About this transcript: This is a full AI-generated transcript of Investors on Edge: Tech Woes, Trump's Tariffs & The Fed — Open Interest 7/24/2026 from Bloomberg Television, published July 24, 2026. The transcript contains 16,996 words with timestamps and was generated using Whisper AI.
"Happy Friday. It's 30 minutes until the start of your cash equity trade. I'm Dani Berger. And I'm Isabelle Lee. Bloomberg Open Interest starts right now. Coming up, an $800 billion wipeout in big tech stocks, but Intel delivers an AI bright spot. And President Trump rebuilt his tariff wall while..."
[00:00:00] Speaker 1: Happy Friday. It's 30 minutes until the start of your cash equity trade. I'm Dani Berger. And I'm Isabelle Lee. Bloomberg Open Interest starts right now.
[00:00:17] Speaker 2: Coming up, an $800 billion wipeout in big tech stocks, but Intel delivers an AI bright spot.
[00:00:24] Speaker 1: And President Trump rebuilt his tariff wall while threatening a massive attack on Iran.
[00:00:30] Speaker 2: All of that keeping investors on edge ahead of a Fed meeting next week.
[00:00:34] Speaker 1: Happy Friday, indeed, Dani. In the whole week, we looked at three stocks. But today, we're just looking at, as you said, the bright spot, Intel. Intel delivered a revenue forecast that shattered Wall Street estimates as data centers spending fueled a long-awaited turnaround. You see the stock here higher by 2.5%.
[00:00:51] Speaker 2: Meanwhile, some other stocks I'm looking at this morning, specifically American Express also had earnings, Isabelle. They beat expectations. Affluent customers, they keep spending, promoting the company to raise its full-year revenue growth forecast. But I do want to mention, shares are down 4 and about a third of 1%. It's something consistent we've seen throughout earnings. Even with 85% of stocks thus far beating earnings expectations, the majority of them have fallen after they've reported.
[00:01:18] Speaker 1: And as we just mentioned, Intel really is gaining momentum. The company's CEO, Lip Bhutan, telling Bloomberg, quote, demand is outpacing our increasing supply. And so those are good problems to have. Joining us now is Bloomberg Tech reporter Ryan Vlas-Teleca. Ryan, Intel did beat on the upside. Is this going to be the turnaround for the company right now, especially under the leadership of their new executive officer?
[00:01:40] Speaker 3: Well, this is certainly the latest indication that the turnaround really is progressing well. The stock has done extremely well over the past year. And there are a lot of signs that they're seeing incredible demand related to AI, that its foundry business is getting momentum. So I think a lot of the things that people were wanting to see in order to really have confidence that this turnaround, which was years in the making and involved a lot of money destruction prior to the turnaround, that it's really playing out. I think people are really seeing everything they wanted to be seeing.
[00:02:11] Speaker 2: They also increased capital expenditures, nothing like we've seen from the likes of the hyperscalers, but still they need to spend more. What can be done, Ryan? The bottleneck from them, they've said it is not demand. It is their ability to continue to build. What can they do to try to get through some of these bottlenecks?
[00:02:27] Speaker 3: Well, that's sort of the tricky thing is here, is building these fabs really takes a lot of money and a lot of time. So even though they are allocating a lot to this, it's likely to be a while before we start to get more supply come on to market. Now, in the meantime, that's going to be good for them in terms of their pricing power and so forth. But this has really become a major issue in the markets overall, because we've seen prices for some of these AI components really rising right now. It's just because there's not enough supply on the market.
[00:02:52] Speaker 1: And you had a great piece, Ryan, that Thursday saw the Magnificent Sevens suffer their worst one-day decline since Liberation Day, wiping out nearly $800 billion. And Wall Street for years have been applauding when it comes to big AI spend. But then now, it seems like the sentiment is turning around. Where do we go from here?
[00:03:09] Speaker 3: Yeah, so this is really the flip side of the Intel story, which is that these companies are spending so much, and a large part of that is because prices have risen so much for things like memory chips and so forth. There has been a real shift in sentiment. I think there is some growing appreciation that these companies are seeing a return on this AI spending. Alphabet's cloud growth, for example, was more than 80%. That's extremely strong, much stronger than expected. But at the same time, they're spending so much that their cash flow turned negative. That was the first time in their history as a public company that that happened. That forces people to reconsider how they are viewing these companies. They were real cash cows just for years and years, and that was one of the most attractive things about them. If that part of the story has really changed, even if you have faith in the long-term ROI of all of this AI spending, I think a lot of people say they need to have a lower multiple if they're not cash flow positive. They need to have a lower multiple, as we kind of consider, what is the timeline for this AI spending paying off? What is the magnitude of the payoff? So until we get a little bit more clarity on that, a lot of people I talk to, even though they still like the strategy, say that there could be some more pain and volatility ahead.
[00:04:20] Speaker 2: And also in the meantime, worst day for MAG-7 yesterday since Liberation Day. Ryan, thank you so much for joining us. Thank you so much for joining us, Ryan Vlastelica. Elsewhere in earnings, American Express raising its full-year revenue forecast, but shares are falling after second-quarter revenue and net card fees came just shy of expectations and at the same time, huge surging expenses over marketing. Bloomberg intelligence analyst Ben Elliott joins us with details. Ben, how much of the sell-off we're seeing in the shares right now, 4.4 percent, is a true disappointment? Or just reflects in American Express where the expectations were very high?
[00:04:55] Speaker 4: Yes, I think this is mostly a story about expectations here. The bar was pretty high going into the quarter. Amex trades, you know, 70 percent premium to many of its peers. I think that people were looking for an acceleration and they got a deceleration, especially in those card fees. And that's kind of the secret sauce of the revenue model. So to see that start to slow down, investors start to ask kind of some questions about the sustainability of the revenue going forward.
[00:05:22] Speaker 1: Ben, with expenses rising faster than revenue, how should investors think about trade-offs between near-term costs and long-term growth investments?
[00:05:31] Speaker 4: Well, so I think expenses came in a little bit below revenue. So there's still a little bit of mild positive operating leverage there. But, you know, sort of the story behind Amex, right, is they have to spend to create the value proposition that attracts Gen Z and millennial customers to these cards. So investors expect and want to see them spending more. I think there are some sort of oddities in the numbers there as they kind of lap the refresh in the Platinum card, which was launched September 18th. So you could see some of that kind of smooth out. But by and large, it's the fee and the interest income that really sort of generates the revenue above what they spend to sort of attract customers to those cards. And so I think that's why people are a little bit more concerned about the slowing in the fee revenue rather than like a temporary increase in the expenses.
[00:06:23] Speaker 2: Ben, appreciate your time this morning. That's Bloomberg Intelligence Analyst Ben Elliott. Isabel.
[00:06:29] Speaker 1: Now to Washington. President Trump is rebuilding his tariff wall, imposing duties of 10 percent to 12.5 percent on imports from dozens of trading partners. Let's get the latest from Bloomberg Washington correspondent Tyler Kendall. So, Tyler, supporters argue that this is about rebuilding American manufacturing. But can you talk to us about evidence, whether they actually have that?
[00:06:51] Speaker 5: Right, Isabel, that's a really good point at this point in time, as we know that it takes companies time to onshore their production. And in certain instances, when it comes to some of those sector-specific tariffs, like what we saw rolled out earlier this week in terms of generic pharmaceuticals, these companies are weighing the pros and cons and how much cost it's going to take in order to onshore their manufacturing. This latest wave of tariffs that we're seeing stem from what's known as a Section 301 investigation into whether trading partners have failed to take effective action to block goods when it comes to forced labor. And that's why you actually see sort of the tier here, that 10 percent rate is going to go towards those countries that have banned forced labor but are not effectively enforcing it, while that higher rate will be for those that have absolutely no laws on the books. At the same time that we are expecting exemptions to come down, we've already gotten a few of them from the USTR, including oil and gas, fertilizer, food products, those items that are very highly exposed to supply disruptions. And in fact, a senior administration official tells me that we should expect more exemptions to come down the pipeline, that the administration has already gotten at this point hundreds of requests amid this new flurry of action that they are taking. And Danny and Isabel, at this point, we should be expecting more. I mentioned those generic pharmaceuticals earlier this week. We also got those tariffs against Canada earlier this week, too. But keep in mind, there's another Section 301 investigation pending out there that has to do with excess capacity. And that, too, could lobby on additional stackable tariffs for many of these trading partners.
[00:08:31] Speaker 2: Just with these tariffs around forced labor, Tyler, you described it. It's not necessarily that they're using forced labor. It's whether they have rules on their books in order to prevent goods that use forced labor from coming in. But even in the case of Canada, for example, they do have a rule on their book. But this White House decided that they didn't have data showing anything, which to them suggested that they aren't enforcing their own rule. Canada, India, various countries have pushed back. Tyler, are we likely to see pushback also result in more lawsuits around these tariffs?
[00:09:04] Speaker 5: That is also a really good point, though Section 301 is considered to be that more legally durable action that the administration does have when it comes to their tool and their toolkit. We had Section 301 tariffs from the first Trump administration that are still on the book. So they're a little bit more difficult to challenge, but we do expect there to be challenges or at least negotiations going further from here. You mentioned India. We saw the USTR outline that India at first was supposed to get that higher 12.5 percent tariff rate, and then that was dropped down to the 10 percent rate. But in the case of Canada, for example, we know that Canada wants to come back to the table with active negotiations. And perhaps this could be used as one of those pressure points, as we saw the USTR in Mexico this week negotiating with the other trading partner in the USMCA. So there are just so many different parts of the puzzle that we have to keep in mind here. As the Trump administration has made it absolutely clear, they want to double down on this economic policy, rebuild that tariff trading wall, even as we head into the midterm elections amid voter concerns about the inflationary impacts.
[00:10:10] Speaker 2: Tyler, appreciate it. As always, thank you. Bloomberg's Tyler Kendall in Washington, D.C. Only two bells to go until you can start your weekend. 20 minutes away from your trading day. The S&P is pushing slightly higher after yesterday's sell-off that took tech down with it. And I mentioned this, worst day for mag-7 since Liberation Day. NASDAQ still underperforming. Yields come in after your 10-year yield breached 4.7 percent across the curve, trading at something like 18-month highs. Part of that was due to crude. Crude trades lowered this morning, down nearly 3 percent. Some of the individual movers that we are looking at this morning, earnings-wise, Verizon raising its guidance as wireless carriers win over customers with perks. Also announcing a partnership with Google and data centers.
[00:10:53] Speaker 1: And Oracle climbing after winning a 10-year U.S. defense contract worth nearly $7 billion. The stock there popping nearly 2 percent in pre-market.
[00:11:02] Speaker 2: And Decker's, the shoemaker, reporting full-year guidance coming in below estimates down 1.8 percent. Do they make vans? I'm pretty sure Decker's makes vans. That might be wrong. I think that, you know, when I first... No, they don't make vans, I'm being told. I thought that they made outdoor stuff. Well, they are called Decker's out... You wear shoes outdoors, so you're not completely right. Yeah, Hoka. No, it's Hoka. Producer Will says it's Hoka. So running things. Usually that had been doing well, but clearly that's turned around. Coming up on the show, SpaceX is no longer taking future reservations for its Falcon 9 program. As the company looks ahead to Starship, we're going to have the details for you next. This is Bloomberg Open Interest.
[00:11:49] Speaker 1: Now to high interest, a look at what's making headlines around the world. Six contenders are vying to be the next United Nations Secretary General. They argued their case at a town hall event moderated by Bloomberg TV in the U.N.'s General Assembly Chamber.
[00:12:06] Speaker 6: Our responsibility is to make the U.N. relevant again, to deliver, to touch the hearts and souls of people on the ground.
[00:12:15] Speaker 7: Well, I believe moral authority is always needed. And you always need to speak out on the issues where violence of human rights have been.
[00:12:22] Speaker 8: What we need to do is to restore this credibility of the U.N. as a valid interlocutor, and then use the tools at hand.
[00:12:35] Speaker 9: I would like to see a U.N. that is back at the table in the scenarios of conflict. I would like to see a U.N. that has revealed trust.
[00:12:44] Speaker 10: The U.N. must be more present, especially in the peace and security arena, that we would have moved from where we are today to a U.N. that is delivering better in peace and security.
[00:12:57] Speaker 11: Because in reality, global security, peace and stability is something that is incumbent on a security council.
[00:13:06] Speaker 1: The candidates are competing to succeed current U.N. Secretary General Antonio Guterres, whose term ends this year. And Samsung and SK Hynix are set to unveil major agreements with U.S. tech companies during the South Korean president's visit to Silicon Valley kicking off today. A senior presidential official saying these announcements involve, quote, very large sums and will likely include new long-term memory chip supply deals. And SpaceX has started turning away satellite operators, looking for dedicated rides to orbit aboard its staple Falcon 9 rocket beyond 2028. Sources telling Bloomberg the company has stopped building some non-reusable components for the Falcon family. And the move underscore CEO Elon Musk's massive bet on its Starship. Danny.
[00:13:53] Speaker 2: Bloomberg's Sana Pashankar helped break that news and she joins us now. Sana, first of all, fantastic reporting. Thank you for bringing us this story. And it seems like this bet is essentially one to say we are betting on Starship away from Falcon. Why is SpaceX making this bet?
[00:14:11] Speaker 12: Yeah, totally. So Starship is key to basically all of Elon Musk's ambitions for SpaceX. That's sending data centers into space. That's expanding the Starlight Communications Network. And it's also sending humans to the moon and Mars. So essentially what this signals is kind of a, you know, a movement of the priority from Falcon 9 and, you know, the launch business that helped it make its name to focusing completely on Starship, building that rocket out and making it operational.
[00:14:43] Speaker 1: So there's obviously, of course, the huge bet and the huge belief that Elon Musk has to do. When it comes to SpaceX being able to really propel this to success. Do you think this is risky?
[00:14:55] Speaker 12: Yeah. So with Musk, you really never know. While today he is saying, you know, we're not going to take any more Falcon 9 reservations past 2028, he could wake up tomorrow and say, you know, Starship isn't ready. We're going to keep extending how many Falcon rides we're doing. But right now, this is the course they're taking. They still have a little bit of wiggle room. It sounds like they are fully booked out until 2028. So things could always change. But, you know, I think it is definitely signaling their priorities for Starship. And that is, like, the route that they want to take for the future.
[00:15:32] Speaker 2: So, could you go through in more detail the struggles that Starship has had? I know you and the team have been covering these test launches that they've continued to scrap. I believe yesterday they scrapped one for the second week in a row.
[00:15:45] Speaker 12: Yes, totally. So, Starship has had, you know, a really rocky development testing cycle. It is advertised as the most powerful rocket ever built. It is very massive. It is supposed to be fully reusable. So, that means the booster, the part that, you know, boosts the rocket to space and the top part are supposed to come back to the Earth intact so that the rocket can fly again, which has never done before. Like, they don't even do that with their current Falcon 9 rocket. But, you know, they have had, as I mentioned, a rocky development cycle. They've had some explosions. They've had some setbacks. Just this week, you know, they had postponed the launch because some of the engines didn't ignite. And then yesterday, they again postponed the launch to today because of bad weather, which that is pretty common in rocketry. But, you know, today, all eyes are on Starship. It is the first test flight since their IPO. So, investors will be watching, I'm sure.
[00:16:43] Speaker 1: But, Sana, talk to us if Starship is not ready to launch missions by the end of 2028. What will happen if the company doesn't revert to the Falcon family?
[00:16:51] Speaker 12: Yeah. So, if Starship isn't ready and the company is deciding to, like, turn off access to orbit with their Falcon family, that could be really catastrophic for so many U.S. space companies that rely on SpaceX to get to orbit. SpaceX basically commands a near monopoly on launch. It launches, it's enabled the growth of all these large-scale satellite networks because it launches more frequently than any other rocket in the world. So, you know, these Amazon's networks, you know, telecoms networks, satellite imagery networks, many of them rely on SpaceX to get to orbit.
[00:17:27] Speaker 1: Sana, fantastic reporting. Sana, I believe that was one of the most read stories on the Bloomberg Terminal at READ Go. I think it's top 10, which is very impressive. Bloomberg, Sana, Prashankar, thank you for that. Coming up, Empower's Martha Norton shares where she sees value in the AI trade. This is Bloomberg Open Interest.
[00:17:59] Speaker 2: MAG7 stocks have wiped out nearly a trillion dollars in value just this week alone, and that could signal a buying opportunity. The Empower chief investment strategist, Marta Norton, argues that within the AI trade, software and hyperscalers look like the value trade. Let's bring in Martin, who joins us now. Great to have you in New York, Marta. Thank you for stopping by.
[00:18:18] Speaker 13: Yes, of course.
[00:18:19] Speaker 2: The idea that MAG7 would be a value trade, if we said that a couple years ago, we'd probably have been like, there's no way. Yeah.
[00:18:25] Speaker 13: So, is this a dip buying opportunity, what we've seen? I mean, I think it is a dip buying opportunity, but I don't think it's instant gratification. I think this is a long-term play. I mean, it's remarkable that when you see Alphabet Report and you see the kind of cloud revenue that we saw, that there still is a massive sell-off. So, the monetization is there, but it's not nearly enough to account for this wild spending, and the markets are all about the wild spending now. And that doesn't look like it's stopping anytime soon. So, in my mind, if you're looking for a piece of the AI trade, this is a great place to go, but you have to be patient.
[00:18:59] Speaker 1: So, I think that's a phrase we've heard throughout the show with Danny and me. Everyone's telling us patience is key, but then the timeline is still different. And you see a market where they reward investors, but they also punish when it comes to all of this AI trade, like the dichotomy between Tesla, IBM, or even other companies. So, then, what is your timeline until when would you be trading? When would we be waiting?
[00:19:21] Speaker 13: Yeah. So, I think what we have to see is we have to see more monetization relative to the CapEx. And I don't think that's happening 2026. That may not even happen 2027. This could be kind of a 2028, 2029 time period. And for those who are much more concerned about the here and now and capitalizing on gains now, I think that's why they're looking to those who are benefiting from all the spending. The chip players and really a lot of companies throughout the market cap, even in small cap industrial areas.
[00:19:51] Speaker 2: It's interesting because a lot of the capital expenditures are no longer just being funded by free cash flow. We saw that with Alphabet turning negative for the first time since 2016. The market has started to push back against some of the funding. I think Google's 100-year sterling-denominated debt is, I mean, that would have its own problems to begin with, to be fair. But it's something like 90% to par. Most of the hyperscaler debt is trading below par. Do you think that these companies might run into any issues just raising the amount of money that they are committed to spending?
[00:20:20] Speaker 13: I think it all depends on what kind of money are we asking for here. And I think that is one of the biggest concerns in the market. I mean, certainly there is a range, when you think about the range of outcomes, there's an outcome out there where this is wasted money and good money after bad. And I think we have to account for that. And that's why I think you want that discount, that margin of safety, if you're going to move into these names. You know, last fall, that was not the time to be buying these names. There was so much enthusiasm around them. So it's really that combination of the possible optimistic outcomes and where the prices are today that makes them a buying opportunity.
[00:20:55] Speaker 2: Okay, Marta, you're going to stick around with us through the opening bell. That's Marta Norton. And a check on your markets ahead of that opening bell. Five minutes to go until we get there. And it is an unchanged market, but maybe that's better compared to what we saw yesterday with a broad sell-off. The first day for MAG 7 since Liberation Day. The dip buying opportunity. Calm also in this bond market. At one point, the front end of the curve was up six basis points yesterday. All of them trading near 18-month highs. We're at 468.52 for your 10-year yield, while Brent crude also takes a breather down to 0.5% after reaching over $100 a barrel. On the other side of this break, we'll have your opening bell. Let's get you started in this trading day. One bell now to go until you have your weekend. I'm Dani Berger. It's a market that is tepid after yesterday's sell-off fueled by inflation woes over higher oil and yields. And some of the earnings we got from Alphabet with CapEx spooking investors. Today, it's the S&P little change, and the NASDAQ starts to fall yet again. Ringing the belt, the New York Stock Exchange, we have Oliver Scholars that helps give education to underserved communities here in New York City. A great and worthy cause. Meanwhile, down at the NASDAQ, we have a new listing. It's Scribe Therapeutics. It's a biotech company backed by Eli Lilly. So you got some of the... So, like, up here, you know, they have the scientists from the labs, like, beaming in. And I'm just like, is that sanitary? Like, aren't these, like, very sanitized labs? Are you allowed to have cameras and that kind of equipment? And then probably, but...
[00:22:47] Speaker 1: Maybe they chose a corner where they would... You know, I never noticed that. Do they always have that? Sometimes, when it's a big company, and you can tell here they want to...
[00:22:54] Speaker 2: They really want to one-up it. And I love it when they bring their kids. Everyone should bring their kids to it. It's a once-in-a-lifetime event. I would have loved to have been there, but maybe we'll have our time. Just needed a parent that started a public company. Is that all? Yeah, that's not too hard. No, no.
[00:23:07] Speaker 1: Let's get you through some stocks to watch now. We're looking at Intel, which just flipped to red right in front of my eyes. And pre-market trade, it was edging higher, but now it's in the red, down by eight-tenths of one percent, wavering after it delivered a revenue forecast that shattered Wall Street estimates. And this comes as data center spending really fuels that long-awaited turnaround, Dani.
[00:23:25] Speaker 2: I'm looking at American Express this morning. That continues to see its shares fall. It raised its full-year revenue outlook as affluent customers kept spending, but shares are lower. Second-quarter revenue card fees and expenses disappointed all of the marketing that they had to do in order to attract customers with their higher fees. We're back in the studio with Empowered Chief Investment Strategist, Marta Norton. And Marta, we've been talking about the sell-off in tech. It hasn't just been that that's been troubling for these markets. I mentioned it. It's also higher yields at the front end and in the middle of the curve, trading near the highest since 2025. At the same time, higher oil prices. What is a bigger risk for this market? Gosh. Some of the concerns about CapEx and tech or what's happening with the concerns over inflation?
[00:24:09] Speaker 13: I mean, it's no question that investors are worried about both. I think if I have to pick a bigger enemy right now, I do think it's the CapEx concerns because it kind of takes some of the momentum out of earnings, which, of course, is what's been driving markets higher. I think that is a source of volatility that we're probably going to have to contend with for quite some time. But there's no question that there are concerns about higher yields. And I think the uncertainty is something that markets have a really hard time handicapping because we don't really know how this geopolitical situation is going to work itself out.
[00:24:41] Speaker 1: So, Danny and I have been talking about the headline ping pong that we're seeing. Have you made any tactical allocation changes recently, like maybe added your hedges or downgraded some asset allocations?
[00:24:50] Speaker 13: Well, I think the thing that we're thinking about the most these days is how do you get defensive in this kind of market environment. Now, I am not one of the people who's lost the faith in fixed income. I still think that there's a value there to diversified investors, especially at these yield levels. I mean, to your point, they're pricing in a lot of different risks, whether it's real rate risk or whether it's inflation risk. But I also think within your equity portfolio, it does make sense to try to find that balance between the anti-AI trade, which is not the easiest thing to find in the U.S., and also something that would be defensive if you do see some sort of massive concern around oil prices, and that leads me to health care.
[00:25:26] Speaker 2: Don't you have to do the same thing in your corporate bond portfolio now, too? BlackRock, for example, just started kicking off a more than $12 billion sale for a metadata center. Every day, there's a new bond offering worth billions coming for the various AI projects. Are bonds in danger territory of also getting highly concentrated in AI and tech, too?
[00:25:47] Speaker 13: Well, I think it's certainly a trend that's on the move. I think we have a ways to go. I mean, when you think about the size of these companies and how much they've issued historically, these are not companies that have been heavy, heavy borrowers, so they have some room to go. But I do think, and this is a refrain we've been hearing for years, but spreads are tight, right? And so it's not necessarily a timing indicator, as we know, but it is an indication that you shouldn't be careless with the risk that you're taking on the bond side.
[00:26:13] Speaker 2: Part of the reason that spreads have been tight that people have pointed to is just the amount of cash that needs to be put to work. Is there a scenario as we keep seeing more issuance, not just on the debt side, but equity, too, with more IPOs, cross-listings, and Google coming to market with another equity offering, that that balance flips, that there is more supply that starts to challenge markets.
[00:26:31] Speaker 13: I mean, I think that is one of the concerns that we have to keep front of mind for us. I think the IPO market doesn't bother me quite as much, because it's not like we're seeing one wild idea after another. It's really these big mega-deals that are coming out. But absolutely, there's just a lot more options to tack into these markets, and when you have that much supply, I think it can just weigh on markets. So the idea that the second half of the year could match the first, I think that's a little too optimistic.
[00:26:57] Speaker 1: And then we have, of course, rising oil prices, which can add to the inflationary pressures, which may make it more likelihood for the Fed to really talk about hiking rates, and they meet next week. But you said you're in the no-hike camp for this year.
[00:27:07] Speaker 13: I am. Yeah, and I think that's largely because I don't understand what a hike would do for us. Now, maybe politically it's a good signal, right? Maybe it's a signal of independence and that kind of thing. And maybe it gives those who are really concerned about inflation a win and helps them relax about concerns around inflation. But when we think about what has been the major source of inflation, and it hasn't been wild consumption, it's been more supply shock after supply shock. And if you raise rates by 25 basis points, is that really going to slow this AI train, which is really what's been pushing the market forward? I'm not sure it will, but it will add to affordability concerns, and particularly around housing. So I think those are the types of questions that the Fed is going to have to grapple with.
[00:27:50] Speaker 2: Now, it is interesting because AI for now, the way that inflation has showed up is maybe through chip prices.
[00:27:55] Speaker 13: Do you expect that to change? Not in the near term, right? I mean, especially when we look at these CapEx numbers that continue to move higher, and we'll see more of that next week. We'll see what that looks like. But it looks like a big proportion of that does relate to that chip buying, and that doesn't seem to be slowing anytime soon. So at least as we think about the intermediate term, the next few years, I think we can still see some of that inflation force coming from the AI trade.
[00:28:19] Speaker 1: And you also in your notes said that investors are already assuming strong earnings growth. Danny and I talked about this, that it's not even the beat that matters. It's what investors react to when it comes to those beats. Talk to us about how much of that optimism or overconfidence maybe is already priced in.
[00:28:33] Speaker 13: Well, it's interesting because when we roll the clock back to the last earnings season, the focus was all on geopolitics. And we weren't really thinking about what earnings could do. And then we see these remarkable numbers that aren't just, you know, above average. They're almost historic in terms of what we're seeing from an earnings perspective. But now we know that to be the case. And we're already seeing that type of growth showing up early in earnings season. And I think it's one of the reasons why investors kind of yawn when they see some of these results and they say, I want to see the details like without the bet instead of getting overly excited about what, you know, the headline numbers look like.
[00:29:05] Speaker 2: Again, the stats that our Bloomberg intelligence team pulled up was 85% of companies thus far have beat, but the majority of stocks are falling after they announced their earnings. So, again, it gets to that point that it is a high bar and so much is already priced in. So, if this earnings season isn't going to be the catalyst that continues to take this market higher, what is then?
[00:29:23] Speaker 13: I don't think it's necessarily going to be valuation. I mean, if we decompose returns and we look at what drove returns over the past year, the bulk of it was earnings and we actually saw valuation compression. And so, when we're at valuations of these levels, broadly speaking, they're not outside of certain areas of the market. They're not overly stretched, but they're not low either. It's not like they have a lot of room to expand. So, you really do need earnings to come through. And I think they are coming through. But if investors keep rerating that, then we might not see exciting returns in this back half of the year. It might be quieter. So, I'm not betting on necessarily a major market sell-off, but I don't think we're going to get what we saw
[00:29:59] Speaker 2: in the first half. All right, Marta, so great to have you here. Thank you for joining us, Empowered Chief Investment Strategist, Marta Norton. Let's get a check on your equity markets about eight minutes into your trading day. And it is a market that's cautiously higher, up one-tenth of one percent. The breath is pretty good, though. Nearly 400 stocks are trading to the upside with 130 trading down. A lot of it is just the mag 7 recovering after that sell-off yesterday. Apple, Microsoft, Alphabet, Amazon, all of them are higher. Eli Lilly having a good day, too. Some of the software stocks also doing well. Verizon reporting earnings and announcing a new partnership and investment with Google. So, that's helping them out. To the downside, because if you have a day where mag 7 is up, it means that chip makers and other tech stocks are going to be down. That's just the nature of the game these days. Intel, interesting to look at. It was higher pre-market after they reported earnings that showed robust demand. But now they flipped negative down nearly two percent. And again, all the others are software, not software, rather chip makers. Luke Kawa of Entry Point puts it well. This is the Seinfeld market, as Jerry says. I'll paraphrase him. When Elaine is happy, George is sad and vice versa. And that's apparently the case with chips and mag 7 stocks these days. Looking at some of the individual sectors this morning in a market that's fighting its way higher, only three sectors are lower. Info tech is lower, even though the mag 7 is higher, because chips aren't doing well. Real estate, energy, communication services. So, some of the bond proxy is doing better this morning. Again, Isabel leading us to a market that's up one tenth of one percent. Dani, I'm going to watch Seinfeld and look at that Elaine and George analogy. To be clear, you have seen Seinfeld before?
[00:31:34] Speaker 1: No. Oh, Isabel. All right. We're going to have a talk in the commercial break. I know. I have a lot of homework from this show. But coming up, more on Intel's blockbuster quarter and the week ahead for big tech earnings. This is Bloomberg Open Interest. Time now for our top calls. Some of the analysts action in focus this morning. First up, Telsey Advisory downgrading Albertson to market perform, pointing to the company's soft earnings report and clouded outlook. You see the stock there down by nearly four and a half percent. Next up, we're looking at Citi raising its price target on HPE to $74 and opening an upside 90-day catalyst watch on the stock. They expected continuing strength in IT infrastructure spending. You're looking at the shares there higher by six-tenths of one percent. And finally, JP Morgan boosting the price target on Intel to $85. This is, I guess, the stock of the day. Dani and I have talked a lot about it. The stock is now down by nearly three percent earlier in pre-market. It was actually in the green. So he's saying that the company's results and outlook cleared expectations by a wide margin.
[00:32:50] Speaker 2: Dani. A big turnaround from Intel. For more on it, we're joined by Bloomberg Intelligence head of global tech coverage, Mandeep Singh. Mandeep, originally, these earnings were interpreted as something that was positive for Intel, showed that their continued turnaround was taking pace. Now, shares are lower. What did you make of the results from the company?
[00:33:07] Speaker 14: I mean, the server demand is pretty strong, and that's fair. Intel did really well, the data center segment growing 59 percent. During the earnings call, they talked about raising their CapEx, and, you know, there are some fears that if they need more money, could they do some equity issuance. And, you know, anybody who is spending CapEx right now is being viewed in terms of, you know, what kind of ROI you are going to show. And we saw that with Google. You know, even 82 percent cloud growth wasn't enough to convince the investors that the ROI is commensurate to the CapEx increases. So, from that perspective, I think Intel is a beneficiary of that CapEx, but then they also have to do their own CapEx, and I think that's where any increase would be viewed as, you know, somewhat of a negative in this market.
[00:34:06] Speaker 1: And how does Intel plan to compete with Nvidia and AMD when it comes to AI infrastructure, and as that spending accelerates, Mandeep?
[00:34:13] Speaker 14: Yeah, I mean, look at, you know, what consensus has for Nvidia right now for the upcoming quarter. Even at the base that Nvidia is at, they will probably end up growing faster than what Intel just printed. So, look, I mean, Intel is a turnaround story. Things seem to be heading in the right direction after a number of years of struggle, whereas Nvidia is just executing to perfection, and probably that's why they're not getting the credit that there is more upside left in terms of, you know, positive sentiment, but very different in terms of, you know, where they are at with respect to their exposures to this CapEx.
[00:34:55] Speaker 2: When it comes to inference chips and others, Mandeep, Intel's mission, be it their partnership with Samba Nova and elsewhere, to try to keep those costs down, how is that progressing? And do we know sort of the uptake from companies, the demand for them versus something like a GPU?
[00:35:12] Speaker 14: Yeah, I mean, look, Intel is trying different things, and you're right. I think they're trying to boost their exposure on the accelerator side, because on the CPU server side, you will have a lot more competition. Even Nvidia makes own CPUs. We saw that from AMD yesterday. And all these companies are trying to sell you systems now. So it's not just about CPU or accelerator, but complete systems where Intel actually trails. And so they're trying to ramp up foundry as well as entrance exposure. But it's a foundry side where there are more expectations in terms of positive surprises, because if they end up landing up Apple or somebody new on the foundry side, that could be huge. And that could justify all the capex investments that they're planning to make.
[00:36:00] Speaker 1: And Mandeep, next week, we hear from Microsoft, Meta, and Amazon. It's going to be another busy week for you and for everyone here. Anything you're going to be on the lookout for? Do you think investors will be grading the market on AI results more than their AI ambitions?
[00:36:14] Speaker 14: Yeah, I mean, you could compare the cloud growth. So if Google is growing 82% and Microsoft Azure comes out at 40%, that's half of what Google grew. Or even Amazon AWS, if it's 35%, that's not good enough. So they have to show acceleration in the cloud growth, because Google has put the bar really high now.
[00:36:35] Speaker 2: Mandeep, thank you so much for joining us. Looking forward to your coverage. Next week, Mandeep Singh of Bloomberg Intelligence.
[00:36:41] Speaker 1: Coming up, an ETF startup named Corgi is launching hundreds of funds in hopes that just one will be a blockbuster. That's next. This is Bloomberg Open Interest.
[00:36:54] Speaker 2: Welcome back to Bloomberg Open Interest. A check on your equity market this morning. The S&P is up, but the NASDAQ is down, led by a sell-off in chip stocks this morning, though MAG-7 rebounds. There were also 2,000 up two-tenths of 1%. Brent crude down 3% yields. If we have those on the board, it would be showing you that those are also moving lower today. After a charting higher by about five basis points across the entirety of the curve. NVIDIA, Intel, Intel, before market pre-market was up, now it is down, down 2.5% as they increase their capital expenditure plans. I mentioned that a lot of the chip makers are selling off Amex, also beating on their earnings, but falling more than 5% with higher fees. Verizon, they reported earnings and announced a partnership with Google, so those shares up to 0.5%, Isabel.
[00:37:50] Speaker 1: Danny, thank you for that update. We're now looking at Corgi Strategies, which is an ETF issuer looking to disrupt the $15 trillion landscape after launching a record 34 funds in one day. Now it's planning to launch hundreds more as it takes aim at giants like BlackRock and Golden Sacks. Bloomer intelligence analyst James Saifert joins us to discuss. James, Corgi is a little-known startup in the humongous ETF world, but then they're already in the top 10 issuers by count. How unprecedented is this? And are they even profitable? Because it seems like they're throwing spaghetti at a wall and seeing what sticks.
[00:38:26] Speaker 15: I mean, that's exactly what's happened. This is spaghetti cannon in action. We don't know. We can't see the internal, like, financials of exactly what's going on, but it's almost certainly the truth that they're not profitable right now. But they have VC backing. They're a larger FinTech-type play. And they're using the VC playbook. So they've filed for well over 500 ETFs. They launched their first ETFs in the late fall last year. So they're on track now. They're just shy of 200 ETFs they've launched this year. One of them is pretty significant in assets. It's nearing 500 million. But it's very unlikely that all of these ETFs, the cost that it takes to run these things on an annual basis, that they're profitable right now. But that's not what they're betting on. They're betting on that one of these will take off, or at least a few of them will take off and support everything else.
[00:39:13] Speaker 2: How do you even come up with 500 a year? Are they just, like, hey, Claude, give me 500 random ETFs? Like, is there any rhyme or reason or consistency among what they're actually offering?
[00:39:22] Speaker 15: So it seems like it really is the VC playbook. They're trying a lot of different things. They're trying to undercut the market. They're trying to do new things. So there's, like, no one set way of doing things. There's filings for what we expect to be super cheap beta products. They have over 100 products that are single stock or theme leverage ETFs. There's thematic ETFs. Their biggest ETF is Ethereum, sorry, lithography related to AI. They file for leveraged versions of that. So they're launching and filing tons of things and also filing leveraged versions and defined outcome versions. So they're basically trying anything and seeing where the market is going to, you know, put their assets with them.
[00:39:57] Speaker 1: Well, James, we know that launching an ETF is becoming easier and becoming cheaper. I mean, there's this famous number that maybe it takes around 300,000 to launch an ETF. But then keeping it up and running is now the hard part. And, of course, we're going to talk about how you think they can surmount those challenges.
[00:40:12] Speaker 15: Well, obviously, one of the ways they're trying to surmount the challenges of distribution is being, like, we're offering cheaper products than everybody else. And a lot of the products are extremely similar. It remains to be seen how that's going to work out. Like I said, they have one fund that's proven to be very successful. But they're basically trying to create this giant whole ecosystem. I mean, this is the same company that has 24-7 cafes all over San Francisco in different parts of California. So they're, like, trying to create this big ecosystem. But one thing we have seen in ETFs more broadly is, like, we're seeing a lot more launches in general. Obviously, Corgi is completely an enigma. It's a thing in all itself. Nothing else is even close. If they launch all the things they file, they will have more ETFs in the market than anybody else, including BlackRock, which is the current leader at just shy of 500. So, essentially, I don't know how they're going to play it out, but they're obviously trying lots of things. And, like I said, they have VC backing. There's a lot of money here. And this is just a piece of what they're doing. So this might be, they might expect this to be a cost center for them. But it remains to be seen how it's going to play out long term.
[00:41:07] Speaker 2: So, clearly, they're issuing so many ETFs, James, and the world is already washed in different exchange-traded funds. Are we seeing, though, at the same time more close? Because of this kind of thing, you do a spaghetti cannon, but not all of them are successful. So, you have to shut them down.
[00:41:23] Speaker 15: Yeah, it's a perfect question. That's 100% what we're seeing. So, you go back, like, a decade plus ago, it was, like, kind of a bad sign to close an ETF. You launch an ETF and it, like, didn't look good if you had to liquidate or close that thing. That is not what issuers are doing now. We're seeing a lot more launches. We had, by far, record launches in 2025. We're on pace to beat that by 30. We're going to see over 1,400 launches this year, most likely. We're also seeing record closures. So, people are launching a lot more, and they're pulling the trigger on liquidating them a lot sooner. Like we talked about before, and Isabel mentioned, it costs a lot of money to launch these things. It also costs hundreds of thousands of dollars just to keep them operating throughout the year. So, if you don't get enough assets and your fees don't compensate for those costs, you're going to end up closing. And it's not a bad look anymore if you close. People just don't care.
[00:42:08] Speaker 2: Are a lot of the new ETFs we're seeing, James, does it also coincide just with more IPOs and more hotly-anticipated IPOs that maybe you want to build, you know, a three-times inverse levered SpaceX ETF or whatever?
[00:42:21] Speaker 15: Yeah. I mean, part of it is that there's a lot of things going on, particularly with AI and space, other thematics, semiconductors, tech. That's a lot of what's happening. But also, we have single-stock ETFs that's booing this, right? So, you can launch, if multiple issuers launch a single-stock ETF in every single stock out there, we're going to see a lot of things. So, part of it is that. Part of it is, like, a lot of people, for the most part, most of the assets are still in, like, those S&P 500, NASDAQ 100, broadly-based, diversified equity ETFs. So, as more money goes in there, a lot of people want to, you know, get wild with another portion of their portfolio. We call it corn explorer, a core satellite. So, in those satellite portions of the portfolio, as people get more disciplined with low-cost beta-type exposures, they're looking to go out and play with things that we refer to as hot sauce, get a little spicier, these types of leveraged ETFs we're talking about. And so, it's creating an opening.
[00:43:12] Speaker 2: All of a sudden, now I'm hungry between spaghetti and hot sauce. James, thank you so much for joining us, James Sefford. And, of course, tune in to ETF IQ Mondays, 12 p.m., New York Time. Coming up in the next hour, Maria Waitman from State Street Global joins us, and economist Douglas Irwin reacts to the latest tariff plan, plus the CEO of Singapore Exchange. All that in Hour 2. 30 minutes into your trading day, welcome to Bloomberg Open Interest. I'm Dani Berger, alongside Isabel Lee. It's a market that's been toggling back and forth between gains and losses, but today, tech continues to lose steam. Coming up on the show, an $800 billion wipeout in big tech stocks, even strong intel results failed to lift sentiment.
[00:44:02] Speaker 1: And President Trump rebuilt his tariff wall while threatening a, quote, massive attack on Iran.
[00:44:07] Speaker 2: It's all keeping investors on edge ahead of a Fed meeting next week. But first, some breaking economic news. We have new home sales coming in higher than estimates, 628,000. The estimate was for about 600,000. Bloomberg's international economics and policy correspondent, Michael McKee, joins us around the desk. Mike, what have you seen in the data?
[00:44:28] Speaker 16: Well, you don't see a whole lot here, except that we had an increase, which was expected, because it's summertime, weather's good, you can build more houses, and certainly we need more houses. New home sales on a month-over-month basis up 1.6%. In May, they were down by 7.3%. So it's an improvement in June, but it doesn't make a whole lot of difference to the economy, because we're still way short of the number of houses we need. And the Fed is still one of the keys to whether or not the housing market gets back on its feet.
[00:45:01] Speaker 1: What about next week? We get the Fed meeting. All eyes will be on there. I mean, everyone's still trying to interpret Kevin Walsh, I think. Do you think that markets are maybe overestimating rate hikes or maybe they're underestimating the pace of rate hikes?
[00:45:15] Speaker 16: I think what they're doing is hedging at this point. When you look at what the investors are thinking, you look at the WIRP function, and it's pretty much the same whether you're using index swaps or Fed funds futures. They're seeing hikes in September and January, which is a turnaround because, obviously, the war situation has gone on. We just released our latest monthly economist survey, 88 economists telling us that there's not going to be any move by the Fed this year, and the next move is going to be a cut in July of 2027. I don't think anybody really knows at this point what's going to be happening. The economists think that unemployment is going to be unchanged as far as the eye can see. 4.3 percent through up to 2028, and GDP isn't going to change a whole lot. So I think everybody's kind of on hold because they don't know what Donald Trump is going to do. I was just on a call with our Fed team. We're talking about what's going to happen next week. And one of the thoughts was, we can't even think about it today because what if the president decides to go to this maximum war he's talking about over the weekend? Maybe the Fed comes in Wednesday morning and looks at the headlines and then decides what's going to happen.
[00:46:25] Speaker 2: But but isn't this also just exacerbated because Kevin Warsh doesn't want to let this market know what he's doing. It's between a president that we're unsure his next move and a Fed chair who certainly not erratic in maybe the case of the other, but doesn't want to kind of tilt his hat to what he might be doing. So isn't this the new normal for this market kind of hedging, being
[00:46:45] Speaker 16: uncertain as to what the next Fed decision will be? Well, what Warsh has argued is that he'd like the markets to sort of make their decision about where interest rates should be. And then the Fed would take cues from that instead of the markets looking for the Fed to set the tone. And if you were going to do that, you'd say raise rates because right now it's across the curve. And the markets are to a certain extent doing the work for him. And it used to be that you'd say the Fed would ratify what the markets are telling you. And now we just don't know. It's still too early. It has become Kevin Warsh's Fed quicker than many people thought because he's kind of the swing vote here if he wants to do it. But I kind of go back to the old Yogi Berra quote. It's tough to make predictions, especially about the future. Thank you so much for joining us.
[00:47:35] Speaker 2: Yogi Berra and all Bloomberg's Michael McKee. Joining us now is Maria Waitman, State Street Global Markets Head of Equity Research. Maria, it's a lot for this market to digest. Should this market be able to look through the hawkishness that it's pricing in at the moment, at least for this bond market, one third odds that we will get a hike next week. Is that something that
[00:47:56] Speaker 17: risk assets can survive? Hello. Thank you for having me here. I mean, I think risk markets are kind of behaving as if they kind of we've seen the story to play out already. So we've seen that kind of market situation when oil price went through 100 political uncertainty was like enormous. And then kind of earnings season happened and earnings were fine and stocks were able to rally. I think that's kind of the mentality stock market is kind of heading now and investors are sticking to that story that kind of we've seen that play out. It has like policy uncertainty.
[00:48:34] Speaker 1: It didn't break it. We hope for the same. Maria has the combination of higher oil and higher yields change how you're hedging your portfolio. Have you changed
[00:48:42] Speaker 17: any tactical asset allocations of late? I mean, our key way of thinking about how to hedge portfolio is to go for companies with better earnings and better margins and kind of stability of earnings. So that has been the key for us kind of throughout this year. And we kind of want to stick to that, particularly now as we're having kind of earnings season. And I think what it means is I mean, probably the kind of the big biggest deal to the preference of U.S. over Europe. So U.S. we have very strong earnings. We have very stable and predictable earnings. In Europe we had a lot of kind of this hope trade where we hope for better earnings and multiples kind of free rate. And now we need to deliver. And that's a lot more challenging for European companies giving a lot to kind of very energy energy hungry. So U.S. versus Europe is probably the key way for us to think about kind of stability of the portfolio.
[00:49:33] Speaker 2: And at the same time, this is a market that expects above 20% earnings growth, the highest that we've seen outside of a recessionary period. And it's leading to this environment where even if you are a stock that beats, take Intel today, take American Express, take your pick. You still sell off and you sell off pretty hard. They're down more than 1%. Maria, I wonder how you navigate an earnings season like this. Last quarter, it was earnings that were able to save us from the concerns over war and otherwise. Can earnings come to the rescue when it's this type of market reaction?
[00:50:06] Speaker 17: Yeah, I think that's a really good point. And I think we probably need to see a little bit more of like earnings disappointments. And that will really crystallize kind of winners versus losers. And I think so far we had quite a lot of bids and everybody has this kind of very positive sentiment. And banks had fantastic numbers. A lot of it obviously come from capital markets and kind of tech companies have like strong bids, but concerns about CapEx. But I think like when we get like more and more through the earnings season and we hear more from consumer companies, from industrial companies, that's where we suspect the kind of pressure will be. And we'll see a lot kind of a higher share of like earnings disappointments. And then I think our expectation is market will actually kind of take a note and say actually kind of underlying economic situation is really, really uncertain. And like as kind of Mike McGee was just talking about, we really don't know where we're going to go with Fed, with economic growth. But here we are. Some companies actually making strong earnings and strong future guidance and other are not. And let me differentiate. So I think that's kind of the sequence of events.
[00:51:12] Speaker 1: How are you looking at tech, Maria? Because tech sector late last year was trading at a 32 multiple. Now it's down by something like 23. And premium protected overall market overall earlier this year was about 45% and now it's down about 10%. Do you think this is a healthy reset or do you think that it should be more cost for concern for investors?
[00:51:30] Speaker 17: Yeah. I mean, we tend to think of kind of sell off and tech as often as a kind of buying opportunity. I mean, for us, as I keep kind of stressing out, it's about stability and predictability of earnings growth. And I think tech is pretty much the only sectors that give it to us. I mean, yes, there is some differentiation within tech sector. And I think it's very, very healthy that investors are kind of favoring kind of like semiconductor parts and increasingly software parts where we can see kind of better earnings and more stable earnings. But it's really that kind of predictability of earnings, like as I was saying, that's really, really important. And you don't get that in consumer companies and healthcare companies. And even like financials, if you think about it, like, okay, they make a lot of money in capital market activities. It's fantastic. I mean, that could be quite erratic and volatile and like core businesses like steady. So to get growth, you need to go to tech. And I think as we kind of get this increase in uncertainty in economic outlook, then markets will start looking into that.
[00:52:34] Speaker 2: But, okay, I get your point on the volatility of markets and what that means for financials. And I know you've had some strong feelings about banks for years, Maria. But when it comes to them, I mean, can't you say if AI is a reliable trade, then so too do financials? Their business is really morphing into lending to these big AI players. So much of their business comes from them, not even equities. Or you could take asset managers, Blackstone. Yesterday, John Gray was saying to me that, and this is something Steve Schwartzman echoed, that they're a cheap way to play AI because they do so much AI, both on the equity infrastructure and debt side of things.
[00:53:12] Speaker 17: Yeah, no, no, that's definitely a fair point. No, I do take it. I think in general, what we see that there is enormous kind of ecosystem of businesses that are kind of leeching on to AI trade, right? So asset managers, good example. I mean, you probably can go further. I mean, we know, like, lots of, like, industrials and data center builders and real estate. So any business that somehow leeches to AI, yeah, absolutely. I'll give you that. I mean, wealth management done fantastically well of this trade, as there are lots of, like, wealth effects and kind of asset under management growth. So definitely. And I think you probably can go even further and argue that kind of AI is really the engine of economic growth. And without that, I mean, we'll probably we'll be discussing kind of recessionary trends in economy. Absolutely.
[00:53:58] Speaker 2: Maria, thank you so much for joining us. Enjoy the rest of your Friday and your weekend. Maria Waitman of State Street. A check on your markets this morning, about 40 minutes into your trading day. S&P is now positive. It was negative just 10 minutes ago. NASDAQ still, though, underperforming. Intel now falling alongside some of the other software, not software names, along the other chip names. Yields come in by about two basis points after breaching 4.7 yesterday. And Brent crude now below $98 a barrel. Some of the single-name stocks moving this hour mentioned this one. Intel, it was a revenue forecast that shattered Wall Street estimates as data center spending fueled a turnaround. But it's the same story we keep hearing this earnings season. You beat and then you sell off in the case of Intel 3%.
[00:54:41] Speaker 1: And we're looking at American Express seeing second quarter expenses surge 12%. And that says the company spent more on marketing to attract premium cardholders. You see shares there down 6%. I don't know if you need to attract people to sign up for American Express. When it's nearly $1,000, you probably do. I guess so. And you never get into a lounge anyway, Danny. The line is like $5 million.
[00:55:00] Speaker 2: To be fair, they did, post-COVID, let everybody come into the lounge. They needed to figure out a way to kind of hack away at that. But it is annoying.
[00:55:07] Speaker 1: First world problems, and I'm not even from a first world. But now I don't even try to lounge anymore. I just sit near the gate.
[00:55:15] Speaker 2: Wow, good for you. Raw dogging before the flight. Here's one company that had better earnings and is rallying. Verizon, better than expected mobility and broadband sales, signaling that the CEO's turnaround plan is starting to pay off and announcing a Google partnership. And coming up, President Trump rebuilds his tariff wall.
[00:55:34] Speaker 18: I really think we're helped a lot by the tariff situation that's going on. I use these tariffs, took in hundreds of billions of dollars to make great deals for our country. I hate to pay people back tariffs. We have other ways of tariffing. As you know, we're already doing it.
[00:55:56] Speaker 1: Now to high interest, a look at what's making headlines around the world. Six contenders are vying to be the United Nations Secretary General. They argued their case at a town hall event moderated by Bloomberg TV in the UN's General Assembly chamber.
[00:56:10] Speaker 6: Our responsibility is to make the UN relevant again, to deliver, to touch the hearts and souls of people on the ground.
[00:56:19] Speaker 7: Well, I believe moral authority is always needed. And you always need to speak out on the issues where violence of human rights have been.
[00:56:27] Speaker 8: What we need to do is to restore this credibility of the UN as a valid interlocutor and then use the tools at hand.
[00:56:39] Speaker 9: I would like to see a UN that is back at the table in the scenarios of conflict. I would like to see a UN that has revealed trust.
[00:56:48] Speaker 10: The UN must be more present, especially in the peace and security arena, that we would have moved from where we are today to a UN that is delivering better in peace and security.
[00:57:01] Speaker 11: Because in reality, global security, peace and stability is something that is incumbent on the Security Council.
[00:57:10] Speaker 1: The candidates are competing to succeed current UN Secretary General Antonio Guterres, whose term ends this year. And millions of barrels of Saudi Arabian crude are still being shipped through the Red Sea to the global market. That's despite threats and attacks by Yemen Houthis militants. Oil tanker owners and traders are on high alert for disruption in the area after a blockade warning. And President Trump is rebuilding his tariff wall, imposing new duties of 10 to 12.5 percent on imports from dozens of trading partners. The move comes after an investigation into the alleged failure of around 60 economies to prevent forced labor in their supply chains. The new rates took effect this morning at 12.01 a.m. New York Time. Danny.
[00:57:53] Speaker 2: Joining us now is Douglas Irwin, professor of economics at Dartmouth College. He's the author of several books on U.S. trade policy, previously served on President Reagan's Council of Economic Advisors and at the Federal Reserve. Professor, we're so thrilled to have you on. Nobody knows this topic better than you. And just looking at the details of this, it's not the White House punishing countries for using forced labor. It's saying you don't have the rules to prevent goods from coming in or maybe even the case of Canada. You have a rule, but you don't have data. So we're not sure that you're actually enforcing it. What do you just make of the method that the White House is using this time with Section 301 to impose tariffs?
[00:58:30] Speaker 19: Well, the White House has made it obvious that they want to continue the tariff regime, and this is just sort of a way of doing so. Sort of a stopgap measure before we get even more tariffs under another Section 301 investigation that's coming. But we're just coming off this time limited 10 percent across the board tariff under Section 122, and that's because the Liberation Day tariffs were struck down by the Supreme Court. So these tariffs were expected. They're pretty much flat at 10 or 12.5 percent. There's a lot of oddities here. We're treating Angola the same way we do Australia with a 12.5 percent tariff, and those countries differ very much in terms of their dealing with forced labor. So it's a little bit of an excuse just to keep the tariffs in place until they can get even higher tariffs imposed down the road, which I think they want to do.
[00:59:21] Speaker 1: Professor, you also say that these blooming tariffs are designed to replace the Liberation Day tariffs that the Supreme Court shut down. I mean, these measures, though, appear more legally defensible, although, of course, I mean, court challenges are still inevitable.
[00:59:34] Speaker 19: Yeah, I think that's right. So Liberation Day, that was struck down by the Supreme Court. They were replaced by these tariffs under supposedly a balance of payments emergency, but those are time limited. Those are also challenged in the courts, and the Court of International Trade struck them down, but they're still under litigation. But the Section 301 tariffs, I think, are in stronger legal ground. They probably will be challenged in the courts, but it's not clear that the courts will overturn them. So these tariffs are probably here to stay for some time.
[01:00:04] Speaker 2: The net effect of this, though, compared to what we had with the Section 122 tariffs, there's only a slightly higher overall tariff regime. Douglas, does this suggest to you that the President's aim of getting back to where we were post-Liberation Day is just unfeasible for this administration?
[01:00:21] Speaker 19: No, because these are continuing those previous tariffs that we've had in place since the Supreme Court decision. But there's a lot more Section 301 cases coming down the pike on the grounds of excess capacity in other countries. And that's a case where I think it'll target China, maybe the European Union and a few other countries, and potentially lead to much higher tariffs than this 10% to 12.5% range that we've been talking about. So those are the ones, I think, that will really try to bring back the Liberation Day levels that we saw last year.
[01:00:54] Speaker 1: And, I mean, businesses have spent years adapting to shifting trade rules. I feel like even I myself am having a hard time keeping up. I wonder if this kind of uncertainty becomes as costly as the tariffs themselves.
[01:01:07] Speaker 19: Very much so. You know, once again, since we've had relatively flat tariffs since the Supreme Court decision, about 10% or so, across the board, affecting all suppliers, firms that were importing didn't really have to think about where they're making their sourcing decisions. But I think, once again, it's not these tariffs that have just been imposed today, but the ones that are coming soon, that's going to vary by country. And that means all sorts of firms are going to rethink their supply decisions because the tariffs will differ by country and by product. And you have to think through where you're sourcing things from and makes logistics incredibly complicated.
[01:01:41] Speaker 2: For these companies, though, let's just take pharmaceuticals as an interesting case study where the president says that for generics, he's going to be opposing 100% tariff. That comes into effect two years from now when it's going to be the twilight of this president's presidency. How does a company even think about something like that? Do they start to adjust or do they assume that this is not sticky, that it's something that next administrations are able to undo or that lawsuits come and something prevents the worst-case scenario from happening?
[01:02:12] Speaker 19: Well, you're right to put your finger on the idea of a tariff uncertainty. Because, once again, those tariffs would come down the pike. You don't know whether they're actually going to be implemented. And that's why there's been an explosion of tariff lobbying, lobbying by firms to press the administration to get some certainty, to get some exemptions. There have been a lot of exemptions that have been doled out over the past year and a half or so. And the same will be true with these incoming tariffs. And so it's just an incredibly uncertain environment. You don't know whether to source at home or abroad, which countries abroad might be hit, whether the tariffs will be in effect for a short period of time or a long period of time. That's the environment businesses have to navigate these days.
[01:02:52] Speaker 1: And talk to us about the objectives here, in your view, because these tariffs are really not leading to the outcome that I think the administration wants. I mean, now it's time with the war in Iran. It's not popular in the midterms. You also said in your notes, it's not popular in Canada.
[01:03:08] Speaker 19: Yes. Well, figuring out exactly what the objective is has been difficult. So just as they've applied different types of laws to identify the tariffs, they've had different rationales for the tariffs. So sometimes it's to raise revenue. And President Trump has talked about all the money pouring into the government as a result of the tariff revenue. Sometimes it's to strike a better trade deal. But then you have to question, well, what are the deals and are they actually beneficial to the U.S.? And sometimes it's to reshore manufacturing and ensure economic security. And the question is, well, is that working? There's a lot of uncertainty. Firms don't know whether to reshore or not or to source from this country or not. We haven't seen a manufacturing renaissance yet. The administration keeps promising it. But whenever we don't see some of the indicators working out well in terms of the administration view, they can point to something else, such as the revenue or the better deals. So it's always a changing situation there as well in terms of what they're trying to achieve with the tariffs.
[01:04:07] Speaker 2: The White House has pointed to an industrial build-out. But it is worth noting that a lot of that is centered around data centers, not anything about bringing manufacturing back home for these various tariff sectors. Douglas, this is something Isabel pointed out. Polling consistently shows the majority of voters, somewhere between 60 to 64 percent, do not agree with this president's method of applying tariffs. And this is ahead of a midterm. I, though, was listening at USTR rep Jameson Greer speaking to the New York Times saying there's always 40 percent of voters that automatically will disagree with everything this president does. Is it clear that political pressure will not assuage or not move, rather sway this administration into backing off the most extreme impulses on tariffs?
[01:04:49] Speaker 19: Well, they're a little bit of a bind because obviously people are very sensitive, households are very sensitive to this affordability agenda in the issue. And with the Gulf War, oil prices going up, with tariffs being taxes on imported goods, pushing up the price of imported goods, that's also raising the cost of living. The administration has also been quite flexible in sometimes reducing tariffs. So tariffs on coffee and bananas last year under Liberation Day, those, because they were politically controversial, households felt the effects of them, they eliminated those. They just recently relaxed some duties on imported aluminum because there's a shortage of aluminum in the US. and they want to relieve that supply constraint. So I think they're aware of the fact that tariffs do increase prices and create shortages in certain markets, but the president also really wants to impose these tariffs. So they're trying to navigate this situation between doing what the president wants and trying to not play into the opposition that will point to higher prices and the affordability issue.
[01:05:51] Speaker 1: It definitely still is a fluid situation, but if there's an action, there's a reaction. And if countries retaliate, how worried are you about a global trade war?
[01:05:59] Speaker 19: Well, what's been interesting is the rather muted reaction to other countries to the Liberation Day tariffs and the subsequent ones. China certainly retaliated. Canada has to a limited extent. But other countries sort of held their fire. And I think what they realized is that starting a trade war with the Trump administration isn't really going to work. It's just going to make a bad situation worse. And therefore, they've decided to hold their fire. So we haven't seen a general outbreak of a trade war the way we have in the past. Certainly during this first term, there was a lot more retaliation to the steel tariffs and the China tariffs, but not so much during this second term.
[01:06:40] Speaker 2: Well, one of the interesting things is Europe, for example, hasn't retaliated necessarily. I mean, there have been some fits and starts. But what we have seen is what appears to be an embrace of China and more closeness between the two countries. There had previously been this fear that if the U.S. puts a lot of tariffs on China, China floods Europe with its cheap products. Douglas, I wonder what you make of just the changing landscape of trade relations with countries and China as the U.S. tries to push not just China away, but everybody.
[01:07:10] Speaker 19: Yeah, I mean, this is a very interesting issue, both for Europe and the rest of the world. Pew just recently came out with a poll showing that most people in the rest of the world trust China as a partner as opposed to the United States. So because we've sort of hit so many countries with tariffs that other countries view as unfair, and let alone issues relating to NATO and what have you, there's a lot of concern in the rest of the world about the reliability of the trade agreements which we've signed in the past and the U.S. as a trade ally.
[01:07:41] Speaker 2: Right. Hey, Douglas, I'm just going to have to jump in. Apologies, just coming up against a break. Thank you so much for joining us. Douglas Irwin, professor of economics at Dartmouth College. Singapore Exchange is expanding its partnership with MSCI. It will build out new derivative products and is working to revive Singapore's IPO market. Joining us now is Singapore Exchange CEO Lo Boon Chai. Bloomberg has collaborations with SGX. Boon Chai, thank you so much for joining us. Really a pleasure to have you in here. Look, this is really exciting, and it's a change. Six years ago, MSCI pulled a lot of its products over to the Hong Kong exchange. Why did they want to work with you this time around, and why open the doors and say yes to them this time around?
[01:08:28] Speaker 20: Well, we're equally excited. It's a good partnership with MSCI. First, they never left. We continue to partner up. In fact, we grew our volumes joining, and we added new products along the way.
[01:08:41] Speaker 2: So the majority of their licenses, they did pull and move over to Hong Kong, though. Maybe not all of them, but a chunk of them they did.
[01:08:47] Speaker 20: Well, the number of licenses is one thing. The number of contracts is the other. But what's important is liquidity and the debt that investors care about. And what we have with MSCI, and importantly with FTSE Russell, provides a very holistic suite of products for our participants accessing Asia and risk managing their exposure.
[01:09:06] Speaker 1: When it comes to the global derivatives business, how realistic is it for SGX to maybe compete with CME, ICE, and UREX?
[01:09:17] Speaker 20: Our participants are telling us that it no longer is just a case of accessing a region or, more importantly, risk managing a region. It is now across regions, across markets, across countries, across asset classes, and even across sectors. So this partnership with MSCI allows us to expand beyond just Asia. And then when we have a resilient, transparent, efficient platform, capital efficiency is very important for our participants.
[01:09:44] Speaker 2: And most of your participants are international. I'm sure there are people watching this program right now in America who trade on SGX. How do you compete, though? Because this idea of 24-hour trading has really taken off. LSC announcing a new venue. You've had NASDAQ and CBOE that are looking at expanding at 23.5. What do you do to say, okay, during the Asia session, those international traders come to us, don't go to these other sort of burgeoning 24-hour exchanges?
[01:10:12] Speaker 20: Well, participants are going to express an opportunity of risk management through different areas, different asset classes. Our FX market is 24 hours. Our business market is almost 24 hours. Our stock market is not 24 hours. But it all really depends on what participants require. And our overnight session is now 22% of our overall volume. And in FX, it's almost 50%. So participants can trade and risk manage around the clock.
[01:10:38] Speaker 1: So what do you think is the biggest growth driver for SGX in the coming years? Is it listings, derivatives?
[01:10:44] Speaker 20: We're excited because we've been able to grow our business very well. I'm in a blackout period. But amongst the different asset classes, we continue to see opportunities in equity, index derivatives, in commodities, in FX, and also our stock market. And we're seeing a good listing pipeline. And many companies are preparing to list.
[01:11:05] Speaker 2: We've seen a lot of volatility this year. Choose your market, but a lot of it has been concentrated in South Korea, for example, with SK Hynix and some of the other chip players. How has that changed behavior on your exchanges?
[01:11:17] Speaker 20: With more uncertainty, greater volatility, we're very focused to make sure that our products, our markets, our platform continues to be very resilient. And in areas where we can be 24 hours, participants are actually using FX markets in a great way.
[01:11:34] Speaker 1: And we know that Singapore's IPO market has struggled. And you did mention earlier that you're maybe excited that more companies will list. Do you think that the IPO market will be making a comeback?
[01:11:45] Speaker 20: We, by the number of IPOs, we have won our best year in the last 12 months. We are excited about the pipeline. We are 50 in the pipeline. The markets continue to be benign. We think these companies will be able to IPO in the next 12, 18 months.
[01:12:02] Speaker 2: Well, how do you convince an Asian tech company to list on SGX when there just does seem to be companies that love to come to the more liquid market, which is the NASDAQ, for example, like a grab or someone like that? How do you convince them to stay in the region and list on SGX when there isn't really fierce competition?
[01:12:19] Speaker 20: Well, we have this global listing board partnership in NASDAQ. But beyond the partnership, we now have, through the efforts of the ecosystem, including the government and the regulator, a 65 equity partners to anchor some of the companies. But importantly, the asset management industry has grown. And many of them are now managing greater portfolios and looking at the Singapore market as part of their portfolio.
[01:12:44] Speaker 1: Here in the U.S., we're seeing fewer and fewer companies list because, I mean, even SpaceX, that's why it was such a big deal because they were already so big. They call it mega-cap tech companies before they listed. Gone were the days where, you know, you become moderately sized and then you list and then you grow. What is your view when it comes to that about how the size of the companies, they're becoming more mature before they even list?
[01:13:06] Speaker 20: Well, they are obviously big mega-companies, but they're also mid-cap companies that can continue to grow. And for some asset managers, some participants, some investors, they like to grow the companies. And which is why some of these companies do very well. We have companies that are on our catalyst board that after 12, 18, 24 months, move on to our main board because they've now grown and the liquidity has improved.
[01:13:31] Speaker 2: Okay, so back to these products with MSCI. Obviously, it takes some time to actually list these things or regulations to get through. How many products are you expecting and what might we expect them to list?
[01:13:41] Speaker 20: We hope to list a bunch of the sectors, countries, between emerging markets and developed markets by the end of this year.
[01:13:52] Speaker 1: And which products are you looking to come first?
[01:13:56] Speaker 20: Well, we'll announce it as a time of purchase. But we'll be listing some of these by the end of this year.
[01:14:03] Speaker 2: So end of this year. And again, it's always so interesting to me just how global in nature your business is. Can you sort of explain to us the mix? You mentioned a lot of people want to trade overnight. The mix of customers that you see, what the breakdown is, how many are in Singapore markets, Asia markets versus international?
[01:14:20] Speaker 20: It's a global marketplace. We have a global platform and our customers are global. They can be trading from U.S., Europe, Asia, Singapore. But one good measure is our T plus one session, overnight session. And that's consistently grow over time. It's a composite market that's 22%. But for a market that's 24 hours like FX, that's almost 50%.
[01:14:43] Speaker 2: Thank you so much for joining us. Congratulations again. Great to see you in your stop in New York. That's Singapore Exchange CEO. And just a reminder for our audience that Bloomberg does have some collaborations with SGX. Let's get a check on your markets over an hour into your trading day. And we are looking at a NASDAQ which continues to fall. Now at the low of the session as the S&P barely hangs on, unchanged this morning. Your 10-year yield, that's down nearly three basis points following a higher push in yields. And yesterday's session is the price of oil went higher. Today, lower by about $3.74 at $96 a barrel. Some of the single stocks that are moving this hour, charter communication shares are down. After the cable company reported second quarter results that missed earnings on key metrics, down nearly 5%.
[01:15:29] Speaker 1: And Ugg and Hoka maker Decker's delivering full-year guidance that came in below estimates. You see the stock there down by nearly 3%.
[01:15:36] Speaker 2: And Oracle wins a 10-year contract from the U.S. Department of Defense worth up to $7 billion.
[01:15:42] Speaker 1: Coming up, President Trump rebuilt his tariff wall with a sweeping new trade policy. That's next. This is Bloomberg Open Interest. President Trump is rebuilding his tariff wall after the Supreme Court struck down his previous trade agenda. Joining us now is Nathan Dean, senior government analyst and Bloomberg Intelligence, and author of the Washington Update newsletter. Nathan, the administration says these tariffs are really about forced labor. But in your view, is that a trade policy or is it just an industrial policy but by another name?
[01:16:28] Speaker 21: So, yeah, I think where you're hinting at is correct. I think this is more about negotiations with other countries. And really what President Trump did here is he's trying to reestablish his authority to put on tariffs. So he converted what is known as a section 122 tariff into a section 301 tariff. And that allows him the tools going forward to say, look, if I don't like a country and I don't like what they're doing, based off this investigation, you're going to see an increased tariff. So we are going to eventually get back to that scenario where you wake up before market on Monday morning, there may be a truth social post saying this country has three days or else they're going to get hit with a massive tariff. But we think that risk is going to be somewhat subdued before the midterm elections. After the midterm elections, that increase, that risk is going to certainly increase.
[01:17:10] Speaker 2: Nathan, this is something we were speaking with Professor Douglas Irwin, an expert on tariffs of Dartmouth, about this idea that all of this is coming ahead of the midterms when it's already a nation that feels squeezed by affordability issues exacerbated by the price of oil. Now we have both a hot war, a kinetic war, and a trade war to keep track of. Nathan, is this a White House that is conscious of what that might do during the midterms? Does it feel like there's any push or any pulling back of the reins because of that wider concern among the American population?
[01:17:40] Speaker 21: Well, let's look at President Trump's agenda and his motivations here. I mean, President Trump is getting nearing towards the second half of his term. And when presidents near the second half of their second term, they become legislative lame ducks and they turn and they go geopolitical and they start looking around the world. President Trump just did that a little bit earlier. And so when it comes to the elections itself, if he loses the House of Democrats, the House of Representatives to the Democrats, that's not all that big of a deal to him for somebody that's already going to be a legislative lame duck. So the use of tariffs for him is a negotiation tool in a way to continue to influence policy on the global stage because that's where the power of the presidency is more powerful. So, yes, it will be leading to increased prices for American consumers. But at the end of the day, outside of losing the house, he's probably not going to pay much of a political price to do it.
[01:18:26] Speaker 1: Nathan, a 100% tariff on imported generic drugs to some may sound dramatic. Who ultimately pays for that?
[01:18:33] Speaker 21: Well, it's going to be the consumer. I mean, the tariff in particular, whether it's drugs or whether it's retailers or anything like that, you know, the consumer is usually the one that's going to pay it. You know, we actually did an analysis of about 400 companies at Bloomberg Intelligence, and we looked at those companies and said, right, based off of the Liberation Day tariffs from last year, how are you going to meet that? And a lot of it was eat a little bit of margin, increase prices, but at the end of the day, it was mostly the consumer that was going to pay for it.
[01:18:59] Speaker 2: MOSTLY the consumer. Maybe if it's not that, then, that changes this market's mind, this president's mind. Maybe it's the market. Although, Nathan, it's unlikely that will happen. It seems like we're moving quite frequently on things like tech stocks. Could it, though? Could that be the Trump putt, the creator of the taco, whatever you want to call it for this administration?
[01:19:17] Speaker 21: So I don't think this year, but potentially next year. And that's where things get a little bit hairy, because if we get into a scenario where the Democrats take the House of Representatives, they're going to begin to start investigating not only President Trump in the White House, but they're going to also investigate companies. And so they're going to want to see from the companies how these tariffs actually make, you know, makes consumers' life more difficult, etc. And so that's where I think next year is going to be really challenging, because from a company perspective, you don't want to be seen fighting the White House on these tariffs. I mean, President Trump has shown if you fight the White House, they're going to come after you and they're certainly going to make things difficult. The Democrats are going to do the same thing. So from the market perspective, right now, I think it's going to be subdued for the rest of the year. But then next year, we're going to get into this, you know, this, you know, this back and forth in Pimpact where Truth Social Post comes out, tariffs go up, market reacts negatively, tariffs go down, repeat over and over and over.
[01:20:14] Speaker 1: Nathan, historically, when the U.S. has relied heavily on tariffs, what have the economic consequences been like?
[01:20:21] Speaker 21: Well, I mean, it's just decreased consumer spending. I mean, this is one of those things where, you know, the American consumer is somewhat pinched. And affordability is the number one issue going into this midterm election. Now, most Americans don't decide to vote until a couple weeks before the midterm. So there's still time for the Republicans to come back and address affordability. But this really isn't on the White House's mindset. I mean, yes, they are doing things like, they just had an announcement yesterday on data center prices, et cetera. But when President Trump refuses to sign the affordability housing bill that the Republican Party really wanted him to push, you know, President Trump is really taking his focus away from the American populace and the domestic policy, and he's going to embrace the international policy because that's going to be what he's going to be able to control more for the rest of his administration.
[01:21:07] Speaker 2: All right, Nathan, what else is on the docket in D.C. next week? What should we look forward to as we're dissecting your newsletter?
[01:21:13] Speaker 21: So there's really two things. One is, are we going to see a Clarity Act pass the Senate or not? Now, I'm a little bit of out of consensus right now. I still think there is a chance, but if you talk to most of the folks, the Clarity Act doesn't have much of a chance of passage. This is going to be somewhat difficult for those crypto platforms like Coinbase and Robinhood. And so if you're a crypto investor, certainly want to pay attention to that vote. We're also going to see the Senate potentially take steps to avert a government shutdown. The House just passed a bill to keep the government open until December 4th, puts it into the lame duck period. I don't think the Senate is going to address it next week, but we are going to be on alert in September. Right now, we're ascertaining a 40% chance of a shutdown comes September 30th.
[01:21:51] Speaker 2: Nathan, thank you so much for joining us. Matt, it would be so sad you're not an invest today, but you're looking sharp as always. Nathan Dean of Bloomberg Intelligence. Up ahead, investors await a Fed decision as market odds for a hike climb to above 30%. We're going to discuss more next. This is Bloomberg.
[01:22:14] Speaker 1: Now a look ahead at what's in the markets next week. Danny, I can't believe it. It's already Friday. But next week on Wednesday, we'll get a Fed rate decision and Chairwarsh News Conference. Plus, Microsoft, Meta, and Qualcomm are set to report earnings after the closing bell. It's going to be another week of busy earnings when it comes to tech. We also have a Bank of England decision and more big tech earnings from Amazon and Apple and PCE and GDP and another round of jobless games also happening next week. And finally, on Friday, again, that means a whole week would have passed. Big oil results from Chevron, Exxon, and others.
[01:23:00] Speaker 2: No rest for the weary next week. On more of what we're expecting from the Fed, we're joined by Michael McKee, Bloomberg's international economics and policy correspondent. I was speaking with Michael Baller, in-house macro strategist, basically was saying if Warsh wants to come in and show credibility and show that he's not going to give forward guidance, what a better way, is there a better way than to put a stake in the ground by hiking 25 basis points? Wouldn't that kind of accomplish the job at which he set out to do?
[01:23:26] Speaker 16: Well, that's one of the arguments being made for the possibility of a rate increase. It's still not 50-50, but 30% is fairly strong, given where we were a little while ago. The issue is, does Kevin Warsh and do others on the Fed feel like inflation is just going to keep going up? In general, probably because of what's happening with oil prices and what's happening with AI equipment demand. But is it enough to push them to raise interest rates now? They certainly would get a reaction from the White House, whether that matters to Warsh, now that he's chair or not.
[01:23:59] Speaker 2: Yeah, but I was going to say, I mean, we've heard from Scott Bessent basically saying, yeah, it's his decision. I feel like they've given him kind of a window to do this if he wants to.
[01:24:06] Speaker 16: Well, it appears that way, and Scott Bessent might not criticize him, but I suspect we might get something from the other guy at the White House, just because they're working on the budget now, and if you raise interest rates, it just makes the interest cost that much more expensive, and all of a sudden, it makes the budgeting much harder.
[01:24:25] Speaker 1: Inflation has improved, but it's still above 2%. How much more evidence do you think the Fed will want and will need before they can be convinced that it's really under their control, Mike?
[01:24:34] Speaker 16: Well, if it's really going down, they're going to need to get to around 2.4 or below and have that trend continue before they'll buy into the idea that they're going to make it to 2%. The problem is we're not going to see it move that quickly, because we already know that energy prices, while they're not going to contribute to an increase in July, probably in August will. That'll push inflation up again. And then that also energy moves up airline prices. It moves up diesel prices, which spreads throughout the economy in terms of deliveries, trucking. So there's still a lot of inflation issues out there that don't seem to be going away, which also kind of weighs on the idea of maybe they should just do it now and get it over with. Well, I mean, a lot of Fed officials have been saying this.
[01:25:25] Speaker 2: I mean, Hammack had her LinkedIn post coming into the weekend basically saying that inflation is the problem right now. Should Warsh, should share Warsh want to hike? Will he find a large consensus to do so? Are there any doves left, Mike, who would push back? We're not sure about Mickey Bowman.
[01:25:40] Speaker 16: But other than that, right now, it looks like if he wanted to, he'd have the votes. There are about six who have said either that we want to raise rates right now. Like Beth Hammack and Lori Logan. And there are some who say we want to raise rates if inflation doesn't come down. So they'd be on the somewhat hawkish side, be easier to get their votes. And then there's about six who say either we're OK with where we are right now or they haven't spoken out about it. So it leaves Warsh as kind of the man in the middle to make the decision whichever way he wants to go. It becomes the worst Fed faster than people thought it might.
[01:26:17] Speaker 1: One of our earlier guests earlier, Maria, Maria Waitman of State Street said that we most likely have seen peak hawkishness when it comes to the Fed. Do you share that view?
[01:26:26] Speaker 16: No, I don't think so. I think it all depends on what happens with inflation. And a lot of that is obviously going to depend on the president. There was a headline just a few minutes ago that Benjamin Netanyahu is coming to the White House on Tuesday. Tuesday is when the Fed starts meeting. Maybe that means the president holds off on making his decision on whether to start a maximum war or not. And then all of a sudden the Fed has to look at this and inflation on Tuesday afternoon and say, oh, you know, it's either going to go back down again or it's going to go up when they did announce the MOU oil prices went down very rapidly. Gasoline prices take longer to come down. But that would set them on the right path. But if we don't get that signal, then you're going to see more people probably say we need to do something.
[01:27:12] Speaker 2: I guess tariffs don't change the picture that much considering these new 301 section tariffs are essentially the same as what
[01:27:18] Speaker 16: we had with the 122. Yeah, there'll be a sort of minor increase for some countries that get to 12 and a half instead of 10%. But remember, there's another set of 301 is coming in terms of industrial overproduction. And that could add more if those are stacking tariffs on top of what's already out there. So then you could see some tariff related impacts. However, what we've discovered is that the tariffs take a long time to work their way through the economy. A lot of it gets absorbed by the middleman. But definitely in the end, the consumer pays for it. It's just not been a big enough factor given all the other
[01:27:53] Speaker 2: things that have pushed up inflation. Mike, thank you so much for joining us. Enjoy your weekend. That is Bloomberg's Michael McKee. And let's get a check on your equity market this morning as we head to the end of the hour. There's a chart in there, too, and I don't know what it's of. But I can promise you, you can see there in the corner that the S&P is trading higher by about one tenth of one percent. The Nasdaq still falling this morning again. We've seen this real issue, Isabel, where stocks can come and they can outperform. Already, earnings expectations were huge. We expect something like 24% growth year over year this quarter, which does not happen outside of recessions. We've been meeting that bar for the most part. But the majority of stocks are
[01:28:33] Speaker 1: falling after they announced their earnings. It's really been spectacular. And even oil doing a whole lot of nothing. I feel like that's the matter. The reason why stocks and bonds aren't affected by it is because it's not the $110. I read a piece earlier that that's the panic level, because in 2022, that was the panic level. But now we're just at the $100. Well, maybe today, that's the case.
[01:28:52] Speaker 2: Yesterday, we certainly saw yields climb at 1.6 basis points on the front end of the curve. Coming up on Monday, Kate Moore, a city, Kelly, Manning, H.B. Fuller, CEO and Koushi Chief Risk Officer. Isabel, thank you so much for joining me this week. Everyone, enjoy your weekend. This has been Open Interest.