Daybreak Holiday: Trump versus Powell, ETF Inflows, Antitrust in Focus
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Thanks so much for joining us for this special edition of Bloomberg Daybreak. The U.S. stock market closed for the Good Friday holiday. I'm John Tucker, and coming up this hour, a look at where the antitrust investigations against big tech stand under the Trump administration. We're going to speak with Jennifer Rhee, Senior Litigation Analyst with Bloomberg Intelligence. Plus, we have seen our share of market volatility so far this year. We'll go inside the markets with Eric Balchunas, the Senior ETF Strategist at Bloomberg Intelligence.

and Jess Menton of the Bloomberg Stocks team. But first, we're going to focus on the future of Fed Chair Jay Powell and what's in store for the economy amid the trade wars. We're pleased to welcome Bloomberg International Economics and Policy correspondent Michael McKee and Stuart Paul, U.S. economist with Bloomberg Economics. So the posting from President Trump said it all. Trump says Powell's termination can't happen fast enough.

Well, so much for Fed independence. Is it really if he's threatening? It sounds like a threat against Powell. Is he threatening Powell or threatening Fed independence or both? Nice Fed you got there. Too bad if something happened to it, right? In theory, he's threatening Powell. But does he really mean termination in the sense of I'm going to fire him? That's an open question because there are court cases right now.

about what power the president has to fire the heads of independent agencies. And while they don't exactly correlate to the Fed, there is a feeling that if the Supreme Court were to rule that the president has unfettered power to fire the heads of agencies, that he could try to fire Powell.

It all may be moot because Powell's term as chair is up in May of next year. So Trump could be just talking about him leaving as the Fed chairman. And it's still the independence of the Fed. We can go back to the next administration when the president had one of his economic people become the Federal Reserve chair. There was Arthur Burns. We know what happened there.

That's right. So, there's no such thing, famously, as a free lunch in economics. But if there is one thing that comes close, it's central bank independence. Countries that have independent central banks have lower, more stable inflation. Countries that are more heavily influenced by the political process, their central banks, when they're determined by political actors, when there are political appointees, when they have less independence, you tend to get higher, less stable inflation.

I think that Mike is right. This might end up just being a moot point and folks in the administration could encourage Trump

to just wait out Powell's term. And the real question is then, who would we end up seeing filling the Fed chair role? Would it be someone like Trump had rolled out as potential appointees in his first term, people like Judy Shelton, who would be a bit more hawkish? Or would it be somebody a bit more dovish, since so much of his proposed policies would require someone quite a bit more dovish?

If you'd like a great conspiracy theory, though, John, that would really fascinate the markets, suppose that Donald Trump does try to fire Powell and to a certain extent is successful. Obviously, the Fed would fight that. There is no opening on the Fed today.

to fill a governor's job. Powell would still be a governor of the Federal Reserve until January. In January, there's an opening. So he could appoint somebody who is the Fed chair-in-waiting. It is also possible that if Powell were gone, he could, as chairman, he could appoint that person, but the Open Market Committee that makes interest rate decisions is a separate body from the Fed itself. So the Open Market Committee could just

rename Powell as chair and you could have a chair designate for the Fed who is not the chair making decisions on interest rate policy. That's a really important and interesting point. We've had a little bit of an experience, a little bit of an experiment with Michael Barr, the former vice chair for supervision. Uh,

Of course, the administration, as it was coming into office, was eyeing who could take the vice chair for supervision role, someone perhaps a little bit more lenient on banks than Barr was. Barr preempted that by resigning his role as vice chair for supervision but retained the title of governor, to your point.

And what's what that sort of did was that it created an opening for the Trump administration to offer somebody up who's already a governor, in this case, Mickey Bowman. And in theory, the Trump administration, if Powell were to take that route.

lose his chairman's role but stay on as a governor, totally departing from convention. But if that were to be the case, it would be somebody like Chris Waller, currently a governor, who could step in and fill that chair role. Well, on Wednesday, speaking in Chicago, was the Fed chair, Jerome Powell, and here's part of what he had to say.

So it doesn't sound like there's going to be a Fed put.

No, and he addressed that specifically. He was asked, would you step in? And he said no, because... I should explain to everybody listening what a Fed put is. Basically, you're going to backstop the market if things really start to go haywire. The Fed, and this has long been their position, that the Fed doesn't interfere when they're

is money being lost in the markets because the markets are going down that's not their job but if trading is interrupted if there is a systemic problem if there are all sellers and no buyers as we saw there if there's a problem with the plumbing right he's going to come with the fed would do something to open open the pipes but uh no they're not going to rescue the markets and his suggestion that inflation is going to be worse because the tariffs are worse

Just tells the markets that the Fed's going to be very slow to think about cutting rates in the future, which is why we saw an additional reaction after the markets were already down on Wednesday. So, Stu, you want to weigh in on that? Powell says, you know, maybe inflation, maybe employment are going to be impacted by the tariffs. And I got to wonder also if that's kind of what set President Trump off.

It's interesting to see the markets in the context of the Fed put. Right now, markets are pricing at about 90 basis points of cuts this year. We think that's so off from reality. As you heard, it sounds like -- Off in which direction? That's way too many cuts that are priced in, in our view. As we heard from Chairman Powell, yes, we're likely to see slower growth, we're likely to see some inflation pressures. The question would be, which does the Fed care more about?

In the same breath, we're also hearing from the chairman that we're very close to the full employment, or maximum employment, that the Fed is charged with trying to achieve as part of its dual mandate. And if you have upward inflation pressures, then it's likely to be the case that the Fed's going to maintain its higher-for-longer position.

So we don't see a Fed poll looming. We see 90 basis points of rate cuts priced, and it looks a little bit crazy to my eye. What's the data been telling us, the hard data and even the soft data, which measures, I guess, sentiment? It's really hard for the Fed right now because the soft data is awful and the hard data is so far so good. Powell said Wednesday, labor market's in good shape. Thursday, we got a decline in initial jobless claims that sort of

suggests that that is the case. But we also saw the Philadelphia Fed report a collapse in business confidence in their district during the month of April that portends bad things for the economy. But also, they reported that inflation expectations went up among manufacturers in the Philadelphia region. So they're kind of caught in between. The question is,

Does all this negative sentiment actually change business and consumer decisions? And that'll take us a couple of months to see. So the Fed, even if they were going to have to move one way or another, they're not going to have evidence until we get to maybe July, I think.

that would tell them one way or another what's going on. Just tangentially, since you mentioned the Philly Fed, who's Anna Paulson? Anna Paulson is the new incoming president of the Philadelphia Fed. And this is somebody who's not picked by the president. No, the board of directors of each bank picked their own. The Fed Board of Governors has veto power, but they can't

other than that influence it. She's the research director at the Chicago Fed. Patrick Harker, the current president, has to retire under Fed rules at the end of June, so she'll take over July 1st. All right, Stu, I'm going to ask you to sort of school us on tariffs.

The president has said so far it's brought in billions, the tariffs. Who pays tariffs? I mean, remind everybody when the stuff comes in from, I don't know, wherever, China comes into Port Newark, Elizabeth, not far from here.

the guy who picks it up is the guy who pays the tariffs. Essentially, yes. The real question is... The tariffs aren't charged in China as they leave the port by some anonymous U.S. official. You pay it here. Sure, but just like all taxes, the real question is who bears the incidence of the tax or who bears the burden of the tax.

Does the imposition of a tax take more out of margins, or can companies then pass along higher prices to consumers? Separate from who has the legal obligation to cut the check for the tariff, what really matters is the incidence of the tariff and how much firms can pass along higher input costs to consumers.

We see from surveys, like the PMIs, that firms are facing higher input costs. They report that they are trying to pass along higher prices. We see that in the regional Fed indices, like we saw from Philly earlier last week.

But the main question is just how demand-destructive are tariffs, how demand-destructive is uncertainty, and how much can tariffs get passed through to consumers. Basic Fed models would suggest that a level of the average effective tariff rate would create an additional two percentage points of core inflation.

Personally, I think that that's probably a little bit high because I do think that the degree of demand destruction that comes from the average effective tariff rate being above 20% is going to limit the extent to how much firms can pass along those higher input costs.

And Mike, one of the stated purposes is to reshore, bring employment back to the U.S. to make all this stuff that's being made over. It seems to forget the idea that it's basically labor arbitrage where stuff moved overseas to be produced in the first place because it's cheaper to do so overseas. Not to mention the fact that with productivity gains, it takes fewer people here in the country

to make the stuff that we used to make. Yeah, and there's also the cost of shipping you have to put into this as well.

The cost advantage in terms of labor is starting to fade as other countries raise their living standards, but it's still an important input. But the problem that you have here is that nobody knows what Donald Trump is actually doing. We don't know what tariffs are going to be put on, and we don't know how long they'll last, and we don't know how he'll change his mind. So if you're a company...

planning a major expansion and investment in some sort of factory, you don't know whether it's going to be worthwhile or not. So it's going to really be hard to justify moving in. And that is going to hold the president back. Now he's talking about

making deals with trade deals with countries. That's not going to bring any factories back. All right. Thanks to Bloomberg International Economics and Policy Correspondent Michael McKee and Stuart Paul, U.S. economist with Bloomberg Economics. And just ahead, a look at how the market volatility is impacting the retail investor in the world of exchange traded funds. It is 20 minutes past the hour. This is Bloomberg.

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Welcome back to this special edition of Bloomberg Daybreak. I'm John Tucker. The U.S. stock market closed for the Good Friday holiday. The ongoing tariff saga has made for historic moves in the stock market. And for a look at how it's impacting the retail market, the exchange-traded fund industry, let's bring in Eric Baltunis, the Senior ETF Strategist at Bloomberg Intelligence, and Jess Metten, Deputy Team Leader of Equities at Bloomberg News. Hi, guys. Thanks for being here.

Hey, where is money flowing these days? Believe it or not, in the U.S., a lot of investors who are using ETS, putting that money into U.S. stocks. So risk assets. I would have guessed just the opposite. Everybody's hiding under a rock.

Well, cash like ETFs and gold have done better than normal. But they haven't interrupted the sort of flow-a-thon, as we call it, into U.S. stock ETFs. So if you were to look at the stocks on, I don't know, any period this year, you're going to see stocks, ETFs like VU, which is the Vanguard S&P 500.

IVV, which is the BlackRock S&P 500. The Q's are in the top 10. It got some little bit of value and growth in there. Explain the Q's for everybody, because you have to explain it to me. S&P 500 is the 500 biggest stocks. The Q's is the NASDAQ 100. Just stocks that list on NASDAQ, and they tend to be more tech and innovative. It's a little more high volatile, and the NASDAQ 100

Over time, it has done way better than the S&P, but it can go down further in a sell-off, and it has. Its drawdown has been rougher than the S&P, but people are still buying it. We've got about $10 billion into both the Q's ETF. So I think what's going on is this.

Over the last 15 years, the trading crowd has been rewarding for buying the dip. And so they are buying the dip still. And there's been a couple of days in this tariff tantrum where the dip has worked. You know, there's like a huge run up. And so those, you know, quick boosts up in inter inter these down weeks or days are going to keep them coming back. And then the retail crowd, the sort of buying holders, I think a lot of them

over the years have just thrown up their hands in terms of market timing. I think they're just like, I can't time this stuff. I mean, after COVID, like who could have timed the Fed buying ETFs and the market rallied and had a good year. So I think a lot of them are like, I'm not even, I'm tuning out. I got a good cheap ETF. I'm just going to dollar cost average until the sun goes down and I retire.

And that's that. And so we call that the Vanguard put in that in a market that's going down, there's the Fed put that they might step in. Now there's the Trump put that he might reverse. But we also have the Vanguard put. There's just a bunch of retail investors who are just going to buy no matter what. And it does help buffer these downturns a little bit.

Jess, are you seeing kind of the same thing? What's your perspective sitting at the equities desk? That's right. We like to look at the individual stocks as well that I'm sure Eric looks at too. And Emma Wu over at J.P. Morgan, she heads up their derivatives strategy and she always collects a lot of great data for individual shares, especially when it comes to retail specifically and what they're buying. And we've begun to see more of a divergence here in two particular popular names that we constantly talk about. So if you look at the inflows recently into Tesla shares,

those are still going into records, whereas the outflows from NVIDIA, those are reaching record levels too. So you're seeing those going in opposite direction. The reason it's important is because typically when I'm talking to fund managers, they're keeping a close eye on their clients and what, especially on the retail side, what they're willing to let go of and what they're not willing to let go of, because you can use that as contrarian indicators. Because for a while, especially the last two years of the AI boom, of course, people were going to continue to pile into shares like NVIDIA. And it's still a

course well off of its record reach just earlier this year, because it's been on up and up the last few years. But now you're starting to see that shift a bit with retail versus Tesla, though. People are still piling in despite that stock being well off of its all-time high back in December. That's what you're seeing, a divergence there. It's going to be interesting to see how that impacts its stock price, because typically people -- and Eric can talk more about this -- people like to talk about when retail throws in the towel, if that can be contrarian and that's the bottom overall for the market. But of course,

I'm sure he remembers, like, in the depths of COVID in 2020, everything happened so fast where retail investors didn't have time to make a lot of changes. And then they ended up not necessarily throwing in the towel and getting that call right. You also look at who's investing in their own company, corporate insiders. Yes.

What are they doing in these troubled times? And the reason we look at corporate insiders, because there's a variety of reasons that they could still buy. But if you have a situation like this, especially with the broader market in a correction, and even the NASDAQ 100, obviously, in a bear market, you want to see what are corporate insiders doing? Are they still continuing to buy more of their stock? Because that can give you confidence of what they see for their businesses as well as the economy.

You're actually seeing that happen right now. Corporate Insider is still scooping up shares of their own companies at the fastest pace in about 16 months. That would have been when the S&P was last in a correction in the fall of 2023. That is something in the nearer term that's giving investors and portfolio managers more confidence that Corporate Insiders are doing that. Hey, guys. Active versus passive investment management. That's been a debate going back and forth for years and years.

In times like this, Eric, let me start with you. Do the active managers perform better than if I stuck my money into just an index fund? Yeah. So what's interesting is it depends on which asset class you're talking about. David Cohen, who covers active and mutual funds for us, did a study.

He just looked at the crazy week, you know, the week where everything just was wild and the market was down a lot. And he just wondered how active it did. And what we found was interesting. On the stock side, the beat rates, the outperformance of the index rates doubled the average. So stock pickers over the last couple of years, they've not been able to sort of buy the MAG-7 at the same rate as the benchmarks.

So they've been lagging because the Mag 7 has done so well. But that actually pays off in the sell-off when the Mag 7 goes down worse than the benchmark. And I think it's because stock pickers tend to be looking at fundamentals, and some of the valuations of the Mag 7 were getting high, and they were like, I need to buy more value.

And that allowed them to outperform during this rough patch. On the flip side, the bond investors who normally outperform, they actually got their beat rates cut in half because bond investors, they actually benchmarked against indexes that are weighted by debt.

Whereas the S&P is an index weighted by market cap, so it has momentum in it. But bond benchmarks are not that good. They're weighted by debt. I equate it to playing the Washington Generals, which is the team the Globetrotters play. It's just a poor, easy-to-beat-up team. All you do is add a little high yield or international, and you're good. And so what happens, though, in a crazy sell-off where you have treasuries doing good,

the ag actually, or their benchmark beats them. So they actually have more risk typically. And then you hit a sell-off, they underperform more. So it is really an interesting dichotomy between the two, but,

But for both of them, the problem with outperforming in a rough market is people don't care as much. We found that if you beat the market, like the market's down 20% and you're down 15%, it doesn't do a lot. It's unfortunate. You should get rewarded for that. That said, if you can go down 15% when the market's down 20%,

That could help you when the market goes back up over a year or two. Now you've got some credits from beating it when it was down, and maybe you outperform. You're up 10, the market's up 8. That's when it can pay off. But right now, all the active stuff, bonds and stocks on the mutual fund are seeing outflows significantly.

So this outperformance doesn't matter in the short term. It could matter long term. But it's interesting the way it's different depending on which asset class you look at. You're listening to Bloomberg Daybreak. I'm John Tucker. And we're talking with Eric Valchunas, Senior ETF Strategist at Bloomberg Intelligence and Jess Menton, Deputy Team Leader of Equities at Bloomberg News.

Jess, you've been writing about the death cross. That's ominous. What is that? Okay, I know it sounds ominous, but I'll break down why it not necessarily always is, and typically what would happen in this. And you can use this for indexes as well as individual stocks. So, this particular explainer that I -- Dumb it down for me. Come on. You can do it. Exactly. So, this is what happens when the S&P 500's 50-day moving average -- so, it's shorter-term moving average --

crosses below its longer-term 200-day moving average. So, when stocks are in an uptrend, typically you wouldn't see that happen like the last two years of the AI bull run. But when you begin to see a correction like this happening, that's when you see the shorter-term moving averages move below its longer-term moving averages. So, typically, people want to point that out because it sounds like doom and gloom because that happened, say, during the dot-com era in 1999. Also, in October 2000, right after the stock bubble burst,

earlier that year, that March. You also saw it happen in December 2007, right ahead of the global financial crisis. And of course, it happened in March of 2020. But again, I want to point out that that is a lacking indicator. We're not calling it a good indicator? We're not?

Well, it depends on how severe an economic downturn is. Because if you go back since the 50s, this has happened over 40 times. So people want to point to kind of the handful of times that it has happened. But even in COVID, when it happened in March of that year, it happened on March 30th, whereas the stock market bottomed on March 23rd.

So, it doesn't always work. Since 1950, the S&P 500 had posted a median loss about 0.7% a month later. But if you look three months out, it was about a 2% gain for an index, and a year later, 10% on average. So, really, what hinges on is, is there a more severe economic downturn or not? We don't necessarily know that yet, but that's why people watch it, because it depends on how much further pain could be happening. So, sometimes it's worked, other times it hasn't. Alright, so, if you want to preserve your money, Eric ...

It sounds like the death cross is here. Where in the ETF world do you put money to preserve your cash? Yeah, some of the names for the technicals are pretty clever. The golden cross, I think, is what you want to see. I think that happens hopefully down the road. We'll get a golden cross. But yeah, so what we found is even though there's a lot of buying of U.S. stocks like normal, what you do find is

The cash-like ETFs, so, SGOV and Bill, these are the second and third best-selling ETFs this year after VOO. SGOV and Bill do the same thing, which is, they're probably the two most boring ETFs, one to three-month treasuries. So, it's literally like a money market fund. So, a lot of people are hiding out. That's probably the safest, most organic way to hide out when things are rough, in my opinion. There's no catch there.

There's some other things people do to hedge. One thing they do, they might use a one-time inverse ETF like SH. That we have seen people do, but there's a little bit of volatility drag that can corrode your investment long-term. So you have to watch that thing. It's not totally natural. Some other people are looking at treasuries, long-dated treasuries, but they had a

a couple days and periods there where they went down with stops. And this is something that's an interesting point, is that bonds, especially as you go along the curve to the mid and the long-dated section,

People buy those thinking that's the 40 to hedge their 60, but it's become less reliable, especially in 2022. Bonds were down 13%, stocks were down 18%. And so what we found is a lot of people use buffer ETFs now, which are ETFs that structure products. They use options, basically, to target an outcome. So you buy one of these, and it will tell you you're only going to get a 5% no more. Or you take the first 10%.

or you know we'll cover the first 10 percent anything beyond that is on you or hey no downside hedge and every one of the sort of situations you have to give up some upside so it's basically an option strategy package into an etf but people like these because unlike bonds which can be shaky or these other hedging instruments which have like technical things that corrode your money eric thanks very much appreciate it eric baltunis the senior etf strategist at bloomberg intelligence and jess manton stopping by the studio today at bloomberg news

Up next, the latest in the government's effort to break up Facebook owner meta-platforms. 38 minutes past the hour, this is Bloomberg.

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where money means more. And thanks for joining us for this special edition of Bloomberg Daybreak. The stock market closed for Good Friday holiday. Hi there, I'm John Tucker. Well, big tech has been in the crosshairs of U.S. antitrust agencies, and so far it's continuing under the Trump administration. Let's get the update on where all these cases stand. And we bring in Jennifer Reese, Senior Litigation Analyst with Bloomberg Intelligence, to go over it with us.

Well, let's start with the courtroom drama. It's got it all. Billionaire witness on the stand, smoking gun emails, paranoia, and even cutthroat competition. We're talking Mark Zuckerberg's Meta on trial. It's the Federal Trade Commission, Jen, trying to break up Meta and force it to sell Instagram and WhatsApp. Right. Why is the government going after Meta? I mean...

I thought they were kind of hands-off in the Trump administration. Well, I think that's what people expected to happen, but we're not really seeing very much evidence of a hands-off approach when it comes to big tech yet.

You know, Meta was first sued during the first Trump administration. And what the FTC is saying is that these acquisitions that Meta made now back in 2012 and 2014, have you, of Instagram and WhatsApp were anti-competitive. That the only purpose for buying the companies by Meta at that time, Facebook, was to just take out a potential competitor.

That they were very concerned about both of these apps, that they would eventually grow to become something more like Facebook, and then possibly supplant them in the market. And that they had a strategy to either bury a competitor or buy a competitor in order to eliminate that rival. And that's what they did here. Well, I mean, there's no denying they brought up successful rivals. Sounds to me, on the surface, case closed.

Well, the interesting thing is that's what makes this case so difficult because based on the documents you mentioned, these hot documents we've been hearing about, it does look bad. Zuckerberg's emails, the quote-unquote smoking gun. What did he say in those? He said it's better to buy than compete. You don't really get more straightforward than that in terms of supporting the FTC's case. But here's the thing. Even if the intent was bad back then, you have

to prove more elements than that to win a monopolization case. It's more than just that intent. You have to properly define the sphere of competition. You have to prove the company as a monopoly. And you have to show how consumers were harmed. And you have to show that that harm was not outweighed by the pro-competitive benefits. And look at what Meta did after it acquired Instagram and WhatsApp. It put in a lot of resources to what were really fledgling companies at the time that they were acquired. And they have a good argument here that it was pro-

competitive. We may have bought them, but we didn't bury them. We grew them. And the judge in this case has to consider also something called network effects. Basically, if you're on this platform, they did all this, it's really hard to go anywhere else.

I mean, what are you going to go to a smaller platform that doesn't have as many users? You need the users. You need to be on it. If a lot of your friends are on it, there is a network effect. But the judge, you know, some of the evidence that's come out is that things have changed over time with TikTok and with Twitter.

X and with YouTube, and that we're moving a little bit away from that network effect need because people are multi-homing and moving around and sharing data and videos and information in a different way. And the judge even questioned whether network effects are as important today as they were 10 years ago.

But wait a second here. I just remembered the government approved these acquisitions in the first place. Very good point. They did. So this would send a difficult signal to businesses. Now, legally, they have the right. The laws say the Federal Trade Commission or Department of Justice can go after any deal, any time. You can change your mind.

They can change their mind. And they've said, look, times have changed. The industry was different back then when we first looked at these deals. And they did. It was about a six-month investigation, I think, into the Instagram deal before they allowed it to close. There's no jury here? I mean, how does this work? Just a judge. It's called a bench trial. It is Judge Boasberg, who's been in the news for other reasons. Oh, like this judge doesn't have enough on his plate? He doesn't catch a break. Yeah.

So it'll be his decision, and he'll first make a decision about liability, whether they're actually guilty, whether the FTC proved its case. If that's the case, he will move on to remedy and decide what is the right remedy. And, Jen, we also have two lawsuits against Google Parent Alphabet. On Monday, we're going to get a remedy on search because there's been a ruling they were found guilty, so they're going to remedy that coming up.

Thursday, we actually got a decision on liability. This comes in respect to the lawsuit that's focused on digital advertising at Google. Tell us about that. What happened? Right. Well, you know, that one was unexpected. This decision on liability was expected a few months ago. And when it didn't come out, everyone was wondering, well, when will it? It came out on Thursday, and it was a partial victory for the Department of Justice.

These products that the Department of Justice had challenged are very complicated. There are a series of products that Google has that connect digital publishers and advertisers together. And so they're all software, essentially. And a couple of them are on the publisher end and a couple of them are on the advertiser end. And what Google was basically alleged to have done is sort of manipulate the whole process.

because fees are taken out for each of these products that are used so that it keeps publishers and advertisers within their whole supply chain, right, to place an ad on a website. So what this judge decided was that Google was found liable for monopolization of what's called the publisher ad server. So it's one of the products on the publisher side. Google actually bought this product. It was originally called DoubleClick.

And when Google bought DoubleClick, it obtained this product. Also, for monopolization of the ad exchange market, so that's one of the advertiser sides, it's an exchange where they can actually come together to buy and sell ads, and for tying the two of them together. What that means in antitrust is conditioning access to one,

conditioning the access of one to get the other. And that is illegal under the antitrust laws. So that came out on Thursday, and what the judges said is, okay, here's my decision. The next step is to have a hearing to decide what the proper remedy is going to be. What are we going to do? What do you suppose the proper remedy with this

end of the lawsuit? Well, you know, like several of the government lawsuits against the big tech companies, they will seek divestiture, forced asset sale, as they're doing, FTC's doing with Meta, as the Department of Justice is doing with Google on the search case that you mentioned. They will seek that. I don't think that they'll get that here. And the reason I don't think so is because I believe judges are

are really looking for the most straightforward and kind of non-intrusive way of remedying a problem. And so if the problem is this unlawful tying, let's say, they're told, you have to stop this. You have to make access unconditional. You can't say you must use one in order to get the other.

And again, the decision only recently came out, so I haven't had a chance to digest it yet, looking at hundreds of pages. But whatever it is the judge found that Google is doing that monopolizes the publisher ad server, it's really, she'll really just say, you have to stop doing that.

That's more likely than a divestiture. Okay, let's move to the other case in which they were found guilty with respect to the search engine. Are they going to have to get rid of search? Google search? I don't think so. So what's starting on April 21st is a hearing also on what the proper remedy should be since a liability decision was made. And this was about Google paying other companies. Chrome, I should say. Yeah, Chrome, right. I call it just Google search, but.

Google was paying other companies to install Google search as the default behind other search engines and at other internet access points and various devices. And basically it locked up all the distribution points for the use of a search. And so rival search engines couldn't get in there. And the judge said these default agreements are illegal. So as I said,

If you're looking at judges that are going to do the most straightforward thing, in my view, what the judge will say is you cannot force this exclusivity anymore on all these third parties, on Apple, Samsung making Android devices. And instead, you have to, you know, you can't pay them anymore to put your search engine exclusively in those positions. There are other cases, too, when it's Apple, Amazon, Live Nation. Yes, yes. Visa. Oh, Visa, okay. Yeah, Visa, you know.

It's the most active that the government's been in 30 years in terms of going after big companies for monopolistic conduct. So it's really pretty remarkable. You know, the last one was Microsoft back in the late 1990s. Oh, right, yeah. And sort of a smaller case against Qualcomm by the FTC in around 2017. Right, the Apple case... No, I get it. Sorry to interrupt. I mean, I get with the Trump administration...

And social media, they say it's biased against conservatives. I kind of get that. I don't understand the whole climate, though, why it hasn't changed under what we thought was going to be more of a laissez-faire administration when it came to cases like this. Well, I think.

that there's always been this anti-big tech sentiment amongst mostly the populist part of the Republican Party. You know, you have J.D. Vance who praised Biden's antitrust authorities saying he thought that they were doing a good job. And it's for a couple different reasons. I mean, the alleged...

Censorship of conservative content is one of them. But I think in some respects, big tech is also kind of considered leftist organization that push liberal ideas that this administration doesn't really agree with. And I think the intent is to continue to be aggressive.

Are these other cases strong in your view? No. I actually don't think the case against Apple or Amazon that you mentioned, both very slow moving, are particularly strong cases. And for those reasons, as those litigations develop and move closer to trial, I do think there might be some possibility of settlements there.

Explain everybody, give us sort of a primer. When we're talking about antitrust cases, anti-monopolization cases, it is both the Federal Trade Commission and the Justice Department that are in on this. They bring separate cases, they work together. How does that work?

They do. They both have authority to enforce the antitrust laws. And what happened, we understand in this case, is that several years ago, I think this was during Trump 1.0, the agencies did get together and they kind of divided up the big tech companies and FTC took Amazon and...

and took Meta, and the Department of Justice took Google and took Apple. They started investigations of the companies, which then culminated in these litigations. But that is how they work. They tend to talk to each other, say who will take on responsibility. They do the same thing in the merger space. And who are the personalities at the FTC and, well, beyond the Justice Department, beyond Pam Bondi?

Well, we have an interesting situation at the Federal Trade Commission now because it is technically supposed to have five commissioners, only three of which can be from one party. So normally with a Republican president, you'd have three Republicans and two Democrats. But President Trump just fired the two Democrats. So at this point, we have only three Republicans that are running the commission. And it looks like it's going to be that way for some time. The two Democrats have filed a lawsuit saying that this firing was illegal. But I

obviously those things take time to work their way through court. We know about all these cases that you just went over. What's next? Well, I think at least in terms of new monopolization cases, I'm not so sure anything's going to come along quickly because first of all, you know,

Trump's enforcers took over the FTC and DOJ with a lot of workload. They inherited a lot of cases. They are resource constrained. They've been resource constrained for many years, actually. They can only bring so many cases. And if more mergers begin to be notified and filed, they're also going to have those that they're going to have to review, possibly negotiate settlements, possibly even challenge deals they find to be anti-competitive. So I think, at least with respect to the monopolization space,

These are all going to play out. I don't think we're going to see very many new cases.

Our thanks to Jennifer Rhee, Senior Litigation Analyst of Antitrust with Bloomberg Intelligence. We'd also like to thank Eric Baltunis, Senior ETF Strategist at Bloomberg Intelligence, and Jess Menton, Deputy Team Leader, Equities at Bloomberg News, as well as Bloomberg International Economics and Policy Correspondent Michael McKee and Stuart Paul, U.S. Economist with Bloomberg Economics. We'd also like to thank you for listening. I'm John Tucker. Stay with us.

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