Starlink Ukraine Controversy; SpaceX and Tesla Study Merger

0:02 Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today.

0:15 Karen, we begin with the latest on the war in Ukraine and fraying relations between the U.S.

0:20 And Ukraine.

0:21 Elon Musk reportedly ordered the slowdown of Starlink satellite technology used to defend Ukraine. This is according to a Wall Street Journal report that cites unnamed American officials who suggest Musk restricted the speed of Ukraine's access to Starlink.

0:36 We get more from Bloomberg's Oliver Crook.

0:38 I think there's still a lot of information that needs to come out about what exactly happened here. I mean, it's already sort of notable that there was no warning to anybody about this ahead of time, that any sort of a service would be throttled down to the Ukrainians. after the Ukrainians were noticing this on the battlefield and then basically went public with it. And then since then, everyone's been trying to figure out, you know, what happened?

1:01 Was there actually the service being reduced? Whose decision was it? And those questions are beginning to be answered by some of the reporting here from The Wall Street Journal, but are not completely answered, right? So, this report suggests that this is a decision that was made consciously and deliberately by Elon Musk, according to a number of the people that The Wall Street Journal spoke to.

1:20 That's Bloomberg's Oliver Crook. The Journal also reports Musk discussed the Starlink decision with President Donald Trump after the shortfall became publicly known.

1:27 Nathan, as controversy swirls over the recent slowdown of the Starlink satellite system, Secretary of State Marco Rubio said the Trump administration had nothing to do with it. During a visit to India, he told reporters Ukraine would not exist without American support.

1:42 The reporting out there was that somehow the United States government was denying them something they needed in order to defend their country.

1:48 That's not true.

1:49 That's not accurate. And for leaders in Ukraine to continue to represent that is also not accurate. I would also say, and again, I harp back on the statement that was made a few days ago. I don't know who this official was in the Ukrainian government that went around saying that a bunch of people had died as a result of what America was denying them. Not only are we not denying them, and it's not true, how many millions of people have been saved because of what America has already provided? No country in the world has done more to help Ukraine over the last four and a half years than the United States, including under the Trump administration.

2:18 Secretary of State Marco Rubio said the U.S. can't control what a private company does with its product.

2:24 Now, Karen, negotiations on the war have shifted to Russia, where U.S. envoy Steve Witkoff has reportedly begun talks with President Vladimir Putin.

2:31 That's according to Russia's Interfax news agency.

2:34 The visit comes a day after Witkoff met with Zelensky and some European leaders in Oslo, Norway. The meeting suggests leaders are keen to bring momentum to peace efforts more than four and a half years after Russia's army invaded Ukraine.

2:46 Let's go to the countdown to the midterms now, Nathan. The election is just 13 days away. And last night, President Trump headlined another campaign rally in Greenville, North Carolina, to support Republican Senate nominee Michael Watley and blast his Democratic opponent, former Governor Roy Cooper.

3:05 He's just a liberal schmuck. He really is.

3:10 You can't have him, you can't have him go to Washington if you want a, he's a super liberal sociopath.

3:17 Who would do this?

3:18 And the president spent much of his rally speech focused on crime, though he did repeat his prediction that gas prices will come down once the Iran war is over. As the election gets closer, the latest Federal Election Commission filings show President Trump's super PAC. unleashed $ 277 million from September through the first two weeks of October. The president's committees have spent at least a million dollars on eight Senate races, including North Carolina's. And in the interest of transparency, we should note that Michael R. Bloomberg, the founder and majority owner of Bloomberg Radio, parent Bloomberg LP, contributed about $ 80 million in September and October to help Democrats in the midterms.

3:58 And Karen, pre-election polls increasingly point to significant Democratic gains in less than two weeks.

4:03 Bloomberg's Amy Morris reports from Washington.

4:06 Democrats are pushing their campaign targets deeper into Republican territory with their House campaign arm expanding the red to blue district list to include seats that aren't usually considered competitive. Jim Messina was Barack Obama's campaign manager. He tells Balance of Power there are ways to break down the numbers to get an idea of how these races will swing.

4:25 The numbers I actually care about are the early vote numbers.

4:29 Democrats have a 15-point lead in party identification of those.

4:32 And then the other thing I really look at is enthusiasm.

4:35 But Republicans do have some structural advantages, including redistricting and huge campaign coffers. In Washington, Amy Morris, Bloomberg Radio.

4:43 All right, Amy, thank you. And as the election gets closer, Democrats are now suing President Trump and the Justice Department for what they call a coordinated effort to erode confidence in the vote. The Democratic Senate and House campaign committees are asking a judge to block the administration from forcing states like California and Nevada to set aside tens of thousands of mail-in ballots until their voter citizenship status can be verified. Last week, the Justice Department sued California for refusing to join its effort to remove suspected non-citizens from the state's voter rolls. This new lawsuit comes a day after federal agents arrested 11 non-citizens in California and charged them with fraudulently registering to vote.

5:23 As we say, Karen, the midterm elections are just 13 days away now. So we invite you to check out Bloomberg's Washington edition, the newsletter about money, power and politics in the nation's capital with reporting and insights through the lens of business markets, government and the economy. Sign up for the Washington edition now for free at Bloomberg dot com slash newsletters.

5:44 And Nathan, President Trump's approval rating has hit a new low, and it's just two weeks before the midterms, as we've been saying. A New York Times-Siena poll found just 36% of likely voters said that they approved of Mr. Trump's performance, while 59% said that they disapproved.

5:59 Well, Karen, there's some news on the trade front this morning. Hopes for an imminent deal with Mexico seem to have hit a snag. Bloomberg News has learned trade negotiators have hit an impasse over steel and aluminum tariffs. Sources tell us talks cooled off in recent days after U.S. officials, including Commerce Secretary Howard Lutnick, took issue with Mexican demands for reduced tariffs on metals. We're told Lutnick's tried to exert more influence on the talks after taking a backseat to U.S. Trade Representative Jameson Greer. The standstill may mean major progress with Mexico. We'll have to wait until after the midterm elections.

6:31 Well, we turn to the markets now, Nathan, where futures are, well, they're kind of mixed this morning. And this is following some better-than-expected earnings from SpaceX. That stock is up about 9.5% in early trading. Elon Musk is now pushing to combine SpaceX and Tesla in what would be the biggest merger of all time. Musk discussed bringing the two companies together on the SpaceX earnings call.

6:54 I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity. And there's a lot to be gained from cooperating on developing superintelligence software.

7:08 Elon Musk and the company conference call a merger of SpaceX and Tesla would be a blockbuster, creating a conglomerate spending electric vehicles, energy storage batteries, rockets, and satellites.

7:19 Well, Karen, Citadel founder Ken Griffin is the latest major investor to warn about an artificial intelligence bubble. He says game-changing technologies have often gone hand-in-hand with investment bubbles.

7:31 The big picture is there's almost certainly bubbles within this moment in time. And any radical transformation of our economy is generally intertwined with a bubble.

7:41 All right?

7:42 I remember back in 1999, 2000, the metrics that we used to value Internet companies. And let's be clear, some of these Internet companies had pretty fanciful business models. But, I mean, I just wish I'd kept my Amazon stock from that moment in time. And the internet, which was the great bubble, could it be more of a part of our daily life today than it is?

8:05 Ken Griffin of Citadel spoke there to Bloomberg's Danny Berger in New York. His comments come as the Wall Street Journal is reporting that Anthropic could spend three quarters of a trillion dollars on computing power.

8:15 And Nathan, former Disney CEO Bob Iger's latest book is scheduled to be released in March. The book is about Iger's second tenure leading the entertainment giant between 2022 and 2026. Iger returned to lead Disney after the ouster of his hand-picked successor, Bob Chapek, whose own book came out in September.

8:35 Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's John Tucker. John, good morning.

8:42 Good morning, Karen. The city of New York wants to force companies to tell people when they're interacting with AI. Let's get more from Bloomberg's Matt Piper.

8:52 The city's Department of Consumer and Worker Protection has unveiled a proposal covering all automated systems, including rules-based chatbots and AI, that handle customer service calls. It would also require a one-touch option to connect callers with a real person. Companies that violate the city's rule would face potential restitution and civil penalties starting at $ 525 per violation. A hearing on the proposal is set for November 19th. In New York, Matt Piper, Bloomberg Radio.

9:18 Thousands of Israelis living abroad are expected to return for the October 27th election, widely considered that country's most consequential in decades. The October 2023 Hamas attack and attempts by Benjamin Netanyahu's government to overhaul the judiciary both served as a wake-up call. According to Trading on Polymark, the odds of Netanyahu leading the next government stand at just 29%.

9:44 A driver was shot dead on the upper level of the George Washington Bridge last night. Port Authority police responded to reports of a one-vehicle crash on the westbound upper level of the bridge just after 7. Officers found the driver with what appeared to be a gunshot wound to the head. Another nor'easter threatening the east coast, so that means flooding alerts for coastal communities from North Carolina right up to Cape Cod. The storm's been carving up the coast for days. We'll have to deal with it another 36 hours or so. We've got coastal flooding, gusty winds, and dangerous surf all the way from New Jersey to the Outer Banks. Global News, 24 hours a day and whenever you want it with Bloomberg News Now.

10:22 I'm John Tucker. This is Bloomberg, Karen.

10:26 Thanks, John. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashower.

10:31 Thanks, Karen. The NBA's 81st season underway. The Knicks celebrated their championship but then lost their season opener in New York. Philadelphia won 106-100. The Sixers win in LeBron James and Jalen Brown's debuts. with their new team. In an afternoon game, the Celtics had a big lead in Detroit. The Pistons came back with a 28-3 run to win 121-113. And Oklahoma City won at San Antonio, 116-104. Victor Wimbledyama shot one for 13. That's your Bloomberg Sports Update.

11:01 Stay with us.

11:02 More from Bloomberg Daybreak coming up after this.

11:09 Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.

11:21 Talks on ending the war in Ukraine continue in Russia today, a day after U.S. envoy Steve Witkoff met with Ukraine's Volodymyr Zelensky in Norway. In the backdrop, Wall Street Journal reporting that Elon Musk ordered the slowdown of Starlink satellite service that blindsided Ukraine's military. Secretary of State Marco Rubio says U.S. policy on intelligence sharing with Kiev hasn't changed, but he does say this.

11:44 If it were not for the assistance of the United States, including under the Trump administration, there would be no Ukraine right now. Ukraine as a sovereign state would not exist.

11:52 That was Secretary of State Marco Rubio speaking to reporters in India. Joining us this morning from Brussels is Bloomberg Chief Europe Correspondent Oliver Crook. Ollie, we've heard Elon Musk say ultimately decisions on Starlink access are left to the Pentagon and the president. But this Wall Street Journal reporting, does that put the lie to that now?

12:11 What more do we know? Good morning.

12:13 Getting a lot of conflicting statements from a lot of different people. But just to kind of set the record straight for what we understand now, this was originally sort of coming out a couple of weeks ago that the Ukrainians coming out and saying it to the public. that the Starlink connectivity had been reduced, had been sort of constrained in some sort of way, which is obviously the main major lifeline for the Ukrainians. And it's actually one of the main capacities that the Europeans are in zero position to actually replace. So something that the Ukrainians remain totally dependent on the United States for. And everybody was sort of passing the baton around, you know, the Trump administration saying it wasn't them. Elon Musk saying kind of

12:48 rather explicitly that he was not the one who had made the decision or given the order when responding on Twitter to some of the Ukrainian officials saying that effectively this is up to the US government But according to the Wall Street Journal, this did come from Elon Musk. There is some conflicting, even within this reporting from the different sources, suggesting that this was something that maybe Elon Musk had sort of done on his own. But potentially, according to one of the sources cited in the story, this is a conversation that had happened previous to it with senior officials within the Trump administration and potentially Trump himself.

13:19 I mean, one does need to pose the question, sort of what personal interest does Elon Musk by himself have reducing the capacities for the Ukrainian military. But again, Nathan, it's something that we're going to certainly continue to watch. I think there's definitely some more reporting that has to be done around this because there's a huge amount of opacity.

13:34 And as we should just say from the Ukrainian side, lives really sort of depend on having this ability to shoot things out of the sky, but of course, to preserve their abilities on the front lines as well.

13:44 Well, one thing we do know for sure, Ali, is that Elon Musk himself has been part of this pressure campaign, I think we can say, on Ukraine with the world's richest man posting a on X that Zelensky should step aside. Where does this leave things now with Zelensky as he's been speaking again with White House envoys in Norway and now those talks continuing in Russia today?

14:08 Yeah, so despite a lot of the sort of, shall we say, fragrant rhetoric we've got over the last couple of days, even from the comments you played there from Marco Rubio sort of a little bit earlier in India, it actually seems, at least from Zelensky, he's calmed himself down a little bit and he's got a much more positive tone. He spoke to Marco Rubio over the phone, we understand, and as you were mentioning, there were also these discussions in Norway yesterday between Steve Witkoff Zelensky and a couple of the European leaders. And certainly the tone from the Ukrainian side is much more conciliatory. It's going to be much more sort of positive over the last couple of days than what we've seen over the last

14:41 couple of weeks. That said, we'll have to wait and see what we get from Steve Witkoff, who is in St. Petersburg today, to meet with Vladimir Putin. But again, you know, this is a large degeneration over the last couple of weeks, what we've seen between the United States and the Ukrainians. I think there is At least a hope on the Ukrainian and European side that this is part of the sort of bluster and the kind of blitz offensive from the Trump administration in the lead up to the midterms. Obviously, the Trump administration under great pressure to do with all the cost of living and the question of diesel and gas.

15:10 So potentially a little opening there after that. But that's obviously there's no guarantee of that.

15:15 Only a minute left here, Olly.

15:16 But you speak with European leaders quite a lot. Is there concern among them about their own Starlink access?

15:22 Well, I don't know that there's concern quite yet at that level. But in the number of the officials that I've spoken to over the last couple of weeks, they do point to the fact that there's been a huge amount of debt shouldering and the burden in terms financially that has been taken up by the Europeans. Of course, the Europeans don't have the sophisticated systems like the Patriot system.

15:40 So that is a place that Ukraine is still fundamentally dependent. But I think it's really the point that I get from all of them is how dependent Ukraine is fundamentally on the Starlink system. And there is no alternative in Europe. And one sort of final point, Nathan, if I can just tie the story from the last couple of days with the Ukrainian story. You've got these protests in France and all of this sort of chaos on the streets within France. The leading candidate now, Marine Le Pen, is the person who wants to withdraw support from Ukraine. That would be one of the two major pillars that's still holding up Ukraine. They're Germany and they're France. If she's elected president, that is something that the Ukrainians are also

16:13 intensely nervous about.

16:16 This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

16:23 Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen.

16:29 You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston and nationwide on Sirius XM Channel 121.

16:43 Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

16:49 And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long.

17:01 I'm Karen Moscow. And I'm Nathan Hager.

17:03 Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.