Earnings Season, AI & Oil Prices in Focus

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: Earnings Season, AI & Oil Prices in Focus · Channel: Bloomberg Television · 1:28:57 · Watch on YouTube

Topics: AI agents, AI infrastructure and hardware

Summary

Bloomberg’s “The Close” examines a market near record highs as investors weigh earnings, inflation, rising oil prices, and geopolitical risks. Guests discuss equity-market concentration, energy and grid investments, defense-sector prospects, and the challenges facing Tesla’s autonomous-driving ambitions. The program also previews bank earnings and CPI/PPI data, while exploring the Federal Reserve’s policy outlook and legal questions around its independence. Later segments focus on AI investment, Anthropic’s potential IPO, and whether Meta’s new Muse model can win users and partners.

Key points

Markets were mixed, with the S&P 500 near record highs and energy shares benefiting from higher oil prices.
Afsaneh Beschloss pointed to strong demand for power and grid infrastructure, but warned that market gains were concentrated in a narrow group of stocks.
Higher oil and fuel costs pose risks beyond crude supply, particularly for diesel and jet fuel; energy security could support domestic nuclear and renewable power.
Bloomberg’s David Welch said Tesla’s autonomous-driving ambitions face technical and regulatory hurdles, while Waymo is currently viewed as a leader in the U.S.
Barclays analyst Anthony Valentini favors defense technology over large defense primes and sees a structural shift toward lower-cost weapons systems.
Former Fed Governor Betsy Duke said recent Fed officials’ comments support patience, while arguing that the Lisa Cook dispute could take a long time to resolve in court.
Guests anticipated that bank earnings and inflation data would shape market expectations, while noting that higher long-term yields and credit risks merit attention.
Inflation Insights’ Omair Sharif said energy pass-through could make inflation firmer in early 2027, although he expected near-term data to be more moderate.
Venture investor Willy Lee described rapid AI revenue growth and argued that enterprise adoption beyond coding could drive another stage of spending.
Bloomberg columnist Dave Lee said Meta’s Muse needs useful integrations and strong partnerships to overcome interoperability and consumer-trust challenges.

Chapters

Start	Chapter	Summary
00:01	Market setup and equity outlook	The hosts introduce the day’s themes before Afsaneh Beschloss discusses market concentration, grid demand, equity issuance, oil, and investment opportunities.
10:17	Tesla’s autonomous-driving ambitions	Bloomberg’s David Welch weighs Tesla’s push toward AI and robotaxis against technical, regulatory, and competitive challenges.
15:50	Analyst calls and defense stocks	The program reviews analyst recommendations and asks Barclays’ Anthony Valentini about aerospace and defense valuations, budgets, and preferred companies.
22:00	Fed outlook and bank earnings preview	Former Fed Governor Betsy Duke discusses upcoming data, Fed messaging, bank results, and the legal effort concerning Governor Lisa Cook.
30:56	Fannie Mae and Freddie Mac shares fall	Bloomberg explains a downgrade and why elevated mortgage rates may make a release of the housing-finance companies from government control less likely.
34:52	Market close and investment themes	Robinhood Markets’ Stephanie Guild discusses bond yields, thematic investing, AI spending, and the risks posed by oil prices.
42:24	Closing market moves	The hosts review the mixed close, sector performance, Meta’s new AI model, and notable stock movers.
53:52	Inflation data and Fed expectations	Omair Sharif previews CPI and PPI, considers possible energy-cost pass-through, and discusses the outlook for Federal Reserve rate decisions.
1:02:46	The central bank ‘reflection problem’	Jonathan Levin argues that central banks should not rely on rising market rates to do their policy work and warns about fragile market breadth.
1:07:44	Big-bank earnings outlook	Gabelli Funds’ Macrae Sykes discusses credit, capital-markets activity, bank valuations, and the outlook for major and regional lenders.
1:12:33	Kroger cuts corporate jobs	Bloomberg reports that Kroger plans to reduce its corporate workforce over three years to simplify operations and redirect resources.
1:13:08	AI investment and Anthropic’s potential IPO	Investor Willy Lee discusses AI-company revenue, valuations, enterprise adoption, and investment opportunities beyond the largest AI firms.
1:19:51	Meta’s Muse model and user adoption	Dave Lee discusses Muse’s early usage, the need for integrations and partners, and the challenges of consumer trust and competition.
1:28:26	What to watch next	The hosts preview upcoming bank earnings, inflation data, economic releases, and a new smart-home device announcement.

Quotes

I think we will see some more of that happening over the next week or two. — 03:20

Waymo was pretty much state-of-the-art right now, particularly in the United States. — 14:45

We have been thematically investing in Robinhood strategies. — 37:31

If things were to go south, boy could they really go south and in a hurry. — 1:06:05

I think what it has to do is just make it really, really good. — 1:23:37

Concepts and entities

Federal Reserve, CPI, PPI, term premium, Tesla, Waymo, Meta, Muse Wonder, Anthropic, OpenAI, SpaceX, NVIDIA, Fannie Mae, Freddie Mac

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.” KATE: WILL STRONG EARNINGS BE ENOUGH FOR THE BULLS, OR WILL A SPUTTERING CHIP TRAY TO KEEP A LID ON GAINS? LIVE FROM BLOOMBERG HEADQUARTERS IN NEW YORK, ON SCARLET FU. HEMA: I AM HEMA PARMAR. WE ARE KICKING YOU OFF TO THE CLOSING BELL.

00:35 SCARLET: THE S&P 500 DOWN LARGELY, HOVERING NEAR RECORD HIGHS. BANKS ARE IN FOCUS, JP MORGAN, GOLDMAN SACHS, ALL TOMORROW FOLLOWED BY BANK OF AMERICA AND MORGAN STANLEY. OIL PRICES FOR THE THIRD STRAIGHT DAY. UKRAINE SAYS IT DOES NOT KNOW ANYTHING ABOUT THE TRADE. AND MOST OF THE G10 CURRENCIES AGAINST THE DOLLAR, POSITIONING NOW THE MOST NEGATIVE SINCE THE EARLY DAYS OF THE PANDEMIC. HEMA:

01:09 BIG EQUITY MOVERS TODAY COME CHIPOTLE DOWN, ON COMMENTS FROM STARBUCKS SAYING THEY WILL NOT BE BUYING CHIPOTLE, ASTRA REPORTS LAST WEEK THAT STARBUCKS WAS CONSIDERING AN OFFER. KEEP IN MIND THE CURRENT STARBUCKS CEO WAS THE CEO OF CHIPOTLE, CURRENTLY DOWN 5% IT ALSO BUMBLE, YOU SEE SHARES RUMBLING THIS AFTERNOON, DESPITE REPORTS THAT THE DATING OUT IS IN ADVANCED TALKS TO GO PRIVATE. IT HELD TALKS WITH ITHACA

01:41 HOLDINGS, A DEAL VALUED AT ABOUT $1 BILLION. AND CONCERNS OF POTENTIAL COMPETITION FROM CHINA, WHICH HAS MADE IT BACK. SCARLET: LET’S KICK THINGS OFF FOR A BIG WEEK HERE WITH US ON A BESCHLOSS, FOUNDER AND CEO OF ROCK CREEK. THANK YOU SO MUCH FOR JOINING US. WE WENT THROUGH SOME OF THE BIG THEMES IN THE MARKET TODAY, BUT EVEN WITH ALL THE CROSSCURRENTS COMMITTED PRETTY QUIET DAY BECAUSE THE BOND MARKET IS

02:14 CLOSED, AND IT FEELS LIKE THE SWIRLING UNDERNEATH THAT GIVES PEOPLE REASON TO BE CONCERNED. HOW ARE YOU LOOKING AT EQUITIES AND HOW FAIRLY VALUED WE ARE RIGHT NOW? AFSANEH: GREAT TO TALK TO YOU, SCARLET. AS YOU SAID, IT HAS BEEN A RELATIVELY QUIET DAY TODAY, EVEN THOUGH OIL PRICES DID JUMP UP, ON THE GEOPOLITICAL SIDE, OBVIOUSLY A LOT HAPPENING OVERNIGHT AND THIS MORNING AND OVER THE LAST COUPLE OF DAYS. SO THAT I THINK IS SOMETHING TO WATCH, BECAUSE AS THE EQUITY MARKETS, YOU KNOW, THAT’S WHAT I TALK ABOUT, ARE GOING TO BE

02:47 GOING THROUGH WHAT IS HAPPENING THIS WEEK WITH THE BANKS STARTING TO PROVIDE THEIR NUMBERS, I THINK THERE’S A LOT OF UNDERPINNINGS IN THE EQUITY MARKETS THAT ARE POSITIVE AND SOME THAT ARE VERY NEGATIVE. ON THE POSITIVE SIDE, WHAT IS HAPPENING IS ON THE POWER AND ELECTRICITY SIDE, THERE IS CRAZY DEMAND FOR POWER. SO REGARDLESS OF WHAT IS GOING ON WITH AI OR DATA CENTERS BEING A POLITICALLY CHALLENGING AT THE MOMENT, THERE IS A DEMAND FOR POWER.

03:20 SO YOU SEE THIS UNBELIEVABLE JUMP IN THE VALUE OF THE EQUITIES AROUND THE CONSTELLATION OR COMPANIES THAT ARE PRODUCING GOODS THAT CAN BE USED FOR EXPANSION OF THE GRID. THE OTHER SIDE ALSO IS THE NEGATIVE SIDE, WHERE YOU SEE THIS NARROW SORT OF CHANGES IN THE MARKET, WHERE A FEW STOCKS ARE GOING UP A LOT, AND A LOT OF STOCKS HAVE COME DOWN OR ARE STAYING SORT OF PUT. I THINK WE WILL SEE SOME MORE OF THAT HAPPENING OVER THE NEXT WEEK OR TWO. SCARLET:

03:52 YOU ALSO POINT OUT THAT WE HAVE A HIDDEN SUPPLY SHOCK IN THE EQUITY MARKET COULD WE SPEND SO MUCH TIME TALKING ABOUT HOW MUCH DEBT THE GOVERNMENT NEEDS TO ISSUE, NO MUCH DEBT THE HYPERSCALERS NEED TO ISSUE TO FIND THEIR AI BUILD OUT. WE KIND OF OVERLOOK SOMETIMES THE IMPACT OF THE EQUITY ISSUANCE AS WELL. HOW IS THAT PLAYING OUT? AFSANEH: ABSOLUTELY. BECAUSE OF THE IPO’S WE’VE ALREADY SEEN WITH SPACEX AND OTHER POTENTIAL IPO’S, EQUITY BEING ISSUED BY OTHER COMPANIES, WE ARE SEEING A LARGE PUSH INTO THE MARKET.

04:26 A LOT OF FROM THE CORPORATE SIDE, SO THAT HAS BEEN A VERY BIG, MAJOR PICKING UP EQUITIES BY THE CORPORATE CELLS, VERSUS – CORPORATE THEMSELVES, VERSUS THE BOND MARKET, THE TREASURY HAS BEEN BUYING BACK SOME OF THE BILLS THEY’VE BEEN ENJOYING. YOU SEE SIMILAR THINGS HAVING BY DIFFERENT PLAYERS. HEMA: YOU MENTIONED OIL A LITTLE BIT. LET’S DIG INTO THAT MORE, WITH A LOT OF THE GEOPOLITICAL CONCERNS. HOW SIGNIFICANT OF A STRUCTURAL RISK DO YOU SEE WHAT WE ARE SEEING IN THE ENERGY SHOCK

04:58 CURRENTLY, AND HOW DO WE SEE THAT PLAYING OUT? AFSANEH: I THINK THE NEXT COUPLE DAYS, WE ARE PROBABLY GOING TO SEE MORE UGLINESS WITH THE WAR AND WHAT IS GOING ON WITH THE HOUTHIS AND THE SAUDI’S IN THE REGION. THAT WILL PUT OIL PRICES FURTHER UP THAN WHERE THEY ARE TODAY. I THINK TALKING, THEY WERE CLOSER TO 107, THIS MORNING CLOSER TO 104. BUT THE BIG ISSUE, OBVIOUSLY, IS THE ONE THAT PRESIDENT TRUMP HAS BEEN TRYING TO ADDRESS OVER

05:29 THE WEEKEND, WHICH IS DIESEL PRICES. THERE’S OBVIOUSLY JET FUEL PRICES. HERE IN THE U.S., WE DON’T REALIZE THAT WE AT LEAST HAVE THE SUPPLY OF THESE GOODS. WHAT IS THE PRICE WE ARE PAYING TO HAVING ACCESS TO THIS FIELD? IN A LOT OF OTHER PLACES, THERE IS AN ISSUE ABOUT SUPPLY AT ANY PRICE. SO WHEN YOU ARE OUTSIDE OF THE U.S., THE ISSUE BECOMES EVEN BIGGER THAN OURS. THE BIG THING WE WERE TALKING ABOUT OVER THE LAST COUPLE OF DAYS AGAIN IS THE CONVERSATION PRESIDENT TRUMP HAD WITH

06:04 PRESIDENT PUTIN TO WRITE IN RUSSIA, WHICH WAS A VERY BIG EXPORTER OF DIESEL, FAR FROM STOPPING ITS DIESEL EXPORT, ALSO HAS ALMOST ONE-THIRD OF ITS DIESEL PRODUCTION IMPACTED BY THE WAR. THE COST OF GIVING – GETTING INSURANCE COSTS, GETTING ACROSS THE BORDER IS HIGHER, AND THE ABILITY TO GET THE SUPPLY UP IS HARDER. SIMILARLY IN CHINA, WHERE THEY HAVE ALSO PUT STOCKS TO DIESEL EXPORTS. SO YOU ARE SEEING A LOT OF

06:36 POTENTIAL ISSUES, NOT JUST WITH CRUDE OIL, BUT MORE IMPORTANTLY WITH THE PRODUCT. HEMA: SO GIVEN ALL OF THESE DYNAMICS, HOW IS ROCK CREEK INVESTING RIGHT NOW, WHERE DO YOU SEE OPPORTUNITY BOTH IN TERMS OF ASSET CLASS AND TOPOGRAPHY? AFSANEH: INTERESTINGLY, WHILE WE SEE THIS HAPPENING TO MY MENTIONED EARLIER, ON THE SIDE OF POWER WHERE WE SEE A LOT OF POTENTIAL GROWTH AROUND THE GRID, I THINK THAT HAS BEEN SOMETHING GOING ON PARTICULARLY

07:07 IN THE LAST FEW WEEKS, BUT WE SEE THAT CONTINUING IN THE REST OF THE YEAR IF NOT BEYOND THAT. THE OTHER THING IS ALTERNATIVE ENERGY, BECAUSE EVERYONE IS CONCERNED ABOUT IMPORTING, WHETHER IT IS LNG OR OIL. AND THERE WILL BE EVENTUALLY, IF THE NEW LNG SUPPLY IS COMING IN, EVEN A POTENTIAL OVERHANG, TOO MUCH LNG IN THE MARKET. I THINK WHAT WILL HAPPEN IS PRODUCING NUCLEAR POWER AT HOME, PRODUCING RENEWABLE ENERGY AT HOME IS GOING TO BE SUPER INTERESTING. AND THE OTHER THING WE’VE SEEN

07:39 IS THAT GAS PRICES HAVE BECOME MUCH MORE INTERESTING AT A TIME WHERE JET FUEL PRICES HAVE GONE THROUGH THE ROOF. SCARLET: WHAT ABOUT DIFFERENT GEOGRAPHIES? A LOT OF PEOPLE SAY THE U.S. IS FAIRLY VALUED IF NOT FULLY VALUED, AND YOU CAN FIND BETTER OPPORTUNITIES ABROAD. AFSANEH: YOU ARE ABSOLUTELY RIGHT. IF WE LOOK PURELY AT PE RATIOS, THE U.S. DOES LOOK RELATIVELY RICH. AT THE SAME TIME, WHERE COULD YOU PUT YOUR MONEY TODAY? AND WHAT YOU SEE IS DESPITE ALL THE NEGATIVE THINGS THAT WE DO HEAR, THE U.S. STILL SEEMS TO BE WHAT CAPITAL

08:13 HAS BEEN FLOWING AND WILL CONTINUE TO FLOW. OBVIOUSLY PLACES LIKE JAPAN, WHERE THEY ARE BIDDING FITTING – THEY ARE BENEFITING FROM AI, INDIRECTLY AND DIRECTLY, FROM ROBOTICS. YOU SEE HOW KOREA HAS BEEN BENEFITING FROM SIMILAR TRENDS. AND YOU HAVE OTHER COUNTRIES THAT ARE REALLY INVOLVED IN INNOVATION AROUND THE THEMES THAT WILL IN FACT, WHETHER IT IS THE GRID OR SOME SECRET GERMAN COMPANIES THAT ARE PRODUCING GOODS FOR THE GRID. THERE ARE THE NORWEGIANS DOING A LOT OF INTERESTING WORK ON ENERGY INNOVATION. I THINK A LOT OF THOSE WILL BE

08:44 SUPER INTERESTING, BUT IT IS VERY SPECIFIC. IT IS NOT A GENERAL SORT OF MARKET TREND. ALL SAID, U.S. IS STILL THE MAIN PLACE TO INVEST. SCARLET: IF YOU NEED TO MAKE A BROAD MARKET CALL, IT IS STILL THE U.S. HAVING SAID THAT, AS WE EMBARK ON THE STARTING EARNINGS SEASON, AFSANEH, WHAT AREA ARE YOU MOST CONCERNED WITH? WHAT IS THE RISK FOR YOU WHEN YOU LOOK AT THE UPCOMING EARNINGS SEASON? AFSANEH: WHILE JP MORGAN MIGHT BE DOING FINE, I THINK IN GENERAL THE BANKING SYSTEM CENTER IS GOING

09:15 TO BE PROBLEMATIC, POTENTIALLY. BUT MORE IMPORTANTLY I THINK IS WHAT WILL HAPPEN WITH THE CONSUMER, BECAUSE WE HAVE SEEN CONSUMER SENTIMENT DOWN, BECAUSE OBVIOUSLY CONSUMERS AS A WHOLE ARE CONCERNED. THERE’S A GROUP OF CONSUMERS THAT HAVE BEEN MADE WEALTHIER BY THE MARKET, AND DEPENDING ON WHAT SECTOR OF THE ECONOMY THEY ARE WORKING ON. SO I THINK THAT CONSUMER SEGMENT NOT BUYING WILL IMPACT CREDIT MARKETS. IT WILL IMPACT CARS COME IT

09:46 WILL IMPACT A LOT OF OTHER THINGS, PARTICULARLY WITH INFLATION AND THAT IS AT SUCH A HIGH LEVEL FOR FOOD AND RENTS AND OTHER GOODS, IS ALSO GOING UP. SCARLET: YEAH. MAKES SENSE CONSIDERING THE CONSUMER DRIVES MORE THAN TWO-THIRDS OF THE ECONOMY. AFSANEH, THANK YOU SO MUCH, AFSANEH BESCHLOSS, FOUNDER AND CEO OVER AT ROCK CREEK. COMING UP, BARCLAYS ANTHONY VALENTINI JOINS US LIVE ON COVERAGE ON THE GROUP. AND WE WILL SET YOU UP FOR THE ECONOMIC DATA DELUGE WITH

10:17 FORMER FED GOVERNOR BETSY DUKE. AND A BIG WEEK FOR THE BIGGEST BANKS. MACRAE SYKES WILL JOIN US LIVE. ALL THAT AND MORE COMING UP. THIS IS “THE CLOSE” ON BLOOMBERG . SCARLET: TESLA’S CYBER COW WAS MAKING HIS WAY OVERSEAS TO THE PARIS MOTOR SHOW THIS WEEK, MARKING THE FIRST TIME TESLA’S OF ROBOTAXI WILL BE SHOWN ON THE CONTINENT AT THE COMPANY LOOKS TO EXPAND ITS FOOTPRINT OUTSIDE THE U.S. JOINING US WITH MORE IS BLOOMBERG NEWS DETROIT BUREAU

10:49 CHIEF DAVID WELCH. TESLA SEES ITSELF MORE AS A LEADING INTELLIGENCE MAKER RATHER THAN AN EV MAKER. DAVID: THAT IS RIGHT. ELON MUSK REALLY WANTS TO DAVID THIS TO BE MORE OF AN AI COMPANY, MORE OF AN ECONOMY COMPANY. THAT’S WHY HE’S PUSHING CYBER CAPS, FULL SELF-DRIVING COME UP THE VEHICLES THEY SELL MORE. YOU CAN SEE GETTING GROWTH IN THE ELECTRICAL VEHICLE BUSINESS GOING FORWARD, FOR A WHILE NOW, HE HAS SEEN REALLY A LONG-TERM

11:21 SLOW PLAY IN THE U.S., OVERLY COMPETITIVE IN CHINA, AND IT’S COMPETITIVE IN EUROPE. WHERE ELSE DO YOU REALLY GROW IN THE WORLD? THEY ARE WHERE THEY ARE IN TERMS OF SALES. IF YOU WANT TO JUSTIFY THE COMPANY POST EVALUATION, THEY’VE GOT TO OFFER SOMETHING NEW, AND THERE’S LESS COMPETITION. A LOT OF AUTONOMY IN CHINA WITH THE COMPANIES THERE, BUT IN THE U.S., IS BASICALLY A GAME AGAINST WAYMO AND A FEW OTHER SMALLER PLAYERS. IN EUROPE, PRETTY SIMILAR THING AT A PRETTY NASCENT MARKET OVER THERE, TOO, SO IF HE CAN GET

12:01 THE CHALLENGE SOLVED, HE HAS A LOT OF POTENTIAL GROWTH FOR THE COMPANY IN TERMS OF THE SELF-DRIVING SERVICES THAT THEY CAN OFFER. SCARLET: HOW MUCH DO WE REALLY KNOW ABOUT THE SELF-DRIVING SERVICES THEY OFFER? ELON MUSK IS NOTORIOUS FOR GETTING SOME FORECASTS AND THEN KIND OF WHEN IT IS TIME TO PROVIDE THE NUMBERS, YOU KNOW, GETTING A BIT OF INFORMATION AND THEN PUSHING FORWARD ONCE AGAIN. DAVID: THAT IS RIGHT HERE THEY ARE RUNNING VEHICLES IN TEXAS, HERE IN THE U.S. THEY’VE GOT CARS ON THE ROAD. BUT IT HAS BEEN PROBLEMATIC,

12:32 YOU KNOW, THIS MORNING WE HAVE A SWATHE OF THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION IS LOOKING AT THEIR VEHICLES AMID COMPLAINTS THAT THEY DRIVE TOO FAST IN SCHOOL ZONES. YOU SEE THIS. YOU SELL THIS WITH GENERAL MOTORS, YOU STILL SEE IT WITH WAYMO. YOU’VE GOT VEHICLES OUT THERE DRIVING WITHOUT A HUMAN, AND IT JUST TAKES TIME FOR THE MACHINE TO LEARN, AND LOOK AT ALL THESE DIFFERENT CHALLENGES AND THINGS THAT HUMAN BEINGS DEAL WITH EVERYDAY. SO, TESLA HAS TO DO ALL OF THAT. THEY WANT TO GO TO EUROPE, THAT THEY LOT OF GOVERNMENT AND A

13:05 LOT OF REGULATORY RULES THAT THEY ARE GOING TO NEED TO COMPLY WITH. SO I THINK THAT IS A LONG WAY OFF AS WELL. BUT THERE AREN’T NEARLY AS MANY VEHICLES ON THE ROAD IN THE U.S. EVEN AS ELON MUSK HAD PLANNED I THINK A FEW YEARS AGO. HEMA: DAVID, WHY DO WE KNOW ABOUT THIS CAR, THIS SSD TECHNOLOGY, THE SOFTWARE? DAVID: YEAH. TESLA DOESN’T SEEM TO HAVE VERY GOOD AI AND VERY GOOD TECHNOLOGY. THE DIFFERENCE BETWEEN WHAT TESLA WANTS TO DO, AND ELON HAVE BEEN VERY ADAMANT ABOUT THIS, VERSUS WAYMO AND THE OTHER COMPANIES, IS HE WANTS TO USE CAMERAS. THEY ARE MUCH CHEAPER –

13:42 CHEAPER THAN THE LASER-BASED LIGHTS THAT WAYMO AND OTHERS USE. BUT THERE’S A LOT OF DEBATE. THE CAMERAS CAN SEE THROUGH FOG, CAN SEE THROUGH SNOW, HEAVY RAIN. OTHER CONDITIONS LIKE THAT, THEY JUST MAKE IT DIFFICULT FOR THAT COMPUTER BRAIN TO READ AND MAKE SMART DECISIONS. AND THEY’VE GOT TO LOG A LOT OF MILES, DO A LOT OF EXPERIMENTATION, RUN INTO CASES WHERE IN DRIVING BUT NEEDED TO BE SAFE. WAYMO HAS BEEN OUT THIS FOR A 16, 18 YEARS, SOMETHING LIKE THAT. TESLA HAS FOR A WHILE, TOO, BUT NOT NEARLY AS LONG. AUTONOMOUS DRIVING IS A VERY

14:15 DIFFICULT CHALLENGE TO BEAT. HEMA: YOU MENTIONED WAYMO, HOW DOES IT STACK UP IN TERMS OF COMPETITION? DOES THIS QUOTE WAYMO AT RISK? THEY’VE BEEN DOING IT FOR LONGER. YOU SAY THE SIZE OF SCALE. I’M CURIOUS HOW YOU WEIGH THESE TWO TOGETHER. DAVID: RIGHT NOW, MOST EXPERTS IN THE FIELD WILL TELL YOU THAT WAYMO’S TECHNOLOGY IS IN THE LEAD, PARTLY BECAUSE THEY’VE BEEN AT IT LONGER, BUT ALSO THEY ARE ON THE ROAD, RUNNING REAL ROUTES, BRINGING GROW REVENUE, FERRYING PASSENGERS AROUND IN MULTIPLE CITIES

14:45 AROUND THE U.S. AND THEY KEEP ADDING TO IT. WE HAD PEOPLE FROM NVIDIA INCOME AND THEY MAKE THEIR OWN SELF-DRIVING STACK. THEY MAKE THAT STACK FOR A LOT OF OTHER COMPANIES. THEY DO WORK WITH TESLA AND A LOT OF THE OTHER PLAYERS IN THE AUTONOMOUS INDUSTRY. AND THEY SAID WAYMO WAS PRETTY MUCH STATE-OF-THE-ART RIGHT NOW, PARTICULARLY IN THE UNITED STATES, AND THAT THEY WORK WITH TESLA. TESLA HAS GOOD TECHNOLOGY, BUT THEY WERE PRETTY CLEAR THAT WAYMO IS IN THE LEAD.

15:17 IF ELON PUSHES HIS TEAM HARD, AND THAT IS THE ONE THEY WANT TO BEAT, IT IS HARD TO COUNT HIM OUT, BECAUSE EVEN WHEN HE IS LATE, HE OFTEN GETS THE COMPANY WHERE HE WANTS TO BE. SCARLET: YEAH. ABSOLUTELY. HE HAS PROVEN HE CAN DO THAT. DAVID, THANK YOU SO MUCH, DAVID WELLS, BLOOMBERG’S DETROIT BUREAU CHIEF. TESLA HAS JUMPED NEARLY 20% SINCE LATE JULY. HEMA: JUST INCREDIBLE. BUT IT IS DOWN STILL 15% BY THE WHOLE YEAR. IF YOU LOOK AT THE SHARP PIVOT WE SEE THESE DAYS IN SOME OF THESE MEGA TECH STOCKS. SCARLET: THAT’S A GOOD POINT.

15:50 LIKE EVERYTHING ELSE, IT HAS BEEN A VOLATILE RIDE TO AND COMING UP, SHARES OF SPACEX ALWAYS MOVING FOLLOWING ITS DECISION TO EXPAND ITS CELLULAR NETWORK. UP RIGHT NOW ABOUT .9%. WE WILL BREAK THAT EFFORT DOWN AND TAKE A LOOK AT THE BROADER AEROSPACE SECTOR AHEAD OF THE EARNINGS SEASON, THE THIRD QUARTER EARNINGS SEASON, WHEN WE COME BACK. THIS IS “THE CLOSE” ON BLOOMBERG. SCARLET: IT IS TIME NOW FOR OUR TOP CALLS COME A LOOK AT SOME BIG MOVERS ON THE BACK OF ANALYST RECOMMENDATIONS. FIRST UP IS ADOBE, WELLS FARGO

16:26 DOUBLE DOWNGRADING FROM OVERWEIGHT TO UNDERWEIGHT, CITING CRACKS IN ITS GROWTH STORY. THE FIRM LOWERING ITS PRICE TARGET TO 220 FIVE FROM 270, ARGUING THAT ADOBE FULL YOUR TARGET LOOKS ESPECIALLY DIFFICULT GIVEN RECENT MANAGEMENT COMMENTARY. SHARES DOWN ALMOST 2%. NEXT IN LINE IS SALESFORCE, BANK OF AMERICA BOOSTING FROM BUY TO UNDERPERFORM ON THE BACK OF TAILWINDS, AI ADOPTION. ANALYSTS SWITCHING THE PRICE TARGET 285 TO 150 SAYING IT HAS ONE OF THE MOST COMPREHENSIVE AI APPROACHES, SHARES OF 1.5%. LAST BUT NOT LEAST, T-MOBILE,

17:02 AND RAYMOND JAMES UPGRADING TO OUTPERFORM AFTER THE POOL LAST WEEK. FROM SETTING THE PRICE TARGET AT $170, WHILE ARGUING THAT RECENT FEARS OVER COMPETITION ARE OVERBLOWN, AS IT IS THREE PLUS YEARS FROM BECOMING A REALITY. SHARES OF ABOUT 2% AT THE MOMENT. THOSE ARE SOME OF OUR TOP CALLS. LET’S STICK WITH SPACEX AND LOOK AT THE BROADER AEROSPACE AND DEFENSE SECTOR, AS WE HEAD INTO BURNING SEASON – EARNINGS SEASON, BOEING, PALANTIR, RTX,

17:35 JOINING US NOW IS THE PERSON BEHIND THOSE CALLS, BARCLAYS MULTISECTOR AEROSPACE AND DEFENSE ANALYST ANTHONY VALENTINI. THEY ARE ALL VERY DIFFERENT COMPANIES, YOU KNOW, UNDER THE DEFENSE UMBRELLA, BUT SPACEX’S FIVE DIFFERENT COMPANIES IN ONE. HOW DO YOU VALUE THESE DEFENSE COMPANIES AND COMPARE THEM 1:1? ANTHONY: YEAH. IT IS DIFFICULT. AEROSPACE HAS CHANGED A LOT. THESE NEW COMPANIES NEED TO BE LOOKED AT IN A DIFFERENT WAY AND ANALYZED IN A DIFFERENT WAY. THESE ARE VERY HIGH GROWTH. THEY ARE DEPLOYING A MORE

18:10 COMMERCIAL MODEL, WHICH MEANS THAT EVENTUALLY WHEN THEY ARE AT SCALE, YOU SHOULD BE ABLE TO DRIVE HIGHER MARGINS. WITH SOMETHING LIKE SPACEX, AN INCREDIBLE ASYMMETRIC UPSIDE, WE THINK THERE ARE OTHER COMPANY IS TO COME THAT WILL DO SIMILAR THINGS. SCARLET: IT FEELS LIKE FOR A WHILE DEFENSE COMPANIES WERE IN THIS LULL. THEY WARNED THAT EXCITING. THERE WEREN’T SECTOR TAILWINDS BEHIND THEM. THAT HAS CHANGED COMPLETELY. HOW LONG DOES THIS CYCLE LAST FOR? ANTHONY: YEAH. I WOULD ARGUE THE GENERATIONAL STRUCTURAL SHIFT IS HAPPENING. BEAR MARKET SHARE GAME STORY

18:43 FOR A LOT OF THESE SMALLER COMPANIES. NEW ENTRANTS OVER THE NEXT 10 PLUS YEARS. IF YOU LOOK AT THE BUDGET, IT TYPICALLY GOES IN CYCLES OF ABOUT 10 YEARS UP AND 10 YEARS DOWN. WE ARE IN THE 12 YEAR OF THIS OF CYCLE, SO THE FEDERAL DEFICIT IS AT ALL-TIME HIGHS, IN THE BUDGET CANNOT CONTINUE TO GROW MID SINGLE DIGITS TO HIGH SINGLE DIGITS FOREVER. LOWER COST WEAPONS SYSTEMS ARE THE FUTURE, AND YOU SEE THE CONCEPT OF THAT IN RECENT CONFLICTS. HEMA: SPEAKING OF COMPANIES THAT ARE THE FUTURE, WE WERE TALKING AND THE COMPUTER BREAK ABOUT SALON

19:17 X, WHICH HAS THE FIRST BOAT SAVING PEOPLE FROM THE STRAIGHT OF HER MOST. – STRAIT OF HORMUZ. WHAT DOES THAT MEAN FOR ESTABLISHED COMPANIES AND NEW ONES? ANTHONY: THAT’S A GREAT QUESTION. IT IMPACTS TICKET PRICES FOR THE AIRLINES, WHICH COULD NEGATIVELY IMPACT PEOPLE BEING WILLING TO FLY, AND THAT COULD LOWER DELIVERIES AND MAINTENANCE ON AIRCRAFT. I WOULD ARGUE FOR COMPANIES LIKE SOME OF THESE EARLIER ENTRANTS, THESE NEWER COMPANIES, THAT THE OIL PRICES

19:51 WERE NOT THAT SIGNIFICANT, AND IMPACT TO THE FRAMEWORK OF THE BUSINESS FOR INVESTORS, JUST BECAUSE THEY ARE SUCH EARLY STAGE COMMIT IS THE BUDGET DOLLARS, AND MORE LOWER-COST AUTONOMOUS LIKE YOU MENTIONED. HEMA: WHEN YOU LOOK AT SOME OF THE SPECIFIC DEFENSE CONTRACTORS, WHERE ARE YOU SEEING THE MOST EXCITEMENT? ANTHONY: FACE OF WHAT I WAS JUST DESCRIBING WHERE I THINK THEY ARE GOING TO TAKE SHARE COME I PREFER DEFENSE TECH OVER THE

20:23 LARGE CAP DEFENSE PRIME. WITHIN THE DEFENSE PRIME’S, I PREFER LOCKHEED MARTIN OVER NORTH OF GARMAN – NORTHRUP GARMAN. AS A RESULT OF THAT, I THINK THEY ARE GOING TO GROW QUICKER WITH MORE OF A MARGIN EXPANSION AND FREE CASH FLOW GROWTH STORY COULD ON THE DEFENSE TECH SIDE, MY TOPICS ARE CARMEN, A MIDDLE – AND MESO COMPONENT PROVIDER, WITH MARGINS AND GROWTH DOUBLED THE REST OF DEFENSE, AND YOU’RE THE ONE I

20:56 WOULD HIGHLIGHT IS CREDO, WHICH I DESCRIBED AS HAVING THE MOST SHOT ACROSS ALL OF THE DEFENSE PIECES, INCLUDING THINGS LIKE ENGINES FOR DRONES, SOLID ROCKET LOADERS FOR MISSILES, AUTONOMOUS SYSTEMS, SPACE, THEY REALLY RUN THE GAMUT. SCARLET: I LOVE THE REFERENCE TO HOCKEY OR SOCCER. DO U.S. DEFENSE CONTRACTORS BENEFIT FROM ANY OF THAT? ANTHONY: YES 100%. THE MOST IMPORTANT THING IS THE

21:28 U.S. DEFENSE BUDGET IS MORE THAN ALL THE EUROPEAN NATO COUNTRIES COMBINED, AND SO THE MAJORITY OF WEAPONS AND SYSTEMS GLOBALLY COME FROM THE U.S. THAT EUROPEAN SPEND, THERE IS AN EFFORT AND A NARRATIVE IN EUROPE TO KEEP THAT INDIGENOUSLY, BUT THEY ARE CERTAINLY GOING TO NEED TO BUY THINGS FROM U.S. DEFENSE CONTRACTORS. SCARLET: ESPECIALLY IF THEY GET UP TO SPEED, THEY WILL NEED TO MAKE DO IN THE MEANTIME. ANTHONY: EXACTLY, AND I WOULD ARGUE IT IS BETTER. SCARLET: ANTHONY VALENTINI, BARCLAYS DEFENSE ANALYST. KEY INFLATION

22:00 DATA ON DECK THIS WEEK WITH A READ ON THE CONSUMER ON WEDNESDAY AND PRODUCER PRICES ON THURSDAY. THE FORMER FED GOVERNOR BETSY DUKE JOINS US LIVE WITH A PREVIEW. THIS IS “THE CLOSE” ON BLOOMBERG. SCARLET: IT IS JUST ABOUT 3:30 P.M. IN NEW YORK, THIS IS THE COUNTDOWN TO THE CLOSE. SCARLET FU. HEMA: I’M HEMA PARMAR R. SCARLET: TODAY IS COLUMBUS DAY SO THE BOND MARKET IS CLOSED.

22:31 THE STOCK MARKET IS OPEN. HEMA: WE WILL GET THE FOLLOWED HOPEFULLY BY FRIDAY. SCARLET: FOR BANKS REPORTING TOMORROW, TWO BANKS REPORTING WE SET THE TONE FOR THE REST OF THE EARNINGS SEASON. HEMA: WE HAVE A FED DECISION LATER THIS MONTH SO MAYBE THIS WILL HELP GIVE CLARITY.

23:02 SCARLET: UNTIL SOME MORE FED SPEAKERS COME OUT AND SAY SOMETHING OTHERWISE. HEMA: EXACTLY. SCARLET: JOINING US NOW IS BETSY DUKE, A FORMER FED GOVERNOR AND FORMER WELLS FARGO CHAIR. WHICH IS GOING TO BE MOST RELEVANT TO YOU FROM WHERE YOU SIT? THE MOST MARKET MOVING AND IMPACTFUL? WAS IT GOING TO BE BANK EARNINGS AND FED SPEAK? BETSY: I THINK IT IS PROBABLY GOING TO

23:35 BE MORE FED SPEAK. IT IS HARD FOR ONE DATA POINT. PARTICULARLY KEVIN WARSH HAS BEEN IT IS VERY WATCHING THE TREND AND NOT THE DATA POINT. AS FAR AS THE OVERALL MARKET I’M NOT SURE IT WILL MAKE THAT MUCH DIFFERENCE. SCARLET: IN TERMS OF FED SPEAK, THE JOBS

24:09 REPORT REDUCED THE URGENCY FOR ANY FALL RATE HIKE IMMEDIATELY. WHAT HAVE YOU HEARD FROM FED OFFICIALS THAT BACKED THAT UP? BETSY: I’M NOT SURE THE JOBS REPORT REALLY MADE MUCH DIFFERENCE IN HOW THEY WERE THINKING. THERE WERE TWO SPEAKERS OUT RECENTLY AND THEY ARE THE TWO MOST IMPORTANT SPEAKERS AFTER THE CHAIRMAN AND THE FIRST WAS JOHN WILLIAMS, THE PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK AND HE WAS PRETTY CLEAR THAT HE THOUGHT THERE WAS ROOM

24:43 TO BE PATIENT AND THAT PROBABLY SOME ADDITIONAL ADJUSTMENT WOULD BE NEEDED. THAT WAS FOLLOWED UP BY PHILIP JEFFERSON WHO SAID ALMOST THE SAME THING. THE PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK WHO IS ALSO THE VICE-CHAIRMAN OF THE FOMC AND THE FED ALONG WITH THE CHAIRMAN MAKE UP WHAT YOU MIGHT THINK OF AS AN EXECUTIVE COMMITTEE FOR THE FOMC.

25:17 FOR THOSE ONES COMING OUT I THINK THAT’S A PRETTY CLEAR SIGN. HEMA: WITH CPI EXPECTED TO JUMP A LITTLE BIT IT LOOKS LIKE GAS PRICES COULD BE MAKING THE OVERALL INFLATION LOOK WORSE THAN THE ACTUAL ECONOMY IS. BETSY: I THINK IT IS DEFINITELY THE CORE MUCH MORE THAN THE HEADLINE. THOUGH THE HEADLINE YOU CAN NEVER FORGET THAT IS WHAT

25:50 PEOPLE FEEL. I THINK IT IS THE CORE THEY WILL BE WATCHING AND THE REAL DIFFERENCE IS CPI AND PCE ARE THE WAY THEY WAY THINGS AND ONE OF THE MEASURES ARE WHAT CONSUMERS ACTUALLY PAY. I DON’T THINK THAT YOU WILL SEE A STRONG ENOUGH MOVE.

26:22 I THINK LOOKING AT THE MINUTES AND HOW THE PARTICIPANTS WERE DESCRIBED AS THINKING OF THE LAST MOVE MAKES MORE OF AN IMPACT THAN ONE PARTICULAR DATA POINT. HEMA: AS WE LOOK AHEAD TO UPCOMING BANK EARNINGS, WHAT ARE YOU LOOKING FOR THAT MIGHT SIGNAL SOMETHING ABOUT THE HEALTH OF THE U.S. CONSUMER OR CORPORATE LOAN DEMAND? BETSY: SO, THERE MAY BE SOME INFORMATION, BUT LOAN LOSSES HAVE BEEN REMARKABLY STABLE.

27:10 SCARLET: THE CAPITAL MARKETS, ESPECIALLY. WE HAVE SEEN M&A VOLUME. WE HAD A BIG START TO THE YEAR AND THEN THINGS TAPERED A LITTLE BIT.

27:41 HOW ARE YOU SEEING THIS WE ARE STILL EXPECTING THE BOND MARKETS TO PERSIST. BETSY: I DON’T KNOW HOW MUCH THE LONG TERM TRADES ARE AFFECTING THE REVENUES. NOT SO MUCH FOR THE VERY LARGEST BANKS BECAUSE THEY ALREADY INCLUDE THOSE BUT FOR THE NEXT LEVEL DOWN, IF YOU REMEMBER BACK TO SILICON VALLEY AND THOSE DAYS , IT WAS THE UNREALIZED LOSSES THAT CAUSE A LOT OF PANIC. SCARLET:

28:15 THAT WILL BE COMING AFTER THE REGIONAL BANKS’ REPORTING. I WANT TO GO BACK TO THE FED, PRESIDENT TRUMP HAS RESUMED HIS EFFORT TO PUSH OUT LISA COOK, THE FED GOVERNOR. BY ANNOUNCING THIS FORMATION OF A COMMITTEE TO INVESTIGATE MORTGAGE FRAUD ALLEGATIONS AGAINST HER. THE PREVIOUS EFFORT WENT ALL THE WAY TO THE SUPREME COURT AND THE SUPREME COURT SAID SHE DESERVES DUE PROCESS. WHAT DO YOU THINK IS GOING ON HERE? BETSY:

28:47 IT IS CLEAR PRESIDENT TRUMP WANTS ANOTHER SHOT AT FIRING LISA COOK. SO, THE SUPREME COURT WHEN THEY ANNOUNCED THEIR DECISION ANNOUNCED THEY NEEDED SOME PROCESS TO UNDERSTAND WHAT THE CHARGES WERE AND HAVE A WAY TO DEFEND HERSELF. THIS IS A WHITE HOUSE COMMITTEE MADE UP ENTIRELY OF TRUMP APPOINTEES. THEY ARE SUPPOSED TO INVESTIGATE AND RECOMMEND TO PRESIDENT TRUMP WHETHER OR NOT HE SHOULD FIRE HER.

29:21 I WOULD NOT BE SURPRISED TO SEE THIS COMMITTEE BE FORMED OF HIS APPOINTEES MAKE A RUN DACIAN – A RECOMMENDATION THAT HE SHOULD FIRE HER. THAT WILL START OFF LABEL NEW GROUP OF LEGAL FILINGS. I WOULD EXPECT THAT THIS ONE WILL ALSO GO ALL THE WAY TO THE SUPREME COURT, WHICH IT NEEDS TO DO BECAUSE THERE NEEDS TO BE SOME FINAL SETTLEMENT AS TO WHETHER OR NOT THE PRESIDENT CAN FIRE MEMBERS OF THE FEDERAL RESERVE BOARD AND WHAT CONSTITUTES APPROPRIATE CAUSE

29:52 IF SO. THIS GOING ALL THE WAY THROUGH WELL IT WILL BE DIFFICULT FOR THE FED AND GOVERNOR COOK, I THINK IT IS HELPFUL IN TERMS OF ULTIMATELY DEFINING WHAT THE ABILITY TO REMOVE FOR CAUSE ACTUALLY MEANS. SCARLET: WE KNOW PRESIDENT TRUMP IS IMPATIENT TO REMAKE THE BOARD OF THE FED. IT SOUNDS LIKE IT WILL NOT BE INSTANTANEOUS. WILL THIS GET DONE BEFORE HIS TERM IS UP? BETSY: I’M NOT SURE HOW LONG IT WILL

30:23 TAKE BUT IT WILL DEFINITELY TAKE A WHILE. I WOULD EXPECT THE COURTS ONCE AGAIN TO SAY THAT SHE CAN STAY ON THE BOARD WHILE IT WORKS ITS WAY TO THE COURTS. I ALSO WOULDN’T RULE OUT ANOTHER ATTEMPT TO FIRE JAY POWELL. PRESIDENT TRUMP HAS MADE SOME COMMENTS ABOUT JAY CONTINUING TO SIT ON THE BOARD SO THAT WOULD BE SOMETHING AS WELL HE WOULD TRY TO MAKE A MOVE ON AND THAT WOULD ALSO HAVE TO WORK ITS WAY THROUGH THE COURTS.

30:56 HEMA: BETSY DUKE, THANK YOU SO MUCH FOR YOUR TIME. COMING UP, FANNIE MAE AND FREDDIE MAC SINKING TO THEIR LOWEST LEVEL SINCE THE BEGINNING OF 2025 AFTER A DOWNGRADE. WE WILL UNPACK THE MOVES IN TODAY’S STOCK OF THE HOUR UP NEXT. THIS IS OPEN TO CLOSE” ON BLOOMBERG. HEMA: SHARES OF FANNIE MAE AND FREDDIE MAC ARE TUMBLING DOUBLE DIGITS AFTER A MIZUHO DOWNGRADE. THE SURGE IN MORTGAGE RATES

31:33 MAKES IT UNLIKELY THE TRUMP ADMINISTRATION WILL MOVE TO RELEASE THE HOME LOAN FINANCE COMPANIES FROM GOVERNMENT CONTROL BY 2028. WALK US THROUGH WHAT IS HAPPENING. NORAH: WE ARE SEEING FANNIE MAE AND FREDDIE MAC HUMBLED DOUBLE DIGITS AND THE MARKETS HAVE BEEN TRADING ONE OF THE BELIEF THAT THE COMPANIES WILL BE RELEASED FROM GOVERNMENT CONSERVATORSHIP. YOU HAVE BEEN SEEING SUCH A VOLATILE TRADE. THEY TRADE OFF PRETTY MUCH ANY

32:05 POLITICAL DEVELOPMENT. WHAT’S INTERESTING TODAY IS THAT MIZUHO IS COMING OUT SAYING IT IS UNLIKELY TO SAY THAT PRIVATIZATION OR RELEASE FROM GOVERNMENT CONTROL WILL HAPPEN BY 2028 AND THERE WERE SO MUCH HOPE GOING INTO THIS ADMINISTRATION THIS IDEA THAT HE MIGHT RELEASE THEM FROM GOVERNMENT CONTROL OR PUT THEM BACK INTO PRIVATE MARKETS AND MAYBE THERE WOULD BE A DIFFERENT TYPE OF CONTROL OR STRUCTURE. SCARLET: LET’S DIG INTO THAT A LITTLE

32:41 MORE. WHY DOES IT MAKE PRIVATIZATION LESS LIKELY? NORAH: WE ARE SEEING RATES THAT ARE STILL ELEVATED IN THE MORTGAGE MARKET BROADLY WHEN WE THINK ABOUT TREASURIES. SPECIFICALLY TODAY WE SEE PRETTY GOOD GOVERNMENT SUPPORT BUT IF THAT STRUCTURE WERE TO CHANGE OR MAY BE THE TREASURY WOULD FIGURE OUT A DIFFERENT METHOD THEY WOULD LIKE TO GO IN

33:15 REGARDS TO HOW MUCH OWNERSHIP THE GOVERNMENT WILL CONTINUE TO HAVE IT ALL, THIS COULD MAKE INVESTORS POTENTIALLY DEMAND MORE INCENTIVE FOR TAKING ON ADDITIONAL RISK. IF THAT IS THE CASE IT COULD TRICKLE INTO HIGHER COSTS FOR THE AVERAGE BORROWER OR CONSUMER IF SOME OF THOSE HIGHER FINANCING COSTS FOR SOME INVESTORS TO TRICKLE OUT TO THE AVERAGE JOE. TRUMP WAS TOUTING THE FACT THAT

33:48 HE WAS GOING TO FIND A WAY TO RELEASE CONSERVATORSHIP. SCARLET: THAT BEING THE CASE, WHAT ARE INVESTORS WATCHING FOR NEXT? IF EVERYTHING HINGES ON A POLITICAL HEADLINE, ARE THERE EVENTS THAT COULD MOVE THINGS ALONG? NORAH: THAT’S THE THING. AND EVERYBODY IS LOOKING FOR ANY SENSE OF CLARITY.

34:19 WHETHER OR NOT THEY WILL MAKE THIS HAPPEN . SCARLET: NORAH MULINDA ON FANNIE MAE AND FREDDIE MAC. COMING UP, WE WILL TAKE YOU TO THE CLOSING BELLS WITH STEPHANIE GILL AT ROBINHOOD MARKETS ALL THAT ON THIS MONDAY WHERE STOCKS RIGHT NOW ARE KIND OF MIXED AS WE HEAD TOWARD THE START OF EARNINGS SEASON BUT THE BIG BANKS KICKING THINGS OFF. THIS IS “THE CLOSE” ON BLOOMBERG. ♪

34:52 SCARLET: WE ARE 10 MINUTES AWAY FROM THE CLOSING BELLS. I’M SCARLET FU. HEMA: I’M HEMA PARMAR. SCARLET: WE SHOULD MAKE CLEAR THAT WE ARE TALKING ABOUT THE CLOSING BELLS OF THE BOND MARKET. IT IS COLUMBUS DAY AFTER ALL. THE STOCK MARKET IS CLOSED. OIL PRICES MOVING UP 1.6% HIGHER.

35:24 EUROPE HAS REMAINED WEAKER. ALL THE CONCERNS ABOUT THE FRENCH DEBT CRISIS LOOMING AND A LOT OF PEOPLE TALKING ABOUT WHETHER THIS WILL BRING ON PART TWO OF THE EUROPEAN DEBT CRISIS. HEMA: WE HAVE SEEN SOME INTERESTING MOVERS WITH AAA AND STARBUCKS AND STARBUCKS SAYING THEY ARE NOT GOING TO BE BUYING TRIPOLI ANYMORE. SCARLET: A LOT OF IT HINGED ON THE IDEA THAT THE CEO OF STARBUCKS WAS

35:57 THE FORMER CEO OF CHIPOTLE AND PEOPLE THINKING THAT MUST MEAN THEY ARE GETTING TOGETHER. LET’S TALK A LITTLE BIT MORE ABOUT THE MARKETS AND GET SOME ANALYSIS. IT GIVES US A LITTLE BIT OF RELIEF FROM THE RISING BOND YIELDS. EVERYONE KEEPS TALKING ABOUT HOW RISING BOND YIELDS MAKES IT A BIT MORE ATTRACTIVE. IT HASN’T DIMMED THE APPEAL OF

36:29 EQUITIES. YOU SEE THAT HAPPENING? STEPHANIE: MAYBE NOT YET AND A LOT OF IT COMES BACK TO WHY OUR BOND YIELDS GOING UP? BECAUSE INFLATION IS GOING HIGHER? BECAUSE DEMAND IS HIGHER FOR BONDS? OR BECAUSE THERE IS HIGHER GROWTH? I THINK THERE WAS HIGH DEMAND BECAUSE OF CAPEX. THE CONSUMER OBVIOUSLY HASN’T SEEN HIGH GROWTH.

37:00 THERE IS THAT GROWTH STEMMING FROM THE PLACES THAT ARE ALSO DEMANDING THE BOND ISSUANCE. SO I THINK THAT IS WHY YOU ARE SEEING RISK OFF. IT IS CREATING UNDER THE SURFACE VOLATILITY JUST AS HIGH. IT IS JUST NOT AT THE S&P LEVEL. HEMA: HOW ARE YOU PLANNING THIS ENVIRONMENT? STEPHANIE: WE HAVE BEEN THEMATICALLY INVESTING IN ROBINHOOD STRATEGIES AND WE HAVE HAD

37:31 THESE THREE PILLARS WHERE IT HAS BEEN POWER THAT FEEDS AND FUNDS THE AI BUILDOUT BECAUSE EVEN THOUGH THAT MAY RESULT IN SLOWDOWNS, WE BELIEVE DEMAND IS GOING TO BE THERE. PRODUCTIVITY, COMPANIES THAT CAN BENEFIT FROM AI USAGE. A HEDGE ACKNOWLEDGMENT OF POTENTIAL DEBASEMENT. JUST KIND OF THE THINGS THAT CAN GO WRONG. WE HAVE NOT BEEN INVESTING IN THINGS LIKE BANKS AND FINANCIAL SERVICES, THEY HAVE NOT BEEN DOING GREAT SO MAYBE THAT IS

38:02 THE PLACE WE WILL START LOOKING. HEALTH CARE IS A PLACE THAT WE THINK THROUGH IT ALL SHOULD DO WELL AND WE HAVE HAD ALLOCATIONS FOR MATERIALS THAT HAVEN’T TAKEN OFF. HEMA: FOR HEALTH CARE IS IT GILLY AND LIKE? STEPHANIE: THAT IS ONE OF THE NAMES. LILY IS ANOTHER ONE. VERITEX IS ANOTHER ONE. THERE HAVE BEEN A GROUP OF THEM. GILEAD THROUGH ACQUISITIONS, THE COMPANY WE THINK HAS

38:34 FURTHER GROWTH. SCARLET: WITH EARNINGS SEASON COMING UP, EVERYONE IS GOING TO FOCUS ON THE BANKS. THEN THE BIG TECH EARNINGS START COMING THROUGH AND WE WILL HEAR FROM MICROSOFT, UP ABOUT, WHAT IS THE MOOD LIKE RIGHT NOW IN TERMS OF HOW FORGIVING ARE INVESTORS FEELING IN TERMS OF SPENDING ON AI BUILDOUT? DO THEY WANT TO SEE STEADY GROWTH OR DO THEY WANT TO SEE A LITTLE BIT OF MONEY TAKEN OFF THE TABLE?

39:07 STEPHANIE: IT KIND OF DEPENDS ON THE COMPANY. META-WAS SPENDING A TON AND NOW THE COMPANY HAS RALLIED. I THINK YOU WILL SEE THE SAME THING FROM A LOT OF THE HYPERSCALERS. ARE YOU GOING TO START SEEING ANY RETURNS? ARE YOU SEEING GRAPHS SPROUTING FROM THERE? I THINK THAT WILL BE THE CASE. A MONTH OR SO AGO I WOULD HAVE SAID THERE IS OPPORTUNITY IN THE HYPERSCALERS BUT NOW THAT

39:38 THEY HAVE RALLIED AND YOU HAVE CREATED THIS ENVIRONMENT WHERE DISPERSION HAS GONE AWAY AND NOW I THINK IT IS ALL ON THE PRICE TEMPORARILY AT LEAST IN THE NEAR TERM SO IT DEPENDS WHAT YOUR TIME HORIZON IS. SCARLET: IN TERMS OF WAITING FOR ANTHROPIC IPO TOPIC TO DROP, HOW MUCH DO YOU THINK PEOPLE ARE HOLDING OFF AND WAITING FOR THAT TO HAPPEN? STEPHANIE: I DON’T KNOW IF THEY ARE, I

40:09 THINK THERE ARE OTHER WAYS TO GET THAT INFORMATION. THERE ARE WAYS TO UNDERSTAND THE FINANCING THROUGH THE DISCLOSURES. THERE NVIDIA AND GOOGLE. DID A DEEP DIVE AND SOME OF THE FOOTNOTES. THAT IS WHERE YOU HAVE TO LOOK. SURE ANTHROPIC THERE HAS BEEN A

40:45 LOT OF NOISE ABOUT THE REVENUE BUT I DON’T KNOW IF IT MATTERS SO MUCH. HEMA: DOES THAT CONCENTRATE RISK ON TOP OF THE RISK WE HAVE ALREADY SEEN IN THE PLACE? SCARLET: GOOD QUESTION. STEPHANIE: THANKS TO A COUPLE THINGS, THEY COLLECT CAPITAL AND LEND IT OUT. NVIDIA HAS BEEN DOING ALL THREE. OVER 500 BILLION DOLLARS WORTH

41:17 SO FAR AS THE JULY DISCLOSURES. THE THING IS THERE PURCHASE COMMITMENTS AND THEIR GUARANTEES ARE IN LOCKSTEP WITH THE COMPANIES THEY ARE IN BUSINESS FROM. WHEN YOU THINK ABOUT ANY FAILURE, IT WOULD BE A DUPLICATIVE FAILURE AND ALSO THEIR INVESTMENTS DROP IN VALUE IT IS CERTAINLY A WORRY YOU

41:49 HAVE SEEN IN THE PAST. SCARLET: WHAT DO YOU SEE HAS THE BIGGEST POTENTIAL WORRY HERE? STEPHANIE: I JUST THINK IT IS OIL PRICES. I THINK IT HAS AN IMPACT ON INTEREST RATES AND BUSINESS IN THE BUILD OUT OF AI WHICH REQUIRES ENERGY. IF THERE IS TRUE LASTING CALMNESS IN THE MIDDLE EAST, I THINK THAT RALLY WILL CARRY FOR A WHILE. SCARLET:

42:24 THAT HASN’T HAPPENED YET. EVERY TIME IT SEEMS TO CALM DOWN, SOMETHING HAPPENS AGAIN. IT IS A GOOD POINT ABOUT OIL PRICES GIVEN THAT THEY ARE UP TODAY. WE ARE MOVING CLOSER TO THE CLOSING BELL AND HELPFUL MARKET COVERAGE RIGHT HERE. >> THE CLOSING BELL, BLOOMBERG’S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S.

42:54 MARKET CLOSE STARTS RIGHT NOW. SCARLET: WE ARE ABOUT 10 MINUTES AWAY FROM THE END OF THE TRADING DAY, SCARLET FU AND HEMA PARMAR HERE AND HERE TO TAKE US THROUGH WE HAVE A GLOBAL SIMULCAST JOINED BY CAROL MASSAR AND TIM STENOVEC, THEY ARE BACK TOGETHER, BRINGING TOGETHER A BLOOMBERG TELEVISION, RADIO AUDIENCES. TIM, WE MISSED YOU, WELCOME BACK. TIM: THANK YOU, I MISSED YOU ALSO. SCARLET: WE ARE LOOKING AT THE START OF

43:27 EARNINGS SEASON. CAROL: IT IS THE BIG BANKS COMING OUR WAY. THEN YOU HAVE THE CPI PRINT TO HELP SHAPE THE TRADE AGAIN. TIM: I LEFT FOR A WEEK AND CAME BACK AND THE AI TRADE IS DOMINATING, BUT ALSO HIGHER ENERGY PRICES THAT WE SAW IN TODAY’S TRADE WITH THE BRAND UP ANOTHER $1.50.

44:03 THIS IS STILL AN ISSUE AND IT IS ESPECIALLY AN ISSUE GOING INTO THE MIDTERM ELECTIONS. HEMA: WHEN IT COMES TO THE TECH STOCKS AND CHIPMAKERS, CONCERN OVER IN CHINA. AS THEY COME UP WITH A POTENTIAL RIVAL TRIP. WE ARE NOT GOING TO HIT A RECORD HIGH TODAY.

44:36 A MIXED CLOSED. THE NASDAQ DOWN 0.4%. THE DOW INDUSTRIALS GAINING. LOOK INSIDE THE INDEX. YOU HAVE THREE HUNDRED 20 NAMES IN THE S&P 500. THREE UNCHANGED.

45:07 SCARLET: LET’S LOOK AT WHICH OF THOSE SECTORS FINISH IN THE GREEN. BECAUSE TECH IS DOWN 9% WE HAVE EIGHT OUT OF THE 11 SECTORS FINISHING IN THE GREEN. ENERGY IS THE BEST PERFORMING GROUP WITH ENERGY STOCKS UP 1.5%. CONSUMER STAPLES AND COMMUNICATION SERVICES FINISHING UP. CAROL: LET’S GO TO THE INDIVIDUAL

45:38 GAINERS, I’M GOING TO GO TO META-PLATFORMS. WE DID SEE SOCIAL VOLUME SURGING TODAY ON THE NAME. STOP WAS UP 3.4 PERCENT ON THE CLOSE. THE COMPANY RELEASING A NEW ARTIFICIAL INTELLIGENCE MODEL CALLED MUSE WONDER, WHICH THEY CLAIM HAS FRONTIER CAPABILITIES. THE COMPANY’S AI CHIEF SAYING IT IS COMPETITIVE WITH THE BEST MODELS THAT ARE OUT THERE PARTICULARLY ON PERSONAL AND PROFESSIONAL A GENT IT WORKS AND INVITE SKEPTICS TO JUDGE FOR THEMSELVES.

46:14 IT IS CURRENTLY AVAILABLE TO DEVELOPERS THROUGH THE META-MODEL. MARK ZUCKERBERG SAYS META-HAS CAUGHT UP WITH RIVALS AT THE FRONTIER OF AI. INVESTORS SEEM TO LIKE WHAT THEY HEARD FROM SCARLET: SCARLET: THE COMPANY. I SAW THE SOCIAL RECKONING THIS WEEKEND. CAROL: AND? SCARLET: IT WAS KIND OF DEPRESSING. [LAUGHTER] NOW I HAVE JEREMY STRONG AS MARK ZUCKERBERG STUCK IN MY HEAD. TIM: HOW WAS HE? SCARLET:

46:45 HE WAS KIND OF ROBOTIC AND KIND OF STIFF, WHICH SOME PEOPLE MIGHT SAY IS A GOOD RENDITION. CAROL: THIS IS AARON SORKIN? I’M DYING TO SEE HIS TAKE AND COMMENTARY WHEN OF THIS. I’M GOING TO GO COFFEE IN BURRITOS, STARBUCKS RALLYING TODAY AFTER SAYING IT WOULD NOT BUY AAA, TAMPING DOWN THE LARGEST EVER DEAL.

47:18 THERE WAS A RUMOR LAST WEEK THAT BRIAN NICCOL HAD WORKED ON A TAKEOVER PROPOSAL. NOT HAPPENING NOW. THIS WAS THE NUMBER FOR GAYNOR AND THE NASDAQ 100. GE HEALTHCARE MOVING UP. NOT ANYTHING REAL IN TERMS OF THE CATALYST. THE BTIG ANALYST RYAN ZIMMERMAN MAINTAINING A BUY ONE THE STOCK. IT DOES REPORT LATER THIS MONTH. THE STOCK IS DOWN 17% YEAR TO DATE.

47:53 SCARLET: LET’S TALK ABOUT SOME OF THE DECLINERS ON THE DAY TODAY. TIM: LET’S TALK QUANTUM COMPUTING. THE COMPANY SAID IT WOULD AGREE TO BUY FELICITY IN AN ALL STOCK TRANSACTION. WE TALK AI, LET’S TALK QUANTUM COMPUTING. A LOT OF PEOPLE THINK THAT IS THE NEXT BIG THING. THE COMPANY ABOUT IS A FAST-GROWING ENTERPRISE SECURITY BUSINESS, THE CEO SAID

48:32 THE COMPANY WILL BE WELL-POSITIONED TO THE QUANTUM ERA. INVESTORS AS THEY OFTEN DO , CAROL TALKED A LITTLE BIT ABOUT STARBUCKS BEING UP TODAY. LET’S LOOK AT AAA BEING LOWER. I WAS GONE FOR THIS, BUT I STILL SAW THE HEADLINE. CAN YOU EXPLAIN THE CASE APART FROM BRIAN NICCOL GOING BACK TO AAA ABOUT WHY THIS WOULD MAKE SENSE? SCARLET:

49:03 I THINK THAT WAS THE CASE. TIM: HE’S ALREADY TRYING TO TURN AROUND STARBUCKS. HEMA: DIVERSIFY YOUR CUSTOMER BASE? TIM: I DON’T KNOW. I’M NOT SOLD ON IT. CAROL: BREAKFAST BURRITOS? TIM: OK. I DO LIKE A GOOD BREAKFAST BURRITO. AAA HAS NEVER DONE BREAKFAST BURRITOS. MAYBE WE WILL NEVER BE TALKING ABOUT THIS AGAIN BECAUSE THIS WILL HAVE BEEN A FLASH IN THE PAN. AAA SHARES DOWN.

49:34 BRIAN NICCOL AS OF NOW NOT GOING BACK TO AAA. LET’S LOOK AT ADR’S OF LVMH. DOWN 2.5% TODAY. AFTER THE FRENCH LUXURY GROUP REPORTED THIRD-QUARTER ORGANIC REVENUE THAT MISSED ESTIMATES, ITS BIGGEST DIVISION POSTED A SLUMP IN SALES. ADR’S FELL. CAROL: GUYS, LET’S GET TO STORIES FROM THE WONDERFUL WORLD OF SOCIAL MEDIA. APPARENTLY A LITTLE BIT OF A BEEF ONLINE, KELLY CLARKSON

50:05 WENT TO A STORE IN BROOKLYN. TIM: SHE DROVE. [LAUGHTER] CAROL: SHE’S ALLOWED. THAT IS WHERE THE OUTRAGE BEGAN. SHE WENT TO THIS BROOKLYN GAME STORE ART OF PLAY. SHE ULTIMATELY CRITICIZE THEM ON SOCIAL BECAUSE SHE FELT WHAT SHE FELT WAS CONDESCENSION. WHEN SHE INQUIRED ABOUT THE PRICE OF AN ANIMATRONICS BIRD.

50:37 IN PLAY RESPONDED SAYING THE ITEM WAS NOT FOR SALE AND NEITHER CONFIRMED NOR DENIED HER STORY. SHE IS BASICALLY SAYING SHE HAD A PRETTY WOMAN MOMENT. THEY ARE SAYING, NO IT WASN’T FOR SALE. PEOPLE ARE SAYING THERE IS A $15,000 PRICE TAG BUT ON THE SOCIAL MEDIA ACCOUNT. WHY IS SHE MAKING A BIG DEAL ABOUT THIS? CAROL: PEOPLE ARE BACKING KELLY CLARKSON OR THEY ARE CRITICAL OF HER. THERE IS SO MUCH MOMENTUM ABOUT THIS. HEMA:

51:09 ISN’T THIS LIKE THE MODERN-DAY A PRETTY WOMAN YOU JUST TWEETED TO 40 MILLION FOLLOWERS? TIM: DO YOU HAVE TO TWEET EVERYTHING? HEMA: FOR SOME PEOPLE APPARENTLY. CAROL: SHARING ISN’T ALWAYS CARING, FOLKS. SCARLET: YOU DON’T ALWAYS GET WHAT YOU WANT. IT’S OK. LIFE GOES ON. [LAUGHTER] HEMA: SOMETHING CAN HAPPEN AND YOU CAN LIVE THE MOMENT. CAROL: YOU HAVE TO BE CAREFUL WHAT YOU DO ON SOCIAL MEDIA BECAUSE YOU

51:39 CONSEQUENCES. TIM: APPARENTLY THIS SHOP HAS A REALLY COOL MAGIC SHOW AND THAT’S WHAT I’M MOST INTERESTED IN. WHAT I’M TAKING AWAY IS THAT HOW DIFFICULT IT WILL BE TO GET TICKETS TO THE MAGIC SHOW NOW. CAROL: THERE WAS A DIRECTOR AT MCKINSEY GLOBAL INSTITUTE WHO HAS BEEN STRIPPED OF HIS LEADERSHIP ROLE BECAUSE HE POSTED ONLINE COMMENTS QUESTIONING THE EXISTENCE OF A GLASS CLIFF, THIS IDEA THAT WOMEN GET PUT IN LEADERSHIP ROLES WHEN THEY ARE PUT IN A POSITION TO FAIL BECAUSE THE JOB IS ALREADY NOT GREAT AND

52:11 THE COMPANY IS STRUGGLING. THIS IS THE TERM SOME ACADEMICS HAVE COME UP WITH, WHETHER YOU BELIEVE IT OR NOT, IT IS THE THING THAT HAS BEEN PUBLISHED AND A LOT OF RESEARCH HAS BEEN DONE. HE QUESTIONED IT AND NOW HE HAS BEEN REPRIMANDED. HEMA: HE SAID THE GLASS CLIFF WAS A VERY CONVENIENT WAY TO ALWAYS BE A VICTIM. TIM: HM. SCARLET: I THINK CAROL’S EXPRESSION SAYS IT ALL. SHE IS RAISING HER EYEBROW.

52:44 CAROL: ACTIONS HAVE CONSEQUENCES, DELL THEY? SCARLET: KELLY OR THIS GUY AT MCKINSEY. CAROL: HE IS STILL EMPLOYED, CHRIS BRADLEY, HE REMAINS A SENIOR PARTNER BASED IN AUSTRALIA. AT THE SAME TIME THERE IS THAT DEBATE OUT THERE, YOU ARE ALLOWED TO HAVE OPINIONS, YOU ARE ALLOWED TO SAY THINGS. I DON’T KNOW WHAT THE RULES ARE. IT IS ONE THING IF YOU ARE KELLY CLARKSON AND YOU WANT TO TELL EVERYONE YOU CAN AFFORD A $15,000 BIRD. IT’S ANOTHER ONE SPEAKING ON

53:18 LINKEDIN WHICH HAS YOUR COMPANY NAME AND MAY BE GIVING THE IMPRESSION THAT THAT IS THE FIRM’S OPINION. WE HAVE ALL LEARNED THAT, RIGHT? WHEN YOU ARE REPRESENTING YOUR COMPANY YOU ARE POTENTIALLY REPRESENTING YOUR COMPANY. GOOD TO SEE YOU BOTH. SCARLET HAND HEMA PARMAR CONTINUING IN OF THE CLOSE. WE WILL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. SCARLET: COMING UP, CPI AND PPI DATA ON THE HORIZON. WE WILL SET YOU UP WITH THE FOUNDER AND PRESIDENT OF

53:52 INFLATION INSIGHTS. THIS IS BLOOMBERG. >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. SCARLET: WELCOME BACK. LET’S TAKE A LOOK AT WHERE MARKETS CLOSED OUT ON THE DAY. THE BOND MARKET WAS CLOSED – OPEN, THE STOCK MARKET WAS CLOSED. IT IS COLUMBUS DAY. YOU HAVE THE S&P LITTLE CHANGED BUT STILL SITTING THERE RECORD HIGHS.

54:25 BANKS CLOSED UP BEFORE FOUR BIG BANKS REPORT EARNINGS TOMORROW MORNING BEFORE THE OPENING BELL AND THE OTHER TWO REPORT WEDNESDAY. OIL PRICES UP 1.5%. WTI TRADING ABOVE $93 ONCE AGAIN. THE EURO SHOWING WEAKNESS. THE EURO VERSUS THE DOLLAR IS AT ITS LOWEST LEVEL SINCE MAY OF LAST YEAR POSITIONING AS WELL AS NOW THE MOST NEGATIVE SINCE THE EARLY DAYS OF THE PANDEMIC BUT THE FUNDAMENTALS DON’T SUPPORT MUCH IF ANY POSITIVE CATALYST. HEMA:

54:58 GREAT AND LET’S TAKE A LOOK AT SOME OF THE BIGGEST MOVERS. WE ARE GOING TO KICK IT OFF WITH AAA AND STARBUCKS. AAA DOWN AFTER STARBUCKS SAYS IT IS NOT GOING TO BE PURCHASING THE COMPANY. THIS AFTER REPORTS LAST WEEK THAT STARBUCKS SAID IT WOULD PURSUE AN OFFER. ADOBE AS WE SEE HERE HAS BEEN TRADING DOWN, IT GOT A DOUBLE

55:30 DOWNGRADE FROM WELLS FARGO AND IT WAS CUT FROM OVERWEIGHT TO UNDERWEIGHT. WELLS FARGO SAYS IT SEES MEANINGFUL CRACKS IN ADOBE’S STRATEGY. MICRON DOWN OVER CONCERNS ABOUT COMPETITION FROM CHINA AS CHINA IS LOOKING AT POTENTIALLY ADVANCED TECHNOLOGY WHEN IT COMES TO ITS CHIPS THAT WOULD RIVAL THE U.S. COMPANIES. SCARLET: THAT HAS BEEN A PERSISTENT THEME WHEN IT COMES TO TECHNOLOGY IN THE LAST FEW YEARS. OUR TOP STORY THAT SOURS A PIVOTAL WEEK COMING UP INCLUDING TWO KEY INFLATION

56:03 BRENTS AND A GATHERING OF CENTRAL BANKERS IN BANGKOK. CPI, THEN PPI ON THURSDAY. THE REPORTS WILL BE TAME ENOUGH TO KEEP THE FEDERAL RESERVE ON HOLD AND THE DATA COMING OUT JUST AHEAD OF A PLANNED APPEARANCE BY FED CHAIR KEVIN WARSH AT THE IMF MEETINGS TAKING PLACE THIS WEEK. THAT’S THE PERFECT SET UP FOR OUR NEXT GUEST. I MENTIONED CPI AND PPI AND WE HAVE FED CHAIR KEVIN WARSH SPEAKING AS WELL. WHICH HAS THE POTENTIAL TO

56:35 SURPRISE? OMAIR: I WOULD PROBABLY GO WITH THE PPI. THE CPI LAST MONTH WE HAD A HIGH PRINT, BUT A LOT OF THAT WAS DRIVEN BY ONE AUTO MOVE IN ONE COMPONENT, THE COST OF YOUR CELL SERVICE PLANS ADDED 10 BASIS POINTS TO THAT MOVE. PPI IS THE ONE WHERE THERE IS POTENTIAL FOR THE HOTTER PRINT

57:08 BECAUSE IT IS GOING TO LOOK TOWARD THE MIDDLE OF SEPTEMBER IN THE MIDDLE OF AUGUST. ENERGY WAS SIGNIFICANTLY HIGHER, GAS PRICES, DIESEL PRICES. I THINK THAT COULD POTENTIALLY BUMP UP THE PPI BY MORE THAN WE WERE LOOKING FOR. THE CHAIRMAN I WOULD EXPECT HIM TO CONTINUE THE SAME LANGUAGE, HE IS NOT GOING TO GIVE US ANY FORWARD GUIDANCE. I DON’T THINK HIS MESSAGE WILL BE VERY DIFFERENT AND I WOULDN’T EXPECT HIM TO CHANGE ANYTHING BASED OFF THIS WEEK’S DATA ALONE. SCARLET:

57:39 DOES THAT POTENTIAL PPI TO RISE BLEED THROUGH INTO CORE PCE IN ANY WAY? OMAIR: IT USED TO MORE BEFORE THEY CHANGE THE METHODOLOGY AT THE END OF SEPTEMBER. FOR EXAMPLE THE STOCK MARKET EFFECTIVELY IN THE PRIOR MONTH SHOWED UP IN THE PCE DATA TO HAVE THE POTENTIAL TO MOVE IT SEVERAL BASIS POINTS IN EITHER DIRECTION. THEY HAVE SMOOTHED OUT THOSE CHANGES SO THAT IS LESS OF AN ISSUE NOW

58:13 IF YOU THINK ABOUT THE CPI AND THE PPI, THE WAY THAT TRANSLATES INTO CORE PCE IS A 0.2% PRINT. THE MORE CLOSELY WASH ONES WILL BE PRETTY MODERATE. OBVIOUSLY OCTOBER RATE HIKES, THERE IS VERY LITTLE PRICING FOR THOSE. THE FED WILL HAVE THIS WEEK’S DATA AND THE OCTOBER NUMBERS BEFORE THEY GO INTO THAT MEETING AND MY FEELING IS THE REALIZED DATA WILL COME IN MORE MODERATE THAN EXPECTATIONS AND POTENTIALLY ALLOW THEM TO PUNT

58:49 DECEMBER INTO Q1. WE THINK ABOUT THEM NOT JUST SKIPPING OCTOBER, BUT HIKING IN DECEMBER. HEMA: IF THEY ARE SKIPPING THE NEXT TWO, HOW MIGHT YOU PROJECT THE FIRST QUARTER LOOKING? OMAIR: MY FEELING IS MARCH MAY BE THE TIME THEY MAY RAISE AGAIN BECAUSE MY EXPECTATIONS ARE A LOT OF THE ENERGY MOVES WE HAVE SEEN HAVE NOT MATERIALIZED INTO THE INFLATION DATA GET AND THAT IS WHERE THE PPI DATA IS GOING TO BE REALLY INTERESTING BECAUSE ARE THE TRANSPORTATION COSTS BLEEDING INTO FOOD PRICES

59:21 FOR THE COST OF MOVING OTHER MATERIALS AROUND THE COUNTRY? IF THE PPI GIVES HINTS OF THAT, WE HAVE N’T SEEN IT SHOWN UP JUST YET. BUT THAT COULD REALLY BUMP UP THE JANUARY AND FEBRUARY READINGS BECAUSE I THINK THAT PENT-UP PASS-THROUGH IF YOU WILL COMING UP AND I THINK MARCH WILL PROBABLY BE THE MOST OBVIOUS PLACE TO SEE THE NEXT HIKE.

59:56 HEMA: 40 SEE THE BIGGEST RISK IN THE NEXT SIX MONTHS? OMAIR: OVER THE NEXT SIX MONTHS, IT IS THE UPSIDE. IT COMES IN PRETTY TAME AND THEN YOU GET A BIG UPSWING AND THIS PENT-UP PASS-THROUGH SO I THINK THE START OF THE YEAR IS A PRETTY OBVIOUS PLACE TO LOOK FOR FIRMER INFLATION AND THAT

1:00:32 LOOKS TO BE A FIRST-QUARTER SITUATION AND WE ARE STARTING TO SEE AIRFARES WENT UP A LOT STARTING TO SOFTEN UP A LITTLE BIT MORE. SOME OF THAT COMES THROUGH AND IT FADES OUT IN THE SECOND QUARTER OF NEXT YEAR. SCARLET: THAT’S INTERESTING HOW THE PRICES , I WANT TO GET A SENSE OF HOW INFLATION EXPECTATIONS PLACE INTO POLICYMAKER THINKING. THESE ARE OFTEN GATHERED THEIR

1:01:04 SURVEYS SO IT IS CONSIDERED SOFT DATA, NOT HARD DATA. I WONDER HOW THIS CAN BE ANYTHING BUT RECENCY BIAS. PRICES WENT UP 4% LAST I CHECKED AND I’M WORRIED. ISN’T IT MORE JUST AN ARTICULATION OF SOMEONE’S CONCERN? OMAIR: I THINK THAT’S A GREAT WAY TO PUT IT, SCARLET BECAUSE WHEN WE GOT BACK, THE INITIAL SET OF TARIFFS LOOKED LIKE THEY WOULD ADD SEVERAL POTENTIAL POINTS TO

1:01:37 THE INFLATION AND YOU MENTIONED SURVEYS STARTED TO JUMP MATERIALLY. I REMEMBER IT WENT NORTH OF 5.6 PERCENT ON INFLATION. THOSE TARIFFS WERE NEVER IMPLEMENTED IN THE WAY THEY WERE INITIALLY INTRODUCED AND THOSE CAME DOWN WHEN THE REALIZED DATA CAME IN. THERE HAS BEEN A LITTLE BIT OF MOVEMENT RECENTLY BECAUSE OF GASOLINE AND DIESEL PRICES BUT REALLY I DON’T THINK THAT’S A BIG CONCERN FOR THE FED BUT THEY WILL ALWAYS TELL YOU THAT

1:02:08 IS A HUGE CONCERN BUT I DON’T THINK THE NUMBERS SUGGEST THIS IS A BIG PROBLEM FOR THE FED TO WORRY ABOUT. SCARLET: THANK YOU FOR JOINING US TODAY. OMAIR SHARIF FOUNDER AND PRESIDENT AT INFLATION INSIGHTS. COMING UP ON THE CLOSE, CENTRAL BANKERS STARING AT A REFLECTION PROBLEM. JONATHAN LEVEN WILL EXPLAIN WHAT HE MEANS WHEN WE COME BACK, SOME MORE ON CENTRAL BANKING AND INFLATION. THIS IS THE CLOSE ON BLOOMBERG. ♪

1:02:46 SCARLET: THE BOND MARKET MIGHT BE CLOSED FOR COLUMBUS DAY BUT LONG-TERM TREASURY YIELDS ARE STILL SETTING UP MULTI-DECADE HIGHS. THE MOVE HIGHER HAS FORCED THE FED TO HIKE INTEREST RATES AT ITS LAST MEETING BUT COULD THE HIGHER RATES THROUGH THE HEAVY LIFTING FROM HERE ON OUT? JONATHAN LEVITT HAS WRITTEN A COLUMN. YOU ARGUE THAT FOR THE CENTRAL BANKS TO RELY ON MARKETS DOING THE WORK FOR THEM, THAT IS A LOSING STRATEGY. WHY? JONATHAN:

1:03:18 EXACTLY, I’M A LITTLE BIT WORRIED ABOUT THE SENSE THAT POLICYMAKERS ARE STARTING TO CITE THIS ARGUMENT THAT THEY DON’T HAVE TO DO AS MUCH BECAUSE TERM PREMIUM HAS GONE UP SO MUCH. I POINT TO SOMETHING THAT THE NOBEL LAUREATE PAUL SAMUELSON SAID MANY DECADES AGO.

1:03:53 MARKETS ARE A REFLECTION OF THE SIGNALS THEY ARE SENDING BACK INTO THE WORLD. THE ENTIRE EDIFICE MAY COLLAPSE. IN MY PEACE I GO INTO A PRECEDENT, 2023 WE ALL REMEMBER THAT.

1:04:31 WE WANT TO AVOID THAT THIS TIME AROUND. SCARLET: YOU MENTIONED TERM PREMIUM. IT FEELS LIKE YOU MIGHT GET A DIFFERENT ANSWER ON THIS. JONATHAN: BOTTOM LINE IT IS ONE OF THE MOST VOLATILE BALL VARIABLES OUT THERE.

1:05:04 TWO YEARS AGO TERM PREMIUM IS SLIGHTLY NEGATIVE. SIX MONTHS AGO OR EVEN THREE MONTHS AGO TERM PREMIUM IS HALF OF WHERE IT IS TODAY. WE SIT AT 100 BASIS POINTS THE TERM PREMIUM GIVETH AND THE TERM PREMIUM TAKETH AWAY. YOU DON’T BACK YOUR INFLATION TARGET IN OR TERM PREMIUM. HEMA: WHILE IT IS UP IT IS ONLY UP BECAUSE OF A HANDFUL OF COMPANIES, BUT YOU HAVE AN

1:05:34 OPINION PIECE OUT WHERE HE TALKS ABOUT HOW IT IS LOUSY FOR MOST PEOPLE ON THE STOCK MARKET UNDER TRUMP. TALK TO US ABOUT YOUR THESIS. JONATHAN: THANKS FOR ACTING – ASKING ABOUT THAT. WHAT I WANT TO UNDERSCORE FROM THAT PIECE IS FIRST OF ALL WE ARE AT HISTORIC LEVELS OF THINNESS AROUND THIS RALLY. I THINK A LOT OF PEOPLE UNDERSTAND THAT THE BREADTH IS REALLY TERRIBLE. ONE THING THE BREATH DOES NOT TELL US IS THAT IS NOT A PERFECT TIMING MECHANISM.

1:06:05 IT DOES NOT TELL US THAT THE END OF THE RALLY IS NINE. SOMETIMES JUST A FEW PLAYERS CAN REALLY CARRY YOU ACROSS THE FINISH LINE BUT WHAT IT DOES UNDERSCORE IS THIS UNDERLYING FRAGILITY, THIS SENDS THAT IF THINGS WERE TO GO SOUTH, BOY COULD THEY REALLY GO SOUTH AND IN A HURRY. HEMA: WITH THIS REFLECTION PROBLEM, WHAT IS THE SOLUTION? WHAT IS THE ANSWER TO SOLVE THE REFLECTION CONCERN WE HAVE? JONATHAN: THE POLICYMAKERS’ ANSWER IS

1:06:38 THAT YOU ABSOLUTELY HAVE TO FOLLOW THROUGH. I GIVE A COUPLE OF EXAMPLES IN MY PEACE, ONE OF THEM THAT CONCERNED ME A GREAT DEAL WAS THAT IF YOU SAW HOW THAT 6-3 DECISION OVER AT THE BANK OF ENGLAND PLAYED OUT IT SEEMED THAT THEY WERE REALLY EXCITING THIS TIGHTENING IN MARKET RATES TO JUSTIFY STAYING ON HOLD. I WOULD HATE FOR SOMETHING LIKE

1:07:10 THAT TO HAPPEN AT THE FED OR OTHER INSTITUTIONS LIKE THE ECB. SCARLET: JONATHAN LEVIN, REALLY APPRECIATE YOU JOINING US. THE CENTRAL BANKERS STARE AT A REFLECTION PROBLEM, AS WELL AS HIS LATEST PIECE ON THE STOCK MARKET AS WELL. THE TRUMP STOCK MARKET IS PRETTY LOUSY FOR MOST. HE DOESN’T MINCE ANY WORDS. EARNINGS SEASON KICKING OFF WITH THE BIG BANKS REPORTING. WE WILL BREAK THINGS DOWN ON WHAT TO EXPECT WHEN WE COME BACK. THIS IS BLOOMBERG.

1:07:44 SCARLET: EARNINGS SEASON IS OFFICIALLY UNDERWAY BEFORE THE BELL TOMORROW WHEN THE RESULTS COME IN FROM JP MORGAN, GOLDMAN SACHS, CITI, AND WELLS FARGO. LET’S BRING IN MACRAE SYKES, PORTFOLIO MANAGER AT GABELLI FUNDS. BIG BANKS HAVE HAD A DECLINE DOWN 10% FROM THEIR RECENT HIGHS. WHAT DO YOU THINK THIS REFLECTS AHEAD OF EARNINGS SEASON?

1:08:15 WHAT ARE PEOPLE TRYING TO PRICE END? MACRAE: I THINK PROBABLY THE BIGGEST QUESTION IS ABOUT THE RISE OF THE 10 YEAR AND WHAT THAT MIGHT MEAN FOR CREDIT GOING FORWARD. REFINANCING IS GOING FORWARD, WE HAVE BEEN IN A INCREDIBLE PRIVATE CREDIT MARKETS OF THE HIGH COST OF CAPITAL IS SOMETHING TO WORRY ABOUT POTENTIALLY AND WE HAVE SOME MACRO CONCERNS AS WELL. IT IMPACTS INFLATION AS WELL.

1:08:47 SCARLET: WHAT ABOUT THE CAPITAL MARKETS? WE HAVE SEEN, AND A SLOWDOWN. WE KNOW IT WAS PROVIDING A LOT IN FEES FOR THESE BIG BANKS. HOW ARE YOU THINKING ABOUT THE CONTRIBUTION FROM THAT BUSINESS? MACRAE: Q2 WAS AMAZING WITH THE SPACEX IPO, ENGAGEMENT, AND OBVIOUSLY A SLOWDOWN QUARTER OVER QUARTER, SO THE EARNINGS

1:09:18 RESULTS FOR JP MORGAN RECENTLY HIGHLIGHTING IT COULD BE UP 15% YEAR-OVER-YEAR, MID TO HIGH TEENS AS WELL AS BANKING FEES. LOWER RELATIVE TO Q2, THE QUESTION FOR Q4 IS GOING PAST THE ELECTIONS CAN WE REBUILD THE IPO BUSINESS AGAIN? A LOT WEIGHING ON ANTHROPIC. WE DID HAVE A NUMBER OF IPOS THAT GOT DELAYED. I THINK WE WOULD LOOK TO THESE BANKS TO GET SOME MORE CONFIDENCE WE CAN RESUME THE

1:09:50 WINDOW INTO THE END OF THE YEAR. SO THAT WOULD BE IMPORTANT. I STILL THINK THE BACKGROUND FOR EARNINGS GROWTH IN THESE MAJOR COMPANIES IS GOOD. YOU HAVE NOMINAL GROWTH, LOW UNEMPLOYMENT, GOOD CREDIT, THEN THE WELLS – WEALTH EFFECT. WE JUST GOT A REPORT ON SEPTEMBER SPENDING IN TERMS OF THE CONSUMER WHICH IS 70% OF THE OVERALL ECONOMY WHICH IS VERY STRONG. DESPITE SOME OF THE CHALLENGES

1:10:21 IN TERMS OF WORRIES ABOUT THE OUTLOOK, WE SEE A PRETTY GOOD ENVIRONMENT. HEMA: YOU HAVE WALKED US THROUGH REASONS WHY WE CAN BE OPTIMISTIC, BUT WE ARE STILL UP AGAINST UPPER AND INFLATION AND OIL PRICES WHERE THEY ARE, WE ARE LOOKING AT GLOBAL GEOPOLITICAL TENSIONS. HOW ARE YOU WEIGHING ALL THOSE THINGS? AND HOW CONCERNED ARE YOU ABOUT THEM? MACRAE: WE ARE ALWAYS CONCERNED ON THE

1:10:55 CREDIT SIDE BECAUSE THAT COULD WEIGH ON RESULTS. WE HAVE HAD A CORRECTION IN VALUATIONS SINCE AUGUST. I WOULD SAY THEY WERE PRETTY BALANCED FOR THESE LARGE BANKS. A LITTLE MORE VALUE AND WELLS FARGO. A LITTLE BETTER THAN EXPECTATIONS COMING INTO THE CORRIDOR AND THE ASSET CAP REMOVAL. WE SEE GOOD MOMENTUM IN TERMS OF COST EFFICIENCIES AND A HIGHER VALUATION AS THEY MARCH UP ON THEIR GOALS. GOOD OPERATING RESULTS, BUT FAIR VALUES, NOT TO CRAZY PREMIUMS AND NOT TOO CHEAP. AGAIN, I THINK THE EXPECTED

1:11:31 RETURNS WILL BE AROUND THE PROGRESS AND THE CAPITAL RETURNS. HOW ARE YOU THINKING ABOUT CREDIT RESERVES AND WORRIES IN THE BROADER ECONOMY? MACRAE: CERTAINLY THE STATUS QUO , BUT WE ARE WITNESSING A 10-YEAR THAT HASN’T BEEN HERE IN 20 YEARS. CERTAINLY A DIFFERENT CREDIT OR RATE ENVIRONMENT. DUE TO THE FACT THAT IT IS CORRELATED. WE WILL LOOK TO THE CALLS TO

1:12:02 GET SOME INSIGHT ON THAT, HOW THEY ARE THINKING ABOUT GETTING RESERVES AND WHAT IT COULD MEAN IN TERMS OF COMMERCIAL LOANS. SCARLET: WELLS FARGO IS A FAVORITE AMONG THE BIG BANKS. HOW ABOUT FURTHER DOWN FROM THE CAP SCALE. WHICH OF THE MORE REGIONAL BANKS MIGHT YOU BE LOOKING AT? MACRAE: FROM MY PERSPECTIVE WE TEND TO OWN THE LARGER, MORE DIVERSIFIED REVENUE. WE LIKE CITIZENS, M AND T BANK, AND PNC AS WELL. SCARLET:

1:12:33 THANK YOU SO MUCH, REALLY APPRECIATE IT. THE BIG BANKS KICK EARNINGS TOMORROW. MACRAE SYKES IS A PORTFOLIO MANAGER AT GABELLI FUNDS. WE HAVE BREAKING NEWS, KROGER WILL BE CUTTING ITS CORPORATE WORKFORCE BY ABOUT 3000 OVER THE NEXT THREE YEARS, 37% OF CORPORATE JOBS IN ORDER TO SIMPLIFY OPERATIONS AND COMPETE MORE EFFECTIVELY ACCORDING TO A MEMO. THE REDUCTIONS WILL PUT RESOURCES TOWARD CUTTING PRICES AND INVESTING IN FRONT-LINE

1:13:08 EMPLOYEES. THE STOCK HOLDING. THIS IS THE CLOSE ON BLOOMBERG. SCARLET: BLOOMBERG IS REPORTING THAT ANTHROPIC IS SET TO MEET PROSPECTIVE INVESTORS AHEAD OF A POTENTIAL IPO AS CONCERNS AND EXCITEMENT GROW OVER AI’S PROSPECTS. JOINING US NOW TO DISCUSS IS A PRINCIPAL AT A VC FUND WHOSE SECOND-BIGGEST PORTFOLIO HOLDING IS OPENAI. I FEEL LIKE WE HAVE BEEN

1:13:41 DISCUSSING THE ANTHROPIC IPO FOR SO LONG THAT I WON’T BE A SURPRISE ANYMORE WHEN IT DROPS. EXPANDING ON WHAT WE ARE MISSING OUT IN THIS SPACE. >> YOU COMPARED TO LAST YEAR HOW MUCH CAPITAL WAS DEPLOYED IN ALL OF 2025, 260 BILLION DOLLARS AROUND THERE. THINK ABOUT HOW MUCH OPPORTUNITY PEOPLE ARE SAYING TO DEPLOY OVER 74% OF THE CAPITAL LAST YEAR.

1:14:16 SCARLET: IT’S A REALLY GOOD POINT AND ANTHROPIC IS NOT THE BE-ALL AND END-ALL, IT IS THE HIGH-PROFILE NAME OF THE MOMENT. HAVING SAID THAT, YOU DO OWN OPENAI AND THE NUMBERS HAVE COME OUT RECENTLY THAT NEED TO BE PUT INTO CONTEXT IN TERMS OF ITS ANNUALIZED REVENUE RUN RATE. NEARING $70 BILLION. FRAMED THAT FOR US IN TERMS OF HOW WE SHOULD THINK ABOUT IT IN TERMS OF GROWTH RATES AND WHAT IT MEANS GOING FORWARD. WILLY: LOOKING AT NOT JUST GROWTH RATES, BUT VALUATION BECAUSE I THINK PEOPLE HAVE THESE

1:14:48 QUESTIONS ABOUT VALUATION AND GROWTH RATE, GOOGLE AS A BUSINESS BETWEEN JUNE OF 2025 AND 2026 THEY ADDED $75 BILLION OF REVENUE AND HAD A ASTRONOMICAL GROWTH IN THE BUSINESS. ABOUT $2 TRILLION OF MARKET CAP ON $75 BILLION OF MARKET CAP – REVENUE. WE THINK THE COMBINED AMOUNT OF ARR THAT OPENAI AND ANTHROPIC HAVE ADDED YEAR TO DATE IS

1:15:20 ALMOST $100 BILLION OF ARR ON A GROSS BASIS AND EVEN IF YOU PULL THAT BACK FOR THE NET BASIS IT IS STILL A MASSIVE AMOUNT OF REVENUE THAT PEOPLE ARE STILL TRYING TO WRAP THEIR ARMS AROUND BECAUSE IT IS SUCH A BIG NUMBER. HEMA: AND THESE NUMBERS ARE GIANT. THE LIKES WE HAVEN’T REALLY SEEN BEFORE. BUT AS YOU LOOK AT VALUATIONS, HOW DO YOU WEIGH THE RISKS? OF SOME OF THE WILD THINGS WE HAVE BEEN HEARING LIKE ANTHROPIC GOING ROGUE AND

1:15:52 SUBMITTING A FAKE TIP TO POLICE? WE ARE SEEING THE KIND OF RISKS WE HAVEN’T SEEN EITHER AND HOW DO YOU WEIGH THAT AS AN INVESTOR? WILLY: THINK ABOUT THE MEGATRENDS WE HAVE SEEN IN TECHNOLOGY OVER THE LAST 25, 30 YEARS. THE DOT COM BOOM, IN THOSE TIMES PEOPLE ADOPTED TECHNOLOGY VERY RAPIDLY BUT YOU COULD IGNORE THEM AND BE OK. YOU CAN ADOPT IT MORE SLOWLY.

1:16:31 I THINK AI IS ONE OF THOSE TECHNOLOGIES, WHETHER HOW AGENTS AND BUSINESSES ARE GOING TO INTERACT, THOSE THINGS ARE FUNDAMENTAL SHIFTS THAT WE SEE THIS ANTHROPIC IPO IN FRONT OF OUR FACE AND THESE OTHER THINGS ARE HAPPENING IN THE BACKGROUND AND WE ARE NOT PAYING ATTENTION TO HOW FAST IT IS EVOLVING THAT CORPORATIONS CAN NO LONGER IGNORE AI AND LET IT PASS BIAS. HEMA: YOU MENTIONED THESE ARE BIG INVESTMENTS BUT A LOT COULD BE MISSED. YOU ARE AN INVESTOR AND A LOT OF THESE BIG COMPANIES, BUT

1:17:04 WHAT ARE THE ALTERNATIVE INVESTMENT OPPORTUNITIES THAT PEOPLE ARE MISSING IN THE VENTURE SPACE THAT MIGHT NOT BE THAT GIANT TECH COMPANIES WITH THESE VALUATIONS? WILLY: I THINK A LOT OF THOSE ARE THE EARLIER STAGE THINGS YOU SEE IN THE PRIVATE SPHERE, ANYTHING FROM QUALITY INFRASTRUCTURE COMPANIES FROM HELPING AGENTS ORCHESTRATION TO COGNITION AND BUSINESSES THAT ARE HELPING COMPANIES ADOPT THIS TYPE OF TECHNOLOGY, YOU SEE IT WITH ENTERPRISES RIGHT NOW WITH

1:17:38 SPOTIFY AND META TRYING TO GET INVOLVED IN THIS SPACE BECAUSE THEIR CORE BUSINESS IS NOT AROUND ENTERPRISE SAAS, THEIR BUSINESSES ARE COMPLETELY DIFFERENT BUT THEY ARE SEEING SUCH AN OPPORTUNITY THAT THEY CANNOT IGNORE PARTICIPATING. SPOTIFY’S CORE BUSINESS IS NOT ENTERPRISE SAAS, BUT THEY WANT TO MOVE INTO THAT BECAUSE THEY ARE BUILDING THESE GREAT TOOLS INTERNALLY AND THEY ARE SEEING THIS DISCREPANCY BETWEEN ENTERPRISES THAT HAVE ADOPTED AND NOT ADOPTED THAT WHY DON’T WE JUMP AT THIS OPPORTUNITY? SCARLET:

1:18:09 IN OTHER WORDS THEY CAN’T AFFORD NOT TO. WILLY: YES. SCARLET: YOU THINK THE DATA SAID THE AI MARKET IS MATURING. THAT IS USUALLY A SLOWING GROWTH RATE. IS THAT WHAT IS HAPPENING? WILLY: NO, WHAT I MEAN IS THE RAPID UPTAKE IN ENTERPRISE CODING. THE NEXT LEG OF I THINK WHAT WE ARE GOING TO SEE IN AI IS REALLY THE ENTERPRISE OPERATIONS IN PARTS WHERE I THINK THIS IS WHAT SPOTIFY AND

1:18:41 META ARE SEEING, ADOPTION ON CODING HAS HAPPENED RAPIDLY, BUT WHOLE OTHER PARTS OF ORGANIZATIONS THAT HAVE BEEN SLOW TO ADOPT AND THIS FEELS LIKE THE TIME TO LEAN IN AND GET THAT SECOND BOARD OF ENTERPRISE SPEND THAT HASN’T HAPPENED YET SO THAT IS WHAT I MEAN BY MATURATION IS YOU HAVE THIS MATURATION IN PARTS AND NOW YOU HAVE IT IN BROADER ENTERPRISE AND PERSONAL ASSISTANCE. SCARLET: MAYBE WHEN YOU DO SEE A BIT OF HIS FALLING PRICES. TALKING ABOUT HOW OPENAI RECENTLY CUT LUNA PRICING BY 80% WHICH SOUNDS LIKE A LOT. IS THAT THE TRAJECTORY ONCE

1:19:15 THEY START CUTTING THEY WILL CONTINUE CUTTING PRICES? WILLY: THAT IS WHAT THE GOAL, WHAT THESE LARGE LANGUAGE MODEL LABS ARE FOCUSED ON, TRYING TO MAKE THE COST EFFECTIVE FOR A LOT OF THESE ENTERPRISES. IT IS NOT JUST THAT THEY’RE MAKING A COST-EFFECTIVE IT IS THAT THEY ARE FINDING EFFICIENCIES NOT ONLY IN TRADING BUT ALSO AN INFERENCE. THEY ARE THING REAL TECHNOLOGICAL ADVANCEMENTS THAT LET THEM CUT. HEMA: NEVER A DULL MOMENT.

1:19:51 SO MUCH TO GET INTO NEXT TIME WE HAVE YOU ON. WILLY LEE OF NEOSTELLAR NEOSTELLAR. META RELEASING MUSE WONDER, THE COMPANY’S AI CHIEF SAYING THE NEW MODEL IS THE COMPANY’S MOST CAPABLE AGENT BUT OUR NEXT GUEST WARNS THIS IS MERELY MUSE’S HONEYMOON PERIOD. WHAT INVESTORS NEED TO SEE NOW IS PROOF THAT THOSE WHO BOUGHT INTO THE MUSE IDEA ARE ACTUALLY FIGHTING IT USEFUL. THANK YOU.

1:20:25 LET’S BRING IN DAVE LEE TO TALK ABOUT THIS. WALK US THROUGH . DAVE: IT HAS BEEN AT THE TOP OF THE APT CHARTS AND USAGE STATISTICS SUGGEST THERE ARE 2 MILLION DAILY ACTIVE USERS.

1:20:57 FROM THE MOMENT CONSUMERS ARE BEING SHOWN THIS TECHNOLOGY, THAT IS SEEING A PRETTY STRONG START. THERE WAS AN ANALYST AT CITI SAYING THAT SAYS THE POTENTIAL TO BE THE NEW FRONT DOOR TO THE INTERNET FOR MANY USERS. WHAT IS THEREFORE META TO BUILD UPON THAT? THE APP IS ONLY GOING TO BE AS USEFUL AS THE THINGS YOU CAN CONNECT TO DIRECTLY. DIFFERENT SERVICES THAT CONSUMERS ARE GOING TO EXPECT THIS TO CONNECT WITH.

1:21:28 I THINK THE ANNOUNCEMENTS TODAY FROM META ABOUT THEIR NEW MODEL IS BUILDING ON THAT. THE BETTER THEIR SYSTEMS ARE GOING TO GET AS WELL. THE FACT THAT THEY ARE DOING THIS IN-HOUSE IS IT WILL BE CHEAPER RATHER THAN GOING TO OPENAI OR ANTHROPIC TO MAKE THEIR ASSISTANT BETTER. MANY ARE SAYING THE POSITIONING HERE IS PRETTY STRONG AFTER JUST OVER A YEAR AGO LOOKING LIKE THEY WERE SEEING ABOUT

1:21:59 SPENDING LOADS OF MONEY TO CATCH UP. THEY HAVE DONE THAT AND THEY SEEM TO BE CATCHING UP PRETTY WELL. HEMA: TO KEEP THAT MOMENTUM GOING, WHERE WILL YOU SEE WHAT IS NEEDED NEXT? IS IT TECHNOLOGY OR TALENT? IS IT THE DEVELOPMENT OF ENGINEERING? WHAT WILL THAT LOOK LIKE? DAVE: I THINK THE BIGGEST CHALLENGE WILL BE INTEROPERABILITY WITH OTHER SERVICES. MUSE USED TO BE ABLE TO SHOP ON AMAZON FOR YOU. IT WOULD SAY THANKS VERY MUCH AND BROWSE. AMAZON VERY QUICKLY SAID, NO

1:22:31 THANK YOU. THEY HAVE BLOCKED META FROM DOING THAT. NAVIGATING SOME OF THOSE DISCUSSIONS WILL BE REALLY INTERESTING BECAUSE AMAZON QUITE UNDERSTANDABLY WANT TO KEEP THEIR E-COMMERCE BUSINESS FOR THEMSELVES TO A POINT. OTHER COMPANIES ARE GOING TO DO THE SAME WITH WHATEVER THEY ARE GOOD AT CURRENTLY. I THINK IF META IS GOING TO GROW MUSE INTO SOMETHING THAT IS TRULY USEFUL, IT HAS TO WORK ON ALL THINGS.

1:23:03 IT HAS TO SELL THE USE CASE TO THE CONSUMER AND TO THE PARTNERS. ONE THING I’M INTERESTED IN SEEING WITH MUSE AND I GET THIS AS COMMENTS ON EVERY ARTICLE, WELL IT IS MADE BY META, SO I DON’T WANT TO GO NEAR IT AND THERE IS A BIT OF A TRUST CEILING IN TERMS OF HOW MANY PEOPLE ARE PREPARED TO TRY AT AND I WONDER WHERE THAT CEILING IS BECAUSE I SUSPECT APPLE MIGHT HAVE A FEW MORE PEOPLE WILLING TO USE APPLE’S INTELLIGENCE WHEN THAT COMES ALONG. SCARLET: I’M SO GLAD YOU WENT THERE. I JUST SOCIAL RECKONING OVER THE WEEKEND. DAVE: I AM SEEING IT TONIGHT. SCARLET: THERE YOU GO. DAVE:

1:23:37 I SHOULD KNOW THIS BY NOW. [LAUGHTER] SCARLET: IT IS A REMINDER OF THE KIND OF TRADE-OFFS MARK ZUCKERBERG WAS AND IS WILLING TO MAKE TO GROW HIS BUSINESS AND EXPAND WHAT IT CAN DO SO THE IDEA OF A TRUST CEILING WITH META, YOU POINT OUT APPLE DOES NOT HAVE THAT SAME THING BECAUSE IT HAS PRIORITIZED PRIVACY ABOVE ALL ELSE. HOW DOES META SOLVE FOR THAT TRUST CEILING? DAVE: I THINK WHAT IT HAS TO DO IS JUST MAKE IT REALLY, REALLY

1:24:08 GOOD. I THINK FOR ALL WE TALK ABOUT META NOT BEING TRUSTED BY CONSUMERS, THREE POINT 6 BILLION PEOPLE USE A META APP EVERY SINGLE DAY. IF EVERYONE TRUSTED – WHO DIDN’T TRUST META STOPPED USING THEIR APPS, THE NUMBERS WOULD BE A LOT LOWER. PEOPLE ALSO LIKE TO SEE WHAT IS HAPPENING IN OUR LOCAL COMMUNITY, THEY LIKE TO GO ON FACEBOOK MARKETPLACE OR KEEP UP WITH FRIENDS ON INSTAGRAM. IF THE MUSE APPLICANT FIND THE

1:24:38 USEFULNESS THAT SITS ALONGSIDE THAT. THAT IS HOW META WILL CONVINCE PEOPLE. THEN IT WILL BE FINE. IT IS AN ADDITIONAL CHALLENGE MARK ZUCKERBERG HAS THAT I DON’T THINK JOHN TERNUS AT APPLE DOES. I DON’T THINK GOOGLE HAS THAT ISSUE EITHER. I THINK PEOPLE ARE MORE INTEGRATED WITH THOSE COMPANIES ON DEEPER THINGS IN THEIR LIVES PERHAPS. IT IS ONE OF THE MOST FASCINATING THINGS IN SILICON VALLEY. SCARLET: THE SUCCESS WILL DEPEND ON THE BREATH OF ITS PARTNERSHIP.

1:25:10 CAN MUSE BE MODERATELY SUCCESSFUL WITH THE BRAND PARTNERSHIPS THEY JUST RIGHT? AMAZON WILL PROBABLY NEVER OPEN UP TO MUSE BECAUSE IT WANTS TO COME UP WITH ITS OWN AI AGENT. HOW MUCH GROUND CAN MUSE REALLY GAIN JUST IN THE PARTNERSHIPS IT HAS RIGHT NOW? LET’S SAY IT IS AT ITS MAXIMUM. DAVE: THE KEY WITH ALL OF THIS IS BY TRYING TO BE THE FIRST MOVER YOU BECOME THE ONE THAT GETS THE SPIRALING MOMENTUM. GOOGLE SEARCH DID A VERY GOOD

1:25:42 JOB OF THE FLYWHEEL EFFECT WHERE BECAUSE IT MADE SUCH A GOOD IMPRESSION EARLY ON WITH SEARCH MORE PEOPLE WENT TO IT, THEREFORE IT HAD MORE INFORMATION. SCARLET: LIKE THE DEFAULT. DAVE: IT BECAME THE DEFAULT AND THAT IS A POWERFUL POSITION TO BE. IT TOOK A LOT OF EFFORT TO GET THERE. IF YOU ARE AMAZON YOU MAY BE THINKING THEY DON’T WANT PEOPLE TO USE META’S BOUGHT, BUT IF YOU DISCOVER 40% OR HIGHER OF CONSUMERS, 70% ARE GOING TO USE CHATBOTS TO DO THEIR BASIC SHOPPING, SUDDENLY AMAZON

1:26:15 DOESN’T HAVE A CHOICE. SHOPIFY IS ANOTHER COMPETITOR, THEY HAVE SAID YES, WE WILL WORK WITH MUSE, AND THEY HAVE A PARTNERSHIP. WE ARE SEEING COMPANIES GIVING UP A LITTLE BIT OF ACCESS DIRECTLY TO THE CUSTOMER IN FAVOR WHAT COULD BE A MUCH BIGGER SCALE. META IS GOING TO WANT TO TAKE A CUT OF THAT WHICH IS ANOTHER THING. HEMA: WE TALK ABOUT THE DAY ONE MOVER ADVANTAGE. HOW LONG DOES THAT LAST? BECAUSE THE PACE OF CHANGE IS

1:26:47 JUST SO FAST AND WE ARE SEEING COMPETITORS COMING OUT FROM ASIA OR EUROPE, RIGHT? AS WE LOOK AT THE LANDSCAPE, IS THAT A GAME CHANGER, BEING THERE FIRST? OR IN THE SPAN OF THE NEXT THREE YEARS DOES IT MATTER? DAVE: IT IS SO HARD TO TELL. YOU WOULD ARGUE CHATGPT IS THE FIRST IN THAT ROUND, THE FIRST TO BRING THAT TO PEOPLE’S ATTENTION. THAT LEADERSHIP STILL HOLDS TODAY, IT IS IN THE LEAD, BUT IT IS WAVERING AND I THINK AS

1:27:19 PEOPLE START TO USE PRODUCTS IN DIFFERENT PARTS OF THE TECHNOLOGY THEY USE, I THINK OF APPLE, THE ADVANTAGE WON’T BE SO IMPORTANT. ONE OF THE THINGS PEOPLE OFTEN SAY ABOUT APPLE’S THEY WEREN’T THE FIRST TO BUILD THE SMARTPHONE BUT THEY DID IT VERY WELL. TO WHAT DEGREE IS APPLE’S FIRST MOVE, IS IT DOING IT REALLY WELL OR IS IT JUST THE FIRST BASICALLY COMPETENT ONE WE ARE SEEING? I THINK MUSE HAS DONE A VERY GOOD JOB OF MARKETING THIS IS SOMETHING FOR NORMAL PEOPLE AS

1:27:51 OPPOSED TO THE AI NERDS THAT ARE DEEP IN THE WEEDS. THAT HAS BEEN A BIG DIFFERENCE I THINK BUT THAT IS GOING TO BE THE CHALLENGE. SCARLET: BE SURE TO READ DAVE LEE’S COLUMN. HE SAID THESE AI AGENTS HAVE CUTESY FAY IN THESE BLOBS AND THAT SEEMS TO BE THE KEY. [LAUGHTER] WHAT INVESTORS NEED TO WALKED IN THE NEXT 24 HOURS AND WE GET ECONOMIC DATA AND EARNINGS. THIS IS THE CLOSE ON BLOOMBERG.

1:28:26 SCARLET: LET’S LOOK AHEAD TO WHAT ELSE WE ARE WATCHING OVER THE NEXT 24 HOURS. OF COURSE IT IS EARNINGS SEASON. JP MORGAN, GOLDMAN SACHS, WELLS FARGO, CITY ARE GOING TO BE REPORTING BEFORE THE OPENING BELL. J&J, UNITEDHEALTH, DOMINO’S ALSO REPORTING. A LOCK TO SIFT THROUGH. HEMA: CPI DATA, PPI DATA. SCARLET: WE HAVE ALL THE DATA.

1:28:57 TOMORROW WE HAVE THE SMALL BUSINESS OPTIMISM AND EXISTING HOME SALES, I THINK IT VERY MUCH DEPENDS ON MORTGAGE RATES WHICH HAVE BEEN SKYHIGH. HEMA: CAPITAL EXPECTED TO INTRODUCE A NEW SMART HOME DEVICE. SCARLET: THAT IS COMING OUT TOMORROW AND BLOOMBERG’S NEW ECONOMY FORUM IN NEW DELHI WILL BE KICKING OFF. THAT DOESN’T. “BALANCE OF POWER” IS UP NEXT IN WASHINGTON. HAVE A GREAT EVENING.