S&P 500 Hits Record High as Big Tech Leads

Author: Bloomberg Television · Watch on YouTube

Video authored by the channel shown, not by IANIA; all rights belong to the creator. Transcript and summary generated automatically; the original-language content is preserved.

Original language: English

Original video: S&P 500 Hits Record High as Big Tech Leads · Channel: Bloomberg Television · 1:28:50 · Watch on YouTube

Topics: Cybersecurity and software security, AI infrastructure and hardware, Markets and economy

Summary

The S&P 500 and Nasdaq closed at record highs, with gains led by technology, AI-related shares and utilities amid easing Treasury yields. Guests discussed earnings expectations, the narrowness of the rally, AI investment and safety, and the effects of AI demand on chips and power. The program also examined the Skydance-Warner Bros. deal, retirement and wealth management, consumer trends affecting alcohol sales, real estate opportunities, dealmaking and IPO prospects. It ended with a look at private-credit restructuring and the economic releases and company results to watch next.

Key points

The S&P 500 reached its first record high since mid-August, and the Nasdaq also closed at a record.
Market gains were concentrated in large technology and AI-related companies, while small caps lagged.
Guests debated whether projected earnings growth can support valuations and how vulnerable the rally is to higher yields.
AI-driven demand supported chipmakers such as AMD and Nvidia, as well as utilities tied to data-center power needs.
A UBS guest said strong earnings, reshoring and infrastructure investment could support equities, while highlighting fixed-income opportunities.
Skydance completed its acquisition of Warner Bros.; discussion focused on streaming competition, content strategy and the challenge of achieving pledged synergies.
BlackRock’s Jaime Magyera discussed retirement income solutions and a wealth-management service gap for affluent women.
Constellation Brands faces shifting drinking preferences, tariff and cost pressures, and changes in consumer spending and demographics.
A Hamilton Lane guest described real estate as an asset-selection opportunity, citing retail resilience and discounts in real-estate secondaries.
Guests discussed a possible rebound in dealmaking and IPO activity, concentration risk, diversification and private-credit workouts.

Chapters

Start	Chapter	Summary
00:01	Markets approach record highs	The hosts review the S&P 500’s rally, earnings expectations, oil and Treasury yields before discussing the narrow leadership of the market.
03:17	UBS on earnings, rates and portfolio choices	Alli McCartney discusses equity valuations, municipal bonds, AI infrastructure, election uncertainty and the role of private investments.
11:20	Top analyst calls and the Skydance deal	The program reviews stock recommendations and examines the completed Skydance-Warner Bros. merger and its streaming strategy.
16:47	Zscaler CEO on cybersecurity and AI	Jay Chaudhry describes demand for zero-trust security and argues that AI adoption increases the need for cybersecurity.
22:23	Retirement income and the future of wealth	BlackRock’s Jaime Magyera discusses retirement savings, guaranteed income and ways advisers can better serve affluent women.
31:11	AMD and demand for AI chips	The hosts consider AMD’s production outlook, continuing chip demand, competition and questions about AI safety.
35:31	Market breadth and AI risks	Portfolio manager Julie Biel assesses the narrow rally, earnings concentration and concerns about AI companies’ safety incentives.
43:08	Closing bell: records and stock movers	The closing team reports record levels for the S&P 500 and Nasdaq and reviews notable gains and declines, including Nvidia and Constellation Energy.
53:40	Consumer trends and Constellation Brands	The discussion turns to the alcohol market, exploring changing preferences, at-home consumption, tariffs and the pressures facing Constellation Brands.
1:00:48	Real estate opportunities	Hamilton Lane’s Elizabeth Bell discusses risks in real estate, the flight to quality in offices, resilient retail and discounted secondary transactions.
1:07:36	M&A momentum and IPO prospects	Ted Smith discusses dealmaking, regulatory uncertainty, financing sources and the outlook for large technology IPOs.
1:14:44	IPO strategy and market concentration	Dimensional’s Joel Schneider discusses IPO performance, concentration risk and the case for diversification across companies and markets.
1:22:15	Private-credit workouts and the next day’s calendar	Ken Kencel explains a two-part approach to restructuring troubled businesses, followed by a preview of economic data and earnings to watch.
1:28:18	Record-setting close	The program recaps the S&P 500 and Nasdaq records, utility gains and the after-hours reaction to Constellation Brands’ results.

Quotes

The demand is growing very primarily. — 17:19

If they can’t reach you, they can’t reach you. — 18:28

They just want a great wealth manager, a great advisor who’s going to help them achieve their goals and be their trusted partner, not their proxy. — 30:06

Everything is a function of incentives. — 40:26

This is an asset selection game, no longer sector allocation. — 1:02:20

Concepts and entities

S&P 500, Nasdaq, NVIDIA, AMD, Zscaler, Zero trust, Paramount, Warner Bros., Netflix, BlackRock, Constellation Energy, Constellation Brands, Anthropic, SpaceX, Alli McCartney, Jay Chaudhry, Jaime Magyera, Julie Biel, Ted Smith

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: HATE IT OR LOVE IT THE S&P IS BREAKING OUT TO ITS FIRST RECORD HIGH FAR COUPLE OF MONTHS. I’M ROMAINE BOSTICK. SALLY: AND I’M SALLY BAKEWELL. LET’S GET A CHECK ON MARKETS AND WE SEE THAT THE S&P IS UP ABOUT .7%, CLIMBING TO ALL-TIME

00:32 HIGHS HELPED BY EXPECTATIONS THAT CORPORATE AMERICA WILL DELIVER STRONG PROFITS AND WEATHER AN ENERGY SHOCK WHEN IT STARTS REPORTING EARNINGS NEXT WEEK. THE TECH HEAVY INDEX IS ALSO UP AND JUST AS NVIDIA LOOKS POISED TO REACH THE $6 MILLION CALIZATION MARK AND OIL

01:04 . SOME OF THE EARLIER RELEASE IN OIL WHEN WHICH FLUCTUATED TODAY DID HELP TAKE SOME OF THE PRESSURE OFF THE TREASURY 10-YEAR YIELD, WHICH IS DOWN ABOUT.3.3 CURRENTLY. ROMAINE: THE INDEX DOES APPEAR READY TO ACTUALLY BREAK OUT. A FRESH HIGH ASSUMING IT HOLDS

01:40 THIS LEVEL, UP ABOUT 6% FROM THAT TWO-MONTH LOW IN SEPTEMBER. >> THERE’S NOTHING THAT WOULD SUGGEST TO ME THAT THIS CAPEX CYCLE IS COMING TO AN END. AT SOME POINT THE SOLUTION TO HIGHER RATES IS HIGHER RATES. I DON’T THINK WE CAN KEEP GOING MEANINGFULLY HIGHER. ROMAINE: APPLE, NVIDIA, META, MICROSOFT, AMD, MICRON, THAT’S IT.

02:13 THEY’RE DOING THE HELP LIFTING SINCE AUGUST. BANK OF AMERICA STRATEGISTS THOUGH SAY IT’SOR UNWILLING TO LEAN INTO THIS NARROW RALLY RISK UNDERPERFORMING. AS A WHOLE THE RISK PREMIUM FOR HOLDING STOCKS IS BASICALLY GONE. EARNINGS ARE DOING THE VALUATION RATE RIGHT NOW WHICH MEANS YIELDS ARE EVER MORE IMPORTANT. A RESURGENCE HIGHER IN THOSE RATES COULD BE THE UNINTENDED

02:45 WILDFIRE THAT MAKE BURNS US ALL. PHENOMENAL EARNINGS FOR 2026. THE THIRD QUARTER EARNINGS SEASON WITH ANALYSTS PENCILING IN 25% E.P.S. GROWTH FOR THE S&P ON AVERAGE. AN OF A NUMBER EXPECTED TO ACCELERATE FOR Q4, WHICH WAS MARK SIX STRAIGHT QUARTERS OF DOUBLE-DIGIT GROWTH. NO SURPRISE, THE BIGGEST SECTORS, TECHNOLOGY AND ENERGY.

03:17 LET’S KICKED YOU OFF WITH AL ALLIE MCCARTNEY. GREAT TO SEE YOU. >> YOU TOO. ROMAINE: THE INTERPLAY OF YIELDS IN THE STOCKS AND WHETHER THIS IS A MARKET THAT CAN ABSORB THE HIGHER YIELDS. >> I THINK IT’S PROVEN IT CAN. OUR BASE EXPECTATIONS IS THAT WE’RE AT OR HAVE SEEN PEAKS IN THE YIELD AND WHEN YOU LOOK AT WHAT THE MARKET HAS DONE IN REACTION TO THAT.

03:48 P.E.’S COME IN ABOUT 17%. 20% TO 30% IN ON MULTIS IS USUALLY WHAT YOU SEE IN A RECESSION SO THERE’S BEEN SOME HEAVY DISCOUNTING. WE SEE A MARKET PRICING 82 DEPTHS MORE OF DIAGNOSTICKENING. WE THINK YOU GET LESS THAN THAT, WE THINK YOU GET TWO, MAYBE THREE MORE MIKES BUT NOT MORE THAN THAT. SO THERE’S A LOT OF BONDS THAT ARE ALSO REALLY INTERESTING RIGHT NOW. WHEN YOU SEE YIELDS AT LEVELS YOU HAVEN’T SEEN IN A MILLE

04:21 MILLENNIUM. ROMAINE: ARE YOU ALINDICATING FOR MORE TOWARDS FIXED INCOME? >> WE ARE, ESPECIALLY FOR MUNI HOLDERS IN CALIFORNIA AND NEW YORK. YOU CAN TAKE SOME MEANINGFUL LOSSES AND GET INTO THE 10%, 15% COUPONS THAT LOOK LIKE 9% TO 11% TAXABLE EQUIVALENT YIELDS. WE STILL THINK THAT IS GOING TO BE DWARFED BY THE RETURN YOU’LL GET IN THE EQUITY MARKET. YOU WERE JUST TALKING ABOUT IT.

04:55 WE SEE 25% EARNINGS THIS YEAR. WE SEE 15 NEXT YEAR. WHEN YOU GO BACK TO THE PAST, YOU SAW 80% OF COMPANIES IS BEAT AND THAT BEAT WAS ABOUT 30% MORE THAN USUAL SO EVEN THOUGH WE’VE SEEN THE BREADTH COME IN WHERE THE DOMINANCE OF THE MAG 7 AND AI STORY AGAIN BOUNCEBACK. THERE ARE SO MANY OTHER AREAS FROM G.D.P. TO EARNINGS.

05:27 RESHOREING, INVESTMENT AND INFRASTRUCTURE THROUGH THE BIG BEAUTIFUL BILL. WE’RE PUTTING A LOT OF MONEY TO WORK. SALLY: YOU’RE ALSO BULLISH ON UTILITIES AS AN AI MAYBE ARGUING THAT THE MARKET UNDERCUTS THE KIND OF INFRASTRUCTURE AND POWER REQUIRED FOR COMPUTE CAPACITY BUT IS THERE A RISK THAT DRAGS THE THROTTLE THOSE BEFORE TECH COMPANIES CAN ACTUALLY REALIZE THEM? ALLI:

05:58 THE SHORT ANSWER IS YES BUT NOT FOREVER THERE ARE A LOT OF TACTICAL INVESTMENT THEMES THAT WE HAVE THAT THERE’S CERTAINLY A COMPONENT OF REGULATORY RISK, ESPECIALLY WHERE WE SIT NOW HEADING INTO THE MIDTERMS. HOWEVER, WE BELIEVE WHAT YOU’RE GOING TO SEE IN THE MIDTERMS IS AT BEST, A DIVIDED GOVERNMENT, WHICH PROBABLY MEANS WE HAVE ANOTHER TWO YEARS BEFORE WE SEE ANY MEANINGFUL CHANGE. AT MOST OR MOST CONCERNING FOR MARKETS WOULD BE A DEMOCRATIC SWEEP BUT YOU STILL HAVE A

06:33 REPUBLICAN IN OFFICE THAT WILL USE VETO SO WE STILL THINK THERE’S NOT GOING TO BE A LOT OF RESTRICTION FOR THE NEXT TWO YEARS. WE HAVE TO UNDERSTAND THAT AI IS COMING. WE’RE ALREADY SEEING THE THINGS WE NEED TO SEE TO PEOPLE REALLY CONSTRUCTION IN TERMS OF USAGE COMING UP, COSTS STARTING TO COME DOWN IN TERMS OF TOKENNIZATION. IT’S GOING TO HAVE TO HEAL SO MAYBE THE BUILD WILL BE A LITTLE SLOWER BUT WE NEED THAT

07:04 ENERGY AND CHIPS. WE’RE BULLISH ON BOTH. SALLY: IF WE DO GET THAT DIVIDED GOVERNMENT AND WASHINGTON SETTLES INTO GRIDLOCK, WHICH SECTORS ARE SAFEST FROM THINGS LIKE POLICY AND WHERE DO THINGS LIKE SOCIAL SECURITY IS AI REFORMS STAND A EXPANSE AFTER MOVING? ALLI: WE’RE LIKELY TO SEE VERY SMALL MAJORITIES SO COMPROMISE WILL HAVE TO HAPPEN. AGAIN, FOR ANYTHING TO HAPPEN

07:35 IN THE NEXT TWO YEARS, IT WILL HAVE TO BE COMPROMISE WITHIN THE CONGRESS AND COME PRISONS WITHIN THE OVAL OFFICE. WE’VE ALWAYS SAID YOU DON’T WANT TO INVEST AROUND AN INDIVIDUAL ELECTION BUT AROUND POTENTIAL LONGER TERM POLICY CHANGES THAT EMANATE FROM THERE THAT. SO WHAT I THINK YOU’RE GOING TO SEE, ESPECIALLY WHERE WE ARE WITH YIELDS AND THE TIMING OF THE ELECTION, I THINK YOU’LL SEE A SMALL MONTH FOR FIXED INCOME.

08:06 EQUITIES CONTINUE TO BE DRIVEN BY THE EARNINGS THAT WE START TO SEE NEXT WEEK WHEN PUNK WAIT THE STORY YOU STARTED THE HOUR WITH AND THEN MAYBE YOU’LL SEE SOME DIGESTION DURING AND JUST OUT OF THE ELECTION TRYING TO FIGURE OUT WHAT IT MEANS AS RISK COMES BACK INTO THE MARKET AND THEN PROBABLY FIRST QUARTER NEXT YEAR. SOME DIALOGUE ABOUT WHAT THE LONG-TERM IMPLICATIONS TO SOCIAL SECURITY AND AI, WHICH ARE THE BIG TWO ELEPHANTS IN THE ROOM. ROMAINE:

08:37 LONGER TERM AS YOU LOOK AT HOW PEOPLE STRUCTURE THEIR PORTFOLIOS, IS THIS STILL PRIMARILY A PUBLIC MARKET STORY, EQUITIES OR FIXED INCOME? ALLI: IT’S A GREAT QUESTION. FIRST OF ALL, PUBLIC EQUITIES HAVE DONE SO EXTRAORDINARILY WELL IN THE LAST THREE OR FOUR YEARS AND EVEN BEFORE THAT. IT IS EASIER THAN EVER TO BUILD PORTFOLIOS WITHOUT A LOT OF PRIVATES. NO ONE CAN TALK ABOUT THE

09:09 ANTHROPICS OF THE WORLD AND HAVINGED A SPOKE TO THAT, WHICH IS GATE. WE’VE SEEN THE GATES ON PRIVATE DEBT FUNDS COME OUT AND SO WE’VE SEEN BOTH SIDES OF IT. HAVING GONE THROUGH LEHMAN, THE ONE THING I CAN TELL YOU IS THAT WHEN THINGS CRUNCH, WHEN YIELDS GO UP, WHEN YOU HAVE WORRIES ABOUT FLICK FINANCE ABOUT THE ABILITY TO – IN GOVERNMENT, YOU WANT TO KNOW WHAT YOU HAVE AND BE NIMBLE

09:42 AROUND IT. THERE’S MORE THAN EVER ON THE HIGH END OF THE FAMILY OFFICE LEVEL, INDIVIDUALS THAT ACT AND TRADE AS SOPHISTICATED INSTITUTIONS, THERE’S A LOT OF PRIVATE OWNERSHIP DOWN IN THERE AND I THINK ONCE YOU START STARTED TO GET TO A POINT WHERE THERE ARE MORE QUESTIONS ABOUT THE SUSTAINABILITY, PAST TWO YEARS, THINGS LIKE MERGER HEDGE FUNDS. MACROHEDGE FUNDS, THE ABILITY

10:13 TO PLAY WHAT IS INCREASINGLY DIVERGENT TRENDS INSPECT WORLD ARE DEFINITELY GOING TO MAKE IT BACK INTO PORTFOLIOS. ROMAINE: ALLI, GREAT TO HAVE YOU. IT’S BEEN WAY TOO LONG. YOU TALKED ABOUT A LIFETIME ON WALL STREET AND SEEING THE VARIOUS STRUCTURES. MANAGING DIRECTOR OF WEALTH MANAGEMENT AT UBS ALIGNMENT PARTNERS. HERE TO KICK US OFF. A CLOSER LOOK AT SKYDANCE, TALKING WITH ALISHA BUSCH ABOUT

10:49 THE IMPACT OF THE DEAL CLOSING TODAY. SALLY: PLUS, Z-SCALER C.E.O. JAY CHAUDHRY WILL JOIN US LIVE. ROMAINE: AND BLACKROCK’S HEAD OF WEALTH MANAGEMENT, JAIME MAGYERA GOING TO JOIN WITH US. ALL THAT AND MORE COMING UP IN A BIT. THIS IS “THE CLOSE” ON BLOOMBERG.

11:20 ROMAINE: TIME FOR OUR TOP CALLS, THE BIG MOVERS ON THE BACK OF ANALYSTS’ RECOMMENDATIONS. STARTING WITH PROCTER & GAMBLE. AN THE BACK OF AN IMPROVED GROWTH OUTLOOK GOING FORWARD. STOCKS UP FOR A THIRD STRAIGHT GAME. SENIOR LEADERSHIP LAID OUT A STRATEGY TO MORE AGGRESSIVELY RETAIN HIGHER END CONSUMERS,

11:52 DOLLAR GENERAL, AND FINALLY NI NIKE. CHALLENGES TO SELL WITHIN THE SPORTS WEAR MARKET AND IN CHINA. NEVERTHELESS SHARES ARE UP FOR A SECOND STRAIGHT DAY. WE WANT TO PIVOT TO SKYDANCE, THE NEW TICKER IS OUT THERE. PARAMOUNT CLOSING THAT DEAL WITH WARNER BROTHERS. 10 BILLION ACQUISITION, COMPLETING ONE OF THE LARGEST MEDIA MERGERS OF ALL TIME. COMBINED ENERGY NOW TRADING

12:24 UNDER SKYD AND IT’S DOWN 4% ON THE DAY. ALICIA JOINS US. THE DEAL IS DONE AND THE BIG QUESTION IS WHAT COMES NEXT. THE STREAMING SIDE IS GOING TO BE A BIG CHUNK OF THIS BUSINESS. HUGE CONTENT LIBRARY, A LOT OF ORIGINAL CONTENT. WHAT DO YOU EXPECT IS THIS. >> I THINK THEY’RE GOING TO COMBINE THE STREAMING SERVICES, PROBABLY SIMILAR TO HOW – PLUS DID IT WITH ESPN, HULU AND ALL OF THE DIFFERENT BRANDS THEY HAVE.

12:55 I THINK HBO IS GOING TO REMAIN AN INDEPENDENT BRAND AND THEY’RE GOING TO TRY TO LEVERAGE THAT TO COMPETE WITH NETFLIX. COMBINED BASIS BEFORE THE CLOSE THEY HAD ABOUT 210 MILLION SUBSCRIBERS. NETFLIX HAS ABOUT 325 GIVE OR TAKE. NETFLIX STILL HAS THE WINNING POSITION BUT PARAMOUNT IS NOW IN THE LEAD, OR SKYDANCE. SALLY: PARAMOUNT SKYDANCE HAS PLEDGED $6 BILLION IN SYNERGIES OVER THE NEXT THREE YEARS.

13:27 HOW AGGRESSIVE IS THAT AND HOW MUCH OF THAT IS THE KINDS TO TRIM EASY CORPORATE LOW-HANGING FRUIT AND WHAT HIGH RISK CHANGES COULD INTRODUCE FRICTION? ALISHA: WITH THE $3.5 MILLION PRODUCTION BUDGETS AND ALL THE CONTENT THAT THEY HAVE TO PRODUCE ON THEATERS AND ON STREAMING TO COMPETE ON THE STREAMING SIDE BUT ENFORBESSABLE ON THE THEATRICAL SIDE, IT’S GOING TO BE TOUGH TO

14:02 GET THOSE $6 BILLION IN STREAMING AND GETTING THAT LEVERAGE DOWN WITH $8 BILLION IN IN DEBT IS GOING TO BE A TRICKY TASK. SO I THINK NETFLIX HAS A LITTLE BREATHING ROOM FOR A WHILE AS THAT WAS NOT PART OF THE CONSENT OF AGREEMENT WITH COLORADO ATTORNEY GENERAL ROB BONTA. I DO THINK THEY HAVE A LITTLE BIT OF SPACE THERE BUT I WOULDN’T PUT THEM OUT OF THE PICTURE. ROMAINE: AS WE’RE SPEAKING RIGHT NOW, THE THE OF THE UNITED STATES GIVING COMMENTS ON A WILD

14:34 VARIETY OF ISSUE ASKS NOW WEIGHING IN ON SKYDANCE BASICALLY SAYING HE’S GLAD IT WENT THROUGH AND THAT IT’S A GREAT MERGER, BLAH, BLAH, BLAH. WHAT IS THE OVERALL LANDSCAPE LOOKING LIKE FOR ALL OF THESE COMPANIES? NOT JUST SKYDANCE BUT NETFLIX ITSELF AS THE TRADITIONAL SIDE OF THE HOLLYWOOD BUSINESS. WE’RE CONSUMING A LOT DIFFERENT CONTENT IN A LOT DIFFERENT WAYS. WE’VE SEINFELD FLICKS TRY TO DABBLE MORE IN LIVE EVENTS. IS THIS GOING TO BE A FUTURE,

15:08 AT LEAST WITH THE COMPUTERS SCREEN WHERE IT’S MUCH MORE ABOUT LIVE OR IS IT GOING TO BE MORE ABOUT THE ACTUAL SCRIPTED AND UNSCRIPTED CONTENT? ALISHA: I THINK IT’S GOING TO BE A COMBINATION OF THOSE. UP A CHANGING LAND AESCAPE WHERE YOUR TRADITIONAL MEDIA IS SHIFTING AND CHANGE SO DRASTICALLY THAT THIS CONSOLIDATION YOU SAW IN PAR POINTS WARNER BORROWS NEEDED TO CONSOLIDATE TO COMPETE.

15:39 YOUTUBE HAS TAKEN OVER IN SO MANY WAYS IN SHORT-TERM CONTENTS AND HAS BECOME INCREASINGLY IMPORTANT. YOU HAVE SPORTS COMING OFF OF CABLE AND COMING OVER TO THE STREAMING SIDE. IT’S CRUCIAL TO GET SPORTS COB TENTS ON TO THESE STREAMING SERVICES SO I THINK YOU’RE SEEING NETFLIX TRYING TO COMPETE AS WELL AS THEY CAN AND HAVING ALL THE DIFFERENT TYPES OF CONTENT BECOMING A PLATFORM OF SORTS WHERE YOU CAN COME FOR ALL THE DIFFERENT TYPES OF CONTENT YOU LIKE OR YOUR FAMILY, YOUR HOUSEHOLD WOULD

16:12 LIKE TO CONSUME ON THAT ONE PLATFORM AND COMPETE AGAINST THESE BIG BEHEMOTH WHO HAVE MORE EQUITY LIKE SKYDANCE DOES. ROMAINE: NETFLIX HIGHER FOR A SECOND STRAIGHT DAY BUT STILL DOWN MORE THAN 10% SINCE MIDDLE SEPTEMBER. WHEN WE COME BACK, A READ ON THE LANDSCAPE AWAY CEO, CHAIRMAN AND FOUNDER OF Z-ZALEER, KAY CHAUDHRY. ROMAINE: Z-SCALER UP ABOUT 4% ON THE DAY.

16:47 IT’S INVESTOR DAY. REAFFIRMING GUIDANCE FOR THE Q1 AND FULL FISCAL YEAR. THE CHAIRMAN SAYING AI IS QUICKLY BECOMING THE MOST SIGNIFICANT OPPORTUNITY IN OUR COUNTRY’S HISTORY. KAY CHAUDHRY JOINS US RIGHT NOW. LET’S START OFF FIRST WITH THIS IDEA OF ZERO TRUST, THE SIGNATURE CLOUD SECURITY PLATFORM AND SOME SENSE HERE, JAY, CAN YOU SHARE WITH US WHAT DEMAND IS LOOKING LIKE AND WHETHER THAT DEMAND HAS INCREASED MATERIALLY THIS YEAR

17:19 GIVEN ALL OF THE INCIDENTS IN FOCUS ON CYBERSECURITY? JAY: IN SHORT, THE DEMAND IS GROWING VERY PRIMARILY. LET ME EXPLAIN WHY – EVERY C.E.O. AND EVERYONE BOARD BELIEVES THAT A.I. MUST BE ADOPTED BECAUSE IT CAN INCREASE YOUR TOP LINE AND IMPROVE YOUR BOTTOM LINE AS WELL. BUT THE BIGGEST CONCERN C.E.O.’S HAVE IS SIGNER SECURITY. CAN THESE AGENTS GO ROGUE AND THE LIKE? THAT’S WHY IT’S CREATING A BIG DEMAND FOR CYBERSECURITY AND

17:51 ESPECIALLY FOR ZERO TRUST SECURITY BECAUSE YOU DON’T WANT AI ACTS TO BE RUNNING AMUCK ON YOUR CORPORATE NETWORK AND Z-SCALER FIXES THAT. ROMAINE: GIVE ME A SENSE. ON YOUR LAST CALL YOU TALK TOO BAD IDEA OF FRONTIER MODELS MULTIPLYING AT THIS EXPONENTIAL LEVEL. AND I’M WONDERING HOW YOU KEEP UP WHEN YOU’RE FIGHTING AGAINST HAS IF NOT THE SAME POWER, MAYBE MORE. JAY:

18:28 IT IS TRUE THAT FRONTIER MODELS ARE VERY POWERFUL AND CAN FIND VULNERABILITIES IN ALMOST ANY SOFTWARE. COMPANIES ARE BUSY FIXING SOFTWARE PATCHES. THAT’S ONE PIECE BUT THERE’S AN EASIER WAY TO DO SOMETHING ELSE. THAT IS BETTER SECURITY BY HIDING YOUR APPLICATION BEHIND ZERO TRUST EXCHANGE. IF THEY CAN’T REACH YOU, THEY CAN’T REACH YOU. THAT’S WHAT WE ALLOW OUR CUSTOMERS TO DO. NUMBER TWO, IF YOU GET

18:59 BREACHED, WHICH MAY HAPPEN, THE MALWARE AND AGENTS WILL GO ON YOUR NETWORK AND OTHER THINGS. WITH ZERO TRUST, WE START THERE BECAUSE YOU DON’T TRUST ANYONE. YOU CREATE ISLANDS. CUSTOMERS ARE LEANING TOWARDS US. OVER 50% OF FORTUNE 500 COMPANIES DEPEND UPON US. SALLY: JAY, YOU’RE AIMING TO DOUBLE

19:30 YOUR RECURVE BALL REVENUE ORGANIZINGLYICALLY AND HAVING A BEST-CASE GOAL OF 0 MILLION. WHAT SPECIFIC SIGNS SHOULD INVESTORS LOOK FOR TO KNOW THAT YOU’VE BEEN SUCCESSFUL IN THIS AND ARE YOU CONSIDERING ANY INORGANIC OPTIONS ON THE TABLE? JAY: THE TWO TARGETS WE GAVE, AS THE C.E.O., OUR FOCUS IS 0 BILLION AND WE HAVE A SECOND TARGET OF $8 BILLION. TRUST OF IT’S VERY MUCH NEEDED

20:08 NOW AND THE SECOND PART IS THE PLATFORM. CUSTOMERS ARE TIRED OF A LOT O OF – PRODUCTS. WE HAVE PUT TOGETHER SOFTWARE THAT’S INTEGRATED AND WORKING VERY WELL TOGETHER. THE THIRD PIECE IS WE REMOVE A LOT OF TECHNOLOGY, OLD FIREWALLS, ETC., HURNS THEY REDUCE COST AND COMPLEXITY. ROMAINE: WE DO HAVE TO ADDRESS THE ELEPHANT IN THE ROOM, JAY, TOO. THE IDEA THAT A LOT OF INVESTORS HAVE DECIDED THAT

20:41 BASICALLY SOME OF THESE AI MODELS CAN BASICALLY DO THE SECURITY WORK FOR THEM AND I KNOW THAT TO A CERTAIN EXTENT THERE HAVE BEEN SOME INCIDENTS THAT MAYBE HAVE CAUSED A BIT OF A RETHINK OF THAT AS OF LATE BUT ARE THOSE PEOPLE WRONG? ARE THERE A LOT OF CAPABILITIES BUILT INTO THESE MODELS THAT EFFECTIVELY TREAD ON YOUR TURF? JAY: THERE’S A LITTLE BIT OF MISUNDERSTANDING OF IT. I WOULD SAY THAT THESE MODELS ARE OVERALL INCREASING THE DEMAND FOR SECURITY AND IS

21:14 PROBABLY THE BIGGEST TAIL WIND FOR Z-SCALER. IT IS TRUE THAT THESE MODELS ARE FIND SOFTWARE VULNERABILITIES SO IT’S GOING TO IMPACT A FEW COMPANIES BUT COMPANIES LIKE Z-SCALERS, ZERO TRUST CONNECTIVITY SO THE RIGHT PARTY CAN TALK TO THE RIGHT PARTY. MODEL COMPANIES ARE WORKING WITH US VERY CLOSELY TO MAKE SURE TOGETHER WE CAN HELP ENTERPRISES. IF WE DON’T DO THAT, ADOPTIONAL MODELS SLOW DOWN.

21:49 SO IT’S IN THE INTERESTS OF MODEL COMPANIES TO WORK WITH COMPANIES LIKE Z-SCALERS. ROMAINE: FRESH OFF THEIR INVESTOR DAY, Z-SCALER AND DOUBLING DOWN ON THEIR CLOUD-BASED SECURITY PLATFORM. WHEN WE COME BACK, THE FUTURE OF WEALTH. BLACKROCK’S NEW REPORT. WE’LL HAIR FROM JAIME MAGYERA WHEN WE COME BACK AFTER THE BREAK RIGHT HERE ON “THE CLOSE” ON BLOOMBERG.

22:23 ♪ >> WHAT I THINK IS GOING TO BE A MUCH BIGGER PART OF THE PRIVATE CREDIT MARKET IS THE RETIREMENT SPACE. AS WE THINK ABOUT PRODUCTS FOR THE RETIREMENT SPACE WE’RE LOOKING AT FUNDS THAT HAVE A MUCH MORE SIGNIFICANT LIQUID COMPONENT SO THINK MULTICREDIT SOLUTIONS. MEANING A RETIREMENT PLAN CAN BUY INTO A FUND THAT MIGHT HAVE 40% LIQUID CREDIT, 30% INVESTMENT GRADE CREDIT. 20% PRIVATE CREDIT. THERE’S A LOT MORE FLEXIBILITY

22:57 SO I THINK MULTICREDIT VEHICLES WILL BECOME THE NORM IN THE RETIREMENT SPACE. ROMAINE: KEN RERCEL SPEAKING WITH ME AT THE GREENWICH ECONOMIC FORUM. IT RELATES TO OUR NEXT GUEST AND HERE’S A NUMBER – A BLACKROCK RETIREMENT SURVEY EARLIER THIS YEAR FOUND THAT SEVEN AND 10 ME, BELIEVE THEY’RE ON TRACK FOR RETIREMENT YET PROJECTED WORKPLACE EARNINGS ARE EXPECTED TO BE ONLY 50% OR 60% OF WHAT THEY’LL NEED. THE GAP INCREASINGLY IS

23:32 ENGINEERING. GUARANTEED INCOME BUILT INTO THE GLIDE PATH. JOINING US MORE IS BLACKROCK’S HEAD OF RETIREMENT AND U.S. WEALTH DEVISE ORE JAIME MAGYERA. GOOD TO HAVE YOU HERE. JAIME: GOOD TO HAVE HERE, THANKS FOR HAVING ME. ROMAINE: HOW BIG IS THIS GAP IS MORE IMPORTANTLY HOW ADDRESSABLE IS IT IN REALITY? JAIME: THE GAP IS BIG. AND AS YOU SAY, IT DEPENDS ON

24:04 HOW OLD YOU ARE, HOW MUCH YOU MAKE, IT DEPENDS ON WHETHER YOU HAVE A 401K PLAN OR ACCESS TO ONE. THE REALITY IS PEOPLE KNOW AND UNDERSTAND AND OUR STUDIES SHOW THAT PEOPLE UNDERSTAND THEY NEED TO SAVE MORE BUT IT’S HARD. THEY HAVE COMPETING PRIORITIES. STUDENTS LOANS OR CHILD CARE OR HELPING MY AGING PARENTS AND HOW DO I PRIORITIZE WHERE MY MONEY GOES? I THINK WHAT’S OPTIMISTIC OR ENCOURAGING IS THERE ARE WAYS TO CLOSE THE GAP SO YES, PEOPLE

24:35 NEED TO SAVE, FOR SURE BUT IF YOU THINK ABOUT MAKING YOUR SAVINGS WORK HARDER FOR YOU THROUGH BETTER TARGET SOLUTIONS. THE BIGGER ISSUE I SEE IS PEOPLE DON’T KNOW HOW TO SPEND DOWN THEIR SAVINGS AND HOW COULD THEY? STAY DON’T KNOW HOW LONG THEY’RE GOING TO LIVE. ROMAINE: WHAT DO YOU MEAN? JAIME: SO I’VE SAVED MY WHOLE CAREER FOR THIS RETIREMENT NEST EGG AND NOW I RETIRE. HOW DO I KNOW HOW MUCH I SHOULD BE TAKING OUT EVERY MONTH TO

25:07 FUND MY LIFE? WE’VE TAKEN THAT DECISION AND WE’VE GIVEN PEOPLE SOMETHING THAT WILL HELP THEM. IT’S CALLED LIFE – PAYCHECK AND IT HELPS PEOPLE HAVE GUARANTEED INCOME FOR THE REST OF THEIR LIFE. ROMAINE: WE HAD ONE OF YOUR COLLEAGUES ON A WEEK OR TWO AGO TO TALK MORE ABOUT LIFE PATH. THIS IS MORE OF A FOCUS ON INCOME RATHER THAN THE RETURN GENERATION IS, THAT THE IDEA BEHIND IT? JAIME: YES, FORUNITED STATES OUR

25:43 RETIREMENT SYSTEMS HAVE FOCUSED ONLY ACCUMULATING, ACCUMULATING AND THEN YOU GET TO THIS POINT OF RETIRING AND YOU DON’T KNOW HOW MUCH UP OR YOU CAN TAKE FROM YOUR SAVINGS SO PAY PATH GIVES YOU INCOME THROUGH PARTNERSHIP WITH INSURANCE COMPANIES SO PEOPLE NOPE HOW MUCH THEY CAN GET FROM THEIR SAVINGS, NOT WORRY ABOUT HOW MUCH THEY NEED. SALLY: IN THIS RESEARCH YOU’RE TACKING THIS $24 TRILLION. BUT YOU ALSO HAVE THIS FIGURE

26:15 THAT NEARLY 40% OF THEM – SOME OF THEM ARE CONSIDERING CHANGING FINANCIAL ADVISORS. SO WHAT IS IT THAT WEALTH MANAGEMENT FIRMS ARE GETTING SO WRONG? JAIME: IF WE TAKE A STEP BACK AND THINK ABOUT THE WEALTH INDUSTRY AND THIS MASSIVE REINVENTION CYCLE THAT’S HAPPENING. YOU HAVE PEOPLE LIVING LONGER, YOU HAVE THIS UNPRECEDENTED WE’LL CREATION, WEALTH TRANSFER. STANDING CAPITAL MARKETS, EXPANDING ACCESS TO CAPITAL MARKETS AND YOU HAVE AI.

26:46 WHEN YOU THINK ABOUT THE FUTURE OF WEALTH AND WOMEN, WHO WILL CONTROL $24 TRILLION IN ASSETS BY 2030. WE WENT TO 1,000 AFFLUENT AND HIGH NET WORTH WOMEN AND 400 FINANCIAL ADVISERS AND OUR STUDIES SHOWED US THAT WOMEN, FIRST OF ALL ARE WEALTH CREATORS. I THINK AS AN INDUSTRY WE’VE FOCUSED A BIT MORE ON WOMEN AS ACQUIRERS OF WEALTH THROUGH INHERITANCE. DIVORCE AND ETC.

27:22 BUT WOMEN ARE CREATOR OF WEALTH. THEY’RE WINDING BUSINESSES, ENTREPRENEURS. THEY’RE CREATING THIS WEALTH AND 80% OF OUR RESPONDENTS SAID THEIR PRIMARY SOURCE OF WEALTH WAS THROUGH THEIR EARNINGS. MORE INTERESTING, AGAIN, GOOUT TO THOSE 1,000 WOMEN WHO RESPONDED. 40% OF THEM ARE UNADVISED AND THESE ARE HIGH NET WORTH WOMEN AND THE NUMBER INCREASED AS WOMEN HAD MORE WEALTH SO BETWEEN WOMEN WHO HAD $45

27:55 MILLION TO 0 MILLION IN ASSETS. 40% UNDEVISED. 45% ALMOST. SALLY: DO YOU THINK WEALTH MANAGERS SHOULD BE PITCHING INTERPRET NEURAL WOMEN AND WEALTH MANAGERS FAR EARLIER IN THEIR CAREERS? JAIME: YES, WHAT AN OPPORTUNITY TO GROW YOUR BUSINESS AND TO SERVE MORE CLIENTS SO WOMEN AS – FIRST OF ALL, THEY’RE FOOT A MONOLITH BUT LET’S TALK ABOUT

28:27 SOME OF THE COMMON PATTERNS IS THE DISCONNECT BETWEEN HOW ADVISORS MIGHT BE VIEWING WHAT’S IMPORTANT TO WOMEN AND WHAT’S ACTUALLY IMPORTANT. THE NUMBER ONE PRIORITY WERE THESE HIGH NET WORTH WOMEN WAS TO GROW THEIR WEALTH THROUGH IT’SING. WE ASKED ADVISERS THE SAME QUESTION, THEY RANKED THAT NUMBER EIGHT. ADVISORS SAID THE NUMBER ONE PRIORITY THEY BELIEVED WOMEN HAD WAS PRESERVING THEIR WEALTH BUT WOMEN WANT TO GROW THEIR WEALTH. ROMAINE: WHEN WE LOOK AT THE STATISTICS

29:01 WITH THE PERCENTAGE OF WOMAN WHAT ARE INADVISED. IS THE PROBLEM THEN MORE ON THE ADVISORY SIDE RATHER THAN ON THE INVESTOR SIDE? IS IT THAT WOMEN ARE ASKING FOR THIS AND NOT GETTING IT OR NOT ASKING FOR IT ALL TOGETHER JAIME: I THINK IT’S A MISSED OPPORTUNITY. I DON’T SEE IT AS A PROBLEM PER SE. WOMEN ARE CLEAR ABOUT WHAT THEY WANT.

29:33 SOMEONE THEY CAN TRUST. HELP ME MANAGE MY TAXES, THE PERSON WHO CAN CONNECT ALL AS PROTECT OF THEIR FINANCIAL LIFE. ACROSS TAXES, INVESTMENT. INSURANCE. THE REALITY IS ADVISERS ARE NOT SEEING WOMEN IN THAT LIGHT IN THEIR DAY-TO-DAY. ROMAINE: IS THIS ALSO A FUNCTION OF MAYBE NOT HAVING ENOUGH WOMEN ADVISORS OUT THERE? WOULD SOME OF THESE WOMEN BE MORE COMFORTABLE HAVING A WOMAN ADVISING THEM RATHER THAN A MAN? JAIME: IT’S A QUESTION WE GET OFTEN. THAT DOESN’T COME OUT IN THE

30:06 RESEARCH. THEY JUST WANT A GREAT WEALTH MANAGER, A GREAT ADVISOR WHO’S GOING TO HELP THEM ATHREE THEIR GOALS AND BE THEIR TRUSTED PARTNER, NOT THEIR PROXY. PEOPLE THINK WOMEN WANT TO DEFER ALL OF THESE THINGS TO AN EXPERT. THEY DON’T WANT TO DEFER, THEY JUST WANT TO UNDERSTAND. I SEE THIS INTO JUST THE LENS OF WHERE THE FUTURE OF WEALTH MANAGEMENT IS GOING. IT’S NOT ABOUT WOMEN. IT’S ABOUT WHAT KIND OF

30:40 INVESTORS ARE GOING TO WANT IN THE FUTURE AND ALL WILL WANT THE SAME THING, MALE OR FEMALE. OUR STUDY ON WOMEN, I BELIEVE, GAVE A LOOK INTO WHERE THE FUTURE IS GOING. SALLY: FASCINATING CONVERSATION. THANK YOU SO MUCH, JAIME. APPRECIATE IT. COMING UP, A.M.D. POPPING OFF SAID CHIP DEMAND WILL CONTINUE TO GROW THROUGH THE NEXT FEW YEARS. IT’S THE STOCK OF THE HOUR.

31:11 UP NEXT. THIS IS “THE CLOSE.” ♪ SALLY: A.M.D. SHARES IN THE BETWEEN AFTER C.E.O. SAID SHE EXPECTS TO SEE VERY HIGH CHIP DEMAND FOR THE NEXT FEW YEARS AND THAT THE COMPANY WILL INCREASE ITS PRODUCTION NEXT YEAR TO KEEP UP WITH THAT DEMAND. JOINING US IS BLOOMBERG CORRESPONDENT NORAH MULINDA.

31:43 NORAH: WE SEE CITIALREADY BOOSTING ITS PRICE TARGETS. REALLY RATCHETING IT UP BUT WHAT THIS REALLY IS A SUPPLY/DEMAND DYNAMIC. CONTINUING TO SEE SO MUCH DEMAND FOR THIS PRODUCT BUT NOT ENOUGH SUPPLY. THERE’S SO MUCH DEMAND THEY’RE NOT ABLE TO KEEP UP WITH IT. FOR AN INVESTOR THINKING ABOUT THE SPACE MORE BROADLY, THIS IS A GOOD SIGN.

32:16 IT MEANS THEY’RE GOING TO CONTINUE TO BE IN DEMAND AND THERE ARE STILL GOING TO BE CUSTOMERS THAT ARE GOING TO CONTINUE TO BECOME TO A.M.D. ROMAINE: WE KNOW SUPPLY HAS BEEN CONSTRAINED. WE KNOW THE DEMAND IS THERE BUT THERE ARE A LOT OF QUESTIONS AS TO HOW QUICKLY YOU CAN INCREASE SUPPLY AND ALMOST DOES THAT, TO A CERTAIN EXTENT END UP WORKING AGAINST IT? FOR THE SUPPLY CONSTRAINT, IT MEANS THEY CAN CHARGE WHATEVER THEY WANT. NORAH:

32:49 WHEN YOU THINK ABOUT A.M.D., YOU HAVE TO THINK ABOUT ITS COMPETITORS. WE TEND TO THINK ABOUT ENVIEDA BUT THEY HAVE ALSO THE COMPETITOR WHEN IT COMES TO INTEL, C.P.U. WE THINK ABOUT AJENIK AI AGENTIC AI WAR PROUDLY BUT SEE HOW THEY’RE ABLE TO NAVIGATE THIS MOMENT AND HOW THEY’RE ABLE TO CAPITALIZE ON IT WHEN IT COMES TO PRICE. ROMAINE:

33:22 ANOTHER THING THEY TALKED ABOUT WAS THE IDEA OF THEM COOPERATING ON SAFETY. DID SHE EXPAND ON THAT? NORAH: NOT MUCH. THAT THE BIGGEST FIRMS IN ARTIFICIAL INTELLIGENCE NEED TO BE ABLE TO CORPORATE SO THAT THE INDUSTRY CAN CONTINUE MAKING MODELS THAT ARE MORE CAPABLE BUT ALSO – WE’VE BEEN HEARING A TON OF PEOPLE, WHISTLEBLOWERS INSIDE THE COMPANIES TALKING ABOUT THIS

33:54 IDEA OF AI SAFETY. SHE DID ADD TO THE CHORUS ABOUT THE SAFETY QUESTIONS BUT – ROMAINE: WHERE ARE ALL THE WHISTLEBLOWERS? ARE THEY ACTUALLY BEING LISTENED TO? IT GETS TO THIS IDEA, TOO, WE KNOW THAT THIS TRAJECTORY ISN’T GOING TO GO ON FOREVER AND AT SOME POINT ALL THE C.E.O.’S HAVE TO FIND SOME GLIDE PATH TO COMMUNICATE TO INVESTORS AS TO WHAT A NORMALIZED GROWTH RATE

34:25 SHOULD LOOK LIKE. NORAH: ABSOLUTELY. THE PHILADELPHIA SEMICONDUCTOR INDEX IS UP ABOUT 86% SO FAR THIS YEAR AND A.M.D. IN PARTICULAR IS UP MORE THAN 200%. SO HOW MUCH CAN THEY SQUEEZE OUT OF INVESTORS OUT OF THIS RALLY AND WHEN DOES IT POTENTIALLY STOP? ROMAINE: IT’S NOT STOPPING TODAY. NVIDIA AT A RECORD HIGH AND SO TOO IS A.M.D.

34:57 NORAH MULINDA THERE. WHEN WE COME BACK, JULIE BEAL FROM KANE ANDERSON REDNIK. ♪ >> PUBLIC EQUITIES HAVE DONE SO WELL FOR THE LAST THREE TO FOUR YEARS AND EVEN BEFORE THAT, IT IS EASIER THAN EVER TO BUILD PORTFOLIOS WITHOUT A LOT OF PRIVATES. THE ONE THING I CAN TELL YOU IS THAT WHEN THINGS CRUNCH, WHEN

35:31 YIELDS GO UP, WHEN YOU START TO HAVE CONCERNS ABOUT AREAS FROM PUBLIC FINANCE TO THE ABILITY TO ISSUE TECHNOLOGY IN GOVERNMENT, YOU WANT TO KNOW WHAT YOU HAVE AND YOU WANT TO BE ABLE TO BE NIMBLE AROUND IT. ROMAINE: ALLI MCCARTNEY AT UBS PARTNERS KICKING US OFF. ROMAINE BOSTICK ALONGSIDE SALLY BAKEWELL ON WHAT IS SET TO BE A RECORD DAY FOR THE S&P 500. SALLY:

36:02 WE SEE THE S&P HITTING ALL-TIME HIGHS AMID EXPECTATIONS THAT EARNINGS CAN DELIVER STRONG PROFITS. HELPED BY THE RALLY FROM AI RELATED SHARES AND OIL IS BACK IN TRIPLE-DIGIT TERRITORY AFTER FLUCTUATING TODAY AMID INCREASING EX PORTS FROM THE MIDDLE EAST BUT ALSO RISKS AND TENSIONS IN THE STRAIT OF HORMUZ CLIMBING. SOME OF THAT HAS HELPED YIELDS

36:37 ON THE 10-YEAR GOVERNMENT BOND. WHICH HAD HIT HIGHS SINCE 2002 AND THEY ARE DOWN NOW AB ABOUT.3. JUST DOWN A LITTLE. ROMAINE: JULIE BIEL JOINS US, PORTFOLIO MANAGER AT KAYNE ANDERSON RUDNICK. JULIE, THANK YOU TILT RALLY WE HAVE ON OUR HANDS. IT IS THE BEST PERFORMING SECTOR BUT OBVIOUSLY A BIG PART

37:09 OF THAT ARE THE TWO BIGGEST NAMES MOVING IN THAT SPACE, DIRECTLY TIED TO THE AI TRADE. THAT’S WHERE I WANT TO START WITH YOU, THE NARROWNESS WE’VE SEEN IN THIS RALLY. WE CONTINUE. TO LOOK A GIFT HORSE IN THE MOUTH WITH AI BUT SIT BACK TO CONCERNING THAT WE HAVE JUST A SMALL GROUP OF COHORTS LEADING US HIGHER? JULIE: NONE OF US LIKE WHEN THE THE MARKET GETS TO NARROW.

37:43 WE’VE NEVER HAD A CYCLE QUITE LIKE THIS WITH THE BUSINESS DEPLOYMENTS THAT HAVE TO CHANGE AND THE MONEY TIED TO ALL OF THAT. NOT TO MENTION A SPRINKLING OF PUBLIC UNREST. I THINK THAT CREATES A SET-UP WHERE PEOPLE START TO GET MORE AND MORE ANXIOUS BECAUSE THEY DON’T HAVE THE CONVICTION THAT THE MORE CYCLICAL COMPANIES ARE STARTING TO BENEFIT IN SEMICONDUCTORS AND ELECTRICIAN HAVE THE SAME KIND OF QUALITY THAT NVIDIA OR FACEBOOK HAVE. ROMAINE:

38:15 WE’RE ON THE PRECIPICE OF EARNINGS SEASON. THE AGGREGATE NUMBERS WITH PHENOMENAL. 25% FOR THE S&P 500, THOUGH A LOT OF THAT IS CONCENTRATED IN THE TECHNOLOGY AND ENERGY SPACE. ONCE YOU GET OUT OF THERE, YOU STILL HAVE GROWTH IN SOME SECTORS LIKE HEALTH CARE AND INDUSTRIALS, IT’S STILL PRETTY MEAGER. IN SOME CASES, LOW SINGLE-DIGIT PERCENTAGES. JULIE: THAT’S RIGHT. THAT’S PART OF THE CHALLENGE.

38:46 WHEN WE LOOK AT EARNINGS ESTIMATES, PEOPLE LOOK AT FORWARD PROJECTIONS AND SAY THE MARKET LOOKS PRETTY CHEAP. THE CONCERN SOME HAVE IS YES, BUT THAT’S DEPENDENT ON THE EXECUTION OF A HANDFUL OF COMPANIES AND PART OF THE EARNINGS GROWTH IS A FINISHES OF GOOGLE AND LARGE CAP COMPANIES BEING ABLE TO WRITE UP THE VALUATIONS OF THEIR PROVIDE INVESTMENTS IN OPEN AI AND ANTHROPOICS. IT’S NOT WE SOLD MORE STUFF ASK THAT’S GOING TO AFFECT G.D.P.

39:19 IT’S A PHANTOM ACCOUNTING THING THAT HAPPENS. I STILL THINK THAT THE UNDERLYING BUSINESS MODELS AT META AND AT MOST OF THESE BIG TECH COMPANIES IS VERY STRONG BUT THE QUESTION IS NOW WE’RE AT VERY, VERY HIGH LEVELS. WE NEED TO MAINTAIN OR EXPAND FROM HERE AND THAT’S HARDER TO SEE. ROMAINE: WE TALK ABOUT 66% GROWTH FOR INFORMATION TECHNOLOGY IS WHAT BLOOMBERG IS MODELING FOR THE QUARTER. COMMUNICATIONS SERVICES. IF YOU STRIP OUT THE BIG NAME THERE, META, ORIGINAL UP ABOUT 5% AND IT KIND OF GETS WORSE FROM THERE.

39:52 HEALTH CARE ABOUT 3.6%. CONSUMER STAPLES, A COUPLE OF PERCENTAGES. CONSUMER DISCRETIONARY A COUPLE OF PERCENTAGES AS WELL. THAT’S BASICALLY YOUR EARNINGS STORY. SALLY: JULIE, YOU ARGUE THAT TECH EXECUTIVES ARE TREATING A.I. DOMINANCE THAT LITTLE BIT LIKE A 2021 GROWTH AT ALL COSTS ERA INIGNORING SAFETY AND SIGNER SECURITY RISKS. IF AI FIRMS ARE HIT WITH SKIER

40:26 LEGAL LINES WITH LEAKS AND SO ON. HOW COULD THAT FORCE BIG TECH TO CHANGE ITS AI BUSINESS MODEL? JULIE: EVERYTHING IS A FUNCTION OF INCENTIVES SO I THINK RIGHT NOW THEY DON’T HAVE A LOT OF INCENTIVE IN TERMS OF BEING ABLE TO PUT REALLY MEANINGFUL GUARDRAILS BUT WHAT IS IT GOING TO TAKE? AI GOING ROGUE AND CAUSING A PLANE TO CRASH AND THEN THERE’S DEATH AND THEN SUDDENLY WE REALLY HAVE LIABILITY. I HOPE WE DON’T GET TO THAT STAGE BUT MY CONCERN IS THEY

40:58 DON’T HAVE A LOT OF INCENTIVES TO DO ANYTHING MEANINGFUL TO SLOW DOWN. THEY NEED MEANINGFUL CHANGE. WE SAW THAT IN 2022 WHEN SUDDENLY WE ASKED OUR TECHNOLOGY COMPANIES TO BE PROFITABLE TOO AND THEY CHANGED THIRD BEHAVIOR AS A RESULT. THERE’S NO INCENTIVE RIGHT NOW FOR THESE TECH COMPANIES TO CLANG SO I THINK THAT’S WHAT WE REALLY NEED TO GET SAFER AI. ROMAINE: WE HAD A.M.D. TALKING ABOUT COMPANIES THAT HAVE COOPERATED.

41:30 THERE’S CERTAINLY A CONVERSATION GOING ON. JULIE: THAT’S THE PROBLEM. WE’VE HEARD THEM BEFORE TALKING ABOUT SAFETY SAFETY AND THE IMPORTANCE. SO MUCH OF STUFF THAT’S BEING SAID TODAY IS STUFF THAT WAS BEING SAID BY SAM ALL THE MAN SAM ALTMAN THREEOR FOUR YEARS AGO. WE’VE MADE AI SOUND LIKE A PERSON.

42:01 LIKE THERE’S NO ONE BEHIND THE CURTAIN. THERE IS. IT’S THESE C.E.O. ICE. THEY HAVE THE ABILITY TO SHUT THINGS OFF. ACTING LIKE THERE’S THE DISEMBODIED PERSON FAR AWAY AND THAT WE DON’T HAVE LIABILITY I THINK IS THE CENTRAL PROBLEM. ROMAINE: WOULD YOU EMBRACE REAL GUARDRAILS, SOMETHING FROM THE GOVERNMENT OR SOME SORT OF INTERNATIONAL BODY? JULIE: ABSOLUTELY. WE’RE ALREADY SEE IT HAPPEN AND PLAY OUT IN CHINA WHERE THERE’S SO MUCH MORE REGULATION, BOTH IN TERMS OF SAFETY, MAKING SURE

42:36 PEOPLE DON’T BECOME AGAIN ON THESE AI CHAT BOTS BUT ALSO CHECKING EVERYTHING AND MAKE SURE THEY’RE SAFE. AND THEY’RE STILL CLOSE TO THE FOREFRONT EVEN WITHOUT OUR GOOD CHIPS SO I THINK IT’S POSSIBLE. ROMAINE: THANK YOU, JULIE. FROM KAYNE ANDERSON RUDNICK, COUNTING US DOWN TO THE CLOSING BELLS. THE S&P AND NASDAQ HOLDING AT RECORD HIGHS. A FULL BREAKDOWN OF ALL OF

43:08 TODAY’S BELL STARTS RIGHT NOW. ROMAINE: RIGHT NOW WE ARE TO BE AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK WITH SALLY TAKING YOU THROUGH TO THE CLOSING BELL. WE ARE JOINED BY CAROL MASSAR AND JESS IN TODAY FOR TIM STENOVEC. WELCOME TO OUR AUDIENCES ACROSS ALL BLOOMBERG PLATFORMS. HERE ON WHAT LOOKS TO BE A RECORD-SETTING DAY FOR THE S&P 500, ITS FIRST RECORD HIGH SHOULD THIS HOLD OVER THE NEXT TWO MINUTES SINCE MID AUGUST. CAROL:

43:40 I AM LUCKY TO HAVE JESS WITH ME BECAUSE SHE SAID THE LAST RECORD. WE ARE DEFINITELY ABOVE IT. WE ARE DEFINITELY OFF OF OUR HIGHS OF THE SESSION. SOME ENTHUSIASM FOR THE AI TRADE RUNNING OUT OF A LITTLE BIT OF STEAM HERE. JESS: ALSO WANT TO POINT OUT WITH THE GAMES HOLDING INTO THE CLOSING BELL, 48 AND TO CONCESSIONS THE S&P 500 – 48 CONSECUTIVE SESSIONS THE S&P 500 HAS DONE WITHOUT A DROP. WE WILL SEE IF THAT WILL CONTINUE TOMORROW. SALLY: WHAT DOES THIS MEAN FOR THE REMAINING U.S. TREASURY AUCTIONS THIS WEEK ON

44:13 WEDNESDAY AND THURSDAY? BECAUSE RECORD HIGH EQUITY MARKETS AND POSITIVE AI DEVELOPMENT CREATE A CHALLENGING BACKDROP FOR THEM AS INSTITUTIONAL T’S’S EQUITY RETURNS RATHER THAN GOVERNMENT DEBT. ROMAINE: YEAH. YOU ARE SEEING A BIT OF A DIP IN YIELDS TODAY. OIL STILL HOLDING ON BRENT CRUDE AROUND 00 A BARREL. NOT NECESSARILY GOING HIGHER OR LOWER. OF COURSE, THIS IS THE BACKDROP TO THE START OF THE EARNINGS SEASON. WE HAVE DELTA AT THE END OF THE WEEK. THAT KICKS IT OFF. CAROL: I CANNOT WAIT.

44:46 ERIC SAID THE BIG THING YOU HAVE TO WATCH IS CAPEX SPENDING AND SEEING WHAT WE HEAR IN TERMS OF OUTLOOKS FROM THESE COMPANIES. ROMAINE: EXPECTATIONS IN AGGREGATE FOR EARNINGS THIS SEASON ARE HIGH. WE SHOULD POINT OUT ALMOST THE ENTIRETY OF THE EARNINGS GROWTH WE ARE SEEING FOR THE S&P 500 ANTICIPATES IT WILL BE FROM THE TECHNOLOGY SPACE. THE DOW JONES INDUSTRIAL AVERAGE ADDING 253 POINTS OR HALF OF 1%. THE S&P 500, 7819.04 IF YOU

45:17 WANT TO BE PRECISE. THAT IS UP 45 POINTS OR 0.6%. THAT IS A RECORD HIGH. THE NASDAQ COMPOSITE UP HALF OF 1%. SIMILAR ROOM FOR THE NASDAQ 100, ALSO CLOSING AT A RECORD HIGH. THE RUSSELL 2000 SITTING THIS ONE OUT, DOWN 0.6%. CONCERN THE EARNINGS GROWTH HAS NOT QUITE TRICKLED DOWN TO THE SMALL CAPS SPACE. CAROL: THAT IS CONCERNING WHAT YOU THINK ABOUT THE DOMESTIC ECONOMY.

45:49 S&P 500, I WILL GO BACK TO THE BIG CAPS. YOU HAVE MOST NAMES, NO SURPRISE, IN THE INDEX HIGHER TODAY. 339 GAINING GROUND. 163 TO THE DOWNSIDE. ONE UNCHANGED. SALLY: INDEED. IF YOU LOOK AT WHAT HAS BEEN DRIVING MOST OF THE ACTION TODAY CAN BE UTILITIES ALREADY STANDOUT MOVER, AND THAT IS DRIVEN BY AI POWERED DEMAND. CONSTELLATION GAINING ON THE BACK OF GOOGLE’S NEW NUCLEAR DEAL, REINFORCING THE THEME THAT HYPERSCALER DEMAND FOR CLEAN RELIABLE POWER IS WHERE IT IS AT. CAROL:

46:23 LET’S GET TO SOME OF THE INDIVIDUAL GAINERS IF I MAY. LET’S GO TO NVIDIA REALLY – RALLYING AT ON THE VERGE OF A $6 TRILLION MARKET CAP. INVESTORS ROTATING TODAY TO THE AI TRADE OVERALL BUT IN PARTICULAR NVIDIA, WHICH FOR A WHILE WAS HAVING A TOUGH TIME GETTING INVESTORS’S ATTENTION. THE STOCK OFF OF ITS HIGHS OF THE SESSION BY 0.1%, BUT WE WATCHED IT MOVE TO THE $6 TRILLION VALUATION.

46:54 WE DID SEE THE STOCK HIT ANOTHER RECORD HIGH TODAY. IT GAVE A ROBUST REVENUE OUTLOOK, ANNOUNCED THE BIGGEST BUYBACK WE KNOW IN HISTORY. THAT IS SOME OF THE BACKDROP OF THE STORY. MAYBE SOME INVESTORS OUT THERE TAKING ADVANTAGE OF AN EVALUATION THAT HAD INITIALLY PULLED OFF SOME OF THOSE HIGHS WE SAW EARLIER. IT HAS BEEN NEAR MULTIYEAR LOWS. THOSE TWIN PILLARS GIVING SOME MOMENTUM TO THE NAME, ALTHOUGH IT RAN OUT OF STEAM TOO. ROMAINE: AT A RECORD HIGH. CAROL: IT WAS HIGHER IN THE SESSION. I AM JUST SAYING IT IS STILL

47:27 INTERESTING. AND RECORD HIGH BUT SAYING. ROMAINE: UP FOR A FIFTH STRAIGHT DAY. CAROL: YOU KNOW, THE MARKET, IT WAS HIGHER TODAY. JESS: BACK-AND-FORTH. ROMAINE: CAROL LOVES IT. CAROL: I LOVE WHEN ROMAINE IS THE OPTIMISTIC ONE. JESS: A CHANGE. CAROL: ROCKS MY WORLD. YEAH, EXACTLY, BIZARRO WORLD. LET’S GO TO CONSTELLATION ENERGY. NUMBER TWO GAINER IN THE S&P 500. NUMBER ONE GAINER IN THE NASDAQ

47:58 500. THAT WENT UP MORE THAN 12%. ALPHABET AGREEING TO BUY NUCLEAR POWER FROM CONSTELLATION ENERGY. A 20 YEAR AGREEMENT THAT WILL UPGRADE SYSTEMS AND 11 CONSTELLATION REACTORS. CONSTELLATION HAS REACTORS. THEY ARE DOING SOME UPGRADES, BUT WE ARE STARTING TO HEAR THAT MAYBE THEY DON’T HAVE A LOT MORE ROOM TO DO A GREAT SO THAT IS INTERESTING FOR FUTURE DEALS. THEY HAVE DONE DEALS WITH AMAZON, WALMART, AND MICROSOFT. THERE IS A LOT GOING ON AT

48:31 CONSTELLATION. MARVELL SHARES RISING AS HIGH AS 11%. FINISHING THE DAY JUST UNDER 6%. COMPANY RAISED ITS REVENUE GUIDANCE FOR FISCAL YEAR 2028 TO $20 BILLION, TOPPING THE AVERAGE ANALYST ESTIMATE. THEY HAD MORE CONTEXT BUT OPTIMISM FOR THAT COMPANY, AND YOU SAW INVESTORS MOVING INTO IT. JESS: THAT’S RIGHT. CAROL: WAITING TO HEAR FROM ROMAINE.

49:02 JESS: QUIET OVER THERE. SURPRISED. THERE WE GO. CAROL: WAIT A LITTLE BIT. JESS: THIS COMPANY DOWN 9%, ITS WORST DAY SINCE OCTOBER 2. PRIVATELY BATTLE AGAINST – PRIVATELY BATTLING TOSHIBA. TDK SHARES ROSE ABOUT 5% IN LOCAL TRADING IN JAPAN.

49:37 LOOKING OVER, BLAZE TECHNOLOGIES , THIS UNFORTUNATE FLAILING AI DARLING HAS A MARKET CAP LESS THAN BILLION, TRADING UNDER ONE DOLLAR. DOWN 33% TODAY, THE WORST DAY SINCE AUGUST 14, SO JUST ABOUT A MONTH AGO. A LOT OF THINGS GOING ON WITH THIS STOCK. IT HAS A NEGATIVE PREANNOUNCEMENT IT WARNED ABOUT. IT ALSO HAD GUIDANCE THAT WAS CUT AND THERE ARE SOME DOJ SUBPOENAS PROMPTING SOME WALL STREET CEL-SCI DOWNGRADES HERE – SELL SIDE DOWNGRADES HERE. ONE LOWERING THE PRICE TARGET

50:16 TO $.40 AND CUT FROM NEUTRAL – TO NEUTRAL FROM BUY. THERE IS ONLY ABOUT FIVE COMPANIES COVERING THAT FIRM. LASTLY, LOOKING AT VACCINE STOCKS. MODERNA DOWN 7.7% TODAY, ITS WORST DAY SINCE AUGUST 20. SOME OF THE PEERS FALLING ON THE BACK OF THAT. SOME OF THE DIFFERENT PIECES WE ARE SEEING WHEN IT COMES TO THOSE REPORTING IN RUSSIA. THE TRUMP ADMINISTRATION MONITORING THE SITUATION. AMONG THOSE, THOSE ARE THE BIGGEST DECLINERS TODAY. CAROL: FREAKING ME OUT, THE WHOLE THING. JESS: NO DOOM AND GLOOM. ROMAINE:

50:50 A QUICK LOOK AT YIELDS DOWN FOR A SECOND STRAIGHT DAY BUT CAMPED OUT NOT FAR FROM SOME OF THE MULTIYEAR HIGHS. PICK YOUR YEAR YOU WANT TO. 2005, 2007. WE ARE STILL STUCK AROUND THERE. A BIT OF RELIEF ON THE DAY, BUT THINGS CAN CHANGE IN A BIG WAY. NEVERTHELESS, THERE IS ONE BIG STORY I THICK EVERYBODY IS READING ON THE BLOOMBERG TERMINAL TODAY. IT INVOLVES YOUR MONEY, CAROL MASSAR. CAROL: I THOUGHT YOU WERE GOING TO DO CONSTELLATION. ROMAINE: SURE, I WILL DO CONSTELLATION FOR YOU.

51:28 CONSTELLATION BRANDS , THE MAKER OF TEQUILA. COMP SALES COMING IN FOR THE. COMING IN FOR $2.6 BILLION. $3.32 A SHARE. FOR THE FULL YEAR, IT WILL STAND BY ITS PREVIOUS EPS FORECAST OF 1 $20 CENTS – 1.20 TO 1.90 A SHARE. DEALING WITH A LOT OF

52:03 STRUCTURAL SHIFTS, DEMOGRAPHIC SHIFTS IN WHAT WE DRINK, HOW WE DRINK, DEALING WITH IMMIGRATION ISSUES AS A LOT OF ITS PRODUCTS ARE PRIMARILY SOLD TO HISPANIC COMMUNITIES, WHICH HAVE BEEN REELING FOR A WIDE VARIETY OF REASONS IN THE U.S. THERE ARE THE TARIFF ISSUES THEY ARE HAVING TO DEAL WITH AS WELL. CAROL: THERE IS A LOT. STOCK IS DOWN 16% YEAR TO DATE. WE HAVE TO TALK ABOUT THE WALL STREET COMMUNITY. ONE OF THE MOST READ STORIES ON THE BLOOMBERG’S ABOUT WALL STREET BUYING RECORD BONUSES AS PROFITABLE HAD PASSED $90 MILLION – HEAD PAST $90 MILLION.

52:35 WE WILL GET AN UPDATE ON HOW BUSINESS IS GOING. ALSO END-OF-THE-YEAR, WE WILL START HEARING ABOUT BONUSES. JESS: WALL STREET FIRMS SIGNALING RECORD REVENUE IN KEY BUSINESS LINES SO FAR THIS YEAR. WHEN YOU HEAR ABOUT VOLATILITY IN MARKETS, IT FEELS LIKE WE DO NOT HAVE A LOT OF THAT NOW BUT THERE ARE PERIODI EARLIER THI – PERIODS EARLIER THIS YEAR WHERE IT HELPED. CAROL: WE HAVE A GOOD STORY ON THE

53:08 TERMINAL ABOUT HOW TO BUY A ROLEX. ROMAINE: GET YOUR HANDS ON THEM. CAROL: IF YOU CAN. THAT IS A WRAP OF OUR CROSS-PLATFORM. ROMAINE: A SWATCH TODAY. CAROL: I DON’T KNOW WHAT I’M WATCHING. HARD TO TELL. THAT WILL DO IT. SALLY AND ROMAINE CONTINUING ON “THE CLOSE” ON TV. JESS AND I BACK ON THE RADIO. WE WILL SEE YOU SAME TIME, SAME PLACE TOMORROW. HAVE A GOOD NIGHT. ROMAINE: WHEN WE COME BACK, WE WILL

53:40 FOCUS ON THE CONSUMER ON THE BACK OF THE RESULTS OUT OF CONSTELLATION BRANDS. WE WILL CATCH UP WITH KATHERINE. WE WILL TRACK THE HISTORIC PACE OF DEALMAKING. TED SMITH WILL BE JOINING US AS WELL. BIG LINEUP COMING UP AFTER THE BREAK RIGHT HERE ON “THE CLOSE” RIGHT HERE ON BLOOMBERG. >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS “THE CLOSE.”

54:13 ROMAINE: WE GOT A BIT OF A RELIEF WHEN IT COMES TO THE YIELD PICTURE. I GUESS I BEEN OF RELIEF WHEN IT COMES TO BRENT CRUDE. IT IS UP HIGHER ON THE DAY BUT SPENT MOST OF THE SESSION LOWER AND QUITE FRANKLY HAS BEEN A LITTLE STUCK THE LAST FEW DAYS. THAT WAS JUST ENOUGH OF A WINDOW FOR INVESTORS TO COME IN AND BID UP STOCKS. THE S&P 500 CLOSING AT A RECORD HIGH, ITS FIRST RECORD HIGH SINCE MID AUGUST. THE NASDAQ ALSO AT A RECORD HIGH. THE BIGGEST GAINER ON THE DAY ON A SECTOR BASIS WAS UTILITIES, UP 3% ON THE DAY. ONE OF ITS BIGGEST

54:46 OUTPERFORMANCE IS RELATIVE TO THE MARKET IN THREE MONTHS. A BIG PART OF THE REASON WAS, WHAT ELSE? AI. WE HAD NAMES LIKE CONSTELLATION ENERGY GET A BID ON THE BACK OF SOME NEW POWER AGREEMENTS TO POWER ALL OF THESE DATA CENTERS. AMD RALLY IN 3% ON THE DAY AFTER THAT SAID SHE REALLY SEES NO END IN THE SHORT TERM TO THIS RELENTLESS DEMAND OR AN END IN THE SHORT TERM TO THIS RELENTLESS SUPPLY CRUNCH. THAT PUSHED AMD AS WELL AS THE VIDEO TO FRESH RECORD HIGHS AS

55:18 WELL. SKYFDANCE DEBUTING TODAY AFTER PARAMOUNT CLOSED THE DEAL WITH WARNER BROS.. THE CHAIR SELLING OFF 2.5 PERCENT. A COUPLE OF VIDEO SOCRATIC STORIES WHEN IT COMES TO THE CONSUMER SPACE. LAMB WESTON UP ON THE BACK OF ENCOURAGING GUIDANCE. TAKE A LOOK AT WHAT WE SAW WITH PROCTER & GAMBLE ALSO MOVING HIGHER HERE ON THE UPGRADE ON THE IDEA MAYBE WE MIGHT SEE A LITTLE MORE STRENGTH. THAT BRINGS US TO OUR TOP STORY. IT IS ANOTHER REASON. ONE OF THE CLEAREST REAMS ON THE AMERICAN CONSUMER, AT LEAST DISCRETIONARY READS.

55:55 CONSTELLATION BRANDS COMING OFF OF FIVE STRAIGHT QUARTERS OF DECLINING REVENUE, AND THE COMPANY REPORTING TODAY THAT NOT A HOLLAND HAS CHANGED. THE BIGGER STORY HERE, NOT HOW MANY CASES OF BEER THEY ARE SELLING. CONSTELLATION SIX AT THE COLLISION POINT OF TRADE POLICY, CONSUMER ANXIETY, AND A GENERATIONAL CHANGE IN HOW PEOPLE DRINK. ALUMINUM TARIFFS HAVE ALREADY WEIGHED ON BEER MARGINS, LEAVING THE COMPANY UNUSUALLY EXPOSED TO NORTH AMERICAN TRADE POLICY AND PACKAGING INFLATION.

56:28 THERE IS THE CHANGE IN CONSUMER. LOWER INCOME HOUSEHOLDS PULLING BACK. YOUNGER LEGAL EDGE CONSUMERS IS GRAVITATING TO FLAVOR FORWARD READY TO DRINK PRODUCTS. LOW AND NO ALCOHOL SALES ARE GROWING RAPIDLY. CONSTELLATION HAS AN ADDED PRESSURE POINT. ABOUT HALF OF ITS U.S. BEER SALES ARE TO HISPANIC COMMUNITIES. HISPANIC COMMUNITY IS REELING FROM THE KNOCK ON EFFECTS OF IMMIGRATION POLICIES. CATHERINE BLACK – KATHERINE BLACK JOINS US NOW FROM WHERE SHE LEADS THE GROCERY AND RETAIL DIVISION.

57:00 GREAT TO SEE YOU AGAIN. KATHERINE: GREAT TO SEE YOU. ROMAINE: WHAT IS GOING ON WITH CONSTELLATION IS NOT UNIQUE TO CONSTELLATION. A LOT OF BEERS DEALING WITH THE SAME ISSUE. UNPACK IF THERE IS LIGHT AT THE END OF THE TIME TO WITH REGARDS TO SOME OF THESE CONSUMPTION TRENDS, COST TRENDS, ETC. KATHERINE: THAT SECTOR HAS BEEN PARTICULARLY HIT WITH CHANGING CONSUMER DEMAND AND THE SOFTNESS .

57:34 WE ARE SEEING THEM GROW. YOUNGER CONSUMERS HAVE GROWN UP IN AN ENVIRONMENT WHERE THEY ARE READY TO GET EXACTLY WHAT THEY WANT WHAT THEY WANT IT. THAT IS A PRICE POINT ENTRY THEY CAN SERVE AN INTERESTING ARRAY OF FLAVORS AND TRY DIFFERENT THINGS OUT AT AN ACCESSIBLE PRICE POINT. THEY DON’T HAVE TO BUY A FULL BAR. THAT IS AN INTERESTING TREND TO WATCH. ROMAINE: I WAS LOOKING AT THE TARIFF ISSUE, AND I WANT TO TALK ABOUT THAT.

58:07 THEY GOT HIT WITH THE ALUMINUM TARIFFS AND MEXICO. BUT THEY PRODUCE A LOT AND MEXICO. THEY WERE GOING TO GET HIT BY THE CANADIAN TARIFFS BUT THEY ARE INSULATED FROM THAT BECAUSE THEY DON’T MAKE A LOT OF HARD ALCOHOL. A FEW THINGS BUT NOTHING THAT CROSSES THE LINE. TO A CERTAIN EXTENT, IT MIGHT BENEFIT THEM AS PEOPLE LOOK FOR ALTERNATIVES. KATHERINE: THAT MAY BE CERTAINLY IN CANADA. PEOPLE ARE WATCHING THE USMCA CLOSELY AND WONDERING. THEY HAVE ANNOUNCED BUILDING A NEW FACTORY OR A NEW PRODUCTION FACILITY IN MEXICO SO THEY

58:39 DOUBLED DOWN ON THAT FROM THE BRAND HERITAGE PERSPECTIVE AND THIS NEW PRODUCTION IN MEXICO, SO I THINK PEOPLE ARE WATCHING CLOSELY TO SEE WHAT HAPPENS. ROMAINE: I AM CURIOUS ABOUT THE YOUNGER GENERATION AND THE NARRATIVE THAT THEY DO NOT DRINK AS MUCH. THEY ARE EITHER MORE HEALTH CONSCIOUS, SOME SAY IT IS BECAUSE THEY CANNOT AFFORD IT. THERE IS THE WHOLE DYNAMIC WITH GLP-1’S AND OTHER HEALTH TRENDS THAT MIGHT BE PUSHING PEOPLE AWAY FROM THAT. ARE YOU FINDING THAT AS WELL? KATHERINE: IT IS A MIXED BAG AND TO ASSUME YOUNGER CONSUMERS ARE NOT DRINKING IS TOO BIG OF A GENERALIZATION. THEY WANT TO DRINK. IT IS THE READY TO DRINK

59:12 COCKTAILS. WE ARE EXPERIMENTING WITH THAT. THEY WANT THE SMALLER PORTION SIZES AND MORE FLAVORS, MORE VARIETY. THEY ARE USED TO GETTING WHAT THEY WANT, AND THAT SPEAKS TO THAT TREND AND ALSO LOW ALCOHOL. WE ARE SEEING IT BE NOT ALCOHOL BEVERAGE BUT SOMETHING SOLD BY THE SAME COMPANIES THAT THEY ARE INTERESTED IN. ROMAINE: WITH REGARDS TO WHERE PEOPLE ARE CHICKEN, IS IT PRIMARILY HIDDEN BARS AND RESTAURANTS AWAY FROM HOME, OR ARE YOU

59:43 SEEING MORE OF THE DRINKING IN PREPACKAGED STUFF? KATHERINE: WE ARE DEFINITELY SEEING PEOPLE DO MORE AT HOME FOR ECONOMIC REASONS, BUT WE ALSO KNOW THAT SOCIAL DRIVES DRINKING, AND THAT IS TRUE IN BARS AND RESTAURANTS AS WELL AS HOMES. THAT IS A REALLY IMPORTANT COMPONENT. IT IS WHY YOU SAW SALES BETTER FOR THE SECTOR AROUND THINGS LIKE THE WORLD CUP WHICH DROVE A SOCIAL OUTING AND SOCIAL EXPERIENCE. THAT IS TRUE FOR OUT OF HOME AND IN-HOME. ROMAINE: WITH REGARDS TO EXPERIENCE, I WAS ALWAYS TOLD WE ARE SEEING PEOPLE GRAVITATE MORE TO EXPERIENCE. THEY WANT TO BE OUT, NOT JUST

1:00:15 AT HOME. WHETHER IT IS GOING TO THE MALL, RESTAURANTS, BARS, OTHER SPORTING EVENTS, DOES THAT HAVE A MATERIAL IMPACT ON ACTUAL SALES OF ALCOHOL ITSELF? KATHERINE: WHEN PEOPLE GO OUT, THEY WANT TO MEMORIALIZE THAT EXPERIENCE SO THEY BUY THINGS TO ENJOY IT AND THINGS TO REMEMBER IT BY SO THAT IS A TREND WE CONTINUE TO SEE. WE SEE PEOPLE STILL CONSUMING IN OTHER SOCIAL ENVIRONMENTS AS WELL. I ABSOLUTELY THINK THAT IS THE CASE. ROMAINE: GREAT TO HAVE YOU. KATHERINE: THANK YOU. ROMAINE:

1:00:48 PARTNER AT GLOBAL MANAGING CONSULTING FIRM CARNEY. COMING UP, WE WILL TALK ABOUT THE FORGOTTEN ELDEST CHILD OF PRIVATE MARKETS. ELIZABETH WILL EXPLAIN WHEN WE COME BACK RIGHT HERE ON “THE CLOSE” RIGHT HERE ON BLOOMBERG. ROMAINE: U.S. MORTGAGE RATES TOPPING 7% FOR THE FIRST TIME IN A COUPLE YEARS, PUTTING FURTHER STRAIN ON THE HOUSING MARKET HAMILTON LANE SAYS THERE ARE POCKETS OF

1:01:18 OPPORTUNITY IN RESIDENTIAL, CALLING REAL ESTATE THE FORGOTTEN ELDEST CHILD OF PRIVATE MARKETS. ELIZABETH BELL FROM HAMILTON LANE JOINS US RIGHT NOW. I GET THE ANALOGY THERE. LET’S TALK ABOUT IT BECAUSE IT GETS TO A LARGER POINT THAT A LOT OF PEOPLE LOOKED AT THE REAL ESTATE MARKET AND THAT IS A BROAD UMBRELLA AND KIND OF SAID, OK, IT IS OVER. HURT BY THE SLOW RECOVERY COMING OUT OF THE PANDEMIC OR IT WAS HURT BY CONSUMER SPENDING TRENDS OR NOW BEING HURT BY RATES. GIVE ME A SENSE OF WHERE YOU SEE THE REAL ESTATE MARKET AT

1:01:49 LARGE AND THEN WE CAN GO INTO THE SPECIFIC AREAS. ELIZABETH: FIRST, THANKS FOR HAVING ME BACK. I THINK THE REAL ESTATE MARKET IS COMPLICATED RIGHT NOW. THERE ARE RISKS OUT THERE AND THESE ARE LARGER RISKS. INTEREST RATES, GEOPOLITICS ARE WEIGHING ON INVESTING IN GENERAL, PARTICULARLY REAL ESTATE AS IT RELATES TO YIELDS. BUT I ALSO THINK THERE IS OPPORTUNITY. JUST AS MUCH OPPORTUNITY BUT YOU HAVE TO BE VERY CAREFUL WITH WHERE YOU ARE PLAYING. THIS IS AN ASSET SELECTION GAME, NO LONGER SECTOR ALLOCATION.

1:02:20 AS WE LOOK TO THE MARKET TO FIND THOSE POCKETS OF OPPORTUNITY, WE ARE WORKING WITH LOCAL SPECIALISTS WHO REALLY KNOW EACH STREETCORNER AND THE DIFFERENCES. ROMAINE: ON THAT POINT, LET’S TALK ABOUT OFFICE FOR A SECOND BECAUSE A COUPLE GUEST TALKED ABOUT THE YEAR THAT WHEN YOU LOOK AT AGGREGATE NUMBERS WITH REGARDS TO HOW THE OFFICE MARKET IS DOING, IT LOOKS GREAT BUT THAT IS BEING DRIVEN BY THE “TROPHY PROPERTIES” AND THEN IT IS LIKE EVERYBODY ELSE IS LAGGING. IS THAT WHAT YOU ARE FINDING AS WELL? ELIZABETH: YES, THERE IS DEFINITELY A FLIGHT TO QUALITY IN OFFICE. WE ARE SEEING AN INCREASE IN

1:02:50 RETURN TO OFFICE TRENDS. THAT IS POSITIVE. I AM NOT SURE PEOPLE ARE TAKING ON MORE FLOOR SPACE. THEY ARE CONDENSING AND DOING A MORE ROTATIONAL HOME TELLING – HOTELLING IN THE OFFICE SPACE. ROMAINE: ONE OF THE BRIGHT SPOTS HAS BEEN IN RETAIL. GOING THROUGH YOUR PORTFOLIO AND A COUPLE RECENT ACQUISITIONS YOU HAD INCLUDING AN OPEN AIR CENTER OUT THERE IN CHINO HILLS. IS THAT RIGHT? ELIZABETH: YEAH. ROMAINE:

1:03:24 YOU HAD A BIG ONE IN LAS VEGAS, RECAPITALIZATION. WHY DO YOU THINK BRICK-AND-MORTAR RETAIL IS DOING BETTER? WE TALK ABOUT THE FORGOTTEN CHILD OR WHATEVER YOU WANT TO CALL IT. A LOT OF PEOPLE LEFT THAT ED SAID IT IS OVER. ELIZABETH: THE RETAIL APOCALYPSE IS OVER, I WOULD SAY. HOWEVER, AS WE GO BACK INTO THE SECTOR COME WANT TO KEEP IT SIMPLE. LOOKING FOR GROCERY ANCHORED RETAIL. ONE HAD PHENOMENAL SALES AND ATTRACTED A LOT OF TENANTS TO THE SELLER.

1:03:56 ANOTHER OPPORTUNITY WAS ESSENTIAL RETAIL IN A WEALTHY SUBURB OF LAS VEGAS. BOTH WERE ATTRACTIVE TO US BECAUSE WE HAD OPERATORS WHO KNEW HOW TO DRIVE THE ASSET LEVEL, THE RIGHT TENANT MIX, AND WE WERE GETTING ATTRACTIVE ENTRY YIELDS NORTH OF WHERE THE COST OF DEBT IS. ROMAINE: GIVE ME A SENSE. IS THAT DEFENSIVE GROWTH WITH REGARDS TO GROCERY ANCHORED RETAIL AND THE OPEN AIR STUFF? ELIZABETH: WE SAW A LOT OF THE ESSENTIAL RETAIL STORES AND QUITE FRANKLY THE RETAIL TENANTS HAVE

1:04:28 SURVIVED. THEY UNDERSTAND HOW TO INCORPORATE ON THE CHANNEL DISTRIBUTION SO THEY ARE MUCH STRONGER RETAILERS THAT ARE IN THE CENTERS TODAY. ESPECIALLY THIS ESSENTIAL RETAIL. THAT DID VERY WELL DURING THE PANDEMIC. OCCUPANCY DROPPED TO 92%, 93% BECAUSE THESE ARE YOUR STRIP MALLS. THEY HAVE YOUR EYE DOCTOR, PETER PARLER, NAIL SALON. ARE THEY THE BEST CREDITS IN THE WORLD? NO BUT RESILIENT AND OPEN. IF ONE BLOWS OUT FOR SOME REASON, YOU CAN REPLACE IT AND BACKFILL EASILY. THE OTHER THING SETTING THE STAGE FOR RETAIL IS THERE IS

1:04:58 VERY LITTLE SUPPLY THAT HAS COME ONLINE. THIS GETS BACK TO REAL ESTATE 101, SUPPLY AND DEMAND BALANCE PRE-AND WHERE ARE YOU? – SUPPLY AND DEMAND BALANCE. WHERE ARE YOU? ROMAINE: OBVIOUSLY, HAMILTON LANE IS NO STRANGER TO THAT, BUT GIVE ME A SENSE AS TO WHY YOU FIND THAT ATTRACTIVE RIGHT NOW. ELIZABETH: WE THINK SECONDARIES ARE THE BEST WAY TO ACCESS THE MARKET IN GENERAL. ROMAINE: REALLY? ELIZABETH: TRULY. WHAT IS EXCITING AS YOU ARE ABLE TO STEP INTO AN EXISTING ASSET, USUALLY AT A DISCOUNT.

1:05:30 THERE ARE MANY FORCED SELLERS OUT THERE TODAY. AND YOU ARE WORKING WITH OPERATORS THAT HAVE ALREADY GOTTEN THE ASSET. THEY KNOW THE OPERATIONAL RISKS AND OPPORTUNITIES SO THERE ARE FEWER SURPRISES STEPPING INTO SOMETHING WHERE SOMEONE REMAINS. ROMAINE: WHAT ARE YOU LOOKING AT WHEN YOU LOOK AT THE ASSET VALUE IN THAT SPACE? HAVE YOU LOOKED AT THINGS A BIT LIKE, OK, COMPLETELY WALKED AWAY AND SAID WE ARE NOT TOUCHING THIS WITH A 10 FOOT POLE? ELIZABETH: 100%. THE DEAL IS STRONGER THE CAPITAL AVAILABLE TO SATISFY

1:06:01 THE DEAL FLOW SO YOU CAN BE SENT ACTIVE. WE ARE WORKING WITH TOP SPONSORS AND OUR APPROACH IS TO TARGET THE MIDDLE MARKET WHERE YOU CAN IDENTIFY PRESPECIFIED ASSETS AND UNDERWRITE THEM. WE ARE NOT TAKING ON RISKS AND SAYING WE WILL RECAP HERE BUT GIVE YOU CAPITAL TO DO MORE UNCONSTRAINED. ROMAINE: WHY DO YOU DETERMINE WHAT THE DISCOUNT IS THAT YOU FEEL IS APPROPRIATE WILL COMPENSATE YOU FOR ALL THE RISK AND THE CRITIQUE OF ETC.? ELIZABETH: ON THE GP LANDSIDE, WE TRIANGULATE TO SAY, WHAT IS THE ABSOLUTE ENTRY YIELDS FOR COMING IN?

1:06:32 WE TRY TO MAKE SURE WE ARE NOT TAKING ON NEGATIVE LEVERAGE. IS IT ABOVE YOUR COST OF DEBT? HOW DOES THAT COMPARE TO COMPS IN THE MARKET, REPLACEMENT COSTS? WE TRIANGULATE THOSE TO UNDERSTAND WHERE YOUR ENTRY BASIS IS TODAY ON A RELATIVE BASIS. ON THE LP LED SIDE OF SECONDARIES, THAT IS A WHOLE DIFFERENT BALLGAME. THAT IS WHERE YOU ARE FOCUSED ON A FUND LEVEL NAV. YOU ARE EXCHANGING BASICALLY POSITIONS, LP POSITIONS IN A FUND. THOSE ARE MUCH MORE OPAQUE. AND PRICING IS WIDER.

1:07:05 YOU ARE SEEING 30% DISCOUNT ON AVERAGE FOR REAL ESTATE LP LED TRANSACTIONS. AROUND 10% INFRASTRUCTURE WHICH IS 1% OR 2% DISCOUNT. REAL ESTATE HAS THE WIDEST DISCOUNT. AS I MENTIONED, YOU HAVE TO BE SELECTIVE. NOT EVERY FUND AT A STEEP DISCOUNT IS ATTRACTIVE. WE DECLINED A TON AND IT IS OK BECAUSE THERE IS MORE DEAL FLOW OUT THERE. ROMAINE: HAVE TO LEAVE IT THERE. GREAT STUFF AND REALLY INSIGHTFUL. ELIZABETH BELL FROM OVER AT HAMILTON LANE. WE WILL TAKE A QUICK BREAK BUT

1:07:36 WHEN WE COME BACK, WE WILL TALK ABOUT M&A MOMENTUM. IT SLOWED DOWN A BIT IN THE THIRD QUARTER. WE WILL GET A READ ON IF THAT TREND IS CONTINUING. TED SMITH OF UNION SQUARE ADVISORS JOINS US WHEN WE COME BACK AFTER THE BREAK. THIS IS “THE CLOSE” ON BLOOMBERG. ♪ ♪ ROMAINE: SO DEAL MAKING, IT’S LOST A LITTLE BIT OF STEAM ACCORDING FROM DATA FROM BLOOMBERG WITH THE VALUE OF DEALS ANNOUNCED IN THE THIRD QUARTER TIPPING 150% YEAR OVER YEAR. DESPITE, THAT $3.8 TRILLION IN

1:08:09 TRANSACTIONS IS IN THE BOOKS FOR THIS YEAR AND WE’RE STILL ON PACE TO HIT THE $5 TRILLION MARK WHICH WOULD BE THAT RECORD WE SET IN 2021. TED JOINS US, FOUNDER AND C.E.O. OF UNION SQUARE TELEVISORS. WE’RE STILL IN REACH OFCLIPSING OR MATCHING THAT RECORD. GIVE US A SENSE OF WHY WE SAW THAT SLOWDOWN INTO THE THIRD

1:08:41 QUARTER? TED: WE HAD SUCH A BOOMING FIRST HALF. ALMOST 5% YEAR OVER YEAR. 47 DEALS WERE 0 BILLION IN MORE IN VALUE THAT FIRST HALF OF THE YEAR AND I THINK WE HAD SOME SEASONALITY. PARTICULARLY AROUND AUGUST AND OCTOBER, PEOPLE SLOW DOWN, TAKE A BREAK. OUR VIEW IS THAT WE’LL SEE AN ACTIVE PACE IN THE THIRD QUARTER AND WE THINK THAT $5

1:09:13 TRILLION IS WITHIN REACH. ROMAINE: WE’VE BEEN TALKING ALL DAY ABOUT THE CLOSING OF PARAMOUNT, SKYDANCE WARNER BROTHERS, NOW SKYDANCE. IS THIS GOING TO BE INDICATIVE IN THE SENSE THAT IF YOU THINK THERE COULD BE A REGULATORY ISSUE WITH YOUR KEEL, WHAT WOULD YOU WAIT ANOTHER YEAR OR TWO YEARS AND RISK WHATEVER POLICY COMES OUT OF WASHINGTON? TED: I AGREE. WASHINGTON IS DEAL ON BUT WHAT WE CLEARLY LEARNED IN SKYDANCE

1:09:45 IS THE STATES ARE NOT NECESSARILY DEAL ON DEPENDING ON WHICH INDUSTRY YOU’RE TALKING ABOUT AND FRANKLY, WHICH SIDE OF THE AISLE THOSE STATES LEAN TOWARD. WE SAW A SHIFT FROM WASHINGTON FROM NOSE 1 STATES THAT ULTIMATELY SUED AND THE CONCESSIONS THEY GOT ULTIMATELY WERE VERY MATERIAL. WE DON’T THINK THIS IS THE LAST TIME WE’RE GOING TO SEE THAT. PARTICULARLY THOSE FOLKS IN STATES AT ODDS WITH THE CURRENT ADMINISTRATION FROM WASHINGTON. ROMAINE: HOW ARE DEAL MAKERS AND THE COMPANIES THEMSELVES ADDRESSING THAT? IS THERE A SENSE THAT THEY

1:10:19 MIGHT BE PUT OFF ABOUT GOING FORWARD WITH THE DEAL OR ARE THEY JUST GOING TO BE READY TO LAWYER UP AND FIGHT IT? TED: I THINK THERE’S A LOT OF ASK FOR FORGIVENESS RATHER THAN PERMISSION. A LOT OF ANTI-TRUST LAWYERS WILL CONTINUE TO DO VERY WELL IN THESE ENVIRONMENTS AND IT’S NOT EVERY DEAL THAT HAS THE SIZE AND SCOPE AND IMPLICATIONS THAT SKYDANCE DID. SO I DON’T THINK EVEN LARGE SIZE M&A NEEDS TO THINK ABOUT THAT.

1:10:54 ROMAINE: WHERE IS THE MONEY ACTUALLY COMING FROM? I KNOW SOME OF IT, BALANCE SHEET BUT OBVIOUSLY A LOT OF THESE COMPANIES HAVE TO EITHER GO TO PRIVATE CAPITAL OR TO THE BANKS FOR SOME TYPE OF SYNDICATED LOANS. WHAT MIKES ARE YOU SEEING? TED: A SHIFT BACK TO THE SYNDICATED FINANCIAL BANKING MARKET. PRIVATE CREDIT IS STILL VERY MUCH A FORCE THIS DEAL MAKING AND WILL CONTINUE TO BE BUT THE BANKS HAVE DECIDED THEY DON’T

1:11:30 WANT TO SIMPLY CONCEDE THAT MARKET TO PRIVATE CREDIT. WE’VE SEEN ACTIVITY FROM BOTH. OBVIOUSLY PRIVATE EQUITY HERE AND AROUND THE WORLD CONTINUES TO BE MAJOR AROUND THAT SIDE OF THE BALANCE SHEET. ROMAINE: TO A CERTAIN EXTENT A LOT OF THESE COMPANIES FOREVER GOING TO THE PRIVATE CREDIT SPACE JUST TO GETTING THE DEAL DONE QUICKLY AND THEN GO TO BANKS TO TRY TO REFINANCE THAT DOWN. TED:

1:12:03 WE SEE THAT A THROAT. THE DEAL OF THE PRIVATE YET MARKET IS FASTER, THE DEALS MAY BE BETTER INITIALLY BUT 24, 36 MONTHS OUT, YOU NEED A SOLUTION FOR HOWER HOW YOU’RE GOING TO DEAL WITH THAT. ROMAINE: WE’VE SEEN A LOT OF COMPANIES COME OUT AND THEN THERE WAS THIS LULL. CAN YOU EXPLAIN WHY? IS IT BECAUSE EVERYTHING IS WAITING FOR THAT ELEPHANT IN THE ROOM TO GET OUT OF THE ROOM? TED: A COUPLE OF THINGS.

1:12:36 OBVIOUSLY SPACEX WAS WATCHED BY EVERYBODY. TOOK A LOT OF CAPITAL OUT OF THE MARKET. EVERYBODY TOOK A BREATH. WE WERE COMING INTO MIDDLE TO LATE SUMMER WHEN THAT WENT OUT. IT’S COME UP BUT LESS THAN 20%. PEOPLE ARE STILL TRYING TO JUDGE HOW THESE MEGA I.P.O.’S ARE GOING TO HIT THE MARKET. THE NEXT ELEPHANT IN THE ROOM IS ANTHROPIC. OPEN AI SEEMS TO HAVE PUSHED TO 2027. ANTHROPIC WANTS TO COME OUT ONE

1:13:09 BETTER THAN SPACE X. IT’S A LITTLE UNCLEAR WHAT’S GOING TO HAPPEN WITH ALL THE CAPITAL CONTRIBUTION TO THAT. ROMAINE: ON ANTHROPIC, HOW DO YOU THINK THAT I.P.O. WILL BE RECEIVED RELATIVE WHAT HAPPENED WITH SPACEX? THERE WAS A LOT OF TALK ABOUT HOW THE MARKET WOULD WEATHER THAT. IT’S BEEN FINE BUT HOW IS ANTHROPIC GOING TO DO WITH THESE $2 TRILLION NUMBERS ARE

1:13:41 TRUE? TED: I THINK ANTHROPIC IS GOING TO DO VERY WELL. I THINK PEOPLE ARE STILL GUY JESTING THE RISK FACTORS TO THE HUMAN THINGS AND OTHER THINGS THAT ARE IN THE DOCUMENT BUT GIVEN THE WAY THEY’VE SURGED INTO THE LEAGUE LEAD, ARGUABLY BIGGER THAN SPACE X. I THINK THEY’RE GOING TO DO REALLY WELL.

1:14:12 THERE ARE SOME REALLY BIG I.P.O.’S THAT COULD COME OUT AND HOW ARE THOSE GOING TO FARE? IF YOU HAVE A REALLY GOOD AI STORY, I SUSPECT YOU’LL DO WELL. IF NOT, I THINK THAT’S TOUGHER. ROMAINE: SO I THINK THAT WILL PRIMARILY BE AN AI STORY FOR THE FORESEEABLE FUTURE? TED: I DO. FOR THE TECHNOLOGY SECTOR, YOU EITHER HAVE TO HAVE A BIG AI SECTOR AND IF NOT, YOU’RE NOT GOING TO GO PUBLIC. ROMAINE:

1:14:44 TH THANK YOU, TED SMITH. JOEL SCHNEIDER, DEPUTY HEAD AT DIMENSIONAL JOINS US AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ROMAINE: WE WERE JUST TALKING WITH TED SMITH ABOUT A POTENTIAL BLOCKBUSTER I.P.O. ANTHROPIC. COULD GO PUBLIC AS SOON AS NEXT MONTH. JOINING US NOW IS JOEL

1:15:15 SCHNEIDER, THE DEPUTY HEAD OF PORTFOLIO MANAGEMENT FOR NORTH AMERICA AT DIMENSIONAL. GREAT TO SEE YOU HERE. JOEL: PLEASURE TO BE HERE. ROMAINE: ASSUMING ANTHROPIC CALMS AND COMES IN AT SOME OF THE NUMBERS THAT HAVE BEEN BANDIED ABOUT, IS THE MARKET GOING TO ABSORB THIS? JOEL: YES, I THINK WE SAW THIS WITH SPACEX. THE RESEARCH SHOWS YOU GET THAT 20% POP ON AVERAGE AND IT

1:15:47 SHOULDN’T BE SURPRISING TO SEE THAT THAT A HAPPENS. WHAT’S INTERESTING IS WHAT HAPPENS AFTER. THE RESEARCH SHOWS THAT THEY TYPICALLY GO ON TO UNDERPERFORM IN THE MARKET. I ALWAYS HEAR ABOUT THE I.P.O. BEING OPEN AND CLOSED BUT IF IT’S A GOOD I.P.O. WITH GOOD FUNDAMENTALS, THINGS SEEM TO BE OPEN. ROMAINE: A LOT OF INDEX FUNDS BOUGHT INTO SPACEX EARLY. MY UNDERSTANDING IS DIMENSIONAL WAS ABLE TO SIT ON THE SIDELINES FOR A LITTLE BIT AND WE SAW WEAKNESS IN SPACEX’S

1:16:23 SHARES POST I.P.O., WHICH IS TYPICALLY NORMAL FOR A LOT OF BIG IPO’S LIKE THAT. I ASSUME THAT’S A WIN FOR YOU GUYS? JOEL: I THINK IT’S A WIN AND A LOT OF THE RESEARCH WILL TELL YOU THERE ARE HIGHER PROBABILITY APPROACHES AND LOWER PROBABILITIES. WE LOVE I.P.O.’S. WE’RE PRIVATE EQUITY INVESTORS AND WE THINK IT’S GOOD BUT HOW AND WHEN YOU INVEST MATTERS. SO SEEING THE INDEX PROVIDERS TREATED DIFFERENTLY. YOU GOT EVERYTHING FROM SOME PU

1:16:54 PUTTING IT IN FIVE DAYS AFTER IT LISTED TO OTHERS SAYING WE’RE GOING TO WAIT A YEAR AND THEN REEVALUATE. WHEN YOU PUT YOUR MONEY IN AN INDEX FUND YOU’RE OUTSOURCING YOUR DECISION TO SOMEONE ON THE INDEX COMMITTEE. ROMAINE: WHAT’S THE MARKET RIGHT NOW FOR I.P.O.’S? AURA PULLED THEIRS LAST WEEK. THE MARKETS RIGHT NOW ARE A LITTLE BIFURCATED TO PUT IT MILDLY BUT WEIRD TO SEE A

1:17:27 COMPANY SAYING MARKET CONDITIONS AREN’T RIGHT. JOEL: I WOULD AGREE WITH YOU. I THINK QUALITY I.P.O.’S TEND TO DO BETTER REGARDLESS OF THE MARKET CONDITION SO WHEN SOMEONE IS SAYING THAT IT’S A GOOD OR BAD MARKET USUALLY IT’S COMPANIES WHO WERE A LITTLE BIT CONCERNED ABOUT THE FUNDAMENTALS OR VALUATIONS THEY ARE TRYING TO SAY. BUT A GOOD COMPANY WITH GOOD FUNDAMENTALS AND GOOD PROFIT GROWTH, I THINK YOU SEE A PRETTY GOOD RECEPTION TO THOSE. ROMAINE: THIS IDEA THAT MARKET CONCENTRATION RIGHT NOW IN THE

1:18:00 PUBLIC MARKETS – WE TALKED ABOUT THIS RECORD HIGH OBVIOUSLY BEING LED, AT LEAST OVER THE LAST COUPLE OF MONTHS BY A FEW HANDFUL OF NAMES. A BIG CHIP MAKER AND A COUPLE OF SOFTWARE NAMES. THEN YOU HAVE ANTHROPIC. IS THAT GOING TO MAKE THE RISK AND CONCENTRATION IN MARKETS EVEN WORSE THAN WHAT IT IS? JOEL: INVESTORS ARE UNDERSTANDABLY COORDINATOR ABOUT CONCENTRATION RISK AND D.C. NOT JUST IN U.S. LIKE IN SOUTH KOREA, A LOT OF

1:18:31 THE SAME NAMES RETRIEVE DREWING THE MARKETS. THE CHIP MAKERS, THE AI MAKERS. WE SAY THAT CONCENTRATION IN AND OF SINCE NOT NECESSARILY A PREDICTOR OR POOR MARKET PERFORMANCE OVERALL. IF YOU OWN THE ENTIRE MARKET, LARGE CAP TO SMALL SCRAP, CONCENTRATION HAS BEEN SEEN BEFORE AND IT’S USUALLY NOT NECESSARILY FOLLOW BUILD POOR PERFORMANCE BUT IF YOU’RE ONE OF THOSE INVESTORS WHO IS DEFINITELY OVERWEIGHT THOSE LARGE CAP U.S.

1:19:02 COMPANIES, SOME OF THOSE LARGE CAP CHIP MAKERS, THIS IS ABSOLUTELY A TIME TO DEAL WITH THAT FIRST ISSUE, WHICH IS TO GET BACK TO OVERALL DIVERSIFICATION. SMALL CAPS, VALUE STOCKS AND NON-U.S. EQUITIES. ROMAINE: THE PUSHBACK ON THAT IS IT’S EASY TO SAYNEED A DIVERSIFIED ALLOCATION BUT WHETHER YOU LOOK AT WHERE THE EARNINGS GROWTH IS. AT LEAST THE S&P SECTORS IT’S BASICALLY ALL COMING FROM INFO TECH AND TO A CERTAIN EXTENT THE ENERGY SECTOR.

1:19:34 A FEW NAMES IN THE COMMUNICATIONS SPACE. BUT OUTSIDE OF THOSE YOU’RE TALKING ABOUT LOW SINGLE-DIGIT EARNINGS GROWTH COMPARED TO DOUBLE DIDN’T, HIGH DOUBLE DIGIT AND IN THE CASE OF ENERGY, TRIPLE DIGITS EARNINGS GROWTH. JOEL: AND THAT’S WHAT MAKES IT CONFUSING FOR INVESTORS. A LOT OF CHIP MAKERS AND AI INFRASTRUCTURE PROVIDERS ARE SEEING EARNINGS GROWTH WITH YOU THAT’S BEING PRICE INTO THE STOCK. IF YOU GET ANOTHER YEAR LIKE IN 2022 WHERE THEY MISS THOSE

1:20:07 LOFTY EXPECTATIONS, THERE’S A LONG WAY TOO WALL FROM NOSE HIGH EXPECTATIONS SO WHILE THE VALUATIONS ARE RUNNING A LITTLE BIT AHEAD OF THE EARNINGS GROWTH FOR THOSE U.S. TECH COMPANIES, LOOK AT THIS YEAR. OUTSIDE THE U.S. YOU’VE SEEN VALUE STOCKS IN DEVELOPED S.U.S. BEAT GROWTH STOCKS BY 10 POCKET. VALUE STOCKS THIS YEAR HAVE BEATEN GROWTH STOCKS BY 16% SO I THINK PEOPLE SOMETIMES DON’T REALIZE THAT THERE ARE ACTUALLY ATTRACTIVE RETURNS COMING FROM

1:20:38 OTHER AREAS OF THE MARKET. ROMAINE: WHAT CREATES A BROADER RECOGNITION OF THAT? OR I SHOULD SAY A BROADER EMBRACE OF THAT. THERE’S THERE IDEA THAT YEAH, EVERYTHING YOU SAID MAKES SENSE ACADEMICALLY, ON MATTER BUT WHEN YOU SEE A.M.D. AND NVIDIA AT ANOTHER RECORD HIGH, IT’S HARD TO PULL OUT OF THAT AND GO INTO SOMETHING THAT’S LAGGING? JOEL: INVESTORS ABSOLUTELY HAVE THAT CHANCE. THE SOLUTION ISN’T NECESSARILY

1:21:13 TO AGGRESSIVELY UNDERWEIGHT THESE AI COMPANIES. YOU STILL WANT TO HOLD THEM, PROBABLY CLOSE TO MARKET CAP EIGHT WEIGHT. THE ONES AND A HALF GOOD EARNINGS NEGOTIATES YOU MIGHT WANT TO HAVE A SLIGHT OVERWEIGHT. THE KEY IS TO TILT TO SOME OF THE OTHERS SO IT’S NOT A BINARY DECISION. ROMAINE: OUTSIDE OF THE U.S. WHERE IS CONCENTRATION LESS THAN PRONOUNCED?

1:21:44 >> DEVELOPED MARKETS. IN EMERGE, MARKETS YOU SEE A DECENT AMOUNT OF CONCENTRATION BUT IN SMALL CAPS YOU HAVE RETURNS THAT ARE MUCH LESS CORRELATED WITH THE AI TRADE. THESE ARE INDEPENDENT SOURCES OF RETURNS THAT CAN HELP YOUR OVERALL RETURN WHILE SERVING YOUR CONCENTRATION OF RISK PROBLEM. ROMAINE: THANK YOU, JOEL SCHNEIDER. A CLOSER LOOK AT THE I.P.O. SPACE, A CLOSER LOOK AT THE

1:22:15 CONCENTRATION WE CONTINUE TO SEE IN THIS MARKET. WHEN WE COME BACK WE’RE GOING TO TAKE A CLOSER LOOK OF WHAT INVESTORS WILL HAVE THEIR EYES ON OVER THE NEXT 24 HOURS. COMING UP NEXT HERE ON BLOOMBERG. ROMAINE: GREENWICH ECONOMIC FORUM IS UNDERWAY. THE TWO-DAY CONFERENCE BRINGING TOP INVESTORS AND POLICY MAKERS TOGETHER. INCLUDING NAMES LIKE FORMER TREASURY SECRETARY ROBERT RUBIN.

1:22:47 AND KEN KENRCEL AT ASSET MANAGEMENT. I CAUGHT UP WITH KEN EARLIER TODAY. HE STILL THINKS IT’S A PLATINUM PERIOD AND TALKS ABOUT THIS IDEA OF HOW INVESTORS ARE BEING MACHINE SELECTIVE IN A GOOD WAY. HERE’S PART OF THAT CONVERSATION. KEN: WE HAVE A 20-YEAR HISTORY OF INVESTING IN PRIVATE CREDIT. WE HAVE A DEEP AND EXPERIENCED WORKOUT TEAM AND I WAS TALKING WITH MATT WHO HEADS UP OUR CREDIT BUSINESS DAY-TO-DAY AND

1:23:18 WE HAD AN INTERESTING CONVERSATION. ONE OF THE IMPORTANT THINGS WHEN YOU THINK ABOUT WORKOUT. THERE’S THE WASHINGOUT SIDE WHICH CAN BE A BIT CONTENTIOUS AND NEGOTIATING OVER TERMS AND WHAT THAT LOOKS LIKE BUT THERE’S ANOTHER PART OF IT WHICH WE’RE LEANING INTO WHICH IS, ONCE YOU OWN THE BUSINESS, THIS IS A VIABLE COMPANY AND HOW DO WE TURN IT AROUND AND HOW DO WE SUPPORT MANAGEMENT, HOW DO WE CREATE THE RIGHT INCENTIVES SO THAT, OK, MAYBE

1:23:49 THE BUSINESS WAS OVERLEVERED AT THE TIME OF THE DEAL FOR WHATEVER REASON BUT HOW DO WE RESET THE DECK AND CREATE VALUE FOR INVESTORS GOING FORWARD? SO THERE’S KIND OF A TWO-HEADED DYNAMIC. ONE IS LIKE MR. TOUGH GUY NEGOTIATION, MAKE SURE AND GET THE RIGHT DEAL AND FIX THE PROBLEM BUT ONCE THE PROBLEM HAS BEEN ADDRESSED FROM A CAPITALIZATION STANDPOINT, YOU WANT TO CREATE A DIFFERENT DYNAMIC. YOU WANT TO MAKE SURE THAT THE PEOPLE WORKING IN THIS BUSINESS FEEL THEY NOW YOUR SUPPORT AS A

1:24:21 NEW OWNER AND THAT MANAGEMENTS IS INCENTIVIZED AND THEY HAVE UPSIDE AND BENEFIT FOR THE REBUILDING THAT BUSINESS. WE’VE TAKEN A TWO-PRONGED APPROACH AND I THINK THAT’S THE RIGHT APPROACH. ROMAINE: ARE YOU THE TOUGH GUY? IS IT LIKE A GOOD COP/BAD COME? KEN: I’M NOT A BAD COP. [LAUGHTER] BUT I WILL SAY, EVEN IN THE BAD COME SCENARIO – OBVIOUSLY YOU KNOW THIS BUT FOR FOLKS – OUR BUSINESS IS A LITTLE BIT DIFFERENT IN THE SENSE THAT WE

1:24:54 HAVE A PRIVATE EQUITY BUSINESS THAT IS AN INVESTOR IN PRIVATE EQUITY FUNDS. WE’RE A LIMITED PARTNER IN OVER 400 U.S. MIDDLE MARKETS PRIVATE EQUITY FUNDS. WE COALESCE WITH THOSE FIRMS AND THEN WE HAVE A PRIVATE LENDING BUSINESS. LAST YEAR WE WERE THE NUMBER ONE RANKED DISTRICT LENDER IN THE U.S. AND THE TWO ARE VERY SYMBIOTIC BUT PARTS OF THAT DYNAMIC IS THAT WE HAVE A RELATIONSHIP WITH THOSE FUNDS. WE’RE THE L.P. IN THE FUND. WE HAVE A HISTORY WITH THEM.

1:25:29 WE MAY HAVE A LONG-STANDING RHYTHM. BUT WE TAKE, I WOULD SAY, A MUCH MORE – A MUCH MORE PRAGUE MATTIC AND A MUCH MORE STRAIGHTFORWARD APPROACH TO RESTRUCTURING AND WORKOUT, WHICH IS, IF YOU AS AN OWNERER PREPARED TO PUT UP CAPITAL AND FIX THE PROBLEM, WE’RE THERE TO PLAY BALL AND FIX THE ISSUES AND MOVE FORWARD AND LET’S GO BUT IF YOU’RE NOT, LET’S CALL IT ASK WE’RE PREPARED TO TAKE THE KEYS AND PREPARED TO WORK WITH THE LEADERSHIP AND

1:26:05 MANAGEMENT TO MOVE THE COMPANY FORWARD. ROMAINE: OTHER TIMES ARE YOU RIGHT SIDE TO WALK AWAY, SAY ENOUGH? KEN: IN SITUATIONS WHERE THE SPONSOR THROWS IN THE KEYS, IF YOU WILL, WE NEED TO BE THERE TO PROVIDE OVERSIGHT AND SUPPORT. WE HAVE A BENCH OF OPERATING EXECUTIVES, FORMER C.E.O.’S OF HEALTH CARE BUSINESSES AND BUSINESS SERVICE COMPANIES AND WE BRING THEM IN EITHER ON THE BOARD OR EVEN INTO MANAGEMENT WHERE THEY CAN PROVIDE GUIDANCE AND SUPPORT AND HOPEFULLY

1:26:36 REPOSITION THE BUSINESS IN A MORE POSITIVE WAY. ROMAINE: AND THAT WAS PART OF MY CONVERSATION WITH KEN KENCEL, THE CO-FOUNDER AND C.E.O. OF CHURCHILL ASSET MANAGEMENT. PART OF A VARIETY OF DECISIONS WE HAD EARLIER AT THE GREENWICH ECONOMIC FORUM IN CONNECTICUT. OVER THE NEXT 24 HOURS, THESE ARE THE THINGS THAT COULD POTENTIALLY MOVE THE PARTNER. STARTING WITH MBA MORTGAGE APPLICATIONS.

1:27:08 THERE’S BEEN A BIG FOCUS ON THAT RISE IN MORTGAGE RATES. NOW ABOVE 7%. THAT’S HAD A DAMPENING IMPACT ON THE NUMBER OF NEW PEOPLE FILING FOR MORTGAGES. OF COURSE, A REALLY ACTIVELY STRONG SPENDING ENVIRONMENT. WHETHER THE CREDIT ENVIRONMENT HOLDS UP AS WELL. IT’S GOING TO BE HARD TO KNOW WHAT TO MAKE OF THE FED MINUTES. EVERYONE IS GOING TO LOOK AND SEE HOW HAWKISH THE COMMENTARY

1:27:42 WAS BUT A LOT OF THAT HAS CHANGED SINCE THAT LAST MEETING AS WELL. WE ARE GOING TO GET SOME MORE EARNINGS. ONE ON THE TECH SIDE. FROM APPLIED DIGITAL AND ONE IN THE CONSUMER SPACE, FROM LEVI STRAUSS. BOTH WILL OFFER, I GUESS TWO DIFFERENT PERSPECTIVES ON THE STATE OF THE U.S. ECONOMY, STILL DRIVEN BY CONSUMER SPENDING BY WAY MORE SO BY ARTIFICIAL INTELLIGENCE AND THE MILKEN INSTITUTE SUMMIT

1:28:18 IS GOING TO TAKE PLACE IN ASIA. WE’LL COVER THAT. WE’LL TAKE A CHECK OF A RECORD-SETTING DAY ON WALL STREET HERE ON THIS TUESDAY AFTERNOON, OCTOBER 6. THE S&P 500 HITTING ITS FIRST RECORD HIGH SINCE MID AUGUST. THE NASDAQ DOING THE SAME. UTILITIES UP ABOUT 3% ON THE DAY. SOME LED BY THAT BIG BUMP WE

1:28:50 SAW IN CONSTELLATION ENERGY. AS WELL AS VISTRA. THE AFTERHOURS TRAILED INVOLVES ANOTHER CONSTELLATION. THIS, CONSTELLATION BRANDS, MAKERS OF BEER AND WINE. THE COMPANY STANDING BY ITS E.P.S. GUIDANCE AND INVESTORS SELLING IT OFF A BIT. THIS IS BLOOMBERG.