WEBVTT - US Inflation in Line With Forecasts Solidifies Bets on Fed Cut 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.360 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.680 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.960 and Tim Stenebek from Bloomberg Radio. 0:00:27.120 --> 0:00:28.480 Well, cross it op your list, folks. 0:00:28.480 --> 0:00:31.680 We got that first inflation print of the week earlier 0:00:31.720 --> 0:00:34.440 this morning. US consumer prices rose at a firm pace 0:00:34.479 --> 0:00:37.720 in the month of November, in line with expectations, solidifying 0:00:37.800 --> 0:00:42.520 expectations that yes, indeed the essential bank, the FED, should cut. 0:00:42.400 --> 0:00:43.640 Interest rates next week. 0:00:44.000 --> 0:00:46.320 As for the so called Core Consumer Price Index, the 0:00:46.320 --> 0:00:48.519 Core CPI that backside, of course, as you know the 0:00:48.560 --> 0:00:50.839 food and energy costs, they can be volatile. Well, it 0:00:50.920 --> 0:00:53.520 increased three tens of a percent for a fourth straight month. 0:00:53.560 --> 0:00:55.920 Tip the US Treasury rates dipping on the news with 0:00:56.000 --> 0:00:58.320 one on the inflation read and the market reaction and 0:00:58.360 --> 0:01:00.960 what it all means for US rates meeting next week 0:01:01.160 --> 0:01:03.680 and also what things might look like in twenty twenty 0:01:03.680 --> 0:01:06.240 five with us in Bloomberg News Economics editor Molly Smith. 0:01:06.240 --> 0:01:09.080 She's here in the Bloomberg Business Week Studio. Also along 0:01:09.120 --> 0:01:12.840 with Bloomberg News chief correspondent for Global macro Markets Liz McCormick, 0:01:12.920 --> 0:01:15.320 joining us from New Jersey. Molly, I do want to 0:01:15.319 --> 0:01:17.800 start with you walk us through the CPI report, because 0:01:18.160 --> 0:01:19.840 it was kind of bang on when it came to 0:01:20.040 --> 0:01:22.920 what economists and surveyed by Bloomberg would think. 0:01:23.080 --> 0:01:25.400 Also, any revisions to the prior. 0:01:25.240 --> 0:01:26.520 Month, No revisions. 0:01:26.560 --> 0:01:29.160 But that's the thing is that this was exactly in 0:01:29.200 --> 0:01:31.679 line with expectations. And if you were to just look 0:01:31.720 --> 0:01:34.160 at those numbers Zough in isolation, you think like zero 0:01:34.160 --> 0:01:36.800 point three percent on the core four months in a row. 0:01:37.200 --> 0:01:39.560 You take that times twelve, that's three point six percent. 0:01:39.600 --> 0:01:42.039 If you were to annualize that rate, that's clearly not 0:01:42.080 --> 0:01:45.000 two percent inflation. That's not consistent with that target. It's 0:01:45.040 --> 0:01:47.520 well above it. And we're thinking, why are we sitting 0:01:47.520 --> 0:01:50.080 here talking about cutting interest rates next week? But that's 0:01:50.080 --> 0:01:52.320 exactly the thing is that we were, the markets were 0:01:52.360 --> 0:01:55.040 really bracing for hopefully it's not going to be worse 0:01:55.200 --> 0:01:58.080 than expected, and thank god it wasn't. So green light 0:01:58.200 --> 0:01:59.440 fed you cut rates next week. 0:01:59.520 --> 0:02:03.680 So I expects, Okay, so it wasn't worse than everybody thought. 0:02:03.680 --> 0:02:06.080 But as you said, we still have inflation. 0:02:06.520 --> 0:02:07.440 We still have inflation. 0:02:07.560 --> 0:02:11.000 And interestingly, I took a look back at the estimates 0:02:11.000 --> 0:02:14.040 in the Bloomberg survey just to see was anyone expecting 0:02:14.080 --> 0:02:17.959 point four nobody h estimates were zero point two percent 0:02:18.000 --> 0:02:20.720 and point three percent, So if anything, maybe we would 0:02:20.760 --> 0:02:23.240 have hoped for surprise to the downside. But again, the 0:02:23.280 --> 0:02:25.280 relief was just that it did not come in worse 0:02:25.639 --> 0:02:28.799 than expected. So I think that's just really good enough 0:02:28.880 --> 0:02:30.720 right now. Obviously, I'm sure Liz would have a lot 0:02:30.760 --> 0:02:31.760 more to say about. 0:02:31.560 --> 0:02:33.520 That, So Liz, come on in on it. You did 0:02:33.520 --> 0:02:35.640 write about the market reaction, you track it. We've also 0:02:35.680 --> 0:02:38.280 had a treasury auction, which we'll get to in just 0:02:38.320 --> 0:02:38.799 a moment. 0:02:39.160 --> 0:02:40.520 Talk to us about market reaction. 0:02:40.639 --> 0:02:44.639 We did see some movement right after the data. 0:02:44.800 --> 0:02:47.000 Yeah, No, I think Molly nailed a lot of it, 0:02:47.240 --> 0:02:49.480 because it is true that we, you know, right after 0:02:49.560 --> 0:02:52.280 the data, Carol, we had two year yields really tumble. 0:02:52.440 --> 0:02:53.560 Now they're about flat. 0:02:53.720 --> 0:02:56.040 I'll get into, you know, why we're oscillating around, but 0:02:56.080 --> 0:02:59.359 I think, yeah, remember the backdrop was Friday, we had 0:02:59.360 --> 0:03:02.320 that payroll report that everyone was bracing for as well, 0:03:02.320 --> 0:03:04.639 and that came out let's call it mixed enough, right, 0:03:04.960 --> 0:03:07.840 the people thought, because a lot of the Fed officials said, like, 0:03:08.000 --> 0:03:11.600 especially Governor Waller, you know, I think I'll cut in December, 0:03:11.800 --> 0:03:13.000 but I got to see all the data and he 0:03:13.040 --> 0:03:16.079 listed all the data right, which included jobs and CPI, 0:03:16.240 --> 0:03:19.840 PPI retail sales a bunch of other stuff. So we thought, oh, 0:03:20.160 --> 0:03:22.960 jobs was okay, lean into the cut a little bit, 0:03:23.040 --> 0:03:25.720 so that pricing went up for that, and then we're like, well, 0:03:25.800 --> 0:03:28.680 we have a you know, inflation next week. And like 0:03:28.720 --> 0:03:31.240 Molly said, it was just bang on. But you know, 0:03:31.280 --> 0:03:33.000 I'm becoming a little bit of an economist. 0:03:33.120 --> 0:03:34.040 Scary maybe, but. 0:03:34.520 --> 0:03:36.600 I thought so too, if you like step your head 0:03:36.640 --> 0:03:40.760 back and say, wow, you know, over three percent analyzed, 0:03:41.000 --> 0:03:43.360 it's not really good number, and the trend has not 0:03:43.440 --> 0:03:44.800 been tracking in the right direction. 0:03:44.880 --> 0:03:47.520 But I think for the bond market they feel like, you. 0:03:47.440 --> 0:03:50.120 Know, especially because let's remember, looking forward, we have so 0:03:50.240 --> 0:03:51.480 much uncertainty. 0:03:51.640 --> 0:03:53.680 We know President Trump won, we know there was. 0:03:53.640 --> 0:03:56.480 A Republican SUITEP at Congress, but we now we don't 0:03:56.480 --> 0:03:58.680 really know what's going to happen, how much of the 0:03:58.720 --> 0:04:01.440 tariffs just a bargaining tool, how much we'll go through, 0:04:01.840 --> 0:04:04.480 will you know every well, even if they have all 0:04:04.520 --> 0:04:07.440 the same you know, politicians on the same party, are 0:04:07.440 --> 0:04:08.800 they going to get everything through they want? 0:04:08.840 --> 0:04:09.640 So now the bomb. 0:04:09.400 --> 0:04:11.600 Market's like, yeah, kind of, we don't know what happens 0:04:11.640 --> 0:04:13.880 next year, nor does the FED. Pal said, we're starting 0:04:13.920 --> 0:04:16.520 to try to model all the scenarios. So but it 0:04:16.560 --> 0:04:18.360 was enough that they think the Fed wants to get 0:04:18.360 --> 0:04:20.920 one more cut in while they know what they know, right, 0:04:21.760 --> 0:04:23.320 But then you're looking to next year. 0:04:23.279 --> 0:04:25.680 Uncertainty and you know, Molly can talk to this too. 0:04:25.720 --> 0:04:28.159 There's a lot of uncertainty of like kind of where 0:04:28.240 --> 0:04:30.880 the end is, what is neutral? You know, what happens 0:04:31.040 --> 0:04:32.719 the run rate? Right? 0:04:32.839 --> 0:04:35.240 I mean that's the I feel like I keep saying 0:04:35.240 --> 0:04:36.200 neutral the new black. 0:04:36.279 --> 0:04:37.680 Everyone keeps bringing it up. 0:04:38.839 --> 0:04:40.960 So I think that's why the market kind of rallied. 0:04:40.960 --> 0:04:42.360 It now is like stabilizing. 0:04:42.400 --> 0:04:44.520 But it was enough to say, Okay, we think for 0:04:44.560 --> 0:04:46.920 sure they're going to cut in December, which is next week. 0:04:47.040 --> 0:04:47.200 Right. 0:04:47.920 --> 0:04:50.520 Why Why though, there seems to be this disconnect between 0:04:50.520 --> 0:04:52.960 what the data says and what traders think is going 0:04:53.000 --> 0:04:55.760 to happen, Molly, because like you said, you know, we're 0:04:55.760 --> 0:04:58.359 not at two percent. Well, and it doesn't seem like 0:04:58.440 --> 0:05:01.599 necessarily this last is coming as easily as many people 0:05:01.640 --> 0:05:02.599 thought it would. 0:05:02.760 --> 0:05:04.840 Well, I think, you know, something I always like to 0:05:04.960 --> 0:05:07.719 think about is that markets see what they want to see, 0:05:08.040 --> 0:05:10.240 and that you know, if we're going to price in, 0:05:10.279 --> 0:05:13.479 you know, before the CPI data today, an eighty six 0:05:13.520 --> 0:05:16.279 percent chance that the Fed is going to cut next week. 0:05:16.560 --> 0:05:18.240 There's not really a whole lot of room for that 0:05:18.320 --> 0:05:20.320 to not happen, Like the numbers would have had to 0:05:20.320 --> 0:05:24.400 have been so awful right in so many levels to really, 0:05:24.920 --> 0:05:27.719 you know, nix that possibility. The other thing, though, is 0:05:27.720 --> 0:05:30.200 that easy to look at this one month in isolation 0:05:30.320 --> 0:05:33.000 and think, okay, that zero point three percent that we've 0:05:33.000 --> 0:05:35.280 now had for four months in a row like that 0:05:35.360 --> 0:05:38.520 clearly doesn't seem to indicate that inflation is coming down. 0:05:38.800 --> 0:05:41.000 But you look at this from a broader perspective where 0:05:41.240 --> 0:05:44.360 inflation was two and a half years ago and how 0:05:44.520 --> 0:05:47.520 high rates got in order to bring that down, and 0:05:47.560 --> 0:05:49.680 that rates are still very high. They haven't really come 0:05:49.720 --> 0:05:52.200 down a whole lot, right, We've only had seventy five 0:05:52.240 --> 0:05:55.200 basis points of cuts so far after raising them up 0:05:55.279 --> 0:05:57.440 to five and a half percent, and that was when 0:05:57.480 --> 0:06:00.880 inflation was at nine percent right now inflation is in 0:06:00.920 --> 0:06:03.920 the two to three percent area. So so rates do 0:06:04.000 --> 0:06:06.520 need to come down. It's just more now about the 0:06:06.560 --> 0:06:08.840 pacing and the spacing of the cuts. 0:06:08.920 --> 0:06:11.200 I keep thinking too about how much of the FED 0:06:11.560 --> 0:06:14.839 rate increases have they worked their way completely through the 0:06:14.880 --> 0:06:17.239 economy at this point, Molly. And then as you say, 0:06:17.320 --> 0:06:20.760 we've only had a few cuts here and we'll see, right, 0:06:20.800 --> 0:06:22.440 all of this kind of has to work its way through. 0:06:22.680 --> 0:06:25.039 Well, that's I think what you know, central bankers are 0:06:25.120 --> 0:06:27.880 always wondering about these you know, so called long and 0:06:27.960 --> 0:06:30.920 variable lags of monetary policy. And I think there's also 0:06:31.000 --> 0:06:33.160 a lot of reason to say though that a lot 0:06:34.279 --> 0:06:36.440 of the disinflation we've seen you could probably argue you 0:06:36.480 --> 0:06:38.760 has nothing to do with interest rates and just had 0:06:38.920 --> 0:06:41.039 you know, people just getting a little bit back to 0:06:41.080 --> 0:06:43.000 normal after the pandemic distortions. 0:06:44.279 --> 0:06:45.680 Liza, I want to bring you back in because I 0:06:45.720 --> 0:06:48.360 did think about you know, we've had some auctions this week, 0:06:49.240 --> 0:06:51.600 had a ten year right just today, we had three 0:06:51.680 --> 0:06:54.320 year notes yesterday nearly matching expectations. 0:06:54.360 --> 0:06:57.400 We've got a thirty year bond reopening tomorrow. But tell 0:06:57.480 --> 0:06:57.960 us about what. 0:06:57.880 --> 0:06:59.480 We're seeing in terms of the auctions and what that 0:06:59.640 --> 0:07:02.200 says to us about investors willing to kind of step 0:07:02.279 --> 0:07:03.039 up to the plate here. 0:07:04.440 --> 0:07:07.560 Yeah, I mean today's ten year note auction went very well. 0:07:07.720 --> 0:07:10.200 You know, the yield that the auction came below the 0:07:10.200 --> 0:07:12.120 one issue, which is a sign of good demand. 0:07:12.440 --> 0:07:14.400 And I think, you know, every investor. 0:07:14.000 --> 0:07:16.280 I talked to, whether I want to talk to them 0:07:16.320 --> 0:07:18.600 about that or not, they bring up, well, you know, 0:07:19.440 --> 0:07:21.880 rates at above four percent, and hey, if we went 0:07:21.920 --> 0:07:23.920 back to four and a half on the on the 0:07:24.000 --> 0:07:26.440 ten year, it's a buying opportunity because they're looking kind 0:07:26.480 --> 0:07:29.320 of longer space, Like, we do have a positive total 0:07:29.360 --> 0:07:31.920 return for the treasury market this year, not a lot, 0:07:32.040 --> 0:07:34.760 but you know, a little over two percent, and they 0:07:34.800 --> 0:07:37.119 were up a little bit last year, and you figure 0:07:37.160 --> 0:07:40.360 you're getting these, you know, coupons that are over four percent, 0:07:40.720 --> 0:07:43.040 even if the FED doesn't end up cutting a lot, 0:07:43.120 --> 0:07:44.720 so you don't get a lot of you know. 0:07:44.880 --> 0:07:45.960 Capital appreciation. 0:07:46.480 --> 0:07:50.200 People feel like, hey, you know, the these levels of yields. 0:07:50.200 --> 0:07:51.480 Remember for years we had. 0:07:51.320 --> 0:07:53.800 Such low yields and we don't know, no one thinks 0:07:53.840 --> 0:07:56.800 we're going back to this uber zero rate environment. But 0:07:56.880 --> 0:07:59.240 they also don't think we're going back to you know, 0:07:59.400 --> 0:08:02.200 ten percent. So if you can lock in getting these 0:08:02.440 --> 0:08:06.000 higher yields above four percent, that's why you're seeing you know, 0:08:06.080 --> 0:08:07.000 bouts of good demand. 0:08:07.080 --> 0:08:08.240 But there's so much uncertainty. 0:08:08.280 --> 0:08:10.880 You still people more are leaning towards you know, call 0:08:10.920 --> 0:08:12.760 it the middle to the belly of the curve, to 0:08:13.120 --> 0:08:14.720 five year notes, that kind of thing. 0:08:14.760 --> 0:08:16.480 But we did see good demand today for. 0:08:16.520 --> 0:08:19.640 Tens and then I think it's the fiscal that we 0:08:19.760 --> 0:08:22.040 really want to know. What's going to happen to the 0:08:22.080 --> 0:08:25.080 long end? What when does debtish one start to increase? 0:08:26.080 --> 0:08:28.600 Is the new Treasury secretary who has to be confirmed, 0:08:28.640 --> 0:08:30.880 does he accomplish some of the things he would like 0:08:30.960 --> 0:08:32.680 to do as far as he says he wants to 0:08:32.720 --> 0:08:35.040 reduce the deficit as a share of GDP and a 0:08:35.040 --> 0:08:38.080 lot of things. So I think that's why the jury's 0:08:38.120 --> 0:08:38.600 still out. 0:08:39.400 --> 0:08:43.120 Just quickly, Molly, twenty seconds PPI. Can this do anything? 0:08:43.200 --> 0:08:45.680 What we get tomorrow on PPI change the Fed's thinking 0:08:45.760 --> 0:08:46.240 just quickly. 0:08:46.320 --> 0:08:49.080 No, I think it's really matter. What PPI really matters 0:08:49.160 --> 0:08:51.599 more for now is like looking at PCE just to 0:08:51.600 --> 0:08:53.600 add a few more acronyms to the list. So we 0:08:53.679 --> 0:08:56.480 get the Fed's favorite inflation gauge later this month depends 0:08:56.480 --> 0:08:58.880 a lot on what comes in tomorrow, So that's really more. 0:08:58.800 --> 0:09:00.640 The ticket gets factored into it, exactly. 0:09:00.679 --> 0:09:02.160 Some of those categories feed through. 0:09:02.200 --> 0:09:04.160 All Right, great staff, guys, both of you, thank you 0:09:04.160 --> 0:09:06.880 so much. Bloomberg News Economics editor Molly Smith here in 0:09:06.960 --> 0:09:10.600 studio and Bloomberg News chief correspondent for Global macro markets 0:09:10.640 --> 0:09:13.240 are one and only Liz McCormick out there in New Jersey. 0:09:13.240 --> 0:09:14.800 And that is today's economic data. 0:09:14.880 --> 0:09:17.000 All right, Well, we're getting some headlines here too, some 0:09:17.080 --> 0:09:20.680 breaking news. FBI Director Christopher Ray resigns his position. This 0:09:20.760 --> 0:09:24.520 according to Fox News. The New York Times also confirming that, 0:09:25.000 --> 0:09:28.080 saying that Christopher Ray has told employees at the bureau 0:09:28.240 --> 0:09:31.160 today that he intends to resign before the next Trump 0:09:31.200 --> 0:09:35.280 administration begins. Remember, he was nominated by Donald Trump to 0:09:35.440 --> 0:09:38.640 be FBI director. But it also comes as the President 0:09:38.679 --> 0:09:41.360 elect has expressed that he would like to nominate Cash 0:09:41.360 --> 0:09:43.560 Ptel to serve as FBI director. 0:09:43.640 --> 0:09:45.760 So the news out of DC certainly continues. 0:09:45.800 --> 0:09:48.640 And that kind of gets us to some news that 0:09:48.760 --> 0:09:52.400 did evolve the FTC yesterday and a ruling. We want 0:09:52.400 --> 0:09:53.800 to get to some company news, and this is on. 0:09:53.880 --> 0:09:57.200 Albertson's filed a lawsuit against Kroger, claiming it failed to 0:09:57.440 --> 0:10:01.559 exercise best efforts and take any and all actions their 0:10:01.600 --> 0:10:04.880 words needed to secure regulatory approval for the company's proposed 0:10:04.920 --> 0:10:08.280 twenty four point six billion dollar deal. Meantime, Kroger put 0:10:08.280 --> 0:10:11.480 out a statement they refute the allegations. They say their 0:10:11.520 --> 0:10:14.840 board is evaluating next steps and looks forward to responding 0:10:14.880 --> 0:10:16.880 to claims in courts. So kind of let the court 0:10:16.880 --> 0:10:18.800 when battle begin, or so it feels. Let's get an 0:10:18.880 --> 0:10:21.520 update on this story. We head back to Bloomberg Intelligence 0:10:21.559 --> 0:10:24.559 senior anti trust litigation Alice. Listen to her this morning, 0:10:24.679 --> 0:10:27.679 Jennifer ree here in studio. You were with the gang 0:10:27.760 --> 0:10:31.000 on surveillance. Jen, we caught up with you yesterday late 0:10:31.040 --> 0:10:32.080 breaking headlines. 0:10:32.320 --> 0:10:34.160 I guess we kind of thought that was it. 0:10:34.400 --> 0:10:35.120 Well, I did ask her. 0:10:35.120 --> 0:10:36.400 I said, Jen, do you think you'll be back in 0:10:36.440 --> 0:10:38.320 our studio before the end of the year, And you 0:10:38.400 --> 0:10:39.720 said yes, I think I will. 0:10:40.080 --> 0:10:41.160 Well, both of you are crystal. 0:10:41.520 --> 0:10:42.760 Four hours later, she's back. 0:10:42.880 --> 0:10:45.440 I didn't think it would be today, but you did 0:10:45.520 --> 0:10:47.920 indicate to us that you thought the deal was done. 0:10:48.080 --> 0:10:50.240 Oh yeah, yeah, and it is done. This is now 0:10:50.280 --> 0:10:52.280 not about the deal. This is about whether one or 0:10:52.320 --> 0:10:54.920 both of them reached the contract, the purchase agreement. The 0:10:54.960 --> 0:10:58.440 deal's finished, you know, they are now in extended litigation 0:10:58.840 --> 0:11:01.520 about the merger agreement and whether or not, according to 0:11:01.520 --> 0:11:04.760 Albertson's Kroger breached that agreement. And I think this is 0:11:04.800 --> 0:11:07.160 about the remedy, the remedy that was offered to fix 0:11:07.200 --> 0:11:10.000 the problematic issues. I mean, this was a horizontal agreement 0:11:10.000 --> 0:11:13.200 between two competitors. Both Kroger and Albertsons knew it raised 0:11:13.240 --> 0:11:15.679 antitrust problems. There was no doubt about that, and that's 0:11:15.679 --> 0:11:17.520 why they offered a remedy, because you don't need to 0:11:17.559 --> 0:11:20.520 fix something if it doesn't raise an issue. The remedy 0:11:20.559 --> 0:11:23.440 wasn't good enough, and that became really apparent during the trial. 0:11:23.559 --> 0:11:26.920 It was complicated, it was piecemeal, it didn't completely resolve 0:11:26.960 --> 0:11:29.800 the concerns, and it really had an inadequate buyer. And 0:11:29.840 --> 0:11:33.120 I think the issue here is that Albertsons is probably saying, look, 0:11:33.320 --> 0:11:35.480 that was an inappropriate remedy. We weren't going to win 0:11:35.520 --> 0:11:37.800 with that remedy, and so you didn't use best efforts. 0:11:38.040 --> 0:11:40.120 That's what I'm guessing they're going to say the complaint 0:11:40.200 --> 0:11:42.720 and all the papers are confidential and not available, so 0:11:42.800 --> 0:11:43.840 we don't know the details. 0:11:43.840 --> 0:11:45.480 Well, that's what I wondered if they have a legal case, 0:11:45.480 --> 0:11:48.760 because Alberson said that Kroger willfully right reached the mergent 0:11:48.800 --> 0:11:53.319 agreement by refusing to Divesta's assets needed for anti trust approval. Like, 0:11:53.440 --> 0:11:56.680 how do you you know this world? Like Kroger knew 0:11:56.800 --> 0:11:59.079 probably what needed to be done. I would assume it's 0:11:59.120 --> 0:12:02.240 loyal to get that deal done. How are you looking 0:12:02.320 --> 0:12:05.120 at it as obviously more information will come out, you know. 0:12:05.240 --> 0:12:07.160 I think in a way it's a difficult claim. And 0:12:07.200 --> 0:12:09.200 the reason I say that is because there's a difference 0:12:09.240 --> 0:12:11.560 between the way the Federal Trade Commission might evaluate a 0:12:11.600 --> 0:12:14.079 remedy and the way a judge would evaluate the remedy. 0:12:14.280 --> 0:12:17.120 And what we have seen in the last three years 0:12:17.200 --> 0:12:19.840 because the FDC has been so difficult, really they have 0:12:19.920 --> 0:12:22.960 really not accepted anything. We've seen several cases where the 0:12:23.000 --> 0:12:24.840 parties have gone to the court with what they call 0:12:24.920 --> 0:12:28.480 a fix it. First FTC said remedies insufficient or DJ 0:12:28.640 --> 0:12:30.560 has said it, and the court has said, no, it's okay, 0:12:30.600 --> 0:12:32.760 and I'm going to let the deal close. So in 0:12:32.800 --> 0:12:37.640 some respects Kroger's using their judgment, abiding by legal advice, 0:12:38.120 --> 0:12:40.120 thinking we can go before a judge and we can 0:12:40.160 --> 0:12:42.760 convince a judge this remedy's okay, even if we couldn't 0:12:42.800 --> 0:12:45.880 convince the FTC. And you know, I think that it's reasonable. 0:12:46.000 --> 0:12:48.280 There's a reasonable argument that they might have had success 0:12:48.280 --> 0:12:51.600 in doing that. And so it becomes so subjective and 0:12:51.640 --> 0:12:52.880 such a difficult cause it's. 0:12:52.800 --> 0:12:54.520 A risk, right, It's a risk. Kind of playing your 0:12:54.520 --> 0:12:56.440 card is the right strategy? 0:12:56.520 --> 0:12:57.040 Absolutely? 0:12:57.120 --> 0:12:57.320 Risk? 0:12:57.440 --> 0:13:00.720 Is this typically what happens after regulators got all a deal? 0:13:01.040 --> 0:13:03.160 Do the companies go from sort of being like, hey, 0:13:03.160 --> 0:13:04.880 we're going to be best friends forever, we're going to 0:13:04.960 --> 0:13:07.960 get married to a very quick and acrimonious divorce. 0:13:08.040 --> 0:13:08.439 It is not. 0:13:08.440 --> 0:13:11.040 Typical, but it has happened. And I go back to 0:13:11.080 --> 0:13:14.040 Anthem and Signa Boy. They litigated for several years in 0:13:14.080 --> 0:13:17.200 Delaware after they terminated their agreement. That was when Anthem 0:13:17.240 --> 0:13:19.880 tried to buy Signa. They were blocked in court, then 0:13:19.920 --> 0:13:22.439 it was blocked on appeal, and they both turned around 0:13:22.440 --> 0:13:24.400 and said the other one breached. And the crazy thing 0:13:24.480 --> 0:13:26.840 about that was that Signa was supposed to get over 0:13:26.880 --> 0:13:30.000 one billion and a breakup fee, and then the anthem 0:13:30.080 --> 0:13:33.040 sued them for billions of dollars, and the Delaware court 0:13:33.080 --> 0:13:35.800 basically said, company gets anything. You've just spent a lot 0:13:35.840 --> 0:13:38.240 of money litigating, and neither of you get anything. You know, 0:13:38.280 --> 0:13:40.400 you both breached, but I'm not going to make either 0:13:40.440 --> 0:13:42.120 of you pay each other a fee. And you know 0:13:42.160 --> 0:13:45.120 they it was just such a long, extended effort with 0:13:45.200 --> 0:13:47.280 so much money spent and nothing to show for it. 0:13:47.360 --> 0:13:49.520 Listen, when these legal cases go on, I think about it, 0:13:49.520 --> 0:13:52.880 whether it's an antitrust case, go back to Microsoft years ago, Like, 0:13:53.120 --> 0:13:55.640 you know, these stocks and companies kind of twisted the 0:13:55.640 --> 0:13:56.240 wind for a while. 0:13:56.520 --> 0:13:57.320 Is that part of it? 0:13:57.400 --> 0:14:00.160 I mean Albertson stock was up four percent today, one 0:14:00.320 --> 0:14:01.960 and a half percent. It's down about two thirds of 0:14:01.960 --> 0:14:04.400 one percent as I look right now. But I mean, 0:14:04.600 --> 0:14:07.040 is this Albertson not loving that a stock has been 0:14:07.080 --> 0:14:09.040 kind of kicked around during this process? Like is there 0:14:09.400 --> 0:14:12.520 a financial element of like this has not been great 0:14:12.520 --> 0:14:15.440 for me? And I wonder is Albertson's damage goods? Now? 0:14:15.679 --> 0:14:18.080 Well, you know that's exactly it. That's what a breakup 0:14:18.120 --> 0:14:20.080 fee in a purchase agreement is meant to take care 0:14:20.120 --> 0:14:23.800 of because in that interim period, that long investigation and litigation, 0:14:24.000 --> 0:14:26.920 there is no doubt the stock of the seller is hurting. 0:14:27.200 --> 0:14:29.240 It goes up and down. But the seller also the 0:14:29.280 --> 0:14:32.400 business struggles, right because they can't enter supply agreements. They 0:14:32.400 --> 0:14:34.360 lose employees. You know, they think they're gonna get bought 0:14:34.400 --> 0:14:35.920 and they're going to lose their job, So why not 0:14:35.960 --> 0:14:38.720 take something else that comes along before they're fired? You know, 0:14:38.720 --> 0:14:40.960 we're laid off, and that is why they're supposed to 0:14:40.960 --> 0:14:42.680 get a breakup fee. And I think in this situation, 0:14:42.800 --> 0:14:46.000 Alberts may feel that they've been pretty significantly damaged. This 0:14:46.040 --> 0:14:48.400 has been a long road for a deal. They don't 0:14:48.480 --> 0:14:51.360 usually last this long, and they are supposed to get 0:14:51.360 --> 0:14:53.400 six hundred million a breakup fee, but maybe they feel 0:14:53.400 --> 0:14:55.200 they really need more to be made whole. 0:14:56.200 --> 0:14:58.040 Why not try again again? 0:15:00.320 --> 0:15:01.680 I mean, is it really over? 0:15:01.960 --> 0:15:05.200 Andrew Ferguson, Yes, would serve as the agency's chair. That's right, 0:15:05.560 --> 0:15:06.800 if all goes according to plan? 0:15:06.960 --> 0:15:07.480 Uh huh. 0:15:07.520 --> 0:15:10.760 We just learned that late yesterday we did. Would this 0:15:10.840 --> 0:15:11.800 work under a different chair? 0:15:11.960 --> 0:15:14.200 I don't think it would. So let me say this 0:15:14.280 --> 0:15:16.400 about the next administration. I think there's a lot of 0:15:16.440 --> 0:15:19.240 exuberance in while on Wall Street about deals, and I 0:15:19.280 --> 0:15:21.760 do think more deals are going to get closed, absolutely, 0:15:21.960 --> 0:15:24.920 But at the end of the day, big problematic deals, 0:15:25.000 --> 0:15:28.320 especially between horizontal competitors, are still going to go get 0:15:28.360 --> 0:15:31.080 challenged by an FTC, even if it's run by Andrew Ferguson. 0:15:31.280 --> 0:15:33.000 And I think this is an example of one that 0:15:33.040 --> 0:15:35.000 probably would have been challenged under Republicans. 0:15:35.040 --> 0:15:36.520 To be sure, you're not going to come back later 0:15:36.560 --> 0:15:39.000 this week you might, we will stand by. 0:15:39.480 --> 0:15:40.840 I was standing by for you, Jen. 0:15:40.920 --> 0:15:43.920 Thank you so much, Jenry, Bloomberg Intelligence Senior Anti Trust 0:15:44.000 --> 0:15:44.840 Litigation Alice. 0:15:46.200 --> 0:15:49.720 You're listening to the Bloomberg Business Week podcast. Catch us 0:15:49.760 --> 0:15:52.560 Live weekday afternoons from two to five pm Eastern. 0:15:52.720 --> 0:15:53.760 Listen on Apple car. 0:15:53.760 --> 0:15:56.320 Play and and Brout Auto with a Bloomberg Business act 0:15:56.520 --> 0:16:00.640 or want us live on YouTube to. 0:16:00.880 --> 0:16:03.760 What's become an annual list featured by a Bloomberg BusinessWeek 0:16:03.800 --> 0:16:05.680 team and on that. Just one little note, if you 0:16:05.720 --> 0:16:08.480 never want to miss a Bloomberg BusinessWeek story, you can 0:16:08.520 --> 0:16:11.320 do so by becoming a subscriber, unlocking all of the 0:16:11.360 --> 0:16:15.080 deep reporting the analysis from reporters around the globe, including 0:16:15.160 --> 0:16:18.200 unlimited access to businessweeks. So for more head to Bloomberg 0:16:18.200 --> 0:16:21.880 dot com slash subscribe now. And so now let's get 0:16:21.960 --> 0:16:24.440 to that annual Bloomberg BusinessWeek feature, which you can read 0:16:24.480 --> 0:16:27.120 on the Bloomberg and at Bloomberg dot com slash BusinessWeek. 0:16:27.120 --> 0:16:29.480 It is about the fifty companies to watch in twenty 0:16:29.560 --> 0:16:32.280 twenty five and the list, Tim and I know this 0:16:32.320 --> 0:16:34.280 list well, we've done it, we look forward to It's 0:16:34.280 --> 0:16:35.960 compiled by our Bloomberg Intelligence team. 0:16:36.040 --> 0:16:37.240 A lot of factors go into it. 0:16:37.320 --> 0:16:38.720 Oh yeah, they do a lot of factors and a 0:16:38.720 --> 0:16:40.720 lot of people too. With more we head to London 0:16:40.720 --> 0:16:44.200 into Bloomberg Intelligence. Senior European strategist Tim Craig had Tim, 0:16:44.440 --> 0:16:47.400 we love going through this list every year and remind 0:16:47.400 --> 0:16:50.680 everybody just how it's put together and the catalysts here. 0:16:50.680 --> 0:16:54.120 It's not a list for you know, to tell investors too, Okay, 0:16:54.120 --> 0:16:56.280 these are the companies that you should be investing in 0:16:56.320 --> 0:16:59.320 for these reasons. It's sort of a more holistic approach. 0:16:59.520 --> 0:17:02.960 Talk us through the approach here, absolutely. 0:17:02.600 --> 0:17:06.440 And thanks for having me on. So the fifty Companies 0:17:06.480 --> 0:17:10.040