FBI Arrests NBA Players, Coaches in Sports Gambling Probes | Bloomberg Businessweek
Summary
Government Shutdown Impact: The ongoing U.S. government shutdown is affecting federal employees, with over 200,000 forced off the job and key negotiations stalled due to political gridlock.
NBA Sports Gambling Probe: Federal prosecutors have charged NBA players and coaches in a major illegal sports gambling investigation, likened to an insider trading scandal within the league.
Intel's Financial Outlook: Intel reports stronger-than-expected third-quarter results, driven by new product launches and improved manufacturing processes, raising questions about its future strategic direction.
Elon Musk's Pay Package Controversy: Tesla's CEO Elon Musk faces criticism over a proposed $1 trillion pay package, with debates focusing on the company's future growth potential and Musk's pivotal role.
U.S. Government's Role in Industry: The U.S. government's investment in companies like Intel is part of a broader move towards a national industrial policy, raising questions about the implications for corporate independence and market competition.
Challenges in Legal Sports Betting: The rise of legal sports betting has led to increased scrutiny and regulatory challenges, particularly around player prop bets and their potential for manipulation.
Market Competition in EVs: Tesla faces growing competition in the electric vehicle market, with new entrants offering competitive pricing and technology, challenging Tesla's market dominance.
Transcript
[Music] Bloomberg Audio Studios, podcasts, radio, news. >> This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. the Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc on Bloomberg Radio. >> Let's um talk about some of the stories that are going on certainly out of the nation's capital. Transportation Secretary Shawn Duffy warned that flight disruptions would continue across the US uh as the government shutdown drags into its fourth week. More than 13,000 air traffic controllers and 50,000 transportation security administration agents are being forced to work during the shutdown without pay. just one important part of the government as you know that is being impacted Tim by this breakdown between Republicans and Democrats. A breakdown that we seem to see over and over and over again. >> Bloomberg News correspondent and host of the Big Take podcast, David Guro, sat down for an interview with House Minority Leader Hakee Jeff to talk about the relationship between the US and Russia, the upcoming New York City mayoral election, and first and foremost, the ongoing government shutdown. As Democrats, we continue to make clear to our Republican colleagues that we will sit down with them anytime, any place in order to reopen the government to negotiate a bipartisan agreement that actually makes life better for the American people in terms of spending and funding. But we also have to decisively address the Republican healthcare crisis. We've maintained that position from the very beginning before Republicans shut the government down and during the entirety of this shutdown because it is a real crisis that has been created at this moment, particularly as it relates to the urgent need to extend the Affordable Care Act tax credits. >> As you and I are speaking, the House Speaker is doing a press conference just down the hall. What is the level of engagement? Do you pass one another? Are you speaking with one another? Are Democrats talking to Republicans right now? Uh the conversations have been very limited unfortunately because Donald Trump has not given House Republican leaders or Senate Republican leaders permission to negotiate. Reinforcing the principle from our view that he made the decision to shut the government down. Uh they want to continue to inflict pain on federal employees. They've done that from the very beginning of Donald Trump's presidency. In fact, uh, more than 200,000 federal employees had been forced off the job prior to the government shutdown. And this is something that we've continued to see them build upon during the shutdown. Until Donald Trump gets serious about reopening the government, unfortunately, we're going to remain in this situation and everyday Americans are being hurt. >> He's getting ready to take a trip to Asia. Is it appropriate for him to be doing that at this moment when the government is is shut down? >> I I think that the president has a responsibility both domestically and throughout the world. However, what has been irresponsible is that throughout this shutdown, he's found more time to golf uh than he has to engage with Democrats on Capitol Hill. He's decided to try to steal $230 million in taxpayer funds from the Department of Injustice. Donald Trump and his administration have found $40 billion to bail out a right-wing wannabe dictator in Argentina and can't find a dime to extend the Affordable Care Act tax credits to keep health care affordable for tens of millions of Americans. And on top of all of that, uh, they are demolishing the east wing of the White House in ways that have appropriately horrified the American people. >> I want to ask you about potential off-ramps and Tammy Baldwin, the senator from Wisconsin Democrat, said Trump is the off-ramp at this point. Do do you agree with that assessment? And has there been any kind of outreach or dialogue between you and the White House? Uh Lad Schumer made clear earlier this week that we have reached out to the White House again uh to indicate that prior to Trump's departure uh for Asia, he should sit down with Democrats to find a path forward to reopen the government to enter into a bipartisan spending agreement and to address the healthcare crisis that Marjgerie Taylor Green acknowledges must be addressed and that traditional conservatives who are in the toughest seats in the country have now publicly acknowledged this week needs needs to be addressed. >> Can I ask you a question of congressional mechanics, and that is, can the Democratic leader pick up the phone, call the White House, and reasonably expect the president's going to take that phone call? Are you able to do that? And if so, what's keeping you from having that dial? >> Well, traditionally, that probably is the case, but in this White House, uh, that's very much unclear. Donald Trump didn't have a meeting, uh, with House or Senate Democratic leadership until 2 days prior to the government shutting down. That of course was House Minority Leader Hakee Jeff with Bloomberg's David Gore. David, joining us from the Bloomberg News Bureau in the nation's capital. Hey David, you know what I picked up from there is, you know, we hear the president and Republicans talk about the shutdown, then we hear Democrats separately talk about it, but again, nothing about leaders coming together to really work on the issues that separate them. And I kind of got that from the House minority leader as well. >> Separately is the key word there, Carol. Uh suffice to say these two parties are not speaking with with one another. And I should say at the Capitol building today, it was incredibly quiet. You do have congressional leadership there holding press conferences uh meeting among themselves. Um but it is sleepy isn't the right word. Empty is perhaps a better word. And uh it was clear from that conversation that the person who needs to be at the table or at least giving the blessing to Republicans who are at the table uh is President Trump. And there is, I think, a level of resignation among uh Democratic leadership that without that, this is just going to continue. So, we're poised for President Trump, as we talked about in that interview, uh to take this trip for about a week to to Asia. Um again, there's a recognition there that with him absent, this is unlikely to to advance or develop here over the coming days. >> Yeah. So, I guess the the big question on the Democrat and Republican side is what can be done with the president on this trip? What can be done out of the country? Is there a chance that these two sides can come together and end the government shutdown even if he's not around? >> Well, there is some hope for optimism uh of course, but uh there are a number of kind of pressure points that are on the horizon. I think that's pretty notable. So, tomorrow is the first one. October the 24th. That's when a lot of federal workers are not going to receive their paychecks for the first time in this this shutdown. So, the pain of the shutdown is going to be more acutely felt by by more people. And I think what's kind of novel about this shutdown is you've had someone who heads the office of management budget at the White House really moving things around playing what he calls budgetary twister to make sure that a number of government employees are paid certain programs are are continued. All of that starts to become more and more difficult here as as the days tick on. So tomorrow a big pressure point. Another one is next week, November the 1st, when some SNAP benefits are scheduled to expire and of course when open enrollment begins for for health care plans. That's the moment at which Democrats believe Americans are going to look at the prospects of their health care going up, becoming more and more expensive, and they're going to perhaps recognize the fact, as Democrats would say, uh, that this is something that's real and important and that having the government shut down so that those subsidies can be restored is is worth doing. >> I will say I think that message is getting to Americans outside of the beltway. I was in Arizona last week. The lead story on local news last weekend was about premiums going up for that that Obama for Obamacare. that is story seems to be getting out there and people are actually talking about that. David a lot in that interview. One thing you also touched on was what's coming here in New York in the next couple of weeks early November the mayoral election and the way that leader Jeff has or has not yet communicated with Zoran Mandani the favorite to win the election here in November. What did he say about that? >> They have spoken a couple of times and I was optimistic. I had my fingers crossed that he'd be willing to make an endorsement today. during that interview he declined to do so but he has said that he's going to speak with Sor Mandani again today and and tomorrow as he prepares to do that he talked about the obligation of doing that. Um, I asked him, did he watch the debate last night, the final mayoral debate, or did he watch the Knicks season opener? He admitted he watched the last few minutes of the basketball game and not the debate, but he kept up with it and kept up with what the conversation has been. And um, after he declined to make an endorsement, I really pushed him on on why, what the outstanding issues are. And um, what he emphasized to me during our conversation is uh, look, he really applauds uh, Mr. Mandani for his emphasis on affordability. He thinks that's a signal issue in New York City and one that's a signal issue across this country for for Democrats. So really applauded him for focusing so much on that. But he acknowledged the fact that President Trump is likely to go after New York after this mayoral election takes place. Does Mandani have the capacity, the experience to deal with the level of pressure that the federal government is going to to bring to bear. Um so I personally a bit disappointed that we didn't get that endorsement during my interview today, but it does seem like that's likely. I mean, I I think what's what what he said over and over again is he plans to weigh in on this race before early voting begins. And as both of you know, early voting in New York City is scheduled to start on Saturday of this week. So time is nigh and he's uh he's going to do it soon. I should say he he was about like 98% there, I think, during the course of our conversation. He really applauded Mandani for saying that he planned to keep Jessica Tish as um the New York Police Department commissioner if he is if he is elected. Uh he saw that as a positive step. >> All right, last question though because this also came up and I feel like people have said to me, why aren't you guys talking about this? But it's all over social media activ uh you know activity and David that is what's happening at the White House. The actual physical demolishing of a piece of the White House. I know in the grand scheme of things maybe isn't as important as a lot of other things that are going on in this world but it feels very symbolic symbolic despite the actual physicality of what's happening and indicative of a president that can kind of do whatever he wants. What did um Mr. Jeffrey say on that? Um he expressed dismay over this happening as I think a lot of people in this city have as well. Of course it's a a very old building that has been remodeled in the past but this is pretty dramatic and in the past it would have gone through a lot of reviews. That hasn't happened here. The president said initially he planned to build this ballroom. That was going to have no effect on the existing building. Of course that's not the case. We have seen images and video of the demolition of the east wing of the White House that are startling to a lot of people as the minority leader said. Uh and then there's just the notion of what what's being built there. this massive structure, this 90,000 square foot ballroom, which the president says is essential for the leader of the United States to entertain foreign leaders who come through Washington DC. Um, you know, an organization of architectural historians pointing out that just proportionality is wrong here. To have a building of that scale on the White House plan is is just huge. So, uh, a lot of people just expressing dismay and stupification over what's happening here. Uh, and I should note as well the price tag on this is has gotten larger over the course of this construction, too. It started out at $200 million. The president said it'd be paid for by himself and private donors. Um, now the price tag is $300 million. So, a lot of people just kind of wondering how this is happening, how it's happening so quickly. And I think that you hitting on kind of the metaphorical side of this is important too, Carol. A lot of people kind of looking at it as a way of the president here moving with some relative impunity. >> Got to say, I have an old house, 1800s, and I can't even change a window without like a commission weighing in. So, there's got to be something when we're talking about the people's house. David, >> you're not the president, Carol. I'm that's why I'm saying I'm nothing and I'm nothing but you're not the president. >> I can't change a window without um stuff coming down on me and I'm just thinking about the historic significance of that building there on Pennsylvania Avenue. All right, David, thank you as always. Bloomberg News correspondent, host of the Big Tape podcast, David Gora. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5:00 p p.m. Eastern. >> Listen on Apple CarPlay and Android Auto with the Bloomberg Business App >> or watch us live on YouTube. Did Miami Heat guard Terry Roser Rosir, excuse me. Portland Trailblazers head coach Chanty Bilips were arrested Thursday morning and charged as part of a sprawling sports gambling probe. Federal prosecutors said in a press conference Thursday, FBI director Cash Patel and Brooklyn federal prosecutors said at least 30 people were arrested across 11 states, including current and former NBA players and coaches as part of two separate criminal schemes related to illegal sports betting. Here's FBI Director Cash Patel at a press conference this morning in New York. >> Let's not, you know, mince words. This is the insider trading saga for the NBA. If you're participating in the legal gambling industry, you got nothing to worry about. If you're participating in illegal conduct, you got everything to worry about and this case shows it. >> That's FBI Director Cash Patel earlier today. We got Miles Miller with us. He's Bloomberg News senior reporter. He covers Homeland Security and the FBI. He joins us here in the Bloomberg Interactive Brokers studio. Miles also covers city government here in New York City. We're getting some news. >> I'm like one of these turn around, you know, like >> So, we're going to get to the sports the sports gambling and the NBA stuff in just a minute. It's it's fascinating. And we're going to bring in Ira Bud in a minute, too. But first, let's talk a little bit about what's going on here in New York because New York City Mayor Eric Adams has endorsed Governor Cuomo for the mayoral election. >> Uh you'll remember uh Gracie Mansion, beautiful palatial mansion uh on the east side of Manhattan. Uh we thought Eric Adams was going to drop out of the race and instead, what did he say? He said, "Andrew Cuomo is a snake and a liar." um asked today why he's endorsing Andrew Cuomo. He said, "Brothers fight, but when families are attacked, brothers come together." He sees this as essential to Cuomo having any shot of winning the election against Mumani. The cards are stacked against Cuomo. They're they're stacked against SWA and they were slack stacked against Adams. And so this is the only way he sees that uh Cuomo could win, which would be by endorsing him. He's going to go out around the city with Cuomo. >> Will he will that help? >> You know, it remains to be seen. He's gonna go to He's going to go to areas where he had support. Um, which you would probably say are in South uh southeast Queens, probably Wakefield in the Bronx, those places. But those are places that Cuomo probably has support already. Will it help? Unclear. But this is New York's second black mayor who is uh going to stand up, going to go to church with Cuomo and say this is the person who is going to best support you, not Mum Donnie. Uh and that is going to be, you know, critical in the last couple days of this election. And it shows how desperate the Cuomo campaign is. >> What's Mayor Adams going to do next? There's been a lot of speculation about would he take a job? I mean, there was there were some there was some reporting that said, okay, maybe he's being offered a job in the Trump administration. what's what's going on there? >> Um, I was told many many years ago never to predict what Eric Adams is going to do. Um, because you know, he can sit right in front of you on business week, Bloomberg Business Week, and tell you no matter what, he is not going anywhere and then sure enough, drop out of the race. >> Like he did that for you. >> Yeah. Right. You know, on my birthday, he tells me tells me he's not leaving the race and then straight up leaves the race. Um, he says he wants to get his PhD. um you know what he really wants to do if he stays in government is have this a source told me this is have any any position where he can bring staff have a detail and do important things. >> All right. So tell us about what happened earlier this morning. Couple of indictments coming down. I'm switching gears. What >> I would like a staff and have a detail. >> You know I've known Eric a long time. I'm just let's just be honest about what he what he's told people. Go ahead. >> You know who have staffs and details sometimes are NBA players. So let's uh go to what happened this morning. What do we find out? >> So, um, you've got, uh, two different scandals here involving the MTA. You've got one, sorry. So, what did I say? >> MTA. Still thinking about this. I've been up since 4 this morning. Okay. You've got you've got two different two separate uh, scandals. You got the first one involving uh, which is basically insider trading at the at the NBA. Uh, basketball player Terry Rosier telling a friend that he planned to take himself out of a game. that friend uh then places a bunch of bets worth more than $200,000 on that game, which would be fishy to anyone. And so it tipped off federal prosecutors. And so they knew that something was wrong there. And it exposed this big um issue uh including four players um who were trading on things that that was trading on private information so they could make money off of things that were not public. Um so that's the first case. So knowing a player is in and out can determine the outcome. >> Right. Exactly. And LeBron James um you know a victim of this, you know, >> second indictment. >> Exactly. Second indictment. You've got uh the mafia. You've got the four four of the five New York crime families running rigged games uh on Lexington Avenue and running rigged games in on Washington Place. Um they had a a table set up where where they could see live the card that was face down. Uh and so the games are rigged. use NBA players uh in order to get people to be enticed into the game. But the players they believe prosecutors believe were in on it. They thought that they believed that Chanty Bilips a coach of the of the um Trailblazers and and an MVP was part of this conspiracy to steal people's money and he got a cut of it. They say >> not nice. >> No. Uh again, indictments, stuff to be known, right? And things will carry out. Miles, thank you for breaking that down. A lot going on. Miles Miller, Bloomberg News senior reporter covering Homeland Security and the FBI. >> I want to bring in Ira Budweet. He's global business of sports reporter for Bloomberg News. Ira, I want to just set the poker stuff aside for a second that the the prop bets about the players is is really what I want to talk about because you wrote in August for Bloomberg Business Week that sports leagues are struggling to deal with so-called player props for bets. Big focus of your story was the MLB if I recall correctly, but this is exactly what materialized here. >> Yeah. I mean, it's a known problem as you say. So, there were these cases earlier this year in July. MLB announced investigations involving two Cleveland Guardians pitchers and they were alleged to have been throwing a ball on purpose and you can bet just on the first pitch, right? That's how small some prop bets get. There had been a previous NBA case, Jonte Porter, actually the same federal investigation that brought the charges today involved uh actually was how Jonte Porter wound up pleading guilty to um to taking himself out of games early, saying he was sick and having co-conspirators bet the under on a prop. So, this is really the vulnerability for leagues. >> I want to say, are we surprised? I mean the the mixing meshing of gambling and sports which was considered a no no for so long. >> Look what happened to Pete Rose. >> Exactly right. Like no, don't do it. Don't do it. Don't do it. Here we are and then this is happening. >> Yeah. I mean it's really interesting. The question that is really hard to get to the bottom of is whether it's better or worse to have legal regulated sports betting, right? Because clearly it's more widespread now. It's on your phone. it's advertised at you all the time, right? So, there's just more people involved, more sliced a million different ways. >> It's also much more closely monitored when it's legal because you you can see every bet and there and there are these uh organizations that actually are watching for suspicious betting activity, which is how in many cases, including these cases, investigators get tipped off. They see unusual betting activity and they follow up. >> All of the gaming apps on apps on your phone, those are all regulated. people are monitoring or no? >> Yes. So, if you're betting on FanDuel, DraftKings, other legal sports books, uh, yes, those bets are being monitored by these independent groups that have access to the data and whose job it is to on behalf of the leagues and the sports books who, you know, if you listen to federal prosecutors are the victims in these cases because people are using insider information to take out bets that then win and the sports books have to pay out. Um so they they participate in these monitoring systems that are set up to catch suspicious activity where often is a lot of action suddenly a lot of bets very suddenly on a player to underperform you know and very large bets from maybe betterers who've never bet before those are the things that get flagged. It does seem like, Ira, there could be a happy medium here where maybe the government comes out and says, "Okay, well, maybe we let it the cat out of the bag a little too much a few years ago with the Supreme Court decision, or maybe the Supreme Court let the cat out of the bag. I don't know if they can do this legally, but what if there were a way to say, "Okay, we can allow you to bet on some stuff, the outcomes of games, but the the the granular prop bets that are 100% in the control of one single player, that just isn't working." Yeah, we're seeing this happen. Prop bets on college players in some states are not allowed. Um the NBA after the Jonte Porter case convinced major US sports books to no longer offer underprop bets on the lowest paid players in the league. Um and with the idea that the lowest paid players would be more incentivized, >> most vulnerable. So Jonte Porter was what's called the two-way player on a $415,000 contract. What's interesting about the the accusations today, the indictment today, is that Terry Roger, who's accused of doing this, making $26 million this year. So, it may not be just a case of going after the most vulnerable players. Adam Silver, the NBA commissioner, has recently hinted that they're looking at other things they might be able to do to restrict prop betting. and and you know after the cases in Cleveland with the Guardians pitchers the governor there Dwine asked their state gaming regulators to get rid of all prop bets and so Ohio's looking into that so there is movement to try to limit prop bets um but it's not clear kind of how that will shake out and actually I think one of the other things that this might lead to is more pressure to have a federally regulated system which is what Adam Silver has always been asking for. You were part of a group of reporters the few years ago who did a big Bloomberg Business Week special on gambling and sports. And I'm just wondering if if what we knew at then or now we knew then would it have turned out this way? Or in other words, has this how has this gone? Has this gone okay? >> Yeah, I think the experiment there's two big vulnerabilities, right? There's the erosion of trust and the corruption issue, right? whether if you keep having cases like this, fans will no longer really believe in what they're watching on TV. That's a big problem. I think it grows today. We will see how persistent that is and how big it gets. The other thing that I think just more broadly in sort of the experiment of sports of legal sports betting in this country. I think once you've had legalization and it's now on phones and mobile, >> what we're finding out is that it's addiction is a real problem and it's damaging the personal finances of a lot of particularly young men who get into this. So, I think those are two things that it's not like we didn't know that problem gambling and manipulation existed. And it's not like those two things don't exist when you do this in black markets. But there is, I think, a real case to be made that opening it up this way has exacerbated those problems. >> Yeah, I know. And then you got the other story that's out there. Our Cat Dohy wrote, uh, I think you are part of that, too. DraftKings acquiring a federal federally regulated trading venue, marking its most aggressive move yet into the contested world of prediction market. So, this just melding of stuff is interesting. Come back soon so we can continue this. Ira Budwe, global business of sports reporter at Bloomberg News, joining us here in our Bloomberg interactive broker studio. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2 p.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 11:30. >> Tesla shares, if you check them out, they have been bouncing around >> 1.4% right now. They turned positive later in the session, but for most of the day, they were lower. Yeah, down almost 6% at their lows today. Right. Listen, the company came out, they posted earnings late yesterday. Uh results largely disappointing. Profit missing estimates despite record vehicle deliveries and operating income plunging 40% in the third quarter. Tim, >> meantime, the head of the company, the world's richest man, we were talking about Elon Musk. He hijacked the earnings call, pleading with investors to approve his $1 trillion pay package and blasting the shareholder advisory firms that have come out against the proposal. The point is I I just like there needs to be enough voting control to give a strong influence, but not not so much that I can't be fired if I go insane. >> That's it. >> That's classic Elon. >> Just in case I go insane. Hey. Hey, look. >> Just those two things, >> I guess. So >> that's the barometer. That's what we're doing, >> I guess. So, I don't know. All right. That's Elon Musk uh apparently making the case last night uh for that pay package on the earnings call and really, I guess, his position at the company. Let's talk all things Elon and Tesla. With us is Bloomberg Business Week senior reporter Max Chaffkin, co-host of the Everybody's Business podcast, author of The Contrarian, Peter Teal, and Silicon Valley's Pursuit of Power, right here in studio. All right, we got a lot to talk. That's classic Elon. >> It is. I mean, I there's probably no figure in modern life who so openly flirts with the idea of his own insanity as Elon Musk. And but of course, what he's talking about >> on an earnings call on an earnings responsibility. Uh, of course, what he's saying essentially is you got to let me cook and and the only reason I should be fired is if I am going, you know, going crazy and and that would be crazier than he normally is because, of course, he's he's pretty out there on a on a normal day. And and for for believers, that's that's kind of part of the appeal. >> Dare I say, Max, a lot of people would say, even though they would could be critical of a trillion dollar pay package, they say, "Well, what would Tesla be without Elon Musk?" >> Yeah. And that's kind of the difficult position that investors find themselves in this company where yeah, there there's some opposition to this pay package and we've seen some of the shareholder advisory firms come out against it. But I think for most investors, you're kind of in a position where if you put if you say no to this package and and and Elon Musk threatens to leave or even does leave, the stock falls, right? it doesn't it doesn't go up because so much of this company's value is about the future and that future is all about Elon Musk. The other thing I'll say about this pay package big as it is, it's mostly it's requiring the company to get even bigger to to to hit milestones that that seem almost cartoonish at this point. So, if you're an investor, you're saying, "Well, I mean, you know, let's hope it works out. He's he's he's been effective before. Why not this time?" Well, I got to say one investor, we're talking about New York State and the comproller, Thomas Dapoli, did say that Tesla pay package for Elon is overly generous, lacks clear performance metrics to justify the $1 trillion that he could earn uh under this proposal. He plans to vote against the compensation package and Tesla directors up for reelection on November 6th. He spoke with Bloomberg Surveillance on TV earlier today. >> When you see the excessive compensation package, I mean, you know, credit to Mr. Musk. He's already one of the richest men in the world. Uh h how much more rich does one person have to be? >> I don't know. I'm not that rich. But so I I don't know. I don't know. I know we joke about that, but I don't know if that's the right question to be asking, Max. Is it about wealth or is it about control? >> I think it's about both. I mean, you know, people always say and and and you always hear things like, well, Elon Musk doesn't care. He's so rich. He is hundreds worth hundreds of billion dollars. What's another couple hundred billion dollars? But I think I think when you're talking about this level of wealth, you do like the the amount of money he stands to make on this package would, you know, double his wealth potentially. So like that that is a big difference. And and the other thing, Tim, as you said, Musk says this is about control. It's about being able to maintain his position to essentially be able to operate without any kind of um shareholder activism, a critic might say, without constraint. You know having said that you go to the the core business right and EV is like listen for a long time he and Tesla did not really face much competition here in the US and he and Tesla for a long time promised promised promised didn't deliver and then they started to deliver but the environment is changing um but so too is the evolution continuing uh for Tesla as a company right whether it's battery storage and other businesses but I don't know what is the business and does that business would it be able to hit some of these metrics to justify this pay package. >> I mean, that is what's so difficult and and to the point uh that Thomas Napoli is making in there, it you know, Tesla has not done that great over the last couple years. The the stock price has been has been phenomenal. Investors and and particularly like the kind of retail investors who follow what Elon Musk says and buy his stock like they they are in love with this thing. There is a boom in AI. Elon Musk is talking a lot about AI, but you know, car sales have not been great. And even in this quarter, which was good, right, where where sales went way up, margins went down. And there is a sense among investors, and you've even heard this from the company itself, that this is going to be a bit of an aberration because what happened is the tax credit, the 7,500 bucks was effectively making electric cars cheaper. It went away as part of the big beautiful bill uh uh that that you know that Trump uh passed. Uh so so this is kind of like a one-time thing where you have a bunch of people basically moving purchases forward at the same time. Lots of competition from lots of automakers. Now now we we talked about this really for years for almost a decade like you know GM and others are going to come. Well they're here now. There are a bunch of really great electric cars that cost the same amount of money or in some markets less than a Tesla. You know BYD has cars in Europe that are very very competitive with Tesla and are cheaper. GM has cars now that are about the same price as the cheapest car and that are competitive. So, so that's a challenge. And then on the other hand, you have Musk's kind of fantastic promises around humanoid robots, around autonomy, and that stuff is hard to value. You you you basically either value that at zero or you value it at like 20 trillion. And and so so it's kind of created a gap in the discourse around this company. So look, obviously none of us know the answer about how to value that business. But if if increasingly these autos are becoming commodity and outside of the US, especially with competition, BYD and Xiaomi, then it looks like a more insular market for Tesla, at least for autos here in the US, if they don't lean into Optimus, if they don't lean into other technology. >> Yeah. I I think Well, I think there are two things. So one is Optimus, humanoid robot. Elon Musk says, you know, very soon, like in a matter of years, we're going to have these things in our homes. They're going to be like friends. You're like not even going to be able to tell. I think he said on the earnings call, you're not going barely be able to tell it's a robot. Like, if that's true, obviously that's great. The other thing uh the other thing is is sort of robo taxis, unsupervised self-driving, which Tesla has yet to do, but it is is trying to do. the there is a question on how you value that because Elon Musk has said for years and years and years, you know, basically that is worth an unlimited amount of money. Your your your cars will increase in value because of this thing. But you're seeing Chinese companies essentially give this stuff away. So that's why I say like we don't really know how valuable this is yet. Even though the idea of not having to drive your car and being able to take a nap, that obviously sounds great. It's just unclear how much people will pay for that and how much they will be asked to pay for that given that a bunch of other automakers are giving away very similar technology. >> It's also not quite quite doable, right? Like like listen, we've talked about Whimo, how much we love it, but I mean it's still tricky and the infrastructure doesn't necessarily support it everywhere. >> No, do not take a nap in your Tesla today. Uh despite what you see on Twitter. Yeah. I mean there there are huge question marks here and I think when you look at Whimo it's a big success but it's a success in a very narrow way like a defined number of markets operating at slow speed you know they don't drive on highways yet that you know there's tons of supervision there's remote supervision we've talked about this same thing with Tesla and and Whimo has been very deliberate you know rolling this out in just in a handful of markets moving very slowly I think Tesla and I think most people who cover the the autonomy space closely believe that there is no way Tesla gets anywhere near the timelines that Elon Musk is talking about. What you know what we kind of expect is that it follows more like the Whimo path. Now, now of course and and if it does that, it's worth a lot less money. Now, of course, Elon Musk is telling a different story where where one day he's going to just basically flip the switch and you're going to see this deploy everywhere. >> We had an interesting conversation with Ross Gerbrand with Ed Lello yesterday on the academic differences between the radar lightar side of things with Whimo and the vision only stuff with Tesla. Where do you fall on that, Max? Is that do you believe that I mean Ross Gerber doesn't think it's possible to have vision only self-driving? >> There are a lot of a lot of experts who I've talked to who are very skeptical of the technical approach which I think is a is a problem. Um the the the great thing about LiDAR is it it it's like an additional safety feature. I I also think again there are so many reasons to think that the timeline is is going to take much longer than than what we're talking about that it's almost not worth parsing the technical differences. This is something that is going to take decades to pull off in the way that Elon Musk wants it to pull off. >> Relevant when you've got a company that trades with a PE of 320 or forward PE of about 262, right? Like because these are things that aren't going to happen so quickly. Got to run. Love, love, love. Max Chaffkin, senior reporter at Bloomberg Business Week, co-host of the Everybody's Business podcast, and author of The Contrarian Peter Teal and Silicon Valley's Pursuit of Power. Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5:00 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App >> or watch us live on YouTube. We're watching a lot of different companies, but I want to home in on one and that would be Intel shares surging in the after hours. >> Just building the momentum to the upside there. >> Yeah, 7% to the upside right now in the after hours. Little bit at the beginning trepidation I think from shareholders, but I don't know. It could have to do also with some corrected numbers that were coming back and forth over the terminal uh for the the results. the most recent results as you mentioned shares what up 90% going into the print this year. >> Well, yeah, we know like there was the US taking that position in Intel specifically an equity position and it is now the third largest investor in Intel. So that certainly has given it uh a jolt if you will uh this year but again I think what's interesting is the company CFO speaking in an interview. You can check out our Ian King's right through on this but Intel saying the third quarter was stronger than it thought across the board. Um, so yeah, server demand was a surprise positive. It feels like there's a lot of things that feel like the changes, the moves uh by Lip Botan, the CEO, maybe some of it starting to pay off. >> Well, I want to see what Jay Goldberg has to say about all this. He's semiconductors and an electronics senior analyst at Seapport Research Partners. He joins us from San Francisco. Uh Jay, good to have you. You cover a lot of these companies including Intel. You got a neutral rating on Intel. just give us your first reaction to these this report that shows an encouraging forecast after a rebound in the PC chip market. >> Yeah, I think it's it's a encouraging step forward for the company. They've been through some rough times and the I think the the driver of this quarter's results are their new products coming on stream uh using their 18A their new manufacturing process uh as well as some help from TSMC. So, a bunch of new products starting to ramp into production and volume. I think that's helping a lot. Um, and I'm most encouraged by sort of the gross margin outlook for next quarter. I haven't run through all my numbers, but it looks like it's it's much better than expected, which is important, not just for the financial weight of that, but also it's it's a good indicator into how their manufacturing processes is is tracking. >> I don't Well, oh, sorry. Go ahead. No, go ahead. I don't want to get you in trouble with compliance, but can you are you going to change your your outlook, your rating on the stock? >> So, I I just upgraded it about a month ago from sell to to neutral. And my my concern here is is more that big picture question you all were talking about earlier. As as much as this quarter is good progress and we're seeing sort of tactically they're moving in the right direction, the looming question over the company is what are they going to do with the fabs? Last quarter the CEO Lip Bhutan said if they don't get a customer for Intel foundry an external customer for Foundry right >> they're going to stop doing manu advanced manufacturing and I think that's one of these tough analyst calls because in the near term if they stop doing that it's it removes a lot of expense numbers go way up stock goes up that's it's a near-term easy thing to do but long term it's probably really bad for the company and it's just hard to square that sort of long-term forecast multi-year forecast >> so I'm I'm still on the fence Hey, one thing I want to uh just point out, Jay, is that it looks like they're talking about seeing a fourth quarter adjusted gross margin of 36.5%. Third quarter adjusted gross margin was 40% uh against an estimate of 36.1%. Is that the number you were looking for? >> Yeah, but there's a lot of adjustments in there, so I haven't worked through them all to be honest. >> Okay. Okay. Hey, listen. Listen, this is a company that's been around for a long time. you know, you're entrenched in how you were, what you were, um, different executives coming in to try and write this ship. You know, it's a big ship to turn. Um, while also facing lots of growing competition. Do you feel like it is in the right direction? >> I think it's too soon to tell. I really hope it's in the moving in the right direction, but it's too soon to tell. >> Like what what are they going to do with those fabs, right? And I you know I' I've been saying for years that Intel's biggest challenge is not external competitors or customers. It's their biggest challenge is internal and fixing their culture. So on that on that mark I think this this is a step forward. Leoo has put a you know he has a plan and he's chipping away at this sort of internal problem but they really have to readjust their worldview internally and understand that they're not the the dominant player that they were for 20 years. They're they're the upstart now and they got to act like it. Jay, we spent a good portion of our program earlier talking about economic statecraftraft and the new role the US government is is taking in companies, the reporting around potentially investing in some of these quantum companies. We of course have the Intel am the US government being among the biggest shareholders in Intel. um US Steel, the golden share there, uh the critical minerals and mining companies that have uh taken investment or had interest expressed in them. From an Intel perspective, how does the US government investment change Intel? >> I I think it is going to encourage other US chip companies to consider working with Intel Foundry, right? Because you know, Nvidia's already invested in it. Soft Bank's invested in Intel. Now, do we see Apple or Amazon or Google or one of these other c other potential Intel customers sign up to work with Intel Foundry take that risk because it could be seen as patriotic >> that Well, that's okay. I'm glad you said that. Do they do it because it's the right thing for their business because it's the best option for a foundry or is it because it shows the Trump administration that they're supporting a business that the administration has invested in? >> So, I think it can be both, right? My my view is that these companies need to work with Intel. They need to see Intel Foundry succeed. If because if they abandon Intel Foundry today and Intel abandons it, you know, entirely, what happens in 5 years when they're, you know, TSMC has an effective monopoly today, >> right? >> In 5 years, they'll have a true actual monopoly. And that's that's going to be really challenging for all these all these companies. And so it's hard in, you know, the way that companies work, they you know, they're thinking on 90-day cycles. Somebody needs to be thinking of sort of the five 10 year time horizon. And maybe the government is the sort of the forcing function that gets us there. >> You know who thinks in more than five or 10 year cycles? A little country named China. They're pretty good about those long-term plannings. Um just having some fun with you, Jay. Well, having said that though, you know, on on the other hand, are there companies who are saying I don't want to get involved with anybody who's involved in the government because just like the way the US government for a long time has been or you know, US investors have been critical of you know sovereign held entities you know in other countries. So is there some you know justification in that as well or should we just assume that Intel now has a massive >> you know backup called the US government. >> So I think everybody's a little bit uncomfortable with the US government taking stakes in companies. Everyone I know on Wall Street, everyone I know in the valley just a little bit uncomfortable about it sort of ideologically. It's it's not something we're used to. It's clear that, you know, the US is moving towards some kind of national industrial policy. This is one way to achieve that. I'm not sure taking a stake in it is quite the right way to do it, but You know, there there there are merits for being a little bit more some somewhere in between the government controlling everything and the government doing nothing. Maybe there's a happy medium we can find. >> Hey, 30 seconds. Uh on the call or you're sitting down with Intel execs, what do you want to ask them? Just quickly, >> what are you doing with Foundry? >> Okay, that was quick. >> So, appreciate it. Jay Goldberg, thanks. Have a good evening. Senior analyst, semiconductors, and electronics at Seapport Research Partners. This is the Bloomberg Business Week daily podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5:00 p.m. Eastern, on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal. [Music]
FBI Arrests NBA Players, Coaches in Sports Gambling Probes | Bloomberg Businessweek
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[Music] Bloomberg Audio Studios, podcasts, radio, news. >> This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. the Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc on Bloomberg Radio. >> Let's um talk about some of the stories that are going on certainly out of the nation's capital. Transportation Secretary Shawn Duffy warned that flight disruptions would continue across the US uh as the government shutdown drags into its fourth week. More than 13,000 air traffic controllers and 50,000 transportation security administration agents are being forced to work during the shutdown without pay. just one important part of the government as you know that is being impacted Tim by this breakdown between Republicans and Democrats. A breakdown that we seem to see over and over and over again. >> Bloomberg News correspondent and host of the Big Take podcast, David Guro, sat down for an interview with House Minority Leader Hakee Jeff to talk about the relationship between the US and Russia, the upcoming New York City mayoral election, and first and foremost, the ongoing government shutdown. As Democrats, we continue to make clear to our Republican colleagues that we will sit down with them anytime, any place in order to reopen the government to negotiate a bipartisan agreement that actually makes life better for the American people in terms of spending and funding. But we also have to decisively address the Republican healthcare crisis. We've maintained that position from the very beginning before Republicans shut the government down and during the entirety of this shutdown because it is a real crisis that has been created at this moment, particularly as it relates to the urgent need to extend the Affordable Care Act tax credits. >> As you and I are speaking, the House Speaker is doing a press conference just down the hall. What is the level of engagement? Do you pass one another? Are you speaking with one another? Are Democrats talking to Republicans right now? Uh the conversations have been very limited unfortunately because Donald Trump has not given House Republican leaders or Senate Republican leaders permission to negotiate. Reinforcing the principle from our view that he made the decision to shut the government down. Uh they want to continue to inflict pain on federal employees. They've done that from the very beginning of Donald Trump's presidency. In fact, uh, more than 200,000 federal employees had been forced off the job prior to the government shutdown. And this is something that we've continued to see them build upon during the shutdown. Until Donald Trump gets serious about reopening the government, unfortunately, we're going to remain in this situation and everyday Americans are being hurt. >> He's getting ready to take a trip to Asia. Is it appropriate for him to be doing that at this moment when the government is is shut down? >> I I think that the president has a responsibility both domestically and throughout the world. However, what has been irresponsible is that throughout this shutdown, he's found more time to golf uh than he has to engage with Democrats on Capitol Hill. He's decided to try to steal $230 million in taxpayer funds from the Department of Injustice. Donald Trump and his administration have found $40 billion to bail out a right-wing wannabe dictator in Argentina and can't find a dime to extend the Affordable Care Act tax credits to keep health care affordable for tens of millions of Americans. And on top of all of that, uh, they are demolishing the east wing of the White House in ways that have appropriately horrified the American people. >> I want to ask you about potential off-ramps and Tammy Baldwin, the senator from Wisconsin Democrat, said Trump is the off-ramp at this point. Do do you agree with that assessment? And has there been any kind of outreach or dialogue between you and the White House? Uh Lad Schumer made clear earlier this week that we have reached out to the White House again uh to indicate that prior to Trump's departure uh for Asia, he should sit down with Democrats to find a path forward to reopen the government to enter into a bipartisan spending agreement and to address the healthcare crisis that Marjgerie Taylor Green acknowledges must be addressed and that traditional conservatives who are in the toughest seats in the country have now publicly acknowledged this week needs needs to be addressed. >> Can I ask you a question of congressional mechanics, and that is, can the Democratic leader pick up the phone, call the White House, and reasonably expect the president's going to take that phone call? Are you able to do that? And if so, what's keeping you from having that dial? >> Well, traditionally, that probably is the case, but in this White House, uh, that's very much unclear. Donald Trump didn't have a meeting, uh, with House or Senate Democratic leadership until 2 days prior to the government shutting down. That of course was House Minority Leader Hakee Jeff with Bloomberg's David Gore. David, joining us from the Bloomberg News Bureau in the nation's capital. Hey David, you know what I picked up from there is, you know, we hear the president and Republicans talk about the shutdown, then we hear Democrats separately talk about it, but again, nothing about leaders coming together to really work on the issues that separate them. And I kind of got that from the House minority leader as well. >> Separately is the key word there, Carol. Uh suffice to say these two parties are not speaking with with one another. And I should say at the Capitol building today, it was incredibly quiet. You do have congressional leadership there holding press conferences uh meeting among themselves. Um but it is sleepy isn't the right word. Empty is perhaps a better word. And uh it was clear from that conversation that the person who needs to be at the table or at least giving the blessing to Republicans who are at the table uh is President Trump. And there is, I think, a level of resignation among uh Democratic leadership that without that, this is just going to continue. So, we're poised for President Trump, as we talked about in that interview, uh to take this trip for about a week to to Asia. Um again, there's a recognition there that with him absent, this is unlikely to to advance or develop here over the coming days. >> Yeah. So, I guess the the big question on the Democrat and Republican side is what can be done with the president on this trip? What can be done out of the country? Is there a chance that these two sides can come together and end the government shutdown even if he's not around? >> Well, there is some hope for optimism uh of course, but uh there are a number of kind of pressure points that are on the horizon. I think that's pretty notable. So, tomorrow is the first one. October the 24th. That's when a lot of federal workers are not going to receive their paychecks for the first time in this this shutdown. So, the pain of the shutdown is going to be more acutely felt by by more people. And I think what's kind of novel about this shutdown is you've had someone who heads the office of management budget at the White House really moving things around playing what he calls budgetary twister to make sure that a number of government employees are paid certain programs are are continued. All of that starts to become more and more difficult here as as the days tick on. So tomorrow a big pressure point. Another one is next week, November the 1st, when some SNAP benefits are scheduled to expire and of course when open enrollment begins for for health care plans. That's the moment at which Democrats believe Americans are going to look at the prospects of their health care going up, becoming more and more expensive, and they're going to perhaps recognize the fact, as Democrats would say, uh, that this is something that's real and important and that having the government shut down so that those subsidies can be restored is is worth doing. >> I will say I think that message is getting to Americans outside of the beltway. I was in Arizona last week. The lead story on local news last weekend was about premiums going up for that that Obama for Obamacare. that is story seems to be getting out there and people are actually talking about that. David a lot in that interview. One thing you also touched on was what's coming here in New York in the next couple of weeks early November the mayoral election and the way that leader Jeff has or has not yet communicated with Zoran Mandani the favorite to win the election here in November. What did he say about that? >> They have spoken a couple of times and I was optimistic. I had my fingers crossed that he'd be willing to make an endorsement today. during that interview he declined to do so but he has said that he's going to speak with Sor Mandani again today and and tomorrow as he prepares to do that he talked about the obligation of doing that. Um, I asked him, did he watch the debate last night, the final mayoral debate, or did he watch the Knicks season opener? He admitted he watched the last few minutes of the basketball game and not the debate, but he kept up with it and kept up with what the conversation has been. And um, after he declined to make an endorsement, I really pushed him on on why, what the outstanding issues are. And um, what he emphasized to me during our conversation is uh, look, he really applauds uh, Mr. Mandani for his emphasis on affordability. He thinks that's a signal issue in New York City and one that's a signal issue across this country for for Democrats. So really applauded him for focusing so much on that. But he acknowledged the fact that President Trump is likely to go after New York after this mayoral election takes place. Does Mandani have the capacity, the experience to deal with the level of pressure that the federal government is going to to bring to bear. Um so I personally a bit disappointed that we didn't get that endorsement during my interview today, but it does seem like that's likely. I mean, I I think what's what what he said over and over again is he plans to weigh in on this race before early voting begins. And as both of you know, early voting in New York City is scheduled to start on Saturday of this week. So time is nigh and he's uh he's going to do it soon. I should say he he was about like 98% there, I think, during the course of our conversation. He really applauded Mandani for saying that he planned to keep Jessica Tish as um the New York Police Department commissioner if he is if he is elected. Uh he saw that as a positive step. >> All right, last question though because this also came up and I feel like people have said to me, why aren't you guys talking about this? But it's all over social media activ uh you know activity and David that is what's happening at the White House. The actual physical demolishing of a piece of the White House. I know in the grand scheme of things maybe isn't as important as a lot of other things that are going on in this world but it feels very symbolic symbolic despite the actual physicality of what's happening and indicative of a president that can kind of do whatever he wants. What did um Mr. Jeffrey say on that? Um he expressed dismay over this happening as I think a lot of people in this city have as well. Of course it's a a very old building that has been remodeled in the past but this is pretty dramatic and in the past it would have gone through a lot of reviews. That hasn't happened here. The president said initially he planned to build this ballroom. That was going to have no effect on the existing building. Of course that's not the case. We have seen images and video of the demolition of the east wing of the White House that are startling to a lot of people as the minority leader said. Uh and then there's just the notion of what what's being built there. this massive structure, this 90,000 square foot ballroom, which the president says is essential for the leader of the United States to entertain foreign leaders who come through Washington DC. Um, you know, an organization of architectural historians pointing out that just proportionality is wrong here. To have a building of that scale on the White House plan is is just huge. So, uh, a lot of people just expressing dismay and stupification over what's happening here. Uh, and I should note as well the price tag on this is has gotten larger over the course of this construction, too. It started out at $200 million. The president said it'd be paid for by himself and private donors. Um, now the price tag is $300 million. So, a lot of people just kind of wondering how this is happening, how it's happening so quickly. And I think that you hitting on kind of the metaphorical side of this is important too, Carol. A lot of people kind of looking at it as a way of the president here moving with some relative impunity. >> Got to say, I have an old house, 1800s, and I can't even change a window without like a commission weighing in. So, there's got to be something when we're talking about the people's house. David, >> you're not the president, Carol. I'm that's why I'm saying I'm nothing and I'm nothing but you're not the president. >> I can't change a window without um stuff coming down on me and I'm just thinking about the historic significance of that building there on Pennsylvania Avenue. All right, David, thank you as always. Bloomberg News correspondent, host of the Big Tape podcast, David Gora. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5:00 p p.m. Eastern. >> Listen on Apple CarPlay and Android Auto with the Bloomberg Business App >> or watch us live on YouTube. Did Miami Heat guard Terry Roser Rosir, excuse me. Portland Trailblazers head coach Chanty Bilips were arrested Thursday morning and charged as part of a sprawling sports gambling probe. Federal prosecutors said in a press conference Thursday, FBI director Cash Patel and Brooklyn federal prosecutors said at least 30 people were arrested across 11 states, including current and former NBA players and coaches as part of two separate criminal schemes related to illegal sports betting. Here's FBI Director Cash Patel at a press conference this morning in New York. >> Let's not, you know, mince words. This is the insider trading saga for the NBA. If you're participating in the legal gambling industry, you got nothing to worry about. If you're participating in illegal conduct, you got everything to worry about and this case shows it. >> That's FBI Director Cash Patel earlier today. We got Miles Miller with us. He's Bloomberg News senior reporter. He covers Homeland Security and the FBI. He joins us here in the Bloomberg Interactive Brokers studio. Miles also covers city government here in New York City. We're getting some news. >> I'm like one of these turn around, you know, like >> So, we're going to get to the sports the sports gambling and the NBA stuff in just a minute. It's it's fascinating. And we're going to bring in Ira Bud in a minute, too. But first, let's talk a little bit about what's going on here in New York because New York City Mayor Eric Adams has endorsed Governor Cuomo for the mayoral election. >> Uh you'll remember uh Gracie Mansion, beautiful palatial mansion uh on the east side of Manhattan. Uh we thought Eric Adams was going to drop out of the race and instead, what did he say? He said, "Andrew Cuomo is a snake and a liar." um asked today why he's endorsing Andrew Cuomo. He said, "Brothers fight, but when families are attacked, brothers come together." He sees this as essential to Cuomo having any shot of winning the election against Mumani. The cards are stacked against Cuomo. They're they're stacked against SWA and they were slack stacked against Adams. And so this is the only way he sees that uh Cuomo could win, which would be by endorsing him. He's going to go out around the city with Cuomo. >> Will he will that help? >> You know, it remains to be seen. He's gonna go to He's going to go to areas where he had support. Um, which you would probably say are in South uh southeast Queens, probably Wakefield in the Bronx, those places. But those are places that Cuomo probably has support already. Will it help? Unclear. But this is New York's second black mayor who is uh going to stand up, going to go to church with Cuomo and say this is the person who is going to best support you, not Mum Donnie. Uh and that is going to be, you know, critical in the last couple days of this election. And it shows how desperate the Cuomo campaign is. >> What's Mayor Adams going to do next? There's been a lot of speculation about would he take a job? I mean, there was there were some there was some reporting that said, okay, maybe he's being offered a job in the Trump administration. what's what's going on there? >> Um, I was told many many years ago never to predict what Eric Adams is going to do. Um, because you know, he can sit right in front of you on business week, Bloomberg Business Week, and tell you no matter what, he is not going anywhere and then sure enough, drop out of the race. >> Like he did that for you. >> Yeah. Right. You know, on my birthday, he tells me tells me he's not leaving the race and then straight up leaves the race. Um, he says he wants to get his PhD. um you know what he really wants to do if he stays in government is have this a source told me this is have any any position where he can bring staff have a detail and do important things. >> All right. So tell us about what happened earlier this morning. Couple of indictments coming down. I'm switching gears. What >> I would like a staff and have a detail. >> You know I've known Eric a long time. I'm just let's just be honest about what he what he's told people. Go ahead. >> You know who have staffs and details sometimes are NBA players. So let's uh go to what happened this morning. What do we find out? >> So, um, you've got, uh, two different scandals here involving the MTA. You've got one, sorry. So, what did I say? >> MTA. Still thinking about this. I've been up since 4 this morning. Okay. You've got you've got two different two separate uh, scandals. You got the first one involving uh, which is basically insider trading at the at the NBA. Uh, basketball player Terry Rosier telling a friend that he planned to take himself out of a game. that friend uh then places a bunch of bets worth more than $200,000 on that game, which would be fishy to anyone. And so it tipped off federal prosecutors. And so they knew that something was wrong there. And it exposed this big um issue uh including four players um who were trading on things that that was trading on private information so they could make money off of things that were not public. Um so that's the first case. So knowing a player is in and out can determine the outcome. >> Right. Exactly. And LeBron James um you know a victim of this, you know, >> second indictment. >> Exactly. Second indictment. You've got uh the mafia. You've got the four four of the five New York crime families running rigged games uh on Lexington Avenue and running rigged games in on Washington Place. Um they had a a table set up where where they could see live the card that was face down. Uh and so the games are rigged. use NBA players uh in order to get people to be enticed into the game. But the players they believe prosecutors believe were in on it. They thought that they believed that Chanty Bilips a coach of the of the um Trailblazers and and an MVP was part of this conspiracy to steal people's money and he got a cut of it. They say >> not nice. >> No. Uh again, indictments, stuff to be known, right? And things will carry out. Miles, thank you for breaking that down. A lot going on. Miles Miller, Bloomberg News senior reporter covering Homeland Security and the FBI. >> I want to bring in Ira Budweet. He's global business of sports reporter for Bloomberg News. Ira, I want to just set the poker stuff aside for a second that the the prop bets about the players is is really what I want to talk about because you wrote in August for Bloomberg Business Week that sports leagues are struggling to deal with so-called player props for bets. Big focus of your story was the MLB if I recall correctly, but this is exactly what materialized here. >> Yeah. I mean, it's a known problem as you say. So, there were these cases earlier this year in July. MLB announced investigations involving two Cleveland Guardians pitchers and they were alleged to have been throwing a ball on purpose and you can bet just on the first pitch, right? That's how small some prop bets get. There had been a previous NBA case, Jonte Porter, actually the same federal investigation that brought the charges today involved uh actually was how Jonte Porter wound up pleading guilty to um to taking himself out of games early, saying he was sick and having co-conspirators bet the under on a prop. So, this is really the vulnerability for leagues. >> I want to say, are we surprised? I mean the the mixing meshing of gambling and sports which was considered a no no for so long. >> Look what happened to Pete Rose. >> Exactly right. Like no, don't do it. Don't do it. Don't do it. Here we are and then this is happening. >> Yeah. I mean it's really interesting. The question that is really hard to get to the bottom of is whether it's better or worse to have legal regulated sports betting, right? Because clearly it's more widespread now. It's on your phone. it's advertised at you all the time, right? So, there's just more people involved, more sliced a million different ways. >> It's also much more closely monitored when it's legal because you you can see every bet and there and there are these uh organizations that actually are watching for suspicious betting activity, which is how in many cases, including these cases, investigators get tipped off. They see unusual betting activity and they follow up. >> All of the gaming apps on apps on your phone, those are all regulated. people are monitoring or no? >> Yes. So, if you're betting on FanDuel, DraftKings, other legal sports books, uh, yes, those bets are being monitored by these independent groups that have access to the data and whose job it is to on behalf of the leagues and the sports books who, you know, if you listen to federal prosecutors are the victims in these cases because people are using insider information to take out bets that then win and the sports books have to pay out. Um so they they participate in these monitoring systems that are set up to catch suspicious activity where often is a lot of action suddenly a lot of bets very suddenly on a player to underperform you know and very large bets from maybe betterers who've never bet before those are the things that get flagged. It does seem like, Ira, there could be a happy medium here where maybe the government comes out and says, "Okay, well, maybe we let it the cat out of the bag a little too much a few years ago with the Supreme Court decision, or maybe the Supreme Court let the cat out of the bag. I don't know if they can do this legally, but what if there were a way to say, "Okay, we can allow you to bet on some stuff, the outcomes of games, but the the the granular prop bets that are 100% in the control of one single player, that just isn't working." Yeah, we're seeing this happen. Prop bets on college players in some states are not allowed. Um the NBA after the Jonte Porter case convinced major US sports books to no longer offer underprop bets on the lowest paid players in the league. Um and with the idea that the lowest paid players would be more incentivized, >> most vulnerable. So Jonte Porter was what's called the two-way player on a $415,000 contract. What's interesting about the the accusations today, the indictment today, is that Terry Roger, who's accused of doing this, making $26 million this year. So, it may not be just a case of going after the most vulnerable players. Adam Silver, the NBA commissioner, has recently hinted that they're looking at other things they might be able to do to restrict prop betting. and and you know after the cases in Cleveland with the Guardians pitchers the governor there Dwine asked their state gaming regulators to get rid of all prop bets and so Ohio's looking into that so there is movement to try to limit prop bets um but it's not clear kind of how that will shake out and actually I think one of the other things that this might lead to is more pressure to have a federally regulated system which is what Adam Silver has always been asking for. You were part of a group of reporters the few years ago who did a big Bloomberg Business Week special on gambling and sports. And I'm just wondering if if what we knew at then or now we knew then would it have turned out this way? Or in other words, has this how has this gone? Has this gone okay? >> Yeah, I think the experiment there's two big vulnerabilities, right? There's the erosion of trust and the corruption issue, right? whether if you keep having cases like this, fans will no longer really believe in what they're watching on TV. That's a big problem. I think it grows today. We will see how persistent that is and how big it gets. The other thing that I think just more broadly in sort of the experiment of sports of legal sports betting in this country. I think once you've had legalization and it's now on phones and mobile, >> what we're finding out is that it's addiction is a real problem and it's damaging the personal finances of a lot of particularly young men who get into this. So, I think those are two things that it's not like we didn't know that problem gambling and manipulation existed. And it's not like those two things don't exist when you do this in black markets. But there is, I think, a real case to be made that opening it up this way has exacerbated those problems. >> Yeah, I know. And then you got the other story that's out there. Our Cat Dohy wrote, uh, I think you are part of that, too. DraftKings acquiring a federal federally regulated trading venue, marking its most aggressive move yet into the contested world of prediction market. So, this just melding of stuff is interesting. Come back soon so we can continue this. Ira Budwe, global business of sports reporter at Bloomberg News, joining us here in our Bloomberg interactive broker studio. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2 p.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 11:30. >> Tesla shares, if you check them out, they have been bouncing around >> 1.4% right now. They turned positive later in the session, but for most of the day, they were lower. Yeah, down almost 6% at their lows today. Right. Listen, the company came out, they posted earnings late yesterday. Uh results largely disappointing. Profit missing estimates despite record vehicle deliveries and operating income plunging 40% in the third quarter. Tim, >> meantime, the head of the company, the world's richest man, we were talking about Elon Musk. He hijacked the earnings call, pleading with investors to approve his $1 trillion pay package and blasting the shareholder advisory firms that have come out against the proposal. The point is I I just like there needs to be enough voting control to give a strong influence, but not not so much that I can't be fired if I go insane. >> That's it. >> That's classic Elon. >> Just in case I go insane. Hey. Hey, look. >> Just those two things, >> I guess. So >> that's the barometer. That's what we're doing, >> I guess. So, I don't know. All right. That's Elon Musk uh apparently making the case last night uh for that pay package on the earnings call and really, I guess, his position at the company. Let's talk all things Elon and Tesla. With us is Bloomberg Business Week senior reporter Max Chaffkin, co-host of the Everybody's Business podcast, author of The Contrarian, Peter Teal, and Silicon Valley's Pursuit of Power, right here in studio. All right, we got a lot to talk. That's classic Elon. >> It is. I mean, I there's probably no figure in modern life who so openly flirts with the idea of his own insanity as Elon Musk. And but of course, what he's talking about >> on an earnings call on an earnings responsibility. Uh, of course, what he's saying essentially is you got to let me cook and and the only reason I should be fired is if I am going, you know, going crazy and and that would be crazier than he normally is because, of course, he's he's pretty out there on a on a normal day. And and for for believers, that's that's kind of part of the appeal. >> Dare I say, Max, a lot of people would say, even though they would could be critical of a trillion dollar pay package, they say, "Well, what would Tesla be without Elon Musk?" >> Yeah. And that's kind of the difficult position that investors find themselves in this company where yeah, there there's some opposition to this pay package and we've seen some of the shareholder advisory firms come out against it. But I think for most investors, you're kind of in a position where if you put if you say no to this package and and and Elon Musk threatens to leave or even does leave, the stock falls, right? it doesn't it doesn't go up because so much of this company's value is about the future and that future is all about Elon Musk. The other thing I'll say about this pay package big as it is, it's mostly it's requiring the company to get even bigger to to to hit milestones that that seem almost cartoonish at this point. So, if you're an investor, you're saying, "Well, I mean, you know, let's hope it works out. He's he's he's been effective before. Why not this time?" Well, I got to say one investor, we're talking about New York State and the comproller, Thomas Dapoli, did say that Tesla pay package for Elon is overly generous, lacks clear performance metrics to justify the $1 trillion that he could earn uh under this proposal. He plans to vote against the compensation package and Tesla directors up for reelection on November 6th. He spoke with Bloomberg Surveillance on TV earlier today. >> When you see the excessive compensation package, I mean, you know, credit to Mr. Musk. He's already one of the richest men in the world. Uh h how much more rich does one person have to be? >> I don't know. I'm not that rich. But so I I don't know. I don't know. I know we joke about that, but I don't know if that's the right question to be asking, Max. Is it about wealth or is it about control? >> I think it's about both. I mean, you know, people always say and and and you always hear things like, well, Elon Musk doesn't care. He's so rich. He is hundreds worth hundreds of billion dollars. What's another couple hundred billion dollars? But I think I think when you're talking about this level of wealth, you do like the the amount of money he stands to make on this package would, you know, double his wealth potentially. So like that that is a big difference. And and the other thing, Tim, as you said, Musk says this is about control. It's about being able to maintain his position to essentially be able to operate without any kind of um shareholder activism, a critic might say, without constraint. You know having said that you go to the the core business right and EV is like listen for a long time he and Tesla did not really face much competition here in the US and he and Tesla for a long time promised promised promised didn't deliver and then they started to deliver but the environment is changing um but so too is the evolution continuing uh for Tesla as a company right whether it's battery storage and other businesses but I don't know what is the business and does that business would it be able to hit some of these metrics to justify this pay package. >> I mean, that is what's so difficult and and to the point uh that Thomas Napoli is making in there, it you know, Tesla has not done that great over the last couple years. The the stock price has been has been phenomenal. Investors and and particularly like the kind of retail investors who follow what Elon Musk says and buy his stock like they they are in love with this thing. There is a boom in AI. Elon Musk is talking a lot about AI, but you know, car sales have not been great. And even in this quarter, which was good, right, where where sales went way up, margins went down. And there is a sense among investors, and you've even heard this from the company itself, that this is going to be a bit of an aberration because what happened is the tax credit, the 7,500 bucks was effectively making electric cars cheaper. It went away as part of the big beautiful bill uh uh that that you know that Trump uh passed. Uh so so this is kind of like a one-time thing where you have a bunch of people basically moving purchases forward at the same time. Lots of competition from lots of automakers. Now now we we talked about this really for years for almost a decade like you know GM and others are going to come. Well they're here now. There are a bunch of really great electric cars that cost the same amount of money or in some markets less than a Tesla. You know BYD has cars in Europe that are very very competitive with Tesla and are cheaper. GM has cars now that are about the same price as the cheapest car and that are competitive. So, so that's a challenge. And then on the other hand, you have Musk's kind of fantastic promises around humanoid robots, around autonomy, and that stuff is hard to value. You you you basically either value that at zero or you value it at like 20 trillion. And and so so it's kind of created a gap in the discourse around this company. So look, obviously none of us know the answer about how to value that business. But if if increasingly these autos are becoming commodity and outside of the US, especially with competition, BYD and Xiaomi, then it looks like a more insular market for Tesla, at least for autos here in the US, if they don't lean into Optimus, if they don't lean into other technology. >> Yeah. I I think Well, I think there are two things. So one is Optimus, humanoid robot. Elon Musk says, you know, very soon, like in a matter of years, we're going to have these things in our homes. They're going to be like friends. You're like not even going to be able to tell. I think he said on the earnings call, you're not going barely be able to tell it's a robot. Like, if that's true, obviously that's great. The other thing uh the other thing is is sort of robo taxis, unsupervised self-driving, which Tesla has yet to do, but it is is trying to do. the there is a question on how you value that because Elon Musk has said for years and years and years, you know, basically that is worth an unlimited amount of money. Your your your cars will increase in value because of this thing. But you're seeing Chinese companies essentially give this stuff away. So that's why I say like we don't really know how valuable this is yet. Even though the idea of not having to drive your car and being able to take a nap, that obviously sounds great. It's just unclear how much people will pay for that and how much they will be asked to pay for that given that a bunch of other automakers are giving away very similar technology. >> It's also not quite quite doable, right? Like like listen, we've talked about Whimo, how much we love it, but I mean it's still tricky and the infrastructure doesn't necessarily support it everywhere. >> No, do not take a nap in your Tesla today. Uh despite what you see on Twitter. Yeah. I mean there there are huge question marks here and I think when you look at Whimo it's a big success but it's a success in a very narrow way like a defined number of markets operating at slow speed you know they don't drive on highways yet that you know there's tons of supervision there's remote supervision we've talked about this same thing with Tesla and and Whimo has been very deliberate you know rolling this out in just in a handful of markets moving very slowly I think Tesla and I think most people who cover the the autonomy space closely believe that there is no way Tesla gets anywhere near the timelines that Elon Musk is talking about. What you know what we kind of expect is that it follows more like the Whimo path. Now, now of course and and if it does that, it's worth a lot less money. Now, of course, Elon Musk is telling a different story where where one day he's going to just basically flip the switch and you're going to see this deploy everywhere. >> We had an interesting conversation with Ross Gerbrand with Ed Lello yesterday on the academic differences between the radar lightar side of things with Whimo and the vision only stuff with Tesla. Where do you fall on that, Max? Is that do you believe that I mean Ross Gerber doesn't think it's possible to have vision only self-driving? >> There are a lot of a lot of experts who I've talked to who are very skeptical of the technical approach which I think is a is a problem. Um the the the great thing about LiDAR is it it it's like an additional safety feature. I I also think again there are so many reasons to think that the timeline is is going to take much longer than than what we're talking about that it's almost not worth parsing the technical differences. This is something that is going to take decades to pull off in the way that Elon Musk wants it to pull off. >> Relevant when you've got a company that trades with a PE of 320 or forward PE of about 262, right? Like because these are things that aren't going to happen so quickly. Got to run. Love, love, love. Max Chaffkin, senior reporter at Bloomberg Business Week, co-host of the Everybody's Business podcast, and author of The Contrarian Peter Teal and Silicon Valley's Pursuit of Power. Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5:00 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App >> or watch us live on YouTube. We're watching a lot of different companies, but I want to home in on one and that would be Intel shares surging in the after hours. >> Just building the momentum to the upside there. >> Yeah, 7% to the upside right now in the after hours. Little bit at the beginning trepidation I think from shareholders, but I don't know. It could have to do also with some corrected numbers that were coming back and forth over the terminal uh for the the results. the most recent results as you mentioned shares what up 90% going into the print this year. >> Well, yeah, we know like there was the US taking that position in Intel specifically an equity position and it is now the third largest investor in Intel. So that certainly has given it uh a jolt if you will uh this year but again I think what's interesting is the company CFO speaking in an interview. You can check out our Ian King's right through on this but Intel saying the third quarter was stronger than it thought across the board. Um, so yeah, server demand was a surprise positive. It feels like there's a lot of things that feel like the changes, the moves uh by Lip Botan, the CEO, maybe some of it starting to pay off. >> Well, I want to see what Jay Goldberg has to say about all this. He's semiconductors and an electronics senior analyst at Seapport Research Partners. He joins us from San Francisco. Uh Jay, good to have you. You cover a lot of these companies including Intel. You got a neutral rating on Intel. just give us your first reaction to these this report that shows an encouraging forecast after a rebound in the PC chip market. >> Yeah, I think it's it's a encouraging step forward for the company. They've been through some rough times and the I think the the driver of this quarter's results are their new products coming on stream uh using their 18A their new manufacturing process uh as well as some help from TSMC. So, a bunch of new products starting to ramp into production and volume. I think that's helping a lot. Um, and I'm most encouraged by sort of the gross margin outlook for next quarter. I haven't run through all my numbers, but it looks like it's it's much better than expected, which is important, not just for the financial weight of that, but also it's it's a good indicator into how their manufacturing processes is is tracking. >> I don't Well, oh, sorry. Go ahead. No, go ahead. I don't want to get you in trouble with compliance, but can you are you going to change your your outlook, your rating on the stock? >> So, I I just upgraded it about a month ago from sell to to neutral. And my my concern here is is more that big picture question you all were talking about earlier. As as much as this quarter is good progress and we're seeing sort of tactically they're moving in the right direction, the looming question over the company is what are they going to do with the fabs? Last quarter the CEO Lip Bhutan said if they don't get a customer for Intel foundry an external customer for Foundry right >> they're going to stop doing manu advanced manufacturing and I think that's one of these tough analyst calls because in the near term if they stop doing that it's it removes a lot of expense numbers go way up stock goes up that's it's a near-term easy thing to do but long term it's probably really bad for the company and it's just hard to square that sort of long-term forecast multi-year forecast >> so I'm I'm still on the fence Hey, one thing I want to uh just point out, Jay, is that it looks like they're talking about seeing a fourth quarter adjusted gross margin of 36.5%. Third quarter adjusted gross margin was 40% uh against an estimate of 36.1%. Is that the number you were looking for? >> Yeah, but there's a lot of adjustments in there, so I haven't worked through them all to be honest. >> Okay. Okay. Hey, listen. Listen, this is a company that's been around for a long time. you know, you're entrenched in how you were, what you were, um, different executives coming in to try and write this ship. You know, it's a big ship to turn. Um, while also facing lots of growing competition. Do you feel like it is in the right direction? >> I think it's too soon to tell. I really hope it's in the moving in the right direction, but it's too soon to tell. >> Like what what are they going to do with those fabs, right? And I you know I' I've been saying for years that Intel's biggest challenge is not external competitors or customers. It's their biggest challenge is internal and fixing their culture. So on that on that mark I think this this is a step forward. Leoo has put a you know he has a plan and he's chipping away at this sort of internal problem but they really have to readjust their worldview internally and understand that they're not the the dominant player that they were for 20 years. They're they're the upstart now and they got to act like it. Jay, we spent a good portion of our program earlier talking about economic statecraftraft and the new role the US government is is taking in companies, the reporting around potentially investing in some of these quantum companies. We of course have the Intel am the US government being among the biggest shareholders in Intel. um US Steel, the golden share there, uh the critical minerals and mining companies that have uh taken investment or had interest expressed in them. From an Intel perspective, how does the US government investment change Intel? >> I I think it is going to encourage other US chip companies to consider working with Intel Foundry, right? Because you know, Nvidia's already invested in it. Soft Bank's invested in Intel. Now, do we see Apple or Amazon or Google or one of these other c other potential Intel customers sign up to work with Intel Foundry take that risk because it could be seen as patriotic >> that Well, that's okay. I'm glad you said that. Do they do it because it's the right thing for their business because it's the best option for a foundry or is it because it shows the Trump administration that they're supporting a business that the administration has invested in? >> So, I think it can be both, right? My my view is that these companies need to work with Intel. They need to see Intel Foundry succeed. If because if they abandon Intel Foundry today and Intel abandons it, you know, entirely, what happens in 5 years when they're, you know, TSMC has an effective monopoly today, >> right? >> In 5 years, they'll have a true actual monopoly. And that's that's going to be really challenging for all these all these companies. And so it's hard in, you know, the way that companies work, they you know, they're thinking on 90-day cycles. Somebody needs to be thinking of sort of the five 10 year time horizon. And maybe the government is the sort of the forcing function that gets us there. >> You know who thinks in more than five or 10 year cycles? A little country named China. They're pretty good about those long-term plannings. Um just having some fun with you, Jay. Well, having said that though, you know, on on the other hand, are there companies who are saying I don't want to get involved with anybody who's involved in the government because just like the way the US government for a long time has been or you know, US investors have been critical of you know sovereign held entities you know in other countries. So is there some you know justification in that as well or should we just assume that Intel now has a massive >> you know backup called the US government. >> So I think everybody's a little bit uncomfortable with the US government taking stakes in companies. Everyone I know on Wall Street, everyone I know in the valley just a little bit uncomfortable about it sort of ideologically. It's it's not something we're used to. It's clear that, you know, the US is moving towards some kind of national industrial policy. This is one way to achieve that. I'm not sure taking a stake in it is quite the right way to do it, but You know, there there there are merits for being a little bit more some somewhere in between the government controlling everything and the government doing nothing. Maybe there's a happy medium we can find. >> Hey, 30 seconds. Uh on the call or you're sitting down with Intel execs, what do you want to ask them? Just quickly, >> what are you doing with Foundry? >> Okay, that was quick. >> So, appreciate it. Jay Goldberg, thanks. Have a good evening. Senior analyst, semiconductors, and electronics at Seapport Research Partners. This is the Bloomberg Business Week daily podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5:00 p.m. Eastern, on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal. [Music]