Big Tech’s AI Divide Widens — Open Interest 7/31/2026

[00:00:00] Speaker 1: Only two more bells until you can start your weekend 30 minutes until the start of your cash equity trade. I'm Danny Berger. I'm David Gurra. Bloomberg Open Interest starts right now. Coming up the big tech divide. Amazon gains on robust results while supply shortages hit Apple. A deal by billionaire Ken Griffin's Citadel with situational awareness caps a dramatic week for the AI [00:00:29] Speaker 2: trade. And as markets head into August earnings season passes the halfway mark while geopolitical risks linger. Some stocks to watch that big tech divide that we talked about just a moment ago in stark relief. Here's we look at the screen. Amazon reporting a fifth straight quarter of cloud sales growth with a 37 percent revenue jump for AWS. I should say it's a totally different story for Apple. Its shares falling this morning after it announced it has component shortages weighing on its forecast here in the quarters ahead. Such big swings after reporting earnings we're seeing from these companies [00:00:59] Speaker 1: watching another sector that reported this morning and that is oil and gas a little bit less dramatic. Chevron reported second quarter results. Oil prices did surge drew to war driven supply disruptions. Exxon they narrowly missed estimates. You can see they're down one and a third percent for their profit forecast. That's what they missed on. Drag down by scheduled refinery maintenance. David. Back to those undulations in the tech sector. [00:01:22] Speaker 2: Let's start with big tech. Apple sliding on a weaker sales outlook while Amazon as I mentioned rallying after the company raced its AI spending plans. But Amazon CEO says demand still exceeds capacity. [00:01:33] Speaker 3: We now believe we will spend approximately 220 billion dollars in cash cap ex in 2026. The higher cost of memory pushing this number up from our prior estimate of about 200 billion. But even at that amount we will still not have enough capacity to meet all the demand we have in 2026. And I believe this dynamic will also be true in 2027 too. [00:01:55] Speaker 2: Good choice now is Bloomberg tech host Ed Ludlow. Ed. Great to see you. And I wonder if we could kind of start with this contrast. It's kind of played out over the course of the week as we've made our way through much of the magnificent seven. What did those results tell you yesterday just about the way that Amazon's positioning itself vis-a-vis these other hyperscalers big tech companies. [00:02:11] Speaker 4: Yeah. I mean Amazon completed the set of data points that Wall Street wants the full flush to reward the stock right which is demand is running ahead of supply. They are committed to spending. Cap ex was higher in large part because the cost environment is higher. And then they offered more than just top line growth more than revenue growth. So AWS 37 percent in the quarter gone. Pretty significantly above expectations. But they said that there's already a return on the existing AI investment which is the AI business for AWS has a 25 billion dollar run rate. And the business of them renting compute capacity based on their custom silicon principally their training chip also is at a 25 billion dollar run rate. And if you are sort of thinking well Amazon I know Amazon is Amazon dot com. Well there's something for you to even said that people that have used Alexa plus are more inclined to join prime or spend more money on prime. And they just kept giving additional data points that account for the stock being up more than 11 percent. [00:03:11] Speaker 1: Well if you care about what the consumer side of the business looks like maybe we can look to Apple as well. And they reported earnings a different situation there because they haven't been spending as heavily on AI a disappointment. Where did Apple miss the mark. [00:03:25] Speaker 4: So with Apple not really you know an AI story or a spending story. It was astonishingly a management of the supply chain story. The quarter gone was good largely a beat across the board. A miss in China. A miss on services. The issue for Apple is that the world is going to get more difficult in the September quarter than it is now. Memory prices will continue to go higher. And the revenue guide of growth of 9 to 11 percent was below what the street was hoping for about 12 percent. But astonishingly what Tim Cook said in his final call as CEO is that they had got it wrong. They had misjudged demand particularly on the iPhone side. And so if you park memory for a moment they actually did not place orders for enough advanced processing chips. Right. They got it wrong. And Tim Cook's you know career has been marked by his ability to manage the supply chain. So that's been really interesting. And look the reaction of the stock [00:04:20] Speaker 1: being down almost 8 percent is quite severe. It's a really good point. And we've seen him to your point do things like change from the China supply chain to the India one quite quite adeptly. And thank you so much looking forward to Bloomberg Tech 11 a.m. Ed Ludlow now to a different side of tech a dramatic unwind specifically in the AI trade. The hedge fund situation awareness is scrambling after margin calls forced it to sell assets. They plunged from 45 billion dollars to roughly 10 billion dollars before Citadel's Ken Griffin swooped in to buy a bulk of the fund's public portfolio. Let's get more of Bloomberg hedge fund reporter Hema Parmar. Hema, you and the team doing excellent reporting when it comes to situational awareness. And I think a lot of people would look at this and say OK this is leverage in the system and it seems to have come undone. What exactly happened with situational awareness and where do we stand now? Yes. [00:05:11] Speaker 5: This is a story we've seen time and time again. Dramatic couple of days dramatic 25 24 hours. And you know what happens is this is what you see what happens when we see these firms which have huge amounts of leverage concentrated positions in volatile stocks. And situational awareness had four to five times leverage on these assets. And this is what happens when those see a downward spiral. They need to meet margin calls. They need liquidity fast. They have to find a buyer. And they were seeking to sell their public stockbrook as well as their private stockbrook. Ultimately if they found a buyer in Ken Griffin's Citadel. Talk a bit [00:05:49] Speaker 2: about the level of panic so much as it existed here within the funds. So you've got this Vunderkind who studies math at Columbia. He's the valedictorian goes on to found this fund. You know from your reporting and others. He was looking at Sand Hill Road maybe as a place that might take on some of this of what's in the portfolio. Was there a lot of port a lot of panic here. So where was where was the head of the founder of this firm here as this all happened. Yes. I mean they were trying to find any number of [00:06:12] Speaker 5: buyers. So they were talking to Millennium to Jane Streets to Citadel. They were in conversations with Green Oaks and Sequoia about the private book. So when you're looking to offload this degree of assets so speedily it's not a good sign. It's problematic. And so I can imagine there would have been a great deal of concern. He's now reassuring investors to say look we made a mistake. This we're trying to get back on. But get back on track. People are getting married this weekend. This weekend. Yes. [00:06:43] Speaker 1: It's a good time. Some of his clients are probably in attendance though. So he can. I think he can get some work done. Busy reception. No [00:06:51] Speaker 2: doubt. Thank you very much. Appreciate that reporting. And I want to turn out to another story. A lot of earnings coming through this morning. Oil giants Exxon and Chevron reporting earnings before the bell maintenance costs brought down Exxon's profits while Chevron beat estimates. Joining us now is Bloomberg energy reporter David Wethi. David great to speak with you. And I think about these two companies and the amount of exposure that they have to the Middle East. It does seem like the story of these two reports which were blockbuster really are closely tied to what we've seen over the last five six months in the Middle East. Talk a bit about that. That connective tissue between the war that [00:07:21] Speaker 6: continues with Iran and what we saw in the results today. Yeah. It's faked into the DNA of these companies because it is such a heavy presence for them over there. And it's a constantly changing situation. It's hard for the executives to tell the street what to expect because it's hard for them to even know what the outlook is in the Middle East. And to that point Exxon said that they expect that if the Strait of Hormuz remains fully closed through the third quarter, they said this in the slides for the call coming up, that they could see as much as 750,000 barrels a day of production offline for them. Right now it's about half a million barrels a day that is offline as a result of the straight closing. So they definitely like to see that open and that would affect their production more. And and but particularly it was the maintenance on the refineries that hurt Exxon this time around. It prevented them from being able to capitalize on the really high oil prices. But they said in the third quarter they expect less downtime due to maintenance. So they should be able to capitalize on some of those higher oil prices. Then what separated them between Chevron who was able to capitalize on those higher oil prices. Yeah probably less maintenance than what Exxon did or they were able to at least tell it better to the street so that there wasn't a miss and so it was easier for the street to [00:08:45] Speaker 1: understand as compared to Exxon. All right. David thank you so much for joining us. That's Bloomberg's David Wethy on the latest big oil earnings to check on markets 20 minutes to go until your trading day your last of the week. And we're coming in from a huge session on the cost. We were rallied nearly 18 percent but it's still down two percent for the week. So the Nasdaq gets a bid up nearly one percent after reaching closing at its highest level in about three months. Ten year yields those move higher this morning up two and a half basis points alongside Brent crude up 1.5 percent. Some of the individual movers we're looking at this morning. Tesla is reportedly weighing a separation of its China business to pave the way for a possible merger with SpaceX. CEO Elon Musk calling the Wall [00:09:28] Speaker 2: Street Journal report quote fake news shares of Moderna falling after the company said a key trial for its norovirus vaccine did not meet the [00:09:35] Speaker 1: statistical criteria for early success. And we're also watching Jersey Mike shares fell six percent in their first trading day. The company raised one billion dollars in an IPO that priced at the midpoint of its marketed range. And we're going to bring you an interview with the CEO next hour. I spoke to him yesterday and he said I promise our lettuce is not making you sick. Coming up we'll [00:09:55] Speaker 2: speak with T.D. Cowan's John Blackledge on Amazon's bigger AI spending plans. And what's next for AWS growth. It's coming up on Bloomberg Open Interest. Now to high interest to look at what's making headlines around the world. President Trump says a U.S.-led Board of Peace has reached a deal for Hamas to disarm calling it a major step toward ending the Gaza war. But Hamas says it won't give up weapons until Israeli troops withdraw leaving key details unresolved and implementation likely months away. Novo Nordisk's push beyond obesity hit a setback. It's experimental anti-inflammatory shot failed to reduce the risk of heart attacks or strokes in a late stage trial sending shares down sharply. The drug had targeted a potential 10 billion dollar cardiovascular market. And FIFA's proposed 20 billion dollar commercial spin-off is facing growing resistance from European soccer giants. Real Madrid joined other top European clubs in saying FIFA doesn't have the right to sell part of its commercial business. The dispute could threaten support for FIFA's club expansion. Club World Cup expansion. [00:11:08] Speaker 1: We'll have more of that story in the next hour. And Messi famously does not play in Europe anymore. That's right. Miami. Just yeah. He's in Miami. But certainly the other one does. Amazon surging after raising its A.I. spending plans and accelerating A.W.S. growth. T.D. Cowan's John Blackledge boosted his price target saying the results show A.I. investments are paying off and he joins us now. John great to see you. I mean the fastest growth for A.W.S. [00:11:32] Speaker 7: since 2021. How did Amazon achieve it. Yeah. Fifth quarter in a row that A.W.S. revenue growth accelerated. And they called out you know massive A.I. demand. So growth in A.I. revenue. Their A.I. business exited the corner at like a 25 billion dollar run rate. And they're also saying that the non-A.I. revenue growth is very strong. And I would also call out that aside from the revenue growth which was great margins expanded meaningfully and crushed consensus estimates. And they've been persistently high for now several quarters as revenue has accelerated. So that was that was really also great to see. John what do we learn [00:12:14] Speaker 2: about the future here. Management talking about a trillion dollar revenue business over time. We know well the success of A.W.S. for Amazon in not just recent quarters recent years. What are executives thinking as they look at the inroads. It seems like Meta and other companies have been kind of trying to get into this space. [00:12:31] Speaker 7: Yeah. No I think CEO Jassy was incredibly bullish and communicated so effectively last night. And you're right he called out potentially A.W.S. one trillion in revenue. If you go back to April to his shareholder letter he was talking about A.W.S. potentially doing 600 billion in revenue. So if if we think about that over what four months you have that type of move. He didn't put a year on it but it was incredible. And the other things that he was talking about were you know A.W.S. is going to be capacity constrained this year 2026 and 2027. And that's on the A.I. demand. And then he said the the A.I. demand in 2028 right from what they're seeing right now is striking which you know we're a little over halfway through 2026. And he's talking about the demand of 2028. So it's just incredible. And I would also add that he reiterated that A.W.S.'s capacity will double by the end of 2027. So at the same time at their capacity is doubling. You know the demand is so strong that they're going to be constrained through 2027. So all in it's just off the charts demand. And we ended up materially raising our A.W.S. revenue and operating income forecast next five years. So ultimately you had [00:13:43] Speaker 1: Andy Jassy communicating a very clear and strong narrative to this market. There had been this idea that part of the reason that Meta struggled after they reported their earnings as we didn't get that same clear narrative from Mark Zuckerberg. John is there a contrast to be drawn between these two CEOs not even just in the business but their communication style to this market and what [00:14:03] Speaker 7: they're hoping to achieve. Yeah exactly. And I've covered both companies for a long time. And CEO Zuckerberg is a great communicator historically has been a great communicator historically inspires confidence within the investment community. But I feel like they've kind of missed the mark three out of the last four quarters. What we were looking for for Meta was some clarity on CapEx trajectory. Clarity on monetizing excess AI compute. And then just more broadly like they're investing a lot in this AI moment. What are the products and services and potential revenue streams out of that. And you know you know we didn't get as much as we would like. And it was disappointing. You know kind of the stock disappointed after after the reporting. But you know they do have an opportunity right. Like CEO Zuckerberg was like yo we can we think we can sell our capacity at a significant premium to what we paid for it. And from a CapEx perspective there they're like oh we're going to maximize our capacity the next couple of years. So I feel like in the coming months we can get we can hear more. And and maybe they will cut some deals on on Meta compute. But to your point yes CEO Jassy was like was spot on this quarter with with his messaging. John let me ask you about prioritization or Ed Ludlow just a moment ago [00:15:21] Speaker 2: talking about how there was something in this report for everybody even those of us who remember Amazon as a bookseller way back. It still has a very sizable of course retail component. What did you learn from Jassy from the company just about the way that they're looking at the the conglomerate as a whole the whole business and how much they're prioritizing one part of it versus the others. It feels like it's it feels like [00:15:40] Speaker 7: everything's firing off and firing on all cylinders to be honest with you. We spend time on AWS. I thought they were incredibly bullish on the e-commerce business. I mean they're at record delivery speeds. And I think they feel like there's meaningful run runaway for further you know kind of improving delivery speeds. And in e-commerce when you increase the delivery speed you massively increase the conversion rate. So I thought that was really bullish for the e-commerce business in the coming years. Advertising growth accelerated. I mean this company is firing on all cylinders and it's a great question in terms of prioritization. And I think they are prioritizing their biggest bets which are what we're talking about. AWS e-commerce advertising among other areas. Talking about India Mexico [00:16:25] Speaker 2: Australia as well for international expansion. John Blackledge of TD Cowan. Thank you very much. Appreciate that update after those earnings. And coming up we're going to speak with Barrett's willpower on Apple's supply challenges as we look at this contrast over the course of the morning. This is Bloomberg Open interest. Apple slumping after supply shortages weighed on the company's sales forecast. Barrett analyst Will Power reiterating his outperform rating on the stock saying supply constraints pressured guidance but demand remains strong. He joins us now. Well let me just start with what Tim Cook is leaving for John turnus here as he looks to the exit. I mean his last day is September the 1st and we think of Tim Cook is having such prowess of success managing Apple's supply chain. How much of what we saw in that report yesterday's attributable to kind of mismanagement on his part or is it just by virtue of the fact that there is such widespread demand now for chips in particular it's becoming increasingly difficult to manage even for somebody who has been known for so long as somebody who can do it so expertly. Look. Well good morning. Thanks for having me David. [00:17:33] Speaker 8: Look this is a still a strong foundation right. And I think you know as you look at the results in the quarter sure they were a bit light of you know expectations or at least the upside that we've had you know the past couple of quarters and guidance might have been a bit light. But if you back out you know some of the impacts from supply constraints and in FX the numbers actually look you know still very good. And so I think you know from our perspective the demand signals continue to be you know quite robust. And so I think the business remains on firm footing as we head into this next 10 [00:18:06] Speaker 1: year. So is it fair to say that Apple does not have a supply chain issue that the shortage of chips and the cost of memory is something they'll be able to get [00:18:14] Speaker 8: through. Well without question they're facing supply constraints you know memory price issues that are you know we're impacting you know the broader industry. But I think that's something to work through with time. And so you know our suggestion is that investors look through that. But sure. Is that something that could create some turbulence as it has over the last couple of quarters. Yes. And I think that is something that will continue to impact both supply and you know memory costs and margins as you look over the next you know several quarters. But we're taking a longer term approach. And again you know that the key for us are the demand signals which I think remain quite healthy. Look we step back. You know iPhone which is a mature business is now grown north of 20 percent the past you know three quarters. And you've also now got a resurgence in Mac as well you know to help balance that services business. You know that's a you know a hundred billion dollar business. You're growing you know low double digits. So you know we remain comfortable with the overall opportunity [00:19:13] Speaker 2: moving forward. So let me play this out. You mentioned the Mac products. And if Apple is able to kind of wade through this hundred year flood as Tim Cook put it yesterday kind of kind of ominously here. It released this MacBook Neo this low end product. And I'm curious what your takeaway is from the reception that that's seen here over the course of the last quarter. I think that that Apple for a long time was kind of pursuing the higher end of the marketplace. There was some resistance I gather from our reporting. Mark Gurman's reporting to kind of going in that direction. But it does seem from the results we saw yesterday in the demand that you've been talking about here. It is a niche that they are well suited to fill. [00:19:47] Speaker 8: Well I think that's exactly right. I mean they basically see the chair to the Chromebook you know market. And so you know really opens up you know a new opportunity for them. And and they're they're going after that. Right. And you're seeing that demonstrated in the numbers in the quarter with overall you know Mac sales up you know 27 percent. So again really a nice resurgence there. And that's still facing supply constraints as well. That number probably would have been higher you know without those constraints. And so you know the combination of you know Neo Mac mini and then of course you know the broader you know Mac portfolio. I think you know sets them up well. Certainly you know you know medium term. Again you know not you know you're notwithstanding some of the supply constraints that we just [00:20:32] Speaker 1: touched on. Even so with some of those lower end product offerings they have raised their prices for their devices some as much as 20 percent. Do we have any sense to the price elasticity among consumers whether they are willing to [00:20:45] Speaker 8: continue to pay more. Well I mean that is a great question took as we get into the next iPhone cycle. Yeah because I think the expectation is we'll see you know probably some higher prices you know there as well to help offset you know some of those supply and memory cost challenges. Look you know our sense is overall demand is going to remain you know fairly inelastic. Now will there be some impact. Sure. You know there's bound to be. But that that is you know that is one of the central questions. You know I think the results again that we're that we're seeing at this point particularly an iPhone. You remain pretty encouraging. I think again the demand signals you know have been strong. And we're going to do a product cycle that you know we're excited about. I think that I think consumers would be excited about with the first foldable phone and Siri AI as potential catalysts to help you know drive demand into the [00:21:34] Speaker 1: back half of the year. OK. Well thank you so much for joining us. Appreciate your time. Will power of Baird. Less than four minutes until your opening bell. We're going to speak with Amanda Agati of PNC Asset Management. That's after this break. This is Bloomberg. Let's get your Friday trading day started. You're watching Bloomberg Open Interest. I'm Danny Berger. A rebound this morning after the tech wreck of this week. We are still headed for declines on the Nasdaq even if we hold this. But we did end at the highest level in about three months. Actually one percent we should be able to end with some gains. S&P also higher this morning too. And we got through the bulk of the earnings season. So we've digested a lot. Maybe smoother sailing. Maybe we'll finally get into the summer doldrums. Down at the New York Stock Exchange. Reformation. Reformation ringing the opening bell. They listed yesterday and did their first day of trading up half of one percent. There's got to be a lot of pressure to dress really good for something like this. If you work for Reformation which is literally a high end clothing brand. They look pretty good. So I think it worked. Down at the Nasdaq it is the Pat Tillman Foundation. They give support to vets and their spouses and they're welcoming in the new class. So that's what's happening down at the Nasdaq. David what are you [00:22:47] Speaker 2: watching this morning. Love the sartorial commentary there. Again watching these two major stocks here Apple and Amazon. Of course that's the contrast we kind of focused on over the course of the morning. Amazon reporting a fifth straight quarter of cloud sales growth with a 37 percent revenue jump for AWS. We're just talking about a few minutes ago. Completely different story for Apple's. It's shares falling after component shortages weighed on the company's sales forecast. I think what's so fascinating here is the demand was there as we were just talking about. People want to buy Macs. They want to buy iPhones. But Apple having a very difficult time getting chips kind of a similar story to what we heard from Qualcomm a little bit earlier this week. Danny. So some big swings for them a little bit [00:23:22] Speaker 1: less of a big swing for a big oil which also reported earnings. Chevron they reported second quarter earnings. Oil prices did surge thanks to war driven supply disruptions. So shares are up one percent. Exxon though even with that they narrowly missed profit forecast. They had an issue with scheduled [00:23:38] Speaker 2: refinery maintenance putting a bow on big tech earnings. Amanda got a PNC asset management group chief investment officer writing. You could say the mag seven band broke up. Google meta and Apple get pummeled all Amazon and Microsoft with big gains. These names are not trading like a herd or a pack any longer. And Amanda joins us now. Amanda we're on the same wavelength. I was talking a bit about this yesterday thinking about Michael Hartnett who coined this term now many years ago. Magnificent seven over at Bank of America. Talk a bit more about this. I mean we talk about hyperscalers broadly now. They are approaching this capex expansion in decidedly different ways. And how useful is it for us now to look at them as one [00:24:16] Speaker 9: coherent group. Well it's always great to be with you. Thanks so much for having me. The AI story continues to be top of mind certainly front and center for investors. But I think what's been different this earning season is just what I wrote right. The band is breaking up. There may be a reunion tour. So let's not give up on them just yet. But I think it's been very interesting that they are not trading and behaving in this sort of pack formation right with this herd mentality. There's been a really significant distinction between winners and losers. Why is that because the business models are different and the levers that each of them are pulling is very different. And I think in an environment where investors are getting pretty paranoid android at the radiohead reference for you. You know I think that's that's showing up here in terms of the results and certainly in terms of the return. So it's going to be OK for sure. It's going to be OK. But in this moment where valuations are pretty elevated. The ones that are winning are the ones that have lots of levers to pull are demonstrating acceleration and revenue growth and still spending. CapEx is still a story but they're kind of keeping it [00:25:24] Speaker 1: in check. Loving this so far. I say I've never felt more powerfully than today that we need more music on the show. Amanda thank you for bringing it to us. The narratives are really powerful in this market as you know very well. Having mag seven as this point of leadership for the market was something that really fueled the last leg of the bull bull market rally. What happens when that narrative starts to get complicated when we don't know exactly who the new leadership or what the new leadership looks like. [00:25:48] Speaker 9: Is it just more volatility more market churn. Well I think it's a great question and I'm not particularly bothered by it to be honest. I don't know if it's all the coffee I've had this morning the songs or what. But I actually would welcome a shift in market leadership. We've been talking for the last few years about how we can't hang our hat on one name. It used to be Nvidia. And then the mag seven. Now it's the lag seven. Right. Like the storyline here needs to be a maturation of this innovation cycle. It can't be about chips. It can't be about semiconductors. It needs to be about the use cases. And so so I would welcome a shift in leadership because I think that really means market breadth is becoming the more powerful story. We're figuring out how to use all of this technological innovation. I think that makes a huge difference in terms of the [00:26:37] Speaker 2: sustainability of the market rally. I'm glad you brought us there because there's been such focus again. It's the immediate thing that we're looking at right now. Of course the magnificent 70s big tech companies. But I wonder if you can situate the results that we got this week in the broader context of the yearning season we're in the middle of. How part and parcel is it of that. And sort of what have we seen beyond the hyperscalers and big tech. And what [00:26:57] Speaker 9: is what did this week's results tell you about those. Well what it tells me is there's a significant amount of resilience in both the earnings backdrop and also the broader economy that I think is underappreciated by investors. We're so fixated on this paranoia around the top seven names. But when you look at the run rate on earnings growth for and it's not over right. We still have a ways to go. But we're at like 47 percent year over year growth for the S&P 500 in terms of earnings this quarter. That's insane. That's a technical term for you. And this is the fourth quarter in a row where we have set a high bar and are handily exceeding it. And so so for me I just it's reinforcement that the underlying fundamentals are really strong. And even at these valuation levels it's not a cheap market. But the earnings power has been so strong. We've actually seen some multiple compression this year. I think it's just a really strong setup going into the fall despite some volatility probably creeping in as a function of the midterms. [00:27:58] Speaker 1: Amanda I hear you talking about fundamentals. And what keeps coming to mind is a conversation at a few months back with a hedge fund manager who said you Bloomberg TV and all of your financial media are covering markets wrong. You cover them every day like there's any rhyme or reason to it. But the world is awash in leverage hedge funds. And that's all that matters for this market. That sort of idea has come even more to the fore with this 24 year old fund situational awareness reportedly having to unwind. Amanda I wonder if we look back at this market and see the huge run up in memory names which situational awareness did own. And then the settle off in AI and then the rebound again yesterday. I'm looking at Morgan Stanley writing a prime brokerage note basically saying that it was hedge funds that were basically the sole buyer of stocks yesterday. If this is just a market that's getting bullied around by leverage and hedge funds right now. [00:28:48] Speaker 9: Well there's no question that the hedge fund community has changed the dynamics a bit as it relates to the market. And so you know in an environment like we're in where there's a lot of concentration historically there's a decent amount of volatility. You really have to get creative about what the future holds for all of this AI innovation robotics automation etc. It's not at all surprising to me that there are organizations out there firms that are taking big bets on one side or another of these trades. And some of it's going to work out. And some of it's not going to work out. But volatility and sort of the the uncertainty around this innovation cycle comes with the territory. I think from a long only perspective there's just a really long runway here. And so if you can take a longer term view but pick your spots carefully and use some of this volatility to your advantage. I think investors really will win out in the long run here staying the course. All right. That makes me feel warm and [00:29:47] Speaker 1: cushioned to hear you say that. Thank you so much. So great to have you on this morning. Enjoy your weekend. Amanda Agati of PNC. Let's get a check on markets and let me do the bad thing where I try to assign any reason to these moves beyond just hedge funds. We are up half of one percent again. I will point out Morgan Stanley saying that hedge funds were huge buyers yesterday whereas retail investors actually sold a large amount one of the biggest single day selling on Robinhood's platform among retail investors. Just give you flavor of where we stand on this market. Amazon after their earnings are higher by 13 percent. You can see a lot of the chip makers doing well today carrying on from that South Korean session where we saw an 18 percent rally in just one day. That's not a weekly figure even so down 2 percent for the week. On the downside Apple in terms of points being subtracted is the biggest loser this morning subtracting 54 points away from the S&P 500. Exxon and Linda also had earnings themselves and that's also falling after disappointments. They're looking at the individual sectors and how they are performing today. Consumer discretionary that is doing well this morning along with communication services as meta rebounds. Materials consumer staples health care rounding out the bottom. So some of the safety sectors not doing well. Infotech only gaining one tenth of one tenth of one percent because Amazon is rallying. Yes the chip makers are rallying but having Apple not playing along is hurting that overall [00:31:05] Speaker 2: sector David. Appreciate it Danny. Contrast in rhetoric and results. Contrast in how they're playing out in the stock market today as well. Amazon Microsoft Alphabet doubled down on AI spending. More on this week's big tech results coming up next here on Bloomberg Open Interest. [00:31:34] Speaker 1: The rebound continues with the Nasdaq trading at its highest level or at least had its best best day yesterday in about three months. The S&P only up about a quarter of one percent. Let's see what the sell side has to say this morning with your top calls for some of the analyst action. First up Wall Street reacts to a disappointing outlook from Roblox. BMO downgrades the video game company cuts its price target over 50 percent. They cited monetization challenges and weaker than expected guidance. Shares getting punished this morning down 26 percent. Next up Wall Street impressed with Rivian's upcoming mid-sized electric SUV. Although that's not reflected in shares this morning. Morgan Stanley says the R2 could attract a lot of buyers but the company still needs to improve its production and lower costs. Barrett sees encouraging early demand for the R2 vehicle. And finally Wall Street focusing in on Apple's weaker outlook. City says services missed expectations. Evercore ISI points to strong iPhone and Mac sales with slower growth in services. TD Cowan says higher chip costs and supply issues are the biggest risk right now. Shares down 9 percent. [00:32:38] Speaker 2: David. All right. More on big tech now. Amazon surging after boosting AI spending joining Microsoft and Alphabet and signaling that demand for AI infrastructure remains strong. We're tech editor Sarah Fryer joins us now on set here in New York. Sarah I want to get to earnings in just a sec. But let's go to another story first involving AI. The anthropic sandbox where there's been jumping out of the sandbox into the sandbox. I don't know what the metaphorical term is here. But we're seeing sort of something similar that we saw with open AI just a few weeks ago. That is they had these models. They were testing [00:33:07] Speaker 10: them. And you correct me if I'm wrong. They've kind of come to life. And the tests have gone differently than they were not properly contained in their digital box by the humans. It's interesting to me here that anthropic is really blaming it on the humans saying that their error in monitoring in the design of that sandbox is what may have caused this. That said it does raise the question of whether this is the tip of the iceberg whether you know if this is happening with open AI and anthropic if it's happening with the other model companies to what how the government will react. And also how do they not notice. Right. You know until they did this investigation they were not aware that this had happened. And so that raises a lot of questions. If you're running a business right now if you're experimenting with models you better be checking that they're doing what you ask them to do [00:34:00] Speaker 1: and nothing beyond. The skeptic in me can't help but look at this and have two reactions. One they want to prove oh it's not just open AI that has these really good models that have a life of their own. We have them too. But the second one I thought of Sarah was this letter that had been circulating circulating circulating around from Jensen Wang saying we want open source here in the U.S. and anthropic pushes back and says government you should really step in to be curbing the pace of AI advancements. Do you think there's a little bit of of PR government relations happening here too with them releasing to the world that this happened kind of saying government if this is happening to us we're honest with you. We can't say what the same would be for Chinese open [00:34:36] Speaker 10: source models. There's a little bit of that. But but remember anthropics line for its for most of its history has been AI models are dangerous. You really need somebody who's responsible who's going to look at the at the risk here and calculate properly how to build those guardrails around it. Like that is that is kind of their thing. And it's a double edged sword. It makes everyone feel like these these models are above and beyond human capability already in that we're just going to be like powerless to to to them in the future. And so we really have to think about it now. And anthropic is the way to do it. It also ends up with situations like what we saw earlier this year between the government and the mythos models and you know blocking it. So you can't do that. So. So here they're saying it was the human error to me that signals that they want to indicate that their model you know once it saw the open Internet the latest version said oh no I'm not going there. I'm not I know I'm not supposed to do that. So. So I think they're trying to show the responsibility a little bit even in the response to this. But of course the incident raises all of these questions about how didn't people know. If anthropic hadn't investigated this would we even know about it. And who are those firms that that were breached. Two instances not a trend make. But we got the same kind of [00:35:55] Speaker 2: introspective blog post from anthropic that we got from from open AI. And I'm curious what happens beyond that. Does this leading to more government interest maybe intervention or they does it lead them to take it more seriously do you think. I mean we [00:36:08] Speaker 10: have we have we have Sam all been in D.C. this way. I'm sure that there are many discussions happening about this. We have you know IPOs on the line for these companies. They have to show this as we have open source models from China. It's not clear that these at least with these companies we know that they're that this is happening. This is like a show of faith like we're disclosing this proactively because we are respond. I think that's what this is about really is they're trying to get ahead of the government requiring that they investigate everything. You know by being proactive. We saw this a lot actually with like the social media companies. We have transparency reports. We have we are doing internal investigations to take down coordinate. We don't need to capitalize this. We don't need the government to tell us to do that. Right. Right. So it is a strategy in that sense. But I don't think that Washington is going to going to just say OK well that satisfies us. I mean we'll have to [00:37:07] Speaker 1: see. Right. I guess with social media though. I mean there are some businesses that built themselves around social media but there are a lot more businesses now that are adopting these AI models and have changed their business plans and their infrastructure and their costs. It's a lot more immersed in our economy. Right. So isn't the risk that the government steps in and something gets shut off just much worse this time around because of the impact it could have on individual [00:37:30] Speaker 10: companies. Yeah. And I think the the scariest thing maybe isn't like cutting off these guys because these guys have do have political power that they built up. But if the government says you can't use open source anymore because we won't get that transparency about what's happening in terms of cybersecurity. Well the majority of businesses by token use are using those open source Chinese models. And so that would really harm a lot of businesses. At the same time you know with these instances you wonder if it's if it's [00:38:00] Speaker 2: necessary. So sir good to see you. Sarah far here with us in New York joining us on set. And coming up here we're going to talk a bit more about South Korea. How it's leveraged ETFs since has leveraged ETFs in sight as that country looks to curb volatility. That's coming up next on Bloomberg Open Interest. 20 minutes into the last trading day of the week. We continue to rebound after the Nasdaq posted its best day in about three [00:38:22] Speaker ?: months. It's up half of one percent supported by some of the earnings. I'll show you that in a second. Small caps having a more [00:38:25] Speaker 1: difficult day. That might be due to the fact that yields are moving higher today. Again now up by five basis points. Really since the Fed decision we have seen some big swings in this bond market. No relief for the 30 year as it continues to trade at its highest. The yield since 2007. Brent crude adds to that pressure up at $90 a barrel. We had big oil earnings Chevron Exxon. Chevron able to capitalize off the high oil prices. Exxon is not hence why you get that difference. Amazon is a huge deal. It is a huge deal. We had a big deal. The revenue growth that they've seen. Apple supply chain issues weigh on them after they report earnings down eight and a half percent. NVIDIA up one and a half percent. SK Hynix. This is child's play. The fact that it is up 2.1 percent in the South Korean session. It was up by 26 percent. That was its best day ever. South Korean stocks in general. Cosby gaining 18 percent. Huge moves. And that's part of the reason why South Korea has stepped in after a sharp sell-off. It was led by those AI chipmakers SK Hynix Samsung Electronics. It rattled the country's stock market. The government now proposing new measures including curbing retail access to leverage ETFs. Bloomberg intelligence analyst James Seffert joins us to discuss. James what are South Korean officials debating at this moment. What might they do to the country and ability to access ETFs. [00:40:02] Speaker 11: Yeah. I mean I think they're debating everything under the sun trying to see whatever is within their purview to actually limit these things. One thing we know is they increase the size of your account limit. So you need to have a certain amount of money in your account to trade these things. That goes into effect I think this month today but potentially even. Another thing they're doing is they're going to limit the amount like the portion of your portfolio that can be in these levered ETFs. They're looking to cap it at 20 percent. They're looking to acquire certain levels of like education and showing that you understand these things before you can actually trade them. They want to increase the fees to trade these things. I mean it seems like they're going to try everything they can to kind of put the lid on this leverage gambling fervor that they're facing. James kind of whipsawed here because there was such [00:40:45] Speaker 2: enthusiasm for these products early on. I'm curious as we talk about SK Hynix's ADR here in New York. Before that I mean this was the means by which U.S. investors others could kind of get a piece of these South Korean companies. How did that shift. How did the terrain shift when we saw that ADR debut here in New York. Yeah. I mean I don't know if I'd say the terrain. I mean obviously [00:41:05] Speaker 11: it hasn't been a great great thing since that ADR went live. But I would say that like when you look at these levered ETFs for the most part people were using ETFs in the U.S. to get exposure to these products. There's a few products like DRAM and a few other ETFs that you could get exposure. South Korea ETFs in general because when you look at what these things were doing SK Hynix and Samsung initially there were 40 ish percents of the underlying index. So it's not people like to talk about the mag seven or whatever mangoes or whatever term you want to come up with the large stocks in the U.S. and say it's overconcentrated. In South Korea two stocks at one point in June were making made up 60 percent of the index. I mean we've never even come close to anything like that here in the U.S. So you end up with these leveraged products that kind of go haywire the traders start using them. Retail investors get heavily involved and things go crazy. And the ADR listing here in the U.S. just kind of you know poured gasoline on that fire in some ways you could say. It doesn't help when there are stories in [00:42:00] Speaker 1: South Korea of retirees tipping and dipping into their pensions and putting them into leverage ETFs. And James I wonder if for that reason or maybe just a completely different market and more liquid market why we don't have the same conversations in the U.S. or maybe we do about leverage ETFs and their impact on the market and what it means to retail investors have various regulatory forces also been looking at the huge amount of ETFs that have listed here that are leveraged bets on single names. Yeah. So the SEC has put out [00:42:27] Speaker 11: requests for comment on things that they're calling novel ETFs. I would say single stock ETFs fall into that. There's a lot of you know pundit worry about these things impacting the market. I have written notes that say there are instances of some of these single stock ETFs impacting the underlying but usually in small and mid cap names. But nothing it pales in comparison to what happened in South Korea. I mean in South Korea in June these single stock leveraged ETFs were the most traded ETFs in the entire market. That just doesn't happen here. Like we're talking about tens of billions of dollars here in trading hundreds of billions of dollars trading here in the U.S. in these leveraged ETF names. It still is not even coming close to touching you know the money that we see trading and things like the S&P 500 or the Nasdaq 100 ETFs. So the size and scale of what happened in South Korea and the fervor with which it grew is nothing compared to what we're seeing here in the U.S. James [00:43:14] Speaker 1: insightful as always thanks for joining us James Safer and of course tune in to ETF IQ on Monday's 12 p.m. New York time coming up in your hour two of open interest Paisley Nardini of PNC asset management plus we'll bring you some of my interview with Jersey Mike CEO Charlie Morrison after the company's trading debut. This is Bloomberg. We are 30 minutes into your trading day. Welcome to Bloomberg open interest. I'm Danny Berger along alongside David Gurra. Matt Miller is still off as this market rebounds after the end of big tech earnings coming up the divide among them. Amazon gains on robust results while supply shortages hit Apple. A deal by billionaire Ken [00:44:05] Speaker 2: Griffin Citadel with situational awareness caps a dramatic week for the AI trade. And as markets head into August [00:44:12] Speaker 1: earnings season passes the halfway mark while geopolitical risks still linger. We begin though with any moment now economic data crossing the terminal. We should be getting final readings for University of Michigan consumer sentiment. It looks like those are just now starting to come in with those numbers is Bloomberg's Michael McKee our international economics and policy correspondent. Mike what do you see. Well we see a little bit of additional [00:44:36] Speaker 12: confidence from the time that Michigan interim survey came out in the middle of the month where it 55.2 now from 54.4 probably reflecting a little bit of the gas price decline which is now going back up again. Now the current conditions index is 54.8. That's a tick down from 54.9 and statistically irrelevant. We'll call it expectations do rise to 55.4 from 54.0. So the increase in the overall sentiment number driven by what people think is going to happen and they're more optimistic about that. Now the one year inflation number is unchanged at 4.2 percent. The five to ten year unchanged at 3.3 percent. So not a whole lot of change in the way people are looking at things. [00:45:20] Speaker 2: Mike we move from consumer confidence to the confidence of Fed policymakers in the central bank's path forward here. And we heard from those three dissenters over the course of the of the morning. Neil Kashkari among them talking about wanting to see more incrementalism here in the fight against high inflation. Well now we have the third. [00:45:40] Speaker 12: Lori Logan of Dallas. She doesn't talk about incrementalism but she does talk about modest action on rates saying inflation will not reach the 2 percent target without further tightening labor consumption and financial market conditions indicate that monetary policy is not restraining the economy without any policy restraint. Inflation will likely to continue to trend above target until there's an unanticipated shock. The FOMC cannot count on unanticipated shocks to achieve its goals and could always adjust policy. If unanticipated shocks occur. Modest action in the near term would reduce the likelihood of needing to take sharper action later. Now that last part is essentially what the message from Neil Kashkari and Beth Hammack was is we raise rates a little bit now to counter the long term inflation. And if for some reason we need to lower them we can do that. [00:46:30] Speaker 1: All right Mike thank you very much Bloomberg's Michael McKee and those hawkish sentiments might be part of the reason we're seeing yields move higher across the curve. Ten year yield now trading at its highest since January 25 30 year yield now at its highest since July of 2007. Joining us now is Paisley Nardinny simplified asset management head of multi-asset solutions. It's the irony of this bond market Paisley moving off the back of what we're hearing from Fed speakers after a chair Kevin we're saying we're playing the ball not the referee. Connorson Bloomberg opinion comments put it thusly at the moment Governor Waller and the regional presence are in charge of monetary policy while chair Warsh is doing task forces. Paisley is this still a market that's putting aside Kevin Warsh [00:47:11] Speaker 13: and is now trading on what regional Fed governors are saying. Yeah I think at some point we have to find a way to glean information. So the data prints that are coming out. We think about employment data. We think about the inflation data. Warsh has reiterated that he wants his decisions in the committee's decisions to be data dependent. So we as the market are now going to place greater emphasis on those data points between now and the next Fed meeting because that's all we have. I do think that he was quite vocal and that his approach would be a bit like the Greenspan era less communication less transparency. And we all know we've been really accustomed over the last 15 or so years to extensive transparency forward guidance the dot plots. And so there's going to be a little bit of a kind of environment where we have to adjust to this. And I think what we've seen over the last several days is the volatility that that places in the market. And so that's something that we've seen really over the last 12 or 18 months that I think will continue. And that's what I think is the most important thing for investors over the next few months is understanding the reality of the environment that we're in. And then how do you adjust your portfolio. How do you navigate these markets to ensure that you're not on your back foot. [00:48:22] Speaker 2: I think this is such an important point because there's kind of a horse out of the barn is to all of this that after Bernanke and Yellen and Powell where there has been such transparency to kind of go back to the Greenspan era seems so difficult. And it makes me wonder just sort of what this means for the primacy or importance of the comments that we're going to get from other policymakers in between meetings now. Yes Kevin Warsh can have this goal of not saying much or not talking about the future. But it does strike me that you have a committee that he's going to try to wrangle here. Are we going to be obsessing even more now over the kind of speeches and interviews that these other policymakers give between meetings. We will. [00:48:54] Speaker 13: And I mean even after the presser this week Warsh had said there was dissent at the table and he's welcoming of these kind of conflicting views to arrive at the best family fight as he put it. Yes exactly. The family fight. But again I think this just provides the market with everything it needs to know for right now even though it is frustrating right. That was kind of one of the main themes coming out of this week's meeting. A lot of investors were just frustrated that they didn't get more either policy decision decision or more transparency. But we are in this the midst of I would say just change of leadership not only at the Fed but in the market as well. And that's where we're really seeing some of this divergence and some of these big tech names the mag seven. And that's again I think there's some rumbling below the surface that a lot of investors still haven't woken up to. We're still just looking at the market cap passive weighted indices and checking whether they go up or down every day but not really understanding the drivers. [00:49:47] Speaker 1: I wonder if we could almost put the two together in this thesis came from the F.T.'s Tobin angle this idea that part of what worse wants to achieve is he wants to get rid of forward guidance because that suppresses volatility by having that for guidance and holding the market's hand guiding it to what it wants. When you have suppressed volatility it allows both this economy and the market to take on more leverage. Paisley I wonder if you could see a future in which there is more Fed induced volatility and that lessens some of what we're seeing in this market here. Players taking on too much leverage [00:50:16] Speaker 13: and then big unwinds as a result of that. I think we absolutely have seen this injection of volatility and it's really been not in just the last couple of months with war stepping in. I think this was kind of the icing on the cake not to frame it in a positive way. But the volatility that we've seen is we really had the baton passed from monetary to fiscal policy over the last several years. And really the Fed's hands are tied. I mean their mandate is to be data dependent. And I think many would argue that the data showing inflation remains too high. But then they have the employment consideration on the other end as well. And so as an investor you start to think how can I navigate these markets. How can I prudently allocate across my portfolio. And there's a lot of ways that I'm hearing advisors and investors are doing so whether it be moving away from market cap concentration into something maybe simplistic like an an equal weight or even starting to adopt active management again. I know that's kind of a bad word over the last few years. But we're seeing plenty of reasons as to why active management can prosper again. The increased market volatility the divergence of the underlying securities obviously lower correlation among some of the major stocks within the S&P 500. All of these give reason and rationale as to why the divergence can be capitalized on and almost seeing it as an opportunity [00:51:34] Speaker 2: rather than a market risk today. What to ask you about the earnings that we've gotten over the course of the last week and what that's done if anything to kind of allay that the generalized agita in the market about AI. So yes we're getting updates from this handful of companies about their CapEx spending. But does it do anything to settle that question about the role that AI is going to play the worth of that trade the bet that these companies are making. [00:51:58] Speaker 13: We've really we've become comfortable with our accustomed to over the last few years of the rising tide lifts all boats. I mean I've heard that over and over and over. I've maybe even been guilty of saying that myself because it's been true. I think what we've seen over the last couple months and especially this week's earnings report across many of the major technology companies and communication services is that the market is now really kind of understanding is there disciplined CapEx combined with proven monetization. And I think that's the delineation now is we're no longer just going to be playing this blanket approach. There's this change in leadership within the stocks as well. And as we all saw in the last few days here Amazon and Microsoft were rewarded because in the case of Microsoft spending and then monetizing that and in the case of Amazon through their AWS services the profit margins on the cloud computing space are massive. And so the fact that they've been growing this consistently just shows in addition to their kind of more fiscal prudency that these two companies are coming out as leaders. And so I'm actually encouraged by the fact that the market is trying to now look through and understand that it is not a rising tide lifts all boats. And we really have to understand the drivers of this and if this can continue into perpetuity. So as we start to look into active management Paisley I wonder if there's [00:53:17] Speaker 1: any lessons to be learned from situational awareness that the story does your of a 24 year old who starts a fund with fantastic results betting all in on AI then is forced to unwind as margin calls crop up is selling an AI related name crop up. Citadel buys it. There's market moves maybe off the back of that. I wonder if there's any any lessons to be learned from that in terms of how the market has reacted to it and just asset management as a whole. I believe there's a very important [00:53:46] Speaker 13: lesson which is that sizing of your position sizing of your bets matters more than the bets themselves sometimes. And so as we look at this instance that occurred this week multiple times levered very concentrated plays. The actual theme itself that was being expressed in the portfolio was not incorrect. It was the sizing of those positions which kind of comes back to what you guys were talking about before I joined the show around just the markets in South Korea and the Cosby and thinking about such a concentrated market and a lot of the margin accounts getting squeezed and that part of the world. And so ultimately the the lesson to investors is that after you've done your homework and your due diligence and you're putting on these position sizes ensuring that you're being prudent in them. And so you don't have those types of catastrophic events for your portfolios. Paisley thank you so much for joining us this [00:54:38] Speaker 1: morning. Paisley Nardini of simplify asset management. I think if you're going to learn a lesson 24 is a good age. Yeah sure. I wasn't betting tens of billions of [00:54:42] Speaker 2: dollars but it is a good day. It's a good age. It's a good age. Not many 24 olds are. Let's get a check on your markets this morning. We're about 40 [00:54:53] Speaker 1: minutes into your trading day and the rebound has now turned into selling. We're down four tenths of one percent. The S&P down four tenths. I will just point out that we are seeing a lot of names like core we've are down. I got to say some of the names that actually happen to be in situational awareness is fun to are down. Nebbi is down one percent. Not saying that's the reason but just want to point out a lot of those AI related relation but not cause out exactly. It could be really but not saying it is basically I'm trying to walk a very careful line. Ten year yields. They're also rising so that's definitely not helping this market. Those are up five and a half percent is Brent crude that moves higher by one percent. Some of the single name stocks that we're looking at this hour. Amazon reporting a fifth straight quarter of cloud sales growth with a 37 percent revenue jump from AWS. That stock seeing its biggest one day gain since November 2022. Another story here with Apple shares of Apple seeing their biggest drop since [00:55:46] Speaker 2: April 2025. Supply chain issues component shortages weighing on that company's sales forecast. And Reddit plunging daily active users in the U.S. came in below [00:55:54] Speaker 1: expectations which offset a strong third quarter forecast. All right. Coming up back to situational awareness. Ken Griffin comes to the [00:56:01] Speaker 2: rescue after margin calls rocked the AI focused hedge fund. Dig into that next. This is Bloomberg Open Interest. Now to high interest. A look at what's making headlines around the world. The Caspian pipeline consortium could vote today to halt oil exports indefinitely. After repeated tanker attacks in the Black Sea. The pipeline moves about 1.8 million barrels a day which counts for nearly 2 percent of global demand. Oil prices jumped on fears of tighter supplies especially for Europe. Anthropic says three of its AI models accidentally hacked real organizations during security testing because the test environment was not fully locked down. The company found the issue after reviewing over 141,000 tests. says the public versions of Claude were not involved. There's now tightening its safeguards to prevent it from happening again. And it is a dramatic unwind in the AI trade. Wunderkeen Leopold Aschenbrenner's hedge fund hammered by margin calls forcing billions of dollars in tech stock sales. The firm also exploring selling part of its prized and philanthropic stake to raise cash but scrapped those plans. But Ken Griffin bought most of its public stock portfolio allowing it to keep its private AI investments. The photo of Aschenbrenner that you see here from the website for our [00:57:27] Speaker 1: posterity. Danny. Do you think that he looks like Max Verstappen in that photo. Yes. Very true. I don't know why that's relevant at all. But just came to my mind. Anyway let's get more to talk about Bloomberg chief Wall Street correspondent Srinatharajan about the things that matter and not what famous race car driver Leopold might look like. So can we just discuss how we even got here. How we got to a place where a 24 year old had such a hold not on not only in the money he managed but maybe the entirety of the market that the machinations of situational awareness seem to have been enough to cause rallying and selling at this point. And this is what we were just discussing Danny. There are echoes of some [00:58:05] Speaker 14: things that are really new and part of this new modern financial markets ecosystem and some things that are just as old as time. You have a 24 year old who's gone through after graduating from Columbia University as a 19 year old through the FTX world the world of Sam Bankman free to open AI and had to be fired from there. And there was a contentious departure from opening I to becoming the Nostradamus of AI suddenly hailed as a know it all in the AI world. And then you have a situation where you have a hedge fund titan rising out of Silicon Valley. How often does that happen. That is all brand new and that is all tied to this great giant AI trade that we've been in and we will be in for the foreseeable future. But the other parts when you think about the fact that it was a concentrated book and lots of leverage. That's been a story for a very very long time. The images that flash through your mind are Bill Hwang LTCM go back over a century and you have Jesse Livermore from before the Great Depression. So these things have been standard parts of the financial markets. The stories repeat themselves every few years. And that's what seems to be happening. He had built up. Leopold had built up a great great following with his picks. Every stock that he touched seemed to be moving higher. And as the markets turn it left him in a [00:59:21] Speaker 2: precarious position because the reliance on leverage. There's a cyclicality to this. I imagine a lot of investors kind of looking at this wondering what happened here. So you lay out his biography so masterfully here. But I would think that maybe if you were an alumni of the FTX world as you put it there might be some stink on you. But there might be people who want to have some aversion to doing business with you. I said this at the top of the show before it began. How does a guy of this age with this experience amass the amount of money and investment that he did. How rare is that. And sort of what do we do. What does that tell us just about the general marketplace here that he was able to do that. But then everything in today's [00:59:51] Speaker 14: marketplace is rare and unprecedented. Something we haven't seen before. Right. Here is someone who like how many AI native AI educated natives exist out there. You won't find them in the crowd that's 40 plus. It is the younger folks who will be doing that. And this is someone who sort of started out in the open AI world is lived in that circle lived in that group. He's getting married to the chief of staff at Anthropic this weekend. So you know that these are embedded folks have been embedded in the growth of this AI world and people are trying to tease out where it goes. And if you go back to the fact that he wrote that big 2024 post about such title situational awareness that laid out the bull case for AI. It wasn't just about in investing in the frontier model. It was talking about building out the AI infrastructure and the data needs and the compute needs and the power needs. And that was reflected in some of his picks when you go from SK Hynix to core weave to sand disk and bloom energy. So broadly it made sense. It's a financial machinations that ended up not making sense for him. And that's why he was sort of in this situation where now it seems clearly badly Bruce not necessarily beaten because you have to remember he emerges out of that still in the vicinity of roughly 10 billion dollars in assets. Maybe a little bit more after this rabid run of headlines over the last 24 hours. Here's the hedge fund that's still up roughly 80 percent year to date. That's called one of the best performing hedge funds of the year if you ignore the last 24 hours. So it was another kind of [01:01:13] Speaker 2: success story reminding me of the post that he I mean that's how we made his name. Yeah. Yeah. I mean it's it's a powerful medium. [01:01:20] Speaker 1: And I mean for what it's worth a lot of the stocks he owns according to last filing which I know isn't since the end of the first quarter of March are selling off yet again. But if you just kind of track the stories about him in this market I think it's a really interesting exercise because you have the story of his huge returns and at the same time you're having this huge run up in things like memory stocks applied to AI. And as the market starts turning you see things start to snowball. And I wonder how much of that is looking at that portfolio and saying this kid is about to get some margin calls. He's very very leverage. I'm going to sell my holdings and get out in front. I just wonder how much of the market dynamic is dominated by hedge funds behaving that way in pod shops. What name you situational awareness itself. How much of that is pushing around [01:02:03] Speaker 14: what we're seeing day to day. Vulnerability begets vulnerability. This had all the hallmarks of a classic bank run. These are not points that I'm making. These are things that Leopold wrote in a letter sent to investors late last night. So clearly they seem to feel that many people in the market who were positioned against them and that sort of amplified their problem. That certainly was the case. But on the other hand you can also make the argument the only reason he was up so much. 270 percent relate me potentially in the range of more than 400 percent relate me was for the same reason. The stocks that he was betting on that everyone was following him on was also going up for the same reason. So you could have expected this to happen. [01:02:42] Speaker 2: He's on the phone with Sequoia. He's going hat in hand to banks within a half mile radius of where we're sitting today. How did he end up in touch with Ken Griffin. What do we know about the way in which they got in touch and why Griffin was [01:02:54] Speaker 14: interested in this. Again in terms of absolute granular detail we still don't know a whole lot. But it is clear that going into Wednesday night this was a all hands on deck moment. They were trying to figure out what is the best way to raise money. Remember so far we haven't heard of any banks having suffered losses. This is very different from what happened with Archegos and Bill Huang in 2021 which basically wiped out credit suites if you were if you had to extrapolate what happened there. In this case the banks haven't lost money. The sense we are getting when we talk to bankers and his various primes is in the last several months they had been tightening their margin requirements. They had excess cash from him that they could call on and that's what they did. They didn't lose money. But it still meant that situational awareness. The firm had to raise money to meet these calls and they were looking at all options potentially selling the private stick potentially selling a good chunk of their and tropic stick which has gone up in value so much. But ultimately the deciders sell a big chunk of the public equity portfolio because they got the right kind of bid. We know Millennium was looking at a Jane Street was looking at it. But at the end of the day it was Ken Griffin's Citadel that came through. And this is not a first time play for Ken Griffin and Citadel. They did it back before the financial crisis with Amaranth with So would capital that distress credit fund back in July 2007. We saw shades of that during the Melvin capital disaster. So this is a tried and tested strategy for Citadel. It seems to work really well for them. And in this case it might have actually helped what was looking like a mediocre July for them turned into something much better. I just hope Leopold has a good wedding planner because I'm going to do no work getting ready for this. One thing you can be sudden of is he won't have to skimp on the shrimp cocktail. This is a great point. Thank you so much for [01:04:33] Speaker 1: joining. We're going to hear part of my conversation with the Jersey Mike CEO. An early rebound this morning turns to selling for this market as the S&P down about a quarter of one percent. The Nasdaq not faring as poorly. The Russell 2000 is down one percent which might give you a hint of why we have this turn. Perhaps we felt confident that Ken Griffin was stepping in to support this equity market buying situational awareness is fun. However, now yields are moving considerably higher about five basis points for the 10 year yield. So we reignite the pressure on this market. So a lot of those names that got relief or selling a new apple down nine percent after their earnings. Amazon up 15 percent after their earnings. Two earnings from Chevron and Exxon and Nova Nordic missing on a clinical trial. Coming up on the show, we're going to hear from the Jersey Mike CEO. Fresh off of its one billion dollar IPO, Jersey Mike slumped in its trading debut. Shares fell by six percent, but are trying to rebound this morning now down for a total of three and a third percent over the past two days. I spoke with the company CEO Charlie Morrison on the floor of the New York Stock Exchange yesterday. I think it's a great time to IPO Jersey Mike's. This is a brand that's been [01:05:54] Speaker 15: built over many, many years. We have a rich history of over 70 years. The last 20 years alone, the only brand that can cite 20 consecutive years of positive same store sales growth. We've been able to navigate the choppy waters over many, many, many times through our cycle. Even this year, year to date, same store sales continue to grow. We've seen sequential improvement from quarter one to quarter two. Exiting quarter two at 2.3 percent same store sales growth. Most of that driven by traffic. So it's a great time to bring this brand to the market. If we can deal with some of the challenges that are in there. But really, it's for the [01:06:26] Speaker 1: long term. So the fundamentals look good heading into this. But was there ever a banker that was thinking, hey, Charlie, maybe now is not the time. [01:06:32] Speaker 15: Maybe we need to wait for calmer waters. Not at all. Full steam ahead. Yeah. Yeah. This is a brand that's really well built for the [01:06:38] Speaker 1: public market. What about the pricing? Because shares have fallen initially down 8.7 percent. They've come back, of course, now down only about 4 percent. What do you think of the pricing? Was the pricing off, perhaps? And that's why we're falling today. Maybe valuations a little bit too richly priced rather. No, I don't think it has anything to do with the price. I think the market's been a little choppy over the [01:06:56] Speaker 15: last few days trying to find its place. Again, we're not looking at today's price. We're not worried about this. We're worried about the long term and continuing to do what we do well, which is grow restaurants, grow our same store sales growth, continue to deliver great value for our shareholders. And we know they're going to win over the long term. Let's talk about the long term, because now with IPO [01:07:13] Speaker 1: proceeds in hand, what do you want to do with them? What are the opportunities for growth that you're going to be pursuing? Well, I mean, we're a brand that is an asset light [01:07:20] Speaker 15: model. So we're 99 percent franchise. We generate a lot of cash. We carry some debt. We're using the primary proceeds just to pay down our debt a little bit. So we get down below four and a half times our EBITDA. And that's OK. Over time, we really will use our cash to return that capital back to shareholders, which is very much the common practice in a business like ours. And that will be the continued pace over time. I [01:07:44] Speaker 1: know one of the growth strategies that you're pursuing is international expansion. You have big plans for the U.K. specifically. I know I know the market. I lived there for a while for about six years. They do it as subways. So they know sandwiches. Quality might vary there. But they love like a Tesco's meal deal where they get, you know, a sandwich and a bag of crisps, as they would call it, for four pounds. How do you convince them? And how are you certain that a British audience would like a Jersey Mike's? Well, we know people all over the world enjoy [01:08:11] Speaker 15: sandwiches and sub sandwiches. Certainly the market's been well established. What they don't know is the authenticity of how to really deliver a deli style sandwich the right way, the way we do it here in Jersey Mike's. That's been part of who we are for the last 50 years. It's exactly what we're going to bring to the U.K. We're going to bring the brand in its full force to the U.K. And look, we have a hot sub option as well. So our cheese steaks, our hot subs, other products will be anchored on the menu. And we're going to do it in a high quality way. People want that kind of quality and authenticity. Do you need to change the menu? Not really. I mean, one little thing maybe we might bring salted beef to the to the protein mix and lineup. We know that's a big fan favorite overseas in the U.K. And so you might see that change. But otherwise it's going to be authentically what we've been all about at Jersey Mike's. [01:08:54] Speaker 1: I also love this subtle dig of they know subs out there, but like maybe not the real deli style. Charlie elsewhere here in the U.S. There has been this real concern about the outbreak of Silas Fora and the concern about iceberg lettuce. I know a lot of the majority of of Jersey Mike subs use iceberg lettuce. [01:09:12] Speaker 15: Is your supply chain affected at all? We are not. We're not affected at all. In fact, we do buy whole head iceberg lettuce, but we buy it from primarily Salinas, California this time of year. None from Mexico. We actually take very good care of that product. We bring it in a whole head fashion. We peel the outer leaves off, wash it carefully and actually shred it for our customers right there. And so we don't see any risk associated. That hasn't impacted our business. It maybe hasn't impacted your supply chain. Chipotle said the same thing. We source it somewhere else. [01:09:40] Speaker 1: But yesterday they pointed out it has impacted sales because the psychological concerns are consumers pushing back or maybe at least not asking for lettuce on their sandwiches. [01:09:48] Speaker 15: Well, every one of our sandwiches can be customized because we make it to order right in front of you. And so if a customer wants to opt out of the lettuce, that's fine with us. We'll accommodate that. Have they been? Not really. I mean, we've seen I mean, we've been eating them for the last two weeks on the road. We've been enjoying them. I think customers understand that the supply chain moves very quickly. The product is probably out of the supply chain and everything's fine. [01:10:08] Speaker 1: The credit card and debit card data that the Bloomberg team cracks tracks does show a little bit of slowing in July for Jersey Mike. Certainly still growing, but a slowdown in that growth. [01:10:17] Speaker 15: What accounts for that then if it's not the lettuce of it all? Well, I think there's a lot going on in the marketplace right now. I wouldn't look to any one or two weeks as indicative. Lots of things kind of ebb and flow and too often you can get too much data that'll point to two different things. But right now we haven't seen much. So you're so summer summer sales have been strong maybe besides a little bit of July. Yeah, we don't we haven't talked about anything about this particular quarter at this point. We certainly saw strong performance in the first quarter sequentially improving in the second quarter. We exited the second quarter on a strong note as well. And so we're going to continue to play our game and execute a game plan that is going to drive long term sustainable same store sales growth. So I hate to do this to you and I hope you don't check your social media mentions. [01:10:56] Speaker 1: But if you just look up Jersey Mike's there is just a wide swath of people who say since you know the Blackstone P.E. overlords came in. They've changed the sandwiches. They have you know shrunk in size. People love to complain that like P.E. comes and ruins their favorite sandwiches. Charlie can you say here definitively have the sandwiches changed at all quality or otherwise. [01:11:15] Speaker 15: Not since you came into the helm. Not at all. That's just hype and social media. They like to pick on people for that reason. We haven't done nothing. I mean I've been involved almost as long as Blackstone has. We haven't changed a thing. Why would we. This brand has grown 20 consecutive years positive same store sales growth. We don't need to change the menu. We enjoy one of the lowest food costs in the industry. Our franchisees have some of the highest cash on cash returns in the industry. They want to grow and build more stores and they're going to do that. And so no need to change anything. We love this brand. We love the way we deliver the product. [01:11:44] Speaker 1: And we're going to continue to do it that way for a long time to come. On the cost because generally this market if you track the macro data things like dairy meats the prices have been rising. How have you been accounting for that. How do you keep your margins. [01:11:57] Speaker 15: Well we have a very diverse lineup in our menu in terms of the proteins that we offer. So beef chicken pork different products all within our menu and we're able to balance that over time. So as one is high like beef prices today we focus on other parts of our business and we've been able to maintain that over time. We also have a very scaled supply chain. Over 3,000 restaurants strong. We buy in very high volumes and are able to hand that back to our franchisees in the form of a very low food cost around 27 percent of sales which is industry leading. [01:12:26] Speaker 1: How about prices. Are you able to use that as a lever to charge more prices for higher prices for sandwiches. [01:12:31] Speaker 15: Certainly over time we do take price. Our long term algorithm is low single digit same store sales growth for this business that will be equally balanced between price and transaction growth. We air towards transaction growth. That's really how you grow the health of the business over time. We've taken some price as we've seen commodity inflation not nearly as much as some other brands. And that quite frankly is what's been fueling our growth this year and years prior compared to the rest of the concepts out there. [01:12:58] Speaker 1: Part of my conversation there with the Jersey Mike CEO Charlie Morrison. The shares did ultimately end down. A lot of the trading community just pointed to the fact that they price at a really rich premium. When stop which he used to run their valuation was about two times as much. But I mean you just hear the CEO he's very confident. We haven't been hit by the lettuce. Everything's fine. We haven't changed the sandwiches. So why not price as richly as they did. We can talk about the debut more. But I have to ask you about the salted beef. Do you think that's going to be successful. So usually this is a popular. It is but not in sandwich form. They usually eat it in a bagel form which I have a lot of opinions about because their bagels are disgusting. And I'm going to get angry mail from Brits who are watching this right now. I don't know. I can't see people eating a salt beef. They're cold by the way. So they're a cold sandwich of roasted beef smothered in bright yellow mustard. So maybe I don't know. I wouldn't eat it. [01:13:51] Speaker 2: Going back to the debut itself. Did your sense of sort of we're going to see more debuts like this going forward. We're talking about it yesterday. Yeah. Big tech IPOs thus far. SK HYNIX ADR. I mean this is like a departure. This is very consumer focus. And we saw a reformation [01:14:06] Speaker 1: yesterday too. They had a little bit of better success only up half of 1%. But I think Bailey put it well. Bailey Lipschelter IPO reporter that there is the slim window of getting out before we have a summer lull. You want to get out into the market and especially if you're private equity and you've had a CEO in the form of John Gray who says this is the year of the IPO. Jersey Mike's of course Blackstone back. You want to show this market. Yep. It's the year of the IPO. So we're going full force ahead. Even though we have seen a lot of the restaurant category stocks falling this year. [01:14:32] Speaker 2: His comments to you about the sandwich is not changing getting a lot of traction. I mean I haven't eaten there enough to know the contrast. Like I've had right subs from there. But I couldn't say definitively have they this is Jane. This is my problem too. I couldn't come in with scientific [01:14:44] Speaker 1: and push back exactly which is you could push back. But you can push back with like exactly which came on shame on me because as a journalist I should have done my due diligence and eaten as many Jersey Mike subs and subs in general as I could before this. But social media is lit up off the back of these comments and the majority of them because people who comment tend to be angry or saying I sure trust the P.E. guy who says that P.E. makes makes no difference at all. This is when I miss Matt Miller and feel like a [01:15:09] Speaker 2: poor substitute. I think like he knows them all by number. Like he's a real I think. Yeah. Yeah. Yeah. I'd be like I want that with Mike's way which is [01:15:15] Speaker 1: I think its way vinegar and oil. Yeah. Yeah. Yeah. Vinegar and oil instead of sauce. Messier. I want a messier sandwich. Exactly. Who doesn't want a messier sandwich. Back to the markets. Departure from sandwiches this morning. Let's just take a look at where we're at at this moment. We're off the lows this morning. The S&P little change. The Nasdaq goes back into rally mode up one tenth of one percent. A really volatile market. Ten-year yields certainly not helping up five basis points as we get the descent stripping in from the three different regional Fed governors and Brent crude up 1.2 percent. Some of the single stocks we're looking at this hour. Chevron reporting results as oil prices surged into the second quarter while maintenance costs drag down Exxon's profits. Look at the [01:15:56] Speaker 2: pharmaceutical sector. Moderna is saying a key trial for its norovirus vaccine did not meet the statistical criteria for early success. It reaffirmed its earnings guidance. And another drug company Nova Nordic slumping after its experimental drug failed to [01:16:09] Speaker 1: reduce the risk of heart attacks and strokes. It's a blow to the drug makers growth prospects beyond obesity and diabetes. Coming up here [01:16:17] Speaker 2: oil moves higher after Iran said it stopped six tankers in the Strait of Hormuz. Dig into that next. This is Bloomberg Open Interest. Washington correspondent Tyler Kendall who is at the White House. [01:16:33] Speaker ?: Tyler, we heard from the president this morning talking about the war in the Middle East. Just going to quote a bit from an interview that he gave us to the [01:16:35] Speaker 2: Fox Business a little earlier today. He said, quote, it's going well. All you can do is keep winning. Then eventually something will happen. We're hitting them hard, knocking them out for a loop. So we saw on Wednesday the president making good on his promise that he would do that. We saw those attacks. I'm curious what's developed since. And you see this news from the IRGC that they stopped these ships and diverted a few others or caused a few others to go in a different direction here. What is the state of play here on this Friday? Well, David, at this point it feels like we're in a cycle of escalation when it comes to retaliatory strikes and Iran really giving us no public indication, at least, that they're willing to let up their leverage when it comes to the Strait of Hormuz. When it comes to the Strait of Hormuz, Iran's state media character. So we saw on Wednesday the president making good on his promise that he would do that. We saw those attacks. I'm curious what's [01:17:20] Speaker 16: developed since. And you see this news from the IRGC that they've stopped these ships and diverted a few others or caused a few others to go in a different direction here. What is the state of play here on this Friday? Well, David, at this point it feels like we're in a cycle of her moves. Iranian state media characterizing these vessels as violating tinkers because they very likely were using that U.S. coordinated route that hugs the coast of Oman instead of that corridor that would get them closer to the Iranian coast. And we have this statement from the IRGC saying that it has advised all companies and insurers to, quote, ignore CENTCOM's announcements. Now, we have to keep in mind that earlier this week there was a proposal put on the table by Oman that had said that both countries could share equal jurisdiction over the Strait of Ramuz by utilizing that so-called middle passage. But Iran ultimately rejected that. Now, we can't say there's been some positive indications in the data, at least when it does come to commercial flows, though it has remained effectively stalled. But Bloomberg News is now reporting that what's known as oil shuttling has picked up in recent days. Our analysts say that this is incredibly significant because it had really fallen amid the escalation. But this is when vessels turn off their transponders and they essentially ferry supplies through the strait and then load them up on vessels that have been waiting outside of the waterway to then load up those cargoes and continue on their way. David, perhaps we heard this tough rhetoric from President Trump earlier today because just moments ago he lifted off here from the White House on Marine One on his way over to Camp David. He's accompanied by his Secretary of State, Marco Rubio, and Secretary of Defense, Pete Hegseth, because they are going to convene a Cabinet meeting at Camp David later today for a status update on the conflict in Iran. [01:19:00] Speaker 1: To what degree are there conversations about military support of getting ships through the Strait of Hormuz? And perhaps not just in the U.S., but before there have been conversations of Europe doing the same as well. Tyler, have there been workarounds over the fear that they might get struck by Iranian drones, what have you? Is the U.S. stepping in to support vessels? [01:19:19] Speaker 16: According to CENTCOM, Danny, they are. They are continuing to escort ships. But now we're seeing that there is this sort of butting of heads, if you will, in the strait, with Iran saying that these ships should not listen to CENTCOM's orders. We did see earlier this week that Saudi Arabia came into the picture in perhaps a much stronger way than we previously saw, saying that they had convened this coalition for a potential maritime coalition of other allies that could maybe help lend support when it comes to the Strait of Hormuz. So far, we've really seen that regional allies and European allies in particular have been wary when it comes to the president's calls to help deploy assets to make sure that the strait can remain safe for transit. We'll have to see where it goes from here, because it's not just the Strait of Hormuz that's seeing these disruptions. Of course, we've been tracking very closely the threat from the Houthis in the Red Sea, which caused Saudi Arabia to reroute those vessels to the Mediterranean coast of Egypt, which earlier this week saw at least two tankers hit off the coast. We still haven't gotten a group to claim responsibility for those attacks, but of course, just lends to the broader picture and heightened tensions in the region. [01:20:28] Speaker 2: Tyler, have about a minute left. In the middle of all of this, the president drawing attention to another conflict that's still very much roiling in the Middle East. That's what's happening in Gaza. And the president writing on Truth Social today, the board of peace reached an historic agreement for the complete disarmament of Hamas and all other armed groups in Gaza. This is, as he put it, a monumental step toward lasting peace and security. That's the post. That's the social media post. What is left unfinished here? Still a lot of [01:20:55] Speaker 16: disagreement, it seems, between both the Palestinians and Israelis on this front. Well, David, if the agreement holds, it would be a very significant step in that 20-point peace plan to end the conflict in Gaza after months of really little progress. But it's unclear exactly how this is going to work. It hinges on Hamas giving up its arms with a senior Israeli official saying that Israel is also demanding that there has to be a complete demilitarization of the Gaza Strip. Once that happens, then Israeli forces would withdraw. But to your point, we're already getting conflicting signals that there may be differing opinions on exactly how this sequencing is going to work because David and Danny Hamas did come out and confirm that it did strike a deal. But their officials are saying that they are not going to take any steps unless Israel withdraws its troops first. Tyler, great to speak with you. Thank you for that update. Tyler Kendall, they're [01:21:37] Speaker 2: reporting from the White House. You can catch our conversation with former U.S. ambassador to Israel, Thomas Nides, along with former U.S. ambassador to Ukraine, Bill Taylor. That's taking place on Bloomberg this weekend, 7 o'clock Wall Street time tomorrow morning. Coming up, FIFA creating a battle off the pitch just as intense as the games on it. More on its spinoff plans next. This is Bloomberg Open Interest. [01:22:14] Speaker 1: The backlash to FIFA's spinoff plans continue. Juventus, Real Madrid and other clubs say that FIFA lacks the authority to sell shares to outside investors. Europe's football governing body UEFA says its members will boycott all FIFA tournaments. For more, we're joined by Bloomberg sports reporter Ira Boudwe. Ira, who is protesting this at the moment, and will they have any ability to sway FIFA or get them to back off of these plans? The biggest protest is coming from UEFA, the 55-member [01:22:42] Speaker 17: associations from Europe who have come out and said they will not participate in any FIFA competitions, which would start with next summer's Women's World Cup in Brazil, include the Men's World Cup. Without Europe, I mean, we just saw Spain win the World Cup. They've won seven out of the last ten. Without Europe, you don't really have a World Cup. Since then, we've seen CONCACAF, which represents North America, Central America, the Caribbean, has 35 voting members come out and say they reject this plan. The Asian Federation has -- the Asian conference has 46 members. They've said they reject it. That's enough to lampoon it. There's 211 members. More than half now have come out and said they're against it. However, how members actually vote when the day comes, FIFA says they're going to continue a consultation process, and the vote's not set to happen until September 19th, so there could be some twists in the road. [01:23:32] Speaker 2: Talk to me about Johnny Infantino, ubiquitous at the World Cup, at every game I seem to watch. He's up for reelection, going unopposed. Talk a bit about that. I mean, there's been a lot of reporting over the many years on FIFA and the way that it's governed here. But talk about the hold that he has on this organization, the confidence that he has that he can get something like this through. [01:23:50] Speaker 17: Yeah, it's pretty spectacular to come off of this World Cup, which was a massive commercial success, arguably the biggest sporting event in the history of the world, made about $10 billion in revenue. He comes off of that and he looks like he's going to cruise to reelection in March. And then just this week says, I've got this plan that he, according to a lot of the federations, he never told them what he was up to. He was talking with JP Morgan Chase and others in the background, comes out with this. And now it looks like he could be in real trouble. I mean, the way it has traditionally worked is FIFA parcels out money from all that $10 billion from the World Cup and so on is parceled out to the 211 member associations. And as long as that spigot continues to flow, they continue to support the leadership. But now with this mutiny on his hands, it's really going to be interesting to see if he can hold on. [01:24:39] Speaker 1: Again, it's always important to reflect back on the idea that FIFA is a nonprofit, and that's how this organization is set up. Even so, you saw a World Cup with an expanded tournament, more teams coming in, thus more games. And Infantino talking about doing even more in the next World Cup. You had hydration breaks, which he said it was to protect the players, but allowed them to conveniently run ads during it. To what degree is sort of the charade of nonprofit sort of falling by the wayside, that this is an entity that is making serious money and becoming commercialized by the tournament? [01:25:09] Speaker 17: Yeah, it's interesting that I spoke with somebody who used to be in governance at FIFA and said that basically the way to think of this is a multinational corporation with a monopoly on football. And so they can kind of do what they want. It was already moving, as you say, in a direction of profit maximization. This move to bring in private investors is really just turning up the dial on that, allowing them to cash in on that. But that seems to be a step too far, at least for some members. So it's possible that Infantino has sort of overplayed his hand here. But even if they don't go forward with this, you will continue to have a framework where the real business of FIFA is putting on these lucrative international tournaments and then sort of parceling out the revenue to its membership. [01:25:52] Speaker 2: All right. Great to see you. Thank you for the update. Ira Boudwe joining us here on set in New York. And now take a quick look here. What's ahead for markets in the week ahead. On Monday, we're going to get earnings from Palantir along with ISM manufacturing data on Tuesday. SpaceX set to deliver its first earnings report. And we're going to get results from AMD as well, plus jolts and durable goods numbers on Wednesdays. Earnings from Disney plus ISM services and ADP employment data Thursday. Warner Brothers discovery earnings and another round of jobless claims. And then on Friday, the much awaited July payrolls report, of course, in light of what happened this week, Danny, with the Federal Reserve. The importance of this data even more paramount than it usually is. And I know we closely scrutinize. [01:26:31] Speaker 1: Well, although this is is a Fed that sort of emphasized the problem is not employment right now. It is inflation. We care about P.C.E. But maybe next year we won't be using P.C.E. as the measure. We'll see what the task force says. I personally am really interested in what Warner Brothers has to say in their earnings because the Skydance Warner Brothers deal has now been put on pause until next year as these court cases start to happen. So paying a sizable monthly fee all the while. Oh, yeah. The Ellison's on the hook for quite a chunky change. And I'm really excited for this weekend this weekend. What do you got on deck? [01:27:03] Speaker 2: As I said, Tom Nines is going to be there. A good focus on geopolitics. But, of course, given what we saw over the course, there will be plenty of markets and the economy as well. Thank you so much for joining. Thank you for having me. [01:27:11] Speaker 1: Really fantastic to have you. That is Bloomberg Open Interest. Enjoy the rest of your Friday. [01:27:16] Speaker ?: We'll be right back.