Supreme Court Re-Shapes Power of Presidency — The Close 6/29/2026

[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. The week begins on a [00:00:13] Romain Bostic: high note as tech stocks reassert themselves. Live from studio two here at Bloomberg headquarters in New York. I'm Romain Bostic. And I'm Katie [00:00:20] Katie Greifeld: Greifeld. We're kicking off to the closing bell here in the U.S. The S&P 500 starting this week with a rebound and then some set to snap a five day losing streak higher by one point one percent at the moment. And as Romain mentioned a lot of that strength is coming from big tech as evidenced by the Nasdaq 100 higher by about two percent right now. That chip wreck of last week a distant memory at this point even though you are seeing a bit of a rise when it comes to Brent. We know that there were some tit for tat attacks between the U.S. U.S. and Iran set to speak tomorrow. Brent higher by about one point two percent or so on the bond market very well behaved at this moment. Romain 10 year treasury yields just about flat holding below 440 on the 10 year. And it looks like the [00:01:04] Romain Bostic: rally in equity starting to broaden out on this penultimate trading day of the quarter. The best quarter for the S&P the Nasdaq and the Russell since 2020 and the best quarter for the Philadelphia Semiconductor Index since well ever. Goldman strategists see the party continuing as a I infrastructure stocks alone have likely contributed about 60 percent of S&P EPS growth for the quarter. RBC strategists they're raising their 12 month target on the benchmark to 81 50. And they're not alone at least as long as [00:01:34] Speaker 4: earnings hold up. So the path to a K is is the earnings. Right. It's the earnings and the fact that it's not just focused on the A.I. beneficiaries but it's actually broadening throughout the S&P. And that's what gets you to the 8000. And of course the [00:01:50] Romain Bostic: rally is not without risk as you would always assume the market leverage that has powered recent gains has now become a bit of a source of unease. There's some concern out there that should any of the lofty earnings expectations miss targets the outsized influence of levered ETFs retail margin accounts hedge fund deposits at prime brokers that that that could fuel a quick and violent reversal of market fortunes. In fact that's one of the big risk flagged this week by the Bank for International Settlements which advises all of the central banks out there. It said in its annual report that the global economy remains caught in the cross currents of progress and peril saying any disappointment in A.I. related returns could trigger a sudden pullback in financing and turn this capex boom into a protracted investment bus with larger macroeconomic consequences today than in the past. Let's talk a little [00:02:40] Katie Greifeld: bit more about those central banks and specifically what traders are expecting out of some of the big developed market central banks. Behind me here I have the change in market implied end of year rates for the Fed. That's in white. Then you have the ECB in blue and in yellow is the Bank of England. And what's interesting right now is that the Fed is seen as the most hawkish of those three. We're looking at about 92 basis points of change. Then you take a look at what's developed when it comes to the ECB when it comes to the BOE because it's a much different picture than where we were at the end of March. As we've seen this retreat when it comes to crude you've seen some of those market implied odds come down. But it's a different story when it comes to the Fed. You can see this white line has been climbing over the past few months which speaks to what we've been speaking about on this program. Romain that when it comes to U.S. inflation for investors and for the Fed. It's not necessarily just an energy storage story. It's more comprehensive than that as evidenced by this chart. And that gets to the cross [00:03:40] Romain Bostic: current picture here. Our first guest actually says that investors are in a period of opportunity but also hidden risk. Jerome Snyder joins us here in studio to head of short term portfolio management at PIMCO. Jerome great to see you again. Good to see you. I do want to talk about this balance between the opportunities and those hidden risks. Where exactly or I should say where do you think some of those hidden risks are. Well I think as you outlined at the beginning of the program you know there's a lot of [00:04:02] Jerome Snyder: differentiation that's going on in the marketplace. There's an increase in the cost of capital that is going on within the market. Increase in the demand of capital more broadly speaking. Both from the public sector clearly with government financing needs to be done but also in the private sectors. We have the AI demand for capital expenditure. We also have equity financing as well as debt financing that needs to come on. But from an investor point of view we're sort of in an odd period where there's the great plains of opportunity. Think about like back to the 1800s of the diaspora of the United States. You had opportunities which are great open spaces but you also had unknown risks lurking in the grasslands. [00:04:41] Romain Bostic: And those unknown risks are inflation. There are unknown costs of capital and the end point for more productive pursuits being AI at that point in time. On the inflation front I know there's the energy component by energy I mean primarily oil and gas prices. That was the result of the war in Iran. But there's also been some concern and the BIS raises about potential energy inflation as a result of the AI build out. What's your general view outlook right now. We do think there's a tension at PIMCO and we do recognize the fact that energy prices have come down [00:05:11] Jerome Snyder: and it might take a little bit longer for those to be removed from the marketplace but longer term while we don't necessarily see wage pressures emanating or inflationary pressures emanating from wages precisely we do see a tension that's developed which doesn't necessarily mean that you're going to get inflation back to that two point something percent target in the immediate sense. It might take you know several years at this point in time which means that the Federal Reserve is probably going to be more on its hands over the course of the next several meetings rather than reacting proactively to this inflationary forecast. But at the same time we also then have to look in the longer term lens understanding where growth comes into the equation in addition to inflation. And that's just a addition a different tension that investors need to take into account as they look to make investment allocations over those medium terms. [00:05:55] Katie Greifeld: Well let's talk a little bit more about the investment implications of that fact that the Federal Reserve looks like it's going to be sat firmly on its hands for the time being because I take a look at money market funds. I mean the numbers just continue to climb. We're sitting at seven point nine trillion right now. I believe I even look in the ETF universe at the fixed income flows. I mean it's zero to three month T-bills that are the hot ticket right now. So I mean it seems like the answer has been to just go into cash. [00:06:23] Jerome Snyder: I mean do you agree with that impulse. No we actually don't agree with this impulse because of two different factors. Number one. Well it might seem an easy task to simply go into cash and earn that coupon carry. There's one major factor which it should be at the top of my eyes for institutional and individual investors like which is purchasing power preservation meaning. How do you actually protect your cash against inflation that is higher than 3 percent. And we forecast that over the medium term here. So what the consequence is is that if you're in cash you're earning something around 3 percent. If the Fed cuts you're underperforming not only in a nominal sense you're earning 2 percent but you're also earning less in the inflation adjusted sense. So the concern is that although the market is forecasting potential for rate hikes at PIMCO we believe this is at least on hold for the remainder of the year. And at the same time you're on hold earning a rate that's less than the inflation rate. That is effectively not necessarily a positive trade in the real sense in inflation adjusted sense for most clients most investors. And we would encourage them to look out beyond that to the short term space really to fixed income in general which is producing 5 to 7 percent nominal returns. But also be equally calibrated to the potential that the outlook for the Fed might actually change not necessarily mean that we're going to get those three rate hikes that the market is expecting at this right in short order. But it might actually be more reflective of what growth happens in 2027 and 2028. So encouraging them to move out a little bit. [00:07:47] Katie Greifeld: How do those conversations go. I mean is that is that appealing the idea that if you step out a little bit you can get 5 percent or you know are folks happy to say I don't know I can get 3 percent. [00:07:57] Jerome Snyder: And no risk at all. So without a doubt a lot of the growth you're seeing in money market funds is organic growth just simply a simple compounding of money market funds. But also seeing a holding place for a lot of the capital that's being raised for the AI pursuits in other places. So we have to really create some differentiation. The clients who are really sensitive to purchasing prices and forward forward obligations in terms of liabilities could be college retirement building a manufacturing plant. They're the ones who are really taking a close look at those opportunities to move out of cash into the front end of the yoke curve where they can pick up another 100 or 200 basis points. And we're seeing that growth in ETFs and mutual funds et cetera by running a diversified portfolio. And I think in this environment what we would really strongly suggest is that if you make that move make sure you're diversifying across industry groups. Categories of opportunity sets from corporate bonds to asset backed securities even agency mortgages. And in doing so it allows you to do the one of the key factors that this market is sensitive to which is producing price volatility. And we don't necessarily know where the outcomes of the equity market might be. But there's going to be volatility as we recalibrate to those inflation expectations and ultimately the Federal Reserve reacts one way or the other. Fixed income is a way to mute that volatility while still producing those equity like returns. All right Jerome great stuff as always. [00:09:13] Romain Bostic: Great insights. Jerome Schneider had a short term portfolio management over at PIMCO kicking us off to the close here on this Monday afternoon a Monday where we got a landmark Supreme Court ruling on the power of the presidency. If you're at the Federal Reserve you got a shield. If you're at any other agency well it's game on. Bill Kovacek former FTC chair and commissioner are going to be joining us in just a break right here on the close right here on [00:09:36] Katie Greifeld: Bloomberg. Well the U.S. Supreme Court granting the president more power to fire top officials a landmark ruling that could impact dozens of agencies that have long functioned independently of the executive brands. Now the decision allows President Trump to fire Democratic Federal Trade Commission member Rebecca Kelly slaughter but fall short of impacting the Federal Reserve the Justice has said. Joining us live to discuss is Bill Kovacek. He is former FTC chair and commissioner now professor at the Competition Law Center at George Washington University Law School. Bill fantastic to have you with us. To start I think I'd love to just hear your reaction to the ruling here. I mean we heard from Chief Justice John Roberts saying that the FTC unquestionably exercises executive power and must therefore be controlled by the chief executive. We'd love to hear what you [00:10:34] Speaker 6: make of that argument and of course how far you think this goes. The chief justice took a very strong position that we only have three branches of government. We don't have a fourth. We can't have a fourth branch of government that's not directly accountable to the president. So he rejected the argument that in some ways powers of oversight could be shared between the president and the Congress. Said the president needs absolute power to govern the way that the FTC operates. And this means the president must have the power to fire commissioners regardless of whether or not he has a good cause. I'd also love to hear your [00:11:12] Katie Greifeld: thoughts on you know how this changes the behavior potentially of the FTC going forward. Obviously you have a unique perspective here as the former chair of the FTC in this new world where basically the FTC is subordinate to the president. How might that affect how it operates going forward. In the short term the chair of the FTC Andrew [00:11:35] Speaker 6: Ferguson has aligned his program precisely with that of the president and has said I work for the president of the United States. So the FTC in the short term isn't going to change direction. But for the longer term going into a new administration it means that the FTC will be much more directly responsive to the desires of the White House. And it means that the commission is basically going to be an extension of the executive branch. It also means that we're going to see probably the general abandonment of a model that involves bipartisan multi-member decision making. So we're going to walk away I think in many ways from having a combination of Republicans and Democrats. We're going to have single party representation because there's nothing that really compels the president to follow any particular timetable and putting minority commissioners on the board. It's going to dramatically change the method of governance and give the White House far more power over how the FTC and other major regulatory agencies behave. It gets to a question though bill and I am curious as to whether there is [00:12:40] Romain Bostic: sort of any hope that we would actually maybe see I guess a reinterpretation if you will with a nod to the idea that these agencies in order to sort of be able to make decisions that are in the best interest of their regulated industries can do so with a level of independence without the White House I guess breathing down their [00:13:01] Speaker 6: shoulder to make one decision one way or the other. I think it's a compelling argument and specifically in this instance I felt when I was at the FTC as the chair and as the general counsel when you go into court the high card you're trying to play is that your decision is based upon the application of your experience your knowledge and that you're bringing forth the highest level of professionalism and that on that basis the court should respect you. You're not telling the court that you're always right but you're telling the court we're likely to get it right more often than you are your honors. As soon as it appears as though decisions are the product of political expediency or pressure from elected officials in this case the White House there's no basis for the court to respect the decisions of the agency and the court is far more likely to simply decide I can make up my own mind about how well you've done. So I think taking away that level of autonomy denies the agency a crucial strength that it has in appearing before and I think it denies the agency a vital element of legitimacy in appearing to the larger public. Believe me there are plenty of accountability mechanisms built into the system already the autonomy that we've been talking about provides the civic society with a greater level of assurance that their interests are being represented by true professionals exercising good [00:14:27] Romain Bostic: professional judgment. I know that the Fed to a certain extent was shielded from this but there are a lot of people that look at the language in the decision and on the slaughter decision specifically with regards to the non fed agencies and say that there is a pathway to actually go back to the Supreme Court with an argument that would actually give the president a little bit more autonomy over [00:14:50] Speaker 6: hiring and firing at the Fed. It seems as though the decision today rested so much on procedural considerations in the way that Federal Reserve Board Governor Cook was treated. When you look carefully at the decision you can imagine that there are other approaches that could have been taken to address her circumstances. She could have been given a proper hearing and an opportunity to challenge facts. It was the impetuousness of the dismissal that I think raise concerns by the court including this court that might have been willing to listen to other arguments but simply couldn't stomach the idea that you can say you behave badly on the basis of my say so I can dismiss you from office. I suppose the court was also very concerned here that it doesn't want to send the markets into a tailspin simply by dismissing a member of a board that's so important to the operation of the monetary system and the entire economy. I am curious bill before we go here do companies out there do they [00:15:51] Romain Bostic: actually fear these agencies or at least did they prior to the decision today. I don't think so. When I listen to the [00:16:01] Speaker 6: companies and their lawyers who assure you that they're the smartest people on earth. They had a pretty good idea of how to navigate through the regulatory process. They're keen students of the identity and preferences of individual nominees. They know all of the pressure points in this city which include the Congress lobbying appropriations the pressure points that exist in the White House. They know how to apply them. That's the essence of the traditional Washington practice that goes back for decades. So my sense is that they might be concerned about the power that these agencies have. And that power can be formidable. But they ought not be concerned that there are no mechanisms to bring these agencies to account. And there are just legions of examples throughout the modern history of the U.S. that shows that that power can be used to constrain the agencies. So I would say important to respect them but not to fear that there's no way to hold them to account for their decisions. [00:17:00] Romain Bostic: All right. Bill really appreciate you joining us today. Professor Bill Kovacek there of course a former FTC chair former commissioner and really a lifetime expert there in antitrust and legal matters in Washington. Now a professor over at the George Washington University Law School. When we come back we're going to talk about the end of an era as comcast gets ready to part with its media assets. That conversation coming up after the break right here on Bloomberg. All right. It's time now for our top calls and we want to put a special focus on the media sector particularly comcast and its plans to spin off NBC Universal and sky into separate into a separate company and in its long run as a telecom media giant. Joining us right now is David Joyce senior analyst over at Seaport Research Partners. A bit of a reversal in strategy though not necessarily a surprise or was it a surprise to you David. [00:17:53] Speaker 7: Well it's a surprise in that they spent a little bit more than a year to spin off just a portion of the NBC Universal assets into Versant Media. That just was completed at the beginning of this year. So people are going to say why didn't they do all of this at once. But be that as it may I think there is logic to having two kind of pure plays one on the content side one on the distribution. I think as long as they know what their strategy is they can have a cleaner more flexible path to various types of [00:18:23] Romain Bostic: partnerships in their respective industries. When it comes to the content side though I am curious about what the value of that is [00:18:29] Speaker 7: as a standalone without the distribution attached to it. Well I think that you can really look to the average of what the cash flows are from NBC So you can also have big years like this when they have got the Super Bowl and the Olympics and political advertising and then there might be light years off those cycles. But you also have some some variability in their cash flows from Universal Studios. Mostly on the film side but somewhat on TV. So there is some volatility here but there is a library of content. There are a lot of valuable TV station assets and these are still key ways that people have big years like this when they have big years like this when they've got the Super Bowl and the Olympics and political advertising and then there might be light years off those cycles. There's a lot of consumer and fan engagement with the Bravo network and some of the properties there. So there's a lot of brands that people can really engage with that do create value on the content side. [00:19:31] Katie Greifeld: I'd love to talk a little bit about what this means for Comcast's path forward particularly when it comes to their M&A strategy because it's been reported that you know they had put in an offer for Warner Brothers Discovery last year. Some folks are seeing this as sort of a precursor to maybe them going out and pursuing other deals. I wonder where you fall on that. [00:19:50] Speaker 7: It is interesting that late in 2024 when they announced they were spitting off Bursant media that really precipitated a wave of speculation of what the industry consolidation was going to look like that turned into Warner Brothers Discovery doing its own separation process that turned into that bidding war and Comcast was involved as you noted. But now we have I think a concept of the Comcast and NBC Universal each on their own being an acquirer or a target and I say target because you do have the new variable of SpaceX having a public equity that could be used if they wanted to have some more new terrestrial grounding for the Starlink asset for example. There was news in the past week a peer of Comcast's charter communications possibly was in discussions operational discussions with Starlink but you know so I think that there's just a wide open array of directions these can head in and that's why you saw a lot of positive activity in the space today. I think Comcast could be an acquirer or more cable assets I don't think there's any reason why they shouldn't be allowed to because they're competing against companies that have full coverage of the U.S. [00:21:12] Katie Greifeld: Well I'd love to hear what you think is more likely you say they could be either either the target or the acquirer but do you lean in either direction. [00:21:21] Speaker 7: I think Comcast is going to be more of an acquirer I think there's more telecom related assets that they could be interested in that provide managed services to businesses they did a small acquisition of a company called Nytel last year so that that's one area that could go in where they still have a small share but they've been growing that well. Data centers definitely are of interest I think not necessarily from their own capital expenditures plan of building them but providing connectivity to them in case they get full contracts with the internet platform companies for example that want dedicated data centers so I think that they're more likely to be an acquirer. [00:22:07] Katie Greifeld: All right David really appreciate your time. That is David Joyce of Seaport Research Partners. Now coming up how this year's massive M&A volatility spikes and AI buildouts are shaping markets. We'll be joined by the CEO of the London stock exchange group up next. This is the close on Bloomberg. 3:30 p.m. here in New York. This is the countdown to the close. I'm Romain Boston. And I'm Katie Greifel keeping an eye on this big rebound that we're seeing in markets particularly when it comes to big tech which ties into the AI trade which we've been tracking very closely. And it's worth pointing out I mean the AI trade it isn't just an up arrow story as we've seen over the past few months here for a lot of sectors in the market that means a lot of disruption. [00:22:59] Romain Bostic: A lot of disruption. And we talk about this idea of no one really knows who's going to be disrupted. And this is kind of the same parlor game people played 30 years ago with the advent of the internet. I mean if you had picked the winners back then most likely you would have been wrong. I mean we always kind of I always use this little anecdote that you know two of the biggest companies today were probably two of the least profitable and least likely winners of the sort of tech revolution. Of course Amazon being one of them. And I feel like we're going through that once [00:23:25] Katie Greifeld: once once more this time around. It's an incredibly valid point that the winners that we have today the leaders of today might not necessarily be the leaders in five to 10 years. And the same is true on the flip side. So let's keep this conversation going with David Schwimmer. He is CEO of the London stock exchange group joining us on set in New York. David it's great to see you. Thanks for having me. So let's talk about AI. Of course you think about LSAT shares. It was a rough 2025 because people have really been trying to figure out where the next disruption could be. So talk to us a little bit about how LSAT is approaching AI [00:24:00] Speaker 8: and how you sort of future proof your business here. So AI is actually a great opportunity for LSAT and the market. Our investors have gotten to understand that better and better over the last several months in large part because there's a better understanding of the fact that the vast majority like 90 percent plus of our data is effectively proprietary. And these AI channels AI capabilities are making our data more valuable. And so we're seeing this in terms of our customers wanting to access our data. For example through these channels and being able to use more and more data through the power of AI. So we've got partnerships with all those you would expect whether that's an open AI whether that's anthropic of course Microsoft Google others. And we're seeing this as basically a new distribution channel. And our customers are seeing it as a great way to access our data and using AI. They're actually consuming more of the data than they would have been using if for example it's just a human accessing the data. An agent or model tends to consume a lot more data than a human. So sending up I think going to be a big positive for [00:25:10] Katie Greifeld: us. And the market our investors are starting to understand that better and better. And so I want to talk a little bit about how this relates to your dealings with your activist investor Elliot because you know they really have pushed you to show how AI you know sort of benefits your data business which as you point out is very sticky. And a lot of it is proprietary. They've also really focused on your share buyback program. And earlier this year you did announce a pretty sizable share buyback plan here when it comes to I believe it was three billion pounds. Elliot I think wanted five billion pounds. So do you have plans to increase that buyback or how are we [00:25:50] Speaker 8: engagements with Elliot going. So we engage with all of our shareholders. Some of our shareholders are more vocal than others. But we listen to all of them. We engage with all of them. I think the three billion buyback that we announced at I guess that was our Q. I'm not sure if that was our Q1 or our full year. Yeah. Full year results. It landed really well with the markets. And the reason we targeted that amount was because that allows us to it's a bigger buyback than we've ever done before significantly larger. And it also allows us to maintain our strategic flexibility. So as we go through this year this is a business that generates a healthy amount of cash flow. And so we can definitely fund the full buyback. And then at the end of the year we'll be squarely in the middle of our one and a half to two and a half times net debt to even dot range. And so that just gives us strategic flexibility. If there's M&A that we want to do over the course of the year. We're able to do that at the same time that we have very healthy buyback in the market. [00:26:51] Romain Bostic: Are there M&A opportunities out there that you're looking for. I mean what could you even digest at this point. So we're always evaluating [00:26:57] Speaker 8: opportunities. Over the last few years we've done I think about seven modest size what we call bolt on transactions. And they've all been very helpful in terms of adding new capabilities adding new functionality for us and enabling us to really plug those capabilities into the breadth of our offering. And we're evaluating opportunities on a regular basis. We say more say no to a lot more than we do. But I think it makes sense to always [00:27:29] Romain Bostic: evaluate what's out what's out there. I am curious. So just in terms of growing your business. And I mean let's just focus on just the organic growth itself. I would assume some of the market volatility of late aids you. I know that might be a more of a short term. But I'm also curious just about we talk here in the U.S. about this whole pipeline of IPOs coming to market. I am curious about what is sort of the health of the listing market overseas in London and Europe right now relative to what we're seeing here in the U.S. [00:27:55] Speaker 8: Is there a competitive case to be made for London right now. Sure. So we are actually seeing a healthier pipeline today than I have seen in my eight years in the role. And the team at the London Stock Exchange sees that pipeline actually being stronger than we've seen going back really before the financial crisis. So that we'll see that in the back half of this year and going into next year. And it's a bunch of companies that are based out of the U.K. It's some based out of Europe some out of the Middle East some from Asia as well. So it is a healthy and [00:28:29] Romain Bostic: attractive pipeline. So none of the I guess we'll call it political issues over there have had any potential effect on your [00:28:36] Speaker 8: business. I mean you've cycled through quite a few leaders over there. So yeah I would say that the markets certainly prefer political stability. But we've had political instability all over the world. Yeah. And I think in many ways the markets again they'd prefer stability. But people are looking companies issuers are looking for capital. They're looking for growth. And in many ways a lot of them are at the point where you know we can't wait for everything to become calm and stable. And they're looking to access the [00:29:10] Katie Greifeld: markets. Well you talk about the healthy pipeline that you see. I do want to talk about the trend that we've seen develop in a big way over the past few years which is you know companies listed elsewhere in Europe in London switching their listing altogether to New York or you know U.S. exchanges. And you know when you talk about this healthy pipeline does that imply that you know you see that trend maybe tapering off a bit. Or how do you sort of keep the companies that you already have listed with your exchange. So companies have a better [00:29:40] Speaker 8: understanding of to use your word that trend. If you look at companies over the last several years that have gone from the U.K. to listing and raising capital in the U.S. it's actually a pretty tough track record. It's about 20 companies that have come to the U.S. and raised over a hundred million in capital. And I think something like three of them might be four are still listed and trading up. And then the other 17 or so is a combination of having been de-listed or trading down an average of sort of 60 to 70 percent. So it's it's a frankly terrible track record. There are there are a couple examples where companies have come over to the U.S. and done well but they're really the exceptions. And the companies that are over in the U.K. and in Europe that look at this like they can see those results and they can recognize you know you come over to the U.S. if you don't have a reason for being in the U.S. if you're not a very large company with a great story there's a significant risk of being an orphan stock. And we also hear this from some companies over here listed in the U.S. that if they're not of a certain size they're at risk of being so-called orphan stocks. So now from that perspective there are a lot of companies that look at that and they realize we're going to be much better off on the London Stock Exchange. All right. I got to leave it there. David really appreciate you coming in. [00:31:12] Romain Bostic: And of course we should note that LSEG is a direct competitor with Bloomberg LP with several of their software and data products. Now when we come back we're going to take a look at what's going on here in the U.S. and shares of Rocket Lab trying to set up potentially a competitor to SpaceX's Starlink. That conversation coming up next as part of our stock of the hour right here on Bloomberg. Time now for our stock of the hour. Shares of Rocket Lab up about 16 percent blasting off after the company agreed to buy satellite telephone company Iridium Communications a cash and stock transaction. Rocket Lab now second to SpaceX in the number of missions by U.S. space companies. Join us right now to talk a little bit more about this is Nora Melinda Bloomberg Markets correspondent. Nora obviously this seems to be more of a play here to compete against Starlink. So talk to me a little bit about what Rocket Lab actually wants out of Iridium which is kind of like the OG kind of the satellite communications. I was kind of going back because I kind of forgot like all about it. Yeah. Because remember the phone and then it was like well the only people who use it are like you know basically sailors and like you [00:32:21] Speaker 9: know drug dealers. Not us. Yeah. Not us. Yeah. So what do they want out of this. Well OK. Rocket Lab they already have rockets. Yeah. They have satellite manufacturing. What they're looking for out of Iridium is essentially spectrum. That's what everyone's really looking for right now which is scarce spectrum is essentially like a digital highway if you think about it in terms of how people are really able to get the access to be able to communicate using satellites to cell phones here on Earth. And that's what they're looking for from Iridium that they don't already have right now as [00:32:50] Katie Greifeld: they're continuing to scale. And so you know we keep mentioning the potential SpaceX competition that that is sort of the logic behind this deal. But is rocket lab seriously a competitor to Starlink to SpaceX. [00:33:03] Speaker 9: Just give us some context here. So when we think about the scale right. SpaceX is much more massive than this company here. But when we also think about all the other players in the space it actually is doing pretty well. I mean we just talked about the stat about this being the second second to SpaceX in terms of the number of missions completed by U.S. companies. But of course it's not nearly as massive of a company as SpaceX. But you see investors on Wall Street. They're trying to figure out where the next SpaceX could be and which competitors are potentially best poised to be able to compete. And if we're able to see these two things come together between rocket lab and Iridium they are betting on the fact that they think that it could have some pretty strong competition there. But this gets to the underlying valuation on [00:33:45] Romain Bostic: SpaceX too. I mean I know I mean ostensibly it's a rocket launch company but really kind of the real value wasn't actually what they were putting up there and into space and the idea that they controlled a lot of that. And this appears to be rocket labs strategy maybe I [00:33:58] Speaker 9: guess in using Iridium. Well also this is our biggest acquisition. And so that's also something that a lot of investors are thinking about right now. And as they're thinking about how they can actually compete with SpaceX they see Iridium as essentially being a part of that puzzle. What they're really thinking about a complete picture here. I mean the CEO is saying essentially there's nothing that you can really do that you can best utilize if you don't have the spectrum. And that's what [00:34:20] Romain Bostic: Iridium has here. Yeah. So I look back. Yeah. OK. So please tell me. Yeah. So the original original reading form that was out of Motorola. OK. And Al Gore made the first call. No kidding. No way. And the company went bankrupt like a few months [00:34:34] Katie Greifeld: after that. And then it's been revived. But nevertheless. Well it was probably a fantastic phone call that he made. So it had to have been. Yeah. What a moment in time. Great reporting. That is Bloomberg TV markets correspondent normal Linda talking about this interesting deal coming from Rocket Lab. And meanwhile you take a look at the S&P 500 higher by 1.1 percent on the day. Looks like we're going to close out near the highs of the session. We have the closing bill just about 15 minutes away. We're going to take you there with Mira Pandit. She is executive director and global market strategist over at J.P. Morgan Asset Management. This is the close on Bloomberg. [00:35:18] Jerome Snyder: From an investor point of view we're sort of in an odd period where there's the great plains of opportunity. Think about like back to the 1800s of the diaspora of the United States. You had opportunities which are great open spaces but you also had unknown risks lurking in the grasslands. And those unknown risks are inflation. There are unknown costs of capital and the end point for more more productive pursuits being AI. [00:35:42] Romain Bostic: Jerome Schneider there over at PIMCO kicking us off to the close. About 50 minutes ago those great plains of opportunity. Right now it has the NASDAQ 100 and the Philadelphia Semiconductor Index near their session highs. Yeah. The S&P 500 looking to snap that five day [00:35:56] Katie Greifeld: losing streak. It did not post a positive gain at all at any point last week. But kicking off this holiday shortened week on a high note. A lot of strength coming through with big tech. It's going to be interesting to see how enduring this is. It sort of feels I mean aside from the jobs report that we get on Thursday this week like we're in a little bit of a catalyst vacuum right [00:36:17] Romain Bostic: now. Yeah. I mean we kind of have to wait what another two and a half weeks or so before we start to get their earnings start to trickle back. I don't want to wait. But if you care I mean you got you got Kevin Warsh is speaking in a couple days in Portugal. I know you're you follow big center conference there. And of course as you say we get the jobs report. And then that's it. We celebrate the 250th anniversary of our declaration of independence Katie rifle. Absolutely. So we'll see how this trade develops. [00:36:41] Katie Greifeld: I have to imagine that a lot of folks perhaps are celebrating that birthday early. It is very much [00:36:47] Romain Bostic: the dead of summer here. All right. Well let's celebrate the closing bells which are just about eight and a half minutes away. Mira Panta joins us here in studio to executive director and global market strategist at JP Morgan asset management. All right Mira I mean we're closing out the quarter on a high note more or less. I mean no matter how things shake out over the next 24 hours. Most of the major indices are sitting on pretty healthy gains. And I guess the big question is sort of what propels those gains further. When you look at the earnings picture which I would assume is sort of what got us here not just speculation does [00:37:16] Speaker 10: that hold up. It's been this constant battle this entire year between fundamentals and sentiment to some extent around geopolitics but mainly around this AI trade where fundamentals have been pretty strong all year. But we just need to keep being reminded of them every earnings season. But in between you get these belts of anxiety around job displacement wholesale industry displacement compute costs. The list goes on in terms of some of these different fears. And so right now we're waiting for that again reinvigoration from an earnings standpoint. But I think the challenge here is when you think about stocks and you think about whether it's a good buy or not. We typically look at valuations are things expensive or cheap. And then we also look at what's the earnings looking like. The earnings have been unimpeachable over the last couple of years. But there is this growing question of how sustainable is this level of earnings growth. And even if you continue to see high earnings growth but it starts to inflect just a little bit lower is that enough to spook the markets. And you see that with areas like the mag seven the hyperscalers where even where earnings have been consistent that has been an area of the trade that is very much faded. Well that's what I'm curious about is the concentration risk and not just [00:38:24] Romain Bostic: concentration risk in terms of the weightings and the indexes. But we talk about the vast majority of earnings growth coming from the AI infrastructure build out. So if you get one company or at least one major company that even intimates that somehow we're falling short of targets or we're going to pull back CapEx. Is that going to be a major market event meaning a broad market event or do you think that will be confined to that company and maybe a couple of its peers. We may have to think about the mag seven again in the [00:38:50] Speaker 10: hyperscalers is a good example here where the earnings have still been strong but aspects of those trades have fizzled and given way to other areas the AI ecosystem expect as this trade evolves there will continue to be a passing of the baton into other areas perhaps more to some of the model developers in the apps over time. But at this point the infrastructure layer is still really holding in there. Now the recognition here also in terms of earnings growth is that these are going to become much more cyclical areas of the economy as tech moves from capital light to capital intensive and all of the offshoots of that ecosystem do as well. So we have to prepare ourselves for some degree of cyclicality. The question is how long is that cycle because right now it does look like that earning cycle is reasonably long. Nonetheless to your point about concentration overlap risk it's not too early to try to balance that a little bit more in portfolios. What do you think you make a really [00:39:40] Katie Greifeld: interesting point that you know you think about potential cyclicality coming into this market. I mean the idea that you have a lot of these huge tech names shifting from being capital light to capital intensive. I mean that's a pretty big sea change when you think about how tech is you know traditionally fit into a portfolio. Absolutely. And that means when we think about how our portfolios are [00:40:02] Speaker 10: constructed we need to look underneath the hood and understand where those exposures are. So we just had the Russell rebalance on Friday. If we think about value and growth really a lot of the changes at the sector level on both ends happened just from a couple of companies that then drove big swings underneath the surface at the sector and industry level. So if you look at the top 10 percent stocks within the Russell 1000 about 35 percent of them are about 35 percent of that exposure is coming from just 10 companies. That's about 16 percent in the value and about 55 percent in growth. So you think about that overlap risk and people think I have value I have growth. There's real overlap risk here. And you're also seeing that the mag seven have actually increased in weight probably just at the wrong time as they're underperforming in value. And then you look at growth semi is about a third of growth and 70 percent of growth is tech. So really important to understand not only the overlaps but the concentrations and to think about some of the areas of the market that are still high quality high earnings. So I'd point to an area like financials for example where the earnings growth has been strong. You maybe have not seen the sentiment around financials that that strong. But most of the pullback this year has been really a multiple compression. You're still seeing good loan growth. You're seeing a consumer that is resilient underneath the surface when you look at credit card charge offs delinquencies even though areas like savings rates are not that high. And you think about all this M&A and IPO activity that has helped fuel that as well. So we think about areas like that within the U.S. and some other value oriented areas internationally to balance. [00:41:33] Katie Greifeld: Well financials I can never make heads or tails of what the stocks actually respond to because as you mentioned I mean M&A activity IPO activity that has to be great for the big banks. You think about the volatility that we're seeing in markets. I mean they must be trading a ton. And then I take a look at the year to date scorecard financials are your worst performing sector in the S&P 500. So what what do they actually respond to what actually drives financial stocks. Ultimately this year it has again been that tension between sentiment and [00:42:01] Speaker 10: fundamentals where the fundamentals have been strong but the sentiment hasn't really caught up. And you see two sides of the coin too. It's the same thing with AI where everyone changes their mind about being bull or bear about certain aspects of the trade even with financials in the beginning of the year. Well private credit is actually going to hit broader financial balance sheets and this is going to create an issue. And now the narrative is more around. Hey financials are able to take the share in the public markets from private credit as private credit goes through a little bit of a reckoning. And therefore this is a good loan growth opportunity. So the sentiment again is so sensitive to the market narrative that we really have to think long term about what those fundamentals may tell us. All right. [00:42:40] Romain Bostic: We're going to talk about this idea of what's powering the rally. We continue to see the names that have taken us here continue to take us further. A full breakdown of all of today's market action starts now. The closing bell Bloomberg's comprehensive cross [00:43:17] Speaker 1: platform coverage of the U.S. Market close starts right now. And right now we are two minutes away from the end of the trading [00:43:25] Romain Bostic: day. Romain Bostic here with Katie Greifeld taking you through to that closing bell. It's a global simulcast Carol Massa I know you know reading is fundamental but you know. Oh my gosh. Oh my God. Here we go. Starting off. A warm and fuzzy Monday. I still love you. All right. S&P 500 that even split. Even to be fair you did walk [00:43:49] Speaker 11: right. I know I did. That's called I was kind of listening but not listening. So I just heard part of that. And then. Anyway very impressive as usual. S&P 500 there. 230 names to the upside to 73 to the downside. So it's like an even split. Like it's not like everybody's all in here. Yeah. I mean all in on the quarter though. There was a lot of volatility the S&P 500 right now up exactly 14 percent. This quarter. What did you get on your S.A.T.s. I hope you can't [00:44:27] Katie Greifeld: remember. The S.A.T.s. I don't know what I did last week. You're asking me what do you know. Do we really want to talk about this. Okay. Anyway. Try not to move it on. I will say when it comes to these markets to brag though but I was a straight A [00:44:48] Speaker 12: student. So I'm sure. I mean I remain. He did. He did skip me to remain. How many grades did you skip. I skipped a couple. Yeah. Really. Yeah. And it's taken me to such great heights. And now I sit here with you. Wow. [00:45:01] Romain Bostic: I'm kidding. Now I'm kind of impressed. Have it for its finest. We get the closing bills here in New York. Actually a bit of volatility towards the end that volatility pushing stocks to the upside. Most of the major indices now finishing the day at session highs. The Dow Jones industrial average adding roughly about 300 points or six tenths of 1 percent. The S&P up about 86 points or 1.2 percent. The Nasdaq composite and the Nasdaq 100. Each going to finish higher by more than 2 percent on the day. And the Russell 2000 which had actually been oscillating between gains and losses. It's just going to barely just poke into the green up less than one point on the day. But [00:45:37] Speaker 11: green is green. Carol Masser. Can you do that again. That was kind of fun. I kind of love that. All right. Back to the S&P 500. I said it before guys. Kind of an even split Katie. A little bit more downside in terms of the names down in the S&P 500 [00:45:51] Katie Greifeld: about 274. Well it's an interesting divide when you take a look at the circle. You did have six sectors of 11 finished in the green. That is more than the five that fell. A lot of the big important ones gained. Information technology higher by 1.7 percent as a sector. Communication services higher by more than 3 percent. Consumer discretionary higher by 2.7 percent. So that's the good news side of the ledger. And then you can see those little slices of red. Not a huge weighting here when it comes to materials. But as a sector it did fall about 1.9 percent. You also had real estate energy utilities and consumer staples fall on this Monday. All right guys. Let's get to some of the [00:46:27] Speaker 11: individual gainers if I may. We have to talk a little bit about some of the cable names and take a look at Comcast. At its high it was up something like 17 percent intraday. Still finishing with a gain of about 4.5 percent here. This has Comcast plans to spin off NBC Universal and Sky into a new company holding businesses such as theme parks, film and TV studios, and the Peacock streaming service. And then Comcast holding its original cable TV broadband and wireless businesses. I mean the cable media industry is continuing to change. So you had Comcast again finishing off its highs but up 4.5 percent. And I thought it was interesting also that you had charter rallying big time up about 9.4 percent. Some saying that Comcast move could pave the way for M&A across both the connectivity and media businesses. That was a note from our BI analyst Gita Ranganathan and Ravino Douglas. So we'll see whether or not charter is in play. Wall Street Journal writing that Comcast News has investors betting on the prospect of Comcast acquiring charter after the splits completion. So just kind of watching this space overall. I want to go over to the Bloomberg Mag 7 total return index. We had five of the seven names higher in today's session. So that averaged up about 2.6 percent. Mag 7 are down about 10 percent since May 28th but up about 3.5 percent in the past two trading days alone. So we have seen investors moving back into that space except for Microsoft and Apple. We've talked about Microsoft heading into their worst month in years. And then I could do SpaceX and Tesla. I feel like I should do them. So let's bring them up both rallying in today's session. You had SpaceX up about 7 percent. You have Tesla up about 8.5 percent. Late Friday we got the news that SpaceX would join the NASDAQ 100 on July 7. That really news. We knew it was coming. And then there were a lot of tweets by Elon over the weekend. A tweet on Sunday that SpaceX Grok 4.5 AI model was perhaps better than products from Anthropic. And he also pointed out that the model was being used by SpaceX and Tesla. So another example of the deepening relationship between those two companies. And then I have to just throw in one more. There's another one? Yes. Oh, okay. What's maybe even more interesting than SpaceX and Tesla is Rocket Lab. Top in the NASDAQ 100. Up almost 16 percent. Rocket Lab agreeing to buy Iridium Communications in a cash and stock transaction. To combine launch capabilities in satellite manufacturing with Iridium's low Earth orbit network. Basically, you know, watch out, SpaceX. There's competition maybe slowly coming. All right. I know I had a lot. Over to you. [00:48:58] Speaker 13: All right. Let's start with the worst performer in the S&P 500 today, which is Super Micro Computer down 8 percent. Offices in Taiwan for the company were raided by government authorities. This, remember, it's part of this investigation into the alleged smuggling of NVIDIA chips into China using the company's servers. The investigation is part of Taiwan's crackdown on AI chip diversion, which Taipei -- with Taipei considering criminalization of exports of AI chips to China and fortifying export controls to better align with the U.S. Micro shares. Again, worst performer in the S&P 500. You can see when that news crossed just before 2:00 p.m. today. That's when it really took a turn lower, down 8 percent today. Verizon, for much of the day, in fact, was actually the worst performer in the S&P 500. But now among the worst performers today. Shares finished down by 5.2 percent. Shares fell after Bloomberg News reported that SpaceX and Charter have held executive-level talks about partnering on a consumer mobile phone offering that could directly challenge wireless providers. We got an update from Carol on that. Separately, Verizon also announced earlier on Monday that it expected to record a loss of about $700 million to $800 million in the second quarter. And finally, Microsoft. We just had a great conversation with Brody Ford at Bloomberg News about Microsoft's woes this month. Down 1.2 percent today, Romaine. Look at that chart. But heading for their worst month going back to 2000. The stock down about 18 and change, 18 percent and change just in June. $613 billion in a market value. It's valued right now at the cheapest in a decade. [00:50:31] Romain Bostic: Yeah, a lot of questions here really about just kind of the software space overall and kind of whether Microsoft ends up being kind of the endemic representative of that. We take a quick look at the old skies. The rally that we had seen at least on the shorter and mid part of the curve taking a bit of a pause today yields up on your two-year, your five-year and your 10-year. No real change, though, on the longer end of the curve. [00:50:54] Speaker 11: All right. So kind of wild, guys, that here we are getting ready to wrap up the first half of the year. You look at something like small caps. I mean, they've really charged ahead in this most recent quarter. But we'll see what the jobs report holds, whether or not it shows wage pressures and whether or not there's some inflationary pressures as a result and what that might mean for the next move by the Fed. [00:51:13] Speaker 13: I think, too, we can't forget about geopolitics and what's happening in the Strait of Hormuz. We have a lot of questions about, OK, what does peace actually look like and durable, sustained peace. And the president did make some comments from the Oval Office just a little while ago on oil prices and sort of on the latest when it comes to negotiations. But I think that's also a risk investors are feeling moving into the second half of the year. [00:51:34] Katie Greifeld: Especially, I mean, when you think about oil, I mean, in some of the ways it's been moving, it has felt kind of unintuitive. You think about these big declines that we've seen, even though on Friday, you think about some of the headlines that we got. It was pretty tense. You saw a plunge in oil. Now you're seeing some of that come back. But certainly that has ripple effects into every asset class and acutely into the bond market. So it feels like we've lived a lot of lives this past quarter, and we'll see what the catalysts hold for the next one, though. It seems like, you know, we're in a little bit of a lull here, Romain. [00:52:06] Romain Bostic: I am interested in hearing what Kevin Warsh has to say a little bit later this week. He's going to be speaking over at that central conference in Portugal and kind of the contrast between what we see on some of these headline inflation figures and the idea that there's a lot of inflation out there that doesn't necessarily show up in those numbers. And exactly how he views those numbers and whether that's something that the Fed should be taking into account. [00:52:28] Speaker 11: Right. He doesn't love necessarily, you know, the metrics that are used right now. All right, guys, that is a wrap. Our cross-platform radio TV, YouTube, Bloomberg. We do call it the closing bell. Katie and Romain continuing on the close on Bloomberg TV. Tim and I back here on Bloomberg Businessweek Daily on Bloomberg Radio. We will see you again. Same time, same place tomorrow. [00:52:47] Romain Bostic: And when we come back, we keep our focus on the Fed, a conversation with former Fed Governor Betsy Duke. We're going to talk about that Supreme Court ruling that, at least for now, seems to preserve the Fed's independence. That's coming up next here on the close right here on Bloomberg. [00:53:02] Speaker 1: The countdown is on. Everything you need to get the edge at the end of the market day. This is the close. [00:53:11] Katie Greifeld: Welcome back to the close. I'm Katie Greifeld. [00:53:16] Romain Bostic: And I'm Romain Bostic here on this Monday afternoon, a rally for most of the major stocks here in the U.S. Led by what else tech? The S&P 500 adding about a percent on the day. But once again, it was a lot of the chip stocks, a lot of the AI infrastructure stocks that really led the charge. You had some sentiment boosted today by what is still a relatively decent macroeconomic picture. The 9% drop that we saw in crude features last week, giving way to about a 1% rise as people still trying to figure out what's going on in Iran. And an interesting story out of Japan, the Japanese yen weakening to its lowest levels versus the dollar in 40 years. [00:53:51] Katie Greifeld: Yeah, just stunning moves in the currency market. But let's talk about some of the big moves on the individual equity side, because there were a lot of them. I wanted to highlight Alphabet. This was your biggest points contributor to the S&P 500 today. Shares rising nearly 5%. Comcast also having a huge day, which we've discussed. Coming out with the news that it's going to spin off NBC, Universal and Sky into a separate company. Shareholders seem to like that. Shares rising about 4.4%. And SpaceX, I wanted to highlight. Of course, we saw that Russell rebalance on Friday. So SpaceX now trading in some of the Russell indexes. We know that that Nasdaq 100 inclusion coming next week. But let's get to our top story this hour. And that is the Supreme Court reshaping the power of the presidency. The court ruling that Fed Governor Lisa Cook can stay in her job for now. But in a separate ruling, really expanding President Donald Trump power to fire top officials. Now, this decision puts the White House firmly in control of potentially dozens of agencies that have long operated independently, Romain. [00:54:59] Romain Bostic: So clearly a sea change here. Absolutely. Let's get some insights out of Betsy Duke. She's a former Fed governor, also former chair over at Wells Fargo. And Betsy, we've talked on the program with you before about Fed independence and obviously about the significance of this case. What you just want to point out, I mean, they didn't actually necessarily rule specifically on whether the Fed should be independent. They basically said that, well, you know, they really didn't give Lisa Cook a chance to actually make her case. But it was actually what John Roberts wrote. And I just want to read this to you because he basically made it clear in his majority opinion that we see no reason to leave the public in limbo or to sow doubt as to the status of our nation's most important financial institutions. So basically saying that in his view, the Fed is independent and outside the purview of presidential powers to hire and fire at will. [00:55:46] Speaker 14: Point out, they really made the case that it's important for the Fed to be independent. And by issuing it at the same time as the other opinion, made it clear that they view the Fed differently than others. The other thing about Roberts' opinion is that he reached all the way back to the first attempt to form a central bank and the second attempt to form a central bank in the United States. The first one was actually before the Constitution and used those as precedent to show that the founding fathers believed in the importance of an independent central bank. [00:56:22] Romain Bostic: I am curious, how do you feel, though? And we should point out, but Kavanaugh seemed to also assert in his writings as well about the need to preserve Fed independence. There are a lot of people, though, they look at some of the open questions about addressing the Cook case directly, but also the idea of the separate case involving the president's ability to fire members of other federal agencies like the FTC, FCC, etc., and whether that actually opens the door for a revisiting of this issue with the Fed. Do you feel right now that the issue of Fed independence, at least as far as we can ascertain, is basically a done deal? [00:57:01] Speaker 14: Well, I think it was very clear from what came out today. And if you looked even at the dissent, so it was a 5-4 opinion, you could say that was close. But if you looked at the dissents, there was only one that disagreed with the actual conclusion. Two of them thought it should not have been brought up, as I understand, it should not have been brought up on the emergency docket. And one thought that it was decided more broadly than it needed to be. But I would say, you know, in just skimming them, it looks to me like at least eight of the justices would stand by Fed independence with the provision that a governor, a member of the Board of Governors, could be fired for cause. [00:57:39] Katie Greifeld: And I do want to read a little bit of Justice Kavanaugh's opinion, because Romain referenced it. But I think it's worth reading out loud. He wrote that even temporary uncertainty about the status of the Federal Reserve could spark political upheaval, including confusion about whether the president could immediately remove multiple governors as at will, as well as turmoil in the U.S. and world economy. So there is the lingering concern out there that, you know, this matter isn't completely put to bed, that, you know, how sustainable this independence will actually be, Betsy. But I'm curious, you know, if these questions persist, if these question marks do linger around the Fed and the independence of the central bank, I mean, how would you expect that to be expressed when you think about, you know, the economy and you think about these broader markets? [00:58:27] Speaker 14: So I think markets have already voted on how they feel about any sort of uncertainty about what's going to happen at the Federal Reserve Board of Governors and uncertainty about the independence of the central bank. The performance of the economy and the performance of the bank is dependent on the independence of the bank. And I think the Supreme Court went as far as they possibly could have to establish that. So I feel real good from the standpoint of the institution. Unfortunately, what they didn't do is create barriers to, you might not be able to fire a member of the Board of Governors, but you can certainly harass them and you can certainly drag them through the courts, which is not a cheap situation for an individual sitting governor. So that's the piece that I still worry about. [00:59:24] Katie Greifeld: Let's talk a little bit about Jerome Powell, obviously. None of this applies to him. He has his own investigation going on right now, and he's on the board right now. We did hear from new Fed chair Kevin Warsh saying last week or at the most recent press conference that he expects a report from the IG by the end of summer. I assume, Betsy, that there's nothing we can extrapolate from the Supreme Court into Jerome Powell's case. But assuming things fall in his favor, I mean, [00:59:54] Speaker 14: what do you think his future at the board is? So he has said and I would take him at his word that he plans to leave as soon as he's he's determined that this case is well and truly ended. And when the Department of Justice suspended the investigation, they laid the next step on the Federal Reserve's inspector general at the press conference. Kevin Warsh did say that he expected that report by the end of summer. So that report will [01:00:23] Katie Greifeld: come out and then whether or not Department of Justice finally comes out and says this this investigation is over. If they come out and say very clearly this investigation is over, I think you'll see Jay Powell move on with his life. All right. Well, Betsy, really great to get some time with you. That is Betsy Duke. She is former Fed governor and former chair of Wells Fargo. Now coming up, AI driving the labor market narrative in 2026, at least according to Goldman Sachs economist Joseph Briggs. He joins us next on his latest report on on AI and on the workplace. This is the close on Bloomberg. Well, this shortened trading week will end with a look at the labor market when we get June's jobs report on Thursday. Our next guest says that AI is the big 2026 labor story with his latest report laying out various scenarios for AI driven job losses. Joining us live in studio. I'm pleased to say is Joseph Briggs. He is an economist over at Goldman Sachs. Joseph, great to have you in person with us. I want to start with the big scary number in the top line of this report. You argue that the AI transition could [01:01:30] Speaker 15: displace more than nine percent of workers. Talk us through how you ended up at nine percent. What sort of timeline that we're talking about here. Yes. So that estimate the way that we came up with it was we looked at historically when you say see technology drive productivity gains. What is the impact on the labor market and you know estimating basically this regression you're able to come up the parameter and then apply that to our baseline forecast that AI will deliver 15 percent gross productivity upside. following full adoption. And so having done all that math we just come up with the estimate that you know around nine percent of people will be displaced during the transition. Now I'd be amiss not to say and not to emphasize that that nine percent number doesn't mean that everyone will lose their job at once. I expect that it's going to be spread out over a long period of time. And as a result the impact of the unemployment rate will be much smaller than that headline would suggest. Interesting. So spread out in terms of the time frame here. talk to us too about the spread when it comes to sectors when it comes to industries. Are you seeing any concentration there. Is there that similar dispersion. Definitely. So if we look at the impact that AI is having on the labor market today. You can see it in a few specific sectors tech management consulting graphic design anything where we know that there's already the tools that are built out. And so in all these sectors hiring over the last couple of years has underperformed its longer on trend by around five percent. So the effects are definitely visible. At the same time we still are very early on in the transition. We haven't seen most other parts of the economy start to use AI tools to drive efficiency gains yet. I think that will happen over the next couple of years. But it's still pretty early on and fairly concentrated. [01:03:12] Romain Bostic: that I mentioned. I am curious about the nine percent number though because I mean you guys had a report out I don't know maybe in March. And wasn't that number is kind of lower like around six percent or so. So you're telling me that based on your calculations just so effectively over the last you know three and a half months. Was that an acceleration in the trend or was that just a better calculation on your end. [01:03:35] Speaker 15: Mostly a better calculation. There's a lot of different ways that you can look at the numbers. And you know history only provides a loose guide for what we should be expecting to happen going forward. And so the first number that we had that was six percent you're right a little bit lower. That was looking at the unemployment rate and seeing how much the unemployment rate fall rose following a technology driven productivity shock. The most recent number was looking at the impact that technology productivity shocks have on gross job loss. And so just looking at a little bit of a different macroeconomic statistic. And when we did that exercise we came up with something a [01:04:09] Romain Bostic: bit bigger. I am curious about this idea of the potential for jobs to be created and where the balance is obviously you have a data center built out. I presume that requires a lot of jobs as well assuming there's going to be some sort of maintenance going forward on those centers as well as some of the other AI products out there. So where's the balance between the potential jobs that are [01:04:29] Speaker 15: lost and where new jobs would actually be created. You hit the nail on the head because I think that for us to see the relatively positive labor market outcome that we're expecting. We do need to see a lot of jobs be created. And the good news is that technology provides a long historical record of being the main driver of job growth in the U.S. You know a couple stats around that 85 percent of job growth over the last 85 years has been driven by the creative destruction due to technology that leads to the formation of new types of occupations. You know a stat that most people underappreciate is that even though net job numbers are typically around 1 million a year. If we look at the number of gross jobs that the U.S. economy creates in any given year it's around 25 to 35 million. And so there's always a lot of job creation happening in the background. And I think that AI will accelerate that. Well I want to talk about the [01:05:18] Katie Greifeld: sequencing a little bit because you think about that creative destruction and when we're seeing these job losses occur some of that has already started. Have we already seen that that job creation begin to start or do you see the destruction first and then the [01:05:32] Speaker 15: creation. It's natural to expect that there might be a little bit more destruction up front because it will just take some time for for for new jobs to emerge. At the same time I'd emphasize that already today we're seeing 200 to 250,000 jobs emerge over the last couple of years on the back of data center construction. And so on net so far I would say that the job creation of the job [01:05:55] Romain Bostic: destruction happened basically in lockstep. When you look at sort of what we've heard right now by a lot of the companies out there who have either talked about either productivity enhancements either the realized or the implied of potential going forward. I know it's hard to quantify but do you get the sense here that what's being promised is going to match up with the realized reality. [01:06:17] Speaker 15: So there's two ways that that you can look at it. You know one if we look at the overall macro statistics there's really not much happening yet. That doesn't mean that we're not going to see the big productivity gains in the next five to ten years emerge. But it's still just a little bit too soon to see impacts on top line numbers. That being said if we look down at specific use cases where a company tries to develop a tool to solve a specific problem. Likewise if we look at academic studies in these scenarios you're seeing uplifts of productivity to the tune of 20 to 30 percent. And so you know there are big big gains being realized or just in very specific applications today. And just before we let you go you know you mentioned that you think about the overall [01:07:00] Katie Greifeld: impact to the unemployment rate. Maybe it won't be as dramatic the influence of AI as some are expecting. But give us your your baseline here because there will be some impact. Yeah there definitely will be. And under our baseline forecast where over the full transition nine percent of workers are displaced. If we assume that takes place over 10 years and that people are able to find a job within one year after they're affected by AI. That's kind of in line with the historical patterns that we've seen. That would mean that the right [01:07:18] Speaker 15: in the rise in the unemployment rate in a given year would be half a point to a point. And so definitely notable. But a macroeconomic shock that I think is manageable. All right. So really great to have you here. And some great research by Joseph Briggs and economists over at Goldman Sachs helping to lead their global investment research. When we come back we're going to talk a little bit about well I guess you could call it the newest kid on the block. [01:07:47] Romain Bostic: Honeywell Aerospace officially spun off from its parent company Honeywell International. We're going to talk to the CEO Jim Currier when we come back. After the break on the first first day of trading after that spin off that conversation coming up next right here on the close right here on blooper. It's the first day of trading for Honeywell Aerospace. It's in the books. The shares of the defense and aerospace firm are moving today following the completion of its the first of its spin off from Honeywell International. Joining us right now is the CEO of Honeywell Aerospace Jim Currier. Jim great to have you here on the program. Thank you so much for me. It's great to be here. Obviously this is kind of a long time coming given Honeywell kind of separating into three companies. You were kind of the last leg of that. I am curious as to what is the message that you had for employees here on day one. [01:08:38] Speaker 16: I think first it's important to understand a little bit about Honeywell Aerospace and then what does that mean in a post separated state not being part of Honeywell International. So we are embedded within the ecosystem of the entire aerospace and defense industry with the products and services and the technology that we provide which are mission critical systems on every major commercial and defense platform. We have a 90 billion of backlog you know 19 billion of demand that we're currently seeing right now to fulfill for the year and the like. So it's just a great opportunity with all the demand that we're seeing in the business to be able to be in this state of separation. Now for us separating allows us to be just hyper focused on the strategy of Honeywell Aerospace as a pure play A&D company as opposed to being part of the conglomerate where you're looking at multiple businesses multiple strategies. And when you look about deploying capital in that regard you kind of have to give a little bit to each one of the businesses. But now we're just so focused on what we need to do for the [01:09:36] Romain Bostic: business. This is a big unlock for us. Let's talk about the D in that a and D which is defense. And obviously there's been a big focus on that both here and abroad. The idea that we're seeing defense budgets not only rise but also take on a different complexion. There's an importance that a lot of that a lot of governments see in that. Where does Honeywell fit into that. Where is your growth on the defense side. So first off it's [01:09:58] Speaker 16: important to understand 40 percent of our businesses defense 60 percent of it is commercial. And of that defense business 30 percent of it is international defense. So where we see growth is happening in our international defense business as well as our domestic defense business. And so as you think about sustainment needs as you think about as we've talked about this at length missiles and munitions program. You know restockpiling the arsenal and the magazines accordingly. Our products and services and technologies are on every single fixed wing helo missile system in the U.S. Arsenal. So as those budgets are increasing it creates tremendous growth opportunity for us. Well when we think about you know why defense [01:10:39] Katie Greifeld: budgets are going up you think about all the turmoil in the world right now. I want to talk about how that impacts potentially your aerospace business. Bloomberg intelligence has a report out talking about you know reduced air traffic due to the war in Iran. You think about jet fuel prices going higher. More than doubling since February through the end of March. They could threaten growth when it comes to commercial aerospace units. And I wonder you know whether you're seeing that how you're navigating through those cross currents. We're not seeing any decline in the air travel [01:11:08] Speaker 16: business that affects our portfolio. But I think it's important to understand when we think of commercial aerospace as part of Honeywell Aerospace. There's the commercial air transport section which is airlines and airline traffic. OEM production rates. But as well as business aviation where we have a very unique positioning with our products and technologies in business aviation. So half of our OEM business is actually business aviation. The other half is commercial air transport or commercial aftermarket business which is what you're referring to in terms of airlines and flight travel and the like and flight hours. 60 percent of that is commercial or transport. 40 percent of it is business aviation. It's truly an underappreciated aspect of Honeywell Aerospace as to how much exposure we actually have in business aviation. And what we've seen as a result of the conflicts and the rising fuel prices is actually an uptick in flight hour traffic for business aviation. Well Jim you mentioned that [01:12:03] Katie Greifeld: you know being a standalone business completing this spinoff you can really just focus on your strategy not necessarily being part of a conglomerate here. You also see a bunch of sell side notes coming out initiating coverage of you as a standalone and Jeffries in particular points out that now you have a chance to run the M&A playbook. You've shut the books on the first day of trading. Where would you say M&A falls on your priority list. Is that something that you're evaluating. So as we discussed at our investor day in early [01:12:33] Speaker 16: June there's four pillars upon our capital allocation strategy. First and foremost is investing capital into our factories and in the supply base to unlock additional capacity within the industrial supply base because we have so much demand for all of our products in commercial and defense. So that number one priority for us the more we can unlock the more we can deliver on the 19 billion dollars of backlog that we have which is up 20 percent year on year indicative of how much demand there is for our products and technologies. So that first and foremost is our top priority unlocking the supply base increasing capacity and deliver for our customers and for shareholders in that regard. Specifically around M&A that's number two on our priority list. And if you think about what we did when we when we acquired two companies back in September of 2024 case in Civitan Avi they fit into a very specific framework. First and foremost technology differentiation. It's what Honeywell Aerospace has been founded upon is being innovators and differentiating with our technology. So you must have differentiated technology and servicing a demand that's high growth in excess of the growth that we're seeing in our business today which will outgrow with the market growth is right now for Honeywell Aerospace. If you have those two elements then we look at who are you serving today. Are they the same customers. Are there synergies between what the target company may be doing and what Honeywell Aerospace is doing. And then the fourth piece of that rubric is really around can we scale you greater than how you can scale yourself. And if you think about those two acquisitions that we did in September of 24. They hit all four parts of that rubric and particularly on the [01:14:13] Romain Bostic: scaling front. I am curious to when I'm going back about about a year when the CEO of Honeywell International was talking about the first spin off and then now of what's going on with aerospace kind of highlighted this idea of electrification automation safety kind of these ideas of pillars of correct. And I am curious as to where that fits in. And is there sort of one particular area of that where you see more opportunity. I mean how does Honeywell Aerospace capitalize on electrification for example. So we we feel that those are truly the four [01:14:47] Speaker 16: technological trends that are happening in the aerospace industry electrification autonomy. Okay. We think about automation is more autonomy. Autonomy makes safety efficiency productivity and the like in our systems the way we design our systems are such as we're always thinking about because it's a long cycle business. Where's the technology need to be five years from now and 10 years from now for the next great competitions that may occur with new aircraft platforms. And there is a shift within the aerospace industry to move more towards electrification when it comes to the aircraft to drive efficiency and productivity of the airframes. And that's where we are investing substantially on current technologies and future technologies to become a little bit more electrified in terms of the products we have. Whether that's electromechanical actuation electrical pressurization systems electrical cooling systems. And you think that's within reach. That's not like you know 20 years down the road. No absolutely within reach. I mean today we are designing technologies specifically around electrification where we've actually been selected on platforms in business aviation and defense [01:15:52] Katie Greifeld: where that core technology will be developed in those end markets and then we bring them over into the commercial market. Well Jim congratulations on completing the spinoff. Great to get some time with you on a busy day. That is Jim courier. He is the CEO of Honeywell Aerospace. Let's take a quick look at how markets close out on the day on this Monday. The S&P 500 finishing the day 1.2 percent higher. It can really thank a lot of those chip makers for the strength of those gains. The Philadelphia the Philadelphia semiconductor index rebounding in a big way from the crater of last week higher by about 3.8 percent. You saw Brent crude rise a little bit here. And dollar yen. Keep an eye on this cross. The yen sliding to its weakest level against the dollar since 1986. [01:16:34] Romain Bostic: This is the close on Bloomberg. A fresh read on the consumer out tomorrow and that's with the results from Nike. The earnings comment CEO Elliot Hill cements a leadership reset appointing a new CFO David Denton. Stacey Woodlitz joins us right now. President and founder over at SW Retail Advisors. [01:16:56] Speaker ?: We'll talk a little bit more about this. And first Stacey I do want to start off just with the expectations for the actual numbers. There's been let's just say a lot of ink spilled over the past few months as [01:16:56] Romain Bostic: exactly what progress Elliot Hill has been making with regards to getting sales up. Reigniting that China business and more importantly boosting profitability. What are your expectations heading into tomorrow. Well we're not going in the right direction right because last quarter revenues were flattish this quarter. They're going to be down 2 to 4 percent. They reaffirmed that when they [01:17:18] Speaker 17: talked about the new CFO. So we've turned negative here. And I think the biggest concern for me is obviously we know the China market is getting worse. And projected to be down heavy double digits. Europe was quite challenging due to the Middle East war and lack of tourism. But to me the biggest concern is North America. Their direct channel was nicely negative last quarter. So you know if we've cleaned up the channel we should be further along in the process right now. Don't forget Elliot Hill has been with this company now close to two years. So we should be further into this [01:18:02] Romain Bostic: turnaround. Well that's what I'm curious about. I know they've been trying to work down inventory. One thing that I've said and this is just anecdotal on my part. I know that there was all this talk about trying to hold the line a little bit more on price. The idea of not offering as many discounts. I can just tell you anecdotally as somebody who gets a lot of emails being a Nike customer. I've seen a lot more offers for discounts. Are you finding this to be something material that investors should be paying [01:18:26] Speaker 17: attention to. I am. And that's a great observation. You're you're a very good consumer. They're looking out for the bargains. And you know if you look at Nike they they clean up the wholesale channel that that took some time. And we face some really easy comparisons last quarter. So their wholesale channel was up double digits. Again it's the direct channel that's really been challenging. And we collect proprietary data. We look at the percentage of items on discount year over year by category. And in the past few data cycles that we've published those the percent of items on discount have been up in some cases significantly year over year for a few of the weeks. So you know what you're seeing in real time in the marketplace is what I'm seeing gathering the data. So that would suggest you know we're in for some gross margin pressure in the future. And I would also point out last quarter they did mention that some of their sell through was disappointing. So if you're selling into the channel and it's not selling as quickly out of the channel as you would like. Chances are gross margin flags are ahead. Interesting. So [01:19:29] Katie Greifeld: discounts going up gross margins perhaps coming under pressure here. Stacey I do want to talk a little bit about the world cup. Of course we are in the thick of it now counting down to that final which I believe is on July 19th. I mean does that provide any sort of halo for Nike even if they aren't you know the proper sponsor necessarily. It should. I think it [01:19:52] Speaker 17: brings attention to sport and to excitement. And you know does it certainly Nike's got nine out of the 12 countries still in the game here. So good luck to them. But I think I would play it in a different way. I would look at Dick's sporting goods that is really it's creating excitement in the sport and you can go in and buy gear or clothing and it's value oriented and they've got every single brand under their umbrella. They also acquired footlocker which is very much in turnaround mode. There's been an inflection point there. They've really cleaned up footlocker. Footlocker was very promotional and now they're largely full price. Again our data year over year shows lower percentage of items on discount at footlocker. Very different than what we're seeing in Nike. So that's the way I would play the [01:20:37] Katie Greifeld: World Cup. All right. So maybe it's not Nike. It's some of their peers that stand to see a bigger bump here. I do also want to get your thoughts on tariff free funds. Those one time tariff free funds. You know taking a look at some of the preview pieces coming out. Certainly a focus on that. How much of a catalyst would this be for Nike at this juncture in your view. I don't think it's a catalyst. [01:21:01] Speaker 17: It's kind of like a cost cutting story. It's what we're really looking at here is the top line turn around. And that's what has to happen to get this stock moving and not push it down further. It's great that we're getting these refunds because for some brands that are a bit smaller or pulling back on marketing this gives them a little extra room to push harder. But for a massive brand like this is this the inflection point to to get them more eyeballs. It's just not here. [01:21:32] Romain Bostic: I do want to just kind of wrap this up with a real focus on the leadership again. And I know we're coming up. We talk about the two years that Elliot Hill has been there. He got rid of a lot of executives brought in a lot of his own folks. The one big holdover was the CFO. We now learned last week Matthew Friend is out starting mid-August. Dave Denton from Pfizer is coming in. How much does the CFO story, if at all, potentially change the outlook for this company? Was there a financial management issue here that needed to be addressed? [01:21:59] Speaker 17: I don't think so. I think, again, this is a product story. So, you know, when when you're losing market share to Adidas and Hoka and on running and shelf space allocation is changing when you've made decisions to pull out of wholesale, then reenter wholesale. There is a lot of moving parts here. And those are product. Those are product changes and their allocation changes between wholesale and DTC. Those are operational decisions. So, to me, great CFO, fresh look. You always need a solid CFO. But with product and brand stories, that's the missing piece of the puzzle here. Very similar to [01:22:41] Katie Greifeld: Lululemon. All right. Well, 24 hours to go until we get those Nike results. Great to preview them with you, Stacey. Good to see you. That is Stacey Whitlett. She is president and founder over at SW Retail Advisors. Well, speaking of sports, this month's high profile sporting events also put a spotlight on the premium experiences fueling much of the associated spending. Our next guest hosted the New York Knicks for their post win after party at the ultra exclusive members only fly fish club in downtown Manhattan. Joining us live in studio is David Robinson. He's the founder and CEO of VCR group. David, great to see you. Excited to be here. Thanks for having me. So I feel like I can't get too worked up over the World Cup because I'm still hung over from the NBA finals and what we saw the Knicks deliver. They came to the fly fish club to celebrate that win. Talk us through what you're talking about. Talk us through what that meant for you as you know, the owner here. What sort of return do you see on a big event like that? You think about some of the press coverage that it's generated. It was a tremendous moment. Obviously, New York has been [01:23:40] Speaker 18: mourning this for 53 years. We spent a lot of time with the Knicks. A lot of the Knicks are our members, our friends. We've been building that relationship over many years. This wasn't like a switch of a light. This was something that we've been building the trust. And this was such an important moment for them with their friends and family. So when they decided that they wanted to celebrate the following day, you know, we're on phones with them and they just felt very comfortable to have that hosted with us at Fly Fish Club. Obviously, everybody was excited. Sports create emotion. Fly Fish Club is a place that we could bring that emotion, be with people we care about and celebrate together. We obviously saw a business spikes from it every time the Knicks had a playoff game. We saw a business double every single day. Our wait list for memberships grew 2x from 500 to 1,000. So it's definitely been a tremendous influence over business in New York. But we're just very stoked to celebrate them in a safe and trusted place. Well, that's what I was wondering, you know, and it's interesting to hear your wait list doubling because you think about a members only club. Yes, you're generating all of this press. But I mean, the appeal is that you're exclusive. Yeah, there's definitely an exclusivity component to members clubs. I think for us, it's actually more about inclusivity and more about curation around a certain set of people that enjoy the right things and that care about the same things or creating a community. It's a lifestyle. They like elevated food and beverage. They want to be in a safe place. They want to be in a place that we know who they are, that we know what their preferences are. So it's a little bit less for us about exclusivity and more about curation and really showing up for them and giving them the experiences that they're looking for. But what's the big difference between running a members club like this and running just a regular, you know, open restaurant like you did? Yeah, so we have a collection of restaurants. We have about 10 restaurants. We have a pretty robust pipeline. And we love our restaurants. But sometimes restaurants could feel transactional. Yeah. Margins are thin. We all know that the industry is tough. Members clubs give us another level to flex. First off, we can have multiple experiences under one roof, which allows us to create more moments, more experiences. It's more efficient for a guest. You could go to one place, get a lot of different dynamics and enjoyment in the course of a night. And there's just a different business aspect as an operator for us. Obviously, there's a member's due component. Those dues allow us to really reinvest in the guest experience, really allow us to invest in programming [01:26:10] Romain Bostic: to give more to our members. So I think dining could feel a little transactional. We don't really try to maximize transactions. We're trying to maximize relationships and experience. I understand how the dues certainly helps you. Now, the members, I mean, they can sort of trade their, what do you call it, the seats or whatever for a night or two or something like that. So there was a moment that fly fish was birthed through birth through blockchain technology. We remember that. Yeah. That's right. You were the NFT club. You know, which I know is a dirty word now. [01:26:38] Speaker 18: Whether it's a dirty word or not, we run parallel with two forms of memberships. People were able to buy memberships originally through the blockchain. Now we have a traditional membership, which seems more comfortable for people to just go online, submit their application, put down their credit card. So we're agnostic. What's really important to us is creating that experience for our members every single day. Is the memberships relatively sticky? Like when people sign up, they basically say. Yeah. Our retention is very strong. People that are joining fly fish club. I think we're seeing some of the other clubs. There might be a little bit of a fad component. I think a lot of them will stay. Some of them will go. But for us, we're really just showing up on the experience. We're very culinary driven. We're hospitality led. So I think people are feeling that fly fish club is a place that they're going to keep in their in their portfolio. Are you a member of this club? I'm not. Oh, all right. You should be. You should be. I don't know. That wait list sounds pretty intimidating. So we look for the right people that really want to participate and show up in a certain way to have certain intentions and come there with open minds and to enjoy all the enjoy the programming and the events that we're hosting. All right. Well, David, obviously, you got a big bump with the Knicks. Maybe who knows? Maybe all the get the World Cup champion. [01:27:54] Romain Bostic: I mean, it is being played right here in, as you say, New Jersey, New York. Yeah, the New Jersey, New York Stadium is what I want to call it. David, great to have you. Appreciate you having me. David, founder and CEO over at the VCR Group, which of course runs fly fish here in New York City. We'll be back in a moment setting you up for what to watch over the next 24 hours. This is Bloomberg. Let's set you up for what to watch over the next 24 hours. We're going to start at roughly 9 a.m. We get the update on the house price index here in the U.S. We'll see if that actually has any sort of effect on the home builders. [01:28:29] Katie Greifeld: And then at 10 a.m., an update on the conference board, consumer confidence figures, as well as jolts, a nice little appetizer for that Thursday jobs report. [01:28:37] Romain Bostic: Aftermarket, two earnings of interest, Nike, which we were just talking about here, expectations pretty low. I mean, this is a stock that's down, what, 20 plus percent since its last earnings report. And no one really expecting a sea change. But they do have a big leadership change up ahead. We'll see what happens. Yeah. [01:28:51] Katie Greifeld: Certainly some question marks there over that Elliott Hill engineered turnaround. Also, Constellation Brands, the beer company. Beer. [01:28:59] Romain Bostic: Modelo, Corona. They have wine. They do. Casanoble. You are well acquainted with the portfolio. We'll be back tomorrow right here on the close.