Court Blocks Trump Global Tariffs as Nvidia Lift Markets
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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. No one better than Anastasia Amoroso, Chief Investment Strategist at ICAP, who is trumpeting large cap growth. Participate.

when it was a very lonely call. Let's recapitulate right now. I'm hearing people come over to the Amoroso side. Is it still large cap growth in tech? Look, I think so. I think back in March, we were talking about the sell-off being temporary. And of

course, you know, we're now in late May and here we are, the S&P is up. And actually, we talked about software and software is up. AI software in particular is up about 12% for the year. So, yes, I think the reasons are still plentiful to continue to stick with stocks. And, you know,

You know, Tom, one of the things you have to do is you have to look at the economy. And while the sentiment around the economy fell apart, the hard economic data never did. So as a result, we're still looking at 2.3% GDP growth this quarter when everybody was worried about the tariff impacts. So that's the first thing. The second thing is,

the determination you just heard from Peter Navarro to cut those deals and continue to negotiate is absolutely there. So as long as that's the drumbeat, then I think we have to discard any sort of data that goes against that. And then the last thing I would say, Tom,

you know tomorrow we get the core pc inflation report which is projected to be about two and a half percent and whether it's oil prices that are lower whether it's wages that are lower all of that is supportive so i still think investors are not tapped out it's not max bullish by any means so yeah i think we add here ivan brought up the three point x trillion of cash ball out there yeah yes it's always been out there i mean earlier this year it was

Out of the U.S., out of cyclicals, out of tech, now it seems to be, if I look at the S&P 500, if I look at NASDAQ, it seems to be that trade's getting reversed here. People are coming, investments coming back to the U.S., back into cyclicals, back into tech. Was it just a...

What was that? Well, there's a lot of discussion around that. And first of all, the month of May has all been about these stark reversals back into the U.S. tech and back into the U.S. and back into cyclicals. But if you actually look at the performance here to date, it's the defensive sectors like utilities, for example, that lead the S&P. They're up about 5% or 6%.

The semiconductors, for example, are down about 5% to 6%. So I don't think it's actually too late for this rotation trade. And look, we were never in the camp of the US exceptionalism being over. Because what's not over, for example, is the fact that we have one of the most constructive tax policies relative to our developed market peers. The fact that the corporate tax rate in the US is 21%,

And with some write-offs, maybe the effective one is even 18%. That is a very constructive environment to do business in the United States. And obviously, that's what the administration is trying to foster through tariff policy as well. Do we have to bring the valuation discussion back on the table? Because, boy, when the market sold off, a lot of folks are saying, wait, 18 times earnings, I'm going to go in and buy this thing. But now we're back...

you know, above 20 times, how do you think about earnings? Because there still may be some earnings risk in this market. Right. So a few weeks ago, we sort of had, when we didn't know what is likely to happen with tariffs, we sort of had this binary risk. We either have to price in a recession and therefore recessionary earnings, which could have taken us, well, it has taken us as low as $5,000, but could have taken us lower if we also had to assign a recessionary multiple.

Now, we don't have to assign a recessionary multiple, and we actually have to focus on the earnings not only this year but next year, which are expected to be around $307. So if you apply the existing multiple to that, you actually do get north of $6,000 on the S&P 500. And that's why, to Tom's point, I say large cap stocks are certainly worth staying with.

What does free cash flow look like in use of cash? I mean, back when you were lonely and correct, the answer is the free cash flow came in, and I'm hearing a lot of fancy, well, it's not going to be this, this first, second derivative, da-da-da-da-da. Do you see sustained free cash flow by the market leaders?

I mean, look, I do. And the use of free cash flow, I think, certainly would benefit the share repurchases and buybacks. And Tom, that's what we're seeing in the market. We actually have some of the record authorizations for corporate buybacks. And that is such a strong presence in the market as well, which is why I say market participants are not tapped out. It's individual investors, it's hedge funds, it's CTAs, but it's also corporates buying back those shares.

Look, the beauty of the setup, Tom, is that corporate margins are near highs. And so there's a lot of room to absorb the potential negative impact of tariffs. Just quickly here, how lonely do you feel now? Is everybody in the AMRO so poor?

I think it's sort of a pretty lonely call. There's a lot of fear out there, right? You know, I still think there's a degree of fear out there, but I'll just quote these stats. You know, back in April, you had about 66% of investors that were bearish. That is not the number today. It's probably closer to 30%. Wow. It's a big reversal. Wow.

A couple of weeks ago, you probably had only 20% of investors that were bullish. Today, that's about 37%, but it's not 50. It's not half of the investors that were in the bullish camp to start the year. So I think we need a few more to join the party. Don't be a stranger. Come back again. Too short a visit today. Anastasia Amoroso with iCapital. She's been courageous about long in the market for years.

If this government spending in defense goes towards things like R&D that have dual-use civilian purposes, you could get spillovers that actually end up enhancing productivity in Europe and so have a more long-lasting impact on growth.

To learn more about the intersection of national security and global trade, subscribe to PGM's The Outthinking Investor in your favorite podcast app. AI is redefining what's possible for your business. Are you up for the challenge? Microsoft is helping leaders like you get AI ready faster with unified data and simplified platform management, unlocking up to 150% improved output.

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Now joining us, Dee Ives. NVIDIA's not Cisco, right? It's almost an insult to NVIDIA when you say, look, because the reality is that

It's a fourth industrial revolution, and it's being led by godfather of AI, Jensen and NVIDIA. There's only one chip in the world fueling this. And that's why I believe $4 trillion and eventually $5 trillion is where we're going to see for NVIDIA. Okay, in the Ives' perspectives on this, page 42, risk factors. What's the risk factor for the certitude this thing's going to work out? Look, I mean, when you think about China, and obviously that's all factored in here, I mean...

anything that gets a little positive in terms of moves on trade and tariffs between us and china is ultimately that that to me right now the biggest risk is just china and i think jensen called it out shot across about trump administration you're essentially giving away the china business because of the h20 to huawei and that's the biggest risk but tom it just comes down to like

It is Jensen and NVIDIA's world. Everyone else is paying rent when it comes to AI. So what was the biggest takeaway from the earnings last night? The stock's up 5%, 6% this morning. What's the street taken away from last night? It was a staggering quarter in a bullish way relative to the demand. I believe right now demand's out, shipping supply 8 to 1. Demand's out, supply 8 to 1. 8 to 1. Wow. So where does...

this company go what does nvidia do now to kind of take advantage of that demand out there it's when you think about autonomous robotics physical ai eventually keen with a robot you know in in his in his palace you've been talking to mike hey look this is the only way it's fueled is by nvidia so to me now the the ai revolution coming to middle east side

sovereigns, they want to be online. - It's on a unit basis. They're selling these things, right?

Do you have a linear, I mean, I got 77% up free cash flow. These numbers, we've never seen this. How do you extrapolate the unit growth into the future? Forget about price, forget about tech boys with their fancy shoes and you going out to all the conferences you go to. On a unit basis, is it a linear extrapolation?

Look, it's unprecedented in terms of what we've seen. Granted. But if you look, it's linear, but to the point that right now you only have 3% of enterprises in the U.S.,

that have actually even gone down the AI path. So when you think about the demand trajectory and where we ultimately see this playing out, I mean, you will be on a trajectory to $10 an earnings time. Okay, Cincinnati, Paul knows it cold, Procter & Gamble, what in God's name is Bella Balsam Shampoo? What are they gonna do with AI?

They're going to look at marketing penetration of customers. They're going to look at all their data, probably 70% of it that basically they've not analyzed. And they're going to come up with 8, 10, 15 use cases for how AI agents could be deployed, which is bullish from Microsoft.

bullish or messy of AI Palantir, bullish ultimately for the rest of the food chain. Well, I looked at the chart yesterday. I mean, the quiet story at Q2 is a moonshot, and Microsoft may be record highs this morning. Yep, yep. So NVIDIA expects revenue of about $45 billion in the second fiscal quarter, despite new export restrictions costing about $8 billion.

That's a headwind. Okay, but let's just talk Apple. And this is why the stock's up. Apples to Apples Street, which is say April 2nd, you know, liberation day didn't happen. Streets at 48 billion. Yep. Okay, Apples to Apples.

it would have been 53. Gotcha. A 5 billion. So Paul, that to me, it's a headwind, but that speaks apples to apples and everyone recognizes, I mean, you're looking at something that's really been unprecedented relative to what we're seeing with Nvidia. If I'm Nvidia, can I,

Can my chip guys do a workaround, whatever the U.S. restrictions are? Well, that's... The market's basically reading through this, saying at one point, you're going to have to come to the table. Pardon negotiations. When you look at chips on the table, it's Nvidia, it's Apple. When you think about Trump administration, come to the table. And

And that's something where there could be some work around the $8 billion that they've given away. Maybe half of that they get back. Okay, Apple. Unfortunately, the chart doesn't look like Microsoft. I got Apple right now down 22% from the peak. We don't have time for the why. How does Tim Cook turn it around?

I mean, he, this is, it continues to be a hall of fame moment in terms of how he's now together. Come on. You bought it. Paul told me to buy this thing at the beginning of the year. I'm down 22%, but it's not a hall of fame moment. It's a hall of fame moment relative to the China tariffs and getting around in ultimately India being the life raft. You're going to have 65, 70% of assembly and,

coming out of India. And I think, look, no company is more caught in the storm when it comes to tariffs than Cook and Cupertino. We'll be at WWDC. It's the start of that broader AI strategy. Yeah, but you said that last year. 100%. I love Boston. No, and Tom, if you take out tariffs...

This is a stock that's $40 to $50 higher. So my view is that Cook is 10% politician, 90% CEO. He'll navigate around this. And I think we sit here six months from now, the name that I think is way mispriced is Apple. Get one more in here.

Elon's going back to work, it seems like. What do you expect over the next six months from Tesla? Look, I mean, the dark chapter is over, right? And I think it's bullet because now the autonomous and robotics future is here. And ultimately, look, this was a fork in the road moment. He bet on Tesla. And now I think even though there is still some brand damage that remains, we believe the path to a $2 trillion markup for Tesla is now on the table. Lisa.

If your daughter in her prom, if her date shows up in a tuxedo that's that pink. No, that's the trend now. Is this the trend now? That's what the kids are doing? That's what the kids are doing for prom. They're wearing these outrageous suits. The kid's going to show up in a Dan Ives tuxedo? With like, no, everything like bananas, pineapples, like whatever on the suit. Yeah, like I said, a Dan Ives tuxedo. Crazy colors.

Because I keep waiting for the keen pink bow tie. I think with AI, it could be coming. With AI. That's what it's going to take. I looked at pink today. They said Ives was here, and I went with pink. I think you look phenomenal in a pink bow tie. I'm just saying. Yeah, you know, I don't know.

i just gave my black tuxedo to charity yesterday you did what yeah my tuxedo that had i haven't worn in 20 years oh okay that's why yeah the difference paul by the way would fit paul you can still get into that exactly my tuxedo from 20 years ago it ain't happening single best buy apple

Single best buy here, to me, it's Tesla. Really? Interesting. Given the autonomous path and must recommitted, that continues to be front and center. There you go. You're pro. I'm an amateur. I don't buy it. I just can't get there. Paul, can you get there? I can't bet against Elon in this stock. It's just been...

It's been an amazing story. And if he's back, if he's really back, that's good for the company. He's back. That's the way we roll. Dan Ives with Wedbush. Thank you so much. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app.

You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. The most important interview of the day, folks. Riveting America is with Andrew Gilbert joining us now. He's with ECP, but forget about that. Far, far more. Andrew Gilbert has a massive cred out of Stern on data centers. Yeah, you need to be utilities. Yeah.

I have seen the collective's amount of hot air from people that didn't take thermodynamics now is off the chart.

Cut to the chase, is retail electric America going to pay for Microsoft or NVIDIA's data center electric bill? Well, first, thanks for having me on. Happy to be here and a really exciting time in our industry for- Nuts! For 25 years, no growth, and now all of a sudden we're on TV here after NVIDIA earnings. Yeah, you look better than me, so it works. Are we going to pay for NVIDIA's data center? Yeah.

So across across. It's a great question across the country. Regulators are trying to figure out how to make those companies pay for it, how to make Microsoft, Amazon pay for it. You have a confidence they will. They will. And I think they're already finding a better way to do that in competitive markets. So regulated utilities want you and I to pay it on our con ed bill. But competitive markets, it's different. Companies like ours invest in competitive

competitive generation and we take the risk and i think that's the big difference between regulated areas like the southeast of the country and competitive markets like the northeast and texas so how do we power all these data centers what's the what's the path forward because i keep seeing nvidia and other companies microsoft and we're building we're building we're building we're building you got to power this stuff i mean i watch landman i know how the oil and gas industry works oh here we go talk to us how we're going to power this stuff with

With everything. This is an industry that really, again, hasn't had much demand growth, all of a sudden has an explosion of it. And so we're going to need electricity from all sources. Gas is going to have to be a big component of it, renewables as well. And that stuff faces challenges with tariffs and protectionist policies.

with tax credit risk on the renewable side. On the gas side, it's just an industry that for a while was sort of adapting to almost no growth. So companies like G, Vernova, and Siemens are ramping up production capacity, but it's not there yet. So it's going to take time. Is it a public-private partnership here? What's the regulatory environment that you guys on the financial side need to see?

Uncertainty has been, I think, used a lot in this show and many shows recently. We need policy certainty. The industry is ready to make the investments needed. The industry? What is the industry? Is it just the power industry? Is it old? Is it ExxonMobil? Is it Greenpeace? Is it Dominion Electric? It is...

It's competitive generators like Constellation, Vistra, NRG, Talon, companies like that are the companies that are going to move more quickly than regulated utilities. But regulated utilities, the Dominions, the Southerns, they will be part of this too. GE, Vrnova, GEV, I really don't know what it is. All I know is Mr. Culp's a genius. I got a moonshot 150.

to 485. Is that the future of your business, whether it's private, you know, like your shop, like ECP, or public utilities, boring, grandma stock dominion, I need a dividend increase. Is this total return of GE for Nova the future?

It's all about the shortage of gas turbines. That's what's driving GEV's performance, and that's what we're seeing. Yeah, but gas turbines aren't spinning windmills going around. Don't give me this renewable energy song and dance. It's traditional energy, dare I say coal, going to power Microsoft's need for the 14th data center.

Coal will not. Coal will survive a bit longer, but it's declining, and that's not going to change. Gas has really changed. Gas has been the biggest kind of replacement of coal, and that's going to accelerate because data centers need 24-7 electricity. Wind and solar don't provide that. But wind and solar are cheap, and they can be constructed quickly. So we need all of it. To meet this challenge, you can't do it with one fuel source. See that?

That's what I've understood. You got to have it all. Talk to us about nuclear. I like the modular nuclear things. Pop that baby right next to a data center and let it power it. Is that realistic? Well, if you're willing to pay, I don't know, seven times the price of gas, maybe. And we think it will be a factor. That cost will come down over time, but it's not ready two years from now. It's probably 10 years from now.

Oh, man, I thought that was a cool technology. Let me interrupt you. It is. Well, this is fascinating. He's going to be with us for the next four hours. Andrew Gilbert with us. He's partnered at ECP. We've been dying to do this. Paul's in the meeting at 3 a.m. When are we going to do data centers? We're doing it right now. Are the tech companies...

or are they opaque about their plans? Like, they're like, you know, we have to keep our image up. You know, Cupertino, they're out there wearing sneakers and, you know, they're Lululemon and all that. Are they open?

about their electrical demand needs? Well, we mentioned uncertainty. What's certain is the top five or six companies are going to spend $400 billion a year on this stuff. A year? And that's going to drive electricity demand growth. Yes, per year. Uh,

On the opacity, sure. It's hard to get projects connected. So if you're a meta and you have a two gigawatt need, you're going to apply for projects in different parts of each market and hope that one of them kind of gets service, gets connected. So you've got to make sure you've got to have contingency plans. So I think they're doing some of that. I think they're becoming more transparent.

You're 38 years old, dude. How did you-- you guys are doing some serious stuff at ECP. What's the focus of what you guys are doing? You're investing equity, credit for power generation. Where's the next five years? As I mentioned before, this industry was-- even though electricity, I think, is the most exciting commodity in the world, nobody cared about it three years ago. I've seen you at a bar. The whole bar goes to sleep when you start talking gigawatts.

But that is our focus, and it's an industry that all of a sudden is growing. Is this an administration that wants to support smart energy development, whether it's fossil fuels or green?

I hope so. Okay. How'd you react when Spain went dark? To me, the heart of the matter, my, you know, I did a little bit of the act. Yes, I survived thermodynamics, folks. Not quantum mechanics, but that's a different story. Okay, great. Spain goes dark because of the grid, and the rap is, I'm speaking out of turn, folks, a bunch of touchy-feely theory. How does America avoid a pitch-black Spain for two days?

I think it's about paying and compensating generators for reliability. A big challenge in the electricity market is the capacity that's not needed most of the time, but is needed in that 5% scenario. And you've got to make sure those units are compensated, and they're starting to be. In honor of Dan Fuss, Boston, Luma Sales, can Quebec Hydro come to the rescue? Can the Canadians be...

data center conduit to keep us in or is it just too far to get it to some data center in French Hills, Arkansas? They need it up there too. They need it up there. Especially during the winter so it's not 24/7 reliable type generation which is what we need now. Lisa emails in, "Should I put solar panels on my garage roof?" Maybe losing that tax credit soon to do that so it could get a little bit more expensive. Should we have the tax credit? Yes.

It's radio. You've got to talk more than that. I mean, just real quickly, what's the next investment you guys want to make? Where do you want to put your client's capital today? It's...

It's powering data centers. So it's partnering with the biggest companies in the world to supply these needs and to make sure that rate payers aren't paying for it so it doesn't show up on our electricity bills. Unfair question. Final question. Andrew Gilbert, which traditional utility has best practices for the future? I think what...

what some of the Western utilities are doing in terms of hardening and the efforts they're making around wildfire prevention is excellent. It's a huge challenge they face to keep the wires safe, to keep people safe. And I think they're doing a fantastic job turning those businesses around. Don't be a stranger. Yeah, would love to come back. Did you pay the congestion tax or have you figured out how to get around that?

It's tough. It's tough. Subways. Subways. Absolutely superb. Folks, I hope you love this. Somebody said Lisa or Paul came to the rescue and said, get some geek on all this data center electric stuff. Andrew Gilbert. Yep. Did you take thermodynamics in school? I did not. I'm not bright enough for that stuff. That's probably why Lisa could. He's a banker. Yeah.

Andrew Gilbert, thank you so much. With ECP, we'll do this again. It's a huge story. If this government spending in defense goes towards things like R&D that have dual use civilian purposes, who could get spillovers that actually end up enhancing productivity in Europe and so have a more long lasting impact on growth?

To learn more about the intersection of national security and global trade, subscribe to PGM's The Outthinking Investor in your favorite podcast app. AI is redefining what's possible for your business. Are you up for the challenge? Microsoft is helping leaders like you get AI ready faster with unified data and simplified platform management, unlocking up to 150% improved output.

Just look at the NDA. They're using AI-powered insights to deliver more personalized fan experiences. Then there's BMW, driving change confidently with safe, secure AI tools and guidance. And the LEGO house? They're creating new interactive experiences for people to explore.

No matter where you are in your business journey, Microsoft is here to help you achieve real breakthroughs that drive impact. Their industry-leading trustworthy AI fuels innovation in ways that are safe and secure. Business leaders Microsoft surveyed saw an average of 3.7 times ROI per $1 invested in generative AI.

Growing and innovating your business is your job. Microsoft helps you achieve that with innovative AI tools and experiences to guide you confidently into the future. Whatever change comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. We are honored to bring you the nation's expert in civics. Her textbooks are absolutely foundational. Wendy Schiller is professor at Brown University, the Taubman Center and such. Wendy, so honored to have you here.

The document is incredibly detailed for a hack like me. Halfway through on page 25, discussion, they go right to the Schiller matter. They go right back to 1788, James Madison, Federalist No. 1.

48. Where's the legislature? Whatever you believe in, folks, whatever the issue is, pro-Trump, anti-Trump, et cetera. Wendy Schiller, where is the legislature in this tariff battle? Well, it's fascinating that the court, this sort of structure for tariff courts, has now intervened and said these are illegal. You would have thought the Congress intervened.

which tariffs are import taxes. Congress, particularly the House of Representatives, has a constitutional authority to generate revenue and to authorize spending. Only the House can initiate that. And so they do have jurisdiction over tariffs. And the president can suspend the rules indefinitely if he so chooses. But the idea was that this is just for an emergency and that the power really rests with Congress. But the Republican-dominated House

and the Senate has chosen to let the president extend this authority, literally chosen to do that. They could have revoked it earlier this year, but they didn't. So this is really fascinating that now the court that is part of the international trade and domestic trade system has said, no, these are illegal. Where is Congress?

What will the appeal process look like? Peter Navarro with us here in an hour and a half from 1600 Pennsylvania Avenue. Professor Schiller, Navarro's going to be apoplectic over this. Who does the Trump administration appeal to? Who are those guys?

Well, that's the big question mark. I mean, everything this is sort of an embedded government structure. So, you know, when you think about the final word, who has the final word and the Trump administration is not that interested in any other structure in the American political system having power over them, you know, does everything go to the Supreme Court? And the Supreme Court is interesting to watch. We have a lot of decisions coming down in June that we can expect.

And, you know, where do they rein in executive power? And the important thing with the Supreme Court is to make sure this isn't about Donald Trump. This is about the balance of power in the system itself. So that's where the adjudication on tariffs lie. In immigration, we've seen the courts say to the president and Congress, Congress has authority to make the laws on immigration. Make the laws. The president cannot just create immigration law.

So is that the same thing that will be applied to tariffs? We're probably about to find out. So, Wendy, what happens in the interim here? I mean, I feel like the United States is negotiating with dozens of countries over tariffs. Why?

What do I do if I'm, I don't know, China, Canada, Mexico? What do I do now with this ruling? Well, I mean, when you think about the other countries, you also think about small businesses. Rhode Island is a state with a disproportionate amount of small business owners. How do they plan? You know, are you paying the tax or are you not paying the tax? And I call it a tax because it is a tax.

um a tariff you know what do you do do you raise your prices now you know how much do you order what do we think about the economy it creates and generates of course uncertainty we saw the markets react badly to major tariffs then they come down now the market is settled but now there's continued uncertainty so if you're navarro and you want to make the argument that government that businesses should invest in the united states they need a stable consistent business environment

And right now, the Trump administration is not providing a stable and consistent business environment. How hard do you think the Trump administration will fight this court ruling and fight for its tariff mandates? The instinct to fight comes straight from the top. Trump is a fighter, and he doesn't like limits on his power. You know, he could be talked into lowering them, and he has been talked into lowering them. And so when you think about this, the president

will fight for the sake of retaining executive power. And Congress has to send him a signal eventually, but they aren't acting on that. Again, we look at this tax bill. Once it's out of the way, what does Congress do to assert itself? I don't have great expectations for Congress to assert itself once this tax bill is done. I think the Republicans realize that's about the only thing they're going to get done this year.

And your commute across the nation, a hugely eventful Thursday with legal opinions, which will brief you on a number of times you're across the morning. Good morning on YouTube worldwide as well. Wendy Schiller of Brown University is with us today. Wendy, I'm just going to cherry pick here on a gentleman from New Jersey. Samuel Alito is on the Supreme Court. Let's assume if it's a decision of...

8-1, 7-2, 9-1, whatever, 9-2, 3-4. Alito's leading a certain charge to support the executive branch. Describe the thinking of the people like Judge Alito who says, wait, you three-judge court, you can't do that. Describe Alito's Federalist and Madisonian veal.

I mean, to me, when you look at Alito and Thomas, they're different, I think, in the way they vote a lot similarly a lot of the time. But Alito truly believes that the entire apparatus of the federal government is far too large and is completely inconsistent with the constitutional structure and the intent of the federal government as it was created, which was basically to protect democracy.

the national defenses and allow an economy to flourish, but basically let the original 13 colonies live the way they were. They were very different from each other when they entered into the Union. And so his argument is nobody ever built, nobody ever intended for this to be so big. Nobody wanted it to be like,

out this large. So I'm going to take every opportunity to basically reduce the scope of the government. And what he believes is that Congress drives the size of the federal government and not the president, that the president executes, but that the president can, in fact, reduce the size of the government. This is so important. I got to squeeze it in. Professor Schiller, I look at a three-judge court, Reagan, Trump, what was it, Obama? Obama.

Yep. Reagan, Trump, Obama, judges. Nobody's talking originalist theory here. They're just talking nuts and bolts of a 1977 agreement and the huge detail in their professionalism. Is this going to just go back to originalist theory a la Thomas and Alito and what President Trump supports?

The problem for Thomas and Alito to do that is that originalist theory literally in not only the Federalist Papers, but the Constitution itself, is that the House controls tariff policy. That you can't just wake up in the morning and say, "I'm going to impose 130% or 45% on an individual country if you're the President of the United States," only under extraordinary circumstances.

And the Constitution and the founders are very clear that when you execute these powers as president in extraordinary circumstances, those circumstances have to be extraordinary. So this is the problem for Alito and Thomas. It goes completely against their theory of originalism to put all this power and opportunity in the president's hands when the Constitution is quite explicit that it should rest with the Congress, particularly the House of Representatives. - I can't imagine your day. Wendy Schiller, thank you so much for being with us this morning with Brown University.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Lisa Mateo now with the newspapers.

What do you have? All right. I'm starting with this Wall Street Journal exclusive. This is about Paramount Global. They're offering reportedly offering President Trump 15 million dollars to settle that lawsuit he had against Paramount CBS News. But sources are telling the journal that the president feels it's not enough. He wants more than 25 million. He also reportedly wants an apology from CBS News.

If you remember that lawsuit, it was it all surrounds how the network supposedly edited a 60 Minutes interview with Kamala Harris to to make her sound better. CBS says that's not true. But they're also saying that the president's team has threatened another lawsuit against CBS related to bias on its news coverage.

But there's supposed to be a session today. Paul, am I right this is unprecedented? I mean, isn't CBS supposed to fight back as a news organization? The reason they're not fighting back is they have a planned merger with Skydance Media, and they want that to go through. They need the FCC approval, and presumably there's some concerns that the government will use this suit as a reason not to approve the deal. Sherry Redstone needs the merger to go through so she can get paid out. It's as simple as that. So it's...

You know, they'll come to some degree. And we've seen some, I should point out, separate from this news, we've seen resignations at CBS. Yeah, yep. There's a lot going on there. A lot going on there. And it's all because they need to get this deal approved and get it through. So...

It's all about money as it always is. I'm shocked. Next. Okay, all right. We'll take you to luxury, okay? LVMH, okay? They said they could increase the price of its goods by about 3% to offset tariffs. But there are two things that they say they cannot raise the price on, and that is cognac and lower-priced beauty products, the lower-priced end.

They say things like jewelry, those high-end jewelry, they can withstand the price increases because their buyers can take on the price increases. But they've had a tough time with the alcohol sales. Apparently the Cognac Spirits of Vision, they dipped in the past year. They're selling fewer champagne bottles on top of it too. So they're saying those are the things they can't. I don't think I've ever had Cognac. Cognac is a variety of brandy named after the commune of Cognac, France.

All right. It's not bad. Yeah? Yes. You're a cognac drinker? I drink a little Hennessy sometimes. Nice. What's that flask you've got on your desk? The flask in the desk. It's the Hennessy cognac. All right. That's going to suck into a tariff. I thought it was Jack Daniels. What are you doing?

Cognac's had a tough time. But it has. And champagne. I can't remember the name of the company now, but it's a small, obscure French thing. And like one third of their business is Cognac or whatever. And it ain't happening. I mean, it's not just LVMH. It's an aquarium. It's overall. So they're not lowering the price of all the merch that...

sundry teens look at? Of the cognac and the spirits. Of the other high-end jewelry and that kind of stuff, yes. Is Louis Vuitton shoes too much for the prom?

Yes, definitely. Thank you. That was a discussion last night. Definitely. You can't even see the feet with the dress, so don't even think about it. Next. We've been talking a lot about AI and will they replace jobs, right? So this story about Salesforce kind of puts that into perspective a little bit. They said they're reducing the hiring for some roles because of its AI tools. So

Its CFO gave this example, and she said 500 customer service workers will be moved to different positions within the company, and that'll save them about $50 million. Also said they're hiring fewer engineers on top of it. They say they hope it's going to make their staff more productive, but at the same time, where they're increasing are the ranks of its sales force. So that's where they're starting to see the difference. But we've seen it, you know, different companies like Microsoft, Alphabet are doing it.

Get to a business where you have a revenue number next to your name. That's it. That's my strategy. That's my advice. You know, get to a business. And so Salesforce. Do you believe, we don't have the time here, but like all these jobs are going to go away. I just don't buy it. Well, I think a lot of them are. I mean, I just think of my investment banking business. I mean, do I need three analysts staffed on a deal to draft models and things like that? I don't think so.

I don't think so. So I think there's going to be an issue there. The newspapers today, Lisa Mateo, thank you so much. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. 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.

Thank you.

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