Nike Earnings Disappoint as China Sales Lag

>> THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. ROMAINE: ON ONE HAND, THE ECONOMY IS GOOD. ON THE OTHER HAND, THINGS AIN'T SO GOOD. LIVE FROM BLOOMBERG HEADQUARTERS, I'M ROMAINE BOSTICK. EMILY: AND I AM EMILY GRAFFEO. LET'S GET A QUICK CHECK ON MARKETS. WHERE WE STAND ON THIS THURSDAY, THE S&P 500 IS HIGHER TODAY. THE EQUITY MARKET GETTING A LITTLE BIT OF RALLY AFTER ALL OF THAT MIXED ECONOMIC DATA THAT WE HAVE SEEN THIS WEEK. WHAT IS IT DOING TO TREASURIES? WE DO HAVE YIELDS LOWER BY ABOUT 10 BASIS POINTS, TO 4.7. THE LONGER END, NOT AS MUCH MOVEMENT. BUT YIELDS ARE LOWER DESPITE THE FACT WE ARE SEEING A MOVE HIGHER IN BRENT, UP ABOUT FOUR POINT 5%. BUT OVERALL, THE STORY HERE IS YIELDS LOWER. VICE CHAIR PHILIP JEFFERSON SAYING IT MIGHT TAKE MORE TIME BEFORE POLICYMAKERS CAN EVEN JUDGE WHETHER FURTHER RATE INCREASES ARE NEEDED TO SLOW INFLATION. ROMAINE: WE HAD STOCKS ON THE BACK OF AN ENCOURAGING OUTLOOK FOR MACRON AND A DROP IN TREASURY YIELDS -- BUT THE GAINS AND MICRON SHARES MODEST COMPARED TO ITS OUTSIZED REVENUE AND EARNINGS GROWTH, AND THE BOND REALLY APPEARED TO BE MORE OF A FLIGHT TO SAFETY AFTER A DISORDERLY SELLOFF IN FRENCH BONDS AND A NEAR DOUBLING IN THE SPREAD BETWEEN ITALY AND GERMANY'S TWO YEAR YIELDS, THE BIGGEST DAILY JUNK WE HAVE SEEN THERE SINCE 2020. FURTHER PRESSURE ON U.S. ASSETS AMID REPORTS THE U.S. MAY BE GEARING UP FOR A FRESH LITERARY OPERATION IN IRAN. BUT THAT IS BEING COUNTERBALANCED BY RELATIVELY UPBEAT EXPECTATIONS FOR TOMORROW'S MONTHLY PAYROLLS REPORT. THAT REPORT COULD BOLSTER THE NARRATIVE AROUND THE RESILIENCY WE HAVE BEEN SEEING IN HOUSEHOLD INCOMES AND IN CONSUMER SPENDING. AN IT BE GREAT IF IT ALL WERE JUST ONE CLEAN NARRATIVE IN ONE DIRECTION OR ANOTHER? BUT IT IS NOT. THIS MORNING'S REPORT SHOWED A HEALTHY LINE OF DEMAND FOR U.S. MANUFACTURERS, WITH ORDER BACKLOGS RISING TO THE HIGHEST SINCE FEBRUARY. BUT WHILE PRODUCTION EXPANDED, IT WAS AT A SLOW PACE. THE GAUGE OF RAW MATERIAL PRICES ROSE TO THE HIGHEST SINCE MAY, AND SUPPLIER DELIVERY TIMES CONTINUE TO LENGTHEN. IT RAISES A LOT OF QUESTIONS ABOUT THE STATE OF MANUFACTURING. WHO BETTER TO KICK US OFF TO THE CLOSE THAN THE BIGGEST HVAC SUPPLIER IN THE COUNTRY? KEVIN MURPHY IS THE CEO OF FERGUSON AND JOINS US RIGHT NOW. KEVIN, GREAT TO HAVE YOU ON THE PROGRAM. BEFORE WE GET SPECIFICALLY TO YOUR BUSINESS, I WANT YOUR GENERAL THOUGHTS RIGHT NOW ABOUT THE STATE OF MANUFACTURING, BECAUSE WE KIND OF SAW AT THE START OF THIS YEAR WE KIND OF EMERGE FROM THIS MULTIYEAR SLUMP IN MANUFACTURING, KIND OF BUOYED BY A LOT OF FACTORS. I'M WONDERING IF YOU ARE STILL SEEING THAT MOMENTUM HEADING INTO THE FINAL THREE MONTHS OF THE YEAR. >> GREAT TO BE WITH YOU AND THANK YOU FOR HAVING ME. AND YES, WE DO SEE IN OUR NONRESIDENTIAL BUSINESS, WHICH IS ROUGHLY HALF OF OUR REVENUE BASE, THAT CONTINUED GROWTH IN THE MANUFACTURING SECTOR. WE ALWAYS GO TO DATA CENTERS FIRST, AND THAT DATA CENTER CONSTRUCTION AND BUILDOUT CONTINUES FOR US. WE SEE OPEN ORDER VOLUMES GROWING IN OUR NONRESIDENTIAL BUSINESS FASTER THAN OUR REVENUES WERE GROWING AS WE EXITED Q2. WE SEE IT BUILDING NOT ONLY IN DATA CENTER CONSTRUCTION, BUT POWER GENERATION. WE SEE IT IN WATER AND WASTEWATER INFRASTRUCTURE, PHARMACEUTICALS AND BIOTECHNOLOGY, MINING AND MINERALS. WE ALSO SEE IT IN GENERAL MANUFACTURING AND ON SHORING. THAT CONTINUES TO BE THE GROWTH DRIVER IN WHAT IS NOT THE GREATEST OVERALL NONRESIDENTIAL PICTURE. ROMAINE: I AM CURIOUS ON THE DATA CENTER FRONT. THIS HAS BEEN A TAILWIND FOR YOU AND YOUR COMPETITORS AS WELL. HOW LARGE RIGHT NOW IS THE BACKLOG FOR YOU IN THE DATA CENTER SPACE, RELATIVE TO YOUR OVERALL EARNINGS AND OVERALL REVENUE? AND IS THERE ANY SORT OF CONCERN AT ALL ABOUT THE PACE OF SPENDING OR THE POTENTIAL SLOWDOWN IN THE PACE OF SPENDING? ASK IT IS THE BIGGEST PART OF WHAT WE WOULD TERM THAT LARGE CAPITAL CONSTRUCTION PROJECT GROWTH. THAT IS THE PRINCIPAL DRIVER OF GROWTH IN OUR NONRESIDENTIAL BUSINESS. THE DATA CENTER PORTION IS ROUGHLY HALF OF THAT GROWTH THAT WE ARE SEEING AN OVERALL NONRESIDENTIAL MAJOR PROJECTS. THE LARGE CAPITAL PROJECTS SPEND IS A BIT MORE DIVERSIFIED. IT IS IN AREAS LIKE POWER GENERATION, WATER, PHARMACEUTICAL. WHEN WE SEE THAT BUILDOUT, WE SEE ROUGHLY 4000 PROJECTS WITH OVER 6 TRILLION DOLLARS WORTH OF OVERALL CONSTRUCTION SPEND ATTACHED TO IT OVER THE NEXT FIVE YEARS. IT IS A LARGE PIPELINE, AND WE CONTINUE TO SEE THAT BUILDING WITHOUT A TREMENDOUS AMOUNT OF HESITATION. EMILY: I WANT TO STAY ON AI. YOU MENTIONED NOT A LOT OF HESITATION. WE HAVE BEEN HEARING ABOUT LOCAL PUSH BACK TO THE CONSTRUCTION OF SOME OF THESE AI-RELATED PIECES OF INFRASTRUCTURE, PARTICULARLY DATA CENTERS. HOW ARE YOU NAVIGATING THAT? ARE YOU SEEING THAT MUCH PUSHBACK REALLY DELAYING ANY CONSTRUCTION? >> WE CERTAINLY RECOGNIZE THE CONCERNS THAT ARE OUT THERE IN THE LOCAL COMMUNITIES. WE HAVE NOT SEEN A TREMENDOUS AMOUNT OF CANCELLATION OR PAUSE. WE HAVE SEEN SHIFTS IN GEOGRAPHY, WHERE PROJECTS ARE BEING LOCATED. WHEN YOU LOOK AT OUR IMPACT INSIDE OF THOSE PROJECTS, WE ARE LOOKING TO SOLVE A LOT OF THOSE CONCERNS THAT MAY EXIST INSIDE THE COMMUNITIES. WE ARE LOOKING TO SOLVE WHAT THE POWER SOURCE LOOKS LIKE, IN MANY CASES BEHIND THE METER INSIDE OF THOSE DATA CENTER PROJECTS. WE ARE ALSO LOOKING TO MAKE SURE WE ARE ADDRESSING WHAT IT IS FOR RAW WATER SOURCING, WATER TREATMENT ON SITE, AND CLOSED LOOP SYSTEMS FOR COOLING OF CHIPS TO MAKE SURE WE ARE MORE EFFICIENT AND THE USE OF THAT PRECIOUS WATER RESOURCE. EMILY: HOW IS THE MARKET LOOKING FOR THE KINDS OF TRADES PEOPLE THAT YOU NEED TO HIRE? IS IT EASIER OR HARDER THAN A FEW YEARS AGO TO FIND THESE SKILLED WORKERS? >> OUR WORKFORCE, WE ARE IN PRETTY GOOD SHAPE. OUR CUSTOMER WORKFORCE ON THE CONTRACTOR SIDE OF THE WORLD REMAINS PRESSURED. WE STILL SEE IT. MORE RETIREMENTS OF THE TRADES THAN WE SEE JOINING THE TRADES. WE ARE VERY MUCH ADVOCATES OF HAVING KITCHEN TABLE CONVERSATIONS BETWEEN PARENTS AND YOUNG PEOPLE ABOUT WHAT A CAREER IN THE TRADES CAN MEAN. THAT IS A PRESSURE POINT THAT IS OUT THERE IN TERMS OF HOW PROJECTS GET COMPLETED ON TIME. WHEN YOU LOOK AT OUR BUSINESS, WHAT WE ARE TRYING TO DO, AND OUR PEOPLE ACROSS ALL 50 STATES, ALL PROVINCES AND CANADA, WAKE UP EVERY DAY, TRYING TO DRIVE CONSTRUCTION PRODUCTIVITY FOR THE TRADE PROFESSIONAL. IF WE CAN HELP THEM COMPLETE A JOB ON TIME, IF WE CAN HELP THEM GET ONE MORE PROJECT DONE DURING THE DAY, WE THINK WE WILL GAIN SHARE AND GAIN MARGIN. THAT IS WHAT WE WAKE UP TRYING TO DO EVERY SINGLE DAY. ROMAINE: I HAVE TO ASK YOU ABOUT THE HOUSING ENVIRONMENT. OBVIOUSLY, RESIDENTIAL IS A BIG PART OF YOUR BUSINESS. WE ARE SPEAKING ON A DAY WHEN THE AVERAGE MORTGAGE RATE IN THE U.S. IS AT 7.3%. IS THERE ANY CONCERN ABOUT ANY POTENTIAL HIT TO RESIDENTIAL DEMAND, GIVEN THE RISE WE SEE IN BORROWING COSTS? KEVIN: RESIDENTIAL DEMAND IS A TOUGH ENVIRONMENT RIGHT NOW. WE DON'T SEE ANY REAL NEAR-TERM CATALYST THAT IS GOING TO CAUSE A MAJOR CHANGE AND UPWARD MOMENTUM AROUND THE HOUSING MARKET, IN NEW CONSTRUCTION AS WELL AS IN THAT REPAIR/REMODEL SECTOR BECAUSE OF EXISTING HOME TURNOVER BEING A BIT DEPRESSED. THAT SAID, WE ARE PLEASED BECAUSE WE GREW IN OUR RESIDENTIAL MARKETS, AND WE GREW AGAINST A MARKET THAT WAS PRETTY CHALLENGING. WE SEE THE REPAIR SIDE OF THE BUSINESS HOLDING UP IN A MORE HEALTHY WAY. FRANKLY, OUR FERGUSON HOME BUSINESS IS WELL-POSITIONED FOR THE PREMIUM AND LUXURY SPACE. THAT HAS PERFORMED QUITE WELL ON THE REMODEL SIDE OF THE WORLD IN PARTICULAR. BUT WHEN WE LOOK AT THAT HOUSING MARKET RATE AND OVERALL AFFORDABILITY IS CHALLENGING. WHEN WE LOOK OUT, IT REALLY IS A QUESTION OF WIN, NOT IF. WE REMAIN UNDER BUILT IN TERMS OF HOUSING STOCK, AND WE STILL HAVE A HOUSING STOCK THAT IS OVER 40 YEARS OLD. AS YOU LOOK AT THE NEED TO REPAIR AND REMODEL, THAT IS GOING TO BE A HEALTHY MARKET. IT IS A MATTER OF WOMEN, NOT IF. ROMAINE: HVAC GROWTH, A HUGE BRIGHT SPOT. I KNOW YOU CANNOT TALK ABOUT NUMBERS GIVEN THE QUIET PERIOD, BUT MAYBE YOU CAN GIVE US INSIGHTS INTO WHETHER THAT 11% GROWTH RATE LAST QUARTER WAS INDICATIVE OF A CONSUMER THAT IS STILL SPENDING EITHER BECAUSE THEY HAVE TO, BECAUSE THEY NEED TO REPLACE HVAC, OR BECAUSE THEY ARE PRIORITIZING MAYBE SOME OF THOSE PROJECTS OVER OTHER THINGS. KEVIN: PEOPLE ARE NOT GOING TO SACRIFICE BEING COOL IN A HOT ENVIRONMENT OR WARM IN A COLD ENVIRONMENT. REPAIR OR REPLACE ON THE HVAC SIDE WILL CONTINUE. IT HAS BEEN MORE REPAIR THAN REPLACE OVER THE PAST YEAR TO TWO YEARS. BUT WHEN YOU LOOK AT THE 11% GROWTH RATE THAT YOU SAW LAST QUARTER, WE WERE REALLY PLEASED WITH THAT. BUT IT WAS MORE A FUNCTION OF THE INVESTMENTS WE HAVE MADE OVER THE COURSE OF THE LAST SEVERAL YEARS, EXPANDING THAT HVAC PRESENTS. AND THEN TAKING CARE OF A GROWING DUAL TRADE CONTRACTOR, THE CONTRACTOR THAT DOES PLUMBING REPAIR AND REPLACE, BUT ALSO HVAC. AND WE THINK WE ARE REALLY WELL-POSITIONED ACROSS ALL 50 STATES IN THE U.S. TO TAKE CARE OF THAT HVAC CONTRACTOR. WE THINK IT IS SHOWING IN THE RESULTS, IN THE GROWTH AND SHARE THAT WE CONTINUE TO TAKE. ROMAINE: WE HAVE TO LEAVE IT THERE. HOPEFULLY WE CAN CATCH UP NEXT MONTH AFTER YOUR EARNINGS. KEVIN MURPHY IS THE CEO OVER AT FERGUSON. AS WE CUT YOU DOWN TO THE CLOSING BELL, WE ARE GOING TO CHECK IN ON THE DEAL SPACE. LAVINA WRAPPING UP ITS TAKEOVER OF SCHROEDER WITH $2.6 MILLION IN ASSETS UNDER MANAGEMENT. AN EXCLUSIVE FIRST CONVERSATION WITH THE CEO OF LEVINE WHEN WE COME BACK AFTER THE BREAK. EMILY: AI IS RESHAPING THE WEALTH MANAGEMENT INDUSTRY AND HOW MANY MANAGERS SERVE THEIR CLIENTS. INVESTMENT IS A FINTECH PLATFORM THAT RECENTLY PARTNERED WITH ANTHROPIC TO GIVE INVESTMENT ADVISORS MORE AI TOOLS AT THEIR DISPOSAL. CHRIS TODD, THE CEO, JOINS US NOW. CHRIS, GREAT TO SEE YOU. LET'S TALK ABOUT WHAT ADVISORS ARE LOOKING FOR WHEN IT COMES TO AI. IT IS INTERESTING BECAUSE WE WERE RECENTLY TALKING TO THE ROBINHOOD CEO, AND THEY ARE ROLLING OUT AGENTIC TRADING PORT RETAIL. IS THAT WHAT THE ADVISOR COMMUNITY WANTS? >> I DON'T THINK SO. NOT AT THIS STAGE. WHAT THE ADVISORY COMMUNITY WANTS IS LEVERAGE. THEY WANT FIRMS LIKE IN BEST NET WHO SPECIALIZE IN THE TECHNOLOGY TO MANAGE THEIR FIRMS AND THEIR CLIENTS TO DELIVER AI SO THEY CAN BE MORE EFFICIENT. BECAUSE WHAT THEY REALLY WANT IS TO SPEND MORE TIME WITH THEIR CLIENTS. THEY WANT TO BE ABLE TO BUILD THEIR BOOKS. THEY ARE DEPENDING ON US TO DO THAT FOR THEM. EMILY: WHAT HAS BEEN THE FEEDBACK SO FAR WITH SOME OF THE AI YOU HAVE ROLLED OUT ON THE PLATFORM? CLICKS THE FEEDBACK IS IT IS GROWING. IN THIS MARKET, LIKE YOU SEE WITH EVERY TECHNOLOGY MARKET, ADOPTION IS GOING TO GO SLOWLY UNTIL IT IS FAST. WE NEED TO BE READY. TO DATE, ADVISORS ARE USING TECHNOLOGY LIKE CALL SUMMARIES, MEETING PREP, MEETING NOTES, IN ORDER TO FREE UP TIME IN THEIR DAY. BUT THE TECHNOLOGY WE ARE BUILDING IS MUCH MORE SOPHISTICATED THAN THAT. I BELIEVE WHAT THEY WILL UTILIZE OVER TIME WHICH IS UNIFYING THE TRADING PLATFORMS THEY HAVE ACROSS THE ORGANIZATION, UNIFYING THE PLANNING, HELPING THEM ORCHESTRATE THEIR ENTIRE DAY, AND USING THE DATA WE HAVE WITH A TRILLION ASSETS ON OUR PLATFORM AND 22 MILLION ACCOUNTS TO HELP THEM KNOW WHAT IS THE NEXT BEST ACTION FOR THEM WITH THE CLIENTS THEY ARE SERVING. ROMAINE: I ASSUME YOU CAN DETERMINE THE PORTFOLIOS, WHETHER PEOPLE ARE BEING AS ACTIVE OR PROACTIVE AS THEY SHOULD BE. GIVE ME A SENSE OF HOW MUCH OF THAT ECONOMIC BENEFIT YOU CAPTURE FOR THE BOTTOM LINE RATHER THAN JUST THE ADVISOR AND INVESTOR. >> DESK CLIPS CALL -- CHRIS: MOST OF THAT ACCRUES TO THE INVESTOR. WITH THE CLIENTS WOULD SERVE, THERE ARE FIXED RATES, AND THEY CHARGE US, SOMETIMES FOR THE TECHNOLOGY, SOMETIMES FOR THE ASSETS. BUT THE BENEFITS GO TO THEM AS THEY UTILIZE THE PORTFOLIOS MORE EFFECTIVELY. THE DATA SHOWS THAT IF THEY USE OUR TECHNOLOGY, IF IN PARTICULAR THE USE MODEL PORTFOLIOS, THE RETURNS ARE HIGHER. THEIR CLIENTS DO BETTER. ROMAINE: THE QUESTION EVERYONE IS ASKING THESE DAYS IS ABOUT PRIVATE ASSETS AND WHAT ALLOCATIONS START TO LOOK LIKE FOR INDIVIDUAL INVESTORS. I KNOW IT IS STILL RELATIVELY EARLY. BUT THIS IS ALL ANYBODY IS TALKING ABOUT RIGHT NOW. HOW ARE YOU MAPPING THIS OUT FOR YOUR PLATFORM AND FOR YOUR ADVISORS? CHRIS: OUR INVESTMENT IN THE TECHNOLOGY TO OFFER ALTERNATIVES TO FINANCIAL ADVISORS ACROSS THE ECOSYSTEM IS AN IMPORTANT PART OF OUR TECHNOLOGY ROADMAP AND IT IS A BIG PLACE WE HAVE BEEN INVESTING FOR THE PAST YEAR AND WILL CONTINUE TO INVEST. AS YOU SAID, THERE IS A LOT OF TALK. THERE ARE NOT A LOT OF FLOWS RIGHT NOW. THE DATA WE SEE IS THAT IN HIGH NET WORTH PORTFOLIOS, IT IS 3%, 4%, 5% OF THE PORTFOLIO IS ALLOCATED TO ALTERNATIVES THESE DAYS. I CAN TELL YOU FROM THE FIRMS WE SPEAK WITHIN THE ADVISORS WE SPEAK WITH, THEY HAVE HIGHER GOALS OVER TIME. OUR STRATEGY IS TO MAKE SURE THE TECH CHASSIS IS THERE SO THAT WHEN THE VOLUMES COME, WE ARE PREPARED AND THEY CAN MEET THE NEEDS OF THEIR CLIENTS. ROMAINE: I'M CURIOUS ABOUT WHAT YOUR AMBITIONS ARE. ARE YOU JUST TRYING TO BUILD THIS SUPER PLATFORM? WHEN I LOOK AT IT, THERE DOES SEEM TO BE SOME OVERLAP. I DO WONDER WHAT YOU BRING TO THE TABLE THAT YOU DID NOT ALREADY HAVE. CHRIS: THIS IS AN ACQUISITION WE ANNOUNCED A COUPLE OF WEEKS AGO. NOT TO GET TO OVERLY SPECIFIC, BUT VEST MARK HAS FANTASTIC PORTFOLIO MANAGEMENT TECHNOLOGY. TRUE INSTITUTIONAL GRADE TRADING. AN OUTSOURCED INVESTMENT MANAGEMENT. THEY HAVE BEEN DOING THAT FOR 25 YEARS. THEY ARE THE LEADING COMPANY IN PROVIDING THAT INDUSTRIAL GRADE TRADING FOR LARGE BROKER-DEALERS WITH THE WIRE HOUSES, AND FOR LARGE RIA'S THAT NEED TAILORED TECHNOLOGY, AND WHERE INVEST NET HAS FOCUSED IN A SLIGHTLY DIFFERENT WAY IS ON ORGANIZATIONS THAT HAVE MORE INTEGRATED NEEDS. INVEST NET IS A FULL SUITE SOLUTION. VEST MARK IS MORE MODULAR. WE THINK ADDING THESE TWO TOGETHER IS GOING TO ALLOW US TO MEET EVERY FIRM WHEREVER THEY ARE IN TERMS OF HOW THEY WANT TO MANAGE THEIR TRADING TECHNOLOGY. ROMAINE: CHRIS TODD, THE CEO OVER AT INVEST NET. ♪ ROMAINE: YOU KNOW LEVINE AND SCHRODERS. NOW THEY ARE ONE. A COMBINED COMPANY WITH 2.6 TRILLION DOLLARS IN ASSETS UNDER MANAGEMENT. OPERATIONS IN MORE THAN 40 MARKETS AROUND THE WORLD. THE CEO IS NOW HAVING TO DIGEST IT ALL. I CAUGHT UP WITH THE NEW CEO, BILL HUFFMAN, TO TALK ABOUT THE DEAL, THE TRANSITION PERIOD, AND THE PATH FORWARD. ASK A TRANSACTION WAS SET UP TO DO A COMBINATION OF TWO GREAT FIRMS. THESE FIRMS COME TOGETHER TO MAKE A ONE POINT $6 TRILLION ASSET MANAGER. FROM THERE, WE ARE ABLE TO BRING A PUBLIC TO PRIVATE PLATFORM TO OUR CLIENTS. WE WILL BE ABLE TO HAVE THE LEADING INDUSTRY PRIVATE PLATFORM WITH THE TOP 10 ASSET MANAGERS IN THE WORLD, AND A LEADING PUBLIC PLATFORM. AND WE WILL BE ABLE TO SERVICE OUR CLIENTS WITH SOLUTIONS IN ANY MARKET CONDITION. ROMAINE: IS THERE SOMETHING YOUR CLIENTS WILL BE ABLE TO DO UNDER THIS COMBINED COMPANY THAT THEY WERE NOT ABLE TO DO UNDER JUST ONE OF THE SEPARATE COMPANIES? >> THE GLOBALIZATION OF THIS ORGANIZATION MAKES A BIG DIFFERENCE. IT IS ALL ABOUT GROWTH AND IT IS ALL ABOUT OUR CLIENTS. WHEN YOU TAKE A COMPANY WITH THIS TYPE OF PLATFORM AND YOU PUT IT WITH A GLOBALIZED ORGANIZATION AND LOCAL MARKETS, 40 OF THEM AROUND THE WORLD, WE WILL BOTH BE ABLE TO DO THINGS WE COULD NOT DO BEFORE. FOR EXAMPLE, WE HAVE A VERY LARGE PRIVATE PLATFORM. SCHRODERS DOES NOT. WHEN YOU PUT THOSE TWO TOGETHER AND YOU PUT THAT IN A GLOBAL ORGANIZATION, YOU CAN REALLY SERVE THE CLIENTS WELL. ROMAINE: THE PLAN TO ALLOW SCHRODERS TO REPRESENT -- TO OPERATE AS A STAND-ALONE, OR WILL IT BE FULLY INTEGRATED? >> FOR THE FIRST 12 TO 18 MONTHS, IT WILL OPERATE JUST THE SAME AS TODAY. OVER THE COURSE OF THE YEAR, WE WILL BRING THE TWO ORGANIZATIONS TOGETHER TO LEVERAGE BOTH COMPANIES TO PROVIDE INVESTMENTS TO OUR CLIENTS. ROMAINE: ARE THERE ANY CONCERNS ABOUT HOW SMOOTH THAT TRANSITION WOULD GO, PARTICULARLY GIVEN SCHROEDER'S HISTORY, THE TWO DIFFERENT COMPANIES, THE DIFFERENT TIMELINES FOR GROWTH? >> WE ARE NOT CONCERNED ABOUT IT. WE HAVE HAD A PLAYBOOK FOR THE LAST 10 YEARS OF ACQUIRING COMPANIES AND BRINGING THOSE TOGETHER, AND THAT HAS ALWAYS BEEN BUILT ON GROWTH, TRUST IN THE STRATEGY -- WE BOTH AGREE ON THAT STRATEGY, AND EXECUTING THAT STRATEGY TOGETHER. WHEN YOU COMBINE THOSE TOGETHER, YOU CAN ACTUALLY DO SOMETHING VERY SPECIAL. SO WE ARE NOT WORRIED ABOUT THAT. IT IS ABOUT WHAT IS IN THE FOREFRONT OF OUR CLIENTS. WHAT DO OUR CLIENTS WANT? WE ARE AN INVESTMENT COMPANY FIRST. WE DRIVE INVESTMENT PERFORMANCE. WE NEVER CHANGE OUR INVESTMENT PROCESS WHEN WE DO THESE TRANSACTIONS. SO IT IS ABOUT CLIENTS AND BRINGING NEW CAPABILITIES. >> YOU HAVE DONE A LOT OF ACQUISITIONS AND THIS IS A DIFFERENT BEAST. IT IS ONE THING TO BUY A SMALLER COMPANY WHERE YOU KNOW IT IS PROBABLY IN A DIFFERENT STAGE OF GROWTH RELATIVE TO A 100-YEAR-OLD COMPANY THAT MIGHT BE A BIT MORE MATURE. DID YOU TAKE THAT INTO ACCOUNT? >> WE DID. WE HAVE DONE LARGE TRANSACTIONS BEFORE. WE DID A LARGE TRANSACTION VERY SMOOTHLY. THAT ACTUALLY SET US UP TO BE ABLE TO DO THESE TRANSACTIONS THAT ADDED CAPABILITIES LIKE GREEN WORKS. AND THIS IS VERY MUCH THE SAME. ACQUISITIONS ALL HAVE THE SAME BASIC PLAYBOOK. ONE, YOU HAVE TO HAVE A STRATEGY. TWO, YOU CANNOT DISRUPT THE INVESTMENT PROCESS. AND THREE, YOU HAVE TO HAVE TRUST IN WHAT YOU DO WITH YOUR PARTNERS BEFORE YOU ANNOUNCE A DEAL. WE HAVE THAT. ROMAINE: ARE YOU PUTTING MORE ACQUISITIONS? WE ARE ALWAYS LOOKING AT ACQUISITIONS TO STAY A STEP IN FRONT OF THE MARKETPLACE. WE ALWAYS WANT TO BRING NEW THINGS TO CLIENTS. WE WANT TO BE INNOVATIVE. WE WANT TO CONTINUE TO GLOBALIZE. DEPENDING WHAT COULD BE OUT THERE, WE COULD DO MORE ACQUISITIONS. ROMAINE: THE FUTURE, WHEN I THINK ABOUT, OVER THE YEARS -- YOU TALK ABOUT THE LOCAL NATURE OF THIS DEAL -- WHAT ARE YOUR AMBITIONS? >> WE WANT TO MAKE IT THE MOST RESPECTED INVESTMENT COMPANY IN THE WORLD. WE HAVE SCALE. WE ARE ONE OF THE TOP 10 LARGEST ASSET MANAGERS IN THE WORLD. IT IS ABOUT BEING RESPECTED. IT IS ABOUT SERVING OUR CLIENTS. IT IS ABOUT DELIVERING FOR THEM. IF YOU DO THAT, YOU GROW. ROMAINE: WHAT DO YOUR CLIENTS WANT NOW? PUT IN CONTEXT OF YOUR CAREER WITH NORTHERN TRUST AND THE TYPES OF PORTFOLIO CONSTRUCTION THAT WE HAVE SEEN PEOPLE ASK FOR -- IT IS DIFFERENT THAN MAY BE WHAT IT WAS WHEN BOTH YOU AND I WERE STARTING OUR CAREERS. OBVIOUSLY, PRIVATE ASSETS ARE A BIG PART OF THAT. HOW MUCH MORE DOES THAT CHANGE, AND WHAT DOES THAT BREAKDOWN LOOK LIKE FOR YOUR AVERAGE CLIENT? >> WHEN WE STARTED, THE TALK WAS ALL ABOUT ACTIVE/PASSIVE. IT WAS EQUITIES, FIXED INCOME, ACTIVE/PASSIVE WE STARTED BRINGING OUT PRIVATE MARKET CAPABILITIES OVER 10 YEARS AGO. THAT IS WHY WE ARE ONE OF THE TOP 10 PRIVATE MARKET MANAGERS IN THE WORLD. NOW, THE PORTFOLIO IS SHIFTING. WHERE DO YOU GET EXPOSURE? YOU GET EXPOSURE FROM PUBLIC MARKETS, FROM PRIVATE MARKETS. IT SHIFTS AROUND A LITTLE BIT. MAYBE IT IS A 50/30/20 PORTFOLIO. BUT DEPENDING ON THE CLIENT, IT MIGHT BE THAT MUCH MORE. IT IS ABOUT THE EXPOSURE AND HOW YOU ARE DELIVERING THAT EXPOSURE TO THE CLIENT. THAT IS A MUCH DIFFERENT DISCUSSION THAN ACTIVE/PASSIVE WAS YEARS AGO. WE THINK WE ARE KIND OF RESHAPING THE INDUSTRY. ROMAINE: WHAT DOES THE PHRASE PATIENT CAPITAL MEAN TO YOU? I THINK ABOUT A WORLD WHERE THINGS ARE CHANGING EVERY WEEK AND INVESTORS ARE CHANGING THEIR POSITIONING ALMOST AS FREQUENTLY. CAN YOU BE PATIENT IN THIS ENVIRONMENT? >> I THINK YOU SHOULD BE. ANY INVESTOR FOR THE LONG-TERM NEEDS TO BE PATIENT. YOU NEED THE RIGHT ASSET ALLOCATION AND YOU NEED TO LET YOUR INVESTMENTS PLAY OUT OVER TIME. I THINK IT IS PATIENT CAPITAL. THEY HAVE INVESTED INTO LEVINE. -- NUVEEN. THEY MANAGE ALL THE MONEY FOR THE GENERAL ACCOUNT OF RETIREES OF TEACHERS. THEY HAVE DONE IT FOR DECADES ON END. THEY HAVE GIVEN PEOPLE GREAT RETIREMENTS AND DIGNITY. ROMAINE: BILL NUVEEN AND HUFFMAN'S. CEO'S ARE SOUNDING OFF ON AI, DEALMAKING, AND THE FORCES RESHAPING BUSINESS. ANDREA GREEN ZONE HE IS THE VICE CHAIR AT EY. HE HAS A NEW REPORT OUT ABOUT HOW CEO'S ARE THINKING. THAT CONVERSATION IS COMING UP NEXT. ROMAINE: IT'S BEEN A RECORD YEAR FOR STOCKS AND A RECORD YEAR FOR DEALMAKING, BUT ONE SIMILARITY BETWEEN THE TWO MAYBE CAUSE FOR CONCERN. MOST OF THE RECORD RUN INSTRUCTS KIM FROM THE FIRST HALF OF THE YEAR, AND MOST OF THE RECORD DEALMAKING, TOO. TRANSACTIONS WERE OF IN THE FIRST HALF OF THE YEAR, THE BEST FIRST HALF SINCE 1998. THE VALUE OF THE DEALS SINCE SEPTEMBER, DIPPED IS ONE GEOPOLITICAL HEADACHE AFTER ANOTHER CREATED CAUTION. A NEW SURVEY FROM EY-PARTHENON SHOWS PORTIONS OF CEOS OVER THE NEXT FEW MONTHS HAS FALLEN 62% FROM MAY. ANDREA GUERZONI JOINS US FOR AN EXCLUSIVE BIDDING ON THE BACK OF THE LATEST CEO'S SURVEY. --EXCLUSIVE INTERVIEW ON THE BACK OF THE LATEST CEO'S SURVEY. IT IS NOT NECESSARILY FALLING OFF A CLIFF, BUT IT IS A PULLBACK, AND I WONDER IF YOU CAN ARTICULATE WHY. ANDREA: THE GLOBAL ENVIRONMENT IS BECOMING PROBABLY MORE CHALLENGING. THE COST OF DEBT AND THE INCREASED LEVEL OF GEOPOLITICAL TENSIONS ARE ALL REASONS FOR, LET'S SAY, DECREASE IN APPETITE FOR M&A. BUT IT'S -- AGAIN, IT IS NOT A COMPLETE STOP. WE CAN REALLY SEE THE LAST TWO MONTHS, THE AMOUNT OF DOLLARS TRANSACTED IS PROBABLY LIKELY BELOW THE FIRST HALF OF THE YEAR, BUT STILL AROUND 400 BILLION PER MONTH. IT IS STILL THERE, BUT I THINK THE CIRCUMSTANCES HAVE CHANGED, AND THERE IS MORE CONSERVATISM AND FOCUS ON CORE BUSINESS, RATHER THAN MORE RISKY M&A VENTURES. ROMAINE: WE SHOULD POINT OUT WE ARE STILL ON PACE POTENTIALLY TO HIT $5 TRILLION IN M&A ACTIVITY DOES THIS YEAR, WHICH WOULD SURPASS THE RECORD FROM 2021. ANDREA: CORRECT. ROMAINE: PUT IN YOUR REPORT, YOU TALK ABOUT THE FACT THAT A LOT OF THE M&A ACTIVITY IS CENTERED AROUND INVESTMENTS RATHER THAN ACQUISITIONS--DIVESTMENTS RATHER THAN ACQUISITIONS. ANDREA: CEO'S HAVE BROADENED THEIR TOOLKIT, REALLOCATING CAPITAL, TAKING INTO CONSIDERATION ALLIANCES AND PARTNERSHIPS AND DIVESTMENTS AS WELL. DIVESTMENTS IS ON THE RISE. SPINOFFS, CARVEOUTS. THE SURVEY SHOWS QUITE CLEARLY THAT THERE IS MORE APPETITE FOR SIMPLIFICATION AND REDEPLOYMENT OF CAPITAL TOWARDS AREAS WHERE THE RETURN IS EXPECTED TO BE HIGHER. AT THE SAME TIME, REDUCE THROUGH THESE TRANSACTIONS. >> I WANT TO POINT OUT ONE STAT THAT STUCK OUT TO ME IN THE STATISTIC, PIVOTING TO AI HERE. ONLY 16% OF CEOS IN YOUR SURVEY SAID THEY HAD A CLEAR REAL-TIME VISIBILITY INTO THE RETURN ON INVESTMENT OF AI. TALK A LITTLE BIT ABOUT WHY THAT NUMBER IS SO LOW. ANDREA: IT'S VERY DIFFICULT. ACTUALLY, THE ADOPTION HAS INCREASED MASSIVELY. THE SURVEY REPRESENTS THIS IN A WAY THAT HAS NEVER HAPPENED BEFORE. THERE IS A CLEAR RECOGNITION THAT A HIKE CAN BRING ABOUT SAVINGS AND EFFICIENCIES. THERE ARE PRODUCTIVITY GAINS. THE POINT IS THAT THE ENTIRE CALCULATION REGARDING THE RETURN OF THESE INVESTMENTS IS VERY COMPLICATED. IT IS A DISCIPLINE THAT HAS NOT BEEN EMBEDDED YET AT CORPORATE LEVEL AND IS STILL UNDER DEVELOPMENT. AND IT REQUIRES A LOT OF EXPERTISE, TECHNICAL EXPERTISE, AND IS A MULTIDIMENSIONAL GAME. YOU NEED TO COMPUTE AND ADJUST THE INITIAL INVESTMENT, THE COST FOR THE TRAINING OF THE PEOPLE AND THE OPERATING COST. ALL OF THESE VARIABLES ARE DIFFICULT TO CALCULATE. EMILY: RIGHT. DOES IT SEEM LIKE MOST OF THE CEOS YOU WORK WITH ARE MAKING A MEANINGFUL EFFORT TO TRY AND GET A CLEARER PICTURE? AT LEAST FOR THE EQUITY MARKET, THIS IS THE KEY QUESTION, WHETHER ALL OF THESE INVESTMENTS ARE ACTUALLY SHOWING SOME RETURN. ANDREA: THIS IS A FUNDAMENTAL QUESTION, AND I THINK IT IS ON TOP OF PRIORITIES. RIGHT NOW IT IS CRYSTAL CLEAR THAT CAPACITY AUGMENTATION, AUTOMATION, PROVIDING COMPETITIVE ADVANTAGE, THE WAY IN WHICH THESE ADVANTAGES CAN ACTUALLY BE REACHED AT THE BOTTOM LINE IS STILL TO BE ASSESSED PROPERLY. THIS IS THE NEXT STEP OF THIS JOURNEY. ROMAINE: WHEN WE TALK ABOUT THE DEAL ENVIRONMENT, IS IT STILL CENTERED PRIMARILY AROUND AI AND AI-RELATED TYPES OF DEALS? ANDREA: I THINK IT REPRESENTS A SIGNIFICANT PART OF THE DEALMAKING, BECAUSE THE NEED TO ACQUIRE CAPABILITIES THAT CANNOT BE INTERNALLY DEVELOPED REMAINS VERY, VERY HOT. PUT--VERY, VERY HIGH. BUT YOU CAN ALSO SEE THERE IS A SIGNIFICANT PUSH TOWARDS STRENGTHENING OF THE CORE BUSINESS, MAKING IT MORE RESILIENT, AND REALLY DOWN THE PATH THAT IS WELL KNOWN, INSTEAD OF DIVERSIFYING. THIS IS ALSO DRIVING THIS M&A ACTIVITY. AND AGAIN, STICKING TO THE TRADITIONAL, THE CORE BUSINESS REDUCES THE RISK, AND THOSE OF THE COST OF THESE INVESTMENTS. ROMAINE: I WANT TO ASK YOU WHAT HAS BEEN GOING ON IN THE PRIVATE EQUITY SPACE, BECAUSE THERE IS INTERESTING DATA ABOUT THE VALUE OF SOME OF THE EXIT DEALS, BUT MORE IMPORTANTLY -- I'M GOING TO QUOTE THIS -- 90% OF THE SURVEYED GP'S WOULD ACCEPT AT LEAST SOME DISCOUNT TO THE ORIGINAL UNDERWRITING TO GENERATE LIQUIDITY. THAT SEEMS LIKE A BIT OF A SHIP FROM WHERE WE WERE JUST A COUPLE QUARTERS AGO. ANDREA: THIS IS SOMETHING THAT -- IT WAS QUITE CLEAR THAT WAS COMING. THE INVESTMENT PERIOD HAS BEEN EXTENDED SO MUCH THAT AT A CERTAIN BONNIE RAITT ---AT A CERTAIN POINT YOU REACH REALLY THE NEED TO DIVEST AND RETURN CAPITAL TO YOUR INVESTMENT. I THINK THE POSSIBILITY TO KEEP HOLDING THESE ASSETS IN THE HOPE OF GETTING MORE BENEFITS FROM TRADITIONAL VALUE CREATION TOOLSETS IS ACTUALLY FADING AWAY. SO THAT IS REALLY THE GROWING ACCEPTANCE OF THE FACT THAT THEY NEED TO ROTATE OUT SOME OF THESE ASSETS AND MOVE ON. EMILY: WHAT ARE YOU SEEING WHEN IT COMES TO EMPLOYEE WORKFORCES IN THE BACKUP OF AI? YOUR SURVEY SHOWS THAT CEOS ESSAY AI IS DRIVING PRODUCTIVITY. ARE YOU SEEING THAT AFTER-M&A ACTIVITY MORE, EMPLOYEES ARE BEING SHED, GIVEN HOW PRODUCTIVE THIS TECHNOLOGY CAN BE? ANDREA: I THINK IT IS VERY EARLY DAYS TO CALCULATE THAT KIND OF IMPACT. AGAIN, IF YOU LOOK AT THE THREE MAIN AREAS OF APPLICATION OF THIS VERY SOPHISTICATED TECHNOLOGY, AUGMENTATION OF THE SKILLS, THE AUTOMATION, THE INNOVATION, REALLY THE CREATION OF NEW AVENUES OF REVENUE, NEW BUSINESSES, THIS THIRD BUCKET IS STILL UNDERDEVELOPED. IT IS THE NEXT STEP OF THE JOURNEY. THAT IS REALLY WHY WE STILL NEED TIME TO FIGURE IT OUT, MUCH MORE PERVASIVE STRUCTURAL CHANGES IN THE PROCESSES OF THESE COMPANIES WHEN THEY MERGED, WHEN THEY DIVEST. THIS NEW TECHNOLOGY CAN REWIRE THE ORGANIZATION, CREATING MORE VALUE THAT CAN BE MATERIALLY INCREASING THE TOTAL RETURN. IT IS VERY EARLY DAYS. COMPANIES TODAY HAVE MORE FOCUS ON THE FIRST TWO BUCKETS OF AUGMENTATION AND AUTOMATION. EMILY: OUR THANKS TO ANDREA GUERZONI OF EY. ROMAINE: LET'S TAKE A LOOK AT THE MARKETS ON THE DAY. WE TALK ABOUT A MARKET IN THE GREEN BUT UNDER PRESSURE ALL DAY. INTERESTING INDIVIDUAL STORIES CROSSING THE BLOOMBERG TERMINAL JUST IN THE PAST FEW MINUTES, INCLUDING A RED HEADLINE ON DISNEY, SAYING THAT DISNEY IS PLANNING TO RESTRUCTURE ITS TV UNIT AND CUT HUNDREDS OF JOBS. LOTS OF DETAILS I'VE YET TO BE FINALIZED. UC SHARES TAKING A LE--YOU SEE SHARES TAKING A LEG DOWN PEN AND THE NIKE--AND THEN NIKE. YOU SEE THAT STUCK FADING INTO THE CLOSING BELL. WHEN WE COME BACK AFTER THE BREAK, WE ARE GOING TO TALK ABOUT MATTEL, ANOTHER STORY OUT OF "THE WALL STREET JOURNAL," THAT MATTEL MIGHT BE THE NEXT M&A PLAY. THAT IS COMING UP NEXT RIGHT HERE ON BLOOMBERG. ROMAINE: MATTEL WENT PUBLIC IN 1980, AND TODAY IT IS HAVING ITS BIGGEST INTRADAY GAIN, WELL, SINCE EVER. A "WALL STREET JOURNAL" REPORT SAYING THE COMPANY IS GARNERING TAKEOVER INTEREST FROM AUTHENTIC BRANDS. NORAH MULINDA JOINS US ON OUR STOCK OF THE HOUR. WE HAD THE CEO OF AUTHENTIC BRANDS TWO OR THREE WEEKS AGO, FRESH OFF NEW ACQUISITIONS. THEY MOVED DEEPER INTO THE ENTERTAINMENT SPACE WITH THE ACQUISITION OF THE CARE BEARS FRANCHISE. I KNOW THIS REPORT. WHAT DO KNOW ABOUT ERIN VISIONS? --THEIR AMBITIONS? NORAH: THEY ARE STEADY MOVING. THE COMPANY IS FOCUSED ON BRAND MANAGEMENT BUT ALSO LICENSING. IF YOU THINK OF MATTEL, YOU HAVE BARBIE, UNO -- ROMAINE: UNO? INTERESTING. WHAT ABOUT HOT WHEELS? NORAH: SO MANY NAMES. [LAUGHTER] I JUST PLAYED UNO LAST WEEKEND, I SHOULD SAY, SO MAYBE IT IS TOP OF MIND. WHEN YOU THINK OF THESE TYPES AND BRANDS, CAN WE EXTEND OUR PRESENCE BEYOND THE TOY AISLE IN THE STORE? WE DID SEE SUCCESS IN THE PAST OF MATTEL DOING THIS. IF YOU THINK ABOUT BARBIE, I'M SURE YOU REMEMBER THE "BARBIE" MOVIE. ROMAINE: HATED IT. NORAH: HATED IT? WE GOTTA TALK ABOUT THAT LATER. THIS IS A COMPANY THAT COULD TRANSFORM MATTEL IN A WAY THAT IT HAS A PRESENT THAT COULD EXTEND BEYOND JUST THE PHYSICAL TOYS. EMILY: OK, WHY NOW FOR MATTEL? I FEEL LIKE MATTEL HAS BEEN ON AN UP-AND-DOWN RIDE FOR AS LONG AS I CAN REMEMBER LEARNING ABOUT WHAT MATTEL WAS. AS A YOUNG GIRL. NORAH: IT DOESN'T STRUGGLED AS A STOCK, IT HAS HAD LACKLUSTER GROWTH, BUT ALSO PRESSURE FROM ACTIVISTS. WE GOT THIS SUDDEN TRANSITION OF THE CEO. HE JUST LEFT, GOING OVER TO PARAMOUNT. ROMAINE: THAT IS WHAT I THOUGHT WAS INTERESTING, THAT THIS WOULD COME OUT AS THEY LOST THEIR CEO. TURNAROUND GUY WHO IS TRYING TO DO HIS BEST TO TURN AROUND THIS COMPANY. NOW AUTHENTIC BRANDS -- NORAH: POTENTIALLY SWEEPING IN. ALLEGEDLY. ROMAINE: THE LAST HIGH? 2013. NORAH: IT'S BEEN A MINUTE. EMILY: NORAH WAS PLAYING UNO. NORAH: STILL AM TODAY. ROMAINE: THE BIGGEST BIDS RIGHT NOW COMING INTO THE MID-CAPS IN THE TRANSPORTS. YI8ELDS IN CHECK. ANN MILETTI JOINS US AFTER THE BREAK ON BLOOMBERG. ♪ ROMAINE: WE ARE JUST ABOUT 10 MINUTES UNTIL WE GET TO THOSE CLOSING BELLS ON THIS THURSDAY AFTERNOON. BIT OF A TOPSY-TURVY DAY. WE STARTED OFF WITH A RELATIVELY STRONG VALLEY. FITTING JUST A TOUCH-. FADING- JUST A TOUCH. EMILY: BE 500 STILL IN THE GREEN, UP .4%. THIS IS DESPITE THE FACT THAT OIL IS CONTINUING ITS CLIMB TODAY, UP 4.5%. THE YIELD STORY ON MUCH DIFFERENT PICTURE TODAY THAN IT WAS YESTERDAY. TWO-YEAR YIELDS MOVING DOWN 10 BASIS POINTS. A LOT OF THAT MOVEMENT OFF A BE MORE DOVISH FED SPEAK. ROMAINE: AS YOU SPEAK OF, WE ARE HEARING FROM THE FED VICE CHAIR NIKKI BOWMAN IN A Q&A SESSION, SAYING THAT SHE SEES "NO URGENT NEED" FOR MORE RATE MOVES THIS YEAR, ECHOING SENTIMENT FOR OTHER MEMBERS WEB SPOKEN AS WELL. WE HEARD FROM NEEL KASHKARI, NOT QUITE AS DOVISH, BUT NOT CLEAR WHERE RATES SHOULD GO NEXT. THAT IS THE PARLOR GAME FOR MARKETS, PARTICULARLY EQUITY MARKETS, WHERE WE LOOK AT THE CORRELATION BETWEEN YIELDS AND EQUITIES AND WHETHER THEY HOLD. COUNTING US DOWN TO THE CLOSING BELLS THIS THURSDAY AFTERNOON IS ANN MILETTI, HEAD OF EQUITY INVESTMENTS AT ALLSPRING GLOBAL INVESTMENTS. I WANT TO ASK YOU FOR A CALL ON WHERE RATES GO, BUT I WANT TO GET YOUR THOUGHTS INTO HOW MUCH INVESTORS SHOULD BE PAYING ATTENTION TO WHERE THEY GO AND WHETHER IT STARTS TO WORK AGAINST FUTURE GAINS IN THIS MARKET. ANN: ROMAINE, IT'S A GREAT QUESTION. LISTENING TO YOU AND EMILY TALK ABOUT THE RATE ENVIRONMENT IS SOMETHING THAT THE EQUITY INVESTORS ARE SPEAKING MORE ABOUT. WE ARE IN A PHASE OF TWO COMPETING DYNAMICS, AND THAT IS REALLY STRONG FUNDAMENTALS AND GOOD EARNINGS GROWTH. Q3 IS EXPECTED TO SHOW OR BE THE THIRD QUARTER IN A ROW WITH DOUBLE DIGIT EARNINGS GROWTH. AT THE SAME TIME THAT IS HAPPENING, WE ARE SEEING PRESSURE FROM RISING YIELDS, AND THAT IS CAUSING SOME ANXIETY OR CONCERN FOR EQUITY SHAREHOLDERS, JUST IN TERMS OF THE COST OF CAPITAL, WHERE THAT IS GOING, AND WHERE IT COULD CREATE A BREAKING POINT FOR SOME COMPANIES. ROMAINE: THERE HAS BEEN A LOT OF TALK ABOUT WHETHER WE COULD SEE A LITTLE BIT MORE FLOWS BACK INTO EQUITIES, PARTICULARLY OFF A SLOPPY SEPTEMBER, AND THIS DOWNTURN THAT WE HAVE SEEN, AT LEAST SINCE LATE SUMMER. SCOTT OF CITADEL HAD A GREAT NOTE SAYING RETAIL INVESTORS COULD BE THE SALVATION. I'M CURIOUS AS TO WHETHER YOU ARE SEEING MATERIAL FLOWS OR POTENTIAL FOR INFLOWS THAT WOULD BE MATERIAL ENOUGH TO BRING STOCKS BACK TO OR ABOVE RECORD HIGHS. ANN: THERE IS A LOT OF OPPORTUNITY STILL IN THE EQUITY MARKETS, AND IF YOU THINK ABOUT HOW CONCENTRATED WE HAVE BEEN IN A TERMS OF WHAT NAMES HAVE BEEN OUTPERFORMERS OVER THE LAST SEVERAL YEARS, THERE HAS BEEN A LOT OF LAGGARDS AS WELL. IT FINALLY SEEMS THAT RETAIL INVESTORS AND INVESTORS IN A GENERAL ARE MORE FOCUSED ON DIVERSIFICATION AND WHAT ALLSTATE NEEDED TO OW--AND WHAT ELSE THEY NEED TO OWN RELATIVE TO THE LOGITECH NAMES. THIS IS AN INTERESTING OPPORTUNITY. THE OTHER THING I WOULD SAY IS I LOVE THE TECHNICAL TERM SLOPPY SEPTEMBER. I MIGHT STEAL THAT FROM YOU. BUT THAT IS RIGHT, WHILE THE S&P 500 DOESN'T LOOK LIKE IT HAS BEEN THAT DISRUPTED, WHEN YOU LOOK AT THE MEDIAN S&P 500 STOCK, ON AVERAGE IT IS DOWN 15%. THE SLOPPINESS HAS CREATED A LITTLE OPPORTUNITY AND BETTER ENTRY POINTS FOR SOME INVESTORS. EMILY: WHEN YOU THINK ABOUT THE OPPORTUNITY OUTSIDE THE MAG 7, CONSIDERING THE BACKDROP OF HIGHER RATES, IS IT ABOUT GOING DOWN THE MARKET CAP SPECTRUM? IS IT SECTORS THAT HAVEN'T PERFORMED? WHAT DOES THE ROTATION OUT OF MAG 7 LOOK LIKE TO YOU? ANN: I THINK IT MEANS DIVERSIFICATION ACROSS REGIONS, SO THINKING EVEN OUTSIDE THE U.S., I THINK IT MEANS GOING DOWN CAP. WE THINK THE SWEET SPOT RIGHT NOW IS THIS MID-CAP SPACE, SMALL TO MIDSIZE COMPANY. BUT IT ALSO IS DIVERSIFICATION ACROSS INDUSTRIES, AND THERE ARE A LOT OF INDUSTRIES THAT HAVE LEGS, SUBSTANTIALLY -- HEALTH CARE IS 1 -- THAT WE ARE INTERESTED IN THE OPPORTUNITY SET, WHERE FUNDAMENTALS DO LOOK BETTER AND EVALUATIONS WERE HEALTH CARE AT LEAST ARE STILL AT DECADE LOWS. EMILY: WHAT WOULD BE THE CATALYST FOR MEANINGFUL MOVE UPWARD IN THOSE SECTORS THAT HAVE LAGGED? WOULD IT BE RELIEF ON THE INTEREST RATE ENVIRONMENT? ANN: I THINK IT'S -- YOU KNOW, I DON'T KNOW THAT WE ARE GOING TO NEED IMMEDIATE REALLY. I THINK A CONTINUED STEEPENING YIELD CURVE WILL CREATE SOME LEVEL OF CONCERN ACROSS ALL SECTORS. BUT I THINK INVESTORS ARE GOING TO BE CONTINUING TO LOOK AT THE OPPORTUNITY SET OUTSIDE OF JUST THE CONSTANTLY TRADED AREAS THEY HAVE BEEN. AGAIN, HEALTH CARE, THERE IS A LOT OF OPPORTUNITY. I THINK ABOUT HEALTH CARE, INDUSTRIALS, OTHER SECTORS ACROSS THE ECONOMY THAT PEOPLE MAY NOT THINK OUR AI-RELATED, BUT THEY ARE THE SECOND OR THIRD DERIVATIVE OF PLAYS OF AI. ONE MAY THINK ABOUT HEALTH CARE, WE HAVE SEEN INNOVATION AND OBESITY AND CANCER TREATMENTS. BUT WITH AI-ENABLED DRUG DISCOVERY COULD BECOME A MUCH QUICKER, MORE INDIVIDUALIZED. AND CERTAINLY DIAGNOSTICS COULD SHIFT AND BE MUCH MORE FORWARD-LOOKING. IT HAS POTENTIAL, AI HAS THE POTENTIAL, OF REALLY TURNING OUR HEALTH CARE SYSTEM MORE INTO WELLNESS CARE THAN JUST A SICK CARE. AT LEAST I'M OPTIMISTIC ABOUT THAT. OTHER AREAS LIKE INDUSTRIALS AS WELL, THEY SIT AT THE INTERSECTION OF THIS CAPITAL BUILDOUT CYCLE WE ARE SEEING FOR AI, BUT ALSO THE GLOBAL SUPPLY CHAIN REALIGNMENT. ROMAINE: YOU SAID A MAGIC WORD A SECOND AGO, AI. I HAVE TO ASK YOU ABOUT THE AI TRADE, ON A DAY WHEN YOU LOOK AT MICRON SHARES UP A COUPLE PERCENTAGE POINTS, WHICH I GUESS IS FINE, BUT WHEN YOU CONSIDER 400% REVENUE GROWTH, 1000% BOTTOM-LINE GROWTH, GUIDED INTO NUMBERS THAT ARE GOING TO BE SIMILAR THE NEXT QUARTER OR TWO, IS THIS INDICATIVE OF THE IDEA THAT INVESTORS LOOK AT THE AI TRADE AS NOT HAVING RUN ITS COURSE, THEN MAYBE MIGHT HAVE POTENTIALLY REACHED IT ITS PEAK? ANN: IT'S A GOOD -- I THINK IT IS THE QUESTION, ROMAINE. AND I THINK THE QUESTION HAS NOT BEEN THE FOCUS, DOES AI WORK OR NOT. AI IS HERE TO STAY. BUT IT IS THE RETURN ON INVESTED CAPITAL THAT WE ARE SEEING THAT IS BEING QUESTIONED. I THINK IT WILL CONTINUE TO BE QUESTION. I BELIEVE WE WILL PROBABLY GET A PRETTY GOOD EARNINGS SEASON. MICRON'S A GOOD START TO IT. ARE INVESTORS GOING TO BE SATISFIED IF THE SPEND CONTINUES TO GO UP? ROMAINE: MAYBE YOU COULD PUT YOUR OLD ANALYST HAT ON FROM BACK IN THE DAY, BECAUSE YOU WERE AROUND DURING THE DOT-COM BOOM, THE TELECOM BUILDOUT. YOU COVERED THE COMCASTS AND AT&TS IN THOSE TYPES OF COMPANIES. ARE THERE PARALLELS TO THE CAPEX CYCLE WITH REGARD TO AI INFRASTRUCTURE AND WHAT WE SAW BACK THEN, OR IS THAT NOT A FAIR COMPARISON? ANN: I DO SEE A LOT OF THINGS THAT ALIGN HERE. I THOUGHT THAT WAS THE BIGGEST INNOVATION CYCLE I WOULD SEE IN MY CAREER. I WAS WRONG. [LAUGHTER] IT LOOKS LIKE AI IS GOING TO TRUMP THIS IN A VERY BIG WAY. BUT WHAT I DIDN'T RECOGNIZE AS AN ANALYST -- DID RECOGNIZE AS AN ANALYST DURING THAT TIME, THERE WAS A LOT OF SPEND UP FRONT THAT PEOPLE QUESTIONED DIDN'T BELIEVE IN. SOME OF THAT SPEND CREATED A LOT OF REVENUE GROWTH FOR MULTIPLE COMPANIES OVER YEARS. IT ALSO CREATED BANKRUPTCIES. PEOPLE THAT SPEND MONEY IN THE WRONG PLACES AND DIDN'T THINK STRATEGICALLY ABOUT WHETHER THEY NEEDED TO BE THREE TO FIVE YEARS FROM NOW. THAT IS DEFINITELY A SIMILARITY I SEE. WHEN I AM TALKING TO OUR PORTFOLIO MANAGERS AND INVESTMENT TEAMS, WHAT I SEE THEM DOING IS TRYING TO ANALYZE THE LONGEVITY AND THE STRATEGY OF THE COMPANY, NOT NECESSARILY JUST FOR TODAY, BUT FOR THE NEXT THREE YEARS, WHICH I THINK IS REALLY IMPORTANT AT THIS TIME. EMILY: ONE OF THE TOP STORIES ON THE TERMINAL TODAY, ANTHROPIC SAID TO TARGET MEGA IPO BEFORE THANKSGIVING. IS THIS THE RIGHT TIME FOR ANTHROPIC TO BE TRYING TO RAISE THIS MUCH MONEY IN THE EQUITY MARKET? ON THE CREDIT SIDE AND LOOKS LIKE TRADERS ARE GETTING A LITTLE NERVOUS WITH SOME OF THESE NEGATIVE DEALS.WHAT-- MEGA DEALS. WHAT ABOUT THE EQUITY MARKET? ANN: I THINK THE EQUITY MARKET HASN'T EXHIBITED MORE DEALS COMING AND ESPECIALLY LARGE IPOS. THERE IS A LITTLE BIT OF ROOM FOR IT, BUT THESE VALUATIONS ARE PRETTY EYE-POPPING. AGAIN, THE REVENUE GROWTH FOR SOME OF THE COMPANIES HASN'T QUITE CAUGHT UP TO EVEN THE LEVEL OF SPEND. THAT IS REALLY IMPORTANT. SOME INVESTORS STILL WANT TO BE THERE, WANT TO BE THERE EARLY. I COULD HAVE NEVER SEEN THE FIRST OPPORTUNITY THAT AMAZON WOULD BE TODAY WHEN THEY STARTED AS AN ONLINE BOOK BOOK COMPANY YEARS AGO. THERE IS A LEVEL OF BELIEF THAT HAS TO GO INTO IT AND SOME INVESTORS ARE WORTH -- FEEL GOOD TAKING THE RISK. ROMAINE: HOLD THAT THOUGHT ONE SECOND. WE GET THE CLOSING BELL IN NEW YORK. WE WILL CALL IT AN UNCHANGED DAY. WE HAD A STRONG RALLY BUT IT FADED AS WE GOT CLOSER TO THE BELLS. DOW JONES INDUSTRIAL AVERAGE OF ABOUT 20 TO 30 POINTS. THAT WILL BASICALLY BE UNCHANGED ON THE DAY. S&P CLOSING OUT ABOUT 15.4 .2%. NASDAQ COMPOSITE UNCHANGED ON THE DAY. NASDAQ 100 UP .2%. ANN WAS TALKING ABOUT THE SMALL AND MID. MID-CAPS UP ABOUT 1%. DOW TRANSPORTS OF ABOUT 1.2%. EMILY: WE WERE TALKING ABOUT INDUSTRIALS. THAT IS LEADING IN THE S&P 500 TODAY. AND EVEN SPLIT BETWEEN WHAT IS PERFORMING ABOUT WAS IN THE RED TODAY WHEN WE LOOK AT THE IMAP. ENERGY HIGHER, UP ABOUT 2% ON THE DAY. INDUSTRIALS, UTILITIES AND THE GREEN. WHAT WAS LACKING TODAY? MATERIALS, HEALTH CARE, COMMUNICATIONS SERVICES. ENERGY THE LEADING SECTOR ON THE RISE IN OIL TODAY. ROMAINE: THE BIGGEST MEMBERS TO THE UPSIDE. PARAMOUNT DOWN 10% ON THE DAY. MCCORMICK DOWN AROUND 5%. THE YIELD PICTURE FOR NOW SLIGHTLY LOWER ON THE DAY. DOWN ABOUT 10 BASIS POINTS. 11 ON THE TWO YEAR YIELD. 10-YEAR DOWN ABOUT FIVE BASIS POINTS. WE SHOULD POINT OUT SOME OF THE MOVES WE ARE SEEING IN U.S. YIELDS TODAY ARE A FUNCTION OF WHAT WE SAW WITH SOME OF THE BLOWOUT SPREADS OVER IN EUROPE. STILL WITH US IS ANN MILETTI. I WANT TO PUSH TO THE EARNINGS SEASON. I NOTICED A HUGE DOWNDRAFT AND A LOT OF THE FINANCIAL STOCKS BECAUSE OF THE YIELD AND ECONOMIC PICTURE. THE KBW BANK INDEX IN CORRECTION TERRITORY. THEY OSTENSIBLY KICKED US OFF IN ABOUT A WEEK AND A HALF. SHOULD THAT BE A BAROMETER FOR THE EARNINGS SEASON OR IS THAT GOING TO BE AN IDIOSYNCRATIC SECTOR? ANN: I THINK WE WILL SEE SOME SEPARATION BETWEEN SECTORS THAT WILL BE MORE SENSITIVE TO RATES LIKE UTILITIES, FINANCIALS. THE MARKET IS SNIFFING THAT OUT. EVEN WITHIN BANKS AND FINANCIALS, I THINK WE WILL SEE QUITE A SPREAD BETWEEN THE COMPANIES THAT ARE OPTIMISTIC AND SOME OF THE COMPANIES THAT MAY NOT BE AS OPTIMISTIC ABOUT THE NEXT SEVERAL QUARTERS. ROMAINE: ANN, WE WILL CATCH UP WITH YOU SOON AGAIN I'M SURE. WE NEED TO TAKE A QUICK BREAK BUT DON'T GO ANYWHERE. UP NEXT, RESULTS, EARNINGS OUT OF NIKE. WE WILL TALK CONSUMER SPENDING WITH MICHELLE MEYER OF MASTERCARD ECONOMICS INSTITUTE TO GET HER LATEST READ ON ECONOMIC CONDITIONS. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ >> THIS IS "THE CLOSE." ROMAINE: WELCOME BACK. STOCKS CLOSING OUT THE DAY RELATIVELY UNCHANGED AFTER A RELATIVELY STRONG START TO THE DAY. S&P 500 UP ABOUT .2% ON THE DAY. WE SAW A LITTLE ACTIVITY IN CHIP STOCKS. MACRON HAVING A GOOD DAY COME UP ABOUT 2% TO 3%. YIELDS WERE LOWER WHICH PUT A LITTLE BIT OF A BOOST UNDER STOCKS. KEEPING AN EYE ON THE BOTTOM LINE OF YOUR SCREEN, BRENT CRUDE UP 4.5%. REPORTS OF A POTENTIAL RENEWED ESCALATION OF THE SITUATION GOING ON OVER IN IRAN. AS FAR AS THE INDIVIDUAL MOVERS WE WERE TALKING ABOUT, BANK STOCKS, YOU LOOK AT MORGAN STANLEY. ONLY DOWN LESS THAN 1/10 OF 1% BUT THAT IS DOWN FOR AN EIGHTH STRAIGHT DAY, THE LONGEST DAILY LOSING STREAK GOING BACK TO. 2023 BRINKER INTERNATIONAL WITH A MODEST BIT ON THE DAY. SHAKING OFF A FEW DAYS OF LOSSES. WE SAW A LOT OF ACTIVITY IN APPLE. SHARES WERE HIGHER BUT CLOSING DOWN ABOUT .8%. THEY WILL START TAKING THOSE ORDERS FOR THAT NEW IPHONE DUO, THE MOST EXPENSIVE EVER. NIKE, WE ARE AWAITING EARNINGS IMMINENTLY. SHARES FADED INTO THE CLOSE, DOWN ABOUT .7%. THAT BRINGS US TO THE TOP STORY, A FOCUS ON CONSUMER SPENDING. DISCRETIONARY SPENDING. AMERICANS HAVE BEEN CONTENDING WITH HIGH INFLATION FOR MORE THAN HALF OF A DECADE NOW WITH NO REAL SIGNS OF RELIEF. RENEWED INCREASES IN GASOLINE AND DIESEL ADDING PRESSURE AND TOMORROW'S PAYROLLS REPORT LIKELY TO SHOW INFLATION-ADJUSTED AVERAGE HOURLY EARNINGS FALLING FOR THE SIXTH CONSECUTIVE MONTH. CONSUMER BORROWING COSTS ARE EDGING HIGHER AND THE CONTRACT RATE ON A 30-YEAR FIXED MORTGAGE AT 7%. THE CONFERENCE BOARD GAUGE OF CONSUMER CONFIDENCE HIT ITS LOWEST LEVEL SINCE 2014. YET CONSUMER SPENDING REMAINS RESILIENT. AUGUST SALES UP 1.2%, MORE THAN DOUBLE WHAT EXPECTATIONS WORK. THEY ROSE ABOVE THE RISING AND CONSUMER PRICES ITSELF, SPENDING AT RESTAURANTS AND BARS OF BELLWETHER ROSE. SPENDING A CLOTHING STORES ROSE. SPENDING AT SPORTING GOOD STORES ROSE. WHAT IS KEEPING IT GOING? HOUSEHOLDS ARE TAPPING THEIR PERSONAL SAVINGS CUSHION. U.S. HOUSEHOLD NET WORTH UP TO A A RECORD $12.8 TRILLION IN THE SECOND QUARTER. YOU HAD MORE BORROWING GOING ON THROUGH CREDIT CARDS AND BY NOW, PAY LATER SERVICES. SHOULD WE BE WORRIED? LET'S ASK MICHELLE MEYER AT MASTERCARD ECONOMIC INSTITUTE. WHAT IS REALLY GOING ON HERE? MICHELLE: CONSUMERS ARE SPENDING. IT IS WHAT YOU SAW THE RETAIL SALES REPORT AND THEN SOMEWHERE CONSUMERS HAVE BEEN SPENDING THROUGHOUT THE YEAR AT A PRETTY SOLID CLIP. THERE ARE A VARIETY OF FACTORS. PART OF THAT IS INFLATION. THAT IS SHOWING UP IN SPENDING AT THE PUMP, SPENDING BETWEEN 15% TO 20% YOU OF YOUR SPENDING GROWTH AT THE PUMP. AIRFARE PRICES ARE UP AND THAT'S LEADING TO AN INCREASE IN SPENDING ON AIRFARE. IT IS NOT JUST PRICES. IN CATEGORIES WHERE INFLATION IS SOMEWHAT SUBDUED, WE ARE SEEING SOME PRETTY STRONG NOMINAL SPENDING. IT IS BOTH REAL SPENDING AND PRICES LEADING TO THIS INCREASE IN NOMINAL SPEND. ROMAINE: BRIDGE THE GAP BETWEEN THE BACK-TO-SCHOOL SHOPPING SEASON WHICH WAS RELATIVELY STRONG NOW THE HOLIDAY SHOPPING SEASON, IF YOU LOOK AT THE STORES IN MY NEIGHBORHOOD IS ALREADY STARTING. GIVE ME A SENSE AS TO WHAT YOUR EXPECTATIONS ARE. IS IT GOING TO BE ON AN INFLATION-ADJUSTED BASIS BETTER THE LAST YEAR AND THE YEAR BEFORE? MICHELLE: WE JUST RELEASED OUR HOLIDAY A SALES FORECAST. LOOKING FOR A -- 5% -- LOOKING FOR A .5% INCREASE -- 5.5%. BACK TO LEVELS FROM 2022. PART OF THAT IS INFLATION. HALF THE GROWTH IS INFLATION. IF YOU LOOK AT REAL SPENDING, IT IS LIKELY TO EXCEED WHAT WE HAD LAST YEAR. ROMAINE: WHAT ARE PEOPLE GOING TO BE SPENDING ON THIS HOLIDAY SEASON? A COUPLE OF PEOPLE ARE SAYING MAYBE WE ARE NOT BUYING AS MUCH, FOR, YOU KNOW, THE LUXURY STUFF. MAYBE WE ARE BUYING THINGS THAT ARE NECESSARY, IF NOT -- I DON'T WANT TO CALL THEM STAPLES BUT THINGS THAT ARE MAYBE JUST NOT THE INDULGENT SEES OF THE PAST. ARE YOU SEEING THE SAME THING? ROMAINE: ONE CATEGORY THAT IS SHOWN STRENGTH IS ELECTRONICS. EVERYTHING TECH IN A WORLD WHERE WE ARE RACING TO GET MORE TECHNOLOGY AND BETTER TECHNOLOGY, ALL THE TOOLS WE NEED. THERE IS SOME INFLATIONARY PRESSURE AS WELL. ELECTRONICS SPENDING HAS BEEN ROBUST. I CATEGORY WITH PERSISTENT'S APPAREL SPENDING. IT HAD A MOMENT LAST HOLIDAY. IT LOOKS LIKE IT IS CONTINUING TO SOMEWHAT -- MAYBE NEW FASHION, NEW TRENDS, NEW MUST-HAVE OUTFITS THAT ARE HITTING AND MAKING A BIG DIFFERENCE. I THINK THE INFLUENCER ECONOMY IS A BIG PART OF IT. THESE MUST-HAVE EXPERIENCES OR MUST-HAVE GOODS. WALK AROUND NEW YORK CITY AND SEE LONG LINES OUTSIDE OF DIFFERENT PLACES THAT ARE OFFERING THESE VERY SPECIFIC ITEMS THAT ARE HIGHLY DESIRABLE AT WHATEVER PRICE POINT. ROMAINE: YEAH. THAT IS HOW I KNOW I OLD BECAUSE I WALK BY THESE CRAZY KIDS. MICHELLE: YOU HAVE GOT TO GET ONLINE. ROMAINE: THE IDEA OF PEOPLE WILLING TO INDULGE. LET'S TALK FASHION. THERE'S TALK THAT SOME OF THE TAILWINDS AND FASHION BY HAVE TO DO WITH GLP-1'S AND PEOPLE LOSING WEIGHT AND EATING AND WARDROBES. SOME MIGHT BE INFLUENCERS SHOWING OFF WHATEVER IT IS ONLINE. IS THAT SUSTAINABLE GROWTH? MICHELLE: IT IS SUSTAINABLE AND WE WILL KEEP SHIFTING BUT REALITY IS WHAT MAKES IT SUSTAINABLE IS THE FUNDAMENTALS FOR THE CONSUMER. CONSUMERS CAN CHOOSE WHAT THEY ARE DOING WITH THEIR PURCHASING POWER. WHAT IS SUPPORTING THAT PURCHASING POWER? A LOT OF THAT IS THE LABOR MARKET COUPLED WITH THE BALANCE SHEET, THE WEALTH GAINS. WE WILL SEE WITH THE JOBS REPORT REVEALS BUT WE ARE SEEING A HIGHER TREND OF JOB CREATION, A VERY LOW UNEMPLOYMENT RATE. WAGES ARE RUNNING SLIGHTLY WITH INFLATION DEPENDING ON WHAT MEASURE YOU USE. THE CONSUMERS ARE SUPPORTED BY A SOLID LABOR MARKET COUPLED WITH ALL THESE WEALTH GAINS THAT ARE HELPING THEIR BALANCE SHEETS. ROMAINE: WHAT ABOUT SPENDING ON SERVICES LIKE RESTAURANTS AND MOVIES AND TRAVEL? MICHELLE: TRAVEL IS VERY MUCH A GOOD AMOUNT OF MOMENTUM. LIFE EXPERIENCES AS WELL. YOU THINK ABOUT WHAT HAPPENED THIS SUMMER IN THE U.S. AND THROUGHOUT THE AMERICAS IN TERMS OF ALL THE TOURISM, ALL THE SPECIAL MOMENTS. THINK ABOUT THE KNICKS AND EXCITEMENT AND SPENDING THAT LIT UP -- THAT WENT ALONG WITH THE BIG MOMENTS IN TIME. THE EXPERIENCE SPENDING WE SEE GOES BACK TO THE INITIAL PART OF THIS CONVERSATION, WHICH IS CONSUMERS CHOOSING HOW THEY WANT TO SPEND, WHETHER IT IS INDULGING OR JUST PRIORITIZING. THERE ARE SHIFTS. IF YOU'RE GOING TO SPEND, MAYBE YOU WILL NOT SPEND ON AS MUCH AS YOUR EVERYDAY ITEM THAT YOU PURCHASE. ROMAINE: I'M CURIOUS HOW PEOPLE ARE GOING TO SHOP. IS THERE GOING TO BE MORE ONLINE? MORE IN BRICK-AND-MORTAR STORES? CAN YOU MAYBE JUST FOLD AND HOW DOES AI -- WE SEE THE SHOPPING AND YOU HAVE THE AGENTS APPARENTLY THEY CAN DO ALL THE SHOPPING FOR ME. I THAT BE A BIGGER DRIVER THIS HOLIDAY SEASON? MICHELLE: THERE ARE TWO INTERESTING FORCES THAT WE ARE TRYING TO UNDERSTAND WITH OUR DATA. ONE IS AROUND AI AND THE OTHER IS A SECONDHAND CIRCULAR ECONOMY WHICH IS FASCINATING TO SEE PLAY OUT IN REAL TIME. ON AI, WE HAVE FOUND IN OUR RESEARCH -- WE DON'T UNDERSTAND HOW THIS SPENDING DIFFERS. THERE'S A GREATER DIVERSIFICATION OF THE TYPES OF MERCHANTS THEY VISIT. PARTICULARLY FOR CERTAIN SPECIALTY ITEMS LIKE BEAUTY SERVICES, SPECIALTY FOODS, EVEN RESTAURANTS. THOSE THAT ARE USING AI WILL GO TO A GREATER NUMBER OF MERCHANTS AND STOREFRONTS THAN THOSE THAT ARE NOT. THE OTHER VERY INTERESTING POINT IS AROUND THIS CIRCULAR ECONOMY AND THE AMOUNT OF GROWTH WE HAVE SEEN IN THE SECONDHAND ECONOMY WHICH IS CREATING MORE CHOICE AND OPTIONS, AND IS DRIVEN IN PART BY THE INFLUENCER COMMUNITY. CLOSE TO 13% GROWTH YEAR-OVER-YEAR IN CERTAIN -- SECONDHAND APPAREL. ROMAINE: DOES THAT CONTRIBUTE TO ECONOMIC ACTIVITY THAT SHOWS UP IN THE NUMBERS? MICHELLE: IT IS VERY MUCH MOVEMENT OF A GOOD. IT IS NOT A NEW OUTPUT WHEN YOU THINK ABOUT PRODUCTION BUT IT IS STILL ITEMS EXCHANGING HANDS AND FINDING VALUE. IT IS STILL CONSUMERS THAT ARE SPENDING. ROMAINE: IS A GENERATIONAL? I HAVE A TEENAGER WHO BASICALLY LIVES IN SECONDHAND STORES NOW. MICHELLE: YOU ARE LIVING IT AND PROBABLY WAITING ON LONG LINES. YES, IT COULD BE GENERATIONAL BECAUSE THERE'S MORE INFORMATION OUT THERE ABOUT HOW TO ACCESS THE SECONDHAND OPTIONS. HOW TO FIND AND ENGAGE IN THE CIRCULAR ECONOMY. IT IS CONSIDERED COOL AND YOU CAN FIND AN ITEM THAT WAS WORN LAST BY SOMEONE IN 1920 AND THERE'S A HISTORY AND STORY BEHIND IT. PERHAPS IT IS GENERATIONAL, BUT IT IS ALSO THE DESIRE TO BE MORE CLIMATE-FOCUSED AND ECO-FRIENDLY. THAT RESONATES. ROMAINE: MICHELLE MEYER, CHIEF ECONOMIST AT MASTERCARD INSTITUTE. I WANT TO BRING TO OUR VIEWERS' THIS ATTENTION, ANTHROPIC'S SCHEDULING A PRE-IPO INVESTOR DAY OCTOBER 14, TWO WEEKS FROM NOW. THIS IS AN IPO EVERYONE HAS BEEN WAITING ON AND SPECULATING ABOUT BASED ON BLOOMBERG REPORTING. THIS DOES APPEAR TO SET A BIT OF A SHORT RUNWAY FOR ANTHROPIC INTO ACTUALLY COME TO MARKET. WE HAVE BREAKING WE NEED TO GET TO COME TO THIS INVOLVING NIKE. THOSE EARNINGS CROSSING THE WIRE. NIKE REPORTING IN ITS MOST RECENT QUARTER EPS OF $.48 A SHARE, A PENNY BELOW WHERE IT WAS YEAR-OVER-YEAR. REVENUE IN THE QUARTER, FISCAL FIRST QUARTER, $11.21 BILLION. THE STREET WAS LOOKING FOR $11.33 BILLION, SO LITTLE BIT LIKE. THE GREATER CHINA REGION, $248 MILLION. THE STREET WAS LOOKING FOR $312 MILLION, SO THAT IS LIGHT AS WELL. MARGINS ARE SLIGHTLY ABOVE ESTIMATES. THE COMPANY SAYING THAT THE BRAND REVENUE, THE NIKE BRAND ITSELF, CAME IN LIGHT, 10 POINT $5 BILLION. THE STREET WAS LOOKING FOR $11.1 BILLION. THE INVENTORY SITUATION IMPROVING EVER SO SLIGHTLY, % -- $7.8 BILLION. THIS TREE WAS LOOKING FOR -- WE WILL ROUNDED UP TO $8 BILLION. WE WILL DIVE INTO THOSE NUMBERS IN A SECOND. YOU SEE THE KNEE-JERK REACTION, SHARES DOWN 4% IN THE AFTER-HOURS TRADE. STILL WITH MICHELLE MEYER, CHIEF ECONOMIST AT MASTERCARD ECONOMICS INSTITUTE. IF YOU COULD GO BACK TO APPAREL FOR A SECOND, WHEN I WAS LOOKING AT THE RETAIL SALES NUMBERS, APPAREL WAS DOING GREAT -- WOMEN'S APPAREL, MEN'S APPAREL. WE HAVE HEARD FROM RETAILERS, DEPARTMENT STORES IN THE LAST EARNINGS CYCLE SAYING AT LEAST THE ONES ABLE TO OFFER THINGS THAT WERE UNIQUE AND A NEW AND FRESH, THEY ARE DOING PRETTY WELL. DO YOU THINK THAT IS WHEN YOU CONTINUE? MICHELLE: WELL, AS WE LOOK INTO THE HOLIDAY SEASON, THERE IS CERTAINLY MOMENTUM. AGAIN, THE POINT YOU MADE AROUND NEW, FRESH, INTERESTING, THAT PULLS THE CONSUMER IN. ONE THING THAT IS CLEAR RIGHT NOW IS CONSUMERS HAVE CHOICES OUT THERE. THEY HAVE THE ABILITY TO SEARCH FOR WHATEVER THAT DEFINES VALUE TO THEM, WHETHER IT IS THE PRICE POINT, A PARTICULAR ITEM OR EXPERIENCE. WITH AI MORE PREVALENT AND MORE IMPORTANT IN THE SHOPPING DECISION, THAT WILL FURTHER MOVE IN THAT DIRECTION. YES, I THINK THERE IS A LOT OF MOMENTUM INTO THE VENETO OF THE YEAR -- INTO THE END OF THE YEAR, BUT THE DECISION OF WHAT TO PURCHASE, WENT TO PURCHASE, IS GOING TO BE DICTATED BY THESE TOOLS. ROMAINE: GREAT TO HAVE YOU, MICHELLE MEYER OF MASTERCARD ECONOMICS INSTITUTE. WE WANT TO GO BACK TO NIKE. WE ARE WATCHING THE SHARES. DIVE A LITTLE BIT DEEPER, FOR THE MOST RECENT QUARTER, THE NUMBERS WERE LARGELY IN LINE WITH ESTIMATES, SLIGHTLY BELOW. NOW THE COMPANY IS SAYING THAT FOR THE CURRENT FISCAL YEAR, IT EXPECTS A REVENUE DECLINE IN THE HIGH SINGLE DIGITS. THE COMPANY SAYS IT ALSO EXPECTS ADJUSTED EPS FOR THE YEAR OF $1.15 TO $1.35. I WILL GET YOU THE COMPARISON WITH ANALYST ESTIMATES. THE COMPANY SAYS IT IS ON PACE TO DELIVER $2.5 BILLION IN SAVINGS DURING FISCAL YEAR 2031 AND THAT ITS OPERATION MODEL IS HELPING THE COMPANY TRANSFORM. WE GO BACK TO THOSE HEADLINE NUMBERS, NUMBERS THAT WHILE NOT NECESSARILY A SURPRISE, CERTAINLY A BIT OF A DISAPPOINTMENT. EQUITY ANALYST AT CFRA HAS A BUY RATING ON SHARES OF NIKE. I KNOW YOU HAVE AT A COUPLE OF SECONDS TO LOOK AT THE NUMBERS, BUT BASED ON WHAT WE HAVE LEARNED OUT OF THIS RELEASE, IS THIS INDICATIVE OF A COMPANY THAT IS TURNING THINGS AROUND, OR DO WE NEED MORE TIME FOR THE MANAGEMENT THERE TO GET THINGS BACK TO SOMETHING SOMETHING NORMAL? --SOMETHING RESEMBLING NORMAL? >> YEAH, I'M A LITTLE DISAPPOINTED IN THE RESULTS. I HAVE A BUY RATING. THIS IS WHAT I EXPECTED TO OR THREE QUARTERS IN SCO, NOT-- TWO OR THREE QUARTERS IN AS CEO, NOT TWO YEARS AND. WE WILL HAVE TO HEAR MORE ON THE CALL, WHAT THE REASONS ARE FOR THAT, AND WHAT SOME OF THESE NEW PRODUCT LAUNCHES HAVE DONE. ROMAINE: WE SHOULD POINT OUT AS WE SPEAK, TODAY THE COMPANY RELEASED THE CAITLIN CLARK COLLECTION. THERE IS ANECDOTAL EVIDENCE THAT SOME OF THE SHOES ARE ALREADY SOLD OUT. THERE IS AN APPAREL LINE THAT NIKE SEEMS TO BE BANKING ITS FUTURE, NOT JUST ON CAITLIN CLARK, BUT THESE ATHLETES THAT GENERATE BUZZ IN A WAY THAT THEY HAVE NOT HAD. DO YOU THINK THAT LINEUPS LIKE THIS OUT OF CAITLIN CLARK AS WELL AS OTHER STAR PLAYERS AND ATHLETES ON THE ENDORSEMENT ROSTER CAN REINVIGORATE INTEREST IN THE BRAND? ZACHARY: YEAH, I THINK SO. CAITLIN IS A GREAT DEAL. SHE IS OBVIOUSLY VERY POPULAR AND DRAWS A LOT OF EYES. THEY LOST MBAPPE OVER THE SUMMER, EARLY FALL. BUT THEY HAVE HAD SUCCESS IN THEIR SOCCER FOOTWEAR LAUNCHES. RUNNING'S BEEN ON TRACK FOR MULTIPLE QUARTERS NOW. IT IS MORE OR LESS THE LEGACY BRANDS THEY HAVE, JORDAN AND SOME OF THESE OTHER BRANDS, THAT THEY NEED TO FIGURE OUT AND STEP UP THERE. ROMAINE: WE TALKED ABOUT THE JORDAN BRAND, OBVIOUSLY ONE OF THE MORE SUCCESSFUL AND ICONIC BRANDS OUT THERE, NOT JUST FOR NIKE, BUT ACROSS SPORTS. WE HAVE SEEN THE MOMENTUM SLIP IN RECENT QUARTERS. I'M CURIOUS AS TO IS THAT JUST FATIGUE WITH THE BRAND OVERALL, OR IS IT MAYBE THEY JUST NEED TO FIGURE OUT A NEW DESIGN OR A NEW COLLAB TO MAKE PEOPLE MORE EXCITED. ZACHARY: I THINK THERE IS COUPLE THINGS THEY COULD DO. THEY COULD BRING ON DIFFERENT PLAYERS TO REDESIGN SOME OF THEIR SHOES. I THINK JORDAN HAS BEEN -- IS AN OPERATING ISSUE NOW. OVER THE COMING QUARTERS THAT WILL STABILIZE. WE EXPECTED IT TO STABILIZE SOONER THAN IT HAS. YEAH, WE ARE GOING TO HAVE TO LISTEN TO THE CALL, REALLY LISTEN TO WHAT SPECIFIC BRANDS AND SPORTS ARE DOING WELL AND WHERE THEY ARE HAVING ISSUES AND WHERE THEY ARE SEEING EARLY SUCCESS. WE ARE IN THE CAMP THAT THEY ARE SEEING A LOT OF EARLY SUCCESS IN THEIR NEW LAUNCHES THAT THEY HAVE GOTTEN TO IMMEDIATELY AS THE NEW CEO CAME I. IT WILL BE INTERESTING TO HEAR WHAT THEY HAVE TO SAY MOVING FORWARD. ROMAINE: I AM COMBING THROUGH THE RELEASE, AND THEY TALK ABOUT WHAT THEY ARE CALLING PACE, AND OPERATING MODEL TRANSFORMATION TO SCALE THE SUCCESS OF WHAT HE CALLS FOR OFFENSE. ELLIOTT HILL CAME INTO THIS COMPANY A COUPLE YEARS AGO, OCTOBER 2024. HE WANTED THIS COMPANY TO REFOCUS ON THE ATHLETE, REFOCUS ON PERFORMANCE APPAREL, PERFORMANCE SHOES. I'M WONDERING, DOES PERFORMANCE MEAN THAT HIGH ATHLETE PERFORMANCE TYPE OF METHODOLOGY -- DOES THAT END UP TRANSLATING INTO SALES TO A SCHLUB LIKE ME WHO IS NOT GOING TO GO RUNNING IN ANY THESE THINGS, BUT WHEN JORDAN BRAND CAME OUT, THAT WAS A PERFORMANCE SHOE THAT BECAME ONE OF THE MOST ICONIC FASHION WEARS OUT THERE. ZACHARY: THEY CAN HAVE A FEW OF THOSE BRANDS WHERE THEY TARGET A HIGHER PRICE POINT AND HIGHER-INCOME CONSUMER, BUT THEY ARE ONE OF THE BIGGEST COMPANIES IN THE WORLD IN TERMS OF RETAIL SO THEY HAVE TO APPEAL TO THE MASS CONSUMER. THEY CAN DO THAT WITH A FEW LUNCHES AND A FEW PRODUCT LINES, BUT THEY HAVE TO REALLY FOCUS ON -- I LIKE THAT THEY ARE FOCUSING ON THE OPERATING SIDE OF THINGS BECAUSE NIKE CAN EARN NEW OF THREE DOLLARS A SHARE EASILY IF THEY FOCUS ON OPERATING EFFICIENCIES. WE THINK THE BRAND RESONATES ACROSS THE GLOBE. THEY ARE DOING REALLY WELL IN RUNNING. THEY NEED TO NAIL DOWN THE OPERATING EFFICIENCIES MOVING FORWARD. I HAVEN'T READ THROUGH THE NEW PACE PROGRAM, BUT THAT IS A GOOD START. ROMAINE: IT SEEMS LIKE IT. CURIOUS ABOUT THE INVENTORY SITUATION. THIS HAS BEEN A DRAG, LEGACY OF THE PREVIOUS CEO, AND THEY HAVE BEEN TRYING TO WORK TO GET THE INVENTORY DOWN, STILL OVER $7 BILLION. GIVE ME A SENSE AS TO HOW MUCH MORE PROGRESS YOU NEED TO SEE TO HELP THE BOTTOM LINE. ZACHARY: TOUGH WITH INVENTORY WITH A COMPANY LIKE NIKE. THEY ARE SO BIG, AND SPECIFIC BRANDS ARE DOING REALLY WELL AND SELLING OUT IMMEDIATELY, WHEREAS THE LEGACY BRANDS NEED TO WORK ON, STILL NEED IMPROVEMENT, STILL NEED TO OFFLOAD THE INVENTORY. THEY HAVE DONE THAT A LITTLE BIT WITH PUSHING A LOT OF PRODUCT THROUGH WHOLESALERS AND TRYING TO REESTABLISH RELATIONSHIPS. YOU HEARD FROM THE DIX CALL RECENTLY, THEIR SHELLS WERE NOT AS GOOD AS THEY THOUGHT THEY WOULD BE, AND THE EXPECTATIONS FOR THE FUTURE ARE PRETTY BAD. I THINK THEY ARE WORKING ON IT AND THEY HAVE HAD FOR QUARTERS WHERE THEY TRY TO WORK ON INVENTORY, AND IT IS GETTING TO A POINT WHERE IT IS ALMOST TURNING THE CORNER, BUT WE WILL HAVE TO HEAR MORE ON THE CALL. ROMAINE: IS THERE ANY HOPE FOR THEM TO TURN AROUND THE CHINA BUSINESS AND RETURN THAT TO GROWTH, OR IS THAT MARKET SHARE THAT HAS BEEN LOST, IF NOT PERMANENTLY, AND FOR THE LONG-TERM? ZACHARY: NO, WE THINK THAT IS A GREAT OPPORTUNITY FOR THEM, ASIA, CHINA SPECIFICALLY. COMPANIES HAVE PROVEN TO GO IN THERE AND GROW QUICKLY. WE THINK PRODUCT LAUNCHES IN CHINA, THEY FOCUSED ON A LOT OF DIFFERENT EVENTS THERE TO GROW SPECIFIC PRODUCTS -- WE THINK IF SPECIFIC PRODUCTS CAN LAUNCH AND DO WELL, CHINA CAN DO WELL. THEY HAVE NOT FULLY CAPTURED THE REGION. ROMAINE: IT WILL TAKE A WHILE BEFORE WE GET MORE DETAILS ON THE PACE PROGRAM. WE WAIT FOR THE CONFERENCE CALL AT THE START OF THE NEXT HOUR. OF COURSE, THEY'VE GOT AN INVESTOR DAY IN A MONTH AND A HALF. ONE THING WE DO KNOW IS THAT THEY HAVE TRIED TO INCREASE SOME OF THEIR MANUFACTURING CAPABILITIES IN CHINA FOR THE CHINA MARKET. BUT IN THE RELEASE THEY ALSO TALK ABOUT THIS IDEA OF ESTABLISHING A NEW CAMPUS IN INDIA TO FUEL ITS ENTERPRISE CAPABILITIES AND A REALIGNMENT TO THREE GEOGRAPHIES TO FURTHER STREAMLINE AND REDUCE COSTS. DOES THAT SOUND GOOD TO YOU? ZACHARY: THAT MAKES A LOT OF SENSE. MANUFACTURING IN CHINA IS GREAT IF YOU'RE GOING TO RELEASE THE PRODUCTS IN CHINA. BUT RIGHT NOW WITH THE TARIFF SITUATION, THEY ARE TYPICALLY THE HIGHEST RATE ACROSS ASIA. I THINK THAT MAKES A LOT OF SENSE TO MOVE SOME OF THEIR FACILITIES INTO THE INDIA REGION. I THINK WE HAVE BETTER RELATIONS WITH THEM, AND SO I THINK -- I DO LIKE MANUFACTURING WHAT YOU SELL IN CHINA BECAUSE IT IS A LARGE MARKET FOR THEM. BUT I DO LIKE DIVERSIFYING AWAY FROM SOME OF THE OTHER ASIAN REGIONS. ROMAINE: WHEN WE TALK ABOUT THE GLOBAL GROWTH STORY, THE POTENTIAL GLOBAL GROWTH STORY IN CHINA AND GREATER ASIA, I HAVE TO ASK YOU ABOUT COMPETITION OVERALL. WE KNOW SOME OF THE CHANGES MADE PRIOR TO ELLIOTT HILL COMING IN. THAT GAVE A LOT OF AIR, CERTAINLY IN THE U.S. CAN PUT IN CHINA WE HAVE HEARD ANOTHER DIFFERENT STORY, HOMEGROWN BRANDS THAT ARE TO A CERTAIN EXTENT CHEAPER. WHETHER THEY ARE AS GOOD, WHO KNOWS, BUT THEY SEEM TO BE A LITTLE MORE COUNTRY LOYALTY WITH SOME OF THE SHOPPERS THERE. HOW DO THEY OVERCOME OR ADDRESS THAT? ZACHARY: I THINK YOU WILL STILL HAVE PEOPLE IN THE REGION THAT WANT THE AMERICAN-MADE PRODUCTS, AMERICAN BRAND PRODUCTS. I THINK THAT PRICE WILL DICTATE A LOT OF THAT. BRANDS IN CHINA, LIKE YOU SAY, THEY WILL HAVE TO BATTLE ON THE PRICE FRONT, WHICH HURTS MARGINS. I THINK THEY CAN. THE STRONG BRANDS IN THE U.S., LIKE YOU SAID, THEY ARE DOING REALLY WELL. THEY CAN'T SELL IN CHINA. WE ARE POSITIVE ON THE ENTIRE-- THEY CAN SELL IN CHINA. WE ARE POSITIVE ON THE FOOTWEAR SPACE AS A WHOLE. MOVING FORWARD, THE RISK-REWARD IS VERY POSITIVE FOR THOSE COMPANIES. ROMAINE: APPRECIATE IT. ZACHARY WARRING OF CFRA. NIKE SHARES DOWN 4%, SEEING MODEST MOVES LOWER THAN SOME OF ITS COMPETITORS, EVEN LULULEMON. WE WILL DIVE A LOT DEEPER INTO NIKE'S HIGH-STAKES TURNAROUND WITH E-SPORTS MARKETING AND BRANDING EXPERT. THAT IS COMING UP NEXT ON "THE CLOSE" ON BLOOMBERG. ♪ ROMAINE: TAKING A LOOK AT IT LIKE YOU MIGHT KNOW, SHARES UNDER PRESSURE AFTER THE COMPANY'S MOST RECENT EARNINGS REPORT. A TOUCH LIGHT FOR THE MOST RECENT QUARTER AND THE COMPANY GUIDING FOR THE FULL FISCAL YEAR THAT WE ARE IN RIGHT NOW REVENUE DECLINE IN THE HIGH SINGLE DIGITS. THERE IS A BIG QUESTION ABOUT DEMAND CREATION, ABOUT ITS MARKETING EXPENSES AND EXACTLY HOW IT RECAPTURES SOME OF THAT MAGIC. JOINING US NOW IS JOE FAVORITO, LONGTIME SPORTS MARKETING AND PR CONSULTANT, WORKING WITH TEAMS LIKE THE NEW YORK KNICKS, 76ERS, AND IS AN ADJUNCT PROFESSOR AT COLUMBIA UNIVERSITY. I WANT TO START WITH BRANDING AND MORE IMPORTANTLY SOME OF THE PRODUCTS THAT WE HAVE SEEN UNDER ELLIOTT HILL PRIME PROJECT AMPLIFIED, MIND, TODAY, THE NEW CAITLIN CLARK COLLECTION, WHICH THEY ARE PUTTING A LOT OF STOCK INTO REINVIGORATE NOT JUST INTEREST IN THAT PARTICULAR LINE, BUT IN THE NIKE BRAND OVERALL. WHAT DOES THAT EXPENSE ACTUALLY LOOK LIKE WITH REGARDS TO ROLLING OUT THESE NEW PRODUCTS? WHAT IS THE RUNWAY TO ACTUALLY MAKE BACK YOUR MONEY ON THAT, ONCE THIS IS ACTUALLY RELEASED? JOE: A COUPLE QUESTIONS. MAKING BACK THE MONEY TOWARD BUILDING THE FUTURE. IF YOU LOOK AT THE GROWTH OF WOMEN'S SPORTS, A POWERHOUSE LIKE CAITLIN CLARK OR SOME OF THE OTHER ATHLETES THAT NIKE HAS UNDER THEIR UMBRELLA, THAT IS WHERE YOU HAVE TO GO. THEY ARE GLOBAL BRANDS. IS IT GOING TO HAPPEN TOMORROW COME IS THE STREET GOING TO REACT RIGHT AWAY? NO, BUT THEY ARE STILL POSITIONING THEMSELVES IN A PLACE WHERE THE GROWTH WILL COME BECAUSE WE ARE MORE INTERESTED IN THE ACTIVEWEAR SPACE NOW THAN EVER BEFORE. I AM SITTING HERE AT COLIMA UNIVERSITY WITH A SEATTLE SEAHAWKS GOLF SHIRT WITH A NIKE SOLUTION ON IT, AND THEY COULDN'T BE HAPPIER. ROMAINE: WE KNOW THAT CAITLIN CLARK IS THE BIGGEST STAR IN THE WNBA, ONE OF THE BIGGER SPORTS STARS OVERALL. WNBA HAS OBVIOUSLY PUT A LOT OF STOCK IN HER IN HELPING THE LEAGUE. WITH REGARD TO NIKE, JUST AWAITING HER AS AN ENDORSER, TO SOME OF THE HANDWRINGING THAT WE SAW A COUPLE WEEKS AGO WHEN WE LEARNED THAT MBAPPE HAD JUMPED SHIP, AND THIS IDEA THAT MAYBE IT WAS TIME TO MOVE ON TO A DIFFERENT GENERATION, TO A CERTAIN EXTENT, A DIFFERENT COMPLEXION OF ATHLETES THAT WILL SPEAK TO A NEW GENERATION. IS CAITLIN CLARK READY FOR THAT IN THE SAME WAY THAT MAYBE WE SAW MICHAEL JORDAN BACK IN THE DAY, SOME OF THE OTHER BIG ATHLETES THAT HAVE COME THROUGH PRIMARILY ON THE MEN'S SIDE? JOE: IF YOU LOOK AT THE NIKE PORTFOLIO, IT CERTAINLY HAS AN ALL-STAR LINEUP, BUT THAT HAS NOT CHANGED. IT SHOULD ALTER LIKE IT SHOULD ALTER. IF YOU ARE A GOOD BRAND, YOU ARE GOING TO EVOLVE OVER TIME AND MAKE SURE YOU ARE LISTENING TO THE STREET, LISTENING TO THE CONSUMER, AND PREDICTING WHERE THINGS WILL GO. IF YOU THINK ABOUT CAITLIN CLARK , THINK ABOUT WHAT WILL HAPPEN IN THE NEXT THREE YEARS, NOT JUST WITH THE WNBA, GO FORWARD INTO THE LAO OLYMPICS, IF CAITLIN CLARK IS SOMEONE ON YOUR ROSTER, YOU'LL BE IN PRETTY GOOD SHAPE. AND SHE IS NOT ALONE. FROM A CONSUMER STANDPOINT, FROM A LISTENING STANDPOINT, WHEN YOU GO ON THE STREET AND TALK ABOUT THE NIKE SOLUTION, IT HAS -- SWOOSH, IT HAS AS MUCH POWER TODAY AS IT HAS EVER HAD. IS THERE MORE COMPETITION? OF COURSE, BUT I WOULD BE VERY LIKE BULLISH ON WHERE NIKE IS GOING. ROMAINE: DO YOU THINK THEY WOULD SPEND MORE ON MARKETING? I AM LOOKING AT ONE OF THEIR LINE ITEMS IN THEIR FINANCIAL STATEMENTS ON DEMAND, EXPENSE, ONLY UP 5% QUARTER OVER QUARTER, ONE .2 BILLION. LAST FISCAL YEAR, THEY SPENT CLOSE TO $5 BILLION. IT LOOKS LIKE IF THIS NUMBER HOLDS FOR THE FIRST FISCAL FIRST QUARTER, THAT WOULD MEET OR SURPASS THAT FOR FISCAL 2027. SHOULD THEY BE SPENDING MORE? JOE: I DON'T THINK IT'S A QUESTION OF SPENDING MORE COMMITTED IT'S A QUESTION OF SPENDING WHERE. LISTENING TO WHERE THE AUDIENCE IS TODAY, LOOKING AT THE SOCIAL SPACE, FIGURING OUT, IS IT A GOOD IDEA TO TAKE FULL-PAGE ADS OUT ANYMORE? IT'S A QUESTION OF MAKING SURE YOU GETTING EVERY PENNY YOU ARE SPENDING ESPECIALLY ACROSS THE SOCIAL SPACE WITH THE PEOPLE UNDER YOUR UMBRELLA. ROMAINE: IT GETS TO SOME OF THE SHIFTS THAT ELLIOTT HAS MADE, PUTTING A BIG FOCUS BACK ON SPORTS. I THINK ABOUT NIKE'S REPUTATION ABOUT BEING AROUND THE DO CULTURAL MOMENTS, TALK ABOUT HOW THIS WORLD CUP COULD PROVIDE A BOOST, AND IT'S NOT CLEAR IF THAT SHOWS UP IN THE NUMBERS. THEY HAVE ALSO BEEN MOVING TO THIS IDEA OF MICRO COMMUNITIES. I AM CURIOUS ABOUT THE BALANCE BETWEEN THOSE TWO. JOE: IT IS FUNNY, WE JUST DID A CLASS AND WE TALKED ABOUT NICHE INFLUENCING AND HOW HOW PEOPLE MAY NOT HAVE THE BIGGEST IN PRINT, BUT PEOPLE ARE LISTENING TO THEM, MAYBE THAT IS WOMEN'S SPORTS, LACROSSE, THREE ON THREE BASKETBALL, GLOBAL SPORTS. I THINK THAT IS SOMETHING THE SMARTEST BRANDS, NIKE IS IN THAT GROUP, ARE LOOKING AT MORE AND SAYING WE CAN GET THE BIGGEST BANG FOR THE PEOPLE THAT RESONATE IN THAT PARTICULAR COMMUNITY VERSUS TRYING TO CAST THE LIGHT IS NOT POSSIBLE. YOU CAST SMALLER NETS IN VERY IMPACTFUL PLACES AND YOU CATCH A LOT OF FISH. ROMAINE: GREAT TO CATCH UP WITH YOU, JOE FAVORITO COME LONGTIME SPORTS MARKETING CONSULTANT, ADJUNCT PROFESSOR AT COLUMBIA UNIVERSITY. A BIG PART OF NIKE'S ATTEMPT AT RESURGENCE HAS A LOT TO DO NOT ONLY WITH BRANDING BUT ALSO ABOUT BEING IN THE CULTURAL ZEITGEIST. THE JORDAN BRAND HAS LONG BEEN ONE OF THE BEST-PERFORMING DIVISIONS, BUT QUESTIONS REMAIN ABOUT WHETHER THAT ATHLETE COLLABORATION MODEL HOLDS THE SAME WEIGHT NOW AS IT DID BACK THEN. LET'S BRING IN ELIZABETH SEMMELHACK, DIRECTOR AND CURATOR OVER AT THE BATA SHOE MUSEUM IN CANADA. YOU ARE A HISTORIAN AND YOU KNOW A LOT ABOUT NIKE'S LEGACY WITH JORDAN, DOUG'S, AIR FORCE ONES. THIS WAS THE CULTURE FOR DECADES, AND FOR A CERTAIN EXTENT IT STILL IS. YOU WALK INTO ANY CITY IN AMERICA AND YOU SEE THAT CULTURE IS STILL THERE. BUT IT'S ALSO GOTTEN A LOT MORE CROWDED. THERE ARE A LOT MORE OPTIONS TODAY THAN THERE WERE IN THE 1970'S, 80'S, EVEN THE 1990'S. HOW DO YOU STAND UP WHEN THERE ARE SO MANY COMPETING BRANDS OUT THERE FIGHTING FOR THAT SAME CULTURE? ELIZABETH: I AGREE, IT'S BECOME MUCH MORE CROWDED, BUT I THINK WE STILL ARE CREATING SOCIAL IDENTITY THROUGH BRAND ALLIANCE. SO THERE IS OPPORTUNITIES THERE. I THINK SOME OF THE RISKS MAY BE THAT NIKE IS TAKING GOES ALL THE WAY BACK TO WHEN THEY SUED THE SHOE SURGEON, SAYING CUSTOMIZERS MIGHT BE SUE-ABLE. THAT WILL NOT HELP THEIR MONETARY SITUATION BUT IT DOES A GREAT DEAL OF POTENTIAL DAMAGE TO THE CULTURES THAT THEY SPECIFICALLY NEED TO RELY ON. I HAVE SOME CONCERNS. I THINK IT IS GREAT TO THINK THAT NIKE IS SORT OF TOO BIG TO FAIL. CERTAINLY, THE AMOUNT THEY ARE EARNING, STILL SUCH A HUGE COLOSSUS. BUT THE CULTURE PART OF IT IS THE PART THAT THEY REALLY HAVE TO BE CAREFUL OF, I THINK, AND ULTIMATELY RESPECT. ROMAINE: THAT RAISES THE QUESTION, WHO IS ACTUALLY CREATING THE CULTURAL VALUE? IS IT NIKE ITSELF, THE CAITLIN CLARK'S, THE MICHAEL JORDAN'S WEARING THE PRODUCTS, THE DESIGNERS, OR SOMETHING MORE ORGANIC COMING FROM THE COMMUNITY ITSELF? ELIZABETH: I THINK THERE HAS TO BE AN APPRECIATION OF THAT COMMUNITY-BASED INFLUENCE. ABSOLUTELY, YOU HAVE THESE PHENOMENAL ATHLETES. I THINK CAITLIN CLARK IS AN AMAZING ATHLETE, HOPEFULLY GOING TO BE ABLE TO CONTINUE TO DO AMAZING THINGS. I THINK THAT WOULD BE GOOD FOR THE BRAND. BUT YOU DO ALSO HAVE TO RESPECT THE PEOPLE WHO ARE ACTUALLY GOING TO GO AND WHERE THE BRAND. SO I THINK SOME MISSTEPS THAT NIKE HAS ALSO TAKEN IS WITH THE FEMALE MARKET. THERE HAS TO BE A LITTLE BIT MORE, I THINK, A GREATER APPRECIATION FOR WHO THE CONSUMER BASE IS. I THINK NIKE CAN LEAN INTO BEING -- THIS IS WHAT WE ARE DOING, TAKE IT OR LEAVE IT TYPE OF APPROACH -- AND I THINK HAS TO BE A LITTLE BIT MORE COLLABORATIVE, AS IT WERE. EVEN THE COLLABS HAVE SORT OF OVERSATURATED THE MARKET AS WELL. ROMAINE: CURIOUS ABOUT THE GENDER DYNAMICS. WE WERE TALKING ABOUT CAITLIN CLARK. EARLIER THIS YEAR, I WAS LOOKING AT THE SHOES FROM SABRINA IONESC U, NOT JUST WITH GIRLS, BUT THE MEN IN THE NBA WEARING THEM AS WELL. IT GETS TO THE IDEA THAT AS THE CULTURE SHIFTS, WHERE A QUOTE ON QUOTE WOMEN'S SHOE LIKE THE CAITLIN 1 WILL ESSENTIALLY BE A UNISEX SHOE? ELIZABETH: THAT WOULD 100% BE THE DREAM. I THINK THAT SOCIETY ITSELF IS GOING THROUGH SOME INTERESTING MACHINATIONS AROUND GENDER. SO I DON'T KNOW THAT WE ARE THERE YET. I THINK IT IS GREAT THAT WE ARE SEEING MORE MOVEMENT TOWARD FEMALE DESIGNED MODELS BEING WORN BY MEN. IF WE COULD ACTUALLY ACHIEVE THAT, THAT WOULD BE A WONDERFUL SWEET SPOT. I DON'T THINK WE ARE THERE YET, THOUGH. ROMAINE: AS A HISTORIAN, WE TALK ABOUT THE AIR JORDANS, AIR FORCES, DUNKS, BRANDS THAT HAVE GONE THROUGH DECADES, THROUGH A LOT OF DIFFERENT ITERATIONS, COLLABORATIONS, BUT LOTS OF QUESTIONS BY INVESTORS ABOUT WHETHER THOSE COLLABORATIONS BECOME A CRUTCH AND IF YOU ARE INNOVATING SOMETHING NEW OR JUST REHASHING THE OLD? ELIZABETH: THAT'S A REALLY GOOD QUESTION TO ASK. OVERSATURATED. ONE OF THE THINGS THAT I APPRECIATE ABOUT SNEAKER CULTURE IS THE APPRECIATION OF THE HISTORY, OF WHO WORE THE SHOE WHEN IT FIRST CAME OUT, REMEMBER WANTING THE SHOE, THERE IS A KIND OF NOSTALGIA BUILT INTO THE CONSUMPTION OF THOSE PIECES. BUT THE MORE DISTANCE YOU GET FROM THOSE MOMENTS -- THE AIR JORDAN 1 COMES OUT IN 1985, AND HERE WE ARE IN 2026. HOW LONG CAN YOU CONTINUE TO RELY ON THAT NOSTALGIA TO MAKE THAT PARTICULAR MODEL REMAIN RELEVANT, ESPECIALLY WHEN IT DOES GET COLLABED OVER AND OVER AGAIN, TO THE POINT OF OVERSATURATION. ROMAINE: AS SOMEONE WHO HAS BEEN TO YOUR MUSEUM, WHEN YOU THINK ABOUT THE NEWER PRODUCTS BEING RELEASED TODAY, LIKE THE MIND THAT HAVE COME OUT UNDER ELLIOTT HILL, DO YOU ANTICIPATE AT SOME .1 OF THOSE ITEMS WILL BE IN YOUR MUSEUM, DO THEY HAVE THAT KIND OF HEAT? ELIZABETH: IT'S AN INTERESTING MOMENT BECAUSE THE MARKET ITSELF OR SNEAKERS HAS MORE GENERALLY SOFTENED. I PERSONALLY DON'T SEE THE NEXT IT SHOE. I DON'T THINK SNEAKERS ARE GOING TO GO ANYWHERE, BUT I DON'T KNOW IF THEY ARE CARRYING THE EXACT LEVEL OF CULTURAL SIGNIFICANCE THAT THEY WERE, SAY, 5, 10 YEARS AGO. IN ANSWER TO YOUR QUESTION, I AM LEANING MORE TOWARD INCLUDING IN THE MUSEUM SHOES THAT ARE FOCUSED ON INNOVATION. AND I DO THINK THAT PERFORMANCE, LEANING INTO PERFORMANCE, IS SOMETHING THAT NIKE IS OBVIOUSLY DOING, BUT ALSO SOMETHING THAT HELPS SAVE ITSELF. ROMAINE: WE HAVE TO LEAVE IT THERE. WE HAVE TO CATCH UP AGAIN SOON. ELIZABETH SEMMELHACK IS THE SENIOR CURATOR OVER AT THE BATA SHOE MUSEUM IN TORONTO. WE HAVE SOME BREAKING NEWS INVOLVING A SEMICONDUCTOR. ON SEMI HIGHER BY 7% IN THE AFTER HOURS TRADE ON A REVISED DEAL TO BUY SYNOPTICS. WE ARE GOING TO GET YOU SOME MORE DETAILS ON THAT. THIS IS A CASH DEAL AS WELL. THE COMPANY SAYS THEY EXPECT THE TRANSACTION TO CLOSE BY THE MIDDLE OF 2027. THIS IS THE CLOSE ON BLOOMBERG. ROMAIN: EARNINGS ARE NOT ONLY A TEST OF BRAND RELEVANCE, THEY ARE A TEST OF BOARDS, LEADERSHIP, CHOICES. AT 32-YEAR-OLD COMPANY VETERAN TO LEAD THE COME BACK AFTER OUTSIDER CEO JOHN DONAHUE. THE MOVE IS YET TO SATISFY INVESTORS. QUESTIONS MOUNTING OVER THE DIRECTION OF THE COMPANY. BROADER QUESTIONS ABOUT WHEN A COMPANY NEEDS CULTURAL RESTORATION AND STRATEGIC DISRUPTION. THE CEO FITS THE BILL. HE LEADS RUSSELL REYNOLDS ASSOCIATES, AND HE IS THE AUTHOR OF A NEW BOOK CALLED THE CATALYST CEO, WHY CEOS CAN LEAD TO TRANSFORMATION ALONE, AND WHAT THE BEST DO INSTEAD. HE JOINS US NOW. GREAT TO HAVE YOU HERE. LET'S GET THIS OUT OF THE WAY. WHEN WE TALK ABOUT TURNAROUND STORIES. WHEN COURTS BRING IN A CEO AND SAY HERE IS WHAT WENT WRONG, WE WANT YOU TO FIX IT, HOW MUCH RUNWAY DO THOSE CEOS TYPICALLY GET? TWO YEARS, THREE YEARS, FIVE YEARS? WHAT IS THE BREAKING POINT WHERE THE BOARD SAYS IT IS NOT WORKING? >> THERE IS AN EXACT ANSWER. CERTAINLY EVERY COMPANY HAS OBJECTIVES SET OUT OVER A PERIOD OF TIME TO DRIVE A TURNAROUND. FIVE YEARS IS PROBABLY ON THE LONG SIDE OF TURNAROUND TRAJECTORY. BUT CERTAINLY THERE ARE CONDITIONS WITHIN THE COMPANY AND THE ENVIRONMENT THAT COULD CHANGE THE TIMELINE FROM 18 MONTHS TO THREE YEARS. LIKE AN ENVIRONMENT WE ARE IN TODAY WITH UNEXPECTED CHALLENGES COMPANIES ARE FACING. ROMAINE: ONE BOARDS LOOK FOR A NEW CEO, THERE HAS ALWAYS BEEN THIS DEBATE, DO YOU GO FOR AN INSIDER WHO KNOWS THE COMPANY WELL AND RUN THE RISK OF HIS OR HER PREDECESSOR'S PROBLEMS, OR DO YOU GO FOR THE PERSON WHO IS FROM OUTSIDE THE FRAY WHO COMES IN WITH A LITTLE BIT OF A FRESHER LENS? >> DATA SHOWS MOST COMPANIES GO FOR INSIDERS. CERTAINLY THERE IS AN INCREASED TREND AT THE MOMENT FOR COMPANIES WANTING EXPERIENCED CEOS WHO HAVE BEEN THERE, DONE THAT, WHO CAN HIT THE GROUND RUNNING AND MITIGATE THE RISK OF THE TRANSITION. ROMAINE: ONE THING I'M CURIOUS ABOUT, DO WE PUT TOO MUCH IMPORTANCE ON THE CEO RATHER THAN THE ENTIRE EXECUTIVE TEAM? AT THE END OF THE DAY, THE NEW CEO AT DISNEY OR WHEREVER ELSE, JOHN TERNUS AT APPLE, AT THE END OF THE DAY, HIS SUCCESS WILL BE DETERMINED BY THE DEPUTIES HE BRINGS IN OR THE DEPUTIES HE INHERITS FROM THE PREVIOUS CEO. >> IT IS A GREAT POINT, A CENTRAL PREMISE OF THE CEO, AROUND THE WORLD IS TOO COMPLEX, CEOS HAVE TOO MANY THINGS FACING THEM IN TODAY'S ENVIRONMENT TO REALLY BE THE ACTUAL HERO OF THE COMPANY'S SUCCESS. WHICH MEANS THEIR SKILL SET NEEDS TO BE HONED IN ON HOW YOU MAKE A LEADERSHIP TEAM SUCCESSFUL, HOW YOU CREATE CONDITIONS FOR SUCCESS WITHIN A COMPANY'S OF THE COMPANY CAN TRANSFORM, EVEN IF THE CEO IS NOT THERE. ROMAINE: IN REGARDS TO THEIR, WHO IS AT FAULT? PARTLY AS YOU GET THESE OUTSIDE PAY PACKAGES FOR CEO, THE NARRATIVE AROUND THEM IS ALSO HERE IS OUR SAVIOR, PUT THE CAPE ON HIM. IS IT COMING FROM THE BOARD, OR INVESTORS, OR THE MEDIA? >> ALL OF THOSE THINGS. IT IS AN APPEALING STORY. BY NO MEANS AM I SAYING THAT ELEVATING THE IMPORTANCE OF LEADERSHIP TEAM ARE YOU DECREASING THE IMPORTANCE OF THE CEOS ABILITY TO SET THE AGENDA, HOLD PEOPLE ACCOUNTABLE, AND DRIVE THE COMPANY'S SUCCESS, BUT IT IS ABOUT A COMPLEX SYSTEM THAT REALLY NEEDS SPECIFIC ENABLEMENT WITHIN THE ORGANIZATION TO BE SUCCESSFUL. ROMAINE: I WANT TO POINT OUT RESEARCH YOU GUYS HAD THAT LAST YEAR, SOMETHING LIKE 54 CEOS LEFT PUBLICLY TRADED CONSUMER COMPANIES, THE MOST SINCE YOU BEGAN TRACKING THE SECTOR. BUT THE TURNOVER RATE IS LOW THIS YEAR. I THINK 17% OR SOMETHING? WHAT ACCOUNTS FOR THAT? >> FIRST HALF OF THE YEAR, WE SEEN A DRAMATIC DECREASE IN CEO TURNOVER. WE THINK IT IS BECAUSE A GENERAL DIRECTION OF THE ECONOMY IN THE MARKETS IS POSITIVE, RISING TIDES RAISE ALL SHIPS. I THINK THERE'S A BENEFIT TO RESULTS BEING POSITIVE AND THINGS MOVING IN THE RIGHT DIRECTION. ROMAINE: WE ARE AT THIS HUGE TRANSFORMATION IN OUR SOCIETY WITH REGARDS TO AI AND TECHNOLOGY, AND IT HAS TO SHAPE A LOT OF BOARD DECISIONS ABOUT WHO THE RIGHT PERSON IS FOR THE JOB TO LEAD THE COMPANY. WHAT ARE BOARDS LOOKING FOR? NOT JUST TECHNOLOGY COMPANIES, WE KNOW AI HAS PERMEATED EVERYTHING, BANKS AND CONSUMER COMPANIES AS WELL. ARE THEY LOOKING FOR CEOS WHO CAN ARTICULATE AN AI STRATEGY, OR THEY JUST WANT A MANAGER THAT THEY CAN PUT THE TECH EXPERTISE AROUND? >> THE BOARDS WANT CEOS SAVVY ABOUT THE IMPACT AI CAN HAVE ON THE COMPANY. THE SKILLS THEY ARE LOOKING FOR ARE NOT NEW SKILLS, BUT THEY ARE RISING IN THE LIST OF SKILLS. LIKE BEING ABLE TO MANAGE IN THE AMBIGUITY OF INVOLVING AI LANDSCAPE. BEING ABLE TO CREATE TENSION WITHIN THE COMPANY TO PROACTIVELY CHALLENGE WHERE IT IS GOING TO GO AND INVENT THE FUTURE THROUGH TRANSFORMATION. ROMAINE: I SAW ANOTHER STAT ABOUT THE CEOS THAT HAVE BEEN HIRED. A LOT OF PEOPLE WERE VERY EXPERIENCED. HE GETS TO THE QUESTION, WHERE ARE THEY DRAWING FROM THAT EXPERIENCE? THE STANDARD CEO WE ARE USED TO AT THE EXPENSE OF FINDING SOMEONE WHO MIGHT BE A LITTLE MORE INNOVATIVE AND TRANSFORMATIONAL, OR IS IT ALREADY BAKED INTO THE DECISION? >> IT IS HARD TO GENERALIZE. YOU ARE RIGHT THAT THERE IS A SPIKE IN CEOS WHO MAY HAVE BEEN IN RETIREMENT FOR SEVERAL YEARS COMING BACK TO LEAD A COMPANY. ALWAYS THERE IS SOMETHING IN THAT EXPERIENCE, IN THE SKILL SET OR CHALLENGES COMPANIES ARE FACING THAT IS APPEALING TO THE BOARD AND ABUSE THAT CANDIDATE AS BEING ABLE TO DE-RISK THE CEO CHANGE. ROMAINE: IS THERE A GAP WITH HOW BOARDS ARE LOOKING AT THINGS IN CEOS? YOUR RESEARCH SEEMS TO SUGGEST SOME ARE FRUSTRATED WITH THE LACK OF INNOVATIVE THINKING BY THE BOARDS. I THINK YOUR RESEARCH SAID BOARDS ARE PRETTY CONFIDENT AND INNOVATIVE THINKING AS WELL. >> THERE IS A BIT OF A GAP. OUR LEADERSHIP CONFIDENCE SHOWS CEO TRUST IN BOARDS HAS BEEN DECREASING SINCE 2021 ABOUT TWO PERCENTAGE POINTS PER YEAR. THAT IS A MESSAGE TO ALL CEO AND BOARDS THAT SAYS THEY HAVE TO COME TOGETHER AND BE VERY SPECIFIC ABOUT WHAT TRANSFORMATIONAL OBJECTIVES THEY ARE TRYING TO ACHIEVE, AND NOT JUST DEFINE THOSE OBJECTIVES, BUT A RUN THROUGH THE NEGATIVE SCENARIOS LIKELY TO OCCUR DURING TRANSFORMATION BECAUSE TRANSFORMATIONS ARE HARD. AND AGREE TO WHAT THEY ARE GOING TO DEAL WITH IN THOSE MOMENTS. ROMAINE: REALLY APPRECIATE IT. A NEW BOOK OUT CALLED THE CATALYST CEO. WE WILL BE BACK IN A MOMENT SETTING YOU UP FOR WHAT TO WATCH. THIS IS BLOOMBERG. ROMAINE: LET'S SET YOU UP FOR WHAT TO WATCH OVER THE NEXT 24 HOURS. ALL EYES WILL BE ON THE U.S. SEPTEMBER JOBS REPORT AT 8:30 A.M. FULL COVERAGE OF THAT ON BLOOMBERG. 10:00 A.M., MORE ECONOMIC DATA INCLUDING FACTORY ORDERS AND DURABLE GOODS MAY GIVE US A LITTLE BIT MORE OF THE PICTURE. MAYBE A CLEARER PICTURE ON THE STATE OF THE ECONOMY. AT 11:00 A.M., A SPECIAL LIVE SHOW FROM LOCKHEED MARTIN SKUNK WORKS FACILITY, FOCUSING ON DEFENSE TECH IN SOUTHERN CALIFORNIA. WE WILL GET SOME FED SPEAK, INCLUDING FROM THE DALLAS FED PRESIDENT ROUNDING OUT A BARRAGE OF FED SPEAK THIS WEEK. WANT TO CHECK BACK IN ON NIKE. SHARES PARING SOME LOSSES WAITING FOR THE CONFERENCE CALL TO START. IN ABOUT THREE MINUTES, WE WILL HEAR FROM ELLIOTT HILL APPROACHING THE TWO-YEAR ANNIVERSARY. WE WILL ALSO HEAR FROM HIS NEW CFO, JOINING ME FOR THE NEXT FEW WEEKS. INVESTORS WANT MORE CLARITY ABOUT PROGRESS ON THE TURNAROUND PLAN. THANK YOU FOR JOINING US ON THE CLOSE. WE WILL BE BACK TOMORROW ON BLOOMBERG.