Hot Inflation, AI Selloff & Anthropic IPO

[00:00:01] Speaker 1: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE [00:00:10] Vonnie Quinn: MARKET DAY. THIS IS THE CLOSE. FASTER THAN ANTICIPATED INFLATION. WHO IS GOING TO CLINCH VICTORY IN ALL OF THIS WALL STREET TUGS OF WAR? I AM VONNIE QUINN. WHAT A DAY. WE ARE MUCH IMPROVED FROM WHERE WE WERE EARLIER ON. THE NASDAQ 100 DOWN 0.5%. IT WAS A ROUGH DAY FOR THE SOX INDEX. RIGHT NOW THE SOX INDEX DOWN ALMOST 1%. ABOUT HALF AND HALF WHEN IT COMES TO GAINERS AND DECLINERS. YIELDS WAS WHERE IT WAS AT TODAY AFTER THE INFLATION DATA HALF AND HALF AND HALF. THAT SENT THE FRONT END UP SUBSTANTIALLY. THE BELLY OF THE CURVE AS WELL. WE ARE ON THE 10-YEAR. WE TOP 5%. [00:01:12] Speaker 3: THE TWO-YEAR YIELD IS UP 16 BASIS POINTS. A STRONGER DOLLAR ON THE PROSPECT OF MORE OR SOONER FED HIGHTS. 10% ON PACE FOR ITS BEST DAY. SINCE APRIL 2025. IT PLANS TO BUY BACK ABOUT 1.5 BILLION OF DEBT FOR CASH JUST DAYS AFTER LAUNCHING AN OVERHAUL OF ITS BUSINESSES TO CUT SOME OF THOSE COSTS. AND THEN ON THE FLIP SIDE OF THAT, IF YOU LOOK AT SKYDANCE, DOWN MORE THAN 7% ON PACE FOR ITS WORST DAY. SINCE OCTOBER 15TH. IF YOU SEE THERE, SKYDANCE SHARES. AND ALSO THE PARAMOUNT THIRD QUARTER RESULTS FOR THAT. SO ANALYSTS SAID THE RESULTS WERE STRONG. BUT THEY DID EXCLUDE WARNER BROTHERS AMID THOSE LINGERING UNCERTAINTY ABOUT HOW THE TWO COMPANIES WILL BE POTENTIALLY INTEGRATED HERE. AND THEN ALSO TAKE-2 INTERACTIVE. SO THOSE SHARES ARE UP. THE VIDEO GAME COMPANY GAVE AN OUTLOOK THAT HAS SEEN ITS CONSERVATIVE AHEAD OF ITS RELEASE HERE. BUT IF YOU LOOK AT THAT, UP ABOUT 8% ON PACE FOR ITS BEST DAY SINCE FEBRUARY OF 2025. AND THEN HIMS AND HERS DOWN ALMOST 18% HERE ON PACE FOR ITS WORST DAY SINCE JUNE 2025. SO UNFORTUNATELY, IT GAVE A REVENUE ADJUSTED EVEN OF FORECAST IN THE FOURTH QUARTER THAT FELL SHORT OF EXPECTATIONS, BONNIE. [00:02:17] Vonnie Quinn: LOTS MOVING UNDER THE HOOD OF THIS MARKET. LET'S KICK THINGS OFF NOW ON THE AI TRADE WITH TIM URBANOWITZ, CHIEF INVESTMENT STRATEGIST FOR INNOVATOR AT GOLDMAN SACK ASSET MANAGEMENT. ALL RIGHT. HOW HAS THE INNOVATION TRADE CHANGED IN THE LAST FIVE DAYS, TIM? [00:02:31] Tim Urbanowitz: WE THINK THE MARKET HAS GIVEN US A LITTLE BIT OF A GIFT HERE. THE POST-ELECTION SELL-OFF THAT WE'VE SEEN, WE DON'T THINK IT'S CHANGED THE FUNDAMENTAL STORY. WE STRUGGLE TO SEE THE BEAR CASE ON AI. IF YOU LOOK AT WHERE VALUATIONS ARE AT, THE AI COMPLEX RIGHT NOW, WE'RE BACK TO PRECHAT GPT LEVELS. WE'RE BACK TO 2016 LEVELS. IF YOU LOOK AT SOME OF THE TOP NAMES IN THE MEMORY COMPLEX, YOU'RE LOOKING AT TRADING TWO TO THREE TIMES NEXT YEAR'S EARNINGS. THAT'S A VERY BIG MOVE DOWN OVERALL. IF WE JUST PUT THIS IN CONTEXT, IF YOU LOOK AT IT RELATIVE TO OTHER SECTORS, YOU EXTRAPOLATE EARNINGS OUT 24 MONTHS FOR THE AI COMPLEX, YOU'RE LOOKING AT ABOUT HALF THE VALUATION THAT YOU'RE SEEING CONSUMER STAPLES TRADE OVER THAT TIME PERIOD. SO WE THINK THERE'S GOOD VALUE HERE AND WE WANT TO FOCUS ON THE HYPER SCALERS. [00:03:14] Vonnie Quinn: SURE, EXCEPT THAT IF THE WHOLE TRADE HAS CHANGED IN VALUATION, CHANGED IN OUTLOOK, NOT JUST POST ELECTION, BUT JUST WITH ALL OF THE UNCERTAINTY AND CONFIDENCE THAT COULD BE VERY MUCH DRAINED FROM THIS MARKET, NOT LEAST THANKS TO NVIDIA'S AFFAIR, THEN MAYBE THOSE ARE CORRECT VALUATIONS AND MAYBE THEY'RE EVEN RICH. [00:03:33] Tim Urbanowitz: WELL, WE DON'T SEE THE FUNDAMENTAL STORY CHANGING. AND ONE THING WE'RE FOCUSED ON RIGHT NOW IS DELAYED CAPEX IS STILL CAPEX AND DEMAND IS STILL THERE. YOU LOOK AT ALL OF THE DEMAND, THEY'RE ALL HEADING IN THE RIGHT DIRECTION, WHICH WE THINK THAT EVERYTHING ELSE GETS SORTED OUT. SO THE HAIRCUT, WE WANT TO LEAN INTO QUALITY. WE THINK THE HYPER SCALERS RIGHT NOW, THEY'RE TRADING AT SIGNIFICANTLY LOWER VALUATIONS IS REALLY WHERE GOOD VALUE IS AT AND WHERE WE WANT TO LEAN INTO AS THEY'RE GOING TO BE CAPITALIZING ON A LOT OF THE DEMAND COMING DOWN THE PIPE. [00:04:02] Speaker 3: SO, TIM, HOW MUCH MORE SELLING DO YOU THINK IS LEFT MORE BROADLY IN THE MARKETS? ARE WE DONE, IS THE WASHOUT HAPPEN OR IS MORE PAIN TO POTENTIALLY COME HERE? [00:04:10] Tim Urbanowitz: WE THINK A LOT OF THE WASHOUT IS BEHIND US HERE. I WANT TO BE VERY CLEAR, YOU WANT TO MAKE SURE YOU ARE HEDGING THIS TRADE AS WELL. WE DON'T NECESSARILY SEE THE RISK THAT THE MARKETS HAVE, BUT WE DO THINK ADDING OTHER ASSETS TO THE PORTFOLIO RIGHT NOW AND SPECIFICALLY ADDING DURATION INTO THE PORTFOLIO PORTFOLIO CAN BE A GOOD HEDGE TO THE AI TRADE. WE THINK THAT HEDGE IS IN AN AI DISAPPOINTMENT TYPE SCENARIO. BUT, AGAIN, LOOK, THERE'S GOOD VALUE OUT THERE. ESPECIALLY IF YOU LOOK OVER, YOU KNOW, IN EM ASIA, THERE'S SOME GOOD VALUE THAT IS TAKING PLACE ACROSS THE COMPLEX. [00:04:40] Speaker 3: THERE'S A HOTTER THAN EXPECTED CPI REPORT EARLIER THIS MORNING THAT I KNOW YOU SAW. HOW DOES THAT POTENTIALLY CHANGE THE DYNAMIC WITH SWAPS BASICALLY PRICING IN MORE AGGRESSIVE FED HIKES COMING AT LEAST AS SOON AS DECEMBER HERE? [00:04:52] Tim Urbanowitz: WELL, YES, IT'S A REPORT THAT WE DON'T WANT TO IGNORE. IT WAS STRONG ENOUGH WE DON'T WANT TO IGNORE IT. BUT AT THE SAME TIME FOR US, IT WASN'T STRONG ENOUGH TO CHANGE OUR CORE OUTLOOK ON INFLATION OR THE FED. WE STILL THINK THE FED IS GOING TO HIKE ONE MORE TIME AND PAUSE THERE. I THINK WHAT GIVES US CONFIDENCE IN THAT, IF YOU LOOK AT WAGE GROWTH, WAGE GROWTH IS STRONG BUT IT'S CONTAINED. AT THE END OF THE DAY, WAGES DRIVE CONSUMPTION. CONSUMPTION DRIVES INFLATION. I DO THINK THE ONE AREA THAT WE DO WANT TO BE PAYING ATTENTION TO HERE IS THE MARKET HAS PRICED IN A LOT OF DEESCALATION IN THE SITUATION IN IRAN. IF YOU LOOK AT WHERE OIL IS TRADING RIGHT NOW, THAT IS SOMETHING THAT WE WANT TO BE CAUTIOUS ON AND PAYING ATTENTION TO IN THE PORTFOLIO. IT'S A LOT OF DEESCALATION THAT'S BEING PRICED IN RIGHT NOW. [00:05:33] Vonnie Quinn: YOU'RE COMFORTABLE SAYING ALL THAT WITH NVIDIA DOWN 11.5% IN TWO DAYS. WE'RE DOWN MORE THAN 7% IN TODAY'S TRADE. CAN NVIDIA BE TAKEN JUST AS A SOLE SEPARATE CASE, INSULATED FROM THE REST OF THE AI TRADE? [00:05:45] Tim Urbanowitz: WELL, THEY'RE A CORE PLAYER, RIGHT? OBVIOUSLY, THE TRADE DOESN'T WORK WITHOUT COMPANIES LIKE THAT. YOU KNOW, I THINK IF WE LOOK ACROSS THE SPECTRUM AND THE AI TRADE IN GENERAL, WE WANT TO FOCUS ON COMPANIES IN THIS NEXT WAVE THAT ARE CAPITALIZING ON DEMAND. AND, YOU KNOW, THE FIRST WAVE OF THIS TRADE WAS ALL THE AI INFRASTRUCTURE BENEFICIERS. WE THINK THAT IS SHIFTING. WE WANT TO FOCUS ON WHERE IS THE SCARCITY, WHERE IS THE DEMAND TAKING PLACE. [00:06:09] Speaker 3: SO WHERE ARE THOSE COMPANIES? WHAT ARE THEY SPECIFICALLY OR THOSE INDUSTRIES WITHIN THE TECH AI UNIVERSE? [00:06:14] Tim Urbanowitz: WELL, THERE'S A LOT OF IT. I THINK, AGAIN, WE TALKED ABOUT, YOU KNOW, EX-U.S. YOU TALK ABOUT VALUE, WE THINK THERE'S EVEN MORE VALUE OUTSIDE OF THE U.S. IN THE AI TRADE RIGHT NOW. YOU LOOK AT SOUTH KOREA, YOU KNOW, VERY STRONG VALUE. THAT CAN BE TWO COMPANIES. [00:06:29] Vonnie Quinn: YEAH, GO ON. [00:06:30] Tim Urbanowitz: THAT'S TRUE. BUT, YOU KNOW, WE WANT TO OWN, AGAIN, WE WANT TO OWN THE HYPERSCALERS RIGHT NOW. WE THINK THAT'S WHERE THE BEST VALUE IS. [00:06:39] Vonnie Quinn: YOU SAID DURATION AS WELL. [00:06:42] Tim Urbanowitz: WHAT DO YOU MEAN BY DURATION? JUST FIXED INCOME, ADDING BONDS. AND I THINK IF YOU TAKE A STEP BACK, WE ACTUALLY DO FAVOR THE SHORT END OF THE CURVE. THAT'S WHERE WE SEE A LOT OF VALUE. AND, LOOK, YOU TAKE A STEP BACK, YOU LOOK AT WHERE BOND YIELDS ARE RIGHT NOW. WE THINK THAT IS A HIGHER BAR TO CLEAR ACROSS THE BOARD FOR DIFFERENT ASSETS. SO WE'RE NOT DEFENSIVE. CLEARLY, EVERYTHING I JUST SAID IS NOT DEFENSIVE. BUT WE DO WANT TO BE SELECTIVE AND MAKE SURE THAT ANY ASSET WE'RE PUTTING IN OUR PORTFOLIO HAS THE ABILITY TO CLEAR THAT HURDLE BECAUSE THAT'S A MUCH DIFFERENT HURDLE THAN WE'VE SEEN IN THE LAST SEVERAL YEARS. [00:07:12] Speaker 3: YOU WERE MENTIONING HYPER SCALERS. IT'S INTERESTING IF YOU THINK ABOUT WHEN THE STOCKS ACTUALLY PEAKED ON JUNE 22ND. IN THAT SPAN, APPLE IS ACTUALLY UP MORE THAN 17%, BUT OBVIOUSLY IT'S CHIP COUNTERPARTS, ESPECIALLY THAT ARE SPENDING MORE HEAVILY ON AI, ARE THE ONES GETTING HIT HARDER. WHERE SPECIFICALLY WITHIN THE HYPER SCALERS DO YOU LIKE? [00:07:30] Tim Urbanowitz: I DON'T GET INTO INDIVIDUAL NAMES. WE LIKE THE COMPLEX AS A WHOLE. INVESTORS HAVE BEEN LOOKING FOR A SALE. WE'RE BACK TO 2012 LEVELS ON A LOT OF THE HYPER SCALERS. I THINK THAT'S A GOOD PLACE WHERE WE'RE PUTTING HIGH QUALITY INTO THE PORTFOLIO AND IT'S A PLACE WHERE WE'RE CAPITALIZING [00:07:47] Vonnie Quinn: ON SCARCITY AND DEMAND. ALL RIGHT. TIM, THANK YOU SO MUCH. LOOKING FORWARD TO OUR NEXT CONVERSATION. THAT IS TIM URBANOWITZ, CHIEF INVESTMENT STRATEGIST FOR INNOVATOR AT GOLDMAN SACHS ASSET MANAGEMENT. COMING UP, THAT FASTER THAN EXPECTED INFLATION SPIKE, NOT CURVING CONSUMER APPETITE FOR RESTAURANTS AND EATING OUT. OPEN TABLE CEO DEBBIE SUE JOINS US LIVE WITH HER OUTLOOK FOR [00:08:13] Speaker 3: DINING TRENDS IN 2027. COMING UP TO FINANCE, STEEP FOLKS CHAIRMAN AND CEO RON KRUSZOWSKI JOINS US LIVE TO DISCUSS PARTNERSHIPS, ESPECIALLY WITH ANTHROPIC AND HOW HIS FIRM IS NAVIGATING THE RECENT MARKET VOLATILITY. [00:08:25] Vonnie Quinn: AND CORWEAVE, DUE TO REPORT AFTER TODAY'S CLOSING BELL, WE'LL HAVE FULL COVERAGE OF THAT REPORT AND ITS INVICATIONS FOR AI. ALL THAT AND MORE, THIS IS THE CLOSE ON BLOOMBERG. [00:08:37] Speaker 3: THANK YOU SO MUCH FOR JOINING US. HIGHER FINANCING COSTS AND RISING ENERGY PRICES. JOINING US NOW, CHIEF CREDIT OFFICER AT MOODY'S RATINGS. THANK YOU SO MUCH FOR JOINING US ONCE AGAIN. WALK US THROUGH WHAT YOU'RE SEEING IN THE CREDIT MARKETS, AND PARTICULARLY IF YOU SEE ANY SORT OF RED FLAGS THAT ARE POPPING UP RIGHT NOW, JUST GIVEN WHAT'S HAPPENED WITH THE AI TRADE AND THOSE DEBT CONCERNS. [00:09:10] Speaker 5: CERTAINLY. SO, YOU KNOW, OVERALL, WHAT WE'VE SEEN IN 2026 IS A VERY RESILIENT MACRO ECONOMY. AND IF YOU THINK ABOUT THE NUMBER AND MAGNITUDE OF SHOCKS THAT HAVE HIT BOTH INVESTMENT AND CONSUMPTION, IT IS QUITE REMARKABLE HOW RESILIENT IT IS. BUT WHAT WE'RE SEEING, LOOKING OUT INTO 2027, IS THAT RESILIENCE IS NOT LIMITLESS. AND THERE'S A FEW THINGS THAT WE POINT TO TO WATCH IN TERMS OF WHAT COULD BREAK THAT RESILIENCE. ONE IS DEFINITELY CAPITAL COST. HERE WHAT WE'RE SEEING IS THAT IF YOU'RE RATED AT THE LOWER END OF THE SPECTRUM, SO IF YOU'RE MORE HIGHLY LEVERAGED, IF YOU BORROWED IN 2021 AT VERY FAVORABLE RATES AND YOU HAVE TO REFINANCE NEXT YEAR, THAT'S GOING TO BE A BIG JUMP IN YOUR FINANCING COST, ESPECIALLY IF YOU'RE HIGHLY LEVERAGED. SO THAT'S AN AREA WE'RE WATCHING. AND THAT'S ACROSS SECTORS, WHEREVER YOU ARE AND YOU'RE VERY LEVERAGED. THE SECOND THING THAT WE'RE WATCHING IS SORT OF IN THE CONSUMER SECTOR, WE KEEP TALKING ABOUT HOW RESILIENT THE CONSUMER IS, BUT AGAIN, THEY COMPLAIN ABOUT THE COST OF LIVING, BUT THEY KEEP SHOWING UP AT THE CHECKOUT COUNTER, AS WE SAY. THE JOBS MARKET UNDERPINS THIS RESILIENCE. SO THE THING THAT WE'RE WATCHING IS WHAT KIND OF CORPORATE DECISIONS WILL BE MADE GOING INTO 2027 IN TERMS OF THE JOBS OUTLOOK. AND IF THAT OUTLOOK CHANGES FROM THE CURRENT, VERY BENIGN AND ROBUST, TO SOMEWHAT WEAKER, THAT COULD BE ANOTHER SHOCK TO THE CONSUMPTION CYCLE AND THEN SPREAD TO CREDIT MARKETS. [00:10:33] Speaker 3: SO HOW ARE YOU EXACTLY ADVISING CLIENTS THEN TO POSITION IN THIS TYPE OF ENVIRONMENT? [00:10:37] Speaker 5: SO WE'RE A RATING AGENCY, AND OUR RATINGS ARE REALLY -- WE DON'T GIVE ADVICE, BUT IT'S THE RATINGS THAT PEOPLE LOOK AT TO GET A SENSE OF OUR VIEWS, RIGHT? SO ONE OF THE THINGS THAT WE'VE SAID IS, IF YOU THINK ABOUT THE BEGINNING OF THIS YEAR, THERE WERE CONCERNS ABOUT AI DISRUPTION RISKS IN CERTAIN SECTORS. AND THERE AGAIN, WHAT WE'RE SAYING IS, IF YOU'RE LOOKING AT THIS FROM A PURELY SECTORAL PERSPECTIVE, YOU'RE PROBABLY GOING TO MISS SOMETHING, BECAUSE THERE'S ACTUALLY VERY MUCH WIDE DISPERSION IN THE SOFTWARE SECTOR, WHICH IS THE ONE THAT PEOPLE THINK ABOUT. THERE ARE SOME ENTITIES HIGHLY RESILIENT BECAUSE THEY'VE GOT VERY STABLE BUSINESS MODELS, RECURRING REVENUES, THEY'VE ADJUSTED TO THE AI DISRUPTION ALREADY. AND THEN ON THE OTHER SIDE, THERE ARE THOSE THAT ARE HIGHLY LEVERAGE, LESS ROBUST BUSINESS MODELS. SO DISPERSION IS THE THING THAT WE'RE ASKING FOLKS TO WATCH FOR. AND AGAIN, IF YOU LOOK AT THE RATING ON MOODIES.COM, YOU'LL SEE OUR VIEWS ON DIFFERENT ENTITIES. [00:11:34] Vonnie Quinn: I WON'T GO INTO THAT HERE ON THE SHOW. WHAT AREAS ARE YOU MOST KEEPING AN EYE ON IN TERMS OF THE POTENTIAL TO SLIP INTO JUNK OR EVEN FURTHER? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? [00:11:53] Speaker 5: WHAT ARE YOU GOING TO SEE? [00:11:54] Speaker ?: WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? [00:11:54] Speaker 5: WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? [00:12:00] Speaker ?: WHAT ARE YOU GOING TO SEE? [00:12:00] Speaker 5: WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? 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WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WHAT ARE YOU GOING TO SEE? WE'VE DONE THIS RESEARCH LOOKING AT YEARS OF DATA ON RATING TRANSITIONS AND OTHER SORT OF CREDIT PERFORMANCE METRICS AND WE FOUND THAT GOVERNANCE CAN BE A GREAT DETERMINANT OF YOUR CREDIT TRANSITION. SO IF YOUR GOVERNANCE IS STRONG, IF YOUR BALANCE SHEET IS STRONG, THEN THE KIND OF EVENT RISK YOU HAVE, LIKE THE NEWS THAT YOU WERE TALKING ABOUT, YOU CAN ABSORB. BUT IF YOUR BALANCE SHEET IS OVERLEVERAGED, YOUR MARGINS ARE NOT WIDE ENOUGH TO ABSORB THE COST THAT MIGHT COME WITH EVENT RISK AND YOUR GOVERNANCE IS NOT AS ROBUST, THAT'S WHEN YOU HAVE TO HAVE TROUBLE IN YOUR CREDIT PROFILE. [00:14:42] Vonnie Quinn: DR. SHAITH, THANK YOU SO MUCH FOR JOINING US TODAY. THAT IS AXI SHAITH, CHIEF CREDIT OFFICER AT Moody's RATINGS. HEADLINES JUST CROSSING THE WIRE NOW ON NVIDIA AND MEGASPEED. THE FINANCIAL TIMES SAYING THAT THE COMMERCE DEPARTMENT IS DELAYING EFFORTS TO BLACKLIST MEGASPEED. THAT IS THE COMPANY LINKED TO THE ALLEGED CHINESE SPY WHO HAD AN AFFAIR WITH NVIDIA'S JENSEN WONG. DESPITE CONCERNS, IT WAS SMUGGLING ADVANCED CHIPS INTO CHINA. SEVERAL GOVERNMENT AGENCIES, INCLUDING TREASURY AND PENTAGON, HAVE BEEN PUSHING FOR IT TO BE BLACKLISTED. LET'S GET MORE FROM MICHAEL SHEPARD, EXECUTIVE EDITOR AT BLOOMBERG NEWS. MICHAEL, WHY MIGHT THE COMMERCE DEPARTMENT BE DELAYING THE INCLUSION OF ANY COMPANY, NEVERMIND MEGASPEED? [00:15:26] Speaker 6: MICHAEL SHEPARD: WELL, THEY MAY BE CONDUCTING STILL THEIR OWN INVESTIGATION INTO MEGASPEED AND INTO ALLEGATIONS THAT IT HAD BEEN DIVERTING CHIPS, THAT IT HAD BEEN LEGALLY ACQUIRING FOR USE OFFSHORE, OUTSIDE CHINA IN DATA CENTERS THROUGHOUT SOUTHEAST ASIA, WHERE IT WOULD RENT COMPUTING POWER TO COMPANIES. THAT'S NOT A VIOLATION OF EXPORT CONTROLS. BUT THE AGENCY HAS BEEN EXPLORING WHETHER SOME CHIPS THAT THE COMPANY HAD BEEN PURCHASING FROM NVIDIA COULD HAVE BEEN SENT TO CHINA IN VIOLATION OF AMERICAN RESTRICTIONS. NOW, THAT INVESTIGATION CONTINUES. IT'S UNDERWAY. IT'S BEING CONDUCTED NOT ONLY BY THE COMMERCE DEPARTMENT, BUT ALSO BY THE JUSTICE DEPARTMENT. THE ENTITY LISTING WOULD BE A SEPARATE STEP, BONNIE. AND THIS WOULD BE WHERE THEY GET PUT ON SOMETHING CALLED LITERALLY THE ENTITY LIST. AND THAT WOULD BAR U.S. COMPANIES FROM DOING BUSINESS WITH MEGASPEED OR WITH ANY OTHER VENTURE. AND IT'S A MAJOR STEP FORWARD. AND IT WOULD BE AN ESCALATION THAT WOULD COMPLICATE EFFORTS BY ANY BUSINESS TO WORK WITH THE LISTED COMPANY. SO IT'S A STEP THAT THEY TAKE CAREFULLY AND NOT ONE THAT THEY TAKE LIGHTLY. BUT THE ALLEGATIONS, OF COURSE, AGAINST MEGASPEED HAVE BEEN PILING UP. AND WE DO SEE IN THE F.T. REPORTING THAT THERE HAS BEEN INTERAGENCY PRESSURE FOR SUCH A MOVE TO BE MADE. [00:16:42] Speaker 3: MIKE, WHEN IT COMES TO THE DELAYS FOR MEGASPEED'S INCLUSION ON THE TRADE BLACKLIST, WHAT'S THE POTENTIAL TIMELINE ON THIS? HOW LONG COULD THAT TAKE BEFORE THEY COULD POTENTIALLY BE BLACKLISTED? OR ONCE WE HEAR NEWS THAT MAYBE THEY WON'T BE? [00:16:57] Speaker 6: THAT'S A GREAT QUESTION. IT'S REALLY THE ONE WE ARE TRYING TO ANSWER AND TRYING TO REPORT OUT OURSELVES, TOO, IS THAT WILL THIS HAPPEN AND HOW SOON WILL IT TAKE PLACE? NOW, ONE BENCHMARK WE CAN LOOK AT ACTUALLY IS THE CHANGE OVER IN POWER IN CONGRESS. THERE'S BEEN INCREASED PRESSURE SINCE THE ELECTION TO DO MORE IN EXPORT CONTROL. AND THAT IS ONLY INCREASING IN THE WAKE OF THE REVELATIONS ABOUT JENSEN WONG AND HIS ROMANTIC RELATIONSHIP WITH A WOMAN WHO WAS SUSPECTED OF BEING A SPY FOR CHINA. AND THIS IS FUELING CALLS NOT ONLY AMONG DEMOCRATS WHO ARE TAKING POWER IN JANUARY, BUT AMONG REPUBLICANS AS WELL. AND WE MAY BE SEEING SOME OF THESE MEASURES ACTUALLY ENACTED BEFORE THE END OF THE YEAR AS AMENDMENTS TO A MUST-PASS DEFENSE BILL. BUT IF THAT DOESN'T HAPPEN, DEMOCRATS, ONCE THEY TAKE CONTROL IN EARLY JANUARY, THEY ARE PROMISING TO STEP UP ACTION ON THIS FRONT. AND WE HEARD INCOMING SENATE MAJORI LEADER CHUCK SCHUMER PROMISED TO DO EXACTLY THAT EARLIER TODAY. [00:17:55] Vonnie Quinn: ALL RIGHT, MICHAEL SHEPHERD, THANK YOU SO MUCH FOR THAT ON THIS BREAKING NEWS. OUR THANKS TO BLOOMBERG'S MICHAEL SHEPHERD. THIS IS BLOOMBERG. THANK YOU SO MUCH. OPEN TABLE OUT WITH ANNUAL DINING TRENDS REPORT SHOWING CONSUMERS ARE STILL GOING OUT TO EAT DESPITE HIGHER COSTS OF LIVING. JOINING US NOW LIVE IN STUDIO IS DEBBIE SUE, CEO OF OPEN TABLE. SO THERE WERE SOME FINDINGS IN HERE THAT BLUE ME AWAY. CLEARLY, GOING OUT TO EAT IS AS TRENDY AS IT EVER WAS. [00:18:28] Speaker 7: PEOPLE ARE DOING AS MUCH OF IT AS THEY EVER WERE, EVEN IF WAGES AREN'T GOING UP. THEY WILL CONTINUE TO PRIORITIZE GOING OUT. GEN Z, IN PARTICULAR, REALLY LIKES THE EXPERIENTIAL. SO EVEN WITH TOUGHER ECONOMIC TIMES AND ALL THE HEADLINES AND PEOPLE FEELING IT AT HOME, THEY STILL PRIORITIZE THAT EXPERIENTIAL, THAT SPECIAL MOMENT, GOING OUT AND CELEBRATING, A MICRO MOMENT OR A BIG CELEBRATION. AND ALL OF THAT, I THINK, IS GREAT FOR RESTAURANTS. [00:18:52] Speaker 3: DEBBIE, YOU WERE MENTIONING YOUNGER DINERS. VONNIE AND I WERE SURPRISED EARLIER BECAUSE WE WERE LOOKING THROUGH THE DATA. FOR GEN Z PLANS TEN DINNERS OUT PER MONTH COMPARED WITH EIGHT OVERALL. WALK US THROUGH THAT, ESPECIALLY WHEN YOU THINK ABOUT INFLATION, INFORTABILITY, IS IT MORE GROCERIES ARE MORE EXPENSIVE AND THEY'RE ABLE TO SPEND LESS [00:19:10] Speaker 7: THAT. I THINK THE HEADLINE IS THEY'RE GOING OUT FOR A SPECIAL EXPERIENCE AS OPPOSED TO BUYING THAT SWEATER. THEY REALLY WANT GENUINE, AUTHENTIC EXPERIENCES THAT YOU CAN'T GET OTHER PLACES. LIKE CHEF COLLABS WE'RE SEEING KIND OF BLOW UP. DOES COVID TIE INTO THAT? COVID I THINK TIES INTO THAT SOMEWHAT. BUT I ALSO THINK HOW DIGITAL EVERYTHING IS AND HOW TIED WE ARE TO OUR DEVICES. I THINK PEOPLE CRAVE GOING INTO A RESTAURANT AND LOOKING AT EACH OTHER FACE TO FACE AND INTERACTING AND BEING WELL TAKEN CARE OF. I THINK THAT'S WHY WE'RE SEEING ESPECIALLY THAT GENERATION SPIKE IN DINING. INTERESTINGLY, SOLO DINING WAS ALSO UP. YEAH. I MEAN, I'M A MOM OF TWO, SO SOLO DINING IS GREAT FOR ME. BUT, YEAH, SOLO DINING IS UP. SOMETIMES FOR SOME OF THESE VERY HARD TO BOOK RESTAURANTS, ESPECIALLY A PLACE LIKE NEW YORK CITY, THAT'S A GREAT WAY TO KIND OF GET IN. YOU KNOW, ONE AT THE BAR, FOR EXAMPLE, OR ONE AT 5:00 P.M. SO, YEAH, WE'RE SEEING THAT UP. BUT WE'RE ALSO SEEING DATES HAVE KIND OF COME BACK UP 34%, I BELIEVE, YEAR-OVER-YEAR. SO, LOVE IS BACK, WHICH IS GREAT TO SEE. BUT, YEAH, WE'RE SEEING -- I THINK ALL OF THESE THINGS ARE REALLY GREAT FOR RESTAURANTS, ESPECIALLY THE YOUNGER FOLKS OR THE GEN Z'S. THEY LIKE CELEBRATING WHAT WE'RE CALLING MICRO MOMENTS OR MICRO OCCASIONS. SO, WHEN THEY GET PAID, IT'S A REAL, LIKE, TREAT YOURSELF MOMENT. AND THEY'RE GOING OUT AND THEY'RE CELEBRATING. AND, AGAIN, YOU KNOW, ANYTHING THAT DRIVES DEMAND INTO RESTAURANTS, I THINK IS GREAT. [00:20:40] Speaker 3: THE CONSUMER, OF COURSE, THE BACKBONE OF ECONOMIC GROWTH, MORE THAN TWO-THIRDS OF SPENDING, PUSHING GDP. SO, WHAT DO YOU THINK THIS REALLY TELLS US ABOUT THE ECONOMY, IF PEOPLE ARE DINING OUT MORE? [00:20:48] Speaker 7: I THINK TIMES ARE STILL TOUGH FOR, YOU KNOW, AND WE JUST HEARD K-SHAPED ECONOMY, ALL OF THAT. BUT WE'RE SEEING ACROSS ALL PRICE POINTS THAT DINING IS UP, RIGHT? SO, PEOPLE WHO ARE MORE VALUE-CONSCIOUS, THEY STILL ARE GOING OUT AND DINING. PEOPLE WHO ARE LESS PRICE-SENSITIVE, GOING OUT A LOT. AND, AGAIN, I THINK IT'S, YOU KNOW, BECAUSE RESTAURANT TOURS ARE VERY INNOVATIVE. IT'S HARD TO DO WHAT THEY DO, AND THEY ARE OFFERING REALLY GENUINE AND AUTHENTIC AND DIFFERENTIATED EXPERIENCES. [00:21:19] Vonnie Quinn: AND JUST A RAPID-FIRE COUPLE OF QUESTIONS, THE MOST SOUGHT-AFTER TYPE OF FOOD? [00:21:25] Speaker 7: WELL, THESE DAYS, THIE. IN NEW YORK CITY, IF YOU HAVEN'T BEEN TO SOOTH, I WOULD HIGHLY RECOMMEND IT. BUT THIE IS SEEING A SURGE. I ACTUALLY HAVE BEEN THERE. OTHER RESTAURANTS IN NEW YORK CITY IN PARTICULAR THAT ARE VERY POPULAR? WELL, GOD. DON ANGIE, I WAS JUST AT DEMO LAST NIGHT. I MEAN, THERE'S SO MANY TO MENTION. THIS CITY IS REALLY WHERE IT'S AT FOR DINING. SO YOU BOTH ARE VERY LUCKY. [00:21:49] Vonnie Quinn: WELL, IF GEN Z IS PLANNING TO GO OUT TEN TIMES IN THE MONTH OF NOVEMBER AND TEN TIMES IN THE MONTH OF OCTOBER, THEN I'M GOING TO MAKE THAT MY BUSINESS. THAT'S RIGHT. THANK YOU SO MUCH, DEBBIE. IT IS A GREAT, GREAT SURVEY AND SO FASCINATING AND FUN TO PARSE THROUGH. WE APPRECIATE YOU COMING IN TO JOIN US. THAT IS DEBBIE SUE, CEO OF OPEN TABLE. DO YOU GET OUT MUCH TO EAT? I TRY, BUT I FEEL LIKE AT BLOOMBERG WE'RE LUCKY WE HAVE ALL THIS FOOD HERE. THIS IS TRUE. IF YOUR GROCERY SHOPPING IS GOING UP SO MUCH, YOU MAY AS WELL GO OUT TO EAT. SPEAKING OF CPI TOPPING ESTIMATES FOR THE THIRD STRAIGHT MONTH, WE'LL SPEAK TO DIANE SWONK ABOUT WHAT THE FED SHOULD REALLY BE DOING ABOUT THIS. THIS IS THE CLOSE ON BLOOMBERG. [00:22:32] Speaker ?: IT'S JUST ABOUT 3:30 IN NEW YORK. [00:22:36] Vonnie Quinn: THIS IS THE COUNTDOWN TO THE CLOSE. I'M VONNIE QUINN. AND I'M JESS MINTON. JOINING US LIVE NOW IS DIANE SWONK. I JUST WANT TO POINT TO A HEADLINE CROSSING THE BLOOMBERG AS SHE JOINS. WE HAVE MICKEY BOWMAN SAYING THAT THERE IS A RISK THAT WE COULD SEE QUITE THE DRAWDOWN IN EQUITIES. THAT JUST COMING OUT IN HEADLINES JUST A MOMENT AGO. WE WANT TO GET TO YOU ON THIS INFLATION DATA THAT WE SAW TODAY, OBVIOUSLY HOTTER THAN EXPECTED, 0.3% FOR THE THIRD MONTH RUNNING. I KNOW YOU THINK THE FED SHOULD PROBABLY HAVE ALREADY HIKED A SECOND TIME, BUT DOES THIS MAKE A JUMBO HIKE A NECESSITY OR WHAT ELSE WOULD WE NEED TO SEE FOR AN ACTUAL JUMBO HIKE IN DECEMBER? [00:23:18] Speaker 8: WELL, I THINK WE'RE GOING TO SEE ENOUGH INFLATION. THE PCE INDEX IS GOING TO COME IN EVEN HOTTER ON THE SUPERCORE SERVICES, THE UNDERLYING SERVICE SECTOR INFLATION, WHICH THE FED HAS BEEN WORRIED ABOUT IN TERMS OF BEING STICKY. AND I THINK THAT'S IMPORTANT. WE SAW CHRIS WALLER IN LONDON. HE ALREADY HAD THIS DATA SAY THAT, YOU KNOW, LISTEN, WE COULD BE WEIGHING A HALF PERCENT HIGH BECAUSE OF THE FED'S NEED TO SHORE UP ITS CREDIBILITY ON INFLATION AS WELL, WHICH, LET'S FACE IT, WE'VE HAD MORE THAN FIVE AND A HALF YEARS OF THIS ELEVATED INFLATION AND MORE MONTHS THAN WE'D LIKE TO COUNT WITH WAGES FALLING SHORT OF THAT INFLATION. WE DON'T HAVE A YEAR OVER YEAR COMPARISON THIS MONTH BECAUSE WE LOST LAST YEAR'S CPI DUE TO THE SIX-WEEK GOVERNMENT SHUTDOWN. BUT THE ANNUALIZED, THREE-MONTH ANNUALIZED PACE ACCELERATED QUITE SHARPLY. AND THE GAINS WERE SO BROAD-BASED. IN FACT, SORT OF THE OUTLIER WAS SORT OF ONE THING LIKE THE FALL IN USED CAR PRICES. BUT OTHER THAN THAT, FURNITURE, APPLIANCES, GOODS, SERVICES, A LOT OF RECREATIONAL SERVICES, GOING TO SPORTING EVENTS, GOING TO CONCERTS, ALL OF THAT WENT UP ALONG WITH HOTEL ROOMS, ALONG WITH AIRFARE. SO YOU REALLY SAW THIS SORT OF BROAD-BASED INFLATION IN BOTH GOODS AND SERVICES, WHICH ACCELERATED. AND WE WILL SEE SOME COMING OFF OF GAS PRICES AS WE MOVE INTO NOVEMBER. HOWEVER, THAT'S NOT ENOUGH BECAUSE THE SHIPPING COSTS HAVE GONE UP. THE AI BOOM HAS BOOSTED SHIFTING COSTS ALONG WITH THE CONFLICT IN THE MIDDLE EAST. AND YOU'RE SEEING THIS OIL INCREASE IN THE BUYANT OIL PRICES CREATE ANOTHER BOOM IN TERMS OF THE OIL SECTOR. BUT THAT BENEFITS PRODUCERS AND SHAREHOLDERS WHILE IT HURTS THOSE AT THE PUMP. AND I THINK THESE ARE THE REAL ISSUES THAT ARE BEING PLAYED OUT. AND IT REALLY GETS TO HOW CORROSIVE INFLATION CAN BE. AND I KNOW IT'S PAINFUL. AND I THINK THE FED SORT OF VIEW THAT IT COULD GET THIS SOFT LANDING, SORT OF COOL INFLATION AROUND THE EDGES. I STILL THINK THAT'S A BIT FANCIFUL, OUR BASE CASES FOR THE EXPANSION TO CONTINUE. BUT WE HAVE A BEAR MARKET SCENARIO NOW AS WELL. [00:25:31] Vonnie Quinn: AND THE FACT THAT WE DIDN'T GET A HIKE IN OCTOBER, DOES THAT NOW INCREASE THE CHANCES OF A MISTAKE? FOR EXAMPLE, NEIL DADA TALKING ABOUT THE BIGGEST RISK INTO NEXT YEAR NOW BEING OVER TIGHTENING IF WE GET EITHER TWO QUICK 25 BASIS POINT HIKES OR A JUMBO ONE? [00:25:49] Speaker 8: I THINK A HALF PERCENT ONE WAY OR THE OTHER IS NOT GOING TO MAKE OR BREAK THE ECONOMY. IT'S HOW MANY HIKES DO WE ACTUALLY NEED. AND THAT'S WHAT'S UNCLEAR. CLEAR. AND AT THE END OF THE DAY, WHAT WILL IT TAKE TO DERAIL THIS INFLATION? IF WE SEE EQUITY MARKETS COOL, THAT COULD HELP TO TAKE SOME OF THE EXTRA INFLATION OFF A SERVICE SECTOR INFLATION. BUT THE SLEEPER ISSUE HERE IS HEALTH CARE COSTS, HOSPITAL COSTS WENT UP QUITE A BIT THIS MONTH. AND THE COMPONENTS THAT GO INTO THE PCE INDEX, WHICH THE FED WILL GET, ARE GOING TO BE MUCH HOTTER. AND THAT'S REALLY IMPORTANT, TOO. WE REMEMBER, IT WAS HEALTH CARE INFLATION THAT LINGERED EVEN AFTER THE BACK-TO-BACK RECESSIONS OF THE EARLY 1980S, RIGHT INTO THE 1990S. AND BACK THEN, AND INTO THE 2000S, WE HAD FALLING GOODS PRICES DUE TO GLOBALIZATION. NOW, SOME OF THAT IS REVERSED. BUT YOU DO NOT HAVE THOSE CHEAP IMPORTS OFFSETTING PRICES LIKE THEY ONCE DID IN THE SERVICE SECTOR, MOST NOTABLY FOR HEALTH CARE. [00:26:50] Speaker 3: HEY, DIANE, OF COURSE, WE'LL HAVE ANOTHER UPDATE ON PRODUCER PRICES LATER IN THE WEEK. AND SOMETIMES WE CAN SEE MORE EARLIER INDICATIONS THERE, AS YOU KNOW, THAN WE DO IN THE CPI RELATED DATA. WHAT ARE YOU EXPECTING? BECAUSE THE PRIOR REPORT WE SAW WITH PPI THAT CAME OUT LAST MONTH, IT ENDED UP SHOWING THAT THERE WAS RISING AT THE FASTEST PACE SINCE 2022. [00:27:10] Speaker 8: IT'S STILL GOING TO BE VERY HOT. AND I THINK THAT'S WHAT'S REALLY IMPORTANT, ESPECIALLY THE THINGS THAT FEED INTO THE SERVICE SECTOR COMPONENTS OF THE PCE. AND THAT'S GOING TO KEEP THAT SERVICE SECTOR INFLATION VERY STICKY. THAT'S SOMETHING THE FEDERAL RESERVE IS VERY CONCERNED ABOUT. I'VE BEEN TALKING TO A LOT OF CLIENTS LATELY, AND EVERYONE KEEPS TALKING ABOUT HOW MUCH THEY'RE PASSING ALONG, AND THEY'RE ANTICIPATING THE NEXT SHOCK BEFORE THE LAST SHOCK HAS ABATED. THAT IS THE EXACT BEHAVIOR THE FEDERAL RESERVE IS TASKED TO AVERT. CONSUMERS ARE MUCH IN THE SAME PLACE. IF I CAN SAY, INFLATION EXPECTATIONS ARE WELL ANCHORED BY THEIR MEASURES, BUT THE REALITY ON THE GROUND SUGGESTS SOMETHING VERY DIFFERENT. [00:27:52] Speaker 3: WHAT'S THE NEXT DATA POINT THAT YOU'RE KEENLY FOCUSED ON, OBVIOUSLY BEYOND EVEN THE INFLATION FIGURES? [00:27:58] Speaker 8: WELL, WE'RE GOING TO BE LOOKING AT THE EMPLOYMENT DATA. OBVIOUSLY, THAT CAME IN MUCH STRONGER IN THE MONTH OF OCTOBER. UNDER THE HOOD, STILL SOME WEAKNESS THERE THAT I THINK IS IMPORTANT TO UNDERSCORE IN TERMS OF UNDER EMPLOYMENT. THAT SAID, WE'LL BE WATCHING THE EMPLOYMENT FIGURES VERY CLOSELY, BECAUSE WHAT WE'VE SEEN IS THE AI BOOM IS SPREAD INTO, OF COURSE, THE UPGRADING OF ELECTRICAL GRIDS, AND SOME OF THE SPILL-OVER EFFECTS ARE STARTING TO SHOW UP IN EMPLOYMENT AS WELL. AND THAT'S GOOD, BUT TO THE EXTENT THAT IT BUYS DEMAND AT A TIME WHEN WE ALREADY HAVE STICKY INFLATION, THAT'S A COMBINATION THAT MAKES IT FOR A LONGER, LINGERING BOUT OF INFLATION AND HIGHER INFLATION THAN ANYONE WOULD LIKE. AND IT'S GOING TO BE A VERY DIFFICULT SITUATION FOR THIS FEDERAL RESERVE TO DEAL WITH THAT. I THINK ONE OF THE THINGS THAT WE'VE SEEN ALREADY IS THE RESILIENCE OF THE U.S. ECONOMY HAS BEEN STUNNING, BUT IT DOESN'T RESONATE. IT DOESN'T RESONATE BECAUSE THE LEVEL OF PRICES HAVE COMPOUNDED AND THEY'RE TOO HIGH FOR TOO MANY. AND IT'S HIGHER INFLATION FOR THOSE WHO ARE DEPENDENT ON WAGES AND DON'T HAVE LARGE STOCK PORTFOLIOS AS WELL. [00:29:08] Vonnie Quinn: YOU KNOW, MICKEY BOWMAN IS THE FED VICE CHAIR FOR SUPERVISION, SO I SUPPOSE IT'S IN HER REMIT. BUT WHAT DO YOU MAKE, DIANE, OF HER COMMENTS JUST IN THE LAST FEW MINUTES IN D.C., THAT THERE COULD BE A MASSIVE STOCK VALUATION, SHE'S SLAGGING CONCERNS ABOUT, I'M QUOTING, RAPIDLY RISING AI-RELATED DEBT, NOTABLE GAINS IN CORPORATE BONDS, PRIVATE CREDIT AND PROJECT FINANCE. AND SHE SAYS THAT THAT COULD ACTUALLY HURT CONSUMER SPENDING BECAUSE SOME OF THE SPENDING WE'RE SEEING IS PREDICATED ON THIS MARKET STAYING HIGH. [00:29:37] Speaker 8: THAT'S EXACTLY WHY I DID A BEAR MARKET SCENARIO. WE'RE WORRIED ABOUT AN AI BUBBLE. INNOVATIONS ALWAYS COME WITH BUBBLES, ALMOST ALWAYS COME WITH BUBBLES, AND OFTENTIMES THE BUBBLE ITSELF ENABLES THE INFRASTRUCTURE NEEDED TO SCALE THE PRODUCTIVITY GROWTH LATER, BUT IT'S A SEQUENCING PROBLEM. THE COSTS LAND PRIOR TO THE ACTUAL SCALING OF PRODUCTIVITY AND THE RETURNS ON THOSE INVESTMENTS. AND INVESTORS OFTEN FRONT-RUN THOSE RETURNS IN THEIR EUPHORIA ABOUT AN INNOVATION, AND THAT'S EXACTLY WHAT WE'RE SEEING. AND SO WE'RE VERY WORRIED ABOUT BUBBLE DYNAMICS, AND I THINK THAT'S PART OF THE REASON THE FED HAS MOVED WITH CAUTION INSTEAD OF CONVICTION, AS OPPOSED TO 2022, WHEN THEY WERE MUCH MORE AGGRESSIVE IN THEIR RATE HIKES. OF COURSE, RATES ARE STARTING AT A HIGHER LEVEL AS WELL. SO I SHARE THOSE CONCERNS, WHICH IS EXACTLY WHY WHAT IS ABOUT TO BE PUBLISHED WITHIN THE NEXT HOUR ON MY LINKEDIN PAGE IS GOING TO COME OUT WITH THOSE TWO SCENARIOS. I DO THINK IT'S VERY IMPORTANT TO LOOK AT THAT. AND IT IS THE UNDERBELLY OF WHERE THE RISKS ARE. THE WILD CARD IN PRIVATE CREDIT, VERY OPAQUE. WE DON'T KNOW EXACTLY WHERE ALL OF THAT REPRICING WILL COME IN, AND ALSO HOW MUCH STRESS THOSE FIRMS WILL FACE IN 27 AND 28 IF THE ECONOMY WERE TO ACTUALLY HIT A RECESSION. AND WE THINK A SIGNIFICANT BEAR MARKET WOULD PUT US INTO [00:30:59] Speaker 3: RECESSION. WE'LL HAVE TO LEAVE IT THERE. THANK YOU SO MUCH FOR JOINING US ONCE AGAIN. TODAY'S STOCK OF THE HOUR AND CATCH UP WITH TEXAS CAPITAL CEO ROB HOLMES ABOUT WHAT THE COMPANY'S NEW TICKER MEANS FOR ITS FUTURE. THIS IS THE CLOSE ON BLOOMBERG. OUR STOCK OF THE HOUR IS TEXAS CAPITAL CHANGING ITS TICKER TO TXCP SAYING THIS MARKS AN INFLECTION POINT FOR THE FORUM. JOINING US LIVE IS ROB HOLMES, CHAIRMAN, PRESIDENT, AND C.E.O. OF TEXAS CAPITAL CHANGING ITS TICKER TO TXCP SAYING THIS MARKS AN [00:31:33] Speaker ?: INFLECTION POINT FOR THE FORUM. [00:31:33] Speaker 3: JOINING US LIVE IS ROB HOLMES, CHAIRMAN, PRESIDENT, AND C.E.O. OF TEXAS CAPITAL BANK SHARES. THANKS SO MUCH, ROB, FOR JOINING US. OF COURSE, I'M A BIT FAMILIAR WITH TEXAS GIVEN THAT I GREW UP THERE. WALK US THROUGH THIS TICKER CHANGE. WHY SPECIFICALLY THIS ONE? [00:31:49] Speaker 9: WELL, LOOK, WHEN YOU CHANGE EXCHANGES, IT'S A PERFECTLY NORMAL TIME TO CONTEMPLATE YOUR TICKER CHANGE. WE'VE GONE THROUGH A SIX-YEAR TRANSFORMATION HERE AT THE BANK, CREATING THE FIRST FULL-SERVICE FINANCIAL SERVICES FIRM EVER CREATED IN THE STATE OF TEXAS. SO WE'RE NOT JUST A BANK ANYMORE. WE TOOK THE B OUT OF THE TICKER. WE'VE RETIRED TCBI AND ADOPTED TXCP FOR TEXAS CAPITOL, WHICH IS A NEW BRAND THAT WE GO BY. [00:32:15] Vonnie Quinn: SO, ROB, WITH ALL THIS TALK OF EXTENDING HOURS AND SO ON, I NOTICED HEDGE FUNDS ARE ASKING FOR 23-5 BEFORE WE ACTUALLY GO TO 24-7. HOW IS TEXAS PREPARED FOR EXPANDED TRADING AND EXPANDED HOURS? [00:32:29] Speaker 9: WELL, I THINK TEXAS IS RUNNING AS MUCH AS ANYWHERE ELSE. AS A MATTER OF FACT, THIS NEW EXCHANGE, THE TEXAS STOCK EXCHANGE, IS CREATED TO COMPETE WITH THE LEGACY EXCHANGES. IT'S GOT A WONDERFUL MANAGEMENT TEAM. IT'S GOT GREAT SHAREHOLDERS, SOME OF THE MOST ADMIRED IN FINANCIAL SERVICES. IT'S GOT A GREAT MATCH TRADING ENGINE. IT'S GOT A SHARED LISTING CONSTRUCT, WHICH MAKES IT VERY ADVANTAGEOUS FOR INSURERS TO LIST AND TRADE ON THE TEXAS EXCHANGE. SO WE WERE HAPPY TO MOVE OUR SYMBOL OCTOBER 8TH AND HAPPY TO CHANGE OUR TICKER YESTERDAY TO NOVEMBER 9TH THAT YOU HIGHLIGHTED. [00:33:12] Speaker 3: SO, ROB, TEXAS IS AMONG ONE OF THE MOST ROBUST PLACES IN THE COUNTRY AND AMONG SOME OF THE TOP 10 ECONOMIES JUST GLOBALLY. HOW EXACTLY SHOULD INVESTORS TRY TO PLAY THIS IF THEY DO WANT TO INVEST IN THAT STATE? [00:33:26] Speaker 9: WELL, THAT'S THE GREAT THING ABOUT IT. THEY CAN -- FIRST OF ALL, THEY SHOULD BUY OUR TXS ETF, WHICH IS BUILT FOR PEOPLE TO WANT TO INVEST IN TEXAS THAT DON'T LIVE OR WORK HERE. BUT THE GREAT THING ABOUT TEXAS IS THERE'S NO PART OF THE ECONOMY THAT'S GREATER THAN 10% OF GDP. SO WE'RE VERY DIFFERENT THAN, YOU KNOW, YOUR DAD'S TEXAS. WE'RE VERY DIVERSIFIED. WE HAVE 10% OF THE U.S. PUBLIC COMPANIES. WE'RE 10% OF THE U.S. GDP, AS YOU HIGHLIGHTED. WE'RE 10% OF U.S. MANUFACTURED GOODS. AND WE'RE NUMBER ONE IN EXPORTS IN THE COUNTRY. WE HAVE BEEN FOR 24 YEARS. AND IT'S BROAD EXPORTS. PEOPLE DON'T KNOW THAT WE'VE BEEN NUMBER ONE IN SEMICONDUCTOR EXPORTS FOR 15 YEARS. [00:34:07] Vonnie Quinn: WE'VE BEEN TALKING ABOUT THE COUNTRY. WE'VE BEEN TALKING ABOUT IT. ROB, JUST BRIEFLY, HOW DO THE ELECTION RESULTS CHANGE THE [00:34:17] Speaker 9: PROSPECTS FOR TEXAS IN THE IMMEDIATE TERM, IF AT ALL? THE TEXAS ECONOMY, WHICH IS CALLED THE TEXAS MIRACLE, BECAUSE WE'VE LED THE COUNTRY IN GDP GROWTH AND JOB GROWTH AND POPULATION GROWTH OVER 20 YEARS. WE'VE GOT THE SECOND-LARGEST WORKFORCE, THE YOUNGEST WORKFORCE. IT'S WELL-EDUCATED, 16 TIER-1 UNIVERSITIES. WE'RE A BROAD ECONOMY. WE'RE VERY DIVERSIFIED. I DON'T THINK ANY ONE GOVERNOR -- WHICH, BY THE WAY, I THINK THE NEW GOVERNOR WILL BE A GREAT GOVERNOR. I THINK THE LAST GOVERNOR WAS A GREAT GOVERNOR. WE'RE VERY SUPPORTIVE OF BOTH. WE'LL WORK WITH BOTH. BUT I DON'T THINK THE ECONOMY IS GOING TO CHANGE WHATSOEVER BY ANY ONE ADMINISTRATION OR ANY ONE DECADE. THIS ECONOMY WAS BUILT OVER A LONG, LONG PERIOD OF TIME. YOU DON'T GET THE SCHOOLS WE HAVE OVER ONE ADMINISTRATION OR A DECADE. SO I DON'T SEE IT AFFECTING IT WHATSOEVER. I LOOK FORWARD TO WORKING WITH THE NEW GOVERNOR. [00:35:10] Vonnie Quinn: THANK YOU FORWARD. WE LOOK FORWARD TO TALKING TO YOU AGAIN. ROB HOLMES, CONGRATULATIONS. [00:35:20] Speaker 10: THIS IS BLOOMBERG. IT REMAINS CLEAR TO ME, GIVEN THE CURRENT OUTLOOK, THAT THE FOMC NEEDS TO IMPLEMENT AT LEAST TWO MORE 25 BASIS POINT RATE INCREASES. AFTER TWO MORE INCREASES ARE IN PLACE, IT WOULD MAKE SENSE IN COMPANIES. [00:35:44] Vonnie Quinn: WE WANT TO MAKE SURE THE ECONOMIC AND FINANCIAL [00:35:46] Speaker ?: DEVELOPMENTS TO DETERMINE WHAT FURTHER ACTION MAY BE [00:35:46] Vonnie Quinn: APPROPRIATE. DALLAS FED PRESIDENT LAURIE LOGAN SPEAKING AT THE CENTRAL BANK'S 11TH ANNUAL ENERGY CONFERENCE IN COMPANIES. THANK YOU VERY MUCH. IT COMES ON THE HEELS OF WHAT WALLER SAID ABOUT HOW HE MIGHT BE VERY HAPPY WITH A 50 BASIS POINT IKE AT THE NEXT BASIS POINT. IT SET THE TONE FOR THE MARKET THIS MORNING. WE SAW YIELDS SPIKE INCREDIBLY, PARTICULARLY AT THE FRONT END WHERE WE SAW THE TWO YEAR YIELD JUMP MORE THAN 20 BASIS [00:36:12] Speaker ?: POINTS AT ONE POINT. [00:36:12] Vonnie Quinn: IT WAS REALLY INCREDIBLE. [00:36:14] Speaker 3: LOOKING OVER TODAY AS WELL FOR SOME OF THESE INDIVIDUAL MOVERS. CHARTER COMMUNICATIONS THAT STOCKS UP ALMOST 11% ON PACE FOR ITS BEST DAY SINCE LATE JUNE. PLANS TO BUY BACK AROUND 1.5 BILLION OF DEBT FOR CASH THERE. MOVING OVER TO THE FLIP SIDE OF THAT THOUGH, SKYDANCE DOWN MORE THAN 7% HEADING FOR ITS WORST DAY SINCE MID-OCTOBER. SO THAT'S DOWN OVER ITS THIRD QUARTER RESULTS. ANALYSTS WERE TALKING ABOUT HOW THEY WERE STRONG BUT THEY DID EXCLUDE WARNER BROTHERS AMID LINGERING UNCERTAIN TALKING ABOUT HOW THE COMPANIES WOULD BE INTEGRATED. THEN TAKE TWO INTERACTIVE UP ALMOST 9% ON PACE FOR ITS BEST DAY SINCE FEBRUARY 2025. SO IT GIVES AN OUTLOOK THAT IS SEEN POTENTIALLY AS CONSERVATIVE HERE. AND THEN HIMS AND HERS DOWN MORE THAN 17%, ALMOST 18% ON PACE FOR ITS WORST DAY SINCE JUNE 2025 HERE. SO THOSE SHARES DROPPING THE TELEHEALTH FIRM GAVE REVENUE AND ADJUSTED EBITDA FORECAST FOR THE FOURTH QUARTER THAT FELL SHORT OF EXPECTATIONS. [00:37:11] Vonnie Quinn: THOSE EARNINGS STORIES CONTINUING TO COME IN AND WE ARE OBVIOUSLY WAITING FOR CORE WEAVE IN ABOUT 20 MINUTES. BUT OVERALL THINGS ARE IMPROVING AT LEAST AT THE LEVEL OF THE INDICES WITH THE S&P NOW DOWN JUST TWO-Tenths OF 1% AND THE NASDAQ DOWN ABOUT A HALF A PERCENT. EARLIER THAT WAS MUCH WORSE. THE SOFTWARE INDEX IN PARTICULAR SUFFERING. BUT AGAIN WE'RE NOT SEEING THAT MUCH PAIN RIGHT NOW. SO LET'S GET SOME MORE MARKET ANALYSIS WITH KATIE KAMINSKI, CHIEF RESEARCH STRATEGIST AND PORTFOLIO MANAGER AT ALPHA SIMPLEX. HOW DO YOU EXPLAIN THIS MARKET, KATIE? [00:37:41] Speaker 11: WELL I MEAN TODAY'S BEEN AN INTERESTING DAY BECAUSE WHAT YOU'VE SEEN IS IT'S REALLY A FOCUS ON FIXED INCOME. IT'S A REPRICING OF FED EXPECTATIONS. IT'S A REALIZATION THAT HIGHER FOR LONGER IS STILL HERE EVEN THOUGH GEOPOLITICAL RISK HAS SUBSIDED SOME. SO I THINK FROM MY PERSPECTIVE AS SOMEONE WHO FOLLOWS SHORT BOND TRENDS, IT'S BEEN A REPRICE, LIKE A RESPITE FOR THAT PARTICULAR TRADE. [00:38:10] Vonnie Quinn: HOW LIKELY IS IT THOUGH THAT WE'RE GOING TO GET SOMETHING QUITE AGGRESSIVE FROM THE FED IN ORDER TO COUNTERACT THE OBVIOUS INFLATIONARY CONCERNS, BUT ALSO WHAT THE MARKET IS LOOKING FOR? THE MARKET IS LOOKING AT THE DATA AND REPRICING ITSELF, WHICH IS EXACTLY WHAT KEVIN WASH WANTED THE MARKET TO DO. [00:38:27] Speaker 11: WELL, I THINK THIS IS AN IMPORTANT POINT. I DON'T THINK THAT IT'S SOMETHING THAT'S GOING TO BE AN EXTREME REPRICING OR EXTREME REACTION. LET'S JUST LOOK AT THE NUMBERS HERE. REALLY SORT OF INFLATION IS JUST STICKIER THAN WE WOULD LIKE. IT'S NOT INCREASING PER SE RIGHT NOW. IT'S COME DOWN FROM WHAT WE SAW THIS, YOU KNOW, SPIKE IN SEPTEMBER. SO I THINK IT'S JUST A REALLY BASELINE. WE'RE A LITTLE TOO HIGH, WHICH MEANS THAT WE'RE GOING TO SEE A LITTLE -- SOME REACTION FROM THE FED, LIKELY. AND THE MARKET IS JUST PRICING THAT IN. BASICALLY THIS IDEA THAT WE'RE NOT GOING TO HAVE A RESPITE WITH LOWER RATES ANYTIME SOON, GIVEN SORT OF HOW STRONG GROWTH LABOR DATA AND INFLATION NUMBERS ARE. [00:39:06] Speaker 3: OF COURSE WE'RE ONLY ABOUT SEVEN TRADING SESSIONS INTO THE MONTH, IF YOU CAN BELIEVE THAT, KATIE. WHEN YOU'RE THINKING ABOUT ALL THE TWISTS AND TURNS SO FAR OVER THE PAST WEEK OR SO WHEN IT COMES TO MIDTERMS, THE CONTROVERSY AROUND NVIDIA AND, OF COURSE, TODAY'S LATEST DATA ON CPI, WHEN IT COMES TO THAT, HOW EXACTLY ARE YOU ADVISING YOUR CLIENTS TO POSITION? WHAT ARE YOU TELLING THEM TO BUY? WHAT ARE YOU TELLING THEM TO SELL? [00:39:27] Speaker 11: ACTUALLY, THIS IS A REALLY GOOD POINT BECAUSE, HONESTLY, WE'VE SEEN A MASSIVE AMOUNT OF VOLATILITY THIS MONTH AND THOSE OF US IN THE CROSS ASSET SPACE HAVE SEEN, YOU KNOW, SIGNIFICANT REPRICING, PARTICULARLY OUTSIDE OF EVEN EQUITY MARKETS. AND YOU'VE SEEN SORT OF THAT VOLATILITY THAT KIND OF SHOWS THAT THE MARKET ISN'T REALLY SURE WHAT TO MAKE OF THESE CHANGES. AND SO WHAT WE SAY IS DURING THESE TYPE OF VERY, YOU KNOW, BIMODAL EVENTS LIKE AN ELECTION, THERE'S ALWAYS A LOT OF THINGS TO DIGEST, SO IT'S VERY GOOD JUST TO KIND OF WAIT, BE PATIENT, AND SORT OF SEE, YOU KNOW, WHAT THE REAL IMPLICATIONS OF THESE THINGS ARE INSTEAD OF EXTRAPOLATING AT THIS POINT. [00:40:04] Vonnie Quinn: WHY ARE WE GETTING SUCH BIG MOVES, KATIE, THOUGH, IN THINGS LIKE SOFTWARE AND IN THINGS LIKE THE AI TRADE? I MEAN, THIS ISN'T ACROSS THE MARKET. THERE'S A SPECIFIC POTHOLES AND AREAS WHERE INVESTORS ARE ALREADY A LITTLE BIT WORRIED, ANYWAY. [00:40:19] Speaker 11: OKAY, SO I THINK IT'S A FEW THINGS. ONE, PEOPLE ARE ALREADY A LITTLE WORRIED, LIKE YOU MENTIONED, BUT TWO, WE'RE TALKING ABOUT THINGS THAT HAVE VERY LONG-TERM CASH FLOWS AND THAT ARE CONNECTED TO A COMPLEX NARRATIVE THAT HAS ALSO BEEN OVERBOUGHT OR BOUGHT PRETTY AGGRESSIVELY. SO I THINK WHENEVER YOU HAVE A SITUATION WHERE YOU'RE TRYING TO SORT OF EXTRAPOLATE THESE SORT OF REALLY BIG MACRO CHANGES INTO SOMETHING THAT COMPLEX AND THAT LONG-TERM, IT'S ALWAYS HARD TO VALUE THESE THINGS. AND SO I THINK FROM MY PERSPECTIVE, IT'S JUST GOING TO TAKE A LITTLE BIT OF PATIENCE AND A LITTLE BIT MORE TIME TO UNDERSTAND WHAT THIS REALLY MEANS. [00:40:54] Speaker 3: WITH EVERYTHING GOING ON, I'M CURIOUS, KATIE, WHAT'S THE TOP QUESTION THAT YOU'RE CURRENTLY GETTING FROM CLIENTS AND HAS THAT CHANGED FROM RECENT MONTHS? [00:41:02] Speaker 11: THAT'S A GOOD POINT. I THINK THE BIGGEST QUESTION HAS ALWAYS BEEN SORT OF INFLATION, GEOPOLITICAL RISK, IS THIS GOING TO DISSIPATE? AND THE MARKET HAS SORT OF PRICED THAT OUT MORE RECENTLY. SO I THINK THE BIGGER QUESTIONS WE'RE GETTING IS WHAT ARE THE BIG RISKS THAT WE COULD BE MISSING OR THAT WE MIGHT BE UNDERESTIMATING? SO I'D SAY RESURGENCE IN GEOPOLITICAL RISK IS ONE THAT'S A KEY ONE, BUT IT'S ALSO SORT OF THE LONG-TERM IMPACT OF HIGHER YIELDS AND WHAT POTENTIAL AT WHAT POINT THAT MIGHT BE A DRAIN ON GROWTH, AND NOT TO MENTION AI TRADE, WHICH EVERYBODY HAS BEEN KIND OF CONCERNED ABOUT IN GENERAL. [00:41:37] Vonnie Quinn: YEAH, AND THEN YOU HAVE TO WONDER, SHOULD THE MARKET BE PRICING IN THE PROSPECTS FOR THE BLACK SWAN EVENT THAT WAS THE NVIDIA AFFAIR, RIGHT? IT LOOKS LIKE THAT'S GETTING A LITTLE BIT MORE NEFARIOUS AS TIME GOES ON. WE'RE GETTING A DRIP DRIP. THE COMMERCE DEPARTMENT NOW DELAYING THE DECISION ON WHETHER MEGA SPEED SHOULD BE BLACKLISTED, BUT WE DON'T KNOW WHY AND SO ON. KATIE, DOES THIS ALL HAVE THE POTENTIAL TO UNRAVEL THE AI TRADE EVENTUALLY? [00:42:03] Speaker 11: I THINK THE CHALLENGE OF THE AI TRADE IS THAT IT HAS COME VERY FAR FROM WHERE WE'VE BEEN. AND RIGHT NOW WE'RE AT SORT OF THIS INFLECTION POINT WHERE WE HAVE TO FIGURE OUT WHO ARE THE WINNERS AND LOSERS IN THE NEXT PHASE OF THIS PARTICULAR TRADE. AND I THINK ANY TIME YOU HAVE A NEW TECHNOLOGY, A NEW CAPABILITY, A NEW CAPABILITY, BUT IT IS A LITTLE BIT OF COMPETITION. IT IS A LITTLE BIT OF COMPETITION. IT IS SO COOL TO ESTIMATE WHAT THOSE CASH FLOWS ARE GOING TO BE. AND THEN THERE'S ALSO ISSUES WITH CONCENTRATION. SO I THINK WE REALLY NEED TO FIGURE OUT HOW DO WE DIVERSIFY AND FIND SOME THINGS THAT MIGHT HELP US. [00:42:41] Vonnie Quinn: THANK YOU SO MUCH FOR SPEAKING WITH US TODAY. THAT IS KATIE KAMINSKI, CHIEF RESEARCH, STRATEGIST AND PORTFOLIO MANAGER AT ALPHA SYMPLEX. I DON'T KNOW IF IT WAS ON ANYONE'S BINGO CARDS THAT THERE WOULD BE -- I SURE WASN'T ON MINE. AFFAIR IN MORE SENSE THAN ONE. NOT JUST TALKING ABOUT THE ACTUAL AFFAIR, BUT THE FACT THAT IT COULD HAVE TENTACLES AND THIS COULD BE THE EVENT OF 2026. [00:42:59] Speaker 3: ESPECIALLY THE GYRATIONS THAT WE'RE SEEING. SO THE SOX YESTERDAY HAD ITS BEST DAY VERSUS NVIDIA SINCE 2019. BUT THEN IF YOU LOOK TODAY WHERE THE SOX IS, OFF OF ITS LOW IS STILL DOWN ABOUT 2/10 OF A PERCENT, BUT AS MUCH DOWN AS 2.5% EARLIER. ALL RIGHT. [00:43:13] Vonnie Quinn: WE'RE MOVING CLOSER TO THE CLOSING BELL. FULL MARKET COVERAGE RIGHT HERE ON BLOOMBERG. [00:43:20] Speaker 12: THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. [00:43:28] Vonnie Quinn: ABOUT TWO MINUTES AWAY FROM THE END OF THE TRADING DAY, BONNIE QUINN AND JAS MENTON. HERE TO HELP TAKE US THROUGH THE CLOSING BELL, A GLOBAL SIMULCAST, WE'RE JOINED NOW BY CAROL MASER AND TIM STUNEVECK BRINGING TOGETHER OUR BLOOMBERG TELEVISION, RADIO AND YOUTUBE AUDIENCES WORLDWIDE TO PART THROUGH THE MOST CRUCIAL MOMENTS OF THE TRADING DAY. AND AT LEAST FOR EQUITIES, THINGS DID SEEM TO IMPROVE THROUGHOUT THE AFTERNOON, GUYS. [00:43:48] Speaker 13: YEAH, WE SAW A LITTLE BIT OF BUYING, IT LOOKS LIKE, IN THE LAST 15, 20 MINUTES OR SO. I WILL SAY THE MOST CRUCIAL MOMENT STARTED AT 8:30 A.M. [00:43:56] Speaker 14: THAT WAS MY CRUCIAL MOMENT. IT WASN'T THE TRADING DAY. [00:43:59] Speaker 13: NO, BUT IT WAS PRE-MARKET TRADE, SO COME ON. IT SETS UP THE TONE. [00:44:03] Speaker 14: YEAH, I DON'T WANT TO TAKE ALL THE THUNDER FROM PEOPLE WHO ARE TALKING ABOUT BONDS IN JUST A FEW MINUTES, BUT I MEAN, LOOK AT THE WAY THE YIELDS HAVE SPIKED THE MOST SINCE THE TARRIFF MELTDOWN, THE QUESTION IS, HOW HIGH DO RATES HAVE TO GO TO TACKLE THIS INFLATION? YEAH, I MEAN, THAT'S SUCH A GOOD POINT, TOO. [00:44:16] Speaker 3: AND ESPECIALLY WHEN YOU ARE JUST GIVEN SOME OF THE YEAR-OVER-YEAR CPI DATA, WE DIDN'T GET THAT BECAUSE OF THE SHUTDOWN THAT HAPPENED A YEAR AGO, BUT PARSING THROUGH THOSE MONTH-OVER-MONTH NUMBERS, OBVIOUSLY STILL STICKING INFLATION IN THE QUESTIONS OF WHAT DOES THAT MEAN AHEAD FOR THE FED. BASICALLY, TRADERS PRICING IN THE PROBABILITY OF A MORE LIKELY HIGH THAT'S GOING TO COME IN MID-DECEMBER, GUYS. [00:44:36] Vonnie Quinn: WELL, AND, OF COURSE, EXACTLY. YOU KNOW, IT WASN'T JUST THE COMMENTS WE GOT THIS MORNING FROM LAURIE LOGAN OR THE DATA, IT WAS ALSO THE FACT THAT WALLER SEEMS TO BE A BIT HAWKISH, SO WE SAW THAT MASSIVE HAWKISH REPRICING IN YIELDS. AND THEN ON THE OTHER SIDE OF THINGS, YOU HAVE THE ANTHROPIC IPO WITH MORE HEADLINES COMING NOW, BACKERS APPARENTLY SHOPPING ADVANCE IPO ALLOCATIONS FOR A 3% TO 5% FEE. AND YOU KNOW WE'RE JUST GOING TO GET MORE AND MORE HEADLINES RIGHT THROUGH TO WHEN WE GET THE PRICING NEXT WEDNESDAY BEFORE IT STARTS TRADING NEXT THURSDAY. ALL RIGHT, YOU CAN HEAR THE CLOSING BELLS AS WE SPEAK. CAROL AND TIM, I HOPE I DIDN'T SHOCK YOU TOO MUCH WITH WHAT I JUST SAID. IT SOUNDS LIKE I SHOCKED YOU INTO SILENCE. BUT THERE WE GO, THE CLOSING BELLS WITH THE NASDAQ, THEY'RE DOWN 7/10 OF 1%, THE S&P 500 DOWN 4/10, AND THE DOW JONES THE WINNER TODAY DOWN JUST 3/10. [00:45:27] Speaker 13: EVERYTHING SHOCKS ME RIGHT NOW, I GOT TO SAY. LET'S GO BACK TO THE S&P 500. DESPITE THE INDEX DOWN, AS BONNIE JUST MENTIONED, ACTUALLY KIND OF AN EVEN SPLIT HERE. 249 NAMES TO THE UPSIDE, 250 TO THE DOWNSIDE, FOR UNCHANGED. SO NOT EVERYTHING WAS DOWN TODAY. [00:45:43] Speaker 3: LOOKING UNDERNEATH THE HOOD HERE FOR THE S&P 500, PROBABLY NOT SURPRISINGLY, INFORMATION TECHNOLOGY, THE BIGGEST DECLINER HERE DOWN, 1.4%, ON THE FLIP SIDE OF THAT THOUGH, FINANCIALS, THE BIGGEST GAINER UP AROUND A HALF A PERCENT, AS WELL AS CONSUMER DISCRETIONARY, AND THEN BEHIND THAT, ENERGY UP AROUND 3/10 OF A PERCENT, CAROL. [00:46:01] Speaker 13: LET'S GO TO SOME OF THE INDIVIDUAL GAINERS, IF I MAY. NUMBER ONE GAINER IN THE S&P 500, WE'RE TALKING ABOUT CHARTER COMMUNICATIONS, UP 10.6% IN TODAY'S SESSION. THIS AS THE COMPANY PLANS TO BUY BACK ABOUT $1.5 BILLION WORTH OF DEBT FOR CASH. THIS IS JUST COMING DAYS AFTER LAUNCHING AN OVERHAUL OF ITS BUSINESS TO CUT COSTS. THE CABLE AND INTERNET PROVIDERS TARGETING 8 BONDS DUE BETWEEN 2041 AND 2062. IT'S GOING TO PURCHASE THEM BASED ON DIFFERENT PRIORITY LEVELS. THEY PUT OUT A STATEMENT EARLIER TODAY. KEEP IN MIND THE STOCK IS DOWN ABOUT 36% YEAR-TO-DATE, NEARLY 16% OF THE FLOAD IS SHORT. IT WAS JUST ON FRIDAY THAT THE COMPANY SHOWED FURTHER DECLINES IN HOME INTERNET AND CABLE TV CUSTOMERS AND SAID IT'S UNDERTAKING A QUOTE-UNQUOTE FUNDAMENTAL DESIGN OF ITS BUSINESS, AIMING FOR $2 BILLION IN ANNUALIZED RUN RATE OPERATING EXPENSE SAVINGS OVER THE NEXT 18 MONTHS. SO THERE YOU HAVE IT. AND THAT ONE IS CERTAINLY AN OUTPERFORMER. TAKE TWO INTERACTIVE, NUMBER TWO GAINER IN THE S&P 500. THAT WENT UP ABOUT 8.3%. THE VIDEO GAME COMPANY GAVE AN OUTLOOK THAT IS SEEN AS CONSERVATIVE AHEAD OF THE RELEASE OF ITS HIGHLY ANTICIPATED GAME, GROUND THEFT AUTO 6. [00:47:06] Speaker 14: YOU'RE PLAYING THAT, RIGHT? [00:47:08] Speaker 13: THAT'S LIKE A BIG ONE. [00:47:09] Speaker 14: THAT WOULD BE A NO. SHE'S LIKE, I WAS UP ALL NIGHT PLAYING THIS NEW GAME. MIAMI, RIGHT TIM? [00:47:13] Speaker 13: I GUESS. [00:47:14] Speaker 14: I DON'T KNOW. GARYL DOESN'T TELL ME. ALSO DOESN'T PLAY. [00:47:17] Speaker 13: STOCK DOWN ABOUT 13% YEAR-TO-DATE. AND THEN, REAL QUICKLY, ZIP RECRUITER. THAT ONE SHARES RALLYED 40% AT ITS INTRADAY HIGH TODAY, FINISHING THE DAY ACTUALLY EVEN HIGHER, UP ALMOST 54%. SO, OBVIOUSLY, A HIGHER INTRADAY HIGH. BUT IT JUST, LIKE, WAS OFF AND RUNNING. EMPLOYMENT SERVICES COMPANIES THIRD QUARTER RESULTS BEAT EXPECTATIONS. ANALYS ARE PRETTY POSITIVE ON THE REPORT, WHICH DID SHOW GROWTHS BY THE WEAKER LABOR MARKET BACKDROP. UBS RAISING THE FIRM'S PRICE TARGET TO $5 FROM 4.50 A SHARE. STOCK RIGHT NOW, WHAT IS IT, $6.59 A SHARE? YEAH, $6.59 A SHARE. AND THEY KEPT THEIR NEUTRAL RATING. STOCK IS NOW UP ABOUT 49% YEAR-TO-DATE. SO, ON A TEAR. OKAY. [00:47:59] Speaker 14: ONE STOCK THAT HAS NOT BEEN ON A TEAR IS NVIDIA. IT'S ACTUALLY DOWN ABOUT 30% SINCE THAT OCTOBER 5TH HIGH. AND JUST IN THE LAST TWO DAYS, SHARE IS DOWN ABOUT 9.5%. NVIDIA SHARE IS TUMBLING YET AGAIN TODAY. IF I WENT OVER ALL THE NEWS THAT WE GOT ABOUT NVIDIA TODAY, THERE WOULD BE NOTHING ELSE TO TALK ABOUT. AND IT WOULD TAKE ME QUITE THE REST OF THE PROGRAM. SUFFICE IT TO SAY THAT THE INFORMATION AND NEWS REPORTS CONTINUE TO TRICKLE OUT. AMONG THE LATEST IS THAT THE COMPANY'S INDEPENDENT BOARD MEMBERS TAPPED A FORMER FEDERAL PROSECUTOR TO HELP PROBE COO JENSEN HUANG'S RELATIONSHIP WITH A SUSPECTED CHINESE SPY. IN ADDITION TO THAT, NOW THERE'S MORE OUT OF WASHINGTON, D.C. AND THE CLOSE TIES THAT THE PRESIDENT HAS HAD WITH JENSEN HUANG AND WITH NVIDIA ARE NOW COMING UNDER SCRUTINY. THE PRESIDENT SAID HUANG ASSURED HIM THAT HE HAD, QUOTE, ABSOLUTELY NO IDEA THAT THE PERSON IN QUESTION WAS A SPY AND THAT HE THINKS HUANG IS A QUOTE, VERY HONORABLE MAN. NVIDIA SHARES DOWN ABOUT FIVE AND A HALF PERCENT TODAY. ALSO WATCHING SHARES OF ON HOLDING, THE FOOTWARE COMPANY'S DIRECT TO CONSUMER REVENUE MISSED WALL STREET ESTIMATE. SHARES TODAY FELL BY SEVEN AND A HALF PERCENT. AND ONE MORE ON THE AI TRADE, A MEASURE OF THIS. GE VERNOVA, IT'S THE TURBINE MAKER, GE VERNOVA. SHARES HAVE BEEN DOWN THROUGHOUT THE DAY TODAY. THEY ENDED UP CLOSING LOWER AFTER SOFTBANK REVISED ITS EQUIPMENT PROCUREMENT STRATEGY FOR AI DATA CENTER PROJECTS IN THE U.S. SOFTBANK REPORTED ITS FIRST NET LOSS IN ALMOST TWO YEARS. AFTER THE TECH INVESTOR SWALTED A $3.7 BILLION WRITE DOWN, SHARES OF GE VERNOVA OFF THE WORST LEVELS, CLOSING AT THE BEST LEVELS OF THE DAY BUT STILL DOWN 3.9%. [00:49:30] Vonnie Quinn: LET'S TAKE A LOOK AT YIELDS BECAUSE IN MANY WAYS THAT WAS THE STORY TODAY AFTER THOSE COMMENTS AND OF COURSE THE CPI DATA, OBVIOUSLY THE CPI DATA WHICH CAME IN HARDER THAN ANTICIPATED AND AS JESS WAS SAYING EARLIER, WE DIDN'T GET THE YEAR-OVER-YEAR DATA BUT BLOOMBERG ECONOMICS ESTIMATED IT AT 3.9% DOWN EARLIER AT 4.1%. SO REALLY NO RELIEF IN INFLATION OR HAWKISH REPRICING PARTICULARLY AT THE FRONT END. 4.73 NOW ON THE TWO-YEAR YIELD UP 17 BASIS POINTS AND THAT 10-YEAR YIELD TOP 5% AT ONE POINT TODAY BUT EVEN THE BACK END, IF YOU LOOK AT THE 30-YEAR YIELD, WE'RE UP 7 BASIS POINTS, CAROL, AT 5.35 THERE. [00:50:07] Speaker 13: YEAH, ABSOLUTELY. THAT WAS CERTAINLY THE BIG STORY THERE AND SOMETHING WE'RE GOING TO CONTINUE TO WATCH AS WE MOVE TO THE FRIDAY PPI REPORT. HAVING SAID THAT, YOU KNOW, HIGHER RATES HAVE BEEN REALLY HARD FOR HOME BUYERS. THIS STORY DEFINITELY CAUGHT OUR ATTENTION. A NEW POLICY GROUP CHAIRED BY LAIL BRAINARD IS PUSHING FOR THE CREATION OF A FEDERAL HOUSING ADMINISTRATION PROGRAM TO URGING A $1,000 DOWN PAYMENT FOR FIRST-TIME HOME BUYERS. LET'S JUST JUMP BECAUSE WE'VE GOT CORE WEAVE ON. [00:50:31] Vonnie Quinn: YEAH, JUST GOING TO JUMP IN, CAROL. TOP AND BOTTOM LINE BEATS FOR CORE WEAVE. IT DID HAVE A LOSS PER SHARE OF $1.27 BUT WALL STREET WAS LOOKING FOR A LOSS OF 146. SO THAT'S A LITTLE BETTER OF A LOSS THAN EXPECTED. AGAIN, A LOSS BUT IT IS BETTER THAN EXPECTED. AND THE REVENUE FIGURE AT $3.66 BILLION WAS JUST A LITTLE BETTER THAN $3.56 BILLION THAT THE STREET WAS EXPECTING. SO AGAIN, A TOP AND BOTTOM LINE BEAT FOR CORE WEAVE. WE'LL SEE HOW THE MARKET REACTS. [00:50:57] Speaker 13: YEAH, WELL, THE MARKET IS ALREADY REACTING, BONNIE. AS YOU CAN SEE, IT'S UP ABOUT 5% HERE IN THE AFTERMARKET. I THINK, YOU KNOW, SUCH A KEY PLAYER WHEN IT COMES TO THE AI BUILD. THIS IS A PURE AI DATA CENTER PLAY. AND SO LET'S LOOK AT THE REVENUE BACKLOG. ABOUT 132.5 BILLION AS OF SEPTEMBER 30TH. I'M CURIOUS WHAT THE STREET WAS EXPECTING. BUT THEY RAISED THEIR ANNUALIZED RUN RATE REVENUE GUIDANCE. THEY RAISED THEIR FISCAL YEAR 2026 REVENUE GUIDANCE. THAT THIRD QUARTER REVENUE, AS VONNIE MENTIONED, THAT WAS A B, 3.66 BILLION VERSUS AN ESTIMATE OF 3.56. AND IT NOW SEES FISCAL YEAR REVENUE OF 13 BILLION TO 13.3 BILLION. IT HAD SEEN 12 BILLION TO 13 BILLION. SO AGAIN, THE STOCK, TIM, YOU CAN SEE GAINING MOMENTUM UP ABOUT 7.5% HERE IN THE AFTERHOURS. I THINK MANY PEOPLE WERE SAYING WE NEEDED TO SEE SOME POSITIVE NUMBERS FROM THIS COMPANY. [00:51:49] Speaker 14: YEAH, I MEAN, LOOK, SHARE IS DOWN 30% THIS YEAR. SHARE IS DOWN FROM LAST YEAR'S HIGHS OF, WHAT, OVER $180 A SHARE, DOWN MORE THAN 73%. SO EVEN WITH TODAY'S REPORT, UP 6.8% STILL HAS A LONG WAY TO GO FROM WHERE IT WAS. I MEAN, THIS WAS AT ALL-TIME LOWS JUST A FEW DAYS AGO. BUT TO CAROL'S POINT AND THE QUESTION ABOUT FUNDING AND FINANCING, THE COMPANY'S CO-FOUNDER, CHAIRMAN, AND CEO POINTING TO THAT, HE TALKS ABOUT GROWTH BEING SUPPORTED BY MULTIPLE SOURCES OF FUNDING, FINANCING BACKED BY CUSTOMER CONTRACTS, OPERATING CASH FOR APPROXIMATELY $9 BILLION IN CUSTOMER PREPAYMENTS AND DEPOSITED EXPECTED IN THE NEXT THREE MONTHS ALONE. HE SAYS THERE'S FINANCIAL FLEXIBILITY AND IT'S A POSITION THAT KEEPS US DELIVERING THE INFRASTRUCTURE AND SOFTWARE CUSTOMERS NEED TO BUILD, RUN, AND SCALE AI. MICHAEL AND TROTTER TALKING ABOUT THIS, THE COFOUNDER OF CORWAVE. [00:52:39] Vonnie Quinn: AND CHAIR IS JUST COMING OFF THEIR HIGHS, A LITTLE BIT OBVIOUSLY BOUNCING AROUND, BUT WE'RE ALSO GETTING A CAPEX NUMBER, WHICH IS A LITTLE BIT HIGHER THAN THE STREET WAS EXPECTING, FULL-YEAR CAPEX GUIDANCE, $37 BILLION TO 39. THE STREET WAS LOOKING FOR 35.6. [00:52:53] Speaker 13: YEAH, AND WE SHOULD BE KEEPING A WATCH ON OTHER NEOCLOUDS. I'M JUST QUICKLY BRINGING UP NEBIUS IF I CAN AND JUST TAKING A LOOK AT WHAT IT'S DOING IN THE AFTERMARKET. IT, TOO, IS UP ABOUT 3.4%. SO WATCH THE WHOLE NEOCLOUD AREA AS WE CONTINUE TO GO THROUGH THESE NUMBERS AND ALSO WAIT FOR THE CALL WITH ANALYSTS AND INVESTORS WHEN IT COMES TO CORWAVE. ALL RIGHT, GUYS, THAT IS A WRAP. OUR CROSS-PLATFORM, RADIO, TV, YouTube, Bloomberg originals. WHOOPS, LET ME FIX THAT. OF COURSE, BONNIE AND JESS FINISHING UP THERE ON THE CLOSE ON BLOOMBERG TELEVISION. TIM AND I BACK HERE ON BLOOMBERG BUSINESS WEEK DAILY ON RADIO. WE'LL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. [00:53:29] Vonnie Quinn: COMING UP, WE'RE GOING TO DRILL DOWN ON CORWAVE'S EARNINGS RESULTS, A VERY IMPORTANT ONE FOR THE STREET, GIVEN EVENTS OF RECENT DAYS, WHAT THEY FORTELL ABOUT BROADER DEMAND FOR A.I. AND THE SURVIVABILITY OF THIS TRADE, THIS IS THE CLOSE ON BLOOMBERG. [00:53:45] Speaker 1: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. [00:53:55] Vonnie Quinn: WELCOME BACK TO THE CLOSE. I'M BONNIE QUINN. LET'S TAKE A LOOK NOW AT WHERE MARKETS CLOSED OUT THE SESSION. THIS WAS BEFORE CORWAVE EARNING, SO WE'LL SEE WHAT HAPPENS TOMORROW. BUT CERTAINLY WE IMPROVED THROUGHOUT THE DAY. EVEN SOFTWARE STOCKS DID BETTER AT THE END OF THE DAY. THE S&P 500 DOWN JUST 4/10 OF 1%. THE NASDAQ 100 DOWN 6/10 OF 1%. YIELDS WERE WHERE IT WAS AT TODAY. REPRICING HAWKISHLY AT THE FRONT END IN PARTICULAR. THAT TWO-YEAR YIELD PRICING IN SOONER OR MORE OF A HIKE AT 473. AND THEN THE DOLLAR INDEX BASED OFF OF THAT HOTTER CPI DATA AND THE COMMENTS FROM WALLER AND LOGAN ALSO STRONGER BY 6/10 OF 1%. [00:54:33] Speaker 3: VONNIE, LET'S LOOK AT NOTABLE MOVER IN AFTER HOURS TRADING. OF COURSE, CORWE BOOSTING ITS ANNUAL RUN RATE REVENUE OUTLOOK BETWEEN $20 BILLION TO $21 BILLION. IF YOU LOOK AT SHARES COMING A LITTLE BIT OFF OF THOSE SESSION HIGHS AND AFTER HOURS TRADING UP, STILL MORE THAN 6% RIGHT NOW. THE STOCK CLOSED ABOUT A HALF OF A PERCENT LOWER. BUT OF COURSE, YEAR TO DATE, THAT STOCK IS STILL DOWN MORE THAN 30%. AND THE PRESSURE WAS ON, VONNIE, OF COURSE, FOR THIS TO HAVE A HIGH BAR TO IMPRESS CORPORATE AMERICA, ESPECIALLY JUST GIVEN WHAT HAPPENED IN THE AFTERMATH OF THOSE MIDTERM ELECTIONS. AND PEOPLE REALLY FOCUSED ON AI SPENDING AND WHAT IT MEANS FOR SOME OF ITS PEERS AS WELL AS NEVIUS MOVING FORWARD. SO WE'LL HAVE TO SEE IF THESE GAINS CAN STILL HOLD IN AFTER HOURS INTO MORE EARNINGS TRADING, TOO. [00:55:16] Vonnie Quinn: YEAH, YOU WOULD HAVE THOUGHT IT WAS A HIGH BAR, MAYBE EVEN A HIGHER BAR, GIVEN EVENTS OF RECENT DAYS. IT DID BEAT, AS YOU SAY, JESS, ON THE TOP LINE AND THE BOTTOM LINES. AND IT RAISED ITS GUIDANCE. BUT IT'S STILL, YOU KNOW, REPORTING A LOSS PER SHARE OF $1.27. LET'S BRING IN GIL LURIA, HEAD OF TECHNOLOGY RESEARCH AT DA DAVIDSON, WHO JOINS US NOW TO LOOK AT THESE RESULTS OUT OF CORWEAVE. SO A BEAT, IT DEFINITELY NEEDED A BEAT, GIL. BUT WAS THIS ENOUGH OF A BEAT AND ENOUGH OF A RAISED GUIDANCE? [00:55:44] Speaker 15: THE RESULTS THEMSELVES ARE VERY GOOD. THE MARKET FOR SELLING COMPUTERS IS WHITE-HOT. ANYBODY THAT NEEDS COMPUTERS IS HAVING A HARD TIME FINDING IT. COMPANIES LIKE CORWEAVE THAT HAVE THE ABILITY TO DELIVER COMPUTER GETTING AS HIGH A PRICE AS THEY WANT RIGHT NOW. THEY'RE SELLING A LOT OF THEIR COMPUTERS SHORT-TERM, GETTING THEM EVEN BETTER PRICES. THAT EXPLAINS THE UPSIDE TO REVENUE AND SOME UPSIDE TO PROFITS AS WELL. THE CHALLENGE FOR CORWEAVE IS THE ABILITY TO RAISE MORE CAPITAL TO KEEP GOING. THE DEBT MARKETS FOR MOST INTENSE AND PURPOSES ARE SHUT DOWN, ESPECIALLY AT THE UNSECURED LEVEL. THEY CAN STILL TRY TO DO SOME SMALLER SECURE DEBT, WHICH IS MORE LIMITED IN SCOPE AND STILL BECOMING MORE EXPENSIVE. AND THEY'RE NOW PIVOTING TO DOING EQUITY. PREVIOUSLY THEIR STRATEGY WAS TO ONLY FINANCE THE CAPITAL EXPENDITURES WITH DEBT. NOW THEY'RE ALSO ISSUING EQUITY. THAT'S SOMETHING THAT AS INVESTORS DIGEST, THEY'RE GOING TO HAVE TO FIGURE OUT WHAT THE DILUTION IS. SO THAT'S THE BIGGER CHALLENGE FOR CORWEAVE IS GETTING THE CAPITAL. THE FACT THAT THE COMPUTE PRICES ARE VERY HIGH RIGHT NOW, WE ALREADY KNEW THAT. [00:56:50] Vonnie Quinn: THE FOURTH QUARTER INTEREST EXPENSE WAS OVER A BILLION DOLLARS, 1.05 TO 1.15. AND THEIR TOTAL CURRENT LIABILITIES ARE MORE THAN $24 BILLION. WHAT KIND OF REVENUE WOULD YOU NEED FOR THAT TO BE MAKING SENSE, GILL, GIVEN THAT WE DON'T REALLY KNOW WHAT'S GOING TO HAPPEN WITH THE AI TRADE. AND IT DOESN'T MATTER IF THERE ARE COMMITMENTS MADE, YOU KNOW, THIS DEBT IS ON THEIR BOOKS. [00:57:13] Speaker 15: WELL, THAT'S EXACTLY RIGHT. IF YOU TAKE THEIR ADJUSTED OPERATING INCOME, MULTIPLY BY FOUR, DIVIDE BY THEIR NET PPNE AS A PROXY FOR RETURNS, THEY'RE PROBABLY AT AROUND 4%. IF YOU TAKE THAT INTEREST RATES AND DIVIDED BY THEIR DEBT, THEY'RE BETWEEN 7% AND 8%. SO THEY'RE DESTROYING VALUE EVERY QUARTER NOW. THEY NEED TO GET THEIR RETURNS FAR HIGHER, AND THEY NEED TO FIGURE OUT SOME WAY TO LOWER THEIR COST OF CAPITAL. OTHERWISE, THEY WILL CONTINUE TO BE IN THIS MODE. AND AS YOU'RE POINTING OUT, THEIR INTEREST EXPENSE ITSELF, THAT'S THE OTHER PROXY FOR THE VIABILITY OF THIS ENDEAVOR. THEIR INTEREST EXPENSE IS FAR HIGHER THAN ADJUSTED OPERATING INCOME. THAT TELLS YOU THAT THE BUSINESS THEY GENERATE FROM THESE DATA CENTERS IS NOT ENOUGH TO PAY DOWN THE DEBT THAT THEY'RE ACCREWING. SO THAT'S -- IT'S A STRUCTURALLY CHALLENGED BUSINESS. THAT'S WHY IT'S BEEN UNDER SO MUCH PRESSURE. AND BY THE TIME THE CALL IS DONE, I'M NOT SURE THAT PRESSURE WILL BE RELIEVED. THERE'S SOME RELIEF THAT THERE WAS AT LEAST UPSIDE TO NUMBERS. BUT BY THE TIME INVESTORS DIGEST ALL THE THINGS WE JUST TALKED ABOUT, I'M NOT SURE HOW WELL THE STOCK WILL DO EVEN TOMORROW. [00:58:18] Speaker 3: SO, GIL, HOW EXACTLY CAN THE COMPANY RAISE CAPITAL AND AT WHAT COST? [00:58:22] Speaker 15: WELL, SO THAT'S THE THING. THEY WERE DOING IT BY RAISING DEBT. THOSE PROGRAMS HAVE BECOME MORE EXPENSIVE. AND AT THE CORPORATE LEVEL, UNTENABLE. BECAUSE THEIR UNSECURE DEBT IS TRADING IN MORE THAN 15 TIMES IN THE SECONDARY MARKET, THAT MEANS THEY CAN'T RAISE ANY MORE UNSECURED. SO THEY'VE HAD TO PIVOT THE ISSUE OF EQUITY, WHICH THEY ANNOUNCED IN THIS PRESS RELEASE THAT THEY'RE GOING TO DO AN AT THE MARKET OFFERING OF EQUITY. THAT'S A COMPLETE PIVOT. THAT'S DIFFERENT THAN WHAT THEY SAID EVER SINCE THEIR IPO LAST YEAR. AND THAT'S WHAT THEY'RE GOING TO HAVE TO DO. BUT AGAIN, THERE'S A COST TO SHAREHOLDERS. THEY'RE GOING TO BE DILUTED BY THIS AT THE MARKET OFFERING. AND THERE'S GOING TO BE AN OVERHANG ON THE STOCK UNTIL IT'S COMPLETED. [00:59:00] Speaker 3: SO IF YOU WERE ABLE TO ASK A QUESTION ON THE EARNINGS CALL, WHAT WOULD IT BE? [00:59:06] Speaker 15: DO THEY THINK THEY'LL EVER BE ABLE TO COME BACK TO THE CAPITAL MARKETS? BECAUSE RIGHT NOW IT LOOKS LIKE THE DEBT MARKET, ESPECIALLY AT THE UNSECURED LEVEL, IS SHUT DOWN. WHAT'S THEIR PLAN FOR DEPLOYING CAPEX IF THEY HAVE TO CONTINUE TO PIVOT AWAY FROM THE STRATEGY? WILL THEY CONTINUE TO DILUTE SHAREHOLDERS WITH EQUITY? THAT IS THE OPERATIVE QUESTION RIGHT NOW. [00:59:26] Vonnie Quinn: YOU HAVE TO WONDER IF SHAREHOLDERS WILL PUNISH THEM FOR THAT DILUTION. THEY'RE NOT RIGHT NOW. BUT AGAIN, SHARES ARE ALREADY DOWN 50% HERE TODAY. GIL, HOW DOES THE NVIDIA SITUATION CHANGE THE PROSPECTS FOR GROWTH FOR CORWEAVE? AND ALSO, JUST IF YOU CAN TACK ON A COMMENT ON NVIDIA ITSELF, DOES IT AUTOMATICALLY REDUCE ITS VALUATION BY A CERTAIN PERCENT? [00:59:45] Speaker 15: YEAH, THERE'S A REAL RISK TO NVIDIA RIGHT NOW THAT JENSEN WONG IS GOING TO STEP DOWN. AND IF JENSEN WONG STEPS DOWN, THE WHOLE NOTION OF INVESTING IN THE ECOSYSTEM AS AGGRESSIVELY AS HE DID WHILE HE WAS CEO, AS HE IS CEO OF NVIDIA, WILL MAY GO AWAY. BECAUSE FOR CORWEAVE, A LOT OF INVESTORS BELIEVE THAT CORWEAVE WON'T FAIL BECAUSE NVIDIA WILL BAIL THEM OUT. NVIDIA HAS ALREADY BAILED THEM OUT FOUR OR FIVE TIMES SINCE BEFORE THE IPO UNTIL NOW. SO THERE'S SOME SENSE THAT THEY'LL KEEP DOING THAT. IF JENSEN WONG IS NOT CEO OF NVIDIA, NVIDIA IS NOT BAILING CORWEAVE OUT. THEY WILL ALLOW CORWEAVE TO FAIL IF CORWEAVE CAN'T TAP THE CAPITAL MARKETS AS MUCH AS IT NEEDS TO. SO THAT RISK TO NVIDIA THAT THE INVESTIGATION IS GOING TO FIND WRONGDOING OR THAT IN ANY CASE, JENSEN WONG HAS TO STEP DOWN. THAT'S RISK TO THE BROADER ECOSYSTEM, ESPECIALLY COMPANIES THAT ARE RELYING ON NVIDIA AS A BACKSTOP. [01:00:43] Vonnie Quinn: WELL, GIL, THANK YOU SO MUCH. I CAN ALWAYS RELY ON YOU FOR SOME STRAIGHT TALKING. STRAIGHT TALKING, GIL, HEAD OF TECHNOLOGY RESEARCH AT DA DAVIDSON. COMING UP, WE'RE STICKING WITH THESE CORWEAVE RESULTS AND WHAT ALL MEANS FOR THE AI LANDSCAPE. LAUREN CASSIDY, CIO OF FOUNDER ETFS, JOINS US NEXT. THIS IS THE CLOSE ON BLUEBURG. [01:01:06] Speaker 3: TAKING A LOOK AT SHARES OF CORWEAVE, UP AROUND 3.5% IN AFTER HOURS TRADING. COMING OFF A LITTLE BIT OF THOSE HIGHS, BUT WATCHING OBVIOUSLY OTHER NEW CLOUD RESULTS, TOO. SO THE RESULTS COME AS INVESTORS QUESTION WHAT LAST WEEK'S MIDTERMS COULD MEAN FOR THE AI TRADE WITH SHARES OF CORWEAVE, OBVIOUSLY FALLING SHARPLY SINCE ELECTION DAY. JOINING US NOW IS LAUREN CASSIDY, CIO OF FOUNDER ETFS. AND FUNNY ENOUGH, I WAS SPEAKING WITH YOU EARLIER TODAY ABOUT POTENTIAL DIP BUYING, WHAT YOU WERE DOING THERE. YOU CAN'T MAKE CHANGES JUST YET TO YOUR PORTFOLIO UNTIL THE END OF THE MONTH. BUT YOU MENTIONED YOU WERE CONSIDERING POTENTIALLY BUYING SHARES OF NVIDIA, NEO CLOUD, OTHER STOCKS TOO. BUT OBVIOUSLY YOU'RE HINDLY FOCUSED ON WHAT'S GOING TO HAPPEN WITH JENSEN AND NVIDIA. TALK US THROUGH SORT OF WHAT YOU'RE SEEING THE BIGGEST RISK OF THE MARKET TO BE RIGHT NOW. [01:01:54] Speaker 16: YES, JUST THERE'S A NUMBER OF RISKS IN THE MARKET. WE'RE WATCHING VERY CLOSELY. THE TOP TWO REALLY ARE NVIDIA, THE CONCLUSION OF THE INVESTIGATION. WE WOULD LIKE TO SEE A THOROUGH INVESTIGATION DONE VERY SWIFTHLY SO THAT WE CAN MOVE FORWARD WITH CLARITY. NVIDIA REALLY IS THE CENTER OF THE AI TRADE AND JENSEN IS THE CENTRAL FIGURE. SO WHAT HAPPENS WITH PEM MATTERS A GREAT DEAL TO US. IT'S OUR SECOND LARGEST HOLDING AS WELL. AND THEN ANTHROPIC WITH THEIR IPO, I THINK THEY SHOULD HAVE A VERY SUCCESSFUL IPO. I THINK THEY HAVE A LOT TO OFFER THE MARKET. IT'S A MOTED BUSINESS. THEY'RE BUILDING OUT A WHOLE ECOSYSTEM WITHIN US ENTERPRISE. BUT WE'LL FEEL BETTER ONCE WE SEE THEM PUBLICLY TRADING AND DOING WELL IN THE MARKET. AND IF YOU'RE UNSUCCESSFUL THEN THAT WOULD BE A BIG RISK. [01:02:51] Speaker 3: YOU MENTIONED THAT YOU WERE ALSO EYING OTHER NEO CLOUD AND SOFTWARE COMPANIES POTENTIALLY TO BUY THE DIP ON SOON. WHAT DO YOU NEED TO SEE TO GIVE YOU MORE OF THAT CONVICTION? AS IN HAVE WE SEEN THE WORST OF IT OR IS MORE PAIN TO COME IN THE MARKET? [01:03:03] Speaker 16: YES, THE MARKET HAS BEEN VERY FOCUSED THE PAST FEW MONTHS ON CAPX AND THAT SPINNING IS GOING TO CONTINUE. BUT WE ARE STARTING TO SEE SIGNS THAT THESE LARGE INVESTMENTS ARE PAYING OFF. THE NEO CLOUDS ARE NO EXCEPTION. SO EVEN JUST WITH CORE WEAVE TODAY MOMENTS AGO REPORTING HEALTHY RESULTS AND RAISING YOUR GUIDANCE. WE CONTINUE TO SEE A STRONG CADENCE AND A LOT OF PROGRESSION THERE AND WE ARE LOOKING FOR BUYING OPPORTUNITIES. [01:03:37] Vonnie Quinn: LAUREN, YOUR ETF TICKER, FFF, OBVIOUSLY IT'S COMPOSED OF COMPANIES THAT ARE STILL RUN BY THEIR FOUNDERS. BUT HOW DO YOU DECIDE WHAT WEIGHTING TO GIVE EACH COMPANY? SO RIGHT NOW YOU SAID NVIDIA IS YOUR LARGEST BUT OBVIOUSLY META AND PALANTIER ALSO HAVE A VERY HEAVY WEIGHTING. I MEAN IT WOULD SEEM THAT YOU'RE SORT OF BEHOLDEN TO THE WHIMS OF THE PARTICULAR CEO AT ANY GIVEN TIME AS WELL. AS WE'VE SEEN IN THE LAST FEW DAYS THAT CAN COME OUT OF NOWHERE. [01:04:06] Speaker 16: IT CAN. WE OWN A HUNDRED COMPANIES ACTUALLY ACROSS EVERY SECTOR OF THE U.S. ECONOMY. YOU SEE FOUNDERS SO WE'RE IN ALL 11 SECTORS. WE DO CAP OUR WEIGHTS AT 7.5%. WE ALLOW THEM TO FLOAT HIGHER INTER-QUARTER. FOR EXAMPLE, META IS NOW OVER 8.5% BUT THAT'S JUST BECAUSE OF GOOD PERFORMANCE. SO THERE ARE RISK MITIGATING FEATURES OF FFF THAT ALLOW US TO HAVE HIGH CONVICTION LONG-TERM IN OUR 100 FOUNDER-LED COMPANIES. [01:04:39] Vonnie Quinn: GIVEN THE ELECTION RESULTS, WOULD THAT CAUSE YOU TO DO ANYTHING WITH ANY ELON MUSK-RELATED COMPANIES IN TERMS OF WAITING? YES. [01:04:47] Speaker 16: WE'VE ACTUALLY BEEN VERY LIGHT. WE HAVE A 1% POSITION IN SPACEX. IT'S SOMETHING WE TRULY BELIEVE IN LONG-TERM AS WELL AS TESLA, WHICH WE DON'T OWN ON VALUATION. SO WE ARE VERY SELECTIVE IN WHEN WE GET INVOLVED AT WHAT PRICE. THE FOUNDERS HAVE INCREDIBLE STORIES TO TELL. THEY'RE BUILDING OUT FANTASTIC INDUSTRIES. WE BELIEVE IN THEM ON A 5- AND 10-YEAR BASIS. BUT WE'RE VERY CAREFUL ABOUT OUR ENTRY POINT AND WE THINK THAT'S THE MARKET WE'RE IN. [01:05:16] Speaker 3: YOU WERE TALKING TO ME EARLIER ABOUT HOW YOU FELT LIKE THE MARKET WAS TOO FOCUSED ON THOSE CAPEX FEARS BECAUSE YOU'RE ALSO WATCHING WHAT'S HAPPENING WITH CASH FLOWS OVER THE NEXT THREE YEARS. WHY IS THAT GIVING YOU MORE OPTIMISM AND WHY DO YOU THINK THE MARKET SHOULD SHIFT ITS FOCUS INSTEAD TO THAT? [01:05:32] Speaker 16: ABSOLUTELY. SO ONE OF THE GREATEST COMMON FEATURES THAT WE SEE ACROSS ALL OF OUR FOUNDERS IS THEIR VISION. AND THEY HAVE A VERY CLEAR PICTURE IN THEIR MINDS OF WHERE THE FUTURE IS GOING TO TAKE US AND HOW THEY'RE GOING TO HELP US GET THERE. AND THEY HAVE THAT STRONG CONVICTION AND THAT GRIT. THEY DON'T GIVE UP AND THEY PUSH FORWARD WITH THAT VISION. AND SO WE ARE SEEING COMPANY AFTER COMPANY REPORT HOW CLOSE THEY ARE TO TURNING FREE CASH FLOW POSITIVE, TO BEING ABLE TO HAVE THESE LONG LIFE ASSETS GENERATE FREE CASH FLOWS FOR DECADES TO COME. ORACLE WE FELT WAS OVERLOOKED THIS LAST WEEK WHEN THEY HAD THEIR INVESTOR DAY. THEY ARE ONLY BORROWING ANOTHER 10 BILLION OF DEBT, RAISING 10 BILLION OF EQUITY IN THE MARKET. THEY ARE FINISHED. THEY PLAN TO GENERATE AROUND 30 BILLION OF FREE CASH FLOW IN THREE YEARS AND IT WILL GROW FROM THERE. SO WE THINK THE MARKET IS TOO MYOPHICALLY FOCUSED ON NEAR-TERM CAPEX AND NOT THINKING ABOUT THE UPSIDE AND NOT LOOKING UP AT WHERE THIS IS GOING TO TAKE US OVER THE NEXT DECADE. WE'RE REALLY EXCITED. WE THINK AI IS HERE TO STAY. YEAH. IT'S AS IMPORTANT AS ELECTRICITY. AND WE SEE BIG THINGS. LAUREN? [01:06:44] Speaker ?: WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. [01:06:45] Speaker 3: WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. [01:06:56] Speaker 16: WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. [01:07:37] Vonnie Quinn: WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. WE'RE GOING TO TAKE A LOOK AT THE EARNINGS. FOR MANY FUND MANAGERS OUT THERE, YOU DON'T WANT TO SELL NVIDIA. YOU DON'T WANT TO PREEMPT ANY DECISIONS, WHETHER IT BE BY THE BOARD OR CONGRESS OR ANYBODY ELSE. [01:08:00] Speaker 3: AT THE SAME TIME, YOU HAVE A FIDUCIAR DUTY AND YOU HAVE TO WATCH WHAT THESE LEVELS ARE DOING, WHAT THESE PRICES ARE DOING. EVEN COMING INTO THIS WEEK, NVIDIA HAD ALREADY ERASED ITS YEAR-TO-DATE LOSSES LOOKING AT THE SMH. SOME PAIN POTENTIALLY TO COME AND CORE WEA AFTER HOURS COMING OFF THOSE HIGHS, STILL UP AROUND 2%, BUT STILL [01:08:18] Vonnie Quinn: KEEPING AN EYE ON THOSE NEOCLOUD COMPANIES. AND WAITING ON THAT CALL TO HEAR MORE COMING UP. STIFFEL ANNOUNCING A NEW PARTNERSHIP WITH ANTHROPIC. WE'LL GET THE DETAILS FROM STIFFEL'S CEO WHEN WE COME BACK. THIS IS BLOOMBERG. STIFFEL ANNOUNCING A NEW PARTNERSHIP WITH ANTHROPIC EARLIER TODAY THAT STIFFEL SAYS WILL GIVE FINANCIAL ADVANTAGE THEIR CLIENTS ACCOUNTS. JOINING US NOW IS RON KRSZEWSKI. HE'S CHAIRMAN AND CEO AT STIFFEL. AND HE'S JOINING US FROM STIFFEL'S 2026 BLUEPRINT CONFERENCE WHICH IS TAKING PLACE IN LAS VEGAS. SO, RON, EXPLAIN TO US WHAT THESE NEW TOOLS ARE BEFORE WE EVEN GET TO THE RECEPTION OF THE TOOLS. [01:08:57] Speaker 17: AGAIN, EVERYONE IS TALKING ABOUT THE PRODUCTIVITY OF WHAT ARTIFICIAL INTELLIGENCE CAN DO AND THE WAY THAT IT CAN HELP YOU ORGANIZE, MAKE PEOPLE MORE PRODUCTIVE. IMPORTANTLY FOR US, THE TOOLS ARE TO HELP OUR CLIENTS BETTER COMMUNICATE ORGANIZE WITH THEIR CLIENTS, NOT TO REPLACE HUMAN JUDGMENT. THAT'S WHAT I LIKE ABOUT TODAY'S ANNOUNCEMENT, WHERE ANTHROPIC SEES THE POTENTIAL OF THEIR TECHNOLOGY COUPLED WITH HUMANS TO DELIVER A BETTER OUTCOME. SO, WE'RE NOT GOING TO HAVE AI AGENTS ANSWERING THE PHONE OR COMING THROUGH PORTFOLIOS TO COME UP WITH IDEAS. WE'RE GOING TO USE IT AS TOOLS. OUR ADVISORS ARE GOING TO BE BETTER EQUIPPED AND COMBINED WITH TECHNOLOGY, WE'RE GOING TO GAIN MARKET SHARE. IT'S GREAT. [01:09:44] Vonnie Quinn: RON, WHAT HAS BEEN THE RECEPTION TO THESE TOOLS? ARE THEY ALREADY IN USE? AND WHAT'S THE FEEDBACK? [01:09:52] Speaker 17: SOME OF THEM ARE IN USE. WE'RE JUST REIMAGINING THE ENTIRE SPACE. SO, AGAIN, THIS REMINDS ME A LITTLE BIT OF WHEN THE PERSONAL COMPUTER CAME INTO VOGUE IN THE EARLY '80s, THE INTERNET IN THE LATE '90s, AND NOW AI, AND IT'S GOING TO BE A VERY PRODUCTIVE TOOL. EVERYONE IS TALKING ABOUT THE AI TRADE AND INFRASTRUCTURE AND HYPER SCALERS. WHAT YOU HAVE TO REALLY LOOK AT ARE THE COMPANIES THAT ARE GOING TO BENEFIT FROM ALL THIS TECHNOLOGY. AND THAT'S THE BROADER AI TRADE. AND I FEEL THAT WITH OUR BUSINESS, WHICH IS HUMAN CAPITAL, AND LOOKING INTO THE FUTURE, AI DOESN'T REALLY DO A GOOD JOB OF TRYING TO LOOK INTO THE FUTURE. IT'S REALLY GOOD AT LOOKING BACKWARDS. BUT WHEN WE COMBINE THOSE, WE'LL HAVE THAT. WE'VE DONE INVESTOR SURVEYS WHERE 87% OF INVESTORS LIKE THE HYBRID MODEL. THEY'RE LIKE THE HUMANS WITH TECHNOLOGY. [01:10:45] Speaker 3: HEY, RON, COMPETITORS LIKE SCHWAB ARE ROLLING OUT SIMILAR CLAWD TOOLS. HOW EXACTLY DO YOU DIFFERENTIATE YOURS FROM THEIRS? [01:10:55] Speaker 17: AGAIN, WE VIEW IT AS A TOOL TO HELP COME UP WITH IDEAS. BUT AT THE TOP OF OUR PYRAMID IS A HUMAN BEING. AND WE TALK TO OUR INVESTORS ALL THE TIME. THEY DON'T JUST TRUST TO ASK AN AI AGENT WHAT THEY SHOULD DO. THEY WANT TO HAVE SOMEONE THAT UNDERSTANDS THEIR PERSONAL NEEDS, THEIR FAMILY, THEIR EMOTIONS, WHAT COULD BE GOING ON. THAT'S ALL A VERY HUMAN THING. AND I DON'T SEE THAT GOING AWAY. NOTHING AGAINST SCHWAB. THEY HAVE BEEN DO-IT-YOURSELF MODEL SINCE 1975. WE'RE IN THE ADVICE BUSINESS. THE ADVICE BUSINESS STARTS WITH HUMAN INPUT, UNDERSTANDING YOUR CLIENT, GETTING TO KNOW PEOPLE, GETTING TO KNOW FAMILIES, AND THEN USING TOOLS TO HELP THEM BE BETTER ORGANIZED. IT'S GREAT. [01:11:38] Speaker 3: TALK TO US ABOUT THE BENEFIT OF BEING ON THE OTHER SIDE OF THE AI TRADE. [01:11:44] Speaker 17: THAT'S EXACTLY WHAT I'M TALKING ABOUT. WE'RE NOT REALLY ON THE OTHER SIDE OF IT. IT IS A GENERAL UTILITY LIKE RAILROADS, LIKE ELECTRICITY TO GO WAY BACK. IT IS A TOOL THAT WILL BENEFIT ALL COMPANIES. IT WILL REALLY BENEFIT SOCIETY AS WE KNOW IT. BUT IT'S NOT GOING TO REPLACE PEOPLE. WHAT'S THE FUN OF THAT? NEXT YEAR YOU WANT TO HAVE AN INTERVIEW? I'LL HAVE MY AI AGENT TALK TO YOUR AI AGENT? LET'S NOT DO THAT. FIRST OF ALL, IT WOULD BE A TERRIBLE INTERVIEW. NO ONE WILL BE ABLE TO LOOK FORWARD. THAT'S WHAT I BELIEVE. [01:12:21] Vonnie Quinn: RON, WHAT'S IT COSTING YOU? WE'RE SEEING MORE AND MORE STORIES ABOUT COMPANIES BEING VERY DISCERNING IN WHAT UNITS THEY ROLL OUT, YOU KNOW, THE AI CAPABILITIES TO, AND HOW MANY TOKENS PEOPLE CAN USE AND SO ON. AND DEPENDING ON YOUR UNIT, YOU CAN USE MORE OR LESS. WHAT'S IT COSTING YOU? [01:12:36] Speaker 17: WELL, NO, THERE'S CERTAINLY A COST. YOU KNOW WHAT TELLS ME ABOUT THESE CONVERSATIONS IN MANY WAYS, AND I MIGHT BE CONTROVERSIAL ON THIS. DO YOU REMEMBER, AND I REMEMBER TALKING TO MY KIDS AND SAYING, HOW COULD YOU SPEND 150 MINUTES ON A FRIDAY NIGHT TALKING TO YOUR FRIENDS WHEN WE USED TO COUNT CELL PHONE MINUTES, AND THEY USED TO COST. YOU WOULD SAY, I CAN'T DO THAT. AND THEN WHAT HAPPENED? EVERYONE PUT INVESTMENTS INTO THAT. NO ONE TALKS ABOUT THE COST OF CELL PHONE MINUTES. I BELIEVE THAT'S WHERE WE'LL GET WITH TOKENS. I REALLY DO. WE'RE GOING TO HAVE A FRIENDS AND FAMILY PROGRAM FOR TOKENS AT SOME POINT. THERE'S SO MUCH INVESTMENT BEING PUT INTO THIS THAT A BENEFIT WILL COST WILL COME DOWN FOR COMPANIES LIKE MINE AND OTHER USERS. AND THAT'S NOTHING AGAINST THE HYPER SCALERS. THEY'RE GOING TO BE FINE, BUT IT'S A COMMODITY. AND THIS COMMODITY PRICE IS GOING TO COME DOWN. [01:13:22] Vonnie Quinn: RON, DOES THIS ALL STILL SEEM SUCCESSFUL IN A BEAR MARKET? [01:13:27] Speaker 17: WELL, WHAT'S SUCCESSFUL IN A BEAR MARKET? I MEAN, YOU KNOW, IT'S -- I THINK IF YOU WANT TO BE CAUTIOUS A LITTLE BIT ABOUT THIS IS THAT WHEN EVERYONE'S OPTIMISTIC, THE AMOUNT OF DEBT THAT GETS ROLLED UP CAN CAUSE SOME STRESS ON THE SYSTEM. AND WHEN I LOOK AT IT, I THINK THERE'S PLENT OF CASH FLOW TO PAY FOR THIS. BUT ANYTIME YOU HAVE A PULLBACK IN ECONOMIC ACTIVITY, THE FIRST PLACE YOU WANT TO LOOK IS WHERE'S THE DEBT. HISTORY TELLS YOU THAT. BUT IN A BEAR MARKET, I MEAN, WE'VE BEEN THROUGH MANY OF THEM. WE'LL BE THROUGH THEM IN THE FUTURE. THE MAIN THING TO DO IS NOT PANIC IN A BEAR MARKET. THAT'S WHY I HAVE ADVISORS TO HELP OUR CLIENTS GET THROUGH [01:14:02] Speaker ?: THAT. [01:14:02] Speaker 3: I HAVE TO ASK, RON, JUST GIVEN THE LATEST BOUT OF VOLATILITY, WHETHER OR NOT YOUR INSTITUTIONAL CLIENTS AS WELL AS RETAIL, IF THEY'RE TAKING CHIPS OFF THE TABLE OR IF THEY'RE LOOKING FOR THOSE TYPES OF BUYING OPPORTUNITIES GOING INTO YEAR-END HERE. [01:14:16] Speaker 17: I THINK IT'S MORE -- YOU KNOW, IT'S A GREAT QUESTION BECAUSE THERE'S TWO TRADES GOING ON. THERE'S THE LONG-TERM TRADE OF ALL THE PRODUCTIVITY. BUT THEN TODAY YOU GET A HOT CPI NUMBER. YOU'VE GOT -- I'VE ACTUALLY CHANGED MY PERSONAL VIEW ON WHETHER OR NOT THERE WILL BE AN INCREASE IN RATES. WE COULD GET A 50 BASIS POINT INCREASE IN RATES BECAUSE INFLATION -- ONE OF THE THINGS I'LL SAY IS THAT 3% IS THE NEW 2%. AND SHORT-TERM RATES WILL BE 4%. AND THE TEN-YEAR TREASURY WILL HAVE A TERM PREMIUM OF 1.5%. WHEN PEOPLE ABSORB THAT IN THE SHORT RUN, IT PUTS PRESSURE ON EQUITY VALUES. BUT WHAT IT REALLY IS TALKING ABOUT IS ALL THE PRODUCTIVITY THAT'S GOING TO COME INTO THE ECONOMY. THAT'S A LONGER-TERM TRADE. MY RETAIL INVESTORS INVEST LONGER-TERM. THEY REALLY DON'T ASK ME WHAT THE FED IS GOING TO DO AND SHOULD THEY SELL THE LONG-TERM CAPITAL GAINS. INSTITUTIONAL IS A LITTLE MORE PLAYS THE VOLATILITY GAME. BUT THAT'S THE MARKETS. [01:15:09] Vonnie Quinn: SO, RON, WHAT'S THE NEXT PLAN FOR STEEFL AS A BUSINESS? ALONG WITH ALL THE OTHER FINANCIALS, IT COULD BE DOING A LITTLE BIT BETTER IN THE EQUITY MARKET? [01:15:18] Speaker 17: LOOK, I MEAN, FROM THE STOCK, FOR SURE. AND, YOU KNOW, AT THE HADER HIGH THIS YEAR, SINCE I'VE BEEN CEO IN '97, DIVIDENDS REINVESTED, WE'RE UP 96 TIMES. OUR REVENUES HAVE GONE FROM 100 MILLION TO ALMOST 6 BILLION. WE'VE BEEN A GROWTH COMPANY. AND SO, WHEN I LOOK FORWARD, I JUST LOOK BACK AND I SEE MANY CHANGES. I'VE LISTENED TO ROBO ADVISORS. I'VE LISTENED TO THE INTERNET. I'VE LISTENED TO EVERYTHING THAT'S GOING TO REPLACE THE ADVICE BUSINESS. AND WE SEE IT THROUGH IT. WE INVEST LONG-TERM. AND I AM VERY OPTIMISTIC. YOU KNOW, IF I WASN'T, I MIGHT BE SAYING, WELL, MAYBE IT'S TIME TO DO SOMETHING ELSE. BUT IT'S NOT. I AM REALLY EXCITED ABOUT THE FUTURE. [01:16:00] Vonnie Quinn: YEAH, WE CAN ABSOLUTELY TELL. AND IN THE MEANTIME, YOU'RE IN VEGAS. SO WHAT'S NOT TO LIKE ABOUT THAT AS WELL, RON? HAVE FUN AT THE REST OF THE BLUEPRINT CONFERENCE. THAT IS RON KRUSCHEWSKI, CHAIRMAN AND CEO AT STEEPLE. ALL RIGHT. [01:16:12] Speaker 3: WELL, TAKING A LOOK AT A MARKET CHECK HERE, ESPECIALLY WITH THE S&P 500, CLOSING DOWN AROUND 4/10 OF A PERCENT TODAY. THE NASDAQ 100 ALSO LOWER, BUT STILL COMING OFF OF THOSE SESSION LOWS DOWN 6/10 OF A PERCENT. THE U.S. TWO-YEAR TREASURY YIELD AROUND 4.7. AND THEN THE DOLLAR SPOT INDEX AROUND 1.02, UP AROUND 6/10 OF A PERCENT, BONNIE. ABSOLUTELY. [01:16:36] Vonnie Quinn: AND WE WILL CONTINUE TO MONITOR THE POST-MARKET MOVES OF SOME OF THESE COMPANIES THAT WE HAVE BEEN FOLLOWING, LIKE REGETTI AND CORWEAVE. [01:16:48] Speaker 3: THIS IS THE CLOSE ON BLOOMBERG. THE U.S. MIDTERM ELECTION SENDING A CLEAR MESSAGE TO THE ENERGY SECTOR WITH SURGING POWER AND GAS PRICES A TOP PRIORITY FOR VOTERS. IT COMES AS OUR NEXT GUEST SAYS, AMERICA'S POWER CHALLENGE IS A REGIONAL ISSUE, RATHER THAN A NATIONWIDE PROBLEM. PAUL SIEGEL, THE CEO OF ELLIS POWER, JOINS US NOW. THANKS SO MUCH FOR BEING WITH US TODAY, AS WELL AS WITH VONNIE AND MYSELF. SO TALK TO US THROUGH THOSE REVERBERATIONS JUST LAST WEEK AFTER THE MIDTERM ELECTIONS. THERE'S THIS CONCERN ABOUT OBVIOUSLY DATA CENTERS BUT THEN ALSO THE U.S. POWER MARKET. WHERE EXACTLY ARE YOU SEEING THE INVESTMENT OPPORTUNITIES RIGHT NOW? [01:17:26] Speaker 18: THE INVESTMENT OPPORTUNITIES ABOUND. OUR SECTOR IS POSITIONED IN A WAY WHERE TO REALLY CREATE NEW GENERATION ASSETS, WHICH IS A SIGNIFICANT PART OF WHAT WE SPEND OUR TIME THINKING ABOUT, TAKES MANY YEARS. SO ONE PARTICULAR ELECTION, EVEN THE VOLATILITY BETWEEN ELECTIONS DOESN'T REALLY CHANGE OUR APPROACH TO THE OPPORTUNITY IN ANY WAY. AND THERE'S A SIGNIFICANT SHORTAGE OF POWER GENERATION IN MANY EASTERN MARKETS. WHILE TODAY WE TALK A LOT ABOUT TEXAS ON THE BACK OF THIS ELECTION, THE POWER GENERATION SITUATION IN THAT STATE IS ACTUALLY QUITE WELL SUPPLIED AS WE SIT HERE TODAY. [01:18:05] Speaker 3: SO WALK US THROUGH MORE OF THE REGIONAL ASPECTS OF THAT. HOW EXACTLY DO YOU PLAY IT TO WORK, ESPECIALLY WHEN YOU'RE TALKING WITH YOUR CLIENTS? [01:18:12] Speaker 18: SO WE THINK A LOT DEEPLY ABOUT THE FUNDAMENTALS OF EACH MARKET. SO WHEN WE LOOK AT A MARKET LIKE PJM, WHICH STRETCHES FROM NEW JERSEY ALL THE WAY TO ILLINOIS DOWN SOUTH TO VIRGINIA, THIS IS A MARKET WHICH FOR THE LAST COUPLE OF YEARS HAS BEEN GETTING INCREASINGLY SHORT. THERE'S THE NEED FOR INCREMENTAL CAPACITY AND WE'VE SEEN THAT THROUGH A VARIETY OF PRICE SIGNALS THAT HAVE COME THROUGH. ON THE OTHER HAND, YOU HAVE MARKETS LIKE TEXAS WHERE DUE TO THE ABILITY TO ADD VERY PRODUCTIVE WIND, SOLAR, AND BATTERIES, WE'RE ACTUALLY IN A VERY WELL SUPPLIED DYNAMIC, AT LEAST FOR TODAY IN THAT MARKET. SO EACH OF THESE MARKETS HAS ITS OWN STORY THAT UNDERPINS OUR INVESTMENT DECISIONS. [01:18:58] Vonnie Quinn: SO IT DOES SEEM LIKE THERE'S PLENTY OF CAPITAL OUT THERE, AND YOU PROBABLY WANT TO BE WHERE THE SUPPLY CONSTRAINTS ARE, RIGHT, BECAUSE THAT'S WHERE THE CAPITAL CAN BE DEPLOYED. SO WHAT DO YOU NEED IN ORDER TO UNCONSTRAIN THOSE AREAS? IS IT, YOU KNOW, A BETTER GOVERNOR? A MORE, YOU KNOW, AMENABLE GOVERNOR? IS IT PERMITTING? IS IT -- WHAT IS IT? [01:19:18] Speaker 18: IT'S THE ABILITY TO PLAN. AND, AGAIN, IN AN INDUSTRY WHERE, ON THE ONE HAND, SIGNIFICANT DEMAND IS COMING FROM THE DATA CENTER UNIVERSE, AND THEIR PLAN -- THEIR TIMELINES TO GO FROM THE CONCEPTION OF A PROJECT TO DELIVERING THAT PROJECT IS MEASURED IN ONE OR TWO YEARS. ON THE OTHER HAND, FOR US, BUILDING OUT A MULTI -- A GIGAWATT SCALE POWER GENERATION FACILITY THAT'S POWERED BY GAS IS A FIVE-YEAR ENDEAVOR FROM START TO FINISH. SO IF WE HAD THE PRICE SIGNAL THAT WE HAVE TODAY, THREE YEARS AGO, WE WOULD BE IN A VERY DIFFERENT POSITION THAN WE ARE TODAY AS AN INDUSTRY. OUR INDUSTRY WOULD HAVE PLANNED, WE WOULD HAVE DEVELOPED MORE SITES, ENTITLED THOSE SITES, TAKEN STEPS TO GET THOSE SITES CONNECTED TO THE GRID, CONNECTED TO PIPELINES, GET COMMUNITY SUPPORT AND BUY-IN, AND THEN THE FINANCING WILL COME IF YOU HAVE GOOD PROJECTS. [01:20:13] Vonnie Quinn: WELL, SO THEN DID THE MIDTERMS CHANGE ANYTHING ABOUT THE ATTRACTIVENESS OF ANY STATE? [01:20:18] Speaker 18: THEY ALWAYS CHANGE ON THE MARGIN, STATE BY STATE. BUT THE BIGGER PICTURE IS WE HAVE A 50-STATE, VERY LARGE COUNTRY HERE. AND OUR VIEW IS THAT THE DATA CENTERS, ELECTRIFICATION DEMAND, INDUSTRY, COMMERCIAL GROWTH WILL GO WHEREVER IT'S WELCOMED. AND WE WILL GO TO, WITH NEW GENERATION, TO STATES THAT ALSO WELCOME THAT FORM OF INVESTMENT AND THE ABILITY TO DELIVER MEGAWATTS TO THE GRID. [01:20:51] Speaker 3: SO IS PRIVATE CAPITAL READY? [01:20:54] Speaker 18: PRIVATE CAPITAL IS LINED UP AND READY TO INVEST. THERE'S A SIGNIFICANT AMOUNT, BILLIONS OF DOLLARS, ON THE SIDELINES READY TO BE DEPLOYED INTO THIS OPPORTUNITY. AGAIN, THE CRITICAL LIMITING FACTOR IS ENTITLED, READY-TO-BE FINANCED PROJECTS. BUT I DON'T GET IT. [01:21:11] Vonnie Quinn: HOW COME THE AI DATA CENTERS CAN GET, YOU KNOW, OVERFUNDED? IT FEELS LIKE YOU CAN'T THROW ENOUGH MONEY AT THEM, BUT THERE SEEMS TO BE A SHORTAGE FOR POWER? IS THAT TRUE? [01:21:21] Speaker 18: I THINK IT COMES BACK TO THE SCHEDULING ISSUE. IT'S -- PEOPLE HAVE BEEN -- THE INDUSTRY, THE DATA CENTER DEVELOPMENT INDUSTRY HAS BEEN WORKING ON DEVELOPING DATA CENTERS ACROSS MANY MARKETS FOR LONGER THAN THERE'S BEEN A PRICE SIGNAL FOR OUR INDUSTRY TO GO AND DEPLOY PEOPLE AND OTHER RESOURCES, CAPITAL RESOURCES, TO CREATING POWER GENERATION PLANTS THAT, AGAIN, TWO, THREE YEARS AGO IT WAS LESS CLEAR THAT WE WOULD NEED SIGNIFICANT NEW POWER GENERATION ADDED TO OUR GRID. [01:21:55] Speaker 3: WHERE ARE THE CRITICAL BOTTLENECKS RIGHT NOW? YOU'RE MENTIONING TEXAS, SOME OTHER REGIONS EARLIER. [01:22:00] Speaker 18: SO LONG LEAD TIME ITEMS INCLUDE GRID CONNECTION. SO THE MORE DEMAND THERE IS TO GET ON THE GRID, WHETHER THAT'S FOR LOAD LIKE DATA CENTERS OR INDUSTRIAL FACILITIES OR EVEN EV CHARGING, THAT CREATES A LOAD DEMAND ON THE GRID. AND TO PLUG IN NEW GENERATION ALSO CREATES A DEMAND ON THE GRID. THE GRID NEEDS TO BE UPGRADED SO THAT WE CAN DELIVER MORE CAPACITY TO THE DEMAND CENTERS. AND ACCOMPLISHING THAT TAKES REAL TIME. THAT'S A VERY SIGNIFICANT CONSTRAINT. AND THEN ENTITLING THESE PROJECTS TAKES ON THE ORDER OF ONE TO TWO YEARS FROM CONCEPTS TO AIR PERMITS AND EVERYTHING ELSE THAT YOU WOULD REQUIRE TO GO AND HAVE A FINANCEABLE PROJECT TO DELIVER. WELL, IT SOUNDS LIKE YOU GUYS ARE DOING IT RIGHT. [01:22:49] Vonnie Quinn: YOU JUST FINISHED YOUR CLOSING OF YOUR MOST RECENT FUND, FUND 6, AND IT CLOSED AT $6 BILLION WHERE YOU WERE ONLY ORIGINALLY LOOKING FOR $4 BILLION. SO SOMETHING GOING ON RIGHT AT L.S. POWER. PAUL, THANK YOU SO MUCH. PAUL SIEGEL IS THE CEO OF L.S. POWER. AND STILL AHEAD, FED OFFICIALS OPENING THE DOOR TO MORE AGGRESSIVE HIKES. WALKER AND DUNLOP CEO WILLIE WALKER JOINS NEXT ON WHAT HIGHER RATES COULD MEAN FOR THE REAL ESTATE SECTOR. THIS IS BLOOMBERG. FASTER THAN EXPECTED INFLATION INJECTING A NEW SENSE OF URGENCY INTO THE FED'S BID TO TAME PRICES WITH FED GOVERNOR WALLER WARNING A 50 BASIS POINT HIKE IN DECEMBER MAY BE NEEDED. FOR WHAT FUTURE FED POLICY COULD MEAN FOR THE COMMERCIAL REAL ESTATE SECTOR, LET'S BRING IN WILLIE WALKER, CHAIRMAN AND CEO AT WALKER AND DUNLOP. WILLIE, WHEN WE SEE THESE REPRICINGS, OBVIOUSLY WE SAW TODAY MORE AT THE FRONT END THAN BACK END, BUT DO THEY THROW RIPPLES INTO YOUR INDUSTRY OR IS THE INDUSTRY ROBUST ENOUGH THAT A FEW POT HOLES IN VOLATILITY HERE AND THERE IN THE INTEREST [01:23:55] Speaker 19: RATE MARKETS DON'T MAKE THAT MUCH OF A DIFFERENCE? ON A DAY-TO-DAY BASIS, NO. BUT WHEN YOU GET THE KIND OF INTEREST RATE MOVEMENT WE GOT AT 40, 50 BASIS POINTS, VERY CLEARLY THINGS SORT OF STOP. AND THEN PEOPLE REASSESS WHERE WE SIT AND THEN THEY DECIDE, OKAY, ARE WE AT SORT OF A CLEARING PRICE, WHETHER IT'S ON THE PRICE OF THE ASSET OR ON THE COST OF THE DEBT, AND THEN WE START TO TRANSACT AGAIN. BUT THE MOVEMENT TODAY, IT DOESN'T SLOW THINGS DOWN PARTICULARLY. I THINK THAT ONE OF THE THINGS IT PROBABLY DOES IS ACCELERATE A LOT OF PEOPLE'S THOUGHTS AS IT RELATES TO SHOULD I GO NOW OR SHOULD I WAIT? YOU WAIT UNTIL DECEMBER OR JANUARY WHEN THERE'S PROJECTIONS THAT YOU'RE GOING TO GET A 25 BASIS POINT RAISE WHICH RIGHT NOW HAS A HUNDRED PERCENT PROBABILITY TO IT. AND I THINK THE JANUARY RAISE IS AT 60% PROBABILITY TODAY. YOU PROBABLY SIT THERE AND SAY, OKAY, THAT PROBABLY PUSHES RATES UP A LITTLE BIT. MAYBE I WANT TO GO TODAY RATHER THAN WAIT UNTIL THE BEGINNING OF 2027. [01:24:44] Vonnie Quinn: ARE YOU EXPECTING TO RECEIVE OR MAKE A FLURRY OF CALLS TOMORROW? AND WHERE WILL THOSE DEALS GET DONE? THE MAJOR CITIES OR SOMEWHERE ELSE? [01:24:53] Speaker 19: DATA CENTERS? SO, I MEAN, 2027 IS GOING TO BE A VERY ACTIVE YEAR AS IT RELATES TO COMMERCIAL REAL ESTATE FINANCING. THERE'S ABOUT $650 BILLION OF COMMERCIAL REAL ESTATE DEBT ACROSS ALL COMMERCIAL REAL ESTATE THAT TERMS IN 2027. SO, SOMETHING HAS TO BE DONE WITH THAT. YOU'VE EITHER GOT TO PUT DEBT CAPITAL TO IT, YOU'VE GOT TO PUT DEBT AND EQUITY CAPITAL TO IT OR YOU SELL THE ASSET. AND I THINK ONE OF THE THINGS TO PUT THAT IN CONTEXT, THERE WILL BE ABOUT $650 BILLION OF DEBT CAPITAL PUT TO DATA CENTERS IN THE UNITED STATES IN 2026. NOT 27, BUT 26. SO, TO GIVE PEOPLE A SENSE OF THE AMOUNT OF CAPITAL THAT IS GOING TO DATA CENTERS RIGHT NOW, VERSUS WHAT IS NEEDED TO GO TO COMMERCIAL REAL ESTATE NEXT YEAR, IT'S ABOUT THE SAME AMOUNT OF CAPITAL, WHICH IS QUITE SOMETHING BECAUSE DATA CENTERS WAS AN ASSET CLASS WE DIDN'T EVEN TALK ABOUT THREE YEARS AGO. BUT THAT WILL REQUIRE A LOT OF CAPITAL TO GET THAT $650 BILLION REDONE. AND THE PROBLEM IS THAT A LOT OF THOSE LOANS WERE PUT ON BACK IN 2018 AND 2019 WHEN WE WERE IN A LOWER RATE ENVIRONMENT. AND THE ASSET VALUES IN MANY INSTANCE HAVE COME DOWN SINCE THEN. SO, YOU'VE GOT A LOWER VALUED ASSET WITH A HIGHER COST OF FINANCING AND THAT PUTS A LOT OF BORROWERS UPSIDE DOWN ON THEIR CAPITAL STRUCTURE. [01:26:06] Speaker 3: WHAT DO YOU THINK THAT MEANS FOR CAPITAL MARKETS IN GENERAL GIVEN THAT DYNAMIC THAT YOU JUST LAID OUT? [01:26:11] Speaker 19: VERY ACTIVE BECAUSE UNLIKE THE SINGLE FAMILY MORTGAGE MARKET WHERE LOTS OF PEOPLE GO VERY LONG AND DON'T HAVE THE PRESSURE OF THEIR LOAN TERMING IN COMMERCIAL REAL ESTATE, THAT $650 BILLION HAS TO GET DONE. WHICH MEANS THAT PEOPLE HAVE TURNED TO COMPANIES LIKE OURS AND BANKS AND OTHER PEOPLE AND SAY, HEY, HELP US. AND IF THE NEW LOAN DOESN'T SIZE TO TAKE OUT THE OLD LOAN, THEN WE HAVE TO GO FIGURE OUT WHAT ELSE WE DO. DO WE BRING IN PREFERRED EQUITY? DO WE BRING IN JV EQUITY TO BE ABLE TO MAKE THE CAPITAL STRUCTURE WORK ON THE ASSET? OR THEY GET TO A POINT WHERE THEY JUST SAY, I DON'T HAVE THE ACCESS TO THE EQUITY CAPITAL. I DON'T WANT TO GO BORROW PREFERRED EQUITY TO FILL THE GAP. I'M GOING TO SELL THE ASSET. AND THEN YOU GO AND SELL THE ASSET AND SOMEBODY ELSE COMES IN WITH A NEW BASIS. WHAT ABOUT MULTIFAMILY? [01:26:51] Speaker 3: HOW DOES THAT CHANGE THE OUTLOOK, IF AT ALL, FOR YOU? [01:26:54] Speaker 19: SO MULTI IS ABOUT HALF THE COMMERCIAL REAL ESTATE INDUSTRY. SO IT'S HUGE. FANNY AND FREDDIE FROM A FINANCING SIDE ARE ALWAYS THERE. IT'S ONE OF THE BIG DIFFERENCES BETWEEN MULTIFAMILY AND THE REST OF COMMERCIAL REAL ESTATE. AND FANNY AND FREDDIE HAVE A MANDATE FROM THEIR REGULATOR TO GO AND PUT OUT $86 BILLION EACH IN 2026. AND WE'LL SEE WHAT THE 2027 CAPS ARE. THEY NEITHER FANNY NOR FREDDIE HAVE BIG FINANCING REFINANCING VOLUMES IN 2027. SO AS IT RELATES TO LOANS THAT GET TO THE END OF THEIR TERM AND ARE PROBLEM LOANS, NEITHER ONE OF THEM HAS A BIG ISSUE IN 27. THEY BOTH HAVE HUGE ISSUES IN 29 AND 30. SO WE'LL SEE HOW THE MARKET EVOLVES, HOW RATES GO BETWEEN NOW AND THEN WHEN THEY HAVE A BIG REFI WAVE COMING UP. [01:27:37] Vonnie Quinn: SO BEYOND THE REPRICINGS THAT ARE ALL GOING TO HAPPEN BETWEEN NOW AND WHENEVER THEY EXPIRE, LET'S SAY NEXT YEAR, WHAT ARE YOU LOOKING AT LONGER TERM FOR A NEW OPPORTUNITY? SO DATA CENTERS WERE AN OPPORTUNITY FOR THE LIKES OF YOU MAYBE TEN YEARS AGO, EIGHT YEARS AGO, YOU KNOW, YOU'RE NOT LOOKING AT THEM NOW, LET'S PUT IT THAT WAY, IT'S TOO LATE. WHAT ARE YOU LOOKING AT? [01:27:54] Speaker 19: SO I'M INTERESTED THAT YOU SAY IT'S TOO LATE BECAUSE I DON'T THINK THE DEVELOPMENT OF DATA CENTERS IS DONE, DONE. BUT CLEARLY THE VOLUME OF DATA CENTER PROJECTS THAT WILL GET SHOVELS IN THE GROUND AND GET GOING IS GOING TO COME DOWN PRETTY SIGNIFICANTLY GIVEN THE MIDTERMS. [01:28:06] Vonnie Quinn: MORE EXPENSIVE, MORE ACCURATELY PRICED FOR THE MARKET THAT WE'RE IN, RIGHT? [01:28:10] Speaker 19: YEAH. THE ONLY OTHER THING I'D SAY, THOUGH, IS THAT AS CLEARLY ON THE DEMAND SIDE, THERE'S GOING TO BE INSATIONABLE DEMAND FOR THAT COMPUTE. SO PEOPLE WANT TO BUILD THEM, I JUST DON'T KNOW IF THEY'RE GOING TO BE ABLE TO BUILD THEM AND GET THEM FINANCED. BUT AS IT RELATES TO THE OUTLOOK, I THINK ONE OF THE THINGS THAT WE'VE BEEN IN, COMMERCIAL REAL ESTATE, GENERALLY SPEAKING, HAS BEEN UNDER A LOT OF PRESSURE SINCE 2022 WHEN THE FED STARTED RAISING. AND SINCE RATES HAVE GONE UP, EVERYTHING IN COMMERCIAL REAL ESTATE HAS BEEN BASICALLY TRADING DOWN AS TECH HAS BEEN GOING UP TO THE RIGHT. WE'VE SEEN, OBVIOUSLY, GIVEN WHAT HAPPENED LAST WEEK, A SELL-OFF IN THE TECH MARKET. I THINK THAT ROTATION OUT OF TECH LOOKS FOR A HOME. THERE ARE MANY, MANY UNDERVALUED REAL ESTATE COMPANIES, WHETHER IT'S ON THE FINANCING SIDE, SERVICING SIDE, OR ACTUAL PROPERTY OWNERSHIP. AND I THINK THAT IF YOU'RE IN A HIGHER INFLATION ENVIRONMENT FOR THE NEXT COUPLE YEARS, WHICH MOST PEOPLE ARE PROJECTING WE WILL BE, INVESTORS ARE LOOKING FOR AN INFLATION HEDGE. AND HARD ASSETS ARE A GREAT PLACE TO GET THAT INFLATION HEDGE. SO I WOULD THINK THAT, YOU KNOW, WE ARE IN A SYCLOLOGICAL INDUSTRY. YOU HAD THE CEO OF STEVE A LONG A MOMENT AGO AND HE SAID, YOU KNOW, WE'RE GOOD FOR BULL MARKETS AND FOR BEAR MARKETS. COMMERCIAL REAL ESTATE HAS BEEN VERY MUCH OUT OF FAVOR FOR THE LAST FOUR YEARS. WE ARE SEEING THE SIGNS OF A SECULAR SHIFT BACK INTO IT. BUT HIGHER RATES DOESN'T HELP. BUT THERE'S PLENTY OF CAPITAL OUT THERE TO COME IN AND REFINANCE PROPERTIES AND GO BUY PROPERTIES. [01:29:27] Vonnie Quinn: AND YOU'VE SEEN SO MANY CYCLES THAT YOU KNOW EXACTLY WHAT TO DO. EASY ON MY AGE THERE. [01:29:31] Speaker 19: I HAVE BEEN AROUND FOR A WHILE. [01:29:33] Vonnie Quinn: BUT IT'S ALL GOOD. I DIDN'T MEAN IT LIKE THAT. MINI CYCLES. IT'S ALL GREAT. WILLIE WALKER, CHAIRMAN AND CEO AT WALKER AND DUNLOP. THAT DOES IT FOR US. I THINK WE'VE PROBABLY UNSULTED ENOUGH PEOPLE NOW. BALANCE OF POWER IS UP NEXT. YOU HAVE A GREAT EVENING. THE CLOSE WILL BE BACK RIGHT HERE TOMORROW. THIS IS BLOOMBERG.