All Eyes on Nvidia With Results Due After Bells | Bloomberg: The Close 08/28/2024

Bloomberg: The Close ANNOUNCER: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ♪ ROMAINE: IT'S NVIDIA'S WORLD. WE ARE JUST ALL LIVING IN IT. FROM STUDIO 2 IN NEW YORK, I'M ROMAINE BOSTICK. SCARLET: AND I AM SCARLET FU. ALIX STEEL IS OFF FOR THE DAY. WE ARE KICKING YOU OFF TO THE CLOSING. STOCKS BROADLY LOWER. AT ONE POINT ON COURSE FOR THE WORST DAY SINCE AUGUST 1. IT GIVES YOU A SENSE OF THE NEGATIVE PRINTS WE ARE SEEING. DRILLDOWN, YOU CAN SEE THE MAGNIFICENT 7 UNDERPERFORMING, WITH ALL SEVEN NAMES IN DECLINE. DRILLING FURTHER, NVIDIA IS DOWN 1.9%. WE HAVE 80 MINUTES OR SO BEFORE NVIDIA'S EARNINGS RELEASE, A RELEASE THAT WILL BE AS PICKED AS ANY JOBS REPORT FOR FOMC STATEMENT TREASURIES FALLING AT THE LONG END OF THE CURVE, THE 3-YEAR YIELDS EDGING HIGHER TO 3.83%. . ROMAINE: LET'S GET TO THE ELEPHANT IN THE ROOM, NVIDIA, THE BIG MACRO EVENT. FIVE QUARTERS NOW WHERE IT HAS POSTED TRIPLE DIGIT REVENUE GROWTH. THAT IS A STREET THAT LIKELY CONTINUES FOR A SIXTH QUARTER BASED ON ANALYST EXPECTATIONS FOR THAT EARNINGS REPORT TONIGHT, THAT IS THE EFFECT OF BEING THE MAIN BENEFICIARY OF BILLIONS IN AI SPENDING. BUT THAT SPENDING HAS SLOWED A BIT AND THAT HAS THE MARKET A BIT ON EDGE. WHAT IS EASILY THE MOST PHENOMENAL STOCK OF THE LAST COUPLE OF YEARS. NOT JUST PHENOMENAL ARE THE MOST CONSEQUENTIAL TO BOOT, ACCOUNTING FOR OVER 6% OF THE S&P WEIGHTING, 11% OF THE NASDAQ, 40% OF THE PHILADELPHIA SEMICONDUCTOR INDEX. THOSE WEIGHTINGS MEAN THAT IT AND SHIPWRECKS IS KOREA, TAIWAN AND EUROPE, NVIDIA WILL INFLUENCE TRADING ACROSS THE WORLD PEOPLE. >> NO QUESTION NVIDIA IS A LARGE PART OF MARKET MOVEMENTS BECAUSE OF THE REPRESENTATION IN MOST INDUSTRIES AND IN MOST PEOPLE'S PORTFOLIOS. BUT I THINK THE MARKET IS MOVING AWAY FROM THAT. IT IS BROADENING OUT. ROMAINE: FOR BETTER OR WORSE, NVIDIA WILL INDEED DOMINATE THE CHARTER TODAY AND TOMORROW. BUT IT'S NOT THE ONLY STORE IN TOWN, ONE OF ITS MAIN DISTRIBUTORS, SUPERMICRO, PLANTING ALMOST 30% AFTER DELAYING ITS 10K FILING IN THE WAKE OF THE HINDENBURG REPORT. SALESFORCE, WHAT THIS CORPORATE REPORTERS, THEY REPORT AFTER THE BELL. AS DOES OKTA, APPLIED DIGITAL, CROWDSTRIKE AND OTHERS EACH WITH THEIR OWN POTENTIAL TO DRIVE THE MARKET. SCARLET: ABSOLUTELY, BUT THE STORY FOR THIS YEAR IS NVIDIA AND ITS INFLUENCE ON THE EQUITY IN BULL MARKET. ED HARRISON FEATURED THIS CHART IN HIS LATEST EVERYTHING RISK, AND IT SHOWS THE S&P 500 IN ORANGE, TAKING OFF AFTER THE LAST RATE HIKE IN JULY OF 2023. YOU HAVE THE MELTDOWN THIS SUMMER, THAT BIG DIP. IT WAS BRIEF. NVIDIA IN WHITE, AND LARGE CAPS HAVE PRETTY MUCH RECOVERED. ED HARRISON SAYS WE NEED TO SEE RECORD HIGHS FOR THE RALLY TO BE CONFIRMED. THE BEING THAT ANYTHING NEGATIVE FROM NVIDIA WILL HAVE MARKETWIDE IMPLICATIONS ESPECIALLY AFTER EARNINGS FROM THE OTHER MAG SEVEN NAMES RAISED CONCERNS THAT ALL OF THAT AI SPENDING HAS YET TO PAY Dan Morgan, Synovus Trust OFF. ROMAINE: ALMOST $29 BILLION IN REVENUE IN THE MOST RECENT QUARTER, DOUBLE WHAT IT DID A YEAR AGO. DAN MORGAN IS JOINING US. SENIOR PORTFOLIO MANAGER AT SYNOVUS TRUST WHICH HAS $19 BILLION IN ASSETS UNDER MANAGEMENT. I WANT TO START WITH THE GROWTH STORY. IT'S BEEN THE STOCK PRICE APPRECIATION STORY. EVEN WITH THE SLOWDOWN IN THAT GROWTH FROM 200 PLUS PERCENT TO NOT 100% HERE, DOES THAT STILL LEAVE YOU POSITIVE ON THE LONGER-TERM OUTLOOK FOR THIS COMPANY ? DAN: I WOULD EXPECT THE REVENUE GROWTH RATE TO START TO FALL GOING INTO SUBSEQUENT QUARTERS JUST BECAUSE THE COMPARISON HAS BECOME SO DIFFICULT, BUT AS YOU MENTIONED COMING INTO THIS QUARTER, THE CONSENSUS OF 28 AND A HALF MILLION, MOST LIKELY THEY WILL HAVE TO DO A COUPLE OF BILLION OVER THAT AND GUIDE IT TO THIS UPCOMING THIRD QUARTER ABOVE THE CONSENSUS WHICH IS ABOUT 31.5 BILLION. TO REALLY MOVE THE STOCK IN THE INTERIM. BUT I WOULD EXPECT THAT THE YEAR-OVER-YEAR GROWTH WILL CONTINUE TO SLOW DOWN JUST BECAUSE IT'S HARDER TO KEEP TALKING THESE HUGE COMPARISONS. ROMAINE: I AM CURIOUS ABOUT THE SLOWDOWN WE HAVE SEEN IN SOME CORPORATE AI SPENDING. THERE HAS BEEN A LOT OF TALK WHEN WE TALK ABOUT THE MAG SEVEN ON HOW CONCENTRATED THE MARKET IS, BUT THERE IS A LOT OF TALK ABOUT HOW CONCENTRATED REVENUE SOURCES ARE FOR NVIDIA, MORE THAN 50% OF ITS REVENUE COMING FROM COMPANIES LIKE MICROSOFT, META, SUPER MICRO AND ALPHABET. DOES THAT CONCENTRATION GIVE YOU ANY CONCERN? DAN: WE TALKED EARLIER ABOUT SOME OF THOSE CONFERENCE CALLS. YOU LOOK AT THE GUIDANCE, THE FAANG STOCKS, SO TO SPEAK, THE MATTERS THE MICROSOFTS, THEY ARE BETWEEN 40 OR $50 MILLION IN THEY WERE GOING TO SPEND IN A LARGE PART OF THAT WILL GO TO DATA CENTER AI. WHEN I HEARD THOSE NUMBERS, I WAS VERY ENCOURAGED BY THEM. ALSO BY THE FACT THAT AWS, GCP AND AZURE ALSO SHOWED ON A IN YEAR-OVER-YEAR GROWTH IN THE SECOND QUARTER DUE TO DATA CENTER AND AI. BUT YOU ARE RIGHT, IT'S A VERY NARROW GROUP, RIGHT, IF THOSE GUYS START TO PEEL BACK, THEY DO HAVE OTHER AREAS THEY ARE IN, BUT IT IS SO HEAVILY INTENSIVE WITH THESE DATA CENTER SPEND RATES. SCARLET: YES, DATA CENTER IS THE DRIVING FORCE, AT LEAST OF THE STOCK. YOU MENTIONED IT' GENERATES MOR REVENUE THAN INTEL AND AMD'S COMBINED DATA CENTER UNITS. ONE THING I FIND INTERESTING IS YOU BOUGHT INTO NVIDIA IN 2018 BEFORE PEOPLE IT IN DATA CENTERS. WHAT WAS THAT OF THE TYPE THAT ATTRACTED YOU TO THE STOCK AND STILL RETAINS VALUE EVEN IF THAT SPENDING ON AI CHIPS STARTS TO SLOW DOWN MORE THAN WE MIGHT EXPECT? DAN: IT'S INTERESTING. THE REASON WE ADDED THAT TO OUR BUY LIST FIVE YEARS AGO WAS BASED ON THE FACT THAT IN THE PAST WE HAD ALWAYS PERCEIVED THEM AS REALLY A GAMING STOCK WHERE THEY WERE PRODUCING GPU CHIPS IN THE GAMING SPACE. THEY STARTED TO COME OUT WITH CHIPS THAT WERE GOING INTO THE DATA CENTERS AND COMPETING DIRECTLY AGAINST AMD AND INTEL, AND THEY WERE GAINING MARKET SHARE. ALL OF A SUDDEN, CONFLICT WHERE THE AMOUNT OF REVENUE THEY WERE GENERATED FROM DATA CENTERS ACTUALLY EXCEEDED THEIR GAMING SEGMENT. THAT WAS A FEW YEARS AGO. AND KIND OF IN THE REARVIEW MIRROR, WE WOULD OTHERS BE, LIKE, BY THE WAY, WE HAVE 70% SHARE IN THE AI CHIP SPACE. NO ONE REALLY CARED. THEY WOULD TALK MORE ABOUT THE OMNIVERSE. IF YOU REMEMBER, META, FACEBOOK CHANGED ITS NAME AND STARTED TALKING ABOUT THE OMNIVERSE, THEY HAD A LOT OF CHIPS SKEWED TOWARDS THAT THAT THEY WOULD TALK ABOUT. THAT IS WHEN WE PUT IT ON THE BUY LIST. IT'S LIKE PUTTING APPLE ON THE BUY LIST BACK IN 2005 WITH THE IPOD, THAT ALL OF A SUDDEN THE IPHONE CAME OUT AND EXPLODED. SO, JUST HIT A NICE HOME RUN. [LAUGHS] WHAT CAN WE SAY? CLIENTS ARE HAPPY! [LAUGHTER] SCARLET: MASSIVE HOME RUN. I'M SURE IT COMES UP ALL THE TIME WHEN CLIENTS SPEAK WITH YOU. ONE THING ABOUT THESE RESULTS ARE ABERCROMBIE & FITCH HAD A BEAT AND RAISE QUARTER AND THAT IS NOT ENOUGH THE STOCK IS FALLING TODAY. NVIDIA COULD HAVE A BEAT AND RAISE QUARTER, BUT IT NEEDS TO DO MORE THAN JUST BEAT, DOESN'T IT? DAN: THAT IS THE CHALLENGE IN THIS REPORT. YOU MENTIONED WHAT REMAINED SAID, OVER 100% GROWTH TOP LINE, FOR THIS UPCOMING QUARTER BUT EVERYBODY IS HANGING THEIR HAT ON THE Q3 NUMBER. THE CONSENSUS IS 31.5 BILLION. I'VE HER NUMBERS WHISPERED AS HIGH AS 33 TO 34 BILLION. EVEN IF THEY BEAT ESTIMATES BUT THEY DON'T GET THAT 33-34 BILLION MARK IN TERMS OF GUIDANCE ON THE THIRD QUARTER, IT'S ALMOST LIKE A DISAPPOINTMENT, RIGHT, EVEN THOUGH THEY ARE GROWING OVER 100%. IT'S A TOUGH CROWD TO PLEASE RIGHT NOW. [LAUGHTER] SCARLET: ABSOLUTELY. DAN, WE'LL SEE HOW IT SHAKES OUT. DAN: THANK YOU, SCARLETT. SCARLET: DAN MORGAN FORM SYNOVUS TRUST. BE SURE TO TUNE INTO BLOOMBERG TECHNOLOGY, WE HAVE AN INTERVIEW WITH NVIDIA CEO AND COFOUNDER JENSEN HUANG. ROMAINE: COMING UP, MORE TO TALK ABOUT INCLUDING THE ETF SPACE. INFLOWS HAVE STARTED TO HEAT UP IN JULY, THE SECOND BEST MONTH OF FLOWS FOR FRIENDS EVER. WE WILL SIT DOWN WITH THE CEO OF ONE OF THE LARGEST ETF PROVIDERS IN THE U.S. SCARLET: PLUS, PE FIRMS ARE GETTING READY TO PLAY BALL WITH THE NFL AFTER A DEAL AND ELASTICITY TO ALLOW PRIVATE EQUITY IN TEAMS. WE WILL SIT DOWN WITH JOE SINCLAIR. ROMAINE: AND WE WILL KEEP A BROADER EYE ON THE MARKET, NVIDIA WILL POTENTIALLY HAVE A HUGE IMPACT ON THE MARKET. STOCKS ARE ON THE BACK FOOT RIGHT NOW BUT THAT COULD CHANGE IN 15 MINUTES TIME. STICK WITH US. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: SUMMER CAN TYPICALLY BE A SLEEPY TIME FOR TRADING, INCLUDING EDS, BUT THIS YEAR, THE FUNDS ARE SEEING A SURGE. JULY WAS THE SECOND BEST MONTH ON RECORD. EVERY MONTH SO FAR THIS YEAR, HAS EXCEEDED THE HISTORICAL TEN-YEAR AVERAGE WHICH YOU CAN SEE ON THIS CHART, THE BARS REPRESENTING THE LONG-TERM AVERAGE, THE LINES INDICATING WHERE WE ARE THIS YEAR. VANECK HAS MORE THAN 60 EDS UNDER ITS Jan Van Eck, Van Eck Associates Corporation MANAGEMENT, INCLUDING A NEW ONE ANNOUNCED TODAY THAT IT BEGAN TRADING FOLLOWING THE BIG FACTOR BEHIND TODAY'S BIG STORY, SAMMY'S. CEO'S JAN VAN ECK JOINS USS NOW. SMH X PLAYS ON YOUR EXISTING ETF, SMH. TELL US ABOUT IT. JAN: IT'S BROKEN INTO THE GIANTS THAT MAKE CHIPS LIKE SMC AND THE DESIGNERS, AND THE EQUIPMENT MAKERS. IF YOU LIKE AN ASSET-LIGHT MODEL LIKE A LOT OF PEOPLE DO AND YOU WANT TO AVOID THE RISK OF MANUFACTURING CHIPS WHICH HAS STRIPPED UP INTEL AND OTHER COMPANIES, YOU COULD PUT TOGETHER A PORTFOLIO OF THESE FABULOUS SEMICONDUCTOR CHIPS, SO, SMHX. SCARLET: ANY OVERLAP AT ALL BETWEEN SMH AND SMHX? >> YOU TAKE OUT THE EQUIPMENT MANUFACTURERS. IT TREATS DIFFERENTLY. PROBABLY NOT SURPRISINGLY, IT HAS OUTPERFORMED IN THE LAST 10 YEARS OR SO. SCARLET: DOES NVIDIA FALL IN THE CATEGORY OF SMHX? JAN: NVIDIA HAS BEEN THE STAR OF SMH AS WELL. WHAT YOU ARE EXCLUDING IS THE FACT THAT MANUFACTURERS AND THE EQUIPMENT MAKERS. YOU'RE GETTING 20 OR SO CHIP DESIGNERS THAT DON'T REQUIRE AS MUCH CAPITAL AND HAVE PERFORMED REALLY WELL. A LITTLE BIT OF THAT THAT WE THINK, IS THAT IN TWO TO THREE YEARS, NVIDIA, GOD FORBID, WILL HAVE COMPETITORS, AND THE MOST OF THE COMPETITORS WILL BE THE OTHER COMPANIES IN THE FUND. ROMAINE: WHAT ABOUT FURTHER ALONG THE SUPPLY AND PURCHASE CHAIN, IT HAS BEEN SO MUCH FOCUS ON THE CHIPS THEMSELVES. BUT WHAT ARE INVESTORS LOOKING FOR? I KNOW THAT RIGHT NOW, EVERYBODY WANTS NVIDIA THEY WANT, THE PERSON OR THE COMPANY MAKING THE CHIPS, BUT THEY WILL EVOLVE TO TRY TO LOOK FOR OTHER BENEFICIARIES. IS IT EATING INTO ETS YET? JAN: NVIDIA IS TRYING TO LOCK IN MARKET SHARE. IT SEES THE COMPETITION COMING. SO THEY ARE TRYING TO LOCK IN THAT HARDWARE DOMINANCE. BUT THE OTHER SOFTWARE COMPANIES, YOU LISTEN TO THEM, IT WILL TAKE THEM TO THE THREE YEARS, BUT THEY ARE COMING AND WITH A HIGH DEGREE OF CONFIDENCE, THEY FEEL THE SAME DEMAND FOR DIVERSIFICATION FROM CUSTOMERS. ROMAINE: WHERE DO YOU GET TO A POINT WHERE YOU FEEL LIKE IT'S WORTH COMING UP WITH A NEW PRODUCT TO ADDRESS THAT, WHAT IS A CRITICAL MASS THAT MAKES IT WORTH YOUR WHILE? JAN: WE WANT TO HAVE A SIMPLE, CLEAR PURE PLAY. WE'VE BEEN LOOKING AT THIS WITH SMH BEING 20 BILLION, WE HAVE LOOKED AT A LOT OF DIFFERENT IDEAS AND THIS WAS THE ONLY ONE THAT CAME ACROSS OUR RADAR SCREENS. SCARLET: THIS IS ANOTHER ETFS IN A LONG LINE OF THEMATIC ETFS. HOW DO YOU SEE THEMATIC ETFS FITTING INTO SOMEONE'S PORTFOLIO? JAN: THEY ARE SORT OF A CORE SATELLITE CONCEPT. YOU WANT TO HAVE THE VAST BULK OF YOUR RETIREMENT SAVINGS, YOUR NON-PLAY MONEY IN 60/40 PORTFOLIO. THAN IT IS WHAT YOU WANT TO OVERWEIGHT. SEMICONDUCTORS HAVE GONE FROM 2% TO 10%, OF THE S&P SO I GUESS IT'S BEYOND THEMATIC, SINCE IT'S BIGGER THAN THE ENERGY AND FINANCE SECTORS AT THIS POINT. WHAT ARE THE THEMATIC PLAYS A LIKE,, FOR INSTANCE,, INDIA, YOU KNOW IT WILL BE THE SIZE OF INTERCONTINENTAL EUROPE IN TERMS OF GDP SOON. THE RETURNS HAVE MASTERED THAT. I WANT THAT IN MY PORTFOLIO. I CALL THAT THEMATIC EVEN IF IT'S A COUNTRY, BECAUSE I HAVE HIGH CONVICTION OVER THE TREND. ROMAINE: HOW MUCH DIVERSIFICATION IS NECESSARY TO TAKE ADVANTAGE OF THESE THEMES? I THINK BACK TO WHEN WE STARTED TO SEE A LOT OF ETFS IN THE EV'S FACE BUT IT WAS JUST DOMINATED BY TESLA, AND IF TESLA HAD A BAD DAY, THE ETF HAD A BAD DAY, VICE VERSA. HOW MUCH DOES DIVERSIFICATION MATTER AND DO YOU NEED THAT? JAN: YOU DO. THAT IS SOMETHING THAT WE TALK ABOUT PURE PLAY, WE LOOK FOR, BUT YOU ALSO HAVE TO DIG ABOUT THE MATURITY OF THE BUSINESSES. IF THEY AREN'T MAKING EVS BUT THEY BECAME PUBLIC THROUGH SPAC OR SOMETHING LIKE THAT, THAT IS A LITTLE SCARY. GOOD THING ABOUT THE SEMI-SPACE, IT'S BEEN AROUND FOR, DECADES TSMC WENT PUBLIC IN 1993. ROMAINE: ALRIGHT, JAN VAN ECK, GREAT STUFF, APPRECIATE YOU TAKING THE TIME FOR US ON A CONSEQUENTIAL DAY FOR THE MARKETS. A CLOSER LOOK AT THE ETF WORLD, YOUNG VANECK IS EXECUTIVE OFFICER AT VAN ECK ASSOCIATES. COMING UP, A CLOSER LOOK AT WHAT HAS BEEN GOING ON IN THE BOND MARKET. IT'S A BIG WEEK FOR MACROS WITH CONSEQUENTIAL DATA COMING AT THE END OF THE WEEK. OUR NEXT GUEST WILL BE JOINING US, KARISSA MCDONOUGH. THIS IS "THE CLOSE" ON BLOOMBERG. ROMAINE: LET'S GET ALL YOU FROM THE CELLS -- A VIEW FROM THE SELL-SIDE. OUR TOP CALLS, SOME OF THE BIG MOVERS OFF THE BACK OF ANALYST RECOMMENDATIONS. UNITED THERAPEUTICS CORPORATION 25 75 UP FROM 400, WITH THE ANALYST POSITIVE ABOUT ITS PROSPECTS TO TREAT PATIENTS WITH THE LUNG DISEASE KNOWN AS IPF . COULD ADD $5 BILLION IN SALES FOR THE NEXT THREE YEARS. SHARES ARE UP 3%. NEXT UP, MODERNA AND UPGRADED TO HOLD FROM REDUCED AT HSBC, BUT THE PRICE TARGET STAYING WHERE IT IS. THE ANALYST SEEING POTENTIAL FOR ITS MRNA CANCER VACCINE AS A FUTURE REVENUE STREAM. MODERNA VACCINE WHICH IS ENTERING LEAD CLINICAL STAGE TRIALS A LEADING COMPETITORS IN THE RACE TO GET A VACCINE TO MARKET NEVERTHELESS, SHARES ARE SLIGHTLY LOWER ON THE DAY. FINALLY SUPER MICRO COMPUTER. LOSING ITS BUY RATING AT CSRA. THE ANALYST SAYING HE IS CONCERNED THAT THE SERVER EQUIPMENT MAKER DELAYED FILING ITS 10K FILING TO THE SEC, DAYS AFTER THE HINDENBURG SHORT-SELLER REPORT ABOUT ITS ACCOUNTING PRACTICES. WHILE CFO IS STILL POSITIVE ABOUT THE LONG-TERM FUNDAMENTALS, ANALYST SAYS IT IS PROBABLY BEST TO EXERCISE CAUTION. SHARES WHICH WERE DOWN 30%, NOW DOWN 19%. THOSE ARE SOME OF OUR TOP CALLS. SCARLET: SMCI, 19% DROP, WORST PERFORMER. MORE THAN DOUBLE THE SECOND BIGGEST DECLINE. LET'S TURN TO THE ON THE HEELS OF TODAY'S FIVE-YEAR AUCTION, WHICH SAW THAT WORST RESULT SINCE APRIL OF 2023. YOU CAN SEE THE 5-YEAR AT 3.66%. OF THE TWO YEARS SEEING SOME Karissa McDonough, Community Bank Trust Services VALUE, 3.86%. THE 2-YEAR IS ULTRASENSITIVE TO FED POLICY. KARISSA MCDONOUGH IS FIXED INCOME STRATEGIST AT COMMUNITY BANK TRUST SERVICES. IT'S GOOD TO SPEAK WITH YOU. I KNOW EVERYONE IS FIXATED ON EQUITIES, BUT THERE IS A LOT OF ECONOMIC DATA COMING UP AT THE END OF THE WEEK, NOTABLY, CORE PCE WHICH PEOPLE WILL REALLY GRAVITATE AROUND. HOW ARE YOU THINKING ABOUT EXPECTATIONS HEADING INTO THIS DATA POINT GIVEN THE PRICING OF EXPECTED FED CUTS? KARISSA: GREAT, THANK YOU FOR HAVING ME. OUR DISH WE BELIEVE THAT INFLATION IS ACTUALLY BECOMING UNDER CONTROL. I THINK THE SURVEY DATA THAT WE HAVE SEEN EARLIER IS NOT NECESSARILY MATCHING HISTORICAL HEART DATA, AND EACH INFLATION DATA. WE HAVE SEEN COMING OUT, AND PCE IS NO EXCEPTION, WE EXPECT THAT TO STAY WITH THIS WHOLE NOTION OF THE FED HAS BEEN VERY CAREFUL IN LEAVING RATES WHERE THEY ARE. WE THINK THAT WILL FOLLOW SUIT AND SHOW THAT INFLATION IS COMING UNDER CONTROL. SCARLET: WHEN YOU LOOK AT WHAT THE MARKET IS PRICING INFO RATE CUTS THROUGH THE END OF THE YEAR, 24 PERCENTAGE POINTS IN 2025, HOW COMFORTABLE ARE YOU WITH THAT PRICING? KARISSA: IF YOU HAD ASKED ME THAT QUESTION BEFORE POWELL'S SPEECH LAST FRIDAY, I WOULD HAVE SAID "A VERY MEASURED PACE." LIKE THIS FED HAS BEEN VERY CAREFUL WITH ALL THE DATA POINTS, IT IS VERY DELIBERATE. BUT WHEN WE HEARD POWELL HIMSELF, AND SAY, "IT'S TIME TO START CUTTING NOT NECESSARILY BELIEVING THAT WE WILL HAVE POSSIBLY TWO IN SEPTEMBER, BUT I DON'T THINK THAT IS OFF THE TABLE. LET'S NOT FORGET, WE HAD THE MINUTES COME OUT FROM THE JULY MEETING AND THERE WERE MEMBERS OF THE FED WHO BELIEVED CUTS WERE APPROPRIATE AT THAT MEETING. SO IF POWER IS NOW ON BOARD, I DON'T THINK A PERCENT BY THE END OF THE YEAR, TO PERCENTAGE POINTS, ACTUALLY WE ARE SEEING CLOSER TO OVER TWO PERCENTAGE POINTS IN 2026, I DON'T THINK ANY OF THAT IS OFF THE TABLE. THE FED HAS A LOT OF HISTORY TO BASE THEIR DECISION-MAKING ON. I ALWAYS SAY THIS IS ONE OF THE MORE SUCCESSFUL FED POLICY CYCLES WE HAVE HAD, BUT WE ARE AT A TRANSITION POINT. ROMAINE: CERTAINLY SO. IF YOU LOOK BACK ON ALL THE CRITICISM THEY GOT FOR THE DELAYED START TO THIS CYCLE. NOW, THEY FIND THEMSELVES IN THAT SAME POSITION AGAIN. I AM WONDERING IS AN INVESTOR, KARISSA, IF YOU BUY INTO THIS IDEA THAT RATES ARE COMING DOWN, IF THEY ARE COMING DOWN HERE, ARE YOU COMFORTABLE NOW EXTENDING DURATION NOT JUST IN THE TREASURY SPACE ARE ALSO IN CORPORATE BONDS AND FOR THAT MATTER, SOMETHING LIKE MORTGAGE BONDS, AS WELL? KARISSA: EXCELLENT QUESTION. DURATION IS OUR TOP TRADE. WE HAVE HAD A SIGNIFICANT MOVE IN LONGER RATES, THEY HAVE COME DOWN CLOSE TO HALF A PERCENT. BUT IF WE LOOK AT LONG-TERM TENANTS SPREADS THAT WE ARE FINALLY GETTING BACK TO MAY BE IN NOT INVITING YIELD CURVE, WE MIGHT SEE SOME POSITIVE YIELD CURVE ACTION HERE. IS THAT LONG-TERM HISTORICAL AVERAGE IS SOMETHING LIKE 50 BASIS POINTS ARE HIGHER, THAT SUGGESTS THAT LONG-TERM TREASURIES STILL HAVE ROOM FOR RATES TO CONTINUE TO DROP. SO, YES, LONG TREASURIES, TOP TRADE, WE LIKE MORTGAGE BACKS HERE, THAT CLARIFIES THAT DURATION BET TOO. ROMAINE: I DON'T WANT TO GET TOO WONKY. YOU HAVE THE 10 YEAR THAT IS BASICALLY ABOUT 3.9, SLIGHTLY LESS THEN THE TWO YEAR. WHAT IF WE SEE A MEANINGFUL DROP IN SHORT-TERM RATES, AS THE FED STARTS TO CUT, SO THAT TWO EARDROPS, BUT WE DON'T SEE A SIMILAR DROP IN THE 10 YEAR, FOR THE 30 YEAR, IT DOESN'T MESS UP THE TRADE OR IS THERE A BALANCE THERE? KARISSA: NO, YOU ARE STILL WELL-POSITIONED IF YOU HAVE THAT DURATION BET. I WOULD NOTE THAT THERE IS PLENTY OF -- YOU HAVE CORPORATE EXPOSURE, YOU HAVE OTHER SHORTER-TERM EXPOSURE. WE ARE NOT SUGGESTING 100% OF YOUR PORTFOLIO SHOULD BE LONG TREASURIES, ALTHOUGH WE ARE KIND OF LONG, OVER 60 YEARS AT THIS POINT. BUT YOU SHOULD HAVE REPRESENTATION ACROSS THE BOARD. EVEN IF YOU ARE JUST CLIPPING COUPONS IN LONG TREASURIES AND YOU HAVE A BIT OF A YIELD MOVE DOWN, THAT IS STILL A MAGNIFIED TRADE DURATION WAYS THAN THE BENEFIT HE WOULD GET FROM THE DROP IN THE TWO-YEAR RATE, SO THAT LOGIC STILL HOLDS. ROMAINE: ALRIGHT, GREAT STUFF, KARISSA MCDONOUGH, FIXED INCOME STRATEGIST AT THE BTS. WHEN WE COME BACK, WE LOOK AT THE HEALTH OF THE PRIVATE EQUITY MARKET. WITH 32% OF GE FIRMS LAUNCHING THIS YEAR -- 32% FEWER FIRMS LAUNCHING THEM, IN 2023, WE WILL TAKE A CLOSER LOOK AT HOW THE MARKET IS DOING. SUNAINA SINHA HALDEA, FROM RAYMOND JAMES, WILL BE JOINING US IN THE SECOND. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ ROMAINE: JUST ABOUT 3:30 P.M. HERE IN NEW YORK. THIS IS THE "COUNTDOWN TO THE CLOSE." I AM ROMAINE BOSTICK. SCARLET: AND I'M SCARLET FU. 30 MINUTES BEFORE NVIDIA -- 50 MINUTES? ROMAINE: NVIDIA IS COMING AFTER THEM BOTH. 20 OTHER COMPANIES REPORTING EARNINGS, BUT NOBODY REALLY CARES. BUT THERE ARE OTHERS LIKE SALESFORCE, WHICH NORMALLY USED TO BE THAT BELLWETHER. AND THESE OTHER SECOND-TIER SOFTWARE COMPANIES THAT MIGHT HAVE AN AI STORY, WE MIGHT MENTION THEM, BUT ALL THE OXYGEN OUT OF THE ROOM WILL BE SUCKED OUT BY JENSEN HUANG AND NVIDIA. SCARLET: AND THEN AFTER THAT HAPPENS, DOES EVERYBODY WAIT FOR PCE ON FRIDAY THAN THE JOBS REPORT NEXT WEEK, AND WE ARE DONE? ROMAINE: IT HAS BEEN THE HOT STORY. WE SHOULD POINT OUT, WE HAVE THE HEADLINES CROSSING THE TERMINAL. A NEW REPORT BY THE WALL STREET JOURNAL, A NEW FUNDING ROUND FOR OPENAI. OF COURSE, MICROSOFT ALSO PARTICIPATING. GETS TO THE BROADER IDEA THAT THIS RIGHT NOW IS WHERE THE MONEY IS GOING AND MAY BE WHERE IT MIGHT GO FOR SOME TIME. WE DO, OF COURSE, WANT TO TALK ABOUT THINGS OTHER THAN JUST NVIDIA AND AI, AND FOCUS ON WHAT HAS BEEN GOING ON IN THE PRIVATE CAPITAL MARKET SPECIFICALLY PRIVATE EQUITY. LAST FRIDAY, 848 PRIVATE EQUITY FUNDS ARE LAUNCHED. SOUNDS LIKE A LOT BUT IT IS 32% DOWN FROM LAST YEAR. Sunaina Sinha Haldea, Raymond James TO DISCUSS THE STATE OF PRIVATE CAPITAL AND WHERE THAT MONEY IS GOING OR MIGHT NOT BE GOING, IT IS SUNAINA SINHA HALDEA, GLOBAL HEAD OF PRIVATE CAPITAL ADVISORY AT RAYMOND JAMES. SUNAINA: THANK YOU FOR HAVING ME. ROMAINE: I AM GLAD WE HAD THE HEADLINE CROSS THE WIRE. THIS IS WHERE ALL THE ATTENTION, AND TO A CERTAIN EXTENT, WHERE A LOT OF THE MONEY HAS BEEN FLOWING TO. THINK ABOUT THE STATE OF PRIVATE EQUITY AND THE IDEA THAT SO MUCH OF WHAT IT DOES HAS BEEN THEMATIC INVESTING, SORT OF FOLLOWING THE MOON SHOTS HOW MUCH HAS BEEN I -- HAS AI HELPED OR HINDERED THE STATE OF THE PRIVATE EQUITY INDUSTRY? SUNAINA: IT HAS GIVEN A HOCKEY STICK EFFECT TO A NUMBER OF BUSINESSES WHO HAVE DEVELOPED AI PRODUCTS. IT CAN BE A GREAT INTEREST POINT. IT'S A GAME OF VENTURE AND GROWTH PRACTICAL TO FUND THOSE MOONSHOTS. SO WELKE IT I HAS BEEN A GOOD STORY FOR MARKETS IN GENERAL AND HAS BEEN A GOOD PROMISED LAND FOR MANY BUSINESSES, THE ABILITY OF WHAT ACTUALLY EXISTS IN MANY BUSINESSES WHO ARE MAKING AI PLAYS, THAT IS A STORY THAT IS YET TO BE TOLD. ROMAINE: ONE OF THE ISSUES IN THE PRIVATE EQUITY SPACE HAS BEEN THE BIG RISE IN INTEREST RATES, WHICH NOW MAY ACTUALLY COME DOWN, BUT ALSO THE ISSUE, TOO, THAT SOME OF THE RETURNS PROMISED IN THE MOST RECENT VINTAGES, AT LEAST FOR RIGHT NOW, HAVEN'T PANNED OUT. ARE WE AT A POINT WHERE THAT WILL START TO PAN OUT, THAT THESE ISSUES WILL BE RESOLVED? SUNAINA: I THINK THERE IS A WHOLE SLEW OF THE MARKET, THE LIMITED PARTNERS THAT FUND PRIVATE MARKETS THAT ARE WAITING FOR AN M&A BLOOM AND THEREFORE A RETURN OF CAPITAL BOOM TO THEM. IT HAS BEEN SLOWER THAN ANYONE EXPECTED. LAST YEAR WAS OVER THE LOWEST YEARS FOR RETURN OF CAPITAL IN THE LAST 15 YEARS AND SO FAR, YEAR TO DATE, THE SECOND LOWEST. IT GOES TO SHOW THAT THE LIMITED PARTNERS, ENDOWMENTS, FOUNDATIONS AND PENSION PLANS WHO FUND PRIVATE MARKETS,, UNLESS YOU GET A RETURN BACK, I AM NOT LIKELY TO RE-UP AT THE SAME LEVEL I WAS IN THE PAST. THIS WILL RESOLVE OVER TIME AND IT IS RATE PIVOT WILL CERTAINLY HELP, BUT IT'S BEEN A STRUGGLE THE LAST 13 MONTHS. SCARLET: I SPEAK OF WHAT THIS PERSON SAID IN JUNE, "I AM HERE TO TELL YOU, NOT EVERYTHING WILL BE OK THERE WILL BE FEWER REALIZATION AND LOWER RETURNS FOR THE INDUSTRY." HOW MUCH OF THAT HAVE WE SEEN AND HOW MUCH IS STILL TO COME? SUNAINA: IN TERMS OF THE REALIZATION PART, HE IS RIGHT IT'S BEEN A TOUGH SIX QUARTERS OR SO. PRIVATE EQUITY RUNS ON THE CLOCK. FOUR TO FIVE YEAR INVESTMENT CYCLE FOLLOWED BY A FOUR TO FIVE YEAR HARVEST OR EXIT PERIOD. WE HAVE RUN UP AGAINST THE BACK END OF THAT AND COMPANIES ARE FACING LOSING. WITH THAT CLOCK ALSO COMES IN A PROTEST THAT EVERYBODY HAS TO DO SOMETHING SOON OR THEY WILL RUN OUT OF THE TIME CLOCK. SO WE HAVE THIS PRESSURE BUILDING WHERE THAT INTEREST RATE PIVOT PLUS, THE ELECTION THAT EVERYONE WANTS TO GET PASSED BEFORE THAT PRIVATE EQUITY SPONSORS REALLY COME TO THE MARKET TO SELL THEIR BUSINESSES. I THINK WE ARE GOING INTO A TICK UP WE HAVE BEEN SEEING, AT THE LAST TWO QUARTERS, BUT INFLATION POINT WOULD HAPPEN AFTER THE FED STARTED CUTTING RATES. SCARLET: HOW SOON AFTER THE FED STARTS CUTTING RATES? SUNAINA: ONCE WE GET PAST THE ELECTION AND THE ELECTION SETTLE IN AND THEY ARE PRICED INTO THE MARKETS IN TERMS OF VALUATIONS, YOU ARE LOOKING AT A QUARTER OR TWO QUARTERS THEREAFTER. SCARLET: SUNAINA SINHA HALDEA, THANK YOU FOR JOINING US, GLOBAL HEAD OF PRIVATE CAPITAL ADVISORY OVER AT RAYMOND JAMES, NORMALLY IN LONDON, BUT SHE JOINED US IN NEW YORK TODAY. SPEAKING OF PRIVATE INVESTING, COMING UP, A TOUCHDOWN FOR A PE FIRMS SEEKING INVESTMENT IN NFL FRANCHISES. WE BREAK DOWN THE HISTORIC NFL OWNERS' VOTE. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: THE PRIVATE INVESTING AND THE SPORTS WORLD BUZZING TODAY FOLLOWING THE NFL OWNERS' LANDMARK VOTE. TEAM OWNERS VOTED 31-1 TO ALLOW PE FIRMS TO PURCHASE 10% STAKES IN THEIR TEAMS. A MOVE EXPECTED TO ATTRACT MILLIONS OF DOLLARS IN FRESH CAPITAL. JOE SICLARE IS CURRENTLY THE NFL'S EXECUTIVE VICE PRESIDENT Joe Siclare, National Football League AND ALSO SERVING AS A FORMER CFO. THIS IS WHAT HE SHARED ABOUT WHAT LED UP TO THAT FINAL DECISION. JOE: THE COMMITTEE HAS BEEN WORKING HARD ON THIS FOR A YEAR AND OVER THE COURSE OF THAT, WE HAD MANY COMMITTEE MEETINGS AND UPDATED THE MEMBERSHIP SEVERAL TIMES DURING THE PROCESS, SO EVERYONE WAS UP TO SPEED OF THE DIRECTION WE WERE HEADING. WE VIEW THAT AS ONE OF THE FUNDAMENTAL STRENGTHS OF OUR BUSINESS MODEL, OUR OWNERSHIP POLICY, THE WE WE SHARE REVENUE A MONTH THE CLUBS, THESE ARE ALL THINGS THAT ARE IMPORTANT TO OUR BUSINESS MODEL. SO WHEN YOU ARE LOOKING AT MAKING A CHANGE TO ONE OF THOSE, WE SPENT A LOT OF TIME, SO THE 90 MINUTES WE WERE THERE YESTERDAY, THERE WASN'T A LOT OF DENIGRATION, IT WAS JUST THINKING ABOUT GOING TO THE PROCESS, OF REESTABLISHING AND REMINDING EVERYONE WHAT OUR GOALS WERE WHEN WE STARTED, GOING TO THE PROCESSOR LAST YEAR, THE MEETINGS WE HAD. WE HAD A LOT OF DISCUSSION WITH INDUSTRY EXPERTS, FUND MANAGERS. SO IT WAS JUST GOING THROUGH ALL OF THAT, THAN LAYING OUT WITH THE POLICY IS IN FOCUSING THE FULL MEMBERSHIP ON THE SPECIFIC ELEMENTS OF THE POLICY THAT WE FELT WAS IMPORTANT. THERE WAS A BIT OF CONVERSATION ON THE FLOOR, I WILL NOT CALL IT DELIBERATION, BUT A BIT OF CONVERSATION. ROMAINE: HOW DID YOU ARRIVE AT THE 10% LIMIT? JOE: ONE OF THE THINGS OF THE OTHER SPORTS LEAGUES DID, THEY ARE MUCH HIGHER, BUT I THINK THE OWNERS JUST WANT TO TAKE IT ONE STEP AT A TIME. THIS IS A VERY NEW AND EMERGING AS A CLASS, WE COULD ALL HAVE THOUGHTS ABOUT WHERE THE MARKET WILL GO WITH WHAT THE MARKET DYNAMICS ARE, BUT NOBODY REALLY KNOWS FOR SURE. WE DO THINK THE PROGRAM WILL GROWTH AND MORE FUNDS TO INVEST IN SPORTS, MANY OF THEM LOOK AT IT AS AN INDIRECT WAY OF BUYING INTO THE BEST MEDIA CONTENT THERE IS. SOME MORE OF THEM WOULD BE INTERESTED. AS FAR AS THE LEAGUE GOES, MORE OWNERS WILL LOOK AT THIS OVER TIME I THINK ABOUT HOW IT WORKS FOR THEIR FRANCHISE. SO WE WANTED TO START OUT A LOWER PERCENTAGE AND THEN GO FROM THERE. ROMAINE: ANYONE WHO INVESTS IN ANYTHING GETS A SAY TO A CERTAIN EXTENT, IN WHAT GOES ON IN THAT BUSINESS, A MUCH DIFFERENT STRUCTURE THAN WHEN YOU ARE DEALING WITH INDIVIDUALS AND FAMILIES WHO ARE A BIT MORE CONTAINED. WITH THE PE STRUCTURE, YOU ARE DEALING WITH THE PE FIRM AND OBVIOUSLY THEIR LIMITED PARTNERS. HOW MUCH TO SAY ARE THEY GOING TO HAVE? WILL THEY HAVE TO FUNNEL THAT THROUGH THE GENERAL PARTNER? JOE: THERE HAS BEEN A LOT OF ATTENTION TO THAT, PEOPLE HEAR ABOUT PRIVITY INVESTMENT, "WHAT DOES THAT REALLY MEAN?" IN THAT CASE, THE CONTROLLING OWNER HAS FULL CONTROL OVER EVERY ASPECT OF THE TEAM. LIMITED PARTNERS HAVE NO GOVERNANCE SAY AT ALL. THESE ARE NONCONTROLLING LIMITED PARTNER SHARES, NO GOVERNANCE RIGHTS, NO SAY IN HOW THE TEAM OPERATES. . SCARLET: THE NFL IS LOOKING AT THE FIRST SALES TO BE ANNOUNCED AT THE DECEMBER OWNERS' MEETING, DO EXPECT MULTIPLE SALES ANNOUNCEMENTS AT THE TIME? JOE: WE TOLD THE OWNERS YESTERDAY THAT WE WOULD TRY OUR BEST, THAT IF ANYONE IS INTERESTED, TO ACCOMMODATE A SALE AND GROWTH OF THE NORMAL APPROVAL PROCESS. IF ANY TRANSACTIONS ARE READY TO BE APPROVED, WE WILL DO OUR BEST TO GET THEM APPROVED THIS YEAR. I DON'T KNOW IF THERE WILL BE ANY. SCARLET: DOES THAT LEAVE NEED TO APPROVE ANY SEPARATE TRANSACTION, INCLUDING WHEN THE FIRMS EXIT SOME OR ALL OF THOSE STAKES? JOE: WERE TYPICAL POLICIES ARE THAT ANY SALES TRANSACTION HAS TO BE APPROVED EITHER BY THE MEMBERSHIP FOR THE DELEGATES OF THE FINANCE COMMITTEE, BUT ALL THE APPROVAL PROCESSES WOULD APPLY THAT SAME WAY THEY DO WITH INDIVIDUALS. FINANCIAL HEALTH OF THE NFL RIGHT NOW? IT IS EXCELLENT. WE ARE THE LARGEST LEAGUE BY MANY MEASURES. EVERY TEAM IS PROFITABLE. WE HAVE LONG-TERM MEDIA DEALS, LONG-TERM COLLECTIVE BARGAINING AGREEMENT. EVERYTHING IS EXCELLENT. ROMAINE: SO EVERY TEAM COULD STAND ON ITS OWN, YOU DON'T NECESSARILY NEED THE COHESIVENESS OF THE NFL? JOE: THEY ARE ALL PROFITABLE, I MEAN, WE SAY THEY STAND ON THEIR OWN -- NOT SURE WHAT YOU MEAN BY THAT, THEY HAVE TO BE PART OF THE LEAD TO DRIVE THEIR BUSINESS, BUT THEY ARE ALL PROFITABLE. SCARLET: A LOOK AT THE OTHER LEAGUES, EVEN SOME OF THE NBA, MOVE IN FORTHWITH EXPANDING ITS TEAMS AFTER SIGNING THAT BIG MEDIA RATES DEAL. THE NFL CURRENTLY HAS 32 TEAMS. IS THERE ANY CONSIDERATION BEING GIVEN TO EXPANDING THE NFL BE UNDER CURRENT 32? JOE: THERE IS NO REAL CONVERSATION. DOWN THE ROAD, IS THERE AN INTERNATIONAL DIVISION OF SOME SORTS? PERHAPS, BUT THERE IS NO REAL CONVERSATION GOING ON RIGHT NOW ABOUT EXPANDING. SCARLET: I ASKED BECAUSE GIVEN THE DEMAND FROM INSTITUTIONAL INVESTORS BEYOND THE 4 YOU APPROVED, PROPOSALS TO BUY STAKES, FOOTBALL IS AN EMERGING ASSET CLASS, THERE'S NOT ENOUGH SUPPLY BUT PLENTY OF DEMAND. JOE: PLENTY OF DEMAND, FOR SURE. SCARLET: WHEN YOU LOOK ACROSS OTHER LEAGUES, WHAT IS THE SINGLE BIGGEST BENEFIT AND ALSO THE SINGLE BIGGEST DRAWBACK TO COMES TO INVEST WE? JOE: HOPE WE HAVE ADDRESSED ANY DRAWBACKS, BY BEING MEASURED AND STARTING OFF SMALL. PROBABLY ONE OF THE BIGGEST ISSUES TO ADDRESS IS MAKING SURE YOUR FANS UNDERSTAND IT'S NOT GOING TO CHANGE THE OPERATIONS OF THE BUSINESS. GOING TO YOUR PRIOR QUESTION, NO SAY IN THE OPERATIONS. PEOPLE HEAR OF THEM A PRIVATE EQUITY AND TO THINK ABOUT TAKING THE TURN OF COMPANIES THAT'S NOT GOING TO HAPPEN HERE. WE HAVE TRIED OUR BEST TO COMMUNICATE TO THE FANS THAT THIS IS JUST FINANCING FOR OWNERS, IS AN OPTION TO ACCESS NEW CAPITAL FOR FINANCING, AND THAT'S IT. ROMAINE: WHAT ABOUT THE LONGEVITY OF THE CAPITAL? WHEN YOU ARE DEALING WITH INVESTORS, AND THE NATURE OF WHAT PRIVATE CAPITAL IS, OBVIOUSLY THERE ARE LONG-TERM INVESTORS, THAT THEY ARE NECESSARILY BUY IT FOR LIFE INVESTORS THAT THE NFL HAS BEEN ACCUSTOMED TO FOR YEARS, WHAT IS THE POTENTIAL THAT THERE COULD BE OUR TURN IN THOSE INVESTMENTS MUCH QUICKER THAN EXPECTED? JOE: AS WE HAVE LOOKED AT THIS AND STUDIED THIS GOING BACK TO TRYING TO PREDICT MARKET DYNAMICS, ONE OF THE THINGS WE ARRIVED ON WITH LIQUIDITY EXPECTATIONS. YOU'RE RIGHT, A LOT OF PRIVATE EQUITY FIRMS TYPICALLY BUY AND HOLD FOR A SHORT TIME WE. ONE OF OUR POLICIES IS THAT THEY HAVE TO HOLD FOR AT LEAST FIVE OR SIX YEARS. THESE GLOBAL FUNDS HAVE SMALLER FUNDS WITHIN THEM, SOME OF THEM ARE LONGER DURATION AND SOME OF THEM WILL BE MAKING THE INVESTMENTS. SO IT REMAINS TO BE SEEN. BUT THAT GOES TO WHAT I SAID BEFORE ABOUT HOW WE SEE THE PROGRAM EXPANDING DOWN THE ROAD, IF THERE ARE SALES, I BELIEVE THERE WILL BE BUYERS. ROMAINE: CURIOUS ABOUT THE LEAGUE'S'S STANCE ON PRIVATE PLAYERS TAKING OWNERSHIP STAKES IN THE LEAGUE? JOE: OUR CURRENT POLICY WOULD NOT ALLOW THAT. THAT IS A CONCEPT WE HAVE THOUGHT ABOUT, BUT I THINK IT WOULD HAVE TO THINK MORE ABOUT THAT DOWN THE ROAD. SCARLET: THAT WAS JOE SICLARE, NFL EXECUTIVE VICE PRESIDENT AND SENIOR ADVISOR AND ALSO FORMER CFO OF THE LEAGUE. THANK GOD FOR THAT STORY, AND NVIDIA'S EARNINGS TODAY, ROMAINE, BECAUSE IT'S LATE AUGUST AND THERE AREN'T A LOT OF CATALYSTS IN THE MARKET TODAY. ROMAINE: WE WILL DEFINITELY GET THEM, NVIDIA AFTER THE BELL TONIGHT, INFLATION DATA FRIDAY, DOING WHAT IS NORMALLY, GIVING IS THE LAST WEEK OF AUGUST, USUALLY A PRETTY SLOW KIND OF DAY. TAKE A LOOK AT THE S&P, GOOD NEWS IS WE AREN'T WELL OFF THE LOWS OF THE DAY, LOOKS LIKE WE WERE HEADED FOR A SELLOFF. STILL 14 MINUTES BEFORE WE GET THERE. KEEPING AN EYE ON SOME HEADLINES CROSSING THE TERMINAL, THE TELEGRAM CEO HAS NOW BEEN FORMALLY CHARGED IN FRANCE MEMBER FOR THE ALLEGED CRIMINAL USE OF THAT TELEGRAM APP. SOMETHING WE WILL KEEP AN EYE ON. ALL EYES ARE ON NVIDIA. NVIDIA IS ONE OF THE BIGGEST DRAG OF THE BROADER MARKET TODAY. SCARLET: IT IS, DOWN MORE THAN 0.5%. OPTIONS INDICATED WILL HAVE A BIG MOVE IN THE AFTER-HOURS TRADING OR TOMORROW NO MATTER WHAT IT ANNOUNCES. ALSO, SUPER MICRO COMPUTER'S, A DISTRIBUTOR FOR NVIDIA, THE BIGGEST DECLINE IN THE S&P AND NASDAQ 100. IT HAS DELAYED ITS FINANCIAL REPORT. ROMAINE: AND GOING BACK TO NVIDIA, WE TALK ABOUT THE MARKET IN FACT, IT'S READING THEM IN THE VARIOUS INDICES --ITS WEIGHTING IN THE VARIOUS INDICES --THERE ARE ONLY THREE COMPANIES THAT EVEN HAD AN AVERAGE HIGHER THAN 5%. IT WAS MICROSOFT, ALPHABET AND META. YOU HAVE FOR COMPANIES THAT HAD PUT THESE TYPES OF OUTSIDE MOVES ON AVERAGE AND NVIDIA IS STILL FAR AMONG THEM. DESPITE THE FACT THAT IT'S A SMALL COMPANY. HAS IN THE COMPANY ADDED THIS MUCH MARKET CAP? SCARLET: WE WENT FROM A COMPUTER GRAPHICS, VIDEO GAME PROCESSOR TO WHAT, A BITCOIN MINING COMPANY AND NOW THE POSTER CHILD OF AI. ROMAINE: AND WE JUST MENTIONED THE TELEGRAM NEWS, THE CEO BEING CHARGED IN FRANCE. WE WE WILL KEEP AN EYE ON THAT CASE. AS WE MARCHED CLOSER TO THESE CLOSING BELLS, AND LITTLE MORE THAN 11 MINUTES TO GO, ALL EYES ARE ON NVIDIA. THE OUT-SIZED EFFECT IT COULD HAVE ON THE MARKET TRADE AND THAT SESSION TOMORROW. KATY KAMINSKI JAMES LEWIS, Kathryn Kaminski, AlphaSimplex Group CHIEF RESEARCH STRATEGIST AT ALPHASIMPLEX GROUP. WE HAVE TO START WITH, I GUESS, THE MICRO MOVES, MESH MACRO MOVES, AND VIDEO. TALK ABOUT THE IMPORTANCE. IT'S BEEN YEARS. CAN'T REMEMBER THE LAST TIME WE HAD A STOCK THAT HAD THIS MUCH IS ONE PARTICULAR EARNINGS REPORT, THE ABILITY TO EITHER THIS THIS MARKET WERE COMPLETELY TANKED IT. KATY: IT'S FASCINATING. TODAY I THINK THAT -- NOTHING THAT HAS BEEN MOST SURPRISING IS EVERYONE HAS BEEN EXPECTING IT TO GENERALLY EXPECTATIONS ARE POSITIVE BUT TODAY HAS BEEN A NEGATIVE DAY. THAT TO ME, HAS BEEN A BIT INTERESTING. BUT THE FACT THAT THE MARKET IS SO FOCUSED ON THIS ONE STOCK, IT TELLS US HOW VULNERABLE WE ARE TO THESE NARRATIVES, AND TOMORROW COULD BE A VERY INTERESTING DAY. ROMAINE: THAT HAS BEEN A LOT OF TALK ABOUT THE CORRELATIONS WITH NVIDIA AND THE BROADER MARKET, OUR OWN INTERNAL ANALYST, GINA MARTIN ADAMS, WHO LEADS OUR STOCK TEAM HERE IN BLOOMBERG, SHE POINTED OUT THAT THOSE PROVISIONS OF COME DOWN -- -- NOW SO IF THEY ARE STILL HIGH, LIKE 50 -- BUT IS NOT WHERE IT WAS A YEAR AGO. I WOULD THINK THAT WOULD BE A GOOD THING, RIGHT, FEW MONTHS MORE OF THAT IDIOSYNCRATIC-ITY OR SOMETHING? KATY: EXACTLY. YOU WANT A BIT OF THAT. [LAUGHTER] WHAT I WOULD SAY IS THAT IT SHOWS HOW MUCH WE HAVE HAD A POLARIZED AND DISTANTLY CROWDED POSITIONING, THAT THE MARKET HAS BEEN REALLY FOCUSED ON SOME KEY NAMES AND THOSE ARE DRIVING A LOT OF ACTIVITY. I WOULD POINT OUT THAT WE HAVE SEEN A LOT OF ROTATION WITH WHAT HAS HAPPENED EARLIER THIS MONTH AND EVEN IN JULY. SO I THINK THERE IS SOME SORT OF DIFFUSION OF THAT CROWDED BEHAVIOR. BUT IT DOES MAKE US MORE VULNERABLE TO INDIVIDUAL DATA. I THINK THAT IS WHY ON THE WEEK LIKE THIS, IT IS PRETTY QUIET, ALL EYES ARE ON NVIDIA TODAY. SCARLET: I LIKE WHAT YOU SAID ABOUT CROWDED BEHAVIOR AND IT GIVING RISE TO RISKS AND HOW THAT LEADS TO OVER POSITIONING PERHAPS. TELL US A BIT ABOUT THE OTHER NARRATIVES OUT THERE, PARTICULARLY AS THEY AFFECT OTHER ASSET CLASSES. FOR INSTANCE, THE CARRY TRADE UNWINDING, THE YEN CARRY TRADE THAT EVERYONE FOCUSED ON, HOW FAR ALONG THAT NARRATIVE H ARE WE? HAS THAT BEEN RESOLVED? KATY: GLAD YOU ASKED THAT. HONESTLY, THIS SUMMER HAS BEEN A SEISMIC SHIFT. WE HAVE SEEN MASSIVE FLUX IN CHANGES IN AS A CLASS POSITIONING OUTSIDE OF EQUITIES THAT IS MORE INDICATIVE OF CONCERN ABOUT POTENTIAL RECESSIONARY TRADE. LET ME GIVE YOU AN EXAMPLE. WE HAVE SEEN COMMUNITIES GO FROM LUNG SIGNALS TO MUCH MORE SHORT SIGNALS. WE HAVE SEEN FIXED INCOME SIGNALS GO FROM SHORT TO LONG ESPECIALLY IN THE DOLLAR AND GIVEN WHAT HAPPENED THIS MONTH, THE NARRATIVE HAS ALSO CHANGED THEIR THAT MOUTH SIGNALS ARE LONG FX CURRENCIES VERSUS THE DOLLAR, SO WE ARE LOOKING AT A WEAKER DOLLAR GOING AHEAD. SO WE ARE IN UP TO BUT WE WILL SEE VERY DIFFERENT BEHAVIOR IN THE NEXT FEW MONTHS, AND CROSS ASSET THEMES ARE DEFINITELY SHOWING THAT THINGS HAVE SHIFTED DIFFERENT BEHAVIOR IN THE NEXT FEW MONTH, DOES THAT MEAN WE MAY. SCARLET:. SCARLET: GET DELAYED REACTIONS TO THINGS, GIVEN THAT IT'S GOING TO BE PRETTY SLOW TRADING THE REST OF THIS WEEK AND NEXT WEEK, AFTER LABOR DAY WHEN PEOPLE COME BACK AND THEY ARE READY TO WORK? KATY: YES, THAT IS CORRECT. SEPTEMBER IS TYPICALLY A CHALLENGING MONTH, AND OCTOBER, FOR EQUITY MARKETS AND GIVEN THE AMOUNT OF UNCERTAINTY AND THE FOCUS ON THIS PACE AND THE SIZE AND THE TIMING OF THE FED, I THINK THERE'S GOING TO BE A LOT OF VOLATILITY. AND THE FACT THAT THE MARKETS HAVE SHIFTED MORE TOWARDS A FOCUS ON ECONOMIC WEAKNESS THAN ECONOMIC GROWTH. WHICH IS A DIFFERENT NARRATIVE THAN THINKING ABOUT INFLATION, WHICH IS WHAT WE THOUGHT ABOUT EARLIER THIS YEAR. ROMAINE: BUT WE ARE STILL NOT PART OF. I KNOW THE MARKETS ARE ALREADY CELEBRATING THE DROP IN RATES -- THAT STILL HASN'T ACTUALLY HAPPENED -- BUT EVERYONE HAS PRICED FOR IT AND IN FAIRNESS, THE FED SIGNALED THEY WILL DO IT. BUT IS THERE GOING TO BE THE FUNDAMENTAL SHIFT IN ALLOCATION, AND STRATEGY, ONCE WE SEE THAT RATE CUTS, OR IS EVERYONE ALREADY POSITIONED AROUND IT ALREADY? KATY: THIS IS A GOOD POINT. FOR FIXED INCOME, IT STILL MATTERS. IT MATTERS BECAUSE INFLATION IS VERY IMPORTANT FOR LONG-TERM CASH FLOWS. I THINK WE ARE GOING TO SEE A LOT OF VOLATILITY AROUND THE YIELD CURVE. WE ARE GOING TO SEE THE POTENTIAL FOR STEEPENING IN THE YIELD CURVE, SOMETHING YOU TYPICALLY MIGHT SEE AS YOU SEE CUTS. SO IT'S NOT OVER. IT MAY LOOK BETTER NOW FOR INFLATION, BUT WE COULD DEFINITELY HAVE A POP BACK UP IN INFLATION THAT AFFECT FIXED INCOME MARKETS GOING FORWARD, ESPECIALLY IN THE EYE OF CUTS. ROMAINE: CURIOUS ABOUT MACRO CONDITIONS. THE IDEA THAT WE MIGHT ACTUALLY BE STICKING THAT PROVERBIAL SOFT LANDING WE HAD BEEN HOPING FOR FOR THE LAST COUPLE OF YEARS. WE HAVE SEEN SOFTNESS IN THE ECONOMY, IN CONSUMER SPENDING. I WANT TO ASK YOU ABOUT THE COMMODITIES MARKET AS OF LATE, THERE IS A LOT OF WEAKNESS THERE PARTICULARLY WHEN IT COMES TO OIL, AND I KNOW THAT A LOT OF THIS IS EX-U.S. VERSUS WHAT IS HAPPENING IN THE U.S., BUT IN THE PAST, THAT TYPE OF SOFTNESS THAT WE SEE IN INDUSTRIAL METALS, OIL, AND OTHER PRODUCTS, HAS USUALLY BEEN A HARBINGER THAT SOMETHING IS WRONG WITH OUR ECONOMY. IS THAT NOT THE CASE THIS TIME? KATY: THIS IS AN IMPORTANT POINT FROM A TECHNICAL TRADER'S PERSPECTIVE. FROM A TRANS-FOLLOWING PERSPECTIVE, PRECISELY WHAT WE'LL WITH COVID, CROSS ASSET THEMES MOVE FIRST. COMMODITIES, FOR EXAMPLE, SHORT SIGNALS AND COMMODITIES CAN BE AN INDICATION OF WEAKENING DEMAND. THE FACT THAT PEOPLE ARE FLOCKING TO FIXED INCOME SUGGESTS THAT THERE MAY BE MORE RISK OUT THERE. WE ARE DEFINITELY SEEING MORE OF THAT POTENTIAL CONCERN FOR EQUITIES, SO THE PROBABILITY HAS BEEN REPRICED FOR A POTENTIAL RECESSION GOING INTO THE SECOND HALF OF THIS YEAR. SCARLET: WHAT DO YOU SEE AS THE BIGGEST RISK FOR THE REST OF THE YEAR? KATY: I THINK IT WOULD BE ECONOMIC DATA THAT COMES OUT AS A SURPRISE. WHY? BECAUSE PEOPLE ARE DEFINITELY AT HIGH VALUATIONS. IF WE START TO SEE THAT THIS NARRATIVE IS NOT AS STABLE AS WE THOUGHT, AND THAT IS PRECISELY WHAT WE SAW EARLIER THIS MONTH, AN INDICATION THAT THERE IS SOME ECONOMIC WEAKNESS, IT IS SOMETHING THAT MIGHT SPOOK INVESTORS THAT PERHAPS THE CUTS CAME A LITTLE BIT TOO LATE AND THAT IS THE THING I WOULD BE WATCHING THE MOST. SCARLET: FOLLOWING THAT, WHICH ASSETS ARE PRICED TO REFLECT THAT POSSIBILITY VERSUS THOSE THAT AREN'T? KATY: THIS IS PROBABLY MORE CROSS ASSETS, THINGS OUTSIDE OF EQUITIES. UNFORTUNATELY, EQUITIES TEND TO FALL LAST. WHAT WE SEE IS THAT COMMODITY PRICES HAVE PRICED IN QUITE A BIT OF WEAKNESS. YOU HAVE ALSO SEEN THE DOLLAR ALSO UNDER PRESSURE. FIXED INCOME HAS RALLIED, BUT I THINK COMMODITIES IS PROBABLY THE SECTOR TO WATCH THE PROCESS AND THAT HAS BEEN IN A DOWNWARD TREND SINCE EARLIER THIS SUMMER, PARTICULARLY SOME REVERSALS IN METALS AS WELL AS ENERGY PRICES CHANGE IN DIRECTION AS WELL. ROMAINE: THAT WILL CIRCLE BACK TO THE THING NOBODY WANTS TO TALK ABOUT. NVIDIA, AGAIN. BUT THIS IS MORE A QUESTION ABOUT BIG TECH AND THE LARGE MEGACAP NAMES THAT HAVE LED THE MARKET HIGHER. AS WE SORT OF TRANSITION TO A NEW RATES CYCLE AND MAY BE A NEW ECONOMIC CYCLE DO YOU THINK WE COULD GET A NEW MARKET CYCLE THAT IS BROADER AND MORE DIVERSIFIED THAN WHAT WE HAVE HAD OVER THE LAST YEAR AND A HALF? KATY: I WOULD HOPE SO. RIGHT NOW IT'S UNCLEAR HOW WE GET THERE BECAUSE I HAVE FELT THAT WAY THE LAST TWO MONTHS AS WE SAW A LOT OF ROTATION. BUT I GUESS IF WE START TO SEE AN ENVIRONMENT WHERE THINGS STABILIZE, WHERE LOWER RATES HELPS COMPANIES, WE MIGHT HAVE A SCENARIO WHERE SMALL CAPS MIGHT DO WELL AND YOU MIGHT CONTINUE TO SEE THAT ROTATION. SO THE QUESTION WILL BE HOW CUTS IMPACT THE ECONOMY AND HOW THEY REACT TO THAT. SO IT'S POSSIBLE WE COULD HAVE A BIT MORE BROADENING IN THAT SCENARIO. ROMAINE: I WAS A SMART CONVERSATION, WE HAVE TO LEAVE IT THERE, DR. KATY KAMINSKI, CHIEF RESEARCH STRATEGIST AT ALPHASIMPLEX GROUP, HELPING US COUNT YOU DOWN TO THE CLOSING BELLS. THREE MINUTES TO GO HERE. WE HAVE A SLEW OF EARNINGS COMING, META, SALESFORCE, OKTA, VICTORIA'S SECRET, CROWDSTRIKE, AM I FORGETTING ANYONE? SCARLET: THERE MIGHT BE ONE. NVIDIA. ROMAINE: RAISES THE QUESTION, AND LOOKING AT SOME OF THOSE NAMES ON THE BOARD YOU INCLUDED HP. SCARLET: ANOTHER TECH COMPANY, FORMER TECH GIANT AND NOW LESS SO. ONE INTERESTING THING ABOUT SALESFORCE IS WHAT IT SAYS ABOUT FURTHER ACQUISITIONS PERHAPS. ROMAINE: ALRIGHT, A FULL BREAKDOWN OF ALL THE MARKET ACTION AND NVIDIA IS COMING RIGHT NOW. ANNOUNCER: THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE MARKET COVERAGE OF THE CLOSE START RIGHT NOW. ROMAINE: RIGHT NOW WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK ALONGSIDE SCARLET FU DIGGING YOU TO THE CLOSING BELL. THE GLOBAL SIMULCAST STARTS WITH CAROL MASSAR AND TIM STENOVEC JOINING US IN THE RADIO BOOTH. ALIX STEELE WAS TOO AFRAID OF NVIDIA EARNINGS, SHE DECIDED TO TAKE THE DAY OFF. [LAUGHTER] CAROL: SHE'S NOT AFRAID OF ANYTHING. ROMAINE: WE WELCOME ALL OUR AUDIENCES ACROSS BLOOMBERG TV, RADIO, YOUTUBE AND ORIGINALS. ♪ CAROL: NOW YOU ARE PUSHING IT. [LAUGHTER] IT'S AN IMPORTANT ONE FOR THE MARKETS. WE KNOW NVIDIA, WHAT HAPPENS IN TERMS OF EARNINGS AND HOW IT TRADES, IT'S IMPACTED THE OVERALL EQUITY MARKETS A LOT. THE SELLOFF THAT WE SAW, THEN THE BOUNCEBACK. I FEEL LIKE YOU CAN SEE IT IN THE LEAD UP, THE VOLATILITY WE HAVE SEEN IN THE MARKETS OVERALL TODAY. TIM: NOT JUST NVIDIA DO, CERTAINLY A BIG STORY. CAROL: IT IS ABOUT NVIDIA. TIM: WE ARE STILL GETTING EARNINGS. SCARLET: YEAH, BUT IT'S STILL ABOUT NVIDIA. TIM: ROMAINE, TELL HIM THERE ARE OTHER COMPANIES OUT THERE. SCARLET: BUT NO OTHER COMPANY WILL MOVE THE MARKET LIKE NVIDIA. TIM: YOU GOING TO BACK ME UP A LITTLE BIT? ROMAINE: I DO BACK IT UP HERE. WE TALK ABOUT THE OUTSIZED IMPORTANCE OF NVIDIA BECAUSE OF ITS WEIGHTINGS [LAUGHTER] , IT WILL GIVE US A BETTER READ ABOUT ECONOMIC CONDITIONS. NVIDIA IS KIND OF IN ITS OWN WORLD. WE TALK ABOUT THIS IDEA HERE THAT WHEN YOU HAVE A COMPANY THAT IS SO OUTSIZED IN THE MARKET, HOW DO YOU PUSH BACK ON THAT IF YOU ARE AN INVESTOR? DO YOU GO ALONG FOR THE RIDE? [CLOSING BELL RINGING AND CHEERS] IT'S LIKE DON'T FIGHT THE FED. "DON'T FIGHT NVIDIA." . SCARLET: THAT IS THE RISK, UNDERPERFORMING FOR ANY INVESTOR. ROMAINE: ALRIGHT, LET'S GET TO THE NUMBERS. EVERYTHING PRETTY MUCH IN THE RED ACROSS THE BOARD. . . THE DOW JONES INDUSTRIAL AVERAGE DOWN THE DOW JONES INDUSTRIAL AVERAGE DOWN A HUNDRED POINTS, 0.4%. THE S&P DOWN 30 POINTS, 0.6%. NASDAQ DOWN MORE THAN 1%. THE RUSSELL 2000 CLOSING THE DAY DOWN BY ABOUT 0.7%. CAROL: BACK TO THE BIG CAPS. WE HAD TO 14 NAMES IN THE S&P GAINING GROUND. TO 85 LOSING GROUND. 4 UNCHANGED. SCARLET: LET'S LOOK AT THE IMF. IT IS PRETTY MUCH A RED PIZZA PIE. A BIT OF GREEN. THE ONLY GREEN IS IN THE FINANCIALS AND THE HEALTH CARE SPACE THAN THEY ARE MARGINALLY HIGHER. THE BIG LAGGARDS, TECH, CONSUMER DISCRETIONARY AND COMMUNICATIONS SERVICES WHICH BASICALLY ENCOMPASSES THE MAG SEVEN CONSUMER DISCRETIONARY AND TECH DOWN AT LEAST 1%. CAROL: INDIVIDUAL MOVERS. JULIE IS UP 11%, RALLYING TO THE HIGHEST IN ABOUT A YEAR -- CH EWY. THE COMPANY GIVE OUT WITH SECOND QUARTER RESULTS AND GIVE GUIDANCE THAT WAS REALLY GOOD. WE'VE GOT SOME OTHER EARNINGS. ROMAINE: SALESFORCE. SALES COMING IN SLIGHTLY ABOVE ESTIMATES, 2.0 7 BILLION. THE STREET WAS LOOKING FOR 2.01. OPERATING INCOME, 3.1 4 BILLION. THE STREET WERE LOOKING FOR 2.96. UPS, $2.56 A SHARE. THE COMPANY IS GUIDING REVENUE AT 37.7 BILLION TO 38 MILLION, THAT IS THE RANGE. THE STREET WAS LOOKING ON AVERAGE $437.8 MILLION. RELATIVELY IN-LINE WITH ESTIMATES ON THE FORECAST AND A MODEST BEAT FOR THE MOST RECENT QUARTER. SCARLET: NETAPP, A STORAGE COMPANY, HARDWARE. FOR THE QUARTER THAT ENDED, EPS BEAT ANALYSTS’ ESTIMATES. $1.17 ON A NET BASIS. ADJUSTED EPS, 1.5 SIX DOLLARS VERSUS $1.45 ESTIMATED. REVENUE TOPPING THE ESTIMATES. THIS QUARTER IT SEES REVENUE FROM 1.57 TO $1.72 MILLION, THE CONSENSUS ESTIMATE IS 1.6 2 BILLION. FULL-YEAR ADJUSTED GROSS MARGIN GUIDANCE IS 71-72%, THE STOCK NOT YET MOVING IN AFTER-HOURS TRADE. TIM: TAKING A LOOK AT SHARE OF OKTA, THEY ARE NOT MOVING IN AFTER-HOURS TRADING EITHER BUT SECOND ADJUSTED EARNINGS PER SHARE BEAT ESTIMATES. $.72 VERSUS ESTIMATES OF $.61. REVENUE WAS UP 60% YEAR-OVER-YEAR ABOVE ESTIMATES OF $46 MILLION. ROMAINE: ALL RIGHT, SALESFORCE. RIGHT NOW, THE BIGGEST COMPANY REPORTING. THE PRESIDENT AND CFO OF THE COMPANY, HER NAME IS AMY WEAVER, SHE IS STEPPING DOWN ALTHOUGH SHE WILL REMAIN FEARFUL UNTIL HER SUCCESSOR IS NAMED. NOT SEEING THE REASON FOR HER DEPARTURE HERE, BUT WE DO KNOW THERE HAS BEEN A LOT OF TALK ABOUT THE C-SUITE UP THERE AT SALESFORCE, WHETHER SOME OF THE FOLKS THERE WERE AGING OUT FOR THEY NEEDED TO CHANGE. AMY WEAVER IS THE PRESIDENT AND CEO AND SHE WILL BE STEPPING DOWN ONCE A SUCCESSOR IS FOUND. CAROL: SHE WAS NAMED CFO BACK IN EARLY 2021. LET'S GO TO ANOTHER ONE PERSON, FIVE BELOW, THE RETAILER COMING OUT WITH HIS LATEST RESULTS. THE OUTLOOK -- FOR FISCAL YEAR ADJUSTED EPS, $4.71. THE ESTIMATE WAS $4.75. THAT IS BELOW. THE STOCK WAS UP 4%. THIRD-QUARTER ADJUSTED EPS -- $.10 TO $.22. THE ESTIMATE OF THE STREET WAS $.15 A SHARE. THIRD-QUARTER NET LOSS OF 3 MILLION TO $30 MILLION. THIRD-QUARTER NET SALES OF 700 MILLION. ESTIMATE WAS $792 MILLION. LAST QUARTER, SECOND-QUARTER EPS WAS SIX CENTS BETTER THAN WHAT THE STREET IS EXPECTED. THE STOCK IS RALLYING 5%. SCARLET: YES, FIVE BELOW IS A 5%. OF COURSE, THEY AFFORDABLE ITEMS. ROMAINE: THAT WAS COOL. FIVE BELOW AT 5%. [LAUGHTER] THAT IS WHAT I AM HERE, USELESS FACTS. SCARLET: ANYTHING THAT PROVIDES VALUE TO THE CONSUMER IS IN SESSION. IN TERMS OF THE MOST ACTIVE STARTS BY VALUE, SALESFORCE IS UP 2%, BUT THE OTHER NAMES AND HAVE GONE THROUGH, YOU AREN'T SEEING A LOT OF ACTIVITY IN THOSE COMPANIES IN AFTER-HOURS TRADE. NVIDIA, WE SHOULD MENTION STOCK IS UP MARGINALLY BEFORE RESULTS COME OUT. TIM: WE HAD A CHANCE TO CHECK OUT SHARES OF OF OKTA, SHARES ARE DOWN 3% IN AFTER HOURS. THIS COMES AFTER THE COMPANY REPORTED ITS LATEST RESULTS THAT DID SHOW THAT IT BE FROM THE TOP LINE AND ON THE BOTTOM LINE. ROMAINE: WE ARE BIDING TIME UNTIL WE GET TO THE NVIDIA EARNINGS YEAR, AND IT HAS BEEN A LOT OF TALK ABOUT THE WEIGHTING IN THE S&P, ALMOST 7%, 11% IN THE NASDAQ COMPOSITE, HE DOESN'T REALLY MATTER WITH THE STOCK DIES, IT WILL MOVE THE BROADER MARKET. CAROL: WE'VE GOT CROWDSTRIKE CROSSING THE TERMINAL. WE'VE GOT CROWDSTRIKE SECOND-QUARTER REVENUE A SLIGHT BEAT, $953.9 MILLION COMPARED TO THE ESTIMATE OF 950 A .2 BILLION. SEVEN FOR THE ADJUSTED EPS ALSO A BEAT, $1.04, SEVEN CENTS BETTER. CROWDSTRIKE IS DOWN 0.5 PERCENT IN THE AFTERMARKET. SCARLET: LOOKING AT THE COMMENTS, THEY HAD A COMMENT IN RESPONSE TO THE RISING PRODUCTIVITY COMPLEXITY -- A LOT OF CORPORATE TALK -- AND AN ELEVATED THREAT ENVIRONMENT, ORGANIZATIONS INCREASINGLY FOCUSED ON CONSOLIDATING THEIR CYBERSECURITY VENDORS INTEREST TREATMENT PLATFORM THAT DELIVERS BETTER SECURITY OUTCOMES, WHICH IS CROWDSTRIKE FALCON. THE BIG ISSUE FOR CROWDSTRIKE THIS QUARTER WAS WHAT HAPPENED WITH ITS SYSTEMS AND HOW IT ON MICROSOFT FOR A THOUGHT LIKE EVERY INDUSTRY. TIM: YES, THEY REFERRED TO THE JULY 19 INCIDENT AT THE PRESS RELEASE THEY SAID,, "WORKING WITH CUSTOMERS TO RECOVER, WE EMERGED AS AN EVEN MORE RESILIENT AND EVEN MORE CUSTOMER-OBSESSED CROWDSTRIKE, CONTINUING TO AGGRESSIVELY INVEST IN INNOVATION." THE BIG QUESTION CUSTOMERS HAVE IS TO WHAT EXTENT DO CUSTOMERS ENDED UP GOING TO COMPETITORS AS A RESULT OF THAT OUTAGE. CAROL: ALSO GETTING SOME NEWS IN TERMS OF THE OUTLOOK. CROWDSTRIKE SEES ITS FISCAL YEAR REVENUE OF 3.892 $3.9 BILLION, IT HAD SEEN THE FISCAL YEAR REVENUE OUTLOOK AT THREE POINT NINE 8 BILLION TO 4.01 BILLION DOLLARS. NEVERTHELESS, INVESTORS SEEM OK, AT 3% IN THE AFTERMARKET. ROMAINE: I AM GLAD WE HAD A CHANCE TO GO THROUGH SOME OF THESE, I KNOW THEY ARE KIND OF SECOND-TIER, COMPARED TO NVIDIA, BUT THESE NAMES ARE IN THE BROADER SOFTWARE TECH SPACE, SO YOU'RE GETTING A BROADER SENSE OF THE HEALTH OF THESE COMPANIES AS, MORE IMPORTANTLY, THE HEALTH OF CORPORATE SPENDING. THAT WILL BE A BIG FEE WHEN WE GET TO NVIDIA. WE KNOW THEY ARE MAKING A LOT OF REVENUE, BUT WE HAVE HEARD FROM THE HYPERSCALERS THAT THEY HAVE TAKEN A CLOSER LOOK AT THEIR AI SPEND AND DECIDED THAT MAYBE IT WAS A BIT TOO MUCH, TOO SOON. CAROL: IT'S FUNNY YOU BRING THAT UP, WE HAD A CONVERSATION WITH IAN KING AND HE WAS TALKING ABOUT, SPECIFICALLY FOR NVIDIA, JUST PULLING UP THE SUPPLY CHAIN FUNCTION ANALYSIS OF THE BLOOMBERG, THAT WHEN YOU HAVE A COMPANY LIKE MICROSOFT THAT 45% OF THEIR SPENT IS NVIDIA. FOR META-, IT IS ALMOST 50%, HOW MUCH MARKET THEY GET FOR THEIR CUSTOMERS? IT'S IMPORTANT TO THINK ABOUT HOW THAT IMPACTS EMPATHY AND YOUR TOP LINE GOING FORWARD. ROMAINE: THAT IS A GREAT POINT. SPLC. I WAS LOOKING AT THAT THIS MORNING AND I DIDN'T REALIZE HOW MUCH OF NVIDIA'S REVENUE WAS DEPENDENT ON JUST FIVE BIG-TECH COMPANIES, OVER 50%. TIM: YEAH, SUPER MICRO COMPUTER. CAROL: DON'T YOU LOVE HER I BRING YOU ADDED -- [CROSSTALK] TIM: SUPER MICRO WAS THE TOP OF THE LIST FOR ME, GUYS. CAROL: NVIDIA IS UNCHANGED AND AFTERMARKET. STERNLICHT I AM WITH YOU. [LAUGHTER] ROMAINE: LOOK AT THAT, NEPOTISM. CAROL: THAT'S A WRAP UP OF OUR CROSS-PLATFORM COVERAGE ON RADIO, TV, YOUTUBE AND BLOOMBERG ORIGINALS. ON BOTH SIDES, WE ARE WATCHING FOR THIS NVIDIA EARNINGS. WE WILL SEE YOU AGAIN SAME TIME, SAME PLACE TOMORROW. ROMAINE: AND THE CLOCK IS STILL TICKING, WE ARE WAITING FOR NVIDIA. WE WILL HAVE A FULL BREAKDOWN OF THOSE RESULTS THE SECOND THAT THEY HIT THE WIRE. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: WELCOME BACK TO THE "CLOSE." TIME, SCARLET FU. ROMAINE: AND I'M ROMAINE BOSTICK VOLUME IS LIGHT AS EVERYONE IS AWAITING RESULTS OUT OF NVIDIA. THE S&P 500 WASN'T WELL OFF THE LOWS OF THE DAY THAT PHILADELPHIA SEMICONDUCTOR INDEX WITH A 2% DROP, A BIG DRAG FROM NVIDIA AS A LOT OF FOLKS TRY TO FRONT FROM THE EARNINGS. THE BRIGHT SPOT IS IN FINANCIAL STOCKS, UTILITIES, NOT NECESSARILY A HARBINGER OF FURTHER BROAD MARKET GAINS, SCARLET. SCARLET: REALLY DO HAVE TO LOOK FOR SOME GAINERS THAT I DID FAIL TO FIND ONE. I THOUGHT I SHOULD HAVE ABERCROMBIE & FITCH. IT WASN'T ENOUGH TO IMPRESS INVESTORS BECAUSE IT HAS DOUBLED THIS YEAR AND CONSISTENTLY TOPPED ESTIMATES AND INVESTORS QUOTED TO HIGHER STANDARDS THAN MOST RETAILERS. THE NEGATIVES IN THE EARNINGS REPORT, GROSS MARGINS WERE SLIGHTLY BELOW ESTIMATES. SUPER MICRO COMPUTER IS DOWN 19% AFTER DELAYING FINANCIAL DISCLOSURES AFTER SHORT-SELLER HINDENBURG RESEARCH PUBLISHED A CRITICAL REPORT ON THE COMPANY. AND WE CAN'T GET TOO FAR WITH FROM NVIDIA, MOVING IN AFTER-HOURS TRADING BY NOT A LOT, DOWN 0.2 5% IN CONTRAST TO THE OPTIONS WHICH INDICATE MUCH LARGER MOVES WHEN THE EARNINGS HIT. ROMAINE: THAT COULD CHANGE IN A BIG WAY IN A FEW MINUTES. RIGHT NOW THAT THE BIGGEST MOVER IS A FIRM POP, SHARES UP 50% ON THE BACK OF ITS EARNINGS REPORT. $659 MILLION IN REVENUE IN ITS MOST RECENT QUARTER, STILL POSTING A LOSS OF $.14 A SHARE BUT THAT IS BETTER THAN WHAT THE STREET HAD ANTICIPATED FOR A FFIRM. IT'S C'S 2025 GROSS MERCHANDISE VOLUME ABOVE 30 $3.5 TRILLION. IT IS GUIDING ABOUT WHAT THE STREET WAS LOOKING FOR FOR THE FULL YEAR GROSS MERCHANDISE VOLUME FOR NEXT YEAR. IT SAYS REVENUE FOR THE FIRST QUARTER, THE QUARTER IT IS IN RIGHT NOW, IT WILL ALSO TOPPED ESTIMATES. THEY ARE PROVIDING A RANGE OF 640-6 $70 MILLION. SCARLET: THIS IS ONE OF THE BIG BUY NOW, PAY LATER VENDORS, COMPANIES. RIGHT NOW, IT WILL ALSO TOPPED ESTIMATES. THEY ARE PROVIDING A RANGE OF 640-6 $70 MILLION. SCARLET: THIS IS ONE OF THE BIG BUY NOW, PAY LATER VENDORS, COMPANIES. IT SUGGESTS THE ADOPTION OF BUY-NOW, PAY-LATER AMONG CONSUMERS OVERALL IS GROWING. Anurag Rana and Mandeep Singh, Bloomberg Intelligence METRICS IN THE MOST RECENT QUARTER AND PROVIDING GUIDANCE ON THE QUARTER AND THE YEAR THAT IS TRENDING ABOVE WHAT THE STREET WAS LOOKING FOR. ANURAG RANA IN CHICAGO, FROM BLOOMBERG INTELLIGENCE, JOINS US NOW. WHAT WAS THE MOST CONSEQUENTIAL THING WE LEARNED FROM SALESFORCE? ANURAG: WE LEARNED THAT MOST THINGS ARE NOT GETTING WORSE AT THIS POINT AND THEY WERE MARGINALLY BETTER. THAT IS GOOD NEWS BECAUSE WE HAVE SEEN FROM COMPANIES LIKE WORKDAY THAT CLIENTS ARE NOT ADDING A LOT MORE SEED AND THERE IS PRESSURE ON YOUR TRADITIONAL SOFTWARE BUSINESSES AT THIS POINT, CLIENTS ARE MOVING MORE OF THEIR FUNDING TOWARDS BUYING GPUS . SCARLET: YES. TALK A BIT ABOUT ACTIVIST INVESTORS AND HOW THEY HAVE CHANGED THE FOCUS OF SALESFORCE, CERTAINLY TO FOCUS ON PROFITABILITY AND STRAYING AWAY FROM ITS PREVIOUS STRATEGY OF BUYING GROWTH. ANURAG: YEAH, THAT IS THE SINGLE BIGGEST THING WE HAVE SEEN IMPROVED OVER THE LAST TWO YEARS. IF YOU CAN GIVE THE OUTGOING CFO SOME BENEFIT, BECAUSE SHE HAS DONE SUCH A GOOD JOB OF MANAGING MARGINS. THE COMPANY SHOULD POSE MERGING STRUCTURE TREATED COMPLETELY, IN PART, BECAUSE OF ACTIVIST PRESSURE. THERE WERE SOME RUMORS ABOUT M&A AND THAT WAS SLIGHTLY CONCERNING, BUT SALESFORCE IS THIS THE RIGHT TRAJECTORY IN TERMS OF PROFITABLE GROWTH. IF TECH SPENDING COMES BACK NEXT YEAR, WE WOULD ASSUME THAT THE PLAN WILL IMPROVE AS WELL. ROMAINE: HAS THERE BEEN AN ISSUE WITH SALESFORCE MAY BE LOSING SOME OF THAT CORPORATE SPANISH TO ALL THE HYPE AROUND AI AND THE ANCILLARY THINGS THAT GO WITH IT? ANURAG: THAT IS THE BIG STORY FOR ALL THE TOP SOFTWARE COMPANIES, IS IF YOU ARE NOT AT PURE PLAY I COMPANY, YOU ARE LOSING FUNDING TOWARDS PEOPLE BUYING CHIPS OR MICROSOFT PROCESSING MORE TRANSACTIONS ON THEIR CLOUD. COMPANIES LIKE WORKDAY AND SALESFORCE HAVE SUFFERED BECAUSE OF THAT. SCARLET: WE APPRECIATE YOU JOINING US FOR THE LATEST ON SALESFORCE, ANURAG RANA OF BLOOMBERG INTELLIGENCE. HP REPORTED EARNINGS. THIRD-QUARTER REVENUE, $13.5 BILLION, BEATING THE ESTIMATE OF $13.73 BILLION. IN TERMS OF ITS OUTLOOK, FULL-YEAR ADJUSTED EPS OF $3.35 TO $3.35. AT THE HIGH-END AND MUCH OF THE AVERAGE ANALYST ESTIMATE OF $THREE POINT 45. THE STOCK HOWEVER, LOWER IN AFTER-HOURS TRADING, EVEN AFTER IT BOOSTED ITS SHARE BUYBACK AUTHORIZATION. ROMAINE: WE CONTINUE TO WAIT ON NVIDIA. WE DID GET RESULTS OUT OF A COUPLE OF KEY CYBER SECURITY COMPANIES INCLUDING CROWDSTRIKE. OKTA IS ALSO OUT WITH EARNINGS. MANDEEP SINGH OF BLOOMBERG INTELLIGENCE JOINED US IN THE STUDIO. LET'S START WITH CROWDSTRIKE, THEY HAD A BIT OF AN INCIDENT A FEW WEEKS AGO. WHAT DID YOU MAKE OF THE RESULTS AND, MORE IMPORTANTLY, THE RESPONSE TO WHAT HAPPENED? MANDEEP: EVERYONE IS EXPECTING THEY WOULD GIVE A MUCH LOWER GUIDANCE FOR THE SECOND HALF, BUT THEY HAVEN'T DONE THAT. THEY TOLD US IT WOULD BE $30 BILLION IMPACT FOR THE NEXT FEW QUARTERS. THAT IS 150 BASIS POINTS IN TOPLINE REVENUE THAT THEY EXPECT FROM THE OUTAGE. OTHER THAN THAT, THEY ARE STICKING TO THEIR GUIDE WHICH I AM SURPRISED BY HONESTLY, BECAUSE THIS WAS A BIG EVENT. IF DELTA SAID THEY HAD A $500 MILLION IMPACT THERE ARE OTHER CUSTOMERS LIKE THAT, AND THEY CLEARLY SEEM TO BE DOWNPLAYING WHAT CUSTOMERS MAY BE CLAIMING DOWN THE LINE. SCARLET: WHY DO YOU THINK THAT IS? BECAUSE OF THE AFTER SALES SERVICE CROWDSTRIKE IS PROVIDING ITS CUSTOMERS? MANDEEP: I THINK SO. REMEMBER, THEY ARE THE CATEGORY LEADERS IN ENDPOINT CLOUD SECURITY, SO CLEARLY, THEY HAD A VERY GOOD MARKET POSITION AND WERE ABLE TO CONVINCE SOME OF THEIR CUSTOMERS. AND MAYBE THEY HAVE INSURANCE, YOU KNOW, FOR THE INCIDENT. BUT THE INITIAL HUNCH THAT I HAVE IS, GIVEN THE MAGNITUDE OF THE LOSSES SOME OF THESE CUSTOMERS HAD, THE INSURANCE IS ADEQUATE TO COVER ALL OF THOSE LOSSES, SO THEY ARE BETTER OFF SANDBAGGING THE SECOND HALF GUIDANCE. CLEARLY, THEY ARE NOT DOING IT AND THEY ARE STICKING TO THE 25 TO 30% TOPLINE GROWTH. ROMAINE: THOSE SHARES GETTING A BOOST IN AFTER-HOURS TRADING. OKTA SHARES ARE MOVING LOWER. EXPLAIN WHAT IS GOING ON WITH THIS COMPANY. MANDEEP: IF YOU ROLLED BACK SIX QUARTERS, THEY ALSO HAD A SECURITY INCIDENT TO THEIR SYSTEMS, AND THEY NEVER RECOVERED SINCE THEN, TOPLINE GROWTH HAS BEEN DECELERATING AND ESTIMATES HAVE BEEN COMING DOWN. THAT IS WHAT I AM SURPRISED BY. THE SECURITY COMPANY HAS THAT INCIDENT LIKE THIS, IT TAKES AT LEAST TWO QUARTERS TO RECOVER. SO IT CROWDSTRIKE IS SUGGESTING THAT THEY ARE ALREADY THINKING ABOUT EVERY BOND AND THERE WILL NOT BE MUCH IMPACT, I AM HONESTLY SURPRISED BY THEIR GUIDE YOU THINK MAYBE WE COULD SEE A REPEAT OF WHAT HAPPENED WITH OKTA? MANDEEP: OKTA'S EVENT WAS NOT EVEN OF THIS MAGNITUDE, IT IS NOT AN OUTAGE, IT WAS MORE OF A SECURITY EVENT, AND IT WASN'T EVEN OF THIS MAGNITUDE. ROMAINE: ALRIGHT, MANDEEP SINGH, WE APPRECIATE HIM JUMPING ON TO COVER THESE EARNINGS AS WE GET THEM, THE BEST FROM BLOOMBERG INTELLIGENCE, AS WELL AS ANURAG RANA. AS THE CLOCK OFFICIALLY TICKS DOWN TO THE RESULTS FROM NVIDIA. WE ARE EXPECTING THEM ANY MINUTE NOW. TO SEE THE POPE EDITIONS ARE EXTREME WOULD BE AN UNDERSTATEMENT. SCARLET: ABSOLUTELY, AND TO SAY AS FAR AS THERE ARE CONSENSUS ESTIMATES, THERE ARE DEFINITELY WHISPERED NUMBERS BEING BANDIED ABOUT. DAN EARLIER, THIRD-QUARTER REVENUE OUTLOOK, HE IS HEARING A NUMBER OF 33-30 $4 BILLION EVEN THOUGH THE CONSENSUS ESTIMATE IS $31.9 BILLION. THAT WOULD BE CRITICAL. ROMAINE: IT GETS THE IDEA OF WHAT ARE THE EXPECTATIONS. WHEN YOU HAVE A COMPANY THAT WAS GROWING 300 PERCENT, 200% AND NOW THIS QUARTER, ONLY 100% WHICH IN EVERY OTHER CIRCUMSTANCE WOULD BE PHENOMENAL, BUT, OF COURSE, PEOPLE WANT MORE. THEY WANT GROWTH, AND HOW MUCH OF THAT IS PRICED IN? NVIDIA EARNINGS ARE CROSSING THE WIRE. HERE IS YOUR NUMBER. TOPLINE REVENUE IN THE MOST RECENT QUARTER, $30 BILLION EVEN. THE STREET WAS LOOKING FOR 28.8 6 BILLION. ADJUSTED EPS, $.68. THAT IS A BEAT. THE COMPANY ALSO SAYING THAT FOR THE THIRD QUARTER, THE QUARTER WE ARE IN RIGHT NOW, IT EXPECTS TO POST -- GET THIS, $32.5 BILLION IN REVENUE PLUS OR -20 PERCENT. THAT IS WELL ABOVE WHAT THE STREET WAS LOOKING FOR, WHICH WAS ABOVE THE 31.9 BILLION DOLLARS. IF IT GETS THAT NUMBER OR THE PLUS 2%, IT'S A BIG BEAT. THE COMPANY ALSO APPROVING $50 BILLION IN SHARE BUYBACKS. SCARLET: RIGHT, BUT THE WHISPER NUMBER IS WHAT WE SHOULD MAYBE BE LOOKING AT, YES, EVEN WITH THAT INCREASED FORECAST, IT'S NOT AT THE 33-34 BILLION DOLLARS. WITH THE PLUS OR MINUS 2%, YOU GET CLOSER TO THAT. THE STOCK IS MOVING UP MARGINALLY IN AFTER-HOURS TRADING. IT'S ABOUT THE FORECAST AND WHATEVER IS SAYS ABOUT BLACKWELL, DURING THE CONFERENCE CALL, AS WELL, KEEPING AN EYE ON NVIDIA SHARES, WE BRING IN ANTOINE Antoine Chkaiban, New Street Research CHKAIBAN, TECHNOLOGY INFRASTRUCTURE ANALYST AT NEW STREET RESEARCH. HE HAS A BUY RATING ON THE STOCK WHAT ARE YOU SEEKING THESE RESULTS THAT PERHAPS ARE ENCOURAGING WHEN IT COMES TO THE OUTLOOK? ANTOINE: THANKS FOR HAVING ME. I WOULD SAY THE RESULTS ARE DIRECTIONALLY ALIGNED WITH OUR EXPECTATIONS. IT WAS ACTUALLY LEGITIMATE TO EXPECT NVIDIA TO DO BETTER THAN THEY GUIDED A FEW MONTHS AGO AND GUIDE ABOVE EXPECTATIONS, AS WELL, FOR THE NEXT THREE MONTHS ON THE. ONE HAND SO IF YOU HAVE HYPERSCALERS WHO ARE INCREASING CAPEX, ON THE OTHER HAND,, YOU HAVE THE SUPPLY CHAIN WHICH IS INCREASING CAPACITY STEADILY. SO ALL OF THAT ACTUALLY LINED UP VERY WELL. HE TELLS US THAT ACTUALLY, IT IS REASONABLE TO EXPECT NVIDIA TO KEEP BEATING FOR THE FORESEEABLE FUTURE. NOW THE QUESTION IS WHAT HAPPENS WE'LL 2025. I DON'T THINK YOU HAVE ANY VISIBILITY ON THAT ANYTIME SOON. SCARLET: OK, LET'S GIVE YOU SOME COMMENTARY FROM THE COMPANY WHEN IT COMES TO BLACKWELL, NVIDIA SAYING BLACKWELL SAMPLES ARE SHIPPING TO PARTNERS AND CUSTOMERS, AND ANTICIPATION FOR BLACKWELL IS INCREDIBLE. I KNEW THAT AS BEGIN TO GIVE US ANY NUMBERS, BUT GIVEN THERE ARE REPORTS OF SOME DELAYS AND DESIGN ISSUES WITH BLACKWELL, DO YOU SEE ENOUGH DEMAND FOR THE HOPPER CHIPS, THE CURRENT-GENERATION CHIPS, TO MAKE UP FOR THE ELEVATED EXPECTATIONS FOR BLACKWELL? ANTOINE: YES. SO NVIDIA CAN MITIGATE THE SITUATION IN MANY WAYS. AS YOU MENTIONED, THEY CAN EXTEND THE LIFE OF THAT HOPPER CHIPS. IT'S A MATURE PLATFORM. IT IS EASIER TO RAMP UP IN LARGER VOLUMES THAT CAN DEFINITELY OFFSET A DELAY IN BLACKWELL. WE COULD ALSO SEE A SINGLE DIET BLACKWELL CHIPS THAT COULD ONLY USE S PACKAGING. IT WOULD HAVE LOWER PERFORMANCE THAN THE DUAL DIE BLACKWELL SKU, BUT THERE WILL STILL BE AN UPLIFT VERSUS HOPPER. SO AT THE EIGHT OF THE DAY, WE STILL SINCE THE ENORMOUS AND URGENT DEMAND ACROSS THE BOARD AND THAT MITIGATES TO NOTABLY, THE RISK OF A SLEW IN SHIPMENTS AS CUSTOMERS WAIT CHIPS TO SOLD. ROMAINE: GIVE US A SENSE OF HOW NVIDIA CAPITALIZES ON THIS. NOT JUST THE REVENUE FROM THE ORDERS COMING IN, BUT THE LONG-TERM CAPITALIZATION. WHAT DOES JENSEN HUANG DO, MORE IMPORTANTLY, WHAT DO YOU WANT TO HEAR HIM ARTICULATE ABOUT HOW HE INSURANCE THAT THE OFFSPRING WE HAVE SEEN IN THE COMPANY FOR THE PAST TWO YEARS IS PERMANENT? ANTOINE: I THINK WHAT WE WANT TO HEAR IS THE FACT THAT ALL OF THESE INVESTMENTS THAT HAVE BEEN DEPLOYED OVER THE LAST FEW YEARS ARE ACTUALLY GETTING DEPLOYED FOR USE CASES THAT WILL DRIVE SUSTAINABLE MONETIZATION. I AM NOT SURE ACTUALLY THAT JENSEN WILL BE ABLE TO CONVINCE US IN THE NEAR TERM, THAT IS WHAT I MEANT EARLIER. I THINK YOU HAVE TO READ A BIT FURTHER AND SEE IS REMOVED -- WAIT A BIT FURTHER AND SEE INTO 2025 FOR THE LITTLE START TO HEAR FROM THE COMPANIES DEPLOYING THOSE CHIPS, HYPERSCALERS, MICROSOFT IN PARTICULAR, OR THERE WE WILL START TO HEAR TANGIBLE MONETIZATION FROM THESE COMPANIES. AND THERE IS A LOT OF WORK TRYING TO EVALUATE WHERE THE CHIPS ARE GETTING DEPLOYED, ARE THEY DEFLATING THE CLOUD? IN INTERNAL USE CASES? TO HEALTHY I STARTED TRADE -- TO HELP AI STARTUPS CHRISTMAS WE NEED TO HEAR CONVINCING ARGUMENTS THAT THESE TUBES ARE BEING DEPLOYED IN WAYS THAT WILL DRIVE REVENUES. I DON'T THINK IT IS SOMETHING NEW HERE. MAYBE OVER THE NEXT FEW QUARTERS -- I DON'T THINK IT IS SOMETHING THAT WE WILL HEAR RIGHT NOW. ROMAINE: ON THE WEBSITE THEY KIND OF LAY OUT A LOT OF THE THINGS THEY ARE TRYING TO DO TOO I GUESS DIVERSIFY PRODUCT REVENUE. THEY TALK ABOUT DOING MORE FAB WORK AND A FEW OTHER THINGS. YOU LOOK AT THE REVENUE, THIS IS STILL A DATA CENTER DRIVEN COMPANY, $26 BILLION REVENUE, $3 BILLION FROM GAMING, AND AFTER THAT IT DROPS OFF. DO YOU WANT TO SEE MORE DIVERSIFICATION IN PRODUCT LINES AND HISTOLOGY? ARE YOU HAPPY WITH THIS DATA CENTER-ALL-IN A STRATEGY? ANTOINE: WE CAN SEE DIVERSIFICATION WITHIN THE DATA CENTER. YOU CAN SEE DIVERSIFICATION WITHIN THE CUSTOMER FRONT. WE KNOW THAT HYPERSCALERS, A HANDFUL OF COMPANIES, BACK ON FOR ABOUT HALF OF NVIDIA'S REVENUE. WE EXPECT DIVERSIFICATION TO HAPPEN ON THE CUSTOMER FRONT. WE EXPECT SECOND-TIER CLOUDS TO REPRESENT A MORE SIGNIFICANT PORTION OF THE DATA CENTER REVENUES. WE EXPECT CLOUD, LIKE SERVER IN AI TO REPRESENT AN INCREASING PORTION. WE EXPECT ENTERPRISES LIKE APPLE, LIKE BYTEDANCE AND OTHERS, TO ACTUALLY START USING SIGNIFICANT CLUSTERS AS WELL. THAT IS ONE THING I WOULD SAY. OF COURSE, YOU HAVE GAMING AND AUTOMOTIVE THAT KEEP GROWING, AUTOMOTIVE REPRESENTS A SIGNIFICANT OPPORTUNITY BUT IT IS PROBABLY NOT GOOD TO IMPACT THE STOCK ANYWHERE IN THE NEAR TERM. ROMAINE: ALL RIGHT, ANTOINE CHKAIBAN, WE APPRECIATE YOU JUMPING ONTO IT LOOK AT THE EARNINGS IN REAL TIME, OVER AT NEW STREET RESEARCH. I SHOULD POINT OUT, AND HAVE A SPECIAL INTERVIEW AND SPECIAL COVERAGE LATER TONIGHT, A SIT NVIDIA CEO JENSEN HUANG STARTING AT 6:30 P.M. EASTERN TIME HERE ON BLOOMBERG. AS WE SEE NVIDIA SHARES NOW DEEPER IN THE RED, THEY WERE DOWN 4%, NOW DOWN 2% TO 3%. WHAT IS PHENOMENAL TO ME, SCARLET, TO 30 MILLION SHARES HAVE SOFT HANDS ON THE BACK OF THESE EARNINGS REPORT. SCARLET: AND THE CONFERENCE CALL HASN'T EVEN BEGUN YET -- 230 MILLION SHARES. WE HAVEN'T HEARD THE BULK OF THE COMMENTS FROM THE CEO AND HER OUTLOOK. ROMAINE:. ROMAINE: WE TALK ABOUT THE BROADER MARKET, WE ARE SEEING FUTURES OVERALL, BEING DRAGGED DOWN AND APPEARS LIKE AMD AND TSMC ALSO MOVING LOWER. WE WILL CONTINUE OUR COVERAGE OF NVIDIA EARNINGS. ROMAINE: NVIDIA EARNINGS ARE OUT. A BEAT ON THE MOST RECENT QUARTER. THE FORECASTS THE COMPANY GAVE MAYBE NOT QUITE WHAT INVESTORS EXPECTED. TALKING ABOUT A COMPANY SITTING ON $30 BILLION OF QUARTERLY REVENUE. WHERE THE COMPANY GROWTH AS MUCH AS IT HAS, SOMETIMES Daniel Newman, Futurum Group ENOUGH IS NEVER ENOUGH. DANIEL NEWMAN JOINING US, CEO OF THE FUTURE READ HIM GROUP TO TALK MORE ABOUT THE LONG-TERM PROSPECTS. IF YOU NEED A CHIP THAT CAN POWER THESE DATA SERVERS COME THAT CAN BE AT THE FOCAL POINT OF WHAT YOU NEED TO CRUNCH THESE NUMBERS, TO BE AT THE CENTER OF A.I., YOU HAVE TO GO TO NVIDIA. THAT WILL CHANGE AT SOME POINT. THEY WILL HAVE MEANINGFUL COMPETITORS. HOW SOON DO YOU THINK WE WILL SEE THAT COMPETITION? >> NVIDIA IS OFF TO A FAST START. MORE THAN A DECADE OF RESEARCH AND INVESTMENT THAT WENT INTO BUILDING THIS PLATFORM. IT WAS NOT JUST HARDWARE, YOU ARE NOT BUYING A GPU. YOU ARE PUTTING IT TOGETHER, THE SOFTWARE, THE FRAMEWORKS, IT MADE A.I. ACCESSIBLE, ENABLING DEVELOPERS TO THE HARDWARE THAT HAS POWERED THIS WHOLE MOVEMENT. LET'S BE HONEST, AMD IS GOING TO ENTER THE FRAY AND A BIG WAY. AND WE ARE SEEING EVERY HYPER SCALA, AWS, WHETHER IT IS MICROSOFT MY, NEW GEMINI MODELS, THEY ALL WANT TO ENTER THE FRAY. THEY UNDERSTAND THE IMPORTANCE OF BUILDING VERTICAL INTEGRATION. I THINK IT WILL COME SLOW. THIS IS A CLEAN QUARTER. NVIDIA DID WHAT IT SAID IT WOULD DO. THE MARKET DOESN'T WANT 100%, THEY WANT TO HUNDRED PERCENT ACCELERATION OF GROWTH. THEY WANT TO KNOW A.I. WILL LAND AND BLACKWATER WILL BE ON TIME. THAT HAS MADE IT A $3 TRILLION COMPANY. ROMAINE: IT IS INTERESTING LOOKING AT WHAT NVIDIA SAYS AND HOW THEY CHARACTERIZE IT IN THEIR PRESENTATIONS. ALSO THE FOLKS WE SPOKE TO. THEY SAY THAT THERE IS NO DEMAND ISSUE. THE DEMAND IS THERE AN AMPLE. IT IS STILL A SUPPLY ISSUE. AS LONG AS NVIDIA DOESN'T HAVE AN AMD OR TSMC, OR ANOTHER COMPANY CAPABLE OF PROVIDING COMPARABLE CHIPS, IT IS STILL THERE WORLD, ISN'T IT? >> YEAH, THIS IS NOT A DEMAND ISSUE. WE ARE LOOKING AT THE LONGER TAIL. WE HAVE SEEN THE COMMENTS FROM GOLDMAN AND SEQUOIA ON WHETHER OR NOT AI IS BEING DEPLOYED AT THE ENTERPRISE LEVEL, FINANCIAL SERVICES COMPANY, HOTELS, RESTAURANTS AND RETAIL. BUT THE CAPEX INVESTMENTS, THEY ARE NOT GOING TO SLOW DOWN ANYTIME SOON. BUT THEY ARE GOING TO HEDGE. THEY WILL BUILD THEIR OWN ACCELERATORS. THEY ARE PARTNERING WITH COMPANIES TO BUILD THESE XPU'S, WHICH WE SEE GROWING FASTER THAN THE GPU SYSTEMS. OVER TIME, AS WE SEE INFERENCE BECOME THE KILLER WORKLOAD RATHER THAN FOCUS ON TRAINING, WE WILL SEE DIFFERENT ARCHITECTURE OF CHIPS START TO PLAY A MEANINGFUL ROLE IN THIS A.I. BUILDOUT. I SEE IT BOTH WAYS. FOR THE NEXT THREE OR FOUR QUARTERS, NVIDIA IS IN THE DRIVER SEAT. IF THEY DO THINGS RIGHT, THEY WILL HAVE SO MUCH MARKET SHARE. THINK WHAT INTEL DID WITH THEIR BUSINESS CENTER, IT WILL BE THERE MARKET TO LOSE. SCARLET: I WANT TO GO BACK TO WHAT INVESTORS ARE REACTING TO RIGHT NOW. THE OUTLOOK FOR THIS CURRENT QUARTER. NVIDIA SAYS IT SEES REVENUE THIS QUARTER, THIRD QUARTER, $32.5 BILLION PLUS OR -2%. THE CONCESSIONS ESTIMATE -- THE CONSENSUS WAS JUST UNDER 32.2 BILLION DOLLARS. IT WOULD BE A 6% JUMP VERSUS LAST YEAR. THE HIGHEST ESTIMATE WAS JUST UNDER $38 BILLION. WHEN WE LOOK AT A COMPANY LIKE NVIDIA AND THE KIND OF STOCK MOVES IT HAD OF 160% THIS YEAR, UP 35% SINCE ITS LAST EARNINGS REPORT, INVESTORS WANT TO SEE IT DELIVERING IN EVERY WAY, ON ALL CYLINDERS. IS IT A CASE WHERE ANYTHING OTHER THAN THE HIGHEST ESTIMATE WOULD AUTOMATICALLY GET SOME KIND OF A PULL DOWN IN ORDER FOR THE STOCK TO ATTRACT INVESTORS ONCE AGAIN? THE COMMENTARY ON THE CONFERENCE CALL HAS TO OUTPERFORM. >> WE HAVE SEEN SO MANY QUARTERS IN A ROW WHERE THEY HAVE BEEN SUBSTANTIAL ABOVE WHERE THE GUIDE WAS. OVER THE PAST SEVERAL QUARTERS, WE ARE SEEING THE DECELERATION QUARTER ON QUARTER YEAR ON YEAR. BECAUSE THEY'VE HAD THE MASSIVE 300% AND 400% GROWTH. NOW WHAT WE ARE UP AGAINST IS WHETHER OR NOT IT IS SUSTAINABLE, IF INVESTORS WANT TO GET OUT AFTER MAKING 1000% PLUS RETURNS. ARE THEY LOOKING AT IT AND SAYING WE WILL LET IT BREATHE? I SAID THIS COMING INTO THE QUARTER, THERE WAS NO RESULT OTHER THAN PERFECT THAT WOULD PROBABLY CREATE A BIG LIFT. BUT THERE WAS A LOT OF DOWNSIDE. NOT JUST NVIDIA, THE WHOLE MARKET, IF THEY DID NOT COME UP. FUTURES ARE SHOWING THAT AS WELL. SCARLET: NVIDIA IS THE ONLY GAME IN TOWN WHEN IT COMES TO THESE A.I. CHIPS TO POWER DATA CENTERS. NVIDIA HAS PRICING POWER, THEREFORE IT HAS MARKET POWER. DO YOU LOOK AT THE GROSS MARKET NUMBER AS AN ACCURATE GAUGE OF DEMAND FOR NVIDIA CHIPS? IS IT NOT THAT SENSITIVE BECAUSE THE PRICING IS NOT DYNAMIC? >> THE MARGIN POWER IS INDICATIVE OF THE INFLUENCE NVIDIA HAS. IT HAS LARGE PARTNERS, IT IS BUILDING SYSTEMS, NOT NECESSARILY SELLING A CHIP. THE SYSTEM MARGINS ARE VERY HIGH BECAUSE THE DEMAND IS SUBSTANTIAL. WE HEAR EVERYONE FROM OPEN A.I. TO OTHER SMALLER ENTERPRISES HAVING A PROBLEM GETTING ACCESS TO THE CHIPS AND SYSTEMS THEY NEED, AND COMPANIES LIKE META, TESLA,X MICROSOFT, ALL THAT DEMAND. IT GIVES THEM GREAT PRICING POWER. UNTIL AMD REALLY STARTS TO SEE ACCELERATION IN ITS BUSINESS, AND TO SOME EXTENT, WHEN THE HYPER SCALARS SEE GROWTH IN THEIR HOME GROWTH PLATFORMS, IS NVIDIA GOING TO BE UNDER SUBSTANTIAL PRESSURE TO PLAY IN THE PRICING BATTLE. I THINK OVER FOUR QUARTERS TO EIGHT QUARTERS, THERE WILL BE PRESSURE ON MARGINS AND IT WILL BE SOMETHING TO WATCH. ROMAINE: ABSOLUTELY. OUR TEAM HAVE BEEN CRUNCHING THE NUMBERS AND POINTING OUT THIS IS THE SMALLEST TOPLINE BEAT WE HAVE SEEN FOR NVIDIA IN SIX QUARTERS. STILL, WE HAVE TO POINT OUT ALMOST TRIPLE DIGIT GROWTH. THAT WOULD NORMALLY BE SOMETHING TO CELEBRATE. YOU MENTIONED THE HYPER SCALARS. I'M CURIOUS ABOUT THE END USE CASES FOR A.I. ULTIMATELY THAT WOULD DETERMINE THE LONG-TERM GROWTH FOR NVIDIA AND SOME OF ITS PEERS. EVEN PAST THE HYPER SCALARS, WHEN DO YOU SEE A MORE MEANINGFUL USE CASE FOR A.I., AND A.I. THAT WILL BE PROFITABLE FOR THE COMPANY'S DOING IT? >> WE ARE STARTING TO SEE THE MOMENTUM. WALMART ANNOUNCED A SUBSTANTIAL EFFICIENCY GAINS IN THEIR SYSTEMS IN THIS MOST RECENT QUARTER. WE HEARD ANDY JASSY TALK ABOUT THEIR CODEVELOPMENT AND EFFICIENCIES. TALKING ABOUT YEARS OF DEVELOPER TIME THAT WAS ABLE TO BE REDUCED BECAUSE OF WHAT THEY HAVE DONE WITH GENERATIVE A.I. TOOLS FOR CODE DEVELOPMENT. THAT IS WHERE MY HEAD IS. BUILDING THIS INTO SALESFORCE INSTANCES, THEY HAD THEIR EARNINGS TODAY. BUT COMPANIES AND THEIR CRM SYSTEMS, CAN THEY GET BETTER UNDERSTANDING OF WHAT CUSTOMERS WILL BUY AND GETTING THEM THE RIGHT MESSAGE IN THE RIGHT CHANNEL AT THE RIGHT TIME AND USING GENERATIVE TOOLS TO DO THIS? WE WANT TO SEE DIGESTION OF THE CAPEX TURN INTO MEANINGFUL COME -- CONSUMPTION ON THE OPEX SIDE. I HAVE BEEN SAYING TO THE MARKET IT IS A FOUR QUARTER TO 12 QUARTER LAG. WE ARE GETTING VALUE OUT OF A.I. , SO THAT IS A MISCONCEPTION. THE ALGORITHMS OR FOUR DECADES OLD. BLOOMBERG HAS BEEN USING IT IN ITS OWN ASSESSMENTS FOR A LONG TIME. GENERATIVE TOOLS NEED TO BRING MORE VALUE. WE NEED TO UNDERSTAND MONETIZATION BETTER FOR MORE OF THESE SOFTWARE AND OTHER BUSINESSES. SCARLET: AS OPPOSED TO BETTING BLINDLY. DANIEL NEWMAN, CEO OF THE FUTURUM GROUP. AS WE LOOK AT NVIDIA SHARES DECLINED IN AFTER-HOURS TRADING, WE HAVE A SPECIAL EDITION OF BLOOMBERG TECHNOLOGY. AN INTERVIEW WITH JENSEN HUANG AT 6:30 P.M. EASTERN TIME. IT IS WORTH REVISITING MARKETS WERE DOWN, EQUITIES WERE DOWN IN THE LEAD UP TO THESE RESULTS. S&P 500 LOWER, THE NASDAQ 100 LOWER BY EVEN MORE. NOT MUCH MOVEMENT IN TREASURIES ARE THE DOLLAR. UP SLIGHTLY BY .25 PERCENT. RIGHT NOW, THE SET UP HEADING INTO THE EARNINGS CALL THAT IT DID NOT DELIVER TO THE HIGHEST EXPECTATIONS. ROMAINE: WE WILL SEE THE EFFECT ON THE CASH SESSION. S&P FUTURES ARE DOWN MORE THAN 10 POINTS FROM WHERE THEY CLOSED OUT THE CASH SESSION AND NASDAQ FUTURES DOWN SIGNIFICANTLY MORE, ABOUT 100 POINTS OR SO. IT WILL BE INTERESTING TO SEE -- THEY'RE ON YOUR SCREEN, THE S&P, NASDAQ, AND THE DOWN FUTURES. THIS WILL BE A BIG STORY IN THE MORNING, HOW MUCH OF A DRAG NVIDIA HAS ON THE BROADER MARKET. MORE COVERAGE COMING UP. THIS IS THE CLOSE ON BLOOMBERG. ♪ ROMAINE: CONTINUING TO KEEP A CLOSE EYE ON SHARES OF NVIDIA. WE'LL GET BACK TO THAT STORY. WE WOULD BE REMISS NOT TO POINT OUT IT IS STILL A MACRO DRIVEN MARKET, ONE THAT CAN BE DRIVEN IN A BIG WAY OVER THE NEXT COUPLE OF DAYS. WE GET A FEW POINTS OF ECONOMIC DATA, INCLUDING THE REVISION ON GDP NUMBERS TOMORROW. ON FRIDAY, THE FED'S PREFERRED MEASURE OF INFLATION IS DUE OUT. CORE PCE EXPECTED TO HOLD AT 0.2% ON A MONTH OVER MONTH BASIS. THE BIG QUESTION NOW AS TO WHAT THAT WILL MEAN FOR THE FED RATE CUTTING DREAMS. TIFFANY WHILE JOINING US, TO TALK MORE ABOUT THIS. Tiffany Wilding, PIMCO BEFORE WE GET INTO THE NUMBERS OF THE SPECIFIC DATA POINTS, I'M WONDERING WHAT YOUR BROADER ASSESSMENT IS OF THE ECONOMIC ENVIRONMENT AGAINST THIS BACKDROP OF WHAT THE MARKET IS EXPECTING, WHICH IS SEVERAL RATE CUTS OVER THE NEXT THREE MONTHS? >> I THINK IF YOU ZOOM OUT, WE ARE SEEING A U.S. ECONOMY GETTING BACK TO SOME SEMBLANCE OF NORMAL AFTER THE VERY UNIQUE SET OF ECONOMIC SHOCKS WE SAW POST-PANDEMIC. IF YOU ZOOM OUT, LOOK AT HEADLINE INFLATION LEVELS, WE ARE CLOSE TO THE RANGES WE WERE PREPEND AND MAKE. IF YOU LOOK AT LABOR MARKET INDICATORS, INCLUDING THE UNEMPLOYMENT RATE OR THE JOB OPENINGS TO UNEMPLOYED RATIO. WE ARE BACK TO LEVELS WE WERE IN 2019. LOOK AT MEASURES OF WEALTH IN THE ECONOMY THAT EXPLODED POST-PANDEMIC, IT IS BACK TO THE LEVELS WE WERE IN 2019. MEASURES OF SUPPLY CHAIN STRESS ARE BACK TO WHERE WE WERE IN 2019. INFLATION EXPECTATIONS HAVE REMAIN WELL ANCHORED THROUGH THIS WHOLE EPISODE. IF WE ARE GETTING BACK TO MORE OF A PRE-PANDEMIC TYPE OF ECONOMY, WHY ARE WE NOT CLOSER TO A PRE-PANDEMIC LEVEL OF INTEREST RATES FROM THE FEDERAL RESERVE? ALL OF THAT TO SAY POLICY IS RESTRICTIVE, GIVEN UNDERLYING ECONOMIC CONDITIONS. CENTRAL BANKERS, JAY POWELL KNOWS THIS. I THINK THE WAY HE COMMUNICATED AT JACKSON HOLE, HE WAS VERY CLEAR THE FED IS MOVING TOWARDS NEUTRAL. THEY KNOW THEY NEED TO GET THERE. THE QUESTION IS MORE ABOUT THE PACE THAN IT IS WHETHER THEY ARE GOING TO GO THERE OR NOT. ROMAINE: THERE IS ALSO A QUESTION ABOUT WHAT NEUTRAL IS. I LIKE THE FACT YOU TALKED ABOUT HOW WE RE-NORMALIZED, BACK TO THE PRE-PANDEMIC LEVELS. BUT DOES IT MEAN INTEREST RATES HAVE TO GO BACK TO THOSE LEVELS? A LOT OF FED MEMBERS WILL SAY WHAT WE HAD BACK THEN WAS NOT NORMAL. >> I CERTAINLY TAKE THAT POINT. THAT IS SOMETHING THAT FEDERAL RESERVE MEMBERS WILL HAVE TO TRY TO UNDERSTAND AND ESTIMATE IN REAL TIME AS THEY ARE REDUCING POLICY. THAT CERTAINLY IS A REASON WHY ABSENT A RECESSION, IF WE ARE NOT IN A RECESSION, THEY CAN STILL TAKE SOME TIME TO GET BACK TO LEVELS CLOSER TO WHAT THE ESTIMATE IS NEUTRAL. KNOWING THOSE ARE UNCERTAIN. I THINK THAT IS WHAT THEY ARE THINKING THEY WILL DO. YOU BRING IN THE DISTRIBUTION OF RISKS, THAT ALSO MATTERS. THE FACT AS POWELL SUGGESTED, UPSIDE INFLATION RISKS HAVE MODERATED. THERE ARE SIGNALS WITHIN THE LABOR MARKET REPORT WITHIN THE LABOR MARKETS THAT SUGGEST LABOR MARKET HAVE EASED QUITE A BIT. USUALLY THOSE THINGS HAVE MOMENTUM THAT BUILD ON EACH OTHER, AT LEAST THEY HAVE HISTORICALLY. WHEN THE UNEMPLOYMENT RATE MOVES UP, IT RESULTS IN A BIGGER MOVE UP IN THE UNEMPLOYMENT RATE. WITHIN THE BALANCE OF RISKS, WE WOULD ARGUE THE FED HAS ROOM TO START CUTTING, SEE HOW THE ECONOMY RESPONSE, AND REVISE THEIR ESTIMATE OF NEUTRAL AS THEY DO THAT. >> A GRADUAL, METHODICAL APPROACH TO POLICY AND HOW THE RATE CUTS, THE LOOSENING MONETARY POLICY GETS HANDLED. HOW INSYNC IS THE BOND MARKET AND FED POLICYMAKERS WHEN IT COMES TO THE OUTLOOK FOR RATE CUTS FOR NOT JUST THIS YEAR, THE REST OF THIS YEAR, BUT NEXT YEAR? >> IF YOU THINK ABOUT THE DISTRIBUTION OF RISKS, THE SEP FORECAST IS A MODAL EXPECTATION, THE MOST LIKELY EXPECTATION. FEDERAL RESERVE OFFICIALS HAVE SUGGESTED THE RISKS AROUND THE INFLATION AND UN-IMPLANT RATE GOAL WHICH SUGGESTS IF ANYTHING, THE POLICY RATE FORECASTS PREDICTIONS ARE TO THE DOWNSIDE. I THINK WHAT THE MARKET IS PRICING IS WE HAVE THIS MODAL EXPECTATION. THINGS WILL BE METHODICAL IN HOW THEY GET DOWN. BUT THERE'S ALWAYS A RANGE OF SCENARIOS THE MARKETS WILL PRICE. THERE IS CERTAINLY A RISK THEY COULD GET THEIR A BIT FASTER THAN THAT. IN THE CASE OF A RECESSION, IT IS A LOT FASTER. I THINK THAT IS WHAT THE MARKETS ARE PRICING. OVERALL LOOKING EVALUATION, WE SEE A LOT OF VALUE DESPITE THE RECENT RALLY. LOOK AT FIVE-YEAR REAL INTEREST RATES, THEY ARE STILL WELL ABOVE LEVELS WE THINK ARE MORE CONSISTENT WITH REAL NEUTRAL INTEREST RATES. EVEN IF THEY ARE HIGHER THAN PRE-PANDEMIC. I THINK ALL OF IT SUGGESTS THE BOND MARKET IS STILL AN INTERESTING PLACE TO BE. >> STILL INTERESTING, BUT PEOPLE ARE COMFORTABLE WITH THE IDEA OF STALKING MONEY AWAY IN MONEY MARKET FUNDS AND HANGING OUT AND GETTING THE 5% RETURN. THEY DON'T NECESSARILY WANT TO MAKE THE MOVE. WE'VE ANTICIPATED RATE CUTS FOR SO LONG AND IT HAS NOT COME TO FRUITION. WHAT WILL CONVINCE PEOPLE TO MAKE THE MOVE, EVEN A 25 BASIS POINT CUT MAY NOT BE THE CATALYST. >> WE HAVE CERTAINLY BEEN TRYING TO CONVINCE PEOPLE. 5% OVERNIGHT RATE IS A HIGHER LEVEL OF RATE THAN WHAT YOU SEE WITH A 10 YEAR BOND YIELD OR WHAT HAVE YOU. BUT YOU ARE NOT GOING TO GET THE 5% OVERNIGHT RATE FOREVER. AS THE FEDERAL RESERVE STARTS DROPPING INTEREST RATES, THE YIELD YOU ARE GETTING WILL ALSO DROP QUITE QUICKLY. INVESTORS NEED TO TAKE THAT INTO CONSIDERATION. THE OTHER THING PEOPLE NEED TO REMEMBER IS I SET AROUND A RANGE OF SCENARIOS THE BOND MARKET DOES WELL. IF YOU ARE IN CASH, THE MONEY MARKET TYPE OF INVESTMENT WILL NOT GIVE YOU AS GOOD OF A HEDGE AGAINST A RECESSIONARY SCENARIO OR A SCENARIO WHERE THE ECONOMY DETERIORATES MORE THAN EXPECTED. YOU WILL NOT GET THE HEDGING BENEFITS. MOVING INTO THE INTERMEDIATE PART OF THE CURVE IS WHERE WE LIKE TO BE. A SWEET SPOT. WE SEE A LOT OF VALUE THERE. IT GIVES YOU NICE HEDGING PROPERTIES AS WELL. SCARLET: TIFFANY WHILEING, ALWAYS APPRECIATE YOU JOINING US. THANK YOU. SOME BREAKING NEWS THAT HAS NOTHING TO DO WITH CHIP COMPANIES OR TECH COMPANIES. BIG LOTS, OLD-SCHOOL RETAILER, CONTEMPLATING A POTENTIAL BANKRUPTCY FILING AFTER YEARS OF SALES DECLINES. THIS IS ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. WE ALSO KNOW BIG LOTS IS POTENTIALLY SEEKING INVESTORS IN ORDER TO AVOID CHAPTER 11 AS WELL. ROMAINE: WE ARE TALKING ABOUT A STOCK DOWN 99% FROM ITS ALL-TIME HIGH THAT WAS REALLY JUST ABOUT THREE YEARS AGO. IT WAS $72 A SHARE, NOW BASICALLY CLOSING OUT THE DAY AROUND $.73. IT GETS TO THE POINT OF HOW DOES A DISCOUNT, WE TALK HOW COSTCO IS DOING WELL, WHY IS THIS DISCOUNT RETAILER NOT ABLE TO GET OUT OF ITS OWN WAY AND MAKE MONEY LIKE THE OTHERS? SCARLET: MAYBE IT DID NOT HAVE THE RIGHT SUPPLIERS, NOT GETTING THE RIGHT GOODS AND INVENTORY TO ATTRACT THE CONSUMER. ROMAINE: THOSE SHARES DOWN ABOUT 33%. NVIDIA ALSO OSCILLATING BETWEEN GAINS AND LOSSES. WE WILL SET YOU UP FOR SOME OF THE BIG MARKET MOVING EVENTS OVER THE NEXT 24 HOURS WHEN WE COME BACK. THIS IS THE CLOSE. >> INVESTORS CONTINUING TO TRY AND MAKE SENSE OF NVIDIA'S AFTER HOURS TRAINING FOLLOWING ITS LATEST EARNINGS REPORT. CURRENTLY DOWN ABOUT 4%. HANGING ON TO EVERY WORD OF THE COFOUNDER WHEN HE SPEAKS WITH BLOOMBERG TELEVISION. JOINING US WITH MORE ON THE Ed Ludlow, Bloomberg News CONVERSATION IS ED LUDLOW. CONGRATULATIONS ON GETTING THE INTERVIEW. WHAT WILL -- WHAT IS FIRST ON YOUR MIND WHEN IT COMES TO THIS OUTLOOK, WHICH FAILED TO MEET THE HIGHEST EXPECTATION? >> IT IS NEVER ENOUGH. BLACKWELL. NVIDIA HAS A COMMITMENT TO BRING A NEW GENERATION OF AI ACCELERATION TO MARKET. THEY TOLD US TWO THINGS. THEY MADE A DESIGN CHANGE, WHICH IMPACTED THEIR INITIAL PRODUCTION, WHICH WILL RAMP IN THE FISCAL FOURTH-QUARTER AND INTO FISCAL YEAR 26. THIS IS THE FISCAL YEAR 25 THEY REPORTED. HE SAID IN THE FISCAL FOURTH-QUARTER IT WOULD BE SEVERAL BILLION DOLLARS OF SALES OF THIS CUTTING EDGE SHIP. WHAT DOES SEVERAL BILLION DOLLARS MEAN? WHO IS BUYING IT, WHO WILL GET IT FIRST? ALL THESE THINGS IS WHAT THE MARKET IS CRYING OUT FOR. ROMAINE: I KNOW THEY DON'T TALK A LOT IN THEIR RELEASE ABOUT COMPETITION, AND I KNOW THAT COMPETITION IS RELATIVELY NASCENT. I'M CURIOUS AS TO WHETHER IT IS AT LEAST ON HIS RADAR, IF HE'S WATCHING THESE OTHER COMPANIES AND WHAT THEY ARE TRYING TO BUILD. AND IF HE SHOULD BE WORRIED. >> AMD IS THE MOST SIGNIFICANT DECLINER AFTER HOURS. I THINK IT WAS DOWN 1%. YOU MADE A REALLY INTERESTING OBSERVATION. NVIDIA HAS FIVE CUSTOMERS. THE HYPER SCALARS AND META. THE HYPER SCALARS ARE WORKING ON THEIR OWN. THEY ALSO DO BENCHMARK AND HAVE SPECIFIC USE CASES FOR OTHER ACCELERATORS. AMD WOULD PROUDLY BOAST OTHER NAMES USING ITS AI ACCELERATOR. THE ISSUE IS THE SCALE. NVIDIA WILL BE $100 BILLION OF SALE, AMD WILL DO FOR $.5 BILLION. THEY HAVE NOT BEEN ABLE TO CATCH UP DEPLOYING THAT TECHNOLOGY INTO THE REAL WORLD. ROMAINE: THIS IS STILL THE MOST CONSEQUENTIAL STOCK AND THE MOST CONSEQUENTIAL STORY BEFORE THE BROADER MARKET. MAYBE FOR THE ECONOMY, THAT WE'VE HAD IN QUITE SOME TIME. ED LUDLOW WILL HAVE A CHANCE TO SIT DOWN WITH THE MAN AT THE CENTER OF ALL THAT. THE NVIDIA CEO, JENSEN HUANG LATER TODAY. SPECIAL COVERAGE AT 6:30 P.M. NEW YORK TIME WITH ED LUDLOW. THERE ARE SOME OTHER POTENTIALLY MARKET MOVING THINGS, IF YOU CARE ABOUT THEM. IT STARTS TOMORROW MORNING WITH MORE EARNINGS. NOT QUITE AS CONSEQUENTIAL AS NVIDIA, BUT SOME INSIGHT INTO THE ECONOMY. SCARLET: INSIGHT INTO THE CONSUMER. DOLLAR GENERAL, BEST BUY, AMERICAN PEOPLE, RUNNING THE GAMUT IN TERMS OF PRODUCT AND PRICE POINT. A TURNAROUND STORY, GAP. ROMAINE: STILL EARLY TURNAROUND MODE, BUT GOOD FOR THEM. I'M CURIOUS TO SEE WHAT ALTA BEAUTY HAS TO SAY. THERE IS CONCERNS BEAUTY IS NOT HOLDING UP AS MUCH AS PEOPLE THOUGHT. SCARLET: WARREN BUFFETT IS NOT CONCERNED. ROMAINE: MARVELL TECHNOLOGY. ANOTHER LEAD ON THE TECH SPACE. TOMORROW, WE WILL GET THE GDP REVISIONS FOR THE MOST RECENT QUARTER. AND HERE YOU GO. WE HAVE NOT HEARD FROM THEM. FED SPEAK FROM RAPHAEL BOSTIC. SCARLET: DIDN'T WE JUST HEAR FROM HIM TODAY? ROMAINE: I THINK SO. HEARING FROM HIM AGAIN TOMORROW. FULL COVERAGE OF THAT. STICK AROUND. A LOT COMING UP TONIGHT. "BLOOMBERG BUSINESSWEEK -- "BALANCE OF POWER COMING UP THE TOP.