Tech Stocks Rebound as Investors Reassess the AI Trade

Author: Bloomberg Television · Watch on YouTube

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Original language: English

Original video: Tech Stocks Rebound as Investors Reassess the AI Trade · Channel: Bloomberg Television · 1:29:47 · Watch on YouTube

Topics: AI agents, AI infrastructure and hardware, Markets and economy

Summary

U.S. stocks rebounded after a difficult week, led by technology and Amazon, as investors weighed whether AI-related investment can deliver returns before debt, power, and infrastructure costs become overwhelming. Guests discussed credit-market capacity for AI data-center financing, chip startup Tenstorrent’s funding and product plans, and proposed nuclear power for data centers. The program also examined consumer spending, upcoming earnings, and long-term investment themes including AI-driven productivity, diversification, tokenization, and Treasury clearing. The closing segments previewed earnings and economic data due over the following day.

Key points

Major U.S. indexes rose, with technology stocks leading; Amazon gained nearly 5% after Morgan Stanley named it a top pick.
Goldman Sachs said AI-related borrowing can remain financeable, but public markets have limits and access to capital may depend on returns, deal timing, and financing structure.
Tenstorrent raised $1.5 billion at a reported valuation of $6.5 billion; CEO Jim Keller said the company is shipping its Galaxy service and AI and CPU IP.
Amazon, AEP, and X-energy are evaluating a proposed 960-megawatt nuclear plant in Indiana using 12 small reactors; the project remains subject to feasibility, permitting, and other development work.
Ankur Crawford said AI adoption fundamentals appear stronger than the recent stock performance suggests, while pointing to constraints including power, skilled labor, and supply-chain capacity.
Meredith Whitney warned that consumer spending is increasingly strained, with households making trade-offs as higher fuel costs weigh on budgets.
J.P. Morgan Asset Management discussed AI-related productivity growth, elevated market volatility, portfolio diversification, and a projected 7% annual return for 60/40 portfolios over the next 10 to 15 years.
SIFMA’s Ken Bentsen discussed tokenization rules and market structure, the planned Treasury clearing transition, extended trading hours, and AI-related risks to financial-market resilience.
The program previewed earnings from companies including General Motors, General Electric, 3M, Northrop Grumman, United Airlines, Capital One, and Netflix, alongside U.S. housing data.

Chapters

Start	Chapter	Summary
00:01	Stocks attempt a rebound as investors reassess AI	The hosts describe a technology-led market bounce and frame the key question as whether AI returns can arrive before investment costs mount.
02:38	Credit markets and financing the AI buildout	A Goldman Sachs guest discusses AI-related credit spreads, capital costs, financing methods, and the capacity of public and private markets to fund data centers.
10:48	Tenstorrent’s funding and chip strategy	Jim Keller discusses Tenstorrent’s $1.5 billion funding round, its products, supply-chain spending, open-source approach, and growth plans.
17:24	Analyst calls and earnings outlook	The program reviews calls on Amazon, CoreWeave, and Whirlpool before discussing expectations for defense, airline, and aerospace earnings.
22:23	AI infrastructure and proposed nuclear power	The hosts report a potential Anthropic cloud-computing deal and interview X-energy’s CEO about a proposed nuclear project with Amazon and AEP.
32:14	Diesel supply concerns and the market close	Energy Secretary Chris Wright discusses European diesel stockpiles and possible measures, as the hosts connect energy costs to inflation and AI infrastructure.
35:31	Consumer spending and economic strain	Meredith Whitney assesses the consumer outlook, household trade-offs from higher fuel costs, and the financial system’s exposure to AI-related deals.
43:08	Closing bell: market performance and movers	The hosts recap the closing indexes, sector performance, major stock movers, and the day’s rise in Treasury yields.
53:37	The AI trade: fundamentals, returns, and constraints	Ankur Crawford argues that AI fundamentals remain strong while discussing the time needed for returns and practical constraints on the buildout.
1:02:52	Personal AI agents, trust, and guardrails	Espa Labs co-founder Deon Nicholas discusses personal AI agents, data ownership, business models, integrations, and safeguards for user actions.
1:08:22	Long-term returns, productivity, and diversification	J.P. Morgan Asset Management guests consider AI-driven capital spending and productivity, interest rates, alternatives, volatility, and crypto research.
1:19:48	Tokenization and securities-market rules	SIFMA’s Ken Bentsen discusses tokenization, issuer consent, Treasury clearing, extended trading hours, and the financial sector’s use of AI.
1:27:38	Geopolitical remarks and the next day’s agenda	The program airs remarks from Germany’s chancellor and previews upcoming corporate earnings, U.S. housing releases, and the NBA season opener.

Quotes

the key metric to watch is the unlevered IRR versus the cost of capital. — 04:13

1.5 billion dollars is not multiple years of runway. — 14:07

not only is it both can coexist but both must coexist. — 31:11

They will come. It will take time. — 58:01

You would create the right guardrails and build trust over time. — 1:07:49

Concepts and entities

AI trade, unlevered IRR, hyperscalers, Tenstorrent, Jim Keller, CoreWeave, X-energy, AEP, Espa Labs, Deon Nicholas, tokenization, SIFMA

Full transcript (original language)

00:01 >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS “THE CLOSE.” ROMAINE: SOME FOLKS LOOKING FOR A BARGAIN IN THE AI STOCKS TELEPHONE OTHER SEARCH FOR CONFIDENCE. LIVE FROM STUDIO 2, I’M ROMAINE BOSTICK. >> WE ARE KICKING YOU OFF TO THE CLOSING BELLS IN THE U.S. WITH GREEN ON THE SCREEN AFTER A ROUGH WEEK LAST WEEK.

00:33 S&P 500 UP .5 PERCENT. TECH DRIVING THE MOVE. THE BIGGEST DRIVER IN BOTH INDEXES, AMAZON UP ALMOST 5%, THE BIGGEST GAIN IN ABOUT TWO AND A HALF MONTHS AFTER MORGAN STANLEY NAMED IT A TOP PICKS SAYING THEY ARE UNDERAPPRECIATED. AND KEEPING AN EYE ON 10 YEAR. 5.13. ALL EYES AND EARS WILL BE ON EARNINGS. TODAY SEEING A BID IN TECHNOLOGY STOCKS.

01:03 ROMAINE: THE ATTEMPTED REBOUND IS ADMIRABLE BUT ON THE INDEX LEVEL, GOOD TO SEE MORE ACTIVITY TO SEE THE REBOUND STICK. AFTER WHAT WE SAW LAST WEEK WHICH CLEARLY SHOWED A MAJOR SHIFT IN THE AI NARRATIVE FROM WEATHER AI DEMAND ISRAEL TO NOW WHETHER FINANCIAL RETURNS CAN ARRIVE IN TIME BEFORE THE COST BEGIN TO OVERWHELM THE INVESTMENT CASE. THAT MAKES EARNINGS EVEN MORE IMPORTANT THAT BEFORE WITH META

01:35 AND SPACEX THE FIRST TO PUT THEIR CARDS ON THE TABLE. GOLDMAN STRATEGISTS SEE A BIT OF CAUTION WHEN IT COMES TO EQUITIES. MORGAN STANLEY SEE OPPORTUNITY TO ADD TO RISK AND WHAT THEY SAY IS A POTENTIAL EVENT OF A RAPID RECONCILIATION OR AT THE VERY LEAST A SLOWER BLEED INTO NOVEMBER. ONE SIGNAL TO TRY TO FIGURE OUT WHO IS RIGHT AND WRONG LIKELY COMES LESS FROM EQUITY MARKETS AND MORE FROM THE CREDIT MARKET. LAST WEEK’S SELLOFF WAS LARGELY

02:06 ABOUT INVESTOR PERCEPTIONS. BERKELEY SHOWED THE BALANCE BETWEEN COMPLACENT SLEEP AND CAPITULATION IS IN THE MIDDLE GROUND WHERE RISKS ARE INCREASINGLY PRICED IN BUT STILL WELL SHORT OF A BROAD INVESTOR FLIGHT FROM THE OUTSET CLASS AND THAT IS THE FULCRUM THAT PETER SAYS HE IS WATCHING. >> I DON’T SEE HOW EQUITIES DO WELL. I THINK THEY CAN – IT REALLY IS ABOUT THE CORPORATE CREDIT SPREADS. ROMAINE: PETER SPEAKING EARLIER ON BLOOMBERG SURVEILLANCE TO TAKE

02:38 US TO THE CLOSING BELLS. AMANDA IS WITH US, FROM GOLDMAN SACHS. I’M SURE YOU WERE WATCHING FROM THE SIDELINES LAST WEEK AS EVERYONE ELSE WAS. DOES THIS FEEL IDIOSYNCRATIC, WITH A VERY SPECIFIC SET OF WHAT COREWEAVE WAS DOING? >> IN SOME WAYS IT FELT REMINISCENT TO JULY.

03:10 WE HAD SOME WIDENING IN THE AI ECOSYSTEM. TWO THINGS ARE DIFFERENT. IN JULY IT WAS THE INVESTMENT GRADE UNIVERSE LEE – LEADING THE WIDENING. AND THE SECOND KEY DIFFERENCE IS THAT IN JULY IT FELT REALLY TECHNICAL. IN THIS EPISODE THERE ARE FUNDAMENTAL QUESTIONS WE ARE FIELDING FROM INVESTORS. I AGREE WITH WHAT YOU SAID AT THE START, IT FEELS THE WIDENING IS LARGELY A PERCEPTION.

03:41 WE WOULD PUSH BACK A BIT AND SAY THE MOVE HAS BEEN EXACERBATED BY A FEW DIFFERENT FACTORS. BUT THIS IS CONSISTENT WITH OUR VIEW THAT THERE IS ACCESS TO CAPITAL FOR THE AI THEME BUT IT MAY BE AT A HIGHER COST OF THE CAPITAL IS DIFFERENTIATED ACROSS THE ECOSYSTEM. ROMAINE: IS THERE A THRESHOLD WHERE YOU SEE THE YIELD IS MORE A SIGN OF RISK MEANING THE REST BECOMES TOO MUCH OF THE WAITING? >> WE SEE THAT IN THE CCC COHORT OF THE MARKET.

04:13 WHAT OUR CALLING ON THE EQUITY SIDE AS RELATED TO SOME OF THE STOCKS COVERED THIS MORNING IS THE KEY METRIC TO WATCH IS THE UNLEVERED IRR VERSUS THE COST OF CAPITAL. AS LONG AS THE UNLEVEL IRR IS IN EXCESS OF THE WAY THAT CAPITAL, OUR EXPECTATION IS THAT THE CREDIT MARKETS WILL REMAIN OPEN TO FUND THE THING. IF THE CREDIT MARKETS ARE A RATIONAL BUNCH AND THERE IS PROFIT TO BE MADE FROM THE BUILDOUT THEY WILL LEND TO IT. BUT WE WILL BE WATCHING IS

04:47 THERE MONETIZATION ON THE BACK – WHAT WE WILL BE WATCHING IS IS THERE MONETIZATION? >> COREWEAVE WAS A TRAILBLAZER IN THE SENSE THAT THEY WERE FUNDING PROJECTS. AT THE TIME IT FELT NOVEL. WHEN YOU LOOK BACK, THAT CAN BE TAKEN TWO WAYS. HOW ARE YOU THINKING THROUGH THE DIFFERENT MECHANISMS? >> I THINK THERE IS A RANGE OF FINANCING OPTIONS UTILIZED. SOME COMPANIES EVEN IN THE INVESTMENT GRADE ECOSYSTEM HAVE

05:23 BEEN ISSUING EQUITY. WHAT WE THINK THAT SPEAKS TO IS THAT COMPANIES ARE ANTICIPATING A MULTIYEAR ISSUE WHEN CYCLE AND ARE APPROPRIATELY DIVERSIFYING THEIR SOURCES. THE ASSET-BASED LENDING IS ACTUALLY PRETTY ATTRACTIVE IN THIS MARKET FOR FUNDING SUCH BUILD OUTS BECAUSE IT CAN OFTEN BE AMORTIZING AND BACKED BY ASSETS AT A LOWER COST OF CAPITAL. THE KEY POINT OUR ANALYSTS MAKE IS THAT WHILE UNSECURED BONDS ARE TRADING AT 15% OR 16%, FOR THESE COMPANIES THAT MAY NOT BE

05:55 INDICATIVE OF WHERE THEY ARE FUNDING THE BUILDOUT. THAT IS AN IMPORTANT DISTINCTION TO MAKE. >> HOW DOES THAT PLAY OUT IF 10 YEAR IS 5% AND THAT’S WHAT WE GET USED TO AND YOU HAVE HYPERSCALERS NEEDING DEBT ATOP VARIOUS MARKETS COMPETING WITH THE U.S. GOVERNMENT. >> THIS IS WHERE ACCESS TO CAPITAL BECOMES A COMPETITIVE ADVANTAGE. FOR THE BROAD RANGE OF THE HYPERSCALED ARE ECOSYSTEM, MOST OF THOSE COMPANIES ARE AT THE HIGH-END OF THE RATING SPECTRUM. ON BLOOMBERG DATA IT SHOWS AA

06:28 COMPANIES AVERAGE COVERAGE IS 27 TIMES. THEY HAVE PLENTY OF ROOM TO ABSORB THE HIGHER COST OF DEBT. WHEN IT GOES BACK TO IS THE HIGHER COST OF DEBT – AS LONG AS THAT IS CONSISTENT, THIS IS A CREATIVE INVESTMENT OPPORTUNITY. YOU RAISE A VALID POINT. IT GOES BEYOND WHY THIS IS SO DIFFERENT FOR THE CREDIT MARKET. THE CREDIT MARKET WORKS BEST IN FUNDING PERIODS OF ACTIVELY LEVERAGING. WHEN THE NEED IS QUANTIFIABLE AND THERE IS AN END IN SIGHT AND IDEALLY WHEN THERE IS A

07:01 PERIOD OF DEBT REDUCTION ON THE OTHERS IP. IT IS LESS ABOUT THE COST OF CAPITAL AND MORE ABOUT HOW THESE JUMBO DEALS ARE BEING DELIVERED TO THE MARKET. IF THEY ARE A BIT MORE WELL TELEGRAPHED AND IF THE TIMING IS MORE PREDICTABLE, SIMILAR TO THE U.S. BANKS, I THINK IT COULD BE WELL ABSORBED. ROMAINE: WHEN WE TALK ABOUT THE LONGER-TERM COST OF THIS AND WE HAD A CONVERSATION AT THE FIXED INCOME FORUM ABOUT THE IDEA OF HOW MUCH BORROWING MAY COME DOWN TO WHAT THE MARKETS CAN ABSORB. THERE ARE BEEN A LOT OF QUESTIONS ABOUT WHAT THE PUBLIC

07:37 MARKET CAN ABSORB. WHAT WE SAW WITH COREWEAVE IS CONCERNED ABOUT THE QUALITY OF WHAT HAS BEEN PUT IN THERE. DOESN’T GO INTO PRIVATE MARKETS IF IT CAN’T FIND A HOME IN THE PUBLIC MARKETS? >> EVEN FOR THE HIGH-END OF THE RATING SPECTRUM, WE THINK THERE IS A LIMIT TO HOW MUCH OF THIS DEBT CAN BE ABSORBED BY THE PUBLIC MARKETS DUE TO ISSUE OR CONCENTRATION CONSTRAINTS FROM INVESTORS MANAGING THEIR OVERALL EXPOSURE TO THE AI THEME. I THINK THE RUNWAY IS FAIRLY

08:10 OPEN IN 2027 AND 2028. 428 BILLION DOLLARS OF HYPERSCALER ISSUANCE NEXT YEAR. THE RUNWAYS AND THE MAJOR MARKETS ARE OPEN FOR THAT. AS WE GET THROUGH THE ADDITIONAL OUTER YEARS OF THE CYCLE, THAT IS WHEN WE EXPECT OTHER IMPORTANTLY MARKETS AND OTHER INVESTOR TYPES TO TAKE SOME OF THIS EXPOSURE SO PRIVATE INFRASTRUCTURE, PRIVATE REAL ESTATE IS SOMETHING WE

08:41 HAVE FLANKED. IT IS IMPORTANT THAT THE INVESTOR OVERLAPS. I THINK THE KEY MESSAGE FROM OUR SIDE IS THAT WE ARE NOT CONCERNED ABOUT ACCESS TO CAPITAL FOR THIS THEME BECAUSE THERE IS $4.5 TRILLION OF DRY POWDER IN THE PRIVATE MARKETS. ROMAINE: I HAVE TO ASK YOU A BROADER QUESTION. AI IS THE ELEPHANT IN THE ROOM. WHEN WE TALK ABOUT THE RATE ENVIRONMENT AND GENERAL ASSUMPTION THAT WE ARE IN A

09:13 HIGHER FOR LONGER ENVIRONMENT, WHAT DOES THE RESET IN MOVES IN TREASURIES TELL YOU? WHAT DOES THAT TELL YOU ABOUT INVESTOR SENTIMENT? DOES NOT BECOME MORE OF AN OPPORTUNITY FOR CREDIT INVESTORS LONGER-TERM OR IS THAT SOMETHING YOU HEDGE AGAINST? . THE KEY DISTINCTION FOR CORPORATE CREDIT IS IT YIELDS HAVE BEEN A MEANINGFUL TAIL WIND AND SUPPORT FACTOR FOR CREDIT SPREADS KEEPING THEM TIGHT.

09:46 WHILE RATES WERE HIGH RATES VOL WAS LOW. FROM THAT PERSPECTIVE WHAT WE ARE WATCHING CAREFULLY IS, DOES IT REDUCE YIELD BASED INVESTORS CONFIDENCE TO DEPLOY IN THE CORPORATE CREDIT MARKET? THAT IS A SIZABLE INVESTOR COHORT. WE HAVE ATTRIBUTED THIS TO GROWTH PROSPECTS, SHIFT IN THE FED REACTION FUNCTION AND EVEN THE PRICE OF OIL. FROM OUR PERSPECTIVE WHAT MATTERS IS DUE YIELD BASED

10:17 INVESTORS SWITCHED TO SITTING MORE ON THE SIDELINES AND GOT ALLOWS –? ROMAINE: KICKING US OFF TO THE CLOSE ON THIS MONDAY AFTERNOON. WHEN WE COME BACK WE WILL CONTINUE OUR CONVERSATION ABOUT FINANCING IN THE WORLD OF AI. THE PHYSICAL BUILDOUT. AND A BIG FOCUS ON CHIPS. WE WILL TALK TO ONE OF THE PREMIER ARCHITECTS IN THAT SPACE. JIM KELLER HAS RAISED A LOT OF MONEY AND THERE’S A QUESTION ABOUT WHAT HE WILL DO NEXT. THAT CONVERSATION COMING UP

10:48 AFTER THE BREAK RIGHT HERE ON “THE CLOSE” ON BLOOMBERG. ROMAINE: AI CHIP START UP TENSTORRENT RAISING $1.5 BILLION IN THE LATEST FUNDING ROUND BOOSTING ITS VALUATION TO MORE THAN $6 BILLION. JIM KELLER SAYING AI MODELS ARE CHANGING FASTER THAN ANYONE CAN REBUILD THE DATA CENTER. HE SAYS HE MIGHT ACTUALLY HAVE THE SOLUTION. ONE OF THE MOST CELEBRATED ENGINEERS OUT THERE IN THE CHIP SPACE AND HE JOINS US NOW.

11:21 THE LAST TIME WE SPOKE THERE WAS A LOT OF SPECULATION AS TO WHETHER YOU WENT INTO TALKS WITH COMPANIES LIKE QUALCOMM OR INTEL TO SELL THE COMPANY. I ASSUME THIS MEANS YOU ARE NOT FOR SALE ANYMORE. JIM: I HAVE A BOARD AND THE BOARD IS INTERESTED IN GETTING THE BEST VALUE RETURN FOR OUR INVESTORS, CUSTOMERS AND EMPLOYEES. RAISING $1.5 BILLION AT 6.5 IS SUPER MATERIAL TO OUR OUTLOOK. TO RAISE THE VALUE OF THE COMPANY.

11:52 OUR VISION IS TO SCALE OUR PROGRAM AND CONTINUE TO BUILD AI IP FOR OUR CUSTOMERS. ROMAINE: GIVE ME A SENSE ON THE VALUATION. A PRETTY BIG JUMP SINCE THE LAST REPORTEDLY PUBLIC VALUATION. WHAT HAS CHANGED OPERATIONALLY? JIM: WE ARE IN PRODUCTION AND SHIPPING OUR GALAXY SERVICE WHICH IS MATERIAL. WE RELEASED OUR AI AND CPU IP WHICH IS NOW SHIPPING TO CUSTOMERS. IT IS PARTLY A REVENUE SIGNAL

12:25 AND PARTLY A CONFIDENCE IN THE OVERALL APPROACH. IN MAY WE HAD AN EVENT WHERE WE SHOWED REAL-TIME VIDEO OF VERY FAST INFERENCE ON THE MODELS. THAT HELPED US WITH INVESTORS AND WITH CUSTOMERS. >> HOW DO YOU THINK ABOUT DIFFERENTIATION IN COMPETITION? YOU ARE GROWING BUT STILL RELATIVELY SMALL IN A COMPETITIVE FIELD? JIM: I’M REALLY INTERESTED IN ORGANIC GROWTH.

12:58 OUR CUSTOMERS ARE NOT SELLING TO HYPERSCALERS. WE ARE SELLING 10, 20, 50 MILLION DOLLAR UNITS. WE ARE DOING IP DEALS AND GROWING ORGANICALLY. THAT IS WHERE WE ARE FOCUSED. PEOPLE BUILDING THEIR OWN SO WE CAN WITH OUR IP. WE THINK THAT IS A SOLID ENTRY POINTS. THE THINGS WE FEEL VERY STRONGLY ABOUT IS AI CONTINUES TO CHANGE. I THINK THE DISAGGREGATION IN THE LARGER AI MODELS ISRAEL

13:33 SPECIAL-PURPOSE HARDWARE FOR PIECES OF IT WILL NOT AGE WELL OVER THE NEXT COUPLE OF YEARS. >> 1.5 BILLION DOLLARS IS QUITE A BIT OF CASH. HOW ARE YOU THINKING ABOUT RAISING MONEY WHEN YOU CAN AND NOT WHEN YOU NEED TO? HOW LONG DOES NOT EXTEND THE RUNWAY FOR THE COMPANY? JIM: 1.5 BILLION DOLLARS SOUNDS LIKE A MONEY – SOUNDS LIKE A LOT OF MONEY AND IT IS BUT WHEN YOU GO INTO PRODUCTION, PRICES OF THINGS LIKE FLASH DRIVES AND CILIC AND IN GENERAL HAS REALLY GONE UP AND THE PAYMENT TERMS

14:07 HAVE GOTTEN A LITTLE MORE AGGRESSIVE. WE ARE DEPLOYING THAT MONEY IN OUR SUPPLY CHAIN DIRECTLY. AS WE START TO MAKE REAL MONEY NEXT YEAR, THAT WILL EXTEND OUR RUNWAY. 1.5 BILLION DOLLARS IS NOT MULTIPLE YEARS OF RUNWAY. OUR MISSION IS TO DEPLOY THE CAPITAL AND THE SUPPLY CHAIN AND CONTINUE TO BUILD THE ENGINEERING TEAM AND KEEP MOVING FORWARD. ROMAINE: MOST OF THAT IS GOING INTO THE SUPPLY CHAIN AND PAY YOUR ENGINEER’S.

14:38 AS YOU MAKE THIS PITCH TO INVESTORS, THERE HAS BEEN A LOT OF DISCUSSIONS ABOUT THE OPEN-SOURCE MODEL THAT YOU HAVE EMBRACED. WHEN WE LOOK AT A COMPANY LIKE NVIDIA, A LOT OF THE MOAT AROUND THAT IS EVERYONE IS TETHERED TO A CERTAIN EXTENT TO THEIR ECOSYSTEM. LONGER-TERM, WHY POTENTIAL HE DOES YOUR VERSION OF WHAT THIS SHOULD LOOK LIKE WIN OUT? JIM: WE HAVE SEEN SUCH A MAJOR CHANGE. WE’VE BEEN USING AI TO WRITE

15:11 CODE FOR THE LAST YEAR AND A HALF. SOMEWHERE AT THE LAST – SOMEWHERE AT THE END OF LAST YEAR WE USE A – WE USE A – WE USE AI TO CODE EVERYTHING. EARLIER THIS YEAR I PLAYED AROUND AND SAID I WANT TO BUILD A TRANSLATOR. I DID NOT HAVE TO WRITE ANY CODE. THAT WAS JUST CLAUDE. WE TOOK PROGRAMS THAT COMPILED AND DIRECTLY COMPILED THEM INTO WHAT WE CALL A NEURAL NETWORK LIBRARY.

15:46 WITHOUT WRITING A COMPILER, WE STARTED COMPILING MODELS. A REALLY DEEP MODE ON THESE SPECIFICS IS GOING AWAY. DISAGGREGATION IS VERY COMPLICATED. THERE ARE A NUMBER OF SOFTWARE COMPONENTS. WE BUILD THAT ALL THE TIME WITH AI. ROMAINE: IF WE TALK TO YOU IN A YEAR, WHAT WILL BE DIFFERENT WITH REGARD TO THE NUMBER OF CUSTOMERS THAT YOU HAVE AN SCALE AND ADOPTION OF YOUR PRODUCT? JIM:

16:19 WE ARE AIMING AT STEADY GROWTH. AIMING TO TRIPLE OUR REVENUE NEXT YEAR. WE WILL START DISCLOSING THAT AS WE GO FORWARD. OUR ABILITY TO BE THERE FOR DAY ONE MODELS IS IMPROVING EVERY DAY. THE OPEN-SOURCE MODELS ARE GETTING REALLY GOOD IN THE GAPS BETWEEN PROPRIETARY MODELS AT THE BIG LABS AND THE OPEN-SOURCE MODELS IS GETTING SMALLER. WE WILL START A REAL PUSH NEXT YEAR ON TRAINING AND FINE TUNING. SO IF YOU BUY FROM TENSTORRENT, YOU GET ON ONE HARDWARE

16:52 PLATFORM VIDEO AND TRAINING. YOU DON’T NEED A SPECIAL PLATFORM TO DO SOME PART OF AI. AND I THINK THAT IS A REALLY BIG DEAL. I THINK AI COMPUTERS SHOULD EVOLVE TO A GENERAL PURPOSE SPECIFIC – EVOLVED TO A GENERAL-PURPOSE. ROMAINE: CONGRATULATIONS ON THE LATEST FUNDING ROUND. JIM KELLER, CEO OF TENSTORRENT. WHEN WE COME BACK WE WILL TALK

17:24 ABOUT AEROSPACE AND DEFENSE DOTS AND GET A PREVIEW OF SOME OF THE NAME SET TO REPORT THIS WEEK. THAT IS COMING UP NEXT ON “THE CLOSE” RIGHT HERE ON BLOOMBERG. ROMAINE: LET’S GET RIGHT TO OUR TOP CALLS. FIRST UP IS AMAZON. MORGAN STANLEY SAYING IT IS A TOP PICK. THE PRICE TARGET BOOST TO 350 DOLLARS. SHARES UP 5%. COREWEAVE.

17:58 GOLDMAN GOING TO BUY FROM NEUTRAL IN THE WAKE OF THE SELLOFF LAST WEEK. THE PRICE TARGET LOWERED TO $106. THE ANALYST OVER THERE SAYING IT WAS A SELLOUT THAT WENT TOO FAR, TOO FAST WITH UNLEVERED IRR ATTRACTIVE. AND WEAKENING CONSUMER OUTLOOK FOR WHIRLPOOL. WEAK INDUSTRY SALES WILL MAKE IT A CHALLENGE FOR WHIRLPOOL TO

18:29 ACHIEVE MEANINGFUL VOLUME LEVERAGE. SHARES DOWN 6%. QUITE A FEW COMPANIES ARE SCHEDULED TO REPORT EARNINGS THIS WEEK INCLUDING RTX, LOCKHEED AND NORTHROP HERE SHEILA JOINS US NOW WHO COVERS ALL OF THIS OVER AT THE JEFFRIES. LET’S START WITH THE DEFENSE COMPANIES. I FEEL THEY HAVE A REASON TO RALLY. ARE YOU HEADING INTO THE EARNINGS SEASON WITH HIGHER EXPECTATIONS OR ARE YOU TEMPERING THEM? >> SHORT-TERM I DON’T LIKE ANY OF THE DEFENSE COMPANIES. THEY ARE ALL TRADING AROUND MARKET MULTIPLES.

19:04 MARGINS ARE Q4 WAITED. I’M NOT SHORT-TERM LONG INTO THE EARNINGS PRINTS. I SPENT A WEEK IN DO YOU SEE LAST WEEK AT THE ARMY TRADE SHOW AND I GOT SOME CLARITY ON THE BUDGET. WE THINK THE PRESIDENT’S BUDGET REQUEST IS FOR 50% INCREASES. THE BASE BUDGET WE THINK COULD GROW 11%. YOU HAVE CLARITY ON THE MARGINS. ROMAINE: IS 11 PERCENT GOOD? >> A LIVE – A LITTLE LOWER THAN WHAT CONSENSUS EXPECTED.

19:35 LONGER-TERM I’M A LITTLE MORE BULLISH ON THE MARGIN STRUCTURES OF THESE COMPANIES. THE GOVERNMENT, THE BIDEN AND TRUMP ADMINISTRATION’S, FOCUSED ON RESHORING ACTIVITY AND BUILDING UP THE SUPPLY CHAIN AND THE INVESTMENT BASED ON WHAT THE DIFFERENCE COMPANIES LOOK LIKE. PERHAPS MORE MARGIN VISIBILITY. THEY HAVE A SEVEN YEAR AGREEMENT RATHER THAN NEGOTIATING EVERY YEAR ALLOWING THE GOVERNMENT TO SHARE IN THE UPSIDES ALONG WITH THE COMPANIES. BAILEY: HOW ARE WE THINKING ABOUT THINGS LIKE UNITED.

20:06 A STRONG PRINT FROM AIRLINES OR IS THAT ALL OIL? >> I WAS SURPRISED TO SEE THE WORLD PULLED DOWNGRADE BECAUSE I’VE BEEN SCRATCHING THE SURFACE OF THE EARTH FOR CONSUMER NEGATIVE DATA POINTS AND WERE NOT FINDING ANY. WE TRACKED ENGINE UTILIZATION FOR THE OLDEST AIRCRAFT ON THE PLANET. MAYBE YOU ARE SEEING SOME SOFTNESS ON LEASING RATES. WE DOWNGRADED AIR CANADA TO SELL THIS MORNING. THAT ASIDE WE ARE EXPECTING GOOD EARNINGS OUT OF UNITED SIMILAR TO DELTA.

20:39 15% INCREASES FOR AIRFARES. ROMAINE: THE BLOOMBERG STORY – HOW MUCH MORE CONSUMERS CAN ABSORB WITH REGARDS TO HIGHER AIRFARES. WE’VE SEEN A RACE TO THE PREMIUM CABINS AND OFFERINGS. DO YOU WORRY THAT ALL THAT MIGHT BE NEAR A LIMIT THAT CONSUMERS CAN TAKE? >> SPENDING IS MAINLY HAPPENING AT THEIR PREMIUM AND CORPORATE’S ARE CONTINUING THEIR INCREASES.

21:15 YOUR ACTUALLY SEEING THE SOFTER CABINS GROW AND GROW AT A FASTER RATE. AIRLINES DON’T PROVIDE A LOT OF VISIBILITY ON DATA POINTS BUT WE ARE NOT SEEING ANY SOFTNESS IN TERMS OF THE CONSUMER. FOR NEXT YEAR WE ARE ASSUMING A 2% PRICE INCREASE AND I DO THINK YOU WILL SEE SOFTNESS IN THE LOWER TIERED AIRLINES. THEY WILL STRUGGLE TO KEEP UP WITH UNITED AND DELTA. BAILEY: A LOT OF NAMES YOU ARE INTERESTED TO HEAR FROM.

21:46 >> GE AND RAYTHEON. THEY ARE LEVERED TO THE COMMERCIAL AFTERMARKET CYCLE. I THINK IT IS GOING TO BE HARD TO FULL PROOF A FALSE NEGATIVE CORRECT. I THINK YOU COULD STILL GROW THESE EARNINGS 8%, 10% TOPLINE MINIMUM. I LIKE BOTH OF THOSE NAMES. IT IS GOING TO BE TOUGH. THEY HAVE HAD A TOUGH RUN WITH OIL WHERE IT IS TODAY. ROMAINE: SHEILA OVER AT JEFFRIES.

22:23 WHEN WE COME BACK WE WILL TALK ABOUT THE AMAZON DEAL TAPPING INTO NUCLEAR POWER FOR THE AI BUILDOUT. ONE COMPANY IN THE MIDDLE OF THAT IS X ENERGY. THE CEO WILL JOIN US AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ♪ ROMAINE: BREAKING NEWS. THIS INVOLVES NSCALE AND ANTHROPIC WITH ANTHROPIC SAID TO BE IN TALKS WITH A CLOUD COMMUTING DEAL. NSCALE HAS BEEN IN THE NEWS BECAUSE OF SOME COMMENTARY OVER

22:54 THE WEEKEND ABOUT MICROSOFT POTENTIALLY BACKING OUT OF ONE OF ITS U.K. PROJECTS. THIS IS THE MONARCH PROJECT IN WEST VIRGINIA. OUR REPORTERS SPOKE TO THOSE SAYING NSCALE WILL SELL THE COMPUTING POWER TO ANTHROPIC OVER TIME FOR AN INFRASTRUCTURE DEAL WORTH ABOUT 45 BILLION DOLLARS. THAT WOULD DELIVER AROUND 460 MEGAWATTS OF COMPUTING POWER USING AND VIDEOS AI CHIPS. THE TALK ABOUT AI CENTERS

23:28 CANNOT BE TALKED ABOUT WITHOUT TALKING ABOUT THE POWER TO RUN THOSE DATA CENTERS. EARLIER TODAY WE LEARNED THAT AMAZON AND ELECTRIC POWER ARE IN A PARTNERSHIP RIGHT NOW TO EVALUATE PLANS FOR A 960 MEGAWATT NUCLEAR PLANT IN INDIANA AND IT WILL USE A NEW REACTOR DESIGN MADE BY A COMPANY CALLED X ENERGY. THE PLAN WOULD USE 12 SMALL REACTORS. AND THE CEO IS HERE RIGHT NOW THE TALK A LITTLE MORE ABOUT THIS. I GUESS ONE, CONGRATULATIONS BUT I HAVE TO ASK YOU THE

24:00 OBVIOUS QUESTIONS. HOW FAR ALONG ARE WE FROM THIS GOING TO A CONCEPT, A FEASIBILITY PLAN TO ACTUAL REACTORS THEY ARE DELIVERED TO THE SITE? CLAY: ULTIMATELY THE SCHEDULE WILL BE SET BY OUR CUSTOMER AT A P BUT WE HAVE BEEN INSUBSTANTIAL DISCUSSIONS WITH THEM FOR A NUMBER OF MONTHS. THEY HAVE DONE THE EARLY SITE WORK AND COMMUNITY ENGAGEMENT THAT DECIDED ON A FORMER COAL

24:31 SITE IN INDIANA WHICH IS AN EXCELLENT LOCATION FOR REACTORS. THEY HAVE BEGUN THE POLITICAL AND COMMUNITY ENGAGEMENT PROCESS AND THE STAGE. WE WILL GET TO WORK ON FEASIBILITY AND SITE-SPECIFIC ENGINEERING AND CONSTRUCTION PERMIT PLANNING AND I WILL LET OUR PARTNER SET THE ULTIMATE SCHEDULE. THERE IS NO QUESTION THAT THE DEMAND FOR POWER, FOR CLEAN WORK IN THE REGION IS DRAMATIC. AMAZON NEEDS THE POWER. AND ALL OF THAT ENERGY IS

25:06 DRIVING THIS PARTNERSHIP BETWEEN AEP, AMAZON AND X ENERGY. ROMAINE: I KNOW WE ARE STILL IN A PHASE OF IT WHERE WE ARE STILL TRYING TO FIGURE IT OUT BUT WE’VE SEEN PROJECTS GET DISRUPTED NOT BECAUSE OF EVERYTHING ELSE BUT BECAUSE OF THE ACTUAL POWER EITHER BECAUSE OF PERMITTING OR COMMUNITY BACKLASH ETC. ETC. WHY WILL THIS PROJECT BE ABLE TO AVOID SOME OF THESE PITFALLS? CLAY:

25:40 I THINK WE HAVE A GREAT PARTNER IN AEP. THEY KNOW HOW TO DEVELOP PROJECTS. THEY HAVE ALREADY ENGAGED WITH COMMUNITY LEADERS AROUND THE REID SITE. WE HAVE PROVEN TO BE SUCCESSFUL IN WORKING WITH OUR OTHER PARTNERS AT DOW AND ELSEWHERE TO GET THE REGULATORY APPROVAL TO MOVE FORWARD WITH THESE PROJECTS. WE RESPECT THE COMMUNITY. WE RESPECT THE OPPORTUNITY. WE WORK IT. AEP KNOWS HOW TO DEVELOP PROJECTS AND WE LOOK FORWARD TO WORKING WITH THEM TO BRING THIS PROJECT TO FRUITION. BAILEY:

26:16 BLOOMBERG REPORTING SAYS THE COMPANY WILL MAKE A FINAL DECISION BY LATE 2029. HOW SHOULD WE THINK ABOUT THE TIMELINE IN THE CONTEXT OF THE TECHNOLOGY YOU ARE WORKING ON? CLAY: WE ARE ALREADY DEVELOPING THE TECHNOLOGY. WE WILL HAVE PROJECTS UNDER CONSTRUCTION BEFORE THEN. LET ME REMIND YOU THAT WE HAVE AN EXISTING PROJECT UNDERWAY WITH DOW CHEMICAL IN THE STATE OF TEXAS. WE HAVE AN EXISTING PROJECT WITH ENERGY NORTHWEST IN WASHINGTON STATE.

26:47 THOSE PROJECTS ARE AHEAD. AND THE LIFE OF A PROJECT LOOKS LIKE THIS – WE DO EARLY WORK UNDER THE RADAR WITH OUR PARTNERS TO SET THE STRUCTURE OF THE DEAL. AND THEN, WE WILL FORMALLY ANNOUNCE IT BECOMES THEN IT BECOMES A MATTER OF PUBLIC ENGAGEMENT AND COMMUNITY ENGAGEMENT. AND WE START DOING THE WORK. WITH THE ANNOUNCEMENT TODAY, THERE ARE VERY MATERIAL CAPITAL DEVELOPMENT DOLLARS THAT ARE BEING COMMITTED TO THIS PROJECT FROM THE PARTIES INVOLVED. SO WE START SPENDING THE MONEY

27:22 TO DO THE SITE CHARACTERIZATION WORK SO WE CAN FILED WITH THE NRC AND APPLICATION TO GET PERMISSION TO BEGIN CONSTRUCTION. AND THAT WILL BE ABOUT – IT COULD BE KIND OF A YEAR PROCESS TO DEVELOP THE SITE ENVIRONMENTAL CHARACTERIZATION WORK AND THEN A YEAR TO A YEAR AND A HALF TO GET THE PERMIT APPROVED. THAT SETS THE EARLIEST POSSIBLE TIMELINE WHEN YOU CAN MOVE TO A FINAL INVESTMENT DECISION. THE IMPORTANT NEWS TODAY AS WE ARE ANNOUNCING IT AND MOVING FORWARD. IT IS CAPITALIZED.

27:57 WE HAVE A SPECIFIC SITE AND GREAT PROJECTS. BAILEY: WE ARE TALKING 2029 THROUGH 2033. HOW ARE YOU THINKING ABOUT THINGS LIKE THE UPCOMING ELECTION AND HOW POLITICS NATIONALLY AND LOCALLY IMPACT THINGS LIKE THE POTENTIAL FOR NUCLEAR ENERGY TO BE IMPACTED HERE IN THE U.S.? CLAY: IT IS INTERESTING YOU ASK THAT. NUCLEAR POWER HAS EMERGED AS ONE OF THE MOST BIPARTISAN ISSUES IN CONGRESS. AND THAT HAS BEEN THE CASE ACROSS ADMINISTRATIONS OVER THE

28:29 LAST SEVERAL YEARS. BUT TRUMP ADMINISTRATION, LAST TIME WAS VERY AGGRESSIVE. THE BIDEN ADMINISTRATION WAS MORE AGGRESSIVE ON NUCLEAR. THE SECOND TRUMP ADMINISTRATION HAS BEEN STRONGER YET ON NUCLEAR AND WE ANTICIPATE THAT NO MATTER WHAT PARTY WINS THE MIDTERM ELECTIONS AND WHO IS IN CONTROL AND THEY GO FORWARD BASIS, THOUGH STRONG BIPARTISAN SUPPORT FOR SEEING THE UNITED STATES RETURNED AGGRESSIVELY TO

29:02 CLEAN SECURE POWER THAT ALSO PRODUCES FANTASTIC JOBS IN THE COMMUNITIES IN WHICH WE OPERATE. THE SUPPORT FOR THAT WILL CONTINUE NO MATTER WHAT HAPPENS IN THE ELECTION. ROMAINE: ON THAT THOUGH, YOU WERE AT THE ENERGY DEPARTMENT WAY BACK WHEN. EVERYTHING YOU SAID NOW, I’M SURE I HEARD THE SAME IN THE EARLY 2000’S. CLAY: NO, YOU DID NOT HEAR THAT. IN THE EARLY 2000’S, CENTERLEFT PARTIES AND THE DEMOCRATS IN

29:33 PARTICULAR WERE NOT SUPPORTIVE OF NUCLEAR POWER. REPUBLICANS WERE FOR TRADITIONAL ENERGY SECURITY REASONS. THE DEMOCRATS IN THE MAIN WERE NOT. WHAT HAS CHANGED SINCE THEN? WHAT HAS CHANGED IS A RECOGNITION BY CENTERLEFT PARTIES AND THE DEMOCRATS THAT CLEAN, FIRM POWER IS KEY TO DECARBONIZATION, KEY TO ADDRESSING CLIMATE CHANGE. NOW YOU HAVE DEMOCRATS ON THE LEFT FOCUSED ON CLIMATE CHANGE, JOBS AND SUSTAINABILITY. AND YOU HAVE REPUBLICANS ON THE

30:08 RIGHT FOCUSED ON TRADITIONAL ENERGY SECURITY AND POWER SUPPLIES COMING TOGETHER FOR A DIFFERENT SET OF REASONS. BOTH TO SUPPORT THE ATTRACTIVENESS OF NUCLEAR POWER. THAT HAS CHANGED. AND HAS CHANGED IN THE LAST SIX YEARS RESULTING IN REGULATORY REFORM, TAX CREDIT REFORM, PERMITTING REFORM. ALL THE THINGS THAT WILL ENABLE THIS NUCLEAR FUTURE THAT WE ARE UNFOLDING AT X ENERGY. ROMAINE: FAIR ENOUGH. I DO HAVE TO ASK YOU ABOUT THE

30:39 INTERPLAY BETWEEN WHAT WE ARE SEEING WITH REGARDS TO THE DEMAND OF SOME OF THESE SMALLER NUCLEAR REACTORS AND FUEL CELLS. I KNOW AEP HAS AN AGREEMENT WITH BLOOM ENERGY. IS THERE A SENSE THAT THERE IS A TIME TABLE FOR FUEL CELLS BEING DELIVERED FOR THESE DATA CENTERS QUICKER THAN FOR THE ACTUAL NUCLEAR REACTORS? IS THIS A ONE OR THE OTHER OR CAN BOTH COEXIST IN THE SAME BROADER ECOSYSTEM? CLAY:

31:11 NOT ONLY IS IT BOTH CAN COEXIST BUT BOTH MUST COEXIST. THEY ARE VERY COMPLEMENTARY SOLUTIONS. FUEL CELLS CAN GO IN EARLIER. THEY CAN PROVIDE SMALL AMOUNTS OF EARLY POWER AND THEY CAN PROVIDE BACKUP POWER BUT THEY CANNOT PROVIDE THE QUANTITY OF CLEAN FIRM POWER AT THE ECONOMIC RATE THAT NUCLEAR CAN. THE COMPLEMENTARY SOLUTIONS AND AEP HAS TAKEN A LEADERSHIP ROLE IN FACILITATING BOTH. ROMAINE: WE REALLY APPRECIATE YOU

31:42 JOINING US. WE WOULD LOVE TO TALK AGAIN AS YOU MOVE CLOSER TO PUTTING THINGS ON THE GROUND. CLAY CELL. SHARES UP 3% AS WE MOVE CLOSER TO THE CLOSING BELLS. WE WILL CONTINUE OUR CONVERSATION ABOUT A LOT OF THE ENERGY NEEDS WITH CHRIS RIGHT. THAT IS COMING UP AFTER THE BREAK HERE ON BLOOMBERG. ♪ BAILEY: CRUDE PRICES HITTING A FIVE MONTH HIGH WITH BRENNAN NEAR 110 DOLLARS A BARREL AMID

32:14 GROWING SUPPLY CONCERNS IN THE MIDDLE EAST. SECRETARY CHRIS WRIGHT SPOKE WITH ANNMARIE HORDERN EARLIER. SEC. WRIGHT: FOR US IT DOES ALL LEVERS. WE HAVE TO SOLVE THIS WITH OR WITHOUT AN ELECTION. THE BIGGEST THING WE ARE WORKING RIGHT NOW AND I WILL CONTINUE TO WORK LATER THIS WEEK IS DISCUSSIONS WITH THE EUROPEAN – OUR EUROPEAN PARTNERS THAT HAVE SIGNIFICANT DIESEL STORES. THEY STORE MUCH MORE REFINED PRODUCTS AND CRUDE AND THEY

32:45 HAVE HUGE VOLUMES OF DIESEL. >> 90 DAYS FOR THE EUROPEANS. THEY HAVE TO HAVE 90 DAYS OF STOCKPILES. SEC. WRIGHT: I WOULD SAY, YES. SEVERAL OF THE COUNTRIES HAVE WELL BEYOND THAT. WE HAVE NEVER HAD A SHORTAGE OF DO YOU THIS ONE. THEIR RELUCTANCE TO RELEASE STOCKS IS AGAINST THEIR OWN INTERESTS AND AGAINST THE INTERESTS OF THE GLOBAL DEMAND RIGHT NOW. WE HAVE A THREE ALARM FIRE FOR DIESEL. TIME TO RELEASE THOSE DIESEL

33:17 STOCKS. I’VE ENCOURAGED THEM TO DO THE SAME THING THAT WE HAVE WITH THE STRATEGIC PETROLEUM RESERVE. DON’T SELL IT BUT SWAP IT. THEY CAN REVIEW THEIR STOCKS BUT RIGHT NOW THE WORLD IS VERY SHORT DIESEL. >> THE PRESIDENT ANNOUNCED THE G7 WAS GOING TO DO THIS. WHY DO YOU SAY THEY ARE DRAGGING THEIR FEET? SEC. WRIGHT: COMMITMENTS ARE ONE THING BUT WE WANT A CLEAR AND SMOOTH FLOWS OF THE MARKETPLACE KNOWS

33:49 HOW MUCH DIESEL IS COMING OVER WHAT TIME PERIOD. >> THERE WAS DISCUSSION ABOUT THE ADMINISTRATION HAVING ITS OWN EXPORT BAN ON PRODUCTS AND THE LATEST ON DIESEL. THE PRESIDENT DECIDED NOT TO GO WITH THAT. IS IT STILL ON THE TABLE? SEC. WRIGHT: ANYTHING WE CAN DO TO LOWER THEIR PRICES FOR ENERGY FOR AMERICANS IS STILL ON THE TABLE. BUT THE PROBLEM WITH A CRUDE INSTRUMENT LIKE A BAND IS YOU CAN DRIVE DOWN DIESEL PRICES BUT YOU WILL PROBABLY DRIVE UP GASOLINE PRICES.

34:23 REFINERIES MAKE A ROUGHLY FIXED MIX OF PRODUCTS TO GOT TO THINK ABOUT THE WHOLE PALLET. WHEN YOU ARE IN A SHORTAGE OF SOMETHING, MY INCLINATION IS TO MAXIMIZE SUPPLY. DON’T DO THINGS TO REDUCE SUPPLY. ROMAINE: CHRIS WRIGHT SPEAKING EARLIER AT THE CITADEL CONFERENCE WITH ANNMARIE HORDERN. ENERGY IS ALWAYS IN FOCUS BUT MORE SO NOW AS THE AI TRADE CONTINUES AND A LOT OF PEOPLE REALIZE IT IS NOT ABOUT CHIPS AND THE PHYSICAL INFRASTRUCTURE. IT IS ABOUT THE POWER. BAILEY: AND WHEN YOU THINK HOLISTICALLY

34:59 WHERE WE ARE AND OIL IS DRAGGING SO MUCH OF THIS MARKET BUILDING INFLATIONS – BUILDING EXPECTATIONS AROUND INFLATION. ROMAINE: A BIT OF A REBOUND IN STOCKS ON THE DAY THOUGH SOME OF THE CONCENTRATED LARGELY ON DISCRETIONARY NAMES AND TACH. WE ARE SEEING A RESUMPTION IN THE SELLOFF OF TREASURIES WITH THE 10 YEAR UP SEVEN BASIS POINTS. MEREDITH WHITNEY WILL JOIN US COMING BACK AFTER THE BREAK ON BLOOMBERG. ♪

35:31 >> EVEN FOR THE HIGH END OF THE RATING SPECTRUM, WE THINK THERE IS A LIMIT TO HOW MUCH OF THIS DEBT CAN BE ABSORBED BY THE PUBLIC MARKET. WE THINK THE RUNWAY IS STILL FAIRLY OPEN THROUGH 2027 AND 28. ROMAINE: AMANDA FROM GOLDMAN SACHS KICKING US OFF TO THE CLOSED WITH A CLOSER LOOK AT WHAT THE CREDIT MARKET IS SIGNALING ABOUT THE EQUITY MARKET. THE EQUITY MARKET THAT FOR TODAY SEEMS LIKE IT IS TRYING

36:02 TO GET ITS MOJO BACK WITH THE EMPHASIS ON TRYING. BAILEY: TRYING VERY HARD ESPECIALLY AHEAD OF A CRITICAL EARNINGS WEEK. THE NASDAQ IS UP MORE THAN 1% AND A LOT OF THAT IS BEING DRIVEN BY AMAZON. RIGHT NOW UP MORE THAN 5%, ITS BEST DAY SINCE JULY 31. THE BEST DAYS SINCE 2012 AFTER THEIR CLOUD SALES GROWTH CRUSHED EXPECTATIONS. THAT IS A BIG MOVE. KEEPING AN EYE ON SEMICONDUCTORS.

36:32 A 2% RALLY DOESN’T DO MUCH BUT DOES SNAP AND A DAY SLIDE. ROMAINE: AMAZON IS THE BIGGEST POINT CONTRIBUTOR. YOU ARE MORE THAN 300 STOCKS ON THE S&P 500 AND THE RED AND QUESTIONS ABOUT WHETHER THERE IS ANY BREATH LEFT IN THE MARKET. THE S&P SECTORS, FOUR OF THEM ARE IN THE GREEN. AND ONLY TWO CONTRIBUTING SUBSTANTIALLY WHICH IS TACT AND DISCRETIONARY WHICH IS AMAZON.

37:06 MEREDITH WHITNEY JOINS US NOW AND I WANT TO START WITH THE EARNINGS SEASON BUT NOT SO MUCH ON TACT BUT MORE ON THE CONSUMER’S SIDE. I WAS TAKING A LOOK AT A LOT OF THE EXPECTATIONS HEADING INTO THE EARNINGS SEASON. WE KNOW EXPECTATIONS ARE HIGH FOR ATTACK. – FOR TECH. I AM CURIOUS, COMING OUT OF THE LAST COUPLE OF WEEKS WHERE WE HEARD FROM A LOT OF THE BIG BANKS AND WHILE THERE IS A MIXED PICTURE, I’M CURIOUS AS TO WHAT WE LEARNED IF IT ALL ABOUT THE STATE OF ECONOMIC CONDITIONS OVERALL THE STATE OF

37:37 THE CONSUMER. MEREDITH: I THINK WHAT THE BENDS WILL TELL YOU IS WHAT IS GOING ON WITH THE HIGHER END CONSUMER. THE PRIME AND SUPER PRIME CONSUMER. THEY HAVE PULLED BACK FROM EVERYONE ELSE AND THE PULLBACK HAS INTENSIFIED OVER THE LAST THREE YEARS. THEY ARE ONLY PART OF THE PICTURE. AT THE REST OF THE PICTURE IS, I THINK, A STRUGGLING CONSUMER AND I THINK IT WILL BE A DIFFICULT EARNINGS SEASON FOR MANY OF THE RETAILERS. ONE THING I PAY ATTENTION TO IS

38:13 THE OVERALL SPENDING. GROCERY SPENDING HAS BEEN BASICALLY 0% GROWTH OR NEGATIVE SINCE THE IRAN WAR BEGAN AND A LITTLE BEFORE THEN. CONSUMERS ARE MAKING TRADE-OFFS, PUTTING GAS IN THEIR TANK TO BUYING GROCERIES. AND YOU SEE OVERALL CONSUMER SPENDING HIGHER BUT THAT IS ONLY BECAUSE YOU HAVE HIGHER TICKET SALES ARE NOT BECAUSE YOU HAVE MORE TRANSACTIONS ARE FOOT TRAFFIC. ROMAINE: I WILL ASK A LOADED QUESTION.

38:44 WE HAVE BEEN IN THE SITUATION FOR A WHILE. A LOT OF EVIDENCE THAT THE GROWTH WE SEE ON THE CONSUMER SIDE IS COMING FROM THE HIGHEST EARNERS OR THOSE WITH THE MOST WEALTH. THERE HAS BEEN THE IDEA THAT AS LONG AS THOSE PEOPLE KEEP SPENDING, IT DOESN’T NECESSARILY MATTER IF THE REST OF THE 90 PLUS PERCENT OUT THERE ARE STRAPPED AND CANNOT SPEND. IS THAT FAIR? MEREDITH: I THINK IT IS FAILURE. BUT ONE THING I’VE PICKED UP MORE RECENTLY IS AND THIS COMES FROM THE FED WEEKLY CREDIT CARD

39:19 DATA, THAT HAD BEEN TRACKING ALMOST 1 FOR 1 CREDIT CARD BALANCE GROWTH WITH GAS PRICE GROWTH YEAR-OVER-YEAR AND THE CORRELATION BROKE DOWN THE LAST FEW WEEKS. AND THAT TELLS ME THAT THOSE TRADE-OFFS ARE GOING UP MARKET AND NOT JUST FROM THE 50% OF HOUSEHOLDS BUT GOING HIGHER. AND THAT IS TROUBLING. THE IRAN COST MORE INDEX – EVERY HOUSEHOLD HAS SPENT

39:53 ALMOST $600 MORE SINCE THE BEGINNING OF THE WAR ON GAS. THAT IS A BIG NOT FOR MOST HOUSEHOLDS OR AT LEAST 50% OF THE HOUSEHOLDS THAT LIVE PAYCHECK-TO-PAYCHECK. BAILEY: WHAT WOULD BE LOOKING FOR FOR SIGNS THAT THAT IS GOING TO CRACK AND WHAT SHOULD WE BE LOOKING FOR IF THAT IS GOING TO HAPPEN SOONER RATHER THAN LET – RATHER THAN LATER? MEREDITH: I THINK THE ASSUMPTION IS THAT AFTER THE MIDTERMS, EVERYTHING

40:24 GOES GREAT AND ENDS. I THINK THAT IS NAÏVE. SO GAS PRICES STAY HIGHER. I’M NOT SAYING THE HIGHER END, LET’S SAY THE 20%, 30%, YOU ARE NOT SEEING IT CRACK BUT FRAY. THAT WILL IMPACT SPENDING ACROSS THE BOARD. I THINK THAT IS WHAT YOU HAVE PEOPLE LIKE LARRY FINK SAYING, IF WE SLOW DOWN ON AI SPEND, WE GO INTO A RECESSION BECAUSE SO MUCH IS HINGING ON THE AI SPENT. BECAUSE YOU HAVE A WEAKER

40:55 CONSUMER UNDERNEATH IT. ROMAINE: TO THAT POINT AND IT GETS BACK TO THE BANKS, AND I KNOW A LOT OF THE FINANCIAL RISK IS NOT NECESSARILY TIED TO THE BIG BANKS. YOU THINK ABOUT 2006, 2007 AND SEEING THE CIRCULARITY IN SOME OF THE WAY THINGS WERE FINANCED. I DON’T WANT TO DRAW TOO MANY PARALLELS TO TODAY BUT I DO WONDER, IF WE ARE GOING TO HAVE A CLEARER LENS INTO THAT POTENTIAL RISK IN A WAY THAT

41:28 MAY BE WE HAD BACK THEN MEANING WE WON’T HAVE IT NOW GIVEN THAT SO MUCH OF WHAT IS HAPPENING IF – IS OUTSIDE OF THE TRADITIONAL BANKING SYSTEM. MEREDITH: THE BANKS HAVE EXPOSURE TO THE PRIOR CREDIT AND PRIVATE EQUITY FUNDS. THEY ARE BACKDOOR LENDERS TO THEM. THERE IS SOME EXPOSURE. AND THEY ARE UNDERWRITERS OF A LOT OF THESE HYPERSCALERS AND THESE DEALS. GOLDMAN AND JP MORGAN, DEFENDERS OF COREWEAVE ARE BIG UNDERWRITERS OF COREWEAVE. YOU HAVE – THE BANKS HAVE

42:04 SPECTACULAR EARNINGS IN THE UNDERWRITING CALENDAR HAS BEEN INCREDIBLY ROBUST THIS YEAR. THAT IS ALL DUE TO HYPERSCALER UNDERWRITING AND THE NIO CLOUD UNDERWRITING. I THINK THERE IS A LOT OF – THERE IS NO SYSTEMIC RISK WITHIN THIS MARKET BUT THERE IS A LOT OF THE MARKET THAT IS DEPENDENT ON THIS ONE TRAIN. ROMAINE: AND THAT GETS TO LARRY FINK’S POINT. THE ECONOMY MIGHT BE DEPENDENT ON IT AS WELL AND THE SHORT TERM. MEREDITH WHITNEY FROM MEREDITH

42:37 WHITNEY ADVISORY GROUP AS WE COUNT YOU DOWN TO THE CLOSING BELLS. THE NASDAQ INDICES UP ABOUT 1% ON THE DAY TRYING TO GET BACK SOME MOJO. BAILEY: TODAY FEELS LIKE A ROTATION OF THE ROTATION WE SAW LAST WEEK. YOU SEE THE LAGGING FROM UTILITIES AND REAL ESTATE AND FINANCIALS. IT IS A CRITICAL EARNINGS WEEK FOR THE ENTIRE ECOSYSTEM. WHEN WE HEAR FROM THE LIKES OF A META-WHEN WE TALK ABOUT WHAT WILL ACTUALLY LOOK LIKE.

43:08 ROMAINE: WE WILL HEAR FROM QUITE A FEW OTHERS IN THE TECH SPACE AND OTHER COMPANIES IN THE BROADER ECONOMIC ECOSYSTEM. WE COUNT YOU DOWN TO THE CLOSING BELLS WITH STOCKS AND YIELDS HIGHER. >> THE CLOSING BELL, BLOOMBERG’S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: RIGHT NOW WE ARE TUNING INTO THE END OF THE TRADING DAY. ROMAINE BOSTICK AND BAILEY LIPSCHULTZ TAKING YOU TO THE

43:40 CLOSING BELL. WE ARE JOINED BY CAROLYN MASSAR AND NORAH MULINDA. WELCOME TO ALL OF OUR AUDIENCES. CAROL MASSAR, LAST FRIDAY WE WERE TALKING ABOUT THE SELLOFF THAT WE SAW IN TECH STOCKS AND SOME ATTEMPTS TO BITE INTO THAT DIP. THE QUESTION IS, DOES IT HOLD? >> I KEEP GOING TO TODAY’S TRADE. WE ARE WELL-OFF TODAY’S HIGHS EVEN SEMICONDUCTORS.

44:14 THEY WERE UP THREE POINT 7%. STILL UP ABOUT 1.9 PERCENT BUT OFF THEIR HIGHS OF THE SESSION. I THINK PEOPLE ARE WAITING TO SEE SOME OF THE BIG TECH RESULTS. >> THIS IS THE THIRD BUSIEST WEEK OF THE EARNINGS SEASON. A LOT OF FOCUS ON THE BIG TECH NAMES THAT HAVE BEEN A LARGE PART OF MARKET LEADERSHIP SO FAR THIS YEAR. BAILEY: DOW JONES, S&P, NASDAQ, TRADING VOLUME 12% TO

44:46 18% BELOW AVERAGE. KIND OF POSITIONING, HOLDING OUR BREATH, GETTING READY FOR EARNINGS TO SHAKE OUT THIS MARKET TO THE UP OR DOWN SIDE? ROMAINE: WHAT DO YOU THINK THE RESPONSES GOING TO BE? YOU HAVE HIGH EXPECTATIONS, TECH COMPANIES POTENTIALLY POSTING DOUBLE-DIGIT, TRIPLE IN SOME CASES GROWTH. A A LOT OF PEOPLE FEEL ALL THE GOOD NEWS IS PRICED IN.

45:19 DOES SOMEBODY COME OUT AND SAY, THE STOCK GOES NOWHERE OR SELLS OFF? JUST ASKING. THESE ARE QUESTIONS. [LAUGHTER] I WILL ASKING THEM MYSELF. WE HAVE THE CLOSING BELL IN NEW YORK. THE DOW JONES DOWN BY ABOUT 36 POINTS. THE S&P ADDS ABOUT 32 POINTS ON THE DAY, .4%. THE NASDAQ COMPOSITE AND 100 EACH HIGHER BY 1.1%. THE RUSSELL 2000 ADDING POINT TO – ADDING .2%.

45:52 CAROL: TO DIG INSIDE, YOU’VE GOT 323 NAMES – SO MORE NAMES IN THE S&P LOWERED TODAY. 177 TO THE UPSIDE AND 3 UNCHANGED. BAILEY: WE SAW STRONG PERFORMANCE RELATIVELY IN CONSUMER DISCRETIONARY, TECH AND COMMUNICATION SERVICES. AMAZON IS THE BIG DRIVER. ALL TECH TO THE UPSIDE. LAGGARDS, UTILITIES DOWN 2%, REAL ESTATE DOWN MORE THAN 1%,

46:23 FINANCIALS DOWN .8%. CAROL: INDIVIDUAL GAINERS, THE PHILADELPHIA SEMICONDUCTOR INDEX, SNAPPING A LOSING STREAK, THE LONGEST LOSING STREAK IN 18 YEARS. WIPED OUT ABOUT $2.3 TRILLION IN MARKET VALUE. WE TALKED ABOUT THAT A LOT LAST WEEK. THE STOCK TODAY UP ABOUT 1.6%, WELL OFF ITS HIGH. MARVEL TECHNOLOGY WAS A TOP GAINER EARLIER, NUMBER ONE IN

46:56 THE S&P AND NASDAQ 100. IT MOVED OFF THAT BUT WE SAW A HIGH OF ABOUT 8% INTRADAY. TODAY A 4% GAIN. SANDISK, NUMBER TWO GAINER, UP 4.5%. SHARES RSING – SHARES RISING AMID A BROAD-BASED RALLY. COREWEAVE WAS HIGHER ALSO BUT FINISHED THE DAY DOWN. A BIG MOVE AGAIN AND THAT NAME. AMAZON, WE SAW THIS ONE

47:32 RALLYING AS MORGAN STANLEY NAMED IT THE TOPIC ON AI TAILWINDS. UP JUST SHY OF 5%, CITING A NUMBER OF STRONG GROWTH DRIVERS, SAME WE CONTINUE TO THINK GROWTH AND PROFIT RUNWAY IS UNDERAPPRECIATED REFERRING TO AWS, SEEING THEM AS A WINNER OF AGENTIC A.I. LEVERAGING E-COMMERCE INFRASTRUCTURE AND LOYAL USER BASE TO CONTINUE TO MONETIZE. PRICE TARGET UP TO 350 FROM 335 DOLLARS WITH THE OVERWEIGHT

48:05 RATING. A 40% UPSIDE ON AMAZON’S FRIDAY CLOSE – MOVEMENT TO THE UPSIDE. DATA DOG, ROMAINE, YOU LIKE TO HEAR ABOUT THAT NAME – A TOP GAINER IN THE S&P AND NASDAQ 100. OUTPERFORMING FOR MARKET PERFORMANCE CITING AI TAILWINDS. PRICE TARGET UP TO 350 FROM 237 DOLLARS. THE STOCK CLOSING AT $260 OR SO AND CHANGE. NORAH: WHIRLPOOL IS HAVING A TOUGH

48:37 DAY, HITTING THE LOWEST LEVEL SINCE 2009. LONGBOW RESEARCH CUTTING RECOMMENDATION ON THE STOCK TO NEUTRAL FROM BUY, TAKING A MORE CAUTIOUS VIEW ON 2027 FUNDAMENTALS FOR THE COMPANY GIVEN THE WEAKNESS THEY ARE SEEN IN NORTH AMERICA AND LATIN AMERICA, THE CONSUMER OUTLOOK AND THE PROSPECT FOR A MORE STAGFLATIONARY MACROENVIRONMENT. THE STOCK HAS BEEN PRESSURED THIS YEAR. SHARES DOWN ABOUT 63% YEAR TO DATE. LET’S TAKE A LOOK AT AMERIPRISE FINANCIAL. FALLING BY ABOUT 4% ON THE DATE. A DOUBLE DOWNGRADE THE COMPANY

49:13 GOT AT BANK OF AMERICA TO UNDERPERFORM FROM BUY. THE ISSUE COMES DOWN TO RETENTION. MORE ADVISOR TEAMS ARE STARTING TO START LEAVING OR JOINING FIRMS WHERE THEY COULD EARN MORE MONEY AND BIG WALL STREET FIRMS ARE DOING BETTER KEEPING ADVISORS OR SO IT IS ESSENTIALLY CAUSING THIS COMPANY TO HAVE TO PAY THEIR EMPLOYEES MORE TO REALLY ENTICE THEM TO STAY. WE DID SEE BANK OF AMERICA HAVING THE PRICE TARGET CUT TO

49:44 400 $45 FROM $570. AND LASTLY TAKE A LOOK AT MATTEL, FALLING BY 1.9% ON THE DAY. A BIT OF A SHAKEUP IN SOME LEADERSHIP WE HAVE BEEN SEEING FROM THIS COMPANY. THE NEW CFO PETER GRIFFITH REPLACING PAUL R. TOMORROW. WE KNOW RECENTLY THE FORMER CEO, LEAVING FOR PARAMOUNT OCTOBER 2. A BIT OF UNCERTAINTY FROM INVESTORS ABOUT WHAT IS GOING ON WHEN WE THINK ABOUT THE LEADERSHIP SHIFTS. THE STOCK IS DOWN ABOUT 15% YEAR TO DATE. ROMAINE:

50:21 IN YIELDS, WE SAW THE SELLOFF AS MARKETS RESUMED. WE GOT A TASTE OF THIS RIGHT AS WE SAW YIELDS RISE. IT CREPT UP EVEN FURTHER TODAY. A 16 BASIS POINT DROPPED LAST WEEK ON THE 10 YEAR YIELD GIVING BACK ABOUT SEVEN BASIS POINTS TODAY, SIMILAR MOVE FRIDAY HERE AS A LOT OF PEOPLE AGAIN SORT OF TURNED BACK TO THE LONGER TERM STRUCTURAL ISSUES GOING ON RIGHT NOW AND THE TREASURY SPACE, LESS FOCUS ON THE SHORT-TERM. CAROL: IT’S GOING TO BE A BUSY WEEK BUT HERE ARE INTERESTING STORIES THAT CAUGHT OUR ATTENTION. ROMAINE, YOU LOOK A LITTLE OLDER. [LAUGHTER] DO YOU REMEMBER LEARNING TO

50:54 WRITE CURSIVE? ROMAINE: DO I REMEMBER. YEAH. NORAH: YOU REMEMBER HOW STILL? ROMAINE: YEAH. [LAUGHTER] BAILEY: I’M IN MY 30’S. IF YOU LIKE THIS IS MORE OF A LAST FOUR YEAR THING MAYBE. NORAH: MY FAVORITE THING TO DO ACTUALLY. CAROL: SCHOOLS HAVE GOTTEN AWAY FROM THIS WITH THE INCREASE IN TECHNOLOGY AND NOW YOU’VE GOT MORE THAN A DOZEN STATES REINTRODUCING CURSIVE MANDATES IN RECENT YEARS, NEW JERSEY, PENNSYLVANIA THE LATEST TO DO

51:30 IT. SOME STUDIES SAY CURSIVE LEADS TO SPELLING, WRITING FLUENCY. THERE’S SOME DEBATE. ROMAINE: I SAW THIS – APPARENTLY THIS IS AN OP-ED, WRITTEN BY THE EDITORS, BUT UNNAMED, BY THE WAY. TO PLAY DEVIL’S ADVOCATE, WHAT IS THE PURPOSE? BAILEY: ONE THING WITH CURSIVE IS SIGNATURES. THAT’S IT. THAT’S ALL I’VE GOT. CAROL: THAT’S ALL YOU DO. NORAH:

52:02 ON X THERE WAS ESSENTIALLY A TREND OF THE FACT THAT ANGELINA JOLIE LEFT A NOTE FOR HER HOUSEKEEPERS IN THE HOTEL SHE LEFT AND NO ONE CAN READ IT – THAT’S HOW CONCERNING IT IS. THAT PEOPLE DON’T UNDERSTAND IT. CAROL: BUT WHAT ABOUT READING THE DECLARATION OF INDEPENDENCE? NORAH: IMPORTANCE OF. ROMAINE: HAVE YOU SEEN OUR POLITICAL DISCOURSE? NO ONE IS READING THAT ANYMORE. CAROL: I DON’T KNOW. ROMAINE: SOME IN I WOULD LOVE TO READ IT OUT TO. EVERY SINGLE NIGHT. CAROL: IT’S IMPORTANT. ROMAINE:

52:34 AD NAUSEAM. CAROL: WRITING LETTERS AND NOTES – ROMAINE: SOME STILL DO IT. YOU CAN STILL PRINT IF YOU WANT TO. BUT IT’S GOOD. I DON’T KNOW. WHY NOT FOCUS OUR KIDS ON WRITING CURSIVE INSTEAD OF THE THINGS THAT WILL ACTUALLY GET THEM JOBS? CAROL: OK, WOW. [LAUGHTER] ROMAINE: WHO WERE THE EDITORS THAT WROTE THIS? I WOULD LIKE TO KNOW. CAROL: I THINK IT’S KIND OF INTERESTING. I DON’T KNOW. IT TEACHES KIDS TO BE, LIKE FOCUSED, – LIKE, FOCUSED ON A

53:07 SPECIFIC ITEM. MAYBE I AM JUST OLD-FASHIONED. [LAUGHTER] I’M RIGHT THERE WITH YOU, OLD-TIMER. THAT IS A WRAP. WE CALL IT THE CLOSING BELL. WHAT YOU ARE SEEING NOW ISBLOCK PRINTING. [LAUGHTER] HELP ME. ROMAINE AND BAILEY CONTINUING ON “THE CLOSE.” WE WILL SEE THE SAME TIME, SAME PLACE TOMORROW.

53:37 ♪ ROMAINE: “THE CLOSE” IS FOR THE KIDS AND ALL THEY ARE TALKING ABOUT IS A BIG WEEK COMING UP FOR TECH EARNINGS AFTER THE BREAK WITH ANKUR CRAWFORD OVER AT ALGER. >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS “THE CLOSE.” ROMAINE: WELCOME BACK TO “THE CLOSE.” BIT OF A REBOUND COMING OFF OF LAST WEEK’S SELLOFF, THE WORST

54:08 THAT WE SAW IN THE NASDAQ 100 AND PHILADELPHIA SEMICONDUCTOR INDEX ON A WEEKLY BASIS GOING BACK TO APRIL OF 2025. A LOT OF INVESTORS THOUGHT THE BABY GOT THROWN OUT WITH THE BATHWATER. A LOT OF FOLKS, PILING BACK INTO SOME TECH NAMES. THE S&P UP .4%. THE NASDAQ COMPOSITE AND 100 EACH UP 1%. CONSUMER DISCRETIONARY NAMES, ADDING ABOUT 3% BECAUSE OF THE BUMP UP WE SAW AND AMAZON. UTILITIES TO THE DOWNSIDE. YIELDS BACK UP TO THE UPSIDE. AND THE DOLLAR RELATIVELY UNCHANGED. AMAZON RALLYING 4%, NAMED AS

54:44 ONE OF THE BEST IDEAS GOING FORWARD LARGELY BECAUSE OF THE INCREASED PRESENCE IN THE A.I. SPACE. PNC FINANCIAL, THE WHOLE COHORT OF FINANCIAL NAMES DOWN ONCE AGAIN PARTLY BECAUSE OF THE UPLIFT WE CONTINUE TO SEE IN RATES. PNC, COMING OFF SIX STRAIGHT WEEKS OF DECLINES IN STARTING WEEK SEVEN NOT NECESSARILY ON THE BACK FOOT. THE RISE IN YIELDS PUTTING HOMEBUILDERS ON THE BACK FOOT. AND THERE WAS COREWEAVE. AT ONE POINT RALLIED SIX OR SEVEN PERCENT BUT STARTED TO FADE CLOSER TO THE CLOSING BELLS, ENDING IN THE RED.

55:18 BONDS REMAIN IN DISTRESSED TERRITORY. THAT BRINGS US TO THE TOP STORY OF THE HOUR, A REBOOT IN THE AI TRADE COMING OFF THE BIGGEST WEEKLY DROPS IN THE NASDAQ AND THE SOX IN A YEAR AND A HALF. THE DEBATE SHIFTED ON WHETHER AI ISRAEL TOOK QUESTIONS ON WHETHER FINANCIAL RETURNS WILL ARRIVE BEFORE THE DEBT, POWER AND POLITICAL COST OVER ONE THE INVESTMENT CASE. BONDS RALLIED EARLIER BUT LOST STEAM LATER IN THE DAY. IT DID NOT HELP THAT NEIL PLOWED AND SKILL SET OVER THE WEEKEND MICROSOFT PULLED OUT OF

55:50 A U.K. DATACENTER DEAL. ANOTHER REMINDER NOT EVERY PROJECT OR FINANCING MODEL WILL SURVIVE THE INVESTMENT CYCLE. WHAT IS THE MESSAGE FROM THE MARKET? IS IT THAT COMPANIES CANNOT BORROW INDEFINITELY AGAINST PROFITS? IT MIGHT STILL BE INDETERMINATE? THAT’S A FAIR DEBATE FOR NEO PLOWED BUT WHAT ABOUT FURTHER HYPERSCALERS – FOR THE HYPERSCALERS THAT FARED BETTER IN LAST WEEK’S SELLOFF SUGGESTING A ROTATION OF MONEY WITHIN THE A.I. EQUITY TRADE RATHER THAN MONEY

56:21 HEADING FOR THE EXITS ALTOGETHER. BONDS TELL A SIMILAR STORY. HIGH-YIELD SPREADS WIDENED. INVESTMENT CREDIT STAYED TIGHT. META AND TESLA REPORT WEDNESDAY PROVIDING THE NEXT POTENTIAL TEST OF DEMAND AND PROFITABILITY IN THE A.I. SPACE. OUR NEXT GUEST BRINGS AN ENGINEER’S EYE TO THE DEBATE. ANKUR CRAWFORD. PORTFOLIO MANAGER AT ALGER, GREAT TO SEE YOU AGAIN.

56:56 LOOKING BACK TO LAST WEEK, I WOULD LIKE YOUR TAKE ON WHAT WE SAW AND MORE IMPORTANTLY, DID IT REALLY SIGNAL ANYTHING BROADER ABOUT THE A.I. TRADE OR SOMETHING THAT HAD TO DO WITH COREWEAVE AND ITS OWN ISSUES? ANKUR: THERE’S A LOT OF SKITTISHNESS IN THE MARKET BECAUSE A.I. IS A HARD THING TO FATHOM AND GET YOUR HANDS AROUND – ESPECIALLY THE RATE OF THE BILL. NATURALLY THERE IS NERVOUSNESS AROUND CAN WE DO SOMETHING THIS FAST? BUT I WILL SAY WHAT I SEE IN THE FUNDAMENTALS – I WENT TO A

57:30 DATACENTER SHOW THREE WEEKS AGO, IN SAN FRANCISCO LAST WEEK. IF YOU LOOK AT WHAT IS HAPPENING IN AI TODAY, I HAVE NEVER SEEN A BIFURCATION BETWEEN THE STOCKS VERSUS FUNDAMENTALS THAT IS QUITE SO WIDE. IN PART BECAUSE, YOU KNOW, WE ARE ACTUALLY ON VERY STRONG FOOTING IN THE A.I. BUILD AND THE ADOPTION OF A.I. USE CASES ARE BECOMING EVEN MORE OBVIOUS. SO IT IS INTERESTING, THIS DICHOTOMY OF THE STOCK

58:01 PERFORMANCE VERSUS THE FUNDAMENTALS. ROMAINE: WHY DO YOU THINK INVESTORS ARE SKITTISH? WHAT IS CAUSING THAT, THEY HAVE NOT SEEN THE RETURNS, THE RETURNS THEY WANT TO SEEK? ANKUR: IT HAS TO DO WITH THE RETURNS. THEY WILL COME. IT WILL TAKE TIME. YOU DON’T SEE RETURNS IMMEDIATELY. DEBT CAN BE A PROBLEM. THE SUPPLY CHAIN – THERE MAY BE A LOT OF GOLDEN SCREWS THAT CREATE HEADWINDS FOR THE GROWTH. MOST OF THE SUPPLY CHAIN FOR A.I.

58:35 IN THE INDUSTRIAL SPACE WERE GDP MINUS GROWERS. FOR DECADES THEY BASICALLY GREW GDP MINUS. AND NOW WE ARE ASKING THEM TO GROW 30 OR 40 OR 50 OR 100 PERCENT INTO 2028. THAT REQUIRES A COMPLETELY DIFFERENT MINDSET. REQUIRES PEOPLE, THE POWER, A WHOLE DIFFERENT KIND OF OPERATIONAL EXCELLENCE. ROMAINE: WHEN WE TALK ABOUT THE A.I. BUILD OUT, THE TIME, THE IDEA THIS MONEY IS GOING IN, TAKE

59:07 DATA CENTERS FOR EXAMPLE, A LOT OF THE TALK HAS BEEN ABOUT THE IDEA THAT YOU CAN BUILD OR PLAN TO BUILD BUT AT SOME POINT YOU CANNOT PLUG THAT INTO THE GRADE OR A POWER SOURCE, WHAT IS THE VALUE OF THAT? WE SAW THAT WITH JUPITER FORCE, HELD UP BECAUSE OF A GAS PERMIT, NOT ABOUT A LACK OF DEMAND FOR WHATEVER THE END PRODUCT IS. WHEN YOU WERE AT THE CONFERENCE, WHERE THE CONFERENCE, WHETHER TALKING MORE ABOUT THAT OR THE END USE CASES? ANKUR: MORE ABOUT HOW THEY ARE SHORT

59:41 PEOPLE AND SHORT POWER, AND IT FELT A LITTLE FRENETIC IN THAT AGAIN THEY DID NOT HAVE ENOUGH PEOPLE TO KIND OF BUILD COOLING SYSTEMS OR SOME OF THE BASIC ENGINEERING KIND OF INDUSTRIAL THINGS THAT YOU NEED TO GO INTO A DATACENTER. THERE WAS A LITTLE BIT OF FRENETICISM AROUND THAT, HOW ARE WE GOING TO KEEP UP? NOT NECESSARILY ARGUING END USE CASE FOR A.I. ROMAINE:

1:00:15 WHEN WE TALK ABOUT THE CASE FOR WHAT A.I. CAN BE, AND LOOK AT THE INVESTMENTS YOU GUYS A PUBLICLY DISCLOSED AT ALGER. IT IS PRETTY BROAD-BASED. PICKS AND SHOVELS, POWER, AND IN BETWEEN. IS THAT THE IDEA OF SPREADING YOURSELF OUT OR ARE THESE TARGETED BETS? ANKUR: THEY ARE DEFINITIVELY TARGETED BETS. IF YOU THINK ABOUT WHAT A.I. TOUCHES, IT IS STARTING TO TOUCH A LOT OF DIFFERENT

1:00:46 ASPECTS OF THE ECONOMY. AND WE TRYING TO THINK ABOUT WHERE WE ARE GOING IN TWO YEARS AND BE THERE BEFORE EVERYONE ELSE IS. WE ALL KNOW THAT WE ARE SHORT POWER. THEY TRADE SINGLE-DIGIT MULTIPLES FOR THE IPP’S. IT DOESN’T MAKE SENSE THEY SHOULD TRADE AT THESE VALUATIONS ESPECIALLY AS THE MARKET IS GETTING ON LAW – GETTING UNLOCKED. LOWER MULTIPLES THEN WHEN WE DID NOT HAVE AN A.I. TRADE ON. HAVE INCREDIBLE AMOUNT OF

1:01:18 PRICING POWER. ROMAINE: WE WERE TALKING EARLIER WITH JIM KELLER ABOUT THIS IDEA – HE RAISED THE IDEA OF HE IS ABLE TO USE A LINK TO PROGRAM, WHATEVER HE IS DOING ON THE OPEN SOURCE SIDE. I HEARD YOU TALKING ON THE SHOW ABOUT SOFTWARE WRITING SOFTWARE. HOW FAR ALONG ARE WE IN THAT?

1:01:49 ANKUR: PRETTY FAR ALONG, AND AND I THINK THE ONE THING WE NEED TO COMPLETE THAT VIEW IS HAVE THE SOFTWARE ACTUALLY WRITE SECURE SOFTWARE, NOT JUST SOFTWARE. RIGHT NOW WE CAN WRITE A LOT OF UNSECURE SOFTWARE THAT ENTERPRISES WILL NOT USE. BUT WE ARE FAR ALONG IN WHAT SOFTWARE CAN DO. AND I WOULD GIVE IT ANOTHER COUPLE OF YEARS BEFORE ALMOST EVERYTHING CAN BE REENGINEERED.

1:02:20 ROMAINE: DO YOU THINK IT IS POSSIBLE YOUR TIMELINE MIGHT END UP ACCELERATING, GIVEN HOW MUCH WE HAVE SEEN A.I. AND LARGE LANGUAGE MODELS ACCELERATE THEIR CASE OF QUALITY I GUESS – [ACE OF QUALITY I GUESS – PACE OF QUALITY I GUESS? ANKUR: IT IS MOVING FASTER THAN EVEN WE HAD THOUGHT. SO, COULD IT BE SOONER? SURE. EVEN SOONER THAN WE THINK. ROMAINE: ANKUR CRAWFORD. PORTFOLIO MANAGER OVER AT ALGER.

1:02:52 WE WILL CONTINUE TO FOCUS ON A.I. AND AGENTIC A.I. THE COFOUNDER AND CEO O – OF ESPA LABS JOINS US AFTER THE BREAK HERE ON BLOOMBERG. ROMAINE: WE HAVE GONE FROM CHATBOTS TO AGENTIC A.I. IN A FEW YEARS. OUR NEXT GUEST SAYS PERSONAL AI AGENTS ARE HERE FOR MAINSTREAM USE. HE HELPED TO CREATE ESPA LABS. I’M PLEASED TO SAY DEON

1:03:26 NICHOLAS JOINS US IN THE STUDIO. I AM WANT TO FRAME THIS AROUND META, THE AGENT EVERYONE IS TALKING ABOUT. THERE WAS A LOT OF QUESTIONS AS TO WHETHER PEOPLE WANTED THIS, IF THEY WOULD BE WILLING TO TRADE PRIVACY FOR WHATEVER USEFULNESS THEY GOT OUT OF IT. WHEN YOU SEE A COMPANY LIKE META SHOW PROOF THAT THERE IS DEMAND, WHAT DOES THAT MEAN FOR YOU AT ESPA? DEON: I THINK THERE IS A HUGE MARKET FOR AGENTIC A.I. TO BE APPLIED TO PERSONAL USE.

1:03:58 MY LAST COMPANY I BUILT AND SCALED. WE BUILT AGENTS FOR BUSINESSES AND ENTERPRISES TO USE. AND ONE OF THE BIG THINGS I SAW WAS AT THE END OF THE DAY INDIVIDUAL HUMANS WERE ALSO GOING TO BE EMPOWERED AND ENABLED WITH A.I. AGENTS. THERE’S GOING TO BE A MASSIVE MARKET, THERE WILL BE A BILLION SMALL BUSINESS OWNERS AND INDIVIDUALS WERE ABLE TO USE A.I. BOTH FOR PERSONAL AND WORK. AND THE BIG QUESTION THEN IS, IF A.I. IS CAPABLE AND POWERFUL IN OUR LIVES, WHICH KIND OF A.I. SHOULD WE BE TRUSTING WITH OUR DATA AND WITH OUR LIVELIHOODS?

1:04:29 ROMAINE: YOU MENTIONED YOUR PREVIOUS COMPANY FORETHOUGHT WHICH YOU SOLD THE CRP OVER THE LAST PART YOU SET ABOUT TRUSTING WITH OUR DATA. YOU WORKED AT FACEBOOK BACK IN THE DAY. THERE’S BEEN A LOT OF QUESTIONS AS TO HOW MUCH PEOPLE TRUST META AND THE ECOSYSTEM. WHEN I LOOK AT OTHER A.I. AGENTS, WHY SHOULD I HAVE MORE TRUST IN THAT THAN THE OTHER GUY IF YOU KNOW WHAT I MEAN? DEON:

1:05:00 I WOULD FIRST START WITH WHAT IS THE FUNDAMENTAL BUSINESS MODEL OF THESE BUSINESSES? YOU HAVE A LOT OF COMPANIES LAUNCHING A.I. AGENTS WHERE AT THE CORE THEY ARE ADVERTISING COMPANIES THAT WILL BUILD A FREE PRODUCT. AND IF YOU ARE NOT THE CUSTOMER, IN SOME WAY YOU ARE THE PRODUCT. WHEN YOU SEE THE INCENTIVES, YOU CAN SEE WHAT THE AGENTS WILL BE DOING FOR YOU IN TERMS OF POWER BUT ALSO IN TERMS OF THE WAYS YOU CAN OR CANNOT TRUST THEM. THERE WILL BE OTHER AGENTS FOR COMMERCE AND THINGS LIKE THAT

1:05:35 AND IT IS ALL ABOUT THE BUSINESS MODEL. ARE YOU PAYING FOR A SOFTWARE THAT IS FUNDAMENTALLY YOURS WHERE YOUR DATA IS OWNED BY YOU AND YOUR MEMORIES ARE OWNED BY YOU OR ARE YOU USING FREE A.I. AGENTS THAT CAN EFFECTIVELY REFER YOU OR SEND YOU TO THE BEST BIDDER? DEON: WHAT IS – ROMAINE: WHAT IS ESPA’S’S BUSINESS MODEL? DEON: AN AI AGENT FOR PERSONAL AND FOR WORK. FOR PERSONAL FOR FREE BUT THEN FOR WORK WE HAVE INTEGRATIONS TO THINGS LIKE QUICKBOOKS AND BUFFER, HUBSPOT, ALL THE TOOLS YOU USE. WHETHER IT IS A RESTAURANT OWNER OR A MUSIC PRODUCER IN

1:06:08 LOS ANGELES, A REALTOR, THESE ARE THE PEOPLE WHO WILL BE USING A.I., TRUSTING ESPA WITH THEIR DATA AND WHAT THEIR WORKFLOWS. ROMAINE: ARE YOU CONCERNED ABOUT A POTENTIAL BACKLASH TO THIS? NOT FROM THE USERS BUT FROM COMPANIES LIKE BANK CEO’S SAYING WE ARE NOT GOING TO LET THESE THINGS COME INTO OUR ECOSYSTEM WITHOUT THE HUMAN INVOLVED, CONSUMER FACING COMPANIES SAYING SIMILAR THINGS WHETHER IT IS FOR REAL REASONS OR THEY ARE SCARED? DEON: I THINK TRUST GOES BOTH WAYS.

1:06:42 IT’S FUNNY – THE NAME ESPA COMES FROM THE FRENCH WORD TO “HOPE” OR “TO TRUST.” A LOT OF BUSINESSES ARE BUILDING OUT MCP’S AND MODEL CONTEXT PROTOCOLS AND INTEGRATIONS AND WE ACTUALLY HAVE ALMOST 100 DIFFERENT INTEGRATIONS – NATIVE INTEGRATIONS TO THESE BUSINESSES. LONG-TERM THE ACTUAL SECRET IS TO PARTNER WITH THESE COMPANIES. IT IS NOT TO HAVE STRAIT OF HORMUZ AGENTS THAT GO ROGUE – IT IS NOT TO HAVE A.I. THAT GO ROGUE.

1:07:18 BUILD THAT TRUST IN THE ENTERPRISE AND BUSINESS USERS. ROMAINE: ON THIS IDEA OF GOING ROGUE, HOW DO YOU ENJOY YOUR TECHNOLOGY IS NOT JUST GOING TO DECIDE TO EMPTY OUT MY BANK ACCOUNT OR BY A BUNCH OF THINGS I DID NOT WANT TO BUY? DEON: IT COMES DOWN TO A THOUGHTFUL GUARD RAILS. WHEN WE THINK ABOUT SOFTWARE, IT’S LIKE THINKING ABOUT WORKING WITH A HUMAN EXECUTIVE ASSISTANT OR A TEAMMATE OR EMPLOYEE, YOU WOULD NOT GIVE THEM UNFETTERED ACCESS TO EVERYTHING ON DAY ONE.

1:07:49 YOU WOULD CREATE THE RIGHT GUARDRAILS AND BUILD TRUST OVER TIME. THE SAME IS TRUE WITH AN A.I. AGENT. WE HAVE BUILT GUARDRAILS AROUND WHEN CAN THE A.I. SEND AN E-MAIL ON YOUR BEHALF VERSUS NOT? BY THE TILL IT ALWAYS DRAFTS AND YOU APPROVE EVERYTHING. THE SAME WITH PAYMENTS AND BOOKINGS. ANYTHING LIKE THAT. AS YOU BUILD CAPABILITIES, YOU BUILD GUARDRAILS. ROMAINE: ALWAYS A GREAT CONVERSATION. DEON NICHOLAS. CO-FOUNDER AND CEO OF ESPA LABS. WHEN WE COME BACK, MORE RETURN, MORE RISK AND MORE OPPORTUNITY,

1:08:22 ACCORDING TO THE TEAM AT J.P. MORGAN ASSET MANAGEMENTM TAKING THE LONG VIEW INT 2027. AFTER THE BREAK ON “THE CLOSE” RIGHT HERE ON BLOOMBERG. ♪ ROMAINE: A QUOTE, CAPEX SUPERNOVA FUELING HIGHER GROWTH AND STRONG RETURNS. THAT IS WHAT J.P. MORGAN ASSET MANAGEMENT SAYS IN THE LATEST REPORT. THEY PROJECT A 7% ANNUAL RETURN

1:08:54 FOR 60-40 PORTFOLIOS OVER THE NEXT 10 TO 15 YEARS. JOINING US IS DAVID KELLY – ARE DAVID KAILEY AND STEPHEN PARKER. THIS IS A LONG-TERM OUTLOOK GOING IN. WHEN YOU TALK ABOUT THIS CAPEX SUPERNOVA AND RESULTS THAT MIGHT COME OUT OF IT, IS THAT SHORT-TERM OR FAR OFF? >> BOTH SHORT-TERM AND LONG-TERM. THIS IS THE 31ST YEAR WE HAVE DONE THESE MARKET ASSUMPTIONS. 90 PEOPLE WORKING ON THIS FOR THE LAST SIX MONTHS OR SO.

1:09:28 WE SORT OF KEPT ON BUMPING INTO THE MULTIPLE WAYS IN WHICH THE A.I. BOOM IS AFFECTING BOTH CAPITAL SPENDING AND LONG-TERM PRODUCTIVITY. IN THE SHORT RUN, IT IS PART OF A WAVE OF CAPITAL SPENDING AROUND THE WORLD, IN DEFENSE IN EUROPE, COUNTRIES IN GENERAL DOING MORE CAPITAL SPENDING. BUT ALSO OVERTIME TIME MORE AND MORE TASKS AND JOBS WILL GET REPLACED BY A.I. AND THAT IS CHALLENGING FOR EVERYBODY BUT THERE’S

1:09:59 PRODUCTIVITY IMPROVEMENT AND THAT IS IMPORTANT FOR MARKETS BECAUSE THERE’S NOTHING THAT PUSHES OUR PROFITS THAN PRODUCTIVITY. ROMAINE: WHEN DO WE START TO SEE THAT SHOW UP IN THE INCOME STATEMENTS AND BALANCE SHEETS OF COMPANIES? >> WE ARE STARTING TO SEE IT. IT’S NOT JUST THE HYPERSCALERS AND CAPEX . THE IMPORTANT THING IS WHEN YOU LOOK FOR THE EXPECTATION FOR EARNINGS AND GROWTH, THE TAILWINDS START OUT WITH THE TECH SECTOR BUT OVER THE NEXT DECADE IT’S ABOUT THE BROADENING TO OTHER PARTS OF

1:10:30 THE MARKET. ROMAINE: WHEN DO WE SEE THE BROADENING? THAT’S BEEN THE GAME IN MARKETS FOR A WHILE. A LOT OF PEOPLE BELIEVE IN THE GENERAL THESIS YOU LAID OUT. BUT QUESTION ON TIME. >> THIS IS ALL TRIAL AND ERROR. IS ONE OF THE WONDERFUL THINGS ABOUT AMERICAN CAPITAL MARKETS. LIKE IN THE INTERNET BOOM, WE TRIED LOTS OF THINGS. THINGS THAT WORKED WORKED REALLY WELL. MORE COMPANIES ARE EXPERIMENTING WITH USING A.I.

1:11:06 TECHNOLOGY ITSELF IN TERMS OF CODING IS ONE OF THE AREAS WE HAVE SEEN THE BIGGEST INROADS OFF THE BAT. WE ARE SEEING IT ACROSS THE ECONOMY WHERE COMPANIES ARE SEEING – WE COULD HAVE A.I. DO THIS OR THAT. VARIOUS A.I. APPLICATIONS ARE MUCH BETTER DOING PARTICULAR JOBS THAN HUMANS OR THE EXISTING WORKFORCE. WE WILL BUILD OVER TIME. IT’S EXTRAPOLATED OF IN TERMS OF A TECHNOLOGY. ROMAINE: ARE THERE CERTAIN INDUSTRIES THAT MIGHT SEE GREATER UPSIDE

1:11:40 FROM PRODUCTIVITY IMPROVEMENTS RELATIVE TO OTHERS? BETTER INVESTMENTS? >> WHEN WE LOOK AT THE EXPECTATIONS FOR U.S. EQUITIES AS AN EXAMPLE, WE THINK MARGINS ARE STRUCTURALLY HIGHER NOW. IN ALL-TIME HIGHS IN MARGINS. MANY ARE WORRIED ABOUT REVERSION TO HISTORIC LEVELS. THAT IS NOT NECESSARILY THE CASE. IN THE NEAR TERM IT IS A TECH STORY. THAT IS MARGIN BOOST. THEN YOU WILL SEE A ROTATION INTO OTHER PARTS OF THE MARKET. THE U.S. LARGE-CAP NUMBERS WERE UPGRADED BECAUSE WE THINK YOU’VE GOT A NICE DIVERSIFICATION DESPITE

1:12:13 THE CONCENTRATION IN THE TECH SECTOR. >> WE DO THIS RESEARCH IN A.I. IN A NUMBER OF TASKS, THE NUMBER OF TASKS WHICH BY 2040 A.I. WILL BE ABLE TO ESSENTIALLY DO MUCH FASTER THAN HUMANS – EVENTUALLY AI IS GOING TO BE ABLE TO DO IT TWICE AS FAST AT THE SAME QUALITY. AND WE THINK OVER 70% OF THE TASK DONE BY AMERICAN WORKERS,

1:12:44 GLOBAL WORKERS WILL BE ESSENTIALLY IN THAT CATEGORY OVER 15 YEARS OUT. IT GETS MORE AND MORE IMPORTANT. ROMAINE: THERE’S BEEN A LOT OF QUESTIONS AS TO – DOES THAT INCREASE IN PRODUCTIVITY COME AT THE EXPENSE OF JOBS? TO THE POINT WHERE IT HAS A MATERIAL IMPACT ON THE ECONOMY AND THE COMPANIES THEMSELVES? >> IT DOES HAVE THE POTENTIAL, IT WILL CERTAINLY CAUSE DISRUPTION. IT MAY BE PHASED IN SLOWLY

1:13:16 ENOUGH TO NOT CAUSE A CYCLICAL DOWNTURN IN JOBS BUT THERE WILL BE JOBS LOST. AND OF COURSE JOBS GAINED. WE HAVE FOUND THIS WITH EVERY REVOLUTION IN TECHNOLOGY. THE ONE THING WE ARE CONCERNED ABOUT IS T – IT COULD MAKE INEQUALITY AROUND THE GLOBE EVEN WORSE BECAUSE THOSE INDIVIDUALS WHO CAN TAKE ADVANTAGE OF A.I. AND THOSE WHO WILL BE CHALLENGED BY A.I. >> WHEN YOU LOOK AT DEMOGRAPHIC TERMS, THE LABOR FORCE IS ACTUALLY SHRINKING. YOU’VE GOT HEAD WINDS AROUND IMMIGRATION. WE VIEW TECHNOLOGY AND A.I.

1:13:50 NOT NECESSARILY AS WHAT WILL CAUSE MASSIVE DISRUPTION BUT ACTUALLY TO FILL AN IMPORTANT GAP WE WILL SEEK OVER THE NEXT – SEE OVER THE NEXT 10 OR 15 YEARS. >> MASSIVE POPULATION GROWTH IS ALWAYS PART OF GDP GROWTH EQUATION. AS LABOR FORCES STOP GROWING, YOU HAVE TO FIND GROWTH SOMEWHERE ELSE AND A.I. AND PRODUCTIVITY IS ONE OF THOSE PLACES. ROMAINE: YOU BROUGHT UP SOMETHING INTERESTING ABOUT THIS IDEA OF MARGINS BEING STRUCTURALLY HIGHER AND THIS IS NOT JUST

1:14:20 TEMPORARY. HAVE TO ASK YOU ABOUT THE RIGHT SIDE OF QUESTIONS BECAUSE A LOT OF PEOPLE LOOK AT THE INCREASE WE HAVE SEEN AN INTEREST RATES AND THEY VIEW THAT AS POTENTIALLY A STRUCTURAL SHIFT AS WELL, IS THIS MAYBE A POTENTIAL TO SEE SOME REVERSION NOT NECESSARILY BACK DOWN TO THE 1% OR 0% WORLD? >> WE DON’T THINK WE ARE GOING BACK TO THAT LOW INTEREST RATE WORLD. YOU COULD SEE RATES DECLINE A LITTLE BIT. IMPORTANTLY WHEN WE LOOK AT EXPECTATIONS, NOT JUST THE U.S. WOULD AROUND THE WORLD,

1:14:52 REPRICING HAS MADE THIS ONE OF THE MOST ATTRACTIVE OPPORTUNITIES TO INVEST . EXPECTATIONS ARE THE HIGHEST THEY’VE BEEN IN TWO DECADES. WHILE BONDS WON’T NECESSARILY PROTECT YOU AS WELL IN A WORLD OF HIGHER INFLATION, YOU HAVE A MUCH BIGGER BUFFER. WHEN TALKING TO CLIENTS, WE TALK ABOUT A MUCH MORE COMPELLING ENTRY POINT FOR FIXED-INCOME BUT ALSO THINKING ABOUT DIVERSIFYING AGAINST INFLATION RISK. >> WE HAD THIS PERIOD OF ABOUT 15 YEARS BETWEEN THE FINANCIAL CRISIS AND THE PANDEMIC RECESSION WHERE RATES WERE LOW.

1:15:25 IT IS BACK TO NORMAL NOW BUT NOT QUITE THE SAME AS YOUR GRANDFATHER’S BOND MARKET BECAUSE THERE IS SO MUCH THAT – DEBT OUT THERE. UNIT PRIVATE MARKETS TO GIVE YOUR BROADER DIVERSIFICATION. WHAT WILL BE A VOLATILE ENVIRONMENT. ROMAINE: LET’S TALK ABOUT PRIVATE MARKETS, TOO . IT’S NOT JUST ABOUT RETURN. IT’S ABOUT DISPERSION. DIVERSIFICATION, FOR CERTAIN TIME, RECENTLY WAS LACKING IN A

1:15:56 LOT OF FOLKS’ PORTFOLIO. HOW DOES THAT CHANGE? >> WE ARE REFRAMING A CONVERSATION AROUND ALTERNATIVES. THERE’S AN OPPORTUNITY TO BE MORE INTENTIONAL. THERE ARE ALTERNATIVES ALL ABOUT ENHANCING THE RETURNS OF YOUR PORTFOLIO, THINGS LIKE PRIVATE EQUITY AND VENTURE CAPITAL. AND THEN ALTERNATIVES FOCUS ON DIVERSIFYING THE RISK IN YOUR PORTFOLIO LIKE HEDGE FUNDS AND INFRASTRUCTURE. CLIENTS ARE TILTING TOWARD THOSE DIVERSIFIERS, GIVEN THE

1:16:28 RALLY WE HAVE SEEN IN MARKETS AND THE STRONG GROWTH ENVIRONMENT WE ARE TALKING ABOUT. THEY NEED TO BUFFER THAT PORTFOLIO PARTICULARLY OF INFLATION IS A THING PEOPLE ARE STARTING TO WORRY ABOUT. >> WE ARE MORE OPTIMISTIC. WE LIFTED RETURN EXPECTATIONS THIS YEAR GOING FORWARD. YOU CAN SEE IN OUR REPORT, YOU’VE GOT THESE HUGE FORCES OF ECONOMIC NATIONALISM AROUND THE WORLD. THIS TAILWINDS OF A.I. AND ALL THE UNPREDICTABILITY OF THE. – OF THAT.

1:17:01 THINGS THAT COULD CAUSE SHOCKS. WE EXPECT VOLATILITY FROM INFLATION, THE TECH BUILD OUT, AND SOME OTHER ASPECT OF TECHNOLOGY GOING WRONG – SO IT IS ALL IMPORTANT NOT JUST TO BE BROADLY DIVERSIFIED AGAINST THE THINGS THAT COULD GET YOU ROMAINE: ARE THOSE SHOCKS BECOMING A MORE PERMANENT FEATURE? EVERYONE IS LOOKING FOR THE NEXT GLOBAL FINANCIAL CRISIS BUT MAYBE THE REAL RISK IS SMALL THE SHOCKS THAT PERSISTENT AND CONTINUOUS.

1:17:32 >> EVERYONE IS SAYING MAYBE THE INCREASE IN INTEREST RATES WILL CAUSE IT – THAT IS NOT WHAT THE PROBLEM IS. THE PROBLEM IS LOOK AT THE SHOCKS OF THE 21ST CENTURY. 911. THE GREAT FINANCIAL CRISIS. THE FINANCIAL INDUSTRY. THE PANDEMIC. THESE COME FROM OUTSIDE. TECH GETS MORE AND MORE POWERFUL OR MORE EXPOSED TO THESE GLOBAL SHOCKS. IS YOUR PORTFOLIO RESILIENT? NOT IN THE CASE OF ARMAGEDDON TODAY. BUT SOMETHING REALLY BAD HAPPENING. WE HAVE HAD SOMETHING BAD HAPPEN, HOW CAN YOU WHETHER THAT? RESILIENCE IS THE KEY TO BETTER

1:18:06 LONG-TERM RETURNS. THAT’S WHY WE BELIEVE IN A MORE THOUGHTFUL WAY OF DIVERSIFYING. DIVERSIFICATION SHOULD NEVER BE AUTOPILOT. THINK ABOUT HOW TO DO THAT. ROMAINE: A LOADED QUESTION – YOU HAVE BEEN DOING THIS 31 YEARS, YOU SAID? YOU ARE NOT AS A OVER 40, DAVID. I LOOKED AT THIS IDEA, YOU HAVE A RETURN FOR BITCOIN HERE, THE FIRST TIME, THAT I’VE SEEN THAT FOR CRYPTO. NOT AN ACTUAL ALLOCATION

1:18:39 RECOMMENDATION BUT YOU HAVE A RETURN RANGE. WHY DID YOU PUT THAT IN THERE? >> FIRST IT IS IMPORTANT TO RECOGNIZE THIS IS A RESEARCH AND FRAMEWORK FOR CLIENTS RATHER THAN RECOMMENDATION ABOUT INCORPORATING BITCOI CRUDE – BITCOIN OR CRYPTOCURRENCIES INTO THE PORTFOLIO. IN AN ASSET CLASS THAT IS EMERGING, HIGHLY VOLATILE, WE ARE THERE – WHERE THERE’S

1:19:12 UNCERTAIN, PROVIDE A FRAMEWORK FOR THE DIFFERENT POTENTIAL DRIVERS OF RISK AND RETURNS. THE CONCLUSION AS THIS IS NOT SOMETHING WE SEE AS A CORE PART OF YOUR PORTFOLIO BUT SOMETHING THAT IS IMPORTANT TO A LOT OF CLIENTS AND WE WANT IT TO HELP THEM THINK THROUGH THAT. ROMAINE: YOU CAN READ THE LONG-TERM CAPITAL MARKETS ASSUMPTIONS, THE LATEST REPORT OUT BY J.P. MORGAN ASSET MANAGEMENT IS OUT. THANKS TO DAVID KELLY AND STEPHEN PARKER, OF JP MORGAN PRIVATE BANK. WE CLOSE HIGHER FROM – FOR

1:19:48 MOST OF THE MAJOR INDICES. MORE STRENGTH IN THE DISCRETIONARY AND TECH SPACE HERE. TRYING TO REBOUND FROM LAST WEEK’S SELLOFF. WE WILL BE BACK IN A MOMENT. THIS IS BLOOMBERG. ♪ >> ONE OF THE THINGS ABOUT TOKENIZATION IS TWO MAJOR QUESTIONS, CAN IT BE MORE EFFICIENT AND CAN IT BE MORE ACCURATE? IF THAT IS THE CASE, WHY WOULD WE NOT WANT TO THINK ABOUT MOVING TOWARDS THAT SYSTEM JUST AS WE MOVED AWAY FROM THE 1960’S LABOR BASE? ROMAINE:

1:20:20 MARKET WAY TO SPEAKING ON A PROGRAM LAST MONTH ABOUT THE PUSH TOWARDS TOKENIZATION AS DIGITAL ASSETS CONTINUE TO GROW ACROSS THE FINANCIAL ECOSYSTEM. A LETTER TO THE SEC TODAY, WRITING TOKENIZATION HAS REAL POTENTIAL TO MODERNIZE MARKETS. BUT GETTING FOUNDATIONS RIGHT FROM DAY ONE IS A CENTRAL – ONE IS ESSENTIAL. KEN, I WANT TO START WITH TOKENIZATION AND HOW MUCH HAS

1:20:52 CHANGED OVER THE 20 YEARS SIFMA HAS BEEN AROUND. MY QUESTION IS, DOES TOKENIZATION FULFILL A NEED OR IS IT ADDING ANOTHER LAYER OF COMPLEXITY? >> THANK YOU FOR HAVING ME. WE ARE EXCITED ABOUT THE 20TH ANNIVERSARY OF THE BOND MARKET ASSOCIATION. A LOT HAS HAPPENED OVER THE LAST 20 YEARS. TOKENIZATION IS IN SOME WAYS THE LATEST ADVENT OF BOOK ENTRY AND HOW FINANCIAL PLUMBING WORKS. AND THE INDUSTRY HAS BEEN WORKING ON THINGS AROUND

1:21:27 BLOCKCHAIN FOR OVER A DECADE. WE ARE SEEING TOKENIZATION OF TRADITIONAL ASSETS IN THE TREASURY MARKET, MONEY MARKET FUNDS – LESS SO THE EQUITIES MARKETS. BUT HOW IT WORKS AND OPERATES IS VERY IMPORTANT AND THAT IS WHY YOU REFERENCED LETTER WE SENT TO THE SEC TODAY OF A NUMBER OF QUESTIONS THAT COULD HAVE – IF THEY ARE NOT ANSWERED, COULD HAVE CONSEQUENTIAL IMPACTS ON HOW EQUITY MARKETS OPERATE. THE TECHNOLOGY HAS PROMISED.

1:21:59 WE ARE SEEING IT TAKE UP – NOT AS FAST AS SOME THOUGHT. WE HE TOO UNDERSTAND WHAT THE RULES ARE. ROMAINE: THERE’S BEEN PUSHED BACK FROM PUBLICLY THIS ACCOMPANIES IT SAYING TOKENIZATION CIRCUMVENTS THE WHOLE PROCESS OF WHY THEIR PUBLIC. WHAT ASSURANCES – THEY ARE PUBLIC. WHAT ASSURANCES SHOULD BE PUT IN PLACE TO MAKE SURE OWNERSHIP OR WHATEVER CHAIN OF OWNERSHIP SHOULD BE IS APPROPRIATELY REPRESENTED BY WHATEVER SECURITY REPRESENTS THOSE COMPANIES? KEN: FIRST OF ALL WE THINK THERE SHOULD HAVE BEEN AN OPT IN, NOT

1:22:34 OPT OUT TO BE TOKENIZED. WE HAVE BEEN TALKING ABOUT HOW THE COMPANIES WILL KNOW WHETHER OR NOT TSV – TOKENIZATION SECURITIES VENUE WANTS TO TOKENIZED AN ISSUER’S STOCK. ISSUERS HAVE TO BE CONCERNED IF THEY ARE TRADING ON MULTIPLE VENUES OR THEY ARE FRAGMENTED PRICING. PARTICULARLY WITH THE TSV VENUES THAT DON’T OPERATE UNDER THINGS LIKE THE MBBO. THAT’S A LEGITIMATE CONCERN AS WE THINK ABOUT IT.

1:23:06 THERE ARE OTHER EFFORTS IN TOKENIZATION LIKE DTCC SETTING UP THE PLATFORM THAT IS AN ISSUER CONSENT INSIDE THE DTCC ECOSYSTEM. NOT THE SAME RISK OF POTENTIAL PRICE FRAGMENTATION. ROMAINE: I DO WANT TO TALK ABOUT BASICALLY ONE OF THE BIGGEST CHANGES IN TREASURY MARKET IN DECADES AT THE END OF THIS MONTH, WITH REGARDS TO SORT OF MOVING TOWARDS THIS WILL TREASURY CLEARING. ARE WE READY FOR THIS?

1:23:42 I CAUGHT UP WITH THE DTCC CEO LAST MONTH AND THEY SAID THEY ARE READY TO GO, ARE YOU SEEING THAT? KEN: WE ARE GOING TO GO TO CASH TREASURIES CLEARING AT THE END OF THE CALENDAR YEAR, WE FEEL CONFIDENT THAT WILL GO WITHOUT A HITCH. WE HAVE BEEN DOING A LOT OF WORK WITH PARTNERS ACROSS THE INDUSTRY. DEVELOPING DOCUMENTATION FOR DONE WITH/DUNAWAY CLEARING. WORKING WITH DTCC, THE FICC, SOME LIKE CME AND

1:24:13 ICE. A LOT OF WORK HAS GONE INTO THE LAST COUPLE OF YEARS. CASH I THINK WE’LL BE FINE. SOME THINGS THE SEC NEEDS TO DO AROUND IN AFFILIATE TRANSACTIONS AND CROSS-BORDER TRANSACTIONS. WE HAVE BEEN TALKING A BIT ABOUT THAT. LET’S GET THROUGH – AND LET ME SAY THE INDUSTRY IS WORKING TO MEET THE DEADLINES. WE ARE GOING TO KEEP OUR NOSE DOWN AND KEEP WORKING TOWARDS IT. ROMAINE: SHOULD THE SEC PUSH BACK THE

1:24:45 REPO DEADLINE? WOULD SIFMA ADVOCATE FOR THAT? KEN: WE HAVE NOT. WHAT WE PLAN TO DO IS AGAIN GET THROUGH CASH. THE SEC HAS NO INTEREST IN EXTENDING THAT. WE ARE KEEPING OUR NOSE TO THE GRINDSTONE ON THIS. WE WILL REGROUP WITH THE INDUSTRY AND AND SEE WHERE THINGS STAND WITH RESPECT TO REPO AND PROCEED FROM THERE. ROMAINE: ONE THING A LOT OF PEOPLE, WHEN THEY WERE LOOKING AT THE

1:25:15 ROLLOUT OF THIS, THIS IDEA OF MOVING TO A TRUE 24/7 CYCLE FOR MARKETS, THE IDEA THAT IT IS ALWAYS ON, YOU CAN ALWAYS TRANSACT. DO YOU SEE TOKENIZATION OR ANY OTHER SORT OF FINANCIAL PRODUCT OUT THERE THAT DOES PROVIDE A QUICKER AND CLEARER PATH TO 24/7 TRADING? KEN: SO, YOU KNOW, WE THINK OF IT AS 23/5 TRADING TODAY.

1:25:50 NASDAQ AND NYSE ARE WHICH WE EXPECT TO GO LIVE AT THE END OF THIS YEAR. THE VOLUMES ARE PRETTY THIN OUTSIDE THE OPEN AND CLOSE. AND MOSTLY ASIA RETAIL. BUT THERE’S STILL A LOT OF THINGS THAT HAVE TO BE WORKED OUT THAT WE ARE WORKING ON IN TERMS OF THINGS LIKE CORPORATE ACTIONS AND HOW TO THOSE THINGS WORK IN THE OVERNIGHT? AND THAT WILL TAKE A LOT OF WORK. IN TERMS OF MODERNIZATION OF TECHNOLOGY, WE WILL HAVE MORE TO SAY IN THE NEXT COUPLE WEEKS. THINGS LIKE THE PAYMENTS

1:26:31 PROCESS OF DIGITAL CASH/MONEY COMING TO THE FOUR WHICH WILL BE AN ADDITIVE TO THE PROCESS BUT WE WILL HAVE MORE TO SAY ABOUT IT IN A COUPLE OF WEEKS. ROMAINE: WITH REGARD TO TECHNOLOGY, I HAVE TO ASK OF THE OBLIGATORY QUESTION ABOUT ARTIFICIAL INTELLIGENCE AND ITS INTEGRATION POTENTIALLY INTO OUR FINANCIAL SYSTEM, EVEN DEEPER THAN WHERE IT IS RIGHT NOW. KEN: CERTAINLY, LIKE EVERY SECTOR ACROSS THE ECONOMY, OUR INDUSTRY IS LOOKING AT A.I. AND HOW IT CAN BE COMPLEMENTARY. AND HAS BEEN FOR MANY YEARS. ALSO LOOKING AT IT FROM A RISK FACTOR, CYBER CONCERNS. SO IT IS TOP OF MIND FOR OUR

1:27:05 RESILIENCY. FOR PEOPLE ACROSS THE INDUSTRY AS WELL. OUR VIEW IS THAT, YOU KNOW, WE THINK THE RULES FOR FIRMS’ USAGE FOR AI ARE PRETTY CLEAR IN WHAT THE OBLIGATIONS ARE. I THINK WHERE THERE IS INCREASING INTEREST AND POTENTIAL CONCERN IS OUTSIDE THE PERIMETER OF THE INDUSTRY, HOW CLIENTS MAY BE USING A.I. AND WHERE IT BUMPS INTO THE INDUSTRY, THAT IS SOMETHING WE WILL THINK ABOUT AS WELL. ROMAINE: REALLY APPRECIATE YOU JOINING

1:27:38 US ON THE YIELDS OF YOUR ANNUAL MEETING, A COUPLE WEEKS OUT OF THE 20TH ANNIVERSARY OF THE SIFMA COMBINATION. THE PRESIDENT AND CEO OF SIFMA. WE WILL BE BACK IN A MOMENT SETTING YOU UP FOR WHAT TO WATCH OVER THE NEXT 24 HOURS ♪ >> MY BIGGEST CONCERN IS THE UNDERESTIMATED RUSSIAN IMPACT ON OUR SOCIETIES. WHICH HAS TO DO WITH THE WAR IN UKRAINE. BUT THIS IS ONLY A PART OF THE PICTURE. THE BIG PICTURE IS THAT RUSSIA

1:28:15 IS ON THE WAY TO DESTABILIZE THE ENTIRE POLITICAL ORDER OF OUR EUROPEAN CONTINENT. AND THIS IS OBVIOUSLY UNDERESTIMATED BY MANY PEOPLE IN MY COUNTRY AS WELL. ROMAINE: CHANCELLOR MERZ SPEAKING EXCLUSIVELY WITH FRANCINE LACQUA EARLIER TODAY ABOUT THE THREAT POSED BY RUSSIA. THE CONVERSATION TAKING OVERSEAS TAKEN OVERSEAS. OVER THE NEXT 24 HOURS, THERE’S A FIRE HOSE OF EARNINGS THAT

1:28:46 KICKS INTO GEAR EARLY IN THE MORNING. WE WILL HEAR FROM GENERAL MOTORS AND GENERAL ELECTRIC. 3M ALSO REPORTING AND ANOTHER REPORT OUT OF NORTHROP GRUMMAN. A LOT OF THE ACTION STARTS TO COME IN FROM SPACEX, UNITED AIRLINES, CAPITAL ONE. WE WILL ALSO HEAR FROM NETFLIX. THE STOCK HAS BEEN ON THE BACK FOOT FOR SEVERAL WEEKS. IT’S BASICALLY GONE NOWHERE SINCE THE LAST EARNINGS REPORT, THAT SINCE THEN, WE HAVE SEEN A SLEW OF CHANGES AT THE EXECUTIVE LEVEL THAT COULD HAVE WIDE-RANGING RAMIFICATIONS

1:29:17 FOR HOW THE COMPANY SPENDS ITS MONEY AND HOW MUCH MONEY IT MAKES. . ON THE ECONOMIC FRONT, AN UPDATE ON U.S. HOUSING STARTS, U.S. BUILDING PERMITS AND PENDING HOME SALES. THAT OF COURSE COMING AGAINST THE BACKDROP OF A HIGHER FOR LONGER RATE ENVIRONMENT THAT HAS SCARED A LOT OF WOULD-BE HOMEBUYERS AWAY FROM THE MARKET. AND FOR SPORTS FANS, THE NBA REGULAR SEASON TIPS OFF TOMORROW – LET ME JUST CHECK MY CALENDAR HERE – AT 3:00 P.M. EASTERN TIME.

1:29:47 WE WILL KEEP YOU UPDATED. THE CELTICS AND PISTONS KICK OFF AT 3:00 P.M. YOU – THE NEW YORK KNICKERBOCKERS WILL HOST THEIR FIRST HOME GAME AS CHAMPIONS AGAINST THE PHILADELPHIA 76ERS. I WILL BE BACK TOMORROW FOR ALL YOUR MARKET MOVING COVERAGE. “BALANCE OF POWER” IS UP NEXT AT THE TOP OF THE HOUR. ♪