Presidential Debate Tonight | Bloomberg: The Close 9/10/2024

The Close Begins ♪ ANNOUNCER: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ♪ ROMAINE: THE JITTERS IN THE MARKETS CONTINUE FOR ANOTHER DAY. LIVE HERE FROM BLOOMBERG HEADQUARTERS IN NEW YORK. I AM ROMAINE BOSTICK. ALIX: AND I AM ALEX STEELE. IT'S BRUTAL. THIS CHART SHOWS WHAT HE WAS TALKING ABOUT. THE HEADLINE LEVEL SHOWS S&P UP 3.3%, BUT IT'S REALLY UGLY. IF YOU ARE A BUCK OR AN OIL STOCK. YOU CAN SEE THE REST OF SAFETY WHEN IT COMES TO THE BOND MARKET. THREE YEAR AUCTION WENT WELL. ALSO THE MOVE IN THE DOLLAR. THE SAFETY TRADES ARE HOLDING FIRM TODAY. ROMAINE: ON THE DAY WHEN THE MARKETS ARE ON THE PAGE. YOU HAVE TWO OF THE BIGGEST BANKS IN THE WORLD TELLING INVESTORS TO SLOW THEIR ROLE ON EARNINGS EXPECTATIONS. THAT GOLDMAN'S CEO DAVID SOLOMON SAYING THIRD-QUARTER TRADING REVENUE COULD FALL 10%. JP MORGAN PRESIDENT DANIEL PINTO TELLING ANALYSTS THEY ARE TOO OPTIMISTIC IN PROJECTING NEXT YEAR'S EXPENSES AND NET INTEREST INCOME. JP MORGAN DONE THE MOST SINCE 2020 AND THE BIGGEST POINT DROP TODAY ON THE RUSSELL 2000. AND THE BIGGEST PERCENT DECLINE ARE IN THAT INDEX IS ALLIED FINANCIAL, DOWN THE MOST SINCE 2020 AFTER THE CFO HIGHLIGHTED INTENSIFYING CREDIT DETERIORATION. THE COMMENTARY FROM FINANCE CHIEFS COMES AMID A PLUNGE IN OIL PRICES. BRENT BELOW $70 A BARREL FOR THE FIRST TIME SINCE 2021 AS DOWNBEAT ECONOMIC COMMENTARY FROM THE U.S. TO CHINA STIRS UP FEARS ABOUT CONSUMER DEMAND. AND IF THAT'S NOT ENOUGH, INVESTORS ARE BEING FORCED TO FINALLY CONFRONT POLITICAL RISK HEAD-ON, 55 DAYS UNTIL THE U.S. PRESIDENTIAL ELECTION, AND A FEW HOURS BEFORE THE FIRST AND LIKELY ONLY DEBATE BETWEEN KAMALA HARRIS AND FORMER PRESIDENT TRUMP, A 3-MONTH MEASURE OF APPLIED VOLATILITY IS AT THE HIGHEST SINCE MARCH OF 2023. ALIX: AND HOW DO YOU HEDGE IT? LET'S GET TO THE REAL STORY OF THE DAY, WHAT IS HAPPENING IN BANK STOCKS. JP MORGAN IN PARTICULAR, OFF BY 11%, HAD TO LOOK AT THAT TWICE. LET'S POINT OUT THE 50 DAY, THE 100 AND THE 200 DAY MOVING AVERAGES. HE HAS NOT SEEN THIS KIND OF SOLVE SINCE 2020. YOU CAN SEE HOW IT CLEARED THROUGH SOME KEY SUPPORT LEVELS AND IS TESTING THAT 100-DAY MOVING AVERAGE. GOING BACK IN THE PAST YEAR, WE HAVE NOT CONVINCINGLY BROKEN DOWN FROM THE 100-DAY MOVING AVERAGE. IF WE BREAK THE KEY SUPPORT LEVELS, WHAT EXTRA DOWNSIDE CAN YOU SEE? ROMAINE: WE ARE KICKING OFF TO THE CLOSE Richard Saperstein, Treasury Partners WITH THE CHIEF INVESTMENT OFFICER TREASURY PARTNERS JOINING US HERE ON STUDIO TWO. ON ANOTHER WILD DATE OF MARKETS. A LOT HAS CHANGED SINCE EVERYONE GOT BACK TO WORK IN SEPTEMBER AND I THINK PEOPLE ARE ON EDGE AS TO WHERE WE GO NEXT. WHAT WILL DRIVE THIS MARKET? IS IT POLITICS? THE FED, THE ECONOMY, WHAT? GUEST: IS GOING TO BE EARNINGS. FED TIGHTENING IS HAVING AN IMPACT FINALLY ON UNEMPLOYMENT AND MANUFACTURING AND THAT IS CONFRONTING THE ELEVATED EXPECTATIONS FOR EARNINGS. SO AS STATISTICS, SHOWING WEAKNESS, INVESTORS ARE TRYING TO FIND THE LOCATION OF, ARE WE GOING TO END WITH A SOFT LANDING OR A HARD LANDING? AND THAT IS A CHALLENGE FOR THE MARKET. ROMAINE: THERE HAS BEEN TALK ABOUT THE POTENTIAL DROP IN RATES WE COULD GET ASSUMING THE FED LOOKS GOOD ON WHAT THE MARKET HAS PRICED IN. IF WE SEE THE EFFECT OF THE TREASURY MARKET AT MENA FIXED INCOME SPACE, DOES NOT CREATE A BUYING OPPORTUNITY, OR DOES THE BUYING OPPORTUNITY, SHOULD THAT HAVE COME BEFORE THE FED MOVES? RICHARD: LAST YEAR WE HAD A LOT OF MUNICIPAL BONDS AT 4.5% YIELDS. RATES HAVE JUMPED 100 BASIS POINTS AND THOSE BONDS ARE NOW AT 3.7 PERCENT YIELDS. INVESTORS SHOULD STILL BE ADDING MUNICIPALS. BASICALLY IF YOU HAVE THE DRIVE WHICH IS THAT RETURN TO CAPITAL IS MORE IMPORTANT THAT RETURN ON CAPITAL, YOU WANT TO HAVE BONDS IN A SLOWING ECONOMY. SO INVESTORS SHOULD BE LOOKING AT THEIR LOCATIONS AND DETERMINING IF THEY HAVE ADEQUATE PROTECTION AGAINST THE UNCERTAINTY OF WHERE THE ECONOMY WILL END UP, IN EITHER A RECESSION OR A SOFT LANDING. SCARLET: THAT WHAT WE HAVE SEEN IN THE LAST FEW MONTHS IS FINANCIALS AND UTILITIES OUT BEFORE ME. YOU GET SOME CYCLICAL AND YOU GET SOME DEFENSIVE. DO YOU EXPECT THAT TO CONTINUE? RICHARD: WE LIKE UTILITIES. BECAUSE A SHORTAGE OF ANY ENERGY PRODUCTION, ELECTRIFICATION AND POWER, IN THE COUNTRY AS A RESULT OF THE BUILDOUT OF DATA CENTERS, IF YOU LOOK AT THE MIGRATION WITHIN THE COUNTRY MOVING TO FLORIDA, MOVING TO TEXAS, THERE IS A SHORTAGE THERE AND THERE ARE UTILITIES TO OWN IN THOSE STATES THAT HAVE A LONG SECULAR OPPORTUNITY TO BUILD ON POWER PRODUCTION AND TAKE ADVANTAGE OF IMMIGRATION INTO THE STATES AS WELL AS DATA CENTER GROWTH. SCARLET: THAN WHAT DO YOU DO WITH THE LIKES OF, SAY, FINANCIALS AND OTHER CYCLICALS LIKE THE INDUSTRIALS AND ENERGY RIGHT NOW? RICHARD: YOU WILL GET THE BOTTOM LINE FROM MIKE ON INDUSTRIALS. WE LIKE THE SECTOR BECAUSE IT PROVIDES AN OPPORTUNITY TO ADD TO THEM. BUT WE ARE OVERWEIGHT TECHNOLOGY. WE THINK IN THE LONG RUN, IT IS A TREMENDOUS OPPORTUNITY. GOOGLE'S OPERATING CASH FLOW HAS GROWN 93% IN THE LAST FIVE YEARS . THE STOCK IS ONLY UP TO 99%. SO YOU ARE FIRED ON A CASH FLOW MULTIPLE SIMILAR TO IT WAS FIVE YEARS AGO AND SIMILAR WITH THE OTHER BIG TECH NAMES -- BIG CAP NAMES. ROMAINE: SOME PEOPLE LOOK AT THE METRICS THAT AREN'T RELATED RELEVANCE TO THE STOCKS. BUT DOES THE CASH FLOW MULTIPLE, IS THAT STILL THE METRICS TO LOOK AT? RICHARD: WE FOCUS ON THE CASH FLOW WHICH IS WHY WE ARE ON OIL AND LARGE-CAP TECH. BUT WE ARE NOT BUYERS OF THE SMALL CAPS, THE MID-CAPS, INTERNATIONAL EMERGING MARKETS. WE WOULD RATHER FOCUS ON THE U.S. MARKETS, LARGER CAP, AND THERE IS A LOT OF OPPORTUNITIES IN THE MARKET IN DIFFERENT SECTORS, LIKE TECHNOLOGY. WE THINK OIL IS VERY CHEAP ESPECIALLY IF YOU THINK ABOUT THE WORLD BEING A DANGEROUS PLACE, AT ANY POINT, A FLASH COULD OCCUR. SO THEY ARE ATTRACTIVE AT THIS POINT. ROMAINE: WHAT DO YOU MAKE OF THE RECENT MOVES IN OIL? WE TALK ABOUT OIL DROPPING BELOW $70 A BARREL, WTI IS DOWN, THE FORECASTS POINTING TO TAMPED DOWN DEMAND BUT I GUESS IT COULD BE MORE OF A SUPPLY ISSUE, WHERE DOES THAT LEAVE OIL GOING FORWARD? RICHARD: I THINK EQUITIES RIGHT NOW BY TRADING WITH OPERATING CASH FLOWS OF ANYWHERE FROM 15-20 5%. IF YOU TAKE OUT ALL OF THE EXPENSES YOU NEED AFTER THAT, YOU ARE BUYING THESE COMPANIES AT 10%-14% FREE CASH FLOW. WHAT THEY ARE DOING IS THEY WILL BUY BACK STOCK AND PAY DIVIDENDS PLUS, YOU HAVE PROTECTION AGAINST THE BAD WORLD WE LIVE IN. SCARLET: BUT CAN THEY BUY BACK AS MUCH STOCK AS WE THINK IF OIL IS A $50 A BARREL? RICHARD: NOT AT $50. BUT LOOK AT CANADIAN PRODUCERS, THEY HAVE LOW EXTRACTION COSTS AND THEY WERE AND STILL BE PROFITABLE EVEN DOWN TO $50 A BARREL DID YOU JUST MAKE A CALL IN OIL? [LAUGHTER] SCARLET: I WAS JUST SAYING. IF I CAN DO THAT, I WOULDN'T BE SITTING HERE. [LAUGHTER] ROMAINE: 69 DOLLARS A BARREL ON BRENT CRUDE. RICHARD SAPERSTEIN JOINING US FROM TREASURY PARTNERS. A CLOSER LOOK AT THE BIG MOVERS, INCLUDING ULTA BEAUTY. B. RILEY IS SUGGESTING IT MIGHT BE TIME FOR A MARKET MAKEOVER. THE ANALYST BEHIND THAT CALL IS UP AHEAD. SCARLET:, SO IT WOULDN'T BE VODKA MADE BY "AQUAMAN PROCESS IF IT WASN'T MADE WITH THE BEST WATER. ACTOR JASON MOMALA JOINS US TO TALK ABOUT HIS NEW LIQUOR BRAND WHICH FOCUSES ON QUALITY INGREDIENTS DOWN TO THE WATER IT IS DISTILLED WITH. ROMAINE: AS WELL AS A CONVERSATION A THAT BIG CPI REPORT COMING TOMORROW MORNING. WHY INVESTORS -- WE WILL LOOK INTO WHAT INVESTORS ARE EXPECTING TO SEE OUT OF THE DATA. STICK WITH US. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ >> THE ANALYST CONSENSUS IS A DROP IN NET INTEREST INCOME. THAT IS VERY REASONABLE BECAUSE THE RATES EXPECTATIONS IS LOWER BY 250 BASIS POINTS. SO I THINK THAT THAT NUMBER WILL BE LOWER. SCARLET: JP MORGAN PRESIDENT AND COO DANIEL PINTO SPEAKING AT BERKELEY'S 22ND ANNUAL GLOBAL FINANCIAL SERVICES CONFERENCE, WARNING THAT ANALYSTS ARE TOO OPTIMISTIC ABOUT NEXT YEAR'S NET INTEREST INCOME. BUT MOYNAHAN ALSO -- BRIAN Mike Mayo, Wells Fargo Securities MOYNIHAN ALSO EXPECTS THEM TO COME LOWER THAN EXPECTATIONS. WE WANT TO BRING IN MIKE MAYO, MANAGING DIRECTOR AND HEAD COACH OF U.S. LARGE-CAP BANK AT WELLS FARGO SECURITIES. THE DRAMATIC SLIDE IN JP MORGAN IS TREMENDOUS. DOWN 5%, WE HAVEN'T SEEN THIS LEVEL IN FOUR YEARS. IS THIS AN OVERREACTION, MIKE? MIKE: WELL, GARBAGE IN, GARBAGE OUT. LOOK AT THE LAST FOURTH QUARTER, EVERYONE FORECAST OF SIX RATE REDUCTIONS THAN THEY WERE OFF THE TABLE AND NOW WE ARE LOOKING AT EIGHT REDUCTIONS OVER A PERIOD OF SEVERAL QUARTERS. SO THERE WILL BE A LOT OF RATE REDUCTIONS AND I CAN TAKE AN INCREMENTAL TOLL ON JP MORGAN'S TRADITIONAL SPREAD REVENUE. ALIX: EVERYONE CAN LOOK AT THEIR MODELS AND KNOW THAT. BUT DOWN 5% ONE DAY BECAUSE THE COO SAID THAT? MIKE: YOU HAVE A VERY HYPERSENSITIVE MARKET TO ANYTHING RELATED TO THE THREE RRR'S -- RIGHT, RECESSION AND REGULATION. ALL OF THEM ARE FRONT AND CENTER RIGHT NOW. YOU CAN SEE THE STOCK AND GROUP SWING BACK VERY QUICKLY JUST BASED ON THE NEWS ABOUT CPI TOMORROW, SAID CUTS, CHANGES IN REGULATION. A LOT OF MOVING PARTS HERE. ROMAINE: TO ALIX'S POINT, WE HAVE KNOWN FOR SOME TIME NOW THAT THE RATE HIKING CYCLE HAD ENDED AND IT WAS JUST A MATTER OF TIME BEFORE WE GOT TO THE EASING CYCLE. I WONDER WHY WE DIDN'T SEE THAT BANKS PREPARE A LITTLE BETTER FOR IT. OR WAS THERE NOTHING TO PREPARE FOR? MIKE: BUT JP MORGAN HAS MANAGED INTEREST RATES ABOUT AS WELL AS ANY LARGE BANK I MEAN, THEIR NET INTEREST INCOME WHICH THEY ARE SAYING IS TOO HIGH FOR NEXT YEAR, THAT IS BASED ON CONSENSUS AND HAS GROWN TREMENDOUSLY, AMONG THE BEST IN CLASS IN TERMS OF MANAGEMENT OF INTEREST RATES. MAY BE ANOTHER STORY HERE IS THAT SO MUCH OF HIGHER TRADITIONAL REVENUES ARE LIKELY TO REMAIN. THE STOCK MARKET IS BASED ON EXPECTATIONS, AND THESE ARE TWEAKS AROUND THE EDGES FOR WHAT THE BEST IN CLASS GLOBAL BANK, GIVEN THEIR MULTI PRODUCT, MULTI-DISTRIBUTION, MULTI-GEOGRAPHIC APPROACH THAT HAS GAINED MARKET SHARE OF BOTH KEY LINES OF BUSINESS. ROMAINE: YOU MENTIONED REGULATION. IT LOOKS LIKE THE BANKS WILL GET A REPRIEVE WHEN IT COMES TO CAPITAL REQUIREMENTS, BASED ON BLOOMBERG REPORTING AS WELL AS COMMENTARY BY MICHAEL BARR, WE ARE LOOKING AT A 9% INCREASE. ORIGINALLY THEY WERE LOOKING AT A 20% INCREASE, OBVIOUSLY THESE RULES ARE NOT IN PLACE YET,, BUT IF IT ENDS UP BEING THE MAGIC NUMBER, I WOULD THINK THAT WOULD BE SOMETHING TO CELEBRATE. MIKE: I THINK, COLLECTIVELY WE WERE THINK IT MIGHT BE CUT IN HALF THE NEXT SEVERAL MONTHS, FROM 19% INCREASE TO 11 PERCENT INCREASE WAS EXPECTATIONS AND I THINK EXPECTATIONS WERE MAYBE EVEN FOR LESS THAN THAT, I WAS LOOKING FOR 5% TO 7%. SCARLET: SO THE MAN PERCENT DISAPPOINTED? MIKE: THE DEVIL IS IN THE DETAILS. BUT THAT FOR A SECOND. AS IT RELATES TO JP MORGAN AND CAPITAL'S, HERE IS THE GOLD MEDAL. I GET IT TO THE BANKING INDUSTRY FOR RESILIENCY. I ALSO GIVE IT TO THE REGULATORS FROM A DECADE AGO FOR MAKING SURE THAT BANKS WOULD BE A BETTER POSITION TO NOT HAVE A REPEAT OF THE GLOBAL FINANCIAL CRISIS. LOOK AT THE PANDEMIC. OPERATIONALLY THEY WERE STRONG. THE LARGEST BANKS WERE STRONG. THE FED STRESS TEST OF THIS YEAR, THAT WAS LARGER THAN THE GLOBAL FINANCIAL CRISIS ITSELF AND WHEN YOU RUN THE MODELS, BOUND -- BANKS HAD A LOT OF EXTRA CAPITAL. AT THE INVESTMENT-GRADE BOND MARKET, THE LARGEST BANKS ARE TIGHTER THAN REGIONAL BANKS. SO THE U.S. RESILIENCY, I THINK, IS UNDERAPPRECIATED. WHEN I LOOK AT REGULATION, I SAVED MISSION ACCOMPLISHED AND JOB WELL DONE. THERE IS ROOM TO A LIST ENSURE THAT BANKS ARE RESILIENT WHILE ALSO MAKING SURE YOU DO IT EFFICIENTLY. I MEAN, A LOOK AT JP MORGAN, 80,000 PAGES ON THE FED'S STRESS TEST. YOU CAN HAVE PRESIDENT BIDEN'S AND HAVE THEM MORE EFFICIENT. ALIX: AND I AM SURE THAT YOU READ EVERY PAGE. [LAUGHTER] CAN YOU RATE THE BANKS NOW, WHICH YOU THINK IS THE BEST ? MIKE: CITIGROUP HAS BEEN OUR NUMBER ONE PICK. IT HASN'T WORKED AS WELL RECENTLY, IT GOES IN FITS AND STARTS. THE STOCK HAS NOT PERFORMED WELL BUT THEY REITERATED THEIR GUIDANCE FOR THIS YEAR. IF THEY GET THEIR GUIDANCE OF THIS YEAR WITH REVENUE FOR OUTPACING EXPENSES, IF THEY GET IN THE BALLPARK TO THEIR RETURN TARGETS IN THE NEXT TWO YEARS, I STILL THINK CITIGROUP STOCK CAN DOUBLE IN THE NEXT TWO AND A HALF YEARS. SO I DON'T HAVE A SHORT-TERM CATALYST. BEHIND THAT IS BANK OF AMERICA, THEY HAD A DECENT PRESENTATION TODAY. WARREN BUFFETT AS I READ THE BLOOMBERG ARTICLES AND IT IS LIKE HERE WE GO AGAIN. I THINK THEY ARE POISED TO FINALLY HAVE THAT INFLECTION POINT. SO WHILE JP MORGAN IS TALKING DOWN OF THEIR IN NET INTEREST INCOME, BANK OF AMERICA IS SAYING THAT THEY ARE AT WHAT COULD BE A MULTIYEAR INFLECTION POINT. ROMAINE: YES, I THOUGHT IT WAS INTERESTING HOW THEIR PRESENTATION WAS A BIT MORE POSITIVE THAN WHAT WE HAD HEARD FROM DANIEL PINTO AND SOLOMON. I HAVE TO ASK, THAT IS YOUR ACTUAL GOLD-MEDAL? [LAUGHTER] YOU COULD BE IN THE U.S. EVENT? WHAT WAS YOUR TOTAL? MIKE: I GOT 1000. [LAUGHTER] MIKE: THAT IS POUNDS? ROMAINE: NOT KILOGRAMS. FOR THE REST OF THE ROAD, ABOUT 500 KILOGRAMS. [LAUGHTER] MIKE: SPECIAL MASTERS CATEGORY. KIND OF LIKE RECOMMENDING CITIGROUP. YOU DON'T HAVE TO DO THAT WELL TO MAKE A LOT OF MONEY. [LAUGHTER] ROMAINE: CONGRATULATIONS, MIKE, MANAGING DIRECTOR AND OF U.S. LARGE-CAP BANK OVER AT WELLS FARGO SECURITIES. INTERESTINGLY WE DID GET A COMMENTARY FROM SOLOMON AND BRIAN MOYNIHAN, THAT WILL BE THE BACKDROP WAS TO START EARNINGS SEASON IN ABOUT A MONTHS TIME. ALIX: DID YOU HEAR ABOUT THE SALARY INCREASE FROM BANK OF AMERICA? MINIMUM HOURLY WAGE IS $24 NEXT MONTH? ROMAINE: PER HOUR? ALIX: AND $25 BY 2025. THERE YOU ROMAINE: GO. MAYBE THE FED IS LOOKING AT THIS AND WEEPING. ALIX: TO BE FAIR, THEY SAID IT WOULD BE A WHILE AGO. MAYBE IT IS DUE TO INFLATIONARY PRESSURES FROM THE PANDEMIC, BUT YOU NEVER KNOW. ROMAINE: WHEN WE COME BACK FROM THE BRAKES, WE LOOK AT THE CONSUMER SECTOR. ALIX LEWIS SAYS INVEST IN YOUR FACE, BUT ONE ANALYST SAYS WE ARE NOT INVESTING ENOUGH, WE WOULD LOOK AT WHY AND ALSO TALK TO THE ANALYST BEHIND THE CALL. THIS IS "THE CLOSE" Top Calls ON BLOOMBERG. ROMAINE: LET'S GET A VIEW FROM THE SOUTH SIDE. THE TOP CALLS, A LOOK AT THE MOVERS OFF THE BACK OF ANALYST RECOMMENDATIONS, THE BIGGEST MOVERS. ORACLE. THE SOFTWARE COMPANY UPGRADED TO MARKET PERFORM. THE ANALYST PRAISING ARTICLES ACCELERATING REVENUE GROWTH, SAYING IT HAS SUCCESSFULLY EVOLVED INTO A LEADING STRATEGIC CLOUD PLATFORM SERVICES PROVIDED. THE SHARES HAVING A PHENOMENAL DAY, UP 11% TO A RECORD HIGH. IN NEXT UP, DRAFTKINGS UPGRADED AT BNP PARIBAS. THE ANALYST SAYING HE IS ENCOURAGED BY THE IMPROVING NEAR-TERM OUTLOOK AND EXPECTS THE ONLINE SPORTS BETTING COMPANY'S INVESTMENTS TO SHORE UP PROFITABILITY IN THE COMING YEARS. THOSE SHARES MOVING HIGHER ON THE DAY. FINALLY, BENCHMARK CUTTING THE $15 PRICE TARGET OF THE WAY DOWN TO $10 A SHARE FOR VIVID SEATS. IT HAS BEEN A CHALLENGING YEAR FOR THE TICKETING PLATFORM AND UNCERTAINTY OVER THE HEALTH OF THE CONSUMER AND TOUGH PATHS IN 2024 FROM THE 2023 BOOST OF THE TAYLOR SWIFT AND BEYONCE TORES. THE CURRENT QUARTER NOT PROVIDING RELIEF ANYTIME SOON. THOSE SHARES HAVING ONE OF THEIR WORST DAYS OF THE YEAR, DOWN 15%. THOSE ARE SOME OF OUR TOP CALLS. WE WENT TO STAY IN THE SELL-SIDE SPACE AND GO FROM TAYLOR SWIFT AND BEA ARTHUR TO THE BEAUTY INDUSTRY. B. RILEY SECURITIES RATING ELF BEAUTY AND HONEST BEAUTY BUY. ESTEE LAUDER GETTING NEUTRAL. Anna Glaessgen, B Riley Securities AND A SELL RATING FOR ULTA BEAUTY. THE ANALYST BEHIND THE CALL IS JOINING US NOW, SENIOR RESEARCH ANALYST OVER AT B. RILEY, AND A GLASS AGAIN. LET'S START WITH ALL T --ULTA. WHEN TIMES ARE GOOD, WE BUY BEAUTY PRODUCTS. WHEN TIMES ARE BAD, WE STILL APPLY BEAUTY PRODUCTS. WHAT IS GIVE YOU PAUSE HERE? ANNA: YES, THAT IS A BIG PART OF THE THESIS, PEOPLE ARE USED TO ULTA. IT HAS BEEN A STRONG STORY. BUT OVER THE PAST FEW QUARTERS, HE HAS SEEN INCREMENTAL PRESSURE EMERGING FROM THE COMPETITION. HE HAS SEEN A MASSIVE ROLLOUT OF OTHERS IN SEPHORA AND ALSO CATEGORY DECELERATION. WHAT WE KNOW ABOUT CONSUMER COMPANIES IS THAT IT IS HARD TO CITE BOTH OF THOSE TIDES AT THE SAME TIME. SO WE HAVE SEEN IT REFLECT NEGATIVELY IN THE MOST RECENT QUARTER WITH ESTIMATES EXPECTING FURTHER COMP DECLINES THROUGH THE BACK HALF OF THE COMPANY CONTINUES TO GRAPPLE WITH THESE CHALLENGES. WE HAVE SEEN MARKET SHARE DECLINES IN PRESTIGE MAKEUP AS THEY STRUGGLE WITH THE CATEGORY DECELERATION, AND THE ENCROACHMENT. SO WE THINK THERE COULD BE INCREMENTAL PRESSURE AS WE THINK ABOUT 2025. ROMAINE: I JUST WANT TO MAKE ONE THING CLEAR, IS THIS MORE OF AN ISSUE OF BROADER SOFTNESS IN THE SECTOR, OR MORE THE CUSTOMERS WHO WOULD HAVE GONE TO ULTA JUST FINDING A DIFFERENT PLACE TO GO? ANNA: I WOULD SAY AS FAR AS SOFTNESS, YOU ARE SEEING MEANINGFUL DECELERATION BUT STILL SEEING GROWTH OVERALL IN THE CATEGORY. BEAUTY RESPONDED OUT OF COVID A LOT STRONGER THAN I THINK MOST PEOPLE THOUGHT, ESPECIALLY PRESTIGE, GROWING IN THE DOUBLE DIGITS. SO YOU ARE SEEING IN NATURAL GLIDE PATH DOWN TOWARDS NORMAL DECELERATION IN THE CATEGORY. I WOULD SAY OVERALL THE MARKET SHARE PRESSURE SUGGESTS TO US THAT THE BIGGER ISSUE IS COMPETITION, BUT YOU CAN'T LOOK AT EITHER OF THOSE IN A VACUUM, THEY WORK HAND-IN-HAND. ALIX: IT IS TRUE, AS I SCROLL ON ULTA BEAUTY PRODUCTS, IT LOOKS LIKE A LOT OF OTHER PLACES I FREQUENT LIKE THE SAFAR APP, ET CETERA, SO ULTA STAND OUT? ANNA: THAT IS PART OF THE THESIS. ULTA WAS -- FOR THINGS LIKE COLOR COSMETICS, THERE IS A NATURAL PART OF THE PURCHASE JOURNEY OF BEING IN-STORE, MAKING SURE YOU FIND THAT THE FOUNDATION MATCHES. SO WHEN YOU HAVE RAISING DISTRIBUTION AND DREDGING AT THIS FOR CONSUMERS TO EXPERIENCE THAT PRODUCT IN-STORE, THAT HISTORICAL COMPETITIVE MODE MIGHT FACE SOME STRUCTURAL CHALLENGES. SO THAT IS PART OF WHAT WE ARE CONTEMPLATING HERE WITH OUR RATING. ALIX: ON THE MACRO SENSE, THE FED LOWERS RATES AND WE A BOTTOM IN THE WEAKNESS IN THE ECONOMY AND THE LABOR MARKET STABILIZES, DOES OTTO GET A BOOST ON THAT -- THAT'S OUT OF THE MARKET OF THE STOMACH? ANNA: IT IS NATURAL FOR THEM TO GET A BOOST, BUT I DON'T THINK MOST END-USERS AND CUSTOMERS ARE THINKING ALL BASE RATES ARE CUT, I WILL BUY MORE LIPSTICK. I THINK IF YOU'RE TRYING TO PLAY A LOWER RATE, IT WOULD BE FOR MORE TEXT CATEGORIES. ALIX: IN MAKING THESE, I WILL BUY THAT HIGHLIGHTER. MAYBE THAT I WILL DO. AND NOW, THANKS A LOT, ANNA GLAESSGEN AT B. RILEY SECURITIES, WE APPRECIATE IT. ROMAINE: I JUST WENT INTO SEPHORA TODAY. WE HAVE ONE HERE NEAR BLOOMBERG WORLD HEADQUARTERS. I GOT SOME FACIAL CLEANSER SO I COULD WATCH ALL OF THIS MAKEUP OFF OF MY FACE. ALIX: YOU INVEST IN YOUR FACE? ROMAINE: I DO, I ALSO GOT SOMETHING FOR MY WIFE FOR HER UNDER I. GOT IT ONLINE. I WAS IN AND OUT IN FIVE MINUTES OR LESS. ALIX: YOU DID NOT BROWSE? ROMAINE: I DON'T DO THAT. I DON'T BROWSE. [LAUGHTER] SORRY. ALIX: YOU DON'T DRINK COFFEE. TECH IS OUTPERFORMING TODAY, A RELATIVE STORY, BUT IT IS ABOUT THE CHIPS. THEY HAVE CONTINUED TO BE HIT HARD, DOWN 20% SINCE THEIR Stock of the Hour ROMAINE: WELCOME BACK TO THE "THE CLOSE." TAKING A CLOSER LOOK AT ALLY FINANCIAL SHARES HAVING THE WORST PERCENTAGE DROP GOING BACK TO MARCH OF 2020. THE AUTO LENDER WARNING THAT IT IS SEEING DELICACIES UP 20 BASIS POINTS COMPARED TO THEIR EXPECTATIONS. THAT WARNING COMING FROM THE BARCLAYS GLOBAL CONFERENCE WHERE WE HAVE BEEN GETTING A LOT OF COMMENTARY FROM BANK CEOS AND CFOS. THIS IS A PRETTY DRAMATIC MOVE DOWN. ABIGAIL DOOLITTLE JOINS US TO BREAK IT DOWN. . MAYBE THE CONSUMER REALLY IS ON THE BACK FOOT? ABIGAIL: I DON'T ENTIRELY GET IT. IT'S A HUGE MOVE DOWN. ROMAINE: IF YOU DON'T GET IT AND I DON'T GET IT, DOES ALIX GET IT? ALIX: WHAT? [LAUGHTER] ABIGAIL: IT IS THE WORST DROP FOR A 20 BASIS POINTS DIVISION IN THE AUTO LOAN WRITE-OFFS SINCE AUGUST. WHAT I HAVE BEEN TOLD IS THE CFO RUSSELL HUTCHINSON, HE GAVE A REALLY PESSIMISTIC -- IT WAS THE TONE. HE BASICALLY SAID SOMETHING ALONG THE LINES OF, HOW BAD ARE THE CHARGE-OFFS? THEN HE WENT INTO THE 20 BASIS POINTS. ROMAINE: THAT IS ONE APPROACH. ABIGAIL: HE IS FROM GOLDMAN SACHS. HE IS VERY WELL BRED IN TERMS OF HOW TO COMMUNICATE THINGS BUT THAT DOESN'T SEEM LIKE THE RIGHT WAY TO DO IT FOR A SMALL PIECE. I THINK THE BIGGER PIECE BEHIND THIS IS THAT AUTO CHARGE-OFFS FOR THE COMPANY HAVE BEEN GOING UP 30 FOUR QUARTERS IN A ROW. Q2 IT WAS SEEN AS THE PEAK BUT INSTEAD, NOT ONLY IS THE THIRD QUARTER BAD, THERE IS MORE PRESSURE AHEAD. THEY REFUSED TO GIVE MORE GUIDANCE FOR THE FULL YEAR. SO THERE IS THIS IDEA THAT IT COULD BE MUCH WORSE WHEN. I THINK ABOUT THE ALLY, I THINK ABOUT THE GFC. WHEN YOU HAVE THE CFO TALKING ABOUT THINGS ARE WORSE THAN EXPECTED, I THINK PEOPLE ARE A BIT NERVOUS. ALIX: I WAS TALKING TO ALISON LYONS OF BLOOMBERG INTELLIGENCE, AND SHE SAID, I DON'T KNOW WHY JP MORGAN IS DOWN 5%. SEEMED LIKE AN OVERREACTION. I WOULD ASSUME THE SAME FOR ALLY FINANCIAL'S. LIKE, WHY DON'T WE GET ALL THE BAD NEWS OUT AND THEN GET RESET? ABIGAIL: I DON'T KNOW. IF YOU HAVE JP MORGAN SAYING THAT INTEREST INCOME IS TOO HIGH FOR NEXT YEAR, IT'S TOO MANY MONTHS AWAY, WHY ARE THEY SETTING THE BAR LOWER? SO THAT, I GET. BUT THIS IS MORE INTERESTING FROM THE STANDPOINT THAT THE CEO AT ALLY FINANCIAL CAME FROM DISCOVER, HE IS KNOWN FOR DOING THINGS LIGHTNING-FAST. WHEN HE FIRST TOOK OVER AT DISCOVER, HE LOWERED THE GUIDANCE THERE. SO SOME ARE SPECULATING THAT THIS IS THEIR WAY OF LOWERING GUIDANCE WITHOUT ACTUALLY DOING IT. ROMAINE: TO HAVE YOU BEEN LISTENING TO THE COMMENTARY? I AM SURPRISED AT HOW MUCH A LOT OF IT IS PESSIMISTIC EXCEPT FOR THE BANK OF AMERICA CEO. BUT IF THIS IS KITCHEN-THINKING OR JUST TRYING TO MANAGE EXPECTATIONS IN NO WAY BY SETTING THE BAR LOW AND THEN IF YOU BEAT, YOU CAN SAY OK IT'S. ABIGAIL:. ABIGAIL: A GREAT QUESTION. IF YOU LOOK AT THE CONSUMER FROM THE RETAIL PERSPECTIVE, THERE ARE MIXED SIGNALS WITH DIFFERENT RETAILERS WHERE CONSUMERS ARE STRONG, THERE ARE NO CREDIT CARD DELINQUENCIES, SOME CREDIT CARD DELINQUENCIES FROM THE MAJOR COMPANIES ARE GOING LOWER. BUT 66% OF GDP, THE CONSUMER, SOUNDS LIKE THERE IS SOME WEAKNESS. NOT QUITE AS FIRM, JUST HOW BAD IT IS, WE DON'T KNOW. BUT WHEN YOU START TO HEAR THAT CREDIT, THE LIFEBLOOD OF THE AMERICAN ECONOMY, IS BEING WATCHED, THAT IS AN ISSUE. ALIX: ALLY FINANCIAL AT ONE POINT WAS UP 74% OF THE -- ON THE YEAR. ERASING ALL THE GAINS OF THE YEAR. ABIGAIL: WOW. ABIGAIL DO LITTLE, THANK YOU SO MUCH. WE DO GET THE AMERICAN EXPRESS CEO SPEAKING TOMORROW. ALIX: THEY STILL DOING REALLY WELL. ROMAINE: ROMAINE: IF THEY ARE PESSIMISTIC, THEN MAYBE WE ARE IN TROUBLE. >> THE FED TIGHTENING IS FINALLY HAVING AN IMPACT ON WEAKER UNEMPLOYMENT, LOWER MANUFACTURING, AND THAT IS CONFRONTING THE ELEVATED EXPECTATIONS FOR EARNINGS. SO AS STATISTICS, SHOWING WEAKNESS, INVESTORS ARE TRYING TO FIND A LOCATION OF, ARE WE GOING TO END UP WITH A SOFT LANDING, HARD LANDING? AND THAT IS THE CHALLENGE FOR THE MARKETS. ROMAINE: RICHARD SAPERSTEIN FROM TREASURY PARTNERS HELPING TICKETS AFTER THE CLOSE. LOOKING AT YIELDS LOWER. A MIXED DAY FOR STOCKS AS WE HAD COME INTO A COUPLE OF BIG CATALYSTS, THE PRESIDENTIAL DEBATE TONIGHT, CPI REPORT TOMORROW AND A BUNCH OF OTHER THINGS. ALIX: IF YOU LOOK AT THE S&P, WE ARE NOT DOING MUCH, THE ENERGY AND FINANCIALS ARE GETTING HIT SO HARD. YOU CAN'T MAKE THAT UP FOR, SAY, REAL ESTATE STILL AT 1%, CONSUMER DISCRETIONARY UP 1.3%. BUT FOR THE CYCLICALS ,WHEW, TOUGH. ROMAINE: IS THIS ABOUT DEMAND OR SUPPLY? ALIX: I THINK NEITHER. AT THIS POINT, IT HAS TO BE SENTIMENT. THE CURVE IS STILL BACKWARDATED, PRICES TODAY ARE STILL HIGHER THAN PRICES LATER. FEELS LIKE A WASHOUT. IT DOES IT CREATE MORE SELLING? ROMAINE: ROMAINE: RAISES QUESTIONS ABOUT WHERE Liz Ann Sonders, Charles Schwab & Co SENTIMENT IS THAT WHERE THE MARKET IS OVER ALL WHEN YOU LOOK AT OIL, OR WHETHER YOU LOOK AT THE DOLLAR, BONDS OR STOCKS. OUR NEXT GUEST IS CHIEF INVESTMENT STRATEGIST AT CHARLES SCHWAB, LIZ ANN SONDERS. 8.5 MINUTES UNTIL THE CLOSING BELL WHERE IS SENTIMENT NOW? NOT SURE IF IT IS GOOD OR BAD OR JUST NONEXISTENT. LIZ ANN: SENTIMENT INDICATORS, PARTICULARLY INVESTMENT INDICATORS, THEY FALL INTO TWO BUCKETS. ATTITUDINAL SENTIMENT INDICATORS WHICH IS SURVEY BASED, INVESTORS INTELLIGENCE. THEN YOU HAVE BEHAVIORAL MEASURES, WHETHER IT IS FUND FLOWS, THE PUT CALL RATIO, AND OTHER METRICS. YOU LOOK AT THE COLLECTION OF THEM, THE ATTITUDINAL MEASURES WHICH HAD BEEN SWINGING WILDLY UP, AND DOWN THE MARKET THEY ARE KIND OF STUCK IN AN OPTIMISTIC ZONE. WHICH IS SURPRISING TO ME. I WOULD'VE THOUGHT YOU WOULD EASE SOME OF THAT COMPLACENCY GIVEN THE WEAKNESS WE HAVE SEEN IN THE MARKET SINCE MID-JULY, BUT THAT IS NOT THE CASE. THAT SAID, WE HAVE SEEN FUND FLOWS KICK BACK INTO THE NEGATIVE SIDE OF THE LEDGER, AT LEAST IN SOME CATEGORIES. A COUPLE OF WEEKS AGO YOU HAD BIG OUTFLOWS OUT OF U.S. LARGE CAPS. LAST WEEK IT WAS OUT OF CONSUMER-CYCLICAL AREAS. SO ON THE BEHAVIORAL SIDE, A BIT OF WEAKNESS CREEPING IN, BUT NOT UNIVERSAL. ROMAINE: THERE HAS BEEN A LOT OF TALK THAT WE WILL MAYBE SEE A PULLBACK HERE, STRATEGISTS AT GOLDMAN AND OTHER PLACES SAYING WE ARE NOT GO INTO A BEAR MARKET, THIS IS JUST A HEALTHY REEVALUATION OF VALUATIONS, IF YOU WILL. LIZ ANN: KEEP IN MIND, UNDER THE SURFACE, WE HAVE HAD A BEAR MARKET, OR CLOSE TO IT IN THE CASE OF THE S&P. THE S&P ON THE EURO TO EIGHT DATABASES AT THE INDEX LEVEL HAS HAD AN 8% MAXIMUM DRAWDOWN. IT DIDN'T HIT CORRECTION TERRITORY. THE AVERAGE MEMBER MAXIMUM DRAWDOWN IS -19%. FOR THE NASDAQ, IT IS EVEN MORE EXTREME. AT THE INDEX LEVEL IT HAS HAD A CORRECTION OF 13% MAXIMUM DRAWDOWN, BUT THE AVERAGE MEMBER MAXIMUM DRAWDOWN AND THE NASDAQ IS -34%. THAT IS A HECK OF A LOT OF WEAKNESS AND CHURN AND ROTATION AND TURMOIL UNDER THE SURFACE. IT'S JUST BEEN MASKED BY THE DOMINANCE OF THE MEGA CAPS IN THESE CAP WEIGHTED INDEXES. SO THERE HAS BEEN A LOT MORE TO THE STORY THAT IS TOLD UNDER THE SURFACE OF THE INDEXES. AND THAT IS WHERE YOU HAVE SEEN SOME OF THE WEAKNESS. ALIX: NEVERTHELESS, NON-MAG 7 FIRMS HAD MORE THAN DOUBLE GROWTH EXPECTATIONS FOR THE LAST QUARTER, 3 OF 11 S&P SECOND SHOWING GROWTH LIKE INDUSTRIALS, REAL ESTATE AND STAPLES. HOW SHOULD YOU THEN BE REALLOCATING YOUR MONEY? LIZ ANN: I THINK THAT HELPS TO EXPLAIN WHY WE HAVE LOST THE LEADERSHIP PROFILE OF THE MAG SEVEN. A COUPLE OF QUARTERS AGO SO THAT YOU HAD EXTREME SPREAD IN TERMS OF MAG SEVEN EARNINGS TO THE TUNE OF 60 PERCENT YEAR-OVER-YEAR RELATIVE TO A FLAT-ISH IS NOT MARGINALLY DOWN FOR THE REST OF THE INDEX. THAT IS STARTING TO CONVERGE. BY THE END OF THIS YEAR YOU WOULD BE DOWN IN THE HIGH TEENS FOR THE MAG SEVEN IN TERMS OF EARNINGS, AND YOU WILL BE UP TO THE LOW TO MID TEENS IN THE CASE OF THE REST OF THE MARKET. I THINK THAT IS PART OF THE REASON WHY YOU SAW THE SHIFT IN LEADERSHIP AWAY FROM JUST THE MAG SEVEN. THEN YOU ADD TO IT THE FED POLICY SHIFTING INTO EASY MODE MOST LIKELY, AND THOSE INTO -- SENSITIVE AREAS LIKE REAL ESTATE THAT YOU TOUCHED ON. I THINK THE LEADERSHIP AND THE LACK OF CONSISTENT DOMINANCE BY THE MAG SEVEN, THAT HAS LEGS. NOT EVERY WEEK. BUT I THINK ABOUT TURNING OUT PROBABLY HAS SUSTAINABILITY. ALIX: IS THAT BARGAINING INTO CYCLICALS, MATERIALS AND ENERGY, OR INTO FINANCIALS AND HEALTH CARE? LIZ ANN: IT WAS INTO THE CLASSIC INTEREST-RATE SENSITIVES, GOING BACK TO THE MID-JULY HIGHS IN THE OVERALL INDEX. YOU SAW THE BEST BREADTH PROFILES OF THE LAST SEVERAL WEEKS IN FINANCIALS, UTILITIES, IN REITS. BUT OBVIOUSLY IN A SECTOR LIKE ENERGY, YOU WILL BE AT THE MERCY OF OIL PRICES, WTI IS DOWN IN THE LAST COUPLE OF MONTHS FROM $82 A BARREL TO $66 A BARREL. THE BROAD COMMODITY COMPLEX HAS BEEN UNDER PRESSURE, YOU WERE TALKING ABOUT IT BEFORE WE CAME ON HERE AS TO WHETHER IT IS A DEMAND STORY OR THE SUPPLY STORY, MAY BE A POSITIONING STORY OR A BIT OF A SENTIMENT STORY. NONETHELESS THAT TYPE OF CYCLICAL SECTOR IN ENERGY WILL BE DRIVEN BY THE UNDERLYING PRICES OF THE COMMODITY ASSOCIATED WITH IT. SO I STILL THINK THE INTEREST-RATE SENSITIVES CAN DO WELL. THEN YOU GET STORIES LIKE ALLY FINANCIAL TODAY PUTTING PRESSURE ON FINANCIALS, AND WE WILL LIVE WITH THAT. ROMAINE: I AM CURIOUS, DOES ANYTHING CHANGE BASED ON WHAT WE THINK WE WILL HEAR FROM THE FED IN ONE WEEKS TIME HERE? IT IS ALL PRICED IN, BUT DOES NOT PROVIDE ANY SHIFT IN HOW PEOPLE ARE GOING TO VIEW CONDITIONS? LIZ ANN: OBVIOUSLY, WE JUMPED AROUND IN TERMS OF PROBABILITIES AROUND 50 OR 25 BASIS POINTS WITH EVERY INCOMING DATA RELEASE. RIGHT NOW YOU ARE AT TWO-THIRDS PROBABILITY OF 25 BASIS POINTS, ONE THIRD PROBABILITY OF 50. BUT WE HAVE THE CPI AND PPA REPORTS COMING UP. OUR VIEW IS THEY ARE MOST LIKELY TO MOVE 20 FIVE BASIS POINTS. I WOULD SAY BE CAREFUL WHAT YOU WISH FOR IT FOR FOLKS WISHING THAT THE FED WILL START WITH 50 AND DO ANOTHER 50, BE AGGRESSIVE. BASED ON HISTORY, THE MORE AGGRESSIVE FED, IT THEY START A CUTTING CYCLE, WHETHER IT IS THE SIX MONTHS FOLLOWING THE FIRST CUT OR 12 MONTHS FOLLOWING THE FIRST CUT THE, AVERAGE MAXIMUM DRAWDOWN IS TWICE AS BIG WHEN THE FED IS MOVING AGGRESSIVELY VERSUS WHEN THEY ARE MOVING MORE SLOWLY. SO NOT ONLY DO WE THINK 25, IT IS PROBABLY A BETTER BACKDROP FOR THE EQUITY MARKET. ROMAINE: ALWAYS GREAT TO TALK TO YOU, LIZ ANN SONDERS, CHIEF INVESTMENT STRATEGIST AT CHARLES SCHWAB HELPING US, YOU DOWN TO THE CLOSING BELLS. A MIXED DAY. NASDAQ IS UP 1%. Closing Bell THE S&P WHICH HAD BEEN IN THE RED, NOW POSTING UP FOR A 0.1% GAIN. A FULL BREAKDOWN OF THE MARKET ACTION IS COMING UP RIGHT NOW. ♪ ANNOUNCER: "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 HERE WITH ALIX STEEL, TAKING YOU TO THE CLOSING BELL. A GLOBAL SIMULCAST STARTING WITH SCARLET FU JOINING US IN THE TV STUDIO. TIM STENOVEC IN THE RADIO BOOTH, KATIE GRAYFIELD AT HIS SIDE FILLING IN TODAY FOR CAROL MASSAR. WELCOME TO ALL OF OUR AUDIENCES FROM ALL OUR PLATFORMS INCLUDING OUR PARTNERSHIP WITH YOUTUBE. 10, A MIXED DAY IN MARKETS. WHAT DO YOU MAKE OF IT? I TIM: AM WATCHING WHAT IS GOING ON WITH THE BANKS. THE KBW BANK INDEX DOWN 1.9 PERCENT. WE ARE HEARING FROM BANKS AT THE BARCLAYS CONFERENCE COMMITTEE DO THIS EIGHT YEAR, AND IT SEEMS THEY ARE TEMPERING EXPECTATIONS, OR MANAGING EXPECTATIONS ABOUT WHAT IS TO COME IN THE RECENT QUARTER IN JUST ABOUT A MONTH. KATIE: IT WILL BE INTERESTING TO SEE WHAT WE ACTUALLY HEAR FROM THEM AND WHETHER THEY ARE UNDER PROMISING NOW, TO OVER DELIVER. WE WILL GET INTO THAT. INTERESTINGLY HAVE SO MANY RISK EVENTS BETWEEN NOW AND 8:30 A.M. TOMORROW, THE DEBATE, INFLATION NUMBERS, THINGS ARE GETTING EXCITING. EVEN THOUGH ON THE MARKETS TODAY, NOT TOO MUCH. SCARLET: ACTION NOT TO MENTION NVIDIA AS JENSEN HUANG SPEAKING WITH GOLDMAN SACHS TOMORROW. I KNOW THE QUESTION IS WHAT IS GOING ON WITH BLACKWELL AND ITS MANUFACTURING DELAYS. ALIX: I THINK YOU GUYS ARE OVERSELLING IT. THE DEBATE, SURE. BUT CPI TOMORROW, WILL THAT REALLY RESOLVE THE DEBATE OF 25 OR 50 AND GIVE DIRECTION TO THE MARKETS? ROMAINE: I GUESS MAYBE THAT IS PART OF THE PROBLEM, INVESTORS HAD SO MUCH THEY COULD FOCUS ON. QUESTION IS WHAT DO THEY PICK AND CHOOSE? [CLOSING BELL RINGING AND CHEERS] A MIXED DAY ON WALL STREET AS WE GET THE CLOSING NUMBERS. THE DOW JONES INDUSTRIAL AVERAGE LOWER BY MORE THAN 80 POINTS, AT ROUGHLY 0.2%. LOOKS LIKE IT WILL BE A DOWN DAY FOR THAT INDEX. S&P 500 DESPITE ALL THE TURMOIL AND HANDWRINGING, TWO STRAIGHT GAMES OF DAYS -- DAYS OF GAMES, UP 0.5%. NASDAQ UP ZERO POINT 8%. RUSSELL 2000 TRIED TO GET A BID GOING INTO THE CLOSE, WE WILL, UNCHANGED, IT IS DOWN LESS THAN ONE POINT ON THE DAY. TIM: TAKING A DEEPER LOOK AT THE S&P 500, MORE STOCKS ADVANCED THAN DECLINED, NOT SURPRISING. 263 STOCKS MOVING HIGHER, 236 MOVING LOWER. SCARLET: THE S&P 500 CHANGED DIRECTION AT LEAST SIX TIMES TODAY ALTHOUGH IN THE LAST TWO AND A HALF HOURS IT, HAS BEEN ON A STEADY UPWARD TRAJECTORY. THAT IS WHAT YOU SEE IN THE SECTOR PERFORMANCE AS WELL A LOT OF GREEN LED BY A REITS, CONSUMER DISCRETIONARY AND BY TECH ALL THOSE GROUPS OF 1%. BUT THE WEAKLINGS ARE PRETTY WEAK, ENERGY STOCKS ARE OFF BY 1.9%. FINANCIALS LOSING 1% ON THE DAY. ROMAINE: I WONDER IF STACY RASGON BOUGHT A BARREL OF OIL AND KEPT ONE IN HER BATHROOM -- TRACY ALLOWAY. SHE KEPT IT IN HER BATHTUB KATIE: [LAUGHTER] TIM: NEW YORK PROBLEM, RIGHT? LET'S LOOK AT THE GAINERS, ORACLE IS HIGHER BY 11.4 PERCENT, THEY HIT A RECORD AFTER THE COMPANY REPORTED PROFIT AND BOOKING SALES THAT TOPPED ESTIMATES. AI DEMAND CONTINUES TO BOOST ITS BUSINESS. REMEMBER, THEY HAD BEEN FOCUSED ON EXPANDING, CLOUD INFRASTRUCTURE THEY COMPETE WITH AMAZON AND MICROSOFT AND GOOGLE. THEY HAVE DEVELOPED A REPUTATION FOR SUCCESS WITH GENERATIVE AI WORKLOADS. IT TOUTED CUSTOMERS INCLUDING ELON MUSK'S XAI. SPEAKING OF ELON MUSK, TESLA IS ONE OF THE GAINERS, SHARES FINISHING HIGHER AFTER DEUTSCHE BANK RESUMED COVERAGE OF U.S. AUTOS AND THE AUTO TAX ACT SECTOR AND NAMED TESLA, IT'S TOP PICK SAYING THE COMPANY IS AN "LEAGUE OF ITS OWN AND REPRESENT OUR HIGHEST CONVICTION SECULAR LEADER." TESLA HIGHER BY 4.6 PERCENT. I WANT TO DO A FUN ONE ON THE DAY, 20 INDUSTRIES. TRUS. ROMAINE: I ALWAYS FORGET THEY ARE PUBLICLY TRADED. ALIX: THEY ARE GROSS. [LAUGHTER] ALIX: TOOTSIE ROLLS ARE DISGUSTING. TIM: TIM: I THINK THE 69 BOYS DISAGREE WITH YOU. [LAUGHTER] THE STOCK IS THE BEST PERFORMER IN ITS PEERS, FINISHING, HIGHER TODAY NO FUNDAMENTAL NEWS I COULD FIND. ROMAINE: I LOVE TOOTSIE ROLL'S. ALIX: BUT YOU DON'T LIKE CHOCOLATE? [LAUGHTER] NOW THIS MAKES SENSE. KATIE? KATIE: LET'S GET TO THE BAD NEWS, J.P. MORGAN WE KNOW THE STORY THERE. WE HAD PRESIDENT DANIEL PINTO, AND SAY ANALYSTS ARE BEING TOO OPTIMISTIC IN PROJECTING NEXT YEAR'S EXPENSES AND NET INTEREST INCOME. HE WAS ONE OF SEVERAL BANKS, GOLDMAN INCLUDED, TEMPERING THE OUTLOOK. JP MORGAN SHARES FINISHING 5% LOWER. AT ONE POINT IT WAS SEVEN POINT 5% WHICH WAS ONE OF ITS WORST DAYS SINCE I THINK JUNE OF 2020. STILL DOWN 5%. THE NEXT ONE IS HEWLETT-PACKARD. HPE SHARES FALLING QUITE SIGNIFICANTLY. IT IS A BORING REASON. THEY SAID YESTERDAY THAT THEY HAD COMMENCED A CONVERTIBLE PREFERRED STOCK OFFERING. INVESTORS CLEARLY NOT PSYCHED ABOUT THAT. IF YOU LET PACKARD SHARES TAKING A DIVE. -- HEWLETT-PACKARD SHARES TAKING A DIVE. ENERGY STOCKS ARE ONE OF THE WEST PERFORMANCE TODAY AT EXXON WAS NO EXCEPTION. YOU LOOK AT HOW SHARES FINISHED DOWN, ABOUT 3.6%. ROMAINE: WHAT IS THE DIFFERENCE BETWEEN FUDGE AND CHOCOLATE? ALIX: I COULD NOT TELL YOU. IS IT A MORE CONDENSED MILK VERSUS SOMETHING ELSE? ROMAINE: I WILL GOOGLE THIS. YOU DO THE YIELDS. ALIX: ALRIGHT,'S 2-YEAR YIELD DOWN SEVEN BASIS POINTS. THE THREE YEAR AUCTION WENT PRETTY SMOOTHLY, DEMAND WAS SOLID. TOMORROW YOU GET $39 BILLION WORTH OF THE 10 YEAR, THEN 30-YEAR ON IT LATER IN THE WEEK, 22 BILLION DOLLARS. BOND BULLS CLEARLY STILL VERY MUCH ALIVE. ROMAINE: AND WELL ACCORDING TO GOOGLE, FUDGE IS NOT THE SAME AS CHOCOLATE BUT IT CAN CONTAIN CHOCOLATE. IT'S MADE FROM SUGAR, FLAVORINGS. SIMILAR TO CARAMEL. SCARLET: I LIKE FLAVORINGS. VERY SPECIFIC. [LAUGHTER] ALIX: I WILL NOT EAT FUDGE, BUT I WILL LEADER TOOTSIE ROLL. KATIE: LEARNING A LOT ABOUT ALL OF US. MOSTLY ALIX. [LAUGHTER] TIM: ARE WE STILL GETTING EARNINGS? ROMAINE: WE ARE. ANYONE EVER BEEN TO A DAVE AND BUSTER'S? TIM: YES, THEIR EARNINGS ARE PULLING UP, SECOND QUARTER EPS BEAT ESTIMATES. SECOND-QUARTER ENTERTAINMENT REVENUE ABOVE ESTIMATES AT $375.7 MILLION. SECOND QUARTER EPS WAY HIGHER THAN ESTIMATES, 1.12 CENTS. SHARES BOUNCING AROUND BUT UP 5.6 -- 7% AS WE SPEAK NOW. KATIE: ALRIGHT, FED. THAT IS WHERE THAT PET GOES. SHARES HIGHER BECAUSE THEY REPORTED NET SALES FOR THE SECOND QUARTER THAT MEET EXPECTATIONS. COMING IN AT 1.5 TO $2 BILLION. THE ESTIMATE WAS FOR 1.5 3 BILLION DOLLARS. THE ADJUSTED LOSS PER SHARE CAME IN AT TWO CENTS, SLIGHTLY BETTER THAN WHAT ANALYSTS HAD BEEN LOOKING FOR, ABOUT 2.3 CENTS. THIRD-QUARTER ADJUSTED LOSS PER SHARE HAS BEEN -- THEY ARE LOOKING FOR THREE POINT TWO CENTS. 3.1 CENTS WORTH THE ESTIMATE. SHARES ARE MOVING HIGHER. SCARLET: LET'S LOOK AT GAMESTOP EARNINGS. EARNINGS". LOOK AT THE REVENUE LINE. SECOND-QUARTER HARDWARE AND ACCESSORIES NET SALES OF MISSING THE AVERAGE ANALYST ESTIMATE. ABOUT 451 MILLION DOLLARS. DOWN 24% VERSUS LAST YEAR, ANALYSTS WERE LOOKING FOR 477 MILLION DOLLARS. NET SALES OVERALL DOWN 31%. SOFTWARE NET SALES DOWN 48%. EVERYTHING IS DOWN YEAR ON YEAR. ALIX:. ALIX: I WAS LOOKING THROUGH THE PRESS RELEASE FOR COLOR, THERE IS NO COLOR. JUST NUMBERS. NO CONFERENCE CALL TODAY. WEDBUSH ANALYST SAID THE COMPANY CONTINUES TO FACE A "NEAR INSURMOUNTABLE BARRIER TO ITS PLANNED RETURN TO GROWTH." CLEARLY NEEDS DECLINES YOU'RE ARE NOT HELPING ANY. ROMAINE: "PLANNED RETURN TO GROWTH," WHAT IS THE PLAN? 39% DROP IN REVENUE EVEN ON THE COLLECTIBLE SIDE WHICH WAS ANOTHER BRIGHT SPOTS IN PAST QUARTERS, THAT DOWN 18%, A NEGATIVE SIGN FOR EVERYTHING. WHAT ARE YOU DOING, SCARLET? SCARLET: SCARLET: WHAT ARE MY DOING? TIM: TIM: LOOKING AT THE DIFFERENCE BETWEEN FUDGE AND CHOCOLATE. SCARLET: I WAS THINKING WHEN WAS THE LAST TIME I WENT TO GAMESTOP. KATIE: I DON'T KNOW WHAT THEY ARE SET TO DO. THIS TURNAROUND HAS BEEN EIGHT YEARS IN THE MAKING AND IS YET TO MATERIALIZE. ALIX: TAKE KATIE'S POINT IN THE CHART, THE STOCK IS AT 34% YEAR TO DATE. THANK YOU SO MUCH, MEME STOCKS. KATIE: YES, YOU ARE OUTPERFORMING IF YOU ARE IN A SINGLE STOCK PORTFOLIO. JUST TO GAMESTOP. [LAUGHTER] TIM: THAT'S A WRAP UP OF OUR CROSS-PLATFORM COVERAGE ON RADIO, TV, YOUTUBE AND BLOOMBERG ORIGINALS. WE WILL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. ALIX IS HEADING OUT. SCARLET AND ROMAINE ARE STAYING. WE WILL SEE YOU TOMORROW. Jason Mamoa & Blaine Halvorson, Meili Vodka ♪ ROMAINE: OUR COVERAGE CONTINUES ON BLOOMBERG TV. AS WE MAKE A PIVOT, WE WANT TO TALK ABOUT NATURAL RESOURCES. MAYBE. NATURAL FROM MONTANA ARE BEING USED TO FILL THE SO-CALLED VOID IN THE VODKA INDUSTRY. MEILI VODKA PROMISES TO LIFT YOUR SPIRITS WITH LOCALLY-SOURCED HIGH QUALITY AND NATURAL SPRING WATER AND IF THAT ISN'T ENOUGH TO SELL, ONE OF ITS SUSTAINABLE BOTTLES, AND THE STAR POWER BEHIND IT MIGHT DO THAT AS WELL. JOINING US IS BLAINE HALVORSON AND THE ACTOR, JASON MOMOA. THANK YOU TO BOTH OF YOU FOR JOINING US. JASON, I WILL START WITH THE OBVIOUS QUESTION, TELL ME, WHAT'S AT THE VODKA APART FROM MANY OTHERS? JASON: WHAT SETS IT APART FROM OTHER VODKAS, THE OTHER VODKAS DO NOT TASTE GOOD. WE SET OUT TO MAKE THIS VODKA BECAUSE WE WANTED TO TREAT IT LIKE A SPIRIT INSTEAD OF AN INGREDIENT SO IT HAS BEEN OUR GOAL AND IT TOOK US A LONG TIME TO DO THAT BUT WE FOUND OUT IT WAS ACTUALLY BECAUSE OF THE WATER WE USE. VODKA IS 50% WATER AND REUSE WATER FROM MONTANA. ROMAINE: GIVE US A SENSE OF HOW YOU MARKET THIS AND GIVEN WHAT WE KNOW IS A CROWDED SPACE, THERE ARE A LOT OF VODKA BRANDS OUT THERE. HOW DO YOU GET THIS IN FRONT OF PEOPLE IN ONLY WHERE THEY LOOK TO MEILI VODKA RATHER THAN THE OTHERS? BLAINE: WHEN WE STARTED, WE WERE NOT VODKA GUYS, WE WERE IN THE WHISKEY AND TEQUILA SIDE OF THINGS. WE SAW THAT MARKET WAS LOOKED UPON AS AN INGREDIENT. SO WE WANTED TO CREATE SOMETHING THAT WAS DIFFERENT AND GIVING VODKA AND ACTUAL FLAVOR PROFILE AND SOMETHING SMOOTH AND TREATING IT, AS JASON SAID, AS AN ACTUAL SPIRIT RATHER THAN AN INGREDIENT. SO IT HAS BEEN A BIG PIECE. OBVIOUSLY THE VODKA MARKET IS CONTROLLED IN GENERAL BY THE BIG FOUR THAT HAVE BEEN AROUND FOR SOME TIME. AND IT JUST FELT LIKE A PIECE OF THE LIQUOR INDUSTRY THAT WAS READY FOR CHANGE AND NEEDED SOMETHING DIFFERENT. SCARLET: BOTH OF YOU HAVE A HISTORY TOGETHER, HE STARTED ON THE JOURNEY TO CREATE SOMETHING EIGHT YEARS AGO AND IT SOUNDS LIKE YOU STUMBLED UPON VODKA AS YOUR COLLABORATIVE PRODUCT HERE, BUT PART OF THE ORIGIN STORY FOR MEILI VODKA IS THAT NEITHER OF YOU ACTUALLY LIKED VODKA. I AM GUESSING THAT HAS CHANGED NOW. [LAUGHTER] JASON: WE LOVE IT NOW. THAT IS THE BEAUTIFUL THING. THIS BOTTLE, WHAT WE SET OUT TO DO, JUST THE DESIGN QUALITY OF IT, IT T ICKS OFF EVERYTHING WE LEFT. THE SUSTAINABILITY PART OF IT. AND THE TASTE. WE ASK EVERYBODY TO DRINK IT NEAT AND WARM, AT ROOM TEMPERATURE, AND IT TASTES BEAUTIFUL. WE WENT UP FOR ALL THE COMPETITIONS AND POURED IT OUT IN A BLIND TASTE TEST AND WE WON EVERYTHING. SO IT HAS BEEN ONE OF THE MOST DECORATED SPIRITS IN THE WORLD, SEVEN GOLDS, THREE PLATINUM'S, MORE PERFECT SCORES. WE HAVE BEEN OUT FOR A YEAR AND A HALF THAT IT HAS BEEN WONDERFUL TO SHOW IT TO PEOPLE. AND AT THE PRICE POINT, WE ARE STILL ANYWHERE FROM $20 TO $24 A BOTTLE, IT IS BEAUTIFUL. AND IT TASTES GOOD. WE WANTED TO MAKE IT AFFORDABLE. AND WE SHOULD SCARLET: POINT OUT THAT NO TWO BOTTLES ARE THE SAME, EACH MODEL IS DIFFERENT. THE MANUFACTURING OF THE BOTTLE IS REALLY A POINT OF PRIDE FOR YOU. I AM CURIOUS AS YOU BRING THE VODKA AROUND AND YOU HAVE DIFFERENT PEOPLE TASTE IT, I WONDER IF YOU HAVE GOTTEN ANY FEEDBACK FROM THE BIG PLAYERS IN THE INDUSTRY, HAS ANYONE TALKED TO YOU ABOUT THE FLAVOR PROFILE THAT YOU HAVE COME UP WITH FOR MEILI VODKA. BLAINE: MOST PEOPLE IN AMERICA DON'T REALLY KNOW WHAT VODKA TASTES LIKE, THEY ARE USED TO TAKING IT IN A DRINK. THAT WAS OUR POINT. . THE FACT THAT WE HAVE PEOPLE TRY IT AT ROOM TEMPERATURE IN ITS NATURAL FORM, YOU CAN TELL A LOT BY PEOPLE'S FIRST IMPRESSION WHEN YOU ARE ASKING THEM TO DRINK VODKA WARM. MOST OF THEM SORT OF TURN THEIR NOSE BECAUSE EVEN THE ONES THAT HAVE, THEY KNEW THAT IN GENERAL, VODKA TASTES LIKE RUBBING ALCOHOL. IT IS HOT, IT HAS THAT BURN. THAT IS WHY IT BECOMES COVERED UP IN DREAMS. WE WANTED TO CREATE A BEAUTIFUL SPIRIT THAT YOU DIDN'T HAVE TO COVER UP AND THAT IT WOULD GIVE THE BARTENDERS AND MIXOLOGISTS AND PEOPLE IN INDUSTRIES SOMETHING TO ACTUALLY BUILD OFF OF. WE CAN GO-DISTILL -- SINGLE-DISTILL FOR ONE REASON. AND THE MAIN THING IS A BEAUTIFUL WATER. ROMAINE: MOST OF THESE VODKAS ARE DISTILLED SEVERAL TIMES PRIMARILY TO MAKE IT A NEUTRAL'S. , WHICH AS YOU POINT OF, PEOPLE USE IT TO MAKE SOMETHING ELSE. BY ONLY DISTILLING THIS ONCE, YOU ARE LEAVING BEHIND THE FLAVOR FROM THE GRAINS. WHY DO YOU THINK OTHER VODKA COMPANIES ARE THROWING THAT OUT, FOR LACK OF A BETTER WORD. BLAINE: I THINK IT HAS BEEN MERELY A MARKETING TOOL. I DON'T THINK PEOPLE NECESSARILY UNDERSTAND THAT THE MORE YOU DISTILL, THE ONLY THING THAT SURVIVES THE DISTILLATION IS ALCOHOL. TWO ME, THAT IS WHY WE NEVER LIKED IT, BECAUSE DRINKING ALCOHOL IN ITS NATURAL FORM IS VERY GOOD. THIS WHOLE MYTH OF VODKA, NO SMELL, NO TASTE, IF THAT WAS THE CASE, EVERYONE HAS FAILED. I MEAN, ANYBODY WHO HAS TRIED VODKA AND KNOWS THAT THERE'S NOTHING ABOUT IT AND HAVE HEAT IN TASTE SOMETHING. WE WANTED TO CREATE SOMETHING THAT WAS SMOOTH. WE AGE OUR VODKAS. GIVING IT TIME SIMILAR TO WHISKEY HELPS MOVE THAT OUT. IN THIS SINGLE DISTILLATION, BECAUSE WE ARE LEAVING THIS BEAUTIFUL WATER, IT WILL BE SMOOTHER BECAUSE YOU ARE NOT COOKING IT DOWN, NOT GETTING RID OF EVERYTHING BUT THE ALCOHOL. SCARLET: JASON, FINAL QUESTION HERE, WHAT HAS SURPRISED YOU MOST ABOUT THIS. INDUSTRY? YOU HAVE BEEN IN THE ENTERTAINMENT INDUSTRY A LONG TIME, YOU HAVE OTHER BUSINESSES, BUT AS YOU MOVE CLOSER TO THE SPIRIT INDUSTRY, WHAT SURPRISES YOU THE MOST? JASON: WELL, NOTHING AT THIS POINT REALLY SURPRISES ME AS MUCH AS HOW -- IT WAS EXTREMELY CHALLENGING FROM THE GET-GO. IT TOOK US A LITTLE OVER EIGHT YEARS, NINE YEARS TO BUILD THIS TO WHERE IT IS AT, IT WAS NOT AN OVERNIGHT THING. NO ONE CAME TO US AND SAID, HEY, WOULD YOU BE A PART OF THIS. IT HAS JUST BEEN BLAINE, AND I, NO PARTNERS. NO DIAGEO, NO NOTHING. IT GAVE US TIME TO TEST THIS OUT. BLAINE REALLY WAS THE GENIUS BEHIND IT. OBVIOUSLY I KNOW A FEW THINGS ABOUT WATER. BUT IT WAS ALL ABOUT THESE PURE WATER SOURCES. SO WE TRAVELED, AND BROUGHT WATER BACK FROM ANTARCTICA, FROM THE SHACKLETON, FROM GREENLAND. BRINGING BACK WATERS, MIXING IT WITH OUR MASH AND FINDING OUT, IF YOU DISTILL IT, IT WILL NOT GO AWAY, EACH FLAVOR PROFILE IS DIFFERENT. IF YOU HAVE A BEAUTIFUL WATER, WHICH WE DO, IT IS OUR UNICORN IN MONTANA, THAT WATER SOURCE IS LOW IN SODIUM SO IT DOESN'T CORRECT THE GRAINS. SO THE HARDEST PART WAS AT THE BEGINNING, BECAUSE IT TOOK A LONG TIME TO REALLY PERFECT, A PLACE WHICH WE DIDN'T KNOW MUCH ABOUT. NOW WE KNOW HOW TO SELL, WE KNOW HOW TO BE INTIMATE AND BE ABLE TO GO TO PLACES AND MEET WITH PEOPLE. NOW IT IS ACTUALLY QUITE FUN. I WILL GO ON STAGE AND PLAY MUSIC WITH MY BAND AND SHARE DRINKS WITH THOUSANDS OF PEOPLE AND REALLY JUST EXPERIENCE WHAT IT'S LIKE AND HAVE A GOOD TIME. SO I THINK THE MARKETING ASPECT OF THAT HAS ALREADY PASSED THE HARD PART. SCARLET: RIGHT. JASON: NOW IT IS JUST GETTING IT TO PEOPLE AND SAY HERE IS A VODKA, YOU NEED ONE. TAKE ONE OF THESE MODELS HOME, BLIND TASTE IT AND TRY IT OUT. IT IS $20. HAVE A BALL. SCARLET: ALRIGHT, JASON MOMOA AND BLAINE HALVORSON, SPOKEN AS TRUE ENTREPRENEURS, THE JOURNEY OF STUMBLES AND STARTS BEFORE YOU FIND YOUR WAY. COFOUNDERS OF MEILI VODKA, THANK YOU SO MUCH. >> THANK YOU VERY MUCH. >> THANK YOU. ROMAINE: HE KNOWS A LOT ABOUT WATER. WE DIDN'T ASK HIM ABOUT HIS TURN IN "AQUAMAN." [LAUGHTER] HE WILL ALSO BE IN THE NEW MOVIE, DON'T KNOW IF YOU HAVE SEEN "MINECRAFT." IT IS HUGE IN MY HOUSEHOLD. THE MOVIE WILL BE RELEASED NEXT YEAR, STARS JACK BLACK. YOU JUST SAW HIM THERE, JUST SAW HIM THERE, JASON MAMA. . I DON'T KNOW IF THAT THE LEG. SCARLET: DOES NOT LOOK LIKE JASON MOMOA. MIGHT BE PART OF THE PROBLEM. [LAUGHTER] ROMAINE: IT IS GETTING A LOT OF TRACTION ON THE INTERNET AS PEOPLE TRY TO FIGURE OUT WHY THIS MOVIE IS WHAT IT IS. . HE HAS BEEN NEGOTIATING WITH WARNER BROS. FOR A LONG TIME ON THIS AND WE WILL FINALLY GET IT IN 2025. SCARLET:. SCARLET: I AM NOT LIKING JASON MOMOA WITH BANKS. IS THAT JACK BLACK? ROMAINE:? ROMAINE: THAT IS HIM. HE IS THE STAR OF THE MOVIEM WHEN I THINK OF MINECRAFT, I THINK OF A CERTAIN AESTHETIC AND THIS IS NOT WHAT I THOUGHT IT WOULD BE. COMING UP, MEME STOCK MEDIA. WE ARE DIVING DEEPER INTO GAMESTOP RESULTS -- I DID NOT SAY EARNINGS -- WITH NATHANIEL POPPER, AUTHOR OF "THE TROLLS OF WALL STREET," SCARLET: WE ARE KEEPING AN EYE ON SHARES OF GAMESTOP NOW, FALLING ON THE LATEST RESULTS IN WHICH NET SALES HAVE MISSED, WHETHER YOU ARE LOOKING AT THE HARDWARE CATEGORY OR SOFTWARE SALES. THE STOCK BOUNCING AROUND. Nathaniel Popper, The Trolls of Wall Street Author LITTLE CHANGED AT THE MOMENT. NATHANIEL POPPER IS THE AUTHOR OF "THE TROLLS OF WALL STREET ." NATHANIEL, WE MAKE A VALIANT EFFORT TO LOOK AT THE EARNINGS RESULTS AND SEE WHAT WE CAN GLEAN ABOUT THE COMPANY, WHETHER SECOND-QUARTER NET SALES ARE DOWN BY DOUBLE-DIGIT PERCENT, WHAT IT MEANS WHEN HARDWARE SALES ARE DOWN. THE PRESS RELEASE ITSELF HAS A BOILERPLATE THAT IS LONGER THAN THE ACTUAL RESULTS. WHY EVEN PUBLISH RESULTS AT THIS POINT THAT DO NOT TELL YOU VERY MUCH ABOUT HOW THE COMPANY WILL MOVE FORWARD? NATHANIEL: I THINK YOU ARE RIGHT, A COMPANY LIKE THIS, I MEAN, THIS IS THE ARCHETYPE OF THE MEME STOCK. AND TO SOME DEGREE, THE PRICE OF THE STOCK HAS BECOME DISCONNECTED. FROM THE FUNDAMENTALS. TO SOME DEGREE, THE FUNDAMENTALS DON'T MATTER. THIS IS A COMPANY THAT OVER TIME, IT BEGAN IN JANUARY OF 2025 REALLY, THE FRENZY AROUND GAMESTOP THAN IT IS DOWN SINCE THEN AND THERE IS A REASON. THIS BUSINESS, INVESTORS ARE LOOKING AT REVENUE AND AT THE SUPPER WAS A TURNAROUND THAT EVERYBODY HAS BEEN WAITING FOR FOR SO LONG. SO IT IS A PUSH AND PULL BETWEEN THE TROLLS AND THE FUNDAMENTAL INVESTORS. SCARLET: AS A JOKE BECAUSE OF COURSE, THE COMPANY NEEDS TO PUBLISH RESULTS, AS A PUBLICLY TRADED COMPANY THAT IS PART OF THE REQUIREMENTS. YOU TALK ABOUT THE TROLLS. ROARING KITTY HAD STYLED HIMSELF AS A FUNDAMENTAL INVESTOR. BUT WE HAVEN'T LEARNED WHAT HE LIKES ABOUT THE COMPANY FUNDAMENTALLY. NATHANIEL: I THINK WHEN ROARING KITTY RETURNED IN MAY OF THIS YEAR, IT WAS IN SOME WAYS A NEW CHARACTER, A DIFFERENT CHARACTER THAN ROARING KITTY FROM 2020 AND 2021. BACK THEN, AT ROARING KITTY WAS, IN MANY WAYS, A VALUE INVESTOR, AS HE PUT IT IN HIS SCREEN NAME, AND HE WAS THINKING ABOUT THE FUNDAMENTALS OF THIS BUSINESS, DIGGING IN DEEPLY INTO THE DETAILS OF THE EARNINGS RELEASES, OF REGULATORY, EVERY NEW REGULATORY FILING THAT WAS COMING UP. AND WHEN HE RETURNED THIS YEAR IN MAY, IT WAS A DIFFERENT MEME- FIELD CHARACTER WHO WAS MUCH LESS PLUGGED INTO THE FUNDAMENTALS OF THIS BUSINESS. -- MEME-FUELE D CHARACTER. WHAT WE HAVE SEEN SINCE, MAY AND JUNE, GAMESTOP SHUT UP WHEN HE RETURNED BUT HE HAS SINCE THEN BACKED OUT OF THE STOCK. HE WENT UP A BUNCH OF THEM LOST A BUNCH. AND IT SEEMED LIKE HE HAS MOVED ON TO OTHER STOCKS, OTHER INTERESTS. ROMAINE: WHAT WAS INTERESTING, TOO, ABOUT YOUR BOOK IS THAT CAPTURES THE ZEITGEIST OF THE TIME, THE IDEA THAT RETAIL TRADERS WERE AT HOME SO THEY HAD THE FLEXIBILITY TO PARTICIPATE IN THIS. YOU HAD THE WALL STREET BETS COMMUNITY WHICH FOUND ITSELF THRUST INTO THIS, AND THE RIVALRY BETWEEN DIFFERENT MODERATORS HERE. FEELS LIKE THAT PART OF IT HAS DISSIPATED ALSO AND MAYBE THAT IS WHY IT IS MOVED TO EAT OR POST BY ROARING KITTY DOESN'T GET AS MUCH TRACTION. NATHANIEL: YEAH, THERE IS A LOT GOING ON HERE. ONE PART OF THAT IS THE MEME STOCK ELEMENT OF THE INVESTING CROWD HAS DIMINISHED OVER TIME. I THINK PART OF WHAT IS INTERESTING THOUGH IS THAT RETAIL INVESTORS, THE INTEREST IN THE MARKETS BROADLY HAS NOT DIMINISHED OVER TIME. TO MISS THAT EVOLUTION INTO A NEW, MORE LONG-TERM KIND OF INVESTOR, I MEME STOCKS WERE SORT OF THE GATEWAY DRUG TO THE MARKET FOR A LOT OF INVESTORS. AND WHAT YOU HAVE SEEN RECENTLY DURING THE BIG MARKET GENERATIONS AROUND NVIDIA AND AI STOCKS IS THAT WHEN STOCKS HAVE GONE DOWN, RETAIL INVESTORS HAVE PILED BACK IN. SO YOU ARE SEEING LEVELS OF RETAIL INTEREST IN THE MARKETS THAT ARE BASICALLY WHERE THEY WERE IN JANUARY 20 DURING THE MEME STOCK KHRIS. SCARLET: YEAH, THEY HAVE PILED BACK IN IN DIFFERENT WAYS, ETFS, THINGS LIKE THAT. NATHANIEL POPPER, THANK YOU. A GREAT LOOK AT WHAT IS GOING ON IN THE MEME STOCK UNIVERSE. WE WANT TO GO NOW TO OUR TOP-THREE WHERE WE FOCUS ON THE PEOPLE DRIVING SOME OF THE DAY'S MOST TALKED ABOUT STORIES. FIRST IS SELENA GOMEZ, OR COSMETICS COMPANY IS NOW POSITING ITS SALE PROCESS. ON PAPER, SHE IS A BILLIONAIRE BASED ON THE TO BILLION-DOLLAR VALUATION, BUT NOT DOING SO WELL FINDING A BUYER. ROMAINE: AND OF COURSE THE NEXT GUY IS THE FOUNDER OF A FAST FOOD CHAIN, CALVE UP. IT WENT PUBLIC AND HE IS PUTTING SOME OF THAT MONEY HE MADE TO USE. A $6.8 MILLION MANSION IN D.C. I THINK THE LISTING SAID SEVEN BEDROOMS. THERE YOU HAVE IT. IT LOOKS LIKE A COZY PLACE. IN WASHINGTON, D.C. SCARLET: TWO KITCHENS, ELEVATOR, WINE STORAGE CELLAR -- NEXT UP IS BILL MCFARLAND, THE MAN BEHIND THE INFAMOUS FYRE FESTIVAL. HE SAYS THOUSANDS OF FANS HAVE APPLIED FOR TICKETS TO FYRE FESTIVAL 2. TICKETS ARE GOING FOR THOUSANDS OF DOLLARS. DO PEOPLE NEVER LEARN? ROMAINE: I DON'T KNOW. BACK IN A MOMENT, WE WILL LOOK BACK IN HISTORY IN THE MOMENT HERE ON BLOOMBERG. ROMAINE: LET'S BOOK BACK IN HISTORY TO 74 YEARS AGO THIS SEPTEMBER WHEN THE INSURANCE COMPANY OF NORTH AMERICA BEGAN OFFERING A FIRST OF ITS KIND HOMEOWNERS POLICY THAT BUNDLED THE RISKS WITH OWNING A HOME INTO A SINGLE PACKAGED POLICY. AT THE TIME IN 1950, A HOMEOWNER WHO WANTED INSURANCE FOR FIRE WOULD TAKE OUT A POLICY FOR JUST THAT IN A SEPARATE POLICY FOR THEFT AND A SEPARATE POLICY FOR ACCIDENTS. INA FIGURED IT COULD CAP -- COULD PACKAGE OF THOSE TOGETHER INTO A POLICY THAT THE MYRIAD RISKS FOR A HOUSE AT A COST OF THE HOMEOWNER THAT WAS 20% LESS THAN THE COMBINED PREMIUMS ON SEPARATE POLICIES. THAT ALL-INCLUSIVE FIVE-YEAR POLICY WHICH INCLUDED PROTECTION FOR FIRE, THEFT, THE WEATHER, RIOTS, EVEN LATER -- AIRCRAFT AND LAND VEHICLES COST BETWEEN 88 AND $100 OR ROUGHLY $1300 ON AN INFLATION-ADJUSTED BASIS TODAY. THESE ALL IN POLICIES WERE A HIT WITH CONSUMERS WHO APPRECIATED THE COST SAVINGS. THEY WERE A HIT WITH INSURANCE SAVINGS WHO FOUND THE CONTRACTS SIMPLER TO EXPLAIN AND SO. BUSINESS WEEK MAGAZINE CALLED THE PRODUCT REVOLUTIONARY AND IT WAS. THE NEWCOMER HAS A POLICIES COMPLETELY RESHAPE THE INSURANCE INDUSTRY IN A WAY THAT ULTIMATELY RESHAPED HOMEBUILDING AND MORTGAGE BANKING AS THE POLICY GAVE LENDERS MORE SECURITY THAT HOMEOWNERS WOULD BE LESS LIKELY TO DEFAULT IN THE EVENT OF A HOME CATASTROPHE. THAT MADE HOMES MORE AFFORDABLE. THAT INCREASED HOMEBUILDING WHICH INCREASED NUMBER OF CONSTRUCTION JOBS AND SPURRED GREATER ECONOMIC ACTIVITY ALL TIED TO A SIMPLE ACTIVITY -- SIMPLE IDEA THAT PACKAGING THINGS AS ONE COULD BE BETTER THAN LETTING THINGS STAND ALONE. SCARLET: KIND OF LIKE THE ORIGINAL BUNDLE. WHEN WE TALK ABOUT HOMEOWNERSHIP, THERE IS A TIE TO POLITICS BECAUSE KAMALA HARRIS HAS MADE SUPPORTING THE U.S. David Gura, Bloomberg News HOUSING MARKET ONE OF HER MAIN ISSUES AS SHE HEADS INTO THE DEBATE AGAINST FORMER PRESIDENT TRUMP. . THE TWO GEARING UP FOR THEIR ONE AND ONLY SCHEDULED DEBATE AT 9:00 P.M. EASTERN IN PHILADELPHIA. THE AGREED TO A 90 MINUTE EVENT WITH NO AUDIENCE, NO OPENING STATEMENTS AND MICROPHONES MUTED DURING THE OTHER'S TURN TO SPEAK. DAVID GURA HAS MORE ON THIS. HEADING INTO THIS, WE KNOW BOTH SIDES WERE PREPARING IN THEIR OWN SPECIFIC WAYS FOR THIS UPCOMING DEBATE. THERE IS NOTHING TO DRAW ON HERE. EITHER OF THEM HAVE MET EACH OTHER WERE TALKED TO EACH OTHER BEFORE. DAVID: IT WILL BE A DRAMATIC MOMENT WHEN THEY FACE EACH OTHER ON THE STAGE. IT DOES COMPLICATE THINGS. IMAGINE HOW THEY HAVE BEEN PREPARING IN DIFFERENT WAYS. VICE PRESIDENT HARRIS HAS BEEN IN PITTSBURGH FOR THE LAST FEW DAYS GOING OVER POLICY BRIEFINGS. . SHE HAD SOMEBODY PLAYING THE ROLE OF DONALD TRUMP. LOOKING AT FOOTAGE OF WHAT THE DEBATES WERE LIKE BETWEEN HILLARY CLINTON IN 2016 AND DONALD TRUMP TRYING TO GET A SENSE OF WHAT THE BODY LANGUAGE MIGHT BE LIKE AND HOW SHE MIGHT ACT IN RESPONSE TO IT. DONALD TRUMP TAKING A DIFFERENT APPROACH. . HE HAS BEEN ON THE ROAD DOING RALLIES AND HAVING POLICY CONVERSATIONS WITH SOME OF HIS CLOSEST ADVISORS. NOT DOING THE KIND OF TRADITIONAL DEBATE PREPARATION THEY WOULD HAVE SEEN IN PAST DEBATES. ROMAINE: I KNOW YOU ARE AT A SEPARATE SITE WHERE THEY KEEP THE MEDIA FURTHER AWAY FROM THE CONSTITUTION CENTER A FEW BLOCKS FROM INDEPENDENCE HALL. NO AUDIENCE HERE. YOU'RE GOING TO HAVE THE MODERATORS. THERE HAS BEEN A LOT OF DISCUSSION ABOUT THE PARAMETERS OF THIS DEBATE AND WHAT THE HARRIS CAMPAIGN AGREE TO. WHAT THE TRUMP CAMPAIGN APPEARED TO. HOW IS THIS GOING TO FEEL DIFFERENT FROM WHAT WE SAW WITH THE BIDEN TRUMP DEBATE IN LATE JUNE? DAVID: FUNDAMENTALLY THE RULES ARE VERY SIMILAR IF NOT IDENTICAL. I WALKED DOWN MARKET STREET WHERE THE DEBATE IS GOING TO BE. IT IS HEAVILY FORTIFIED. THEY ARE NOT ALLOWING OUTSIDE MEDIA OR AN AUDIENCE OF ANY SORT. WE ARE HERE TO COVER IT. IT IS GOING TO FEEL IN A LOT OF WAYS AT HIM SPHERICALLY LIKE WE SAW IN ATLANTA. WE KNEW SECONDS IF NOT MINUTES INTO THE DEBATE SOMETHING WAS NOT GOING THE WAY THE PRESIDENT HOPED IT WOULD. IT WAS AN ODD DYNAMIC BETWEEN THE CANDIDATES TO SAY THE LEAST. WE WILL LOOK FOR ANY INDICATIONS OF HOW THIS MIGHT PLAY OUT OVER THE COURSE OF TONIGHT. FUNDAMENTALLY THE RULES, THE PARAMETERS ARE THE SAME AS WE SAW IN ATLANTA. . THIS WAS HARD-FOUGHT THE LAST FEW WEEKS. . THERE WAS A ROBUST ARGUMENT AMONG BOTH CAMPAIGNS ABOUT MEETING THE MICROPHONES. HAVING ONE MICROPHONE MUTED WHEN ANOTHER CANDIDATE WAS ANSWERING A QUESTION. THAT IS SOMETHING THE TRUMP WANTED TO BE IN PLACE. THE HARRIS CAMPAIGN DID NOT WANT. SUCH A SIGNAL MOMENT FOR HER DURING HER LAST DEBATE AGAINST MIKE PENCE WAS WHEN HE KEPT UP -- HE KEPT INTERRUPTING HER SHE WAS ABLE TO SAY COUPLE TIMES I'M SPEAKING. THAT WAS MADE VIRAL. HARRIS CAMPAIGN WAS HOPING FOR THE OPPORTUNITY FOR ANOTHER MOMENT LIKE THAT. WE WILL SEE IF THEY GET ONE. SCARLET:SCARLET: THERE WAS A RECENT POLL BUT THE NEW YORK TIMES AND SIENA COLLEGE THAT FOUND THE RACE IS NOT AN. TRUMP LEADING HARRIS BY 48 TO 47%. IT IS BASICALLY DEAD SPLIT HERE. IN TERMS OF WHAT THE POLLS INDICATED, WHAT ARE VOTERS GOING TO BE LISTENING FOR? WHAT ARE THEY WANT TO HEAR FROM KAMALA HARRIS OR FORMER PRESIDENT TRUMP? DAVID: THAT POLL THAT YOU ARE CITING CONFIRMED WHAT A LOT OF PEOPLE INCLUDING ON THE CAMPAIGNS EXPECTED. IT IS GOING TO BE DECIDED ON A RAZORS EDGE. IF YOU LOOK INTO THOSE NUMBERS, THE THING THAT STANDS OUT TO ME IS THE FACT WHEN YOU LOOK AT THOSE WHO WERE PULLED WHO WANT TO KNOW MORE ABOUT A CANDIDATE, MORE THAN A QUARTER SAY THAT ABOUT VICE PRESIDENT HARRIS. DONALD TRUMP IS A KNOWN QUANTITY THE AMERICAN ELECTORATE KNOWS WHAT HE STANDS FOR AND HOW HE ACTS. I DON'T THINK THE SAME THING IS TRUE IF YOU LOOK AT THE POLL NUMBERS FOR VICE PRESIDENT HARRIS. IF THIS IS THE ONLY OPPORTUNITY FOR THESE CANDIDATES TO MEET ON STAGE AND CURRENTLY IT IS, IT IS THE ONLY DEBATE ON THE CALENDAR BEFORE ELECTION DAY, IT IS A HUGELY IMPORTANT MOMENT FOR HER TO ANSWER SOME OF THE QUESTIONS VOTERS MAY HAVE ABOUT HER BACKGROUND, WHAT IS IMPORTANT TO HER, WHAT POLICY SHE PRIORITIZES AND HOW SHE MIGHT APPROACH BEING PRESIDENT IF SHE WERE ELECTED IN NOVEMBER. ROMAINE: DAVID GURA ON THE GROUND IN PHILADELPHIA. BLOOMBERG TELEVISION AND RADIO WILL HAVE SPECIAL COVERAGE OF ABC'S PRESIDENTIAL DEBATE BETWEEN THE TWO CANDIDATES. ARE COVERED STARTS AT 8:00 A.M. EASTERN. THE DEBATE KICKS OFF AT 9:00 P.M. FROM NATIONAL CONSTITUTION CENTER. BACK IN NEW YORK WE STICK WITH POLITICS AND TAKE A CLOSER LOOK AT WHAT CEOS HAVE ON THEIR MIND. OUR NEXT GUEST SAYS GEOPOLITICS IS OCCUPYING THE MINDS OF GLOBAL CEOS IF THEY WANT TO WITHSTAND THE THREAT OF DISRUPTION. Courtney Rickert McCaffrey, EY COURTNEY IS GLOBAL STRATEGY INSIGHTS LEADER AT EY. GREAT TO SEE YOU HERE. LET'S TALK ABOUT THAT BECAUSE GEOPOLITICS MORE SO THAN THE LAST ELECTION IS FRONT AND CENTER NOT ONLY FOR CEOS BUT FOR A LOT OF REGULAR FOLKS ON THE GROUND. WHAT IS IT SPECIFICALLY WITHIN THE GEOPOLITICAL REALM CEOS ARE FOCUSED ON? >> THERE IS A LOT TO BE SURE. A FEW OF THE MAIN QUESTIONS WE GET ASKED A LOT FROM CEOS AND BOARD MEMBERS IS AROUND SUPPLY CHAIN DYNAMICS. SUPPLY CHAIN DIVERSIFICATION. THINKING THROUGH THE RAMIFICATIONS AND HOW GEOPOLITICS PLAYS A BIG ROLE IN THOSE STRATEGIC DECISIONS. A BIG PART OF THAT IS DYNAMICS BETWEEN CHINA AND THE U.S., THE E.U. AND CHINA, THAT TRILATERAL RELATIONSHIP IS ON THE MINDS OF A LOT OF CEOS IN TERMS OF HOW THEY ARE THINKING ABOUT THEIR GLOBAL FOOTPRINTS, GLOBAL STRATEGIES AND SUPPLY CHAINS. ROMAINE: WHAT CAN THEY DO? THIS IS EFFECTIVELY OUT OF THEIR CONTROL. THIS IS AN ELECTORAL DECISION. THEY WILL HAVE TO LIVE WITHIN THE MATTER WHO ENDS UP IN OFFICE. DO THEY START TO MAKE CHANGES IN ANTICIPATION OF WHAT HAS HAPPENED? DO THEY WAIT UNTIL YOU GET AN INAUGURATION IN THE CABINET AND THE OTHER ADMINISTRATOR IS IN PLACE TO REACT TO WHAT THE NEW WORLD ORDER IS GOING TO BE? COURTNEY: WE HAVE SEEN A LITTLE BIT OF ALL OF THE ABOVE. IT DEPENDS ON THE COMPANY'S FOOTPRINT. THERE SECTOR, THEIR RISK TOLERANCE. WHAT WE ARE SEEING A LOT OF CEOS DO IS USE SCENARIO ANALYSIS TO TRY TO PLAN AHEAD. SOME OF THEM ARE GAMING OUT THOSE SCENARIOS, SEEING THERE ARE SOME MOVES THEY CAN MAKE NOW THAT WOULD POSITION THEM NO MATTER WHO WINS THE ELECTION. OTHERS ARE HOLDING THEIR GROUND A LITTLE BIT TO SEE HOW THINGS PLAY OUT. WE ARE SEEING 98% OF CEOS TELL US THEY ARE ACHING STRATEGIC CHANGES IN RESPONSE TO THE GEOPOLITICAL ENVIRONMENT. SCARLET: IS EVERY INDUSTRY AFFECTED IN THE SAME WAY? TECHNOLOGY COMPANIES OBVIOUSLY HAVE A LOT TO CONTEND WITH EVEN THE DIFFERENT GOVERNMENT RESPONSES AND ACTIONS THEY ARE TAKING. CONSUMER FACING COMPANIES HAVE TO DEAL WITH BOYCOTTS OF CERTAIN KINDS OF PRODUCTS. HOW ARE THEY RESPONDING TO THIS PARTICULAR SITUATION ON THE GROUND VERSUS WHAT THEY ARE HEARING IN TERMS OF WHAT COULD HAPPEN? COURTNEY: THERE ARE DIFFERENCES BY SECTOR. MATTER WHAT SECTOR A COMPANY IS IN, THEY FEEL GEOPOLITICS IN SOME WAYS. WE HAVE SEEN IS GOVERNMENTS ARE TARGETING POLICY ACTIONS. BOTH THE CARROTS AND THE STEAKS AT WHAT THEY CONSIDER TO BE STRATEGIC SECTORS FOR NATIONAL ECONOMIES, FOR THEIR GEOPOLITICAL COMPETITIVENESS GOING FORWARD. TECHNOLOGY TOPS THE LIST THERE. WE ARE SEEING INCREASING POLICY ACTIONS AROUND ELECTRIC VEHICLES AND THAT ENTIRE SUPPLY CHAIN. WE ARE SEEING MORE ACTIVITY IN THE BIOTECH SPACE. SCARLET: HOW DOES THIS IMPACT COMPANY'S ABILITIES TO GROW THROUGH EXPANSION? TO BY OTHER COMPANIES OR BUYING THEIR SUPPLIER OR GETTING MORE OF A FOOTHOLD THROUGH M&A. COURTNEY: WHAT WE HAVE SEEN IS THE POLICIES GOVERNMENTS ARE USING TARGET INVESTMENTS IN A LOT OF CASES. WHAT WE ARE SEEING IS MERGERS AND ACQUISITIONS ARE A LOWER SHARE OF THE OVERALL M&A MARKET IN THE PAST. WHAT WE ARE SEEING IS THERE ARE MORE OPPORTUNITIES FOR M&A ACROSS THE BORDER BETWEEN GEOPOLITICAL FRIENDLY COUNTRIES. BETWEEN RIVALS, THOSE OPPORTUNITIES ARE GOING DOWN. OPPORTUNITIES EXIST. THEY ARE SHIFTING IN RESPONSE TO THE GEOPOLITICAL ENVIRONMENT. ROMAINE: THIS IS MORE OF A LONGER-TERM QUESTION BUT DOES THIS CHANGE THE COMPLEXION OF WHO ENDS UP BECOMING A CEO? THE IDEA THAT BOARDS HAVE TO CONSIDER A SKILL SET THAT CEOS WHO HAVE BEEN THERE FOR A WHILE DID NOT HAVE TO CONFRONT THESE ISSUES AND MAY ARE NOT PREPARED FOR. WHEN THEY TALK ABOUT NEW CEOS, DO YOU NEED SOMEBODY CUT FROM THE CLOTH OF BEING A DIPLOMAT OR ABLE TO RUN A SCENARIO ANALYSIS AND FIGURE OUT THE THINGS GOING ON? COURTNEY: I WOULD CERTAINLY AGREE WITH THAT STATEMENT. THE SKILL SETS OF CEOS, WHAT IS NEEDED IN THE BUSINESS ENVIRONMENT DOES CHANGE FROM DECADE TO DECADE. WHAT WE ARE SEEING NOW IS INABILITY TO UNDERSTAND THE GEOPOLITICAL ENVIRONMENT. TWO TASK YOUR EXECUTIVE TEAM WITH UNDERSTANDING HOW IT AFFECTS YOUR COMPANY IN PARTICULAR. BEING ABLE TO INCORPORATE THE INTELLIGENCE INTO HOW DECISIONS ARE MADE IS A KEY SKILL SET. SCARLET: WHAT KIND OF TIMEFRAME ARE THE CEOS THINKING OF WHEN THEY ARE LOOKING AT DECISIONS THAT CAN -- THEY CAN MAKE BASED ON THE SHIFTING GEOPOLITICAL LANDSCAPE? WE SEEM TO SWING WILDLY FROM ONE ADMINISTRATION TO THE NEXT. COURTNEY: I WOULD BROADEN IT A LITTLE BIT. THIS HAS BEEN THE YEAR OF THE GLOBAL ELECTION SUPER CYCLE. THE U.S. IS ONE OF MANY ELECTIONS THAT HAS HAPPENED THIS YEAR AFFECTING 60% OF GLOBAL GDP HAS GONE TO THE POLLS THIS YEAR. WHAT WE ARE SEEING IS CEOS HAVE SHORT-TERM AGENDAS AND THEY ARE TRYING TO LOOK OUT AS FAR AS THEY CAN MUCH BEYOND THAT IT DOES GET VERY HARD TO FORECAST WHERE THE WORLD IS HEADING. GLOBAL GEO STRATEGY INSIGHTS LEADER AT EY. THANK YOU SO MUCH. HOW MUCH DO YOU THINK GEOPOLITICS IS GOING TO COME UP IN TONIGHT'S DEBATE? SCARLET: I HAVE PRETTY LOW EXPECTATIONS FOR THIS DEBATE FOR OBVIOUS REASONS. I AM SURE -- I HAVE NO DOUBT THE MODERATORS WILL ASK. WHETHER THEY ACTUALLY GET RESPONSES THAT ARE SUBSTANTIVE. , THAT REMAINS TO BE SEEN SCARLET: THAT IS A REALLY GOOD POINT. WHAT -- ROMAINE: WHAT BAR ARE YOU GOING TO TO WATCH THIS? SCARLET: I'M NOT GOING TO A BAR. ROMAINE: YOU ARE GOING TO SIT ON YOUR COUCH? SCARLET: LOOK THROUGH MY HANDS. ROMAINE: MAYBE PUT ON SOME 3D GLASSES. SCARLET: THERE IS A LOT OF ANTICIPATION BEFORE TOMORROW’'S CPI REPORT. WHEN IT COMES DOWN TO A COME AS A GOING TO ANSWER THE QUESTION OF WHETHER THE FED IS GOING TO CUT BY 25 OR 50 BASIS POINTS? ROMAINE: THE MARKET OBSESSES OVER THESE THINGS. MAYBE THAT GIVES THEM MORE COMFORT THE FED WILL DO WHAT MOST PEOPLE THINK IT IS GOING TO DO DEPENDING ON WHAT THAT NUMBER IS TOMORROW. IT GIVES THIS IDEA YOU HAVE THE MARKETS ON EDGE. IT IS NOT JUST ABOUT THE REPORT. IS ABOUT THIS COMMENTARY WE GOT OUT OF THE BANK EXECUTIVES TODAY. THE DEBATE TONIGHT. WHAT THE FED DOES NEXT WEEK. . WE ARE GOING TO HEAD TO ANOTHER EARNINGS SEASON. IF YOU ARE AN INVESTOR, THIS IS NOT THROUGH A DART AT THE BOARD KIND OF MARKET WE HAD AT THE START OF 23 AND 24. SCARLET: THE NASDAQ AND S&P 500, LIVING UP TO ITS RAPID DEBT ITS REPUTATION AS A VOLATILE MONTH FOR STOCKS. SCARLET: INVESTORS ON EDGE WAITING FOR TOMORROW'S CPI PORT DO OUT -- CPI REPORT DUE AT 8:30 A.M. JOINING US FOR MORE ON THIS IS STUART PAUL OF BLOOMBERG ECONOMICS. IT WILL BE NEXT WEDNESDAY WHEN THE FED DOES MAKE ITS DECISION. INVESTORS ARE COMFORTABLE WITH THIS NARRATIVE INFLATION HAS MODERATED APPROACHING THE 2% TARGET. IS NO LONGER THE RISK IT ONCE WAS. DO YOU SEE ANY REASON FOR TOMORROW'S PRINT TO STRAY FROM THAT NARRATIVE? >> OUR BEST ESTIMATE FOR HEADLINE CPI IS 0.15 PERCENT MONTH ON MONTH. THE KNIFE EDGE ESTIMATE WITH THE BLS DOES IT'S ROUNDING. WE THINK IT IS GOING TO ROUND UP TO 0.2% CONSISTENT WITH WHAT WE HAVE SEEN THE PAST TWO MONTHS. WE DON'T THINK THERE IS GOING TO BE THAT MAJOR UPSIDE SURPRISE THAT WOULD KNOCK THE FED ALL FOR CUTTING TRACK IT -- CUTTING TRACK. YOU CAN SEE HEADLINE INFLATION A MONTHLY BASIS. IT LOOKS LIKE THE ANNUAL MEASURE OF COURSE YOU IS GOING ON. OUR BEST ESTIMATE IS IT AT THREE POINTS -- PUTS IT AT 3.2% YEAR-OVER-YEAR. WE ARE SEEING THE STARTLING OUT-OF-COURT PC. ROMAINE: WHAT HAS BROUGHT US TO THAT LONG LAST MILE? WE CAN POINT TO THE FED AND WHAT IT DID TO TAMP INFLATION DOWN THERE WAS A LOT MORE TO IT THAN THAT. STUART:STUART: THERE WAS THE ALLEVIATION OF SUPPLY CHAIN BACK LOGS AND OTHER SUPPLY CHAIN SNARLS THAT HELPED CONTRIBUTE TO THE DISINFLATION. WE NOW HAVE ACTUAL DEFLATION IN GOODS. THAT IS THE SORT OF THINGS WE HAVE EXPERIENCED FOR ALMOST A DECADE BEFORE THE PANDEMIC. WE HAVE SEEN A LOT OF DISINFLATION IN SHELTER. AT THIS POINT THE DISINFLATION WE ARE SEEING IS VERY SLOW. WE ARE GETTING KNOCK ON EFFECTS FROM PAST INFLATION. AUTO PRICE INSURANCE. HOME INSURANCE. THOSE OF THE THING SUPPORTING INFLATION BETTER MAKING FOR THE LONG LAST MILE. IT IS GOING TO BE A BIT STICKY GETTING TO THE 2% INFLATION. SCARLET:SCARLET: ONCE THE INSURANCE COMPANIES TACK ON THE EXTRA PREMIUMS, THEY ARE NOT GOING TO TAKE IT AWAY. CPI'S TOMORROW. PPI ON WEDNESDAY. FED PAYS ATTENTION TO CORE PCE. WILL WE GET ENOUGH OF A READ TO UNDERSTAND WHAT CORE PCE WILL LOOK LIKE? STUART: WE ARE GOING TO GET MOST OF THE COMPONENTS FROM CPI. SOME OF THE PRETTY SWING EFFECT -- OF THE BIG SWING FACTORS EXCLUDING SHELTER, SOME OF THE MAJOR SWING FACTORS COME FROM PPI. ONE OF THE MOST IMPORTANT IS FINANCIAL SERVICES. PARTICULARLY PORTFOLIO MANAGEMENT SERVICES. PART OF THE WAY THAT IS CALCULATED COMES FROM -- THERE IS A LONG LAG TO IT. IS A THREE AND SIX MONTH MOVING AVERAGE THAT FEEDS IN FROM PPI AND INTO PCE. BECAUSE IT MOVES SLOWLY, THE EQUITY PRICE MOMENTUM WE SAW IN THE EARLY ART OF THE SUMMER IS GOING TO BE FEEDING IN. THAT IS GOING TO BE UNDERGIRDING THE PCE READING THAT MATTERS FOR THE FED. ROMAINE:ROMAINE: WHEN WE TALK ABOUT THE HEALTH OF THE ECONOMY, THERE WAS A LOT OF HATE TODAY FROM THE CONFERENCE. A LOT OF EXECUTIVES TALKING ABOUT VARIOUS THINGS. SOME OF IT TALKING ABOUT THE DROP IN INTEREST RATES. TALKING ABOUT A TERRIER RATION OF AUTO LOANS AS WELL AS A FEW OTHER FOLKS WHO SEEM TO SUGGEST YOU ARE DEALING WITH A CONSUMER THAT IS NOT JUST TAPPED OUT BUT FALLING BEHIND HER POTENTIALLY FALLING BEHIND ON PAYMENTS HOW. MUCH OF THAT HAS TO FACTOR INTO THE FED DECISION-MAKING NEXT WEEK OR THE DISCUSSION THEY HAVE UNDER THE TWO DAY MEETING? STUART: IT GOES INTO THE FULL SCOPE OF EVERYTHING THEY ARE CONSIDERING. WE ARE SEEING MORE BANKRUPTCY FILINGS. PERSONAL AND CORPORATE BANKRUPTCY FILING. WE ARE SEEING DOING QUINCY ON ALL CONSUMER LOANS INCLUDING AUTO LOANS AND UNSECURED LOANS LIKE CREDIT CARDS. WHEN THE FED IS CONSIDERING THE HEALTH OF THE CONSUMER, THEY ARE NOT JUST THINKING EVERYTHING IS A PARTY AND CONSUMERS ARE SPENDING LINK FOR -- ARE SPENDING FRIVOLOUSLY. THEY ARE SEEING CONSUMERS TAPPED OUT. THEY'RE TRYING TO MAKE ENDS MEET ON CREDIT. THAT MEANS SOME OF THEIR PAYMENTS ON BILLS ARE FALLING BEHIND. ROMAINE: STUART PAUL, ONE OF THE BEST IN THE BUSINESS AT BLOOMBERG ECONOMICS. A CLOSER LOOK AT THE CPI REPORT SCHEDULED FOR 8:30 A.M. WASHINGTON TIME. TEAM SURVEILLANCE WILL HAVE FULL COVERAGE OF THE. IF YOU ARE LOOKING FOR THE INFLATIONARY OR DEFLATIONARY TRENDS, MAYBE LOOK AT YOUR GROCERY BILL. CONSUMERS ARE GETTING SOME RELIEF. NEW DATA SHOWING ONLINE GROWTH GRADES -- ONLINE GROCERY PRICES ARE PLUNGING BY THE MOST SINCE AUGUST. I WAS FASCINATED BY THIS WHY THEY ARE SEPARATING OUT THE ONLINE STUFF FROM IN STORE. IS THIS A TRUE DEFLATIONARY CYCLE OR THE FACT WE HAVE GONE BACK TO THE STORES AFTER RELYING ON INSTACART DURING THE PANDEMIC? SCARLET: I'M NOT SURE HOW MANY PEOPLE BY MOST OF THEIR GROCERIES ONLINE. MOST PEOPLE ARE NOT AT HOME TO ACCEPT THEIR GROCERIES. SITTING UNDER THE SUN. SOMEONE MIGHT TAKE IT OR IT MIGHT BE RAINED UPON. OVER THE LAST TIME YOU BOUGHT ALL OF YOUR GROCERIES ONLINE? AT LEAST THE MAJORITY OF IT. ROMAINE: MY WIFE DOESN'T ALLOW THE. . SHE IS AGAINST ALL THAT STUFF. SHE WANTS TO GO TO THE STORE AND TOUCH THE PRODUCE AND ALL THAT STUFF WHICH I GET. MAYBE THIS -- THIS GETS TO THE POINT OF ARE YOU SEEING THIS JUST IN THE ONLINE THINGS? ? IS THAT LIKE FEES COMING DOWN? OR IS THAT THE ACTUAL PRICE OF EGGS GOING DOWN VERSUS WHAT I'M GOING TO SEE IN THE STORE? SCARLET: THAT IS TRUE. LET'S NOT FORGET ANYTHING THAT IS ONLINE IS SUBJECT TO DYNAMIC PRICING. HOW STABLE ARE THOSE PRICES? THEY COULD CHANGE MINUTE BY MINUTE. THEY COULD CHANGE BASED ON WHETHER YOU PUT SOMETHING IN YOUR SHOPPING CART AND YOU LEFT IT FOR 10 MINUTES AND THEN CAME BACK. ROMAINE: A COMPLEX ECONOMY. OFFERING SOME RELIEF FOR CONSUMERS. A LOT GOING ON THIS WEEK. A LOT GOING ON THE NEXT 24 HOURS. WE ARE GOING TO SET YOU UP WITH WHAT TO WATCH WHEN WE COME BACK. THIS IS THE CLOSE ON BLOOMBERG. What To Watch ROMAINE: LET'S SET YOU UP FOR WHAT MARKETS ARE GOING TO HAVE THEIR EYES ON THE NEXT 24 HOURS. WE HAVE TO START WITH TONIGHT. THE FIRST AND POTENTIALLY THE ONLY PRESIDENTIAL DEBATE BETWEEN KAMALA HARRIS AND DONALD TRUMP. THE RULES ARE GOING TO BE THE SAME AS TRUMP'S DEBATE WITH BIDEN IN THAT THERE IS NO LIVE AUDIENCE. THE MICROPHONES WILL BE MUTED. IT WILL BE ONE HOUR AND A HALF LONG. I THING I'M GOING TO WAIT FOR THE HIGHLIGHTS THE NEXT DAY. ROMAINE: WE FORGET THERE WAS A PRESIDENTIAL DEBATE BETWEEN BIDEN AND TRUMP. THAT WAS BACK ON JUNE 22. YOU HAD THAT ATTEMPTED ASSASSINATION ON TRUMP IN JULY AND BIDEN DROPPING ON JULY 21. FULL COVERAGE ON BLOOMBERG STARTING AT 8:00 P.M. EASTERN. THE ACTUAL DEBATE STARTS AT 9:00 P.M. WE DO GET SOME ECONOMIC DATA POINTS AT 7:00 A.M. TOMORROW. SCARLET: THE REALLY IMPORTANT ONE IS 7:00 A.M. ROMAINE: WE ALSO GET 8:30 A.M. EASTERN TIME THOSE MONTHLY U.S. CPI NUMBERS WE WERE TALKING ABOUT WITH STUART PAUL. SCARLET: AT 10:20 AM, THE CEO OF NVIDIA WILL BE SPEAKING AT A GOLDMAN SACHS TECH CONFERENCE WITH DAVID SALOMON IN CHICAGO. THAT WILL BE FASCINATING ESPECIALLY AS PEOPLE ARE WAITING TO HEAR ANY KIND OF UPDATE FROM HIM THAT MAY DIFFERENT -- THAT MAY DIFFER FROM WHAT HE SAID IN THE EARNINGS CALL. ROMAINE: MTV'S BMA'S ALSO TOMORROW. THAT IS 8:00 P.M. HOSTED BY MEGAN THEE STALLION. THANKS FOR JOINING US ON THE CLOSE. WILL BE BACK TOMORROW FOR ALL OF YOUR MARKETS COVERAGE. FOR ALL YOUR POLITICS COVERAGE STICK AROUND. A LOT GOING ON TONIGHT. BALANCE OF POWER TEAM ON DECK AT THE TOP OF THE HOUR RIGHT HERE ON BLOOMBERG.