Open Interest 10/1/2026

DANI: WELCOME TO THE FIRST DAY OF OCTOBER, THE FIRST OF THE QUARTER. 30 MINUTES UNTIL THE START OF TRADING. I AM DANI BURGER. MICHAEL: AND I AM MICHAEL MCKEE. “BLOOMBERG: OPEN INTEREST” STARTS RIGHT NOW. COMING UP, INVESTORS USHER IN A NEW QUARTER AS STOCKS WRESTLE WITH A RELENTLESS RISE IN YIELDS. MACRON'S BULLISH FORECAST FUELS THE AI TRADE BUT THE CHIPMAKER WARNS OF RISING COSTS. AND NETFLIX ONCE MORE GROWTH. THE STREAMING GIANTS NEXT ACT. LIZ ANN SONDERS WITH THIS IDEA THAT WHAT THE SELL SIDE HAS TO SAY IS DIFFERENT THAN THE BUY SIDE EXPECTATIONS. MICRON DELIVERED RECORD MARGIN AI DRIVING DEMAND WITH A HUGE JUMP OF SALES IN ITS MEMORY CHIPS. THE COMPANY GAVE A MUCH LARGER THAN EXPECTED OUTLOOK SYNC DEMAND CONTINUES TO OUTSTRIP SUPPLY AS DATA CENTERS RAISED TO SECURE HIGH-BANDWIDTH MEMORY FOR AI. MAYBE THAT WAS ALL PRICED IN. ELSEWHERE THE 10 YEAR YIELD HIT ITS HIGHEST LEVEL SINCE 2002 AS GLOBAL BONDS GRAPPLED WITH STUBBORN INFLATION AND WARNINGS RATES MAY STAY HIGHER FOR LONGER. NEEL KASHKARI SPOKE WITH MICHAEL MCKEE AND THE REST OF THE TEAM ON "SURVEILLANCE." NEEL: I LOOK AT CAPITAL MARKETS ACTIVITY -- IF DEALS ARE GETTING DONE, THEY ARE OVERSUBSCRIBED AND OVERSUBSCRIBED, THAT MAKES ME QUESTION IS POLICY AS TIGHT AS I PREVIOUSLY THOUGHT IT WAS. I'M NOT CELEBRATING ANYBODY'S IPO BEING SHELVED, BUT TO THE EXTENT THERE IS SOME TENTATIVENESS CREEPING INTO BROAD FINANCIAL MARKETS THAT INDICATES THE RATE ENVIRONMENT MAY BE HAVING SOME EFFECT. DANI: NEEL KASHKARI HAVING A CONVERSATION WITH YOU. IT IS NOTABLE YOU CAN, OFF THE BACK OF A QUARTER THAT IS THE WORST FOR 10 YEAR TREASURIES SINCE 1994 AND STILL SAY RATES ARE NOT RESTRICTIVE, PLENTY OF COMPANIES ARE STILL BORROWING. MICHAEL: IT IS ONE OF THE CONUNDRUMS PEOPLE ARE STILL TRYING TO UNDERSTAND ALONG WITH THE FACT THAT CONSUMER CONFIDENCE IS REALLY LOW. COMPANIES ARE BORROWING LIKE CRAZY. INTEREST RATES KEEP GOING UP. SOMETIMES I THINK BACK TO THE CHUCK PRINCE DAYS. YOU HAVE TO KEEP DANCING. DANI: KEEP DANCING WHILE THE MUSIC IS PLAYING. RISK MARKETS ARE DOING REALLY WELL. TROUBLING FOR THE BOND MARKET IS THERE DOES NOT SEE MUCH TO CURB HIGHER. 10 YEAR YIELDS ARE HIGHER BY TWO BASIS POINTS BUT IT IS NOT CRACKING EQUITY MARKETS. PART OF THE ISSUE IS THE REASON YIELDS ARE GOING SO MUCH HIGHER IS FOR A MULTITUDE OF REASONS. IT IS NOT JUST INFLATION. IT IS GOOD GROWTH. THE JOBS NUMBERS HAVE BEEN ROBUST. MICHAEL: IT DOES SEEM LIKE THE ECONOMY MAY BE ACCELERATING. THERE IS A COMBINATION OF GOOD GROWTH WHICH SUGGESTS GOOD EARNINGS FOR STOCKS BUT ALSO THE HOPE THAT THE HYPERSCALERS CAN DELIVER PROFITS. THAT IS KIND OF GOING TO BE THE PIVOT POINT IF SOMEBODY DECIDES THEY CANNOT. DANI: SO FAR WE ARE SEEING ANOTHER BOOST TO THE TECH TRADE. IT IS NOT PLAYING OUT HOW YOU WOULD EXPECT IF YOU GET A MONSTER BEAT AND THAT IS MICRON. IT DELIVERED AN UPBEAT FORECAST BUT IT WARNED AN INCREASE IN PAY COULD LOWER PROFIT MARGINS. JOINING US IS JAKE SILVERMAN. IS IT BECAUSE THEY ARE PAYING THEIR PEOPLE MORE OR WAS THE GOOD NEWS ALREADY PRICED IN? JAKE: PART OF IT IS BALANCE BETWEEN UPSIDE AND DOWNSIDE. WITH MEMORY INVESTORS ARE NEVER GOING TO FULLY REMOVE THE RISK OF DOWNSIDE BECAUSE THE INDUSTRY HAS BEEN SO CYCLICAL. WHEN INVESTORS ARE LOOKING AT CREATING THEIR FORECASTS AND THEIR MODELS, THEY ARE THINKING ABOUT THE DOWNSIDE RISK TO THIS AS OPPOSED TO THAT POINT WHERE EVEN THE CFO SAID HIMSELF WE ARE EXPECTING DECREASING PRICING GROWTH THROUGH THE FISCAL 2027 AND LIKELY GOING FORWARD. INVESTORS ARE LOOKING AT THIS AND THINK WE HAVE AN IDEA OF WHAT PRICING CAN GO TO. EVEN WITH THESE AGREEMENTS WHAT IS THE RISK THAT AT SOME POINT THE AI CAPEX INVESTMENT CYCLE DOES NOT DECLINE BUT SLOWS TO A DEGREE WHEN SUPPLY AND DEMAND GOES OUT OF BALANCE. MICHAEL: THERE IS A STORY THAT GIVEN THE HISTORY OF CHIPMAKERS YOUR CHIP BECOMES OBSOLETE FAIRLY QUICKLY. SOMEBODY LIKE MICRON SHOULD BE ABLE TO ANTICIPATE A REVOLVING GROWTH STORY EVEN IF THEY CANNOT RAISE PRICES AS MUCH. JAKE: DRAM GENERALLY, THEY ARE COMMODITY-LIKE PRODUCTS. THE ARGUMENT BUT COMPANIES ARE TRYING TO MAKE IS IT IS NOT REALLY THE CASE ANYMORE. THESE ARE STRATEGIC PRODUCTS AND THAT IS WHY THEY CALL STRATEGIC CUSTOMER AGREEMENTS, THESE LONG-TERM CONTRACTS THEY ARE SIGNING WITH CUSTOMERS, NOW THEY HAVE 26 FROM 16 LAST QUARTER. WHERE THAT IS TRUE IS WITH HIGH-BANDWIDTH MEMORY. THIS IS PART OF THE DESIGN CYCLE FOR CUSTOMERS LIKE NVIDIA WHO HAVE THEIR AI SERVERS AND NOW HYPERSCALERS AS WELL. EVEN OPENAI WITH THEIR RECENT JALAPENO CHIP. IT IS IMPORTANT TO KEEP IN MIND TECHNOLOGY PROGRESS. AT THE SAME TIME THE SAME RULES THAT HAVE GOVERNED MEMORY IN THE PAST STILL APPLY TO SOME EXTENT. THERE IS STILL A SUPPLY AND DEMAND ELEMENT THAT WILL UNDERPIN THE ABILITY FOR THE COMPANY TO MAINTAIN PRICING IN INCREASE AT LONG TERM. DANI: 87% MARGINS WHICH IS WILD. IS THAT THE PEAK? JAKE: THEY WERE CLEAR THIS WAS SOME TEMPORARY HIT. THAT THESE ARE FLOOR MARGINS FOR Q1 AND THEN IT WILL INCREASE THROUGH FISCAL 2027. WE THINK THAT WILL BE THE CASE, ESPECIALLY WHEN YOU'RE SEEING THESE PRICE INCREASES THAT ARE LIKELY TO OCCUR IN 2027 OR ARE GOING TO OCCUR IN 2027. THAT WILL INCREASE PRICING AND INCREASE MARGINS AS WELL. OVERALL THE MARGIN PROFILE FOR THE ENTIRE BUSINESS WILL CONTINUE TO IMPROVE. WITH PRICING INCREASING AT A DECELERATING RATE MARGINS WILL IMPROVE AT A MUCH SLOWER RATE THAN THEY HAVE BEEN. MICHAEL: SLOWER THAN 87%. YOU CAN PROBABLY LIVE WITH THAT. JAKE: A LOT OF INVESTORS ARE TRYING TO JUGGLE THAT. IS THAT NOW ACCEPTABLE. MICHAEL: OUR THANKS TO JAKE SILVERMAN OF BLOOMBERG INTELLIGENCE. THE NET FIXED CO-CEO SAYS THE STREAMING GIANT IS NOT GROWING AS QUICKLY AS HE WOULD LIKE. HE SPOKE AT THE BLOOMBERG SPRINGTIME CONFERENCE. >> WE ARE NOT GROWING AS FAST AS I WANT US TO AND WE ARE MAKING THE MOVE TO MAKE THAT FASTER. WE ARE ALSO DOING THINGS THAT CREATE A LOT OF HEADWIND. WHEN WE DO LIVE PROGRAMMING ON NETFLIX WHICH IS A RELATIVELY NEW THINGS WE SPEND ABOUT 5% OF OUR CONTENT BUDGET ON LIVE EVENTS. THEY GENERATE ABOUT 1% OF OUR WATCHING. MICHAEL: HE ALSO DEFENDED NETFLIX'S PURSUIT OF WARNER BROTHERS SAYING HE DOES NOT REGRET GOING AFTER THE COMPANY EVEN THOUGH NETFLIX ULTIMATELY LOST A PARAMOUNT. JOINING US IS BLOOMBERG INTELLIGENCE MEDIA ANALYST. WHAT ARE WE LOOKING AT HERE IN TERMS OF NETFLIX GOING ON FROM THIS TO MAY BE WANTING TO BUY SOMEBODY ELSE? >> ABSOLUTELY. I THINK THAT IS THE BIGGEST QUESTION ON EVERYBODY'S MIND. WE ALWAYS KNEW NETFLIX HAVE BEEN VERY SHY IN TERMS OF M&A BUT WITH THAT WARNER DEAL DID SHOW THEY HAVE SOME APPETITE AND THEY COULD GO AFTER BIG PROPERTIES. NOW AT PARAMOUNT FINALLY CLOSING THE WARNER BROS. TRANSACTION, ALL EYES ARE ON WHAT HAPPENS NEXT. CAN NBC WHICH WILL BE SPUN OFF FROM COMCAST BE A POTENTIAL TARGET. IT HAS A LOT OF ATTRACTIVE ASSETS, PLUS IT OFFERS NETFLIX THEME PARK EXPOSURE WHICH COULD BE PRETTY INTERESTING. DANI: WHEN IT COMES TO THE PARAMOUNT DEAL, THIS THING NEEDED TO CLOSE YESTERDAY AND WE CERTAINLY GOT MOVED THERE. WE HAVE A NEW CEO. THE FORMER CEO OF MATTEL WHO HAS JOINED THE SHOW BEFORE. IT SEEMS LIKE AN ODD PAIRING. A TOY COMPANY MOVING TO BECOME THE CEO OF THIS MUCH LARGER PARAMOUNT SKYDANCE, NOW WITH WARNER BROS.. WHAT DO YOU MAKE OF THAT? >> I THINK IT IS PRETTY GOOD NEWS FOR PARAMOUNT BECAUSE IN DAVID ALLISON YOU HAVE A YOUNG INDIVIDUAL WHO IS HUNGRY AND HAS A LOT OF TECHNOLOGY EXPERIENCE, BUT NOT NECESSARILY A LOT OF EXPERIENCE RUNNING A MEDIA COMPANY. NOW YOU HAVE SOMEBODY WHO HAS BEEN RESPONSIBLE FOR AN OPERATIONAL TURNAROUND AT MATTEL AND SOMEONE WHO IS TAKEN MATTEL FROM BEING A TOY COMPANY INTO MORE OF AN IP DRIVEN PLATFORM. YOU SAW WHAT HE DID WITH THE BARBIE MOVIE. THAT WILL BE ONE OF THE BIGGEST PROOF POINTS, WHETHER HE CAN GET THAT BARBIE'S EQUAL GOING ONCE IT GETS TO PARAMOUNT AND WARNER BROS.. MICHAEL: OUTSIDE OF NETFLIX AND TALKING ABOUT WHAT THEY MIGHT DO , I AM WONDERING WHO ELSE MIGHT BE IN THE MARKET GIVEN WILL HAVE MAY BE A CHANGE IN CONTROL IN WASHINGTON OVER THE NEXT TWO YEARS IF NOT NEXT YEAR AND THAT COULD RAISE ANTITRUST QUESTIONS. WHAT IS THE PLAY OUT THERE NOW? >> A LOT OF QUESTIONS STILL HANGING IN THE BALANCE OUT THERE IN TERMS OF ANTITRUST. WE KNOW ONE OF THE BIGGEST DEALS IN THE TELEVISION BROADCASTING SPACE WHICH IS NEXT ARE -- WHICH IS NEXSTAR-TEGNA IN LIMBO RIGHT NOW. FOX AND ROKU FACING SOME HURDLES. EVERYTHING COULD WORK OUT BY MID-2027. UNCERTAINTY AS WE ARE TRYING TO UNDERSTAND THE LANDSCAPE AND WHAT HAPPENS WITH A LOT OF THE REGULATORY SCRUTINY. A LOT OF DEALS WAITING TO HAPPEN ONCE THAT REGULATORY UNCERTAINTY CLEARS. DANI: THANK YOU SO MUCH FOR JOINING US. LET'S GET A CHECK ON YOUR MARKETS. 20 MINUTES UNTIL THE TRADING DAY STARTS. WE MOVE HIGHER THIS MORNING. THOUGH YIELDS ARE CHARTING HIGHER, THAT WILL KEEP A LID ON WHAT EQUITIES DO. 10 YEAR YIELDS AT 5.30, STILL NEAR THEIR HIGHEST SINCE 2002. BRENT CRUDE $99, BACK BELOW $100. LET'S GET A LOOK AT INDIVIDUAL MOVERS WITH NORAH MULINDA. NORAH: LET'S LOOK A BIG MOVERS. SHARES OF ACCENTURE JUMPING. THE RESULTS EASING SOME OF THE CONCERNS THAT AI COULD DISRUPT THE CONSULTING BUSINESS. A CENSURE GAVE A SOLID OUTLOOK FOR THE YEAR AHEAD. YOU WILL SEE SHARES OF THE COMPANY HIRED BY 18%. -- HIGHER BY 18%. MCCORMICK DOWN BUT DID EXPECT -- BUT DID POST BETTER THAN EXPECTED SALES. THE SPICE MAKER MAINTAINING ITS OUTLOOK. IT IS ALSO SAYING BECAUSE CONTROLS ARE HELPING TO SUPPORT MARGINS. OVER TO ENERGY. EXXON FOLLOWING AFTER WELLS FARGO DOWNGRADED THE STOCK TO EQUAL WEIGHT FROM OVERWEIGHT AND SAID THE STOCK'S PREMIUM COULD START TO SHRINK. THE FIRM ALSO SEES -- SHARES OF EXXON DOWN ABOUT .6%. DANI: WE WILL CATCH UP WITH YOU LATER. MICROSOFT JUST HAD A $1 TRILLION QUARTER AS CLOUD GROWTH DRIVES THE STOCK HIGHER. MORE ON THE AI TRADE NEXT. THIS IS "OPEN INTEREST." ♪ DANI: LET'S GET YOU SOME HIGH INTEREST STORIES, LOOK AT WHAT IS MAKING HEADLINES AROUND THE WORLD. BLACKSTONE IS COMMITTING $1 BILLION TO BUILD A NEW DEFENSE TECH COMPANY AS THE U.S. FACES GROWING THREATS FROM INEXPENSIVE DRONES AND MISSILES. IT WILL FOCUS ON LOWER-COST NAVIGATION AND GUIDANCE TECHNOLOGIES FOR WEAPON INTERCEPTORS. BLACKSTONE SAYS IT PLANS ADDITIONAL ACQUISITIONS AS IT EXPANDS ITS DEFENSE PORTFOLIO. ACTOR AND FILMMAKER BEN AFFLECK SAYS HE IS LESS WORRIED ABOUT AI REPLACING HOLLYWOOD THEN WHAT IT COULD MEAN FOR KIDS. HE SAYS AI SHOULD ENHANCE FILMMAKING, SOMETHING HIS OWN AI COMPANY WAS DOING BEFORE NETFLIX BOUGHT IT. HE SPOKE AT BLOOMBERG SPRINGTIME CONFLUENCE -- CONFERENCE IN L.A.. BEN: WHEN I WORRY ABOUT AI, I WORRY ABOUT MY KIDS IN SCHOOL. I WORRY ABOUT THE 30% RISE IN THE NUMBER OF A'S GIVEN OUT IN COLLEGES. I WORRY ABOUT RESPONSIVE USE. I DO NOT WORRY ABOUT SKYNET AND I DO NOT THINK IT WILL TAKE OVER THIS BUSINESS IN ANY MEANINGFUL WAY. I THINK IT WILL BE ADDITIVE. DANI: MORE FROM THAT CONFERENCE THROUGHOUT THE DAY ON BLOOMBERG. THAT INCLUDES CONVERSATIONS WITH DISNEY DANA WOLLMAN AND NBC UNIVERSAL'S DONNA LANGLEY. GOOGLE IS LAYING OUT ITS NEW FLAGSHIP AI MODEL CALLED GEMINI FOR ARGON STARTING WITH GOVERNMENT AND CYBERSECURITY PARTNERS. GOOGLE SAYS IT DELIVERS FRONTIER PERFORMANCE IN LEGAL WORK AND CYBER DEFENSE. SOME EMPLOYEES SAY THE MODEL STRUGGLE WITH CERTAIN CODING TASKS AND ITS PERFORMANCE REMAINS ON EVEN. MICHAEL: LET'S DISCUSS ALL OF THAT WITH BLOOMBERG EQUITIES REPORTER CARMEN REINICKE. GOOGLE IS THE LATEST TO ROLL OUT A NEW AGENT. HOW DO WE KNOW WHETHER YOU SHOULD USE IT OR NOT OR THESE OTHERS BECAUSE THERE IS A NEW ONE ALL THE TIME? CARMEN: THAT IS SUCH A GOOD POINT AND SOMETHING THAT IS IMPORTANT FOR GOOGLE THAT THEY ARE ROLLING THIS OUT. INVESTORS ARE EXCITED ABOUT IT. THE STOCK IS UP 1.7% IN PREMARKET. THEY HAVE A DELAY WITH GEMINI 3.5 MODEL. HAVING THIS NEW MODEL COME OUT HAS BEEN SHEARED BY INVESTORS. IT IS INTERESTING BECAUSE IT CAME OUT ON THE HEELS OF OUR REPORTING FROM BLOOMBERG THAT THERE WAS INTERNAL SKEPTICISM AROUND SOME OF THE CAPABILITIES. IT IS A CONSTANT RACE TO THE NEXT MODEL. OPENAI IS COMING OUT WITH NEW ONES, ANTHROPIC IS COMING OUT WITH NEW ONES. WHAT INVESTORS ARE REALLY LOOKING FOR IS THESE COMPANIES THAT HAVE THESE LARGE LLMS IS THAT THEY ARE MAKING PROGRESS. I THINK OVER THE COMING DAYS WE WILL HEAR MORE AS USERS GET IN THERE AND SEE WHAT THESE CAPABILITIES ARE. WE WILL HEAR MORE ABOUT WHAT WORKS AND WHAT DOES NOT AND WHAT COULD BE COMING OUT NEXT. DANI: I CANNOT WAIT FOR ANTHROPIC AND OPENAI TO BE PUBLICLY TRADED BECAUSE I WONDER IF NEWS LIKE THIS WILL COME OUT AND THE OTHER STOCKS DROP. HOW MUCH OF THIS WILL IMPACT FOR THE HORSE RACE IS. THE OTHER THING YOU AND YOUR TEAM HAVE BEEN TRACKING THAT I HAD COMPLETELY MISSED WAS HOW GOOD OF A QUARTER MICROSOFT HAD, THE BEST SINCE 1998. WHAT WAS GOING ON AT MICROSOFT THAT IT HAD SUCH A BANGER OF A THIRD QUARTER? CARMEN: IT IS INTERESTING BECAUSE COMING IN JUNE IT WAS THE WORST MONTH SINCE 2000. THE BIGGEST CATALYST WAS THE EARNINGS. THEY HAD A GREAT EARNINGS REPORT THAT SHOWED FAST REVENUE GROWTH IN THEIR CLOUD BUSINESS, AND FROM THERE THE STOCK HAS CONTINUED TO CLIMB. MICROSOFT GETS UP IN AI THEMES. IT IS A SOFTWARE NAME SO IT IS BEEN CAUGHT UP IN SOME OF THE SOFTWARE ISSUES WE HAVE SEEN BUT IT IS ALSO A HYPERSCALER. ESPECIALLY LATELY WITH YIELDS HIGHER AND MORE OF MACRO PRESSURE, THOSE NAMES HAVE SEEN MORE SHINE FROM INVESTORS. IT HAD THIS HUGE JUMP IN JULY AND FROM THERE HAS SLOWLY GROUND HIGHER AND NOW THE BEST QUARTER SINCE 1998 IS INCREDIBLE. MICHAEL: SO MUCH OF THE GAME WAS ATTRIBUTABLE TO CLOUD. HOW MUCH ROOM IS THERE IN THAT SEGMENT TO POST IF NOT THE SAME KIND OF EARNINGS COME AT LEAST STRONGER? DANI: THAT IS A GREAT -- CARMEN: THAT IS A GREAT QUESTION AND GETS TO THE HIGH BAR WE ARE SEEING FOR THESE COMPANIES. INVESTORS WANT TO SEE BEAT AND RAISE BUT EVEN THAT IS NOT ENOUGH. YOU HAVE TO BLOW YOUR RESULTS OUT OF THE WATER. FOR MICROSOFT WALL STREET SEES A LOT OF UPSIDE FOR THIS COMPANY. THEY ARE VERY BULLISH AND HAVE BEEN BULLISH. INVESTORS I SPEAK TO HAVE SAID THIS COULD BECOME ONE OF THE BIGGEST WINNERS IN AI BECAUSE OF ITS CAPABILITIES, BECAUSE OF COPILOT AND ALL OF THE INTERNET AND OUR DIGITAL LIVES THAT IT TOUCHES. I AM GOING TO BE VERY CLOSELY WATCHING WHAT HAPPENS IN EARNINGS SEASON. THAT WILL BE INTERESTING. MICHAEL: THANK YOU FOR JOINING US AND EXPLAINING ALL OF THAT. I GUESS WE WILL TAKE TO AI TO WATCH THE EARNINGS. DANI: WE ARE JUST GOING TO ASK OUR OWN AI HOW THE EARNING RESULTS WENT DOWN? MICHAEL: THEY WILL TELL US WHERE THE COMPANIES MADE A MISTAKE AND WHAT THEY SHOULD USE OF THE AI AGENTS. DANI: I LIKE THIS WORLD BECAUSE MAYBE WE CAN JUST BE ON THE BEACH OF THAT IS HAPPENING. MICHAEL: COMING UP, KATE MOORE OF CITIWEALTH. THIS IS "BLOOMBERG: OPEN INTEREST." ♪ >> WE HAVE LOTS AND LOTS OF CHALLENGES. THE MACRO. I ALMOST WONDER WHY A STOCK GUY IS ON TODAY WHEN WE SHOULD JUST BE TALKING ABOUT BONDS 24/7 AT THIS POINT. HIGH OIL COME INCREDIBLY HIGH YIELDS. THE GLOBAL COMPETITION FOR CAPITAL. THE IRAN SITUATION. AND THE MIDTERMS. LET'S REMEMBER THE LAST COUPLE OF MIDTERMS OF THE TRUMP POLITICAL ERA HAVE BEEN VERY VOLATILE. DANI: JULIAN EMANUEL EXPLAINING WHY HE EXPECTS VOLATILITY. LET'S BRING IN KATE MOORE. SHOULD WE ERASE THE NAME OPEN INTEREST AND PRETEND THIS IS NOT A STOCK SHOW AND TALK ABOUT BONDS? KATE: RIGHT NOW THERE'S A LOT OF THAT. I AGREE WITH JULIAN IN TERMS OF VOLATILITY INTO THE FOURTH QUARTER. FOR A COUPLE OF THINGS I'M FOCUSED ON. THE IRAN WAR. THE IMPACT NOT JUST OF OIL BUT ALL REFINED PRODUCT OF INFLATION INTO 2027. THAT'LL BE A TOUGH NUT FOR MANY OF THE POLICYMAKERS. THE SECOND IS AROUND AI USE CASES. A LOT OF THE STOCK FOLKS ARE WORRIED ABOUT THEIR CONCENTRATION IN AI GIVEN THE FACT WE HAVE NOT MONETIZED AS MUCH AS MANY PEOPLE HAD HOPED. THEY HEADED ON THE EQUITY SIDE IN THE CREDIT SIDE AND THAT IS A MASSIVE WORRY. THE OTHER THING I WOULD SAY IS POLITICS. WE HAVE A LOT OF NOISE THAT COULD LEAD TO THIS VOLATILITY THAT JULIAN WAS REFERRING TO. SOME OF IT MAY BE AROUND WHAT HAPPENS IN THE U.S.. WE HAVE A BRAZILIAN ELECTION BUT WE ALSO HAVE BIG POLICY DECISIONS EVERYWHERE ELSE. THERE IS A LOT OF RISK THAT COULD SHIFT THE NARRATIVE THIS QUARTER. MICHAEL: FOR THOSE OF US WHO ARE OLD ENOUGH TO LIVE THROUGH THE LAST COUPLE OF TIMES WE HAD A BENT WRIST BUILT UP, HOW DO YOU SEE THIS PLAYING OUT? SHOULD WE START TO BE WORRIED THAT MAYBE WE ARE OUT OVER OUR SKIS IT IS TIME TO PULL BACK? KATE: AS A FORMER SKI RACER I LOVE TO BE A LITTLE OVER MY SKIS . I THINK WE HAVE TO WORRY ABOUT WHAT THE LONGER TERM IMPACT OF BOND YIELDS IS GOING TO BE ON THE DISCOUNT RATE AND ON VALUATIONS. RIGHT NOW WE HAVE SEEN EARNINGS SIGNIFICANTLY SURPASS ANY CONTRACTION WE HAVE HAD IN MULTIPLES IN 2026. THAT IS MY BASELINE FOR 20 TO AS WELL. NO MULTIPLE EXPANSION AND ALL RETURNS COMING FROM EARNINGS. THE EARNINGS PALMS WILL GET HARDER AND WE NOTE -- THE EARNINGS COMPS WILL GET HARDER AND WE KNOW THERE ARE OTHER PRESSURES THAT WILL WEIGH ON THE BOTTOM LINE. THIS WILL SOMETHING THAT WILL BE A REAL DEBATE AND SOMETHING TO WATCH IN THE MARKETS. DANI: I WAS NOT AWARE THAT YOU ARE A SKI RACER. WHEN DID YOU DO THAT? YOU STILL GET OUT THERE AND SPEED DOWN THE SLOPES? KATE: I DO, SOMETIMES A BIT TOO DANGEROUSLY. CONVERSATIONS ABOUT THE RISKS I TAKE ON THE MOUNTAIN. DO NOT TELL MY BOSSES. DANI: YOU CAN GET OUT THE HIGH-OCTANE STUFF AND BE VERY REASONABLE IN THIS MARKET. WE WILL GET THE MARKET OPEN IN JUST A MOMENT SO YOU WILL STAY WITH US. OUR VERY OWN SKIER KATE MOORE STAYING WITH US THROUGH THE MARKET OPEN. WE ARE SEEING STOCKS MOVE HIGHER. IT IS THE FIRST DAY OF OCTOBER AND FIRST DAY OF THE QUARTER. STOCKS MOVING HIGHER EVEN IN THE FACE OF HIGHER BOND YIELDS. YIELDS ARE HIGHER NEARLY THREE BASIS POINTS THIS MORNING, THE HIGHEST SINCE 2002. THEY HIT A HIGH YESTERDAY OF ABOVE THIS LEVEL. BRENT CRUDE BELOW $100 A BARREL. UP TO PERCENT THIS MORNING. YOUR OPENING BELL AFTER THIS BREAK. ♪ DANI: LET'S GET YOUR TRADING DAY STARTED. YOU ARE WATCHING "BLOOMBERG: OPEN INTEREST." ONE OF THE WORST QUARTER SINCE THE 1990'S FOR THE TREASURY MARKET. STOCKS DOING OK. UP .2%. THE NASDAQ OUTPERFORMS. MICRON EARNINGS CAME IN LINE. WE HAVE THE ISLAND FUND RINGING THE BELL AT THE NEW YORK STOCK EXCHANGE TO PROMOTE INVESTING IN IRELAND AS YOU WOULD ASSUME GIVEN THE NAME AND ALL OF THE GREEN THEY ARE WEARING. 50 YEARS OF THIS THEY ARE CELEBRATING. WE HAVE POWER US DOWN AT THE NASDAQ, THEY DO AI INFRASTRUCTURE AND THE BACKBONE TO INFRASTRUCTURE FOR AUTOMATION. THEY MERGED INTO ANOTHER COMPANY. I KNOW IT IS CROWDED THERE. YOU MIGHT NEED TO SIT ON THE FLOOR BUT I AM ANNOYED THEY MADE THE WOMEN SIT ON THE FLOOR. THERE IS ONE GUY DOWN THERE. MORE DUDES SHOULD BE DOWN THERE. THERE NEEDS TO BE MORE GENDER EQUALITY WHEN IT COMES TO SITTING ON THE PODIUM. MICRON IS DOWN 1%. THEY DELIVERED QUARTERLY RESULTS THAT WE ARE A RECORD AI DEMAND DROVE A HUGE JUMP IN SALES OF ITS MEMORY CHIPS. MARGINS ARE 87%. THE COMPANY GAVE A STRONGER-THAN-EXPECTED OUTLOOK BUT THERE IS A QUESTION DOES THE BUY SIDE EXPECT MORE THAN WHAT THE SELL SIDES ESTIMATES WERE SO MAYBE A BEAT WAS NOT GOOD ENOUGH FOR MICRON. MICHAEL: I AM SAVING YOU A CHAIR SO YOU DO NOT HAVE TO SIT ON THE FLOOR. CITI WEALTH CHIEF KATE MOORE IS JOINING US IN STUDIO. WE WERE TALKING ABOUT SKIING IN JACKSON HOLE AND I HOPE IT WILL BE A GOOD YEAR AND I WILL SEE YOU OUT THERE. IN THE MEANTIME YOU HAVE TO SELL PEOPLE SOMETHING. WE WERE TALKING ABOUT BONDS. BONDS HAVE HAD A TERRIBLE COUPLE OF QUARTERS. THE PRICE KEEPS GOING DOWN. WHAT ARE YOU TELLING PEOPLE, PARTICULARLY IN THE WEALTH MANAGEMENT SIDE, SOME OF YOUR OLDER CUSTOMERS ABOUT FIXED INCOME? KATE: IT IS A REALLY GOOD QUESTION AND I HAVE TO GIVE SOME UNCOMFORTABLE TRUTHS TO CLIENTS THAT ARE VERY ACCUSTOMED TO THINKING ABOUT BONDS AS BEING A SAFE HAVEN ASSET. WE TALKED A LOT ABOUT WHAT IS DRIVING BOND YIELDS MAYBE THAT IS A GOOD WAY TO START THE CONVERSATIONS. WE HAVE BEEN VERY UNDERWEIGHT DURATION AND PORTFOLIOS AND THIS HAS BEEN A VERY GOOD CALL FOR US. WE TALKED ABOUT THIS BEFORE BUT I STARTED SUBSTITUTE IN THE MIDDLE PART OF LAST YEAR AT SOME OF THAT SUBSTITUTION FOR GOLD. WHAT WE BASICALLY HAVE SAID IS WHAT IS BEEN DRIVING BOND YIELDS HIGHER HAS NOT JUST BEEN HIGHER INFLATION EXPECTATIONS, IT HAS BEEN REALLY YIELDS COME EXPECTATIONS AROUND GROWTH AND WE HAVE THIS FISCAL STORY WHERE SPENDING WILL HAPPEN IN ANY REGIME AND IT IS HAPPENING EVERYWHERE AROUND THE WORLD, EXERTING UPWARD PRESSURE ON YIELDS. YOU HAVE ALL OF THESE FORCES TOGETHER AND THERE ARE VERY FEW THINGS WE SEE THAT WILL SHAKE THOSE DRIVERS AT MOVING YIELDS HIGHER. A LOT OF TIMES CLIENTS HAVE BEEN SAYING WE HAVE HIT THIS MAGICAL 5% THRESHOLD. THAT IS MADE UP. THEY WANT TO KNOW IS THIS THE TIME TO ADD. THE REASONS WE ARE MOVING HIGHER ARE FOR REAL YIELDS AND THE EXPECTATIONS AROUND GROWTH WE ARE UNLIKELY TO GET A SIGNIFICANT PULLBACK IN YIELDS THAT IMPROVES PRICES. WE ARE STAYING SUPER UNDERWEIGHT DURATION. WE TRIMMED THE SECURITIES IN OUR PORTFOLIOS OVER THE PAST COUPLE DAYS AND ADDED MORE TO EQUITY RISK. THAT IS WHERE WE WILL FEEL WE WILL GET THE BEST RETURNS. DANI: GIVEN THOSE DRIVERS IT WOULD MAKE SENSE THAT EQUITIES ARE HOLDING UP. THERE ARE POCKETS OF RISK THAT SEEM TO BE UNDER PRESSURE. THE EQUAL WEIGHT JUST HAD ITS SEVENTH CONSECUTIVE WEEK DOWN. THAT IS THE SECOND LONGEST STREAK IN HISTORY. THE OTHER TWO TIMES WERE DURING BEAR. CCC'S WERE TRADING FOR 1000 BASIS POINTS OVER TREASURIES, THE MOST SINCE THE 2023 BLOWUP OF SVB. THERE ARE POCKETS THAT FEEL LIKE THEY ARE UNDER STRESS. IS THERE RISK THAT WILL BE MORE WIDESPREAD? KATE: WHEN THERE ARE NO AREAS IN THE MARKET FACING ANY STRESS, THAT MAKES ME MORE WORRIED THAT THERE IS TOO MUCH COMPLACENCY. THE FACT THAT THERE IS DISPERSION IN TERMS OF CREDIT QUALITY, IN TERMS OF COMPANIES PRODUCING FREE CASH OR COMPANIES THAT HAVE A LOT OF INVESTMENT IN EXPENSE TO TAKE ON TO BE COMPETITIVE, I WANT TO SEE THAT DIFFERENTIATION. I HEAR YOU ENTIRELY ON THIS ONE. I JUST WANT TO MAKE A POINT ON CREDIT WHICH WE THINK IS A SIGNIFICANT REASON FOR THE CREDIT SPREAD WIDENING HAS TO DO WITH SUPPLY. SUPPLY THAT CAME IN SEPTEMBER. I AM SURE YOU TALK ABOUT THAT. VERY IMPORTANTLY, THAT MAY NOT BE REPEATED IN OCTOBER. SPREADS WERE AT INCREDIBLE TIGHTS EVEN AS EQUITY MULTIPLES CONTRACTED. THERE HAD TO BE THAT ADJUSTMENT TO THE RATE VOLATILITY. IT IS OVERDUE IN THE CREDIT SPACE AND NOT SIGNALING SOMETHING THAT MAKES ME CONCERNED. ON THE EQUITY SIDE WE WILL ONCE AGAIN BE STARTING EARNINGS SEASON IN JUST A FEW WEEKS AND I THINK IT WILL BE VERY IMPORTANT FOR PEOPLE TO SEE THE BREADTH OF EARNINGS. THIS IS THE MOST IMPORTANT. THIS NARRATIVE THAT IT IS ALL AI DRIVING EARNINGS AND THE ECONOMY IS NOT QUITE TRUE. YET WE NEED PROOF POINT AFTER PROOF POINT THERE ARE SPACES IN THE INDUSTRIAL SIDE DOING WELL. THAT THE CONSUMER, WHOSE DATA LOOKS QUITE GOOD, CONTINUES TO SPEND AND INCOMES ARE OK. THE NEXT COUPLE OF WEEKS SHOULD ALLOW FOR COMFORT EVEN AS WE GET THE POLICY DECISIONS AND THINGS THAT COULD CAUSE VOLATILITY. MICHAEL: ONE OF MY FAVORITE QUESTIONS I EVER HEARD IN THE OVAL OFFICE OF THE PRESIDENT. YESTERDAY ONE OF THE REPORTERS ASKED DONALD TRUMP WHETHER THE TREASURY SHOULD INCREASE THE SIZE OF 30 YEAR OPTIONS. I AM NOT SURE THAT IS SOMETHING THE PRESIDENT FOCUSES ON. PROBABLY NOT HIS WHEELHOUSE. WHEN HE TALK ABOUT EQUITIES AND BONDS, EVERYBODY HAS BEEN BUYING SEVEN STOCKS, NOW YOU WANT BREATH. HOW ARE THE REST OF THE STOCKS IN THE S&P 500 BESIDES THE MAGNIFICENT 7 GOING TO BE ABLE TO HANDLE HIGHER INTEREST RATES? SEVEN WILL BUY WHATEVER YOU OFFER THEM. WHAT ABOUT EVERYBODY ELSE? KATE: WE HAVE TO BE CONSCIOUS OF THE FACT THAT THERE ARE AREAS OF THE MARKET THAT INTEREST-RATE SENSITIVE. AT THE BEGINNING OF THIS YEAR WE FELT CONTRARIANS ARE OUTSIDE OF CONSENSUS WHEN WE WERE SAYING THE POLICY MOVES WAS LIKELY TO BE TIGHTENING INSTEAD OF CUTTING RATES. THIS IS IMPORTANT BECAUSE WE ARE ALSO LOOKING AT THE RATE SENSITIVE PARTS OF THE MARKET AND SOME PEOPLE RUSHING INTO THAT, WE SAW THAT HAPPEN WITH THE PAST MONEY COMMUNITY, THEY WOULD FIND THEMSELVES DISAPPOINTED. IT TOOK A LITTLE LONGER FOR SMALL CAPS WHO ARE MUCH MORE RATE SENSITIVE AND WILL BE MUCH MORE CHALLENGED AS WE CONTINUE TO TIGHTEN POLICY FOR THIS PRICE REACTIONS TO HAPPEN. SOME AREAS OF THE MARKET THAT ARE REALLY RELIANT ON FUNDING WE WILL HAVE TO WATCH. THAT DISPERSION IS HEALTHY. INTEREST RATES SHOULD MOVE HIGHER AS A RESULT OF THE GROWTH IN THE INFLATION PICTURE. I THINK YOU WILL HAVE TO BE ON YOUR TOES A LITTLE BIT AND ACTIVE MANAGERS SHOULD BE REPOSITIONING AND BEING TACTICAL. DANI: THERE IS A LOT OF NARRATIVES IN THIS MARKET THAT KEEP GETTING CHALLENGED. MICRON HAS BEEN THE STAR IN THIS MARKET AND MAY BE TODAY WE ARE RECONSIDERING. I WAS LOOKING AT ACCENTURE. THE TECH CONSULTING FIRM. WHILE MICRON IS UP ACCENTURE IS DOWN 16% BECAUSE THERE IS A QUESTION OF WHAT DOES TECH CONSULTANCY LOOK LIKE. THEY ARE UP FOR THEIR BEST DAY EVER TODAY BECAUSE THEY HAD GOOD EARNINGS. I WONDER HOW MANY OF THESE NARRATIVES YOU EXPECT TO GET CHALLENGED IN EARNINGS AND WHAT KIND OF CHOP THAT MEANS FOR THE MARKET? KATE: A REALLY GOOD QUESTION ESPECIALLY WITH PROFESSIONAL SERVICES AROUND TIMING. IN THE NEAR TERM CONSULTING SERVICES WILL BE NEEDED TO HELP ENGINEER AND ARCHITECT THE TRANSITION INTO A NEW WORLD USING NEW TECHNOLOGIES. OVER THE MEDIUM-TERM WE HAVE TO ASK OURSELVES, DO WE NEED THOSE PEOPLE, DO WE NEED HUMANS DOING THAT WORK. WHEN YOU LOOK AT THE AREAS OF THE MARKET, THE AREAS OF OUR ECONOMY THAT ARE THE MOST LIKELY TO BE DISRUPTED, COMPANIES AND SECTORS THAT HAVE HIGH LABOR INTENSITY TO SALES AND THINGS THAT ARE REPEATABLE TASKS LIKE PROFESSIONAL SERVICES IS IN THE TOP RIGHT QUADRANT OF PLACES TO BE DISRUPTED. I WOULD JUST SUGGEST PEOPLE WILL CONTINUE TO TEST ALL OF THESE COMPANIES AND WILL TEST ALL OF THE INVESTORS AND SPENDERS IN AI FOR REALIZING THE BENEFITS IN THE NEAR-TERM EVEN THOUGH I AM HIGHLY CONVICTED THAT OVER THE MEDIUM TERM THIS WILL BE TRANSFORMATIONAL FOR EVERYONE. DANI: THANK YOU SO GREAT FOR JOINING US. THAT IS CITI WEALTH'S KATE MOORE. WE ARE UP BY ONE THIRD OF 1% DESPITE YIELDS MOVING HIGHER. LESS STOCKS MOVING TO THE UPSIDE THAN DOWN. MICROSOFT, WE WERE TALKING ABOUT THIS WITH OUR REPORTER CARMEN REINICKE, IT'S BEST QUARTER SINCE 1998. THE GAINS CONTINUE. HERE IS ACCENTURE COME UP 22%. IT SERVICES WERE BEING WIDELY USED. EVEN THOUGH THIS IS A COMPANY THAT IS DOWN FOR THIS YEAR. THIS QUESTION AROUND SERVICES WHEN IT IS LABOR-INTENSIVE, CAN YOU REPLACE THINGS WITH PEOPLE? LET'S LOOK AT SOME OF THE SECTORS. MATERIALS DOWN SIGNIFICANTLY THIS MORNING, DOWN ABOUT 5%. INFORMATION TECHNOLOGY, MICROSOFT DOING WELL. COMING UP, BILLIONAIRE INVESTOR BILL ACKMAN CALLS ANTHROPIC ONE OF THE GREATEST BUSINESS STORIES HE HAS EVER SEEN. MORE FOR MY EXCLUSIVE INTERVIEW COMING UP NEXT. THIS IS "OPEN INTEREST." ♪ TIME FOR SOME TOP CALLS. HERE IS NORAH MULINDA WITH THE ANALYST ACTION WE ARE WATCHING THIS MORNING. NORAH: WELLS FARGO PLACING MICROSOFT ON ITS TACTICAL IDEAS LIST FOR THE FOURTH QUARTER KEEPING ITS OVERWEIGHT RATING ON THE STOCK. THE ANALYST SAYS MICROSOFT IS IN A STRONG POSITION TO MAKE MONEY FROM THE AI BOOM. FROM TECH TO REAL ESTATE, MORGAN STANLEY INITIATING COVERAGE OF SEVERAL HOMEBUILDERS BUT SLAPPING AND UNDERWEIGHT RATING ON NVR. THE COMPANY SAYS IT IS NOT IMMUNE TO HAPPENING -- TO HOUSING AFFORDABILITY AND MARGIN PRESSURE. GOLDMAN SACHS UPGRADING OCCIDENTAL PETROLEUM TO BUY FROM NEUTRAL SAYING IT LOOKS CHEAP. GOLDMAN ALSO SAYS HIGHER OIL PRICES COULD MEAN BIGGER DIVIDENDS. THOSE ARE YOUR TOP CALLS. DANI: BILLIONAIRE BILL ACKMAN IS LOOKING TO TRANSFORM PERTHSHIRE SQUARE AND OR MORE BERKSHIRE HATHAWAY STYLE INVESTMENT FIRM. AS HE IS LOOKING FOR OPPORTUNITIES HE SAYS HE IS NOT BUYING ANTHROPIC IF IT IPO'S BUT IT IS ONE OF THE GREATEST BUSINESS STORIES HE IS EVER SEEN. BILL: THE MARKET IS NARROWLY FOCUSED ON SPACEX AND ANTHROPIC AND THE PICKS AND SHOVELS THAT SUPPORT SPACEX AND ANTHROPIC. DANI: IS THAT A PROBLEM. ON THE 22ND YOU PUT OUT SOMETHING SAYING WILL WE SEE IN ANTHROPIC AS ONE? THERE IS A 10% CHANCE WE KILL HUMANITY. THERE WAS A LARGE PART OF THAT PROSPECTUS THAT BASICALLY SAID HERE'S ALL THE HARM WE MIGHT CAUSE. WHAT YOU MAKE OF IT IPO WITH THAT SORT OF THING IN IT AND IS THAT A COMPANY YOU WOULD BUY? BILL: ANTHROPIC IS PERHAPS THE GREATEST BUSINESS STORY I HAVE EVER SEEN IN TERMS OF FROM DEN OVO TO $2 TRILLION. IN TERMS OF THE REVENUE OF THE COMPANY ON THE QUALITY OF THE PRODUCT, IT IS CLEARLY AN AMAZING COMPANY. QUERY WHETHER THE FRONTIER MODEL COMPANIES WILL BE ABLE TO MAINTAIN THEIR MARKET PRESENCE IN LIGHT OF THE POWER OF OPEN SOURCE AND OPEN WEAVE MODELS. DANI: DOES THAT MEAN YOU WOULD NOT BUY IT BECAUSE YOU ARE SCARED OF THAT COMPETITION? BILL: WOULD LOOK TO BUY BUSINESSES TO PREDICT WHAT THEY WILL LOOK LIKE. BORING THINGS LIKE MICROSOFT OR S&P GLOBAL OR VISA AND MASTERCARD. THINGS THAT ARE IN OUR PORTFOLIO. WE ARE LESS LIKELY TO BE AN INVESTOR IN A FAST-GROWING BUSINESS THAT IS CONSUMING A HUGE AMOUNT OF CAPITAL AND YOU ARE BETTING ON THE LINES CROSSING AT SOME POINT. DANI: IS THERE A RECKONING? BILL: HAS THE PROSPECTUS ACTUALLY BEEN FILED? DANI: IT IS JUST REPORT SO WE HAVE TO WAIT TO SEE WITH THE ACTUAL LANGUAGE HAS SAID. BILL: I THINK JENSEN HUANG HAS MADE THIS POINT WELL. IF YOU'RE A $2 TRILLION COMPANY AND YOUR PRODUCT OR SERVICE THAT CAN CAUSE ENORMOUS HARM YOU WILL BE CAREFUL ABOUT RELEASING THE PRODUCT TO THE MARKET. I FEEL LIKE YOU DO NOT NEED, AT LEAST FOR THE ANTHROPIC'S OF THE WORLD, YOU DO NOT NEED LEGISLATION OR THE GOVERNMENT TO PROTECT THEM FROM DOING SOMETHING STUPID. IT IS A BIT LIKE A PHARMA COMPANY. YOU DO NOT RELEASE A DRUG TO THE WORLD. MAYBE IN THE CASE OF A DRUG YOU HAVE GOVERNMENT OVERSIGHT. THERE IS A HUGE DISINCENTIVE TO PUT OUT A PRODUCT THAT WILL DESTROY THE WORLD. DANI: DOES THAT MEAN YOU'RE LESS CONCERNED ABOUT THE AI WORST CASE SCENARIO. YOU THINK THEY WILL SELF REGULATE OK? BILL: I AM LESS CONCERNED ABOUT ANTHROPIC OR OPENAI. I AM MORE CONCERNED ABOUT A ROGUE ACTOR WHO DOES NOT HAVE THE SAME CONSIDERATIONS WHO USES THE RESOURCES OF AN OPEN-SOURCE MODEL TO CAUSE ENORMOUS FARM. THAT IS A VERY SIGNIFICANT RISK. I WOULD RATHER THE BEST FRONTIER LABS ARE INCREDIBLY POWERFUL SO THEY CAN PROTECT US APART FROM THE ROGUE OPERATOR LESS POWERFUL AI. DANI: MORE FROM MY EXCLUSIVE INTERVIEW IN THE NEXT HOUR. WE ALSO GOT INTO HIS SURPRISE THAT THE AURO IPO WAS DELAYED AND THAT FITS INTO OUR NEXT STORY. DEALMAKING HAS LOST STEAM. THE VALUE OF DEALS FELL 10% FROM A YEAR AGO. COMPANIES ARE JUST $1.2 TRILLION AWAY FROM A RECORD M&A SET IN 2021. JOINING US IS BLOOMBERG SENIOR DEALS REPORTER MICHELLE DAVIS. I FEEL LIKE WHEN THERE WAS THIS BONANZA OF DEALS IN THE FIRST AND SECOND QUARTER THERE WAS A NARRATIVE LIKE MAYBE WE WILL NOT HAVE A SUMMER, IT WILL BE A REALLY BUSY SUMMER. NOT THAT IT WAS NOT BUSY BUT IT DID FEEL LIKE SLIGHTLY A LULL. MICHELLE: SOME OF THE MOMENTUM DEFINITELY SLOWED. THE IRONY AND SOMETHING BANKERS HAVE TOLD ME IS BECAUSE EVERYONE FEELS LIKE NOW IS THE TIME TO TRY YOUR DREAM DEAL FROM EVERYONE IS SHOOTING FOR THE STARS. THAT MEANS THEY ARE WORKING ON BIG DEALS AND BIG DEALS ARE HARD TO GET DONE AND THEY HAVE A LOW SUCCESS RATE. I THINK PEOPLE WERE BUSY RUNNING AROUND BUT A LOT OF THEM NEVER SAW THE LIGHT OF DAY. WE CANNOT SAY THAT THEY WERE BUSY. THEY ALL CLAIM THEY ARE THE BUSIEST THEY HAVE EVER BEEN. SOME THINGS DID CHANGE SINCE THE SECOND QUARTER. THE WAR IN IRAN. MIDTERM ELECTIONS ARE COMING UP. NOT AS GREAT OF AN ENVIRONMENT AS IT WAS STARTING THE YEAR. MICHAEL: ORDINARILY YOU GET TO A CERTAIN LEVEL OF INTEREST RATES AND IT TURNS OFF THE DEAL FAUCET. HOW MUCH HIGHER IS THAT REDLINE THAN IT USED TO BE? MICHELLE: WHAT SOURCES TELL US IS FOR A LOT OF THE BIG COMPANIES THINKING ABOUT MEGA M&A, AN INCREASE BY A COUPLE INTEREST RATES WILL NOT BE THAT MEANINGFUL. EITHER THEY ARE FUNDING A STOCK WHERE THEY ARE INVESTMENT GREAT COMPANIES AND IT IS NOT THAT COST PROHIBITIVE. I THINK AT THE MARGINS IT DOES START TO IMPACT SENTIMENT OF BANKS ARE FEELING LIKE IT IS RISKIER TO EXTEND LARGE AMOUNTS OF DEBT, PRIVATE EQUITY. IT IS NOT GREAT FOR THEM. WE HAVE BEEN WAITING FOR FIVE YEARS FOR THEM TO GET OFF THE SIDELINES. INTEREST RATES GOING UP IS THE WRONG DIRECTION FOR THAT TO HAPPEN. DANI: ON THIS IDEA THAT PEOPLE CAN DREAM THEIR IDEAL DEALS, I WONDER HOW MUCH THAT IS HITTING A ROADBLOCK WHEN IT COMES TO STATE REGULATORS. WE WERE TALKING ABOUT THIS. A COMPANY THAT WANTS TO SPIT OUT AND AGRICULTURAL UNIT ADDING A CHALLENGE FROM CALIFORNIA. SHARES ARE DOWN CONSIDERABLY BECAUSE THEY ARE ABLE TO FINALLY COMPLETE THAT SPIN OFF. IS THERE THIS TENSION THAT THE FEDERAL REGULATORY ENVIRONMENT LOOKS GOOD BUT MAYBE THE DEAL IS HARDER TO GET THROUGH THAN WE THOUGHT BECAUSE STATES HAVE SOMETHING TO SAY. MICHELLE: THAT IS EXACTLY WHAT WE ARE STARTING TO SEE. EVEN THOUGH NO MATTER WHAT HAPPENS IN NOVEMBER THE FTC AND DOJ ARE STILL GOING TO HAVE THE SAME REGULATORS AND STILL BE A GOOD FEDERAL REGULATORY ENVIRONMENT, WE HAVE SEEN STATE AG'S GETTING POLITICAL AND DEALS GETTING EXTREMELY POLITICIZED. IF YOU KNOW YOU WILL BE ANNOUNCING A DEAL THAT IS POLITICALLY SENSITIVE, YOU DO NOT WANT TO ANNOUNCE SOMETHING IN THE MONTH BEFORE THE MIDTERMS WHERE POLITICIANS WILL HOLD YOU UP AS A POSTER CHILD FOR WHY M&A SHOULD NOT HAPPEN. THAT IS SPOOKING COMPANIES ARE MAKING THEM LESS EMBOLDENED TO MAKE A SPLASH. IT IS NOT A GUARANTEE THAT IF YOU AND IF YOU KNOW TRUMP WILL GREENLIGHT IT SOMEONE COULD TRUMP -- SOMEONE COULD COME IN AT THE LAST MINUTE AND TRIED TO BLOCK IT. MICHAEL: YOU TALK ABOUT EVERYONE LOOKING FOR THE BIG DEAL. IF YOU WANT TO MAKE UP THAT $1.2 TRILLION, I LOVE THE WAY WE FRAME IT AS IT IS NOT THAT FAR AWAY, IT IS A LOT OF MONEY, WHERE ELSE BESIDES TECH AT THE BIG COMPANIES ABSORBING THE SMALLER PLAYERS, WHERE ELSE COULD YOU LOOK? MICHELLE: A LOT OF WHAT IS MISSING FROM THIS BIG M&A BOOM HAS BEEN THE SMALLER DEALS THAT THE SMALLER COMPANIES PURSUE BECAUSE EVERYONE IS SPENDING THEIR TIME ON THE M&A. THERE IS A LOT OF APPETITE TO TRANSACT ACROSS ALL SECTORS. CONSUMER RETAIL IS THE EXCEPTION TO THAT BECAUSE SO MUCH OF THE MONEY IN PUBLIC MARKETS IS LEAVING CONSUMER AND GOING INTO TECH AND INDUSTRIALS. EVERYTHING ELSE EVERYONE SAYS WILL CONTINUE TO BE BUSY. BIOFARMA HAS BEEN ONE WHERE WE SEE MORE DEALS OVER $1 BILLION THAT IN ANY OTHER YEAR. NO DEALS OVER 10 OR 15. IT IS NOT LIKE WE HAVE SEEN BIG DEALS IN THAT SPACE. WE WILL SEE MORE THERE. FINANCIAL SERVICES. IT SEEMS LIKE PEOPLE ARE TAKING ADVANTAGE OF OVERALL REGULATORY ENVIRONMENT THERE. DANI: THANK YOU SO MUCH. MICHELLE, YOU HAD A GREAT SCOOP ON SOME BIOFARMA DEALS JUST THIS WEEK. MICHELLE DAVIS FROM OUR DEALS TEAM, THANK YOU. ACCENTURE ON TRACK FOR ITS BIGGEST ONE-DAY GAIN EVER. MORE ON THE BIGGEST MOVERS. THIS IS "OPEN INTEREST." ♪ DANI: STOCKS PUSHING HIGHER ON THE FIRST DAY OF THE QUARTER IN THE FIRST DAY OF THE MONTH. UP .2% FOR THE S&P. THE NASDAQ OUTPERFORMS. YOU CAN SEE WHERE THE TENSION IS. IT IS IN THE IMPACT OF HIGHER YIELDS. THE RUSSELL 2000 IS DOWN .3%. RUSSELL 2000 HAS BEEN VASTLY UNDERPERFORMING. THE EQUAL WEIGHT HAS BEEN ON TRACK FOR THE LONGEST CONSECUTIVE WEEKLY LOSSES, SEVEN OF THEM. THAT ONLY HAPPENED TWO OTHER TIMES IN HISTORY. BOTH OF THOSE HAPPENED IN A BEAR MARKET. YIELDS HIGHER FOUR BASIS POINTS. THAT IS THE PRESSURE AS BRENT CRUDE JUMPS 3%. REALLY INTERESTING SINGLE NAME STORIES. MICRON, BLOWOUT QUARTER, 87 PERCENT PROFIT MARGINS. MAYBE THAT WAS ALL PRICED IN. A CENSURE IS A REAL WINNER. -- ACCENTURE IS A REAL WINNER. THERE WERE QUESTIONS OVER AI. CORTEVA COMPLETES A SPIN OFF, SOMETHING THE CALIFORNIA GOVERNMENT TRIED TO BLOCK. DOWN 83% AS ITS BUSINESS GET SPUN OUT. ROCKET LABS IS UPGRADE, CITI CALLING IT A CORE HOLDING FOR SPACE BULLS. PARAMOUNT SKYDANCE FINISHES ITS ACQUISITION OF WARNER AND HAS A NEW CEO, THE FORMER CEO OF MATTEL. COMING UP WILL CATCH UP WITH THE ASTON MARTIN CEO. DANI: WE ARE 30 MINUTES IN YOUR TRADING DAY. ALONGSIDE MICHAEL MCKEE. THE MARKET IS ATTEMPTING TO RALLY. WE ARE WAITING ON BREAKING DATA FROM ISM SPIRIT WE GOT THE FINAL READING FROM S&P MANUFACTURING PMI AND WE WERE WEAKER THAN THE PRELIMINARY NUMBER. IT CAME IN AT 57 AND NOW IT IS AT 55. IT DID BECAUSE YIELDS TO SPIKE HIGHER IN WEEKS PRIOR. WE ARE GETTING ISM ANY FACT COMING THROUGH. LET'S BREAK DOWN THE DATA. MICHAEL: IT IS INTERESTING BECAUSE THE NUMBER BARELY CHANGES AND GOES TO 54.5 FROM 54.6. READING TOO MANY COLUMNS. THE PRICES PAID INDEX GOES UP TO 77.9 FROM 77.1 AND THAT IS NOT GOING TO GO OVER WELL IN THE MARKETS. NEW ORDERS AT 55.3 FROM 53.7. THE EMPLOYMENT INDEX IS AT 52.7 FROM 51.2 WHICH MIGHT SUGGEST SOME GOOD NEWS IN TERMS OF FACTORY HIRING WHEN WE GET THE REPORT TOMORROW. WE HAD A BIG GAIN IN THE ADP NUMBERS FOR THAT. IT DOES LOOK LIKE WE ARE STILL SEEING SOME STRENGTH IN MANUFACTURING. THEY ARE HAVING TO PAY UP AND THAT WILL NOT BE SOMETHING THE FED WANTS TO SEE AND THAT MEANS THE INVESTMENT WORLD WILL NOT BE HAPPY. DANI: MARKETS ARE REACTING. THE S&P STARTED SELLING OFF AS WE ENTERED THE 10:00 A.M. OUR. IT IS DOWN ABOUT .1%. THAT UNDOES ITSELF. IT READ ON WHAT THE BOND MARKET IS DOING. THE FRONT END IS DOWN BY ABOUT ONE BASIS POINTS. FURTHER OUT ON THE CURVE YOU GET GAINS, YOU GET LOSSES AND HIGHER YIELDS. YOUR 10 YEAR YIELD UP BY FIVE BASIS POINTS. THE 30 YEAR OF YIELD IS UP SIX BASIS POINTS. BOTH TRADING AT MULTIYEAR DECADE HIGHS. MAYBE IT IS THE SAME NARRATIVE MARKET HAS BEEN GRAPPLING WITH. THIS IS AN ECONOMY THAT LOOKS STRONG. WE HAD THE JOB REPORT EARLIER. MAYBE ISM RESULTS DO NOTHING TO CHALLENGE THAT. MICHAEL: LOOKING AT THE ISM COMMENTARY, THEY COLLECT COMMENTS FROM VARIOUS INDUSTRIES. THE STORY YOU'RE GETTING IS ORDER LEVELS ARE STRONG. PEOPLE ARE STILL ORDERING BUT THERE IS A CHALLENGE FINDING WORKERS, BUT FOR THE MOST PART IS A QUESTION OF COSTS. THERE IS SOMEONE IN THE FOOD AND BEVERAGE AND TOBACCO AREA SAYING FUEL COSTS ARE STILL AFFECTING TRANSPORTATION COSTS AND THE OVERALL COST OF GOODS. THAT IS SOMETHING YOU WILL HAVE TO FIGURE INTO WHEN YOU'RE LOOKING AT EARNINGS, ESPECIALLY SINCE WE SAW A BIG INCREASE IN AUGUST FOR FUEL PRICES. INTERESTING TO SEE HOW THAT AFFECTED THE LAST MONTH OF THE MARGINS FOR COMPANIES. DANI: SHALL WE THAT QUESTION TO DAN SUZUKI? MICHAEL: IF ONLY WE HAD SOMEONE TO ASK. DANI: IF ONLY WE HAD THE PERFECT PERSON. DAN SUZUKI JOINS US NOW. YOU EXPECT ANY OF THOSE TENSIONS TO SHOW UP IN CORPORATE RESULTS? DAN: ABSOLUTELY. THE QUESTION IS HOW MUCH. IT IS A PRESSURE THAT IS BUILDING. THE QUESTION IS HOW MUCH WORSE IT WILL BE GOING FORWARD. IF YOU LISTEN TO THE COMPANY COMMENTARY THEY'VE BEEN TELLING US THIS IS HAPPENING. INPUT COSTS ARE RISING FASTER THAN THEY CAN PASS THOSE ON TO CONSUMERS SO THAT WILL BE ONGOING PRESSURE. IT IS ONE OF MANY OF THE ISSUES COMPANIES ARE HAVING TO DEAL WITH. MICHAEL: CAN COMPANIES PASS THAT ALONG? I WAS IN THE MIDWEST TALKING TO MANUFACTURERS AND THEY ARE SAYING WE ARE AT A POINT WHERE WE HAVE TO RAISE PRICES. THEN YOU TALK TO OTHERS WHO SAY WE HAVE TO RAISE PRICES BUT THE CUSTOMERS GO AWAY WHEN WE DO THAT. DAN: OBVIOUSLY THIS IS THE STORY OF THE K-SHAPED ECONOMY. BY AND LARGE THE U.S. CONSUMER AS A WHOLE CAN PAY THOSE HIGHER PRICES AND BE WILLING TO PAY THOSE PRICES. IF YOU LOOK AT ALL SORTS OF MEASURES OF SPENDING AND RETAIL SALES, PEOPLE ARE SPENDING. THE UPWARD REVISION WE GOT TO THE THIRD QUARTER ESTIMATES IS REALLY A FUNCTION OF CONSUMER SPENDING. REVISION TO THE SECOND QUARTER NUMBER WAS CONSUMER. CLEARLY THE CONSUMER CAN SPEND. IT IS GETTING MORE DIFFICULT BUT THERE WILL BE PRICING POWER. DANI: YOU HAVE YIELDS THAT CONTINUE TO PUSH HIGHER. FOR THE LAST WEEKS AND MONTHS THERE IS THIS QUESTION OF MAYBE THIS IS JUST POSITIONING, MAYBE THIS IS FUNDS. AT WHAT POINT DO YOU GET THE ALL CLEAR? CAN YOU HAVE THE ALL CLEAR WHEN DATA CONTINUES TO COME IN LIKE THIS? DAN: I DON'T THINK YOU CAN GET THE ALL CLEAR WITH RATES RISING ABOVE 5%. THAT IS THE ISSUE. TODAY'S ISM REPORT IS THE WORST CASE SCENARIO. GROWTH HAS BEEN THE THING HOLDING THINGS UP AND YOU BEEN HAVING TO DO WITH THAT GROWTH ON TOP OF INFLATION. NOW YOU GET SLOWER GROWTH AND HIGHER INFLATION PRESSURES. THAT IS WHAT THE MARKET DOES NOT WANT TO SEE. THAT IS THE ISSUE. IF YOU TALK ABOUT RATES AND YOU TALK ABOUT THE BREAKING POINT AND WHAT IS GOING TO HAPPEN, I THINK IT IS REALLY JUST AN OIL STORY. REGARDLESS OF THE FISCAL DILEMMA AND GEOPOLITICS AND WHATNOT, THE REALITY IS ORIOLE CORRELATIONS WITH RATES ARE AT AN ALL-TIME HIGH, THEY ARE AT A RECORD HIGH AND THAT IS WHAT WILL DRIVE FED POLICY AND WHAT HAPPENS WITH RATES GOING FORWARD. MICHAEL: THE QUESTION IS WHAT HAVE YOU DONE FOR ME LATELY. OIL PRICES MAY GO DOWN AS A CERTAIN PERSON KEEP SAYING THEY DO NOT GO DOWN, BUT THE FED RAISING INTEREST RATES, THOSE RATES WILL STAY UP. IS IT AT A POINT WHERE YOU HAVE TO START FACTORING THAT INTO YOUR FORWARD PE OUTLOOK BECAUSE THE FED HAS NOT RAISED RATES IN'S 2023 AND HERE WE GO AGAIN? DAN: OBVIOUSLY THE FACT THAT INTEREST RATES ARE HIGHER IS STARTING TO BITE, IT IS STARTING TO PRESSURE THE LOWER QUALITY SEGMENTS OF THE CREDIT MARKETS AS WELL AS THE STOCK MARKET. YOU HAVE TO PRICE THAT THIS WILL CONTINUE AND BE THE CASE FOR SOME TIME. THE REALITY IS IT IS ALREADY STARTING TO BE REFLECTED INTO MARKETS. THE MARKET AS A WHOLE IS NEAR ALL-TIME HIGHS BUT IF YOU LOOK UNDERNEATH THE SURFACE LOTS OF PEOPLE ARE TALKING ABOUT THIS. MOST PARTS OF THE MARKET ARE AT LEAST 5% OFF THEIR HIGHS, LET ALONE SEGMENTS OF THE MARKET THAT ARE DOWN 15 PLUS PERCENT. THERE IS LOT OF ACTION HAPPENING BENEATH THE SURFACE. A LOT OF THAT HAS TO DO WITH THE HIGHER INTEREST RATES AND THE TIGHTENING OF FINANCIAL CONDITIONS. DANI: WE HAVE SEEN EQUAL WEIGHT UNDERPERFORMS THE LAST SEVERAL WEEKS. I GET YOUR POINT THERE ARE POCKETS BUT THEY FEEL RELATIVELY ISOLATED. I WONDER IF ANYTHING CAN HAPPEN THAT MAKES IT FEEL MORE WIDESPREAD OR AS LONG AS YOU HAVE THAT HEAVY CONCENTRATION AROUND AI, THAT CONTINUE TO BE THE CORNERS OF THIS MARKET AND NOT THE MAIN ATTRIBUTE TO IT? DAN: THEY'RE BASICALLY TWO TUG-OF-WAR IS HAPPENING FOR MARKETS. ONE IS RATES AND GROWTH. TODAY THE GROWTH STORY LOST A LITTLE BIT THERE. THE OTHER TUG-OF-WAR IS A VERSUS EVERYTHING ELSE. THE AI STORY IS HOLDING UP THE MARKETS AND PULLING UP THE EARNINGS STORY. WHEN YOU GO OUTSIDE OF THAT AI TRADE, IT IS NOT JUST SMALL POCKETS. IF YOU LOOK OUTSIDE THE U.S. MOST MAJOR MARKETS ARE DOWN SIGNIFICANTLY. RSIS ARE FALLING OFF QUICKLY. THAT IS HAPPENING IN EVERY SEGMENT OUTSIDE OF THE AI STORY WITHIN MARKETS. I DON'T THINK IT IS JUST ISOLATED POCKETS. MICHAEL: A TOUGH QUESTION. GOING BACK TO MOHAMED EL-ERIAN YEARS AND YEARS AGO SAYING THE LOW INTEREST RATE ENVIRONMENT IS THE NEW NORMAL. ARE WE BACK TO A NEW OLD NORMAL? IS THIS WHAT INVESTORS SHOULD EXPECT, RATES IN THIS VICINITY OUT INTO THE FUTURE? DAN: THAT IS THE PERFECT FRAMING OF IT. WE WERE JOKING ABOUT WHAT YOU ARE TALKING ABOUT. THE NEW OLD NORMAL OR BACK TO THE OLD OLD NORMAL. YOU HAVE THIS POST GFC INTO THE PANDEMIC PERIOD, THAT IS THE HISTORIC ANOMALY. YOU LOOK AT VARIOUS FACTORS. THAT WAS THE ANOMALY AND WE ARE GOING BACK TO A MORE NORMAL PERIOD. THAT NORMAL PERIOD MEANS THERE'LL WILL BE MORE RATE VOLATILITY, THERE WILL BE HIGHER HIGHS AND HIGHER LOWS ON RATES. THIS IS A DIFFERENT ENVIRONMENT. THE LAST 10 YEARS OR PRE-COVID THIS WAS ABOUT BUILDING YOUR BUSINESS AND YOUR BALANCE SHEET FOR A DIFFERENT KIND OF WORLD THAN WE ARE NOW IN TODAY. DANI: SO GREAT TO HAVE YOU ON. DAN SUZUKI, I CAPITAL GLOBAL INVESTMENT STRATEGIST. A CHECK ON YOUR MARKETS. STOCKS REVERSE THEIR GAINS, YIELDS MOVE HIGHER, JUST NEAR 5.32, HIGHEST LEVEL SINCE 2002. BRENT CRUDE AT $100. I WONDER HOW FAR THIS GOES TO UNDO SOME OF THE EXCITEMENT AROUND WILLIAMS, THIS IDEA THAT MAYBE THERE IS NO URGENCY. MAYBE THE DATA NOW SUGGESTS URGENCY AND THE FACT THAT WE HAVE 10 FED SPEAKERS COMING UP ON THE DOCKET. MICHAEL: WE HAVE 13 OF THE 19 FOR THE WEEK AND EVERYONE WILL BE PARSING VERY CLOSELY FOR THEIR VIEWS. IT GOES BACK TO SOMETHING A MEMBER OF THE OPEN MARKET COMMITTEE TOLD ME YESTERDAY. YOU CANNOT LOOK AT FED FUNDS FUTURES BECAUSE AT THIS POINT THEY WILL CHANGE. THEY WILL CHANGE ON ISM NEWS AND CHANGE ON JOBS NEWS, THEY WILL CHANGE THE INFLATION NEWS WE GET. DANI: AND 24 HOURS AFTER THE JOB DATA WHO KNOWS WHAT THE MARKET LOOKS LIKE. LET'S GET TO MOVERS WITH NORAH MULINDA. NORAH: MACRON IS FALLING AFTER A BLOWOUT QUARTER. -- MICRON IS FALLING AFTER A BLOWOUT QUARTER. THE STOCK HAS BEEN ON A TEAR COME UP 260% THIS YEAR. GOOGLE UNVEILING GEMINI, ITS LATEST AI MODEL WITH A FOCUS ON CYBERSECURITY. THIS IS ANOTHER SIGN GOOGLE IS CLOSING THE GAP OF THE FRONTIER OF ARTIFICIAL INTELLIGENCE. BLOOMBERG DOES REPORT SOME EMPLOYEES ARE SKEPTICAL ABOUT HOW WELL THE MODEL PERFORMS. YOU'LL SEE SHARES OF GOOGLE DOWN .4%. LET'S GO TO SPACE. CITI STARTING ROCKET LAB AND CALLING IT A CORE HOLDING FOR SPACE GOALS. THE FIRM SAYS ROCKET LAB IS WELL-POSITIONED TO MAKE MONEY FROM THE GROWING OPPORTUNITIES ACROSS THE SPACE INDUSTRY. SHARES 1.9%. THOSE ARE YOUR MORNING MOVERS. DANI: COMING UP, MARK JENKINS ON GROWING CONCENTRATION RISKS AS PRIVATE CREDIT POURS INTO AI. THAT IS ON THE OTHER SIDE OF THE BREAK. ♪ >> IF THERE IS THE CAPITAL, IS THE PORTFOLIO CONSTRUCTION APPROPRIATE IN TERMS OF CONCENTRATION, DIVERSIFICATION, WHICH FOR CREDIT PEOPLE YOU NEED THE DIVERSIFICATION. IS IT THE RIGHT DISCIPLINE TO DO ALL THE UNDERWRITING, NOT JUST IN TERMS OF UNDERSTANDING THE LESSEE OR THE HYPERSCALER, THAT IS THE EASY PART OF UNDERSTANDING THE CREDIT RISK. IT IS STRUCTURING THE CONTRACTS TO MAKE SURE THEY CANNOT WALK FROM THAT CONTRACT IN ADDITION TO UNDERSTANDING THE ASSET YOU'RE ACTUALLY RELYING ON. DANI: THAT WAS KKR'S CHRIS SHELDON YESTERDAY. CARLISLE'S GLOBAL PRESIDENT MARK JENKINS IS WARNING ABOUT GROWING CONCENTRATION RISK AS PRIVATE CREDIT PUSHES INTO AI. HE LOOKS TO THE SOFTWARE BOOM SAYING THE RISK IS REPEATING THE SAME MISTAKES WITH AI INFRASTRUCTURE BY ALLOWING ENTHUSIASM FOR A POWERFUL INVESTMENT THEME TO DRIVE EXCESSIVE CONCENTRATION. MARK JENKINS JOINS US NOW. THIS IS SUCH A GOOD PIECE BECAUSE PEOPLE LOVE TO SAY IT IS DIFFERENT THIS TIME ABOUT MANY THINGS. SO MANY OF YOUR PEERS HAVE SAID WE ARE AN AI FIRM NOW. IS THE INDUSTRY MAKING A MISTAKE IN FINDING ITSELF OVER CONCENTRATED IN AI? MARK: THANKS FOR HAVING ME. WHAT WE SAID HIS LET'S NOT REPEAT THE PAST. THE PAST WAS LESS THAN 12 MONTHS AGO. THE SECOND POINT IS, THIS IS BEEN ACROSS ALL OF OUR INVESTING VEHICLES IS CONCENTRATION IS SOMETHING THAT COMES UPON YOU WHEN VOLATILITY OCCURS BUT DIVERSIFICATION, IT IS TOO LATE. DIVERSIFICATION IS YOUR ONLY ANECDOTE IN TERMS OF EXTREME VOLATILITY AND UNCERTAINTY IN THE MARKETS. WE CAN ARGUE THERE IS SOME UNCERTAINTY IN THE MARKET, THE RATE MARKET, GEOPOLITICAL UNCERTAINTY COME INTO AI RIGHT NOW IS A GREAT BOON TO THE ECONOMY BUT THERE IS UNCERTAINTY AS TO WHERE IT WILL BE. I THINK IT IS A BROAD ISSUE BECAUSE WITH THE AMOUNT OR THE DELUSION OF PAPER COMING TO THE MARKET ON THE AI SIDE, IT HAS TO GO DOWN EVERY POCKET. IT IS GOING THROUGH THE INVESTMENT-GRADE SIDE COME INTO PROJECT FINANCE AND INFRASTRUCTURE AND NOW COMING INTO THE BANK SYNDICATED LOAN MARKET AND ALSO PRIVATE CREDIT. THE STAT WE PUT OUT THERE WAS ABOUT ONE TRILLION GOING INTO PRIVATE CREDIT. THAT WOULD BE AN INCREASE OF 50% OF OVERALL PRIVATE CREDIT. THAT WOULD BE EXTREME CONCENTRATION AFTER WHAT WE WENT THROUGH WITH THE SASPOCALYPSE WHERE WE HAD A MASSIVE CONCENTRATION OF SOFTWARE WE BELIEVED WAS NOT A CONCENTRATED RISK. THERE WERE A NUMBER OF VERTICALS WITHOUT SOFTWARE. WE HAD TECHNOLOGICAL DISRUPTION AND WE FOUND OUT IT WAS CORRELATED. HE DID NOT WANT TO HAVE THAT SAME THING HAPPENING AGAIN IN YOUR PORTFOLIO. DANI: I AM ASSUMING INVESTORS HAVE TO WRESTLE WITH THIS CONUNDRUM OF SAYING THIS IS A HUGE FORCE WHICH YOU ALSO THINK IT IS. I DO NOT WANT TO BE OVEREXPOSED. WHAT ARE YOU DOING AT CARLYLE? ARE THERE SPECIFIC RISK LIMITS OR METRICS YOU'RE USING TO MAKE SURE YOU ARE INVESTED IN THIS BUT YOU ARE NOT EXCEEDING ANY SORT OF CONCENTRATION THAT WOULD MAKE IT UNCOMFORTABLE? MARK: WE ARE HUGELY RECEPTIVE TO AI. IF YOU THINK ABOUT WHAT CARLISLE HAS DONE, THE MOMENT FOR US WAS NOVEMBER 2022 AND WE SAW THAT AND WE SAID WE HAVE TO IMPLEMENT IT TO BE MORE EFFICIENT, THAT IS HOW WE RUN OUR BUSINESS. WILL BE USING OUR PORTFOLIO COMPANIES TO APPROVE RETURNS FOR INVESTORS. A COUPLE WEEKS AGO OUR CEO ANNOUNCED WE HAVE A PARTNERSHIP WITH M.I.T. WHERE WE WILL BE USING OUR PRIVATE DATA TO THINK ABOUT HOW WE CAN MAKE BETTER INVESTMENT DECISIONS. WE EMBRACE IT. WE THINK THIS IS A PROFOUND CHANGE. MOST PROFOUND THING I'VE SEEN IN 36 YEARS. THE FACT OF THE MATTER IT DOES NOT TAKE AWAY FROM FUNDAMENTAL INVESTMENT PRINCIPLES WHICH ARE NOT TO GET OVERLY CONCENTRATED IN ANY THEME. THERE ARE NUMBER OF THEMES TO INVEST IN THE MARKET. AI IS ONE THEME. ANOTHER THEME IS DEFENSE AND AEROSPACE. ANOTHER THEME IS ENERGY SECURITY . THERE ARE A NUMBER OF THEMES WE CAN INVEST IN ACROSS OUR PLATFORM AND THAT IS WHERE WE ARE FOCUSING OUR TIME. NOT ONE THEME WE GO ALL IN ON MULTIPLE THEMES. WE CANNOT PATH OUT WHAT WILL HAPPEN, ESPECIALLY WITH THE UNCERTAINTY. MICHAEL: HOW DO YOU KNOW HOW TO ALLOCATE INTO THE DIFFERENT THEMES? MARK: AND CREDIT IT IS LITTLE MORE -- YOU REALLY DO NOT WANT TO BE OVER ALLOCATED RELATIVE TO THE MARKET WAITS. WHAT HAPPENS IS WHEN THERE IS A MASSIVE AMOUNT OF PAPER COMING IN IT DOES OVERWHELM THE MARKET ALLOCATIONS. WE LOOK AT THAT AND SAY TO OURSELVES IS THAT THE AMOUNT OF RISK WE WANT TO TAKE? I'M OF OUR INVESTORS ARE SAYING THEY WANT US TO PUT LIMITS IN PLACE WITH THE ALLOCATIONS, SPECIFICALLY ON THE SYNDICATED LOAN SIDE. THE LIMITS ARE 8% TO 10%. DANI: SOME OF THESE DEALS FEEL INCREDIBLY COMPLICATED, ESPECIALLY AROUND DATA CENTERS. I'VE BEEN FASCINATED BY WHAT ORACLE HAS GONE THROUGH, DECLARING FORCE MAJEURE, SAYING WE'RE NOT GETTING ENOUGH PERMITS. IF WE CANNOT GET THIS BUILT BY A CERTAIN TIME WE MIGHT NOT HAVE LEASE PAYMENTS. I LOOKED AT THAT AND SAID HOW WAS THE CONTRACT WRITTEN IN WHICH THIS IS A FORM OF A FORCE MAJEURE THAT THINGS ARE SO FAVORABLE THEY HAVE A GET OUT OF JAIL FREE CARD THAT CAN EXERCISE. IN THE SCRUTINY OF THE STUFF I WONDER WHAT YOU MAKE OF THE CURRENT DEALS COMING TOGETHER. WHEN YOU LOOK AT THE DEALS TODAY THERE ARE THREE COMPONENTS, THE COUNTERPARTY RISK, SEVEN TO EIGHT YOU'RE FACING. NUMBER TWO IS THE ACTUAL STRUCTURE OF THAT CONTRACT. WHAT AVAILABILITY DO YOU HAVE TO HAVE FOR THAT DATA CENTER? WHAT DELIVERIES DO YOU HAVE TO HAVE? WHAT MAINTENANCE. FINALLY IT IS THE UNDERLYING ASSET VALUE. IN TODAY'S ENVIRONMENT EVERYBODY IS RECOGNIZING THE TRUE VALUE IS ON THE COUNTERPARTY BECAUSE THEY ARE INVESTMENT-GRADE BUT THEY ARE FINDING OUT THERE IS A COMPLICATION IN THE ACTUAL CONTRACT BECAUSE HAVING DONE THIS FOR 36 YEARS, I WENT THROUGH THIS AND THE INDEPENDENT POWER MARKET WHEN THEY WERE BUILDING MASSIVE PROJECTS OUT THERE. THERE IS A LOT OF COMPLEXITY IN THOSE MARKETS TO GET BACK TO THE EVENTUAL CREDIT YOU THINK YOU HAVE. THE FINAL IS THE ASSET VALUATIONS, WHICH ARE DIFFICULT RIGHT NOW. IT IS DIFFICULT AND HAVE FAST-MOVING TECHNOLOGY TO UNDERSTAND THE UNDERLYING VALUE. THE LAND AND BUILDING IS NOT RELEVANT TO THE TECHNOLOGY. DANI: I WAS THINKING ABOUT ONE OTHER DEAL. HUDI DOESN'T INFRASTRUCTURE DEAL WHERE THEY ARE ALSO RENTING ANTHROPIC COMPUTE AND THEY PUT NVIDIA CHIPS AND THEY USE NVIDIA NAME TO DO THE LEASE BECAUSE THEY HAVE A BETTER CREDIT RATING. IT FEELS LIKE THERE IS SOME FINANCIAL ENGINEERING GOING ON. MARK: THERE DEFINITELY IS. THE HYPERSCALERS WERE INITIALLY FINANCING THIS OUT OF INTERNALLY GENERATED CASH FLOW AND NOW IF YOU LOOK AT VARIOUS REPORTS, 80% OF IT WILL BE EXTERNALLY FINANCED. THEY CAN ONLY PUT SO MUCH DEBT ON THEIR BALANCE SHEETS SAY THEY WILL LOOK FOR WAYS TO PUT IT OFF BALANCE SHEET AND THESE ARE THE STRUCTURES YOU HAVE SEEN. DANI: IS IT A PROBLEM THAT IS HAPPENING? >> I DON'T THINK IT IS A PROBLEM NECESSARILY. IF ULTIMATELY WHAT WE ARE RELYING ON IS THE UNDERLYING BUSINESS MODEL THOSE ENTITIES HAVE WHICH IS NOT LOOKING AND AI BUSINESS BUT THE VARIOUS BUSINESSES THAT GOOGLE OR META OR AWS OR MICROSOFT HAVE, THEY OF REAL CASH FLOW WE CAN UNDERSTAND AS A CREDIT INVESTOR, BUT THE ISSUE BECOMES WHAT ARE THE RETURNS ON THAT EQUITY GOING TO BE IN ANY -- IN A SEVERE DISTRESS SITUATION WHERE THE MODEL CHANGES WHAT HAPPENS? THAT IS UNKNOWABLE. MICHAEL: GOING BACK TO DANI'S QUESTION, THERE IS AN OLD SAYING THAT GOOD TIMES MAKE FOR BAD LOANS. I KNOW CARLYLE GROUP WOULD NEVER DO THAT. OUR LIVING STANDARDS CHANGING AND IF SO FOR THE WORSE? MARK: WHAT I WOULD SAY IS WE HAD A REALLY NICE MOMENT, I DO NOT THINK ANYONE IN THE INDUSTRY WOULD SAY IT IS A NICE MOMENT, BUT IT IS A GOOD MOMENT WHERE WE PAUSED ON THE RETAIL SIDE. WHAT THAT MEANT WAS PEOPLE PULLED BACK BECAUSE THE SUPPLY THAT WAS AVAILABLE THERE. THEN WE DID SEE A PULLBACK IN TERMS OF WHAT PEOPLE ARE WILLING TO COMMIT TO AND DOCUMENTATION. THAT WAS VERY HEALTHY. RIGHT NOW I WOULD SAY WE ARE IN A GOOD MARKET IN TERMS OF THE AVAILABILITY OF CREDIT. I THINK TERMS ARE SLIGHTLY BETTER THAN THEY WERE 12 MONTHS AGO. THAT IS A GOOD THING RIGHT NOW. I WILL GO BACK TO WHAT I SAID BEFORE. IT IS REALLY IMPORTANT IN THESE DEALS THAT YOU UNDERSTAND THE DOCUMENT. THESE ARE 400 OR 500 PAGES. YOU NEED TO READ THEM. WHEN DISTRESS HAPPENS WE USED TO USE LAWYERS TO HELP US FIGURE OUT HOW TO GET AROUND THESE THINGS AND NOW YOU WILL USE LAWYERS AND AI TO FIGURE IT OUT. DANI: A BRAVE NEW WORLD. THAT IS ALL WE HAVE TIME FOR. THAT IS MARK JENKINS. COMING UP, BILLIONAIRE INVESTOR BILL ACKMAN WEIGHS IN ON ANTHROPIC AND THE BLOCKBUSTER IPO CAPTURING WALL STREET'S ATTENTION. MORE FOR MY EXCLUSIVE INTERVIEW NEXT ON BLOOMBERG. ♪ >> BILLIONAIRE INVESTOR BILL ACKMAN SAT DOWN WITH ME FOR A WIDE-RANGING CONVERSATION ON HIS FUNDS, MARKETS, AI, AND THE DEEPLY PERSONAL STORY BEHIND HIS INVESTMENT IN THE NEW BRAIN INSTITUTE. >> THE MARKET IS NARROWLY FOCUSED ON SPACEX AND ANTHROPIC AND THE PICKS AND SHOVELS. QUOTES IS THAT A PROBLEM? ANTHROPIC WAS ON THE 22ND YOU PUT OUT SOMETHING BASICALLY SAYING WHAT WE SEE ANTHROPIC AS ONE? BY THE WAY, THERE IS A 10% CHANCE WE KILL HUMANITY. THAT IS WHAT WE SAW. THERE WAS A LARGE PART OF THE PROSPECTUS THAT SAID, YOUR OF ALL THE HARM WE MIGHT CAUSE. WHAT DO YOU MAKE OF AN IPO WITH THAT IN IT? IS THAT A COMPANY YOU WOULD BUY? >> ANTHROPIC IS PERHAPS THE GREATEST BUSINESS STORY I HAVE EVER SEEN. FROM LENOVO TO $2 TRILLION, JUST THE REVENUE RAMP OF THE COMPANY AND THE QUALITY OF THE PRODUCT, WE USE CLAUDE INTERNALLY. THERE A QUESTION AS TO WHETHER FRONTIER COMPANIES WILL BE ABLE TO MAINTAIN THEIR MARKET PRESENCE IN LIGHT OF OPEN SOURCE AND OPEN LATE MODELS. >> SO YOU WOULD NOT BUY IT BECAUSE YOU ARE SCARED OF THE COMPETITION? BILL: WE BUY BUSINESSES TO PREDICT WHAT THEY LOOK LIKE OVER A LONG PERIOD OF TIME. MICROSOFT, S&P GLOBAL, VISA, MASTERCARD. THINGS IN OUR PORTFOLIO. WE ARE LESS LIKELY TO BE AN INVESTOR IN A VERY FAST GROWING BUSINESS THAT IS CONSUMING A HUGE AMOUNT OF CAPITAL AND YOU ARE BETTING ON THE LINES CROSSING AT SOME POINT IN THE FUTURE. >> IS THERE A RECKONING TO COME THERE? >> HAVE THE PROSPECTUS BEEN FILED? >> IT IS JUST REPORTS AT THIS MOMENT GOOD >> ON THAT POINT, AND I THINK JENSEN HAS MADE THIS POINT WELL. IF YOU ARE A TRUE -- TO TRILLION DOLLAR COMPANY AND YOU HAVE A PRODUCT OR SERVICE WHICH CAN CAUSE ENORMOUS HARM, YOU WILL BE CAREFUL ABOUT RELEASING THE PRODUCT TO THE MARKET. FOR THE ANTHROPIC S OF THE WORLD YOU DON'T NEED LEGISLATION FROM THE GOVERNMENT TO PROTECT THEM FROM DOING SOMETHING STUPID. IT'S LIKE A PHARMA COMPANY. YOU DON'T RELEASE A DRUG TO THE WORLD. THE HUGE AGAINST DESHA -- THE HUGE DISINCENTIVE IS TO PUT OUT A PRODUCT THAT WILL DESTROY THE WORLD. >> ARE YOU LESS CONCERNED ABOUT AI WORST CASE SCENARIO? DO YOU THINK THEY WILL SELF REGULATE OK? >> I'M LESS CONCERNED ABOUT ANTHROPIC. I'M LESS CONCERNED ABOUT A BAD, ROGUE ACTOR THAT DOES NOT HAVE THE SAME CONSIDERATIONS USES THE RESOURCES OF AN OPEN-SOURCE MODEL. THAT'S A SIGNIFICANT RISK. I WOULD RATHER THE BEST FRONTIER LABS ARE INCREDIBLY POWERFUL TO PROTECT US FROM THE ROGUE OPERATOR USING USE PRODUCTIVE AI. >> I WANT TO CHANGE TONE FOR A MOMENT. YOU HAVE BEEN PRODUCTIVE -- VERY PUBLIC ABOUT THE INCREDIBLY DIFFICULT YEAR YOU HAVE HAD. YOU POSTED A LONG MISSIVE ON X THAT I RECOMMEND TO ANYBODY ABOUT YOUR DAUGHTER, LUCY, WHO SUFFERED A BRAIN HEMORRHAGE AND SHE HAD TO GO TO THE HOSPITAL FOR A SIGNIFICANT OPERATION. AND IN THE WAKE OF THAT SHE WAS LEFT UNABLE TO SPEAK AND WALK. THE MOST IN QUESTION IS, HOW IS HER RECOVERY MOVING ALONG? BILL: I THINK SHE'S DOING REALLY WELL. IT IS A JOURNEY. BUT FROM WHERE SHE STARTED, SHE HAS THE SAME LUCY. SHE HAS THE SAME FRIENDS. SHE HAS HUMOR. SHE IS LEARNING TO WALK AND LEARNING VOWELS AND CONSONANTS -- CONSONANTS AGAIN. SHE IS VERY GOOD AT SAYING NO. EVEN HER VISION, WEAK DID THAT KIND OF MITOCHONDRIAL THERAPY FOR THE FIRST HUMAN PATIENT. AND SHE HAD A ZERO ABILITY TO SEE LIKE. 22-1 THOUSAND IN ONE OF HER EYES, NOT GREAT. WE DON'T KNOW ENTIRELY WHAT IF IT WAS THE MITOCHONDRIAL THERAPY. WE ARE USING HER OF PATIENT ONE. IT SHOULD BE AVAILABLE TO EVERYONE. CONTEMPORARY IS LUCY'S RECOVERY. WE ARE BUILDING AN INSTITUTE THAT IS FOCUSED ON DELIVERING CARE TO PATIENTS. DUR ANI: IN THE MIDDLE OF THIS YOU WERE IN THE MIDDLE OF TWO IPO SPIRIT WHAT WAS GOING THROUGH YOUR MIND? BILL: IT WAS A GOOD DISTRACTION. I WAS ABLE TO RENT THE HOSPITAL ROOM NEXT TO HER. IPOS ARE DONE BY ZOOM TODAY, REALLY. VERY FEW IN PERSON MEETINGS. THIS KEPT ME BUSY. SHE WAS RIGHT THERE. THIS WAS MY INSPIRATION FOR GETTING THE IPO DONE. >> YOU MENTOR DO THAT THROUGH THIS EXPERIENCE, YOU AND YOUR WIFE HAVE STARTED THIS INSTITUTE. YOU FELT BEFORE THAT YOU WERE DESIGNED TO HELP HER. THAT EVERYTHING IN YOUR LIFE LED TO THIS MOMENT. DO YOU THINK IT HAS CHANGED AT ALL WHAT YOU SEE YOURSELF DOING WITH THE REST OF YOUR LIFE? BILL: I ALWAYS HAD THE VIEW THAT A SIGNIFICANT LIFE IS HAVING ONE IN WHICH YOU HAD THE LARGEST IMPACT ON THE LARGEST NUMBER OF PEOPLE, THE LARGEST GOOD IMPACT. IN A WAY, THIS FITS INTO THE MANDATE. I THINK THIS INITIATIVE CAN HAVE A HUGE IMPACT ON A LARGE NUMBER OF PEOPLE. I DON'T KNOW ANYBODY WHO HAS NOT HAD A PARENT OR GRANDPARENT OR A SON OR DAUGHTER OR FRIEND WHO HAS NOT HAD A MAJOR BRAIN RELATED ISSUE. THEY WERE IN THE MILITARY AND THEY GOT HIT WITH A BALLISTIC BULLET, OR THEY WERE RIDING A BICYCLE AND CRASHED IN CENTRAL PARK. OR PSYCHIATRIC ISSUES. THE BRAIN, THOUGH WE HAVE STUDIED THE BRAIN, WE DON'T UNDERSTAND IT. WHAT MAKES THE MOMENT UNIQUE IN HISTORY IS THE ANTHROPIC'S OF THE WORLD ARE MAKING IT POSSIBLE. THE BRAIN GENERATES AN ENORMOUS AMOUNT OF DATA. WE ARE DEVELOPING DEVICES DEARLY, PRECISION AND NARROW SILENT NEUROSCIENCE. THERE ARE LOTS OF APPROACHES TO BASICALLY GETTING DATA FROM THE BRAIN AND SEEING EXAMPLES OF THE DATA BEING CONVERTED INTO, THIS IS WHAT HE IS ACTUALLY TRYING TO SAY. IT WILL BE SOON. LUCY, HERE IS HOW YOU CAN SEE AGAIN. MAYBE YOU WEAR A PAIR OF GLASSES WITH A CAMERA THAT TRANSMITS DATA DIRECTLY TO THE VISUAL CORTEX. WE WILL LEARN A TON ABOUT THE BRAIN IN THE NEXT 3-5 YEARS. HAVING A PLACE THAT AGGREGATES EVERYBODY INTERESTED IN THE TOPIC, I THINK WE WILL MAKE HUGE PROGRESS. >> THAT IS VERY IMPORTANT WORK. WE ARE LUCKY TO HAVE YOU SHARE THE WORK YOU ARE DOING WITH US. BILL ACKMAN SHARED IT IS A -- BILL ACKMAN. IT IS A RARE MOMENT. IN HIS PERSONAL LIFE, HE HAS BEEN VERY UPFRONT. WHEN MOST PEOPLE THINK OF BILL ACKMAN THEY THINK OF A COLD OPERATOR RUNNING THESE FUNDS. IT IS A VERY PERSONAL MOMENT FOR HIM. HE SAYS THEY ARE IN THE FINANCIALLY FORTUNATE POSITION THAT HE CAN FEEL -- FUEL ALL THIS RESEARCH. THE MAN WITHOUT MARKETING TWO IPOS FROM A HOSPITAL FIRM. I INTERVIEWED HIM AT THE TIME AND IT WAS NOT CLEAR HE HAD THIS TRAUMATIC LIFE EVENT. >> SOME PEOPLE CAN COMPARTMENTALIZE BRITA THAT MAKES HIM A GOOD DEALMAKER. IT IS INTERESTING. HE WANTS TO MAKE SHOES AND OTHER BERKSHIRE HATHAWAY. IN THAT OPEN, WARM PERSONALITY WAS WARNED BUFFETT. MAYBE IT IS DRAWING HIM IN THAT DIRECTION. >> UP EVEN TO THE EVERYDAY PERSON. -- APPEALING TO THE EVERYDAY PERSON. HE EXPRESSED SURPRISE THAT THE IPO WAS NOT GOING FULL STEAM AHEAD. THIS IS SOMETHING WE TALKED TO REPORTER MICHELLE DAVIS ABOUT. THE FACT OF THE DEAL ENVIRONMENT IS FACING ALL THE HEADWINDS. TO HIM, IT IS ON THE MARGINS. IT DOES NOT CHANGE WHO -- HOW HE IS INVESTING. YES, IT IS A STRONG MARKET. A DEAL ACTIVITY HAS BEEN STRONG. BUT THE REGULATORY ENVIRONMENT FOR STATES, HIGHER YIELDS MAKES US QUESTION HOW ROBUST CAPITAL MARKETS ARE. >> IT SEEMS LIKE WITH A STRONG, STRENGTHENING ECONOMY, AND AT THE SAME TIME, IT IS FRAGILE. YOU HAVE SEEN MARKETS CONTINUE TO RISE, BONDS CONTINUE TO FALL. AND DATA COME IN GOOD EXCEPT FOR TODAY'S ISM. THE -- THEY LIST COMMODITIES UP IN PRICE. LITERALLY ALL OF THEM. HAVE YOU SEEN THAT BEFORE DANI: HAVE YOU SEEN THAT BEFORE? JUST THE WORD AND NONE UNDER COMMODITIES. >> THERE ARE ALL OF THESE RISKS YOU KEEP TALKING ABOUT. PEOPLE ARE WONDERING HOW LONG THIS CAN KEEP GOING UP. DANI: LET'S LOOK AT THIS MORNING'S MELTDOWN. NOT A MELTDOWN. THE 10 YEAR YIELD WAS HIGHER BEFORE, I WILL CLARIFY. WE ARE TRADING JUST UNDER 5.3. WE ARE AT THE HIGHEST LEVEL IN MORE THAN A DECADE. THE NASDAQ IS HOLDING ONTO GAINS. THE S&P IS UNABLE TO MOVE HIGHER, BASICALLY UNCHANGED, SLIGHTLY LOWER. BRENT CRUDE TRADES ABOVE $100 PER BARREL. INDIVIDUAL MOVERS THIS MORNING. >> THE TOP GAINER IN THE S&P 500. ANOTHER COMPANY JUMPING AFTER EARNINGS TOP EXPECTATIONS, STRONGER REVENUE, AND TO PICK UP OUR NEW CLIENTS CONTRIBUTE OPTIMISM. CONCERNS AI COULD DISRUPT CONSULTING. OF THE COMPANY GIVING A SOLID OUTLOOK FOR THE YEAR AHEAD. AND, COURT DIVA --CORTEVA SHAREHOLDERS, GETTING ONEVYLER. MCCORMICK. MORE PEOPLE COOKING AT HOME TO SAVE MONEY IS GOOD NEWS FOR THE SPICE BUSINESS. MCCORMICK POSTING AT FAST'S SALES GROWTH SINCE 21 AS CONSUMERS LOOK FOR CHEAPER WAYS TO EAT. SHE WAS GIVING UP EARLIER GAINS WE STOP AND INTERCESSION, RIGHT NOW LOWER DUNK -- LOWER BY ABOUT 2%. THOSE ARE YOUR MORNING MOVEMENTS. DANI: MCCORMICK FINALLY TURNED ITS OUTLOOK. COMING UP ASTON MARTIN. WE SPEAK TO THE COMPANY'S CEO NEXT. THIS IS BLOOMBERG OPEN INTEREST. MARTIN IS REVEALING ITS LATEST ENTRY IN THE LUXURY SUV MARKET WITH THE GT MODEL FEATURING A 44.0 LITER ENGINE: 0-60 IN 3.1 SECONDS. THIS CAR WAS REVEALED AT THE OPENING OF THE COMPANY'S NEW FLAGSHIP STORE IN LONDON. HERE IS THE ASTON MARTIN CEO ADRIAN HALLMARK. THE REVIEWS HAVE BEEN BLOWING SO FAR. I WILL ASK THE QUESTION THAT I THINK A LOT OF VIEWERS ARE WONDERING THAT FARMED THIS THING EQUALLY GORGEOUS. HOW MUCH WILL THIS SET THEM BACK, ADRIAN? >> THE U.K. PRICE IS 207,000 POUNDS. AROUND 260 THOUSAND DOLLARS PRETAX IN THE U.S.. >> THAT'S GOOD NEWS, FOR MANY PEOPLE. WHAT IS THE AIM WITH THIS? I WAS TALKING TO MATT MILLER. HIS QUESTION WAS, DO YOU NEED TO BUILD THE ANTITHESIS TO FERRARI, SOMETHING MORE ANALOG THAN THE DIRECTION THEY ARE GOING? IS THAT THE MARKET SHARE YOU ARE CAPTURING WITH THIS, ADRIAN? ADRIAN: I WOULD NOT REFERENCE FERRERI PERSONALLY. THE SUV SEGMENT IN THE LUXURY WORLD IS MORE THAN 50% OF ALL LUXURY CAR SALES. TO BE SUCCESSFUL THERE IS VERY IMPORTANT FOR ASTON MARTIN AND OUR TRANSFORMATION. WE HAVE A SUCCESSFUL CAR WITH THE ORIGINAL DBX. WE LAUNCHED DBX EX LAST YEAR AND WE HAVE BEATEN MANY COMPETITORS IN CREDIBLE PROTESTS, MOTOR TREND AND OTHERS. WHAT WE ARE TO DO WITH DBX IS GIVE IT ANOTHER PERSONALITY AND CHARACTER. DESPITE HAVING 720 SEVEN PS AND BEING ZERO-3.61 SECONDS IT IS THE MOST ELEGANT DBS EVER BUILT. A BRAND-NEW INTERIOR, VERY COMFORTABLE AND LUXURY ORIENTED. IT STILL HAS MORE CREDENTIALS THAN YOU WOULD EXPECT FROM AN ASTON MARTIN. IT IS TO ATTRACT EXISTING OWNERS THINKING OF TRADING UP AND REACH OUT TO NEW CUSTOMERS AND REMIND EVERYBODY THAT WE ACTUALLY DO A FANTASTIC SUV. >> A TOP SPEED OF 193 MILES PER HOUR. I WILL ASK THE MATT MILLER QUESTION. YOU COULDN'T SQUEEZE OUT ANOTHER SEVEN NEGATIVE TWO HUNDRED? YOU TALK ABOUT THE FTSE 250. I WONDER WHAT THIS MODEL IS EXPECTED TO CONTRIBUTE. >> WHEN YOU LOOK AT OUR PRODUCT RANGE, CARS TODAY ARE VERY CREDIBLE. THEY WIN AWARDS, BUT WE NEED GROWTH. ALL OF THE CARS MANTRA TO THE PAST FEW YEARS ARE TO ENSURE WE APPEAL TO US MANY CUSTOMERS AS POSSIBLE. AND TO CREATE A BUSINESS MODEL THAT GENERATES RATHER THAN CONSUMES CASH. WE PUT A LOT OF EFFORT INTO TRANSFORMATION. WITH ALL THESE THINGS COMBINED, YOU SHOULD SEE, THIS YEAR, ALREADY, THE GREEN SHOOTS OF POSITIVE CASH GENERATION AND POSITIVE PROFIT FOR THE FIRST TIME IN A NUMBER OF YEARS. THIS IS A KEY COMPONENT TO GROWING THE DBX BUSINESS AND GROWING THE MARGINS IN DBX AND GETTING THE COMPANY ONTO SOLID FOOTING. >> ARE WAS FORTUNATE TO SEE THE VALHALLA AT THE VALKYRIE AT THE MONTEREY CAR SHOW. INCREDIBLE CARS. YOU ARE CONFIDENT ON THE PATH YOU ARE GOING ON. PART OF TRYING TO RIGHT THE SHIP. THERE WERE CERTAINLY JOB CUTS. YOU HAVE CUT ABOUT 20% OF THE WORKFORCE IN TWO ROUNDS OF REDUNDANCIES. OUR FURTHER JOB LOSSES ON THE TABLE? ADRIAN: NO. I MEAN, NEVER SAY NEVER, BECAUSE ANYTHING COULD HAPPEN TOMORROW. BUT FROM THE FIVE YEAR PLAN POINT OF VIEW, WE HAVE A CLEAR WAY FORWARD. OUR CAPITAL EXPENDITURE IS DEFINED TO GET THE MOST OUT OF EXISTING CARS WE CAN WITH MORE EXCITING DERIVATIVES, IN ADDITION TO DBX GT. WE HAVE A ROADMAP TO THE NEXT GENERATION OF CARS. NEW TECHNOLOGY, NEW POWER TRENDS. THAT GROWTH IS DEPENDENT ON THE RIGHT CAPACITY OF PEOPLE AND TO THE RIGHT CAPABILITY OF PEOPLE. WE NEVER MAKE JOB CUTS SLIGHTLY. WE TAKE IT VERY SERIOUS. WE DESIGNED THE FUTURE ORGANIZATION. WE MADE THAT CHANGE. WE ARE COMMITTED TO MAKING GROWTH HAVING -- GROWTH HAPPEN. THERE IS NO INTENTION TO REDUCE FURTHER. ALL THE FURTHER IMPROVEMENTS WE NEED TO MAKE COME FROM THE TOP LINE GROWTH AFTER BECOMING MUCH MORE EFFICIENT ACROSS ALL THE AREAS AROUND THE BUSINESS. WITHOUT QUALITY OR LOGISTICS, ALL OF THESE FUNDAMENTAL THINGS THAT NEED TO BE ADDRESSED. THAT IS THE TRANSFORMATION PLAN. >> WHAT YOU SEE THE POWER TRADE MARKET GOING? BENTLEY ANNOUNCED IT WILL BE DOING AN ELECTRIC SUV, SAME WITH THE RANGE ROVER. DO YOU SEE ELECTRIC IN YOUR FUTURE? IS IT DIFFICULT IF YOU HAVE TO SELL A LOT OF CARS IN THE U.S. TO DEAL WITH THE FACT THAT RIGHT NOW, THE UNITED STATES IS NOT VERY FRIENDLY TO ELECTRIC CARS. >> IF WE TAKE THAT VIEW UNTIL ABOUT 2035, THE ANSWER IS DRIVEN BY TWO THINGS. ONE, CONSUMER INTEREST. TWO, LEGISLATIVE REQUIREMENT. TODAY WE DON'T HAVE A Q OF PEOPLE ASKING US TO DELIVER THEM IN ASTON MARTIN ELECTRIC POWER TRADE. WHEN IT COMES TO THE LEGISLATION, IF I LOOK AT THE PERIOD UNTIL 2035, WE, WITH OUR SIZE OF COMPANY ON THE CONCESSIONS WE HAVE AND THE LEGISLATION AND WHAT WE CAN ACHIEVE WITH ENGINE EMISSIONS, WE DON'T NEED A BATTERY ELECTRIC VEHICLE UNTIL JUST BEFORE 2035. WE ARE NOT DENIERS. WE DO THINK BATTERY ELECTRIC VEHICLES WILL FORM A PART OF OUR FUTURE. BUT WE DON'T SEE THAT BEING ANYTHING LIKE THE MAJORITY OF OUR SALES BETWEEN NOW AND 2035. WE SEE IT THE OTHER WAY AROUND. THE VAST MAJORITY OF OUR BUSINESS WILL BE COMBUSTION ENGINES WITH SOME DEGREE OF RECTIFICATION BEFORE 2035. THEREAFTER, WHO KNOWS WHAT WILL HAPPEN. BUT OUR TECHNICAL PARTNERS AND OUR TOOLKIT FOR THE NEXT GENERATION OF CARS, IN CASE AND FOR WHEN WE NEED A BATTERY ELECTRIC VEHICLES. DANI: BEHIND YOU YOU HAVE YOUR F1 CAR. I WOULD BE REMISS IF I DID NOT ASK ABOUT THE F1 TEAM. FOR THE YEAR OF 2027, YOU HAVE DONE INTERESTING DEALS TO GET CASH OUT OF THAT. A BRANDING AND LICENSING DEAL, RATHER. HOW DO YOU LOOK AT THE F1 PROGRAM? WHAT METRICS DO YOU USE TO MEASURE WHETHER THIS IS A FINANCIAL DRAG OR BRAND ASSET? >> THERE IS NO QUESTION THAT IN TERMS OF AWARENESS BUILDING, IT IS ONE OF THE MOST POWERFUL TOOLS IN THE WORLD FOR ANY COMPANY. WE SEE THAT AS A MAJOR PLAY. WE ARE IN TURNAROUND. NOW WE SEE THE GREEN SHOOTS. YOU KNOW HOW MUCH INVESTMENT AND THE PEOPLE THAT HAVE A BIG PART TO PLAY IN THE ASTON MARTIN FORMULA ONE TEAM. WE ARE VERY EXCITED ABOUT THAT. THIS IS DEFINITELY A LEARNING SEASON FROM AN ENGINE AND A CHASSIS POINT OF VIEW. BUT WE ARE HIGHLY AMBITIOUS. WE HAVE A WORLD-CLASS TEAM WITH THE BEST FACILITIES. WATCH THIS SPACE. AWARENESS IS THE NUMBER ONE OBJECTIVE FOR US AT THE CAR COMPANY. BUT WINNING IS THE NUMBER ONE OBJECTIVE FOR THE ASTON MARTIN ARAMCO FORMULA ONE TEAM. >> THANK YOU. ADRIAN HOMEWORK OF ASTON MARTIN, THANK YOU FOR JOINING US TODAY. COMING UP, LOOKING AHEAD TO TOMORROW'S JOBS REPORT ON OPEN INTEREST. >> NOTED WE HAVE A 4.1% UNEMPLOYMENT RATE. THAT IS NOT EXPECTED TO CHANGE, THE NUMBER THE FED LOOKS LIKE -- LOOK FOR. LOOKING FOR A RISE IN JOBS, 85,000. >> WE ARE LUCKY TO HAVE YOU TOMORROW TO BREAK IT DOWN. TOMORROW, THE U.S. JOBS REPORT.