Speaker 1: Now from our nation's capital. This is Bloomberg Sound on.
Speaker 1: Our private sector has now recovered all of the jobs
Speaker 1: lost during the pandemic and added jobs. On top of that.
Speaker 1: Your wage growth was seeing some of the biggest gain
Speaker 1: in the lowest income earners, which is good. Obviously, we're
Speaker 1: still dealing with inflation. Bloomberg Sound on politics, Policy and
Speaker 1: perspective from DC's top names. Is it possible that he
Speaker 1: decides not to step down? So much of the Democratic
Speaker 1: base has been demoralized with Biden? Sometimes, I think unfairly
Speaker 1: because he's not seen as being angry enough. Bloomberg Sound
Speaker 1: On with Joe Matthew on Bloomberg Radio. All of the
Speaker 1: jobs lost in COVID restored, according to the White House.
Speaker 1: Welcome to the fastest hour in politics, as we check
Speaker 1: under the hood of a stronger than expected jobs report
Speaker 1: today and what it means for inflation and the Biden
Speaker 1: administration's economic agenda. Joining us to discuss in just a moment,
Speaker 1: Austin guls Be, former Chair of the White House Council
Speaker 1: of Economic Advisors. Later it may be the biggest economic
Speaker 1: story that no one is talking about. Enhanced subsidies for
Speaker 1: Obamacare are set to expire at the end of the year.
Speaker 1: Democrats are worried about the potential impact and whether they
Speaker 1: can find a solution in time. We'll talk about it
Speaker 1: with the architect of the Affordable Care Act, Professor John Grewbery,
Speaker 1: economist at m I T. And our signature panel is
Speaker 1: in place on a Friday, Bloomberg Politics contributors Rick Davis
Speaker 1: and Genie Chanzano helping us distill all of the news
Speaker 1: over the course of the hour, and first we update
Speaker 1: the markets on a Friday here and in the wake
Speaker 1: of the jobs report of mixed finish for Wall Street,
Speaker 1: little changed actually in the end, the S and P
Speaker 1: five hundred down three points, the Dow Industrial Average down
Speaker 1: forty six, but the NASDAC finished higher, up four team,
Speaker 1: making for the longest wind streak on the NASDAC since November.
Speaker 1: All three indexes banked games for the week. The NASDAK
Speaker 1: was actually the big winner of four point six percent
Speaker 1: this week, the S and P two the ten year
Speaker 1: note yielding three point oh seven percent. Traders reacting to
Speaker 1: us stronger than expected jobs report, which we're going to discuss.
Speaker 1: As I mentioned in a moment with Austin Gulsby, showing
Speaker 1: payrolls up by three hundred seventy two thousand jobs. Estimates
Speaker 1: were calling for two hundred and fifty k, the unemployment
Speaker 1: rate holding steady at three point six percent. So President
Speaker 1: Biden spoke to the job gains today in an event
Speaker 1: at the White House. Here he is, our private sector
Speaker 1: has now recovered all of the jobs lost during the
Speaker 1: pandemic and added jobs. On top of that, we have
Speaker 1: more Americans working today in the private sector than any
Speaker 1: day under my predecessor, more today than any time in
Speaker 1: American history. Labor Secretary Marty Walsh was also upbeat when
Speaker 1: he appeared on Bloomberg after the release of the report,
Speaker 1: but he tried to maintain little perspective fears. The Secretary
Speaker 1: the waves growth was seeing the biggest well some of
Speaker 1: the biggest gain and the lowest income earners, which is good. Obviously,
Speaker 1: were still telling with inflation and and and the wage
Speaker 1: growth isn't quite keeping up with inflation. But I think
Speaker 1: what we want to do is actually bring inflation down.
Speaker 1: Let's get into that and get into the fine prints
Speaker 1: and the messaging from this White House with someone who
Speaker 1: has been their former chair of the White House Council
Speaker 1: of economic Advisors now Professor of economics at the University
Speaker 1: of Chicago's Booth School of Business. That's Austin Gouls being
Speaker 1: welcome Stirt back to Bloomberg. Thank you for having me back.
Speaker 1: Always our pleasure. Today's jobs report shows unexpected strength in
Speaker 1: hiring from last month. Does this make you feel more
Speaker 1: confident that we can avoid a recession? Yeah, a little bit.
Speaker 1: I mean it was a pretty amazing report. Uh, the
Speaker 1: unemployment rates three point six percent, and you don't normally
Speaker 1: put up three hundred and seventy two thousand new jobs
Speaker 1: a month when the unemployment rates already that law. Um,
Speaker 1: And this follows on We've been month after month, we've
Speaker 1: been having these these big jobs reports. If if we
Speaker 1: keep having jobs numbers like that, no one will say
Speaker 1: it's a recession. It's not. It's not a recession if
Speaker 1: jobs are growing like that. Um. But we we're definitely
Speaker 1: not out of the woods. Hopefully it's a sign of
Speaker 1: soft landing. But you know, the Fed is raising rates
Speaker 1: as fast as as any time in in Hodern memories.
Speaker 1: Does this put you in the seventy basis point camp
Speaker 1: or were you already? Yeah? That from from their language,
Speaker 1: I think seventy five base points is quite likely, and
Speaker 1: um more than two thirds of the recessions in the
Speaker 1: United States since World War Two, since we've been keeping track,
Speaker 1: have started because the Fed raised interest rates faster than
Speaker 1: the economy can handle. So at a moment where they're
Speaker 1: raising rates like that, you know, it might not be
Speaker 1: a knife's edge, but it's it's definitely not. There's there's
Speaker 1: not a lot of mark and for error wage growth.
Speaker 1: If they go too far, it could be a problem. Yeah,
Speaker 1: of course there's concern about wage growth here. And I
Speaker 1: don't mean to sound cold, but average hourly earnings up
Speaker 1: over five from a year ago. Raised a lot of eyebrows.
Speaker 1: This is good for workers, of course, Austin, but the
Speaker 1: inflationary aspect is not. Do you see wages pressing here?
Speaker 1: Tell me why? Well, because it's less than prices. I mean,
Speaker 1: I thought you were gonna say that there are critics
Speaker 1: on the wage side because the real wage continues to fall.
Speaker 1: But there's no evidence in this report of a wage
Speaker 1: price spiral. I mean the way wages are up less
Speaker 1: than prices are up, So you don't see a tight
Speaker 1: market exacerbating the inflation problem. So far, not a wage
Speaker 1: price FIRL. Absolutely not like I say, the real wage
Speaker 1: is falling. We've we've never had the unemployment rate below
Speaker 1: four in this country, and real wages were going down,
Speaker 1: not up. Normally, when the unemployment rate is that low
Speaker 1: and the labor market is this type, there's a dramatic
Speaker 1: increase in the bargaining power of workers, and their real
Speaker 1: wage goes up, their wage goes up faster than businesses.
Speaker 1: Prices go up, and the business profit margins shrink. And
Speaker 1: that's that's what happened in the in the years before COVID,
Speaker 1: That's what happened at the at the mid two thousand's,
Speaker 1: before the financial crisis, that's what happened at the end
Speaker 1: of the nineties. All of those were periods where people say, Wow,
Speaker 1: what a type labor market. We have to pay people
Speaker 1: more than our prices are going up, so we're getting squeezed.
Speaker 1: For all of the smoke that's coming from the business
Speaker 1: sector about labor shortage, it's pretty notable that business margins
Speaker 1: have increased and the real wage has not. If you're
Speaker 1: an employer and you're paying five more than you were
Speaker 1: a year ago, doesn't that become inflationary? Your prices are
Speaker 1: up eight percent and your costs are up five percent,
Speaker 1: so your profit margin got bigger. It could become a problem.
Speaker 1: You should never make too much about trends from one
Speaker 1: month's numbers, but for wages to be up five percent,
Speaker 1: which is a decrease, and to be up less than prices,
Speaker 1: As I say, the good news on the inflation front
Speaker 1: is that's that's not what a wage price spiral of
Speaker 1: inflation looks like. And you've at least seen inflation starting
Speaker 1: to come down and the world price of oil starting
Speaker 1: to come down. Hopefully that continues. The participation rate fell
Speaker 1: last month just a bit, but specifically the rate for
Speaker 1: workers to fifty four hit a four month low. The
Speaker 1: number of America is not in the labor force rose
Speaker 1: to the highest level that we've seen this year. How
Speaker 1: come people are not coming back to work the way
Speaker 1: many expected or hoped. Ye, yes and no, I mean
Speaker 1: as I say, don't don't make too much out of
Speaker 1: any one month's number. Overall, there's enough astounding unexpected increase
Speaker 1: of people coming back to work and the for the
Speaker 1: much remarked upon rising to quit rate. It's worth emphasizing
Speaker 1: that the vast majority of people that have quit their jobs.
Speaker 1: Quit their job not to go home, but quit their
Speaker 1: job because they had another job that paid more than
Speaker 1: the job they had before. So we'll have to see
Speaker 1: if this monthly blip is an indicator that participation is
Speaker 1: actually going down. If you have two openings for every
Speaker 1: job seeker, though, is that a good thing or not? Well,
Speaker 1: you know, compared to what I mean, I it's good
Speaker 1: for the worker, but how about the broad economy. Yeah,
Speaker 1: it's excellent for the worker. The fear you have for
Speaker 1: the economy is that could something a situation like that
Speaker 1: could lead to a wage price spiral if you're already
Speaker 1: starting from a period of high inflation. And in a way,
Speaker 1: the large number of vacancies compared to the how many
Speaker 1: unemployed workers there are gives the FED hope that they
Speaker 1: can do their so called soft ish landing, that you
Speaker 1: could reduce the number of job vacancies without actually increasing
Speaker 1: the number of unemployed people. And that would be a
Speaker 1: that would be a great accomplishment. And you know, given
Speaker 1: the numbers like what we're seeing this month, it definitely
Speaker 1: seems more doable um and and a little less of
Speaker 1: a risk of stagflation from your compared last year I
Speaker 1: want to ask you, Austin, to be about the messaging
Speaker 1: around all of this. As President Biden refers to the
Speaker 1: Putin price hike and Americans see their prices continue to
Speaker 1: rise his approval ratings. I don't need to tell you
Speaker 1: how would you advise this administration in how to talk
Speaker 1: about these challenges. You know, I always say, don't don't
Speaker 1: ever ask message advice from a guy with a PhD.
Speaker 1: You've done. Your first thing i'd say is don't ask me.
Speaker 1: But you know, it does feel like the administration has
Speaker 1: tried several explanations with varied success, and certainly in the
Speaker 1: polling people expressed that they don't think the economy is
Speaker 1: good as high as share if not more people say
Speaker 1: it's going badly in the economy, as said so in
Speaker 1: the middle of the Great Recession. So that's been very
Speaker 1: How that's happening when the unemployment rate is three point
Speaker 1: six percent? Is is is odd? And you've got the
Speaker 1: second odd thing happening in the polling data where big
Speaker 1: majorities say, asked, how's the economy, they say bad, but
Speaker 1: when asked about their personal situation they say good. So
Speaker 1: we've never had a bigger difference between the my own
Speaker 1: finances are okay. The economy overall is no good. So
Speaker 1: I kind of think, no matter what you say, as
Speaker 1: long as the unemployed, as long as the inflation rate
Speaker 1: is as high as it is, and until we start
Speaker 1: seeing progress on the inflation rate, I kind of think
Speaker 1: it might not make any difference what you say or
Speaker 1: what how you describe it. Should Democrats seek a reconciliation
Speaker 1: bill this year or is is that the wrong message? Uh?
Speaker 1: They probably should on the grounds of what's in the bill,
Speaker 1: not on the grounds of inflation, because you know, it's
Speaker 1: a whole separate topic. But if you pass a bill
Speaker 1: that has actually increases on high income people to pay
Speaker 1: for it, that should have very little impact on how
Speaker 1: much the economy is overheated. So I think just spin
Speaker 1: that into the inflation discussion is Yeah, I don't know.
Speaker 1: It's funny because the President says that will help the
Speaker 1: lower prices, Republicans say it'll make inflation worse. It's hard,
Speaker 1: hard to get a straight answer, So I think you're right.
Speaker 1: I kind of think both sides because inflations what's on
Speaker 1: people's mind. It feels like both sides are trying to
Speaker 1: spin an inflation story about it, and I think it
Speaker 1: has very little to do with it. Appreciate the insights
Speaker 1: as always. Austin Gulsby, We thank you for being with
Speaker 1: us on Bloomberg. Yeah, great talking to you. Yet. President
Speaker 1: Biden says today's jobs report is proof that his economic
Speaker 1: plan is working, and again Republicans say the very opposite.
Speaker 1: So let's get into the politics around this. We'll do
Speaker 1: it next. As we assemble the sound on panel, Rick
Speaker 1: Davis and Genie Schanzano are ahead on the fastest hour
Speaker 1: in politics. We'll check traffic for you on the way.
Speaker 1: Glad you're with us. As I remind you as ever
Speaker 1: to subscribe to the sound on podcast. You can do
Speaker 1: it easily, especially if you showed up late on this Friday.
Speaker 1: Stay with us. I'm Joe Matthew in Washington. This is Bloomberg.
Speaker 1: This is Bloomberg sound On on Bloomberg Radio. The headline
Speaker 1: on the terminal, Biden says, private sector employment has fully recovered.
Speaker 1: Just think about that, after the way things felt two
Speaker 1: years ago in the throes of COVID, when people weren't
Speaker 1: leaving their houses. You think we'd have a parade to
Speaker 1: celebrate that kind of news. All the jobs are back
Speaker 1: to pre COVID, but of course it's not two years ago,
Speaker 1: with historically high inflation, now, a war in Europe, deep
Speaker 1: political divisions, malaised stare I say, it's just a different world,
Speaker 1: and that's why we assemble our panel to talk it out.
Speaker 1: Rick Davis is back with us. Jennie Chanzano here to
Speaker 1: Bloomberg Politics. Contributors make up our signature panel. Uh and Brick,
Speaker 1: I'll start with you on this job's report. My goodness,
Speaker 1: a headline like that you think would get a president
Speaker 1: reelected without even thinking about it. But when you look
Speaker 1: at the rest of the environment that we're in here,
Speaker 1: it doesn't even make a splash today, does it. I
Speaker 1: don't think people will believe what he's saying. I mean,
Speaker 1: it's obviously a good report, he's obviously excited about it.
Speaker 1: It's an accomplishment of his administration to get to this point.
Speaker 1: I mean, you know, above pre pandemic levels. Nobody thought
Speaker 1: this was going to happen, certainly this time. But when
Speaker 1: you look at other tracking mechanisms like the Mission Consumer Index,
Speaker 1: which tracks political success also, um, you know, it's the
Speaker 1: worst it's ever been. And we've seen some bad ones,
Speaker 1: including when I was running a presidential campaign in the
Speaker 1: middle of a you know, massive global economic downturn. And
Speaker 1: it's worse than that. I mean, it's at the lowest
Speaker 1: point in its recordings since the nineteen fifties, so consumers
Speaker 1: aren't buying it. So when he says, hey, this is
Speaker 1: great news, I'm not sure anybody's going to agree with him. Well,
Speaker 1: I want to be fair with what he said as well.
Speaker 1: Let's listen as he did celebrate, of course, and and
Speaker 1: and and said even more than we played for you
Speaker 1: about what's going right with the economy. Listen to President
Speaker 1: Biden framen this uh in terms of his own economic
Speaker 1: agenda while also kind of balancing everything else going on.
Speaker 1: I know times are tough, prices are too high, families
Speaker 1: are facing the cost of the limit crunch. But today's
Speaker 1: economic news confirms the fact, and my economic plan is
Speaker 1: moving this country in a better direction. Jeanie Schanzano, is
Speaker 1: that enough? Is he qualifying it the right way? When
Speaker 1: I was listening to the President, I was I kept thinking,
Speaker 1: you know, he needs to explain why if the headlines
Speaker 1: are good and the report is really good, he's right
Speaker 1: about that, why does it feel so bad, and it
Speaker 1: sort of sounds like a bad country song, but that's
Speaker 1: literally the message that politically he needs to be able
Speaker 1: to commune a song. He's singing those the Putin price hike,
Speaker 1: that's right. And I'm not sure that that gets to
Speaker 1: explaining it, because you know, I was listening to the
Speaker 1: president then the headlines throughout the day, and every single
Speaker 1: one of them them said great job numbers. But and
Speaker 1: of course the rule is anything before a butt is
Speaker 1: a lie. So great job numbers be damned. Nobody cares
Speaker 1: about that. So he's going to have to do a
Speaker 1: better job explaining this, and you know, it's a hard
Speaker 1: thing to explain, and he also needs people and his
Speaker 1: surrogates out there explaining why there's still a They don't
Speaker 1: we don't all feel so good about this. We have
Speaker 1: breaking news on the terminal that I have to mention
Speaker 1: that has nothing to do with what we're talking about.
Speaker 1: Elon Musk, this is real. Elon Musk terminates Twitter merger agreement.
Speaker 1: The buyout is off. Twitter stock right now is down
Speaker 1: seven percent after hours, and we'll keep tabs on this
Speaker 1: for you as we learn more. Of course, we're talking
Speaker 1: politics here as we wrap up the week in Washington,
Speaker 1: and the President said a lot more than he did
Speaker 1: about jobs today. This was actually an event that had
Speaker 1: to do with the end of Roe v. Wade uh
Speaker 1: the right to life. It's it's an executive order that
Speaker 1: he signed, and I'll let the President speak to it
Speaker 1: here to try to protect some rights for women. Here's
Speaker 1: what he said. The executive order directs HHS to identify
Speaker 1: ways to expand access to reproductive health services Mike I
Speaker 1: u d s birth control pills, emergency contraception, and equally important,
Speaker 1: this executive order protects patient privacy and access to information.
Speaker 1: He spoke passionately about this and directed people to the
Speaker 1: mid term elections. This was essentially what he said. The
Speaker 1: fastest and only real way to solve this is to
Speaker 1: elect two more Democrats to the Senate. Here's the President.
Speaker 1: I don't think the Court, or for that matter, of Republicans,
Speaker 1: who for decades of wish to extreme agenda, have a
Speaker 1: clue about the power of American women, but they're about
Speaker 1: to find out. In my view, it's my hope and
Speaker 1: strong belief that women will in fact turn out in
Speaker 1: record numbers to reclaim the rights that have taken from
Speaker 1: them by the court. And let me be clear, Well,
Speaker 1: I wish it had not come to this. This is
Speaker 1: the fastest route available record numbers, Rick Davis, Is he right? Look, Uh,
Speaker 1: he's going to find out in six months, so we'll see.
Speaker 1: But the reality is, uh, you know, we've been just
Speaker 1: talking about the number one issue in America today, which
Speaker 1: is inflation, is not abortion. He had a good opportunity
Speaker 1: to talk about it today in the context of a
Speaker 1: really positive jobs report, just the way Gulsby just did
Speaker 1: with you on the air and made it sound like
Speaker 1: it was a much more positive impact, uh, and that
Speaker 1: there's a plan going forward that will give us a
Speaker 1: soft landing on inflation. And he did none of that.
Speaker 1: He stepped on his own positive message by by pivoting
Speaker 1: to arguably a more niche issue and abortion, which will
Speaker 1: be the headline rather than what he was talking about
Speaker 1: with jobs today. He's he's suggested this before, Jennie, that
Speaker 1: that there will be record turnout and turn expectations upside
Speaker 1: down in November because of that singular issue, because of
Speaker 1: the Row ruling. And we've talked a lot about how
Speaker 1: Democrats can mobilize the base. How does he actually make
Speaker 1: that happen. How does he realize it? Well, he does
Speaker 1: what he did today, he tries to use the bully pulpit.
Speaker 1: I think many people on the progressive left are saying,
Speaker 1: why didn't he do this too? You know earlier, we
Speaker 1: knew the decision was coming out. Why not that day?
Speaker 1: Why the next day he didn't say, you know, the
Speaker 1: EO today is not you know, anything really new. Um.
Speaker 1: So people feel like he should have done it much earlier.
Speaker 1: And then to Rick's point, he could have spent the
Speaker 1: time today talking about the good jobs the number. So
Speaker 1: he had to combine these two things, which is never good.
Speaker 1: But on the issue of mobilization, after the Casey decision
Speaker 1: was the year of the women. Women did come out
Speaker 1: in larger numbers. We do command a large force at
Speaker 1: at at the voting box, so it could be that
Speaker 1: they are able to get them out, but we simply
Speaker 1: don't know if that's going to happen. We have to
Speaker 1: look at the reality and abortion opponents have long been
Speaker 1: well organized and on the left that they're going to
Speaker 1: have to catch up to that, and this is going
Speaker 1: to be a test for them. Well, we've talked about
Speaker 1: the test in the suburbs here women in the suburb's
Speaker 1: rick and and that's obviously who President Biden is talking
Speaker 1: about here. Is he being presumptuous though, with the way
Speaker 1: they feel about this? Yeah? Look, I mean, you know,
Speaker 1: politics is the opposite and equal reaction of force, right,
Speaker 1: And so you're gonna go out and rally your base
Speaker 1: to um make the next election count on this issue. Uh.
Speaker 1: And and that's gonna that's gonna just mobilize Republican voters
Speaker 1: in the same way. Right, there are a lot of
Speaker 1: suburban women who were pro life, and and if they
Speaker 1: believe that the objective of the Democratic Party is to
Speaker 1: pass a um um uh you know, a national row
Speaker 1: um bill that will secure abortion uh nationally, then they're
Speaker 1: gonna be motivated to to turn out. And so it's
Speaker 1: a it's a non linear exercise, right, I mean, like
Speaker 1: it's not just for Democrats. And and so every time
Speaker 1: these messages go out from the President, you know, it's
Speaker 1: kind of a red flag for Republican pro life voters.
Speaker 1: And and so whether you can gain a significant advantage,
Speaker 1: and it has to be significant this cycle, because Democrats
Speaker 1: have are very much in a down cycle. Uh. And
Speaker 1: and they're gonna have to really create a multiple effect
Speaker 1: on this, and I just don't see abortion that It's
Speaker 1: never had that kind of impact on politics, and it's
Speaker 1: unlikely to have it now as we spend time with
Speaker 1: our panel, Rick and Janie or with us, Welcome to
Speaker 1: Sound On on a Friday, the fastest hour in politics.
Speaker 1: I feel like I've buried the lead here and it's
Speaker 1: where I started with Austin Goulsby. This report led a
Speaker 1: lot of smart people today to say, hey, you know what,
Speaker 1: this is not a recession and we're not about to
Speaker 1: go into a recession. Is that the best news that's
Speaker 1: buried in today's stream of headlines? Genie? It is very
Speaker 1: good news. You know, the job numbers are very good,
Speaker 1: the unemployment rate is very good. The fact that it
Speaker 1: may have you know, we may not see a recession
Speaker 1: is very good. It's going to mean more interest rate hikes, though,
Speaker 1: and that's that's the bad news. That's the butt and
Speaker 1: what comes after the butt, and that's you know what
Speaker 1: the president really and not just him, but his surrogates
Speaker 1: have to do a good job of explaining, you know,
Speaker 1: why we can't feel and why we're not feeling so
Speaker 1: good about this yet, and I think you know the President,
Speaker 1: I didn't hear him talk about oil prices, gas prices dropping,
Speaker 1: Googles be talked about that, shipping prices dropping, mortgage rates dropping.
Speaker 1: There's some good news out there. He's got to keep
Speaker 1: talking about that and keep reminding the American people he
Speaker 1: has a plan and we're headed in the right direction,
Speaker 1: which you know when you look at the data. In fact,
Speaker 1: we are, but you've got to make the case over
Speaker 1: and over. Stay with us. Ricking Genie are here for
Speaker 1: the hour our sound on Signature panel on Bloomberg Radio.
Speaker 1: I'm Joe Matthew in Washington. If you're just joining us,
Speaker 1: We've got a big breaker. It's a pretty amazing headline
Speaker 1: to see. Actually a lot of people predicted it, but
Speaker 1: it's different when it happens. Elon Musk terminates Twitter merger agreement.
Speaker 1: It's right there, says his advisers. Sent a letter to
Speaker 1: Twitter formally notifying the company that he's killing the deal.
Speaker 1: Includes the letter to Twitter and an amended third teen
Speaker 1: D filing, which is why we've got it. And we
Speaker 1: talked with somebody who's on the beat here and I'm
Speaker 1: sure a very busy moment for man deep seeing Bloomberg
Speaker 1: intelligence tech analyst with the headline, man, deep, did you
Speaker 1: expect to see today? Well after yesterday, I think the
Speaker 1: Washington Post news it was kind of getting to a
Speaker 1: point where the uh, it was getting closer to our
Speaker 1: termination talking about bots a lot in the last couple
Speaker 1: of hours. I mean, the big story before this was
Speaker 1: was about the bots. Right, he didn't believe what he
Speaker 1: was hearing. Yes, And look, I think the market, uh,
Speaker 1: where it is right now with regards to you know,
Speaker 1: the other social media names and the evaluations for those companies.
Speaker 1: It was seemingly obvious that Elon Months had overpaid given
Speaker 1: the market, uh circumstances, and uh, I think he was
Speaker 1: looking to get out of the deal. Now the bod situation,
Speaker 1: you could argue, you know, and I'm sure there will
Speaker 1: be a suit you know from Twitter. Uh they will
Speaker 1: end up suing Months on on this. But look, on
Speaker 1: a standalone basis, you will see Twitter stock really go
Speaker 1: down to maybe around dollars who knows. And I think
Speaker 1: from that standpoint, uh, there could be another buyer if
Speaker 1: if they and and look, it could be a large
Speaker 1: one of the large tech companies that uh may think
Speaker 1: you know, Twitter has become cheap enough and it's it's
Speaker 1: an attractive asset for the long term. So that is
Speaker 1: one possible scenario. But I think Twitter will inevitably sue
Speaker 1: Musk in this case because he has terminated the agreement
Speaker 1: here down six percent now six and a quarter percent,
Speaker 1: and after hours trading as we follow shares of Twitter
Speaker 1: here in real time on Bloomberg. Do you think he
Speaker 1: ever actually meant to buy this company or was this
Speaker 1: a ploy to change the makeup of Twitter to become
Speaker 1: a hero for free speech. I think the time when
Speaker 1: he announced the murder, he felt like, you know, he
Speaker 1: had the funding and look, you know, he saw he
Speaker 1: sold a bunch of Tesla's talk and he had a
Speaker 1: few private investors joined him in the bid. But the
Speaker 1: market has changed so much over the course of the
Speaker 1: last two months that you know where the public equity
Speaker 1: market valuations are. It's seemingly obvious that, you know, forty
Speaker 1: four billion dollars was a very high price, uh, given
Speaker 1: the market conditions, and uh he that's why he's walking back.
Speaker 1: I mean, the box situation is really not the make
Speaker 1: or break factor here, at least in my opinion. But
Speaker 1: that's what he's alluding to in terms of, you know,
Speaker 1: what has changed materially after he has announced the deal,
Speaker 1: Twitter had been talking layoffs. If it were not for
Speaker 1: Elon Musk Well, so Twitter always had that cost structure problem,
Speaker 1: and for any prospective buyer of the company, they would
Speaker 1: have easily recognized the fact that their revenue per employee
Speaker 1: was much lower and the cost structure was bloated somewhat,
Speaker 1: you know, compared to the other social media platforms. So
Speaker 1: I think Twitter would have had to do that anyways,
Speaker 1: But he made that point, you know that why does
Speaker 1: a tech company like Twitter, you know, needs so many engineers,
Speaker 1: and why is the margins higher than there they were?
Speaker 1: You know, the force announced to deal boy, how about it?
Speaker 1: Uh Man Deep thank you so much for the insights.
Speaker 1: We'll let you get back to filing on this as
Speaker 1: we continue our coverage of course on the terminal and
Speaker 1: here on the radio with the panel. Rick and Genie
Speaker 1: and and I just would love to ask you both
Speaker 1: just quickly your thoughts on this. Rick, you obviously you
Speaker 1: work at Stone Court Capital. You have a good feel
Speaker 1: for this side of the business. When something falls apart
Speaker 1: like this, does it screen lawsuits to you? Yeah, I
Speaker 1: think that's the first thing you think about, is there
Speaker 1: there's a billion dollar breakup fee. That's not small change,
Speaker 1: and uh, I'm sure Twitter is gonna want to get
Speaker 1: their hands on that as quickly as possible. So, Um,
Speaker 1: regardless of whether Musk was sincere in this bid or
Speaker 1: whether it was a shield for other business activity, Um,
Speaker 1: he's probably gonna pay a price for it, but he
Speaker 1: can afford the billion dollars. So, Jenny, there's there's a
Speaker 1: personality story here as well, beyond the business. In the
Speaker 1: financial aspects here, we've been talking about babies being born
Speaker 1: the last couple of days. Uh, we're talking about boring
Speaker 1: under l a going back to Mars. You add this
Speaker 1: bizarre saga to Elon Musk's biography, is it just going
Speaker 1: to be a footnote? You know, He's he's got so
Speaker 1: much to offer, it's hard to tell. It's a big
Speaker 1: story today. Um, but he I'm sure has a lot
Speaker 1: to come. But you know, as you you step back,
Speaker 1: not only you know has he overpaid as Mondep was
Speaker 1: just talking about, um, but of course who wants to
Speaker 1: take on Twitter? He has now made himself the king
Speaker 1: of free speech in the world. And you can't be
Speaker 1: the king of free speech when you own the platform.
Speaker 1: So if he wanted to maintain that, and my senses,
Speaker 1: that was more important to him than owning Twitter. He
Speaker 1: had to step away from this, and of course he
Speaker 1: was over paying and he gets much more out of
Speaker 1: his ev businesses and his other businesses. Is clearly an
Speaker 1: excuse to get out of this, and it's a it's
Speaker 1: a probably the biggest breakup fee in the world if
Speaker 1: you can imagine and imagine if they take him to
Speaker 1: court and ask for all forty four billion of it.
Speaker 1: You know what this means, Rick, Donald Trump not coming
Speaker 1: back to Twitter. Yeah, that's probably the big political news.
Speaker 1: I wonder if truth social is going to go up
Speaker 1: in price. Uh, you know, I'm sure Donald Trump sitting
Speaker 1: there going dang. I was gonna hopefully get on Twitter
Speaker 1: before my big presidential announcement. But the reality is that, um,
Speaker 1: you know, this whole idea of free speech, Um, you know,
Speaker 1: I think a lot of people were really worried about
Speaker 1: his definition of free speech and uh and and unabated, uh,
Speaker 1: nonpoliced activity on the web is exactly what got us
Speaker 1: in trouble on January six. You know, when we when
Speaker 1: we saw the attack on the Capitol So I think
Speaker 1: that's only going to continue the debate, especially on Capitol Hill.
Speaker 1: What kind of regulations do these platforms need to have,
Speaker 1: and and and what kind of government intrusion into that
Speaker 1: world is there going to be? Because I don't think
Speaker 1: it's a question of if it's only going to be
Speaker 1: a question of what Genie, there was a whole free
Speaker 1: speech a conversation that that this started that we've alluded
Speaker 1: to here a little bit. Um is it over? Now?
Speaker 1: Does anyone else? I mean, man Deep mentioned there could
Speaker 1: be another buyer here. Certainly if if Twitter bleeds out,
Speaker 1: maybe somebody comes along to buy it. But we now
Speaker 1: know how complicated this is. If you're buying that algorithm, boy,
Speaker 1: you've got a lot of pressure to deal with this
Speaker 1: in a certain way. Is everyone going to kind of
Speaker 1: forget that whole part of a conversation. I don't think
Speaker 1: they'll forget it. I think there will be other buyers,
Speaker 1: Oh oh please, just for us. Could Donald Trump be
Speaker 1: among that? I just hope. I don't think he can
Speaker 1: afford it, Yeah, I don't think he can afford it,
Speaker 1: but maybe he has friends who can. But I do
Speaker 1: think there's gonna be other buyers. Um And I do
Speaker 1: think that Bob iss you will continue to be a concern.
Speaker 1: But again, I don't think there's real clarity on the
Speaker 1: fact that this was what, you know, what pushed Elon
Speaker 1: Musk out of the deal. It seems that for a
Speaker 1: long time he has been looking for a way out
Speaker 1: and he has finally found one and he's gonna have
Speaker 1: to now pay the price for that. And on the
Speaker 1: and on the you know, the issue of free speech
Speaker 1: and an absolute free speech that is going to continue
Speaker 1: to be a huge political discussion in this country and
Speaker 1: around the world. It kind of made him a political
Speaker 1: figure in a way that he was not before. Uh Rick,
Speaker 1: is there a future for that side of Elon Musk?
Speaker 1: Now that he's moving away from Twitter, he goes back
Speaker 1: to SpaceX and Tesla. But my goodness, he was he
Speaker 1: was tweeting about not just free speech, but never voting
Speaker 1: for a Democrat again, and a lot of people were listening. Yeah,
Speaker 1: a lot of people were listening. I mean, he's got
Speaker 1: a massive Twitter following. Uh he is influential to a
Speaker 1: large segment of society and many voters. So sure, I
Speaker 1: think he remains a figure in the political world now
Speaker 1: that he's sort of entered it. Uh, he doesn't have
Speaker 1: the platform that he was going to have at Twitter,
Speaker 1: but he certainly does have a presence on Twitter that
Speaker 1: is is only compared to a few individuals. So he's
Speaker 1: gonna he's gonna use his voice. And it wouldn't surprise
Speaker 1: me that he doesn't have more investments in this area
Speaker 1: to continue to push his brand of free speech. I mean,
Speaker 1: start a new platform, sure, I mean he's he's started
Speaker 1: a lot of platforms. I mean most we we we
Speaker 1: know about his cars and his in his in his space.
Speaker 1: But he's born tunnels under l a, He's putting solar
Speaker 1: panels on roofs, He's doing all kinds of things. So, uh,
Speaker 1: he is unstoppable in as an entrepreneur, and I wouldn't
Speaker 1: be surprised that he shows up somewhere else here. I'm
Speaker 1: looking at his Twitter feed. He hasn't said anything in
Speaker 1: twenty three hours. The last tweet from Elon Musk super
Speaker 1: fired up for future product development with our awesome Tesla team.
Speaker 1: Such an honor to work with them, certainly had nothing
Speaker 1: to do with Twitter, who shares We continue to follow
Speaker 1: after hours heading lower, but off their lows at least
Speaker 1: of the session. Here, we're down a little bit less
Speaker 1: than six percent, a little more than two dollars a share.
Speaker 1: Uh Man Deep mentioned the stock could go down to
Speaker 1: twenty five dollars. That would be painful. It's still just
Speaker 1: below thirty five dollars this year with the losses. He
Speaker 1: today the Big Tech team leader, Sarah, thank you for
Speaker 1: stopping what you're doing to talk with us. We didn't
Speaker 1: think we'd be having this conversation this afternoon, or did you.
Speaker 1: Oh I knew something something was cuming, something of brewing.
Speaker 1: But you know, we've said over and over again that
Speaker 1: it's not as simple as Elon much saying he doesn't
Speaker 1: want to buy Twitter anymore. There has to be a
Speaker 1: materially adverse effect um that changes the nature of the
Speaker 1: company since he bought it in order to justify leaving.
Speaker 1: And I just wonder, you know, Twitter has said that
Speaker 1: they are definitely going to bring Elon Musk to court
Speaker 1: and fight so that he has to go through with
Speaker 1: this deal. I just don't know if the boss argument
Speaker 1: is going to be enough um for him to get
Speaker 1: out of it. And and the maybe the stronger argument
Speaker 1: in his letter his team's letters to Twitter is about
Speaker 1: the fact that Twitter has had to do a lot
Speaker 1: of of cost cuts and changes in its business, a
Speaker 1: lot of a lot of changes to the structure of
Speaker 1: firing of a couple of senior leaders. You mean since
Speaker 1: the bid or or or over the past period of
Speaker 1: time here since the bid, over the cost few months
Speaker 1: we were just talking about that, which so would that
Speaker 1: have happened? Would layoffs have been on the conversation without
Speaker 1: Elon Musk, Well, I I think that they might have still.
Speaker 1: You know, that's some of the guidance we're getting, just
Speaker 1: that it is a tough time in the advertising market
Speaker 1: right now That is going through it. Twitter is going
Speaker 1: through Google going through it. But you know, maybe not
Speaker 1: to the extent they're sort of in limbo right now
Speaker 1: with Twitter. They've been waiting for this deal to go through,
Speaker 1: and there's not that much that they can materially change
Speaker 1: about the business and um, and that's one reason probably
Speaker 1: why they had to make these changes. Um. But Elon
Speaker 1: Musk has has been in communication there, his team has
Speaker 1: been in communication with Twitter this whole time. In my
Speaker 1: from my perspective, it looks like he just he got
Speaker 1: cold feet here and doesn't want to go through with it,
Speaker 1: but he already the deal almost it's almost too late.
Speaker 1: So they're accusing though Twitter if not not complying with
Speaker 1: its obligations. Right. They say Twitter did not give Elon
Speaker 1: Musk the the information he requested and that gives them
Speaker 1: the out. As you know, he continues to doubt their
Speaker 1: their claims about the number of of of bots uh
Speaker 1: that are actually out there? Does that not stand up
Speaker 1: in court? Well, you know, we'll have to see. Elon
Speaker 1: Musk has a good track record of getting his way legally. Um.
Speaker 1: But I think that that you usually you do due
Speaker 1: diligence before you sign a deal contract um. And And
Speaker 1: Elon Musk waves the right to look at a lot
Speaker 1: of the internal documents at Twitter, and Twitter has handed
Speaker 1: over access to the fire hose of public tweets. Um.
Speaker 1: But they've also said listen, you know, we can't really
Speaker 1: no one on the outside can really answer this question
Speaker 1: of of how many bots there are on Twitter. And
Speaker 1: in fact, I think it's almost impossible for anyone period,
Speaker 1: even people on Twitter, to answer that question because the
Speaker 1: definition of what is a bot It just vary depending
Speaker 1: on who you talk to. So I really think it's
Speaker 1: a tough spot for the company, and certainly if the
Speaker 1: deal doesn't go through, it could be um, could be
Speaker 1: even worse. Yeah, that's a heck of a business model.
Speaker 1: The stocks down and after hours trading. Could it be
Speaker 1: much more severe as we move ahead? I think you know,
Speaker 1: things could could definitely get worse from here. Um. We
Speaker 1: may we may see Twitter have to file lawfood next Um,
Speaker 1: and we'll just have to see how it how it
Speaker 1: works out. I I think you know it's it's so
Speaker 1: it's very rare for somebody to agree to buy an
Speaker 1: individual person to agree to buy a company for forty
Speaker 1: four billion dollars and not want it after. It's just
Speaker 1: it's such a rare situation, you guys. I just so,
Speaker 1: what are you allowing? I don't know that. I don't
Speaker 1: know that we can we can draw on any past
Speaker 1: experience here? Um? What am I? What am I looking for?
Speaker 1: What are you allowing for? With that in mind? What?
Speaker 1: What could happen in your wildest dreams here? Well? I
Speaker 1: mean I think that that he could be held to it, right,
Speaker 1: he has a financing lined up, he could be Um,
Speaker 1: he could find a way out. Some of these arguments
Speaker 1: may work. Um, and you know, there could be there
Speaker 1: could be some other kind of of partial ownership they
Speaker 1: could bring, bring him to the negotiating table, maybe Twitter's board. Um,
Speaker 1: you'd rather than go to court ends up getting Elon
Speaker 1: muss to to come in and come up with some
Speaker 1: you know, investment option or some other version of a deal,
Speaker 1: or a deal at a lower price. Um, And maybe
Speaker 1: that that latter option would be the most likely. Is
Speaker 1: that you know, they say, hey, you know, we still
Speaker 1: want you to buy Twitter. Maybe we could do it
Speaker 1: for a little less. Wouldn't that be something falling right?
Speaker 1: I love your imagination, Sarah Fryar. How about the idea
Speaker 1: of other buyers? Who is there anyone likely on that list?
Speaker 1: Twitter was kind of hoping that somebody might show up
Speaker 1: to to try to outbid Elon Musk at the beginning.
Speaker 1: That obviously isn't going to be in the cards. But
Speaker 1: if we're starting from scratch, anyone sound realistic? Well, I
Speaker 1: think that they're they're not gonna do much better I
Speaker 1: think than than fifty twenty a share. But maybe there's
Speaker 1: a less dramatic buyer that could come to the table.
Speaker 1: I UM don't think that we would be able to
Speaker 1: see you know, somebody like Meta or Alphabet do it.
Speaker 1: Because there's so much antitrust pressure. Washington wouldn't let that
Speaker 1: happen with one of the big tech companies. Microsoft isn't
Speaker 1: going to get to that. Yeah, any of the big
Speaker 1: tech companies would be very tricky. So so um, you know,
Speaker 1: Twitter's on on the hunt for a suit or before
Speaker 1: in the past we've seen Disney sales Force, Google consider it.
Speaker 1: I I really think that this story could could get wilder,
Speaker 1: or you know, something could could fizzle, and then Twitter
Speaker 1: will be back to back to the drawing board with
Speaker 1: itself and trying to make trying to make a business
Speaker 1: that gets the shares that got to fifty four twenty,
Speaker 1: which is the really tough thing. Boy, Sarah, thanks so
Speaker 1: much for chiming in here. This is great to be
Speaker 1: hearing from the entire Bloomberg universe. You know, we've had
Speaker 1: a lot of people who have been working on this
Speaker 1: story since this all started, and I'm guessing most of
Speaker 1: them are as shocked as you are. Jeff Feely joins
Speaker 1: us right now Bloomberg News legal reporter with the headline
Speaker 1: must Twitter buy out? Fight poses question of who might
Speaker 1: sue first, Jeff, it's inevitable that we're going to court.
Speaker 1: But how does it start. Well, it just depends on
Speaker 1: who's got the trigger finger. Musk is Mr Musk is
Speaker 1: known as being a very aggressive individual. I wouldn't put
Speaker 1: it past him to try to file something preemptively to
Speaker 1: ask a delaware judge. Hey, bless my my decision to
Speaker 1: nix this. I'm in the right. Twitter could easily also
Speaker 1: pull the trigger first. To some degree, they got the
Speaker 1: stronger hand. They've got an agreement sitting there, signed, sealed, delivered,
Speaker 1: and negotiated, and you know, it's going to be difficult
Speaker 1: to prove that this bot issue is a material adverse
Speaker 1: change that sinks the deal because there were just as
Speaker 1: many bots before, right, and Twitter says it already gave
Speaker 1: Musk the info and he's obligated now to complete the deal.
Speaker 1: As you point out in your piece, that's right. The
Speaker 1: number of bots hasn't changed. And you know it's according
Speaker 1: to the tech team, folks, it's not unusual to have
Speaker 1: difficulty segregating out the humans from the robots, you know,
Speaker 1: or the non human stuff. You gotta have some really
Speaker 1: bad stuff to get a material adverse change. Ruling in Delaware.
Speaker 1: We've only had one clear one. So what does that
Speaker 1: mean for Elon Musk. It means that it means that
Speaker 1: he's going to have a very tough road to ho
Speaker 1: on this. You know, Sarah was talking about the possibility
Speaker 1: of him being drawn back to the negotiating table based
Speaker 1: on what you just described. Uh, you know, the legal
Speaker 1: mess that could follow, and maybe there's a lower buying
Speaker 1: price in the end. Is this Is this another bizarre
Speaker 1: negotiating point. Yes, this has done all the time. I
Speaker 1: call it arbit larbitrage by lawsuit or negotiation by lawsuit.
Speaker 1: Somebody's gonna have to file because we're you know, we
Speaker 1: got this game of chicken right here. In the end,
Speaker 1: this could be nothing more than the markets have moved
Speaker 1: evaluations off. You guys got to cut the Twitter of course,
Speaker 1: is saying hold on, buddy, you negotiated this, You had
Speaker 1: smart lawyers. You're the smartest guy in the world. You know,
Speaker 1: you're the richest guy in the world. What do you
Speaker 1: mean we've got to get a new price. Well, I'll
Speaker 1: tell you what, fifty four dollars this year it seems
Speaker 1: a far way off. We're below thirty seven right now.
Speaker 1: We're down seven percent after hours. What the heck happens
Speaker 1: on Monday when the markets reopen Here in old boring Delaware,
Speaker 1: we call that fires remorse. Well, I'll tell you what
Speaker 1: I earlier. We talked to man Deep on the air
Speaker 1: about this. He says it could go down to twenty
Speaker 1: five if that happened, wouldn't Twitter maybe turn around and say, hey,
Speaker 1: let's find another buyer here? This is this is obviously
Speaker 1: selling it a discount. I mean, you're beyond my legal expertise,
Speaker 1: but common sense would say, yes, I don't mind going
Speaker 1: beyond your your expertise here because I think it'd be
Speaker 1: fun to take you completely off the rail. Uh at
Speaker 1: this point, Jeff, because you're fun to talk to. But
Speaker 1: I think I think my colleague that just was on
Speaker 1: said it fast. I mean, they've tried this before, They've
Speaker 1: looked around, and you know, there's no ice cream sitting
Speaker 1: there waiting for anybody to scoop up. Understood, But is
Speaker 1: Elon Musk laughing right now while we're talking about this,
Speaker 1: knowing that he's going to end up buying Twitter at
Speaker 1: a lower price. I saw something that said he thrives
Speaker 1: in the environment of chaos. So is he laughing? Probably?
Speaker 1: I saw him on the stand and he thinks he's
Speaker 1: terribly funny, believe but but you know this is this
Speaker 1: is billions of dollars, serious business. I wouldn't be laughing.
Speaker 1: He's talking on Saturday Night and Sun Valley, right, he's
Speaker 1: talking at the closing Sun Valley the Big Closer. Does
Speaker 1: he mention this or is that a legal liability? I'm
Speaker 1: asking you that seriously. Yeah, well, I think he's not.
Speaker 1: I think he has to not say a word. I
Speaker 1: can't point about this. Yeah, I would say again, I
Speaker 1: don't you know, I'm not a complete m and a lawyer.
Speaker 1: I just play one on TV. But you know it's
Speaker 1: I think he's got to not say a word. Find
Speaker 1: Jeff's column on the terminal Musk Twitter buyout fight, pose
Speaker 1: this question of who might sue first, and you can
Speaker 1: see a little more where Jeff is going here. Jeff,
Speaker 1: you need to have your own show. Yeah, yeah, that's
Speaker 1: what I need. I need to get paid twice, have
Speaker 1: a radio show and do what I do. Yeah, it's
Speaker 1: get paid twice. I like the world you live in,
Speaker 1: Jeff Feely fantastic. I delighted that we got Jeff's comment
Speaker 1: in there as we reassembled our panel, Rick Davis, Jeanie Chanzano,
Speaker 1: Bloomberg Politics contributors, we didn't know we'd be talking about
Speaker 1: this this evening. We had a whole different plan as
Speaker 1: a matter of fact. But this really is something here, Rick,
Speaker 1: with your experience in the investment world, is this hardball negotiating? Yeah, well,
Speaker 1: who knows if it's a negotiation. I mean, I think
Speaker 1: you'll almost might not take You have to take us
Speaker 1: at his word, which is he's walking away from this transaction.
Speaker 1: And as Jeff was saying, there are all kinds of
Speaker 1: consequences legally to that, depending upon who files first, and
Speaker 1: who's angry, and and and if there's a scoop of
Speaker 1: ice cream laying around for somebody else to pick up.
Speaker 1: But uh, I I now have a new business theory,
Speaker 1: the scoop of ice cream theory. I like it. I
Speaker 1: love it. Uh And so um so, look this is
Speaker 1: gonna play out. And I do think Saturday will be
Speaker 1: interesting to see what Elon must says, because I mean
Speaker 1: he is not used to listen to lawyers. I mean,
Speaker 1: anybody you would talk to would say, lawyer up, now
Speaker 1: do no more. Further damage. Don't give anybody an opportunity,
Speaker 1: and this guy will not take that advice. I mean,
Speaker 1: we could learn all kinds of interesting new things from him,
Speaker 1: and and he does win more than he loses, you know,
Speaker 1: in the court of loss. So you have his a
Speaker 1: fixed legal team or or I mean, my goodness, when
Speaker 1: if you're the richest person in the world, you're not
Speaker 1: you're not hiring new lawyers, are you. Oh? First of all,
Speaker 1: he got a fixed legal team, but he has also
Speaker 1: got access to every lawyer in the world, and and
Speaker 1: and and if you are the richest man in the world,
Speaker 1: you don't care how many lawyers you have. It's just
Speaker 1: it's a rounding air. So for him, he's gonna find
Speaker 1: people who can do the best possible job of representing him,
Speaker 1: regardless of what whether it's a suit that he's filing
Speaker 1: against uh Twitter, or whether Twitter is coming after him
Speaker 1: or shareholders. Remember there are a lot of shareholders who
Speaker 1: have seen since his offer their value and Twitter go
Speaker 1: down in half, and they're not going to be very
Speaker 1: happy about this. So the third party out there are
Speaker 1: all the shareholders are sitting there looking us. Wait a minute,
Speaker 1: you know we have we have a lawsuit waiting to file.
Speaker 1: Then there's the workforce genie, and they have been through
Speaker 1: a tumultuous time here. Uh, you know, it's been outrage
Speaker 1: for some Elon Musk did address the workforce layoffs have
Speaker 1: been have become a reality and a lot of questions
Speaker 1: about what they might be headed for. Uh, how do
Speaker 1: you recover from that level from a management standpoint when
Speaker 1: when you've got a workforce that's been traumatized. Yeah, it's
Speaker 1: gonna be difficult, and it's going to depend, of course
Speaker 1: on if you know, Elon Musk eventually ends up coming
Speaker 1: back into this deal or somebody else takes it, and
Speaker 1: who the management ends up being. And of course, you know,
Speaker 1: this idea that he could use this body issue and
Speaker 1: use that as a material adverse effect is hogwash. He
Speaker 1: himself tweeted in late April that if the bid succeeded,
Speaker 1: they're going to defeat the spam boxer die trying. So
Speaker 1: how could he now flip around or his lawyers better yet,
Speaker 1: and say that this was a materially adverse effect. So
Speaker 1: you know, he has himself in quite a bind. But
Speaker 1: I do think that he's going to say something if
Speaker 1: you know, if you follow Elon Musk. I mean, he
Speaker 1: may very well say something out in Sun Valley, and
Speaker 1: there's a lot of people out there with him, including
Speaker 1: one of our favorite, other favorite, Joe's Joe Mansion. So
Speaker 1: it's why the gathering out there. And you know, when
Speaker 1: the first time they tell him not to speak, he's
Speaker 1: probably going to say something right away. All right, we
Speaker 1: don't have much time left here, but we're gonna add
Speaker 1: one more voice to this conversation. Rick and Jeanie stay
Speaker 1: right where you are as Kurt Wagner joins us Bloomberg
Speaker 1: News tech reporter who's literally been filing on this in
Speaker 1: real time, and I appreciate you getting on the line
Speaker 1: with us here, Kurt. What's going through Elon Musk's mind tonight.
Speaker 1: I guess he's finally got what he wanted, which is,
Speaker 1: you know, to to get out of this deal, which
Speaker 1: is what it feels like he's wanted for a couple
Speaker 1: of weeks. Now. I thought that he would try to
Speaker 1: renegotiate the price. Um maybe he did behind the scenes
Speaker 1: and that didn't work, so he said, Okay, I'm gonna walk.
Speaker 1: I don't know, but I think if you followed this,
Speaker 1: you could tell that from the last few weeks, he's
Speaker 1: really been uh, you know, backtracking from this original excitement
Speaker 1: of buying Twitter in late April to constantly kind of uh,
Speaker 1: you know, pouring water on this deal. And do you
Speaker 1: believe he did want to buy it ulgitimately? At one
Speaker 1: point this was a real effort to buy this company.
Speaker 1: It's hard to say that it wasn't if you're willing
Speaker 1: to go you know, I don't know, I guess I
Speaker 1: it's hard for me to imagine the kind of person
Speaker 1: who would go through this whole thing without having an
Speaker 1: intention of doing it. But think of what has happened
Speaker 1: at the stock market over the last two months, right,
Speaker 1: I mean, the Twitter deal he made in April looked
Speaker 1: a lot different than what a Twitter deal would look
Speaker 1: like today. And obviously he didn't know that at the time. Okay,
Speaker 1: so could this go back to the drawing board? Well,
Speaker 1: I don't know, because right now he signed a merger agreement.
Speaker 1: Twitter said that it's planned and planning to enforce that
Speaker 1: merger agreement. I don't think it's really in Twitter's interest to,
Speaker 1: you know, give him a lower price when he's already
Speaker 1: agreed to buy it for a share so I think
Speaker 1: this is going to a court more than it is
Speaker 1: going back to a negotiating table. Yeah, we have quite
Speaker 1: an escapade here in court coming up. How long does
Speaker 1: that take? Do we have any sense? I mean, is
Speaker 1: this tied up in court for for years? Kurt? I
Speaker 1: don't know, because this isn't something that happens very often. Um.
Speaker 1: The question I asked a few weeks ago, and most
Speaker 1: of the response I got from people was like, we're
Speaker 1: not really sure because we haven't seen you know, this
Speaker 1: is rare, right, So it's possible they settle. I would
Speaker 1: probably think both sides would be very eager to settle
Speaker 1: to avoid doing something that could take you months, if
Speaker 1: not years. Um. But you know, a lot of this
Speaker 1: is sort of uncharted, I think, especially with the big
Speaker 1: names that are involved, Kurt. We just got a statement
Speaker 1: from Twitter. It's probably in your email from chairman Brett Taylor.
Speaker 1: This is the official line from the company and the
Speaker 1: first we're hearing of it. The Twitter board is committed
Speaker 1: to closing the transaction on the price in terms agreed
Speaker 1: upon with Mr Musk. Sounds a lot like what Kurt
Speaker 1: was just saying, and plans to pursue legal action to
Speaker 1: enforce the merger agreement. We are confident we will prevail
Speaker 1: in the Delaware court. Uh, they do have quite a
Speaker 1: leg to stand on here, Kurt. They say they already
Speaker 1: gave all of the inform nation that Elon Musk requested,
Speaker 1: so it's now up to Musk to prove they did not.
Speaker 1: I think I think that's right, because again, he the
Speaker 1: agreement is signed, right, so at this point, if he
Speaker 1: wants to break that agreement, he needs to be the
Speaker 1: one to kind of prove that Twitter did something wrong here.
Speaker 1: And um, we don't know exactly what Twitter shared with him,
Speaker 1: but the company clearly, as you just read, is claiming
Speaker 1: that they've shared everything necessary. Um, so I think it's
Speaker 1: going to be up to him to prove that they
Speaker 1: acted in bad faith in some way. How does this
Speaker 1: start Monday morning in court? Um? I imagine it takes
Speaker 1: the lawyers a little bit more time to to uh
Speaker 1: get into a courtroom. But I'm sure there's going to
Speaker 1: be paperwork filed. I wouldn't be shocked at their stuff
Speaker 1: filed by the end of the weekend. That's more what
Speaker 1: I mean. Yeah, incredible, good luck with your coverage this weekend.
Speaker 1: Something tells me Kurt's work and Kurt Wagner, great talk.
Speaker 1: Thank you for being here, Bloomberg News Tech reporter, as
Speaker 1: we bring you as many voices of authority that we
Speaker 1: can on this ory breaking. If you're just joining us,
Speaker 1: it's uh, it's not looking good for Twitter in the
Speaker 1: after hour session, now down nine percent after Elon Musk
Speaker 1: announces that he is pulling out of the deal. Final
Speaker 1: thoughts from Rick Davis and Jeanie Schanzano. Uh, your insights
Speaker 1: in the clutch are ever valuable here, Rick, this is
Speaker 1: going to be an interesting couple of days. As we've
Speaker 1: already pointed out, anything could happen in Sun Valley, and
Speaker 1: every time that Elon Musk walks in front of a
Speaker 1: camera or or I guess a Twitter feed, UH, this
Speaker 1: could change. I'm amazed though, that we haven't seen him tweeting,
Speaker 1: aren't you. Yeah. I mean maybe the lawyers have prevailed
Speaker 1: and gotten him to lawyer up a little bit, but
Speaker 1: I just don't know how long that can last with
Speaker 1: Elon Musk, right, I mean, he's he's more right than wrong,
Speaker 1: and he's not gonna just listen to a bunch of
Speaker 1: lawyers are trying to protect his his interest. He's gonna
Speaker 1: believe that he's got to defend himself, especially because he
Speaker 1: will probably come under withering attack over the weekend and
Speaker 1: he'll pay attention into that, so he'll I'm sure there'll
Speaker 1: be a reaction, Jenie. At one point, there was the
Speaker 1: idea of making Twitter a public trust, essentially that it
Speaker 1: would become a nonprofit. You know, if you really wanted
Speaker 1: to realize the town square, the digital town square concept,
Speaker 1: you have to get the ads off of there. You
Speaker 1: have to get rid of the algorithms and make it
Speaker 1: as pure as you can. Is that conversation come back
Speaker 1: or is that just happy talk? Nobody nobody's going to
Speaker 1: be spending money on that. You know, it is a
Speaker 1: way to address some of the speech issues, but but
Speaker 1: I'm not sure that in this day and age, that's
Speaker 1: you know, a likely scenario. I think, you know, depending
Speaker 1: on what happens with with Elon Musk and with Twitter,
Speaker 1: that if there are other buyers in the offing, this
Speaker 1: is you know, still a very very valuable platform and
Speaker 1: depending how on how much they can get it, it
Speaker 1: is a valuable platform. And I do think you're going
Speaker 1: to have other buyers in the offing if not Elon
Speaker 1: Musk and they renegotiate this thing. And I think this
Speaker 1: makes the weekend a lot more interesting than it otherwise
Speaker 1: was going to be. Sylvia is tweeting at us here
Speaker 1: Jeanie and says what about other buyers, Microsoft, Tech companies,
Speaker 1: Google and so forth? Rick that that's that's a problem
Speaker 1: in Washington though, right as we discussed earlier this hour,
Speaker 1: the antitrust element just makes that impossible. Yeah. Absolutely, Uh.
Speaker 1: The only group of people, uh that Congress dislikes more
Speaker 1: than China is a big tech and likelihood of more
Speaker 1: consolidation is going to be very hard to pull off
Speaker 1: either at the Justice Department, which has a whole new
Speaker 1: of a batch of of of lawyers who were anxious
Speaker 1: to break up big companies, UH to Capitol Hill, who
Speaker 1: want to diminish the power that these groups have over
Speaker 1: the public discourse. And I would say the one guy
Speaker 1: I'm really anxious to hear from his President Biden, because
Speaker 1: his war with the Elon Musk is legendary and I
Speaker 1: can't imagine him not taking a shot into this some Wait,
Speaker 1: you know that's a great point. Are we gonna hear
Speaker 1: from Joe Biden? You know? On his way to the
Speaker 1: on his way to the airplane this weekend when he's
Speaker 1: heading out of town. Jennie, I would hope we don't.
Speaker 1: He should he should have learned his lesson and stay
Speaker 1: out of this, but we very well might because he
Speaker 1: gets very frustrated with Elon Musk obviously, And you know,
Speaker 1: and I think Sylvia does raise a really a really
Speaker 1: good point. But I do agree with Rick. I think,
Speaker 1: you know, this is going to be fascinating to see
Speaker 1: how this plays out in the courts. But you know,
Speaker 1: I think there's still a possibility they renegotiate this thing,
Speaker 1: and this could be in negotiating uh, you know, ploy
Speaker 1: on his part, and they could, uh, you know, settle
Speaker 1: this out of court, because imagine that fiasco if they
Speaker 1: tried to do it in court. Boy, what a conversation, NonStop,
Speaker 1: fastest hour in politics and business depending on the day,
Speaker 1: Rick Davis, thank you, great to have you back in.
Speaker 1: Jeanie Schanzano, of course, your insights ever valuable here in
Speaker 1: the conversation on Bloomberg Radio. Sound On is the name
Speaker 1: of the program. You should absolutely subscribe to the podcast
Speaker 1: and be like Sylvia, send us a tweet while we're
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