Jobs Report Fuels Fed-Rate Hike Bets — The Close 6/5/2026

[00:00:00] Speaker 1: The countdown is on. Everything you need to get the edge at the end of the market day. This is The Close. [00:00:11] Romaine Bostic: Evaluation reckoning for the tech trade as the Nasdaq 100 plunges the most since the Liberation Day sell-off of April 2025. Live from Studio 2 here at Bloomberg headquarters in New York, I'm Romaine Bostic. [00:00:23] Katie Greifel: And I'm Katie Greifel. Kicking you off to Closing Bell here on this Friday. And, boy, what an ugly day to end this week. Nowhere to hide, as you can see on this screen. The S&P 500 down by about 2.4 percent. As Romaine mentioned, a big reckoning when it comes to your tech benchmark. The Nasdaq 100 down by more than 4 percent at this point. The Russell 2000, the small companies in the market as well, also taking a beating. This was your outperformer yesterday. Lower by about 3.5 percent. And then we take a look at what's going on in the bond market. We did get that job sprint at 8.30 this morning, coming in much stronger than expected. You can see those Fed rate hike wagers really being lifted, and that's lifting two-year Treasury yields as well. Now higher by about 11 basis points, Romaine. [00:01:10] Romaine Bostic: And let's see on the bond market, because any doubts about the short-term direction of short-term interest rates, that was put to rest shortly after the release of that U.S. jobs report for May, the strongest three-month advance in hiring in more than two years. And it's a report that comes ahead of a CPI release next week that is expected to show consumer price growth tracking back above 4 percent for the first time in three years. Now, some folks out there, like Rick Reeder over at BlackRock, are a little bit less concerned about the negative impact. But when you factor in the Fed's three rate cuts last year because of weakness in the labor market, it's the renewed strength in that same labor market that has economists over at BNP Paribas saying that the Fed will probably follow its 1999 playbook and effectively withdraw those 2025 cuts by doing three successive rate hikes in 2026. Now, that's still an extreme scenario based on bond market pricing. But, of course, any meaningful increase of a threat, or a threat, I should say, of a meaningful increase in rates, that lowers the perceived value of long-duration investments. And let's face it, nothing has been a proxy for long-duration investments like the AI trade. Take a look at the stocks. You're buying into that, heading into today, a multiple of 12 times future annual sales. An unprecedented level, at least three times the standard deviation, an outsized multiple that ties directly to what is now something rare that we have not seen, where we basically get correction territory in a single session. Katie Greifeld, the Philadelphia Semiconductor Index, down almost 10 percent in one day. [00:02:46] Katie Greifel: Some pretty grim statistics out there. If you're looking for a glimmer of hope, maybe take a look at the ETF flows, where money is actually moving in this market. Behind me, I have the flow picture for investors. It goes QQQ ETF. This tracks the NASDAQ 100. As you can see, it's very noisy overall. This is really a trading instrument when it comes to these markets. But if you take a look at the last three days, the last three trading sessions for which we have data available, the Qs have taken in money all three of those days on that side of the screen. So there has been some appetite to come in and buy this weakness, Romain. But it will be fascinating to see what these lines look like come Monday in the midst of this 4 percent decline in the NASDAQ 100, whether or not this is a dip, a decline that's actually being bought. [00:03:35] Romaine Bostic: Mona Mahajan joins us right now, head of investment strategy at Edward Jones. And Mona, I think that is a big question for a lot of investors right now, an opportunity maybe to buy into the dip, sort of a bet on that long-term structural trade with regards to AI, or finally time to run for the hills with your two-year yield at 4.2 percent. [00:03:55] Mona Mahajan: Yeah, thanks, Romain. And what a way to end the week. You know, overall, I think there's two competing narratives in the market. One, of course, is the sell-off in AI and the semiconductor index in particular. Now, keep in mind, that index has had a parabolic move higher. And, in fact, even after today's 8 percent sell-off and this week's down movement, the semiconductor index overall is up over 70 percent year-to-date. So it's still a very healthy gain for investors that have joined this trade early on this year. The other narrative, of course, is around the labor market and the Fed. And I think that one is also interesting. The labor market was showing signs of really kind of a healthy rebound here. Job growth above expectations, unemployment rates steady. And, by the way, a steady labor market usually implies consumption that continues to be steady, move higher, remain optimistic. You know, when folks are comfortable about their jobs, they tend to be more comfortable in spending. The other silver lining I will mention is that in that jobs report, we didn't see any signals of a wage price inflation spiral. And that's something we were watching for. Wage gains looked relatively contained. So, overall, what we'd say is probably not a time to start chasing tech or AI here. But that broadening theme, which did start to show its head yesterday, we think still has some legs. And that means make sure you have exposure beyond the AI and tech theme as well. [00:05:20] Romaine Bostic: Well, I am curious about that, too. I mean, Katie was kind of talking about flows and maybe what we'll find out when we get, I guess, more actual hard data into next week. But there is a sense here that money isn't necessarily coming completely out of this market. We're seeing, obviously, today a bid into health care and consumer staples, utilities, some of those defensive sectors. And I am curious as to what that says about investor psychology, that this is not a broad-based sell-off. This is, for the most part, a tech sell-off. And to be, to put an even finer point on it, it's pretty much a sell-off of, as you said, probably the most parabolic moves that we had so far year-to-date. [00:05:58] Mona Mahajan: Yeah, absolutely. And, you know, I think where we would be more worried or when we would be more worried is if we started to see cracks in the broader U.S. economy. And as we talked about, labor market steady, consumption potentially steady, earnings growth still looking to be double digits for 2026. And, by the way, positive across almost all 11 sectors. I think that is a good underpinning of the stock market broadly, not a scenario where we would see a deeper, prolonged bear market, which is why I think investors and investor appetite does remain intact. And so I think when you talk about buying the dips, we do think after a nice rally broadly in the market, we're up nearly 20% since the March 30th lows, we would have expected some period of consolidation, digestion, perhaps some market volatility. barring or absent any deeper, prolonged bear market, those are usually opportunities to add to investments in parts of market, perhaps you were not exposed to coming into this. [00:06:55] Katie Greifel: I do want to talk about the small caps a little bit because the Russell 2000, as I mentioned, down about 3.5%. We've been talking about this broadening. A lot of folks have given us their case for why that might extend down the size spectrum as well. But you think about what we're seeing when it comes to the bond market pricing in, not any cuts in terms of what this Fed is going to do, but actually a full quarter point rate hike priced in for 2026. What does this mean for some of those smaller companies in this economy that a lot of that bull case was kind of predicated on the fact that you were going to see interest rate relief? [00:07:34] Mona Mahajan: Yeah, it's a fair point. And look, I think the small cap space has outperformed large caps and even mid caps year to date, partly because, as you noted, of that rate story, small caps are highly leveraged. And so a move in interest rates does impact their balance sheets in an outsized way. But the other part of the story was the economy was holding in there. And this is a part of the economy that's very much levered to consumption and economic growth and a labor market that's steadying. And by the way, without much wage price increases as well. Now, what we'd say broadly is, from our perspective, we came into the year overweight, large cap and mid cap. We were a little more cautious. I mean, still neutral on the small cap space exactly because of that. These companies tend to be more levered. They also tend to have more what we call zombie companies or negative earners in that cohort as well. So we continue to like small, sorry, large and mid as a way to play that broadening theme. [00:08:30] Katie Greifel: And I do want to get your thoughts on a headline we got in the past hour or so coming from the Financial Times, that Meta considering a capital raise to the tunes of tens of billions of dollars. You think about what Alphabet announced earlier this week, actually upsizing their own equity offering to about $85 billion, not specifically on those companies necessarily, but it does seem that, you know, corporate America is actually now issuing more shares than they have in the past, that, you know, net equity issuance had been going down for a period of years. And maybe that dynamic is starting to reverse. You know, we'd love to hear your thoughts on how that actually affects the motion of markets and the end investor in this equity market. [00:09:16] Mona Mahajan: Yeah, it's an interesting point. And look, of course, we're going to have no shortage of capital raises coming to the market in the next couple of weeks and couple of months ahead, not only these large cap mega magnificent seven names, but also, of course, the SpaceX's of the world coming in the next week or two as well. Overall, what we'd say is this is a trend we've been seeing throughout the year. It started with debt raises by a lot of these large tech companies. We know the theme for the next year and probably two years is all about CapEx spending, data center spending and investing in these businesses. And so to the extent that these companies can raise capital in the public markets at a relatively benign or lower rate cost of capital than using, you know, existing cash on the balance sheet, that, you know, probably makes sense from a capital market and capital structure perspective. But it does dilute existing equity and debt holders. And so we want to be cautious as we move forward. One, of course, we want to make sure that what they're investing and spending in does have a return on that investment. And I think a lot of investors are focused on the return of that CapEx spending. [00:10:26] Romaine Bostic: Mona Mahajan, head of investment strategy at Edward Jones on a very active Friday afternoon. As we now see Treasury yields hitting session highs, your two-year yield four spot, one, six, three, seven stocks right now, hitting session lows with the Nasdaq 100 down 4.4 percent and the S&P now down about two and a half percent. When we come back, we're going to talk about what's been going on in the tech space, particularly on the heels of some earnings that we got yesterday out of DocuSign. We're going to catch up with the CEO, Alan Teganson, when we come back after the break. Right here on The Close, right here on Bloomberg. [00:11:04] Katie Greifel: Shares of DocuSign taking a dive today on an ugly day overall after the company's full-year guidance left investors underwhelmed. Analysts framing this as a wait-and-see story as the company builds out its AI offerings. So let's get straight to the source and welcome in Alan Teganson. He is the CEO of DocuSign. Alan, great to have you with us. I want to talk about your intelligent agreement management platform here. That is your AI-powered platform for contracts. It's early days. It looks like adoption has been strong, but you're not necessarily seeing that reflected in your sales growth rate. And I just wonder, you know, when we might start to see that feed through into the bottom line. [00:11:45] Speaker 5: Yeah, we are. We are seeing really good traction with that. We mentioned we just got to 40,000 customers live on the platform, which is, I think, a pretty impressive number. It's now over 10 percent, 12.6 percent of our total revenue. And we've forecasted that we'll finish the year around 18 percent. So it's starting to become meaningful, but still not moving the needle as much overall. But we're really pleased with the progress. It's the future of the company. And we're seeing adoption across customer segments and geographies. [00:12:19] Katie Greifel: Well, just to, you know, draw a line under that point. I mean, as you said, you're not seeing it move the needle yet. Do you think that's a 2026 story or how patient should investors be here? [00:12:29] Speaker 5: Well, we've indicated that we just reaffirmed that we are expecting to accelerate growth this year and exit the year with a higher growth rate than last year. We also are dropping more to the bottom lines. We also rate our operating income instruments. So it's in it's in our plans already. And we're we're reaffirming that and actually raising it just a little bit. So I think we're on track. And the market is responding extremely well. We're at the center of gravity for agreements inside of companies and companies are realizing that they could do so much more with AI in agreements. [00:13:04] Romaine Bostic: Well, talk about the balance here. I mean, I'm sure you've heard all of the sort of, I guess, rumors of your death or the death, I should say, of the broader software space. The SaaS apocalypse, if you will. And look, we can joke about it. We know there have been some extreme predictions out there. But there is a serious question right now about the pricing model, the perceived software pricing, the integration of some of these large language models. So how are you, as the leader of this company, trying to find that right balance of, I guess, what was the old business model and whatever you think potentially might be the new business model? [00:13:40] Speaker 5: Yeah, we're really not a perceived model. So historically, DocuSign, you know, everyone knows our signature product and that was sold on a capacity basis. So you bought a certain amount of capacity and we're extending that model now in with this much broader intelligent agreement management platform, which really covers the entire journey of the life cycle of an agreement. So that's a natural evolution for us, whereas maybe for others, there's more of a transition from seats seats to a different model. I don't view that as a big pressure point for us. And our customers have been very receptive. We just released a more general purpose model where we have platform price and then credits and you buy bundles of credits. And I think that seems to be very well received. [00:14:21] Romaine Bostic: Do you worry at all about a potential increase in competition, particularly from some of the nontraditional players in this space? [00:14:30] Speaker 5: No, I actually think this is enabling us to do so much more. As we have announced here over the last few weeks, we're partnered with the Anthropics and Open AIs and Googles of the world. So if you want to use a chat engine to access your agreements or ask questions about them or trigger a workflow related to agreements, you can do that from inside a chat engine. That's a natural extension of what we've always been doing with the sales forces and Microsoft and SAPs of the world. And so we just view that as a way to allow agreements to be used by everyone in the company in the environment that they're most comfortable in. Of course, the the AI models also power a lot of the capabilities that are inside of our products and we work with all of them. It's allowed us to take some amazing leap forward in capability. You're used to agreements used to be dumb flat files and now you can peek into them and really understand what's in them. And how do you get what you negotiate and how do you do it better the next time? And we're very grateful for the partnership with those companies. [00:15:25] Katie Greifel: And Alan, just quickly here, this is typically a question we ask to, you know, CEOs of physical good producing companies. But I do wonder how the macro environment interacts with what you do over at DocuSign. You think about high inflation, high energy costs. You think about, you know, the fact that the spending power potentially of the consumer, there's fears it could go down. Does that does that necessarily matter for you, that sort of macro backdrop? [00:15:53] Speaker 5: We're so diversified across companies and industries that we don't see much effect of that as usually those things reflect sort of sector mixes. But obviously, if there's very significant macroeconomic changes, that will also flow through to us. But, you know, we've seen very limited macro effects over the last several years. It's been very steady. And I think we have such a balanced portfolio across all sectors and geographies that we are relatively insulated. [00:16:23] Romaine Bostic: All right, Alan, really appreciate you taking time for us. Alan Teguesson there. He's the CEO over at DocuSign, a fresh off its most recent earnings report. Those shares, of course, down on the day, as are most shares here, as we are now at fresh session lows with the NASDAQ 100 down 4.8 percent. The S&P 500 down 2.8. It's not all tech selling off. We're also seeing a bit of a sell-off in some of the retail and apparel names, and that includes Lululemon, headed for what is potentially going to be its worst week in more than a month. We're going to talk about what's ailing the yoga wear maker and, more importantly, what could potentially turn things around. That conversation coming up after the break right here on Bloomberg. Let's get right to our top calls, the big movers on the back of analysts' recommendations. And we start off with Chipotle. J.P. Morgan upgrading to overweight, citing a rare valuation opportunity for the stock due to what it calls the gradual easing of the company's growth rates. Those shares, one of the bright spots on the day. Next up, Campbell's, Bernstein souring on the package food stocks, downgrading Campbell's because of rising costs. However, those shares up on the day, largely because of folks flocking for some sort of sense of defensiveness and safety. And finally, let's take a look at Tesla. Some palace entry going on over at J.P. Morgan, swapping out its lead autos analyst just, well, the day after it actually feeded Elon Musk there on the heels of his SpaceX IPO. Rajat Gupta, the analyst replacing Ryan Brinkman, deciding to lift the underweight rating to neutral and citing a unique advantage of vertical integration for Tesla. The share is nevertheless down 7% on the day. Let's switch gears, go into retail and apparel. Lululemon down for a fourth straight day on the back of the company's earnings, the back of a cut in its forecast, and a lot of concerns about what turns this company around. Simeon Siegel joins us right now over at Guggenheim to talk a little bit more about this. And Simeon, I've heard a lot of theories about this. It's about better products. It's just about more discipline. Some people are saying the logo needs to change. What exactly is going on over there? [00:18:27] Speaker 6: Wouldn't it be great if it was that easy? It's like all these cheap things, bringing better product, bringing better logo, call it a day. It's not how it works, right? So I think that, and by the way, good to see you on this beautiful Friday. I think you and I talked about this. There are certain businesses that just get too large. And I think that the problem is when a business gets too large, the only thing you can do is shrink. And so I think Lulu is a great brand, but I think it's overstretched. And I think the reality is it needs to return to what made it special. That probably means selling less and charging more for it. [00:18:58] Katie Greifel: Well, Simeon, how much more pain potentially is in the offing? Because, you know, they did cut your guidance, but I'm taking a look at your notes, and you write that, you know, your team is concerned that that guide cut is not deep enough. So what looks more realistic in your view? [00:19:13] Speaker 6: Yeah, hey, Katie, good to see you. So, listen, my team did a report in March. We did this big deep dive that looked into the revenues and the margins. We got to as low, and this is not where I am. This is the bear case, so this is kind of the range. But we could get as low as $7 of earnings. That is well below the number they just cut to. I went to well below where they just cut to, and I'm nowhere near $7. And so I think the fear here is you have to figure out, going back to that initial question of what's wrong, is there a fix because product, and therefore it's a patch, and it's going to be painful, but then we're going to get there? Or did this company in the last three, four years just overstretch? We watched this with Nike. Looking back, it seems that that was exactly the problem. We watched it with a lot of other businesses. If that's the problem, normally when this happens, you'll oversell and under-earn. Lulu had high revenues and high margins, and that means when it goes the other way, it's doubly problematic as well. [00:20:05] Romaine Bostic: Also, I'm just curious also just about the idea of management. I mean, it's kind of rare to see a company going through what's going through right now and not actually have a firm leadership. Obviously, Heidi O'Neill has been officially hired, but she doesn't officially start for a few months. You've got two co-CEOs. I mean, what's happening, I guess, Simeon? Do you have any clarity into what's happening between now and September when Heidi takes over? Is there actual efforts here to turn this around, or are investors just going to have to wait until Heidi O'Neill gets there? [00:20:35] Speaker 6: You were very polite. You didn't mention there's also two activists, but to just make it even more of a pile-on. No, but I think that you're right. I think that everything is happening. It just might be happening in the reverse order. Normally, when companies have a problem, you hatch the CEO, you bring in a new CEO, you then cut guidance. I think we're in this limbo period. But I do think this idea of, okay, bring in a new CEO, I think the new CEO is going to have a very hard time. I don't think it's an easy fix. And if the problem is, no one joins a company saying, hey, I want to shrink it. That's not exciting. They join it with the belief that they can grow it. The question is, do they acknowledge they need to shrink first? Unclear yet what Heidi's strategy is going to be. Obviously, she's not been there and won't be there for a while. But I think it does go back down to, okay, what is the scenario here? And then kind of Katie's point that I thought was really interesting is, if you look at Q2, so they reported Q1, they guided Q2. Both of those have earnings down around 40%. The back half, the third and the fourth quarter that they implied is basically flat. And so you're looking at this and saying, I've got a brand new CEO that's going to come in, and it's going to have to execute change and affect change. But at the same time, we're going to go from down 40 to flat. That seems wishful thinking. And so that's why I think, to your point, I don't know if they, I don't know who would be different. I don't know if there's someone sitting in that seat right now, we'd be having a different conversation. But you're right, it sure doesn't help. [00:21:57] Katie Greifel: All right, Simeon, unfortunately, we have to leave it there. I hope to continue this conversation soon. That is Simeon Siegel of Guggenheim. And I think it's really interesting that when you take a look at the sell-side reception of Lululemon, I don't know if I've seen this before, but according to analysts tracked by Bloomberg, there's only one buy rating, and that's for 2021. [00:22:15] Romaine Bostic: Yeah, and you just pointed this out for me. And I actually looked it up real quickly. You go through the Russell 1000 on the Bloomberg terminal right now with a few outliers that basically have a zero. This is basically one of the lowest consensus sell-side rated stocks out there amongst the 1,000 largest stocks. [00:22:31] Katie Greifel: Well, we're going to talk the economy a little bit more coming up next. This is the close. And I'm Katie Greifeld, keeping an eye on a huge show-off in markets and when it comes not just to stocks, but also in bonds. We got that job sprint this morning, shockingly strong for the month of May. And what was interesting was that it wasn't broad-based like we've been seeing in the past few reports. It wasn't just health care necessarily. You saw more sectors participating here in that job creation. [00:23:08] Romaine Bostic: But it was kind of also, there was some lopsidedness. If you take those total private payrolls, it was 120,000 jobs added, 172,000 on the top line non-farm number. But 120 for total private, 70,000 of those jobs were basically leisure and hospitality. And there's been a lot of speculation as to whether this might be sort of a seasonal thing tied to the World Cup being here in the U.S., which kicks off next week and whether we saw an uptick in hiring because of that. [00:23:32] Katie Greifel: Yeah, and the fact that you saw Canada also have a pretty strong jobs report of their own, certainly adds some water to that theory that maybe this is World Cup related. But let's break down these numbers in some more detail with Gene Sperling. He is president of Sperling Economic Strategies and former director of the National Economic Council. And Gene, we'd love to hear your take on the numbers we got at 8.30 this morning. Because as we were talking about, I mean, if you're looking for some good signals here, you have the headline number alone. But then you also have the fact that, you know, it did seem like it was broadening out a little bit, the job creation in this economy. So just to start things off, what's your take? [00:24:11] Speaker 7: Well, anyone would have to, you know, acknowledge that this was much stronger than projected. And for me, I found the good news in it that it makes me think that chances of a recession are quite low, you know, despite the turmoil with Iran and prices and even tariffs. So I think that is all good. I think, you know, as you just raised, of course, there's some questions. Is some of this, the 70,000 in hospitality jobs being driven by, you know, World Cup hiring, seasonal type of things. But, you know, once you'd be able to take, you know, some good news occasionally when you see it, I think the hard news is going to be, how does the average worker feel? Because what it also showed is relatively slow wage growth in the face of 7.2 percent inflation CPI annualized over the last three months. And take it from somebody who is in the Biden White House, you know, the painful lesson you do learn is that, you know, even strong unemployment and jobs numbers do not overcome unhappiness. If the mass number of people are feeling that 7 percent the last three months in inflation or the 6 percent year over year on electricity or that feeling that they're falling behind because their wage gains are just not as much as the inflation on the prices they're spending on. [00:25:51] Katie Greifel: Yeah, you think about average hourly earnings increasing on a 3.4 percent annualized pace, a little bit lower than the prior reading and pretty much at three tenths of percent when it comes to that monthly number. And, Gene, I mean, the idea out there, if you take a look at what the bond market is pricing, is that now we have a situation where the Federal Reserve isn't looking at rate cuts anymore. Now we're pricing in a full rate hike for 2026. And you think about all of the affordability concerns percolating through this economy, the fact that you're not necessarily going to get that relief when it comes to interest rates. [00:26:27] Speaker 7: I mean, how does that factor in? Yeah, I mean, this is a tough situation. It's not easy to be on the Federal Reserve now. Just to add to your point, this was like the lowest real wage growth since right after the pandemic in 21, which wouldn't be as bad if it wasn't, you know, essentially coming in a period where you had such high inflation. So, yes, people are feeling the squeeze. Their wages are not keeping up with prices. Now, you know, for me, as I said, you might have seen the stock market rally in the sense that recession risk has been reduced. But as you said, it's not actually a good day in the markets because people are now anticipating a higher chance of a rate increase. I personally am not projecting that and I don't think I'd be for it. I think that it makes a lot of sense just to hold just for the reasons you've said. And yes, it's a strong job market. But, you know, it's we've only averaged about 50,000 since January 2025. We're a little over 100,000 for 2026. I think it's showing it's solid. I think if I were on the Federal Reserve, I would be for holding, not either get rid of the president's idea of cutting more. But I also think, you know, Kevin Moore is just going to try to get a consensus on holding rates where they are. Well, good luck to him. I am curious outside of the monetary policy circles, Gene. [00:28:03] Romaine Bostic: And I do want to go back to this idea of how people feel about the economy. I know as academics, as market participants, etc., economists, we can sort of look at these numbers and understand that, yes, they are strong. I also look at that wage growth number that you talked about, which, of course, is now undershooting headline inflation growth. And we get another CPI report tomorrow that's going to show that gap widening even further. What is the potential policy response? And I mean, there's more on the from the White House and the Treasury, et cetera, rather than the Fed that can address what I think a lot of people on the ground from low income to middle income have basically been saying now for months, which is that they don't feel like this is a strong economy. [00:28:44] Speaker 7: Yeah, I mean, as I said, you know, what we've really learned after the last four or five years is some of the traditional indicators that like unemployment and job growth. It's not that they're not important. They are. But if people, you know, are feeling prices are high, their wages aren't keeping up, you know, that affects everybody, not just the people on the margins fighting for jobs that affects everybody. I mean, it was shocking to see the Michigan consumer sentiment be the lowest, you know, on record in 70 years. I mean, lower than 9/11, lower than the pandemic, lower than the great, great financial crisis. So, you know, I guess where I would be a little offer critic, you know, some constructive criticism to this White House is that, you know, there's some things you really can't avoid. You know, President Biden, you know, and President Trump before him, they inherited the, you know, a pandemic. And you can argue whether President Biden, you know, put too much into the economy or put just the right amount in. But here, you really have these things like tariffs and the war in the military conflict in Iran that are unquestionably affecting prices. So unlike other situations where, geez, there's nothing the president could really do about gas prices, about inflation, you do have options. And one of them is to work harder to resolve things in Iran. And, you know, if I'd been there long ago, I would have said management of the Straits of Hormuz is the number one issue. Don't even start the military conflict until you have it figured out. And let's get out relatively quick. And so that's still an option that would make things better. And you've seen them start to pull back on some of the tariffs related to farm equipment. So there so this is a White House that has some tools to do something in terms of tariff and the military cons conflict. And I think there's a whole lot of Republicans running for reelection right now that would like the White House to start using some of those tools. [00:30:57] Romaine Bostic: Well, it'll be interesting to see that. And, of course, as you say that, we're now getting new headlines about new aluminum, steel, and copper tariff regimes. So kind of the yin-yang and the swing back and forth here coming out of that White House. And, of course, the people stuck in between are, of course, the voters. Gene Sperling, president of Sperling Economic Strategies and former director of the National Economic Council. And I just want to point out to our viewers, Katie Greifeld, we get a slew of really key economic data next week, including a CPI report that's expected to be hot, back above 4% on a headline basis, a PPI report as well, and a new University of Michigan consumer sentiment survey at the end of the week, which, of course, as he pointed out, the last one was the lowest sentiment rating that we've had since the late 70s, which is surprising. [00:31:39] Katie Greifel: It is just amazing. When you think about all that, you know, we've lived through as a population in that time, certainly a lot for investors to chew on next week and certainly a lot for, of course, the Federal Reserve and our new chairman to chew on as well ahead of that June 17th decision, which looks more and more contentious by the day. [00:31:58] Romaine Bostic: They're going to have a lot to talk about, particularly with the big down drop that we're seeing in stocks today. We're off session lows, but still down 4% on the NASDAQ, down almost 2.5% on the S&P, 1% on the Dow. And crypto still in the doldrums there at one point trading below. Well, there it is now trading below that 60,000 level. We're going to unpack exactly what's been going on in that space in our stock of the hour coming up next here on the close right here on Bloomberg. Time now for our stock of the hour. We're taking a look at some of the crypto exposed names out there. Bitcoin below $60,000 for the first time since late 2024. The cryptocurrency has lost around half of its value since it peaked last October. Joining us right now is Nora Melinda, Bloomberg TV markets correspondent on the day. We're looking at Coinbase down about 8%, Riot down about 11%, and MicroStrategy just down a mere 9% today. But of course, they have kind of been the poster child here for, I think, the sell-off here. What drove this? Was this sort of inspired by what we learned a little bit earlier this week from MicroStrategy, or is this more about what's going on with the macro conditions and the general risk-off in broader equity markets? [00:33:10] Speaker 8: Well, it's actually a mix of all the things that you laid out there. We do know, of course, the geopolitical tensions that's been in the backdrop of pretty much any sector that you take a look at. But, of course, also what's going on with strategy and the concerns that some of the biggest... Strategy. I keep calling it MicroStrategy. I know. It's okay. We're all with you. That's some of the concerns that some of the... [00:33:27] Romaine Bostic: Well, if it keeps falling, they may have to put the micro back on. [00:33:30] Speaker 8: We might have to stop. I agree. I agree. But concerns that some of the biggest sources of Bitcoin demand could potentially not be as strong as investors thought. That's really weighing on broader sentiment, especially as we think about the fact that Bitcoin is a more speculative sector. It tends to attract a lot of those retail traders. But also, you've got the macro in focus. I mean, if you take a look at today, specifically, we have a market sell-off, pretty broad-based, but really focused on a rotation out of tech. And when you think about this risk-off sentiment more broadly, you tend to see that really being exacerbated, amplified in crypto names. [00:34:03] Katie Greifel: You know, it's interesting. Joe Weisenthal had a newsletter about how this Bitcoin winter is different because, you know, some of the pillars of support that you think that we've had. We've had institutional demand unlocked. Retail's still there. None of that is helping. And also, it's a pretty favorable regulatory environment for crypto. President Donald Trump, I mean, and his entire family have been pretty supportive of this asset class. That doesn't seem to be making much of a dent right now, though. [00:34:29] Speaker 8: Absolutely. Especially when you think about the fact that we did see a peak just back in October, where we saw Bitcoin trading above $126,000. Take a look at it now much further from that. But we are seeing a bit of that post-election or re-election enthusiasm when we think about Bitcoin, crypto more broadly, and its link to President Donald Trump potentially making this a more favorable environment for the sector as a whole. We're really seeing that fading. And you're seeing, really, Bitcoin and crypto more broadly just taking it to the chin. [00:34:59] Katie Greifel: Yeah, pretty amazing to see it trading with a $50,000 handle today. Nora Melinda really... [00:35:06] Romaine Bostic: Handles. I love when we talk handles. [00:35:07] Katie Greifel: Handles, you know. We do it all here on The Close. Nora Melinda, our Bloomberg TV markets correspondent. Coming up, we're going to talk a little bit about the broader market action with Steve Sosnick of Interactive Brokers and Breakdown, a very ugly day on Wall Street. This is The Close. [00:35:24] Romaine Bostic: 10 Minutes until we get to the closing bells on this Friday. A deep sell-off in U.S. equity markets with the NASDAQ 100 down more than 4%, something that we haven't seen basically since the Liberation Day eruptions back in 2025. And it raises the question, Katie, is exactly why people are selling? [00:35:46] Katie Greifel: Yeah, it's a good question, especially when you think about tech in particular, because, I mean, you think about what's going on with small caps and the S&P 500, you could connect that to that very strong jobs report that we got this morning, what's going on with rates. When it comes to tech specifically, I don't know if the line is as direct. [00:36:04] Romaine Bostic: Yeah, and I mean, I just want to point out, this sell-off kind of started before today, so before the jobs report, before the spiking yield. So there was clearly something already in the water, and, of course, it doesn't help matters that, you know, you have a two-year yield up 12 basis points on the day. [00:36:16] Katie Greifel: No, and it also is striking that there's not a lot of places to hide in this market. Gold, for example, down 3.4% right now, not exactly acting as a portfolio hedge. [00:36:27] Romaine Bostic: Do you know what's up today? [00:36:28] Katie Greifel: Please. [00:36:29] Romaine Bostic: Campbell's soup. [00:36:29] Katie Greifel: No kidding. So is Walmart and Coca-Cola. [00:36:32] Romaine Bostic: And Coca-Cola. Maybe it's the tin can trade. Who knows? Let's see if we can get some insights out of our next guest. Steve Sashnik joins us here in Studio 2, chief strategist over at Interactive Brokers, to count us down to the closing bill. And I just want to put a finer point on this, too, particularly with the tech sell-off. The NASDAQ 100, obviously, the outsized one. But you take a look at the Philadelphia Semiconductor Index. At one point, it was down 10% on an intraday basis. It's now only down a mere 8.4%. Obviously, a big drag on that has been names like Qualcomm, like Sienna, and more importantly, like Broadcom, which I just checked, it's having its biggest two-day drop ever. What's going on here? [00:37:08] Speaker 9: Trees don't grow to the sky. Parabolic moves, like the type we had in semiconductors, are inherently unstable. And, you know, they're wonderful on the way up. You don't know when they're going to end. But the one thing that they all have in common is they end unpredictably and they end badly, because you have people who are just chasing the returns without regard to risk. And then risk always has a way of sneaking up on you at the worst and most [00:37:33] Romaine Bostic: in opportune time. So I get that. And I'm going to play devil's advocate here for a second. There was this idea that that parabolic move higher to a certain extent was justified by this broad new addressable market of AI, that every time you heard one of these CEOs go on, you saw their growth rate in revenue. You saw the margins. And then they would talk about this future, which I know is hard to quantify. But that seemed to be what everybody was buying. Did something change over the last, this past week that I just missed? [00:38:01] Speaker 9: Two things. I think, number one, I think they outkicked the coverage. I think what happened was you got, you did get good guidance, good earnings and good guidance from a wide range of companies. I'll stipulate that. But I think what the market was doing was saying was taking the one to two good quarters that a lot of these companies were, were, you know, were, were guiding toward and extrapolating that for three to five years. And so if you do that, you can put any multiple on stuff. So what's the difference? And then Broadcom punctured the narrative because Broadcom was was the first one to say, you know what, we're not just collecting, we're just not collecting money hand over fist in this AI trade. We're making, by the way, guiding down to 16 billion dollars. Just let's put that in perspective. Yeah. But it was a shortfall and sort of the first thing that really punctured the narrative. And you never, and that's, that's what I mean by these unstable, unstable situations is you don't know [00:38:51] Katie Greifel: what's, you don't know what's going to puncture it. I'd also love to get your thoughts on something we were discussing with Mona Mahajan at the start of this show. The fact that, you know, you have seen some of these big tech names this week come out and announce or be reportedly thinking about maybe equity capital market raises. Alphabet actually upsized their offering. The FT reporting that Meta apparently is thinking about it as well. And I wonder if, you know, beyond those specific stocks, day of announcements, whether or not that potentially over the longer term could have an impact on this equity market if we see more companies follow that trend. And we see net net net equity issuance actually turn positive to two things to take away [00:39:36] Speaker 9: there. First of all, what what Alphabet told us without necessarily telling us what Meta may or may not be telling us is that it's cheaper. They need to raise boatloads of cash. And the cheapest way for them to do it right now is not to go to the debt markets, which are working again, which are actually today working against them even worse, but that instead it's cheaper to do with equity capital. So apparently they're saying, you know what, we're better sellers of our stock here than buyers. Secondly, you've alluded to the to the supply demand dynamic within the market that's been very favorable. You've had basically net reduction of supply between buybacks and private equity. And now we're looking at situations where there are, you know, both spot secondaries from from Alphabet and potentially meta and of course the big wave of IPOs that's coming. So that it may not completely upend the supply demand dynamic that we've gotten used to, but it's it's definitely a bit of a pig in the Python problem where they have the markets got to digest this. [00:40:33] Katie Greifel: Absolutely. And certainly something to keep an eye on as we potentially get more of these announcements. And also as we ride into that IPO wave, we know that SpaceX is coming in the next few weeks. We know that anthropic potentially coming into the fall. I mean, where to even start. When you think about SpaceX, you think about what we're talking about when it comes to the supply demand balance of this market. I mean, can these markets absorb some of the sizes that we're talking about when you think about the totality of this year without discussing any specific IPOs, which I'm not supposed to [00:41:07] Speaker 9: do. Right. Let me just say that can the market do it. Yes. You know, but don't be misled when you hear people say, oh, there's seven trillion dollars in cash on the sidelines, because to a certain extent, the amount of cash relative to the size of the market capital is capitalization. That's actually not very big. And I think to a large extent, you have people fully invested. So you do have to wonder, you know, where's where's all the where's all the money going to come from from all this. It'll get absorbed. But like anything else, it's a matter of price. You know, they'll go back to your econ 101, the supply demand charts. And, you know, we have to and we have to wrestle with the idea that if all things being equal, if supply goes up, price has to demand remains about the same price [00:41:49] Romaine Bostic: comes down. And this gets to the idea, though, too, when we talk about the activity that we've seen in this market. I mean, let's just take valuations out of the equation here. There did seem to be this impulse for continuing to buy, even when you had downturns. Obviously, we haven't seen anything this severe. But is there a sense that with the folks that at least are invested in right now, that they will maybe potentially buy into this dip with the expectation that even with, look, I know, look, I know price sales price to earnings. I know they're crazy. And I know my question is crazy. But just indulge me. If you do believe that AI is our future, why wouldn't you want to be in some of these names that are being sold off so much today. Question's not crazy. Yeah. And I will tell you, [00:42:30] Speaker 9: yeah, we saw customers buying in size Wednesday and yesterday. They bought a lot of Broadcom yesterday. Younger investors. I don't mean to pick on Katie, but younger investors are in our condition to buy. Well, you know, condition to buy every dip. I think you came of age before the global financial crisis. Yes. And so, you know, if you didn't live through a big downturn, you're conditioned to see every dip as a buying opportunity. So you're going to do it. And to be fair, it's generally worked out because most dips haven't really persisted for any length of time. And of course, if we're at new highs, well, over time, they've all been buying opportunities. But, you know, that doesn't mean they're always buying opportunities every single every single day, every single minute. And I think that's where you get into the situation where you have to you have to balance out the timing. [00:43:17] Romaine Bostic: See Sasha, the chief strategist over at Interactive Brokers, our global simulcast. It starts right now. [00:43:26] Speaker 10: The closing bell, Bloomberg's comprehensive cross-platform coverage of the U.S. market close starts right now. [00:43:35] Romaine Bostic: And right now, we are two minutes away from the end of the trading day. A shot of beautiful San Francisco. Romain Bostic here in Studio 2 in New York alongside Katie Greifeld. As we take you through to the closing bell, it's our global simulcast in San Francisco. Today is Carol Masser and Tim Stenevic. Welcome to our audiences across all of our Bloomberg platforms, television, radio, our partnership with YouTube. We have a lot to discuss here with the NASDAQ 100 down 4.6 percent heading into the close. The S&P down 2.5 percent and the Russell 2000 right now down 3.5 percent. Tim, Carol, you are sitting right there in the heart of our tech industry, of our tech economy. And this sell-off is [00:44:15] Speaker 11: undoubtedly one about tech valuations. Yeah, absolutely, especially in a higher interest rate environment. We've seen, I'm sure we're going to talk a lot about U.S. yields and expectations for what the Fed will do. But yes, it makes those pricey valuations look different. But you keep, I think, the Bloomberg Technology Summit we covered yesterday. There is still so much in terms of conversations about demand outstripping supply. That's what we hear fundamentally. But right now, certainly investors may be questioning some of that against the valuations. [00:44:46] Speaker 12: Yeah, I mean, the superlatives here are pretty remarkable. At one point today, you had the worst sell-off going back to Liberation Day for the NASDAQ 100, down more than 4.5 percent. It's recovered some of those gains. Broadcom shares are lower right now by 7.6 percent. They fell by 12.6 percent yesterday, of the worst two-day period for Broadcom ever. So, yeah, even though we're seeing, we saw some big gains, we're seeing [00:45:10] Romaine Bostic: some pretty big declines. Yeah, we should point out, though, we are seeing some selling pressure into the closing bells here as you hear them in New York. And, of course, you know, there is an obligation to clap and cheer, but not a whole lot to clap. And I do just want to reiterate some significant selling pressure in this final few moments here on this Friday afternoon. The Dow Jones Industrial Average, for the most part, is kind of the least dirtiest shirt in the drawer. It is down 694 points, or about 1.3 percent. The S&P 500, it's a drop of 200 points, or about 2.64 percent. The NASDAQ Composite, down 4.2 percent. And the NASDAQ 100, which is your primary decliner here on the day. That's down 4.8 percent to close out the day. The worst one-day drop since that 6 percent drop on April 4th, 2025, when everyone is freaked out over those Liberation Day tariffs. Your Russell 2000, it's down 3.5 percent. The S&P 400 mid-caps down 1.9 percent. And I do just want to throw in a rare bright spot on the day, and this one is for you, Katie Greifeld. Please. And that is the Dow Transportation Average, which ends the day higher. No kidding. Not only higher, by 6 cents of a percent, up 140 points, but once again, guys, this is really about the sell-off that we're seeing in the other [00:46:25] Speaker 11: benchmark indices. All is at last. Yes, indeed. And yes, indeed, a sell-off. But you take a look at the S&P 500. It's not like everything was down today. It's almost an even split, which I think is really telling. Katie, you've got 237 names in the S&P 500, actually higher for the Friday trade, 266 to the downside. So again, not everything and not everybody was running for the exits. [00:46:48] Katie Greifel: Absolutely. I mean, some of your more defensive sectors, when you take a look at the circle, definitely had a pretty solid Friday performance. Consumer staples higher by about 1.6 percent. Utilities, eight-tenths of percent, real estate, health care, and financials also in the green. But then you take a look at what's on the downside. Tech as a sector down 5.8 percent. Even, you know, the best day ever in consumer staples, it'd be hard to sort of counteract that. And I just want to add that on the tech side, [00:47:17] Romaine Bostic: the Philadelphia Semiconductor Index, of course, 30 chip stocks, all 30. Don't you dare. And Tim Stenevich, I'm stepping on your toes, a 10 percent drop. That's the worst day since 2020. March 16th of 2020, to be specific. You all remember what [00:47:34] Speaker 12: happened then. Everybody was freaked out about COVID. You know, today, today should be a day. Today should be a day where the decliners go first. But I'm a gentleman. Carol Master will have. I'm the optimist. I'm just going to go for it. Let's hear [00:47:48] Speaker 11: about it. What is this, like tin can soup? Exactly. It is really funny to go for the gainers and what gained. Although everybody knows Chipotle Mexican grill look, not a bad trade. It was up as much as seven percent of the ties today, finishing with a gain of more than four percent. J.P. Morgan upgrading to overweight from neutral, citing a rare valuation opportunity for the stock. The analyst John Ivanko saying that the stock's multiple now has fully rerated to reflect a more moderate, yet still well above average growth profile. Price target set to $35 a share, implying a 24 percent increase from the Thursday close. You can see the stock closing just below $30 a share. All right. Let's get to the number one. Let me just double check. Yep. It's the number one gainer in the S&P 500. Cooper companies. Yeah. We don't talk about this one a lot, right? We do not. Top of the S&P after the contact lens maker. It's also a medical device maker posted second quarter sales and adjusted profit that topped estimates. Company also gave updates about its ongoing strategic review that analysts found encouraging. It's about a $13 billion market cap company. If you're not familiar, it is still down about 18 percent year to date. But yeah. Do you have something you want to add? Well, we're familiar with [00:48:59] Romaine Bostic: it. Yeah. Oh, that's your leader. That's your leader in the S&P 500. You're encouraged by it. And I think it's kind of [00:49:06] Speaker 11: it. No. No. I think it's fascinating. If you go to the Nasdaq gainers, Mondelez, Coca-Cola Enterprise. Like these are not high-tech companies. Like I thought it was kind of interesting. Same thing in the S&P. It's FedEx freight. It's Clorox. It's [00:49:19] Romaine Bostic: Kennedy. Right. Kimberly Clark. So we see where investors minds are at. Yeah. They did not go to cash, but they're [00:49:25] Speaker 11: going into some more defensive sectors. Right. Which is telling. Right. They're willing to look at some other different names. And like you said, not putting cash under their mattresses. Hey, for something different, something small. Even from 2,500 miles away. Can I just tell you, I was just at a family wedding. They're like, what's with a dude who always gives you a hard time? I'm like, you know. They said Tim? Did you say Tim? No, no. No. And I'm just like, truly a teddy bear. You know, when you get, you scratch below the surface. Here's for something. It's hard to get there, though. Actually, you need kind of a pick to kind of get to it. But hey, we'll move on. A small cap company because remain. I know you love them. It's a $907 million market cap company. Merlin ticker. I know I had to dig. MRLN. It's a software company involved in the aerospace and defense tech areas rallying big time today as we bring it up almost 20 percent here after it announced the successful completion of the critical design review for its C-130J autonomy program with the U.S. Special Operation Command. I thought that was interesting in terms of what's happening with defense in particular. Stocks still down by 18 percent with about 5 percent of the float is short. Take it away. The Kleiner man. All right. Well, not [00:50:36] Speaker 12: everything is lower today, but some prominent names lower. Let's go to the socks down more than two points 10.2 percent today. We'll go ahead and round that up to 10.3. Worst day going back to March of 2020 during the covid scare. Every name in the socks is lower today. You've got Marvell down more than 16 percent. Micron down more than 13 percent. AMD down more than 10 percent. Intel down 11.3 percent. Broadcom down 8 percent. Nvidia down 6.2. Qualcomm down 11 percent. The list goes on. I could give you 25 more names that are lower in the socks today. Tech stocks broadly lower following that latest jobs report. Added to speculation the Fed's next interest rate move will be a hike. Let's change gears, though, and talk a little bit about retail. Earlier in the session, one of the worst performers going into today would have been Lululemon, not the worst performer, but it was down throughout the day today. Closed at 8.6 percent lower. This lowest levels in more than eight years after the company cut its annual forecast due to deteriorating performance in North America. The company now sees revenue in the range of 11 to 11.15 billion dollars for the fiscal year down below the average analyst estimates compiled by Bloomberg. The company says it's been contending with increased competition, poor product launches and negative commentary in the media and social media, which has led to lower store traffic and lower sales. And finally, I can't believe we haven't talked about Bitcoin yet. It fell below $60,000 for the first time going back to October 2024. This is the iShares Bitcoin Trust ETF, otherwise known as iBit, down more than 5.2 percent. This leg lower fueled by a combination of investors pulling money from Bitcoin tied ETFs such as this. Renewed geopolitical tensions, growing concern about the durability of one of the market's most important sources of demand. I think big questions about what happens with all these retail investors who may have been putting money into cryptocurrency when we have some big AI companies that are going public, not just next week, but in the next few months. [00:52:36] Romaine Bostic: Well, let's talk about next week. And I just want to check on the yields real quickly. And particularly focusing on the two-year yield, because that spooked a lot of folks, a 12 basis point rise in the two-year yield to roughly about 4.1 0.6 percent. And this is the idea that with that strong labor market report, the idea that the Fed might be in a position, well, certainly in a position where they maybe can't justify cutting rates, but even potentially they may have to raise rates. And that's kind of the backdrop for next week, because we are going to get a CPI report, a PPI report, both expected to be hot. We're going to get another read on consumer sentiment, which is expected to be low. And of course, this market is going to be asked to digest not only the biggest IPO ever, but let's just call it what it is, probably one of the more lopsided public offerings, at least in terms of who gets what and well, where that wealth accrues. Yeah, it should be an interesting week. [00:53:27] Speaker 11: A lot coming at us. I know, I know. Do you want to read that one out? Yeah. Yeah, I actually do. This has to do with the lawyer, right, over at Goldman. Yeah, Kathy Remler. Kathy Remler and the Goldman CEO asking her to stay at the firm despite some of concerns over her relationship or connections with Jeffrey Epstein. So we're going to be speaking with Jason [00:53:53] Speaker 12: Leopold in our four o'clock hour, just in a few minutes. He's the author of the FOIA Files newsletter, and he's been all over the story. So tune in for us. I know you guys are busy over there in New York, but we're doing fun [00:54:04] Speaker 11: stuff on Bloomberg Business Week daily, too. Sounds awesome. They can be. Romain can be fun. I know Katie can be fun. Romain, you know. Romain is a lot of fun. Romain. All right. We have to go. You have to go. All right. For some reason. It's chocolate. Is that why you're so cranky? Oh, did I say that out loud? All right. Have a good and safe weekend. Yeah, I know the feeling. All right, guys. Have a good and safe weekend. That's a wrap. Our cross platform broadcast. We do it on radio, TV, YouTube and Bloomberg originals. Have a good and safe weekend. Katie and Romain continuing on the close on television. Tim and I back here on Bloomberg Business Week daily on radio, YouTube and Bloomberg originals. We'll see you again. Same time, same place on Monday. And our coverage continues here on the close. We're going to wrap up a [00:54:49] Romaine Bostic: wild week with Jeremy Siegel professor emeritus over at the Wharton School at the University of Pennsylvania on a day where we saw tech stocks having their worst session in 14 months. This is the close on Bloomberg. [00:55:04] Speaker 1: The countdown is on everything you need to get the edge at the end of the market day. This is the close. [00:55:14] Romaine Bostic: Welcome back to the close. I'm Katie Greifeld. And I'm Romain Bostic. We close out what had already been a relatively tepid week for U.S. equities. And today turned into an awful day. One of the worst days that we've seen at least for tech stocks in at least a year. We talk about an S&P 500 dropping about 2.6 percent here on the day. The Nasdaq 100 was down almost 5 percent. And you see it there. The second line on your screen. A 10 percent drop for the Philadelphia semiconductor index and index that we should remind you actually hit a record high earlier this week. So basically we had a correction all in the course of one day. A big part of that reason is what you see on the bottom of your screen there. And that is a big rise that we saw in Treasury yields two year yields up 12 basis points as now a lot of investors starting to bet that the Fed given the strong labor market and given strong inflation may not be able to cut cut rates and may actually have to start hiking them. Well that leads us to our top story this hour and that is Wall Street's historic weekly [00:56:12] Katie Greifel: run comes grinding to a halt. You have growing anxiety about valuation sending the S&P 500 lower in a big way as such failing to complete a 10th straight week of gains. That would have been the longest weekly streak since the 1980s. But certainly you can see that all unraveling just in the past day. Meanwhile the Nasdaq 100 sinking the most since April 2025. Now that sell off in stocks bonds and crypto is the biggest setback in months for the latest leg of the bull market romaine which as we know had been raging up until this [00:56:47] Romaine Bostic: point. Let's bring in Jeremy Siegel. He's a professor emeritus of finance at the Wharton School at the University of Pennsylvania. And of course has been watching and analyzing markets for decades. You've seen a lot of cycles. You've seen a lot of parabolic moves higher a lot of parabolic moves lower. What do you make of the sell off that we saw today. Is this just sort of I guess you know I want to use the word correction but just maybe a bit of a rethink of some of those sky high valuations or is there something more deeper going on. You know Romain one of the oldest sayings in Wall Street is up the [00:57:19] Speaker 13: staircase down the elevator. And today was an elevator down. And what you have is an awful lot of trend followers a lot of momentum players. They just pick the group that is rising. They don't care about valuation. And they place their sell signal very close on that trend line. And as soon as it breaks that they are out. And that's why you get this trending market and then sudden move in the other direction. Sometimes you get it down in bear markets on the other way around. You get the declines day after day and then suddenly a sharp up move. So this is one of the oldest type of reactions that we see to these strong moves in markets that we've had over the last many decades. Well this got this was one of the big [00:58:12] Romaine Bostic: criticisms about this rally was the tight concentration in a few names and the idea that if and obviously the huge sort of increase in multiples and the idea that if anything went wrong you were going to get this rush to the door. Do you think that potentially or at least maybe give me some idea historically how that course corrects if at all. Well usually when you get this sort of trend you get a sharp [00:58:34] Speaker 13: movement down and then there's usually a recovery and that's where you really look. Is it going to break the old highs or not. If it doesn't and trend down that could be the sign of a more significant downward movement. So you know my feeling is yeah we may go a little bit further on Monday or even Tuesday but I expect a recovery from this. But it doesn't necessarily mean that the coast is clear. History tells us it would have to break those other highs to really move significantly higher. So that's the that's really the point to to watch. I think a little more movement downward some recovery and then keep your eyes on. But there's no question domain. I mean you were absolutely right about the fact that we had stocks that were going up far in excess of earnings. Maybe not one year earnings but multi-year earnings but multi-year earnings. They were pricing these increase in chip earnings that they would extend into the infinite future. That's the only way you can justify a doubling and a tripling of a stock when the earnings double or triple. A lot of people came to me and said oh Dr. Segal their PE is not really rising. Right. And I said do you think that those earnings can stay at this escalated level for the next 10, 15, 20 years. As we know semiconductors chips. They have a cyclical background. Even four years of strong earnings if it goes back to trend only justifies a 20 percent increase in price not some of the 100 percent increases that we've been seeing. Well professor you know you [01:00:14] Katie Greifel: you bring up earnings and certainly think about why we had a nine week weekly rally when it comes to the S&P 500. A big part of that time was dedicated to earnings. We were in the thick of it and the numbers were coming in great. And I just wonder you know what catalysts look like from here because you mentioned we could see you know this current sell off continue for the next few days. But it feels like for the next couple of weeks we're going to be really focused on the macro. We got that jobs print at 8:30 this morning. Rocketing yields higher. We have a bunch of inflation prints to dig into next week. And then we have a big Fed meeting the week after that. And I wonder you I wonder if you're going to think about how this backdrop sort of pretends for the motion of markets from here. When you think about all the different concerns about how the Fed is going to thread the needle between very strong job growth and a pretty inflationary environment. [01:01:06] Speaker 13: Okay, you're right. I mean the macro today was a big jump in. I mean that was a blowout employment report. I don't know anyone on Wall Street. You guys collect the data on I know, you know, 20 or so individuals. I don't think anyone was that high. And not only that high, but the revisions were so high. And the revisions a lot of, I mean, we saw a big increase in the leisure. Of course, health care has been strong for a while. And that's one reason you saw that rotation away from tech. People are saying, hey, you know what, the non-tech economy is not dying. It seems to be hiring. And I think that's one reason why we actually, you really got a big rotation today rather than just a general sell off. As you might think when you have those yields coming up. We should not ignore, as you people know, what's going to go on. I guess it's Thursday of next week with the SpaceX IPO. I mean, that's what everyone's talking about. Are people selling some of their tech stocks to raise cash to buy that? I mean, so many people I know have been informed by the brokerage firm, hey, how many do you want to buy? They don't know what they're going to be allocated. And some of the people say, I've got to sell to get cash if I'm allocating what I'm what I want to buy. So, I mean, that's what's going on next week. You're right on the CPI and the PPI important. And of course, if you talk about macro two weeks, Kevin Warsh's very first statement. Wow. We have a calendar that is just unreal in the month of June. [01:02:45] Katie Greifel: Yeah. No, it is. It is incredible. And you think about sort of the environment that the new Fed chair is inheriting. And it's certainly a tough one. But I want to talk a little bit more about that SpaceX IPO, because you think about the valuations that we're talking about. You think about the retail allocation and the fact that it's going to be fast tracked this IPO into many indexes, not the S&P 500, but some of the FTSE Russell indexes and the NASDAQ 100. The cynical take is that maybe this is what finally bursts the bubble. Maybe this is what finally, you know, hearkens the end of the bull market that we're currently living in right now. Professor, I wonder, you know, what you'll be keeping an eye out for and whether, you know, you think some of those worries actually are founded. [01:03:31] Speaker 13: Well, I think there are worries. I mean, it's like so many people I talk to say, you know, I want a piece of SpaceX and I don't care about the price. When you stop caring about the price, you're going to be disappointed. You know, something else that, you know, we just heard that some of the brokerage firms have been saying, you've got to hold this stock for a week or two weeks. Now, something was, oh, good, it stopped speculation. But actually, I think it's going to worsen the situation because that will reduce the supply once the stock starts trading. And that may mean that SpaceX is actually going to start out at a much, much higher price. And I have to say, I think that that's going to mean disappointment. Now, Nasdaq is going to buy it. It's maybe a couple of weeks and it may be even come down 50 percent in that period of time if they don't allow enough supply to meet the, you know, the unheard of type of demands that we've been listening to [01:04:35] Katie Greifel: on next Thursday. Yeah, it's going to be just fascinating to see that pricing coming on Thursday. The first trades expected a week from today. Professor, can't thank you enough for making time for us. That is Jeremy Siegel. He is professor emeritus of finance over at the Wharton School at the University of Pennsylvania. And think about the supply and demand. One of the breaking news items on the terminal today was that the SpaceX IPO is said to draw more orders than shares available. Probably not that surprising when you think about all the hype around this IPO. But let's get back to the economic backdrop because Fed hike bets reigniting after this morning's jobs report with investors laser focus on Wednesday's CPI print. Now, our next guest says that, quote, improvement in the labor market coupled with stickiness of service sector inflation has caused hawks to flock. Joining us, I'm pleased to say, is Diane Swank. She is chief economist over at KPMG. Diane, great to have you with us. And you saw that reflected in the bond market pricing. The fact that, you know, bond traders are pricing an entire 25 basis point rate hike for 2026. You think about the incoming Fed chair, Kevin Warsh. This isn't exactly the environment he might have been anticipating a couple of months ago. And I wonder how you expect a new Fed chair to try to thread that needle and bring together a board of now diverging opinions. [01:06:06] Speaker 14: Well, the diverging opinions are certainly diverging in the area of wanting rate hikes. We've seen some presidents actually talk about a rate hike sooner rather than later. And not just that they could be in the future. That is a major shift within the leadership of the Fed. And that's a lot of cats to corral and try to get them to not hike as quickly and not vote against him. I think they'll give him some grace period. And they'll wait over the summer. But we do see two rate hikes in the back half of the year. And the problem is that when you're thinking about inflation and the persistence of inflation right now, the higher end of the income strata are helping to buoy service sector inflation. The well-heeled are traveling. We've got the World Cup that's adding going to add an extra heat to inflation over the summer and added to that hiring and leisure and hospitality. That's very important because it's happening at the same time that we know that overall wage gains have become even more bifurcated. Real wage gains for the top third of income earners are accelerating while wage gains for the bottom two thirds are in the red and moving further into the red, especially when you think about what inflation is likely to come in for the month of May. It looks like it will easily clear 4%. That is important. And so, you know, at the end of the day, inflation is the most regressive of taxes that we have out there. And you cannot attain or sustain full employment unless you derail inflation because ultimately inflation is also a labor market problem because input costs are rising as well. [01:07:42] Romaine Bostic: Well, I mean, what is your general outlook for, I guess, whether this uptick and, I mean, at least based on Bloomberg estimates right now, we're talking about headline CPI back above a 4% for the first time in quite some time. If you believe that a lot of this is tied to the situation in Iran, do you model as an economist the idea that that rate comes down assuming that we actually do get some sort of meaningful resolution and more importantly, [01:08:07] Speaker 14: a reopening of the Strait of Hormuz? Well, we do get, we expect a reopening of the Strait of Hormuz in some form or another by the end of June. And, you know, that keeps moving. But that is what we've held to. And that is what we continue to expect. What's important is that's not the only shock. This is more than an energy shock. It's a supply chain shock. And what many people sort of miss in translation is how rationing and scarcities are affecting emerging markets. And in fact, production of things like rubber gloves that are very important in hospitals have been already hit in Thailand, Malaysia, the Philippines. That's important. Garment production is running 40 to 50 percent of what it usually is in places like Bangladesh. All of those kinds of things sort of echo the supply chain problems that we saw emerging from the pandemic. And we've also seen tender rates, which is really a measure of the pricing power in shipping and freight costs absolutely soar. And that is those are all things coming down the pipeline. So even though we expect, you know, inflation, the headline numbers to crest fairly soon, there will be a lingering inflation. And the biggest issue is the service sector, which is just not going away and accelerating. Well, Diane, we only have about a minute left. And to that [01:09:27] Katie Greifel: point, you know, you think about the inflation expected to come and sort of, you know, the composition of it. If the Fed were to hike rates and if they were to hike rates sooner rather than later, how much of an impact would it have on the types of price pressures that you're [01:09:40] Speaker 14: describing? Well, I think the issue is we need to basically it's going to take a while to get rid of this inflation. We actually don't see the inflation rate. Unlike the Fed keeps putting it one year out, we'll get back to 2%. We don't see inflation getting back down to 2% until we get into 2028. Now, that is with rate hikes by the Fed. Inflation will cool enough before then to allow them to start cutting again. But that's a pretty different kind of scenario than we were looking at certainly at the end of last year. I did think the last cut by the Fed was too much, along with some of the more hawkish members of the FOMC because of the service sector inflation. And this is just something you can't escape. We're five years in. Yeah, absolutely. Diane, got to leave it there. Always appreciate it. Diane Swank, chief [01:10:29] Romaine Bostic: economist over at KPMG setting us up for what is going to be an incredible macro week ahead and really two weeks if you count the Fed meeting that comes after that. We're going to continue to focus in on the big sell-off today and get a better read not on where market sentiment is, but more importantly, where it might go. That's coming up next here on the close right here on Bloomberg. Welcome back to the close as we wrap up this Friday. You're taking a look at how stocks close on the day for most of the major indices. We're talking about basically the worst one day drop that we've seen since a lot of the liberation day ructions back in April of 2025. The Nasdaq 100 losing almost 5%. The Philadelphia semiconductor index in one single session down 10%. New York Kesar is a Bloomberg opinion columnist and also an investor and knows a lot about market cycles and more importantly how these cycles sort of adjust over time. And we should just point out a 4.8% drop in the Nasdaq 100 is rare, although it is not in the end of the year. We're not going to get it. And I do wonder, given the parabolic move up that we saw higher, how do you read today's price action? Is this indicative of maybe a longer and broader correction or simply maybe just a slight adjustment in where some folks are allocating their money? And maybe we see a reversal of today's downdraft into next week. [01:11:54] Speaker 15: I don't mean, yeah, I mean, I think what makes it even more jarring is that this this market has just been nothing but up and huge gains. So we haven't seen a day like this in a while. At least it feels that way. And that makes it I think particularly jarring. You know, I think part of it is that volatility works in two directions. Tech is particularly volatile and we're going to get days like this occasionally. I don't know that I'd read any more into it than that yet. However, I do think you have to sort of look around and notice some of the headwinds that have been gathering recently. First of all, one is the concentration in the tech sector in general. The market is concentrated. The tech sector even more so. That means that it's it's relying on fewer and fewer names. Many of them semiconductors. They've done really well. When they start to hiccup, you're going to see, I think, exaggerated moves in in in in tech in general. And I think that's what we're seeing today. Whether that's part of a longer trend or not, I think will depend on some bigger issues. One is that, you know, the inflation numbers are not looking great. The jobs number today was was great. But you do have, you know, you know, you have the economy maybe not as strong as it was several months ago. And now you have the two year Treasury, you know, a fair bit ahead of the Fed. I mean, probably two to three hikes ahead. That doesn't mean the Fed is going to raise tomorrow, but it does mean probably we're going to lean more on tightening. And that's in general not great for the business environment. So you have some [01:13:21] Katie Greifel: gathering headwinds, I think. Yeah. And certainly the data that we got this morning for the labor market raises the stakes for already some very important inflation figures that we're going to get next week near. But you bring up the price action that we're seeing in the bond market, the big rise that we're seeing not just at the long end, but at the front end as well. And it's interesting. You look around this market and I'm not seeing where the havens are. I mean, gold is down. You have bonds down. Bitcoin is down. I remember when that was cast as sort of an inflation hedge. I mean, where is the safety in a market like this one? [01:13:57] Speaker 15: P-mills, Katie. I think that's probably the only thing you had if you're looking for absolute safety. But, you know, you could you could find more. I mean, one way to look at this is if you look at them now, if you look at the Cleveland Fed's nowcast for inflation, they're showing CPI at about four core PCE and just under four, I think 3.9. And so that's basically the information I think that the market or at least you should assume that's the information the market is trading on. So, you know, right now, based on that information, which is which is a lot higher than what the what the Federal Reserve wants. You have a two year that's at about 4.2. So another maybe two or three hikes away. I think if you it depends ultimately on your outlook. I mean, if you're comfortable that this is this inflation scenario is not going to get out of control. And I think that has to be sort of the baseline assumption at this point. But I think the pain in the bond market is behind you. And I think if you wanted to buy on the shorter end of the curve, you could do better than T bills. You can get short term corporate short term treasuries and you could collect some additional yield. I think relatively safely where it gets more interesting, I think, is as you go further out the curve and you look at what's happened to the spread. If you look at the 10 to not long ago, it was about 70 bits and the tenure has risen, but not as much as the two year, which means the 10 to is compressed to about 30, 35 bits. I mean, once that spread starts to get closer to zero, you get less and less comfortable with how the economy is doing. And that that is a whole different discussion. So that's what I would keep an eye on. If you had to have safety, I would keep on the short end of the curve. Right. And I would keep an eye on where the where the where the where the 10 to spreads are going. Yeah. Well, [01:15:37] Katie Greifel: currently currently the two cents curve is trading at about 38 basis points and flattening fast near really appreciate your insight. That is near case are of Bloomberg opinion. Now, coming up, the next big test from the markets awaits. It's SpaceX's first day of trading expected a week from now. We're going to talk with Kareem Busta. He is co-founder and partner over at DVX Ventures and the man who scaled Tesla's customer business. He joins us next. This is a close on Bloomberg. [01:16:06] Romaine Bostic: All right. We are about a week away from SpaceX's IPO. It is expected to price some point late next week. And the firm has already received more orders and shares available according to people familiar with the situation that Bloomberg reporters have spoken to. We want to bring in Kareem Busta into the conversation. He's co-founder and partner over at DVX Ventures. But he's also the man who scaled Tesla's customer business back in the day. So he has some unique insights here. And to what Elon Musk might be looking to do with SpaceX and Kareem, I do want to actually start there because this is kind of a much different story than what we saw with Tesla when they came to the public markets. It was basically a small company, a company that was really only pumping out a few thousand cars and a lot of questions about how it would be able to scale up. When you look at the space business, the launch business, Starlink, these are mature businesses and these are largely category dominant businesses. What is Elon Musk's vision, though, for this company as a whole, particularly with regards to attaching XAI and some of the other properties to it? [01:17:13] Speaker 16: Yeah, that's a that's a great that's a great question. And as you said, the situation for SpaceX is very different than what we've seen in prior major IPOs, including Tesla's IPO in 2010 in that SpaceX has already disrupted multiple industries, has already established a dominant position across multiple segments of the of the space space industry. But I think what's what's even more fascinating when you look at what is what could be the plan and what could be the strategy for for SpaceX that Elon is driving is when you start combining the different assets and technologies that he started to work on that go far beyond the the pure space industry. And you alluded to the to the addition of XAI. We've already seen a lot of activity on the on the commercial side with with SpaceX selling its computer capacity to major players in the industry. So all this points to a very ambitious and very broad strategy to combine within the space industry the new capabilities coming from from AI and the the the advantage and the the advantage and the leadership that that Elon's companies have built over the past few years. [01:18:33] Romaine Bostic: What is sort of the proposition, though, with regards and I'm talking from the perspective of investors that they are actually buying into something that is scalable from here rather than something that's already been scaled. It's easy to talk about this total addressable market and all of these things that nobody can prove or disprove for that matter. But I do wonder how you articulate that once this is in the public markets and once there is quarterly scrutiny of earnings or lack thereof what exactly the scale up is. [01:19:05] Speaker 16: Yeah, you're pointing to the exact right question that everybody should be should be asking. You look at a company that has already achieved. SpaceX has already achieved incredible things disrupting reinventing creating entirely new markets. And so normally in a in an IPO. The question would be is the company going to be able to to compete and to succeed at achieving its plans. Here we're we're basically buying into a company that that is that is presenting a much more ambitious plan which is frankly very hard to price and very hard to understand how big it can be. So that becomes really the key question. And I can see actually two key questions. One is how big is it going to be and how much of this this this big industry that Elon is creating can can can SpaceX monetize and capture value out of. And the other the other the other question on the other hand is will there be any competitor that will be able to mobilize the resources and the to to compete with with SpaceX. So these two are very fascinating questions that I can't wait to see what the next few months and years are [01:20:21] Katie Greifel: are are going to tell us. Well to the latter question I would love to hear you know your thoughts on it because we were having that conversation with SpaceX investor Chad Anderson yesterday that you think about you know how capital intensive the space industry is which of course it isn't just rockets. It's a whole ecosystem. But it seems like the barrier to entry for a lot of the the startups potentially in that space might be prohibitive for you know the lion's share. Yeah. And I think that's that's really the the the question [01:20:52] Speaker 16: mark with regards to the bigger industry is will there be another player that emerged that will be in a position to compete effectively with SpaceX. And right now when you when you look at it and as you correctly pointed out this seems really challenging and and and incredibly difficult for competitors to even consider being able to to be in the game and in the race against SpaceX. So that raises that that that that question mark in terms of the viability of the competition and and who would be the player. We've seen something happen in the in the automotive industry where at some point Tesla had established an edge and very strong leadership with technology innovation and disruption. But China has been able to catch up and in a few years put itself in a position where there's now multiple players that are able to compete and actually over take over from from from from Tesla. So the question is we we see the same in in space and AI or will SpaceX establish a permanent dominant [01:22:00] Katie Greifel: position. All right. Kareem really great to get some time with you. That is Kareem Busta. He is co-founder and a partner over at DVX Ventures and sticking with things SpaceX. You know you think about the news that we got last night Romain from the S&P Dow Jones Jones indices. Yeah making way of saying that actually they're going to keep their existing eligibility requirements for their benchmarks including the all important S&P 500 which means that when it comes to the addition of SpaceX theoretically it might be a year at least before it's added to that index. You compare that to the Nasdaq 100 the Russell 1000 and the Bloomberg 500. Yeah. Let's not forget the [01:22:39] Romaine Bostic: Bloomberg 500. It's nine days five days 15 days. A matter of 100 is going to be the more critical one here 15 days. And I guess it gives a little bit of a reprieve at least for the S&P 500. But it kind of makes you wonder obviously they have different structures the committee structure at the S&P sort of I guess maybe nipped in the bud the idea that they would do it. But is it going to matter. Well I'm really curious to [01:23:01] Katie Greifel: see you know what this means for active managers because you think about the potential return dispersion. The fact that maybe you know active managers can have an edge in either direction when it comes to the fact that this incredibly large company coming through isn't going to be in the benchmark for at least a year definitely creates. You know the potential for some fireworks and again for some dispersion. But it is in the Bloomberg 500. Yes. And that's important. And it's good that we keep saying that. And you know if you want to read a little bit about this and what's going on in the ETF industry. I have great news. You could subscribe to my newsletter. It's called ETF IQ. Just go to Bloomberg dot com slash ETF IQ newsletter. [01:23:43] Romaine Bostic: This is the close on Bloomberg. Our next guest is a powerhouse in the world of marketing formerly Unilever's global chief growth and marketing officer helping to lead a 60 billion dollar company across 400 brands in 190 countries. Tomorrow night she will be the honorary chair of the iconic class dinner experience at Carnegie Hall here in New York City. A mashup of food culture as well as philanthropy. AC Eccleston Bracey joins us now here in studio two in New York. Great to see you AC. Thank you for having me. Let's talk about this iconoclast dinner. I mean it's a gathering of chefs a gathering of a lot of folks to celebrate food and culture but also to raise money for scholarships for Spelman College. A black or women's only college. Talk a little bit about how you got involved with the iconoclast dinner experience and what [01:24:36] Speaker 17: exactly you hope to see tomorrow night. This experience is so coveted as a personal foodie and someone interested in shaping culture. I was privileged to get to know Dr. Leslie who's the founder of the event and what she's created. She's been 11 years building this foundation of identifying the top influencers and culinary cuisine. And the experience brings together thought leaders. She may call them power players and create circles that bring people together in celebration of influencing culture and expressing culture. One thing that's interesting about that and Leslie has a great [01:25:09] Romaine Bostic: background. I mean she kind of started this kind of on the side. She was a dentist and now is doing this full time after it took off. But the idea of just trying to identify who might be the next big thing to a certain extent. You spent a lot of years working with brands and trying to I guess tap into what the consumer might want. Talk a little bit about what that experience is like particularly from the food side of how you even know you know that this person really has something special or something unique. Yeah that's really important because some of it is [01:25:39] Speaker 17: logic and some of it is intuition. And you do that by watching watching behavior watching trends and experiencing. And what Leslie has demonstrated she can done is she can pick them. You know some of her honorees from 2016 from Paul Carmichael to Kwame are some of the biggest most impactful chefs chefs today. She finds them young by watching watching food trends that are moving watching how people approach their creation and their [01:26:08] Romaine Bostic: restauranting if you will. And I think that's what you do. Michael's Kabawa. Yes. A Kabawa. Yes. A Kabawa. Yes. With Momofuku and Kwame. Of course Danny Meyer really kind of gave him a nice boost. He's got one of the. Are you a foodie. I do. I go to Tatiana all the time. I'm a big big fan of his. The hard to get reservations as well. Well you know. But someone special. Not to brag. Yeah. You don't have to [01:26:34] Katie Greifel: worry about him. But you see I do want to you know broaden out the conversation. Just talk about you know when it comes to identifying you know what principles you know you can apply to brands in this day and age because you think about your wealth of experience when it comes to marketing and you know how the experience of marketing has changed. First of all how consumers receive it sort of interact with it and touch with it and also how marketing content is produced. We think about the influence of AI. I mean what are what are some of the principles that are sort of timeless here that still hold true when you think about you know a brand type conversation. Yeah. It's an excellent question. I always say that everything and yet nothing is changing in marketing. [01:27:14] Speaker 17: So it's important to be clear on the nothing that isn't changing. And it's always about people. Marketing is about creating desire for your brand. That won't change. And how you do that is understanding people what they need and importantly what they desire. What is changing is people. Where we are. How we find out about brands. What we value in terms of community. What kind of content we're connected to. Mass media has changed. So you can't lose sight of those things that don't change. People and the need to create a clear compelling proposition. But you have to change everything else around that. And when I say what are what are some of those everything else that you need to change. What connect people is culture today. It's not a one way communication. It's participating in culture and having people pull for your brand. That's why this kind of class experience is so important because you have desire for cultural experiences that people want to engage in. So you're not just shouting at them about your product and what it does. And then you can create that experience with people. The influencer economy. The creator economy is all about co-creating with people. That changes. The other thing that's really changed is the idea if you're not just reaching people to influence people. You have to connect with people and machines today. Because machines do a few things. One they explode the algorithm and social media. Social media is a new mass media. Yeah. The other thing is you've got LLMs where people are searching and discovering [01:28:45] Romaine Bostic: and learning about the Tatiana's. Yeah. I am curious. So you just said something that I thought was interesting this idea of kind of creating culture. And I think about some of the brand campaigns that you're on in the past. Unilever with Dove and even before that a cover girl and et cetera. And I know you've just only recently joined the board of Lululemon. But we were talking about that that company earlier today. Because when I thought about kind of the origins of that company it was a there was a culture around. It was more than just a product. And I do wonder that when you see brands maybe start to lose some of what I guess what made them so prominent. Is that something that can be gotten back or do you just have to kind of start over from scratch. [01:29:22] Speaker 17: I am a huge believer in iconic brand. Some of the brands that we know today. The brand dove that I've spent eight years working with at Unilever is 50 years old. And it is more relevant today and most relevant among young people than it was when the brand was created. So you know back to what I was saying before about brands brands. You know who you're serving and then you stay deeply connected to what they care about. And then when you do that you constantly evolve. And so I think iconic brands are really really important. And what I really think Leslie is creating with 11 years of experience. It's a brand in itself. It's a kind of class experience with other brands or partners as the chefs. You know and the beverage leaders that bring it to life. You know you made an interesting point that you think about social media being the new mass media. [01:30:13] Katie Greifel: You know that's a lot of people's touch points into sort of brand recognition. That's where you build it. And I do wonder you know thinking about different industries whatever sort of product you're talking about. I mean how do you sort of engineer that viral moment so to speak. How does that differ from you know how maybe it used to be when you think about traditional media such as television. [01:30:37] Speaker 17: Well first there's no more one size fits all. You know back in the old day it was broadcast. So you'd come up with the message and you would spill that out to lots of people and try to reach and persuade them. Today even in streaming there's so many different platforms and social media there's so many platforms. So to get that mass effect you have to connect with lots of communities and really intersect lots of different cultural elements. So what you have to do for the brand is tap into and make choices of what communities what cultures you want to partner with and what message you're going to build out not just broadcast out that will be relevant to those cultures and communities. So it's a mass it's a new mass media but you can't hack it the same way you could connect hack TV media because it's so much more diverse and there's so much more pull instead of push. [01:31:36] Romaine Bostic: A.C. Pleasure to have you here. A.C. Eccleston Bracey former Unilever global chief growth and marketing officer and honorary chair of the iconic class dinner experience taking place tomorrow here in New York. Let's set you up for what to watch over the next week Katie. We do get that Apple worldwide developer conference and of course quite a few things popping up on the macro front. [01:31:56] Katie Greifel: Absolutely. Think about all the different inflation prints that we're going to get especially when it comes to Wednesday. We get that May CPI report which again consequential as always but even more so after that blowout job spread. [01:32:10] Romaine Bostic: And obviously towards the end of the week all eyes will be on space at the IPO set the price Thursday start trading Friday special coverage right here on the close on Bloomberg.