Wall Street Gains on Optimism US Will Soon Reopen

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Wall Street Gains on Optimism US Will Soon Reopen
Date: November 11, 2025
Hosts: Carol Massar & Tim Stenovec

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Episode Overview

This episode of Bloomberg Businessweek dives into the shifting mood on Wall Street amid hopes the U.S. government will end its record-breaking shutdown, plus investors' optimism about reopening and the evolving macroeconomic landscape. The hosts speak with wealth advisor Eddie Gabor, economist Neil Dutta, media analyst Geetha Ranganathan, and national correspondent Josh Green, unpacking the implications for markets, policy, workers, and key industries—from the Federal Reserve's future path to the shake-up in legacy media.

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Key Discussions & Insights

1. Wall Street Sentiment & Government Shutdown

Participants:

• Carol Massar, Tim Stenovec (hosts)
• Eddie Gabor (Key Advisors Wealth Management)

Highlights:

• Major indices rebound somewhat from earlier lows, with optimism tied to possible government reopening.
• Eddie Gabor describes the shutdown as a "bullish catalyst" due to increased likelihood of a Federal Reserve rate cut, which could fuel a 'Santa Claus rally'.
• The hosts debate whether Fed policy alone is to blame for economic disparities or if corporate wage practices and cumulative political decisions play a larger role.

Notable Quotes:

"The probability of a rate cut in December has gone up tremendously now...the Fed is going to kind of err on the side of caution and go ahead and cut rates just because of the fears of a slowdown getting worse going into 2026."
— Eddie Gabor [03:19]

"If the Fed tries to get us down to 2%, it's going to be too late. We're not going to get there."
— Eddie Gabor [04:44]

• Gabor predicts the Fed will abandon its 2% inflation target in favor of job stability.

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2. The New Normal for the Fed’s Inflation Target

Participants:

• Eddie Gabor, Carol Massar, Tim Stenovec

Highlights:

• Gabor argues for a more flexible inflation target (2.5–3%), citing structural changes and persistent inflation.
• Emphasis on the pains of small businesses under current monetary policy, with higher rates disproportionately punishing borrowers without access to capital markets.
• A "K-shaped economy" is repeatedly referenced, denoting prosperity for the wealthy and struggles among lower earners and small businesses.

Notable Quote:

"They're killing small businesses and the bottom of the K, the lower earners in this country are the ones that are getting hurt by this tighter monetary policy."
— Eddie Gabor [05:26]

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3. Economic Inequality & Policy Impacts

Participants:

• Eddie Gabor, Carol Massar

Highlights:

• Conversation on policies driving inequality, low wages, food insecurity, and the impact of corporate cost-cutting (e.g., Walgreens ending paid holidays for retail workers).
• Mounting concerns about US debt and its long-term impact on both markets and economic stability.

Key Moment:

"When it [the bubble] does pop, this is a bubble, it's going to be ugly and you need to be able to sell and pivot...Every family, hard-working American family should have a tactical strategy."
— Eddie Gabor [09:43]

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4. Labor Market Weakness & Data Drought

Participants:

• Neil Dutta (Renaissance Macro Research), Carol Massar, Tim Stenovec

Highlights:

• Analysis of weakening labor markets using ADP data, with official statistics delayed by the shutdown.
• Dutta estimates real unemployment may already be at 4.5%.
• He notes that further risk to the labor market outweighs current inflation threats—arguing for continued rate cuts regardless of stickier inflation.

Notable Quotes:

"I think there's more downside risk to the labor market than there is upside risk to inflation."
— Neil Dutta [15:46]

"Employment tends to evolve potentially in nonlinear ways...once an increase in the unemployment rate really gets going, it tends to keep on going."
— Neil Dutta [16:52]

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5. Deep Economic Imbalance & the “Three Americas”

Participants:

• Neil Dutta, Carol Massar

Highlights:

• Dutta presents the U.S. as “a deeply imbalanced economy”—housing in recession, consumers stable, AI/tech booming.
• Describes disparate experiences: Wall Street highs coexist with food insecurity and stagnating wages.
• Warns against using consumer spending as a downturn predictor; historically, it lags in signaling recessions.

Notable Moment:

"If you're waiting on the consumer to give you a tell, you've probably waited too long."
— Neil Dutta [21:01]

"It's come for the young first and I think it's going to come for the affluent next."
— Neil Dutta on labor market weakness [21:23]

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6. Political Fallout from the Government Shutdown

Participants:

• Josh Green (Bloomberg Businessweek national correspondent), Carol Massar, Tim Stenovec

Highlights:

• Democrats break ranks to reopen the government in exchange for a future vote on ACA subsidies, sparking grassroots anger.
• Public confusion and frustration over party strategies—some see the compromise as wise, others as a capitulation.
• Political optics worsened for Republicans due to visible White House extravagance during shutdown, hurting their “party of the working class” narrative.

Key Quotes:

"Democrats who've just come off the sweeping election victory...Why they would suddenly decide to throw in the towel...has upset an awful lot of people, mostly at the grassroots level."
— Josh Green [25:41]

"The American public is very aware that these premiums are about to arise...if and when those premiums do rise, the American people are largely going to blame Trump and Republicans."
— Josh Green [30:54]

Timestamps:

• [24:53–32:48] – Political analysis of the shutdown and the ACA premium standoff.

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7. Paramount-Skydance: Media Shakeup & Cost-Cutting

Participants:

• Geetha Ranganathan (Bloomberg Intelligence), Carol Massar, Tim Stenovec

Highlights:

• Paramount Skydance is the S&P 500’s top gainer following ambitious cost-cut and synergy targets, though concerns remain about layoffs and feasibility of the plan.
• The company eyes Warner Brothers Discovery for transformative acquisition, but faces challenges scaling up in a market dominated by giants like Netflix.
• AI cited as a key driver for reducing costs and evolving media business models.

Key Quotes:

"The media company of the future is one that can be agile, that can be nimble...We're seeing that AI is going to really kind of change the game..."
— Geetha Ranganathan [40:23]

"They do seem to have a good strategy. They seem to be very bold and ambitious...but in their current configuration I just don't think it's going to cut it when they have to compete with...Netflix or an Amazon or a Disney."
— Geetha Ranganathan [41:41]

Timestamps:

• [36:06–43:41] – Paramount-Skydance segment

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Notable Quotes Table

| Timestamp | Speaker | Quote | |-----------|-------------------|-------| | 03:19 | Eddie Gabor | "The probability of a rate cut in December has gone up tremendously now... the Fed is going to... cut rates just because of the fears of a slowdown getting worse going into 2026." | | 05:26 | Eddie Gabor | "They're killing small businesses and the bottom of the K... are the ones that are getting hurt by this tighter monetary policy." | | 15:46 | Neil Dutta | "I think there's more downside risk to the labor market than there is upside risk to inflation." | | 21:01 | Neil Dutta | "If you're waiting on the consumer to give you a tell, you've probably waited too long." | | 25:41 | Josh Green | "Democrats who've just come off the sweeping election victory... Why they would suddenly decide to throw in the towel... has upset an awful lot of people." | | 40:23 | Geetha Ranganathan| "The media company of the future is one that can be agile, that can be nimble... We're seeing that AI is going to really kind of change the game..." |

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Segment Timestamps

• [02:20–10:16]: Markets, the Fed, shutdown implications (Eddie Gabor)
• [13:21–21:43]: Labor market data, economic outlook (Neil Dutta)
• [24:34–32:48]: Political impact of shutdown and ACA fight (Josh Green)
• [36:06–43:41]: Paramount Skydance, cost updates, media future (Geetha Ranganathan)

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Summary: Tone & Takeaways

The tone is sharp, pragmatic, and skeptical regarding official narratives—especially about economic “good times” in the face of glaring inequality. The experts and hosts maintain a jargon-light, conversational approach while delivering nuanced insights on markets, policy, and industry change.
For listeners: This episode is a fast tour through the interconnected risks of monetary policy, political volatility, labor market stress, and the ruthless restructuring of America’s media and service economy.

Transcript

[Carol Massar]

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[Geetha Ranganathan]

Co.

[Tim Stenbeck]

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 Stenbeck on Bloomberg Radio.

[Geetha Ranganathan]

I've been driving all night, my hands.

[Carol Massar]

Wet on the wheel. Come on, let's take a drive.

[Josh Green]

A drive?

[Tim Stenbeck]

Yeah, a drive.

[Carol Massar]

Can you just focus on driving?

[Eddie Gabor]

Focus on the road? Why would I drive fast?

[Tim Stenbeck]

Because I'm asking you to take your.

[Neil Dutta]

Place in the drive.

[Tim Stenbeck]

Just drive, baby.

[Express Employment Professionals Announcer]

This is the drive to the close, but we're going.

[Tim Stenbeck]

We don't need road on Bloomberg Radio.

[Carol Massar]

All right Everybody, just by 18, 19 minutes to go until we wrap up the trade on this Tuesday, November 11th. Carol Masserton Stanwick live here in our Bloomberg Interactive Broker Studio. I mean, you look at the charts and we're definitely well off our worst levels of the session. But just up a hair. Tim, on The S&P 500, we just heard from Bill and Alexis and you still have the NASDAQ 100 slightly lower, but again, it's much more upbeat than where it was earlier in the session.

[Tim Stenbeck]

I want to See what Eddie Gabor has to say about this. He's the co founder and CEO of Key Advisors Wealth Management. The firm has more than $900 million in assets under management. Eddie joins us here in the Bloomberg Interactive Brokers studio. It's good to see you.

[Eddie Gabor]

Thank you for having me.

[Tim Stenbeck]

Welcome back. The macro outlook here. Carol and I have been talking a lot about whether or not the government shutdown actually matters to equity investors. John Van Eck, right before the government shutdown was on our program and he said it doesn't matter. It doesn't affect the Federal Reserve and it doesn't affect earnings. Do you agree? I do.

[Eddie Gabor]

And a matter of fact, I think the shutdown is a real bullish catalyst because I think the probability of a rate cut in December has gone up tremendously now because prior to the government shutdown there was talk that the bond market wasn't really pricing in a December rate cut. And now the rate cut is about 60% because it is going to be a drag on economic data when it comes out. And so I think the Fed is going to kind of err on the side of caution and go ahead and cut rates just because of the fears of a slowdown getting worse going into 2026. They don't want that on their watch. So I don't think it had a big impact in regards to stocks. But what it does indirectly is increase that probability of the Santa Claus rally. Because the one thing I think that could end that would be if the Fed does not cut in December.

[Carol Massar]

Having said that, you know, Treasury Secretary Scott Bessant has been out and about and he has said that he's going to be out and about over the next few weeks as he talks about the big beautiful tax bill that was passed by Congress. What I'm curious about, Eddie, is he kind of deflected when it comes to inflation concerns and he talked about better times in 2026. So why would we need a rate cut?

[Eddie Gabor]

So I think the rate cut is because we have this dynamic, especially there's.

[Carol Massar]

Inflationary concerns and still pressures because they're.

[Eddie Gabor]

Going to pick the labor market and the economic slowdown over where we are right now. From an inflationary perspective about the Fed. That's correct. The Fed, because inflation, I think the new normal has to be 3%. If the Fed tries to get us down to 2%, it's going to be too late. We're not going to get there.

[Carol Massar]

But the Fed has conceded on that yet.

[Eddie Gabor]

They have not. However, I think last time when Fed chairman spoke he talked about it being transitory, the tariff concerns in regards to inflation. And I think the new normal, they're going to be forced to pivot. I believe next year they will pivot and go away from that 2% number. Because at the end of the day, as long as we continue to grow economically, if you focus more on growth, the inflation is not going to have a big of an impact. But if you just focus on inflation and cause growth to go down, you're going to have a double whammy where inflation is going to stay sticky and then potentially take us into a recession.

[Tim Stenbeck]

So you think under Fed chair Jay Powell, the Fed will abandon the 2% goal?

[Eddie Gabor]

I do. I think that'll happen next year. Wow, okay. They're going to be forced to because we're not going to get the 2% inflation. And if they stay tight with monetary policy. Right. This K shaped economy we have, they're killing small businesses and the bottom of the K, the lower earners in this country are the ones that are getting hurt by this tighter monetary policy.

[Carol Massar]

Well, is the Fed killing the lower rung or, you know, as we had a great conversation with Henrietta Trey's Veda Partners yesterday and, and getting to this point, that you have records on Wall street, yet you have, you know, one in eight Americans on food stamps. That is not a Republican or Democratic policy. That is cumulative over the years. So her point was that there are a lot of companies out there and she named names that aren't really paying workers a living wage. So, you know, to put the blame on the Fed doesn't seem to make sense to me.

[Eddie Gabor]

Well, in regards to the Fed, when I look at it from an entrepreneurial perspective, these small businesses, they don't go out and issue bonds to raise capital like the large companies have the luxury of doing. They have to go to their local bank to raise capital to get monetary, to get money from those for loans. And when you talk to them, the increase in interest rates have really hurt them. So they don't have the capital that the other companies do. So when we talk about the Fed keeping monetary policy tight and hurting the smaller businesses, that's what we're talking about. Are they solely the blame? Of course not. I'm not putting all the blame on the Fed, but that's a big component, is being able to get capital.

[Tim Stenbeck]

But the Fed still will have a dual mandate, stable prices and maximum employment. So from the stable prices perspective, what is the new 2%?

[Eddie Gabor]

So I think where we are right now, 2 and a half to 3% on core. I think they can live with that at the because they've already been cutting rates when we are not down the 2%. They did a 50 basis point rate cut last year. They're doing rate cuts again now. So you can make the argument that they've already abandoned that because why would they be cutting rates if they're not abandoning the 2% mandate?

[Carol Massar]

I don't know, to be preemptive.

[Eddie Gabor]

I think what they're, I mean some.

[Tim Stenbeck]

Might say maybe they're concerned about the labor market.

[Eddie Gabor]

That's it. And this is why I say they're in a really tough spot because now they have to pick are they going to pick inflation or slowing growth that.

[Carol Massar]

They were concerned about so doing something to kind of juice it a little bit.

[Eddie Gabor]

So that's why I think they're, they don't want to be abandoned the 2% but they're going to be forced to because I think they're going to pick the labor market and I think that's wise. I'd rather them pick the labor market and try to help it from slowing to a point where we go into a recession. So that way we can grow economically and hopefully continue to prosper here.

[Carol Massar]

But how do you grow when you have, you know, I'm kind of obsessed with this story and we're going to talk about it a little bit later on. But Walgreens no longer giving many of its retail workers paid vacation time for Thanksgiving, Christmas and other major holidays. Company looking to cut costs under their new owners like it does. Does it seem like there is still a squeeze on workers and wages?

[Eddie Gabor]

The unfortunate reality is, and this is a problem in this country, we recognize as we talk about it all the time when it goes back to the K shaped economy, that the wealthy, the top 50% in this country are continuing to do really well and they're going to do well whether the Fed cuts or doesn't cut. So I think the focus on the Fed and companies and businesses is the bottom part of the K. We're going to be prosper more if the entire economy is doing well.

[Carol Massar]

But doesn't, doesn't policy have a responsibility too in terms of helping out the economy? We talk about the Treasury Secretary kind of on a tour to talk about the big beautiful bill. I mean what is there for, you know, Americans at large? I think this small business or you know, there's lots of tax breaks but it seems like for bigger corporations.

[Eddie Gabor]

So I think this stems from years in the making of the amount of massive debt that our country has put ourselves into. That's ultimately what causes inflation is you.

[Carol Massar]

Over spending bill creates more debt too, right?

[Eddie Gabor]

It does. I mean every administration one ups the other. I mean the amount we have 30 plus trillion dollars of debt that did not happen overnight. And so we have have a real fiscal problem. And that's ultimately what's going to break the back of this market is the bond market at some point in time is going to say you know what, I don't care what you do monetarily wise the 10 year is going to go through 5%.

[Carol Massar]

So what does that break in the market look like? So what does it mean for equities? And just got about 30, 35 seconds here.

[Eddie Gabor]

This is an amazing bull run. It's not far, it's far from over. But when it does pop, this is a bubble. It's going to be ugly and you need to be able to sell and pivot. We are not in a buy and hold strategy and I don't think individual investors should. Large institutions are tactical. Every family hard working American family should have a tactical strategy as a way to protect against when this bubble does pop.

[Carol Massar]

And the bubble is going to pop because of debt or because of the AI spend or all of it.

[Eddie Gabor]

It's going to be all of it. All of it's going to be a combination of it all. And then the bond market will speak very loudly.

[Carol Massar]

So then administrative policies are supportive or.

[Eddie Gabor]

No, I think they're supportive of economic growth going into 2026. You know they are. That is our opinion. And look, as a business owner myself, we pay our teams very well.

[Carol Massar]

Okay, well that's good to know. Eddie Gabor, co founder and CEO of Key Advisors Wealth Management.

[Tim Stenbeck]

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

[Carol Massar]

Bloomberg businessweek is brought to you by Evolving Money, a podcast that explores how cryptocurrency is the next logical evolution of the financial system. The program investigates how traditional finance firms are integrating crypto into their operations now that Washington has begun to pass much needed regulations. Follow the podcast, which is sponsored by Coinbase. Wherever you get your audio programs, support.

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[Carol Massar]

Now, as the US Treasury Secretary looks to highlight the administration policy, whether it's inflation or other aspects of their policies, we continue to live in a world that really lacks U.S. government data. We did get one piece of private data today. ADP research suggested that the labor market slowed in the second half of last month. Traders now we know, have relied on private data as the government closure Tim has delayed the release of official statistics.

[Tim Stenbeck]

Meantime, the government now and it's well known to the Bloomberg audience who is with us right now, Neil Dutta, partner and head of economics at Renaissance Macro Research. He joins us from New Jersey. Neal, good to have you back on the program. I want to start exactly there and with regard to the shutdown where we are longest shutdown on record, but also the lack of data, the picture that we're kind of piecing together from various disparate parts show that a labor market is weakening. In your view, how weak is it.

[Neil Dutta]

You know, I tend to concern myself more with the direction as opposed to the magnitude, to be honest. But I think, I think we're probably at the Fed's estimate for the unemployment rate for year end already, so a couple of months ahead of schedule. So that's not necessarily a good thing. So my sense is that the speed of the weakness has, you know, maybe picked up a little bit, but I think we're probably at four and a half percent already on the unemployment rate.

[Tim Stenbeck]

Okay.

[Neil Dutta]

If it were to come out and you know, I think, you know, what people need to kind of answer is why do you think that stops and what gets it to stop? Because I think when you look at it bottoms up, like which, you know, if you kind of go industry by industry, it's really hard to see where the growth in employment is coming from at the moment.

[Carol Massar]

Well, and on that, you know, I'm thinking about. Neil, great to be talking with you again. The dual mandate. Right. And so I'm just wondering if we continue to see weakness, you know, in the labor market. And then we just talked about Treasury Secretary Scott Bess and kind of deflecting when it came to inflation as he's out and about talking about the administration's policies. I mean, we've heard from Fed Chair Jay Powell about the struggles on both of those mandates. Do you think it's going to be a bit of a squeeze for the Fed, for the US Economy, for all of us, in terms of weaker labor market staying that way and inflationary pressures kind of staying that way?

[Neil Dutta]

Well, I don't. I mean, my own view of it is that I don't view the trade offs as nearly as onerous as, as the Fed does. I mean, I think there's more downside risk to the labor market than there is upside risk to inflation. You know, at the end of the day, inflation is 3% this year. It was 3% last year. The difference between this year and last year is tariffs. So that would tell me what that underlying inflation is probably slowing. And the fact that it's really hard to make a case for why tariffs are anything more than a one off lends support to the idea that the Fed should continue to cut interest rates here in terms of, and remember, to me, the big story is that employment tends to evolve potentially in nonlinear ways. It kind of, once an increase in the unemployment rate really gets going, it tends to keep on going. And that's why you have this sort of, it's episodic. I mean, you see big spikes in the unemployment rate at times. Right?

[Geetha Ranganathan]

Yeah.

[Neil Dutta]

That's not really the case with inflation. In other words, inflation tends to move in a more linear way and particularly outside of commodities and unemployment. That's not necessarily the case. It tends to be more nonlinear in fashion. And I think that's what, you know, frankly, the Fed and, you know, the, the markets might be missing is the sort of downside, kind of growth tail risks associated with, with the labor markets.

[Tim Stenbeck]

What if the Supreme Court comes back and says the tariffs are not legal as they're implemented? Does that change your view?

[Neil Dutta]

No, I mean, I think, if you, if you think that the Supreme Court is going to be the institution in Washington, D.C. with the last word on tariffs, I think you're, I mean, I'd like to have some of what you're smoking.

[Tim Stenbeck]

Well, is that, is that because you think there are other, there are other avenues for the Trump administration to these tariffs apart from ipa?

[Neil Dutta]

Absolutely. The Congress, I mean, this is really about Congress. And Congress is frankly a lazy bunch. Okay. And they've delegated a lot of their tariff authority to the White House. And there's a vast legal architecture from which the President can draw from to prosecute a trade war. And, you know, I think immediately he could probably do a temporary 15% baseline tariff and he can do that for six months and that will, you know, sort of act as a bridge, you know, to get towards national security tariffs. So I don't think we're out of the woods on tariffs because the SCOTUS rules of one way or the other. I mean, it's. Yeah, I think that's, that's sort of wishful thinking, in my opinion.

[Carol Massar]

Hey, a couple of stories I just want to bring in. One was from last week, Neil, and it was about US Consumer sentiment tumbling to near the lowest on record. And part of it was the government shutdown weighing on the economic outlook, but also high prices, souring views about personal finances. There were also concerns about the labor market continuing to weaken in the future. We got that from that report. And then we just had a story that our Alexis Christophers mentioned about Walgreens no longer giving many of its retail workers paid vacation time for Thanksgiving, Christmas and other major holiday holidays. The company looking to cut costs under new owners. Like, I just keep thinking about this K shaped economy and there's just so many people, and I think about the snap benefits, how many people are on food stamps and getting assistance. Like, this economy doesn't feel great. And yet we have records on Wall street and we have earnings that seem to be okay. And the spend is out there still in a big way, even if there's been some questions over the last week or so. So I don't know from an economic perspective, are we in a good economy or no?

[Neil Dutta]

I mean, I think we're in a very, in a deeply imbalanced economy, Carol. And it's been that way for a while. You know, I recently wrote a piece for your colleague Joe Wiesenthal on odd, lots of, you know, just sort of characterizing the the economy is really three different things. Right. It's you have the housing market, which I think is in recession, and you have the consumer, which is kind of, let's say in the mid middle and then you have AI, which is, you know, booming. And when I go to client meetings and I give my sort of outlook on the economy, you know, the pushback that I get is kind of what you were describing. Right. It's, you know, AI, it's stocks, it's the high end consumer. And people talk about that, frankly as if those are three separate things, but they're really derivatives of the same thing. And I think that's something to keep in mind here. The other thing I would say is that we talk a lot about the resilient consumer. We hear a lot about never bet against the US Consumer. The truth is the consumer never actually gives you a signal ahead of an economic slump. Right. If you go back historically, consumer spending has never ever declined in the quarters leading up to broader economic downturn.

[Carol Massar]

Interesting.

[Neil Dutta]

Sometimes in an economic downturn, consumer spending actually expands.

[Express Employment Professionals Announcer]

Right.

[Neil Dutta]

Like go back to 2001.

[Carol Massar]

Right.

[Neil Dutta]

Like so that's not unusual either. So if you're waiting on the consumer to give you a tell, you've probably waited too long. Right. I mean, consumption has a way of amplifying downturns. But I would just say, you know, what's been interesting to me is just how quick.

[Carol Massar]

Yeah.

[Neil Dutta]

Like the labor markets have evolved the way you've expected. Right. It's come, it's come for the young first and I think it's going to come for the affluent next.

[Carol Massar]

Interesting stuff out yet? Well, this is something we talked about, the three A's in that Trump economy story. Neil Dadda, good to connect again. Come back soon. Partner and head of economics at Renaissance Macro Research.

[Tim Stenbeck]

Stay with us. More from Bloomberg Business this week daily coming up after this.

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Well, a record setting 42 day US government shutdown on a path to end as soon as today. We're thinking about that, but what's really on our minds is the functionality of US political parties in particular. What is happening with Democrats who some or many have said struggle with a single message, especially after some of those moderates broke away.

[Carol Massar]

Yeah, it's like some folks scratching their heads. This is after they broke away. They dropped their demand to renew expiring Affordable Care act subsidies aca, and instead secured a Republican Party promise to vote on extending Obamacare insurance premium credits by mid December.

[Tim Stenbeck]

Josh Green is Bloomberg businessweek national correspondent. He's the author of several books, including the number one New York Times bestseller Devil's Bargain, Steve Bannon, Donald Trump and the Storming of the Presidency. He joins us from our Washington, D.C. bureau. Democrats, Josh, crossing the aisle to end the shutdown. Was it a, quote, terrible mistake, as Senator Elizabeth Warren told reporters? Governor Gavin Newsom called it, quote, pathetic, or is this smart ahead of the midterms? This is kind of a narrative that's emerging now. Republicans will own the ACA premiums going up. That'll affect a lot of their constituents. What's the chatter?

[Josh Green]

Well, I think the overwhelming sentiment at the Democratic grassroots is anger and confusion that, you know, Democrats who've just come off the sweeping election victory, who polls showed were not being blamed for a shutdown that they in fact had had caused. Why they would suddenly decide to throw in the towel without really much, much warning, I think has upset an awful lot of people, mostly at the grassroots level, but also from a lot of the politicians, especially ones like Gavin Newsom, who maybe have their eye on the White House and are especially attuned to grassroots sentiment. But I think that there's another kind of quieter realist wing of the party that looked in the mirror and said, look, there's really no clear winning exit strategy. We've got to pull the plug at some time. So let's do it now before things get really bad for federal workers, before the entire US Airline industry grinds to a halt, maybe on Thanksgiving weekend and just turn around and decided to kind of rip off the band aid. Now, that's caused a lot of anger, but it's not necessarily clear that long term this is going to be the wrong move.

[Carol Massar]

What's that like thinking or strategizing about, like, okay, what party gets? And, you know, I was thinking about this when I was on a TSA line amid the government shutdown, and I look up at those scream screens and who do I see? Kristi Noem, you know, playing over and over on a loop, and I just wonder the general public, like, who do they blame? And so was it was there a feeling that it was the Republican shutdown was it both the parties, how did, how was it playing out?

[Josh Green]

I mean, it's an interesting dynamic over the last, like, three or four government shutdowns. What's happened in pretty short order is that that services start shutting down, national parks start shutting down, you have a problem with airlines. Everybody says, well, gee, who's to blame? And it's pretty clear whichever party shut down the government gets blamed by the other party, because everybody in that party is on the same page. They can kind of point to the same bad guy. I think the tricky thing this time around was that President Trump didn't really seem to be all that interested in the shutdown for, like, the first two or three weeks. He was much more interested in knocking down the east wing of the White House, building up his new ballroom. And so you had this kind of mixed message from Republicans where some Republicans in Congress were trying to run the ordinary playbook of blaming Democrats, but Trump wasn't really on that page, wasn't really doing that. And it's a much more interesting, exciting story to write about this grand new ballroom that's apparently going up in the White House. And so nobody really focused on who was to blame. And when things started going wrong, they just kind of naturally blamed the president and the party that controls Congress.

[Carol Massar]

You know, Josh, I do wonder, like, did things like, you know, tearing down the ballroom, showing off a new marble bathroom at the White House that the president has, having a great Gatsby party for Halloween?

[Josh Green]

Exactly. Yes.

[Carol Massar]

That was really over the top, if you saw some of the images. And I'm not, I don't want to be political, but I do wonder, this is a president who said, like, I am here for you, and I'm going to take actions that are here for more Americans. That's, you know, at the same time, we're talking about one in eight who aren't going to get food stamps because of the government shutdown. So I'm just curious how that plays politically. Was that getting noticed, that kind of gap?

[Josh Green]

It definitely was. I think it does two things. I mean, going back to sort of that, you know, how a party deals with a shutdown. If all Republicans had been unified from day one, including President Trump, saying, look, the Democrats did this in. It's their fault, blame them. I think things would have ended much earlier, but as we said, that didn't happen, Trump was more concerned with other things. And when he did begin to get upset about the shutdown, instead of blaming Democrats, he started getting angry at Republicans and told them they ought to eliminate the Filibuster, which would be another way to open the government. But it's not something that Republicans wanted to do. And so as this fight was going on, you do see these images on tv, on social media of, you know, the redecoration in the White House, of these glitzy parties at Mar a Lago. Meanwhile, you know, food stamps are being frozen. The White House is out saying, no, we don't want to pay these. During the government shutdown, Democrats and states are having to take them to court. So it really did create a political problem that polls show pretty clearly was hurting President Trump's approval rating and hurting Republicans in Congress. And that's one reason why Democratic kind of grassroots and a lot of lawmakers were so upset that moderates in their caucus decided to pull the plug and end the shutdown early because they didn't think it was hurting Democrats, they thought it was hurting their opponents.

[Tim Stenbeck]

I think it was Mike Allen in Axios over the weekend who wrote a commentary about how it could be a challenge for the Trump administration to present themselves as fighting for the little guy or fighting for the middle class or the working class if they're not focused on the ACA subsidies or on funding SNAP during this time. I wonder if that message will resonate with voters going into the midterms in 26.

[Josh Green]

Yeah, I think that's a really smart point. I think it might resonate even sooner. I did a BusinessWeek newsletter yesterday, just kind of my gloss on the shutdown and what was and what was not accomplished. And I do think that one of the things that Democrats accomplished, even though so many of them are unhappy about the way things ended, are they've added real salience to this issue of rising Obamacare premiums.

[Geetha Ranganathan]

Premiums.

[Josh Green]

Originally, Democrats said, we're only going to reopen the government if Trump and Republicans agree to fund these provisions that will help extend subsidies, keep insurance affordable. Republicans don't want to do that. They didn't do that. So even though Republicans or Democrats weren't able to win that as a concession to reopen the government, it's been on the front pages of newspapers, it's been in the news. I think the American public is very aware that these premiums are about to arise. And I think partly because of the spotlight that the shutdown shown on this issue, if and when those premiums do rise, the American people are largely going to bring Trump and Republicans, and essentially it's going to be up to them to kind of find a solution, which isn't exactly how Democrats wanted things to end. But it could turn out to be that public pressure in the event of these rising premiums actually does produce some sort of solution, the Democrats could get behind.

[Carol Massar]

So you know, Josh, when the Republicans in the Democrats that went over to the other side or basically, you know, broke away and got this Republican promise to vote on extending Obamacare insurance premium credits by mid December. So politically it will happen or could Republicans back out? Just got about 40 seconds here.

[Josh Green]

I think it's very unlikely to happen. I mean, Republicans have been adamant that they're not going to vote to support these things. So you can have a vote. The vote will lose and that will probably be the end of it, at least in the short term. If the vote were to win in the Senate, it would go to the House. House is controlled by Republicans and they've said they might not even take it up. But eventually, if insurance premiums do go up and just ordinary people begin to react badly to that, including Republican districts, that could put pressure on Republicans and Trump to finally have to do something about it.

[Carol Massar]

And there's a record, right, of people of how they voted.

[Josh Green]

Absolutely. Yeah. And ultimately, look, Republicans, Republicans control Congress. They control the White House. The buck stops with them. If there needs to be a solution, they're also going to have to come through and deliver one.

[Carol Massar]

All right. Great stuff as always, Josh. Thank you so much. Josh Green, he is Bloomberg businessweek national correspondent. Be sure to check out all of his writings. They are on the Bloomberg terminal [e-mail] really appreciate it.

[Tim Stenbeck]

Order his books to his.

[Carol Massar]

Listen, he's the guy you want to talk to like understood what you know, how President Trump got to the White House the first time around and just continuing to report it all out.

[Tim Stenbeck]

Josh Green out of Washington, D.C. stay with us. More from Bloomberg Businessweek Daily coming up after this.

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Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC Crypto trading provided by ZeroHash complete disclosures available at public.com disclosures.

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[Tim Stenbeck]

In the heat of battle, your squad relies on you. Don't let them down. Unlock elite gaming [e-mail] Dominate every rematch with next level speed, seamless streaming and performance that won't quit. Push your gameplay beyond performance with Intel Core Ultra processors for the next era of gaming. Upgrade to smooth high quality streaming with Intel Wi Fi 6e and maximize game performance with enhanced overclocking. Win the tech search power [e-mail] Lenovo Lenovo. You're listening to the Bloomberg Businessweek 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.

[Carol Massar]

Che one stock and company that we wanted to highlight. It is the number one gainer in the S&P 500 today it's up about 9%. We're talking about Paramount Skydance shares rallying. In fact, they've been up more than 12% at their intraday high today after the newly merged company raised its target for job cuts and cost saving measures. As you know, the media and entertainment company has also been trying to buy rival Warner Brothers Discovery. It also said in a letter to shareholders we talked about this a little bit that it plans an additional 1600 person workforce reduction and did lay out a specific goal to achieve at least $3 billion Tim in cost savings with.

[Tim Stenbeck]

More on the results, the company and its place in the world of media and Its future to Bloomberg Intelligence, senior media analyst Geetha Ranganathan joins us. She's at Bloomberg Intelligence headquarters in Princeton, New Jersey. Githa is today's move. Before we get to the big picture, is today's move all the result of that least, at least $3 billion in cost savings? Is that why investors are happy today?

[Geetha Ranganathan]

Yeah, absolutely, Tim. So you know, the 3 billion cost savings target, which was upward guidance revision from the 2 billion, basically caused them to lift their ebitda target for 2026. I mean, when I say lift, it's much higher than what consensus was expecting. So consensus was expecting around 3.1 billion for 2026. They 3.5 billion. So I think that really gave investors some cost to, to cheer and that's, that's driving the stock upwards today.

[Tim Stenbeck]

Well, we should, we should just remind everyone, Carol always points this out that, you know, that includes an additional 1600 person workforce reduction. So I would imagine there are people within the organization that are worried about not having a job in the near future. Do we know at all where these layoffs will hit?

[Geetha Ranganathan]

So these layoffs actually the 1600 are going to be a part of their Latin American operation. So they're going to do some of the divestitures of their LATAM assets in Chile, in Argentina, and a lot of those job cuts are actually associated with that.

[Carol Massar]

All right, so you know what, Gita, I keep thinking, is this the media company to watch right now?

[Geetha Ranganathan]

It definitely is, Carol. So you know, a lot of what David Ellison and his team laid out yesterday, I mean, they came as a really strong team with a very, you know, they have a game plan, they know what they're doing. But at the end of the day, and if you just look at the playbook, right. You guys mentioned the cost synergies, which are a big part of, you know, the forward plan. But if you just kind of think back a few years, this is so reminiscent of exactly what Warner Brothers Discovery did. This was their playbook. They came in with, you know, the merger of Warner Brothers and Discovery. They kind of kept raising their synergy targets, but in the end what happened was everything fell apart because they did, they couldn't really kind of get to the INIT initial EBITDA target that they had laid out up until this year, of course, when they kind of came out with their whole plan to separate the company. So one doesn't really know what's going to happen with Paramount Skydance. So, yes, things looked pretty promising as laid out by the management team yesterday. They obviously are not Afraid to make big bold bets when it comes to content. We saw them, they're ready to spend about $8 billion on UFC content. They obviously are more than willing to go after Warner Brothers Discovery, but at the end of the day, it's going to come down to some, you know, execution. Are they going to actually be able to execute? And even if they do execute, is it going to be enough? You know, those are really the questions because I'm not sure. Yes, they might be able to drive up their streaming subscriber base a little bit. They have about 80 million right now. But then when you're competing with Netflix, which has well over 310 million again, what do you do? You need something transformative. So you do need that Warner Brothers Discovery acquisition.

[Carol Massar]

Well, I do think about kind of where media companies are going, Geeta. You know, who would have thought at one point that the major networks would ever be challenged? Who would ever thought, you know, ESPN went through its own, like we've seen things that were juggernauts or a given that it's just not the way it is anymore. You know, so many of us are watching YouTube television or watching us things on our phone or, you know, we don't care what time things are on anymore. Like it's just been turned upside down. Look at the news business, how much that has changed. And I do think about, you know, what is, is the media company of the future.

[Geetha Ranganathan]

The media company of the future is one that can be agile, that can be nimble, you know, and that's exactly what Netflix has been able to do in terms of, you know, making. They did make the content investments when they need to, when they needed to make it. But then they were able to pare back when they realized that, you know, that couldn't go on forever and when they were burning through to free cash. Right. The content company, or rather the media company of the future, is one that can, you know, adapt. You know, we have to make investments in AI. We're seeing that AI is going to really kind of change the game when it comes to recommendations, when it comes to kind of tweaking algorithms, and even when it comes to cutting down on content costs. We're already seeing this play across the board. You know, in terms of post production cost. It can kind of lead to a significant reduction. We're thinking at least baseline, 10%. And so a company that's able to achieve that and is ready for that is going to, to really position itself for, for the future pretty well back.

[Tim Stenbeck]

To the idea of what assets the company might need to add in the near future. David Ellison on the call, Geetha said he couldn't comment on speculation around dealmaking, but said there are no must haves for us. Do you agree with that?

[Carol Massar]

Is he just not trying to show his hand?

[Tim Stenbeck]

Like, are there some assets that are must have for this company?

[Geetha Ranganathan]

I think so, Tim. I mean, again, they did and, you know, full credit to the, to the management team. They, they do seem to have a good strategy. They seem to be very bold and ambitious. There's absolutely no doubt about it. They are not going to just be okay with the status quo. That is absolutely clear. But, you know, in their current configuration, I just don't think it's going to cut it when they have to compete with the likes of a Netflix or an Amazon or a Disney. They do need a better studio. Yes. They're, you know, they're committing to basically doubling their theatrical output. But if you just kind of look at the, you know, performance of the studio over the past so many years, it has clearly been such a laggard. So, you know, getting some of those Warner Brothers titles I think is transformative. They do need something for their streaming assets as well. Again, they're doing a lot of, you know, things that they can, you know, again, in the, in the current format, but again, they need a lot more content. You know, the UFC is good, the NFL they have, but I don't think, you know, that's good for some amount of customer acquisition. I just don't think it's enough, hey.

[Carol Massar]

Swallowing Warner Brothers, if indeed Warner Brothers Discover, indeed, that gets done. I mean, I think we all keep being like, well, wait a minute, Paramount, Scott, Skydance is about an $18.3 billion market cap. Warner Brothers is about almost 57 billion. I mean, it's going to be a lot of debt. Right. We see that typically in media companies. Is it manageable?

[Geetha Ranganathan]

I think it is manageable. I mean, we have to remember here that, you know, this is a little bit of an unusual situation. This is David Ellison. You know, his father is one of the richest people in the world. So I think financing might not necessarily. I mean, yes, we've heard all these different reports of, you know, the Paramount team kind of looking for private equity partners. We really don't know exactly how the financing structure is going to be. But I think, you know, in the grand scheme of things, and we've seen this, even with the Warner Brothers discovery, you know, management team, that, yes, they do have to take on a lot of debt. But I think. I think in the end it will be, it will be manageable because they still will have a good amount of free cash flow. Flow.

[Carol Massar]

All right, we're going to leave it on that note. Hey, Geetha, thank you so much. Geezer Ranganathan, she's senior media analyst at Bloomberg Intelligence, joining us from headquarters out there in Princeton, New Jersey. As we mentioned, Paramount, Skydance continuing to be the top gainer in the S&P 500. Tim, that stock up about 8.7% at one point.

[Tim Stenbeck]

It was up 12 and a half percent. So off its best levels of the day, but still enough to the upside to be that best performer in the.

[Carol Massar]

S and P. I love it though. It's just kind of interesting. We'll see where it goes next. All right.

[Tim Stenbeck]

Are you watching anything on Paramount plus because those price increases are going to come.

[Carol Massar]

I don't know. It's all a mush to me. Just go to the menu I click.

[Tim Stenbeck]

It's not what they, that's not what they want to hear. But that is the reality for so many people.

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. In the heat of battle, your squad relies on you. Don't let them down. Unlock elite gaming [e-mail] Dominate every match with next level speed, seamless streaming and performance that won't flip. Push your gameplay beyond performance with Intel Core Ultra processors for the next era of gaming. Upgrade to smooth high quality streaming with Intel Wi Fi 6e and maximize game performance with enhanced overclocking. Win the tech search power [e-mail] lenovo.

[Eddie Gabor]

Lenovo.

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