Sound On: Musk Bails on Twitter Deal, June Jobs Data

base has been demoralized with Biden? Sometimes, I think unfairly because he's not seen as being angry enough. Bloomberg Sound On with Joe Matthew on Bloomberg Radio. All of the jobs lost in COVID restored, according to the White House. Welcome to the fastest hour in politics, as we check under the hood of a stronger than expected jobs report today and what it means for inflation and the Biden

administration's economic agenda. Joining us to discuss in just a moment, Austin guls Be, former Chair of the White House Council of Economic Advisors. Later it may be the biggest economic story that no one is talking about. Enhanced subsidies for Obamacare are set to expire at the end of the year. Democrats are worried about the potential impact and whether they

can find a solution in time. We'll talk about it with the architect of the Affordable Care Act, Professor John Grewbery, economist at m I T. And our signature panel is in place on a Friday, Bloomberg Politics contributors Rick Davis and Genie Chanzano helping us distill all of the news over the course of the hour, and first we update the markets on a Friday here and in the wake of the jobs report of mixed finish for Wall Street, little changed actually in the end, the S and P

five hundred down three points, the Dow Industrial Average down forty six, but the NASDAC finished higher, up four team, making for the longest wind streak on the NASDAC since November. All three indexes banked games for the week. The NASDAK was actually the big winner of four point six percent this week, the S and P two the ten year note yielding three point oh seven percent. Traders reacting to us stronger than expected jobs report, which we're going to discuss.

As I mentioned in a moment with Austin Gulsby, showing payrolls up by three hundred seventy two thousand jobs. Estimates were calling for two hundred and fifty k, the unemployment rate holding steady at three point six percent. So President Biden spoke to the job gains today in an event at the White House. Here he is, our private sector has now recovered all of the jobs lost during the

pandemic and added jobs. On top of that, we have more Americans working today in the private sector than any day under my predecessor, more today than any time in American history. Labor Secretary Marty Walsh was also upbeat when he appeared on Bloomberg after the release of the report, but he tried to maintain little perspective fears. The Secretary the waves growth was seeing the biggest well some of

the biggest gain and the lowest income earners, which is good. Obviously, were still telling with inflation and and and the wage growth isn't quite keeping up with inflation. But I think what we want to do is actually bring inflation down. Let's get into that and get into the fine prints and the messaging from this White House with someone who has been their former chair of the White House Council of economic Advisors now Professor of economics at the University

of Chicago's Booth School of Business. That's Austin Gouls being welcome Stirt back to Bloomberg. Thank you for having me back. Always our pleasure. Today's jobs report shows unexpected strength in hiring from last month. Does this make you feel more confident that we can avoid a recession? Yeah, a little bit. I mean it was a pretty amazing report. Uh, the unemployment rates three point six percent, and you don't normally put up three hundred and seventy two thousand new jobs

a month when the unemployment rates already that law. Um, And this follows on We've been month after month, we've been having these these big jobs reports. If if we keep having jobs numbers like that, no one will say it's a recession. It's not. It's not a recession if jobs are growing like that. Um. But we we're definitely not out of the woods. Hopefully it's a sign of soft landing. But you know, the Fed is raising rates as fast as as any time in in Hodern memories.

Does this put you in the seventy basis point camp or were you already? Yeah? That from from their language, I think seventy five base points is quite likely, and um more than two thirds of the recessions in the United States since World War Two, since we've been keeping track, have started because the Fed raised interest rates faster than the economy can handle. So at a moment where they're raising rates like that, you know, it might not be

a knife's edge, but it's it's definitely not. There's there's not a lot of mark and for error wage growth. If they go too far, it could be a problem. Yeah, of course there's concern about wage growth here. And I don't mean to sound cold, but average hourly earnings up over five from a year ago. Raised a lot of eyebrows. This is good for workers, of course, Austin, but the inflationary aspect is not. Do you see wages pressing here?

Tell me why? Well, because it's less than prices. I mean, I thought you were gonna say that there are critics on the wage side because the real wage continues to fall. But there's no evidence in this report of a wage price spiral. I mean the way wages are up less than prices are up, So you don't see a tight market exacerbating the inflation problem. So far, not a wage price FIRL. Absolutely not like I say, the real wage

is falling. We've we've never had the unemployment rate below four in this country, and real wages were going down, not up. Normally, when the unemployment rate is that low and the labor market is this type, there's a dramatic increase in the bargaining power of workers, and their real wage goes up, their wage goes up faster than businesses.

Prices go up, and the business profit margins shrink. And that's that's what happened in the in the years before COVID, That's what happened at the at the mid two thousand's, before the financial crisis, that's what happened at the end of the nineties. All of those were periods where people say, Wow, what a type labor market. We have to pay people more than our prices are going up, so we're getting squeezed.

For all of the smoke that's coming from the business sector about labor shortage, it's pretty notable that business margins have increased and the real wage has not. If you're an employer and you're paying five more than you were a year ago, doesn't that become inflationary? Your prices are up eight percent and your costs are up five percent, so your profit margin got bigger. It could become a problem.

You should never make too much about trends from one month's numbers, but for wages to be up five percent, which is a decrease, and to be up less than prices, As I say, the good news on the inflation front is that's that's not what a wage price spiral of inflation looks like. And you've at least seen inflation starting to come down and the world price of oil starting to come down. Hopefully that continues. The participation rate fell last month just a bit, but specifically the rate for

workers to fifty four hit a four month low. The number of America is not in the labor force rose to the highest level that we've seen this year. How come people are not coming back to work the way many expected or hoped. Ye, yes and no, I mean as I say, don't don't make too much out of any one month's number. Overall, there's enough astounding unexpected increase of people coming back to work and the for the

much remarked upon rising to quit rate. It's worth emphasizing that the vast majority of people that have quit their jobs. Quit their job not to go home, but quit their job because they had another job that paid more than the job they had before. So we'll have to see if this monthly blip is an indicator that participation is actually going down. If you have two openings for every job seeker, though, is that a good thing or not? Well, you know, compared to what I mean, I it's good

for the worker, but how about the broad economy. Yeah, it's excellent for the worker. The fear you have for the economy is that could something a situation like that could lead to a wage price spiral if you're already

starting from a period of high inflation. And in a way, the large number of vacancies compared to the how many unemployed workers there are gives the FED hope that they can do their so called soft ish landing, that you could reduce the number of job vacancies without actually increasing the number of unemployed people. And that would be a

that would be a great accomplishment. And you know, given the numbers like what we're seeing this month, it definitely seems more doable um and and a little less of a risk of stagflation from your compared last year I want to ask you, Austin, to be about the messaging around all of this. As President Biden refers to the Putin price hike and Americans see their prices continue to rise his approval ratings. I don't need to tell you how would you advise this administration in how to talk

about these challenges. You know, I always say, don't don't ever ask message advice from a guy with a PhD. You've done. Your first thing i'd say is don't ask me. But you know, it does feel like the administration has tried several explanations with varied success, and certainly in the polling people expressed that they don't think the economy is good as high as share if not more people say it's going badly in the economy, as said so in

the middle of the Great Recession. So that's been very How that's happening when the unemployment rate is three point six percent? Is is is odd? And you've got the second odd thing happening in the polling data where big majorities say, asked, how's the economy, they say bad, but when asked about their personal situation they say good. So we've never had a bigger difference between the my own

finances are okay. The economy overall is no good. So I kind of think, no matter what you say, as long as the unemployed, as long as the inflation rate is as high as it is, and until we start seeing progress on the inflation rate, I kind of think it might not make any difference what you say or what how you describe it. Should Democrats seek a reconciliation bill this year or is is that the wrong message? Uh?

They probably should on the grounds of what's in the bill, not on the grounds of inflation, because you know, it's a whole separate topic. But if you pass a bill that has actually increases on high income people to pay for it, that should have very little impact on how much the economy is overheated. So I think just spin that into the inflation discussion is Yeah, I don't know. It's funny because the President says that will help the

lower prices, Republicans say it'll make inflation worse. It's hard, hard to get a straight answer, So I think you're right. I kind of think both sides because inflations what's on people's mind. It feels like both sides are trying to spin an inflation story about it, and I think it has very little to do with it. Appreciate the insights as always. Austin Gulsby, We thank you for being with

us on Bloomberg. Yeah, great talking to you. Yet. President Biden says today's jobs report is proof that his economic plan is working, and again Republicans say the very opposite. So let's get into the politics around this. We'll do it next. As we assemble the sound on panel, Rick Davis and Genie Schanzano are ahead on the fastest hour in politics. We'll check traffic for you on the way. Glad you're with us. As I remind you as ever

to subscribe to the sound on podcast. You can do it easily, especially if you showed up late on this Friday. Stay with us. I'm Joe Matthew in Washington. This is Bloomberg. This is Bloomberg sound On on Bloomberg Radio. The headline on the terminal, Biden says, private sector employment has fully recovered. Just think about that, after the way things felt two years ago in the throes of COVID, when people weren't leaving their houses. You think we'd have a parade to

celebrate that kind of news. All the jobs are back to pre COVID, but of course it's not two years ago, with historically high inflation, now, a war in Europe, deep political divisions, malaised stare I say, it's just a different world, and that's why we assemble our panel to talk it out. Rick Davis is back with us. Jennie Chanzano here to Bloomberg Politics. Contributors make up our signature panel. Uh and Brick,

I'll start with you on this job's report. My goodness, a headline like that you think would get a president reelected without even thinking about it. But when you look at the rest of the environment that we're in here, it doesn't even make a splash today, does it. I don't think people will believe what he's saying. I mean, it's obviously a good report, he's obviously excited about it. It's an accomplishment of his administration to get to this point.

I mean, you know, above pre pandemic levels. Nobody thought this was going to happen, certainly this time. But when you look at other tracking mechanisms like the Mission Consumer Index, which tracks political success also, um, you know, it's the worst it's ever been. And we've seen some bad ones, including when I was running a presidential campaign in the middle of a you know, massive global economic downturn. And

it's worse than that. I mean, it's at the lowest point in its recordings since the nineteen fifties, so consumers aren't buying it. So when he says, hey, this is great news, I'm not sure anybody's going to agree with him. Well, I want to be fair with what he said as well. Let's listen as he did celebrate, of course, and and and and said even more than we played for you

about what's going right with the economy. Listen to President Biden framen this uh in terms of his own economic agenda while also kind of balancing everything else going on. I know times are tough, prices are too high, families are facing the cost of the limit crunch. But today's economic news confirms the fact, and my economic plan is moving this country in a better direction. Jeanie Schanzano, is

that enough? Is he qualifying it the right way? When I was listening to the President, I was I kept thinking, you know, he needs to explain why if the headlines are good and the report is really good, he's right about that, why does it feel so bad, and it sort of sounds like a bad country song, but that's literally the message that politically he needs to be able to commune a song. He's singing those the Putin price hike,

that's right. And I'm not sure that that gets to explaining it, because you know, I was listening to the president then the headlines throughout the day, and every single one of them them said great job numbers. But and of course the rule is anything before a butt is a lie. So great job numbers be damned. Nobody cares

about that. So he's going to have to do a better job explaining this, and you know, it's a hard thing to explain, and he also needs people and his surrogates out there explaining why there's still a They don't we don't all feel so good about this. We have breaking news on the terminal that I have to mention that has nothing to do with what we're talking about. Elon Musk, this is real. Elon Musk terminates Twitter merger agreement.

The buyout is off. Twitter stock right now is down seven percent after hours, and we'll keep tabs on this for you as we learn more. Of course, we're talking politics here as we wrap up the week in Washington, and the President said a lot more than he did about jobs today. This was actually an event that had to do with the end of Roe v. Wade uh the right to life. It's it's an executive order that he signed, and I'll let the President speak to it

here to try to protect some rights for women. Here's what he said. The executive order directs HHS to identify ways to expand access to reproductive health services Mike I u d s birth control pills, emergency contraception, and equally important, this executive order protects patient privacy and access to information. He spoke passionately about this and directed people to the mid term elections. This was essentially what he said. The fastest and only real way to solve this is to

elect two more Democrats to the Senate. Here's the President. I don't think the Court, or for that matter, of Republicans, who for decades of wish to extreme agenda, have a clue about the power of American women, but they're about to find out. In my view, it's my hope and strong belief that women will in fact turn out in record numbers to reclaim the rights that have taken from them by the court. And let me be clear, Well, I wish it had not come to this. This is

the fastest route available record numbers, Rick Davis, Is he right? Look, Uh, he's going to find out in six months, so we'll see. But the reality is, uh, you know, we've been just talking about the number one issue in America today, which

is inflation, is not abortion. He had a good opportunity to talk about it today in the context of a really positive jobs report, just the way Gulsby just did with you on the air and made it sound like it was a much more positive impact, uh, and that there's a plan going forward that will give us a soft landing on inflation. And he did none of that.

He stepped on his own positive message by by pivoting to arguably a more niche issue and abortion, which will be the headline rather than what he was talking about with jobs today. He's he's suggested this before, Jennie, that that there will be record turnout and turn expectations upside down in November because of that singular issue, because of the Row ruling. And we've talked a lot about how Democrats can mobilize the base. How does he actually make

that happen. How does he realize it? Well, he does what he did today, he tries to use the bully pulpit. I think many people on the progressive left are saying, why didn't he do this too? You know earlier, we knew the decision was coming out. Why not that day? Why the next day he didn't say, you know, the EO today is not you know, anything really new. Um. So people feel like he should have done it much earlier. And then to Rick's point, he could have spent the

time today talking about the good jobs the number. So he had to combine these two things, which is never good. But on the issue of mobilization, after the Casey decision was the year of the women. Women did come out in larger numbers. We do command a large force at at at the voting box, so it could be that they are able to get them out, but we simply

don't know if that's going to happen. We have to look at the reality and abortion opponents have long been well organized and on the left that they're going to have to catch up to that, and this is going to be a test for them. Well, we've talked about the test in the suburbs here women in the suburb's rick and and that's obviously who President Biden is talking about here. Is he being presumptuous though, with the way

they feel about this? Yeah? Look, I mean, you know, politics is the opposite and equal reaction of force, right, And so you're gonna go out and rally your base to um make the next election count on this issue. Uh. And and that's gonna that's gonna just mobilize Republican voters

in the same way. Right, there are a lot of suburban women who were pro life, and and if they believe that the objective of the Democratic Party is to pass a um um uh you know, a national row um bill that will secure abortion uh nationally, then they're gonna be motivated to to turn out. And so it's a it's a non linear exercise, right, I mean, like

it's not just for Democrats. And and so every time these messages go out from the President, you know, it's kind of a red flag for Republican pro life voters. And and so whether you can gain a significant advantage, and it has to be significant this cycle, because Democrats

have are very much in a down cycle. Uh. And and they're gonna have to really create a multiple effect on this, and I just don't see abortion that It's never had that kind of impact on politics, and it's unlikely to have it now as we spend time with our panel, Rick and Janie or with us, Welcome to Sound On on a Friday, the fastest hour in politics. I feel like I've buried the lead here and it's

where I started with Austin Goulsby. This report led a lot of smart people today to say, hey, you know what, this is not a recession and we're not about to go into a recession. Is that the best news that's buried in today's stream of headlines? Genie? It is very good news. You know, the job numbers are very good, the unemployment rate is very good. The fact that it may have you know, we may not see a recession is very good. It's going to mean more interest rate hikes, though,

and that's that's the bad news. That's the butt and what comes after the butt, and that's you know what the president really and not just him, but his surrogates have to do a good job of explaining, you know, why we can't feel and why we're not feeling so good about this yet, and I think you know the President, I didn't hear him talk about oil prices, gas prices dropping, Googles be talked about that, shipping prices dropping, mortgage rates dropping.

There's some good news out there. He's got to keep talking about that and keep reminding the American people he has a plan and we're headed in the right direction, which you know when you look at the data. In fact, we are, but you've got to make the case over and over. Stay with us. Ricking Genie are here for the hour our sound on Signature panel on Bloomberg Radio. I'm Joe Matthew in Washington. If you're just joining us, We've got a big breaker. It's a pretty amazing headline

to see. Actually a lot of people predicted it, but it's different when it happens. Elon Musk terminates Twitter merger agreement. It's right there, says his advisers. Sent a letter to Twitter formally notifying the company that he's killing the deal. Includes the letter to Twitter and an amended third teen

D filing, which is why we've got it. And we talked with somebody who's on the beat here and I'm sure a very busy moment for man deep seeing Bloomberg intelligence tech analyst with the headline, man, deep, did you expect to see today? Well after yesterday, I think the Washington Post news it was kind of getting to a point where the uh, it was getting closer to our termination talking about bots a lot in the last couple of hours. I mean, the big story before this was

was about the bots. Right, he didn't believe what he was hearing. Yes, And look, I think the market, uh, where it is right now with regards to you know, the other social media names and the evaluations for those companies. It was seemingly obvious that Elon Months had overpaid given the market, uh circumstances, and uh, I think he was looking to get out of the deal. Now the bod situation, you could argue, you know, and I'm sure there will be a suit you know from Twitter. Uh they will

end up suing Months on on this. But look, on a standalone basis, you will see Twitter stock really go down to maybe around dollars who knows. And I think from that standpoint, uh, there could be another buyer if if they and and look, it could be a large one of the large tech companies that uh may think you know, Twitter has become cheap enough and it's it's an attractive asset for the long term. So that is

one possible scenario. But I think Twitter will inevitably sue Musk in this case because he has terminated the agreement here down six percent now six and a quarter percent, and after hours trading as we follow shares of Twitter here in real time on Bloomberg. Do you think he ever actually meant to buy this company or was this a ploy to change the makeup of Twitter to become

a hero for free speech. I think the time when he announced the murder, he felt like, you know, he had the funding and look, you know, he saw he sold a bunch of Tesla's talk and he had a few private investors joined him in the bid. But the market has changed so much over the course of the last two months that you know where the public equity

market valuations are. It's seemingly obvious that, you know, forty four billion dollars was a very high price, uh, given the market conditions, and uh he that's why he's walking back. I mean, the box situation is really not the make or break factor here, at least in my opinion. But that's what he's alluding to in terms of, you know, what has changed materially after he has announced the deal,

Twitter had been talking layoffs. If it were not for Elon Musk Well, so Twitter always had that cost structure problem, and for any prospective buyer of the company, they would have easily recognized the fact that their revenue per employee was much lower and the cost structure was bloated somewhat,

you know, compared to the other social media platforms. So I think Twitter would have had to do that anyways, But he made that point, you know that why does a tech company like Twitter, you know, needs so many engineers, and why is the margins higher than there they were? You know, the force announced to deal boy, how about it? Uh Man Deep thank you so much for the insights. We'll let you get back to filing on this as we continue our coverage of course on the terminal and

here on the radio with the panel. Rick and Genie and and I just would love to ask you both just quickly your thoughts on this. Rick, you obviously you work at Stone Court Capital. You have a good feel for this side of the business. When something falls apart like this, does it screen lawsuits to you? Yeah, I think that's the first thing you think about, is there there's a billion dollar breakup fee. That's not small change, and uh, I'm sure Twitter is gonna want to get

their hands on that as quickly as possible. So, Um, regardless of whether Musk was sincere in this bid or whether it was a shield for other business activity, Um, he's probably gonna pay a price for it, but he can afford the billion dollars. So, Jenny, there's there's a personality story here as well, beyond the business. In the financial aspects here, we've been talking about babies being born the last couple of days. Uh, we're talking about boring

under l a going back to Mars. You add this bizarre saga to Elon Musk's biography, is it just going to be a footnote? You know, He's he's got so much to offer, it's hard to tell. It's a big story today. Um, but he I'm sure has a lot to come. But you know, as you you step back, not only you know has he overpaid as Mondep was just talking about, um, but of course who wants to take on Twitter? He has now made himself the king

of free speech in the world. And you can't be the king of free speech when you own the platform. So if he wanted to maintain that, and my senses, that was more important to him than owning Twitter. He had to step away from this, and of course he was over paying and he gets much more out of

his ev businesses and his other businesses. Is clearly an excuse to get out of this, and it's a it's a probably the biggest breakup fee in the world if you can imagine and imagine if they take him to court and ask for all forty four billion of it. You know what this means, Rick, Donald Trump not coming back to Twitter. Yeah, that's probably the big political news. I wonder if truth social is going to go up in price. Uh, you know, I'm sure Donald Trump sitting

there going dang. I was gonna hopefully get on Twitter before my big presidential announcement. But the reality is that, um, you know, this whole idea of free speech, Um, you know, I think a lot of people were really worried about his definition of free speech and uh and and unabated, uh, nonpoliced activity on the web is exactly what got us

in trouble on January six. You know, when we when we saw the attack on the Capitol So I think that's only going to continue the debate, especially on Capitol Hill. What kind of regulations do these platforms need to have, and and and what kind of government intrusion into that world is there going to be? Because I don't think it's a question of if it's only going to be a question of what Genie, there was a whole free speech a conversation that that this started that we've alluded

to here a little bit. Um is it over? Now? Does anyone else? I mean, man Deep mentioned there could be another buyer here. Certainly if if Twitter bleeds out, maybe somebody comes along to buy it. But we now know how complicated this is. If you're buying that algorithm, boy, you've got a lot of pressure to deal with this in a certain way. Is everyone going to kind of forget that whole part of a conversation. I don't think they'll forget it. I think there will be other buyers,

Oh oh please, just for us. Could Donald Trump be among that? I just hope. I don't think he can afford it, Yeah, I don't think he can afford it, but maybe he has friends who can. But I do think there's gonna be other buyers. Um And I do think that Bob iss you will continue to be a concern. But again, I don't think there's real clarity on the fact that this was what, you know, what pushed Elon

Musk out of the deal. It seems that for a long time he has been looking for a way out and he has finally found one and he's gonna have to now pay the price for that. And on the and on the you know, the issue of free speech and an absolute free speech that is going to continue to be a huge political discussion in this country and around the world. It kind of made him a political figure in a way that he was not before. Uh Rick, is there a future for that side of Elon Musk?

Now that he's moving away from Twitter, he goes back to SpaceX and Tesla. But my goodness, he was he was tweeting about not just free speech, but never voting for a Democrat again, and a lot of people were listening. Yeah, a lot of people were listening. I mean, he's got a massive Twitter following. Uh he is influential to a large segment of society and many voters. So sure, I think he remains a figure in the political world now

that he's sort of entered it. Uh, he doesn't have the platform that he was going to have at Twitter, but he certainly does have a presence on Twitter that is is only compared to a few individuals. So he's gonna he's gonna use his voice. And it wouldn't surprise me that he doesn't have more investments in this area to continue to push his brand of free speech. I mean, start a new platform, sure, I mean he's he's started

a lot of platforms. I mean most we we we know about his cars and his in his in his space. But he's born tunnels under l a, He's putting solar panels on roofs, He's doing all kinds of things. So, uh, he is unstoppable in as an entrepreneur, and I wouldn't be surprised that he shows up somewhere else here. I'm looking at his Twitter feed. He hasn't said anything in twenty three hours. The last tweet from Elon Musk super fired up for future product development with our awesome Tesla team.

Such an honor to work with them, certainly had nothing to do with Twitter, who shares We continue to follow after hours heading lower, but off their lows at least of the session. Here, we're down a little bit less than six percent, a little more than two dollars a share. Uh Man Deep mentioned the stock could go down to twenty five dollars. That would be painful. It's still just below thirty five dollars this year with the losses. He today the Big Tech team leader, Sarah, thank you for

stopping what you're doing to talk with us. We didn't think we'd be having this conversation this afternoon, or did you. Oh I knew something something was cuming, something of brewing. But you know, we've said over and over again that it's not as simple as Elon much saying he doesn't want to buy Twitter anymore. There has to be a materially adverse effect um that changes the nature of the company since he bought it in order to justify leaving.

And I just wonder, you know, Twitter has said that they are definitely going to bring Elon Musk to court and fight so that he has to go through with this deal. I just don't know if the boss argument is going to be enough um for him to get out of it. And and the maybe the stronger argument in his letter his team's letters to Twitter is about the fact that Twitter has had to do a lot of of cost cuts and changes in its business, a lot of a lot of changes to the structure of

firing of a couple of senior leaders. You mean since the bid or or or over the past period of time here since the bid, over the cost few months we were just talking about that, which so would that have happened? Would layoffs have been on the conversation without Elon Musk, Well, I I think that they might have still. You know, that's some of the guidance we're getting, just that it is a tough time in the advertising market right now That is going through it. Twitter is going

through Google going through it. But you know, maybe not to the extent they're sort of in limbo right now with Twitter. They've been waiting for this deal to go through, and there's not that much that they can materially change about the business and um, and that's one reason probably why they had to make these changes. Um. But Elon Musk has has been in communication there, his team has

been in communication with Twitter this whole time. In my from my perspective, it looks like he just he got cold feet here and doesn't want to go through with it, but he already the deal almost it's almost too late. So they're accusing though Twitter if not not complying with its obligations. Right. They say Twitter did not give Elon Musk the the information he requested and that gives them the out. As you know, he continues to doubt their their claims about the number of of of bots uh

that are actually out there? Does that not stand up in court? Well, you know, we'll have to see. Elon Musk has a good track record of getting his way legally. Um. But I think that that you usually you do due diligence before you sign a deal contract um. And And Elon Musk waves the right to look at a lot of the internal documents at Twitter, and Twitter has handed

over access to the fire hose of public tweets. Um. But they've also said listen, you know, we can't really no one on the outside can really answer this question of of how many bots there are on Twitter. And in fact, I think it's almost impossible for anyone period, even people on Twitter, to answer that question because the definition of what is a bot It just vary depending

on who you talk to. So I really think it's a tough spot for the company, and certainly if the deal doesn't go through, it could be um, could be even worse. Yeah, that's a heck of a business model. The stocks down and after hours trading. Could it be much more severe as we move ahead? I think you know, things could could definitely get worse from here. Um. We may we may see Twitter have to file lawfood next Um, and we'll just have to see how it how it

works out. I I think you know it's it's so it's very rare for somebody to agree to buy an individual person to agree to buy a company for forty four billion dollars and not want it after. It's just it's such a rare situation, you guys. I just so, what are you allowing? I don't know that. I don't know that we can we can draw on any past experience here? Um? What am I? What am I looking for? What are you allowing for? With that in mind? What?

What could happen in your wildest dreams here? Well? I mean I think that that he could be held to it, right, he has a financing lined up, he could be Um, he could find a way out. Some of these arguments may work. Um, and you know, there could be there could be some other kind of of partial ownership they

could bring, bring him to the negotiating table, maybe Twitter's board. Um, you'd rather than go to court ends up getting Elon muss to to come in and come up with some you know, investment option or some other version of a deal, or a deal at a lower price. Um, And maybe that that latter option would be the most likely. Is that you know, they say, hey, you know, we still want you to buy Twitter. Maybe we could do it for a little less. Wouldn't that be something falling right?

I love your imagination, Sarah Fryar. How about the idea of other buyers? Who is there anyone likely on that list? Twitter was kind of hoping that somebody might show up to to try to outbid Elon Musk at the beginning. That obviously isn't going to be in the cards. But if we're starting from scratch, anyone sound realistic? Well, I think that they're they're not gonna do much better I think than than fifty twenty a share. But maybe there's a less dramatic buyer that could come to the table.

I UM don't think that we would be able to see you know, somebody like Meta or Alphabet do it. Because there's so much antitrust pressure. Washington wouldn't let that happen with one of the big tech companies. Microsoft isn't going to get to that. Yeah, any of the big tech companies would be very tricky. So so um, you know, Twitter's on on the hunt for a suit or before in the past we've seen Disney sales Force, Google consider it.

I I really think that this story could could get wilder, or you know, something could could fizzle, and then Twitter will be back to back to the drawing board with itself and trying to make trying to make a business that gets the shares that got to fifty four twenty, which is the really tough thing. Boy, Sarah, thanks so much for chiming in here. This is great to be

hearing from the entire Bloomberg universe. You know, we've had a lot of people who have been working on this story since this all started, and I'm guessing most of them are as shocked as you are. Jeff Feely joins us right now Bloomberg News legal reporter with the headline must Twitter buy out? Fight poses question of who might sue first, Jeff, it's inevitable that we're going to court. But how does it start. Well, it just depends on who's got the trigger finger. Musk is Mr Musk is

known as being a very aggressive individual. I wouldn't put it past him to try to file something preemptively to ask a delaware judge. Hey, bless my my decision to nix this. I'm in the right. Twitter could easily also pull the trigger first. To some degree, they got the

stronger hand. They've got an agreement sitting there, signed, sealed, delivered, and negotiated, and you know, it's going to be difficult to prove that this bot issue is a material adverse change that sinks the deal because there were just as many bots before, right, and Twitter says it already gave Musk the info and he's obligated now to complete the deal. As you point out in your piece, that's right. The

number of bots hasn't changed. And you know it's according to the tech team, folks, it's not unusual to have difficulty segregating out the humans from the robots, you know, or the non human stuff. You gotta have some really bad stuff to get a material adverse change. Ruling in Delaware. We've only had one clear one. So what does that mean for Elon Musk. It means that it means that he's going to have a very tough road to ho

on this. You know, Sarah was talking about the possibility of him being drawn back to the negotiating table based on what you just described. Uh, you know, the legal mess that could follow, and maybe there's a lower buying price in the end. Is this Is this another bizarre negotiating point. Yes, this has done all the time. I call it arbit larbitrage by lawsuit or negotiation by lawsuit. Somebody's gonna have to file because we're you know, we

got this game of chicken right here. In the end, this could be nothing more than the markets have moved evaluations off. You guys got to cut the Twitter of course, is saying hold on, buddy, you negotiated this, You had smart lawyers. You're the smartest guy in the world. You know, you're the richest guy in the world. What do you mean we've got to get a new price. Well, I'll tell you what, fifty four dollars this year it seems a far way off. We're below thirty seven right now.

We're down seven percent after hours. What the heck happens on Monday when the markets reopen Here in old boring Delaware, we call that fires remorse. Well, I'll tell you what I earlier. We talked to man Deep on the air about this. He says it could go down to twenty five if that happened, wouldn't Twitter maybe turn around and say, hey, let's find another buyer here? This is this is obviously

selling it a discount. I mean, you're beyond my legal expertise, but common sense would say, yes, I don't mind going beyond your your expertise here because I think it'd be fun to take you completely off the rail. Uh at this point, Jeff, because you're fun to talk to. But I think I think my colleague that just was on said it fast. I mean, they've tried this before, They've looked around, and you know, there's no ice cream sitting

there waiting for anybody to scoop up. Understood, But is Elon Musk laughing right now while we're talking about this, knowing that he's going to end up buying Twitter at a lower price. I saw something that said he thrives in the environment of chaos. So is he laughing? Probably? I saw him on the stand and he thinks he's terribly funny, believe but but you know this is this is billions of dollars, serious business. I wouldn't be laughing.

He's talking on Saturday Night and Sun Valley, right, he's talking at the closing Sun Valley the Big Closer. Does he mention this or is that a legal liability? I'm asking you that seriously. Yeah, well, I think he's not. I think he has to not say a word. I can't point about this. Yeah, I would say again, I don't you know, I'm not a complete m and a lawyer. I just play one on TV. But you know it's

I think he's got to not say a word. Find Jeff's column on the terminal Musk Twitter buyout fight, pose this question of who might sue first, and you can see a little more where Jeff is going here. Jeff, you need to have your own show. Yeah, yeah, that's what I need. I need to get paid twice, have a radio show and do what I do. Yeah, it's get paid twice. I like the world you live in,

Jeff Feely fantastic. I delighted that we got Jeff's comment in there as we reassembled our panel, Rick Davis, Jeanie Chanzano, Bloomberg Politics contributors, we didn't know we'd be talking about this this evening. We had a whole different plan as a matter of fact. But this really is something here, Rick, with your experience in the investment world, is this hardball negotiating? Yeah, well,

who knows if it's a negotiation. I mean, I think you'll almost might not take You have to take us at his word, which is he's walking away from this transaction. And as Jeff was saying, there are all kinds of consequences legally to that, depending upon who files first, and who's angry, and and and if there's a scoop of ice cream laying around for somebody else to pick up. But uh, I I now have a new business theory, the scoop of ice cream theory. I like it. I

love it. Uh And so um so, look this is gonna play out. And I do think Saturday will be interesting to see what Elon must says, because I mean he is not used to listen to lawyers. I mean, anybody you would talk to would say, lawyer up, now do no more. Further damage. Don't give anybody an opportunity, and this guy will not take that advice. I mean, we could learn all kinds of interesting new things from him, and and he does win more than he loses, you know,

in the court of loss. So you have his a fixed legal team or or I mean, my goodness, when if you're the richest person in the world, you're not you're not hiring new lawyers, are you. Oh? First of all, he got a fixed legal team, but he has also got access to every lawyer in the world, and and and and if you are the richest man in the world, you don't care how many lawyers you have. It's just

it's a rounding air. So for him, he's gonna find people who can do the best possible job of representing him, regardless of what whether it's a suit that he's filing against uh Twitter, or whether Twitter is coming after him or shareholders. Remember there are a lot of shareholders who have seen since his offer their value and Twitter go down in half, and they're not going to be very happy about this. So the third party out there are

all the shareholders are sitting there looking us. Wait a minute, you know we have we have a lawsuit waiting to file. Then there's the workforce genie, and they have been through a tumultuous time here. Uh, you know, it's been outrage for some Elon Musk did address the workforce layoffs have been have become a reality and a lot of questions about what they might be headed for. Uh, how do you recover from that level from a management standpoint when

when you've got a workforce that's been traumatized. Yeah, it's gonna be difficult, and it's going to depend, of course on if you know, Elon Musk eventually ends up coming back into this deal or somebody else takes it, and who the management ends up being. And of course, you know, this idea that he could use this body issue and use that as a material adverse effect is hogwash. He himself tweeted in late April that if the bid succeeded,

they're going to defeat the spam boxer die trying. So how could he now flip around or his lawyers better yet, and say that this was a materially adverse effect. So you know, he has himself in quite a bind. But I do think that he's going to say something if you know, if you follow Elon Musk. I mean, he may very well say something out in Sun Valley, and there's a lot of people out there with him, including one of our favorite, other favorite, Joe's Joe Mansion. So

it's why the gathering out there. And you know, when the first time they tell him not to speak, he's probably going to say something right away. All right, we don't have much time left here, but we're gonna add one more voice to this conversation. Rick and Jeanie stay right where you are as Kurt Wagner joins us Bloomberg News tech reporter who's literally been filing on this in real time, and I appreciate you getting on the line with us here, Kurt. What's going through Elon Musk's mind tonight.

I guess he's finally got what he wanted, which is, you know, to to get out of this deal, which is what it feels like he's wanted for a couple of weeks. Now. I thought that he would try to renegotiate the price. Um maybe he did behind the scenes and that didn't work, so he said, Okay, I'm gonna walk.

I don't know, but I think if you followed this, you could tell that from the last few weeks, he's really been uh, you know, backtracking from this original excitement of buying Twitter in late April to constantly kind of uh, you know, pouring water on this deal. And do you believe he did want to buy it ulgitimately? At one point this was a real effort to buy this company.

It's hard to say that it wasn't if you're willing to go you know, I don't know, I guess I it's hard for me to imagine the kind of person who would go through this whole thing without having an intention of doing it. But think of what has happened at the stock market over the last two months, right, I mean, the Twitter deal he made in April looked a lot different than what a Twitter deal would look like today. And obviously he didn't know that at the time. Okay,

so could this go back to the drawing board? Well, I don't know, because right now he signed a merger agreement. Twitter said that it's planned and planning to enforce that merger agreement. I don't think it's really in Twitter's interest to, you know, give him a lower price when he's already agreed to buy it for a share so I think this is going to a court more than it is going back to a negotiating table. Yeah, we have quite an escapade here in court coming up. How long does

that take? Do we have any sense? I mean, is this tied up in court for for years? Kurt? I don't know, because this isn't something that happens very often. Um. The question I asked a few weeks ago, and most of the response I got from people was like, we're not really sure because we haven't seen you know, this is rare, right, So it's possible they settle. I would probably think both sides would be very eager to settle to avoid doing something that could take you months, if

not years. Um. But you know, a lot of this is sort of uncharted, I think, especially with the big names that are involved, Kurt. We just got a statement from Twitter. It's probably in your email from chairman Brett Taylor. This is the official line from the company and the first we're hearing of it. The Twitter board is committed to closing the transaction on the price in terms agreed upon with Mr Musk. Sounds a lot like what Kurt was just saying, and plans to pursue legal action to

enforce the merger agreement. We are confident we will prevail in the Delaware court. Uh, they do have quite a leg to stand on here, Kurt. They say they already gave all of the inform nation that Elon Musk requested, so it's now up to Musk to prove they did not. I think I think that's right, because again, he the agreement is signed, right, so at this point, if he wants to break that agreement, he needs to be the one to kind of prove that Twitter did something wrong here.

And um, we don't know exactly what Twitter shared with him, but the company clearly, as you just read, is claiming that they've shared everything necessary. Um, so I think it's going to be up to him to prove that they acted in bad faith in some way. How does this start Monday morning in court? Um? I imagine it takes the lawyers a little bit more time to to uh get into a courtroom. But I'm sure there's going to be paperwork filed. I wouldn't be shocked at their stuff

filed by the end of the weekend. That's more what I mean. Yeah, incredible, good luck with your coverage this weekend. Something tells me Kurt's work and Kurt Wagner, great talk. Thank you for being here, Bloomberg News Tech reporter, as we bring you as many voices of authority that we can on this ory breaking. If you're just joining us, it's uh, it's not looking good for Twitter in the after hour session, now down nine percent after Elon Musk announces that he is pulling out of the deal. Final

thoughts from Rick Davis and Jeanie Schanzano. Uh, your insights in the clutch are ever valuable here, Rick, this is going to be an interesting couple of days. As we've already pointed out, anything could happen in Sun Valley, and every time that Elon Musk walks in front of a camera or or I guess a Twitter feed, UH, this could change. I'm amazed though, that we haven't seen him tweeting,

aren't you. Yeah. I mean maybe the lawyers have prevailed and gotten him to lawyer up a little bit, but I just don't know how long that can last with Elon Musk, right, I mean, he's he's more right than wrong, and he's not gonna just listen to a bunch of lawyers are trying to protect his his interest. He's gonna believe that he's got to defend himself, especially because he will probably come under withering attack over the weekend and he'll pay attention into that, so he'll I'm sure there'll

be a reaction, Jenie. At one point, there was the idea of making Twitter a public trust, essentially that it would become a nonprofit. You know, if you really wanted to realize the town square, the digital town square concept, you have to get the ads off of there. You have to get rid of the algorithms and make it as pure as you can. Is that conversation come back or is that just happy talk? Nobody nobody's going to

be spending money on that. You know, it is a way to address some of the speech issues, but but I'm not sure that in this day and age, that's you know, a likely scenario. I think, you know, depending on what happens with with Elon Musk and with Twitter, that if there are other buyers in the offing, this is you know, still a very very valuable platform and depending how on how much they can get it, it

is a valuable platform. And I do think you're going to have other buyers in the offing if not Elon Musk and they renegotiate this thing. And I think this makes the weekend a lot more interesting than it otherwise was going to be. Sylvia is tweeting at us here Jeanie and says what about other buyers, Microsoft, Tech companies, Google and so forth? Rick that that's that's a problem in Washington though, right as we discussed earlier this hour,

the antitrust element just makes that impossible. Yeah. Absolutely, Uh. The only group of people, uh that Congress dislikes more than China is a big tech and likelihood of more consolidation is going to be very hard to pull off either at the Justice Department, which has a whole new of a batch of of of lawyers who were anxious to break up big companies, UH to Capitol Hill, who want to diminish the power that these groups have over

the public discourse. And I would say the one guy I'm really anxious to hear from his President Biden, because his war with the Elon Musk is legendary and I can't imagine him not taking a shot into this some Wait, you know that's a great point. Are we gonna hear from Joe Biden? You know? On his way to the on his way to the airplane this weekend when he's heading out of town. Jennie, I would hope we don't.

He should he should have learned his lesson and stay out of this, but we very well might because he gets very frustrated with Elon Musk obviously, And you know, and I think Sylvia does raise a really a really good point. But I do agree with Rick. I think, you know, this is going to be fascinating to see

how this plays out in the courts. But you know, I think there's still a possibility they renegotiate this thing, and this could be in negotiating uh, you know, ploy on his part, and they could, uh, you know, settle this out of court, because imagine that fiasco if they tried to do it in court. Boy, what a conversation, NonStop, fastest hour in politics and business depending on the day, Rick Davis, thank you, great to have you back in.

Jeanie Schanzano, of course, your insights ever valuable here in the conversation on Bloomberg Radio. Sound On is the name of the program. You should absolutely subscribe to the podcast and be like Sylvia, send us a tweet while we're on the air. You can be part of this conversation as well, following Shares after hours and coming up with more on Wall Street Week with David West and This is Bloomberg