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Here we go the breaking news from the Supreme Court. Supreme Court overturning a Chevron ruling. And this really is a blow to agency power. So this is truly about federal agencies and the current wide birth They have to interpret unclear laws, and it looks like the Supreme Court has now overturned that Chevron deference. Let's get to June Grosso right away. She covers Bloomberg legal analysts and hosts of the Bloomberg Law Show. June We've been waiting for this. Walk us through what this means.
So the Chevron doctrine means, you know, the legal definition of it basically is that if there is an ambiguous statute and ambiguous law, then deference is given to the agency's interpretation. What it also means is, basically, you know who has more power the administrators at agencies or judges, you know, experts in the area or judges who have to sort of learn as they as the.
Cases go on.
So we have been suspecting that this court was going to overturn Chevron because conservatives have for years been targeting it, and several of the justices, including Clarence Thomas, have been talking about overturning Chevron.
What this means.
And this case was just a case, actually it was two cases with the National Marine Fisheries where there's a rule that the fisheries have to have observers on the boats and they have to pay for those.
And that was being challenged here.
And so even though the fact is that they've never actually had to pay for those fines, but theoretically they do.
So what the court is saying, and.
It's the chief road is it's six to three again, second six to three decision in this case. And you know, we suspected it that it would come out this way because of yesterday's opinion knocking back the sec and saying it can't have in fraud cases, it can't have its in house counsel. It has to be people have to be able to go to the federal court and have a trial by jury. So we expected this, and you know,
anyone knows. There are these people who say this is the you know, basically the end of the world kind of things. This means that federal agencies are going to you know, cut back on their regulations. Things are going to be challenged, they do things, you know, all of regulations, health and safety, consumer regulations, food and drug that all these are going to be affected by this, and they will. But the question is how much, and that remains to
be seen. So and people on the other side say, well, no, it's not going to really have that much of an effect. We haven't been really using Chevron, and as I've said before, the Department of Labor has already stopped using Chevron as a reason for its regulations in light of this case coming down.
So we just don't know what the effect will be, whether it will be huge.
And also the Supreme Court hasn't really based any of its decisions.
On Chevron in a while, so who knows. But is a blow to agency power. As you said in the first place.
Why do we call it the Chevron deference, Because, like you said, this actual case at hand that the Supreme Court is making a ruling on right now didn't have anything to do with the actual company Chevron. Well, it was just a precedence walk us through life.
Well, in how we're understanding that.
With Supreme Court precedents, often the name of the case where it's decided is given the title. So Chevron difference comes from a case four decades ago involving Chevron. So that's why we call it Chevron defference. It has that name. Has nothing really to do with the case the fisheries case here, but that's the name it's had for four decades and that's the way it's referred to. So you know, if you're in law school, that's what you're studying, the Chevron Chevron.
It's called it's Chevron document.
It's called Chevron deference because you give deference to the agency's interpretation.
So does this mean, though, that it's going to be judges that are going to decide the laws versus experts within agencies that aren't elected.
That decide laws.
Well, that is the intention of the what a judges know about it interpreting? Well, what happens is judges, let's say, you know, they'll learn, for example, you have anti trust cases. Right, judges do all kinds of complex cases, So you have anti trust cases, and they take evidence from both sides, they listen to all the experts, they study it, and then they come out with a ruling. I mean the Supreme Court, are they experts in the areas that they've
been homelessness? You know, that's the way the judicial system works. You have judges who are supposedly independent and are independent and they come to a decision based on the facts and based on weighing both sides of the arguments. But you know, it's going to make it more difficult for some agency regulations and you can imagine that. And this was pushed by conservatives and business groups. They wanted to get rid of Chevron. So and this is all about
the you know, the war on the administrative state. How the six Conservatives have sort of been bent on not taking down the administrative state, but certainly lessening the power of federal agencies. And as last year there was a case involving the EPA and its control over water pollution, and the Supreme Court invented a doctrine called the Major Questions doctrine so that they could take back some.
Of the power that the EPA has there.
So it's been going on for a while, but this has been sort of out there as a target of conservatives and business groups. So the impact is who knows what the impact will really be.
So what exactly do the how do the businesses feel about this decision? What is the general argument of why the businesses want to overturn this.
Well, they think that agencies have too much power basically, so they think that this is evening out the landscape, and you know, it just will make you know, businesses don't like restrictions, right, I mean the sec that all that we were talking about yesterday was in house you know, whether you can have your proceeding in house judged by an administrative law judge who knows the area.
Securities right, securities.
Lawyer who knows the area, versus being able to go to court and have it, you know, a trial. So obviously it's it's sort of the less restrictions on business, the better it is. So that's I think what you know, And so I haven't I haven't been able to read it because I've been talking about it.
Yeah, but my question, how much of this do you think is about climate and the EPA And they're really tough restrictions that have come down through the agencies on interpretations.
That excuse me, that's one sort of big area here. But it's not just climate that's going to be affected, of course not.
But was that really why conservatives were pushing this or we're not totally clear.
Conservatives have been pushing this for And what's funny is this case, the Chevron doctrine was a conservative doctrine that was put out forty years ago, and in time conservatives have just you know, don't like it. They don't like the restrictions that it imposes, and so they've.
They have attacked it.
But so it's it's just a you know, where you want less regulation. It's sort of you know, when Trump came in, less regulation, that's one of his things. I took regulations away and he had this big stack of regulations. So and it, you know, also depending on the administration whether or not regulations are being enforced more what.
The regulations are.
But this you know, will affect everything, workplace rules, every rule. And I think that what's gonna happen is a lot of agencies are going to do what labor has been doing, which is not rely on that say, it doesn't rely on this. This is our agency power. It comes from our agency power. We don't have to go to the Chevron difference.
All right, June, thank you very much. I know we're not done with you yet. Stay tuned because you never know what else is coming out. June Grassol Bloomberg, Senior legal analyst, joining us. Let's continue the conversation here Anthony Sabino as professor at Saint John's University, Tobin College of Business, and as a reminder, we're looking at the Chevron deference has now been overturned. The Supreme Court throws out decades
old legal doctrine that empowered federal regulations to interpret unclear laws. Professor, thank you for joining us. We appreciate it. You've had some time to read through the opinions, give us your takeaways here.
Yes, well, first of all, thank you for having me on on this important day. This decision is the right decision. It's a very good decision because it honors both the Constitution in terms of its text and its constitutional plan. Now, no doubt we have heard and we're going to hear a lot more of the ringing of hands and stermon drag about. This is the Supreme Court going off the rails, discarding story decisives, upending agency power and basically making life
very difficult for the agencies. I respectfully disagree, And to use a word I've heard mister Biden used quite recently, quite a lot recently, is that's a lot of malarkey. First of all, it's not a radical decision. It's true to the Constitution's text and to the constitutional plan for the Supreme Court for all judges, wherever they may be. Their job description can be summed up in two words, judges.
Judge Chevron diminished that. Okay. It required judges to defer to agencies, and it was keeping judges from doing their jobs which is too independently, thoughtfully and of course forthrightly use all their skills or their wisdom to interpret the law. And as such, Sefron inflicted damage upon checks and balances and separation of powers. In fact, Cheffron introduced an imbalance because it gave an advantage to the agencies, to the
government side. And again, it's a zero sum game. If you advantage one side, then by force of logic, you disadvantaged the other. But this case now does low for bright is it levels the playing field. Now everyone comes into court, okay, and has the same situation. The agencies will still be able to advocate for their position, the public, okay, the American citizens, she will still be able to advocate for her position, and the court will listen to both sides,
and we will take it. We will take it from there, and as such, now we will have that balance restored as the way it should be.
Okay, how should.
We understand what this means for business?
Is?
We are Bloomberg.
We do follow markets very closely. What's your take on the business implications of this decision?
Right?
Well, yes, yes, okay, right.
I'm sorry, sorry, I'm zooming I I'm zooming in at the same time. Okay, but I'll stay on the phone with you.
All right, we got you.
Can you hear us?
Yes, yes, okay.
Do you want me to stay on the phone or the computer?
This is a great question. I feel like the computer is just fine.
All right.
So let's get back to that question in tid that Emily was asking in terms of what businesses sort of think about.
Well, businesses are going to obviously welcome this because it removes that unfair advantage. It is not, in any way, shape or form, going to radically change how agencies do business. They still have all the enforcement tools available to them
that they had previously. They're still going to be able to argue their position, for they simply will know no longer have that unfair advantage of coming in ahead of the game and already being able to basically tell federal judges, well, look, you don't have to apply your skills, you don't have to analyze these ambiguities and statutes. We're the experts. We will do that for you, and just listen to us.
And again, that violates separation of powers and checks and balances because you diminish the power of the judges to do the job that they constitutionally bound to do, and you were expanding the power of the agencies, which are, of course, as we know, part of the executive branch part of Article two. So you elevate one branch over the other branch and prevent the other branch, the judiciary,
from doing its job. Now, certainly businesses will benefit by having this, but also enforcement actions are going to go around. They're going to continue and the way they have in the best.
Going forward.
Do you think that laws will then be written with different kind of clarity then to prevent things being helped up courts like exactly.
Okay, so that's the whole point.
Right, So if that's the case, can you give me an example of something that might have been that that might be rewritten or might be written differently, now that the Chevron deference is by the way aside.
Okay, Well, for example, and I heard you discussing this for June a couple of moments ago. Is environmental laws and regulations promulgated there under Congress. And again this ships if anything shifts a burden slightly or basically is reminded to Congress that they need to do a better job. We have to remember that one of the reasons Chevron came about was that the Supreme Court at that time, in nineteen eighty fourth said all right, well, what do
we do when there were ambiguities in the statute? Well, you have a statute that's ambiguous. You have an agency that promulgates regulation or brings some enforcement action to enforce that statute notwithstanding the ambiguity. And as such, a court at that time in Chefron said, well, let's listen to
the experts, let's listen to the agencies. And that again at the time Chefron was a good decision and rightly decided and worked, but it's been taken too far where now again the difference has gotten out of hand and it has increased the imbalance of the favoritism of the agency's view and also again basically shutting out for closing
judges from doing their job. Now back to again as an example environmental law bit it applies to securities law anti trust law as well because over the controversy presently therein, it's going to compel Congress to write better laws, to erase ambiguity, to iron out the ambiguities and the problems and the misconceptions in the words the statute, so that way you have clear statutory text. Therefore, regulations promulgated by agencies will just be just as clear because they are
starting from the clear foundation of the statute itself. And enforcement actions in terms of what can be brought and what cannot be brought will likewise benefit from that same clarity, and judges of course will have an easier time because as again the Supreme Court has said, and the Supreme Court of two hundred years is said, we go by the plain English meaning of a statute and we apply it according to its plain English text.
So in theory though in theory, businesses should have then more clarity, I think, is what you're saying, Like, if the law is written more clearly, then the business should say, Okay, now I got it. What's the reality though, like Congress can barely get you know, anything done, are they're really going to be able to write more clearly when it comes to certain laws, particularly confusing ones like climate or antitrust.
That's their job, that's what we the people let them for. And if Congress cannot write laws with clarity, then it's up to the American people to exercise our will at the ballot box and put in people who know how to write a clear, unambiguous statute. It's as simple as that. That's the constitutional plan. That's separation of powers, that's checks
and balances. So Congress needs to get to work. And in the instances where Congress cannot be okay, as clear as one might like, the bottom line is that also reflects political compromise, because, yes, ambiguities arise in statutes because of the political compromise that is undertaken in the halls of Congress, and of course with the President and ultimately sign it off and make it into law and so forth. So to that extent, that's a natural part of the process.
That's democracy at its best. That's a republican form of government.
That's it's best.
All right.
You're not always going to get perfectly clear statutes, okay, but again, there's nothing wrong with Congress trying to do that. And if I may, as you say, businesses, but let me broaden that, if you allow me. Okay, it's not just American businesses, it's all Americans. All Americans individual in their personal lives, their personal liberties, business people, okay, business persons, businesses, and entities. We're all entitled to statutes that clearly state
what the law is. So that way we can look at them and we know that the law is consistent, it's applied to everybody the same way. It's predictable. So when I decide I'm going to take a certain course of action, okay, I know what the legal result is going to be. That's part of America. That's the way it should be. And once again, Local Right today restores that balance by letting judges judge.
All right, professor, we hope that plays out that way. Anthony Sabino, Professor at Saint John's University Tobin College of Business. Just as a reminder to update you on this breaking news, the Supreme Court overturns a Chevron ruling in a blow to agency power, throwing a four decade old legal doctrine that empowered federal regulators to interpret unclear laws, and now that goes to judges and then back to Congress to write very clear laws.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecard Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
It's definitely the Supreme Court decision day. The latest is the Supreme Court backs the January sixth defendant curbing the use of Enron law. Remember, nearly three hundred defendants, including Donald Trump, were charged under this twenty two thousand and two law that grew out of the Enron collapse regarding people who obstruct an official proceeding. And it looks like the Supreme Court is backed the January sixth defendant. June
grasshow senior legal analyst is still with US June. What does this mean, Well.
It means that some defendants are going to have their cases trim back. And this also affects Donald Trump because he's been charged with this same with the same crime. So it's going to affect a lot of January sixth cases. I think very few of the January sixth defendants just have this charge that they're facing, So if they've had a trial already, they'll probably still.
Be And is this charge specifically against preventing approving President Biden or or is it like them breaking into Congress it's like listening Nancy Pelosi's desk.
Well, it's yeah, it's about obstructing, that's the whole question. It's about obstructing official proceeding. And this was a law that came in as we know post and Ron, and so what the defendants were saying here is this law doesn't apply to this kind of a proceeding. This is a law about papers and disrupting papers and stuff. And so but you know, the law could be any law
can be read broadly or narrowly. And it says that they said that the government must show that the defendant impaired the availability or integrity for use in an official proceeding of records, documents, objects, or other things used in an official proceeding, or attempting to do so.
It's six to three again. But what's interesting is that the three are not the three liberals.
The three are two liberals, Justice Kagan and Justice Soto Mayor and conservative Justice Amy Coney Barrett. So it'll be interesting to see. And this is a case.
That the Chief wrote the majority opinion in.
And you know, if you look back a lot of the most important cases, the Chief decided because the Chief has the ability if he's in the majority, to decide who will write the opinion, And so the Chief decided that he'll write it himself, meaning that you know, he thinks it's a very important case and he wanted to handle it. And I'm trying to see what else it says.
While you're looking, I want to update our audience right now, the Supreme Court backs January sixth defendant, curbing the use of Enron law. This could affect President Trump as well as hundreds of January six cases. In this centers on the Enron rule that said that people who obstruct an official proceeding could be charged for that. This appears to them sort of put that on the sidelines and say, no,
this was not a disruption of a official proceeding. We're talking something like nearly three hundred defendants, including Donald Trump, were charged under this two thousand and two law. So we are looking at that as we go. So if I'm one of the defendants, what happens June, like, do I go back and say.
Yeah, what happens?
You know, I don't know procedurally exactly how it works, but most likely the defendants in these cases, their attorneys will go to maybe the Justice Department will do something wholesale and you know, drop all that. The Justicepartment will just come in and drop all the charges that have to do with this and then you know, but it could it's going to cause a lot of hassles in that. So defendants might say I was sentenced to well, not
many of them are serving long sentences. I was sentenced to six months, and now this came out, so maybe I should only be sentenced to three because I have two other charges. But I mean, this is about the interpretation of this law and whether you could interpret it as meaning more than you know the fact that it applies to January sixth actions that a decision. I'm trying to just see one thing and to see what they said. But in other words, it's they took the statute and
it was a novel use of this statue. But they were trying to find something that would fit with the way the January sixth rioters went into Congress and obstructed what was going on there. So they were trying to find a way to fit it, and this, to them fit. But what the Supreme Court is saying is that, know, this is not about that kind of proceeding. This is about more about papers and documents, and that's what Enron was about. So you know, it's hard because I'm.
You're talking as your as you read, Okay.
So the case is going to go back to the DC Circuit and then it will assess whether the indictment can still stand, the Trump indictment in light of this new and narrow interpretation of the law. It'll be interesting to see what happened. Justice Jackson, who is siding with the with the five Conservatives here has a concurring opinion.
It'll be interesting to see.
Why she decided to side with the conservatives. And you know, we've seen this term that she's one of the liberal justices who has gone in different ways than the other liberal justices in different points in certain cases, and this is certainly one of them. So it's a narrow reading of this statute, is what it basically is. And I think you can see today we had there were all six to three decisions today.
So I mean, this is a court so highly divided.
And you know, at the beginning of the term, we had justices even Justice amy Cony Barrett and Justice Sonya so to Mayor and the Chief loves to say this, you know, most of our decisions, most of the decisions are unanimous.
Well, those are unanimous.
Because they are decisions in cases that you and the rest of the public doesn't hear about their technical or whatever when it comes to these hot button social issues, when it comes to this kind of a case things involving Trump, it's six to three yes.
So this court is so divided.
And this is exactly what they don't want to show the public that they're divided down, you know, ideological lines for the most part.
Yeah, and Dune, it looks like we will see you on Monday. They're done for the day, and it looks like Supreme Court's last opinion day will be Monday. We know what that means. Trump Community will be coming at ten o'clock on Monday. We will be here with June Grasso for that Senior Legal and List joining us at Bloomberg.
So again, we've had a lot going on. But the latest Supreme Court ruling is that they sided with the January sixth Capitol riot defendant in a ruling that could affect hundreds of prosecutions, including the criminal case in Washington against former President Trump. It Noah goes back to the d C Serga Court to rule on whether the indictments can still stand under this new interpretation of the Enron law that is designed to help ease official proceedings. That
you cannot obstruct official proceedings. That is that Enron rule. All right, let's get more here with Caroline Frederickson, Senior Fellow at Brennan and Strategic Council Counselor on Democracy and Power at Open Markets Institute. Can you just walk me through what you expect to happen next?
Well, I mean, I'm just like you. I'm trying to digest what happened but I think we're going to have a whole variety of cases that are going to be reopened for return to lower cour for you know, either dropping the charge all together and proceeding on the other charges, or adding further you know, evidence and qualifications to make it more pertinent to the actual connection.
To the destruction of evidence.
And you know, I think that's going to be obviously challenging. There are a lot of people who've been convicted already.
Caroline, to what extent are you considering this a win for Donald Trump a positive development?
You know, it's really hard to say on you know, the little that you know, we know, having just glanced at the headnotes to try and absorb it. But he's certainly going to make it out like it's a win and that the Justice Department has overreached and that it continues to overreach and his and it goes to his story about the vendetta that is has been waged against him by an over politicized Department of Justice. So he's going to call it a win regardless of what anybody
else says. To the extent that it actually affects any case against him, We'll have to see again. I think the Justice Department is going to reformulate these cases. It's going to try and establish in some that they have the requisite connection to the charges that are listed. And this is you know, this is an interesting case because it follows on an earlier case dealing with the destruction
of a fish. Actually when some fisher fisherman was was was picked up for violating laws regarding the kind of size and the fish he was he was pulling up and uh, and he threw he threw back some fish, and he was charged under this law. And the question was, you know, is a fish a tangible object under the law, And and they found in fact in that case that it wasn't. That it was supposed to be related to a document and so forth. So we're sort of seeing
this as of a piece with that. Kagan was of dissent in both in both cases here this one and that one, your prior case, and so I think, you know, it'll be she's been trying to make the argument that this otherwise word in there is a broad sweeping term that should allow anything that's connected to the obstruction of
an official proceeding. Then it doesn't have to be related to a particularly destruction of evidence, and so you know, I think, will the Justice Department be able to now show that they were trying to inhibit the actual uh counting of the ballots and you know, a physical piece of evidence a document. Maybe they will and they may be able to, but that remains to be seen.
If they don't or they can't, then what happens with all of these defendants, including President Trump.
Well, I mean just remember that there were multiple charges in all of these cases, and so I think there are probably any of them who were uh prosecuted simply on this on this particular charge. This was you know, I think an additional one that that allowed them to enhance these sentences, and so I think in this case, you know, they will be a potential lessening of the sentences.
Some people will be sentenced to time served, uh and some people, you know, will perhaps get off altogether because they're their charges are so minimal that they will be uh uh kind of slap on the wrist. So I think it'll be seen, I mean there, it will remain to be seen. There'll be a lot of different outcomes depending on the level of engagement with with President Trump.
You know, he obviously had greater involvement in in all of the different UH back and forth between members of his campaign and variety of people working on on thwarting the counting of ballots and UH on January sixth. There there, there they may be able to and Jack Smith may be able to assemble a greater amount of evidence that will continue to keep these charges more relevant for Donald Trump himself.
Can we actually zoom out and could you talk a little bit more about the two thousand and two law that grew out of Enron that's kind of at the center of the question this decision.
Right, Well, you know, it was an interesting in that particular situation. You had a statue that was not able to capture somebody who actually destroyed the documents and destroyed physical evidence, and instead it went after those who encouraged or embedded, but it didn't actually go after the direct perpetrator.
And so what Congress tried to do is strengthen the law so that it would be broader in scope and enable the prosecution of those who'd actually been directly involved in trying to evade.
Prosecution.
So it let the big fish, so to speak, off, and those who are less responsible could be prosecuted. So they tried to fix that, and this this irony perhaps is that, at least according to the Supreme Court, they didn't do a very good job of it.
Yeah, Caroline, we appreciate it. Thank you for walking us through all of this. Caroline Frederickson, Senior Fellow at Brennan and strategic counselor on Democracy and Power at Open Markets Institute. The Supreme Court is done for the day. They're coming back on Monday, and the Supreme Court will be issuing the Trump Community ruling on Monday around ten am. In that hour, we are going to have live coverage of that, so definitely stay tuned with us for that.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
With Radio Malex Deel Longside Emily, who just got a nice dose of Supreme Court awesomeness on her Friday. She helps me out. Paulsmini sitting on a beach off today. This is Bloomberg Intelligence. We bring you all the top news in business and finance and economics. There are lens of our Bloomberg Intelligence analysts. They cover two thousand companies and one hundred and thirty industries worldwide. Let's go to one of them right now, Nathan, Dean, Bloomberg Intelligence Senior
policy analysts. Lots of stuff happening in DC. We are keeping an eye on those Supreme Court decisions, but we cannot lose sight of the complete disaster that was yesterday and that debate between President Trump and President Biden. I think the big question today, Nathan, is what does it look like to get Biden off the ticket? Like legally, how does that actually happen?
So it's going to have to come from the President himself. I mean, this is going to be a decision that he's going to have to make, and I think that, you know, we'll see over the weekend as he's fundraising and meeting with advisors. But as of this morning, he was even saying to journalists that he is going to be on the ticket and he's looking forward to a
second debate in September. Now, the way would work is that if President Biden were to decide that he's not going to run, then we go to the convention and the delegates would have to figure it out.
Now.
President Biden already has enough delegates to secure it in the nomination, but if he were to say I'm not going to run, he could release those delegates to then vote for whoever. But ultimately then it would become a race of who wants to be the nominee for three months before the election and trying to take down President Trump. It's gonna be very messy. You would have Kamala Harris the vice president. You have a lot of governors probably
thinking about it. But if this were to happen, and it would happens soon, it's gonna be something that we haven't seen since Lyndon Johnson in nineteen sixty eight.
Nathan, how soon must a decision be made? It's almost July. Biden doesn't seem to have a lot of time here.
No, so, but he does have the advantage that the Democrats are going second in terms of the conventions, So the Republicans are meeting in July fifteenth, the Democrats aren't meeting until August, so really before the convention, there's a lot of bit of time in terms of least the logistics of getting on the ballot. If this were to happen after the election, Essentially Democrats would have to go to the polls and vote for Joe Biden, knowing that
they would get somebody else. But if President Biden were to decide tomorrow that he's decided he's not going to run, you're going to see a scramble amongst the Democratic Party to try and figure out, Okay, is Kamala Harris the next nominee. You know, she doesn't pulling, She isn't pulling all that well against President Trump on a one on one race. You know, is Governor Newsome, Governor Pritzker, Governor Whitmer. You know, the governors I think would be able to
put their hands up there and say we're interested. So you would almost have like this like uh, you know reality TV show, if you will, trying to fre exactly. And then ultimately it comes down to a vote in Chicago, which you know the last time, you know, you know, Chicago obviously doesn't have the best reputation when it comes to democratic conventions and open conventions, but you know, it would be quite a show in August.
Hey, Nathan, what.
Do you think is realistically going to happen?
So look, this decision is going to come from President Biden and President Biden himself. I mean, it is extremely difficult for a politician, Republican or Democrat, who has served their entire life and is used to being a fighter to then say, you know what, I'm going to take a step back and it's time for me to move on. And so you know, we've seen this with a lot of other politicians, both in Congress and you know, the
executive branch. Now, I think it comes down to two things. One, if President Biden believes that last night was just because of the cold and that he can then change the narrative in the next few months, he's going to stay in. If there's something more serious that President Biden begins to believe that there is something that you know, that this is an issue, then I think eventually we may say we're going to step out.
All right, Nathan, we got to leave it there.
Thank you so much for that, Nathan Dean Bloomberg Intelligence Senior Policy Analystic.
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We do want to keep you updated on the Supreme Court. We did get run one ruling that's coming out. The US Supreme Court reinstated in Oregon city's law banning public camping, and this is its first ruling on homelessness in about four decades. We're going to get you much more on this with June Grasso in just a moment. Let's go back to Nike and just the level of the stock drop that we're seeing here.
Put him.
Goyle, Senior US e Commerce and retail analyst at Bloomberg Intelligence, joins us. Now put him, I guess what would a turnaround for this company at this point look like and how long would something like that take?
Sure, So I think it's all product dependent. They have introduced a new product as a recent and that product has done well, especially in their air franchise. I think it's a matter of time. Nike really took its foot off the pedal when it came to innovation since the pandemic, and now it's just starting to push the pedal harder. It won't happen overnight. We think it's going to take at least six to twelve months. So this year their
fiscal twenty twenty five will be a wash year. It will be down, and I think we will have to look past that in another six months. But I do think the Nike has the ability to bring back innovation. It is the largest at leisure brand, and while it has lost shared at Hooka on and Running and Adidas in the lifestyle category, if they can get the right product out, they can do well. Their dunks for a huge success, but they need more.
Can you talk about how much of the movement that we're seeing in Nike today has to do with company specific news and how much of it has to do with traders kind of telling us a signal about the consumer maybe being weaker than perhaps the numbers that we got this morning, the ego data that we got this morning, suggesting sure.
I would say that the bulk of the move that you're seeing today is company specific, it's not the macro. When I look at the at leisure space, there's a lot of tailwinds in there, especially the sporting events. We have the paras Olympics coming up, and there is still brand Heat for sports to be outdoors. That provides a
benefit to these at leisure brands. So I'd say, while the consumer is being picky and they're choosy, they're still spending where they want to spend and if you have the product, they will come to you.
But nevertheless, why is it going so poorly? Like they want to sell direct to consumer and like not do the retail stores as much. But even that strategy didn't work. I mean, how do they fix a problem that has so many tentacles.
The problem is at the core. The problem is at the product. So if they can fix the product, I think the problems almost resolve in themselves. It's not that Nike has lost its brand Heat. They still in basketball are the most preferred brand, They have the best sports flares, they have the highest endorsers. It's really in lifestyle where they're struggling and they've lost here, and you could say in running too. Those are the two categories that they
need to bring forward more innovation. So I think the answer to their problem is product. It's innovation and Nike just needs to qush harder. And we'll have to watch execution to see over the next six months if they can really deliver on what they're promising.
So Emily, Wait, so you do have Nike's or you don't. It's the Adidas ones that you don't have. The Zambas you don't have.
I don't have the Sambus, but it really is incredible. I mean I like to think that I follow like sneaker trends, and the Adidas Szambus is a lifestyle sneaker that is so popular and has really driven a lot of Adidas's growth. Punam are you saying that Nike kind of has to come up with a product similar to that, kind of a product that everyone on the street is I guess obsessed with and wants to wear.
Yeah.
Absolutely, and they did right. They had the Air Forces, which were a life style shoe. They had their Dungks, which became a lifestyle shoe.
But they need more.
They need to continue to keep innovating because now they're camping those tough comparisons and they just need more innovation. So it's really really getting the product right here.
I just like, how much more can you innovate a sneaker?
Like?
I mean, this is such a dumb question. I don't we're sneakers I have a weird foot. I gotta wear bionics, like you know, my feet are old feet. But I mean, how hard is it to innovate a sneaker?
Well, I mean the palm was not really that innovative, right, I mean I grew up wearing salm as of the kids. So it's about just getting people comfortable and getting the trend right, getting the look right, to feel right, and being where the customer is and really bringing your brand
forward with those customers. Look, Nike is still the largest active were brand, It's still the dominant player in sneakers, and Hoka and On are very small compared to Nike, so when they grow double digits, it's a small fraction of what Nike's sales are. So as I really do think that they can. They can bring something forward and really do well. If they get the product, and remember they also have to endorse the product right, the product
could come out. But then they need athletes, they need celebrities, They need influencers to make that product develop grand heat and catch steam into the marketplace, because that's how it works, that's how products selve.
Yeah, they need Emlin Graffeto. I think it's cool like her and all her buddies. She's going to be like, my cool like person.
Like who knows supports?
You have weird feed Emily, what is it?
It's a life changing event with your sneaker or lifestyle, a.
Life lifestyle sneakers like her, not her, she can't wear those, but like it's just like that's what all her cool friends wear. I have planner fasciitis, like you wear to hang out as opposed to a running sneaker.
That's going to look more like.
A John has two pairs of shoes.
So let's just keep that in mind.
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All right, let's get to what's happening in the bond market. You're right, yields have moved higher despite the fact we got that PCE that seemed to be interpreted as okay, the Fed can cut It's okay. Inflation is coming down, spending an income is hanging in Okay, Danielle de Martino Booth is CEO and chief strategist for QI Research. Hey, what was your interpretation, Danielle about the data and then what we're seeing in the bond market right now.
So, you know, a thanks for having me this morning. It's great to be with you again. And this is a real head scratcher for me. You know, unrounded zero point zero eight percent increase in the core the Fed's year end target is two point eight percent for the core PCE, it's down to two point six percent. Same with its unemployment target for the end of the year four point z z or percent.
That's where the unemployment rate is right now.
So it would seem to be, you know, a green light for the Fed to cut rates here. And we had University of Michigan see an appreciable decline in inflation expectations in both the short.
And long term.
So go figure on why bond yields are up. That's my honest answer here.
So what about when you look to the rest of the year, we're just at the halfway mark. What do you really see is going to be drying the cross asset market action, So you know.
There's a real tug of war there are a lot of good observations being made right now. But the K shaped economy, the haves and the have nots. You see that when you get the second print for the University of Michigan, and that you get tersiles of income broken out, and you see that there's a lot of anxiety among
the lowest income earners. We've got an institutional client at QI who was saying that a Tampa food bank is on from twenty thousand to forty thousand per month households, that it's serving that a lot of these nonprofits are just overwhelmed.
With the amount of demand.
As we're seeing again, the difference between twenty twenty three and twenty twenty four is twenty twenty three, we're really white collar layoffs six to nine months of severance.
And then you hear from the likes of Walgreens.
Yesterday, you know, up to maybe sixty thousand jobs in peril there with all of those stores closing these types of job cuts.
The people who lose their jobs only get six to nine weeks of severance. So it's a huge difference.
So fair enough, Okay, So if we just sort of go with yield, are doing stuff, we're end of the second quarter, so things are moving, et cetera. Do you think the data that we got today can green light a cut from the FED? And when do you think that could be green lit?
I do.
We have seen revisions out of the state of California that show that net job losses through the second half of twenty twenty three, the last six months of twenty three were negative. We're going to get several revisions out of the Census Bureau for payrolls before even the July FED meeting, and certainly a very large one in August before the September meeting. So I'm looking at September as the definitive launch date for FED rate cuts.
Does the equity market need a rate cut in September? Because here we are, we're at all time highs today and we still have, you know, yields moving a little bit higher. But I'm just wondering if we don't get that cut, maybe it's pushed out even further, maybe into twenty twenty five. Does it tank stocks you think? Or are we able to kind of stay here at these all time highs and continue chugging along for the rest of the year.
I think the stock market does hang in there. Historically speaking, until the FED actually cuts rates, stocks are very well behaved. It's only after the FED actually makes that rate cut, no jaw boning, no quantitative tightening or quantitative using, but actual rate cuts that start, then you see stocks correct.
Then you see stocks decline.
And that's again historically back in the post war era, how the script is played out.
Hey, Danielle, walk us through what you're expecting for jobs Friday next week, so we get the PCE. It seems to be okay. The infleetion story seems to be adjusting right, that super core is coming down. The data this week was very lumpy, not great, particularly when it comes to housing. You heard Mary Daily talking about worries about growth for example, and we had also worries about are we actually restrictive enough and if we're not, then that could really spur
more growth issues. What reflection do you think we're going to get in that in the jobs from number next week?
So I would be surprised, just on a pure databasis if we didn't see a little bit more weakness at the margin in the jobs data. The survey week for non farm hayrolls did see an uptick in both initial and continuing claims. Continuing claims in that survey week rising to the highest since twenty twenty one, and that is when the survey data are collected by their Buer of Labor statistics. So I would expect to see this weakness
again a lot of the layoffs we're seeing. The reason we're seeing the four week moving average and initial jobless claims steadily march upward over the last few months is because the people who are losing their jobs get a very short period of pay from their former employer before they're filing that initial jobless claim.
We're seeing that of very steadily rise this year.
So that's the macro I want to go super micro maybe, and we don't have that much time left, Danielle, But what do you make of the volatility in these pet stocks? After Roaring Kitty comes on Twitter he posts a picture of a dog. I mean, just talk about what does this tell you about the market that we're in that we're still seeing He didn't even mention pet COO, and yet the stock kind of went crazy after his tweet.
So again, I think this goes back to the point that I made earlier, and that would be one that we have not seen any capitulation in this stock market. The fervor to speculate is still very much alive, what we call animal spirits.
It's still out there.
People are still ready to gamble on the stock market, as if the pandemic just hit the shores. So it again shows you that there's a great, big willingness to take risk.
Well said Emily's quoting you right now for an article. She was very excited to ask you that question. Yeah, and then you need it's too much liquidity. It's a lot of cool liquidity out there, even if that upside didn't continue into today. All right, Danielle, We really appreciate Danielle de Martino, Booth CEO and chief strategist for a QI Research, joining us there.
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