TSMC Sales Hike, Defense Spending Spotlighted in Aspen | Bloomberg Businessweek Daily 7/16/2026

>> THIS IS "BLOOMBERG BUSINESSWEEK DAILY," REPORTING FROM THE MAGAZINE THAT HELPS GLOBAL LEADERS THEY HAD, INSIGHT ON THE COMPANIES AND TRENDS SHAPING TODAY'S ECONOMY. PLUS, GLOBAL BUSINESS, FINANCE, AND TECH NEWS AS IT HAPPENS. "BLOOMBERG BUSINESSWEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC, LIVE ON BLOOMBERG RADIO, TELEVISION, AND BLOOMBERG ORIGINALS. CAROL: VERY GOOD AFTERNOON EVERYBODY, YES INDEED, ACROSS BLOOMBERG PLATFORMS. THIS IS "BLOOMBERG BUSINESSWEEK DAILY" ON THURSDAY, JULY 16, 2026. WE'VE GOT ONE SECTOR WEIGHING ON MARKETS. TIM: THAT WOULD BE THE PHILADELPHIA SEMICONDUCTOR STOCK EXCHANGE INDEX. DOWN ABOUT 5% NOW. 30 MEMBERS ARE ALL LOWER. LOOK AT THAT. CAROL: YEAH. I MEAN, LISTEN, IT'S BEEN A VOLATILE SECTOR AS OF LATE. TRADING AND MOVING AS IT SEEMS FROM ONE BIG PIECE, OR EVEN LITTLE PIECE OF NEWS TO THE NEXT. THE HEADLINE FROM TSMC, WHICH HIKED ITS SPENDING AND REVENUE PROJECTIONS. REVENUE, YAY, EXCITEMENT. CAPEX SPEND GOES UP. THAT GETS INVESTORS WORRIED AND IT REUNITES CONCERNS OUT THERE, THE BIG NARRATIVE AROUND DATA CENTERS, THE OVERBUILDING, THE UNCERTAINTY ON WHEN TRILLIONS OF DOLLARS OF SPENDING WILL DELIVER LUCRATIVE TRENDS. AT WHAT POINT DOES A GOOD TO BE A LITTLE IRRATIONAL? THIS IS WHERE WE ARE TRYING TO FIGURE IT OUT. TIM: THE FIRST PART OF OUR PROGRAM IS FOCUSED ON THIS. ED LUDLOW JOINING US IN A MINUTE. ALSO, AN AI STORY, WHERE RETURNS THE AI RECKONING HAS ALREADY ARRIVED. CAROL: LOVE THIS STORY BY OUR TEAM. WE HAVE GOT TO GET THE U.S.-IRAN, HOSTILITIES WORSENING. WE WILL HEAR FROM SENATOR CHRIS MURPHY UNBLOCKING THE DEFENSE AUTHORIZATION BILL. THIS IS MASSIVE, AND IT IS AMID TWO WARS AROUND THE WORLD, ONE IN WHICH THE U.S. REALLY KICKED OFF. TIM: UNITEDHEALTH IS ALONE. WALL STREET IS A BEAR NO MORE. CAROL: WE WILL GET ALL OF THIS THE NEXT 60 MINUTES. LET'S GET TO THE TRADING SESSION WITH CHARLIE PELLETT. CHARLIE: THANK YOU, CAROL AND TIM. DOW, NASDAQ, S&P DECLINING, AND TIM'S SET US UP PERFECTLY. 30 OUT OF 30 NAMES TRADING LOWER. LEADING THE CLIENTS, SEVERAL--DECLINES, STERILE LABS FOLLOWED BY MARVELL TECHNOLOGY AND CREDO TECHNOLOGY. DOW, S&P, NASDAQ VERY MUCH IN THE RED. S&P DOWN .4%. NASDAQ DOWN 1.1%. NASDAQ 100 INDEX DOWN 1.5%. PHILADELPHIA STOCK EXCHANGE SEMICONDUCTOR INDEX, IT IS TRADING LOWER BY ALMOST 5%. NASDAQ 100 DOWN BY 1.6%. NASDAQ DOWN 1.1%. 10-YEAR, 4.56%. TWO-YEAR, 4.15%. SPOT GOLD DOWN $74 DOWNS. THAT IS A DROP OF 1.8%. CREW DOWN 1.2%--CREW DOWN 1.2%. AND WORTH REPEATING ON SPOT GOLD, BACK BELOW 4000. 3984 THE OUNCE. EXXON MOBIL UP 1%, CHEVRON UP 1.2%, CONOCOPHILLIPS UP .9%. GOLF NEWS, ROUND ONE OF THE OPEN CHAMPIONSHIP NOW OPEN IN ENGLAND. AT LAST CHECK, JACKSON SUPER SITS ATOP THE LEADERBOARD. FOR ON-DEMAND NEWS 24 HOURS A DAY, SUBSCRIBE TO "BLOOMBERG NEWS NOW" WHEREVER YOU GET YOUR PODCAST. CAROL AND TIM, THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: SEMICONDUCTOR STOCKS A DRAG ON THE OVERALL U.S. EQUITY TRADE. CHARLIE PUTTING THAT INTO CONTEXT. ALL NAMES ARE DOWN THIS THURSDAY. THE INDEX IS OFF 5%. THIS COMES AS U.S.-LISTED SHARES OF TAIWAN SEMICONDUCTOR MANUFACTURING ARE DOWN AND A DRAG. THE CHIPMAKER RECORDED SECOND-QUARTER RESULTS. THE COMPANY IS SPENDING MORE TO MEET AI-RELATED DEMANDS. YOU HAVE GOT THE PUSH-PULL GOING ON. TIM: WE HAVE ED LUDLOW IN OUR BLOOMBERG NEWS SAN FRANCISCO BUREAU. ANALYSTS BROTHER POSITIVE ON THE REPORT. YOU HAVE GOT TO SPEND TO MEET THIS DEMAND. WHAT IS NOT TO LOVE IN THIS REPORT? ED: THAT IS PROBABLY EXACTLY THE RIGHT WAY TO FRAME IT, THE WORLD'S BIGGEST CHIP MANUFACTURER BEAT ACROSS THE BOARD, RAISED ITS SALES OUTLOOK. EVERYTHING IS AI-DEMAND-SPECIFIC. THE MARKET RIGHT NOW IS RECALCULATING THE SPENDING ENVIRONMENT OVERALL. IT IS KIND OF LIKE A CHAIN EFFECT. IF TSMC IS SAYING WE ARE GOING TO BOOST CAPEX, AND WHAT THEY SAID IS NOT JUST THIS YEAR, BUT BOOST CAPEX MULTIPLE TIMES OVER MULTIPLE YEARS, I THINK THEY SET UP TO THREE YEARS, WHAT'S THE NEXT STEP OF THAT? THEY SEE THE HYPERSCALERS ALSO BOOSTING CAPEX. THE RECIPIENTS OF CAPITAL EXPENDITURES NEEDING TO UP THEIR OWN GAME, AND SO THE MARKET IS BE CAPTIVATING RELATIVE TO VALUATIONS. JUMP IN, CAROL. CAROL: ONE THING I WANT TO ASK YOU -- IT SEEMS LIKE EVERYONE IS WORKING ON THE TIMEFRAME OF LOOKING UNTIL 2030. WHY IS IT? WHY IS IT THAT THREE-YEAR THINK EVERYONE SEEMS TO LAND ON? ED: SUPER GOOD QUESTION. IN SIMPLE TERMS, THE BIT THAT TSMC IS CONFRONTING ON THE DEMAND SIDE IS CAPACITY DEMAND FOR LEADING-EDGE CHIPS FOR AI, LOGIC AND MEMORY. THOSE CHIPS GO INTO DATA CENTERS, THE DATA CENTERS TAKE TIME TO GET BUILT. THERE IS THIS BACKLOG THAT GOES ALL THE WAY THROUGH TO THE END OF THE DECADE, WHICH IS PROJECTS THAT ARE UNDERWAY, PROJECT THAT HAVE BEEN PLANNED BUT NOT YET STARTED, AND IT FACTORS IN FUTURE DEMAND ON INPUTS BASICALLY, WHAT THEY THINK THE COMPUTE DEMAND WILL BE FOR RUNNING AI WORKLOADS, SUCH AS THE INFORMATION THEY HAVE NOW. THE WAY YOU GUYS FRAME THIS IS COMPLETELY FAIR -- THE MARKET IS TAKING A BREATHER. I LOVED -- WHAT DID TIM SAY, IT WAS SO GOOD -- THE STOCKS GIVEN AND TAKE-- GIVETH AND TAKETH AWAY. IT IS SO NORMAL TO SEE A SWING TO THE UPSIDE WITH THE DOWNSIDE. TIM: EVERY DAY IT SEEMS LIKE IT IS THE LEADER OF CAROL'S GAINERR S OR MY DECLINERS. IT IS 5%. SO FAR THIS YEAR IT IS UP TWO THIRDS, 66%. ED: EXACTLY. TIM: WE TALK ABOUT THIS WITH IAN KING ALL THE TIME, CHIPMAKERS ARE THE ONES THAT MOVE DRASTICALLY WHEN IT COMES TO CYCLES SUCH AS THESE. YOU HAVE BEEN IN SILICON VALLEY FOR QUITE A FEW YEARS AT THIS POINT. WHAT ARE FOLKS TELLING YOU WHO LIVED THROUGH THE DOT-COM BOOM AND BUST? AND OTHER TIMES WHEN CHIPMAKERS HAD BEEN THE BELL OF THE BALL -- BELLE OF THE BALL? ED: THE DIFFERENCE IS THE HELP FROM THE BALANCE SHEET PERSPECTIVE OF THE COMPANIES, THE SCALE THEY HAVE NOW. IN THE DOT-COM BUBBLE, THESE ARE FINANCIAL METRICS, BUT FROM A CASH FLOW PERSPECTIVE FOR CASH ON THE DONALD SHEET PERSPECTIVE--BALANCE SHEET PERSPECTIVE, THE WORLD'S BIGGEST TECHNOLOGY COMPANIES, THEY DIDN'T HAVE THE FINANCIAL CLOUT THAT THEY DO NOW. EQUITY MARKETS, THOSE USING EQUITY MARKETS WEREN'T BEING USED IN THE SAME WAY THEY ARE BEING TAPPED NOW. THAT IS THE PRINCIPAL DIFFERENCE. YOU ARE EXACTLY LIKE TO PUT IT IN RELATIVE PERFORMANCE YEAR-TO-DATE AND ZOOM OUT. NVIDIA IS THE EASIEST CASE STUDY OF LOOK AT ITS PERFORMANCE OVER MULTIPLE YEARS. ON DAYS LIKE THIS I DO MY BOWTIE, MY GROWTHE-- GRUFFEST TOM KEENE VOICE AND HEAR HRH ON THE BLOOMBERG TERMINAL. A MOVE WITHIN 5% IS TWO STANDARD DEVIATIONS. AND SO THE VOICE-- DO THE VOICE, IT'S LIKE NORMAL. CAROL: WE ARE TALKING ABOUT TSMC TODAY, BUT IT IS NOT JUST A TMC STORY. THE FOUR BIGGEST U.S. AI OPERATORS, META, ALPHABET, EXPECTED TO SPEND UPWARDS OF $725 BILLION THIS YEAR ALONE. WHAT IS GOING ON RIGHT NOW, THIS MARKET TURN, IS ABOUT WHETHER OR NOT YOU BELIEVE THE AI SPEND IS REAL AND IMPACTFUL AND WILL PAY OFF, OR DO YOU KIND OF DON'T BELIEVE THAT STORY, AT LEAST NOT AT THESE CONSTANTLY GROWING SPEND LEVELS. THAT IS WHERE WE ARE. ED: THE WAY I READ ALL THE SELL SIDE NOTES AND I TALK TO US MARKET PARTICIPANTS AS I CAN, THE CONCLUSION IS YES, EVERYONE IS MORE BULLISH ON AI, BUT BULLISH ON THE IDEA THAT CONFIRMATION SPENDING GETS BIGGER. WE DON'T HAVE ANY CONFIRMATION THAT THE PAYOFF ON THE OTHER SIDE IS THERE. THE LITERAL REVENUE GROWTH DERIVED FROM AI WORKLOADS WHEN YOU STRIP THE HARDWARE STORY OUT. TSMC IS A CHIP MANUFACTURER. IT MAKES CHIPS FOR OTHER COMPANIES. THE MOST ANALOGOUS STORY THIS WEEK IS ASML, WHICH IS A CHIP EQUIPMENT MAKER. TSMC IS THE BIGGEST BUYER OF ASML EQUIPMENT. ASML DID THE SAME THING, RAISE THE SALES OUTLOOK FOR THIS YEAR, BOOSTED WHAT THEY CALLED CAPACITY, BUT THE NUMBER OF CHIPMAKING MACHINES THEY PLAN TO BUILD THIS YEAR, AND SAID THIS IS A MULTIYEAR HORIZON, THEY HAVE A BACKLOG FOR MULTIPLE YEARS. IT IS LINKED IN A CHAIN OF CHRONOLOGICAL ORDER. TSMC BUYS THE MACHINES FROM ASML. TSMC TURNS OUT THE CHIPS, THE CHIPS GO INTO DATA CENTERS. THE THING THAT IS MISSING IS HOW ARE THE SOFTWARE COMPANIES SHOWING US THAT THEY, TOO, ARE SEEING THE SAME BOOM. TIM: HAVE YOU BEEN TO THE TSMC FACILITY IN ARIZONA? ED: I HAVE NOT. I WISH. TIM: SO WHAT IS HAPPENING? WE DON'T HAVE TIME TO GET A COMPLETE ANSWER HERE, BUT THIS IS SUPPOSED TO BE AN ABILITY FOR THE U.S. TO GET SOME OF WHAT TSMC DOES IN TAIWAN HAPPENING IN THE UNITED STATES. STARTED WITH THE BIDEN ADMINISTRATION AND CONTINUE DURING THE TRUMP ADMINISTRATION. WHAT IS THE STATUS OF WHAT TSMC CAN DO HERE VERSUS TIME ON?-- TAIWAN? ED: THE NEWS IS THAT THEY BOOSTED THE COMMITMENT BY $100 BILLION. 250-ISH BILLION OVERALL FOR INVESTMENTS IN AMERICA. WHAT IS $100 BILLION EXTRA GET YOU? IT GETS YOU FOUR FABS. WHAT WE'RE TALKING ABOUT 2030? FABS COST TENS OF BILLIONS OF DOLLARS APIECE AND THEY TAKE A REALLY LONG TIME TO BUILD. AT THE ROOT OF YOUR QUESTION IS ALL TECHNOLOGY QUESTION. AMERICA WANTS TO REINSURE CHIP MANUFACTURING, WANTS TO BRING CHIP LEADERSHIP BACK TO THE COUNTRY. FROM A TECHNOLOGY PROCESS STANDPOINT, IS TSMC A TAIWANESE COMPANY, OR SAMSUNG, A KOREAN COMPANY, GOING TO PUT THE LATEST AND GREATEST PROCESS INTO AMERICAN OR DO IT DOMESTICALLY? THAT IS THE BIG PEOPLE QUESTION. CAROL: I MEAN, GOSH, IT'S A FAIR QUESTION. IF YOU WANT TO PLAY IT SAFE, YOU KEEP IT IN YOUR HOME FRONT, RIGHT? OR I DON'T KNOW. ED LUDLOW, THANK YOU SO MUCH. YOU WILL BE JOINING US IN THE 4:00 HOUR TO TALK ABOUT NETFLIX, A LOT ABOUT NETFLIX, WHICH WILL REPORT EARNINGS. THANK YOU, THANK YOU. HE IS THE HOST OF "UBER TECH," 11:00 A.M.--"BLOOMBERG TECH," 11:00 A.M. MONDAY THROUGH FRIDAY ON BLOOMBERG TELEVISION. AI IS PART OF ALMOST EVERY STORY THAT WE GET TO. FASCINATING STORY, THE MOST READ ON THE BLOOMBERG, BY OUR BUSINESSWEEK TEAM ABOUT HOW THE REALITY OF AI AND ITS IMPACT, AI RECKONING, YOU MIGHT SAY, HAS ARRIVED FOR SOFTWARE ENGINEERS. "BLOOMBERG BUSINESSWEEK " DEPUTY EDITOR JOINING TIM AND ME IN STUDIO. FIRST OF ALL, GREAT STORY, LOVED IT, CAUGHT OUR ATTENTION THIS MORNING ON OUR READ IN. WE TALK ABOUT ROI AND PRODUCTIVITY GAINS. CODERS, SOFTWARE ENGINEERS ARE FEELING THE IMPACT OF WHAT AI CAN DO FOR THE WORLD. MAYBE THERE IS AN UPSIDE, MAYBE THERE IS A DOWNSIDE. WALK US THROUGH WHAT IS GOING ON. >> I USED TO LIVE IN SAN FRANCISCO, I COVERED THE TECH INDUSTRY FOR MORE THAN 15 YEARS. I AM LIVING HERE NOW AND WORKING AT "BUSINESSWEEK." BUT I'VE BEEN HEARING FROM SOURCES AND OLD FRIENDS OUT THERE THAT THIS IS THE BIGGEST THING THAT HAS HAPPENED IN THEIR INDUSTRY IN 20 YEARS. I FELT LIKE I HAD TO GO OUT THERE AND SEE AND REALLY UNDERSTAND WHAT WAS GOING ON, BECAUSE YOU HEAR A LOT OF TUMORS TALKING ABOUT HOW AI IS GOING TO TAKE -- A LOT OF DOOMERS TALKING ABOUT HOW AI IS GOING TO TAKE ALL THE JOBS. THEY ARE SAYING THAT BECAUSE IT IS AT LEAST DRASTICALLY CHANGING THEIR JOBS. I WENT INTO ANTHROPIC AND OPENAI AND SPEND TIME AT THE LABS AND MET WITH PEOPLE WHO HAVE BEEN DOING THIS THEIR WHOLE ADULT LIVES, LEARNING TO CODE, CODING. THEY ARE NOT WRITING CODE ANYMORE, THEY'RE HAVING CONVERSATIONS WITH CLAUDE. TIM: MAYBE THEY ARE VIBE CODING, OR SOMETHING DIFFERENT? THERE IS NOT NECESSARILY A NAME FOR THIS FULL MARK: THEY LOOK AT IT AS A DEROGATORY TERM. TIM: FOR FOLKS LIKE ME WHO DON'T KNOW HOW TO CODE. MARK: EXACTLY. MOST OF THEM CALL IT CODING EVEN THOUGH THEY ARE NOT WRITING THE CODE TO THEMSELVES. IT IS BASICALLY TELLING IT WHAT YOU WOULD'VE SPENT THE NEXT SIX HOURS DOING. HERE IS HOW I WANT TO THE APP TO BE STRUCTURED. TIM: WHAT DO THEY SPENT SIX HOURS DOING NOW? MARK: THEY SPENT SIX HOURS BUILDING 10 DIFFERENT FUTURES FOR THE KILLER--FEATURES FOR THEIR APPS. THEY OPENWINDOWS -- YOU WORK ON THIS, YOU WORK ON THIS. IT IS LIKE A PROJECT MANAGER, FOR THOSE PEOPLE DON'T HAVE PEOPLE WHO ARE GOING TO PRODUCE THINGS WITHIN 10 MINUTES THAT WOULD TAKE A PERSON A COUPLE DAYS. CAROL: TELL US ABOUT BORIS OUT IN SAN FRANCISCO WHO CREATED THE SOFTWARE CLAUDE CODE, RUNS IT AT ANTHROPIC. YOU SAID THAT AT ANTHROPIC, THE EXPECTATION THAT EVERYBODY IS A LITTLE BIT OF A CODER IS ENDEMIC AND THAT MINDSET IS BEGINNING TO AFFECT THE TECH INDUSTRY. MARK: I SPENT A BUNCH OF TIME WITH BORIS. HE IS A REALLY INTERESTING GUY PEARCE HE IS LIKE A COD-- INTERESTING GUY. HE IS LIKE A CODER'S CODER. PEOPLE FOLLOW HIM AND HIS X POSTS TO FIGURE OUT HOW MY JOB IS GOING TO CHANGE TOMORROW. ANTHROPIC IS RELEASING STUFF ALMOST EVERY SINGLE DAY. HE HAS A LONG BACKGROUND IN THE INDUSTRY. HE WAS THE LEADER OF CODE QUALITY AT META. HE SET THE STANDARDS FOR HOW META DEVELOPED FACEBOOK AND INSTAGRAM AND WORKED ON THE SERVER ARCHITECTURE AT INSTAGRAM. HE'S ARTICULATED WHAT THIS NEW WORLD LOOKS LIKE AND IT IS CHANGING EVEN FOR HIM EVERY WEEK. INSTEAD OF ASHLEY TELLING IT WHAT TO DO, NOW HE'D--ACTUALLY TELLING IT WHAT TO DO, NOW HE CREATES THIS BROAD FRAMEWORK FOR AI AND SPENDS THE NEXT SEVERAL DAYS WORKING ON THIS CHALLENGE. TIM: WHAT DOES THIS MEAN FOR WHAT WE HAVE SEEN WITH TALENT PIPELINE IN SILICON VALLEY THE LAST 20 OR 30 YEARS? I WAS SPEAKING WITH A BLOOMBERG INTERN. WE HAVE A GREAT CLASS OF INTERNS HERE. HE IS NOT ON THE MEDIA SIDE. I ASKED WHAT HE WAS STUDYING AND HE SAID "I NOW STUDY CYBERSECURITY, BUT I SPENT MY FIRST YEAR MAJORING IN COMPUTER SCIENCE AND PROGRAMMING." HE SAW THE WRITING ON THE WALL, HE DECIDED TO SWITCH AS MAJOR AS A RESULT. MARK: >> YES, IT’S BEEN A SEA CHANGE, ESPECIAL IN ENTRY-LEVEL JOBS IN THIS INDUSTRY. IT’S STILL SO NEW SO IT’S HARD TO KNOW HOW IT’S GOING TO SHAKE OUT. OPTIMISTS WILL SAY THERE’S MORE DEMAND THAN EVER FOR PEOPLE IN SOFTWARE AND PEOPLE WHO UNDERSTAND HOW SOFTWARE FITS TOGETHER. I TALKED TO SOMEBODY AT CARNEGIE MELLON, WHO’S WORKING ON HELPING RESTRUCTURE THEIR COMPUTER SCIENCE PROGRAM. BUT THE EARLY SIGNS HAVE NOT BEEN GREAT. SO SINCE CHATGPT CAME OUT IN 2022, CODING JOBS FOR PEOPLE IN THEIR 20’S IS DOWN 20%. IT’S A LOT OF THE -- FIRST IN, FIRST OUT AT THE BIG COMPANIES. THEY’RE DOING MASS LAYOFFS. SOME OF THEM ARE BLAMING A.I. WHEN IT’S REALLY NOT A.I.’S FAULT, AND THEY MAYBE OVERHIRED DURING COVID AND ARE TRYING TO CORRECT THAT. BUT FOR A LOT OF COMPANIES, THEY’RE TRUE BELIEVERS THAT THIS IS A NEW WAY OF WORKING. CAROL: METRIC PRODUCTIVITY, R.O.I., IS TRICKY, EVEN AMONG THESE FOLKS WHO MAYBE ARE FINDING THEY CAN BASICALLY USE A.I. AND TALK TO IT AND SAY GO FOR FIVE OR SIX HOURS AND DO SOMETHING, AND THEN MAYBE YOU DO ANOTHER ONE SOMEWHERE ELSE. BUT IT’S STILL TRICKY. >> IT’S TRUE. EVERYTHING BASED ON MY REPORTING LEADS ME TO BELIEVE THAT THIS DRAMATICALLY INCREASES PRODUCTIVITY FOR A SOFTWARE ENGINEER. BUT FINDING ACTUAL DATA TO SUPPORT THAT HAS BEEN VERY DIFFICULT. THERE’S ONE STUDY THAT WAS HIGHLY RESPECTED THAT TOOK PLACE EARLY LAST YEAR, BEFORE A.I. CODING WAS REALLY A COMMON THING AND THE MODELS WEREN’T AS GOOD. AND THEY FOUND THAT, WELL, PEOPLE THOUGHT THEY WERE MORE PRODUCTIVE, BUT THEY’RE NOT ACTUALLY MORE PRODUCTIVE. BUT THERE WAS A MOMENT IN TIME LAST NOVEMBER WHEN CLAUDE RELEASED A NEW MODEL THAT REALLY WAS CAPABLE OF REPLACING PARTS OF PEOPLE’S JOBS, AND CHATGPT FOLLOWED WITH A SIMILAR MODEL. THEY COULDN’T RUN THE EXPERIMENT AGAIN, BECAUSE ALL THE SOFTWARE, MOST OF THE SOFTWARE ENGINEERS SAID WE DON’T WANT TO HAND CODE ANYMORE. WE’VE GOT A BETTER WAY. WE’RE NOT GOING TO WASTE OUR TIME FOR YOUR EXPERIMENT. TIM: WHAT’S THE THING NOW YOU SAW IN SILICON VALLEY THAT PEOPLE ARE HAVING TO DO THAT MAYBE A YEAR FROM NOW CLAUDE WILL BE ABLE TO DO? >> YOU KNOW, THERE’S SOME EXAMPLES OF PEOPLE WHO WERE CODING ON VERY OUTDATED HARDWARE THAT HAD SEVERE LIMITATIONS THAT CLAUDE, WHICH IS TRAINED ON INCREDIBLE AMOUNTS OF CODE BASES TO UNDERSTAND THE BEST PRACTICES, THEY’RE VERY NICHE TYPES OF ELECTRONICS THAT REQUIRE A HUMAN TOUCH. BUT FOR THE MOST PART, THOSE PEOPLE, THEY WOULD USE CLAUDE, THEY WOULD FIND ERRORS, FIX THE ERRORS THEMSELF, BUT THEY’RE STILL USING CLAUDE. CAROL: IT’S ALMOST SHOCKING HOW QUICKLY WE ARE HERE. I KNOW WE’VE BEEN TALKING ABOUT IT THREE YEARS, BUT IT DOES STILL FEEL PRETTY SHOCKING. SORRY. MARK, THANK YOU. GREAT STORY. OUR DEPUTY EDITOR. CHECK OUT THE STORY ON THE TERMINAL. COMING UP, THE LATEST ON THE IRAN-U.S. HOSTILITIES. CHARLIE: IT IS 2:20 ON WALL STREET. WE CHECK MARKETS ALL DAY LONG HERE AT BLOOMBERG. WE’VE GOT A CHIPMAKER ROUT UNDERWAY AGAIN. LOTS OF CONCERNS ABOUT A.I. SPENDING AND STOCKS ARE SELLING OFF. LET’S BEGIN WITH TECH, SPECIFICALLY SEMIS, BECAUSE THE SOX IS NOW DOWN 4.2%. THAT IS THE PHILADELPHIA STOCK EXCHANGE’S SEMICONDUCTOR INDEX. 30 MEMBERS, ALL 30 ARE LOWER RIGHT NOW. BOTTOM LINE, TECHS DECLINING. NASDAQ DOWN 1.1%. THE NASDAQ 100 INDEX DOWN 1.6%. AGAIN, THE SOX BEARS REPEATING, DOWN BY 4.2%. S&P PUTTING IT ALL IN CONTEXT, DOWN 31, A DROP OF .4%. THE DOW NOW LOWER BY .2%. NASDAQ COMPOSITE INDEX DOWN 1.1%. OUR MAG 7 INDEX ALSO LOWER AS WELL, DOWN .7%, WITH A 10-YEAR AT 4.56%, AND THE TWO-YEAR CURRENTLY YIELDING 4.15%. GOLD AT $39.90 AN OUNCE. SPOT GOLD DOWN 1.7%. WEST TEXAS INTERMEDIATE CRUDE DECLINING TO $78.78 A BARREL. BRENT, LOWER BY 1%. SPACEX WILL ATTEMPT A MAJOR TEST FLIGHT OF ITS MASSIVE STAR SHIP ROCKET TONIGHT, A MILESTONE FOR A VEHICLE THAT IS A CRITICAL PART OF ELON MUSK’S PLANS FOR THE SPACE, SATELLITE, AND A.I. CON GLOM LATE. LIFTOFF TARGETED FOR 6:45 P.M. WALL STREET TIME FROM SPACEX’S STAR BASE FACILITY IN SOUTH TEXAS. WE’LL HAVE IT FOR YOU LIVE ON BLOOMBERG. ROUND ONE OF THE OPEN CHAMPIONSHIP UNDERWAY AT ROYAL BIRKDALE GOLF CLUB IN SOUTHPORT, ENGLAND. RIGHT NOW AT LAST CHECK, JASON SUBER SITTING ATOP THE LEADERBOARD AT FIVE UNDER PAR. FOR ON-DEMAND NEWS, SUBSCRIBES TO BLOOMBERG NEWS NOW WHEREVER YOU GET YOUR PODCAST. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: CHARLIE PELLETT KEEPING YOU UP TO DATE ON THE TRADE. AGAIN, STOCKS OVERALL SELLING OFF SEMICONDUCTORS IN PARTICULAR UNDER A LOT OF PRESSURE. ALL RIGHT, WE ALSO CONTINUE TO KEEP AN EYE ON WHAT’S GOING ON IN THE MIDDLE EAST. THE WAR BETWEEN THE U.S. AND IRAN CONTINUING. THE U.S. INTENSIFYING STRIKES OVERNIGHT, HITTING AN OIL TANKER NEAR THE MAIN EXPORT TERMINAL AS SHIPPING TRAFFIC SLUMPED THROUGH THE STRAIT OF HORMUZ. IRAN RESPONDED BY FIRING AT AMERICAN BASES IN KUWAIT AND JORDAN, AND TEHRAN SEEMS IN NO MOOD TO BACK DOWN IN THE FACE OF PRESIDENT TRUMP’S WARNING THAT HE WILL ESCALATE STRIKES. TIM: WE HEAD TO THE BLOOMBERG NEWS WASHINGTON, D.C. BUREAU AND TO OUR NATIONAL SECURITY REPORTER, WHO JOINS US FROM THERE. NICK, WE AS A NATION A LOT OF PEOPLE HAVE, CAROL WAS ASKING THIS EARLIER, ARE WE LESS SECURE OR MORE SECURE THE LONGER THIS WAR BETWEEN THE U.S. AND IRAN GOES ON? NICK: ARE WE LESS SECURE? YOU KNOW, I THINK THE BIG QUESTION THAT YOU HAVE TO LOOK AT THIS FROM A FEW ANGLES. ONE IS U.S. BASES IN THE REGION AND U.S. ALLIES, SO THEIR WILLINGNESS TO SORT OF PARTNER WITH THE UNITED STATES IN THE LONG TERM, BIG QUESTION THERE. THEY ARE OBVIOUSLY GETTING A LOT MORE ANXIOUS GIVEN THAT IRAN’S WAY OF RESPONDING HAS BEEN TO ATTACK U.S. ALLIES, AS WELL AS U.S. BASES. SO SERVICE MEMBERS IN THE REGION, CERTAINLY LESS SECURE. I WOULD SAY THAT HASN’T BLED OVER INTO THE UNITED STATES ITSELF, THOUGH OBVIOUSLY THERE ARE ASSASSINATION PLOTS AGAINST THE PRESIDENT WHERE THEY’VE ACCUSED IRAN OF TRYING TO DO THAT. SO THAT IS A BIG CONCERN. ECONOMICALLY, I THINK VERY MUCH AN OPEN QUESTION AND A MUCH MORE DIFFICULT ONE, OIL GOING BACK UP. THE PRESIDENT HAD SAID, WHEN HE SIGNED THAT CEASE-FIRE, LISTEN, WE WANTED TO AVOID ECONOMIC CATASTROPHE. THEY’RE LOOKING TO RAMP UP STRIKES AGAIN, AND YOU CAN BET THAT THAT WILL HAVE REAL AFTER SHOCKS FOR THE ECONOMY, AND IT WILL HIT PEOPLE’S POCKET BOOKS BACK HOME. CAROL: SPEAKING OF SUCH, THE U.S. FORCES BEGAN CONDUCTING A NEW WAVE OF STRIKES ON IRAN, SO IT CONTINUES. AND IT GOES ON AND ON. YOU KNOW, ONE OF THE THINGS THAT WE’VE BEEN TALKING ABOUT AS A TEAM IS MILITARY STOCKPILES. WHERE ARE WE? YOU’VE GOT THE UKRAINE WAR WITH RUSSIA, WHATEVER THE U.S. HAS BEEN PROVIDING THERE, OBVIOUSLY IT’S EFFORT, ACTIONS IN THE WAR WITH IRAN. WHERE ARE WE? JUST YESTERDAY PRESIDENT TRUMP WAS TALKING ABOUT CALLING MILITARY CONTRACTORS TO SPEED UP PRODUCTION. A LOT OF THEM WERE AT THIS EVENT IN PENNSYLVANIA WITH HIM. NICK: RIGHT. WELL, THERE ARE SO MANY ISSUES THERE, BUT CERTAINLY THE INFORMATION WE HAVE HERE, I MEAN, THE ADMINISTRATION IS NOT DISCLOSING THE EXTENT OF ITS STOCK PILES FOR SOME OF ITS MORE ADVANCED WEAPONS SYSTEMS, BUT CERTAINLY WHEN YOU FIRE A LOT OF CRUISE MISSILES AND BOMBS AT IRAN, THAT MEANS YOU CAN’T USE THOSE WEAPONS OR STOCKPILE THOSE WEAPONS IF CONFLICTS SHOULD ARISE ELSEWHERE. WE’VE SEEN THAT STRAIN, ESPECIALLY ON THE BALLISTIC MISSILES, ON PATRIOT MISSILES, AND THINGS LIKE THAT, WHICH COST MILLIONS OF DOLLARS, AND TAKE YEARS TO PRODUCE. AND THEN WE’VE ALSO SEEN ON THE FLIP SIDE THE U.S. HAS REALLY STRUGGLED TO RAMP UP PRODUCTION OF CERTAIN OTHER MUNITIONS, SUCH AS 155-MILLIMETER SHELLS FOR ARTILLERY THAT WAS SO DESPERATELY NEEDED IN UKRAINE. OBVIOUSLY THAT’S NOT AN ISSUE FOR PRESIDENT TRUMP, BECAUSE HE’S NOT SUPPLYING THOSE WEAPONS AS MUCH AS JOE BIDEN WAS. BUT YOU DO SEE THIS ISSUE ACROSS THE DEFENSE SECTOR, WHICH IS WHY IT’S SO IMPORTANT TO THE PRESIDENT. DEFENSE COMPANIES ARE NOT ABLE TO RAMP UP AS QUICKLY AS HE WANTS, AND THAT’S ALSO PUSHED A REAL QUESTION FOR OTHER COUNTRIES THAT WANT TO BUY THOSE THINGS FROM THE UNITED STATES. THE WAIT LIST SOMETIMES GOES FOR YEARS. TIM: WE COVERED THIS YESTERDAY, AND I WANT TO GET YOUR TAKE ON THIS. "THE WALL STREET JOURNAL" WITH REPORTING YESTERDAY THAT SAID THAT THE PRESIDENT IS LEANING TOWARD EXPANDING U.S. MILITARY OPERATIONS IN IRAN, HOSTING A SITUATION ROOM MEETING ON TUESDAY TO DISCUSS THE SEIZURE OF KHARG ISLAND. QUESTIONS ABOUT THE ACTUAL PRESENCE OF TROOPS IN THE AREA AS WELL. WHAT IT IS YOUR REPORTING TELLING YOU ABOUT THE WAY THAT THIS COULD ESCALATE? NICK: I MEAN, CERTAINLY THE BIG QUESTION, WHAT YOU SAW FROM THE OVERNIGHT STRIKES WAS ITSELF AN ESCALATION, IF THEY’RE HITTING AN OIL TANKER, THAT DOES SUGGEST THAT THE ADMINISTRATION IS WILLING TO GET A LITTLE CLOSER TO THAT LINE OF REALLY GOING AFTER CIVILIAN AND ENERGY INFRASTRUCTURE RATHER THAN JUST MILITARY INFRASTRUCTURE. THAT’S SOMETHING THAT THE PRESIDENT HAS NOT REALLY BEEN WILLING TO DO IN AN EXTENSIVE WAY. AND IF THEY START DOING THAT, THAT COULD OPEN UP A LOT OF THORNY LEGAL QUESTIONS. BUT THEN OBVIOUSLY THERE’S THE BIGGER RISK. IF HE DECIDES TO COMMIT TROOPS TO THE GROUND, I MEAN, THAT EXTENDS THE TIME HORIZON MUCH MORE FOR THE CONFLICT. OBVIOUSLY IT PUTS U.S. TROOPS IN MUCH GREATER DANGER. THE BLOWBACK COULD BE MUCH MORE SEVERE. I MEAN, THERE’S A REASON WHY PRESIDENTS HAVE WANTED TO RELY ON AIR POWER FOR SO LONG, BECAUSE THOUGH IT’S EXPENSIVE, IT’S CONSIDERED A MUCH LESS DANGEROUS WAY TO DO THE CONFLICT. AS IRAN IS SHOWING, THEY’VE BEEN ABLE TO HOLD OUT AGAINST THAT. SO THE PRESIDENT REALLY WANTS THIS THING TO END, BUT HE DOESN’T SEEM TO BE ABLE TO ACHIEVE A STRATEGIC ENDS THROUGH BOMBING ALONE, SO THAT THEN RAISES THAT QUESTION OF A MORE SERIOUS COMMITMENT, EITHER GOING AFTER INFRASTRUCTURE PROVIDING TROOPS. BUT, YOU KNOW, A HUGE POLITICAL ISSUE FOR THE PRESIDENT, AS WELL AS THE LIVELIHOOD, LEVELS OF HIS TROOPS, BECAUSE THIS IS -- LIVES OF HIS TROOPS, BECAUSE THIS IS SOMETHING HE CAMPAIGNED AGAINST, NO NEW WARS, AND THIS ONE HAS BEEN GOING ON FOR SEVERAL MONTHS, AND INDICATIONS SUGGEST HE MAY BE THINKING OF DEEPENING THE U.S. INVOLVEMENT JUST BEFORE THE MIDTERMS. THAT’S GOING TO HAVE BLOWBACK. CAROL: -- IRAN'S LEAD NEGOTIATOR DEFENDING DIPLOMATIC EFFORTS TO END THE WAR, PUSHING BACK AGAINST HARDLINERS, URGING THEM TO ABANDON A TENTATIVE PEACE DEAL IN THE COUNTRY'S SLAIN SUPREME LEADER. WE KEEP THINKING ABOUT WHAT IS GOING ON INSIDE IRAN. WHAT DO WE KNOW ABOUT THE TENSIONS AND BATTLES WITHIN IRAN AND HOW THAT COMPLICATES BRINGING THE WAR TO AN END? >> THOSE REMARKS CLEARLY SHOW THERE ARE DEEP DIVISIONS WITHIN IRAN, JUST LIKE THERE ARE ANYWHERE ELSE, INCLUDING IN THE UNITED STATES, WHERE YOU HAVE MEMBERS OF CONGRESS, MEMBERS OF THE ADMINISTRATION, MEMBERS OF THE OPPOSITION WHICH HAVE A VOICE AND CAN SLOW DOWN OR SPEED UP THAT PROCESS. WE HAVE SEEN IRAN, THE POLITICAL LEADERSHIP, THE IRGC, THE SUPREME LEADER, ALL OF WHOM HAVE DEEP INTERESTS IN THE OUTCOME OF THIS THING. BUT WE SEE A FASCINATING ELEMENT, DESPITE THE WAR, THERE ARE TWO VERY POWERFUL AND CLEAR FACTIONS IN THE U.S. AND IN IRAN THAT WANT TO SEE THIS THING AND. AND THEY ARE LOOKING FOR AN OFFRAMP. THE QUESTION IS WHETHER THEY HAVE THE POWER TO PUSH THAT POLICY THROUGH AMID ALL THE VOICES THAT DON'T WANT THAT. AND OBVIOUSLY, THE ISSUE OF HOW THE U.S. AND IRAN EITHER READ OR MISREAD EACH OTHER'S INTENTIONS OR ACTIONS. IT IS A PSALTER OF COMPETING INTERESTS AND POWER CENTERS ON BOTH SIDES NOT EVEN LOOKING AT THE DYNAMIC WHEN THE U.S. AND IRAN GET IN THE ROOM WITH EACH OTHER. TIM: I'M GLAD YOU MENTIONED THE POLITICS OF THIS. I WANT TO COMMENT ON THE NUCLEAR ISSUE AND THE MANY MONTHS IT TOOK OVER A DECADE AGO FOR THE JCPOA TO RENEGOTIATE. WHAT IS THE U.S. STRATEGY AROUND -- THE NUCLEAR ENRICHMENT PROGRAM IN IRAN RIGHT NOW, IT SEEMS LIKE SOMETIMES WE HEAR FROM THE PRESIDENT ABOUT PHYSICALLY GOING AND GETTING WHAT HE CALLS THE DUST VERSUS BOMBING FACILITIES THAT INTELLIGENCE AND IN SOME CASES REPORTING SAYS WHERE THEY COULD BE WORKING ON THIS STUFF. WHAT IS THE STRATEGY WITH THAT PART OF THE MISSION? >> THIS IS A GREAT QUESTION. THE ADMINISTRATION MAY HAVE A STRATEGY, THEY HAVE BEEN INCONSISTENT IN COMMUNICATING THAT STRATEGY. THE PRESIDENT WHEN HE ANNOUNCED THE CEASE-FIRE A FEW WEEKS AGO SAID MAYBE IRAN SHOULD HAVE THE RIGHT TO ENRICH, OTHER COUNTRIES ARE ALLOWED TO ENRICH, NUCLEAR CIVILIAN NUCLEAR PROGRAMS. WOULD IT BE FAIR FOR IRAN NOT TO GET THAT? IT GOES AGAINST HIS OWN PROGRAMMING HE HAD BEEN SETTING FOR YEARS, AND A LOT OF HIS ADVISERS HAVE BEEN SAYING IRAN SHOULD NOT HAVE THE RIGHT TO ENRICH URANIUM AT ALL. THE ISSUE WITH THE JCPOA, THAT TOOK YEARS TO NEGOTIATE. THE OBAMA ADMINISTRATION GAVE VERY DETAILED EXPLANATIONS OF WHAT IT WAS SEEKING TO ACHIEVE. ALLOWING IRAN TO ENRICH AT A LOW LEVEL FOR A SET TIME, THEN THEY WOULD ADDRESS IT ONCE THE TERMS OF THE DEAL RAN OUT. THIS ADMINISTRATION HAS NOT GIVEN US NEARLY DETAILED A ROAD MAP. WHAT THEY SEEM TO TOGGLE BETWEEN IS AN ACKNOWLEDGMENT THAT WE ARE PROBABLY GOING TO HAVE TO GIVE THEM THE RIGHT TO ENRICH, AT LEAST AT A LOW LEVEL, SIMILAR TO WHAT THE JCPOA DATA, THEN WE CAN FIGURE OUT THE REST LATER WHILE INSISTING THEY DON'T HAVE A NUCLEAR BOMB. >> WHERE IS ISRAEL ON ALL OF THIS? WE GIVE YOU ALL OF THE EASY SITUATIONS, AS YOU KNOW, TO MAKE SENSE OF. WE KNOW BENJAMIN NETANYAHU IS GOING TO BE IN TOWN AND SPEND SOME TIME WITH THE PRESIDENT. BUT I'M CURIOUS WHERE THEY FIT INTO ALL OF THIS? >> IT IS A GREAT QUESTION BECAUSE YOU ARE TALKING ABOUT THE POLITICAL CENTERS IN THE UNITED STATES AND THE FACTIONS HERE AND IN IRAN, AND THE ISSUE OF ISRAEL, WITH PRIME MINISTER NETANYAHU ACTING INDEPENDENTLY, AND IN SOME WAYS, AN ALLY OF THE PRESIDENT ACTING AS A SPOILER FOR THE PRESIDENT'S PLANS. CONTINUING THE WAR IN LEBANON AND MAINTAINING ITS OWN COVERT CAMPAIGN THEY HAVE BEEN DOING FOR YEARS TO ELIMINATE IRANIAN NUCLEAR SCIENTISTS AND ESSENTIALLY CONDUCT THEIR OWN CAMPAIGN AGAINST IRAN. THAT HAS BEEN ENORMOUSLY COMPLICATING FOR PRESIDENT TRUMP BECAUSE WE HAVE SEEN REPEATEDLY EVEN WHEN THE U.S. COMMITS TO A CEASE-FIRE WITH IRAN, IT IS NOT ABLE TO STOP ISRAEL FROM ATTACKING LEBANON IN PARTICULAR, THOUGH IRAN CONSIDER STOPPING LEBANON, THAT FIGHTING TO BE PART OF THE CEASE-FIRE. IT IS VERY COMPLICATED AND DIFFICULT FOR THE PRESIDENT TO CONTROL PRIME MINISTER NETANYAHU. HE WANTS THE IRANIAN REGIME ESSENTIALLY, THEIR NUCLEAR PROGRAM COMPLETELY ELIMINATED, WORKING SOMETIMES AT COUNTER PURPOSES TO PRESIDENT TRUMP. >> PRIME MINISTER NETANYAHU IS NOT COMING TO THE U.S. NEXT WEEK. BUT THIS IS AS LINDSEY GRAHAM'S FUNERAL SERVICE HAS BEEN PUSHED OFF, POSTPONED A LITTLE BIT. I'M SHOCKED, I THINK FOLKS ARE SHOCKED THAT WE ARE STILL TALKING ABOUT THIS. I THINK THE ASSUMPTION WAS IT WOULD BE DONE EARLIER. ANYONE WHO UNDERSTOOD IRAN IN THE MIDDLE EAST WOULD HAVE SAID DIFFERENTLY WHEN THIS HAPPEN. WHERE DO WE GO FROM HERE? MARKETS SOMETIMES LOOK THROUGH IT, MARKET SOMETIMES DON'T LOOK THROUGH IT. I GUESS WE ARE GOING TO HAVE TO WAIT AND SEE. IS THERE A TIME, AT SOME POINT DO YOU EXPECT THE PRESIDENT TO TALK ABOUT IT IN HIS SPEECH? WE HEAR IT MAY BE ABOUT ELECTIONS. >> IT SEEMS LIKELY HE WOULD ADDRESS IT IN SOME WAY, BUT THE PRESIDENT FACES A BIG CHOICE BECAUSE WHAT IRAN HAS SHOWN IS WITH RELATIVELY FEW RESOURCES, DESPITE THE INTENSE U.S. BOMBING CAMPAIGN, IT CAN LOCK UP THE STRAIT OF HORMUZ AND KEEP SHIPS FROM GOING THROUGH IT. IT DOESN'T NEED A LOT OF RESOURCES TO DO THAT BECAUSE SHIPPERS WILL MAKE THE DECISION WHETHER THEY WANT TO RISK IT. RIGHT NOW THEY ARE SHOWING THEY DON'T WANT TO RISK IT. THAT IS SOMETHING THE PRESIDENT DOESN'T HAVE A LOT OF CONTROL OVER. IN A WAY HE'S STUCK IN A BIND, HE WANTED TO END, BUT IF THE ONLY WAY TO GET IT TO END WOULD BE TO COUNTER INTO REALLY RAMP UP THE MILITARY CAMPAIGN TO A DEGREE THAT HE DOES NOT WANT TO DO. IT IS A REAL BIND. I DON'T SEE HOW THIS ENDS ANYTIME SOON, ESPECIALLY GIVEN THE COMPLETE LACK OF TRUST BETWEEN THE TWO SIDES. IT FEELS LIKE WE ARE GOING TO BE IN THIS CYCLE WHERE THE PRESIDENT PROMISES A CEASE-FIRE, MAYBE WE GET A CEASE-FIRE, AND WE RETURN TO CONFLICT, THAT IT WILL HAPPEN IN MANY MORE CYCLES OR REPEATS OF THAT CYCLE TO COME. >> IT DOES FEEL THAT WAY. WE APPRECIATE EVERYTHING YOU DO. NICK WADHAMS, BLOOMBERG NEWS NATIONAL SECURITY REPORTER IN OUR WASHINGTON DC BUREAU. >> WE HEADED BACK TO THE ASPEN SECURITY FORUM, WHERE WE FIND DAVID GURA, HE ALSO IS THE COHOST OF THE BIG TAKE PODCAST. SITTING DOWN WITH SENATOR CHRIS MURPHY, DEMOCRAT OF CONNECTICUT. >> WE GOT WORD A FEW MINUTES AGO THE U.S. WAS STRIKING IRAN, I WOULD LIKE TO START THERE. THE SITUATION WE FIND OURSELVES IN, THE PRESIDENT'S POLICY TOWARD THE REGION, YOUR THINKING ON WHERE WE ARE AND WHERE THINGS ARE HEADED. >> WE STARTED ABOUT A WEEK AGO, THE WAR SHOWS NO SIGNS OF ENDING. THIS IS THE MOST SIGNIFICANT FOREIGN POLICY DISASTER IN THE LAST 20 YEARS, IRAN EFFECTIVELY HAS CONTROL OF THE STRAIT OF HORMUZ, THEY WILL HAVE CONTROL FOR THE LONG RUN. AS A PRICE OF OPENING IT, THEY WANT THE SANCTIONS RELEASED, WHICH WILL PUT NEW MONEY INTO THE ECONOMY BUT ALLOW THEM TO SEND MONEY OUT TO THEIR PROXY GROUPS IN THE REGION. THIS WAR SHOULD HAVE NEVER STARTED, IT IS HARD TO FIGURE OUT WHAT TO DO BECAUSE IT IS LIKE ASKING SOMEBODY NOW THAT THE EGG IS SPLATTERED ALL OVER THE FLOOR HOW YOU PUT IT BACK TOGETHER. IT SEEMS AS IF THE U.S. IS GOING TO HAVE TO PAY THAT BILLIONS OF DOLLARS TO IRAN SANCTIONS RELIEF AND WE WILL HAVE TO PREVAIL UPON THE ISRAELIS TO PERMANENTLY STOP THE WAR WITH LEBANON. IF THOSE THINGS HAPPEN, MAYBE WE CAN GET IT REOPENED. I HAVE NO CONFIDENCE ULTIMATELY THERE WILL BE ANY BIGGER DEAL BETWEEN THE U.S. AND IRAN. I DON'T THINK THEY WILL MAKE COMMITMENTS ON THE NUCLEAR PROGRAM. I GUESS THE BEST WE CAN ASK FOR IS TO STOP THE SHOOTING, GET THE STRAIT OF HORMUZ REOPENED, AND WE ARE STILL SEEMINGLY FAR AWAY FROM THAT. >> AS WE LOOK AT HUMPTY DUMPTY ON THE FLOOR, DOES THE ADMINISTRATION GET THAT? ARE THEY CONFIDENT THEY CAN STARE DOWN IRAN AND FIND A SOLUTION? >> I THINK WE CAN OVERHYPED THE DEGREE THAT PLAIN OLD INCOMPETENCE PLAYS IN THIS STORY. THE TRUMP ADMINISTRATION DOESN'T KNOW WHAT IT IS DOING. ITS PRIMARY DIPLOMATS WITH IRAN ARE THE PRESIDENT'S SON-IN-LAW AND A GUY WHO IS A REAL ESTATE DEVELOPER. IT IS NOT SURPRISING THEY ARE FAILING. THEY EITHER HAVE TO PUT ACTUAL ADULTS LIKE EXPERIENCED DIPLOMATS IN CHARGE, OR THEY HAVE TO STEP OUT OF THE WAY AND ASK EUROPEAN FRIENDS TO COME IN TO TRY AND SEAL AN ULTIMATE DEAL ON REOPENING THE STRAIT OF HORMUZ. I HAVE VERY LITTLE CONFIDENCE THIS CROWD IN CHARGE OF OUR NATIONAL SECURITY WILL BE ABLE TO GET ANYTHING DONE. >> YOUR COLLEAGUES ON THE OTHERS OF THE AISLE, MANY EXPRESSING RESERVATIONS ABOUT THIS. DO YOU DETECT A REAL CHANGE IN THEIR POSITION? >> THIS IS A DEEPLY UNPOPULAR WAR, THE AMERICAN PEOPLE WANT IT TO END. THEY ARE PAYING THE PRICE. NOT JUST IN HIGHER GAS PRICES AND DIESEL PRICES AND FERTILIZER, BUT ALSO IN THE COST OF THE BUDGET. THIS IS $100 BILLION TO 200 BILLION DOLLARS. WHAT WILL HAPPEN IS REPUBLICANS WILL CUT FUNDING FOR SCHOOLS, FOR TRANSPORTATION, NUTRITION IN ORDER TO PAY FOR THE WAR. PART OF THE REASON THE AMERICAN PUBLIC DON'T WANT IT. CLOSER TO THE ELECTION, IT BECOMES AN ISSUE THEY WILL HAVE TO DEAL WITH BECAUSE IT WILL BE AN ISSUE WHERE VOTERS ARE GOING TO SAY ARE YOU FOR THE WAR OR AGAINST IT, AND IT WILL MATTER IN THEIR CHOICES. I EXPECT YOU WILL GET MORE REPUBLICANS SAYING TIME TO END THE WAR FOR THE FIRST TIME EVER. WE PASSED A RESOLUTION IN THE SENATE TO END THE WAR. IT ULTIMATELY WAS STYMIED BY SOME PROCEDURE MOVES, BUT THERE IS EVIDENCE REPUBLICANS ARE STARTING TO WAKE UP. >> YOU MENTIONED ISRAEL, THAT MEMO OF UNDERSTANDING IS NOT WORTH THE PAPER IT WAS PRINTED ON, I THINK THE PRESIDENT WOULD AGREE. ISRAEL NOT A PARTY WITH THOSE CONVERSATIONS. I'M CURIOUS HOW YOU LOOK AT THE U.S. POWER TO PRO SE -- PERSUADE ISRAEL TO PULL BACK ITS CAMPAIGN IN LEBANON. >> I THINK YOU HAVE TO USE THE LEVERAGE WE HAVE, OR DEFENSE RELATIONSHIPS. SO LONG AS ISRAEL BELIEVES THE TRUMP ADMINISTRATION IS GOING TO CONTINUE TO FEED THEM THE WEAPONS AND THE INTELLIGENCE THAT THEY NEED TO CARRY OUT WAR ON LEBANON, THEY WILL CONTINUE TO CARRY OUT THE WAR. THAT IS A BLUNT TOOL. IT TOOK ME A LONG TIME TO ACCEPT IT AS A TOOL TO TRY AND INFLUENCE THEIR BEHAVIOR IN GAZA. IF THERE IS A PRECONDITION TO GETTING THE STRAIT OF HORMUZ OPEN, WE HAVE TO USE THAT TOOL. AS LONG AS IT IS CLOSED, IT IS AMERICAN CITIZENS, FAMILIES BEARING THE COST. >> LET'S TALK ABOUT THE DOMESTIC POLITICS, YOU MENTIONED IT IS A DEEPLY UNPOPULAR WAR. HOW DO YOU SEE IT PLAYING OUT AND HOW DO YOUR FELLOW DEMOCRATS CAPITALIZE -- IT MAY NOT BE THE RIGHT WORD TO USE, BUT HOW DO YOU HIGHLIGHT THE FACT IT IS AS UNPOPULAR AS IT IS WITH THE ELECTORATE? >> IN MY TIME IN POLITICS, MOST OF THE TIME FOREIGN POLICY DOESN'T MATTER IN ELECTIONS UNTIL IT IS SOMETIMES THE ONLY THING THAT MATTERS. I DO THINK THIS ELECTION IS GOING TO BE ON THE BALLOT. EVEN IF TRUMP WERE TO GET THE STRAIT OF HORMUZ REOPENED TODAY, THE COST OF A GALLON OF GASOLINE OR FERTILIZER IS NOT GOING TO COME DOWN TO ANY REASONABLE LEVEL BY NOVEMBER. IT WILL BE A VOTING ISSUE. AND THE PRESIDENT'S FOREIGN POLICY INCOMPETENCE. THAT AGREEMENT YOU MENTIONED WAS JUST AN EXAMPLE OF INCOMPETENCE. SIGNED AN AGREEMENT COMMITTING ISRAEL TO DO SOMETHING WITHOUT ISRAEL AT THE TABLE. APPARENTLY BY ACCIDENT HE SIGNED AN AGREEMENT THAT GAVE CONTROL OF THE STRAIT OF HORMUZ PERMANENTLY TO ISRAEL -- TO IRAN. HIS FOREIGN POLICY DISASTERS ARE GOING TO BE RELEVANT THIS NOVEMBER. >> I ASKED RAHM EMANUEL EARLIER, HE SEEMED TO WELCOME HAVING THIS DEBATE ABOUT U.S.-ISRAEL RELATIONS INTO THE MIDTERMS IN THE GENERAL ELECTIONS. THERE'S A LOT OF INK BEING SPILLED ABOUT THE DIVISION IN THE DEMOCRATIC PARTY, HOW HEALTHY IT MIGHT BE, WHERE DO YOU FALL ON THAT? >> BROADLY, I DON'T THINK YOU ARE A HEALTHY PARTY UNLESS YOU HAVE DEBATE, DIVISION. PART OF THE REASON THE REPUBLICAN PARTY IS ABOUT TO GET THEIR CLOCK CLEANED IN THE ELECTION IS -- >> YOU ARE CONFIDENT OF THAT? >> I AM CONFIDENT OF THAT. THEY WILL TRY TO CHEAT TO A WIN. BUT IF IT IS A FREE AND FAIR ELECTION, DEMOCRATS WILL DO VERY WELL. IN A HEALTHY POLITICAL PARTY, YOU HAVE DEBATE, AND WE CERTAINLY DO HAVE DEBATE ABOUT WHAT TO DO WITH ISRAEL. I WANT A STRONG U.S. RELATIONSHIP WITH ISRAEL, I BELIEVE IN THE PRESERVATION AND ELECTION OF A JEWISH STATE IN THE MIDDLE EAST. WHAT BENJAMIN NETANYAHU IS DOING IS NOT SERVING THAT OBJECTIVE, AND THE LONG RUN HE'S GOING TO END UP RECRUITING MORE ENEMIES OF ISRAEL, TERRORIST ENEMIES AND COUNTRIES THAT DON'T SUPPORT ISRAEL'S EXISTENCE THROUGH HIS CONDUCT IN GAZA AND IN LEBANON. THAT IS WHY I THINK WE HAVE TO USE BLUNT TOOLS TO GET HIS POLICY TO CHANGE. >> THE POTENTIAL FOR THAT ELECTION MALFEASANCE. THE PRESIDENT IS GOING TO GIVE A SPEECH TO THE NATION AND REPORTEDLY WILL FOCUS ON THE 2020 ELECTION, ELECTION IRREGULARITIES AS HE SEES THEM. BUT MORE BROADLY, WHAT IS THE MESSAGE OF THAT AND THE DANGER IF HE MIGHT CONTINUE TO EXPEL SOMETHING THAT MAY NOT BE TRUE? >> FOR THE FIRST TIME IN AMERICAN HISTORY WE DON'T HAVE A FREE ELECTION. I DON'T KNOW WHAT THE PRESIDENT WILL RECOMMEND. IF HE'S TRYING TO PUT TROOPS OUT IN THE POLLING PLACE AS HE WAS BE STOPPED BY THE SUPREME COURT, WE WILL SEE WHETHER OUR DEMOCRACY COLLAPSES AND HE DOESN'T LISTEN TO THE SOLUTION OF THE SUPREME COURT. THIS IS A REALLY DANGEROUS MOMENT, AND I'M REAL WORRIED SO MANY OF MY REPUBLICAN COLLEAGUES ARE QUIET ABOUT IT. THERE PARTY IS A CULT RIGHT NOW. I’M STILL HOPEFUL SOME OF MY COLLEAGUES STAND UP AND CALL OUT WHAT THE SPEECH FOR WHAT IT WILL LIKELY BE, THE MOST SIGNIFICANT RHETORICAL ATTACK ON DEMOCRACY ON THE NATIONAL AIRWAVES THAT HAS EVER BEEN MADE IN THE HISTORY OF THE COUNTRY. DAVID: LET ME ASK YOU LASTLY ABOUT YOUR VISION FOR THE DEMOCRATIC PARTY. YOU HAVE A NEW BOOK OUT, AND A LOT OF THE COUNTS IN THAT BOOK IS JUST FOR US TO COME TOGETHER THROUGH ACTIVITIES AND REENGAGE WITH THE WAY THINGS USED TO BE, NOT WHOLLY LEANING ON NOSTALGIA, BUT THAT’S PART HERE. I COULD ASK IF YOU’RE RUNNING FOR PRESIDENT. I EXPECT YOU TO DEMURE ON THAT. BUT HOW DO YOU SEE THE FUTURE OF THE DEMOCRATIC PARTY HERE, VIS-A-VIS THAT TEXT OR HOW YOU THINK THE PARTY SHOULD TAKE SHAPE GOING INTO THE NEXT ELECTION? >> I WANT MY PARTY TO RECOGNIZE THERE’S NOT JUST AN ECONOMIC CRISIS IN THIS COUNTRY, THERE’S A SPIRITUAL CRISIS. PEOPLE ARE FEELING LESS MEANING AND PURPOSE IN THEIR LIVES, FEELING MORE DISCONNECTED FROM THEIR FAMILY AND COMMUNITY THAN EVER BEFORE. WE’VE GOT TO SPEECH A GOSPEL OF HAPPINESS, ABOUT HOW PEOPLE CAN WAKE UP EVERY DAY AND FEEL LIKE THEY HAVE MEANING IN THEIR WORK, HOW WE CAN CONTROL THESE TECHNOLOGIES THAT ARE SENDING THEIR KIDS INTO LIVES OF ISOLATION. OUR PARTY SOMETIMES SOLVES VERY TECHNICAL PROBLEMS, LIKE THE PRICE OF A PRESCRIPTION DRUG. BUT IT DOESN’T EXPLAIN TO PEOPLE HOW THAT’S ACTUALLY GOING TO MAKE THEM HAPPIER. IF WE WERE TO LEAD THIS NOVEMBER AND TWO YEARS FROM NOW WITH A REALLY AGGRESSIVE PLAN ON HOW TO CONTROL THE RAVAGES OF SOCIAL MEDIA AND A.I., A SPACE THAT, BY THE WAY, IS OPEN FOR THE DEMOCRATIC PARTY RIGHT NOW, LIKE PARENTS DON’T KNOW WHICH PARTY TO PICK IF THEY WANT TO PROTECT THEIR CHILDREN FROM A.I., THAT WOULD SPEAK TO FAMILIES IN A SPIRITUAL WAY, BECAUSE THEY FEEL LIKE THEY’RE LOSING CONTROL OF THEIR LIVES AT THE HANDS OF THE TECHNOLOGY. THAT IS THE CONVERSATION MY BOOK IS TRYING TO START. DAVID: THINK YOU’RE RUNNING? >> IT’S TOO EARLY, BECAUSE WE’RE NOT EVEN SURE WE’RE GOING TO HAVE A DEMOCRACY IN 2028, SO LET’S MAKE SURE WE HAVE A FREE AND FAIR IN 2026. DAVID: SENATOR MURPHY, THANK YOU VERY MUCH, JOINING HE IS HERE IN ASPEN. BACK TO YOU, CAROL AND TIM, IN NEW YORK. CAROL: SO APPRECIATE IT, DAVID GURA, "BLOOMBERG THIS WEEKEND" CO-HOST AND CO-HOST OF "THE BIG TAKE" PODCAST. STILL TO COME, THE LONE BEAR ON UNITED HEALTH IS A BEAR NO MORE. THAT’S COMING UP IN JUST A MOMENT. TIM: FIRST UP, A CHECK OF THE DAY’S TRADE. CHARLIE PELLETT IS STANDING BY. CHARLIE: THANK YOU VERY MUCH. UNITED HEALTH, BY THE WAY, TRADING HIGHER RIGHT NOW. THEY’RE UP BY 1.7%. HEADLINE RIGHT OFF THE BLOOMBERG RIGHT NOW, GOOGLE, GEMINI LAUNCH DELAYED AS THE TECHNOLOGY FALLS SHORT OF GOLDS. ALPHABET, WHICH IS THE PARENT COMPANY OF GOOGLE, TRADING LOWER BY 3%. WE’VE GOT THE DOW, S&P, NASDAQ ALL MOVING LOWER. NASDAQ, A DROP OF .5%. WEAKNESS IN TECH SPECIFICALLY SEMIS, THE SOX, THE PHILADELPHIA UNSPORTSMANLIKE STOCK INDEX, DOWN BY 4.6%. NASDAQ 100 INDEX DOWN 1.6%. THE S&P CURRENTLY AT THE WORST LEVEL OF THE DAY. SPOT GOLD DOWN 1.9%, $3982 AN OUNCE. CRUDE, W.T.I. DOWN .7%. SPORTS, SPECIFICALLY GOLF, ROUND ONE OF THE OPEN CHAMPIONSHIP UNDERWAY AT THE ROYAL BIRKDALE GOLF CLUB IN ENGLAND. AT LAST CHECK, WE HAVE JACKSON SUBER OF THE U.S. SITTING ATOP THE LEADERBOARD AT FIVE UNDER PAR. CAROL AND TIM, THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: CHARLIE, THANK YOU SO MUCH. UNITED HEALTH LONE BEAR COMING OUT OF HIBERNATION. THIS IS FOLLOWING THE COMPANY’S QUARTERLY UPDATE. THE COMPANY DID RAISE ITS OUTLOOK FOR THE YEAR AND REPORTED QUARTERLY PROFIT WELL AHEAD OF WALL STREET VIEWS, HELPING TO SOLIDIFY THE COMPANY’S EARNINGS RECOVERY AFTER A HISTORIC COLLAPSE. IT’S BEEN A JOURNEY. TIM: YEAH, BAIRD SENIOR RESEARCH ANALYST, COVERING NAMES IN THE GROUP INCLUDING UNITED HEALTH, WHICH HE JUST UPGRADED WITH A $453 PRICE TARGET. HE JOINS US HERE ON THE "BLOOMBERG BUSINESS WEEK" STUDIO. YOU WERE SITTING IN THE SAME SEAT A FEW MONTHS AGO, AND YOU WERE THE ONLY BEAR OUT THERE ON WALL STREET. THAT WAS UNTIL TODAY. WHAT HAPPENED? WHAT DID YOU SEE? >> THANK YOU FOR HAVING ME ON. I WANT TO JUMP INTO IT, BUT QUICKLY, I THINK WE MIGHT BE AT THE BEGINNING OF QUITE ARGUABLY THE BIGGEST SHIFT IN HEALTHCARE INVESTMENT OVER THE NEXT FEW YEARS, AND FOR CONTEST -- AND FOR CONTEXT, OVER THE PAST FEW YEARS INVESTORS HAVE WANTED TO BUY HOSPITALS, BECAUSE HEALTHCARE UTILIZATION HAS KEPT SURPRISING TO THE UPSIDE. WELL, OVER THE PAST MONTH OR SO, BASED ON OUR WORK AND OUR CHECKS, WE SEE EVIDENCE THAT THESE COST TRENDS ARE COMING DOWN, AND WE’RE NOT TALKING ABOUT SLIGHTLY. IT COULD BE IN A POTENTIALLY UNPRECEDENTED WAY. AND IF THIS IS TRUE, IF IT’S DURABLE, WE SEE A SHIFT TO MANAGED CARE AND AWAY FROM HOSPITALS, AND THAT’S WHY I THINK TODAY WAS SO IMPORTANT. TIM: EXPLAIN THE DISTINCTION BETWEEN MANAGED CARE AND HOSPITALS. >> HEALTH INSURERS, YIKE UNITED HEALTH. HOSPITALS THEY TRADE INVERSELY. IF HEALTHCARE UTILIZATION GOES UP, PEOPLE ARE GOING TO THE NO PARTICULARTIME, THAT’S BAD FOR INSURERS. THAT’S HOW THEY TRADE. OVER THE PAST FEW YEARS, HOSPITALS HAVE GONE UP AND UP AND UP. HEALTH INSURERS DOWN. I THINK WE’RE JUST AT THE BEGINNING WHERE THE TRADE IS FLIPPING. AND IT SPELLS A LOT OF OPPORTUNITY FOR INVESTORS AHEAD. CAROL: WHAT DOES IT MEAN FOR PATIENTS, THAT SHIFT? >> RIGHT, FOR PATIENTS, THERE’S A MULTITUDE OF THINGS HERE. MAYBE THIS IS A GOOD SEGUE INTO UNITED, ACTUALLY. SO YEAH, I’VE BEEN THE LONE BEAR FOR A WHILE NOW. AND THE THING IS, LONG TERM STRUCTURALLY, STILL A LOT OF CONCERNS ABOUT THE CROWN JEWEL, WHICH I’M HAPPY TO TALK MORE ABOUT. BUT NEAR TERM, AM REMEMBER, UNITED HAS A HEALTH INSURANCE BUSINESS, THE BIGGEST IN THE COUNTRY, AND THEY’RE GOING SCORCHED EARTH, BURNING ALL THE FURNITURE, CUTTING BENEFITS FOR SENIORS, EXITING MARKETS AND PLANS, WHICH IS BAD FOR THE CONSUMER AND INDIVIDUAL. BUT FOR THEM, THEIR BRUTE FORCE AND POWER AND MARGINS, AND AS OF TODAY, WE’RE SEEING THE STRENGTH OF THAT TAKE PLACE AND TAKE HOLD WITHIN THEIR EARNINGS. CAROL: SO THE FUNDAMENTALS, FINANCIALS, AND IF AN INVESTOR WANTS TO INVEST IN THE NAME, IT SOUNDS LIKE A GREAT PLAY. BUT WE WILL SEE THE IMPACT ON PATIENTS. >> OH, WE ARE. CAROL: WE ARE ALREADY? >> RIGHT. SO THERE’S A MULTITUDE OF THINGS, BUT THERE’S BEEN ELEVATED HEALTHCARE UTILIZATION. A LOT OF PEOPLE UTILIZING THE SYSTEM OVER THE PAST FEW YEARS, AND WE’RE SEEING EVIDENCE OF THAT BEGINNING TO NORMALIZE. AND THERE’S A MULTITUDE. CAROL: I HATE THAT WORD, NORMALIZE. WHAT DOES IT MEAN, LESS PEOPLE USING THE SYSTEM? >> COULD BE THAT. BASED ON OUR WORK, WE’RE ALSO -- CAROL: FORGIVE ME. >> NO WORRIES AT ALL. BASED ON OUR WORK, WE’RE SEEING THAT A.I. HAS HAD A BIG IMPACT OVER THE PAST FEW YEARS IN HELPING HOSPITALS MAXIMIZE THEIR REVENUE, COLLECTION, DIAGNOSIS, CODING, IF YOU WILL, AND WHAT WE’RE SEEING IS IT QUITE POSSIBLY COULD BE A BIG ONE-TIME SHOT THAT HIT, AND THAT ABILITY TO CODE MAY BE FLATTENING, SO THAT’S ONE OF THE ELEMENTS. BUT TO YOUR POINT AS WELL, JUST UTILIZATION IN GENERAL, THINGS LIKE SURGICAL TRENDS, FOR EXAMPLE. TIM: THOSE ARE GOING DOWN, OR QUOTE-UNQUOTE, NORMALIZING. WHERE WERE THEY HIGHER OVER THE LAST FEW YEARS? >> THERE ARE A LOT OF DIFFERENT THEORIES. POST-COVID, NO ONE WAS USING THE HOSPITALS DURING COVID, SO THERE’S A BUILT-UP, PENT-UP DEMAND, DEFERRED CARE THAT RAN THROUGH THE SYSTEM. MORE RECENTLY, OUR WORK SUGGESTS MAYBE A.I. PLAYED INTO ELEVATED TRENDS EVEN MORE. TIM: MEANING LIKE PEOPLE -- WHAT DO YOU MEAN? HOW WOULD A.I. PLAY INTO THAT? >> I THINK MORE ON THE HOSPITAL SIDE. THEY’RE UTILIZING A.I. AND MAXIMIZING THEIR ABILITY -- TIM: TO BRING PEOPLE IN. >> TO TAKE EXISTING PROCEDURES, SERVICES, AND SAY, OK, YOU KNOW WHAT, WE MISSED THIS PREVIOUSLY, BUT NOW THEY ACTUALLY HAVE GREATER SEVERITY AND YOU CAN CODE TO EVEN MORE DISEASES, AND THAT’S HELPING THEM CAPTURE MORE REVENUE. CAROL: YOUR UPGRADE, JUST TO SHARE IT WITH EVERYBODY, IN YOUR NOTE TODAY, WE ARE UPGRADING TO NEUTRAL FOLLOWING CLEARANCE OF THE SECOND QUARTER 2026 UNDERWRITING HURDLE, IMPROVING NEAR-TERM EARNINGS VISIBILITY, SUPPORTS A MORE BALANCED VIEW. THE PRIMARY DRIVER OF OUR UPGRADE IS INCREASED CONVICTION ON NEAR-TERM MEDICARE ADVANTAGE MARGIN IMPROVEMENT. SO THEY JUST BECOME BETTER AT MAKING MONEY? >> EXACTLY. TIM: IN OTHER WORDS. >> WE SAW SIGNS IN THE FIRST QUARTER, BUT THE GOOD RULE OF THUMB IS YOU DON’T HAVE MUCH VISIBILITY AS THE HEALTH INSURER. YOU MAY HAVE ONE MONTH OF CLAIMS IN JANUARY. SO MOST OF WHAT THEY WERE IMPORTANT IN THE FIRST QUARTER ARE RESERVES, BY SECOND QUARTER, THAT’S THE IMPORTANT HURDLE. IF YOU CLEAR IT, THAT’S GENERALLY A GOOD SIGN THAT THE REST OF THE YEAR IS PRICED POSITIVELY. TIM: WHAT DOES ALL THIS MEAN FOR PREMIUMS? CAROL ASKED ABOUT PATIENTS, BUT WHAT ABOUT PREMIUMS? >> IT DEPENDS ON WHICH PART OF INSURANCE. THERE’S MEDICARE ADVANTAGE, MEDICAID, EXCHANGE MARKETPLACE. TIM: I THINK THE ANSWER IS THEY’RE ALL GOING UP. >> WELL, FOR MEDICARE ADVANTAGE, IT’S NOT SO MUCH THAT. IT’S MORE -- CAROL: LESS COVERAGE? >> PREMIUMS WILL STAY THE SAME ON MEDICARE. I’M NOT REALLY EXPECTING THAT MUCH. BENEFITS ARE GETTING SLASHED. FOR EXAMPLE, WE’RE GETTING DOUBLE-DIGIT INCREASES, WHICH CONGRESS, IT’S BEEN A BIG BATTLEGROUND. CAROL: COMING OFF OF LOW. IT’S DOUBLED WHAT THEY HAVE TO PLAY NOW. I’M GOING TO PUT ON MY BLOOMBERG HAT, AS I FOCUS ON FINANCIAL MARKETS AND HOW YOU MAKE MONEY. WHAT WILL IT TAKE TO BOOST TO A BUY RATING? >> RIGHT, SO RIGHT NOW, WE HAVE VERY GOOD NEAR-TERM VISIBILITY TO EARNINGS OUTPERFORMANCE FOR UNITED. BUT LONGER TERM, WE STILL HAVE ISSUES OR CONCERNS OVER STRUCTURAL ISSUES WITHIN OPTUM. THE WAY IT WORKS, THERE’S A LOT OF DYNAMICS WHERE THE HEALTH INSURANCE GENERATES PROFIT, THERE’S TRANSFER ELEMENTS INTO OPTUM. I WANT TO SEE HOW THE BUSINESS LOOKS LIKE WHEN THE HEALTH INSURANCE BUSINESS IS ACTUALLY GROWING AGAIN, NOT SLASHING BENEFITS FOR SENIORS. AND WHAT DOES IT LOOK WHEN THEY CAN STAND ALONE? ARE MARGINS DURABLE? THAT WOULD GET US TO OUTPERFORM. AND IT MAY TAKE YEARS TO GET THERE. TIM: WHY WOULD THAT TAKE YEARS? >> RIGHT ANYWAY, THE ENTIRE HEALTH INSURANCE MARKETPLACE, LIKE MEDICARE ADVANTAGE, EVERYONE IS SLASHING BENEFITS, TRYING TO REGAIN MARGINS, THAT THEY’VE ALL SUFFERED IN THE PAST FEW YEARS, SO YOU’RE STILL IN THE UNDERWRITING CYCLE WHERE I WAS WITH THE ARE GOING TO GET TRUST, THE UNITED IS GOING TO CONTINUE TO GET MARGIN. KATIE: IF YOU LOOK AT THE HEALTH INSURERS WITH EXPOSURE TO PRIVATE HEALTH PLANS, THEY ARE TUMBLING TODAY AFTER UNITED HEALTH TALKED ABOUT HIGHLIGHTED PERSISTENT PRESSURES DURING ITS SECOND QUARTER CALL. AND I’M TALKING ABOUT ELEVANCE. THEY’RE DOWN 4%. CIGNA IS ALSO DOWN. YOU COVER THESE NAMES. ARE INVESTORS RIGHT TO BE SELLING THEM? >> I THINK THE DOWN MOVE MAKES SENSE. AND IT ALL COMES FROM, IF THERE WAS ONE SMALL BLEMISH, IT’S THAT THEY MENTIONED SOME PRESSURE WITHIN THE COMMERCIAL BUSINESS, COST RUNS WERE RUNNING HIGHER, AND THEY CITED ONE THING IN PARTICULAR CALLED THE INDEPENDENT DISPUTE RESOLUTION. BASICALLY THINK TV AS BASEBALL ARBITRATION BETWEEN HOSPITALS AND PAIRS, AND THESE ARBITERS ARE CHOOSING THE PROVIDER RATES MORE OFTEN, AND THAT’S GENERATING MORE COST FOR INSURERS AND COMMERCIAL SITUATION. DO WE KNOW IF IT’S ACTUALLY IMPACTING THOSE PARAS RIGHT NOW? WE DON’T KNOW. THAT’S THE DEBATE RIGHT NOW. CAROL: THESE GUYS YET TO REPORT, CORRECT? OR HAVE THEY REPORTED YET? >> THEY REPORTED YESTERDAY, AND NEVER CAME UP. COMMERCIAL GROUP WAS ACTUALLY FINE. CIGNA HAS YET TO REPORT. THAT WILL BE A BIG ONE TO WATCH. TIM: YOU MENTIONED WATER, IN REGARD TO MARKETPLACE, AND WE’RE SEEING WITH PRICES THERE, IS THERE OTHER POLITICAL RISK THAT INVESTORS NEED TO HAVE ON THEIR RADAR FOR THESE NAMES AHEAD OF THE MIDTERM ELECTIONS? >> IT’S A GOOD QUESTION. I WOULD SAY TYPICALLY IT’S A VERY TO WHICH CAL THING INTO MIDTERM SAYS. I WOULD SAY RIGHT NOW, IF WHAT I JUST SAID EARLIER ABOUT COSTS COMING DOWN IN THAT BIG OF A WAY, THAT MAY, THAT MIGHT BE THE TOPIC THAT KEEPS THIS GROUP GOING HIGHER. TIM: BECAUSE THERE ARE CERTAIN PERIODS OF TIME WHERE YOU HAVE THE ENTIRE SECTOR MOVE BASED ON ONE THING THAT’S OUT OF WASHINGTON, WHICH IS, LIKE, REIMBURSEMENTS, FOR EXAMPLE. THEY CAN BE VERY VOLATILE BASED ON WHAT HAPPENS OUT OF THE CAPITAL. >> I WOULD REMIND EVERYONE THAT THAT IS IT HAPPEN. FRED RARE FOR ALL JUST SIX, SIX YEARS AGO, THE GROUP YES, EVEN THOUGH IF THE HOUSE SPLITS AT MID CERTAINS, SO THE REASON TO PASS IS VERY SLOW. I WOULD BUY THE DIP. >> JUST 20 SECONDS, S&P UP 30% THIS YEAR. DOES THAT MOMENTUM CONTINUE? >> IT CONTINUES. I WOULD FOCUS LEASE MULTIPLE AT THIS POINT AND LOOK AT PURE EARNINGS POWER. LOOK AT THE MEDICARE ADVANTAGE PLANS, UNITED, CVS, ALIGNMENT HEALTH, POSSIBLY EVEN HUMANA, AND ONE OTHER SORT OF DARK HORSE NAME, I WOULD LOOK AT ALL OF THEM. CAROL: GREAT STUFF. WE ALWAYS GETTING TIME WITH YOU, AND OUR REPORTING, ALSO PEPPERING US WITH QUESTIONS TO SHARE WITH YOU. THANK YOU SO MUCH. MICHAEL HA COVERING BASKETBALL. REALLY APPRECIATE IT. THAT DOES IT FOR THE FIRST HOUR OF "BLOOMBERG BUSINESS WEEK DAILY." WE’VE GOT A COUPLE OF HOURS COMING UP. PSYCHEDELIC DRUGS ARE SO HOT RIGHT NOW. ELI LILLY IS BUYING THEM. CAROL: IT’S BECOMING MORE MAINSTREAM. TIM: ABSOLUTELY. ♪