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Back to the top story. In some breaking news that we continue to cover, dozens of Democratic lawmakers are considering signing a letter demanding President Joe Biden withdraw from the race. A senior party official said as panic mounts that he'll cost them control of Congress. This exclusive report coming just in the last ten minutes from Billy House and Eric Wasason. Billy is Bloomberg News congressional reporter. He joins us from our Washington DC bureau right now, Billy, the calls for
Biden to step aside are growing increasingly louder. This time though, it's coming from lawmakers who are concerned about Congress.
What did you learn?
Yeah, there's a draft letter that's prepared for signing, has not been sent out, but it is being circulated from safe seat democrats. These are Democrats from traditionally safe seats, non competitive areas. This underscores that it's just not people worried about losing their elections who are concerned about Biden staying on the ticket, but those who likely will be re elected and concerned about the state of Congress as a way to put a break on perhaps a Trump presidency.
Billy, this is such an unusual situation. Obviously, I can't ever remember in my many years on this planet of the House Democrats actually moving against a president like this. Do we have any sense of who will be the signers of this letter? I mean, could it be a Nancy Pelosi type of person to actually sign on to this?
I think it's far more likely to be a senior Democratic lawmakers, again from safe seats, who are concerned about status on committees on legislation and on ability to block the White House Trump White House from ramming through things. These are probably veteran lawmakers, and the question is will they pull the trigger and actually send this letter, and or will something else happen to prevent that?
Billy?
Is the concern here that that Trump will become president and that Republicans will control Congress?
Also?
Is this a last ditch effort at this point to have a Congress that is not in the same party as the president?
Well, the concern is that both the Senate and the House would fall because of a Biden candidacy, that that would derail down ballot candidacies, and the fact that Democrats are fearful of a White House and Congress totally dominated by Republicans running this country.
Yeah, but I wonder you mentioned, well they really pull the trigger? I mean, is them leaking this news to you sort of enough to get that message across to Biden? Do you think that's part of the plan, is just to make it clear to Biden that this is something they're willing to do.
Could be the case, but we do know that Biden's hearing some of these concerns. In fact, he called a House Minority leader, King Jeffries for a second time yesterday for a very what was described as a very personal talk, very private talk, and the House Democrats, a group of them got together for some legislative discussion yesterday, but that devolved into a fear fest, panicky gripe session about what happened if Biden sticks around?
Well, so what happens if he doesn't, though, that's I think a big question as well. There's no as Mike mentioned, that hasn't happened in our lifetimes that this late in a candidacy, a president sitting president has decided not to continue, or even a presumptive nominee has decided not to continue. You go back to nineteen sixty eight and Lyndon Johnson, but that was back in March when he decided not
to pursue the presidency, was before the primaries. Billy, what happens if he were to step aside?
Well, that's the big question. Of course, Hubert Humphrey didn't farewell back in sixty eight when Johnson withdrew late in the game. They are all kinds of scenarios and nobody really knows for sure whether Kamala Harris, the vice president, would simply be the choice, or there would be an open convention, or what exactly would happen. And that's or whether it would actually be a boost for Democrats to drop Biden this late in the game.
Well, Billy, what a tremendous scoop on this letter potentially from House Democrats. How do you see it all playing out? I mean, your guess is as good as anyone's is. This kind of looked like the last straw for Biden. This type of thing happening.
It's really hard to tell, but I would suspect he has, and others have suggested that he really has just a matter of days to turn this around with performances at public events or an interview on ABC. But this pressure on him is moving faster than many many expected, and people are now talking just days for him to do something dramatically to show that he's fit and ready to stay on board with this campaign.
Billy, what did you see shift in recent days? Because as soon as the debate ended and everybody realized it was a political catastrophe for the sitting president, you did have a lot of folks come out with what seemed like the very manicured statements, including Foreign President Obama, who worked closely with Biden for eight years, and others as well, sort of mounting this defensive that seemed very coordinated. But something shifted in recent days.
Well, whether something.
Shifted or something didn't happen that they had asked to happen. I mean, certainly the White House and the Biden campaign and the President himself had been asking Democrats to keep their powder dry in terms of calls for him to withdraw, to give him time to show that was that shaky debate performance was not really the best picture of where he and how he can perform. But instead of really coming out forcefully in these few days, he asked, he has not done that.
Hey, Billy, We're gonna let you run because I know you are super busy. Once again, this breaking news just happening just before the noon hour. Just in the last twenty minutes, Billy House and Eric Wasason reporting that House Democrats are considering demanding that Biden withdraw from the race. Billy House is Bloomberg News Congressional reporter joining us from Washington, DC.
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So funny story. Yesterday, Tim and I do a simul cast together. I'm on TV, he's on radio, and we do a simulcast. I'm at the closing bell and we're talking about Paramount, and Tim.
Says, I say, well, more news in Paramount yesterday because there were a couple reports that there were some bidders circling, and I said, when is this story just going to die? When is this going to be done?
Yeah?
And then literally like two and a half seconds later, there is a headline that said sky Dance and Paramount have been talking for a deal.
A deal.
I thought Skydance was out, so did we.
And apparently now they have a preliminary agreement. So it's so confusing. Luckily, Keitha Rongganathan Bloomberg Intelligence US media analyst can help us. Keitha, what is happening?
Yeah, thank you so much for having me, Alex and Tim. Yeah, it's it's not over until it's over. And this this movie. We've seen this movie now play out so many times. But yes, sky Dance is back. It looks like they have amended some of the terms of the deal agreement with Paramount. Remember they had been in this very very
long drawn out negotiating process. We're talking almost six seven months, and then right when they were at the finish line somewhere in mid June, you know, Sherry Redstone basically just
walked away, you know, from the entire deal. But I think now they're back, and I think the one big thing that Sherry Redstone was kind of looking for, which she seems to have gotten, is slightly better in terms of the amount of cash that she's going to get paid, So I think previously it was about one point seven billion,
now it's one point seven five billion. But I think more importantly is that she is getting stronger indemnification languages language in the deal agreement, which basically protects her from any potential lawsuits. That's something that she has been pretty worried about because remember the sky Dance steal basically favors her over everybody else, so that is obviously breeding ground
for a lot of litigation. And the one thing I think that is going to work for skuy Dance and David Ellison is that there is no longer this requirement for the majority of the minority shareholder approval, which was kind of a non starter for David Ellison. So I think she has said that, Okay, we don't need that anymore.
So that's where we stand right now. We're really not sure about, you know, if there are any deal sweeteners for the Class B shareholders or what else is happening in terms of the other deal terms.
Yeah, this is a very complicated deal, and it's also given the dual class share structure makes it even more complicated. Kita, I'm wondering who gets what lay it out for us? Because we know David Allison, who's we should notice, the son of Larry Allison. He's a film producer, he's certainly interested in the studio business. But who gets what if this deal were to go through?
Yes, I think what is going to happen is, obviously, as you said, this is an extremely convoluted, complex process. So in stage one of this deal, it's a multi step deal. In stage one, what is going to happen is Skydance is basically going to acquire National Amusements. Now, National Amusements is the parent company of Paramount.
Okay, I'm just getting out the white board to make a diagram here.
Actually that's a good idea.
Yeah, yeah, it holds about eighty percent of the voting stock for Paramount. So they're going to go ahead and do that transaction first, and then once that's in place, then they're actually Paramount is going to merge with sky Dance,
so it becomes one whole combined entity. And then obviously, right now you have this really kind of funny structure at the paramount, So they've basically fired their previous CEO, Bob Backash, and now they have kind of this three headed CEO, so they have three different division chiefs who are heading the company as kind of the stop gap arrangement. So I think the plan is once David Ellison takes control, he's going to have Jeff Shell run the whole thing.
And remember Jeff Shell used to run NBC, so he's extremely familiar with the media business. So that is kind of the tentative plan. But again we'll have to say. And I think the reason why Sherry Redstone prefers the sky Dance plan to let's say, the Sony Apollo plan, which actually gave better financial terms to the rest of the shareholders, was because they were really looking to sell a lot of the assets and only keep the studio.
I think what Skydance has promised Sherry is that they will keep the company pretty much intact before they start looking to kind of dispose of assets. And I think that was very important for Sherry and kind of her preserve her her family's legacy.
So one key point though, was the majority of the minority of the voting shares won't have to vote on this deal. How are the majority of the minority voting shareholders going to feel about that?
Not good? And that's been the feeling all true, right because this was Sherry Redstone basically having her payday at the expense of everybody else, and so they have been threatening. You know, Mario Gabelli especially has been extremely vocal about this. He has been threatening litigation. He said, don't go down this path with sky Dance because I'm definitely going to sue you. Everybody else is going to sue you as well.
So you know, obviously they do not like this, which is why you know sky Dance was kind of putting in all of these different deal sweeteners for the Class B shareholders, even for the Class A shareholders. But again, I think Shary Redstone, especially when you know about three weeks ago when she said no, was again scared of all the litigation that was going to come her way. And I think the other thing that has happened Alex over the past few days is, you know, the regulatory environment.
I think there's a whole different perspective of what might happen in Washington right now. So I think initially we were kind of looking at a regulatory process that was going to be extremely difficult for these companies across the finish line. If you have a Trump administration, that whole climate definitely changes. It eases things up. It's pro consolidation. So I think maybe that these companies are looking at it from that perspective as well.
That's interesting. I mean, that's a big bet to make ahead of an election where a lot can still happen. I think many people would argue, Gita, this is I don't have to tell you this, and I don't have to tell much of our audience this. But media is a tough business right now, and I'm wondering what makes these assets attractive to this buyer. We're in an environment where we're seeing traditional linear TV just completely fall apart.
The movie business is being taken on by the it's not even fair to call them upstarts, but the streamers, the legacy companies are trying to adapt to become streamers, with very mixed success. I think it's fair to say, what are the attractive parts of Paramount's business.
Yeah, so definitely not the TV networks. I mean one could argue that.
Okay, Survivor is still awesome. Okay, let's just put it out there. You know how I feel about this, KEITHA.
Yeah, Well, CBS I was I was going to say, CBS is actually the one crown jewel in the whole Paramount TV portfolio. And obviously that has you know, Survivor, that has all of the NFL, all of the sports, right, it has a pretty pretty robust news lineup, so you know, when it comes to sports and news which CBS has,
they're actually in a good place. It's the rest of the Paramount and the Viacom cable networks that are really not in such a good place, which is you know, Nickelodeon, Comedy Central, you know, MTV, VH one, all of these other channels which are general entertainment channels which have basically been exposed to the most rapid kind of deterioration in terms of audiences. So obviously that part of the business,
I'm not really sure who would really want. Maybe Warner Brothers Discovery, maybe they see that there's you know, they could potentially be some kind of synergies there. But again sky Dance, I know has not you know, is not obviously very excited about that. The one ascid that sky Dance is definitely very excited about is the studio. And remember they've had a long history with Paramount. I mean they've financed so many of the movies, whether you know it's Transformers or Mission Impossible.
So they did the New Top Gun too.
H Yeah, Okay, New Top Gun as well. So they've had a long history with Cherry Redstone with the Paramount studio business. And remember, at the end of the day, content is king and they know that. And you know, whether the Paramount plus streaming service works or not, I mean, this content is still valuable and they could sell it to Amazon, they could sell a lot of this content
to Netflix. They're already doing some deals. But again, the content is definitely valuable, and there is definitely this arms race for content. So you know, I think they definitely want the content production piece of it. Again, You're absolutely right that the TV networks is going to be a little bit hard, But I think that's what Cherry Redstone also realizes, and she realizes that the longer this process kind of drags out, the less and less valuable those assets are going to be.
Do we think that Paramount stands a chance? Like what, Okay, let's just say this actually happens, what's your time frame, Like, let's give them a year, six months?
You mean as a standalone company.
Yeah, like until you say, okay, this deal is a success or the deal was not a success.
Yeah, oh okay, okay. So once the deal actually goes through, Yeah, I think you know, it would take at least about twelve to eighteen months to kind of get the whole integration done and to kind of figure out what the path forward would be. So yeah, I think it would, you know. And we're also kind of looking at this broader media landscape also, Alex, in terms of what could happen in terms of other deals, right what is going to happen with Warner Brothers, Discovery, what's going to happen
with Peacock and NBC? And there probably is a whole wave of consolidation coming. It's just that the regulatory climate right now looks extremely difficult.
All right, Githa, We really appreciate it. We appreciate you and all these circumstances. Either on Nathan Bloomberg, intelligence US media analyst. Yeah, I don't have Tim knows this about me. I'm a big survivor. I didn't know that about it and yeah, well we got into it when I had a concussion in November, and then my family and I we have like joint surveyor survivor family night. We talk about it and we learn things.
It's like a whole It's like Season in the thirties.
We Big Bong No. Forty six maybe for we Big Bong all over. We're currently watching I think season thirty six. We kind of just go where we feel. And then yeah, it's a guilty secret that I have that I apparently share with all of radio.
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If you go to our EA d go on the Bloomberg terminal, you can see the most red stories over the last eight hours, over the last one hour. You can play around with it. And one thing that you're seeing right now is the most red story in the last eight hours is JP Morgan's Kalanovic to exit amid string of poor stock calls. We're very lucky to have it with us.
This morning.
Alexandra Semenova. She is Bloomberg Equities reporter and she's here in our Bloomberg Interactive Broker's studio. This was huge news. Congratulations on the scoop. It's got a green bee or black b in a green circle on the terminal, which means it's a Bloomberg exclusive. You were the first to report about this huge news happening. What's going on?
Yeah, thank you guys for having me on. So obviously pretty significant that one of the most prominent forecasters on Wall Street is leaving JP Morgan. He's been at the firm for nineteen years. He most recently has become known for being one of the few remaining contrarions on Wall Street, sticking with his s and P five hundred target of forty two one hundred. That's a drop of more than twenty percent from where we are now before the year ends, and it's been a bit of a challenging run for
him over the last three years. In twenty twenty two, he was bullish through much of the route that we experienced. Last year, he stayed bearish even as the SMP five hundred rows twenty four percent, and then of course this year he's kind of stuck with that call in the face of the rally, so, you know, I mean, it's always a tough job to try to predict the market, but especially when you're in a very prominent position like that and making calls as a face of JP Morgan's research team.
You know, Alexandra, what I find interesting about Marko Klanovich is he was one of the first strategists who sort of looked at how some of the big quant funds were trading and their influence on the market. You know, most strategists look at, you know, what they expect earnings per share to do what they expect for you know, interest rates, that sort of thing. He really got in the weeds on, you know, your volatility targeting hedge funds
and momentum tracing CTA funds. What exactly in his thinking was led him to believe that we're due for this bearish turn this year.
Yeah, I mean, as you point out, Mike, the guy's brilliant. He has a PhD in physics. You know, he has obviously been very focused on the quantitative aspect of you know, all of this. He's been talking a lot over the last few years about you know, very low volatility and how that's been an issue for market. So that has definitely been part of his call recently. You know, he is saying that a lot of people are you know,
too optimistic given the macroeconomic backdrop. He says that we're at the end of this business cycle that with sustained higher rates, it's going to be very difficult to achieve the growth that appears to be priced into equity markets. And he was just you know, insisting that eventually we will get that drop that he's calling for.
So if I go to your biopage, just see all the stories that you've written in recent days, and you have to scroll a lot because you've written so many stories. You have an interview with David Kelly JP Morgan Asset Management of JP Morgan Asset Management, and his call that he shared with you was polar opposite of Marco Kolonovic's call. These two guys work at the same firm, they're making different calls, they're out there in public. How does that
relationship work? How does it work that they're they're not sort of espousing the same thing. Is it is that hard for employees there, like, help me understand how that works?
Yeah, so that's been really really interesting. So technically it is really you know, a good thing to have different views under one roof of diversity of opinion. But it feels like, you know, it's been more pronounced over the past two years as a lot of people are struggling to predict what will happen, and it's certainly been pronounced. To JP Morgan, they're trading desk actually led by Andrew Tyler.
They're very bullish. Andrew Tyler has said that his outlook doesn't depend on it interest straight cuts, that the economy is good, that earnings are strong, and you know, the equity run can continue. And then of course at JP Morgan Asset Management, David Kelly also very constructive on equities. He does say that he doesn't really like the mag seven. He says, stay away from the top ten stocks if
you're a long term in investors. He wants to you know, he recommends avoiding some of what he thinks is froth forming at the top, but he overall does think that you know, maybe things will broaden out and that so far equities can chug along. So very different views from Klanovic.
You know, it's a true it's not unusual for there to be sort of turnover in these chief market strategist roles at the big banks.
You know, it's a hard job right now, a very hard job.
I don't envy anyone who's doing it.
I always compared to like, you know, forecasting the weather on the year's eve of twenty twenty seven or something like that. It's an incredibly difficult job. But you know, Klanovitch was such a brand name. How did you sort of catch on that he was leaving the firm? I mean, is there any drama there? Do we really know what's going on as far as why he's leaving.
Yeah, So, you know, very interesting. Interestingly, some sources have told me that he wasn't at their recent conference in Paris, and then JPM Morgan did have a webinar for their
mediar outlook and he did not participate in that. So definitely can sense some of the pressure going on perhaps internally ahead of this news and ahead of this announcement and to you know, to that point, now dubrothco lekos Bujas, who was the chief equity strategy he is moving on to take on Kolonovix's roles chief market strategist and Hussain Malik, who was co head of Global research with Kolonivik, will
now be the sole head of Global Research. So a lot of moves going on on the research team there overall.
Hey, I want to remind everyone of some breaking news that we've been covering over the last hour or so. The drumbeat of pressure on President Joe Biden to drop out of the presidential race intensified on Wednesday with a bombshell report in The New York Times that he had conceded to an ally that he might have to abandon his re election bid if he was unable to turn
around public opinion in the coming days. The White House and Biden's campaign quickly denied the report, but time is running out for the beleaguered president to convince anxious Democratic officials, donors, and voters that he remains viable in his efforts to keep former President Donald Trump from returning to office. We're going to continue to have coverage of this developing story
as more information does break. Alex, I just want to end with you and sort of get the last word here as to what we know about next moves for Marco.
We know what is he what is he going to be working on.
Unclear what the next move will be, very keen to find out, but it is very common for strategists at these banks to sometimes move on to open up their own research shops. The most recent example that comes to mind is Adam Parker, who was chief US equity strategist for Morgan Stanley. He is now running his own firm, Trivariate Research, so a lot of that could happen. Will definitely stay on top of whatever his next move might be.
Tom Lee. Tom Lee was the head of equity the chap Morgan too.
And he's been in the news a ton lately. Yeah, this is what the market needs, is for the I think I saw on oddline.
Yeah, fifteen thousand by the end of twenty three.
Wow.
Okay, so quite a bit.
Hey.
Alex Simonova, Bloomberg News Equities reporter here in our Bloomberg Interactive Broker's studio. Check out her story. It is the most read in the last eight hours on the Bloomberg terminal. This is Bloomberg.
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Okay, let's get to the ISM services. As Charlie was just saying, you had a yields dropping after IM Services coming at a four year low. Steve Miller, IM Services chair joins us in Fort Worth, Texas. Hey Steve, what is happening?
Hi?
Hi, good morning Alex.
Yeah, it was.
It was a surprise for sure. We saw, you know, three of the sub indexes dropping from from last month and and we think that's what well, that's definitely what drove the overall the overall rating down. The only the business activity new orders and employment. We're in contracting territory, the supplier delivery state and expansion territory. But with a small drop, how.
Do you explain it? I mean, we we get the numbers, we have the data in front of us. As you mentioned, surprise, lowest in four years. How do you explain it?
Well, what we saw from you know, so two months ago we saw a contraction reading and then last month we saw I'd bump up, hoping that that was a return to growth. But what we saw was real estate rental and leasing returned to negative, transportation and warehousing returned to negative, and h and we saw mining consistent negative, and information and wholesale trade also swapped from from growth
to contraction. So we saw a pretty significant shift from from many companies in the growth mode to atraction.
So is this is this like bad news like processionary harbinger thing or is this just a softening like what what's the read ahead?
Yeah, so one of the things that we saw in the numbers was was a continuing commentary on costs being high, but we saw some backing off of the rate of increase. So I'm so, you know, we're hoping that this is this is a blip. And and from the overall commentary, there was a bit of a mix in terms of positive of sustained business kind of meeting plan. So it didn't seem like a shock from the overall commentary, but it certainly wasn't good news.
Yeah, that's what I'm trying to Is it good news for the FED?
Though?
You know it kind of the down up down that we saw this month, in the last two months, I certainly give some credence to the FED and saying you know, let's look at things for a little while, make sure that we're seeing that stabilization before rate cuts.
Just one more question, then the consumer. Does this show that the consumer is slowing and buying less stuff?
Well, we saw.
Retail trade for the second month in a row in contraction mode, and then wholesale trade went from went from expansion to contraction mode from last month to this month. So I would say, yes, all.
Right, Steve, we're gonna have to leave it there. Thanks so much for joining us. Steve Miller is ISM Services Chair. He joins us from Fort Worth, Texas. Once again June, us ISM Services falling to forty eight point eight below all estimates.
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