Chip Stocks Slide as Global Bond Anxiety Builds | The Close 8/18/2026

>> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." >> CHIP STOCKS TAKE A BREATHER FROM THEIR BLISTERING RUN WILD BOND ANXIETY FLARES UP IN THE U.S. AND AROUND THE WORLD. IT'S ABOUT -- ISABELLE: THAT SHIP SLUMP REALLY IS BIG. I THINK SEMICONDUCTORS ARE DOWN ABOUT 6%. SCARLET: THEY ARE AND THEY DON'T CALL IT TURNAROUND TUESDAY FOR NOTHING. ALL THREE STOCK INDEXES ARE LOWER. THE S&P 500 DOWN FOR A THIRD STRAIGHT DAY AFTER CLOSING AT A RECORD LAST THURSDAY. WTI WAS ABOVE $85 A BARREL, JUST BELOW THAT NOW. THE 10-YEAR YIELD NOT DOING A LOT TODAY BUT STILL ELEVATED. THERE IS STILL A WAYS TO GO BEFORE YOU GET TO 5%, WHICH IS WHAT EVERYONE IS WATCHING FOR. ISABELLE: DEFINITELY THE LEVEL PEOPLE ARE WATCHING. DUOLINGO SHARES EDGING HIGHER AFTER DEI DAVIDSON UPGRADED THE STOCK TO BUY, CITING A TURNING POINT IN ACCELERATION OF DAILY ACTIVE USERS. SOMETHING OF A 2000-DAY WINNING STREAK. HOME DEPOT SHARES UP. SALES COMPARABLE FOR THE SECOND QUARTER, BEAT CONSISTENT -- CONSENSUS ESTIMATES. KLARNA DOWN MORE THAN 20% AFTER THE COMPANY SLASHED ITS FULL-YEAR FORECAST MISSING EXPECTATIONS. SCARLET: I WANT TO GO BACK TO THE BOND MARKET BECAUSE THE SELLOFF IS NOT JUST A THING THAT JUST HAPPENED THIS WEEK OR THIS MONTH OR THIS YEAR. IT GOES BACK TO THE DEPTHS OF THE PANDEMIC AND YOU CAN SEE HOW YIELDS HAVE COME WAY UP. THE U.S. LONG BOND YIELD IS THE BLUE LINE. YIELDS IN JAPAN, U.K., AND GERMANY ARE CLIMBING AS WELL. LUNG MATURITY BONDS ARE -- LONG MATURITY BONDS. LET'S KICK THINGS OFF WITH JEFFREY SHERMAN, DEPUTY CIO AT DOUBLELINE CAPITAL AND PORTFOLIO MANAGER OF THE DOUBLELINE FLEXIBLE INCOME FUND. ALWAYS GOOD TO SPEAK WITH YOU. THANK YOU FOR SPEAKING WITH US. I WANT TO START WITH THE IDEA THAT WE HAVE TAKEN ANOTHER LEG OFF. WHAT DOES THIS REFLECT TO YOU? JEFFREY: I THINK YOU NAILED IT, THIS CONFLUENCE OF ALL THESE ANXIETIES OUT THERE, NOT JUST FROM THE CAPEX CYCLE BUT WE ARE STILL WORKING OUT THE EXCESSES OF OUR FISCAL BOOM AND DEBT EXPANSION IN THE DEVELOPED WORLD. THAT IS WHAT YOU SEE AT THE CHART AT THE TOP OF THE HOUR. THIS IS NOT JUST A U.S. PHENOMENON, ALTHOUGH I JUST CAME OUT OF OUR STRATEGY MEETING WHERE WE TALKED ABOUT INTENTIONALLY SEEING THE U.S. DEFICIT HIT $40 TRILLION BY THE END OF THE MONTH IF NOT BY LABOR DAY. SIMULTANEOUSLY, YOU DO NOT HAVE A LOT OF CENTRAL BANKS AROUND THE WORLD PROVIDING THE FODDER TO TRY TO TACKLE THAT INFLATION NARRATIVE AS WELL. THE BOND MARKET IS VOTING WITH ITS FEET, VOTING ON THE BACK END OF THE YIELD CURVE, AND WHAT WE SEE IN THE U.S. IS A NEW CYCLE HIGH WITH THE REST OF THE CURVE HAS NOT. IT IS REALLY THE INDICATOR TO BE WATCHING. WE BROKE THROUGH 5.30 PERCENT ON THE LONG BOND. IT DOES NOT SEEM THERE IS A LOT OF RESPITE. I GUESS THE ONLY RESPITE ONE CAN SAY IS IT'S NOT ACCELERATING TO THE UPSIDE RIGHT NOW. SCARLET: IT DOES LOOK FAIRLY ORDERLY. EDGAR DENNY, WHO COINED THE TERM BOND VIGILANTES, SAYS IT IS NOT TIME TO PUSH THE BUTTON JUST YET. WHAT WOULD THAT LOOK LIKE? JEFFREY: I THINK YOU WOULD SEE IT AS A SPIKE IN YIELDS. IT IS ONE THING THE U.S. HAS NOT SUFFERED FROM IN THIS LAST BOUT SINCE WE SAW THE INFLATION PEAK IN 2023. ONE THING I WOULD LOOK FOR IS LOOK FOR THE REST OF THE CURVE TO CONFIRM THIS. WE HAVE NOT SEEN THIS IN 10'S AND THE BELLY OF THE CURVE. WE GOT THAT FOR OVERNIGHT TRADING IN THE U.S.. THAT PSYCHOLOGICAL LEVEL I THINK WILL BE PARAMOUNT, BUT EVEN IF WE GO ORDERLY THAT DIRECTION, TO ME, THAT IS NOT ON VIGILANTISM -- BOND VIGILANTISM. THAT IS A REJECTION OF POLICY. WATCHING CONGRESSIONAL LEADERS CONTINUE TO SPEND LEFT AND RIGHT AND THE BOND MARKET LEADERS SAY NO, YOU'RE NOT. ONE PROBLEM THE FED HAS AT THE JUNCTURE IS THEY PROBABLY SHOULD HIKE TO CONTROL SOME OF THIS AND CONTAIN SOME OF WHAT'S GOING ON AROUND THE GLOBE, BUT UNFORTUNATELY, IT IS JUST NOT WHERE THEY ARE RIGHT NOW, AND IT'S PROBABLY LIKELY THEY DON'T DO ANYTHING IN SEPTEMBER AND LET THIS GRIND ALONG. KEVIN WARSH DID TAKE CREDIT FOR MARKET REPRICING EVEN THOUGH HE HIMSELF AND HIS FELLOW GOVERNORS ARE NOT RAISING RATES. THEY DID TAKE CREDIT FOR THE BOND REPRICING THAT. IF THE BOND MARKET TAKES HOLD, THEY WILL HAVE TO RESPOND A LOT QUICKER. ISABELLE: THE BOND MARKET IS SELLING OFF, BUT CREDIT SPREADS REMAIN TIGHT. TALK TO US ABOUT THAT DISCREPANCY. JEFFREY: IF YOU LOOK AT THE ISSUANCE OF THE CORPORATE SIDE, IT SITS ON THE FRONT END OF THE BELLY, AND THOSE AREAS ARE NOT PUTTING PRESSURE, BUT WE HAVE SEEN WEAKNESS IN THE HYPERSCALERS. IT PROBABLY DOES NOT LOOK LIKE IT TO MOST INVESTORS, BUT TO US BOND FOLKS WHO WATCH THIS, SPREADS ARE WIDER AND HYPERSCALERS ARE DRIVING THAT, BUT SOMEWHAT ORDERLY NOW. WHENEVER YOU START TO HEAR THIS ARGUMENT ABOUT SHOULD I LEND TO MICROSOFT OVER FIVE YEARS OVER THE U.S. GOVERNMENT OVER 30, I THINK MOST INVESTORS CHOOSE THAT CONCEPT OF LENDING TO MICROSOFT OVER FIVE YEARS BECAUSE WE KNOW THERE IS SOME SEMBLANCE OF REVENUE RELATIVE TO SPENDING. I THINK YOU WILL SEE THIS CONTINUED COMPETITION IN THE BOND MARKET AS WE HAVE MORE AND MORE GROSS ISSUANCE WHEN IT IS INVESTMENT GRADE, HIGH YIELD, LOANS, ABS, CM BS -- ALL MARKETS HAVE TO FUND THIS CAPEX EXPANSION WHILE THE GOVERNMENT IS ALSO RUNNING MASSIVE DEFICITS AS WELL. IT IS A COMPETITIVE ON MARKET, AND SOME OF THIS MAY BE JUST THE RUSH TO GET IN FRONT OF U.S. GOVERNMENTS AS WELL. ISABELLE: WHAT IS IN FRONT OF BONDS RIGHT NOW, THE INFLATION PRINT OR RISK/BORROWING NEEDS? IT IS A CONFLUENCE OF FACTORS. IF YOU WERE TO PICK ONE REASON, WHAT WOULD IT BE? JEFFREY: I THINK IT IS INFLATION STILL. WE HAVE NOT GOTTEN THE INFLATION GENIE BACK INTO THE BOTTLE AT THIS STAGE, AND UNTIL THAT HAPPENS AND YOU HAVE A FED TALK ABOUT WE ARE GOING TO FIGHT INFLATION BUT NOT REALLY TAKE ANY ACTION, SOME OF THAT IS THE RELEASE ON THE BACK END OF THE CURVE. THE LABOR MARKET GAVE US SOME QUESTION MARKS, AND IT GIVES THE FED A REASON TO PAUSE, BUT WE HAVE ANOTHER INFLATION PRINT IN FRONT OF THE NEXT FED MEETING. I THINK INFLATION IS THE NEXT BIG FACTOR. WE HAVE NOT SEEN ALL OF THE SPENDING THAT'S GOING ON ON THE WAR AS WELL. IT WILL CONTINUE AND WE WILL CONTINUE TO HAVE HEADLINES BACK AND FORTH AND IT WILL BE THIS PUSH AND PULL BETWEEN LABOR AND THE INFLATION MARKET AND SO FAR, THE INFLATION HAWKS ARE WINNING THAT ARGUMENT. SCARLET: WHAT ARE THE CATALYSTS THAT WOULD TRIGGER THE MOMENT OF WHEN INFLATION RATES MATTER? IS IT A SPECIFIC LEVEL? DO LIKE A SPECIFIC SET OF CONDITIONS? JEFFREY: I THINK WHAT YOU WOULD NEED TO SEE IS THE 10-YEAR SET A NEW CYCLE HIGH. IF YOU STARTED TO PUSH THROUGH THEM AND WE STARTED TO REALLY SETTLE ABOVE THAT AND STAY ABOVE THAT 5% LEVEL, I THINK THAT MAY BE A WARNING TO OTHER INVESTORS OUT THERE. WE HAVE HAD A LOT OF CONGESTION ABOVE THAT 4.75% LEVEL ON THE 10-YEAR. THAT IS THE LEVEL THAT HAS BEEN HOLDING, SO A LOT TO SEE. ALL IN ALL, I THINK THAT IS THE NUMBER TO LOOK FOR. SCARLET: DUST 5% CREATE A BUYING OPPORTUNITY? -- DOES 5% CREATE A BUYING OPPORTUNITY? JEFFREY: LIKE I SAID WHEN WE TALK ABOUT LEVELS, IT ALWAYS MATTERS THE PATH THAT TAKES YOU THERE. SPIKE OVERNIGHT, I DON'T THINK YOU SEE A LOT OF BUYERS INSTANTANEOUSLY. I THINK THINGS START TO GET MORE INTERESTING, BUT WE WOULD NOT BE WILLING TO PUT UP WITH THE RATION JUST BECAUSE WE SAW A 5% 10-YEAR. I WOULD WATCH, LIKE, 5.5% ON THE LONG BOND. THAT PROBABLY LEADS TO A 5% 10-YEAR. WE WILL HAVE TO SEE HOW THE MARKET STARTS TO REPRICE THINGS. SCARLET: ALWAYS A PLEASURE, THANKS SO MUCH, JEFFREY SHERMAN. COMING UP, THE AI VIDEO COMPANY IS FRESH OFF A FUNDRAISER UP $5.4 BILLION. WE WILL SPEAK WITH THE CEO OF HEX FIELD -- OF HEGSFIELD NOW THAT IT HAS A NEW PATHWAY FORWARD. AND MARK CUBAN BACKED A ROBOTICS START UP ON THE CUSP OF A $500 BILLION SPAC DEAL. WE WILL CATCH UP WITH CEO SAMUEL REEVES ON WHAT IS AHEAD. ALL THAT AND MORE COMING UP ON BLOOMBERG. SCARLET: AI VIDEO AND IMAGE GENERATION PLATFORM HEGSFIELD WITH A $5.4 MILLION POST IPO VALUATION. JOINING US LIVE IS THE CEO. WHAT IS YOUR COMPANY SPECIFICALLY ON WHAT PROBLEM DOES IT SOLVE FOR ITS USERS? ALEX: THANK YOU SO MUCH FOR HAVING ME ON THE SHOW. TODAY, IT'S THE LEADING VIDEO AI PLATFORM, WHICH DRAMATICALLY DEMOCRATIZE HIS THE COST OF VIDEO PRODUCTION BY LEVERAGING ALL THE VARIOUS MODELS OUT THERE AND BUILDING A PROPRIETARY LAYER AROUND THAT. THIS IS PARTICULARLY USEFUL IN THE SPACE OF SOCIAL MEDIA MARKETING WHERE MARKETERS HAVE TO PUSH A COUPLE HUNDRED PIECES OF CONTENT EVERY YEAR TO HELP THEIR BRAND STAY RELEVANT. SCARLET: WHY FOCUS ON ENTERPRISE CUSTOMERS RATHER THAN CONSUMERS? WHAT WAS THE THINKING BEHIND THAT? ALEX: THIS IS A REALLY EXCITING SPACE WHICH I HAVE BEEN WORKING FOR THE LAST SEVERAL YEARS PERSONALLY. WHAT I OBSERVED FOR MANY YEARS IS THAT SOMEHOW -- SOCIAL MEDIA HAS BECOME THE LARGEST MEDIA IN THE WORLD, BUT IN THE SAME TIME, THE TOOLING TO TELL STORIES IS REALLY LAX. IT IS ALMOST IMPOSSIBLE TODAY TO JUST KEEP UP WITH THE PACE OF SOCIAL MEDIA TRENDS USING PHYSICAL PRODUCTION, AND THAT IS WHERE PLATFORMS LIKE HIGGSFIELD COME INTO PLACE WHERE MARKETERS CAN MAKE COMMERCIALLY VIABLE ADVERTISEMENTS AND REALLY GO FROM MARKET RESEARCH THEN TO IDEA, THEN TO THE VIDEO GENERATION, THAN TO HYPER PERSONALIZATION, WHICH IS VERY IMPORTANT AS MARKETERS USE AI TO HYPER PERSONALIZED ARE MESSAGE, AND THEN THEY CAN USE CONNECTORS TO DO DISTRIBUTION ACROSS VARIOUS CHANNELS AS WELL. ISABELLE: YOU TALKED ABOUT THE DEMOCRATIZATION OF VIDEO CREATION, BUT AT WHAT POINT, DOES THE AI GENERATION DESTROY THE VALUE OF CONTENT CREATED, AND THEN IT GIVES YOU AN IMAGE. ALEX: WE ARE ACTUALLY SEEING OPPOSITE HEARING IN WE ARE NOT SEEING THE VALUE BEING DESTROYED. JUST GOING BACK INTO THE HISTORY OF INNOVATION. I BELIEVE ONCE WE OBSERVE THIS, THE PHOTOGRAPHY MARKET ACTUALLY BOOMS WITH IPHONE AND THERE'S MORE DEMAND FOR HIGH-QUALITY PHOTOGRAPHY NOW THAN EVER. SIMILARLY TO VIDEO I'D -- AI. IT'S AN INTERSECTION OF THREE IN ARMIS INDUSTRIES. ONE OF THEM BEING ADVERTISEMENTS . SECOND IS ENTERTAINMENT. THIRD ONE IS ECONOMY. ALL OF THESE ARE FUNDAMENTALLY BOTTLENECKED BY THE PACE AND THE COST OF VIDEO PRODUCTION. WE DO BELIZE -- BELIEVE THAT SOME OF THESE CONSTRAINTS ARE BEING REMOVED, WE ARE GOING TO SEE AN INFLUX OF HYPER PERSONALIZED, HIGHER QUALITY CONTENT. SCARLET: YOU ARE AT A $700 MILLION ANNUALIZED REVENUE. HOW MUCH OF THAT IS RECURRING? HOW MUCH OF THAT USAGE COULD DISAPPEAR IF AI MAKES CONTENT PRODUCTION CHEAPER? ALEX: SO OUT OF $700 MILLION RUN RATES, WE HAVE OVER 700,000 USERS PER YEAR. WHAT'S IMPORTANT IS THAT PREDOMINANTLY OVER 70% OF THE REVENUE IS SUBSCRIPTION-BASED AND THE REST IS USAGE-BASED. VERY OFTEN WE ARE SEEING BUSINESSES SEEING HIGH ROI AND THEY KEEP GENERATING MORE AND MORE PER MONTH. NOT JUST PER YEAR. THEN THEY BUY UP MORE CREDITS. SCARLET: I WOULD LIKE TO HEAR MORE ABOUT THE FUNDRAISING ENVIRONMENT RIGHT NOW. INVESTORS ARE BULLISH ON AI. THERE ARE QUESTIONS ABOUT WHETHER WE ARE GETTING NEAR BUBBLE TERRITORY. DID YOU FIND IT EASIER TO RAISE MONEY IN YOUR SERIES? WAS IT EASIER TO SELL IN SERIES B THEN SERIES A? ALEX: THERE'S DEFINITELY AN INTERESTING THING THERE. WE DEFINITELY CAN SEE LOSS OF GROWTH FANS ARE LOOKING FOR OPENAI AND ANTHROPIC AND THEIR POTENTIAL UPCOMING IPO'S. IT'S NOT A SPECULATIVE BET. OUR FUNDAMENTALS ACTUALLY BACK UP THIS. LOOKING AT THE GROWTH, WE GREW MORE THAN 40 TIMES YEAR-OVER-YEAR, CROSSING $700 MILLION RUN RATES WITHOUT BURNING ANY MARKET. WE ARE CASH FLOW BREAKEVEN. WE ALSO GO AFTER THESE BIGGER OPPORTUNITIES IN THE VIDEO MARKETS WHICH OTHER COMPANIES ARE LEADING ON. THAT'S WHY WE BELIEVE THERE'S A GREAT OPPORTUNITY FOR US TO ACTUALLY KEEP GROWING WITH THE SAME BASE AND A TRACKING MORE CAPITAL DOWN THE LINE. SCARLET: YOU ARE MOVING INTO HOLLYWOOD AND ENTERTAINMENT. IS AI GENERATION GOING TO PLACE -- REPLACE SET PRODUCTION? OR ARE WE STILL OVERSELLING IT A LITTLE BIT? ALEX: I DEFINITELY AGREE WITH YOU. THE GENERAL PERCEPTION OF VIDEO AI IS THAT SOMEONE CAN JUST CLICK ONE BUTTON AND GET A MOVIE. BUT IT DOESN'T WORK THAT WAY. WHEN WE DO IT, WE NEED TO MAKE SURE THAT WE BUILD SHOWCASES OF THE TECHNOLOGY. WE SHOW WHAT'S POSSIBLE. WE EMPOWER UNDERLYING ECONOMICS. WE CAN LOOK DEEPER AT WHAT'S POSSIBLE. WITH THIS SPECIFIC SEGMENT. THE TEAM OF 40 PEOPLE WAS WORKING FOR MORE THAN FOUR WEEKS . THE COST OF GENERATED WAS OVER $2 MILLION. THE SUCCESS RATE TODAY WITH AI IS MAYBE ONE OUT OF 80. MEANING THAT HUMAN INTENTIONALITY AND CREATIVE VISION ARE MORE IMPORTANT THAN EVER. SCARLET: FASCINATING DEVELOPMENTS. THANK YOU SO MUCH FOR JOINING US. THANK YOU FOR JOINING US. COMING UP, HOME DEPOT'S EARNINGS BEAT FOR HOUSING MARKET SIGNALS. WHAT THE RESULTS TELL US ABOUT CONSUMER SPENDING AND THE PRESSURED HOUSING MARKET, WHEN WE RETURN. THIS IS THE CLOSE ON BLOOMBERG. SCARLET: TIME NOW FOR OUR TOP CALLS. FIRST UP IS BATH AND BODY WORKS. CITY SAYS THE STRATEGY IS WORKING, BOOSTING THE STOCK TO BUY FROM NEUTRAL ON A BLEND OF TAILWINDS. CITING ATTRACTIVE RISK REWARD AFTER AN EARNINGS WEEK WITH SOLID PRODUCT LAUNCHES. THE STOCK UP 7%. NEXT UP IS DUOLINGO. THE LANGUAGE LEARNING COMPANY IS AT A TURNING POINT, BOOSTING ITS RATING TO FIVE FROM NEUTRAL. EXPECTING A LONG RUNWAY AS DAILY USERS ACCELERATE WITH THE PRICE TARGET NOW AT 160 OVER 130. THE STOCK UP MORE THAN 8%. NORWEGIAN CRUISE WARNING OF TROUBLED WATERS AHEAD, CUTTING THE STOCK TO NEUTRAL, LOWERING ITS PRICE TARGET TO 17 FROM $22. CITING RISK OF A POTENTIAL FUNDING GAP OVER THE NEXT 82 MONTHS BUT WOULD STILL BELIEVES IN THE TURNAROUND IN THE LONGER TERM. THOSE ARE SOME OF OUR TOP CALLS. ANOTHER STOCK WERE WATCHING HIS HOME DEPOT AFTER TODAY'S EARNINGS BEAT. JOINING US NOW IS THE MANAGING DIRECTOR IN SENIOR ANALYST AT OPPENHEIMER. YOU POINT OUT THAT THE SALES GROWTH IS BETTER BUT IT IS STILL LESS THAN INSPIRING. IS HOME DEPOT HELD HOSTAGE TO THE FATE OF THE HOUSING MARKET? >> GOOD AFTERNOON. I THINK YOU SAID THAT PERFECTLY. WHAT I HAVE SET FOR A WHILE, HOME DEPOT IS MANAGING WELL. WE SAW THAT IN TODAY'S RESULTS. THE COMPANY IS MANAGING WELL. I KEEP SAYING, I WROTE MY ROAST -- MOST RECENT COMMENTARY, I AM HARD-PRESSED TO SEE THEM GETTING BACK TO THE GROWTH ALGORITHMS UNTIL THE HOUSING MARKET IN THE UNITED STATES REVITALIZES OR IMPROVES. AT THIS POINT, HOME DEPOT IS VERY MUCH HOSTAGE TO AN UNFAVORABLE HOUSING BACKDROP. SCARLET: I'M GOING TO PLAGIARIZE . IF YOU STRIP OFF THE FREE FUND, DOES THE QUARTER LOOK WORSE THAN THE HEADLINE SUGGESTS? >> ABSOLUTELY. I WANT TO MAKE SURE I SAY THIS CAREFULLY. THIS IS A WELL-RUN COMPANY. ONE OF THE NUANCES, I DON'T THINK THE MARKET IS PICKING UP ON IT. YOU HAD A RATHER SUBSTANTIAL TARIFF REFINE THAT OCCURRED IN THE SECOND QUARTER. MY ASSOCIATES AND I ISSUED A REACTION COMMENT. YOU ARE PROBABLY LOOKING AT THAT. IF YOU TAKE THAT OUT, THE QUARTER WAS WEAKER. YOU SAW WEAKER MARGINS THAN YOU WOULD'VE SEEN, WEAKER EARNINGS. WHAT'S INTERESTING ABOUT THIS, THE WAY HOME DEPOT POSITIONED IT IS THAT YOU HAVE THIS TARIFF REFUND AND THAT OFFSET HIGHER OPERATING COSTS, MOSTLY FUEL. AGAIN, A LOT OF MOVING PIECES. WHAT ESSENTIALLY WOULD'VE HAPPENED HAD THEY NOT HAD THE TARIFF REFI, YOU WOULD HAVE LIKELY SEEN AN EARNINGS MISS ON HIGHER FUEL COSTS. SCARLET: WE KNOW THAT HOME DEPOT HAS BEEN PUTTING A LOT OF WEIGHT BEHIND PROFESSIONAL CONTRACTOR BUSINESS, TARGETING THAT SEGMENT. IS THERE MORE TO BE MINDED THERE? CAN THEY DO MORE IN THAT LINE OF WORK OR DO THEY NEED TO WAIT FOR THE DIF -- TI WAY HOME OR TO PICK THINGS UP? >> IT'S A GOOD QUESTION. I THINK THERE'S A LOT OF MARKET SHARE. THERE'S A LOT OF MARKET SHARE. PROFESSIONAL MARKET FOR HOME DEPOT. I WOULDN'T MAKE THE SAME COMMENT FOR LOWS. WHAT YOU'VE SEEN HOME DEPOT DO IS ON THE ONE HAND, THEY HAVE VERY GOOD AT SERVING SMALLER PROFESSIONALS WITHIN THEIR STORES. MORE RECENTLY THEY MADE THESE PROFESSIONALLY MINDED ACQUISITIONS. THAT'S HELPING THEM FURTHER PENETRATE THE RESTAURANT MARKET. THERE'S A LOT OF MARKET SHARE APPEARING AT THAT WILL BE AN ONGOING STORY FOR HOME DEPOT. GOING BACK INTO MY PRIOR COMMENTARY. WHAT WOULD BE A SIGNIFICANT CATALYST IS IF THE U.S. HOUSING MARKET PICKS UP. YOU WILL SEE HOME DEPOT BEING IN A MUCH BETTER POSITION TO CAPTURE MORE AGGRESSIVELY MARKET SHARE WITHIN THE MARKET. >> YOU PREFER LOWES. WHAT ARE THEY DOING THAT HOME DEPOT SIMPLY ISN'T? >> I DON'T KNOW IF IT'S A MATTER OF WHAT THEY ARE DOING. THE STOCK IS CHEAPER. THIS IS SOMETHING I'VE BEEN TALKING ABOUT FOR YEARS NOW. LOWES HAS BEEN IN A SIGNIFICANT TURNAROUND FOR THE LAST NINE YEARS. I THINK THAT REPOSITIONING HAS BEEN SUCCESSFUL. THE VALUATION GAP IS STILL TOO CHEAP RELATIVE TO HOME DEPOT. SCARLET: THANK YOU SO MUCH FOR JOINING US. WE WILL STICK WITH THE HOUSING MARKET BECAUSE COMING UP, ASSESSING THE PRESSURES ON THE HOUSING MARKET WITH FRANCIS KATZEN. HOW SHE'S NAVIGATING THE SLIDE IN PENDING HOME SALES. THIS IS THE CLOSE ON BLOOMBERG. SCARLET: IT'S JUST ABOUT 3:30 P.M. IN NEW YORK. THIS IS "COUNTDOWN TO THE CLOSE ." I AM SCARLET FU. ISABELLE: I AM ISABELLE LEE. SCARLET: WE GOT TO DATA POINTS ON HOUSING. THERE WAS HOUSING STARTS, AND MORE RELEVANT TO US IN NEW YORK BECAUSE MOST OF THE HOUSES ARE IN EXISTENCE, PENDING HOME SALES DOWN AGAIN, 2.3%. THE CONSENSUS ESTIMATE WAS NO CHANGE. ISABELLE: IT AGAIN HIGHLIGHTS THAT THIS MARKET IS PLAGUED BY HIGHER MORTGAGE RATES AND PRICES. I LOVE TALKING ABOUT THIS BECAUSE I AM A RENTER. WE JUST MOVED TWO WEEKS AGO. SCARLET: YOU FEEL VINDICATED THAT YOU DON'T BUY? ISABELLE: I FEEL LIKE FOR BOTH, IT IS JUST EXPENSIVE ALL OVER, UNLESS YOU ARE HANDED DOWN AN APARTMENT, WHICH IS GREAT. [LAUGHTER] I WOULD LOVE THAT. SCARLET: LET'S TALK ABOUT THE HOUSING MARKET NOW BECAUSE JOINING US IN STUDIO IS FRANCES KATZEN, A TOP BROKER AT DOUGLAS ELLIMAN IN NEW YORK CITY AND FOUNDER OF THE KATZEN TEAM. A LOT OF PEOPLE OBSERVED WE HAVE A K-SHAPED ECONOMY. IT FOLLOWS WE HAVE A K-SHAPED HOUSING MARKET AS WELL. WHAT DOES ACTIVITY LOOK LIKE AT THE TOP LEG OF THE K? FRANCES: IT'S A COUNTERINTUITIVE UPDATE TO GIVE YOU BECAUSE IN Q2 OF THIS YEAR, THE $10 MILLION TO $20 MILLION MARKET WAS UP 39% IN MANHATTAN, AND $3 MILLION TO $5 MILLION WAS UP 27%. ALTHOUGH WE ARE DOWN OVERALL, THERE IS AN UPTICK OF 15%. BUT THE PRICING IS WHAT IS MOST INTERESTING. IT'S THE STAYING, BECAUSE OF THE SUPPLY AND DEMAND ISSUE. NOT ENOUGH SUPPLY. SCARLET: SO AFFORDABILITY CONCERNS CONTINUE TO REIGN. ARE PEOPLE JUST STARTING OFF WITH A CERTAIN PRICE RANGE AND THAT HAVING TO -- FINDING THEMSELVES PRICED HIGHER AND HIGHER AS A RESULT OF THE LACK OF DEMAND --LACK OF SUPPLY? FRANCES: ABSOLUTELY. THE BIG ISSUE IS WE ARE DEALING WITH AFFORDABILITY, COMPOUNDED BY MORTGAGE RATES. 30-YEAR IS UP 6.7% AND CLIMBING, WHICH MEANS THOSE BUYERS ARE SIDELINED. THE EQUITY-RICH WEALTH ARE ABLE TO PULL IT, BUT THEY ARE ABOUT SCARCITY, FORENSICALLY ANALYZED TO MAKE SENSE FOR THEM. ISABELLE: I LOVE TALKING ABOUT THIS BECAUSE IT SEEMS THE DIVERGENCE IS GETTING BIGGER AND BIGGER, ESPECIALLY IN THE HOUSING MARKET. YOU TALK ABOUT THE 5 MILLION NUMBER BECOMING THE MAGIC NUMBER. WHY 5 MILLION? ARE BUYERS NEGOTIATING WITHOUT THRESHOLD --FRANCES, I HAVE $5 MILLION AND THIS IS WHAT I WANT TO SPEND? FRANCES: BUYERS HOPE THEY ARE NOT OVERPAYING. THAT NUMBER IS SOMEWHAT A CLIFF NOTE. I THINK THERE ARE DEVIATIONS OF THAT AND ABOVE THAT. I THINK THAT IS THE SWEET SPOT IF THEY ARE AT 8 AND OVERPRICED IF THEY ARE AT 3. ISABELLE: ARE CLIENTS REALLY WILLING TO LEAVE NEW YORK OVER TAXES, OR DO YOU THINK THE CITY REMAINS TOO ATTRACTIVE, LIKE NEW YORK OR NOWHERE, MAYBE? FRANCES: I THINK NEW YORK HAS A GRAVITATIONAL PULL. I DON'T THINK PEOPLE ARE LEAVING BECAUSE OF ONE TAX. THE MORE CONSISTENT CONCERNED IS CONSISTENCY AND ACCURACY AS IT RELATES TO WHAT IS BEING ROLLED OUT. I THINK LONG-TERM LEGACY IS TRYING TO FORMULATE APPROPRIATELY WHAT THAT NUMBER LOOKS LIKE LONG-TERM. THIS IS NOT A ONE-TIME HIT. SCARLET: I FEEL LIKE 10 TO 15 YEARS AGO FOREIGN BUYERS WERE HUGE SOURCES OF DEMAND. AS THAT DISAPPEARED BECAUSE OF IMMIGRATION RESTRICTIONS? WHO HAS REPLACED THIS GROUP OF BUYERS? FRANCES: IT HASN'T SLOWED, BUT THERE ARE STILL PLENTY OF-- HAS SLOWED, BUT THERE ARE STILL PLENTY OF MO PEOPLE TRYING TO GET MONEY OUT OF RESPECTIVE COUNTRIES, AND IT IS LEGALLY ONE OF THE SAFER BETS IN TERMS OF DEPLOYING CASH INTO AN ECONOMY. SCARLET: WHEN THEY DO BUY HOMES IN NEW YORK, IT IS OFTEN A SECOND HOME. WE KNOW THERE IS HUGE UNCERTAINTY OVER THE PIED-A-TERRE TAX. IS EVERYONE JUST LISTING PROPERTIES AT $4.99 MILLION NOW? FRANCES: NO, AND THE PROBLEM WITH WHAT IS GOING ON IS THERE ARE ONE TO THREE FAMILY DWELLING, WHICH MEANS THAT THERE IS A PIED-A-TERRE TAX FOR LESS THAN $5 MILLION. THAT ROLLOUT WAS BASED ON LAND VALUE. THE ROLLOUT FOR NUMBERS WAS SUPPOSED TO GO OUT NEXT YEAR IN 2028, AND IT DIDN'T. IT WENT WAY PAST THE PEOPLE THAT WERE SUPPOSED TO RECEIVE THOSE NOTICES. ISABELLE: WHAT WOULD MAKE YOU GENUINELY BEARISH OVER NEW YORK IN THE COMING YEARS? HIGHER TAXES, HIGHER RATES? OR NEVER, MAYBE? FRANCES: IT IS PROBABLY GOING TO BE A COMBINATION OF BOTH ULTIMATELY. ISABELLE: AND WHEN YOU TALK TO YOUR CLIENTS, YOU SAID THE UPPER END OF THE DEMAND IS ACTUALLY GROWING WHAT ABOUT THE LOWER END? FRANCES: I THINK THEY ARE TRYING TO GET IN BECAUSE WHEN THERE IS UNCERTAINTY, THERE IS OPPORTUNITY. THEY ARE BUYING AGAINST THE GRAIN. THE ISSUE WILL BE HOW FAR CAN THEY EXTEND THEMSELVES GIVEN THE WAY IT IS NOT IN THEIR FAVOR. SCARLET: YOU MENTIONEDSCARLET: THE 30-YEAR FIXED-RATE MORTGAGE. EVERYONE FIXATES ON THAT NUMBER BECAUSE IT IS THE MOST COMMON MORTGAGE. I WONDER IF PEOPLE ARE TAKING ON ADJUSTABLE-RATE MORTGAGES IN THE HOPE THAT RATES WILL COME DOWN AND THEY CAN REFINANCE. HAS THAT PICKED UP STEAM? FRANCES: ABSOLUTELY. ALL OF THAT IS PLAYING INTO HOW TO GET IT DOWN AND EVEN BUY DOWN THE RATE. SCARLET: BUT THAT IS COSTLY IN THE END. HOW ABOUT ALL-CASH TRANSACTIONS? THAT IS A STAPLE OF THE NEW YORK HOUSING MARKET. FRANCES: ABSOLUTELY. 60% OF OUR MARKET LAST YEAR WAS PREDICATED ON CASH DEALS. ISABELLE: WHEN YOU TALK TO YOUR CLIENTS, WHAT ARE THEY LOOKING FOR IN TERMS OF HOUSING? IN NEW YORK, INVENTORY IS EVER SO LOW. THIS IS PART OF THE REASON I MOVED TO BROOKLYN. WHERE ARE THEY LOOKING? FRANCES: NEIGHBORHOODWISE? I THINK IT IS LIKE BUYING A STOCK NOW. THEY ARE LOOKING FOR THE MOST HIGHLY PERFORMING MARKETS, ONES THAT HAVE A VIEW, LOCATIONALLY DESIRABLE SUCH AS CENTRAL PARK WEST, 5TH AVENUE, WEST VILLAGE, TRIBECA, ALL THE MAIN HITS. SCARLET: THOSE ARE BLUE-CHIP AREAS, THOUGH. WHAT ARE THE GROWTH AREAS? FRANCES: THE GROWTH AREAS ARE STILL BROOKLYN, PARTS OF IT, AND I THINK CHELSEA IS HOLDING ITS OWN. FINANCIAL DISTRICT. TURTLE BAY HAS BECOME THE NEXT COOL LOCATION ACROSS FROM GRAMERCY. ISABELLE: GRAMERCY -- DO LOVE GRAMERCY. WE MUST HAVE A KEY TO THAT. [LAUGHTER] WHEN YOUR CLIENTS COME TO YOU, CAN YOU TALK TO US ABOUT THEIR COMPETITION? ARE THE MOST--COMPOSI TION? SCARLET MENTIONED WE HAD A HUGE DELUSION OF INTERNATIONAL BUYERS. WHAT ARE THEY LIKE NOW? FRANCES: PEOPLE WHO HAVE TO BE IN NEW YORK ARE GOING TO STAY IN NEW YORK. JUST LIKE FOOD, SHELTER IS A BIG PART OF THAT. GROWTH, YOU HAVE GROWING NEEDS. THE END USER OF PEOPLE WORKING HERE PRIMARILY, WHO NEED TO BE HERE, AND THESE BUYS ARE TECH, FINANCE, AND BE NESTERS, ALTHOUGH WE DON'T--EMPTY NESTERS, ALL THE WAY DOWN TO THE ENTRY MARKET, WHO ARE DONE RENTING, HELLO. SCARLET: HOW MUCH IS BOOMERS BUYING ON BEHALF OF THEIR KIDS WHO JUST GRADUATED FROM COLLEGE AND ARE GETTING SETTLED IN A CITY? FRANCES: THERE IS A LOT OF THAT. THEY HAVE TO OFFSET THE FACT THAT THEY CANNOT COME UP WITH A DOWN PAYMENT. THAT HAS BECOME A HUGE DRIVER. THAT IS A HUGE CHUNK OF PURCHASE POWER, PARENTS BUYING FOR CHILDREN. SCARLET: I'M SURE CASH COMES INTO THE EQUATION AS WELL. FRANCES, REALLY APPRECIATE IT, GIVING US A SNAPSHOT OF THE HOUSING MARKET PARTICULARLY IN NEW YORK. FRANCES KATZEN IS AT DOUGLAS ELLIMAN IN A NEW YORK. ISABELLE: TRADING AT A 50% DISCOUNT, AN OVERBLOWN AI FEAR? THANK OF AMERICA MADE THE CASE-- BANK OF AMERICA MADE THE CASE AND WE WILL UNPACK IT. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ ISABELLE: OUR STOCK OF THE HOUR IS NVIDIA. BANK OF AMERICA SAYS IT SHARES COULD BE TRADING AT A DISCOUNT OF AS MUCH AS 15%. OVERBLOWN AI FEARS ARE THE PRIMARY CAUSE OF THE PRESSURE, THE FIRM SAYS, AS NVIDIA JOINED A BROADER CHIP SLIDE IN TODAY'S TRADE. JOINING US IS NORMAL AND --NORAH MULINDA. THIS WAS SURPRISING. TALK TO US ABOUT THE RATIONAL AND WHAT THEY ARE ARGUING. NORAH: THEIR PRICE TARGET IS $350. THE STOCK IS TRADING AT $219. THERE IS CONCERN BY INVESTORS ABOUT CIRCULAR FINANCING, WHICH WE TALKED ABOUT IN THE AI SPACE. INVESTORS ARE QUESTIONING WOULD ALL OF THESE CUSTOMERS BE BUYING NVIDIA CHIPS AT THE MAGNITUDE THEY ARE IS NVIDIA WASN'T HELPING TO FINANCE THE BROADER ECOSYSTEM. THEY WANT TO KNOW IS THIS INDEPENDENT DEMAND OR IS NVIDIA PUTTING THE MONEY IN DIFFERENT PLACES AND THAT IS PROPPING THE COMPANY UP. BANK OF AMERICA IS SAYING RELAX, GUYS, THAT'S NOT THE CASE. THEY SAY THE DEMAND FOR AI COMPUTE IS INSATIABLE AND SHE VIEWS ARE SCARCE AND VALUABLE, AND ESSENTIALLY-- GPUS ARE SCARCE AND VALUABLE AND ESSENTIALLY INVESTORS MAY BE SEEING A STOCK THAT IS AT A DISCOUNT. SCARLET: THE PREMISE IS ALWAYS THE DEMAND FOR THESE CHIPS AND COMPUTE IS INSATIABLE. BUT WHAT HAPPENS IF THE AI BOOM SLOWS DOWN? NORAH: THAT IS THE QUESTION A LOT OF INVESTORS ARE GRAPPLING WITH BECAUSE IF YOU THINK OF AI DEMAND SLOWING DOWN, THAT WOULD NOT ONLY, ONE, IMPACT THE CHIPS FROM NVIDIA AND THEIR REVENUE SOURCE, BUT SECONDLY, IF THEY ARE PUTTING ALL OF THEIR MONEY INTO THESE INVESTMENTS AND COMPANIES IN THE AI SPACE AND THOSE DRY UP AS WELL, WHAT DOES THAT MEAN FOR NVIDIA IN THE LONG-TERM IF THERE POTENTIALLY, AS SOME INVESTORS ARE ASSUMING, RELYING ON THESE COMPANIES TO GENERATE REVENUE AND DEMAND FOR THE CHIPS THAT THEY THEMSELVES ARE MAKING? ISABELLE: TALK TO US A LITTLE BIT MORE ABOUT THAT. DID THEY DISCUSS THE CIRCULARITY OF THE FINANCING? EVERYONE IS WORRIED ABOUT -- IT IS LIKE ONE FLYWHEEL OF ECOSYSTEM. NORAH: AND THAT IS WHY A LOT OF INVESTORS ARE CONCERNED IF YOU THINK ABOUT THE TECH BOOM MORE BROADLY AND YOU SEE THE RUN-UP IN ANY ARTIFICIAL INTELLIGENCE STOCKS, AS TO WHETHER OR NOT THESE COMPANIES ARE INTERLINKED AND GETTING COZY WITH ONE ANOTHER, AND IF WE WERE TO SEE ONE OF THEM STRUGGLE, WHAT DOES THAT MEAN AS TO WHETHER OR NOT THEY WILL SEE SOME SORT OF RIPPLE EFFECT THROUGH THE ENTIRE INDUSTRY? YOU SEE A BIT OF A DIVERSIFIED VIEW ON WALL STREET. BANK OF AMERICA IS INTO THE COMPANY WITH THE HIGHEST PRICE TARGET ON THE STOCK. ONE SAYING THEY SHOULD BE AT $500 -- AGAIN, IT IS AT $219. WE SEE 96% OF THE STREET SAYING BUY THE STOCK. SCARLET: ANOTHER ARGUMENT BANK OF AMERICA MAKES AS IT WANTS NVIDIA TO BUY BACK MORE OF ITS OWN SHARES. NVIDIA HAS ATTENTIVE CASH, $13 MILLION AS OF THE RECENT QUARTER. WE WILL GET AN UPDATED NEVER, BUT PLENTY OF CASH--UPDATED NUMBER, BUT PLENTY OF CASH, FREE CASH FLOW FROM ALL DIRECTIONS. NORAH: AND WITHOUT THOUGHT OF BUYING BACK YOUR OWN STOCK, BANK OF AMERICA IS SAYING WE WANT YOU ALL TO ESSENTIALLY YOU NOT ONLY HAVE ENOUGH CASH ON HAND TO PUSH AHEAD ANY SORT OF INTEREST THAT YOU HAVE GOING BUT ALSO FINANCE THESE AI INVESTMENTS AND STILL HAVE ENOUGH MONEY TO RETURN TO SHAREHOLDERS. THAT'S ESSENTIALLY BANK OF AMERICA'S ARGUMENT. THEY THINK THAT THEY SHOULD CONTINUE BUYING BACK SOME STOCK TO IMPRESS TRADERS. ISABELLE: BANK OF AMERICA ESTIMATES THAT THEY HAVE COMMITTED TO PROVIDE $300 BILLION FOR CAPITAL FOR ITS ECOSYSTEM PROGRAM. TALK TO US ABOUT HOW POLARIZING -- YOU HAD A GOOD WORD EARLIER. HOW DIVERSIFIED THE VIEWS ARE WHEN IT COMES TO NVIDIA. EITHER YOU THINK IT IS SO EXPENSIVE OR YOU THINK THAT IT'S GOOD VALUE. NORAH: I WOULD POINT TOWARD WALL STREET. IF YOU TAKE A LOOK AT THE PAGE ON THE TERMINAL, YOU SEE 78 ANALYSTS ARE SAYING TO BUY. 96%. ONLY 1.2% ARE SAYING CELL. AS I MENTIONED, THE MAJORITY, 95% SAYING THAT THIS IS A STOCK THAT YOU NEED TO BUY. SCARLET: THANK YOU SO MUCH. THE CALL ON NVIDIA FROM BANK OF AMERICA. COMING UP, WE TAKE YOU TO THE CLOSING BELL WITH THE CHIEF RESEARCH STRATEGIST AT ALPHA SIMPLEX GROUP. THIS IS THE CLOSE ON BLOOMBERG. ♪ ISABELLE: 10 MINUTES AWAY FROM THE CLOSING BELL. WHAT WE SEE TODAY IS SIMILAR TO YESTERDAY IN THAT CHIPMAKERS ARE AT THE CENTER OF EVERYTHING EXCEPT TODAY THEY ARE DOWN QUITE A BIT AND THAT IS DRAGGING THE BROADER MARKETS LOWER. ISABELLE: WHAT'S REALLY AT THE CENTER OF THE MARKET DISCUSSION IS THE MOVEMENT IN THE BOND MARKET. IT IS DEFINITELY SOMETHING TO BE CLOSELY LOOKING OUT FOR APPEARING AT THE MOVE IN THE YIELD CURVE AFFECTS RISK ASSETS. SCARLET: OIL PRICES REMAIN ELEVATED. WTI AT $85 EVEN. NO REAL PROGRESS ON THE WAR IN IRAN. I DON'T KNOW THAT MANY PEOPLE ARE EXPECTING ANY KIND OF BREAKTHROUGHS ANYTIME SOON. ISABELLE: OIL AROUND $85 PER BARREL. IT SEEMS LIKE IT'S A DEADLOCK AT THIS POINT. DEVELOPMENTS REMAIN TO BE SEEN. SCARLET: ALWAYS. LET'S WELCOME THE CHIEF RESEARCH STRATEGIST AT ALPHA SIMPLEX GROUP. THANK YOU FOR JOINING US TODAY. I WONDER HOW MUCH WE CAN READ INTO THE THIRD DAY OF LOSSES IN A THESE. MORE IMPORTANT LEAK, THE ELEVATED BOND YIELDS. ARE WE MARKING TIME UNTIL WE GET THE FED MINUTES TOMORROW AND THE BIG NVIDIA PRINT NEXT WEEK? >> THIS IS A GOOD QUESTION. WHAT'S BEEN INTERESTING TODAY IS YOU SAW A U-TURN IN THE BOND MARKETS. YIELDS WERE UP A BIT AND THEY ACTUALLY FOUND SOME GROUND AND PEOPLE STARTED BUYING. I THINK THERE'S CONTINUED CONCERN ABOUT THE POTENTIAL FOR HIGHER RATES, HIGHER OIL PRICES, MAYBE NOT EXTREME. BUT SO FAR, THE EQUITY MARKET HAS BEEN WILLING TO LOOK THROUGH THIS. COULD THAT KEEP GOING? I'M NOT SURE. WE ARE SEEING INDICATIONS THAT IT IS A LITTLE BIT CONCERNED. SCARLET: THAT DYNAMIC HAS HELPED DRIVE THE EQUITY MARKET TO THESE HIGHS AND CONTINUES TO SUPPORT EQUITY PRICES. WHAT CHANGES THAT? KATY: I THINK WHAT YOU REALIZE TODAY IS THAT TODAY'S MOVE IS DRIVEN BY AI CONCERN AND POTENTIAL INTEREST RATES, SUSCEPTIBILITY FOR STOCKS THAT HAVE LONG-TERM GROWTH POTENTIAL IF INTEREST RATES ARE HIGHER. IT AFFECTS THEM. I THINK WE'VE DEFINITELY SEEN THOSE NARRATIVES DESTROY. TODAY FEELS MORE LIKE AN AI SELLOFF. BUT AT SOME POINT, THESE NARRATIVES MIGHT CONVERGE WHICH COULD CAUSE MORE SELLING INEQUITIES AS THEY'VE OVERLOOKED GEOPOLITICAL RISK RECENTLY. ISABELLE: IS THIS A HEALTHIER MARKET OR DO YOU THINK INVESTORS ARE ROTATABLE THE SAME RISK AROUND? KATY: ROTATION IS A KEY POINT. AS YOU SEE HIGHER VALUATIONS, PEOPLE ARE GETTING NERVOUS. THEY ARE ROTATING. YOU HAVE SEEN NEW OPPORTUNITIES AND DIVERSIFICATION ACROSS MARKET LEADERSHIP. I THINK THAT DOES FEEL MORE HEALTHY. BUT IF YOU THINK ABOUT WHAT THAT MEANS, IT MEANS THAT INVESTORS ARE CONCERNED ABOUT POTENTIAL CONTINUED DOMINANCE IN THE AI THEME. I THINK WE HAVE TO TAKE THAT WITH A GRAIN OF SALT AS WELL. ISABELLE: AI IS STILL A DRIVING ENTHUSIASM. DO YOU THINK INVESTORS ARE UNDERPRICING THE AI RISK? THEY WILL BE VULNERABLE WHEN AI DISAPPOINTS US, ESPECIALLY NVIDIA NEXT WEEK. KATY: THIS IS A CASE WITH ANY SORT OF NEW TECHNOLOGY. ANY TIME IN HISTORY WHERE WE'VE HAD SOMETHING THAT REALLY IS A CHANGE OR, A MOVER IN MARKETS LIKE THE TECH BUBBLE, IT'S HARD TO UNDERSTAND THE TRUE VALUATION OF THESE TYPE OF INNOVATIONS. I THINK WE WILL BE CONCERNED ABOUT IT BUT WE MIGHT BE CONCERNED FOR VERY LONG TIME. THAT MEANS THAT BEING INVESTED IS STILL PROBABLY THE RIGHT THING TO DO UNTIL WE HAVE SOME MORE CONCRETE EVIDENCE OTHERWISE. SCARLET: FOR A WHILE IT SEEMED LIKE THE TAIL WAS WAGGING THE DOG. YOU WOULD HAVE DEVELOPMENT IN THE SOUTH KOREAN MARKET THAT WOULD DRIVE THE ACTION IN TECH STOCKS IN THE U.S.. THINGS HAVE REASSERTED THEMSELVES WITH THE U.S. OWNING THE NARRATIVE AGAIN. WHY DO YOU THINK THAT IS? THAT THE U.S. MARKET IS SO VULNERABLE TO WHAT'S HAPPENING IN SOUTH KOREA. KATY: THERE'S DIRECT LINKS BETWEEN MANY OF THESE COMPANIES WITH WHAT'S GOING ON IN THE U.S. AS WELL. SUCH A CONCENTRATED THEME. THAT'S HOW WE TEND TO THINK ABOUT IT. YOU HAVE A CONCENTRATED THEME THAT IS DIRECTLY LINKED. IT'S A LESS DIVERSIFIED TRADE. THAT'S WHY YOU SEE THE TRANSMISSION MECHANISM BEING MUCH STRONGER IN SUCH A CONCENTRATED THEME. ISABELLE: A LOT OF MARKETS CORRELATED WITH ONE ANOTHER. THAT HAPPENS IN THE BOND MARKET AS WELL. THE LONG BOND RISING. THAT'S ALSO HAPPENING IN JAPAN AND GERMANY. IS THAT CONCERNING FOR US TO SEE BOND YIELDS WRITING ACROSS THESE DIFFERENT YOUNGER FEES? KATY: I THINK IT'S ALWAYS CONCERNING TO MOST INVESTORS WHEN LONG BOND YIELDS RISE. IN GENERAL, IT'S USUALLY A DIRECT SIGNAL OF INFLATION UNCERTAINTY AND CONCERNS OVER THE IMPACT OF POTENTIAL FOR INFLATION ON BONDS. FOR ME, WHAT WE HAVE REALLY SEEN THIS YEAR, THIS IS WHERE YOU SHOULD NOTICE THIS. BONDS ARE NEGATIVELY CORRELATED WITH ENERGIES. SO YOU ARE SEEING A STRONGER LINK BETWEEN GEOPOLITICAL RISK AND BONDS AS OPPOSED TO THEIR RELATIONSHIP WITH GROWTH AND EQUITIES WHICH I THINK IS HOW WE TRADITIONALLY THINK ABOUT BONDS. BONDS ARE MORE SUSCEPTIBLE TO THOSE OPAQUE RISKS LIKE INFLATION. ISABELLE: WHAT'S THE FIRST TRADE YOU WOULD EXPECT TO UNWIND? KATY: THAT'S A GOOD QUESTION. I THINK IF THE 30 YEAR CONTINUES TO KEEP BREAKING OUT, YOU START TO SEE ANY SORT OF LONG-TERM GROWTH TYPE STOCKS BEING MORE VULNERABLE TO LONG-TERM CASH FLOWS. WHAT'S INTERESTING TO ME IS THAT YOU SAW THAT UPWARD MOVEMENT. TODAY, YOU SAW BUYING PRESSURE. LATER IN THE DAY. THAT SUGGEST THAT PEOPLE MIGHT BE THINKING, PERHAPS THE INFLATION CONCERN FOR -- COULD BE CONFLATED. WE MIGHT BE MORE WORRIED THAN WE NEED TO DO TO BE ABOUT LONG-TERM BOND YIELDS. THE FACT THAT YOU SEE BUYING PRESSURE IS A POSITIVE FOR LONG-TERM BONDS RIGHT NOW. ISABELLE: THE CURVE REPRICED MEANINGFULLY. DO YOU THINK THE BOND MARKET IS TELLING US THAT THE FED HAS BECOME TOO OPTIMISTIC WHEN IT COMES TO INFLATION? KATY: THAT'S A GOOD QUESTION. THINK ABOUT WHERE THE FED IS RIGHT NOW. A SITUATION WHERE INFLATION IS ABOVE TARGET. DATA HAS BEEN MIXED. THERE'S BEEN WEAKER GOLDILOCKS TYPE DATA IN TERMS OF WAGES AND OTHER THINGS LIKE RETAIL SALES LAST WEEK. THE PICTURE IS VERY MIXED. TO BE HONEST, BONDS HAVEN'T MOVED THAT MUCH. WE ARE WAITING TO SEE SOME SORT OF CATALYST TO UNDERSTAND IF IT GOES IN EITHER DIRECTION. ARE THEY OPTIMISTIC? I WOULD HOPE SO. I DO THINK YOU HAVE SEEN INFLATION NUMBERS COMING DOWN. BUT AS WE KNOW, ALL WE NEED IS ANOTHER SURPRISE IN TERMS OF COMMODITY PRICES TO CAUSE MORE CONCERN AGAIN. SCARLET: ABSOLUTELY. THEY COULD COME FROM ANY DIRECTION. THANK YOU SO MUCH. CHIEF RESEARCH STRATEGIST AT OFFICER PLEX GROUP. ONE OF THOSE CATALYSTS IS THE FOMC MINUTES TOMORROW. ONLY BECAUSE KEVIN WARSH HAS BEEN A WILD CARD FOR INVESTORS. ISABELLE: HE HAS BEEN. I FEEL LIKE ANYTHING THAT INVESTORS CAN GET, THEY WILL GET. ANY CLUES, ANY SIGNALS. HE HAS SAID HE WILL BE TALKING LESS. SCARLET: TALKING LESS. HE PLANS TO REDUCE THE PRESS CONFERENCES. WE ARE MOVING CLOSER TO THE CLOSING BELL. FULL MARKET COVERAGE RIGHT HERE >> THE CLOSING BELL, BLOOMBERG'S CAR -- CROSS-PLATFORM COVERAGE STARTS RIGHT NOW. SCARLET: WE ARE ABOUT TWO MINUTES AWAY FROM THE END OF THE TRADING DAY ON THIS TUESDAY. SCARLET FU AND ISABELLE LEE HERE. HELPING US TAKE YOU THROUGH THE CLOSING BELL, WE HAVE A GLOBAL SIMULCAST WITH CAROL AND JIM IN FOR TIM STENOVEC BRINGING TOGETHER OUR AUDIENCES WORLDWIDE TO PARSE THROUGH THE MOST CRUCIAL MOMENTS OF THE TRADING DAY. IT FEELS VERY SIMILAR TO YESTERDAY WITH YIELDS ELEVATED, GRINDING HIGHER. EQUITIES THIS TIME DOWN ONCE AGAIN BUT SEMICONDUCTOR STOCKS HAVE TURNED AROUND. CAROL: YEAH. I MEAN, VERY MUCH SO. I FEEL LIKE ONCE AND I -- ONCE AGAIN, JOE AND I TALKED ABOUT THE LONG-TERM DEBT COSTS SOARING. IT IS NOT JUST A U.S. THING, IS A GLOBAL THING. JOE: IT IS A GLOBAL THING AND INESCAPABLE NO MATTER HOW MUCH YOU WANT TO AVOID AI. IT IS GOING TO FIND YOU AND THAT IS WHAT WE ARE SEEING IN TODAY'S TRADE FOR SURE. ISABELLE: ARE WE JUST MARKING TIME OR IS THE MARKET IN A HOLDING PATTERN? THERE ARE SO MANY UP-AND-COMING FROM NVIDIA EARNINGS TO THE FED MINUTES TOMORROW BUT SCARLET POINTED OUT THAT WE ARE NOT PUSHING THE PANIC BUTTON YET. DEFINITELY SOME TEA TO KEEP A CLOSE OUR EYE ON -- DEFINITELY SOMETHING TO KEEP A CLOSE EYE ON . SCARLET: NO SURPRISE THAT THE VOLUME HAS DROPPED OFF AS WELL. IT IS THE MIDDLE OF AUGUST. WE GOT A LATE LABOR DAY. THINGS ARE SLOWING DOWN AND WE ARE WAITING FOR A COUPLE DIFFERENT CATALYSTS BUT WE ARE NOT QUITE THERE YET. I GUESS THE NVIDIA RESULTS WOULD BE A BIG ONE. HERE YOU HAVE THE CLOSING BELL. YOU HAVE THE S&P 500 MOVING DOWN ABOUT THREE QUARTERS OF 1%. THE NASDAQ DOWN 1.3%, DRAGGED LOWER BY THE CHIPMAKERS. ISABELLE: IT IS SMALL CAPS AS WELL, SHOWING WEAKNESS WITH THE RUSSELL 2000 CLOSING LOWER BY 1.3%. CAROL: THAT IS A LOOK AT THE MAJOR EQUITY AVERAGES. THANK YOU. I WILL GO BACK TO THE S&P 500. IT IS A REMINDER NOT EVERYTHING WAS DOWN. ALMOST AN EVEN SPLIT. 226 NAMES IN THE S&P 500, HIGHER FOR THE TUESDAY TRADE. 273 TO THE DOWNSIDE. FOUR UNCHANGED. ISABELLE: I LIKE THE EVEN SPLIT. LET'S TAKE A LOOK AT THE IMAP. IT IS LOOKING A BIT MORE RED BECAUSE WE HAVE TECH LOSING BY MORE THAN 1%. CONSUMER STAPLES AND ENERGY TO NO SURPRISE IN THE GREEN BUT THE REST IN THE NEGATIVE TERRITORY. CAROL: LET'S GO TO SOME OF THE INDIVIDUAL GAINERS IF I MAY. A PHARMACEUTICAL COMPANY CAUGHT MY ATTENTION. CHAIRS CLIMBING A RECORD 53% INTRADAY. ACTUALLY, EVEN MORE. ALMOST 64% HERE AT THE CLOSE. QUITE A MOVE. THE TRUCK DEVELOPER -- THE DRUG DEVELOPER HAS A TREATMENT FOR PATIENTS WHO EXPERIENCE DANGEROUSLY LOW BLOOD SUGAR LEVELS FOLLOWING BARIATRIC SURGERY. KEEP IN MIND THE STOCK IS UP MORE THAN 160% YEAR-TO-DATE. 13% OF THE FLOAT IS SHORT BUT DEFINITELY A MAJOR BULLISH MOVE IN THE TUESDAY TRADE. LET'S GO TO EXXON MOBIL AND TARGA RESOURCES, THE NUMBER ONE GAINER IN THE S&P 500. THAT STOCK IS UP MORE THAN 7%. EXXON MOBIL UP ABOUT 2.6%. TARGA UP AFTER THE ENERGY COMPANY CITED NEW 20 YEAR FEE BASED INTEGRATED MIDSTREAM AGREEMENT WITH EXXON MOBIL SUBSIDIARIES COVERING GATHERING PROCESSING TRANSPORTATION AND FRACTIONATION ACROSS THE PERMIAN BASIN THROUGH 2046. TALK ABOUT SOME VISIBILITY ON A LONG-TERM CONTRACT. TARGET IS UP MORE THAN 60% YEAR-TO-DATE. EXXON MOBIL NOT TOO SHABBY. ENERGY NAMES CONTINUING TO OUTPERFORM THIS YEAR. THAT ONE IS UP 36% YEAR TO DATE. COURTESY OF TIM, NOT HERE THIS WEEK, JOE IN AND WE ARE HAPPY TO HAVE YOU HERE, BUT TIM LOVES DOING LINGO. SCARLET: SHOUT OUT TO TIM. CAROL: START RALLYING. AN ACCELERATION OF DAILY ACTIVE USER METRICS. THE STOCK CLOSED JUST BELOW $140 A SHARE SO LOOKING AT MORE THAN 20% UPSIDE, AT LEAST THAT FROM THE CLOSING PRICE BEFORE THIS CALL. YEAH, OUTPERFORMER. ALL YOURS. JOE: I HAVE DECLINERS. A COMPANY FELL MORE THAN 20% AFTER CUTTING INTERVIEW FOR THE YEAR AMID FOREIGN-EXCHANGE PRESSURES AND WEAKER CONSUMER SPENDING IN GERMANY, MARKING ONE OF KLARNA'S DECLINED SINCE GOING PUBLIC LAST YEAR. IT IS SEEKING A NEW CFO. THE CHIEF MARKETING OFFICER STEPPING DOWN AFTER NINE YEARS AT THE COMPANY. THE EXECUTIVE DEPARTURES ALONGSIDE THE LOWERED SECOND-HALF GUIDANCE ARE DRIVING MORE UNCERTAINTY AROUND THE OUTLOOK OF THE BUSINESS IN THE COMING QUARTERS FOR INVESTORS. ALSO LOOKING AT META SHARES WHICH FELL TUESDAY AS IT HEADS TO COURT FOR A LANDMARK SOCIAL MEDIA TRIAL. THIS START IS DOWN OVER THE LAST THREE TRADING SESSIONS AND HAS ERASED $100 BILLION IN MARKET VALUE. LISTEN, THE SHOWDOWN INVOLVES A COALITION OF STATE ATTORNEYS GENERAL CLAIMING THE COMPANY ENCOURAGED COMPULSIVE USE AMONG YOUNG USERS. AN ANALYST WROTE THIS TRIAL IS POTENTIALLY THE END OF SOCIAL MEDIA AS WE KNOW IT. SCARLET: WOW, THAT IS A BIG STATEMENT. JOE: THAT IS A BIG STATEMENT. WE WILL SEE. CATERPILLAR, ONE OF MY FAVORITES. I COVERED IT FOR A NUMBER OF YEARS. CAROL: YOU HAVE A SOFT SPOT FOR CATERPILLAR. JOE: I LOVE CONSTRUCTION AND MACHINERY. THE BLUE-CHIP COMPANY IS KNOWN FOR ITS ICONIC YELLOW DIGGERS AND BULLDOZERS. IT HAS ENJOYED UNPRECEDENTED GROWTH THE LAST TWO YEARS BECAUSE OF AI. COMPANIES GO AFTER BUILDING MORE DATA CENTERS AND PURCHASE CATERPILLAR'S POWER GENERATION EQUIPMENT. THE STOCK IS GETTING HIT TODAY WITH THE REST OF THE CHIPS. CATERPILLAR DOES NOT ALWAYS JUST TRADE AS A CONSTRUCTION COMPANY. SCARLET: IT IS AN AI ADJACENT TRADE AS WELL. LET'S TAKE A LOOK AT THE BOND MARKET BECAUSE THE FOCUS IS ON THE SELLOFF IN BONDS. IT IS HALTED FOR NOW. YIELDS ARE SLIGHTLY LOWER BUT ELEVATED. CERTAINLY LOOKING AT THE 30 YEAR YIELD. 5.28%, SITTING AT THE HIGHS SINCE 2007 BUT COMING ACROSS THE CURVE. CAROL: THERE IS THE KIRKLAND FOOD BRAND. THERE IS GAS. THERE IS ALL OF THESE GOOD THINGS. SCARLET: COSTCO VACATIONS. CAROL: I HAD NO IDEA THEY WERE DOING THIS. THERE IS SO MUCH STUFF THEY SELL. I HAVE NEVER BEEN IN A COSTCO. ISABELLE: MY GOSH, YOU AND ME. I HAVE NEVER BEEN TO ONE EITHER. CAROL: I AM DYING TO GO BUT THERE HAS NOT BEEN ONE NEARBY. I KNOW. I FEEL LIKE MY LIFE IS NOT FULFILLED AND COMPLETE UNTIL I GO INTO A COSTCO. HAVING SAID THAT, CHECK THIS OUT. ACCORDING TO THE WALL STREET JOURNAL, THEY ARE LOOKING TO GET INTO MEDICARE PLANS. SCARLET: COSTCO GETS INTO EVERYTHING. THEY WILL DO THIS WITH A LIMITED ROLLOUT OF MEDICARE PLANS IN A COUPLE OF STATES AND DO THIS IN SMALL DOSES, BUT IT GOES TO SHOW THAT COSTCO HAS THESE MEMBERS WHO PAID A MEMBERSHIP FEE AND ARE VERY LOYAL CUSTOMERS AND TRUST COSTCO TO TAKE CARE OF ALL OF THESE DIFFERENT SERVICES, NOT JUST BASICALLY CURATE THE PRODUCTS THEY BUY. JOE IS NODDING VIGOROUSLY. JOE: YES. I JUST WANT MY HOT DOG. OK? ISABELLE: CAROL AND I NEED TO GO ON A FIELD TRIP. SCARLET NEEDS TO TAKE US. MAYBE JOE KENT TAGALONG. I ASKED SCARLET, WHAT IS THE SIGNIFICANCE OF THIS? IT IS A BIG DEAL. WHEN THEY WERE SELLING GOLD BARS, THAT WAS BIG. SCARLET: THEY SELL DIAMOND EARRINGS, EVERYTHING. ISABELLE: I WOULD LOVE THAT. JOE: NO STONE LEFT UNTURNED WITH COSTCO. ISABELLE: MY SON. SCARLET: I AM ASKED -- ISA BELLE: NICE ONE. SCARLET: IT REALLY LIMITS WHAT IT SELLS IN ITS WAREHOUSES. YOU GO IN THERE AND THERE IS MAYBE THREE DIFFERENT KINDS OF SOAP AS OPPOSED TO FIVE DIFFERENT KINDS OR 15 DIFFERENT KINDS OF SOAP. ISABELLE: YOU ARE A GREAT AMBASSADOR. CAROL: YOU AND LISA MATEO, MAN. SHE TOO INTO HOTDOGS. MY FAMILY, MY SISTER OR SOMETHING, WHERE DID YOU GET THAT? THEY WOULD END UP BUYING IT FOR ME LIKE MY MULES. IS THAT CRAZY? THAT IS CRAZY. MY STANDING OF THE NEW MEDICAL PRODUCTS, THEY WILL NOT COME WITH A COSTCO MEMBERSHIP THROWN IN. NOT ALLOWED BY FEDERAL RULES. SCARLET: I SEE, OK. CAROL: STOCKING MEDICARE AND THERE ARE RULES. SCARLET AND JOE WILL TAKE US ON A ROAD TRIP. THEY ARE ALWAYS LIKE, LOOK WHAT I GOT. THAT IS A WRAP. WE CALL IT THE CLOSING BELL. ISABELLE AND SCARLET CONTINUING ON "THE CLOSE" ON BLOOMBERG TELEVISION AND JOE AND I CONTINUING ON "BLOOMBERG BUSINESSWEEK DAILY" ON RADIO. WE WILL SEE YOU SAME PLACE, SAME TIME TOMORROW. SCARLET: HOW SOARING TRADING VOLUMES ARE RESHAPING THE U.S. EQUITY MARKET LANDSCAPE AND RETAIL INVESTORS ARE FINDING OPPORTUNITY. WE WILL CATCH UP WITH STEVE QUIRK FROM ROBINHOOD. THIS IS "THE CLOSE" ON 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. 500, A THIRD STRAIGHT DAY OF LOSSES AFTER CLOSING AT A RECORD HIGH. WITHIN SPITTING DISTANCE OF 1700 BUT TODAY CHIP STOCKS DRAG THE S&P 500 LOWER. CHIP STOCKS ARE LOWER TODAY. ALL THREE MEMBERS OF THE FOOT OF SOME A CONNECTOR INDEX LOWER. ISABELLE: THAT IS A HUGE LOSS. I GUESS IT IS NORMAL FOR MARKETS TO TAKE A BREATHER BUT UNDER THE HOOD WE HAVE SOME STOCKS MOVING. DUOLINGO SHARES CLOSING TODAY HIGHER BY MORE THAN 7% AFTER AN UPGRADE OF THE STOCK TO A BUY CITING A TURNING POINT IN ITS ON THE RATION OF DAILY ACTIVE USER METRICS. I TALKED ABOUT MY TEAM LEADER. I GUESS IT IS PEOPLE LIKE HER WHO ARE HELPING THE STOCKS. SCARLET: USERS. ISABELLE:. YES. HOME DEPOT SHARES CLOSING LOWER. SECOND-QUARTER BEAT EARNINGS ESTIMATES. FINALLY, KLARNA DOWN BY MORE THAN 20% AFTER THE COMPANY SLASHED ITS FULL YEAR REVENUE AND GROSS MERCHANDISE NUMBERS. SCARLET: OUR NEXT GUEST SAYS TRADING VOLUMES HIT NEW HIGHS ACROSS MOST ASSET IN THE SECOND QUARTER. STEVE QUIRK IS THE CHIEF BROKERAGE OFFICER AT ROBINHOOD AND JOINS US NOW. I HIGHLIGHTED THE CHIP STARTS EARLIER BECAUSE THEY HAVE BEEN SWINGING SO MUCH LATELY AND HAD A BIG SWING IN JULY. A LOT OF PEOPLE WOULD CALL IT A RESET. THIS IS THE EPICENTER OF WHERE PEOPLE SEE OPPORTUNITY WHEN IT COMES TO THE AI TRADE. WHAT ARE YOU SEEING OR WHAT HAVE YOU SEEN ACROSS YOUR CUSTOMER DEPOSITS, ACROSS THE CUSTOMER BROKERAGE ACCOUNTS WHEN IT COMES TO JULY AND WHAT THE DATA INDICATES ABOUT THE LONGEVITY OF THIS MARKET RALLY? STEVE: I WOULD SAY IF WE LOOK AT IT ON A LONGER DURATION, SO OVER THE COURSE OF -- IF WE LOOK AT OUR VOLUMES IN Q2, THEY WERE UP PRETTY DRAMATICALLY ACROSS VIRTUALLY EVERY ASSET CLASS, SO EQUITIES WERE UP ALMOST 60%. OPTIONS WERE UP ABOUT 60%. EVENT CONTRACTS WERE UP 20 FOLD. BUT IF WE LOOK AT IT LIKE MORE RECENTLY, WE SAW SOMETHING VERY INTERESTING. THE AVERAGE AGE OF ROBINHOOD'S 28 MILLION CUSTOMERS IS EARLY 30'S SO THEY ARE AGGRESSIVE. THEY HAVE A LONG DURATION TO INVEST. WHEN THERE ARE MOVES LIKE WE SAW WITH THE TARIFFS, THEY STEP IN PRETTY AGGRESSIVELY. BUT WHAT WE SAW IN THE END OF JULY INTO AUGUST FOR TWO WEEKS, WHICH IS PRETTY RARE, WAS SELLING. SCARLET: REALLY? STEVE: IT IS ALMOST EVERY SINGLE WEEK OF THE YEAR. IT IS NOT A HUGE NUMBER OUT PACING THE SELLS, BUT IT WAS INTERESTING THAT WE SAW THAT BEHAVIOR. IT HAS RESUMED TO BUYING NOW AND VOLUMES ARE STILL HEALTHY. WHEN WE LOOKED AT WHAT THEY WERE BUYING AND SELLING, A LOT OF THESE STOCKS AS YOU SAID WERE NEARING HIGHS. WHAT HAPPENS IS THESE INDIVIDUAL RETAIL CUSTOMERS ARE ACTUALLY SORT OF PORTFOLIO MANAGERS FOR THEMSELVES AND THEIR FAMILIES. SO WHEN THEY SEE HEAVY APPRECIATION IN THESE NAMES, THEY ARE TAKING SOME OF THAT EXPOSURE OFF AND EITHER WAITING TO SEE IF THERE ARE OTHER OPPORTUNITIES OR ROLLING INTO THINGS THAT HAVE UNDERAPPRECIATED. SCARLET: SOUNDS LIKE THEY ARE REBALANCING. STEVE: THAT IS CORRECT, EXACTLY. SCARLET: YOU ALSO SENT AN ADMISSION STOCKS ARE AMONG THE MOST ACTIVELY TREATED NAMES. TALK TO US MORE ABOUT THAT. ARE THEY BUYING THE AI STORY ON THE WEAKNESS OR THE STRENGTH? THIS IS A FASCINATING POINT.YOU SAID MOST OF THE TRADERS ARE IN THEIR 30'S. STEVE: THEY ARE VERY YOUNG SO THEY HAVE A LONG INVESTMENT HORIZON. THEY CAN AFFORD TO BE MORE AGGRESSIVE THAN PEOPLE WHO ARE LATER IN THEIR INVESTMENT CAREER. WE SEE IT IN CATEGORIES BUT IT IS EVEN WITHIN THOSE IF I BOUGHT SOMETHING THAT'S APPRECIATED, NVIDIA AT A VERY GOOD CLIP, AFTER THE TARIFFS, I'M GOING TO ROLL OUT OF THAT. AND ROLL INTO SOMETHING WHICH IS UNDERAPPRECIATED. SO WE KIND OF WATCH THEIR BEHAVIORS. IS VERY HEALTHY, IT'S REALLY NICE TO SEE THAT THEY ARE DOING THAT BECAUSE YOU DON'T WANT TO SEE YOUR PORTFOLIO GET OVERLY CONCENTRATED BECAUSE IT'S SEEN TREMENDOUS GAINS AND HAVE 70% OF IT BE IN ONE NAME. SO THAT RULING I THINK IS HEALTHY IN GOOD BEHAVIOR. ISABELLE: WHAT ABOUT DEFENSE CONTRACTS, TALK TO US MORE ABOUT THAT. IS THAT THE DIVERSIFICATION METRIC THAT THEY ARE MOVING AWAY FROM THE TRADITIONAL PLAYBOOK AND HOW DO YOU COMPETE WITH THE OTHER BIG PLAYERS? STEVE: SO WE ARE A UNIQUE COMPANY IN THAT WE ARE A SCALE PLAYER ACROSS VIRTUALLY EVERY ASSET CLASS. WERE SCALE PLAYER IN CRYPTO, EQUITIES OPTIONS EVENT CONTRACTS. SO WE KIND OF A THAT WHOLE ECOSYSTEM, AND WHAT WE TEND TO SEE IS CUSTOMERS, WHEN WE HAVE CUSTOMERS COME IN WHO ARE BRAND-NEW TO INVESTING, 5-7 YEARS AGO MANY OF THE CUSTOMERS THAT WERE COMING INTO INVESTING CAME IN THROUGH CRYPTO. I DIDN'T COME THROUGH CRYPTO. TODAY THOSE PEOPLE HAVE A RETIREMENT ACCOUNT. THEY HAVE BANKING, CREDIT CARDS, ALL THE OTHER SERVICES WE PROVIDE, A YIELD ACCOUNT. TODAY WE SEE PEOPLE THAT COME IN FOR EVENT CONTRACTS, AND IN THE FIRST WEEK, 40% OF THEM GET INTO EQUITIES OR CRYPTO OR SOMETHING ELSE. SO FOR US IS PROVIDING THE DEPTH OF THE OFFERING AND THEN SAYING HOW CAN WE HELP THEM SEE EVERYTHING THAT'S OFFERED SO THEY CAN INVEST IN A SUITABLE MANNER THAT HOPEFULLY GIVES THEM A LONG INVESTING CAREER. SCARLET: ONE OF THE NAMES WE BEEN TALKING A LOT IS RISING INTEREST RATES. YOU'LL RATES OF THE HIGH SINCE 2007. DOESN'T HAVE ANY IMPACT ON HOW YOUR CUSTOMERS BEHAVE? HAVE YOU SEEN ANY KIND OF SPILLOVER? STEVE: THE ONLY THING I THINK THEY'VE BEEN FACTORING IN IS, THERE'S A TREMENDOUS AMOUNT OF DEBT THAT'S BEING TAKEN ON BY SOME ENTITIES AND COMPANIES TO BE ABLE TO FINANCE THE FUTURE OF AI. THAT'S GOING TO DIRECTLY IMPACT THEM. SO I THINK THAT'S WHERE THERE HAS BEEN SOME NERVOUSNESS, WHEN YOU LOOK AT CUSTOMERS BEHAVIORS, WITH RESPECT TO HOW CONFIDENT THEY ARE IN THAT COMPLEX GOING FORWARD BECAUSE NOW YOU ARE MAKING A DECISION ON SOMETHING THAT -- LOOK, THE BUILD OUT OF SOME OF THESE IS GOING TO BE MORE THAN 10 YEARS, SO THAT IS MATERIALLY IMPACTING THE COST OF THAT BUILDUP, WHEN THESE LONG BONDS GET TO THE RATES THAT WE'VE SEEN SINCE 2007. ISABELLE: YOU HAVE SIGNIFICANT NET DEPOSITS, OR NEW INVESTORS CONSOLIDATING THEIR ASSETS IN ROBINHOOD BECAUSE YOU SAID YOU'RE A SCALE PLAYER AND BASICALLY ALMOST EVERY MARKET FROM CRYPTO TO OPTIONS. STEVE: IT'S A COMBINATION OF MORE PEOPLE TRUSTING US WITH THEIR WEALTH. WHEN AVERAGE AGE IS WHAT IT IS, THEY ARE STARTING TO ACCUMULATE MORE WEALTH. THEY ARE IN THEIR PRIME EARNINGS. BUT THERE'S ALSO A LOT OF NEW CUSTOMERS THAT ARE COMING TO ROBINHOOD. WE TAKE CUSTOMERS FROM VIRTUALLY EVERYONE OF OUR COMPETITORS, EVERY MONTH. BECAUSE OUR BREATH OF OFFERING IS GETTING BROADER AND BROADER, AND WE AREN'T MYOPICALLY FOCUSED ON MAKING SURE THAT THE EXPERIENCE IS THE BEST IT CAN BE FOR EVERYBODY ACROSS ALL THOSE ASSET CLASSES. SCARLET: AS YOU LOOK OVER THE NUMBERS, WHETHER IT'S TRADING VOLUMES, NET SELLING AND BUYING, WHAT SURPRISES YOU THE MOST ABOUT WHAT WE'VE SEEN IN THE LAST COUPLE OF WEEKS? STEVE: THE THING THAT IS THAT, AND PART OF IT GETS BACK TO WHAT BROUGHT UP EARLIER, IS THE OPTIMISM OF A YOUNG INVESTOR. THINK ABOUT ALL THE THINGS THAT ARE GOING ON IN THE WORLD. GEOPOLITICAL RISKS, RATES, ALL CONS OF THINGS THAT COULD CAST A SPELL ON THE INVESTING ENVIRONMENT, BUT THE KIND OF LOOK THROUGH THEM AND SAY, LOOK, I GOT KIDS THAT NEED TO COLLEGE, GOT TO PUT THIS MONEY TO WORK SOMEWHERE. I WILL BE NIMBLE WITH IT, BUT IN THE LONG RUN I'M GOING TO HAVE TO CONTINUE TO INVEST, SO I LIKE THAT OPTIMISM. THEY ARE BRIGHT ABOUT THE WAY THEY DO IT, BECAUSE IN THE LONG RUN, IT'S A TOUGH GAME TO TRY AND JUMP IN AND OUT OF MARKETS. YOU HAVE TO BE RIGHT TWICE. I HAVE TO BE RIGHT WHEN I SELL, I HAVE TO BE RIGHT WHEN I'M BUYING. I LIKE THAT OPTIMISM AND PERSISTENCE. ISABELLE: THE OPTIMISM AND PERSISTENCE OF THE YOUTH. THANK YOU JOE FOR JOINING US ON THE SET. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: THE MULTIBILLION-DOLLAR WOMEN'S HEALTH MARKET IS MADE UP SEVERAL CATEGORIES THAT ARE OFTEN OVERLOOKED, INCLUDING MENOPAUSE. SOME ARE TRYING TO CHANGE THAT. MIDI JUST ACHIEVED DOUBLE-DIGIT PAGE AND GROWTH ON ITS PLATFORM. ALWAYS GOOD TO SPEAK WITH YOU. MIDI HEALTH FOCUSES ON MIDLIFE WOMEN WHICH OFTEN MEANS PROVIDING MENOPAUSE SOLUTIONS. TALK TO US ABOUT YOUR CARE MODEL AND WHY MENOPAUSE IS SOMETHING YOU CAN SOLVE VIRTUALLY BETTER THAN TRADITIONAL HEALTH CARE PROVIDERS. >> THE GREAT THING ABOUT MENOPAUSE IS IT'S NOT SOMETHING THAT REALLY REQUIRES IN-PERSON CARE. IT REALLY REQUIRES EXPERT TRAINING AND TECHNOLOGY TO GIVE ALL WOMEN ACCESS TO THE HIGHEST QUALITY PROTOCOLS THAT ARE DESIGNED AROUND WOMEN'S HEALTH. IT DOESN'T REQUIRE GOING TO AN IN PERSON DOCTOR. INSTEAD, IT REQUIRES REAL KNOWLEDGE AND EXPERTISE TO UNDERSTAND WOMEN'S BODIES SO IT'S ACTUALLY PERFECT FOR VIRTUAL CARE. SCARLET: HOW DO YOUR PROVIDERS DETERMINE WHAT IS APPROPRIATE AND PERHAPS NOT APPROPRIATE FOR VIRTUAL MENOPAUSE CARE? >> WE HAVE SPENT LAST YEARS BUILDING OUT VERY SPECIFIC -- SENSITIVE CARE PROTOCOLS ON ALL ASPECTS OF WOMEN'S HEALTH. WE HAVE SPENT A LOT OF TIME PUTTING THESE CARE PROTOCOLS AND USING AI TO SCALE THEM TO GIVE REALLY PERSONALIZED AI TRAINING MODELS ON MENOPAUSE. SO ALL THE WOMEN WHO COME TO US ARE BASICALLY GETTING NOT JUST THE EXPERTISE FROM THE PROVIDER THEY ARE SEEING BUT ALL THE EXPERTISE OF ALL THE CARE THAT WE'VE GIVEN TO HUNDREDS OF THOUSANDS OF WOMEN THAT WE HAVE ALREADY TREATED. SO WE HAVE THAT INFORMATION ON WHAT WORKS AND WHAT DOESN'T WORK AND WE ARE ABLE TO CUSTOMIZE AND PERSONALIZE ALL OF OUR CARE BASED ON THAT. ISABELLE: MIDLIFE WOMEN'S HEALTH CARE IS BECOMING SUCH BIG BUSINESS. WHAT CHANGED IN THE ECONOMICS OF THAT? >> PRIOR TO COVID, THIS COMPANY COULDN'T HAVE EXISTED. BEFORE THEN YOU WOULD'VE HAD TO GO TO A CONCIERGE DOCTOR AND PAY OUT-OF-POCKET TO GET THIS TYPE OF CARE. BECAUSE OF THE COVID LAW CHANGE, NOW WE CAN OFFER INSURANCE COVERED CARE USING TECHNOLOGY TO WOMEN ALL OVER THE COUNTRY. SO NOW WE ARE ABLE TO BASICALLY GIVE ALL WOMEN ACCESS TO THE TYPE OF CARE THAT YOU WOULD HISTORICALLY ONLY HAVE GOTTEN AT A CONCIERGE DOCTOR. ISABELLE: AND MUCH OF IT IS COVERED BY INSURANCE. IS THIS KEY TO MAKING IT WORK AT SCALE? >> I FEEL STRONGLY THAT ALL WOMEN DESERVE ACCESS TO THE CARE AND IT MUST BE COVERED BY INSURANCE. WE SPENT A LOT OF TIME TALKING TO INSURANCE COMPANIES EXPLAINING AND DEMONSTRATING TO THEM THAT TAKING CARE OF BUSINESS IS GOOD FOR THEM. IF WE CAN SAVE THEM MONEY, WE CAN GIVE WOMEN REALLY HIGH CARE AND IT SAVES THEM MONEY SO THEY ARE WILLING TO PAY FOR OUR COVERAGE. AND YES, THE INSURANCE IS KEY TO THIS. WE BELIEVE ALL WOMEN DESERVE ACCESS TO THIS AND IN ORDER TO DO THAT, YOU NEED INSURANCE COVERAGE. SCARLET: EMPLOYERS INCREASINGLY CLAIM MENOPAUSE CARE IS A RETENTION AND PRODUCTIVITY ISSUE. WHAT EVIDENCE IS THERE THAT THIS AFFECTS ABSENTEEISM, BENEFIT CLAIMS, OR ATTRITION? >> WE CAN SAVE SIGNIFICANT DOLLARS FOR EMPLOYERS WHEN THEIR EMPLOYEES ARE USING US, ANYWHERE FROM 15%-20% COST SAVINGS WE ARE ABLE TO DEMONSTRATE WITH THE PAYERS AND EMPLOYERS WHEN WOMEN GET APPROPRIATE CARE. IT SEEMS THE MONEY -- SAVES THEM MONEY IN ADDITION TO THE FACT THAT IT ENABLES THEIR EMPLOYEES TO THRIVE. SCARLET: I MENTION MENOPAUSE AS A STARTING POINT, BUT HOW DO YOU EXPAND BEYOND MENOPAUSE CARE? OR IS THAT A LARGE ENOUGH MARKET TO STAY FOCUSED ON AND CONTINUE PINNING YOUR GROWTH ON? >> MENOPAUSE IS A 20 YEAR JOURNEY. IT JUST MEANS YOUR HORMONES ARE FLUCTUATING. AS WOMEN'S HORMONES FLUCTUATE, IT CREATES A LOT OF ISSUES IN THEIR BODY. IT'S RELATED TO THYROID, MIGRAINE, ANXIETY, DEPRESSION. IT HAS A LOT OF IMPACT. IT'S NOT JUST THE HISTORICAL THOUGHT ABOUT MENOPAUSE BEING A HOT FLASH. IT IS FAR MORE THAN THAT. WHAT WE HAVE LEARNED IS THAT BY BECOMING EXPERT IN WOMEN'S HEALTH AND WOMEN'S HORMONAL HEALTH, WE ARE ABLE TO TAKE CARE OF A BROAD SPECTRUM OF WOMEN. TAKE CARE OF WOMEN AFTER THEY HAVE A BABY AND MAYBE THEIR HAIR IS FALLING OUT AND THEY ARE HAVING SOME ANXIETY AND THEY WANT TO LOSE WEIGHT. AND WE TAKE CARE OF THEM IN THEIR 40'S WHEN THEY HAVE OTHER ISSUES. AND WOMEN OVER 65. SO IT IS A BROAD SPECTRUM OF CARE THAT WE ARE PROVIDING. MENOPAUSE RELIGIOUS EQUALS HORMONE HEALTH. SCARLET: AND ONCE YOU START USING THOSE HORMONES AND BECOMES A LOT TIME OF USING THOSE HORMONES AS WELL SO THESE ARE LIFELONG CUSTOMERS. THANK YOU SO MUCH, CEO AND COFOUNDER OF MIDI HEALTH. THEY WERE UNICORN NOT SO LONG AGO. ISABELLE: AND THEY'RE REPORTING A HUGE JUMP IN THEIR GROWTH. I LIKE WHAT SHE SAID THAT EVERY WOMAN HAS NEEDS WHEN YOU REACH A CERTAIN AGE, AND ACCESS IS ALWAYS A BIG THING. SCARLET: ABSOLUTELY. COMING UP, A MARK CUBAN BACK ROBOTIC STEEL, THE CEO OF THAT COMPANY WILL JOIN US NEXT. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: A MARK CUBAN BACKED ROBOTICS STARTUP IS PLANNING TO GO PUBLIC THROUGH A BLANK CHECK VEHICLE IN A DEAL THAT WOULD VALUE IT AT $500 MILLION. THE PHILADELPHIA-BASED FIRM IS EXPECTED TO LIST ON THE NASDAQ STOCK MARKET. SAMUEL REEVES, THE CEO, JOINS US NOW. GREAT TO SEE YOU HERE. SAMUEL: GREAT TO SEE YOU. SCARLET: TELL US WHAT YOU WILL GO PUBLIC THROUGH A SPAC INSTEAD OF AN IPO. WHAT WAS THE THINKING BEHIND THAT? SAMUEL: THE BIGGER PICTURE IS ROBOTICS AND PHYSICAL AI ARE HITTING EVERY WORKSITE EVERYWHERE. I AM A CAREER ROBOTICS ENTREPRENEUR. I STARTED MY FIRST ROBOTICS COMPANY 20 YEARS AGO AND STARTED IT WITH THE IDEA ROBOTS COULD TRANSFER MY FOR HUMANS AND THAT IS STARTING TO HAPPEN IN BIG INDUSTRIES LIKE CONSTRUCTION AND AGRICULTURE AND WAREHOUSING AND DEFENSE. WE SEE THAT THROUGH OUR 600 CUSTOMERS. WE HAVE GROWN TREMENDOUSLY THROUGH INBOUND DEMAND, BUT THERE IS SO MUCH MORE DEMAND THAN WE CAN HANDLE WITH OUR CURRENT STAFFING AND CURRENT RESOURCING THAT WE NEEDED TO FIND A WAY TO SCALE IT. IN EVALUATING ALL OF OUR OPTIONS, DOING THIS BACK DEAL, IT MADE SENSE. SCARLET: SPEED. SAMUEL: SPEED. IS MAINLY SO WE CAN SCALE UP OUR TECHNOLOGY AND GO TO MARKET AND OPERATIONS AND INTERNATIONAL EXPANSION STRATEGY, SO IT IS TO SERVE THE DEMAND WE HAVE FROM OUR CUSTOMERS BECAUSE EVERYONE IS SCALING. SPAC IS A GREAT WAY TO DO IT. THAT IS EFFICIENT. WE HAVE AN INCREDIBLE PARTNER WHO HAS TREMENDOUS EXPERIENCE IN ROBOTICS AND PHYSICAL AI ALREADY SO IT IS AN EFFICIENT WAY OF SCALING THE COMPANY UP. SCARLET: LET ME ASK YOU A QUESTION. YOU MENTIONED PHYSICAL AI. WHAT IS THE DIFFERENCE WHICH HE ROBOTICS AND PHYSICAL AI? SAMUEL: I ALWAYS SAY THEM TOGETHER, ROBOTICS AND PHYSICAL AI, BECAUSE IT IS KIND OF THE SAME THING. WE THINK ANYTHING THAT MOVES IS GETTING CONTROLLED BY AI, SO THAT IS PHYSICAL AI. ROBOTICS IS A SUBSET OF PHYSICAL AI. A LOT OF PEOPLE THINK HUMANOIDS WHEN IT COMES TO ROBOTS, BUT IT IS ANYTHING THAT MOVES. ISABELLE: I LIKE THAT SIMPLE EXPLANATION. AI CAN HALLUCINATE SOFTWARE. WHAT IS THIS KNITTING LOOK LIKE IN YOUR WORLD? LIKE A FORKLIFT, HOW CAN THAT HALLUCINATE? I IMAGINE THAT SCARY. SAMUEL: ABSOLUTELY. AI MAKES MISTAKES AND WE ALL EXPERIENCED THAT. IF YOU HAVE EVER BEEN TALKING WITH A CHATBOT AND THINKING THAT DOES NOT MAKE SENSE, IMAGINE THAT THE PHYSICAL WORLD. PEOPLE COULD DIE. PROPERTY COULD BE HURT. THERE NEEDS TO BE AN INDEPENDENT SET OF GUARDRAILS THAT SET THE DRIVER AND THE MACHINE ITSELF TO MAKE SURE THE MACHINE FOLLOWS THE RULES WHATEVER THE RULES ARE. ISABELLE: CAN YOU TALK TO US ABOUT HALLUCINATIONS OR FAILURES THAT MAYBE YOU DID NOT ANTICIPATE THAT HAPPENED IN REAL LIFE? I HAVE NOT WRITTEN A SELF-DRIVING CAR FOR INSTANCE BECAUSE I AM SCARED. SCARLET: NO WAYMO FOR ISABELLE. SAMUEL: THEY ARE SAFETY CONSCIOUS AND HAVE DONE IT INCREDIBLY WELL AND THEY WILL TELL YOU IT TOOK THEM 18 MONTHS BUT THAN 15 YEARS TO GET TO SCALE AND A LOT THAT WAS GETTING THE SAFETY EXACTLY RIGHT SO IT PHYSICAL AI IS GOING TO GO OUT ACROSS THE ECONOMY, ACROSS THE DIFFERENT WORKSITES, NOT EVERYBODY CAN SPEND 15 YEARS WITH GOOGLE FUNDED DOLLARS. THIS IS THE TRUST EVERYONE CAN SUBSCRIBE TO RATHER THAN HAVING TO DO IT THEMSELVES. SCARLET: USE A TRUSTED SAFETY IS A HIDDEN BOTTLENECK IN SCALING PHYSICAL AI. HOW IS THAT ACHIEVED BEFORE ROBOTICS CAME ALONG, BEFORE YOU GUYS APPLIED WHAT YOU ARE ABLE TO DO TO THE TECHNOLOGY? SAMUEL: THE FIELD IS CALLED FUNCTIONAL SAFETY AND IT INVOLVES ANALYZING THE RISK OF ANY KIND OF MACHINE AND DESIGNING MITIGATIONS AND BUILDING THOSE MEDICATIONS. THIS IS A PRACTICE THAT APPLIES TO ANYTHING THAT MOVES, SO PLEASE GET THIS, CARS GET THIS, INDUSTRIAL ROBOTS GET THEIRS. FUNCTIONAL SAFETY FOR ROBOTICS HAS REALLY REVOLVED AROUND 1961 WHEN WE GOT THE FIRST INDUSTRIAL ROBOT ARM INSTALLED ON AN AUTOMOTIVE ASSEMBLY LINE. IT HAS NOT YET BEEN ADOPTED FOR THIS NEW CLASS OF MACHINE THAT IS MOVING ABOUT RUNNING AI, WORKING AROUND PEOPLE AND PROPERTY, CONNECTED TO THE INTERNET. TOTALLY DIFFERENT RISK PROFILE. SO THE SAFETY THAT WORKED FOR THE MACHINES THAT WERE STATIONARY SURROUNDED BY A CAGE NO LONGER WORKS FOR THIS NEW KIND OF MACHINE. YOU NEED A NEW APPROACH. THAT IS WHY WE ARE HERE. ISABELLE: YOU ARE WHICH YOUR COMPANY AS A UNIVERSAL SAFETY LAYER ACROSS ALL OF THE PHYSICAL AI'S. WHAT IS STOPPING OTHER COMPANIES FROM BUILDING THAT LAYER THEMSELVES? SAMUEL: IT IS REALLY HARD. SAFETY IS REALLY HARD. DOING IT WELL TAKES SETTING UP A THIRD-PARTY AUDITED DEVELOPMENT PROCESS AND GETTING YOUR TECHNOLOGY DONE AND GETTING THAT AUDITED AND TAKING THEM THROUGH THIRD-PARTY CERTIFICATION SO IT IS LIKE DEVELOPING A DRUG. NOBODY WANTS TO ACTUALLY DO THAT IF THIS IS NOT THEIR BUSINESS. THEY WANT TO DO THE JOB OF MOVING PALLETS OR DIGGING HOLES OR PICKING APPLES OR WHATEVER IT IS SO THAT IS WHY SAFETY IS ALWAYS OUTSOURCED IN EVERY OTHER MACHINE INDUSTRY. SAFETY IS ALWAYS OUTSOURCED. SCARLET: BUT IN DEVELOPING A DRUG, THERE IS AN FDA, A GOVERNMENT ENTITY INVOLVED. IS THERE A GOVERNMENT ENTITY INVOLVED IN PHYSICAL AI SAFETY? SAMUEL: IT IS IN DIFFERENT -- IT IS DIFFERENT IN DIFFERENT PLACES. EFFORTS ARE HAPPENING. WE ARE SITTING ON SEVERAL STANDARDS BODIES AND HELPING CRAFT THE STANDARDS. THE INTERNATIONAL STANDARDS WILL BE THE THING THAT GUIDES TECHNOLOGY DEVELOPMENT AND RELATIONS WILL POINT TO THE STANDARDS IN DIFFERENT WAYS. IT WILL BE DIFFERENT IN THE EUROPEAN WAY VERSUS THE AMERICAN WAY EUROPEANS HAVE LEGISLATED MACHINE LEARNING HAS TO HAVE BY LAW INDEPENDENT GOVERNANCE SO THAT IS WHY WE EXIST. SCARLET: I SEE. ISABELLE: THANK YOU. WE UNPACKED A LOT AND LEARNED A LOT. SAMUEL REEVES, THANK YOU FOR JOINING US IN PERSON. SAMUEL: MY PLEASURE. THANK YOU. SCARLET: LET'S TAKE A LOOK AT EARNINGS BECAUSE WE HAVE NUMBERS CROSSING NOW. TOLL BROTHERS IS UP A QUARTER OF 1% IN AFTER-HOURS TRADE. IT REPORTED THIRD-QUARTER EARNINGS-PER-SHARE OF $2.97 COMPARED TO $3.73. I DON'T KNOW IF WE ARE COMPARING LIKE WITH LIKE BUT THAT IS THE FIGURE. IN TERMS OF DELIVERIES, 10,500 TO 10,700, AN UPGRADE OR I SHOULD SAY A NARROWING OF WHAT IT HAD SEEN EARLIER. THIRD-QUARTER REVENUE BEATING THE CONSENSUS ESTIMATE OF $2.63 BILLION. EXPENSES ABOUT 10%, PRETTY MUCH IN LINE WITH WHAT ANALYSTS HAD EXPECTED. THIS IS BLOOMBERG. SCARLET: A BUSY WEEK FOR RETAILERS. HOME DEPOT RESULTS ARE IN THE BOOK. TARGET AND TJX ARE NEXT. WITH WHAT TO EXPECT IS THE SENIOR VICE PRESIDENT OF EQUITY RESEARCH OVER AT JEFFERIES. BOTH OF THESE BRANDS, BOTH OF THESE STORES BY VALUE OR LIKE TO THINK THEY PROVIDE VALUE TO CONSUMERS. TARGET HAS HAD A TOUGHER TIME DOING SO. IT WAS REALLY POPULAR FOR A WHILE AND LOST SOME LUSTER, HAD SOME MISSTEPS. HAS IT FOUND ITS WAY? >> I THINK TARGET IS COMING BACK. ONE OF OUR TOP PICKS THIS YEAR. IT IS GROUNDED IN NEW MANAGEMENT AND THE CHANGE THAT NEW MANAGEMENT IS MAKING. IT IS NEW PRODUCT, NEW PEOPLE, NEW PROCESSES, AND IT IS WORKING. THEY HAVE ADDED JUST IN THE LAST SIX MONTHS 3000 NEW FOOD ITEMS, 1500 NEW WELLNESS ITEMS. NEWNESS ACROSS THE BOX AND IT IS WORKING. WE HAVE SEEN LINES FORM IN THE TARGET STORES. I HAVE WOKEN UP AND CHECKED STORES AND SEEN LINES THREE OR FOUR DAYS SO FAR THIS YEAR BECAUSE OF THE PARTNERSHIPS. THESE ARE THINGS YOU DO NOT TYPICALLY SEE AT TARGET, SO IT HAS BEEN REALLY EXCITING SO FAR. ISABELLE: WHEN PEOPLE LINE UP, CAN YOU TELL WHAT THEY ARE BUYING OR IS IT MOSTLY IN THE PARTNERSHIP? THIS IS NOT THE MOST ACCURATE EXAMPLE BUT IN TRADER JOE'S EVERYONE WAS CRAZY OVER THE TOTEBAG. IN TARGET, IS IT LIKE THAT? ARE THERE SEASONAL ITEMS PEOPLE CLAMOR FOR? I AM ASKING BECAUSE I AM NOT A TARGET GOER. SCARLET: SHE BUYS EVERYTHING ONLINE. THAT IS WHAT WE LEARNED TODAY. COREY: TARGET HAS DONE A GOOD JOB LEADING INTO BRANDS THAT ARE RESONATING WITH CUSTOMERS. ON TOP OF THAT LIKE SOME OF THE PARTNERSHIPS I TALKED ABOUT, THEY HAVE BEEN REALLY LEANING INTO AFFORDABILITY AND THEIR OWN BRANDS OR WHAT OTHER PEOPLE CALL PRIVATE LABELED TYPE PRODUCTS. FOR TARGET, IS ABOUT A THIRD OF THEIR OVERALL BUSINESS COMPARED TO 20% OF WALMART. THE REPORT ON THURSDAY. SO IT IS A SIZABLE PENETRATION OF TARGET'S BUSINESS THAT HELPS THEM STAY COMPETITIVE WITH OTHER LARGE RETAILERS OUT THERE BECAUSE YOU WILL NOT BEAT WALMART ON PRICE, BUT THEY CAN OFFER THESE REALLY ATTRACTIVE PRODUCTS AT RELATIVELY AFFORDABLE PRICES. I THINK THEIR PRIVATE-LABEL BUSINESS IS ALSO HIGHER-MARGIN ALSO SO WHEN YOU SEE MORE PEOPLE GRAVITATE TO A STATEMENT, -- TO A SECOND, IT HELPS BOOST SALES AND PROFIT. SCARLET: THE TARGET APPEAL THEY ONCE HAD THAT MAY BE LOST ITS WAY A LITTLE BIT HERE. WE HAVE BEEN REPORTING TARGET HAS OVERHUNG ITS GROCERY AUTOS TO REVIVE ITS UPSKILL IMAGE AND ADDING THINGS LIKE MATCHA, THINGS TO CATER TO A CERTAIN CONSUMER. IS THIS A WORTHWHILE INVESTMENT PUTTING MORE MONEY INTO THE GROCERY BUSINESS AS OPPOSED TO HOME CARE OR DECOR OR ALL THE OTHER THINGS THAT MADE TARGET? COREY: SURE, GROCERY CREATES THIS CONSISTENCY IN TERMS OF TRAFFIC AND TRAVEL AND STABILIZES THE BASKET. IT IS YOUR BALLAST. YOU GO THERE BECAUSE YOU NEED CERTAIN THINGS BUT YOU CAN ADD ON A DISCRETIONARY ITEM. IF THEY HAVE WHAT IS RESONATING WITH YOU, IT EXPANDS THE OVERALL TICKET AND CAN REALLY HELP SALES. SPECIFICALLY TO THE TARGET THROUGH JOURNEY, IT STARTED YEARS AND YEARS AGO. THE PRIOR CEO BRIAN CORNELL WAS A FORMER PEPSI GUY, HELPED EMPHASIZE THAT FURTHER. THE CURRENT CEO, WHO TOOK THE HELM IN FEBRUARY, I THINK WILL LEAN MORE INTO THAT IN THE RIGHT WAY, IN A WAY THAT IS DISTINCTLY TARGET BECAUSE THEY ARE NOT GOING ON PRICE BUT IF THEY ARE UNIQUE, DIFFERENTIATED, IF IT IS NEW, THE DATA SHOWS IT IS WORKING THE WAY IT SHOULD. SCARLET: SPEAKING OF RETAILERS THAT CAN REALLY LEANING IN ON PRICE AND DIFFERENTIATION AND THE SURPRISE ELEMENT, TJX ALSO REPORTED. YOU DO NOT GO THERE, BUT YOU NEVER KNOW. ISABELLE: THE LINES ARE TOO LONG BUT I UNDERSTAND THE ENTHUSIASTS ARE DIEHARD ENTHUSIASTS. SCARLET: THEY ARE. THAT IS A GOOD POINT. THE IDEA THAT LINES ARE TOO LONG. THERE IS AN ONLINE OFFERING I BELIEVE FOR T.J. MAXX AND MARSHALLS BUT MOST OF THE MONEY IS MADE THROUGH FOOT TRAFFIC. COREY: YEAH, FOOT TRAFFIC IS THE LION'S SHARE OF THE BUSINESS. WE ALL LOVE TO SHOP ONLINE. IT IS REALLY A LOW SINGLE-DIGIT PERCENTAGE OF THE SALE. SCARLET: NOTHING. COREY: IT IS SMALL AND THE BUSINESS POTENTIALLY OVER TIME, SO THERE IS REAL VALUE IN HAVING 25,000 SQUARE-FOOT STORES THAT ARE MUCH CLOSER TO YOUR HOME THAN THOSE 100,000 SQUARE-FOOT APARTMENT STORES, AND TJ MAXX HAS THE SAME ITEMS BUT 20%-70% OFF. ISABELLE: I KNOW YOU ALSO COVER WALMART. TALK IN GENERAL ABOUT THE INCREASING PRICE SENSITIVITY TO CONSUMERS. THE ECONOMY SEEMS TO BE GETTING WORSE, IS TOUGH OUT THERE, GROCERIES ARE EXPENSIVE. TALK MORE ABOUT THAT AND WHAT YOU ARE EXPECTING. COREY: WE THINK IT'S GOING TO BE A STRONG QUARTER, FOR A COUPLE OF REASONS. THE FIRST ONE IS, AS YOU POINT OUT, THE CONSUMER'S POTENTIALLY BECOMING INCREASINGLY STRETCHED. TAX REFUNDS HAVE NOW BEEN EXHAUSTED. WE NOW HAVE FOUR DOLLARS A GALLON OR MORE IN FUEL COSTS. THESE ARE STARTING TO WEIGH ON CONSUMER SENTIMENT, AND THAT'S GOING TO BECOME POTENTIALLY A PROBLEM IN AN AREA WHERE I THINK CONSUMERS CAN LEAN MORE INTO WALMART AS THEY STRUGGLE. THE SECOND REASON THAT I WANT TO POINT OUT IS A BIT OF A NUANCE, BUT TARIFF REFUNDS. WALMART PAID A LOT IN TARIFFS LAST YEAR, ABOUT $3 BILLION. THEY WOULD BE -- THEY WILL BE GETTING THAT BACK. THE IMPORTANT PART IS WHAT THEY DO WITH THOSE DOLLARS. ISABELLE: HAD THEY INDICATED ANYTHING? >> THEY HAVE, YES. THEY WILL BE REINVESTING THOSE DOLLARS THEY RECEIVED BACK FROM REFUNDS BACK INTO LOWER PRICES AND HIGH-FREQUENCY CONSUMABLE OTTOMANS SO THE MAXIMUM AMOUNT CONSUMERS CAN BENEFIT. WHAT THAT DOES I THINK FROM A FINANCIAL PERSPECTIVE AND A STOCK PERSPECTIVE IS IT ACTUALLY CREATES UPSIDE TO TRAFFIC AND SALES BECAUSE THEY ARE INVESTING IN LOWER PRICES TO DRIVE MARKET SHARE GAINS. IT FEELS LIKE IT'S ACTUALLY A GREAT BUYING OPPORTUNITY FOR SHARES TODAY GIVEN STOCKS RECENT SELLOFF. SCARLET: THANKS SO MUCH FOR THAT PREVIEW INTO EARNINGS THAT WE WILL GET FROM THESE RETAINERS, TARGET, TJX, AND WALMART ALL COMING UP. I KNOW THAT YOU BUY EVERYTHING ONLINE,, INCLUDING WALMART. ISABELLE: FOOT TRAFFIC IS STILL THE IMPORTANT THING. THEY'RE PEOPLE LIKE ME THAT ARE ONLINE CREATURES, BUT PEOPLE LIKE YOU STILL GO TO THE STORES AND THAT FEEDS INTO THE EARNINGS OF THESE COMPANIES. SCARLET: I DO, AND IS PARTLY BECAUSE YOU DON'T KNOW WHAT YOU WILL FIND WHEN YOU GO IN THE STORES. YOU WILL BE SURPRISED. ISABELLE: THAT WOULD BE ME. SCARLET: STILL AHEAD, WHAT INVESTORS NEED TO WATCH FOR OVER THE NEXT 24 HOURS. THIS IS BLOOMBERG. SCARLET: SPEAKING OF EARNINGS, LET'S GET BACK TO EARNINGS RIGHT NOW. A REPORT EARLY THIS HOUR, SHARES MOVING AROUND IN AFTER-HOURS TRADE AFTER THEY CAME OUT WITH THE THIRD QUARTER NUMBERS. EARNINGS-PER-SHARE $2.97 VERSUS $3.77 A YEAR EARLIER. OUR MARKETING CORRESPONDENT COVERS THIS AND JOINS US NOW. WHAT STOOD OUT TO YOU? >> WHEN YOU THINK ABOUT HOMEOWNERS THERE ARE A FEW KEY METRICS EVER AND KEEPS IN MIND. THINK OF HOW MANY ORDERS ARE COMING IN WITH IN TERMS OF YOU HOMES BEING BUILT, BUT ALSO GROSS MARGIN. TOLL BROTHERS SLIGHTLY BEAT EXPECTATIONS BUT STILL POSITIVE. WHERE THEY ARE FOCUSED RIGHT NOW IS A FORWARD OUTLOOK AS IT RELATES TO DELIVERIES. WE THINK ABOUT THOSE ORDERS AND DELIVERIES IN CONJUNCTION GIVES YOU A GREAT IDEA OF THE HEALTH OF THIS COMPANY AS YOU THINK ABOUT THE FUTURE. WE KNOW THE HOMEBUILDING SPACE HAS BEEN AN AREA THAT'S BEEN INTERESTING, WHEN YOU THINK ABOUT RATES BEING SO HIGH, ABOUT 6.7% RIGHT NOW. THAT IS EXTREMELY ELEVATED FROM WHERE WE WERE JUST A YEAR BACK. AT ONE POINT WE SAW HOMEOWNERS GRASPING THIS MOMENT, WHEN YOU THINK ABOUT THE MAJORITY OF THE HOUSING MARKET WAS ESSENTIALLY MAINLY MADE UP BY SOME OF THOSE PREVIOUSLY OWNED HOMES. WE SAW NEW HOMES BEING THE MINORITY OF THE BUNCH, BUT THEN OF COURSE WHEN YOU SEE A LOT OF PEOPLE NOT BEING WILLING TO MOVE OUT OF THEIR HOME -- SCARLET: I'M NOT MOVING BECAUSE I HAVE LESS THAN A 3% MORTGAGE. >> A LOT OF FOLKS ARE BRAGGING ABOUT THAT. YOU WILL SEE PEOPLE LIKE YOURSELF WANTING TO MOVE OUT SO THAT GIVES A WONDERFUL OPPORTUNITY FOR SOME HOMEBUILDER SHOULD COME IN AND TAKE MARKET SHARE. YOU SAW THAT BOOMING IN THE GROUP MORE BROADLY FOR A WHILE. THIS YEAR THE GROUP IS ONLY -- TOLL BROTHERS IS UP ONLY ABOUT 5.7% BUT THEY ARE FOCUSED ON THE MORE AFFLUENT BUYERS, THE HIGH LUXURY TYPE OF HOME. SO YOU ARE SEEING THEM AS ONE OF THE OUTPERFORMERS IN THE BUNCH, IF YOU LOOK AT IRREGULARITIES IN THE HOMEBUILDING INDEX, THEY ARE OUTPERFORMING THE GROUP. SHE BIT MORE PADDING FOR THE HIGHER INCOME LEVEL AS OPPOSED TO ENTRY-LEVEL BUYERS. ISABELLE: THAT'S A GREAT POINT. TOLL BROTHERS IS INDEED A LUXURY HOMEBUILDER AND THEY HAVE AN AFFLUENT CUSTOMER BASE. DO YOU SEE THAT MORE AND MORE, I KNOW YOU COVERED HOMEBUILDERS A LOT IN YOUR PRIOR LIFE. TALK ABOUT MORE ABOUT THAT. I FEEL LIKE WE TALK ABOUT THE K-SHAPED RALLY BUT IT'S COMING UP MORE AND MORE. >> WHEN YOU THINK ABOUT HOUSING, THIS IS A CRITICAL PART OF ONE'S PAYCHECK. IT GOES TO YOUR RENT OR MORTGAGE. YOU SEE THIS BIFURCATION IN THE MARKET. I'VE WRITTEN STORIES IN THE PAST ABOUT THIS BIFURCATION AND YOU CONTINUE TO SEE HIGHER INCOME INDIVIDUALS, THOSE WILLING TO SPLURGE ON A LUXURY HOME SEAL BEING ABLE TO HOLD UP IN THIS MARKET. WHEN I SPEAK TO REALTORS AND FOLKS ON THE GROUND HERE EVEN IN NEW YORK CITY, YOU ARE STILL SEEING A LOT OF CASH BUYERS. THE BROADER, HIGHER IN INDIVIDUALS MAYBE NOT WANTING TO TAKE OUT A MORTGAGE. THEY ARE SAYING LET'S JUST BYPASS THE RATES ALL TOGETHER, I'M GOING TO LIQUIDATE SOME OF MY PORTFOLIO AND ACTUALLY PUT DOWN CASH ON A HOME TO BYPASS THAT EXPENSE. SCARLET: THANK YOU SO MUCH, NORAH MULINDA, WITH THE LATEST ON TOLL BROTHERS. JUST TO RECAP ON TOLL BROTHERS REVENUE, ABOVE THE CONSENSUS ESTIMATE OF 2.63 BILLION DOLLARS. TOLL BROTHERS NARROWING ITS FULL-YEAR DELIVERIES FORECAST AND NO EXPECTS 10,500-10,600. PREVIOUSLY ANTICIPATED A RANGE OF 10,004 HUNDRED-10,700. LET'S LOOK AT WHAT ELSE WE ARE WATCHING OVER THE NEXT 24 HOURS. AT 12:01 A.M. WASHINGTON TIME, THE U.S. IS SET TO IMPOSE A FRESH 50% TARIFF ON SOME CANADIAN GOODS ON WHAT IT CALLED UNFAIR TREATMENT OF U.S. ALCOHOL, CARS, AND DAIRY. THERE IS A LITTLE BIT OF TIME LEFT TO PREVENT THAT FROM HAPPENING. ISABELLE: AND THEY WERE LOOKING AT EARNINGS, TARGET, ESTEE LAUDER, ANALOG DEVICES. WE'VE TALKED A LOT ABOUT RETAILERS AND AN EARLIER GUESS SAID THE SAME STORE SALES ARE REALLY IMPORTANT. SOME PEOPLE STILL LINE UP AND GO TO THE STORES. UNLIKE ME, A LAZY ONLINE SHOPPER. SCARLET: WE ALSO HAVE MORTGAGE APPLICATIONS AT 7:00 A.M., WE WERE TALKING WITH NORA ABOUT TOLL BROTHERS AND MORTGAGE RATES, OBVIOUSLY WITH RATES CLIMBING IN RECENT WEEKS, THIS IS HUGELY IMPORTANT FOR WHAT IT MEANS YOU CAN REFINANCE YOUR MORTGAGE. AND IT 2:00 P.M., THIS IS SOMETHING REALLY INTERESTING. TYPICALLY IT'S A SNOOZER, THE FED MINUTES. BUT BECAUSE IT WAS THE SECOND FED MEETING UNDER NEW CHAIR KEVIN WARSH COME THERE STILL A LOT OF QUESTIONS OVER THOSE FAMILY FOOD FIGHTS ACTUALLY LOOK LIKE. ISABELLE: AND ECONOMIST SAYING THE MEETING IS LIKELY TO SHOW HAWKISH SENTIMENT. MAYBE WE WILL SEE A LITTLE MORE PERSPECTIVE ON WHAT KEVIN WARSH IS THINKING. SCARLET: THAT DOES IT FOR US. BALANCE OF POWER IS UP NEXT. HAVE A GREAT EVENING, EVERYONE. THIS IS BLOOMBERG.