This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
So let's talk a bit about Tesla at its highest today, shares up about one point six percent, stuck pretty much unchanged on the day, but there was a flurry of news on the company decliners. Sorry, it's up point zero four percent. You can always hope we still have one about half an hour ago. Never Tesla, all right. So among the stories on Tesla and Elon, Tesla deliveries sliding. Bill Ackman telling CNBC today he would be interested in a deal to take Elon Musk's ex Corp public, but
he said he hasn't talked to Elon yet. And then there's you know, maybe he wasn't watching the Jet Chiefs game and looking at for Taylor shift. Maybe he was doing something else last night.
Tim, Yeah, he livestream himself playing through Diablo Dungeon late last night. It's a test of his social network's ability to handle game streaming. Did it go better than his visit to the border last week.
Good question, good question, All right, So what does it all mean for the company and the priorities of its ever evolving and news generating leader. With that, returned to Bloomberg News EV reporter Sean o'caine on the phone out there in Austin, Texas, and then right here in our interactive broker studio, Bloomberg Business Wee columnist Max Chapkin. Let's get to the kind of news news, and that is the Tesla deliveries. Sean, what can you tell us about
the news? And I thought Tesla had telegraphed.
A lot of this, and I think the question was really just, you know, how big of a slowdown were they going to encounter? And I think, you know, we just we really saw that impact today. They did a pretty big changeover in China by getting that facility ready to produce what is not a dramatically new version of the Model three, but certainly something that required some downtime to get new tooling in. And they've also had some downtime here in Austin as they have been getting things
ready to start production of the cyber truck. So you know, I think you're right they telegraphed it. I think it was just a little bit of surprise to Wall Street, maybe not to Tesla. How much of a miss it was sewn?
You said cyber truck. So I got to ask you about the cyber truck. Sure, this thing was unveiled years ago. Is it actually going to start production in the fourth quarter this year?
We well, I mean, you never know what Tesla, right, but yeah, I think we're probably going to see some limited production. I mean, even Elon Musk has said that they're not going to start They're not going to be in volume production for this thing until next year at some point. But we're seeing a lot of signs that they're actually getting close to that. There are some, you know, people who follow the company really closely, investors or fans who have been flying drones over the factory here in
Austin who have seen some crash tested cyber trucks. We've seen some sort of you know, what they call release candidates, which is pretty close to production quality driving out in the wild. So that they're doing crash tests is a pretty good sign that they feel comfortable with the level that they're at and they're ready to start maybe shipping some of them soon, even if they are missing the third quarter target that they the most recent headline they've given themselves.
All right, not to shame on toddlers, but sometimes it feels like watching Elon is like watching a toddler. He's the kind of all over the place. So Max Chafkin, come on in on here. We've got you know, the delivery news. We've got Bill Ackman out there on CNBC. Maybe I don't know regarding X. And then you've got Elon Musk late last night streaming. How do you think about him?
Well, so I am not a Diablo expert. All I can say is that you know, for months Twitter now, the company now known as X, has been you know, trying to find ways to justify itself, trying to find ways to essentially turn the company around, turn perceptions about
the company around, both among advertisers and users. And I think that is the most important asset that the company has is Elon muh skin, Elon Musk's own feed and so logging on to X to live stream a video game as he did the other night, or going to the border in Texas as he did on for I believe he's on Friday and sort of trying to, you know, do kind of like a weird political magazine things. It's all about just finding ways to again, to change the
narrative here. I don't think it's totally clear that it's working, although the company definitely wants to. We have Linda Yakarino set to meet with bankers later in the week, and of course this kind of long running question about how long it's going to take for advertisers to to sort of come back in big numbers.
But Max, is there any indication that he's built a viable business now that he's let so many people go and change the product so much since he took it private.
Well, I think it's possible. You know, the other day, like are.
We putting the cart before the horse here with talking about taking this company public.
The most important asset that, as I said, you know, the most important asset this company has is Elon Musk's following. As we know, you know, Elon Musk is amazing at getting public market investors to put money into speculative investments. Here we are talking about the cyber truck, this thing that, as you said, is years years delayed, and investors are still sort of you know okay with it. So from
from Bill Ackman's point of view. From Acman, of course, is basically has this investment vehicle that's a lot like an IPO. He needs a candidate company. If he were somehow able to persuade Elon Musk to you know, work with him on a on a spark deal, it's called a spark. It's basically a lot like an IPO or somewhere between an IPO and a spack. And if you were able to persuade Elon Musk to stay as CEO, that would probably you know, go over well with with
public market shareholders. There still are a lot of right.
Yes, yeah, Hey, Sean, I do wonder too in terms of there's always I feel like when we talk about Elon that he's got his hands into many pots. Although he's seems to do well with it, but there is always that point when there's maybe some concerns it's like, well, wait a minute, maybe he's just doing too much. What are investors, you know, thinking about how Tesla kind of longer term in terms of where it's going is it's still on track.
I mean, I think there's always questions from some investors
about succession planning and sort of the roadmap. You know, I think it'll be really interesting to see if those questions resurface in any sort of tangible way on this call later this month, as they had discussed the third quarter results, because this is going to be the first one since we find out that the CFO, Zach Kirkhorn, is leaving, and that's one of the big sort of questions hanging over the company right now and over the last couple of weeks, is what are the circumstances of
that departure. Zach is someone who was making promises that, you know, Chris Margins were going to stay at a certain level and that you know, all the price cuts earlier this year really weren't going to eat into the business, and then that wound up actually not being exactly the case, and then a couple months later he's out saying he's out the door. So I think there are you know, maybe more than recently, over the last couple of months or a year or so, we're probably going to hear
more of those questions about it. But you know, broadly, I don't think we see too much too much doubt in the in the outlook for them, because they the stock still sort of holds, and they've been able to deliver the vehicles that they have on the road in pretty pretty sizable numbers, right especially this year.
Yeah, hey, Sean, give me like thirty seconds on the cyber truck here, because this thing is really important for Tesla, and it's entering a market that's dominated by Ford and GM that you know, Japanese automakers have tried to enter and dominate and they've failed.
It's it's really a great unknown. I mean, there clearly seems to be a lot of interest. How much of that is just people liking to joke about how they have a pre order in for it or not is kind of hard to tell. But there's so much that we don't know about it. We don't really know the final base price because that's obviously going to be going up by the company's owned admission. We don't know, you know, how well it's going to perform in these crash tests.
Deal is pretty heavy and pretty rigid compared to the cars that we're used to these days that crumple up pretty easily. To be able to displace all that energy, I'm sure Elon Musk would say, hey, look, we've got autopilot and maybe full self driving down the road, We're not going to need that, but I think there's just a lot we need to know. And that's one of the reasons that this delivery event, whenever it happens, is going to be so key to watch. How much more information do we get?
Got about thirty five?
Yeah, and there's also the question of demand. I mean, you know, going back six months or so, we were talking a lot about our Tesla buyers getting tired of Elon's antics. Is there is there demand for these things? Price cuts, these these massive price cuts on the Model three and Model Y in particular, have clearly helped address that problem, if it even was a problem. But the cyber truck presents, you know, a new challenge, right. This is a very very different looking car, a very different
car from what the average truck buyer is into. And it's not clear that the combination of video games and weighing in on immigration policy is necessarily the best way to reach you know, the average.
Truck buyer, but it's pretty normal for you, you.
Look, definitely the best way to reach you on FAM all right.
Gotta leave it there. Our thanks to Sean Okay in Bloomberg News EV reporter and of course, Bloomberg Business Wee columnist Max Shaftin.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
All right, So, Tim, we've been talking a lot about this conversation that Jamie Diamond had with Bloomberg originals Emily Chang that over the next generation, AI, artificial intelligence is going to have a profound impact not just on the way we work, but also in a big way on our health.
Yeah, here's what he said. Your children are going to live to one hundred and not have cancer because of technology, and literally they'll probably be working three and a half days a week, lived to one hundred, a world without cancer, three and a half day work weeks.
Sign me up.
Yeah sounds pretty great, right.
All right, So let's see what our next guest has to say about the role AI will play in our health. Michael Dolling back with US president and CEO at Northwell Health, you know, the largest healthcare provider in New York. The Northwell System, treating over two million New Yorkers each year at twenty one hospitals eight hundred and ninety outpatient facilities. Michael Dowling joining us on the phone from Long Island this afternoon. Michael, it is great to be talking with
you and not necessarily focused on the pandemic. So nice to be back with you once again. AI. You guys are hosting your annual Constellations forum that focuses on AI and healthcare Constellation Forum, I should say, And you are focusing on AI and healthcare. How are you guys and putting this together? Thinking about artificial intelligence, which is not a new science. You're actually on Zoom, so good to see you on camera. Yeah, tell us a little bit about well.
I mean, as you just mentioned, is not new.
The ability of it, the accelerated capability of it has been enhanced dramatically over the last couple of years, and that will continue and it's going to be an integral part of whatever everything that.
We do going forward. So we have to decide. The big decision point for me is deciding what is it good for and what is it not so good for? And I think we will be going through that analysis for quite a time because it provides extraordinary opportunity to improve clinical care, improve diagnosis, analyze data. But it also brings with it some potential dangers. You don't want the machine brain to outpace the human brain so that the human brain can't figure out what the machine brain is
doing to you. Okay, is something we have to be very, very careful.
Let's talk about the pluses before we get into the potential dark side here, which sounds like, you know, something out of a sci fi movie. What do you make of what what Jamie Diamond said earlier today? Your children are going to lift to one hundred and not have care answer because of AI technology. Is that is that true?
I want I want to live to be one hundred, folks.
That's what we were.
Talking about earlier, me too here here, But is that where we are?
Is that?
Is that an accurate thing to say?
Do you think we're getting nothing class?
And I think we just got to be careful not to over exaggerate. I think it can have wonderful potential to allow us to identify the diseases earlier on, especially with the genome sequencing. When you combine them the results of the mapping of the human genome. With AI, we will be able to predetermine way, way in advance, what you potentially could end up having problems with.
Okay, so then what would you do about it to intervene? What would you do about that if you noticed somebody was set to get cancer.
Well, then I think that you've got to determine. The clinical leadership has the determine how you intervene, how you how you change behavior, saw people act differently, What kind of clinical treatment that you have to engage in to allow people to live longer a member, In the last fifty years or sixty years, we've added about thirty years to life as life expectancy back in the nineteen thirties was around forty seven to fifty today's were in the
seventies and eighties, so we've had major progress.
I do want to push back on this a little bit because in recent years we've also seen it come down as a result of COVID and drug overdoses.
Yeah, but that's a temporary thing. I mean that happens. You look at the long term trend, not the short terment. You know, births in a statistic, it's the long term trend. And sure when you have a thing that COVID is an increase of mortality, and it does come down a little bit, But I don't think that's something that will set a prediction for the future.
What do you believe will be the most significant changes in healthcare that helps patients live longer and live a better longer life. Watching aging parents, grandparents, it isn't always pretty and it's often very difficult. So I would live to two hundred as long as I know I'm healthy and I can get around.
Some of your friends were living at two hundred two.
That would be kind. So how do we how are you thinking about that?
The biggest change in my view, to make those results a reality. It goes beyond the delivery of medical care. It has to do with lifestyle and behavior, so all of the social determinants of health. It has to deal with some of the societal issues. I mean, we do a great job of taking care of you after you get sick, but we have to do a much better job of taking care of you before you get sick, so you can prolong life. But that involves finding ways to get people to improve their own health, but prove
their own lifestyle. And that's just where AI can also be very very helpful to be able to do the analytics right, to be able to tell you what people should be doing to improve their own cas situations and not dependent upon all those old times.
We'll go back to that idea of genetic mapping, and you know, we're born, we get a map and we can already see what might be the potential problems. Maybe it's hard problems, So then maybe we know from the
get go that we have an awareness. I think about kids who are born, you know, who have you know, diabetes from a young age or or different issues if you will, you know, from a young age, they that's their life and they grow into or grow with that problem and just from the get go look at life differently in terms of what they eat and what they
need to do. And I do wonder if we have that map from the get go, whether it's removing organs, treating things differently, like, I just wonder, can we do it better at a much earlier stage.
Absolutely, I think that you'll be doing genome sequencing of all kids within a couple of years in most children's hospitals. We are investigating that possibility right now. We have it not well as part of our children's hospital, So I think that that's where it will start, mostly with children, and then I think it will expand to be doing
genome sequencing with adults. But let's let's be cautious here because while it offers wonderful, wonderful potential, we don't fully know all of the implications yet, and we don't fully understand all of the ethical issues involved. So, you know, you find out something about somebody or some family member, to what extent do you disclose it, what extent do you share it, How should it be shared, and when
should it be shared? All of these issues have to be worked out very very carefully over the next couple of years. So the enormous potential is here with the combination of genome secuencing and AI, but I think we're going to a process over the next couple of years to figure out how to make use of it as appropriately as we possibly can and not over react, not
on the react either, but not overreach. A little bit of caution is important here here, especially given the situations you're seeing with chat chipec, where it produces lots of controversial information that's not correct. You cannot be doing that in the healthcare sphere. It's just too dangerous.
But there's something kind of strange happening here where we're talking about AI, Carol and what it can do in the future, because you know, there's this article in the current edition of Bloomberg BusinessWeek about a moxicillin shortage here in the US. I mean, we're talking about a drug
that was discovered more than fifty years ago. And I lived this nightmare on Friday when my son was diagnosed with an ear infection and the doctor had to spend a half hour of her time calling different pharmacies around Brooklyn trying to find a ten day supply of antibiotics a maxicillan that ended up costing me three dollars and sixteen cents when she finally found it. Michael, she wasted
so much time doing this. How are we talking about world where AI helps us live to one hundred but we can't get a moxicillin.
Well, But that's why you've got to be This is why you've got to be a little bit cautious. As I said, this is why you can automatically assume that there's a new technology coming into play that is going to just solve everything immediately. There's a lot of other
issues involved. I mean, one of the biggest changes in healthcare is moving more and more health care out into the community, expanding ambulatory care, moving stuff out of the hospital, be less hospital centric, the whole supply chain issues, the whole labor cost issues, all of these things are all part of the complete package that you've got to deal with.
There is no one magic and pure all just because you have a new technology, it's how we used it that technology in the context of the whole environment that makes If we do it right, we'll improve everything. But again, things are complicated. Health Care is not a simple business. It's much more complex than other businesses. And you know there is these days, there is, especially COVID. There's a
growing mistrust of science. Got it, Michael, We've got to rebuild that trust at Michael, we've got to the discovery's work.
We've got to run. Michael Dowling, of course, CEO at Northwell Health, joining us right here on Bloomberg.
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Pause on student loan payments that lasted for more than three years. It has come to an end, so Tim, starting this month, forty million people with outstanding student loan payments that collectively exceed more than one point six trillion dollars, They're going to have to start repaying them.
There's a reason our market's guests keep talking about this effectingly. Zoomer spending well. Melissa Burn is executive director of We the forty five Million. It's a nonprofit organization. It says it represents student loan borrowers here in the US. The group wants to cancel all student alone debt. Melissa joins us on zoom from Washington, d C. What's it good to have you with us?
How are you? I've been better.
It's a sad day knowing that the loans are turned back on, but you know, as it.
Goes, I mean, was this did you expect this? We knew this was going to happen.
I mean, I guess I had faith in you know, I probably is a little naive to think that once we got the president to do the loan relief back in August of twenty twenty two, that we would get that done and then we would have an ease and to repayment for the remaining twenty million people. The you know, the right wing dark money groups going all in to kill loan relief was you know, a kick in the gut. And then Kevin McCarthy basically saying, we'll crash the global
economy if we don't do return to repayment. You know, it's a lot, and I think in both circumstances, it's people with loans who weren't seen as fully human.
Melissa help me out here, and we took about this a lot in the newsroom, and I've had individuals who come up to me and say, you took a loan out, You've got to repayment and repay it. And one individual in particular said, you know, I chose not to go to college because I saw, you know, my siblings and the debt that they took on. I took a different route, but I was concerned about repayment. You know, what do you say to that argument?
I think, what I mean, one thing that I say is that it is really terrible that back in the eighties, our governments, both at the state level and federal level quit funding higher education and they made a choice to move funding of it. If you're going to if you're poor or working class or for generation college student, you have to choose between you know, getting education or going into debt. And you know, that's not a fair situation.
Like if you're eighteen or nineteen, you don't have savings, and the idea that in our country that if your parents are wealthy, they get to give you tax free, you know, hundred thousand dollars to pay for your college. And if you don't come from that kind of family, your option is debt or no college, or it's you know, working through jobs.
Is the bigger issue. I mean, I took on student debt, you know, and my parents kicked in what they could and got an award from the school and then took on some debt and I paid back that college debt. The bigger issue I think many would argue is that the cost of higher education has just gotten out of control many times over right, the rate of inflation. We've all done the stories. Is that the bigger issue yeah.
I mean that's the part I when I first started working on this back in I think it was twenty ten, and I come at this from being a borrower, from being a first nursion college students. I come at this as like an impacted person who's experienced this whole system and the shame that came from it. It took me a long time to get over my shame of having debt. I thought we would win free college first, and then it would be a cleanup round to help the folks
that are struggling. But because of the pandemic in the ability to do the pause and then try to do a cleanup after the pause via a first round of a very mod like we want full cancelation, but we didn't, you know, whine and complain that we just got ten k or twenty k. We were good, you know, we saw that it helps real people, but twenty million people, and that you don't say no and you don't complain when twenty million people have a chance to have a decent life.
So what's the solution here? Because the part that I have a trouble understanding is if we cancel all student loan debt, but we don't address the cost of college. Then we're going to end up in the next generation with the same exact issue, and it could even.
Be worse, right, which is why we need to have free public college. We need to fix the way graduate programs work. Right now, a lot of universities will offer these master's programs that are basically used to help fund the whole university or going into you know, for example, see like these like random policy degree programs or what you're seeing now on a whole growth of They're called online program managers, which are these online master's programs at university. So you'll see them in social.
Work or.
Other kinds of programs like that. So people are going into like two hundred grand of debt to get this online degree. USC in California had a big scandal around this, and then the money from that goes into just the general funds because it doesn't cost that much money to you know, educate somebody online. And so I think that these are things to look forward to. Look at what the administration did. I think it was last week in terms of the gainful employment regulations and to have that
also apply to graduate schools. But I think it really it all goes back to a value is like should people when they hit eighteen or whatever age they want in education, should they have should it be paywalled? Whether you want to become a welder or you want to care cancer, so you need to get a go go from like undergrad to med school, Like, should that be paywalled?
And should we have it where we're subsidizing rich families three via five to nine programs to say, for their kids college, but not making a path for kids that are working class or middle class to be able to go on and get that education. So and they become like, you know, functional contributing numbers of society, whatever that education is. If it's getting the education because you want to work at a hospital and draw blood and do that work.
Melissa years. So we just have about a minute left here if I could just pop in because I'm curious. Many would argue that the top end of the income strata and the lower end they're taken care of. Either families can afford it and they can do the college savings plans, or at the lower end that's where schools provide, you know, often pay for a big bulk of the tuition. You're talking about the middle income I'm assuming, like, who are the forty five million in.
The middle and lower? Yeah, it's the middle and the lower. I mean, you know, outside of Harvard and Yale and Princeton, folks who come from you know, if you're going to a state school, because there's been so much the funding, you're mostly going to have some debt if you even if you're on PAL, because unfortunately PAL isn't pagged to the cost of college.
Yeah, it's a tricky situation, you know, And I'm playing Devil's advocate a little bit because there are those who say, listen, you know, how do you forgive when other people are paying back their loans? And I feel like it to many would argue that it gets to that bigger issue of just how expensive it's all become.
State school.
Not all jobs are created equal when you graduate, absolutely, and I think that's a real issue because there's this you know, we're taught follow your passion, and oftentimes passions don't pay. That's an issue. I mean, I could talk about this for five minutes, but.
Didn't Present Obama get into this, like trying to get colleges to say, you come out with this degree. Yeah, here's what you're likely to make with that kind of degree, like to give people some transparency to say, go ahead and study this.
But a lot of these people graduated before Obama was president still still paying back student loan debt. I mean people who are graduated in two thousand and two are paying bucks.
I would argue it's just gotten way in terms of how expensive it is and making you almost impossible for many to pay back those loans in an easy way or manageable way. Melissa Burn, executive director of We the forty five million. As you can tell, it's a hot topic.
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Send yours guns and money.
Dead, Get me out out of this God.
Certainly on the docket for the new US Supreme Court new I mean opening up a new term today ten.
Yeah, and the lawyers will certainly be involved.
Also, yeah, all right, Well, the Court, the nation's highest court thinking about where its conservative revolution should go next. One federal appeals Court already has lots of ideas.
In the next nine months, an outside share of the High Court's biggest cases will come from the ultra conservative Fifth US Circuit Court of Appeals. Those far reaching rulings are providing impossible, are proving impossible for the Supreme Court to ignore. Cases involving federal regulatory power, guns and probably abortion in social media regulation are going to test Carrol just how far the Supreme Court's conservative majority wants to go in remaking the nation's legal landscape.
We're all watching closely. Greg Stores, Bloomberg News Supreme Court reporter, writes for Bloomberg BusinessWeek about the conservative Fifth Circuit and the key decisions that could come in the Justice's next terms. He joins us from Washington, DC. Also here, the editor of Bloomberg Business Week, jol Weber, with us at Bloomberg Headquarters.
The story, by the way, in the upcoming issue of Bloomberg Business Week, out on newstands later this week, but find this story also online at Bloomberg dot com, slash BusinessWeek, and of course, on the Bloomberg terminal. I feel like the fourth quarter is a big one on so many different levels, Joel, but definitely for the nation's highest court.
So this is the beginning of a new term for the Supreme Court, and Greg has become indispensable in writing sort of these walk ups and helping us make sense of these moments. Obviously, the Supreme Court has made a number of interesting and controversial and headline making decisions within
the last couple of years. What he flagged heading into this one is that the Fifth Circuit is an area of the country that is basically an appellate court that has a lot of very conservative judges, and this term in particular has a number of cases that originate with that appellate court. So, Greg, what does it all mean and help us make sense of it all?
Well, it means a number of things. It starts in starts off with some big cases involving the power of federal regulatory agencies. There's a case that the Court's going to be hearing tomorrow involving the Consumer Financial Protection Bureau. That's the entity that regulates things like mortgages and auto loans set up after the two thousand and eight financial collapse.
And then it's got cases involving guns and almost certainly abortion and coming up later on in the term, and they're really going to shape how far the Supreme Court's going to go this term.
Okay, so the Fifth Circuit talk to us about what they oversee and their jurisdiction and also what makes this time so different.
Yeah, So this is a court that has twelve Republican appointed judges and just for Democratic appointed just judges, and six of the Republican appointed just judges are Trump appointees. And the individual personalities on the court are also very distinctive and very outspoken. So just to name one, there's a judge named James ho who, even while on the bench, has written and that abortion is a moral tragedy and said that if there's too much money in politics, it's
because there's too much government. And these conservative litigants in many cases, like the State of Texas which is part of the Circuit, like to get their cases before this court because very very often they get good results. And with a number of these cases this term, what has happened is that this Circuit has struck down an administration policy or said that it administrative agency has to change
the way it's doing something. And the Biden Administration has gone to the Supreme Court saying, hey, that this circuit's gone too far. So it's kind of testing just how conservative the US Supreme Court is.
Well, it sounds like it's a list that they will be dealing with with some very very important issues. It's hard to pick out, like what's the most significant? But where shall we begin in terms of cases that you, as someone who's followed the US Supreme Court like really is kind of front and center and you're thinking about this one in a big way.
Well, certainly the gun case that they're going to hear arguments on November seventh is one that's going to get a lot of attention. This is a case involving whether somebody who is subject to a domestic violence restraining order still has his or her full Second Amendment rights. The Supreme Court back a year and a half ago, in a case called Bruin, that the way we test whether a gun restriction is constitutional is to look back into history and see if we can find a historic analog
to the current restriction. And in this case, the Fifth Circuit said, you know, we look back at seventeen eighty nine and we didn't see any laws that restricted gun possession by somebody who has a domestic violence restraining order and therefore the Second Amendment doesn't allow this sort of restriction. So this is going to be a real test whether the Supreme Court's history test that had set up a couple of years ago means what it seems like it means.
And if it does, then that means it's going to be really hard to argue in favor of all these other gun restrictions around the country.
So what does that mean for the federal ban on bump stocks? If we're continuing with the firearms theme, what would this court potentially do in that context and explain what bump stocks are actually? I think a lot of people might remember them, I think in the wake of the Las Vegas shooting years ago.
Right right, there's a Las Vegas shooting. Basically, it's a device that turns a semi automatic weapon, which is legal, into a machine gun, which is illegal. And the question this is actually a very different legal question than the case involving the domestic violence restraining orders. This is actually a question of administrative law and not a question of
the Second Amendment. The question is whether the Bureau of Alcohol and Tobacco and firearms when it banned those, and this actually was under the Trump administration, whether it had authority to do that. Essentially, what ATF did was to say that a bump stock is akin to a machine gun, which is illegal, and therefore we're going to say the bump stocks are illegal too. So this one actually goes to one of those questions of how much power do
federal regulatory agencies do. It just happens to be one that also coincides with this big fight over gun rights.
Greg, let's bring it back to core Bloomberg competencies. Two other areas that will be of great interest the Consumer Financial Protection Bureau, as was the Securities Exchange Commission. What might be in the balance here?
Yeah, it's like barely a decade old, I think the CFPP.
Yeah, yeah, just slightly more than that. You're right, And this is actually the second time we've had a CFPB case at the Supreme Court. This is a Fifth Circuit ruling in some ways came out of nowhere. This was not like an argument people have been raising for years.
But the Fifth Circuit said, there's a constitutional provision that says you can't spend money without a congressional appropriation and the way CFPB is set up, it gets its money from the Federal Reserve, it doesn't not subject to the year to year congressional appropriation process, and the Fifth Circuit said, up, that's unconstitutional. The way it's set up, and it struck down is paid a lending rule that never actually took effect, but it cast a cloud over basically everything the CFPB
had done. Because if everything it's been doing all this time has been using money that it wasn't supposed to have, maybe there are questions about whether those past actions can stand. So there's a lot of concern, and there's a brief buy like the mortgage industry saying, hey, we're really concerned that this might unsettle the mortgage industry if the Supreme Court adopts in a full threaded way what the Fifth
Circuit did. So big stakes for this agency. There's an agency that has been very active in a lot of fronts, both the banking world and the non banking world. So the business community is going to be watching this one very closely.
You know, I do wonder too, Greg, I think about our audience, right, And obviously Supreme Court justices can Supreme Court decisions excuse me, will impact different parts of the US population. But I think about the investment world and the business world, and I think about certainly the CFPB they're going to be following that. But what do you think is top of mind for like the Bloomberg audience.
Certainly, all these cases about regulatory agencies are really really important, and the business community kind of has an ambivalent relationship with them, So they don't like a lot of the regulation, but they do like stability, and the CFPB case sort of threatens some of that stability. There's another big case involving another big case involving it's a little technical, but really really important, how much authority agencies have to interpret
ambiguous federal statutes. And that's another case where to give the agency more power, which is tradition what they've had that at least ensures some stability in terms of the regulations. So that is a big thing. So far this term, we don't have any of the major business fight if nothing else like punitive damages or class actions, none of the kind of traditional fights that the Chamber of Commerce
has been pushing. The biggest action is probably going to be in these administrative law questions.
Which also raises the interesting observation I suppose that, I mean, of all the courts that you could bring some of these conversations to, this Supreme Court is one that has been, you know, willing to wag into controversies before that. Prior Supreme courts have not. So what's the current kind of chatter about why they picked what they picked and and the you know, the read of the Supreme Court on these particular cases.
So what's interesting about this term is that a lot of these cases, the ones we've been talking about, we're kind of ones the Supreme Court didn't have any choice. But here traditionally, if a lower court strikes down a federal statute, blocks a regulation, and if the Solicitor General, who's the top government supreme court lawyer, asks the Supreme Court to hear an appeal, the Supreme Court almost always will.
And that is that there are a number of cases both granted already in cases that probably will be granted soon. Where that's what's going on. Where so it's less the case so far this term that we can say, oh, the Supreme Court is really interested in affirmative action, and you may want to consider outlawing affirmative action like we had less term, or overturning the constitutional right to abortion
like we had the term before. There are fewer cases like that and more cases where a court like the Fifth Circuit is saying, hey, Supreme Court, do you want to go this far? And the Supreme Court is sort of forced to grapple with whether it really does.
Hey, one thing I wanted to ask you the Fifth Circuit and then the Supreme Court picking up these cases, not all of them go the way of the conservatives, right. We've seen that in the past.
Yes, that is absolutely the case, Carol. Last term, for example, the Fifth Circuit lost at least a significant amount of the case. The Supreme Court reverse the Fifth Circuit and significant part in seven of the nine cases they have, So that court has not been doing all that well lately, and it is very much an open question. I'm sure
the Supreme Court. I think highly likely the Supreme Court will uphold the Fifth Circuit in some of these cases, but probably not all of them, and which one is very hard to say.
The story that we're discussing Supreme Court has pile of cases from conservative Fifth Circuit is in the upcoming issue of BusinessWeek magazines. But you can read it now on the Bloomberg terminal and at Bloomberg dot com. Hey, we're talking with Greg Store, Bloomberg News Supreme Court reporter.
Greg.
If we I'd be remiss if I didn't ask you right now about the news today from just Clarence Thomas, who's issued a rare recusal in January sixth Trump lawyer appeal. What's going on here?
Yeah, So Justice Thomas did not give us any explanation for this refusal. So to some degree, you know, all we can do is speculate. But I'll tell you what the case is about. It is this lawyer, John Eastman, a law professor who has been a lawyer for Trump, advising him on the election issues. He is one of the people who's under indicted named Georgia in that case. And this was a case involving the House committee looking into the January sixth attack, trying to get access to
his emails. The Supreme Court turned away John Easton's petition today and Clarence Thomas, without any explanation, said I'm recusing myself. I'm not taking part in this case. So this is the first time in a January sixth related case that
he has recused. What exactly the reason is? You know there there was a report in Politico about a year ago that indicated that some of these emails that we're talking about reference Justice Thomas and had Johnny's been saying he is our best hope for overturning the election results. And so that might be what it is, that that Justice Thomas is aware of the there's substance he's in
there substantively. It may be something else. Again, the justices are required to although some justices do give an explanation as to why they we recused, he did not.
Interesting times. We are living no doubt about it, guys. Thank you so much. Greig Store, Bloomberg News Supreme Court Reporter. His story is in the upcoming issue of Bloomberg Business Week on newsstands later on this week. Find it online at Bloomberg dot com, slash Business Weekend on the Bloomberg And if I can just give a little shout out his wife, Kimberly Ekins Store on a podcast called Sisters in Law. I love it. It's I love it. I'm obsessed with it.
And also we had a connection to.
I didn't know initially and then I'm like, oh, but it's really fun. They just go through all of the legal cases and of course our thanks to the editor of Bloomberg business Week, Jil Webber, joining us from Bloomberg headquarters. Yeah, it's a great podcast. It's four prominent lawyers, all women, sisters in law, but they're all involved in the legal
universe and just whatsever front and center. A lot of it has been on Trump cases, as you would imagine, as we talked about earlier, but just goes in and out of different things. They've talked on things with legal issues with Elon Musk and Tesla.
We should come on the show.
It's I would love. It's really really fun and kind of a must listen, just like we are. This is Bloomberg Radio.
Brother Mark.
A journal How about you let me drive?
No no, no, drive, honey please, I'll do the riding gravels.
I want to try it. It's a good question.
This is the Drive to the Globe on Bloomberg Radio.
Believe it's October already.
I didn't even realize it snuck up on me. I mean, we got to buy our plane tickets.
I haven't done it.
That's what that's what makes me think of. And I'm not talking for Thanksgiving or you know, Christmas holiday. I'm talking like we got a trip coming up next week, next week tickets yet. So that's how it's snuck up on me.
All right, a lot of things sneaking up on us, including earnings just a couple of weeks away. Let's get to our next guest. She's senior VPN uh. Lisa Erickson is also head of the Public Markets Group over at US Bank Wealth Management. She's on Zoom in Minneapolis, Minnesota. Uh, it is nice to have you back with us, Lisa. This market environment the fourth quarter, what are you thinking might ultimately be the major themes or is it hard to kind of figure that out right now?
Well, we're going into this fourth quarter a little bit cautious, and the reason why is when you look at the balance of risk and reward, what you really see is pretty even stack on both sides. Certainly on the positive side, we've had corporate earnings remain relatively resilient and beating expectations
for most of the year. In addition, the consumer really has held in there with their spending despite multiple headwinds, and certainly when we look at monetary policy, we're certainly closer to the end of a hiking cycle, although the exacting is yet to be unknown. But on the other hand, when we just look at overall economic activity, it certainly is slowing and not just tier in the US. And again, as we talk about monetary policy, it's unclear how long higher,
for longer it's going to last. So that really leads us more at a neutral position, just recommending that clients would stay at their strategic weight, whatever that typically would be.
So does that mean a recession is coming, a recession is imminent? What does that mean?
Well, right now, our US Bank economics team really is on the soft landing side of it, although again the chances are pretty near fifty to fifty. And the reason why again is if you look at the underlying driver of the US economy, the consumer, they have really hung in there in terms of being able to continue to
spend both on experiences and goods. But again we've got that continued challenge where inflation hasn't come all the way down and as well, as a result, the Federal Reserve is still keeping that tighter monetary policy.
How much risk or how much risk are investors at at this point, especially if ultimately we are going to continue to take out key levels. When it comes to the treasury trade and yield in particular, you know ten year yields, we talk five percent, that's the easy part. Six percent, seven percent that people have floated around, that's that's a different environment.
Do your point care? That really is what's keeping us again on the more cautious side of neutral, And it's really the fact that you've had this relentless rise and treasury yields, both on the back of what's going on with federal reserve policy, but also simply because investors are concerned. It's kind of a good news is bad news scenario.
As we continue to get some nice economic readings, they're just concerned again what that means for rates staying higher, and eventually that does have to impact the consumer.
When do you think it starts to actually impact the consumer, because you did say that, you know, the consumer has hung in there. The consumer has hung in there for quite a while. But you know, gas prices are going up, We got oil prices.
Talking about hustle balance sheets for.
Hustle balance sheets are done with that excess cash except for the wealthiest of people. And then of course you have the autoworker strike as well, and then student loan repayments starting up again for forty five million Americans.
Well, really, that that's our big question, Tim, is really how long can that consumer continue to spend at the levels they have been And all the signs are pointing to those headwinds that you've talked about continuing on through the fourth quarter, and so really it's that rate of change game between again, how quickly can some of those inflation pressures come down Hopefully we get some eventual of relief on the rate front, besides the fact that you know,
they are being able to consumer wise continue to hang in there with some of the excess savings that they still had from the pandemic spending, as well as the fact that the labor market is still relatively strong. And so that really is some of the key data that we're going to be looking at as we continue to move in through this fourth quarter.
All right, so big macro talk, we've got your macro perspective. What does it mean in terms of what investors should do either on the equity side of things or on the fixed income side of things. On a day where we see the rustle, which is a great indicator of kind of our local and US domestic economy goes negative for the year.
We are really recommending that clients right now stay neutral on the big asset classes. So again, whatever with their it does.
New typical long term you still have yeah, go ahead.
Correct, So whatever their typical long term weight would be on an asset allocation basis to equities, fixed income, and real assets, that they just stay at that weight as opposed to overweighting or underweighting while we continue to monitor the data. Now, certainly within those markets there may be some areas where you can skewed to and four, But within the US equity market, we really just believe having
that broader exposure at this point certainly just makes sense. Again, at whatever your long term weight would.
Be, Okay, so does that mean more interest in the market weighted performers or how do you see that?
Well, right now, we just recommend broader exposure to market, but certainly for clients who have a shorter term time horizon in terms of any liquidity or current investment objectives.
Our favoritism within the US equity market actually would be to some of those sectors that offer above average dividend growth and yields, And really the reason why is again, with some of this uncertainty in the economy right now and the potential volatility that we've seen, having that income cushion, we think really makes a difference.
You're the second person, since I did a show earlier on Bloomberg Radio and on our YouTube channel with Bailly Lipshealtz second person, Tim, who talked about dividends and looking at dividend paying stocks in this stay.
So is that where we are in the cycle?
Lisa, Well, certainly, we think again, with the lack of clarity, having that cash in hand certainly is attractive now for clients with longer term horizon. We do see some opportunity again in those secular growth sectors. There's a lot of ongoing trends towards AI, machine learning, just use of the cloud, anytime, anywhere,
spending that should benefit those companies. But again, given the run up that they've had really over the last few months, and as well as the fact that their valuations are relatively more rich, we would advise looking for those on a longer term basis.
All right, we're gonna run, Hey, listen, Thanks so much, Lisa ericson Senior VP and Head of the Public Markets Group over at US Bank Wealth Management on zoom in Minneapolis.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live weekday afternoons from three to six Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal