Stocks Drop, Oil Rises on Iran Report; TSMC, Samsung Disappoints Investors

VONNIE: GOOD MORNING I'M VONNIE QUINN WITH YOUR BLOOMBERG BRIEF. STOCKS AND BONDS FALLING AS PRICES ADDING INFLATIONARY PRESSURE TOUTING THE PICTURE FOR THE FED. WALLER SAY MOMENTS AGO INFLATION EXPECTATIONS ARE ACCURATE. BRENT'S BACK ABOVE $104 A BARREL AFTER A REPORT PRESIDENT TRUMP MIGHT ORDER MORE STRIKES ON IRAN BEFORE THE MIDTERM ELECTIONS. SAMSUNG AND TSMC FAILED TO IMPRESS INVESTORS IS BROAD, EYES'S FINANCING FOR OPENAI CHIPS. LET'S GET A CHECK ON MARKETS AROUND THE WORLD. WINNIE: GOOD MORNING, A BAD DAY FOR ASIA STOCK ESPECIALLY WITH THE HIGH PRICES CONCERNS. INTERESTINGLY YOU HAVE SOME BENCHMARK TODAY LEADING LOSSES AS BANKS CONTINUE TO EXTEND DECLINES GIVEN THE WORRIES ON HIGHER YIELDS WEIGHING ON THEIR EARNINGS OUTLOOK GOING FORWARD. WHEN IT COMES TO SOUTH KOREA'S KOSPI INDEX. WE HAD SAMSUNG ELECTRONICS POSTING RECORD QUARTER PROFIT BUT THAT STILL MISSED SOME OF THE EXPECTATIONS FOR ANALYSTS AND THAT IS ALSO COMING AS INVESTORS REALLY WANT TO SEE THE SUSTAINABILITY OF THE EARNINGS GROWTH GOING AHEAD. WHEN IT COMES TO THE RELIEF WAS OF THE JGB 10 YEAR BOND AUCTION SEEING SOLID DEMAND AND THAT IS WHAT WE SAW FOR THE 10 YEAR EARLIER THIS WEEK. FOR MORE WE LOOK AT THE ONSHORE CHINESE MARKET. COMING BACK FROM A VERY LONG HOLIDAY WE ARE SEEING SOME WEAKNESS THERE GIVEN THE SLUGGISH DATA WHEN IT COMES TO SPENDING AND TRAVEL. WE ARE ALSO SEEING TEXTURES LEADING DECLINES TODAY GIVEN THE STRETCH, A VALUATION AND BOND YIELDS STILL WAITING SENTIMENT. >> A SIMILAR STORY FOR EUROPE. THE STOXX 600 DOWN ALMOST 9/10 OF A PERCENT REALLY ALMOST EVERY SECTOR IN THE RED WITH THE EXCEPTION OF ENERGY ON HIGH ORAL PRICES. FRANCIS 10 YEAR YIELD -- HIGH OIL PRICES. FRANCE'S 10 YEAR YIELD HIGHER AFTER A LITTLE BIT OF RELIEF IN THE LAST DAY. BACK TO 4.92 THERE. WE HAVE SEEN THE EURO CONTINUE TO WEAKEN. 1.1190 IN THE NEXT LEVEL TRADERS WILL BE WATCHING. LET'S TAKE A LOOK AT OIL BECAUSE WE HAVE SEEN A MASSIVE INCREASE IN THE PRICE OF BRENT ABOVE 104. AS YOU CAN SEE NEW YORK CRUDE AT 91.79 AND EURO FUTURES PUTTING SEVERE PRESSURE ON EUROPE AT A TIME IT'S NOT GOING TO RELEASE MORE RESERVES. WE SAW A LITTLE HINT OF THE FUTURES PICTURE IN THE U.S.. WE ARE LOWER NOT BY A MASSIVE AMOUNT AND THE RUSSELL 2000 TAKING THE BRUNT OF THIS ON HIGHER INTEREST RATES. THE NASDAQ 100 LOOK SICK IT MIGHT HAVE WEAKER EVEN AFTER WE GOT BETTER NEWS OUT OF SAMSUNG AND TSMC OVERNIGHT. YIELDS ARE HIGHER ACROSS THE CURVE AT THIS POINT EVEN THE TWO YEAR YIELD IS HIGHER TODAY. WE ARE NOT AT THE HIGHS WE SAW YESTERDAY ON THE 30 YEAR. WE TOUCHED 5.73 AND CHANGE. BUT STILL ALMOST AT 5.5 ONE IN THE 10 YEAR CLOSE TO 5.33. CONTINUED PRESSURE FROM YIELDS. INDIVIDUAL PREMARKET MOVERS HERE IS JUSTINA LEE. JUSTINA: GOOD MORNING, STARTING WITH APPLIED TO DIGITAL IT'S AN AI DATA CENTER DEVELOPMENT OPERATOR SO MAYBE UNSURPRISINGLY IT REPORTED REVENUE THAT SURGED AND BEAT ANALYST ESTIMATES. IT IS REACTING PRETTY WELL IN THE PREMARKET TODAY EVEN THOUGH EXPANDING THE PIPELINE OF PROJECTS IS STILL REPORTING A LOSS BUT CLEARLY INVESTORS ARE FOCUSED ON THE SURGE IN REVENUE. NEXT STOP REACHING A CONDITIONAL LOW COMMITMENT WITH THE DEFENSE DEPARTMENT $1.5 BILLION OVER A LONG-TERM 30 YEARS IT IS 50% IN -- UP 15% IN PREMARKET TODAY. A MAKER OF POWER DEVICES AND LASTLY TSMC CAME OUT WITH A 51% SURGE IN EARNINGS TODAY BUT WE CAN SEE CLEARLY EVEN THOUGH IT IS A SIGN OF SOME VERY STRONG DEMAND FOR AI INFRASTRUCTURE IT IS DOWN TODAY BECAUSE INVESTORS ARE CONCERNED WHETHER THIS IS ULTIMATELY SUSTAINABLE AND I THINK THAT IS TELLING RIGHT NOW. VONNIE: THANK YOU SO MUCH JUSTINA LEE. COMING UP, KAYLA SEDER OF STATE STREET. LET'S KICK OFF WITH STOCKS AND BONDS FALLING AFTER A RISE IN OIL PRICES. JOINING US IS A VEN RAM. WE GOT THE MINUTES YESTERDAY SHOWING ALL 19 MEMBERS WERE HAWKISH. THAT WOULD'VE CHANGED PRESUMABLY AFTER RECENT DATA BUT NOW THAT WE HAVE OIL ABOVE 104 AND THE THREAT OF STRIKES, HOW ARE FED GOVERNORS BOARD MEMBERS SUPPOSED TO THINK ABOUT THIS ECONOMY? VEN: GOOD MORNING. IT STILL REMAINS THE CASE THAT OCTOBER IS PRETTY MUCH OFF THE TABLE WE JUST HEARD FROM FED GOVERNOR WALLER WHO SAID THE NEXT RATE HIKE IS IMPORTANT BUT NOT SO MUCH THE TIMING OF IT. BASICALLY ENDORSING THE VIEW THAT OCTOBER IS NOT IN PLAY. EVEN THOUGH PRICES ARE RISING WE KNOW THE IMPACT OF THE ELEVATED CRUDE PRICES THEY HAVE BEEN LONG ENOUGH FOR NINE MONTHS NOW THEY HAVE BEEN ELEVATED SO THE IMPORTANT -- THE IMPORTANCE IS NOT LOST ON ANYONE. I THINK THE FED HAVING RAISED RATES AND THEY ARE KIND OF THINKING FOR THE REASONS MENTIONED THE RECENT SOFT DATA THE LABOR MARKET DATA AND THE RISING UNEMPLOYMENT RATE AND THE METHODOLOGY FOR CORE PCE THEY ARE THINKING MAYBE THEY ARE STARTING TO HOLD OFF UNTIL DECEMBER. VONNIE: ANOTHER COMMENT IS AI PRODUCTIVITY HAS BEEN SEEN ANECDOTALLY BUT NOT YET IN THE DATA. WHAT IS -- WHAT ARE THEY SAYING WITH THAT COMMENT. IF WE DON'T SEE IT IN THE DATA CAN WE CONTINUE TO RUN THIS ECONOMY ON ANECDOTAL EVIDENCE THAT AI WILL ACTUALLY GRANT US MORE PRODUCTIVITY AND MAY BE ADDED GDP GROWTH. VONNIE: -- VEN: IF WE ARE SEEING -- IF YOU'RE NOT YET SEEN IT IT HAS SOME SINISTER IMPLICATION FOR THE BOND MARKETS. THE ECONOMY ALREADY DOING WELL ABOVE TREND AND IF THAT BOOST IS GOING TO COME DOWN THE LINE THEN GROWTH WILL PROBABLY TREND EVEN MORE AND ACCELERATE EVEN MORE WHICH MEANS YOU'VE GOT A SITUATION WHERE YOU HAVE TO TAKE INFLATION FOR WHAT IT IS TODAY NOT WHAT THE FED WANTS IT TO BE AND THAT IS A WORLD WHERE 3% INFLATION SEEMS TO BE THE NORM. IF YOU'VE GOT 3% AND AN ECONOMY GROWING ABOVE TREND THAT IS GOING TO ACCELERATE MORE BECAUSE OF AI PRODUCTIVITY THAT ONLY MEANS EVEN HIGHER NOMINAL INTEREST RATES OR EVEN HIGHER NOMINAL YIELDS. VONNIE: LET'S TURN TO WHAT'S DRIVING UP OIL PRICES. THE ATLANTIC REPORTING THE WHITE HOUSE ASKED THE PENTAGON TO DRAW UP STRIKE OPTIONS AGAINST IRAN BEFORE THE MIDTERMS. WITH REPORTS A TANKER WAS STRUCK OFF QATAR. JOINING US NOW IS ABEER ABU OMAR IN DUBAI. THIS REPORT THE PRESIDENT MIGHT BE LOOKING AT A PRE-MIDTERM STRIKE WHEN HE HAD BEEN TALKING ABOUT A POST-MIDTERM STRIKE IS A LITTLE CONCERNING KNOW? ABEER: THE TIMELINE IS WHAT IS WEIRD. OVER THE PAST COUPLE OF MONTHS OR SO IT'S BEEN WIDELY REPORTED WE MIGHT SEE SOME KIND OF RETURN TO ESCALATIONS BETWEEN THE U.S. AND IRAN I.E. THE U.S. -- THIS WAS ABOUT TO HAPPEN AFTER THE MIDTERM ELECTIONS. THE ATLANTIC IS REPORTING CITING A GROUP OF SOURCES THAT THERE HAVE BEEN PLANS THAT THE WHITE HOUSE ADMINISTRATION HAD TOLD THE PENTAGON TO DRAW UP SOME TARGETS TO BE HIT IN THE IRAN BEFORE THE MIDTERM ELECTION SO THAT IS THE SURPRISING ELEMENT IN THE REPORTING THAT HAPPENED THERE. WE DON'T KNOW IF THIS IS GOING TO HAPPEN. WE UNDERSTAND THIS IS STILL BEING DEBATED AND WE UNDERSTAND IT COULD BE ANY KIND OF TARGETS THIS COULD BE ENERGY TARGETS THAT THE U.S. HAD HIT BEFORE AT THE HEIGHT OF THE WAR. AND THE OTHER POTENTIAL TARGETS BUT STILL GETTING DEBATED. IT GETS TO SHOW YOU THE U.S. ADMINISTRATION THE CURRENT WHITE HOUSE ADMIN IS DESPERATE TO GET THOSE ENERGY PRICES UNDER CONTROL AND SHOW THERE WERE SOME KIND OF RESOLUTION IN THE CONFLICT WITH IRAN IS A WIN BEFORE THESE MIDTERM ELECTIONS TAKING PLACE NEXT MONTH. THIS REPORTING AND WHAT WERE SEEING IN THE STRAIT OF HORMUZ ARE DRIVING UP ENERGY PRICES. OIL PRICES, BRENT CRUDE PRICES ARE WELL ABOVE $100 A BARREL. VONNIE: TELL US ABOUT THESE ATTACKS THAT HAVE BEEN ESCALATING SO DEEP IN THE GULF BUT ALSO MORE HOUTHI ATTACKS AS WELL. ABEER: IN SAUDI ARABIA THREE CASUALTIES REPORTED IN DIFFERENT PARTS OF THE KINGDOM. THE HOPUUTHIS HAVE TAKEN CREDIT FOR THOSE. THE AIRPORT WAS ATTACKED AS WELL. TWO CASUALTIES REPORTED. THIS IS THE FIRST TIME WE ARE REPORTING ABOUT DEATHS IN THIS CONFLICT. THE JCC THE WIDER PERSIAN GULF AND WE ARE HEARING ABOUT ATTACKS IN THE STRAIT OF HORMUZ AT THE TOP OF QATAR SO WE ARE SEEING SKIRMISHES IN THE STRAIT OF HORMUZ OVER THE PAST COUPLE MONTHS. BOAT THIS CATCHES UP TO A DEEP PART IN THE STRAIT OF HORMUZ. THE PARALLEL CONFLICT IS ESCALATING BY THE DAY AND SO THESE ARE ALL SIGNS OF DANGER WE ARE SEEING ACROSS THE MIDDLE EAST. REDUCING THE UPSIDE AND ENERGY PRICES ACROSS THE BOARD. VONNIE: THANK YOU FOR JOINING US. SAMSUNG'S QUARTERLY PROFITS UP NINE FOLD THANKS TO THE AI BOOM. JOINING US NOW IS NEIL CAMPLING. WHY IS NOW THE TIME TO SELL? I UNDERSTAND THERE IS ALWAYS A SELL ON THE NEWS IMPETUS BUT WE ARE STILL 25% BELOW THE PEAK SO WHY SELL? NEIL: MORNING VONNIE. I THINK QUITE POSSIBLY THE STOCK OFTEN FALLS ON PRE-LIM RESULTS WE KIND OF WAIT FOR THE FULL RELEASE TO COME OUT LATER IN THE MONTH TO GET MORE GRANULARITY ON THE DIVISION. AND WHAT THE GUIDANCE IS GOING FORWARD BEEN ALTHOUGH THE STOCK IS DOWN FROM ITS PEAK IT IS STILL UP TRIPLE DIGITS 120% YEAR-TO-DATE. THE OTHER THING IS THAT MASSIVE SURGERY MENTIONED IN PROFITABILITY THE STRAIGHT WAS ALREADY THERE. SOME OF THE NUMBERS THAT WERE OUT THERE FROM INVESTORS WERE ABOVE THESE KIND OF NUMBERS. AND THE NUMBERS EVEN WITHOUT THE HUGE GROWTH DID INCLUDE SOME OF THOSE WAGE COST INCREASES WITH THOSE LABOR DISCUSSIONS THAT THEMSELVES AND THE OTHER MEMORY COMPANIES HAVE HAD. YOU COULD ARGUE THE SAME THING IN TERMS OF TOTAL SEMICONDUCTOR NUMBERS THIS MORNING. MASSIVE GROWTH OF THEIR 51% YEAR ON YEAR AND THAT'S EXPECTED TO ACCELERATE IN THE NEXT QUARTER. BUT CERTAINLY IF YOU LOOK AT THE RESULTS IN ISOLATION THEY ARE VERY STRONG BUT IT IS GETTING THAT TRADITIONAL REACTION RESULT. VONNIE: WHAT WOULD BE THE SIGNAL WE LOOK FOR TO SUGGEST SOMETHING LIKE THIS IS SLOWING DOWN. I DON'T KNOW HOW MANY QUARTERS THINGS HAVE NOT BEEN SLOWING DOWN AND THEY DON'T KNOW IF THEY CAN SEE A TIME WHEN THINGS SLOW DOWN. NEIL: TRYING TO KEEP AN EYE WHEN YOU SEE THE RATES OF CHANGE OF GROWTH MAY BE SLOWING WILL BE KEY FOR THE TECH COMPANIES INTO EARNINGS SEASON. WHETHER IT IS PUSHED OUT REMAINS TO BE SEEN. FROM STRATEGIST AT DEUTSCHE BANK THIS MORNING EXPECTING THREE Q EARNINGS SEASON TO DELIVER 34% YEAR ON YEAR GROWTH RATES FOR EARNINGS THIS QUARTER. AI DEMAND GROWTH MEANS THAT MEGA CAP AND TECH IS EXPECTED TO GROW AT LEAST 50%, 54% YEAR ON YEAR SO AI GROWTH IS FASTER THAN THE MARKET GROWTH BUT OBVIOUSLY AI IS CRUCIAL TO THE GUIDANCE INTO THE WHOLE AI NARRATIVE AND HAS THAT SEEPED INTO ALL KINDS OF ASSETS. VONNIE: BROADCOM IS HOLDING TALKS ABOUT FINANCING FOR OPENAI CHIPS. UNCLEAR BROADCOM CAN RAISE ENOUGH CAPITAL TO GET INTO THE CHIP UNIVERSE. ARE THERE ANY OTHER OPTIONS FOR THESE COMPANIES? IS IT SIMPLY OPENAI, A CEREBRAL RISK, THE USUAL COMPANIES. ANY UPSIDES I COULD TAKE A CHUNK OF THIS MONEY? NEIL: THE PACE OF THESE IS PHENOMENAL. WE HEARD LAST WEEK BANKS INVOLVED IN BROADCOM THEMSELVES. A MASSIVE DEBT PACKAGE FOR ANTHROPIC. WE ARE SEEING JUST A HUGE AMOUNT OF CAPITAL BEING DEPLOYED TO THIS. BUT WE ARE SEEING OTHER COMPANIES IN AI ALSO BEING ABLE TO RAISE CAPITAL. WE ARE GETTING POTENTIALLY A PUSHBACK ON AN AUSTRALIAN DATA CENTER IPO THAT MIGHT GET PULLED THIS WEEK. PERHAPS WE ARE SEEING SOME SIGNS THAT THE FUNDING IS MORE AVAILABLE FOR ALL AI RACES OUT THERE. AS WE GET CLOSER TO THE WEEKEND TO SEE WHETHER THERE IS SOME RISKS APPEARING IN PARTS OF THESE MARKETS FOR AI FUNDING. VONNIE: WE WILL KEEP AN EYE ON THAT. THANK YOU SO MUCH NEIL CAMPLING. TWO OF THE TOP STORIES TRENDING ON THE TERMINAL. MARINE LE PEN PUSHES ASIDE HER PROTEGE, A REASSERTING CONTROL OF THE NATIONAL RALLY AS A PRESENT FOR CAMPAIGN KICKS INTO HIGH GEAR. DIFFERENCES WITH JORDAN SPILL INTO THE PUBLIC VIEW. THE ECONOMIC BLUEPRINT LE PEN ANNOUNCED TUESDAY SHOWS HOW THE PRO-BUSINESS AGENDA HAS BEEN SHUNTED TO THE BACKGROUND. DAVID ALLISON AND HIS FAMILY INVESTED AROUND $17 BILLION TO COMPLETE PARAMOUNT'S 110 BILLION DOLLARS TAKEOVER OF WARNER BROS.. PUBLIC FIGHTING SHOW THEY ACQUIRED ONE POINT 4 MILLION SHARES IN A STOCK OFFERING. A SPOKESPERSON FOR THE SKYDANCE DECLINED TO COMMENT. NEW HIRES AT GOLDMAN SACHS SEEING AI AGENTS FROM THE TIME THEY JOINED. ACCORDING TO KEVIN WHO HAD -- OUTSIDE JAPAN SAYS NEW HIRES WILL NO LONGER HAVE TO WAIT YEARS TO BECOME MANAGERS. ACKNOWLEDGING THIS MEANS THE MANAGEMENT TASK WITH NO LONGER SITS -- BEIJING AND BRUSSELS TRY TO AVOID A FULL-BLOWN TARIFF WAR. THIS IS BLOOMBERG. ♪ VONNIE: THE EUROPEAN UNION IS STRIKING A MORE ASSERTIVE APPROACH TO CHINA AS IT HEADS INTO NEGOTIATIONS IN BEIJING AIMED AT AVOIDING A TRADE WAR. THE TRADE CHIEF IS IN CHINA TO MEET WITH THE COUNTRY'S COMMERCE MINISTER TO ADJUST -- ADDRESS THE TRADE DEFICIT. JOINING US IN BRUSSELS IS OLIVER CROOK. WHAT EXACTLY IS THE EU POSITION RIGHT NOW. ONE TO IMPOSE TARIFFS ON CHINA AND STOP SOME EV'S COMING IN BUT ON THE OTHER HAND DESPERATELY WANTS CHINA TO KEEP BUYING EUROPEAN GOODS. OLIVER: YOU HIGHLIGHT SOME OF THE CONFLICTS WITHIN THE INTERNAL POLITICS OF THE EUROPEAN UNION AND ITS APPROACH TO THE CHINESE HISTORICALLY WHAT WE'VE SEEN FOR EXAMPLE THE GERMANS ARE RELUCTANT TO TAKE ANY AGGRESSIVE TRADING ACTION ON THE CHINESE BECAUSE OF HOW DEPENDENT THEY ARE ON THE MARKET. WE GOT A JOINT LETTER FOR THE FRENCH AND GERMANS CALLING FOR A STRONGER APPROACH TO TRADE. THAT BEING SAID SOME OF THE LANGUAGE SUGGESTING CLEARLY WAS CHINA THEY HAD IN MIND SO YOU HAVE BETRAYED CHIEF IN CHINA FOR THE NEXT TWO DAYS ALREADY MEETING WITH EUROPEAN COMPANIES THAT OPERATE WITHIN CHINA AND REALLY HIS GOAL IS TO REBALANCE TRADE ON CHINA ON TWO FRONTS. ALL OF THESE ARE FAMILIAR ISSUES WHETHER IT'S IP THEFT, FX MANIPULATION UNFAIR TRADE PRACTICES ALL THOSE THINGS. THE SAME THINGS WE'VE BEEN TALKING ABOUT FOR MORE THAN A DECADE. WHAT THEY'VE GOTTEN TO IS BASICALLY THIS BILLION DOLLAR DEFICIT AS SOMETHING NOT SUSTAINABLE EVEN FOR THE COUNTRIES THAT WANT A REASONABLY CLOSE ECONOMIC RELATIONSHIP WITH CHINA SUCH AS SPAIN EVEN THEY ARE DRAWING THE LINE. WHAT HE NEEDS TO DO IS SEE IF HE CAN ADVANCE TALKS ON LIMITING THE POTENTIAL IMPORTS OF CERTAIN THINGS INTO THE EUROPEAN UNION THAT ARE DEEMED CRITICAL. HYBRID CARS FOR EXAMPLE. BUT ALSO GAINING MORE ACCESS TO THE CHINESE MARKETS THE EUROPEANS AND WE WILL GET A READ OUT OVER THE NEXT COUPLE OF DAYS AS TO WHETHER OR NOT HE IS ABLE TO MAKE PROGRESS ON THAT THEN WE KICK IT INTO NEXT WEEK WITH OUR EUROPEAN LEADERS SUMMIT. AT THAT SOME OF THE NEED TO DETERMINE WHETHER THEY NEED TO TAKE AN AGGRESSIVE APPROACH ON CHINA FOR WHICH THERE ARE A LITTLE MORE CONSEQUENCES. IF YOU GET INTO A FULL-BLOWN TRADE WAR AND THE CHINESE THE CHINESE HOLD A LOT MORE CARDS SO I THINK IT IS IN EVERYONE'S INTEREST TO TRY AND COME UP WITH SOME RESOLUTION. IT'S VERY CLEAR THAT THESE SORT OF RARE EARTH MINERALS SIT SQUARELY IN THE HAND OF CHINA. VONNIE: PEOPLE ARE ALSO BUYING IT AND ENJOYING CHINESE GOODS WHICH IS BAD NEWS PARTICULARLY FOR GERMANY. THE FT REPORTING CHINA REJECTED A REQUEST TO VOLUNTARILY RESTRICT ITS SURGING EXPORTS. YOU CAN SEE WHY CHINA WOULD SAY NO THANKS WE ARE OK BUT WHAT DOES THE EU COME BACK WITH? SOME KIND OF IMPOSITION OF TARIFFS ON EXTRA CARS? HOW CAN IT PROTECT GERMANY'S CAR INDUSTRY WHEN IT'S ALREADY CLEAR IT IS QUITE TOO LATE. OLIVER: THAT IS WHAT'S INTERESTING. YOU DID ALREADY HAVE SOME ACTION FROM THE EUROPEAN SIDE ON BATTERY AND ELECTRIC VEHICLES. DIFFERENT ONES FOR THE BATTERY ELECTRIC VEHICLES COMING OVER FROM CHINA. WHAT IT EXEMPTED WAS THIS HYBRID CLASS OF CARS WHICH IS WHAT WE SEEN COMPLETELY WIPE OUT THE EUROPEANS IN TERMS OF MARKET SHARE. WE LOOK AT PLUG-IN HYBRID VEHICLES SOLD IN EUROPE IT GOT TO A THIRD OF THE MARKET IN A VERY SHORT AMOUNT OF TIME. THOSE OF THE KINDS OF THINGS THE EUROPEANS WANTED TO FOCUS ON. THEY ARE VERY GLAD TO BUY CHEAPER GOODS FROM CHINA IN CERTAIN SECTORS. WHEN YOU GET TO THE CRITICAL ONES THAT'S WHERE IT GETS COMPLICATED. OLIVER: -- VONNIE: THIS IS BLOOMBERG. ♪ VONNIE: TIME FOR YOUR FRONT-PAGE NEWS. THE WASHINGTON POST REPORTING PRESIDENT TRUMP WANTS TO TURN HIS WEST PALM BEACH GOLF CLUB INTO A PRESIDENTIAL RETREAT LIKE CAMP DAVID. ASKING THE GOVERNMENT TO BE GRANTED PART OF THE PROPERTY WITH THE REST OF IT AS A PRIVATE COURSE. KIMBERLY GUILFOYLE ASKED A DONOR FOR 100,000 DOLLARS TO PAY AN AMERICAN EXPRESS BILL. SHE WAS PRAYING FOR A HEARING TO BECOME U.S. AMBASSADOR TO GREECE AT THE TIME. ERIC PETERSON HAD BEEN LOOKING FOR HER HELP DID NOT PAY. FINANCIAL TIMES REPORTING CHINA BUILDING DATA CENTERS AT RAPID SPEED ACROSS ITS ENERGY-RICH HINTERLAND AS BEIJING LOOKS TO TURN ELECTRICITY AND SHE PLANNED. WE WILL BE SPEAKING WITH KAYLA SEDER OF STATE STREET, THIS IS BLOOMBERG. ♪ VONNIE: 5:30 IN NEW YORK CITY, GOOD MORNING VONNIE QUINN WITH YOUR BLOOMBERG BRIEF. STOCKS AND BONDS FALLING, OIL RISING ADDING INFLATIONARY PRESSURE AND CLOUDING THE PICTURE FOR THE FED. BRENT BACK ABOVE $104 A BARREL ON A REPORT PRESIDENT TRUMP MIGHT ORDER STRIKES ON IRAN BEFORE THE MIDTERMS. SAMSUNG AND TSMC FAILED TO IMPRESS INVESTORS. BROAD, EYEING FINANCING FOR OPENAI CHIPS. LET'S LOOK AT OIL THEN BECAUSE WE ARE WELL ABOVE 104 AND IT'S NOT JUST ON THAT REPORT IT'S ALSO ESCALATING ATTACKS DEEP INSIDE THE GULF AND ATTACKS ON SAUDI ARABIA CAUSING CASUALTIES IT AIRPORTS AND OTHER AREAS. WTI ABOVE $91 A BARREL AND EUROPEAN GAS FUTURES GETTING CLOSE TO 80 EUROS PER MEGAWATT HOUR PUTTING SEVERE PRESSURE ON EUROPE AS IT HEADS INTO THE EARNINGS SEASON. FUTURES POINTING LOWER OPIATE RIGHT BELOW RECORDS LITERALLY. RUSSELL 2000 FUTURES PERHAPS SUFFERING MOST ON THIS HIGHER YIELDS AND IF WE LOOK WE SEE THAT HIGHER ONCE AGAIN TODAY. THE 30 YEAR YIELD IS OFF. THE HIGH POINT OF THE SESSION BUT STILL ABOVE 5.70. WE SO THE 10 YEAR YIELD CLIMBING HIGHER AS WELL. THAT IS UP MORE THAN THREE BASIS POINTS. DIDN'T HAVE A SUCCESSION -- WE ARE LOOKING TO THE 30 YEAR AUCTION TODAY FOR MORE ON THE HEALTH OF THIS BOND MARKET. LET'S GET TO SOME INDIVIDUAL PREMARKET MOVERS. JUSTINA: STARTING WITH APPLIED DIGITAL THE COMPANY REPORTED A SURGE IN REVENUE THIS QUARTER WHICH BEAT ESTIMATES AND CLEARLY WE CAN SEE IT IS UP PREMARKET. THAT IS WHAT FOCUSED ON EVEN THOUGH REPORTED A LOSS PER SHARE DEEPER THAN EXPECTED. NEXT UP WOLF SPEED RECEIVING A COMMITMENT FROM THE DEFENSE DEPARTMENT BUT IS WORTH ABOUT 1.5 BILLION DOLLARS OVER 30 YEARS WHICH IS TIED TO THE COMPANY MAKING THESE SILICON CARBIDE MATERIALS AND OTHER POWER DEVICES IN AMERICA CLEARLY GREAT NEWS FOR THE COMPANY. AS YOU MENTIONED EARLIER SAMSUNG AND TSMC REPORTING GREAT NUMBERS EARLIER TODAY WITH TSMC REPORTING A 51% JUMP IN SALES. BUT CLEARLY THE ADRS FALLING IN THE PREMARKET YOU CAN SEE INVESTORS LOOKING AHEAD AT HOW SUSTAINABLE ALL OF THIS AI INVESTMENTS COULD BE WITH DEBT LEVELS RISING OF COURSE. THAT IS PRETTY SELLING OF TEMPERAMENT. VONNIE: JUSTINA LEE IN LONDON PUT HIGHER OIL PRICES, PUTTING THE MARKET BY ADDING TO INFLATION PRESSURES AFTER LAST MONTH'S RATE HIKE. LET'S BRING IN THE MACRO MULTI-ASSET STRATEGIST AT STATE STREET. HAVE YOU STARTED TO SEE CHANGING BEHAVIOR AMONG INVESTORS? CAYLA: THANK YOU FOR HAVING ME. WE ARE STARTING TO SEE INVESTORS TURN A LITTLE MORE RISK-AVERSE. THE THEME REALLY OVER THE LAST TWO YEARS HAD BEEN WE HAVE SEEN A LOT OF RISK SEEKING AND A LOT OF COMFORT WITH EVEN ADDING TO OVERLY RISKY POSITIONS. OVER THE LAST THREE OR FOUR WEEKS THIS HAS SHIFTED AND WE'VE SEEN MORE RISK AVERSION ESPECIALLY IN THE FX SPACE AND A LITTLE BIT WITH IN FIXED INCOME AS WELL. VONNIE: WHEN YOU SAY IN FIXED INCOME WHAT ARE THEY TURNING AWAY FROM? WHAT IS CONSIDERED RISKY AND WHAT IS CONSIDERED SAFE THESE DAYS? CAYLA: A GREAT QUESTION AND I THINK IT COMES DOWN TO WHAT IS DRIVING YIELDS. WE HAVE STARTED TO SEE A LITTLE BIT MORE DEMAND WITHIN THE U.S. TREASURY SPACE RELATIVE TO OTHER PARTS OF THE DEVELOPED SPACE. SO PLACES LIKE FRANCE, ITALY AND I THINK SOME OF THAT HAS TO COME DOWN TO WHAT IS DRIVING THE MOVE IN YIELDS. BIG PICTURE A LOT OF IT WHEN WE THINK ABOUT REAL YIELDS, THEY ARE ALSO UP HIGHLY RELATED TO TERM PREMIUMS. WHEN WE LOOK AT WHERE OUR TERM PREMIUMS RISING THE MOST OR WHERE OUR INVESTORS DEMANDING MORE COMPENSATION FOR RISKS, IT LOOKS TO BE PLACES WHERE GROWTH IS NOT COMING UP QUITE AS GREAT. I THINK THAT IS ONE REASON WHY WE STARTED TO SEE MORE HESITATION AROUND PLACES LIKE FRANCE AND ITALY AS OPPOSED TO PLACES LIKE THE U.S. WHERE GROWTH IS CONTINUING TO BE VERY RESILIENT. >> A STATISTIC THAT WAS PRETTY CHILLING IN THE BLOOMBERG NEARLY 40% OF FRANCE'S COMPANY BONDS ARE TRADING AS IF THEY WERE SAFER THAN THE GOVERNMENTS. IS THAT SOMETHING THAT COULD HAPPEN IN THE U.S.? CAYLA: I THINK THIS IS STARTING TO BECOME A BIGGER CONVERSATION IN THE U.S.. THERE HAS BEEN SOME DISCUSSION OF HIGH QUALITY HYPERSCALER ISSUANCE CROWDING OUT DEMAND FOR TREASURIES. WE HAVE NOT SEEN CLEAR SIGNS OF THAT YET BUT THAT CONVERSATION IS CERTAINLY HAPPENING AND THAT IS SOMETHING STARTING TO BE ON INVESTORS MINDS ESPECIALLY AS HYPERSCALERS AND HIGH QUALITY COMPANIES START TO INCREASE THEIR ISSUANCE OVERALL. VONNIE: WE ARE STILL AT RECORDS. BASICALLY WE ARE AT ALL-TIME HIGHS. THE MARKET LOOKS TO BE PRICING IN SOME OF THIS YEAR'S EARNINGS. AT WHAT POINT DO WE GET A LITTLE BIT OF A PULLBACK OR JUST A BREATHER IN THIS RALLY? CAYLA: WE HAVE SEEN INVESTORS START TO PULL BACK FROM EQUITIES A LITTLE BIT. WHAT IS INTERESTING IS WHEN WE LOOK AT THE COMPOSITION OF EQUITY ALLOCATION, IT REALLY HAS NOT CHANGED THAT MUCH. SO WE STILL SEE VERY HIGH ALLOCATION TO TECH. WHAT THAT MEANS IS INTO EARNINGS WHEN WE LOOK AT THE RISK FOR ALLOCATION WE MIGHT SEE SOME PULLBACK WITH IN EQUITIES AND TECH SPECIFICALLY JUST BECAUSE EXPECTATIONS ARE ELEVATED. IT DOES NOT NECESSARILY MEAN THAT IS A LONG-TERM TREND. TYPICALLY WHAT WE SEE IS SELLING AHEAD OF HER EARNINGS, AND A COUPLE WEEKS LATER WE SEE THEM COME BACK BECAUSE QUALITY IS JUST SO HIGH IN THAT SPACE RELATIVE TO THE MARKET. I WOULD EXPECT THAT TO CONTINUE GOING INTO THE REST OF THIS. VONNIE: IT SEEMS WE HAVEN'T HAD MUCH OF A MIDTERM IMPACT ON THIS MARKET. THE MARKET SEEMS TO BE NOT TOO CONCERNED ABOUT WHAT WILL CHANGE IN THE MIDTERM ELECTIONS. ARE YOU GETTING QUESTIONS ABOUT THAT AND DO YOU HAVE THOUGHTS ON WHETHER THERE MIGHT BE SOME SIGNIFICANT CHANGE IN PARTS OF THIS MARKET. >> WHERE WE'VE SEEN THAT THE MOST IS WILL THIS IMPACT THE FED. I THINK THIS IS PROBABLY A BIGGER QUESTION AHEAD OF THE SEPTEMBER HIKE. THERE'S A LOT OF QUESTIONS AROUND WILL THE FED ACTUALLY HIKE AHEAD OF THE MIDTERMS. AND WHAT WE FOUND IN THE PAST IS THEY TYPICALLY WOULD NOT START A HIKING CYCLE AHEAD OF MIDTERMS, BUT IF THEY ARE ALREADY IN ONE THEY TYPICALLY DO NOT SLOW DOWN. I THINK MOVING FORWARD AS WE GET CLOSER TO MIDTERMS, OF THOSE QUESTIONS WILL POP UP AGAIN BUT I THINK OVERALL FOR US IT IS STILL LEADING BACK TO THE FED STILL BACK TO INTEREST RATES. WHAT IS HAPPENING WITH MIDTERMS IS CERTAINLY TOPICAL BUT I THINK THE BIGGER QUESTION IS WHAT DOES IT MEAN FOR THE FEDERAL RESERVE. VONNIE: MARKETS HAVEN'T COMPLETELY TAKEN OCTOBER OFF THE TABLE BUT IT IS BASICALLY A 20% CHANCE THERE'LL BE ANOTHER HIKE IN OCTOBER AND 80% IN DECEMBER. THE WEAK DATA WE GOT OR THE WEAKER THAN EXPECTED DATA IS THAT ENOUGH TO CAUSE THE FED TO PAUSE HERE IN THE SENSE THAT EVERYBODY IS WORRIED ABOUT INFLATION RIGHT UP UNTIL WE GOT TWO DATA POINTS. IS THAT ENOUGH? CAYLA: WHEN I LOOK AT PRICING FOR OCTOBER IT'S A LITTLE LOW IT PROBABLY SHOULD BE HIGHER. I THINK WE HAVE ABOUT FOUR TO FIVE BASIS POINTS PRICED BUT THE LIKELIHOOD IS A LITTLE BIT HIGHER THAN THAT AND WITH THAT SAID WHETHER WE GET A HIKE IN OCTOBER OR DECEMBER I THINK DEPENDS ON THE CPI DATA COMING OUT NEXT WEEK. WITHIN THAT DATA DO WE SEE STRONG FEEDTHROUGH OF EITHER SECOND-ROUND EFFECTS OR DO WE SEE STRONG FEEDTHROUGH OF COMMODITY PRICES INTO CORE. WHEN WE LOOK AT OUR DAILY MEASURES OF ONLINE INFLATION WHAT WE SAW IN SEPTEMBER WAS PRICES REALLY ACCELERATED. ABOUT NEARLY DOUBLE WHAT WE TYPICALLY SEE IN SEPTEMBER AND SO, TO ME WHAT THAT SIGNALS IS CPI WILL PROBABLY BE VERY HIGH. WHEN I LOOK AT SECTORS. SECTOR COMPONENTS OUTSIDE OF COMMODITIES WERE CLOSER TO NORMAL. SO ONE PERSPECTIVE OF THIS IS IT DOES GIVE THE FED TIME TO BE PATIENT IF THEY WANT TO SAY WE KNOW HEADLINE IS REALLY FIRM, WE ARE NOT SEEING STRONG SIGNS OF SECOND-ROUND EFFECTS. WITH THAT IN MIND WE WILL PAUSE IN OCTOBER AND GO IN DECEMBER IS PROBABLY HOW THE MARKET WOULD INTERPRET THAT. VONNIE: THANK YOU SO MUCH FOR JOINING US THIS MORNING. NOW TO THE TOP STORIES ON THE TERMINAL, SAUDI ARABIA SAID TO BE IN TALKS WITH CUSTOMERS TO OFFER OIL LOADINGS OUTSIDE THE STRAIT OF HORMUZ NEXT YEAR ACCORDING TO SOURCES DISCUSSIONS ARE ONGOING AND MUST CONCLUDE BY YEAR END. IF APPROVED IT WOULD MARK A SIGNIFICANT CHANGE IN THE WAY SAUDI ARABIA SENDS ITS OIL TO CUSTOMERS. NATWEST SET TO BE PULLING BACK FROM THE U.S. EUROPEAN BOND MARKETS AS PART OF THE PLAN TO STOP PRIMARY DEALING IN THOSE MARKETS. CALLING AS MANY AS 10 JOBS AND WILL REMAIN A PRIMARY DEALER IN THE U.K. BOND MARKET. CHINA IS SAID TO OF GOTTEN HOLD OF SENSITIVE PARTS FROM AN F. A UPS EMPLOYEE MISSED A MESSAGE WARNING NOT TO RUN THE SHIPMENT THROUGH HONG KONG. THE INCIDENT HAS PROMPTED INVESTIGATIONS. COMING UP, THE WHITE HOUSE COULD ORDER MORE STRIKES ON IRAN BEFORE THE MIDTERMS. MORE FROM WASHINGTON. THIS IS BLOOMBERG. ♪ VONNIE: THIS IS BLOOMBERG BRIEF, COMING UP ON SURVEILLANCE, RICK RIEDER AT BLACK ROCK. THAT INTERVIEW AT 8:00 A.M. NEW YORK TIME, 11 :00 LONDON TIME. THIS IS BLOOMBERG. THIS IS BLOOMBERG BRIEF, I AM VONNIE QUINN IN NEW YORK. OIL CLIMBING AFTER THE ATLANTIC REPORTED THE WHITE HOUSE ASKED THE PENTAGON TO DRAFT RESPONSES TO IRAN THAT COULD HAPPEN BEFORE THE MIDTERMS. I SUPPOSE IN ONE SENSE THIS WOULD BE PERFECTLY ACCEPTABLE IN TERMS OF A REQUEST GIVEN THINGS ARE ESCALATING IN THE MIDDLE EAST IT DOES NOT MEAN WE ARE GOING TO STRIKE IRAN AGAIN BUT I SUPPOSE ON THE OTHER HAND IT IS A SIGNAL THAT COULD BE ON THE PRESIDENTS MIND. >> ABSOLUTELY AND THIS COMES AT A TIME WHEN THE PRESIDENT IS CLEARLY STRUGGLING TO END OF THE IRAN WAR ONE MONTH AHEAD OF THE MIDTERMS. THE PRESIDENT HAS TAKEN DRASTIC ACTIONS TO TRY AND REDUCE GAS PRICES THAT ARE RISING AS A RESULT. SO WE WILL SEE WHAT HAPPENS HERE BUT IT IS CLEAR THE ADMINISTRATION RIGHT NOW DOES NOT HAVE A CLEAR-CUT PLAN TO TRY AND FINALIZE A MORE FORMAL END TO THE OPERATIONS THERE. THE PRESIDENT HAS TEASED DOING THAT AFTER THE ELECTION BUT THINGS REMAINED VERY MUCH IN FLUX. VONNIE: THE ELECTION LESS THAN FOUR WEEKS AWAY. WHAT IS HAPPENING WITH THESE TAXPAYER-FUNDED TV ADS. A LAWSUIT FILED BY THE DEMOCRATIC PARTY. CAYLA: -- MICA: THE DEMOCRATIC PARTY OFFICIALLY HAS SUED TO THE PRESIDENT AFTER RAISING CONCERNS ABOUT PRESIDENT TRUMP PROPOSING TAXPAYER MONEY TO PAY FOR WHAT HE CALLS OUR PUBLIC SERVICE ANNOUNCEMENT BUT WHAT CRITICS CALL ESSENTIALLY CAMPAIGN STYLE ADS THAT ARE AIRING NATIONALLY PROMOTING POSITIVE ASPECTS OF THE ADMINISTRATION AS WELL AS 2024 CAMPAIGN MESSAGING THAT TALKS ABOUT WHY PEOPLE VOTED FOR THE PRESIDENT, IN PROMISING TO END COMMUNIST SOCIALIST IDEOLOGY IN THE UNITED STATES AS WELL AS SOME OF THE PRESIDENTS BORDER POLICIES. IT'S A VARIETY OF THINGS HAPPENING HERE BUT THE LAWSUIT WILL MAKE THINGS INTERESTING. WE SAW IN RECENT DAYS PRESIDENT TRUMP SAID HE WILL SHIFT USING PUBLIC FUNDS TO NOW USE MONEY COMING OUT OF HIS POLITICAL OPERATION. THAT IS ALSO GOING TO BE FASCINATING TO SEE WHAT HAPPENS WITH THEM. VONNIE: WE ARE WATCHING CERTAIN RACES AROUND THE COUNTRY. ONE OF THOSE IS THE TEXAS SENATE RACE HEATING UP WITH TRUMP GETTING INVOLVED NOW. TELL US MORE. CAYLA: -- MICA: THE PRESIDENT MADE WHAT WAS A'S THIRD STOP IN TEXAS YESTERDAY TO PROMOTE AND SUPPORT THE SENATE NOMINEE KEN PAXTON WHO HAS BEEN STRUGGLING IN HIS RACE AGAINST JAMES TALARICO. THIS IS INTERESTING BECAUSE THIS IS A VERY CLOSE RACE IN TEXAS WHICH WE HAVE NOT SEEN IN A LONG TIME. OBVIOUSLY THERE WAS A VERY CONTENTIOUS PRIMARY THE PRESIDENT WEIGHED IN ON. WE CAN DEFINITELY EXPECT TO SEE MORE VISITS TO BOOST PAXTON WHO IS IN A REALLY TIGHT RACE NOW. THIS WILL BE ONE OF THE MOST CLOSELY WATCHED RACES. I'VE TALKED TO DEMOCRATS AND REPUBLICANS WHO GAVE ME DIFFERENT ANSWERS IN TERMS OF WHAT WILL HAPPEN BUT THERE IS A LOT OF ANXIETY HERE ON THE REPUBLICAN SIDE WHEN IT COMES TO IF PAXTON CAN PULL THIS OUT. VONNIE: THANK YOU SO MUCH. SHARES OF SAMSUNG DOWN DESPITE A NINE FOLD INCREASE IN OPERATING PROFITS. RESULTS FAILING SEEMINGLY TO IMPRESS OVER HOW LONG AI SPENDING CAN HOLD UP. A SNEAK PREVIEW JOINING US NOW IS NEIL CAMPLING. THESE ARE PRELIMINARY RESULTS. WE HAD A GREAT RUN BUT WHY SELL NOW? NEIL: THIS COMES BACK TO THE PUSH PULL ARGUMENT IN MEMORY STOCKS PRIMARILY AS TO WHETHER IT'S DIFFERENT THIS TIME IN THE AI CAN FUEL THE MEMORY TRADE FOR MANY YEARS TO COME OR WHETHER IT'S GOING TO BE CYCLICAL. WERE WAITING FOR THE FULL RESULTS TO GET A SENSE WITH CAP X. THE TIGHTNESS IN THE SUPPLY MEANS THAT THE PRICING FOR CONTRACTED MEMORY HAS BEEN VERY HIGH IN THOSE RESULTS. BUT ALSO YOU LOOK AT THE RESULTS VERSUS EXPECTATIONS. THE STRENGTH IS PRETTY MUCH THERE SO RECORD NUMBER WAS FORECAST ON THIS. THE QUESTION IS WHAT COMES NEXT AND WHETHER YOU CAN SUSTAIN THAT FOR QUITE A LONG TIME TO THE FUTURE. THAT WILL BE THE KEY FOR SAMSUNG AND THE MEMORY COMPANIES WHICH ARE CHEAP IN TERMS OF VALUATIONS. BUT THE OLD ADAGE IS YOU BY THESE STOCKS EXPENSIVE AHEAD OF THE EARNINGS CYCLE. DIRECT MEASURES LIKE PRICE BOOK. THE STOCK TRIMMING PRETTY EXPENSIVE RELATIVE TO LONG-TERM HISTORY. VONNIE: WE ARE TALKING ABOUT TWO AND HALF PERCENT AFTER HOURS BUT WE ARE TALKING ABOUT THIS OFF THE JUNE PEAK. TSMC ALSO HAD A BLOWOUT QUARTER ACCORDING TO PULMONARY RESULTS. I WANT ABOUT BROADCOM. EVEN MORE MONEY THIS TIME FOR OPENAI CHIPS. NEIL: IS IT JUST HOLDING THESE FOR THE FUTURE OF CAPEX BUILD. WE SEE FOR THESE DATA CENTERS. A HUGE APPETITE FOR THE PRODUCTS . BUT THE QUESTION IS ARE WE FRONT RUNNING WHERE DEMAND IS HYPING TO BE OR WHERE WE'VE GOT FIRM COMMITMENTS. THAT'S GOOD TO BE A QUESTION WE WILL HAVE TO WAIT TO SEE BECAUSE A LOT OF THESE AI DATA CENTERS BEING BUILT OUT HAVEN'T ACTUALLY YET BROKEN GROUND. SO EVEN WITH SAN FRANCISCO HAVING A TEMPORARY MORATORIUM ON DATA CENTER BUILD. THAT'S A HOME OF ANTHROPIC AND AI. GETTING THEM IN PLACE TODAY FOR THE CHIPS. SO THEY ARE REALLY TESTING THE MARKET APPETITE. KEEPING AN EYE ON THE SPREADS FROM THESE TECH COMPANIES TO SEE HOW THE CREDIT MARKETS ARE LOOKING FOR THESE TO SEE WHERE THEY THINK THESE ARE RAISING RISKS FOR A GROWTH DRIVEN INVESTMENTS. VONNIE: THANK YOU SO MUCH NEIL CAMPLING. PEPSICO GOING TO BE OUT WITH RESULTS IN JUST A FEW MINUTES THE STOCK HAS RECEIVED TWO DOWNGRADES IN THE LAST MONTH AS CONCERNS OVER ITS NORTH AMERICAN FOOD AND BEVERAGE MAKING ITS WAY ON SENTIMENT. JOINING US IS ERICA. DOWN ABOUT 13% YEAR-TO-DATE AND QUICK COMPARISON WITH COCA-COLA SHOWS COKE IS UP 23% YEAR-TO-DATE. WHAT IS PEPSI DOING WRONG? ERIC: THIS IS A STOCK THAT'S BEEN UNDER PRESSURE, THEY HAVE GOT A BUNCH OF HEADWINDS ON A VARIETY OF FUNDS. YOU HAVE CONSUMERS TRYING TO COME BACK ON SALTY SNACKS AND SOFT DRINKS WHICH FACES THE SECTOR. SOME OTHERS HAVE BEEN BETTER AT BRINGING IN HEALTH CARE ALTERNATIVE -- HEALTHIER ALTERNATIVES. FLIPPING FLOP -- FLIP-FLOPPING A LITTLE BIT. UNDER PRESSURE TO A CERTAIN EXTENT THE INVESTOR THAT CAME IN LAST YEAR AND THEY FIRST MOVED TO CUT PRICES A LITTLE BIT EARLY THIS YEAR TRYING TO REGAIN MARKET SHARE. THE PROBLEM IS THAT CAME IN TO A TIME WHEN COSTS WERE RISING WITH THE INCREASE IN FUEL COSTS DUE TO THE WAR IN IRAN AND OTHER FACTORS. SO THAT DID NOT REALLY WORK AND NOW MORE RECENTLY THEY HAVE SHIFTED TO TRY AND RAISE PRICES. I THINK INVESTORS ARE CONFUSED ABOUT WHERE THEY ARE GOING. VONNIE: WHAT WILL WE HEAR IN TERMS OF THEIR SNACKS DIVISION. THEY HAD BEEN ON THE FRONT FOOT IN TERMS OF HEALTHIER OPTIONS. IT DOES NOT SEEM LIKE THAT IS THE SPACE. ERIC: I DON'T THINK IT IS DONE ENOUGH ESPECIALLY THE U.S. MARKET BEING THE FOCUS. INTERNATIONALLY THINGS ARE GOING WELL. SALES ARE UP STRONGLY OUTSIDE THE U.S. BUT THE U.S. IS THE CENTER SO FAR FOR THE GLP-1 WEIGHT LOSS DRUGS AND THAT IS REALLY KICKING IN THERE. MORE SENSITIVE MARKET TO INCREASING GASOLINE PRICES WHEN PEOPLE ARE TRAVELING LESS THEY'RE FILLING YOUR CARS LESS OFTEN THEY ARE STOPPING LESS OF THE CONVENIENCE STORES AND PICKING UP FEWER BAGS OF CHIPS AND SODAS AND YOU KNOW PEPSI THAT YOU HAVE A BIG FOOD DIVISION A CHIPS DIVISION ESSENTIALLY. THAT'S THE PART THAT'S REALLY UNDER PRESSURE. VONNIE: THAT IS BLOOMBERG'S ERIC PFANNER. COMING UP WE GET YOU SET UP FOR YOUR TRADING DAY, THIS IS BLOOMBERG. ♪ VONNIE: NOW I LOOK AT WHAT IS AHEAD TODAY. WEEKLY JOBLESS CLAIMS 8:30 NEW YORK TIME. PEPSICO REPORTING EARNINGS BEFORE THE BELL. AND THEN WE GET FED SPEAK FROM NEEL KASHKARI AT 10:30 AND ALBERT SPEAKING AT THE BLOOMBERG'S FIXED INCOME EVENT AT 1:30 P.M. EASTERN. APPLIED TO DIGITAL UP ALMOST 4% AND A DOUBLE BEAT ON ITS FIRST QUARTER RESULTS. OBVIOUSLY THE SHARES RISING. WE WILL SPEED UP 15.5%. THE U.S. AGREED TO A LOAN FOR THE CHIPMAKER THAT WENT BANKRUPT LAST YEAR. INCREDIBLE TRADE BUT IT'S BEEN ALL OVER THE PLACE AND UP CERTAINLY QUITE SUBSTANTIALLY. LEVI'S DOWN, GROWTH SLOWED. THE BAGGY JEANS SCENARIO IS OVER AND IT MAY BE SEEING MORE LOW RISE JEANS. THAT IS YOUR PSA FOR THE DAY. HERE IT IS WHEN IT COMES TO THE MACRO ENVIRONMENT. LOOKS LIKE WE MIGHT BE HAVING A LOWER DAY ON THE NASDAQ BASICALLY IT RECORDS. THE 30 YEAR YIELD BEARS WATCHING UP FIVE BASIS POINTS WE HAD A 30 YEAR AUCTION AROUND LUNCHTIME AND THEN BRENT CRUDE THIS IS PARTIALLY THE CULPRIT AT $105 A BARREL RIGHT NOW. THAT IS IT FOR BLOOMBERG BRIEF, SURVEILLANCE IS NEXT, THIS IS BLOOMBERG. ♪