Supreme Court Thwarts Trump Bid to Oust Fed’s Cook

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1:07Scarlet Fu:JPMorgan Chase and Company. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast.

1:52Scarlet Fu:Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Here's a great lead sentence in a Bloomberg News story by Greg Storr. A divided U.S. Supreme Court expanded the president's power to fire top government officials in a blockbuster decision that puts the White House firmly in control of potentially dozens of agencies that have long operated independently. I'm not sure how to think about that. I think everybody's trying to digest it. Nick Ackerman, he's got some thoughts.

2:27He's a former assistant special Watergate prosecutor. Nick, thanks so much for joining us here. It seems like the executive branch just got a big, big win today. How do you think about that? Well, they did and they didn't. They certainly got it on all of the agencies other than the Fed. The Supreme Court told the president that he cannot fire Lisa Cook unless he fires her for cause, gives her notice, has a hearing. he can't just use it to basically take over the Fed and bend the Fed to his will. The court there said very clearly that Congress intended that the Fed would have independent power to regulate the economy.

3:10Now, on the other hand, the case the other case that came out today had to do with the Federal Trade Commission, where the court essentially went along with this unitary executive theory. that if the agency itself was doing what would normally be done by the president as part of his executive authorities, I mean, keep in mind that the FTC does antitrust enforcement, pretty much the same thing that the Department of Justice does. That what the court said was that those are matters within the realm of the executive power, and therefore the president has the right to fire those people. Now, they did leave open the notion that there's maybe another issue out there that has to do with whether or not something like the FTC is a semi-judicial body and that the FTC commissioners sit as judges in certain respects and therefore are entitled to a little more deference.

4:14But the court said that's an issue for another day and sent that back to the lower courts for consideration.

4:22Scarlet Fu:OK, so does that mean Rebecca Kelly Slaughter has a recourse here that she can kind of relitigate what's happening? Well, all she can relitigate is to argue that just as we had always thought about these federal agencies, that they're quasi judicial, quasi legislative and quasi executive. and somehow she's got to be able to argue out that there is a special part of this that is quasi-judicial and that she should be permitted to continue in that role. The problem with that is is that obviously a FTC commissioner has a lot of different roles and to separate it out is not that easy and why would you keep somebody in just for that purpose?

5:09I just don't know where this goes But it seems to me any president who now comes into office has the right to get rid of all the FTC commissioners, the FCC commissioners, etc., in order to put his own people in there. What's unfortunate is in the past, whatever president was in power got the majority of commissioners. And the other party, whether it was Democrat or Republican, had a certain number of positions. It really was more of a bipartisan type of operation. This will make it much more partisan in terms of who gets appointed to these positions. It means whoever becomes president will have the power to appoint those commissioners.

5:51All right, Nick, if I'm former Fed Chairman Jerome Powell, how do I look at this Lisa Cook decision? Do I feel comfortable leaving the Fed and going out into private practice? Well, I guess there's two parts to that question. One, I think he'd feel comfortable knowing that Lisa Cook cannot be taken away, that nobody else could be taken away just because President Trump disagrees with how they come out on interest rates. On the other hand, it does mean that the president can appoint other people, that he can still put in his own individuals. officials. And if I were the chairman, the former chairman, I don't think I'd leave quite yet since he's going to be a vote more consistent with an independent view than the others.

6:46And so from that standpoint, I would stick it out for a while and see how things go. I think he has to feel comfortable before he leaves. He can feel comfortable in the Lisa Cook situation. But as to How else the Fed is run, I think he probably has to wait and see.

7:05Scarlet Fu:Right. And of course, he also probably wants to wait for that DOJ investigation to be completely put out to pasture. Nick, before we let you go, we know the Supreme Court will issue its remaining opinions tomorrow, and that includes the birthright citizenship decision. How are you thinking about what a likely decision would mean for the economy? Well, I think it's going to be, it should be at least, that they're just going to go along with the plain language of the Constitution, that somebody born in the United States is a citizen of the United States unless they have some other jurisdictional issues such as being the offspring of an ambassador from a foreign country.

7:49I don't think that will really impact the economy whatsoever. The decision a few days ago relating to the Haitians and the Syrians, that does have an impact on the economy because those people could be sent back to their countries. They could be taken out of the economy, could be taken out of their jobs. And that is where I think where we're going to see an impact on the economy, none of which is good.

8:16Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this.

8:47Learn more at brookfield.com. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Support for the show comes from public.com.

9:27If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the VIX hits 25, buy a put option on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions and executing your strategies exactly as defined.

10:03An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

10:35Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's check in with Mike McGlone. He's our senior commodity strategist for Bloomberg Intelligence. Mike, the latest out of Iran and the Middle East is that both sides have agreed to halt mutual attacks. Is that necessary for crude oil prices to kind of stay at these current levels? or if there's going to be skirmishes once again, because we've gone through a couple of weekends like this, will that reignite oil prices?

11:14Well, I think the round-trip world use Scarlet is much appropriate. I don't think we've ended the bottom end of that round-trip. So something really bad has to happen straight for crude oil to maybe get near or stay above 80. I think that's what most traders are looking at is leveling, want to reset those shorts. And both entities in the straight have vested interest in staying open now. I mean, Iran's getting a good deal, can sell crude oil in an open market finally. That drill, well, is going global. So the normal scales for crude oil to get back to where it was before, but with fuel this time, because we just added a lot of supply in the Western Hemisphere from all those prices going up, that was hovering around$55 a barrel.

11:52So my base case for the second half of the year is we're going to push below that and potentially towards$40 on one key premise. The stock market drops down a little bit and stays down a little bit. That's usually how crude oil makes bottoms. The stock market has to go down. So is there going to be, I don't know if you talk to your trader buddies, some kind of Strait of Hormuz kind of premium baked into global oil? Or are we just going to go right back to supply and demand? Well, we've already gone back to it, Paul, but we've accelerated the supply and decrease of demand. And we've accelerated the process of the redundancy of OPEC and the price maker status shifting to the Western Hemisphere.

12:31So let's look at drill will before this war started. First, we had U.S., Canada. Now we have Venezuela, Iran, UAE, potentially Iraq. The whole world's going that way. And it's also looking forward to a potential, you know, drawdown in what's happening in the economy. So, to me, this is a normal cycle. But it's not just crude oil. It happened in corn, soybeans, and wheat, Bitcoin and natural gas. All those markets are heading lower. And the key theme is what makes them go up in the second half of the year. But what does Mr. Trump need for midterms? Lower inflation. Crude oil is going to lead the way.

13:01I fully expect he's going to get it heading towards below 50 and stocks go lower, like I said, closer to 40.

13:07Scarlet Fu:Yeah, you've been remarkably consistent about that call, Mike, since the beginning. Let's get your take on gold prices, because you said commodities are going down. Gold is no exception, holding it about 4 ,035, but still a far cry from where it was before the Iran war, which was basically at about 5 ,200 or so. What is the outlook for gold right now? I think, Scarlett, it's shifting to a bear market on the back of Bitcoin. And it has to look forward to Fed vigilance. We've reached a plateau of inflation increasing on the back of the stock market and really hurting people in elections. So what does Mr.

13:46Trump need? He needs lower inflation. Gold's a big part of that. The key thing about gold is that opportunity we got in Q1 might have been the best-selling opportunity in a couple decades. And now we're heading towards a more normal cycle. I think it's going to be stuck in a range for years. Good support's around 3 ,400. Good resistance is around its 200-day moving average around 4 ,400. But if history's a guide, gold will be stuck in a range maybe for the next 20 years like crude oil was for the last 20 years.

14:15Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Support for this show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest.

14:53Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

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16:42Scarlet Fu:Real-time menus, Seamless updates. Big League reliability for any business. That's genius. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. John Butler, he covers all the telecom stuff for Bloomberg Intelligence. And John, Charter, SpaceX, you're part of the research team covering SpaceX here. What's the story here? Yeah, so Paul, SpaceX is looking for an in in the U.S. wireless market. You know, if you look at their satellite constellation today, they have 650 direct-to-cell satellites that are providing very limited coverage and service in partnership with T-Mobile, by the way.

17:38It's called the T-Satellite Service. But it really doesn't have the kind of horsepower where they could really compete closely with the incumbent carriers like AT &T or Verizon. And so I think what Starlink may be hoping to do here with Charter is get access to a terrestrial network that they can pair with or that they can put together with the satellite network and take another step forward towards providing what I'll call terrestrial-like cellular services. I'd add there's a lot that would need to be done before they really get there, even if they were to partner or or even buy charter. But again, it would it would bring them a big step closer to competing with the big incumbents here.

18:29And I think there's a lot of concern among telecom investors about this rising competitive threat. Right. So what do you think? How much terrestrial capacity do you think SpaceX might need? Would a charter get it done or would you need a charter, a Comcast, get an AT &T or something? Boy, it's a complicated question. So the cable operators have gotten into the terrestrial wireless business by striking a wholesale deal with Verizon and some of the other carriers. So they don't quite have the spectrum or the airwaves to do it themselves. They're essentially using Verizon and AT &T's network as a means of allowing their consumers to have wireless service.

19:22Starlink has about 65 megahertz of spectrum. I'm going to give some numbers here just to give perspective. Whereas T-Mobile has almost 400 megahertz. And so Starlink has a way to go before they're there as a standalone carrier. And then if they partner with one of the cable operators, there's the complexity of that wholesale deal with the carriers themselves that might get called into question. If you look at Charter, they have some spectrum, but they don't have a lot of it. So again, Starlink would be sort of left in what I'll call that subscale position in terms of having the right amount of airwaves to offer wireless service.

20:08Well, here's a name from way back in the past in Spectrum. What happened to Charlie Ergen's Spectrum? so charlie sold his spectrum to uh to spacex which is how spacex got the 665 megahertz of spectrum that they have today um and what ergen was doing was using that spectrum together with those wholesale agreements with verizon and at &t and t-mobile by the way to offer their own branded wireless service. So my feeling is to just sort of distill it all down. Even if Starlink were to acquire Charter, let's say, I still think they would need to work out a deal where they wholesale some network capacity from the big three incumbents.

21:00And to date, at least, that has proven to be a little bit of a sticking point for them. So is the stock movement here at 12, 13 percent move higher and Charter. Is that telling you that some investors think that Starlink may in fact, I mean, SpaceX may in fact buy Charter outright? They might. But as I sort of think through it, one thing that Starlink has is they have a very strong broadband business. And if you look at what's driving the bus for all the cable operators today, it is the broadband business. So they're acquiring redundancy there, I think, if they buy charter. In my mind, I think what they would more likely do is wholesale the charter network to begin that process of trying to figure out how to provide that last mile in-building wireless coverage, which is the real challenge for SpaceX.

21:53And having those network facilities would afford them a bit of an advantage relative to where they are today. So in my mind, I'm thinking partnership as opposed to acquisition. But who knows? I mean, I think they could go either route here.

22:11Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest.

22:49Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

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24:01Scarlet Fu:Make every journey more rewarding with a$300 annual travel credit and access to a network of airport lounges, whether you're looking for pre-flight productivity or time to rest and recharge.

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