US to Cut 10% of Flights; Longest-Ever Shutdown Hurts Republicans in Elections

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

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's about to lead to a partial shutdown of the nation's airspace. Transportation Secretary Sean Duffy says the Federal Aviation Administration will begin cutting flight capacity by 10 % at 40 high-volume locations starting tomorrow. That's to alleviate pressure on air traffic controllers who are working through the shutdown without pay. I anticipate there will be additional disruptions. There will be frustration.

1:42We are working with the airlines. They're going to work with passengers. But in the end, our sole role is to make sure that we keep this airspace as safe as possible. Transportation Secretary Sean Duffy made the announcement alongside FAA Administrator Brian Bedford. We get more from Bloomberg Aviation correspondent Sid Phillip. This would actually be a really bad step for the airline industry because they're going to have to reduce flights in order to actually make these cuts. And so we're going to see a situation where airlines are forced to have to cut their flights, cut routes and cut services to destinations, which could lead to some disruption for passengers who book travel, especially as we go into the holidays.

2:20And we You have to see how long the shutdown lasts. Bloomberg's Sid Phillip reports the cuts are expected to be staggered, with 4 % of flights reduced tomorrow and 5 % Saturday. Sources tell Bloomberg News international flights will not be affected. Along with the shutdown, Nathan, the big wins for Democrats in this week's elections have shifted the political landscape. President Trump says the midterm stakes are set after New Yorkers elected Democratic Socialist Zoran Mamdani to be their next mayor. The decision facing all Americans could not be more clear. We have a choice between communism and common sense.

2:57Does that make sense to you? Common sense. It's common sense or communism. President Trump spoke at the American Business Forum in Miami, but Democratic Congressman Ted Lieu says there's a reason why voters in blue and purple states picked their candidates on Tuesday. Under the policies of Donald Trump and Republicans, inflation continues to increase food prices have gone up and health care costs are skyrocketing democrat ted lou of california spoke to abc news and now republicans are split on how to respond to their losses the washington post reports some strategists think president trump needs to get more involved to fire up his base while others suggest congressional republicans develop their own message on the economy of course karen zorn mom donnie was one of the big democratic winners on election night, and now some of the world's business leaders are adapting to a new reality, a critic of capitalism about to run the world's financial capital.

3:51JPMorgan Chase CEO Jamie Dimon tells CNN he's willing to help. I'm hoping any mayor does what's right to help the citizens of that city. If you do it right, it benefits all the citizens. If you do it wrong, it hurts all the citizens. So, yeah, I would help someone if they wanted my help. And Zoram Amdani says he's willing to work with Dimon and other Wall Street CEOs. I look forward to meeting with Jamie Dimon and meeting with anyone who is concerned about the future of our city and is invested in the vitality of that same city. And these are not very different from the conversations I had over the course of this campaign with many business leaders who, while we may have disagreements on fiscal policy, we also found many areas of agreement as to what the city actually needed.

4:34It was New York mayor-elect Zoran Mamdani. And along with Jamie Dimon, Citigroup CEO Jane Frazier says, quote, we hope to work with the mayor-elect on making the city an even better place for our people and clients to live and work. Well, Nathan, the Supreme Court heard arguments about whether President Trump can unilaterally impose sweeping tariffs. It is a pivotal test of just how far a president's authority can reach. And Bloomberg's Amy Morris has more from Washington. Justices seemed skeptical of Trump's power to unilaterally impose sweeping tariffs. Several conservative justices signaled their concerns.

5:08Chief Justice John Roberts questioned the executive branch taxing authority. The vehicle is imposition of taxes on Americans, and that has always been the core power of Congress. But Solicitor General John Sauer, defending the tariffs, argues this is not a tax. These are regulatory tariffs. They are not revenue-raising tariffs. The fact that they raise revenue is only incidental. A decision could come by mid to late December. In Washington, Amy Morris, Bloomberg Radio. Amy, thanks. Let's turn to the markets now. Futures are a little changed to lower this morning following yesterday's gains on Wall Street.

5:40Shares of Qualcomm are down 3%. The largest maker of smartphone processors became the latest chip maker to post profit above estimates and deliver an upbeat forecast. But that wasn't good enough for outsized expectations. Qualcomm stock is up 40 % since April. The revolution in artificial intelligence, Nathan, has helped lead to the most job cuts in the month of October in more than two decades. According to data from outplacement firm Challenger Gray and Christmas, companies last month announced more than 153 ,000 job cuts. And that's nearly triple the number during the same month last year. The job cuts are attributed to AI adoption, softening consumer and corporate spending, and rising costs, which are driving belt tightening and hiring freezes.

6:22A global bond sales have soared to a record this year. Bowers are taking advantage of easy market conditions to fund everything from the boom in AI projects to a revival in acquisitions. Issue and set a new annual record of$5.94 trillion, topping the previous high set last year. And there's still nearly two months of this year to go. Well, over in Europe, Nathan, it's decision day at the Bank of England and a tricky call for the UK's rate-setting committee. Bloomberg's Ewan Potts joins us from London with more. Ewan, good morning. Karen and Nathan, the Bank of England has been cutting rates once a quarter since August of last year.

7:00But the expectation from markets and economists is that the BOE will break that pattern today and leave rates on hold at 4%. Governor Andrew Bailey is seen as the key swing voter on a divided committee. And although there are signs of a cooling of inflation pressures, policymakers may prefer to wait and see what's in the government's budget. that's due in less than three weeks from now. In London, I'm Ewan Potts, Bloomberg Radio.

7:27Time 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 Riggs. Monica, good morning. Good morning, Karen. Federal investigators will be back out in Louisville, Kentucky this morning, scouring the charged site where a UPS plane crashed earlier this week, killing at least 12 people. Dr. Jason Smith is a trauma surgeon at the University of Louisville Hospital. We've seen blast injuries from the explosion itself. We've also seen some shrapnel injuries where flying pieces of debris have hit either bystanders or people in relatively close proximity to the accident.

8:01Authorities there are still trying to figure out why the plane caught fire and lost an engine shortly after takeoff. Partial snap benefits for November will be a little more than estimated. The USDA revising its guidance last night to comply with a federal court order. It now says recipients will get 65 % of their benefits this month as the government shutdown continues. President Trump says he is not going to the G20 summit later this month in South Africa. You know, I'm not going to. We have a G20 meeting in South Africa. South Africa shouldn't even be in the Gs anymore because what's happened there is bad.

8:36I'm not going. I told him I'm not going. I'm not going to represent our country there. Trump was speaking at a business forum in Miami last night and said the U.S. will stop all aid to Nigeria and go guns a-blazing if the country doesn't stop killing Christians. The Israeli military says Hamas has handed over remains believed to be another deceased hostage to the Red Cross. If confirmed by forensic testing, that leaves the remains of just six others in Gaza. Here at home, unionized Starbucks baristas are prepping for the biggest strike they've ever been on next week, unless they can secure a contract.

9:10Those strikes would start November 13th, the company's Red Cup Day. And we're learning a little bit more about how jewel thieves were able to crack security at the Louvre last month to steal$100 million worth of crown jewels. French prosecutors say the password to the museum's video surveillance system was Louvre. And they were just one camera off from getting caught because there was just one camera on the window they broke into. Four suspects have been charged for the robbery so far. At least one remains at large. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Monica Ricks and this is Bloomberg.

9:45Karen. Thanks, Monica. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. Week 10 in the NFL begins tonight in the AFC West. to 2-6 Raiders visiting the 7-2 Broncos. They've won six in a row. The AFC South Sunday has Houston at Jacksonville, and the Texans will be quarterbacked by Davis Mills. C.J. Straub out. He's in concussion protocol. And Arizona QB Kyler Murray's going to miss at least another month. He's been placed on injured reserve. Another milestone for Alex Ovevskine, who last year passed Wayne Gretzky and became the NHL's all-time leading goal scorer last night, career goal number 900.

10:21That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

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11:32Coast 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 with the government shutdown in Washington now into a record day 37. The Trump administration says it is forced to cut back on flights in some of the nation's busiest airspace starting on day 38. Transportation Secretary Sean Duffy says there's too much strain on air traffic controllers working through the shutdown without pay. There is going to be a 10 percent reduction in capacity at 40 of our locations. The administrator is going to tell you that it's been this is data based.

12:13Transportation Secretary Sean Duffy made the announcement alongside FAA Administrator Brian Bedford. And for more, we're joined by Bloomberg News Managing Editor for Space and Aviation, Benedict Kamel. 10 % in 40 locations sounds major. Benedict, how disruptive could this be? Good morning. Good morning. Yes, this will be disruptive and particularly on domestic routes. What we know for now is this isn't going to be on the routes that are in the country and not so much the international routes. If they were to do that, that would be even more disruptive. They're trying to manage it in a sort of cascading way.

12:47So, we're going to get a 4 % cutback first, then 5%, and then sort of work our way up to 10%. So, it's not going to happen in one fell swoop. We don't yet know where these 40 so-called high-volume markets will be. We'll get the details on that today. And we don't also know whether it will end at 10%. Sean Duffy, who we just heard, he did say this is a data-led exercise. And if the data, in his words, goes in the wrong direction, we might see additional restrictions. So 10 % might not even be the end of it. And with every additional percentage point, obviously, the pain will become more pronounced for travelers.

13:25Even before this announcement, of course, Benedict, we've heard Transportation Secretary Duffy say that he'd be willing to shut down airspace entirely if safety is an issue during the government shutdown. I mean, could we see that go this far? I mean, that's probably the sort of the nuclear option, dare I say. And we'll see where this 10 % reduction takes us. What they're trying to do is essentially take capacity out of a very strained market. We have had days where there have been real disruptions, but we've also had a couple of days where things have sort of hummed along just nicely. So it's difficult to see a definitive pattern at this point.

14:04It's really up and down. And we are all tracking that very carefully. But one thing is for sure, Sean Duffy has increased the pressure. He's come out continuously in the last week saying, we will see disruptions, we will see chaos, we will have to see action as a response. So that's sort of been the continuous theme from the government side. Obviously, there's also a slightly political undertone in that. We know that the Republicans are blaming the Democrats for the shutdown. So that is a bit of a tool that is being used. But Duffy, again, will tell you this is the data that we're seeing and we have to respond.

14:39In terms of how the data plays out, how could this unfold working with the airlines to make these flight pullbacks actually happen at airports? So airlines will look at, OK, where's the capacity that we can take out of the market with minimal disruption? This is why they say, for now, we're going to focus on regional and domestic mainline flights. So, that's an exercise that we'll go through in the next couple of days. The good news is, we are coming out of the busiest travel season. And the summer period is over. Yes, we have Thanksgiving still coming up. But right now, there's a little bit of a lull, and they might be able to accommodate those additional seats that they will need.

15:20So, we heard from the United Airlines CEO, Scott Kirby, last night in a memo to employees where he said, we will try and accommodate all the travelers on the council flights as best as we can elsewhere. We're working through the system. So they're trying to keep these disruptions to a minimum. They are also looking at the bottom line. This was supposed to be a strong quarter. We came out of a very good third quarter and the hopes from airlines was that things would continue like this into the fourth quarter. So they obviously also don't want to see a disruption that sort of destroys their earnings in the fourth quarter.

15:57In our last 30 seconds, I wanted to ask you about how this could affect airline profitability at a time when we'd heard from a number of these airlines during earnings calls that they're seeing a pretty high demand for travel right now. Yes, indeed. So what we're seeing is that more travelers are going into what we call the shoulder season, so the weaker fourth quarter. They are booking additional flights. We've seen a great focus on premium travel, and those are vulnerable markets. And we came into the year with a strong sense of growth. Then we had that dip during what was called Liberation Day.

16:27The market or the industry has recovered from that. But now we're at that tipping point again where things could go south again. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

17:08And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'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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