Stocks & Bonds Fall as Oil Rises on Geopolitical Tensions | The Close 8/17/2026

>> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. >> AN OTHERWISE QUIET WEEK ALMOST REPAIRED FROM STUDIO TWO, IN NEW YORK, I'M SCARLET FU. >> I AM ISABELLE LEE. IT'S MONDAY AGAIN. >> MID AUGUST AND FAIRLY QUIET. NEVERTHELESS, STOCKS AND BONDS ARE FALLING, OIL RISING ON THE NEW GEOPOLITICAL TENSIONS. THE S&P 500 DOWN AFTER LAST WEEK'S RECORD HIGH. CHIPMAKERS ARE HIGHER FOR A FOURTH DAY. WTI IS AT THE HIGHEST LEVEL THIS MONTH SO A REMINDER THAT INFLATIONARY PRESSURES PERSIST AND THAT IS HELPING PUT PRESSURE ON BONDS AT THE LONG END OF THE YIELD CURVE. THE 30 YEAR YIELD, HIGHEST SINCE 2007 AND THAT IS BEFORE THE FINANCIAL CRISIS HE --. -- CRISES. ISABELLE: THE COMPANY REPORTED ITS CFO PLANS TO RETIRE AT THE END OF 2027 SO YOU SEE THE STOCK DOWN BY NEARLY 5% AND NEXT UP, JETBLUE AIRWAYS, SHARES DROPPING DOWN BY MORE THAN 6% AFTER SEAPORT GLOBAL CUT ITS RECOMMENDATION TO NEUTRAL. THE ANALYST SAYING THE BALANCE SHEET RISK MOVES TO THE FRONT BURNER WITHOUT THE STRAIT OF HORMUZ OPENING. SHARES ARE ALSO IN THE RED. I SHOULD HAVE JUST SAID IT'S A SEA OF RED, SCARLET. PHILIPS SECURITIES DOWNGRADED THE E-COMMERCE PLATFORM WITH THE PRICE TARGET AT 170 FROM 180. DEFINITELY BIG LOSERS THERE. SCARLET: SHOPIFY, ENTERPRISE SOFTWARE COMPANY. LET'S TALK ABOUT WHAT IT LOOKS LIKE IN THE TECH SPACE. I REMEMBER A TIME WHERE IF INVESTORS TALKED ABOUT ROTATION, IT WAS USUALLY BETWEEN DIFFERENT CENTERS BUT TECH IS SO BIG THAT WE GET QUOTATIONS WITHIN THE INDUSTRY. YOU CAN SEE A LOT OF BLUE BARS TO THE DOWNSIDE AND THAT REPRESENTS ONE-DAY DECLINES IN CHIP STOCKS. SOMETIMES, THERE IS WHITE BARS MOVING UP, ONE DAY GAINS IN SOFTWARE STOCKS. WE ARE GETTING THERE. WHAT YOU WILL SEE IS A BLUE BAR GOING UP. DECLINES IN SOFTWARE AS INVESTORS ROTATE OUT OF SOFTWARE AND BACK INTO SEMICONDUCTOR STOCKS. AS THE PERFORMANCE BROADENS, EXPOSURE TO THE ACADEMIC -- EQUITY MARKET SHOULD FOLLOW SUIT SO LET'S KICK THINGS OFF WITH THE EXECUTIVE DIRECTOR AT MORGAN STANLEY PRIVATE WEALTH MANAGEMENT. GOOD TO SPEAK WITH YOU. WE CAN LOOK AT WHAT IS GOING ON IN SEMICONDUCTORS AS A WAY INTO OUR CONVERSATION AFTER THE SELLOFF IN JULY IN THAT GROUP. THE WORD THAT KEEPS COMING UP SEEMS TO BE REBALANCING OUR PORTFOLIO. DOES A ROTATION BETWEEN SOFTWARE IN SEMICONDUCTORS COUNT AS EFFECTIVE REBALANCING? >> THANK YOU FOR HAVING ME ON. YOU ARE 100% RIGHT. AS INVESTORS ARE GETTING SO ENAMORED WITH AI, THE POSSIBILITY THAT IT BRINGS ALL ACROSS THE SECTOR AND OF COURSE VARIOUS PARTS OF TECHNOLOGY, THIS IS WHERE IT'S VERY EASY TO FALL INTO THIS CONCENTRATED POSITION, BEING SO CONCENTRATED IN ONE SECTOR AND WHILE WE MIGHT BE DIVERSIFIED IN TECHNOLOGY, WE ARE NOT QUITE EXPOSED TO OTHER CENTERS AND THIS IS WHERE OUR VIEW OF BROADENING OF THE MARKET TAKES PLACE, WHEN WE LOOK AT THE POTENTIAL AI HOLDS ACROSS THE SECTORS, IN FINANCIALS, AND INDUSTRIALS, IN HEALTH CARE. IT TRULY IS AMAZING BUT WE NEED TO SEE THE DEPTHS OF THE MARKET JUST LIKE WE SAW HIM RECENTLY AND IS BUYING OPPORTUNITIES BUT ALSO UNDERSTAND THAT VOLATILITY IS HERE TO STAY AND IT IS SOMETHING THAT WE ARE GOING TO BE DEALING WITH AZTEC INVESTORS. SCARLET: REMOUNT -- IN TECH INVESTORS. SCARLET: THAT INCLUDES SEMICONDUCTORS AND SOFTWARE COMPANIES AND ADDING TO OTHER INDUSTRY GROUPS. WHAT IS THE SINGLE BIGGEST SECTOR THAT YOU LIKE RIGHT NOW, YOUR MOST FAVORED ONE? KATERINA: THE SECTOR THAT IS THE BEST IS FINANCIAL SECTOR. ONE IS WE SEE THE AI IMPLEMENTATION. THE GAME RIGHT NOW THAT EVERYONE IS TRYING TO PLAY IS HOW TO MONETIZE THE AI INVESTMENT IN FINANCIALS, ESPECIALLY THE LARGE FINANCIALS. TO BE POSITIONED BEST IN THE SPACE. NOT ONLY THAT, THERE IS A POSSIBILITY OF HIGHER FOR LONGER AS WE SEE THAT THE GEOPOLITICAL SITUATION IN THE STRAIT OF HORMUZ AND IRAN CONFLICT IS PRESENTING THIS UNCERTAINTY AND MOST LIKELY WE ARE GOING TO HAVE HIGHER OIL PRICES AFFECTING THE INFLATION AND PUSHING PROFITABILITY. THIS IS A POSITIVE ENVIRONMENT FOR FINANCIALS. THERE IS A GREAT BUYING OPPORTUNITY AND THE OPPORTUNITY REIT -- TO RECEIVE SOME DIVIDENDS AS WELL AS THE APPRECIATION OF THESE STOCKS SO THAT IS OUR FAVORITE SECTOR RIGHT NOW. >> IF THE FED DOES STAY ON HOLD THROUGH THE YEAR END, WHICH BREAKTHROUGH FIRST? THE BOND MARKET, THE DOLLAR? KATERINA: IT'S HARD TO BE -- IT IS SUCH A TOUGH DECISION WITH THE UNCERTAINTY OF THE MARKETS BUT AT THE SAME TIME, WHAT WE JUST SAW IS THAT EASING LABOR MARKET EQUALING INFLATION SO OUR POSITION IS THE FED IS MOST LIKELY GOING TO STAY ON HOLD FOR THE REMAINDER OF THE YEAR BUT WE STILL HAVE TO BE REALISTIC THAT THERE IS 30% CHANCE THEY ARE GOING TO RAISE RATES AND IF THAT WERE TO HAPPEN, THERE ABSOLUTELY IS GOING TO BE WEAKNESS IN THE EQUITY MARKET AND YOU KNOW, WE HAVE TO BE READY FOR IT NOT TO PANIC BUT THAT IS WHERE THE REBALANCING OF THE PORTFOLIO TAKES PLACE. ON THE FIXED INCOME SIDE, HIGHER RATES ALWAYS PRESENT OPPORTUNITIES AND WE THINK THE SWEET SPOT IS THE INVESTMENT GRADE INTERMEDIARY SPACE AND IT CAN PRESENT A VOLATILITY TO THE CURRENT BOND HOLDINGS BUT THIS IS SOMETHING THAT WE ENCOURAGE INVESTORS TO SEE AS A PASSING PHASE BECAUSE INFLATION EVENTUALLY, WITH ALL THE FUNCTIONS AND POLICY OF THE FED, IS GOING TO COME DOWN AND READ THE FED IS GOING TO COME BACK TO LOWERING OF THE RATES. WE WOULD ENCOURAGE INVESTORS TO VIEW THIS AS AN OPPORTUNITY TO PICK UP HIGH-QUALITY BONDS. HIGHER PAYING BONDS FOR THEIR PORTFOLIOS AS PART OF THE DIVERSIFICATION. >> HOW HIGH DO OIL PRICES HAVE TO GO BEFORE YOU CALL THE IRAN SHOCK A GENUINE INFLATION PROBLEM? KATERINA: IT'S A TOUGH QUESTION. HERE IS WHY IT IS TOUGH. AT SOME POINT, LET'S JUST SAY WITH THE OIL PRICE BETWEEN 95 AND 125, OIL IS GOING TO PUT INFLATIONARY PRESSURES. THIS IS SOMETHING THAT WILL ABSOLUTELY AFFECT THE ECONOMY AND EARNINGS. THIS IS WHAT IS SOMETHING THE FED WILL BE ABLE TO CONTROL WITH RISING INTEREST RATES AND SLOWING THE ECONOMY DOWN. WE KNOW THIS IS WHAT IS IN THEIR TOOLBOX. IF THE PRICE OF OIL WERE TO GO FURTHER, AND IT'S VERY UNLIKELY SCENARIO, THEN WE COULD POTENTIALLY GO INTO AN OIL-BASED RECESSION. THAT SCENARIO IS CURRENTLY NOT IN OUR BOOKS, NOT SOMETHING WE ARE FORECASTING. IT IS SOMETHING THAT HAS TO BE CONSIDERED ONE OF THE WORST CASE SCENARIOS IF THIS CONFLICT WERE TO BE PROLONGED. >> WHAT IS THE NUMBER ONE CONVERSATION THAT YOU ARE HAVING WITH YOUR CLIENTS? WHAT IS THE QUESTION THEY ARE ASKING YOU? KATERINA: CAN THIS MARKET CONTINUE? WHEN WE LOOK BACK, NOT AT ONE, AT TWO, BUT THE LAST FIVE YEARS AND THE RETURNS THAT WE ARE LOOKING FOR THE PORTFOLIOS, THEY ARE HISTORICALLY UNPRECEDENTED AND WHAT WE TELL THEM IS THAT THIS IS THE CONVERSATION ABOUT THE FUNDAMENTALS. THIS IS THE TIME TO BE VERY SELECTIVE AND CAREFUL IN THAT PORTFOLIO DESIGN, THAT THE STORY OF AI IN THE STORY OF US MOVING INTO THE NEXT PHASE OF PRODUCTIVITY IS NOT JUST THE STORY OF ONE INDIVIDUAL COMPANY. THIS IS JUST A STORY OF OUR BRIDAL -- BROADER GLOBAL ECONOMY SO THEREFORE WE THINK THE GLOBAL EXPOSURE IS IMPORTANT WHILE WE ARE LEANING ON THE U.S. AND BEING VERY MUCH IN TUNE WITH WHAT IS HAPPENING IN THE ECONOMY AND BEING ON THE FOREFRONT OF THIS OPPORTUNITY ALL ACROSS THE SECTORS. IT IS SOMETHING THAT IS GOING TO GET US THROUGH THE NOISE. SCARLET: THE CUSP OF A FOURTH STRAIGHT YEAR. THANK YOU SO MUCH. KATERINA IS EXECUTIVE DIRECTOR AT MORGAN STANLEY WEALTH MANAGEMENT. COMING UP ON THE CLOSE, STOCKS ARE POPPING. WE ARE GOING TO DISCUSS THE RISKS AND CHALLENGES TO LARGE-SCALE AI ADOPTION WITH THE CHIEF ANALYTICAL OFFICER AT GLOBAL RATINGS. ISABELLE: ROMAINE BOSTICK JOINS US WITH A TIME THE CONVERSATION WITH THE FORMER PEPSICO PRESIDENT. SCARLET: CRITICAL INSIGHTS WITH A LONG-TERM LEADER IN THAT SPACE. OPERATING PARTNER AT ADVENT INTERNATIONAL JOINS US WITH HER PERSPECTIVES. ALL THAT AND MORE, COMING UP. THIS IS THE CLOSE ON BLOOMBERG. >> AI STOCKS GETTING A LIFT AFTER ANTHROPIC REPORTED PRELIMINARY SECOND-QUARTER REVENUE OF 1.5 BILLION. THAT IS AT LEAST 14 FOLD YEAR INCREASE YEAR OVER YEAR. OUR NEXT GUEST SAYS AI SPENDING AND ADOPTION WON'T CHANGE CREDIT QUALITY OVERNIGHT. SHE DOES SEE GOVERNMENT RECOGNIZING THE TECHNOLOGY'S POTENTIAL. JOINING US AND -- US NOW, THANK YOU FOR JOINING US ON THIS MONDAY. WHAT WILL CHANGE YOUR VIEW TO SAY THAT AI IS NOW MATERIALLY AFFECTING A HIGH CREDIT QUALITY? >> I THINK IT'S IMPORTANT TO JUST SAY AI IS A HUGE UMBRELLA OF THINGS, RIGHT? IT CAN BE TECHNOLOGY. IT CAN BE A WHOLE BUNCH OF THINGS. IT CAN BE DATA CENTER INVESTMENT. DIGITAL INFRASTRUCTURE. FOR GOVERNMENTS, WHAT WE ARE REALLY LOOKING AT IS HOW WE CAN LEVERAGE THE EFFICIENCIES OR THE OPERATIONAL ASPECTS OF AI TOOLS. COPILOT, THINGS OF THAT NATURE. IT'S PROBABLY NOT GOING TO BE SORT OF AN OVERNIGHT TRANSITION TO WHERE IT AFFECTS CREDIT QUALITY. EVEN OUR COMPANY -- I'M SURE BLOOMBERG AND S&P GLOBAL RATINGS, WE ARE STILL TRYING TO FIGURE OUT HOW TO BEST UTILIZE IT WHILE ALSO PROTECTING INTELLECTUAL PROPERTY OR CONFIDENTIAL INFORMATION AND I THINK FOR GOVERNMENTS, THAT IS A KEY ASPECT IS ENSURING THAT THEY DON'T INADVERTENTLY RELEASE CONFIDENTIAL INFORMATION. >> HOW DO WE KNOW WHETHER GOVERNMENTS ARE SENDING MONEY WITH AI RATHER THAN ADDING AN EXPENSIVE TECH LAYER ON TOP OF IT? NORA: I THINK THAT IT WILL COME BUT NOT RIGHT AWAY. YOU HAVE TO AMORTIZE THAT INVESTMENT BEFORE YOU CAN REALLY LEVERAGE THE OUTCOMES OF IT. IT'S PROBABLY GOING TO BE MAY BE IN A COUPLE OF YEARS OR SOMETHING LIKE THAT THAT THE COST SAVINGS ARE REALLY EVIDENT. IT WILL HAPPEN AS A NUMBER OF PEOPLE RETIRE FROM GOVERNMENT SERVICES WHICH WE'RE BEGINNING TO SEE AND MAYBE THEY ARE BACKFILLED WITH A TOOL OR SOMETHING THAT CAN DO THAT REPEATABLE TASK MAKE LOOK AT A PERMIT TO MAKE SURE IT IS FULLY COMPLETE OR READ AND HR IMPLEMENT FIRM OR -- FORM OR SOMETHING LIKE THAT. >> SOME STATES WILL MOVE FASTER THAN OTHERS. A VERY SIMPLISTIC WAY OF THINKING ABOUT IT MIGHT BE CALIFORNIA WHICH IS HOME TO SILICON VALLEY. THEY WILL PROBABLY HAVE A COMFORT LEVEL THAT OTHER STATES DO NOT. HOW DO YOU THINK ABOUT POTENTIAL EARLY ADOPTERS AND THE OPPORTUNITIES THAT THAT CREATES? >> THERE'S A LOT OF OPPORTUNITIES BUT WHAT IS KEY IS MAKING SURE EMPLOYEES ARE TRAINED AND COMFORTABLE WITH THE TOOLS. DO THEY KNOW EXACTLY HOW TO MAKE SURE THE TOOL IS NOT HALLUCINATING AND MAYBE SOME INFORMATION THAT YOU ARE TRYING TO GET ACCESS TO MAKING SURE NOT ERRONEOUS. I THINK GENERALLY, PEOPLE ARE GETTING MORE AND MORE COMFORTABLE WITH THE TOOLS, ESPECIALLY THOSE OFF THE SHELF LIKE COPILOT OR CHATGPT OR SOMETHING. SOMETIMES, I THINK ORGANIZATIONS, GOVERNMENTS, NOT FOR PROFIT ENTERPRISES WILL HAVE TO DO A BIT OF CUSTOMIZATION TO MAKE SURE IT IS UNIQUE TO THEIR ORGANIZATION AND CAN ACCOMMODATE CERTAIN ASPECTS OF THE ORGANIZATION THAT MIGHT BE A LITTLE BIT DIFFERENT THAN MICROSOFT COPILOT OFF THE SHELF. SCARLET: THERE IS THIS IDEA THAT PERSONNEL IS POLICY. DIFFERENT GOVERNMENTS ARE INCONSISTENT WITH APPLYING THE USE OF THIS TECHNOLOGY, INVESTING IN AND ADOPTING IT OVERALL. IT WILL GET SWINGS DEPENDING ON WHO IS LEADING THAT PARTICULAR OFFICE. >> AT THE LOCAL LEVEL BUT I DEFINITELY CAN FORESEE THAT SOME ORGANIZATIONS WHO EITHER HAVE HIGHLY COMPLEX OPERATIONS, LET'S SAY A UTILITY OR NEW YORK CITY OR SOME OTHER LARGE STATES THAT HAVE VERY LARGE COMPLEX ORGANIZATIONS. THEY MIGHT BE QUICKER TO ADOPT IT BECAUSE THEY WILL SEE THE BENEFITS SOONER AND MAYBE SOME OF THE SMALL ORGANIZATIONS, GOVERNMENTS WE WRITE TO. ISABELLE: I KNOW IT'S HARD TO GENERALIZE, BUT OUR GOVERNMENT MOVING FAST ENOUGH, OR DO YOU THINK BUREAUCRACY AND PROCUREMENT ARE RISKING LEAVING THEM BEHIND? NORA: PROCUREMENT FOR GOVERNMENTS, AS YOU KNOW, THEY ARE TYPICALLY AT POINTS AT WHICH A GOVERNING BODY HAS TO EITHER OK THE PROCUREMENT OR GO FORWARD WITH A PROCUREMENT BASED ON CERTAIN VALUE OF A CONTRACT, SOMETHING OF THAT NATURE. OBVIOUSLY, THERE IS INFRASTRUCTURE PROJECTS THAT ARE BID OUT, SOMETIMES YOU HAVE TO TAKE THE LOWEST BIDDER DEPENDING ON HOW THE CONTRACT IS FORMULATED. I'M NOT EXACTLY SURE THAT GOVERNMENTS ARE ALWAYS BEST POSITION TO BE EARLY ADOPTERS, BUT WE OBSERVE AND HEAR FROM MANAGEMENT TEAMS, PARTICULARLY IN PLACES LIKE THE HEALTH-CARE INDUSTRY, ACUTE CARE PROVIDERS THAT MIGHT BE ADOPTING MORE QUICKLY. SCARLET: IS THAT THE INDUSTRY LEADING THE WAY OUT OF EVERYTHING YOU ARE SURVEYING, THAT YOU MONITOR, THE HEALTH-CARE CARE INDUSTRY WILL BE THE QUICKEST? NORA: I'M NOT SURE I WOULD SAY THE QUICKEST BUT THEY ARE ALREADY MOVING AHEAD BECAUSE THEY ARE ALREADY FAMILIAR WITH SOME OF THE OPTIMIZATION THROUGH ELECTRONIC HEALTH CARE RECORDS THAT WERE ADOPTED IN THE 2010'S, OTHER THINGS WHERE THEY CAN LEVERAGE -- IF YOU ARE WATCHING ANY MEDICAL TV SHOW, THEY ARE ALL DOING AI-ASSISTED NOTES ON FILES, THINGS LIKE THAT. THAT IS NOT UNTRUE. IT IS ACTUALLY HAPPENING, AS WELL. THEY ARE MORE MOTIVATED JUST BASED ON SOME OF THE THINGS THEY HAVE SEEN IN THEIR INDUSTRY THAT ARE MORE AI-LIKE, IF YOU WILL. ISABELLE: YOU MADE A POINT ABOUT SEEING "THE PITT." WHAT IS ONE FUNCTION WHEN YOU SEE THIS MOST FUNCTIONAL IN THE FUTURE? NORA: ONE THING THAT COULD BE BENEFICIAL IS LIKE A 311 SYSTEM WHERE SOMEBODY CAN CALL AND REPORT SOMETHING. YOUR VOICE AUTOMATION GETS YOU TO THE RIGHT DEPARTMENT. I THINK THAT'S A HELPFUL THING FOR GOVERNMENTS TO BE ACTION ING ON. I WOULDN'T SAY EASY, BUT IT IS PROBABLY EASIER THAN SOME OF THE OTHER THINGS THEY ARE USING IT FOR. SCARLET: THANK YOU FOR JOINING US TODAY. NORA WITTSTRUCK IS THE CHIEF GOVERNMENT OFFICER FOR S&P GLOBAL RATINGS. COMING UP, WHAT IS BEHIND THE DROP OF SHARES IN SHOPIFY TODAY? THE STOCK IS LOWER BY 3% THIS MONDAY AFTERNOON. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: IT IS TIME FOR OUR TOP CALLS, SOME OF THE BIGGEST MOVERS ON THE BACK OF ANALYST RECOMMENDATIONS. GOLDMAN SACHS REINSTATING COVERAGE OF ETSY WITH A NEUTRAL RATING. THE ANALYST ATTACHING AN $89 PRICE TARGET, SAYING ETSY HAS POSITIONED ITSELF TO BE A SURE TAKER AND FIRST MOVER AS THE WORLD INCREASINGLY SHIFTS TOWARD AGENTIC COMMERCE. THE STOCK IS DOWN ABOUT ONE POINT 5% TODAY. APPLE, ROTHSCHILD AND REDBIRD UPGRADING THEM TO A BUY BASED ON UNDERAPPRECIATED STRENGTH IN HIS PRODUCT ROADMAP. THE FIRM BOOSTING ITS PRICE TARGET TO $400 FROM 260 AS RISING COSTS ARE SQUEEZING THOSE WITH LOWER MARGINS. THE STOCK IS LITTLE CHANGED ON THE DAY. FINALLY, SHOPIFY. PHILIPS SECURITIES CODING THE STOCK FROM ACCUMULATE TO A BUY. MORE THAN A PAUSE THAN AN OUTRIGHT DOWNGRADE. THEY SAY THEY CONTINUE TO DELIVER ROBUST GROWTH WHILE REMAINING WELL POSITIONED IN AGENTIC COMMERCE. SHARES ARE DOWN ABOUT THREE PERCENT. THOSE ARE SOME OF OUR TOP CALLS. WE WILL STAY WITH SHOPIFY, SHARES ON PACE FOR THE WORST DAY SINCE JULY. LET'S BRING IN OUR SENIOR TECHNOLOGY ANALYST WHO COVERS THE STOP. LET'S TALK ABOUT SHOPIFY HERE AND POSITIONING IT HAS IN AGENTIC COMMERCE. WOULD YOU AGREE WITH THE IDEA THAT IT REMAINS WELL POSITIONED, SEEING SOME OF THE RECENT GAINS BEING REMOVED ON A DAY LIKE TODAY? ANURAG: IN OUR VIEW, SHOPIFY IS ONE OF THE BETTER POSITIONED SOFTWARE COMPANIES TO BENEFIT FROM AI. THESE GUYS HAVE BEEN INVESTING AGGRESSIVELY, TAKING MARKET SHARE. THE GROWTH RATE THEY HAVE SHOWN OVER THE LAST YEARS HAS BEEN IMPRESSIVE. WHEN IT COMES TO AGENTIC, THEY ARE DOING MORE THAN ANYONE ELSE HAS DONE. THEIR CATALOG IS OUT THERE FOR AGES TO DO SHOPPING. THEY HAVE A PAYMENT SYSTEM THAT COMBINES WITH GOOGLE. I THINK THEY ARE AT THE FOREFRONT OF EVERYTHING AS IT RELATES TO COMMERCE. SCARLET: YOU LOOK AT THE REVENUE NUMBERS, GROWING AT A LOW 30'S PERCENTAGE RATE, THE SIXTH STRAIGHT QUARTER OF REVENUE GROWTH EXCEEDING 30%. I FEEL LIKE THAT IS THE BENCHMARK NOW, AND ANYTHING BELOW THAT IS SEEN AS A DISAPPOINTMENT. ARE THERE ANY COMPETITORS IN THE SPACE THAT CAN LOCK SIMILAR KINDS OF GROWTH? ANURAG: WHEN IT COMES TO SHOPIFY, EVEN BEFORE THAT, TWO YEARS BEFORE THAT, GROWTH RATE WAS IN THE 20'S. THEY HAVE DONE AN EXCEPTIONAL JOB OF GAINING MARKET SHARE AT THE EXPENSE OF SOME OF THE BIG ARRIVALS THEY HAVE. THE LIKES OF SALESFORCE, ADOBE, ORACLE. WHAT THEY ARE DOING IS BASICALLY SAYING, WE HAVE THE MOST RELATIVE PLATFORM OUT THERE FOR YOU TO DO ALL THINGS, WHETHER OR NOT JUST DIGITAL COMMERCE, BUT ALSO WHEN IT COMES TO SOCIAL COMMERCE. THE PACE OF INNOVATION THEY HAVE FAR SUPERSEDES EVERYBODY ELSE AT THIS POINT. ISABELLE: WHAT ABOUT WORKDAY? HOW DO YOU READ WHAT IS HAPPENING THERE? DO YOU THINK THEY ARE STILL IN THE SELLING PHASE, CONVINCING INVESTOR PHASE? MAYBE INVESTORS DON'T NEED CONVINCING WHEN IT COMES TO ENTERPRISE SOFTWARE. ANURAG: IF YOU GO BACK TO LAST 12 MONTHS, THEY SAID THE ENTIRE SOFTWARE SPACE CLOSED OR SUBMITTED WITH THE FEARS THAT PEOPLE WILL VIBE CODE THEIR OWN SOFTWARE INTERNALLY AND THEY WILL NOT NEED THIS. ONE OF THE CROWN JEWELS OF ANY S&P INDEX YOU COULD THINK OF BECAUSE OF HIGH GROWTH AND HIGH PROFILE. WHAT IS HAPPENING NOT JUST WITH WORKDAY BUT THE ENTIRE SOFTWARE SPACE, PEOPLE ARE INVESTING AGGRESSIVELY IN THEIR AI INFRASTRUCTURE, HARDWARE. THAT IS TAKING AWAY SHARE FROM ENTERPRISE SOFTWARE. THE OTHER THING THAT IS HAPPENING, COMPANIES ARE NOT HIRING AT THE SAME RATE. WHEN YOU ARE PRICED ON A PER SEAT BASIS, IF YOUR CUSTOMERS ARE NOT HIRING MUCH, THEY ARE ALSO NOT BUYING YOUR SOFTWARE. THE GROWTH RATE HAS GONE DOWN FROM 18% TO 14, BUT WE THINK THAT IS NOT BECAUSE OF AI, IT IS JUST BECAUSE THEY DON'T HAVE ENOUGH FUNDING TO BUY SEATS, OR THE CLIENTS DON'T HAVE THE FUNDING. THERE IS A BIG SHIFT GOING ON. WE DON'T THINK THAT WILL BE DISRUPTED WITH AI. THEY WILL BENEFIT IN THE WRONG RUN. THE GROWTH RATE NEEDS TO GO UP BEFORE PEOPLE CAN GET COMFORTABLE WITH THAT. ISABELLE: WHEN YOU LOOK AT THE BROADER LANDSCAPE, WHAT IS THE BIGGEST RISK INVESTORS ARE UNDERESTIMATING, SLOWING GROWTH OR THE FACT THAT THESE STOCKS ARE SO RICHLY VALUED? ANURAG: I WOULDN'T CALL THEM RICHLY VALUED, BUT THEY HAVE BEEN DECIMATED, FRANKLY, FROM THEIR HISTORICAL VALUATIONS. THE BIGGEST CONCERN IS THE PRICING OF THESE PRODUCTS GOING FORWARD. CAN THEY KEEP UP WITH THAT SEAT-BASED MODEL? IF GLOBAL CORPORATIONS ARE NOT GOING TO ADD MORE HEADCOUNT TO THEIR OVERALL PORTFOLIO, HOW ARE THEY GOING TO SHOW GROWTH? THAT IS THE BIGGEST QUESTION FOR EVERYBODY. IF THEY TRANSITION INTO AN AI-BASED MODEL WHICH IS MORE CONSUMPTION BASED, HOW WILL THEY PRICE THINGS? THE PRICING PART OF IT IS A BIGGER UNKNOWN THAN THEM BEING DISRUPTED BY AI. SCARLET: ALWAYS A PLEASURE SPEAKING WITH YOU. ANURAG RANA, OUR SENIOR TECHNOLOGY ANALYST. COMING UP, WE ARE HEADING TO THE CLOSE FOR AN INTERVIEW WITH ROMAINE BOSTICK SPEAKING TO THE FORMER PEPSICO CEO DEREK LEWIS. THIS IS "THE CLOSE" ON BLOOMBERG. >> IT IS JUST ABOUT 3:30 P.M. IN NEW YORK. THIS IS THE COUNTDOWN TO THE CLOSE. I AM SCARLET FU. BLOOMBERG NEW VOICES INITIATIVE IS HOLDING ITS LATEST EVENT IN MARTHA'S VINEYARD THIS WEEK AS THE NEXT GENERATION OF FEMALE PROFESSIONALS CONVERGE ON THE ISLAND. THAT'S GO OVER TO THE CLOSE. ROMAINE BOSTICK WHO IS OUT ON ASSIGNMENT IN MARTHA'S VINEYARD. WE HAVE -- ROMAINE HAS BEEN WORKING ALL WEEKEND. WHO HAVE YOU BEEN SPEAKING WITH? ROMAINE: IT HAS BEEN A TOUGH ASSIGNMENT OUT HERE IN MARTHA'S VINEYARD BUT YOU MENTIONED THE NEW VOICES PROGRAM. EIGHT YEARS AND RUNNING NOW WHERE YOU TRY TO ROOT OUT ESTABLISHED EXECUTIVES BUT NOT NECESSARILY EXECUTIVES WHO DO A LOT OF MEDIA. WE GO FROM CITY TO CITY TO TRY TO FIND THESE FOLKS AND GET THEM TRAINED UP TO THE FOREFRONT AND AS PART OF TALKING TO THOSE NEW VOICES, THIS IS THE FIRST TIME WE ARE HERE IN MARTHA'S VINEYARD. WE TALKED TO THE ESTABLISHED VOICES. WE HAD A CHANCE EARLIER TODAY TO CATCH UP WITH THE FORMER PRESIDENT OF PEPSICO'S NORTH AMERICAN BEVERAGE UNIT, DEREK LEWIS. SHE IS AN ADVISOR NOW AT ADVENT INTERNATIONAL BUT A LOT OF PEOPLE MIGHT REMEMBER HER. SHE WAS RUNNING FACEBOOK'S DIGITIZATION STRATEGY BACK IN THE DAY, BASICALLY A PAYMENT STRATEGY LEADING UP TO THE LAUNCH OF THE LIBRA. SHE WAS AT STANDARD CHARTERED FOR A LOT OF YEARS. WE WILL CATCH UP WITH THE FORMER CEO OVER WALGREENS AND FORMER COO OVER AT STARBUCKS. DEREK HALL WHO RUNS -- THIS IS THE BIG VENTURE CAPITAL FUND CREATED BY HIM, THE FOUNDER OF AOL TO DISPERSE VENTURE CAPITAL AWAY FROM JUST KIND OF THE BIG COASTAL COMMUNITIES. THE FLYOVER STATES AND SOME OF THEM MORE UNDERREPRESENTED GROUPS. >> WE ARE GOING TO CHECK AND OF COURSE WITH YOU LATER ON. ROMAINE BOSTICK, THE CLOSE COHOST. LET'S GET TO ONE OF THOSE CONVERSATIONS ROMAINE WAS TELLING US ABOUT. WE SPOKE WITH DEREK LEWIS AT PEPSICO BEVERAGES. TAKE A LISTEN. QUANTS I WANTED TO SHIFT FROM A LONG CAREER, THREE POINT FIVE DECADES. WHAT A GREAT RUN. A GREAT COMPANY THAT HAS A TON OF POWERFUL BRANDS AND OPERATIONAL CAPABILITIES, CULTURE AND WAS UNBELIEVABLE. I WANTED TO DO SOMETHING DIFFERENT TO PIVOT AWAY FROM THIS BEING A GO-GETTER. I WAS A GO-GETTER FOR MOST OF MY ENTIRE CAREER AND I WANTED TO BE MORE BALANCED. I WANTED TO BE A GO-GIVER. I WANTED MORE PURPOSE IN MY LIFE. THE THINGS I SHIFTED TO OUR MORE PURPOSEFUL FOR ME SO I KEEP THAT BALANCE. I DID NOT WANT TO SHIFT COMPLETELY SO NOW, I FOUND THE RIGHT RHYTHM. I HAVE BEEN ENJOYING THAT SINCE I RETIRED AND IT’'S BEEN A REALLY FUN RUN. THE SECOND CHAPTER HAS BEEN JUST AS FUN. ROMAINE: YOU MADE SOME INVESTMENTS IN THE RESTAURANT SPACE AS A FRANCHISEE. WHY RESTAURANTS? DEREK: I HAD AN AFFINITY FOR IT. I GREW UP IN D.C. BUT IT WAS ALWAYS A TREAT WHEN I WAS ABLE TO EAT A CHEESE STEAK AND PRETZEL. I CRAVE THOSE FOODS. I ALWAYS CRAVED A PHILLY CHEESE STEAK WHEN I LIVED IN PHOENIX, PORTLAND, DENVER. I COULD NEVER FIND A GREAT CHEESE STEAK GREAT SOFT PRETZEL. ALWAYS FELT LIKE I WAS CRAVING THOSE FOODS. I END UP WORKING WITH A LOT OF ENTREPRENEURS, PARTICULARLY ONE NOW. I SUPPORTED THAT BRAND IN TERMS OF MY WORK AND GOT TO LOVE THE BUSINESS IS SOFT. I LOVE THE OWNER AND THE BUSINESS. HERE I AM NOW WITH A COUPLE UNITS IN ORLANDO. A MULTI -- BEING A MULTI-BRAND FRANCHISEE IS A FUN THING TO DO. A GREAT RELATIONSHIP WITHIN THE ORLANDO COMMUNITY. PARTICULARLY IN THE SPORTS REALM AS WELL. TO GET THE BRANDS OFF THE GROUND AND FULFILL ENGAGEMENT. ROMAINE: DO YOU TRY TO DO THAT ORGANICALLY, REINVESTING BACK IN THE BUSINESS? HOW DOES THAT WORK? DEREK: IT'S ALL OF THE ABOVE. THAT OPENS UP A LOT OF OPPORTUNITIES. THERE'S BEEN A LOT OF INQUIRIES AROUND EXPANSION AND LOOKING FORWARD TO THE EXPANSION IN THE FUTURE. WE HAD THIS ECONOMIC CYCLE WHICH HAS BEEN A CHALLENGE. THEY ARE DOING WELL. A GREAT TEAM, A GREAT STAFF, BUILDING GREAT EQUITY AMONGST THE COMMUNITY. I LOOK FORWARD TO BUILDING UPON THAT AS A GO FORWARD IN THE FUTURE. ROMAINE: YOU KNOW ECONOMIC CYCLES AND HOW CONSUMERS SHIFT THEIR SPENDING WHEN TIMES GET TOUGH. DEPENDING ON WHO YOU ASK, OTHERS WILL SAY THE ECONOMY IS NOT DOING GREAT AND IT DEPENDS ON YOUR INCOME LEVEL MAY BE. DEREK: CONSUMERS ARE BEING INTENTIONAL RIGHT NOW. THEY HAVE A LOT MORE INFORMATION AND HIGHER EXPECTATIONS, RIGHT? WHILE VALUE IS AT THE CENTER OF THE DECISIONS MAINLY, NOT JUST FROM A PRICING STANDPOINT BUT ALSO FROM THE EXPERIENCE STANDPOINT, PERSONALIZATION MATTERS, CONVENIENCE MATTERS, SPEED MATTERS PAID ALL OF THESE THINGS GOING TO THE VALUE EQUATION OF THE CONSUMER. 10 PERCENT OF AMERICAN CONSUMERS ARE DRIVING 60% OF THE ECONOMY SO IT REALLY TELLS YOU THAT THERE IS A LOT AT THE TOP END GENERATING THE MOST OF WHAT IS GOING ON OUT THERE AND THAT IS SORT OF THAT OTHER 90% ARE BEING VERY SELECTIVE, YOU KNOW? SOME CASES, PULLING BACK. IT'S MORE OCCASION BASED. YOU SEE CONSUMERS LEADING THE PREMIUM. OTHERS ARE LEADING THE VALUE BECAUSE THEY ARE TRYING TO CREATE THAT BALANCING ACT SO AT THE END OF THE DAY, BEING SELECTIVE I THINK LOYALTY IS SO IMPORTANT. THAT IS WHAT I TRY TO DO. I WANT TO EARN IT. IT'S HARD TO EARN BUT EASY TO LOSE. ROMAINE: I WANT TO ASK YOU ABOUT YOUR NATURAL AT PEPSICO. OBVIOUSLY, THAT WAS KIND OF BORN IN THE AFTERMATH OF THE GEORGE FLOYD MURDERS AND THE INTENTIONAL MOVE BY A LOT OF COMPANIES TO FIND WAYS TO SORT OF EMBRACE IF NOT INVEST DIRECTLY. IT WAS YOUR DEPARTURE A REFLECTION ON MAYBE THAT COMMITMENT WANING? DEREK: NOT AT ALL. THE COMPANY HAS A LONG LEGACY AND HISTORY OF INVESTING IN THOSE SPACES. THINK ABOUT THE DEMOGRAPHIC SHIFTS THAT ARE OCCURRING. YOU WANT TO CAPTURE THAT. BRANDS WANT TO CAPTURE THAT. FROM A TALENT POOL STANDPOINT, YOU WANT TO CAPTURE THAT SO THERE IS NO REASON TO TURN AWAY FROM THAT AT ALL. RESOURCES ARE GETTING DEPLOYED A LITTLE BIT DIFFERENTLY. I WAS ASKED TO STAND THAT UP. THE BEST PRACTICES WE ARE PUTTING IN PLACE TO INVEST IN THOSE COMMUNITIES AND CONSUMER GROUPS TO KEEP THE WHOLE LIST AT FRONT AND CENTER WAS THE REASON WHY OUR BUSINESS WAS REALLY STRONG. CAN YOU TAKE THESE BEST PRACTICES YOU ARE DOING ON A GEOGRAPHIC LEVEL AND SCALE THESE ACROSS THE ENTERPRISE? EVERYBODY IS PARTICIPATING IN THE ABILITY TO REACH ALL THE CONSUMER GROUPS OUT THERE AND GROW OUR BUSINESS. THERE IS NO NEED TO TALK ABOUT INVESTING IN THESE ACTIVITIES. YOU CAN ACTUALLY DO WELL FROM THE PERSPECTIVE AND YOU CAN BE GOOD FROM A PURPOSE PERSPECTIVE AND BOTH CAN COEXIST AND DRAW THE GREATEST RESULTS POSSIBLE AND THAT IS EXACTLY WHAT I DID AND THE INTENTION OF SETTING UP THE BUSINESS DEAL TO DO THAT ACROSS THE SCALE ACROSS THE ENTIRE ORGANIZATION. ROMAINE: THAT MAKES A LOT OF SENSE AND IT MADE A LOT OF SENSE IN 2022. CANNICK -- CAN AN EXECUTIVE WALK INTO THE OFFICE GIVEN THE POLITICAL CLIMATE? DEREK: YOU WILL HAVE TO POSITION IT A LOT DIFFERENTLY. YOU HAVE TO KEEP THE GREATER GOOD IN MIND. BEING SURGICAL IN PLACES THAT ARE GOING TO DRIVE INCREMENTAL LIFTS IN YOUR BUSINESS AND NOT ERODE YOUR CORE -- A LOT OF THE DEMOGRAPHIC CHANGES IN THE COMPANY OR A BIG PART OF THE GROWTH -- ARE A BIG PART OF THE GROWTH. YOU ARE NOT GOING TO WANT TO DISRUPT THAT. STAYING TRUE TO GROWING THE BUSINESS BUT ALSO INVESTING IN COMMUNITIES IN THE SAME MANNER OR IN A MANNER CONSISTENT WITH WHAT THOSE CONSUMERS BELIEVE TO BE A COMPANY THEY WANT TO STAY LOYAL IN, YOU HAVE TO BE MINDFUL OF THAT BECAUSE YOU HAVE TO BE CAREFUL ABOUT THAT BUT YOU HAVE TO SORT OF REIMAGINE HOW YOU ARE DOING. THINKING ABOUT THE COLLECTIVE. IT TOTALLY MAKES SENSE TO SUPPORT LEADERS THAT CAN STILL CONVEY THAT MESSAGE IN A BROAD-BASED SENSE THAT NOBODY IS LEFT BEHIND. SCARLET: THAT WAS ROMAINE BOSTICK. BREAKING NEWS. ROMAINE SPEAKING WITH HER AT THE MARTHA'S VINEYARD EVENT. LET'S GET TO THE BREAKING NEWS NOW. IT'S ON TRACK TO GENERATE AND ANALYZE REVENUE OF MORE THAN 65 BILLION DOLLARS BASED ON ITS CURRENT PERFORMANCE ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. THAT IS UP MORE THAN SEVEN: -- SEVENFOLD FROM ITS PACE AT THE END OF LAST YEAR. IT MAKES A HUGE DIFFERENCE TO INVESTORS WHO ARE ANTICIPATING THE IPO OF ANTHROPIC OR ITS RIVAL, OPENAI. ISABELLE: ANTHROPIC WAS ONCE THE UNDERDOG. OPENAI'S REVENUE RUN RATE RECENTLY EXCEEDED $40 BILLION. THOSE TWO MAY NOT BE MEASURED APPLES TO APPLES, APPLES TO ORANGES BUT IT'S REALLY SPECTACULAR NUMBERS COMING FROM THESE BIG TWO COMPANIES. SCARLET: THESE ARE MUCH ANTICIPATED IPO'S. WE WILL HAVE MORE. THIS IS THE CLOSE ON BLOOMBERG. ISABELLE: OUR STOCK OF THE HOUR IS JET BLUE AND SHARES ARE UNDER PRESSURE AFTER DANIEL MCKENZIE DOWNGRADED THE STOCK BECAUSE OF FUEL VOLATILITY CONCERNS. JOINING US LIVE IS NORAH MULINDA MELENDEZ. WHY ALL THIS NEGATIVITY AROUND JETBLUE? >> JETBLUE IS NOT UNLIKE ANY OTHER AIRLINE RIGHT NOW. THEY ARE ALL EXPOSED TO THE IDEA OF THE HIGHER FUEL PRICES RIGHT NOW BEING SPARKED BY THE ONGOING CONFLICT IN THE MIDDLE EAST. WHAT IS DIFFERENT ABOUT JETBLUE IS ITS DEBT LOAD. IF PRICES CONTINUE TO GO UP AND WE STILL SEE THE ELEVATED PRICE FOR FUEL, DOES THAT MEAN THEY WILL HAVE TO TAKE ON MORE DEBT WITHOUT MORE CASH TO WORK WITH? THAT IS WHAT YOU ARE SEEKING SEAPORT DOWNGRADING THE STOCK FROM BUY TO NEUTRAL. THEY WERE SAYING IN PEOPLE THEY WOULD BE ABLE TO BENEFIT FROM SPIRIT AIRLINES. THEY DID NOT THINK THE WAR WOULD PERSIST AS LONG AS IT HAS BUT IT IS STILL ONGOING IN AUGUST. NOW THEY ARE SAYING MAYBE WE SHOULD CUT IT BACK TO NEUTRAL AND SEE WHAT HAPPENS NEXT. SCARLET: AN ACKNOWLEDGMENT THAT NO ONE KNOWS WHAT IS GOING TO HAPPEN WITH OIL. REMARKABLE TO SEE SO MANY CELLS. YOU NOTICE IN THE NOTE THERE ARE EXTREMES THEY ARE CAUTIONING ABOUT. >> THEIR BASE CASE SCENARIO IS THAT THE COMPANY WILL HAVE TO BE STRUGGLING A BIT BUT THEY TALK ABOUT THE DOWNSIDE SCENARIO WHICH COULD BE THE COMPANY BECOMING WORTHLESS. THAT IS COMING OUT THE IDEA THAT IF THE COMPANY CONTINUES TO SPEND MORE MONEY AND MORE MONEY COMING OFF THE FACT THAT PRICES ARE SO HIGH JUST TO OPERATE SOME OF THESE PLANES, WHAT COULD IT MEAN IN TERMS OF HAVING THE CAPITAL, THE CASH ON HAND TO BE ABLE TO ABSORB SOME OF THESE FINANCIAL CONCERNS. THAT WOULD LEAVE INVESTORS WITH NOT MUCH TO WORK WITH IS WHAT SEAPORT IS SAYING. ISABELLE: YOU SAID YOU TAKE JETBLUE. SCARLET: I TAKE IT A LOT BECAUSE I FLY TO CALIFORNIA. IT IS CONVENIENT FOR THAT AND A NEW YORK-BASED AIRLINE BUT THESE ARE THINGS THAT MAKE YOU QUESTION SOME OF YOUR DECISIONS. NORAH MULINDA WITH OUR STOCK OF THE HOUR WHICH IS JETBLUE. SHARES ARE LOWER IN TRADING TODAY ON THIS MONDAY. WE HAVE A LOT COMING UP AND COULDN'T -- INCLUDING THE COUNTDOWN TO THE CLOSE. ♪ KEEP IT HERE. ♪ SCARLET: WE ARE JUST ABOUT 10 MINUTES AWAY FROM THE CLOSING BELL. ISABELLE: ON THIS MONDAY, I THINK STOCKS ARE QUIET BUT WE HAVE SOME BIG NEWS IN THE TECH WORLD AT THE VERY LEAST WITH ANTHROPIC ANNOUNCING A 65 BILLION DOLLAR REVENUE RUN RATE WHICH IS AN EYE-POPPING NUMBER. SCARLET: AND IT GETS US MORE EXCITED ABOUT WHEN THE IPO WILL HAPPEN. AND WILL IT BE FOLLOWED BY OPENAI. THESE ARE UNANSWERABLE QUESTIONS. WE CAN TELL YOU WE ARE LOOKING AT A SECOND DAY OF DECLINES ON THE S&P 500 THOUGH YOU DO HAVE THE CHIPMAKERS BUCKING THE TREND. A FOURTH GAIN IN FIVE DAYS SO CHIPMAKERS CONTINUE TO SEE AN INFLOW OF INTEREST. OVERALL, STOCKS AND BONDS ARE DOWN SO THE MACRO CONCERNS ARE PLAYING A PROMINENT ROLE TODAY. ISABELLE: IT IS HARD BECAUSE WE HAVE A HEADLINE RISK DAY AFTER DAY. SOMEONE TOLD ME IT IS HEADLINE PING-PONG. WE HAVE NEWS AGAIN ABOUT A DEAL TO ALMOST AND THE SIX-MONTH WAR IN THE MIDDLE EAST BUT DOTS FADING AND US WHAT YOU SEE OIL PRICES MOVING THE WAY WE ARE. SCARLET: LET'S GET DEEPER INTO ALL OF THIS AND BRING IN THE U.S. HEAD OF EQUITY AND DERIVATIVE STRATEGY AT BNP PARIBAS. AS WE TALK ABOUT STOCKS AND BONDS FALLING, THE 30 YEAR YIELD IS MOVING OUT. THE HIGHEST SINCE 2007 SINCE BEFORE THE FINANCIAL CRISIS. WHAT KIND OF KNOCK ON EFFECT DOES NOT HAVE ON EQUITIES BEYOND SENTIMENT? >> IT BRINGS TENSION INTO THE MARKET. WHY ARE RATES HIGHER? YOU CAN LOOK AT THE CORRELATION AND YOU CAN SEE THE MOST NEGATIVELY CORRELATED TO RATES IS THE RUSSELL, SMALL CAPS WHICH INTO -- WHICH INTUITIVELY MAKES SENSE. PERHAPS THAT HAS MORE TO DO WITH GOOD DATA THAN THE GREAT -- THEN THE RATES. SCARLET: WHAT KIND OF POSITION DO YOU SEE OVERALL AHEAD OF THE BIG EVENTS? >> POSITIONING WE THINK IS RELATIVELY CLEAN. GOING INTO THE BACK END OF JULY WE SAW A BIT OF CAPITULATION IN RETAIL FLOWS. WE SAW A RETAIL SELLING INTO THE BACK OF THE -- INTO THE BACK OF JULY. WE THINK IN AN ENVIRONMENT WHERE -- WE THINK CERTAINLY AHEAD OF THE CATALYSTS, NVIDIA IS A KEY ONE AND A SERIES OF MACRO CATALYSTS, LEADING THOSE WILL BE THE FOCAL POINTS. ISABELLE: YOU ARE SEEING ANOTHER 5 BILLION FROM SYSTEMATIC BUYING. WHAT IS THERE LEFT TO SELL? >> WHEN WE THINK OF THE SYSTEMATIC FLOWS, THEY CAN BE PREDICTABLE FOR A GIVEN SCENARIO. WE KNOW THE SYSTEMATIC FLOWS ARE DRIVEN BY VOLATILITY. AS VOLATILITY COMES DOWN, MORE MONEY GETS PUT TO WORK AND IT CAN BE SELF REINFORCING. THE LAST FEW WEEKS WE'VE SEEN VOLATILITY IN THE U.S. EQUITY MARKET HAS COME IN RAPIDLY. ISABELLE: WHAT WOULD MAKE YOU TURN OUT RIGHT BULLISH? WE HAVE POSITIVE NEWS WHEN IT COMES TO THE TECH WORLD BUT IT SEEMS YOU'RE NOT THERE YET. >> WE ARE BULLISH IN TERMS OF OUR WORK DELTA VIEW. BUT THE DISPARITY WE SEE IN TERMS OF THE MARKET. IT IS -- YOU POINTED OUT THE SEMIS OR ON ANOTHER RUN TODAY AND THAT IS A PART OF THE MARKET WE ARE BULLISH ON. WE THINK POSITIONING THERE HAD BEEN CLEANED OUT AT THE END OF JULY. AND WE MENTIONED THE NVIDIA CATALYST. THE MOST IMPORTANT NAME FOR THE SEMICONDUCTOR SPACE. WHEN YOU LOOK AT THE HISTORY FROM THE LAST FEW EARNINGS, IT ISN'T EARNINGS THAT IS THE CATALYST, THE STOCKS HAVE RUN INTO EARNINGS. SCARLET: BROADENING OUT AND REBALANCING OUR TERMS I KEEP HEARING THESE LAST FEW WEEKS AFTER THE BIG RESET IN JULY. HOW IS THAT SHOWING UP IN WHAT YOU MONITOR DAILY? >> I THINK WHAT WE SEE THIS YEAR IS A SERIES OF DIFFERENT LEADERSHIP IN THE MARKET. OVER THE COURSE OF THE MARKET YOU HAD MANY DIFFERENT PATHS OF VALUE. THEY HAVE ALL DONE WELL BUT IT HAS BEEN A DIFFERENT SERIES OF LEADERSHIP. AT THE MOMENT, THE SEMIS COULD HAVE A CATCH-UP TRADE. THEY ARE STILL A LONG WAY OFF THEIR HIGHS. WE THINK THE BROADENING OUT TRADE IS AN INTERESTING ONE. YOU HAVE TO BE CAREFUL ON HOW YOU TRADE TACTICALLY. SEMIS OR SMALL OR MID-CAPS MIGHT BE A BETTER PLACE. SCARLET: WE ARE IN THE DOG DAYS OF AUGUST. LOOKING AT TRADING VOLUME, SOME OF THE HEAVIEST TRADING DAYS THIS YEAR TOOK PLACE IN JUNE. DOES THE MARKET ADHERE TO SEASONAL PATTERNS THE WAY IT USED TO? >> THERE ARE THINGS IN SEASONALITY THAT WORK AND THINGS THAT DON'T WORK. WE SAW A WEEK OR SO AGO AN EXPLOSION AND ACTIVITY. WE HAD ONE OF THE BIZ -- -- WE HAD ONE OF THE BUSIEST DAYS EVER. WE DEFINITELY DO SEIZE SEASONALITY IN TERMS OF VOLUMES. AND ALSO IN TERMS OF EARNINGS AND AROUND RETURNS. THIS APPEARS TO BE A BETTER PERIOD OF RETURNS. YOU HAVE TO BE CAREFUL. SOME OF THAT PERSISTENCE CAN BE QUITE WEAK. ISABELLE: GIVE US A CONTRARIAN TRADE. WHAT IS THE PART OF THE MARKET THAT INVESTORS ARE GETTING WRONG? >> SMALL AND MID-CAPS -- GOING UNDER THE RADAR FOR THE LAST FEW MONTHS. PEOPLE ARE WORRIED ABOUT THE BACKDROP OF RISING RATES. THE RUSSELL IS VERY NEGATIVELY CORRELATED TO HIGHER RATES. I THINK THE IDEA THAT HIGHER RATES ARE BEING DRIVEN BY A SMALLER -- A STRONGER ECONOMY COULD LEAD TO A FATTER RIGHT TAIL FOR THE RUSSELL. SCARLET: THE VIX IS ABOUT 15. HALF OF WHERE IT WAS IN LATE MARCH. AND A DECLINE FROM THE 20 RECORDED AT THE END OF JULY. WHAT DOES THAT FARE -- FAILED TO SHOW US? >> IT HAS SHOWN AS VOLATILITY HAS COMPRESSED. WHAT IT MASKS IS HOW FIERCE THE VOLATILITY COMPRESSION HAS BEEN UNDER THE SURFACE. WHAT WE SAW GOING INTO THE SUMMER WAS A MASSIVE SPREAD BETWEEN SINGLE NAME OPTIONS. THEY WERE EXTREMELY ELEVATED RELATIVE TO THE INDICES. DIRECTIONALLY WHAT HAS HAPPENED IS VOLATILITY HAS COME DOWN OVER THE LAST MONTH BUT THE ORDER OF MAGNITUDE FOR SINGLE NAMES HAS BEEN ABSOLUTELY MASSIVE VERSUS WHAT IS A MORE NORMAL OR HEALTHY CORRECTION IN THE VIX. SCARLET: GREG IS THE U.S. HEAD OF EQUITY AND DERIVATIVE STRATEGY. WE HAVE A COUPLE OF BIG EVENTS COMING UP. NVIDIA -- NVIDIA EARNINGS. I REMEMBER WHEN PEOPLE USE TO HOLD WATCH PARTIES. ISABELLE: AND IS INTERESTING BECAUSE WE HAVE J.P. MORGAN SAYING THAT MARKETS CONTINUE TO CLIMB. WE GET A SLEW OF RETAILERS THIS WEEK AND FED MINUTES. I FEEL ANY CHANCE INVESTORS CAN GET TO PARSE THROUGH KEVIN WARSH'S VIEW THEY WILL TAKE. SCARLET: AND KEVIN WARSH WILL BE SPEAKING AT JACKSON HOLE THE FOLLOWING WEEK. LET'S COUNT YOU DOWN TO THE CLOSING BELL. >> THE CLOSING BELL, STARTS RIGHT NOW. SCARLET: WE ARE TO MINUTE AWAY FROM THE END OF THE TRADING BELL ON THIS MONDAY. HERE TO HELP US TAKE YOU THROUGH THE CLOSING BELL IS THE GLOBAL SIMULCAST. WE ARE JOINED BY CAROL AND JOE, BRINGING THE BEST OF OUR TV AND RADIO AND YOUTUBE AUDIENCES TOGETHER WORLDWIDE AND IT FEELS A LITTLE BIT LIKE A QUIET SUMMER DAY AS WE AWAIT SOME KIND OF CATALYST. MAYBE IT WILL BE RETAIL EARNINGS. MAYBE NOT UNTIL NVIDIA'S RESULTS NEXT WEEK. CAROL: FOMC MINUTES ON WEDNESDAY. NOT SO BORING WHEN YOU SEE THE TREASURY TRADE. WE DEFINITELY SEE U.S. EUROS GOING HIGHER. WE HAVE MAY BE CONCERNS ABOUT THE U.S. WAR IN IRAN. WTI AND BRENT PUSH TIRE. WTI AND BRENT CRUDE UP TO .3%, SO AGAIN THAT SPEAKS TO CONCERNS INFLATIONARY WISE. JOE: JUST ANOTHER DAY IN THESE MARKETS WITH SOME UNPREDICTABLE TWEETS FROM THE PRESIDENT OVER THE WEEKEND THAT KEEP US ON OUR TOES. CAROL: YOU GUYS ARE ALWAYS TALKING ABOUT THAT. ALL RIGHT YOU -- AREN'T YOU? WE ALL ARE. JOE: ALWAYS. ISABELLE: GOLDMAN-S AND EPS GROWTH IS TRACKING AT 31% YEAR-TO-YEAR BUT THE IMPACT OF AI ADOPTION AND CORPORATE EARNINGS REMAINS RELATIVELY NARROW SO THE WINNERS ARE STILL RELATIVELY I WOULD SAY A SMALL GROUP, BUT IT IS INTERESTING TO SEE THE OUTSIZED IMPACT THAT IT HAS. SCARLET: YEAH, CONTINUES TO HAVE AN OUTSIZED IMPACT AND YOU REMIND US OF THE HEADLINE WE GOT ON ANTHROPIC. $60 BILLION PLUS RUN RATE AND THE ANTICIPATION AHEAD OF THAT EVENTUAL IPO. WE ARE GETTING CLOSER TO THE CLOSING BELL. RIGHT NOW, WE ARE LOOKING AT DECLINES FOR A SECOND DAY FOR THE S&P 500, DOWN HALF OF 1% AS WE HEAR THE CLOSING BELLS RINGING. DOW INDUSTRIALS DOWN HALF OF 1%. THE NASDAQ THE BETTER PERFORMER AMONG THE THREE MAJOR INDEXES, DOWN A THIRD OF 1%. THE RUSSELL 2000 SMALL-CAP STOCKS, WHICH HAVE BEEN DOING BETTER THAN SOME OF THE BIG CAP NAMES IN JULY, DOWN ABOUT A THIRD OF 1%. CAROL: JUST GOING BACK TO THE BIG CAPS, THE S&P 500 DEFINITELY MORE OF A RISK OF TRADE, NO DOUBT ABOUT IT. 367 NAMES TO THE DOWNSIDE AS I LOOK AT THE INDEX. 134 TO THE UPSIDE. TWO UNCHANGED. ISABELLE: TAKING A LOOK AT THE IMAP, SEEING A MIXED PICTURE. ACTUALLY, NO, MINE WAS TAKING A WILD TO LOAD.YOU SEEING MOSTLY RED -- YOU ARE SEEING MOSTLY RED. CAROL: LET'S GO TO SOME INDIVIDUAL GAINERS. JOE HAS THE DECLINERS. I START WITH SANDISK. THIS IS YOUR NUMBER ONE GAINER IN THE S&P 100 AND NASDAQ 100. THE ANTHROPIC INVESTMENT, OR THE ANTHROPIC INFORMATION IN TERMS OF ITS FINANCIALS, JUST GETTING AN IDEA OF HOW BIG A BUSINESS IT HAS AND HOW MUCH GROWTH WE ARE SEEING. AI LINK STOCKS RISING AFTER ANTHROPIC TOLD PROSPECTIVE INVESTORS THE SECOND QUARTER REVENUE WAS ANOTHER NUMBER. SANDISK STOCK UP ALMOST 9% IN TODAY'S SESSION. PICK YOUR NAME. MARVELL WAS ALSO A HIGH FLYER, UP 5.5%. WESTERN DIGITAL WAS GOOD FOR A GAIN OF 5.3%. COHERENT WAS UP ALMOST 7.8%. AGAIN, KEEP IN MIND IT IS THE ANTHROPIC NAME, BUT ONCE AGAIN, INVESTORS JUST PUSHING WHAT HAS BEEN A COMMON NARRATIVE, THIS BROADER RALLY WHEN IT COMES TO MEMORY AND STORAGE STOCKS AFTER SANDISK LINED AN UPBEAT MULTIYEAR FINANCIAL OUTLOOK. WE GOT THAT LAST WEEK. SEND US CONTINUING TO BE A HIGH FLYER THIS YEAR, A WIDE MARGIN IN THE S&P 500. SO THERE IS THAT GROUP, AND I HAVE TO MENTION SPACEX BECAUSE WE HAVE SEEN THIS NAME TOP OF THE NASDAQ 100 TODAY, UP 4.5% AT THE CLOSE BEGIN INVESTMENT FIRMS FOR ULTRA WEALTHY INDIVIDUALS HAVE BUILT UP BILLIONS OF DOLLARS OF EXPOSURE TO SPACEX, SO MORE THAN A DOZEN FAMILY OFFICES HOLDING A TOTAL OF AT LEAST $3.8 BILLION IN SPACEX THROUGH THE FIRST HALF OF 2026 ACCORDING TO THE U.S. FILINGS, 13F FILINGS. HARVARD HAS A BIG STAKE. 2.2 BILLION DOLLARS WERE NEARLY 13 MILLION SHARES. YOU KNOW, EVEN THOUGH SPACEX HAS STRUGGLED IN TERMS OF THE TRADE COMING OFF THE IPO, ULTRA WEALTHY, HARVARD, AND SOME OTHERS, THEY DEFINITELY WANT TO HAVE A PIECE OF SPACEX. NO DOUBT ABOUT IT. YEAH. JOE: IT IS INTERESTING TO SEE WHO WAS HOLDING THE STOCK NOW VERSUS WHEN IT WENT PUBLIC. CAROL: REALLY GOOD POINT. IT HAS MOVED ALONG IN ANOTHER. HAVE THE DECLINERS. JOE: I HAVE A BIT OF A MIXED BAG. MINE DOES NOT HAVE A THEME TO IT BUT LOOKING AT EYEPOINT SHARES, THEY HAD A RECORD DROP TODAY. THE DRUG DEVELOPER SAID THE TREATMENT FOR AN EYE DISEASE FAILED TO MEET ITS GOAL IN A LATE STAGE TRIAL. THE MAIN THING HERE WAS CANCER CUT THE RATING ON THE COMPANY FROM NEUTRAL TO OVERWEIGHT SAYING THE TRIAL MESS WAS A SCENARIO SHOWING WE HAVE NOT EVEN CONTEMPLATED IT IN OUR BOLD BEAR BASE CASE SCENARIO ANALYSIS IN OUR RECENT INITIATION, SO THAT WAS INTERESTING. THEY HAVE ANOTHER TRIAL COMING UP SO THAT MEANS THIS IS NOT NECESSARILY THE END. THE CASINO ENTERTAINMENT COMPANY SHARES TUMBLED THE MOST INTRADAY SINCE FEBRUARY OF LAST YEAR AFTER THE COMPANY WARNED INVESTORS OF SUBSTANTIAL DOUBT THAT IT WILL BE ABLE TO CONTINUE AS A GROWING CONCERN. THE COMPANY REPORTED FINANCIAL RESULTS IN THE SECOND QUARTER LATE FRIDAY. JORDAN BENDER NOTICED THE SITUATION DOES NOT APPEAR DIRECT BUT WE DO NOT BELIEVE THE COMPANY HAS THE ABILITY TO FINISH ALL OF ITS PROJECTS WITHOUT SELLING OR BRINGING IN A DEVELOPMENT PARTNER AT ITS CURRENT LEVERAGE LEVELS. LEVERAGE IS A MASSIVE THING THERE. BENDER NOTED THEY SUBMITTED ANOTHER $30 MILLION. THEY HAVE A DOWNSTATE CASINO PROJECT WHICH SOME FOLKS AROUND HERE MIGHT KNOW ABOUT, AND OF COURSE IT HAS A LAS VEGAS DEVELOPMENT. FINALLY, LOOKING AT JETBLUE AIRWAYS. SHE WAS DROPPED AS MUCH AS 6.7 PERCENT AFTER SEAPORT GLOBAL SECURITIES CUT THE RECOMMENDATION FROM NEUTRAL TO BUY. TALKING A LOT ABOUT HORMUZ AND I RENTED A. BALANCE SHEET WITH MOVES TO THE FRONT BURNER WITHOUT THE STRAIT OF HORMUZ OPEN, WHICH IS A CRITICAL ASSUMPTION. THEY NOTE JET FUEL VOLATILITY IS A CHALLENGE FOR ALL BUT IT IS A DISPROPORTIONATE RISK GIVEN THE ELEVATED DEBT LEVELS TO JBLU. CAROL: NO BUY RATINGS. SCARLET: 10 HOLES AND SEVEN SELLS. YOU CAN SEE A LOT OF RED ON THE SCREEN. A SOTLOFF AND TREASURIES, PARTICULARLY THE LONG END OF THE YIELD CURVE. GO STRAIGHT TO THE BOTTOM FOR THE 30 YEAR YIELD, NOW THE HIGHEST SINCE JUNE OF 2000 SEVEN, BEFORE THE FINANCIAL CRISIS. THE 10 YEAR YIELD ALSO ELEVATED, AT THE HIGHEST LEVEL SO FAR THIS MONTH. IT HAS NOT RETRACED THE HIGHEST LEVEL WE HAVE SEEN IN JULY, BUT STILL, THAT IS QUITE SOME MOVEMENT. THE BALANCE OF RISK SEEMS INCREASINGLY TILTED TOWARDS INFLATION, PERSISTENT INFLATION. CAROL: WE HAVE A GREAT STORY ON OUR RADAR ABOUT SEE STEALING FROM TRAINS -- THIEVES STEALING FROM TRAINS. YOU THINK ABOUT WESTERNS. YOU THINK ABOUT JESSE JAMES OR BUTCH CASSIDY AND ALL OF THAT GOOD STUFF. TURNS OUT CRIMINALS ARE TAKING MORE THAN $2 MILLION OF GOODS FROM 75,000 THEFTS ON U.S. FREIGHT RAIL NETWORKS IN 2025 ACCORDING TO AN INTERESTING GROUP THAT REPRESENTS SOME OF THE BIG TRAIN NAMES INCLUDING CSX. THEY ARE STEALING THINGS LIKE NIKES AND OTHER STUFF. JOE: CLASSIC RAILROADS BACK IN THE NEWS, MAYBE NOT FOR WHAT THEY WANT TO BE KNOWN FOR. THE NUMBER OF HEISTS YOU HEAR ARE SIMILAR TO THIS. PEOPLE PUTTING COPPER ON FLATBED TRUCKS AND GETTING OUT IN THE MIDDLE OF THE NIGHT. THIS IS ONE ANYONE WOULD LOVE TO READ. SCARLET: THERE IS INCREDIBLE DETAIL IN THE STORY WHEN THEY ARE TRYING TO STEAL CARS BUT IT WAS DIFFICULT TO MOVE A CAR AND SELL IT SOMEWHERE ELSE ON THE BLACK MARKET SO THEY RESORTED TO THINGS LIKE COMPUTER PARTS OR THINGS EASIER TO SELL. ISABELLE: THEY ARE GOING TO TRY TO INCORPORATE OR WHAT IS THE WHAT I AM THINKING OF? THEY ARE GOING TO PUT HIGH-TECH. THANK YOU FOR THE GRE LESSON. THEY WILL INTEGRATE MORE HIGH-TECH TO MAYBE CATCH THE THIEVES. SCARLET: THERE ARE CAMERAS EVERYWHERE AND THEY HAVE MASSIVE FENCES TO PREVENT PEOPLE FROM STEALING BUT THERE IS A LOT OF CARTELS AND GANGS INVOLVED IN ALL OF THIS. CAROL: THEY MIGHT TRY TO STEAL BEEF. SCARLET: YES. THANK YOU. BEEF IS FINALLY BECOMING A LITTLE TOO EXPENSIVE FOR HOUSEHOLDS. BEEF PRICES HAVE BEEN GOING UP AND THE TRUMP ADMINISTRATION HAS BEEN DOING A LOT OF WORK TRYING TO BRING IT DOWN PERHAPS LIKE OPENING THE DOOR TO MORE IMPORTS FROM ARGENTINA, BUT IT HAS NOW COME TO THE POINT WHERE THE GROWTH IN BEEF HAS STARTED TO FALL OFF A LITTLE BIT. IT IS HARDER TO TURN OVER. WE ARE STILL EATING A LOT OF BEEF BUT MAYBE NOT AT THE SAME PACE AS BEFORE. CAROL: IT IS SHOCKING SOMETIMES. YOU LOOK AT SOME OF THE PRICES, AND MY HUSBAND DOES A LOT OF THE SHOPPING, BUT HOW MUCH IS THAT STEAK? MY GOD. YOU CAN BUY NOT QUITE A HOUSE BUT IT FEELS LIKE IT. ISABELLE: THAT IS WHY THEY ARE EATING CHICKEN NOW. I GUESS IT DEPENDS WHO WE ASKED BUT PEOPLE SAY CHICKEN IS HEALTHIER ANYWAY WITHOUT ALL THE GMO I GUESS. CAROL: SOMETIMES YOU NEED A GOOD STEAK. SCARLET: I SAW PEOPLE AT COSCO HOLDING UP SOME SHORT RIBS AND SAYING "THIS ONE IS FOR THE DOG." ISABELLE: WOW. CAROL: THOSE ARE THE PEOPLE GIVING THEIR DOGS PEPTIDES AND LIGHT TREATMENTS. COME ON. ISABELLE: THE HUMANIZATION OF PETS. THAT LINE I STOLE FROM THE STORY. JOE: I CURRENTLY JUST HAVE A TOLERANCE. CAROL: ALSO. THAT IS THAT ALSO EXPENSIVE -- ALSO EXPENSIVE. THAT IS A WRAP. THEY ARE BACK ON "THE CLOSE" ON BLOOMBERG TELEVISION. JOE AND I BACK ON BLOOMBERG BUSINESSWEEK DAILY. WE WILL SEE YOU SAME TIME, SAME PLACE TOMORROW. SCARLET: COMING UP ON "THE CLOSE ," AARON FROM J.P. MORGAN ASSET MANAGEMENT COMING UP IN THE SECOND HOUR OF "THE CLOSE" RIGHT HERE ON BLOOMBERG. ♪ >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." SCARLET: WELCOME BACK TO "THE CLOSE." TOOK A LOOK AT WHERE MARKETS CLOSED ON THE DAY. IT IS ANOTHER DOWN DAY FOR U.S. EQUITIES. THE S&P 500 LAST WEEK CLOSED AT A RECORD HIGH. TODAY THOUGH HER BY HALF OF 1% BUT CHIPMAKERS DID NOT PARTICIPATE IN THE SELLOFF. THEY WERE HIGHER FOR A FOURTH DAY IN FIVE. 1.6% FOR THE PHILADELPHIA SEMICONDUCTOR INDEX. OIL PRICES ARE HIGHER AND BOND YIELDS ARE HIGHER AS WELL. 30 YEAR YIELD NOW AT THE HIGHEST SINCE 2007, BEFORE THE FINANCIAL CRISIS. ISABELLE: THAT WAS THE BIG HEADLINE GRABBER LAST WEEK. I FEEL LIKE EVERYONE WAS TALKING ABOUT THAT BECAUSE IT RAISES QUESTIONS ON WHAT IT WILL MEAN FOR THE FISCAL DEFICIT OF THE NATION. OBVIOUSLY IT WILL BE A HEADACHE FOR THOSE IN WASHINGTON. SCARLET: ABSOLUTELY. YOU HAVE SOME INDIVIDUAL MOVERS YOU ARE WATCHING. ISABELLE: THANK YOU FOR REMINDING ME. A HEALTH INSURER SHARES ARE DOWN AFTER THE CFO PLANS TO RETIRE AT THE END OF 2027. THE STOCK DOWN BY 4.5%. JETBLUE AIRWAYS, ALWAYS TAKING THIS TO THE WEST COAST. SHARES DOWN. CLOSED EVEN LOWER BY SEVEN POINT 5%, AFTER SEAPORT GLOBAL SECURITIES CUT ITS RECOMMENDATION ON THE AIRLINE TO NEUTRAL. THE ANALYST OVER THERE SAYS THE BALANCE SHEET RISK MOVES TO THE FRONT BURNER WITHOUT THE STRAIT OF HORMUZ OPENING, AND FINALLY, SHOPIFY. SHARES ARE DOWN BY 3.5% AFTER PHILIP SECURITIES DOWNGRADED THE E-COMMERCE PLATFORM. THE PRICE TARGET IS NOW AT 70. SCARLET: LET'S ALSO REMIND EVERYONE THE BIG HEADLINE WE GOT IN THE LAST HOUR, WHICH IS FROM ANTHROPIC ON TRACK TO GENERATE ANALYZED REVENUE OF MORE THAN $65 BILLION BASED ON ITS CURRENT PERFORMANCE ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. AI REMAINS A CENTRAL MARKET STORY WITH THOSE IMPRESSIVE FIGURES, HELPING TO LIFT STOCKS TIED TO THE AI BUILDOUT. OUR NEXT GUEST SAYS THE MASSIVE FUNDING FLOWING THROUGH THE SPACE IS TRANSFORMING THE CHEMPARK MARKET. JOINING US IS AARON MULVIHILL FROM J.P. MORGAN ASSET MANAGEMENT. IT GOES TO THE POINT OF ALL OF THESE HYPERSCALERS AND HYPERSCALER ADJACENT COMPANIES HAVING A LOT OF THINGS THEY ARE SPENDING ON. THEY NEED TO FIND MONEY TO BORROW FROM WHEREVER THEY CAN GET IT, WHETHER THE PUBLIC MARKETS OR PRIVATE MARKETS. THE PROBLEM THAT CREATES IS FOR INVESTORS THEY NEED TO WORK REALLY HARD TO MAKE SURE THEY ARE NOT OVERLY CONCENTRATED IN TECH WHETHER IN EQUITIES, PUBLIC ORDER, OR PRIVATE CREDIT. AARON: THEY DO. IT IS INCREASINGLY A CHALLENGE FOR ANY KIND OF INVESTOR ACROSS THE PUBLIC MARKETS, PRIVATE MARKETS. LOOKING ACROSS ALL ASSET CLASSES AND SEEING WHERE TECHNOLOGY IS PICKING UP A GREATER SHARE. TODAY YOU LOOK AT THE PUBLIC MARKETS. WE ARE WELL AWARE OF THE S&P 500. 47% OF THE LATEST ANALYSIS IS TECH. IF ANYTHING, THAT IS AN UNDERSTATEMENT BECAUSE IT DOES NOT INCLUDE COMPANIES WE CLASSIFY AS CONSUMER GOODS. IN THE PRIVATE MARKETS, WE HAVE ANNOUNCEMENTS OVER THE LAST COUPLE WEEKS OF ASSET MANAGERS, PRIVATE EQUITY, PRIVATE CREDIT AGAIN CONTRIBUTING MASSIVE AMOUNTS OF COMMITMENT TO BUILD OUT AI DATA CENTERS. THAT IS NOT JUST TECHNOLOGY BUT ALL INVESTORS NEED TO BE AWARE OF THE CONCENTRATION IN MARKETS TODAY. SCARLET: ABSOLUTELY, AND WE HAVE SEEN THE DAMAGE TO PRIVATE CREDIT FUNDS WITH A LOT OF INVESTORS TRYING TO REDEEM THE STAKES IN THOSE COMPANIES AND TRYING TO EXIT SOME OF THAT POSITION AS MUCH AS THEY CAN, ALTHOUGH THEY ARE OFTEN STOPPED BY THE MANDATES. FOR THOSE ABLE TO GET SOME OF THEIR MONEY BACK, HOW ARE THEY REDEPLOYING IT? WHERE ARE THEY MOVING INTO OUT OF PRIVATE CREDIT? AARON: THE FIRST QUARTER AND THE FIRST HALF OF THIS YEAR HAS BEEN INTERESTING. WE SAW A BIT OF A PULLBACK FROM RETAIL INVESTORS, PRIVATE WEALTH INVESTORS. INSTITUTIONAL INVESTORS, NOT SO MUCH. THEY MAKE UP 90% OF THE PRIVATE CREDIT MARKET. WE ARE SEEING THAT WE DEPLOYED INTO PRIVATE MARKET ASSETS INTO AREAS LIKE VENTURE CAPITAL. CERTAINLY ATTRACTED A LOT OF FUN THE LAST YEAR OR SO BECAUSE INVESTORS WANT TO GET SOME SHARES OF THE PRE-IPO COMPANIES. OTHER AREAS, REAL ESTATE SEEING A BIT OF A TURNAROUND. THE REAL ESTATE TRUST FUND WE TRACK IS BELOW PRE-COVID LEVELS. IT'S HARD TO FIND BARGAINS ANYWHERE IN THE MARKET TODAY. INFRASTRUCTURE IS THE OTHER AREA WHERE WE SEE ASSETS BEING REDEPLOYED, INVESTING IN THE POWER LAYER OF AI. SORT OF AI ADJACENT BUT IT DOESN'T NECESSARILY COME WITH THE VOLATILITY A LOT OF THE AI PLAY COMES WITH. >> YOU MENTIONED INFRASTRUCTURE, IS THE TRADE BECOMING AN INFRASTRUCTURE BUBBLE AND WHERE DO YOU SEE THE INVESTORS SHOULD BE MORE AT RISK WHEN IT COMES TO THAT -- WILL BE MORE AT RISK WHEN IT COMES TO THAT? >> INCREASINGLY IN CONVERSATIONS THE BUBBLE QUESTION IS COMING UP A LOT. IT REALLY COMES DOWN TO WHERE DO YOU INVEST ACROSS THE VALUE CHAIN? IT'S VERY CHALLENGING TO KNOW WHO WILL BE THE BENEFICIARIES, THE DATA COMPANIES, THE MODEL BUILDERS, THE COMPANY IS USING THE MODELS? IT'S IMPORTANT TO INVEST ACROSS THAT CHAIN AND NOT HAVE MANY EGGS IN ONE PARTICULAR BASKET. SO THE DATA CENTER PLAY, INVESTMENT COMES WITH SOME RISK. WE ARE CONCERNED ABOUT THE RISK OF OVERBUILDING OF DATACENTERS AND THERE'S A RISK OF OBSOLESCENCE. WE LIKE THE POWER LAYER MORE AS A LOWER VOLATILITY PLAY BECAUSE AI IS NOT THE ONLY THING DRIVING ELECTRICITY PRICES AND ELECTRICITY DEMAND. YOU ALSO HAVE GOT EV'S AND OTHER PARTS OF THE ECONOMY. >> WAS THE BIGGER RISK, THE OBSOLESCENCE OR OVERBUILDING? IT SEEMS LIKE BY THE HEADLINES IT WOULD BE THE RISK OF OVERBUILDING SO FAR. AARON: BOTH ARE CONCERNING INVESTORS RIGHT NOW, IT IS DIFFICULT TO TEASE APART AND ONE OF THE BIG CHALLENGES RIGHT NOW ACROSS THE PUBLIC OR PRIVATE SPACE THE INCREASED COMPLEXITY OF SOME OF THESE DEALS. YOU LOOK AT THE AMOUNT OF OFF-BALANCE-SHEET -- THAT'S HAPPENING. IT TAKES INCREASINGLY LARGE TEAMS AND SOPHISTICATED RESEARCHERS TO UNDERSTAND BOND ISSUANCE AND UNDERSTAND PRIVATE CREDIT DEALS AND PRIVATE MARKET DEALS AND FOR PASSIVE INVESTORS -- THAT IS A REAL CHALLENGE. YOU ARE ALONG FOR THE RIDE SO WE THINK IT CERTAINLY BOLSTERS THE CASE TO BE AN ACTIVE INVESTOR AND WORK WITH US MANAGERS THAT CAN WORK ACROSS PUBLIC AS WELL AS PRIVATE ASSETS. >> IF YOU ARE ACTIVELY TRYING TO REDUCE SOME OF YOUR EXPOSURE TO THE A.I. TRADE OVERALL AND THE ADJACENT TRADE, YOU STILL WANT TO GET DOUBLE DIGIT RETURNS BUT YOU DON'T WANT THAT MUCH A.I. EXPOSURE BECAUSE YOU'VE GOT PLENTY ALREADY AND YOU DON'T WANT THAT VOLATILITY. WHERE CAN YOU GO? WAS LEFT TO LOOK ATTRACTIVE AT THIS POINT? AARON: THAT'S THE BIGGEST QUESTION WE ARE GETTING FROM CLIENTS BECAUSE NOBODY WANTS THAT SORT OF EIGHT-YEAR BERKELEY DIVERSIFICATION OF TAKE LOWER RETURNS -- EAT YOUR BROCCOLI DIVERSIFICATION OF TAKE LOWER RETURNS. I WOULD SAY BE CAUTIOUS ABOUT THE DATACENTER AND DIGITAL PART OF REAL ESTATE WITH TRADITIONAL COMMERCIAL REAL ESTATE MARKET WE SEE AS ATTRACTIVE RIGHT NOW. AND OTHER AREAS WOULD BE SMALL TO MID CAP PRIVATE EQUITY. INVESTING IN THE CONSUMER GOODS, ORGANIC GROWTH STORIES WITHIN PRIVATE EQUITY. THESE COMPANIES USED TO BE IN THE SMALL CAP MARKET AND PUBLIC MARKETS. THEY ARE NO LONGER LISTING BECAUSE NOW WE ARE SEEING LARGER AND LARGER LISTINGS. IT IS HARD TO JUSTIFY DOING AN IPO IF YOU HAVE A COMPANY THAT'S LESS OF THREE TO FOUR BILLION DOLLARS IN REVENUE BUT A LOT OF HIGH-GROWTH STORIES TODAY AND PRIVATE EQUITY. >> WANT TO GO BACK BRIEFLY TO PRIVATE QUITE -- PRIVATE CREDIT. SOFTWARE, HOW BAD COULD IT GET A BIT BLOWS UP -- BLOWUP IS A WORD THAT WOULD ANGER SOME INVESTORS, AND WHO IS MORE AT RISK? AARON: THIS THE BILLION-DOLLAR QUESTION AND THAT'S WHAT WE THINK HAS BEEN DRIVING SOME OF THE PULL FROM RETAIL INVESTORS, IT'S NOT JUST SOFTWARE HAS UNDERPERFORMED OR WE ARE SEEING DEFAULTS OF THE SPACE, WE ARE NOT. THE PERFORMANCE HAS BEEN ACCEPTABLE. BUT THERE IS A CONCERN AI COULD BE DISRUPTIVE TO SOFTWARE. THAT MIGHT BE AN OVERBLOWN CONCERN OF WE LOOK AT THE EQUITY MARKET. SOFTWARE SOLD OFF IN -- EARLIER THIS YEAR. A LOT OF SOFTWARE NAMES HAVE COME BACK STRONGLY. IT'S BEEN ONE OF THE BEST PERFORMING SECTORS THE LAST COUPLE OF MONTHS, THE EQUITY MARKETS. WE MAY SEE THE SAME THING IN THE PRIVATE CREDIT MARKET. IT COMES ON TO RESEARCH AND UNDERSTANDING THE COMPANY'S UNDERLYING ISSUING THIS DEBT AND COMING TO THE DETERMINATION ARE THESE THE COMPANIES THAT ARE LIKELY TO BE WINNERS OR AND LOSERS IN THE A.I. TRADE GOING FORWARD? ISABELLE: UNDERSTANDING THE COMPANIES AND RESEARCHING AND MAYBE JUST NOT FOLLOW THE HYPE. THANK YOU SO MUCH FOR JOINING US, AARON MULVIHILL. J.P. MORGAN ASSET MANAGEMENT GLOBAL ALTERNATIVES STRATEGIST. ALWAYS A DELIGHT TO HAVE YOU. WE WILL SET YOU UP FOR THE RETAIL EARNINGS DO THIS WEEK. PLUS A LOOK AT THE RESTAURANT STOCKS, AS CYCLOSPORA CONCERNS CONTINUED TO SWIRL. ALL THAT AND MORE, COMING UP. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: CONCERNS AROUND FOODBORNE ILLNESSES, PUTTING PRESSURE ON RESTAURANT STOCKS IN RECENT WEEKS. HEALTH OFFICIALS, CLOSELY TRACKING THE CASES POPPING UP ACROSS THE COUNTRY. WE CAUGHT UP WITH ANY OTHER THE KEY STAKEHOLDERS IN RECENT DAYS. TAKE A LISTEN. >> DOUBLE WHAMMY OF FOODBORNE ILLNESSES IS CONSUMER TRUST OF THE TEST. AN OUTBREAK OF THE PARASITIC PATHOGEN CYCLOSPORA TIED TO RAW LETTUCE PLUS A SALMONELLA FLAREUP TIED TO JALAPENOS. IT'S PUTTING RESTAURANTS AND FOOD BRANDS UNDER PRESSURE. >> CYCLOSPORA HAS HAD AN IMPACT ON OUR BUSINESS AS IT HAS HAD A N IMPACT ON ANYONE SELLING FRESH PRODUCE. >> WE WANT TO BE PRUDENT WITH OUR GUIDANCE AND TAKE INTO ACCOUNT THE IMPACT OF SOME OF THE BROADER CONCERNS AROUND FOOD SAFETY ISSUES. >> PEOPLE ARE EATING LESS GREENS AS THEY PROCESS THE INFORMATION HAPPENING. ROMAINE: IT WASN'T LONG AGO THAT SOME CEOS DID NOT SOUND SO CONCERNED. >> WE ARE NOT AFFECTED AND CUSTOMERS UNDERSTAND THIS MOVES QUICKLY, THE PRODUCT IS PROBABLY OUT OF THE SUPPLY CHAIN AND EVERYTHING IS FINE. >> WE'VE GONE THROUGH INGREDIENTS WITH PARTNERS TO UNDERSTAND IF ANY HAVE BEEN INDICATED IN THE CYCLOSPORA OUTBREAK. AND THEY HAVEN'T TO DATE. WE DON'T EXPECT THEY WILL. ROMAINE: BUT NOW. FOOD SAFETY CONCERNS ARE BIG TO IGNORE -- TOO BIG TO IGNORE. A FOOD TRACKING ANALYTICS FIRM SAYS TRAFFIC IS DOWN AT MAJOR FAST FOOD CHANCE INCLUDING TACO BELL. >> WHEN CONSUMERS DON'T HAVE CONFIDENCE IN WHAT HAPPENED TO CAUSE THE OUTBREAK AND WHAT SOLUTIONS WERE PUT IN PLACE TO MAKE IT HAPPEN, THAT MAKES IT DIFFICULT. ROMAINE: IT IS THAT COMMUNICATION THAT COULD BE THE DIFFERENCE BETWEEN A SHORT-LIVED HIT TO TRAFFIC AND A LONG-LASTING BLOW. THINK ABOUT WHAT HAPPENED TO CHIPOTLE NEARLY A DECADE AGO. A STRING OF OUTBREAKS LEADING TO A SALES PLUNGE AND THE DEPARTURE OF THE COMPANY'S THEN CEO. BUT THOSE MISSTEPS MAY HAVE PREPARED THE CHAIN FOR THE LATEST SCARE WITH THE COMPANY IDENTIFYING AND REPLACING TAINTED JALAPENOS DAYS BEFORE PUBLIC HEALTH AUTHORITIES ISSUED THAT OFFICIAL RECALL. >> SOMETIMES YOU CAN THINK OF THESE INVESTIGATIONS AS BEING LIKE A JIGSAW PUZZLE. THERE CAN BE A LOT OF DIFFERENT PIECES OF THE JIGSAW PUZZLE, AND TRYING TO FIGURE OUT EXACTLY HOW THEY ALL FIT TOGETHER -- SOMETIMES PIECING THAT ALTOGETHER TAKES SOME TIME. >> I WOULD ALSO SAY 25 TO 30 PERCENT OF THE CDC WORKFORCE IS GONE, WHO DID THESE INSPECTIONS AND INVESTIGATIONS. ROMAINE: WHILE OFFICIALS WORK TO CONNECT THE DOTS, RESTAURANTS ARE LEFT SCRAMBLING TO EASE CUSTOMER CONCERNS AND REBUILD TRUST IN THE FOOD THEY SERVE. I'M ROMAINE BOSTICK. THIS IS BLOOMBERG. ♪ >> OUR THANKS TO THE HEALTH EXPERTS AND RESTAURANT EXECUTIVES WHO SPOKE WITH US. IF YOU LOOK AT THE SHARES OF RESTAURANT COMPANIES, THEY HAVE BEEN HIT BY THE CYCLOSPORA NEWS SWIRLING AROUND. YOU CAN SEE IT HAS NOT BEEN A COMPLETE RECOVERY. ISABELLE: IT HAS NOT. SWEET GREEN HAS FALLEN 16%. TO PUT LAID DOWN BY 2%. BUT CAVA'S A BRIGHT SPOT. THEY REACTED DIFFERENTLY. DOES CAVA HAVE GREENS? YES, YOU CAN CHOOSE RICE OR GREENS. BUT WITH TO PUBLIC -- CHI[ -- CHIPOTLE, JALAPENO PEPPERS SPOOKED SOME. I JUST THINK OF THE GREENS BUT THERE ARE OTHERS. SCARLET: IT WAS BE ON THE LETTUCE. I SUPPOSE IF YOU THINK ABOUT HOW CHIPOTLE IS TRYING TO CHANGE A CONVERSATION, IT IS GIVING AWAY MORE THAN MILLION OF FREE FOOD STARTING TOMORROW BY BRINGING BACK THE CHIPOTLE IQ GAME, MAKING SURE PEOPLE REMEMBER THEY HAVE OTHER THINGS BEYOND GREENS. ISABELLE: WE SHOULD LINE UP. SCARLET: SHOULD WE? [LAUGHTER] WE WILL MAKE IT A CLOSED EVENT. HOW ABOUT THAT? ISABELLE: YOU ARE RIGHT. CHIPOTLE MORE THAN ANY OTHER -- COMPARED TO OTHERS, THEY HAVE A LOT OF DISHES THAT ARE MORE PROTEIN HEAVY COMPARED TO JUST GREENS. WE SHOULD DEFINITELY GO. SCARLET: WE WILL WORK ON THAT. COMING UP WE WILL HEAD BACK OUT TO MARTHA'S VINEYARD FOR A LOOK AT ROMANS CONVERSATION WITH ADVENT'S KAHINA VAN DYKE. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: WE ARE BACK WITH MORE FROM MARTHA'S VINEYARD. ROMAINE BOSTICK SAT DOWN WITH KAHINA VAN DYKE ON A WIDE-RANGING CONVERSATION FROM STABLECOINS, FINTECH CONSOLIDATION, AND THE PRICE OF AI. TAKE A LISTEN. KAHINA: WHEN I JOINED THE CITIBANK TEAM, I WAS THE SEVENTH EMPLOYEE. WE DID BELIEVE THAT THE INTERNET WAS COMING AND THAT WAS GOING TO HAVE AN IMPACT ON THE DIGITAL WORLD OF MONEY. IT WAS AN UNPROVEN THEORY, BUT YOU PUT A BUNCH OF 20-YEAR-OLDS TOGETHER AND SPEND A LOT OF TIME IN SILICON VALLEY AND WE LAUNCHED THINGS LIKE ONLINE STATEMENTS. PEOPLE WIN, WHAT ARE YOU TALKING ABOUT? WHY WOULD I TAKE A STATEMENT NOT DELIVERED BY THE U.S. MAIL? A LOT OF THE THINGS WE DID BACK THEN WERE ENVISIONING THE FUTURE THAT IS NOW JUST NORMAL FOR PEOPLE. TAP AND GO. THE FIRST TAP AGO WE DID WAS ACTUALLY A STICKER ON THE PHONE BECAUSE THE PHONES COULD NOT HANDLE AN ACTUAL TAP, SO WE WERE JUST BEING REALLY CREATIVE BACK THEN, ENVISIONING THIS WORLD. AND TO SEE IT ACTUALLY HAPPEN IS BEAUTIFUL TO SEE HOW IT HAS ENHANCED ACCESS FOR SO MANY MORE PEOPLE TO PARTICIPATE. YOU USED TO HAVE TO GO TO A BANK, BY THE WAY. BANKING HOURS WERE NINE APARTHEID 3:00 AND THEY WERE NOT IN -- 9:00 TO 3:00 AND THEY WERE NOT IN ALL THE NEIGHBORHOODS. YOU NOW HAVE A NEW RELATIONSHIP WITH MOVING MONEY AROUND THE WORLD INSTANTANEOUSLY SO I AM PROUD OF THAT WORK. ROMAINE: WHAT IS THE ROLE OF STABLECOINS IN THAT PARTICULARLY IN REGARDS TO MOVING AROUND MONEY? I THINK ABOUT THE GENIUS ACT WHICH PASSED ALMOST A YEAR AGO FROM WHERE WE STAND, AND I KNOW THERE IS THE CLEAR REACT WORKING ITS WAY THROUGH CONGRESS, BUT YOU ARE SITTING -- SETTING UP THE REGULATORY GUARDRAILS. DOES THAT BENEFIT THE TRADITIONAL BANKS IN THAT SPACE OR IS NOT GOING TO FAVOR THE NEWCOMERS, THE REAL FINTECH FORWARD TYPES? KAHINA: I AM A BELIEVER IN STABLECOINS AND HAVE BEEN FOR THE LAST DECADE. I ALWAYS THOUGHT CRYPTO AND BLOCKCHAIN WERE ALL UPSIDE OPPORTUNITY. IT WAS THE SAFEST WAY, THE MOST SECURE, AND THE OPPORTUNITY -- WE HAVE HOW MANY CURRENCIES IN THE WORLD? HOW MANY CURRENCIES? THE PERUVIAN SOUL, WHO KNOWS ABOUT THAT? IT IS NEEDED TO CONDUCT, SO THE IDEA OF STABLECOIN HAS ALWAYS BEEN FOR ME A SAFE WAY TO INSTANTANEOUSLY GO IN AND OUT OF MULTIPLE CURRENCIES. THE FX TRADERS ARE PROBABLY NOT HAPPY TO HEAR THIS BUT I THINK IT DEMOCRATIZE IS THE IDEA OF COMMERCE, INTERNATIONAL COMMERCE MOVING ACROSS BORDERS WITH SAFETY AND SECURITY INSTANTANEOUSLY. ROMAINE: DO YOU THINK THE CENTRAL BANKS WILL STAND BY AND NOT NECESSARILY ALLOW IT TO HAPPEN BUT NOT NECESSARILY TRY TO COMPETE ON THEIR OWN WITH THEIR OWN VERSION? KAHINA: THEY ABSOLUTELY SHOULD. I HAVE BEEN TALKING TO REGULATORS FOR A LONG TIME ABOUT THE FACT THAT WE SHOULD HAVE THE CENTRAL BANKS HAVE AN OPPORTUNITY TO TAKE A LEADERSHIP POSITION. THINGS ARE HAPPENING OUTSIDE OF THE CENTRAL BANKING SYSTEM. I GREW UP IN BANKING. I AM A BIG BELIEVER WE NEED TO OF THE REGULATORS, OF THE LEGISLATION TO MAKE IT SAFER, TO MAKE PEOPLE FEEL MORE COMFORTABLE WITH IT. THIS IS THE WORLD. WE ARE IN A DIGITAL WORLD ALREADY SO HAVING DIGITAL COMMERCE STABLECOINS IS ABSOLUTELY CRUCIAL TO DIGITAL COMMERCE. ROMAINE: WHEN DID WE GET TO THE MORE TRANSACTIONAL VOLUME? I WAS TAKING A LOOK. IN TERMS OF THE ACTUAL RAW VOLUME URC OUT THERE, IT IS IN THE TRILLIONS, $30 TRILLION PLUS, BUT WHEN I WAS LOOKING SPECIFICALLY AT THE NUMBERS FOR WHAT WAS ACTUAL PAYMENT ACTIVITY, THAT WAS AROUND $400 MILLION. THAT IS A HUGE GAP. MONEY IS MOVING BUT WHEN CAN WE SEE MORE MOVING ON THE TRANSACTIONAL FRONT? KAHINA: I THINK ADOPTION CURVES, AS YOU HAVE BEEN FOLLOWING THIS WORLD FOR A LONG TIME, AND IT ALWAYS STARTS -- YOU TALK ABOUT PEOPLE'S MONEY, THEIR SECURITY, THEIR ABILITY TO BUY A HOUSE, TO SEND THEIR KIDS TO SCHOOL. THESE ARE IMPORTANT THINGS AND THEY SHOULD MOVE FAST QUITE FAINTLY BUT THE INTERCEPTOR HAS TO EXIST FIRST. THE EARLY ADOPTERS ARE SHOWING US WHAT IS POSSIBLE AND WE ARE AT THE CUSP OF PEOPLE ARE SAYING I GET IT, I UNDERSTAND IT, I WANT TO PARTICIPATE IN IT. NOT EVERYONE KNOWS HOW TO DO IT SAFELY BUT EVEN THE MANAGERS, FIVE USE AGO YOU COULD NOT GO TO FIDELITY AND BY CRYPTO -- BUY CRYPTO BUT YOU CAN TODAY. THAT IS WHERE STABLECOINS IS GOING. ROMAINE: CAN YOU GIVE ME AN EXAMPLE OF THE FIRST MASS CONSUMER USE CASE, WHAT IT WILL BE WHEN WE WILL START TO SEE THAT? KAHINA: I PERSONALLY THINK IT IS AROUND THE STABLECOINS. YOU DON'T NEED STABLECOINS SO MUCH IN THE DOMESTIC MARKET, RIGHT? WE HAVE A CURRENCY. I SENT YOU A VENMO OR PAYPAL. YOU KNOW IT IS GOING TO YOUR ACCOUNT. YOU START THINKING ABOUT HOW SMALL BUSINESSES WANT TO OPEN UP TO OTHER MARKETS, SO IN OTHER MARKETS, BUYING THINGS ACROSS BORDER, I THINK THE BORDERS ARE FALLING DOWN IN SOME WAYS WHERE PEOPLE ARE TRYING TO PARTICIPATE IN THE GLOBAL ECONOMY, AND THAT IS THE MAJOR USE CASE WHERE YOU AGREE ON A STABLECOINS YOU CAN GO IN AND OUT WITHOUT TAKING FX RISKS. ROMAINE: WHAT IS INTERESTING, THE INVESTOR INTEREST HAS SHIFTED A LOT, PARTICULARLY IN PRIVATE MARKETS. FOR A WHILE, IT SEEMED THERE WAS THIS RETICENCE MAY BE BECAUSE OF THE REGULATORY AND LEGISLATIVE ISSUES. THAT SEEMS TO HAVE BEEN REMOVED. YOU SEE A LOT MORE ACTIVITY IN PUBLIC MARKETS. THAT CONTINUES. KAHINA: WE ARE A BIG BELIEVER. ADVENT, I AM THE OPERATING PARTNER FOR FINTECH SO I AM PROBABLY NOT SURPRISINGLY GOING TO SEE THIS IS AN AREA OF PAYMENTS AND BANKING -- I SAID A FEW YEARS AGO, ALL BANKS ARE FINTECH COMPANIES AND ALL FINTECH COMPANY'S ARE OFFERING BANKING SERVICES SO THE HARDLINE IS REALLY BLURRING. IF YOU ARE NOT A BANK THAT IS DIGITIZED AND EMBRACING THIS TECHNOLOGY, YOU WILL NOT BE HERE IN 10 YEARS. ROMAINE: DO YOU ANTICIPATE WE WILL SEE A BIT OF CONSOLIDATION IN THIS SPACE WITH SOME OF THE LARGER BANKS AND INSTITUTIONS? KAHINA: ABSOLUTELY, WE HAVE TO. FIRST OF ALL, THERE HAVE BEEN A THOUSAND FLOWERS BLOOMING. IT HAS BEEN GREAT TO SEE ALL OF THIS CREATIVITY BUT WE ARE GETTING TO A POINT WHERE PEOPLE ARE UNDERSTANDING FINANCIAL TECHNOLOGY WHICH INCLUDES THE BANKS, WHICH INCLUDES THE PAYMENT PROCESSORS, WHICH INCLUDES THE DIGITAL MEAL BANKS. ALL OF THESE ARE ALL AROUND MAKING MONEY MOVE IN A SEAMLESS AND SECURE WAY. I THINK CONSOLIDATION WILL BE A GOOD MATURING OF THE INDUSTRY. ROMAINE: IN YOUR ROLE OVER AT ADVENT, YOU ARE AN ADVISOR FOR A COMPANY, INSURANCE, AIA INSURANCE COMPANY. KAHINA: YES. ROMAINE: WHAT DOES THAT MEAN? KAHINA: IS A COMPANY WE ARE REALLY EXCITED ABOUT, I AM PERSONALLY EXCITED ABOUT. THEY ARE A COMPANY THAT USES GENERATIVE, PREDICTIVE, AND AGENTIC AI TO SERVE THE INSURANCE INDUSTRY. THEY STARTED WITH FRAUD BUT NOW HAVE MOVED INTO ALL DIFFERENT AREAS OF INSURANCE. WHAT I THINK IS SO EXCITING IS YOU GOT A GROUP, A COMPANY WHO HAS 800 DATA SCIENTISTS WHO ARE ALL SPECIALISTS IN AI AND AGENTIC SERVING THESE MORE TRADITIONAL COMPANIES AS THEY GET UP TO SPEED. SO AGENTIC AI RIGHT NOW SHIFTS THEIR BIGGEST USE CASE AND THEY GOT 70% OF THE BIG INSURERS ON THE MARKET OUT THERE. THEY CAN IDENTIFY FRAUD BECAUSE THEY ARE PROCESSING THINGS AT SUCH A SPEED AND WITH SUCH AN AMOUNT OF DATA THAT THE OLD MODELS WERE NOT AS EFFECTIVE AT. I THINK THAT IS THE OPPORTUNITY. AI, ESPECIALLY AGENTIC AI, IS NOT JUST ABOUT IDENTIFYING TRENDS WHICH IS WHAT WE ALL WERE DOING IN BANKING. IS ACTING ON IT, STOPPING IT, SAYING WAIT A MINUTE, I SEE A PATTERN RECOGNITION USING ALL OF THIS INFORMATION. I THINK THERE WILL BE MORE AND MORE SPECIALIZATION IN ARTIFICIAL INTELLIGENCE VERSUS THE MORE GENERALIZATION CHATBOTS WHERE YOU ARE ACTUALLY SOLVING THE INDUSTRY PROBLEMS. ROMAINE: IS THAT TECHNOLOGY RELIABLE ENOUGH FOR AN INSURANCE COMPANY TO DEPEND ON WHETHER DETECTING FRAUD OR UNDERWRITING OR WHATEVER? KAHINA: I THINK IT HAS BEEN PROVEN THAT IT IS NOT ONLY RELIABLE, AND IDENTIFIES FRAUD THAT THE CURRENT MODELS WOULD NOT BECAUSE OF THE SCOPE OF THE DATA AND THE MODELS. AS WE MOVE INTO DIFFERENT USE CASES, IT WILL HAVE TO BE PROVEN. WE WORK WITH THE LARGEST INSURANCE IS IN THE WORLD. LISTEN, I DO NOT THINK AI IS THE SOLUTION FOR ALL THINGS THAT ARE GOING ON, BUT I THINK IT CAN BE AN INCREDIBLY USEFUL TOOL BECAUSE OF THE COMPREHENSIVENESS OF ITS DATA SETS AND THE WAY THE MODELS ARE NOW WORKING TOGETHER. YOU HAVE AGENTS TALKING TO AGENTS NOW AND WE ARE IN A REALLY EXCITING TIME. IT IS LIKE BACK WHEN WE SAID PEOPLE RECEIVED THEIR STATEMENTS DIGITALLY. NO, I WANT AND IN THE U.S. MAIL. NOBODY WANTS IT IN THE U.S. MAIL NOW SO YOU ARE AT THE BEGINNING OF THAT AND EXCITING TO BE AT THE DAWN OF SOMETHING NEW. SCARLET: THAT WAS ROMAINE BOSTICK SPEAKING WITH KAHINA VAN DYKE. BE SURE TO TUNE IN TOMORROW WHEN WE BRING YOU HIS CONVERSATIONS WITH THE FORMER CEO ROZ BREWER AND DAVID HALL. ALL OF THAT IN THE NEXT DAY. IT WAS LAST WEEK THE S&P 500 CLOSED AT A RECORD HIGH, BUT SINCE THEN, IT FEELS LIKE THINGS HAVE REALLY SLOWED DOWN. WE ARE IN THE MIDDLE OF AUGUST. RETAIL EARNINGS ARE COMING UP AND THE FED MINUTES ON WEDNESDAY, BUT IT FEELS VERY MUCH LIKE PEOPLE HAVE LOOKED AT AUGUST LIKE WE ARE ALL GONE FOR A WHILE NOW. ISABELLE: I THINK YOU AND ME ARE THE ONLY TWO PEOPLE IN THE BUILDING AND OF COURSE ARE A GREAT TEAM WHO HELP US PRODUCE THIS SHOW, BUT IT IS REALLY BECAUSE OF THE GEOPOLITICAL NEWS. YOU SEE OIL PRICES ELEVATED. I THINK IT IS JUST CONCERNS ABOUT WHETHER INFLATION WILL AGAIN BE WORSE BECAUSE OF ENERGY PRICES, AND THERE ARE HOPES THAT THERE IS A DEAL TO END THE WAR IN IRAN. SCARLET: BRENT TOPPING $90 A BARREL, WTI APPROACHING $85 A BARREL. YIELDS MOVING HIGHER. IT IS NOT JUST THE U.S. IS AROUND THE GLOBE. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: RETAIL STORES -- RETAIL ANALYSTS ARE PREPARING FOR A BUSY WEEK. A SENIOR ANALYST AT CONSUMER HARD LINES AND BEAUTY WITH BLOOMBERG INTELLIGENCE JOINS US NOW WITH MORE. WHEN WE LOOK AT EARNINGS OUT OF HOME DEPOT OR LOWE'S, HOW WILL THAT DIFFER FROM OTHER CONSUMER COMPANIES? I FEEL LIKE THERE IS A LOT OF FOCUS ON THE WEATHER WHEN IT COMES TO THESE TWO KINDS OF NAMES. >> YEAH, HI, SCARLET. THANK YOU FOR HAVING ME. I THINK THE MAIN DIFFERENCE WHEN THINKING ABOUT THE SECOND QUARTER IS HOME DEPOT'S EXPOSURE TO THEIR PROFESSIONAL CONTRACTOR MARKET. HALF OF THEIR BUSINESS COMES FROM PROS. THEY ARE MAKING A BIGGER PUSH WITH THOSE CONTRACTORS TO SPEND MORE WITH THEM. WHILE WE CONTINUE TO SEE PRESSURE ON CONSUMERS, WHICH WE WILL SEE THROUGH EARNINGS FROM SOME OTHER RETAILERS, HOME DEPOT HAS NOT OFFSET. THOSE PROS HAVE REALLY HIGH TICKET VALUE AS WELL A HIGHER TICKET FROM THOSE PROS CAN OFFSET THE DECLINES IN TRANSACTIONS AND PRESSURES ON THE CONSUMER. ISABELLE: HOME DEPOT IS FACING HIGHER OPERATING COSTS. HOW MUCH LONGER CAN IT PROTECT MARGINS WHEN SALES REMAIN WEAK? LINDSAY: COSTS ARE RISING. HOME DEPOT HAS FILED FOR TARIFF REFUNDS. THEY COULD OFFER ONE-TIME BENEFITS BE THEY'RE WORKING ON M&A INTEGRATION AS THEY DO A BIGGER PUSH WITH THE PROFESSIONAL CONTRACTORS AND THAT IS ALSO WEIGHING ON PROFITABILITY. THERE'S MULTIPLE LEVERS GOING ON AND THEY ARE WORKING REALLY HARD TO CUT COSTS WHERE THEY CAN AND INCREASE THE MARGIN PROFILE AS TIME GOES ON. SCARLET:. LOWE'S ON THE 19TH. HOME DEPOT REPORTS TOMORROW. LOWE'S HAS MIMICKED HOME DEPOT STRATEGY BY GOING AFTER THE PROFESSIONAL CONTRACTORS. >> THAT'S CORRECT. LOWE'S STILL HAS MORE EXPOSURE TO CONSUMERS. WHEN WE LOOK AT EXPECTATIONS FOR THE QUARTER, BOTH ARE EXPECTING MAY BE A MODEST SEQUENTIAL IMPROVEMENT IN SAME STORE SALES GROWTH COMING FROM THOSE PROS. LOWE'S HAS MORE EXPOSURE TO DIY CONSUMERS AND SO ANY PRESSURE ON THAT CONSUMER -- WE SAW TRACTOR SUPPLIER EARLIER MISSED SALES AND EARNINGS. LOWE'S HAS MORE EXPOSURE TO THAT RISK. >> WHAT ARE YOU MOST KEEN TO HEAR WHEN IT COMES TO HOME DEPOT EARNINGS? WHETHER IT IS A CONSUMER SENTIMENT, WILL WE SEE IT WEAKEN CONSUMER OR STRONGER CONSUMER? MAYBE THEY WILL CUT THEIR OUTLOOK? >> I THINK SECOND QUARTER SO FAR WHEN WE THINK ABOUT THE HOUSING MARKET WHICH IS A DOMINANT DRIVER FOR THESE RESULTS -- THERE'S NOT A SIGNIFICANT CHANGE FROM FIRST QUARTER. AFFORDABILITY IS STILL A PROBLEM. HOUSING TURNOVER ARE STILL LOW. WE STILL SORT OF EXPECT THOSE DYNAMICS PLAYING THROUGH THE SECOND QUARTER. PRO SPENDING IS EXPECTED TO EXCEED CONSUMER. I WOULD EXPECT THAT TREND TO COME THROUGH EARNINGS. WE WILL HAVE TO SEE ON THE GUIDE. THERE'S A LOT OF UNCERTAINTY ON THE CONSUMER AND DEMAND GOING INTO THE SUPER IMPORTANT SECOND HALF OF THE YEAR. BUT WE HAVE TO SEE WHAT CAME THROUGH IN THE SECOND QUARTER. TRACTOR -- TRACTOR HAD A WEAK MONTH IN MAY. WE WILL BE ON THE LOOKOUT FOR THAT. IF WE THINK ABOUT SOME NEW GROUP, THEY SELL BEDDING. THIS A JULY 4 SALES WERE WEAK. A BETTER UNDERSTANDING ON WHAT HAPPENED IN THE MONTHS OF THE QUARTER WILL GIVE US A BETTER IDEA. >> YOU MENTIONED TRACTORS AND BEDDING. WE KNOW WHIRLPOOL IS A SUPPLIER TO HOME DEPOT. WHAT CAN COMPANIES LIKE THAT TELL US ABOUT HOW HOME DEPOT'S POSITIONED? >> THE APPLIANCE CATEGORY HAS BEEN VERY WEAK. I COVER BEST BUY. THAT'S BEEN A CHALLENGE FOR BEST BUY AS WELL. LOWE'S STANDS OUT WITH APPLIANCES. THEY HAVE A UNIQUE PROPOSITION WHERE THEY CAN REALLY GET THAT DELIVERY WHEN YOU HAVE AN EMERGENCY WITH THE APPLIANCE. THAT IS ONE WHERE JULY 4 SALES WOULD BE REALLY KEY IN THAT CATEGORY. AND WE HAVE TO SEE IF THAT WAS ENOUGH TO FUEL SOME GROWTH BUT THE OUTLOOK WAS WEAK FOR THIS YEAR. ISABELLE: THANK YOU SO MUCH FOR THOSE INSIGHTS. OUR BLOOMBERG INTELLIGENCE SENIOR ANALYST. LET'S STICK WITH THE RETAIL SPACE. . TAKE A LOOK AT HOME DEPOT, SET TO REPORT BEFORE THE BELL TOMORROW TUESDAY. THE RETAILERS STRUGGLED IN 2026. WITH SHARES OF STILL IN THE RED YEAR TO DATE. THE STOCK IS DOWN BY 2%. LET'S BRING IN OUR RETAIL ANALYST AT CITI. YOU HAVE A BUY RATING ON HOME DEPOT, AND EXPECTATIONS FOR TOMORROW WHEN THE REPORT? >> THANKS FOR HAVING ME ON. EXPECTATIONS, SLIGHTLY POSITIVE FOR HOME DEPOT, SLIGHT BEAT ON SALES AND EARNINGS. A REITERATION OF THE YEAR. THE STORY AND HOME IMPROVEMENT HAS BEEN A WAITING GAME FOR HOUSING TURNOVER TO IMPROVE. YOU LIKE TO SEE LARGE PROJECT ACTIVITY COME BACK. THAT IS THE OPPORTUNITY ON THE MULTIYEAR HORIZON. RIGHT NOW A SLIGHT BEAT IS THE EXPECTATION FROM HOME DEPOT. ISABELLE: IF RATES STAY HIGHER FOR LONGER, IS NOT A PROBLEM FOR THE $400 PRICE TARGET FOR THE STOCK? >> I WOULD NOT SAY SO. WE HAVE SEEN ENGAGEMENT IN A CATEGORY COME BACK TO LAST YEAR. IT'S FROM THE EXISTING HOMEOWNER. SO YOU ARE DOING PROJECTS AT THE HOME. WHAT'S MISSING IS THE TURNOVER COMPONENT. WE CAN SEE EXISTING HOME SALES. METRIC HAS BEEN BOUNCING ON THE BOTTOM FOR YEARS. MORTGAGE RATES ARE SUDDENLY HOT. -- HIGH. YOU ARE WAITING FOR THAT IMPROVEMENT. IT'S ENCOURAGING YOU HAVE SEEN PRETTY TRENDS DESPITE RATES HITTING ONE-YEAR HIGHS AMIDST POLITICAL CONFLICT AND HIGHER OIL PRICES SO IT HAS BEEN ENCOURAGING. I THINK I CAN HIT IT. YOU ARE BUYING HOME DEPOT FOR A MULTIYEAR IMPROVEMENT. WE HAVE SEEN THREE TO FOUR YEARS OF NEGATIVE COMPS. WE ARE AT THE POINT WHERE THE INDUSTRY IS BOTTOMING AND YOU ARE LOOKING FOR TWO TO THREE YEAR IMPROVEMENT FROM HERE. SCARLET: IS A NAME LIKE HOME DEPOT VULNERABLE TO ACTIVIST INVESTORS COMING IN? >> I WOULD NOT SAY SO. THEY HAVE MADE GOOD STRATEGIC DECISIONS, THEY HAVE BEEN GOING AFTER THE DOLLAR OPPORTUNITY WITH THE LARGER PRO. THEY DID THE ACQUISITION AND GMS ACQUISITION AND HVAC ACQUISITION THIS YEAR, THEY ARE GOING AFTER THE DOLLAR OPPORTUNITY. THEY ARE NOT AS FOCUSED ON THE MARGIN RATE AS THEY WERE PRE-PANDEMIC. NOW IT IS GOING AFTER THE DOLLARS. THAT IS THE RIGHT STRATEGY LONGER-TERM. WE ARE HOPING FOR A BETTER HOUSING MARKET. THAT WOULD BE ICING ON THE CAKE. NOTHING STRATEGICALLY HAS BEEN POORLY DONE HERE AT HOME DEPOT. SCARLET: HOME IS ONE OF THOSE COMPANIES THAT BENEFIT WHEN THERE'S DESTRUCTIVE WEATHER WHETHER IT IS STORMS IN THE WINTERTIME WITH NO STORMS OR HURRICANES DURING THE LATE SUMMER AND EARLY FALL. SO FAR THIS SUMMER AND HAS BEEN FAIRLY QUIET, WHAT DOES THE PERIOD LOOK LIKE? >> WE DID NOT HAVE ANY NAMED STORMS LAST YEAR AND THAT IS AN OPPORTUNITY AS YOU THINK ABOUT 2026 AND THE BACK HALF YEAR. IT'S MORE IMPORTANT FOR HOME DEPOT BECAUSE THE BUSINESS -- SRS BUSINESS THE ACQUIRED HAS A BIG ROOFING COMPONENT. THAT IS THE EASIEST COMPARISON. YOU ARE ROOTING FOR A MORE NORMAL ENVIRONMENT THAT WOULD BE FAVORABLE FOR HOME DEPOT. LOWE'S WOULD STAND TO BENEFIT AS WELL. ISABELLE: WHAT ABOUT TARIFFS? OUR THEY ULTIMATELY A MARGIN PROBLEM FOR HOME DEPOT? UNTIL WHEN CAN THEY PUSH COSTS TO CONSUMERS? >> THEY HAVE BEEN ABLE TO. PRICING ON AVERAGE HAS BEEN UP ABOUT 3% FOR THE LAST COUPLE QUARTERS. AS THE EXPECTATION WE HAVE BEEN THE SECOND QUARTER. WHEN YOU THINK ABOUT TARIFFS, THE BENEFIT FROM A TARIFF REFUND. WHEN YOU THINK ABOUT USE OF PROCEEDS, OPTIMIZING COSTS AND PRICE IS KEY. HAVE BEEN ABLE TO HANDLE THE PRESSURE. THEY ARE A BIG ORGANIZATION. THEY HAVE BEEN ABLE TO PASS THAT ON. THAT'S THE CONTINUATION OF THAT TREND GOING FORWARD FOR THE NEXT COUPLE QUARTERS. >> SO GLAD YOU BRING UP THE TARIFF REFUNDS. FOR HOW LONG IS THAT A TAILWIND? >> DEPENDS ON YOUR INDUSTRY. RIGHT? WHEN YOU LOOK AT HOME DEPOT AND LOWE'S HOME IMPROVEMENT, YOU TYPICALLY HAVE A RATIONAL INDUSTRY. THERE EVENTS WE CAN TALK ABOUT LIKE JULY 4 AND MEMORIAL DAY WEEKEND BUT IT'S NOT A PROMOTIONAL DRIVEN PURCHASE. IN OTHER AREAS OF RETAIL, LIKE GROCERY, WE WOULD BE FOCUSED TO HEAR WHAT SOME OF THE BIG MASS PLAYERS SAY ABOUT REINVESTING SOME OF THE TARIFF REFUNDS. THAT CAN GET MORE PROMOTIONAL AND COMPETITIVE. YOU HAVE TO BE SHARP ON PRICE. HOME IMPROVEMENT, NOT AS MUCH. SCARLET: REALLY APPRECIATE YOU JOINING US. AHEAD OF HOME DEPOT'S RESULTS TOMORROW. STILL AHEAD ON THE CLOSE, WHAT INVESTORS NEED TO WATCH FOR OVER THE NEXT 24 HOURS. WE'VE GOT A PREVIEW FOR YOU. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: IT IS MONDAY AFTERNOON. LET'S LOOK AHEAD TO WHAT WE ARE WATCHING OVER THE NEXT 24 HOURS. IN TERMS OF EARNINGS, HOME DEPOT WILL BE REPORTING. BAIDU REPORTS IN BEIJING TUESDAY NIGHT. TUESDAY MORNING OUR TIME. SPORTS WILL BE REPORTING RESULTS AS WELL -- AMER SPORTS WILL BE REPORTING RESULTS AS WELL. ISABELLE: FANCY BRANDS. SCARLET: IT'LL HAVE TO BE A SKIER TO WHERE IT -- WEAR IT. ISABELLE: WE ALSO HAVE ECO DATA, IMPORT AND EXPORT PRICES, BUILDING PERMITS AND INDUSTRIAL PRODUCTION AND PENDING HOME SALES READ ON THE HOUSING MARKET WITH RESULTS COMING UP. SCARLET: AND TOMORROW WE HAVE PRIMARY ELECTIONS IN ALASKA, FLORIDA AND WYOMING. CAN YOU BELIEVE IT? IS ALMOST HERE AGAIN. TOMORROW WE ALSO HAVE BLOOMBERG NEW VOICES LIVE STILL IN MARTHA'S VINEYARD, I AM JEALOUS ROMAINE BOSTICK IS THERE. >> HE SAID THE WEATHER IS NOT GREAT, IT IS SUPPOSED TO CLEAR UP AND WE WILL BE CHECKING IN WITH HIS CONVERSATIONS. THAT DOES IT FOR US. "BALANCE OF POWER" IS UP NEXT IN WASHINGTON. HAVE A GREAT EVENING, EVERYONE. THIS IS BLOOMBERG. ♪