Earnings Season, AI & Oil Prices in Focus

[00:00:01] Speaker 1: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE [00:00:09] Speaker 2: MARKET DAY, THIS IS THE CLOSE. WILL STRONG EARNINGS BE ENOUGH FOR THE BULLS OR WILL STUBBORN INFLATION AND A SPUTTERING CHIP TRADE KEEP A LID ON GAINS? LIVE FROM STUDIO 2 AT BLOOMBERG HEADQUARTERS IN NEW YORK, I AM SCARLETTE FOO. I AM HEMA PARMAR. WE ARE KICKING YOU OFF TO THE CLOSING BELL HERE IN THE U.S. TAKE A LOOK AT WHAT IS HAPPENING HERE ACROSS THE EARNINGS. WE ARE TALKING ABOUT THAT. THE BOND MARKET IS CLOSE TODAY. DON'T LOOK FOR ANY TWO-YEAR YIELDS OR 10-YEAR YIELDS. THE S&P 500 DOWN MARGINLY, STILL HOVERING NEAR RECORD HIGHS. BANKS ARE IN FOCUS BEFORE THEY KICK OFF EARNINGS SEASON TOMORROW. J.P. MORGAN, GOLDEN SAC, CITY AND WELLS FARGO ALL TOMORROW FOLLOWED BY BANK OF AMERICA AND MORGAN STANLEY ON WEDNESDAY. OIL PRICES RISING FOR A THIRD STRAIGHT DAY. PRESIDENT TRUMP MAY HAVE ANNOUNCED AN ENERGY TRUTH BUT POSITIONING THE MOST NEGATIVE SINCE THE EARLY DAYS OF THE PANDEMIC. [00:01:01] Speaker 3: LET'S TAKE A LOOK AT SOME OF THE BIG EQUITY MOVERS TODAY. WE ARE GOING TO KICK IT OFF WITH CHIPOTLE DOWN. STARBUCKS UP A BIT ON COMMENTS FROM STARBUCKS SAYING THEY WILL NOT BE BUYING CHIPOTLE. THIS AFTER NEWS REPORTS LAST WEEK THAT STARBUCKS WAS PURSUING AN OFFER. KEEP IN MIND THE CURRENT STARBUCKS C.E.O. WAS PREVIOUSLY THE C.E.O. OF CHIPOTLE. CHIPOTLE DOWN FOR NEARLY 5%. ALSO BUMBLE YOU ARE SEEING SHARES RALLYING THIS MORNING. THANK YOU SO MUCH FOR JOINING US. IT IS A BIG THING ABOUT THE C.E.O. THANK YOU SO MUCH FOR JOINING US. WE JUST KIND OF WENT THROUGH SOME OF THE BIG THEMES IN THE MARKET TODAY BUT EVEN WITH ALL THOSE CROSS CURRENTS, IT IS A PRETTY QUIET DAY BECAUSE THE BOND MARKET IS CLOSED AND WE DO HAVE EARNINGS STARTING OFF TOMORROW. [00:01:49] Speaker 2: THANK YOU SO MUCH FOR JOINING US. WE JUST KIND OF WENT THROUGH SOME OF THE BIG THEMES IN THE MARKET TODAY BUT EVEN WITH ALL THOSE CROSS CURRENTS, IT IS A PRETTY QUIET DAY BECAUSE THE BOND MARKET IS CLOSED AND WE DO HAVE EARNINGS STARTING OFF TOMORROW. IT FEELS LIKE THE CALM BEFORE THE STORM. BUT THERE IS A LOT OF THINGS IN THE MARKET TODAY. THERE IS A LOT OF THINGS SWIRLING UNDERNEATH THAT GIVE PEOPLE REASON TO BE CONCERNED. HOW ARE YOU LOOKING AT EQUITIES AND HOW FAIRLY VALUED WE ARE RIGHT NOW? [00:02:19] Speaker 4: GREAT TO TALK TO YOU, SCARLET. AS YOU SAID, IT HAS BEEN A RELATIVELY QUIET DAY TODAY EVEN THOUGH OIL PRICES DID JUMP UP. ON THE GEOPOLITICAL SIDE, OBVIOUSLY A LOT HAPPENING OVERNIGHT AND THIS MORNING AND OVER THE LAST COUPLE OF DAYS. SO THAT I THINK IS SOMETHING TO WATCH, BECAUSE AS THE EQUITY MARKETS THAT WE ARE GOING TO TALK ABOUT ARE GOING TO BE GOING THROUGH WHAT IS HAPPENING THIS WEEK WITH THE BANKS STARTING TO PROVIDE THEIR NUMBERS, I THINK THERE IS A LOT OF UNDERPINNINGS IN THE EQUITY MARKETS THAT ARE POSITIVE AND SOME THAT ARE VERY NEGATIVE. ON THE POSITIVE SIDE, WHAT IS HAPPENING IS ON THE POWER AND ELECTRICITY SIDE, THERE IS CRAZY DEMAND FOR POWER. SO REGARDLESS OF WHAT IS GOING ON WITH AI OR DATA CENTERS BEING POLITICALLY CHALLENGING AT THE MOMENT, THERE IS A LOT OF DEMAND FOR POWER. SO YOU SEE THIS UNBELIEVABLE JUMP IN THE VALUE OF THE EQUITIES AROUND CONSTELLATION OR COMPANIES THAT ARE PRODUCING GOODS THAT CAN BE USED FOR EXPANSION OF THE GRID. THE OTHER SIDE ALSO IS THE NEGATIVE SIDE WHERE YOU SEE THIS NARROW SORT OF CHANGES IN THE MARKETS WHERE A FEW STOCKS ARE GOING UP A LOT AND A LOT OF STOCKS HAVE COME DOWN OR ARE STAYING SORT OF PUT. SO I THINK WE WILL SEE SOME MORE OF THAT HAPPENING OVER THE [00:03:48] Speaker 2: NEXT WEEK OR TWO. YOU ALSO POINT OUT THAT WE HAVE A SUPPLY SHOCK, A HIDDEN SUPPLY SHOCK IN THE EQUITY MARKET AS WELL. WE SPEND SO MUCH TIME TALKING ABOUT HOW MUCH DEBT THE GOVERNMENT NEEDS TO ISSUE, HOW MUCH DEBT THE HYPERSCALERS NEED TO ISSUE TO FUND THEIR AI BUILDOUT THAT WE KIND OF OVERLOOK SOMETIMES THE IMPACT OF THE EQUITY ISSUANCE AS WELL. HOW IS THAT PLAYING OUT? [00:04:07] Speaker 4: ABSOLUTELY. I THINK BECAUSE OF THE IPOs WE'VE ALREADY SEEN WITH OTHER POTENTIAL IPOs AND EQUITY BEING ISSUED BY OTHER COMPANIES. WE ARE SEEING A LARGE PUSH INTO THE MARKETS. A LOT OF, OF COURSE, BUYBACK FROM THE CORPORATE SIDE. SO THAT HAS BEEN A VERY BIG MAJOR PART OF TAKING OUT EQUITIES BY THE CORPORATES THEMSELVES. VERSUS LOOKING AT THE BOND MARKET WHERE OBVIOUSLY THE TREASURY ALSO HAS BEEN BUYING BACK SOME OF THE BILLS THAT THEY'VE BEEN ISSUING. SO YOU SEE SORT OF SIMILAR THINGS HAPPENING BUT BY DIFFERENT PLAYERS. YOU MENTIONED OIL A LITTLE BIT. [00:04:45] Speaker 3: LET'S DIG INTO THAT MORE WITH A LOT OF THE GEOPOLITICAL CONCERNS WE ARE SEEING RIGHT NOW. HOW SIGNIFICANT OF A STRUCTURAL RISK DO YOU SEE WHAT WE ARE SEEING IN THE ENERGY SHOCK CURRENTLY AND HOW DO YOU SEE THAT PLAYING OUT? [00:04:57] Speaker 4: I THINK THE NEXT COUPLE OF DAYS WE ARE GOING TO SEE PROBABLY MORE CONTINUED SORT OF UGLINESS WITH THE WAR AND WHAT IS GOING ON BETWEEN THE HOOTIES AND THE SAUDIS AND IN THE REGION. THAT COULD PUSH OIL PRICES FURTHER UP THAN WHERE THEY ARE TODAY AND AS WE STARTED TALKING THEY WERE CLOSER TO 107. I THINK THEY STARTED THIS MORNING CLOSER TO 104. BUT THE BIG ISSUE OBVIOUSLY IS THE ONE THAT PRESIDENT TRUMP HAS BEEN TRYING TO ADDRESS OVER THE WEEKEND WHICH IS DIESEL PRICES. THERE IS OBVIOUSLY ALSO JET FUEL PRICES. HERE WE SIT IN THE U.S. AND WE DON'T REALIZE THAT WE AT LEAST HAVE THE SUPPLY OF THESE GOODS. ONE IS THE PRICE WE ARE PAYING. TWO IS HAVING ACCESS TO THESE FUELS. IN A LOT OF OTHER PLACES THERE IS AN ISSUE ABOUT SUPPLY AT ANY PRICE. SO WHEN YOU GO OUTSIDE OF THE U.S. THE ISSUE OF DIESEL BECOMES EVEN BIGGER THAN OURS. THE BIG THING THAT WE WERE TALKING ABOUT OVER THE LAST COUPLE OF DAYS AGAIN IS THE CONVERSATION PRESIDENT TRUMP HAD WITH PRESIDENT PUTIN. BUT RIGHT NOW RUSSIA, WHICH WAS A VERY BIG EXPORTER OF DIESEL, APART FROM STOPPING ITS DIESEL EXPORTS, ALSO HAS ALMOST A THIRD OF ITS DIESEL PRODUCTION IMPACTED BY THE WAR. THE COST OF GETTING IT, INSURANCE COSTS, GETTING IT ACROSS THE BORDER IS HIGHER AND THE ABILITY TO GET THE SUPPLY OUT IS HARDER. SIMILARLY IN CHINA, WHERE THEY HAVE ALSO PUT A STOP TO DIESEL EXPORTS. SO YOU ARE SEEING A LOT OF POTENTIAL ISSUES, NOT JUST WITH CRUDE OIL, BUT MORE IMPORTANTLY WITH THE PRODUCTS. [00:06:38] Speaker 3: GIVEN ALL OF THESE DYNAMICS, HOW IS ROCK CREEK INVESTING RIGHT NOW? WHERE DO YOU SEE THE BIGGEST OPPORTUNITY, BOTH IN TERMS OF ASSET CLASS AND GEOGRAPHY? [00:06:47] Speaker 4: INTERESTINGLY, WHAT IS HAPPENING IS WHILE WE SEE THIS HAPPENING, I THINK I MENTIONED EARLIER, ON THE SIDE OF POWER, WHERE WE SEE A LOT OF POTENTIAL GROWTH AROUND THE GRID. I THINK THAT IS SOMETHING THAT HAS BEEN GOING ON, PARTICULARLY IN THE LAST FEW WEEKS. WE SEE THAT CONTINUING IN THE REST OF THE YEAR, IF NOT BEYOND THAT. THE OTHER THING IS OBVIOUSLY ALTERNATIVE ENERGY, BECAUSE EVERYONE IS CONCERNED ABOUT IMPORTING, WHETHER IT IS LNG OR OIL. THERE WILL BE EVENTUALLY NEW LNG SUPPLIES COMING IN, EVEN A POTENTIAL OVERHANG, TOO MUCH LNG IN THE MARKETS. SO I THINK WHAT WILL HAPPEN IS PRODUCING NUCLEAR POWER AT HOME, PRODUCING RENEWABLE ENERGY AT HOME IS GOING TO BE SUPER INTERESTING. THE OTHER THING WE HAVE SEEN IS THAT SAF PRICES HAVE BECOME MUCH MORE INTERESTING AT THE TIME WHERE JET FUEL PRICES HAVE GONE THROUGH THE ROOF. [00:07:43] Speaker 2: WHAT ABOUT DIFFERENT GEOGRAPHIES? A LOT OF FOLKS SAY THAT THE U.S. IS FAIRLY VALUED, IF NOT FULLY VALUED, AND YOU CAN FIND BETTER OPPORTUNITIES ABROAD. [00:07:52] Speaker 4: SO YOU'RE ABSOLUTELY RIGHT. IF WE JUST LOOK PURELY AT PE RATIOS, U.S. DOES LOOK RELATIVELY RICH. BUT AT THE SAME TIME, WHERE COULD YOU PUT YOUR MONEY TODAY? AND WHAT YOU SEE IS DESPITE ALL THE NEGATIVE THINGS THAT WE DO HERE, THE U.S. STILL SEEMS TO BE WHERE CAPITAL HAS BEEN FLOWING AND WILL CONTINUE TO FLOW. BUT THERE ARE PLACES LIKE JAPAN WHERE THEY'RE BENEFITING FROM THE AI DIRECTLY AND INDIRECTLY AND ROBOTICS. YOU SEE HOW KOREA HAS BEEN BENEFITING FROM SIMILAR TRENDS. AND THEN YOU HAVE OTHER COUNTRIES THAT ARE REALLY INVOLVED IN INNOVATION AROUND THE THEMES THAT WILL IMPACT WHETHER IT'S THE GRID, THERE ARE SOME PARTICULAR GERMAN COMPANIES THAT ARE PRODUCING GOODS FOR THE GRID. THERE ARE THE NORWEGIANS DOING A LOT OF INTERESTING WORK ON ENERGY INNOVATION. SO I THINK A LOT OF THOSE WILL BE SUPER INTERESTING BUT IT'S VERY SPECIFIC. IT'S NOT A GENERAL SORT OF MARKET TREND. ALL SAID, THE U.S. IS STILL THE MAIN PLACE TO INVEST. [00:08:54] Speaker 2: SO IF YOU NEED TO MAKE A BROAD MARKET CALL, IT'S STILL IN THE U.S. HAVING SAID THAT, AS WE EMBARK ON THE START OF EARNINGS SEASON, WHAT ARE YOU PERHAPS MOST CONCERNED WITH? WHAT'S A RISK AREA FOR YOU WHEN YOU LOOK AT THE [00:09:05] Speaker 4: UPCOMING EARNINGS SEASON? I THINK WHILE JP MORGAN MIGHT BE DOING FINE, I THINK IN GENERAL THE BANKING SECTOR IS GOING TO BE PROBLEMATIC POTENTIALLY. BUT MORE IMPORTANTLY, I THINK, IS WHAT WILL HAPPEN WITH THE CONSUMER. BECAUSE WE HAVE SEEN CONSUMER SENTIMENT DOWN BECAUSE, OBVIOUSLY, CONSUMERS AS A WHOLE ARE CONCERNED. THERE IS A GROUP OF CONSUMERS THAT HAVE BEEN MADE WEALTHIER BY THE MARKETS, AND DEPENDING ON WHAT SECTOR OF THE ECONOMY THEY ARE WORKING ON. SO I THINK THAT CONSUMER SEGMENT, NOT BUYING, WILL IMPACT CREDIT MARKETS. IT WILL IMPACT CARS. IT WILL IMPACT A LOT OF OTHER THINGS, PARTICULARLY WITH INFLATION THAT IS AT SUCH A HIGH LEVEL FOR FOOD AND RENT AND OTHER GOODS, BUT ALSO GOING UP. [00:09:53] Speaker 2: THANK YOU SO MUCH. THANK YOU SO MUCH. THANK YOU SO MUCH. COMING UP ON THE CLOSE, THE BULL CASE FOR SPACEX, BOEING AND OTHER BIG PLAYERS IN AEROSPACE. ANTHONY VALENTINI JOINS US LIVE ON THE HEELS OF INITIATING COVERAGE ON THE GROUP. BOND MARKETS ARE CLOSED TODAY, BUT THE REST OF THE WEEK WILL MAKE UP FOR IT. WE WILL SET YOU UP FOR THE ECONOMIC DATA DELUGE WITH FORMER FED GOVERNOR BETSY DUKE. THANK YOU FOR JOINING US. THANK YOU FOR JOINING US. IT IS LIVE WITH HIS WATCH LIST FOR THE FLURY OF EARNINGS [00:10:30] Speaker ?: REPORTS COMING DOWN THE PIKE. [00:10:32] Speaker 2: ALL THAT AND MORE COMING UP, THIS IS THE CLOSE ON BLOOMBERG. TESLA'S CYBERCAB IS MAKING ITS WAY OVERSEAS TO THE PARIS MOTOR SHOW THIS WEEK, MARKING THE FIRST TIME TESLA'S ROBO TAXI WILL BE SHOWN ON THE CONTINENT AS THE COMPANY LOOKS TO EXPAND ITS FOOTPRINT OUTSIDE THE U.S. EARNINGS OF THE CYBERCAB VEHICLES TO PIVOT THE EARNINGS. DAVID, THIS GOES BACK TO THE IDEA THAT TESLA SEES ITSELF [00:10:59] Speaker 5: MORE AS A LEADING INTELLIGENCE PRODUCT MAKER RATHER THAN A E.V. MAKER. EARNINGS OF THE CYBERCAB BEING MORE OF AN A.I. COMPANY, MORE OF AN AUTONOMY COMPANY. THAT'S WHY HE'S PUSHING THE CYBERCAB, FULL SELF DRIVING WITH THE VEHICLES THEY SELL MORE. I THINK HE KIND OF SEES THAT GETTING GROWTH IN THE ELECTRIC VEHICLE BUSINESS GOING FORWARD, FOR A WHILE NOW HE'S SEEN THAT AS REALLY A LONG-TERM SLOW PLAY IN THE U.S. OVERLY COMPETITIVE IN CHINA AND AT LEAST IS COMPETITIVE IN EUROPE AND WHERE ELSE DO YOU REALLY GROW IN THE WORLD. THEY'RE KIND OF WHERE THEY ARE IN TERMS OF SALES. AND IF HE REALLY WANTS TO JUSTIFY THE COMPANY'S VALUATION, THEY'VE GOT TO OFFER SOMETHING NEW AND THERE'S LESS COMPETITION. YOU DO HAVE A LOT OF AUTONOMY IN CHINA WITH THE COMPANIES THERE. BUT IN THE U.S. IT'S BASICALLY A GAME AGAINST WAYMO AND A FEW OTHER SMALLER PLAYERS. AND THEN IN EUROPE, PRETTY SIMILAR THING AND A PRETTY NASCENT MARKET OVER THERE TOO. SO IF HE CAN GET THE CHALLENGE SOLVED USING THE CAMERA-BASED SYSTEM AS OPPOSED TO THE CAMERA-BASED SYSTEM THAT TESLA USES, HE HAS A LOT OF POTENTIAL GROWTH FOR THE COMPANY IN TERMS OF SELF-DRIVING SERVICES THAT THEY CAN OFFER. [00:12:07] Speaker 2: HOW MUCH DO WE REALLY KNOW ABOUT THE SELF-DRIVING SERVICES THAT THEY DO OFFER? I MEAN, ELON MUSK IS NOTORIOUS FOR GIVING SOME FORECAST AND THEN KIND OF WHEN IT'S TIME TO PROVIDE THE NUMBERS, YOU KNOW, GIVING A BIT OF INFORMATION AND THEN PUSHING IT FORWARD ONCE AGAIN. THAT'S RIGHT. [00:12:22] Speaker 5: THEY ARE RUNNING VEHICLES IN TEXAS, YOU KNOW, HERE IN THE U.S. THEY'VE GOT CARS ON THE ROAD. BUT IT'S BEEN PROBLEMATIC. YOU KNOW, THIS MORNING WE JUST HAD A STORY THAT THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION IS LOOKING AT THEIR VEHICLES AMID COMPLAINTS THAT THEY DRIVE TOO FAST IN SCHOOL ZONES. AND YOU SEE THIS. YOU SAW THIS WITH GENERAL MOTORS WHEN THEY HAD CREWS. YOU STILL SEE WITH WAYMO. YOU'VE GOT VEHICLES OUT THERE DRIVING WITHOUT A HUMAN. AND IT JUST TAKES TIME FOR THE MACHINE TO LEARN AND LICK ALL OF THESE DIFFERENT CHALLENGES AND THINGS THAT PEOPLE, THAT HUMAN BEINGS DEAL WITH EVERY DAY. SO TESLA HAS TO DO ALL OF THAT. IF THEY WANT TO GO TO EUROPE LIKE THEY'RE SHOWING THIS VEHICLE AT THE PARIS MOTORS SHOW, THAT'S A LOT OF GOVERNMENTS AND A LOT OF REGULATORY RULES AND LAWS THAT THEY'RE GOING TO NEED TO COMPLY WITH. SO I THINK THAT'S A LONG WAY OFF AS WELL. BUT THERE AREN'T NEARLY AS MANY VEHICLES ON THE ROAD IN THE U.S. EVEN AS ELON MUSK, I THINK, HAD PLANNED A FEW YEARS AGO. [00:13:18] Speaker 3: AND, DAVID, WHAT DO WE KNOW ABOUT THE BRAIN OF THIS CAR, THE FSD TECHNOLOGY, THE SOFTWARE? [00:13:24] Speaker 5: YEAH, THE TESLA DOES SEEM TO HAVE VERY GOOD AI AND VERY GOOD TECHNOLOGY. THE DIFFERENCE BETWEEN WHAT TESLA WANTS TO DO, AND ELON'S BEEN VERY ADAMANT ABOUT THIS, VERSUS WAYMO AND THE OTHER COMPANIES, IS HE WANTS TO USE CAMERAS. THEY ARE MUCH CHEAPER THAN THE LASER-BASED LIDAR SYSTEMS THAT WAYMO AND OTHERS USE. BUT THERE'S A LOT OF DEBATE WHETHER OR NOT THOSE CAMERAS, WHICH ARE SORT OF LIKE THEY SEE LIKE THE HUMAN EYE DOES, CAN SEE THROUGH FOG, CAN SEE THROUGH SNOW, HEAVY RAIN. OTHER CONDITIONS LIKE THAT THAT JUST MAKE IT DIFFICULT FOR THAT COMPUTER BRAIN TO READ AND MAKE SMART DECISIONS. AND, LOOK, THEY'VE GOT TO LOG A LOT OF MILES, DO A LOT OF EXPERIMENTATION, RUN INTO CASES THAT ARE RARE IN DRIVING BUT NEEDED TO BE SAFE. WAYMO'S BEEN AT THIS FOR 16, 18 YEARS, SOMETHING LIKE THAT. TESLA HAS FOR A WHILE, TOO, BUT NOT NEARLY AS LONG. AND AUTONOMOUS DRIVING, AS WE'VE DISCOVERED, IS A VERY DIFFICULT CHALLENGE TO BEAT. [00:14:17] Speaker 3: AND YOU MENTIONED WAYMO. HOW DOES THIS STACK UP IN TERMS OF COMPETITION? AND DOES THIS PUT WAYMO AT RISK? BUT THEY'VE BEEN DOING IT FOR LONGER, AS YOU'VE BEEN SAYING. BUT THE SIZE AND SCALE THAT WE SEE FROM TESLA, I'M CURIOUS HOW YOU WEIGH BOTH OF THESE TWO TOGETHER. [00:14:29] Speaker 5: RIGHT NOW, MOST EXPERTS IN THE FIELD WILL TELL YOU THAT WAYMO'S TECHNOLOGY IS IN THE LEAD. IT'S BETTER, PARTIALLY BECAUSE THEY'VE BEEN AT IT LONGER. BUT ALSO, THEY'RE ON THE ROAD, RUNNING REAL ROUTES, BRINGING IN REVENUE, FERRYING PASSENGERS AROUND IN MULTIPLE CITIES AROUND THE U.S. AND THEY KEEP ADDING TO IT. WE HAD PEOPLE FROM NVIDIA IN. AND THEY MAKE THEIR OWN SELF-DRIVING STACK. AND THEY MAKE THAT STACK FOR A LOT OF OTHER COMPANIES. THEY DO WORK WITH TESLA AND A LOT OF THE OTHER PLAYERS IN THE AUTONOMOUS INDUSTRY. AND THEY SAID WAYMO IS PRETTY MUCH STATE OF THE ART RIGHT NOW, PARTICULARLY IN THE UNITED STATES. AND THAT THEY WORK WITH TESLA. TESLA HAS GOOD TECHNOLOGY. BUT THEY WERE PRETTY CLEAR THAT WAYMO IS IN THE LEAD. SO, LOOK, ELON PUSHES HIS TEAM HARD. AND THAT'S THE ONE THAT THEY WANT TO BEAT. AND IT'S HARD TO COUNT HIM OUT. BECAUSE EVEN WHEN HE'S LATE, HE OFTEN GETS TO WHERE HE WANTS THE COMPANY TO BE. [00:15:26] Speaker 2: YEAH, ABSOLUTELY. HE HAS PROVEN THAT HE CAN DO THAT. DAVID, THANK YOU SO MUCH. DAVID WALCH, BLOOMBERG NEWS, DETROIT BUREAU CHIEF. AND JUST LOOKING AT TESLA SHARES, IT'S JUMPED ABOUT 27% SINCE LATE JULY AS INVESTORS RERATE THE STOCK. [00:15:39] Speaker 3: IT'S A GOOD POINT. IT'S A GOOD POINT. IT'S A GOOD POINT. [00:15:46] Speaker 2: BUT IT STILL HAS DOWN 15% SO FAR FOR THE WHOLE YEAR. SO I'M CURIOUS HOW WE LOOK AT THE SHARP PIVOTS THAT WE SEE THESE DAYS IN SOME OF THESE MEGA TECH STOCKS. THAT'S A GOOD POINT. LIKE EVERYTHING ELSE, IT'S BEEN A VOLATILE RIDE. COMING UP, WE'RE GOING TO TAKE A LOOK AT SHARES OF SPACEX. WE'RE GOING TO BREAK THAT EFFORT DOWN AND TAKE A LOOK AT THE BROADER AEROSPACE SECTOR AHEAD OF THE EARNINGS SEASON. THE THIRD QUARTER EARNINGS SEASON WHEN WE COME BACK. THIS IS THE CLOSE ON BLOOMBERG. IT'S TIME NOW FOR OUR TOP CALLS. A LOOK AT SOME OF THE BIG MOVERS ON THE BACK OF ANALYSTS RECOMMENDATIONS. AND FIRST UP IS ADOBE. WELLS FARGO DOUBLE DOWNGRADING THE SOFTWARE DEVELOPER FROM OVERWEIGHT TO UNDERWEIGHT, CITING CRACKS IN ITS GROWTH STORY. THE FIRM LOWERING ITS PRICE TARGET TO 225 FROM 270, ARGUEING THAT ADOBE'S FULL-YEAR TARGET LOOKS ESPECIALLY DIFFICULT GIVEN RECENT MANAGEMENT COMMENTARY. THE SHARE IS DOWN ALMOST 2%. NEXT IN LINE IS SALESFORCE BANK OF AMERICA BOOSTING ITS RECOMMENDATION TO BUY FROM UNDERPERFORM ON THE BACK OF TAILWINS FROM AI ADOPTION. ANALYSTS BOOSTING THEIR PRICE TARGET TO 285 FROM 160, SAYING THAT SALESFORCE HAS ONE OF THE MOST COMPREHENSIVE ENTERPRISE AI APPROACHES. THE SHARE IS UP 1.5%. THE SHARE IS UP 2% AT THE MOMENT AND THOSE ARE SOME OF OUR TOP CALLS. LET'S STICK WITH SPACEX AND TAKE A LOOK AT THE BROADER AEROSPACE AND DEFENSE SECTOR AS WE HEAD INTO EARNINGS. AND LAST BUT NOT LEAST IS T-MOBILE. RAYMOND JAMES UPGRADING THE CELLPHONE OPERATOR TO OUTPERFORM FROM MARKET PERFORM AFTER THE STOCK'S RECENT PULLBACK LAST WEEK. THE FIRM SETTING HIS PRICE TARGET AT $170 WHILE ARGUING THAT RECENT FEARS OVER SPACEX COMPETITION ARE OVERBLOWN AS IT IS 3-PLUS YEARS FROM BECOMING ANY REALITY. SOME OF OUR TOP CALLS. LET'S STICK WITH SPACEX AND TAKE A LOOK AT THE BROADER AEROSPACE AND DEFENSE SECTOR AS WE HEAD INTO EARNINGS SEASON. BARCLAY'S STARTING COVERAGE ON THE GROUP WITH BUY RATINGS FOR THESE COMPANIES AND DEFENSE COMPANIES. THEY ARE ALL DIFFERENT COMPANIES. THEY ARE ALL VERY DIFFERENT COMPANIES UNDER THE DEFENSE UMBRELLA BUT SPACEX IS FIVE DIFFERENT COMPANIES IN ONE. HOW DO YOU VALUE THESE DEFENSE COMPANIES AND COMPARE THEM ONE-TO-ONE? [00:17:52] Speaker 6: IT IS DIFFICULT. I WOULD ARGUE WE ARE AT THIS INFLECTION POINT WHERE THE AIRSPACE AND DEFENSE HAS CHANGED A LOT. THESE NEW COMPANIES NEED TO BE LOOKED AT IN A DIFFERENT WAY AND ANALYZED IN A DIFFERENT WAY BECAUSE THEY ARE VERY HIGH GROWTH AND THEY ARE DEPLOYING A MORE COMMERCIAL MODEL WHICH MEANS THAT EVENTUALLY WHEN THEY ARE AT SCALE THEY SHOULD BE ABLE TO DRIVE HIGHER VARGINS. WITH SOMETHING LIKE SPACEX THERE IS INCREDIBLE ASYMMETRIC UPSIDE WHICH WE TALK ABOUT IN OUR REPORT AND WE THINK THERE ARE OTHER COMPANIES TO COME THAT ARE GOING TO DO SIMILAR THINGS. [00:18:22] Speaker 2: IT FEELS LIKE FOR A WHILE DEFENSE COMPANIES WERE IN THIS LIKE LULL THEY JUST WEREN'T THAT EXCITING. THERE WASN'T A LOT OF SECULAR TAILWINDS BEHIND THEM BUT THAT HAS CHANGED COMPLETELY AND THEY ARE IN THIS NEW CYCLE. HOW LONG DOES THIS CYCLE LAST FOR? [00:18:36] Speaker 6: I WOULD ARGUE THAT IT IS A GENERATIONAL STRUCTURAL SHIFT THAT IS HAPPENING. I THINK THERE WILL BE MARKET SHARE GAIN STORY FOR A LOT OF THESE SMALLER COMPANIES. THE NEW ENTRANCE OVER THE NEXT 10-PLUS YEARS. IF YOU LOOK AT THE BUDGET IT TYPICALLY GOES IN CYCLES OF ABOUT 10 YEARS UP AND 10 YEARS DOWN. WE ARE IN THE 12TH YEAR OF THIS UP CYCLE. THE FEDERAL DEFICIT IS AT ALL-TIME HIGHS AND THE BUDGET CAN'T CONTINUE TO GROW MID SINGLE DIGITS TO HIGH SINGLE DIGITS FOREVER. I THINK LOWER COST WEAPONS SYSTEMS ARE THE FUTURE. [00:19:05] Speaker 3: WE ARE TALKING ABOUT THE LOWER COMPANIES THAT ARE GOING TO BE INVOLVED IN RECENT CONFLICTS. SPEAKING OF COMPANIES OF THE FUTURE, WE ARE TALKING ABOUT SERRANIC WHICH HAS THE FIRST DRONE BOATS THAT HAVE SAVED PEOPLE FROM THE STREET OF HOMUZE. I'M CURIOUS WITH OIL PRICES AND THE CONFLICT WE ARE SEEING RISING, WHAT DOES THAT MEAN FOR BOTH ESTABLISHED DEFENSE [00:19:25] Speaker 6: COMPANIES AND NEWER ONES? THAT IS A GREAT QUESTION. OIL HAS A BIG IMPACT IN THE AIRSPACE INDUSTRY BECAUSE IT IMPACTS TICKET PRICES FOR THE AIRLINES, WHICH COULD BEING WILLING TO FLY, AND THAT RESULTS IN LOWER AIRCRAFT DELIVERIES AND MAINTENANCE ON SAID AIRCRAFT. I WOULD ARGUE FOR SOME OF THESE EARLIER ENTRANCE, THESE NEWER COMPANIES THAT THE OIL PRICES ARE JUST NOT THAT SIGNIFICANT OF AN IMPACT TO THE FRAMEWORK OF THE BUSINESS FOR INVESTORS, JUST BECAUSE THEY ARE SUCH EARLY STAGE. IT IS REALLY MORE ABOUT THE BUDGET DOLLARS AND WHERE THEY ARE SHIFTING TO FROM EXQUISITE SYSTEMS TO MORE LOWER COST AUTONOMOUS SYSTEMS LIKE THE ONES THAT YOU MENTIONED. [00:20:05] Speaker 3: AND SO WHEN YOU LOOK AT SOME OF THE SPECIFIC DEFENSE CONTRACTORS, WHERE ARE YOU SEEING THE MOST EXCITEMENT COMPANY-WISE? [00:20:10] Speaker 6: YES, SO BASED OFF OF WHAT I WAS JUST DESCRIBING, WHERE I THINK THAT THE NEW ENTRANCE ARE GOING TO TAKE SHARE, I PREFER DEFENSE TECH OVER THE LARGE CAP DEFENSE PRIMES. WITHIN THE DEFENSE PRIMES, I PREFER LOCKHEED MARTIN OVER NORTHROP GRUMMAN. I THINK THAT LOCKHEED MARTIN HAS BETTER EXPOSURE TO THE TOP PRIORITY, WHICH IS MISSILES, VERSUS SOME OF THE OTHER EXQUISITE PROGRAMS THAT NORTHROP HAS, WHICH I THINK ARE VERY IMPORTANT, BUT MAYBE LONGER TAIL. AS A RESULT OF THAT, I THINK THAT THEY'RE GOING TO GROW QUICKER, WITH MORE OF A MARGIN EXPANSION AND A FREE CASH FLOW GROWTH STORY. AND THEN ON MORE OF THE DEFENSE TECH SIDE, MY TOP PICS ARE CARMEN, WHICH IS A MISSIL COMPONENT PROVIDER, DOWN ABOUT 60% YEAR-TO-DATE, WITH MARGINS AND GROWTH THAT ARE DOUBLE THE REST OF DEFENSE. AND THEN THE OTHER ONE THAT I WOULD HIGHLIGHT IS KREDOS, WHICH I DESCRIBE AS HAVING THE MOST SHOTS ON NET ACROSS ALL OF THIS DEFENSE TECH THESIS. THAT INCLUDES THINGS LIKE ENGINES FOR DRONES, SOLID ROCKET MOTORS FOR MISSILES, AUTONOMOUS SYSTEMS, SPACE, C4I. THEY REALLY RUN THE GAMUT. [00:21:11] Speaker 2: LOVE THE REFERENCE TO HOCKEY OR SOCCER IN THAT INSTANCE. VERY QUICKLY, WE KNOW THAT EUROPE IS INCREASING ITS DEFENSE SPENDING. DO U.S. DEFENSE CONTRACTORS BENEFIT FROM ANY OF THAT? YES, 100%. [00:21:22] Speaker 6: SO I THINK THE MOST IMPORTANT THING IS THAT THE U.S. DEFENSE BUDGET IS MORE THAN ALL OF THE EUROPEAN NATO COUNTRIES COMBINED. SO THE MAJORITY OF WEAPON SYSTEMS GLOBALLY COME FROM THE U.S. THAT EUROPEAN SPEND, THERE IS AN EFFORT IN A NARRATIVE IN EUROPE TO KEEP THAT INDIGENOUSLY, BUT THEY ARE CERTAINLY GOING TO NEED TO BUY THINGS FROM THE U.S. DEFENSE CONTRACTORS. [00:21:43] Speaker 2: ESPECIALLY AS THEY GET UP TO SPEED, THEY HAVE TO MAKE DO IN THE MEANTIME. [00:21:47] Speaker 6: EXACTLY. I WOULD ARGUE THAT THE TECH IS BETTER. [00:21:50] Speaker 2: THANK YOU SO MUCH FOR JOINING US. THANK YOU SO MUCH FOR HAVING ME. THANK YOU SO MUCH FOR JOINING US. THANK YOU SO MUCH FOR JOINING US. COMING UP ON THE CLOSE, KEY INFLATION DATA ON DECK THIS WEEK WITH A READ ON THE CONSUMER ON WEDNESDAY AND [00:22:09] Speaker ?: PRODUCER PRICES ON THURSDAY. [00:22:10] Speaker 2: THANK YOU SO MUCH FOR JOINING US. IT'S JUST ABOUT 3:30 P.M. IN NEW YORK. THIS IS THE COUNTDOWN TO THE CLOSE. I'M SCARLETTE FOO. I'M HEMMA PARMAR. TODAY IS COLUMBUS DAY, SO THE BOND MARKET IS CLOSED. THE STOCK MARKET IS OPEN, BUT WE ARE GOING TO START TO REALLY GET THE DATA COMING OUT TOMORROW AND AFTERWARDS BECAUSE BANKS START REPORTING EARNINGS TOMORROW. THEN YOU HAVE CPI ON WEDNESDAY AND PPI ON THURSDAY. EXACTLY. FOUR BANKS REPORTING TOMORROW, TWO BANKS REPORTING THE DAY AFTER, SO THEN WE'LL GET A BIG PICTURE VIEW OF EARNINGS SEASON AND WHAT THE BANKS ANTICIPATE. AND WE KIND OF SET THE TONE FOR THE REST OF THE QUARTER, CERTAINLY FOR THE REST OF EARNINGS SEASON. [00:22:53] Speaker 3: EXACTLY. WE HAVE A FED DECISION COMING OUT LATER THIS MONTH. SO MAYBE THIS WILL HELP GIVE SOME CLARITY ON HOW INFLATION IS LOOKING. [00:23:00] Speaker 2: UNTIL SOME MORE FED SPEAKERS COME OUT AND SAY SOMETHING OTHERWISE. EXACTLY. JOINING US RIGHT NOW IS BETSY DUKE. FORMER FED GOVERNOR AND THE FORMER WELLS FARGO CHAIR. KIND OF THE PERFECT PERSON TO SPEAK WITH ON A WEEK LIKE THIS. BETSY, WE MENTIONED A BUNCH OF DIFFERENT CATALYSTS. IT'S CERTAINLY QUIET RIGHT NOW, THE CALM BEFORE THE STORM. WHICH IS GOING TO BE MOST RELEVANT TO YOU FROM WHERE YOU WANT TO DO IT. WHICH IS A LITTLE BIT. WHICH IS A LITTLE BIT. IS IT GOING TO BE BANK EARNINGS? [00:23:28] Speaker ?: IS IT GOING TO BE CPI? [00:23:29] Speaker 7: IS IT GOING TO BE FED SPEAK? I THINK IT'S PROBABLY GOING TO BE MORE FED SPEAK. MORE HEARING FROM PEOPLE WHO ARE WILLING TO SAY WHAT THEY ARE ANTICIPATING AND HOW THEY ARE THINKING ABOUT THINGS. IT'S HARD FOR ONE DATA POINT TO MAKE A WHOLE LOT OF DIFFERENCE. I DON'T THINK THAT BANK EARNINGS ARE GOING TO AFFECT THE OUTLOOK FOR INTEREST RATES. THEY WILL DEFINITELY AFFECT THE MARKET FOR THE BANK STOCKS. AS FAR AS THE OVERALL MARKET, I'M NOT SURE IT'S GOING TO MAKE THAT MUCH DIFFERENCE. [00:24:02] Speaker 2: IN TERMS OF FED SPEAK AND WHAT WE HAVE LEARNED SO FAR, THE JOBS REPORT REDUCED THE URGENCY FOR ANY FOLLOW RAID HIGH AT LEAST IMMEDIATELY. WHAT HAVE YOU HEARD FROM FED OFFICIALS THAT BACK THAT IDEA UP? WHAT WOULD YOU BE LISTING FOR SPECIFICALLY AS THEY CONTINUE TO TALK ABOUT WHAT THEY SEE? [00:24:21] Speaker 7: FIRST OF ALL, I'M NOT SURE THAT THE JOBS REPORT REALLY MADE MUCH DIFFERENCE IN HOW THEY WERE THINKING. BUT THERE WERE TWO SPEAKERS OUT RECENTLY, AND THEY ARE THE TWO MOST IMPORTANT SPEAKERS AFTER THE CHAIRMAN. THE FIRST WAS JOHN WILLIAMS, THE PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK. THE FEDERAL RESERVE BANK OF NEW YORK WAS ALSO THE VICE CHAIRMAN OF THE FOMC AND THE VICE CHAIRMAN OF THE FEDERAL MAKE UP WHAT YOU MIGHT THINK OF AS AN EXECUTIVE COMMITTEE FOR THE FOMC. SO THAT SET UP AN EXPECTATION FOR NOT AT THIS MEETING, POSSIBLY IN DECEMBER. AND THAT WAS FOLLOWED UP BY PHILIP JEFFERSON WHO SAID ALMOST THE SAME THING. THE PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK WHO IS ALSO THE VICE CHAIRMAN OF THE FOMC AND THE VICE CHAIRMAN OF THE FED ALONG WITH THE CHAIRMAN MAKE UP WHAT YOU MIGHT THINK OF AS AN EXECUTIVE COMMITTEE FOR THE FOMC. SO WITH THOSE TWO COMING OUT, WE'RE SAYING HE'S NOT GOING TO MAKE ANY PREDICTIONS OR COMMENTS ABOUT HIS OUTLOOK. I THINK THAT'S A PRETTY CLEAR SIGN. [00:25:22] Speaker 3: BETSY, WITH CPI EXPECTED TO JUMP A LITTLE BIT, BUT CORE CPI BEING A LITTLE BIT MORE MODERATE, IT LOOKS LIKE GASOLINE PRICES COULD BE MAKING THE OVERALL INFLATION LOOK WORSE THAN THE UNDERLAND ECONOMY ACTUALLY IS. I'M CURIOUS HOW YOU SEE THAT IMPACTING THE FED'S EXPECTATION TO BE PATIENT. [00:25:40] Speaker 7: WELL, I THINK IT'S DEFINITELY THE CORE MUCH MORE SO THAN THE HEADLINE. EVEN THOUGH THE HEADLINE, YOU CAN NEVER FORGET, THAT'S WHAT PEOPLE FEEL. BUT I THINK IT'S REALLY THE CORE THEY'RE GOING TO BE WATCHING AND THE REAL DIFFERENCE IN CPI AND PCE ARE PRIMARILY THE WAY THEY WEIGHT THINGS. ONE OF THE MEASURES, WHAT CONSUMERS ACTUALLY PAY, THE OTHER MEASURES INCLUDES THINGS THAT ARE PAID ON BEHALF OF CONSUMERS. FOR EXAMPLE, HEALTH INSURANCE, THAT SORT OF THING. SO THAT'S WHAT THEY'RE GOING TO BE LOOKING AT. I DON'T THINK YOU'RE GOING TO SEE A STRONG ENOUGH MOVE TO REALLY CHANGE THE OUTLOOK FOR WHERE RATES ARE. I THINK MUCH MORE LOOKING AT THE MINUTES AND LOOKING AT HOW THE PARTICIPANTS WERE DESCRIBED AS THINKING OF THE LAST MOVE, I THINK MAKES MORE OF AN IMPACT THAN ONE PARTICULAR DATA POINT. [00:26:30] Speaker 3: AND AS WE LOOK AHEAD TO THE UPCOMING BANK EARNINGS, WHAT ARE YOU LOOKING FOR IN THERE THAT MIGHT SIGNAL SOMETHING ABOUT THE HEALTH OF THE U.S. CONSUMER OR CORPORATE LOAN DEMAND? [00:26:42] Speaker 7: SO THERE MAY BE SOME INFORMATION IN THERE ON LOAN LOSSES, BUT LOAN LOSSES HAVE STILL BEEN REMARKABLY STABLE AND LOW FOR QUITE SOME TIME. SO I JUST DON'T KNOW THAT THERE'S GOING TO BE MUCH THERE. I THINK WITH THE EARLY BANKS REPORTING, PROBABLY THE MARKETS ARE GOING TO BE LOOKING MOST AT WHAT THEIR TRADING INCOME AND THAT PIECE IS. [00:27:04] Speaker 2: YEAH, THE CAPITAL MARKETS ESPECIALLY, WE'VE SEEN M&A VOLUME KIND OF DROP OFF OVER THE PAST THREE MONTHS. WE OBVIOUSLY HAD A BIG START TO THE YEAR, BUT THEN THINGS KIND OF TAPERED A LITTLE BIT, ESPECIALLY AS BOND YIELDS CONTINUE TO RISE. HOW ARE YOU SEEING BOND YIELDS, RISING BOND YIELDS, THAT IS, AFFECTING THE BUSINESS OF BANKS, ESPECIALLY THE TRADING BUSINESS OF BANKS, RISING BOND YIELDS OF BANKS, AND THAT IS AFFECTING THE LONG-TERM RATES, NOT JUST IN THE QUARTER PAST, BUT KIND OF [00:27:33] Speaker 7: ONGOING, BECAUSE WE ALL EXPECT VOLATILITY IN THE BOND MARKETS TO PERSIST. YEAH, SO I DON'T HAVE A REAL SENSE, HONESTLY, OF HOW MUCH THE LONG-TERM RATES ARE AFFECTING THEIR TRADING REVENUES. BUT I KNOW THAT THE RISE ACROSS THE TERM STRUCTURE OF INTEREST RATES IS DEFINITELY AFFECTING CAPITAL POSITIONS, THEIR LONG-TERM RATES AND THE BANKS AND THE UNREALISED LOSSES, WHICH NOT SO MUCH FOR THE VERY LARGEST BANKS, BECAUSE THEY ACTUALLY ALREADY INCLUDE THOSE IN THEIR CAPITAL MEASURES, BUT FOR THE NEXT LEVEL DOWN, IF YOU REMEMBER BACK TO BANKS, IT WAS THAT UNREALIZED LOSS THAT REALLY CAUSED A LOT OF [00:28:08] Speaker 2: PANIC. ABSOLUTELY. THAT, OF COURSE, WILL BE COMING AFTER THE BIG BANKS, THE REGIONAL BANKS REPORTING. I WANT TO GO BACK TO THE FED FOR A MOMENT, BECAUSE WE HAD THE NEWS LAST WEEK THAT THE WHITE HOUSE, PRESIDENT TRUMP HAS RESUMED HIS EFFORT TO PUSH OUT LISA COOK, THE FED GOVERNOR, BY ANNOUNCING THIS FORMATION OF A COMMITTEE TO INVESTIGATE MORTGAGE FRAWD ALLEGATIONS AGAINST HER. THE PREVIOUS EFFORT WENT ALL THE WAY TO THE SUPREME COURT AND THE SUPREME COURT BASICALLY PUSHED BACK AND SAID SHE DESERVES DUE PROCESS. WHAT DO YOU THINK IS GOING ON HERE AND HOW ARE YOU INTERPRETING THIS LATEST DEVELOPMENT? [00:28:42] Speaker 7: SO IT'S CLEAR THAT PRESIDENT TRUMP WANTS ANOTHER SHOT AT FIRING LISA COOK. AND SO THE SUPREME COURT, WHEN THEY ANNOUNCED THEIR DECISION, IT WAS ALL ABOUT PROCESS AND THEY SAID SHE NEEDED SOME PROCESS TO UNDERSTAND WHAT THE CHARGES WERE INVESTIGATING THEIR DEMOCRATS. AND THEY WERE SUPPOSED TO CONFERENCE AND HAVE A WAY TO DEFEND HERSELF. NOW THIS IS A WHITE HOUSE COMMITTEE MADE UP ENTIRELY OF TRUMP APPOINTEES AND THEY ARE SUPPOSED TO INVESTIGATE AND THEN RECOMMEND TO PRESIDENT TRUMP WHETHER OR NOT HE SHOULD FIRE HER. I WOULD NOT BE SURPRISED TO SEE THIS COMMITTEE THAT HE SHOULD FIRE HER. THAT WILL START OFF A WHOLE NEW GROUP OF LEGAL FILINGS. AND I WOULD EXPECT THAT THIS ONE WILL ALSO GO ALL THE WAY TO THE SUPREME COURT WHICH IT NEEDS TO DO BECAUSE THERE NEEDS TO FIRE A MEMBER OF THE FEDERAL RESERVE BOARD. AND IF SO WHAT CONSTITUTES APPROPRIATE COST. SO THIS GOING ALL THE WAY THROUGH WHILE IT'S GOING TO BE DIFFICULT FOR THE FED AND DIFFICULT FOR GOVERNOR COOK I [00:30:00] Speaker 2: DON'T THINK IT'S GOING TO GO ALL THE WAY TO THE SUPREME COURT AGAIN. WE KNOW PRESIDENT TRUMP IS IMPATIENT TO REMAKE THE BOARD OF THE FED AND YOU'RE SAYING THIS COULD GO ALL THE WAY TO THE SUPREME COURT AGAIN SO THAT SOUNDS LIKE IT'S NOT GOING TO BE [00:30:21] Speaker 7: INSTANTANEOUS. THIS COULD TAKE A WHILE. WILL THIS GET DONE BEFORE HIS TERM IS UP DO YOU THINK? I DON'T KNOW IF IT WILL GET -- I'M NOT SURE HOW LONG IT WILL HAPPEN. I DON'T KNOW IF IT'S GOING TO BE DONE. I DON'T KNOW IF IT'S GOING TO BE DONE. I THINK THAT SHE CAN STAY ON THE BOARD WHILE THIS WORKS ITSELF THROUGH THE COURTS. I ALSO WOULDN'T RULE OUT ANOTHER ATTEMPT TO FIRE JAY POWELL. PRESIDENT TRUMP HAS MADE SOME COMMENTS ABOUT JAY CONTINUING TO STAY ON THE BOARD SO THAT COULD BE SOMETHING AS WELL THAT HE WOULD TRY TO MAKE A MOVE ON AND THAT ALSO WOULD HAVE TO [00:30:53] Speaker 3: WORK ITS WAY ALL THE WAY THROUGH THE COURTS. THANK YOU SO MUCH BETSY DUKE FORMER FED GOVERNOR AND THANK YOU SO MUCH. COMING UP, FANNY MAY AND FREDDY MAC SINKING TO THEIR LOWEST LEVELS SINCE THE BEGINNING OF 2025 AFTER A MIZUHO DOWNGRADE. THE ANALYST SAYING THE SURGE IN U.S. MORTGAGE RATES MAKES IT UNLIKELY THE TRUMP ADMINISTRATION WILL MOVE TO RELEASE THE HOME LOAN FINANCE COMPANIES FROM GOVERNMENT CONTROL BY 2028. [00:31:38] Speaker 8: THANK YOU SO MUCH. WALK US THROUGH WHAT IS HAPPENING. THANK YOU SO MUCH. I THINK THEY HAVE SEEN A RELEASE FROM GOVERNMENT CONSERVATORS CONSERVATORSHIP WHICH WE KNOW THEY HAVE BEEN UNDER SINCE 2008. YOU HAVE BEEN SEEING SUCH A VOLATILE TRADE WHENEVER YOU LOOK AT THESE STOCKS EXPECT VOLATILITY. THEY TRADE OFF OF ANY HEADLINE AND POLITICAL DEVELOPMENT. THANK YOU SO MUCH. I THINK IT'S UNLIKELY THAT PRIVATIZATION OR A RELEASE FROM GOVERNMENT CONTROL WILL HAPPEN BY 2028. THERE WAS SO MUCH HOPE GOING INTO THIS ADMINISTRATION, TRUMP 2.0. THIS IDEA THAT HE MIGHT ACTUALLY RELEASE THEM FROM GOVERNMENT CONTROL AND ACTUALLY PUT THEM BACK INTO PRIVATE MARKETS AND THAT MAYBE THERE WOULD BE A DIFFERENT TYPE OF CONTROL AND TYPE OF STRUCTURE BUT IT SEEMS LIKE THERE ARE SO MANY OTHER THINGS ON THE AGENDA AND SPECIFICALLY WITH THE BACKTROP THAT WE'RE SEEING IN THE ECONOMY RATES REALLY HIGH. MAYBE THIS ISN'T THE TIME. [00:32:42] Speaker 2: LET'S GET INTO THAT A LITTLE BIT MORE. WHY DO HIGHER MORTGAGE RATES AND I BELIEVE THE 30 YEAR FIXED RATE IS NOW LIKE AT ABOUT 7.5%. [00:32:49] Speaker 8: WHY DOES THAT MAKE PRIVATIZATION LESS LIKELY? THAT'S LITERALLY ITS HIGHEST SINCE 2023. WE'RE SEEING RATES THAT ARE STILL ELEVATED IN THE MORTGAGE MARKET AND JUST BROADLY WHEN WE THINK ABOUT TREASURIES AND THE SPACE MORE BROADLY. BUT SPECIFICALLY TODAY WE SEE PRETTY GOOD GOVERNMENT SUPPORT WHEN IT COMES TO FANNY MAY AND FREDDIE MAC SECURITIES. IF THAT STRUCTURE WERE TO CHANGE OR MAYBE THE TREASURY FIGURES OUT A DIFFERENT METHOD THEY WOULD LIKE TO GO IN REGARDS TO HOW MUCH OWNERSHIP, IF THE GOVERNMENT WILL CONTINUE TO HAVE OWNERSHIP AT ALL OF THESE NAMES, THIS COULD ACTUALLY MAKE INVESTORS POTENTIALLY DEMAND MORE INCENTIVE FOR TAKING ON ADDITIONAL RISK. THIS COULD ACTUALLY POTENTIALLY TRICKLE INTO HIGHER COSTS FOR THE AVERAGE BORROWER OR CONSUMER ESSENTIALLY IF SOME OF THOSE HIGHER FINANCING COSTS FOR SOME INVESTORS ACTUALLY START TRICKLING BACK OUT INTO THE AVERAGE SHOW. [00:33:36] Speaker 3: JUST QUICKLY, WHY DID THESE STOCKS INITIALLY RALLY AFTER TRUMP RETURNED TO OFFICE? [00:33:40] Speaker 8: HE HAD REALLY BEEN TOUTING THE FACT THAT HE WAS GOING TO FIND A WAY TO RELEASE IT FROM GOVERNMENT CONSERVATORSHIP. THAT'S WHAT EVERYONE'S REALLY BEEN HINGING ON. WITH THE MIDTERMS COMING UP NEXT MONTH AND THE BACKTROP THAT WE'VE BEEN TALKING ABOUT REGARDING RATES, IT'S A LITTLE BIT UNCLEAR AS TO WHETHER OR NOT THIS IS SOMETHING THAT CAN EVEN HAPPEN THIS YEAR, LET ALONE WHAT SOME ANALS ARE SAYING EVEN BY 2028, 2029. [00:33:58] Speaker 2: THAT BEING THE CASE, WHAT ARE INVESTORS WATCHING FOR NEXT? IF EVERYTHING KIND OF HINGES ON A HEADLINE, A POLITICAL HEADLINE, ARE THERE SPECIFIC EVENTS THAT COULD [00:34:08] Speaker 8: MOVE THINGS ALONG? EVERYONE IS REALLY LOOKING FOR ANY SENSE OF CLARITY. THEY ARE ASKING FOR SOME SORT OF ROADMAP FROM THE ADMINISTRATION AS TO WHETHER OR NOT THEY ARE GOING TO BE ABLE TO MAKE THIS HAPPEN, WHEN THEY WILL MAKE IT HAPPEN, ANY SORT OF DETAILS ARE ESSENTIALLY WHAT IS MOVING AND [00:34:22] Speaker 2: DRIVING MARKETS RIGHT NOW. THANK YOU SO MUCH. BOTH ARE DOWN DOUBLE DIGITS TODAY ON THIS BEARISH CALL. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE ABOUT TEN MINUTES AWAY FROM THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT THE BANKS. WE ARE GOING TO BE ABLE TO TALK ABOUT IT BECAUSE THE BOND MARKET IS CLOSED TODAY. IT IS COLUMBUS DAY AFTER ALL. RIGHT NOW IN EQUITIES YOU ARE SEEING A MIXED TRADE. THE S&P 500 IS DOWN EVER SO SLIGHTLY BUT STILL KIND OF HOLDING YOUR RECORD HIGHS. BANKS ARE UP BY A THIRD OF 1% BEFORE J.P. BANKS ARE GOING TO BE ABLE TO TALK ABOUT WHEN THE BANKS WILL BE ABLE TO TALK ABOUT THE BANKS. OIL PRICES MOVING UP 1.6% HIGHER AND EURO HEMMA HAS REMAINED WEAKER. ALL THE CONCERNS ABOUT THE FRENCH DEBT CRISIS KIND OF LOOMING AND A LOT OF PEOPLE TALK ABOUT WHETHER THIS IS [00:35:35] Speaker 3: GOING TO BRING ON PART TWO OF THE EUROPEAN DEBT CRISIS. WE ARE SEEING EVEN THOUGH BOTTOM MARKETS ARE CLOSED AND STOCKS HAVE BEEN A LITTLE BIT UP AND DOWN. WE HAVE SEEN SOME INTERESTING MOVERS WITH CHIPOTLE AND STARBUCKS AND STARBUCKS SAYING THEY ARE NOT GOING TO BE BUYING CHIPOTLE ANYMORE. [00:35:48] Speaker 2: I GUESS A LOT OF IT WAS HINGED ON THE IDEA THAT THE CEO OF STARBUCKS WAS THE FORMER CEO OF CHIPOTLE. THERE SEEMED TO BE PEOPLE THINKING THAT MUST MEAN THAT THEY ARE GOING TO GET TOGETHER. I'M NOT SURE HOW THAT GOT STARTED BUT THE COMPANY IS DENIED THAT FOR NOW. LET'S TALK MORE ABOUT THE MARKETS AND GET ANALYSIS. LET'S TALK ABOUT THE RISING BOND YIELDS. THANK YOU FOR JOINING US. WELCOME STEPHANIE GILD, CIO AT ROBIN HOOD MARKETS. I MENTIONED THE BOND MARKETS CLOSED AND THAT GIVES US A LITTLE BIT OF RELIEF FROM THE RISING BOND YIELDS. WHICH HAS BEEN THE STORY, THE BACKDROP HERE FOR EVERYTHING. EVERYONE KEEPS TALKING ABOUT HOW RISING BOND YIELDS MAKES BONDS LOOK MORE ATTRACTIVE, HOW IT IS GOING TO GET PEOPLE BACK INTO THE BOND MARKET ONCE AGAIN. [00:36:33] Speaker 9: BUT IT HASN'T DIMMED THE APPEAL OF EQUITIES AT ALL. I THINK A LOT OF IT COMES BACK TO WHY ARE BOND YIELDS GOING UP? ARE THEY GOING UP BECAUSE INFLATION IS HIGH? ARE THEY GOING UP BECAUSE DEMAND IS HIGH FOR BONDS? OR ARE THEY GOING UP BECAUSE THERE IS HIGH GROWTH? I THINK THE ANSWER IS THERE IS HIGH DEMAND BECAUSE OF CAPEX. THERE IS ACTUALLY HIGH GROWTH. NOT MAYBE IN EVERY ASPECT OF THE MARKET. THE CONSUMER HASN'T SEEN HIGH GROWTH. THAT IS HIGH GROWTH. IT IS HIGH GROWTH. I THINK THAT IS WHY YOU ARE SEEING RATES GO UP AND THE MARKET BE ABLE TO HANDLE IT. BUT IT CERTAINLY CREATED UNDER THE SURFACE VOLATILITY JUST AS HIGH AS THE MOVE INDEX HAS SHOWN US ON THE BOND MARKET. IT IS JUST NOT AT THE S&P LEVEL. [00:37:20] Speaker 3: HOW ARE YOU PLAYING THIS ENVIRONMENT RIGHT NOW? WHERE ARE YOU OVEREXPOSED? WHERE ARE YOU PULLING BACK FROM? [00:37:25] Speaker 9: WE HAVE BEEN THEMATICALLY INVESTING IN ROBIN HOOD STRATEGIES. WE HAVE HAD THREE PILLARS WHERE IT HAS BEEN POWER THAT FEEDS AND FUNDS THE AI BUILDOUT BECAUSE EVEN THOUGH THAT MAY RUN INTO SOME SLOWDOWN TEMPORARILY, WE STILL BELIEVE THAT A LOT OF DEMAND IS GOING TO BE THERE. PRODUCTIVITY, WHICH IS COMPANIES THAT CAN BENEFIT FROM ACTUALLY AI USAGE AND THEN THIS THIRD LEG WHICH IS LIKE A HEDGE, ACKNOWLEDGEMENT OF POTENTIAL DEBASEMENT, JUST KIND OF THE THINGS THAT CAN GO WRONG. WE HAVE NOT BEEN INVESTING IN THINGS LIKE BANKS AND FINANCIAL SERVICES. OBVIOUSLY THEY'VE ACTUALLY NOT BEEN DOING GREAT AND SO THAT IS MAYBE A PLACE WE'LL START LOOKING, BUT WE HAVE BEEN INVESTING IN HEALTH CARE AS A PLACE THAT WE THINK KIND OF THROUGH IT ALL SHOULD DO WELL AND WE'VE HAD FOR A WHILE ALLOCATIONS TO MATERIALS WHICH WE HAVEN'T REALLY TAKEN OFF. WITHIN HEALTH CARE, IS IT GILLEAD THAT YOU LIKE? THAT'S ONE OF THE NAMES THAT WE LIKE. WE HAVE ALLOCATIONS TO A NUMBER OF NAMES THERE. LILY IS ANOTHER ONE. VERTEX IS ANOTHER ONE. WE'VE BEEN TALKING ABOUT SOMETHING THAT WE THINK HAS [00:38:39] Speaker 2: FURTHER GROWTH. WITH EARNINGS SEASON COMING UP, EVERYONE WILL FOCUS ON THE BANKS. YOU SAID YOU ARE NOT PARTICULARLY BIG ON THE BANKS. WE'RE GOING TO HEAR FROM MICROSOFT, ALPHABET, AND HOW MUCH THEY'RE PUTTING ASIDE FOR CAPEX. WHAT IS THE MOOD LIKE RIGHT NOW IN TERMS OF HOW FORGIVING ARE INVESTORS FEELING WHEN IT COMES INVESTORS? DO THEY WANT TO SEE A STEADY GROWTH IN CAPEX OR DO THEY WANT TO SEE A LITTLE BIT OF MONEY TAKEN OFF THE TABLE? [00:39:09] Speaker 9: IT PROBABLY DEPENDS ON THE COMPANY. IF YOU LOOK AT META, THEY WERE OBVIOUSLY SPENDING A TON. AS SOON AS IT STARTED TO LOOK LIKE THEY MIGHT ACTUALLY HAVE SOME BENEFITS FROM IT, THE COMPANY HAS RALLIED. I THINK YOU'LL SEE THE SAME THING FROM A LOT OF THE HYPERSCALERS. ARE YOU GOING TO START SEEING ANY RETURNS ON THESE INVESTMENTS THEY'RE MAKING? ARE YOU STARTING TO SEE GRASS SPROUTING FROM THERE? ARE YOU TRYING TO TALK ABOUT THE COMPANY? I THINK THE COMPANY DOES NOT CONTINUE TO BE THE CASE. IF THIS WAS A MONTH OR SO AGO, I WOULD HAVE SAID THERE'S ACTUALLY OPPORTUNITY IN THE HYPERSCALERS BUT NOW THAT THEY HAVE RALLIED AND YOU'VE CREATED THIS ENVIRONMENT WHERE DISPERSION HAS GONE AWAY AND NOW I'M LIKE, I DON'T KNOW, I THINK IT'S ACTUALLY ALL IN THE PRICE TEMPORARILY, AT LEAST IN [00:39:50] Speaker 2: THE NEAR TERMS. IT DEPENDS ON WHAT YOUR TIME HORIZON IS. IN TERMS OF WAITING FOR AN ANTHROPIC IPO TO DROP, WE'RE GOING TO TALK ABOUT HOW MANY OF THESE PEOPLE ARE KIND OF [00:40:01] Speaker 9: HOLDING OFF AND WAITING FOR THAT TO HAPPEN. I DON'T KNOW IF THEY ARE. I THINK THERE ARE OTHER WAYS TO GET THAT INFORMATION, BECAUSE NONE OF THE PUBLIC MARKETS ARE DIRECTLY INVESTED IN THE ANTHROPICS OF THE WORLD. THERE'S WAYS TO UNDERSTAND THE FINANCING THAT'S HAPPENING THROUGH THE DISCLOSURES OF COMPANIES LIKE INVIDIA AND GOOGLE. AND THAT'S REALLY WHAT WE'VE BEEN STUDYING. I DID A DEEP DIVE IN SOME OF THE FOOTNOTES. THAT'S WHERE YOU CAN KIND OF FIND HOW A LOT OF THESE COMPANIES HAVE BEEN ACTING, TECH COMPANIES, LARGE PUBLIC TECH COMPANIES HAVE BEEN ACTING LIKE BANKS. SO I THINK THAT'S WHERE YOU HAVE TO LOOK BECAUSE, SURE, ANTHROPIC, THERE'S BEEN A LOT OF NOISE ABOUT THE REVENUE THERE. BUT I DON'T KNOW IF IT MATTERS SO MUCH OTHER THAN CAN THEY CONTINUE TO GROW. I THINK THE GROWTH RATE IS NOT NECESSARILY PERSONALLY IN QUESTION. [00:40:52] Speaker 3: WITH THESE TECH COMPANIES ACTING LIKE BANKS, LIKE NVIDIA AND SOME OF THESE OTHER GIANTS, DOES THAT THEN CONCENTRATE RISK ON TOP OF THE RISK WE ALREADY SEE IN THE SPACE? [00:41:01] Speaker 9: GOOD QUESTION. I THINK SO. ONE OF THE CONCLUSIONS I CAME TO WHERE, IF YOU LOOK AT IT, BANKS DO A COUPLE OF THINGS. THEY OBVIOUSLY COLLECT CAPITAL AND LEND IT OUT. THEY PUT THEIR GUARANTEES BEHIND THINGS AND THEY MAKE INVESTMENTS. AND NVIDIA HAS BEEN DOING ALL THREE. OVER $500 BILLION WORTH SO FAR AS OF THE JULY DISCLOSURES. AND THE THING IS, THEIR PURCHASE COMMITMENTS, YOU KNOW, AND THEIR GUARANTEES ARE IN LOCKSTEP WITH THE COMPANIES THAT THEY EXPECT TO GET BUSINESS FROM. SO IF YOU THINK ABOUT ANY SORT OF FAILURE THAT HAPPENS, IT WOULD BE A DUPLICATE OF FAILURE, WHICH IS LIKE LESS REVENUE AND ALSO THEIR INVESTMENTS DROP IN VALUE. SO IT'S CERTAINLY A WORRY THAT YOU'VE SEEN KIND OF HAPPEN IN THE PAST IN OTHER INDUSTRIES. [00:41:45] Speaker 2: IT'S A WORRY, BUT I'M NOT SURE IF IT'S THE SINGLE BIGGEST WORRY OUT THERE. WHEN YOU LOOK ACROSS EVERYTHING, CROSS ASSETS, THE MACRO, WHAT DO YOU SEE AS THE BIGGEST OVERHANG, THE BIGGEST POTENTIAL WORRY HERE? [00:41:57] Speaker 9: I JUST THINK IT'S OIL PRICES AND THE TENSION THAT'S HAPPENING IN THE MIDDLE EAST AND ITS REPERCUSSIONS. I THINK IT HAS AN IMPACT ON INTEREST RATES. IT HAS AN IMPACT ON BUSINESS. IT HAS AN IMPACT ON THE BUILDOUT OF AI, WHICH REQUIRES ENERGY. SO I THINK IF THERE IS TRUE LASTING CALMNESS IN THE MIDDLE EAST, I THINK THAT RALLY WILL CARRY FOR A WHILE. [00:42:21] Speaker 2: THAT HASN'T HAPPENED YET. EVERY TIME IT SEEMS TO QUIET DOWN, SOMETHING HAPPENS ONCE AGAIN. STEPHANIE, THANK YOU SO MUCH. IT'S A GOOD POINT ABOUT OIL PRICES, GIVEN THAT THEY ARE UP TODAY ONCE AGAIN. WE'RE LOOKING AT WTI, THE U.S. BENCHMARK GAINING 1.6% TO 93.32 A BARREL. WE'RE MOVING CLOSER TO THE CLOSING BELL. WE'VE GOT FULL MARKET COVERAGE RIGHT HERE ON BLOOMBERG. [00:42:45] Speaker 10: KEEP IT HERE. THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. [00:42:56] Speaker 2: WE'RE ABOUT TWO MINUTES AWAY FROM THE END OF THE TRADING DAY ON THIS MONDAY. SCARLETT FOE AND HEMMA PARM ARE HERE. AND HERE NOW TO TAKE US THROUGH THE CLOSING BELL, WE'VE GOT A GLOBAL SIMULCAST. WE'RE JOINED BY CAROL MASTER AND TIM STENOVIC, THEY'RE BACK TOGETHER, BRINGING TOGETHER OUR BLOOMBERG TELEVISION RADIO AND YOUTUBE AUDIENCES WORLDWIDE TO PARSE THROUGH THE MOST CRUCIAL MOMENTS OF THE TRADING DAY. [00:43:16] Speaker 11: TIM, WE MISSED YOU LAST WEEK. WELCOME BACK. I MISSED YOU GUYS TOO. GLAD TO BE BACK. [00:43:21] Speaker 2: WELCOME BACK TO THE TRADING DAY. WE'RE LOOKING AT THE START OF EARNINGS SEASON TOMORROW. [00:43:31] Speaker 12: THE BIG BANKS GETTING READY TO REPORT. DON'T YOU FEEL LIKE IT'S A LITTLE BIT OF A MEH KIND OF A DAY IN TERMS OF THE TRADE? I AGREE WITH YOU. IT'S THE BIG BANKS COMING OUR WAY STARTING TOMORROW. AND THEN YOU'VE GOT A CPI INFLATION PRINT ON WEDNESDAY. [00:43:43] Speaker 11: THE THING IS, I LEFT FOR A WEEK AND I CAME BACK. STILL WHAT'S DOMINATING RIGHT NOW ARE OBVIOUSLY THE AI TRADE, HEMA, BUT ALSO HIGHER ENERGY PRICES. WE SAW THAT IN TODAY'S TRADE, TOO, WITH BRENT UP ANOTHER $1.50, UP ABOUT 1.4% TODAY, UP ABOVE $106 PER BARREL. SO THIS IS STILL AN ISSUE AND IT'S ESPECIALLY AN ISSUE GOING INTO THE MIDTERM ELECTIONS IN JUST A FEW WEEKS. [00:44:07] Speaker 3: ABSOLUTELY. NO END IN SIGHT FOR THE GEOPOLITICAL VOLATILITY. ALSO WHEN IT COMES TO THE TECH STOCKS AND THESE CHIPMAKERS, SOME COMPETITION AND CONCERN OVER IN CHINA. SO THAT ISSUE IS SORT OF LIKE COMING BACK TO THE FOREFRONT AS THEY COME UP WITH A POTENTIAL RIVAL TRIP. [00:44:23] Speaker 2: RIGHT. RIGHT AS WE SEE THE TECH STOCKS KIND OF TAKE OFF ON THEIR OWN, HELPING WITH THE S&P 500, TWO RECORD HIGHS AND KIND OF KEEPING US THERE RIGHT NOW. WE'RE NOT GOING TO HIT A RECORD HIGH TODAY FOR THE S&P 500, BUT BASICALLY LITTLE CHANGE AT THIS POINT. A MIXED CLOSE HERE FOR THE MAJOR BENCHMARK INDEXES. THE S&P 500 UNCHED AT 7808. THE NASDAQ DOWN 4/10 OF 1% AT 27,250. AND THE DOWN INDUSTRIALS GAINING 4/10 OF 1%. CAROL: [00:44:50] Speaker 12: BACK TO THE BIG CAPS I GO, THE S&P 500. LOOK INSIDE THE INDEX AND MAYBE A LITTLE BIT MOVEMENT IN THE INDEX OVERALL. BUT, SCARLET, YOU'VE ACTUALLY GOT 320 NAMES IN THE S&P 500. HIGHER TODAY, 181 TO THE DOWNSIDE AND THREE UNCHANGED. [00:45:04] Speaker 2: LET'S TAKE A LOOK AT THE IMAP THAT REALLY SHOWS US WHICH OF THOSE SECTORS FINISHED IN THE GREEN VERSUS IN THE RED. AND BECAUSE TECH WAS DOWN 9/10 OF 1%, IT LOOKS LIKE THE OVERALL MARKET IS DOWN WHEN, IN FACT, YOU'VE GOT 8 OUT OF THE 11 SECTORS FINISHING IN THE GREEN. THE BEST PERFORMING GROUP, ENERGY, AS THOSE OIL PRICES ROSE, WITH ENERGY STOCKS UP 1.5%. CONSUMER STAPLES AND COMMUNICATIONS SERVICES ALSO FINISHING UP AT LEAST 1%, AS I MENTIONED TECH DOWN 9/10 OF 1%. [00:45:30] Speaker 12: ALL RIGHT, GUYS, LET'S GO TO SOME OF THE INDIVIDUAL GAINERS. I'M GOING TO GO TO THE NUMBER FOUR GAINER IN THE S&P 500, NUMBER TWO IN THE NASDAQ 100. WE'RE TALKING ABOUT META PLATFORMS. WE DID SEE SOCIAL VOLUME ALSO SURGING TODAY ON THIS NAME. 3.4% HERE AT THE CLOSE. THE COMPANY RELEASING A NEW ARTIFICIAL INTELLIGENCE MODEL CALLED MUSE WONDER, WHICH THE COMPANY CLAIMS IS A BIG LEAP OVER ITS PREDECESSORS WITH, QUOTE, "FRONTIER CAPABILITIES." THE COMPANY'S AI CHIEF COMING OUT AND SAYING IT'S COMPETITIVE WITH THE BEST MODELS THAT ARE OUT THERE, PARTICULARLY ON PERSONAL AND PROFESSIONAL AGENTIC WORK, AND INVITE SKEPTICS TO TRY IT OUT AND JUDGE FOR THEMSELVES. THE AI BATTLE IS ON. MUSE WONDER WILL SOON POWER THE SUBSCRIPTION VERSION OF META'S PERSONAL AI AGENT MUSE, WHICH WE'VE BEEN TALKING ABOUT A LOT OVER THE LAST FEW WEEKS. IT IS CURRENTLY AVAILABLE TO DEVELOPERS THROUGH THE META MODEL API AND MUSE CODE. FTE ALSO OUTNOTING THAT MARK ZUCKERBERG SAYS META HAS CAUGHT UP WITH RIVALS AT THE FRONTIER OF AI. SO INVESTORS SEEM TO LIKE WHAT THEY HEARD FROM THE COMPANY. YOU KNOW WHAT I SAW THIS WEEKEND? WHAT? [00:46:29] Speaker 2: I SAW THE SOCIAL RECKONING. AND? AND, YOU KNOW, IT'S KIND OF DEPRESSING, BUT ALSO -- YEAH. LIKE, NOW I'VE GOT JEREMY STRONG AS MARK ZUCKERBERG, LIKE, STUCK IN MY HEAD. HOW WAS HE? HE WAS KIND OF ROBOTIC AND KIND OF STIFF, WHICH SOME PEOPLE MIGHT SAY IS A GOOD RENDITION. I DON'T KNOW. [00:46:48] Speaker 12: THIS IS AARON SORKIN, RIGHT, WHO WROTE THIS WHOLE THING? YES. I AM ACTUALLY DYING TO SEE HIS TAKE AND COMMENTARY ON ALL OF THIS. ALL RIGHT. SO A.I. AND THEN I'M GOING TO GO FROM -- WELL, ADEOS, COFFEE AND BURRITOS, BECAUSE IT SOUNDS LIKE STARBUCKS ACTUALLY RALLYING TODAY, ABOUT 1.7%. STARBUCKS SAID IT'S NOT BUYING CHIPOTLE, TAPPING DOWN SPECULATION ABOUT WHAT COULD HAVE BEEN ONE OF THE RESTAURANT SECTOR'S LARGEST EVER DEALS. SO THE COMPANY DID ISSUE A STATEMENT TODAY FOLLOWING THAT REPORT LAST WEEK THAT STARBUCKS RUN BY FORMER CHIPOTLE CEO BRIAN NICHOL HAD WORKED ON A TAKE OVER PROPOSAL. SO ALL RIGHT. NOT HAPPENING NOW. AND THEN I'M JUST GOING TO THROW THIS OUT. IT WAS THE NUMBER FOUR GAINER IN THE NASDAQ 100. GE HEALTHCARE. JUST MOVING UP. YEAH, 3%. HAVE TO BE QUITE HONEST. NOT ANYTHING REAL IN TERMS OF A CATALYST, BUT THE BTIG ANALYST RYAN ZIMMERMAN MAINTAINING A BUY ON THIS STOCK, LOWERING THE PRICE TARGET FROM 79 TO 75. IT DOES REPORT LATER THIS MONTH JUST IF YOU'RE THINKING ABOUT EARNINGS. AND STOCK IS DOWN 17% YEAR TODAY. BUT NONETHELESS, INVESTORS ARE MOVING INTO IT. SO. [00:47:50] Speaker 11: OKAY. YOU GOT THE GAINERS. ALL YOURS, BUD. ALL RIGHT. LET'S TALK ABOUT SOME OF THE DECLINERS ON THE DAY TODAY. I WANT TO START WITH IONQ. LET'S TALK QUANTUM COMPUTING. DOWN 9% TODAY. THIS AFTER THE COMPANY HAS SAID IT WOULD AGREE TO BUY ELICITY FOR AS MUCH AS $1.3 BILLION IN AN ALL-STOCK TRANSACTION TO EXPANDED CYBER SECURITY PLATFORM. WE TALK AI. WELL, LET'S TALK QUANTUM COMPUTING. BECAUSE APPARENTLY A LOT OF PEOPLE THINK THAT IS THE NEXT BIG THING. THIS COMPANY ELICITY THAT IT BOUGHT IS A FAST GROWING ENTERPRISE SECURITY BUSINESS THAT WILL ADD TO IONQ'S EXPANDING QUANTUM SECURITY OFFERINGS. THE CEO, NICOLO DEMASI, SAID THE COMPANY WILL BE WELL POSITIONED TO HELP CUSTOMERS PROTECT CRITICAL INFRASTRUCTURE AND ENTERPRISE NETWORKS THROUGHOUT THE TRANSITION TO THE QUANTUM ERA. STILL INVESTORS, AS THEY OFTEN DO, SENDING SHARES OF THE COMPANY DOING THE ACQUISITION. AGAIN, THIS IS AGREEING TO BUY THE COMPANY. DOWN 9%. CAROL TALKED A LITTLE BIT ABOUT STARBUCKS BEING UP TODAY. LET'S LOOK AT CHIPOTLE BEING LOWER. THIS AFTER STARBUCKS SAID -- I WANT TO TELL YOU THE CASE. I WAS GONE FOR THIS, BUT I STILL SAW THE HEADLINE ACROSS FROM THE F.T. CAN YOU EXPLAIN THE CASE, APART FROM MAYBE [00:49:03] Speaker 2: BRIAN NICKEL GOING BACK TO CHIPOTLE, LIKE WHY THIS WOULD [00:49:04] Speaker 11: MAKE SENSE? I THINK THAT WAS THE CASE. THAT'S IT. BUT HE'S ALREADY TRYING TO TURN AROUND STARBUCKS. [00:49:10] Speaker 3: RIGHT. [00:49:11] Speaker 11: SO I TRULY -- MAYBE YOU DIVERSIFY YOUR CUSTOMER BASE? [00:49:15] Speaker 12: I DON'T KNOW. I'M NOT SOLD ON IT. [00:49:17] Speaker 11: YOU GET COFFEE WITH YOUR BURRITO. [00:49:19] Speaker 12: THERE YOU GO. [00:49:20] Speaker 11: I DO LIKE A GOOD BREAKFAST BURRITO. THAT IS -- BUT, LIKE, CHIPOTLE'S NEVER DONE BREAKFAST BURRITOS. ANYWAY, MAYBE WE'LL NEVER BE TALKING ABOUT THIS AGAIN, BECAUSE THIS WILL HAVE BEEN A FLASH IN A PAN AND WILL JUST BE GONE. CHIPOTLE SHARES DOWN IN THE NEWS, DOWN BY ABOUT 3.8%. SO BRIAN NICKEL, AS OF NOW, NOT GOING BACK TO CHIPOTLE. AND FINALLY, LET'S LOOK AT ADRs OF LVMH. LOOK AT THIS. DOWN 2.5% TODAY. THIS AFTER THE FRENCH LUXURY GROUP REPORTED THIRD QUARTER ORGANIC REVENUE THAT MISSED ESTIMATES. ITS BIGGEST DIVISION, FASHION AND LEATHER GOODS, POSTED A SLUMP IN SALES. ADRs OF LVMH FELL BY 2.5%. ALL RIGHT, GUYS. [00:49:54] Speaker 12: LET'S GET TO SOME STORIES. AND ALL OF IT HAS TO BE ABOUT THE WONDERFUL WORLD OF SOCIAL MEDIA AND MEDIA THAT WE LIVE WITHIN. I DON'T KNOW. I DON'T THINK ANYBODY COULD HAVE MISSED THIS. BUT APPARENTLY, A LITTLE BIT OF A BEEF ONLINE. KELLY CLARKSON WENT TO A STORE IN BROOKLYN. SHE DROVE TO THE STORE. [00:50:07] Speaker 11: SHE DROVE. [00:50:08] Speaker 12: SHE'S ALLOWED. SHE CAN. THAT'S WHERE THE OUTRAGE BEGINS. [00:50:12] Speaker 11: MAYBE ON THE WEEKEND, THE SUBWAY DOESN'T RUN VERY WELL. [00:50:15] Speaker 12: SO SHE WENT TO THIS BROOKLYN GAME STORE, ART OF PLAY, AND THEN, SHE ULTIMATELY CRITICIZED THEM ON SOCIAL BECAUSE SHE FELT WHAT SHE FELT WAS CONDESCENTION. IS THAT RIGHT? CONDESCENTION? CONDESCENTION. SENDED WEIRD. WHEN SHE INQUIRED ABOUT THE PRICE OF AN ANIMATRONIC BIRD, ART OF PLAY RESPONDED CLAIMING THE ITEM THAT KELLY CLARKSON ASKED ABOUT, A BIRD AUTOMATO NAMED MOLLY, WAS NOT FOR SALE AND NEITHER CONFIRMED OR DENIED HER STORY. SHE'S BASICALLY SAYING THAT SHE HAD A PRETTY WOMAN MOMENT. SHE WALKED INTO THE STORE AND THEY WERE LIKE, YOU CAN'T AFFORD THIS, AND THEN THEY'RE SAYING, NO, IT WASN'T FOR SALE. [00:50:49] Speaker 11: SOME PEOPLE ARE SAYING, WAIT, THERE'S A $15,000 PRICE TAG AND A PICTURE ABOUT THIS. [00:50:53] Speaker 12: WHAT'S THE DATE OF THAT PICTURE? [00:50:54] Speaker 11: ON THE SOCIAL MEDIA ACCOUNT, A PHOTO FROM SEPTEMBER. [00:50:57] Speaker 2: WHY ARE PEOPLE POSTING ABOUT THIS ON SOCIAL MEDIA? THERE'S SO MUCH -- I DON'T KNOW. [00:51:01] Speaker 12: PEOPLE ARE BACKING EITHER KELLY CLARKSON OR CRITICAL OF HER. THERE'S SO MUCH MOMENTUM AROUND THIS. [00:51:06] Speaker 3: ISN'T IT LIKE THE MODERN-DAY VERSION OF PRETTY WOMAN WHERE INSTEAD OF COMING BACK WITH ALL OF THE SHOPPING, YOU JUST TWEET IT TO YOUR 40 MILLION FOLLOWERS? IS THAT WHERE WE ARE? [00:51:16] Speaker 11: DO YOU HAVE TO TWEET EVERYTHING, THOUGH? [00:51:19] Speaker 3: FOR SOME PEOPLE, APPARENTLY. [00:51:21] Speaker 12: JUST A QUESTION. [00:51:22] Speaker 2: I DON'T KNOW. SHARING ISN'T ALWAYS CARING, FOLKS. ALSO, YOU DON'T ALWAYS GET WHAT YOU WANT. IT'S OKAY. LIFE GOES ON. [00:51:28] Speaker 3: SO SOMETHING CAN HAPPEN AND YOU CAN JUST LIVE THE MOMENT AND NOT OVERSHARE. [00:51:32] Speaker 12: YOU HAVE TO BE CAREFUL WHAT YOU DO ON SOCIAL MEDIA BECAUSE THERE CAN BE CONSEQUENCES. [00:51:36] Speaker 11: APPARENTLY THIS SHOP HAS A REALLY COOL MAGIC SHOW AND THAT'S WHAT I'M MOST INTERESTED IN. THAT IS WHAT I WILL BE TAKING AWAY FROM THIS IS HOW DIFFICULT IT WILL BE TO GET TICKETS TO THE MAGIC SHOW NOW. [00:51:46] Speaker 2: YEAH, WELL, NOW IT'S A KNOWN QUANTITY FOR A LOT OF PEOPLE. SPEAKING OUT ON SOCIAL MEDIA, THERE WAS A DIRECTOR AT MACKENZE GLOBAL INSTITUTE WHO HAS BEEN STRIPPED OF HIS LEADERSHIP ROLE AT THAT INSTITUTE BECAUSE HE POSTED ONLINE COMMENTS QUESTIONING THE EXISTENCE OF A GLASS CLIFF. THIS IDEA THAT WOMEN GET PUT IN LEADERSHIP ROLES WHEN THEY ARE PUT IN A POSITION TO FAIL BECAUSE THE JOB IS ALREADY NOT GREAT AND THE COMPANY IS KIND OF STRUGGLING. THIS IS KIND OF A TERM THAT SOME ACADEMICS HAVE COME UP WITH. WHETHER YOU BELIEVE IT OR NOT, IT'S A THING THAT'S BEEN PUBLISHED AND A LOT OF RESEARCH HAS BEEN DONE. HE QUESTIONED IT AND NOW HE HAS BEEN REPRIMANDED. [00:52:28] Speaker 3: HE SAID THE GLASS CLIP WAS A QUOTE "VERY CONVENIENT WAY TO ALWAYS BE A VICTIM IN THE RAIN." [00:52:36] Speaker 2: I THINK CAROL'S EXPRESSION SAYS IT ALL. FOR THOSE OF YOU ON RADIO, SHE'S BASICALLY RAISING HER EYEBROW. [00:52:44] Speaker 12: IT'S A LITTLE BIT. [00:52:48] Speaker 2: IT'S A LITTLE BIT ABOUT THAT. THE ACTIONS HAVE CONSEQUENCES, DON'T THEY? KELLY OR THIS GUY AT MACKENZE? THIS GUY AT MACKENZE. HIS NAME IS CHRIS BRADLEY. [00:52:58] Speaker 12: HE'S STILL EMPLOYED. REMOVED FROM HIS ROLE AND REMAINS A SENIOR PARTNER AT MACKENZE GLOBAL INSTITUTE. HE'S BASED IN AUSTRALIA. [00:53:06] Speaker 2: HE'S BASED ON THE COMPANY. HE'S A LITTLE BIT ABOUT WHAT THE RULES ARE. IT'S ONE THING IF YOU'RE A KELLY CLARKSON AND YOU WANT TO TELL EVERYONE THAT YOU CAN AFFORD A 15,000 WHATEVER BIRD. IT'S ANOTHER THING IF YOU ARE SPEAKING ON LINKED IN, WHICH HAS YOUR COMPANY NAME ON THERE, AND MAYBE GIVING THE [00:53:24] Speaker 12: SOMETHING THAT YOU WANT TO MAKE, WHEN YOU'RE REPRESENTING YOUR COMPANY OR POTENTIALLY REPRESENTING YOUR COMPANY. ALL RIGHT, GUYS, THAT IS A WRAP. GOOD TO SEE YOU BOTH. OUR CROSS PLATFORM, RADIO TV, YOUTUBE, BLOOMBERG ORIGINAL, SCARLET AND HEMA CONTINUING ON THE CLOSE ON TV. TIM AND I BACK HERE ON BLOOMBERG BUSINESS WEEK DAILY. WE'LL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. [00:53:42] Speaker 2: COMING UP ON THE CLOSE, WE'VE GOT CPI AND PPI DATA ON THE HORIZON. WE'LL SET YOU UP FOR BOTH OF THOSE REPORTS WITH OMAR SHARIF, FOUNDER AND [00:53:54] Speaker 1: COUNTDOWN. THIS IS THE CLOSE ON BLOOMBERG. THE COUNTDOWN IS ON. [00:54:06] Speaker 2: EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. WELCOME BACK TO THE CLOSE. I'M SCARLET FOO. AND I'M HEMA PARMAR. LET'S TAKE A LOOK AT WHERE MARKETS CLOSED OUT ON THE DAY. THE BOND MARKET WAS CLOSED. THE STOCK MARKET WAS OPEN, BUT VOLUME WAS DOWN GIVEN THAT IT WAS COLUMBUS DAY. THE BANKS CLOSED UP HALF OF 1% BEFORE THE OPENING BELL. THE OIL PRICES ELEVATED UP 1.5%. WTI NOW TRADING ABOVE $93 ONCE AGAIN. THE EURO SHOWING WEAKNESS. THIS HAS BEEN A THEME FOR A WHILE. THE EURO VERSUS THE DOLLAR IS AT ITS LOWEST LEVEL SINCE MAY OF LAST YEAR. POSITIONING AS WELL AS NOW THE MOST NEGATIVE SINCE THE EARLY DAYS OF THE PANDEMIC. NORMALLY WOULD MAKE IT VULNERABLE TO A BOUT OF SHORT COVERING. ANALYSTS SAY THE FUNDAMENTALS DON'T SUPPORT MUCH OF ANY POSITIVE CATALYST. LET'S TAKE A LOOK AT SOME OF THE BIGGEST MOVERS. [00:55:01] Speaker 3: WE'RE GOING TO KICK IT OFF WITH CHIPOTLE AND STARBUCKS. CHIPOTLE DOWN NEARLY 4% AFTER STARBUCKS SAYS IT'S NOT GOING TO BE PURCHASING THE COMPANY. STARBUCKS UP NEARLY TWO. THIS AFTER REPORTS LAST WEEK THAT STARBUCKS SAID IT WAS GOING TO -- REPORTS THAT STARBUCKS WAS GOING TO PURSUE AN OFFER. THAT IS NOT HAPPENING. ADOBE HAS BEEN TRADING DOWN ALL MORNING. IT GOT A DOUBLE DOWNGRADE FROM WELLS FARGO AND IT WAS CUT FROM OVERWEIGHT TO UNDERWEIGHT. WELLS FARGO SAYS IT SEES MEANINGFUL CRACKS IN ADOBE'S GROWTH STORY. COMPETITION FROM CHINA AS CHINA IS LOOKING AT POTENTIALLY ADVANCED TECHNOLOGY WHEN IT COMES TO ITS CHIPS THAT WOULD RIVAL THE U.S. COMPANIES. [00:55:55] Speaker 2: THAT'S BEEN A PERSISTENT THEME WHEN IT COMES TO TECHNOLOGY IN THE LAST FEW YEARS. OUR TOP STORY THIS HOUR IS A PIVOTAL WEEK COMING UP FOR US INCLUDING TWO KEY INFLATION PRINTS AND A GATHERING OF CENTRAL BANKERS OUT IN BANCOCK. YOU'VE GOT U.S. CPI DUE WEDNESDAY FOLLOWED BY PPI ON THURSDAY. ACCORDING TO BLOOMBERG ECONOMICS THE REPORTS WILL BE TAME ENOUGH TO KEEP THE FEDERAL RESERVE ON HOLD. THIS DATA COME OUT JUST AHEAD OF A PLANNED APPEARANCE BY FED CHAIR KEVIN WARSCH AT THE IMF WORLD BANK MEETINGS TAKING PLACE THIS WEEK. THAT'S THE PERFECT SETUP NOW FOR OUR NEXT GUEST OMER SHARIF FOUNDER AND PRESIDENT AT INFLATION INSIGHT. OMER, I MENTIONED CPI, I MENTIONED PPI, AND OF COURSE WE'VE GOT FED CHAIR KEVIN WARSCH SPEAKING AS WELL. WHICH OF THOSE HAS THE POTENTIAL TO SURPRISE? [00:56:41] Speaker 13: I WOULD PROBABLY GO WITH THE PPI. I THINK THE CPI, IF YOU THINK BACK TO LAST MONTH, WE HAD SORT OF A HIGH PRINT OF 0.3, BUT A LOT OF THAT WAS REALLY DRIVEN BY ONE KIND OF ODD MOVE IN ONE COMPONENT. THE COST OF YOUR CELL SERVICE PLANS ADDED 10 BASIS POINTS TO THAT MOVE. WITHOUT IT, THE CORE WOULD HAVE BEEN MUCH MORE MODEST 0.2, WHICH IS WHAT I'M EXPECTING TO SEE THIS WEEK AS WELL. THE PPI IS THE ONE WHERE I THINK THERE'S POTENTIAL FOR A HOTTER PRINT, IF YOU WILL, BECAUSE IT'S GOING TO LOOK AT WHERE PRICES WERE AROUND THE MIDDLE OF SEPTEMBER VERSUS THE MIDDLE OF AUGUST. ENERGY, OF COURSE, OVER THAT PERIOD WAS SIGNIFICANTLY HIGHER, YOU KNOW, BOTH RETAIL GAS PRICES, DIESEL PRICES. SO THAT'S GOING TO BLEED INTO TRANSPORTATION COSTS. AND I THINK THAT COULD POTENTIALLY BUMP UP THE PPI BY PERHAPS MORE THAN WHAT WE'RE LOOKING FOR. WHEREAS WITH THE CHAIRMAN, I WOULD EXPECT HIM TO KIND OF CONTINUE, YOU KNOW, THE SAME LANGUAGE HE'S USED THAT THEY'RE GOING TO DELIVER PRICE STABILITY. HE'S NOT GOING TO GIVE US ANY FORWARD GUIDANCE. WE KNOW HE DOESN'T LIKE TO DO THAT. I DON'T THINK HIS MESSAGE WILL BE VERY DIFFERENT THAN WHAT WE'VE HEARD FROM HIM RECENTLY. AND CERTAINLY I WOULDN'T EXPECT HIM TO CHANGE ANYTHING BASED OFF OF JUST, YOU KNOW, THIS WEEK'S DATA ALONE. [00:57:43] Speaker 2: SO DOES THAT POTENTIAL PPI SURPRISE BLEED THROUGH INTO CORE PCE IN ANY WAY? [00:57:50] Speaker 13: IT USED TO MORE BEFORE THE BEA CHANGED THE METHODOLOGY, YOU KNOW, VERY RECENTLY AT THE END OF SEPTEMBER. SO, FOR EXAMPLE, YOU KNOW, THE STOCK MARKET, WHAT IT EFFECTIVELY DID IN THE PRIOR MONTH WOULD SORT OF SHOW UP IN THE PCE DATA AND HAVE THE POTENTIAL TO MOVE IT SEVERAL BASIS POINTS IN EITHER DIRECTION. THEY HAVE EFFECTIVELY SORT OF SMOOTHED OUT THOSE CHANGES. SO THAT IS LESS OF AN ISSUE NOW FOR THE PCE NUMBER. BUT IF YOU KIND OF THINK ABOUT, YOU KNOW, THE EXPECTATIONS FOR THE CPI THIS WEEK AND THE PPI, THE WAY THAT KIND OF TRANSLATES IN THE CORE PCE DUE AT THE END OF THE MONTH IS PROBABLY, AGAIN, A 0.2 PERCENT PRINT. SO, TO ME, THE CPI AND PCE, WHICH ARE MORE CLOSELY WATCHED, ARE PROBABLY GOING TO BE PRETTY MODERATE. AND OBVIOUSLY, YOU KNOW, OCTOBER RATE HIKES ARE ALREADY VERY -- THERE'S VERY LITTLE PRICING THERE FOR A OCTOBER, BUT MY FEELING IS THE FED IS GOING TO HAVE THIS WEEK'S DATA AND THE OCTOBER NUMBERS BEFORE THEY GO INTO THAT DECEMBER 9th MEETING. MY FEELING IS THE REALIZED DATA IS GOING TO COME IN MORE MODERATE THAN EXPECTATIONS AND POTENTIALLY ALLOW THEM TO EVEN PUNT DECEMBER INTO Q1. SO I THINK WE NEED TO START THINKING A LITTLE BIT MORE ABOUT NOT JUST THEM SKIPPING OCTOBER, BUT POTENTIALLY ALSO [00:58:56] Speaker 3: SKIPPING IN DECEMBER. AND IF THEY'RE SKIPPING THE NEXT TWO, DO YOU HAVE A SENSE [00:59:05] Speaker 13: OF HOW YOU MIGHT PROJECT THE FIRST QUARTER LOOKING? I WANT TO MAKE SURE THAT THEY MIGHT RAISE AGAIN, BECAUSE MY EXPECTATIONS ARE A LOT OF THE ENERGY MOVE WE'VE SEEN HAS NOT REALLY MATERIALIZED INTO THE INFLATION DATA JUST YET. AND THAT'S WHERE THE PPI DATA THIS WEEK IS GOING TO BE REALLY INTERESTING, IS THOSE TRANSPORTATION COSTS, ARE THEY STARTING TO BLEED INTO, FOR EXAMPLE, FOOD PRICES OR THE COST OF MOVING OTHER MATERIALS AROUND THE COUNTRY. AND SO IF THE PPI GIVES HINTS OF THAT, WE REALLY HAVEN'T SEEN IT SHOW UP SO FAR IN THE CONSUMER DATA. BUT IF IT DOES, I EXPECT THE START OF THE YEAR IS A PRETTY OBVIOUS PLACE WHERE, AS YOU KNOW, CONTRACTS START TO RESET, FIRMS START TO CHARGE HIGHER PRICES. WE'VE SEEN THAT REALLY EVERY QUARTER FOR THE LAST SEVERAL YEARS, AND THAT COULD REALLY BUMP UP THE JANUARY AND FEBRUARY READINGS, BECAUSE I THINK ESSENTIALLY SORT OF A PENT-UP PASS THROUGH, IF YOU WILL, COMING IN THE FIRST QUARTER. IF THAT MATERIALIZES, THEN I THINK MARCH WILL PROBABLY BE THE MOST OBVIOUS PLACE TO SEE THE NEXT HIKE. [00:59:55] Speaker 3: VERY INTERESTING. SO WHERE DO YOU SEE, I GUESS, THE BIGGEST RISK OVER THE NEXT SIX MONTHS? [01:00:01] Speaker 13: YES. SO I THINK OVER THE NEXT SIX MONTHS, IT REALLY IS SORT OF, FOR ME, THE FIRST QUARTER IS THE UPSIDE. WHEREAS I THINK OVER THE NEXT MONTH OR TWO, IT'S A LITTLE BIT MORE MODERATE ON THE INFLATION FRONT. SO I THINK IT PROBABLY COMES IN PRETTY TAME OVER, LET'S SAY, THE NEXT TWO, THREE MONTHS. BUT THEN YOU KIND OF GET A BIG UPSWING IN THE FIRST QUARTER. A LOT OF THIS SORT OF, YOU KNOW, PENTA PASS THROUGH MATERIALIZES AND FIRMS BEGIN TO CHARGE HIGHER PRICES. SO I THINK THE START OF THE YEAR IS A PRETTY OBVIOUS PLACE TO LOOK FOR FIRMER INFLATION. BUT AGAIN, I THINK THAT TENDS TO BE A FIRST QUARTER TYPE SITUATION AND THAT SORT OF FADES OUT IN THE SECOND QUARTER. WE'RE ALREADY STARTING TO SEE, FOR EXAMPLE, AIRFAIRS THAT WENT UP A LOT WHEN SHEPHUEL WENT UP, START TO SOFTEN UP A LITTLE BIT MORE. SO I THINK SOME OF THAT HAS KIND OF COME THROUGH AND THE REST OF IT COMES THROUGH IN Q1 AND THEN FADES OUT IN THE SECOND QUARTER OF NEXT YEAR. [01:00:50] Speaker 2: THAT'S REALLY INTERESTING ABOUT HOW THE PRICES ARE LIKELY TO GET A BOOST AT THE START OF THE YEAR GIVEN THAT IT'S A TIME TO RESET EVERYTHING AND NEW CONTRACTS COME INTO PLAY. I WANT TO GET A SENSE FROM YOU ON HOW INFLATION EXPECTATIONS PLAYS INTO POLICYMAKERS THINKING. THESE ARE OFTEN GATHERED THROUGH SURVEYS. SO IT'S CONSIDERED SOFT DATA, NOT HARD DATA. AND I WONDER HOW MUCH INFLATION EXPECTATIONS, ESPECIALLY WHEN YOU ASK CONSUMERS, CAN BE ANYTHING BUT RECENCY BIAS. I THINK PRICES ARE GOING UP 4% BECAUSE THEY WENT UP 4% LAST THEY CHECKED AND, YOU KNOW, I'M WORRIED. SO ISN'T IT JUST MORE, YOU KNOW, AN ARTICULATION OF SOMEONE'S CONCERN? [01:01:25] Speaker 13: YEAH, I THINK THAT'S A GREAT WAY TO PUT IT, SCARLETTE, BECAUSE IF YOU KIND OF THINK BACK TO WHEN WE GOT THE TARIFFS IN THE FIRST PLACE, IF YOU GO BACK TO LIBERATION DAY, THE INITIAL SET OF TARIFFS LOOKED LIKE THEY WERE GOING TO ADD SEVERAL PERCENTAGE POINTS TO HEADLINE INFLATION OVER THE NEXT YEAR. AND IF YOU REMEMBER BACK THEN, SURVEYS YOU MENTIONED LIKE THE UNIVERSITY OF MICHIGAN, FOR EXAMPLE, STARTED TO JUMP VERY MATERIALLY. I MEAN, I THINK I REMEMBER THEM GOING, I BELIEVE THEY WENT NORTH OF 5%, 6% ON INFLATION. OBVIOUSLY THOSE TARIFFS WERE NEVER IMPLEMENTED IN THE WAY THEY WERE INITIALLY INTRODUCED AND THOSE EXPECTATIONS CAME DOWN WHEN THE REALIZED DATA CAME IN. SO I DON'T REALLY SEE EXPECTATIONS AS A PROBLEM RIGHT NOW. THERE'S BEEN A LITTLE BIT OF MOVEMENT RECENTLY, OBVIOUSLY, BECAUSE OF GASOLINE AND DIESEL PRICES. BUT REALLY I DON'T THINK THAT'S A BIG CONCERN FOR THE FED RIGHT NOW. THEY'LL ALWAYS TELL YOU THAT'S A HUGE CONCERN, BUT I DON'T THINK [01:02:16] Speaker 2: THE NUMBERS REALLY SUGGEST RIGHT NOW THAT THIS IS A BIG PROBLEM FOR THE FED TO WORRY ABOUT. THANK YOU FOR JOINING US. OMAR SHARIF IS FOUNDER AND PRESIDENT AT INFLATION INSIGHTS. HE SAYS IF THERE'S ANY SCOPE FOR SURPRISE, IT WILL PROBABLY BE IN THE PPI REPORT ON THURSDAY. COMING UP ON THE CLOSE, CENTRAL BANKERS STARING AT A "REFLECTION PROBLEM". JONATHAN LEVIN WILL EXPLAIN WHAT HE MEANS WHEN WE COME BACK. MORE ON CENTRAL BANKING AND INFLATION. THE BOTTOM MARKET MIGHT BE CLOSED TODAY FOR COLUMBUS DAY, BUT LONG-TERM TREASURY YIELDS ARE STILL SITTING AT MULTI-DECADE HIGHS. THE MOVE HIGHER IN RECENT MONTHS HAS FORCED THE FED TO HIKE INTEREST RATES BY 25 BASIS POINTS AT ITS LAST MEETING. BUT COULD THESE HIGHER RATES DO THE HEAVY LIFTING FOR CENTRAL BANKS FROM HERE ON OUT? LET'S BRING IN BLOOMBERG OPINION'S JONATHAN LEVIN WHO HAS WRITTEN A COLUMN ON THIS AND HAS SOME VIEWS AS WELL. JONATHAN, YOU ARGUE THAT FOR THE CENTRAL BANKS TO RELY CENTRAL BANKS FOR HAVING A LOT OF PEOPLE, THAT IS A LOSING STRATEGY. WHY? [01:03:16] Speaker 14: I'M A LITTLE BIT WORRIED ABOUT THE SENSE THAT I GET THE POLICYMAKERS ARE STARTING TO CITE THIS ARGUMENT THAT THEY DON'T HAVE TO DO AS MUCH BECAUSE TERM PREMIUM HAS GONE UP SO MUCH. I POINT TO SOMETHING THAT THE NOBEL LAUREATE PAUL SAMUELSON SAID MANY DECADES AGO WHICH IS THAT THIS IS ESSENTIALLY A REFLECTION PROBLEM. SOMETIMES POLICYMAKERS LOOK OUT THERE AT THE WORLD AND THEY THINK THAT MARKETS ARE THIS EXTERNAL VARIABLE THAT HAS NOTHING TO DO WITH WHAT THEY DO WHEN IN FACT MARKETS ARE BASICALLY A REFLECTION OF THE SIGNALS THAT THEY ARE SENDING OUT INTO THE WORLD. AND SO YOU KNOW IF MARKETS MOVE BUT THEN THEY DON'T FOLLOW THE ENTIRE EDIFICE IS GOING TO COLLAPSE RELATIVELY QUICKLY. AND SO IN MY PIECE I GO INTO A PRECEDENT. 2023 WE ALL REMEMBER THAT. THE FED WENT ON PAUSE IN LATE 2023. WE HEARD SOME WHISPERS ABOUT HOW THE BOND MARKET WAS DOING A LOT OF THE TIGHTENING WORK FOR THEM. LORI LOGAN EVEN GAVE A RELATIVELY FAMOUS SPEECH ABOUT THIS. AND GUESS WHAT? TERM PREMIUM COLLAPSED JUST A FEW WEEKS OR MONTHS LATER. AND ALL OF THE TIGHTENING CAME OUT OF THE SYSTEM. SO WE WANT TO AVOID THAT THIS TIME AROUND. [01:04:34] Speaker 2: SO YOU MENTIONED TERM PREMIUM AND I WANT TO GO TO THIS IDEA BECAUSE IT'S KIND OF SQUISHY. I MEAN YOU CAN CALCULATE IT BUT IT'S NEVER REALLY CLEAR WHERE IT'S SUPPOSED TO BE OR WHAT THE HISTORICAL RANGE IS. I MEAN IT FEELS LIKE IF YOU WHOEVER YOU ASK YOU MIGHT GET A DIFFERENT ANSWER ON THIS. WHY IS TERM PREMIUM A RISK WHEN YOU FACTOR IT INTO IT DRIVING BONN YIELDS HIGHER? [01:04:56] Speaker 14: YEAH. BOTTOM LINE IT'S ONE OF THE MOST VOLATILE VARIABLES OUT THERE. YOU CANNOT DEPEND ON THIS THING. TWO YEARS AGO TERM PREMIUM WAS SLIGHTLY NEGATIVE. SIX MONTHS AGO OR EVEN THREE MONTHS AGO I THINK TERM PREMIUM WAS LIKE HALF OF WHERE IT IS TODAY. TODAY WE SIT AT 100 BASIS POINTS BUT THE TERM PREMIUM GIVES AND THE TERM PREMIUM TAKES AWAY. YOU DON'T BANK YOUR INFLATION [01:05:24] Speaker 3: TARGET ON WHAT TERM PREMIUM IS DOING. I THINK THE PEOPLE ARE GOING TO BE A LITTLE BIT OF TRUMP. YOU HAVE AN OPINION PIECE OUT WHERE YOU TALK ABOUT HOW IT ACTUALLY LOWSY FOR MOST PEOPLE THE STOCK MARKET UNDER TRUMP. [01:05:42] Speaker 14: TALK TO US A BIT ABOUT YOUR THESIS. WHAT I REALLY WANT TO UNDERSCORE FROM THAT PIECE IS THAT FIRST OF ALL, WE ARE AT HISTORIC LEVELS OF THINNESS AROUND THIS RALLY. I THINK A LOT OF PEOPLE UNDERSTAND THAT THE BREATH IS REALLY, REALLY TERRIBLE. ONE THING THAT THE BREATH DOES NOT TELL US -- IT'S NOT A PERFECT TIMING MECHANISM. IT DOES NOT TELL US THAT THE END OF THE RALLY IS NIGH. SOMETIMES JUST A FEW PLAYERS CAN REALLY CARRY YOU ACROSS THE FINISH LINE. WHAT IT DOES UNDERSCORE IS THIS UNDERLYING FRAGILITY. THIS SENSE THAT, YOU KNOW, IF THINGS WERE TO GO SOUTH, BOY, COULD THEY REALLY GO SOUTH AND GO SOUTH IN A HURRY. [01:06:25] Speaker 3: AND WITH THIS REFLECTION PROBLEM THAT YOU MENTIONED EARLIER, WHAT IS THE SOLUTION TO THIS? WHAT IS THE ANSWER TO SOLVE THE REFLECTION CONCERN THAT YOU HAVE? [01:06:33] Speaker 14: WELL, THE POLICYMAKER'S ANSWER HERE IS THAT YOU ABSOLUTELY HAVE TO FOLLOW THROUGH. YOU CAN'T TAKE ANYTHING FOR GRANTED, RIGHT? SO I GIVE A COUPLE OF EXAMPLES IN MY PIECE, HEMA. YOU KNOW, ONE OF THEM THAT CONCERNED ME A GREAT DEAL WAS THAT IF YOU -- IF YOU SAW HOW THAT 6-3 DECISION OVER AT THE BANK OF ENGLAND PLAYED OUT IN SEPTEMBER, IT SEEMED THAT THEY WERE REALLY CITING THIS TIGHTENING IN MARKET RATES TO JUSTIFY STAYING ON HOLD. I WOULD HATE FOR SOMETHING LIKE THAT TO HAPPEN AT THE FED OR OTHER INSTITUTIONS LIKE THE ECB. [01:07:12] Speaker 2: ALL RIGHT. JONATHAN LEVIN, REALLY APPRECIATE YOU'RE JOINING US. BLOOMBERG OPINIONS, JONATHAN LEVIN, HIS LATEST PIECE, THE CENTRAL BANKERS STARE AT A REFLECTION PROBLEM AS WELL AS HIS LATEST PIECE ON THE STOCK MARKET AS WELL. THE TRUMP STOCK MARKET IS PRETTY LOWSY FOR MOST. WE'VE GOT FOUR OF THEM BEFORE THE OPENING BELL. WE'VE GOT FOUR OF THEM BEFORE THE OPENING BELL. WE'RE GOING TO BREAK THINGS DOWN ON WHAT TO EXPECT WITH GABELI'S MCRAE SYKES WHEN WE COME BACK. THIS IS BLOOMBERG. EARNINGS SEASON IS OFFICIALLY UNDERWAY BEFORE THE BELL TOMORROW WHEN THE RESULTS ROLL IN FROM J.P. MORGAN, GOLDMAN SACKS, CITY AND WELLS FARGO. EXPECTATIONS ARE PRETTY HIGH FOR THE GROUP WITH OUR NEXT GUEST SAYING THAT CURRENT CONDITIONS ARE IDEAL FOR EARNINGS WORTH FOR THIS SECTOR. LET'S BRING IN MCRAE SYKES. MCRAE SYKES IS PORTFOLIO MANAGER AT GABELI FUNDS. MCRAE, YOU POINT OUT THAT WE'VE SEEN BIG U.S. BANK STOCKS CORRECT. THEY'VE HAD A DECLINE DOWN 10% FROM THEIR RECENT HIGHS. WHAT DO YOU THINK THIS REFLECTS AHEAD OF EARNINGS SEASON? WHAT ARE PEOPLE PERHAPS TRYING TO PRICE IN? [01:08:18] Speaker 15: I THINK PROBABLY THE BIGGEST QUESTION IS AROUND THE RISE OF THE 10-YEAR AND WHAT THAT MIGHT MEAN FOR CREDIT GOING FORWARD. CLEARLY IT WILL IMPACT CRE AND REFINANCING GOING FORWARD. WE'VE BEEN IN A PRETTY INCREDIBLE CREDIT ENVIRONMENT. SO THE HIGHER COST OF CAPITAL IS SOMETHING TO WORRY ABOUT POTENTIALLY. THEN WE ALSO HAVE SOME MACRO CONCERNS AS WELL. THOSE HAVE BEEN ONGOING. WITH THE OIL PRICES INCREASING, IT IMPACTS INFLATION AS WELL. [01:08:43] Speaker 2: WHAT ABOUT THE CAPITAL MARKETS? WE'VE ALSO HEARD WHAT WE'VE SEEN ACTUALLY, M&A SLOW DOWN QUITE A BIT OVER THE LAST THREE MONTHS. WE KNOW THAT M&A WAS DEFINITELY PROVIDING A LOT IN FEES FOR THESE BIG BANKS WITH CAPITAL MARKETS DIVISIONS AND INVESTMENT BANKS. HOW ARE YOU THINKING ABOUT THE CONTRIBUTION FROM THAT BUSINESS? [01:09:01] Speaker 15: WELL, 2Q IS AMAZING AND, YOU KNOW, WITH THE SPACEX IPO, ENGAGEMENT, SOME OF THE TRENDS THERE AND THEN OBVIOUSLY A MARKET SLOW DOWN QUARTER OVER QUARTER. BUT YEAR OVER YEAR THE EARNINGS RESULTS, YOU KNOW, FOR JP MORGAN RECENTLY HIGHLIGHTED THAT MARKETS REVENUE COULD BE UP 15% YEAR OVER YEAR, MID TO HIGH TEENS AS WELL AS BANKING FEES. SO WHEN YOU DO THOSE COMPARISONS, VERY STRONG EVERY YEAR BUT CERTAINLY LOWER RELATIVE TO 2Q, I THINK THE QUESTION FOR 4Q IS, YOU KNOW, GOING PAST THE ELECTIONS, CAN WE REBOOT THE IPO BUSINESS AGAIN? CERTAINLY A LOT WEIGHING ON ANTHROPIC WITH 100 BILLION POTENTIAL ISSUANCE THERE. WE DID HAVE A NUMBER OF IPOs THAT GOT DELAYED. SO I THINK WE WOULD LOOK TO THESE BANKS TO GET SOME MORE CONFIDENCE THAT WE COULD RESUME THE WINDOW AND INTO THE END OF THE YEAR. SO THAT WOULD BE IMPORTANT. BUT, YOU KNOW, I STILL THINK THAT THE BACKGROUND FOR EARNINGS GROWTH FOR THESE MAJOR COMPANIES IS GOOD. YOU HAVE NOMINAL GROWTH, LOW UNEMPLOYMENT, GOOD CREDIT, AND THEN THE WEALTH EFFECT, AS WE KNOW, HOUSEHOLD WEALTH IS UP ALWAYS TO 20 TRILLION AS OF JUNE. SO A LOT OF THESE THINGS. AND THEN WE JUST GOT A REPORT ON SEPTEMBER SPENDING IN TERMS OF THE CONSUMER, WHICH IS 70% OF THE OVERALL ECONOMY, WAS VERY STRONG THERE, TOO. SO, YOU KNOW, DESPITE SOME OF THE CHALLENGES IN TERMS OF WORRIES ABOUT THE OUTLOOK, YOU KNOW, WE STILL SEE A PRETTY GOOD ENVIRONMENT FOR OWNING THE BANKS. [01:10:26] Speaker 3: YOU WALKED US THROUGH A FEW REASONS WHY WE CAN BE OPTIMISTIC. BUT SPEAKING OF THOSE WORRIES, YOU KNOW, WE ARE STILL UP AGAINST INFLATION, WE ARE LOOKING AT THESE OIL PRICES, WHERE THEY ARE, WE ARE LOOKING AT GLOBAL GEOPOLITICAL TENSIONS HERE. WE ARE LOOKING AT THINGS WITH THOSE UPSIDES AND HOW CONCERNED [01:10:44] Speaker 15: ARE YOU ABOUT THEM? WE ARE ALWAYS CONCERNED, ESPECIALLY ON THE CREDIT SIDE, BECAUSE THAT COULD REALLY WEIGH MATERIALLY ON RESULTS. BUT, YOU KNOW, IF YOU LOOK AT WHERE WE ARE, THE VALUATIONS, WE HAVE HAD A CORRECTION SINCE AUGUST, SO THEY HAVE COME IN. I WOULD SAY, FOR THE MOST PART, PRETTY BALANCED FOR THESE LARGE BANKS. I MEAN, WE WOULD HIRED A LITTLE BIT MORE VALUE THAT WE SEE IN WELLS FARGO, JUST GIVEN THE TRAJECTORY, A LITTLE BETTER NIM EXPECTATIONS COMING INTO THE QUARTER THAN THE ASSET CAP REMOVAL. SO WE SEE GOOD MOMENTUM FOR THEM IN TERMS OF COST EFFICIENCIES AND PERHAPS A HIGHER VALUATION AS THEY MARCH UP ON THEIR GOALS. BUT FOR THE MOST PART, GOOD OPERATING RESULTS, BUT KIND OF FAIR VALUATIONS IN HERE HISTORICALLY, NOT TOO CRAZY PREMIUMS AND NOT TOO CHEAP LIKE WE SAW IN '23. SO, AGAIN, I THINK THE EXPECTED RETURNS WILL BE AROUND THE FUNDAMENTAL PROGRESS AS WELL AS THE CAPITAL RETURNS OVER THE NEXT YEAR. [01:11:34] Speaker 3: HOW ARE YOU THINKING ABOUT CREDIT RESERVES AND WORRIES [01:11:38] Speaker 15: ABOUT THE BROADER ECONOMY? COMING INTO THE QUARTER, CERTAINLY THE STATUS QUO, VERY GOOD BACKGROUND FOR THAT. WE ARE WITNESSING A TENURE RATHER THAT HASN'T BEEN HERE IN 20 YEARS. CERTAINLY A DIFFERENT CREDIT ENVIRONMENT, POTENTIALLY A RATE CREDIT ENVIRONMENT AND IN THE FACT THAT THAT IS CORRELATED. WE WILL HAVE TO SEE, BUT WE WILL LOOK TO THE CALLS IN THE NEXT FEW DAYS TO GET INSIDE ON THAT, HOW THEY ARE THINKING ABOUT RESERVES, ET CETERA, AND WHAT IT COULD MEAN IN TERMS OF COMMERCIAL LOANS, ET CETERA. [01:12:07] Speaker 2: YOU SAID AMONG THE BIG BANKS, WELLS FARGO IS A FAVORITE. HOW ABOUT FURTHER DOWN THE CAP SCALE, LIKE WHICH OF THE MORE REGIONAL BANKS MIGHT YOU BE LOOKING AT IN A SIMILAR WAY? [01:12:20] Speaker 15: I THINK FOR OUR PERSPECTIVE, WE TEND TO OWN THE LARGER, MORE DIVERSIFIED REVENUES, BUT WE ALSO LIKE FOR CITIZENS, WE LIKE M&T [01:12:30] Speaker 2: BANK, AND WE LIKE P&C AS WELL. GOT IT. THANK YOU SO MUCH, McCRAY. REALLY APPRECIATE IT. THE BIG BANKS KICK OFF EARNINGS TOMORROW. THE BIG BANKS, PARTICULARLY WELLS FARGO. WE HAVE SOME BREAKING NEWS THAT JUST CROSSED. KROGER WILL BE CUTTING ITS CORPORATE WORKFORCE BY ABOUT 3,000 OVER THE NEXT THREE YEARS. THAT IS 37% OF CORPORATE JOBS IN THE ORDER TO SIMPLIFY OPERATIONS AND COMPETE MORE EFFECTIVELY. THIS IS ACCORDING TO A MEMO. THE REDUCTIONS WILL HELP THE COMPANY PUT MORE RESOURCES TOWARD CUTTING PRICES, IMPROVING SHOPPING EXPERIENCE, AND INVESTING IN FRONTLINE EMPLOYEES. THE STOCK NOT MOVING A WHOLE LOT IN AFTERHOURS, JUST DOWN MARGINLY BY 1/10 OF 1%. THIS IS THE CLOSE ON BLOOMBERG. [01:13:15] Speaker ?: BLOOMBERG IS REPORTING THAT ANTHROPIC IS SET TO MEET [01:13:18] Speaker 2: PERSPECTIVE INVESTORS THIS WEEK, AHEAD OF A POTENTIAL IPO. THIS COMES AS CONCERNS AND EXCITEMENT GROW OVER AI'S PROSPECTS. JOINING US NOW TO DISCUSS IS WILLIE LEE, PRINCIPAL AT NEOSTELLAR, A VC FUND WHO'S SECOND BIGGEST PORTFOLIO HOLDING IS OPEN AI. I FEEL LIKE WE HAVE BEEN DISCUSSING THE ANTHROPIC IPO FOR SO LONG THAT BY THE TIME IT DROPS IT WON'T BE A SURPRISE ANYMORE. YOU MAKE THE POINT THAT WE ARE FOCUSED SO MUCH ON IT, WE KIND OF MISS OUT ON A LOT OF OTHER THINGS TAKING PLACE IN THIS SPACE. JUST EXPAND ON THAT A BIT. [01:13:51] Speaker 16: IF YOU LOOK AT HOW MUCH CAPITAL HAS BEEN DEPLOYED JUST THIS YEAR, FIRST HALF, ALMOST 200 BILLION HAS BEEN DEPLOYED IN JUST THE U.S. FOR VENTURE CAPITAL. COMPARE THAT TO LAST YEAR, HOW MUCH CAPITAL WAS DEPLOYED IN ALL OF 2025, MAYBE AROUND 260 BILLION, SOMEWHERE ABOUT THERE. THINK ABOUT JUST HOW MUCH OPPORTUNITY PEOPLE ARE SEEING TO DEPLOYED OVER ABOUT 74% OF THE CAPITAL OF LAST YEAR, JUST IN THE FIRST HALF OF THIS YEAR. [01:14:15] Speaker 2: IT IS A REALLY GOOD POINT. OF COURSE, ANTHROPIC IS NOT THE BE-ALL, END-ALL. IT IS THE HIGH-PROFILE NAME OF THE MOMENT. HAVING SAID THAT, YOU DO OWN OPEN AI, AND THE NUMBERS HAVE COME OUT RECENTLY THAT I THINK NEED TO BE PUT INTO CONTEXT HERE IN TERMS OF ITS ANNUALIZED REVENUE RUN RATE. NEARING $70 BILLION. JUST FRAME THAT FOR US IN TERMS OF HOW WE SHOULD THINK ABOUT IT IN TERMS OF GROWTH RATES AND WHAT IT MEANS GOING FORWARD. [01:14:42] Speaker 16: I THINK LOOKING AT NOT ONLY GROWTH RATES, BUT VALUATION. I THINK PEOPLE HAVE ALL THESE QUESTIONS ABOUT VALUATION AND GROWTH RATE. THINK OF JUST GOOGLE, FOR EXAMPLE, AS A BUSINESS. BETWEEN JUNE OF 2025 TO JUNE 2026, THEY ADDED ABOUT 75 BILLION OF REVENUE. DURING THAT TIME, THEY HAD AN ASTRONOMICAL GROWTH IN THE BUSINESS. THEY ADDED ABOUT 2 TRILLION OF MARKET CAP DURING THAT TIME PERIOD. 75 BILLION OF REVENUE THAT THEY HAVE GROWN DURING THAT TIME PERIOD. YOU TAKE THE COMBINED AMOUNT OF ARR THAT OPEN AI AND ANTHROPIC HAVE ADDED JUST THIS YEAR, NOT EVEN THE FULL YEAR, JUST TO DATE. THAT IS A MASSIVE AMOUNT OF REVENUE THAT I THINK PEOPLE ARE STILL TRYING TO RAPE THEIR ARMS AROUND BECAUSE IT IS SUCH A BIG NUMBER. THESE NUMBERS ARE GIANT AND [01:15:31] Speaker 3: THE LIKES WE HAVEN'T REALLY SEEN BEFORE. AS YOU LOOK AT VALUATIONS, HOW DO YOU WEIGH THE RISKS OF SOME OF THE WILD THINGS WE HAVE BEEN HEARING LIKE ANTHROPIC GOING ROGUE AND SUBMITTING A FAKE TIP TO POLICE? WE ARE SEEING THE KIND OF RISKS WE HAVEN'T SEEN EITHER AND HOW DO YOU WEIGH THAT AS AN INVESTOR IN A LOT OF THESE [01:15:50] Speaker 16: COMPANIES? THINK ABOUT THE MEGATRENDS WE HAVE SEEN IN TECHNOLOGY OVER THE LAST 25-30 YEARS. YOU HAVE THE DOT COM BOOM IN THE EARLY 2000s. YOU HAVE THE COVID BOOM IN 2021 IN THAT TIME PERIOD. IN THOSE TIMES, PEOPLE ADOPTED TECHNOLOGY VERY RAPIDLY. BUT YOU CAN IGNORE IT IN SOME WAYS AND YOU WOULD BE OKAY. AND YOU CAN ADOPT IT MORE SLOWLY. I THINK AI IS ONE OF THOSE TECHNOLOGIES WHERE PEOPLE JUST CANNOT IGNORE IT. WHETHER THAT IS FROM WHAT YOU ARE SEEING IN THE HEADLINES FROM AI TO JUST THE DEVELOPMENTS WE ARE SEEING EVEN IN THE LAST MONTH FROM THE ADOPTION OF MUSE TO THE CHANGING OF THE PROTOCOLS FOR HOW AGENTS AND BUSINESSES ARE GOING TO INTERACT WITH SIERRA DROPPING POPPY. THOSE THINGS ARE JUST FUNDAMENTAL SHIFTS THAT WE SEE THIS ANTHROPIC IPO IN FRONT OF OUR FACE. ALL THESE OTHER THINGS ARE HAPPENING IN THE BACKGROUND. WE ARE NOT PAYING ATTENTION TO JUST HOW FAST ALL THIS TECHNOLOGY IS EVOLVING THAT CORPORATIONS CAN NO LONGER JUST IGNORE AI AND SAY WE ARE JUST GOING TO LET IT PASS BY US. [01:16:50] Speaker 3: AND YOU MENTIONED EARLIER THAT THESE ARE GINORMOUS INVESTMENTS BUT THERE ARE A LOT OF ONES THAT COULD BE MISSED. YOU ARE AN INVESTOR IN A LOT OF THESE BIG COMPANIES, OPEN AI, CORE WEAVE, CANVA. WHAT ARE THE ALTERNATIVE INVESTMENT OPPORTUNITIES THAT PEOPLE ARE MISSING IN THE VENTURE SPACE THAT MIGHT NOT BE THESE BIG GIANT TECH COMPANIES WITH THESE VALUATIONS BUT THAT MIGHT BE [01:17:10] Speaker 16: OVERLOOKED? I THINK A LOT OF THOSE ARE THESE EARLIER STAGE THINGS THAT YOU ARE SEEING IN THE PRIVATE SPHERE. SO THAT CAN BE ANYTHING FROM CALL IT THE INFRASTRUCTURE COMPANIES OF HELPING AGENTS AND ORCHESTRATION TO LIKE COGNITION AND BUSINESSES THAT ARE HELPING COMPANIES ADOPT THIS TYPE OF TECHNOLOGY. I MEAN, YOU SEE IT WITH ENTERPRISES RIGHT NOW FROM, YOU KNOW, SPOTIFY AND META THAT ARE TRYING TO GET INVOLVED IN THIS TYPE OF SPACE BECAUSE THEY ARE NOT CORE BUSINESSES AND AROUND ENTERPRISE SAS OR AI SAS, RIGHT? THEIR BUSINESSES ARE COMPLETELY DIFFERENT BUT THEY ARE SEEING SUCH AN OPPORTUNITY THAT THEY CANNOT IGNORE, YOU KNOW, PARTICIPATING THERE. I MEAN, SPOTIFY'S CORE BUSINESS IS CLEARLY NOT ENTERPRISE SAS, BUT THEY WANT TO MOVE INTO THAT BECAUSE THEY ARE BUILDING ALL THESE GREAT TOOLS INTERNALLY. THEY ARE SEEING THIS DISCREPANCY BETWEEN ENTERPRISES THAT HAVE ADOPTED AND NOT ADOPTED THAT THEY ARE LIKE, WHY DON'T WE JUMP AT THIS OPPORTUNITY? IN OTHER WORDS, THEY CAN'T AFFORD NOT TO. [01:18:08] Speaker 2: EXACTLY, YES. SO YOU POINT OUT THAT THE AI MARKET IS MATURING. WHEN I HEAR THE WORD MATURING, I THINK THAT MEANS A SLOWING [01:18:14] Speaker 16: GROWTH RATE. IS THAT WHAT YOU MEAN? WHAT WE ARE HEARING IS WE FIRST SAW THIS ADOPTION OF MATURATION FOR AI WITH ENTERPRISE CODING. AND THAT HAS BEEN SUCH A RAPID UPTAKE. YOU SEE THAT IN ANTHROPICS BUSINESS. THIS NEXT LEG OF I THINK WHAT WE ARE GOING TO SEE IN AI IS REALLY THE ENTERPRISE SORT OF OPERATIONS IN PARTS WHERE I THINK THIS IS WHAT SPOTIFY AND META ARE SEEING IS GREAT. ADOPTION ON CODING HAS HAPPENED RAPIDLY. BUT THERE ARE OTHER PARTS OF ORGANIZATIONS THAT HAVE BEEN SLOW TO ADOPT AND THIS FEELS LIKE THE TIME TO REALLY LEAN IN AND TRY TO GET THAT SECOND BOARD OF ENTERPRISE SPEND THAT HASN'T HAPPENED YET. SO I THINK THAT IS WHAT I MEAN BY MATURATION IS YOU HAVE THIS MATURATION IN PARTS AND NOW YOU HAVE IT IN BROADER ENTERPRISE AND NOW YOU HAVE IT IN PERSONAL ASSISTANCE AS WELL. [01:19:01] Speaker 2: MAYBE ONE OF THE MATURATION THAT YOU DO SEE A BIT OF IS FALLING PRICES. YOU'RE TALKING ABOUT HOW OPEN AI RECENTLY CUT GPT 5.6 LUNA PRICING BY 80% WHICH SOUNDS LIKE A LOT. I MEAN IS THAT NOW THE TRAJECTORY ONCE THEY START CUTTING THEY ARE GOING TO CONTINUE CUTTING [01:19:15] Speaker 16: PRICES? YEAH. I MEAN THAT IS WHAT THE GOAL I THINK OF A LOT OF THESE DIFFERENT LARGE LANGUAGE MODEL LABS ARE REALLY FOCUSED ON IS TRYING TO MAKE THE COST EFFECTIVE FOR A LOT OF THESE ENTERPRISES. IT'S NOT JUST THAT THEY'RE TRYING TO MAKE IT COST EFFECTIVE FOR THESE ENTERPRISES. IT'S THAT THEY'RE ACTUALLY FINDING EFFICIENCY IS NOT ONLY IN TRAINING BUT ALSO IN INFERENCE THAT THEY'RE PASSING ALONG TO CONSUMERS INTO ENTERPRISES SO THAT THEY CAN GET THAT ADOPTION ON BOARD. IT'S NOT JUST THEIR CUTTING JUST BECAUSE THEY WANT MARKET SHARE. IT'S THEIR CUTTING BECAUSE THEY'RE SEEING REAL TECHNOLOGICAL ADVANCEMENTS THAT [01:19:46] Speaker 3: LETS THEM CUT. NEVER A DULL MOMENT. WE'LL HAVE SO MUCH TO GET INTO THE NEXT TIME WE HAVE YOU ON. WE'LL STICK WITH A.I. META SHARE IS RISING TODAY. AFTER RELEASING ITS LONG-AWAITED A.I. MODEL MUSE WANDER, THE COMPANY'S A.I. CHIEF SAYING THE NEW MODEL IS THE COMPANY'S MOST CAPABLE AGENTS WITH FRONTIER CAPABILITIES. BUT OUR NEXT GUEST WARNS QUOTE THIS IS THE MERELY MUSE'S HONEYMOON PERIOD. WHAT META INVESTORS NEED TO SEE NOW IS PROOF THAT THOSE WHO BOUGHT INTO THE MUSE IDEA ARE ACTUALLY FINDING IT USEFUL. THANK YOU. SO LET'S BRING IN DAVE LEE TO TALK ABOUT THIS. DAVE, WALK US THROUGH WHAT YOU WANT TO SEE FROM MUSE IN ORDER TO BE IMPRESSED. [01:20:32] Speaker 17: MUSE HAS HAD A FANTASTIC START. WE ARE HEARING IT FROM OUR GUESTS JUST THERE. LOTS OF PEOPLE HAVE DOWNLOADED IT. IT HAS BEEN AT THE TOP OF THE APP CHART FOR A GOOD TWO WEEKS NOW. USES STATISTICS SUGGEST THERE IS AROUND 2 MILLION DAILY ACTIVE USERS. THAT IS A TINY AMOUNT COMPARED TO THE REST OF FACEBOOK'S BUSINESS. LESS THAN 1% OF THE PEOPLE USE META APPS EVERY SINGLE DAY. BUT IN THIS SORT OF NASCENT AREA, THIS MOMENT IN WHICH CONSUMERS ARE HAVING TO BE SHOWN THIS TECHNOLOGY FOR THE CONSUMERS. THAT HAS BEEN SEEN AS A PRETTY STRONG START. THERE WAS AN ANALYST REPORT FROM ANALYST AT CITY SAYING THIS HAS THE POTENTIAL TO BE THE NEW FRONT DOOR TO THE INTERNET FOR MANY, MANY USERS. WHAT I WOULD LIKE TO SEE FROM META IS TO BUILD UPON THAT. THE APP IS ONLY GOING TO BE AS USEFUL AS THE THINGS IT CAN DO FOR YOU. IT'S GOING TO BE AS USEFUL AS THINGS IT CAN CONNECT TO DIRECTLY. DIFFERENT SERVICES THAT CONSUMERS ARE GOING TO EXPECT THIS TO WORK WITH. THAT IS REALLY THE NEXT PHASE. IT'S GOING TO BE CHEAP FOR THEM AS WELL. THE BETTER THEIR MODEL GETS, THE BETTER THEIR ASSISTANT IS GOING TO GET AS WELL. THE FACT THAT THEY ARE DOING THIS IN-HOUSE MEANS IT WILL BE CHEAPER FOR THEM AS WELL THAN IF THEY HAD TO HAVE GONE TO HAPPENED. [01:22:04] Speaker 3: THEY HAVE BEEN DOING THAT. SO FAR THEY SEEM TO BE CATCHING UP PRETTY WELL. IN ORDER TO KEEP THAT TRAJECTORY GOING AND THAT MOMENTUM GOING, WHERE WILL YOU SEE WHAT'S NEEDED NEXT? TECHNOLOGY, TALENT, IS THAT THE DEVELOPMENT OF ENGINEERING? [01:22:18] Speaker 17: WHAT WOULD THAT LOOK LIKE? I THINK THE BIGGEST CHALLENGE IS GOING TO BE THE E-COMERCE BUSINESSES. WE SAW WITH MUSE IT USED TO BE ABLE TO SHOP ON AMAZON FOR YOU. YOU COULD GO, RIGHT, I WANT TO BUY THIS, AND IT WOULD GO, THANK YOU VERY MUCH, AND IT WOULD BROWSE AND DO THAT. AMAZON VERY QUICKLY SAID, NO, THANK YOU. WE ARE NOT GOING TO ALLOW THAT. THEY HAVE BLOCKED META FROM DOING THAT. NAVIGATING SOME OF THOSE DISCUSSIONS IS GOING TO BE REALLY INTERESTING, BECAUSE AMAZON QUITE RIGHTLY WANT TO QUITE UNDERSTANDABLY WANT TO KEEP THEIR E-COMMERCE BUSINESS FOR THEMSELVES TO A POINT. OTHER COMPANIES ARE GOING TO DO THE SAME WITH WHATEVER THEY ARE GOOD AT CURRENTLY. I THINK IF META IS GOING TO GROW MUSE INTO SOMETHING THAT IS TRULY USEFUL, IT HAS TO WORK WITH ALL THOSE THINGS. IN ORDER TO GET THERE, IT HAS TO SELL THE USE CASE TO THE CONSUMER, BUT ALSO TO THOSE PARTNERS AS WELL. ONE OF THE THINGS I'M INTERESTED IN SEEING WITH MUSE, AND I GET THIS AS COMMENTS UNDER EVERY ARTICLE ABOUT THIS, PEOPLE SAY IT'S MADE BY META, SO I DON'T WANT TO GO TO END HERE. THERE'S A BIT OF A TRUST CEILING IN TERMS OF HOW MANY PEOPLE ARE PREPARED TO TRY IT, AND I JUST KIND OF WONDER WHERE THAT CEILING IS, BECAUSE I SUSPECT APPLE MIGHT HAVE A FEW MORE PEOPLE WILLING TO USE APPLE'S INTELLIGENCE WHEN THAT COMES ALONG, THEN WAVE WHERE MUSE IS RIGHT NOW. [01:23:30] Speaker 2: I'M SO GLAD YOU WENT THERE. I JUST SAW SOCIAL RECKONING OVER THE WEEKEND, AND IT WAS A REMINDER. I HOPE THIS DOESN'T GIVE ANYTHING AWAY. I SHOULD KNOW THE SPOILERS. IT'S A REMINDER OF THE KINDS OF TRADE-OFFS MARK ZUCKERBERG WAS AND IS WILLING TO MAKE TO GROW HIS BUSINESS AND TO EXPAND WHAT IT CAN DO. SO THIS IDEA OF TRUST CEILING WITH META, YOU POINT OUT THAT APPLE DOESN'T HAVE THAT SAME THING BECAUSE IT'S REALLY PRIORITIZED PRIVACY ABOVE ALL ELSE. HOW DOES META SOLVE FOR THAT TRUST CEILING? [01:24:00] Speaker 17: I THINK WHAT IT JUST HAS TO DO, AND THIS WILL SEEM QUITE SORT OF SIMPLISTIC, JUST MAKE IT REALLY, REALLY GOOD. I THINK FOR ALL WE TALK ABOUT META BEING NOT TRUSTED BY CONSUMERS, 3.6 BILLION PEOPLE USE A META APP EVERY SINGLE DAY. SO IF EVERYONE WHO SAID THEY DIDN'T TRUST META STOP USING META, THAT NUMBER WOULD BE A LOT LOWER, I THINK. OR CERTAINLY WOULD BE A LOT LOWER. SO THE REASON FOR THAT IS BECAUSE AS MUCH AS PEOPLE MIGHT COMPLAIN ABOUT THE COMPANY, THEY ALSO LIKE TO SEE WHAT'S HAPPENING IN THEIR LOCAL COMMUNITY OR THEY LIKE TO GO ON FACEBOOK MARKETPLACE OR KEEP UP WITH FRIENDS ON INSTAGRAM. IF THE MUSE APP CAN FIND A USEFULNESS THAT SITS ALONGSIDE THAT AND BY USING THOSE OTHER SERVICES, THAT'S HOW META WILL CONVINCE PEOPLE, I THINK, THEN IT WILL BE FINE. BUT THAT'S -- IT'S AN ADDITIONAL CHALLENGE THAT MARK ZUCKERBERG HAS THAT I DON'T THINK JOHN TURNESS TO APPLE DOES. I DON'T THINK GOOGLE HAS THAT ISSUE EITHER. PEOPLE ARE MORE INTEGRATED WITH THOSE COMPANIES ON DEEPER THINGS IN THEIR LIVES, PERHAPS. SO IT'S ONE OF THE MOST FASCINATING DYNAMICS IN SILICON VALLEY, I THINK, AT THE MOMENT. [01:25:03] Speaker 2: I AGREE. THAT IDEA THAT YOU SAID THE SUCCESS OF MEWS WILL ULTIMATELY DEPEND ON THE BREATH OF ITS PARTNERSHIPS, CAN MEWS BE MODERATELY SUCCESSFUL WITH THE BRAND PARTNERSHIPS IT DOES STRIKE? I MEAN, AMAZON PROBABLY WON'T EVER OPEN UP ITS PLATFORM TO MEWS BECAUSE IT PROBABLY WANTS TO COME OUT WITH ITS OWN VERSION OF AN AI AGENT TO DO ALL THE THINGS THAT MEWS DOES. HOW MUCH GROUND CAN MEWS REALLY GAIN JUST IN THE PARTNERSHIPS IT HAS RIGHT NOW? LET'S JUST SAY IT'S AT ITS MAXIMUM. [01:25:31] Speaker 17: I THINK THE KEY WITH ALL THIS IS BY TRYING TO BE THE FIRST MOVER, YOU BECOME THE ONE THAT GETS THE SPIRALING MOMENTUM. GOOGLE SEARCH DID A VERY GOOD JOB OF THIS SORT OF FLYWHEEL EFFECT WHERE BECAUSE IT MADE SUCH A GOOD IMPRESSION EARLY ON WITH SEARCH, THEN MORE PEOPLE WENT TO IT, THEREFORE IT HAD MORE INFORMATION, MORE PEOPLE WANT TO BE ON IT. IT BECAME THE DEFAULT. THAT'S A VERY POWERFUL POSITION TO BE. OBVIOUSLY, IT TOOK A LOT OF EFFORT TO GET THERE. IF YOU ARE AMAZON, YOU MIGHT THINK, SURE, WE DON'T WANT PEOPLE TO USE META'S BOT. IF YOU THEN DISCOVER THAT 40% OF CONSUMERS OR HIGHER, 70% OF CONSUMERS ARE GOING TO USE CHAT BOTS TO DO THEIR BASIC SHOPPING, AMAZON DOESN'T HAVE MUCH OF A CHOICE. IT HAS TO DO THAT IF IT WANTS TO INTERFACE. IT IS INTERESTING TO ME THAT SHOPPY, ANOTHER E-COMMERCE COMPETITOR, DIFFERENT IN AMAZON IN NATURE, IT IS A BIT MORE BEHIND THE SCENES, THEY HAVE SAID YES, WE WILL WORK WITH MEWS AND THEY HAVE A PARTNERSHIP. WE ARE SEEING COMPANIES WEIGHING UP, SORT OF GIVING UP MAYBE A LITTLE BIT OF ACCESS DIRECTLY TO THE CUSTOMER IN FAVOR OF WHAT COULD BE A MUCH, MUCH BIGGER SCALE. META IS GOING TO WANT TO TAKE A CUT OF THAT AS WELL, [01:26:35] Speaker 3: WHICH IS ANOTHER THING TO DISCUSS. YOU TALK ABOUT THE DAY ONE MOVER ADVANTAGE. HOW LONG DOES THAT LAST? BECAUSE THE PACE OF CHANGE IS SO FAST. WE ARE SEEING COMPETITORS COMING OUT FROM ASIA OR EUROPE. SO AS WE LOOK AT THAT LANDSCAPE, IS THAT A GAME CHANGER, BEING THERE FIRST, OR IN THE SPAN OF THE NEXT THREE YEARS, DOES IT MATTER? [01:27:00] Speaker 17: I THINK IT IS SO HARD TO TELL. YOU WOULD ARGUE I THINK THAT CHATGPT WAS THE FIRST IN THAT REALM AND IT WAS THE FIRST TO REALLY BRING THAT TO PEOPLE'S ATTENTION. THAT LEADERSHIP STILL HOLDS TODAY IN TERMS OF THE TOTAL NUMBER OF USED CHATBOTS, IT IS IN THE LEAD. I THINK PEOPLE START TO USE PRODUCTS IN DIFFERENT PARTS OF THE TECHNOLOGY THEY USE, AGAIN I THINK OF APPLE IN THIS, THEN THE FIRST MOVER ADVANTAGE WON'T BE SO IMPORTANT. ONE OF THE THINGS THAT PEOPLE OFTEN SAY ABOUT APPLE IN PARTICULAR IS THAT THEY WEREN'T THE FIRST TO BUILD A SMARTPHONE, THEY JUST DID IT VERY, VERY WELL. SO I GUESS THE QUESTION IS TO WHAT DEGREE IS APPLE'S FIRST MOVE, IS IT DOING IT REALLY, REALLY WELL OR IS THIS JUST THE FIRST BASICALLY COMPETENT ONE WE HAVE SEEN? A LOT OF IT IS GOING TO COME DOWN TO MESSAGING. I THINK MUSE HAS DONE A VERY GOOD JOB OF MARKETING THIS AS SOMETHING FOR NORMAL PEOPLE AS OPPOSED TO THE SORT OF AI NERDS THAT ARE DEEP IN THE WEEDS HERE. THAT HAS MADE A BIG, BIG DIFFERENCE I THINK. THAT IS GOING TO BE THE CHALLENGE. BE SURE TO READ DAVE LEE'S COLUMN. [01:28:00] Speaker 2: I LIKE THE LINE THAT HE HAS ABOUT HOW THESE AI BOTS HAVE CUTEY PHASES, SOME BLOBS, AND I THINK THAT SEEMS TO BE THE KEY TO GETTING MASS ADOPTION OF THESE AI AGENTS. DAVE LEE OF BLOOMBERG OPINION, THANK YOU SO MUCH. STILL AHEAD ON THE CLOSE, WHAT INVESTORS NEED TO WATCH FOR OVER THE NEXT 24 HOURS, THE BOND MARKET REOPENS AND WE GET SOME ECONOMIC DATA AND EARNINGS. THIS IS THE CLOSE ON BLOOMBERG. LET'S LOOK AHEAD TO WHAT ELSE WE ARE WATCHING FOR OVER THE NEXT 24 HOURS. OF COURSE, IT IS EARNINGS SEASON. J.P. MORGAN, GOLDMAN SACHS, WELLS FARGO, CITY, THOSE ARE THE BIG BANKS THAT WILL BE REPORTING BEFORE THE OPENING BELL. J&J, UNITED HEALTH, DOMINOS ALSO REPORTING. [01:28:45] Speaker 3: WE'VE GOT CPI DATA COMING OUT. WE'VE GOT PPI DATA COMING OUT. WE'VE GOT ALL OF THE DATA COMING OUT. [01:28:50] Speaker 2: J.P.I. AND PPI A LITTLE BIT LATER ON IN THE WEEK, BUT TOMORROW WE'VE GOT NFIB, SMALL BUSINESS OPTIMISM, AND EXISTING HOME SALES. YOU KNOW, THE HOME SALES ARE GOING TO -- I FEEL LIKE IT VERY MUCH DEPENDS ON MORTGAGE RATES, WHICH HAVE BEEN SKY HIGH. J.P. AND THEN WE'RE ALSO LOOKING FOR APPLE, EXPECTING TO INTRODUCE A NEW SMART HOME DEVICE. J.P. THAT IS COMING OUT TOMORROW. WE'LL TAKE A LITTLE BIT IN THE WEEK AND BLOOMBERG'S NEW ECONOMY FORM IN NEW DELI WILL BE KICKING OFF. THAT DOES IT FOR US THIS EVENING. BALANCE OF HOUR IS UP NEXT IN WASHINGTON.