Nasdaq Falls 1% as Nvidia Hit Before Before Earnings | Bloomberg: The Close 8/26/2024

The Close Begins STICKING WITH US ON BLOOMBERG TV, THE CLOSE IS NEXT. >> THE COUNTDOWN IS ON, EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ALIX: LIVE FROM STUDIO TWO IN NEW YORK, I'M ALIX STEEL. GREAT TO HAVE YOU HERE WITH US, VONNIE. WE ARE SEEING SOME MARKET MOVES SO LET'S GET A CHECK ON WHERE WE STAND. THE S&P IS DOWN .3%. WE ARE OFF THE LOWS OF THE SESSION BUT IT IS ABOUT THE CHIP STOCKS. THE STOCKS ARE DOWN ALMOST 2% OFF THE LOWS BUT IT WEIGHED ON THE BROADER TECH SECTOR -- TECH SECTOR AS THE RALLY WE SAW LAST WEEK STALLS OUT. >> EQUITIES ROLLING OVER DRIVEN DOWN BY THE CHIPS. GOLDMAN SACHS STILL SEES ALL-TIME HIGHS THIS WEEK. THEY SAY ROBOTS WILL FURTHER STOKE FOMO. MARY DALY SAYS ADJUSTING POLICY IS APPROPRIATE BUT THE PACE IS STILL UNKNOWN. AND PRICES RALLY FOR OIL AS USED IN LIBYA SAYS IT WILL SHUT DOWN OIL PRODUCTION AND EXPORTS AMID ALREADY HEIGHTENED TENSIONS BETWEEN ISRAEL AND HEZBOLLAH. ALIX: THE S&P CLOSING WITHIN .6% OF AN ALL-TIME HIGH LAST WEEK. YOU CAN SEE THE DRAWDOWN WE SAW IN EARLY AUGUST AND HOW WE HAVE COME BACK FROM THAT TO ALMOST NEUTRAL. THE QUESTION BECOMES, WHAT HAPPENS THIS WEEK? WE HAVE A MARKET EVENT WITH NVIDIA. IT IS -- HAVE WE FORGOTTEN THE LAST FOUR WEEKS? >> I THINK I WOULD BET ON IT CHANGING THE CALCULUS BECAUSE WHAT HASN'T? LET'S KICK THINGS OFF AND GET Mo Haghbin, Invesco THE GLOBAL INVESTMENT HEAD OF SOLUTIONS WITH INVESCO. IS THIS A CATALYST, THE SELLOFF IN SEMIS OR ARE WE JUST TREADING WATER? >> NICE TO BE BACK WITH YOU IN STUDIO. I THINK THIS WEEK WILL BE AN IMPORTANT WEEK. WE HAVE THE EARNINGS REPORT WITH THE AI THEME -- WHETHER THAT WILL SHOW RESILIENCE. WE HAVE JOBLESS CLAIMS AND CORE INFLATION. PCE IS THE PREFERRED MEASURE FOR THE FED. WHAT WILL BE INTERESTING IS MORE ON-THE-JOB SIDE THAN THE INFLATION SIDE. I THINK THE FED HAS PIVOTED AWAY FROM INFLATION AND RIGHTLY SO. IF YOU LOOK AT YOUR OVER YOUR INFLATION, YOU ARE GETTING CLOSE TO THE 2% TARGET. WHAT I WILL BE WATCHING CLOSELY THIS WEEK IS AROUND JOBS AND ARE WE SEEING THE UNEMPLOYMENT RATE TAKE UP HERE ALIX: BEFORE WE GET A JOBS WE HAVE NVIDIA. I'M OBSESSED WITH WHETHER IT WILL BE A MARKET EVENT OR AN NVIDIA EVENT. IF IT IS JUST AN NVIDIA EVENT, CAN THE S&P CONTINUED A GRIND HIGHER WITHOUT THE SEMIS? >> I THINK IT IS A MARKET EVENT. IN A WAY, YOUR VIEW ON NVIDIA IS A MACRO BET BECAUSE A LOT OF THE MARKET RETURN YOUR TODAY AND THE VOLATILITY IS COMING FROM THAT SECTOR AND THAT STOPPED. SOMETHING TO BE WATCHING CAREFULLY. LONGER THE QUESTION IS, IS THE UNEMPLOYMENT AND EMPLOYMENT RATE IN THE U.S. STARTING TO TAKE UP? WHAT WE HAVE SEEN WITH UNEMPLOYMENT IS AS IT TICKS UP, IT DOESN'T GO BACK DOWN. WHERE WE HAVE BEEN CAUTIOUS IN THE PORTFOLIO IS AROUND WHAT WE ARE SEEING IN THE LABOR MARKET. >> WE JUST SPOKE WITH MARY DALY AND THEY WATCH THE MARKET CLOSELY. THEY TALKED TO SOME OTHER BUSINESSES AROUND THE SAN FRANCISCO AREA AND SHE DOESN'T SEE ANY REAL WEAKNESS IN THE LABOR MARKET. >> IT IS INTERESTING. IT DEPENDS ON HOW YOU LOOK AT IT AND THERE IS A SUPPLY RELATED ISSUE THAT I THINK IS BUILT INTO SOME OF THE REPORTING AND SOME OF THE NUMBERS WE ARE SEEING. BUT IT IS HARD TO DENY -- THAT WE ARE SEEING A SOFTENING ECONOMY AND JOBS MARKET. TO ME, TO YOUR EARLIER COMMENTS, WHAT IS THE PATH OF RATES AND NOT WHETHER THEY ARE COMING DOWN. THAT HAS BEEN THE FOCUS. ALIX: THAT IS RIGHT IT WAS A HEAD SCRATCHER. THE RUSSELL IS OUTPERFORMING TODAY WHICH I WOULDN'T HAVE EXPECTED OF WE WERE WORRIED ABOUT GROWTH. >> YOU ARE ASKING AN INTERESTING QUESTION BECAUSE WHAT WE ARE SEEING IS A RELATIONSHIP BETWEEN RATES AND THE EQUITY SECTOR BREAK APART. WHAT USED TO BE THE CASE IS WHEN RATES WENT UP, THAT WAS GENERALLY A BAD THING FOR DEFENSIVE SECTORS BECAUSE THEY HAVE MORE INTEREST RATE SENSITIVITY. THEY HAVE BIGGER CASH FLOWS OUT IN THE FUTURE. WE ARE SEEING THE OPPOSITE. WHEN RATES ARE GOING UP, IT IS NOT A BAD THING FOR TECH. WHEN RATES ARE GOING DOWN IT HAS BEEN A GOOD THING FOR SMALL CAPS. IT IS AN INTERESTING RELATIONSHIP BETWEEN RATES AND EQUITY SECTORS WHICH HISTORICALLY HAS BEEN WHAT WE'VE NOT SEEN IN QUITE SOME TIME. VONNIE: WILL THIS BE GOOD FOR ALL EQUITIES? >> WHAT IS GOING TO BE IMPORTANT IS WHAT IS BUT CUT, 25 BASIS POINTS OR 50? I THINK OF IT IS 50, THAT IS PROBABLY NOT GOOD FOR EQUITIES BECAUSE IT IS CONFIRMING WHAT WE ARE SEEING IN THE DATA WHICH IS THAT THE JOBS MARKET AND GROWTH ARE CHALLENGED. IF IT IS 25 THAT INDICATES THE FED IS NOT CONCERNED AND IT IS A SLOW RENORMALIZATION OF RATES. ALIX: IF THE FED CUTS NOT IN A RECESSION AND THEY ARE CUTTING TO NORMALIZE, DOES THAT CHANGE THE ROTATION YOU WOULD EXPECT IN A RATE CUTTING CYCLE? >> I THINK WHERE WE WOULD BE POSITIONED IN THIS CURRENT ENVIRONMENT AND I'M HAPPY TO TALK MORE ABOUT THIS IS MORE ON THE DEFENSIVE SIDE. WE TEND TO LIKE LARGER CAPITALIZATION, LARGER COMPANIES IN THE U.S. AND ABROAD AND WE HAVE A MORE HOME COUNTRY BIAS. OUR VIEW IS THAT THE SOFTENING DATA IS WHAT IS WHAT IS LEADING THE FED TO CUT AND THERE IS MORE OF A DEFENSIVE POSTURE REQUIRED IN THE PORTFOLIO. I'VE BEEN WITH YOU BEFORE OVER THE LAST SEVERAL QUARTERS AND I'VE BEEN PRO RISK ASSETS SINCE BEFORE COVID PUREE WE ARE NOW UNDERWEIGHT. THAT TELLS YOU ABOUT HOW WE ARE THINKING ABOUT THE CURRENT ECONOMIC ENVIRONMENT. VONNIE: IT IS A SLOWER WEEK IN THE LAST WEEK OF AUGUST. THERE IS PLENTY OF CATALYSTS. WILL THE MARKETS ATTITUDE CHANGE POST LABOR DAY? >> YOU HAVE SOME IMPORTANT THINGS HAPPENING IN THE FIRST TWO WEEKS OF SEPTEMBER. THE BIG EVENT IS THE JOBS MARKET ON SEPTEMBER 6. I THINK THE MARKET IS MORE REACTIVE TO DATA NOW THAN AT HAS BEEN BECAUSE EQUITIES HAVE BEEN STRETCHED AND RISK ASSETS HAVE BEEN ON A PRETTY NICE RUN. THE S&P IS UP 18% YEAR-TO-DATE. CORPORATE CREDIT SPREADS ARE TIGHT. ALL OF THAT UNDERPERFORMANCE WERE DRAWDOWN IN EQUITY MARKETS AND THE CREDIT MARKETS HAVE REVERSED AND WE ARE ACT TO ALL-TIME TIGHTS IN CREDIT AND ALL-TIME HIGHS IN EQUITIES. I THINK THE MARKET WILL BE MORE REACTIVE TO THE JOBS NUMBER. ALIX: YOU ARE CUTTING RISK APPETITE AFTER BEING RISK ON SINCE COVID. THAT IS AN IMPRESSIVE STATEMENT. ARE YOU CUTTING RISK APPETITE TO GO PURE --? >> OUR UNDERWEIGHT IN EQUITIES IN MOST CASES IS LIKE 5% RELATIVE TO OUR BENCHMARK. WHAT WE ARE NOT EXPECTING IS A BENCHMARK IN THE NEXT FEW QUARTERS. I DON'T THINK WE HAVE EXPERIENCED A RECESSION WITH LABOR MARKETS SO STRONG. WE HAVE SEEN SOME WEAKNESS BUT THE AVERAGE UNEMPLOYMENT RATE FOR THE U.S. IS WELL NORTH OF 5% AND WE ARE AT 4%. IN THE GRAND SCHEME OF THINGS, IT IS A STRONG LABOR MARKET WITH SIGNS OF WEAKNESS. VONNIE: AND MARY DALY USED THE TERM HIGHLY RESTRICTIVE FOR THE MONETARY ENVIRONMENT. WHAT IS THE OUTLOOK FOR THE CONSUMER? LAST TIME CONSUMER CONFIDENCE PERFORM BETTER THAN EXPECTED. >> WE DON'T SEE ANY MAJOR EXCESSES BUILDING UP FOR THE CONSUMER. THERE IS NOT OVERLEVERAGED IN THE SYSTEM. BUT THE SAVINGS RATE HAS GONE DOWN. WE ARE KIND OF BACK IN THE 2008, 2009 LEVEL WHICH SOUNDS SCARY BUT I DON'T THINK IT IS THAT BAD. WE HAD A LOT OF SPENDING POST-COVID. THE GOVERNMENT SHUT DOWN THE ECONOMY. WE REOPENED IT AND EVERYONE SPENT AND THERE WAS A HUGE AMOUNT OF STIMULUS PROVIDED TO THE MARKET TO SPEND. WE'VE SEEN -- WE ARE SEEING SOME OF THAT TAIL OFF WHICH IS NATURAL. THE CONSUMER DOESN'T SCARE ME. THE U.S. IS SUCH A RELIANT ECONOMY ON CONSUMER SPENDING. IT IS AN AREA TO WATCH CAREFULLY. BUT IT IS UNLIKELY WE WILL HAVE A RECESSION IN THE NEXT SEVERAL QUARTERS. THE PROBABILITY OF A RECESSION HAS GONE UP VERSUS THE BEGINNING OF THE YEAR WHICH IS INFORMING OUR DEFENSE OF COST YOU'RE IN THE PORTFOLIO. VONNIE: AND YOU HAVE TO WONDER IF THE ELECTION WILL CHANGE ALL OF THIS. THANK YOU FOR JOINING US. THE GLOBAL HEAD OF INVESTMENT SOLUTIONS WITH INVESCO. ALIX: BRENT CRUDE OIL CONTRACTS BUBBLING HIGHER. WHERE WTI AND BRENT COULD BE HEADING. VONNIE: AND GETTING A CARDIO BOOST, -- ALIX: SHARES OF BOEING CRUISING FOR A BRUISING. MORE BAD NEWS IS SENDING THE STOCK DOWN FURTHER TODAY. >> IT IS INCUMBENT ON ALL PARTIES IN THE REGION TO WORK TOWARDS DE-ESCALATION AND STABILITY. AND SO WE ARE FEVERISHLY WORKING IN CAIRO AS WE SPEAK WITH OUR TEAM AND THE TEAMS OF THE OTHER MEDIATORS AS WELL AS WITH THE ISRAELIS TO GET TO A CEASE-FIRE AND HOSTAGE DEAL. ALIX: THAT WAS JAKE SULLIVAN SPEAKING ON THE ISRAEL-LEBANON ATTACK AND THIS IS ONE ISSUE MOVING THE OIL MARKET. LEBANESE EASTERN GOVERNMENT SHUTTING DOWN EXPORTS WITH THE NEW ROUND OF CONFLICT. JOINING US IS DAVID. THE BIG QUESTION IS COMING IN Devika Krishna Kumar, Bloomberg News TERMS OF LIBYA, HOW LONG WILL THE SHUTDOWN LAST AND WILL IT SPREAD? >> ALL TRADERS ARE LOOKING FOR THE ANSWERS. LIBYAN OUTAGES DO GET SOLVED FAIRLY QUICKLY, A FEW DAYS. BUT IT DOES TEND TO HAVE RIPPLE EFFECTS ACROSS THE MARKET. INTERESTINGLY, THIS TIME AROUND THE MAIN LIBYA OILFIELD, HAS BEEN SHUT SINCE EARLY AUGUST. IF YOU WANT TO GET A SENSE OF HOW OIL MARKETS ARE UNDER ALL THE GEOPOLITICAL TENSIONS, YOU CAN SEE IT BY THE FACT THAT THE MARKET BARELY REACTED TO THAT NEWS. NOW YOU ARE GETTING THE RISK THAT ALMOST A MILLION BARRELS A DAY WILL NOW BE AFFECTED. VONNIE: LIBYA IS RESPONSIBLE FOR 4%. WHAT IS THE MAXIMUM IMPACT THIS COULD HAVE EVEN WITH A TOTAL SHUT OUT FOR A LONG TIME? >> IT COMES BACK TO THE QUESTION OF HOW LONG. WE ARE COMING INTO THE TIME OF YEAR IN THE OIL MARKETS WHERE THINGS SLOW DOWN A LITTLE BIT. WE ARE PAST THE P DEMAND OF SUMMER DRIVING SEASON. THE REFINERIES ARE STARTING TO GO TO MAINTENANCE WORK. THE QUESTION IS, HOW LONG WILL THE OUTAGE LAST? IF WE SEE DEMAND PICK UP AND SEE MORE SUPPLY OUTAGES, THIS COULD SEND OIL INTO THE MID-TO LATE 80'S. THIS IS INTERESTING FOR OPEC COMING UP AND WHETHER THEY WILL BRING BACK SOME OF THE BARRELS FOR THE SECOND HALF OF THE YEAR AS THEY WERE PLANNING TO. ALIX: I WAS WONDERING IF OPEC+ COULD SEE THIS AS AN OPPORTUNITY TO GET THEIR OIL BACK ONLINE IF THE OUTAGE CONTINUES. THEY HAVE SUCH A CAPACITY I HAVE A HARD TIME BELIEVING WE WILL GET INTO THE 90'S AND STAY THERE. >> THERE IS ALMOST A REPRICING OF THE RANGE. THE QUESTION BECOMES, WHAT HAPPENS WITH DEMAND? THERE IS SOFTNESS FROM CHINA AND IN THE U.S. WE ARE ALSO SEEING SOFTNESS AND INFLATION COOLING OFF AND INFLATION WAS A BIG PART OF IT. GASOLINE PRICES ARE SITTING AT THEIR LOWEST IN SIX MONTHS. THAT WILL CREATE ALMOST -- YOU ARE GOING TO HAVE TO BACK INTO THE POLICY AND WORK YOUR WAY BACK FROM HOW DEMAND IS LOOKING AND THEN OPEC WILL HAVE TO TAKE A VIEW ON THE OVERARCHING STATE OF THE MARKET. VONNIE: YOU SAID THESE PROBLEMS IN LIBYA GET SOLVED QUICKLY BUT YOU HAVE RUSSIA SUPPORTING THE MILITIAS, TURKEY IS SUPPORTING THE GOVERNMENT --WHO WANTS A SOLUTION TO THIS? >> HONESTLY, THE MARKET IS KEEN TO SEE THIS RESOLVED QUICKLY. THE MARKET DOESN'T LIKE UNCERTAINTY. THERE IS NO CLARITY IN TERMS OF HOW LONG THIS WILL LAST OR IF IT WILL ESCALATE FURTHER. ADDING TO THAT THE BACKDROP OF ISRAEL AND LEBANON. YOU HAVE A MARKET VERY ON EDGE. AND IF THE FUNDAMENTALS STATE THAT OIL MARKETS ARE NOT BULLISH, TRADERS DON'T HAVE THE CONVICTION TO TAKE ON A SHORT POSITION BECAUSE THERE IS A RISK WE COULD HAVE DEVELOPMENTS LIKE THIS OVER A WEEKEND. AND THEN YOU COME INTO AN OIL MARKET THAT IS UP 3% OR 4%. THAT IS SOMETHING TRADERS DON'T WANT TO RISK. WE ARE PRETTY BEARISH. WHICH GIVES TRADERS THE BELIEF THAT, GIVEN POSITIONING IS SO BEARISH, THAT WE COULD ACTUALLY SEE MORE OF A PICKUP AS TRADERS ARE LOOKING AT THOSE POSITIONS BUT THEY WILL NEED MORE CATALYSTS TO BREAK OUT OF A BEARISH MENTALITY THAT SET IN THIS WEEKEND. VONNIE: THANK YOU SO MUCH FOR YOUR TIME. ALIX: IT IS INTERESTING, LIBYA HAS LIGHT SWEET CRUDE SO I WONDER IF WE WILL SEE IT IN DIFFERENTIALS. COMING UP, GETTING PUMPED UP ON THE PLANET FITNESS STOCK. THIS IS THE CLOSE ON BLOOMBERG. ALIX: TIME NOW FOR SOME OF OUR TOP CALLS. A LOOK AT SOME OF THE BIG MOVERS. WE GO WITH A FITNESS THEME. FOOTLOCKER, BAIRD KICKING THE PRICE PER GET UP WHILE STICKING WITH A NEUTRAL RATING ON THE SHARES. THEY ARE SEEING SOME HEADWINDS FOR PROFIT. SHARES UP 1%. NIKE, LOWERING ITS PRICE TARGET ON THE SHARES TO 88. STICKING WITH A HOLD RATING. THE ANALYST SAYS NIKE IS FACING COMPETITIVE PRESSURES AS EVIDENCED BY THEIR SURVEY IN THE COMPANY HAS ALREADY LOST A MEANINGFUL CHUNK OF U.S. FOOTWEAR MARKET. SHARES UP 2%. AND PLANET FITNESS, BAIRD RAISING THE BAR MAKING IT A BULLISH AND FRESH PICKED FOR THE END OF THE GEAR. YOU'RE EXCITED BY THE VALUE PROPOSITION. AND THE MODEL SHOULD PROVE RESILIENT. SHARES UP 1.4%. THOSE ARE SOME YOUR TOP CALLS. VONNIE: WE GO BACK TO THE LAST CALL ON PLANET FITNESS AND BRING IN THE AND WAS BEHIND IT FROM BAIRD. JONATHAN, THANK YOU. Jonathan Kemp, Baird ONE OF THE REASONS WHY YOU HAVE UPGRADED YOUR PRICE TARGET IS THE NEW CEO. WHAT SHOWED HER STRATEGY BE TO ATTRACT MORE FRANCHISEES OR SOMETHING ELSE? JONATHAN: PLANET -- AS YOU KNOW IS THE LEADER OF THE GYM INDUSTRY WITH ALMOST 20 MILLION MEMBERS. VERY STRONG FRANCHISE MODEL. THE LAST YEAR THIS HAS BEEN A STORY IN TRANSITION AND PART OF THAT HAS BEEN LEADERSHIP CHANGE. THEY REPLACED THE CEO. SHE WILL BE MAKING A FEW ADDITIONAL HIRES. WE THINK OVER THE LAST YEAR THERE HAS ALREADY BEEN A LOT OF HEAVY LIFTING IN TERMS OF EFFORTS TO STRENGTHEN THE RETURNS ON BUILDING A NEW PLANET FITNESS FOR FRANCHISEES AND GOING FORWARD, A COMMITMENT TO LOOK AT THINGS LIKE MARKETING AND THE MEMBER EXPERIENCE TO CONTINUE TO MAKE UPGRADES THAT GOING INTO NEXT YEAR WE THINK COULD BE A BIG DRIVER. ALIX: WHO IS THE STRAIGHT UP COMPETITOR TO PLANET FITNESS? THEY ARE BASIC BUT HAVE A LOT OF VOLUME. WHO IS A GOOD COMPETITOR? JONATHAN: PLANET HAS BEEN A LONGTIME DISRUPTOR IN THE INDUSTRY. THEY LARGELY SCALED AND CREATED THE LOW-COST MODEL THAT HAS ATTRACTED A LOT OF MEMBERS. IN TERMS OF THE PUBLIC COMPANY LANDSCAPE, THERE REALLY ISN'T ANY OTHER COMPETITORS IN THE U.S. SOME OF THE COMPETITORS ARE IN THE PRIVATE SECTOR, BUT MUCH SMALLER. THAT IS WHERE WE THINK PLANET HAD GOOD SCALE ADVANTAGE. THEY SPEND OR THEN $300 MILLION ON MARKETING EVERY YEAR ACROSS THE SYSTEM AND THAT IS WHY WE THINK THERE IS A NEW OPPORTUNITY IF LEADERSHIP CAN GET MESSAGING AND MARKETING RIGHTS. VONNIE: IT IS FUNNY, WE LOOK THIS UP BECAUSE I WAS CURIOUS. SOHO HOUSE AND TIME LIFE GROUP -- THEY ARE NOT COMPETITORS IN THE DAILY WORLD. IT WAS HARD TO FIND SOMEONE THAT WOULD ALLOW YOU TO GO EVERY DAY FOR $15 PLUS AN ANNUAL FEE ALL UNDER $50. WHAT HAPPENS WHEN INTEREST RATES GO DOWN? DOES IT MAKE BUYING REAL ESTATE MORE ATTRACTIVE FOR FRANCHISEES? DO THEY RENT? JONATHAN: THERE ARE A COUPLE OF FACTORS. WE THINK, AS RELATED TO A LOWER INTEREST RATE ENVIRONMENT, OR A FALLING INTEREST-RATE ENVIRONMENT, TIES IN WITH SLOW DOWN WITH THE ECONOMY. WE SEE THAT IN OUR RESEARCH. OUR THOUGHT IS THAT THE VALUE PROPOSITION IS SO STRONG FOR PLANET FITNESS THAT WE DON'T EXPECT A MAJOR IMPACT TO THE COMPANY'S FUNDAMENTALS OR REVENUE GROWTH. WE EXPECT THE INCREMENTAL COST TO BUILD A UNIT WHETHER THAT IS TO FINANCE THROUGH INTEREST RATES OR THE COST OF CONSTRUCTION, THOSE ARE AREAS WE THINK COULD GET RELIEF INTO 2025. AND AS A RESULT, IF YOU LOOK AT THE STOCK PRICE, WE NOTED AN INVERSE CORRELATION TO INTEREST RATES. WHEN THEY HAVE FALLEN, THAT HAS BEEN POSITIVE FOR THE STOCK AND THAT IS WHAT WE ARE LOOKING FOR IN 2025. WE THINK THERE ARE TANGIBLE BENEFITS BUT ALSO SENTIMENT TAILWINDS IF WE SEE LOWER RATES INTO NEXT YEAR. ALIX: THE STOCK HAS HAD QUITE A RUN, A 52 WEEK HIGH AND QUITE SOLID. I WONDER HOW MUCH MORE JUICE SHORT-TERM CAN WE EXPECT FROM THE STOCK? JONATHAN: WE HAVE HAD AN OUTPERFORM RATING AND A FAVORABLE PRICE TARGET ON A 12 MONTH BASIS. OUR CALL TODAY ADDS AN EXTRA CONVICTION LEVEL. THAT IS GETTING AHEAD OF WHAT WE SEE IS A BETTER SET UP INTO 2020 FIVE. WE OUTLINED A BOLD CASE OF NORTH OF 100. BASED ON THE FUNDAMENTAL BACKDROP WE SEE GOOD BUT WE THINK THERE IS STILL A LOT OF ROOM TO RUN. BOSTOCK IS PUSHING A NEW 52-WEEK HIGH. EARLY 2023, WHEN THE STOCK WAS LAST AROUND THESE LEVELS, THE EARNINGS ARE 30% HIGHER THAN THEY WERE THEN. I WOULD ARGUE ON A PRICE TO EARNINGS METRIC, THE STOCK STILL LOOKS RELATIVELY INEXPENSIVE AND IS TRADING BELOW WHERE WE THINK IT SHOULD RELATIVE TO THE FRANCHISE GROUP. THAT IS WHERE WE SEE OPPORTUNITY IN ADDITION TO THE FUNDAMENTAL OATH OUTLOOK. ALIX: JONATHAN, THANK YOU SO MUCH FOR JOINING US. WE SHOULD -- I USED TO GO DO PLANET FITNESS AND PAY LIKE $10. PRINCIPAL CEO WEIGHS IN ON THE PACING OF THE INTEREST RATE CYCLE AS POWELL OPENS THE DOOR TO CUTS. THE PACE IS STILL IN QUESTION. ALIX: IT IS JUST ABOUT 3:30 IN NEW YORK. HAVE AN HOUR AWAY FROM THE CLOSING BELL AND STOCKS TRADING HEAVY. WE HEARD EARLIER TODAY FROM MARY DALY THESE SAN FRANCISCO FED PRESIDENT WHO SPOKE WITH MICHAEL MCKEE ON HOW SHE SEES THE RATE PATH CUT EVOLVING. >> TO MY MIND WE HAVE BEEN ON THIS PATH ARE READY TO ADJUST POLICY RATES FOR SEVERAL MONTHS. WE JUST NEED TO GET MORE CONFIDENCE, THAT INFLATION WAS TRULY ON ITS PATH TO 2%. I WANTED TO SEE THE LABOR MARKET COME INTO BALANCE BUT I THINK THAT HAS COMPLETELY HAPPENED. THE GOALS ARE NOW BALANCED AND THE TIME TO ADJUST POLICY IS UPON US. ALIX: THAT'S GOT MORE REACTION FROM Kamal Bhatia, Principal Asset Mgmt KAMAL BHATIA, PRESIDENT AND CEO OF PRINCIPAL ASSET MANAGEMENT. IT IS CLEAR THE FED WILL CUT IN SEPTEMBER. HOW MUCH THEY ARE GOING TO CUT AND HOW QUICKLY IS THE QUESTION. HOW DO YOU GUYS THINK ABOUT IT? KAMAL: I THINK AS YOU HEARD MARY DALY SAY, I THINK THEY HAVE MUCH MORE CONFIDENCE IN THEIR PATH FORWARD THAN THEY HAD THE LAST FEW MONTHS. THE BIG CHANGE FOR THEM IS THEY FEEL MORE CONFIDENT ABOUT INFLATION. THEIR HIGH IS ON THE LIVER MARKET. THE LABOR MARKET HAS WEAKENED. OUR VIEW IT IS THE SUPPLY OF LABOR COMING INTO THE MARKETPLACE RATHER THAN UNEMPLOYMENT WHICH I THINK IS GIVING THEM HIGHER CONFIDENCE ON THE PATH FORWARD. CLEARLY SEPTEMBER IS IN THE BOOKS AND THEY HAVE TO SEE HOW THE AUGUST JOB REPORT LOOKS. VONNIE: IT IS A LITTLE CONCERNING THOUGH, RIGHT? IT WILL BE EITHER 25 OR 50. MORE LIKELY TO BE 25. BUT IT IS A MASSIVE DIFFERENCE, ESPECIALLY FROM THE FIRST RATE CUT. HOW ARE YOU HEDGING FOR A POTENTIAL 50 CUT? KAMAL: THAT IS A GREAT QUESTION. THIS RATE ENVIRONMENT HAS NOT JUST US BUT EVERY GLOBAL INVESTOR PAYING ATTENTION TO THE PATH FORWARD. OUR REVIEW REMAINS THAT IT IS VALUABLE. THE 25 BASIS POINTS IS MUCH MORE VALUABLE TO FIXED INCOME INVESTORS. YOU NEED THE RATES TO MOVE BY 50 OR 75 BASIS POINTS FOR THE EQUITY AND REAL ESTATE INVESTORS TO REALLY CARE ABOUT THAT MOVE. GIVEN HOW LONG PORTFOLIOS ARE FROM A DURATION PERSPECTIVE, ANY RATE CUT WILL CREATE VALUE FOR THE FIXED INCOME INVESTOR FIRST AND THAT IS HOW WE THINK ABOUT IT. ALIX: WE HAVE HAD A NICE WASHOUT HERE IN THE SUMMER MONTHS. WHAT IS WORKING RIGHT NOW IN THIS ENVIRONMENT AND IN THIS MARKET? KAMAL: I WOULD SAY QUALITY HAS COME BACK INTO WORK. WE HAVE HAD A FEW YEARS OF VERY STRONG MOMENTUM ON THE EQUITY SIDE, PARTICULARLY WITH TECH NAMES. BUT I THINK QUALITY IS REALLY COMING BACK. I WOULD SAY THE SWEET SPOT IN THE MARKETPLACE SEEMS TO BE MID-CAPS, TO SOME EXTENT SOME SMALLER CAPS BUT MID-CAP IS AN AREA WHERE YOU SEE ROTATION HAPPENING AND A LOT OF EARNINGS. I WOULD SAY THAT FROM A RISK PERSPECTIVE. VONNIE: YOU ARE BIG REAL ESTATE INVESTORS. WE ARE ALL WAITING TO SEE WHAT THE IMPACT ON REAL ESTATE WILL BE, FOR MORTGAGES AND NEW BILLS AND EVERYTHING ELSE. HOW HURT WAS YOU ARE FRANCHISE AND WHAT DO YOU ANTICIPATE WILL HAPPEN BETWEEN NOW AND THE END OF THE YEAR IF THERE ARE FOUR CUTS? KAMAL: REITS WERE DEPRESSED. FOR MANY YEARS. IF YOU LOOK AT YEAR-TO-DATE RETURNS ALMOST ALL REITS INCLUDING OFFICE REITS HAD RALLIED VERY QUICKLY. I DO THINK THERE IS MORE TO GO ON THE REITS SIDE. THE AREA WE SEE THE MOST MOMENTUM ON IS OBVIOUSLY WE ARE BIG INVESTOR IN DATA CENTERS BUT WE ALSO DO HOTELS AND INDUSTRIALS AS WELL. I THINK AS THE MARKET EVOLVES THE GLOBAL REIT PORTFOLIO HAS NOT CORRECTED AS MUCH AS WE WOULD LIKE PARTLY BECAUSE OF WHAT HAPPENED WITH RATES IN PLACES LIKE HONG KONG AND JAPAN IN ADDITION TO THE U.S. BUT I DO THINK THE HOUSING SIDE OF REITS WILL PROBABLY REACT VERY WELL. INDUSTRIALS AND HOUSING WOULD BE AN AREA I WOULD WATCH OUT FOR. ALIX: THIS IS WHERE THE 25 OR 50 COMES INTO PLAY. 25 IS A NORMALIZATION IN WHICH THAT IS GOOD FOR REITS AND SMALL AND MID-CAP STOCKS. 50 SAYS WE ARE IN DEEPER TROUBLE THAN WE THOUGHT AND THEN THAT IS NOT SO GREAT FOR SMID, OR MAY BE DICIER WHEN IT COMES TO REAL ESTATE. IS THAT FAIR? KAMAL: I THINK 50 IS STILL GOOD FOR THE MARKETS. WE HAVE BEEN AT SUCH HIGH ELEVATED RATES OF LEVELS OF RATE THAT A 50 CUT IS NOT REALLY GOING TO BE A SIGNAL OF A DAMAGED ECONOMY. IT IS JUST CREATING MORE OPPORTUNITY FOR TECH INVESTORS TO GET BACK INTO THE MARKETPLACE. VONNIE: YOU SAID YOU ARE IN HOTELS AS WELL AND AROUND THE WORLD, THERE ARE SOME PARTS OF THE WORLD HURTING VERY BADLY AND WE ARE GETTING MORE AND MORE CONFIRMATION CHINA IS ONE OF THOSE. EVEN IN THE U.S. IT IS A MIXED PICTURE ABOUT THE CONSUMER. WE ARE NOT SURE HOW HEALTHY THE CONSUMER IS. CAN YOU TELL US MORE ABOUT THAT? KAMAL: THE BIGGEST CHANGE IN THAT SECTOR HAS BEEN SUPPLY IS A BIGGER STORY THAN DEMAND. I THINK ACROSS THE WORLD, AND WE HAVE ALL SEEN THIS WITH HOW THE CONSUMER HAS BEHAVED. AN EXTREMELY STRONG CONSUMER THAT HAS CONTINUED TO SPEND. YOU HAVE SEEN RECENTLY LUXURY AND LEISURE TAKE A BACKSEAT FROM THE AIRLINES AND SOME OF THE OTHER HOSPITALITY OPERATORS. BUT THERE IS GENERALLY A DEARTH OF SUPPLY OF HOTELS ACROSS THE WORLD. STRATEGICALLY, WE ARE MUCH MORE OF A STRATEGIC INVESTOR, I SEE IN PLACES LIKE EUROPE, THAT IS SOMETHING WHERE DEMAND SUPPLY HAS BEEN AN IMBALANCE FOR A WHILE. IN THE U.S. AND EUROPE I WOULD SAY DATA CENTERS, WHICH IS A BIG AI PLAY, CONTINUES TO BE VERY STRONG IN TERMS OF PICK UP CAP RATES AS WELL AS OCCUPANCY OR USE BY TECHNOLOGY SCALES UP. ALIX: FOR YOUR CLIENTS, WHAT DO YOU TELL THEM ABOUT HOW TO DO WITH AI IN TERMS OF HOW TO INVEST AT THIS POINT, IF THEY WERE NOT ALREADY INVESTED? KAMAL: OUR VIEW IS YOU WANT TO INVEST IN THE INFRASTRUCTURE OF AI AND I THINK YOU HAVE SEEN IT WITH THE HARDWARE COMPANIES. THE REAL ESTATE COMPANIES ARE A BIG PARTICIPANT IN THE BUILDOUT OF THE INFRASTRUCTURE AND THAT IS THE WAY TO PLAY IT IN OUR VIEW. THAT IS A VERY LONG CYCLE THAT WILL TAKE A WHILE. VONNIE: SO WHY DO WE SEE THE SIPHONING OFF OF NVIDIA? NVIDIA IS STILL DOING FINE, AND ALL THE OTHER AI STOCKS SELLING OFF STILL. KAMAL: IT IS AN AMAZING TECHNOLOGY COMPANY BUT IT HAS HAD A LOT OF INTEREST AND A LOT OF MOMENTUM. LONGER-TERM IT WILL STILL DO FINE. BUT AS I SAID, THERE ARE OTHER SECTORS ATTACHED TO AI THAT ARE CATCHING UP NOW AND I THINK YOU WILL GET TO A BALANCE IN WHO PARTICIPATES IN THE GROWTH CYCLE. ALIX: ISN'T THERE SO MUCH DEMAND IN THAT? EVERY REAL ESTATE GUY I SPEAK TO SAYS, DATA CENTERS, YAY. AM I GOING TO SQUEEZE POTENTIAL RETURNS OR WHAT? KAMAL: THERE HAS BEEN A LOT OF INTEREST IN THE SECTOR. THERE -- OUR VIEW MEANS TO BE YOU NEED TO BE AN ASTUTE REAL ESTATE INVESTOR TO REALLY OPERATE. ULTIMATELY IT IS REAL ESTATE, IT IS NOT TECHNOLOGY. AND SO YOU HAVE TO HAVE BEEN A LONG-TERM REAL ESTATE INVESTOR. WE HAVE DONE REAL ESTATE FOR A VERY LONG TIME INCLUDING GSE. ONE OF OUR VIEWS IS YOU HAVE TO UNDERSTAND HOW TO MANAGE THE PROPERTY. YOU HAVE TO HAVE AN UNDERSTANDING OF HOW YOU BUILD THESE ASSETS AND MAINTAIN THESE ASSETS AND THERE IS A BIG ELEMENT OF GETTING THE RIGHT POWER SUPPLY, MANAGING WATER. IT IS A MORE COMPLICATED ASSET TYPE THAN PEOPLE REALIZE. VONNIE: CAN'T WAIT TO HAVE YOU BACK FOR AN UPDATE AFTER THE CUTTING CYCLE STARTS. THANK YOU TO KAMAL BHATIA. COMING UP, BOEING CANNOT SEEM TO CATCH A BREAK. SHARES FALL AFTER THEIR LATEST SPACE MISSION HAS TO BE RESCUED BY SPACEX. WHAT IT ALL MEANS FOR THE FUTURE OF BOEING'S SPACE PROGRAM. IT IS UP NEXT ON THE CLOSE ON BLOOMBERG. ♪ Stock of the Hour VONNIE: WE ARE WATCHING BOEING AFTER SPACEX WILL USE A CAPSULE TO BRING HOME ASTRONAUTS STUCK ON THE INTERNATIONAL SPACE STATION NEXT YEAR. THIS AFTER THE BOEING- MADE STARLINER SUFFERED MALFUNCTIONS. ABIGAIL DOOLITTLE JOINS US WITH WHAT THIS MEANS FOR AN ALREADY EMBATTLED COMPANY. IT IS A BIG STATEMENT WHEN YOU SAY YOU PUT THEM UP THERE, BUT IT IS BROKEN, WE ARE NOT LETTING YOU BACK UP THERE. ABIGAIL: THERE IS A LOT GOING ON IN SPACE RIGHT NOW ESPECIALLY WITH POLARIS TOMORROW, SPACEX'S FIRST COMMERCIALIZED SPACEWALK FLIGHT. THESE TWO ASTRONAUTS, IT WAS SUPPOSED TO BE AN EIGHT DAY FLIGHT BUT THERE WAS A HELIUM LEAK PROBLEM, AND BASED ON EVERYTHING I HAVE READ AND THE CONVERSATIONS I HAVE HAD, IT IS NOT CLEAR THAT IF BOEING WAS MAKING THE DECISION ON THEIR OWN THEY WOULD CHOOSE TO USE SPACEX. IT SOUNDS AS THOUGH NASA IS MAKING THE DECISION, THEY WANT THE ASTRONAUTS TO BE SAFE, SO THEY ARE USING SAY FACTS. THEY HAVE TWO DIFFERENT SUPPLIERS, SPACEX AND BOEING. IT IS INTERESTING, BOEING CANNOT CATCH A BREAK, THAT HEADLINE AFTER BAD HEADLINE IN TERMS OF THE PLANES AND DIFFERENT PARTS. AT THE END OF THE DAY THIS IS A ROUNDING ERROR IN TERMS OF THEIR BOTTOM LINE BUT REPUTATIONAL HE HERE WE HAVE YET ANOTHER BOEING PROBLEM. NOW IT IS NOT JUST AIRPLANES, IT IS SPACECRAFT. ALIX: I WAS TRYING TO FIGURE OUT HOW MUCH THEY WIND UP SPENDING ON SPACE AND IF THE NEW CEO WILL CONTINUE THAT. IT IS WRAPPED INTO THAT DEFENSE AND SECURITY. THE REVENUE IS $6 BILLION FOR THE SECOND QUARTER, R&D EXPENSES IS $550 MILLION, OPERATIONAL INCOME WAS -$913 MILLION. I DON'T KNOW WHAT IS SPACE AND HOW THAT WINDS UP SHAKING OUT. ABIGAIL: NOT ONLY SHOULD YOU BECOME THE CEO, YOU SHOULD NOT BECOME AN ANALYST. IT'S REALLY INTERESTING AND WE HAVE TO WAIT ON THE CEO TO SEE HOW INTERESTED HE IS IN PURSUING THIS. IT WILL ALSO HAVE TO DO A LOT WITH THE CAPSULE. WILL IT BE ABLE TO RETURN, COME BACK TO REENTER EARTH BACK INTO OUR ATMOSPHERE AUTONOMOUSLY AND SAFELY? IF IT DOES, THEN YOU HAVE TO BELIEVE NASA WILL CONTINUE TO WORK WITH THEM, ALTHOUGH NASA IS SAYING THEY MAY HAVE TO TEST THIS CAPSULE A NUMBER OF TIMES WHICH WOULD COST ANOTHER $400 MILLION. WE DON'T KNOW RIGHT NOW. ELON MUSK, CEO OF TESLA AND SPACE X, HE HAD A REALLY INTERESTING TWEET SAYING IN THE SAME WAY THAT CARS WERE NEVER -- AUTOMAKERS WERE NEVER SUPPOSED TO MAKE AIRCRAFT, THAT AIRCRAFT MAKERS ARE NEVER SUPPOSED TO MAKE SPACECRAFT. HE IS MAKING THE POINT THAT A SPACECRAFT COMPANY HAS TO BE THE MAKER OF SPACECRAFT. WHETHER THAT WILL PROVE TRUE, WE WILL SEE. VONNIE: AND YET HE MAKES CARS. ABIGAIL: I GUESS HE IS THE ULTIMATE RENAISSANCE BEING, I SHOULD SAY. RENAISSANCE MAN. LOTS OF DIFFERENT BUSINESSES. BUT THERE IS A TENSION BETWEEN BOEING AND SPACE X. BOEING FOLKS ARE REALLY UNHAPPY THAT SPACEX IS COMING UP TO RESCUE THE ASTRONAUTS. ALIX: IT DOES NOT LOOK GOOD ON THE SURFACE. ABIGAIL DOOLITTLE JOINING US. ANOTHER STOCK WE ARE WATCHING HIS PDD HOLDINGS. SHARES FELL THE MOST SINCE ABOUT 2022. THIS IS TEMU'S OWNER, WARNING REVENUE GROWTH WILL INEVITABLY DWINDLE. THAT IS A TERRIBLE STATEMENT FROM YOUR CEO. HAVE YOU EVER BEEN ON TEMU? VONNIE: I HAVE. I HAVE NOT SHOPPED FROM THEM BUT IT WAS ONLY FOUNDED IN BOSTON LITERALLY TWO YEARS AGO. ALIX: I BROWSED IT AND IF NOT BOUGHT ANYTHING BUT IT IS APPARENTLY THE MOST DOWNLOADED U.S. APP, AFTER A DEBUTED IN 2022. APPARENTLY IF YOU HAVE RAZOR THIN MARGINS IN THE CONSUMER IS ROLLING OVER IT IS A TOUGH PLACE TO BE. VONNIE: EXACTLY. REMEMBER WHEN YAHOOS WAS SAVED WITH HIS OWNERSHIP OF ALIBABA? YOU HAVE TO WONDER HOW A COMPANY LIKE PDD CAN DO THE SAME THING AS ALIBABA AND BE COMPETING WITH ALIBABA IN SUCH A SHORT TIME. EVEN PDD WAS ONLY FORMED IN 2015. ALIX: ALSO THAT QUOTE, DOWNWARD TREND AND PROFITABILITY INEVITABLE. THAT IS NOT GREAT. YOU DON'T WANT TO SEE THAT. COMING UP, KIMBERLY FORREST FROM BOKEH CAPITAL PARTNERS TAKES US INTO THE CLOSE. WE ARE ABOUT 15 MINUTES AWAY ON THIS MONDAY. ALIX: WE ARE ABOUT 10 MINUTES AWAY FROM THE CLOSE OF TRADING ON THIS MONDAY. VONNIE QUINN ALONGSIDE ALIX STEEL. IT COUNTS. WE'RE BOUNCING ALONG THE BOTTOM FOR THE S&P, THE NASDAQ. BUT THE STOCKS CONTINUE TO ROLL OVER. THE RUSSELL HOLDING UP, BUT NOW JUST BARELY. VONNIE: YOU ARE NEVER SUPPOSED TO TAKE ANY SIGNALS FROM A MONDAY AND YET YOU CANNOT HELP IT. THIS IS SUCH A MAJOR SIGNAL. YES, WE HAVE NVIDIA WEDNESDAY, BUT CAN'T HELP BUT TAKING THIS SERIOUSLY. ALIX: JP MORGAN INTELLIGENCE NO DOUBT HAD THEIR MORNING NOTES SAYING LAST WEEK'S MOVES APPEARED WITH THE LOWEST VOLUME WEEK OF THE YEAR AND I WONDER IF THIS WILL AIR LEVEL IT AND WHAT THAT WINDS UP MEETING FOR NVIDIA. VONNIE: WEDNESDAY TUNE IN BECAUSE YOU WILL BE COVERING THEM. ALIX: OH, I WILL BE OFF. VONNIE: SHE WILL BE SPENDING HER PROFITS FROM NVIDIA. ALIX: I WISH. LET'S GET MORE INSIGHT WITH KIM Kimberly Forrest, Bokeh Capital Partners FORREST, FOUNDER AND CHIEF INVESTMENT OFFICER AT BOKEH CAPITAL PARTNERS, FORMERLY AN I.T. NERD HERSELF. WHAT DO YOU EXPECT FROM NVIDIA AND HOW DO YOU PLAY WEDNESDAY? KIM: SURE. HERE'S THE DEAL. ABSOLUTELY NO ONE HAS GIVEN ANY INDICATION THAT THEY ARE NOT CONTINUING SPENDING. IN FACT, GOOGLE, AMAZON, MICROSOFT, THEY ALL SAID THEY ARE GOING TO SPEND MORE ON THIS. SO I DON'T REALLY UNDERSTAND WHAT THE SPOOK IS HERE. KIND OF LIKE WHEN YOU ARE RIDING A HORSE AND IT JUST SHIFTS FOUR FEET TO ONE SIDE FOR NO REASON, THAT IS WHAT THE MARKET IS DOING HERE. I DO THINK INVESTORS ARE LOOKING AND GOING IT HAS BEEN A GREAT ALMOST NINE MONTHS OF THE YEAR, LET'S TAKE SOME PROFITS. AND I NEVER, EVER SAY THAT. BUT I THINK NVIDIA IS THE KEY TO THIS AND PEOPLE ARE WORRIED THAT THEY ARE NOT GOING TO HAVE FORWARD PROJECTIONS THAT ARE HIGH ENOUGH TO SUSTAIN ITS PRICE RIGHT HERE. VONNIE: IT IS VERY DIFFICULT TO VALUE A COMPANY LIKE THIS. WE HAVE BEEN SEEING PRICE DISCOVERY ONGOING NOW FOR SEVERAL QUARTERS. I REMEMBER ONE ANALYSTS WERE UPGRADING TO THE $900 MARK AND EVERYONE WAS GASPING, AND SUDDENLY WE HAD THE SPLIT AND NOW WE CAN BE AT $150 A LITTLE WHILE AGO. WHEN DOES THIS PRICE DISCOVERY PROCESS FOR ALL OF THE CHIPS, WHEN DOES IT COME TO REST? KIM: I AM GOING TO BE HONEST WITH YOU, I DON'T KNOW. BUT I KNOW THE CONDITIONS UNDER WHICH IT NEEDS TO COME TO REST. THERE ARE A COUPLE OF MOVING PARTS. FIRST THERE IS AI, AND ARE WE GOING TO NEED MANY LARGE MODELS? I THINK THE ANSWER IS NO. BUT IT IS STILL GOING TO CONSUME A LOT OF THE HIGH-END CHIPS. NOTICE I DID NOT PUT NUMBERS WITH THEM? I DON'T THINK ANYBODY KNOWS THE NUMBERS. SO THERE IS THERE. THE SECOND THING, AND I WAS TALKING WITH A FRIEND ABOUT THIS, TECH USED TO GO UP AND DOWN AND KIND OF BE THE INDICATOR OF THE HEALTH OF THE ECONOMY. AND I THINK THAT WAS BECAUSE WHENEVER BACK IN THE 1990'S AND EARLY IN THE CENTURY, WHEN PEOPLE WERE HIRED, COMPANIES HAD TO BUY THEM A PC, BUY THEM ADDITIONAL CAPACITY FOR THE NETWORK, AND ALL OF THIS STUFF HAD TO BE ADDED. THAT DOES NOT REALLY SEEM TO BE GOING ON NOW. WE ARE NOT ADDING TREMENDOUS AMOUNTS OF PEOPLE, SO WE DON'T GET THAT LIFT WHENEVER HIRING HAPPENS. I THINK PEOPLE WHO WATCH SEMICONDUCTORS ARE OVERREACTING TO MAYBE SLOWER ECONOMIC NEWS THINKING JUST LIKE IN THE OLD DAYS WHEN PEOPLE GOT LAID OFF, NOBODY BOUGHT NEW PC'S. BUT THAT IS NOT THE DRIVER BEHIND SEMIS NOW, AND I THINK INVESTORS HAVE TO WAKE UP TO THIS NEW WORLD AND UNDERSTAND IT AND NOT SELLOFF WHENEVER YOU THINK FED IS LOWERING BECAUSE IT SEES TROUBLE AHEAD. ALIX: ARE YOU AVOIDING THE MACRO? IS THAT WHAT I AM HEARING? KIM: NO, I AM PAYING CLOSE ATTENTION TO THE MACRO, BUT I THINK OTHER INVESTORS ARE USING THE OLD. ALIX: USING THE OLD RULE OF WHAT? KIM: OF LIKE, GOOD TIMES MEAN THAT COMPANIES BUY MORE TECHNOLOGY, AND I DON'T KNOW THAT IS TRUE. I THINK COMPANIES BUY TECHNOLOGY NOW TO GET BETTER PRODUCTIVITY, NOT NECESSARILY TO ROLL OUT A WHOLE FLEET OF PC'S. VONNIE: IS THERE JUST A LOT OF EXUBERANCE FOR NVIDIA? IF YOU LOOK AT THE SELLOFF RECENTLY, NVIDIA HAS RECOVERED A BIT. NOT ALL OF ITS LOSSES, BUT MANY OF THE OTHER ASSOCIATED HALO-TYPE STOCKS HAVE NOT. KIM: I THINK THAT IS BECAUSE NOBODY REALLY UNDERSTANDS THIS WORLD AND THEY ARE TRYING TO PLAY WHAT THEY KNOW. A LOT OF RETAIL MONEY MOVED INTO NVIDIA SINCE THE SPLIT BECAUSE THEY THOUGHT IT WAS CHEAP. WHETHER IT IS CHEAPER NOT, WE WILL SEE. BUT THE FACT IS I DON'T THINK ANYONE REALLY UNDERSTOOD HOW MUCH THAT EXTRA BUYING FROM RETAIL WISHED THE STOCK SO TREMENDOUSLY HIGH. AND THEN WHEN THAT DRIED UP SUPPORT WASN'T THERE. SO, NEW RULES, SAME STOCK. ALIX: WHAT IS YOUR TOP PICK RIGHT NOW? KIM: THIS MIGHT ELICIT AN EYE ROLL, BUT I REALLY LOVE AMD. THIS ACQUISITION THEY ARE DOING WITH A COMPANY THAT ESSENTIALLY HELPS THE AI CHIPS GET ON A BOARD AND GET OUT INTO THE REAL WORLD IS GOING TO ALLOW THEM TO BETTER UNDERSTAND THEIR TRUE END CLIENT, WHICH IS THE MICROSOFTS AND GOOGLES OF THE WORLD. THAT'S 1000 ENGINEERS THAT NVIDIA DOESN'T HAVE FOR HOW THESE THINGS HAVE TO ACT IN THE REAL WORLD. I THINK IT IS A BRILLIANT MOVE. VONNIE: THE STOCK IS ONLY UP 1.8% SO FAR THIS YEAR EVEN THOUGH WE HAVE A BIG RUN UP. HAVE YOU GIVEN UP ON INTEL? KIM: NOT REALLY. I JUST THINK IT HAS BEEN STRETCHED OUT IN TIME. I THINK THEY STILL HAVE A LOT OF TECHNOLOGY IN-HOUSE THAT NEEDS TO SOMEHOW GET RECOGNIZED AND COME BACK INTO PLAY. BUT IT IS NOT THE TOP PICK RIGHT NOW BECAUSE TIMELINE HAS BEEN EXTENDED. ALIX: DO YOU THINK THAT YOU ARE GOING TO LEARN ANYTHING ABOUT RETAIL THIS WEEK IF WE JUST MOVE FOR A SECOND OFF OF TECH? WE HAVE NORDSTROM'S, BUT DOLLAR STORE, CONSUMER DATA, ETC. WHAT ARE YOU GOING TO LEARN? KIM: I THINK WE ARE GOING TO LEARN WHAT WE HAVE BEEN LEARNING ALL EARNINGS SEASON. IF THE CONSUMER WANTS TO BUY SOMETHING, THEY WILL FIND A WAY TO DO IT. IF IT IS JUST A MEH KIND OF PRODUCT, THEY WON'T. IT LOOKS LIKE KOHL'S WAS SO PUNISHED, BUT TJ MAXX LOOKS LIKE THE BEST PLACE ON EARTH TO SHOP. THEY SERVE THE SAME CLIENT, THEY JUST DON'T SERVE THE SAME PRODUCT. ALIX: KIM AND I HAVE BEEN TRYING TO GET ON A JOURNEY TO T.J. MAXX. I LOVE IT. YOU DON'T LIKE IT? KIM: I LOVE IT. OF COURSE I DO. ALIX: WHO DOESN'T LOVE T.J. MAXX? KIM THANKS A LOT. KIM FORREST OVER AT BOKEH CAPITAL PARTNERS. YOU KNOW WHO DOESN'T LIKE IT? ROMAINE. WHAT CAN I SAY? HE'S A HIGHER END CONSUMER. WE ARE ABOUT THREE MINUTES AWAY FROM THE CLOSING BELL RIGHT HERE IN THE U.S. AND WE ARE COUNTING YOU DOWN TO THE CLOSING BELL. FULL MARKET COVERAGE RIGHT HERE ON BLOOMBERG TELEVISION. Closing Bell >> THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ALIX: WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY AT AND VONNIE QUINN TO HELP US TAKING THROUGH THE CLOSING BELL SCARLET FU, ROMAINE BOSTICK, AND CAROL MASSAR ALL OFF TODAY. MAYBE THEY ARE ALL VACATIONING TOGETHER. BUT TIM STENOVEC IS HERE ALONG WITH KATIE GREIFELD BRINGING TOGETHER OUR AUDIENCES WORLDWIDE. TIM: IF THEY ARE ALL VACATIONING TOGETHER AND THEY DID NOT INVITE US, THAT WOULD BE SO NOT COOL. ALIX: WE ARE VERY HAPPY TO HAVE YOU HERE. YES, TECH IS TRADING HEAVY, BUT AGAIN, THAT LIGHT VOLUME, YOU HAVE TO WONDER HOW MUCH YOU CAN TAKE THESE MOVES SERIOUSLY. TIM: YOU BROUGHT UP EVERYTHING I WANT TO TALK ABOUT. 25% LOWER IN VOLUME FOR THE S&P 500. NASDAQ COMPOSITE DOWN SLIGHTLY. MEGACAP TECH UNDER PRESSURE. AGAIN, WE ARE POST-JACKSON HOLE. THE HIGHLIGHT OF THIS WEEK IS WHAT HAPPENS AFTER 4:00 ON WEDNESDAY THE 28TH WHEN WE HEAR FROM NVIDIA AND JENSEN HUANG. KATIE: IT IS INTERESTING TO SEE NVIDIA TAKE A BIT OF A BATH TODAY, DOWN 2% OR SO. OF COURSE ALL THAT EVENT RISK COMING WEDNESDAY. YOU THINK ABOUT WHAT IS PRICED IN IN TERMS OF THE ONE-DAY MOVE FOR NVIDIA AND WHAT IS PRICED IN FOR THE S&P 500. SOME ARE SAYING THIS IS AS IMPORTANT AS THE FED MEETING. VONNIE: SPEAKING OF THE FED MEETING, EVEN THOUGH NVIDIA IS PROBABLY THE BIGGEST EVENT OF THE WEEK WE WILL GET A LOT OF ECONOMIC DATA INCLUDING CONSUMER CONFIDENCE, WHICH THROUGH US CROSSWAYS THE LAST TIME. CAN WE HAVE A GOODS ORDER WHICH WAS STRONG ALTHOUGH NOT NONDEFENSE, THAT WAS WEAKER THAN EXPECTED. THERE IS A LOT OF DATA INCLUDING PERSONAL INCOME AND DATA SPENDING. ALIX: WE ALSO HAVE GOLD AT A RECORD. CLEARLY IT IS A SAFE HAVEN BID. WHETHER OR NOT THAT IS EARNINGS RELATED OR ECONOMIC DATA. THERE YOU HAVE THE CLOSING BELLS ON THIS MONDAY. VOLUME REALLY WEASK. NASDAQ CLOSING DOWN. S&P DOWN .3%. DOW JONES UP .1%. KIND OF A MIXED DAY TO THE MEH SIDE. TIM: IT DOES GO TO SHOW WHAT DID MOVE HIGHER AND WHAT MOVED LOWER IN THE S&P 500. YOU SEE THAT MORE STOCKS WERE HIGHER IN THE S&P EVEN THOUGH WE MOVED LOWER. 270 STOCKS MOVED HIGHER, 231 MOVED LOWER. VONNIE: IF YOU LOOK AT THE SEGMENTATION OF THE MARKET THERE IS A LOT OF RED, BUT THERE IS ESSENTIALLY A LOT OF I.T. AND SEMI STOCKS, INDUSTRIALS, CONSUMER DISCRETIONARY. AND THERE ARE FOUR OR FIVE AREAS HIGHER. MOSTLY IT IS THOSE ENERGY PRODUCERS WE ARE GOING TO BE TALKING ABOUT LATER ON. GEOPOLITICAL RISK NOT JUST FROM HEZBOLLAH AND ISRAEL, WHICH MAY BECOME A BIGGER RISK, ALSO FROM LIBYA SHUTTING OFF THE TAPS. TIM: YOU BROUGHT ME TO MY FIRST GAINER TODAY, THAT IS EXXON MOBIL. TOUGH TO FIND GAINERS TODAY THAT ARE NOTABLE TO BE HONEST. EXXON MOBIL AMONG THE BEST PERFORMERS IN THE S&P 500. ON A POINTS BASIS THE BEST PERFORMER, UP MORE THAN 2%. ENERGY STOCKS ON A WHOLE DID RISE AS UKRAINE LAUNCHED MISSILES ACROSS RUSSIA, CAUSING BLACKOUTS. SHARES OF EXXON MOBIL TODAY HIGHER BY MORE THAN 2.1%. TAKING A LOOK AT WHAT HAPPENED WITH CAVA TODAY. LAST WEEK THIS WAS ALL ABOUT THE COMPANY BOOSTING ITS YEAR SALES OUTLOOK. IN THE WAKE OF THAT REPORT LATE THURSDAY ANALYSTS RAISED PRICE OUTLOOK FOR CAVA, ACCORDING TO DATA FILED BY BLOOMBERG. MINE AVERAGE OF 23%. TODAY THAT STOCK MOVING HIGHER BY MORE THAN 3%. I HAVE A MICROCAP FOR YOU TO ROUND OUT. RICHIE ROBOTICS. RICH TECH ROBOTICS, EXCUSE ME. A MARKET CAP OF ABOUT $133 MILLION. THEY MAKE ROBOTS TO HELP WITH FOOD AND BEVERAGE AND MORE. DOWN MORE THAN 70% SO FAR THIS YEAR BUT SURGING TODAY CLOSE TO WHAT HE PERCENT. KATIE: IT WAS NOT TO FIND DECLINERS. NVIDIA, NOT HAVING A GREAT START TO THE TRADING WEEK. A VERY CONSEQUENTIAL TRADING WEEK WITH NVIDIA DUE TO REPORT EARNINGS WEDNESDAY AFTERNOON. FALLING ABOUT 2.3% TODAY. NO REAL CATALYST. THIS IS A STOCK THAT HAS MOVED ABOUT 155% HIGHER YEAR TO DATE, SO MAYBE SOME AIR COMING OUT OF THE BALLOON. I ALSO WANTED TO TALK ABOUT PDD HOLDINGS, SHARES FOLLOWING THE MOST SINCE 2022. OF COURSE THIS IS THE OWNER OF TEMU, AND THEY WARNED THAT REVENUE GROWTH SALES ARE PROBABLY GOING TO SLOW FROM HERE. IT IS A SIMILAR STORY TO WHAT WE ARE SEEING IN THE STATES. BASICALLY THAT WEAKENING CONSUMER. I WANTED TO HIGHLIGHT ELTH BEAUTY BECAUSE THIS HAS BEEN A STANDOUT THE PAST COUPLE OF YEARS. CHAIRS FALLING TODAY, FINISHING MUCH LOWER AFTER A PIPER SANDLER NOTE CAME OUT THAT FLAGGED THAT THERE IS A SLIGHT DECELERATION IN CREDIT CARD DATA FOR THE COSMETICS COMPANY AND YOU CAN SEE SHARES REFLECTING THAT. ALIX: THIS FLIES AGAINST MY WHOLE INVEST IN YOUR FACE THING. ANYWAY, THAT IS A SIDE THING. YIELDS, THEY DID MANAGED TO CREEP THEIR WAY HIGHER A LITTLE BIT. YIELDS UP ABOUT TWO BASIS POINTS. THE WHY, I AM STILL TRYING TO FIGURE OUT. IF IT IS A SAFE HAVEN BID, YOU WOULD SEE YIELDS LOWER. I WONDER IF WE ARE JUST MOVING ON DIFFERENT THINGS. THE HIGHER DOLLAR IS A SAFE HAVEN THING, BUT YIELDS STILL MOVING A TOUCH HIGHER. TIM: WHAT DO YOU THINK ABOUT REAL ESTATE AS A SAFE HAVEN? ALIX: I AM SUPER RISK-AVERSE. I LIKE GOLD BARS UNDER MY BED, SOUP CANS. VONNIE: INFLATION HEDGE DEPENDING ON HOW GOOD OF AN INVESTOR YOU ARE. TIM: HOW ABOUT IF YOU ARE JOSH AND CARLY? WE CAN'T STOP TALKING ABOUT THIS STORY. SHE IS NOT A HUGE FAN OF MIDCENTURY MODERN. KATIE: NO. ALIX: DON'T LIKE MIDCENTURY MODERN? WHAT DO YOU LIKE? KATIE: I LIKE HOUSES THAT ARE SORT OF BUILT OUT OF STONE AND WOOD. I DON'T REALLY LIKE THE LOOK OF THIS WAVE HOUSE. THE WALL STREET JOURNAL DESCRIBES IT AS ICONIC AND I GUESS SOME PEOPLE COULD SEE IT THAT WAY. TIM: IT IS ON THE TV. KATIE: IT LOOKS LIKE THE SYDNEY OPERA HOUSE. THAT IS COOL. IT WAS BUILT IN THE 1950'S. BUT LOOK AT THAT CONVERSATION PIT. IT GIVES ME THE HEEBIE-JEEBIES. TIM: $29.5 MILLION, DOWN FROM WHAT WAS LISTED FOR IN 2023. SO, SOUNDS LIKE THEY GOT A DEAL. VONNIE: THERE ARE NOT MANY OF THESE MANSIONS THAT ARE ATTRACTIVE AND COZY. I HAVE TO SAY THAT ONE LOOKS ATTRACTIVE AND COZY TO MEET. I WOULD NOT SAY NO. TIM: I AM WITH YOU. IT IS IN MALIBU. KATIE: IF YOU DON'T LIKE THE STRUCTURE, DO NOT LIKE THE CHAIRS? IS THIS ANTI-ALL THINGS ARE JUST THE ARCHITECTURE? KATIE: I AM NOT A HUGE FAN OF THE FURNITURE UP IT MY HUSBAND AND I COMPROMISE BECAUSE HE LIKES MIDCENTURY MODERN. I LIKE A LOT OF GOLD AND BRASS AND HEAVY JEWEL TONE FURNITURE, THAT SORT OF VIBE. SO, YOU KNOW, WE FIND OUR WAY ALONG. ALIX: OK. VONNIE: YOU HAVE TO HAVE A FEW ROOMS TO ACTUALLY DECORATE. I DON'T HAVE THAT PROBLEM YET. ALIX: THE STORY I ABSOLUTELY LOVE, IMAGINE YOU GETTING EMAIL FROM YOUR BOSS, HEY, WHAT DO YOU THINK OF THIS STORY? THEN YOUR FIRM GETS FINED $6 3,000. WHAT WOULD THAT BE LIKE? APPARENTLY IN AUSTRALIA, AUSTRALIANS CAN LEGALLY IGNORE UNREASONABLE AFTER OUR WORK CALLS. UNDER THIS NEW LAW THAT WENT TO INTO EFFECT TODAY, ANY NONESSENTIAL BUSINESS OUTSIDE OF WORK HOURS CAN BE FINED $63,000. VONNIE: HOW DO YOU KNOW IF IT IS NONESSENTIAL UNTIL YOU PICK UP THE CALL? KATIE: I DON'T KNOW, I AM CURIOUS TO SEE WHETHER THIS IS ACTUALLY ENFORCED. I CAN SEE WORKERS, I DON'T KNOW, MAYBE GETTING PAINT. MAYBE IT WOULD NOT BE GREAT FOR YOUR REPUTATION AT WORK IF YOU HAVE YOUR FIRM WRITTEN UP FOR SENDING EMAIL. TIM: LISTEN TO WHAT THE AUSTRALIAN PRIME MINISTER SAID. PEOPLE DON'T GET PAID $24 HOURS A DAY, THEY DON'T HAVE TO WORK 24 HOURS A DAY. HE HAD IT HE EXPECTS THE CHANGES TO BOOST PRODUCTIVITY. KIND OF SHOWS THE DIFFERENCE BETWEEN THE WAY PEOPLE THINK ABOUT WORK IN DIFFERENT COUNTRIES. VONNIE: THEY ARE IN A DIFFERENT TIME ZONE AS WELL PUT WE ALL KNOW THE U.S. TIME ZONE IS THE ONE THAT COUNTS. ALIX: HERE'S MY QUESTION. IF YOU ARE NOT PAID ON AN HOURLY BASIS HOW DO YOU JUDGE WHETHER OR NOT YOU ARE PAID TO WORK 24/7? IF YOU ARE PAID $1 MILLION I AM LIKE, DUDE, CHECK YOUR EMAIL. $10 AN HOUR, NO, YOU SHOULD HAVE A SET TIME. HOW DO YOU JUDGE THAT? KATIE: IT IS A FAIR POINT. YOU HAVE LOCAL BUSINESS GROUPS WHO HAVE EXPRESSED CONCERNS ABOUT THE NEW LAWS. THE CEO OF THE AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY SAID THAT THESE CHANGES ARE A QUOTE, THOUGHT BUBBLE, AND THAT THE BUSINESS WAS NOT ACTUALLY CONSULTED ON THEM. ALIX: IF YOU WORK FOR 10 YEARS IN AUSTRALIA YOU GET A PRETTY MANDATORY SABBATICAL OF A YEAR. TIM: THAT IS GREAT. SOUNDS GREAT. ALIX: WE ARE IN THE WRONG PLACE. TIM: WE REALLY ARE. KATIE: ANYWAY. TIM: THE LAND OF BLUEY. MAYBE THAT'S WHY IT TAKES SO LONG TO GET NEW SEASONS OF BLUEY. ALIX: BLUEY IS AN AMAZING CARTOON FOR KIDS AS WELL AS PARENTS, AND YOU SHOULD WATCH IT ON YOUR OWN BECAUSE IT IS AWESOME. TIM: BLUEY HAS WIDE APPEAL. WE HAVE MORE TO DO ON RADIO AND YOU HAVE ALL MORE TO DO ON TV . BUT WE WILL BE BACK TOMORROW. THAT WILL DO IT FOR OUR CLASS PREP FROM COVERAGE. YOU HAVE A GREAT REST OF YOUR DAY AND WE ARE GOING TO HEAD ON OVER AND TALK NVIDIA. ALIX: MORE COMING UP. THIS IS ONLY THE FIRST THING OF THE WEEK AND WE HAVE A LOT COMING UP, PARTICULARLY NVIDIA EARNINGS. PLUS BREAKDOWN NORDSTROM'S COMING OUT TOMORROW. PLUS, WHAT ARE ROBOTS AND CORPORATE'S DOING? THEY SHOULD BE BUYING. WE WILL BREAK THAT DOWN. THIS IS BLOOMBERG. ♪ ALIX: WELCOME BACK. LET'S TAKE A LOOK AT WHERE MARKETS CLOSED OUT TODAY ON THIS MONDAY. THE S&P CLOSED DOWN ABOUT .3%. THERE WERE THE HAVE AND THE HAVE-NOTS. THE HAVE-NOTS WERE TECH. THE HAVES WERE THE ENERGY INDEX, UP OVER 1%. OIL ALSO GETTING A POWERFUL RALLY, UP OVER 3%. GEOPOLITICAL RISK AND LIBYAN PRODUCTION HALTED THAT WOUND UP MOVING THE COMMODITY MARKET. THAT IS TRANSPORTING ITSELF INTO THE EQUITY INDEX. TWO THINGS I FOUND INTERESTING. ONE YOU SAW SELLING IN THE BOND MARKET AND YOU SAW BOND WHEN IT COMES TO THE DOLLAR AND GOLD. GOLD HITTING ANOTHER RECORD. BLOOMBERG DOLLAR INDEX UP AGAINST MOST G10 CURRENCIES AS WELL. WHAT IS THAT TELLING US? IS THAT A SAFE HAVEN BID AND IF NOT, WHY DID YIELDS NOT PUT THIS UP EIGHT? -- NOT PARTICIPATE? VONNIE: BROADCOM WAS THE WORST PERFORMER, DOWN ABOUT 4%. IT HAD BEEN UP TO THE RIGHT AND ONWARD. ONE OF THE PERFORMERS THAT DID WELL TODAY, KROGER FINALLY GETTING ITS DAY IN COURT WITH ALBERTSON'S TRYING TO WORK OUT A POTENTIAL MERGER. THE FTC SAYS THERE WOULD ONLY REALLY BE TWO RIVALS, SO THIS ARGUMENT THAT THEY NEED TO COMBINE IS BOGUS. THE FTC MIGHT BE ABLE TO WIN THIS TIME. THAT IS NOT WITH THE MARKET THINGS TODAY. I ALSO CHOSE GOLD. A RECORD IS 2531, HIT JUST LAST WEEK. WE ARE MAYBE NOT INASMUCH MUCH DANGER ECONOMICALLY AS WE THOUGHT. THE STAKES ARE HIGH. PLUS AS A BONUD, WE GET NUMBERS FROM MORE RETAIL NAMES. THE CONSUMER DISCRETIONARY SECTOR LOOKING AT 14% EARNINGS GROWTH SO FAR THIS QUARTER SO NOT TOO BAD. ALIX: INVESTORS ARE ON ALERT THIS WEEK FOR AN ALL-TIME HIGH WITH ALL THESE CATALYSTS GOING ON. EXPECTING FOMO TO INCREASE Natalia Kniazhevich, Bloomberg News AFTER ROBOTS AND CORPORATE'S RUSH IN. WHAT DOES THAT MEAN? WHY THE FOMO? >> WE KNOW DURING THIS LAST SELLOFF SYSTEMATIC FUNDS WHICH INCLUDE COMMODITY TRADING ADVISORS, BASICALLY ROBOTS THAT FOLLOW THE TREND WHEREVER THE MARKET GOES, THEY ADJUST POSITIONING. NOW THEY ARE IN A BUYING MODE SCOTT IS SAYING AS OF NOW WE SEE A GREEN SWEET WHICH MEANS THOSE SYSTEMATIC FUNDS, THEY WILL BE BUYING NO MATTER WHICH DIRECTION THE MARKET GOES. ON TOP OF THAT WE ALSO SEE DEMAND FOR CORPORATE BUYBACKS IS REALLY STRONG. GOLDMAN SACHS BUYBACK DESK SAID LAST WEEK WAS THE STRONGEST IN 2024 WHEN IT COMES TO DEMAND FROM BUYBACKS FROM CORPORATE. IT WAS TWO TIMES HIGHER VERSUS THE SAME PERIOD IN 2023. VONNIE: WHAT ARE THE BIGGEST DRIVERS? WHY NOW? NATALIA: ALTOGETHER IT IS SEASONALITY AND ALSO THE MOST RECENT SELLOFF ADDED MORE POWER. WE KNOW THOSE SOLD PRETTY AGGRESSIVELY AND NOW THEY ARE BUYING BACK. I IMAGINE CTA FUNDS. THERE ARE ALSO VOLATILITY CONTROL FUNDS AND RISK PARITY. WHEN VOLATILITY DROPS, WHICH IS HAPPENING RIGHT NOW, THIS IS AN INDICATOR FOR THEM TO BUY STOCKS. ON TOP O FTHAT, SEASONABLY CORPORATE BUYBACKS AUGUST AND SEPTEMBER IS A FAVORABLE SEASON FOR THAT AND SCOTT IS ALSO SAYING KEEP AN EYE BECAUSE CORPORATE BUYBACKS WILL BE STRONG UNTIL SEPTEMBER 13 WHEN THIS BLACKOUT WINDOW STARTS. SO HE IS TECHNICALLY BULLISH UNTIL THE MIDDLE OF SEPTEMBER. ALIX: BECAUSE WHAT HAPPENS IN THE MIDDLE OF SEPTEMBER? NATALIA: LESS BUYING FROM CORPORATE'S AND THEN SEASONALITY BECAUSE HE TRACKS DATA GOING BACK TO 1928. THERE'S A HUGE SPREADSHEET A SICKLY HE TRACKS THAT SHOWS RETURNS FOR THE S&P 500 FOR EVERY MONTH AND HISTORICALLY SEPTEMBER IS NOT A GOOD MONTH FOR THE S&P 500. ALIX: BEFORE YOU LEAVE, VOLATILITY CONTROL FUNDS IS INTERESTING. THAT IS IF VOLATILITY MOVES UP AND MOVES UP QUICKLY OR GOES DOWN QUICKLY, THEY HAVE TO QUICKLY CHANGE HOW THEY ARE ALLOCATED TO PROTECT HOW THEY ARE EXPOSED TO VOLATILITY. IS IT SAYING ON THE UPSIDE AND THE DOWNSIDE? NATALIA: ALMOST BUT NOT EXACTLY THE SAME. THEY ATTEMPT TO SELL QUICKLY BUT WHEN IT COMES TO BUYING BACK IT CAN TAKE MORE TIME. ALSO THEY TRACK REALIZED VOLATILITY SO THEY NEED TO SEE VOLATILITY FOR QUITE SOME TIME BEFORE THEY START BUYING BACK. ALIX: REALLY APPRECIATE IT. NATALIA KNIAZHEVICH JOINING US. THE S&P CLOSED DOWN SLIGHTLY, THE BOND MARKET TRADE A LITTLE HEAVY, YIELDS BACKING UP A TOUCH. BUT THERE ARE SOME BIG CATALYSTS THIS WEEK LIKE NVIDIA AND PCE. Chris Caine, Bloomberg Intelligence COUPLE THOSE WITH ROBOTS AND CORPORATE'S, AND WE WANTED TO CHECK IN ON WHERE THE FLOWS AND POSITIONING SETS. CHRISTOPHER KANE IS OVER AT BLOOMBERG INTELLIGENCE. HOW ARE WE SET UP? CHRISTOPHER: THE ONE THING I'M LOOKING AT IS THE CORRELATION BETWEEN STOCKS AND BONDS. IT IS SOMETHING I DON'T SEE MANY PEOPLE SPEAK ABOUT AND IT IS REALLY INTERESTING. WHEN YOU LOOK AT THE CORRELATION BETWEEN LONG-DURATION TREASURY BONDS AND S&P 500, PRICES VERSUS PRICE IS VERY HIGH. POSITIVE .78. IT IS ONE OF THE HIGHEST RELATIONS ON A ROLLING 12 MONTH BASIS WE HAVE SEEN IN 50 YEARS. IF YOU TRANSFORM THAT INTO A PERCENTILE IT IS 98TH PERCENTILE RESULT. VERY POSITIVELY CORRELATED. THE ONE THING WE FOUND IS A COINCIDENT INDICATOR IS INFLATION. WHEN INFLATION IS VERY HIGH WHAT YOU TEND TO SEE IS STOCKS AND BONDS MOVE TOGETHER. WHEN INFLATION GOES LOW THEY TEND TO DECOUPLE. IF YOU LOOK AT THE MEDIAN CPI INFLATION IT HAS BEEN ABOUT 3% IN THE U.S. AND WE JUST CROSSED BELOW THAT THRESHOLD. TO ME THAT SAYS THE CORRELATION SHOULD COME DOWN. WHEN YOU BREAK UP THE CPI INTO TWO BUCKETS OVER THE LAST 50 YEARS YOU SEE AN AVERAGE CORRELATION OF .4% WHEN INFLATION IS ABOVE 3% AND -.2% WHEN IT IS BELOW 3%. VERY ELEVATED BUT WITH INFLATION COMING DOWN IT SHOULD COME DOWN A LOT. VONNIE: WHEN YOU SAY CORRELATION YOU MEAN THERE IS BUYING INEQUITIES THEY ARE SELLING IN BONDS? THAT HAS BECOME CONFUSING. CHRIS: SOMETIMES THE CORRELATION BETWEEN STOCKS AND BONDS IS CONFUSING BECAUSE SOMETIMES YOU DO IT THE PRICE OF STOCKS AND YIELDS. WHAT I'M TALKING ABOUT IS THE PRICE OF BONDS AND THE PRICE OF STOCKS. LIKE YOU SAID, BUYING IN STOCKS AND BONDS. VONNIE: SO THAT IS COUNTERINTUITIVE THEN. CHRIS: I THINK THE INTUITION HERE IS LIKE WHEN INFLATION IS REALLY HIGH, IT IS BAD FOR BOTH. IT IS MATHEMATICALLY BAD FOR BONDS. IT SHOULD BE RATES GO UP COME OF GETS HAWKISH, ETC.. WHEN INFLATION GOES LOWER OR IS TO INCREASING, IT IS NOT AS CLEAR OF A PICTURE. I THINK THAT IS WHY YOU SEE THE CORRELATION REALLY DECREASE. WHAT STUCK OUT TO YOU OVER THE LAST FEW WEEKS IN TERMS OF WHEN WE SOLD OFF, AND HOW DO YOU THINK THE REACTION FUNCTION WILL BE GOING FORWARD? CHRIS: THE ONE BIG THING THAT REALLY STOOD OUT, WHAT WAS IT, THREE WEEKS AGO WE HAD BIG VOLATILITY. ALIX: IT FEELS LIKE A YEAR AGO, BUT SURE. CHRIS: I LOOKED AT UP AND IT WAS AUGUST 5. I KNOW, RIGHT? WE HAD THAT BIG DECLINE, A BIG SPIKE IN EQUITY VOLATILITY. THE VIX A 60 INTRADAY, CLOSED AT VERY HIGH LEVELS. ONE THING WE LOOKED AT IS THE RELATIONSHIP BETWEEN EQUITY VOLATILITY AND CORPORATE BOND SPREADS. THAT RELATIONSHIP IS WHAT YOU WOULD THINK. WHEN EQUITY VOLATILITY GOES UP, USUALLY THAT MEANS THE STOCK MARKET GOES DOWN. THAT WOULD BE COUPLED WITH WIDER CORPORATE BOND SPREADS, WHICH IS TOTALLY LOGICAL. WHAT WE SAW AUGUST 5 WAS A HUGE OUTLIER WHERE WE HAD VERY HIGH EQUITY VOLATILITY IN VERY MUTED CORPORATE BOND SPREADS. THEY BARELY MOVED. THEY ARE STILL RATHER LOW, HISTORICALLY. WHEN YOU MAKE A SCATTERPLOT OF THOSE TWO THINGS, THERE WAS A HUGE OUTLIER. OUR TAKE AWAY FROM THAT WAS THE SELLOFF THREE WEEKS AGO WAS MORE TECHNICAL IN NATURE. IT WAS NOT BECAUSE OF A QUOTE-UNQUOTE REAL ECONOMIC PROBLEM WITH THE ASSUMPTION THAT WE SHOW UP ON THE BOND MARKET. WE THOUGHT POTENTIALLY IT WAS A GOOD OPPORTUNITY TO PUT CASH TO WORK. IT HAS SEEMED TO PROVE OUT TO BE. VONNIE: IS THIS ALL MAX EVANS'S FAULT? IT LOOKS LIKE THERE IS A BIG SELLOFF INEQUITIES? CHRIS: OF COURSE THEY HAVE AN OUTSIZED INFLUENCE BECAUSE OF MARKET CAP WEIGHTING. ALMOST ALL THE EQUITY INDICES PEOPLE FOLLOW, THE S&P 500, BLOOMBERG 500, MARKET CAP WAITED. EARNINGS SEASON HAS BEEN VERY GOOD. REST OF THE STOCKS HAVE BASICALLY DOUBLED EARNINGS EXPECTATIONS OVER THE QUARTER. THE OTHER 493 WE CALL THEM. THE RALLY IS BROADENING OUT, THE FUNDAMENTALS ARE VERY STRONG. I CAN SEE US MOVING INTO A SCENARIO WHERE IT IS NOT JUST A MAG-7 CARRYING US. VONNIE: ALWAYS A PLEASURE. CHRIS CAIN. COMING UP, THE TOP THREE WILL REFOCUS ON THE TOP THREE MOVERS AND SHAKERS AT THE CENTER OF THE DAY'S BIGGEST STORIES. THAT'S NEXT ON BLOOMBERG. The Top Three ALIX: TIME FOR THE TOP THREE WHERE WE NAMED DROP THE PEOPLE DRIVING SOME OF THE DAY'S MOST TALKED ABOUT STORIES. FORTRESS INVESTMENT GROUP HAS APPOINTED THE FORMER CHIEF EXECUTIVE OFFICER OF PF CHANG'S TO LEAD RED LOBSTER WHEN IT IS ACQUIRED BY ITS LENDERS OUT OF CHAPTER 11. HE WILL BECOME RED LOBSTER'S CEO AFTER A FLORIDA BANKRUPTCY JUDGE APPROVES PLANS FOR EXITING CHAPTER 11 UNDER NEW OWNERSHIP. CAN HE GET IT DONE? VONNIE: FIRST OF ALL UR BUYING NICKEL BEING TAKEN FROM CHAPALA TO STARBUCKS AND NOW YOU HAVE SOMEONE WITH A LOT OF EXPERIENCE GOING TO RED LOBSTER. LET'S HOPE HE CAN MAKE A GO OF IT. HE DEFINITELY COMES FROM THE PRIVATE EQUITY END OF THINGS AND HE KNOWS HOW TO -- ALIX: TURN IT AROUND, MAKE IT LEANER. ALSO MAKE IT SOMETHING YOU WANT TO GO TO THAT STILL HAS ITS BRAND. MAYBE UNLIMITED TRIP IS NOT VERY PROFITABLE -- MAYBE UNLIMITED SHRIMP ISN'T VERY PROFITABLE. VONNIE: THE WU TANG CLAN'S ALBUM, ONE COPY WAS MADE, AND GUESS WHO BOUGHT IT? MARTIN SHKRELI. HE WAS PROHIBITED FROM POSSESSING IT. HE WAS ALSO TOLD TO FORFEIT ALL OF HIS ASSETS. THIS ALBUM, THIS ONE DOUBLE CD ALBUM, WAS BOUGH T TWICE BY A GROUP. IN TOTAL THEY PAID $4.47 MILLION. THEY CANNOT GET THEIR HANDS ON IT, AND IT TURNED OUT MARTIN SHKRELI DID A YOUTUBE WHERE HE BROADCAST IT IN 2024. THAT IS HOW THEY KNEW HE STILL HAD IT. NOW THEY ARE LOOKING FOR IT, AND I CANNOT BELIEVE THIS STORY. BUT THE QUESTION IS DID HE EVER MAKE COPIES, WHERE IS THE DOUBLE ALBUM NOW, WHY CAN'T WE GET OUR HANDS ON IT, WHAT IS ON THIS ALBUM? ALIX: WAIT A SECOND, SO HE BOUGHT IT, HE HAD IT, IT WAS SOLD TO THIS GROUP OF INVESTORS, AND THEN HE WOULD NOT GIVE IT OVER? VONNIE: IT WAS SOLD TWICE. HE PAID $2 MILLION, THEY PAID $4.75 MILLION, SO GOOD INVESTMENT MARTIN SHKRELI. BUT HE DIDN'T HANDED OVER AND NO ONE KNEW WHERE IT WAS. HE WAS IN PRISON, BUT WHEN HE GOT OUT HE WAS IN POSSESSION OF IT. ALIX: WHEN HE GOT OUT HE JUST BROADCAST IT? VONNIE: AND I DID NOT KNOW IT WAS BEING BROADCAST. ALIX: HERE IS A CEO WHO IS DEFINITELY UNDER A HEADACHE. QANTAS AIRWAYS ACCIDENTALLY SOLD RETURN FIRST-CLASS AIRFARE BETWEEN THE U.S. AND AUSTRALIA FOR AS MUCH AS AN 85% DISCOUNT OF THE USUAL PREMIUM CABIN FARE. PASSENGERS SNAPPED UP 300 TICKETS WITHIN EIGHT HOURS. THE LUCKY FLYERS GOT THE TICKETS FOR ROUGHLY $3300 VS. $13,000 TO $20,000. THEY SAID THEY ARE REBOOKING TO CUSTOMERS INTO BUSINESS CLASS. VONNIE: WHY ARE YOU GETTING REBOOKED? ALIX: I WOULD BOOK AND REOBOK INTO BUSINESS CLASS. VONNIE: IT IS NOT MY FAULT QANTAS MESSED UP. ALIX: YES, BUT ISN'T IT NICE YOU STILL GET BUSINESS? VONNIE: NO, I PAID FOR FIRST-CLASS. I THINK BUSINESS CLASS IS FINE, BUT IF I BOOKED AND PAID FOR IT, OR COMPENSATE ME, GIVE ME A SECOND FLIGHT. ALIX: $3300 BUSINESS CLASS TO AUSTRALIA? I WILL TAKE IT. COMING UP WE LOOK AT ALIX: APPLE UP ALMOST 10% SINCE ITS AUGUST LOW. IT'S NEXT CATALYST COULD BE AROUND THE CORNER. Mark Gurman, Bloomberg News REPORTEDLY APPLE HAS SENT EXPECTATIONS -- INVITATIONS FOR ITS OF 10 WERE NINTH PRODUCT LOSS -- WHAT DO WE EXPECT? MARK: IF YOU LOOK AT THE GRAPHIC, THAT IS IN REFERENCE TO THE NEW USER INTERFACE FOR SIRI COMING TO THE NEW IPHONES THIS YEAR AS WELL AS LAST YEAR'S AS PART OF APPLE INTELLIGENCE. WHEN YOU PRESS THE SIDE OF THE PHONE OR ACTIVATE SIRI COME YOU GET THAT COLOR EFFECT ON THE RIM OR THE BEZEL AROUND THE IPHONE. SAME AS ON THE IPAD AND CAR PLAY, AND THOSE COLORS ARE THROUGH THE APPLE INTELLIGENCE INTERFACE. CLEARLY A REFERENCE TO THAT BEING A KEY FOCAL POINT. VONNIE: WHAT CAN WE ANTICIPATE IN TERMS OF FUNCTIONALITY AND OTHER PRODUCTS? MARK: THE THREE THINGS I'M EXPECTING ON THE NINTH ARE THE IPHONE 16 WHICH IS FOUR MODELS, NEW AIR PODS, AS WELL AS NEW APPLE WATCHES, WHICH IS THREE NEW VERSIONS. IT WILL BE A FAIRLY JAMPACKED SHOWCASE ON THAT MONDAY. THE IPHONES, NOT MAJOR OVERHAULS YOU WILL SEE NEW PROCESSORS, YOU WILL SEE A NEW BUTTON WHICH IS A DEDICATED SHUTTER BUTTON FOR TAKING PICTURES. AND ON THE PRO MODELS YOU WILL SEE SLIGHTLY BIGGER DISPLAYS. THE AIRPODS, THE NON-PRO ONES, ARE BEING REVAMPED FOR THE FIRST TIME IN FIVE YEARS. AS WELL AS NEW MID TIER AIRPODS FOR THE FIRST TIME IN THREE YEARS. THOSE WILL HAVE SOME PRO FEATURES. THE MID TIER WILL HAVE A SIMILAR CHARGING CASE WITH SOUND AS THE AIRPODS PRO, AS WELL AS ACTIVE NOISE CANCELLATION. AND THE THIRD THINK WITH A NEW APPLE WATCHES YOU WILL SEE A NEW LOW END APPLE WATCH WITH A MOVE TO PLASTIC FOR THE FIRST TIME, WHICH SHOULD MAKE IT MORE KID FRIENDLY. THEY HAVE BEEN PUSHING THAT IDEA, USING WATCHES INSTEAD OF PHONES FOR CHILDREN IN SCHOOLS. THERE WILL BE A NEW MID TIER WATCH, THINNER WITH BIGGER SCREENS. AND AN UPGRADED APPLE WATCH ULTRA THREE WITH A NEW HEALTH FEATURES COMING TO BE SERIES 10. ALIX: I KNOW I HAVE YOU ON THE SPOT, BUT THIS HEADLINE JUST CROSSING THAT APPLE IS REPLACING LUCA MY STREET AS ITS CFO. KEVIN WILL BE TAKING THAT ROLE. ANY REACTION TO THAT? THE STOCK IS DOWN ABOUT 1%. MARK: NOT SURPRISED. WE HAVE BEEN HINTING AT THIS FOR SOMETIME THAT HE IS BEING REPLACED. WE HAVE REPORTED SEVERAL TIMES THAT THAT IS HAPPENING. LUCA HAD BEEN IN THE ROLE FOR NEARLY A DECADE. KEVIN HAD BEEN THE HEIR APPARENT, AND IT HAS BEEN OBVIOUS IN RECENT MONTHS. VONNIE: WONDERFUL STUFF ALWAYS WITH THE BREAKING NEWS. MARK GURMAN, THANK YOU SO MUCH. DO FOLLOW HIS STORIES ON THE BLOOMBERG. AS WE KNOW, NVIDIA EARNINGS WEDNESDAY COULD MOVE THAT STOCK MORE THAN 9% IN EITHER DIRECTION AND THEREFORE OVERALL MARKETS. NARA LOGICS CEO JANA EGGERS IS Jana Eggers, Nara Logics WITH US NOW. YOU HAVE BEEN IN THIS SPACE FOR MANY YEARS, A LOT LONGER THAN MOST. WE ALL KNOW AI IS DISRUPTING BUT IT HAS BEEN AROUND FOR FOREVER. IT HAS BEEN DISRUPTING OVERALL. HOW MANY QUARTERS CAN NVIDIA OUTPERFORM SUCH THAT IT MAKES US BELIEVE AI IS TAKING OVER ALL OF OUR JOBS? JANA: THAT WILL BE THE QUESTION. CAN THE AI THAT IS HAPPENING RIGHT NOW OUT LAST WHAT IS NEEDED NEXT? AND WHAT IS NEEDED NEXT IS MORE SOME THINGS THAT APPLE BROUGHT OUT LAST TIME I WAS HERE ACTUALLY. THAT INTEGRATED AI WHERE IT IS LOOKING AT YOUR CALENDAR AND YOUR EMAIL AND MAYBE SOME VOICE MESSAGES YOU HAVE AND BRINGING THAT ALTOGETHER MUCH LIKE OUR BRAINS DO. OUR BRAINS BRING OUR EYES, EARS, AND NOSE TOGETHER TO MAKE A COMPLETE PICTURE. SO CAN THIS RELATIVELY SIMPLE AI THAT IS HAPPENING RIGHT NOW CONTINUE TO FUEL SOMEBODY LIKE NVIDIA RIGHT NOW UNTIL WE GET TO THAT NEXT STAGE, AND WILL THEY THEN BE ABLE TO CATCH UP WITH CHIPS? ALIX: THEN THERE ARE TWO THINGS. ONE IS THE HYPER SCALARS AND THE DATA CENTER AND LARGE LANGUAGE MODELS AND ALL THAT STUFF. AND THE OTHER IS HOW THE CONSUMER, SOMEONE LIKE ME, IS GOING TO USE THE PRODUCT AND PAY A LITTLE MORE TO GET THAT ADDED BENEFIT. WHICH ONE DO YOU THINK WILL BE THE SHORT-TERM DRIVER? JANA: I THINK THE LARGE LANGUAGE MODELS ARE GOING TO BE THE SHORT-TERM DRIVER. WHEN YOU THINK ABOUT IT, THERE IS INTERESTING RESEARCH OUT OF M.I.T.'S RESEARCH LAB AND WHAT THEY HAVE SHOWN IS OUR BRAIN, THE LANGUAGE LOTTO -- MODEL PART OF OUR BRAIN IS SEPARATE. YOU ARE LOOKING FOR THE LOGIC PART OF THE BRAIN AND WHAT WILL HELP YOU MAKE BETTER DECISIONS FASTER, WITHOUT AS MUCH TAX ON YOUR BRAIN. SO THAT WILL BE THE QUESTION. CAN LOM'S SIT THERE AND FEED SOME OF THAT FOR NOW AND THEN GET TO THE MORE COMPLEX TASK OF COMMON SENSE AND REASONING? VONNIE: CAN YOU GIVE US AN ESTIMATION FOR WHEN WE GET CLARITY ON THIS? HOW MANY YEARS ARE WE FROM THAT? JANA: IT DEPENDS ON HOW DISTRACTED WE GET FROM THINGS LIKE IMAGE GENERATION AND LOM'S. ALIX: PROBABLY VERY. JANA: I THINK WE ARE VERY DISTRACTED BY THEM AND THAT IS WHERE LARGE AMOUNTS OF MONEY IS GOING RIGHT NOW AND IF WE PUT MORE OF THAT MONEY INTO SOME NEW AND FOUNDATIONAL RESEARCH, JEFF HENTON SAID A FEW YEARS AGO THE BIGGEST ADVANCEMENT IN AI THAT IS GOING TO COME IS SOMEBODY THAT THROWS OUT WHAT I DO AND STARTS SOMETHING NEW. I THINK THAT IS REALLY TRUE. LET'S NOT GET THE STRENGTH, LET'S USE IT AND LEVERAGE IT AND BE EXCITED BY IT, BUT LET'S NOT GET DISTRACTED BY IT. ALIX: TWO QUESTIONS FOR NVIDIA. ONE, ARE HYPER SCALARS GOING TO PULL BACK, AND WHAT ARE THE CAPACITY CONSTRAINTS AND IT COMES TO ITS CHIPS? ARE THOSE THE RIGHT QUESTIONS TO BE ASKING ON WEDNESDAY, AND/OR WHAT ARE THE QUESTIONS YOU WOULD BE ASKING? JANA: I DON'T THINK THE HYPER SCALARS ARE GOING TO PULL BACK. ALIX: WE HAVE NOT READ ANYTHING OF THAT NATURE. JANA: I DON'T THINK THAT AT ALL. THE QUESTIONS I WOULD BE ASKING IS A LITTLE MORE ON THE POWER SIDE. WHERE ARE WE GOING TO GET CRUNCHED ON THE POWER SIDE WITH THE DATA CENTERS? BECAUSE YOU ARE STARTING TO SEE SOME CREAKING IN THAT, AND THE POWER INFRASTRUCTURE IS NOT QUITE THERE YET. SO WHEN ARE WE GOING TO HIT THOSE LIMITS, WHICH IS NOT MY AREA OF EXPERTISE. VONNIE: IT IS INTERESTING. THEY TALK ABOUT NATURAL GAS FUELING THESE STATIONS AND THEN YOU SEE OTHER REPORTS SUGGESTING THERE IS A LOT OF LACK OF CLARITY AROUND THAT SPACE. JANA: THAT IS ONE QUESTION I WOULD HAVE. AND THE SECOND IS HOW ARE THEY GOING TO PACKAGE WITH OTHER THINGS? EVEN NOW WITH LOM'S WE STILL NEEDED TO MARRY WITH OTHER THINGS. AMAZON JUST ANNOUNCED $260 MILLION IN SAVINGS. COMPARED TO THEIR SPEND, THAT IS .04% OF THEIR OVERALL EXPENSES. IT IS NOTHING. AND SO, THAT'S .04% OF A JOB. THAT IS REALLY NOTHING. MOST OF US CAN PICK THAT UP OR, HEY GREAT, THAT ALLOWS ME TO DO SOMETHING EXTRA. I THINK THAT UNDERSTANDING HOW THOSE IS IS FIT INTO OTHER JOBS IS WHERE IT IS GOING TO BE LIKE, WHAT CAN NVIDIA DO TO LINK THOSE TOGETHER. VONNIE: IS THERE ANY KIND OF SCENARIO WHERE THIS ALL FALLS APART AND IT REALLY DOES NOT BECOME ALL THAT PROFITABLE FOR ANYBODY AND MAYBE NVIDIA LOSES EVALUATION? JANA: THAT WOULD DEFINITELY BE A MARKET EVENT. VONNIE: IF YOU FOLLOW YOUR LOGIC. JANA: I DON'T THINK IT WILL ALL FALL APART. LOOK, I HAVE BEEN DOING THIS FOR 30 YEARS. I AM VINTAGE AI. I THINK WE HAVE ENOUGH BEHIND US. THERE IS ENOUGH COOL STUFF GOING ON. I AM NOT TRYING TO PLAY DOWN WHAT AMAZON HAS DONE. I THINK IT IS GREAT. I HAVE HUNDRED YEARS WHO WOULD LOVE THESE FOUNDATIONAL MODELS TO BE OF NEEDED MORE EFFICIENTLY. I DON'T THINK THAT WILL ALL FALL APART. THERE IS ACTUALLY VALUE THERE, BUT IT IS NOT THE BILLIONS AND BILLIONS OF VALUES IMMEDIATELY THAT PEOPLE HAVE BEEN TALKING ABOUT. VONNIE: IT REMINDS ME OF THE CRYPTO INFRASTRUCTURE. WE HAVE BEEN TALKING ABOUT CRYPTO AND BLOCKCHAIN FOR FOREVER AND IT IS REALLY ONLY NOW IT HAS BECOME USEFUL TO SOME PEOPLE. ALIX: ARE THERE RESTRICTIONS WE HAVE SEEN FOR DATA CENTERS FOR CRYPTO AND THEN AI THAT WILL SORT OF STEM THAT GROWTH. BEFORE WE LET YOU GO, THE OTHER CONVERSATION IS, IS NVIDIA GOING TO FLATTEN OUT? THEY WILL DELIVER TO PURCELL NUMBERS, THE STOCK WILL DO NOTHING, AND THE HOME SECTOR HAS BEEN IN A MALAISE. WHAT DO YOU THINK? JANA: I THINK IT COULD. BUT MY CAUTION ON THAT WOULD BE THAT I SEE THEM DOING A LOT OF THIS INTEGRATION I WAS TALKING ABOUT. I WAS AT HPE'S DISCOVERY EVENT AND THEY HAD A BIG ANNOUNCEMENT WITH NVIDIA. THE MORE THEY DO THAT AND WORK WITH THE ECOSYSTEM OF, HEY, HOW DO I PLUG IN HERE RATHER THAN JUST BEING ALONE THEMSELVES, WHICH THEY ARE NOT DOING AT ALL, I THINK THAT THERE MAY BE A LITTLE BIT OF FLATTENING COMPARED TO WHERE THEY WERE BEFORE BUT I THINK THERE IS SO MUCH OPPORTUNITY. THAT IS NOT AN AREA I WOULD WORRY ABOUT. VONNIE: JANA EGGERS JOINING US ON WHAT TO ASK ABOUT WHEN WE SEE NVIDIA EARNINGS COMING OUT ON WEDNESDAY. LET'S LOOK ON WHERE THE MARKETS CLOSED FOR THE DAY. YOU HAVE THE S&P DOWN ABOUT .3%. THE RUSSELL A LITTLE FLAT. IT WAS UP THE MAJORITY OF THE SESSION BUT IT ROLLED OVER INTO THE CLOSE. WHERE YOU DID WIND UP PUTTING MONEY WAS IN OIL, THE DOLLAR, AND GOLD. WITHIN THE S&P INDEX YOU SAW ENERGY OUTPERFORM, UP OVER 1% WHILE CONSUMER STAPLES AND UTILITIES WERE ALSO UP ABOUT .7%. THIS IS BLOOMBERG. ♪ ALIX: ANOTHER BIG EARNINGS WEEK. YEAH, WE GOT NVIDIA, BUT YOU HAVE ALL EYES ON CONSUMER SENTIMENT AND MARGINS WITH ALL RETAIL COMPANIES REPORTING EARNINGS. NORDSTROM, BEST BUY, AND DOLLAR GENERAL. LULULEMON ALSO REPORTS. AND DANA TELSEY CUTTING HER PRICE TARGET ON LULULEMON TO 360 FROM 470 AS SHE MODERATES FOR THE BACK HALF OF THE YEAR. DANA TELSEY JOINS US NOW. LULU IS THE 29TH, RIGHT? DANA: YES. LULU, GAP, ALL AFTER THE CLOSE, AND WE HAVE A TON THE BEGINNING OF THE DAY. ALIX: HANG ON ONE SECOND. YOUR MIC IS OFF. LULULEMON IS REPORTING THURSDAY, THERE IS A LOT MORE COMING OUT. ULTA AND NORDSTROM TOMORROW. VONNIE: YOU HAVE SPECTRUM OF THE CONSUMER. EVERYTHING FROM NORDSTROM ALL THE WAY DOWN TO ULTA. Dana Telsey, Telsey Advisory AND LULULEMON. THAT IS A VERY DISCRETIONARY PURCHASE. ALIX: OK, DANA'S MIC IS WORKING. LET'S START WITH LULULEMON. WHY THE DOWNGRADE? DANA: LOWERED THE PRICE TARGET GIVEN THE FACT WE EXPECT EARNINGS TO BE MODERATED. THE STOCK HAS COME DOWN ALMOST ANTICIPATING THE WEAKNESS. I THINK YOU'RE GOING TO HEAR A LOT ABOUT THE INTERNATIONAL BUSINESS, WHAT IS HAPPENING WITH CHINA, GIVEN IT HAS BEEN A BIG GROWTH VEHICLE FOR THEM. THEY DID ELIMINATE THE BREEZE THROUGH, PULLED IT OFF THE SHELF, THE NEW FABRIC. THE BACK HALF OF 2024, THERE IS GOING TO BE AN ACCELERATION OF NEW PRODUCT INNOVATION AND THAT IS WHERE THE DEMAND WILL BE GOING FORWARD. VONNIE: DO YOU SEE ANY CONSOLIDATION IN THIS SPACE? THERE IS A CERTAIN PART OF TOWN WHERE I WALK DOWN AND I CANNOT STOP PASSING STORES TRYING TO SWELL ME SWEATPANTS AND LEGGINGS. WHAT IS GOING TO HAPPEN? DANA: WHEN YOU LOOK AT ALL OF THEM TO EACH HAVE A DIFFERENT PROFILE IN A WAY. I THINK OF SWEATY BETTY MORE AFFORDABLE. I THINK OF LULU AS MORE TECHNICAL. WHAT THEY ALL NEED TO DO IS RUN AT INNOVATION TO BE ABLE TO DRIVE DEMAND AND CAPTURE THE CONSUMER DOLLAR. LET'S SEE WHAT HAPPENS AS THE NUMBERS COME OUT. THE OTHER THING THAT WILL COME OUT THURSDAY, GAP. AND DON'T FORGET, THEY OWN ATHLETIC. ALIX: I LOVE THOSE WORKOUT CLOTHES. WHAT DO YOU THINK WE ARE GOING TO SEE AT GAP? DANA: I THINK IMPROVEMENT WITH DENIM. DENIM HAS INCREASED, WIDE LEG DENIM IS A NEW TREND. AND THEY HAVE A LOT OF NEW MARKETING AND ADVERTISING TO GIVE PEOPLE SOMETHING TO REMEMBER. LET'S SEE IF THEY GIVE US EARNINGS TO REMEMBER. VONNIE: ARE PEOPLE STILL BUYING WORKOUT CLOTHES? PRESUMABLY WENT ON A RAMPAGE DURING THE PANDEMIC. DANA: I THINK THEY STILL ARE LOOK AT WHAT HAS HAPPENED WITH WORK ENVIRONMENTS. FOR THOSE PEOPLE WHO DO GO TO WORK, EVEN TWO OR THREE DAYS A WEEK, THEY ARE WEARING MORE CASUAL CLOTHES TO WORK. EVERYONE'S SHOES ARE MORE COMFORTABLE THAN JUST HEELS. AND THERE IS A NEW BRAND OUT, SNEAKERS WITH HIGH HEELS CALLED SNEEKS. ALIX: WAIT, WHAT? VONNIE: I'M A LITTLE RELUCTANT. REMEMBER THOSE WELLINGTON BOOTS YOU PUT OVER YOUR REGULAR BOOTS? ALIX: I CANNOT THINK ABOUT WINTER RIGHT NOW. WHAT ELSE DO WE HAVE? DOLLAR STORES. DANA: DOLLAR STORES COMING OUT. IT HAS BEEN A CASE OF THE HAVES AND THE HAVE-NOTS. WALMART, TARGET, T.J. MAXX HAS BEEN THE HAVES. WEAKNESS OUT OF MACY'S, URBAN OUTFITTERS. BURLINGTON COMING OUT ALSO THURSDAY. WE WILL SEE WHAT THEY HAVE TO SAY. YOU THINK OF WHERE THERE IS INNOVATION IN MOMENTUM. LET'S WATCH AMBER COMBI AND BIRKENSTOCK. INTENTIONAL SPENDING AT FULL PRICE I THINK IS WHAT YOU ARE GOING TO SEE. ALIX: THE ONLY THING I PAY FULL PRICE FOR HIS BIRKENSTOCKS AND BIONICS. I HAVE TO HAVE ORTHOPEDICS. VONNIE: NOW IT IS ABOUT CLOSE -- VONNIE: HOW MUCH IS IT ABOUT INNOVATION AND HOW MUCH IS ABOUT GETTING THE TIKTOK CROWD OR THAT ONE INFLUENCER? DANA: IT IS ALL OF IT. YOU ARE NOT GOING TO GET THE TIKTOK CROWD IF YOU ARE NOT INNOVATIVE. YOU WILL GET THE TIKTOK CROWD IF YOU HAVE SOMETHING NEW AND EXCITED. AND WHAT DO THEY DO? IT EXPANDS THE AUDIENCE NOT JUST TO BE TIKTOK GENERATION, BUT GENERATIONS BEYOND THAT. VONNIE: YOU TALK ABOUT ULTA, I AM AMAZED AT HOW MANY MAKEUP BRANDS THERE ARE CONSTANTLY NOW. IT USED TO BE KIND OF A BIG DEAL IF YOU SAW A NEW MAKEUP BRAND. NOW THERE ARE SO MANY OF THEM. DANA: YES. THIS YEAR ULTA WILL BE INTRODUCING 25 NEW MAKEUP BRANDS. THE KEY IS WHO GETS THE EXCLUSIVES. THIS WEEK WE HAVE THE U.S. OPEN TENNIS MATCHES, AND SERENA WILLIAMS, WHO HAS HER EXCLUSIVE MAKEUP LINE AT ULTA, WILL BE EXPANDING THAT LINE. THE EXCITEMENT OF MAKEUP IS NOT JUST ZOOM MAKEUP ANYMORE. KEEP IN MIND THE ITEMS EVERYONE IS BUYING ON TIKTOK, THEY WANT TO LOOK GOOD IN PERSON IN REAL LIFE AND ON THE SCREEN. ALIX: I AM ABSCESSED WITH THE SHOES. THE HIGH-HEELED SNEAKERS. OH MY GOSH. THIS WILL BE SO SAD FOR ME. I DIGRESS. NORDSTROM TOMORROW. DANA: NORDSTROM COMING OUT TOMORROW AFTER THE CLOSE. YOU HAVE THE ANNIVERSARY SALE THAT HAPPENED. IT PULLED INTO THE SECOND QUARTER SO IT SHOULD BE A BENEFIT FOR THEM. IT IS STILL ABOUT THE RACK. THE RACK IS THEIR GROWTH VEHICLE. IT BRINGS PEOPLE TO THEIR FULL-LINE STORES. TO ME IT IS ABOUT THE RACK. OBVIOUSLY THERE ARE NEW INITIATIVES, BETTER BRANDS. WE NEED TO SEE IF THE DESIGNER BUSINESS IS STILL CHALLENGED NORDSTROM. LET'S SEE WHAT HAPPENS WITH CREDIT CARD REVENUES TOMORROW. FROM WHAT WE HAVE SEEN FROM OTHER DEPARTMENTS OR RETAILERS IT IS A CHALLENGING ENVIRONMENT WITH ORDERS BEING VERY CAUTIOUS WITH VENDORS. ALIX: WHAT DO YOU DO IN A SITUATION LIKE THAT? VONNIE: STORES ARE DOING EXTRAORDINARILY WELL, ABERCROMBIE & FITCH TURNING AROUND, GAP. YET DEPARTMENT STORES CANNOT DO IT BUT THEY ARE JUST AN AMALGAMATION OF DIFFERENT STORES. SO WHY NOT? DOES SOMEONE NEED TO GET FIRED? DANA: IT IS NOT NECESSARILY SOMEONE GETTING FIRED. IT IS INNOVATING AND CHANGING THE LOOK. YOU NEED TO REINVEST IN THE PRODUCT AND REINVEST IN MARKETING TO ATTRACT NEW CUSTOMERS. EVERYONE HAS A LOT OF CHOICE THESE DAYS. WHEN YOU THINK OF WHAT MAKES A BRAND OR RETAILERS SUCCESSFUL, WHAT ARE YOU DOING THAT IS INNOVATIVE TO DRIVE A SUCCESSFUL CONCEPT WITH REPEAT CUSTOMERS? HOW ARE YOU ON SEAMLESS AND SPEED TO EXECUTE BETTER? WHAT THE DATA IS INFORMING MANAGEMENT OF IN ORDER TO FULFILL THEIR PATH OF PROGRESS AND GROWTH GOING FORWARD? THERE IS A LOT CHANGING IN OUR WORLD AND WE WILL HAVE MORE ABOUT THAT END OF THE WEEK. ALIX: WHAT ARE PEOPLE GOING TO BUY DURING CHRISTMAS? WHAT WILL BE THE HOT SELL? DANA: I THINK BIRKENSTOCK WILL BE A HOT SELLER. YOU WILL HAVE NEWNESS IN OUTERWEAR. AND COULD WE SEE A RETURN TO ELECTRONICS FOR THE HOLIDAY SEASON? LET'S WATCH THAT. ALIX: ISN'T BEST BUY LATER THIS WEEK? DANA: THAT IS ONE OF THE THINGS WE COULD HEAR ABOUT. ALIX: SKINNY JEANS. DANA: NO, THEY ARE DEAD. VONNIE: I THINK YOU DON'T HAVE YOUR FULL INFORMATION. BELLA HADID WAS PHOTOGRAPHED WEARING THEM AND KENDALL JENNER AS WELL. I THINK THEY ARE MAKING A COMEBACK. DANA: AS LONG AS THERE IS NEW TOPS AND NEW SHOES, HELLO RETAIL SALES. ALIX: I LOVE HAVING YOU HERE. IN GENERAL, WE KNOW THERE IS A BIFURCATED CONSUMER. WHAT KIND OF COMPANIES HANDLE THEIR MARGINS WELL AND NOT DISCOUNT TOO MUCH, BUT STILL KEEP THE TOP LINE IN THE AMOUNT OF PEOPLE COMING INTO THEIR STORES? HOW DO YOU FIND THAT MAGIC SAUCE? DANA: EVERYBODY'S INVENTORY LEVELS ARE STILL LEAN. YOU STILL NEED A PRODUCT THAT SELLS. VONNIE: HOW MUCH OF THE RED SEA TROUBLES TAKE UP YOUR TIME THE LAST COUPLE OF MONTHS? ARE YOU CONCERNED? DANA: YES. I'M WORRIED ABOUT THE INCREASED FREIGHT EXPENSES. A LOT OF THEM GET RENEWED IN THE SPRING. WE ARE WATCHING FOR WHAT IMPACT ON 2025 THEY COULD HAVE. I LIKE THE BIRKENSTOCKS STORY. ALIX: YOU ARE DOUBLING DOWN ON THAT ONE. DANA: I LIKE TJX. TJ, ROSS, AND BURLINGTON WILL ALL BE WINNERS. VONNIE: IF KAMALA HARRIS, DO ANY OF THESE BRANDS NEED TO BE WORRIED ABOUT PRICE GOUGING? DANA: I THINK OVERALL, TYPICALLY BUT WE HAVE SEEN, BECAUSE WE LOOK BACK TO 1972 AND ELECTIONS, DEMOCRATS AND INCUMBENTS TYPICALLY DO BEST FOR CONSUMER SPENDING. VONNIE: WE CANNOT WAIT TO SEE THE RESULTS OF THIS WEEK'S RESULTS WITH YOU. DANA TELSEY IS JOINING US IN THE STUDIO. STILL AHEAD, WHAT INVESTORS NEED TO WATCH FOR TOMORROW AND THE REST OF THE WEEK. THIS IS BLOOMBERG. What To Watch ALIX: MONDAY IN THE BOOKS THERE IS A LOT HAPPENING TOMORROW. HERE'S WHAT WE ARE WATCHING. AFTER THE MARKET BIG NORDSTROM, SENTINEL ONE, AND PVH WHICH OWNS RALPH LAUREN. OBVIOUSLY INTERESTED IN ALL OF THE READTHROUGH WE GET FROM RETAIL. VONNIE: CANNOT WAIT TO SEE WHAT THAT SAYS ABOUT THE CONSUMER. YOU KNOW WHAT ELSE WE GET? THE CONFERENCE BOARD CONSUMER CONFIDENCE DATA. WE HAVE HAD MIXED DATA ON THE CONSUMER AND THEIR CONFIDENCE. THEY HAVE BEEN WORRIED ABOUT THE LABOR MARKET BUT MAYBE THOSE WORRIES WILL GET ASSUAGED AND WE WILL SEE THAT IN THIS NEW DATA. ALIX: AND WE ARE DEFINITELY GOING TO GET THE PRESENT SITUATION AND EXPECTATIONS. I WONDER HOW THE ELECTION WILL OR WON'T AFFECT EXPECTATIONS. THE NFL IS MOVING TO DISCUSS PRIVATE EQUITY FIRMS BUYING INTO TEAMS. VONNIE: YOU KNOW ROGER GOODELL WOULD NOT ALLOW THE VOTE TO HAPPEN UNLESS IT WOULD PASS, BUT THE NFL IS ONE OF THE LAST SPORTS TO ALLOW PE IN. APPARENTLY THEY CAN OWN UP TO 30% OF A BASKETBALL TEAM, WHICH I DID NOT KNOW. BUT IT WILL HELP IF YOU ARE BUILDING A STADIUM, WHICH THE BUFFALO BILLS ARE, THE CLEVELAND BROWNS, CHICAGO BEARS. I HAVE BEEN WATCHING HARD KNOCKS, SO THAT MIGHT BE WHY I KNOW ALL THIS. IF YOU ASKED ME A FEW WEEKS AGO, I WOULDN'T HAVE. ALIX: I WILL TAKE IT BECAUSE I WAS LIKE YEAH, THAT'S HAPPENING.