Stocks & Bonds Rose as US-Iran Hopes Spur Oil Drop | The Close 8/3/2026

>> THE COUNTDOWN IS ON. EVERY THINK YOU NEED TO GET THE END OF THE MARKET A. THIS IS "THE CLOSE." ROMAINE: A DROP IN YIELDS GIVE STOCKS ROOM TO RUN BUT TO WHERE? LIVE FROM BLOOMBERG HEADQUARTERS, I'M ROMAINE BOSTICK. KICKING YOU OFF TO THE CLOSE ON THIS MONDAY AFTERNOON. STOCKS HIGHER IN THE FIRST TRADING DAY OF THE MONTH. FRESH OFF THAT TURBULENT JULY. JULY STILL ENDED WITH BACK TO BACK GAINS FOR THE S&P. THROW IN TODAY AND A THREE-DAY RUN WITH THE S&P NOW BACK ABOVE ALL OF ITS KEY MOVING AVERAGES. NO COINCIDENCE THEY ARE THAT MEANINGFUL DROP WE ARE SEEING IN OIL PRICES HAVING A BIG IMPACT. IT WAS A 5% DROP ON A WEEKLY BASIS LAST WEEK. 5% ON THE DAILY BASIS HERE. YOU GET THE SENSE OF WHY YOU SEE GREEN AT THE TOP OF YOUR SCREEN. KEEP AN EYE ON DEALS AS WE ARE SEEING A TAMP DOWN ON THIS MONDAY AFTERNOON AFTER LAST WEEK'S 15 BASIS POINT JUMP WE SAW. I WANT TO LOOK AT THOSE YIELDS. THAT U.S.-LET CURRENCY INTERVENTION TO CONTAIN THE DROP IN THE YEN ACTUALLY KEPT JAPAN FROM BEING A SELLER OF U.S. TREASURIES AND THAT'S A BIG PART OF WHY YIELDS ARE ACTUALLY DOWN, PRICES UP, BUT THE TREASURIES RALLY. SOME OF THOSE GAINS ARE AT RISK OF FADING AS QUICKLY AS THEY CAME. REMEMBER WARSH'S WARBLING ON THE LACK OF TRANSPARENCY STILL HAS SOME BOND INVESTORS SHELLSHOCKED AND ARE DEMANDING NOT JUST MORE ANSWERS BUT MORE OF A PREMIUM TO BUY LONG DATA TREASURIES. >> YOU CAN'T FULL THE BOND. YOU CAN'T DO IT. THE BOND WILL SEE THROUGH IT. THAT IS OUR INTERPRETATION OF WHAT HAPPENED LAST WEEK. IF THIS CONTINUES, THE BOND WILL CONTINUE TO REFLECT A GREATER INFLATION RISK PREMIUM AND MORE UNCERTAINTY. THE ONLY ONE WHO WILL BE CRYING WILL BE THE TAXPAYER. IT MEANS HIGHER ASSOCIATED COSTS AND LIKELY WIDER BID OFFER SPREADS. ROMAINE: THEY ALSO HAVE TO RECKON WITH MACRO CONDITIONS THAT SUGGEST HIGHER YIELDS MAY BE WARRANTED. U.S. FACTORY ACTIVITY SURGING TO THE HIGHEST SINCE 2022. THE MEASURE OF EMPLOYMENT IN THAT SPACE, MANUFACTURERS INCREASE HEADCOUNT FOR THE FIRST TIME SINCE 2023. ISM RELEASES ITS SERVICES GAUGE ON WEDNESDAY WHICH SHOULD PROVIDE MORE INSIGHT. THAT WILL BE FOLLOWED BY A SLEW OF LABOR MARKET DATA LEADING UP TO FRIDAY POSEY MONTHLY JOBS REPORT THAT'S EXPECTED TO SHOW A REBOUND IN THE NUMBER OF NONFARM PAYROLLS ADDED. DON'T FORGET OUR S&P COMPANIES ON TAP FOR THIS WEEK, INCLUDING PALANTIR, SANDISK, SPACEX. DEUTSCHE BANK SAYS THE EARNINGS REPORT FROM LAST WEEK AND THIS SLATE UP AHEAD THIS WEEK WILL SPUR A MEANINGFUL ROTATION BACK INTO TECH STOCKS. A LOT OF THE FROTH HAS BEEN REMOVED. VALUATIONS HAD ACTUALLY BEEN RESET AND A LOT OF THAT PRIME BROKERAGE DATA ACTUALLY SHOWS LEVERAGE HAS LARGELY BEEN CLEANED UP. LET'S TAKE A LOOK AT THOSE VALUATIONS. TAKE THE S&P AS A PROXY ON A RELATIVE BASIS COMPARED TO WHAT WE HAVE SEEN OVERSEAS. VALUATIONS DROP BACK DOWN TO SOME OF THE LOWEST LEVELS WE HAVE SEEN SINCE 2020. GROW ON THE NASDAQ 100 AND IT'S THE SAME STORY. SOME OF THE VALUATION RESET IS EVEN A BIT MORE EXTREME. JOINING US NOW TO KICK US OUT TO THE CLOSE ON THIS MONDAY AFTERNOON IS MONA MAHAJAN OVER AT EDWARD JAMES. MONA: GREAT TO BE HERE. ROMAINE: LET'S TALK ABOUT THE VALUATION RESET. THIS IS PROBABLY A FAVORABLE SITUATION FOR A LOT OF INVESTORS WHO BELIEVE IN THE LONG-TERM NATURE OF THE TECH TRADE. YOU HAD EARNINGS. THEY ARE THERE. PRICE HEADING INTO THE EARNINGS FOR A LOT OF THESE NAMES WERE DOWN. WHAT IS THE MIX RIGHT NOW? MONA: IT WAS FASCINATING TO SEE. S&P RETURNS ARE DRIVEN BY VALUATION EXPANSION AND EARNINGS GROWTH. WE DID NOT HAVE VALUATION EXPANSION ACROSS REALLY ANY SECTOR THIS YEAR. A LOT OF VALUATION MODERATION AND EARNINGS GROWTH HAS BEEN THE STORY. COMING INTO THIS QUARTER WE THOUGHT 25% EARNINGS GROWTH. WE ARE LOOKING AT 35% OF 40% EARNINGS GROWTH FOR Q2 THUS FAR. THAT HAS LARGELY BEEN DRIVEN BY TECH. TECH CAME INTO THE QUARTER IN A NOT BAD SET UP. WE SAW THE SEMI'S TAKE A LITTLE BIT OF A BREATHER. WE SAW THE CORRECTION AFTER A PARABOLIC MOVE HIGHER. THE MAG SEVEN HAS NOT REALLY BEEN PARTICIPATING ALL YEAR. THIS SLEW OF EARNINGS THAT SHOWED NOT ONLY CAPEX SPENDING INCREASING, EARNINGS BACKLOG AND REVENUE BACKLOG INCREASING, BUT MEANINGFUL REVENUE POTENTIAL FOR THE MAG7 AND HYPERSCALERS. ROMAINE: I'M CURIOUS ABOUT THE REST OF THE SEASON, THE NONTAX SIDE. WE WILL START TO GET A LOT OF CONSUMER COMPANIES, DISCRETIONARY NAMES. IS THIS SORT OF BROADENING OF THE EARNINGS PICTURE A LOT OF PEOPLE WERE HOPING FOR THIS QUARTER? MONA: IT LOOKS LIKE THUS FAR EARNINGS GROWTH HAS BEEN STRONG ACROSS TECH AND NON-TECH PARTS. BUT WE H SAW WAS THE BROADENING OF MARKET LEADERSHIP. A LOT OF THE LEADERSHIP BEYOND THE S&P 500 CAME FROM AREAS LIKE SMALL AND MID-CAP STOCKS. THE EM SECTOR PLAYED A BIG CATCH UP AS WELL. WE ALSO SAW VALUE DIVIDEND PARTS OF THE MARKETS PLACE A MEANINGFUL CATCH UP AND WE BELIEVE THAT HAS LEGS. AS WE THINK ABOUT THE NEXT LEG OF THE AI TRADE IT IS GOING TO GO FROM AI INFRASTRUCTURE TO AI ADOPTION, WHICH WE THINK IS STILL AN EARLY PHASE AND THAT IS WHERE YOU WANT TO BE POSITION. ROMAINE: WITH REGARDS TO THE ADOPTION, ARE THOSE COMPANIES TECH COMPANIES OR ARE WE TALKING ABOUT THE HEALTH CARE NAMES LIKE THE BANKS AND THOSE KIND OF COMPANIES BENEFITING FROM INTERNAL USE OF AI? MONA: I THINK IT IS THE LATTER. THE NEXT PHASE OF THE AI TRADE WILL BE IN THE SECTORS THAT COULD ACTUALLY SEE PRODUCTIVITY GAINS. WE HAVE NOT QUITE SEEN IT YET BUT AREAS LIKE FINANCIAL SERVICES, HEALTH CARE, INDUSTRIALS, MAYBE MANUFACTURING ALL COULD SEE SOME MEANINGFUL PRODUCTIVITY GAINS IN THE QUARTERS AHEAD. THAT IS WHAT WE WANT TO START HANDLING PORTFOLIOS, MAKING SURE WE HAVE EXPOSURE THERE. ROMAINE: I HAVE TO ASK ABOUT SOME OF THE MACRO ISSUES. LET'S GO BACK TO LAST WEEK AND KEVIN WARSH AND THE FED. THE BOND MARKET STILL A LITTLE ON EDGE AND THAT IS WHAT COMES NEXT. IS THERE A SINCE WHEN WE LOOK AT THE LINK BETWEEN WHAT IS HAPPENING IN THE TREASURY SPACE AND WHAT MAY OR MAY NOT BE HAPPENING IN THE EQUITY SPACE, ARE WE AT RISK OF EQUITY RALLY BEING UPSET BY SOME OF THE ISSUES GOING ON WITH TREASURIES? MONA: IT WAS A MIXED MESSAGE LAST WEEK. I THINK THE MARKET REALLY PUNISHED CHAIR WARSH FOR TALKING TOUGH BUT NOT EXECUTING. WE GOT A HOLD LAST WEEK. THE FED FUNDS RATE AT 3.5 TO 3.75%. WE THINK THE PICTURE COMING INTO THAT FED MEETING LOOKED A LITTLE BIT MIXED AS WELL. WE GOT TWO SOFTER INFLATION READINGS PRIOR. NOW WE HAVE OIL PRICES THAT HAVE ROLLED OVER A BIT. THE NEXT TWO CPI PRINTS WILL BE CRITICAL. WE GET TWO BEFORE THE NEXT MEETING ON SEPTEMBER 16 AND THAT IS WHERE IF THE FED AND THE FOMC IS GOING TO TAKE A STANCE AT THE SEPTEMBER MEETING, IT'S A LIVE ONE. ROMAINE: ANY RISK THAT INFLATION BECOMES AN ISSUE FOR CORPORATE PROFITABILITY? WE TALK ABOUT IT AROUND THE EDGES. SO FAR -- NOT TO MINIMIZE IT BUT SO FAR WE HAVE NOT SEEN IT SHOW UP IN THE MATERIAL WAY. MONA: EVEN WITH TREASURIES CLOSE TO THE HIGHS OF THE YEAR, WE HAVE NOT SEEN THE SLOWDOWN IN CAPEX SPENDING, AND BORROWING. THIS IS AN ECONOMY THAT WAS ABLE TO NOT ONLY SURVIVE BUT THRIVE SOMEWHAT EVEN IN THIS ELEVATED YIELD ENVIRONMENT. IN OUR MIND EVEN IF THE FED DOES EXECUTE A 25 BASIS POINT RATE HIKE, MAYBE GETS ONE OR TWO RATE HIKES IN THE CYCLE, IT DOESN'T NECESSARILY DERAIL THE BROADER ECONOMY AND BROADER STORY. WHAT WE ARE WATCHING IS DUE INFLATION EXPERTISE AND REMAIN ANCHORED. THUS FAR WHEN YOU LOOK AT THE FED'FORWARD-LOOKING INFLATION METRICS, INFLATION HAS REMAIN ANCHORED. ROMAINE: WE HAVE TO LEAVE IT THERE. MONA MAHAJAN, HEAD OF INVESTMENT STRATEGY AT EDWARD JONES KICKING US OFF TO THE CLOSE ON THIS MONDAY AFTERNOON. WE WILL TALK PRIVATE CREDIT AND THE PLATINUM ERA. RANDY SCHWIMMER. WE WILL TALK ABOUT WHERE HE SEES OPPORTUNITY COMING UP NEXT. SPACEX PREPARING FOR ITS FIRST EARNINGS REPORT AS A PUBLIC COMPANY. WE WILL BREAK DOWN WHAT TO EXPECT WITH JULIE ZHU OVER AT MOFFITT NATHANSON LATER IN THE STORY. IN MORE GREEN FOR STABLECOIN INFRASTRUCTURE COMPANY YELLOW CARD? WE WILL CATCH UP WITH THE CEO CHRIS MAURICE FRESH OFF THE FUNDING ROUND TO TALK ABOUT WHAT'S NEXT FOR THE VISA BACKED OPERATOR. THAT'S COMING UP IN A BIT RIGHT HERE ON "THE CLOSE" RIGHT HERE ON BLOOMBERG. ♪ ROMAINE: LET'S TALK HEALTH CARE IN THE RESEARCH. THE TRUMP ADMINISTRATION IS EXHILARATING PLANS OVERHAULED MEDICAL RESEARCH IN THE U.S. A REPORT RELEASED BY THE WHITE HOUSE OUTLINES $200 BILLION IN SPENDING PER YEAR TO SUPPORT INDIVIDUAL SCIENTISTS AND PRIVATE RESEARCH FACILITIES. THIS IS IN PLACE OF SOME OF THE MONEY THAT WOULD HAVE GOT THE UNIVERSITIES THAT RELY ON FEDERAL FUNDING FOR THEIR RESEARCH. JOINING US NOW IS JOHN FLAVIN, THE CEO OF PORTAL INNOVATIONS THAT HELPS FUND EARLY-STAGE MEDICAL RESEARCH FUNDS IN CHICAGO AND SEEDS AND BUILDS AND SCALES EARLY LIFE SCIENCES COMPANIES. WHEN I HEAR ABOUT THIS NEW INITIATIVE BY THE TRUMP ADMINISTRATION, I THINK, ISN'T THIS YOUR BUSINESS MODEL? YOU HAVE BEEN BANGING THIS DRUM FOR A WHILE BUT THE PRIVATE SECTOR CAN DO A LOT ON ITS OWN WITHOUT THE TRADITIONAL UNIVERSITY-LED RESEARCH CAPACITIES. JOHN: NO QUESTION ABOUT IT. IT'S IMPORTANT NOT TO UNDERSTAND HOW IMPORTANT THE UNIVERSITY INFRASTRUCTURE IS TO AMERICAN INGENUITY AND INNOVATION. HAVING SAID THAT, OVER THE PAST SEVERAL DECADES FUNDING FROM THE FEDERAL GOVERNMENT HAS CONTINUED TO BE MOVING DOWNWARD. AS A RESULT, THAT HAS ENABLED MORE OF A MOTION FOCUS ON TRANSLATIONAL RESEARCH, MEANING TAKING GREAT IDEAS THAT PROFESSORS DEVELOP AFTER YEARS OF STUDYING AND UNDERSTANDING HOW A NEW MOLECULE MIGHT HELP FIGHT CANCER OR ALZHEIMER'S, HOW THAT GETS TRANSLATED INTO A PRODUCT AND A DRUG THAT CAN TREAT PATIENTS DOWN THE ROAD. WITH THE ADMINISTRATION PULLING BACK TO A CERTAIN DEGREE ON FUNDING, OR AT LEAST NOT BEING OVERLY SUPPORTIVE AT THE GREATEST SCALE THAT WE HAVE SEEN IN THE PAST SEVERAL DECADES, THAT HAS OPENED THE DOOR FOR OUTSIDE GROUPS TO START TAKING GREATER INTEREST. WHETHER THAT IS FOUNDATIONS, VENTURE CAPITAL FIRMS, ANGEL INVESTORS TO START TRANSLATING RESEARCH COMING OUT OF THE UNIVERSITIES AT A GREATER PACE. I DO THINK THE MOVEMENT OR AT LEAST THE ASPIRATIONAL ELEMENTS OUTLINED IN THAT PLAN BY THE OFFICE OF SCIENCE AND TECHNOLOGY POLICY ARE ENCOURAGING. IF YOU LOOK AT THE NEED TO REVAM THE WAY WE THINK ABOUT FUNDING RESEARCH, NOW IS THE TIME TO DO THAT. ROMAINE: YOU DO KINDA GIVE A HAT TIP TO THE IMPORTANCE OF UNIVERSITIES IN OUR SCIENTIFIC ENDEAVORS, BUT YOU HAVE TALKED ABOUT ON THIS PROGRAM THE IDEA THAT COMPANIES LIKE YOURSELVES AND OTHERS HAVE AN INCENTIVE TO SORT OF BE MUCH MORE INVOLVED MUCH EARLIER IN THE RESEARCH AND DISCOVERY PROCESS. HAVE WE ALREADY STARTED TO SEE THAT EVEN PRIOR TO THIS INITIATIVE BY THE TRUMP ADMINISTRATION? JOHN: NO QUESTION ABOUT IT. THE RISE OF FOUNDATIONS, PATIENT ADVOCACY GROUPS THAT ARE STARTING TO USE THEIR OWN FINANCIAL CAPITAL TO PARTNER WITH PHARMACEUTICAL ORGANIZATIONS THAT CAN TAKE IDEAS OUT OF UNIVERSITIES AND TREAT RARE DISEASES. WE HAVE A NUMBER OF EXAMPLES OF COMPANIES WE SUPPORT THAT ARE FOCUSED ON RARE DISEASES THAT NEED ACCESS TO DIFFERENT KINDS OF FUNDING SOURCES THAT ARE NOT AVAILABLE THROUGH THE FEDERAL GOVERNMENT AND NOT AVAILABLE NECESSARILY THROUGH LATE STAGE VENTURE CAPITAL GROUPS. AT THE SAME TIME A LOT OF THOSE INNOVATIONS REALLY ARE IMPORTANT FOR THE PATIENTS THAT CURRENTLY DON'T HAVE ANY CAPABILITY OF BEING ABLE TO ALLEVIATE THAT ROMAINE: I'M CURIOUS, JOHN, A LOT OF WHAT YOU DO IS FOCUS ON LIFE SCIENCES AND I WAS GOING THROUGH THE REPORT AND THERE IS AN EXPLICIT SORT OF FOCUS ON WHAT I GUESS THEY ARE REFERRING TO AS PHYSICAL SCIENCE. VISIBLE SIGNS OVER BIO TO A CERTAIN EXTENT. IS THERE CONFLICT IN TERMS OF WHAT THEY ARE PUSHING IN TERMS OF THE TYPES OF RESEARCH THEY WANT AND THE TYPES THAT YOU AND YOUR PEERS ARE ALREADY DOING? JOHN: THEY ARE GOING TO ALLOCATE AN OUTSIZED AMOUNT OF CAPITAL UP TO $5 BILLION TOWARD AI AND AGAIN AS A COUNTRY, THIS IS AN AREA WE KNOW WE NEED TO DEPLOY A LOT OF CAPITAL AND FREE SCIENTISTS TO BE ABLE TO WORK JUDICIOUSLY TO STAY AT THE CUTTING EDGE FROM THE GLOBAL COMPETITIVE RACE PERSPECTIVE SO I THINK THAT IS A GOOD THING AND I THINK THE UNDERPINNINGS OF THAT IN HEALTH CARE OF COURSE, AI CAN BE APPLIED TO A LOT OF DIFFERENT APPLICATIONS. ONE OF THE AREAS THAT IS RIGHT FOR THAT IS HEALTH CARE. DEVELOPMENT, CLINICAL TRIALS. THE U.S. HAS BECOME A LOT MORE AGGRESSIVE, BEING ABLE TO GET THROUGH FDA APPROVAL MUCH MORE QUICKLY. THAT IS ONE OF THE OTHER PROVISIONS NOTED IN THE MEMO WAS THE ABILITY TO START TO STREAMLINE FDA REVIEW PROCESSES, SOME OF WHICH WE HAVE BEGUN TO SEE GET ROLLED OUT, MEANING THE MOVEMENT FROM ONE WELL-CONTROLLED STUDY VERSUS TWO WHICH WAS PREVIOUSLY WHAT WAS REQUIRED FOR FDA APPROVAL. ROMAINE: ONE CRITICISM IS THE IDEA OF WHETHER THE PRIVATE INDUSTRY WILL HAVE THE SAME LONG-TERM VIEW THAT HAS LED TO SOME BREAKTHROUGH DISCOVERIES. IT'S ONE THING TO LOOK AND SAY IF WE CAN DO THIS IN FIVE YEARS, WE WILL DO IT BUT WHEN YOU START TO THINK ABOUT GLP-1'S AND HOW LONG IT TOOK FOR MATT TO COME ABOUT, CRISPER, HOW LONG THAT TOOK TO COME ABOUT, OUR PRIVATE COMPANIES GOING TO HAVE THE SAME INCENTIVE TO STICK THIS OUT FOR POTENTIALLY DECADES IN A WAY THAT A UNIVERSITY PROBABLY WOULD NOT MIND? JOHN: IT'S A VERY FAIR POINT THAT YOU'RE MAKING AND WE NEED TO MAKE SURE THAT WE ARE BEING VERY CAREFUL AS A COUNTRY TO CONTINUE TO INVEST INTO BASIC RESEARCH THAT DOES TAKE YEARS TO GET TO THE POINT WHERE CRISPER BECOMES AN ACTUAL APPLICATION. CLINT BENTLEY, JENNIFER DOWDEN'S COMPANY JUST WENT PUBLIC LAST WEEK. A PRODUCT WITH CRISPER GOING INTO THE CLINIC IN THE NEAR TERM. RIGHT BEFORE OUR EYES, WE SEE HOW IMPORTANT THAT EARLY-STAGE RESEARCH INVESTMENT IS. THE POINT IS THAT MORE INNOVATIVE MONEY IS COMING IN FROM OTHER SOURCES. FOR EXAMPLE, WE OPENED OUR NEW LAB AT THE NEW JERSEY INNOVATION HUB IN NEW BRUNSWICK, NEW JERSEY. PUBLIC-PRIVATE PARTNERSHIP IS GETTING INVESTING THROUGH FUNDS AND PLATFORMS LIKE OURS. IF YOU ARE GOING TO DO THE KIND OF LONG FOCUSED RESEARCH, YOU NEED TO START WITH THE MARKET IN MIND. IT'S A SWINGING OF THE PENDULUM TO BECOME A LITTLE BIT MORE BALANCED. WE NEED BASIC RESEARCH BUT YOU ALSO NEED A MARKET EYE TOWARDS AM I SOLVING A PROBLEM? HISTORICALLY BACK TO THE END OF OUR BRUSH, POST-WORLD WAR II NIH FUNDING, IT WAS A DISCOVERY ON OUT AND I THINK WHAT WE ARE SEEING NOW IS SWITCHING WHERE IT IS MARKET DEMAND ON INTO THAT DISCOVERY. ROMAINE: ALWAYS GREAT TO TALK TO YOU. CEO OVER AT PORTAL INNOVATIONS. WE ARE GOING TO STAY IN THE HEALTH CARE SPACE BECAUSE THERE IS A BIG DEAL GROWING OUT THERE BETWEEN BRISTOL-MYERS AND ASTRAZENECA AND LET'S JUST SAY SOME INVESTORS DON'T LIKE THIS DEAL AT ALL. WE WILL BREAK IT DOWN FOR YOU WHEN WE COME DOWN AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ROMAINE: SHARES OF ASTRAZENECA DOWN AS MUCH AS 10% AS INVESTORS ARE BULKING AT THE IDEA OF A -- BALKING AT THE IDEA OF A MEGAMERGER. THE TWO COMPANIES HAVE HELD EARLY-STAGE TOPS THAT COULD RESULT IN WHAT WOULD BE THE LARGEST FARM A DEAL IN HISTORY. NEITHER COMPANY HAS COMMENTED YET AS TO WHETHER THIS WOULD ACTUALLY COME TO FRUITION. THAT IS NOT STOPPING ANYBODY FROM PARSING EXACTLY HOW THEY FEEL ABOUT IT. JOINING US NOW AS JARED HOLTZ OVER AT MIZUHO SECURITIES. THE SHARE PRICE REACTION FOR ASTRAZENECA WAS PRETTY SEVERE. WE SAW THE SHARES IN LONDON DOWN 9% AND THE ADRS IN THE U.S. ARE ALSO DOWN 6% OR SO AS WE SPEAK. IT SEEMS LIKE THIS IS A SIMPLE SORT OF -- THE DUALITY OF IT ALL, THE IDEA THAT ASTRAZENECA IS A COMPANY THAT IS GROWING. REVENUE GROWTH, EPS GROWTH, IT, ETC., BIG PIPELINE OF -- ETC., ETC., BIG PIPELINE OF DRUGS. WHAT DOES ASTRAZENECA GET OUT OF THIS AT ALL? >> THANKS FOR HAVING ME. IT'S PRETTY SIMPLE ON THAT SIDE AS FAR AS THE REACTION. A LITTLE BIT OF A SHOCK WITH HOW MUCH MONEY THIS DEAL WOULD BE IN THEORY AND ALSO WHY MESS IT UP AT THIS POINT? WHAT THEY WOULD GET WOULD BE A LARGE-SCALE PHARMACEUTICAL COMPANY, DIVERSIFIED WITH A GREAT DEAL OF COST-CUTTING OPPORTUNITY. ARE THERE ENOUGH COSTS TO CUT WHERE THE DEGRADATION OF SOME OF THE KEY DRUGS OUT OF BRISTOL BECOME LESS MEANINGFUL AND THEN THE TOTALITY OF THE COMPANY OVER THE NEXT FIVE TO 10 YEARS LOOKS PRETTY GOOD? ROMAINE: TALK TO ME ABOUT THE PIPELINE. THERE ARE A FEW THINGS THERE THAT I WAS TRYING TO LOOK AHEAD AND IT DOES SEEM THERE ARE A FEW THINGS THAT COULD HAVE SOME POTENTIAL AROUND INFLAMMATORY DISEASES AND OBVIOUSLY IN THE TRADITIONAL ON QUALITY SPACE. -- ONCOLOGY SPACE. IS THERE SOMETHING THAT COULD BE ADDITIVE TO THE COMBINED COMPANY SHOULD THIS ACTUALLY HAPPEN? >> THERE ARE BASICALLY THREE SEGMENTS THAT ARE WORTH WATCHING. ONE IS OBVIOUSLY ONCOLOGY. THIS IS WHERE BRISTOL HAS A STRONGHOLD IN A VERY GOOD POSITIONING. OBVIOUSLY, THEY ARE GOING TO BE FACING SOME HEADWINDS IN TIME AND THEN YOU HAVE NEUROSCIENCE AND INI OR INFLAMMATION WOULD BE THE THIRD. ALL THE THREE CATEGORIES ARE IMPORTANT TO LOOK OUT FOR FOR BRISTOL. POTENTIALLY THAT IS WHY ASEAN HAS INTEREST. THEY ARE BULLISH HERE. OTHER INVESTORS WOULD PUSH BACK AND SAY WHY WOULDN'T THEY WAIT FOR SOME OF THOSE PIPELINE OPPORTUNITIES TO PLAY OUT RATHER THAN SPENDING THE MONEY NOW? ROMAINE: I AM CURIOUS ABOUT THE REGULATORY ISSUES HERE. THE LARGEST HEALTH CARE DEAL IN THE U.S. IF THIS WERE TO BE PULLED OFF. YOU COULD GET A LOT RUBBERSTAMPED IF YOU KNOW THE RIGHT PEOPLE AND IF YOU ARE GOING TO DO THIS, NOW IS THE TIME TO DO THIS. IS THAT MAY BE PART OF WHY WE ARE SEEING THIS? JOHN: I DON'T KNOW HOW HEAVILY IT'S BEING PUSHED BUT THERE ARE PROBABLY BANKERS AROUND WHO ARE LOOKING AT THIS ADMINISTRATION AND ARTICULATING A VIEW THAT IF YOU HAD ANY INKLING OR INCLINATION TOWARDS A LARGE-SCALE MEGAMERGER, THIS WOULD BE THE WONDER -- WINDOW. IT DOES SEEM LIKE THE OPPORTUNITY IS IN FRONT OF THEM IN A WAY THAT HAS NOT BEEN IN FRONT OF THEM FOR A WHILE. ROMAINE: I'M CURIOUS ABOUT WHETHER THERE WOULD BE ANY ISSUES ABOUT THIS PARTICULAR ADMINISTRATION GIVEN THEIR FOCUS ON TRYING TO LOWER DRUG COSTS. WITH THAT MAY BE UP AND SORT OF ANY BENEFIT FROM THIS? JOHN: IT'S HARD TO KNOW. I THINK ONE OF THE VARIABLES HERE COULD BE ASTRAZENECA GROWING ITS PRESENCE IN THE U.S. WHICH WOULD BE A POSITIVE. I WOULD DOUBT THEY WOULD BE ANY ARTICULATION OF INCREASING DRUG PRICES AS A CORE STRATEGY HERE JUST TO SORT OF GET OUT OF HARMS WAY SO I DON'T THINK SO BUT YOU KNOW, OVER THE LONG-TERM, YOU JUST DON'T KNOW. ROMAINE: JARED HOLTZ, HEALTH CARE EQUITY STRATEGIST OVER AT MIZUHO SECURITIES. SHARES AND ADR'S DOWN ON THE DAY. WE ARE TAKING A LOOK AT SHARES OF YOUNG -- YUM! BRANDS DOWN 3% RIGHT NOW AS WE ARE STARTING TO SEE MORE DETAILS ABOUT THE CYCLOSPORA OUTBREAK AND WITH THESE COMPANIES NEW. ACCORDING TO A STORY, MICHIGAN HEALTH AUTHORITIES HAD ALREADY BEEN IN TOUCH WITH YUM! BRANDS, THE PARENT COMPANY OF TACO BELL, AS EARLY AS JULY ABOUT THIS PARASITIC OUTBREAK. NOW OUT WITH THE STATEMENT OVER THE LAST FEW MINUTES SAYING THAT IT DID MOVE SWIFTLY TO REMOVE TAINTED INGREDIENTS. IN THAT IT DID DISCUSS ITS RESPONSE IN MICHIGAN WITH REGARD TO THAT INVESTIGATION. WE ARE GOING TO TRY TO GET YOU MORE DETAILS ON THIS AS THE SHARES REMAIN UNDER PRESSURE ON THE BACK OF THAT OUTBREAK. WHEN WE COME BACK, WE ARE GOING TO TALK PRIVATE CREDIT. IN THE PENALTY BOX OR NOT? THE CHIEF INVESTMENT STRATEGIST AT CHURCHILL ASSET MANAGEMENT RIGHT HERE ON BLOOMBERG. ♪ ROMAINE: 3:30 P.M. IN NEW YORK. THIS IS THE COUNTDOWN TO THE CLOSE. WE KEEP OUR EYES ON PUBLIC MARKETS AS WE COUNT YOU DOWN TO THE CLOSING BELLS. A MOMENT TO TALK ABOUT WHAT'S GOING ON IN PRIVATE MARKETS. LAST WEEK WE LEARNED THE DEFAULT RATE ACROSS 1300 U.S. PRIVATE DEBT FOLLOWERS -- BORROWERS ROSE TO A HIGH OF 6%. THE NEXT GUEST SAYS IT'S IMPROVING FOR THE SECOND HALF AS THE PLATINUM ERA FOR PRIVATE MARKETS DAWNS. JOINING US NOW TO DISCUSS IS RANDY SCHWIMMER, CHIEF INVESTMENT STRATEGIST AT CHURCHILL ASSET MANAGEMENT. GREAT TO SEE YOU. RANDY: GREAT TO BE BACK. ROMAINE: YOU HAVE TALKED ABOUT THE IDEA FOR ASSETS AND THE LENDING YOU GUYS DO OVER AT CHURCHILL, YOU ARE NOT SEEING THE SAME STRESS, THE SAME DEFAULT AS MAY BE WHAT WE SEE IN THE BROADER MARKET. SQUARE THE CIRCLE WITH SOME OF THAT 6% NUMBER ACROSS THOSE 1300 ISSUES AND WHAT IS UNDER THE HOOD AT CHURCHILL ASSET MANAGEMENT. RANDY: THAT'S A TIMELY QUESTION. I MENTIONED LAST MONTH THAT THE LEAD WHICH IS COMING OUT AS A REBRAND, WE WILL BE DOING A WEBINAR ON DEFAULT IT WILL HAVE THE TOP FOUR RATING AGENCIES IN SEPTEMBER EACH TALKING ABOUT WHAT THEY ARE SEEING. WHAT YOU DISCOVER IS EVERYBODY'S METHODOLOGY IS DIFFERENT. FITCH INCLUDES OTHER THINGS OTHER THAN ACTUAL DEFAULT RATES. FOR EXAMPLE, WHEN THEY SEE A RESTRUCTURE OR PUSHING A MATURITY OR THEY SEE THEY PICK LOAN, THEY INCLUDE THAT AS IF IT IS A DEFAULT AND THAT'S A REASONABLE ASSUMPTION. THE LENDERS ARE DOING SOMETHING TO CHANGE THE DYNAMICS FROM THE ORIGINAL DEAL. IT ACTUALLY HAS NOT DEFAULTED YET. THEY WILL EXPLAIN THE METHODOLOGY AND SAY WE THINK IT IS A RISK AND WE SEE THE RISK IS A LITTLE HIGHER. HENCE THE 6% THEY HAVE IS HIGHER THAN SOME OF THE OTHERS. WE WANT THEM TO EXPLAIN THAT. WHAT WE ARE SEEING -- ROMAINE: THAT IS NOT JUST SEMANTICS. THAT'S A TECHNICAL DEFAULT. IT DOESN'T MEAN IT'S A WASH OUT. SOMETHING CHANGED AND THEY HAVE AN OBLIGATION TO FLAG THAT HAS A DEFAULT. RANDY: SOME OF THE OTHER AGENCIES DON'T. THEY ARE SAYING, IS THE COMPANY IN DEFAULT OF ITS PAYMENT? ARE THE LENDERS SAYING, YOU KNOW WHAT? WE WILL RESTRUCTURE THIS TO ALLOW THE BUSINESS TO RECOVER. IN SOME CASES IT HELPS THEM RECOVER AND EVERYBODY GETS THEIR MONEY BACK. IT'S IMPORTANT TO UNDERSTAND THE DIFFERENCES. WHY IS ONE SAYING 6% IN ONE SAYING 2%? THAT'S IMPORTANT. WE ARE NOT SEEING THAT. THESE ARE MARKET COMPANIES AS WE TALKED ABOUT BEFORE AND WE ARE SEEING THE SAME LEVEL OF RISK WE HAVE BEEN SEEING FOR THE LAST 24 TO 36 MONTHS. INTEREST RATES HAVE COME DOWN IN THE LAST COUPLE OF YEARS. THAT IS HELPFUL. INTEREST RATES WILL START TO COME UP AGAIN. ALL INVESTORS ARE THINKING NOW IS, WHAT IS IN THIS PORTFOLIO SUCH THAT IF INTEREST RATES GO UP THERE MAY BE MORE RISK? ROMAINE: IS THE EXPECTATION THAT THEY WILL GO UP SIGNIFICANTLY OR WE WILL JUST BOUNCE AROUND? WE WILL BOUNCE AROUND THAT LEVEL? RANDY: IF YOU THINK ABOUT THE FED SAYING WE WILL HAVE AT LEAST ONE OR TWO RAISES -- RATE HIKES BEFORE THE END OF THE YEAR, IF YOU THINK ABOUT A 9% UNLEVERED YIELD ON SENIOR CREDIT RIGHT NOW, YOU ARE TALKING 9.5% TO 10% BY THE END OF THE YEAR. INVESTORS ARE SAYING, THAT'S ATTRACTIVE. IT IS NOT THE 12% WE HAD IN THE GOLDEN AGE OF PRIVATE CREDIT. I THINK THIS IS MORE SUSTAINABLE. ROMAINE: TALK ABOUT THE DIFFERENCE BETWEEN WHAT WE SEE ON THE TECH SIDE OF LENDING, PARTICULARLY AI AND DATA CENTERS, AND THE NON-AI TECH STUFF. IS THERE A SIGNIFICANT DIFFERENCE IN HOW THOSE ARE VALUED? RANDY: IT'S INTERESTING BECAUSE THE NON-TECH IS GETTING VALUED A LOT HIGHER BECAUSE SINCE THE FOCUS ON AI IS SO HIGH, WHEN PRIVATE EQUITY INVESTORS ARE LOOKING AT BUSINESSES NOW, THE OLD ECONOMY BUSINESSES THAT WE TRAFFIC IN ARE GETTING ALMOST AS HIGH PURCHASE PRICE MULTIPLES AS SOME OF THE TECH BUSINESSES. I THINK TECH IS EVOLVING. THAT'S ONE OF THE BEAUTIES OF IT. IT EVOLVES ALL THE TIME. SENIOR CREDIT, WHICH IS LOWER RISK IS WE ARE NOT LOOKING AT HIGH GROWTH BUSINESSES. WE ARE LOOKING AT STEADY GROWTH BUSINESSES. THE DIFFERENCE YOU MENTIONED BETWEEN AI AND TECH IS SOMETHING THAT WILL BE EVOLVING EVERY TIME. WE ARE LOOKING AT IT WITH ANY OTHER SECTOR YOU WANT TO MAKE SURE OBSOLESCENCE RISK IS OUR PRIME FOCUS. ROMAINE: WHEN OBSOLESCENT RISK -- THE IDEAS HALO. PEST CONTROL. HVAC. ON AND ON HERE. RANDY: VET CENTERS. ROMAINE: IF SOMEONE WHO HAS A DOG, YOU GET A LOT OF MONEY OUT OF ME ONE WAY OR ANOTHER. IS THERE IS SENSE THAT YOU DON'T WORRY ABOUT THAT ECONOMIC -- NOT A SILLY PROOF BUT ECONOMICLLY RESILIENT -- ECONOMIC DUTY RESILIENT? -- ECONOMICALLY RESILIENT? RANDY: THESE OLD SERVICE RELATED BUSINESSES TEND TO BE MORE RESILIENT. THEY TEND NOT TO BE IMPACTED BY TARIFFS. THEY ARE LESS IMPACTED BY SOME OF THE TECHNOLOGY. PEST CONTROL IS NOT TYPICALLY INVOLVED WITH THAT. THERE ARE 300,000 COMPANIES IN UNITED STATES, TWO THIRDS ARE IN THE SERVICE SECTOR. PRIVATE EQUITY FIRMS THAT ONLY ON ABOUT 5% OF THE TOTAL HAVE SO MUCH WHITE SPACE RIGHT NOW TO LOOK AT AND THEY ARE LOOKING AT THESE BUSINESSES AND SAYING, OVER TIME TARIFFS AND AI AND COVID IN ALL THESE MACROS THAT HAVE EMBROILED THE UPPER MARKETS ARE NOT AFFECTING THE SMALLER COMPANIES. ROMAINE: I WANT YOUR THOUGHTS ABOUT HOW THE INDUSTRY IS CHANGING FROM THE PERSPECTIVE OF THE INVESTOR SIDE. MAYBE I AM MAKING TOO MUCH OF THIS BUT YOU HAD THIS NEWSLETTER PRODUCT. YOU DROPPED LEFT. IS THERE A REASON FOR THAT? LEAD LEFT HAS A SPECIFIC CONNOTATION IN THE WORLD OF FINANCE. IS THAT A NOD TO SOMETHING? RANDY: THAT SPECIFIC REFERENCE IS SOMETHING YOU AND I WOULD PROBABLY KNOW ABOUT AND OTHERS MIGHT NOT, PARTICULARLY THE GENERATION THAT DOES NOT UNDERSTAND ABOUT WHAT OLD TOMBSTONES WERE IN THE WALL STREET JOURNAL. THE LEAD LEFT WAS THE LEAD UNDERWRITER ON THE TOP LEFT OF THE TOMBSTONE AD. YOU DON'T SEE THAT IN THE JOURNAL ANYMORE. WITHOUT THE REFERENCE WAS CONFUSING. SOME OF MY PERSONAL CONTACTS THAT WOULD GET THIS AND THINK IT WAS A POLITICAL REFERENCE, WHICH IT IS NOT. IT'S AN INVESTMENT BANKING TERM. AS WE BROADEN THE SCOPE OF THE LEAD, WHICH IS EVEN MORE SIMPLE AND POWERFUL TITLE GOING OUT TO NOW OUR CLIENTS AND THE WEALTH CHANNELS AND INSTITUTIONAL, WE ARE TRYING TO BROADEN THE UNDERSTANDING OF THE ASSET CLASS. PRIVATE CREDIT RIGHT NOW HAS SHOWN SO MUCH FOR STAYING POWER. THE THING THAT IS SO ATTRACTIVE TO INSTITUTIONAL INVESTORS, AS YOU KNOW OVER THE LAST DECADE, EQUALLY ATTRACTIVE TO THE WEALTH INVESTORS BUT THEY DON'T UNDERSTAND IT AS WELL BECAUSE THEY DON'T HAVE THE EXPERIENCE OF THE INSTITUTIONAL MARKET HAS HAD. WITH THE LEAD COMING OUT WE ARE TRYING TO EXPLAIN THE ASSET CLASS IN A WAY THAT THE AVERAGE INVESTOR LOOKS AT AND SAYS I UNDERSTAND IT'S LIKE MY HOUSE. I'M COMFORTABLE WITH THE VALUE OF MY HOUSE. I KNOW IT WILL NOT TRADE EVERY DAY. THE SAME WITH PRIVATE CREDIT. IT IS STABLE AND WILL PROVIDE ME WITH INCOME THAT IS HIGHER YIELD THAN PUBLIC CREDIT AND ALLOW ME TO NOT WORRY AS MUCH ABOUT THE MACRO ISSUES WE HAVE BEEN TALKING ABOUT BECAUSE THE BUSINESSES ARE MORE INSULATED AND MORE RESILIENT. ROMAINE: I HAVE TO LEAVE IT THERE. GREAT TO HAVE YOU BACK ON THE PROGRAM. RANDY SCHWIMMER OVER AT CHURCHILL ASSET MANAGEMENT IN THE LEAD OF THE LEAD. WE WILL TALK EBAY SELLING OFF. A DOWNGRADE FROM WELLS FARGO. THE ANALYST ON THAT CALL JOINS US NEXT ON BLOOMBERG. ROMAINE: TIME FOR THE STOCK OF THE HOUR. IT IS EBAY. SHARES DOWN ABOUT 6% ON THE DAY, HAVING ITS WORST DAY GOING BACK TO EARLY FEBRUARY AFTER WELLS FARGO CUT THE STOCK TO UNDERWEIGHT, LOWERING THE PRICE TARGET TO $92 CITING AN INCREASINGLY COMPETITIVE LANDSCAPE IN THE U.S. AND INCREASED MARKETING SPEND FOR ONE OF ITS COMPETITORS. JOINING US NOW IS THE ENDLESS BEHIND THE CALL. KEN, LET'S TALK ABOUT THE COMPETITION. FOR A WHILE EBAY IS THE PLACE YOU WENT TO FOR COLLECTIBLES, CAR PARTS, WATCHES, WHATEVER. NOW IT SEEMS LIKE THERE'S A PROLIFERATION OF WEBSITES WHERE I CAN GET A LOT OF THE SAME THINGS. IS THIS A REAL EXISTENTIAL THREAT TO THE COMPANY? KEN: THANKS FOR HAVING ME ON. I WANT TO BE CLEAR. EBAY HAS DONE A GREAT JOB OF TURNING THIS BUSINESS FROM A MARKETPLACE THAT SERVES EVERYONE AND EVERYTHING FOR EVERY PURPOSE TO HAVING SOME REAL DISTINCT STRENGTHS AND VERTICALS. THAT IS WHY YOU HAVE SEEN THEIR GROWTH ACCELERATE. THIS WAS HOPING AROUND 0% GROWER FOR QUITE SOME TIME. IT HAS ACCELERATED. THE STOCK HAS APPRECIATED SIGNIFICANTLY. IT'S BEEN A GREAT PERFORMER. WHAT WE SEE NOW IS THERE'S AN EMERGING -- THIS IS A CLASSIC COMPETITIVE INTENSITY RISING CASE WHERE YOU HAVE A EUROPEAN COMPETITOR FROM A PRIVATELY HELD COMPANY VENTED THAT IS ENTERED THE U.S. IN A SPECIFIC AREA, LIKE CONSUMER TO CONSUMER. GENTLY WORN, GENTLY USED FASHION AND ACCESSORIES. ENTERING INTO THE U.S.. WHAT WE SEE IS EBAY THROUGH BUSIN -- THROUGH THIS NEW ASSET THEY ARE AGGRESSIVELY SPENDING TO DEFEND THEIR MARKET POSITION AND TO EXTEND THEIR MARKET POSITION IN THE U.S. ROMAINE: EXPLAIN WHAT DPOP DOES. I HEAR THIS FROM MY TEENAGE SON. TALKS ABOUT IT ALL THE TIME. ALL HIS FRIENDS. IS THE IDEA THAT JUST THE INTEGRATION OF IT IS GOING TO BE COSTLY? IS THAT A SHORT-TERM ISSUE BUT LONG-TERM IT SMOOTHS OUT? KEN: THIS IS ABSOLUTELY A SECULAR GROWTH AREA. YES, AGAINST THE YOUNGER DEMO THEN DARE I SAY YOU ARE ME. ROMAINE: NO PROBLEM. KEN: I WOULD SAY WE DO THINK -- THESE BUSINESSES, -- THIS BUSINESS IS UNPROFITABLE. BWE HAVE SEEN A MATERIAL INCREASE IN MARKETING INTENSITY IS THIS NEW ENTRANT CAME IN. WE BELIEVE THE BUSINESS HAS A LOWER RETURN PROFILE THAN THE CORE EBAY BUSINESS. IT IS NOT THAT THIS IS A BAD MOVE STRATEGICALLY FOR EBAY. THERE IS A HISTORICAL PRECEDENT WHERE EBAY HAD TO REDUCE ITS FEES OR REDUCE ITS COMMISSION STRUCTURE IN BOTH GERMANY AND THE U.K. OVER THE LAST THREE YEARS. IT WAS VERY HARMFUL TO THEM FROM A FINANCIAL PERSPECTIVE. THIS IS ANOTHER WAY TO FIGHT A NEW ENTRANT WITH THIS DPOP ASSET. IT WILL CAUSE SOME PAIN IN THE SHORT TERM. ROMAINE: ONLY ABOUT A MINUTE LEFT. PART OF EBAY'S SECRET SAUCE WITH THE IDEA OF TRUST. THE IDEA THAT YOU KNEW YOU WERE DEALING WITH AUTHORIZED ROMAINE: YOU ARE MAINLY GETTING PRODUCTS FOR WHAT THEY WERE SUPPOSED TO BE. DOES THAT LEVERAGE FOR SOME OF THE COMPETITORS? KEN: IT HAS IN AREAS LIKE COLLECTIBLES WHERE AUTHENTICITY, HIGHER-END LUXURY ITEMS, ETC. THIS IS A LITTLE DIFFERENT BUSINESS, CONSUMER TO CONSUMER. THIS IS AN AVERAGE SELLING PRICE OF AROUND $20, MUCH LOWER THAN THE TYPICAL EBAY PRODUCT SO IT HAS A LITTLE BIT DIFFERENT FLAVOR HERE. AND AS SUCH, I THINK IT IS A LITTLE DIFFERENT. IT ALSO HAS A DIFFERENT DEMOGRAPHIC, MUCH YOUNGER. AT THAT PRICE POINT, I THINK THERE IS A DIFFERENT EXPECTATION. ROMAINE: KEN OVER AT WELLS FARGO. ROMAINE: JUST ABOUT 10 MINUTES AWAY FROM THE CLOSING BELLS, GREEN ACROSS THE SCREEN AT THE S&P AND NASDAQ UP FOR A THIRD STRAIGHT DAY. THE S&P WELL ABOVE ALL OF ITS KEY MOVING AVERAGES WITH A BIT OF A SCARE THAT WE HAD OVER THE LAST FEW WEEKS WITH THE HUGE SELLOFF IN MOMENTUM GIVING WAY JUST A LITTLE BIT NOW THAT THE EARNINGS HAS LARGELY CLEARED FOR MOST OF THE BIG TECH NAMES. WE GET SOME EARNINGS AFTER THE BELL FROM PALANTIR AND FROM ON SEMI THAT COULD SHAPE THE NARRATIVE AS WELL AS FROM AMD AND SPACEX TOMORROW AFTER THE BELL, SOMETHING TO KEEP AN EYE ON BUT AT LEAST FOR RIGHT NOW, A LOT OF FOLKS COMING BACK INTO THE POOL. THE NASDAQ COMPOSITE UP ABOUT TWO POINT 2% AND DOW TRANSPORTS ADDING ABOUT .7%. SOME OF THIS OF COURSE BEING AIDED BY THE DROP THAT WE ARE SEEING TODAY IN OIL PRICES AND THE DROP THAT WE ARE SEEING IN TREASURY YIELDS. VICE PRESIDENT AND HEAD OF DERIVATIVES MARKET INTELLIGENCE AS CBOE GLOBAL MARKETS. GREAT TO SEE YOU HERE. LET'S TALK YIELDS. DOWN TODAY, WE SAW THE BIG SPIKE ON WEDNESDAY AFTER THE FED MEETING AND A LITTLE BIT MORE OF STEEPENING THAT WE SAW ON FRIDAY. THERE SEEMS TO BE THIS CONSENSUS NO MATTER WHAT IS HAPPENING ON THE DAY THAT MOST PEOPLE ARE BETTING ON HIGHER YIELDS GOING FORWARD. WE HEARD FROM RANDY JUST A BIT AHEAD OF YOU AND HE SAYS HE EXPECTS YIELDS TO BE HIGHER AS WELL. ARE YOU SEEING THAT PLAY OUT RIGHT NOW? >> THAT IS THE CONSENSUS WHEN YOU LOOK AT THE OPTION MARKET AND WHAT INVESTORS ARE PRICING WHEN IT COMES TO THE OPTIONS MARKET SO THAT WEEK, PLUS FED MEETING, WE SAW NOT ONLY A BIG JUMP IN YIELD BUT A BIG SPIKE IN INTEREST RATE VOLATILITY. IT MEASURES THE EXPECTED VOLATILITY. THAT TOOK A BIG UPWARD MOVE AND IN ADDITION, WE ARE SEEING IN TERMS OF THE POSITIONING IS A HUGE INCREASE IN DEMAND FOR POETS. THE SKEW MEASURES TO DEMAND FOR PUTS RELATIVE TO CALLS, THAT HIT ITS HIGHEST LEVEL SINCE THE GLOBAL FINANCIAL CRISIS MEANING MORE AND MORE INVESTORS PAYING FOR PROTECTION AGAINST IT FOR THE BOND SELLOFF MEETING POSITIONING FOR YIELDS TO POTENTIALLY MOVE EVEN HIGHER AND THAT IS A SIGN OF INCREASING QUESTIONS AROUND CREDIBILITY OF THE FED AND THE COMMITMENT TO FIGHTING INFLATION. ROMAINE: DID THAT ARISE ON WEDNESDAY OR WAS THIS IN THE WORKS PRIOR TO THE FED MEETING? >> VERY ABRUPT REPRICING IN THE BOND MARKET IN VOLATILITY AND OPTION MARKET POSITIONING POST THE FED MEETING LAST WEEK. ROMAINE: PART OF THE ISSUE WASN'T SO MUCH THAT THEY ARE SCARED OF YIELDS BUT THIS IDEA THAT THE LACK OF TRANSPARENCY OR PERCEIVED LACK OF TRANSPARENCY, SOMETHING HE TALKS ABOUT, THE IDEA THAT THEY CAN COMMUNICATE TO THE SAME EXTENT. I GUESS THE QUESTION THEN BECOMES DOES THIS SET US UP FOR MORE BOND VOLATILITY PERPETUALLY OR AT LEAST AS LONG AS WARSH IS THERE AN IS ON HE TAKES THIS ATTACK OF MAY BE SAYING LAST? -- TACK OF SAYING LAST? -- LESS? >> IT SEEMS THE WAY THAT CHAIR WARSH HAS GONE ABOUT KIND OF COMMUNICATING, HE ALMOST WANTS THAT VOLATILITY IN THE BOND MARKET WITH KIND OF THE LACK OF GUIDANCE, LACK OF FORWARD GUIDANCE AND A LOT OF THE COMMUNICATION AND THE FED HAS BEEN KNOWN FOR. THAT IS THE TRADE-OFF AND ONE OF THE THINGS WE ARE WATCHING IS THIS VOLATILITY IN THE MOUNT -- BOND MARKET AND HOW MUCH OF IT SPILLS OVER INTO OTHER ASSET CLASSES. ROMAINE: LET'S TALK ABOUT EQUITIES AND DRAW THE LINK THERE. WE KNOW KIND OF THE CORRELATIONS BETWEEN RISING YIELDS AND THE POTENTIAL IMPACT THAT THAT HAS ON STOCKS AT THE SAME TIME, IT SEEMS LIKE WHAT WE ARE SEEING IN THE EQUITY MARKET AT LEAST FOR THE MOMENT IS A LITTLE BIT DISCONNECTED FROM THAT. >> EQUITY INVESTORS ARE NOT BRUSHING OFF THE CONCERNS OR THE LONG-TERM TRAJECTORY FOR INTEREST RATES BUT THE MORE IMMEDIATE CONCERN IS AROUND EARNINGS WITH THE AI TRADE, THE HYPERSCALERS, THE PROJECTIONS AND THAT IS WHY LAST WEEK WAS SUCH A CRITICAL WEEK WHEN IT COMES TO EQUITY MARKET MOMENTUM. MANY OF THE HYPERSCALERS REPORTING EARNINGS WHICH BEAT EXPECTATIONS AND LESLIE CAME IN WITH AN EXPECTATION AND THAT KIND OF PROVIDED THE MOMENTUM FOR THE REBOUND THAT WE SAW IN THE MARKET. ROMAINE: WE HAD SOMEONE ON THE PROGRAM LAST WEEK IN THE MIDST OF ALL THESE EARNINGS AND HE SAID BASICALLY IN HIS YOUTH THE DISPERSION TRADE WAS KIND OF OVER, THE IDEA THAT YOU ARE STARTING TO GO FROM WHAT WAS PURELY KIND OF A SINGLE STOCK IN A STOCK FIGURES TYPE OF MARKET AND NOW YOU'RE STARTING TO SEE A LOT MORE CORRELATIONS. ARE YOU STARTING TO SEE THE SAME THING IN YOUR DATA? >> NOT YET BUT THAT IS A DISCUSSION -- TOPIC OF DISCUSSION WITH THE -- HOW DOES IT PERSIST? WE ARE STILL SEEING A FAIR AMOUNT OF REALIZED DISPERSION IN THE MARKET. THEY ARE GETTING EITHER REWARDED OR PUNISHED BASED ON THEIR FUNDAMENTALS, DOUBLE DIGIT SWINGS IN EITHER DIRECTION LAST WEEK SO CERTAINLY I WOULD SAY THERE'S STILL PLENTY -- PLENTY OF IDIOSYNCRATIC RISK IN THE MARKET THAT THE QUESTION IS WHEN DOES IT TURN MORE MACRO SYSTEMIC? WHAT WE ARE SEEING WITH THE AI TRADE WITH FREE CASH FLOW AND THE HYPERSCALERS GOING NEGATIVE MEANING THEY ARE NOW MORE DEPENDENT ON EXTERNAL FUNDING SO YOU COULD GET MORE SYSTEMIC MACRO RISKS THROUGH THE CREDIT CHANNEL AND WE ARE ALSO SEEING MORE INVESTORS TALKING ABOUT KIND OF THE CIRCLE OF FINANCING WE ARE SEEING WITHIN THE AI TRADE AND CERTAINLY, THAT RAISES A RISK OF SOMETHING GOING ON WITH IT. ONE COMPANY HAS OBVIOUSLY BROADER IMPLICATIONS AND THE THIRD FACTOR WHICH ALSO HAS BEEN IN THE NEWS A LOT, WHICH IS LEVERAGE. LEVERAGE IS ANOTHER CHANNEL IN WHICH AN IDIOSYNCRATIC RISK CAN TURN MORE SYSTEMIC OR MACRO. THE WAY IT IS CURRENTLY SET UP WHICH IS PRICING PURELY FOR THE IDIOSYNCRATIC MOVE AND UNDERPRICING THE MACRO RISK HAS PEOPLE TAKING THE OTHER SIDE OF THE TRADE. THE LONG CORONATION COME ALONG MARKET WIDE RISK AND SHORT DISPERSION. ROMAINE: WE HAVE A FEW MORE EARNINGS. NVIDIA A FEW WEEKS AWAY FROM THAT. I'M NOT SURE EXACTLY WHAT IS GOING ON WITH SPACEX. GIVE ME A SENSE HERE OF HOW PEOPLE SORT OF SET UP FOR THESE THINGS. IS IT STILL BASICALLY THIS BINARY TRADE UH OH WE ARE GOING TO, ALL GO TO THE MOON WERE DOWN TO THE BASEMENT? MANDY: WHEN WE LOOK AT INVESTOR POSITIONING FOR RETAIL, WE HIGHLIGHTED THAT RETAIL WAS GETTING A LOT MORE BULLISH ON THE HYPERSCALERS GOING INTO EARNINGS. WHEN WE LOOK FOR THE CHIP STOCKS, AMD IN PARTICULAR FOR THIS WEEK, A THEME FROM THE RETAIL SIDE IS MORE AND MORE PEOPLE SELLING OPTIONS SO TAKING THE VIEW THAT THE STOCK LIKELY HIS RANGE BOUND AND OBVIOUSLY, THE RANGE IS QUITE WIDE GIVEN THE HISTORICAL VOLATILITY FOR THE STOCK BUT MORE AND MORE PEOPLE ARE TAKING ADVANTAGE OF THE CURRENT HIGH LEVELS OF IMPLIED VOLATILITY IN AMD AND IN THESE CHIP STOCKS EITHER GENERATE INCOME THROUGH CALL OVERWRITING OR TAKING THE VIEW THAT THE STOCK IS LIKELY TO BE MORE RANGE BOUND IN THE NEAR TERM. ROMAINE: IMPLIED ONE-DAY MOVE ON SPACEX, 13%. IT SOUNDS ABOUT RIGHT. MANDY: EXACTLY. ROMAINE: MANDY, VICE PRESIDENT AND HEAD OF DERIVATIVES MARKET INTELLIGENCE, LOOKING AT THE OPTIONS ACTIVITY AND FEEDING BACK INTO THE CASH SESSION INTO THE MARKET WITH THE S&P 500 SET TO CLOSE OUT THE DAY COME UP ABOUT ONE POINT 5%. 2% GAINS FOR THE NASDAQ AS A LOT OF PEOPLE GETTING BACK INTO SOME OF THE HIGH MOMENTUM AI TECH RELATED NAMES BUT AS MIKE WILSON AT MORGAN STANLEY POINTED OUT, THERE IS A QUALITY FACTOR THAT IS ALSO DRIVING THIS AS WELL. TIED DIRECTLY TO EARNINGS AND CASH FLOW. WE ARE GOING TO BREAK DOWN ALL OF TODAY'S EARNINGS. WE ARE GOING TO BREAK DOWN ALL OF TODAY'S EQUITY MARKET ACTION. WE ARE GOING TO BREAK DOWN EVERYTHING GOING ON IN THE TREASURY SPACE WITH OUR GLOBAL SIMULCAST NOW. >> BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE, STARTS RIGHT NOW. ROMAINE: RIGHT NOW, WE ARE TO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK HERE TAKING YOU THROUGH THE CLOSING BELL. IT IS A GLOBAL SIMULCAST. CAROL AND TIM JOIN US NOW. CAROL: NOBODY WANTED TO PLAY WITH YUAN SET -- YOU ON SET. TIM: I DID NOT KNOW WE CAN DO A THREE BOX. ROMAINE: YOU CAN. BE CAREFUL, CAROL. [LAUGHTER] ROMAINE: WELCOME TO ALL OF OUR AUDIENCES ACROSS OUR PLATFORMS. GREEN ON THE SCREEN FOR A THIRD STRAIGHT DAY HERE. REMEMBER THAT SCARE WE HAD, YOU KNOW, A COUPLE WEEKS AGO? EVERYBODY WAS JUMPING OUT OF THE POOL. LOOKS LIKE PEOPLE ARE WILLING TO WADE BACK IN THE WATER. CAROL: IT IS AMAZING AS WE DISSECT WHAT IS GOING ON BETWEEN THE U.S. WAR WITH IRAN, THAT IS KIND OF CONFUSING. WE WILL SEE ECONOMICS DANA. EVERYONE TRYING TO FIGURE OUT FED CHAIR -- I ALWAYS WANT TO SAY JAY POWELL, SORRY. ROMAINE: DON'T BLAME JAY POWELL FOR THIS. WHAT DO YOU THINK JAY POWELL IS DOING? TIM: YOU CAN PROBABLY SEND HIM SOMETHING ON THE TERMINAL. ROMAINE: I TRIED THAT. CAROL: ALWAYS FASCINATING HOW QUIET. I GIVE HIM PROPS HE IS LETTING THE NEW FED CHAIR DO HIS THING. ROMAINE: I AM CURIOUS BECAUSE A LOT OF PEOPLE DID NOT TAKE WELL TO HIS COMMUNICATION OR LACK THEREOF ON WEDNESDAY. WE SAW THE VISCERAL REACTION IN THE BOND MARKET. OBVIOUSLY, YIELDS DOWN TODAY, BUT THAT SEEMS MORE TIED TO WHAT HAPPENED WITH THE YEN INTERVENTION. BUT IT GETS TO THIS IDEA THAT PEOPLE ARE BETTING ON YIELDS BEING HIRED THAN THEY WERE ON WEDNESDAY -- HIGHER THAN THEY WERE ON WEDNESDAY. CAROL: THAT IS A GOOD POINT. ROMAINE: WE GET THE CLOSING BELL HERE. GREEN ACROSS THE SCREEN FOR ALL OF THE MAJOR INDICES IN THE U.S. THE DOW JONES INDUSTRIAL AVERAGE ENDED UP ABOUT 1.3%. THE S&P GOING TO CLOSE AT THE 7600 LEVEL. THAT IS UP ABOUT 111 POINTS OR 1.5%. THE NASDAQ COMPOSITE UP 2.1%. NASDAQ 100 UP 1.8%. EVERYONE ELSE ALSO GETTING IN ON THE ACTION. THE S&P MID-CAPS UP 1.1%. THE S&P EQUAL WEIGHT UP 1%. THE RUSSELL 2000 UP 1.7%. CAROL: GOOD STUFF. THAT IS YOUR BIG OVERVIEW. I WILL GO BACK TO THE BIG CAPS, THE LARGE CAPS, THE S&P 500. YOU FIND MOST NAMES IN THAT INDEX REMAIN HIGHER. 340 NAMES GAINING GROUND ON THIS MONDAY. 163 TO THE DOWNSIDE. ROMAINE: NO SURPRISE HERE WHEN WE LOOK AT THE MAJOR INDICES HERE IN THE U.S. -- SECTORS, SHOULD SAY. COMMUNICATION SERVICES OUT IN FRONT, UP 4.3% ON THE DAY. DISCUSSION RESTOCKS GETTING BIDS . TO THE DOWNSIDE, ENERGY STAPLES AND HEALTH CARE. THOSE ARE YOUR LAGGARDS. CAROL: LET'S GO TO THE INDIVIDUAL GAINERS. AMAZON, NOW A $3 TRILLION MARKET CAP COMPANY, FOR THE FIRST TIME CROSSING THAT THRESHOLD, BECOMING ONLY THE FIFTH COMPANY EVER TO REACH THE MILESTONE. YOU CAN SEE THE STOCK IS UP ABOUT 4.6%. IT HAS BEEN ON SUCH A TEAR SINCE IT REPORTED EARNINGS LAST WEEK. OF 25% IN THE LAST THREE TRADING DAYS. INVESTORS SNAPPING UP SHARES. IT IS JOINING OTHER COMPANIES THAT HAVE REACHED THIS SIZE. THE STOCK CALLED IT TO RISE ABOUT 14% OVER THE YEAR ACCORDING TO BLOOMBERG DATA. I SHOULD POINT OUT AWS. WE JOINED ED LUDLOW EARLIER, AND HE SAID THE BUSINESS FOR THE COMPANY IS MASSIVE, SO ALL IN ON AWS. LET'S SLIP ON OVER TO BOEING. ALSO AN OUTPERFORMER IN TODAY'S SESSION. TIM POINTED THIS OUT. THANK YOU VERY MUCH. TIM: THE 737 MAX. CAROL: I KNOW. UP 8% IN TODAY'S SESSION. BOEING RECEIVED SIGN-UP FOR THE 737 MAX. SEVEN FROM THE FAA. ENDING A CERTIFICATION PROCESS AFTER TWO FATAL CRASHES AND QUALITY LAPSES. THIS REVIEW HAS BEEN GOING ON FOR A DECADE OR SO. BOEING HAS ORDERS STILL FOR THE MAX 7. IT IS KEY TO RUNNING OUT THE 737 FAMILY AND HELPING GENERATE CASH AND IMPROVE ITS BALANCE SHEET AFTER SEVERAL TUMULTUOUS YEARS TO SAY THE LEAST. I SHOULD POINT OUT BNP PARIBAS RAISED THEIR RECOMMENDATION -- DID I SAY PARIBAS? TIM: TOOK SPANISH IN HIGH SCHOOL. ROMAINE: WE ARE FROM CALIFORNIA. CAROL: I KNOW THAT. RAISED TO OUTPERFORM FROM UNDERPERFORM. I WILL THROW ONE MORE IN THERE. A TOP GAINER IN THE S&P 500, BIGGEST MOVE INTRADAY SINCE OCTOBER 2025, FIRST SOLAR. FIRST SOLAR UP MORE THAN 10%. CITI RAISED THE PRICE TARGET TO $297 AND KEEPS THE BUY RATING. JEFFRIES LOWERED THE FIRM PRICE TARGET ON IT TO $196 AND KEEPS A HOLD RATING. STOCK AT $232 IN CHANGE. TIM: THOSE ARE THE GAINERS. I GOT SOME DECLINERS. I WANT TO START WITH ONE IN THE HOSPITALITY INDUSTRY. MID-CAP INTERNATIONALLY SAID ROOM GROWTH FOR 2026 WOULD LIKELY COME AT THE LOWER END OF GUIDANCE. SHARES FELL BY 7%. IT IS ALL ABOUT CONSTRUCTION DELAYS IN THE MIDDLE EAST. IT DOES EXPECT UNIT GROWTH TO THE BOTTOM OF THE EARLIER FORECAST OF 4.5% TO 5%, THE COMPANY SAID IN A STATEMENT. THE CONFLICT IN THE MIDDLE EAST COULD CONTINUE TO AFFECT RESULTS, ACCORDING TO THE COMPANY CFO. IN THE CRYPTO WORLD, SHARES OF CIRCLE FELL TODAY BY ABOUT 3.6%. WE GOT A NOTE FROM MORGAN STANLEY. THEY DOWNGRADED TO CIRCLE, SLASHED ITS PRICE TARGET FROM $106 TO $38. THAT IMPLIES A 39% DECREASE FROM LAST PRICE. MORGAN STANLEY LOWERED THEIR PETITION FOR CIRCULATION AND THE BUSINESS MODEL WILL NEED TO TRANSITION TO A TRANSACTION-BASED REVENUE. FINALLY, A COUPLE RESTAURANTS ON OUR RADAR THIS AFTERNOON. SWEETGREEN SHARES FELL 8.2%. YUM! BRANDS FELL TO 3%. THEY HAVE BUT I DID FIND AS PART OF THE OUTBREAK AFFECTING MICHIGAN. WE ALSO GOT THE BLOOMBERG NEWS REPORT THIS AFTERNOON THAT SAID MICHIGAN HEALTH AUTHORITIES WERE ACTUALLY IN TOUCH WITH PACHELBEL'S PARENT COMPANY YUM! BRANDS ABOUT A PARASITIC OUTBREAK IN EARLY JULY WEEKS BEFORE THE COMPANY OFFICIALLY OTHER THAN CONSUMERS. SWEETGREEN DOWN 8.2%. YUM! BRANDS DOWN 2.9%. ROMAINE: WE ARE GETTING SOME EARNINGS. THIS OUT OF PALANTIR FOR THE MOST RECENT QUARTER, ITS SECOND-QUARTER. IT LOOKS LIKE IT BE ON THE BOTTOM LINE -- BEAT ON THE BOTTOM LINE. REVENUE ABOVE ESTIMATES. HERE IS YOUR FORECAST. WE WILL START WITH THE FULL YEAR. THE COMPANY SAYS FOR THE FULL YEAR, EXCEPT REVENUE OF $8.15 BILLION TO $8.16 BILLION SO A TIGHT RANGE THERE. MORE IMPORTANTLY, THAT IS ABOVE WHERE IT GUIDED PRIOR. BASICALLY GOING FROM 7.6 IS BILLION DOLLARS AND GUIDANCE TO -- $7.66 BILLION IN GUIDANCE TO $8.16 BILLION. THE COMPANY NUDGING THE FORECAST HIGHER. ON AVERAGE, THE STREET HAD BEEN LOOKING TO 4.5%. SO A BEAT AND RAISE QUARTER FOR PALANTIR. THOSE SHARES UP 7% IN THE AFTER HOURS. CAROL: THAT IS EXACT WHAT ANALYSTS WERE HOPING FOR -- NOT ANALYSTS. INVESTORS, EXCUSE ME. IT IS DOWN HERE TODAY, OFF 40% SINCE THE STOCK HIT A PEAK IN NOVEMBER. SOME OUTPERFORMANCE CERTAINLY WHEN IT COMES TO THAT OUTLOOK IN TERMS OF FISCAL YEAR IS MAYBE WHY INVESTORS ARE SAYING, OK, HERE IS A GOOD NEWS. 7.7% TO THE UPSIDE. TIM: I AM LOOKING AT THE PRESS RELEASE RIGHT NOW FOR SOME COMMENTARY FROM ALEX KARP. IT IS VERY MUCH IN HIS STYLE OF SPEAKING. HE SAYS DEMAND FOR AI SOVEREIGNTY HAS BEEN UNLEASHED. PALANTIR IS THE ONLY COMPANY, ACCORDING TO ALEX KARP, THAT HAS DEMONSTRATED IT CAN TRANSFORM TOKENS INTO ACTUAL ECONOMIC VALUE. HE SAYS CAMARO CUSTOMERS TRUST US TO PROVIDE MAXIMUM CONTROL OVER APPARITIONS DATA -- OVER OPERATIONS, DATA. THE REVENUE GREW. THE REVOLUTION MAKES US VERY OPTIMISTIC ABOUT THE FUTURE, HE SAYS. ROMAINE: THE RULE OF 40, ANNUAL REVENUE GROWTH, THE IDEA IS IT SHOULD EVEN OUT TO 40%. A QUICK FACT CHECK, THEY ARE NOT THE ONLY COMPANY THAT HAVE HIT THAT ON THE TOOK ISSUE. NEVERTHELESS, SHARES UP 8% NOW IN THE AFTER HOURS TRADE. MEANWHILE, SLIGHTLY TO THE DOWNSIDE IS A CHIPMAKER OUT WITH RESULTS ON THE BOTTOM ONE FOR THE MOST RECENT QUARTER, ON SEMICONDUCTOR. ADJUSTED EPS IS $.74 A SHARE. THAT IS A SLIGHT BEAT. THE STREET WAS LOOKING FOR $.71 A SHARE. REVENUE IN THE QUARTER, WE WILL CALL IT ALMOST IN LINE WITH ESTIMATES. $1.6 BILLION. THE STREET WAS LOOKING FOR $1.59 BILLION. HERE IS YOUR FORECAST. THE COMPANY SAYS FOR THE CURRENT QUARTER, EXPECT EPS OF $.81 TO $.93 A SHARE. THE STREET WAS LOOKING FOR A FOUR CENTS. REVENUE UP TO $1.75 BILLION. THE STREET ON AVERAGE WAS LOOKING FOR $1.67 BILLION. CAROL: THE STOCK IS RALLYING IN THE AFTERMARKET. ON A TEAR THIS YEAR, 8% OF THAT FLOAT IS SHORT. A SHARE AMOUNT OF EXPOSURE TO IN THE INDUSTRIAL SPACE -- TO THE INDUSTRIAL SPACE, AUTOMOTIVE IN PARTICULAR. INVESTORS LIKING WHAT THEY HEARD. THE EXPENSES FORECAST MRS. ESTIMATES -- MISSES ESTIMATES. THAT IS A QUICK HEADLINE. ON SEMI UP TO PERCENT. WE WILL ALSO WATCH PALANTIR. THAT ONE MOVING UP AS WELL. JUST GOING TO BRING IT UP REAL QUICK ON BY BLOOMBERG, AND IT IS UP 8.8%. THAT IS A WRAP. ROMAINE, YOU CAN DO THIS ALONE. ROMAINE: YOU GOT A SLOW BLOOMBERG. WE HAVE TO GET YOU THE PRO SUBSCRIPTION. CAROL: [LAUGHTER] TIM: WHAT DID YOU SAY ABOUT ROMAINE BEFORE? CAROL: I'M JUST GOING TO TELL YOU IT IS FINE. I GOT A LOT OF STUFF ON HERE ON ONE LITTLE PANEL, I WILL JUST SAY. I HOPE YOU DON'T FEEL LONELY OVER THERE. THAT IS A WRAP. ROMAINE SOLO ON "THE CLOSE" ON TV. TIM AND I CONTINUING ON "BLUEBIRD BUSINESSWEEK DAILY" ON RADIO -- "BLOOMBERG BUSINESSWEEK DAILY" ON RADIO. ROMAINE: WE WILL CATCH UP WITH LINDSAY BELL -- LINDSEY BELL WHEN WE COME BACK AFTER THE BREAK ON BLOOMBERG. ♪ >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ROMAINE: WELCOME BACK TO "THE CLOSE." ROMAINE BOSTICK HERE, WRAPPING UP THE FIRST TRADING DAY OF THE MONTH OF AUGUST. COMING OFF A TUMBLE TO US JULY. BELIEVE IT OR NOT, THE S&P PUTTING TOGETHER THREE STRAIGHT DAYS OF GAINS. ADD TO THAT 1.5% RIGHT AT THE 7600 MARK, AND NOW WILL ABOVE ALL OF ITS KEY MOVING AVERAGES. THE NASDAQ 100 AND NASDAQ COMPOSITE EACH ADDING ABOUT 2%. SOME OF TODAY'S GAINS AIDED BY THE DROP IN YIELDS, MORE IMPORTANTLY BY THE DROP WE SAW IN CRUDE OIL PRICES. IN FACT, OF COURSE AND HAS -- IT HAS THE OPPOSITE EFFECT OF NAMES IN THE CRUDE AND GAS SPACE. CHEVRON DOWN 2% ON THE DAY. MOST OF THE COMPLEX IN THE OIL AND GAS SPACE TAKING A BIT OF A LEG LOWER. MEANWHILE, BOEING UP 8%, THE BEST DAY FOR THAT STOCK IN ABOUT A YEAR. A BIG UPGRADE OVER AT BNP PARIBAS. FINALLY, CERTIFICATION OF THE NEW 737 MAX. AS FAR AS THE TECH SPACE, LOOK, WE ARE FINALLY STARTING TO SEE SOME OF THE HYPERSCALERS GET THEIR MOJO BACK. COREWEAVE UP 19% ON THE DAY. AMAZON UP FOR A THIRD STRAIGHT DAY, UP ABOUT 5%. MICROSOFT UP FOR A THIRD STRAIGHT DAY AS WELL. REMEMBER, YOU HAD SEEN A BIG SELLOFF IN THOSE NAMES BACK IN JUNE AND JULY, BUT SOME INVESTORS NOW FEELING LIKE THEY CAN WE EMBRACE THAT STORY. THAT IS OUR TOP STORY. AFTER ONE OF THE WEST MOMENTUM SELLOFFS IN HISTORY, IS THE PAIN OVER FOR SOME OF THESE AI STOCKS? MIKE WILSON SEEMS TO THINK SO, CITING A "LARGE PLAYER EXITING MOST OF ITS PUBLIC EQUITIES PORTFOLIO AS THE ENDPOINT FOR THIS TIME TO UNWIND." WILSON MAKES THE POINT THAT THE NEXT MOMENTUM CYCLE WILL LIKELY LOOK A BIT DIFFERENT FROM THE LAST, A ROTATION TO SO-CALLED QUALITY SHARES WITH STABLE EARNINGS HISTORY WITHIN THEIR TECH AND AI SPACE -- THAT TECH AND AI SPACE. YOU SAW THAT LAST WEEK. THAT GREATER DISCERNMENT OVER THE REAL DEAL IN AI AND THE PRETENDERS BECOME A HALLMARK OF THIS EARNINGS SEASON. IT CONTINUES THIS WEEK. AMD AND SPACEX ARE OUT TOMORROW. WE JUST HEARD FROM PALANTIR AND ON SEMI. PALANTIR, NICE BEAT AND RAISE QUARTER I THINK A LOT OF INVESTORS WERE HOPING THEY WOULD FINALLY GET. LET'S BRING LINDSEY BELL INTO THE CONVERSATION. THAT IS WHERE I WANT TO START. THERE WAS KIND OF A WHOLESALE THROWING OUT OF THE BABY WITH THE BATHWATER FOR A FEW WEEKS. WE SAW A RESET OF SOME VALUATIONS. NOW AS WE CONTINUE TO GET EARNINGS, THE E IS THERE, NOW DOES THE P GET RUN BACK UP? LINDSEY: IT IS LIKELY GROWTH PEAKED IN Q2, 130% FOR SEMICONDUCTORS. IT SHOULD CONTINUE TO BE OVER 100% FOR THE NEXT TWO QUARTERS. WE ARE NOT SEEING ANY SORT OF MASSIVE DECELERATION FOR SEMICONDUCTORS. WE ARE GOING TO SEE GREAT EARNINGS. IT IS NICE TO SEE ON SEMICONDUCTOR COME OUT AND THE STOCK REACT POSITIVELY. THAT HAS NOT BEEN THE CASE ACROSS SEMICONDUCTORS EVEN THOUGH IT HAS BEEN A GOOD EARNINGS SEASON. I THINK WHAT WE ARE STARTING TO SEE NOW IS A LITTLE BIT OF BABY A HEALTHY ROTATION -- MAYBE A HEALTHY ROTATION. THIS UPSWING, DOUBLE-DIGIT UPSWING IN THE MAG SEVEN MAG 7 THE LAST COUPLE OF WEEKS, IS STARTING TO CLOSE THE GAP IN THE PRICE-PERFORMANCE BETWEEN THE TWO. ROMAINE: I THOUGHT IT WAS INTERESTING. LIKE EVEN TODAY WHERE WE HAD THIS BIG RALLY, TYPICALLY WHEN YOU HAVE BROAD MARKET RALLIES, IT IS USUALLY THE PHILADELPHIA SEMICONDUCTOR INDEX OUT IN FRONT OF EVERYBODY. YOU ACTUALLY HAD IT UNDERPERFORMED THE S&P, IF YOU CAN BELIEVETH. WHAT DOES THAT SAY ABOUT THE IDEA OF WHERE PEOPLE ARE LOOKING AT THE TECH TRADE? THE IDEA IT WILL NOT NECESSARILY BE LED BY CHIPS AND MAYBE BY THE HYPERSCALERS FOR OTHER TECH NAMES? LINDSEY: I THINK WHAT WE ARE SEEING THIS QUARTER FOR THE HYPERSCALERS AND MAG 7 IN PARTICULAR IS WE ARE FINALLY STARTING TO SEE THIS EXPERIMENTAL PHASE, AS MICROSOFT CALLED IT, IN THE AI SPACE IS TURNING INTO A FOUNDATIONAL TECHNOLOGY LAYER. THAT MEANS IT IS TURNING INTO REAL REVENUE AND LARGER GROWTH. LOOK AT MICROSOFT, AZURE CROSSING $100 BILLION IN REVENUE FOR THE FIRST TIME. LOOK AT AMAZON AWS MARGINS EXPANDING TO 37%. GOOGLE CLOUD UP 82% IN REVENUE GROWTH. THESE ARE IMPRESSIVE NUMBERS. I THINK FINALLY INVESTORS ARE FEELING MORE COMFORTABLE ABOUT THE CAPEX SPEND. YOU HAVE MICROSOFT SAYING WE ARE HOLDING WHERE WE ARE AT NOW, SHOWING SOME DISCIPLINE. BUT THE DEMAND IS STILL THERE. THAT SHOULD HELP SUPPORT THE SEMICONDUCTORS GOING FORWARD. WE HAVE COME OFF MORE THAN 20%. I THINK THE 200-DAY MOVING AVERAGE IS THE MOMENTUM AREA WHERE LOOKING AT -- WE ARE LOOKING AT TO GAIN SOME TRACTION. I DON'T THINK THAT STORY IS OVER. EARNINGS GROWTH WILL BE OVER 100 THE NEXT TWO QUARTERS. THERE IS DEFINITELY MORE ROOM TO RUN IN THOSE STOCKS. ROMAINE: SEMI IS NOT TRADITIONALLY TALKED ABOUT IN THE SAME SPACE. THEY ALSO HAVE THAT BRIDGE INTO THE ANALOG AND MORE INDUSTRIAL TYPES AS WELL. WHEN YOU LOOK AT A CHIPMAKER IN YOUR THINKING WHAT YOU WANT TO BE ASSOCIATED WITH AS AN INVESTOR, IS IT JUST A PURE PLAY AI NAME LIKE NVIDIA OR DO YOU WANT A CHIPMAKER MORE DIVERSIFIED? LINDSEY: I THINK IT IS GOOD TO BE DIVERSIFIED WITHIN THE SEMI SPACE. I THINK THAT IS WHY THE HYPERSCALERS AND MAG 7 STOCKS ARE STARTING TO SHOW THE REAL STRENGTH, BECAUSE THEY ARE DIVERSIFIED. THEY HAVE OTHER PARTS OF THEIR BUSINESSES. EVEN AMAZON TALKED ABOUT THE RETAIL BUSINESS AND THE STRENGTH AND OPERATING MARGIN EXPANSION THEY ARE SEEING. I THINK IN GENERAL, THE PLAYERS THAT HAVE DIVERSIFIED BUSINESS LINES IS A GOOD WAY TO PROTECT YOURSELF FROM ANY SORT OF SOFTNESS THAT MAY COME INTO THE MARKET. I THINK IT IS A GREAT PLACE TO BE DIVERSIFIED AND FIND QUALITY IN GENERAL. ROMAINE: IT IS INTERESTING. ON SEMI HAD BEEN UNDERPERFORMING. PALANTIR TO A CERTAIN EXTENT HAD BEEN UNDERPERFORMING. I WANT TO DRAW YOUR ATTENTION TO ANOTHER HUGE UNDERPERFORMER, SNAP. EARNINGS CROSSING THE WIRE RIGHT NOW. THEY ARE UP 12% AFTER HOURS BEATING JUST ABOUT EVERY KEY METRIC. THEY ARE ALSO GUIDING SLIGHTLY ABOVE WHAT THE STREET WAS LOOKING FOR GOING FORWARD. I KNOW YOU HAVE NOT HAD A CHANCE TO SEE THESE NUMBERS, BUT I WANT TO GET YOUR THOUGHTS ABOUT THIS IDEA SOME OF THESE TECH COMPANIES THAT HAD GOTTEN LEFT BEHIND BECAUSE THEY WERE NOT CENTER IN THE AI STORY, HAVE WE KIND OF FORGOTTEN THEM? WE TALK ABOUT MET AT WHICH IS A HUGE AD JUGGERNAUT. SNAP, THE SAME THING. I KNOW IT IS NOT A BEHEMOTH BUT IT IS A RELIABLE GENERATOR OF AD REVENUE. I AM WONDERING IF THERE IS VALUE TO BE FOUND IN SOME OF THOSE NAMES. LINDSEY: I THINK THERE IS VALUE TO BE FOUND. THESE ARE COMPANIES PUTTING UP NUMBERS THAT ARE NOT JUST MEDIOCRE. THEY ARE SHOWING SUBSTANTIAL GROWTH ON THE TOP AND BOTTOM LINE. THEY HAVE BEEN FORGOTTEN ABOUT AS EVERYBODY HAS CHASED THE SHINY NEW OBJECT WHICH HAS BEEN THE AI TRADE. SEMICONDUCTORS HAVE BEEN THE MAIN BENEFICIARY FOR THE MAJORITY OF THE YEAR. THEY RAN SO FAR THEY GOT THE DISPERSION BETWEEN THEM AND THE REST OF THE TECH TRADE, IT JUST GOT TOO CRAZY. NOW I THINK WE ARE COMING BACK TO REALITY. I THINK INVESTORS ARE SEEING A ROTATION INTO SOME OF THE NAMES THAT HAVE BEEN FORGOTTEN BUT REMAIN HIGH QUALITY, HAVE CASH FLOW, ARE INVESTING, AND HAVE FUTURE DEMAND THAT WILL CONTINUE TO DRIVE AND GROW THE OPERATING PROFITS AND STOCK GOING FORWARD. ROMAINE: ALWAYS A PLEASURE, LINDSEY BELL. SPEAKING OF THE TECH TRADE, WE ARE GOING TO GET ANOTHER BIG TEST TOMORROW. SPACEX ARE SET TO REPORT EARNINGS, THE FIRST EARNINGS REPORT AS A PUBLIC COMPANY. A LOT OF QUESTIONS AS TO WHETHER THE HEIGHT CAN LIVE UP TO A REALITY CHECK. JULIE ZHU JOINS US NEXT ON THE CLOSE RIGHT HERE ON. ROMAINE: IS SET TO REPORT EARNINGS RESULTS TOMORROW, ITS FIRST REPORT SINCE ELON MUSK TOOK THE COMPANY PUBLIC. SHARES TRADING BELOW THE IPO PRICE OF $135. THAT DOES NOT MEAN EXPECTATIONS ARE NOT HIGH. JULIE ZHU JOINS US. THE FIRM HAS A NEUTRAL RATING ON THE SHARES WITH A PRICE TARGET OF 121. I NEVER KNOW WHAT TO MAKE OF ANY ELON MUSK COMPANY. ARE PEOPLE GOING INTO THIS LOOKING FOR ACTUAL REVENUE AND EPS NUMBER OR WHATEVER SORT OF MOONSHOT PIE IN THE SKY FORECAST ELON MUSK MIGHT GIVE ABOUT WHERE THIS COMPANY MIGHT GO IN THE FUTURE? JULIE: FIRST OF ALL, THANK YOU FOR HAVING ME, ROMAINE. THAT IS A GREAT QUESTION. I WOULD SAY OFF THE BAT, SPACEX IPO'D TO GREAT EXPECTATIONS. IT IS NOT CLEAR TO US AND MY COLLEAGUES. OUR POINT OF VIEW IS WE ARE PROBABLY NOT GOING TO HEAR THAT MUCH TOMORROW TO HELP US RESET THOSE EXPECTATIONS. THE WAY WE THINK ABOUT PROJECTIONS AND FORECASTS VERSUS THE REST OF CONSENSUS IS WE ARE WELL BELOW CONSENSUS ON THE AI AND CONNECTIVITY SEGMENTS OF THE BUSINESS FOR A NUMBER OF REASONS WE CAN TALK ABOUT. TOMORROW, WE ARE PROBABLY NOT GOING TO HEAR ANYTHING THAT WILL PROVE OR DISPROVE THOSE FORECASTS. ROMAINE: TALK ABOUT THE AI CONNECTIVITY. GIVE US A SENSE OF HOW YOU VALUE THE COMPANY. IS IT A ROCKET LAUNCH COMPANY, I COMPANY? IS IT STARLINK, ALL OF THE ABOVE? JULIE: SPACEX IN OUR VIEW SORT OF HAS AN IDENTITY CRISIS. THEY HAVE SO MANY DIFFERENT PARTS OF THE BUSINESS. FOR US, THE CROWN JEWEL IS THE LAUNCH PIECE OF THE BUSINESS WITHOUT THE BOTTLENECK ROCKET CAPABILITY. IT IS DIFFICULT TO THINK OF THE CONNECTIVITY BUSINESS BEING AVAILABLE. THE AI ORBITAL DATA CENTERS WOULD NOT EVEN BE A TOPIC OF DISCUSSIONS WITHOUT IT. WHEN YOU THINK ABOUT VALUING A BUSINESS SUCH AS THIS, YOU HAVE THE PEACE THAT WE CALL THE KNOWN KNOWNS AND KNOWN UNKNOWNS THAT YOU CAN PUT NUMBERS AROUND. THEN YOU HAVE THE COMPONENT OF THE BUSINESS THAT WILL LIKELY COME FROM THE LAUNCH BOTTLENECK FOR ALL SORTS OF SPACE ACTIVITIES THAT ARE DIFFICULT TO PUT A FINGER ON TODAY BUT ARE ABSOLUTELY NECESSARY TO INCLUDE IN THE VALUATION IF YOU BELIEVE IN THIS CATEGORY OF LONG LAUNCH POSITION. ROMAINE: GIVE US AN IDEA OF WHAT YOU EXPECT WITH CAPEX SPENDING AND CASH BURN. JULIE: WE CONTINUE TO EXPECT ELEVATED LEVELS. I THINK TOMORROW WHAT YOU WILL SEE COMING OUT OF THE NUMBERS IS YOU ARE PROBABLY GOING TO SEE A BEAT IN THE AI BUSINESS AND ALSO CONTINUED SPEND IN THAT BUSINESS. SPACEX SIGNED THESE TERRESTRIAL SERVICE DEALS WITH GOOGLE, ANTHROPIC AT SIGNIFICANTLY ADVANTAGED PER GIGAWATT PRICING. THEY WILL CONTINUE TO INVEST IN THAT BUSINESS AS LONG AS THERE IS A CONTINUED BOTTLENECK AND REQUESTS FOR COMPUTE CAPACITY. BASED ON MY COLLEAGUE NICK'S RESEARCH, THIS PRICING IS TWO TO THREE TIMES WHAT YOU WOULD TYPICALLY SEE. THERE IS GOING TO BE A QUESTION OF SUSTAINABILITY GOING FORWARD. TOMORROW, YOU WILL PROBABLY SEE THAT BE A POSITIVE OR A GOOD GUIDE. ROMAINE: THANK YOU, JULIE ZHU. FOR THOSE FOLKS THAT DO CARE, THERE IS CONSENSUS ON THE BLOOMBERG TERMINAL, REVENUE EXPECTATIONS, $6.2 BILLION IN THE MOST RECENT QUARTER WITH AN OPERATING LOSS OF $2.39 BILLION IN OVERALL LOSS PER SHARE ESTIMATE OF $.24. WE WILL HAVE FULL COVERAGE OF THOSE EARNINGS TOMORROW ON THE CLOSE. WHEN WE COME BACK, WE WILL GET INTO THE WORLD OF STABLECOINS, CRYPTO, AND EVERYTHING ELSE. WE ARE GOING TO CATCH UP WITH DAN MIZUHO IN A SECOND AND CHRIS MAURICE. ROMAINE: A LOT OF ACTIVITY AROUND CIRCLE. MORGAN STANLEY EARLIER CUT ITS RATING TO UNDERWAY FROM EQUAL RATE AND SLASHED IT DOWN TO $38. TD COWEN INITIATING WITH A BUY RATING AND $82 PRICE TARGET. MIZUHO MAINTAINING ITS UNDERPERFORMING. DAN DOLEV JOINS US NOW FROM MIZUHO. SENIOR ANALYST COVERING THE PAYMENT SPACE. ALL OVER THE MAP HEREBY GIVE ME A SENSE. YOU HAVE BEEN UNDERWEIGHT AND WHILE AND I UNDERSTAND WHY BUT DO YOU SEE POTENTIAL FOR UPSIDE ANYTIME SOON IN THE STOCK? DAN: THE ONLY UPSIDE TO THE STOCK -- GREAT TO BE ON YOUR SHOW, BY THE WAY. BUT THE ONLY WAY IS IF THE RATES COME UP. I THINK IT MIGHT GO THE OTHER WAY. THEIR ONLY HOPE RIGHT NOW IS RATES GO UP. THE WAY THEY MAKE MONEY IS P TIMES Q. THEY SHOULD HOPE FOR THE P TO GO UP. THE Q IS GOING DOWN. ROMAINE: A LOT OF FOLKS IN THE BOND MARKET THINK RATES ARE GOING UP, PARTICULARLY AFTER WHAT HAPPENED LAST WEEK WITH THE FOMC. DAN: YEAH, AND THEY ARE HAPPY TO SQUEEZE. BUT FUNDAMENTALLY, IT IS AN UNDER RATE BECAUSE EVERYTHING IS GOING THE OTHER WAY. CLEARLY WILL NOT HAPPEN. ROMAINE: YOU DON'T THINK IT WOULD ACT IS HAPPENING? DAN: IT IS ALREADY AUGUST NOW AND YOU NEED 60 DAYS. AT SOME POINT, IT WILL HAPPEN BUT IT WILL NOT HAPPEN THIS YEAR. THAT IS AT LEAST WHAT EXPERTS ARE SAYING. BITCOIN IS HIGHLY CORRELATED. A CONSORTIUM OF 140, 145 DIFFERENT BANKS, FINANCIAL INSTITUTIONS, THEY ARE ALL BASICALLY SITTING THERE TRYING TO DISRUPT USDC, AND THOSE ARE THE BIGGEST FINANCIAL INSTITUTIONS OUT THERE. ROMAINE: HOW MUCH OF A COMMITMENT TO HAVE TO DO THAT? I KNOW THEY ARE TALKING ABOUT AND WHAT IS THIS SOMETHING THAT WILL REALLY COME TO FRUITION? DO YOU THINK COOPERATION WILL BE THERE? DAN: YOU LOOK DOWN THE LIST AND EVERYONE IS THERE. IT IS TOO BIG OF A PRICE. I AM BULLISH STABLECOINS, BUT NOT CIRCLE OR USDC. STABLECOINS, THERE IS REALLY USE CASES FOR STABLECOINS, AND THERE IS A LOT OF YIELD TO BE GAINED FOR THAT. IT IS JUST THAT THEY ARE GIVING IT AWAY TO THEIR PARTNERS INSTEAD OF RETAINING THEM, WHICH IS WHAT CIRCLE DOES. IT IS A GREAT BUSINESS, BUT THERE IS NO MODEL. ROMAINE: WHEN THEY FIRST WENT PUBLIC, THIS IS WHEN EVERYONE WAS TALKING ABOUT THIS IDEA. COULD THEY BE USURPED BY THE GOVERNMENT OR SOME CAUSE I GOVERNMENT AGENCY? THE GENERAL IDEA WAS GIVEN THEIR SIZE AND FOOTPRINT THEY WOULD ALWAYS HAVE A ROLE TO SOME DEGREE OR ANOTHER. YOU DON'T SEE THE POTENTIAL? DAN: I THINK IT IS GETTING SMALLER AND SMALLER BECAUSE WITH MASTERCARD BEING THE DISPATCHER OF STABLECOINS THERE IS NO ADVANTAGE OF SCALE. SO THEY WILL HAVE A ROLE, BUT IT WILL BE RAINING STABLECOINS. I WILL WRITE A SONG ABOUT IT. ROMAINE: FEELS LIKE THAT WILL HURT. ARE WE THERE AT THAT POINT? JUST BROADLY, THIS GOES BEYOND CIRCLE. WHERE WE ARE GOING TO ACTUALLY SEE WIDER USE OF STABLECOINS? DAN: YES, WE ARE THERE. IT IS ALREADY BEING USED BROADLY AND GLOBALLY. IT IS JUST THAT IT DOES NOT MATTER. IT IS LIKE YOU TAKE YOUR DOLLAR OUT OF YOUR WALLET AND I TAKE MY DOLLAR OUT OF MY WALLET. I DON'T USE ANY CASH BUT VIRTUALLY I TAKE MY DOLLAR AND IT IS THE SAME DOLLAR. IT DOES NOT MATTER. IT IS INTERCHANGEABLE AND INTEROPERABLE. ROMAINE: YOU JOKE YOU DO NOT TAKE A DOLLAR OUT OF YOUR WALLET. I REMEMBER YEARS AGO THE FIRST THING YOU DO, YOU GO TO THE BANK, THE ATM, AND TAKE CASH OUT. I CAN'T THINK OF A REASON TO DO THAT. EVERYTHING WE DO NOW IS SOME WAY OR ANOTHER ELECTRONIC. DAN: THERE USED TO BE LINES OUTSIDE OF ATM'S. ROMAINE: I KNOW SOMEONE WILL NEED MONEY FOR SOMETHING AND I WON'T PRESS A BUTTON AND MAGICALLY IT GOES THERE. THE FUTURE IS HERE. WHO CONTROLS THE FUTURE? DAN: THE PAYMENT INDUSTRY BECAUSE VISA, MASTERCARD, THE ENTIRE PAYMENT INDUSTRY WILL COME BACK. DIGITIZATION OF PAYMENTS, THE PAYMENTS INDUSTRY CONTROLS THIS FROM STABLECOINS TO THE NETWORKS TO THE MERCHANT ACQUIRERS. A GREAT TIME TO BE IN PAYMENTS. PEOPLE DON'T SEE THAT RIGHT NOW, BUT IN TWO OR THREE MONTH, PEOPLE WILL START SEEING IT AGAIN. ROMAINE: WHICH COMPANY DO YOU FAVOR THE MOST IN THIS SPACE? DAN: I STILL LOVE ROBINHOOD THE MOST. IT IS NOT REALLY PAYMENTS, BUT IT IS A SINGULARITY. IT IS THE HYPERSCALER OF NEXGEN BROKERAGES. THEY WILL BE GLOBAL. THIS COULD BE 10X OVER THE NEXT 10 YEARS. ROMAINE: INTERESTING. IT IS AMAZING HOW DIVERSIFIED THIS COMPANY HAS BEEN. ALWAYS A PLEASURE. DAN: MY PLEASURE. ROMAINE: DAN DOLEV FROM OVER AT MIZUHO. WE WANT TO STICK WITH THIS CONVERSATION ABOUT STABLECOINS AND TALK ABOUT SOME OF THE INFRASTRUCTURE BEHIND IT. I WOULD GUESS DOESN'T JUST -- DOES JUST THAT. CHRIS, GREAT TO HAVE YOU HERE. >> GREAT TO BE HERE. RAINING STABLECOINS, SOUNDS LIKE THE HIT OF THE SEASON. ROMAINE: YOU HEARD IT. I ASSUME IT WILL BE GOOD FOR YOUR BUSINESS IF IT RAINS TO AN EXTENT. RIGHT? >> IT IS ALWAYS RAINING. ROMAINE: IT IS ALWAYS RAINING. I WANT TO TALK ABOUT THE BUILDOUT OF YOUR BUSINESS. WE DID NOT MENTION IT, BUT YOU RAISED MORE MONEY. ANOTHER $40 MILLION THAT ROUND. IS THAT CORRECT? >> YEAH. WE PULLED TOGETHER A GREAT STRATEGIC BRIDGE HERE WITH GREAT COMPANIES. SC VENTURES, STANDARD CHARTERED'S VENTURE ARM, SONY, BLOCKCHAIN CAPITAL, A NUMBER OF GREAT INVESTORS, ALL JUST AROUND THIS THESIS WE HAVE PROVEN OUT IN AFRICA, NOW BROUGHT TO THE REST OF THE WORLD, WHICH IS EVERYONE WANTS ACCESS TO THE DOLLAR. ROMAINE: THAT IS WHAT I'M CURIOUS ABOUT. YOU STARTED OFF WITH THE FOCUS ON EMERGING MARKETS AND WE TOLD YOUR STORY A LOT. YOU ARE FOCUSED ON NIGERIA AT THE START. SK VENTURES, SONY INNOVATION FUND, WHY ARE THEY IN THIS? CHRIS: AGAIN, IT IS INDICATIVE OF THE FACT THAT STABLECOINS HAVE GONE GLOBALLY HERE. FOR US, IT IS NOT JUST AFRICA. IT IS, HOW DO YOU DO THE WHOLE WORLD? HOW DO YOU BRING THIS TECHNOLOGY TO THE ENTIRE WORLD? SO, SPECIFICALLY, WHAT THEY ARE COMING INTO BACK US ON HIS GLOBAL ACCOUNTS -- IS GLOBAL ACCOUNTS, SO NAMED GLOBAL ACCOUNTS WE ARE ABLE TO ISSUE TO BUSINESSES ANYWHERE IN THE WORLD TO DO INSTANT STABLECOIN ON AND OFF. U.S. DOMESTIC PAYMENTS IN 50 PLUS COUNTRIES WITHOUT SWIFT. ROMAINE: OK, THAT IS INTERESTING. SC MADE SENSE. STANDARD CHARTERED, IN ONE OF THE BREAD IS EMERGING MARKETS. I ASSUME THEY HAVE A SENSE OF WHERE THE PUCK IS GOING WITH REGARDS TO TRANSACTIONS AND THE USE OF STABLECOINS. I ASSUME THIS IS A BET ON THAT LONGER-TERM. CHRIS: THOSE GUYS ARE DEEP IN THE SPACE. OBVIOUSLY, THEY ARE WORKING WITH US. THEY HAVE OTHER PLAYS THAT ARE MAKING IN STABLECOINS. STANDARD CHARTERED HAS BEEN EXTREMELY MISSIONARY FROM A BANKING STANDPOINT IN TERMS OF WHERE THIS INDUSTRY IS GOING AND WHERE FINANCIAL SERVICES AS A WHOLE IS GOING WITH STABLECOINS AND WITH THIS TECHNOLOGY. ROMAINE: AS A BUSINESS, YOU HAVE RAISED A LOT OF MONEY. I ASSUME YOU HAVE HAD SOMEONE COME TO YOU AND SAY WE WILL BUY YOU OUT. HAVE YOU GOTTEN OFFERS FROM BANKS OR ANYTHING LIKE THAT? CHRIS: PEOPLE COME. PEOPLE COME AROUND. PEOPLE POKE. I THINK THERE IS SO MUCH MORE TO DO IN THIS SPACE AND THERE IS SO MUCH MORE THAT WE NEED TO CONTINUE BUILDING. IF THE RIGHT OPPORTUNITY CAME AROUND, WE WOULD CONSIDER IT, BUT I THINK OVERALL, WE HAVE BEEN ABLE TO RAISE A LOT OF MONEY. WE HAVE BEEN ABLE TO CONTINUE TO PUSH IN THIS SPACE AND WANT TO CONTINUE TO BRING THIS TECHNOLOGY TO PARTS OF THE WORLD THAT NEED IT MOST RATHER THAN JUST FOCUS ON THE U.S. ROMAINE: WE TALK ABOUT LOCAL ACCOUNTS. HOW BIG ARE WE NOW IN THIS SPACE AND HOW MUCH BIGGER DO YOU THINK IT CAN GET? CHRIS: THERE IS SO MUCH BIGGER THAT IT CAN GET. THE TAM IS ESSENTIALLY ALL OF PAYMENTS WHEN YOU THINK ABOUT STABLECOINS. ROMAINE: OF COURSE, EVERYTHING IS ALMOST THE WHOLE WORLD, BUT REALISTICALLY, YOU THINK IT WILL BECOME THE DOMINANT SORT OF SOURCE OF NOT JUST CROSS-BORDER BUT EVEN WITHIN BORDER TRANSACTIONS? CHRIS: WITHIN BORDERS IS A BIT MORE COMPLICATED. I THINK WHEN YOU LOOK AT INTERNATIONAL TRANSACTIONS, WITHIN 10 YEARS PEOPLE WILL NOT BE USING OTHER FORMS OF MOVING MONEY ACROSS BORDERS. EVEN IF YOU ARE USING A COMPANY OR ANYTHING LIKE THAT TO MOVE THAT MONEY ACROSS BORDERS, THEY WILL BE USING STABLECOINS ON THE BACKEND. IT IS SUCH A PARADIGM SHIFT IN THE WAY MONEY MOVES ACROSS BORDERS. ROMAINE: I HAVE SEEN A LOT OF OTHER COMPANIES TRY TO DO WHAT YOU DO, STRIPED, A FEW OTHERS HERE -- STRIPE, A FEW OTHERS HERE. WHAT SETS YELLOW CARD APART? CHRIS: WHEN IT COMES TO COMPANIES LIKE STRIPE AND WISE, WE ARE THE ONES BUILDING THE INFRASTRUCTURE FOR THOSE TYPES OF COMPANIES. WE ARE THE ONES THAT BUILD INFRASTRUCTURE FOR COMPANIES TO ACTUALLY BE ABLE TO MOVE MONEY INTERNATIONALLY. ON AND OFF RAMP ALL AROUND THE WORLD DIRECTLY TO STABLECOINS. ROMAINE: THAT IS WHAT YOU DO FOR CIRCLE. WHAT IS YOUR RELATIONSHIP WITH CIRCLE RIGHT NOW? YOU ARE USING THEIR INFRASTRUCTURE? CHRIS: WE USE USDC AND OTHER STABLECOINS FOR ACTUALLY MOVING THAT MONEY AROUND THE WORLD. THE BIG THING THAT WE DO THAT SETS US APART IS THERE IS A LOT OF COMPANIES USING USDC AND OTHER STABLECOINS TO MOVE MONEY AROUND THE WORLD BUT THEY ACTUALLY ONLY INTERACT WITH THE DOLLAR. YOU HAVE A COMPANY THAT MINTS USDC, SENDS IT TO YOU, AND YOU HAVE TO BURDEN FOR THE DOLLARS. WE JUST ADD TWO EXTRA STEPS TO ME WIRING YOU DOLLARS. WE GO INTO COUNTRIES ALL OVER THE WORLD, AND WE HAVE DIRECT LIQUIDITY AND DIRECT ON AND OFF RAMPS AGAINST THE LOCAL CURRENCY. SO INSTEAD OF GOING USDC TO USD AND WIRING THE MONEY SOMEWHERE, YOU CAN ACTUALLY SEND IT. SEND THE STABLECOIN DIRECTLY TO CHINA, TO AFRICA, TO ANYWHERE, AND OFFRAMP AGAINST THE LOCAL CURRENCY. ROMAINE: WE BROUGHT THIS UP WHEN TALKING WITH DAN DOLEV EARLIER. CIRCLE IS TIME TO BUILD OUT A PAYMENTS NETWORK, AT LEAST THAT IS WHAT BLOOMBERG HAS REPORTED. DOES THAT BECOME A COMPETITOR TO YOU, A THREAT TO YOU? CHRIS: WE ARE PART OF THE CIRCLE PAYMENTS NETWORK. ROMAINE: YOU ARE? CHRIS: YES. ROMAINE: YOU WILL REMAIN IN PARTNERSHIP WITH THEM, OR THEY WILL REMAIN IN PARTNERSHIP WITH YOU? CHRIS: YES, THUS THEY WANT TO GO BUILD THIS STUFF OUT THEMSELVES ACROSS ALL OF THESE COUNTRIES, WHICH IS A TALL TASK. IT TAKES A WILD. WE WORK WITH GREAT COMPANIES LIKE CIRCLE, POWERING THOSE TYPES OF PAYMENT NETWORKS. CIRCLE IS JUST ONE OF THEM. WE DO THIS ACROSS THE BOARD. WE WORK WITH GREAT COMPANIES LIKE VISA, WESTERN UNION, ALL THESE TYPES OF COMPANIES. ROMAINE: HOW MUCH DOES I GUESS THE PROMINENCE OF THE DOLLAR AND A RENEWED FOCUS BY THIS PARTICULAR MINISTRATION OF MAKING SURE THE DOLLAR REMAINS THE ESSENTIAL CURRENCY AROUND THE WORLD -- HOW MUCH DOES THAT FACTOR INTO YOUR BUSINESS RIGHT NOW AND ANY ADJUSTMENTS YOU WOULD HAVE TO MAKE? CHRIS: LOOK, THAT HAS DEFINITELY BEEN A BIG BOOST TO THE ENTIRE INDUSTRY. TO STABLECOINS AS A WHOLE. IT HAS MADE THE CONVERSATIONS THAT WE HAVE WITH FOREIGN BANKS, FOREIGN GOVERNMENTS SO MUCH EASIER AROUND, WHY IS THIS TECHNOLOGY BENEFICIAL? RIGHT? THE BIG THING STABLECOINS ARE DOING IS EXTENDING DOLLAR DOMINANCE, WHICH IS WHY THE CURRENT ADMINISTRATION LOVES THEM SO MUCH. THEY ARE TAKING THE DOLLAR, WHICH EVERYBODY LOVES TO TALK ABOUT THE DOWNFALL OF THE DOLLAR, BUT THEY ARE EXTENDING DOLLAR DOMINANCE BY AT LEAST 30 YEARS PAST HOWEVER MUCH LONGER IT ALREADY HAD. IT HAS REALLY TAKEN IT TO ANOTHER LEVEL AND WILL KEEP THE DOLLAR IN ITS POSITION AS THE DOMINANT WORLD CURRENCY FOR A WHILE. ROMAINE: ALL RIGHT, CHRIS. GOOD STUFF. CHRIS: GREAT TO BE HERE. ROMAINE: CHRIS MAURICE FROM YELLOW CARD. LET'S TAKE A QUICK LOOK AT THE AFTER HOURS TRADE. PALANTIR, ON SEMI, AND SNAP, WE ARE WAITING THE CONFERENCE CALLS TO KICK OFF, BUT THERE WAS A LOT OF CONCERN ABOUT THE SELLOFFS WE HAVE SEEN IN THOSE NAMES. A BIT OF A SNAP BACK IN THE AFTER HOURS TRADE. WE WILL BE BACK IN A MOMENT. THIS IS BLOOMBERG. ROMAINE: KEEPING AN EYE ON EARNINGS. AND TOMORROW, THAT INCLUDES FROM MCDONALD'S. THE COMPANY IS SET TO REPORT AS INVESTORS LOOK BEYOND THE CHAIN FOR CLUES ON BROADER RESTAURANT DEMAND, AND ANY COMMENTARY AMID A RECENT OUTBREAK OF CYCLOSPORA TIED TO ICEBERG LETTUCE. SARAH, LET'S START WITH AN OVERALL GROWTH HERE. WE ARE EXPECTING COMP SALES TO BE UP ABOUT 1.4% OVERALL. IS THAT KIND OF IN LINE WITH WHAT YOU ARE LOOKING FOR? SARAH: WHAT WE HAVE OBSERVED, THERE IS HIGH-FREQUENCY DATA WE CAN LOOK AT. ROMAINE: WHEN WE START TO TALK ABOUT WHAT THE STORY IS AND WHAT THIS COMPANY WILL ARTICULATE, WHERE DO YOU SEE THAT GROWTH COMING FROM? IS IT MORE TRAFFIC IN STORES, OR HIGHER END RECEIPTS FOR FOLKS COMING IN? SARA: MOST RESTAURANTS HOPE IT WILL BE A MIX OF THOSE TWO. YOU ALSO WANT A LITTLE BIT OF -- WITH SOME EVIDENCE THAT MAYBE PEOPLE ARE TRADING UP OR -- MCDONALD'S DID LAUNCH THE FIRST WAVE OF ITS BEVERAGE INDUSTRY -- INITIATIVE IN MAY. PEOPLE WHO WOULD HAVE GOTTEN A SODA ARE NOW GETTING A REFRESHER. ROMAINE: TALK TO ME ABOUT THAT. IT SEEMS LIKE EVERY RESTAURANT CHAIN IS TRYING TO DO THESE REFRESHERS OR WHATEVER. I ASSUME THAT HAS TO BE A RELATIVE HIGH MARGIN FOR THAT. IS THAT A WAY TO BOOST THE BOTTOM LINE OR ARE PEOPLE COMING IN JUST FOR THE DRINKS? SARA: WHAT MCDONALD'S HAS SEEN OR THEY ARTICULATED SEEING IN THE TEST MARKET WAS THAT YOU DID SEE SOME PEOPLE COME IN FOR JUST A BEVERAGE, AN ADDITION TO ATTACHING THEM. THE IDEA ON THESE BEVERAGES WHAT THEY WOULD BRING IN A NEWER YOUNGER CUSTOMER, BUT ALSO A DIFFERENT DAY FOR IT. MAYBE IN THE AFTERNOON, SOMETHING LIGHT LIKE A PICK ME UP. ROMAINE: ONE OF THE REASONS I ASKED, IT SEEMS LIKE THERE HAS BEEN A BIG FOCUS ON COSTS AND MCDONALD'S HAS A LOT OF EXPOSURE WHETHER IT IS BEEF PRICES, COFFEE PRICES, CHICKEN, CHEESE. I'M PROBABLY FORGETTING A FEW OTHER THINGS. ARE WE STARTING TO SEE MORE MODERATION IN SOME OF THOSE MATERIAL PRICE INCREASES FOR MCDONALD'S? SARA: BEEF HAS REALLY BEEN THE MOST INFLATIONARY PART OF THE ECONOMY FOR RESTAURANTS. WE'VE ACTUALLY SEEN GROUND BEEF INFLATE MORE THAN THE MORE PRIME CUTS. THAT REMAINS A PRESSURE POINT. YOU ASKED ABOUT THE MARGINS. CERTAINLY WHAT WE SEE IS BEVERAGE MARGINS ARE BETTER THAN FOOD. THAT IS PART OF THE APPEAL OF THAT LAUNCH. THE PRICE POINTS ARE MEANT TO BE ATTRACTIVE, COMPETITIVE, MORE CONSISTENT WITH MCDONALD'S POSITIONING. THERE HAS BEEN MODERATION ACROSS MOST COMMODITIES. ROMAINE: I AM CURIOUS ABOUT THE HEALTH OF THE CONSUMER AS WELL. I REMEMBER ON THE LAST CONFERENCE CALL IN EARLY MAY, MCDONALD'S WAS ASKED ABOUT THE HEALTH OF THE CONSUMER. HE SAID THAT THERE WAS -- THAT HE WAS EXPECTING MEANINGFUL DECELERATION IN THE CURRENT QUARTER, BECAUSE OF THE RUN-UP IN GAS PRICES. I KNOW GAS PRICES HAVE FLUCTUATED BECAUSE OF WHAT IS GOING ON IN THE MIDDLE EAST, BUT THERE -- IS THERE SOME SENSE THAT INVESTORS SHOULD ANTICIPATE SEEING SOFTNESS, EITHER IN THE NUMBERS OR THE FORECAST, BECAUSE OF THE POTENTIAL STRAIN ON THE CONSUMER? SARA: PART OF THE EXPECTATION WAS ALSO JUST THE COMPARISONS OF GETTING MORE DIFFICULT. I THINK THE EXPECTATION WAS THE TWO-YEAR TRENDS MAY BE BETTER SEQUENTIALLY. ONE YEAR WAS EXPECTED. WE ARE EARLY DAYS, IN TERMS OF THE EARNINGS SEASON FOR RESTAURANTS. RESTAURANTS THAT OFFER SOMETHING COMPELLING ARE SEEING TRAFFIC GROW. THE LOW INCOME CONSUMER IS STILL UNDER PRESSURE. WE HAVE SOME SIGNS THAT IS ABATING A LITTLE BIT, OR WAGES ARE ACCELERATING. THAT IS COMING -- COVERING SOME OF THESE ELEVATED GAS PRICES. BUT RESTAURANTS THAT HAVE SOMETHING WITH RESPECT TO MENU INNOVATION, OR MARKETING OR SOMETHING THAT IS UNIQUE HAVE BEEN SEEING TRAFFIC GROW. THAT IS WHAT WE ARE LOOKING FOR, RESTAURANTS THAT CAN BREAK THROUGH THE NOISE. ROMAINE: I REMEMBER MCDONALD'S GOT DINGED A LOT, FOR HOW HIGH IT'S PRICES HAD GOTTEN. THEN THE INTRODUCED THE BIG ARCH, A $10 BURGER. PRETTY PRICEY FOR MCDONALD'S. LAST QUARTER, THEY ACTUALLY SAID THAT THEY SOLD PRETTY WELL. I WONDER IF THAT WAS SIMPLY BECAUSE IT WAS SOMETHING NEW AND IN THE MINDS OF A LOT OF PEOPLE, NOVEL AND INNOVATIVE. PEOPLE DIDN'T MIND SPENDING A COUPLE BLOCKS FOR THAT AS OPPOSED TO A REGULAR QUARTER POUNDER. SARA: WE ARE SEEING THE SUCCESS OF A BARBELL STRATEGY, WHICH IS ESSENTIALLY YOU HAVE TO HAVE SOME PREMIUM OFFERS. WHETHER IT IS TO APPEAL TO A HIGHER INCOME COHORT, OR BECAUSE OF NEWNESS AND THE VALUE FOR THE MONEY. AT THE SAME TIME, YOU ALSO HAVE TO HAVE ACCESSIBLE PRICE POINTS. DONALD'S RELAUNCHED VALUE WITH THEIR MVCALUE 2.0. IN ADDITION TO SOME OF THESE COMBO MEAL PRICES. AND CERTAINLY AT LOCAL LEVEL WE ARE SEEING SOME AGGRESSIVE PRICE POINTS. BUT THEY AMONG OTHER RESTAURANTS DO NEED TO HAVE AN ARRAY OF OFFERINGS FOR ALL OF THE DIFFERENT PEOPLE OUT THERE. ROMAINE: WE REALLY APPRECIATE YOU TAKING TIME WITH US. SARA SENATORE, SENIOR RESTAURANTS ANALYST OVER AT BANK OF AMERICA, SETTING US UP FOR THOSE MCDONALD'S EARNINGS IN THE MORNING. WE COME BACK, WE WILL SET YOU UP WITH WHAT TO WATCH OVER THE NEXT 24 HOURS. THAT'S COMING UP NEXT, ON BLOOMBERG. ♪ ROMAINE: LET'S SET YOU UP FOR WHAT TO WATCH OVER THE NEXT 24 HOURS. WHAT THE MARKETS WILL HAVE THEIR EYES ON, IT INCLUDES QUITE A FEW EARNINGS. MCDONALD'S, WE ALSO GET SOME INTERESTING REPORTS IN THE INDUSTRIAL SPACE AND HEALTH CARE. PFIZER AND CATERPILLAR, ALSO EXPECTED TO REPORT BEFORE THE BELL. ALSO LOOK FOR WAYFAIR AND MERCK. AMD AND SPACEX. SPACEX'S FIRST EARNINGS REPORT SINCE THEY WENT PUBLIC IN JUNE. ON THE ECONOMIC FRONT, WE WILL GET AN UPDATE ON OUR TRADE BALANCE IN THE U.S., UPDATE ON FACTORY ORDERS, UPDATE ON DURABLE GOODS. FRIDAY, MONTHLY JOBS REPORT. THE POLITICS FRONT, KEEP AN EYE OUT FOR PRIMARY ELECTIONS IN KANSAS, MICHIGAN, MISSOURI AND WASHINGTON. A PRELUDE TO WHAT WE MIGHT FIND OUT FOR THE NOVEMBER 3 GENERAL ELECTION. PRESIDENT TRUMP IS SET TO MEET WITH AI FIRMS TOMORROW, AND WASHINGTON. WE WILL TRY TO GET MORE DETAILS ON THAT. THE FOLKS OVER AT BALANCE OF POWER MAY HAVE MORE INFORMATION AT THE HOUR.