US Flights Cut as Shutdown Drags On; Musk's $1T Tesla Pay Package Approved

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest on the government shutdown. It is now having an impact in the air. This week, the Transportation Department said it would cut 10 % of flight capacity across 40 major airports to ease the strain on the travel system. As of this morning, about 700 flights are already canceled at the four biggest airlines, United, American, Delta and Southwest. Republican Senator Mike Rounds says it doesn't have to be this way. This is serious.

1:42It's one more step in the wrong direction for us. The American people expect us to have the aircraft run on time. They expect the trains to run on time. They expect us to actually have government operating. Republican Senator Mike Rounds appeared on Bloomberg's Balance of Power. You can get the full conversation on the Bloomberg podcast channel on YouTube. The top Democrat on the House Transportation Committee, Rick Larson, is calling on the FAA to share its risk assessment to ensure the flight cuts aren't politically motivated. Well, another major story that we're following, Nathan, involves Elon Musk.

2:16Tesla shareholders have approved his$1 trillion compensation package. And we get more from Bloomberg transportation reporter Danny Lee. This ultimately means that shareholders have given Elon Musk and Tesla their full backing for Musk to do whatever he needs to do to drive the company forward. And of course, we are seeing this transition of Tesla from just an EV maker to one that Musk wants to take it into, to robotics, to artificial intelligence and a driverless future. So there's a lot at stake here. And of course, for Musk, he doesn't automatically get this trillion dollars. He has a series of very lofty goals and hurdles he needs to pass financially in terms of the valuation of Tesla and also operationally in delivering, for example, 20 million vehicles and selling a million robots and driverless cars in order to hit some of these extremely stretched goals.

3:12And Bloomberg transportation reporter Danny Lee says this is the largest payout ever awarded to a corporate leader and shares of Tesla are up about 1 % this morning. And we're also watching shares of NVIDIA this morning, Karen. They're up two-tenths percent after yesterday's 3.7 percent sell-off. This morning, NVIDIA CEO Jensen Wong says his company has no plans to ship its Blackwell AI chips to China. Wong is in Taiwan this morning. He says it's up to China when they would like NVIDIA products to go back to serve their market. Meanwhile, the information is reporting that the White House has told others in the federal government it will not allow NVIDIA to sell its latest scaled-down AI chips to China either.

3:52While Nathan exports from China unexpectedly dropped in October for the first time in eight months, they contracted by 1.1 % in October from a year earlier, global demand failed to offset a slump in shipments to the U.S. We get more from Bloomberg News Chief Asia Correspondent Rosalind Matheson. Well, there's likely to be quite a lot of volatility still going forward. I mean, we've had quite a bit of front loading that went on, which really propelled exports from China through most of this year. Even though we do have a truce in trade, we've got big questions about whether Donald Trump's tariffs stay at all.

4:28So for a lot of companies and countries, still a fair bit of uncertainty, including for China, about what the next six months are going to look like. And Bloomberg's Ross Madison says shipments to all nations except the US rose 3.1%. That was not enough to compensate for the more than 25 % decline to America. Well, Karen, the makers of blockbuster weight loss drugs have secured a big deal at the White House. Eli Lilly and Nova Nordisk have agreed to slash the prices on their popular ZepBound and Wagovi shots in exchange for tariff relief and wider access to Medicare. As heard live here on Bloomberg Radio, President Trump made the announcement in the Oval Office.

5:04For years, politicians have talked about making health care affordable, But my administration is actually doing it. Americans deserve the best health care in the world. And we're now getting the best health care at the lowest price. And under the deal with President Trump, the prices of Wegovia and Zep bound under Medicare will be$245 a month. The drugs currently list at more than$1 ,000. In return, Lilly and Novo get a three-year grace period from upcoming tariffs on pharmaceutical companies that don't manufacture in the U.S. We spoke with Novo Nordisk CEO Mike Duestar. We are more American than many companies that were born in USA.

5:41And the reason I say that is that long before many American companies started to think of developing and producing their raw ingredient in US, we were there doing that. Nova Nordisk's Mike Duesdar, the Danish drugmaker, has pledged billions in US investment, including a$4.1 billion factory expansion that began last year in North Carolina. Well, we turn to the markets now, Nathan, where futures are higher. After another sell-off on Wall Street, the S &P 500 has dropped more than 1 % twice this week as some of big tech's AI spending has spooked some investors. David Bianco is chief investment officer at DWS Group.

6:23The valuations are very demanding, yet we understand why. And we're taking a constructive view on tech and communications and all that. But our preferences are financials, health care, and electric utilities because power is still a really important part of the AI story. DWS Group's David Bianco. The S &P 500 is up 14 % so far this year, while the Nasdaq is higher by 19%. In Europe, Karen shares of the owner of British Airways are flying lower. IAG says its all-important North Atlantic route experienced some weakness in the third quarter, and that weighed on earnings that missed estimates. The results have led the stock to drop the most since April.

7:03This morning, IAG is down almost 7%. Nathan, Comcast, owner of the European paid television service Sky, is in talks to buy ITV's media and entertainment unit in a deal that would dramatically shake up the UK broadcasting landscape. The business to be acquired runs ITV's commercial free-to-air TV channel operations in the UK, as well as the ITVX streaming platform. If a deal goes ahead, it would leave ITV with its studios division, which produces shows such as Britain's Got Talent and Love Island. Well, Karen, Apple's streaming service suffered an outage on the premiere of its new series Pluribus.

7:42Users across the U.S. and Canada reported the service crashing from around 1030 Eastern last night, not long after the first two episodes of the new drama were made available to stream. Apple says the matter was resolved within about an hour and a half. Well, Nathan, what is the best city in the world for the global elite? The answer there would be Dubai, according to research by real estate broker Seville's, which ranked 30 global cities by their appeal to high net worth individuals. Dubai was ranked as the most accommodating location for the world's rich due to its tax advantages and strong family infrastructure.

8:18New York, Singapore, Hong Kong and Abu Dhabi round out the top five.

8:26Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Monica Ricks. Monica, good morning. Good morning, Karen. A federal judge has ordered the Trump administration to find the money to fully fund SNAP benefits for November. The Trump administration has agreed to pay partial benefits this month when judges ruled that it had to use emergency funds, but it's now appealing that ruling to pay 100 percent. The Supreme Court has temporarily revived the Trump administration policy requiring new passports to reflect a person's sex on their birth certificate.

8:57Bloomberg's Amy Morris has more from Washington. A divided Supreme Court dealt a fresh blow to transgender rights, temporarily requiring new passports to reflect the sex on the holder's birth certificate. The court's majority wrote that displaying passport holders sex at birth does not offend equal protection principles. Justice Ketanji Brown-Jackson dissented, writing that the decision would force transgender Americans to make a difficult choice between using the wrong gender on their passports and risking harassment or avoiding activities that require a passport. The Supreme Court decision will apply while litigation continues in this case.

9:34In Washington, Amy Morris, Bloomberg Radio. South Korea's military confirms North Korea has fired a short-range ballistic missile off its east coast. That launch follows new U.S. imposed sanctions on some of North Korea's bankers, which Pyongyang has condemned as proof of Washington's hostility. In Louisville, Kentucky, a vigil was held last night to remember the 13 people killed in a UPS cargo plane crash this week. Louisville Mayor Mike Greenberg called the scene horrific. We saw the firefighters walking towards bodies that were still on the ground with the stretchers. It was too painful for me to watch.

10:10that was the moment that I had to turn away. Investigators still don't know what caused that crash. And Texas Attorney General Ken Paxton has now asked a federal judge for a restraining order against Tylenol to stop advertising that in consultation with a doctor, Tylenol is safe for pregnant women and young children to use. The Trump administration has claimed it can cause autism and other disorders. The drug makers denied it. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Monica Ricks and this is Bloomberg. Karen? Thanks Monica. Time now for our Bloomberg Sports Update and for that we bring in John Stashauer.

10:47Thanks Karen. A defensive battle to begin week 10 in the NFL in Denver. The Broncos didn't get a first down for the first 24 minutes. They didn't get a touchdown till late second quarter. They added a field goal late third and they beat the Raiders 10 to 7 and Denver at 8 and 2 has the best record in the NFL. Broncos have won seven straight. They're 5-0 at home. 41-year-old Craig Stammen named the new manager of the San Diego Padres as a former Padres relief pitcher. The Dodgers picked up the$10 million option for Max Muncy. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

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12:28Coast to Coast on Bloomberg Radio. nationwide on Sirius XM and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. He's already the world's richest man. And if he plays his cards right, he could be the world's first trillionaire. Tesla shareholders have overwhelmingly approved a 12-figure pay package for the electric vehicle CEO Elon Musk. But for ARK Invest CEO Kathy Wood, it's not just about the EVs. We think robo taxis, he has them at the starting gate as of June, and now they're rolling out. And that AI project is well underway.

13:08That was ARK Invest CEO and Tesla investor Kathy Wood ahead of the vote at Tesla's annual meeting. And joining us for more is Bloomberg News Global Auto's editor, Craig Trudell. And Craig, it really is, in a lot of ways, about the autonomous robotics vision more than the electric vehicles. So do we have to start thinking about this company as more than just an EV maker? Good morning. Yeah, good morning. I think that at least is the narrative Musk wants out there. And this has been a trend for some time where he's been talking more and more about his humanoid robots as opposed to his cars. You know, I think that the cynic would say that that would probably be explained by the fact that the car business has been slowing down pretty dramatically for the company for some time now.

13:50But, you know, in addition to talking up the prospects for robots last night, he also talked about expanding production of Tesla's vehicles next year, including with the CyberCab. And interestingly, just last week, we spoke with the chair of the board, Robin Denholm, about the notion that while the CyberCab was designed without pedals or a steering wheel, the company has maybe some flexibility and some willingness to, in the event that regulators say, you know what, we're just not ready for you to put fully autonomous vehicles on the road yet, she told us that they would be willing to put steering wheel and pedals in those cars in order to be able to sell them.

14:33So, Craig, walk us through some of these benchmarks that Elon Musk has to achieve in order to get to that trillion-dollar level. What's it going to take, and how high is the bar? Yeah, the bar is very high to get the full payout. The market cap of the company today is around$1.5 trillion. He would need to take it to$8.5 trillion to get the full slug of shares that this pay package includes. But in addition to that, he needs to achieve a series of performance milestones that are more operational. So, you know, some are on the sort of easier side in terms of, you know, 20 million vehicles on the road.

15:16That sounds like a lot, but it's cumulative. And this is a pay package that he's eligible to receive over the next decade. The other sort of, you know, operational targets include adjusted EBITDA all the way up to$400 billion. And this is a company that is on course for, give or take, about$13 billion in adjusted EBITDA this year. So we're talking many multiples of what the company is earning here and now. Got about a minute left, Craig. Elon Musk has won past compensation fights. The company says more than 75 % of votes cast went his way. Should we be surprised by that margin? I wasn't surprised.

15:51I think there were some major institutional shareholders who have balked at these pay packages in the past. But the retail shareholder base for Tesla is extremely, extremely loyal to Musk. And I think an important little bit of context here, too, is that Musk and his brother Kimball's shares counted toward that 75%. And so, you know, when you consider the fairly substantial stake that Musk already has, you know, this sort of bar for him to clear 50%, you know, was not necessarily all that high. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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17:12I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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