WEBVTT - Tariffs Legality, DC Shutdown, Dick’s M&A 0:00:15.240 --> 0:00:18.520 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:18.520 --> 0:00:22.079 by the Litigation and Policy team at Bloomberg Intelligence, the 0:00:22.120 --> 0:00:26.040 investment research platform of Bloomberg LP on the Bloomberg Terminal. 0:00:26.600 --> 0:00:30.360 Bloomberg Intelligence has five hundred analysts and strategists working across 0:00:30.360 --> 0:00:33.680 the globe and focused on all major markets. Our coverage 0:00:33.680 --> 0:00:36.280 includes over two thousand equities and credits, and we have 0:00:36.400 --> 0:00:40.240 outlooks on more than ninety industries and one hundred market industries, 0:00:40.240 --> 0:00:45.199 currencies and commodities. This podcast series examines the intersection of 0:00:45.240 --> 0:00:49.400 business policy and law, and today's our weekly look at 0:00:49.440 --> 0:00:53.320 the litigation and policy catalysts that we're currently watching and 0:00:53.360 --> 0:00:56.440 that we think will impact companies across a number of 0:00:56.560 --> 0:01:00.320 different sectors. My name's Elliott Stein. I'm an analyst with 0:01:00.320 --> 0:01:04.600 Bloomberg Intelligence covering litigation in the financials sector, and I'm 0:01:04.640 --> 0:01:07.360 delighted today as always to be joined by several of 0:01:07.400 --> 0:01:11.360 my Bloomberg Intelligence colleagues. And as always, you can find 0:01:11.400 --> 0:01:13.920 all of our research on the Bloomberg terminal at BI 0:01:14.040 --> 0:01:18.040 go and more specifically on our Litigation and Policy Dashboard, 0:01:18.080 --> 0:01:23.000 which is available at BI space laws Go. I'm going 0:01:23.040 --> 0:01:26.679 to time stamp this today is July thirty. First, it's 0:01:26.840 --> 0:01:30.679 three pm. Things move quickly, especially when we're talking about 0:01:30.680 --> 0:01:34.280 things like tariffs, so it's important to time stamp this 0:01:36.280 --> 0:01:38.880 and to get the conversation going. Let me bring in 0:01:39.000 --> 0:01:43.000 one of my colleagues, Holly Frome, who covers a lot 0:01:43.000 --> 0:01:45.600 of different litigation and policy issues in the consumer and 0:01:45.680 --> 0:01:50.320 industrial sectors, but in particular, she's been covering the lawsuits 0:01:50.360 --> 0:01:54.240 that have been challenging the Trump administration's tariffs and today, 0:01:54.560 --> 0:01:56.840 just a few hours ago in the Federal Circuit, there 0:01:56.920 --> 0:02:01.640 was an important hearing by all of the judges of 0:02:01.720 --> 0:02:06.440 the Federal Circuit concerning a decision by the Court of 0:02:06.520 --> 0:02:10.480 International Trade from late May that struck down President Trump's 0:02:10.520 --> 0:02:15.120 reciprocal tariffs and also those concerning sentinel trafficking. But I 0:02:15.120 --> 0:02:18.359 don't want to step on Holly's toes. I'll let her 0:02:18.400 --> 0:02:22.520 talk about the hearing in these cases more specifically. So Holly, 0:02:22.639 --> 0:02:24.920 why don't you come in and sort of tell us 0:02:25.480 --> 0:02:28.320 what your takeaways are from the hearing today? 0:02:28.720 --> 0:02:29.320 Thanks Elliot. 0:02:29.639 --> 0:02:32.720 So, I think a group of the judges, especially during 0:02:32.760 --> 0:02:35.359 the first part of the argument, seem to be concerned 0:02:36.320 --> 0:02:41.240 about the government's argument that the emergency statute allows for teriffs. 0:02:42.520 --> 0:02:44.560 This statue, you know, one of the judges said that 0:02:44.600 --> 0:02:48.280 the statute doesn't mention the word tariffs. Another judge said that, 0:02:48.680 --> 0:02:52.120 you know, if we assume that the president can impose 0:02:52.160 --> 0:02:55.840 these tariffs, that would upset the entire you know, statutory 0:02:55.880 --> 0:02:59.720 regime that imposes tariffs, that allows you know, Congress to 0:02:59.720 --> 0:03:00.720 import tariffs. 0:03:01.080 --> 0:03:03.400 And another thing. 0:03:03.440 --> 0:03:06.119 They said, there there are a whole bunch of statutes 0:03:06.160 --> 0:03:09.240 in the Code, in section nineteen of the Code that 0:03:09.320 --> 0:03:12.200 allow for tariffs and specifically mentioned either the word tariffs 0:03:12.280 --> 0:03:16.760 or duties. So this statute doesn't mention that that word 0:03:16.800 --> 0:03:19.480 at all. And that's something that the court was focusing on, 0:03:20.960 --> 0:03:25.200 and I think the government was just trying to say that, 0:03:25.400 --> 0:03:29.040 you know, the regulated imports language has been construed to 0:03:29.120 --> 0:03:32.359 allow a bunch of different things, and if you look 0:03:32.400 --> 0:03:37.200 at regulated imports alongside of you know, the other actions 0:03:37.560 --> 0:03:40.640 the emergency statue allows the president to take, this is 0:03:40.960 --> 0:03:44.480 you know, sort of a lesser power than than the 0:03:44.480 --> 0:03:48.840 powers he can use under that statute. So I think 0:03:48.880 --> 0:03:52.360 that's one of the concerns that you know, that that 0:03:52.560 --> 0:03:55.320 a group of the judges seem to be concerned about. 0:03:56.080 --> 0:03:58.560 And when you're talking about the statute in question. This 0:03:58.720 --> 0:04:04.160 is IEPA, Right, International Economic Emergency Powers Act, that's right. 0:04:04.840 --> 0:04:07.680 And the language you were talking about it has language 0:04:07.720 --> 0:04:13.200 saying that president under certain circumstances, right, if there's like, 0:04:13.400 --> 0:04:16.159 you know, an extraordinary event or an emergency of some sort. 0:04:16.520 --> 0:04:20.240 Yeah, the language is like an unusual an emergency that 0:04:20.279 --> 0:04:24.080 poses an unusual and extraordinary threat to national security or 0:04:24.120 --> 0:04:24.800 the economy. 0:04:25.320 --> 0:04:27.560 He can quote regulate importation. 0:04:28.480 --> 0:04:30.839 And that's the language that the government's hanging it's had on. 0:04:31.040 --> 0:04:33.360 And so you don't think there's a majority of judges 0:04:34.120 --> 0:04:36.640 at the hearing today that bought that argument from the government. 0:04:37.240 --> 0:04:41.200 I think that if they're going to find for the challengers, 0:04:41.360 --> 0:04:43.400 it's going to be on that argument. In other words, 0:04:43.440 --> 0:04:45.680 like I don't think that they're comfortable that any of 0:04:45.720 --> 0:04:51.400 the judges were comfortable saying that the trade deficit is 0:04:51.440 --> 0:04:54.120 not an emergency, which is something that I was saying, 0:04:54.880 --> 0:04:57.120 that the trade deficit doesn't appear to be an emergency 0:04:57.120 --> 0:05:00.840 that meets ayep as you know, requirements. I don't think 0:05:00.880 --> 0:05:04.160 the judges are going to rest their their hat on that. 0:05:04.279 --> 0:05:06.120 I think that if they're going to find for challengers, 0:05:06.120 --> 0:05:08.400 they're going to find that AEP but doesn't authorize terraffs 0:05:08.440 --> 0:05:12.440 at all, in which case both reciprocal tariffs and fentanyl 0:05:12.520 --> 0:05:16.920 trafficking terrorifts are unlawful. When I was counting, I think 0:05:16.960 --> 0:05:20.240 I counted about six judges who had this problem. And 0:05:20.279 --> 0:05:26.080 there are I think ten that are I'm sorry, eleven 0:05:26.120 --> 0:05:29.960 that are on that panel. So that would be a majority. 0:05:30.480 --> 0:05:31.840 So you think in some ways they might go, they 0:05:31.880 --> 0:05:34.720 might go farther than the Court of International Trade and 0:05:34.839 --> 0:05:37.360 essentially say that APA doesn't allow for terrifts at all. 0:05:38.279 --> 0:05:42.120 I think so interesting. And so when do you expect 0:05:42.120 --> 0:05:42.480 a ruin? 0:05:44.560 --> 0:05:47.080 I said, in August or early September. 0:05:47.920 --> 0:05:52.320 Okay, and inevitably this is destined for the Supreme Court 0:05:52.360 --> 0:05:55.560 no matter what happens, right, yes, And so how do 0:05:55.560 --> 0:05:56.320 you see that planet? 0:05:56.960 --> 0:06:00.760 I think, you know, nothing's changed my mind about you know, 0:06:01.440 --> 0:06:04.000 the oral ar even today didn't change my mind about 0:06:04.040 --> 0:06:05.719 what I think will happen at the Supreme Court. And 0:06:05.760 --> 0:06:07.680 I think that the Supreme Court will be the only 0:06:07.760 --> 0:06:10.760 court that finds that the trade deficit is not an emergency. 0:06:11.320 --> 0:06:15.000 Uh So I think that they'll say that the reciprocal 0:06:15.080 --> 0:06:18.680 terrorists are unlawful on those grounds. But nobody has challenged, 0:06:19.839 --> 0:06:22.680 and even today, I think they were talking about other 0:06:22.720 --> 0:06:27.400 ways to find pentanal trafficking tariffs unlawful. Besides finding that 0:06:27.440 --> 0:06:29.800 it's not an emergency. No, nobody has said that the 0:06:29.880 --> 0:06:33.320 fentanyl crisis is not an emergency. And for that reason, 0:06:33.440 --> 0:06:37.200 I think that the Supreme Court, you know, is not 0:06:37.240 --> 0:06:39.560 going to reach that issue. They're just going to decide 0:06:39.600 --> 0:06:44.599 whether the tariffs deal with the fentinal crisis. And I 0:06:44.640 --> 0:06:47.640 don't think they're going to want to allow courts to 0:06:47.800 --> 0:06:50.520 or or they're gonna they're going to either approve or 0:06:50.520 --> 0:06:52.839 disapprove of that reasoning. 0:06:53.880 --> 0:06:55.839 In which the the the. 0:06:55.720 --> 0:06:59.640 International Trade Court said that that the tariffs don't deal 0:06:59.640 --> 0:07:01.960 with them. And I don't think that the Supreme Court 0:07:02.000 --> 0:07:06.239 is going to want to allow courts to address whether, 0:07:07.640 --> 0:07:11.840 you know, actions taken in response to emergencies deal with 0:07:11.880 --> 0:07:14.480 the emergency. So I think they're going to reverse on 0:07:14.560 --> 0:07:17.560 those grounds and reinstate the fentanyl trafficking terriffs. 0:07:17.600 --> 0:07:20.000 Interesting. So, then at the end of the day, whenever 0:07:20.040 --> 0:07:22.680 this gets us to the Supreme Court, presumably towards the 0:07:22.760 --> 0:07:26.120 end of this year, you think the Supreme Court will 0:07:26.120 --> 0:07:31.080 strike down the so called reciprocal tariffs, but allow the 0:07:31.120 --> 0:07:38.720 President to impose the fentanyl related teriffs, and thinks, so, okay, great, 0:07:38.760 --> 0:07:43.000 all right, well we shall stay tuned. All right, let's 0:07:43.000 --> 0:07:46.800 move on from tariffs. We'll stick with DC though. Let's 0:07:46.840 --> 0:07:50.120 bring in Nathan Dean, who covers a whole slew of 0:07:50.240 --> 0:07:55.920 policy issues for US out of Washington. Nathan, you wrote 0:07:55.960 --> 0:07:58.760 yesterday that the odds of a government shut down dunt 0:07:58.800 --> 0:08:01.600 dun duh at the end of September have increased to 0:08:01.680 --> 0:08:06.680 forty percent. That's not an insignificant number. So tell us 0:08:06.680 --> 0:08:07.920 what you're seeing and why you think that. 0:08:08.720 --> 0:08:11.360 Yeah, so, you know, I think you know, the general 0:08:11.400 --> 0:08:13.600 expectation is when you get to one of these things, 0:08:13.920 --> 0:08:15.680 you know, when the government runs out of money, which 0:08:15.720 --> 0:08:18.440 is in this case, the fiscal year ends on September thirtieth, 0:08:19.000 --> 0:08:21.480 you know, the general thought is you have a continuing resolution. 0:08:21.600 --> 0:08:25.920 Because look, Congress is nowhere near finalizing its twelve appropriations bills. 0:08:26.200 --> 0:08:28.280 I was actually just looking at the current status of it. 0:08:28.520 --> 0:08:30.560 Ten of them have passed, sorry, two of them have 0:08:30.640 --> 0:08:34.600 passed the House, obviously on bipartisan lines. The rest haven't 0:08:34.600 --> 0:08:36.360 even come up for votes yet, and there's still just 0:08:36.360 --> 0:08:39.240 past the committee level. Which means when Congress comes back 0:08:39.360 --> 0:08:42.360 from their August recess, they essentially have like three or 0:08:42.360 --> 0:08:45.240 four weeks to put all of this together to finalize 0:08:45.240 --> 0:08:48.400 inappropriations bills. So it ain't gonna happen. So I think 0:08:48.400 --> 0:08:50.120 the solution is what do you get when you have 0:08:50.160 --> 0:08:53.680 a continuing resolution? Well, you get a kick of the can. 0:08:54.600 --> 0:08:56.880 But this situation is a little bit different because the 0:08:57.000 --> 0:09:01.440 Democrats spent all last week before the House left. The 0:09:01.440 --> 0:09:05.040 Senate's still here, but the House was is gone. Before 0:09:05.080 --> 0:09:08.240 they left. The Senate leadership and House leadership over the 0:09:08.240 --> 0:09:11.839 Democratic Party spent some time talking about what to do 0:09:12.080 --> 0:09:14.480 in terms of this funding fight, because there are a 0:09:14.480 --> 0:09:17.240 lot of folks on the progressive side that want to 0:09:17.320 --> 0:09:20.120 fight President Trump. And one of the easiest ways you 0:09:20.160 --> 0:09:24.760 can do that is through the appropriations process, because you know, 0:09:24.800 --> 0:09:27.960 the Republicans are dictating what the bills look like. They're 0:09:27.960 --> 0:09:29.640 going to come in. They're going to say here's our 0:09:30.040 --> 0:09:33.320 appropriations for next year, and you can essentially say to 0:09:33.320 --> 0:09:35.400 President Trump, no, we're not going to play, We're going 0:09:35.440 --> 0:09:39.720 to shut the government down. The challenge is is that politically, 0:09:39.880 --> 0:09:42.880 every party that has been seen shutting the government down 0:09:42.920 --> 0:09:45.800 for the last ten years has a political price for it. 0:09:46.160 --> 0:09:47.840 Obviously not to the point where people are going to 0:09:47.840 --> 0:09:50.520 remember this when they get to the November midterms, but 0:09:51.440 --> 0:09:54.400 you know, when you're talking about momentum and momentum swings, 0:09:55.040 --> 0:09:57.240 you know it's going to be a very difficult position 0:09:57.280 --> 0:09:59.800 for the Democrats to be in if the Republicans come 0:09:59.840 --> 0:10:04.560 to them say here's a continuing resolution that is clean ish, 0:10:04.760 --> 0:10:07.920 you know, just call it clean clean ish, and it's 0:10:07.920 --> 0:10:10.480 gonna be very difficult. Now, the one thing I would 0:10:10.480 --> 0:10:13.080 throw in here is is that if the omb decides 0:10:13.120 --> 0:10:16.920 to put additional recissions packages in play, that could fire 0:10:16.960 --> 0:10:20.080 up the Democrats because if you recall, you know, Congress 0:10:20.080 --> 0:10:22.679 has passed a nine billion dollar recissions package that takes 0:10:22.679 --> 0:10:27.160 away funds from USAID rail stations of MPR for example. 0:10:28.120 --> 0:10:30.120 Not that big of a deal when you talk about 0:10:30.160 --> 0:10:35.079 a budget that's in the trillions, But because recissions avoids 0:10:35.120 --> 0:10:37.160 the filibuster and is a majority vote in the House 0:10:37.160 --> 0:10:40.240 and majority vote in the Senate, if the Republicans try 0:10:40.280 --> 0:10:44.480 that again in September, political roadblocks from political rhetoric is 0:10:44.520 --> 0:10:46.040 going to increase, and we're going to have to take 0:10:46.080 --> 0:10:48.720 a closer look the last thing I'll say though, is 0:10:48.720 --> 0:10:51.480 is that you know, just from the investment point of view, 0:10:52.080 --> 0:10:54.160 you will see a lot of headline risk, and you'll 0:10:54.200 --> 0:10:57.920 see headlines in the news that say, like shutdown may 0:10:58.000 --> 0:11:00.679 spook markets or so forth like that. There is no 0:11:00.800 --> 0:11:04.320 market impact to government shutdowns. In the thirty days shutdown 0:11:04.360 --> 0:11:06.480 it occurred under the first Trump administration, the S and 0:11:06.520 --> 0:11:09.560 P yes declined about three to four percent right after 0:11:09.600 --> 0:11:11.520 the shutdown, but by the time the shutdown ended, it 0:11:11.559 --> 0:11:12.800 was up like fifteen percent. 0:11:13.320 --> 0:11:15.920 The only thing that we actually something we want to 0:11:15.960 --> 0:11:17.600 shut down why yeah. 0:11:17.640 --> 0:11:20.000 I mean, I'm well, for those of you in New York, 0:11:20.000 --> 0:11:21.720 you may, but for me wants to take my kids 0:11:21.760 --> 0:11:24.319 to the zoo, I'm gonna say no shutdown because it 0:11:24.440 --> 0:11:28.000 means I can't get into the museums. But and I'll 0:11:28.000 --> 0:11:30.880 say a little bit of the secret sauce here, just 0:11:30.960 --> 0:11:32.480 you know, every time we get a shutdown, we do 0:11:32.559 --> 0:11:35.240 get calls from people saying, look, we're trying to figure 0:11:35.280 --> 0:11:39.040 out what impacts, if any, that were of this shutdown. 0:11:39.080 --> 0:11:42.160 And I said, outside of small contractors and people who 0:11:42.200 --> 0:11:45.680 are furloughed, it's very difficult because even large defense contractors, 0:11:46.400 --> 0:11:48.800 you know, yes, they have their separate issues with impoundment 0:11:48.880 --> 0:11:52.480 and you know recisions, but even large defense contractors are 0:11:52.520 --> 0:11:55.719 usually funded on a two year basis. So if you're 0:11:55.720 --> 0:11:58.520 thinking of like the Boeans, the Raytheons, the Lockey Martins 0:11:58.559 --> 0:12:02.200 and so forth, studexos, you know, they're they're usually covered. 0:12:02.280 --> 0:12:05.640 And the last thing on a shutdown is that you know, 0:12:05.720 --> 0:12:09.319 a lot of traders don't get information from the FEDS, 0:12:10.000 --> 0:12:13.000 like the Commitment of Traders report from the CFTC or 0:12:13.040 --> 0:12:16.400 the Bureau of Statistics reports and so forth. All that stops, 0:12:16.400 --> 0:12:17.720 and so you may have to learn how to trade 0:12:17.760 --> 0:12:19.319 for a couple of days without having that info. 0:12:19.840 --> 0:12:23.199 Got it. So you think if there's like more recisions packages, 0:12:23.280 --> 0:12:27.800 that increases the likelihood of a shutdown, Yeah, But if 0:12:27.840 --> 0:12:30.760 there isn't, if we don't see those, then maybe it's not. Yeah. 0:12:30.800 --> 0:12:34.679 I mean, ultimately, the reason why one shuts the government 0:12:34.760 --> 0:12:37.120 down is they want to get political gains from it. 0:12:37.880 --> 0:12:41.679 And when Senator Schumer has this position where you know, 0:12:41.920 --> 0:12:45.040 let's just continue to let policies play out and then 0:12:45.120 --> 0:12:49.040 we'll develop a strategy in twenty twenty six, it's going 0:12:49.120 --> 0:12:51.319 to be a tall task for him to come back 0:12:51.360 --> 0:12:53.800 and say, right, I think it's going to be politically 0:12:53.960 --> 0:12:57.160 advantageous to shut the government down right now. It certainly 0:12:57.200 --> 0:13:00.120 would play up to the base. But what's the endgame strategy. 0:13:00.280 --> 0:13:03.720 Let's say you shut the government down and President Trump says, okay, 0:13:03.720 --> 0:13:06.439 we've got a government shutdown. Eighty five percent of the 0:13:06.440 --> 0:13:09.560 government is now non essential, deemed non essential. Why do 0:13:09.600 --> 0:13:12.120 they have to come back? You know, if they're not essential, 0:13:12.160 --> 0:13:15.000 then why do they have to come back? And the 0:13:15.040 --> 0:13:17.080 other thing I just point out here is that if 0:13:17.120 --> 0:13:19.360 there's no endgame strategy here, how do you get out 0:13:19.360 --> 0:13:22.400 of it? Because if you're seen folding two three weeks 0:13:22.440 --> 0:13:25.439 later and you don't get anything in return, that's almost 0:13:25.480 --> 0:13:28.079 as bad as you know, not doing it anything at all. 0:13:28.160 --> 0:13:30.760 So I just again, I'm not seeing the road path 0:13:30.840 --> 0:13:33.360 here for a shutdown, despite the fact that a lot 0:13:33.400 --> 0:13:36.880 of Democratic congressmen and women have been going on Bloomberg 0:13:36.920 --> 0:13:39.160 Television saying that they're going to welcome a shutdown. 0:13:39.200 --> 0:13:42.040 Alright, it makes for good, good talking points, good politics, 0:13:42.080 --> 0:13:44.679 as you said, but at the end of the day, 0:13:45.000 --> 0:13:49.920 risky path to follow. All right, thanks Nathan. All Right, 0:13:50.000 --> 0:13:53.640 let's turn to anti trust. We have our two anti 0:13:53.679 --> 0:13:56.400 trust analysts on this episode, we're going to start with 0:13:56.640 --> 0:14:00.920 Jen ree Jan. Let's talk a couple of different issues. First, 0:14:02.360 --> 0:14:09.120 the Dick Sporting Goods and its acquisition of foot Locker 0:14:09.240 --> 0:14:12.480 for two and a half billion dollars back in May. 0:14:12.559 --> 0:14:14.600 You put out a note last week saying you think 0:14:14.960 --> 0:14:20.680 antitrust clearance might come by mid August. Why don't you 0:14:20.720 --> 0:14:22.280 tell us what you're thinking? Is there? 0:14:22.400 --> 0:14:25.080 Sure? We go from government shut down to Dick's spoorting goods. 0:14:26.400 --> 0:14:28.000 It's a natural segue, a. 0:14:28.040 --> 0:14:30.960 Natural segue, you know. It is a little bit sticking 0:14:31.000 --> 0:14:33.080 my neck out a little bit saying that I think 0:14:33.120 --> 0:14:36.240 this probably could get clearance in August. And the reason 0:14:36.320 --> 0:14:39.280 is because a deal like this would normally take something 0:14:39.320 --> 0:14:41.680 from the signing in May that you mentioned to a 0:14:41.760 --> 0:14:46.160 decision would normally take something more like eleven months. Yeah, 0:14:46.240 --> 0:14:48.760 because you know, everybody knows what these companies do, and 0:14:48.920 --> 0:14:51.520 you all know superficially that they compete. They both sell 0:14:51.560 --> 0:14:53.960 athletic shoes. You know you could go to either one 0:14:54.000 --> 0:14:57.440 to buy a pair of sneakers and ideal yeah, and 0:14:57.520 --> 0:14:59.840 we do, right, And they sell related apparel. And when 0:14:59.880 --> 0:15:03.520 you have retailers that merge, those reviews can take time 0:15:03.560 --> 0:15:05.360 and The reason is because it's really like a thousand 0:15:05.440 --> 0:15:08.680 mini mergers that have to be assessed because people aren't 0:15:08.680 --> 0:15:11.600 going to drive from California do Illinois to buy the shoes, 0:15:12.040 --> 0:15:14.960 and what the FTC's looking at our brick and mortar 0:15:15.040 --> 0:15:17.920 stores not necessarily buying them buying something on the internet. 0:15:18.160 --> 0:15:20.400 And so they're just drawing little circles all over the 0:15:20.400 --> 0:15:22.840 country where these both of these companies have stores and 0:15:22.840 --> 0:15:25.160 then asking what their market shas are and who else 0:15:25.200 --> 0:15:27.320 competes and that kind of an assessment. Yeah, it takes 0:15:27.360 --> 0:15:32.640 a long time. But here's the thing that's happened. These 0:15:32.640 --> 0:15:35.760 companies did something recently called a poll and refile. Now, 0:15:35.760 --> 0:15:38.720 what that is is when they decide to merge, they 0:15:38.720 --> 0:15:40.680 have to notify that deal to the government. That's what 0:15:40.720 --> 0:15:43.280 the law says, and once they do, the government has 0:15:43.320 --> 0:15:45.600 thirty days to make their decision as to whether to 0:15:45.760 --> 0:15:48.080 just clear the deal or to get into a very long, 0:15:48.080 --> 0:15:50.600 in depth investigation the thing I'm talking about that can 0:15:50.640 --> 0:15:55.640 take eleven months, and the companies are not voluntarily allowed 0:15:55.680 --> 0:15:58.240 to give the FTC more time than those thirty days. 0:15:58.440 --> 0:16:00.440 But one way they can give them an extra thirty 0:16:00.480 --> 0:16:03.760 days is by pulling the notification, canceling it essentially and 0:16:03.800 --> 0:16:07.280 refiling it because they're restarting that new thirty days now. 0:16:07.840 --> 0:16:11.160 During the Biden administration, doing that didn't really mean anything, right, 0:16:11.200 --> 0:16:13.480 It didn't mean much at all other than companies adding 0:16:13.480 --> 0:16:14.080 thirty days. 0:16:14.080 --> 0:16:14.800 And the reason is. 0:16:14.800 --> 0:16:18.240 Because it was sort of wrote that the FTC and 0:16:18.360 --> 0:16:21.960 DJ in that administration was just asking for more time 0:16:22.000 --> 0:16:26.280 from companies and looking for these notifications and refilings, and 0:16:26.360 --> 0:16:29.280 it didn't necessarily mean the company could get clearance after 0:16:29.320 --> 0:16:32.400 that second filing. It didn't necessarily mean they'd get out 0:16:32.400 --> 0:16:34.760 of that in depth investigation. But I think this FTC 0:16:34.920 --> 0:16:39.520 now is different. I haven't seen I don't think a 0:16:39.560 --> 0:16:44.560 pull and refile yet in this administration. But I think 0:16:44.600 --> 0:16:47.680 by doing it, the companies probably got signals from the 0:16:47.760 --> 0:16:51.760 FTC that maybe they just needed about another thirty days 0:16:52.160 --> 0:16:55.160 to get comfortable with the two companies I know they 0:16:55.320 --> 0:16:58.840 have said they don't really view themselves as being all 0:16:58.920 --> 0:17:02.120 that competitive because they have a different demographic that shops 0:17:02.120 --> 0:17:04.919 in their stores. One is a mall store always and 0:17:04.960 --> 0:17:07.880 one is a non mall store always, So they say, 0:17:08.359 --> 0:17:11.320 if you really dig in FTC, we don't compete as 0:17:11.400 --> 0:17:13.719 much as you think we do and where we do compete, 0:17:13.720 --> 0:17:16.639 there are a lot of other competitors regionals, Mom and pops, 0:17:16.680 --> 0:17:20.119 et cetera. So it may be a very good sign 0:17:20.160 --> 0:17:22.919 here that they could get cleared after that second thirty 0:17:23.000 --> 0:17:26.960 days expires. And the other possibility I'm thinking about is 0:17:27.000 --> 0:17:30.960 that this FTC has been very vocal about telling companies, 0:17:31.040 --> 0:17:33.520 if you do have an overlap that could be problematic, 0:17:33.680 --> 0:17:36.920 come to us early. Just walk right in as soon 0:17:36.960 --> 0:17:40.119 as you file, show us where that overlap is, offer 0:17:40.240 --> 0:17:43.040 up your remedy, your divestitures, and maybe we can't just 0:17:43.080 --> 0:17:46.560 get this done fast. And it's possible that Dix did 0:17:46.600 --> 0:17:48.720 something like that where they walked in said here are 0:17:48.720 --> 0:17:51.320 the regions where we overlap, here's where there are to 0:17:51.359 --> 0:17:53.920 other competitors, this is what we're willing to divest. Let's 0:17:53.960 --> 0:17:55.720 just work on that for thirty days and make this 0:17:55.800 --> 0:17:59.080 all go away. So either way, we're going to hear 0:17:59.119 --> 0:18:01.760 in mid augustether this deal is cleared or whether an 0:18:01.760 --> 0:18:03.359 in depth investigation is opened. 0:18:03.760 --> 0:18:07.719 Very interesting, and you know what, I never really it 0:18:07.760 --> 0:18:10.480 never dawned on me that foot Locker is only in 0:18:10.560 --> 0:18:14.200 malls and Dix is only not in malls. But yeah, 0:18:14.200 --> 0:18:16.960 It's like one of those revelations like when you first realize, 0:18:17.200 --> 0:18:19.800 you know, like the FedEx logo has that like a 0:18:19.920 --> 0:18:20.440 arrow in it. 0:18:20.640 --> 0:18:22.840 Exactly, and you know, I started looking into it, and 0:18:22.840 --> 0:18:24.960 they are actually a lot more small competitors to these 0:18:24.960 --> 0:18:27.840 companies than you would think. Different regions have different companies, 0:18:27.840 --> 0:18:30.920 but each region kind of has another sort of equivalent 0:18:31.000 --> 0:18:33.840 to Dix and other you know, specialty shoe stores that 0:18:34.040 --> 0:18:35.680 where you go in and you get fitted for the 0:18:35.760 --> 0:18:38.800 right running shoes or the right basketball shoes. So you know, 0:18:38.800 --> 0:18:41.280 I think competition maybe wrote more robust in a lot 0:18:41.320 --> 0:18:42.480 of regions than people think. 0:18:43.000 --> 0:18:45.760 All right, good stuff. Let's the other thing I wanted 0:18:45.800 --> 0:18:47.840 to ask you about, which you've talked about on this 0:18:47.960 --> 0:18:51.040 podcast before. But now we're like really getting close to 0:18:52.040 --> 0:18:55.360 sort of the d day that you expect. And this 0:18:55.680 --> 0:19:02.600 is in the Justice Department's antitrust case against Google oversearch issues, 0:19:02.680 --> 0:19:06.920 monopolization issues, and you'll expect a remedy pretty much any 0:19:06.960 --> 0:19:07.760 day at this point. 0:19:08.200 --> 0:19:11.320 Yeah, really, I think early August. The judge that August, 0:19:11.359 --> 0:19:13.560 it could be any time doesn't even have to be August. 0:19:14.200 --> 0:19:15.520 Judges aren't held to what they. 0:19:15.400 --> 0:19:17.040 Say, well did he say which August. 0:19:17.800 --> 0:19:19.439 So but I do think it's going to be August. 0:19:19.480 --> 0:19:21.119 I think it'll be in the first few weeks. And 0:19:21.160 --> 0:19:23.320 that kind of was confirmed because just the other day 0:19:23.359 --> 0:19:25.280 there was an order on the docket where the judge 0:19:25.320 --> 0:19:28.840 asked Google to submit a brief by August first that 0:19:28.960 --> 0:19:32.919 just explained some differences between some of its proposals in 0:19:33.000 --> 0:19:35.760 its own remedy proposal, and so that suggests to me 0:19:35.840 --> 0:19:37.960 he's really working on it hard now and he's kind 0:19:38.000 --> 0:19:41.200 of on the detail and he's going to get something 0:19:41.240 --> 0:19:44.800 out in you know, before middle August. So right, this 0:19:44.880 --> 0:19:48.040 is about that liability decision against Google that came down 0:19:48.119 --> 0:19:50.920 last year that it was paying third parties to set 0:19:50.960 --> 0:19:54.639 Google as the default, essentially was illegal and was pushing 0:19:54.680 --> 0:19:59.280 out other rival general search engines which weren't able to 0:19:59.280 --> 0:20:02.240 gain scale because Google had these agreements and sort of 0:20:02.280 --> 0:20:06.359 blocked up that position. And the DOJ really asked the 0:20:06.480 --> 0:20:09.879 judge for a very long list of measures to be 0:20:09.920 --> 0:20:12.240 imposed on Google, including the big one that we hear 0:20:12.280 --> 0:20:15.200 about to force Google to sell Chrome. Now that's really 0:20:15.400 --> 0:20:17.360 the big thing I think people are waiting to hear. 0:20:18.320 --> 0:20:20.720 But aside from that, they are actually still also pretty 0:20:20.800 --> 0:20:24.399 drastic the DJs asked Google to share user click and 0:20:24.480 --> 0:20:28.080 query data with general search engine rivals, It's search index, 0:20:29.080 --> 0:20:33.040 it's search text ad data with both rivals and advertisers, 0:20:33.080 --> 0:20:35.840 to syndicate search results, and to employ choice screens for 0:20:35.880 --> 0:20:38.960 Google's properties like Android and Chrome, and to be of 0:20:39.000 --> 0:20:42.120 course prohibited from paying anything of value to these third 0:20:42.119 --> 0:20:45.359 parties for these default positions or to favor Google Search. 0:20:45.640 --> 0:20:48.280 And I think the same would probably extend to AI. 0:20:48.680 --> 0:20:52.400 Google's AI product, Gemini as well. It cannot pay other 0:20:52.440 --> 0:20:55.639 companies to set Gemini as the default or to exclude 0:20:55.760 --> 0:21:00.000 rival AI chatbots. And then they want a technical committee 0:21:00.040 --> 0:21:02.880 that would oversee this that would mostly be controlled the DOJ. 0:21:03.640 --> 0:21:07.680 When you say the DOJ, this is the Trump administration's DOJ, right. 0:21:07.960 --> 0:21:11.200 Okay, Yes, Now, the first set of remedies were proposed 0:21:11.200 --> 0:21:14.560 by the Biden DOJ, and the Trump DOJ did revise those, 0:21:14.600 --> 0:21:18.359 but only very very slightly. Really, they asked for pretty 0:21:18.400 --> 0:21:21.520 much the exact same subset of measures. They dropped out 0:21:22.480 --> 0:21:25.199 what they want. What the Biden administration wanted that DOJ 0:21:25.400 --> 0:21:29.440 dropped was sort of pre approval for any AI investments 0:21:29.440 --> 0:21:30.240 that Google makes. 0:21:30.520 --> 0:21:34.359 Okay, right, And I mean what just struck me was that, 0:21:34.480 --> 0:21:36.560 you know, there've been these news reports of a couple 0:21:36.840 --> 0:21:40.719 senior Justice Department officials and the Anti Trust Division who 0:21:40.720 --> 0:21:43.320 were sort of forced to leave because I think they 0:21:43.359 --> 0:21:45.560 want to be more aggressive on the M and A front, 0:21:46.040 --> 0:21:49.359