Iran, Oil, Canada & U.S. Trade Tensions

>> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ROMAINE: SUMMER IS OFFICIALLY OVER BUT THE VOLATILITY OF SEASONALITY IS OFFICIAL LIHIR. I’M ROMAINE BOSTICK. TYLER: AND I’M TYLER KENDALL, KICKING YOU OFF TO THE CLOSING BELL HERE IN THE U.S. ROMAINE: A SOMEWHAT VOLATILE DAY. THE SUMMER LULL IS OVER IN THIS HOLIDAY-SHORTENED WEEK AND A LOT OF CONCERNS ABOUT THE CATALYSTS THAT CAN BATTLE THIS MARKET DOWN. THE S&P DOWN ABOUT .5%. CRUDE PRICES SETTLING RIGHT BELOW 9 AND WHAT’S GOING ON WITH SOME OF THE AUTOMAKERS. AND A SHOW-ME THE MONEY EARNINGS PERIOD DID JUST THAT. THE S&P HOLDING ROUGHLY 1% BELOW ITS RECORD HIGH BUT THAT CEILING IS STARTING TO DROP. PRESSED NARROWS ANDTH NEXT RECORD HIGH APPEARS AND A HALF HARDER TO GRASP. NOT HELPING IS THE ESCALATING IT THE FOR AT THAT PARTICULAR TIME BETWEEN THE U.S. AND CANADA BETWEEN TRADE. CANADIAN PRIME MINISTER MARK CARNEY TODAY PUTTING 15% TO 50% TARIFFS ON HUNDREDS OF PRODUCTS INCLUDING STEEL, MOTORCYCLES AND CHEESE. THAT’S ADDING TO ECONOMISTS’ CONCERNS ABOUT HITS TO G.D.P. FOR BOTH COUNTRIES AS WELL AS ADDED INFLATIONARY PRESSURES. AND I SAY ADDED BECAUSE THOSE CONCERNS WERE ALREADY OUT THERE AND THEY’RE GOING TO GET ANOTHER OFFICIAL READ ON CONSUMER PRICES IN FRIDAY THAT WILL DETERMINE WHETHER THE FED HIKES OR HOLDS IN SEPTEMBER. THEY MIGHT HAVE TO GO UP, PARTICULARLY WITH U.S. GASOLINE AT THAT RECORD 5.5 A GAL LON AND PRESENT CRUDE BACK TOWARDS $100 AGAIN. >> THE MARKET WILL OFFICIALLY TURN ATTENTION TO A SERIES OF HIKES, WHEN YOU POTENTIALLY GET SOME RESISTANCE FOR EQUITIES. IF THE MARKET IS STRONG, EQUITIES CAN GET THROUGH THE CHALLENGES AHEAD BUT WE THINK THAT THE NEXT COUPLE OF MONTHS ARE LIKELY TO BE PRETTY ROCKY WITH ONLY MODEST GAINS TO BE HAD FOR THE REST OF THE YEAR. ROMAINE: WE TALK WITH AMY AT RBC CAPITAL MARKETS. THIS GETS TO THE IDEA OF POSITIONING HEADING INTO THE NEXT FEW WEEKS. AMY: WE CAME INTO THE SUMMER, LOTS OF GOOD NULLS. NOW A LOT OF MACRO CATALYSTS AHEAD. MACRONATURE NOT VERY GOOD. A PART OF THE YEAR WHERE VOLATILITY TENDS TO PICK UP. WHEN YOU THINK ABOUT THE POSITIONING AND MORE MACRO NATURE OF IT. I WOULD EXPECT US TO MATCH OR EXCEED T THE VIX WE USUALLY SEE IN SEPTEMBER. ROMAINE: SO YOU THINK THAT’S GOING TO REVERSE? AMY: PART OF THAT IS WHEN YOU HAVE EARNINGS SEASONS, YOU HAVE SOME STOCKS UP AND OTHERS DOWN. THAT PADDLING DUCK WHEN YOU GET THAT DISPERSION. ROMAINE: WHEN DOES THE FADDLING DURING GO AWAY? AMY: I HAVE BEEN TRYING TO CHANGE THIS ANALOGY FOR TWO YEARS BUT THE MARKET WON’T LET ME. BUT IF WE’RE GOING TO GET SOME SORT OF PICKUP, THIS IS THE TIME OF YEAR WHERE IT TYPICALLY HAPPENS AND WE CAME INTO THIS SEPTEMBER WITH PRETTY INEXPENSIVE HEDGES BUT I DO SEE SOME INKLING THAT CLIENTS ARE STARTING TO LOOK AT THOSE IN PARTICULAR BECAUSE OF THE MACRO COMING UP. TYLER: WHAT ARE PEOPLE BUYING AHEAD OF C.P.I. AND I’M CURIOUS ABOUT THE ASYMMETRY HERE? WHAT WOULD BE MORE -- A MISS OR A BEAT COME FRIDAY? 0.4% FOR HEADLINE INFLATION, 0.2% FOR CORE. AMY: PRIOR TO N.F.P., THE BREAKING EVENTS THAT OPTIONS WERE PRICING, IT WAS SORT OF A NOTHING BURGER IN THE SENSE THAT THE AVERAGE IMPLIED MOVE AROUND THAT WAS ALWAYS PRETTY AVERAGE. TO GET BACK TO YOUR QUESTION, IF EITHER EXTREME HAPPENS OUTSIDE OF THAT NORMAL STRADDLE BREAK-EVEN PRICING THEN YOU’LL GET A FUM EITHER WAY BECAUSE IT’S GOING TO BE SURPRISING. NOW THE MARKET IS PRICING MORE LIKELIHOOD OF THAT RATE HIKE FOR THE SEPTEMBER FOMC. HOWEVER, YOU HAVE TWEETS FROM THE PRESIDENT THAT ALWAYS CREATE THIS MIX AND MATCH IN TERMS OF WHAT PEOPLE HAVE TO PRICE IN. TYLER: THE PRESIDENT ALSO RECENTLY WAS TWEETING ABOUT AI INFRASTRUCTURE, AI SPEND AS THERE ARE QUESTIONS ABOUT THOSE NEAR-TERM IMPACTS NOW CUPPED WITH WHAT HAS BECOME SOME REALLY STRONG ANTI-DATA CENTER SENTIMENT AS WE GET CLOSER TO THE MIDDLE TERMS. DO YOU SEE THAT THREATENING NOT JUST TECH STOCKS OR MAYBE THE OVERALL MARKET? AMY: THIS IS A SUPER INTERESTING POINT BECAUSE ONE QUESTION THAT INVESTORS KEEP ASKING IS WHAT MAKES THE CORRELATION PICK UP OVERALL? IT SEEMS LIKE THIS IS ALL ONE BIG TRADE, IT SEEMS LIKE THE SURGE PROTECTOR PLUGGED INTRO ITSELF BUT WHAT MAKES IT ALL MOVE TOGETHER? THIS ANTI-DATA CENTER NEGATIVITY I KEEP HEARING ABOUT, THAT RHETORIC AS YOU HEAD INTO MIDDLE TERMS IS MACROBUT QUALITATIVE IN NATURE AND WE’RE STARTING TO SEE THENAR. A LITTLE STEEPNESS AND PEOPLE LOOKING AT HEY, LET’S LOOK AT MAYBE NASDAQ OR S&P. PICK UP SOMETHING WHEN THINGS ARE SO REGULAR ACTIVELY CHEAP BECAUSE THERE’S A LOT OF OPTIONALITY AS TO WHAT COULD HAPPEN HEADING INTO THE MIDDLE TERMS. ROMAINE: I FEEL LIKE IN THE PAST IT’S LIKE OH, ELECTIONS DON’T REALLY MATTER. ULTIMATELY THE TRAJECTORY IS THE SAME. IS THERE A SENSE AROUND YOU ASK YOUR TEAM THAT THIS MIGHT BE A LITTLE BIT DIFFERENT GIVEN THAT HOW MANY THINGS ARE ON THE TABLE THIS TIME THAT PROBABLY ARE OF A LOT MORE CONSEQUENCE TO MARKETS? AMY: YOU ALWAYS HATE TO BE THE PERSON THAT SAYS I FEEL THIS TIME IS DIFFERENT BUT IT FEELS THAT WAY. EVERYTHING FROM C.P.I., ISRAELI ELECTIONS TO MIDDLE TERMS. THAT ARE MEANINGFUL EVENTS AHEAD BUT TWO, WE’VE NEVER HAD THIS CONVERSATION BEFORE BECAUSE A S SO NEW, SO NOVEL. YOU HAVE NEWS THAT AGENETIC AI IS ALREADY HERE. EVERYTHING IS MOVING VERY QUICKLY. THE REALITY IS THIS IS A BRAND-NEW CONVERSATION. ROMAINE: ONE THING, JUST TO PUSH BACK ON THAT A LITTLE BIT. A LOT OF THE CONCERNS TODAY, WE HAD THEM A FEW MONTHS AGO AS WELL, PARTICULARLY AT THE START OF THE YEAR AND THEN YOU HAD A SERIES OF EARNINGS SEASONS THAT BLEW EVERYTHING OUT OF THE WATER AND A LOT OF INVESTORS SAID WAKE ME UP WHEN THIS STARTS TO AFFECT THE BOTTOM LINE ON OF THIS OF THESE COMPANIES. SO FAR IT HASN’T. IT WONDER IF NOW IT MIGHT BE A BUFFER FOR ALL OF THE THINGS YOU JUST TALKED ABOUT. AMY: WHIFF THESE CONVERSATIONS WITH INVESTORS, THE APPROACH IS SIMPLY THAT T THE THE CITY METAIRIE IS MORE ABOUT PROTECTING WHAT YOU HAVE THAN NECESSARILY SAYING I THINK THIS IS A LEFT TAIL THAT WILL OCCUR. THESE ARE THINGS THAT ARE INCREMENTALLY NEW THAT AS YOU GET TO MID TERMS BECOME LOUDER. IT’S FOR MACRO IN CORRELATION PICKING UP IN NATURE THAN BEFORE. ROMAINE: AMY, ALWAYS GREAT TALKING WITH YOU. KICKING US OFF TO THE CLOSE. WITH WHEN WE COME BACK, WE’LL TALK TO THE C.E.O. BEHIND MARQUEE BRANDS, MARTHA STEWART AND A FEW OTHERS. TYLER: PLUS, THE NEXT ADMINISTRATOR OF THE PANAMA CANAL WILL JOIN US. ROMAINE: PLUS, WE’LL CATCH UP WITH QUALCOMM’S C.F.O. IN A MINUTE TO TALK ABOUT THE TIE-UP AND WHERE IT PUSHES IN THE STATE OF AI. MORE ON "THE CLOSE" HERE ON BLOOMBERG. SEMITYLER: CANADA FIGHTING BACK, TILT FOR AT THE ON TRADE. RETALIATORY TARIFFS RANGING FROM 15% TO 50% ON HUNDREDS OF U.S. PRODUCTS TODAY. BUT WHAT HAPPENS IF THE RELATIONSHIP GETS WORSE? BLOOMBERG ECONOMICS MODELED THAT CANADA COULD SEE EX PORTS FROM THE U.S. DROP TO 40% AND A GOOD PERCENTAGE OF CANADA’S G.D.P. COULD DISSIPATE IF THEY MATCH THE U.S. AND CANADA. AT FIRST WE’D HEARD FROM PRIME MINISTER MARK CARNEY SAYING THAT MAYBE CANADA WANTED TO GO DOLLAR FOR DOLLAR. ULTIMATELY THAT’S WHAT HAPPENED. SENIOR OFFICIALS SAYING THEY’RE IN TALKS TO TRY TO GET A DATE ON THE BOOKS TO RESTART THESE NEGOTIATIONS. WHAT CAN BE THE LONG-TERM SUSTAINED DAMAGE TO CANADA’S ECONOMY? WE HAD THE PRIME MINISTER SAYING THAT THIS TYPE OF RETALIATION WASN’T SUPPOSED TO BE ECONOMICALLY FEASIBLE FOR THE COUNTRY. >> THANK YOU. WE HAVE TO BE REALISTIC AND THE FACT THAT THIS IS ASYMMETRICAL TRADE WAR. THIS WAS PRE-PLANNED BY THE FEDERAL GOVERNMENT SO THE U.S. ADMINISTRATION EXPECT THAT WOULD THIS WAS COMING. THIS WAS TO PROTECT INDUSTRIES IMPACTED BY THOSE -- TARIFFS AND IT’S PROPER PORTION THAT THE. IN MANY WAYS THE TARIFF RATES ARE ACTUALLY LESS THAN WHAT THE U.S. IS IMPOSING ON CANADIAN EXPORTS. IT’S NOT A POSITION THAT WE WANT TO WITH THIS RIGHT NOW BUT THE FEDERAL GOVERNMENT IS TAKING A STRONG APPROACH AND BACK IN 2018-2019 UNDER TRUMP 1.0 WHEN STEEL TARIFFS WERE IMPOSED ON MOST COUNTRIES, MANY COUNTRIES RETAILUATED. NOW CANADA SEEMS TO BE ONE OF THE OUTLIARS AND IS NOW IN FOCUS FOR THE PRESIDENT. TYLER: WE HAVE REPORTING THAT CANADA IS COURTING OTHER MARKETS, INCLUDING INDIA AND CHINA. I’M WONDERING IF THIS DIVERTING FROM THE U.S. ECONOMY IS ANOTHER SIGN OF RETALIATION IN A WAY. >> WE ARE A SIGNIFICANT SUPPLIER OF OIL TO THE U.S. MARKET. WE’VE SEEN WITH THE TRANSMOUNTAIN PIPELINE EXPANSION OFF THE WEST COAST OF CANADA, WE’VE BEEN ABLE TO SELL OUR CRUDE OIL AND EVEN NATURAL GAS TO OTHER MARKETS IN ASIA AND EUROPE. THERE IS SIGNIFICANT DEMAND FOR OUR NATURAL RESOURCES SO WE’VE SEEN A LOT OF SUCCESS IN THAT. OF COURSE, WE WANT TO CONTINUE TO SELL TO THE UNITED STATES AS WELL. SOME PRODUCTS ARE NOT AS EASILY DIVERSE FINAL. AUTOS IS A LITTLE BIT MORE INTEGRATE AND WOULD IS AT THE CENTER OF THIS TRADE WAR. WE’VE SEEN SOME SUCCESS OF ALUMINUM AND OF COURSE WITH PRECIOUS METALS BEEN AT RECORD PRICES, CANADA HAS BENEFITED FROM THAT AS WELL. WE’RE NOT HAVING A VERY STRONG ECONOMIC YEAR BUT WE’VE BEEN CHUGGING AROUND AND SEEING SOME GREEN SHOOTS THAT WILL ALLOW US TO BUFFER THIS BLOW IN THE U.S. ROMAINE: WHEN YOU HEAR SOME OF THE RHETORIC BY CARNEY, OF COURSE, IT IS TOUGH BUT HE SEEMS TO HAVE THIS UNDERLYING TONE THAT AT SOME POINT THERE HAS TO BE SOME SORT OF RECONCILIATION OF ALL THIS. THESE ARE TWO NATIONS THAT CAN’T REALLY EXTRACT THEMSELVES FROM EACH OTHER. BASICALLY EACH OTHER’S BIGGEST PARTNER RELYING HEAVILY ON EXPORTS AND IMPORTS. CAN CARNEY FIND SOME COMMON GROUND WITH AMERICA UNDER TRUMP? >> IT’S A GOOD QUESTION. IT SEEMS PRETTY UNLIKELY AT THIS POINT IN TIME, DOESN’T IT? WE’RE PRETTY FAR FROM THE TABLE AND I THINK THERE NEEDS TO BE A REALISTIC APPROACH FROM THE CANADIAN GOVERNMENT TO GET BACK FROM THE TABLE BUT THE KEY MESSAGE FROM THE FEDERAL GOVERNMENT IS THEY WANT TO PROJECT A COUPLE OF THINGS TO INVESTORS AND THE GLOBAL COMMUNITY. ONE IS STABILITY IN THE CANADIAN MARKET AND CONFIDENCE. WE HAVE INVESTMENT CONFERENCE COMING UP IN ABOUT A WEEK. THERE ARE MANY THINGS ON THE TABLE. IF WE CAN BUILD INFRASTRUCTURE EAST-WEST, DIVERSIFY, BUILD A STRONG ECONOMY, WE CAN BUILD ON THAT STRENGTH BUT AT THE SAME TIME WE ARE GOING TO FEEL -- THE PRIME MINISTER’S MESSAGE TODAY TO CANADIANS IS LISTEN, WE MAY NEED TO BUCKLE UP FOR SOME PAIN AHEAD TO GIVE OPTIONALITY TO PUSH BACK AGAINST THE UNITED STATES. ROMAINE: IF FROM ISN’T A RETISOLUTION. WE’VE CRUNCHED THE NUMBERS. TYLER READ THEM AT THE START HERE, OF THE POTENTIAL HIT TO THE CANADIAN ECONOMY. AS YOU LOOK LONGER TERM, CAN THERE BE A WAY TO FILL THAT VOID WITH STRONGER RELATIONSHIPS WITH NON-U.S. NATIONS? ANDREW: MAYBE SOME PRODUCTS, NOT ALL PRODUCTS. THERE ARE 45,000 CANADIAN BUSINESSES THAT EXPORT TO THE UNITED STATES. 2/3 OF THOSE BUSINESSES ONLY EXPORT TO THE UNITED STATES. WE NEED TO HAVE A DEAL ON THE TABLE. WE HAVE TO GET PREFERENTIAL ACCESS TO THE UNITED STATES. I THINK THAT’S ULTIMATELY THE END GOAL, AT LEAST FROM THE CANADIAN SIDE SO WE JUST NEED TO RESPECT EACH OTHER AS PARTNERS. WE HAVE TO PUT IT ALL ON THE TABLE. I THINK THROUGHOUT -- THE LAST COUPLE OF WEEKS I THINK WE’VE BEEN ABLE JUST THROUGH A DISCOVERY PROCESS IDENTIFY WHAT ARE THE RED LINES? WE’VE SEEN THE USTR ON TV. THE TREASURY SECRETARY. THERE HAVE BEEN SOME TELLING SIGNS IN TERMS OF WHAT MAY BE ON THE TABLE THERE BUT WE DO NEED TO GET BACK TO IT AND HOPEFULLY WE CAN. ROMAINE: ALWAYS APPRECIATE YOUR CANDOR, ANDREW AND UNFORTUNATELY I GUESS WE’RE GOING TO HAVE TO TALK AGAIN AS THIS DOESN’T SEEM TO BE AN ISSUE THAT’S GOING TO BE RESOLVED ANYMORE SOON. AS WE CONTINUE TO KEEP OUR EYE ON THE TRADE SITUATION HERE AND ABROAD AND HEADLINES CROSSING THE WIRE A MOMENT AGO. THIS ON FORD, SESSION LOWS AFTER THE DEPARTMENT OF SECRETARY CRITICIZES THE CEO FOR SOME OF ITS PARTNERSHIPS WITH CHINA. WHEN WE COME BACK, FOCUS ON THE RETAIL SECTOR WITH MACY’S EARNINGS JUST A COUPLE OF DAYS AWAY. THAT’S COMING UP HERE ON "THE CLOSE" HERE ON BLOOMBERG. ROMAINE: TIME FOR OUR TOP CALLS. THE BIG MOVERS. THE BIG APPLE. BOOSTING ITS PRICE TARGET. FOLDABLE I PHONE LAUNCH TOMORROW. THE FIRM MAINTAINING THE NEUTRAL RATING NOTING THAT THE EXPECTED HIGHER SELLING PRICE WILL HELP OFFSET PRODUCTION THAT MEMORY CHIP SHORTAGE. NEXT UP, PELOTON. MORGAN STANLEY DOWNGRADING TO UNDERWEIGHT CITING STRUCTURAL HEADWINDS. THERE’S A BIG SHIFT GOING ON TOWARDS STRENGTH TRAINING AND GYM ADOPTION. SHARES HIT A FRESH 52-WEEK HIGH LAST WEEK. GIVING UP 7% THIS WEEK. BEST BUY IS GOING TO MAINTAIN ITS PRICE TARGET OF $95 BUT IT FLAGS A POTENTIAL SLOWDOWN IN COMPUTER TRENDS AFTER SEVERAL WEEKS OF GROWTH. WE WANT TO CHECK IN ON THE RETAIL SPACEX LOOK AHEAD TO MACY’S, SET TO REPORT EARNINGS BEFORE THE BELL ON THURSDAY. ONE OF THE LAST RETAILERS TO REPORT IN A SEASON OF WINNERS AND LOSERS. I WAS OFF WHEN LULULEMON REPORTEDDED BUT WHAT THE HECK IS GOING ON THERE? >> GOOD TO SEE YOU. THERE ARE BRANDS THAT GET TOO LARGE. THEY’RE GOOD BRANDS. YOU STOP BEING SPECIAL ULTIMATELY YOU’RE GOING TO SEE PRESSURE. I THINK THAT’S WHAT WE’RE SEEING. ROMAINE: MAYBE THIS WAS A LITTLE BIT OF RECENCY BIAS BUT I WAS WALKING DOWN THE STREET AND IT SEEMS LIKE EVERY WOMAN I SAW HAD ON OWL. YEARS AGO IT WOULD BE LULULEMON. HAVE WE JUST MOVED ON TO THE NEXT THING? >> LET’S BE CLEAR, YOU WERE WALKING DOWN THE STREET IN HAHNEMANN HATTEN. WE TALKED ABOUT PELOTON. BY THE WAY, I HAVEN’T SEEN PELOTON AND APPLE BACK TO BACK IN A LONG TIME. THE STORY WITH PELOTON WAS THE SAME STORY. WE SAW FIVE ADVANCE DOWN EVERY STREET. THE PROBLEM IS THEY WERE ON EVERY OTHER STREET AND NOT DOWN OUR STREET. YOU HAVE TO KNOW WHAT THE AUDIENCE SIZE IS. MAN HALT SEASON NOT THE PERFECT BUBBLE BUT WHAT YOU’RE SAYING IS THAT ALLOW, RIOLO AND OTHER BRANDS ARE GRABBING MARKET SHARE. THERE’S SYMPTOMATIC ANDER HEMATIC. LULU GETS SO BIG IT ALLOWS OTHER COMPANIES TO JUMP IN. TYLER: CAN YOU TALK ABOUT OFF-PRICE RETAIL WHICH HAS BEEN A DURABLE WINNER COMPARED TO OTHER SECTORS. WHY IS THAT IF PART OF THE STORY MAY BE THE WEAKNESS MOVING UP THE CONSUMER LADDER BUT FOR OFF PRICES IT SEEMS TO KEEP GOING. >> GOOD QUESTION. RETAIL IS SO EASILY ACCESSIBLE FOR US. YOU GUYS TALK ABOUT VERY SMART THINGS ALL DAY. I TALK ABOUT CLOTHING ALL DAY. THERE ARE COMPANIES WINNING AND LOSING IN ANY STRATA OF THE INCOME SEGMENT AND THERE ARE COMPANIES LOSING AT EVERY ONE. OFF PRICE HAS BEEN DOING GREAT BUT NOT ALL OF THEM. YOU WATCH ROSS AND MAXX SELL MORE AND OTHERS NOT. I THINK WHAT IS IMPORTANT IS YOU HAVE TO REALIZE IN THE REAL WORLD IN COVID EVERYONE LOST AND EVERYONE ONE. IN THE REAL ENVIRONMENT IT’S MARKET SHARE TAKERS AND MARKET SHARE GIVERS AND THAT’S WHAT YOU WANT TO SEE. ROMAINE: MACY’S, SEEMED LIKE THE LAST COUPLE OF QUARTERS THEY WERE GETTING THINGS ON TRACK. A LOT OF DISCUSSION ABOUT WHERE DO DEPARTMENT STORES EVEN FIT IN THE CURRENT RETAIL LANDSCAPE? >> WE ONLY HAVE A MINUTE LEFT. EITHER YOU’RE SHORTENING UP MY TIME OR YOU’RE LIMITING MY EXPECTATIONS. I THINK THEY’RE BOTH CONNECTING QUESTIONS. UP COMPANIES LIKE MACY’S WHO STILL SELLS OVER $20 BILLION IN REVENUE. THEY SELL A LOT TO A LOT OF PEOPLE. COME TO MY STORE, YOU’RE NOT GOING TO BE GUARANTEEDED TO FIND WHAT YOU WANT BUT IF YOU FIND SOMETHING YOU’LL FEEL GOOD ABOUT IT BECAUSE IT’S A GOOD VALUE. THAT SPECIAL ABOUT DEPARTMENT STORES HAS SORT OF EVAPORATED. THEY NEED TO MAKE IT MORE SPECIAL. HOW’D I DO IN MY MINUTE? ROMAINE: YOU STILL HAVE 15 SECONDS LEFT BUT WE’LL LEAVE IT THERE. WE’LL BE BACK IN A MOMENT TO CONTINUE THIS DISCUSSION ABOUT THE CONSUMER SPACE WITH THE C.E.O. OF MARQUEE BRANDS. ROMAINE: MARQUEE BRANDS IS GOING SHOPPING AGAIN, THIS TIME FOR A CANADIAN 0 AND LIFESTYLE BRAND ROOTS. IT’S THE LATEST IN A STRING OF ACQUISITIONS FOR THEIR PORTFOLIO WHICH INCLUDES MARTHA STEWART, CAVALL AND I, QUITE A FEW OTHERS. KEITH, GOOD TO HAVE YOU HERE. THREE BIG ACQUISITIONS. THE ROOTS DEAL IS BIG. I’M CURIOUS ABOUT HOW THAT FOLDS IN. IT SEEMS LIKE IT MAY BE STRUCTURED IN A DIFFERENT WAY FROM THE OTHERS. WHY ROOTS? >> THERE’S ONE RED THREAD THAT RUNS THROUGH OUR ENTIRE PORTFOLIO WHICH WILL SOON BE 24 BRANDS. WE ACQUIRE BRANDS WITH HIGH QUALITY AND A WHICH ALLOWS THEM TO GROW. I VIEW IT AS RIGHT UP OUR FAIRWAY AND WE COULDN’T BE MORE EXCITED ABOUT IT. ROMAINE: A FEW YEARS AGO ROOTS WAS ALL THE RAGE, PARTICULARLY WHEN CANADA HOSTED THE OLYMPICS AND IT WAS EVERYWHERE. IS THIS A SURVIVAL STORY? HEATH: , NO ROOTS IS, A WONDERFULLY HEALTHY BUSINESS TODAY. THRIVING IN CANADA, HAS A GOOD AMERICAN BUSINESS, AND TAIWAN EASE BUSINESS. MAYBE A LITTLE LESS ACTIVE IN AMERICA. YOU MIGHT SEE LESS OF IT BUT IT’S THRIVING IN ITS HOME MARKET AND IN TAIWAN SO WE HAVE WONDERFUL PROOFS OF CONCEPT FOR EXPANSION AND AS A LIFESTYLE BRAND THAT HAS SO MUCH PERMISSION AND CATEGORIES IN OUTDOOR BRANDS. WHENEVER WE SEE CHOPPINESS IN THE ECONOMY, OUTDOORS IS EVEN MORE IMPORTANT. ROMAINE: IS THERE ANY CONCERN HERE ABOUT TAKING OVER A CANADIAN -- AN AMERICAN COMPANY TAKING OVER A CANADIAN BRAND AND HAVING TO DEAL WITH WHATEVER IS GOING ON WITH TRADING TARIFFS? HEATH: GREAT QUESTION. THIS IS THE BEAUTY OF YOUR MODEL. WE’RE A LEADER IN THE BRAND MANAGEMENTS SPACE. OUR MODEL IS SO FLEXIBLE. IT THRIVES IN A COMPLICATED GEOPOLITICALLY MEDIA FRAGMENTED WORLD. WE DEBATE TAKE OVER A THE BRAND. WE DID IT IN PARTNERSHIP WITH A CANADIAN OPERATOR. THE BRAND IS STILL ROOTED IN CANADA AND WILL STAY ROOTED IN CANADA. THE BRAND WILL ALWAYS STAND FOR CANADA AND THAT’S WHERE WE COME IN WHICH IS TO HELP EXPAND IT BY CATEGORY AND GEOGRAPHY AROUND THE WORLD. TYLER: THAT MEANS A MORE ASSET-LIGHT MODEL. DOES THAT INSULATE YOU FROM THE TARIFFS THAT ROMAINE IS ASKING ABOUT? HEATH: WE WANT ALL OF OUR PARTNERS TO THRIVE. WE NEED THE ECOSYSTEM TO DO WELL. WE WANT THE STORES OPEN FOR EACH OF OUR BRANDS. THEY’LL CONTINUE TO KEEP THEIR 100-PLUS STORES OPEN AND OUR PARTNERS IN TAIWAN ALSO BUT THEY’RE ON THE FRONT LINES DEALING WITH THOSE TARIFF ISSUES AND WE’RE ABLE TO FLEX AND BRING IN OTHER PARTNERS INDICT DATED BY WHATEVER IS -- DICTATED BY WHATEVER IS HAPPENING IN THE WORLD. TYLER: WHAT’S YOUR REALISTIC TIMELINE? HEATH: NO RUSH. HE’S A HEALTHY BUSINESS, PUBLICLY TRADED. IT’S A THRIVING BUSINESS TODAY, WHICH IS WHAT WE’RE STEPPING INTO BUT NOW IT’S REALLY JUST UNLOCKING ALL OF THAT POTENTIAL, AUTHENTICITY, PERMISSION TO EXPAND BY CATEGORY AND GEOGRAPHY. WE HAVE IN WONDERFUL POINT IN TAIWAN SO YOU’LL SEE US LEANING INTO OTHER PARTS OF ASIA. MEXICO, CENTRAL, SOUTH AMERICA. ROMAINE: I’M CURIOUS ABOUT THIS BRAND ACCELERATOR TYPE COMPANIES. MARQUEE AND OTHER COMPETITORS. YOU BOUGHT CAVALLI IN WHAT CLEARLY WAS A LUXURY DOWN DOWNTURN. ON THAT, WHAT DO YOU AS A COMPANY BRING TO THE TABLE FOR A BRANDS LIKE THAT THAT DOES HAVE OPERATIONAL ISSUES. WHAT ARE YOU INJECTING INTO TH THAT? HEATH: WE PRIDE OURSELVES WITH THE ABILITY TO BUILD THE HEALTHIEST ECOSYSTEM AND THAT REQUIRES A CORE PARTNER. SO IN CAVALLI YOU NEED TO BE GREAT AT FASHION, FOOT WEAR. GREAT AT HOME. WE TAKE THE BEST OF THE BEST BY CATEGORY, BY GEOGRAPHY. TREND-WISE, QUALITY-WISE AND BRING THEM TO BEAR. WHEN IT SHOWS UP AS MERCHANDISE IN A RETAIL CENTER, IT LOOKS LIKE IT’S ALL ONE. WE PUT IT IN HANDS WITH PARTNERS WITH A GREAT STRATEGY WE’RE DICTATING FROM THE TOP DOWN AND BRINGING THE BEST RETAILERS TO BE OUR PARTNERS AS WELL. BCBG AS WELL. IT STANDS FOR HAPPINESS AND SPECIAL OCCASION DRESSING SO WE’VE REENVISION RATED THAT, PUT THAT WITH OUR PARTNER G3 WHO’S THE BEST AT THAT IN NORTH AMERICA, AND MACY’S. PEOPLE WANT HAPPINESS. ROMAINE: I DON’T KNOW ABOUT THE DRESS THING. TYLER WOULD HAVE MORE INSIGHT ON THAT. I DO WANT TO ASK ABOUT MARTHA STEWART. I’M CURIOUS WHEN YOU HAVE A BRAND LINKED TO AN ICONIC PERSON. SOMEONE IN HER 80’S AND PROBABLY WON’T BE HERE. HOW DO YOU ENSURE THAT YOU CAN CARRY THAT BRAND ON FOR ANOTHER 20, 30, 40 YEARS AFTER SHE’S PRESUMABLY GONE. HEATH: MARTHA STEWART IS AN INCREDIBLE PARTNER. SHE’S WITH US, SHE’S AN INCREDIBLE PARTNER. YOU CAN COME WITH ME AT 4:00. WE’RE GOING DOWN TO A BIG EVENT DOWNTOWN THAT WE’VE ANNOUNCED OUR PODCAST WITH NETFLIX. SHE HAS A THRIVING PODCAST WITH I HART THAT NOW IS A VODCAST AVAILABLE WITH NETFLIX. MARTHA IS GOING TO BE WITH US FOR A VERY LONG TIME. NO ONE WORKS HARDER THAN MARTHA AND MARTHA SEES AROUND QUARTERS BETTER THAN ANYONE I KNOW BUT THE BRAND IS GROWING FASTER INTERNATIONALLY THAN IT EVER HAS. WE OPENED THE FIRST RETAIL STORES IN THE HISTORY OF THAT BRAND IN DUBAI WITH OUR PARTNER SKECHERS, WE’RE IN OVER 40 COUNTRIES WITH THE MARTHA STEWART COLLECTION. THAT BRAND IS WANTED BY CONSUMERS AROUND THE WORLD. OUR MARTHA STEWART TV SHOWS ARE ON FIVE CONTINUE INNOCENTS AND COUNTRY OF THE TOP PERFORMERS. ROMAINE: OBVIOUSLY MARTHA STEWART HAS BEEN A MASTER OF THAT LONG BEFORE SHE CAME UNDER THE MARQUEE UMBRELLA BUT CAVALLI AND SOME ESTREATS PARTNERS YOU’VE HAD. IS THAT KIND OF THE FUTURE OF THE RETAIL SECTOR, NOT JUST THE CLOTHING, ETC.? HEATH: PEOPLE ARE ABOUT WELLNESS, COMMUNITY AND ACTIVE AND WE WANT TO MAKE SURE THAT EACH OF OUR BRANDS IS IN THOSE AREAS. CAVALLI IS ABOUT LUXURY AND FEELING GOOD. AS ARE OUR ACTIVE OUTDOOR BRANDS. EMERIL LAGASSE, MARTHA. THAT’S THE CARE AND AUTHENTICITY AND WE ARE THE FOREMOST EXPERTS AT LEANING INTO THAT AND BRINGING THAT TO THE WORLD FOR DECADES TO COME. TYLER: WE LOOK FORWARD TO YOU AND MARTHA STEWART POTENTIALLY COMING BACK HERE ON "THE CLOSE." STICK WITH US. MORE AFTER THE BREAK. THIS IS BLOOMBERG. ROMAINE: AFTER TWO DECADES OF FLAT U.S. ELECTRICITY DEMAND, AI DATA CENTERS HAVE TURNED POWER INTO THE HOTTEST STOCKS. PWRX, AN ACTIVELY MANAGED ETF THAT WILL DEBUT NEXT WEEK INVESTING ACROSS THE WHOLE POWER ECOSYSTEM. IT WILL ALSO MAKE HISTORY AS THE FIRST NEW ETF LISTING ON THE TEXAS STOCK EXCHANGE. THE C.E.O. JOINS US RIGHT NOW. HEY, BRIAN. YOU GOT A LISTING THIS YEAR IN NEW YORK. WHY TEXAS? THAT STOCK EXCHANGE HAS ONLY BEEN AROUND FOR A COUPLE OF MONTHS. >> IT REALLY ALIGNS WITH OUR TEXAS VALUES. OUR ENERGY TEAM IS IN HOUSTON AND THEY MANAGE ABOUT $3. 5 BILLION OF SECURITIES AND IT JUST MADE SENSE FOR US TO TRY THE TEXAS STOCK EXCHANGE. TYLER: WHAT CAN AN INVESTOR GET FROM THAT THEY COULDN’T GET FROM A CONVENTIONAL ENERGY OR UTILITY ETF? BRIAN: FOR THE LAST THREE YEARS THE MARKET HAS BEEN TRYING TO FIGURE OUT WHO CAN MAKE THE FASTEST CHIP AND EVERY TIME YOU ADD AI COMPUTE POWER IT DRAGS A LOT OF THINGS BEHIND IT SO ALL OF THE I FROM STRUCTURE, ALL THE STUFF NEEDED TO GENERATE POWER IS WHERE WE THINK THERE’S A LOT OF VALUE THAT WILL BE CREATED OVER THE NEXT DECADE. ROMAINE: HAS YOUR TEAM SEEN MISPRICINGS FOR SOME OF THE STUFF IN THE MARKET THAT CAN BE CAPTURED IN SOME WAY BY THE ETF? BRIAN: INFORMATION TECHNOLOGY IS ABOUT 37% OF THE S&P RIGHT NOW AND UTILITIES, WHICH IS ONLY A SMALL PORTION OF WHAT WE’LL HAVE IN THIS PORTFOLIO, THAT’S 2%. USUALLY THE INDEX IS TELLING YOU WHERE VALUE HAS BEEN CREATE AND WOULD WE WANT TO INVEST WHERE WE THINK VALUE WILL BE CREATED. TYLER: DO YOU EXPECT ANY OTHER ETF’S TO MIGRATE TO THE TEXAS STOCK EXCHANGE IF IN DOES WELL? IS THIS A TEST CASE, IF YOU WILL? BRIAN: IT IS. WE HAVE STOCKS ON THE NEW YORK STOCK EXCHANGE AND NASDAQ. WE’LL TRY THIS ONE. THE MOST IMPORTANT THING IS THAT THE INVESTOR EXPERIENCE IS GOOD. ROMAINE: WOULD YOU CONSIDER MOVING OTHERS TO TEXAS IF MAYBE THIS WORKS OUT? BRIAN: PERHAPS. ROMAINE: THAT’S A GREAT NONANSWER. YOUR ETF BOOK NOW, I THINK YOU’RE OVER $400 MILLION OR SOMETHING LIKE THAT. OBVIOUSLY THAT’S GROWTH. WHAT IS YOUR AMBITION FOR THE ETF SIDE OF THIS BUSINESS? BRIAN: IT IS ONE OF THE FASTEST GROWING PARTS OF THE ASSET MANAGEMENT BUSINESS. WE WOULD HOPE TO BE A BILLION DOLLARS IN OUR ETF ACTIVITY A YEAR FROM NOW. ROMAINE: PEOPLE ARE SAYING THERE ARE MORE FINANCED JOBS IN TEXAS NOW THAN IN NEW YORK. BRIAN: THAT IS TRUE. EVERYTHING AROUND US IS BLOWING UP. ALL THE MAJOR FINANCIAL SERVICES COMPANIES ARE MOVING TO DOLLARS. IF YOU READ LIAR’S POKER BACK IN THE DAY, IF YOU MOVED TO DALLAS, THE WAS LIKE YOU’D BEEN BAN AND I SHOULD NOW PEOPLE WANT TO MOVE TO DALLAS. ROMAINE: BRIAN, GREAT TO HAVE YOU. BRIAN CASEY, THE C.E.O. OF WESTWOOD. MEANWHILE, BACK HERE IN NEW YORK, NELSON YU JOINS US AFTER THE BREAK. >> WE’RE ALREADY HEADING INTO A PART OF THE YEAR SEASONALLY WHERE VOLATILITY TENDS TO PICK UP. AVERAGE OF AROUND 9% FOR THE VIX OVER THE LAST 20 YEARS. I WOULD EXPECT A PICKUP IN CORRELATION LEVELS AND US TO MATCH IF NOT EXCEED THE VIX PICKUP WE’VE SEEN SEASONALLY IN SEPTEMBER. ROMAINE: ABOUT 50 MINUTES TO THE CLOSE. A LOT OF INVESTORS NOW HAVE TO CONFRONT A LOT OF THE BIG CATALYSTS OUT THERE THAT COULD BAT STOCKS AROUND IN EITHER DIRECTION. RIGHT NOW THE DOW DOWN BY MORE THAN A PERCENTAGE. THE S&P DOWN BY HATCH A PERCENTAGE POINT. BRENT CRUDE RIGHT NOW AT 98.69. AT ONE POINT IT TRADED UP AT ABOUT 100 BUCKS A BARREL. THE TIT FOR TAT TARIFF BATTLE BETWEEN THE U.S. AND CANADA ARE RATCHETING UP WITH PRIME MINISTER CARNEY WITH TARIFFS AS MUCH AS 50% ON COSMETICS, MOTORCYCLES AND CHEESE. A LOT OF INVESTORS CONCERNED ABOUT THE FINAL FOUR MONTHS OF THE YEAR. NELSON YU JOINS US IN STUDIO. GREAT TO SEE YOU. NELSON: GREAT TO SEE YOU TOO. ROMAINE: APROPOS THAT WE COME BACK AFTER THE LABOR DAY HOLIDAY AND ALL OF THIS HITS US AT ONCE. YOU LOOK AT THE FIRST SEVEN, EIGHT MONTHS OF THIS YEAR, ALL OF THE THINGS WE’RE ABOUT TO TALK ABOUT FOR THE REST OF YEAR WE’VE BEEN TALKING ABOUT ALL YEAR. WE HAD A COUPLE OF EARNINGS SEASONS THAT WERE, IF NOT RESILIENT, SPECTACULAR AND THAT HELPED US GET TO RECORD HIGHS. CAN THAT STILL BE THE CASE GOING FORWARD OR ARE SOME OF THESE GEOPOLITICAL, INTEREST RATES AND INFLATION ISSUES GOING TO BECOME MORE DOMINANT? NELSON: IT’S INTERESTING. AT THE BEGINNING OF THE YEAR WE TALKED ABOUT SCARCITY OF CAPITAL AND OTHERS. TODAY WHEN YOU TALK ABOUT TARIFFS AND GEOPOLITICS AND RISING OIL PRICES, THAT CERTAINLY BRINGS UNCERTAINTY. GROWTH THAT BE SURPRISING TO THE UPSIDE BUT ONE OF THE THINGS WE’VE COME TO REALIZE IS THAT A LOT OF THAT WAS DRIVEN BY THIS NARRATIVE AROUND AI CAPEX AND THAT’S WHAT THE MARKET REWARDED. YOU SEE THE MARKET RETURNS, THE MARKET REALLY REWARDED THOSE COMPANIES THAT BENEFITING FROM THE AI CAPEX ROLLOUT AND THE BOTTLENECKS WE SAW ACROSS THAT BUT THERE HAVE BEEN SO MANY OTHER STOCKS THAT THEIR EARNINGS HAVE BEEN REWARDED JUST BY THE BREDTH OF GROWTH BUT NOT BEEN REWARDED BY THE MARKET. ROMAINE: THE LAST EARNINGS SEASON REALLY WAS ABOUT THE BREDTH OF EARNINGS. NOT JUST THE BIG TECH AND AI RELATED STOCKS BUT AS YOU SAID, WE DIDN’T SEE THAT COMPLETELY REFLECTED IN THE STOCK PRICES THEMSELVES. CAN THAT CHANGE, PARTICULARLY WITH ALL OF THE ECONOMIC AND MACROECONOMIC ISSUES OUT THERE? A LOT OF THOSE STOCKS ARE PROBABLY MORE ACADEMICALLY SENSITIVE. NELSON: WE’RE STARTING TO SEE THAT CHANGE, I’D SAY OVER THE LAST SIX WEEKS, A BROADENING OF MARKET. HEALTH CARE AND OTHER PLACES IN THE MARKET, INDUSTRIALS. THEY’VE BEEN DOING WELL AND WHAT I WOULD SAY IS JUST AS THIS UNCERTAINTY AROUND -- ARE THESE HYPER SCALERS GOING TO CONTINUE TO INVEST IN THAT CAPEX AND WE’RE SEEING THE RATE OF INVESTMENT START TO SLOW DOWN AND THAT HAS GIVEN SOFTWARE A BID BECAUSE MORE CONFIDENCE HAS BEEN AROUND. HOW QUICKLY WE’RE GOING TOO GET TO THAT DISRUPTION. ROMAINE: THIS IDEA, TOO, WE TALK ABOUT HOW LONG THAT GOES ON. MOST FORECASTS ARE SAYING ABOUT A TRILLION DOLLARS IN AI-RELATED CAPEX AT LEAST THROUGH 2030. THAT SEEMS TO BE THE TAKE, GIVE OR TAKE 100 BILLION HERE OR THERE. HAS THAT ALREADY BEEN BAKED INTO THE A LOT OF STOCK PRICES OR CAN IT GO FURTHER? NELSON: WHEN WE LOOKED AT THE RATE OF GROWTH OF CAPEX WE’RE AT THE SECOND DERIVATIVE WHERE RATE OF GROWTH IS SLOWING DOWN. IT’S BEEN RUNNING AT ABOUT 70% GROWTH FOR THE LAST FEW YEARS. OUR FORECAST FOR NEXT YEAR IS 30% AND GOING DOWN THERE FLORIDA THERE SO WE’RE STARTING TO SEE THAT PETER OUT. ROMAINE: IF YOU’VE ALREADY GOTTEN A LOT OF UPSIDE OUT OF SOME OF THOSE NAMES, DO YOU ROTATE OUT OF THAT? REDUCE POSITIONS BUT MAINTAIN SOME UPSIDE SPOKE AND ROTATE INTO OTHER SECTORS OR TAKE THAT CASH AND BANK IT? NELSON: HOW DO YOU INVEST AND WE HAVE THREE PILLARS OF A STRATEGY. ONE IS I STILL THINK THAT ANCHORING QUALITY IS SO IMPORTANT. TWO IS THE ABILITY TO DIVERSIFY AND CAST A WILDER KNELT AND THE THIRD IS ACTIVELY REDUCE VOLATILITY. WE CAN GO THROUGH EACH OF THOSE IN TERMS OF HOW WE’RE ADVISING OUR CLIENTS. ROMAINE: LET’S TALK ABOUT THAT VOLATILITY. A REDHEAD CROSSING THE BLOOMBERG TERMINAL ON U.S. OFFICIALS TELLING FOX NEWS THAT THE U.S. HAS HIT IRANIAN TARGETS NEAR KHARG ISLAND. THE KNEE-JERK REACTION WAS A SPIKE IN OIL FUTURES AND A DOWNWARD SPIKE IN THE S&P 500 BACK TOWARDS SESSION LOWS AND NELSON, THIS GETS TO THIS IDEA WITHOUT KNOWING A LOT OF THE DETAILS, THE IDEA THAT THESE ARE THE TYPE OF HEADLINES THAT INVESTORS ARE GOING TOO TO CONTEND WITH FOR THE FORESEEABLE FUTURE AND THAT CREATES A LOT OF VOLATILITY WHICH MAYBE CREATES WHAT FOR MARKETS? NELSON: AGAIN, IF YOU LOOK AT THE MARKETS TODAY, THE U.S. EQUITY MARKETS, YOU LOOK AT A BASKET OF AI STOCKS AND ITS CORRELATION TO THE U.S. EQUITY MARKET. THAT’S A NEARLY PERFECT CORRELATION. ABOUT .9. IF YOU LOOK AT EMERGING ASIA MARKETS, ALSO VERY HIGH CORRELATION BUT THERE ARE OTHER PLACES ACROSS THE MARKET WHERE YOU HAVEN’T SEEN THAT TYPE OF CORRELATION. EUROPE, JAPAN, EVEN LATIN AMERICA, THESE MARKETS ARE RUNNING INDEPENDENT OF THIS AI TRAILED SO I THINK AS THIS FOLLOW TILLTY SPIKES UP, WE CAN LOOK FOR NATURAL PLACES OF DIVERSIFICATION THAT CAN GIVE YOU RETURNINGS AND VOLATILITY. ROMAINE: DOES AN INCREASE IN FED RATES, INTEREST RATES CONCERN YOU AT ALL? NELSON: IT DOES A LITTLE BIT. THERE CLEARLY ARE SOME RATE-SENSITIVE STOCKS AND THE CONTINUING DEMAND FOR CAPITAL AND I THINK THAT’S WHY IN FIRST ANCHOR ON QUALITY -- YOU WANT TO LOOK AT COMPANIES WHO HAVE HIGH CAPABILITY. ROMAINE: NELSON YU, GREAT TO HAVE YOU BACK. THE S&P 500 HITTING SESSION LOWS ON THE BACK OF THE HEADLINE THAT SENT OIL FUTURES SPIKING BACK UP. A >> CLOSING L, BLOOMBERG'S CROSS ASSET COVERAGE STARTS NOW. RIGHT NOW WE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. TAKE ME THROUGH THE CLOSING BELL OF THE GLOBAL SIMULCAST JOINED BY CAROL MASSAR AND TIM STENOVEC. OUR PARTNERSHIP WITH YOUTUBE HERE ON A DAY WHERE MOST OF THE U.S. STOCKS ARE IN THE RED. ALL OF THE INDICES ARE IN THE RED. CAROL MASSAR IS LOOKING TAN AS HECK. [LAUGHTER] CAROL: IT HAS BEEN NICE TO BE AWAY. I DID MISS YOU GUYS AND I FOLLOWED FROM AFAR BUT NICE TO BE OUT IN THE FRESH AIR AND THE SUN GETTING A LITTLE BIT OF VITAMIN D. TIM: WE ARE GLAD TO HAVE YOU BACK. CAROL: I JUST WANT TO NOTE, IS THAT MAIZE OR YELLOW, YOUR SUIT? ROMAINE: I LIKE MAIZE. I DON'T KNOW WHAT THAT MEANS. CAROL: LIKE CORN. ROMAINE: OH SURE. [LAUGHTER] I THOUGHT IT WAS MORE GOLD. CAROL: YOU BELIEVE WHAT YOU NEED TO BELIEVE. ROMAINE: I LIKE TO BELIEVE. CAN YOU BELIEVE THE MARKETS? TIM: CAN YOU GET US BACK ON TRACK? CAROL: WE ARE WAITING FOR STUFF. TIM: WE ARE WAITING TO SEE WHAT HAPPENS IN THE MIDDLE EAST. THE FOCUS OF THE CONVERSATION HAS BEEN THE MOST RECENT KINETIC ACTION NEAR KHARG ISLAND. U.S. OFFICIAL TELLING FOX THIS IS PART OF SQUEEZING THEM ECONOMICALLY. NONETHELESS WE ARE SEEING OIL MOVE HIGHER. ROMAINE: IT ADDS TO THE UNCERTAINTY AND VOLATILITY. THE SESSION TOPPED OUT, THEY HAD DROPPED BACK BELOW 97 BUT SPIKING BACK NOW JUST A SMIDGE BELOW $99 A BARREL. THAT HEADLINE SENT S&P TO SESSION LOWS AND IT WILL CLOSE JUST OFF THE SESSION LOWS DOWN ROUGHLY 45 POINTS OR ABOUT 0.6%. THE DOW LOSING ABOUT 6%. THE NASDAQ COMPOSITE. TIM: JUST REMEMBER, SEPTEMBER IS HISTORICALLY THE WEAKEST MONTH FOR STOCKS AND I'M JUST GOING TO POINT THAT OUT THERE. AS FOR THE TUESDAY TRADE, MOST NAMES IN THE S&P 500 WERE LOWER. ROMAINE: ABSOLUTELY AND WE TALK ABOUT THE SECTORS THAT ACTUALLY MOVED ON THE DAY, YOU WILL HAVE TO LOOK LONG AND HARD. TECH IS ONE OF THE BIG DECLINERS ON THE DAY. ENERGY STOCKS GETTING A MODEST BID ON THIS TUESDAY AFTERNOON AS A LOT OF PEOPLE START TO PRICE IN NOT JUST HIGHER OIL PRICES BUT A LOT OF THOSE REFINED NUMBERS. CAROL: A LOT OF RED, SO LET'S SEE IF MY GAINERS SOLD TRUE. LET'S TALK A LITTLE BIT ABOUT BLUE ENERGY AND EVER PURE, BOTH STOCKS RISING, BLOOM ENERGY OF 9.6%. THIS IS RISING AFTER THE S&P DOW JONES INDICES SAID LATE FRIDAY BEFORE THE LONG HOLIDAY WE CAN THE COMPANIES WOULD JOIN THE S&P 500 INDEX EFFECTIVE PRIOR TO THE OPENING TRADE. INVESTORS LIKE THAT AND WE SAW IT MOVING INTO THAT. DO YOU WAVE, QUANTUM, RIGHETTI RALLYING AS THE U.S. GOVERNMENT IS TAKING MINORITY EQUITY STAKES . THE WAVE YOU CAN SEE BOUNCING AROUND. NONETHELESS UP 6.5% HIGHER. WE ALSO SAW SOME GAINS IN THAT ONE AS WELL, SO SOME EXCITEMENT. INTEL, GOT TO TALK ABOUT THAT ONE. I BELIEVE YOUR NUMBER TWO GAINER IN THE S&P 500 AND IF I LOOK AT THE NASDAQ 100 WE SEE IT ALSO YOUR NUMBER THREE GAINER. INTEL RALLYING UP ABOUT 9% HERE. THE COMPANY IS EXPECTED TO RAISE PRICES. THEY SUPPLIED IT -- CITED SUPPLY CHAIN SOURCES. THEY'VE GOT A PRICE TARGET SET TO 120 AND AN INCREASE FROM THE LAST PRICE. YOU ALSO HAD AN UPGRADE FROM NORTHLAND SECURITY SO INVESTORS MOVING INTO THAT ONE. ROMAINE: I WANT TO START WITH THE SECOND WORST PERFORMER AND THAT WOULD BE AMGEN DOWN MORE THAN 10%, A DOUBLE DOSE OF BAD NEWS FOR THE COMPANY. NOVARTIS SAID ITS POTENTIAL BLOCKBUSTER HEART MEDICATION FAILED IN A FINAL STAGE STUDY. THEY SAY IT IS A NAEGELE -- NEGATIVE SIGNAL FOR AMGEN AS WELL. THEY COME FROM MARKET PERFORM TO OUTPERFORM. THE CFO SPEAKING TODAY AT A BARCLAYS CONSUMER CONFERENCE AND THEY DID NOT HAVE GREAT THINGS TO SAY ABOUT WHAT HAPPENED OVER THE SUMMER. OFF PREMISES WAS FRANKLY PRETTY LACKLUSTER ACCORDING TO THE EVENT. AUGUST WAS ALSO LACKLUSTER. MAYBE A PIECE OF -- PEOPLE ARE SPENDING MORE TO FILL UP THEIR TANK THEY ARE SPENDING LESS AT THE LIQUOR STORE. I'M LOOKING AT ADR'S OF IN BARNIER AFTER PRESIDENT TRUMP SUGGESTED THE COMPANY SHOULD BE BLOCKED FROM U.S. SALES. THERE IS A BACKLOG FOR JETS THESE DAYS. IT TAKES A LONG TIME TO GET ONE IF YOU HAVE ORDERED ONE, I KNOW YOU HAVE ORDERED A FEW IN YOUR DAY. ROMAINE: WE ARE TALKING ABOUT ONE BASIS POINT ON YOUR 10 YEAR YIELD. YOUR TWO YEAR YIELD UP ABOUT THREE BASIS POINTS. 30 YEAR YIELD ONLY UP LESS THAN A BASIS POINT, BUT UP FOR A FIFTH STRAIGHT SESSION. CAROL: GOOD STUFF AS ALWAYS. THAT IS A RAPID ARE CROSS PLATFORM. ROMAINE IN THAT GOLD SUIT, VERY DASHING. TIM: I LIKE MAIZE. CAROL: I LIKE MAIZE. WE WILL SEE YOU SAME TIME, SAME PLACE TOMORROW. WE ARE ON BLOOMBERG BUSINESSWEEK DAILY ON RADIO. ROMAINE: WHEN WE RETURN WE WILL CATCH UP WITH THE QUALCOMM CEO TO TALK ABOUT THE COMPANY'S LATEST IT WITH AMAZON AS THE COMPANY CHIPS AWAY AT ITS LOFTY AI PROSPECTS. THAT COMING UP ON THE CLOSE INJUSTICE CAN 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." ROMAINE: WELL, LABOR DAY HOLIDAY HAS PASSED IN THE U.S., BASICALLY THE UNOFFICIAL END OF SUMMER, THAT MEANS INVESTORS HAVE TO GET BACK TO WORK AND THEY CAME BACK TO WORK STARING IN THE FACE OF A LOT OF HUGE CATALYST THAT COULD BOUT THIS MARKET AROUND FOR THE REST OF THE YEAR. THE S&P 500 CLOSING BACK BELOW THAT 7700 LEVEL. DOWN 0.5% ON THE DAY. COREWEAVE HAVING A PHENOMENAL DAY. INTEL UP ABOUT 9% AS WELL BUT THE CONCERNS ABOUT WHETHER A CYBERSECURITY FOR SOME OF THE ISSUES GOING ON RIGHT NOW IN IRAN HEADLINES. THE U.S. HAS INCREASED AROUND SOME OF THE KEY KHARG ISLAND STORAGE FACILITIES THAT PUSH BRENT CRUDE BACK UP TO $99 A BARREL HERE IN THE NEW SESSION TRADING OVERNIGHT. ONE OF THE BRIGHT SPOTS WAS BLOOM ENERGY AHEAD OF ITS EDITION INTO THE S&P 500 IN A WEEK AND A HALF. NOVARTIS TAKING A HUGE LEG DOWN. KEEP ON NUCOR. THE TRADE TENSIONS BETWEEN THE U.S. AND CANADA TAKING STEEL STOCKS DOWN. THAT DOES BRING US TO OUR TOP STORY FOR THE HOUR. INCREASING STRAINS AMID A LOT OF THE WILD CURRENCY SWINGS THAT ELEVATED OIL PRICES TO THE LIKELY POTENTIAL FOR RATE HIKES. NOW YOU ADD IN THE ESCALATION OF THE TRADE BETWEEN ITS NEW BIGGEST TRADING PARTNERS. THAT TRUMP USHERED IN DURING HIS TERM, THAT WAS SET TO BEGIN AGAINST THE BACKDROP OF THOSE INCREASED U.S. TARIFFS ON CANADIAN GOODS AND MARK CARNEY CANADA FIRING BACK TODAY BY DOUBLING IMPORT TAXES. MEANWHILE, MEXICAN PRESIDENT CLAUDIA SHEINBAUM EXPRESSED OPTIMISM THAT SHE CAN REACH A TRADE DEAL WITH TRUMP AND THAT CONTRAST IS TELLING BECAUSE MEXICO'S FINANCIAL MARKETS HAVE BEEN ONE OF MEXICO'S QUIET WINNERS NOT FAR FROM RECORD HIGHS. THE ECONOMIC FUNDAMENTALS STILL ACQUIRE MENDING TIES WITH MARKET EXCHANGE LEADERS TO GET MEXICO'S GREAT COMPANIES TO RAISE MONEY RATHER THAN GOING TO NEW YORK OR U.S.-BASED PRIVATE EQUITY DEALERS. JOINING US RIGHT NOW IN NEW YORK AND STUDIO 2, A CEO OF MEXICO'S INVESTMENT WEEK. >> THANK YOU FOR YOUR TIME. ROMAINE: YOU HAVE A DOING THIS FOR SEVEN YEARS AND I'M SURE IT WASN'T A WHOLE LOT DIFFERENT BACK THEN. I'M SURE YOU'RE DEALING WITH TRADE AND GEOPOLITICAL ISSUES BACK THEN. THESE MAY HAVE TAKEN A LITTLE BIT OF A TURN OVER THE LAST FEW MONTHS. TO SET COMPLICATE YOUR PITCH TO INVESTORS IN NEW YORK THIS WEEK? >> IT HAS BEEN SEVEN YEARS SINCE WE STARTED. IT IS ALWAYS IMPORTANT FOR BOTH SIDES TO SIT DOWN AND TALK ABOUT THE THINGS THAT MOVE THE NEEDLE AND INVESTORS ALWAYS HAVE THE QUESTIONS OR SUGGESTIONS FOR THEM TO BE READY TO INVEST IN MEXICO. AND FOR OUR LOCAL MARKETS, WE NEED THE INVESTORS TO COME IN. THIS SIDE OF THE YEAR WE ARE IN THE MIDST OF THE NEGOTIATIONS SO FOR MEXICO IT IS CRUCIAL THAT WE SIT DOWN WITH INVESTORS AND WE TALK TO THEM THAT WE COMMUNICATE THE GREATEST OPPORTUNITIES WE HAVE IN DIFFERENT INDUSTRIES. WE ARE DOING THIS SYSTEMATICALLY. ROMAINE: YOU ARE PUSHING UP AGAINST THE MACROECONOMIC FORCES. THEY SAID MEXICO IS AT RISK OF DRIFTING BACK IF YOU DON'T TURN -- START TO SEE MORE CAPITAL INVESTMENT LOCALLY. >> WE THINK INVESTMENT IS NEEDED FOR MEXICO TO GROW AND MEXICO IS A COUNTRY OF GREAT NEEDS AND GREAT OPPORTUNITIES. OUR PENSION FUNDS IN MEXICO ACCOUNT FOR 25% OF GDP IN MEXICO AND THEY ARE GROWING UP TO 40% SO LOCAL CAPITAL IS VERY PROFOUND BUT WE NEED INTERNATIONAL INVESTORS TO COME IN AND TO COINVEST WITH THE LOCAL MANAGERS SO THAT WE CAN DEPLOY CAPITAL INTO THE MARKETS THAT ARE STILL THERE. INFRASTRUCTURE IS A HUGE OPPORTUNITY. THESE ARE GREAT OPPORTUNITIES, INVESTMENT COMING COME IN. ROMAINE: I'M CURIOUS EVEN BEFORE WE TALKED BEFORE USMCA AND NAFTA AND SOME OF THE OTHER TRADE RELATIONSHIPS IT HAS BEEN MUCH MORE FOCUSED ON MANUFACTURING AND THAT SIDE OF THE ECONOMY. YOU DIDN'T SEE AS MUCH FINANCIAL INTEGRATION OVER THE YEARS. THAT WOULD NOT ONLY HELP MEXICO BUT HELP THE U.S.. >> THAT'S WHAT WE NEEDED. WE ARE VERY INTEGRATED. WE HAVE A VERY SOLID, WE NEED OUR GLOBAL MARKET TO BE DYNAMIC SO THAT WE HAVE NEW AMERICAN INVESTORS COMING AND WE SEE THE ACTIVITY AND THE ASSETS WE OFFER AND PUSH IN. IT IS A TWO-WAY THING. WE NEED LONG-TERM INVESTMENT AND CAPITAL TO THROW CASH FLOW THROUGH DIFFERENT ASSETS. THROUGH THE SUPPLY CHAIN COMPANIES. ROMAINE: I ASKED A COUPLE INVESTORS IN THE U.S. WHAT WOULD DRAW THEM THERE. ONE PERSON POINTED OUT THAT DELISTING IN OF THE MAIN STOCK EXCHANGE ARE OUTPACING ACTUAL LISTINGS, THAT WHEN A MEXICAN COMPANY WANTS TO GO PUBLIC OR WANTS CAPITAL, IT LOOKS TO THE U.S., I KNOW YOU GUYS A COUPLE YEARS AGO YOU LOOSEN YOUR SECURITIES LAWS TO MAKE THAT A LITTLE BIT EASIER. WHEN DO WE START STATING THE RESULTS OF THAT? >> WE NEEDED THE REGULATION TO BE EASIER AND MORE EFFICIENT FOR COMPANIES TO COME IN. WE NEEDED A DEEPER LIQUID MARKET AS IT IS NEEDED IN THE U.S. SO THE VALUATIONS MAKE SENSE. WE ARE TRYING TO WORK ON THAT. SINCE WE ARE TRYING TO DEVELOP A LAYER OF NEW INVESTORS, WE NEED FOREIGN INVESTORS TO COME AND PUSH IT FORWARD. ROMAINE: I DID SEE THAT THE DEBT SIDE IS DOING PRETTY WELL. THAT SEEMS TO SUGGEST THAT WE ARE MUCH MORE DRIVEN, WE HAVE A VERY DEEP PRIVATE EQUITY, BUT OUR MARKETS, WE ARE AT A RECORD HIGH. 22 ANY, 2026 WERE AT A RECORD HIGH SO WE ARE SLOW, MAYBE WE ARE NOT AS LARGE AS THE U.S. MARKET CAP. WE ARE ABOUT $560 BILLION. WE HAVE HUGE OPPORTUNITIES TO COME IN. ROMAINE: PART OF YOUR REASON WHY IT EXISTS IS THIS IDEA THAT IT WAS SUPPOSED TO BE A LITTLE BIT MORE LIQUID. THERE AREN'T ENOUGH COMPANIES. I KNOW THERE HAS BEEN SOME TALK ABOUT DIVA BEING UP FOR SALE. ARE YOU STILL FIELDING OFFERS? >> YES. WE HAVE DONE OUR JOB AND FEES ARE NOW HALF OF IT. LIQUIDITY IS NOW RAISING THE VOLUME BY 70% SINCE WE STARTED OPERATION. LIQUIDITY IS BETTER FOR MEXICAN COMPANIES. WE HAVE NOW REACHED MORE THAN 15 COMPANIES IN THE MEXICAN MARKET. WE HAVE DONE OUR WORK. THERE IS MUCH MORE NEEDED TO DO. WE HOPE TO BE PART OF CHANGING THAT REGULATION AND WE ARE PUSHING INTO THIS NEW INVESTOR LAYER OPPORTUNITY. I THINK THINGS ARE GOOD. THERE ARE MANY MEXICAN COMPANIES I THINK WE CAN ACTUALLY BE A REAL OPTION FOR FINANCING THESE COMPANIES. OPPORTUNITIES ARE THERE. WE NEED TO TAP INTO THESE DIFFERENT COMPANIES, NOT ONLY THE LARGEST ONES BUT ALSO THESE MEDIUM-SIZED COMPANIES. THESE MEDIUM-SIZED COMPANIES NOT INSIDE OF THE MARKET THAT NEEDS EFFICIENT COST OF CAPITAL. ROMAINE: REALLY APPRECIATE YOU BEING HERE, THE CEO OF MEXICO'S VIVA STOCK EXCHANGE. WE TALK ABOUT TRADE BOTTLENECKS AND HOW TO NAVIGATE THEM. THE NEWLY SWORN IN ADMINISTRATOR OF THE PANAMA CANAL. THAT CONVERSATION COMING UP NEXT RIGHT HERE ON "THE CLOSE" ON BLOOMBERG. ♪ ROMAINE: FURTHER STRAINS COULD BE IN STORE IN GLOBAL SHIPPING, THE NEW HEAD OF THE PANAMA CANAL WORKING OF POSSIBLE TRANSIT CUTS, TELLING THE FINANCIAL TIMES THEY REPRESENT A WORST-CASE SCENARIO BASED ON RAINFALL PATTERNS. JOINING US NOW IS ILYA ESPINO DE MAROTTA, THE NEW ADMINISTRATOR OF THE PANAMA CANAL. BEFORE WE GET TO THE NITTY-GRITTY, YOU WERE JUST SWORN IN LESS THAN 48 HOURS AGO. BUT I MEAN YOU GO BACK, YOU HAVE BEEN THERE A LONG TIME, 40 YEARS AGO WRITING THAT TRAIN UP IN COLONUS A TEMPORARY HIRE. THE ONLY WOMAN ENGINEER OUT THERE IN THE CANAL SHIPYARD AND KNOW YOU ARE RUNNING THE WHOLE THING. IT'S GOT TO FEEL GOOD, DOESN'T IT? >> YES, IT DOES FEEL GOOD. [LAUGHTER] I'M EXCITED. I'M SUPER EXCITED WITH THIS NEW CHALLENGE. ROMAINE: LET'S TALK ABOUT SOME OF THOSE CHALLENGES. THE CANAL IS TAKING AND RECORD REVENUE BUT WE START TO TALK ABOUT SOME OF THE ISSUES FACING YOU WITH REGARD TO ACTUALLY BEING ABLE TO GET SHIPS THROUGH THE CANAL. WITH THE SEVERE EL NIÑO FORECASTS COMING THROUGH, GIVE ME A SENSE OF WHAT YOU'RE MODELING IS RIGHT NOW FOR THE NEXT FEW MONTHS AS TO WHAT TRANSITS ARE GOING TO LOOK LIKE RELATIVE TO WHAT THEY WERE A YEAR AGO. >> WE DEFINITELY ARE BEING HIT BY EL NIÑO SO WE ALREADY ANNOUNCED DRAFT RESTRICTIONS AND ALSO REDUCED TWO SLOTS FROM 36 DAYS TO 34 AND EVENTUALLY IT WILL GO TO 32. WE HAVE RAINFALL THAT HAS ALLOWED US TO POSTPONE FURTHER DRAFT RESTRICTIONS. WE MAINTAINED THE 48 FOOT DRAFT. HOW WEATHER IS BEHAVING AND SHIPPING IS BEHAVING AND WE NOTIFIED THE INDUSTRY WITHIN PLENTY OF TIME WHAT ARE THE ADJUSTMENTS GOING TO BE. THEY ARE THE RAINIEST MONTHS OF THE YEAR. HOPEFULLY WE WILL BE ABLE TO MAINTAIN THAT. ROMAINE: ARE WE GOING TO GO BACK TO 2023 WITH THE DROUGHT. WOULD IT GO BACK TO WHAT IT IS TODAY? >> WE ARE NOT FORECASTING THAT AT ALL. WE HAD A VERY WET DRY SEASON KNOWING THAT EL NIÑO IS COMING. THAT IS WHY WE DROPPED FROM 36 DAILY'S TO 34. AND THAT IS WHY WE MAINTAIN THAT TYPO LEVEL DURING THE DRY SEASON. ROMAINE: HOW MUCH DO THINGS LIKE THIS AFFECT YOUR BUSINESS LONG-TERM? WHEN I THINK BACK TO THE PREVIOUS DROUGHT, THE SEVERE DROUGHT AND YOU SAW A LOT OF THAT TANKER TRAFFIC WITH LNG CARRIERS FINDING OTHER ROUTES, SAWYER DRY BULK NUMBERS RUNNING WELL BELOW WHERE THEY WERE A FEW YEARS BACK. >> WE WERE WORKING WITH THE EL NIÑO LAKE, THE RESERVOIR TO STORE THE RAINFALL IN THE RAINY MONTHS THAT WILL ALLOW US TO MAINTAIN OUR 36 TRANSITS WITH THE 50 FOOT DRAFT LONG-TERM. IT WILL GIVE US HYDRO SECURITY FOR THE CANAL. WE HAVE TO COMPANIES THAT COMPETE AGAINST EACH OTHER AND THE NEW LIKE WILL GIVE US THE ABILITY TO HANDLE BOTH WITHOUT RESTRICTING EITHER. WE CANNOT RESTRICT DRINKING WATER BUT THAT IS WHY WE ADJUST THE NUMBER OF TRANSITS. ROMAINE: GIVE ME A SENSE OF WHAT THE BRIDGE IS UNTIL 2031. I WAS LOOKING AT YOUR REVENUE NUMBERS FOR THE CURRENT YEAR SO FAR. I THING YOU SAID IN THE PAST HE WOULD TOP $5.2 BILLION FOR THE FISCAL 2026. WHAT ARE WE LOOKING LIKE FOR 2027 AND FOR THE YEARS BETWEEN NOW AND 2031? >> OK COMING YEAR 2027 WE ALREADY PRESENTED THE BUDGET TO CABIN IN AND IT HAS BEEN APPROVED . AS LONG AS WE CAN MAINTAIN A GOOD DRAFT . TO MAKE UP FOR THE NUMBER OF TRANSITS. WE ARE NOT TOO CONCERNED RIGHT NOW TO MAKE SURE THIS IS NOT A RECURRING ISSUE. WHEN WE SAW THE LNG MARKET LEAVE IT WAS NOT BECAUSE OF LACK OF WATER, IT WAS BECAUSE OF THE RUSSIA-UKRAINE WAR. THAT IS ALSO GOOD NEWS TO SEE THAT COMING BACK. IT IS A MARKET THAT IS COMING BACK BUT LIKE YOU MENTIONED SLOWLY. EVERYBODY GETS A CHANCE TO TRANSIT THE CANAL. WE ARE ALSO CONTINUING WITH OUR NET ZERO SLOT WHICH IS A PERK FOR THE VESSELS GOING GREEN ARE TO BE ABLE TO GET A RESERVATION. WE DO TALK TO OUR CLIENTS REGULARLY. WE TRY TO ADJUST TO MAKE SURE EVERYBODY GETS A CHANCE TO TRANSIT. BRINGING MORE CARGO AND LESS TRANSIT. ROMAINE: AS YOU EMBARK ON THESE PROJECTS WITH THE GAS PIPELINE, I'M CURIOUS ABOUT YOUR RELATIONSHIP WITH THE U.S. ADMINISTRATION. ARE THEY INVOLVED IT ALL OR HAVE THEY MADE ANY BIDS IN TRYING TO GET THAT GAS PIPELINE HAS OR BEEN ANY PRESSURE COMING FROM THE WHITE HOUSE TO MAKE SURE THAT THE U.S. >> THE PANAMA CANAL IS AN OPEN BED. WE HAVE ALREADY RECEIVED FOR COMPANIES THAT WERE INTERESTED IN PREQUALIFICATION ON JULY 23. IT IS OPEN MARKET, WE HAVE A VERY OPEN BIDDING SYSTEM, A OPEN PROCUREMENT SYSTEM. ANY COMPANY THAT HAS THE CAPABILITIES CAN PUT IN FOR THE POTENTIAL PROJECT. WE WILL ANNOUNCE WHEN WE FINALIZE THE EVALUATION OF THE PROPOSALS RECEIVED ABOUT WHO ARE THE PREQUALIFIED COMPANIES BUT WE WILL CONTINUE WORKING WITH THOSE PREQUALIFIED COMPANIES ON THE REQUEST FOR PROPOSAL FOR THIS FUTURE PROJECT. ROMAINE: I DO JUST HAVE TO POINT OUT, PRESIDENT TRUMP'S RHETORIC, HE TALKED ABOUT TAKING BACK THE CANAL, I KNOW YOUR PRESIDENT, THE PANAMANIAN PRESIDENT, SAID THE DISPUTE HAS BEEN RESOLVED, BUT IT GETS TO THIS IDEA THAT THIS HAS BECOME A POLITICAL FOOTBALL ON OUR SIDE OF THE BORDER. HOW DO YOU NAVIGATE A PROJECT THAT IS STILL YEARS AWAY AND ENSURE THAT IT GETS DONE WITH SOME OF THE POLITICS SURROUNDING IT? >> THE CANAL IS NOT A POLITICAL ENTITY, WE ARE AN AUTONOMOUS ENTITY, PROJECT DRIVEN. SO I KNOW THERE IS A LOT OF NOISE IN THE NEWS, BUT REALLY THE CANAL HAS REMAINED AS COMPETITIVE AS EVER IN THESE 25 YEARS OF THE PANAMANIAN ADMINISTRATION. WE KNOW WE ARE A VERY OPEN AND NEUTRAL CANAL. I UNDERSTAND THAT THERE IS SOME NOISE POLITICALLY, BUT THE CANAL KEEPS RUNNING EVERY DAY LIKE WE HAVE BEEN DOING AT THE LAST 25 YEARS. ROMAINE: NOT TO KEEP HARPING ON THIS, BUT I WANT TO MAKE SURE YOU CAN ASSURE FOLKS THAT THAT NEUTRALITY IS THERE. YOU GO BACK TO WHEN THAT TREATY WAS SIGNED, WHETHER WE TALK ABOUT PRESSURE ON THE U.S. ON PANAMA, PRESSURE ON THE U.S. ON CHINA'S PRESSURE ON YOU AS WELL. HOW DO YOU MAKE SURE THAT YOU CAN STAND UP TO THAT NEUTRALITY WHEN YOU HAVE THE TWO BIGGEST ECONOMIES IN THE WORLD, THE TWO BIGGEST MILITARY SUPERPOWERS IN THE WORLD LEANING ON YOU? >> THAT IS THE BEAUTY. THEY ARE OUR NUMBER ONE AND NUMBER TWO USERS, SO THEY WANT TO MAKE SURE THE CANAL REMAINS NEUTRAL AND IT ACCOMPLISHES WHAT IT IS HERE TO DO, TO FACILITATE WORLD COMMERCE FROM EVERYBODY, BUT DEFINITELY THE U.S. IS OUR NUMBER ONE USER AND CHINA IS OUR SECOND USER, SO PROVIDING A GOOD, RELIABLE SERVICE TO ALL OF OUR CLIENTS REGARDLESS OF THE COUNTRY AND GUARANTEEING THAT WORLD COMMERCE CAN MOVE THROUGH THE PANAMA CANAL AS EFFICIENTLY AS POSSIBLE IS A WAY TO GUARANTEE THE NEUTRALITY TREATY. WE ARE VERY CONSCIOUS ABOUT IT AND WE WANT TO MAKE SURE WE COMPLY WITH THAT WHATEVER WAS AGREED. WE THINK IT IS GREAT BECAUSE IT HAS WORKED BEAUTIFULLY FOR THESE 25 YEARS. WE CAN SEE HOW THE CARGO THAT THE CANAL HAS MOVED SINCE WE OPENED THE NEW LOCKS IN 2016, WE HAVE DOUBLED CAPACITY OF THE CARGO GOING THROUGH THE CANAL. I THINK THAT IS EVIDENCE, THAT IS PROOF OF WHAT WE CAN ACCOMPLISH BY BEING NEUTRAL, BY BEING PROFESSIONAL, AND BY DOING THE JOB WE ARE HERE TO DO WHICH IS FACILITATE. ROMAINE: REALLY APPRECIATE YOU TAKING THE TIME FOR US TODAY. THE ADMINISTRATOR OF THE PANAMA CANAL, ILYA ESPINO DE MAROTTA. WE DO WANT TO RESET JUST A LITTLE BIT. WE DID SEE SOME STRONG BIDS IN THE TECH SPACE. COREWEAVE AND INTEL GETTING STRONG BIDS. QUALCOMM SHARES CLOSED UP. THIS AFTER LANDING AMAZON AS A DATA CENTER CHIP CUSTOMER AND INVESTOR. JOINING US RIGHT NOW TO TALK A LITTLE BIT MORE ABOUT THIS NEW DEAL IS THE CFO OF QUALCOMM. GREAT TO HAVE YOU HERE, CONGRATULATIONS ON THE DEAL, GIVE ME A SENSE AS EXACTLY WHY OR WHAT THE DEAL ACTUALLY TELLS US ABOUT QUALCOMM'S ATTEMPT TO BREAK DEEPER INTO THE AI DATA CENTER MARKET. >> FIRST OF ALL, THANKS FOR HAVING ME HERE. WE ARE VERY EXCITED ABOUT THIS DEAL, THIS IS A LONG-TERM STRATEGIC ENGAGEMENT BETWEEN AMAZON AND QUALCOMM AND IT BECOMES ONE OF THE FOUNDATION DEALS FOR OUR DATA CENTER BUSINESS GOING FORWARD. WHAT WE ANNOUNCED TODAY IS WE ARE ENGAGING IN MULTIPLE GENERATIONS OF ENGAGEMENT BETWEEN QUALCOMM AND AMAZON AND WE ARE GOING TO SUPPLY MULTIPLE GENERATIONS OF OPTICAL CONNECTIVITY SOLUTIONS TO THEM AND AS A PART OF THIS, WE ARE LOOKING AT A TRANSACTION THAT IS A LONG-TERM TARGET OF $60 BILLION IN REVENUE OVER THE NEXT 10 YEARS AND WE ARE ISSUING WARRANTS AGAINST IT. VERY EXCITED THIS IS GOING TO BE ONE OF THE WAYS WE ARE GOING TO DEVELOP OUR DATA CENTER BUSINESS AND IT GIVES US HIGH CONFIDENCE IN ACHIEVING THE REVENUE FORECAST WE PUT IN FRONT OF INVESTORS. BEYOND WHAT WE PREVIOUSLY EXPECTED. ROMAINE: OVERALL GREAT DAY FOR US IN A GREAT OPPORTUNITY FOR US. WHAT WAS THE THINKING BEHIND ISSUING THE WARRANTS AGAINST IT? AKASH: WE ARE LOOKING AT THE VALUE OF THE DEAL IS GOING TO QUALCOMM. I THINK IT ALLOWS US TO DIVERSIFY INTO A NEW AREA. THIS IS A STRUCTURE THAT HAS BEEN ADOPTED BY A FEW PLAYERS IN THE INDUSTRY. WHEN WE LOOK AT THE NET ECONOMICS, WE THINK IT IS VERY ATTRACTIVE AND THAT WAS WHAT WE ENTERED INTO INTO THIS TRANSACTION. ROMAINE: WE TALK ABOUT MAYBE THE POTENTIAL UPSIDE TO THE TOP AND BOTTOM LINE HERE, BUT GIVE ME SOME SENSE OF HOW MUCH RUNWAY YOU THINK IS GOING, WE TALK ABOUT THE AI CHIP SPACE AND IT IS EVOLVING FAST. WE ARE MOVING AWAY FROM JUST THE BASICS TO MORE TALK ABOUT EFFICIENCY AND HOW TO ACTUALLY RUN THESE CHIPS AT A LEVEL WHERE IT IS NOT GOING TO BE A COMPLETE POWER HOG. HOW FAR ALONG ARE WE IN THAT PROCESS AND HOW MUCH CAN QUALCOMM GUARANTEE THEY WILL BE AT THE FOREFRONT OF THAT? AKASH: THAT'S A GREAT QUESTION. OUR STRENGTH HAS ALWAYS BEEN DELIVERING HIGH-PERFORMANCE AT LOW POWER AND THIS IS ONE OF THE AREAS THAT IS MAKING US AN ATTRACTIVE OPTION TO DATA CENTER PLAYERS. WE ARE DEVELOPING A BROAD PORTFOLIO THAT CUTS ACROSS CUSTOM CHECKS, AI ACCELERATORS, CPU CHIPS AND CONNECTIVITY CHIPS AND ALL OF THESE SOLUTIONS FOR DATA CENTER. THE SET ONE UNDERLYING THEME THAT CONNECTS THEM ALL WHICH IS DELIVERING HIGH PERFORMANCE SO AS POWER BECOMES MORE AND MORE PERFORMANCE, I THINK IT POSITIONS US WELL TO BECOME A SIGNIFICANT PLAYER. A FEW MONTHS AGO YOU ANNOUNCED THAT DEAL WITH META-. CAN YOU GIVE US ANY SENSE AS TO WHETHER YOU ARE IN ACTIVE NEGOTIATIONS WITH ANYONE ELSE THAT MAY BE INVESTORS SHOULD BE AWARE OF? AKASH: WHAT WE ANNOUNCED SO FAR AS THE META-ENGAGEMENT ON THE CPU SIDE. WE ENGAGED WITH THE HYPERSCALER ON CUSTOM CHIPS. I THINK WE ALSO HAVE THIS UNIQUE TECHNOLOGY CALLED HBC HIGH-BANDWIDTH COMPUTE THAT ALLOWS US TO DELIVER AI ACCELERATION IN DATA CENTERS THE VERY HIGH PERFORMANCE AND MEMORY BANDWIDTH AND THESE ARE PROBLEM STATEMENTS THAT EXIST WITHIN THE DATA CENTER. THIS TECHNOLOGY POSITIONS US TO DELIVER SOMETHING THAT IS UNIQUE THAT SOLVES WHAT THE HYPERSCALERS NEEDED. I THINK WE HAVE ENGAGEMENT GLOBALLY ON THIS TECHNOLOGY. WE ARE EXCITED ABOUT THE PORTFOLIO AND CUSTOMER BASE EXPANSION. ROMAINE: I DO HAVE TO ASK ABOUT TARIFF ISSUES AS THEY ARE BACK IN THE NEWS AGAIN. IS THAT HAVING ANY MATERIAL IMPACT ON YOUR INCOME STATEMENT AND BALANCE SHEET, BUT WITH REGARD TO THE ROLLOUT OF THESE NEW PRODUCTS? ARE THERE CONSTRAINTS THAT MIGHT LIMIT YOUR ABILITY TO MAKE GOOD ON THE AGREEMENTS THAT YOU HAVE? AKASH: AS YOU KNOW WELL, THIS IS AN EVOLVING AREA, THIS IS SOMETHING WE HAVE TRACKED VERY CLOSELY. BUT AT THIS POINT WE DON'T SEE ANY IMPACT TO US AT THIS POINT. IT IS CONTEMPLATED IN THE GUIDANCE WE HAVE GIVEN TO INVESTORS AND IT IS A TECHNOLOGY THAT IS IMPORTANT FOR THE INDUSTRY SO OUR PARTNERSHIP IS MORE ABOUT BRINGING TECHNOLOGY, BRINGING SOLUTIONS TO THE TABLE AND WE WILL CONTINUE TO TRACK THE TARIFF ENVIRONMENT AS IT EVOLVES. ROMAINE: WE ARE TALKING ABOUT DATA CENTERS AND THIS AI REVOLUTION. YOU GUYS STILL GET A LOT OF MONEY FROM THE SMARTPHONE SPACE. YOU ARE EXPECTED TO HAVE A RELATIVELY BIG EVENT ANNOUNCING NEW SMARTPHONES. CAN YOU GIVE US A SENSE OVERALL, YOU DON'T NEED TO COMMENT ON APPLE, BUT WHERE WE ARE IN THE SMARTPHONE CYCLE AND HOW ACCRETIVE YOU EXPECT THAT BUSINESS TO BE GOING FORWARD AS YOU MAKE THIS BRIDGE INTO A MORE AI CENTRIC DATA CENTER BUSINESSES? AKASH: WE ARE EXCITED ABOUT DEVICES AT THE EDGE AS WELL. I THINK WE HAVE SEEN IMPACT DUE TO THE HIGH MEMORY COST AND SUPPLY CONSTRAINTS IN THE CONSUMER AREA. BUT AS WE LOOK FORWARD, I THINK BECAUSE OF AI WE ARE GOING TO SEE THESE DEVICES EVOLVE INTO SOMETHING DIFFERENT AND IT BECOMES DEVICES YOU CAN HAVE AN AGENTIC AI INTERACTION WITH AND THESE DEVICES ARE SO PERSONAL, YOU ARE CARRYING THEM AROUND. I THINK PHONES EVOLVE. YOU WILL SEE PHONES NOT JUST IN DATA CENTERS. PERSONALLY OUR DEVICES, SOMETHING LIKE META-RAY-BAN GLASSES AND THE DEVICE CAN SEE WHAT YOU CAN SEE AND YOU CAN HEAR WHAT YOU CAN HEAR AND YOU CAN HAVE AN AGENTIC AI CONVERSATION WITH THE DEVICE. AI IS OBVIOUSLY CHANGING EVERYTHING THAT IS HAPPENING UNDER THE DATA CENTER SIDE. BUT THE DEVICES AT THE EDGE ARE NOT THAT FAR BEHIND. YOU WILL SEE THOSE EVOLVE AS WELL. THAT WILL CREATE OPPORTUNITY FOR US. ROMAINE: WE ARE ALL LOOKING FORWARD TO IT WITH TOMORROW'S SMARTPHONE ANNOUNCEMENT AND SOME OTHER DEVICES START TO GET ROLLED OUT. REALLY APPRECIATE YOU JOINING US TODAY IN CONGRATULATIONS ON THE DEAL WITH AMAZON. AKASH: THANK YOU FOR HAVING ME. ROMAINE: ABSOLUTELY. AKASH PALKHIWALA, THE CFO OVER A QUALCOMM. WHILE HE WAS SPEAKING WE DID GET BREAKING NEWS INVOLVING LIV GOLF , WE ARE NOW LEARNING THAT LIV GOLF HAS INDEED FILED FOR CHAPTER 11 BANKRUPTCY. THIS IN A NEW JERSEY COURT. LIV GOLF FILING FOR CHAPTER 11 BANKRUPTCY PROTECTION. WE WILL TRY TO GET YOU MORE DETAILS WHEN WE COME BACK AFTER THE BREAK. THIS IS THE CLOSE ON BLOOMBERG. ♪ ROMAINE: WELL, THE NEW MODEL OUT BY OPENAI, NEW IPO POTENTIALLY BITE ANTHROPIC AS A LOT OF PEOPLE TALKING, PARTICULARLY AS OPENAI, CISCO, AND 100 OTHER TECH COMPANIES CALL ON ORGANIZATIONS TO MAKE CYBER DEFENSE AND IMMEDIATE LEADERSHIP PRIORITY. AI ENABLED CYBERATTACKS WILL BECOME FAR MORE WIDESPREAD AND SOPHISTICATED AS MODELS BECOME INCREASINGLY CAPABLE. JOINING US NOW IS THE PRESIDENT AND CHIEF PRODUCT OFFICER AT CISCO, ONE OF THE FIRMS WHO SIGNED THAT OPEN LETTER. IT GETS TO THIS IDEA THAT WE TALK ABOUT ALL THE BENEFITS AND ADVANCES WE HAVE SEEN THESE AI MODELS MAKE IN HELPING US DO OUR JOBS, BUT OF COURSE THE FLIPSIDE OF THAT IS IF YOU ARE A BAD ACTOR YOU ARE PROBABLY LOOKING AT IT AND THINKING, YEAH, IT IS HELPING ME DO MY JOB AS WELL. >> THE REALITY IS ANY GOOD TECHNOLOGY WILL HAVE ITS DOWNSIDE EFFECTS ON THE FACT THAT THESE ATTACKS FROM ADVERSARIES IS ALSO GOING TO BE AT MACHINE SCALE THAT USES THESE AGENTS THAT YOU AND I WILL JUST BE THE NORMAL COURSE OF THE WAY THE BUSINESS IS CONDUCTED. WHAT WE HAVE TO DO IS MAKE SURE TO COMBAT THAT AND MITIGATE THAT RISK YOUR DEFENSES , IF YOU DON'T CHOOSE AI YOU WILL BE LESS SECURE BECAUSE THERE IS NO WAY FOR HUMANS BY THEMSELVES TO BE ABLE TO COMBAT MACHINE SCALE ATTACKS THAT WILL HAPPEN AT A MORE AND MORE SOPHISTICATED MANNER AS THESE MODELS GET MORE AND MORE PROMINENT AND CAPABLE. ROMAINE: WHEN WE TALK ABOUT THE ATTACKS FOR ATTEMPTS, CANNOT BE CAPTURED OR DETECTED ALONG THAT NETWORKING ROUTE, FORGIVE THE PEDESTRIAN PHRASING WEATHER GETS TO THE ACTUAL SERVER OR END-USER? >> IT IS QUITE IMPRESSIVE, ROMAINE. LET ME BREAK IT DOWN FOR YOU. WHAT YOU HAVE TO ASSUME IN THE WORLD IS AT THE ADVERSARIES IS THAT THE BAD ACTORS HAVE ALREADY BROKEN INTO YOUR SYSTEM AND THE NAME OF THE GAME IS WHAT THEY CALL IN TECHNICAL TERMS INVENTING THESE ATTACKERS FROM YOUR CREDIT CARD DATABASE, THEY DON'T GO DIRECTLY TO YOUR CREDIT CARD DATABASE. THEY DON'T GO FOR YOUR ATTACK, WHERE DOES LATERAL MOVEMENT HAPPEN? WHO HAS THE MOST AMOUNT OF TELEMETRY ABOUT THE NETWORK? CISCO DOES. WE THING ABOUT THIS FROM A STANDPOINT OF IN ORDER TO BE SECURE, YOU HAVE TO ACTUALLY FUSE SECURITY INTO THE FABRIC OF THE NETWORK. THESE THINGS DON'T EXIST WITHOUT ONE ANOTHER. IF YOU WANT TO HAVE A NETWORK, IT BETTER BE A SECURE NETWORK, SO WHAT CISCO IS IN THE BUSINESS OF DOING IS MAKING SURE THAT WE CAN PREVENT LATERAL MOVEMENT, FIND THE ADVERSARIES. IF THE ADVERSARIES ARE AGENTS, MAKE SURE THAT YOU CAN PREVENT THOSE AGENTS FROM CAUSING TOO MUCH HARM OR DAMAGE AND INTERCEPT THEM WHILE THAT BAD ACT IS ACTUALLY OCCURRING WHICH IS WHAT THEY CALL IN TECHNICAL TERMS RUN TIME. ROMAINE: IS THAT SOMETHING THAT HAS TO BE DONE FROM THE GROUND UP? OR CAN YOU TAKE AN EXISTING LEGACY NETWORK AND INTEGRATE THAT INTO IT IN A COST EFFICIENT MANNER? JEETU: THAT'S A GREAT QUESTION. THE WAY TO THINK ABOUT THIS IS IF YOU TAKE A STEP BACK, THE ARCHITECTURAL SHIFT THAT IS HAPPENING RIGHT NOW IS THAT THE SECURITY IS GETTING FUSED INTO THE NETWORK. YOU HAVE THESE THINGS IN THE PAST THERE IS A SWITCH THAT MOVES YOUR TRAFFIC AROUND. WHAT WE ARE STARTING TO SEE HAPPEN NOW IS THAT THESE TWO ARE FUSING TOGETHER INTO THESE THINGS CALLED SMART SWITCHES WHICH INCLUDES A FIREWALL. THE REASON FOR THIS IS YOU WANT TO MAKE SURE THAT THE LATENCY AT WHICH YOU CAN GO OUT AND DETECT SOMETHING GOING WRONG AND THEN BEING ABLE TO STOP IT HAPPENS ALMOST IN REAL TIME. SO EVERY MILLISECOND COUNTS AND THE MORE PERFORMANCE YOU CAN GET OUT OF THE SYSTEM, THE MORE SECURE YOU WILL BE AND THAT IS WHERE SYSTEM HAS AN ADVANTAGE BECAUSE WE CAN TAKE SECURITY AND NETWORKING AND FUSE THEM TOGETHER SO THE NETWORK YOU RUN ON IS A SECURE NETWORK. THERE IS NO SUCH THING AS AN INSECURE NETWORK BECAUSE IF YOU ARE CONNECTED BY CISCO, YOU WILL BE PROTECTED. ROMAINE: OBVIOUSLY AN IMPORTANT CONVERSATION. CISCO'S PRESIDENT AND CHIEF PRODUCT OFFICER THERE. WE DO WANT TO STAY IN THE TECH SPACE AND LOOK AT IT FROM THE LENS OF WHAT IS INVESTING AND FINANCING IT IN THE PRIVATE SECTOR? THERE HAVE BEEN A LOT OF FEARS OF A SAASPOCALYPSE MAKING WAYS ACROSS -- MAKING WAVES. THAT IS ACCORDING TO THE CEO OF KROLL WITH JACOB SILVERMAN WITH PRIVATE CREDIT BENCHMARK DATA SHOWING NEW DEALS HAVE HAPPENED. JACOB JOINS US IN STUDIO. GREAT TO HAVE YOU BACK ONE OF THE PROGRAM. >> THANK YOU FOR HAVING ME. ROMAINE: YOU ARE ONE OF THE LARGEST VALUATION AGENTS IN THE PRIVATE MARKETS. WE KIND OF TALKED ABOUT THIS IDEA OF SOME OF THE CONCERNS THAT WERE OUT THERE, THE GROWING PAINS. HAS ANYTHING CHANGED FROM THE LAST TIME WE TALKED FOR FIVE MONTHS AGO UNTIL NOW? >> GREAT QUESTION AND I HAVE BEEN SAYING THE PRIVATE CREDIT MARKET IS ACTUALLY STABLE, IT IS GROWING, AND GROWING UP. AS PART OF THAT GROWING UP PROCESS, THE MATURITY CURVE, THERE IS A FOCUS ON DATA AND GOVERNANCE AND WE ARE SEEING THAT IN THE ACTIVITIES OF PRIVATE CREDIT MANAGERS. THEY ARE FOCUSED ON BEING MORE FREQUENT IN VALUATIONS AND EMBRACING FACTS WHICH IS WHY A YEAR AGO WE LAUNCHED THE KROLL STEPS OWN PRIVATE BENCHMARK WITH OUR GREAT PARTNERS AT PRIVATE. ROMAINE: HOW MANY ASSETS ARE YOU LOOKING AT THIS? JACOB: WE BELIEVE WE ARE THE LARGEST BENCHMARK FOCUSED ON THE PRIVATE CREDIT MARKET AT THIS POINT IN TIME AND IT IS GROWING EVERY DAY. WE HAVE 30,000 POSITIONS THAT WE ARE VALUING, THAT REPRESENTS WELL OVER $1 TRILLION OF CAPITAL THAT HAVE BEEN PUT TO WORK. ROMAINE: ARE YOU SEEING A SIGNIFICANT GAP IN WHAT YOU ARE VALUING? JACOB: THE WHOLE PURPOSE OF THE BENCHMARK ITSELF IS TO SHINE A LIGHT OF TRUTH TRANSPARENCY ON WHAT HAS HISTORICALLY BEEN A RATHER OPAQUE MARKET. WHAT WE ARE SEEING IS THAT GREAT IN CLASS PRIVATE CREDIT MANAGERS ARE VERY FOCUSED ON BEING TRUE TO THE REAL, INTRINSIC VALUE OF THESE POSITIONS. THEY ARE USING THIRD-PARTY VALUERS. WE LIKE TO THINK WE ARE AT THE EPICENTER SUPPORTING THE PROPER GOVERNANCE AND GROWTH OF THIS MARKET AND WE BELIEVE THAT FACT HAS REALLY SEPARATED FROM FACTION -- FICTION. MANAGERS ARE SEEING SPREADS WIDENED. ROMAINE: DOES THAT MEAN WE ARE SEEING ? JACOB: WE ARE ABOUT TO LAUNCH AN ENHANCEMENT TO THE KROLL STEPS OWN PRIVATE CREDIT BENCHMARKS WHICH IS A PIC TRACKING FEATURE, PAYMENT IN KIND TRACKING FEATURE TO OBSERVE CREDIT QUALITY AS EVIDENCED BY THE USAGE OF PIC IN THE PRIVATE CREDIT LANDSCAPE. YOU HAVE SEEN THE FUNDAMENTAL PRIVATE CREDIT STATISTICS AND RISK PARAMETERS ARE ACTUALLY PRETTY GOOD. LEVERAGE IS STILL RELATIVELY LOW. INTEREST COVERAGE IS REASONABLY CONSTRUCTIVE AND POSITIVE. AND MARGINS HAVE ACTUALLY BEEN HOLDING IN, NOTWITHSTANDING THE FOCUS AND SCRUTINY ON THIS MARKET. ROMAINE: THERE IS A BIG REFINANCING CALENDAR COMING UP AHEAD AND THAT IS CRASHING HEADFIRST INTO A FED THAT IS GOING TO START RAISING RATES. IS THAT THE IMPROVEMENT WE HAVE SEEN IN PRIVATE MARKETS? DOES THAT MAY BE CHANGED WE START TO GET A MATERIAL INCREASE IN INTEREST RATES? JACOB: AT THE END OF THE DAY, GOOD BUSINESSES WILL BE ABLE TO REFINANCE AND THE PRIVATE CREDIT MARKET AND THE CREDIT MARKET MORE BROADLY WILL SUPPORT BUSINESSES. ROMAINE: HANG ON, ANYBODY CAN REFINANCE. IT IS ABOUT HOW MUCH HIGHER YOU ARE GOING TO PAY PRIOR TO THE REFINANCE. JACOB: AT THE END OF THE DAY WE WILL FOCUS ON GOOD CREDITS BEING ABLE TO FINANCE AT NARROWING SPREADS ASSUMING THEY ARE ABLE TO SUPPORT THEIR DEBT SERVICE WHICH IS REALLY WITH THE PRIVATE CREDIT BENCHMARK IT IS THERE TO ILLUMINATE. WHAT IS THE QUALITY OF THESE CREDITS? WHERE SHOULD SPREADS BE RELATIVE TO THE MARKET FUNDAMENTALS? ROMAINE: AS WE START TO GET A LITTLE BIT MORE VALUATION OF THINGS, A MORE TRANSPARENT VALUATION, MORE FREQUENT, THE IDEA IS MORE INDIVIDUAL INVESTORS START TO MOVE INTO THE SPACE, FINANCIAL ADVISORS, DOES THAT COUNTERINTUITIVELY MAY BE CREATE MORE VOLATILITY IN THE SPACE? I KNOW EVERYONE CRITICIZES WE ONLY GET A MARK EVERY QUARTER OR WHATEVER, BUT IF WE CAN SEE SOME SORT OF REAL-TIME VALUATION ON A DAY-TO-DAY BASIS, DOES THAT MAYBE INCREASE THE TRADING ACTIVITY AND THE POTENTIAL FOR VOLATILITY? JACOB: IT INCREASES LIQUIDITY AND TRANSPARENCY. WHAT WE HAVE SEEN AS MANY PRIVATE CREDIT MANAGERS ARE FOCUSED ON INCREASING THE FREQUENCY OF THEIR VALUATIONS. WE HAVE SEEN A DOUBLING AND REQUEST. ROMAINE: BY THE MANAGERS? JACOB: TO GIVE YOU A SENSE OF WHAT PEOPLE ARE FOCUSED ON. A HEIGHTENED FOCUS ON SCRUTINY IN GOVERNMENT. AND THE RETAILIFICATION OF THE PRIVATE MARKETS. WHICH WE EXPECT TO GROW. ROMAINE: KROLL IS A LOT MORE THAN PRIVATE MARKET VALUATIONS. I SAW YOU HAD JOINED CROWDSTRIKE'S AI SECURITY COALITION EARLIER THIS YEAR AND WE WERE JUST TALKING WITH A COUPLE OTHERS ABOUT THE CONCERNS AS THE AI BUILDOUT GOES ON WHETHER WE ARE PREPARED FOR THE SECURITY RISK THAT COMES WITH IT, WHERE DO WE STAND ON THAT? JACOB: THE REALITY IS MANY COMPANIES AND MANY SYSTEMICALLY IMPORTANT ORGANIZATIONS ARE NOT PREPARED. THE RAPIDITY OF TECHNOLOGICAL ADVANCEMENT FOR BOTH CRIMINAL ACTORS AND DEFENDERS IS HAPPENING AT RECORD PACE AND OUR PARTNERSHIP WITH CROWDSTRIKE WHICH IS A VERY POWERFUL PARTNERSHIP IS THERE TO SUPPORT THE MIDDLE-MARKET LAYER OF CYBERSECURITY INFRASTRUCTURE AND WE THINK THAT IS CRITICALLY IMPORTANT AS AI THREATS CONTINUE TO EMERGE. ROMAINE: JACOB, REALLY APPRECIATE HAVING YOU HERE. JACOB SILVERMAN IS THE CEO AT KROLL. NOW, WE DO WANT TO GET BACK TO THE BREAKING NEWS IN THE WORLD OF SPORTS THAT JUST CROSSED THE BLOOMBERG TERMINAL INVOLVING LIV GOLF, THE BANKRUPTCY FILING IN THE STATE OF NEW JERSEY. JOINING US TO TALK ABOUT THIS IS BLOOMBERG'S SENIOR SPORTS REPORTER RANDALL WILLIAMS. NOT A SURPRISE I ASSUME? >> NOT AT ALL. YOU LOOK AT ALL THE MONEY THEY HAVE LOST VERSUS THEY HAVE MADE AND THERE IS AN ASTRONOMICAL DIFFERENCE TO WHEN THE SAUDIS ARE FINDING THIS AND WHEN THEY WEREN'T SO THIS IS NOT A SURPRISE AT ALL. ROMAINE: IT DOESN'T SEEM LIKE THEY ARE REALLY FUNDING THIS, THEY ARE PROVIDING A BRIDGE FOR THE BANKRUPTCY PROCESS. DO YOU HAVE A SENSE AS TO WHY THEY COULDN'T HAVE FOUND A WAY TO MAKE THIS WORK? WHAT WAS THE TRIPPING POINT? RANDALL: THE OPTICS ARE THAT THE SAUDI'S WERE PUSHING LIV GOLF WITH A $5 BILLION ROCKET SHIP AND WHEN YOU PULL THE PLUG ON THAT AND SAY WE HAVEN'T MADE MONEY, NOW THEY PULLED THE PLUG A LOT EARLIER THAN LIV GOLF EXECUTIVES ANTICIPATED, BUT AT THAT POINT IF YOU ARE GOING OUT TO THE MARKET AND SAYING WE HAVEN'T BEEN ABLE TO TURN OVER A PROFIT AND $5 BILLION HAVE BEEN INVESTED IT WILL RAISE A LOT OF QUESTIONS FROM PEOPLE YOU HAVE CONVERSATIONS WITH. ROMAINE: I REMEMBER THERE WAS A LOT OF HEAD SCRATCHING WHEN THIS STARTED AND THEY SPENT A LOT FOR THE TALENT, BUT THEY GOT THE BIG TALENT THERE AND IT WAS A LITTLE BIT OF A LOOSER GAME, A LITTLE MORE FUN. FOR THOSE OF US, I'M A BIG GOLFER AND I DON'T LIKE THE STATED NATURE OF GOLF AND I WAS AT A CLUB THIS WEEKEND WITH THE DRESS CODE. IT'S FINE. THE IDEA THAT THIS WOULD DRAW MORE PEOPLE IN. I WONDER WHY YOU DIDN'T GAIN A LITTLE BIT MORE TRACTION BECAUSE IT SEEMS LIKE PEOPLE WERE HUNGRY FOR THIS? RANDALL: I THINK THE PGA TOUR RECOVERED VERY QUICKLY. THEY HAD THE PGA TOUR ENTERPRISES IN UP TO $3 BILLION THEY WERE ABLE TO EXERCISE WITH THAT AND YOU COMBINE THAT WITH HOW LONG THE HISTORY IS, LIV GOLF WAS BARELY FIVE OR SIX YEARS. SO WHEN YOU ARE TRYING TO BRING A NEW PRODUCT TO THESE MARKETS AND IT IS UNFAMILIAR, IT'S GOING TO BE VERY TOUGH WORK IN TERMS OF THE BRANDING AND THE BUSINESS RELATIONSHIPS BECAUSE THE PGA TOUR IS MORE FAMILIAR. I THINK TRADITION ONE OVER INNOVATION. ROMAINE: DO YOU THINK THE LIVE GOLFERS WILL BE WELCOMED BACK INTO THE FOLD? RANDALL: WELCOMED IS A VERY TOUGH FOR. THERE WILL BE A LOT OF PEOPLE ARE RETURNED BUT SOME PEOPLE MIGHT STICK AROUND AND MIGHT WANT TO STICK THROUGH WHAT THEY ARE GOING THROUGH BUT WE WILL HAVE TO SEE. ROMAINE: BLOOMBERG'S SENIOR SPORTS REPORTER RANDALL WILLIAMS AS WE CLOSE OUT HERE ON THE CLOSE ON THIS TUESDAY AFTERNOON AND PUSH AHEAD TO TOMORROW. KEEP AN EYE ON EARNINGS OUT OF CHEWY AND WE WILL HAVE SPECIAL COVERAGE OF JOHN TERNUS'S FIRST MAJOR PRODUCT LAUNCH. WE DO APPRECIATE YOU JOINING US. THE TEAM WITH THE BALANCE OF POWER ARE COMING UP AT THE TOP OF THE HOUR AND THEY HAVE A LOT TO TALK ABOUT WITH PRESIDENT TRUMP SAID TO HEAD TO DALLAS FOR THE FIRST-EVER NATIONAL REPUBLICAN MIDTERM CONVENTION. THIS IS BLOOMBERG.