AI Trade Faces Big Test as Trump Rings Opening Bell — Open Interest 7/6/2026

[00:00:00] Dani Berger: Happy Monday. After a long weekend, we start to rally after the best week since early May. 30 minutes to go into the start of cash trading. I'm Dani Berger. [00:00:07] Bonnie Quinn: And I'm Bonnie Quinn. Bloomberg. Open interest starts right now. [00:00:19] Dani Berger: Coming up, it is a pivotal week for the AI trade as SpaceX joins the Nasdaq 100, Samsung reports earnings, and SK Hynix makes its U.S. debut. [00:00:28] Bonnie Quinn: The market is getting its first look inside. Kevin Warsh is fed when the June FOMC minutes drop Wednesday. [00:00:34] Dani Berger: Plus of Wall Street first. And the White House, President Trump will be ringing the opening bells. Both of them bells plural in celebration of the Trump accounts. [00:00:42] Bonnie Quinn: Got a few stocks to watch. And wouldn't you know, Dani, memory chip makers are among them. So we'll start with Sandisk leading the rebound here up 5.6% after the major sell-off. Loved nearly a quarter of its value last Wednesday and Thursday. It was a strange week, of course, some of those memory chip makers in particular. But it looks like we're off to a good start this week as well with several deals. And, of course, the SK Hynix IPO on Friday in the works for this week as well. So you have Micron up 3.7%. And good old NVIDIA still hasn't come back to the $200 mark, but it is at least pointed fractionally higher this morning, Dani. [00:01:17] Dani Berger: Yeah, I think we're going to get SK Hynix tomorrow even. So that might add to this market. And one of the deals you mentioned, Bonnie, Broadcom, they've expanded their partnership with Apple. We'll be designing custom chips through 2031. Broadcom shares up 4.2%. We know with the chip crunch, it is a grab for this supply. Let's dig more into it. Joining us now is Bloomberg Intelligence Head of Global Tech Coverage, Mandeep Singh. Mandeep, a lot happening in the world of chips. The Broadcom being the latest. SK Hynix comes to market to get funding. It is all part of the same ecosystem of just we're in a supply crunch right now. [00:01:51] Mandeep Singh: It is. And, look, Micron earnings showed us that all these consumers of memory are looking to lock in the prices through supply chain agreements. And, you know, Micron talked about four hyperscalers actually forming almost $100 billion in backlog for, you know, Micron through 2030. So from that perspective, these companies not only have the pricing power, they have earnings visibility now. And the real thing here is the supply expansion. And so far, these companies, especially on the memory side, have been quite disciplined with their CapEx. Unlike the hyperscalers that are growing their CapEx very rapidly, you haven't seen that kind of CapEx increases from the memory side. And all of that supply is going to come online two years from now. And even that may not be enough if NVIDIA continues to add more memory to the next version of their architecture. So those are the dynamics that are at play here. And that's supportive of what memory companies are printing [00:02:52] Bonnie Quinn: in terms of earnings growth. Mandeep, this SK Hynix IPO, it's not your typical IPO, right? It's a company that's been, you know, around for decades. It's coming to the U.S. Can it find $28, $29 billion more, you know, investor interest and beyond that? Can it push the price higher after that? [00:03:08] Mandeep Singh: I mean, just going by how well SpaceX has done, I think memory dynamics are probably even better in terms of, you know, the earnings growth story that these companies can show, at least for the foreseeable future. And look, the cyclicality will always be there when it comes to memory, but SK Hynix is the leader when it comes to HBM. And from that perspective, they may actually grow earnings that, you know, supports almost half of their market cap over the next two to three years, given by we are seeing triple-digit earnings growth for a lot of these companies. [00:03:42] Bonnie Quinn: Thank you so much, Mandeep Singh of Bloomberg Intelligence there. Another potentially market-moving event this week is the Fed Minutes coming out Wednesday. It will give investors a better idea of how the committee is viewing inflation as oil prices continue to drop. Bloomberg's international economics and policy correspondent Michael McKee joins us now. Michael, Kevin Borisch keeps teasing us about family fights. How much detail are we going to get about these fights, if any? [00:04:07] Michael McKee: Well, that's kind of the bottom-line question here. It's a good thing you have the tech news this week, because not much on the eco front, except for ISM coming up at 10 o'clock, and then we get the Fed Minutes on Wednesday. Let's look at what's in the minutes, first of all, to set the stage here. First, you get any kind of write-up about any kind of special briefing that was given on any particular topic. Then the staff market analysis, the staff economic analysis, and then the committee discussion, which usually follows the pattern of growth, jobs, and what they think about inflation. Then you get the statement and the vote. Now, will we get the same kind of minutes on Wednesday? That's the question under Kevin. Please don't talk too much, Warsh. Will the minutes be trimmed? There's a chance of that. They have been slightly edited in recent years to make them a little bit easier to read. How strong was the rate hike push? That's going to be the key question there. How many people -- we know nine people are leaning that direction, but how much argument was there in favor of the idea of raising rates soon? And is there any forward guidance at all? In the minutes, usually you get some people saying, well, they think if this happens, then that might happen. Maybe all that is scrubbed. We just don't know yet. And I thought I would add one thing for all the viewers out there. Clip and save. Copy this down from your television set. These are the Fed minutes counting words that we use all the time. In order. They run from all to one or another. And so we have to figure out how many people are represented by each one of those. And that's the main task of trying to figure out the [00:05:46] Dani Berger: minutes up to this point. Yeah, but is there going to be a committee on these words and, you know, they're all going to be changed and we're going to decide that the Fed minutes don't exist anymore because whatever the committee says -- certainly could be a task force. A task force, thank you. A task force on communication, right? True. And I just wonder, though, how Trump and the administration are setting this up. Trump was speaking on Thursday basically saying it's a hostile Fed. And if they're basically giving Kevin Warsh the room, that if this is a Fed that leans more hawkish, that it's not his fault. [00:06:13] Michael McKee: He's just trying to herd cats. Well, he is trying to herd cats and he's brand new at the job of being chair. And there are 18 other members of the open market committee, 17 at the moment because we're missing the Atlanta Fed president. But trying to get everybody together on one viewpoint is difficult. And now when you've got the Fed right on the edge of is it too accommodative? Is it too tight? It's going to be hard for him to get anywhere. There's no case right now at this moment for a rate cut. So the president is going to be disappointed by definition. Perhaps. But you know what I always [00:06:49] Bonnie Quinn: think he is the president's guy, right? So almost no matter what he does, the president will likely back him. No matter what he says about interest rates. I mean, Powell was the president's guy too. Well, that's true. But he wasn't because he was in office by the time he came back in again already. And so he was able to be a villain in the president's eyes. I don't know. I just think, [00:07:06] Michael McKee: you know, Kevin is Donald's guy. Well, we think that the president will give him some runway room, but this is Donald Trump. So nobody has any idea. Mike, thank you so much. That's Bloomberg's Michael [00:07:16] Dani Berger: McKee. Speaking of the president, let's turn to NATO. Russia has launched a massive overnight assault on Ukraine as President Trump prepares to meet with Ukrainian President Vladimir Zelenskyy on the sidelines of Wednesday's NATO summit in Turkey. Joining us now is Bloomberg Washington correspondent Tyler Kendall. Tyler, what are we expecting? Well, Danny, at this point, [00:07:35] Speaker 5: we know that our allies are hoping that they can renew this focus on Ukraine during this NATO summit. As you mentioned, the White House does confirm that there will be this bilateral meeting taking place on the sidelines of the G20 between President Trump and Ukrainian President Zelenskyy. Sorry, I have a [00:07:54] Dani Berger: noise coming from the computer. Tyler is going to say we can't hear it. Continue on. I think it's low enough that we can't hear your computer noise. So what are we expecting? But basically, we know that [00:08:07] Speaker 5: allies are hoping that the U.S. will perhaps commit some further military investments when it comes to Ukraine. Zelenskyy himself is saying that he's going to be asking for some additional Patriot missile batteries as we are seeing some of these recent attacks really expose some of those gaps when it comes to Ukraine's air defense systems. The thing is, at the moment, we have seen so much focus when it comes to the conflict in Iran. There does seem to be this push to get it back re-centered on what really has been stalled negotiations when it comes to Ukraine. The issue becomes, though, the conflict in Iran has really exposed these rifts within the NATO alliance. And we have President Trump just days ago renewing his threats when it comes to NATO, even his U.S. ambassador to NATO, Matthew Whitaker, has said that if allies do not boost their defense spending, then the U.S. could take away some of the benefits of the alliance. The U.S. has already said that it is reconsidering deploying about 5,000 troops in the region. And we'll look at what to do when it comes to deploying assets in times of crisis. Now, Danny and Bonnie, we did see the NATO Secretary General Mark Rutte here in Washington just the other week. He was really touting what has been some significant spending increases when it comes to European countries. Our own analysts at Bloomberg Economics say that the top five European economies are now at about two and a half percent of GDP when it comes to military spending. But that's still below this White House's goal of five percent by 2035. [00:09:35] Bonnie Quinn: Tyler, before all that happens, there's going to be the official launch of the Trump accounts. And in the last few weeks, we've seen companies talk about, you know, adding to them and even individuals. Gwen Shotwell of SpaceX, for example, this morning going to give a share away to a certain cohort of kids in the United States along with their husband. What do we know about the ceremony and what exactly is official now? [00:09:57] Speaker 5: Well, President Trump is now set to ring the bell this morning, as you guys mentioned at the top of the program alongside officials from the Nasdaq and the New York Stock Stock Exchange. It's going to be a custom-made bell. I'm excited to see what that's going to look like. But you're right, it does mark what is the launch of these Trump accounts that started on July 4th, keeping in mind that these are those tax advantage accounts. And if you have a child that's born between January 1st of 2025 and December 31st of 2028, so essentially President Trump's second term, then you'll see the seed money put in from the government of $1,000. This is something that the Trump administration is really hoping will help bolster their economic agenda and their plans as we head into the midterm elections. I pulled the most recent stats, Vani, from the Treasury Department, which says that so far 6 million Trump accounts have been opened, and that includes 1.4 million that are eligible for that federal seed money. So we'll see [00:10:48] Dani Berger: what President Trump says shortly before the open. And then, as we've been mentioning, Tyler, a historic opening bell from the Oval Office. Bloomberg's Tyler Kendall in Washington. Let's get a check on markets to start your week. After the best week for stocks since early May, you have seen the hyperscalers outperform as the chip stocks took a breather. But today, everything is rallying. There does seem to be some reports that we have yet to confirm floating around there that Intel has also hiked the prices of their chips. So that's helping us rally more than one percent. Ten-year yields come in by two basis points. We're at 446. And Brent crude below $72 a barrel with Saudi Arabia cutting the price of their oil output to Asia by the most in 26 years. Vani. Well, Danny, let's get a look at some other movers on our radar now. [00:11:32] Bonnie Quinn: Advanced materials firm Solstice is buying chemical producer element solutions in a $14 billion deal. [00:11:38] Dani Berger: Elsewhere, Tara Wolf says that Anthropics signed a 20-year lease with its Kentucky, Kentucky data center with some [00:11:45] Bonnie Quinn: $19 billion. Tara Wolf up 16 percent. And a little check on SpaceX. There are some more details on what I was just talking about. Well, President Gwynne Shotwell says a share will be donated to certain children in this Trump accounts initiative being announced later this hour. And that is on her personal behalf, her and her husband. [00:12:04] Dani Berger: Coming up on the show, Alibaba shares get a lift as a federal judge also lifts a lobbying ban tied to a Pentagon blacklist. We'll have the details for you next. This is Open Interest. [00:12:23] Bonnie Quinn: Now to high interest to look at what's making headlines around the world. FIFA clearing U.S. striker Folloran Mulligan to play against Belgium after President Trump appealed directly to the FIFA president. Belgium called the decision astonishing and is considering an appeal. European soccer leaders also criticized the move, saying it hurts the integrity of the World Cup. Brookfield-backed data center operator C-square is targeting up to $1.35 billion in its U.S. IPO. The company, which operates more than 60 data centers across North America and the U.K., plans to use the proceeds to pay down debt. Brookfield will keep voting control after the offering as investor demand for AI infrastructure remains strong. A federal judge temporarily blocked the Pentagon from enforcing a new lobbying ban against Alibaba, giving the Chinese tech giant a reprieve while the court weighs its constitutional challenge. The law prompted every registered Alibaba lobbyist to drop the company after it was added to the Pentagon's blacklist of alleged Chinese military linked firms. Let's discuss more, Bonnie, with Bloomberg senior tech [00:13:30] Dani Berger: editor Mike Shepard. Shep, great to see you this morning. And look, we can go through the details of this story, but I wonder just kind of at a large scale if this somewhat shows the limits of this Trump administration's ability to try to enforce their will on Chinese tech companies. Well, it's a great [00:13:48] Speaker 6: question. It really underlies the dispute at hand here because what Alibaba is claiming is that, look, two things. One, they say we are not a Chinese military company and they would like that question addressed in court. But two, they also see this new law that took effect barring the Defense Department from working with companies that hire lobbyists serving both their business and sanctioned Chinese entities as a violation of their free speech rights. The law that just took effect last week essentially forces lobbyists to make a choice. You either work for the Chinese firms that are now on this Pentagon blacklist or you work for one of the tens of thousands of contractors serving the Pentagon. Now, that is a pretty forward leaning step by the U.S. government in its effort to try to rein in China wherever it can, including in its dealings with the U.S. government and the Pentagon. Now, depending on what the judge ultimately rules here, we have to remember the courts have often given some deference on national security questions to the government. This really could have far reaching implications because, Danny, there are so many other big Chinese companies on this list. Most recently, the added Baidu, BYD. We also see some top chip makers, including CXMT and YMTC on there, as well as Tencent. So this will have some ripple effects [00:15:08] Bonnie Quinn: beyond just this courtroom. Mike, what are they currently lobbying for? And what other companies are they [00:15:14] Speaker 6: competing against for these aims? Well, you know, Vani, all the companies that you can think of under the sun are looking for one break or another from the government. And in part, what they would like to be able to do simply is to be able to lobby the Pentagon so that they can get their names taken off the list. There are a lot of different ways that they can make these appeals to be removed from the so-called 1260-H list that refers to the section of law that established this list that the Pentagon is supposed to put together and publish every year of companies it believes serve the People's Liberation Army. They can fight that in court or they can just try to take their appeals through a different manner just by knocking on doors at the Pentagon, going to members of Congress, going to other parts of the administration. But unless they have a registered lobbying firm here working on their behalf, that becomes much harder. And in this case, it would, in essence, start to really brush up against this new law that took effect last week. [00:16:15] Bonnie Quinn: All right, Mike. Thank you so much. Bloomberg's Mike Shepard in Washington, D.C. Coming up, RBC's Lori Calvasina on her firm's new S&P 500 price target of, get this, $81.50. This is Bloomberg Open Interest. [00:16:36] Speaker 7: The memory stocks, the revisions have been spectacular, but they can only go so high. So all that's kind of happening at the same time. And I expect the hyperscalers now to stabilize. That's what's going on in the last couple of weeks. And the semiconductor stocks are going to are going to correct. That's a good that's a good development. That doesn't mean the CapEx cycle is over, but that ebbing and flowing between the two is a natural kind of governing factor because you can't have this divergence continue. It's unstable. [00:17:05] Dani Berger: Morgan Stanley's Mike Wilson on surveillance with a call of rotating from chips to hyperscalers. Joining us now is RBC Capital Markets head of U.S. equity strategy Lori Calvasina. Lori, I want to get to that in a moment, but first we've got to start with your price target upgrade from you and the team. Where are we at now and what was driving the upgrade? So we did this last week. [00:17:28] Speaker 8: We put it out on Monday and we went to 81.50. And this is a 12-month target. And I bring that up because most strategists have the December 31st number. We stopped doing that. And we really want our price target to be sort of a long-term compass, right, where we sort of keep our eye, you know, irrespective of the noise and pullbacks here and there, where do we expect to be 12 months down the road. And so we have five models that we look at. 81.50 is roughly the median and the average of the five models. And at the low end, our GDP test is at 7777, which is an easy number to remember, but hard to say. And then the most bullish model is over 8300. And two of the models are actually right in that 81, you know, kind of 60-ish type area, which we've rounded to 81.50. That's our sentiment model and our valuation and earnings model. And I do think our valuation and earnings model, like all the things that we can get excited about and all the things that we can get worried about, that valuation earnings model probably gives us the best ability to kind of bake all those together. [00:18:22] Bonnie Quinn: In your base case, not even your most optimistic case, what brings us there? How much of it is AI-related, semiconductors, memory chips? [00:18:30] Speaker 8: Yeah, you know, I do sort of share, you know, some of Mike's concerns, you know, about the correction and the semiconductors. We actually went to London and Zurich back in mid-May. And I got an earful from the London crowd in particular about how they had all been in the AI stocks and the semis. And, you know, what else should we be talking about? So if you read between the lines, right, it could tell you they were thinking about taking profits. And I will say, continuing, you know, since that trip, even as late as last week, people have been wanting to look elsewhere for opportunities. Can we just run down the sectors? What other, you know, industries look interesting? And I'll say, you know, I'm not really sensing a ton of doubts longer term on the AI story. It just does feel to me like it's a trade that's gotten ahead of itself. You know, when we look at semiconductor valuations, Russell 3000, looking at like a 30-year history, we're not at tech bubble highs, but we're at post-tech bubble highs, right? And so this market has not really displayed a tolerance for letting things stay too frothy for too long. So I think that's what's going on there right now. If you think more about like the mag 7 trade, we watch the top 10 market cap names in the S&P on a rolling basis. Earlier, you know, in the second quarter, we had seen that basket of stocks get up to 31 times on forward earnings. And when it's crossed 30, the most, you know, recent couple of times, we've seen a bit of a stumble there. And that's now down in the 20s. It's not at past lows yet. But we think that both of those, you know, kind of pockets have just shown some valuation froth that's in the process of being taken out. [00:19:54] Dani Berger: Well, what happens when you get some of these more technical elements coming in, in terms of supply? So this week, tomorrow, we're going to get SpaceX added to the NASDAQ 100. And then Bonnie mentioned this, we're going to get SK HINIX doing a dual listing in the U.S. to close the week. What difference does that make having demand at the start of the week from ETS and then supply to cap [00:20:12] Speaker 8: the week with SK HINIX? You know, you know, I'll leave sort of the supply discussion to other folks who are a little bit stronger on that than I am. But I would say you're brilliant on everything, but continue. But I would say, you know, the question of market froth, I think, is one that comes up. And when you kind of, you know, zoom out and you look at things like the AAII survey, for example, it's fairly subdued. It's been chopping around kind of at average, one standard deviation below average. That doesn't feel like a frothy market to me that's on the cusp of a major correction. If you look at CFTC data for institutional futures positioning and equities, it's a one standard deviation event, not a two standard deviation event. We've been hovering around that one standard deviation event for quite some time. So you haven't really seen euphoric positioning there. You do see it if you look at conference board, the consumer survey, the question on retail investor optimism, you know, sort of, or just consumer optimism on the stock market over the next six to 12 months. That's been pretty elevated. So that's maybe one place you can see a little bit of frost. [00:21:07] Bonnie Quinn: Nobody called you up last week and said, oh, my gosh, is this the beginning of the end when Korea was down eight percent and the U.S. was following it and it happened two days in a row and everyone was freaking out. [00:21:14] Speaker 8: You know, I only cover the U.S., right? So I'm not going to get those questions anyway. But I would say on the broader, you know, sort of tech space, well, number one, it was very quiet last week. True. And I think it's going to be. But there's sometimes a bleed over effect. Lori, we have to jump to the break, [00:21:28] Dani Berger: but we're going to continue this conversation after the opening bell. Lori is going to stick with us. And markets are rallying and we are awaiting words from the president who is currently in the oval office with the Nasdaq CEO Adina Friedman and the Nasdaq President Nelson Griggs. We'll have that opening bell after this commercial break. [00:21:46] Speaker 9: Stay in the White House because I'm not giving it back. [00:21:51] Dani Berger: It's looking great from the oval office today. We listen in to the president speaking ahead [00:21:56] Speaker 9: of that about Trump accounts. It looks to me like it's going to stay. Yes, it's staying here. Well, we'll watch the clock. [00:22:06] Speaker 10: Thank you, Mr. President. So great to see you. So great to see you. [00:22:09] Speaker ?: Great show this weekend. Thank you. I was down in your box. I would be pleased to join you again. Thank you. Thank you, Mr. President. Mr. President. That was great to see you soon. Mr. President. Thank you, Mr. President. Hi, everyone. Good evening from Nasdaq. Thank you. Thank you very much. Thank you. Thank you, Mr. President. [00:22:26] Speaker 9: Okay, I'll get over at the bell, right? Yep. I want to stand next to these soon to be very rich people. [00:22:35] Speaker 11: Good. So we'll get going. And good morning. I'm grateful to be with you on this historic occasion. The American dream belongs to every child. And today, we are equipping the next generation with the right to claim their rightful share of it. Through Trump accounts, our president is creating an ownership economy, an ownership economy where all citizens become shareholders. Thirty-eight percent of American families do not have any exposure to our great equity markets. But with Trump accounts, over time, we can get that number to zero. Already, six million American children have signed up, 86 percent of them with families earning less than $200,000. U.S. Treasury, 1.4 million of those accounts will receive $1,000 from the U.S. Treasury to seed the accounts. When the markets open in just a few minutes, Trump accounts will benefit. So ring the bell, Mr. President. I will just finish by saying on the eve of our -- on the heels of our, our -- on the heels of our 250th anniversary, that this will be one of the president's most enduring legacies. And the great bounty of this will go for generations to come. It is my privilege to invite President Trump to speak after we had two firsts today -- first time we've ever had the New York Stock Exchange and NASDAQ. They do a joint opening and first time we've ever had the opening bell run in the Oval Office. So, Mr. President. [00:24:42] Speaker 9: Well, this is very exciting and amazing achievement. People -- we don't know this, Michael, but people have been trying to do this for 30 years. And they were so generous. He put up -- and she put up -- I think she more than him, maybe -- both very much involved. But Michael and Susan put up. $6,250 million. And I'm sure if I make a phone call, they'll do it again. The job they've done is incredible in life. So, we want to thank you very much. Amazing. Really amazing. And our friend from Micron, by the way, called me on Friday. And he said Micron's putting in $250 million. And he's done a phenomenal job. And 250 million and many other companies and people are putting up tremendous amounts of money. And it's something I'm very proud of. Some people think it's going to be -- go down as one of the most important things we've done during the administration. So, after a truly historic weekend, celebrating the 250th anniversary of America today, we're thrilled to officially launch the Trump accounts. And we had some beautiful people and speeches and tremendous crowds. We had the biggest crowd anyone's ever seen that, unfortunately, lightning caused it to leave. And everybody said, "Well, we'll do it another time." When I heard that, I said, "No, we won't." Everybody had left. I said, "We're not doing it another time. We're doing it on the 4th of July." And we actually started the speech on the 4th of July. We had to wait a little while, like a couple of hours, let the lightning pass. And everyone had left. And we came back and they had 150,000 people came back from the -- they took their car. They're going back home to Texas. They turned their car around and came back. You wouldn't believe it. 150. I think the 150 was more impressive than the 425 or whatever it was. It was pretty amazing. And Mount Rushmore, likewise, was so incredible. So, the people love our country. Our country is doing incredibly well. Strongest military in the world has been displayed with Venezuela, who we're getting along with fantastically now. We've taken hundreds of billions of dollars of oil and given them hundreds of billions. They have more money than they've ever made. And we're doing very well. Paid for the war many times over. And then, Iran, we're doing actually equally as well. We're just not getting the kind of coverage that we should. But we have eviscerated them military and the bottom line is our country is strong. We have the greatest military anywhere in the world. I was with President Xi three weeks ago and I said that and there was no argument. Nobody's arguing. We built it during my first term. Now, we're using it now for very good reasons because, in this case, Iran can never have a nuclear weapon. We can never let that happen. On Saturday, July 4th, our administration deposited one-time seed contributions of $1,000 each into the Trump accounts of over 500,000 American children. It's a lot. And millions more. We'll be getting additional contributions from generous owners like, as I mentioned, Michael and Susan Dell. They are truly incredible. Go out and buy a Dell computer. He's not doing it for that. But I'll bet his business, Brad, has gotten even bigger. I have a son that loves their laptop. I have to tell you, no, I want a Dell. We're going to get him that money back one way or the other. And then I'll ask for another $6,250,000. We'll start the whole process all over again. No, he makes an incredible product and right from the beginning. And Brad Gerstner has been pushing this. So he's a very successful man. Not quite as famous as the Dell family, right? You know, Michael, but you are he's an amazingly successful guy. And he's put up a tremendous amount of money. And again, I want to thank Mike and all of the companies that have already called me. And they're putting up a lot of money. This is nothing. This is not me. And putting the name on it was not my idea. That was a whole group of people that passed legislation because this is all made possible only by the passage of the great big, beautiful bill. And I knew that this was happening, but I didn't know. All of a sudden, they see my name on it in the bill. But I'm very proud to have my name. They think it would sell. They said it'll sell better if your name's on. I said, look, leave it on. But I did not. I just want to. I did not ask for it. Michael, is that a correct statement? Did I ever go to you say, Michael, don't put up the money unless they use my name? No. But I have done that in other cases. I will tell you. In certain in certain other cases, I've done that. Right, Scott? But not in this case. This is a very special kind of a thing that took place. It's in a way, it's a miracle. Nobody thought it was possible. Think of it. Children that are born without money, without any money, great parents. They can have everything can be great, but they have no money. They can become very wealthy children at 18 and they can flip it over or their people can flip it over into other vehicles at a certain age so that they don't take it out. I would recommend they probably don't take it out, but they can have a lot of money, especially if the market continues. Can you imagine if you did this during Trump a year ago, a year and a half ago, where the market's gone up at levels? As an example, everybody said when I got elected, there's no way that during the four year period we'll ever hit 50,000 on the Dow. And we had 50,000 on the Dow, I would say, in the first year records. We had records. What NASDAQ has done, what the New York Stock Exchange, all the stock exchanges, 7,000 on the S&P was impossible during the first year. But they really thought it was impossible in four years and we hit it before the first year. So if you had if the children had invested the money a year and a half ago, we should have had faster. Actually, it's too bad, but it's going to go up. We have a hot country. It's going to go up. I think the market is going to go through the roof when all those factories open. They're being built all over the country at record numbers. We have never built in the history of our country what we're building now. We have 19.2 trillion dollars and much of that money is going toward building factories, plants, a automobile. We've never built as many automobile plants are all over and they're coming from all over the world. You know why? Because they don't want to pay tariffs if they build their cars here. They pay no tariffs. So Japan, instead of making them in Japan or South Korea, instead of making them in Germany with Volkswagen and Mercedes and BMW, they're all building plants here now. They're coming out of Canada. They're coming out of Mexico. Mexico took a lot of our business. So did Canada. They're all coming back. I don't know what the countries are going to do, but they're all coming back. So today, with the ringing of the opening bell for the stock market, those accounts will now begin to grow right along with our booming economy. And I really believe we're going to have the biggest boom of all right now. You haven't seen anything yet. Between individual contributions and the seed funds, $800 million in new capital will be invested in the stock market for America's children this week. And I also think that we're going to be putting numbers in the budget, which will be really spectacular because it's really not costing us anything. We're giving this money to children so they can have a good life very early on. They can have a good life. And that we're going to be doing also something we're working on later on. And it'll be also, I think, very popular. And I guess the best definition is they have a plan in Australia, which people really like. It's really worked out very well, incredibly well and very respected. And we're going to be talking about that with Congress and see if we can implement it. And that would be more for grownups as opposed to children. But it's something that's going to be great, I think, if we can get it done. And we're going to try very hard. But again, I want to thank Michael and Susan, Brad and his son Lincoln, as well as Secretary of the Treasury, Scott, who is really, Scott Pessant, who has really been an incredible, if you're, if you're casting a movie, you put him as the Secretary of the Treasury because he's central casting. Do we agree? What do you say? He's done a more importantly, he's done a great job. SBA administrator Kelly Loeffler, who has been phenomenal chairman of the SEC, Paul Atkins. Paul, thank you. What a job you do. You know, there's always been a problem there. And with you, everything goes smoothly. Although I have to say, Jay did a very good job also during my first term. But Paul's been incredible. Everybody, everybody wanted Paul. And he's exceeded expectations, I will say. And everybody knows it. Thank you, Paul. Great job. You're doing director of the National Economic Council. Kevin has said, I didn't want to lose Kevin. I said, Kevin, you're at a huge disadvantage, because selfishly, for a certain other position. And we have another, we had the two Kevins, and they're both great. And a friend of mine, Ted Cruz, we fought each other for a while. And he's a very tough competitor. And we became friends. We're actually great friends before the campaign. And everybody said, will this ever end? In fact, he was doing a rally. He said, could we do a joint rally? That's like you people doing a joint bell ring. It's like crazy, right? But he said, remember, we did the joint rally outside in Washington. We had a big crowd. And the media was saying, will it ever end? I said, it will, but not yet. But it ended. But then it came together better than, I think, better than ever before. He's done a wonderful job as a senator. Highly respected. In fact, somebody said, would you ever appoint him to the United States Supreme Court? Because he's a brilliant lawyer. [00:34:57] Dani Berger: You are currently listening to President Trump at the Oval Office for a historic ringing of the opening bells, the NASDAQ and the New York Stock Exchange coming together at the White House to celebrate the launch of Trump accounts, where they say they've deposited $1,000 and 500,000 accounts for children. The president praising both Micron and Dell. Dell rallying off the back of that. You can see Michael and Susan Dell there behind him. Shares of 3.8%. At the same time, we also learned in the middle of that, that Microsoft laying off about 2.8% of staff concentrated in its Xbox department. Those shares declining 2%. Overall, it is a market rally we have on our hands since the best week since early May last week. And the NASDAQ outperforms up 1.1%. Semiconductors bounce back after falling, and Brent crude remains around $72 a barrel. Let's bring back in RBC Capital Markets Head of U.S. Equity Strategy, Laurie Calvacina. And, Laurie, you know, Trump likes to speak in a very bullish way, talking about the hottest economy ever. But a lot of sell-side analysts have agreed and had this huge wave of earnings upgrades. I wonder how sustainable and achievable you think the bar is right now. [00:36:04] Speaker 8: So, you know, it depends on your time horizon, I think. If you go through and you sort of look at, like, the quarterly stats, the 2Q numbers are starting out, right, at a place of deceleration versus the monster 1Q. I think the street knows that, right? And we have been seeing earnings expectations kind of tick up for a lot of sectors that weren't moving much during the war. We've been seeing some tick up recently. So there's a little bit of optimism going into this reporting season. And the bar maybe feels a little bit high in the short term. But I would say longer term, you know, we've spent a lot of time sort of parsing through the consensus estimates. And at the end of the day, you know, I do believe that the company-level analysts are the best ones to sort of give you, you know, the specific read on individual companies and you add them up. So we use the bottom-up consensus as a starting point. Even with that, I am haircutting it by 5% in my earnings model just to be on the safe side. If you go back and you look historically, a typical year where you see earnings downgrades, you kind of pull them in by about 8%. So we're not pulling them in quite that much. But I think that's a reasonable, you know, sort of place to start. I do think what's unusual about this year is that we're not coming out of a major crisis and we're continuing to sort of pull numbers up and up and up. Is that necessarily indicative that we're in an earnings bubble? You know, I've started to see that phrase thrown around and I know it catches a lot of headlines and kind of feeds in some of the angst of the moment. I'm not sure that we're there yet. [00:37:26] Bonnie Quinn: You know, the market isn't a monolith, right? Right. I mean, is the fear of missing out on any further AI upside, which, you know, you've got to think has to be capped at this point, still greater than the fear of missing out on any financials upside or industrials upside or, you know, Russell 2000 upside? [00:37:41] Speaker 8: You know, I think if you look at things like financials, some of the non, you know, sort of sectors that aren't right in the center of the AI story, right, kind of the ultimate end users, I think they're very much in the early days of seeing benefits from AI. But if you think about, you know, since 2015, 2016, I know in my old earnings model, I had a heck of a time forecasting S&P 500 operating margins because they just kept going up and up and up to the right. And a big reason for that wasn't just the tech sector's presence. It was all this software and all this innovation that was helping all of the other companies. We do have a story like that coming to the rest of the market. Now, I will grant you, you know, a year and a half ago, we're hearing like, hey, I got a chat bot. And, you know, now we're starting to hear better stories about innovation and, you know, specific impacts on things like distribution centers. We're still a bit away from companies coming out and saying, we boosted our earnings by 5% because of AI, or we saw a 10% increase in, you know, revenues because of, you know, this AI tool that we developed. I think we will get there one day. It's still very early. And I do think that messiness is feeding some of the angst we've got right now. [00:38:43] Dani Berger: Is it too early to price that in? Because it feels like that at least is part of the bullish thesis for hyperscalers. Because at the moment, what's kind of supporting this ecosystem is the huge amount of CapEx that they're doing. And that's the money in the system right now. It's not coming from enterprises who are willing to spend the money in order to reach the profitability or the efficiency that you're talking about. [00:39:03] Speaker 8: Well, let me give you an example. So when people start to kind of, I don't want to say freak out, but when they express some angst over the CapEx cycle, I take them to this chart in my deck and it goes through the first quarter and it basically shows year over year growth rates and quarterly CapEx rates for the S&P 500. And it's a scary little chart. It's sitting there at peak, but it's also been kind of edging, you know, along this peak level of growth for a little bit of time. We parse that out into the top 10 market cap names and the rest of the market. Those top 10 market cap names are close to the peak. They're not right at it, but you can, you can look at that chart and if you squint, you know, you can not sleep well at night looking at that. But the thing that calms people down is I take them to the right hand side of the page. We have the S&P 500 X, the top 10 market cap names. That growth rate is headed in the right direction. It is finally inching up. Guess what? It is also led by ISM new orders over about four quarters and that is ticking up as well. So that leading indicator is telling us that the rest of the market is headed in the right direction and likely to continue on that trajectory. We see the same, you know, kind of early stages of CapEx recovery. If we look at Russell 2000 or Russell mid cap. So when you really dig into the data, you can sort of see the case, right, for how we can extend this cycle by other companies participating more. It's just very, very early. But I do think this is part of what happens in technology revolutions is that you essentially have some messiness. You throw spaghetti at the wall. You try to see what works. It takes a while to figure out what the use cases are. And that's where we are. [00:40:31] Bonnie Quinn: All right, Laurie, thank you so much. Laurie is going to bring us all the way through all of these cases when we get them eventually. Our disease, Laurie Calvasina. Breaking a few moments ago, Microsoft announcing 6400 layoffs, half of which will stem from its Xbox unit. Bloomberg's Jason Schreier covers the gaming industry. So Jason, how much are these layoffs due to Microsoft's ailing fate in the stock market recently? And how much are they just due to the fact that Xbox hasn't had a hit in forever? And what on earth are those staff doing? [00:41:02] Speaker 10: Yeah, so the Xbox organization specifically has been struggling for a couple of years now. They replaced their CEO in February, who has vowed to do what she calls a reset. And this is the first step of that. This is, I think, maybe tangentially, but not really related to the broader cuts at Microsoft, which are about efficiency and AI. These are specific problems that Xbox has. [00:41:27] Dani Berger: And on those problems, by the way, I was just looking at the CEO of Xbox, the memo he wrote to staff, which you all covered, saying, we must reset Xbox. I don't know if a pun is the best way to announce that you're laying off more than 3000 employees. But putting that aside, how much of this, Jason, also has to do with what we've been learning about how expensive components are with Xbox itself having to rise prices? How much is that weighing on the company? [00:41:54] Speaker 10: Yeah, it's definitely significant. Asha Sharma, the new CEO, she actually wrote in a memo a few weeks ago that Bloomberg reviewed that they're projecting that by 2027, the price of memory and of storage is going to be five times what it was in 2024 as a result of this chip crunch that is globally caused by these AI data centers and everybody needing the chips for that. So that is definitely significant. I mean, that is a 5x increase. That is a huge. And so we've seen Xbox raise prices of their consoles in order to account for that, but they're still taking a big loss on every console. So that is definitely significant. I would say the biggest factor here is that Xbox grew way too much without seeing financial growth. Way too grew too much in employees without seeing the financial growth that they were hoping would correspond with that. [00:42:46] Dani Berger: Jason, does this at all relate to the larger parent company? I realize it's kind of about half and half. But when looking at this, should we be concerned, for example, and I know you mostly concentrate on Xbox. So, you know, that taken with a grain of salt. But the overall spending of this company, because it has been one of the big hyperscalers, the spending. Do Xbox woes translate into greater Microsoft woes and their willingness to continue to throw money at AI? [00:43:11] Speaker 10: I don't think the two are related. Microsoft has a layoff every fiscal year. I think the part of this that is not Xbox is their kind of typical quote-unquote efficiency AI job cuts that they seem to do every early July. No, I think Xbox as an organization has its own struggles. You may recall that a few years ago, they bought Activision Blizzard for $69 billion, an enormous amount of money that they've been spending to try to drive growth. And they just haven't seen that growth, which is one of the reasons we're seeing this new leadership regime take over and come in and do what they're calling this reset. So, no, I don't think you can really extrapolate much about the broader Microsoft organization from this. And, in fact, Xbox is saying that they are going to reinvest this money that they're cutting, these jobs that they're cutting. They're going to reinvest in content in making bigger franchises like Fallout and others, Halo, Call of Duty, etc. So, no, the answer is no. I don't think you can take much away as far as the Microsoft's broader goals. This is an Xbox-specific issue. [00:44:17] Bonnie Quinn: Yeah, and it's not like they haven't had the opportunity. I mean, we had the FIFA World Cup this year again, Jason. You would have thought they would be able to, you know, make use of that somehow. Jason, thank you so much. Bloomberg's Jason Schreier. Coming up, Lockheed Martin is making a big bet on undersea warfare. That's next. This is Bloomberg Open Interest. [00:44:39] Dani Berger: We're going to be spending $1 billion in defence tech bets. They own Cobham, which is selling. This asset to Lockheed Martin, I just wonder how much deal activity has really whipped up in this sector, considering, I mean, Iran, Ukraine is still going on, but just the defensive posture of so many countries. [00:45:21] Speaker 12: Yes, the defence sector has seen tons of deals, I mean, especially Cobham, which was originally sold to Advent back in 2020, and for $4 billion, and they sort of assemble this giant defence company that they're now sort of selling parts of as they develop and mature technologies. And so the deal's seen a lot of, I mean, there's lots of interest in deals at the moment. There's lots of interest in scaling up technology. I mean, we've seen that with the Axiom deal. We've seen that with this deal in particular. So there is a lot of, especially defence, defence technology, and especially in the naval space. So there is definitely a lot of interest. [00:45:57] Bonnie Quinn: Yeah, I mean, you have to wonder, how much did the Strait of Hormuz cause this deal to get done? Because it wasn't quite clear whether the U.S. knew there were mines down there, whether they knew they were activated or could be activated, or how to deactivate them. [00:46:10] Speaker 12: Absolutely. I mean, we're obviously not sure what that played in, but there is a sort of growing sense that there needs to be more investment, especially in marine and naval technology, and that's where a lot of these deals come in. [00:46:22] Dani Berger: So another deal that we've been tracking for some time now, I know you and the team have been Castle Lake, the American PE firm, trying to buy EasyJet. It feels like it's been really contentious. Has EasyJet finally agreed to some sort of price coming from Castle Lake? [00:46:35] Speaker 12: Absolutely. So this weekend, we saw that EasyJet recommended that they accept a deal from Castle Lake, and that would basically value the company at about 6.9 pounds a share. And that's about 6% higher than their previous offer. Their previous attempts to acquire EasyJet were rebuffed by the EasyJet board, saying that it undervalued the company. And for EasyJet, it sort of raises the question of where it goes from here, because you've got an airline that's got valuable slots in places like London and Paris and in Switzerland, as well as a fleet of about 300 planes, about 300 planes on order with options for another 300. So they've got a lot of really exciting assets for the aviation industry. [00:47:18] Bonnie Quinn: Does the family being a 15% shareholder cause a wrinkle? [00:47:22] Speaker 12: We're not quite sure whether Stelios supports this deal or not. He hasn't really said anything publicly. But that would be a key contention in terms of whether this goes through. I mean, Castle Lake did propose allowing existing shareholders remain invested, even as they take the company private through this attempt. [00:47:38] Dani Berger: So thank you so much for joining us on those two stories. That's Bloomberg's chief aviation correspondent, Sid Phillips. Coming up in hour two of open interest, Nancy Tangler shares her top stocks to watch. Plus, we talk about William Blair's acquisition of Inner Circle Sports, a great summer for sports. We'll have more of that coming up. This is Open Interest. 30 minutes into your trading day, a rally on our hands. Welcome to Bloomberg Open Interest. I'm Dani Berger alongside Vonnie Quinn, and we are off the back of the best week since early May for this S&P 500. Today, it gets an extra support from Broadcom, which announced a chip deal or at least a deal to produce more custom chips for Apple. So those shares leading us higher. Any moment now, we are expecting ISM services coming through. Let's break down the data. Joining us now is Bloomberg's Michael McKee. [00:48:36] Michael McKee: Mike, what do we got? Well, we have a slight drop in the ISM services PMI headline number 54 from 54.5. The expectation was that we would see a 54. So this is not going to move markets much, but it does suggest there's a little bit of a slowdown there. Now, the second most important number in this report for the Fed and people on Wall Street is prices paid. And we do have a drop there to 62.7 from 71.3. So a little bit of easing of price pressures and service price pressures have been one of the issues in the CPI and the PCE. So it's still not come down a lot, but a little bit might help production right now 55.4 from 54.7. That's a slowdown and new orders are also a slowdown. 55.1 from 57.3 and then employment 51.2 from 47.9, which is interesting because, of course, last week we didn't see a lot of job gains, but there are some improvements there. So the numbers overall a little bit better than had been expected or they are on the expectation side. And the good news is inflation to the extent it does drop a little bit anything that we can take from the employment numbers. [00:49:51] Bonnie Quinn: I know this is just one reading, Michael. And we've had, you know, but we did get a weaker employment, you know, portion of the data last week. [00:49:59] Michael McKee: And we have to start thinking about it now. Well, you can't take a whole lot from these numbers because the ISM's basically compare one month to the previous month. And so we did see a bit of a decline in terms of the total number of jobs, but it's hard to, with those few number of jobs, it's hard to say it's scientifically valid. [00:50:19] Dani Berger: All right, Mike, thank you so much for joining us. That's Bloomberg's Michael McKee breaking down the latest economic data. Joining us now is Nancy Tangler, CEO and CIO of Lawford Tangler. Nancy, wonderful to see you. Hope you had a great Fourth of July. Look, you believe that the Fed, that their next move will be down, not up. That's not what the market is saying. It is pricing in some odds that we get something of a hike by the end of the year. [00:50:41] Speaker 13: What is this market missing? Well, I think the market is focused on short-term. And thank you, Danny. I hope you had a wonderful Fourth as well. I do think the market is focused on short-term inflation numbers. And if you think about it the way we do, which is year over year, you know, basis of base effects and also the difference between a cyclical and cyclical. That's a San Francisco Fed measure of core PCE. A cyclical inflation is on the rise. Cyclical is on the decline. If you look at what drives a cyclical monetary policy, can't control it. It's supply shocks. It's the supply side of the equation. And so we think that will sort itself out as energy prices have come down pretty, pretty dramatically. And that will that will filter through to other aspects of the economy. But but also tariffs are in the rear view. So that the year over year effect of those will decline. And I think you're going to be surprised that we'll see flat to negative prints on CPI and PCE. The ISM manufacturing numbers, prices paid were down a lot. So who knows? The data conflict. But my favorite metric is the private sector metric of Truflation. And that number is real time prices calculated by the private sector. And you can see that as measured by Truflation or Truflation or Truelabs, the company behind it. Inflation is on the wane. And so I think that will be very that will give the Fed cover as will the task force to to to avoid [00:52:21] Bonnie Quinn: right hiking rates. So Nancy with this Fed not of any problem making one move and then being done for now. [00:52:28] Speaker 13: Could be. I mean, we've we've cited. By the way, I don't think a hike would would torpedo the markets. We've cited the 90s when Chairman Greenspan left rates alone because he understood productivity driven growth. I was managing money back then. And we've seen 2 percent productivity growth over the last 10 years. So if if we have a Fed that pays attention to that as Greenspan did, they can let things run a little bit hotter than they might think. But also he raised rates once and then he left things alone. So I do think Kevin Warsh is channeling his inner chairman Greenspan, Bonnie. And I think he has indicated that or telegraphed it in many ways since before he took the [00:53:15] Dani Berger: chairmanship and after. Nancy, we still get headlines. We got one today about tech companies laying off workers. This time it was Microsoft 6400. The half of them seems to be concentrated in Xbox. So maybe it's very specific to that company. But if you look under the hood of the data, there's been some evidence that AI is having some effect on this labor market. It doesn't look widespread yet. We even had services, for example, that seemed to be the big detractor from the last jobs report, not necessarily a hospitality rather, not necessarily tech related things. To what degree is this just a mirage? Is it just headlines to actually something that impacts this labor market? Yes. So Danny, that's a great question. The one everyone's asking, I [00:53:58] Speaker 13: think, if not overtly, certainly in their heads. But we're in an economy that's in transition. This is to quote many the fourth industrial revolution. And so you are going to see some shifts. You know, it's it's expected. It has happened historically. So the irony in all of this is that one of the fastest growing job cohorts is software engineers. So and those aren't my numbers. Those were BLS numbers. And we still have five hundred and seventy thousand plus unfilled manufacturing jobs. So there are jobs. It's just a question of re I guess retooling the workforce, but also just just letting some of this by natural attrition work its way out. We saw a huge amount of hiring over hiring during covid. And I think some of that some of what we're [00:54:55] Bonnie Quinn: seeing is just that unwinding picks Nancy include Nvidia and Micron and video I could potentially see right because it hasn't really been bid up in the last few weeks in particular. Micron, though, you would have thought perhaps there might be a little bit of backlash to the memory pricing at some point. Do you see that affecting these stocks? Yeah, I mean, I do [00:55:15] Speaker 13: Vonnie. We've we've owned it for a long time. So, you know, it's it often is about when you got in. But we have seen a pullback in the name. The demand is robust as far as the eye can see. We aren't seeing companies pull back on their spending. So I think the company is smart enough. I the president just said they donated two hundred and fifty million dollars to the Trump accounts. They will navigate it. And I think you can't ignore that memory is a critical part of this this build out. Stocks still trading at a single digit multiple. So you have to not believe in the earnings growth. We listen to the companies. We think the company understands what their backlog is what the demand is. And so they may have to pull back somewhat on pricing. And that wouldn't be too much of a crime because the margins will go from 84 percent maybe to 80 or a little bit below. I'll take it. I think you want to use weakness in the stock to add. It is incredible chop, though. In the meantime, Nancy, we went [00:56:15] Dani Berger: from the Czech writers to the Czech takers in terms of what led this market. So hyperscalers to the chip makers in the past week. They get decimated. Mag seven comes back a little bit. What do you make of what actually captures market leadership right now? What is the narrative? Is there a narrative right now? And if not, is it just more chop that we're in store for? [00:56:33] Speaker 13: Well, I mean, I've been watching the show all morning as I do every morning. I'm sure you have been too. I heard what Mike Wilson said. And what he said was he's going to see, you know, we're going to see a shift back to the hyperscalers. Great, because one of my top picks is Amazon. And we're overweight, the group. But but it's a summer trade. And those are his words, not mine. I'm not investing for the next three months for my clients. Too big of a tax liability. We're looking out three to five years. And so I think you want to own all of the above. You want to own the infrastructure names like GE Vernova and Quanta Services, which we do, Eaton. You do want to own the companies that are going to drive the future and the build out. But to say that the trade is over or the investment is over, I just don't believe it is. And the chop, it works to your advantage if you're a long-term investor. We say at Laffer-Tengler, volatility is the friend of the long-term investor. We believe that we use it to our advantage as we did during Deep Seek first quarter of this year. We were adding to a lot of these names at much lower levels. And that's how you make money in the stock market. So speaking of adding at lower levels, [00:57:42] Bonnie Quinn: when are you going to buy SpaceX then, Nancy? Because it is one of your longer term ideas. It's a thematic idea for you, you say. And I just wonder, are you waiting for it to drop before getting in? [00:57:52] Speaker 13: Well, we -- depends on what you mean by drop, Bonnie. We bought at the IPO day opening. And then we bought some more when the stock -- after it ran up and pulled back to about 150, 152. And that may prove to still be a lofty level to get in. But we think this is a company that you buy on the theme not on valuation. It's going to change the way we live much like Amazon did. If you bought Amazon on the IPO, you're up 243,000% since the IPO. So when was it too late to get in? We just want to be exposed and we will use weakness to add to it in our client portfolios. But this is a theme that I think will drive -- will take over for AI at some point and drive the future of the way we live and the way we invest. [00:58:45] Dani Berger: Maybe more importantly, Nancy, when are you finding time to get, like, any of these thoughts together and anything done? I mean, I know you're a race fan between Silverstone, between the England and the Norway games yesterday. I mean, how are you finding any time for any of this? [00:58:57] Speaker 13: Oh, and then I'm in Tahoe, and so 4th of July is a thing. Oh, yeah. Yeah, kayaking, hiking, sitting on the beach. No, I always have a stack of research with me. I used to do it, read it during the kids' games. Did you see my home run? Yeah, right over the fence. [00:59:14] Dani Berger: I love it. Yeah, but have you looked at the price of Broadcom recently? Nancy, thank you so much for joining us. Always a pleasure to see you. Nancy Tangler of Lawford Tangler. All right, let's get a check on your equity markets this morning, because we're still higher by about a fourth of 1% for the S&P 500. NASDAQ outperforms. The chip makers are doing better this morning after falling yesterday, despite an overall market that traded higher. The Philly semiconductor index is up 4.5%. Again, it was a painful move in the past week as the mag 7 took over. Brent crude flips to gains, but just barely. We are still around $72 a barrel. Yeah, we're bouncing [00:59:50] Bonnie Quinn: back almost entirely that amount that we lost on Thursday for that stocks index. Let's get a look at some single stock movers this morning. Broadcom expanding its partnership with Apple to design custom chips now through 2031. It's up more than 5.6%. And as we broke to you earlier in the show, [01:00:07] Dani Berger: Xbox from Microsoft planning to eliminate 3200 jobs around 20% of its staff over the next year. [01:00:14] Bonnie Quinn: And we're watching SpaceX after President Gwynne Shotwell announced she'll contribute personally a share to the Trump account initiative for a significant number of children between 11 and 17 in the country, particularly in Texas. Shares of Dell also higher after President Trump praised the [01:00:32] Dani Berger: company for their contributions to the program. Coming up, the most read story, the controversy, the only thing anyone seems to care about, it is FIFA and the World Cup, specifically clearing U.S. star Fuller and Balogun to play in today's World Cup match against Belgium, following a personal appeal by President Trump. And how about that England-Mexico game? We're going to get the details next. You're watching Bloomberg Open Interest. [01:00:56] Speaker 9: Partying in Mexico. If you check his past, President Trump is talking about the World Cup. I don't want to say that because I don't like to create controversy, but very suspect. If you'd like, I'll provide you with the past. He made a call that nobody could believe. You know, even people on the other side, they said, oh, we got lucky. Wow. That's and it's very interesting. They say they don't show them in slow motion. And I never realized that. I never heard of that before, that they're not allowed to review in slow motion because it's so different because you'll take one little quarter of a second and you'll see that a hand is touching a neck or you see something. Whereas when you see it in fast motion, it will look like two guys collided, which is really what happened. They got sort of entangled. He didn't do anything wrong. And he's our best player or one of our best players, a very vital player. And he gave him a red card. I didn't know what that meant. I didn't think it meant much. Then I started hearing that that means he can't play in the next game, at least in the next game. I said, boy, that's a big, you know, if it happened to another player, it would have been unfair. But when they take your best player or just about, they have some great players. But and they say you can't play. That's very unfair. That's, you know, it's one thing to penalize somebody for the game. But how do you penalize them for a game that hasn't been played yet? It's very unfair. You can't do that. So yes, I asked for a review by FIFA. I spoke to a man who's highly respected. And by the way, whose level of respect has gone up tenfold. And he was good before this started. But, you know, he really pushed it in this country. I'm the one that got them to do it. It was not Biden. Biden was asleep. I got him to do it. In fact, it was very sad because I got him to do it. And if the progression was normal, I would have been retired. Now, the Democrats are saying, man, we should have just let him have his way. He would have had him. We would have had him gone. But I said, you know, the saddest thing is I got the Olympics and I got the World Cup. I tried to claim 250 years too, but that didn't work. They said that one is what it is. No, I tried, but it didn't work. But wait, wait. So I got him. I was so proud of it. And then I realized, you know, I wouldn't be president. That is President [01:03:25] Dani Berger: Trump who confirmed that he indeed did call Gianni Infantinio about FIFA's decision to give the red card to Florin Balogin, which was reversed. He's now suspended. Now we'll be able to play against Belgium in today's USA Belgium game. Let's get more on this in FIFA's decision with Bloomberg senior reporter Randall Williams, who covers sports and the co-host of the Bloomberg Businesses Sports podcast. Trump making the argument there, I guess, against red cards in general, saying it's so unfair to punish someone for a game that hasn't happened. But this is without precedent. I know we're talking about this in the break. It's happened going into the qualifying, but revoking or suspending a red card [01:04:04] Speaker 14: during knockouts. It's unprecedented. It's absolutely unprecedented. As I said, as we spoke about before, this happened with Cristiano Ronaldo months ago. FIFA pushed some matches that he was supposed to be suspended for way off down the line. And the issue with that is that this is going to be Ronaldo's last tournament. Now, as it pertains to Flo Balogin is that Flo, this is a round of 16 match, and he has the potential to impact this at a level that we haven't seen before for U.S. soccer. So the global thought of this is that Trump pressed his thumb on the scale and said, Gianni, can you please look at [01:04:38] Bonnie Quinn: this and they didn't alter it? So, so many questions emanate from this. First of all, Belgium is appealing. I mean, is there any point in them appealing, given that it was probably the president that, you know, talked to Infantino? Can other countries now, you know, say, well, we deserve our red cards overturned? Was this, could this have happened even without President Trump input in the sense that it was a controversial red card in the first place? I do not believe that if [01:05:00] Speaker 14: President Trump had, if he had not made a call, the rule would have, he would, Flo would not be playing. Now, the question is, is England's, is England's prime minister going to now make a call because one of their players received a red card yesterday in what I would consider incidental contact. He touched the ball first and then his cleat went into his ankle afterwards. Yeah, but his cleat was like. It was a little farther up than Flo's. Flo's was definitely incidental. But the issue is with the rules. The issue is not, not anything else. Now, of course, the political side of things. When we were talking about the World Cup to begin with, it was concerns at the federal level with ice. What would police presence look like? Now we're seeing rule changes. We're seeing someone literally press their thumb on the scale and say, Gianni, can you please go look at these rules again? And now Flo's going to be playing. So if you're an American, of course, you're celebrating and you're happy today. But if you're everyone else, this is a problem. Can we do the [01:05:47] Dani Berger: VAR debate? Because I know you and I come in. Let's do it. Okay. The president was talking about there. It's not fair to have it in slow-mo. But these refs can look at it at full speed. They get the context of both. I don't understand why people are so upset that it's in slow motion. I mean, surely you would hope and maybe evidence suggests not that these referees are smart enough to know when it is incidental contact. [01:06:07] Speaker 14: I think that the slower you look at something, that the more you can convince yourself that contact was meant with purpose. Just because of the fact that if you slow things down at .5 speed, it's like, ah, he could have moved his foot. But if you watch it in real time, someone trying to go [01:06:21] Dani Berger: for the ball, you might hit somebody on accident. By the way, Trump just -- I just wanted to point out, Trump saying that he didn't tell Infantino what to do in the Oval Office. Well, no, he never does. [01:06:29] Bonnie Quinn: But he told him to review it. Yeah, he told him to review it. He told him to review it, yeah. He told him we would like to see a certain outcome, potentially. But what is the problem with watching something back in slow motion? Every other sport does it. And if you're trying to figure out intent, don't you need to see, you know, the rolling steps up to that point? I think you do. But it can't be that [01:06:45] Speaker 14: slow motion is the ruling. There has to be a 50/50 split between real time and slow motion. And when the contact is incidental, then I think that you should not penalize someone as much as, you know, being suspended. And it's, again, it's an issue with the rules. But the rules are the rules. You should not have a political candidate coming in and pressing a thumb on the scale. [01:07:02] Bonnie Quinn: Also, this probation thing, he can still play while on probation. So what does it even mean? [01:07:06] Speaker 14: Exactly. When Trump presses his thumb on the scale, the rules have no meaning, which is the argument from Belgium, which is the argument from UEFA and everyone else, which is like, what does a red card even mean anymore? Because, of course, England can do the exact same thing today. They can make some calls and try to appeal a decision, which I would think they might be unsuccessful for. [01:07:27] Dani Berger: I think that that probably will be the case. Look, as a USA fan, it's great to have Flo Baligan back. But as like a fan of the sport, it's not great in itself. Can we just end here before you go, Blue Owl, we learned that they have indeed been successful in getting a stake in the Cavs. Yeah. We've seen pushback with other credit funds who have been experiencing issues, whether warranted or not, buying sports teams. I wonder if we might see any of the same pushback in Blue Owl because of all the high-profile headlines now, they're going into the world of the NBA. I think the NBA is where they're comfortable. [01:07:59] Speaker 14: They understand that business. They've had one, I think, the only exit in the NBA. And so with that in mind, that they have to find the right franchises to, of course, invest in. And Cleveland's a good one. They have the surrounding real estate. They have the WNBA team coming. And so they're in a good spot. I will say before we end, if the U.S. wins today, they will have to play potentially Spain, Portugal and France. So, yes, Flo is going to have a huge impact. Yeah. But they play Titans. They play Titans to come. [01:08:23] Dani Berger: No, it's true. I mean, it is a game-changing decision. It is. By the way, how was it at Norway, [01:08:29] Speaker 14: Brazil yesterday? The Norwegians are one of a kind. The Norwegians are one of a kind. [01:08:33] Dani Berger: Which game would you rather have been on that one or if you could have made it down to Mexico City? [01:08:37] Speaker 14: I mean, you want to be in a neutral environment, but Mexico City, even just playing it through the TV, the crowd was roaring the entire time. It's a shame that we didn't get penalties or something. [01:08:45] Dani Berger: Yeah, I think I had, like, 20 heart attacks throughout the progress of that England-Mexico game. I'm glad they got it. Randall, thank you so much. Of course, thank you for having me. Great to see you. So much to cover. What a great summer for sports, you know, controversy. Notwithstanding Bloomberg's Randall Williams. Still ahead, we're going to discuss the booming sports M&A market. We'll speak with William Blair's global head of investment banking, Matt Zimmer, and Inner Circle Sports founder, Rob Hillis. This is Bloomberg Open Interest. Markets still rallying about an hour into your trading day. NASDAQ up one and a half percent, being led by the Philly Semiconductor Index. Broadcom rallying off the back of an agreement with Apple to produce more chips for them. Coming up, we're going to talk sports M&A with William Blair's Matt Zimmer and Inner Circle's Rob Tillis. After a deal between the two of them, this is Bloomberg Open Interest. William Blair is making a play in one of Wall Street's hottest sectors. The investment bank has acquired Inner Circle Sports, a firm known for advising on some of the biggest deals in professional sports, including Liverpool Football Club and the Philly 76ers. Joining us now is William Blair's global head of investment banking, Matt Zimmer, and the founder of Inner Circle Sports, Rob Tillis. Congratulations to you both. Thank you so much for joining. Rob, I want to start with you, because you founded Inner Circle back in 2002, back before this was this institutional behemoth that it has become. So you've grown it so much to this point. Why not stay at it alone? Why join forces with Matt and the rest of the team at William Blair? As you said, the industry has really [01:10:30] Speaker 15: grown up. It's really expanded. So there's a great opportunity with the tailwinds we have behind us to leverage what we're doing across all our favorite five major segments of our business. And we found a partner with Matt and William Blair that aligned with our vision and our mission and what we want to try to accomplish to really grow our business over the next five to ten years. What sports are becoming the ones that [01:10:52] Bonnie Quinn: people are really trying to get involved in? So there was a time when it was, you know, English soccer clubs, for example. I imagine now you might be looking at potentially, you know, college basketball leagues or something. Well, the [01:11:03] Speaker 15: privatization of college sports, I think, is coming. Women's sports is a really hot topic right now. So lots of investors coming into soccer, volleyball, women's basketball. So there's lots of opportunities. Of course, the five professional sports leagues here are still continuing to grow. So the whole business is just, you know, really grown up and really exploded. One last comment I make is when I first started at J.P. Morgan in 1990, the global sports industry was a $50 billion industry and today it's $450 billion. Just that growth. And again and again, [01:11:39] Dani Berger: the proof of concept has been proved that this thing isn't just a trophy asset. Matt, let me bring you in on this and why this deal makes sense for William Blair. You know, why lean in and have this pure play type bet on sports and not just, for example, try to organically grow your consumer group, for example. [01:11:56] Speaker 16: Sure. So we've been looking at the sports, I would say media and entertainment industry for about a year. And we've gotten to know a whole bunch of different folks in the space. And if we met both Rob and Steve, Rob just mentioned his background a little bit. They've both been in the industry for 25 years. And to build that organically would take a lot of money and probably would not do it as well as they do it. So we decided to partner and acquire them. You know, if we think about why we did it, Rob mentioned a little bit of it, the big splashy sports deals are really fun to be a part of. They just did the bulls transaction and the Padres deals both within the last month, which are great. But what we've seen is that the value of these these teams has ballooned so much that you have minority players in there with LP stakes who are wanting to sell a portion of their stake. And so the velocity of those deals is increasing dramatically. If you think about pro sports is one element, but also collegiate sports, as you mentioned, you know, NILs are forcing athletic departments to think about ways of capital formation to monetize their athletic departments essentially. And then even into youth sports, parents are spending a lot of money on their kids right now. So the tailwinds are gigantic across all of that. And we think we've got an excellent team that's been in the market and in that [01:13:08] Bonnie Quinn: ecosystem for a long time. Now when it comes to the pro sports teams, is there any cap on valuations? Is there any point at which we'll hit a ceiling? I'll probably defer to Rob on that. I would say [01:13:19] Speaker 16: it probably depends on what team, what league, but certainly we're seeing prices continue to move up into the right. Rob, I don't know if you want to jump in and weigh in, but I think that's probably true. [01:13:30] Speaker 15: Yeah, I mean, the growth is still happening. When we did the New England Patriots deal for 140 million or represented Wayne Weaver and buying the Jacksonville Jaguars for 170 million, everybody thought they were crazy, like categorically across the board. So there's just been tremendous growth. And the question is, what's the growth from? It's really been two major aspects. One is real estate, so stadiums and arenas and the surrounding developments. The second is the media rights growth that's propelled the value of teams. At the same time, we've had a tremendous amount of wealth that's been created in the last 20 years in the United States. So when you match all that up, it's been a strong growth driver. But we now have international expansion, NBA Europe. We have lots of other growth drivers that are still coming. So I wouldn't say we're in the early days, but we still have plenty of growth coming. [01:14:19] Dani Berger: So some of the growth has been idiosyncratic. I'm going to be honest, I'm just thinking of Wrexum here, and you advised on the deal to Ryan Reynolds and Rob McElhaney, which has been incredible to see them grow and Wrexum come up to the championship league, which, I mean, is just this historic growth. I wonder when you think of an asset like that that has names tied to it. I mean, surely those two guys are never going to be able to sell that thing, right? Like, how do you get unwind an asset when so much of it is tied to the star power of the [01:14:45] Speaker 15: owner owners? Well, they've done a really good job at growing their sponsorship base. So their revenue, you know, I haven't seen it lately, but is a multiple of what it was from when they bought it. So as long as they stay competitive, they're going to be able to sell it to the next person who can then propel that team to the next level. [01:15:04] Bonnie Quinn: No FX documentary. Or maybe if they still get one. I don't know. Yeah. Well, you think about it, when teams win, they make money. Right. So as long as they get them to the place where they're winning, then they can perhaps, you know, re-evaluate another team and maybe, you know, rehabilitate them and move on. And maybe some other celebrities come in as well. Right. What about foreign ownership in various countries? I'm not just talking about, you know, England, because obviously there's a, you know, a lot of controversy there. But here in the United States and elsewhere, is it a thing that we'll see, you know, more global ownership or will that continue to be something that's a little bit, you know, booed? No, we've seen that across the board. [01:15:40] Speaker 15: We were actually on the forefront of bringing the American owners into the EPL back in 2008 with the Liverpool football transaction that we did. That's kind of opened the door for more. And then in terms of foreign ownership in the U.S., I think that will continue to be a trend. We had the Qatari investment authority invest in the Washington sports franchises. I think you're going to see that as well as ultra high net worth people from around the world are continuing to look at U.S. sports. I think that's a theme. Fans are fine with foreign owners as long as their team is [01:16:14] Dani Berger: performing. That seems to be the common theme. Matt, when it comes to some of these investments, again, sort of combining some that you already had at William Blair and what Inner Circle has, I wonder for you where the biggest opportunity seems. Is there are there any other aspects that you think that you want to lean into at this moment? [01:16:33] Speaker 16: Yeah, definitely. One of the biggest elements that we looked at and we assessed alongside Rob is, you know, as you know, Danny, our private equity client base is very big. And I saw it come across the screen just now. Private equity is finding ways to deploy capital into athletics. They may not be buying a big stake in a team. Blue Owl, Sixth Street, some of these firms have. But a lot of the traditional private equity firms are trying to find ways to play around the athletic space. So think about software going into sports, services, products, picks and shovels, those types of elements. As we talked to our client base, we're able to access them, talk to them and bring Rob and Steve's expertise alongside us to really offer what we hope are differentiated ideas of ways to play the category. [01:17:14] Dani Berger: Just on that, because one area, Rob, that private equity has been has been involved in and so has inner circle is youth sports. And you advise on play on's acquisition of Mac Max preps lawmakers right now have introduced a bill trying to stop that institutional private equity ownership ownership of youth sports. The argument goes that it makes it more expensive. It becomes a luxury. It's something that not everybody can afford. What would you say to the critics of the sector's [01:17:40] Speaker 15: involvement in youth sports? I would say the youth sports business has been around for a long time. IMG Academy has been a place where people have been sending their kids for a very long time. The professionalization of youth sports is getting a lot of heat right now. But ultimately, I think it's going to make for better leagues, better competition, being more organized. And we'll see what happens with this bill going forward. [01:18:05] Bonnie Quinn: We can ask both of you, why is golf different? And what should you know, the world of golf learn from the debacle that is was live [01:18:12] Speaker 15: golf? I'll go first. So I think, you know, it's very hard to start leagues. You need a lot of capital. And they obviously came in with a big splash. But you need to maintain the talent. And it has to have a business model that really, really works going forward. So it's actually inverse most of the time when leagues start. Some of the smaller women's leagues we're working with, they raise or raising smaller amounts of capital to kind of grow, you know, in a systematic way. That was obviously like a big splash. And they made large commitments. So we'll see if they can restructure and reorganize it. Matt, any thoughts? No, I agree. I think some of the [01:18:49] Speaker 16: transactions that they're working on right now around league formation, it feels like the way to access capital today, maybe a little bit different than live golf as an example. And it feels like it's going in the right direction. As you mentioned at the start, you've been [01:19:02] Dani Berger: involved in a lot of soccer, football deals, Liverpool FC being one of them, Wrexham, as we're talking about. Do red cards not matter anymore? What do you think? [01:19:09] Speaker 15: No, red cards matter. But I think, you know, there's so much interest around the World Cup right now. We've been involved in soccer for many, many, many years, including I think we've done more transactions than anyone in Major League Soccer. Red cards matter. Rules matter. But there's some question of the severity of that foul and whether that really qualified for a suspension. So FIFA has made their ruling. I think a lot of fans in the U.S. are happy about it. I think it's great for soccer just in terms of this game is going to be the most watched soccer game probably ever in the history of the United States. So it's exciting. Great. I mean, but is it great [01:19:50] Dani Berger: for soccer? I mean, rules rules exist for a reason, right? Red cards exist for a reason. The suspension exists for a reason. Yeah, I [01:19:57] Speaker 15: mean, he's a he's a super talented player. So not having him would have would have hurt the U.S. But, you know, there'll be it's [01:20:05] Dani Berger: going to be a super competitive game. Yeah. To be very clear as a U.S. fan, I'm happy Flo Paladin is playing. Just to be clear as much as I'm a stickler for the rules. [01:20:12] Bonnie Quinn: Yeah. For anybody who loves the ballet that is soccer, of course, we all want to see him play, but that's not really the point here. [01:20:16] Dani Berger: For sure. Thank you both so much for joining. Really appreciate your time. That's William Blair's Matt Zimmer and Inner Circles. Rob Tillis. Please come join us again and catch Bloomberg deals every Wednesday at 12 p.m. New York time. Matt has joined me on the show. We'll get we'll get Rob on there soon. I'm going to force him to agree in the commercial break. Let's get a quick check on markets this morning, though. Over an hour into your trading day we're up by one and a half percent for the Nasdaq as it leads up half a percent for the S&P after a rebound for chip stocks that sees the Philly semiconductor index up 4.4 percent with Brent crude pushing slightly higher still under $73 a barrel. [01:20:50] Bonnie Quinn: And some individual stock movers at this time. Lockheed Martin said to buy undersea warfare solutions firm Ultra Maritime for nearly $3.5 [01:20:59] Dani Berger: billion. We're also looking at the ADRs of Alibaba this morning. They're moving higher by just a third of a percent. A federal judge temporarily blocked the Pentagon from enforcing a new lobbying ban against the company. [01:21:11] Bonnie Quinn: ITV agreeing to sell its media and entertainment arm to Comcast owned a Sky Group. It's a deal worth as much as $2.1 billion. [01:21:19] Dani Berger: Coming up on the show. President Trump continues taking questions at the White House tackling everything from Iran to the World Cup. We're going to have the latest from the Oval Office. We'll catch up with Tyler Kendall. That's coming up next. This is open interest. [01:21:32] Bonnie Quinn: President Trump bringing the opening bell there for both the New York Stock Exchange and the NASDAQ from the Oval Office earlier this morning to celebrate the launch of Trump accounts. He just finished speaking. He had been speaking for more than an hour addressing a wide range of issues from the Iran war to the World Cup. Joining us now is Bloomberg Washington correspondent Tyler Kendall. What did we learn from the comments out of the Oval Office, Tyler, that perhaps we [01:22:08] Speaker 5: didn't know before? Well, Vani, as you're mentioning, there were a range of topics that President Trump discussed here. Perhaps most notably is that he did confirm that he had this phone call with the FIFA president over this red card related to the World Cup, though he ultimately said, I didn't tell him what to do. I can't tell him what to do. And he said that he doesn't believe that Gianni made the decision himself, but rather this was part of a broader deliberation with the organization. We also heard President Trump, of course, really tout what this event was about, which is establishing these Trump accounts. He said that this would be critical to his legacy in his own words, which is really interesting to watch as we get closer to the midterm elections. And we know that the administration is banking on this policy in particular to help as we see voters are growing increasingly concerned when it comes to President Trump's economic policies. But this really stood to be a positive event for the president as the White House is seeking to highlight that government and private sector collaboration as well. Bonnie and Danny, as you saw Michael Dell was inside that room. We also heard from President Trump touting that recent investment from Micron related to this program, which stands to benefit some children in Idaho. The president also briefly spoke about Iran saying either we'll make a deal or finish the job, but would rather have a deal. [01:23:24] Dani Berger: Tyler, it is an oil market that has continued to drop. And recently this morning, Saudi, this morning, U.S. Times, Saudi announcing that they're making the biggest cut to the price of oil that they sell to Asia in 26 years. I wonder how much this is squarely on the focus of the president. And where the deal negotiations stand, considering it does seem like oil is yet again traversing the Strait of Hormuz. [01:23:47] Speaker 5: Right. And Danny, we got those indications that those flows were starting to pick up yesterday after on Saturday. It seemed that satellite imagery was showing us that tankers were actually making a U-turn in that specific corridor that hugs the Strait of Hormuz and is coordinated by the U.S. We were really seeing Iran take some action to threaten that they could still close down that specific route. If vessels didn't start using the one that is closer and more in their control. As of now, though, it does appear that those numbers have been able to take back up to those levels to allow more cargo to move through the Strait of Hormuz. We're trying to get some updates on exactly where these negotiations stand. It's our understanding that they are continuing at the technical level, but we don't quite yet have on the calendar when that leadership level is going to meet next. Though, Danny, we could get some updates this week because President Trump is set to depart tonight for NATO. Of course, the conflict in Iran has, I think it's fair to say, flared up those tensions when it comes to the U.S. and the alliance. Though, we know that allies are hoping that they can renew the focus when it comes to Ukraine, now that it appears that the ceasefire is holding in Iran, at least for now. [01:24:56] Bonnie Quinn: So that's their efforts, Tyler. What does Trump want out of this meeting? [01:25:02] Speaker 5: Well, when it comes to the NATO summit, we know that this White House is going to continue to put pressure, Vani, on our NATO allies when it comes to defense spending. In fact, we're already starting to see some of the response to that just this morning. Within the last hour, we heard from the NATO Secretary General, Mark Rutte, who was just here in Washington the other week in a bid to try to smooth some of the relations heading into this summit. He told reporters earlier that he is demanding that allies provide the, quote, clear, concrete and credible plans that will get them towards boosting their defense spending. Our analysts at Bloomberg Economics have gone through the numbers. They say that some European countries are making sizable increases when it comes to defense spending. The top five European economies are now standing at about two and a half percent of GDP, up about half a percentage point from when President Trump took office. But that still falls below that five percent goal by 2035 that this White House is pushing for. President Trump just acknowledged that he did have a phone call with the Russian President Vladimir Putin over the weekend. He says that Putin is feeling the pressure as the White House confirms that President Trump will meet on the sidelines with his Ukrainian counterpart Zelensky this week as well. [01:26:12] Dani Berger: Tyler, thank you so much for all of that. That is Bloomberg's Tyler Kendall in Washington. Coming up on the show, Goldman Sachs cuts its aluminum price forecast as Middle East supply recovers faster than expected. We have the details next, right after this commercial break. Time now for our metal spotlight. Goldman Sachs has cut its aluminum price forecast, citing a quicker recovery in Middle East production and a growing supply surplus. Let's get more Bloomberg intelligence senior commodity strategist Mike McGlone. Mike, whether it be aluminum or oil, it does seem like there's more optimism that some of the hampering of the flow through the Middle East, that that's undoing itself. How much of that is behind the thesis for aluminum prices coming in? [01:26:59] Speaker 17: Well, hello, Danny. That's a big part of it. The best way to make commodities go down is make them pump up first. It brings on that elasticity, cuts demand a little bit, increases supply and goes back down. But what you mentioned in aluminum is starting to join that pump, then dump list in commodities. It started with Bitcoin and natural gas. Now includes gold, silver, platinum, platinum, iron ore. Aluminum is right on the cusp. It was up 28 percent in the year and now it's up only four percent. And copper and crude oil are next in the list. The key theme is what stops it. So the key thing when I think about aluminum industrial metals, they're very highly correlated, highly correlated to the stock market. They're basically sock puppets. And the stock market goes down. They have no hope to go up. And I think they're just showing that post-inflation deflationary force. [01:27:46] Bonnie Quinn: Mike, is there a difference between the physical and paper prices like we saw through the whole Iran war with oil? [01:27:52] Speaker 17: There is for a little while. But typically it's the paper that moves. On my screen on Bloomberg, the GLCO page, most of that are futures. And the futures track very closely. But that's where the leverage is. And that's where most of the buyers and sellers make their decisions that move markets. So I see aluminum right now around $3,000 a ton. It got to near $3,800. It's probably going to go back down to $2,500 a ton. Just like crude oil is heading back down where it was before the war, maybe around $55, $57 a barrel. And they've all been incentivized by these higher prices. The key theme, I'm worried about it, this is a pumped and dumped scenario very similar to 2008 when crude oil pumped and then it dumped. [01:28:33] Dani Berger: Mike, I just wonder, for these facilities that have been attacked, I know the Middle East's top producer of the metal, Emirates Global Aluminum, that they're trying to speed up production. I just wonder how far away we are from normalcy of being able to get to levels of production that look similar, if not equal or exceeding that of where we were before the war. [01:28:53] Speaker 17: Well, what's really happening, Danny, is every time we get these estimates of demand, some kind of destruction, some kind of supply destruction, we put estimates on how far it's going to bring back that supply. It always comes back faster. And I think that's what Goldman Sachs has pointed out, is the number one bull market commodities is price elasticity. Bring it along a lot faster. But the key thing for aluminum, you have to think China. China's the world's largest producer and a net exporter. And Chinese bond yields at 1.74 show you there's a pretty deflationary trajectory there. So the Gulf will be sorted out. That's not a big part of the market. It produces a spike. But it's going to do the normal commodities. It's not just aluminum, it's all metals. The Bloomberg All-Metals index was at 28% in the year. Now it's flat. [01:29:37] Bonnie Quinn: All right, Mike. We'll ask you about inventories next time. Thank you so much. Mike McGlone of Bloomberg Intelligence. Now, a look at what's ahead for markets this week. So we begin on Tuesday with President Trump, as we were saying, set to attend the NATO summit in Turkey. Plus, SpaceX will be joining the Nasdaq 100 tomorrow. And then we get on to Wednesday, and we have those FOMC minutes, and a massive clue as to how they'll be going forward. [01:30:04] Dani Berger: Or not. Maybe they'll just also slash the minutes in half, and we won't, you know, everything will be redacted. On Thursday, we're going to get another round of jobless claims and earnings from PepsiCo. [01:30:12] Bonnie Quinn: It's amazing that earnings are around again. Finally, on Friday, we get those SK Hynix ADRs beginning to trade. First time that some people will be able to trade SK Hynix should they want to. [01:30:23] Dani Berger: And plus, Delta earnings. And, of course, importantly, then Saturday, England will be playing Norway in Miami. That's the most important thing this week. I wish I could go. I wonder if Mike McGlone is going to be going. [01:30:33] Bonnie Quinn: I was just going to say, you should ask Mike for a ticket. I'm sure he has. [01:30:36] Dani Berger: I just feel bad. Like, Norway and England, I mean, I know England just played in Mexico with its own altitude thing, but like they're playing in the humid heat of Miami. There's no way any of them are used to it. [01:30:45] Bonnie Quinn: I do not feel bad for England. I do. [01:30:48] Dani Berger: I wish I wish them the best. Let's get a quick check on our markets as we head to the end of the hour. We are still moving higher up one and a half percent. Broadcom leads us higher on the S&P and the NASDAQ thanks to an agreement with Apple to help produce them more chips as the price of chips amid that crunch moves higher. The Philadelphia Semiconductor Index also pushes higher after a sell-off last week, while Brent crude is at $72 a barrel, Donnie. [01:31:14] Bonnie Quinn: Coming up, Dana Dioria of Investnet. There's also an interview with Finland President Alexander Stubb at also, Donnie. [01:31:23] Dani Berger: Yeah, Rachel Odin of Raquel Odin of HSBC and Jean Bolan of BlackRock. All that to come tomorrow. This was Open Interest.