Stocks in the Red Amid Geopolitical Uncertainty | The Close 7/27/2026

>> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ROMAINE: GOOD NEWS FOR TECH STOCKS ALREADY PRICED IN. I'M ROMAINE BOSTICK. EMILY: WE ARE KICKING OFF TO THE CLOSING BELL IN THE U.S.. LET'S CHECK ON MARKETS STAND RIGHT NOW AS WE HEADED TO THE END OF THE TRADING DAY. THE S&P 500 INCHING INTO THE GREEN. MOSTLY UNCHANGED AT THE INDEX LEVEL. A LOT OF MOVEMENT UNDER THE SURFACE. TECH STOCKS DOWN ABOUT .3%. OIL REALLY FALLING, DOWN ABOUT 9%. DO THE INDEXES CARE ABOUT THE MOVE? FINALLY, LOOKING AT THAT 10-YEAR YIELD AT FOUR .6%. ROMAINE: A 9% DROP IN OIL WOULD NORMALLY BE CAUSE FOR THE EQUITY MARKETS. WE HAD A STRONG OPENING BUT THAT RAN INTO RESISTANCE. SELLING STARTED 10 MINUTES INTO THE CASH SESSION. THE FOURTH STRAIGHT DAY, SOMETHING IT IS NOT IN SINCE EARLY JANUARY. IT IS POISED TO RETEST IS 100 DAY MOVING AVERAGE FOR THE FIRST TIME SINCE FEBRUARY. THE POTENTIAL RESET WILL BE HIGHLY DEPENDENT ON THE OUTCOME OF EARNINGS FROM THE TECH COMPANIES THIS WEEK, INCLUDING MICROSOFT, META, AND AMAZON. THERE IS HIGH ANXIETY OUT THERE THAT THE DEBT FUELED CAPITAL EXPENDITURE PLANS WILL DROWN OUT ANY STRONG REVENUE OR PROFIT GROWTH NUMBERS. LAST WEEK WE SAW ALPHABET SELLOFF. TEXAS INSTRUMENTS DESPITE A STRONG EARNINGS BEAT. INTEL SOLD OFF DESPITE A STRONG EARNINGS BEAT. INVESTORS TRIED TO SEND THE SIGNAL TO EXECUTIVES THAT WHAT THEY WANT OR WHAT THEY THINK ABOUT ROI IS JUST A LITTLE BIT DIFFERENT. EMILY: -- >> WHEN THE MARKET STOPS AWARDING GOOD NEWS, PAY ATTENTION. IT SIGNALS THE NARRATIVE IS CHANGING. RIGHT NOW FOR US WE ARE FOCUSED ON THIS IDEA THAT MORE IS NO LONGER MORE. MORE CAPEX SPENDING ACTUALLY IS STARTING TO WORRY THE MARKETS ABOUT WHEN I GET A RETURN ON INVESTMENT AND IF WE ARE GOING TO GET TO A PLACE OF OVERSPENDING. ROMAINE: SENTIMENT SHARED BY A LOT OF FOLKS ON WALL STREET, INCLUDING MIKE WILSON AT MORGAN STANLEY. HE SAID THIS EARNINGS SEASON'S STOCK PERFORMANCE WINNERS ARE LIKELY TO BE COMPANIES INTEGRATING AI INTERNALLY, LIKE TRANSPORT COMPANIES, SOFTWARE COMPANIES, JUST PERSONAL -- PROFESSIONAL SERVICE FIRMS, INCLUDING HALLIBURTON, BANK OF AMERICA AND CVS. HE STILL SHOWS LOW FOR THE TRADITIONAL AI COMPANIES LIKE ALPHABET IN NVIDIA. EMILY: WE WILL GET ABOUT -- GET A READ ON HOW THE MARKET THINKS OF THOSE COMPANIES. $24 TRILLION IN MARKET CAPS SET TO REPORT THIS WEEK. THEY FED WEEK AS WELL. THERE'S A LOT HAPPENING, MOSTLY IN THE MEGA CAP NAMES WITH ALPHABET, APPLE, AMAZON, META, MICROSOFT ALL REPORTING AND SOME CONSUMER NAMES AS WELL. ROMAINE: LET'S GET TO THE CLOSE WITH JULIE HERMAN AT NEW YORK INVESTMENT MANAGEMENT. THE BIG FOCUS IS ALL THE BIG EARNINGS OVER THE NEXT FEW DAYS. PEOPLE ARE OPTIMISTIC ABOUT WHAT THEY ARE GOING TO REPORT. IS THAT ALREADY PRICED IN? JULIA: WE NEED TO CONTEND WITH THE FACT THAT MACRO BACKDROP IS NOT NECESSARILY COMPATIBLE WITH THE CURRENT DYNAMICS AND MARKET LEADERSHIP, PARTICULARLY IN THE TECH SEGMENT. WE HAVE THESE REALLY POWERFUL CHIP PROVIDERS THAT HAVE A TON OF PRICING POWER AND ARE SEEN AS THE WINNERS OF THE CYCLE. THEY ALSO COME WITH HIGHER HISTORICAL CYCLICALITY AND VOLATILITY. CANDIDLY, AS WE LOOK TO THE HYPERSCALERS REPORTING THE NEXT WEEK, WE ARE CONSIDERING WHAT THAT BALANCE OF PROFITABILITY IS ULTIMATELY ENDING UP IN FREE CASH FLOW DYNAMICS. ROMAINE: WE ARE ON A DAY WHERE WE ARE LOOKING AT THE PHILADELPHIA SEMICONDUCTOR NEXT DOWN 3%. APPLICATION SOFTWARE COMPANIES IN THE S&P IS A GROUP ARE UP 6%. WE HAVE SEEN THIS PLAY OUT WHERE SOME PEOPLE ARE BUYING BACK INTO SOME OF THESE HYPERSCALERS AND SOFTWARE FIRMS. IS THIS AN ACTUAL BET THAT MAYBE THEY COULD OUTPERFORM OR JUST OK, THESE WERE THE BEATEN-DOWN NAMES TO LET'S GET INTO THOSE? JULIA: HE COULD BE SOME OF WHAT YOU MENTIONED. IF YOU LOOK AT THE CHART OF THE CHIP PRODUCERS THE HYPERSCALERS AND SOFTWARE APPLICATION COMPANIES, IT IS EASY TO LOOK AT THE DIVERGENCE AND SAY AI IS A ZERO-SUM GAME FROM THE INVESTMENT PERSPECTIVE. WE DON'T BELIEVE AI IS A ZERO-SUM GAME. THIS IS A SUPPLY CHAIN MATURING EXTREMELY RAPIDLY. WHEN WE THINK ABOUT THIS FROM THE PERSPECTIVE OF QUALITY, IN ADDITION TO STRONG PROFITABILITY, WHICH MANY PORTIONS OF THE SUPPLY CHAIN ARE DELIVERING NOW, WE LOOK AT LOWER EARNINGS VARIABILITY AS A QUALITY MARKER. THAT CAN BE FOUND AS MUCH OF THE HYPERSCALERS AS IN THE CHIP PRODUCERS LATELY. EMILY: WHEN YOU THINK ABOUT EARNINGS COMING UP, WE ARE SEEING THESE RESULTS THAT ARE PRETTY DECENT IN THE STOCK IS GETTING PUNISHED. THAT IS RARE TO SEE IN THE EQUITY MARKET. ARE WE GOING TO SEE THAT WITH THE OTHER MEGA CAPS, I REPEAT OF WHAT WE SAW WITH ALPHABET WITH THE COMPANY SAYS WE WILL SPEND MORE ON AI AND THE STOCK IS CRUSHED? JULIA: THERE ARE A FEW DIFFERENT MARKERS THAT CAN HELP US THINK OF WHAT THE HEALTH DYNAMICS LOOK LIKE. DIVIDENDS AND SHARE BUYBACK PROGRAMS ARE FUNDED OUT OF FREE CASH FLOW. BETWEEN CAPEX, DIVIDENDS, AND SHARE REPURCHASES, ONE OF THOSE THREE THINGS MAY HAVE TO GIVE. NOT IN THIS QUARTER BUT IN THE COMING QUARTERS AND EVEN YEARS. AS LONG AS WE ARE SEEING HYPERSCALERS PROJECT CONFIDENCE IN TERMS OF THEIR REVENUE, EVEN IF FREE CASH FLOW IS UNDER MORE PRESSURE IN THE CURRENT QUARTER, THAT WOULD HELP US FEEL CONFIDENT THE TOTAL HEALTH OF THIS LATEST SPREE. EMILY: TRADERS ARE PRICING IN A RATE HIKE ON WEDNESDAY OR THE NEXT FEW MEETINGS AHEAD. CAN THE TECH COMPANIES STILL EMBODY THAT CONFIDENCE IF WE SEE RATES MOVE HIGHER FROM HERE? JULIA: WITH HIGHER ISSUANCE RELATED TO AI THERE IS INCREASED INTEREST RATE SENSITIVITY. ON OUR TEAM WE HAVE A DIFFERENT VIEW ON WHAT THE FED WILL DO ON WEDNESDAY. WE THINK THEY WILL HOLD. WE EXPECT A HOLD -- THE FED TO HOLD THROUGH THE REMAINDER OF THE YEAR. THIS MEANT A HUGE FOCUS ON THE INFLATION SIDE OF THE MANDATE AND IT'S HARDER TO IGNORE THAT THE MORE THE U.S. AND IRAN SITUATION ESCALATES. IF YOU LOOK AT THE LABOR SIDE OF THE MANDATE, WE ARE IN SOMETHING LOOKS ABOUT AS CLOSE TO AN EQUILIBRIUM AS AN ECONOMIST LIKE MYSELF CAN POSSIBLY HOPE FOR. THAT REALLY ENHANCES THE CASE FOR THE FED REMAIN ON HOLD. ROMAINE: GREAT DISCUSSION. GREAT TO HAVE YOU HERE IN STUDIO. JULIE HERMAN AT NEW YORK LIFE INVESTMENT MANAGEMENT KICKING US OFF TO THE CLOSE ON THIS MONDAY AFTERNOON AHEAD OF A BUSY WEEK FOR EARNINGS. WE WILL CATCH UP WITH THE CEO OF TAYLOR MORRISON FINDING A NEW HOME AT BERKSHIRE HATHAWAY. A CONVERSATION ABOUT HOW SHE ACTUALLY PLANS TO BUILD THAT BRAND UNDER A NEW ROOF. EMILY: FROM BUILDERS TO BURGERS, FIVE GUYS CEO AND COFOUNDER JERRY MOREL IS STOPPING BY AS THE CHAIN CELEBRATES ITS 40TH ANNIVERSARY. ROMAINE: AND WE WILL TALK SUNSCREEN. SUPERGOOP HAS A NEW CEO WHO USED TO RUN AMAZON'S HEALTH AND BEAUTY BUSINESS. WE WILL CATCH UP WITH HER A LITTLE LATER IN THE PROGRAM AS WELL. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ ROMAINE: TAYLOR MORRISON ENTERING A NEW ERA WITH BERKSHIRE HATHAWAY AS ITS STEWARD. THEY DID CLOSE THE ACQUISITION OF THE HOMEBUILDER ON FRIDAY, I DEAL WITH AN ENTERPRISE VALUE OF ABOUT $8.5 BILLION. THE CEO SHERYL PALMER WILL REMAIN IN CHARGE AND OVERSEE THE INTEGRATION, WORKING WITH GREG ABEL AT BERKSHIRE HATHAWAY. WE CATCH -- WE WERE ABLE TO CATCH UP WITH PALMER TO DISCUSS THE NEXT CHAPTER FOR THE COMPANY. BEFORE WE WENT PUBLIC IN 2014, WE WERE A PRIVATE U.K. ORGANIZATION. WE WERE MUCH SMALLER AND WE HAD A LOT OF GROWTH IN THE PUBLIC MARKET. THIS DEAL IS INTENDED TO PROVIDE THE OPPORTUNITY TO BUILD UPON WHAT TAYLOR MORRISON HAS ACCOMPLISHED. BERKSHIRE BUYS COMPANIES BECAUSE THEY BELIEVE IN THEM. THEY WANT HIM CONTINUE WHAT THEY DO AND WHAT THEY DO SO WELL. I THINK THIS IS HOMEBUILDING HISTORY. WE ARE JOINING ONE OF THE MOST REPUTABLE COMPANIES IN THE WORLD. A COMPANY THAT WILL BACK US FULLY. HOMEOWNERSHIP REMAINS CENTRAL TO THE AMERICAN DREAM. THIS ACQUISITION, WHEN YOU COMBINE THE BERKSHIRE BUILDER GROUP, CLAYTON PROPERTIES GROUP, AND TAYLOR MORRISON, THAT ALLOWS US TO SERVE THE MARKET BETTER. ROMAINE: WHAT DOES THIS SCALE PROVIDE THAT YOU DID NOT HAVE NECESSARILY BEFORE? OTHER ECONOMIC DEFICIENCIES THAT COME ALONG WITH IT? IS IT MARKETING, GEOGRAPHICAL FOOTPRINT, WHAT? SHERYL: ALL OF THE ABOVE FOR SURE. WE HAVE BELIEVED IN THE BENEFITS OF SCALE FOR YEARS AND YEARS. THAT IS BEEN PART OF THE REASON YOU HAVE SEEN SUCH SIGNIFICANT GROWTH FROM TAYLOR MORRISON. IT IS SOMETHING I HAVE THE OPPORTUNITY TO WORK ON FOR THE LAST DOZEN YEARS. I REMEMBER A TIME MAYBE 20 YEARS AGO THAT IT WAS ALL ABOUT LOCAL SCALE. TODAY I WOULD ARGUE WITH THE PUBLIC BUILDERS CONTROLLING -- DOUBLING THEIR CONTROL OF THE MARKETPLACE IN THE LAST 10 YEARS THAT IT TRULY CHANGED. IT'S EVOLVED. LOCAL SCALE MATTERS. REGIONAL SCALE MATTERS. CERTAINLY NATIONAL. THERE IS SOME SIGNIFICANT FINANCIAL ADVANTAGES TO SCALE. IF YOU LOOK AT OUR GEOGRAPHICAL FOOTPRINT, WE DO COVER THE ENTIRE -- MOST OF THE ENTIRE MAP. THEN YOU TAKE LEADERSHIP FROM TWO GROUPS THAT HAVE HAD SUCH A WONDERFUL SUCCESS HISTORY AND BRING THEM TOGETHER. I THINK YOU BRING THESE TEAMS TOGETHER AND PEOPLE WILL MAKE A DIFFERENCE. I MENTIONED THE PORTFOLIO BRAND. TODAY WE SERVE FIRST-TIME BUYERS, FIRST MOVE UP, SECOND MOVE UP. WE SERVE RENTERS AND RESORT LIFESTYLE WITH OUR ESPLANADE BRAND. YOU LOOK AT THE CLAYTON SUITE OF BRANDS AND WE HAVE TO DECIDE HOW TO BRING OTHERS BRANDS TOGETHER FOR A SINGLE PLATFORM. ROMAINE: IS THE MANDATE THAT COMING FROM GREG ABEL AND THE OTHER EXECUTIVES AT THE TOP OF BERKSHIRE TO INCREASE MARKET SHARE FOR TAYLOR MORRISON, CLAYTON, OR SOMETHING ELSE? SHERYL: ABSOLUTELY. SCALE MATTERS. IT IS NOT JUST -- IT IS NOT JUST BIG FOR BIG'S SAKE. IT IS SO WE CAN PRIDE -- PROVIDE A QUALITY PRODUCT AT THE RIGHT PRICE AND FULFILL OWNERSHIP DREAMS. SCALE MATTERS. WE WOULD LOVE TO SEE OURSELVES AS A TOPPY BUILDER IN EVERY MARKET -- AS A TOP THREE BUILDER IN EVERY MARKET. ROMAINE: LET'S TALK A LITTLE MORE ABOUT THE HOUSING MARKET. YOU HAVE HAD TAYLOR MORRISON FOR YEARS THIS BARBELL APPROACH. YOU WERE AT THE HIGH END BUT ALSO DID THINGS THAT WERE ON A MORE AFFORDABLE SIDE OF THE MARKET. SALES BASED ON YOUR LAST PUBLIC EARNINGS REPORT WAS RELATIVELY HIGH. THAT PUT YOU IN A PREMIUM CATEGORY. DO YOU WANT TO BE ALL THINGS TO ALL PEOPLE OR PICK A LANE? SHERYL: GIVEN THE SCALE OF THE BUSINESS, I DON'T THINK WE CAN NEVER BE ALL THINGS TO ALL PEOPLE. BUT WE DO BELIEVE WE CAN SUCCESSFULLY SERVE MANY CONSUMER COMMUNITIES. WITH EVERY SINGLE COMMUNITY, YOU HAVE TO UNDERSTAND WHO YOUR PRIMARY CONSUMER IS AND IF YOU GET THAT RIGHT, THE FINANCIAL BENEFITS OF THAT ARE QUITE SIGNIFICANT BUT I DO THINK WE CAN SERVE A FIRST-TIME BUYER. FOR US, I WOULD SAY IT HAS BEEN ABOUT 25% OF OUR BUSINESS. AND THE RESORT LIFESTYLE, THAT IS WHERE OUR BUSINESS IS VERY DIFFERENT. IT IS VERY SIGNIFICANT, I WOULD SAY HIGH-END. AND A CONCIERGE SERVICE LIFESTYLE. SO YOU HAVE TO HAVE THE PEOPLE IN PLACE TO BE ABLE TO UNDERSTAND THOSE DIFFERENCES BECAUSE IT IS NOT JUST BUILDING AND HOPING PEOPLE COME, IT IS UNDERSTANDING YOUR CONSUMER AS YOU BUY THE LAND, SO YOU MAKE SURE YOU PUT THE RIGHT PRODUCT, CORRECTLY APPOINTED ON IT TO REALLY ASSURE YOUR SUCCESS. ROMAINE: I MEAN OVERALL THOUGH WE ARE TALKING ABOUT HOUSING MARKET THAT HAS BEEN UNDER A LOT OF STRAIN, PARTLY BECAUSE OF AFFORDABILITY ISSUES, LACK OF INVENTORY, HIGHER MORTGAGE RATES ITSELF. YOU ARE OF COURSE NOT IMMUNE FROM THAT A TAYLOR MORRISON BEFORE THE DEAL. WERE YOU STARTING TO SEE ANY SORT OF IMPROVEMENTS? I KNOW WE NEVER GOT YOUR OFFICIALLY QUARTERLY REPORT BECAUSE OF THE CLOSING OF THIS DEAL, BUT WERE YOU STARTING TO SEE IMPROVEMENTS ON A MONTH-TO-MONTH SEQUENTIAL BASIS? SHERYL: AS YOU KNOW, THERE HAS BEEN VOLATILITY IN THIS TRADE ON AND OFF FOR THE LAST 12-24 MONTHS. EACH MONTH WAS A LITTLE BIT DIFFERENT. I WAS HIGHLY ENCOURAGED BY LAST WEEK'S SALES DATA AND I THINK EVERY MARKET TELLS A LITTLE BIT DIFFERENT STORY, BUT CERTAINLY WE ARE SEEING STABILITY IN A NUMBER OF MARKETS AND SOME GREEN SHOOTS IN OTHERS. A MONTH OR TWO DOES NOT MAKE A TREND, ROMAINE. I UNDERSTAND SOME OF THE MACRO WE ARE DEALING WITH TODAY, THE WAR, INTEREST RATES, AFFORDABILITY IS REAL IN THIS COUNTRY AND IT IS NOT GOING TO BE FIXED OVERNIGHT, SO WE HAVE TO BE VERY STRATEGIC IN WHERE WE BUILD AND WHAT WE BUILD TO REALLY ACCOMMODATE OUR CUSTOMERS. EMILY: OUR THANKS TO TAYLOR MORRISON CEO SHERYL PALMER. COCA-COLA RELEASING QUARTERLY RESULTS TOMORROW BEFORE THE OPENING BELL. WE BREAK DOWN WHAT TO EXPECT FROM THE BEVERAGE GIANT AFTER THE BREAK. THIS IS "THE CLOSE" ON BLOOMBERG. ROMAINE: TIME NOW FOR OUR TOP CALLS, THE BIG MOVERS ON THE BACK OF ANALYST RECOMMENDATIONS. WE WILL START OFF WITH ALPHABET. PHILIPS SECURITIES UPGRADING TO BUY. WHILE INVESTMENTS WILL LIKELY SUPPORT STRONGER LONG-TERM AI GROWTH, THE ANALYST DOES TRIM HER PRICE TARGET TO 425 FROM $450. SHARES UP ABOUT TWO POINT 4%, TRYING TO CLAW BACK FROM SOME OF THE LOSSES WE SAW. UP NEXT, BENDING SPOONS. IN-LINE RATING CITING VALUATION CONCERNS ON THE HEELS OF LAST MONTH'S IPO. ANALYSTS ATTACHING A $36 PRICE TARGET SAYING THE STOCK WILL REMAIN RANGE BOUND UNTIL THE ACQUISITION STRATEGY BETTER SYNCS UP WITH EARNINGS. THOSE SHARES DOWN ABOUT 2%. FINALLY, LET'S TAKE A LOOK AT FORD. UPGRADE TO BUY FROM HOLD AHEAD OF THE SECOND QUARTER EARNINGS REPORT SCHEDULED FOR TOMORROW AFTER THE BELL. $17.50 PRICE TARGET AFTER THEY SEE THE SECOND QUARTER AS A LOW POINT. PRODUCTION SET TO NORMALIZE IN THEIR VIEW. THOSE SHARES UP FOR THE SECOND STRAIGHT DAY. MEANWHILE, LET'S TURN OUR ATTENTION TO COCA-COLA. SHARES UP ABOUT 2% ON THE DAY, UP ABOUT 20% THIS YEAR, OUTPERFORMING THE S&P 500 IN THE CONSUMER STAPLES SECTOR. THAT COMPANY EXPECTED TO REPORT EARNINGS TOMORROW BEFORE THE BELL. JOINING US RIGHT NOW TO TALK ABOUT WHAT SHE EXPECTS IS LAUREN LIEBERMAN, U.S. EQUITY RESEARCH ANALYST AT BARCLAYS, SPECIALIZING IN THE BEVERAGE SECTOR. I WAS KIND OF SURPRISED ABOUT THE PERFORMANCE OF THE STOCK SO FAR THIS YEAR, I GUESS I HAVEN'T BEEN PAYING CLOSE ENOUGH ATTENTION TO IT. WHAT IS THE EXPECTATION GOING INTO THIS PRINT TOMORROW MORNING? LAUREN: THE STOCK HAS PERFORMED AS IT HAS AS ONE OF THE FEW NAMES ACROSS CONSUMER STAPLES PUTTING UP TOPLINE GROWTH THAT IS CONSISTENT AND PREDICTABLE. TOPLINE GROWTH HAS BEEN HARD TO COME BY WHEN IT COMES TO STAPLES. IT HASN'T BEEN HARD FOR COKE. PEOPLE ARE LOOKING FOR ANOTHER SOLID TOPLINE PERFORMANCE, 3%. STRONG AND STEADY, I THINK IT WILL BE VERY FOCUSED ON TOPLINE. ROMAINE: I WAS GOING THROUGH SOME OF THEIR PAST EARNINGS AND THEY HAVE BEEN PRETTY CONSISTENT ABOUT BEATING ESTIMATES. I KNOW IT IS A SOMEWHAT NEWER COMPANY THAN WHAT WE SAW WITH PEPSI AND SOME OF THEIR ISSUES, WHICH SEEMS TO BE MORE RELATED TO SNACKS RATHER THAN BEVERAGES. IS THERE ANY SENSE THAT COKE IS AT ALL DEALING WITH ANY OF SOME OF THE PRICE AND AFFORDABILITY CONCERNS THAT SEEM TO HAVE SHAKEN UP PEPSI INVESTORS A FEW WEEKS BACK? LAUREN: THE PEPSI SITUATION IS QUITE DIFFERENT AS YOU POINTED OUT. I WOULD SAY ACROSS THE COKE SYSTEM AND INCLUSIVE OF THE U.S. THEY HAVE HAD A REAL EYE ON MAINTAINING AFFORDABILITY. WE HAVE HEARD THEM TALK ABOUT IT ACROSS EUROPE AND I ALSO COVER THE EUROPEAN BOTTLER. THEY HAVE TALKED ABOUT AFFORDABILITY AND MAINTAINING THAT. IN THE U.S., YOU HAVE SEEN THAT IN THE WAY THE COMPANY IS MANAGING IN THE BOTTLING NETWORK IS MANAGING THROUGH ALUMINUM COST INFLATION, NOT PUTTING THAT THROUGH TO THE CONSUMER AND MANAGING PRICE BACK ARCHITECTURE , MAKING SURE THERE ARE MULTIPLE PACKAGES AVAILABLE AT THE RIGHT PRICE POINT, AT THE RIGHT CHANNEL FOR THE CONSUMER SHOPPING THERE. EMILY: I ALSO DID NOT REALIZE THAT COKE HAD OUTPERFORM SO MANY OF ITS PEERS YEAR TO DATE AND IT IS NOT JUST PEPSICO, MOLSON COORS, GENERAL MILLS ARE BOTH IN THE NEGATIVE TERRITORY FOR 2026. DOES THAT JUST VALIDATE THAT THE GROWTH OUT OF COKE IS REALLY FUNDAMENTAL, NOT TIED LAUREN: TO THE MACRO? LAUREN: ABSOLUTELY, ABSOLUTELY. THAT IS A BIG DIFFERENTIATOR. TOPLINE GROWTH HAS BEEN HARD TO COME BY ACROSS CONSUMER STAPLES SO YOU HAVE BEEN DEALING WITH CHANGING CONSUMER BEHAVIORS, TASTES, HEALTH AND WELLNESS, DIET CONCERNS, INGREDIENT PROFILE. THE LIST GOES ON. WHAT HAS BEEN REMARKABLE ABOUT COKE NOT JUST IN THE U.S. WHERE SOME OF THE THINGS THAT I JUST MENTIONED ARE PROBABLY U.S. AND WESTERN EUROPEAN CENTRIC CONVERSATIONS BUT HAS BEEN THE STRENGTH OF THE BRAND EQUITIES SO THE MOMENTUM THERE IS BEHIND BRAND COKE. THE FIFA WORLD CUP THIS SUMMER WAS LIKE A CELEBRATION OF COKE IF YOU ARE WATCHING THE RIGHT ADS OR IN THE RIGHT MARKETS. SO STRENGTH ACCORDING TO EQUITY, CONTINUED CONSUMER LOVE FOR THE BRAND AND GLOBAL GROWTH AND THAT HAS BEEN THE DRIVER OF THE STOCK PRICE PERFORMANCE YEAR TO DATE. EMILY: WHAT DO YOU EXPECT THE EARNINGS RESULTS TO TELL US ABOUT WHETHER ALL THE ADVERTISEMENTS ACTUALLY CONTRIBUTED TO MEANINGFUL GROWTH FOR THE STOCK? LAUREN: IT IS A BIG AND I WILL CALL IT AN EXCITING QUESTION. ALL THE ACTIVITY YOU CAN HAVE AROUND MAJOR GLOBAL SPORTING EVENTS. IS IT MARKETING AND BRAND BUILDING OR WILL IT DRIVE CONSUMPTION? I WOULD SAY DURING THE OLYMPICS OR THE EUROS IT WAS REALLY MORE ABOUT MARKETING. WE WILL SEE THIS YEAR WITH AMERICA 250, WITH FIFA WORLD CUP BEING IN THE U.S., YOU WERE BRINGING IN THE WHOLE U.S. CONSUMER BASE TO THIS GLOBAL SPORTS PHENOMENON. WHEN I TALKED TO SOME OF MY BOTTLING CONTEXT THEY TALK ABOUT THIS BEING SOME OF THE BEST SET OF COMMERCIAL ACTIVITY THEY HAVE EVER SEEN AROUND THE BRAND. WE WILL SEE TOMORROW. WHAT HAS BEEN DRIVING THE STOCK IS TOPLINE, BUT HOW DOES IT BEAR OUT IN THE CORNER? WAS IT A CONSUMPTION EVENT AND NOT JUST ABOUT MARKETING? ROMAINE: FIRST OF ALL ON THE FAIR LIFE CYBERATTACK, ARE YOU EXPECTING ANY SET OF MATERIAL HIT THAT WOULD SHOW UP IN THIS EARNINGS REPORT FOR THE FORECAST? LAUREN: GREAT NEWS WAS THAT THIS MORNING THEY CAME OUT AND SAID THAT THEY WERE, IT WAS LARGELY RESOLVED WAS THE LANGUAGE USED AND PRODUCTION WAS BACK UP AND RUNNING. SO NO DISRUPTION TO CONSUMER DEMAND AND THEY SAID IT WOULD NOT BE FINANCIALLY MATERIAL, THAT IS PART OF WHY THE STOCK IS UP TODAY. ROMAINE: MY FINAL QUESTION IS A LITTLE LIGHTER, THERE WAS THIS TALK ABOUT THE MINI SIZE OF COKE PRODUCTS, THAT COKE HAD REALLY LEANED INTO THAT. WAS THAT A DECISIVE DECISION TO OFFER THE IS AND IS THAT SOMETHING THEY ARE CONTINUING TO DO? LAUREN: ABSOLUTELY AND IT'S TRUE GLOBALLY AND IT'S NOT SOMEONE -- NOT JUST THE MINI CANS. I SAW SOMEBODY WITH A LEADER CAN OF DIET COKE. IT CAN ALSO BE BIGGER PACKAGES. 1.25 MULTI-SERVE YOU SHARE WITH YOUR FAMILY. THEY HUGE THE LANGUAGE PRICE BACK ARCHITECTURE BUT IT IS A LOT OF WHAT THEY DO TO MAINTAIN AFFORDABILITY AND REMAIN RELEVANT TO CONSUMERS WHEREVER THEY CAN ON A GIVEN DAY OF THE WEEK. EMILY: THANKS TO LAUREN LIEBERMAN AT BARCLAYS. THIS IS BLOOMBERG. ♪ >> IN THE CASE OF CHINA, THEY ARE PRODUCING MORE AI RESEARCHERS AND PROBABLY ALL THE WORLD HAS IN ANY GIVEN YEAR. THEY ARE PRODUCING MANUFACTURING INTELLIGENCE. THEY MANUFACTURE MOST IMPORTANT ELEMENT OF IT, THE RESEARCHERS. THIS IS A COUNTRY THAT WILL PRODUCE EXCELLENT AI TECHNOLOGY. ROMAINE: JENSEN HUANG IN HIS LEATHER JACKET SPEAKING TO AT THE LOW ON FRIDAY. HE'S DEFINITELY BULLISH ON AI BUT MORE IMPORTANT LINK GETTING TO THAT POINT THAT A LOT OF FOLKS FOCUSED ON, WHETHER HE'S BULLISH ON CHINESE AI. WE HAD A BIG IPO IN SHANGHAI. IT WAS TWO .4 TIMES OVERSUBSCRIBED AND THEN RALLIED 500% ON ITS FIRST DAY OF TRADING. EMILY: CXMT CORP. NOT ONLY DID IT IPO BUT ALSO IN THE SAME DAY BECAME CHINA'S LARGEST ONSHORE LISTED COMPANY. HOW IS THAT FOR SOME SUPERLATIVES? ROMAINE: IT RAISES A LOT OF QUESTIONS AND MUCH MONEY LEFT ON THE TABLE. THAT GOES TO SHAREHOLDERS AND NOT THE COMPANY. THE FACT THAT IT VAULTS INTO THE BIGGEST LISTING AS OURS A SHARES ABOUT WHERE THE PUCK IS GOING. GARY MARCUS IS AT NYU, FOUNDER, THE LETTER WHICH WAS ACQUIRED BY ONE OF THE PREEMINENT FOLKS AND KNOWS A LOT ABOUT WHERE WE ARE GOING IN THE SPACE. I WANT TO START OVER THE CHINA ANGLE. YOU HAVE WRITTEN A LOT ABOUT THIS IDEA CHINA SURPASSING THE U.S. IN THE AI RACE. ONE THING WE DID NOT HAVE IN THAT CLIP FROM JENSEN HUANG WAS A DISCUSSION HE'S HAD ABOUT PHYSICAL AI AND THE IDEA THAT CHINA AND ASIA OVERALL WAS MUCH MORE POISED TO EXPLOIT THAT RELATIVE TO THE U.S.-BASED AI COMPANIES. I'M CURIOUS IF YOU SEE SOME TRUTH TO THAT. GARY: I WOULD SAY I DON'T KNOW THAT CHINA'S WILL SURPASS US OVERALL IN AI BUT I THINK IT WILL BE MORE LIKE A TIE. I DON'T THINK WE SHOULD BE THIS IS WINNER TAKE ALL. ONE THING CHINA HAS AN ADVANTAGE IS BUILDING ROBOTS. ROBOTS ULTIMATELY NEED INTELLIGENCE IN YOU NEED SOME MOTOR CONTROL TO PHYSICALLY MANIPULATE THINGS. ON THE PHYSICAL MANIPULATION SIDE, CHINA'S AHEAD OF US. ON THE QUESTION OF PHYSICAL INTELLIGENCE, HOW TO UNDERSTAND THE PHYSICAL WORLD, THAT IS STILL PRETTY OPEN. I DON'T THINK ANYBODY HAS AI THAT DOES THAT ALL THAT WELL. THERE'S A LOT OF ROOM FOR A LOT OF COMPETITORS HERE. CANADA OR SOME OTHER PLACE. ON THE LARGE LANGUAGE MODELS, CHINA AND THE U.S. ARE BATTLING. THEY THINK IT IS TO THE DEATH BUT IT WILL BE A TIE. THERE ARE OTHER QUESTIONS ON SALT. -- ON SALT. -- UNSOLVED. ROMAINE: I DON'T WANT TO SAY THEY'VE MOVED ON FROM ELLA LIMBS WHAT MADE IT CLEAR THEY SEE THE NEXT MONEYMAKING OPPORTUNITY ON THE SECONDARY MARKETS HERE IN THOSE COMPANIES HAVE FOUND A WAY TO PROVIDE THE MORE PHYSICAL USE OF AI RATHER THAN JUST THE LARGE LANGUAGE MODELS. WE FOCUS SO MUCH ON OPENAI AND ANTHROPIC. THEY ARE PROBABLY GOING TO BE AROUND HOPEFULLY AND MAYBE BE A PART OF THAT. ARE YOU SEEING COMPANIES UNDERNEATH THE SURFACE, SMALLER COMPANIES THAT ARE FINDING WAYS TO PUSH US DOWN THAT ROAD? GARY: I HAVE NOT SEEN ANYTHING THAT'S ABSOLUTELY CONVINCING YET. I COMPLETELY AGREE THAT ELLA LIMBS ARE NOT THE ANSWER. I HAVE BEEN ARGUING THAT FOR SEVEN YEARS. -- LLM'S. IT'S GRATIFYING TO SEE PEOPLE REALIZE WE NEED OTHER INNOVATIONS. NEURAL NETWORKS HAVE BEEN AROUND SINCE THE 1950'S. IT TOOK A LONG TIME FOR PEOPLE TO TURN THEM INTO PRACTICAL TOOLS. IT WILL TAKE A WHILE TO TAKE WHATEVER THE NEXT ROUND OF INNOVATION IS AND MAKE IT A PRACTICAL TOOL THAT AFFECTS US ALL. THERE ARE DEEP FOUNDATIONAL QUESTIONS WE HAVE NOT ANSWERED ABOUT WHAT IT MEANS FOR AN AI TO UNDERSTAND THE PHYSICAL WORLD, THE SPATIAL WORLD, TO REASON CAUSALLY ABOUT THE THINGS THAT HAPPEN THE WORLD AND WHY THEY HAPPEN. I'M NOT SURE ANYBODY HAS GOT THE ANSWER TO THAT YET. I'M GLAD PEOPLE ARE STARTING TO EXPLORE A BROADER SPACE OF POSSIBLE ANSWERS THAN JUST LET'S BUILD MORE DATA CENTERS AND HAVE MORE DATA AND JUST MAKE A BIGGER LLM. I THINK WE NEED SCIENTIFIC INNOVATION HERE. EMILY: LET'S TALK ABOUT DATA CENTERS. WE ARE LOOKING AT SHARES OF NVIDIA TODAY GETTING HIT AS WE LEARN ABOUT THEM INVESTING POTENTIALLY OR BACKSTOPPING $250 BILLION FOR OPENAI-LED DATA CENTER. YOU HAVE WRITTEN IN YOUR LATEST SUB STACK POST THAT THE MARKET REACTION WE ARE SEEING TODAY IS MUCH DIFFERENT THAN WHAT WE SAW ORACLE ANNOUNCING INVESTMENT IN OPENAI. WHAT IS YOUR TAKE ON WHERE WE ARE IN THE MARKET CYCLE? WHAT DOES THIS SAY ABOUT HOW MARKET PARTICIPANTS ARE JUDGING ALL OF THESE VERY LARGE INVESTMENTS? GARY: PEOPLE ARE A LOT MORE JADED. YOU GO BACK TO 2020, PEOPLE TREATED OPENAI AS IF THEY WERE SOME KIND OF GOD. THEY WERE AMAZED TO SEE THESE LLM'S. THEY DIDN'T REALIZE THERE WERE TWO PROBLEMS. LLM'S ARE UNRELIABLE. THEY HALLUCINATE. THAT IS NOT GOING AWAY. EVERYONE IS BUILDING THE SAME THING THAT'S MADE IT'S HARD FOR ANYBODY BUT NVIDIA TO MAKE SIGNIFICANT PROFIT. NVIDIA IS MAKING SHOVELS AND A GOLD RUSH BUT COMPANIES LIKE ANTHROPIC AND OPENAI ARE BUILDING SOMETHING THAT'S FUNDAMENTALLY A COMMODITY. BECAUSE THE COMMODITY IS NOT PERFECT, PEOPLE DO WANT TO PAY FOR IT. EVEN AS FAR BACK AS SEPTEMBER, THESE COMPANIES WERE TREATED AS IF THEY WERE MAGIC. THE MAGIC IS WORN OFF. WHEN ORACLE MADE THIS $300 BILLION DEAL WITH OPENAI, WHICH WAS MAY MORE PROMISE THAN ACTUALLY IRONCLAD, EVERYONE WAS EXCITED. THE PRICE OF ORACLE WENT UP 40% IN A DAY OR SOMETHING LIKE THAT. YESTERDAY WAS KIND OF SIMILAR. WE HEARD THERE'S A BIG DEAL WITH OPENAI AND THE MARKET WAS LIKE, OK, WE HAVE SEEN THAT, HEARD THAT, KNOW ABOUT THE CIRCULAR FINANCING. PEOPLE ARE MORE EDUCATED. THEY WANT TO SEE WHAT HAVE YOU ACTUALLY DONE. HAVE YOU INCREASED THE PRODUCTIVITY OF CUSTOMERS OR MAKING PROFITS WERE JUST MAKING A DEAL THAT IS NOT MAGIC ANYMORE? EMILY: ARE YOU CONFIDENT WE ARE GOING TO ACTUALLY GET THOSE ANSWERS, AT LEAST IN THE NEAR TERM? GARY: MY VIEW IS IN THE NEAR TERM THINGS ARE GOING TO GO DOWN. IT IS VERY HARD TO TIME A BUBBLE BUT I THINK WE ARE IN A BUBBLE. IF YOU THINK ABOUT THE TWO LIPS IN 1630, YOU CAN SEE THE PRICES WERE RIDICULOUS. THE METAPHOR I KEEP USING IS IT'S LIKE BEING WILEY COYOTE OVER THE EDGE OF A CLIFF. HE DOESN'T VOLATILITY NOTICES AND I THINK PEOPLE ARE NOTICING VSTOXX I GOT DOWN THE LAST FEW MONTHS. -- NOTICING THESE STOCKS HAVE GONE DOWN THE LAST FEW MONTHS. I THINK THE BLOOM IS OFF THE ROSE AND IT WILL COME DOWN TO YOUR ACTUAL RESULTS. CAN YOU SHOW YOU CAN MAKE A PROFIT WHEN THE CHINESE COMPANIES ARE TRYING TO UNDERCUT YOU WHEN THE RELIABILITY PROBLEMS HAVE NOT BEEN SOLVED? LONG-TERM, 20 YEARS, AI WILL TRANSFORM OUR WORLD BUT RIGHT NOW IT'S MORE TALK THAN ACTUAL ACTION EXCEPT IN A FEW PLACES LIKE COMPUTER CODING. ROMAINE: THIS GETS TO THE IDEA OF WHAT ACTUALLY INTELLIGENCE IS. WE LABEL EVERYTHING ARTIFICIAL INTELLIGENCE. A LOT OF IT IS JUST GASSING ME UP ON MY CHATBOT RATHER THAN ACTUALLY THINKING. THIS IS YOUR FIELD OF STUDY. I ASSUME YOU HAVE INSIGHT INTO HOW FAR AWAY WE ARE. THERE'S A BOOK ABOUT DEEPMIND. WE ARE PAYING ATTENTION TO THE ROWAN COMPANIES. THE ONES THAT HAVE GIVEN US THE SHINY THING TO PLAY WITH. THE REAL HARD WORK STILL SEEMS LIKE IT IS STILL GOING ON AND THE ACTUAL OUTCOME IS STILL A WAYS OFF. ROMAINE: A METAPHOR I HAVE USED IS LIKE CLIMBING IN THE HIMALAYAN MOUNTAIN RANGE. YOU CAN GET TO THE TOP OF ONE MOUNTAIN AND THINK I HAVE DONE THIS AMAZING THING. THAT DOESN'T MEAN YOU'RE ACTUALLY THE TOP OF THE RANGE. WE HAVE TO CLIMB BACK DOWN THE MOUNTAIN. IT'S EXCITING WHERE WE ARE BUT WE HAVE TO GO BACK TO THE VALLEY AND DISCOVER SOME NEW THINGS. HOW WAS IT A CHILD CAN WATCH A MOVIE WHERE DIFFERENT THINGS HAPPEN, ALIENS OR SOMETHING LIKE THAT, AND UNDERSTAND THAT WHOLE DIFFERENT WORLD AND REASON ABOUT WHAT IS POSSIBLE IN THAT WORLD, WITH PEOPLE'S MOTIVATIONS ARE AND SO FORTH? I WATCHED PROJECT HAIL MARY AND THEY HAD UNDERSTAND OF THIS COMPLICATED DIFFERENT WORLD FROM THE WORLD WE ARE IN NOW. WE DON'T REALLY HAVE THE AI TO DO THAT, TO UNDERSTAND THE FICTIONAL WORLD AND READ ABOUT SOME NEW HEADLINES OR SOMETHING THAT'S NEVER HAPPENED BEFORE. I THINK WE HAVE SERIOUS CHALLENGES TO MEET ABOUT HOW WE MAKE AI THINK MORE LIKE SCIENTISTS RATHER THAN JUST STATISTICALLY MODELING THE THINGS THEY HAVE SEEN BEFORE. I THINK THAT IS HARD. WE WILL SOLVE IT EVENTUALLY BUT I DON'T THINK WE ARE WELL-POSITIONED RIGHT NOW. EMILY: SOMETHING TO KEEP AN EYE ON. GARY MARCUS AT NYU AND FOUNDER OF ROBUST AI AND GEOMETRIC AI. COMING UP, OIL SINKING OF THE U.S. PAUSED ATTACKS ON IRAN. WE WILL BREAK DOWN WITH A SLIGHT MEANS FOR THE BROADER MARKETING TODAY'S STOCK OF THE HOUR COME UP NEXT. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ >> OUR STOCK OF THE HOUR IS ACTUALLY A COMMODITY. CRUDE OIL. BRENT CRUDE SINKING 9% AFTER THE U.S. PAUSED STRIKES ON IRAN OVER THE WEEKEND IN AN EFFORT TO RESTART PEACE TALKS. JOINING US I'M TO BREAK IT DOWN IS CORRESPONDENT NORAH MULINDA. THANKS FOR JOINING US. WHY IS OIL DOWN THIS MUCH IF THE CONFLICT HAS NOT NECESSARILY ENDED ENTIRELY? >> THEY ARE ESSENTIALLY REMOVING SOME OF THAT GEOPOLITICAL RISK PREMIUM THAT WE HAVE BEEN SEEING FOR MONTHS ON END. THEY ARE NOT NECESSARILY PRICING IN THE FACT THAT THE WAR IS OVER OR THAT WE ARE SEEING THE END OF THE CONFLICT BUT MORE OR LESS THE FACT THAT WE ARE SEEING A LOWER PROBABILITY OF A MAJOR SUPPLY DISRUPTION DOWN THE ROAD. WE ARE SEEING OIL PRICES COMING BACK JUST A BIT BUT THEY STILL REMAIN VERY HIGH. NOT TO THE MARCH PEAK WE SAW FOR BRENT CRUDE BUT WE ARE STILL SEEING TRADERS TAKING A STEP BACK BUT WE ARE SEEING THE FACT THAT THEY ARE THINKING ABOUT THE FUTURE AND HOW IT MIGHT LOOK LIKE IN REGARDS TO HOW THE SUPPLY OPPORTUNITIES THERE. ROMAINE: IT'S GETTING TO THE POINT WHERE I JUST KIND OF CHECK OUT BUT I AM CURIOUS ABOUT THE MARKET'S RESPONSE PARTICULARLY IN EQUITIES. ON A DAY LIKE TODAY, SEEING AIRLINES VALLEY AND I GUESS THAT IS PARTLY BECAUSE EVERYONE ASSUMES THAT JET FUEL PRICES WOULD BE LOWER AND SOME OF THE OTHER COMMODITIES PRICES SELLING OFF BECAUSE THEY ARE MAKING A PROFIT. IS THERE A LONGER-TERM STORY WITH REGARD TO HOW THESE STOCKS ARE MOVING ON THE BACK OF WHATEVER THE HECK IS GOING ON IN THE MIDDLE EAST? NORAH: THAT IS THE QUESTION HERE. IF YOU TAKE A LOOK AT THE AIRLINES, UP ABOUT 6% YEAR TO DATE BUT WE ARE STILL SEEING THE GROUP REALLY PRESSURED THESE PREVIOUS MONTHS. YOU SAW AMERICAN AIRLINES REPORTING EARNINGS. WE HAVE BEEN HEARING COMMENTARY ABOUT THE FACT THAT THE JET FUEL PRICES ARE NOT ONLY PRESSURING THESE CORPORATIONS BUT ALSO THE CONSUMER. IF YOU TAKE A LOOK AT REGULAR UNLEADED GAS, IT IS SITTING AT AN AVERAGE -- ROMAINE: DON'T START. NORAH: WE GOING? ROMAINE: NOWHERE. NORAH: WE ARE STILL SEEING OIL UP 20% THIS MUST BE -- 20%. CERTAINLY FEELING AT THE PUMP. ROMAINE: THE PRESIDENT SPEAKING AT AN EVENT IN AN AUTO FACILITY, SAYING THAT IRAN IS, YOU KNOW, GOING TO BE HANDLED. THEY WILL LAND IRAN'S NUCLEAR THREAT VERY QUICKLY, BUT OF COURSE, STILL A LOT OF LOOSE ENDS WITH REGARDS TO THE ENERGY SITUATION THAT IS OF COURSE BEING JACKED DOWN. OUR MARKETS CORRESPONDENT, NORAH MULINDA, WITH OUR STOCK OF THE HOUR. A DAY WHERE OIL PRICES ARE DOWN NINE PERCENT. EXPECT THE EQUITY MARKET COULD BE MUCH HIGHER. WE ARE OFF THE LOWS OF THE DAY. STILL IN THE RED FOR THE BENCHMARK INDICES. A CONVERSATION UP AHEAD WITH JASON PRIDE WHO IS GOING TO TAKE US TO THE CLOSING BELLS RIGHT HERE ON BLOOMBERG. ♪ ROMAINE: JUST ABOUT 10 MINUTES AWAY FROM THOSE CLOSING BELLS. I AM ROMAINE BOSTICK. EMILY: AND I AM EMILY GRAFFEO. ROMAINE: WE HAD A PRETTY GOOD START BUT WE HAD A PRETTY STEEP SELLOFF JUST A FEW MINUTES INTO THE SESSION AND MARKETS ARE TRYING TO GET BACK TO THAT WATER LINE IN TIME FOR THE CLOSING BELLS. ROMAINE: THE S&P 500 -- EMILY:THE S&P 500 NOT REACTING MUCH TOO THAT LARGE DOWNWARD MOVE IN OIL. WE HAVE BRENT CRUDE DOWN ABOUT 9%, ROMAINE. AND YET THE INDEX IS JUST SITTING AT ALMOST UNCHANGED. THE TECH STOCKS ARE GETTING HIT. YOU CAN SEE THE NASDAQ 100 DOWN .4%. WHAT IS DRIVING THAT? IT'S NVIDIA, AMD, AND THOSE CHIP NAMES. MOST OF THE MAG 7 NAMES ARE HANGING IN THERE. MICROSOFT HIGHER. APPLE, ALPHABET. AND THEN OF COURSE, YIELDS ARE MOVING IN THE BACKGROUND BUT TRADERS ARE REALLY WAITING. ROMAINE: I HEARD THERE IS A FED MEETING. MAYBE. SO IT LOOKS LIKE KEVIN WARSH IS GOING TO HAVE A LITTLE COMPETITION AS TO WHAT THE MARKET PAYS ATTENTION TO AN RIGHT NOW, WE ARE GOING TO PAY ATTENTION TO THE CHIEF INVESTMENT STRATEGIST OVER AT -- JASON, I KIND OF WANT TO START OFF WITH THIS WILD WEEK. WE GET A TON OF ECONOMIC DATA WHICH WE HAVE TALKED ABOUT ON THE SHOW TODAY. WE HAVE THE FED MEETING AND A SLEW OF TECH EARNINGS, CONSEQUENTIAL TECH EARNINGS BECAUSE IT'S GOING TO GIVE US A BIT OF READ ON THE AI TRADE. WHAT DO YOU PAY MOST ATTENTION TO THIS WEEK? >> THAT IS A GREAT WAY TO THINK ABOUT IT. FIRST AND FOREMOST, THE MOST IMPORTANT THING TO BE WATCHING RIGHT NOW OVERALL IS JUST EARNINGS. AT THE END OF THE DAY, THE STOCK MARKET AND EQUITIES TEND TO FOLLOW THE VALUATION THAT IS ASSIGNED TO THEM BY ANALYST INVESTORS ON THE EARNINGS BASIS AND EARNINGS LATELY HAVE BEEN VERY STRONG. WHEN YOU HAVE A BACKDROP OF THE MAGNITUDE OF FUNDAMENTAL STRENGTH THAT WE HAVE IN TERMS OF BROAD-BASED STRENGTH, MAGNITUDE OF ECONOMIC AND FUNDAMENTAL GROWTH, THAT PROVIDES A LOT OF SUPPORT FOR A MARKET AND ACTUALLY ALLOWS IT TO SUSTAIN ITSELF AT ABOVE AVERAGE VALUATIONS, EVEN IN THE FACE OF ADVERSITY AND UNCERTAINTY LIKE WE HAD TODAY REGARDING THE MIDDLE EAST. ROMAINE: ABSOLUTELY AND IT SHOULD BE POINTED OUT, TALK ABOUT THE RESILIENCE OF THIS MARKET BUT ONE THING I'M CURIOUS ABOUT, WHEN YOU LOOK AT EARNINGS EXPECTATIONS HEADING INTO THIS QUARTER, INTO THIS EARNINGS SEASON, I SHOULD SAY, THE ANALYST ESTIMATES ARE ALL ASTONISHINGLY POSITIVE. WE ARE TALKING FOR MOST SECTORS WITH THE EXCEPTION OF A COUPLE, LOOKING AT DOUBLE-DIGIT PERCENTAGE GROWTH ON EPS, DOUBLE-DIGIT PERCENTAGE GROWTH IN REVENUE IN SOME CASES AND YET MAYBE WE GOT A LITTLE BIT OF A TASTE OF THIS LAST WEEK WITH ALPHABET, INTEL, AND A COUPLE OTHERS. EVEN IF YOU MEET AND EXCEED THOSE NUMBERS, YOU ARE SOLD OFF AND IT RAISES THE QUESTION AS TO WHETHER SOME OF THAT UPSIDE OR MOST OF THAT UPSET HAD ALREADY BEEN PRICED IN. JASON: LET'S ACTUALLY START -- I THINK YOU ARE MAY BE UNDERSELLING IT A LITTLE BIT. WHAT YOU DIDN'T SAY IS 20% PLUS EARNINGS GROWTH WHICH IS ACTUALLY WHAT THE NUMBERS GENERALLY ARE WHICH IS FURTHER INTO THAT DOUBLE-DIGIT TERRITORY . SO THAT IS REALLY STRONG EARNINGS GROWTH. DOES THAT ALLOW FOR SOME DISAPPOINTMENT? DO VALUATIONS TEND TO BACK OFF WHEN YOU ARE DISAPPOINTED? THAT CAN HAPPEN. THESE VALUATIONS CAN CREATE THAT BUT STILL, WHEN YOU ARE GENERATING 20% SORT OF GROWTH, THERE IS A LITTLE BIT OF ROOM THERE LONGER-TERM FOR THINGS TO TURN OUT IN YOUR FAVOR. DON'T THINK YOU ARE NOT GOING TO HAVE SOME DISAPPOINTMENT PARTICULARLY FOR THINGS THAT ARE EXPECTED TO REALLY STRONGLY OUTGROW AND EXPECTATIONS ARE REALLY HIGH OUT INTO THE FUTURE. THE IMPORTANT THING TO RECOGNIZE IS THIS ISN'T JUST ABOUT THOSE BIG TECH COMPANIES RUNNING ON EARNINGS NOW. THIS IS NOW ABOUT THE REST OF THE MARKET COMING IN BEHIND THOSE COMPANIES AND DELIVERING THIS DOUBLE-DIGIT EARNINGS GROWTH AS WELL BECAUSE THIS SCENARIO IS A BROADENING OUT OF EARNINGS GROWTH. NOW I HAVE ONE MORE THOUGHT TO THAT. THIS IS ON THE BACK OF A STRONG ECONOMIC ENVIRONMENT THAT HAS DELIVERED ON THE BASIS OF STIMULUS THAT WAS PUT IN PLACE LAST YEAR. COMPANIES ARE NOW REPORTING ON THAT STIMULUS IN THEIR BOOKS COME IN THE EARNINGS REPORTS, AND SHOWING UP ACROSS THE BOARD. EMILY: WHAT DOES THAT MEAN FOR THE FED MEETING? I KNOW ROMAINE SAID IT IS ALL FOCUSED ON MEGA CAPS BUT OF COURSE, WE ARE ALSO WONDERING WHAT CHAIR WARSH IS GOING TO DO IF YOU ARE SAYING THE ECONOMY LOOKS PRETTY STRONG. DOES THAT ARGUE FOR A HIKE? JASON: I THINK THIS IS GOING TO BE A REALLY INTERESTING MEETING, EMILY, BECAUSE THEY COME INTO IT WITH AN INFLATION RATE THAT IS NOT EXACTLY WHERE THEY WANT IT TO BE. AND AND EMPLOYMENT MARKET IS AT LEAST REASONABLY GOOD WHICH WOULD ARGUE MAYBE THEY HAVE A CHANCE OF RAISING RATES. HAVING SAID THAT, WHAT IS GOING ON KIND OF BEHIND THE SCENES THERE IF YOU ACTUALLY EVEN LOOK AT THE LATEST INFLATION REPORT IS THERE WAS ACTUALLY SOFTNESS IN THERE ACROSS THE BOARD ON A LOT OF DIFFERENT ITEMS THAT I THINK PROVIDES AN OPPORTUNITY FOR THEM TO TAKE AGAIN, YET AGAIN, A WAIT-AND-SEE APPROACH TO INFLATION AT THIS POINT IN TIME. IT WILL TAKE SOME TIME FOR US TO FIND OUT IF THIS INFLATIONARY MARKET WHICH IS PRIMARILY ENERGY AND FOOD RELATED INFLATION ACTUALLY TRANSLATES INTO A BROAD INFLATIONARY BASE. SO FAR, THE DATA IS NOT PROVING THAT OUT AND THESE FEARS THAT WE ARE GOING TO HAVE A LOT OF INFLATION ARE GENERALLY UNFOUNDED AT LEAST SO FAR IN THE DATA WHICH I THINK CREATES A SCENARIO WHERE THE FED CAN KIND OF WAIT UNTIL THEY ACTUALLY SEE THAT DATA DEVELOPED IN THAT DIRECTION. EMILY: THIS IS ALL COMING ON A DAY WHEN WE HAVE OIL PRICES LOWER AND THE INDEX NOT REALLY REACTING THAT MUCH. WHAT IS YOUR EXPECTATION FOR GEOPOLITICAL VOLATILITY FOR THE REST OF THE YEAR? IS THIS SOMETHING THAT MARKETS ARE GOING TO CONTINUE TO BRUSH OFF? JASON: FOR US, IT'S REALLY HARD FOR INVESTORS TO REALLY GAIN AN ADVANTAGE IN THINKING THROUGH GEOPOLITICAL RISK AND WE TEND TO NOT NECESSARILY WANT TO TRY TO MAKE ANY SORT OF SIGNIFICANT WAGE OR AS IT RELATES TO GEOPOLITICAL RISK. IF YOU CAN THINK ABOUT WHAT HAS BEEN GOING ON, WE HAVE AN ONGOING CONFLICT IN THE MIDDLE EAST THAT CENTERS AROUND SOME PRETTY IMPORTANT SHIPPING CHALLENGES -- CHANNELS. WE HAVE SOME RISK PLACED ON THE SECONDARY CHANNEL THAT WE THINK INVESTORS JUST NEED TO HAVE THEIR EYES ON. SO LONG AS IT FEELS LIKE THERE IS AN ELEVATED LEVEL OF CONFLICT IN THAT REGION, WE THINK THERE'S PROBABLY GOING TO BE AN APPROACH BY THE MARKET AND INVESTORS THAT LOOKS AT THIS AS A HIGHER RISK ENVIRONMENT THAT EVERYBODY NEEDS TO KEEP THEIR EYES ON. IT'S A RISK THAT SITS IN THE BACKDROP. I DON'T THINK YOU NECESSARILY WAGER ONE DIRECTION OR THE OTHER AROUND IT. YOU SIMPLY TRY TO CREATE RESILIENCY IN YOUR PORTFOLIO AND POSITION FOR LONG-TERM GROWTH. ROMAINE: JASON PRIDE COUNTING US DOWN TO THE CLOSING BELLS, A DAY WHERE YIELDS ARE DOWN, THE DOLLAR FLAT, A BIG DROP IN OIL PRICES, AND YET WE ARE TAKING A LOOK AT EQUITY PRICES. AT LEAST ON AN AGGREGATE BASIS, RELATIVELY UNCHANGED ON THE DAY. THAT IS AN IMPROVEMENT FROM WHERE WE WERE A COUPLE OF HOURS AGO. EMILY: JASON WAS TALKING ABOUT THE ROTATION. YOU CAN SEE IT IN THE TRADE TODAY. THE SMALL CAPS OUTPERFORMING, UP ABOUT .7% AND THE DOWN, I CAN TALK ABOUT THE DOW BECAUSE KATIE IS NOT HERE. THE DOW HIGHER AS WELL. ROMAINE: WE ARE GOING TO BREAK DOWN ALL OF THE MARKET ACTION WITHOUT GLOBAL SIMULCAST THAT STARTS NOW. >> CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: RIGHT NOW, WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK HERE WITH EMILY GRAFFEO TAKING YOU TO THE CLOSING BELL. IT IS A GLOBAL SIMULCAST. WE ARE JOINED BY THE SKIPPER CAROL MASSAR AND HER DILIGENT TIM STENOVEC. WELCOME TO OUR AUDIENCES ACROSS BLOOMBERG. GREAT TO SEE BOTH OF YOU, BELIEVE IT OR NOT, YOU TOO CAROL, ON THIS MONDAY. EMILY IS HERE TOO. CAROL: WHAT AN INTERESTING DAY. KIND OF MEH ON THE S&P IF YOU LOOK AT THE INDEX MOVEMENT, BUT GO INSIDE AND YOU HAVE A LOT OF NAMES TO THE UPSIDE. A FAIR AMOUNT OF GAINERS TO CHOOSE FROM. ROMAINE: JUST THREE. JUST THREE. CAROL: THERE IS MORE THAN THREE. ROMAINE: WE WILL LIMIT YOU TO THREE. CAROL: WELL, HOW ABOUT IF I'M TALKING A SECTOR AND I HAVE THREE OR FOUR? ROMAINE: HERE WE GO. CAROL: I KNOW THE WORKAROUND. TIM: THERE IS SOME MOVEMENT IN THE OIL MARKET. BRETT DOWN 9% TODAY, STILL ABOVE $87 A BARREL, BUT SOUTH OF $100 A BARREL, SOUTH OF $90 A BARREL. A LITTLE BIT OF A REPRIEVE. WTI CLOSE TO $82 A BARREL. ON A POTENTIAL PEACE DEAL IN THE MIDDLE EAST, THE PRESIDENT HAS BEEN TALKING ABOUT IT ALL DAY. EMILY: THE S&P 500 PRETTY MUCH FINISHING THE DAY UNCHANGED, PERHAPS A SIGN THAT THE FOCUS IS ALL ON THE MEGA CAP TECH EARNINGS WE WILL SEE THIS WEEK AND THE FED MEETING AND LESS SO ON GEOPOLITICS. ROMAINE: IT WILL BE A BUSY WEEK FOR EARNINGS. TODAY, NOT A LOT. WE WILL GET UNIVERSAL HEALTH AND APPLIED DIGITAL TODAY. IT WILL REALLY HEAT UP ON WEDNESDAY AND THURSDAY. FOR TODAY, A MIXED BAG FOR THE BROAD MARKETS WITH THE DOW JONES INDUSTRIAL AVERAGE IN THE GREEN HALF OF A PERCENT. THE S&P 500, WHICH OPEN HIGHER AND SPENT MOST OF THE DAY LOWER, LOOKS LIKE IT WILL BARELY CLOSE HIGHER, UP BY ONE POINT. 7413 AND CHANGE. THE NASDAQ COMPOSITE WILL FINISH IN THE RED, DOWN 0.2%. SIMILAR STORY FOR THE NASDAQ 100, DOWN 0.3%. THE S&P 400 MIDCAPS UP 0.3%. THE RUSSELL 2000 SMALL CAPS UP 0.6% ON THE DAY. CAROL: THERE IS YOUR OVERALL LOOK AT THE MARKET-RATE BEGINNING 328 NAMES HIGHER IN THE S&P 500 ON THIS MONDAY. 175 TO THE DOWNSIDE. EMILY: TAKING A LOOK HERE AT WHAT SECTORS WERE OUTPERFORMING, YOU CAN SEE CONSUMER STAPLES, COMMUNICATION SERVICES, FINANCIALS IN THE GREEN. INFORMATION TECHNOLOGY, THAT LARGE RED SLICED HERE --SL SLICE HERE. THE SECTOR DOWN ON THE DAY. ENERGY AND UTILITIES ALSO LOWER OF COURSE AS WE SAW OIL PRICES MOVING DOWN TODAY. CAROL: LET'S GO TO SOME OF THE INDIVIDUAL GAINERS. AS INVESTORS MOVED AWAY FROM SEMICONDUCTORS, THEY SAID LET'S CHECK OUT THE SOFTWARE APPLICATION STOCKS TODAY. APPLICATION SOFTWARE STOCKS OUTPERFORMED. TAKE A LOOK AT SOMETHING LIKE RICK DAY. IT WAS THE NUMBER ONE GAINER IN THE S&P, NUMBER TWO IN THE NASDAQ, OUTPERFORMING 9%. KEEP IN MIND WE KNOW IT HAS BEEN UNDER PRESSURE, DOWN 30% YEAR TO DATE. 14% OF THE FLOW IS SHORT. INVESTORS TAKING ANOTHER LOOK AT THAT NAME BEGINNING YOU HAD THE ISHARES EXPANDED TECH SOFTWARE EXCHANGE TRADED ETF FUND. IGB IS THE TICKER. THAT WAS OVERALL FOR THE SPACE ABOUT 3.33%. LET'S GO TO THE MEATPACKERS, SURGING AFTER THE UNITED STATES SAYS IT WOULD RESUME CATTLE SHIPMENT FROM MEXICO, EASING A DO MUSTARD SHORTAGE THAT LED TO HIGHER COSTS FOR ANIMALS -- USING A SHORTAGE THAT LED TO HIGHER COSTS FOR ANIMALS. WE ARE SEEING THAT AT THE SUPERMARKET. JBS SOME OUTPERFORMING TO THERE, UP 10% IN TODAY'S SESSION. ALSO, PILGRIM'S PRIDE UP ABOUT 1.8%. A YEAR-LONG BAN WAS PUT IN PLACE FOR SCREW WORM. THAT HAS CERTAINLY BEEN ON THE MEAT MARKET FOR A WHILE HERE. DID I SAY MEAT MARKET? [LAUGHTER] ALL RIGHT, YOU KNOW WHAT I'M TALKING ABOUT. LET ME GO TO FBRX. IS IT FORTE BIOSCIENCES? ROMAINE: I DON'T KNOW. YOU CALLED IT, RIGHT? CAROL: THIS ONE, SOME OUTPERFORMANCE AFTER AGREEING FOR $77 A SHARE IN CASH RESENTING A TOTAL EQUITY VALUE OF ABOUT $2.2 BILLION. STACK IS UP 180% YEAR-TO-DATE, SO IT LITTLE BIT OF DEAL FLOW. THAT I FORGOT TO GIVE YOU GUYS THE TICKER? MAYBE. TIM: I DON'T KNOW. CAROL: IT WAS THE OUTPERFORMER IN TODAY'S SESSION. TIM: LET'S GO TO THE DECLINERS. I WANT TO START WITH SHARES ON THE VIDEO TODAY, THE WORST PERFORMER IN THE S&P 500. SHARES FELL 5%, I COUNTY FOR 21 POINTS TO THE DOWNSIDE IN THE S&P 500 TODAY. THIS AFTER INVESTORS ARE TRYING TO DIGEST THE 700 BILLION DOLLARS IN DEALS IGNITING THE FEARS OF A CIRCULAR FUNDING WHEN IT COMES TO AI. FOR EXAMPLE, $500 BILLION DEAL WITH SK GROUP. NVIDIA INTEXT BACKSTOP OPENAI RELEASE COMPUTER POWER TO FINANCE. $350 BILLION OF PURCHASES OF THE CHIPS. INVESTORS ARE WONDERING WHAT THIS MEANS FOR CAPEX AND INVESTMENT HAPPENING IN THE AI INDUSTRY. NVIDIA SHARES DOWN 5% TODAY. ALSO, SPEAKING OF CHIPS, ASM HOLDINGS, ASML, ADR'S OF THIS COMPANY FELL BY 5.8%. THIS IS INTERESTING AFTER A REPORT A CHINESE STATE BACK COMPANY HAS BEGUN ANY FRACTURING OF CHIPMAKING MACHINES. IT STARTED MAKING LITHOGRAPHY TOOLS. IT HAS ASSEMBLED DEVELOPMENT TEAMS FROM OTHER CHINESE COMPANIES. FINALLY, GIVEN THE DECLINE IN ENERGY NAMES AND POTENTIALLY SOMETHING HAPPENING IN THE STRAIT OF HORMUZ BETWEEN THE U.S. AND IRAN, WATCHING WHAT IS HAPPENING WITH ENERGY AND WITH CHEMICALS AND FERTILIZERS. VENTURE GLOBAL FELL BY 10.4%. CF INDUSTRIES ON THE FROM OTHER SIDE FELL BY 4.2% -- ON THE FERTILIZER SIDE FELL BY 4.2%. ROMAINE: WE WANT TO TAKE A QUICK LOOK AT WHAT HAS BEEN GOING ON IN THE YIELD SPACE. TWO STRAIGHT SESSIONS NOW WHERE WE SEE YIELDS DECLINE. WE SHOULD POINT OUT THEY ARE SIGNIFICANTLY ELEVATED FROM WHERE THEY WERE JUST A COUPLE MONTHS AGO. 4.318% ON THE TWO YEAR YIELD. YOUR 10 YEAR, 4.6% AND CHANGE. THAT IS HEADING INTO THE TODAY FED MEETING WHICH BEGINS ON TUESDAY. CAROL: GOOD STUFF. LET'S GO TO SOME STORIES ON OUR RADAR TODAY. THIS ONE CERTAINLY CAUGHT OUR ATTENTION. MONTHLY RIDERSHIP ON THE LONG ISLAND RAILROAD, BUSIEST COMMUTER LINE IN THE U.S., PASSING PRE-PANDEMIC LEVELS. TIM: I KNOW ROMAINE TAKES THE CHAUFFEUR AND HELICOPTER WHEN HE GOES FROM PLACE TO PLACE BUT US NORMAL FOLKS TAKE PUBLIC TRANSIT. 7.9 USED THE LIR IN JUNE, ONE HUNDRED 2% MORE THAN THE SAME MONTH IN 2019. ROMAINE: DO PEOPLE USED TO GO TO WORK OR THE NEXT GAME -- KNICKS GAME? TIM: WE JUST NEED A SPORT TO DROP PEOPLE AND WE WILL BE GOOD. CAROL: THERE WAS ALSO GOLF FANS. ROMAINE: AREN'T YOU FANCY? THEY ARE KIND OF ROWDY, THOSE PEOPLE. EMILY: SOMEHOW TO GET A DOUBLE-DECKER TRAIN THERE. ROMAINE: I WAS THINKING THE BUS. ANYWAY, YEAH, LIR BACK. CONGRATULATIONS. NICE MILESTONE. HOPEFULLY PEOPLE START USING THAT TO COME TO THE OFFICE AND SUPPORT OUR ECONOMY. MEANWHILE, THE MOVIE ECONOMY IS DOING WELL. THE RELEASE OF "THE ODYSSEY," SOME THOUGHT IT WOULD FLOP, BUT THIS IS THE BIGGEST MOVIE OF THE YEAR. I SAW A STORY THAT IT IS ABOUT TO OPEN IN CHINA OVERSEAS THIS WEEKEND. IN CHINA, THERE ARE ABOUT 800 IMAX SCREENS. THEY ARE DEVOTING ALMOST EVERY SINGLE SCREEN TO THIS MOVIE TO ACCOMMODATE THE DEMAND. CAROL: WHO IS NUMB NUTS? ROMAINE: HAVE YOU SEEN THIS MOVIE, EMILY? EMILY: I REALLY WANT TO SEE THIS MOVIE. I CAN'T EVEN GET INTO THE 2:00 A.M. SHOWING IN NEW YORK CITY. THAT IS SOLD OUT. TIM: IF WE WAIT A FEW MONTHS, WILL IT BE FINE? ROMAINE: I THINK SO. TIM: THAT IS MY PLAN. ROMAINE: WHY NOT RELEASE IT ON STREAMING? EMILY: NO. TIM: WANT TO SEE IT IN THE 70 MILLIMETER IMAX. ROMAINE: WHAT DOES THAT MEAN? TIM: HIGHER QUALITY PICTURE, LIKE YOU ARE THERE. LIKE YOU ARE THERE READING THE BOOK ALL OVER AGAIN. CAROL: A TRIP, ALL OF US, AND GO. ROMAINE: ABSOLUTELY, YEAH. 2:00 P.M.? I AM AN EARLY BIRD. I GO TO DINNER AT 5:30. CAROL: EVERYBODY IS WATCHING. WE DON'T WANT TO DO THAT. MAYBE WE CAN DO THAT 4:00, 3:00. EMILY: THREE HOURS. CAROL: SO NONE OF US HAVE SEEN THIS YET. RIGHT? ROMAINE: IS THERE AN INTERMISSION? ANYWAY, GOOD FOR CHRISTOPHER NOLAN AND OUR FRIEND AT IMAX. I KNOW WE HAVE HAD HIM ON THIS PROGRAM A LOT. HE BANGS A DRUM ABOUT HOW HE WORKS WITH THESE DIRECTORS TO CREATE THESE EXPERIENCES AND HAS BEEN A BIG FAN OF CHRISTOPHER NOLAN. WHO BETTER TO TETHER YOURSELF TO THAN PROBABLY WILL GO DOWN AS ONE OF THE GREATEST DIRECTORS OF THE GENERATION? TIM: IT MIGHT BE TOO IMMERSIVE. I DON'T KNOW. SOME PEOPLE ARE TAKING PUBLIC TRANSIT AGAIN. THEY ARE GOING TO MOVIE THEATERS AGAIN. WE ARE BACK. ROMAINE: WE ARE BACK, BABY. CAROL: WE ARE BACK. ROMAINE: NOW IT IS TIME FOR US TO GO. CAROL: THAT IS A WRAP ON OUR CROSS-PLATFORM. WE CALL IT THE CLOSING BELL. EMILY AND ROMAINE ON "THE CLOSE" ON TV. WE WILL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. ROMAINE: A LOT MORE COVERAGE COMING UP ON "THE CLOSE" AS WE SET YOU UP FOR A BIG WEEK FOR BIG TECH EARNINGS. THAT IS COMING UP AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ♪ >> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." EMILY: WELCOME BACK TO "THE CLOSE." ROMAINE: AN INTERESTING START TO THE WEEK IN U.S. EQUITY MARKETS. TAKE A LOOK AT THE SCREEN BEHIND ME AND BELIEVE ME IT COULD HAVE BEEN WORSE. THE S&P 500 STARTED STRONG ON THE DAY AND DROPPED A PERCENTAGE BUT MANAGED TO CLOSE OUT THE DAY ON THE WATER LINE. A BIG PART OF THE DRAG WAS THE PHILADELPHIA SEMICONDUCTOR INDEX WHICH WAS DOWN ALMOST 5% IN THE SESSION EARLIER BUT MANAGED TO CLAW BACK SOME OF THOSE LOSSES AS WE GOT CLOSER TO THE CLOSING BELLS. THE BIG BENEFICIARY TODAY WE SAW OF THE ROTATION RATE WAS IN A LOT OF THE APPLICATION SOFTWARE COMPANIES. AND OF COURSE WE HAVE TO TALK ABOUT THE MACRO. A BIG DROP IN YIELDS ON THE BACK OF A BIG DROP IN CRUDE OIL PRICES. EMILY: YOU MENTIONED APPLICATION SOFTWARE. I WANT TO HIGHLIGHT WORKDAY. THAT STOCK UP 9% TO FINISH THE DAY. THE SOFTWARE TRADE, THE PRIVATE CREDIT FEARS KIND OF REVERSING TODAY AS INVESTORS BID UP SOFTWARE NAMES. NOT WORKING TODAY IS THE MEMORY NAMES. THOSE CHIP STOCKS FALLING. SANDISK IS WHEN I WANT TO HIGHLIGHT. DOWN 11% TO FINISH THE DAY. ROMAINE: THAT BRINGS US TO OUR TOP STORY OF THE HOUR. EARNING SEASON, CONSEQUENTIAL ONE. YES, WE SAY THAT ALMOST A RECORDER BUT THIS TIME IS DIFFERENT. WITHIN 170 COMPANIES IN THE S&P 500 SET TO REPORT THIS WEEK INCLUDING APPLE, MICROSOFT, AMAZON, THE FIRST, THIRD, AND FOURTH HIGHEST WHICH ACCOMPANIES IN THE INDEX AND EACH IS WIDELY ASSERTED TO BLOW PAST ANALYST EXCITATIONS FOR REVENUE GROWTH AND EARNINGS. YET EACH IS ALSO WIDELY EXPECT TO SEE THEIR SHARES SELLOFF AS A RESULT. THE QUESTION IS NOT SO MUCH WHY BUT RATHER WHAT WOULD ACTUALLY PLEASE INVESTORS ENOUGH TO ADD TO POSITIONS ON STOCKS COMING OFF ONE OF THEIR BEST RALLIES IN MORE THAN A DECADE. JOINING US NOW IS KIMBERLY FORREST OVER AT BOKEH CAPITAL PARTNERS. THAT IS WHERE I WANT TO START. I DON'T THINK ANYONE IS DOUBTING THE INCOME STATEMENTS AND BALANCE SHEETS, WHAT THEY WILL LOOK LIKE, BUT THERE IS SOME CONCERN ABOUT I GUESS MAYBE THE BALANCE SHEET, HOW MUCH THEY ARE SPENDING, AND WHETHER THERE IS ENOUGH OF A BALANCE BETWEEN THE CAPEX SPEND AND THE RETURN ON INVESTMENT, AT LEAST ENOUGH TO CONTINUE BIDDING OF THE STOCKS. WHAT DO YOU EXPECT? KIMBERLY: SURE. THIS IS THE QUESTION COMPANIES SHOULD BE ASKING THEMSELVES, WHAT OUR COMPANIES ARE SPENDING AND WILL THEY EVER WILL -- WILL THEY EVER GET IT BACK? PROBABLY AT THIS POINT WE ARE THINKING MORE ABOUT MARGINS AND EARNINGS IN THE FUTURE, RIGHT? WE DON'T CARE ABOUT WHAT'S HAPPENING TODAY. I DON'T THINK WE HAVE A GOOD ANSWER. PROBABLY THE STAR, IRONICALLY, OF THE WHOLE EARNINGS SEASON IS GOING TO BE APPLE, ALTHOUGH IT ALSO HAS CAUGHT -- IT HAD BEEN LAGGING. NOW THAT IT MIGHT RENT GOOGLE'S AI, PEOPLE ARE HAPPY. ROMAINE: TALK MORE ABOUT THAT. FIRST I WAS GOING TO THE STOCK PERFORMANCE. APPLE'S PROBABLY THE BEST PERFORMING TECH STOCK OVER THE LAST COUPLE OF MONTHS, NOTWITHSTANDING MEMORY CHIP COMPANIES. THE IDEA THAT EVERYONE HAD WRITTEN APPLE OFF, BASICALLY SAYING THEY HAD NO AI STRATEGY -- CLEARLY THEY HAD A STRATEGY, JUST DIFFERENT. I'M NOT MAKING A COMMENTARY WHETHER IT'S A GOOD STRATEGY OR NOT BUT DO YOU THINK AS WE GET TO WHATEVER THIS NEXT PHASE OF THIS A.I. RACE IS, THAT THAT STRATEGY OF SITTING ON THE SIDELINES, WATCHING EVERYTHING PLAY OUT AND PICKING YOUR PUNCHES IS THE WINNING STRATEGY? KIM: IT ABSOLUTELY IS THE WINNING STRATEGY, AND HERE IS WHY. FOREVER, APPLE HAS BEEN A PROVIDER OF HARDWARE. SURE, THEY HAVE IOS, WE HAVE TO HAVE APPLICATIONS THAT RUN ON THEIR SOFTWARE. BUT THEY ARE NOT LIKE MICROSOFT. THEY ARE MAKING END APPLICATIONS. THEY ARE MAKING MIDDLE AND LETTING DEVELOPERS DEVELOP. I THINK IT WAS ABSOLUTELY AN EXERCISE IN RESTRAINT TO NOT START PILING INTO A.I. AND PUTTING TOGETHER TEAMS OF DEVELOPERS THAT THEY DON'T REALLY DO THAT. RIGHT? I THINK THE STRATEGY IS COMPLETELY A WINNER. NOT ONLY THAT, IT LOOKS LIKE THEY WILL NOT COMPLETELY BUILD ON TOP OF ANYBODY'S STACK. SO JUST MAYBE THEY REALLY HAVE THE ANSWER HERE THAT YOU, THE END USER, CAN FIND THE A.I. THAT WORKS FOR YOU AND USE THEIR DEVICE. BECAUSE THEY ARE A HARDWARE MAKER. AND LIVE HAPPILY EVER AFTER. THEY DO HAVE A WINNING STRATEGY. >> KIM, I WANT TO ASK YOU ABOUT NVIDIA'S STRATEGY AND GET YOUR REACTION TO THE NEWS WE GOT THIS MORNING -- NVIDIA WORKING ON A FRESH ROUND OF A IDEALS WORTH MORE THAN $750 BILLION. EVEN FOR A COMPANY AS LARGE AS NVIDIA, THIS IS A TON OF MONEY. WHERE ARE THEY GOING TO GET THIS FUNDING FOR ALL THE DEALS TO GET DONE? KIM: THEY WILL FIRST OF A LOOK IN THEIR OWN POCKETBOOK. THEY HAVE BEEN ACCRUING MONEY. ANDAND I GUESS THEY ARE GOING TO GO OUT TO THE PUBLIC MARKETS OR PRIVATE MARKETS TO GET PEOPLE TO PARTICIPATE. WHAT I THINK THE REAL CONCERNING THING IS AND WHERE THEY ARE GETTING THE MONEY BUT HOW THEY ARE SPENDING THE MONEY -- AND THAT IS IN THEIR CLIENT BASE. WHILE YOU WANT A GOOD ECOSYSTEM, MEANING EVERYBODY IS WINNING AND NOBODY IS TAKING ADVANTAGE, YOU DON'T EVER WANT TO WORK WITH A FIRM THAT IS TAKING ADVANTAGE OF YOU. YOU ALSO DON'T WANT ONE THAT IS TOTALLY INVESTED IN YOU AND I GUESS THAT IS REALLY THE ISSUE WITH NVIDIA. THAT CIRCULAR FUNDING, WHERE THEY ARE SPENDING MONEY THEY HOPE WILL ULTIMATELY LAND RIGHT BACK IN THEIR EARNINGS STATEMENTS. >> I WANT TO ASK YOU ABOUT AMAZON, HAVE RESULTS COMING UP AND YOU ARE A BUYER OF AMAZON. ARE YOU BUYING MORE AMAZON AFTER THOSE EARNINGS? KIM: WE WILL SEEK. WE ARE AN OWNER OF AMAZON. WE ARE TRYING TO HAVE SOME EXPOSURE TO THE MAG7 WITHOUT BUYING ALL THE MAGNIFICENT 7. AND AMAZON HAS DONE SOMETHING WELL WHICH IS CREATE A PRODUCT PEOPLE WANT AND THAT WOULD BE AMAZON WEB SERVICES. THEY ARE SPENDING MONEY IN A.I. TO SATISFY THEIR CUSTOMER BASE. THIS IS UNLIKE NVIDIA, BECAUSE THE CUSTOMER BASE IS NOT GOING TO PARTICIPATE IN AMAZON IN SOME CIRCULAR FASHION. I THINK AMAZON'S SPENDING AS LONG AS THEY CAN SEE A WAY TO RECOVER THAT MONEY THEY ARE SPENDING. THEY KNOW THESE PEOPLE THAT ARE THERE CUSTOMERS WILL PAY THEM. IT'S FINE TO DO WHAT THEY ARE DOING. ROMAINE: ONE INTERESTING THING, IF YOU STRATEGISTS HAVE TALKED ABOUT THIS IDEA THAT THEY SEE SOME OF THE WINNERS CERTAINLY NOT IN THE SHORT-TERM AND LONG-TERM BUT COMPANIES THAT HAVE FOUND BETTER WAYS TO EMPLOY A.I. FOR THEIR OWN PRODUCTS AND SERVICES, AND I AM CURIOUS ABOUT THE RETAIL SHOPPING EXPERIENCE. I HAVE LESS TO SAY USE ONE PARTICULAR RETAILER -- HOW FAR ARE WE FROM HAVING THESE RETAILERS BE ABLE TO PUT SOMETHING FORWARD THAT THE CONSUMERS CAN USE TO FIND WHAT THEY WANT AND NEED AND NOT NECESSARILY WHATEVER THEY ARE PUSHING US? KIM: EXACTLY, THIS IS WHAT I WROTE IN MY NOTE. I LIKE AMAZON TO BUY THINGS, BUT TO SHOP IS A FRUSTRATION. REALLY DO HOPE SOMEBODY COMES UP WITH A PARADIGM. I HAVE NOT FOUND IT. SHOPPING ONLINE IS FRUSTRATING. IF YOU WANT TO BUY SOMETHING, YOU CAN BUY IT. BUT TO DO WHAT YOU DO IN A STORE, WALK THROUGH AND FIND AND DISCOVER THINGS YOU DID NOT EVEN KNOW YOU NEEDED -- THAT IS REALLY HARD TO DO ONLINE. I AM HOPING A.I. CAN DO IT. I DON'T KNOW. >> WE WILL HAVE TO SEE. THANK YOU, KIM FORREST, FOUNDER AND CHIEF INVESTMENT OFFICER AT BOKEH CAPITAL PARTNERS. AND COMING UP, SOME FED OFFICIALS THIS MONTH HAVE SIGNALED THEIR RATIONALE FOR HIGHER INTEREST RATES. THIS WEEK -- WILL THIS WEEK'S DECISION BE A CONTENTIOUS ONE? WE WILL ASK FORMER FED GOVERNOR BETSY DUKE. THIS IS BLOOMBERG. ♪ ROMAINE: A FEW THINGS CROSSING THE WIRE IN THE AFTER-HOURS TRADE, INCLUDING SOME EARNINGS, ALSO AN UPDATE FROM BUZZFEED, THE MEDIA COMPANY THAT IS BEING BOUGHT BY BYRON ALLEN'S INVESTMENT FIRM. THE COMPANY DOES PLAN TO CUT COSTS. THAT INCLUDES 35% OF THE WORKFORCE ACCORDING TO A STATEMENT NOW BEING RELEASED. THE COMPANY EXPECTS ABOUT 29 TO 32 MILLION DOLLARS IN ANNUALIZED SAVINGS. 8.5 MILLION DOLLARS IN RESTRUCTURING CHARGES TO ORCHESTRATE THAT. WE ARE GETTING EARNINGS OUT OF CADENCE DESIGN SYSTEMS WHICH PROVIDES A SOFTWARE TO HELP DESIGN CHIPS. THERE'S BEEN A BIG FOCUS ON A.I. AND WHERE WE ARE GOING IN THAT SPACE, THOSE SHARES ARE UP EXTENDED TRADING AFTER A RELATIVELY DECENT BEAT FOR THE MOST RECENT QUARTER. IT LOOKS LIKE THE GUIDANCE GOING FORWARD ALSO LOOKS RELATIVELY STRONG. EMILY: IT IS INTERESTING TO SEE THE INVESTORS REWARD A GOOD BEAT. WE DID NOT SEE THAT NECESSARILY FOR ALL THE EARNINGS WE GOT LAST WEEK. A LOT WERE GOOD AND YET THE STOCK WAS TRADING LOWER. ROMAINE: OF COURSE WHILE THE MARKET WILL HAVE A BIG EYE ON WHAT IS GOING ON WITH REGARDS TO THE BIG TECH EARNINGS, WE WILL HAVE AN EYE ON THE FEDERAL RESERVE. KEVIN WARSH, PRESIDING OVER A FED MEETING THAT TAKES PLACE TOMORROW. IT CONCLUDES ON WEDNESDAY. AND YES, HE WILL BE GIVING A PRESS CONFERENCE. JOINING US NOW TO TALK MORE ABOUT THIS AND THE EXPECTATIONS IS BETSY DUKE, FORMER FED GOVERNOR. . SHE JOINS US NOW. GREAT TO HAVE YOU ON THE PROGRAM. WE ARE GETTING TO THIS IDEA BY THE DEBATE THAT HAS TO GO ON BEHIND CLOSED DOORS, GIVEN THE FLUCTUATIONS WE CONTINUE TO SEE WITH REGARD TO THE SITUATION IN IRAN AND THE IMPACT ON ENERGY PRICES AND MORE IMPORTANTLY THE FEEDTHROUGH INTO MORE IMPACTFUL INFLATION NUMBERS THE FED WILL HAVE TO PARSE. BETSY: I DO NOT EXPECT THERE TO BE ANY CHANGE, BUT HONESTLY THERE'S A VERY GOOD CASE TO BE MADE FOR MAKING A CHANGE. IF YOU LOOK AT FIVE YEARS, MORE THAN FIVE YEARS THE FED HAS MISSED ITS TARGET. THE LABOR MARKET SEEMS TO BE STABLE, IN ANY CASE, THE GROWTH IN THE ECONOMY IS SOLID. THERE IS NO INDICATION I CAN SAY -- IT WOULD BE HARD TO MAKE THE ARGUMENT THAT THE CURRENT LEVEL OF INTEREST RATES IS RESTRICTED. SO, YOU KNOW, THEY CAME ALSO STRONGLY SAYING WE ARE GOING TO GET INFLATION UNDER CONTROL, IF THEY SEE THAT AND DON'T DO ANYTHING AND DO NOT SAY ANYTHING MORE, THAT IS HARD TO DEAL WITH. SO, A GOOD CASE CAN BE MADE FOR A QUARTER-POINT HIKE. ROMAINE: A HIKE WOULD BE INTERESTING, IT IS TO THAT POINT WE WERE TALKING A LOT OVER THE LAST FEW WEEKS ABOUT THE STRENGTH OF THE ECONOMY AND HOW IF THERE WAS ANY TIME TO MAKE A LITTLE BIT MORE OF A FIGHT AGAINST INFLATION, NOW WOULD BE A, DO YOU AGREE? BETSY: I THINK IT WOULD BE. IF I WERE IN THE ROOM I WOULD CERTAINLY BE ARGUING FOR IT. I DON'T THINK I WOULD BE AT THE POINT WHERE I FELT STRONGLY THAT I WOULD DISSENT BUT YOU MAY SEE DISSENTS AFTER THIS MEETING. EMILY: WHAT WOULD RESTRICTIVE POLICY LOOK LIKE TO YOU? BETSY: I THINK THE NEUTRAL RATE IS SOMEWHERE AROUND 4. THAT IS MY GUESS. AND I THINK WITH DE-GLOBALIZATION -- I THINK GLOBALIZATION MADE INFLATION REALLY EASY TO KEEP UNDER CONTROL, IN THE GREAT MODERATION. DE-GLOBALIZATION WILL TEND TO MAKE INFLATION HARDER TO KEEP UNDER CONTROL. EMILY: WHAT DO YOU KIND OF -- HOW DO YOU PARSE THROUGH THE ONE-TIME SHOCKS OF OIL AND GEOPOLITICS, VOLATILITY IN THE MIDDLE EAST, HAS HOW DOES THAT FACTOR INTO WHERE NEUTRAL REALLY IS? BETSY: EVERYTHING IN ECONOMICS IS LOOKING THROUGH ONE-TIME SHOCKS, BUT IT'S BEEN ONE-TIME SHOCK AFTER ONE-TIME SHOCK -- IT WAS SUPPLY SHOCK FROM THE COVID REOPENING, THERE WERE TARIFFS AND THE WAR, NOW THERE'S MORE TARIFFS AND TROUBLE IN THE MIDDLE EAST GOING ON. THERE COMES A POINT WHERE EACH OF THESE ONE-TIME SHOCKS HAS LINGERING EFFECT AND THEY PILED ON TOP OF EACH OTHER -- PILE ON TOP OF EACH OTHER. ROMAINE: ONLY ABOUT A MINUTE LEFT, WITH REGARDS TO KEVIN WARSH AND THE COMMUNICATION HE'S GOING TO HAVE TO GIVE, AT THE END OF THE DAY NO MATTER WHAT DECISION THEY MAKE WEDNESDAY, THE REAL CHALLENGE WILL BE TRYING TO EXPLAIN THAT TO INVESTORS AT 2:30 P.M. BETSY: I THINK THAT'S TRUE. YOU CAN AVOID GIVING FORWARD GUIDANCE. BUT AT SOME POINT YOU HAVE TO EXPLAIN THE DECISION YOU JUST MADE. THAT IS NOT FORWARD GUIDANCE. THAT IS A DECISION. SO, IT'S GOING TO BE INTERESTING TO HEAR AND REALLY INTERESTING TO SEE THE MINUTES FROM THIS MEETING. TO SEE HOW CONTENTIOUS IT ACTUALLY WAS. ROMAINE: BETSY, WAS A PRESSURE, APPRECIATE YOU GIVING US YOUR TIME, THE FORMER FED GOVERNOR THERE WITH A PREVIEW OF THE FED MEETING THAT KICKS OFF TOMORROW AND THE BIG DECISION ON WEDNESDAY. WHEN WE COME BACK, WE WILL TALK THE CONSUMER AND CATCH UP WITH THE PARTNERS OF CAVU VENTURE PARTNERS. THAT'S COMING UP AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ROMAINE: ALL RIGHT, THE CONSUMER CRAZE OVER HEALTHY LIFESTYLES REACHING NEW HEIGHTS ALONG WITH THE BRANDS OF THAT TREND. CAVU VENTURE PARTNERS INCLUDES BRANDS LIKE POPPI RAISED $205 MILLION IN ITS PAST FUNDING ROUND THIS FEBRUARY. JOINING US NOW ARE THE FOUNDERS OF CAVU, BRETT THOMAS AND ROHAN OZA. GREAT TO SEE YOU IN STUDIO TWO. YOU GUYS HAVE A LONG COLLECTION OF BRANDS. THE ONES WHO ARE CURRENTLY IN AS WELL AS OTHERS YOU MANAGED TO ALREADY CASH OUT. WHEN I HEAR VENTURE CAPITAL AND CONSUMER, I DON'T ALWAYS HEAR VENTURE CAPITALISTS ACTUALLY ALL THAT PLUS ABOUT VENTURING INTO THE CONSUMER SPACE. WHY DID YOU THINK YOU COULD MAKE THAT BET? BRETT: GO AHEAD. I SAW AN OPPORTUNITY WHERE I SAW THE WORLD STARTED TO GET HEALTHIER. I LEFT THE HEDGE FUND WHEN I TURN 30 AND SAID THIS IS GOING TO BE AN UNTAPPED AREA OF DEVELOPMENT WHERE THE CONSUMER OVER TIME WITH MORE INFORMATION AVAILABLE WILL WANT TO MAKE HEALTHIER CHOICES AND UPGRADE THEIR DIET, EXERCISE, AND LIVE LONGER, SO WE MADE AN EARLY BET IN 2010. WE STARTED CAVU IN 2015 IN THIS UNTAPPED SPACE. AS THE NEW GENERATIONS COME UP, THEY WILL BE USING DIFFERENT PRODUCTS TO TAKE CARE OF THEIR BODIES IN DIFFERENT WAYS THAN PREVIOUS GENERATIONS. ROMAINE: I DID NOT MEAN TO SHORT YOU, ROHAN. OBVIOUSLY, YOUR BIG CLAIM TO FAME IS WHAT YOU DID WITH VITAMIN WATER. I THINK YOU WERE WORKING ON ANOTHER DRINK AND THAT IS HOW YOU TWO HOOKED UP. TELL US ABOUT TAKING A CONSUMER PRODUCT, THE BARRIERS OF ENTRY, THE COMPETITIVENESS INVOLVED IN THAT, AND THE MARKETING KNOW-HOW YOU HAVE TO HAVE TO MAKE PEOPLE AWARE OF THIS ONE THING ACTUALLY EXISTS. ROHAN: JUST ONE POINT TO THE BEGINNING. WHY INVEST IN THE CONSUMER? ROMAINE: WHY? ROHAN: IT IS A MASSIVE TAB NOW BECAUSE IF YOU THINK OF THE CONSUMER AS LOGICALLY AND WELLNESS, BECAUSE YOU WERE TO MAKE MONEY FOR YOU AND YOUR FAMILY AND SEE, HOW CAN MY FAMILY LIVED BETTER? THAT STARTS WITH WHAT YOU PUT IN YOUR BODY. THE TAB IS NOW $7 TRILLION. WHEN WE STARTED, IT WAS $1 TRILLION. THE NUMBERS ARE STAGGERING FOR WHAT HUMANS SPEND ON THEMSELVES AND THEIR FAMILIES. THAT IS WHERE WE START. WE CONSIDER OURSELVES GROWTH EQUITY SO WE GO FROM LATER STAGE TO EARLIER STAGE. THE EARLIER STAGE IS THE BRANDING AND MARKETING YOU TALKED ABOUT, WHICH IS WHAT WE THINK WE DO DIFFERENTLY. POPPI IS PROBABLY THE BEST EXAMPLE. I FOUND THAT ON SHARK TANK AND SENT TO THE ORIGINAL FOUNDERS, GOOD NEWS, BAD NEWS. YOU HAVE A TERRIBLE PACKAGE AND BRAND NAME. WE SHUT THAT DOWN AND BASICALLY COFOUNDED IT BECAUSE WE CREATED THE NAME POPPI AND PUT IN THE MARKETING, TEAM, INFRASTRUCTURE, AND BUILT IT FROM ZERO TO 500 MILLION IN FIVE YEARS. EMILY: LET'S STAY ON POPPI, ON CONSUMER PRODUCTS LIKE THAT. WHEN YOU ARE KIND OF EVALUATING WHAT YOU WANT TO INVEST IN, SOMETHING LIKE A PREBIOTIC SODA, THERE IS SO MUCH COMPETITION NOW. I FEEL LIKE I GO IN MY BODEGA AND THERE ARE ROWS AND ROWS OF BRANDS. HOW DO YOU EVALUATE AND FIND THE BRAND THAT WILL STICK WITH CONSUMERS FOR THE LONG-TERM? BRETT: IS A GOOD QUESTION. ONE OF THE THINGS WE STICK TO IS A GUIDING PRINCIPLE. WE WANT TO BACK CREATORS OR INVENTORS. IT IS VERY DIFFICULT TO WIN. WE LOVE TO BACK ONE OF THE ONE OR TWO EMERGENT FORERUNNERS DISRUPTING AN EXISTING OLD CATEGORY WITH A BETTER MOUSETRAP OR CREATING A NEW CATEGORY WHERE WE WANT TO BE PART OF THE FIRST MOVER ADVANTAGE THAT IS REAL IN THE CONSUMER. ROMAINE: HOW DO YOU GET THE ATTENTION? I WANT TO GO BACK. I AGREE WITH YOU, BUT TO EMILY'S POINT, SHE WALKED INTO HER BUT I GOT, HER FANCY -- INTO HER BODEGA, HER FANCY BODEGA I AM SURE, AND I KNOW YOU HAVE PARTNERSHIPS WITH LIBERTIES. YOU HAVE JUSTIN TIMBERLAKE AND OTHERS. IS THAT WHEN IT TAKES TO GET PEOPLE TO NOTICE YOU? ROHAN: IS NOT ONE-SIZE-FITS-ALL BUT LET'S START WITH THE FIRST PART. WHAT HAS BEEN TRUE, ONE IN 10 INFLUENCERS INFLUENCE THE OTHER NINE. THAT IS HOW AMERICA WORKS. FINDING THAT ONE IN 10 IS CRITICAL. HOW YOU FIND THE ONE IN 10 IS WHAT HAS CHANGED. BACK IN THE DAY, YOU WILL REMEMBER THIS, AGING, RADIO DJS. WE HAVE INFLUENCERS BUT IT IS NOT A ONE INFLUENCER ONLY. IT IS A PYRAMID STRATEGY BUILDING UP. THAT IS HOW WE DID IT ON POPPI. BUT THE SAME TIME, YOU NEED PACKAGING, DESIGN THAT STANDS UP THAT IS BETTER THAN YESTERDAY, AND THE THIRD THING WE NEED IS HYBRID DISTRIBUTION STRATEGY. BECAUSE EVERYONE SAID DIGITAL IS GREAT, WHICH IS COOL, BUT FROM DIGITAL TO CAPITALIZE, YOU HAVE TO HAVE ACTUAL RETAIL IN REAL LIFE. ROMAINE: MOST OF YOUR PRODUCTS, ARE THEY DIRECT TO CONSUMER AS WELL? YOU HAVE SEEN SOME BRANDS GO STRAIGHT TO THE DIRECTOR CONSUMER ROUTE FORGET SOME STUCK BY IT AND OTHERS EVOLVED FOR LACK OF A BETTER PHRASE. BRETT: THERE WAS A TIME WHEN DDC WAS THE DARLING AND WHAT'S THE COST OF ACQUISITION KEPT RISING, THAT BECAME AN UNPROFITABLE BUSINESS MODEL. FOR THE FUTURE AND HOW WE BUILD BUSINESS BRANDS, YOU NEED TO BE IN BOTH PLACES. EVEN IF YOU DO NOT CONVEY THE GROSS MARGIN PROFILE TO SPEND IN A CERTAIN FORMAT LIKE GLASS BOTTLES ON AMAZON, YOU STILL NEED TO BE THERE AS A MARKETING CHANNEL BECAUSE IF YOU ARE IN A CROWDED BODEGA LOOKING AT A NEW PRODUCT, YOU MAKE ON YOUR PHONE TO AMAZON AND LOOK AT PRODUCT REVIEWS. IT IS A MARKETING CHANNEL. EMILY: I WANT TO TALK ABOUT TRENDS IN CONSUMER HEALTH, CONSUMER HEALTH TECH. YOU HAVE ONE OF THE COMPANIES YOU GUYS HAVE INVESTED IN. WHERE IS THE WHITE SPACE RIGHT NOW? BRETT: IF YOU ASKED ME THIS QUESTION FIVE OR SIX YEARS AGO, LONGEVITY IS THE CATEGORY. USED TO WAKE UP AND SAY I WOULD LIKE TO BUY ONE LONGEVITY PLEASE. IT IS PHYSICAL, ENERGY, SLEEP, ALL OF THESE DIFFERENT COMPONENTS MAKE UP ENERGY. WHEN WE LOOK AT THINGS WE ARE MOST EXCITED ABOUT, LONGEVITY IS AN CATEGORY. THE COMPANY FITS RIGHT IN THE CENTER. IT HAS GONE FROM A TRACKING DEVICE ON STEPS TO PIVOTING TO BEING A HEALTH OPERATING SYSTEM WHERE IT WANTS TO WONDER COLLECT ALL OF YOUR DATA IN ONE SPOT SO YOU CAN HELP MAKE BETTER INFORMED DECISIONS ABOUT NOT TREATING OR HEALTH ISSUE BY PREVENTING FUTURE HEALTH ISSUES. I THINK THERE IS A HUGE TAM. IT IS NOT WINNER TAKE ALL BUT LONGEVITY IS PROBABLY THE CATEGORY WE ARE MOST EXCITED ABOUT NOW. EMILY: I HAVE TO BE HONEST, I NEVER TRIED ONE OF THESE SLEEP TRACKERS. I NEVER TRIED AN AURA RING. I GET NERVOUS THAT TOO MUCH DATA IS GOING TO HURT MY PERFORMANCE, MY SLEEP. HOW DO YOU REEL A CONSUMER LIKE ME AND? ROHAN: TOO MUCH OF ANYTHING WILL HURT YOU, SELECT START WITH THAT. ONE, I WILL SEND YOU ONE. THAT IS THAT. I THINK FUNDAMENTALLY PEOPLE WANT TO KNOW WHAT IS GOING ON WITH THEIR BODY. BEFORE YOU GO TO THE DOCTOR ONCE EVERY YEAR, ONCE EVERY FIVE YEARS, YOU WOULD GO IN WHEN YOU WERE SICK. YOU NEVER WENT PREVENTIVELY TO FIND OUT WHAT IS GOING ON. WHAT TO DO IS ON A DAILY BASIS ON HOW YOU ARE FEELING. YOU PICK THE TWO ARE THREE THINGS YOU CARE ABOUT AND AS YOU BRING THE REST OF YOUR HEALTH CARE DATA WHICH IS WHERE IT IS MOVING TO NOW, HEALTH CARE INTO THE SYSTEM, THE AI MODEL HELPS TO UNDERSTAND YOUR ENTIRE SYSTEM. I THINK THAT IS CRITICAL DATA EVERYBODY WILL NEED. ROMAINE: ON THAT LONGEVITY, YOU THINK THIS IS A LONG-TERM STRUCTURAL TREND AND NOT JUST A FAD. EVERY DECADE OR SO WE GET THROUGH THIS FITNESS OR HEALTH FOOD FAD. EVERYONE GETS ONTO IT AND FALLS OFF THE WAGON. BRETT: WE DO. WE ARE CONVICTED THE CONSUMER'S WHOLE THESIS WE CAME OVER WITH OVER 10 PLUS YEARS AGO IS MORE TO TODAY. CONSUMERS WANT TO LIVE LONGER, FEEL BETTER, HAVE BETTER SLEEP. SO WE THINK THIS IS WORTH THE START OF THE BREAKTHROUGH OVER THE WORLD IS GOING FROM THE HEALTH STANDPOINT. ROMAINE: WE HAVE A MINUTE LEFT BUT I AM CURIOUS AND HAVE TO ASK YOU, PEOPLE LOOK AT YOU AND THINK YOU ARE THE SHARK TANK POPPI GUY WHO TOOK A PRODUCT MAKING NOTHING AND TURNED IT INTO A BILLION-DOLLAR BUSINESS. NOT TO SHORTCHANGE YOU, BUT IS THAT LIGHTNING STRIKING? OR CAN YOU REALLY REPLICATE THAT? I'M TALKING ABOUT AT THE LEVEL POPPI CAME IN AT AND TURNED IT INTO WHAT IT BECAME. ROHAN: IT IS NOT EASY TO REPLICATE. AND THE REASON, THE VISION I HAD FOR POPPI, WHEN I TRIED THE PRODUCT ON CHART TAKE, MY VISION WAS NOT PREBIOTIC SODA. MY VISION WAS MODERN SODA.AMERICANS LOVE SODA . IF I HAVE A PIZZA, A BURGER, I WANT A SODA WITH IT, SOMETHING I CAN FEEL GOOD ABOUT. THAT SAME THING WHETHER IT IS IN SODA, CHIPS, ANY CATEGORY, PEOPLE WANT TO EAT AND DRINK STUFF THEY FEEL GOOD ABOUT. SO THAT I BELIEVE IS A CHANGE THAT IS FUNDAMENTALLY HERE FOR A WHILE. THE BRANDS OF YESTERDAY MAY NOT BE THE BRANDS OF TOMORROW. ROMAINE: WHICH SHARK IS YOUR LEAST FAVORITE? [LAUGHTER] ROMAINE: DON'T ANSWER THAT. BRETT: KEVIN OBVIOUSLY. ROMAINE: BY THE WAY, WE HAVE HAD FIVE SHARKS ON. HE WAS INTERESTING. HE WAS ON ZOOM THANKFULLY SO WE DID NOT SEE THE BOTTOM. EMILY: I HOPE WE DON'T HAVE TO SEE THAT ANYTIME SOON. ROHAN OZA AND BRETT THOMAS, COFOUNDER AND MANAGING PARTNER OF CAVU, THANK YOU FOR JOINING US. GOOD TO SEE YOU. LET'S TAKE A LOOK AT HOW MARKETS CLOSED ON THE DAY. THE S&P 500 NOT DOING MUCH TO FINISH THE DAY, BUT WE HAVE SOME AFTER HOURS MOVERS HERE. CADENCE DESIGN SYSTEMS UP ABOUT 4.5%. UNIVERSAL HEALTH SERVICES ALSO IN THE RED, DOWN ABOUT 5.3%. APPLIED DIGITAL UP HIGHER. WHIRLPOOL IN THE AFTER HOURS UP ABOUT 1%. GOOD READ ON THE CONSUMER. MORE PEOPLE BUYING JACUZZIS, WHIRLPOOLS. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ EMILY: LET'S TALK ABOUT THE WORLD OF ONENESS. I WOULD GUESS AS THE RISE OF HEALTH AND WELLNESS IS RESHAPING THE CORNER OF THE INDUSTRY. YOU MAY HAVE HEARD OF HER COMPANY WHICH MADE A NAME FOR ITSELF WITH ITS INVISIBLE SUNSCREEN PRODUCT. SHE JOINS US LIVE IN STUDIO. GOOD TO SEE YOU HERE IN PERSON. >> THANK YOU FOR HAVING ME. EMILY: I WANT TO TALK ABOUT SUNSCREEN TRENDS, TRENDS IN SUNSCREEN. WE ARE SEEING PEOPLE ON TIKTOK SAYING USE SUNSCREEN EVERY DAY. ARE YOU SEEING THAT IN THE NUMBERS? THAT SUNSCREEN IS NO LONGER A SEASONAL PRODUCT BUT SOMETHING PEOPLE SHOULD BE USING EVERY SINGLE DAY. >> YEAH. THE WHEN IT IS AROUND HEALTH AND ALSO PREVENTATIVE HEALTH. IT IS REALLY TRULY CHANGING HOW CONSUMERS BEHAVE WHEN IT COMES TO SUN PROTECTION AND CONSUMERS ARE BECOMING INCREASINGLY MORE AWARE OF THE DANGERS OF UV EXPOSURE, AND WE ARE SEEING A SIGNIFICANT BEHAVIORAL SHIFT IN TERMS OF TURNING SUNSCREEN FROM A PURCHASE OCCASION FROM BEACHWEAR TO EVERYDAY ROUTINE, AND EVERYDAY ESSENTIAL ROUTINE, BUT THE NUMBERS ARE STILL FROM A HABIT FORMATION PERSPECTIVE STILL NOT THERE. TODAY IN THE U.S., ONLY 12% OF CONSUMERS PUT ON SOMETHING EVERYDAY AS OPPOSED TO A MAJORITY USE IT ON AN OCCASIONAL BASIS. WHEN YOU LOOK AT PERCEPTION, AWARENESS, REALITY, THERE'S A SIGNIFICANT GAP AS WELL. RECENTLY AMERICAN DERMATOLOGY ASSOCIATION DID A SURVEY AND ACTUALLY FOUND 16 MILLION U.S. CONSUMERS STOPPED USING SUNSCREEN ALTOGETHER BECAUSE OF THE MISINFORMATION ONLINE. EMILY: I WANT TO ASK YOU ABOUT PRICE. YOU WERE AT AMAZON AND YOU KNOW OF THE IDEA OF A DUPE HERE, THERE IS SUNSCREEN'S, THERE'S THE ORIGINAL INVISIBLE SUPERGOOP! AND OTHERS THAT COST MUCH LESS. HOW DO YOU COMPETE WITH ALL THE OTHER SUNSCREEN PRODUCTS OUT THERE WHEN SOME OF YOUR SUNSCREEN DOES COST $30, $40 FOR A SMALL BOTTLE? MELIS: WE HAVE BEEN INNOVATING IN THIS INDUSTRY FOR TWO PLUS DECADES. AS YOU SAID IN THE BEGINNING, WE HAVE BEEN A CATEGORY DISRUPTER AND CREATED THE INVISIBLE SUNSCREEN CATEGORY WITH THE UNSEEN SUNSCREEN. YES, SOME BRANDS CHOOSE TO, YOU KNOW, DUPE OUR LOOK, BUT I DON'T THINK IT IS ACTUALLY DUPING OUR FORMULA BECAUSE WHAT MATTERS IS ACTUALLY THE PRODUCT'S THE EFFICACY -- THE PRODUCT'S EFFICACY, THE SAFETY OF THE FORMULA YOU USE. SUNSCREEN, IT IS PARTICULARLY IMPORTANT AT THE HIGHEST SAFETY AND INGREDIENTS COMES INTO PLAY. ROMAINE: THE COMPANY HAS BEEN DOING THIS FOR A COUPLE OF DECADES, THE FOUNDER LAST -- LEFT LAST YEAR, YOU TOOK OVER AS THE NEW CEO. THERE'S BEEN QUESTIONS ABOUT THE FUTURE OF THE COMPANY. AND HE PLANS TO GO PUBLIC AT ALL? MELIS: -- ANY PLANS TO GO PUBLIC AT ALL? MELIS: IT'S BEEN ALMOST EIGHT MONTHS AND I AM VERY MUCH ALIGNED WITH OUR INVESTOR COMPANY, WHO HAS INVESTED IN SUPERGOOP! IN LATE 2021. ROMAINE: THAT'S BLACKSTONE. MELIS: IN TERMS OF THE LONG-TERM OBJECTIVE FOR SUPERGOOP! THE FOCUS IS BUILDING A SUSTAINABLE, SCALABLE GLOBAL BRAND, WHERE WE CONTINUE TO DRIVE THE MISSION OF HELPING CONSUMERS USE SUNSCREEN EVERYDAY. CURRENTLY MY FOCUS IN THE NEXT FEW YEARS IS TO CONTINUE TO BUILD THAT BUSINESS MOMENTUM AND GROWTH. ROMAINE: YOU RAN AMAZON'S HEALTH AND BEAUTY BUSINESS FOR A LOT SO YOU HAVE THE PERSPECTIVE OF LARGE-SCALE SALES. WHAT GETS SUPERGOOP! TO LARGER SCALE? A WIDER VARIETY OF PRODUCTS OR USERS OF THE EXISTING PRODUCTS? MELIS: FROM A CATEGORY PERSPECTIVE, THE PENETRATION OF EVERYDAY USE IS VERY LOW. THERE IS A SEVEN -- THERE IS A SIGNIFICANT OPPORTUNITY FOR ALL BRANDS TO DRIVE THE MISSION OF EVERYDAY USAGE OF SUNSCREEN. BECAUSE 1 IN 5 AMERICANS UNFORTUNATELY EXPERIENCE AGAINST SCANS ARE IN THEIR LIFETIME OF THE DANGERS AND RISKS ASSOCIATED WITH NOT USING SUNSCREEN IS VERY REAL. WE CONTINUE TO DRIVE PENETRATION OF NEW CONSUMERS WHILST ALSO DRIVING STRONG LOYALTY WITH EXISTING CUSTOMERS. OVER THE PAST TWO DECADES, WE HAVE BUILT A VERY LOYAL AND STRONG CUSTOMER BASE. ROMAINE: REALLY APPRECIATE YOU JOINING US TODAY, WE WILL CONTINUE TO FOLLOW WHAT IS GOING ON. CEO O -- MELIS DEL REY, CEO OF SUPERGOOP! WE WILL MAKE A HARD PIVOT FROM SUNSCREEN TO HAMBURGERS. WE WILL TALK ABOUT FIVE GUYS. THEY NEXT -- COULD THEY BE THE NEXT CHANCE TO GO PUBLIC? THE BIG IPO IS SCHEDULED FOR THIS WEEK. WE WILL TALK TO THE CEO OF FIVE GUYS WHEN WE COME BACK AFTER THE BREAK HERE ON BLOOMBERG. ♪ ROMAINE: LET'S TALK FIVE GUYS. YOU KNOW THE HAMBURGER CHAIN, THEY GIVE YOU A PAPERBACK ENDS UP IT WITH A WEEKS WORTH OF FRIES. IT'S BEEN 40 YEARS SINCE THEY OPEN BACK IN ARLINGTON, VIRGINIA.'S FAMILY HELD AND NOW OPERATING IN 30 COUNTRIES WITH ALMOST 2000 STORES AROUND THE WORLD. HAD A CHANCE TO SIT DOWN WITH JERRY MURRELL. THE COFOUNDER AND CEO OF FIVE GUYS. WE DISCUSSED IT IS STILL A FAMILY-RUN OPERATION AND ASKED WHAT IS NEXT FOR THE COMPANY. AS YOU GROW AND GET TO A POINT IN YOUR LIFE WHERE YOU MAY BE WANT TO PASS THE BATON A LITTLE BIT, HAVE YOU THOUGHT ABOUT GOING PUBLIC, OR IS THE IDEA TO KEEP THIS COMPANY A CLOSELY HELD BUSINESS? JERRY: WE LOOK AT ALL THE OPTIONS. WE GOT A LOT OF OFFERS TO GO PUBLIC AND SELL THE BUSINESS. YOU'VE GOT TO REMEMBER THAT WE'VE GOT PROBABLY 30 -- NOT 30 BUT CLOSE TO 20 FAMILY MEMBERS WORKING IN OUR BUSINESS, GRANDKIDS, KIDS AND WIVES, A WHOLE LOT OF RELATIVES THAT LIKE FIVE GUYS AND WANT TO KEEP IT. ROMAINE: YOU KEEP BRINGING UP FAMILY, JUST THE NAME OF YOUR BUSINESS HARKENS BACK TO YOU AND AT THE TIME YOUR FOUR SONS, HOW DO YOU KEEP A FAMILY BUSINESS GOING LONG-TERM, YOU KNOW, WHEN THERE ARE SO MANY PRESSURES OUT THERE TO SORT OF EITHER SHIFT TO THE BUSINESS IN A DIFFERENT DIRECTION OR JUST DEALING WITH CHANGING TASTES AND PERCEPTIONS IN THE CONSUMER MARKETPLACE? JERRY: I GET A WHOLE LOT OF CREDIT FOR THINGS I DON'T DO. [LAUGHTER] FIVE GUYS WAS BUILT BY MY FIRST THREE OLDER SONS AND JANEY, JANEY AND THE FIRST THREE BOYS BUILT FIVE GUYS, I NEVER COOKED A HAMBURGER. THEY DID ALL THE WORK. AND WHATEVER DECISIONS THEY MADE, WE WENT ALONG WITH THEM, AND THAT IS STILL THAT WAY. SO, I THINK THEY ARE ALL HAVING FUN AND THEY WANT TO KEEP DOING IT. ROMAINE: WHOSE DECISION WAS IT TO PUT ALL THOSE FRIES INTO THE BAG, BASICALLY OVERLOAD IT? THAT BROUGHT A LOT OF PEOPLE TO FIVE GUYS, THAT WAS KIND OF THE HALLMARK, YOU COME FOR THE BURGERS AND WALK OUT WITH A WEEKS WORTH OF FRIES. JERRY: I REMEMBER MY KIDS WHEN WE USED TO GO TO SOMEPLACE FOR HAMBURGERS AND FRIES, ONE OF THE THINGS THE KIDS DID NOT LIKE WHEN THEY WERE LITTLE IS NOT HAVING ENOUGH FRIES IN SERVING. -- IN THEIR SERVING. THE KIDS NOTICED RIGHT AWAY IF THEY PUT EXTRA FRIES IN AND THEY WOULD GIVE MORE TIPS. [LAUGHTER] SO WE THOUGHT, BE GENEROUS WITH THE FRIES, AND IT'S NOT SOMETHING WE DO ON A MARKET THING, IT'S JUST SOMETHING WE'VE DONE. PEOPLE ASK US, ARE PAPER BAGS -- IS THAT A MARKETING THING? NO, IS JUST CHEAP. [LAUGHTER] THAT'S WHAT WE DO. ROMAINE: DO YOU SPEND A LOT ON MARKETING? IF YOU LIKE I DON'T SEE A LOT OF IN-YOUR-FACE TRADITIONAL ADVERTISING THAT YOU GET WITH A LOT OF OTHER FAST FOOD CHAINS. YOU EITHER KNOW ABOUT FIVE GUYS ARE YOU DON'T. -- OR YOU DON'T. JERRY: IN ANY BUSINESS, MARKETING IS THE MOST IMPORTANT THING THERE IS. NOW, WE HAVE NOT HIRED PEOPLE THAT ARE NOT FAMILIAR WITH OUR BUSINESS TO GO UP AND MARKET FOR US. BUT A CLEAN BATHROOM IS MARKETING. SAYING HELLO TO THE CUSTOMERS, MARKETING. SO, WE BELIEVE GREATLY IN MARKETING. WE JUST HAVEN'T PAID FOR IT SO FAR. ROMAINE: MY LAST QUESTION HERE ALSO HAS TO DO WITH THIS IDEA GOING BACK TO EXPANSION, YOU HAVE A FEW HUNDRED STORES OUTSIDE OF THE UNITED STATES. WHEN WE THINK ABOUT THE BURGER AND FRIES WHICH IS QUINTESSENTIALLY AMERICAN, WE THINK OF IT THAT WAY, HOW MUCH DOES THAT TRANSLATE INTO ASIA OR EUROPE OR LATIN AMERICA OR WHEREVER? JERRY: THAT'S A FUNNY QUESTION BECAUSE WHEN WE FIRST STARTED -- I REMEMBER WE OPENED UP A STORE 90 MILES AWAY FROM US IN RICHMOND, VIRGINIA. I COULD NOT SLEEP THAT NIGHT. BECAUSE I SAID, PEOPLE ARE NOT GOING TO KNOW WHO WE ARE. AND WE OPENED UP AND WE DID ALL RIGHT. SAME WITH GREAT BRITAIN. I SAID, MY GOSH. WHY WOULD YOU WANT TO OPEN UP IN GREAT BRITAIN? ? THEY DON'T KNOW ANYTHING ABOUT HAMBURGERS AND FRIES. IN ALMOST EVERY COUNTRY WE HAVE OPENED UP IN, I HAVE BEEN WORRIED WE WOULD NOT BE ACCEPTED. BUT WE HAVE BEEN LUCKY AND PEOPLE HAVE ACCEPTED US. ROMAINE: JERRY MURRELL. COFOUNDER AND CEO OF FIVE GUYS. THAT DOES IT FOR US HERE ON "THE CLOSE" THIS MONDAY AFTERNOON. WE WILL BE BACK TOMORROW WITH ALL THE MARKET NEWS HERE ON