Tesla Offers Elon Musk an Unprecedented $1 Trillion Pay Package

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Tesla Offers Elon Musk an Unprecedented $1 Trillion Pay Package
Date: September 5, 2025
Hosts: Carol Massar, Tim Stenovec
Notable Guests: Ed Ludlow (Bloomberg Technology), Ira Jersey (Bloomberg Intelligence), Misty Hagness (University of Kansas), Louis Navellier (Navellier & Associates)

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Overview

This episode unpacks a historic $1 trillion compensation package offered to Elon Musk by Tesla, exploring its terms, implications for the company and the broader tech industry, and the high-stakes interplay between Silicon Valley leaders, the U.S. administration, and current economic policy. The episode also features deep dives into U.S. labor market trends, the implications of policy changes on women’s workforce participation, and overall market sentiment following new data releases.

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Key Segments & Discussion Points

1. Tech Leaders and the White House: Quid Pro Quo?

[02:03 - 04:53]

• Recent White House dinner hosted by President Trump featured major tech leaders: Tim Cook, Mark Zuckerberg, Sam Altman, Satya Nadella, Bill Gates, and more.
• President Trump publicly asked Tim Cook and Mark Zuckerberg about their U.S. investment commitments ($600 billion each), which was directly linked to potential exemptions from new tariffs on semiconductors.
• AI innovation was highlighted as central to the administration’s economic vision, with deregulation aimed at speeding data center deployment.

Notable Quote:
“We are all different in some ways, but we all believe in the power of technology to improve people's lives and that is the thing that binds us all together.”
— Tim Cook, at White House dinner [02:33]

[04:03]

• Ed Ludlow contextualizes the situation as “almost another quid pro quo,” with tariff relief offered in exchange for domestic investment pledges.
• Musk was notably absent, sparking speculation about his representation.

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2. Tesla’s Unprecedented $1 Trillion Musk Pay Package

[06:39 - 12:57]

Terms and Safeguards

• The $1 trillion package stretches across 10 years and is loaded with ambitious operational and financial milestones (detailed in a 300-page proposal). Access to the full amount hinges on a sequence of major achievements, both financial (stock price/market cap) and operational (AI, robotaxis, humanoid robots, vehicle sales).
• To receive the final tranches, Musk must pay upfront at the closing share price and sign off on a succession plan.
• The package is described as an effort to align Musk’s interests with Tesla shareholders and keep him focused on execution.

Notable Quote:
“It is $1 trillion after 10 years if a very large number and sequenced series of events take place… There are many other safeguards and securities from Tesla and Tesla shareholder standpoint baked into the proposal.”
— Ed Ludlow [06:49]

Tesla’s Rationale

• The package is still subject to a shareholder vote (scheduled for November).
• The board’s negotiation involved substantial give-and-take: Musk insisted on increased voting power (25%), threatening to leave otherwise (pursue work at SpaceX, xAI, etc).
• In return, the board secured Musk’s commitment to wind down political activity and focus on demanding operational goals.

Notable Quote:
“Musk’s point was if you do not give me this voting power of 25% or greater, I will go and do the things that I'm interested in elsewhere... What did the board get in return? ...Reassurances from Elon Musk that he will wind down his political activity.”
— Ed Ludlow [08:23]

Ambitious Growth Targets

• To unlock the full package, Tesla’s market cap must reach $8.5 trillion (from ~$1T currently).
• Key benchmarks:
  • 1 million robotaxis launched
  • 1 million humanoid robots
  • Delivery of 20 million Tesla vehicles
• The package is narrowly designed to incentivize breakthroughs in both AI and traditional vehicle markets.

Notable Quote:
“One of the financial milestones for Elon to realize the full trillion of comp is for [Tesla] to get to $8.5 trillion. ...the operational goals are very much in line with AI.”
— Ed Ludlow [09:34]

Comparison to Other Tech Giants

• Ludlow draws a parallel to Nvidia’s explosive growth ($4T market cap from a few hundred billion in less than 10 years) as precedent.

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3. Tesla’s Relationship to Musk’s AI Startup, xAI

[11:31 - 13:45]

• A shareholder-initiated proposal suggests Tesla invest in Musk’s AI startup xAI, which is developing a chatbot (Grok) and building physical datacenter assets (in contrast to OpenAI and Anthropic’s leased infrastructure).
• The rationale: leverage xAI’s software for Tesla vehicles, especially voice assistants and in-car AI.
• There is debate about whether this is a strategic investment or a potential bailout of another Musk entity.
• Previous cross-pollination: SpaceX has already invested $2 billion in xAI.

Notable Quote:
“There’s synergies that the work xAI is doing on software can benefit Tesla owners and Tesla vehicles. ...Is it a bailout of one Elon Musk company of another?”
— Ed Ludlow [11:47]

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4. U.S. Labor Market Weakness and Fed Policy

[16:33 - 28:16]

• Weak nonfarm payroll print (22,000 jobs added), with downward wage and participation revisions.
• Momentum in the labor market has slowed, with some argue the Fed was slow to cut rates.
• Debate on the likelihood and timing of upcoming Fed cuts, with consensus toward a 25 basis point cut, but uncertainty about further action.

Notable Quotes:
“We haven't had [job losses] for quite a long time... It's a foregone conclusion at this point that the Fed's going to cut.”
—Ira Jersey [17:22]

“People dug into the details... because of this shrinking supply, they might not need to cut as much.”
—Constance Hunter [21:01]

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5. Women’s Participation in the Workforce Declines Again

[30:57 - 39:42]

• New data shows a sharp decline in women’s labor force participation, especially among working mothers—a reversal after post-pandemic gains.
• Misty Hagness describes how government and business policies mandating return-to-office have disincentivized or hampered participation, especially in caregiving households.
• Flexibility shown to be key during pandemic; the retreating of these benefits in 2025 is directly linked to the drop-off.

Notable Quotes:
“In August we had 2 million fewer women age 20 plus in the labor force compared to August of the previous year.”
—Misty Hagness [32:02]

“We know now what it takes to get women back into the labor market... If we want women’s labor force participation to go up again, we need to look seriously at providing a work environment that isn't hostile to family life.”
—Misty Hagness [34:55]

• Discussion of invisible, unpaid labor and the need for better measurement and policy emphasis on the value of caregiving.

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6. Market Close: Investor Sentiment & Economic Factors

[43:00 - 50:23]

• Discussion with Louis Navellier on investor attitudes post-data releases: rate cut expectations, possible inflation print relief, and the U.S. dollar’s resilience.
• Skepticism about the accuracy of government economic data, particularly seasonally adjusted figures, with a call for more transparency.

Notable Quotes:
“We just want raw data. You know, we get it from ADP. I don't know why we can't get it from the labor [department].”
—Howard Lutnick [47:07]

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Memorable Moments & Quotes

• Tim Cook’s $600B investment commitment: “We are all different in some ways, but we all believe in the power of technology to improve people's lives…” [02:33]
• “It is $1 trillion after 10 years if a very large number and sequenced series of events take place.” —Ed Ludlow [06:49]
• “One of the things that gives me hope... is we actually know now what it takes to really get women back into the labor market.” —Misty Hagness [34:55]
• “Unemployment being at the highest rate in four years is a big deal.” —Howard Lutnick [44:29]

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Timestamps for Key Segments

| Segment | Timestamps | |---------------------------------------|-------------------| | Tech execs & White House Dinner | 02:03 - 05:25 | | Tesla $1T Musk Pay Disclosure | 06:39 - 12:57 | | xAI Investment Debate | 11:31 - 13:45 | | Labor Market Data & Fed Outlook | 16:33 - 28:16 | | Women’s Workforce Participation | 30:57 - 39:42 | | Market Sentiment & Data Integrity | 43:00 - 50:23 |

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Tone and Style

The episode blended sharp reporting, analytical exchanges, and candid, jargon-laden discussion true to the Bloomberg Businessweek style. Ed Ludlow’s deep dives were methodical and data-driven, Misty Hagness spoke with empirical authority and empathy, and hosts Massar and Stenovec moved briskly through topics while maintaining clarity and focus on the day’s pressing stories.

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This summary captures the central themes, discussion highlights, and the direct language of Bloomberg Businessweek’s signature Friday episode, providing both context and direct insights for listeners or readers catching up on pivotal developments in business, policy, and the future of work.

Transcript

[Tim Stenovec]

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[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Tim Stenovec]

All right, time to talk about the world of technology because this as we had kind of an amazing visual yesterday at the White House Meta platforms. Mark Zuckerberg Apple's Tim Cook joining tech industry leaders in touting their pledges to boost spending in the United States and artificial intelligence. It was all during a dinner hosted by President Donald Trump that highlighted his deepening relationship with Silicon Valley. The execs making comments at the dinner, among them Apple's cook here in exchange with President Trump.

[Howard Lutnick]

We are all different in some ways, but we all believe in the power of technology to improve people's lives and that that is the thing that binds us all together.

[Ira Jersey]

And Tim, how much money will Apple be investing in the United States?

[Howard Lutnick]

Because I know it's a very lot.

[Ira Jersey]

And it's, you know, you were elsewhere and now you're really coming home in a big way.

[Misty Hagness]

Now.

[Louis Navalier]

How much money will you be investing?

[Tim Stenovec]

600 billion. 600 billion.

[Howard Lutnick]

It's a lot of, we're very proud to do it. That's great.

[Tim Stenovec]

Thank you very much.

[Louis Navalier]

Appreciate you, sir.

[Tim Stenovec]

All right, Apple CEO Tim Cook last night at a dinner at the White House along with other big tech leaders, of course, you heard President Trump there. And Tim, that eye popping image of those CEOs at the dinner. We also had an eye popping story about Elon Musk as well. There's like a lot going on here.

[Louis Navalier]

Yeah. Okay, so let's talk about this and with somebody who knows all about it. We've got Ed Ludd though with us. He's co host of Bloomberg Technology on Bloomberg Television Monday through Friday, 11:00am Wall street time. Check it out. Ed joins us from the Bloomberg News bureau in San Francisco. First up at that meeting of tech CEOs, you had Tim Cook there, you had Mark Zuckerberg there, Sam Altman, Sundar Pichai, Sergey Brin, Satya Nadella, Bill Gates, even members of the Trump administration who previously worked in technology or in venture capital, David Sachs, for example. What was the image that this portrayed of the relationship that Silicon Valley or technology or the biggest companies in the world has with the White House?

[Ed Ludlow]

Well, there was another piece of news that came out with it which is an almost another quid pro quo, right. Which that in that clip you heard President Trump asking Tim Cook, the Apple CEO, how much are you going to invest, Tim? Oh, 600 billion. And the same was put to Mark Zuckerberg who also said 600 billion. But the background comment the President had made is that tariffs for semiconductors specifically are coming and it's those that have pledged to invest in the country that will be spared from them. That's why we look at it a little bit like a quid pro quo. But AI is at the heart of this administration's platform, right. Deregulating to allow for faster building of data centers and those people around the table, bar a few exceptions and missing people, you know, those are the names that leading on that front.

[Tim Stenovec]

Yeah, it's interesting. You know, it's funny, Tim and I were talking kind of before going because it's, it's kind of a little bit remarkable to see these images. And I think there's at times been a love hate relationship between the White House and Silicon Valley.

[Louis Navalier]

Was, I'm just, I was surprised to see Jared Isaac man on the list, Ed, because he was supposed to be administrator of NASA. He's a shift for Payments, of course, somebody you've talked to and you know pretty well.

[Ed Ludlow]

Yeah.

[Louis Navalier]

What's good, you know, he, the President pulled his name from the list and pulled his nomination. Well, why was he there?

[Ed Ludlow]

I think it's important to tell the truth. I don't know why he was there. You know, in chatting with Jared recently, I don't know that he's worked out what his next thing is going to be on social media, which is a dangerous place sometimes. A lot of people would have observed that Elon Musk was not at the table, but they would say, oh, who was there representing Elon Musk? Surely it was not Jared Isaac, man, because of the situation you just explained. And there were other people there at the table who also have connections to Musk. But yeah, I promise you that when next I speak to him, I will ask him specifically how'd you end up at that table given the President's recent handling of your nomination.

[Louis Navalier]

On the, on the Elon Musk thing, he was asked about this on social media. He replied to somebody and said I'm not able to make, I'm not able to make it, but I will have somebody represent me.

[Tim Stenovec]

Me.

[Ed Ludlow]

That's what I'm alluding to. Yeah.

[Louis Navalier]

Is, I mean I'm looking at the list right now.

[Tim Stenovec]

Is that it?

[Louis Navalier]

I don't see a representative from Tesla or from Space X there.

[Ed Ludlow]

Yep. I think that we're just going to have to let the reporting be done.

[Louis Navalier]

Okay.

[Ed Ludlow]

And, and if we still care, we will confirm who Elon's representative at that table was on the night. But we don't know.

[Tim Stenovec]

Does he really care? Because I don't know, he might get a compensation package worth about a trillion dollars. So is it really that important? Any. What do you know about this?

[Ed Ludlow]

Yeah, I think you know, it's been a very long day reading a 300 page document and there's so much detail in it. The simplest way of putting it is it is $1 trillion after 10 years if a very large number and sequenced series of events take place. Tesla and Musk have to meet many operational and financial milestones for the full trillion to be realized. And there are many other safeguards and securities from tester and Tesla shareholder standpoint baked into the proposal that would keep Musk focused on the task at hand. We can get into them but for example, in order to access the last two tranches of stock, Musk A has to pay for them upfront, almost like an options being exercised right at the price that the shares close September 1st. But he also has to participate and sign off on the succession plan. So he has to like work on his own Successor in year 8, 9 and 10 in order to get to not just the reward from money. Right. We're not talking just about compensation but in his case he wanted the voting rights as well and they're staggered over that 10 years.

[Tim Stenovec]

So who is this a win win for? And I only ask because Tom Maloney has also put out a story of Bloomberg News and says that Elon Musk got this $1 trillion with genuine threats to quit Tesla. So was the company really worried about losing Elon? So was he in the driver's seat on this? Because this package sounds like there are some guardrails around Elon in a big way.

[Ed Ludlow]

Yes, Tom Maloney has reported it beautifully. If you don't read the full 300 page proxy, read Tom's report. The committee representing the board met with elon Musk to 10 times in negotiation of this package. They delayed the annual shareholder meeting as they negotiated this package. They hired a number of outside firms and advisers to get the package at least over line. I say over the line. It still has to be voted on by shareholders in November. Musk's point was if you do not give me this voting power of 25% or greater, I will go and do the things that I'm interested in elsewhere. Xi, SpaceX, it's, etc. What did the board get in return? Section A51 or page A51 of the proxy point number two. We have got reassurances from Elon Musk that he will wind down his political activity. So. So it's not a sort of blanket all going to Elon. You know the board is made including with the operational goals they've set on like these are really hard. They've got things to protect them in making sure Elon Musk is focused at time the same same time.

[Louis Navalier]

$8.5 trillion in market cap from $1.1 trillion today. Ed, how does Tesla get there over the next 10 years?

[Ed Ludlow]

Yes, so Tesla has a market cap today of about a trillion. And one of the financial milestones for Elon to realize the full trillion of comp is for it to get to $8.5 trillion. It's very interesting when you set that against the operational goals. The operational goals are very much in line with AI. Grow a robotaxi fleet to 1 million units. Robotaxis 1 million taking people on ride hail ride sharing platform 1 million humanoid robots. But the board also tucked in there a goal for Elon Musk to sell 20 million Tesla vehicles total and deliver them to consumers. And it shows that the board fought to keep Elon Musk focused on Tesla's bread and butter business, even in the likelihood that that $8.5 trillion value in the long run is more closely aligned to the big robotics and AI stuff than it is in the sort of now sort of archaic business of building vehicles and selling them to consumers. You know, that's kind of how I think the market looks at it.

[Tim Stenovec]

That's massive or even crazy to think about an eight and a half trillion dollar market cap for Tesla.

[Ed Ludlow]

When I first moved to California in 2018, which ain't that long ago, Right. Nvidia was a company that made GPUs that for video game developers and went into high end consoles and computers for video games. It was a few hundred billion dollars. It's now a $4 trillion market cap company. It's the easiest example for me to cite.

[Tim Stenovec]

Yeah.

[Ed Ludlow]

Over a period of less than 10 years of a company dropping in trillions of dollars of value.

[Tim Stenovec]

Can I just ask you why all this stuff about Elon's compensation is happening now? Is it just they were having meetings and it's all coming out. Is there anything about the time or what?

[Ed Ludlow]

Well, a proxy needs to be filed in advance of an annual shareholder meeting. Right. And the annual shareholder meeting has to happen at some point. It's happening in November, so there's a chronology to it and the auditors have to prepare it. That's quite boring, but that's part of the answer.

[Tim Stenovec]

One of the things we need to ask too is that the shareholders are going to decide to if Tesla should invest in his AI startup. X A I significant. I mean it does feel like Elon's rolling everything into one or wants to.

[Ed Ludlow]

This is a shareholder initiated proposal. Many shareholders tried to get the proposal on the docket. In the end they went with just one by a single retail shareholder. X I, you could use Grok. I used it this morning. A voice assistant based chat bot in Tesla vehicles. Bigger picture, XI has a very different model to say anthropic and open AI. Despite all the headlines about all the money those two startups have open, they basically lease the datacenter capacity. They don't own the assets outright. XI does. It's committing tens of billions of dollars to buy the GPUs and put them in a data center. So you know, the rationale is that there's synergies that the work X AI is doing on software can benefit Tesla owners and Tesla vehicles. But it's also a bit of a lifeline. And if you allow me to do the plug, I'm going to write about this in my my newsletter and column on Monday because you know, that's the thing that shareholders also have to face. You know, does XI on paper have the ability to stand on its own two feet or is this going beyond an investment by Tesla or is it a bailout of one Elon Musk company of another?

[Louis Navalier]

It just in the last 40 seconds to push back on this a little bit. As Mark Gurman told us, some of the lambs and the tech, there's a concern that this could be a bit of a commodity.

[Ed Ludlow]

Correct. And also the benchmarking figures for Groc 4 are very good. But again, it's a business model based thing. Elon Musk is committed to moving super quick, committing capital to buying GPUs and the model is completely different. Again, it is not a binding proposal. It is a shareholder initiated one. And if it successfully passed in November, then the board needs to look at it and decide if it is a prudent and beneficial thing to Tesla to make that investment. But as I reported earlier in the year, Space X has put 2 billion into Xi, right? So why not Tesla?

[Tim Stenovec]

Oh and by the way, Ed, you can promote anything you want on our air. Your Ed Ludlow all right, we're looking forward to the newsletter. Shares of Tesla by the way, up almost 4%. Ed Ludlow, Co host of Bloomberg Technology.

[Louis Navalier]

Stable with us More from Bloomberg Businessweek Daily. Coming up after this.

[Tim Stenovec]

Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness Treating congenital anomalies even before birth. At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers.

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[Carol Massar]

The Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tim Stenovec]

All right, we want to get to what is really our top story on this Friday. And there's a lot going on, but we have seen some coolness in the US labor market as a result of that data point we got at 831.

[Louis Navalier]

I think we were pretty on time with it. We got a notice though just ahead of that number that there were some technical difficulties. That's something that is kind of new to me.

[Tim Stenovec]

It's definitely new to me as well. It's not the only time, but I.

[Louis Navalier]

Think this is on the government side, by the way, not on the, no.

[Tim Stenovec]

Not on the Bloomberg side. It definitely though did mean a new narrative and reset when it comes to US Rates. Let's get to that part of the story. Bloomberg Intelligence chief US Interest rate strategist Ira Jersey with us from New Jersey. Ira, just the whole morning and how it played out unusual. Like what was top of mind for you there?

[Ira Jersey]

Well, it was kind of funny, right? We got all those that information that around 10 minutes after 8 that hey, the number might be delayed. You know, that's happened before. It's been a long time. But it has happened before that you've had delayed Numbers, because websites break things like that. So I think they were teeing us up for it, being late and then we ultimately got it right on time, which was a little interesting. Yeah, but yeah, weak numbers across the board. You look at the revisions June, we actually had job losses in the non farm payroll series. Right. We haven't had one of those for quite a long time. And you know, and you just see job momentum has slowed so significantly over the last four or five months that it's, it's a foregone conclusion at this point that the Fed's going to cut. Now that the, the question is, and you know, I keep on reminding myself, you know, last year we said the same thing, I said the Fed's going to cut rates, are probably going to cut 100 basis points, but it's going to be over. Four meetings wound up, they did a 50 basis point cut in September. That's some of the talk that I'm hearing from investors right now that, you know, they're wondering, hey, is the Fed going to cut 50? I do think personally the bar is pretty high for the fed to cut 50 in, in September. But you know, we get a week, we get a weak CPI report and maybe they do. The chances I think of a weak CPI report are pretty low though. So 25 basis points is done. Now the question is October, December, January, March, and then do they go more? And that's where I think we need to start focusing on is that terminal rate, how far are they going to cut to, Are they going to go to only 3% or are they going to go to like 2 1/2%?

[Louis Navalier]

The criticism from the Trump administration for months on Jay Powell has been that he has been too late, that the Federal Reserve has been too late. Is the President vindicated with a report such as this?

[Ira Jersey]

Well, maybe one meeting, quite frankly, because if you look at the preponderance of data that was coming in the first half of the year, right through, through the May numbers altogether, they really weren't bad. Right. And so, so, and inflation still remains stubbornly high and above the Fed's 2% target. So, so, you know, the question always becomes the Fed has a dual mandate. Do they care more about the employment part of their mandate or do they care more about the, the inflation part of their mandate? And I think at this point they can say employment's what's important because if the employment situation stays where it is, so very weak, but not, not disastrous or weakens further, right? So you start to get negative payroll prints, wages start to come down. You did see wages that what worries me about this report more than even the payroll number was the fact that wages started to moderate. That's been that super important. But the, you know, now you're at the point where, okay, look, if the job market gets really bad, we don't have to worry about inflation because price is going to come down anyway because consumption is going to go down. So I think that, you know, now it's clear and obvious that they have to start cutting interest rates wasn't so clear in June, August, you know, or the July meeting. You could, you could argue maybe they could have cut. But I think that, that, you know, if I'm a Fed governor, if I were in their seat, you know, June, I probably wouldn't have been cutting personally.

[Tim Stenovec]

Well, one thing they certainly want to avoid is any kind of stagflation. Constance Hunter is with us as well, chief economist at eiu, the Economist Intelligence Unit here in our studio, going to join in on this discussion. I saw you nodding your head a couple of times. Jump in on, on what we got this morning.

[Carol Massar]

So I mean, if we look at that headline number 22,000 looks really weak when we think about what would be replacement rate historically. However, as Powell talked about in his Jackson Hole speech, right, we have a decline in supply, that is the decline in the amount of people that are in the labor force and a decline in demand. So that decline in the supply which is now growing at like 2, 10 of a percent year over year, if we sort of smooth it a little bit for three months, right. That is the denominator in the unemployment rate. And this is really, really important. We could keep growing at this pace. Unemployment rate is going to stay about where it is. So the, but as Ira was saying, consumption is going to weaken because if you think about jobs growth, that's one of the things, things that feeds consumption growth. So there's a feedback loop where this slows consumption, slows demand, slows growth. And they're going to need to cut just to maintain that 4.2, 4.3% unemployment rate. But they probably need to cut a lot less than the market is thinking, given this shrinkage in supply. And if you ask me, that's what caused the big turnaround in equities today. People dug into the details of this number and realized, wait a minute, because of this shrinking supply, they might not need to cut as much.

[Louis Navalier]

So what do you, what does that mean to you? 25 basis points in September and then that's it until 2026.

[Carol Massar]

Oh, I think it's hard to know the exact timing. We think at least another three cuts over the next six months. It's going to depend on how sticky inflation is. What we've seen in core services, that's been remarkably sticky. So we're not even talking about the good sector where we're seeing price increases, but everybody anticipates, dare I say it, it is going to be transitory. But the dirty word in economics. But, but, but it's that core good stickiness that I think if I were a Fed governor or a voter on the fomc, that would keep me up at night.

[Tim Stenovec]

Ira, I mean, is Jay Powell, though, feeling incredible pressure right now?

[Ira Jersey]

I don't, you know, I don't know. I'm not sure if he, you know, I can't get into his head.

[Ed Ludlow]

Right.

[Ira Jersey]

You know, I've met Chair Powell a couple of times, but, you know, mostly in passing at events. But I would imagine that the Federal Reserve is trying to be as, you know, neutral as they can and trying to look past a lot of the rhetoric coming out of the White House. I mean, of they kind. You can't completely ignore it. Right. For sure. But, you know, you look at Secretary Besson and if you look at his Wall Street Journal op ed, which Mike just talked about with Austan Goolsbee. With Austan, yeah, they were talking about in there. There's some, I think, legitimate criticisms of what the Federal Reserve's done over the past 15 years, but it also misses some of the reasons why the Fed did some of those things over the last 15 years. So, like, you know, like, yes, the government should be, you know, doing things from the fiscal side that, you know, back during 2007, 2008, we were waiting for Congress to do something. Congress didn't do anything. So the Fed had to step in because there was no action out of Washington. Right. So. And, you know, should the Treasury Secretary be more involved? Sure, yeah, absolutely. Congress should maybe give the Treasury Secretary additional powers in times of financial emergencies and financial shocks to try and stabilize those so the Fed doesn't have to. Right. And some of those were built into some of the reforms that have happened over the last few years. So it's not exactly. So I agree with some of what Secretary Bessen said, and then other parts, I think, are much more nuanced. But nonetheless, like Fed reform, the Federal Reserve has not been seriously reformed for many decades at this point. And, and the world's changed. Right. The financial world's changed, the markets have changed. So maybe There needs to be some type of, you know, shift. Now, should it be a complete overhaul? I don't think so. But could there be, you know, nuanced changes that Congress considers. Sure.

[Tim Stenovec]

All right. One thing I want to get to you mentioned Secretary Bessen, another member, key member of the president's cabinet joined Bloomberg Surveillance. This morning we talk about the Commerce Secretary, Howard Lutnick. He addressed reliability of the data coming out of the Labor Department. Here's what he had to say to our team.

[Howard Lutnick]

It makes it crystal clear you should have fired the person who was running that group. Right. Because if you didn't fire him two weeks ago, you sure as heck would be firing them today. So they need new leadership in BLS, that's for sure. They need new tech and BLS, that's for sure,. And Donald Trump needs to rely upon the numbers. America needs to rely upon the numbers. You can't have these bent former administration people who have a view and who want to harm the president. We need accurate numbers coming from bls. And finally, we'll have new leadership to deliver. You fire the person, what do you learn? You learn that their technology is just a boy and but we'll fix it.

[Tim Stenovec]

That was, of course, U.S. commerce Secretary Howard Lutnick this morning on Bloomberg Surveillance. Mind you, he does not oversee the Labor Department. He is head of the Commerce Department. But what we care about, Constance, is US Data. Economic data has been the gold standard. Is the data coming out of the of these departments still reliable?

[Carol Massar]

Yes, I think it is. I think it's going to take. We. Yes, it's still reliable. And the person, by the way, who is the acting secretary, Bill Woj Trowski. He has been actress acting secretary in the past. He has been there a number of times. This, this glitch that we had while worrisome and concerning, but is not unusual in a world of technology. Who amongst us has not experienced technology glitches? I'm not saying it's acceptable or that we need to not have a very high standard, but I think that is the wrong thing to attach to. And if we look at the individual who's currently leading bls, he has had this role in the past and there have been no problems or complaints. So it is a very robust system of the way we collect data. It's very robust in how we follow up with revisions. And the reason we have the revisions we have is because we want a timely read. That timely read is 90% directionally correct.

[Howard Lutnick]

Right.

[Carol Massar]

And so it's valuable.

[Misty Hagness]

Yeah.

[Tim Stenovec]

Well, and I'm Glad you went to revisions. I've only got about 30, 40 seconds left here. I mean, we are going to get a bunch of revisions next week which what will what maybe show? What about the US labor market? Will our narrative change again just quickly?

[Ira Jersey]

No, it's still going to show some, probably some weakness because a lot of these revisions tend to be pro cyclical. So as the, as the market turns and the economy turns and gets weaker, then you wind up with weaker revisions and then vice versa as well. Right. Where you get upward revisions when the markets turned upward. But I agree, like, I think generally speaking, the data that we receive is a reasonably high quality. The challenge is, is that the way that we collect data now has to be different because again, the world's changed. And Mr. Lutnick does produce his, his agency does produce a significant amount of data like the Bureau of Economic Analysis, GDP data, the PC report. All of those types of numbers come out of commerce.

[Tim Stenovec]

Let's not forget that. Folks. Thank you so much. Great, great analysis on what we got early this morning and still continues to impact the trade. Ira Jersey, chief US Interest rate strategist at Bloomberg Intelligence, and Constance Hunter joining us right here in studio. She of course is chief economist at the eiu.

[Louis Navalier]

Stay with us. More from Bloomberg businessweek Daily coming up after this.

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[Louis Navalier]

Of course a lot of focus on the jobs print it's been a lot a lot about the big miss when it comes to nonfarm payrolls increasing just 22,000 in August revisions also showing the unemployment shrank in June for the first time since 2020. Yet a deeper look into the stats show that women's participation in the labor force is also declining, in fact as of last month hitting the lowest since December of 2023. Misty Hagness watches these stats, and ones not from the BLS very closely. She's associate professor and associate research science scientist at the Institute for Policy and Social Research at the University of Kansas. She's also former principal economist at the U.S. census Bureau. She's the author of a forthcoming book, it's out in January, called Swift How Women Mastermind and Redefine Our Economy Professor, Good to have you on the program. I know you weren't surprised to see participation fall for women because, as you found, working moms with kids are leaving their jobs in this economy. It's something we talked a lot about during the pandemic, but that seemed to be to reverse in recent years. Why is this happening again now?

[Misty Hagness]

Yeah, thanks so much for having me, Tim. You know, there's a lot of reasons why it might be happening now. I was just looking at the numbers that came out in August for women age 20 plus and this past August we had 2 million fewer women age 20 plus in the labor force compared to August of the previous year. So there's a lot going on with women where it's becoming very challenging for them to stay engaged in the labor market to continue working. When you think about the environment that we're in in 2025, you know, all of the return to office, all of the federal government rifts, all of those types of policy decisions that we made early on in 2025 appear to be negatively affecting women.

[Tim Stenovec]

Why is this happening now?

[Misty Hagness]

Yeah, I mean, it's a great question. And, you know, again, I think we need to think just about policies in general, you know, across institutions. We need to look at how employers are engaging with employees, the type of, you know, protections that they're offering employees when, you know, the environment and work becomes really inhospitable to the way in which we live our lives today. There are a lot of caregivers who are just going to leave the labor market either out of force because they can't make it work, or out of choice because it's just too exhausting.

[Louis Navalier]

What are the specific policies that are pushing women out of the labor force? Is it policies at offices like return five days a week, for example, or clamp down on hybrid work? Or is it coming from the government? What can you cite specifically here?

[Misty Hagness]

Well, I mean, the one thing that I'll say is the government is a leader generally. And so businesses usually look to the way in which the government is structuring its policies around, you know, it's HR policies and policies around employment. And so when the government requires everybody to come back to work five days a week, you know, private business, employers follow suit. And, you know, a lot of the rhetoric in early 2025 was really focused on telling employees that they were going to have to return to office. There's still a lot of businesses who haven't actually fully started that process, but just the fear of knowing that it's coming and your employer telling you that it's coming, you know, means that there's a lot of women out there and a lot of caregivers who are going to adjust even before it actually comes into full effect.

[Tim Stenovec]

You know, the sad part is, while we did feel like we had some gains coming off of COVID we did have some gains coming off of COVID It does feel like these are problems that we have been talking about for a really long time, Misty. And I just. I don't know. It's a bigger rethink in our society to value women. Childcare. There's like. Like a bigger thing that it feels like needs to be at play here 100%.

[Misty Hagness]

You know, I. One of the things that gives me hope in all of this environment is we actually know now what it takes to really, you know, get women back into the labor market. I think the pandemic really showed us that when we do, you know, that employers, you know, it is possible for employers to allow for flexibility and, you know, the roof isn't going to cave in. They will still be productive. They will still be able to produce, you know, the goods and services that they're. They're producing. And now it's just a matter of choice. So we intentionally, in early 2025, made a choice that we were going to restrict a lot of these flexibilities, and we have seen now what has happened. And, and, you know, the flip side of that, which maybe could give us some sort of positive reframing, is that we know how to fix it. So if we want women's, you know, labor force participation to go up again, we need to look seriously at, you know, providing a work environment that isn't hostile to family life. So. Yeah.

[Louis Navalier]

Well, I'm wondering about the book that you have coming out in a few months and the research that you did for the book, specifically, the type of work that's not necessarily measured by official data, the stuff that does disproportionately fall on women. I mean, we're talking childcare, household work, oftentimes falling on women in the house. How do you, how do you quantify that?

[Misty Hagness]

Yeah, so, you know, the book is coming out in January, and also I've developed a dashboard of statistics, of economic statistics all around care and caregiving. It's. You can find it atthecare board.org and the statistics that we've developed there. We basically said, okay, if we went back to 1940s, and instead of having, you know, older white men who tend to have lots of care privilege, and by care privilege, I mean they have other people cooking their meals for them, ironing their clothes, etc. If instead, in 1940s, economic statistics had been developed by caregivers, what would they look like? And that's what the Care Board is. And it's incorporating the amount of time caregivers spend in unpaid domestic load and domestic activities for their families. So cooking meals, washing clothes, all of these type of activities, we count up all the hours that caregivers spend in those activities, and then we put a price tag on it, and then we fold that in to some of the economic statistics that we all are very familiar with, like labor force participation, GDP, etc.

[Tim Stenovec]

It's so funny. I was talking to somebody about the growth of economics and business news and just like this concept that there really is a monetary value to everything that goes on in our world and it's how we value things and it just shows how much we don't really necessarily value caregivers and so on and so forth. And until that changes and we put a value on it, it's hard to get policy to change. Listen, I don't know. What's the government's role that needs to be maybe more aggressive in this to help us out?

[Misty Hagness]

Yeah, I mean, I think it would be great if the government were to create some sort of official statistics around economic productivity and growth that incorporated the value of some of these activities. The VEA does produce a SATEL GDP estimate which incorporates household production. Yeah, like cooking meals at home. So we're moving in the right direction, but we still. There needs to be more awareness. We need to, you know, really start thinking seriously about this. And one of the other reasons why we need to start thinking seriously about this is just because of the high levels of educational attainment that women have these days. High levels of education, of education mean that women are focused more on having a career versus having a job. And that, you know, ties in more strongly to personal identity. It makes it more difficult when women are trying to think about, you know, do I start a family or do I continue down my career path? And if we can't figure this out of how to make the workforce less, you know, hostile to this idea of wanting to have a career and having a family, you know, it's only employers, it's only the economy, it's only all of us writ large who are going to lose out from that.

[Tim Stenovec]

We're just not going to get married and have kids. That's it, guys.

[Louis Navalier]

Well, that's bad for the economy. That's. That's bad for the economy. Hey, just in, in 10 seconds. Is there a country that's doing this really well around the world in your view?

[Misty Hagness]

Well, I think a lot of the Scandinavian countries do actually have quite a robust system of social policies that, you know, provide affordable and high quality daycare, you know, that encourage fathers to also take parental leave. So there are, there are examples in some of the Nordic countries.

[Tim Stenovec]

All right, Gavron, Misty, thanks so much. Misty Higginas, associate professor and associate research scientist, Institute for Policy and Social Research at the University of Kansas. She's got a new book coming out comes out in January. Swifty Nomics Love it. Love it.

[Louis Navalier]

Stay with us. More from Bloomberg businessweek Daily Coming up after this.

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[Jacob Goldstein]

This is Jacob Goldstein from what's yous Problem? Business software is expensive and when you buy software from lots of different companies, it's not only expensive, it gets confusing. Slow to use, hard to integrate. Odoo solves that because all Odoo software is connected on a single affordable platform. Save money without missing out on the features you need. Odoo has no hidden costs and no limit on features or data. Odoo has over 60 apps available for any needs your business might have, all at no additional charge. Everything from websites to sales to inventory to accounting. All linked and talking to each other. Check out Odoo at o d o o.com that's o d o o.com in.

[Carol Massar]

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[Tim Stenovec]

I'm driving in my car.

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How about you let me drive.

[Ed Ludlow]

Oh, no, no, no, no.

[Louis Navalier]

This is not a toy.

[Howard Lutnick]

Who's going to drive you home?

[Ira Jersey]

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[Tim Stenovec]

Drive home.

[Ed Ludlow]

Excuse me, I want to drive.

[Misty Hagness]

It's the question that drives us.

[Carol Massar]

This is the drive to the clothes.

[Ed Ludlow]

Funky music will drive us till the.

[Carol Massar]

Dawn on Bloomberg Radio.

[Tim Stenovec]

All right, everybody, tick tock. Just about 18 minutes to go until we wrap up the trade for the Friday session. Also, the week overall, it was a shortened holiday week. It didn't feel that way, did it?

[Louis Navalier]

No, it wasn't yet a shortened holiday week. It is still a shortened holiday week because we are still here, my friend.

[Tim Stenovec]

We are. We are. All right. So too is Louis Navalier back with us, chairman, founder, CIO of Navalier and Associates, joining us from Manhattan, Florida. How are you? Good, good. Short and sweet.

[Louis Navalier]

That's it. That's all the time we have for you today, Louis.

[Tim Stenovec]

Listen, we saw stocks actually moving up earlier, but they've been down for most of the day. Are investors more worried about an economic slowdown rather than being enthused, perhaps, about rate cuts?

[Howard Lutnick]

No, I just think it's a Friday and people like to clean out their inventory before the weekend. You know, Fridays are seasonally weak, especially in the late hours, especially if the weather's good. Everybody has to go to the US Open or something like that, you know.

[Tim Stenovec]

Is it that simple, really? You're thinking it's just that it's just clearing out on a Friday?

[Howard Lutnick]

Pretty much.

[Louis Navalier]

Alcaraz is up 2 to 1 over Djokovic, but Djokovic is up. Advantage Alcaraz.

[Tim Stenovec]

Now I know where your focal points are.

[Louis Navalier]

I'm just. Hey, Louie brought it up. I gotta mention the score.

[Tim Stenovec]

Well, Louie, to some extent. And would you not be making any big bets until we get through the Fed meeting or did the jobs report, did that kind of clinch it for you?

[Misty Hagness]

Help.

[Tim Stenovec]

Help me out here.

[Howard Lutnick]

Oh, it more than clinched it. I mean, it's. Obviously the Fed should have cut in June, and that downward revision to June to a negative number for the first time in four years was a big deal. Unemployment being at the Highest rate in four years is a big deal, even though I think 426,000 entered the workforce. So, yeah, it was a weak payroll. We were all rooting for a week payroll because we want the Fed to cut and hurry up and catch up with market rates. Market rates, of course, have come down dramatically this week. Of course, they spiked. Long bonds spiked early in the week. But, yeah, we're going to get a rate cut. I guess the only question next week is inflation. Now PPI, I'm sure will be fine. The month before it wasn't because of higher wholesale diesel costs. That was a freak thing, mostly due to the west coast and you know, I spent a lot of time in California. They want green diesel out there. They don't like diesel from oil. So it's a, it's a, it's very complicated. They're shutting a couple of refineries down. So that's California's problem. But it showed up in the numbers and then of course the cpi. We just hope and pray that all the weak real estate and everything finally shows up in owner's equivalent rent even though it only shows up in rentals. But there is a glider rentals and hopefully we'll get some relief and we'll be boarding on deflation because we've got falling crude oil prices.

[Louis Navalier]

I want to hit on the data, specifically the BLS data. We did hear from Commerce Secretary Howard Lutnick on Bloomberg surveillance earlier today. And a reminder, he runs commerce. Not so he's, you know, so he's not running labor here. But he did weigh in on the data. He said Donald Trump needs to rely on the numbers. America needs to rely on the numbers. We need accurate numbers coming from bls. Do we have accurate numbers from BLS.

[Howard Lutnick]

Now when they do the wild seasonal adjustments? I mean, I think the worst month is January where they automatically increase at 600,000 for seasonal adjustment. I hope they're going to stop doing that because that was, you know, the holiday shopping and all that stuff. So I really hope they start just giving us the real numbers, not the seasonally adjusted numbers.

[Louis Navalier]

But, but you can. But do you have any reason to believe that the numbers that are provided to us by the government right now when it comes to non farm payrolls in this country are incorrect in some way that they weren't during a previous administration as has been alleged.

[Howard Lutnick]

I don't think it has anything to do with administrations. I think it has to do with the seasonal adjustments and I think we just to get, have fewer seasonal adjustments and then we'll go on. But yeah, I mean I remember when the June payroll came out we were suspicious because they were all teaching jobs, but teachers get laid off in the summer months. Maybe it was just a high number, but we were all suspicious of it. Like no, that's not right. Those people get laid off for a couple months. So that's the kind of thing that freaks us out. We just want raw data. You know, we get it from adp. I don't know why we can't get it from the labor.

[Tim Stenovec]

One of the things I want to ask you, because you think it's already the Fed has been too late in terms of cutting rates and you talk about what we're seeing in the labor market. Having said that, at the end of the month, you know, Bloomberg reporting others how U.S. consumer spending rose in July by the most in four months. And so we were seeing resilient demand still among consumers in the face of stubborn inflation. And then there's the concern that the president's tariffs, tariffs we, that that is ultimately going to impact something. It's either going to be Americans paying more for things or companies continuing to kind of eat it and that's going to buy into, you know, kind of eat into their earnings. So I'm just, I'm just curious how you factor that in the resiliency that we've seen in consumers and that maybe the economy isn't as bad as everybody thinks.

[Howard Lutnick]

No, it's not as bad as everybody thinks. But there's no doubt that the trade numbers are distorting the GDP numbers and we got to get rid of those distortions. Obviously, we had a preliminary trade number this week that that's going to impact GDP and to the downside, actually. So I just think that the dollar should be appreciating here sooner than later. We hope the dollar's appreciation is going to largely offset the baseline 10% tariffs. As far as the reciprocal tit for tat tariffs, there's no doubt that they're still haggling.

[Tim Stenovec]

How's the dollar going to appreciate, Louis, if we're cutting rates because we were.

[Howard Lutnick]

The last to cut. Europe's got cut eight times last I looked. The other thing is America's not shrinking like Northern Europe is or Asia is because of a lack of household formation. You know, Japan has the highest birth rate in Asia and they're still shrinking. Okay. And so we, we're still pro family in the South. We're still pro family in the Mountain West. We're still younger than everybody else. And we do assimilate our immigrants. I realize that President Trump is, wants, you know, the legal ones. The rate on the battery factory, I think is pretty controversial. Those people were working. You think they could just get extensions. So, you know, I think, you know, it creates an interesting tone. But the bottom line is we assimilate immigrants in America and we welcome them. We need them.

[Tim Stenovec]

Yeah.

[Howard Lutnick]

So we're just going to grow faster than everybody else. But our rates are going to be higher than they are in Europe and, and we're the oasis. You don't want to go to China. I mean, my goodness, the rates are below Japan and they're going to have a currency devaluation soon. So yeah, we're in the place.

[Tim Stenovec]

We're going to wrap it up on that one. All right, Louis, thanks so much. Louis Navalier, Chairman, Founder, CIO of Navalier and Associates, joining us from Florida.

[Carol Massar]

This is the Bloomberg businessweek daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

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