Massive Day for Earnings as Fed Decision Looms | The Close 7/28/2026

>> THEY COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ROMAINE: PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET. EMILY: WE ARE KICKING YOU OFF TO THE CLOSING BELL IN THE U.S. AS THE NASDAQ 100 FLIRTS WITH CORRECTION AND CHIP STOCKS DRIVE DEEPER INTO BEAR MARKET TERRITORY. ROMAINE: A LOT OF QUESTIONS RIGHT NOW ABOUT THE AMOUNT OF SPENDING THAT -- WELL, THESE THINGS YOU SEE ON THE SCREEN. MAINLY THE THREE AT THE TOP, MICROSOFT, META, AND AMAZON, THE HYPERSCALERS, AND IF WE WILL SEE OR START TO SEE A RETURN ON INVESTMENT, BUT THE BIGGER QUESTION IS ABOUT EVALUATION. IF YOU ARE WILLING TO LOOK PAST THAT BIG SPENDING, MAYBE YOU CAN SCOOP UP SOME MARKETS. THROW IN ORACLE AS WELL AS ALPHABET. WE ARE TALKING ABOUT A BASKET OF STOCKS TRADING AT A FORWARD P/E RATIO OF LESS THAN 18. COMPARE THAT TO THE S&P 500 AS A WHOLE, WHICH IS OVER 20. THE CHRISTIAN FAMILY CHAIR OF FINANCE AND EDUCATION AND PROFESSOR OF FINANCE AT THE NEW YORK UNIVERSITY SCHOOL OF BUSINESS. I WANT TO START WITH THIS IDEA OF HOW YOU ACTUALLY VALUE SOME OF THESE HYPERSCALERS. IT IS EASY TO LOOK AT THAT CAPEX SPEND. LET'S LOOK AT ALPHABET, WHICH HAS ALREADY REPORTED. IT IS EASY TO LOOK AT THE NEGATIVE CASH FLOW NUMBER THEY REPORTED AND RAISED SOME CONCERNS, BUT AT THE SAME TIME, THERE'S IS A LONG-TERM STORY SOME INVESTORS WILL LOOK AT AND SAY, I'M COMFORTABLE WITH WHAT I'M SEEING ON THE TABLE. ARE YOU COMFORTABLE? >> EACH OF THESE COMPANIES HAS A CASH COW BUSINESS THAT LEADS INTO WHAT THEY DO. HISTORICALLY, THOSE WERE AVAILABLE TO INVESTORS, BUT IN THE LAST FOUR OR FIVE YEARS, WE HAVE SEEN THE BIGGEST BUILD IN HISTORY. THESE COMPANIES COLLECTIVELY ARE BIG -- BUILDING THE BIGGEST ARCHITECTURE AND FACTORY, BUT THE PROBLEM IS NO ONE KNOWS WHAT THEY ARE GOING TO MAKE OR WHO WILL BUY THE PRODUCTS. I THINK THE UNCERTAINTY INVESTORS FEEL IS MAYBE THESE COMPANIES HAVE COLLECTIVELY OVER INVESTED. IT DOES NOT MEAN ALL OF THEM WILL WALK AWAY AS LOSERS, BUT COLLECTIVELY, I THINK THEY HAVE INVESTED. ROMAINE: MOST PEOPLE I THINK WOULD AGREE WITH YOU. MOST PEOPLE THINK THERE WOULD BE SOME CORRECTION IN THAT AMOUNT OF SPENDING. MOST PEOPLE WOULD ALSO LOOK AT THE BALANCE SHEETS AND INCOME OF THESE COMPANIES AND SAY THEY COULD ACTUALLY WITHSTAND A SHORT-TERM CORRECTION IN THAT STRATEGY. DO YOU THINK THEY CAN? >> ABSOLUTELY. I THINK NONE OF THESE COMPANIES IS IN DANGER OF DEFAULT. THEY ARE BIG COMPANIES WITH CASH COWS. THE QUESTION IS -- WHEN THE DATA STARTS TO COME IN THAT THINGS ARE NOT WORKING, WHICH OF THESE COMPANIES WILL STEP BACK FROM THE BRINK? SOME OF THESE COMPANIES SAYING BABY WE SPENT TOO MUCH AND WE SHOULD BE MORE CAUTIOUS GOING FORWARD. I THINK IT'S INTERESTING THAT APPLE IS IN THE MIX BECAUSE IT IS ON THE SIDELINE SAYING WE WILL WAIT TO SEE WHAT HAPPENS. APPLE MIGHT BE THE BIG WINNER AND THESE OTHER COMPANIES THAT MIGHT HAVE JUMPED IN TOO SOON WITH TOO MUCH MONEY MIGHT END UP GIVING UP 10%, 20% OF MARKET CAP, AS A CONSEQUENCE. EMILY: WE WERE JUST LOOKING AT A CHART OF CDS SPREADS WIDENING ON SOME OF THESE HYPERSCALERS YOU WERE TALKING ABOUT. IT SEEMS THAT SOME OF THESE CRACKS ARE STARTING TO SHOW UP IN THE CREDIT MARKET. HOW DO YOU THINK ABOUT THAT AND WHAT IT TELLS US ABOUT WHERE WE ARE IN THE CREDIT CYCLE? >> I DON'T THINK ANY OF THESE COMPANIES HAVE A CREDIT PROBLEM, BUT SMALLER COMPANIES HAVE USED A LOT MORE DEBT TO FUND DATA CENTERS THAT I THINK ARE IN TROUBLE, AND I THINK IF THEY GO DOWN, THEY WILL TAKE A SEGMENT OF THE PRIVATE CREDIT DOWN, AND THAT IS DANGEROUS BECAUSE IT CAN DRAG THE REST OF US DOWN. I NOTE THE SPREADS ARE WIDENING, BUT IF YOU LOOK AT THE SIZE, 93 BASIS POINTS IS STILL IN THE AA/A-PLUS RANGE. THERE ARE OTHER COMPANIES WHERE I THINK IT IS DANGER TERRITORY. EMILY: LIKE WHAT? >> YOU CAN TAKE THE SMALLER COMPANIES IN THE AR ARCHITECTURE SPACE. THE DEBT CAN BE A REAL ISSUE BECAUSE YOU DON'T HAVE A CASH COW FEEDING INTO THE PAYING MODEL OF DEBT WHEREAS EVERY OTHER ONE OF THESE COMPANIES IF THEY STOP INVESTMENT TOMORROW WOULD BE ABLE TO USE THE CASH FLOWS FROM THEIR ADVERTISING BUSINESS AND SOCIAL MEDIA BUSINESSES TO COVER THE COST OF THE DEBT THEY TOOK ON TO FUND THE AR ARCHITECTURE. ROMAINE: YOU HAVE TALKED A LOT ABOUT THE CLOUD IS THIS FOR SOME OF THESE COMPANIES BEING A UTILITY, BEING OFFER, IF YOU WILL. I'M CURIOUS WHAT YOU THINK ABOUT MARK ZUCKERBERG'S PLAN FOR META TO TRY TO PUSH INTO THE SPACE. LATE TO THE PARTY, TO BE SURE. ARE WE READING TOO MUCH INTO THAT AS A STRATEGIC DECISION THAT THE BUSINESS IS STILL STRONG, BUT IF THEY ARE GOING TO HAVE A LONG-TERM FUTURE, THEY ALSO NEED TO HAVE SOME SORT OF GRASP OF THAT CLOUD AS A UTILITY? >> IT WILL BE INTERESTING BECAUSE THE CLOUD BUSINESS 10 YEARS AGO WAS A GROUP BUSINESS WITH TREMENDOUS MARGIN, SO I THINK THE GROWTH IS STARTING TO LEVEL OFF, NOTWITHSTANDING THE GROWTH OF AI, BUT I THINK IT WILL BE COMMODITIZED GOING FORWARD, SO YOU MIGHT BE ENTERING INTO BUSINESS THAT IS NOT AS LUCRATIVE AS THE BUSINESS MICROSOFT IS LOOKING AT WHEN IT ENTERED THE BUSINESS 10 YEARS AGO, SO THAT HAS TO BE FACTORED INTO HOW MUCH VALUE ADDED HE'S GOING TO GET FROM THE BUSINESS. ROMAINE: I WOULD LIKE TO POINT OUT THAT ZUCKERBERG POSTED A PRETTY LENGTHY LETTER IN "THE WALL STREET JOURNAL," LAYING OUT HIS VISION FOR AI AND SUPER INTELLIGENCE. IT IS A MANIFESTO, TO BE SURE. DO YOU VIEW META ON THE SAME HIERARCHY AS WE VIEW SOME OF THESE OTHER HYPERSCALERS AND AI PLAYERS? >> I'M NOT SURE WHAT META'S ENDGAME IS. HAVING 3 BILLION PEOPLE ARE ON YOUR PLATFORM FOR A SUBSTANTIAL PART OF THE DAY IS A TREMENDOUS ADVANTAGE. IF META CAN FIND WAYS TO CREATE PRODUCT AND FEED THEIR ECOSYSTEM, THEY COULD PERHAPS BE A WINNER IN THIS SPACE, BUT THERE'S SO MUCH WE DON'T KNOW ABOUT WHAT THEIR PLANS ARE WITH AI. ROMAINE: ALWAYS APPRECIATE YOU TAKING TIME. WHEN WE COME BACK, WE WILL TALK ABOUT RITHM CAPITAL. THEY JUST REPORTED EARNINGS, AND WE ARE GOING TO CATCH UP WITH THE CEO WHEN WE COME BACK RIGHT AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ♪ EMILY: SHARES OF RITHM CAPITAL ARE UP OVER 5% AFTER EARNINGS. THE REAL ESTATE INVESTMENT TRUST BEATING ON EPS WITH THE ASSET INVESTMENT ARM REACHING 61 MILLION DOLLARS -- $61 BILLION. THE CHAIRMAN AND CEO JOINS US NOW. IT WAS A REALLY GOOD QUARTER. CAN IT CONTINUE? >> YEAH, OF COURSE. I SAY OF COURSE. WE ARE EXTREMELY FOCUSED ON PERFORMANCE FIRST, AND I THINK PERFORMANCE FIRST WILL HELP US GROW OUR ASSET MANAGEMENT BUSINESS. IF YOU LOOK AT THE HISTORY OF THE COMPANY WHICH WE STARTED IN 2013, IT IS STILL A REIT, BUT WE STARTED TO TAKE ADVANTAGE OF A DISPLACED ASSET CLASS, WHICH AT THE TIME WAS MORTGAGE RESET. 2022 COMES, WE BUY OUT OUR MANAGEMENT CONTRACT, SO IN 2023, WE ACQUIRED SCULPTOR. WE HAVE ADDED ORGANIC GROWTH SO TODAY WHEN YOU LOOK AT THE FIRM, WE ARE $61 BILLION OF THIRD-PARTY ASSETS WITH OVER 2 MILLION CLIENTS AND WE ARE EXCITED OF WHERE WE THINK WE WILL GO NOT ONLY FROM GROWTH BUT AGAIN, PERFORMANCE FIRST. EMILY: WHERE DOES THE AU AND GROWTH COME FROM ON THE ASSET MANAGEMENT SIDE IN AN ENVIRONMENT WHERE THERE WERE A LOT OF CONCERNS AND THERE A LOT OF COMPETITION OUT THERE FOR THAT CAPITAL? >> YOU HAVE TO DIFFERENTIATE YOURSELF. YOU HAVE TO HAVE A FULL SUITE OF OFFERINGS TO BE ABLE TO PUT ON THE TABLE IN FRONT OF THEM. OUR BRAND IS TERRIFIC. AT OUR FIRM TODAY, WE HAVE NORTH OF 200 INVESTMENT PROFESSIONALS. WE ARE OUT THERE TRAVELING THE WORLD. WE HAVE 16 DIFFERENT OFFICES. YOU LOOK AT THE BIGGER PLAYERS, BLACKSTONE, APOLLO, AND THEY ARE RAISING TONS OF MONEY. THERE'S A LOT OF CAPITAL OUT THERE AND A LOT OF ROOM FOR US TO GROW. WE WILL NOT BE BLACKSTONE, BUT THERE'S A LOT OF RUNWAY FOR US TO CONTINUE TO GROW OUR BUSINESS. ROMAINE: YOU HAVE DONE A LOT OF HEAVY LIFTING BUILDING UP THIS COMPANY, BUT I AM CURIOUS HOW THE MARKET VALUES YOU. HAS THERE BEEN ANY MEANINGFUL DISCUSSION TO CONVERT FROM A REIT TO SOMETHING MORE TRADITIONAL SO YOU WOULD BE SCREENED EARLIER BY THOSE COMPANIES? >> AT SOME POINT, WE HAVE TO THINK ABOUT WHAT OUR PATH IS. WE ARE A DIVIDEND PAYER. RETAINING CAPITAL IS OBVIOUSLY MUCH MORE DIFFICULT. I THINK BLACKSTONE TRADES AT AROUND A 4% DIVIDEND YIELD. THE LEVERS OR WE CAN TAKE OUR MORTGAGE COMPANY PUBLIC. THAT IMMEDIATELY SHOULD GIVE US A FEW DOLLARS A SHARE, BUT GETTING VALUED AS AN ASSET MANAGEMENT IS THIS VERSE IS A REIT OR MORTGAGE COMPANY AND NOT DIVIDEND PAYER SHOULD CREATE REAL VALUE FOR OUR SHAREHOLDERS. ROMAINE: I LOOK AT WHAT INTEREST RATES HAVE DONE. I LOOK AT THE DWINDLING ORIGINATIONS, AT LEAST RELATIVE TO WHAT WE HAD A FEW YEARS BACK, AND I WONDER AS A LONG-TERM STORY, IS THAT A GROWTH BUSINESS FOR YOU? >> THE COMPANY DOES ROUGHLY $4.5 BILLION OF REVENUE A YEAR. IF YOU THINK ABOUT WHERE WE ARE GOING WITH TECHNOLOGY, WITH AI AND OUR REAL TECH SPEND, I THINK THERE'S ROOM TO REALLY INCREASE EARNINGS. MAY BE PART OF IT AS WE TAKE THE COMPANY PUBLIC AND OWN A GOOD CHUNK OF THE EQUITY, AND THAT WILL HELP REVALUE THE ASSET MANAGEMENT BUSINESS. FOR US, WE ARE PROBABLY ONE DEAL OR ONE TRUE GROWTH AREA AWAY ON THE ASSET MANAGEMENT SIDE TO GET TO REAL SCALE, AND ONCE WE DO THAT, WE CAN REALLY SEPARATE THE COMPANY, AND THAT IS WHAT WE ARE STRIVING FOR. EMILY: WE CANNOT LET YOU GO WITHOUT TALKING ABOUT SECURITIZATION. YOU HAVE A LONG CAREER IN THAT PART OF FINANCE. I WAS RECENTLY AT A PIMCO EVENT THAT TALKED ABOUT HOW SOME OF THIS FINANCIAL ENGINEERING LOOKS LIKE YOU SAW PRE-FINANCIAL CRISIS. SOME OF THESE ISSUES GETTING A LITTLE TOO COMPLEX AND WORRYING. ARE YOU WORRIED? >> I THINK IT DEPENDS ON THE PRODUCT TYPE. WHEN I LOOK AT THE FINANCIAL ENGINEERING THAT GOES ON, WE ARE A BIG ISSUE OR IN THE MARKETPLACE IN SECURITIZATIONS. WE MANUFACTURE A LOT OF PRODUCT OUT OF OUR GENERATION BUSINESSES. THEY ARE PRETTY COOKIE-CUTTER, I WOULD SAY. WE FEEL PRETTY GOOD WHERE WE ARE. THERE COULD BE SOME THINGS -- I BELIEVE YOU GUYS WROTE AN ARTICLE QUOTING DAN ON SOME OF THE DATA CENTER STUFF AND HOW THEY WERE LEADING SOME OF THE CHARGE. I THINK THAT IS A LOT DIFFERENT THAN SOME OF THE STUFF WE ARE FOCUSED ON. ROMAINE: WE'VE GOT TO GET YOU BACK TO TALK ABOUT SOME OF THAT STUFF. WHEN WE COME BACK, WE WILL GO FROM ONE CEO TO ANOTHER. THE CEO OF BARNES & NOBLE IS STANDING BY. WE ARE GOING TO TALK ABOUT THE NEXT CHAPTER FOR HIS COMPANY, WHICH COULDN'T LOOT AN IPO. -- WHICH COULD INCLUDE AN IPO. THAT IS COMING UP RIGHT HERE ON BLOOMBERG. ROMAINE: YOU REMEMBER A WHILE BACK, INVESTORS IN BARNES & NOBLE. THE COMPANY WENT PRIVATE IN 2019, THEN APPOINTED A NEW CEO, JAMES DAUNT. HIS STRATEGY IS NOW WORKING. WITH A PLAN TO OPEN STORES IN THE U.S. THIS YEAR, A LOT OF TALK ABOUT A POTENTIAL IPO SOMETIME SOON. HE JOINS US IN STUDIO, THE CEO OF BARNES & NOBLE, JAMES DAUNT. GOOD TO HAVE YOU. YOU HAVE HAD A LONG CAREER IN BOOKSELLING WITH YOUR OWN LINE OF BOOKSTORES NAMED AFTER YOU. THEN YOU TOOK OVER A BUSINESS OVER THERE IN THE U.K., NOW BARNES & NOBLE GOT FOLDED INTO THAT. PHYSICAL BOOKS, I THOUGHT THEY WERE DEAD. >> THEY ARE NOT DEAD AT ALL. ROMAINE: WHAT HAPPENED WITH THIS DEATH MARCH? IT SEEMED WE WERE READING EVERYTHING ON E READERS ARE NOT READING AT ALL, THEN IT SEEMED NOT ONLY WERE PEOPLE GRAVITATING BACK TO PAPER, BUT THE ACTUAL, PHYSICAL BOOK STORE. NOT JUST BUYING PAPER BOOKS OFF OF AMAZON OR SOMEWHERE ELSE, BUT GOING INTO THE BOOKSTORES AND LOOKING FOR THAT EXPERIENCE. WHAT HAPPENED? >> I THINK PEOPLE HAD NOT STOPPED READING PHYSICAL BOOKS. I THINK THE NARRATIVE GOT MUDDLED. THEY WERE NOT BUYING IN PHYSICAL BOOKSTORES. THAT WAS BECAUSE THE STORES HAVE LOST THEIR WAY, THEY LOST THEIR CONFIDENCE. AND THEY WERE NOT FUN ENOUGH, NOT ENJOYABLE PLACES TO BE IN. SALES STARTED DROPPING AND THEY STARTED CLOSING STORES, THEY WENT BANKRUPT, AND IT GOT DICEY. ROMAINE: I REMEMBER WHEN THE CHANGE BECAME POPULAR, BORDERS, BARNES & NOBLE, THEY WERE SPACES TO HANG OUT. YOU WANT TO BUY YOUR BOOKS OR MAGAZINES, BUT YOU HUNG OUT. I ASSUME THAT DROVE SALES. WHAT WAS THE STRATEGY SHIFT THAT HAPPENED AT BARNES & NOBLE WHERE PEOPLE STOPPED TREATING A BARNES & NOBLE STORE AS A PLACE TO HANG OUT? >> I WASN'T HERE. ROMAINE: NOT BLAME, JUST CURIOUS. >> THE STORES WERE VERY UNIFORM, THEY WERE IDENTICAL, AND IF YOU DO THAT, THEY BECOME UNIFORMLY LEST INTERESTING. THEN THERE WERE THINGS THAT SHOULD NOT HAVE BEEN IN THERE, THINGS THAT DID NOT MAKE SENSE IN A BOOKSTORE, WHICH THEY WERE SELLING OF, WARM WATER, DURACELL BATTERIES. IT BECAME A MIX OF STRANGE OTHER RETAILERS, QUITE A LOT OF CVS IN IT. THAT IS OUT OF THERE NOW. FIRST AND FOREMOST WE ARE BOOKS, BUT WE SELL A LOT AROUND BOOKS, BUT THINGS THAT MAKE SENSE IN A BOOKSTORE. RECORDS, DVDS, NEWSSTAND, CERTAIN AMOUNT OF TOYS AND GAMES, THAT MAKES SENSE. WE JUST LIBERATED THE STORES TO HAVE FUN. IF YOU ALLOW THE SOURCE TO HAVE FUN, THE KIDS COME IN, SCHOOL IS OVER, THEY HAVE GREAT MEETING PLACES, ALL AGES ARE IN AND SALES GO UP. EMILY: WHAT IS THE STRATEGY FOR CREATING FUN? IS IT ABOUT ADDING MORE COUCHES, A STARBUCKS THAT PEOPLE CAN COME TO? HOW DO YOU MANUFACTURE AN ENVIRONMENT WHERE PEOPLE CAN ENJOY THEMSELVES? >> ABOVE ALL, YOU LET THE STORM TEAM -- STORE TEAM DECIDE WHAT THEY DO. EVERY COMMUNITY IS DIFFERENT, EVERYPLACE IS DIFFERENT. WE LIBERATED THEM FROM CENTRAL CONTROL. IT IS TREATED LIKE IT IS YOUR NAME THAT IS ABOVE THE DOOR. HAVE FUN WITH YOUR TEAMS, BUILD UP REALLY GOOD BOOKSTORES. WE ARE NOT GOING TO TELL YOU HOW TO DO THAT BEYOND THE PRINCIPLES ATTACHED WITH NO RULES. COMMON SENSE AND FUN. EMILY: SPEAKING OF FUN, IT IS INTERESTING TO SEE TIKTOK, GEN Z READERS, THERE IS TALK ABOUT THE GEN Z DOESN'T READ AS MUCH, BUT YOU LOOK AT SOMETHING LIKE BOOKTOK, A LOT OF PEOPLE ARE TALKING OF ALL DIFFERENT KINDS OF GENRES. ONE THAT HAS GOTTEN A LOT OF ATTENTION IS ROMANTASY, ROMANTIC FANTASY BOOKS. IS THAT DRIVING SALES? HOW IS IT THAT GENRE SPECIFICALLY GENERATING FOOT TRAFFIC IN BARNES & NOBLE? >> THAT GENRE IS FANTASTIC, WE HAVE A LOT OF REALLY BIG AUTHORS . HE WAS OUT THE DOOR FOR THE OPENING OF THE LAUNCH OF THE BOOK AT MIDNIGHT KIND OF THING, REAL FUN ATTACHED TO IT. BUT RIGHT NOW, OUR BEST-SELLING BOOK IS BY AN AUTHOR CALLED HOMER, THAT IS WHAT THAT GENERATION IS ALSO READING. THEY LATCHED ONTO THE CLASSICS BEFORE THEY WENT INTO ROMANTASY. THEY WERE READING JANE AUSTEN AND GEORGE ELLIOTT. THEY ARE READING GOOD BOOKS. FUN BOOKS, FANTASY, ROMANTASY, BUT THEY ARE READING AND HAVING FUN AROUND BOOKS. ROMAINE: DOES YOUR BUSINESS MODEL DEPEND ON HAVING THESE TED POE MOMENTS, WHETHER A BIG MOVIE LIKE "ODYSSEY," OR A ROMANTASY NOVEL CAPTURING EVERYONE'S ATTENTION? >> WE HAVE THAT GOING ON ALL THE TIME. I THOUGHT RATHER UNFAIRLY, I HAVE BEEN DOING THIS FOR A LONG TIME IN THE 40 PLUS YEARS, PRETTY MUCH MONTH INCOME A MONTH OUT, THERE IS A BIG BOOK THAT EXPLODES BECAUSE PEOPLE LOVE TALKING ABOUT BOOKS, COMMUNING AROUND BOOKS, THEY LOVE DISCOVERING NEW. THAT HAS BEEN TRUE, AND IT REMAINS NOW AND ACROSS THE COUNTRY. ROMAINE: BARNES & NOBLE GOT PUT UNDER YOUR UMBRELLA IN 2019, I THINK A LOT OF PEOPLE SAW INVESTORS, POTENTIAL INVESTORS SAW THAT AS A TURNAROUND STORY. THE NUMBER OF STORES, 700, BARNES & NOBLE IN THE U.S., 300 SOMETHING OVERSEAS IN THE U.K.. IS THERE A GROWTH STORY? ARE YOU GROWING THE NUMBER OF STORES? IF SO, HOW DO YOU JUSTIFY THAT? >> WE ARE OPENING LOTS OF STORES, 61 YEAR, 60 OF THE YEAR BEFORE THAT. 60 AGAIN THIS YEAR. I WOULD ASSUME WE WILL CARRY ON. PARTLY BECAUSE SO MANY STORES HAVE CLOSED. BARNES & NOBLE CLOSED -- THERE'S NO MORE BORDERS, THERE ARE A LOT OF COMMUNITIES IN AMERICA, THOUSANDS OF COMMUNITIES WITHOUT BOOKSTORES. ROMAINE: ARE THOSE AREAS YOU ARE FOCUSED ON? >> YES, AN INDEPENDENTS ARE DOING WELL, INDIES HAVE EVEN MORE SOURCE, SO IT IS A REALLY EXCITING TIME FOR BOOKSELLING. EMILY: HOW MUCH OF THAT IS BASED ON THE FACT THAT A BOOKSTORE IS ONE OF THOSE FINAL FRONTIERS OF BRICK-AND-MORTAR PLACE THAT YOU ACTUALLY WANT TO BE IN VERSUS OTHER TYPES OF GOODS YOU DON'T NECESSARILY WANT TO GO AND SMELL LIKE BATTERIES, LIKE THERE IS SOMETHING COZY ABOUT A BOOKSTORE, IS IT WHY SO MANY ARE OPENING? >> IT IS THERE, IT APPEALS TO ALL AGES, A BOOKSTORE TO THE OLDEST CITIZEN AND EVERYBODY IN BETWEEN, ACROSS MOST DEMOGRAPHICS AS WELL. BOOKSTORES ARE GREAT PLACES. >> ARE PEOPLE READING MORE, I UNDERSTAND THERE ARE THESE PEOPLE THAT ARE READING, IN THE U.S., THERE'S ALL KINDS OF STATS ABOUT HOW THE MAJORITY OF PEOPLE HAVE NOT OPENED A BOOK ONCE ALL YEAR LONG. CURIOUS TO WHERE YOU FIND GROWTH, TAPPING INTO THAT EXISTING CUSTOMER AND GETTING THEM TO COME BACK INTO THE STORE MORE AND MORE, IS THERE WAY TO EXPAND THE CUSTOMER BASE TO NEW PEOPLE? >> THE ONE TROPE THAT HAS BEEN GOING ON FOREVER MY PARENTS DECIDED I WAS DESTINED FOR A LIFE OF IGNORANCE, SPENT HALF AN HOUR A DAY WATCHING TV, THEY SAID THIS IS THE END, YOU WILL NEVER READ THAT -- THE REALITY IS PEOPLE READ MORE, THAT THERE IS AN ASPIRATION AROUND READING, WE WANT OUR KIDS TO READ, IT IS FUN FOR TEENAGERS. AND YOU PROBABLY GET THROUGH A CYCLE OF LIFE WHEN WORKING HARD WHEN PEOPLE READ LESS. THEN THEY COME BACK TO READING -- >> WHAT IS YOUR RELATIONSHIP WITH THE FOLKS AT ELLIOTT? THERE HAS BEEN TALK ABOUT AN IPO. IF YOU DO THAT, THE PERSON WHO HAS TO COMMUNICATE TO INVESTORS WITH THE GROWTH STORY IS, ARE YOU PREPARED TO GO PUBLIC? >> I'M GLAD TO SAY, IT IS WAY ABOVE MY PAY GRADE. WE CONCENTRATE ON JUST RUNNING THE BUSINESS ROMAINE: BANKERS, WE ALL KNOW. BUT THERE COULD BE A LITTLE SOMETIMES. BUT YOU HAVE TO DEAL WITH THEM IF YOU ARE A PUBLIC COMPANY. UNLESS YOU ARE GOING TO LEAVE. >> I HOPE I WILL CARRY ON RUNNING BOOKSTORES. ONE OF THE GREAT THINGS ABOUT BEING IN THE U.S. IS PEOPLE THINK I'M QUITE YOUNG HERE. YOU THINK I'M GOING TO NEED TO -- ROMAINE: IT CARRIES YOU VERY FAR IN THIS COUNTRY. THANK YOU VERY MUCH, JAMES. EMILY: JAMES DAUNT, GREAT TO SEE YOU IN PERSON. COMING UP, THE UPS CEO JOINS US ON THE HEELS OF THE SHIPPING GIANT'S EARNINGS REPORT. THIS IS THE CLOSE ON BLOOMBERG TELEVISION. ROMAINE: THIS IS THE COUNTDOWN TO THE CLOSE. KEEPING AN EYE ON THE BROADER MARKETS AND SHARES OF UBS DOWN 6% UP THE COMPANY REPORTED EARNINGS THIS MORNING. THEY BEAT MOST OF THE MAIN METRICS. ABOVE ANALYST ESTIMATES REVENUE IN THE QUARTER ABOVE ANALYST ESTIMATES AND THE COMPANY BOOSTING IS FOR YOUR SALES FORECAST AS WELL AS PROVIDING ADJUSTABLE EARNINGS FORECAST AHEAD OF ANIMAL -- ANALYST ESTIMATES. A LOT OF CHANGES THE CEO HAS MADE TO WEAN THEMSELVES OFF OF THE LOWER MARGIN BUSINESS AND MOVE DEEPER INTO THE HIGHER MARGIN PRODUCTS AND SERVICES. THE CEO OF UBS JOINS US NOW ON THE HEELS OF THAT EARNINGS REPORT. I DO WANT TO START OFF WITH THE GUIDANCE FOR THE REST OF THE YEAR IT LOOKS RELATIVELY STRONG. NOT ONLY 2026 WOULD BE A GOOD YEAR FOR THIS COMPANY BUT YOU ALLUDED LAST QUARTER THE 2027 COULD POTENTIALLY BE EVEN BETTER. ARE WE STILL ON TRACK TO SEE THAT? CAROL: IT IS GOOD TO BE WITH YOU AND I'M DELIGHTED TO SAY WE LAUNCHED A STRATEGIC TRANSFORMATION OF OUR COMPANY 18 MONTHS AGO TO RECONFIGURE OUR NETWORK AND WE DID THAT. AND THEN WE RETURNED TO PROFIT AND REVENUE GROWTH AND LOOKING TO THE GUIDANCE FOR THE BALANCE OF THE YEAR WE WILL CONTINUE TO GROW OUR PROFIT IN EARNINGS WHICH GIVES US RUNWAY FOR REALLY GOOD 2027. ROMAINE: TALK ABOUT THE DOMESTIC BUSINESS. LOOKING AT THE SHARE DROP TODAY I SPOKE TO SOME ANALYSTS. SOME SEEM TO RAISE CONCERNS ABOUT THE MARGINS ON THE DOMESTIC BUSINESS. WHY THEY WEREN'T AS STRONG AS SOME WERE LOOKING FOR AS WELL AS THE GUIDANCE GOING FORWARD. IS THAT A REFLECTION OF WHAT YOU'VE LOST FROM THE AMAZON BUSINESS OR IS THAT MORE RELATED TO TARIFFS AND OTHER ECONOMIC ISSUES. CAROL: WE WERE QUITE PLEASED WITH OUR MARGIN PERFORMANCE IN THE DOMESTIC BUSINESS IN THE SECOND QUARTER. IT WAS UP 400 BASIS POINTS FROM WHAT WE RECORDED IN THE FIRST QUARTER AND 100 BASIS POINTS YEAR ON YEAR. IF YOU LOOK AT THE BACK HALF OF THE YEAR WE GOT INTO CONTINUED MARGIN EXPANSION YEAR-OVER-YEAR IN BOTH THE THIRD AND FOURTH QUARTER. BUT BECAUSE WE HAVE ADDED NEW PRODUCTIVITY INTO OUR BUSINESS TO HELP LOWER THE COST PER PIECE WHILE LEANING IN TO THE SEGMENTS OF THE MARKET THAT VALUE OUR END-TO-END CAPABILITIES LIKE COMPLEX HEALTH CARE LOGISTICS AND B2B. WHEN YOU THINK ABOUT THOSE SEGMENTS WE SAW GOOD GROWTH IN THE SECOND QUARTER. HEALTH CARE REPORTED ITS SECOND $3 BILLION QUARTER IN A ROW. S&P VOLUME IN THE U.S. WAS UP YEAR ON YEAR AND WE ARE GAINING SHARE IN AUTOMOTIVE. I'M PLEASED ABOUT THE PROGRESS WE ARE MAKING AND THE RESULTS THAT WE WILL DELIVER. ROMAINE: ON THE DOMESTIC BUSINESS THERE IS A DISPARITY WITH WHAT WE SAW ON ADJUSTED NUMBERS AND THE GAP BASIS WHICH SEEMED TO SUGGEST SOME OF THE POSITIVE WE SAW IS COMING FROM COST-CUTTING. IF WE GET INTO THAT SECOND HALF YOU'RE SAYING U.S. REVENUE IS GOING TO BE ABOUT FOUR AND A HALF PERCENT IN THE SECOND HALF WHICH WOULD BE DOWN FROM NINE PLUS PERCENT WE SAW IN Q2. AVERAGE DAILY VOLUME IS SUPPOSED TO DECREASE EITHER YOU OR THE CFO CONCLUDED THERE WAS MORE SEASONAL FACTORS. SQUARE THE CIRCLE AS TO WHY THERE SEEMS TO BE CELEBRATION WHEN IT COMES TO THE U.S. BUSINESS. CAROL: FIRST OF ALL ON THE VOLUME SIDE. WHILE VOLUME WILL BE DOWN YEAR-OVER-YEAR THAT IS A REFLECTION OF THE AMAZON BY DOWN DYNAMIC BEARING IF YOU LOOK AT THE THIRD AND FOURTH QUARTER OF LAST YEAR, WE COLLIDED DOWN VOLUME IN THE FIRST AND SECOND QUARTER THIS YEAR SO THE YEAR-OVER-YEAR COMPARISON MAKES THE VOLUME LOOK NEGATIVE. IF YOU IGNORE AMAZON WE WILL GROW VOLUME IN OUR U.S. BUSINESS LIKE WE DID IN THE SECOND QUARTER. ON THE RPP DIFFERENCES, IN THE SECOND QUARTER WE HAD STRONG RPP GROWTH DRIVEN BY SOLID BASE RATES, CUSTOMER MIX IMPROVEMENTS AND FUEL. FUEL WAS UP ABOUT HALF OF THAT GROWTH IN THE SECOND QUARTER. WE THINK SOME OF THE STRENGTH IN FUEL WILL CARRY BUT NOT ALL OF IT. WE ARE EXPECTING NOT TO SEE THE KIND OF BENEFITS AND THE BACK HALF OF THE YEAR AS WE DID IN THE SECOND QUARTER. WE ARE UP AGAINST A COUPLE OF TOUGH COMPARISONS YEAR ON YEAR BECAUSE WE MADE ADJUSTMENTS LAST YEAR THAT AREN'T REPEATING THIS YEAR. ALL IN ALL AS LONG AS WE HAVE OUR RPP GROWING FASTER THAN OUR COST WE WILL EXPAND OUR MARGIN. ROMAINE: WITH RELATIONSHIP ON -- ARE RELATIONSHIP ON AMAZON. IT IS SIGNIFICANT WE LOWER THAN THE 13 OR 14% THEY SAW A FEW YEARS AGO. ARE YOU PLANNING TO GET THAT SHARE DOWN EVEN FURTHER. IS THERE SOME SORT OF FLOOR BUT YOU WANT OR CONTRACTUAL FLOOR YOU HAVE TO ABIDE BY. CAROL: OUR GLIDE DOWN WE ARE ALL ABOUT FOCUSING ON GROWTH. OPTIMIZING AMAZON VOLUME IN OUR NETWORK IS IMPORTANT FOR US BUT WE WILL GROW IN OTHER AREAS. WHERE THAT WILL END UP AS A FUNCTION OF GROWTH. AND WE WILL REPORT ON THAT AS WE GO. EMILY: -- ROMAINE: YOU ALLUDED TO HEALTH CARE, A LOT OF THAT DECENT GROWTH THERE. MARGINS ARE PRETTY HEALTHY AND LOW IN THE DOUBLE DIGITS AS WELL. IS THAT THE GROWTH STORY INVESTOR SHOULD FOCUS ON? CAROL: COMPLEX HEALTH CARE LOGISTICS IS A BIG GROWTH STORY FOR UBS BECAUSE WE ARE THE ONLY CARRIER THAT OWNS ALL THE ASSETS NECESSARY TO PROVIDE CONTROL AND VISIBILITY FOR THIS VERY IMPORTANT PACKAGE, IT IS A PATIENT AND SO IT IS A GROWTH STORY FOR US. WE ARE GROWING FASTER THAN THE MARKET IN THE MARKET IS GROWING AROUND 6%. WE ARE GROWING FASTER THAN THE MARKET. DOING THAT ORGANICALLY AND THROUGH THE AID OF A FEW ACQUISITIONS OVER THE PAST SEVERAL YEARS THAT ARE GAINING MOMENTUM. IF YOU LOOK AT THE PROFITABILITY OF OUR SUPPLY CHAIN BUSINESS IN THE SECOND QUARTER IT WAS DRIVEN IN LARGE PART THE YEAR-OVER-YEAR CHANGE BY HEALTH CARE. WE SAW GOOD PROFITABILITY IN OUR DIGITAL BUSINESS AND THIS INCLUDES ROAD AND HAPPY RETURNS. ROMAINE: MORE IMPORTANTLY SOME OF THE CHANGES YOU MADE TO WAREHOUSES WITH REGARDS TO AUTOMATION HOW MUCH DOES THAT HELP YOUR COST STRUCTURE GOING FORWARD IN THE CONTEXT OF MEETING SOME OF THE GUIDANCE YOU'VE GIVEN? CAROL: WE HAVE INVESTED IN AUTOMATION IN OUR NETWORK IN A MEANINGFUL WAY. AT THE END OF THE SECOND QUARTER 68 .5% OF THE VOLUME THAT FLOWED THROUGH OUR NETWORK WENT THROUGH AN AUTOMATED BUILDING. THAT IS UP 400 BASIS POINTS FROM A YEAR AGO. TO PUT THAT IN PERSPECTIVE, THAT MEANT WE HAD OVER 330 MILLION PACKAGES GOING THROUGH AN AUTOMATED PROCESS MORE THAN LAST YEAR. THE COST PER PIECE IN AN AUTOMATED BUILDING IS 28% LOWER THAN IN A NON-AUTOMATED OR CONVENTIONAL BUILDING. THAT'S WHY WE FOCUSED ON AUTOMATION SO WE CAN TALK PRODUCTIVITY GOING FORWARD AND CAPACITY. AS GROWTH COMES BACK IN WE HAVE CAPACITY TO MANAGE THAT GROWTH. ROMAINE: GETTING A GENERAL VIEW ON THE ECONOMY, YOU MOVE A TON OF OUR ECONOMY. UPS IS 3% OF GDP IN TERMS OF WHAT GOES THROUGH YOUR HANDS IN ONE WAY OR ANOTHER. IS THE GLOBAL ECONOMY HEALTHY ENOUGH? CAROL: AS WE LOOK AT THE GLOBAL ECONOMY, WE SEE ELEMENTS OF RECOVERY. OUR MOST PROFITABLE TRADE LANE OUTSIDE THE U.S. IS CHINA TO THE U.S. AND WE SAW THAT RETURN TO GROWTH BEGINNING IN MAY. THAT TRADE LANE GREW BY 22% IN THE SECOND QUARTER. IF WE LOOK AT ASIA TO ASIA TRADE LANES WE SAW VOLUME GROW THERE AS WELL UP 14%. THAT GIVES YOU A SENSE THERE IS CERTAINLY SOME STRENGTH OUTSIDE THE U.S. IF YOU LOOK AT THOSE ASIA TO ASIA TRADE LANES. COMING BACK INTO THE U.S. THE CONSUMER SEEMS RESILIENT AND DOES THE CONSUMER GOES SO DOES THE ECONOMY AND THE CONSUMER SEEMS RESILIENT TO US. ROMAINE: THIS HAS TO DO WITH THIS IDEA OF MAKING SURE INVESTORS FEEL COMFORTABLE WITH WHAT YOU'VE DELIVERED. I KNOW THE SHARE MOVED AND THIS IS A ONE KNEE-JERK REACTION. A LOT OF PEOPLE LOOK AT THE FREE CASH FLOW THAT YOU HAVE IN THE QUARTER. THEY ARE LOOKING AT DIVIDEND OBLIGATIONS YOU HAVE GOING FORWARD WHICH IS IN THE BILLIONS. WHEN DOES THAT RIGHT SIZE ITSELF AND GIVE INVESTORS MORE COMFORT THAT THEY ARE GOING TO GET WHAT THEY THINK THEY DESERVE. CAROL: PROTECTING THE DIVIDEND IS JOB NUMBER ONE FOR UBS -- FOR UPS. I'M PLEASED WITH THE IMPROVEMENTS IN THE CASH FLOW GENERATION. THE SECOND QUARTER HAD A ONE TIME HIT BECAUSE OF A DRIVER CHOICE BUYOUT PROGRAM WE LAUNCHED TO BUY OUT TO DRIVERS FROM THEIR CONTRACTS AT UPS. IT CAME WITH A BILLION DOLLAR COST BUT IT WAS WORTH IT. WE LOOK AT THE CASH FLOW PROJECTIONS FOR THE FULL YEAR. WE WILL GENERATE MORE CASH THAN OUR DIVIDEND AND AS THE MARGIN CONTINUES TO GROW, SO WILL THE CASH. ROMAINE: REALLY APPRECIATE YOU TAKING TIME FOR US. YOU'VE DONE A WONDERFUL JOB THERE. CEO OF UPS COMING OFF A BEAT AND RAISE QUARTER EARLY THIS MORNING. WE WANT TO MOVE FROM ONE OF THE MOST WATCHED PARCEL COMPANIES OUT THERE AND TALK ABOUT ONE OF THE MOST WATCHED PRIVATE ENTERPRISE SOFTWARE COMPANIES. RECHECKING EARNINGS OUT OF MICROSOFT. OUR NEXT BEST COMPANY EXPANDED ITS PARTNERSHIP THROUGH THE 20 30'S IT'S RAISING FUNDS. IN THE SECOND FINANCING ROUND SO FAR THIS YEAR. JOINING US COFOUNDER AND SENIOR VICE PRESIDENT OVER AT DATA BRICKS. GREAT TO HAVE YOU ON THE PROGRAM. I WANT TO TALK ABOUT WHAT YOU ARE SEEING WITH REGARDS TO THE DEMAND FOR THE CONSUMPTION BOTTLE THE DATA BRICKS IS SORT OF I DON'T KNOW IF YOU MADE IT FAMOUS BUT CERTAINLY CAPITALIZED ON IT. YOU CAN TAKE CREDIT IF YOU WANT. I'M CURIOUS HOW THAT IS HOLDING UP. AND ARE YOU SEEING ANY SHIFT IN CONSUMER BEHAVIOR. >> THANK YOU FOR HAVING ME. THINGS HAVE BEEN GOING WELL ON THE CONSUMPTION MODEL CANDIDLY. WE -- ONE OF THE THINGS WE WERE NOTING IT WAS WE'VE SEEN CONSUMPTION ACCELERATE ACROSS THE BOARD. WE SAID SOMETHING LIKE 6.9 MILLION GROWING 80% YEAR-OVER-YEAR AND WON OF THE BIG DRIVERS IS WE'VE SEEN THIS ACROSS ALL REGIONS AND PRODUCT LINES GROWING. PEOPLE WERE USING DATA AND A I BEFOREHAND BUT NOW EVERYBODY HAS DOUBLED THEIR HEADCOUNT WITHOUT KNOWING IT. YOU HAVE AGENTS WERE GENERATING MORE DATA, DRIVING MORE CONSUMPTION. GOING AFTER USE CASES AND BEHIND ALL OF THOSE YOU NEED A DATABASE TO POWER THOSE. PEOPLE WANT TO TALK TO THEIR DATA AND NOW YOU ALLUDED TO IT EARLIER, THINGS LIKE HOW DO YOU CONTROL COSTS IN THAT WORLD IS REALLY IMPORTANT AS WELL. ROMAINE: I'M CURIOUS ABOUT SOME OF THE CHATTER. PEOPLE GOING FOR THE TOKEN MAXING WHERE EVERY CORPORATE HEAD WAS TELLING ALL THEIR EMPLOYEES USE THIS STUFF AS MUCH AS POSSIBLE CANAL A MORE ORIENTED APPROACH ON HOW THEY'RE USING THESE LARGE LANGUAGE MODELS. HOW DO YOU SEE THAT SHIFT IF THAT IS HAPPENING AND DOES NOT HAVE AN IMPACT ON YOUR POTENTIAL REVENUE GENERATION? ARSALAN: I THINK WE ARE SEEING THAT SHIFT. WE HAVE THE CAPABILITY CALLED UNITY AI GATEWAY EXACTLY FOR THIS. YOU SAW PEOPLE GO FROM TOKEN MAXING TO WHAT THEY ARE REFERRING TO AS VALUE MAXING. WHAT IS THE VALUE I WILL GET OUT OF IT. HOW DO I MAKE SURE THERE IS ARE ALIVE. WE ARE SEEING OUR CUSTOMER BASE 78% OF THEM ARE USING TWO MODELS OR MORE. IT IS A DATA STORY. I THINK THE AMERICAN FRONTIER MODEL PROVIDERS ARE BUILDING INCREDIBLE MODELS AND THERE ARE CAPABILITIES THAT ARE REALLY GOOD FITS WHERE YOU ACTUALLY NEED THOSE. AT THE SAME TIME EVERYBODY DOES NOT NEED THE BEST MODEL IN THE WORLD TO GENERATE AN EMAIL DRAFT. SO FOR THAT THEY WILL WANT TO LEVERAGE OPEN SOURCE MODELS THAT ARE FAR LOWER COST. SO WE WANT TO BALANCE THE RIGHT MODEL FOR THE RIGHT USE CASE AND WE'VE SEEN THAT BE AN ACCELERANT BECAUSE FOR US WE ARE BIG BELIEVERS IN MARRYING BOTH OF THOSE WORLDS AND THE FACT WE ALLOW CUSTOMERS TO CHOOSE AND BUILD THEIR APPLICATIONS LEVERAGING THE RIGHT MODEL WITH THE RIGHT TIME HAS BEEN AN ACCELERANT FOR US. EMILY: THERE'S BEEN SO MUCH SPENDING AND AI INFRASTRUCTURE. AI BUDGETED ENTERPRISES ACROSS THE GLOBE HAVE INCREASED THEIR CAPEX SPENDING FORECASTS. AREN'T WE ARE MOST AT THE POINT NOW WHERE CFOS WANT TO SEE ALL OF THAT SPENDING TURN INTO A REAL PROFIT? ARSALAN: ABSOLUTELY, BUT I THINK OBVIOUSLY DEMAND IS STILL VERY HIGH. MANY OF THE CONVERSATIONS WE HAVE WITH CUSTOMERS IT'S WHY HE MENTIONED THE GOVERNANCE PIECE IS SO CRITICAL. CFOS ARE ASKING WHAT IS THE ROI THAT I'M GETTING. WE CAPABILITIES THEY'VE BEEN ASKING FOR IS HOW DO I GET BUDGETS TO FOLKS. HOW DO I HAVE GUARD RAILS ON WHAT THEY DO AND HOW TO INTELLIGENTLY ROUTE THINGS TO THE RIGHT MODEL. IT'S WHY WE SEEN AN OPTION OF THAT UNITY GATEWAY GO SO HIGH. THEY ARE ASKING HOW DO I MAKE -- BUDGETS, UNDERSTANDING OF CAUSE, AND KNOWING USERS ARE BEING ROUTED TO THE RIGHT CAPABILITY AT THE RIGHT TIME. I'M SEEING ACROSS ALL EXECUTIVE CONVERSATIONS WITH CUSTOMERS. ROMAINE: I HAVE TO ASK YOU WHAT EVERYBODY WANTS TO KNOW. ARE WE GOING TO SEE THIS PUBLIC ANY TIME SOON? >> I ALWAYS GIVE THE SAME ANSWER, IT IS WHEN, NOT IF. TO BE HONEST, OUR FOCUS IS HOW DO WE GET A BASIS FOR THESE APPLICATIONS, HOW DO WE HELP EVERYBODY, PRODUCT, 7-11, THE PEPSI'S OF THE WORLD, HOW DO WE HELP THEM GOVERN THIS AI WORLD? THAT IS OUR FOCUS WHEN THE TIME IS RIGHT, WE WILL BE PUBLIC. EMILY: THANK YOU VERY MUCH. THE COFOUNDER AND SENIOR VICE PRESIDENT OF FIELD ENGINEERING AT DATA BRICKS. ROMAINE: DID HE GO TO UVA -- EMILY: WE DID NOT HAVE TIME FOR THAT. COMING UP, WE WILL TAKE YOU TO THE CLOSING BELLS WITH CHRISTINA HOOPER, CHIEF MARKETING STRATEGIST AT MAN GROUP. THIS IS THE CLOSE ON BLOOMBERG. ♪ >> I DON'T EXPECT THERE TO BE ANY CHANGE, BUT I THINK THERE IS 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. GROWTH IN THE ECONOMY IS SOLID. THERE IS NO INDICATION I CAN SAY, I'VE HEARD MADE THE ARGUMENT THE LEVEL OF INTEREST RATES IS RESTRICTED. THEY CAME OUT SO STRONGLY SAYING WE ARE GOING TO GET INFLATION UNDER CONTROL. IF THEY SAY THAT AND DON'T DO ANYTHING, AND DON'T SAY ANYTHING ANYMORE, THAT IS KIND OF HARD TO DEAL WITH. A GOOD CASE CAN BE MADE FOR A QUARTER-POINT HIKE. ROMAINE: FROM THE FED GOVERNOR BETSY DUKE RAISING THE CREDIBILITY QUESTION FOR KEVIN WARSH, THE MEETING AT THE FED UNDERWAY NOW. DECISION DAY TOMORROW. YIELDS HAVE BEEN FALLING IN THE LAST THREE SESSIONS. A BIT OF A DISCONNECT BETWEEN WHAT IS PRICED IN THE SWAMPS MARKET, WHERE PEOPLE ARE EXPECTING THE POTENTIAL FOR A HIKE AND WHAT WE SEE IN THE SECONDARY MARKET WITH TREASURIES. EMILY: IT TREASURY YIELDS REMAIN ELEVATED OFF OF THE LOWS OF THE YEAR. LOOK HOW THE MARKET IS REACTING TO THE TRADE. THE S&P 500 UP .30%. TRADERS BASICALLY WAITING FOR THE HYPERSCALER EARNINGS WE ARE ABOUT TO SEE IN THE NEXT FEW DAYS. TECH STOCKS FALLING. A BIG DIFFERENCE BETWEEN WHAT THE S&P IS DOING AND THE TECH STOCKS. THE SECOND DAY IN A ROW OF THE BIG DOWNWARD MOVES, BURNT DOWN ABOUT 5%. THE 10 YEAR YIELD, FOUR POINT 6%. THIS IS THE THIRD STRAIGHT SESSION WE SEE YIELDS MOVING LOWER. COULD CHANGE. ROMAINE: WE WILL KEEP AN EYE ON IT. WE WILL TALK ABOUT TECH STOCKS. NOT JUST THE EARNINGS STORY, IT IS A CREDIT STORY AS WELL. THE PHILADELPHIA SEMICONDUCTOR INDEX IT DOWN FOR A FOURTH STRAIGHT SESSION, SOMETHING WE HAVE NOT SEEN IN MONTHS AS PEOPLE REPRICE THAT SPACE. JOINING US TO COUNT DOWN THE CLOSING BELL IS CHRISTINA UBER, AT MAN GROUP. I WANT TO START OFF WITH THE READ PICTURE, WHICH SEEMS TO SHIFT EVERY COUPLE OF WEEKS DEPENDS ON WHAT IS GOING ON IN THE MIDDLE EAST AND THE FED. LET'S START WITH THE ELEPHANT IN THE ROOM, A DECISION TOMORROW, KEVIN WARSH HAS TO GET OUT AND EXPLAIN WHAT HAPPENED. ANY CHANCE IN YOUR MIND THERE WOULD BE A HIKE TOMORROW? >> IT IS A VERY LOW PROBABILITY. WE DID BEFORE THE BLACKOUT BEGAN. SOME FOMC VOICES TALKING ABOUT CONCERNS AROUND INFLATION. I THINK HAMMOCK POSTED A REALLY COMPELLING NUMBER OF CONCERNS OF INFLATION AND WHAT SHE IS HEARING FROM HER DISTRICT IN TERMS OF BUSINESS IS WANTING RATES TO BE INCREASED TO FIGHT INFLATION. I THINK THERE'S POTENTIAL, BUT I WOULD ASSIGN A GREATER PROBABILITY TO A HAWKISH HOLD THAN ANY KIND OF RATE HIKE. ROMAINE: IT GIVES IT THE IDEA, AND I WILL SAY THE PROBABILITY BASED ON BLOOMBERG CALCULATIONS IS 30% HIKE TOMORROW, GOES UP TO 60%, 70% FOR THE SEPTEMBER MEETING. IT IS ONE THING TO SAY HIKE TO FIGHT INFLATION OR THAT YOU ARE SERIOUS ABOUT INFLATION, BUT IS THE OTHER SIDE OF THE MANDATE, THE LABOR MARKET IN THE STATE OF THE ECONOMY IS STRONG ENOUGH TO WARRANT A HIKE IN RATES? >> IN MY OPINION, I THINK THE ECONOMY IS RATHER WEAK. BASED ON THE ECONOMIC DATA THE FED IS LOOKING AT, IT IS VERY COMFORTABLE WITH THE STATE OF THE ECONOMY, AND THAT IS WHAT WE HAVE HEARD FROM FOMC PARTICIPANTS. AND I THINK WHAT WE HAVE BEEN TOLD OVER AND OVER AGAIN IS THE PRIORITY IS INFLATION. SO IT SEEMS THE FED WOULD BE LIKELY TO ACT. THE ONE OBSTACLE IS IT IS KEVIN WARSH'S ONLY HIS SECOND MEETING. MARKETS ARE STILL JUST GETTING USE TO HIM. I FEEL AS THOUGH HE THINKS HE DOES HAVE CREDIBILITY. HE HAS BEEN SHAKING THINGS UP, AND WHEN HIS NOMINATION WAS ANNOUNCED IN JANUARY, WE SAW THE SAN FRANCISCO PROXY FED FUNDS RATE DECOUPLED FROM THE FED FUNDS RATE. AND MOVED UPWARD. THAT IS LOOKING AT THE OTHER MONETARY POLICY TOOLS AND GETTING A FEEL ON WHAT THE FED FUNDS RATE WOULD BE IF IT FACTORED IN THE OTHER TOOLS. FROM MY PERSPECTIVE, HE ALREADY HAS CREDIBILITY. THERE IS A VIEW HE WILL SHRINK THE BALANCE SHEET AND TIGHTENED MONETARY POLICY. I THINK HE HAS THE BREATHING ROOM TO SAY WE ARE GOING TO HOLD, IT IS A HAWKISH HOLD, AND WE ARE LIKELY TO HIKE IN SEPTEMBER. >> IT IS INTERESTING WE CAN HAVE A HAWKISH HOLD IN A WEEK WHERE WE HAVE MAKE EARNINGS FROM TECH COMPANIES THAT HAVE BENEFITED FROM LOWER RATES. YOU HAVE TO WONDER WHAT WE WILL SEE IN THE NASDAQ 100 IF KEVIN WARSH DOES SAY WE PLAN TO HIKE MORE AND MORE. CAN THE TECH COMPANIES SUSTAIN IN THAT ENVIRONMENT? >> I'M NOT SURE THAT THEY CAN. WE'VE SEEN AN INCREDIBLE 180 DEGREE TURN ON THE PART OF INVESTORS THAT HAD BEEN A REWARDING TECH COMPANIES, HYPERSCALERS FOR INVESTING AS MUCH AS THEY WANTED TO. I THINK THERE IS A RELUCTANCE TO SEE HYPERSCALERS THROWING MONEY AT THE AI CAPEX BUILDOUT. CERTAINLY NOT USING DEBT TO DO IT, THERE IS A CONCERN AROUND USING ALL THREE CLIENT -- CASH FLOW TO DO IT. IN A DIFFERENT ENVIRONMENT THAN LAST YEAR. ANY KIND OF INCREASE IN YIELDS ON THE LONG END OR THE RATE HIKE, IT WOULD EXERT SOME SIGNIFICANT DOWNWARD PRESSURE ON TECH STOCKS. THEY ARE THE LONG-DURATION ASSETS. >> TALK ABOUT LONG-DURATION ASSETS, I WANT TO TALK ABOUT CREDIT. WE ARE STARTING TO SEE SOME CRACKS IN HYPERSCALER CVS SPREADS WIDENING IN THE TECH SPREADS, IS IT A SIGN OF MORE TO COME? WILL YOU BE SPREADING INTO BROADER CREDIT? >> THAT IS A SIGN OF THINGS TO COME. WE KNOW THERE IS MORE IN THE WAY OF DEBT THAT WILL BE OFFERED IN THE FUTURE. WE ARE GOING TO SEE SOMETHING OF A FLOODING OF DEBT WHEN IT COMES TO THE U.S. RUNNING LARGER DEFICITS, WE WILL ISSUE MORE IN THE WAY OF TREASURIES, AND WE DO HAVE A LOT PLANNED FOR HYPERSCALER DEBT. SO TO ME, THAT IS AN ENVIRONMENT IN WHICH WE ARE LIKELY TO SEE CREDIT SPREADS WIDENING FOR THE HYPERSCALERS. ROMAINE: WITH REGARDS TO THE EQUITY SIDE AND HYPERSCALERS, WHEN YOU LOOK AT VALUATIONS, WE ONLY HAVE ABOUT 30 SECONDS LEFT, SORRY TO PUT YOU ON THE SPOT -- ARE YOU COMFORTABLE WITH THE VALUATIONS GIVEN THE STOCKS HAVE FALLEN SIGNIFICANTLY? >> NO, I THINK WE ARE LIKELY TO SEE SOME KIND OF RE-RATING WITH THE HYPERSCALERS, AND MAYBE EVEN THE SEMICONDUCTORS. ROMAINE: CHRISTINA HOOPER, CHIEF MARKET STRATEGIST COUNTING US DOWN TO THE CLOSING BELLS. WE ARE OFF OF THE LOWS OF THE DAY, THE NASDAQ 100, WHICH EVERYONE IS KEEPING AN EYE ON, DOWN ABOUT .90%, CLOSE FROM ITS ALL-TIME HIGH. >> YOU SEE WHEN YOU LOOK AT THE SECTOR LEVEL, IT IS AN AI RISK OFF TRADE. I.T. AND ENERGY ARE DOWN. ROMAINE: A LOT OF EARNINGS AFTER THE BELL FROM NAMES LIKE FORD, A FULL BREAKDOWN OF ALL OF THOSE EARNINGS STARTS RIGHT NOW. THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE, STARTS RIGHT NOW. ROMAINE: AND RIGHT NOW WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK WITH EMILY GRAFFEO TAKING YOU THROUGH TO THE CLOSING BELL. CAROL MASSAR AND TIM STENOVEC JOIN US NOW. WELCOME TO OUR AUDIENCES ACROSS OUR BLOOMBERG PLATFORMS, OUR PARTNERSHIP WITH YOUTUBE. A LOT GOING ON IN THIS MARKET TODAY. CAROL MASSAR WITH THE NASDAQ 100 FLIRTING WITH CORRECTIONS TERRITORY, AND WE WILL GET A SLEW OF EARNINGS AFTER THE BELL INCLUDING FROM FORD AND VISA. CAROL: YEAH, LOOKING FORWARD TO THOSE EARNINGS AND ALREADY THINKING ABOUT TOMORROW WHEN WE GET BIG TECH EARNINGS. YOU HAVE A FED DECISION, BUT ONCE AGAIN YOU HAVEN'T S&P 500 THAT IS LITTLE CHANGED AND YET GO INSIDE THE INDEX AND YOU WILL NOTICE THAT MOST NAMES ARE ACTUALLY HIGHER IN TODAY'S SESSION WITH SIGNIFICANT GAINS TO THE UPSIDE. TIM: EARNINGS IS WHAT EVERYONE IS WATCHING BUT I WANT TO BA.5 ON THE WALL IN WASHINGTON, D.C. COME OVER THE FEDERAL RESERVE IS MEETING, THE FOMC. KEVIN WARSH'S SECOND MEETING AS FED. SADOW SECURITY SAYS THE COMMITTEE WILL RAISE RATES TOMORROW. WE WILL SEE WHAT HAPPENS. EMILY: YOU HAVE TO WONDER WHAT THIS DOES TO THE MEGA CAPS THAT ARE UNDER PRESSURE TODAY. INTERESTING TO SEE THREE DAYS IN A ROW NOW OF RATES ACTUALLY MOVING LOWER AND THAT IS NOT PROVIDING ANY RELIEF TODAY FOR THE NASDAQ 100. ROMAINE: YEAH, NOT AT ALL. WE TALK ABOUT THE DROP WE ARE SEEING IN SOME TECH NAMES. THE FLOOD OF YOUR STOMACH AND AFTER INDEX HEADING FOR A FOURTH STRAIGHT DAY OF LOSSES, CAUSING A LOT OF SOUL-SEARCHING NOT SO MUCH OF THE VALUATIONS OF THE COMPANIES BUT ABOUT THE CIRCULARITY OF SOME OF THESE FINANCING DEALS, THE IDEA THAT EVERYTHING IS INTERCONNECTED. THIS IS JUST ONE OF THE HYPERSCALERS TO SAY SOMETHING THAT WOULD CAUSE EVERYONE TO REACT. FOR TODAY, LOSSES ARE MODEST. YOU HAVE SOME GREEN ON THE SCREEN INCLUDING FOR THE DOW JONES INDUSTRIAL AVERAGE AT ABOUT 1% ON THE DAY. THE S&P 500 ON A MARKET CAP BASIS IS DOWN 0.2% ON THE DAY. THE EQUAL WEIGHT S&P 500 IS HIGHER BY 1.1%, WHICH MAY BE IS A TESTAMENT TO THE FACT THAT THERE IS ROTATION GOING ON UNDERNEATH THE SURFACE. THE NASDAQ COMPOSITE LOWER BY 0.2%. THE NASDAQ 100 LOWER BY 1%. THE PHILADELPHIA SEMICONDUCTOR INDEX DOWN BY 4.4%. THE RUSSELL 2000 WILL ADD ABOUT SIX POINTS, OR 0.2%. CAROL: WE ARE STARTING TO GET SOME EARNINGS CROSSING THE BLOOMBERG TERMINAL. CAESAR'S OUT. QUARTER LOSS PER SHARE OF $.30. SECOND-QUARTER NET REVENUE OF $3 BILLION SO WE ARE JUST GETTING A FEW HEADLINES HERE. I SHOULD SAY THAT -- LET ME GO HERE AS WE GET MORE. SAME-STORE REVENUE FOR THE SECOND QUARTER MISSED AVERAGE ANALYST ESTIMATES. THAT IS ONE -- $1.02 BILLION. STOCK UNCHANGED. LOOKING TO SEE WHAT ELSE WE ARE GETTING. MENTION THE LOSS PER SHARE OF $.30. ADJUSTED EBITDA $920 MILLION, A BIG MESS -- MISS. STOCK NOT MOVING TOO MUCH RIGHT NOW IN THE AFTER HOURS. ROMAINE: I WANT TO GO TO CORVO. THAT COMPANY REPORTED EARNINGS. OSCILLATED BETWEEN GAINS AND LOSSES. IT BEAT AT $178 MILLION ADJUSTED EPS BEAT AT $1.64. THE AVERAGE WAS LOOKING FOR $1.10. REVIEW OVERALL $785 MILLION, A BEAT OVER THE AVERAGE OF THE STREET ESTIMATES. WE ARE GOING TO HOLD OFF ON THIS OTHER HEADLINE HERE. ACTUALLY, WE ARE GETTING A HEADLINE THAT SKYWORKS AND CORVO REPORT AND EXPECTED TEAM FOR A COMBINED COMPANY. I THINK WE NEED TO DIG DEEPER INTO THIS TO FIND OUT EXACTLY WHAT IS GOING ON BUT WE ARE LEARNING CORVO IS DISCONTINUING ITS CONFERENCE CALL, DISCONTINUING PROVIDING FORWARD GUIDANCE. NOW WE ARE GETTING SKYWORKS EARNINGS, AND WE SHOULD DIVE DEEPER INTO THIS BECAUSE OF THE HEADLINE IS CORRECT, THIS APPEARS TO BE ARE SOME -- BE SOME M&A. TIM: I AM SEEING A PRESS RELEASE THAT IT IS REPORTING FOURTH QUARTER FISCAL RESULTS. THE COMPANY ALSO ANNOUNCING KEY STEPS TO A COMBINATION WITH CORVO. THE CORVO REGULATORY APPROVAL IS PROGRESSING. AN EXPECTED LEADERSHIP TEAM AND IT RAISING $2 BILLION OF ACQUISITION DEBT FINANCING. CORVO SAYING IN ANNOUNCES A NEW CAPITAL ALLOCATION FRAMEWORK FOR A COMBINED COMPANY AND A STOCK REPURCHASE AUTHORIZATION OF $2 BILLION. ROMAINE: OK, WE KIND OF ALREADY DO THIS. I AM CURIOUS WHAT THE CHANGE IS HERE. THEY ANNOUNCED THIS BACK IN OCTOBER WHEN WE TALKED ABOUT THAT. TIM: THEY SAID THEY ARE NOW OPTIMISTIC THEY COULD DO THIS WITHIN THE CALENDAR YEAR AND ARE OPTIMISTIC THEY CAN CLOSE IN THE CALENDAR YEAR. PREPARED TO CLOSE AS SOON AS THE FISCAL YEAR. THE STEPS ARE FINANCING PLAN WITH THE COMPANY EXCITED TO FIND A NEW SHIP TEAM, ABOUT BEING READY TO EXECUTE FROM DAY ONE. ROMAINE: OK. A LITTLE CONFUSING THERE. EMILY: OK, SO WE ARE WATCHING SHARES OF THAT. NOT A TON OF MOVEMENT RIGHT NOW. LET'S GO BACK TO THE IMAP BEFORE WE GET MORE EARNINGS. IT WAS A LARGELY GREEN DAY FOR THE INDEX LEVEL. FINISHING UP 0.2%. AS YOU CAN SEE, I.T. WAS THE SECTOR DRAGGING DOWN THE INDEX. ENERGY AS WELL. AND THEN INDUSTRIALS AND UTILITIES AND REAL ESTATE ALSO IN THE RED. I WANT TO SAY THIS IS AN AI DATA CENTER RISK OFF TRADE BECAUSE ALTHOUGH SECTORS BENEFIT FROM THE BUILDOUT OF ARTIFICIAL INTELLIGENCE. AGAIN, IT WAS A RISK OFF ON THE AI TRADE. HEALTH CARE, MATERIALS, SOME OF THOSE SAFE HAVENS IN THE EQUITY MARKET IN THE GREEN TODAY. CAROL: TO SOME OF THE INDIVIDUAL GAINERS AS WE CONTINUE TO WATCH FOR MORE EARNINGS TO CROSS. KIND OF GOING OLD-SCHOOL FOR TWO OF MY PICKS. COCA-COLA UP 5% IN TODAY'S SESSION. THE COMPANY RAISED ITS FULL-YEAR OUTLOOK AND SERVED AS A MAJOR SPONSOR OF THE FIFA WORLD CUP SO AND BENEFITED. NOW SEEING ORGANIC SALES GROWTH OF 5%. IT RAISED THE FORECAST OF EARNINGS PER SHARE GROWTH. CUPPING SALES EXPECTATIONS FOR THE LAST QUARTER. ORGANIC SALES JUMPING 7%. STOCK UP 26% YEAR TO DATE, SO WE HAVE SEEN QUITE A RUN. I WANT TO GO OVER TO BOEING. THIS ONE SOME OUTPERFORMANCE ALSO TODAY. UP ALMOST 4.8% IN TODAY'S SESSION. BOEING GENERATED BETTER THAN EXPECTED CASH FLOW IN THE SECOND QUARTER ON CONTINUED STRONG DEMAND FOR ITS AIRCRAFT. COMPANY REPORTED FREE CASH FLOW OF $631 MILLION DRIVEN BY HIGHER AIRPLANE DELIVERIES AND SOLIDLY BEATING ANALYST ESTIMATES OF $331 MILLION CASH OUTFLOW. IT STILL PLANS TO GENERATE $1 BILLION IN CASH THIS YEAR DESPITE THE CHARGE FOR THE AIR FORCE ONE PROGRAM. WE GOT SOME MORE EARNINGS FROM FORD. ROMAINE: FORD OUT WITH ITS EARNINGS. ADJUSTED EPS BEAT $.42 PER SHARE. THE STREET WAS LOOKING FOR $.36. THE COMPANY SAYS FOR THE FULL YEAR IT IS ANTICIPATING EARNINGS BEFORE INTEREST AND TAXES $10 BILLION TO $11 BILLION. THAT APPEARS TO BE A NUDGE UP FROM ITS PREVIOUS GUIDANCE FROM 9.5 BILLION DOLLARS TO $10.5 BILLION OVERALL. A BEAT FOR FORD AS FAR AS SOME OF THEIR NET -- THEIR NUMBERS FOR THE ACTUAL QUARTER. ANALYST ESTIMATES WERE $.36 A SHARE BUT THERE WAS A NET LOSS I THINK WE ALREADY KNEW WAS COMING BECAUSE OF THE $3.6 BILLION CHARGE TIED TO THE EB BUSINESS. CAROL: LET'S GO TO FISA. ALREADY IN THE NEWS TODAY. THE COMPANY CUTTING 7% OF ITS WORKFORCE BUT VISA OUT WITH THE EPS OF $3.32 A SHARE. THAT IS A BEAT. THIRD QUARTER NET REVENUE COMING IN BETTER THAN FORECAST. $11.6 BILLION AND THAT COMPARES WITH THE ESTIMATE OF $11.4 BILLION. AND THEN THE THIRD QUARTER TOTAL VISA PROCESS TRANSACTIONS COMING IN. $71.7 BILLION. THE STREET ESTIMATE WAS IN LITTLE LESS THAN $71.17 BILLION. BUT THE STOCK DOWN AFTERMARKET. TIM: WE LOOK TO THIS COMPANY FOR AN IDEA OF WHAT PEOPLE ARE BUYING AND HOW RESILIENT CUSTOMERS ARE. VISA COMING OUT SAYING CONSUMER AND BUSINESS SPENDING REMAINS RESILIENT. TO GO OVER SOME OF THESE NUMBERS, ADJUSTED EPS ABOVE ESTIMATES AT $3.32. THIRD QUARTER NET REVENUE AT $11.6 BILLION. THAT IS ABOVE ESTIMATES. TOTAL PROCESSED TRANSACTIONS COMING IN ABOVE ESTIMATES AT $71.7 BILLION. THIRD QUARTER CROSS QUARTER VOLUMES UP 13%. SHARES HIGHER BY 1% RIGHT NOW. ROMAINE: I WANT TO GO BACK TO FORD AND PARTS SOME OF THESE NUMBERS HERE BECAUSE WE TALKED ABOUT THE BREAKDOWN OF THEIR VARIOUS BUSINESSES. IN THE MOST RECENT QUARTER, FORD POSTED REVIEW OF $17.8 BILLION, BASICALLY IN LINE WITH ESTIMATES HERE. FORD BLUE, WERE A LOT OF PEOPLE HAD LOOKED, REVENUE THERE AT $26.1 BILLION. THAT IS BELOW WHAT THE STREET WAS LOOKING FOR, $25.6 BILLION. A BIG MISS THEIR. WE KNOW THE TROUBLES GOING ON WITH THE MODEL E BUSINESS, WHICH OF COURSE THEY HAVE PULLED BACK. WANT TO POINT OUT SOME INTERESTING COMMENTARY THEY ARE POSTING THAT THEY NOW SEE U.S. MOBILE PRICES INCREASING THIS YEAR. 0.5% HERE BUT THE IDEA IS THEY DO HAVE SOME EXPECTATION HERE OF AUTO PRICES GOING UP ON AGGREGATE. TIM: YOU ARE TALKING TRUCKS AND CARS. I AM TALKING TOTAL ROW AND AN OREO. FISCAL YEAR ORGANIC NET REVENUE COMING IN AT LEAST PLUS 2%, SO 0% TO 2%. SHARES UP 1.5% FOR MONDELEZ. SECOND PUTTER EPS COMING IN AT $1.20. SECOND QUARTER NET REVENUE AT $9.36 BILLION, BEATING ESTIMATES. MONDELEZ INTERNATIONAL SHARES UP BY 1.5%. EMILY: JUST LIKE VISA, MONDELEZ IS ANOTHER GAUGE FOR THE CONSUMER HEALTH IN THE U.S.. RIGHT NOW LOOKS PRETTY SOLID. THE COMPANY SAID THEY EXPECT TO PERCENT ORGANIC NET REVENUE GROWTH, REFLECTS ITS STRENGTH OF THE YEAR TO DATE PERFORMANCE AS WELL. CAROL: ALL RIGHT. I THINK WE HAVE ONE LAST EARNING. JUST CROSSING THE BLOOMBERG TERMINAL, LET'S GO TO IN REAL QUICKLY. FIRST QUARTER REVENUE, $4 BILLION TO $4.2 BILLION, WAY ABOVE WHAT THE STREET WAS LOOKING FOR, $3.79 BILLION. $63 BILLION VERSUS AN ESTIMATE -- FIRST QUARTER ADJUSTED EPS, THE STREET WAS LOOKING FOR $5.08 A SHARE. AS A RESULT, NOT A SURPRISE, STOCK IS UP AT LEAST INITIALLY FOR .5% IN THE AFTERMARKET. WE ARE IN EARNINGS SEASON. MORE TO COME TOMORROW. THAT IS A WRAP. WE DO CALL IT THE CLOSING BELL. EMILY AND ROMAINE CONTINUING ON TV. TIM AND I BACK HERE ON "BLOOMBERG BUSINESSWEEK DAILY" ON RADIO. WE WILL SEE YOU BACK SAME TIME, SAME PLACE TOMORROW. ROMAINE: WHEN WE COME BACK, WE DIVE DEEPER INTO SOME OF THESE EARNINGS INCLUDING FROM FORD AND VISA. STICK WITH US. THIS IS "THE CLOSE" 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: ANOTHER WILD DAY ON WALL STREET. THE S&P SPENT A GOOD PORTION OF THE EARLY POINT OF THE SESSION IN THE RED BUT MANAGED TO FINISH THE DAY IN THE GREEN. OUTPERFORMED THE 0.2% GAIN ON THE SPX, OUTPERFORMED BY THE SPW. THE EQUAL WEIGHT INDEX UP 1.1%, REFLECTION OF A ROTATION WE CONTINUE TO SEE OUT OF SOME OF THOSE BIG TECH NAMES AND INTO THINGS A LITTLE MORE PEDESTRIAN LIKE HEALTH CARE AND CONSUMER STAPLES. A BIG PART OF THE REASON IS THAT SECOND LINE ON YOUR SCREEN, THE PHILADELPHIA SEMICONDUCTOR INDEX DOWN FOR A FOURTH STRAIGHT DAY. DOWN 4.5%. WE HAVE NOT SEEN A STRING OF DAILY LOSSES LIKE THAT ON THE INDEX GOING BACK TO MARCH. YOU HAVE A LOT OF TECH NAMES OUT THERE THAT HAVE STARTED TO DRAG DOWN. IT IS NOT JUST THE CHIPS EITHER. META DOWN FOR A 9TH STREET SESSION, THE LONGEST DAILY LOSING STREAK FOR THAT STOCK IT WENT PUBLIC IN 2012. THE NASDAQ 100 DOWN 1% ON THE DAY. THAT PINS IT DOWN ABOUT 9.5% FROM ITS ALL-TIME HIGH SET IN LATE JUNE. EMILY: WE WILL BE WATCHING CLOSELY HOW THE STOCK PERFORMS AFTER ITS EARNINGS, BUT LET'S TAKE A LOOK AT SOME OF THE BIGGEST MOVERS AFTER HOURS. SOME OF THE EARNINGS RESULTS WE HAVE GOTTEN SO FAR. TAKE A LOOK AT FORD UP 4% AFTER ISSUING A STRONG OUTLOOK ON STRONG SALES OF THEIR PROFIT RICH SUV'S. THEY RAISED THEIR EARNINGS OUTLOOK. THE NET LOSS HERE ALSO INCLUDING A $3.6 BILLION CHARGE TIED TO THE BLUE OVAL JOINT VENTURE. SOME SHAREHOLDERS LOOKING THROUGH THAT AND LOOKING TOWARDS THE OUTLOOK. FOR VISA, A DIFFERENT STORY IN THE AFTER HOURS. IT IS DOWN ABOUT 1.4% IN THE AFTER HOURS. THIS OF COURSE COMING AFTER THE COMPANY SAID IT WILL CUT 7% OF ITS WORKFORCE AS THEIR CEO SEEKS TO REVAMP THEIR COMPANY. A LITTLE BIT OF A BEAT ON VISA BUT NOT ENOUGH TO RAISE THE SHARES. ROMAINE: LET'S GO BACK TO FORWARD -- FORD, UP 4%. WE HAVE SEEN THE NUMBERS AND THE BEAT, VEHICLE SALES, DOWN ABOUT 10%. WE SEE THE REVENUE NUMBERS AND MORE IMPORTANTLY WE SEE THE MARGINS HERE. THIS WAS A SHIFT AWAY FROM LOWER MARGIN VEHICLES TO THOSE HIGHER MARGIN SUV'S. IS THIS A ONE-OFF FOR THE LONG-TERM STORY FOR FORD? >> THANKS FOR HAVING ME. THIS IS THE LONG-TERM STORY IN THE U.S.. WE CONTINUE TO SEE A SHIFT TOWARD PICKUP TRUCKS. MIDSIZE SUV IS, EVEN SOME CARS ARE MAKING SOME HEADWAY HERE. MID IS IN IS WHAT WE HAVE BEEN SIGNED BY THE FULL SIZE CONTINUED TO PERFORM FOR BRANDS LIKE FORD, ABSOLUTELY. ROMAINE: GIVE ME A SENSE ON THE AFFORDABILITY ISSUE. FIRST WE HAD THE BIG PUSH INTO EV'S, WE WILL GET INTO THAT AND THE IDEA OF AFFORDING AFFORDABLE MODELS TO THE CONSUMER. THE AUTO COMPANIES JUST DECIDED THERE'S NO REASON TO DO THAT. WE CAN CONTINUE TO CHARGE $60,000 TO $80,000 FOR AN SUV? >> THERE ARE BRANDS THAT ARE CONTINUING TO GET A TOWARD THE $40,000 RANGE FOR THE MIDSIZE VEHICLES. SO THERE ARE BRANDS THAT ARE CATERING TO THOSE BUYERS. BUT FOR SURE IN THE U.S. MARKET WE ARE SEEING THAT THE UPPER END OF THE K SHAPED ECONOMY CONTINUES TO SUPPORT REALLY EXPENSIVE, BIG FULL-SIZED PICKUPS AND SUVS AND FORD HAS THE NUMBER ON THAT AS WELL AS GM AND STELLANTIS, THE THREE BIG DOMESTIC MANUFACTURERS THAT CONTINUE TO PUSH OUT LARGER VEHICLES AT HIGHER PRICES AND CONSUMERS KEEP COMING FOR THEM. EMILY: WHAT DID WE LEARN IN THIS REPORT AND IN WHAT YOU HAVE SEEN SO FAR ABOUT THE EV BUSINESS AND WHERE IT'S GOING? SALES PLUNGED 41% IN THE SECOND QUARTER. TWO THEY NEED THE EV BUSINESS TO KEEP GROWING? >> EVERY MANUFACTURER RIGHT NOW IS LOOKING GLOBALLY AND I UNDERSTAND EV IS THE NAME OF THE GAME FOR THE FUTURE, 10 YEARS DOWN THE ROAD, AT LEAST IN THE U.S. BUSINESS. THERE IS SOME COST IN DEVELOPING EV TECHNOLOGY. THERE'S NO REASON WHY ALL THE MANUFACTURERS WILL COMPLETELY BACK AWAY. BUT SURELY THEY SAW MAYBE THEY HAD MADE THE WRONG MOVES WITH WHICH EV'S THEY BROUGHT OUT FIRST AND DECIDED TO RELOOK AT HOW THEY BUILD THOSE EV'S. MANY HEARD ABOUT THE DEVELOPMENT CENTER OUT IN CALIFORNIA THAT'S BEEN DEVELOPING THAT NEW UNIVERSAL EV PLATFORM VEHICLE, THAT IS SUPPOSED TO BE COMING OUT AROUND $30,000 IN 2027. SO THEY ARE BACK AT THE GAME HERE BUT THEY ARE TRYING TO DO IT IN A MUCH MORE EFFICIENT AND EFFECTIVE WAY, WHERE THEY ARE NOT HAVING TO WRITE DOWN THE BIG LOSSES IN THE FUTURE. EMILY: GOING BACK TO THE SUVS, WE HAVE SEEN COMPETITORS, GM, CASH AND ON THE RESILIENT DEMAND FOR SUB'S -- SUV'S. HOW DOES FORD DISTINGUISH THEMSELVES? >> THEY LOST THEIR SMALLER SUV AND PULLED THE ESCAPE OFF THE MARKET WHICH IS PART OF WHAT HURT SOME OF THEIR REVENUE AS FAR AS FORD BLUE IS CONCERNED BUT THEY HAVE STRONG REPUTATIONS FOR SIZE AND CAPABILITY AND USABILITY IN THE MARKET. PEOPLE CONTINUED TO COME BACK FOR MORE. ESPECIALLY WHEN YOU GET TO THOSE LARGE PICKUP TRUCKS, THAT IS WHAT THEY ARE KNOWN FOR, THE F SERIES HAS BEEN THE NUMBER ONE BEST SELLER PICKUP TRUCK FOR 50 -- GOING ON 50 YEARS. AND HAS A REPUTATION TO CONTINUE TO PERFORM AND THEY LEAN INTO THAT. BECAUSE THEY RELY SO HEAVILY ON THE F-SERIES, WITH WHAT HAPPENED WITH THE PRODUCTION SLOWED ON THIS YEAR, WE CAN SEE THAT ATE INTO THE SALES OF IT BUT THEY WERE STILL STRONG AGAINST CLOSE COMPETITORS. ROMAINE: COMING OFF LAST WEEK, WE HAD THE GM REPORT, ALSO A GREAT QUARTER, TETHERED TO THIS IDEA OF LEANING A LITTLE HARDER INTO THOSE HIGHER MARGIN SUVS. WE WILL GET STELLANTIS IN A COUPLE OF DAYS AS WELL. A DIFFERENT PRODUCT TO A CERTAIN EXTENT. IF YOU COULD SET THE SCENE HERE IN IN TERMS OF WHAT TYPE OF MODELS PEOPLE ARE GRAVITATING TO, SUV VS. SEDAN, ARE THEY FAVORING CERTAIN BRANDS OVER OTHERS OR OUR CONSUMERS AGNOSTIC TO THE BRAND, GOING AFTER I GUESS WHAT FITS INTO THEIR PRICE RANGE AND WHAT IS ON THE LOT? >> IT IS ACTUALLY A MULTI-POINTED STORY BECAUSE WE DO HAVE SOME PRICE-SENSITIVE SHOPPERS AND THE NEW CAR INDUSTRY HAS ALWAYS TILTED TOWARDS HIGHER INCOME INDIVIDUALS. THAT DOESN'T MEAN WE DON'T HAVE FOLKS LOOKING AT CARS FOR THE $35,000 SWEET SPOT AND THAT USUALLY SITS DOWN IN THE COMPACT SUV, MIDSIZE SUV. WENT OUT TOYOTA, HONDA WITH THE HYBRID OFFERINGS, AND AMTI WITH THE OFFERINGS THEY HAVE -- HYUNDAI AND KIA WITH THE OFFERINGS THEY HAVE ARE COMPETING REALLY WELL AND PUTTING A LOT OF COMPETITION ON THE MANUFACTURERS AS WELL AS THE WINNERS IN HYBRID WITH TOYOTA AND HONDA. THE POWERTRAIN HAS STARTED TO MATTER MORE, MAYBE NOT ELECTRIC VEHICLES JUST YET BUT HYBRID IS TRULY PROVING TO BE A SOLID BRIDGE TO THE FUTURE FROM A POWERTRAIN PERSPECTIVE SO WE KNOW THOSE FOUR BRANDS WITH GM AND FORD ARE PRODUCING WELL IN THE MARKET. WE ARE SEEING SUBARU START TO CLAIM BACK SOME SALES YEAR END NISSAN MAKING MORE NOISE IN THE MARKET BUT THEY ARE STILL FIGHTING FOR SHARE AGAINST THESE CALL IT BIG DOGS IN THE MARKET FOR U.S. CONSUMERS. EMILY: THINK IT TO THE EXECUTIVE ANALYST AT COX AUTOMOTIVE BREAKING DOWN THOSE EARNINGS. COMING UP, MORNINGS AHEAD. VISA SHARES, LOWER. WE WILL IMPACT THAT REPORT NEXT. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ EMILY: SHARES OF THESE ARE LOWER AFTER EARNINGS. OUR NEXT GUEST COVERS THE STOCK WITH A BUY RATING AND A 396 DOLLAR PRICE TARGET. IT IS ON THE LOWER END OF THE STREET'S RANGE. JOINING US LIVE TO UNPACK THE REPORT IS THE DIRECTOR OF PRODUCT STRATEGY AND FINANCIAL SERVICES RESEARCH AT ARGUS RESEARCH. THE SHARES ARE MOVING LOWER DOWN ABOUT 1.2%. NOT MUCH OF A MOVE, GIVE US YOUR INITIAL REACTION TO THESE RESULTS. STEVEN: LOOK, I THINK THIS IS PRETTY STANDARD -- A PRETTY STANDARD REPORT FOR A VISA AND TERMS OF PAYMENT GROWTH. WE HAD AN ACCELERATION ON PAYMENT VOLUMES FROM 9% TO 10%. VOLUMES MOVED FROM 12% TO 13%. THIS IS PRETTY GOOD -- A PRETTY GOOD REPORT OVERALL AND I THINK THE GUIDANCE WAS MOSTLY ONLINE, SLIGHTLY HIGHER TO THE MIDTEENS TYPE OF EPS GROWTH WHICH IS PRETTY STANDARD FOR THEM, TURNING THE KIND OF HIGH SINGLE DIGIT REVENUE GROWTH INTO MIDTEENS OR EVEN UPPER TEENS EPS GROWTH. THAT IS PRETTY STANDARD. NOTHING YET IN THE REPORT WE -- IN THE REPORT, WE HAD THE HEADCOUNT REDUCTION, NOT AN ANNOUNCEMENT THAT WAS PUT OUT BY VISA NECESSARILY BUT I AM SURE WE WILL HEAR MORE ABOUT THAT IN THE CONFERENCE CALL. MORE DETAILS ON THAT. EMILY: WE DID GET ONE DETAIL AT LEAST FROM BLOOMBERG'S PAIGE SMITH WRITING THAT VISA IS TAKING A 500 68 $3 MILLION CHARGE AS A RESULT OF THOSE JUNKETS -- $563 MILLION CHARGE AS A RESULT OF THOSE. HOW URGENTLY DOES VISA NEED TO RIGHT SIZE OPERATIONS AND GET MORE EFFICIENT AND DO YOU SEE SIMILAR MOVES LIKE THIS COMING? STEVEN: LISA IS NOT A COMPANY THAT ROUTINELY HAS HEADCOUNT REDUCTIONS OF ANY MAGNITUDE LET ALONE THIS MAGNITUDE SO I THINK THEY ARE LOOKING AT THE FUTURE AND AS MUCH AS THEY MAY SAY IT WAS NOT A.I. RELATED, THEY ARE LOOKING AT DOING THINGS MORE EFFICIENTLY, AS THE REST OF CORPORATE AMERICA. AND HAS FOUND SOME POSITIONS THAT IT CAN DO WITHOUT AND MAY BE DUE MORE EFFECTIVELY WITH THE EXISTING STAFF. THERE WERE CLEAR AT LEAST FROM THE REPORT WHERE THE SAVINGS ARE GOING TO GO AND WHERE THEY ARE GOING TO REINVEST SOME OF THE -- THAT. IT ALL SOUNDS GOOD ON PAPER RELATIVE TO SPENDING MORE ACROSS BORDERS AND COMMERCIAL PAYMENTS AND TRYING TO DRIVE GROWTH THAT WE. NOT A COMPANY THAT ROUTINELY DOES HEADCOUNT REDUCTIONS SO THIS IS UNIQUE THIS QUARTER FOR SURE. ROMAINE: WHERE DO YOU LOOK AT THE GROWTH LONGER-TERM HERE? THIS IS NOT A JUGGERNAUT IN TERMS OF GROWTH GIVEN THE SIZE BUT WE STILL TALK ABOUT HEALTHY PAYMENTS VOLUME THE MOST RECENT QUARTER, UP ABOUT 10%. THE CROSS-BORDER VOLUME AS WELL. IS THIS A GROWTH STORY THAT JUST STILL HINGES ON ECONOMIC CYCLES OR IS THERE SOMETHING THAT IS A TRAIN TRACK THAT COULD KIND OF PEEL OFF FROM THAT THAT THE MANAGEMENT TEAM CAN FOCUS ON? STEPHEN: THE STORY TENDS TO BE BOTH CYCLICAL AND CIRCULAR FOR A VISA, THE CYCLICAL IS THE BETTER ECONOMY. WE ARE HAVING THIS CONSUMER SPENDING STRENGTH AND UNEMPLOYMENT IS STILL PRETTY HEALTHY. THEY HAVE GOT THAT AS A BACKDROP. THE CIRCULAR PIECE IS MORE AND MORE SPENDING MOVING TOWARDS THE PLASTIC CREDIT CARD RELATIVE TO CASH AND CHECK. THAT IS HOW THEY ARE TURNING THIS 3% TO 5% CONSUMER SPENDING GROWTH INTO HIGH SINGLE DIGIT OR EVEN 10% PAYMENT VOLUME GROWTH. I THINK THAT HAS AN AWFUL LONG RUNWAY TO MOVE FORWARD. SOMETHING LIKE 65% OF PAYMENTS GLOBALLY ARE STILL DONE WITH CASH AND/OR CHECK SO THERE'S A LOT OF DIGITAL SPENDING THERE THAT CAN BE USED. WHY ARE PEOPLE NOT USING MORE CARDS VERSUS CASH -- WHY ARE PEOPLE USING WORKERS VERSUS CASH? THE REWARD PROGRAM SPEAR WITH THE SAFETY. THE CONVENIENCE. THE FACT THAT MERCHANTS ARE ACCEPTING LOWER AND LOWER DOLLAR AMOUNTS TO BE ABLE TO CHARGE. THAT IS A LONG RUNWAY FOR GROWTH AHEAD OF THEM. WITH HIGH 60 PERCENTAGE MARGINS, THAT IS HOW THEY ARE GETTING THIS GROWTH AS WELL. IT IS A MARGIN EXPANSION STORY, A CIRCULAR AND CYCLICAL REVENUE STORY. ROMAINE: REALLY APPRECIATE YOU TAKING TIME FOR US, THE DIRECTOR OF PRODUCT STRATEGY AND FINANCIAL SERVICES OVER AT ARGUS. LISA SHARES ARE DOWN 1.5%. NOT THE BIGGEST DROP WE ARE SEEING IN THE AFTER HOURS. SHARES DOWN ABOUT 15%. KEEP AN EYE ON KLNNXP. WE ARE GOING TO FOCUS MORE ON A.I. AND WHETHER THE MARKET HAS BECOME TOO RELIANT ON THE A.I. INVESTMENTS. JOHN HIRTLE WILL BE JOINING US IN A SECOND. THIS IS BLOOMBERG. ROMAINE: HYPERSCALER INVESTMENT STEALING THE AI BUILDOUT. INVESTOR CONCERNS WHETHER THE AI CASH BURN WILL ACTUALLY PAYOFF. HYPERSCALER BOND RISKS. TAKE A LOOK AT THE MARKET, AND YOU CAN SEE HOW SOME OF THAT ANXIETY IS STARTING TO SETTLE IN. JON HIRTLE IS THE FOUNDER AND EXECUTIVE CHAIRMAN OVER HIRTLE & CO. WE CHECKED A LOT OF THE STUFF, JON, AND ONE REASON WE WANT TO TALK TO YOU IS TO KIND OF GET A SENSE HERE OF THE FACT THAT AI HAS KIND OF EATEN THIS MARKET, GOOD AND BAD, WHETHER EQUITY IS BASED, CREDIT SPACE AS WELL. TALK A LITTLE BIT ABOUT THE NARROWNESS THAT WE'VE SEEN WHEN IT COMES TO SOME OF THESE AI INVESTMENTS AND WHETHER YOU THINK IT POSES ANY REAL RISK. JON: WELL, IT IS NOT JUST AI INVESTMENTS, IT'S ACTUALLY NARROWER THAN THAT. IT WAS CHIP INVESTMENTS. WHAT HAS REALLY SPIKED LATELY IS MICROCHIPS, WHICH IS INTERESTING BECAUSE ALL THROUGH TIME THEY'VE BEEN VIEWED AS A COMMODITY, AND REALLY WE THOUGHT THAT WAS UNSUSTAINABLE, BECAUSE, YOU KNOW, WHEN YOU GET EXCESS PROFITS IN THE MARKET, THE REAL PURPOSE OF A FREE MARKET IS TO ATTACK THOSE EXCESS MARKETS. AS FAR AS THE SUPER SCALARS AND SO FORTH, THE HYPERSCALERS, WE ARE REALLY IN THE MIDDLE OF A CEAS -- A SEACHANGE. THIS IS BIG. AS INVESTORS, WE SHOULD ALL BE HAPPY WE ARE PARTICIPATING IN IT. THERE ARE A LOT OF QUESTIONS ABOUT WHETHER WE CAN GET AN ATTRACTIVE RETURN ON INVESTMENT RELATIVE TO ALL THE MASSIVE AMOUNT OF CAPITAL SPEND, AND ONLY TIME WILL TELL. SO YOU CAN SEE SOME OF THE SKEPTICISM FROM THE QUESTION REFLECTED IN PRICES LATELY, AND YOU'VE SEEN OTHER SECTORS OUTPERFORM THOSE COMPANIES THAT HAVE LED THE WAY FOR SO MANY YEARS. ROMAINE: I UNDERSTAND THE SKEPTICISM, YOU KNOW, JUST TO PLAY DEVILS'S ADVOCATE HERE, THOUGH, THERE WAS A LOT OF CRITICISM THAT A LOT OF THESE BIG COMPANIES THAT FOR YEARS WERE USING THIS MASSIVE CASH FLOW THAT THEY HAD AND IS BASICALLY, YOU KNOW, BUYING BACK STOCK, IN SOME CASES GIVING DIVIDENDS. THERE WAS A LOT OF DISCUSSION AS TO, WHY WOULD THEY NOT REINVESTING IN THEIR BUSINESSES? TAKE ALPHABET. WE GOT THERE EARNING THE OTHER DAY. NEGATIVE FREE CASH FLOW GET ON THE SURFACE THAT IS BAD. SOME PEOPLE WILL SAY, WELL, THAT IS GOOD, THEY ARE INVESTING LONG-TERM IN THEIR BUSINESS, WHETHER THEY PAYOFF ACTUALLY HAPPENS, YOU KNOW, OVER THE NEXT COUPLE OF QUARTERS. SHOULD WE BE CONCERNED ABOUT THAT? IF WE DO BELIEVE IN THIS IDEA THAT AI WILL BE THIS TRANSFORMATIVE BANG FOR OUR ECONOMY AND FOR THESE COMPANIES. JON: WELL, THESE ARE TERRIFIC COMPANIES, AND MOST ARE EARNING MONEY. IT'S NOT A DOT COM BUBBLE WHERE PEOPLE ARE PAYING HUGE PRICES FOR CLICKS ON SCREENS. THESE ARE REAL COMPANIES, FANTASTIC COMPANIES, BUT THEY ARE NOT CHEAP. SO WHAT WE ARE LOOKING AT IN THE MARKETPLACE, AND BY THE WAY, MOST SERIOUS INVESTORS HAVE AN INDEX CORE. IF THEY HAVE THAT INDEX CORE, WE ARE EXPOSED TO ALL OF THOSE NAMES. SO THE REAL QUESTION IS ON THE MARGINS, WHAT DO YOU DO TO DIFFER FROM THE INDEX THAT'S GOING TO ADD VALUE PLUS MITIGATE RISK? IN THAT CASE, YOU HAVE TO LOOK TO THAT INCREMENTAL DECISION, WHICH IS, ARE THEY GOING TO GET AN ATTRACTIVE ROI, RELATIVE TO OTHER THINGS IN THE MARKETPLACE, RELATIVE TO OTHER COMPANIES USING ARTIFICIAL INTELLIGENCE TO INCREASE OUR MARKETS, AND ON THE MARGIN, WE ARE STARTING TO SEE THE MARKET SAY, NOT SO SURE. EMILY: WE HAVE A LOT OF EARNINGS FROM THESE HYPERSCALERS COMING UP THIS WEEK. ARE WE GOING TO SEE ANYONE TALK ABOUT THE ROI, OR ARE WE GOING TO SEE WHAT WE SAW WITH ALPHABET, THE COMPANY SAYS THEY ARE GOING TO DO MORE, THEIR SHAREHOLDERS SELL THE STOCKS. JON: THE MARKET WILL SELL. THERE IS WISDOM IN THE MARKET, AND WE HAVE TO BE HUMBLE ABOUT THAT. WIND IS THE WISDOM OF THE MARKET TURNING INTO THE MANIC OF THE CROWD? RIGHT NOW, THE MARKET IS STILL FAIRLY RATIONAL. SO WE ARE LOOKING AT THOSE EARNINGS AND WILL DIGEST THEM AS WE RESPOND. THERE'S NO WAY TO PREDICT, ALTHOUGH THE MARKET ANTICIPATING THAT IS ANTICIPATING IT AT ITS PRICE LEVEL. SO, YOU KNOW, MY SENSE IS THAT THEY WILL BE HITTING THEIR PLAN. IT'S NOT THAT THEY ARE NOT HITTING THE PLANS, IS THAT THE PLANS THEMSELVES -- IT'S ALMOST LIKE EVERYBODY GOING INTO THE MARKET CANNOT WIN, AND THEY ARE ALL SPENDING IS THAT THEY ARE GOING TO. SO, AT SOME POINT, THERE MAY BE A RECONCILIATION OR RECONCILING ON WHO ACTUALLY GETS THE RETURN ON EQUITY. EMILY: WE STARTED THE SEGMENT SHOWING THIS CHART OF, YOU KNOW, HEDGING FOR THESE HYPERSCALER CREDITS, MOVING A VERY RECENTLY. BUT WHEN YOU LOOK AT THE BROADER CORPORATE CREDIT MARKET, EVERYTHING STILL LOOKS PRETTY TAME. DO YOU EXPECT THERE TO BE CONTAGION? THAT THE FEAR IN HYPERSCALERS IS ACTUALLY GOING TO TRICKLE INTO, YOU KNOW, BROADER FEARS ABOUT WHAT IS GOING TO HAPPEN WITH CREDIT LENDING, ESPECIALLY IF RATES GET HIGHER FROM HERE? JON: WELL, IT IS INTERESTING, IF YOU THINK ABOUT THE BIGGER QUESTION AND WHERE ARE RATES, RIGHT NOW, RATES ARE RELATIVELY HIGH. REAL RATES, IF YOU LOOK AT THE BREAKEVEN INFLATION RATE, IS ABOUT 2.20 IN THE 10-YEAR IS AT 4.60. STOCKS ARE AT 20 TIMES EARNINGS. I HATE TO GET TOO TECHNICAL WITH THE NUMBERS HERE, BUT THAT MEANS BONDS ARE EXPENSIVE -- EXCUSE ME, BONDS ARE CHEAP RELATIVE TO STOCKS. SO ONE OF THE TWO THINGS IS GOING TO HAPPEN. STOCKS ARE GOING TO COME DOWN IN PRICE, OR BONDS ARE GOING TO GO UP IN PRICE, MEANING THE INTEREST RATES WOULD DROP. SO THAT IS GOING TO FLOAT THROUGH THE WHOLE CREDIT MARKET, AND WE DON'T KNOW WHICH IS GOING TO HAPPEN. WE TEND TO BE LONG DURATION, WHICH MEANS WE THINK THE RATES ARE LIKELY TO COME DOWN. BUT AS A CHIEF INVESTMENT OFFICER MANAGING ACROSS ALL OF THESE ASSET CLASSES, WE HAVE TO TAKE ALL OF THOSE FACTORS INTO CONSIDERATION. YOU CANNOT REALLY PREDICT THIS STUFF WITH PRECISION, AND THE JOB OF SERIOUS INVESTORS IS TO SUCCEED, NOT WIN THIS QUARTER, NOT CALL WHAT IS GOING TO WIN THIS MONTH, IT'S TO SUCCEED OVER THE NEXT 5, 10 YEARS, AND IT'S BEING HUMBLE, APPRECIATING THE FACT THAT WE HAVE A SEACHANGE WITH AI, AND THAT IS FULLY REFLECTED IN THE MARKET. AND HAVING AN INDEX CORE MEANS WE ARE PARTICIPATING IN THAT. AND ON THE MARGIN, WE WANT TO PURSUE THE TRENDS THAT I JUST MENTIONED. ROMAINE: WE ONLY HAVE ABOUT A MINUTE LEFT, BUT WHEN YOU LOOK AT REAL DEALS AND WHAT IT IS MAY BE SIGNALING AND AGAINST THE BACKDROP, AT LEAST OVER THE LAST COUPLE OF, PEOPLE HAVE STARTED TO SPECULATE THAT THE FED DIRECTION MIGHT BE THE HYPE GIVEN SOME OF THE INFLATIONARY PRESSURES OUT THERE. ARE YOU IN THIS CAMP THAT THE FED WOULD ACTUALLY WANT TO AND ACTUALLY BE ABLE TO HIKE, OR ARE YOU IN THIS CAMP THAT WE WILL SEE RATES START TO COME DOWN, AND THE BOND RALLY THAT A LOT OF PEOPLE ARE BANKING ON START TO TAKE HOLD? JON: WELL, WE WOULD LIKE TO FORECAST THINGS LIKE THAT, YOU KNOW, I'M STRUCK BY THE PRINCIPAL, ROMAINE, THAT'S A GOOD QUESTION. IT'S GOOD TO SEE YOU AGAIN, I FORGOT TO TELL YOU THAT. [LAUGHTER] NICE TO SEE YOU. ROMAINE: LIKEWISE. JON: IT'S A GREAT QUESTION. JOHN MAYNARD KEYNES SAID THERE ARE TWO TYPES OF FORECASTERS IN THE WORLD, THOSE WHO DON'T KNOW AND THOSE WHO DON'T KNOW THEY DON'T KNOW. YOU CAN PROGNOSTICATE BUT WE WOULD RATHER PREPARE. ON RELATIVE VALUATION, REAL RATE THE RELATIVELY HIGH AND STOCKS ARE RELATIVELY EXPENSIVE. SO ON THE MARGIN, WE WANT TO MOVE AWAY FROM THE MOST EXPENSIVE STOCKS AND BUY BONDS, LONG-DURATION, BECAUSE THE REAL YIELDS ARE HIGH, NOT BECAUSE WE ARE PREDICTING THAT THEY ARE GOING TO CHANGE, BUT BECAUSE TODAY, THE REAL CASH YIELD ON A BOND IS ATTRACTIVELY PRICED. EMILY: J OUR THANKS TO JON HIRTLE, FOUNDER AND EXECUTIVE CHAIRMAN AT HIRTLE & CO.. JON: THANKS. EMILY: LET'S LOOK AT AFTER HOURS EARNINGS, MOVERS. UNDERNEATH THE HOOD, WE HAVE A SEMICONDUCTOR -- NXP SEMICONDUCTORS DOWN. JON WAS TALKING ABOUT INVESTORS NOT TO PLEASE WITH RESULTS. SEAGATE IS A BRIGHT SPOT COME UP ABOUT 7% HIT ANOTHER READ ON THE CONSUMER HERE, AVIS BUDGET GROUP DOWN 14%, KLA DOWN 9%. MAYBE THE LIQUIDITY IS A LITTLE BIT LOW? WE WILL HAVE TO SEE HOW IT OPENS. BUT BIG MOVES HERE. THIS IS "THE CLOSE" ON BLOOMBERG . ♪ ROMAINE: FROZEN YOGURT IS BACK IN THE SPOTLIGHT. PEOPLE FLOCKING ACROSS THE COUNTRY TO GET THE LATEST CRAZE. TCB ONE, FOR THOSE OF US OLD ENOUGH, THAT IS THE OG FOR THOSE AMONG FROZEN YOGURT BRANDS. JOINING US HERE IS THE NEW EXECUTIVE DIRECTOR OF TCBY, RICH SCRENCI. WE HAD THE OWNER OF A COMPANY CALLED MIMI'S, A SMALL CHAIN, THEY OWNED TWO OR THREE AROUND THE COUNTRY, MINDS ACROSS THE BLOCK AND THINGS LIKE THAT. SHE TALKED LESS ABOUT THE PRODUCT AND MORE ABOUT THE EXPERIENCE, THE IDEA OF WHAT SHE'S TRYING TO CREATE. I'M CURIOUS AS TO WHERE TCBY IS RIGHT NOW, BECAUSE I'M OLD ENOUGH TO REMEMBER WHEN IT WAS THAT TREAT, YOUR PARENTS WOULD TAKE YOU OUT, THAT WAS KIND OF THE HEALTHY TREE, INSTEAD OF ICE CREAM, THEY WOULD TAKE YOU TO TCBY, AND MAYBE IT'S REGIONAL, BUT THEY SEEM LIKE THEY DISAPPEAR? RICH: YEAH. WE ARE NOT REALLY MAKING A COMEBACK, BUT WE ARE DELIVERING 45 YEARS, AND WE ARE STILL THOSE THINGS YOU MENTIONED. WE DEFINED THE CATEGORY, WE HAVE A TRUST WITH PEOPLE, BUT WE ALWAYS FOCUS ON OUR EXPERIENCE, BEING THE CENTER OF THE COMMUNITY, RIGHT? TCBY IS A PLACE PEOPLE CAN CONNECT, PEOPLE CAN GATHER, RIGHT? I THINK PEOPLE ARE LOOKING FOR THAT MORE THAN EVER. IT ALLOWED US TO BUILD THE LONGEVITY AND STAY AS RELEVANT TODAY AS ALWAYS. ROMAINE: RIGHT NOW, YOU HAVE ABOUT ONE HUNDRED 20 LOCATIONS? RICH: YEAH. ABOUT. ROMAINE: IS THE PLAN TO EXPAND THAT FOOTPRINT SIGNIFICANTLY? RICH: YEAH. WE HAVE ALL THE TOOLS AND RESOURCES WE NEED TO REALLY PURSUE GROWTH, INTERNATIONALLY, DOMESTICALLY. DOMESTICALLY WE HAVE GREAT OPERATORS ALREADY, AND INTERNATIONALLY, WE ACTUALLY JUST OPENED UP ANOTHER LOCATION IN DOHA THIS MONTH. WE WILL KEEP DOING THAT. WE WILL KEEP GROWING TO NEW MARKETS AS WELL. ROMAINE: THE LOOK AS A STANDALONE ON THE STREET, MORE IN MALLS AND SHOPPING CENTERS? RICH: YEAH. I THINK EVERYTHING IS OPEN TO US. WE HAD SOME OPPORTUNITIES WITH STRATEGIC PARTNERSHIPS THAT OPEN UP NEW CHANNELS NOT JUST FOR TCBY BUT OUR SISTER BRAND, WHICH WE ARE REALLY EXCITED ABOUT, AND WE WANT TO INTRODUCE THESE ICONIC BRANDS TO A NEW GENERATION COME AND I THINK WE CAN DO THAT AND ALL THOSE PLACES. EMILY: WHAT ABOUT IN MANHATTAN? [LAUGHTER] CLEARLY THE DEMAND FOR FRO-YO IS RARE IN NEW YORK CITY. RICH: YEAH. ABSOLUTELY. ANYWHERE PEOPLE ARE HAPPY AND GATHERING IS A PLACE FOR TCBY, SO MANHATTAN IS THE GREAT OPTION. EMILY: I DON'T KNOW THE WORD FOR IT, BUT HAVE YOU SEEN THE TIKTOK TREND, THE PLAYS IN FROYO, HAVE YOU SEEN THAT TRICKLE INTO YOUR NUMBERS? RICH: WELL, FOR US, IT IS JUST BUSINESS AS USUAL, RIGHT? WE ARE DEFTLY SEEING A RENEWED INTEREST FROM A FRANCHISEE COMMUNITY OF NEW INTEREST, BECAUSE THEY ARE SEEING IT IN THE HEADLINES SOME OF THE FOR US, IT IS REALLY BEING CONSISTENT. WE'VE BEEN HERE FOR ALL THE MOMENTS THAT FROYO HAS HAD, RIGHT? WE KIND OF INVENTED THAT MOMENT, BUT DEFINITELY POPULAR TODAY, AND THE MORE PEOPLE TALKING ABOUT IT, THE BETTER FOR US. ROMAINE: LOOKING AT SOME INDUSTRY STATISTICS, NOT JUST TCBY BUT FROZEN YOGURT AS A DESSERT CATEGORY THAT IS GROWING , BUT THEN I THINK ABOUT, I FEEL LIKE WE'VE GONE THROUGH CYCLES. THE FROYO CRAZE IS TETHERED TO THESE ECONOMIC CYCLES. PINKBERRY WAS HOT FOR A WHILE AND IT FALLS OFF. WHO KNOWS WHAT THE NEXT BIG THING IS BUBBLING OUT NOW. IS OUR CONCERN ABOUT ECONOMIC CYCLICALITY OR THE IDEA THAT THE TRENDS WAYNE AND PEOPLE WILL DECIDE I'M ONTO SOMETHING ELSE OTHER THAN FROYO? RICH: THERE IS A LOT OF NUANCE AND COMPETITION IN THE SPACE. IN OUR BUSINESS, THE TYPE OF OPERATOR YOU HAVE WILL TAKE YOU A LONG WAY AND WE HAVE GREAT OPERATORS SO ASIDE FROM THE MACRO POINT OF VIEW, RIGHT, WE HAVE A PRODUCT AND EXPERIENCE THAT HAS CARRIED US THROUGHOUT THAT SO WE ARE NOT AS CONCERNED ABOUT IT. WE WANT TO MAKE SURE WE ARE GIVING A GREAT PRODUCT AT A GREAT PRICE BUT WE ARE REMAINING TRUE TO WHO WE ARE AND THAT CARRIES. ROMAINE: WHAT ABOUT ALL THE FOCUS RIGHT NOW ON HEALTHIER EATING, THE GLP-1 CRAZE, PEOPLE PAYING A LOT MORE ATTENTION TO CALORIES, DOES THAT BENEFIT A COMPANY LIKE THAT? RICH: WE BELIEVE YOU DON'T HAVE TO CHOOSE TO TREAT YOURSELF AND FEELING BELOW ABOUT IT, YOU CAN DO BOTH. IT IS A BENEFIT. THE PRODUCT ITSELF CHECKS A LOT OF BOXES FOR THE MODERN CONSUMER AND ITS BEEN THERE WE ARE. HAPPY TO BE. HERE TODAY WITH THE SAME PRODUCT. EMILY: AND FROYO MAXXING, I JUST CAME UP WITH THAT ON THE SPOT. ROMAINE: I THINK I'M GOING TO GET SOME. [LAUGHTER] EMILY: THANK YOU FOR JOINING US. THE EXECUTIVE DIRECTOR OF TCB WIRE, THANK YOU AGAIN. STILL AHEAD, A RISK IS EMERGING IN THE AI ECOSYSTEM. WE WILL BE DISCUSSING WITH PANO ANTHOS OF XRC VENTURES. THIS IS BLOOMBERG. ♪ ROMAINE: IS A.I. GOVERNANCE BECOMING THE NEXT BIG ENTERPRISE SOFTWARE CATEGORY? I PUT THAT INTO CONTEXT WITH A PETITION SIGNED BY 11 STUFFERS ACROSS A.I. FIRMS CALLING ON THE U.S. GOVERNMENT TO SUPPORT A MECHANISM TO DELIBERATELY PACE AI DEVELOPMENT. A.I. MODELS HACKED -- A LOT OF CONSUMER-BASED COMPANIES BUT WITH A HEAVY TECH AND AI FOCUS. GREAT TO HAVE YOU HERE. LET'S TALK ABOUT AI GOVERNANCE. IS THERE AI GOVERNANCE OUT THERE? >> IT'S LITERALLY A MESS. WHERE DO YOU START? LET'S START WITH THE WHISPER THAT WE DO. WE TALKED TO A LOT OF CFOS. THEY ARE FREAKED OUT BECAUSE THE INSURANCE COMPANIES WHICH ARE THE CANARY IN THE MIND HAVE BEEN DROPPING AND EXCLUDING AI RISK. AND DOUBLING DOWN ON CHARGING FOR IT. BUT THE DEMAND EXCEEDS SUPPLY. THERE IS A LOT OF FEAR AT THE BOARD LEVEL. ROMAINE: WHEN WE TALK ABOUT THE RISK AND THE LIABILITY, ARE WE TALKING ABOUT A LARGE LANGUAGE MODEL DOING SOMETHING THAT IT SHOULD NOT BE DOING OR SOMETHING BEING PLUGGED INTO A CONSUMER PRODUCT LIKE A PHYSICAL CONSUMER PRODUCT THAT MAKES IT DO SOMETHING IT SHOULD NOT DO? PANO: DISPARAGEMENT. THERE'S ALL KINDS OF VARIATIONS ON RISK AND LIABILITY. THE LIABILITY ISSUES ARE REALLY GREAT. THIS EXAMPLE OF THE OPANAI HUGGING FACE ISSUE -- O PENAI HUGGING FACE ISSUE, YOU CAN JUST IMAGINE THE THEFT. EMILY: WHAT EXACTLY ARE THEY SAYING, WHAT DOES IT LOOK LIKE IN PRACTICE FOR THEM TO BE WARNING OTHER ENTERPRISE CUSTOMERS? PANO: THEY ARE MORE THAN WARNING, THEY ARE ACTUALLY DROPPING USING THEIR GENERAL POLICIES IN COVERAGE TO COVER A.I. ISSUES. THEY ARE SEGREGATING OUT MUCH LIKE THE CYBERSECURITY CHALLENGES BACK IN 2020, 2021, SIEBER HAD TO BE CALLED OUT AS A SEPARATE CATEGORY FOR INSURANCE AND HAD TO BE MANAGED AND VALIDATED SO THE CORPORATIONS COULD COMPLY AGAINST IT. IT IS BIGGER THAN CYBERSECURITY ISSUES. SIEBER WAS FOCUS FROM OUTSIDE-IN. THE WHOLE THING WAS KEEPING PEOPLE OUT. KEEPING INVADERS OUT. AND I HAVE TO WORRIED ABOUT PEOPLE FROM THE INSIDE GOING OUT. ITS UNPRECEDENTED IN CORPORATE HISTORY YOU WOULD ENCOURAGE EMPLOYEES TO GO OUT AND USE FRONTIER MODELS. ROMAINE: WHAT DO YOU MEAN WHEN YOU SAY INSIDE GOING OUT? PANO: EMPLOYEES INSIDE THE CORPORATION ARE ENCOURAGED TO USE A.I. WHERE ARE THEY GOING FOR THAT? ANTHROPIC, OPENAI, THOSE ARE OUTSIDE YOUR FIREWALL. ROMAINE: FOR SOME COMPANIES. IF YOU'RE LIKE MOST COMPANIES -- NOT TO POINT OUT ANY SPECIFIC 1 -- BUT THEY ARE MORE DILIGENT ABOUT MAKING SURE THAT IS BOLTED IN WITHIN OUR OWN FIREWALLS. ROMAINE: THE COSTS ARE EXORBITANT, YOU HAVE TO MANAGE THE SERVER FARMS THAT HAVE TO MANAGE ALL THE CPU'S. VERY FEW COMPANIES CAN MANAGE THEIR OWN INTERNAL ARCHITECTURES. EMILY: WHO IS FAILING THE INSURANCE -- FILLING THE INSURANCE VOID? ARE THERE STARTUPS COMING INTO THE SPACE? PANO: THERE MAY BE BUT THE INSURANCE COMPANIES ARE ACTUALLY CREATING PROFILES AND SAYING HERE IS A POLICY COVERAGE. IT'S GOING TO BE EXPENSIVE AND SPECIFICALLY AROUND A.I. RISK, NOT COVERED WITH THE CLASSIC DNO COVERAGE AND LIABILITY. ROMAINE: WHAT'S THE SOLUTION? IS THERE SORT OF A SOLUTION IN TERMS OF EITHER PRODUCT OR SERVICE THAT WOULD LESSEN IT? YOU CAN'T GET RID OF THAT LIABILITY ALTOGETHER BUT WHAT IS THE SOLUTION OTHER THAN NOT USING IT? PANO: NETWORKS ARE DESIGNED TO KEEP PEOPLE OUT, NOT TO KEEP DATA IN, SO, FOR EXAMPLE IF YOU HAVE AN SAP SYSTEM, YOU CAN DO A CASH MANAGEMENT APPLICATION AND RUN TO THE FRONT TIER MODEL AND ACTUALLY SEND CUSTOMER ACCOUNT DATA TO THE FRONTIER MODEL. UNEXPECTEDLY. US ON SOMETHING THEY HAVE HAD TO DEAL WITH BEFORE. IT'S COMING OUT AS A NEW LAYER OF TECHNOLOGY. WE HAVE INVESTED IN ONE CALLED VISCO WHICH CREATES A DATA GOVERNANCE LAYER WITH PROCEDURES FOR THE CORPORATION BEFORE IT EVER GOES OUTSIDE. ROMAINE: BEFORE IT EVER GOES OUTSIDE -- ARE WE SEEING A LOT OF PRODUCTS AND SERVICES LIKE THIS OR ARE WE IN THE EARLY STAGES? PANO: WE ARE IN THE EARLY STAGES BUT IT IS STARTING, EVEN PALO ALTO NETWORKS HAS RELEASED A PRODUCT THAT HAS CAPABILITY IS IN THIS RESPECT BECAUSE IT IS A BIG ISSUE. EMILY: I WAS JUST WONDERING KIND OF WHERE ARE WE IN THE DEMAND CYCLE FOR THESE KINDS OF PRODUCTS? IS THIS A BIG PART OF ENTERPRISE BUDGETS TO PRIORITIZE THESE KINDS OF SERVICES? PANO: IF YOU TALK TO A BOARD MEMBER AND YOU TELL THEM THAT THEIR DNO IS UNDER RISK FOR AN A.I. EXCURSION LIKE THE OPENAI ISSUE, THEY ARE ALL OVER GETTING COVERAGE FOR THAT, WHICH MEANS THEY ARE GOING TO BUTTON DOWN THE HATCHES, EVERY CEO IS TRYING TO FIGURE THIS OUT. ROMAINE: THANKS FOR BEING HERE FOR A SOBERING CONVERSATION BUT OBVIOUSLY AN IMPORTANT ONE AND OF COURSE YOU HAVE BEEN AT THE FOREFRONT, INVESTING A LOT OF THIS TECHNOLOGY, MAKING SURE IT'S DONE RIGHT. PANO ANTHOS. MANAGING PARTNER OVER AT XRC VENTURES. IT'S BEEN A PRETTY WILD DAY HERE. WE SHOULD POINT OUT THE NEXT COUPLE OF DAYS WILL BE EVEN WILDER. WE WILL START TO GET THE FIREHOSE OF THE GIGANTIC EARNINGS THAT HAVE DRIVEN THIS MASSIVE BULL MARKET OVER THE LAST FEW YEARS. A LOT OF THESE COMPANIES WILL HAVE TO PUT THEIR CARDS ON THE TABLE TOMORROW. AFTER THE BELL, WE WILL HEAR FROM A SLEW OF BIG TECH COMPANIES INCLUDING MICROSOFT, META, AND IT ALSO INCLUDES QUALCOMM. INTERESTING BAROMETERS OF JUST HOW MUCH APPETITE INVESTORS HAVE IN THIS CONTINUED CAPEX SPEND. EMILY: AND SOMETHING IS HAPPENING BEFORE THOSE EARNINGS, RIGHT? ROMAINE: WILL GET OTHER EARNINGS IN THE CONSUMER SPACE, STARBUCKS AND TO PUBLIC, TOO -- CHIPOTLE, TOO, WHICH WILL GIVE US A BETTER READ ON THE ECONOMY, AND YES, SOMETHING ELSE. EMILY: SOMETHING BIG. ROMAINE: WHO IS MORE IMPORTANT, KEVIN WARSH OR THE HYPERSCALERS? THAT IS YOUR QUESTION. EMILY: IN MY WILL TO PRIVATE CREDIT, I DON'T KNOW, THAT'S A HARD BIT. IT IS HYPERSCALERS RIGHT NOW. THAT'S WHAT WE'RE FOCUSED ON. BUT OF COURSE 2:00 P.M. WEDNESDAY, THAT WILL BE THE SPECIAL "THE FED DECIDES." WILL THERE BE A HIKE? MOST LIKELY KNOW. ROMAINE: IT WAS JUST ABOUT 24 HOURS AGO WE WERE TALKING ABOUT THAT NOTE OUT OF CITADEL SAYING THAT THEY WERE ACTUALLY EXPECTING A SURPRISE RATE HIKE. WE WERE SPEAKING WITH BETSY DUKE ON THE PROGRAM YESTERDAY, SHE SAYS SHE DID NOT EXPECT A HIKE BUT SHE WOULD NOT NECESSARILY BE SURPRISED IF SHE SAW THE FED PUSH IN THAT DIRECTION. IF YOU LOOK AT THE PRICING IN THE SWAMPS MARKET RIGHT NOW, TRADERS, PRICING AND THE CHANCES OF A HIKE BUT NOT FOR THIS MEETING, BUT FOR THE ONE IN SEPTEMBER. KEVIN WARSH WILL RELEASE THAT STATEMENT AT 2:00 P.M., THE FED, I SHOULD SAY, KEVIN WARSH WILL TAKE THE STAGE AT 2:30 P.M. OUR COVERAGE BEGINS AT 1:30 P.M. EASTERN TIME. A LOT MORE COMING UP HERE IN BLOOMBERG. JOE MATHIEU AND KAILEY LEINZ ARE UP NEXT AT THE TOP OF THE HOUR WITH "BALANCE OF POWER" RIGHT HERE ON BLOOMBERG.