Bloomberg Surveillance 4/24/2026

[0:05] I THINK THIS BOWL MARKET AND TECH HAS FURTHER TO GO. [0:12] THE MARKET IS CLEARLY LOOKING THROUGH THE SHORT-TERM [0:14] UNCERTAINTY. THE MARKET IS TELLING YOU THIS [0:17] IS A TRANSITORY STORY. IF YOU WERE NOT SPENDING RIGHT [0:20] NOW, YOU WERE GOING TO BE LEFT BEHIND. [0:23] THE SHOCK SUPPORTS THE NEED TO INVEST. [0:28] THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA [0:33] AND THE MARKET IS GOING TO BE LEFT. [0:37] THE MARKET IS GOING TO BE LEFT. [0:40] THE MARKET IS GOING TO START RIGHT NOW. [0:43] COMING INTO FRIDAY, EXTENDING THE CHIP RALLY. [0:46] STRONG GUIDANCE FROM INTEL HELPING SEMIS BUILD ON A 17-DAY [0:50] WINNING RUN AS META AND MICROSOFT ARE MOVING TO CUT [0:52] WORKERS TO SUPPORT BIG SPENDING. [0:54] OFFSETTING A CYCLICAL THREAT BREWING IN COMMODITIES. [0:57] BRENT CRUDE UP 18% THIS WEEK. [1:00] IT IS THE BIGGEST WEEKLY GAIN FOR WTI GOING BACK TO THE WEEK [1:03] ROOST, AT LEAST WHEN IT COMES TO THE COMMODITY WORLD. [1:07] HOWEVER, WHEN YOU TAKE A LOOK AT STOCKS, YES, YOU ARE SEEING [1:10] THE FIRST LOSS FOR A WEEK SO FAR. [1:13] IN APRIL, NONETHELESS, THE LOSS IS MINOR AND YOU ARE SEEING [1:15] RECORD HIGH AFTER RECORD HIGH A NUMBER OF BIG TECH STOCKS. [1:18] THESE TWO THEMES CANNOT BE WIDER APART AND THAT REALLY IS THE [1:20] TENSION OF THE MOMENT. [1:21] IT IS THE TUCK OF WAR RIGHT NOW BETWEEN THE CYCLICAL [1:25] TAILWINDS THAT YOU SEE IN TECH AND THE CYCLICAL THREATS [1:27] COMING FROM COMMODITIES. [1:29] IT IS THE LAST WEEK. THE MOVE IN INTEL BY CLOSE TO [1:34] 30% IN THE PREMARKET. YOU WANT TO FIND THIS TEXAS [1:38] INSTRUMENT WITH BETTER FORECAST IN THE LAST WEEK. [1:41] WE TALKED ABOUT ANOTHER AI THEME. [1:45] ALL OF THAT SUPPORTING TECH STOCKS. [1:47] IT IS WHY THE NASDAQ IS UP ON THE WEEK. [1:51] IT IS THE LAST WEEK. [2:02] WE HAVE A BET IN THIS MARKET THAT THIS WON'T BE A [2:04] PROLONGED SHOT. THIS WILL BE A TRANSIENT STORY. [2:07] EVERY SINGLE STRATEGIST SAYS IT IS HARD TO SEE HOW THIS [2:09] GETS RESOLVED IN ANY KIND OF CLEAN WAY. [2:11] ULTIMATELY, DO YOU HAVE THIS REGIME STAYING IN POWER AND [2:14] YOU STILL HAVE SOME SORT OF FREE TRAVEL THROUGH THE STRAIGHT OF [2:15] THE STRAIGHT OF THE LAST WEEK? [2:22] HOW QUICKLY WILL SHIPS HAVE THE CONFIDENCE TO GO BACK IN [2:25] THERE? [2:27] IT IS NOT A GOOD RECIPE TO GET CONFIDENCE OF SOME OF THE [2:30] MARINERS OUT THERE. [2:33] THINK ABOUT WHERE WE WERE THIS TIME LAST WEEK. [2:36] THIS TIME LAST WEEK, WE WERE HEADING INTO THE WEEKEND. [2:40] THE STREET OF HOMES WAS REOPENING. [2:42] LOOK AT WHERE WE ARE A WEEK LATER. [2:44] WE WERE LOOKING AT THE EARNINGS AND THE TECH PROMISES [2:48] THAT SEEM TO BE GOING STRONG. [2:51] THE ENTHUSIASM AND OPTIMISM, THE HOPE INTO LAST WEEKEND. [2:54] HERE WE ARE A WEEK LATER AND VERY LITTLE HAS CHANGED. [2:57] OPEN, CLOSED, OPEN, CLOSED. [2:59] THAT IS ESSENTIALLY WHERE WE ARE. [3:01] PEOPLE SEEM TO HAVE ACCEPTED THE FACT THAT THIS COULD BE A [3:03] LONG PROCESS OR A LONGER PROCESS AND SOMEHOW SOME OF THE [3:05] RISK ASSETS ARE ENTIRELY DIVORCED BECAUSE THEY ARE [3:07] LOOKING AT EARNINGS AND THE TECH PROMISES THAT SEEM TO BE [3:09] GOING STRONG. [3:11] WE ARE LOOKING AT THE SEQUENCING OF THINGS. [3:15] IT STARTS IN ASIA, PAIN, CONTINUES THROUGH TO EUROPE. [3:20] COMPARE THE PMI'S THIS WEEK IN EUROPE TO THE U.S. [3:24] DOWNSIDE SURPRISES IN EUROPE, UPSIDE SURPRISES IN THE U.S. [3:26] FOR HOW MUCH LONGER CAN THEY CONTINUE? [3:27] WE ARE LOOKING AT THE UNITED STATES. [3:29] WE ARE LOOKING AT THE UNITED STATES. [3:31] WE ARE LOOKING AT THE UNITED STATES. [3:33] EUROPE IS UNIQUELY TERRIBLY POSITIONED. [3:35] WHEN PEOPLE GO TO EUROPE AND COME BACK, THEY SAY THE PESSIMISM [3:37] THERE IS HORRIFIC BECAUSE OF THE DEPENDENCE ON OIL IMPORTS [3:40] THAT YOU DON'T SEE IN THE UNITED STATES. [3:42] YOU ALSO HAD THE ONE BIG BEAUTIFUL BILL IN THE REFUNDS THAT [3:44] DID GIVE SOME POWER TO CONSUMERS. [3:46] AS THIS GOES ON LONGER, PEOPLE SAY THERE WILL BE PAIN. [3:49] WE ARE LOOKING AT THE UNITED STATES. [3:59] THE NASDAQ FUTURES UP BY 0.7% SO FAR THIS MORNING. [4:01] COMING UP THIS HOUR, WE WILL CATCH UP WITH PETER CHIER OF [4:04] ACADOBY SECURITIES WITH TECH LEADING STOCKS HIGHER. [4:08] INSIDER TRADING IN WASHINGTON. [4:10] DEALMAKING CONTINUES TO PICK UP. [4:14] WE BEGIN THIS HOUR WITH TECH EARNINGS HELPING TO OFFSET [4:16] CYCLICAL THREATS BUILDING IN THE ENERGY MARKET AS U.S. [4:18] LAST WEEK OF AN IMPENDING AND VERY STRONG DEAL FOR THE U.S. [4:21] COMES TO FRUITION. [4:25] THAT IS YOUR BEST CASE. WHAT IS YOUR BASE CASE? [4:31] THE BASE CASE IS THAT THIS CONTINUES TO STRUGGLE AND IT [4:33] STARTS WEIGHING A LITTLE BIT MORE ON THE ECONOMY. [4:36] WE HAVE BEEN LOOKING LONGER DATED FUTURES CONTRACTS. [4:38] YOU ARE OUT TO $80 IN WTI OUT TO NOVEMBER NOW. [4:41] THAT IS DIFFERENT. YOU ARE STARTING IN THOSE LONGER [4:43] MONTHS, SEPTEMBER, OCTOBER, NOVEMBER. [4:46] YOU ARE ACTUALLY AT THE HIGHS OF THE WHOLE CYCLE. [4:48] WE ARE SEEING THIS PUSH OUT AND IT IS REALLY HARD TO FIGURE OUT [4:51] WHO IS IN CHARGE IN IRAN. I THINK THAT IS A BIG ISSUE. [4:54] IT IS REALLY HARD TO FIGURE OUT WHO IS WILLING TO MAKE THAT [4:55] FIRST MOVE. [4:56] WHEN WE TALK TO OUR GEOPOLITICAL INTELLIGENCE GROUP, THE [4:59] CONSENSUS VIEW IS THAT WE WILL PROBABLY, TO END THIS WAR, HAVE [5:02] TO ESCALATE ONCE MORE TO ACTUALLY WIN. [5:04] THAT WE WILL HAVE TO GO IN, THAT WE WILL HAVE TO FIGHT AND WE WILL [5:07] HAVE TO PUT PRESSURE ON IRAN. [5:09] TRUMP SEEMS RELUCTANT TO DO THAT RIGHT NOW, BUT WE DON'T [5:12] REALLY SEE WINNING ANY OTHER WAY RIGHT NOW. [5:14] RIGHT NOW, WE ARE NOT TRADING THE ECONOMY. [5:15] WE ARE TRADING THE MARKET. [5:16] THERE ARE SLIGHTLY DIFFERENT THINGS. [5:18] THE ECONOMY IS NOT GREAT IN ASIA. [5:19] IN EUROPE, THERE IS A REAL THREAT. [5:20] IN THE U.S., THINGS ARE OKAY. [5:21] BUT THEY ARE BETTER THAN GOOD IF YOU LOOK AT THE U.S. [5:24] TECH STORY. [5:25] WHAT IS YOUR BEST BET IN THE MARKET? [5:27] HOW ARE YOU ALLOCATING CAPITAL? [5:29] WHAT ARE YOU ADVOCATING FOR? [5:33] WE HAVE BEEN TALKING ABOUT PRODUCTION FOR SECURITY, SO [5:34] WE LOVE THAT. [5:35] INTEL WAS ONE OF OUR NAMES BECAUSE WE DID THINK THE [5:38] U.S. HAD TO GROW CHIP BUSINESS ORGANICALLY, [5:40] DOMESTICALLY. [5:41] I THINK NOW THAT IS ALMOST, I HAVE TO ADMIT, I STARTED [5:43] SELLING A LITTLE BIT AHEAD OF EARNINGS. [5:44] I'M PROBABLY GOING TO BE CLOSED A BIT MORE. [5:46] IT IS BETTER LUCKY THAN SMART SOMETIMES. [5:47] BUT WE HAVE HAD THAT GREAT PLAY. [5:49] I THINK YOU HAVE TO START REALLY LOOKING TUNING OUT OF [5:51] EUROPE AND THINKING THAT EUROPE IS FINALLY GOING TO GET [5:53] THE JOKE THAT YOU HAVE TO INVEST IN HEAVY INDUSTRY. [5:56] YOU HAVE TO INVEST IN YOUR OWN ELECTRICITY PRODUCTION. [5:59] YOU HAVE TO LET BP, SHELL, TOTEL DO WHAT THEY'RE GOOD AT [6:02] AND NOT SO WORRY, YOU KNOW, DON'T WORRY AS MUCH ABOUT [6:05] CARBON AND ONE-DEGREE TEMPERATURE CHANGES FIVE YEARS [6:08] FROM NOW WHEN THE REALITY IS YOU NEED ELECTRICITY, YOU NEED [6:11] ENERGY. [6:12] I THINK THEY START UNLEASHING SOME OF THIS. [6:14] THEY'RE GETTING A LITTLE BIT MORE CREATIVE. [6:15] I THINK THEY'RE GETTING A LITTLE BIT MORE ORGANIZED, [6:17] PARTLY BECAUSE THEY'RE GETTING A LITTLE BIT MORE DESPERATE. [6:21] IT KIND OF TAKES THEM YEARS TO FIGURE ANYTHING OUT. [6:22] THEY GOT KICKED BY RUSSIA AND NOW THEY'RE GETTING KICKED BY [6:23] IRAN. [6:24] I THINK THAT'S GOING TO BE REALLY INTERESTING. [6:25] SO I WANT TO OWN THE ENERGY PLACE. [6:27] I WANT TO OWN KIND OF THAT PRODUCTION FOR SECURITY, NOT [6:29] JUST NOW IN THE U.S., BUT REALLY HEAVILY INTO EUROPE. [6:31] LISA, WE MENTIONED IT BRIEFLY. [6:33] YOU SEE THE PRESSURE ON THE EUROPEANS AND THE ECONOMY IN [6:35] THE PMI DATA. [6:36] YOU SEE IT IN THE MARKETS TOO. [6:37] I THINK EURO STOCKS 50 SO FAR THIS WEEK IS DOWN SOME 3%. [6:40] THEY ARE HIT IN BOTH WAYS. [6:42] NUMBER ONE, THEY'RE ENERGY IMPORTERS BUT THEY ALSO DON'T [6:43] HAVE THE TECH STORY. [6:44] THE TECH STORY SEEMS TO BE SUPPORTING THE MARKET IN TWO [6:47] WAYS. [6:48] ON ONE HAND, YOU'VE GOT, OF COURSE, JUST THE IDEA THAT [6:50] THERE'S UPSIDE SURPRISE IN THE EQUITIES, BUT ALSO THE [6:52] INVESTMENT, THE CAPEX, WHICH SEEMS TO BE SUPPORTING THE [6:54] PICKS AND SHOVELS THAT WE SEE WITH THE SEMICONDUCTORS AND [6:57] THE ENERGY STOCKS IN THE U.S. [6:58] AND THAT'S BEEN A HUGE SUPPORT BECAUSE THAT IS EXISTENTIAL [7:01] SPENDING. [7:02] IT ISN'T NECESSARILY SOMETHING THAT'S COMING FROM AN [7:04] OBVIOUS USE CASE. [7:05] IT TAKES US TO NEXT WEEK. [7:08] NEXT WEDNESDAY WE GET SOME BIG EARNINGS FROM MICROSOFT, [7:10] FROM META, FROM ALPHABET. [7:12] THEY ARE THE BIG SPENDERS AND SOME OF THEM ARE ALSO CUTTING [7:14] JOBS TO SUPPORT THAT SPENDING. [7:16] TO LISA'S POINT, WHEN THEY FEEL LIKE IT'S EXISTENTIAL AND [7:19] THEY'VE GOT THE BALANCE SHEET TO CARRY ON SPENDING, ARE [7:21] THESE TRADES YOU WANT TO BE ON THE WRONG SIDE OF TO GET ON THE [7:23] OTHER SIDE OF AT THE MOMENT? [7:29] I THINK WE'RE ALL KIND OF WAITING TO SEE IF SOFTWARE CAN [7:31] REALLY TURN AROUND. [7:32] THE MICROSOFT STORY I THINK WILL BE REALLY INTERESTING. [7:34] CAN WE GET THIS TURN AROUND IN SOFTWARE? [7:36] I'M TEMPTED. [7:37] I DON'T THINK I'LL GET TO THE POINT THIS WEEKEND BUT I WANT TO [7:39] WRITE THE NOTE. [7:40] YOUR COSTS ARE SOMEONE ELSE'S CUSTOMERS. [7:42] I'M GETTING A LITTLE BIT WORRIED ABOUT THE JOB [7:44] SITUATION. [7:45] WE HAVE AFFORDABILITY THAT'S DOING NOTHING BUT GETTING [7:47] WORSE. [7:48] I KNOW WE FOCUS SO MUCH AT GAS AT THE PUMP. [7:50] WE'RE GETTING INCREASINGLY WORRIED ABOUT WHAT'S GOING TO [7:53] HAPPEN TO FUEL COSTS. [7:54] DIESEL IS SUCH A BIG COMPONENT OF FUEL COSTS. [7:56] WE HAVEN'T EVEN STARTED FEELING THE IMPACT OF HIGHER [7:57] FERTILIZER PRICES ON FOOD COSTS. [7:58] I FEEL THIS AFFORDABILITY LIKE THIS WORKING POOR. [8:00] PEOPLE WHO ARE NOT ABLE TO MAKE ENDS MEET THE WAY THEY [8:02] THOUGHT. [8:03] THAT INCOME LINE KEEPS CREEPING HIGHER AND HIGHER. [8:05] NOW YOU'RE STARTING TO LAY OFF SOME PEOPLE VERY NICE JOBS IN [8:08] MANY OF THESE CASES. [8:09] I'M A LITTLE BIT WORRIED THAT THERE IS A SUBTEXT OF THIS [8:12] ECONOMY THAT'S WORSE AND THAT THE ONE THING WE'RE NOT I'M [8:15] STILL TRYING TO FIGURE OUT HOW TO PICK THIS UP MYSELF. [8:17] BUT I FEEL LIKE WE ARE VERY GOOD AT IDENTIFYING JOB LOSS LED [8:20] RECESSIONS. [8:21] WE SEE THE JOB LOSS. [8:22] WE START FIGURING OUT. [8:23] WE KNOW HOW TO DEAL WITH THAT. [8:24] I'M NOT SURE WE'VE HAD AN AFFORDABILITY LED RECESSION. [8:27] AND DESPITE THE FACT THAT CHIPS AND THINGS ARE DOING SO [8:29] WELL I'M INCREASINGLY WORRIED THAT YOU'RE SEEING PRESSURE ON THE [8:31] CONSUMER IN WAYS. [8:32] THEY'RE MAKING ENDS MEET. [8:33] THEY'RE MAKING ENDS MEET. [8:34] WE GOT THE BUMP FROM THE TAX RELIEF AND THINGS. [8:36] WHERE ARE THEY TWO MONTHS FROM NOW. [8:38] SO A LOT OF PEOPLE WILL BE NODDING ALONG AND THEY'LL BE [8:40] SAYING WE SEE THIS IN THE DATA. [8:41] WE SEE THIS IN THE SENTIMENT THAT WE HAVE OF COURSE COMING OUT [8:44] THROUGH ALL THE SURVEYS THAT INDICATE THIS FEAR ABOUT [8:47] AFFORDABILITY. [8:48] BUT THEN STOCKS GET REWARDED FOR CUTTING STAFF AND SAYING THAT [8:51] THEY'RE GOING TO INVEST IN AI INSTEAD. [8:53] HOW AWKWARD IS THAT. [8:54] I MEAN DO YOU THINK THAT THAT'S GOING TO BE THE THE THEME GOING [8:56] FORWARD THAT IF COMPANIES CUT STAFF WHOLESALE AND SAY WE'RE [9:00] GOING TO INVEST IN AI THAT'S A BUY THE STOCK MOMENT. [9:03] I THINK AT SOME POINT PEOPLE START GETTING WORRIED ABOUT THE [9:05] JOB LOSSES AND NOT AT THAT INDIVIDUAL COMPANY LEVEL BUT AT [9:09] THE NATIONAL LEVEL AND SAY WHERE ARE WE. [9:11] IT WAS JUST TWO MONTHS AGO WE WERE GOING TO HAVE THE AI TOOK [9:14] OVER ALL THE JOBS AND THAT KIND OF NARRATIVE DISAPPEARED. [9:17] I THINK THAT STARTS COMING BACK. [9:18] THIS IS A LITTLE BIT CONCERNING IF YOU'RE GOING TO LOSE THESE [9:20] JOBS. [9:21] WHO'S GOING TO TAKE THOSE JOBS. [9:22] AT THE SAME TIME YOU CONTINUE TO USE AI. [9:26] I THINK WE'RE GOING TO TAKE A LITTLE BIT. [9:29] I THINK WE'RE HAVING TO REDO WORK. [9:31] I BELIEVE A BIG LAW FIRM JUST HAD TO MAKE SOME ANNOUNCEMENT [9:34] THAT THEY HAD INCLUDED SOME HALLUCINATIONS. [9:36] THIS IS NOT YET PERFECT AND WE'RE TREATING IT THAT WAY. [9:38] THINGS YOU DON'T WANT TO READ FROM YOUR LAW FIRM. [9:41] I KEEP LOOKING AT THE FAR SIDE. [9:43] WE MIGHT BE THE ONLY SPECIES THAT EXTINKS OURSELF. [9:45] IT'S LIKE WE'RE SITTING THERE AND GOING OUT OF OUR WAY. [9:47] THE MARKET IS ENCOURAGING IT. [9:49] THIS IS THE KEY POINT LISA MAKES IT. [9:52] YOU REPLACE THE OPERATION EXPENSES THE OPEX WITH THE CAPEX [9:55] AND THE MARKET REWARDS YOU FOR IT. [9:57] SO THEN YOU DROP THE OPEX AGAIN. [9:58] YOU BOOST THE CAPEX AND THE MARKET REWARDS YOU FOR IT. [10:00] AND THAT'S THE LABOR MARKET DOOM LOOP. [10:02] AND YOU END UP IN THIS REALLY, REALLY BAD SITUATION [10:04] WHERE THE MARKET IS DOING WELL AND REWARDING THAT KIND OF [10:06] BEHAVIOR AND UNEMPLOYMENT STARTS TO CLIMB. [10:08] I'M NOT SAYING THAT'S THE BASE CASE FOR YOU, THE BASE CASE [10:10] FOR YOU OR THE BASE CASE FOR ME. [10:12] I'M JUST SAYING THAT'S THE FEAR. [10:13] THAT'S THE FEAR OF WHAT COULD HAPPEN IN THE NEXT SEVERAL YEARS. [10:15] WELL, AND ESSENTIALLY IF YOU START TO SEE COMPANIES HAVE TO [10:18] JUSTIFY THEIR EXPENSE IN CAPEX TIED TO AI BY CUTTING STAFF FOR [10:23] EFFICIENCIES, THEN WHAT DOES THAT SET US UP FOR? [10:25] I MEAN, IS THAT ESSENTIALLY WHAT YOU SEE GOING FORWARD, [10:28] PETE? [10:29] THERE'S GOING TO BE A SENSE THAT COMPANIES HAVE TO CUT SOMEWHERE [10:32] IN ORDER TO KEEP SPENDING ON AI AT THE SPEED THAT THEY HAVE BEEN. [10:35] THERE'S CERTAINLY SOME OF THAT SENSE RIGHT NOW. [10:37] AND, AGAIN, I THINK THEY'RE GOING TO GET MORE AND MORE [10:38] INVESTMENT IN THE SEMICONDUCTOR INDUSTRY, RIGHT? [10:40] I THINK THAT'S JUST ONE. [10:41] A, YOU'VE GOT THESE COMPANIES. [10:43] B, YOU CAN START LOOKING AT PLACES LIKE NOKIA, ERICSON. [10:45] WHAT IN EUROPE MIGHT BENEFIT IF EUROPE CAN KIND OF GET SERIOUS [10:48] ABOUT AI? [10:49] YOU'VE SEEN SOME SMALLER COMPANIES, YOU KNOW, THAT BLACKBEAR, I [10:51] THINK, IS A COMPANY I OWN A SMALL BIT OF. [10:53] ALL OF A SOME THAT'S INTERESTING BECAUSE THEY'RE DOING SOMETHING [10:55] IN THE SPACE. [10:56] SO YOU'RE SEEING KIND OF EVERYONE, I THINK, LOOK TO, OKAY, [10:59] WHAT ELSE CAN BENEFIT? [11:00] I THINK THAT'S GOING TO DRIVE THAT PART OF THE MARKET. [11:02] I THINK IT CONTINUES TO DO PRETTY WELL. [11:04] CAN I JUST GET A FINAL WORD ON GOVERNMENT INTERVENTION? [11:07] INTEL. [11:08] TALKED A LOT ABOUT SPIRIT AND WHAT'S GOING TO HAPPEN THERE. [11:09] WE'LL SAVE THAT CONVERSATION FOR LATER THIS MORNING. [11:11] INTEL, I DON'T WANT TO DOWNPLAY THE REAL DEVELOPMENTS TAKING [11:15] PLACE OF THIS COMPANY. [11:16] BUT HOW MANY COMPANIES DO YOU THINK ARE REENGAGING WITH INTEL [11:19] BECAUSE OF THE GOVERNMENT INVOLVEMENT AND THE HALO THAT [11:21] OFFERS AND MAYBE THEY WANT TO PLEASE SOME PEOPLE? [11:23] I THINK THAT WAS PART OF WHY WE HAD THE PROSAC, RIGHT? [11:27] AND WE CONCLUDED INTEL BECAUSE OF THE 10% GOVERNMENT STAKE. [11:29] AND PART OF MY THESIS HAS BEEN TRUMP LIKES TO WIN. [11:32] TRUMP OWNS THIS ON BEHALF OF THE AMERICAN PEOPLE. [11:34] SO THE AMERICAN PEOPLE ARE WINNING. [11:35] BUT PEOPLE ARE GOING TO DO BUSINESS WITH THIS COMPANY [11:38] BECAUSE YOU WANT TO BE ON THE RIGHT SIDE OF TRUMP. [11:40] SO I THINK THAT WAS PART OF MY THESIS. [11:42] I THINK THAT'S PROBABLY PLAYED OUT VERY WELL. [11:44] FOR BETTER OR FOR WORSE. [11:45] I DO WISH THAT WHEN WE'RE MAKING THESE INVESTMENTS, [11:47] WHETHER IT'S IN THAT OR THERE WERE SOME GUIDELINES SET UP [11:49] AND THAT WE HAD SOME GROUP THAT ACTUALLY DOES THIS AND WAS [11:51] WELL ORGANIZED. [11:52] THAT'S NOT HOW THIS ADMINISTRATION WORKS. [11:54] AND FIGHTING HOW THIS ADMINISTRATION WORKS ISN'T A [11:56] GOOD WAY TO MAKE MONEY. [11:57] FIGURING OUT HOW THE ADMINISTRATION WORKS AND TAKING [12:00] ADVANTAGE OR FOLLOWING IT I THINK IS A GOOD WAY TO MAKE MONEY. [12:02] WHAT'S NEXT DEFENSE CONTRACTORS FLYING SPIRIT? [12:04] IS THAT WHAT'S GOING TO HAPPEN NEXT? [12:06] NO, I DO THINK I'M LOOKING FOR ANYTHING IN THE DRONE SPACE. [12:09] THE DRONE SPACE IS JUST GOING TO CONTINUE TO TAKE OFF. [12:11] I THINK A LOT OF THOSE COMPANIES ARE PRIVATE. [12:12] I'D EXPECT A LOT OF IPOs AS WE WERE TALKING OFFLINE. [12:15] THERE'S GOING TO BE IPOs AND EVERYTHING. [12:16] YOU'RE GOING TO SEE THAT. [12:17] I THINK SURFACE DRONES HAVE NOT GETTING ENOUGH ATTENTION. [12:19] THAT'S BOATS BASICALLY. [12:21] SO YOU CAN LOOK AT COMPANIES AGAIN. [12:23] I THINK THE SHIP BUILDING INDUSTRY, WHICH IS ALLEGEDLY WHY THE [12:26] SECRETARY OF THE NAVY WAS LET GO. [12:28] HE WAS NOT FOCUSED ENOUGH ON SHIP BUILDING. [12:30] THAT'S AN AREA I THINK IS GOING TO GAIN ATTENTION. [12:32] I LOOK AT BRUNSWICK, FOR EXAMPLE. [12:33] THEY MAKE SMALL BOATS, NOT MILITARY OR ANYTHING LIKE THAT. [12:36] BUT WHY DON'T THEY GET INVOLVED IN THIS? [12:37] I THINK YOU'RE GOING TO SEE THAT THIS DRONE SPACE EXPLODE. [12:40] I THINK SHIP BUILDING REALLY IS A BIG FOCUS THAT WE NEED TO DO. [12:44] SO THAT'S IF I'M BADING RIGHT NOW, I'M SHIFTING SOME MONEY OUT OF [12:47] MAYBE THE SEMIS THAT HAVE DONE SO WELL. [12:49] I'M LOOKING FOR OTHER THINGS. [12:50] INTERESTING. [12:51] THANK YOU, SIR. [12:52] WHAT A TURN AROUND FOR INTEL. [12:58] WHAT A MOVE THIS MORNING IN THE PRE-MARKET HIGHER BY MORE THAN [13:00] 20%, CLOSE TO 30% HIGHER SO FAR THIS MORNING. [13:04] INTEL MIGHT MAKE SENSE FROM A PRO-SEC STANDPOINT, TRADEMARK. [13:08] I DON'T UNDERSTAND HOW SPIRIT COMES INTO THAT UNLESS YOU HAVE [13:11] DEFENSE CONTRACTORS FLYING SPIRIT, WHICH I DON'T THINK ANY OF [13:13] THEM WOULD WANT TO DO. [13:14] THE TRUTH IS THAT'S EXACTLY THE POINT, WHICH IS HOW DOES THAT [13:16] FIT INTO THE SAME THESIS, WHICH GIVES ANYONE A SENSE OF [13:18] EXACTLY WHAT THE ROAD MAP IS AHEAD FOR THIS GOVERNMENT TO [13:20] INVEST. [13:26] LET'S GIVE AN UPDATE ON STORIES THIS MORNING. [13:30] WE'LL COME BACK TO THAT. [13:32] A U.S. SANCTIONED SUPER TANKER CARRYING IRANIAN OIL [13:35] APPEARS TO BE ATTEMPTING TO CROSS THE STREET OF HORMOOSE. [13:38] THE TANKER IS CARRYING 2 MILLION BARRELS OF CRUDE LOADED FROM [13:41] CARG ISLAND. IT STOPPED SIGNALING ITS [13:44] LOCATION FOR DAYS BEFORE REAPPEARING ON SHIP TRACKING [13:46] PLATFORMS. [13:48] WE'VE BEEN TALKING ABOUT THIS. [13:52] THE LAST WEEKEND, THE LAST WEEKEND, THE CHIPMAKER [13:54] REPORTING A REVENUE OUTLOOK FOR THE YEAR THAT BLEW PAST [13:58] ESTIMATES SIGNALING ITS BEGINNING TO BENEFIT FROM THE AI [14:01] INFRASTRUCTURE BUILDOUT. [14:03] PRESIDENT DONALD TRUMP SAYING ISRAEL AND LEBANON WILL [14:06] EXTEND THEIR CEASE-FIRE BY THREE WEEKS. [14:09] THE LAST WEEKEND, THE U.S. WILL WORK WITH LEBANON TO HELP [14:13] IT PROTECT ITSELF FROM HEZBALLAH. [14:17] THANK YOU FOR THE UPDATE. [14:19] UP NEXT ON THE PROGRAM, INSIDER TRADING IN WASHINGTON. [14:21] THE WHOLE WORLD, UNFORTUNATELY, HAS BECOME SOMEWHAT OF A [14:25] CASINO AND YOU LOOK AT WHAT IS GOING ON ALL OVER THE WORLD [14:28] AND EUROPE AND EVERY PLACE THEY ARE DOING THESE BETTING [14:31] THINGS, I WAS NEVER MUCH IN FAVOR. [14:33] WE WILL TALK ABOUT THAT. [14:39] WE WILL CATCH UP WITH JOHN LIEBER OF EURASIA GROUP. [15:06] LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. [15:08] LOOK AT THAT GAP. EQUITY FEATURES ON THE S&P [15:11] TOTALLY UNCHANGED. THE OUTPERFORMANCE HERE ON THE [15:15] NASDAQ, HIGH BY 0.8%. THANK YOU TO THE CHIPMAKERS ONCE [15:18] AGAIN. INTEL, ABSOLUTELY CRUSHING [15:21] GEAR. THE STOCK IS HIGH IN THE [15:23] COMPANIES. WE ARE LOOKING AT THE [15:27] COMPANIES OF THE CHIPMAKERS. [15:30] THE CHIPMAKERS HADN'T NECESSARILY GOTTEN THE BENEFIT [15:33] THAT A LOT OF PEOPLE HAD EXPECTED BASED ON THE CAPEX [15:36] PLANS THAT WERE ANNOUNCED BY BIG TECH. [15:40] ON THE OTHER HAND, PEOPLE ARE REALIZING THAT THIS IS THE ONE [15:43] TRADE THEY CAN KEEP GIVING BECAUSE BIG TECH WILL KEEP [15:47] SPENDING AND THEY WILL SHOW THAT THEY WILL SACRIFICE THEIR [15:49] PEOPLE IN ORDER TO KEEP SPENDING AND ULTIMATELY THESE ARE [15:51] THE COMPANIES THAT WILL BENEFIT. [15:57] IT HAS BEEN FRUSTRATING IF YOU SET THIS OUT. [16:00] IT HAS ALSO BEEN FRUSTRATING IF YOU FEEL LIKE SOMEONE HAS GOT [16:02] AN EDGE THAT YOU DON'T HAVE. [16:05] THIS MORNING INSIDE OF TRADING IN WASHINGTON. [16:08] IT IS A LITTLE LIKE PETE ROSE. [16:12] HE KEPT HIM OUT OF THE HALL OF FAME BECAUSE HE BETTED ON HIS [16:14] OWN TEAM. THE WHOLE WORLD, UNFORTUNATELY, [16:16] HAS BECOME SOMEWHAT OF A CASINO. [16:18] THEY ARE DOING THESE BETTING THINGS. [16:22] I WAS NEVER MUCH IN FAVORING THAT. [16:24] I LIKE IT CONCEPTUALLY BUT IT IS WHAT IT IS. [16:28] I THINK THAT I'M NOT HAPPY WITH ANY OF THIS. [16:30] HERE IS THE LATEST THIS MORNING. [16:34] A U.S. SOLDIER FACING CHARGES FOR ALLEGEDLY USING [16:36] CLASSIFIED INTEL TO RAKE IN OVER 400,000 ON POLY MARKET. [16:40] BETTING ON THE TIMING OF THE CAPTURE OF VENEZUELA'S THEN [16:42] PRESIDENT NICOLAS MADURA WITH THE LATEST IN WASHINGTON. [16:44] GOOD MORNING, JOHN. [16:47] IT IS NOT JUST WHAT IS HAPPENING IN TERMS OF THIS CRIMINAL [16:49] INVESTIGATION BUT ALSO THE CFTC IS LODGING ITS VERY OWN [16:53] IN PARALLEL CIVIL INVESTIGATION INTO THIS SOLDIER. [16:55] AND THIS MARKS THE FIRST TIME WE SEE THAT REGULAR TAKE THAT [16:59] STEP WHEN IT COMES TO PREDICTION MARKETS. [17:01] IT ALSO COMES THIS OWN WHITE HOUSE SENT OUT A MEMO TO STAFF A [17:05] FEW WEEKS AGO TO MAKE SURE THAT THEY ARE NOT MAKING THESE KINDS [17:07] OF BETS ESPECIALLY GIVEN THEY HAVE ACCESS TO INFORMATION. [17:09] AND WE'VE SEEN A NUMBER OF SIZABLE TRADES NOT JUST WHEN IT [17:11] COMES TO TRADING PLATFORMS ONLINE LIKE KAUSHI AND POLY MARKET BUT [17:15] ALSO IN OUR OWN FINANCIAL MARKET ESPECIALLY WHEN IT COMES TO [17:19] MASSIVE OIL POSITIONS PUT ON IN A TIMELY FASHION BEFORE THE [17:23] PRESIDENT COMES OUT WITH A TRUTH SOCIAL POST. [17:25] AND FOR MORE ON THIS I'M VERY GLAD TO BE JOINED BY JOHN LIBER [17:29] OF EURASIA GROUP A FRIEND OF THE SHOW. [17:31] JOHN, THANK YOU SO MUCH FOR JOINING ME. [17:33] SO THE CFTC IS ALSO JOINING IN ON THIS IN A PARALLEL SUIT. [17:37] ARE WE GOING TO SEE MORE OF THESE KINDS OF LAWSUITS? [17:40] I HOPE SO. [17:41] I THINK THIS IS ACTUALLY A PRETTY MAJOR ISSUE WHERE YOU'VE GOT [17:44] GOVERNMENT OFFICIALS WHO ARE USING THEIR POSITION TO PROFIT. [17:47] AND THE PROLIPERATION OF NEW MARKETS THAT ALLOW THAT TO [17:50] HAPPEN WITH VERY LITTLE OVERSIGHT AND VERY LITTLE [17:52] REGULATION MEANS WE'RE GOING TO SEE MORE OF IT. [17:54] SO I'M ACTUALLY SURPRISED THE CFTC HAS GOTTEN TO [17:57] IN ON THIS. [17:59] THE OIL INVESTIGATION THAT THEY'RE LAUNCHING ABOUT TRUMP'S [18:02] IRAN ATTACKS. [18:03] WHO KNOWS WHERE THAT THING LEADS. [18:04] I MEAN, THESE COULD BE SOME VERY POLITICALLY SENSITIVE [18:07] INVESTIGATIONS. [18:09] AND I THINK THAT AS THESE THINGS PROLIFERATE, YOU'RE GOING [18:12] TO SEE MORE OF THIS. [18:13] REP LUNA YESTERDAY TOOK TO TWITTER AND SAID LESS THE DOJ [18:17] PLANS ON GOING AFTER ALL THE CROOKS IN CONGRESS CURRENTLY [18:19] INSIDE OR TRADING, THIS IS SIMPLY SKUED JUSTICE. [18:21] WILL THERE BE MORE PRESSURE ON CONGRESS TO ALSO MAKE SURE THAT [18:24] CONGRESSIONAL LAWMAKERS, SENATORS, STAFFERS CANNOT TRADE? [18:28] YEAH, THERE'S BEEN PRESSURE ON CONGRESS TO STOP GETTING RICH [18:31] OFF OF INSIDE INFORMATION FOR DECADES NOW. [18:33] AND IT SEEMS LIKE MEMBERS OF CONGRESS SOMEHOW FIND A WAY TO [18:35] KEEP GETTING WEALTHIER. [18:36] SO I DOUBT THERE WILL BE ANY SERIOUS ENFORCEMENT. [18:39] THE STOCK ACT WAS PASSED OVER A DECADE AGO. [18:41] AND THERE HAVEN'T BEEN THAT MANY PROSECUTIONS, MEANINGFUL [18:44] PROSECUTIONS BROUGHT UNDER IT. [18:46] I THINK THAT PROBABLY CONGRESSIONAL STAFF ARE CERTAINLY SCARED [18:48] ABOUT THIS. [18:49] MEMBERS OF CONGRESS ARE RIGHT NOW MORE OR LESS ABOVE THE LAW HERE. [18:53] WHEN IT COMES TO CONGRESS AND THE WAR IN IRAN, THERE'S AN [18:55] IMPORTANT DEADLINE COMING UP WHEN IT COMES TO THE WAR POWERS ACT. [18:58] DOES IT MATTER TO THIS WHITE HOUSE? [18:59] NO, I DON'T THINK SO. [19:00] I THINK THE WAR POWERS ACT, WHICH WAS PASSED DECADES AGO IN ORDER TO [19:03] BE A CHECK ON THE PRESIDENT'S POWER TO DO EXACTLY WHAT TRUMP IS [19:06] DOING IN IRAN RIGHT NOW, IS MORE OR LESS DEFUNCT AS LONG AS [19:09] CONGRESS IS NOT WILLING TO ENFORCE IT. [19:11] AND UNFORTUNATELY, THE ONLY ENFORCEMENT MECHANISM THEY HAVE IS [19:13] IMPEACHMENT, AND WE KNOW THEY'RE NOT GOING TO IMPEACH TRUMP. [19:16] SO WHAT ARE THEY GOING TO DO HERE? [19:17] DOES THIS CHANGE, THOUGH, POTENTIALLY, AFTER THE MIDTERM [19:19] ELECTIONS, IF WE DO SEE A CHANGING OF POWER, WHETHER THAT'S IN [19:22] THE HOUSE OR THE SENATE? [19:23] IT COULD. [19:24] I MEAN, THE DEMOCRATS WOULD CERTAINLY CONTROL THE HOUSE AND [19:26] MAYBE THE SENATE, BUT YOU STILL HAVE THE ENFORCEMENT HERE, WHICH [19:30] IS, YOU KNOW, DOESN'T, ISN'T REALLY, THERE'S NO REAL ENFORCEMENT [19:33] CHANNEL. [19:34] AND I THINK PRESIDENT TRUMP, WHO IN HIS FIRST TERM DISPUTED THE [19:36] LEGALITY OF THE WAR POWERS ACT AS AN UNCONSTITUTIONAL CHECK ON HIS [19:41] ABILITY TO CONDUCT FOREIGN AFFAIRS, I THINK PROBABLY CONTINUES TO [19:45] JUST IGNORE THIS. [19:46] WELL, OBAMA SORT OF IGNORED IT AS WELL WHEN IT COMES TO LIBYA. [19:49] SO WE'VE SEEN THIS ON BOTH SIDES. [19:50] CIRCUMSTANTIAL LEGALITY, CIRCUMSTANTIAL RULE OF LAW, WHERE [19:53] YOU CARE ABOUT IT WHEN IT'S YOUR SIDE AND YOU DON'T CARE ABOUT IT [19:56] WHEN IT'S PREVENTING YOU FROM DOING WHAT YOU WANT. [19:58] WHEN IT COMES TO THE WAR IN IRAN, WHERE IS ERAZIA RIGHT NOW IN [20:00] TERMS OF THIS POTENTIAL OFFRAMP TALKS THAT ARE HAPPENING? [20:04] THERE WAS A CEASE FIRE ANNOUNCE YESTERDAY BY THE PRESIDENT WHEN IT [20:06] COMES TO ISRAEL AND LEBANON. [20:07] DOES THAT HELP THE UNITED STATES WHEN IT COMES TO TRYING TO [20:10] GET THE IRANIANS BACK AT THE TABLE? [20:12] SO IF YOU LOOK AT WHERE THE TWO SIDES ARE RIGHT NOW, THE [20:15] IRANIANS LOOK PRETTY DUG IN. [20:17] THEY'VE GOT A FLOW OF OIL MOVING OUT. [20:19] THEY'VE GOT OIL REVENUES THAT ARE MUCH HIGHER THAN WHAT THEY [20:21] ORIGINALLY BUDGETED FOR THIS YEAR, WITH TWO MILLION [20:24] BARRELS A DAY ON AVERAGE GOING OUT OVER THE LAST MONTH OR SO. [20:27] THAT PROBABLY DROPS SIGNIFICANTLY UNDER THE U.S. [20:31] BARRICADE THAT'S HAPPENING. [20:33] BUT THE U.S. IS QUICKLY BACK PEDDLING OFF OF ITS POSITION. [20:36] WE DON'T THINK TRUMP IS ABLE TO GO BACK IN IN ANY MEANINGFUL WAY [20:40] BECAUSE OF THE POLITICAL CONSTRAINTS THAT ARE ON HIM IN THE [20:42] UNITED STATES. [20:43] AND THE IRANIANS KNOW THIS. [20:44] SO I THINK THE NEGOTIATIONS THAT ARE HAPPENING RIGHT NOW [20:47] EVENTUALLY DO LEAD TO SOME KIND OF A DEAL THAT REOPENS THE [20:50] STRAIGHT, LET'S SAY, BY THE END OF MAY. [20:52] AND I THINK THIS WEEKEND IS GOING TO BE A KEY TIME AS THE TWO [20:55] SIDES ARE EXCHANGING IDEAS ABOUT WHAT EXACTLY THE IRANIANS [20:58] ARE GOING TO DO. [20:59] PROBABLY THEY ARE FORCED TO STOP ENRICHING URANIUM. [21:02] THEY PROBABLY GET SOME PAUSE OVER SOME PERIOD OF TIME. [21:05] AND THE U.S. PROBABLY ENDS UP LIFTING SOME OF THESE SANCTIONS, [21:08] WHICH LOOKS A LOT LIKE THE JCPOA THAT PRESIDENT OBAMA DID. [21:12] AS YOU'RE SAYING THIS, I'M LIKE, OKAY, I'VE SEEN THIS DEAL BEFORE [21:15] THAT THE PRESIDENT THEN RIPPED UP AND TRUMP WON. [21:17] IS TRUMP WILLING TO TAKE A DEAL THAT HE, IN HIS PRIOR TERM, [21:22] WOULD SAY THAT IS NOT EFFICIENT? [21:25] SO IF I WERE BETTING ON POLY MARKET, I WOULD HAVE LOST A LOT [21:27] OF MONEY BETTING ON TRUMP RIGHT NOW. [21:29] SO WHO KNOWS WHAT HE'S GOING TO DO. [21:30] BUT RIGHT NOW, THE SIGNALS THAT THE WHITE HOUSE ARE SENDING [21:33] ARE THAT THEY ARE BACKING OFF OF THEIR KEY DEMANDS, [21:35] AND THEY WANT TO GET A DEAL TO MAKE THIS THING GO AWAY. [21:38] AND THAT'S AT LEAST THE DIRECTION OF TRAVEL RIGHT NOW. [21:41] TRUMP, OF COURSE, CAN CHANGE HIS MIND AT ANY TIME FOR ANY REASON. [21:44] BUT THAT'S WHAT IT LOOKS LIKE RIGHT NOW. [21:46] I SPOKE TO THE FORMER CENTCOM COMMANDER VOTEL YESTERDAY, [21:50] AS WELL AS A SIX-TIME CIA STATION CHIEF, [21:53] AND THEY SAID 9 TO 12 MONTHS. [21:55] UNTIL THE STRAIGHT IS OPEN AGAIN? [21:56] UNTIL THINGS ARE BACK TO NORMAL AND POTENTIALLY HAVE A DEAL. [21:58] YEAH. [21:59] WELL, I THINK THERE'S GOING TO BE TWO LEVELS OF A DEAL. [22:02] THERE'S THE MEMORANDUM OF UNDERSTANDING THAT ALLOWS THE BLOCK AIDES [22:05] TO GO AWAY AND THE IRANIANS CAN OPEN THE STRAIGHT ONCE AGAIN. [22:08] AND THEN THERE'S A DEAL, WHICH IS, YOU MOVE URANIUM OUT OF THE COUNTRY, [22:12] WE GET INSPECTORS IN, HERE'S SOME CASH. [22:14] SO I THINK THAT THE DEAL PART OF IT MIGHT TAKE A LITTLE LONGER. [22:17] BUT RIGHT NOW WE THINK THEY ARE HEADED TOWARDS SOME KIND OF MEMORANDUM OF [22:20] UNDERSTANDING THAT WOULD SKETCH OUT THE PARAMETERS OF A DEAL [22:23] WITHOUT EVEN IF SOMETHING IS NOT WRITTEN. [22:24] BUT I DO AGREE THAT THE DISRUPTIONS WE'RE LIVING WITH RIGHT NOW [22:27] ARE GOING TO BE WITH US FOR A WHILE. [22:29] AND THE STRAIGHT'S NOT GOING TO BE FULLY OPEN UNTIL AT LEAST THE MIDDLE OF THE SUMMER, IF NOT BEYOND. [22:33] RIGHT. [22:34] ACTUAL SAID YESTERDAY THAT THEY WERE LAYING MORE MINES. [22:36] DOESN'T THE IRANIANS WANT TO MAKE THIS AS COMPLICATED FOR THE PRESIDENT [22:40] BEFORE THE MIDTERM ELECTION? [22:41] CERTAINLY THAT'S WHAT IT LOOKS LIKE RIGHT NOW. [22:43] THERE'S BEEN A LOT OF REPORTING ABOUT HOW TRUMP'S TWEETING IS DISRUPTING THE NEGOTIATIONS. [22:49] AND THE IRANIANS, I THINK, THINK THEY'RE PLAYING A STRONGER HAND. [22:52] AND I THINK THEY'RE PLAYING A STRONGER HAND TOO. [22:54] SO I THINK THAT PUTS THE AMERICANS IN A VERY DIFFICULT POSITION IN THE NEGOTIATION HERE. [23:00] WELL, IF THEY THINK THEY'RE WINNING, THEN WHY WOULD THEY BACK OFF? [23:01] BECAUSE THEY WANT IT TO BE. [23:02] I MEAN, I THINK EVERYONE WANTS THIS TO BE OVER AND FOR LIFE TO RETURN TO NORMAL. [23:05] JOHN LIEBER, THANK YOU SO MUCH FOR YOUR TIME. [23:06] OF COURSE, THAT WAS EURASIA GROUP'S JOHN LIEBER, WHO THINKS WE'RE GOING INTO A CRITICAL WEEKEND [23:10] AS BOTH THE IRANIANS AND THE AMERICANS CONTINUE TO NEGOTIATE VIA PAKISTAN WHEN IT COMES TO THESE BACK CHANNELS. [23:17] ANNE-MARIE, I APPRECIATE THE UPDATE DOWN IN WASHINGTON. [23:23] MORE FROM ANNE-MARIE IN THE NEXT HOUR. THINK ABOUT WHAT WE'VE LEARNED SO FAR THIS WEEK FROM THE WASHINGTON POST [23:26] AND FROM AXIOS AS WELL. WASHINGTON POST INDICATING THAT IT COULD TAKE SIX MONTHS TO CLEAR THE MINES [23:30] THROUGH THE ESTRATIVORMERS. AND TO ANNE-MARIE'S POINT, AXIOS YESTERDAY, THE IRGC LAID MORE MINES IN THE [23:35] ESTRATIVORMERS THIS WEEK, ACCORDING TO A U.S. OFFICIAL. [23:39] THEY WANT TO RATCHET UP THE PRESSURE. THEY WANT TO LEAVE THIS AS MUCH AS POSSIBLE. [23:41] THERE IS A SENSE OF BOTH SIDES TRYING TO CREATE LEVERAGE. [23:47] UNCLEAR WHAT BOTH SIDES ARE LOOKING FOR AND WHAT THE POINTS OF PAIN ARE TO BRING THEM TO THE [23:51] NEGOTIATING TABLE. ONE KEY QUESTION IS, AT WHAT POINT DOES [23:53] IRAN HAVE TO STOP PUMPING OIL SHUT IN ITS WELLS BECAUSE IT HAS RUN OUT OF STORAGE CAPACITY? [23:57] A LOT OF DEBATE ON THAT FRONT. TOMORROW, COMING UP ON THE PROGRAM, [24:03] WE WILL CATCH UP WITH RBC CAPITAL MARKETS AS TECH LEADS A RESURGENCE IN DEALMAKING. [24:09] THE BOTH SIDES ARE LOOKING FOR THE BOTH SIDES. [24:13] THE BOTH SIDES ARE LOOKING FOR THE BOTH SIDES. [24:16] THE BOTH SIDES ARE LOOKING FOR THE BOTH SIDES. [24:19] THE BOTH SIDES IS SOARING AS THE TURNAROUND OF THE COMPANY STARTS TO [24:35] PAY OFF. THAT NAME IS UP BY 28% IN THE [24:36] PREMARKET. LIVE FROM NEW YORK CITY THIS MORNING, [24:38] YOU ARE WATCHING BLOOMBERG TV. WE HAVE HAD A SMALL PULLBACK FROM ALL-TIME [24:43] HIGHS ON THE S&P 500. WE HAVE HAD A RUN OF GAINS. [24:46] THREE WEEKS OF 3% PLUS GAINS ON THE S&P. [24:48] THIS WEEK WAS SLIGHTLY DOWN ON THE WEEK BUT STILL UP ON THE MONTH BY 9%. [24:52] EQUITY FUTURES ON THE S&P UP BY 0.1%. [24:59] THE REASON, THE EXPLANATION, LOOK TO ONE THING RIGHT NOW AND THAT'S [25:02] CHIPS. EVERY SINGLE COMPANY THAT WE HAVE [25:05] SEEN REPORT SO FAR IS REPORTING REALLY STRONG GUIDANCE IN THIS [25:07] SECTOR. THAT IS WHY WE HAVE HAD 17 [25:09] CONSECUTIVE DAYS OF GAINS FOR THE PHILADELPHIA SEMICONDUCTOR [25:12] INDEX. I THOUGHT YOU WERE GOING TO [25:15] SAY LOOK TO ONE THING AND THAT WOULD BE INTEL GIVEN THE FACT THAT [25:17] YOU CAN SEE A COMPANY THAT IS WORTH THIS MUCH MONEY, WHEN YOU [25:22] CAN TAKE A LOOK AT A $335 BILLION COMPANY AND THAT IT CAN [25:27] GRAIN 31% OVERNIGHT AFTER REPORTING BETTER THAN EXPECTED [25:29] EARNINGS BECAUSE OF THE CPU'S AND THE PROMISE TO INVEST, [25:33] REALLY GIVES YOU A SENSE OF JUST HOW MUCH OF A MOON SHOT SOME [25:36] OF THESE ARE VIEWED AS. [25:43] JUST HELPING TO INSULATE THIS EQUITY MARKET FROM THIS. [25:48] BRENT CRUDE THIS WEEK, HIGHER EVERY SINGLE DAY THIS WEEK. [25:51] UP ON THE WEEK BY SOME 18%. MORE THAN THAT NOW. [25:55] THAT WEEK, THE SECOND BIGGEST WEEKLY GAIN SINCE THIS WAR [25:56] STARTED. IT HAS BEEN A BIG WEEK. [25:59] IT IS NOT JUST THE FRONT MONTH OF THE FUTURES CURVE. [26:02] IT IS THE LATER MONTHS AS WELL AS YOU LOOK AT THE CURVE. [26:05] THE MARKET IS INFLATIONARY. [26:13] IT IS INFLATIONARY. THAT IS REALLY IMPORTANT. [26:18] THE MARKET IS SLOWLY STARTING TO PUSH THIS OUT TO MAKE IT [26:20] SLIGHTLY MORE PROLONGED. KEY ISSUE FOR A LOT OF [26:25] ECONOMISTS IS ARE WE SEEING A PROLONGED SHOCK THAT LEAVES [26:30] PRICES OF OIL MANAGEABLE BUT INFLATIONARY. [26:32] IF YOU GET TO $120, $125 A BARREL THEN YOU CAN GET TO THE [26:35] PEOPLE HAVE TO REALLY TRY TO UNDERSTAND WHAT THAT LOOKS LIKE [26:38] LATER OUT BECAUSE THIS IS AN ECONOMY THAT CAN HANDLE IT. [26:41] THIS IS A SNEAKY MOVE IN THE BOND MARKET TOO. [26:44] YOU'VE HAD FIVE DAYS OF HIGH CRUDE PRICES. [26:47] YOU'VE HAD FIVE DAYS OF HIGH YIELDS AT THE FRONT END OF THE [26:49] CURVE AS WELL. [26:51] TWO IS BACK TO ABOUT 384, UP A BASIS POINT ON THE SESSION, [26:54] UP BY DOUBLE DIGITS SO FAR THIS WEEK. [26:58] SOME 16 BASIS POINTS OFF THE HIGH OF THE YEAR. [27:01] THE CRAZY DAYS OF 4% ARE STILL BEHIND US BUT WE'RE GETTING [27:04] HIGHER FOR LONGER OIL PRICES. [27:09] PEOPLE ARE ASSESSING HOW DO YOU MEASURE INFLATION? [27:14] WHAT IS THE APPETITE GOING TO BE TO CUT RATES? [27:16] WHAT DOES THIS MEAN IF WE HAVE HIGHER FOR LONGER OIL PRICES [27:19] AND AN ECONOMY THAT KEEPS CHUCKING ALONG? JONATHAN BIDEN [27:24] WE'LL COME BACK TO THAT STORY LATER THIS MORNING. [27:27] LET'S GET YOU SOME SINGLE NAMES. [27:30] THERE IS NO STOPPING INTEL THIS MORNING UP 28.5% IN THE [27:32] COUNTRY. [27:39] THE CHIPMAKER FORECASTING REVENUE WELL ABOVE ESTIMATES [27:41] DUE TO HOT DEMAND FOR ITS CPUS. [27:44] THIS REALLY SPEAKS TO THE TURNAROUND UNDER CEO LIT BOUTON [27:47] WITH THE CONVERSATION SHIFTING FROM WHETHER INTEL CAN [27:49] SURVIVE TO HOW FAST IT CAN SCALE TO MEET THOSE NEEDS FOR AI. [27:54] THE FUTURE IS A LITTLE BIT OF THE COUNTRY. [28:01] WE ARE LOOKING AT THE HISTORIC RUN IN THE PHILADELPHIA [28:03] SEMICONDUCTOR INDEX. [28:06] WE SEE THIS HISTORIC RUN IN THE PHILADELPHIA SEMICONDUCTOR [28:08] INDEX UP FOR 17 STRAIGHT SESSIONS THROUGH YESTERDAY. [28:13] SPEAKING TO THE STRONG EARNINGS WE HAVE GOTTEN FROM TEXAS [28:14] INVESTORS. [28:26] WE ARE ALL CHIPS THIS MORNING WITH TSMC ADR IS ALSO [28:29] RISING 3.25% IN THE PREMARKET FOR A DIFFERENT REASON AS [28:33] TAIWAN MOVES TO LOOSEN INVESTMENT RULES ALLOWING FUNDS TO [28:35] PUT MORE MONEY TO WORK IN A SINGLE STOCK WITH JP MORGAN [28:40] SAYING IT COULD UNLOCK BILLIONS IN INFLOWS FOR THIS NAME. [28:43] THIS IS A SINGLE STOCK. [28:46] THE PRESIDENT IS POSSIBLY INVESTORS. [28:49] PRESIDENT DONALD TRUMP REFUSING TO SET A TIMELINE TO [28:54] RESUME PEACE TALKS. [28:55] HOW LONG ARE YOU WILLING TO WAIT UNTIL YOU GET A UNIFIED [28:57] RESPONSE? [28:58] DON'T RUSH ME, JEFF. [29:00] WE WERE IN VIETNAM FOR 18 YEARS. [29:02] WE WERE IN IRAQ FOR MANY, MANY YEARS. [29:05] WE WERE IN THE KOREAN WAR FOR SEVEN YEARS. [29:07] I'VE BEEN DOING THIS FOR SIX WEEKS. [29:09] THE PRESIDENT POSTING ON TRUTH SOCIAL QUOTE, I HAVE ALL [29:11] THE TIME IN THE WORLD BUT IRAN DOESN'T. [29:13] I'VE BEEN DOING THAT. [29:15] I'VE BEEN DOING THAT. [29:17] I'VE BEEN DOING THAT. [29:20] THE SPECIAL FORCES SOLDIER IS ACCUSED OF PLACING BETS ON [29:23] WHETHER NICOLAS MADURO WOULD BE OUT AS VENEZUELA'S LEADER. [29:26] FINALLY, META IS PLANNING TO CUT 10% OF THE WORKFORCE AND [29:29] WON'T FILL 6,000 OPEN ROLLS AS THE COMPANY LOOKS TO OFFSET [29:32] AI SPENDING. [29:33] IT WILL OFFER VOLUNTARY BUYOUTS TO THOUSANDS OF U.S. [29:36] EMPLOYEES. [29:37] THE SPECULATION HERE IS THAT THEY'RE TRYING TO GET AHEAD OF [29:39] AN INCREASE IN CAPITAL EXPENDITURES AND SAYING, LOOK, [29:42] WE'RE GETTING RID OF SOME COSTS ON THE OVERHEAD HERE BY GETTING [29:44] RID OF PEOPLE. [29:45] THIS REALLY, TO ME, IS A KEY ISSUE FOR THE MARKET. [29:48] DO YOU REWARD THAT? [29:49] IS THAT A POSITIVE? [29:50] IF YOU CUT PEOPLE TO INVEST IN CAPEX RIGHT NOW, IS THAT A BOOM FOR [29:53] FUTURE GROWTH? [29:54] AND AT WHAT POINT DOES THAT REACH A STOPPING POINT BECAUSE [29:56] PEOPLE ARE CONCERNED ABOUT GROWTH WHEN IT COMES TO THE [29:59] ECONOMY AND WHEN THEY'RE WORRIED ABOUT THE ACTUAL USE CASES [30:01] BECAUSE, OSTENSIBLY, IT IS TO BENEFIT HUMANS. [30:03] I'D SUGGEST THAT META IS A DROP IN THE OCEAN RIGHT NOW COMPARED [30:06] TO WHAT THEY'RE SPENDING. [30:07] I ALSO THINK THERE'S A DIFFERENCE BETWEEN SAYING, YOU KNOW [30:09] WHAT, AT OUR COMPANY, WE'VE MADE THESE MASSIVE EFFICIENCIES. [30:11] WE DON'T NEED THESE PEOPLE ANYMORE. [30:12] THAT'S ONE STORY. [30:14] ANOTHER WAY OF PAINTING THIS IS SAYING WE'RE SPENDING SO MUCH [30:16] WE NEED TO CUT COSTS. [30:17] THIS FELT LIKE THE LATTER AND NOT THE FORMER. [30:20] AT WHAT POINT DO OTHER COMPANIES HAVE TO DO THE SAME? [30:23] AT WHAT POINT DO COMPANIES HAVE TO JUSTIFY THEIR INCREASE IN [30:26] AI EXPENDITURES BY SHOWING EFFICIENCIES THAT COME AT THE [30:29] EXPENSE OF PERSONNEL? [30:30] I MEAN, LOOK, THIS IS THE FEAR SO FAR. [30:32] WE ARE NOT SEEING IT IN THE LABOR DATA. [30:33] WE ARE SEEING ACTUALLY AN ACCELERATION IN THE LABOR DATA. [30:35] IT'S IMPORTANT TO POINT THAT OUT. [30:36] AT THE SAME TIME, HEADLINES LIKE THESE FROM META AND [30:38] MICROSOFT REALLY ILLUMINATE JUST HOW MUCH PEOPLE ARE REALLY [30:41] WORRIED ABOUT THIS AND HOW MUCH IT COULD BECOME A REALITY, [30:43] PARTICULARLY IN THESE COMPANIES. [30:45] FOUR-WEEK AVERAGE ON JOBLESS CLAIMS RIGHT NOW, 210. [30:48] 210,000. [30:49] IF I JUST SHOWED YOU THAT, YOU WOULDN'T THINK THERE WAS [30:50] ANYTHING WRONG WITH THIS LABOR MARKET. [30:52] AND WE WERE TALKING TO NEILA RICHARDSON YESTERDAY WHO SAID [30:54] SHE ACTUALLY SEES AN UPTICK IN HIRING, PARTICULARLY IN [30:57] SMALL BUSINESSES. [30:58] SO WE'RE NOT SEEING THAT NECESSARILY YET. [31:00] AT WHAT POINT, THOUGH, DO PEOPLE START TO WORRY ABOUT THE [31:02] MONETIZATION OF SOME OF THE AI EXPENDITURES THAT THEY'VE BEEN [31:05] MAKING AT THEIR COMPANIES. [31:06] METER IN THE PREMARKET HIGH BY 0.2%. [31:08] THAT COMPANY REPORTING NEXT WEDNESDAY. [31:10] ELSEWHERE, A SURGE IN MULTI-BILLION-DOLLAR DEALS FOR [31:12] CHIPS AND AI INFRASTRUCTURE DRIVING A MORE THAN 40% SURGE [31:15] IN M&A ACTIVITY. [31:17] THE HEAD OF RBC CAPITAL MARKETS, U.S. WRITING MEGA DEALS IN [31:20] TECH, A MASKING SUBJUED MIDDLE MARKET ACTIVITY. [31:23] IT'S CONSOLIDATION OF POWER BY THOSE WHO CAN CLOSE THE AI [31:26] VALUATION GAP RIGHT NOW. [31:28] IT'S GREAT TO SEE YOU. THERE'S SO MUCH TO BE CONCERNED [31:32] ABOUT RIGHT NOW, BUT I JUST WANT TO TALK ABOUT THE C-Suite [31:35] AND THE CONFIDENCE THAT YOU SEE HEARING FROM CEOs. [31:38] WHAT ARE THOSE CONFIDENCE LEVELS LIKE THIS MORNING? [31:40] IT'S INTERESTING. [31:41] WE'VE TALKED ABOUT IT BEFORE HERE, ABOUT THE CONFERENCE [31:43] BOARD CEO CONFIDENCE INDEX. [31:46] AT THE END OF THE LAST TWO QUARTERS, IT WAS SITTING BELOW [31:49] 50 OUT OF A SCALE OF 100, WHICH MEANS IT WAS GOOD, BUT THERE [31:52] WAS STILL SOME TREPIDATION IN TERMS OF WHAT THE FORWARD LOOKED [31:55] LIKE. [31:56] THERE WAS A SPIKE IN THE FIRST QUARTER MEASURED AT THE MIDDLE [31:58] OF FEBRUARY. [31:59] YOU'VE GOT TO KEEP IN MIND THESE ARE QUARTERLY MEASURES, AND [32:01] YOU HAVE TO THINK ABOUT THE EXACT DATE OF WHEN IT CAME OUT. [32:04] SO IT WAS A MID-FEBRUARY MEASURE OF 59. [32:06] SO A SIGNIFICANT INCREASE, CEOs ARE FEELING POSITIVE. [32:09] WHAT ARE THEY FEELING POSITIVE ABOUT? [32:11] IT'S THEIR BALANCE SHEETS ARE STRONG. [32:13] THEY UNDERSTAND THEIR BUSINESS. [32:14] THEY'VE BEEN OPERATING IN A CLOUDY ENVIRONMENT, AND AS A [32:17] RESULT, THEY'VE BEEN VERY RESILIENT. [32:19] THEIR BIGGEST CONCERN IS JUST OVERALL UNCERTAINTY OUT THERE. [32:24] AND IF YOU THINK ABOUT MID-FEBRUARY TO NOW, WE'VE GOT THE [32:27] IRAN WAR CONFLICT THAT'S OCCURRED. [32:29] I THINK YOU'RE STARTING TO SEE THAT IN THE EARNINGS [32:32] ANNOUNCEMENTS THIS WEEK. [32:33] A FEW FOLKS REFERRING TO IT, AND SO WE THINK ABOUT IT. [32:36] YOU JUST TALKED ABOUT JOB CUTS. [32:39] ONE OF THE QUESTIONS I'D ASK YOU IS UNDERLYING THAT, YES, THEY'RE [32:43] ANNOUNCING THAT THEY'RE MAKING CUTS IN SPECIFIC AREAS, WHICH [32:46] MAKES SENSE, BUT WHERE ARE THEY ADDING JOBS? [32:49] AND SO, YOU KNOW, I THINK ABOUT THE MARKETPLACE MORE ABOUT WHERE [32:53] THEY'RE TRANSITIONING JOBS TO, NOT NECESSARILY THE NUMBERS OF CUTS [32:58] IN THE ONE PLACE. [32:59] SO I'D ASK, WHAT'S THE NET NUMBER AS A RESULT? [33:01] BECAUSE I THINK IN THE META ANNOUNCEMENT, THEY DID TALK ABOUT THE [33:04] FACT THAT THEY WERE ADDING IN OTHER AREAS, WHICH WOULD MAKE [33:07] SENSE, BECAUSE YOU'RE CHANGING THE SKILLS THAT YOU NEED IN THIS [33:10] ENVIRONMENT. [33:11] AND I THINK, GOING BACK TO THE CEOs, THEY FEEL PRETTY CONFIDENT [33:14] BECAUSE THEY'RE LOOKING AT THEIR BUSINESSES. [33:16] THEY FEEL STRONG. [33:17] WITH EQUITY MARKET VALUATIONS UP, YOU HAVE A REALLY STRONG [33:21] CURRENCY. [33:22] SO WHEN I LOOK AT THE VARIOUS BAROMETERS OUT THERE, OR WHATEVER [33:26] YOU WANT TO CALL IT, YOU KNOW, WE'VE SEEN DEAL VOLUME UP YEAR-TO-DATE [33:31] BY 43 PERCENT, ALTHOUGH GLOBALLY, ALTHOUGH IT WAS AN EASY [33:35] COMPARISON TO THE FIRST TWO QUARTERS OF LAST YEAR. [33:37] AND CERTAINLY THE SECOND QUARTER IS GOING TO BE AN EVEN BETTER [33:40] COMPARISON TO LAST YEAR. [33:42] WE'VE SEEN CEO CONFIDENCE, AS YOU'VE TALKED ABOUT. [33:45] I THINK AI, YOU KNOW, HAS BEEN A BIG DRIVER OF THAT. [33:50] AND I THINK YOU'RE SEEING THE COMPANIES THAT ARE THE LEADERS OUT [33:54] THERE JUST CONTINUING TO CONSOLIDATE. [33:56] AND AS WE'LL TALK ABOUT, THE LARGE-SCALE TRANSACTIONS THAT ARE [34:00] HAPPENING AND THAT ARE BEING CONSIDERED ARE JUST UNPRECEDENTED [34:04] IN THE TIME PERIOD THAT WE'VE ALL BEEN AROUND. [34:06] THAT LAST POINT IS THE POINT I WANT TO PICK UP ON. [34:08] THE ONES BEING CONSIDERED. [34:09] HOW MUCH HAS CHANGED? [34:10] AND IT'S NOT JUST FINANCIAL CONDITIONS WE NEED TO TALK ABOUT [34:12] HERE. [34:13] IT'S THE REGULATORY BACKDROP AS WELL. [34:14] HOW MUCH HAS CHANGED? [34:15] YEAH, LOOK, OUR FRIENDS AT McKINSEY HAVE WRITTEN ABOUT HOW AI [34:19] IS JUST ACCELERATING THE DEAL PACE. [34:21] SO THEY ESTIMATE THAT THE UPFRONT WORK ON TRANSACTIONS IS [34:26] PROBABLY SHORTENED BY 10 TO 30 PERCENT BY THE USE OF AI. [34:30] MORE IMPORTANTLY DOWN THE ROAD, THEY EXPECT IN A COUPLE OF YEARS [34:32] THAT INTEGRATION IS GOING TO BE 50 PERCENT HANDLED BY AI TOOLS, [34:38] WHICH, YOU KNOW, WHEN YOU LOOK AT IT, JUST IT'S MAKING IT EASIER. [34:41] I DO THINK, YOU KNOW, FROM A FINANCIAL PERSPECTIVE, BALANCE [34:45] SHEETS ARE STRONGER, LIKE I SAID. [34:47] THE EQUITY MARKETS ARE HIGHER, SO YOU HAVE A HIGHER CURRENCY. [34:49] BUT THEN YOU'VE ALSO GOT A REGULATORY ENVIRONMENT THAT [34:52] FOLKS ARE LOOKING AT AND GOING, IF I'M GOING TO DO SOMETHING [34:54] SUBSTANTIAL, NOW IT'S PROBABLY THE TIME. [34:57] AND IF YOU THINK ABOUT THAT, THERE'S BEEN SOME WHIPSAW. [34:59] PRIOR ADMINISTRATION WAS MORE DIFFICULT. [35:01] THEY TURNED DOWN A SPIRIT AIRLINE MERGER. [35:04] THIS ADMINISTRATION IS CONSIDERING INVESTING THERE TO SAVE [35:07] THAT COMPANY. [35:08] YOU'VE SEEN A UNITED AND AMERICAN RUMORED DISCUSSION WHETHER [35:12] THERE WERE CONVERSATIONS WITH THE PRESIDENT. [35:14] WHEN WOULD YOU EVER HAVE HAD THAT? [35:16] WELL, HOLD ON ONE SECOND. [35:17] I HAVE TO BREAK IN HERE. [35:18] DO YOU THINK THAT ACTUALLY COULD GET DONE, THAT KIND OF [35:20] TRANSACTION THAT IN THE PAST WOULD HAVE BEEN ABSOLUTELY [35:23] SHUNNED BY ANTITRUST REGULATORS? [35:25] LOOK, I'M, JOKINGLY, I'M NOT A LAWYER. [35:28] I'M MARRIED TO ONE. [35:29] I'M MARRIED TO A LAWYER. [35:33] FANTASTIC. [35:34] YEAH, IT'S GREAT. [35:35] SO I WOULD SIT BACK AND SAY, LOOK, I FIND IT VERY DIFFICULT [35:39] TO THINK HOW THAT WOULD HAPPEN. [35:41] JUST GIVEN THE SCALE AND WHAT THEY WOULD CONTROL. [35:44] AND SO I THINK IT CAN BE DISCUSSED. [35:46] BUT WHAT'S HAPPENING IS YOU'VE HAD AMERICAN HAVING TO RESPOND [35:49] TO IT. [35:50] YOU'RE CERTAINLY HAVING OTHERS NOW HAVE CONVERSATIONS. [35:53] AND WHAT IT'S GOING TO DO IS GOING TO PROMPT OTHER PARTIES [35:56] TO CONSIDER DEALS AND GO, WELL, IF THAT'S BEING TALKED ABOUT, [35:59] I BETTER BE THINKING IF I'M NOT ALREADY. [36:02] AND SO I THINK THE KNOCK-ON EFFECT IS MORE OF WHAT IT CAUSES [36:05] IN THE DIALOGUES. [36:06] AND, LOOK, WE ALWAYS TALK ABOUT AND HAVE JOKE THAT M&A BANKERS [36:11] AND OUR M&A TEAM, SAME THING, ALWAYS TALK ABOUT THE STRENGTH [36:14] OF THE PIPELINE. [36:15] SO WHEN WE SAY PIPELINE, PIPELINE ARE ENGAGED TRANSACTIONS [36:19] AND MANDATED TRANSACTIONS. [36:20] SO THESE ARE TRUE DEALS THAT CLIENTS HAVE SAID, [36:23] LET'S EVALUATE OR PURSUE THIS. [36:25] THERE WAS A STEP FUNCTION CHANGE IN PIPELINES AT THE END OF LAST [36:29] YEAR WHERE IT STEPPED UP IN TERMS OF QUANTUM OF WHAT EVERYBODY [36:32] HAS IN THEIR PIPELINES. [36:34] AND IT STAYED THERE THIS YEAR. [36:36] WHAT THAT MEANS IS THERE'S MORE TRANSACTIONS AND THERE'S LARGER [36:39] TRANSACTIONS. [36:40] AND SO, YOU KNOW, ONE OTHER POINT I WOULD JUST MAKE IS, [36:44] WHEN WE THINK ABOUT THE U.S. YEAR TO DATE, THE U.S. IS UP 43%. [36:48] IT REPRESENTS HALF OF THE M&A MARKET YEAR TO DATE. [36:51] OKAY. BUT NUMBER OF TRANSACTIONS ARE DOWN 30%. [36:56] AND SO WE LIKE TO TALK ABOUT THE K-SHAPED ECONOMY. [36:59] THIS IS LIKE THE K-SHAPED M&A MARKET IN TERMS OF SMALLER DEALS [37:02] ARE KIND OF FLAT IF YOU'RE BELOW A BILLION. [37:05] WHEREAS DEALS THAT ARE 5 BILLION OR GREATER ARE UP 125%. [37:08] SO THIS IS WHERE I WANT TO PICK UP THIS IDEA THAT IT IS [37:11] RESILIENCE TO BE BIGGER. [37:12] IT IS BETTER TO BE BIGGER. [37:14] AND RIGHT NOW THERE IS A MOMENT OF EXCITEMENT AROUND A.I. [37:16] THAT MAY NOT BE REPLICATED AGAIN. [37:17] YEAH. [37:18] IS THIS THE WINDOW FOR ALL OF THE A.I. [37:20] RELATED NAMES TO GET IN? [37:21] BECAUSE RIGHT NOW THE ENTHUSIASM IS KIND OF REACHING ITS PEAK? [37:24] WELL, I THINK THE WAY I WOULD LOOK AT IS WE'VE BEEN TALKING [37:27] QUITE A BIT ABOUT, YOU KNOW, VALUATIONS WILL GET A POP [37:31] WHEN SOMEONE TALKS ABOUT THEIR A.I. INVESTMENTS OR WHAT THEY'RE DOING [37:35] IN THAT FUND. [37:36] I THINK THIS YEAR IS AN INFLECTION POINT WHERE IF BY THE END OF THE [37:40] YEAR YOU DON'T HAVE A CLEAR A.I. STRATEGY THAT'S ALREADY [37:43] IMPLEMENTED INCLUDING IN YOUR M&A PLAYBOOK, FOR EXAMPLE. [37:47] IF YOU'RE OUT THERE AND YOU REALIZE THAT I'M LOW ON SKILLS IN THIS [37:50] ONE AREA, I NEED TO GO ACQUIRE THIS. [37:52] OR IF, YOU KNOW, YOU JUST HAVE THE GRAPHIC UP ON THE SCREEN OF ALL [37:54] THESE LARGE A.I. RELATED ACQUISITIONS, INVESTMENTS, AND [37:58] PARTNERSHIPS AND THE LIKE. [38:00] IF THAT STRATEGY ISN'T LOCKED IN BY THE END OF THIS YEAR, I THINK THERE'S [38:03] A PERMANENT VALUATION DISCOUNT, MEANING YOU'RE SEEING VOLATILITY [38:09] WHEN FOLKS TALK ABOUT IT. [38:11] YOU'VE SEEN SOME OF THE COMPANIES TALK ABOUT EARNINGS THIS WEEK THAT [38:14] HAVE TALKED ABOUT THE FORWARD PIPELINE AND HOW MUCH IT'S BEING [38:17] DRIVEN BY A.I. [38:18] AND WE'RE NOW STARTING TO SEE IT TRANSLATED INTO THE RESULTS. [38:22] THEY'RE, AGAIN, STEP FUNCTION TO A PERMANENT LEVEL. [38:26] AND I THINK IT'S EVEN WORSE FOR THE FOLKS THAT ARE CONSIDERED THE [38:28] LAGGARDS, WHERE IF YOU HAVEN'T CLEAN THAT UP, YOU'RE GOING TO BE [38:32] SITTING IN THIS LOWER VALUATION LEVEL FOR LONGER. [38:35] AND IT'S GOING TO BE HARD TO GET OUT OF THAT. [38:38] IT'S GOOD TO SEE YOU. THANKS FOR BREAKING IT DOWN. [38:40] GREAT. THANK YOU, sir. [38:42] VITO POSITO OF RBC, JUST THINK ABOUT THE MOMENT WE'RE IN. [38:44] THE FACT WE'RE EVEN TALKING ABOUT AMERICAN AND UNITED POTENTIALLY [38:46] GETTING TOGETHER, THE FACT WE'RE EVEN ANCHORING THE [38:48] CONVERSATION THAT WAY, TO VITO'S POINT, JUST OPENS THE DOOR TO [38:51] CONSIDERATIONS OF THINGS THAT WE'D NEVER THINK ABOUT. [38:54] I FEEL LIKE 2026, ANCHORING TO THE EXTREME SHOULD BE THE [38:56] MOTTO, RIGHT? [38:57] AND ESSENTIALLY WHAT ELSE CAN YOU GET, WHAT CAN YOU LOOSEN UP [39:02] AS A RESULT OF ANCHORING TO THE EXTREME? [39:03] A PAGE OUT OF THE PRESIDENT'S BOOK. [39:06] LET'S GET YOU AN UPDATE ON STORIES OUTSWARE THIS MORNING. [39:09] WITH YOUR BLOOMBERG BRIEF, YAHIRA HAS MORE. [39:11] YAHIRA. [39:12] DEEP SEEK UNVEILING ITS NEW FLAGSHIP AI MODEL, CALLING IT THE [39:16] WORLD'S MOST POWERFUL OPEN-SOURCE PLATFORM. [39:20] DEEP SEEK INDICATED A TRILLION-DOLLAR MARKET SELL-OFF. [39:30] WARNER BROTHERS DISCOVERY SHAREHOLDERS VOTING TO APPROVE [39:34] A $110 BILLION TAKE OVER BY PARAMOUNT, BEATING OUT A RIVAL [39:38] BID FROM NETFLIX. [39:40] THE DEAL OFFERS SHAREHOLDERS $31 PER SHARE BUT STILL FACES [39:44] ANTITRUST REVIEW IN THE U.S. AND THE EU. [39:48] PRESIDENT TRUMP SAYS HE IS LOOKING AT THE IDEA OF THE U.S. [39:51] BUYING THE STRUGGLING CARRIER SPIRIT AIRLINE SAYING IT COULD [39:54] BE A GOOD INVESTMENT FOR THE FEDERAL GOVERNMENT. [39:57] WE ARE LOOKING AT SPIRIT. IT IS IN BANKRUPTCY COURT. [40:03] IF WE COULD GET IT FOR THE RIGHT PRICE, I WOULD DO IT TO SAVE [40:05] THE JOBS. I WOULD LOVE TO BE ABLE TO SAVE AN [40:07] AIRLINE. [40:08] THE PROPOSAL WOULD INCLUDE A PACKAGE OF UP TO $500 MILLION [40:13] THAT GIVES THE GOVERNMENT THE RIGHT TO PURCHASE UP TO 90% OF [40:16] SPIRIT AFTER IT EMERGES FROM BANKRUPTCY. [40:19] THAT IS YOUR BLOOMBERG WEEK. [40:24] HAVE WE GOT TIME FOR A METS JUG? [40:28] ABSOLUTELY NOT. [40:29] YOU PLANNED ALL EVENING. [40:31] I WILL CAVEATE THAT I AM A YANKEE FAN. [40:34] NO KIDDING. [40:36] IF YOU WANT TO RELATE THE CURRENT BASEBALL SEASON, HOW [40:38] CAN YOU NOT BE ROMANTIC ABOUT IT? [40:40] YOU MIGHT THINK ABOUT THE DODGERS VERSUS THE METS. [40:43] WOULD YOU LIKE TO MAKE A LARGE ACQUISITION AND HAVE IT BE [40:45] CONSIDERED OTANI OR SOTO? [40:48] CAN I JUST TELL YOU THAT IS NOT ROMANTIC TO ME AT ALL? [40:52] I THINK THAT IS LOVELY. I APPRECIATE THAT. [40:57] I DON'T THINK YOU NEEDED TO TELL US HE IS A YANKEE'S FAN. [41:00] I THINK YOU STARTED SAYING METS. I KNOW WHERE THIS IS GOING. [41:05] THE FED IS VERY INCLINED TO CUT RATES IF JOB DATA WEAKENS, IF [41:09] GROWTH WEAKENS. BUT AT THE SAME TIME, THEY ARE [41:12] PERFECTLY CONTENT SITTING ON THE SIDELINE AND HOLDING PAT. [41:15] UP NEXT, WE WILL CATCH UP WITH KAY HERR OF J.P. [41:17] MORGAN ASSET MANAGEMENT. [41:18] LIVE FROM NEW YORK CITY, WELCOME TO THE PROGRAM. [41:33] UNDER SAVANNAH THIS MORNING, SITTING ON THE SIDELINES. [41:36] WE THINK THE FED IS VERY INCLINED TO CUT RATES IF JOB DATA [41:42] WEAKENS, IF GROWTH WEAKENS. BUT AT THE SAME TIME, THEY ARE [41:45] PERFECTLY CONTENT SITTING ON THE SIDELINE AND HOLDING PAT [41:48] RATES TO REMAIN ON THE SIDELINE. [41:52] THE FED IS A LONG TIME, AS LONG AS THERE IS A LINGERING [41:55] CONCERN ABOUT INFLATION IN THE BACKGROUND AND THE JOB DATA [41:57] STILL LOOKS OKAY AND GROWTH STILL LOOKS PRETTY GOOD. [42:00] WE ARE GOING TO WAIT AND SEE MODE FOR THE FED. [42:03] ULTIMATELY, WE THINK THE FED WILL STILL GET IN AT LEAST ONE, [42:06] IF NOT TWO CUTS BY THE END OF THIS YEAR. [42:10] HERE IS THE LATEST THIS MORNING. [42:13] INVESTORS ARE WAITING FED CHAIR JAY POWELL'S FINAL RATE [42:15] DECISION. [42:17] WE ARE UNLIKELY TO SEE ANY FAMILY FIGHT. [42:20] KAY JOINS US NOW FOR MORE. [42:21] KAY, GOOD MORNING. [42:22] GOOD MORNING. [42:23] FIRST OFF, I NEVER KNOW WHAT WE ARE GOING TO TALK ABOUT ON [42:25] SURVEILLANCE, BUT I WAS A LITTLE SURPRISED BY THE METS [42:27] CONVERSATION, I HAVE TO SAY. [42:29] I WAS SURPRISED TOO. [42:31] AND I THINK WE NEED TO BUY IT RIGHT THERE. [42:33] OKAY, BUT THEY HAVE WON TWO IN A ROW. [42:35] SO MAYBE THIS IS YOUR TIME TO BE A PROUD METS FAN. [42:37] I'M TRYING TO MAKE YOU FEEL BETTER. [42:39] I APPRECIATE THAT. [42:40] LET'S TALK ABOUT THE FED INSTEAD. [42:41] LET'S TALK ABOUT THE FED INSTEAD. [42:42] LET'S TALK ABOUT THE FED RESERVE. [42:43] I SAID IT COULD BE HIS FINAL RATE DECISION AT THE HAM OF THE [42:46] CENTRAL BANK. [42:47] DO YOU THINK IT WILL BE HIS FINAL RATE DECISION? [42:49] I DON'T KNOW, IS THE HONEST ANSWER. [42:53] DOES THAT COMPLICATE YOUR ABILITY TO FORECAST WHAT THIS FED [42:55] IS GOING TO DO OR NOT? [42:56] FIRST OFF, YOU STARTED TALKING ABOUT NEXT WEEK AND I THOUGHT, [42:59] MY GOODNESS, THAT FEELS A VERY LONG TIME AWAY. [43:02] IT FEELS LIKE, GIVEN THE VOLATILITY IN MARKETS, THE NEWS [43:06] FLOW, THE IRAN CONFLICT, IT FEELS LIKE WE'RE ALMOST DAY TO DAY [43:10] IN TERMS OF WHAT'S HAPPENING IN THE DAYS MARKETS WHILE KEEPING [43:13] LONGER-TERM FOCUSED ON HOW WE MANAGE PORTFOLIOS. [43:15] SO NEXT WEDNESDAY FEELS A LONG WAY OFF ALREADY. [43:18] SO, NO. [43:20] I THINK THE FUNDAMENTAL ISSUE, I KNOW YOU HAVE YOUR CONCERNS [43:24] ABOUT INFLATION AND THEY ARE WELL FOUNDED AND THEY ARE IN [43:27] THE MARKET IN TERMS OF WHAT, YOU KNOW, WE HAVE TO ACKNOWLEDGE [43:30] THOSE. [43:31] BUT THE REAL FACTOR IN THE MARKET IS WHAT HAPPENS TO JOBS. [43:34] YOU'VE GOT SOME MAJOR, MAJOR HEADLINES THIS MORNING ABOUT [43:37] LAYOFFS IN THE JOB MARKET. [43:38] THE JOB MARKET'S INTACT. [43:40] I MEAN, THE FED'S GOING TO STAY ON HOLD EITHER WAY. [43:43] NEXT WEEK, THERE'S NOT GOING TO BE ANY FAMILY FIGHTS. [43:45] I DON'T THINK THERE'S GOING TO BE A LOT OF DISCUSSIONS. [43:47] THE FED STAYS ON HOLD. [43:48] THE FED STAYS ON HOLD UNTIL WE SEE EITHER A REACCELERATION [43:55] IN THE JOB MARKET AND WAGE GROWTH IN PARTICULAR, OR WE SEE A [43:59] PARTICULAR REACCELERATION IN THE UNEMPLOYMENT RATE. [44:02] HAS THE UNEMPLOYMENT RATE PEAKED AT FOUR AND A HALF, OR ARE WE [44:04] HEADED BACK DOWN? [44:05] IT'S JUST THAT SIMPLE. [44:06] WOULD YOU BE CONCERNED IF THE FED RESERVE CHANGED THE WAY IT [44:09] MEASURES INFLATION, GIVEN THE FACT THAT THAT'S WHAT KEVIN WASH, [44:12] THE PRESUMED NEXT FED CHAIR, SUGGESTED? [44:14] NOT REALLY. [44:15] YOU WOULDN'T CARE? [44:16] NO. [44:17] TO A LOWER METRIC. [44:18] IS IT TRIMED? [44:19] I MEAN, LOOK, WE LOOK AT PCE. [44:21] WE LOOK AT TRIM PCE. [44:23] WE LOOK AT, YOU KNOW, YOU WANT TO LOOK AT WAGE LABOR. [44:25] YOU CAN LOOK AT EMPLOYMENT COST INDEX. [44:27] YOU CAN LOOK AT UNIT LABOR COST. [44:29] WE'RE ALREADY LOOKING AT 437 DIFFERENT WAYS. [44:32] I DON'T KNOW THAT IT REALLY GETS ME TOO WORKED UP. [44:35] YOU DID TELL ME THAT I'M WORRIED ABOUT INFLATION, AND [44:38] PERHAPS I NEED TO PART THAT. [44:39] YOU REMINDED ME. [44:40] BUT I GUESS WHAT I'M WORRIED ABOUT IS, AS JEAN WAS [44:43] POINTING OUT EARLIER, THE LONGER THIS GOES ON, THE MORE [44:46] THE FORWARD CURVE IS PRICING IN HIGHER OIL PRICES FOR LONGER. [44:49] COMMONDITY PRICES IN GENERAL HAVE BEEN GOING UP. [44:51] AND THEY'RE NOT GOING UP TO SUCH A DEGREE THAT WOULD SUGGEST [44:53] DEMAND DESTRUCTION. [44:54] THEY'RE GOING UP TO A DEGREE THAT WOULD SUGGEST INFLATION [44:56] IN AN ECONOMY THAT OTHERWISE IS FAIRLY STRONG. [44:59] AT WHAT POINT DOES THAT CHANGE YOUR CALCULUS OF HOW MUCH [45:01] INFLATION CAN BE TOLERATED IN THIS ECONOMY? [45:03] IT'S AN EXCELLENT POINT. [45:05] AND YOU'RE EXACTLY RIGHT THAT THE QUESTION IS REALLY ON HOW LONG [45:08] DOES THIS GO ON. [45:10] THIS IS SHORT. [45:11] THERE'S NO CHANGE, RIGHT? [45:12] WHEN YOU GO PAY FOR GAS, MAYBE YOU DON'T BUY THAT DIET COKE [45:16] AND BAG OF CHIPS AT THE GAS STATION. [45:19] IF IT GOES ON LONGER, THE QUESTION IS, DOES IT GO LONG [45:23] LONG ENOUGH THAT IT AFFECTS CONSUMERS, BUT THEY DON'T [45:26] CHANGE THEIR BEHAVIOR IN ANY WAY, RIGHT? [45:30] OUR VIEW IS THAT YOU'RE GOING TO GET DEMAND DESTRUCTION [45:32] IN SOME WAY. [45:33] AND THE OTHER THING IS, IN THIS CASE, YOU'VE GOT A [45:36] ARGUABLY ONE-TIME SUPPLY SHOCK ON THE OIL SIDE. [45:40] AND IT'S NOT LIKE 2020 COMING OUT OF COVID WHEN YOU ALSO [45:44] HAD DEMAND DRIVEN. [45:45] YOU HAD AN ACCELERATION OF THINGS. [45:47] I WOULD SUBMIT WHEN YOU START TO SEE AIRLINE PRICES GO UP, [45:50] YOU START TO SEE OTHER THINGS GO UP, CONSUMERS RESPOND. [45:53] IN FACT, YOU'RE STARTING TO SEE THAT IN CORPORATE AMERICA [45:55] WHEN YOU START TO SEE LAYOFFS. [45:56] SO, YOU KNOW, OVERALL CORPORATE PROFITS ARE STRONG, AS YOU'VE [46:00] SEEN. [46:01] WHAT, ABOUT 25% OF COMPANIES REPORTING EARNINGS. [46:04] AND I THINK THE VAST MAJORITY, THREE-QUARTERS, 80% OR SO, ARE [46:08] BEATING. [46:09] WELL, AS BOND INVESTORS, WE DON'T CARE AS MUCH ABOUT EARNINGS. [46:11] BUT YOU LOOK AT THE SALE SIDE. [46:12] REVENUES ARE UP 7%. [46:14] PROFIT MARGINS CONTINUE TO LOOK VERY STRONG. [46:17] SO THAT'S A PRETTY GOOD BACKDROP. [46:19] WE'VE GOT FUNDAMENTAL STRONG BALANCE SHEETS IN GOOD SHAPE, [46:22] CONSUMER BALANCE SHEETS IN PRETTY GOOD SHAPE. [46:24] THINGS ARE SOLID. [46:28] DO THEY GET SCREWED UP BY A SUSTAINED CONFLICT? [46:31] YOU KNOW, ON THE OTHER SIDE, WE'VE GOT, YOU KNOW, WHEN I WAS [46:33] HERE A COUPLE OF WEEKS AGO, WE WERE TALKING ABOUT U-MICH [46:34] CONSUMER SENTIMENT. [46:36] I THINK THE FINAL NUMBER COMES OUT TODAY, WHICH IS NOT A MAJOR [46:39] PIECE OF DATA FLOW. [46:41] BUT CONSUMER SENTIMENT HAS BEEN WEAKER THAN WE'VE SEEN EVER. [46:45] WHICH IS CRAZY TO THINK ABOUT. [46:47] WORSE THAN GFC? [46:49] I MEAN, I FELT A LOT WORSE THEN THAN I DO NOW. [46:52] BUT IF CONSUMER SENTIMENT LOOKS LIKE THAT, THAT'S GOING TO [46:54] START TO HAVE AN IMPACT ON HOW CONSUMERS SPEND. [46:57] AND THERE'S YOUR REACTION FUNCTION ON THE CONSUMER SIDE. [46:59] DOES THAT MEAN THE TEN YEARS OF BUY AT 433? [47:01] YEAH. WE'VE HAD A RANGE. [47:03] I MEAN, WE'VE GOT MY FRIENDS AND COLLEAGUES ON REGULARLY. [47:07] AND I THINK KELSEY WAS ON TALKING ABOUT A RANGE OF 375 TO 4.25. [47:10] WE'VE REACHED IT ON THE TOP END. [47:12] BUT, YEAH, WE SEE VALUE IN DURATION. [47:14] WE SEE VALUE IN HIGH-QUALITY CREDIT, TOO. [47:16] I MEAN, THE IG MARKET AND THE HIGH-YIELD MARKET HAVE BOTH [47:20] ABSORBED ANOTHER EXTRAORDINARY AMOUNT OF SUPPLY. [47:22] AND I THINK I WAS ON A MONTH OR SO AGO AND TOLD YOU ALL DEALS ARE [47:26] FOUR TIMES OVERSUBSCRIBED IN IG AND NEW ISSUE CONCESSIONS OF [47:29] FOUR BASIS POINTS. THIS WEEK WE'RE DOWN TO 2.4 BASIS POINTS [47:33] OF CONCESSIONS. SO THERE'S A LOT OF DEMAND. [47:38] NOW, THERE'S ABSOLUTELY DISPERSION AMONG THAT. [47:41] THERE'S A FRONT PAGE ARTICLE IN ONE OF THE MAJOR NEWSPAPERS [47:43] TODAY ABOUT SOME INDIGESTION ON SUPPLY. [47:46] AND I THINK WE'VE HAD SUBSTANTIAL SUPPLY FROM THE HYPERSCALERS [47:51] AND THEN ON THE DATA SENATE, AI HYPERSCALER-RELATED. [47:54] SO THINGS ARE OKAY. [47:56] THINGS ARE OKAY. [47:57] BETTER THAN OKAY, MAYBE. OKAY, THANK YOU. [47:59] THINGS ARE OKAY. [48:04] APPRECIATE IT. EVEN THE METS ARE WINNING. [48:09] THINGS ARE OKAY. UP NEXT, SARAH HUNTER OF [48:11] ALPINESAXON WORDS, BOB MCNALLY OF RAPID AND ENERGY. [48:14] WE'LL CATCH UP WITH TED OF BAD AND JOE DAVIS OF VANGUARD. [48:24] THE U.S. ECONOMY WILL STILL DO OKAY, BUT WE'RE GOING TO GROW [48:27] AT A SLOWER PACE. INFLATION IS A REALLY CAREFUL [48:29] WATCH POINT. I WOULDN'T DISMISS IT. [48:31] THE REALITY IS WE STILL HAVE VERSUS HAVE NOT ECONOMY. [48:36] THE LONGER THIS LAST, THE MAIN ADJUSTMENT MECHANISM BECOMES [48:40] LOWER DEMAND AND LOWER ECONOMIC ACTIVITY. [48:43] THERE'S A GOOD CHANCE THAT NOW WE'RE LOOKING AT A 2026 WHERE [48:47] WE'RE LOOKING AT THAT. [48:53] THANK YOU SO MUCH FOR THAT. [48:55] LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING, GOOD [48:58] MORNING. FOR OUR AUDIENCE WORLDWIDE, [49:00] THE SECOND HOUR OF BLOOMBERG SURVEILLANCE STARTS RIGHT NOW. [49:05] THE PRICE ACTION LOOKS LIKE THIS. EQUITY FUTURES POSITIVE BY A [49:07] 10TH OF 1% ON THE S&P. [49:08] THERE'S YOUR ROUTE PERFORMANCE HIGHER BY 0.9%. [49:16] THE MARKET IS A LITTLE BIT OF THE MARKET. [49:23] BRENT CRUDE HIGHER FOR FIVE CONSECUTIVE SESSIONS ON THE [49:25] WEEK SO FAR UP BY SOMETHING LIKE 18%. [49:30] BRENT CRUDE JUST SHORT OF 107. [49:32] IT SEEMS LIKE THE U.S. ECONOMY IS COMING AROUND TO THIS [49:34] IDEA THAT IT CAN KEEP POWERING THROUGH EVEN IF OIL PRICES [49:36] REMAIN AT THIS LEVEL. THAT IS WHAT YOU ARE SEEING. [49:39] IT IS REALLY RESULTING FROM THE AI TRADE. [49:42] THE IDEA THAT PEOPLE WILL STILL INVEST IN SEMICONDUCTORS, [49:46] SEMICONDUCTORS, THEY WILL STILL INVEST IN SEMICONDUCTORS. [49:50] THAT IS UNDERPINNING THE RESILIENCE THAT PEOPLE KEEP [49:52] SCRATCHING THEIR HEADS AND SAYING WE DON'T UNDERSTAND, [49:54] THERE IS A HOT WAR, MAYBE THERE IS A CEASE FIRE, VERY UNCLEAR [49:57] RESOLUTION, OIL PRICES ARE HIGHER AND THE U.S. [50:00] MARKET KEEPS STRUGGLING IT OFF. IT IS THE AI TRADE. [50:04] TO SUMMARIZE, THIS IS HOW IT GOES STATESIDE. [50:07] I'M SURE IT DOESN'T SOUND LIKE THIS IN ASIA IF YOU ARE UP THIS [50:09] EVENING. I'M SURE IT DOESN'T SOUND LIKE THIS [50:11] IN EUROPE THIS AFTERNOON. THIS MORNING IN NEW YORK, THIS [50:13] HUNDREDS STILL CONSISTENT WITH EARNINGS UPSIDE. [50:18] WE CAN LIVE WITH THIS. THE EARNINGS RECOVERY REMAINS [50:20] INTACT. WE CAN LIVE WITH THIS AND THE EARNINGS SPEAK TO IT. [50:25] ONE THING THAT PEOPLE KEEP POINTING TO IS ON AN [50:27] INFLATION ADJUSTED BASIS, OIL PRICES AREN'T NEARLY CLOSE TO [50:30] THE HIGHS THAT THEY HAVE BEEN HISTORICALLY OVER TIME. [50:33] THIS IS SOMETHING THAT PEOPLE CAN ABSORB. [50:35] I KEEP GOING BACK TO WHAT WE HEARD FROM SCOTT KERBY OF UNITED [50:38] SAYING EVEN THOUGH PRICES HAVE GONE UP ON TICKET PRICE, [50:42] THAT IS WHAT WE ARE SEEING IN THE ECONOMY AS WELL. [50:45] YOU CAN POINT TO INFLATION AND WHAT THAT MEANS ON THE OTHER [50:46] SIDE. NONETHELESS, THIS IS AN ECONOMY [50:49] THAT KEEPS CHUCKING ALONG. [50:51] LET'S WORK THROUGH THE DATA. [50:55] RETAIL SALES THIS WEEK, BETTER THAN EXPECTED. [50:57] ADP, JOBS BETTER THAN EXPECTED. [50:59] JOBLESS CLAIMS BETTER THAN EXPECTED, FOUR-WEEK AVERAGE, [51:01] 210,000. ALL OF THAT IS GOOD NEWS. [51:05] I'M NOT SURE YOU CAN SAY THAT ABOUT THE DATA INTERNATIONALLY, [51:08] IN ASIA, IN EUROPE. [51:09] IN EUROPE IN PARTICULAR, THE PMI'S CAME OUT AND THEY [51:11] WERE HIGHLY DISAPPOINTING GIVEN THE FACT THAT YOU HAVE [51:13] THE ONE-TWO PUNCH OF BOTH IMPORTED ENERGY AS WELL AS THE [51:15] LACK OF THE TECHNOLOGY AND ENGINE THAT YOU SEE IN SOME OF [51:18] THE OTHER REGIONS, WHICH, AGAIN, GOES TO THE QUESTION OF [51:20] WINNERS AND LOSERS, A BIFURCATED KIND OF RESULT FOR THE [51:22] ENTIRE GEOGRAPHY, CONSIDERING THE OIL SHOCK THAT [51:24] REALLY HAS DISPROPORTIONATE EFFECTS ON DIFFERENT REGIONS. [51:34] THIS MORNING, POSITIVE BY 0.1% ON THE S&P 500. [51:39] COMING UP THIS HOUR, WE WILL CATCH UP WITH SARAH HUNT OF [51:41] ALPIDE SACHS AND WORDS AS CHIP STOCKS RALLY. [51:43] BOB MCDALY OF RAPID AND ENERGY WITH CRUDE GAINING FOR A [51:45] FIFTH CONSECUTIVE DAY AND JOE DAVIS OF VANGUARD FORECASTING [51:47] CAUTION AT THE FEDERAL RESERVE. [51:49] WE BEGIN THIS HOUR WITH STOCKS LOOKING FOR DIRECTION [51:51] FOLLOWING A STRONG SHOWING FROM SEMIS. [51:53] WE ARE TALKING ABOUT SEMISTERS. [51:55] WE ARE TALKING ABOUT SEMISTERS. [51:56] WE ARE TALKING ABOUT SEMISTERS THAT ACCOUNT FOR [51:58] EARNINGS GROWTH THIS YEAR. [51:59] BUT THE PROMISE OF AI CONTINUES TO DRIVE INVESTOR [52:01] ENTHUSIASM. [52:02] SARAH JOINS US NOW FOR MORE. [52:03] SARAH, GOOD MORNING. [52:04] GOOD MORNING. [52:05] LET'S START WITH CHIPS. [52:07] 17 DAYS, RECORD DAILY WINNING STREAK. [52:10] OVER THAT PERIOD, SINCE THE END OF MARCH, WE ARE HIRED BY [52:13] MORE THAN 40% ON THAT INDEX. [52:14] WHAT NOW? [52:15] THAT IS A GREAT QUESTION. [52:17] BUT I THINK INTEL JUST ANSWERED SOME OF THAT LAST NIGHT AND [52:19] IT IS THE QUESTION OF ARE WE STARTING TO MAKE MONEY IN AI? [52:22] AND IT LOOKS LIKE WE ARE. [52:23] LIKE ALL OF THAT CONCERN THAT PEOPLE HAD ABOUT RETURN ON [52:26] INVESTMENT, AS THINGS GET DEEPER INTO CORPORATIONS AND OTHER [52:29] PLACES, YOU ARE STARTING TO SEE PEOPLE THINK, OKAY, WE ARE [52:32] REALLY GOING TO SEE A RETURN. [52:33] SO IT BECOMES LESS ABOUT ARE WE WASTING MONEY AND MORE ABOUT [52:36] HOW, WHERE ARE WE SPENDING IT AND HOW ARE WE SPENDING IT. [52:39] AND I THINK THAT YOU ARE SEEING THAT RUN CONTINUE. [52:41] AND I THINK RIGHT NOW IT IS HARD TO GET IN FRONT OF. [52:44] FOR EVERY INTEL IN SEMIS, THERE IS A SERVICE NOW IN SOFTWARE. [52:47] FOR EVERY TEXAS INSTRUMENTS, THERE IS AN IBM IN SOFTWARE. [52:50] ARE WE GOING TO START TO SEE THAT DIVERGENCE PICK UP AGAIN? [52:52] BECAUSE IGV AND SOFTWARE HAD A GREAT WEEK LAST WEEK. [52:54] IT HAS HAD A TERRIBLE 24 HOURS. [52:56] IT HAD A GREAT RUN, BUT THAT IS ONE OF THOSE THINGS WHERE IT [52:59] WAS DOWN SO FAR THAT ALMOST ANYTHING LOOKED UP FROM THERE. [53:02] AND NOW I THINK THE QUESTION REALLY IS GOING TO BE, I [53:05] SEE THIS AS BEING AN AND MORE THAN AN OR, BUT THE QUESTION IS, [53:09] YOU HAD A LOT OF GROWTH IN SOFTWARE THAT WAS REALLY BAKED IN [53:11] FOR LONG PERIODS OF TIME. [53:12] YOU HAD A LOT OF CASH FLOW. [53:13] YOU HAD GOOD MARGINS. [53:14] NOW THE QUESTION IS, ARE WE GOING TO NEED AS MANY SEATS? [53:16] DO WE NEED AS MUCH OF THIS? [53:17] DO WE NEED AS MUCH OF THAT? [53:18] SO I DON'T THINK IT IS GOING AWAY, BUT I THINK THAT WHAT [53:20] PEOPLE WERE LOOKING AT AND THE GROWTH THAT THEY WERE [53:22] ANTICIPATING IS NOW REALLY UNDER QUESTION. [53:25] AND I'M NOT SURE WE HAVE AN AN ANSWER FOR THAT YET. [53:27] AS AN INVESTOR, DO YOU REWARD COMPANIES LIKE META AND [53:29] MICROSOFT THAT CUT WORKERS IN ORDER TO AFFORD INVESTING MORE IN [53:33] AIR? [53:34] I THINK THAT'S A REALLY TRICKY QUESTION RIGHT NOW AND THAT [53:36] JUST CAME UP FROM META AND FROM MICROSOFT IS ONE OF THOSE [53:40] THINGS WHERE PART OF THE BOOM WAS ALSO SUPPOSED TO BE THAT [53:44] THESE COMPANIES WERE GROWING. [53:45] SO LAYING OFF PEOPLE WHILE THEY'RE SPENDING MONEY IS, I [53:48] THINK, GOING TO GIVE SOME OF THE QUESTIONS ABOUT WHERE THIS [53:50] LABOR MARKET IS GOING SOME PAUSE. [53:52] RIGHT NOW, IT'S PROBABLY YOU'RE SEEING MORE HIRING IN [53:54] SMALLER BUSINESSES AND LARGER BUSINESSES. [53:56] SO IT COULD, THIS COULD EQUAL ITSELF OUT. [53:59] BUT I DO THINK THAT THERE IS GOING TO BE A QUESTION ABOUT [54:03] IF YOU'RE ONLY, IF YOU'RE ONLY CUTTING PEOPLE SO THAT YOU CAN [54:06] SPEND MORE HERE, IS THAT THE RIGHT BALANCE? [54:08] AND I'M NOT SURE WHERE THAT FALLS YET. [54:10] THIS HAS BEEN A LOT OF TREADING WATER IN TERMS OF JUST A [54:13] QUESTION IN GENERAL ABOUT HEADLINE RISK, GIVEN THE FACT THAT [54:17] THE OIL STORY HAS KIND OF BEEN A DRUMBEAT THROUGH THIS ENTIRE [54:20] PERIOD OF TIME, EVEN AS A.I. STOCKS ARE RELATED STOCKS DO REALLY [54:23] WELL. HOW DOES IT AFFECT YOUR PSYCHOLOGY AS AN INVESTOR [54:27] THAT YOU HAVE GOVERNMENT INTERVENTION WITH THE LIKES OF [54:30] SPIRIT, YOU HAVE A GOVERNMENT INVESTMENT IN INTEL THAT IS [54:34] MAYBE GIVING AN UPPER HAND IN THIS RACE TO SEMICONDUCTORS, AND [54:37] YOU HAVE ALLEGATIONS OF INSIDER TRADING MAKING THE FEELING [54:41] THAT MAYBE THERE'S SOME LEVEL OF A PLAYING FIELD THAT'S BEEN [54:43] RIGGED. DOES THAT TOGETHER PAINT A PICTURE THAT'S CONCERNING FOR [54:47] YOU AS AN INVESTOR OR IS THAT SORT OF LUMPING TOO MANY THINGS [54:50] TOGETHER THAT DON'T BELONG? I THINK THE MARKETS ARE REALLY [54:53] BIG, AND I THINK SOME OF THOSE THINGS I DON'T LIKE TO SEE ANY OF [54:56] THAT. I WOULDN'T WANT TO SEE ANY OF THAT. I WANT SOMEONE TO GO [54:59] POLICING THAT, THE TRYING TO TRADE ON INSIDE INFORMATION. [55:02] BUT I THINK YOU'VE GOT SUCH BIG MARKETS AND DEEP MARKETS. [55:06] IT'S REALLY A QUESTION OF, AND I'VE HEARD THIS THE LAST COUPLE OF [55:09] WEEKS ON THE SHOW, ABOUT HOW IF WE DIDN'T HAVE THE IRAN THING, [55:12] WOULD THE ECONOMY BE BOOMING IN A MUCH BIGGER WAY? IF WE DIDN'T [55:15] HAVE THE ENERGY PROBLEM, WOULD THIS BE LESS OF AN ISSUE? [55:17] FOR THE UNITED STATES, IT'S LESS OF AN ISSUE BECAUSE OF THE [55:20] ENERGY. YOU HAVE MORE ENERGY SECURITY HERE. [55:22] BUT I THINK THAT, ONE, IT ELEVATES ENERGY BACK INTO THE [55:25] DISCUSSION ABOUT WHETHER OR NOT IT'S AN INVESTABLE CLASS, [55:27] BECAUSE YOU NEED SO MUCH OF IT TO DRIVE THE AI BOOM THAT IS [55:30] FUELING ALL THE EXCITING THINGS THAT PEOPLE ARE LOOKING FOR IN [55:33] THE ECONOMY. AND THE ECONOMY IN THE STOCK MARKET ARE ALSO NOT [55:36] ALWAYS THE SAME THING, RIGHT? SO WHAT PEOPLE ARE EXCITED ABOUT [55:39] IN THE STOCK MARKET IS NOT NECESSARILY PLAYING THROUGH [55:42] IMMEDIATELY IN THE ECONOMY, BUT YOU ARE SEEING SOME BETTER DATA [55:45] THAT PEOPLE WERE WORRIED ABOUT, ESPECIALLY AFTER THAT BAD [55:47] YUMISH DATA. SO I THINK THAT WHAT PEOPLE ARE SAYING AND WHAT [55:50] THEY'RE DOING RIGHT NOW IS NOT ALIGNING. AND SO UNTIL THAT [55:52] HAPPENS, THE ECONOMY LOOKS REASONABLY GOOD IN THE UNITED STATES. [55:55] I SUGGEST THAT IT'S LEADING TO A REDUCTION IN THE THINGS THAT WE [55:57] HAVE A CONFIDENCE ABOUT, HAVE A HIGH DEGREE OF CONFIDENCE [55:59] ABOUT, WHICH HAS LED TO THE CROWDING IN TECH AGAIN. [56:02] AND I DO WONDER, IF WE DIDN'T HAVE THIS SHOCK IN IRAN, IN THE [56:05] MIDDLE EAST, WHETHER WE WOULD HAVE BROADER PARTICIPATION IN THE [56:08] EQUITY MARKET? I THINK YOU WOULD HAVE BROADER [56:11] PARTICIPATION, BUT YOU COULD ALSO DO THE COUNTERFACTUAL. [56:14] IF WE DIDN'T HAVE THIS BOOM IN TECH, WE WOULD BE LOOKING AT A [56:16] MUCH WORSE SITUATION ALL OVER THE PLACE, JUST BECAUSE YOU DIDN'T [56:18] HAVE SOMETHING WHERE PEOPLE WERE CHASING WHAT THEY THOUGHT WAS [56:20] GOING TO BE HIGHER PRODUCTIVITY AND BETTER [56:22] WORKFLOWS AND EVERYTHING ELSE. [56:24] SO I THINK THE DUELING NARRATIVES THAT ARE GOING ON, [56:27] SWITCH BACK AND FORTH, BUT OPTIMISM IS DEFINITELY LEADING [56:30] THE PACK RIGHT NOW. AND I THINK THAT AS WE GET [56:32] THROUGH EARNINGS, AND WE HAVE A LOT OF EARNINGS NEXT WEEK, WE'VE [56:34] GOT A LOT OF BIG TECH EARNINGS, AND INTEL HAD GOOD NUMBERS. [56:37] IT'S GOING TO BE INTERESTING TO SEE HOW THAT PLAYS OUT WITH [56:39] EVERYBODY ELSE. THE FACT THAT MICROSOFT AND META [56:41] ARE SAYING WE HAVE TO SLOW DOWN, WE HAVE TO GET RID OF PEOPLE AND [56:44] WE'RE NOT GOING TO HIRE NEW PEOPLE, THAT'S A LITTLE [56:46] CONCERNING IN THE LONGER TERM, BUT WE HAVE TO SEE IF THAT [56:49] PLAYS THROUGH TO EVERYBODY ELSE AS WELL. [56:55] PILING INTO TECH AGAIN THIS MORNING, SESSION HIGHS ON THE [56:58] S&P 500 UP BY 0.4%, ON THE NASDAQ 100 BRIEFLY THROUGH 1% [57:03] HIGHER SO FAR THIS MORNING. WHEN YOU HAVE MOVES ON MAJOR [57:06] MEGA CAPS OF 28% TO 30% PRE-MARKET TRADING, THAT'S THE KIND [57:10] OF THING THAT FUELS THAT KIND OF GAIN IN THE NASDAQ. [57:13] AGAIN, HOW MUCH ARE WE SEEING INDEXES HEAVILY WEIGHTED TO THIS [57:16] TRADE AND INCREASINGLY BIFURCATED FROM THE UNDERLYING [57:17] FEDERAL RESERVE DECISION AND THE FED DECISION, I HAVE TO SAY, [57:20] FEELS LIKE A SIDESHOW COMPARED TO WHAT HAPPENS LATER ON THIS [57:22] AFTERNOON WHEN WE HEAR FROM META, MICROSOFT, ALPHABET AND [57:26] PERHAPS AMAZON AS WELL. HOW HIGH IS THE BAR FOR THE BIG [57:28] SPENDERS NEXT WEEK? [57:29] IT'S REALLY GOING TO BE ABOUT HOW BOTH WHAT THEY SAY AND HOW [57:34] INVESTORS TAKE THAT. I AGREE WITH YOU WITH THE FED, BUT I [57:36] THINK THAT'S MORE BECAUSE THE HIGHER OIL PRICES AND THE SHOCK [57:40] THROUGH THE PRICING SYSTEM MAKES IT UNLIKELY THAT THEY WOULD DO WHAT [57:42] THE MARKET WANTED, WHICH WAS CUT RATES. [57:46] IT ALSO, POWELL HAS BEEN PRETTY CLEAR THAT HE DOESN'T WANT TO [57:48] RAISE RATES, AT LEAST IN THE NEAR TERM. [57:50] SO I THINK THAT IT'S LESS OF A SIDESHOW FOR ANY OTHER REASON THAN [57:53] IT LOOKS LIKE THE ANSWER IS THEY'RE NOT GOING TO DO VERY MUCH. [57:56] BUT WHAT HAPPENS WITH THOSE BIG TECH STOCKS AND HOW THOSE EARNINGS [57:58] ARE TAKEN AND WHAT THEY SAY I THINK IS PRETTY CRITICAL RIGHT NOW [58:02] WITH THE MARKET SITTING AT NEW HIGHS. [58:04] I MEAN, THAT WAS SUCH A FAST SNAPBACK. [58:06] AND, YOU KNOW, TO YOUR POINT EARLIER TODAY, YOU TALKED ABOUT [58:08] THE FACT THAT LAST FRIDAY WE WERE SITTING HERE AND THE STRAIGHT [58:11] WAS OPEN AND NOW IT'S NOT AND THE MARKETS ARE STILL AT NEW HIGHS. [58:14] AT LEAST WE WERE TOLD IT WAS GOING TO BE OPEN. [58:16] IT WASN'T REALLY EVER OPEN. [58:18] NO. [58:19] AND WHAT WE'VE BEEN SAYING ALL ALONG IS SHOW ME THE TRAFFIC. [58:21] SHOW ME THE TRAFFIC. [58:22] WHATEVER YOU'RE SAYING, SHOW ME SHIPS GETTING THROUGH. [58:25] SHOW ME STUFF COMING THROUGH. [58:26] AND THEN THE MARKET CAN BE HAPPIER. [58:28] RIGHT NOW, I THINK THERE IS A LITTLE BIT OF A SENSE OF IT'S GOING [58:31] TO HAPPEN SO IT'S GOING TO BE FINE. [58:33] I'M A LITTLE WORRIED THAT THE LONGER THAT TAKES, THE HARDER IT [58:35] IS TO RECOVER. [58:36] SARAH, IT'S GOOD TO SEE YOU. [58:38] THANK YOU. [58:39] SARAH HUNT THERE. [58:40] I'D ARGUE AROUND THE FEDERAL RESERVE, WE'VE JUST REDUCED THE [58:42] DRAMA JUST A BIT. [58:43] JUST TRACK HOW THINGS ARE BUILDING. [58:45] GET AWAY FROM THE HEARING WITH KEVIN WALSH AND THE BACK AND [58:47] FORTH WITH CERTAIN SENATORS AND JUST FOCUS ON WHAT WE'RE [58:49] HEARING FROM ELSEWHERE. [58:50] THE TREASURY SECRETARY IN THE LAST FEW WEEKS SAYING IT WOULD [58:52] BE UNDERSTANDABLE IF THIS FED REMAINED ON HOLD. [58:57] THE NEC DIRECTOR, KEVIN HASSETT, I DON'T THINK HE WOULD SAY IT [59:00] UNLESS THAT IT HAD ENDORSEMENT AROUND THE WHITE HOUSE THAT IT'S [59:04] OKAY IF THE CHAIRMAN OF THE FED STAYS ON IF WE DON'T HAVE KEVIN [59:06] WALSH CONFIRMED AT THE FEDERAL RESERVE. [59:08] THINGS HAVE CALMED DOWN AROUND THE INSTITUTION. [59:12] YOU ALWAYS LIKE TO SAY BENCHMARK TO THE EXTREME AND IT SEEMS [59:14] LIKE THIS WHOLE CONVERSATION HAS BEEN BENCHMARKED TO THE [59:16] EXTREME. [59:17] THERE IS A LOT OF OFF-RAMP FOR PRESIDENT TRUMP TO GET [59:20] KEVIN WALSH CONFIRMED BY THE MIDDLE OF MAY WHEN HE SHOULD BE [59:23] GETTING TO THE BOARD OF GOVERNORS. [59:25] A LOT OF OFF-RAMPS, IT SEEMS LIKE NOBODY IN THE MARKET [59:27] CARES ANYWAY. [59:29] SEMIS. [59:43] WE'RE NOT REALLY INTERESTED IN THIS BACHELOR. [59:45] BY CHIPS APPARENTLY. [59:49] NASDAQ FUTURES MUCH HIGHER AGAIN THIS MORNING. [59:52] EQUITY FUTURES ON THE S&P HIGH BY 0.4%. [59:55] WITH AN UPDATE ON STORIES WORLDWIDE WITH YOUR BLOOMBERG [59:58] BRIEF. [1:00:00] THE U.S. INCREASING PRESSURE ON IRAN WITH ITS NAVAL BLOCK [1:00:02] AID NEAR THE STRAIGHT OF HORMUZ AS IT TRIES TO GET TEHRAN TO [1:00:06] PRESSURE ON TRUTH SOCIAL QUOTES. [1:00:17] THE WHITE HOUSE IS GIVING A 90-DAY EXTENSION TO A KEY SHIPPING [1:00:20] WAIVER MARKING THE LATEST EFFORT BY THE TRUMP ADMINISTRATION TO [1:00:22] MAKE IT EASIER TO MOVE OIL, FUEL, AND FERTILIZER. [1:00:26] EXTRA TIME IS EXPECTED TO IMMEDIATELY HELP U.S. [1:00:29] INCREASING PRESSURE ON THE CENTRAL BANKS RENOVATIONS. [1:00:39] THE CENTRAL BANKS RENOVATIONS. THE PRESIDENT'S POTENTIAL [1:00:43] SHIFT COULD PROVIDE AN OFF-RAMP TO THE JUSTICE DEPARTMENT [1:00:47] INVESTIGATION, HOLDING UP THE CONFIRMATION. [1:00:50] UP NEXT ON THE PROGRAM, DIPLOMACY ON PAUSE. [1:00:56] HOW LONG ARE YOU WILLING TO WAIT UNTIL YOU GET A UNIFIED [1:01:01] SPOT? WE ARE IN VIETNAM FOR 18 YEARS. [1:01:04] WE ARE IN IRAQ FOR MANY, MANY YEARS. [1:01:07] WE ARE IN THE KOREAN WAR FOR SEVEN YEARS. [1:01:11] I HAVE BEEN DOING THIS FOR SIX WEEKS. [1:01:14] I'M NOT SURE WE WON THE STRAIGHT OF WALMERS CLOSE FOR [1:01:16] 18 YEARS OR SEVEN FOR THAT MATTER. [1:01:18] WE WILL HAVE THAT CONVERSATION IN JUST A MOMENT. [1:01:21] BOB MCNALLY OF RAPID AND ENERGY JOINS US NEXT FROM NEW YORK [1:01:48] CITY THIS MORNING. GOOD MORNING. [1:01:50] CHECK OUT THE MOVES THIS MORNING. [1:01:52] POSITIVE TERRITORY BY THE TIME WE GET TO THE OPENING BELL. [1:01:57] POSITIVE TERRITORY FOR THE WEEK. [1:02:02] ON THE NASDAQ, FLYING UP BY 1.3%. [1:02:06] INTEL UP IN THE PRE-MARKET. [1:02:08] THIS MOVES CRAZY. [1:02:10] UP BY MORE THAN 20%. EVEN WITH THE RALLY WE HAVE SEEN IN [1:02:14] CHIP STOCKS OVER THE PREVIOUS 17 DAYS. [1:02:16] YOU WILL ALSO HEAR THINGS LIKE ELON MUSK USING THEM FOR SOME [1:02:21] OF THE FAB PRODUCTION. THEY KEEP TALKING ABOUT CPUs. [1:02:25] THERE IS A QUESTION ABOUT TPUs FOR THE MORE COMPLICATED [1:02:27] COMPUTE. [1:02:28] THE CPUs THAT PEOPLE USE FOR A LOT OF THE BASIC TASKS THAT [1:02:29] THEY NEED. THEY ARE DOING IT WELL. [1:02:31] THIS IS THE TUCK OF WAR RIGHT NOW. [1:02:35] ON THE ONE SIDE, YOU HAVE THE SECULAR TECH STORY. [1:02:39] ON THE OTHER SIDE, YOU HAVE THE CYCLICAL THREAT IN COMMODITIES. [1:02:44] CHECK OUT THE COMMODITY MOVE THIS MORNING. [1:02:47] PULLING BACK A LITTLE BIT, WE ARE DOWN BY A THIRD OF 1%. [1:02:51] WCI ABOUT 95. UP ON THE WEEK ON BRENT AT THE [1:02:53] MOMENT BY DOUBLE DIGITS AND POTENTIALLY THE SECOND BIGGEST [1:02:55] WEEKLY GAME WE HAVE SEEN ON CRUDE SINCE THIS WAR STARTED. [1:02:57] I WOULD BROADEN THAT OUT AND SAY THERE IS A TUCK OF WAR [1:02:59] CONSUMER. IT IS A LITTLE BIT. [1:03:03] WE ARE TALKING ABOUT $150 MILLION EXTRA COMMODITY COSTS. [1:03:08] THAT SAID, STILL MAINTAINING GUIDANCE BECAUSE THERE IS SO [1:03:12] MUCH STRENGTH IN THE CONSUMER BECAUSE PEOPLE WANT TO LOOK [1:03:14] BEAUTIFUL WHEN THEY GO ON ZOOM OR WHATEVER ELSE THEY ARE [1:03:16] DOING. TO ME, THIS JUST HIGHLIGHTS THE [1:03:19] TENSION HERE. PEOPLE CAN OFFSET SOME OF THE [1:03:22] POTENTIAL COSTS WITH THE STRENGTH ELSE. [1:03:24] SOMETIMES THEY DON'T EVEN KNOW HOW TO RESPOND. [1:03:26] PEOPLE WANT TO LOOK BEAUTIFUL. [1:03:29] PEOPLE WANT TO LOOK BEAUTIFUL. [1:03:36] IT IS DRIVEN BY GROWTH IN THE BEAUTY CATEGORY. [1:03:39] I THINK FAKE LASHES ARE OUT. [1:03:41] SINGLE-HANDEDLY HOLDING UP THE EQUITY MARKET. [1:03:44] THE LIGHTS THAT PEOPLE WOULD GET TO TRY TO LOOK BEAUTIFUL. [1:03:48] I WOULD LOVE ONE OF THOSE LIGHTS. [1:03:51] PEOPLE WANT TO LOOK AT THE LONG END OF THE CURVE. [1:03:58] WE HAVE TENS DOWN TO ABOUT 431. [1:04:01] WE HAVE BEEN TRACKING MOVES AT THE FRONT END OF THE CURVE. [1:04:06] NOW DOWN BY A SINGLE BASIS POINT OF THE SESSION. [1:04:10] YOU HAVE SEEN THE DATA IMPROVE AS WELL. [1:04:14] THINGS HAVE LOOKED PRETTY GOOD SO FAR THIS WEEK. [1:04:17] CONSUMERS HAVE ABSORBED HIGHER PRICES. [1:04:19] IF PRICES OF GASOLINE, DIESEL, JUST CRUDE IN GENERAL AND [1:04:22] PRODUCTS RELATED TO IT STAY HIGHER FOR LONGER AND PEOPLE ARE [1:04:25] ABLE TO ABSORB IT, ALL OF A SUDDEN YOU END UP WITH AN [1:04:27] INFLATIONARY TYPE OF PUSH UNDER A MARKET THAT OTHERWISE IS [1:04:29] RESILIENT AND THIS IS WHAT THE FED WILL HAVE TO DEAL WITH. [1:04:41] LET'S TALK ABOUT THE MIDDLE EAST. [1:04:43] DIPLOMACY ON PAUSE. HOW LONG ARE YOU WILLING TO [1:04:47] WAIT UNTIL YOU GET A? DON'T RUSH ME, JEFF. [1:04:50] GUYS LIKE YOU, YOU WANT TO SAY, OH, SO WE WERE IN VIETNAM [1:04:53] FOR 18 YEARS. WE WERE IN IRAQ FOR MANY, MANY [1:04:57] YEARS. I DON'T LIKE TO SAY WORLD WAR II, [1:05:00] I'VE BEEN DOING THIS FOR SIX WEEKS. [1:05:06] BRENT CRUDE THIS MORNING JUST EAKING OUT ANOTHER GAIN OF A [1:05:08] TENTH OF ONE PERCENT, POTENTIALLY A FIFTH [1:05:10] CONSECUTIVE DAY OF GAINS ON BRENT SO FAR. [1:05:13] THE PRESIDENT REFUSING TO SET A TIMELINE FOR RESTARTING [1:05:15] NEGOTIATIONS WITH IRAN. THE TRUCE REMAINS FRAGILLE. [1:05:18] ANNE-MARIE JOINS US NOW FROM WASHINGTON FOR MORE. [1:05:20] GOOD MORNING, ANNE-MARIE. [1:05:21] GOOD MORNING, JOHN. THE TRUCE RIGHT NOW DOES REMAIN [1:05:25] FRAGILE. AT THE SAME TIME, WE DO SEE THE [1:05:27] ADMINISTRATION LOOKING FOR SOME OF THOSE TOOLS IN THE [1:05:29] TOOLBOX THAT COULD BE USED TO REALLY MAKE SURE THAT [1:05:32] AMERICAN CONSUMERS ARE LESS VULNERABLE TO WHAT IS GOING ON [1:05:34] IN THE WAR. AND WE SAW THAT TODAY, JONATHAN, WITH THE [1:05:36] WHITE HOUSE EXTENDING THE WAIVER FOR THE JONES ACT FOR [1:05:39] ANOTHER 90 DAYS. AND TO DISCUSS THIS ALL, I'M JOINED BY [1:05:43] BOB MCNALLY OF RAPIDOWN ENERGY. BOB, THANK YOU SO MUCH [1:05:45] FOR JOINING. IT'S NOT REALLY A SURPRISE THAT THEY'RE [1:05:47] EXTENDING THIS WAIVER FOR ANOTHER 90 DAYS. [1:05:49] IS IT HELPING? IT DOES, ANNE-MARIE. [1:05:51] IT DOES, ANNE-MARIE. IT HELPS ON THE MARGIN. [1:05:53] IT'S A FEW PENNIES. CALIFORNIA, ESPECIALLY THE [1:05:55] EAST COAST, IT MAKES IT A LITTLE EASIER TO MOVE GASOLINE [1:05:58] WHERE WE'VE GOT TONS OF IT, YOU KNOW, TO THOSE REGIONS [1:06:01] FROM THE GULF COAST. SO IT HELPS. SAME THING WITH THE [1:06:03] RVP WAIVERS, THE ADMISSIONS AND LIMITS ON GASOLINE. [1:06:06] THOSE THINGS HELP WITH THE MARGIN. BUT WHEN WE'RE TALKING [1:06:08] ABOUT THE LARGEST OIL DISRUPTION IN HISTORY, 15% OF GLOBAL [1:06:12] SUPPLY ONGOING NOW, IT IS A DROP IN THE BUCKET. [1:06:15] GOOD STEP, GOOD TO DO IT, BUT A DROP IN THE BUCKET. [1:06:18] THE UNITED STATES HAS BEEN LESS VULNERABLE THAN THE [1:06:21] REST OF THE WORLD. IF IT STARTS TO PRESSURE THIS [1:06:24] ADMINISTRATION MORE HERE, IF PRICES GO UP HIGHER, WHAT [1:06:28] ELSE CAN THEY DO? [1:06:29] WELL, THERE'S NOT MUCH ELSE THAT'S GOOD THAT THEY CAN DO. [1:06:32] THERE ARE BAD THINGS THEY CAN DO, IN MY VIEW, RIGHT? [1:06:35] AND THE TWO IDEAS UNDER DISCUSSION ARE, ONE, GO INTO THE [1:06:39] FUTURES MARKETS AND TRY AND SELL OIL FUTURES IN SOME WAY, [1:06:43] IF THEY CAN FIND A LEGAL WAY TO DO THAT. [1:06:45] I THINK SCOTT BESSEN, ABOVE ALL, WOULD KNOW THAT WOULD BE A [1:06:48] FOLLY AND A MISTAKE. [1:06:49] THE OTHER IS, YOU KNOW, GOD FORBID, THEY DECIDE TO THROW UP [1:06:53] EXPORT RESTRICTIONS ON PRODUCTS OR CRUDE, LIKE THE CHINESE HAVE, [1:06:57] LIKE THE SOUTH KOREANS HAVE. [1:06:58] AT ONE POINT, THAT REALLY WAS SOMETHING THEY WERE SERIOUSLY [1:07:01] DISCUSSING. [1:07:02] WELL, ABSOLUTELY. IN 2022, PRESIDENT BIDEN LOOKED AT THAT [1:07:04] WHEN WE HAD THE ALL-TIME HIGH IN GASOLINE OF $5 A GALLON. [1:07:07] AND ONE WOULD HOPE THIS ADMINISTRATION, WHICH ATTACKED [1:07:09] PRESIDENT BIDEN FOR LIMITING EXPORTS LOOKING AT LNG. [1:07:13] IT WOULD BE QUITE IRONIC IF THEY DID. [1:07:14] NOW, LOOK, THEY'RE TELLING INDUSTRY, AND WE BELIEVE THEM [1:07:17] RIGHT NOW, NOT ON THE TABLE. [1:07:18] THEY'RE NOT GOING TO DO IT. [1:07:19] RIGHT NOW. [1:07:20] WE HAVE A 35% PROBABILITY. [1:07:21] BUT I'VE BEEN IN THE WHITE HOUSE DURING EMERGENCIES. [1:07:24] IF WE HEAD UP THIS SUMMER TOWARDS AND BEYOND $5 A GALLON, [1:07:27] AND THOSE WALLS CLOSE IN IN THE WHITE HOUSE, YOU NEVER CAN RULE IT OUT. [1:07:30] DOES IT MAKE IT MORE LIKELY BECAUSE WE ARE IN A MIDTERM ELECTION YEAR? [1:07:33] WELL, YES AND NO. [1:07:36] IT'S PRESIDENT TRUMP'S LAST TERM, I THINK. [1:07:39] AND, LOOK, I THINK HE KNOWS HE'S GOING TO LOSE THE HOUSE. [1:07:42] NOW, SOMETHING THAT PUT THE SENATE IN PLAY WOULD BE ALARMING. [1:07:45] SO ON THE MARGIN, IT DOES. [1:07:46] BUT AT ANY TIME, ANY PRESIDENT DOESN'T WANT TO BE THE PRESIDENT WHO OWNS THE [1:07:50] HIGHEST GASOLINE PRICES, A NEW RECORD ABOVE $5 A GALLON. [1:07:53] AND SO THEY WILL LOOK TO DESPERATE MEASURES. [1:07:55] AND I JUST HOPE THAT THEY DON'T DO THAT BECAUSE I THINK IT WILL BE COUNTERPRODUCTIVE. [1:07:59] IT MIGHT WORK FOR A FEW WEEKS AND THEN WE'D BE WORSE OFF. [1:08:01] LET'S TALK ABOUT THE STRAIGHT OF HOMOS. [1:08:02] YOU HAD A GREAT NOTE OUT TALKING ABOUT HOW YOU DON'T THINK THIS IS A LEAKY BLOCKADE. [1:08:06] THERE WAS SOME REPORTS THAT SOME IRANIAN VESSELS WERE TURNING OFF THEIR TRANSPONDERS AND GETTING THROUGH. [1:08:11] ARE THEY GETTING THROUGH? [1:08:13] THEY MAY BE GETTING THROUGH THE LINE IN THE GULF OF OMAN. [1:08:16] BUT THIS BLOCKADE IS ACROSS MANY OCEANS. [1:08:20] CENTCOM IS STAFFED UP AND READY FOR THIS. [1:08:22] WE'RE TRACKING EVERY BOAT THAT COMES OUT OF IRANIAN PORT. [1:08:25] JUST THE OTHER DAY WE PICKED UP ONE IN THE BAY OF BANGAL. [1:08:29] WE CAN GET THEM IN THE PACIFIC. [1:08:31] SO WHILE WE MAY BE ALLOWING SOME BOATS TO CROSS THE LINE, IF YOU WILL, THAT DOESN'T MEAN THAT THEY'RE GOING TO GET TO THEIR PORT DESTINATION. [1:08:37] I THINK THEY'LL BE PICKED UP LATER BY OTHER ASSETS WE HAVE FURTHER AFIELD. [1:08:41] WHEN IT COMES TO THE BLOCKADE IN KARG ISLAND, THE TREASURY SECRETARY HAS SAID BASICALLY THEY'RE WAITING FOR SHUT-INS. [1:08:47] WHEN COULD WE SEE THAT HAPPEN TO IRANIAN? [1:08:50] WE ESTIMATE IT COULD BE AT LEAST A MONTH IF NOT MORE. [1:08:53] SO THE BIG DEBATE IS HOW MUCH STORAGE CAPACITY DO THEY HAVE. [1:08:56] AT KARG WE CAN ALL SEE THAT. [1:08:57] THAT'S FILLING UP RAPIDLY. [1:08:59] THEY'RE GOING OUT THOUGH AND ALSO BUYING EMPTY VESSELS. [1:09:01] THAT'S RIGHT. [1:09:02] AND THEY HAVE FLOATING STORAGE AS WELL. [1:09:03] HOWEVER, WHAT'S HARDER TO MEASURE IS INLAND STORAGE. [1:09:07] THEY HAVE TANK FARMS INLAND IN IRAN. [1:09:09] SO EVEN IF WE SEE KARG ISLAND FILL UP AND STOP TO LOAD TANKERS, THAT MAY HAPPEN. [1:09:13] THEY STILL MAY BE ABLE TO AVOID OR DELAY SHUT-INS IF THEY HAVE INLAND TANK FARMS THEY'RE FILLING UP. [1:09:18] WE WOULD ESTIMATE TWO MONTHS AT THE MAX. [1:09:20] SOMEWHERE BETWEEN A MONTH TO TWO MONTHS WOULD BE BEFORE YOU SEE MAJOR SHUT-INS IN IRAN. [1:09:24] SO IF THIS IS TWO MONTHS, DO YOU EXPECT IRAN TO CONTINUE AT THIS POSTURE RIGHT NOW WITH THE UNITED STATES? [1:09:30] WE DO. [1:09:31] THEY'RE DUG IN. [1:09:33] THEY THINK THEY'RE WINNING. [1:09:34] THEIR LEADERSHIP IS FRACTURED, BUT IT'S FUNCTIONING. [1:09:36] THEY KNOW THEY HAVE PRESIDENT TRUMP BY THE THROAT HERE WITH REGARD TO HORMUS. [1:09:41] AND THEIR STRATEGY IS JUST WAIT FOR THOSE HIGH OIL PRICES TO SOFTEN UP THE PRESIDENT. [1:09:45] I THINK THEY'RE GOING TO STICK TO IT. [1:09:46] WHAT DO YOU THINK THE U.S. RESPONSE WOULD BE THEN? [1:09:48] IF THEY'RE DUG IN AND THERE'S NO MOVEMENT, DO WE JUST START ESCORTING VESSELS THROUGH THE STRAIGHT OF HORMUS? [1:09:54] ESCORTS COME LATER. [1:09:56] I THINK, THOUGH, WE HAVE TO DO THE MILITARY SUPRESSION OF IRAN'S BOATS, MINES, MISSILES, THAT THEY HAVE TO THREATEN THE SHIPS. [1:10:04] I THINK WE SHOULD HAVE STARTED DOING ON THE FIRST DAY. [1:10:06] WE'RE SEEING REPORTS NOW THE PRESIDENT HAS PUT A KILL ORDER ON THESE FAST ATTACK CRAFT, ON THESE MINE LAYERS. [1:10:11] AND IT LOOKS LIKE THEY'RE LAYING MORE MINE. [1:10:13] SO I THINK THERE'S TWO WAYS, ANNE MARIE, THIS IS GOING TO END, IN TERMS OF HORMUS. [1:10:17] WE'RE GOING TO HAVE A CEASE FIRE THAT PERMITS FREE FLOW OF NAVIGATION, OR WE'RE GOING TO HAVE TO MILITARILY, FORCIBLY, RE-OPEN THAT STRAIGHT. [1:10:25] AND THAT'S FOUR WEEKS AT LEAST, IF YOU START IT AND STICK WITH IT, WHICH WE HAVEN'T YET. [1:10:29] WELL, APPARENTLY, ACCORDING TO A PAKISTANI OFFICIAL, THE IRANIAN FOREIGN MINISTER IS GOING TO BE IN ISLAMABAD THIS EVENING. [1:10:35] POTENTIALLY, COULD WE SEE A CEASE FIRE AS SOON AS THIS WEEKEND? [1:10:38] DO YOU THINK WE'RE THERE? [1:10:39] BECAUSE THE IRANIANS, IF HISTORY IS ANY INDICATION, LIKE TO DRAG THEIR FEET WITH NEGOTIATIONS. [1:10:46] ABSOLUTELY. [1:10:47] SO AT RAPIDAN, WE HAVE A 20% PROBABILITY ON THAT. [1:10:49] YOU CAN'T RULE IT OUT. [1:10:50] THE PRESIDENT ALWAYS HAS A DUAL TRACK DIPLOMACY GOING ON, AND MILITARY PRESSURE. [1:10:56] BUT AS WE READ THE IRANIANS SIDE AND WHAT'S HAPPENING HERE IN WASHINGTON, WE THINK THEY'RE [1:11:00] STILL VERY FAR APART ON NUKES, HORMUZ, AND OTHER ISSUES. [1:11:03] BOB, THANK YOU SO MUCH FOR YOUR TIME. [1:11:04] IT'S GREAT TO SEE YOU IN PERSON. [1:11:05] BOB MCNALLY OF RAPIDAN ENERGY, JONATHAN. [1:11:07] SPEAKING TO US AS WE ARE LEARNING THAT POTENTIALLY THE IRANIANS ARE WILLING TO SHOW UP TO THE NEGOTIATING [1:11:12] TABLE OR MAYBE THIS IS JUST A BIPARTISAN MEETING WITH THEIR PAKISTANI COUNTERPARTS. [1:11:17] NO WORD FROM THIS WHITE HOUSE JUST YET IF THEY'RE SENDING ANYONE OVER TO ISLAMABAD. [1:11:22] THANK YOU. LET'S TAKE THAT HEADLINE AND RUN WITH IT. [1:11:25] PUSH IT THROUGH THE MARKET. YOU'RE SEEING SOME RESPONSE AND REACTION. [1:11:27] EQUITY FEATURES ON THE S&P 500. [1:11:28] OUT TO NEAR SESSION HIGH IS UP BY 0.5%. [1:11:31] CRUDE OUT TO NEAR SESSION LOADS. WE'RE DOWN BY MORE THAN 1% ON WCI TO 94. [1:11:35] CRUDE DOWN BY 0.9 TO 104. [1:11:38] ALTHOUGH YOU POINTED OUT THE MOVE STARTED BEFORE WE GOT THESE HEADLINES. [1:11:41] ABOUT 15 MINUTES BEFORE, YEAH. [1:11:42] WHICH RAISES SOME QUESTIONS. I THINK IT'S FAIR TO RAISE THAT [1:11:45] CONSIDERING THE FACT THAT WE'VE SEEN THAT REPEATEDLY IN TERMS OF [1:11:48] WHAT'S THE MOVE? WHAT'S THE MOVE? WHAT'S THE MOVE? [1:11:50] AND THEN WE SEE A HEADLINE AND WE'RE LIKE, OH, THAT COULD BE IT. [1:11:52] YEAH. IT'S GETTING COMPLICATED, ISN'T IT? [1:11:54] AND THE FIRST THING YOU GO TO IS THE WORST CASE, WHICH IS SOMEONE KNEW SOMETHING [1:11:58] BEFORE EVERYONE ASKED IT. [1:11:59] THE TRUTH IS SO MANY PEOPLE COME IN HERE AND THEY'RE NOT GOING TO [1:12:02] TALK ABOUT IT ON AIR, BUT THEY WILL SAY THAT THEY ARE CONCERNED ABOUT [1:12:04] WHAT'S GOING ON AND THEY ARE CONCERNED ABOUT WHO KNOWS WHAT. [1:12:07] AND IT IS DAMPENING SOME TRADING AND SOME ASSET CLASSES. [1:12:10] YOU JUST HAVE TO WONDER HOW MUCH THAT'S A DRUMBEAT BEHIND ALL OF [1:12:12] THIS SORT OF HEADLINE WHIPSAW THAT WE'VE BEEN GETTING. [1:12:15] CRUDE RIGHT NOW, WTI DOWN BY MORE THAN 1%. [1:12:18] WTI 94.60. [1:12:19] BRENT CRUDE AT AROUND 104. [1:12:21] UP NEXT, WE'LL CATCH UP WITH TED OF BAD WITH INTEL HEADING FOR ALL-TIME [1:12:26] HIGHS. [1:12:27] WE'VE GOT SESSION HIGHS HERE. [1:12:47] EQUITY FUTURES OUT TO 0.6% HIGHER. [1:12:52] ON THE NASDAQ 100, UP BY 1.5%. [1:12:54] WHEN YOU'VE GOT SESSION HIGHS LIKE THAT IN THE EQUITY MARKET, [1:12:57] THIS IS A PICTURE OF THINGS HAPPENING IN THE COMMODITY MARKET. [1:13:01] NEAR SESSION LOWS, WE WERE HIGHER FOR A FIFTH CONSECUTIVE DAY, [1:13:03] NOW LOWER, DOWN BY 2% ON WTI CRUDE. [1:13:06] BRENT CRUDE DOWN BY 1.4%, 103. [1:13:09] THESE HEADLINES CROSSING JUST MOMENTS AGO, THE IRANIAN FOREIGN [1:13:10] PARTICULARLY. [1:13:14] THE FACT THAT THEY ARE STILL TALKING, DOES GIVE A [1:13:16] SIEFER LEAVING A LITTLE BIT. [1:13:18] PAKISTANI OFFICIALS SAYING A SECOND ROUND OF U.S. [1:13:20] IRAN TALKS ARE EXPECTED. [1:13:22] SOME ENCOURAGING SITES, EARLY SITES. [1:13:25] WE NEED MORE DETAIL ON THIS. [1:13:27] THERE IS A SECOND ROUND OF U.S. [1:13:31] THE FACT THAT THEY ARE STILL TALKING DOES GIVE A SIEF [1:13:33] RELIEF AND HELPS FUEL THE OPTIMISM THAT HAS BEEN UNDERPINNING [1:13:35] THIS MARKET. [1:13:37] SHE IS DOWN IN WASHINGTON, D.C. [1:13:39] TRACKING THE HEADLINES FOR US. [1:13:43] SET THE BAR FOR US. [1:13:45] WHAT SHOULD WE EXPECT NOW INTO FRIDAY EVENING? [1:13:49] I THINK THE ONLY THING WE CAN EXPECT RIGHT NOW IS THE IRANIANS ARE [1:13:54] SHOWING UP. [1:13:55] RIGHT NOW THERE IS NO INDICATION THAT THE UNITED STATES YET HAS SENT [1:13:59] SOMEONE. [1:14:00] POTENTIALLY, IF THE PAKISTANI OFFICIALS ARE SAYING THEY DO EXPECT [1:14:03] A SECOND ROUND OF TALKS, MAYBE WHAT YOU HAVE IS THE FOREIGN MINISTERS [1:14:06] SHOWING UP THIS EVENING IN ISLAMABAD AND THEN THAT GIVES THE [1:14:10] UNITED STATES A LITTLE BIT MORE OPTIMISM THAT THEY CAN THEN SEND [1:14:14] SAID J.D. VANCE, THE VICE PRESIDENT OR STEVE WICKOFF OR THE [1:14:17] PRESIDENT'S SON-IN-LAW JARED KUSHNER ON THE FLIGHT TO ISLAMABAD [1:14:20] BECAUSE THE IRANIANS ARE THERE IN PLACE. [1:14:23] SO POTENTIALLY WHAT WE COULD SEE THIS WEEKEND IS ANOTHER ROUND OF [1:14:26] TALKS. [1:14:27] WHETHER OR NOT WE GET A DEAL OUT OF THIS WEEKEND, THAT REMAINS TO BE [1:14:31] SEEN. [1:14:32] SO THE IRANIANS HAVE BEEN QUITE CLEAR THAT FOR THEM TO ENGAGE IN [1:14:34] TALKS, THE U.S. NEEDS TO END THE BLOCKADE. [1:14:37] AND, MARIE, ANY SIGN OF THAT BLOCKADE BEING ENDED? [1:14:41] ABSOLUTELY NOT. [1:14:42] AND FOR THE FIRST TIME IN DECADES, YOU HAVE CENTCOM THIS [1:14:44] MORNING TWEETING ABOUT HOW THERE ARE THREE AIRCRAFT CARRIERS IN [1:14:48] THE MIDDLE EAST RIGHT NOW. [1:14:50] AND YOU HEARD FROM THE TREASURY SECRETARY EARLIER THIS WEEK THAT [1:14:53] THEY ARE GOING TO GO AFTER EVERY SINGLE IRANIAN VESSEL. [1:14:57] AND BOB MCNALLY OF RAPIDAN ENERGY WHO TRACKS ALL THESE VESSELS IS [1:15:01] SAYING EVEN IF AN IRANIAN VESSEL WAS ABLE TO GET [1:15:04] THROUGH THE LINE IN THE GULF OF OMAN, THE UNITED STATES IS [1:15:08] TRACKING DOWN THESE VESSELS ANYWHERE THEY GO IN ASIA. [1:15:11] AND THEY ARE EITHER BOARDING THEM OR TAKING THEM HOSTAGE, WHICH WE [1:15:15] SAW HAPPEN IN THE PAST 24 OR 48 HOURS. [1:15:19] SO THE BLOCKADE IS NOT ENDING. [1:15:21] AND FOR THE IRANIANS, THAT IS ONE KEY ELEMENT, AS WELL AS WHAT WE SAW [1:15:25] YESTERDAY IN TERMS OF A CEASE-FIRE WHEN IT COMES TO [1:15:29] LEBADON AND ISRAEL, AS ISRAEL WAS TARGETING HEZBALLAH. [1:15:32] THAT IS ONE KEY ELEMENT THAT THEY WOULD NEED TO BE SEEN. [1:15:35] AND RIGHT NOW, IF YOU LOOK AT WHAT IS GOING ON IN THE GULF OF OMAN, [1:15:39] THAT BLOCKADE ACTUALLY FEELS LIKE IT IS GETTING RAMPED UP, NOT [1:15:42] WINDING DOWN. [1:15:43] AND MARIE, LOOKING FOR ADDITIONAL DETAILS. [1:15:44] AMH, STAY CLOSE. [1:15:45] WE WILL WORK THROUGH THOSE DETAILS WHEN WE GET THEM. [1:15:47] PARTICULARLY LOOKING FOR A RESPONSE FROM THE U.S. SIDE ABOUT THE [1:15:49] POTENTIAL FOR TALKS HERE, BUT THIS IS WHAT WE'VE GOT SO FAR, [1:15:52] THAT THE IRANIAN FOREIGN MINISTER IS EXPECTED IN ISLAMABAD ON [1:15:55] FRIDAY NIGHT. [1:15:56] PAKISTANI OFFICIALS SAYING A SECOND ROUND OF U.S.-Iran TALKS [1:15:59] ARE EXPECTED. [1:16:00] IT'S CLEAR THAT PAKISTAN REALLY WANTS THESE TALKS TO [1:16:02] HAPPEN. [1:16:03] WITHOUT A DOUBT. [1:16:04] LET'S REMIND EVERYONE THAT ISLAMABAD HAS BEEN ON [1:16:06] LOCKDOWN FOR ABOUT TWO WEEKS AS THEY PREPARE FOR THESE TALKS. [1:16:08] IT'S A PANDEMIC STYLE LOCKDOWN FOR SECURITY REASONS AHEAD OF [1:16:10] THESE TALKS. [1:16:11] THEY'RE STILL IN LOCKDOWN EVEN THOUGH THE TALKS HAVEN'T [1:16:13] HAPPENED. [1:16:14] I'M SURE PAKISTANI OFFICIALS ARE EARLY PETITIONING BOTH SIDES. [1:16:17] STOCKS RIGHT NOW GETTING THE BEST OF BOTH WORLDS. [1:16:19] ON THE ONE HAND, YOU'VE GOT THE POTENTIAL FOR DE-ESCALATION, [1:16:21] CRUDE PULLING BACK. [1:16:23] ON THE OTHER HAND, YOU'VE GOT GREAT EARNINGS COMING FROM THE [1:16:25] CHIP SECTOR. [1:16:26] EQUITY FUTURES UP BY 0.6%. [1:16:28] LET'S GET YOU SOME OF THOSE SINGLE NAMES AND MORNING MOVERS. [1:16:31] DANNY HAS MORE. [1:16:32] IT'S ALL ABOUT INTEL THIS MORNING. [1:16:34] I WANT TO PUT SOME OF THE SUPERLATIVES IN CONTEXT HERE. [1:16:41] IT'S GOING TO BE OPENING UP AT A NEW RECORD. [1:16:46] IT HASN'T HIT A NEW RECORD SINCE 2000. [1:16:49] AT THE SAME TIME, A SURGE OF NEARLY 30%. [1:16:53] THAT'S GOING TO BE THE BEST SINGLE-DAY REACTION TO EARNINGS [1:16:56] IN MODERN HISTORY FOR THIS COMPANY. [1:16:59] IT'S LIFTING THE ENTIRETY OF THE SEMI-SECTOR, WHICH HAS BEEN [1:17:01] ON A TEAR. [1:17:03] THE EARNINGS, NOT AS BRIGHT, BUT A MUCH SMALLER COMPANY, [1:17:07] COURSERA, THEY MISS ON THEIR EARNINGS. [1:17:10] WILLIAM BLAIR DOES EXPRESS SOME SHOCK THAT IT MISSED BECAUSE [1:17:12] THERE WAS ALREADY A LOW BAR SET FOR THEM, ALSO CONSIDERING THE [1:17:16] AIR DISRUPTION, BUT MAYBE THERE IS JUST THIS FEELING THAT [1:17:18] THEY DIDN'T RAISE GUIDANCE. [1:17:20] IT'S THE 18TH STRAIGHT DAY OF GAINS FOR THE PHILADELPHIA [1:17:22] SEMICONDUCTOR INDEX, SOMETHING THAT IT HAS NEVER [1:17:24] ACHIEVED SINCE THE INDEX WAS COMPILED IN 1994. [1:17:26] AMD, ARM, ALL RALLYING IN SYMPATHY. [1:17:28] THERE IS SOME DISAPPOINTMENT THERE, DOWN NEARLY 10%. [1:17:34] FINALLY, WRAPPING THINGS UP THIS MORNING WITH P&G, ANOTHER [1:17:37] SET OF VERY, VERY STRONG EARNINGS. [1:17:40] P&G BEATS THEIR BEAUTY SECTOR THAT IS THE BEST PERFORMER FOR [1:17:42] THEM. [1:17:44] ORGANIC SALES SURGE 7% BETTER THAN ANY OTHER SECTOR. [1:17:49] THEY DO NOTE SOME CHARGES, THOUGH. [1:17:51] THEY HAVE A CHARGE WHEN IT COMES TO HIGHER COMMODITY COSTS, [1:17:54] ABOUT $100 MILLION, A TARIFF COST, ABOUT $400 MILLION, BUT [1:17:58] THIS THING HAS BEEN DOWN 13% SINCE THE START OF THE WAR, SO [1:18:01] MAYBE THAT IS PRICED IN AND SHARES MOVE HIGHER BY 3%. [1:18:05] MORE FROM DANNY IN THE NEXT HOUR. [1:18:12] LET'S FOCUS ON TECH, MIXED TRADING IN THE TECH SPACE, [1:18:14] SOFTWARE STOCKS TAKEN A BEATING IN THE PAST 24 HOURS, [1:18:17] SERVICE NOW SUFFERING ITS WORST DAY EVER. [1:18:21] A CHIP RALLY PUSHING INTO TOWARDS RECORD HIGHS. [1:18:23] DANNY WENT THROUGH THE NUMBERS, THAT NAME IS UP BY 29% IN THE [1:18:25] PRE-MARKET. [1:18:27] THANKS FOR JOINING US NOW. [1:18:37] TED, WELCOME. [1:18:39] SOME VERY FIERY WORDS THERE. [1:18:41] I WANT TO PICK UP ON THE COMPLACENCY. [1:18:44] WHAT MAKES THESE MOVES COMPLACENT? [1:18:46] I THINK THE GEOPOLITICAL IS JUST NOT FACTORED INTO [1:18:49] ANYTHING RIGHT NOW. [1:18:52] IF YOU LOOK AT EVEN THE BLOCKAGE OF THE STRAITS, THIS [1:18:55] IS REALLY GOING TO AFFECT EUROPE AND EMERGING MARKETS. [1:18:57] I'M ON 70-PLUS CONFERENCE CALLS DURING THE EARNINGS SEASON. [1:19:01] I THINK Q1 EARNINGS ARE SOMEWHAT DE MINIMIS. [1:19:05] IT REALLY DOESN'T MATTER. [1:19:06] WHAT MATTERS IS THE GUIDE AND THE 26 GUIDANCE. [1:19:09] WE'RE SEEING NOW COMPANIES ACTUALLY HINT OF PRUDENT GUIDANCE. [1:19:13] IF YOU LOOK AT THE MARCH QUARTER, WE ONLY HAD ONE MONTH OF WAR. [1:19:18] NOW Q2 IS BASICALLY THE FULL MONTY, IF YOU WILL. [1:19:23] YOU'RE GOING TO SEE SOME INPUTS ON SOME OF THE LARGE, [1:19:26] DIVERSIFIED TECH COMPANIES THAT HAVE 30% EXPOSURE INTO EU. [1:19:33] THEY'RE VERY ENERGY DEPENDENT. [1:19:35] SOME OF THESE MODELS ARE VERY, VERY STALE. [1:19:38] I DON'T THINK THE MARKET IS REALLY LOOKING THROUGH POTENTIALLY. [1:19:41] IF THIS GOES LONGER, THE SUPPLY CHAIN IS GOING TO HIT SOMETIME IN [1:19:45] SEPTEMBER ONWARD. [1:19:52] SOME OF THESE NAMES ARE ALSO QUITE CYCLICAL. [1:19:54] I'M THINKING OF META WHO REPORTS NEXT WEEK AS WELL. [1:19:57] ARE THEY THE PARTS OF THE MARKETS THAT MAYBE HAVE FAID AS WELL? [1:20:00] I THINK THE MARKETS ARE BASICALLY HUGE WORLDWIDE [1:20:05] MONOPOLIES THAT HAVE UNBELIEVABLE TECHNOLOGY ADVANTAGES. [1:20:10] QUITE FRANKLY, THEY'RE YEARS AHEAD OF ANY FOREIGN COMPETITION. [1:20:15] I THINK THEIR FREE CASH FLOW AND THEIR CORE BUSINESSES ARE ENOUGH. [1:20:19] THEY CAN FUND A LOT OF THIS CAPEX JUST ON THEIR CORE BUSINESSES. [1:20:23] SO I THINK A LOT OF MY CLIENTS ON THE INSTITUTIONAL SIDE HAVE TO GO [1:20:28] SOMEWHERE. [1:20:29] AND IT'S A FREE CASH FLOW GAME AND WHO HAS THE ENGINEERS AND QUITE [1:20:33] FRANKLY, WHO CAN PUSH THE AI MODELS FORWARD. [1:20:36] I THINK THOSE POSITIONS ARE GOING TO BE OVERWEIGHTED FOR SOME TIME. [1:20:42] WE'VE BEEN TALKING ABOUT HOW IN SOME WAYS THE TECH TRADE HAS BEEN A [1:20:45] SAFE HAVEN TRADE. [1:20:46] PEOPLE ARE ANALYZING WHAT THEY CAN AMID THE BACKDROP OF A WAR THAT [1:20:49] IS HIGHLY UNCERTAIN AND SEEMS LIKE IT'S ON A ROCKY TRAJECTORY. [1:20:54] CAN YOU GAME OUT WHAT YOU WERE JUST TALKING ABOUT WITH SUPPLY CHAIN [1:20:57] DISRUPTIONS? [1:20:58] WHO YOU THINK IS MOST EXPOSED SHOULD THE CONFLICT IN THE MIDDLE EAST [1:21:00] CONTINUE FOR A LONGER PERIOD OF TIME? [1:21:04] ONE NAME THAT'S NOT EXPOSED HAS TOTALLY LOCKED UP THE SUPPLY CHAIN [1:21:08] IS NVIDIA. [1:21:09] AND I THINK IF YOU LOOK AT WHAT THEY'VE DONE ON JUST INVESTMENTS AND [1:21:14] MARVEL, COHERENT, LAMENTUM, THEY PUT $5 BILLION INTO INTEL. [1:21:20] I MEAN, NICE BILLION-DOLLAR GAIN OVERNIGHT FOR NVIDIA. [1:21:25] THEY'VE LOCKED UP THE SUPPLY CHAIN. [1:21:27] ALSO BROADCOM, ARISTA, CISCO. [1:21:30] THEY HAVE VERY SOPHISTICATED SUPPLY CHAINS. [1:21:33] WHERE MY WORRY IS ALL THE INDUSTRIAL AND AUTO COMPANIES [1:21:37] THAT ARE REALLY CAUGHT FLAT-FOOTED. [1:21:39] THEY WERE REDUCING INVENTORY AT THE END OF LAST YEAR. [1:21:43] AND IF THEY DON'T HAVE THE LONG-TERM SERVICE AGREEMENTS ON [1:21:47] VOLUME AND PRICE PROTECTION, THEY'RE GOING TO SEE GROSS MARGIN [1:21:50] CONTRACTION. [1:21:51] CAN YOU WALK US THROUGH WHAT TYPE OF SUPPLY CHAIN CONSTRAINTS [1:21:54] YOU'RE EXPECTING AS THIS WAR GOES ON FOR A LONGER PERIOD OF TIME? [1:21:58] I DON'T JUST MEAN A HOT WAR. [1:22:00] I MEAN, EVEN THE CEASE-FIRE THAT WE SEE NOW WHERE YOU'RE NOT [1:22:03] SEEING ANY TRAFFIC GET THROUGH THE STRAIGHT OF RAMOS. [1:22:07] WELL, IF YOU LOOK AT WHAT'S COMING THROUGH THE STRAIGHT, [1:22:10] YOU KNOW, THIS IS A DISCUSSION, YOU KNOW, FOR SEMICONDUCTORS ON, [1:22:14] FOR EXAMPLE, HEALING OF ROMIDE OR NEON. [1:22:17] A LOT OF THE PETROLEUM-BASED OUTPUTS GO INTO SEMICONDUCTORS. [1:22:21] SO WHAT WE'RE SEEING KIND OF GOING INTO Q2 AND Q3 IS SOME [1:22:28] MATERIAL INFLATION. [1:22:29] PRICES ARE UP EVERYWHERE FROM TEA GLASS ON SUBSTRATES TO [1:22:34] BASICALLY EVERYTHING. [1:22:36] AND I THINK THAT'S GOING TO, YOU'RE GOING TO SEE IT IN THE [1:22:39] SUPPLY CHAIN. [1:22:40] BUT THE STREET MAY NOT BE TOTALLY ESTIMATING HOW MUCH [1:22:44] INFLATION WE DO AND HAVE IN THAT TECH TRADE. [1:22:46] LET'S JUST PUT IT IN CONTEXT. [1:22:51] THE BIG FOUR CLOUD TITANS ARE SPENDING OVER 700 BILLION IN [1:22:55] CAPEX. [1:22:56] AND THEN NOW YOU PUT IN A WAR AND THE U.S. [1:22:59] GOVERNMENT HAS GOT TO REPLATFORM A LOT OF WEAPONS [1:23:01] SYSTEMS THAT ARE VERY HIGHLY SILICON CENTRIC. [1:23:05] THERE IS UNBELIEVABLE DEMAND. [1:23:08] AND, YOU KNOW, IF YOU DO HAVE THAT STRAIGHT CLOSED, YOU'RE [1:23:12] JUST GOING TO SEE THE INFLATION AND POTENTIAL SHORTAGES [1:23:14] SOMETIME IN LATE Q3 AND Q4. [1:23:18] SO EVERYBODY IS TRYING TO PASS ON PRICES. [1:23:20] TED, CAN I JUMP IN? HOW PRICE-SENSITIVE IS THAT [1:23:23] DEMAND? [1:23:24] RIGHT NOW IT'S NOT PRICE-SENSITIVE. [1:23:27] I THINK IT'S GOING TO BE PRICE-SENSITIVE IN SOME OF THE [1:23:31] INDUSTRIAL AND SOME OF THE AUTO OEMS. [1:23:36] FOR EXAMPLE, IF YOU LOOK AT MICRON LAST QUARTER, THEIR DRAM [1:23:41] PRICES WERE UP 68% SEQUENTIALLY. [1:23:44] THAT'S NOT YEAR-OVER-YEAR. [1:23:47] YOU'RE GOING TO HAVE TO EAT IT. [1:23:49] AND IF YOU'RE GOING TO HAVE TO EAT IT ON, YOU KNOW, LIKE AN [1:23:52] AUTO OEM WITH HIGH MEMORY CONCENTRATIONS, IT'S GOING TO [1:23:56] SHOW IN GROSS MARGIN. [1:23:57] YOU DON'T HAVE A CHOICE. [1:23:59] AND THAT'S THE REALITY. [1:24:01] ON THE CLOUD TITAN SIDE, IT'S JUST A RACE TO AGI. [1:24:05] SO I THINK IT'S A TOTALLY DIFFERENT ARGUMENT. [1:24:08] SO, TED, WITH THAT IN MIND, TOP BUYES RIGHT NOW, JUST TO [1:24:11] WRAP IT UP. [1:24:12] WHAT ARE YOUR FAVORITES? [1:24:13] YOU KNOW, I'M TRYING TO STAY LARGE CAP, REALLY LARGE CAP. [1:24:18] AND NAMES WITH FREE CASH FLOW. [1:24:21] YOU KNOW, IT'S NOT GOING TO BE ROCKET SCIENCE TO SAY THAT IF [1:24:25] YOU'RE DOING A SEMI-PORTFOLIO, YOU REALLY NEED NVIDIA AND [1:24:29] BROADCOM IN YOUR PORTFOLIO. [1:24:31] THAT'S NUMBER ONE. [1:24:32] THOSE ARE JUST LONG-TERM BUYES. [1:24:34] AND THEY FREE CASH FLOW VERY AGGRESSIVELY. [1:24:36] I THINK NVIDIA HAD FREE CASH FLOW OF ALMOST 35 BILLION LAST [1:24:40] QUARTER. [1:24:41] AND THEN I THINK, AGAIN, THE CLOUD TITANS ARE VERY [1:24:45] INSULATED, I THINK, JUST FROM A COMPETITIVE WORLDWIDE [1:24:49] STANDPOINT. [1:24:50] AND THEN THERE ARE SOME OTHER NAMES, YOU KNOW, THAT I [1:24:54] WOULD SAY ARE UNDISCOVERED YET, LIKE A GLOBAL FOUNDRIES THAT [1:25:01] HAS HUGE OPTICAL EXPOSURE. [1:25:04] AND IF LEAD TIMES ARE MOVING OUT TO 40 WEEKS, THEY'RE GOING [1:25:07] TO SEE BETTER UTILIZATION. [1:25:09] THERE'S OTHER SPECIFIC NAMES IN THE DEFENSE AREA THAT I [1:25:12] THINK HAVE THREE YEARS OF 25% GROWTH JUST ON REPLENISHMENT. [1:25:17] AND SOME OF THOSE ARE MORE SMALL CAP IN NATURE. [1:25:21] AND THEN, YOU KNOW, I WISH WE HAD A PULLBACK IN THE MARKET. [1:25:25] MEMORY AND OPTICAL, FROM A STRUCTURAL INFRASTRUCTURE [1:25:28] STANDPOINT, ARE VERY LONG-TERM BUYS. [1:25:31] AND WE'VE GOT THREE TO FOUR YEARS OF NON-CYCLICAL GROWTH IN [1:25:35] THAT SECTOR. [1:25:36] TED, THIS WAS A CLINIC. [1:25:37] IT'S FANTASTIC TO HEAR FROM YOU. [1:25:38] THANK YOU, SIR. [1:25:39] TED MORLINSON THERE OF BAD. [1:25:41] I LOVE IT WHEN SOMEONE'S GOT SOMETHING TO SAY AND TED'S GOT [1:25:43] SOMETHING TO SAY. [1:25:44] YEAH, AND HE HAS A HISTORY. [1:25:45] HE HAS DONE THREE TOURS OF DUTY IN THE MIDDLE EAST. [1:25:47] HE HAS A REAL INTIMATE KNOWLEDGE OF EXACTLY HOW THIS WORKS, [1:25:51] WHAT THE LIKELY PROGRESSION IS, AND WHAT KIND OF TIME FRAME WE [1:25:53] COULD LOOK AT. [1:25:54] AND I THINK THAT REALLY THE SUPPLY CHAIN DISRUPTIONS COULD [1:25:56] BE SOMETHING THAT COMES TO THE SUBICONDUCTOR INDUSTRY A BIT [1:25:59] MORE THAN SOME PEOPLE ARE EXPECTING. [1:26:01] INFLATION AND PRICE INSENTIVE DEMAND AND INSTITUTIONAL BUYERS [1:26:05] GETTING CROWDED INTO CERTAIN NAMES. [1:26:07] THEY'VE GOT TO BE LONG SOMETHING. [1:26:08] THAT'S WHAT THEY'RE GOING TO BE LONG RIGHT NOW. [1:26:09] BIG SPENDERS KEEP ON SPENDING BECAUSE OF EXISTENTIAL RISK. [1:26:16] ALL OF THESE THINGS ARE THE THINGS WE'VE BEEN TALKING ABOUT. [1:26:17] THAT'S WHY I STAND WITH SOME OF THOSE BIG NAMES. [1:26:19] ON THE FLIP SIDE, HIS COMMENTS ABOUT THE AUTO MANUFACTURERS, [1:26:21] A REALLY INTERESTING POINT. [1:26:23] HOW MUCH CAN THEY EAT THOSE HIGHER COSTS AND CONTINUE TO [1:26:25] MANUFACTURE AT THE SAME PACE AND HOW MUCH CAN THEY PASS ALONG [1:26:26] TO CONSUMERS? [1:26:27] THAT'S THE TYPE OF INFLATION THAT COULD LEAD TO DEMAND [1:26:28] DESTRUCTION. [1:26:29] WE'VE BEEN TALKING ABOUT THE U.S.-Iran WAR. [1:26:39] WE'RE FOLLOWING BREAKING UPDATES ON THE U.S.-Iran WAR. [1:26:44] PAKISTANI OFFICIALS SAYING A SECOND ROUND OF PEACE TALKS ARE [1:26:45] EXPECTED AS SOON AS THIS EVENING. [1:26:48] IRAN'S FOREIGN MINISTER IS EXPECTED TO ARRIVE IN ISLAMABAD [1:26:52] WITH A U.S. SECURITY AND LOGISTICS TEAM REPORTEDLY [1:26:56] ALREADY ON SITE. [1:26:59] CITADEL IS CALLING THE MOVE SHAMEFUL WARNING THAT THE [1:27:03] MASSIVE PLANNED TO MAKE MORE THAN $400,000 TRADING ON POLY [1:27:06] MARKET'S PREDICTION MARKET. [1:27:08] THE SPECIAL FORCES SOLDIER WAS INVOLVED IN THE PLANNING AND [1:27:11] EXECUTION OF THE MILITARY EFFORT TO CAPTURE VENEZUELAN [1:27:14] PRESIDENT NICOLAS MADURO. [1:27:17] CITADEL THREATENING TO SCRAP ITS MULTI-BILLION-DOLLAR [1:27:20] EXPANSION INTO NEW YORK CITY. [1:27:23] THE FIRM BLASTING MAYOR ZORAM AMDANI FOR USING FOUNDER [1:27:26] KEN GRIFFIN TO PUSH A NEW LUXURY HOME TAX. [1:27:29] THE MASSIVE PARK AVENUE PROJECT NOW HANGS IN THE BALANCE. [1:27:36] YOU HAVE WON THE ELECTION. [1:27:38] THIS IS WHERE I REALLY START TO GET FRUSTRATED WITH [1:27:39] POLITICIANS. [1:27:41] IT'S NOT ABOUT SOCIAL MEDIA VIDEOS AND GOING AFTER PEOPLE [1:27:43] THAT GENERATE REVENUE FOR THIS ECONOMY. [1:27:45] DE BLASIO USED TO DO THE SAME CRAP. [1:27:47] YOU USED TO IGNORE THE BIGGEST EMPLOYEES IN THE CITY AND NOT [1:27:51] MEET WITH THEM. WHAT IS THE UPSIDE OF DOING [1:27:55] THAT? A LOT OF PEOPLE ARE SCRASHING [1:27:57] THEIR HEADS WITH THAT. [1:27:58] ESSENTIALLY IF YOU NEED A FUNCTIONING CITY YOU NEED TO [1:27:59] HAVE THE BIGGEST BUSINESSES THAT EMPLOY THE MOST PEOPLE [1:28:00] AND FRANKLY INVEST THE GREATEST DEGREE OF MONEY. [1:28:02] HOW DO YOU DO THAT? [1:28:03] THAT WILL BE A CHALLENGE FOR THIS MAYOR AS IT HAS BEEN FOR [1:28:05] EVERY SINGLE MAYOR THAT HAS COME BEFORE HIM. [1:28:07] WE WILL TALK ABOUT THE FEDERAL RESERVE STRUGGLING TO [1:28:10] JUSTIFY A RATE CUT. THERE IS A GOOD CHANCE THAT [1:28:15] NOW WE ARE LOOKING AT A 2026 WHERE WE COULD SEE NO RATE [1:28:19] CUTS UNLESS WE SEE A VERY DIFFERENT STORY TRANSPIRE. [1:28:22] IT IS GOING TO BE I THINK VERY TOUGH FOR THE FED TO REALLY [1:28:26] JUSTIFY A RATE CUT GIVEN WHERE WE ARE. [1:28:31] WE WILL CATCH UP WITH JOE DAVIS FROM NEW YORK CITY. [1:28:54] YOU ARE WATCHING BLOOMBERG TV. [1:28:55] TO SPEED, LET'S GET YOU UP TO SPEED. [1:28:57] WE ARE LOOKING AT THE FEDERAL RESERVE. [1:29:00] WE ARE LOOKING AT THE FEDERAL RESERVE. [1:29:04] THE FEDERAL RESERVE IS UP BY 0.4%. [1:29:07] THE NASDAQ UP BY 1.3%. [1:29:09] THE RUSSELL UP BY 0.3%. [1:29:12] THIS COMES FROM REPORTING HERE AT BLOOMBERG. [1:29:14] APPARENTLY OFFICIALS IN PAKISTAN BRIEFING REPORTERS [1:29:16] THAT THE IRANIAN FOREIGN MINISTER IS EXPECTED TO ARRIVE [1:29:19] IN ISLAMABAD LATER ON TONIGHT WITH A SMALL TEAM. [1:29:23] U.S. LOGISTICS, SECURITY, THOSE TEAMS ARE ALREADY IN [1:29:25] THE FEDERAL RESERVE. [1:29:32] THE SECOND ROUND OF PEACE TALKS BETWEEN THE U.S. [1:29:33] AND IRAN ARE EXPECTED AS A RESULT OF IMPORTANT TALKS AND [1:29:35] DISCUSSIONS WITH PAKISTANI MEDIATION TEAMS. [1:29:38] DIFFICULT TO UNDERSTAND HERE. [1:29:40] I THINK WE NEED ADDITIONAL CLARITY. [1:29:43] WE'VE BEEN TALKING ABOUT WHAT THE MARKET IS FOR THE MARKET. [1:29:46] WE'VE BEEN TALKING ABOUT WHAT THE MARKET IS FOR THE MARKET. [1:29:51] DOES IT MATTER FOR THE MARKET? [1:29:53] GIVEN THE FACT THAT IT TOOK MANY MONTHS AND YEARS TO [1:29:56] NEGOTIATE A JCPOA AND OTHER AGREEMENTS THAT THE U.S. [1:29:58] AND IRAN HAVE REACHED, A QUESTION HERE ABOUT WHAT THE BAR IS [1:30:02] FOR THE MARKET. [1:30:03] IS IT JUST NOT THE THREAT OF ESCALATION OVER THE WEEKEND [1:30:05] ISSUES THAT THE MARKET IS UNDERSTANDING OF THE MARKET. [1:30:09] WE WILL NOT BE TALKING ABOUT THE MARKET TO THE MARKET [1:30:10] TO THE MARKET AS A GAS ACTS AGAIN. [1:30:11] AMERIE IS TRACKING THE STORY IN WASHINGTON, D.C. [1:30:15] LET'S CATCH UP WITH AMERIE NOW FOR MORE. [1:30:17] AMERIE, WHAT IS THE LATEST? [1:30:19] ARE THEY TALKS OR TALKS ABOUT TALKS? [1:30:22] UNCLEAR. [1:30:23] WE STILL NEED CONFIRMATION FROM THE UNITED STATES ON EXACTLY WHAT [1:30:27] DO THEY MAKE OF THIS. [1:30:28] ARE THE TALKS EXPECTED IN THE NEAR FUTURE? [1:30:31] OR ACTUALLY THIS WEEKEND THAT COINCIDES WITH THE IRANIAN [1:30:34] going to see the vice president J.D. Vance, Steve Wyckoff, or the president's son-in-law Jared [1:30:38] Kushner actually go to Islamabad. We really need that confirmation from the United States because [1:30:44] this could just be a bilateral meeting the Iranians are having with the foreign minister and his team [1:30:50] and the mediator team to set the stage for the second peace talks. It doesn't actually mean this [1:30:56] weekend we will see peace talks. I know right now the market is certainly glaring into that, [1:31:00] but right now to have that confidence we really need confirmation from this White House. [1:31:05] Anne-Marie, how unusual is it for the mediator to brief reporters in this way before we've heard [1:31:09] from anybody else? Well, it's a little odd, but I imagine they potentially it was going to come [1:31:16] out in terms of maybe leaks. So they just said let's set the stage and brief everyone because [1:31:22] obviously this is high profile. Usually what you would have is the Iranians would announce the trip [1:31:27] on their own and the White House would announce the trip as well. Or potentially this could be a [1:31:32] scenario where the Pakistanis are really trying to cajole the Iranians to the table to show the [1:31:39] United States, look, they're coming here, they're talking to us. Why don't you try to get on the [1:31:43] plane? We don't really know what is going on exactly for the back channels, but clearly the Pakistanis [1:31:48] are doing everything they can to try to get both these sides to meet in Islamabad. [1:31:53] Sure. Especially because they've been on lockdown for the past two weeks as they expect these talks to [1:31:58] continue. Emery, you've been talking with a lot of Defense Department officials as well as [1:32:01] military representatives. And I'm just curious what is happening on the ground in terms of [1:32:06] preparing for an escalation or any kind of method to try to clear the strait of mines or any other [1:32:13] obstacles? Well, in less than 10 minutes time, we're going to hear ourselves from the DOD. We're going to have [1:32:19] Secretary Pete Hexeth and as well as chairman of the Joint Chiefs of Staff, Cain speaking. I actually [1:32:26] heard him speak yesterday at a defense conference in Nashville. And I would say he was said he was [1:32:31] pretty happy to get out of Washington for a few minutes, but he was racing back. Didn't go into [1:32:36] the details exactly what is going on in the ground. But I spoke to the former CENTCOM commander yesterday, [1:32:41] Joseph Votel, who says the ballcade is working, similar to what we heard from Bob McNally of [1:32:47] Rapidan, that they don't see a porous blockade. There's no leaky blockade, even if they're not [1:32:51] being able to grab an Iranian vessel right there in the Gulf of Oman. They are tracking that vessel [1:32:56] as it makes its way through Asia Pacific, really trying economically to hurt this regime, to try to [1:33:03] bring it to the table. Obviously, the blockade is incredibly important because for the Iranians, [1:33:08] they say they need to see the end of the U.S. blockade in order to get to the negotiating table. [1:33:14] And right now, we are not seeing the end of that blockade. And CENTCOM this morning put out a tweet [1:33:20] saying that for the first time in decades, operational, you have three U.S. aircraft carriers [1:33:25] in the Middle East. So right now, the United States definitely has a posture that at any moment [1:33:30] they could escalate. But that blockade remains firmly in place. We were talking, Emory, with Ted [1:33:35] Mortensen of Baird just a bit ago. And he was talking about how supply chain disruptions come into play [1:33:40] as this goes on for a longer period of time from the officials who you're speaking to. How much of a [1:33:45] sense of a resolution is there in the near term that could potentially reopen the strait in the way [1:33:50] that it was open before this war began any time in the near future? It's interesting because I think [1:33:57] when you look at market participants, they're looking at the screens in front of them and they're [1:34:03] saying this has got to be just a few weeks or a few months time. When you speak to individuals who [1:34:08] have either worked in the Gulf or worked in even the Strait of Hormuz, military officials, [1:34:15] this could take months. At the same time, you have not just the United States trying to find the [1:34:21] mines that the Iranians weeks ago laid, but an Axios report yesterday that they were laying fresh mines. [1:34:28] So there is not going to be enough confidence in the shipping industry to want to take that journey [1:34:34] until mines are cleared and also that they have that confidence that they're not going to get [1:34:40] basically gunned down by Iranian gunboats from the IRGC or potentially hit with Shahadi drone. [1:34:48] So this is going to take months to get the mines cleared and also the confidence from the shipping [1:34:54] industry to go to the Strait of Hormuz. So this is not going to happen in days. And even when the [1:34:59] Strait of Hormuz is quote unquote open again, like we saw with the Houthis in the Red Sea, [1:35:04] it might take a long time for companies to decide, OK, we're going to go back to the normal process [1:35:11] there because they are concerned about putting their employees in harm's way. Very few want to take that [1:35:17] risk right now. That's for sure. Very few want to take that risk at the moment. Anne-Marie, [1:35:21] down in Washington. Anne-Marie, thank you. The equity market fading that initial move. We're off [1:35:25] session highs. We're still positive, but off session highs up by 0.3 to 0.4 percent on the S&P 500. [1:35:31] Very unclear what's about to happen here going into the weekend. But I think we're all got a lot of [1:35:36] experience of this now over the last two months throughout all of this that things can change [1:35:39] pretty quickly from minute to minute. I'll see your green doubt on Sunday night and you'll see mine. [1:35:42] I mean, that's essentially what we're looking for because ultimately there's always some kind of drama [1:35:46] that escalates right heading into the open of futures on Sunday evening. Look, I think people are watching [1:35:53] this saying are we at least going to avoid an escalation over the weekend so I can actually go [1:35:56] out with my family on Sunday or is it going to be. You get Saturday. Thank you. [1:36:00] I appreciate some days along God. So sweet. I know it's true. But Monday morning starts Sunday [1:36:05] evening and the whole week feels like one long day. Right. I mean, Sunday evening through to Friday [1:36:10] at the close. Yes. Someone on Wall Street. How are you doing. Yeah. [1:36:14] Yeah. Pretty good. Coming up next Tracy McMillan of Wells Fargo. [1:36:19] Surrogance of Clio Capital. Veronica Clarke of City. [1:36:22] I think this bull market and tech has further to go. The market's clearly looking through the short [1:36:38] term uncertainty. The market is telling you, look, [1:36:41] this is still maybe a transitory story. If you were not spending right now, [1:36:44] you're going to be left behind. The shock really supports the need to invest. [1:36:48] This is Bloomberg Surveillance with Jonathan Farrell, Lisa Abramowitz and Anne Marie Horderne. [1:36:54] Live from New York City this morning. Good morning. Good morning. Good morning. [1:36:58] For our audience worldwide, the third hour of Bloomberg Surveillance starts right now. [1:37:02] The price action, your scores look like this. Positive by 0.4% on the S&P 500. [1:37:07] On the NASDAQ, up by 1.3 for Intel, a wild ride. The stock is high up by close to 30% [1:37:13] in the pre-market. Stock supported by this and this as well. Commodities, crude, off session highs, [1:37:19] down on the session by more than 1% on WTI. Just in the last 60 minutes, these headlines [1:37:25] coming from officials in Pakistan. The Iranian foreign minister is expected [1:37:29] in Islamabad later this evening. So we might be seeing talks about talks. [1:37:34] I don't even know what to do with these headlines anymore. I actually find them [1:37:36] incredibly annoying because ultimately, we don't have a sense of exactly what they mean, [1:37:40] whether it's talks about talks, whether this is progress, whether we could see [1:37:42] re-escalation over the weekend. Because ultimately, when you look at the facts on the ground, [1:37:46] they tell one story and then you hear these rumors about headlines, you know, [1:37:49] headlines about talks maybe happening in a place that's been on lockdown for two weeks [1:37:53] preparing for these talks. What do you do with that? So what do you do? [1:37:57] This is what people have been doing. You ignore that and you pile into U.S. [1:37:59] equity. I get it. 80% of companies have beaten earnings [1:38:02] expectations so far. You crowd into the tech names, the chip players, the hardware names that are up for 17 [1:38:08] consecutive days supported by fundamentals and results, Intel, Texas Instruments, and the big [1:38:13] spenders next week. They're going to keep on spending and then the big customers. [1:38:17] And what Ted Mortensen just said of Baird, he was saying essentially a lot of the buyers are [1:38:21] price insensitive, right? This is an existential risk. We keep talking about that. [1:38:24] Expect those capex plans to only increase from the likes of Microsoft and Amazon. [1:38:29] At what point are you looking at inflation that happens in one sector that starts to have [1:38:35] ramifications for the rest of the consumer world? And I think that is where people's minds [1:38:39] maybe will float, but it's very difficult to understand what else to do when you have these [1:38:44] sort of headlines that keep coming out and giving you mixed signals. And then on the flip side, [1:38:48] you see a strong economy with all these companies, they're beating earnings. [1:38:51] It's so frustrating. I'm right there with you. It is. [1:38:54] And we mentioned when this program started. Think about where we were last week heading into the [1:38:57] weekend. We were seeing social media posts from both sides around the U.S. [1:39:02] suggesting the Australia was opening. And then by the time we got to the weekend, it was anything but. [1:39:07] Yeah. And then you've got like Lego movies and you've got different gifts. [1:39:10] And so at a certain point, people are just kind of starting to tune out and say, [1:39:14] OK, what can we tolerate? And right now, what the market seems to be saying is right now, [1:39:18] $100 a barrel in the United States can be tolerable. And you know what? [1:39:21] The economy can keep going. Procter and Gamble beating expectations. [1:39:24] We talk about the semiconductors, but this is the quintessential consumer company. [1:39:28] And it is beauty is the sort of discretionary spending that people can go out and do that beat [1:39:33] expectations and saw the best return going back to 2023. So people are looking at [1:39:37] that and saying, OK, if prices stay here, we can manage through this and then we can ignore [1:39:42] these headlines because ultimately, that's what a lot of people want to do. [1:39:45] I've tuned out the world back and forth. Most people have anchored by this belief, [1:39:49] the president's committed to a de-escalatory path. Got that. Great. [1:39:54] But I'm really tuned in still to the consequence and the fallout as it continues to build from Asia [1:39:59] into Europe across the airline sector and elsewhere. And you mentioned the conversation we had with Ted [1:40:04] over a bed. He also pointed out the supply chain risk here for other sectors outside of just tech. [1:40:09] Yeah, and people have pointed out the helium, let alone the fertilizer, not just the oil that we're [1:40:15] talking about, natural gas. At what point does that start to bite any more material way? [1:40:19] And everyone says, well, if this is short term, it's OK. If it's long term, it's not. [1:40:23] Well, what does short term mean when we're coming up on two months? [1:40:26] Right. I mean, at what point do we start saying, OK, we've kind of shifted over to the medium term [1:40:30] or longer term. And if we're talking about minds that are still sitting there in the straight of [1:40:33] removes that are going to be difficult to remove, that prolongs the time frame even more. [1:40:37] So it's the physical world versus the financial world and a U.S. economy that's strong. [1:40:42] And they're in a battle. And right now, people would rather look at longer term than try to sort of [1:40:47] game out headlines that seem to be. That's the point. It's the physical world in the present [1:40:52] and the future in the tech world. And it's a difference of time horizon. [1:40:56] And we talked about anchoring and what's anchoring investors right now. [1:40:59] Investors are very happy anchoring themselves to the future promise. [1:41:03] And that's ultimately the job of equities as an asset class. [1:41:05] Anticipatory asset class, think about the future. [1:41:08] And that maybe gives you the benefit of looking through the present. [1:41:10] Problem is, as you point out, and we've talked about throughout this morning, [1:41:13] it's not just about the very front end of the futures curve anymore. [1:41:16] Just slowly this week, start to build out to later dates as well. [1:41:20] And there's a tension here. How long can you maintain [1:41:22] the strength that's coming from the AI investment from other parts of the world? [1:41:26] And have higher commodity costs on the other side as the physical world is [1:41:29] constrained without having some sort of meeting in between with one [1:41:33] either constraining the other or else inflation coming out in a big way on the other side. [1:41:37] So there is a briefing taking place down in Washington, D.C. [1:41:39] at the Pentagon at the moment. Anne-Marie is going to stand by. [1:41:42] Track those headlines for us. We'll catch up with her in about five minutes time to break down [1:41:46] what took place there. Coming up this hour, we'll also catch up with Tracy [1:41:48] McMillan of Wales Fargo with stocks rising on renewed optimism for peace talks. [1:41:52] We'll speak to Sarah Kunst of Clio Capital on job cuts at Meta and Microsoft. [1:41:56] And Veronica Clark of Citi expecting a Kevin Walsh-led Fed to cut interest rates later this year. [1:42:01] We begin this hour with stocks rising at crude slipping as Pakistani officials say a second round of U.S. [1:42:05] Iran talks are expected. Tracy McMillan of Wales Fargo Investment Institute joins us now for more. [1:42:11] Tracy, welcome to the program. It's been exhausting for a lot of people in Wall Street tracking these headlines. [1:42:16] Are you in a position to tune this out and tune in to the tech story elsewhere? [1:42:20] And that's exactly what investors have been doing, John. And what we have seen here is investors looking beyond the headlines. [1:42:32] And, you know, that's exactly what we instructed investors to do at the beginning of the year was it was going to be a noisy year for headlines, [1:42:41] whether, you know, the war emerged or it was it was something else. We knew that with midterms, there were going to just be a lot of things to grab investors' attention. [1:42:52] And we, you know, we wanted them to look forward and to look toward the end of the year. We still see higher equity markets by the end of the year. [1:43:02] Yes, we're going to see choppiness and we're potentially even going to see another, you know, opportunity to move cash and fixed income into [1:43:11] equities. But it's looking out and making sure that in portfolios are positioned appropriately. [1:43:19] Tracy, sometimes in your business, it's handholding with clients to try to keep them invested. I understand why they feel uncomfortable. [1:43:26] There's just this itch just reminds them a little bit of, say, February 2020 stocks are at all time highs and we haven't really seen the physical pain yet [1:43:34] from a major shock. Why is this different this time around? Yeah, so I think it's different probably in the magnitude and it's probably [1:43:43] different in the duration. You know, obviously, COVID was a two year event. But at the same time, we did see supply chain [1:43:52] disruptions. Now, this time, we don't expect such a prolonged disruption to supply chains. So investors are able to look out at, say, oil [1:44:01] futures at $76, $77 a barrel by the end of the year and anticipate that, you know, that by that point, we should have seen a [1:44:13] lot of the tensions subside. So they're going to be opportunities along the way. And we're telling investors to take advantage of those [1:44:21] opportunities. Tracy, what's long term when it comes to this conflict? Yeah. So we would say that longer term is probably [1:44:32] towards the end of the year. You know, I'm obviously head of asset allocation strategy. We're long term is 1520 years. The full [1:44:41] time horizon of an investor. But, you know, right now, markets are so myopic that we do need to get investors focused out toward [1:44:51] the end of the year. Tracy, what else do you need to see, whether it's from earnings next week or whether it's from the Federal Reserve to [1:45:00] keep your optimism intact, given the fact that potentially this could be a prolonged conflict? It does eventually start to crimp supply [1:45:07] chains on the margins. Yes. Yes. That's obviously very possible. And so to maintain the optimism, we need to continue to see earnings coming [1:45:16] through like they have so far this earnings season. Earnings are expected to be double digits this year. If we continue to maintain that [1:45:23] expectation, that should support equity prices. We're also anticipating, you know, that oil prices will start to come down. We will see a bulge in [1:45:37] inflation through the summer that should start to subside by the end of the year. That's what it's going to take, I think, to maintain the [1:45:44] optimism optimism. Tracy, it's good to hear from you as always. Tracy McMillan there of Wells Fargo Investment Institute. I think that [1:45:52] summarizes the consensus viewpoint pretty well right now for a lot of people. Yeah, people are looking for strength. They're looking to the end of the [1:45:58] year. They're saying if we're looking at long dated crude futures for December, it's somewhere in 70 to 80, low 80s. That's good for [1:46:05] us. And that gives us a sense that we're trying to direct people to the strength that we see right now in markets. Equity features in [1:46:11] markets right now. Their session highs up by 0.4 percent on the S&P 500. Let's give an update on stories worldwide this morning with your [1:46:19] Bloomberg Brief. Yahaira has more. Hi, John. We're following those breaking updates on the U.S. and Iran war. [1:46:25] Pakistani officials saying a second round of peace talks are expected as soon as this evening. [1:46:30] Iran's foreign minister is expected to arrive in Islamabad with a U.S. security and [1:46:35] logistics teams reportedly already on site. Israel reporting that it intercepted a drone bound for [1:46:43] northern part of the country before it entered Israeli territory. The IDF telling residents of a [1:46:49] South Lebanese town to evacuate before it struck its target. It follows Israel and Lebanon agreeing to [1:46:55] extend their ceasefire deal for three weeks. And just in the last hour, Meta striking a [1:47:02] multi-billion dollar deal to use Amazon chips for AI. The multi-year deal will give [1:47:08] Meta access to Amazon's chips unit while the social media giant works to develop its own chip. [1:47:13] Meta has taken a broad approach to securing chips for its AI efforts. That's your Bloomberg Brief. [1:47:18] John. Yahaira, thank you. Thank you very much. [1:47:21] Appreciate the update. I'm next on the program. We'll get you some morning calls. [1:47:23] We'll catch up with Sarah Kunst of Clio Capital on job cuts over at Meta and Microsoft. [1:47:27] And touch base with Ann Marie down in Washington, D.C. to get you the latest on [1:47:31] that briefing over the Pentagon down in the nation's capital from New York City this morning. [1:47:35] Good morning. It is the question of, are we starting to make money in AI? [1:47:59] And it looks like we are. Like all of that concern that people had about return on [1:48:04] investment, as things get deeper into corporations and other places, you're [1:48:08] starting to see people think, OK, we're really going to see a return. [1:48:11] So it becomes less about are we wasting money and more about where are we [1:48:14] spending it and how are we spending it? That was Sarah Hunt of Alpine [1:48:18] coming in on the tech trade at the moment. And what a trade it's been. [1:48:21] 17 consecutive days of gains for chips. The semiconductor index, the [1:48:25] Philadelphia semiconductor index on a 17-day winning run. [1:48:28] Record winning run and up by 40% plus over that period. Unreal. [1:48:33] Up by 4 tenths of 1% on the S&P 500. The Nasdaq 100 up by 1.3. [1:48:38] Not just encouraged by tech, but also encouraged by the prospective talks in [1:48:43] Pakistan. Now, I'm half laughing because who knows where we're going to be [1:48:45] an hour from now. I keep thinking about where we were this time last [1:48:48] week. This time last week, we thought the [1:48:50] stride of Hummers was reopening and then we found out over the weekend [1:48:53] pretty quickly it wasn't at all. And here we are a week later and not [1:48:55] much has changed. Yeah, although we are looking right now at oil [1:48:58] prices on the week that are seeing one of the biggest weekly gains or [1:49:01] the second biggest weekly gain in price going back to the start of this [1:49:05] war, as you pointed out earlier. If we maintain the gains that we're [1:49:08] seeing right now on equities, we will still be up on the week even amid [1:49:12] that increase in oil prices. So how much has this market moved on from the [1:49:16] story in the Middle East as people look to tech earnings next week? [1:49:19] We are looking for a fourth consecutive week of gains on the S&P 500 [1:49:22] potentially a little bit later on today. Crude pulling back, we're down [1:49:25] by 7 tenths of 1% on Brent. WTI down by 1.4, 94 handle on WTI [1:49:31] crude. That's taking yields down too. We're down by two basis points at the [1:49:34] front end of the curve, 382, 10s down one or two basis points to about 430. [1:49:38] That's the price action. Let's get you some morning calls. [1:49:41] First up, City upgrading Intel to buy, citing surging CPU demand. [1:49:46] I think that horse has bolted. Yeah, I think that's pretty much what [1:49:50] we're seeing right now in shares. That stock is up by 27% in the [1:49:54] pre-market, but thank you for the upgrade. Your second call from DA [1:49:57] Davidson upgrading AMD to buy, highlighting Intel's strong [1:49:59] earnings beat. And finally, Wedbush initiating Oracle with an [1:50:03] outperform, calling it the, quote, foundational infrastructure [1:50:06] provider for the AI revolution. Let's stick with tech. Meta and [1:50:10] Microsoft announcing plans to trim their workforces as AI costs surge. [1:50:14] Sarah Kunst of Clio Capital writing, nothing helps morale like [1:50:17] front-running layoffs by a month to juice earnings. Sarah joined to [1:50:20] Snap for more. Sarah, welcome to the program. Let's break this up, Sarah. [1:50:24] Let's start with Meta and then talk about Microsoft. How are you [1:50:27] reacting to the cuts over Meta? I think that they're not super [1:50:32] consequential. When you look at sort of the total savings of, hey, [1:50:36] we're going to cut 8,000 jobs. We're going to pause on hiring for [1:50:39] 6,000 more jobs, right? Carry the one and you still get maybe a [1:50:43] seven to $10 billion cost savings compared to the 100 billion in [1:50:48] CapEx they're spending this year. It's just a tiny drop in the [1:50:51] bucket. So I don't think that it's going to be huge. And it looks [1:50:54] like, you know, the street's not blown away by it either. Sarah, I was [1:50:58] going through your notes and you're far more interested, far less [1:51:01] interested in this and far more interested in ad sales. [1:51:04] This is a piece of the Meta story that I'm interested in, too. [1:51:06] There is a much bigger cyclical component in this company that [1:51:09] maybe we let onto the conversations we have every day about AI. [1:51:12] How important is that going to be next week? I think that it is the [1:51:17] story of Meta, right? We know that basically everyone, like half of the [1:51:21] globe uses Meta products. The problem is that they only make money when [1:51:26] they are serving high quality ads that people are paying a premium [1:51:30] for. And they have tried so many different sort of things to figure [1:51:34] out, hey, can we get into the influencer business? Can we get into [1:51:36] the shopping business? The answer tends to be no. It's that kind of [1:51:40] core ad unit that makes up most of their revenue. And if the global [1:51:44] economy is not great, they're going to see less revenue from that. [1:51:48] That said, Sarah, we saw a headline come out today this morning saying [1:51:52] that Meta is solidifying this multi-billion dollar to use Amazon [1:51:56] chips for artificial intelligence, talking about how they're going to [1:52:00] rent hundreds of thousands of Amazon's general purpose chips for its [1:52:03] AI efforts. Where is the AI effort going, given the fact that ultimately, [1:52:07] yes, it can actually increase the value of some of these ads. But beyond [1:52:11] that, the metaverse is kind of not there. What's next? [1:52:14] You know, it kind of reminds me of the metaverse. [1:52:18] Zuck wanted to live in the metaverse. Now he has an AI digital twin. [1:52:22] He moved his desk next to Alexander Wang. Right. I think that sometimes [1:52:26] you have to look at those things as this is a founder CEO's sort of [1:52:30] passion project. And as long as the core numbers work, it doesn't [1:52:35] necessarily matter where it goes. Ideally, you know, AI means that you're [1:52:39] getting a better feed, a more targeted feed that's relevant to your [1:52:43] interest, that ads are served that are more relevant, that they're [1:52:46] making more money on ads, that the overall product is better. And we [1:52:50] just haven't seen that yet. Sarah, you said that the layoffs are [1:52:54] non-consequential for meta. At the same time, Microsoft is offering [1:52:58] buyouts, voluntary retirements to about 7% of their staff. Do you [1:53:01] think that that is more consequential, a signal of just how companies are [1:53:04] looking to prioritize CapEx over human capital? I think that it's [1:53:09] interesting when you look at sort of that, that the kind of math [1:53:15] equation of you're getting money based on how many years you've [1:53:18] worked. Plus, if your age equals 70, this is clearly a pretty [1:53:22] targeted kind of early retirement scheme as opposed to just mass [1:53:26] layoffs. Those tend to be the people who make the most money and [1:53:30] who maybe were, you know, have been incredible contributors over the [1:53:34] years, but who are not necessarily leading on kind of the AI focused [1:53:39] revolution that Microsoft is very aggressively all in on. So I'm not [1:53:43] surprised to see it. I don't think again that it means a ton when you [1:53:47] look at their total workforce. I think it's probably a natural, [1:53:51] healthy part of the ecosystem saying, look, these are longtime warriors [1:53:53] who've done a great job. Let's let him take an early retirement if they [1:53:58] want with a very generous severance package. Great. I think the bigger [1:54:02] question for Microsoft is going to be one of their other big [1:54:05] obligations, which is open AI. And is that still sort of the golden [1:54:10] goose? Because I suspect it's not going to be. Sarah, why do you [1:54:14] suspect it's not going to be? I mean, at this point, why would you [1:54:18] suspect it is, right? You can look at Claude. You can look at Gemini. [1:54:21] You see that that open AI is not on the forefront of the enterprise [1:54:26] business. You know, they're sort of let adults be adults plan has fallen [1:54:31] apart. You know, their management senior management team who was [1:54:34] brought in to make money has all left their senior kind of tech co-founding [1:54:38] team has mostly all left. Sam is getting hit with bad press left, right [1:54:42] and center. I have a feeling that the Elon Musk lawsuit is going to be [1:54:45] very, very juicy. And so it's hard to see what's going right with open AI [1:54:50] right now. Do you think that means they need to change their strategy [1:54:53] over at Microsoft? And if so, what's that going to look like? [1:54:56] I think that Microsoft is really good at their core business. But for the [1:55:01] last few years, their stock prices really reflected sort of the glow that [1:55:06] the sort of over overflow glow of open AI. And so I think that they need to [1:55:11] focus on what they are excellent at, which is enterprise sales, which is, you [1:55:15] know, their cloud business, their chips. Those are the things that they know [1:55:20] really well and sort of stop focusing quite so much on the hype cycle [1:55:24] because while it certainly helped them on the way up, it is maybe [1:55:27] less likely to help them in this next sort of cycle unless they take it the [1:55:31] other direction and say, hey, actually, let's go find the next open AI [1:55:34] and start doing more investing in the next shiny object. [1:55:37] Sarah, do you think that the IPOs of the likes of open AI and anthropic [1:55:42] later this year, maybe even SpaceX, will be a buying opportunity for this [1:55:46] market or the sell sign that indicates that maybe some of that hype cycle [1:55:51] is over? I think a lot of my peers in venture capital are going to be [1:55:55] very excited to be able to finally cash out on some of those companies. [1:56:00] Will it be a huge buying opportunity? Probably not. We know that IPOs tend to be [1:56:06] a big bounce at IPO. When you look at the SpaceX's of the world, the premium [1:56:12] they're trying to command versus their revenue is steep. It is so steep. [1:56:17] And so I don't think that for the average retail investor or even ETF that [1:56:22] that's going to be sort of this great buying opportunity. I think it is more [1:56:27] private companies saying, look, we need to get more liquidity to our early [1:56:31] shareholders who are early employees. And we're also just running out of bag [1:56:35] holders to get money from in the private market. So we are kind of being [1:56:40] forced to go public. These are not your average IPOs. [1:56:42] That's for sure. Sarah, thank you. Appreciate your opinion. [1:56:45] Sarah Kunz there of Clio Capital. [1:56:47] Had some big earnings next Wednesday. Not just talking about tech this morning, [1:56:50] also the risk in the Middle East. We've had some comments from a briefing [1:56:53] of the Pentagon down in Washington, D.C. over the last 20 minutes or so. [1:56:57] Ann Marie has been tracking that briefing for us. Ann Marie, what's the latest? [1:57:00] Well, we heard from Secretary Hankseth and as well as General Cain, who's [1:57:04] speaking right now. Secretary Hankseth, the first thing he said was this is a [1:57:08] news phase for Iran and they have an important choice, a chance to make a [1:57:11] deal, a good deal, a wide deal. And then he talked about the blockade. [1:57:15] And he said the blockade is ironclad. He said another aircraft carrier will be [1:57:19] joining the blockade. And he said the blockade is global, similar to what we [1:57:23] heard from Bob McNally. If the U.S. Navy is unable to pick up a ship in the Gulf of [1:57:28] Amman. They will track the ship wherever it goes, most likely in the Asia [1:57:33] Pacific, as we've seen the U.S. military do and seize that ship and seize that [1:57:38] cargo. Also interesting, Secretary Hankseth talked about the fact that the United [1:57:43] States, as we've heard from the president, is less reliant on the Strait of [1:57:47] Hormuz. And he says he wants to tell Europe and Asia the time for free riding is [1:57:52] over. This is interesting at this moment because earlier this morning, Reuters was [1:57:57] reporting about an internal email within the Pentagon outlining options on [1:58:02] potentially how they can punish NATO allies that they deem have not been [1:58:07] supportive of what the United States is doing in Iran. And one of those things [1:58:11] they potentially could do is suspend Spain from the NATO alliance. And then you [1:58:17] see Secretary Hankseth really coming down on Europe and Asia when it comes to the [1:58:22] Strait of Hormuz and basically the lack of support in terms of actual hardware, [1:58:27] minesweepers, et cetera, that they had been willing to send to the region. [1:58:31] Anne-Marie, any questions just yet on insider trading? Have you heard anything yet? [1:58:34] No, not yet. I haven't heard any questions just yet on insider trading. I am sure that [1:58:40] will likely to come up. It did come up yesterday, though, with the president, given the [1:58:45] fact that, of course, there is this soldier that was a part of the operation, at least a minimal, the [1:58:51] planning to capture Nicolas Maduro earlier this year, making a huge bet on poly market that the [1:58:58] DOJ as well as the CFTC is going after him for. The president was asked about all of this in terms of [1:59:05] these massive positions that are happening that are linked to geopolitical events. And he basically said the world is a casino. [1:59:11] Anne-Marie, thank you with the latest down in Washington. We'll keep tracking those headlines for you. [1:59:16] This is the one that jumped out to me. We've got a truce. Yes, it's a fragile one, though, and I don't think you can call it [1:59:21] peaceful over in the Middle East right now. That's for sure. General Cain, Iran has attacked five merchant vessels, seized two of [1:59:26] them. That doesn't sound too peaceful to me. This is a very difficult situation to give anyone confidence that they can actually [1:59:32] start sending ships to the region. I mean, that's what a lot of people are watching is not just the traffic through the [1:59:37] strainer from those. But how many shipping companies are going to initiate a voyage to that region with the expectation that [1:59:43] will remain open right now. Very difficult to get that confidence. Who wants to take that risk? Not many people, that's for [1:59:49] sure. Equity futures at the moment on the S&P up by 0.4 percent. The opening about about 65 minutes away. We'll catch up with [1:59:55] Veronica Clark of City expecting a Kevin Walsh led Fed to cut interest rates this year. Plus, Danny's going to drop by. Danny's got some [2:00:01] morning movers for you. Energy stocks dipping on renewed, potentially renewed U.S.-Iran talks in [2:00:07] Pakistan from New York City. You're watching Bloomberg TV. [2:00:10] The opening about 60 minutes away. The scores, the price action shaping up as [2:00:34] follows. Just off session highs up by 0.4 percent on the S&P, up by 1.3 on the [2:00:39] Nasdaq. Danny's going to have some morning movers for you in just a moment. But Intel is a feature of the [2:00:43] conversation for sure, if not the feature of the conversation. Intel up in a [2:00:48] pre-market absolutely flying, supporting this move in the Nasdaq. [2:00:52] About 1.3 percent. Elsewhere, we're starting to see crude pull back from [2:00:55] highs as well. Supportive again of risk assets this morning. [2:00:58] WTI, Brent down by 4 tenths to 1 percentage point lower. Brent down to [2:01:02] 104. WTI down to let's call it 95 on the prospect. And I stress the prospect [2:01:07] because I've got no idea what happens after I sign off in about 30 minutes' [2:01:10] time. The prospect of talks between the U.S. [2:01:14] and Iran later on. The market reaction, I think, is [2:01:17] telling. And I think that this analyst from Bank of America sums it up [2:01:19] perfectly when they write. It's a statement to us that the fear of [2:01:22] missing upside seems to outweigh the fear of downside. That's kind of the [2:01:25] psychological lens through which people seem to be approaching the [2:01:28] market. You could see that today. Just the expectation maybe of talks [2:01:32] perhaps in Islamabad maybe at some point is enough to give people a sense [2:01:36] that it is time to go game on, risk on, green all the way. [2:01:39] Perhaps potentially at some point. Exactly. [2:01:42] You're going to hear a lot of that over the next 24 hours, I'm sure. [2:01:45] Yields are down with crude lower. We're off by two basis points at the [2:01:48] front end of the curve. The two-year around 381. [2:01:51] Higher on the week by around 10 or so basis points at the moment. [2:01:54] The data has been good. This Fed is not in a rush to cut [2:01:57] interest rates. And that Fed meeting next Wednesday could be [2:02:00] somewhat interesting. It's the last scheduled meeting for the Fed [2:02:03] chat. Jake Powell might not be his final meeting at the Federal Reserve. [2:02:06] I imagine there could be a lot of questions about that in the press [2:02:09] conference. I imagine the statement itself might be the risks are [2:02:12] balanced and we're on hold and everyone's going to say, yeah, yeah, [2:02:14] yeah, yeah. Let's get to the questions. Let's answer the question. [2:02:16] Are you going to stay on? What do you think of the new framework? [2:02:18] Do you think that we're measuring inflation wrong? You know, how [2:02:21] concerned are you about the politicization of the Federal Reserve, [2:02:23] et cetera, et cetera, et cetera. Is he going to give some sort of salvo or is [2:02:27] going to say, I don't have any comment on that. JONATHAN CAPEHART [2:02:34] INFLATION ABOVE TARGET FOR FIVE YEARS. WAS THAT A CHOICE? [2:02:37] FIRST QUESTION. IT'S A CHOICE DEPENDING ON THE [2:02:38] INDICTION. THAT'S HOW THAT'S GOING TO GO. [2:02:40] WELL, I MEAN, I THINK THAT IT WILL BE AN INTERESTING [2:02:41] NAVIGATION THAT HE HAS TO DO. JONATHAN CAPEHART JUST AROUND [2:02:43] THE CORNER. LET'S GET YOU SOME SINGLE NAMES. [2:02:45] DANNY BURGER HAS MORE. HEY, DANNY. JONATHAN, YOU LAID OUT WHAT'S [2:02:47] HAPPENING IN THE ENERGY SECTOR WITH THOSE MAYBE PROBABLE TALKS [2:02:51] HAPPENING ON FRIDAY WITH THE IRANIAN FOREIGN MINISTER [2:02:54] ISLAMABAD SAYING HEADING THERE AND WE ARE LOOKING AT ENERGY [2:02:56] STOCKS DROPPING ALONGSIDE THE PRICE OF OIL. [2:02:59] OXY, FOR EXAMPLE, ONE OF THE WORST FARING THIS MORNING DOWN 1.4%. [2:03:02] BUT IT IS THE TECH SECTOR THAT IS DOMINATING THIS MARKET. [2:03:06] I'LL GET TO INTEL IN JUST A MOMENT, BUT THIS OUT JUST MOMENTS [2:03:08] AGO, ABOUT HALF AN HOUR AGO, THAT META WILL BE BUYING [2:03:12] AMAZON'S GRAVITON CHIPS. THE IDEA IS TO HELP SUPPORT ITS [2:03:16] AMAZON SHARES UP 1.6%. IT IS A MULTI-BILLION-DOLLAR [2:03:22] CONTRACT, BUT WE DON'T HAVE THE EXACT DETAILS OF THE [2:03:25] FINANCIALS BEHIND IT. FINALLY, THE STORY OF THE [2:03:28] MORNING FOR THIS EQUITY MARKET, IT IS INTEL, A BIG [2:03:33] BEAT, A BIG EXPECTATION BEAT WHEN IT COMES TO THE REVENUE [2:03:35] GOING FORWARD. IF INTEL HOLDS AT THIS LEVEL, [2:03:38] IT WILL TRADE AT A RECORD HIGH FOR THE FIRST TIME SINCE [2:03:40] 2000. IT IS ONE OF THE BEST POST-EARNINGS DAY [2:03:43] REACTIONS EVER FOR INTEL, UP 26% IN THE PRE-MARKET. [2:03:45] IT IS A LITTLE BIT OF THE SEMICONDUCTOR INDUSTRY. [2:03:49] AMD ARM, ALL UP AT LEAST 7.3%. [2:03:53] WHAT WILL BE THE 18TH STRAIGHT DAY FOR SEMIS, THE PHILADELPHIA [2:03:55] STOCKS INDEX TRADING HIGHER, A RECORD THAT IT HAS NEVER [2:03:57] ACHIEVED BEFORE, JONATHAN. A WIN FOR THE U.S. [2:03:59] TAXPAYER. I GUESS WE CAN SAY THAT, RIGHT? [2:04:01] GOT A STAKE IN IT? [2:04:03] IT IS ACTUALLY REALLY GOOD. I THINK SOME PEOPLE MIGHT SAY THAT [2:04:07] IT IS A LITTLE BIT OF THE COMPANY. [2:04:11] IT IS A LITTLE BIT OF THE COMPANY. [2:04:13] YOU GIVE A LITTLE TO THE COMPANY, BACK THEM WITH THE [2:04:15] WORLD'S BIGGEST PAYCHECK, AND ULTIMATELY YOU END UP WITH [2:04:17] POSITIVE RETURNS. [2:04:19] SPIRIT IS SO DIFFERENT. [2:04:21] YOU HAVE A PROBLEM WITH SPIRIT. LET'S TALK ABOUT IT. [2:04:25] I FEEL LIKE THIS BUSINESS MODEL HAS BEEN IN QUESTION. [2:04:29] THEY DIDN'T MANAGE TO GET THE SPIRIT JET BLUE DEAL ACROSS. [2:04:33] YOU COULD MAKE AN ARGUMENT THAT WAS A HUGE MISTAKE, WHICH [2:04:35] A LOT OF PEOPLE ARE MAKING. SPIRIT NOW IS FAILING. [2:04:39] THERE ARE OTHER AIRLINES COMING OUT BEATING EXPECTATIONS. [2:04:43] THIS IS NOT A TIME OF WHOLESALE FAILURE ON THE AIRLINE [2:04:45] INDUSTRY. SPIRIT NEEDS A LIFELINE. [2:04:47] FOR THE GOVERNMENT TO BAIL THEM OUT, IS THAT A GOOD [2:04:49] INVESTMENT FOR U.S. TAXPAYER DOLLARS? [2:04:51] IT IS A GOOD INVESTMENT. [2:04:55] IT IS A GOOD INVESTMENT. [2:04:57] IT IS A GOOD INVESTMENT. [2:04:59] ON THIS ONE, THERE IS OBVIOUS PUSHBACK. [2:05:01] THIS INDUSTRY HAS BEEN SO MISHANDLED OVER THE PAST TWO [2:05:03] ADMINISTRATIONS. THE PREVIOUS ONE BLOCKING THE [2:05:06] DEAL BETWEEN SPIRIT AND JET BLUE, THAT MADE NO SENSE. [2:05:08] PEOPLE ARE MAKING THE ARGUMENT NOW THAT THIS MAKES NO SENSE [2:05:10] EITHER. AT A CERTAIN POINT, WHERE [2:05:12] IS THE RHYME AND REASON FOR WHICH COMPANIES YOU WANT TO TAKE A [2:05:14] STAKE IN? IS THIS TO GIVE SOME SORT OF BOOST TO A [2:05:18] STRATEGIC SECTOR IN THE UNITED STATES AND A [2:05:20] STRATEGIC SECTOR IN THE UNITED STATES? [2:05:24] THE UNITED STATES IS IN ONE OF THE HEALTHIEST SHAPES IN A [2:05:26] LONG TIME. [2:05:28] IF YOU WANT TO SACRIFICE FREE MARKETS, PEOPLE CAN SUPPORT [2:05:32] THAT. PEOPLE CAN GET BEHIND THAT. [2:05:36] INCREASINGLY, PEOPLE COME ON AND THEY SAY WE DON'T REALLY GET [2:05:38] THIS ONE. WE WILL SEE WHAT HAPPENS. [2:05:42] RIGHT NOW, THE PRESIDENT IS SAYING THE U.S. [2:05:46] COULD OWN A STAKE IN SPIRIT. [2:05:48] WE WILL SEE WHAT TRANSPIRES, WHETHER THEY HAVE TO DECLARE [2:05:50] BANKRUPTCY OR MAYBE WHETHER A SALE WILL BE FACILITATED. [2:05:52] YES, AND MAYBE THE DOOR IS OPEN FOR A LOT OF MOVEMENT IN [2:05:54] THAT PARTICULAR SECTOR. [2:05:56] UNITED, AMERICAN, MAYBE NOT SO MUCH, BUT MAYBE SOME OTHER [2:05:58] TARGETS IN THE MIX. [2:06:00] AS WE CATCH YOU DOWN TO NEXT WEEK, SOME BIG TECH EARNINGS IN [2:06:02] FOCUS, BUT ALSO THIS. [2:06:04] THE FEDERAL RESERVE DECISION COMING UP ON WEDNESDAY. [2:06:06] MIKE MCKEE HAS A PREVIEW FOR YOU. [2:06:08] HEY, MIKE. [2:06:11] WE'LL GET A KIND OF A NOTHING MEETING IN TERMS OF WHAT'S [2:06:13] GOING TO HAPPEN, BUT IT'S GOING TO GET AN AWFUL LOT OF [2:06:15] ATTENTION, BECAUSE IT IS, OF COURSE, JAY POWELL'S LAST [2:06:18] OFFICIAL MEETING AS CHAIRMAN OF THE FED. [2:06:21] WE DON'T KNOW IF HE'S GOING TO STICK AROUND, BUT IT'S GOING [2:06:23] TO BE ALL ABOUT JAY. [2:06:24] YOU WERE TALKING ABOUT THE QUESTIONS HE'LL GET ASKED. [2:06:27] I WOULDN'T BE SURPRISED IF WHAT HIS PLANS ARE ISN'T THE FIRST [2:06:31] QUESTION, BECAUSE THERE'S NO RATE CHANGE, NO SEP, NO DOTS. [2:06:35] ORDINARILY THE OUTGOING CHAIR VIEW OF WHAT WILL HAPPEN DOESN'T [2:06:39] REALLY MATTER, BECAUSE HE'S GOING TO BE GONE, AND WE CARE ABOUT [2:06:42] WHAT THE NEW PERSON THINKS, BUT IS POWELL OUTGOING? [2:06:45] WE DON'T KNOW WHEN KEVIN WARSH WILL GET CONFIRMED AND TAKE [2:06:50] OVER, SO IT'S POSSIBLE POWELL WILL BE AROUND FOR A WHILE. [2:06:54] THE REST OF THE WEEK IS KIND OF INTERESTING IN THAT SENSE. [2:06:58] WEDNESDAY IS THE FED MEETING, OF COURSE, AND THE REST OF THE [2:07:01] WEEK AFTER WEDNESDAY IS WHEN THE NEWS REALLY HITS. [2:07:04] WE GET THE INCOME AND SPENDING AND P.C.E. [2:07:06] NUMBERS, JOBLESS CLAIMS, EMPLOYMENT COST INDEX, AND [2:07:10] FIRST QUARTER GDP, ALL OF THAT AFTER THE FED MEETS. [2:07:14] SO NO REAL HELP TO THEM IN THEIR DECISION MAKING. [2:07:17] FRIDAY ISM MANUFACTURING SETS THE STAGE FOR THE BEGINNING OF [2:07:21] MAY DATA. SOMETIME DURING THE WEEK, THE [2:07:25] JUSTICE DEPARTMENT HAS TO APPEAL THE QUASHING OF THE SUBPOENAS [2:07:29] IN THE J-POWELL FED RENOVATION CASE. [2:07:34] OTHERWISE, THEY RUN OUT OF TIME. THEY ONLY HAVE 30 DAYS TO DO IT, [2:07:37] AND THAT'S UP AT THE END OF NEXT WEEK. [2:07:39] SO WE'LL SEE IF THEY ACTUALLY PURSUE IT OR IF WE GET THIS [2:07:42] POTENTIAL BANKING COMMITTEE LOOK AT WHAT'S BEEN GOING ON THERE [2:07:45] AND WHETHER THAT HAS ANY IMPACT ON WHEN WE SEE KEVIN WASH GET [2:07:50] CONFIRMED. THERE'S ONLY ABOUT EIGHT DAYS [2:07:55] LEFT, EIGHT LEGISLATIVE DAYS LEFT TO GET THIS DONE BEFORE POWELL [2:07:58] LEAVES OFFICE OR TECHNICALLY LEAVES OFFICE. [2:08:01] HE'LL PROBABLY BE STAYING ON. ONE THING I WOULD MENTION, YOU [2:08:04] TALK ABOUT THE PCE NUMBERS COMING UP ON THURSDAY. [2:08:08] RIGHT NOW, PCE IS AT 2.8%. AND THE BLOOMBERG SURVEY OF ECONOMISTS [2:08:12] JUST OUT THIS MORNING SAYS DURING THE SECOND QUARTER THAT'S [2:08:15] GOING TO RISE TO 3.6%. THAT'S GOING TO BRING ITS OWN [2:08:20] CONVERSATION. THANK YOU. MICHAEL, THANK YOU VERY MUCH. [2:08:22] LOOKING AHEAD TO THE FEDERAL RESERVE NEXT WEEK. [2:08:24] THIS HAS TURNED OUT TO BE SO DIFFERENT TO WHAT WE EXPECTED [2:08:27] 12 MONTHS AGO. 12 MONTHS AGO, PEOPLE WERE [2:08:31] TALKING ABOUT THE PROSPECT OF A SHADOW FED SHARE THAT WOULD BE [2:08:35] CONFIRMED EARLY, THAT WOULD TAKE THE ATTENTION AND THE POWER AWAY [2:08:39] FROM THE CURRENT FED SHARE BECAUSE ALL THE ATTENTION WOULD BE [2:08:42] ON THEM. 12 MONTHS LATER WHAT'S ACTUALLY [2:08:45] HAPPENED IS HARDLY ANY ATTENTION IS ON KEVIN WALSH BECAUSE AT [2:08:47] THE MOMENT HE'S GOING TO STRUGGLE TO GET CONFIRMED BECAUSE [2:08:50] FOR AS LONG AS THEY GO AFTER THE FEDERAL RESERVE WITH THIS DOJ [2:08:53] INVESTIGATION, THIS GETS PUSHED OUT AND IT GETS PUSHED OUT. [2:08:57] AND PRESIDENT TRUMP HASN'T TAKEN AN OFF-RAMP QUESTION NOW. [2:08:59] HE'S BEEN GIVEN ANOTHER OFF-RAMP. WILL HE BE GIVEN THAT? [2:09:02] WILL HE TAKE THAT TO ALLOW KEVIN WALSH TO GET TO THE [2:09:04] FEDERAL RESERVE? THERE'S ALSO A BIG DIFFERENCE IN TERMS OF THE [2:09:06] ECONOMIC BACKDROP. PEOPLE EXPECTED BOOM TIME [2:09:10] CONDITIONS FOR THE U.S. ECONOMY AND DISINFLATION BECAUSE [2:09:13] OF SOME OF THE EFFECTS, THE YEAR-OVER-YEAR EFFECTS THAT [2:09:15] WERE RUNNING OFF. WE NOW HAVE THE OPPOSITE. [2:09:18] WE'VE GOT A BOOM TIME CONDITIONS SUPPRESSED BY SOME OF THE [2:09:21] HIGHER PRICES AND POTENTIALLY INFLATION CREEPING HIGHER THAN [2:09:23] PEOPLE PREVIOUSLY EXPECTED. IT IS A DIFFICULT THING FOR THE [2:09:25] FEDERAL RESERVE TO GET THEIR HANDS AROUND AND FRANKLY BOND [2:09:27] MARKETS ARE SO IN A TIZZY THAT THEY SIMPLY ARE STAGNANT. [2:09:32] VERONICA CLARK OF CITY WRITING THIS ON THE FED'S NEXT MOVE, [2:09:35] WE EXPECT A COMBINATION OF SOFT DECOR INFLATION AND LOOSENING [2:09:38] LABOR MARKETS TO HELP WASH CONVINCE THE MAJORITY OF THE [2:09:40] FOMC TO CUT RATES BEFORE THE END OF THE YEAR. [2:09:43] VERONICA JOINS US NOW FOR MORE. GOOD MORNING. [2:09:45] GOOD TO SEE YOU. KEVIN WASH DID NOT REALLY [2:09:47] ARTICULATE A GOOD ARGUMENT TO CUT INTEREST RATES THIS WEEK. [2:09:49] IS THAT BECAUSE THERE ISN'T ONE OR BECAUSE HE DIDN'T WANT TO? [2:09:51] I THINK HE JUST REPEATED THIS, YOU KNOW, PRODUCTIVITY [2:09:55] ENHANCEMENTS, GAINS FROM AI, THINGS LIKE THAT. [2:09:57] THAT CAN BE DISINFLATIONARY. WE CAN CUT AND NOT STAND IN THE [2:09:59] WAY OF STRONGER GROWTH. THAT'S THE ARGUMENT THE [2:10:02] ADMINISTRATION HAS BEEN MAKING, THOUGH. [2:10:03] I DON'T THINK THAT'S ONE THAT OTHER FED OFFICIALS ARE GOING TO [2:10:06] BUY UNTIL WE SEE IT IN SOFT INFLATION DATA ITSELF. [2:10:09] SO, YEAH, HE WAS NOT TERRIBLY CONVINCING, AT LEAST, IN [2:10:13] TERMS OF THE NEAR-TERM PATH. [2:10:14] HAS YOUR TIMING FOR CUTS CHANGED? [2:10:16] HAS IT BEEN PUSHED OUT BECAUSE OF THE SHOCK OF THE MIDDLE EAST? [2:10:18] YEAH, WE DID. WE PUSHED IT OUT TO SEPTEMBER. [2:10:21] BUT I THINK WHAT WE'LL SEE, AND OBVIOUSLY IT WILL DEPEND, OF [2:10:24] COURSE, ON WHAT HAPPENS IN THE MIDDLE EAST WITH OIL PRICES, BUT [2:10:26] THE FOCUS THE NEXT COUPLE MONTHS WILL ABSOLUTELY STILL BE [2:10:28] INFLATION DATA. WE'LL GET SOME UNCOMFORTABLY STRONG READINGS [2:10:31] EVEN IN APRIL AND MAY, I THINK. [2:10:33] BUT AS WE GET INTO THE SUMMER, I DO THINK WE WON'T SEE THE [2:10:37] SUBSTANTIAL PASS THROUGH OF HIGHER ENERGY PRICES TO CORE [2:10:39] INFLATION. AND WHAT HAS HAPPENED IN THE SUMMER THE LAST FEW [2:10:42] YEARS IS THAT THAT'S WHEN THE LABOR MARKET STARTS TO LOOK [2:10:45] WEAKER. AND I THINK THAT WILL REPEAT. AND THEN THE PATTERN [2:10:48] HAS BEEN THAT THEN THE FED CUTS IN SEPTEMBER. [2:10:50] HOW MANY SCENARIOS DO YOU HAVE RIGHT NOW ON YOUR DESK AND [2:10:53] POTENTIAL OUTCOMES FOR EMPLOYMENT AND INFLATION? [2:10:55] TOO MANY. EVEN IF WE WEREN'T DEALING WITH THE OIL SHOCK, [2:11:01] THIS IS A LABOR MARKET THAT'S VERY UNLIKE ANY THAT WE'VE SEEN [2:11:04] BEFORE. AND SO IT'S REALLY HARD TO FORECAST WHEN YOU DON'T [2:11:07] HAVE HISTORICAL COMPARISONS TO BASE THOSE FORECASTS ON. [2:11:10] SO ALL WE'RE REALLY DOING IS FOR THE LABOR MARKET AT LEAST [2:11:13] LOOKING AT THIS IS A VERY LOW HIRE, LOW FIRE DYNAMIC. [2:11:16] IT'S HAPPENED THIS WAY FOR A WHILE. WHAT THAT HAS MEANT THE LAST [2:11:19] FEW YEARS IS STARTING WITHIN THE NEXT COUPLE OF WEEKS, JOBLESS [2:11:22] CLAIMS START TO RISE IN THE SUMMER, AND THAT PROCEEDS A [2:11:26] RISE IN THE UNEMPLOYMENT RATE BY THE END OF THE YEAR, JUST [2:11:29] THREE TO FOUR TENDS. IT'S GRADUAL. BUT A LOT OF WAYS THIS IS [2:11:33] AN ECONOMY THAT IS VERY UNFAMILIAR TO US. [2:11:35] IS THERE ANYTHING ABOUT THE EARNINGS THAT GIVES YOU PAUSE, [2:11:38] GIVEN THE FACT THAT WE'RE SEEING VERY STRONG EARNINGS, [2:11:40] CONSUMER DISCRETIONARY COMPANIES COMING OUT AND SAYING THAT [2:11:42] DEMAND REMAINS STRONG, EVEN AMID SOME HIGHER PRICES. [2:11:45] AND YOU HAVE CREDIT CARD COMPANIES COMING OUT AND SAYING [2:11:48] PEOPLE ARE STILL SPENDING. AT A CERTAIN POINT, DO YOU SAY, [2:11:51] IF PRICES REMAIN WHERE THEY ARE RIGHT NOW IN THE ENERGY [2:11:54] COMPLEX, WE CAN MAINTAIN THIS LEVEL OF ACTIVITY, AND FRANKLY, [2:11:57] THAT BECOMES MORE INFLATIONARY THAN IT DOES SUPPRESSIVE OF GROWTH. [2:12:00] YEAH. THE EARNINGS AND THE SURVEY DATA AND THESE ANECDOTES, [2:12:03] THEY'RE INTERESTING. BUT IT'S ALWAYS KIND OF HARD TO TRANSLATE [2:12:06] THOSE TO MACRO FORECAST, YOU KNOW, AGGREGATE DATA. I MEAN, IF [2:12:09] ANYTHING, IN SOME CASES, IT SEEMS LIKE EARNINGS ARE STRONGER [2:12:12] BECAUSE OF JOB LOSSES AND CUTTING COSTS THAT WAY. [2:12:15] WHAT WE'VE SEEN IN THE ACTUAL SPENDING DATA THE LAST FEW MONTHS [2:12:18] OR SO IS, YES, CONSUMPTION IS VERY RESILIENT. [2:12:21] THAT'S BEEN THE STORY FOR THE LAST FEW YEARS. [2:12:23] BUT WE WERE SLOWING AS WE WERE GETTING INTO THIS YEAR. [2:12:26] OF COURSE, WE HAD A VERY STRONG RETAIL SALES PRINT THIS WEEK. [2:12:29] A LOT OF THAT IS NOMINAL, HIGHER GAS PRICES. [2:12:31] THERE IS A BIT OF A CUSHION RIGHT NOW FOR SOME CONSUMERS, [2:12:34] YOU KNOW, GETTING HIGHER TAX REFUNDS THAN THEY DID LAST YEAR. [2:12:37] BUT THE PRIMARY DRIVER OF PEOPLE ARE SPENDING OR NOT I THINK IS [2:12:42] AGGREGATE TAKE-HOME LABOR INCOME AND THAT IS SLOWING THIS YEAR. [2:12:44] VERONICA, GOOD TO SEE YOU. [2:12:45] STILL LOOKING FOR RATE CUTS. EXPECTING THE FIRST ONE TO COME IN [2:12:47] SEPTEMBER. WE'LL SEE VERONICA CLARK OF CITY [2:12:49] RESEARCH TRACKING THE HEADLINES OUT OF THE MIDDLE EAST [2:12:52] AND CONTINUING TO LOOK FOR SOME EXTRA CLARITY ABOUT WHAT MAY OR [2:12:55] MAY NOT HAPPEN THIS COMING WEEKEND. [2:12:56] ANNE-MARIE HAS MORE FROM WASHINGTON. [2:12:58] ANNE-MARIE. [2:12:59] WELL, JONATHAN, THOSE HEADLINES FROM EARLIER ABOUT WHETHER [2:13:01] OR NOT WE SEE PEACE TALKS, IT SOUNDS LIKE THE FOREIGN MINISTER IS [2:13:04] ON HIS WAY POTENTIALLY TO ISLAMABAD. [2:13:07] THAT'S THE FOREIGN MINISTER OF IRAN. [2:13:08] BUT THIS IS PART OF A REGIONAL TOUR. [2:13:10] AND THIS IS ACCORDING TO IRANIAN PRESS. [2:13:12] SO HE'S NOT JUST MAKING A STOP IN ISLAMABAD. [2:13:15] HE'LL ALSO BE GOING TO MUSKET AND MOSCOW, ACCORDING TO THIS [2:13:18] REPORT. [2:13:19] THAT GIVES A LITTLE BIT MORE CLARITY ON POTENTIALLY WHETHER OR NOT [2:13:23] WE WERE GOING TO SEE A SECOND ROUND OF TALKS TO THE UNITED STATES [2:13:27] AND IRAN THIS WEEKEND. [2:13:28] WE DON'T HAVE CONFIRMATION FROM THE UNITED STATES. [2:13:30] AND IT DOESN'T SOUND LIKE THAT'S THIS TRIP ABBAS ARACHI IS MAKING. [2:13:34] IT SOUNDS LIKE HE'S GOING THERE JUST TO SPEAK TO MEDIATORS. [2:13:38] SOUNDS LIKE THESE ARE TALKS ABOUT FUTURE TALKS, NOT THE ACTUAL BIG [2:13:42] TALKS THEMSELVES. [2:13:43] ANNE-MARIE, THANK YOU. [2:13:44] DOWN IN WASHINGTON. [2:13:45] IT'S ALMOST COMICAL, ISN'T IT? [2:13:46] I WOULD SAY IT'S NOT JUST CLARITY. [2:13:48] IT'S ALSO COVER. [2:13:49] IT'S COVER TO GO TO ISLAMABAD JUST IN CASE THERE HAPPEN TO BE [2:13:53] TALKS ABOUT TALKS ABOUT TALKS. [2:13:54] A REGIONAL TOUR. [2:13:55] I LOVE WHERE THEY'RE GOING TO ISLAMABAD AND MOSCOW TO TALK [2:13:58] TO PEOPLE JUST IN GENERAL BECAUSE I WANT TO SEE WHAT'S GOING [2:14:00] ON OUT THERE. [2:14:01] RIGHT? [2:14:02] GET A FEEL FOR THINGS? [2:14:03] YEAH. [2:14:04] JUST TAKE SOME, YOU KNOW, GET SOME KNICK-NACKS. [2:14:05] BRING THEM HOME TO THE KIDS. [2:14:06] IF J.D. THE VICE PRESIDENT HAPPENS TO GET ON A PLANE TOO [2:14:08] AND WE CAN HAVE TALKS. [2:14:09] FANTASTIC. [2:14:10] IT'S NOT EXACTLY BECAUSE WE WANT TO NEGOTIATE. [2:14:12] IT WOULD BE COMICAL IF IT WASN'T SERIOUS BUT OF COURSE IT'S [2:14:15] MENTALLY, IMMENTALLY SERIOUS. [2:14:17] WHAT DO YOU DO WITH THIS THOUGH? [2:14:18] AGAIN, THIS IS A REASON WHY PEOPLE WANT TO LOOK PAST THIS AND [2:14:20] THEY WANT TO SAY WHAT'S GOING ON WITH EARNINGS. [2:14:22] IT'S REFRESHING. [2:14:23] YOU SEE PEOPLE CHEERING THE EXCITEMENT TO BE ABLE TO TALK [2:14:25] ABOUT EARNINGS SO THEY DON'T HAVE TO DECIPHER THESE TYPES [2:14:27] OF HEADLINES. [2:14:28] BECAUSE ULTIMATELY IF YOU ASK THEM, WHAT DOES IT MEAN TO BE [2:14:31] TAKING A TOUR OF THE REGION? [2:14:33] THEY'RE JUST GOING TO SAY I LIKE THE LONG-TERM PROSPECTS OF [2:14:37] TECH. [2:14:38] OF INTEL. [2:14:39] EXACTLY. [2:14:40] UP IN A PRE-MARKET BY MORE THAN 20%. [2:14:42] FUTURES FADING JUST A TOUCH. [2:14:43] WE'RE STILL UP BY A THIRD OF 1% ON THE S&P WITH AN UPDATE ON [2:14:46] STORIES WORLDWIDE WITH YOUR BLOOMBERG BRIEF. [2:14:48] HI, JOHN. [2:14:49] PAKISTANI OFFICIALS SAYING IRAN'S FOREIGN MINISTER IS [2:14:52] EXPECTED TO ARRIVE IN ISLAMABAD TONIGHT FOR A POSSIBLE [2:14:55] SECOND ROUND OF PEACE TALKS. [2:14:57] AS ANNMARIE JUST SAID, IT LOOKS LIKE HE'S ON A REGIONAL TOUR. [2:15:00] A U.S. SECURITY AND LOGISTICS TEAM IS REPORTEDLY ALREADY ON [2:15:04] SITE TO PREPARE. [2:15:06] THE WHITE HOUSE IS GIVING A 90-DAY EXTENSION TO A KEY [2:15:09] SHIPPING WAIVER MARKING THE LATEST EFFORT BY THE TRUMP [2:15:11] ADMINISTRATION TO MAKE IT EASIER TO MOVE OIL, FUEL, AND [2:15:15] FERTILIZER. [2:15:16] THE EXTRA TIME IS EXPECTED TO IMMEDIATELY HELP U.S. [2:15:19] REFINERS SEEKING WATERBORN SHIPMENTS OF CRUDE. [2:15:22] AND DEEP SEEK UNVEILING ITS NEW FLAGSHIP AI MODEL CALLING IT [2:15:27] THE WORLD'S MOST POWERFUL OPEN-SOURCE PLATFORM. [2:15:30] THE CHINESE START-UP IS PREVIEWING VERSIONS OF THE V4 [2:15:33] FLASH AND V4 PRO SERIES, TOUTING TOP-TIER CODING AND [2:15:36] REASONING CAPABILITIES. [2:15:39] THE NEW MODEL ARRIVES MORE THAN A YEAR AFTER DEEP SEEK [2:15:42] IGNITED A TRILLION-DOLLAR MARKET SELL-OFF. [2:15:45] THANK YOU FOR THE UPDATE. [2:15:47] UP NEXT ON THE PROGRAM WE WILL SET YOU UP FOR THE DAY AHEAD. [2:15:49] PLUS WE WILL CATCH UP WITH ED YARDENY OF YARDENY RESEARCH AS [2:15:52] INVESTORS CONTINUE TO ROTATE OUT OF SOFTWARE STOCKS AND INTO [2:15:55] HARDWARE. [2:16:21] THE CLOUD TITANS ARE BASICALLY HUGE WORLDWIDE MONOPOLIES THAT [2:16:23] HAVE UNBELIEVABLE TECHNOLOGY ADVANTAGES AND QUITE FRANKLY [2:16:26] THEY ARE YEARS AHEAD OF ANY FOREIGN COMPETITION. [2:16:30] IT IS A FREE CASH FLOW GAME AND WHO HAS THE ENGINEERS AND [2:16:35] QUITE FRANKLY WHO CAN PUSH THE AI MODELS FORWARD. [2:16:40] I THINK THOSE POSITIONS ARE GOING TO BE OVERWEIGHTED FOR [2:16:42] SOMETIME. [2:16:43] FANTASTIC CONVERSATION. [2:16:47] YOU CAN CATCH ON BLOOMBERG.COM AND THE BLOOMBERG TERMINAL. [2:16:51] EQUITY FUTURES RIGHT NOW SUPPORTED BY SOME OF THE [2:16:53] CONTENT OF THAT CONVERSATION. [2:16:55] THE POWER OF BIG TECH. [2:16:59] THE BASIS POINT IS NOT GOING TO BE OVERWHELMED. [2:17:05] WE ARE TALKING ABOUT INTEL. [2:17:09] BOND YIELDS SLIGHTLY LOWER BY THIS MOVE IN CRUDE. [2:17:14] ON 2'S, 10'S, CRUDE JUST ABOUT UNCHASED THIS MORNING. [2:17:18] SETTLING DOWN AT ABOUT 105. [2:17:20] ON THE PROSPECT OF TALKS ABOUT TALKS. [2:17:25] WE ALL KNOW AND UNDERSTAND HOW RIDICULOUS SOME OF THE [2:17:27] REPORTING HAS BEEN OVER THE LAST TWO MONTHS. [2:17:29] THAT'S ONE OF THE REASONS WHY PEOPLE ARE LOOKING PAST THIS, [2:17:31] LOOKING THROUGH IT, SETTING IT TO ONE SIDE AND FOCUSED ON U.S. [2:17:34] TECH. [2:17:35] THEY WANT TO SEE WHAT THEY CAN ANALYZE, NOT SOMETHING THEY [2:17:36] CAN'T GET A HANDLE ON. [2:17:37] THAT'S THE REASON WHY YOU ARE SEEING EACH HEADLINE HAVE [2:17:39] DIMINISHING RETURNS WHEN IT COMES TO THE MARKET IMPACT. [2:17:41] BIG WEEK COMING UP. [2:17:43] LOTS TO LOOK FORWARD TO IN TECH AS WELL. [2:17:45] COMING UP NEXT WEDNESDAY, LET'S GET TO THE CALENDAR. [2:17:47] ON WEDNESDAY, DOES ANYTHING ELSE MATTER OTHER THAN THIS NEXT [2:17:49] WEEK? [2:17:51] A FED RATE DECISION IN THE AFTERNOON, THEN IN THE [2:17:53] EVENING YOU WILL HEAR FROM GOOGLE, META, MICROSOFT AND [2:17:55] AMAZON AS WELL. THAT'S LIKE THE WEEK AHEAD. [2:17:59] I WOULD ARGUE ACTUALLY IT'S THE EARNINGS FROM THE TECH [2:18:01] COMPANIES THAT MATTERS THAT MUCH MORE THAN THE FED. [2:18:03] I THINK THE FED IS GOING TO BE A LOT OF NOISE IN POLITICS AND [2:18:05] QUESTIONS AROUND FED CHAIR POWELL. [2:18:07] THE REAL MEAT BEHIND THIS MARKET IS TECH EARNINGS, HOW MUCH [2:18:09] THEY ARE GOING TO SPEND AND HOW MUCH THEY CAN INCREASE THE [2:18:11] CAPEX CONSIDERING SOME OF THE CONSTRAINTS THE MARKET IS [2:18:13] PUTTING ON THEM. [2:18:15] LET'S KEEP IT ON TECH. [2:18:19] INTEL ON TRACK FOR A RECORD HIGH AT THE OPENING BOW. [2:18:23] TRADERS ROTATING OUT OF SOFTWARE AND PILING INTO HARDWARE. [2:18:27] WHAT ARE THE SHORT-TERM CONSEQUENCES OF THE TECHNOLOGY [2:18:31] REVOLUTION AND LOOKING PAST THE SHORT-TERM MESS IN THE [2:18:34] MIDDLE EAST? ED JOINS US NOW FOR MORE. [2:18:35] WELCOME TO THE PROGRAM. [2:18:37] JUST THE PERFECT SUMMARY OF WHERE WE ARE AT. [2:18:39] DO YOU BELIEVE THAT IS GOING TO BE THE RIGHT APPROACH? [2:18:42] I THINK SO. [2:18:46] THE MARKET DOES TEND TO LOOK AHEAD. [2:18:48] TYPICALLY IT LOOKS AHEAD BY 12 MONTHS, BUT MAYBE IT'S LOOKING [2:18:52] BEYOND THAT. THE WHOLE TECHNOLOGY REVOLUTION IS NOT [2:18:54] SOMETHING THAT'S JUST GOING TO CONTINUE TO POWER AHEAD FOR [2:18:56] just the next year. It's going to power ahead right into the right now we're in the roaring 20 20s in my opinion. I think it's going to [2:19:03] roll right into the roaring 20 30s. Do you think that there's anything concerning about the fear of missing out seems to be [2:19:10] triumphing over the fear of some sort of escalation in the Middle East given that there are potentially supply chain constraints and [2:19:18] real world implications that could hamper the expansion. Well you know my job and I guess your job [2:19:26] in a sense is to sort of anticipate where markets are going. But sometimes we just have to look at the markets and kind of get [2:19:34] the signals from the markets. And really it's really quite incredible to me how the price of oil just managed to hang around [2:19:40] a hundred dollars a barrel in the face of the Strait of Hormuz being closed now for over a month. And that implies to me that oil is [2:19:48] getting out one way or another. You know it's pretty slippery liquid and it's certainly getting out through pipelines from [2:19:56] Saudi Arabia to the Red Sea. I think the administration is kind of looking the other way and letting more Russian oil go to [2:20:02] China and India. They're not getting concerned about that upset about that. So that's that's happening. Japan is looking to get [2:20:10] more oil from Mexico. And so everybody's scrambling to figure out where they can get oil. And apparently it's there which is why the price of [2:20:19] oil is holding up around 100. And I think at this price the market here is telling us that the market can handle it especially [2:20:26] since a lot of the strength of the U.S. economy is related to the technology revolution. And that's not that dependent on an oil coming [2:20:36] through the Strait of Hormuz. It's more dependent on how much gas you can pump out of Texas and other areas. And if the oil prices stay at this [2:20:43] level do you start getting concerned about inflation that accompanies the roaring 2020 is in a way that we haven't seen at least in the [2:20:49] past couple of years. Yeah. I think there is. I think we're looking at a stalemate situation in the Middle East. I mean that's my [2:20:58] analysis du jour every day and every hour. As John pointed out things can change. But I think it's a stalemate situation. I think the United States. [2:21:08] I think the Washington feels like we won the war. The problem is there's nobody on the other side to surrender. There's a real problem with a [2:21:17] lack of of a government in Iran. So I think we're kind of stuck with a stalemate situation. And yet the stock market has been remarkably [2:21:26] strong. And I think it continues to do very well. Still using 7700 by the end of the year for the S&P 500. [2:21:34] But I don't think the inflation for quite a while. I just want to jump in there to squeeze in this question. This market's had such a [2:21:41] strong forward looking mindset impressively so. And you're right to point out that it's not just a disconnect. I think that's probably the [2:21:48] wrong word. As you point out it's just a difference in time horizon that we're looking to the future and the technological progress. And in the [2:21:54] short term we've got this mess in the Middle East. But I am curious from your perspective. I'd love to know what would get markets and [2:22:00] investors to start thinking about where we are right now and the mess in the present just a little bit more. What would [2:22:06] change things for you. Well I think the price of oil. I think we're all kind of watching it as long as it stays around here. I think the [2:22:13] market figures we can handle it. To Lisa's question about inflation. I think the market recognizes there's going to be an inflation [2:22:23] problem. But I agree with your previous interview that it's probably not going to spread to the core inflation rate and that we will be looking at [2:22:34] kind of a moderation and inflation late later in the year. But in any event kind of we've been there done it. I mean the same thing [2:22:42] happened. You know when Russia invaded Ukraine oil prices went up and that eventually settled down. Last year we had the tariff mess and that was [2:22:52] followed by a huge rally in the market. Now we've got the mess in the Middle East and already we've got a huge rally in the stock market. [2:23:00] Ed I appreciate your time. Thank you sir. As always. Thank you. [2:23:03] Ed Yardeni of Yardeni Research summarizing that time horizon difference pretty well right now. That's going to be a source of tension for the time being the mess in the [2:23:11] Middle East in the here and now and the promise of a better future and better earnings driven by big tech. And it seems like people are [2:23:17] getting a lot of comfort from the fact that oil prices haven't topped 110 $120. The new benchmark for OK seems to be around $100 a [2:23:24] barrel. That's manageable for an economy that has plenty of cash sloshing around. That at least is the message for markets. The benchmark for [2:23:31] OK has changed a bit hasn't it through March and April. You know we used to talk about long term as being months. Yeah. Now we're talking about it [2:23:38] being through the end of this year. That is a benchmark that keeps shifting. And I wonder why it has changed so substantially. [2:23:43] Brent crude this morning 106 WTI 96 coming up on Monday. We'll catch up with Laurie Calvacino of RBC Norman rule of CSI S. [2:23:51] Kristen Bidley of City Olivia wasn't up of Apollo looking forward to catching up with you all on Monday. Have a wonderful weekend from New York City. [2:23:57] Thank you for choosing Bloomberg TV. This was Bloomberg Surveillance.