October 3, 2025 • 20 mins
In this week’s Votes and Verdicts podcast, Bloomberg Intelligence’s litigation and policy team examines several key catalysts. Justin Teresi examines how a new antitrust case against Zillow and Rocket’s Redfin challenging a 1Q deal between the two likely has steam and might spell significant changes or an end to the arrangement. Matthew Schettenhelm looks at President Donald Trump’s executive order on TikTok and the ramifications it may have for any potential legal challenges. Holly Froum explains how furniture tariffs may work following a Trump social media post and Nathan Dean outlines how a US government shutdown may end in the next week.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the litigation and policy team at Bloomberg Intelligence, the
investment research platform with Bloomberg LP. Bloomberg Intelligence has five
hundred analysts and strategists working across the globe and we
are focused on all major markets. Our coverage includes over
two thousand equities and credits, and we have outlooks on
more than ninety industries, one hundred market industries, currencies and commodities.
(00:38):
This podcast series examines the intersection business policy and law.
My name is Nathan Dean. I'm your host for today
on this episode that we are recording on October second,
twenty twenty five. Now, we have a couple of things
that we want to talk to today. The first thing, though,
I want to turn it over to Justin TERREESI to
talk about the FTC versus Zilo case. If some of
(01:01):
you with Bloomberg Terminals may have noticed some headlines red
headlines coming across the terminal this week, So Justin, can
you just give us an update and where we are
in this court case.
Speaker 2 (01:09):
Yeah, definitely, thanks Nathan. So, a few signs of life
from the FTC this week with regard to antitrust enforcement.
Haven't seen a whole lot yet coming out from this
administration under chaff Ferguson with regard to actional enforcement around
anti trust issues. Lots of action on consumer protection. But
this is the first real case we've seen that's digging
in on antitrust under his tenure. So what's going on Tuesday?
(01:31):
At the FTC filed suit against Zillo and Redfinn related
to online rental listings. Now, I spend a lot of
time on Zilla myself as an elder millennial one day
hoping to buy a home just like everybody else in
my cohort, if you will. But this one really does
look at those multi family rental listings where Zillo wasn't
necessarily the chief the chief leader in that market chair
(01:53):
for that segment. So allegedly what happened back in February,
Zillo entered a partnership with red Fi valued at about
one hundred million dollars, where essentially what the FTC alleged
is is Zillo paid off Redfin to leave the market
for multifamily rental listings and instead only syndicate Zillo's own
listings through their website to reach users on Redfin Redfin
(02:17):
was acquired by Rocket back in July, so that's an
interesting wrinkle to all of this too, But looks like
a pretty strong case from what we're seeing, you know,
just at the front end here. We haven't heard from
the companies yet, but pretty basic rule of anti trust.
You probably can't pay a competitor to stop competing against you.
It's kind of anti trust one oh one when you
look at it that way.
Speaker 3 (02:35):
So what's the next major catalyst in this?
Speaker 2 (02:37):
Yeah, so you know, interestingly too, I think, kind of
showing the level of politics that are happening right now
between the FTC and folks at the state level. A
group of state attorneys general also filed suit the day after,
really around the very same allegation. So really interesting wrink
all there to all of this too. You know, I'd say,
look the facts of the case, at least in the
allegations in the complaint, they look pretty strong. So I
(03:00):
think settlement is something that that could happen in a
relatively short amount of time here compared to some other
litigation we've seen. But now you've got this second case
involving state attorneys general too, who have a lot of
leeway to continue as they'd look. So maybe that doesn't
result in a deal to unwind this partnership as fast
as as we might expect it to happen. But you know,
I should really point out here too, what's really important
(03:22):
is that, you know, the FDC is also saying that
in a lot of ways, this is kind of like
an m and a kind of transaction that wasn't really
done the right way. And what I mean by that is,
you know, Redfin didn't just step outside of this rental
listings business. What they also did is allegedly fired their
own employees that were worked on this line of business,
transition to them to Zilo, and then also transition customer
(03:45):
contracts and customer data from Redfin to Zilo too related
to these listings. So what we're going to see here,
I think is a move by the FDC to unwind
this whole thing that could really result in Redfinn maybe
starting this business back up in some way, kind of
push employees from Zilo back to Redfin through some kind
of an incentive program and basically saying you know, look,
you can't keep these assets like customer data you got
(04:08):
from Redfin. So I think all of that could be
in the crux of a settlement. To answer your question
long windedly on a catalyst, but you know, I think
they could see something sooner than we might have in
an ark case of this type. Have you ever seen
anything like this before related to this specific kind of issue.
Speaker 3 (04:24):
Not really.
Speaker 2 (04:24):
I mean, you know what's interesting is this isn't the
only case right now really that Zillo is facing too.
You know, it seems like they've been rather aggressive with
kind of you know, pushing the envelope in some ways.
You know recently as well. There's copyright infringement things that
are happening between them and co Stars Apartments dot Com.
There's also consumer class actions on hidden fees. I mean,
there's a lot happening. But you know, to your point here,
(04:48):
have I seen anything this egregious on its face? Probably not,
you know, it just it does seem in many ways
that the allegations being what they are, it's a pretty
strong case, I think from my perspective.
Speaker 1 (04:59):
And I guess a lot of question for me is
what impact do you think this will have on midtown
Manhattan condos? And do you think it's going to bring
down the price any for people that are interested in
buying Midtown Manhattan condos.
Speaker 2 (05:10):
I mean, I wish it, would, you know. And and
to your point, you know, I think this is what
Zilla was likely to say here too, is that maybe
there is some kind of benefit here in some way
to advertisers and customers. I'm not quite sure what they
argue from that perspective yet, but you can rest assured
there's somehow going to say in a response to this
that myself, the Bayer or Renter, is really being benefited
by this particular situation of partnership as well.
Speaker 1 (05:32):
Yeah, in full disclosure, I live in d C, so
I don't know if Midtown Manhattan has actually saw it.
After I'm sure Justin will tell me some neighborhood in
Brooklyn is or Queen's is where you should actually be at.
Speaker 3 (05:43):
But anyway, thanks Justin. I really appreciate it.
Speaker 2 (05:46):
So, yeah, you bet.
Speaker 3 (05:47):
Let's go to Matt.
Speaker 1 (05:48):
Matt, we have a question on TikTok. Now, the official
question I'm going to ask you is, you know, there's
a lot of market participants to want to know about
what President Trump's deal is that he's orchestrated with TikTok.
Speaker 3 (06:00):
Can you explain the deal?
Speaker 1 (06:01):
And I guess the unofficial question is what assurances can
you give middle schoolers across this nation, including those in
my household, that are interested in TikTok? You know, will
they eventually see TikTok going away? Or what is this
new app that I hear folks saying that we're going
to have to download to access this.
Speaker 4 (06:21):
Yeah, I've never been more popular with my teenage kids
since I since I started covering this case. So good questions,
and I don't think we have clear answers yet when
you look at what President Trump announced last week. He
signed an executive order one week ago today that said,
(06:42):
you know, saving TikTok while protecting national security was the
title of the document. And I think there are real
questions about whether this will resolve the matter, whether it
complies with the law that remains on the books that
Congress pass that banned TikTok as of January nineteenth. So,
(07:04):
just stepping back a little bit on what this does effectively,
all we have here is a framework agreement that wasn't
publicly released that that would be driven by implementation agreements
that aren't signed yet. So, but what those would do
in theory was wuld would create a new US based
(07:25):
joint venture to operate the app in the United States,
and byte Dance would only own twenty percent or less
of that new operational entity. It would not divest actually
its TikTok subsidiary TikTok us that would all remain owned
(07:46):
by byte Edance, but some operational piece it would drop
its ownership interest to twenty percent. And then there's real
questions about the algorithm and how the thing is going
to work the Trump You look at Trump's executive order
and it really doesn't say much of anything about how
(08:06):
the algorithm is going to be updated or maintained going forward.
It talks about monitoring by trusted partners of the algorithm,
but the law, if you look at it, says there
can be no operational relationship between byte dance and any
new entity with respect to the algorithm. And so I
(08:31):
don't know why we would need monitoring of the algorithm
if it's controlled by a US entity. So real questions
there about are we really complying with this law that
required a divestiture that byte Dance wouldn't control the new entity,
and it was also wouldn't have any operational relationships. So
(08:54):
Trump also extended the law for another period of time
into January up next year. So again kicking the can
down the road. And I'm not sure we'll we'll have
a real resolution to this and and and firm answers
about what TikTok's going to look like going forward yet, So.
Speaker 1 (09:12):
What's the next step in this process? So Trump signs
an executive order? Do they need to get the bankers
in now? I mean, is this this become then a
private transaction between Byte Dance and It's Oracle silver Lake,
who are the other is?
Speaker 4 (09:27):
Andresen I mean yeah, well, I mean we're None of
that was in the executive order. So we've had reporting
on on a lot of this, so we we don't
know those details about who who all is running those
that that joint venture, and we don't know how much
of it's going to be public next. He adopted this
executive order last week that says this is a qualified
(09:51):
divestiture under the law, and it's possible that they envision Hey,
this is all the public we're going to to do
any This is the most public we're going to get
on this stuff, and everything else is going to be
quietly handled, you know, behind the scenes in terms of
signing these these these agreements. It remains to be seen.
(10:14):
There is a way around that, which is that the
law says that any action under the TikTok law can
be challenged within ninety days of that action, and so
in theory you could you could you could see this
go before a court to say, hey, does this actually
comply with the law, and then we would have more
(10:35):
visibility into what these agreements say and what they do
and whether they are compliant. But so far we've seen
very little will from people to challenge the administration on this.
It's difficult to imagine how it was lawful for President
Trump to release letters saying that companies aren't violating the
(10:57):
law after January nineteenth. But they consistently written those letters
to the companies that host TikTok, and no one's challenged
those actions. So it's possible everyone's just going to let
this go too and just do.
Speaker 1 (11:11):
Those companies, in your opinion, still have legal risk if
there's a change administration.
Speaker 4 (11:17):
You know, I think it would be very difficult when
you have the President of the United States and the
Attorney General putting it in writing that you are not
out of compliance with the law. I think you would
have a really strong due process complaint. If someone the
(11:38):
next administration comes along and says, yeah, we got you,
you're not complying with the law, I think that's not
going to go very far. I think these companies are
probably protected by these letters that say you're not violating
the law. Where they wouldn't be protected is if someone
(11:59):
filed the lawsuit that challenged those letters and said, hey,
these these are not consistent with the law. Court a
court would then strike down those letters, vacate those letters.
Then those companies don't have protection going forward. I don't
think they're going to have They're they're they're going to
have a problem in the past with with with such
clear guidance from the administration saying you're you're not out
(12:22):
of compliance.
Speaker 3 (12:24):
No, that sounds good, Okay, thank you, Matt.
Speaker 4 (12:26):
Sure.
Speaker 1 (12:26):
So let's go to Holly from to talk about tariffs,
in particular furniture tariffs, because just this week we saw
two announcements from President Trump on truth social first was
first was dealing with tariffs on movies.
Speaker 3 (12:43):
The second one was tariffs on furniture.
Speaker 1 (12:45):
Now, Holly, I I read one of your notes back
in May about the movie tariffs, and you said weak
legal grounds, you know, and look as as a fan
of Hallmark Christmas movies that are mostly built in or
made in suburban Vancouver. I'm not exact for sure that
how that would work. But let's focus on the furniture
tariffs for today. What can you tell us about what
(13:06):
went in? Does President Trump have this authority? He is
the on and okay legal grounds with this and what
are the impacts that you're seeing so far?
Speaker 5 (13:14):
Thanks Nathan. So. President Trump signed an executive order saying
that effective October fourteenth, he's going to impose twenty five
percent tariffs on upholstered wooden products and kitchen cabinets, and
those go up to thirty and fifty percent, respectively as
of January twenty twenty six. And he's doing this under
(13:35):
section two thirty two of the Trade Expansion Act. What
that Act allows him to do is to impose tariffs
if his Commerce Secretary finds after an investigation that imports
threatened to in pair national security. And what he said
in the executive order is that the Secretary found that
(13:56):
the quantities of wood products that are imported are weak
in our economy and resulting in the threat of closure
of w wood mills here in the US and disrupting
product supply chains. So he says that the state of
the wood industry here in the US has makes it
unable to meet demands for wood products that are crucial
(14:16):
to national defense. So I've said these are on stronger
I llegal grounds than that tariffs he's imposed on worldwide
terriffs or are reciprocal tariffs. Those are terifts he's imposed
on an emergency statue called AIPA because two thirty two
explicitly mentions the word duties and has been held in
(14:37):
the past by courts to allow the imposition of terriffs,
whereas AEPA never mentioned the word tariff. And so as
some of you may know, those tariffs that the President
posed under AEPA, they were challenged in court, and one
of the arguments is, and that's still making its way
through the court system now is up on appeal to
the Supreme Court. The lower courts found that they were unlawful.
(14:59):
And so so what the argument was by the challengers
who challenge those AIPA terriffs was that that statue doesn't
even mention the word terriffs. That's different from section two
thirty two, which explicitly mentions the words duties. So that's
why I think they're on stronger legal ground, but they's
still subject to challenges. There could be procedural challenges, and
(15:20):
there could be other challenges. And I imagine that one
could say argue that the conclusion that would import threatened
to impair national security. They could challenge that contention. But
it does seem as though President Trump is being more
circumstanced effect in terms of the statues he's using to
impose the tariffs.
Speaker 1 (15:40):
So we're recording this on October second. You mentioned this
goes into effect October fifteenth. Do you think that there's
a chance that President Trump could walk these tariffs.
Speaker 5 (15:49):
Back October fourteenth. Yeah, I mean it's possible. He did
say in the Executive Order that they are subject to negotiation,
that he's negotiating with certain countries now, and that they
don't apply to certain countries with which he has a
trade agreement. So the EU has its own rate, they're
not going to be subject to these particular terrorists. The
(16:10):
UK has its own rate, So I can envision that
he may engage in negotiations that could change things, as
he has in the past.
Speaker 3 (16:18):
Yeah, exactly. I mean, it's yeah, it happens. It happens
quite a bit.
Speaker 1 (16:22):
So okay, thank you, Holly, really appreciate it. So, just
to finish things up, I'm going to give an update
on the government shutdown, because, as remember I just said
for the third time that we're recording this on October second.
Speaker 3 (16:36):
Congress is out.
Speaker 1 (16:37):
Today, they will be returning on Friday, October third, and
then Senator Thunis said that the Senate is going to
go home for the weekend, so we don't anticipate any
type of negotiation to take place over at the weekend.
The House Republicans aren't even here in town at the moment.
They are coming back on Monday, so we're not going
to really see any deal or any framework of a
(16:58):
deal come together until early next Now we're in a situation, though,
where I still think the shutdown could be resolved by
mid to late next week. That's under the assumption, however,
that we don't see unilateral moves from the Office of
Management and Budget to conduct widespread layoffs of federal government workers.
(17:18):
We've seen statements from russ Vote, the Director of the OMB,
to say, and I'm paraphrasing here that layoffs are imminent
and they are going to be widespread. And President Trump
has posted entry social that a lot of the earmarks,
or a lot of the clawbacks and recessions of approved
funding would be geared towards Democrat states for those for
you in New York and New Jersey, for example, we
(17:40):
saw eighteen billion dollars paused, and I would say paused
because I would argue that these were paused, not clawed
back from the Hudson Yards or sorry, the Hudson Tunnel
and the Second Avenue subway projects. So I think if
you don't see really that, if you don't see those
widespread layoffs or more additional massive claim back of Democratic
(18:01):
earmarked projects over the weekend, then I think negotiations can
take place and a deal can get done by the
end of next week. If you do see those things
come out, though, it could potentially push the Democrats into
their shell and say, look, we're not going to negotiate
with you. In terms of impacts, we always remind our
clients that there's three things to keep in mind. One
was headline risk. Now in the thirty four days shutdown
(18:23):
that occurred back in twenty eighteen, the SMP dropped significantly
about fifteen percent, before rallying by the end of the shutdown.
We didn't really see much of a market reaction this week,
but you know, shutdowns in the past historically haven't really
been all that big of a deal for the markets. Obviously,
there is a data question. You know, the Bureau of
Labor Statistics is not producing any data at the moment.
(18:44):
Neither is the Commodity Futures Trading Commission, neither is the USDA,
and so there's a lot of folks that just don't
have data at the moment.
Speaker 3 (18:51):
Now, if you are a Bloomberg subscriber, we would.
Speaker 1 (18:54):
Push you to this worksheet that our colleagues have created
over in core product called WA L eight lte wsl
alte go that will actually bring up a list of
all the proprietary and private data that we have on
the terminal. They can assist you with your needs while
we're in this data lapse. And then the last impact
(19:15):
is really economic impact, and our colleagues over Bloomberg Economics
have done in analysis it says that if this shutdown
lasts three weeks, that is when you're going to see
an uptake in unemployment, and that is when you're going
to start to see the economic impact from this. Because
federal government workers, there's about seven hundred and fifty thousand
workers that are furloughed. Each day, they get paid on
a two week cycle, and they get paid next Friday.
Speaker 3 (19:35):
That would be the first paycheck that they ultimately miss.
So again, I think the deal can be made.
Speaker 1 (19:40):
I think that deal would most likely just be a
unofficial handshake to say that we're going to have a
vote later this year on extending Obamacare subsidies. But at
the same time, I think this shutdown could potentially go
longer if we see those moves from the White House
in the Office of Management and Budget. So with that,
we're going to say thank you so much for listening today.
Really appreciate it. If you aren't on the terminal, if
(20:02):
you have any questions, please feel free to reach out
to us. You can always find us via our instant
Bloomberg Instant messaging system, or you can always just email us.
But again, we want to say thank you very much
for listening. We wish you a great weekend and hope
to speak with you soon.
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the litigation and policy team at Bloomberg Intelligence, the
investment research platform with Bloomberg LP. Bloomberg Intelligence has five
hundred analysts and strategists working across the globe and we
are focused on all major markets. Our coverage includes over
two thousand equities and credits, and we have outlooks on
more than ninety industries, one hundred market industries, currencies and commodities.
(00:38):
This podcast series examines the intersection business policy and law.
My name is Nathan Dean. I'm your host for today
on this episode that we are recording on October second,
twenty twenty five. Now, we have a couple of things
that we want to talk to today. The first thing, though,
I want to turn it over to Justin TERREESI to
talk about the FTC versus Zilo case. If some of
(01:01):
you with Bloomberg Terminals may have noticed some headlines red
headlines coming across the terminal this week, So Justin, can
you just give us an update and where we are
in this court case.
Speaker 2 (01:09):
Yeah, definitely, thanks Nathan. So, a few signs of life
from the FTC this week with regard to antitrust enforcement.
Haven't seen a whole lot yet coming out from this
administration under chaff Ferguson with regard to actional enforcement around
anti trust issues. Lots of action on consumer protection. But
this is the first real case we've seen that's digging
in on antitrust under his tenure. So what's going on Tuesday?
(01:31):
At the FTC filed suit against Zillo and Redfinn related
to online rental listings. Now, I spend a lot of
time on Zilla myself as an elder millennial one day
hoping to buy a home just like everybody else in
my cohort, if you will. But this one really does
look at those multi family rental listings where Zillo wasn't
necessarily the chief the chief leader in that market chair
(01:53):
for that segment. So allegedly what happened back in February,
Zillo entered a partnership with red Fi valued at about
one hundred million dollars, where essentially what the FTC alleged
is is Zillo paid off Redfin to leave the market
for multifamily rental listings and instead only syndicate Zillo's own
listings through their website to reach users on Redfin Redfin
(02:17):
was acquired by Rocket back in July, so that's an
interesting wrinkle to all of this too, But looks like
a pretty strong case from what we're seeing, you know,
just at the front end here. We haven't heard from
the companies yet, but pretty basic rule of anti trust.
You probably can't pay a competitor to stop competing against you.
It's kind of anti trust one oh one when you
look at it that way.
Speaker 3 (02:35):
So what's the next major catalyst in this?
Speaker 2 (02:37):
Yeah, so you know, interestingly too, I think, kind of
showing the level of politics that are happening right now
between the FTC and folks at the state level. A
group of state attorneys general also filed suit the day after,
really around the very same allegation. So really interesting wrink
all there to all of this too. You know, I'd say,
look the facts of the case, at least in the
allegations in the complaint, they look pretty strong. So I
(03:00):
think settlement is something that that could happen in a
relatively short amount of time here compared to some other
litigation we've seen. But now you've got this second case
involving state attorneys general too, who have a lot of
leeway to continue as they'd look. So maybe that doesn't
result in a deal to unwind this partnership as fast
as as we might expect it to happen. But you know,
I should really point out here too, what's really important
(03:22):
is that, you know, the FDC is also saying that
in a lot of ways, this is kind of like
an m and a kind of transaction that wasn't really
done the right way. And what I mean by that is,
you know, Redfin didn't just step outside of this rental
listings business. What they also did is allegedly fired their
own employees that were worked on this line of business,
transition to them to Zilo, and then also transition customer
(03:45):
contracts and customer data from Redfin to Zilo too related
to these listings. So what we're going to see here,
I think is a move by the FDC to unwind
this whole thing that could really result in Redfinn maybe
starting this business back up in some way, kind of
push employees from Zilo back to Redfin through some kind
of an incentive program and basically saying you know, look,
you can't keep these assets like customer data you got
(04:08):
from Redfin. So I think all of that could be
in the crux of a settlement. To answer your question
long windedly on a catalyst, but you know, I think
they could see something sooner than we might have in
an ark case of this type. Have you ever seen
anything like this before related to this specific kind of issue.
Speaker 3 (04:24):
Not really.
Speaker 2 (04:24):
I mean, you know what's interesting is this isn't the
only case right now really that Zillo is facing too.
You know, it seems like they've been rather aggressive with
kind of you know, pushing the envelope in some ways.
You know recently as well. There's copyright infringement things that
are happening between them and co Stars Apartments dot Com.
There's also consumer class actions on hidden fees. I mean,
there's a lot happening. But you know, to your point here,
(04:48):
have I seen anything this egregious on its face? Probably not,
you know, it just it does seem in many ways
that the allegations being what they are, it's a pretty
strong case, I think from my perspective.
Speaker 1 (04:59):
And I guess a lot of question for me is
what impact do you think this will have on midtown
Manhattan condos? And do you think it's going to bring
down the price any for people that are interested in
buying Midtown Manhattan condos.
Speaker 2 (05:10):
I mean, I wish it, would, you know. And and
to your point, you know, I think this is what
Zilla was likely to say here too, is that maybe
there is some kind of benefit here in some way
to advertisers and customers. I'm not quite sure what they
argue from that perspective yet, but you can rest assured
there's somehow going to say in a response to this
that myself, the Bayer or Renter, is really being benefited
by this particular situation of partnership as well.
Speaker 1 (05:32):
Yeah, in full disclosure, I live in d C, so
I don't know if Midtown Manhattan has actually saw it.
After I'm sure Justin will tell me some neighborhood in
Brooklyn is or Queen's is where you should actually be at.
Speaker 3 (05:43):
But anyway, thanks Justin. I really appreciate it.
Speaker 2 (05:46):
So, yeah, you bet.
Speaker 3 (05:47):
Let's go to Matt.
Speaker 1 (05:48):
Matt, we have a question on TikTok. Now, the official
question I'm going to ask you is, you know, there's
a lot of market participants to want to know about
what President Trump's deal is that he's orchestrated with TikTok.
Speaker 3 (06:00):
Can you explain the deal?
Speaker 1 (06:01):
And I guess the unofficial question is what assurances can
you give middle schoolers across this nation, including those in
my household, that are interested in TikTok? You know, will
they eventually see TikTok going away? Or what is this
new app that I hear folks saying that we're going
to have to download to access this.
Speaker 4 (06:21):
Yeah, I've never been more popular with my teenage kids
since I since I started covering this case. So good questions,
and I don't think we have clear answers yet when
you look at what President Trump announced last week. He
signed an executive order one week ago today that said,
(06:42):
you know, saving TikTok while protecting national security was the
title of the document. And I think there are real
questions about whether this will resolve the matter, whether it
complies with the law that remains on the books that
Congress pass that banned TikTok as of January nineteenth. So,
(07:04):
just stepping back a little bit on what this does effectively,
all we have here is a framework agreement that wasn't
publicly released that that would be driven by implementation agreements
that aren't signed yet. So, but what those would do
in theory was wuld would create a new US based
(07:25):
joint venture to operate the app in the United States,
and byte Dance would only own twenty percent or less
of that new operational entity. It would not divest actually
its TikTok subsidiary TikTok us that would all remain owned
(07:46):
by byte Edance, but some operational piece it would drop
its ownership interest to twenty percent. And then there's real
questions about the algorithm and how the thing is going
to work the Trump You look at Trump's executive order
and it really doesn't say much of anything about how
(08:06):
the algorithm is going to be updated or maintained going forward.
It talks about monitoring by trusted partners of the algorithm,
but the law, if you look at it, says there
can be no operational relationship between byte dance and any
new entity with respect to the algorithm. And so I
(08:31):
don't know why we would need monitoring of the algorithm
if it's controlled by a US entity. So real questions
there about are we really complying with this law that
required a divestiture that byte Dance wouldn't control the new entity,
and it was also wouldn't have any operational relationships. So
(08:54):
Trump also extended the law for another period of time
into January up next year. So again kicking the can
down the road. And I'm not sure we'll we'll have
a real resolution to this and and and firm answers
about what TikTok's going to look like going forward yet, So.
Speaker 1 (09:12):
What's the next step in this process? So Trump signs
an executive order? Do they need to get the bankers
in now? I mean, is this this become then a
private transaction between Byte Dance and It's Oracle silver Lake,
who are the other is?
Speaker 4 (09:27):
Andresen I mean yeah, well, I mean we're None of
that was in the executive order. So we've had reporting
on on a lot of this, so we we don't
know those details about who who all is running those
that that joint venture, and we don't know how much
of it's going to be public next. He adopted this
executive order last week that says this is a qualified
(09:51):
divestiture under the law, and it's possible that they envision Hey,
this is all the public we're going to to do
any This is the most public we're going to get
on this stuff, and everything else is going to be
quietly handled, you know, behind the scenes in terms of
signing these these these agreements. It remains to be seen.
(10:14):
There is a way around that, which is that the
law says that any action under the TikTok law can
be challenged within ninety days of that action, and so
in theory you could you could you could see this
go before a court to say, hey, does this actually
comply with the law, and then we would have more
(10:35):
visibility into what these agreements say and what they do
and whether they are compliant. But so far we've seen
very little will from people to challenge the administration on this.
It's difficult to imagine how it was lawful for President
Trump to release letters saying that companies aren't violating the
(10:57):
law after January nineteenth. But they consistently written those letters
to the companies that host TikTok, and no one's challenged
those actions. So it's possible everyone's just going to let
this go too and just do.
Speaker 1 (11:11):
Those companies, in your opinion, still have legal risk if
there's a change administration.
Speaker 4 (11:17):
You know, I think it would be very difficult when
you have the President of the United States and the
Attorney General putting it in writing that you are not
out of compliance with the law. I think you would
have a really strong due process complaint. If someone the
(11:38):
next administration comes along and says, yeah, we got you,
you're not complying with the law, I think that's not
going to go very far. I think these companies are
probably protected by these letters that say you're not violating
the law. Where they wouldn't be protected is if someone
(11:59):
filed the lawsuit that challenged those letters and said, hey,
these these are not consistent with the law. Court a
court would then strike down those letters, vacate those letters.
Then those companies don't have protection going forward. I don't
think they're going to have They're they're they're going to
have a problem in the past with with with such
clear guidance from the administration saying you're you're not out
(12:22):
of compliance.
Speaker 3 (12:24):
No, that sounds good, Okay, thank you, Matt.
Speaker 4 (12:26):
Sure.
Speaker 1 (12:26):
So let's go to Holly from to talk about tariffs,
in particular furniture tariffs, because just this week we saw
two announcements from President Trump on truth social first was
first was dealing with tariffs on movies.
Speaker 3 (12:43):
The second one was tariffs on furniture.
Speaker 1 (12:45):
Now, Holly, I I read one of your notes back
in May about the movie tariffs, and you said weak
legal grounds, you know, and look as as a fan
of Hallmark Christmas movies that are mostly built in or
made in suburban Vancouver. I'm not exact for sure that
how that would work. But let's focus on the furniture
tariffs for today. What can you tell us about what
(13:06):
went in? Does President Trump have this authority? He is
the on and okay legal grounds with this and what
are the impacts that you're seeing so far?
Speaker 5 (13:14):
Thanks Nathan. So. President Trump signed an executive order saying
that effective October fourteenth, he's going to impose twenty five
percent tariffs on upholstered wooden products and kitchen cabinets, and
those go up to thirty and fifty percent, respectively as
of January twenty twenty six. And he's doing this under
(13:35):
section two thirty two of the Trade Expansion Act. What
that Act allows him to do is to impose tariffs
if his Commerce Secretary finds after an investigation that imports
threatened to in pair national security. And what he said
in the executive order is that the Secretary found that
(13:56):
the quantities of wood products that are imported are weak
in our economy and resulting in the threat of closure
of w wood mills here in the US and disrupting
product supply chains. So he says that the state of
the wood industry here in the US has makes it
unable to meet demands for wood products that are crucial
(14:16):
to national defense. So I've said these are on stronger
I llegal grounds than that tariffs he's imposed on worldwide
terriffs or are reciprocal tariffs. Those are terifts he's imposed
on an emergency statue called AIPA because two thirty two
explicitly mentions the word duties and has been held in
(14:37):
the past by courts to allow the imposition of terriffs,
whereas AEPA never mentioned the word tariff. And so as
some of you may know, those tariffs that the President
posed under AEPA, they were challenged in court, and one
of the arguments is, and that's still making its way
through the court system now is up on appeal to
the Supreme Court. The lower courts found that they were unlawful.
(14:59):
And so so what the argument was by the challengers
who challenge those AIPA terriffs was that that statue doesn't
even mention the word terriffs. That's different from section two
thirty two, which explicitly mentions the words duties. So that's
why I think they're on stronger legal ground, but they's
still subject to challenges. There could be procedural challenges, and
(15:20):
there could be other challenges. And I imagine that one
could say argue that the conclusion that would import threatened
to impair national security. They could challenge that contention. But
it does seem as though President Trump is being more
circumstanced effect in terms of the statues he's using to
impose the tariffs.
Speaker 1 (15:40):
So we're recording this on October second. You mentioned this
goes into effect October fifteenth. Do you think that there's
a chance that President Trump could walk these tariffs.
Speaker 5 (15:49):
Back October fourteenth. Yeah, I mean it's possible. He did
say in the Executive Order that they are subject to negotiation,
that he's negotiating with certain countries now, and that they
don't apply to certain countries with which he has a
trade agreement. So the EU has its own rate, they're
not going to be subject to these particular terrorists. The
(16:10):
UK has its own rate, So I can envision that
he may engage in negotiations that could change things, as
he has in the past.
Speaker 3 (16:18):
Yeah, exactly. I mean, it's yeah, it happens. It happens
quite a bit.
Speaker 1 (16:22):
So okay, thank you, Holly, really appreciate it. So, just
to finish things up, I'm going to give an update
on the government shutdown, because, as remember I just said
for the third time that we're recording this on October second.
Speaker 3 (16:36):
Congress is out.
Speaker 1 (16:37):
Today, they will be returning on Friday, October third, and
then Senator Thunis said that the Senate is going to
go home for the weekend, so we don't anticipate any
type of negotiation to take place over at the weekend.
The House Republicans aren't even here in town at the moment.
They are coming back on Monday, so we're not going
to really see any deal or any framework of a
(16:58):
deal come together until early next Now we're in a situation, though,
where I still think the shutdown could be resolved by
mid to late next week. That's under the assumption, however,
that we don't see unilateral moves from the Office of
Management and Budget to conduct widespread layoffs of federal government workers.
(17:18):
We've seen statements from russ Vote, the Director of the OMB,
to say, and I'm paraphrasing here that layoffs are imminent
and they are going to be widespread. And President Trump
has posted entry social that a lot of the earmarks,
or a lot of the clawbacks and recessions of approved
funding would be geared towards Democrat states for those for
you in New York and New Jersey, for example, we
(17:40):
saw eighteen billion dollars paused, and I would say paused
because I would argue that these were paused, not clawed
back from the Hudson Yards or sorry, the Hudson Tunnel
and the Second Avenue subway projects. So I think if
you don't see really that, if you don't see those
widespread layoffs or more additional massive claim back of Democratic
(18:01):
earmarked projects over the weekend, then I think negotiations can
take place and a deal can get done by the
end of next week. If you do see those things
come out, though, it could potentially push the Democrats into
their shell and say, look, we're not going to negotiate
with you. In terms of impacts, we always remind our
clients that there's three things to keep in mind. One
was headline risk. Now in the thirty four days shutdown
(18:23):
that occurred back in twenty eighteen, the SMP dropped significantly
about fifteen percent, before rallying by the end of the shutdown.
We didn't really see much of a market reaction this week,
but you know, shutdowns in the past historically haven't really
been all that big of a deal for the markets. Obviously,
there is a data question. You know, the Bureau of
Labor Statistics is not producing any data at the moment.
(18:44):
Neither is the Commodity Futures Trading Commission, neither is the USDA,
and so there's a lot of folks that just don't
have data at the moment.
Speaker 3 (18:51):
Now, if you are a Bloomberg subscriber, we would.
Speaker 1 (18:54):
Push you to this worksheet that our colleagues have created
over in core product called WA L eight lte wsl
alte go that will actually bring up a list of
all the proprietary and private data that we have on
the terminal. They can assist you with your needs while
we're in this data lapse. And then the last impact
(19:15):
is really economic impact, and our colleagues over Bloomberg Economics
have done in analysis it says that if this shutdown
lasts three weeks, that is when you're going to see
an uptake in unemployment, and that is when you're going
to start to see the economic impact from this. Because
federal government workers, there's about seven hundred and fifty thousand
workers that are furloughed. Each day, they get paid on
a two week cycle, and they get paid next Friday.
Speaker 3 (19:35):
That would be the first paycheck that they ultimately miss.
So again, I think the deal can be made.
Speaker 1 (19:40):
I think that deal would most likely just be a
unofficial handshake to say that we're going to have a
vote later this year on extending Obamacare subsidies. But at
the same time, I think this shutdown could potentially go
longer if we see those moves from the White House
in the Office of Management and Budget. So with that,
we're going to say thank you so much for listening today.
Really appreciate it. If you aren't on the terminal, if
(20:02):
you have any questions, please feel free to reach out
to us. You can always find us via our instant
Bloomberg Instant messaging system, or you can always just email us.
But again, we want to say thank you very much
for listening. We wish you a great weekend and hope
to speak with you soon.
Host
Elliott Stein
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!