Bond Traders Eclipsed by Equities in Wall Street Reversal

FROM THE MAGAZINE THAT HELPS GLOBAL LEADERS STAY AHEAD WITH TODAY'S ECONOMY. TECH NEWS AS IT HAPPENS. LIVE ON BLOOMBERG RADIO, TELEVISION, AND ORIGINALS. >> WELCOME. IT IS TUESDAY, OCTOBER 13. WHAT IS GOING ON? THEY RECORD. A QUICK CLOSE AT A RECORD. ABOUT A YEAR OR SO. BANK EARNINGS? AROUND. PULLBACKS. I AM NOT QUITE SURE IF THERE IS TAKEAWAY. TIM: WE WILL POSE THAT QUESTION. BANKS THAT HAVE REPORTED. BEVERLY HILLS. DANI BURGER IS CHECKING IN WITH A PARTNER AT KKR. IF HE SAY THINGS ARE OPENING UP. TIM: WE ARE TALKING THE INTERNET OF THINGS. SOME NEWS THAT THEY ARE LAUNCHING NEW AGENTIC CAPABILITY. CAROL: THAT IS PRETTY COOL. I AM JUST GOING THERE. GLOBAL CONCERNS CITED BY BLACKSTONE. BLOOMBERG NEW ECONOMY FORUM. CONCERN IS. BUSINESS STORIES. >> HELLO. ALL IN THE RED. CHIP STOCKS SELLING OFF. THE S&P IS DOWN. A DROP OF 1/10 OF 1%. THE DOW JONES INDUSTRIAL AVERAGE DOWN TO 50. THE NASDAQ COMPOSITE DOWN 73. THE TWO-YEAR IS 4.80. THE 10 YEAR IS 5.22. SPOT GOLD OF $23. A DROP OF 5/10 OF 1%. WTI IS UP. A BARREL OF BRENT IS DOWN BY 6/10 OF A PRESENT. BITCOIN JUST ABOUT $83,000. LITTLE CHANGE. WE ARE KEEPING AN EYE ON BANK EARNINGS. CITIGROUP DOWN BY 4.3%. GOLDMAN SACHS HIRED. QUARTER. WE WILL HAVE MORE ON THE BANKS COMING UP FOR YOU. RED. 1.2%. FLASH. CAROL: THANK YOU SO MUCH. EARNINGS SEASON. A LITTLE CHANGE IN SHARES. GOLDMAN RALLIED. WELLS FARGO DOWN ABOUT 1.7%. I DROPPING BACK AS WELL. TI TIM: TO HELP US MAKE SENSE OF HERE ARE SOME OF THE HEADLINES. BIG HAUL AS CREDIT RATES MISS. WELLS FARGO BEATS ESTIMATES. THAT IS JUST A HANDFUL OF WHAT HOW WOULD YOU CHARACTERIZE THIS GROUP AS A WHOLE? >> EQUITY TRADING WAS THE HIGHLIGHT FOR THE GROUP. GOLDMAN SACHS LED. THIRD QUARTER. UP. JP MORGAN ALSO STRONG IN THE EQUITY FRONT. IT SEEMS LIKE EVERYONE IN THE SO THERE IS LESS TRADING SIDE. QUESTIONS ON THE ECONOMY. STRONG. BUT THERE ARE QUESTIONS ON IF WE DROPPED. WHAT DOES IT MEAN FOR UNEMPLOYMENT AND LOW LIKE? CAROL: PEOPLE SAY THERE IS OPPORTUNITIES IN FIXED-INCOME. TIME. IS THAT A CASE OF DURING THE QUARTER THOSE OPPORTUNITIES WERE NOT AS CLEAR? INTO IT? MONTHS. ACTIVITIES. UPTURN IN BUSINESS RATES. SIDELINES. BECAUSE OF IT. AMERICA TOMORROW. JP MORGAN SHOULD BE A GOOD VIEW OF THE CONSUMER GIVEN THE CREDIT CARD AND THANKING OPPORTUNITY COUNTRY. ANY COMMENTARY ABOUT THE HEALTH OF THE CONSUMER? REALLY FORMED. WE WERE HOPING TO HEAR SOMETHING ANECDOTAL ABOUT THE SHIFTS AND CHANGES IN STANCES. CONSUMER. WELLS FARGO TALKED ABOUT ON CONSUMER LENDING. CAROL: WHO ARE THE CUSTOMERS? >> YOU ARE TALKING ABOUT THE GROWTH REALLY HAPPENING IN THE FARGO. BOOK AS WELL. PRIME. YOU WILL NOT SEE THE BOTTOM PART WHILE. TIM: WHERE WILL YOU SEE IT? THINGS. BANKS HAVE STEERED AWAY FROM CONSUMER SIDE. PERSONAL LENDING THAT IS BEING DONE BY FOLKS LIKE SOPHIA. ON CREDIT. WHAT IS HE TALKING ABOUT SPECIFICALLY? >> IT SOUNDS LIKE THAT IS REALLY MORE RELATED TO AI. OVER THE PAST FEW DAYS. WHERE BANKS HAVE BEEN A BIT MORE AI CREDIT. THERE ARE QUESTIONS ON THE UNDERLYING RISK AND THE LAYERING THESE DEALS. THEY WANT TO MAKE SURE THEY ARE SECURITIES PROPERLY. SO THEY'RE NOT SURPRISED IF WE HAVE A BUBBLE AND THINGS TURN SOUR. CAROL: ONE OF THE THINGS BANKS CARE ABOUT IS THE INTERNET. WHICH BLOWS MY MIND. WE HAVE A STORY CROSSING THE TERMINAL THAT THE FED BANK PRESIDENT OF NEW YORK SEES ONE APPROPRIATE THIS YEAR. HOW DOES THAT FUEL SOME OF THE GOOD STUFF OF THE BANKS? >> IT IS PART OF THE GOOD STUFF. THE BALANCE SHEETS ARE TILTED TOWARD HIGHER INTEREST RATES. AS THE FED CONTINUES TO RAISE RATES. THAT REALLY SETS UP FOR GOOD GROWTH FOR NEXT YEAR. WE ARE ALSO SEEING REALLY STRONG DEPOSITS STILL GROWING. ALL THAT BODES WELL FOR CONTINUED NET INTEREST INCOME. FOR THE LIKES OF THOSE BANKS. TIM: NO CONCERNS? >> NO CONCERNS SO FAR. EVERYTHING IS GOOD. THERE ARE SOME EXPECTATIONS ON TRADING SIDE. CAROL: USUALLY THESE GUYS LIKE THAT IS HOW THEY MAKE MONEY. GOOD STAFF. [LAUGHTER] CAROL: WE WILL MAKE THAT HAPPEN. THE WORLD OF HIGH FINANCE. WE HAD TO BEVERLY HILLS. AN INDUSTRY GATHERING. BURGER. >> THANK YOU SO MUCH. I'M SO PLEASED TO BE JOINING ME GREAT TO SEE YOU. WHAT A RIDE IT HAS BEEN FOR KKR THIS YEAR. EARNINGS. HISTORY. YEAR. RECORD THIS YEAR? RECORD. WE HAVE ACHIEVED THAT. WHAT IS REALLY IMPORTANT IN TERMS OF ACHIEVING THAT IS IT HAS BEEN VERY LINEAR. HOW WE INVEST. WE ARE ALSO LINEAR AND HOW WE EXIT OUR BUSINESSES. WHEN WE HIT 80% OF THE VALUE WE CREATE, WE SELL A COMPANY. FOREVER. BUYING A COMPANY THAT ONLY HAS ONE WAY OUT, YOU HAVE TO TAKE IT PUBLIC OR THERE IS ONLY ONE BUYER, THAT DOES NOT WORK. IF YOU BUY BUSINESSES THAT HAVE A LOT OF OPPORTUNITIES FOR EXITS TO US. 70% OF OUR EXITS HAVE BEEN SOMEONE WHO BASICALLY SAID SOMETHING ALONG THE LINES OF PE SITTING ON ASSETS. THE INDUSTRY HAS MADE? >> I DO. I THINK IT HAS TO DO WITH THE WITH. WHEN YOU THINK ABOUT THE INDUSTRIES AND GEOGRAPHIES AND TYPES OF COMPANIES YOU ARE TIMES. AND YOU ARE NOT BEHOLDEN TO JUST THING. PROBLEM. WHEN WE THINK ABOUT EXITS, WE OFTEN DO NOT THINK ABOUT HOW YOU GOT INTO THOSE BUSINESSES. I THINK THERE ARE 32,000 PRIVATE EQUITY TODAY. VALUE WAS ORIGINALLY PUT IN THE GROUND, IT WAS IN 2021 AND 2022. MOSTLY IN SOFTWARE. AT THAT TIME HER RATES LOOKED REALLY DIFFERENT. VALUATION. IT'S NOT JUST LET YOU TRY TO HOLD ONTO THEM BECAUSE THE VALUE MAXIMIZING IT. YOU'RE ACTUALLY TRYING TO GROW INTO THE VALUE SO YOU DO NOT HAVE TO SELL IT AT A LOSS. HEAD AT SOME POINT? HEAD. PART OF IT IS CAPITAL STRUCTURES YOU HAVE TO REFINANCE. YOU HAVE TO GO OUT AND RAISE MONEY AGAIN IF YOU ARE A MANAGER WORK. YOU WANT TO GET YOUR OUT. OF ENDS. SITTING IN YOUR HANDS AND FOR THE INDUSTRY. >> WHAT IS THAT MOMENT LOOK LIKE? INDUSTRY? WHEN IT FINALLY BECOMES A PROBLEM, HOW DOES IT PLAY OUT? >> WE TALK ABOUT THE MACROECONOMY IS A K-SHAPED. K-SHAPED. IF YOU ARE IN THE HAPPY PART OF THE CAKE, LIFE IS GOOD. YOU DOING FINE. IF YOU ARE IN THE REST OF THE MARKET, IT IS VERY CHALLENGING. WHAT YOU'RE STARTING TO SEE IS WIDEST IT HAS EVER BEEN BEFORE. BASIS POINTS. THERE WILL BE A DAY OF RECKONING WHERE IT EITHER YOU WILL HAVE TO FIGURE OUT WHAT TO DO WITH THOSE CONSOLIDATION. ALL OF THE ABOVE IS PROBABLY PART OF THE ANSWER. >> THEY REMEMBER YOUR REMARK ALMOST A YEAR AGO SAYING THAT FUNDS THAN MCDONALD'S. OTHER STILL TOO MANY FUNDS OUT THERE? DIRECTION. THERE ARE EVEN MORE FUNDS. YET. THE PROBLEM IS YOU REALLY HAVE TO UNDERSTAND THAT ALL MANAGERS AND NOT CREATED EQUAL. THE ONES WHO DO WELL HAVE SCALE AND BREADTH, AND DEPTH. CAPITAL MARKETS. CREATION. THINK ABOUT IT THIS WAY. 20 YEARS AGO USED TO RELY ON VALUATIONS. ON MULTIPLE'S EXPANSION. OF RETURNS. THAT IS NOT THE CASE ANYMORE. GROWTH. YOU NEED MORE RESOURCES THAN EVER BEFORE. PART OF THE PROBLEM WITH THE THOSE MANAGERS ACTUALLY HAVE THE RESOURCES YOU NEED TO BE IN AN ENVIRONMENT LIKE THIS? >> I HAVE FOR THE ARGUMENT THAT THE BIG SHOPS BECAUSE IT GOTTEN SO LARGE, BECAUSE OF THE SHARED IN. OUTPERFORM. ALTA. THAT? >> I THINK THERE ARE A COUPLE THINGS TO HIT HOME. IF YOU ARE A SMALL MANAGER IT IS REALLY HARD HAVE THE RESOURCES VALUE. PART TWO IS YOU HAVE TO HAVE THE ALIGNMENT OF INTEREST. THE FACT THAT WE ARE THE LARGEST INVESTOR US TO HAVE ALIGNMENT WITH OUR AND CLIENTS WHERE THE BETA PLAY IS NOT GOING TO WORK. YOU NEED THE ALPHA. THE THIRD POINT, AND THIS IS SOMETHING WE OFTEN DON'T TALK ABOUT IN PRIVATE EQUITY, THERE ALPHA, WHEN YOU ARE DOING WITH THE BUSINESS GROWING THE EARNINGS, AND THEN THERE IS PORTFOLIO L5. THAT IS WHAT YOU WOULD TYPICALLY ASSOCIATED WITH HEDGE AND DIVERSIFICATION, OPTIMIZATION IN FLOWS. THAT'S BECOME A MORE IMPORTANT ENVIRONMENT. THE SMALLER MANAGERS DON'T GET TO MAKE SURE YOU ARE HITTING ON ALL THREE. DANI: ONE OF THE THINGS THAT I KNOW HE IS PASSIONATE ABOUT, MAKING SURE WORKERS WITHIN PORTFOLIO COMPANIES AT KKR ARE TREATED WELL. THAT YOU'RE ARE INSTITUTING A BAN ON NONCOMPETES FOR EMPLOYEES DOLLARS. WHAT IS THE THINKING ON THAT? ALISA: IT'S ABOUT VALUE CREATION AND ALIGNMENT. THE WORKERS ARE WHAT DRIVES THE WE OWN. JUST LIKE AT KKR, IT IS THE PEOPLE WHO MAKE THE BUSINESS, IT IS THE WHO, NOT THE WHAT. IN THE COMPANIES THEMSELVES, YOU HONESTLY, VALUE CREATION, GROWTH, TO GET THE COMPANY TO HAVE THE RETURNS LONG-TERM. IF WE DO ALL WELL BY BEING OUTCOME. YOU SAW THAT IN A BUSINESSLIKE COOL I.T. THAT WE JUST SOLD. THE AVERAGE WORKER WAS HIGHLY TIMES WHAT THEIR ANNUAL SALARY WAS, AND IT IS BECAUSE OF THEIR LEADERSHIP AND OWNERSHIP AND MAKING SURE THE BUSINESS WAS THAT WE WERE ABLE TO HAVE THE OUTCOME THAT WE DID. DANI: THANK YOU SO MUCH FOR APPRECIATE YOUR TIME. KKR. GREAT STUFF IN BEVERLY HILLS. TRACK THE INTERVIEWS HAPPENING OUT THERE. WE ARE WATCHING SOMETHING MOVING A RESULT OF A TOP VOICE AT THE FED, THE PRESIDENT OF THE NEW YORK THAT, JOHN WILLIAMS, CURRENTLY SEEING NO NEED FOR A RATE HIKE IN 2027. AND THEN THAT IS IT? TIM: HE SAID I HAVE TO CHANGE MY TO HAVE ONE MORE RATE HIKE. I DON'T THINK THAT WE WOULD BELIEVE TO DO MORE AFTER THAT. CAROL: KIND OF A SHORT RATE INCREASE CYCLE. TIM: DOES THAT COUNT THE OTHERS? CAROL: EQUITY MARKETS LOOK LIKE THEY KICKED UP A LITTLE BIT, BUT YOU ARE RIGHT. MIKE IS GOING TO MAKE SENSE. WE WILL ALSO TALK ABOUT THE DON'T GO ANYWHERE. IT IS A BUSY TUESDAY. WE ARE ON IT. HERE ON BLOOMBERG. STOCKS LOWER ACROSS THE BOARD, LITTLE CHANGE RIGHT NOW ON THE 7803. THAT IS A DROP OF UNDER 0.1 PERCENT. THAT SELLOFF IN CHIPMAKERS IS DEEPENING ON CONCERN ABOUT SUSTAINABILITY OF THE AI TRADE. DOW DOWN 0.3 PERCENT. NASDAQ COMPOSITE DOWN 40, DROP OF 0.1%. PHILADELPHIA SEMICONDUCTOR INDEX DOWN 0.8%. 2-YEAR, 4.79%. 10-YEAR, 5.22%. 30-YEAR, FIVE POINT 56%. 0.3%. 94.34 A BARREL. ONE MORE RATE HIKE AS APPROPRIATE THIS YEAR, BUT AT IS NECESSARY FOR THE CENTRAL 2027. HIS COMMENTS CAME IN AN INTERVIEW AT THE NEW YORK FED. MICHAEL MCKEE WILL HAVE MUCH MORE COMING UP IN JUST A FEW ON "BLOOMBERG BUSINESSWEEK DAILY." JOHNSON SHARES DOWN 6.2%. .2%. J&J AND UNITEDHEALTH ARE MEMBERS S&P DOWN UNDER 0.1%. FLASH. CAROL: THANK YOU SO MUCH. IT IS SOMETHING INVESTORS HAVE CERTAINLY IN MARKETS, YIELDS BACK OFF A LITTLE BIT. NEW YORK PRESIDENT JOHN WILLIAMS MORE INTEREST RATE HIKE APPROPRIATE THIS YEAR, BUT AT IS NECESSARY FOR THE CENTRAL BANK TO INCREASE RATES IN 2027. CORRESPONDENT MICHAEL MCKEE IN THE STUDIO. NEXT YEAR. WHY DO YOU THINK THAT THE FED BANK PRESIDENT JOHN WILLIAMS IS TWO AND DONE IN THIS CYCLE? MORNING, SOME MEMBERS OF THE BLOOMBERG NEWS TEAM, AND BASICALLY SUGGESTED THAT WHILE INCREASE THAT WE GOT IN MANAGEMENT MOVE. SOME PEOPLE SAID IT WAS BECAUSE THE ECONOMY WAS GETTING STRONGER INFLATION COMING FROM THAT. OTHERS, ACCORDING TO MINUTES OF THE MEETINGS, RISK MANAGEMENT. HE IS IN THE RISK MANAGEMENT CAP, SEES NO SIGNS OF AN OVERHEATED ECONOMY, THE LABOR MARKET IS IN BALANCE, THE TARIFF INFLATION EFFECT WILL FADE, AND EVEN IF ENERGY PRICES STAY INFLATION HIGHER NEXT YEAR. THAT GIVES HIM SOME CONFIDENCE. GROWING, YOU MAY NEED SOME WILLING TO DO ONE MORE. TIM: I WANT TO HONE IN ON THE ENERGY QUESTION. MAYBE YOU CAN TALK ABOUT OTHER ECONOMISTS, BUT WHY IS HE SO CONFIDENT THAT EVEN IF ENERGY PRICES REMAIN HIGH NEXT YEAR, CAUSE INFLATION TO INCREASE? MIKE: JUST A MATTER OF LOOKING AT WHERE YOUR BASE IS. THE BASE PRICE RIGHT NOW IS AROUND THE AREA IT HAS BEEN. WE GOT TO MAY BE $105 ON BRENT THAT COME IT GOES DOWN A LITTLE BIT, SOMETHING IN THE 90'S FOR WEST TEXAS. THE MARKETS HAVE GOTTEN ENOUGH THAN THAT. OBVIOUSLY, SOMETHING COULD HAPPEN WITH THE WAR. WE HAVE SEEN THEM GO HIGHER. FOR RIGHT NOW, THE BASE CASE IS THAT WE WILL NOT SEE PERCENTAGE CHANGES IN OIL PRICES BECAUSE WE HAVE ALREADY SEEN THEM, AND THEY ARE BAKED IN AT THIS POINT. CAROL: ARE OTHER FOLKS STARTING TO LEAN TOWARD THAT THINKING KNOW YET? MIKE: WE DON'T KNOW YET, BUT WE HAVE HEARD FROM A LOT OF FED OFFICIALS, 12 OF THEM SPEAKING OVER THE LAST EIGHT DAYS. BASICALLY THE CONSENSUS IS ONE CALL ME AGAIN TOMORROW. THEN WE HAVE TO SEE. SOME THINK WE NEED TO DO MORE. LORIE LOGAN THINK WE NEED TO DO MORE THAN JUST ONE. OTHERS ARE SAYING, WE WILL DO ONE, AND THEN WE WILL SEE. CAROL: WHAT IS A BIGGER RISK, OVERDOING IT IN TERMS OF RAISING RATES, OR UNDER DOING IT? OR ARE THE ODDS EVEN ON THAT? MIKE: THEY WOULD TELL YOU THE RISKS ARE EVEN. IT WOULD BE WORSE TO OVERDO IT GROWING ECONOMY, EXPANSION THAT IS ACCELERATING. IF YOU STAY UNDER, YOU CAN ALWAYS RAISE RATES AND HAVE AN RATES. THE QUESTION REALLY IS NOT HOW MUCH YOU HAVE TO DO AT THIS POINT, IT IS HOW LONG MARKET RATES WILL STAY WHERE THEY ARE, AND WHETHER THE FED NEEDS TO RATIFY THAT BY RAISING RATES. WHOLE LOT MORE. WITH THE MARKETS. TIM: ONE WITH THE LAST TIME INFLATION WAS AT 2%? CAROL: DETAILS, DETAILS. MIKE: MAYBE 2007. IT HAS ONLY BEEN AT THE 2% SET THE TARGET. INFLATION? MIKE: WE WERE UNDER 2% FOR A VERY LONG TIME. IT IS NOT THAT INFLATION, THEY VERY HARD. TIM: THE REASON I ASK, WE HAVE POINT. 46 YEARS. WITHOUT MORE RATE HIKES, MAYBE CONFIDENT THAT WE CAN GET TO THE 2% TARGET? MIKE: IT ALL DEPENDS ON WHAT YOU THINK THE NEUTRAL RATE IS, THE RATE WHEN YOU ARE NOT PUTTING MORE PRESSURE ON THE ECONOMY. STILL SEE INFLATION. THERE IS ADDITIONAL RESTRAINT ON THE ECONOMY, THEN YOU'LL SEE INFLATION GOING DOWN. WEIRDLY ENOUGH, THE CLEVELAND FED PUTS OUT A PREVIEW, THEY DO DOES THE CPI NOW. TOMORROW, THEY THINK WITH THE MARKETS ARE SAYING ABOUT CPI, 3.6% HEADLINE RATE, 3.4% CORE RATE, IS WHAT THEIR NUMBER SAYS. IN OCTOBER, THEY'RE EARLY NEVER SAY IT IS GOING BACK UP AGAIN. ABOUT HOW MUCH RESTRAINT THERE IS IN THE ECONOMY. MORE. HOW MUCH MORE? POINT, WITH THE? MIKE: IT IS NOT LIKE INFLATION IS EXPLODING. WAGES. AND THERE IS COMPETITION FOR WAGES, THEN YOU SHOULD SEE WAGES PRESSURES ON OTHER SIDE. CAROL: THIS HAPPEN AT THE BLOOMBERG NEWS ECONOMY FORUM IN LEADERS, PUBLIC AND PRIVATE SECTORS WITH THE GOAL OF CHALLENGES. BLACKSTONE PRESIDENT JON GRAY AND FED PRESIDENT CHRIS WALLER HAD SOME THINGS TO SAY. TIM: THEY SAY THE FISCAL SIGNS IN FRANCE ARE WORKING FOR A GOVERNMENT SPENDING HEAVILY, BUT THOSE WORRIES ARE MUCH LESS IN GROWTH. JON GRAY KICKS IT OFF FOLLOWED BY GOVERNOR WALLER. >> THE LACK OF FISCAL SUSTAINABILITY IN WESTERN GOVERNMENTS, INTERESTINGLY, EMERGING MARKET COUNTRIES COME IN MANY CASES, HAVE BEEN MUCH MORE RESPONSIBLE. WE ARE NOW FACING A BIT OF A RECKONING. WE ARE SEEING WHAT IS HAPPENING IN THE BOND MARKET, WHICH ALSO THE WARS HAVE CONTRIBUTED THERE IS A PERCEPTION OF THESE RUNNING DEFICITS THAT ARE WAY ABOVE THEIR GROWTH RATES. SHOCKS COME ALONG. FINANCIAL CRISIS AND COVID. GOVERNMENTS WITH DEFICITS THAT ARE GREATER THAN 100% OF GDP AND BID THAT CURVE. AFFORDABILITY CHALLENGES ESPECIALLY AROUND HOUSING AND A NEED TO MAKE TOUGH CHOICES SERVICES. EXISTENTIAL RISK. THIS IS ONE THAT HAS BEEN SLOW TOUGH CHOICES. >> EVERYBODY IS PAYING ATTENTION TO HIGH YIELDS. WHEN YOU LOOK AT IT, IT'S NOT THAT THEY HAVE GONE BECAUSE THERE IS EXPECTED HIGHER THAT DOES NOT SHOW UP. ALL OF THE BUILD UP IS NOT PREMIUM. FROM. IT IS A FACTOR OF REAL GROWTH. IF YOU HAVE REAL GROWTH AND OFF. YOU ARE WILLING TO PAY MORE IN ASK FOR IT. REAL YIELDS. AROUND THE WORLD. RIGHT NOW. YIELDS IN SOME COUNTRIES THAT THE U.S.. SERIOUS CONCERN. CHRIS WALLER. FORUM IN NEW DELHI. GOVERNMENTS WITH LOTS OF DEBT. THE U.S. HIGHER YIELDS PLAYS INTO THIS. A GOVERNMENT AT SOME POINT HAS TO MAKE SOME CHOICES AND THEY WILL CUT BACK ON SPENDING. THAT IMPACTS GROWTH IN THE LIFE FOR PEOPLE. COUNTRIES. WE ARE ALL IN DEBT. IT IS VERY HARD IF NOT BACK ON SPENDING. PART OF THE PROBLEM IN THE U.S. IS WE CUT TAXES TREMENDOUSLY. CAROL: NOT IN MY HOME CITY. >> PEOPLE DO NOT WANT THAT SOCIAL SPENDING CUT BACK. SO IT IS A POLITICAL DILEMMA. GROWING FASTER. DEBT. WE PRINT OUR OWN CURRENCY AND PART OF THE EURO ZONE. IF THEY REALLY GET INTO TROUBLE THAT BRINGS BACK MEMORIES OF THE SUPPORT FROM THE REST OF THE EURO ZONE. AN EYE ON. CAROL: DO YOU HAVE TO GET READY [LAUGHTER] I AM JUST SAYING. SOME TIME IN FRANCE? IT OUT. TIM: ALWAYS GOOD TO SEE YOU. OF THAT COVERAGE. LET'S GET BACK TO THE MARKETS. WE MENTIONED THOSE COMMENTS. THEY DID IMPACTS THE TRADE. CHANGED ON THE S&P 500. MOST OF THE COMPANIES ARE HIGHER. JOHN WILLIAMS SAYS HE SEES ONE BUT HE DOES NOT BELIEVE IT WILL BE NECESSARY AGAIN IN 2027. RIGHT NOW THE S&P FLUCTUATING. LITTLE CHANGE. DOW INDUSTRIALS DOWN 129. THE NASDAQ COMPOSITE INDEX IS DOWN 42. A DROP OF 2/10 OF 1%. THE PHILADELPHIA SEMICONDUCTOR STOCK EXCHANGE INDEX IS FALLING BY 7/10 OF 1%. THE 10 YEAR AT 5.21%. THE 30 YEAR AT FIVE POINT 56%. 3/10 OF 1%. DOWN. PRINT -- BRENT DOWN. SIX FLAGS ENTERTAINMENT WILL CLOSE 10 RIDES AT ITS THEME PARKS AMID A STRING OF INCIDENTS AT ITS FACILITIES. YESTERDAY. PROMPTING THE COMPANY TO ATTRACTIONS ACROSS PARKS. SHARES DOWN BY 40.6%. MAYOR MAMDANI IN THE CITY COUNCIL HAVE STRUCK A DEAL TO BAN HORSE CARRIAGES CITING THAT IS ACCORDING TO POLITICO. CARRIAGE HORSES WILL BE THE FLASH. CAROL: PAY IS MOVING BEYOND CHATBOTS AND INTO HELPING TRUCKING FLEETS IMPROVE SAFETY UTILIZATION. RECENT PODCAST. IT IS JUST PART OF THE PICTURE. TIM: WE TALKED ABOUT HOW AI IS TRANSFORMING PHYSICAL OPERATIONS. OPERATIONS. CAROL: LET'S GET TO IT. COFOUNDER. PERCENT YEAR TO DATE. HE JOINS US FROM SONOMA. GREAT TO HAVE YOU HERE. DIVERSE RANGE OF CUSTOMERS. ALASKA AIRLINES, THE CITY OF OF TRANSPORTATION. REMIND EVERYONE WHAT THE COMPANY BE VERY SPECIFIC. DIFFERENT PODCASTS. IT IS VERY FASCINATING. THE SHOW. WE ARE A TECHNOLOGY COMPANY. OPERATIONS INDUSTRIES. LOCAL GOVERNMENTS. THESE ARE ASSET HEAVY, LABOR-INTENSIVE INDUSTRIES THAT IS NOT THAT IT FITTED IN A WAY WE HAVE SEEN IN WHITE COLLAR WORK IN THE OFFICE. WE ARE BRINGING TECHNOLOGY TO THEM IN A VERY PRACTICAL WAY. WE HAVE HARDWARE, SOFTWARE, APPS . TO REALLY OPTIMIZE THAT OPERATION IN THE FIELD. ENTERPRISES. OPERATIONS. WORKERS. IT IS A VERY INTERESTING DATA CHALLENGE AND IT IS AN AREA MASSIVE IMPACT. THAT. 30 TRILLION DATA POINTS FROM MILLIONS OF PEOPLE AND DEVICES EVERY DAY. CAN YOU SHARE SOME EXAMPLES OF WAYS THAT YOUR CUSTOMERS HAVE BEEN ABLE TO IMPROVE OPERATION PERSPECTIVE? >> ABSOLUTELY. THESE ARE HOUSEHOLD BRANDS. WE WORK WITH COMPANIES LIKE DHL SAFETY OF THEIR FRONTLINE. THIS IS A COMPANY THAT HAS BEEN IN BUSINESS FOR DECADES. SAFE. THEY HAVE BEEN ABLE TO COACHING DRIVERS. BY PUTTING THAT COACHING IN THE CAN ACT UPON IT IT FUNDAMENTALLY REDUCES RISK AND THAT TRANSLATES TO SAVINGS. THEY WERE ABLE TO CUT THEIR RISK RELATED SPENDING IN HALF. EVEN MORE POWERFUL AND THE ACTION BASED ON IT. THAT IS WHAT IS HAPPENING WITH AI. YOU CAN SIT ON TOP OF THE DATA IN FIGURE OUT WHAT IT MEANS AND WHAT YOU SHOULD DO DIFFERENTLY. CAROL: THAT IS A LOT OF DATA. I'M ASSUMING YOU ARE TAPPING CENTERS AND THAT IS WHERE IT IS BEING COMPUTED. DATA? I WANT TO GET HOW MUCH DEMAND YOU NEED FOR THOSE? CAN YOU GET ALL THE CAPACITY YOU NEED? >> WE DO PROCESS A TREMENDOUS AMOUNT OF DATA. THAT IS AN ANNUAL NUMBER. IT IS GROWING VERY QUICKLY. OF DISTINCT PLACES. WE ARE TALKING ABOUT IN THE FIELD WHETHER IT IS IN THE TRUCK WITH A TRAILER OR THE FRONT-LINE WORKERS. THAT IS AN AREA WHERE WE CAN GET A LOT OF LEVERAGE BECAUSE WE GET THAT IN THE FIELD. A DISTRIBUTED FOOTPRINT. BEHIND THE SCENES WE PARTNER WITH THE HYPERSCALERS LIKE AMAZON WEB SERVICES AND GOOGLE AND FRONTIER LABS AND OTHER MODEL PROVIDERS TO GET SOME MORE TASKS. GROW. CAROL: CAN YOU GET ALL OF THE I WANT TO GET TO DEMAND. AS WE MORE BROADLY LOOK AT THE AI BUILDING AND DATA CENTERS THERE ARE SOME BOTTLENECKS. WHETHER THERE IS PUSHBACK BY LABOR OR POWER. ARE YOU HAVING ANY PROBLEMS BECAUSE OF ALL THE GROWTH YOU YOU NEED? >> WE HAVE BEEN FORTUNATE TO KEEP UP WITH THE DEMAND GROWTH. OUR COMPANY HAS BEEN GROWING 30% YEAR-OVER-YEAR. APPETITE FOR COMPUTATION. BECAUSE OF OUR UNIQUE ARCHITECTURE WE CAN DO A LOT OF THE PROCESSING IN THE FIELD. WE ARE NOT AS RELIED TO BUILD A MASSIVE DATA CENTERS. THE KEY HAS BEEN THE WAY THE SCALE AT OUR CUSTOMERS. TIM: HOW STICKY IS THE PRODUCT? WHEN YOU SIGN UP A CLIENT AND MAYBE THEY USE ONE OF THE SERVICES AT THE BEGINNING, HOW BE A CUSTOMER? >> MOST OF OUR COMPANIES HAVE LARGE OPERATIONS. TO SOLVE. LET'S SAY THEY ARE A CONSTRUCTION COMPANY AND THEY FIELD. YOU START TO ASK QUESTIONS EQUIPMENT. SHOULD WE RENT OR OWN? CAN WE RELOCATE PIECES OF IT? WE MAY START WITH A CERTAIN GET A HANDLE ON THAT WE WILL WORK ON EFFICIENCY. CAN PROVIDE VALUE. PARTNERSHIP. WE ARE TRULY PARTNERING WITH OUR CUSTOMERS TO RELATE UNDERSTAND THEIR OPERATIONS AND THAT TENDS TO MAKE THE RELATIONSHIP VERY STICKY AND FRUITFUL. AREAS OF VALUE. ABOUT THIS. THE IDEA THAT SOME OF THE SPECIFIC CATEGORIES OF LARGE BUSINESSES. I'M CURIOUS ABOUT YOUR VIEW. ACROSS DIFFERENT VERTICALS. WHAT ASPECTS OF YOUR BUSINESS REPLICATE? EMPLOY IT THE FIELD. IT. THERE IS THE PARTNERSHIP. COMPANY. THE WAY THEY GET THE JOB DONE EVERY MINUTE MATTERS. WE HAVE TO PARTNER DEEPLY WITH UNDERSTAND THEIR OPERATION. WE USE DATA POINTS TO TRAIN AI PROVIDE VALUE FOR CUSTOMERS SO SUCCESSFULLY. THESE ASSETS COME WITH SCALE. WE HAVE BEEN FORTUNATE TO PARTNER WITH SOME GREAT COMPANIES. THEY DON'T COME EASILY. THIS IS A TECHNOLOGY THAT YOU HAVE TO TRULY PARTNER WITH FIELD. CAROL: ONE OF THE THINGS IS INTERESTING IS THE CUSTOMERS IN TERMS OF VEHICLES OR WHATEVER, THEY OWN THEIR UNDERLYING FLEET AND OPERATIONS DATA BUT YOU GUYS POINTS. OR OPERATIONAL BENCHMARKS THAT PLATFORMS? AND HOW DO YOU LEVERAGE THAT? SPOT. BUSINESS IS. >> ABSOLUTELY. ABSOLUTELY. THE CONCEPT OF SOVEREIGNTY IS INCREDIBLY IMPORTANT FOR OUR CUSTOMERS BECAUSE THEY HAVE A LOT OF VALUE IN THIS OPERATIONAL WELL. WE LOOK AT THE AGGREGATE OF THAT DATA AND WE CAN SEE THINGS THAT HAPPEN IN THE FIELD. IF YOU THINK ABOUT ROAD ACCIDENTS, THEY HAVE BEEN ONLY ABOUT ONCE EVERY MILLION MILES. FOR AN INDIVIDUAL COMPANY TO SEE A LOT OF ACCIDENT DATA, IT MATHEMATICALLY. BECAUSE WE ARE AGGREGATING SO MUCH DATA, WE SEE ABOUT ABOUT 100 5 BILLION MILES BEING DRIVEN ON OUR PLATFORM EVERY YEAR, WHICH MEANS WE SEE THOSE RISKY EVENTS, THOSE RARE EVENTS, AND WE CAN TRAIN AI MODELS USING THE COMMUNITY DATA. WE CAN DO THAT IN A PRIVACY PRESERVING WAY, NOT INTERESTED IN INDIVIDUALS OR LICENSE PLATES. WE ARE INTERESTED IN WHAT CAUSED THAT ACCIDENT AND HOW CAN WE SHARE THAT KIND OF RISK UNDERSTANDING WITH ALL OF OUR OPERATIONS SAFER? THAT SAME CONCEPT APPLIES TO YOU DO MORNING INSPECTIONS. THERE IS SO MUCH VALUE TO THIS COMMUNITY DATA, AND NOW WE ARE APPLYING IT TO UNIQUE AND CONDITIONS ARE LIKE DURING EVERY YEAR. THEY WANT TO KNOW WHAT THEY ARE HEADING INTO MAYBE FIVE HOURS OUT IN THEIR DAY. CAROL: CAN I ASK YOU, DO YOU WORK WITH WAYMO, SOME OF THE SELF DRIVING CARS? MIKE: WE WORK MORE -- SANJIT: WE WORK MORE WITH A LARGE SELF DRIVING TRUCKING COMPANIES. WE ARE DEFINITELY STARTING TO SEE MORE UPTAKE OF THESE ROBOTIC PLATFORMS. OUR CUSTOMERS ARE EXCITED ABOUT IT BECAUSE THEY ARE FUNDAMENTALLY LABOR LIMITED, LOOKING FOR WAYS TO AUGMENT THEIR OPERATIONS. OF IT TOGETHER. WANT TO? DOES IT MAKE SENSE? SANJIT: LIKE A ROBOTAXI COMPANY WE COULD. MAYBE FOR MAINTENANCE. I DON'T KNOW THAT WE ARE WORKING SPECIFICALLY WITH WAYMO. WE DO WORK WITH THE OTHER BY GERMAN COMPANIES. FOR US. DECADE. I SAW SOME THINGS THAT YOU TALKED ABOUT THAT WERE PRETTY SURPRISING TO ME. IF YOU LOOK AT YOUR PHONE WHILE YOU ARE DRIVING, YOU COULD DRIVE OR PEOPLE ARE NOT WEARING SEATBELTS IN THEIR CARS. SURPRISING THING ABOUT HUMAN BEHAVIOR HAS BEEN, NOW THAT YOU UNDERSTANDING OF ALL THESE DATA POINTS? SANJIT: THERE ARE A NUMBER OF BROKEN MY HABIT OF LOOKING AT MY HAPPENS ON THE ROAD. WHAT WE HAVE COME AWAY WITH IS A REAL, DEEP APPRECIATION FOR HOW CHANGE THEIR BEHAVIORS IF THEY GET THE RIGHT COACHING. THE OUTCOMES FUNDAMENTALLY CHANGE WHEN YOU CAN SHOW PEOPLE, YOU WERE LOOKING AT YOUR PHONE, CLOSELY. NOBODY WANTS TO GET HURT ON THE JOB. FOR THE BETTER. I HAVE COME AWAY WITH A MUCH DEEPER APPRECIATION FOR PEOPLE'S COACHING. THAT IS RESULTING IN A SAVINGS BUT MAYBE IT IS NOT INTUITIVE. PEOPLE ARE REALLY SET IN THEIR WAYS. TIM: EXPLAIN HOW THAT COACHING IS DONE, THE EFFECT A WAY THAT YOU BEEN ABLE TO DO IT. IS IT REAL TIME, A PERSON GETTING A REPORT, MEETING WITH THEIR DIRECTOR, TELLING THEM? IS IT HAPPENING IN REAL TIME? IT'S A COMBINATION OF TACTICS. SOME OF IT IS REAL TIME, GETTING TO BREAK THE HABIT. SOME OF THAT IS SOMETHING THAT YOU MIGHT SEE IN AN APP AT THE END OF THE WEEK, A DRIVER'S OVERVIEW PROCESS. THAT'S A GREAT WAY TO SEE SOME OF THE BAD HABITS THAT ARE PILING UP. WE ALSO HAVE THE ABILITY TO HAVE A SIT DOWN. MOST OF OUR COMPANY DON'T HAVE THE EXTRA STAFF ON HAND TO DO SIT DOWNS WITH EVERY FIELD SERVICE TECHNICIAN OR DRIVER, THEY ARE LOOKING FOR AUTOMATION. THAT IS AN AREA WHERE AUTOMATION IS VERY WELCOME. COMPANIES REQUIRE US TO USE THIS TECHNOLOGY? SANJIT: IN THE COMMERCIAL SECTOR, MANY OF THE -- TIM: ON THE CONSUMER SIDE. SANJIT: WE ARE SEEING MORE CARS WITH THIS TECHNOLOGY BUILT IN. THAT WORKS WELL IF YOU ARE AN INDIVIDUAL BUT NOT IF YOU HAVE TENS OF THOUSANDS OF EMPLOYEES. CAROL: WITH ALL THE DATA IN YOUR GOING ON. I HAVE SOMETHING COMPARABLE TO WHAT YOU HAVE. IF I HAVE 23-YEAR-OLD. CASE. IT WORKS. WOULD LOVE TO HEAR MORE. GREAT TO HAVE YOU. SANJIT BISWAS, CHAIRMAN AND CEO "BLOOMBERG BUSINESSWEEK DAILY." TIM: WE HAVE STOCKS ON THE MOVE. BLOOMBERG TV. THIS IS "BLOOMBERG BUSINESSWEEK DAILY." ♪ BUSINESSWEEK DAILY." TELEVISION. CAROL: GETTING NEAR THE LAST OCTOBER 13, 2026. FOR HALLOWEEN? DO YOU HAVE YOUR COSTUME? IT, OR YOU ARE OUT OF LUCK. ELSE. CAROL: WE USED TO GO OUT WITH MY SHE IS NOW DOING HER OWN THING. OWN THING. CAROL: AS THEY GET OLDER. THERE. BOSTON? WORK. CAROL: I FORGOT. TIM: YOU ARE GOING TO BE HOME A FAMILY? POTTER STUFF. DOING. MOST IMPORTANT. MY DAUGHTER IS DOING LILY WORM FROM THE BOOKS. VERY HARD COSTUME TO FIND. THERE ARE NO LILY WORM COSTUMES, IT IS A WORM. MAYBE WE WILL TAKE IT OFF-LINE. I HAVE NOT FIGURED OUT YET. HAVE TO DO SOMETHING TOGETHER. HARRY POTTER STUFF. CAROL: MARKETS, WHERE ARE WE? DOWN ABOUT FOUR POINTS ON THE S&P 500, 147 ON THE NASDAQ 100. CHIP STOCKS A BIT OF A BUMMER WHEN IT COMES TO THE TECH TRADE. TODAY'S SESSION. TIM: LET'S TAKE A LOOK AT SOME NAMES ON THE MOVE TODAY. CORRESPONDENT. TODAY. DOWN BY ABOUT 1%. WHEN YOU LOOK AT WHAT THE STORY HAS BEEN TODAY, IT IS THAT LENDING REMAINS STRONG. WE SAW THAT ACROSS JP MORGAN, CITI, WELLS FARGO SETTING A RECORD WITH LENDING INCOME. A LOT OF FOCUS WITH EQUITY TRADING. WE SAW THAT BLOCKBUSTER QUARTER. WE DID STILL SEE STRENGTH INVESTORS ARE WAITING THAT. LASTLY, YOU HAVE SEEN THAT SOFT INCOME. THAT IS WHERE A LOT OF INVESTORS ARE DIGGING INTO WHEN IT COMES TO THESE REPORTS. 0.2%. CITI IS DOWN BY 4.3% RIGHT NOW. THEY HAVE BEEN ALL OVER THE PLACE. JP MORGAN WAS UP 3% AT ITS HIGHS TODAY, DOWN 1% AT ITS LOWS. AROUND IN A BIG WAY. NORAH: WE WILL HEAR FROM MORGAN STANLEY TOMORROW, BANK OF AMERICA ALSO. WE WILL SEE IF THIS BROADER THEME ABOUT THE FIXED INCOME ISSUES, EQUITY TRADING, IF THIS CASE IN THESE EARNINGS TOMORROW. JOHNSON. THE STOCK IS GETTING BEAT DOWN. NORAH: DOWN 5.8%. THE COMPANY MISSED SALES IN THE IT'S A SMELL DONE WHEN IT COMES UNIT. THAT OVERSHADOWED DEMAND FOR NEWER DRUGS WHEN IT COMES TO CANCER AND AUTOIMMUNE DISEASES. COMPANY. DOING PRETTY DECENTLY WELL THIS BASIS. TODAY, INVESTORS ARE LOOKING AT HAPPY, CLEARLY. CAROL: NOT SO IMPRESSED. TIM: CAN WE TALK ABOUT PIZZA? I WOULD LIKE TO GET SOME PIZZA. SPECIFICALLY? TIM: TOUGH QUESTION. IF YOU LIVE IN NEW YORK CITY -- AND BY THE WAY, THERE ARE A LOT OF DOMINO'S PIZZA IS HERE. PIZZA THAN JUST DOMINO'S. SURVEILLANCE THIS MORNING, I'M GOING TO PARAPHRASE. BASICALLY, PARTYING ALL NIGHT -- TIM: THEY ARE OPEN LATE. WHAT IS GOING ON WITH DOMINO'S PIZZA? NORAH: ARE PROTEIN MAX INCOME EVER HEARD OF IT? CAROL: JUST EAT A BALANCED DIET. CAROL. BUDGET CONSCIOUS CONSUMERS HAVE BEEN TIGHTENING THEIR WALLETS, APPARENTLY EATING OUT LESS AND FAVORING CHICKEN AS A PART OF PROTEIN MAXXING, THIS TREND THAT WE ARE SEEING. CHICKEN. THEN YOU ARE PROTEIN MAXXING. NORAH: IT DID BEAT ON REVENUE. THE U.S. OR OVERSEAS. THIS YEAR. BY ALMOST 4%. YEAR. CAROL: I AM SUPER PICKY ABOUT MY PIZZA. THIN CRUST, BURNED. NORAH, THANK YOU SO MUCH. CHECK OUT HER STOCK MOVERS IN THE STOCK MARKET. YOU CAN FIND IT ON APPLE, SPOTIFY, ANYWHERE THAT YOU GET YOUR PODCASTS. FAVORITE KIND OF PIZZA? TIM: MARGARITA, THE CLASSIC. IT IS THE CLASSIC FRIDAY NIGHT STENOVEC HOME ORDER. CAROL: VERY EXPECTED. I LIKE EGGPLANT. TIM: IT IS SIMPLE, CROWDPLEASER, EVERYBODY LOVES IT. TO THE CLOSE. IN THE MEANTIME, IF YOU ARE WATCHING ON TELEVISION, "THE CLOSE" STARTS RIGHT NOW.