Congress. They control the White House. The buck stops with them. If there needs to be a solution, they're ultimately going to have to come through and deliver one. All right. Great stuff, as always. Josh, thank you so much. Josh Green, he is Bloomberg Businessweek National Correspondent. Be sure to check out all of his writings. They are on the Bloomberg Terminal and at Bloomberg.com. Really appreciate it. Order his books, too. His book. Listen, he's the guy you want to talk to, like understood what you know, how President Trump got to the White House the first time around and just continuing to report it all out.
34:24Josh Green out of Washington, D.C. Stay with us. More from Bloomberg Business Week Daily coming up after this.
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37:46Carol Massar:Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Tate, one stock and company that we wanted to highlight. It is the number one Gator in the S &P 500 today. It's up about 9%. We're talking about Paramount Skydance, shares rallying. In fact, they've been up more than 12 % at their intraday high today after the newly merged company raised its target for job cuts and cost-saving measures. As you know, the media and entertainment company has also been trying to buy rival Warner Brothers Discovery. It also said in a letter to shareholders, we talked about this a little bit, that it plans an additional 1 ,600-person workforce reduction and did lay out a specific goal to achieve at least$3 billion, Tim, in cost savings.
38:29With more on the results, the company and its place in the world of media and its future, too, Bloomberg Intelligence Senior Media Analyst Geetha Ranganathan joins us. She's at Bloomberg Intelligence Headquarters in Princeton, New Jersey. Geetha, is today's move, before we get to the big picture, is today's move all the result of at least$3 billion in cost savings? Is that why investors are happy today?
38:51Carol Massar:Yeah, absolutely, Tim. So, you know, the$3 billion cost savings target, which was upward guidance revision from the$2 billion, basically caused them to lift their EBITDA target for 2026. I mean, when I say lift, it's much higher than what consensus was expecting. So consensus was expecting around$3.1 billion for 2026. They came in at$3.5 billion. So I think that really gave investors some cause to cheer. And that's driving the stock upwards today. Well, we should just remind everyone, Carol always points this out, that, you know, that includes an additional 1600 person workforce reduction. So I would imagine there are people within the organization that are worried about not having a job in the near future.
39:37Do we know at all where these layoffs will hit?
39:40Carol Massar:So these layoffs, actually, the 1600 are going to be a part of their Latin American operation. So they're going to do some of the divestitures of their LATAM assets in Chile, in Argentina. And a lot of those job cuts are actually associated with that. All right. So, you know what, Gita, I keep thinking, is this the media company to watch right now? It definitely is, Carol. So, you know, a lot of what David Ellison and his team laid out yesterday, I mean, they came across as a really strong team with a very, you know, they have a game plan, they know what they're doing. But at the end of the day, and if you just look at the playbook, right, you guys mentioned the cost synergies, which are a big part of, you know, the forward plan.
40:25Carol Massar:But if you just kind of think back a few years, this is so reminiscent of exactly what Warner Brothers Discovery did. This was their playbook. They came in with the merger of Warner Brothers and Discovery. They kind of kept raising their synergy targets. But at the end, what happened was everything fell apart because they couldn't really kind of get to the initial EBITDA target that they had laid out up until this year, of course, when they kind of came out with their whole plan to separate the company. So one doesn't really know what's going to happen with Paramount Skydance. So yes, things looked pretty promising as laid out by the management team yesterday.
40:59Carol Massar:They obviously are not afraid to make big, bold bets when it comes to content. We saw them. They're ready to spend about$8 billion on UFC content. They obviously are more than willing to go after Warner Brothers Discovery. But at the end of the day, it's going to come down to execution. Are they going to actually be able to execute? And even if they do execute, is it going to be enough? You know, those are really the questions because I'm not sure. Yes, they might be able to drive up their streaming subscriber base a little bit. They have about 80 million right now. But then when you're competing with Netflix, which has well over 310 million, again, what do you do?
41:32Carol Massar:You need something transformative. So you do need that Warner Brothers Discovery acquisition. Well, I do think about kind of where media companies are going, Geeta. You know, who would have thought at one point that the major networks would ever be challenged? Who would ever thought, you know, ESPN went through its own? Like we've seen things that were juggernauts or a given that it's just not the way it is anymore. You know, so many of us are watching YouTube television or watching us things on our phone or, you know, we don't care what time things are on anymore. Like it's just been turned upside down.
42:02Carol Massar:Look at the news business, how much that has changed. And I do think about, you know, what is the media company of the future? The media company of the future is one that can be agile, that can be nimble, you know, And that's exactly what Netflix has been able to do in terms of making. They did make the content investments when they needed to make it, but then they were able to pare back when they realized that that couldn't go on forever and when they were burning through free cash. The content company or rather the media company of the future is one that can adapt. We have to make investments in AI.
42:40Carol Massar:We're seeing that AI is going to really kind of change the game when it comes to recommendations, when it comes to kind of tweaking algorithms. And even when it comes to cutting down on content costs, we're already seeing this play across the board, you know, in terms of post-production cost. It can kind of lead to a significant reduction where we're thinking at least baseline 10%. And so a company that's able to achieve that and is ready for that is going to, you know, really position itself for the future pretty well. Back to the idea of what assets the company might need to add in the near future.
43:12David Ellison on the call, Geetha said he couldn't comment on speculation around dealmaking, but said there are no must haves for us. Do you agree with that?
43:22Carol Massar:Is he just not trying to show his hand? Like, are there some assets that are must have for this company? I think so, Tim. I mean, again, they did, you know, full credit to the to the management team. They do seem to have a good strategy. They seem to be very bold and ambitious. There's absolutely no doubt about it. They are not going to just be OK with the status quo. That is absolutely clear. But, you know, in their current configuration, I just don't think it's going to cut it when they have to compete with the likes of a Netflix or an Amazon or a Disney. they do need a better studio. Yes, they're committing to basically doubling their theatrical output.
44:01Carol Massar:But if you just kind of look at the performance of the studio over the past so many years, it has clearly been such a laggard. So getting some of those Warner Brothers titles, I think, is transformative. They do need something for their streaming assets as well. Again, they're doing a lot of things that they can, again, in the current format. But again, And they need a lot more content. You know, the UFC is good. The NFL, they have. But I don't think, you know, that's good for some amount of customer acquisition. I just don't think it's enough. Hey, swallowing Warner Brothers, if indeed Warner Brothers Discovery, if indeed that gets done.
44:36Carol Massar:I mean, I think we all keep being like, well, wait a minute. Paramount Skydance is about an$18.3 billion market cap. Warner Brothers is about almost$57 billion. I mean, it's going to be a lot of debt, right? We see that typically in media companies. Is it manageable? I think it is manageable. I mean, we have to remember here that, you know, this is a little bit of an unusual situation. This is David Ellison. You know, his father is one of the richest people in the world. So I think financing might not necessarily I mean, yes, we've heard all these different reports of, you know, the Paramount team kind of looking for private equity partners.
45:11Carol Massar:We really don't know exactly how the financing structure is going to be. But I think, you know, in the grand scheme of things, and we've seen this even with the Warner Brothers Discovery, you know, management team, that, yes, they do have to take on a lot of debt. But I think in the end, it will be manageable because they still will have a good amount of free cash flow. All right. We're going to leave it on that note. Hey, Geetha, thank you so much. Geetha Ranganathan, she's Senior Media Analyst at Bloomberg Intelligence, joining us from BI headquarters out there in Princeton, New Jersey. As we mentioned, Paramount Skydance continuing to be the top gainer in the S &P 500.
45:44Carol Massar:Tim, that stock up about 8.7 percent. At one point, it was up 12.5 percent, That's off its best levels of the day, but still enough to the upside to be that best performer in the S &P. I love it, though. It's just kind of interesting. We'll see where it goes next. All right. Are you watching anything on Paramount Plus? Because those price increases are going to come. I don't know. It's all a mush to me. Just go to the menu. I click. It's not what they that's not what they want to hear. But that is the reality for so many people. This is the Bloomberg Businessweek Daily Podcast, available on Apple, Spotify and anywhere else you get your podcasts.
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Wall Street’s bets that the largest shutdown in US history is soon coming to an end drove a rebound in stocks, spurring optimism that access to official economic data will shed light on the Federal Reserve outlook.
The S&P 500 erased losses, with about 345 shares gaining. The Dow Jones Industrial Average climbed 1.2%. FedEx Corp. — a barometer of the economy — jumped over 5% as it expects profit this quarter to improve from a year ago. Nvidia Corp. sank 3% as SoftBank Group Corp. sold its entire stake in the chipmaker for $5.83 billion to help bankroll artificial-intelligence investments.
With the bond market closed for Veterans Day, Treasury futures rose after ADP Research data suggested the labor market slowed in the second half of last month. Traders have relied on private numbers as the government closure has delayed the release of official statistics.
A record-setting US shutdown is on a path to end as soon as Wednesday after the Senate passed a temporary funding measure. Reopening the government now depends on the House, which plans to return to Washington to consider the spending package. It would keep most of the government open through Jan. 30 and some agencies through Sept. 30. If approved, the bill goes to President Donald Trump, who has already endorsed the legislation.
Today's show features:
- Eddie Ghabour, Co-Founder and CEO of Key Advisors Wealth Management, on the post-government-shutdown market landscape
- Neil Dutta, Head of Economics at Renaissance Macro Research, on the US economic and monetary policy outlook
- Bloomberg Businessweek National Correspondent Josh Green on the political blowback as Congress moves closer to officially ending the US government shutdown
- Bloomberg Intelligence Senior Media Analyst Geetha Ranganathan on Paramount Skydance shares jumping after the company raised its target for job cuts and cost-saving measures
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