Open Interest 10/15/2026

>> THE BIGGEST SELLOFF SINCE JULY CONTINUES. 30 MINUTES UNTIL THE START OF TRADING. I AM DANI BURGER. >> I AM DAVID GURA AND BLOOMBERG OPEN INTEREST STARTS RIGHT NOW. DANI: COMING UP ON THE SHOW, INFLATION FEARS RAISE THE STAKES AS MARKETS AWAIT REMARKS FROM KEVIN WARSH TONIGHT. DAVID: -- DOING LITTLE TO CALM ANXIETY OVER THE AI TRADE. WE WILL START WITH COREWEAVE. LOOKING AT THE PREMARKET TRADING, DOWN 3.5 PERCENT. CONCERNS MOUNT ABOUT ITS DEBT. THE COMPANY GETTING PUNISHED FOR A SECOND DAY AMIDST QUESTIONS ABOUT ITS DATA CENTER DEBT STRATEGY. EARNINGS SEASON BEGINS IN EARNEST WITH TSMC REPORTING A STELLAR QUARTER. DANI: I'M LOOKING AT SOME OTHER EARNINGS. SPECIFICALLY OUT FROM SCHWAB. THEY REPORTED RECORD REVENUES. SHARES ARE DOWN 3.6%. WE GOT SOME EARNINGS FROM REGIONAL BANKS, INCLUDING PNC AND U.S. BANCORP. THAT'S NOT MOVING. PNC DATA IS DOWN 2%. DAVID: WE WILL START WITH THE ECONOMY, WITH THE NEW DATA OUT THIS MORNING. U.S. PRODUCER PRICES ROSE IN SEPTEMBER AT THE FASTEST PACE IN MORE THAN FOUR YEARS AS HIGH ENERGY COSTS REVERBERATED THROUGHOUT THE ECONOMY. JOINING US IS BLOOMBERG'S KRISTINE AQUINO. LOOKING AT THE DATA AT THE MACRO LEVEL AND MORE GRANULAR EARLY, WHAT STANDS OUT -- MORE GRANULAR, WHAT STANDS OUT? >> I'M LOOKING AT FRED PRICING -- FED PRICING AND WE ARE BELOW 50% WHEN IT COMES TO THE OCTOBER RATE HIKE. ZOOMING THAT OUT TO THE NEXT COUPLE OF MONTHS, WE ARE STILL AT MAYBE TWO RATE HIKES PRICED BY MARCH. WE BRIEFLY HIT THREE YESTERDAY AFTER THAT CPI DATA. NOW WE ARE BACK DOWN TO TWO. THIS TELLS ME THERE IS TENSION IN THE MARKETS AT THE MOMENT. THEY ARE THINKING YES, MAYBE RATE HIKES WILL BE NEEDED, ESPECIALLY AFTER THE DATE OF THIS WEEK. LOOK AT WHAT'S HAPPENING WITH EQUITY MARKETS RIGHT NOW AND IS THAT GOING TO BREAK THE EQUITY MARKET? DANI: IS IT THAT YOU HAD HIGH IN THE FIELDS THAT EQUITY MARKETS ARE BREAKING IT BECAUSE YIELDS ARE NOW LOWER? >> I THINK THIS IS WHAT KEVIN WARSH WAS TALKING UP. LETTING THE MARKETS DO A LITTLE BIT OF THE FED'S WORK FOR THEM. AND LETTING THE MARKETS SIGNAL WHERE THEY ARE WHEN IT COMES TO ITS INPUT INTO FED POLICY. IT'S GOING TO BE INTERESTING WHEN WE HEAR FROM HIM AT THE IMF TONIGHT. LAST TIME WE LEFT, THEY WERE LEANING INTO KIND OF BEING TOUGHER ON INFLATION. THAT WAS THE WHOLE IDEA. WE HAVE SINCE HEARD FROM OTHER FED POLICY MAKERS THIS WEEK AND LAST WEEK, SEEMS LIKE MAYBE THE DEBATE IS SHIFTING A LITTLE BIT MORE NOW TO FLEXIBILITY. NOT SO MUCH A WHOLE SERIES OF RATE HIKES BUT MAY BE A WAIT AND SEE SORT OF MODE. IT WILL BE INTERESTING WHERE KEVIN WARSH LANDS WHEN IT COMES TO RATE HIKES THIS MONTH OR IMMINENT RATE HIKES. DAVID: WE WILL HAVE OUR PAJAMAS ON FOR THIS SPEECH, 11:30 EASTERN TIME. WE HAVE GOTTEN A CLEARER SENSE OF HIS STRATEGY FOR COMMUNICATING OR NOT. HERE WE ARE ON THE EVE OF THE BLACKOUT PERIOD. THIS IS AN IMPORTANT CONVERSATION HE WILL HAVE WITH THE HEAD OF THE IMF. >> ABSOLUTELY. MARKETS HAVE BEEN TOLD THEY ARE NOT GETTING FORWARD GUIDANCE BUT THEY ARE STILL LOOKING FOR ANY SORT OF GUIDANCE NOW WHEN IT COMES TO KEVIN WARSH'S THOUGHTS ON THAT WHOLE INFLATION VERSUS GROWTH TENSION THE FED IS TRYING TO BALANCE AT THE MOMENT. SO FAR, THE GROWTH PIECE HAD BEEN ALL RIGHT. WE HAD BEEN SEEING SIGNS OF ECONOMIC RESILIENCE. BUT THEN THE LAW FIRM PAYROLL SHOCK TO THE DOWNSIDE A COUPLE OF WEEKS AGO. REALLY I THINK FOR RENT AND MACHINE WHEN IT COMES TO IS THE U.S. ECONOMY ACTUALLY DOING ALL RIGHT OR ARE THERE CRACKS STARTING TO SHOW? ON INFLATION, ARE WE HEADING FOR ANOTHER PERIOD OF STAGFLATION, WHICH IS EXACTLY THE ENVIRONMENT THE FED DOES NOT WANT TO BE IN. A LOT OF TOUGH DECISIONS MOVING FORWARD. DOES KEVIN WARSH PRIORITIZE INFLATION OR GROWTH, THAT WILL BE ONE TO WATCH FOR. DANI: THANK YOU SO MUCH FOR JOINING US. KRISTINE AQUINO, MANAGING EDITOR OF MARKETS LIVE. THE HIGHER YIELDS ARE HAVING AN IMPACT ON AI. COREWEAVE EMERGING AS THE POSTER CHILD FOR THE CURRENT PULLBACK IN TECH SENTIMENT. INVESTORS GETTING MORE NERVOUS ABOUT THE DEBT HEAVY BUILD OUT OF THE AI BOOM. LET'S BRING IN ED LUDLOW. I THOUGHT IT WAS TELLING WHEN HE SAID WE NEED INVESTMENT GRADE STATUS IN ORDER TO TAP INSURANCE MONEY. IS A HIGHER COST OF CAPITAL, THE LIKES WE ARE SEEING FROM COREWEAVE AND OTHERS, IS IT BECOMING A REAL PROBLEM FOR THE AI BUILDOUT? ED: YEAH. YOU HAVE SUMMED THAT UP PERFECTLY. WHAT IS HAPPENING IS A REPRICING OF THE COST AND THE RISK FOR COREWEAVE TO MEET DEMAND. IN OTHER WORDS, CONVERT THE BACKLOG THAT THERE IS A HEAVY EMPHASIS FROM THE COFOUNDER AND THE CEO ON, INTO REVENUES. WHAT IS WEIRD ABOUT THIS, PARTICULARLY IN THE CREDIT MARKETS IS THAT NOT A LOT OF THIS IS NEW. IF YOU GO BACK TO THE "OCTOBER AND HOW THE 2032 BONDS HAVE TRADED, THEY WERE NEAR $.80 ON THE DOLLAR AND YIELDS WERE ELEVATED. THEY HIT THIS 15% YIELD THRESHOLD. WE GOT THE CPI PRINT, RIGHT? AND FED HIKE EXPECTATIONS WENT UP. THIS IS A COMPANY WHOSE INTEREST PAYMENT OBLIGATIONS HAVE BEEN RUNNING AHEAD OF OPERATING INCOME. IF WE ARE GOING TO GET A HIGHER RATE ENVIRONMENT, THAT GOES DOWN WITH PRESSURE. ANOTHER CATALYST WAS THIS GARDENER REPORT, WHICH WE MISSED BUT THEY SAID THERE WOULD BE A LOT OF CONSOLIDATION IN NEO-CLOUDS. THE THING THAT CONVERTED IT INTO THE EQUITY MARKET STORY WAS IT BEING POSTED FIVE -- POSTED ON X AND ELON AMPLIFYING IT. THEY HAVE $52 BILLION OF DEBT, A LOT OF IT IS NOW DISTRESSED. IN A WEEK WHERE THERE HAVE BEEN LOTS OF CATALYSTS. DAVID: LET'S TALK ABOUT ANTHROPIC. WE ARE LEARNING THEY HAD $16.8 BILLION IN CORE REVENUE. THE NEW YORK CITY COMPTROLLER HITTING DARIO AMODEI'S DESK. HE SAID I WRITE TO URGE ANTHROPIC TO PAUSE ITS IPO UNTIL THE COMPANY FULLY ADDRESSES THE ARTIFICIAL SAFETY. THE COMPANY SHOULD FOCUS ITS ENERGIES ON ADDRESSING THESE UNPRECEDENTED RISKS. WHAT DO YOU MAKE OF THIS LETTER BEING SENT? HOW DOES IT, COUPLED WITH THE REVENUE I MENTIONED, CHANGE, IF IT ALL, IT'S CALCULUS HEADING INTO THE CPL? ED: INCLUDING COREWEAVE, THERE'S A LOT OF DOWNWARD PRESSURE, FRANKLY FROM DISAPPOINTMENT ON THE NUMBERS THAT BLOOMBERG AND OTHERS REPORTED COMING OUT OF THE INVESTMENT MEETING YESTERDAY IN SAN FRANCISCO. IT'S NOT NECESSARILY THAT THE NUMBERS CAME OUT IN AND OF THEMSELVES. IT'S THEM TRYING TO PIECE TOGETHER THE INFORMATION THEY HAVE. WHAT WE KNOW IS IN THE THIRD QUARTER, REVENUES WERE 16.8 BILLION DOLLARS. WHICH REPRESENTS 45%. Q2 REVENUES WERE $11.6 MILLION. THEY WERE UP 147%. THERE HAS BEEN SOME DECELERATION. THEY SAID THEY WERE PROFITABLE ON AN ADJUSTED BASIS. THE MARKETS RESPONSE, LOTS OF PEOPLE ARE POSITIVE BY THE WAY, THE ANALYSTS. BUT THE PEOPLE WHO HAVE CONTACTED ME DIRECTLY, WHAT DOES ADJUSTMENT EVEN MEAN? A LOT OF PEOPLE ARE POSING THAT QUESTION. THEY COULD FLIP PUBLIC IF THEY PROCEED WITH THE IPO AND DON'T LISTEN TO BE NEW YORK CITY COMPTROLLER. DAVID: THANK YOU VERY MUCH. APPRECIATE IT. CHARLES SCHWAB AMONG THE FINANCIAL SERVICES REPORTING TODAY. THEY REPORTED RECORD REVENUE AND SAW ASSETS OVER MANAGEMENT JUMP ABOVE ESTIMATES. SHARES ARE LOWER AS ANALYSTS FLAGGED QUESTIONS AROUND NET INTEREST MARGIN. HERE TO DISCUSS THIS MORE IS THE SENIOR BANKS ANALYST, HERMON CHANDLER. I GO BACK TO WHAT JAMIE DIMON SAID. THIS IS AN ACCORDION ENVIRONMENT, OPENING AND CLOSING SIMULTANEOUSLY. >> SOME OPENING AND CLOSING, OPENING IN TERMS OF BALANCE SHEET GROWTH. WE ARE SEEING GROWTH IN THE MAIN STREET PART OF THE BUSINESS. YOU ARE SEEING DEPOSITING GROWTH SPIKE HIGHER. YOU ARE SEEING LOAN GROWTH ACTIVITY ACCELERATE, PARTICULARLY IN COMMERCIAL LENDING AND COMMERCIAL REAL ESTATE IS PICKING BACK UP AGAIN, WHICH IS GOOD TO SEE. THERE'S QUESTIONS ON INTEREST MARGIN. YOU MENTIONED WITH SCHWAB. PNC MISSED A LITTLE BIT ON THE MARGIN AS WELL, DESPITE EXPECTING A 3% MARGIN IN THE FOURTH QUARTER. DANI: HOW ARE YOU INTERPRETING HOW BANKS ARE GRAPPLING WITH THEIR FUTURE WHEN IT COMES TO THE CONCERN AROUND REMOVING CONSUMER FRICTION, THAT PEOPLE MOVE THEIR MONEY TO HIGHER-YIELDING ACCOUNTS. MOYNAHAN WAS ON BLOOMBERG TV AND HIS ANSWER WAS CONSUMERS HAVE ALWAYS BEEN ABLE TO DO THAT. THIS IS NOT ANYTHING DIFFERENT. >> IT'S NOT ANYTHING DIFFERENT PER SE BUT THE SWIFTNESS THAT THIS CHANGE COULD HAPPEN IS DIFFERENT AND COULD BE DIFFERENT. BECAUSE WHEN WE SAW THEM USE THE INTRODUCTION LAST MONTH, IT FREAKED A LOT OF PEOPLE OUT, FRANKLY, IN TERMS OF HOW QUICKLY CONSUMERS WILL ADOPT AI AGENTS AND ADOPT IT FOR THEIR PERSONAL FINANCIAL NEEDS. THAT IS OVER THE HORIZON. IT'S A POTENTIAL NEAR TO INTERMEDIATE TERM RISK THAT DEPOSITS COULD BE HIGHER COSTS GOING FORWARD, EVEN THE FACT THAT MONEY COULD MOVE MUCH MORE QUICKLY GOING FORWARD. DANI: I DOWNLOADED IT. I JUST DID IT THIS WEEK. I HAVE NOT GIVEN IT MY FINANCIALS. THAT, I AM SCARED TO DO. DAVID: QUICKLY. WHAT CAN WE TELL FROM THE SCHWAB RESULTS IN PARTICULAR ABOUT INVESTMENT ENTHUSIASM AND EQUITIES, WE SAW THAT MANIFEST IN THE BIG BANKS. >> I THINK A LOT OF NEW ASSET FLOWS ARE COMING IN, WHICH IS GREAT TO SEE. MORGAN STANLEY ALSO MENTIONED YESTERDAY THAT 230-ISH BILLION DOLLARS OF NET NEW MONEY COMING IN. THERE IS A LOT OF MONEY SLAW THING THE EQUITY MARKETS -- SLOTHING IN THE EQUITY MARKETS. DANI: THANK YOU FOR JOINING US. HERMAN CHAN FROM BLOOMBERG INTELLIGENCE. AT THE TOP OF THE HOUR, WE ARE OFF THE BACK OF THE WORST DAY SINCE JULY. THAT CONTINUES. WE ARE IN THIS WEIRD ENVIRONMENT WHERE BONDS ARE MAY BE A HAVEN AGAIN. THINGS HAVE GOTTEN SO BAD THAT WE ARE JUMPING BACK IN. A 12 BASIS POINT DECLINE FOR 10 YEAR YIELDS. THEY HAD BEEN AT MULTI-DECADE HIGHS AT A 5.3 HANDLE. CERTAINLY DIFFERENT THIS MORNING. BRENT CRUDE IS DOWN 1.25%. LET'S GET A LOOK AT THE SINGLE NAME MOVERS. >> ROCKET LAB IS POINTING LOWER AFTER DELAYING THE FIRST LAUNCH OF ITS NEUTRON ROCKET TO 2027. A SETBACK FOR ONE OF THE COMPANIES BIGGEST GROWTH DEBTS. ROCKET LAB IS POINTING LOWER BY 11%. WALMART IS MOVING HIGHER AFTER DEUTSCHE BANK UPGRADED THE STOCK TO BUY. THEY ARE BULLISH HEADING INTO THE HOB -- HOLIDAY SHOPPING SEASON. THEY ARE HIGHER BY 3.2%. APPLE, IT'S AMONG SOME OF THE FEW TECH STOCKS THAT ARE IN THE GREEN THIS MORNING. IMPORTANT WHEN CROSSING A $5 TRILLION VALUATION AS IT PREPARES TO ROLL OUT AI TOOLS AND MAINLAND CHINA LATER THIS YEAR. SHARES OF APPLE ARE HIGHER BY ABOUT 7/10 OF A PERCENT. THOSE ARE YOUR MORNING MOVERS. DANI: WE WILL CATCH UP WITH YOU LATER IN THE HOUR. VOLODYMYR ZELENSKYY DEFIES PRESIDENT TRUMP, ORDERING NEW ATTACKS ON RUSSIAN OIL REFINERIES. THAT IS COMING UP NEXT ON "OPEN INTEREST." ♪ DAVID: NOW IT'S A HIGH INTEREST A LOOK AT WHAT'S MAKING HEADLINES AROUND THE WORLD. HSBC SAYS AI AGENTS COULD BE TRADING BONDS WITHIN THE NEXT TWO TO FOUR YEARS. MICHAEL ROBERTS SPOKE WITH LISA ABRAMOWICZ EARLIER. >> QUANTUM COMPUTING WILL BE ABLE TO LOOK AT VERY COMPLEX TYPE OF MARKET MOVEMENTS. AND WITH THE ADVENT OF AI, WHICH WILL MAKE THAT QUICKER, YOU COULD SEE AGENTS TRADING BONDS USING QUANTUM COMPUTING ON DLT. THAT'S THE FUTURE. DAVID: THAT'S THE FUTURE. THE WALL STREET JOURNAL REPORTING KATIE ZACHARIA HAS NOT PASSED THE U.S. BAR EXAM DESPITE PRESIDENT TRUMP INTRODUCING HER AS AN ATTORNEY. SHE GRADUATED FROM PEPPERDINE LAW SCHOOL AND WORKED ON INTERNATIONAL TRANSACTIONS IN CHINA. THE WHITE HOUSE SAYS SHE WAS HIRED FOR COMMUNICATIONS WORK, NOT LEGAL WORK. VOLODYMYR ZELENSKYY SAYS HE WILL RESUME STRIKES ON RUSSIAN OIL REFINERIES, ENDING A THREE-DAY PAUSE THAT WAS URGED BY PRESIDENT TRUMP. HE SAYS RUSSIA KEPT ATTACKING UKRAINIAN ENERGY SITES DURING THE PAUSE. THE MOVE ADDS NEW STRAIN TO TENSE RELATIONSHIPS BETWEEN KYIV AND WASHINGTON. DANI: LET'S DISCUSS THIS MORE. JOINING US IS BLOOMBERG'S TYLER KENDALL. THE IDEA OF AN ENERGY CEASE-FIRE HAD ALWAYS BEEN TENUOUS. WHAT'S THE LATEST NOW? TYLER: IT APPEARS IT WAS NEVER IMPLEMENTED AND BOTH SIDES WERE CAUGHT OFF GUARD AT THE PRESIDENT'S ANNOUNCEMENT EARLIER THIS WEEK THAT THERE WOULD BE SOME KIND OF ENERGY TRUCE. AS DAVID MENTIONED, WE GOT THE LATEST HEADLINE, WHICH IS THAT B ZELINSKI SAYS UKRAINE WILL RESUME STRIKES ON RUSSIAN OIL REFINERIES. THE IMPORTANT CONTEXT HERE IS THAT RUSSIA CONTINUES TO HIT UKRAINIAN GAS STRUCTURES AND POWER PLANTS EVEN AMID PRESIDENT TRUMP: FOR THIS TRUCE. WE SAW UKRAINE INSTITUTE ITS OWN PAUSE DESPITE WHAT WERE THESE LONG STRIKES CONDUCTED BY MOSCOW. THIS IS JUST ONE PART OF THOSE ESCALATING TENSIONS BETWEEN KYIV AND WASHINGTON. THE OTHER CAME LATE LAST WEEK WHEN WE SAW PRESIDENT TRUMP ANNOUNCE THIS DEAL TO HAVE MORE RUSSIAN DIESEL STOCKPILE RELEASED TO THE MARKETS. THE AVERAGE GALLON FOR A DIESEL TODAY STANDS AT $6.31 ACCORDING TO AAA. THOUGH DANI AND DAVID, I WOULD ADD ONE OTHER DEVELOPMENT THAT WE GOT BREAKING EARLIER THIS MORNING. UNDERSCORING THE FRAUGHT RELATIONSHIP AT THE MOMENT, WHICH IS THAT UKRAINE SAYS NORMAL STARLINK INTERNET SERVICE HAS BEEN RESTORED AMID ALLEGATIONS BY THE UKRAINIAN PRESIDENT THAT PRESIDENT TRUMP WAS WORKING TO CURB UKRAINIAN MILITARY ACCESS TO INTELLIGENCE. PEOPLE FAMILIAR WITH THE MATTER SAID THERE ARE ONGOING CONVERSATIONS BETWEEN UKRAINE'S DEFENSE MINISTRY AND THE PENTAGON ABOUT EXACTLY WHAT HAPPENED. DAVID: LET ME PICK UP ON SOMETHING YOU MENTIONED, THE BLOWBACK WE HAVE SEEN TO THE DIESEL DEAL THE PRESIDENT ANNOUNCED. WE HAVE SEEN DOMESTIC BLOWBACK INCLUDING FROM FELLOW REPUBLICANS AND INTERNATIONAL PUSHBACK AS WE HAVE SEEN EUROPEAN LEADERS GATHER FOR THE SUMMIT WHERE THEY ARE GOING TO DISCUSS UKRAINE. IT IS THE UNITED STATES PROCEEDING AT PACE WITH THIS OR MIGHT HE REEVALUATE THE DEAL HE ANNOUNCED? TYLER: PRESIDENT TRUMP HAS BRUSHED OFF THE CRITICISM ON THE INTERNATIONAL STAGE BUT ALSO HERE AT HOME WITHIN HIS OWN PARTY. WE SAW A GROUP OF BIPARTISAN SENATORS, INCLUDING SOME TOP REPUBLICAN LEADERS LIKE THE SENATE MAJORITY LEADER, JOHN THUNE, SIGN ONTO THIS LETTER, CALLING FOR THE U.S. TO IMMEDIATELY REVERSE COURSE WHEN IT COMES TO THIS DEAL. MANY OF THE SENATORS ARE ARGUING THE WHITE HOUSE DIDN'T GO FAR ENOUGH TO NOTIFY CONGRESS OF ITS PLANS AS REQUIRED UNDER THE 2022 RUSSIAN ENERGY BAND. PLUS, THEY ARE POINTING TO THE FACT THAT REPUBLICANS HAD A POLICY WIN A FEW WEEKS AGO. NOT JUST ADVANCING, PASSING THAT TIGHTER SANCTIONS MEASURE THAT LOOKS TO IMPOSE TOUGHER PENALTIES ON THOSE COUNTRIES THAT DO IMPORT RUSSIAN ENERGY SUPPLIES. THE PROBLEM AT THE MOMENT FOR THIS WHITE HOUSE IS THEY ARE VERY LIMITED IN THE AMOUNT OF LEVERS THEY CAN PULL TO REALLY MAKE A TANGIBLE IMPACT ON CONSUMER PRICES. OUR OWN ANALYSTS AT BLOOMBERG INTELLIGENCE LOOK AT THIS DEAL AND THEY SAY THE INITIAL VOLUMES THAT ARE GOING TO MARKET AREN'T GOING TO DO ENOUGH TO CLOSE THAT SUPPLY GAP. DAVID, KEEP IN MIND THAT A LOT OF THIS IS ALREADY BAKED IN FOR THE AMERICAN ELECTORATE. I MENTION $6.31 FOR A GALLON OF DIESEL. BY TOMORROW FRIDAY, 17 STATES WILL ALREADY BE IN EARLY VOTING. WHILE WE ARE THREE WEEKS TO ELECTION DAY, A LOT OF VOTERS ARE ALREADY CASTING THEIR BALLOTS. DAVID: THANK YOU FOR THE UPDATE, THAT IS BLOOMBERG'S TYLER KENDALL JOINING US FROM WASHINGTON. WE HAVE SEEN A LOT OF ANXIETY, NOT JUST IN SAUDI ARABIA AFTER THE ATTACKS WE HAVE SEEN ON ARAMCO FACILITIES AND ON THE AIRPORT IN RIYADH AS WELL. I THINK THE QUESTION IS WHAT IS THAT GOING TO MEAN FOR RIYADH AS A BUSINESS DESTINATION. WE SAW A NUMBER OF EXECUTIVES ON THE ENERGY SIDE UNABLE TO GET THERE FOR THIS MAJOR CONFERENCE. WE LEARNED THAT THE E.U. AND GULF COOPERATION ARE POSTPONING A MEETING. DANI: THERE IS A SAUDI LED COALITION PRESS CONFERENCE HAPPENING RIGHT NOW IN WHICH THEY ARE SAYING THE HOUTHIS HAVE ACQUIRED ADVANCED WEAPONRY. IT'S HARD TO READ THESE KINDS OF STATEMENTS AND FEEL SAFE ABOUT THE REGION. THAT IS SOMETHING LEADERS ARE GRAPPLING WITH RIGHT NOW. DAVID: THE MEETING IS GOING AHEAD AS PLANNED AT THIS POINT IN TIME. COMING UP ANASTASIA AMOROSO DOES NOT SEE THE FED HIKING THIS MONTH. SHE WILL JOIN US NEXT TO EXPLAIN WHY. THIS IS "BLOOMBERG OPEN INTEREST." ♪ DANI: THE LATEST ECONOMIC DATA MAY SHOW INFLATION ACCELERATING BUT NOT ENOUGH TO FORCE AN IMMEDIATE FED HIKE. ANASTASIA TOMORROW SO THINKS THE FED WILL -- ANASTASIA TOMORROW -- AMAROSO JOINS US NOW. WE HAVE ANOTHER SET OF DATA COMING IN HOT. DO YOU STILL HOLD ONTO THAT, THAT WE HAVE NOT SEEN ENOUGH TO HIKE? ANASTASIA: I DO. ONE METRIC THAT FED CHAIR WARSH MENTIONED IS THE BRENT OF THE INCREASES. WHEN YOU LOOK AT THAT METRIC, YOU SEE IT HAS IMPROVED. FROM 43.6 PERCENT RUNNING ABOVE THE INFLATION DOWN TO 38%. WARSH IS NOT INCLINED TO TAKE HIS CLUES FROM ONE SET OF DATA OR ONE MONTH OF DATA BUT I THINK THAT IS TRACKING IN THE RIGHT DIRECTION. THEN YOU LOOK AT FOR HOUSING FOR EXAMPLE, THAT CONTRIBUTED POSITIVELY TO INFLATION. OR CONTRIBUTED TO INFLATION FOR THE MONTH OF SEPTEMBER. BUT IF YOU LOOK AT THE REAL-TIME DATA, YOU SEE THE RENTAL INFLATION CONTINUING TO EASE. I THINK IT IS THOSE SORT OF DICHOTOMIES THE FED WILL PAY ATTENTION TO, DESPITE THE HEADLINE. DAVID: HOW DO YOU THINK ABOUT ENERGY INFLATION AT THIS POINT IN TIME? IT IS WHAT IT'S ANIMATING ALL OF THIS TOO, TO A BIG DEGREE. HOW DO YOU THINK ABOUT IT? ANASTASIA: IT'S ONE OF THOSE BIG ONE-OFF FACTORS THAT IS LIFTING INFLATION, THE HEADLINE INFLATION. IT IS STILL THE TARIFF INFLATION. THE IMPACTS OF THAT IS STARTING TO ROLL OVER. IT'S NOW ENERGY INFLATION. WHEN I THINK ABOUT IT IN TERMS OF ITS WEIGHT IN THE CONSUMER BASKET, IT'S DECLINED SIGNIFICANTLY. IT WAS 6.5% AND IT'S PROBABLY CLOSER TO 2.5% TODAY. WE DON'T LIKE TO PAY A HIGHER PRICE AT THE PUMP AND WE DON'T LIKE TO HAVE THIS IMPACT SHOW UP IN AIRLINE PRICES. AT THE SAME TIME, IT IS MANAGEABLE WITHIN THE CPI BASKET. DANI: EVEN THOUGH OTHERS ARE WORRIED ABOUT A FED HIKE COMING, IT IS A HUGE RALLY WE ARE SEEING IN THE BOND MARKET. I WONDER IF SOMETHING HAS FINALLY FLIPPED, THAT WE ARE WORRIED ENOUGH ABOUT SOMETHING THAT BONDS ONCE AGAIN ARE ATTRACTIVE. ANASTASIA: I DO THINK INVESTORS HAVE PROBABLY PARED BACK THE EXPECTATIONS FOR JUST HOW MANY RATE HIKES WE ARE GOING TO GET. THE MARKETS WERE LOOKING FOR THREE TO THREE POINT 5% OVER THE COURSE OF THE NEXT SIX MONTHS. MAYBE JUST MAYBE WE ARE GOING TO GET ONE IF YOU LOOK AT -- LISTEN TO THE FED OFFICIALS FROM YESTERDAY. THE SECOND THING IS I THINK INVESTORS GOT EXCITED ABOUT BONDS. A 10 YEAR TREASURY, WHETHER YOU ARE A PRIVATE CLIENT OR AN INSTITUTIONAL INVESTOR, THAT IS QUITE COMPELLING. I THINK THAT'S WHY WE HAVE BEEN SEEING SOME OF THAT DEMAND TO RETURN TO BONDS. TO YOUR POINT THIS MORNING, THERE ARE SOME CONCERNS ABOUT THE SUSTAINABILITY OF THE SEMI CONDUCTOR TRADE. DANI: WE WILL HAVE TO GET INTO THAT. YOU ARE GOING TO STAY WITH US. WE HAVE THE MARKET OPEN BECAUSE WE ARE LOOKING AT SEMI'S SELLING OFF YET AGAIN. DANI: LET'S GET YOUR TRADING DAY STARTED. YOU ARE WATCHING BLOOMBERG OPEN INTEREST. I AM DANI BURGER ALONGSIDE DAVID GURA. MATT MILLER IS STILL OFF. IT WAS THE WORST PERFORMANCE FOR THE S&P SINCE JULY. IT CONTINUES, EVEN WITH BONDS RALLY AND, YOU HAVE HOTTER PPI. CONCERNS. THAT'S DRAGGING THIS EQUITY INDEX LOWER IT YET AGAIN HERE AT THE OPEN. RINGING OF THE OPENING BELL AT THE NEW YORK STOCK EXCHANGE, A BLANK CHECK COMPANY. THERE IS ENOUGH EUPHORIA IN THIS MARKET THAT WE CAN GET STACKS. THAT'S KIND OF COOL. WE WILL SEE IF THEY CAN BUY ANYTHING. AT NASDAQ, WE HAVE AN IPO. NOT ALL IPOS ARE FROZEN. NVIDIA IS ONE OF THEIR BACKERS. THEY ARE IN THIS TO FIND CURES FOR CANCER. THAT'S FANTASTIC. DAVID: COREWEAVE GETTING PUNISHED FOR A SECOND DAY IN A ROW AS INVESTORS QUESTION ITS DATA CENTER DEBT STRATEGY, THAT IS DRAGGING DOWN THE OVERALL MOOD IN TECH SENTIMENT. TSMC REPORTING A STELLAR QUARTER, LIFTING THE COMPANY'S OUTLOOK. SHARES OF IT ARE STILL IN THE RED. I WANT TO NOTE, IF WE LOOK AT COREWEAVE GOING BACK TO WHEN IT DEBUTED IN MARCH OF 2025, THOSE SHARES ARE UP 68%. SOMETHING TO NOTE AS WE TALK ABOUT IT AND ITS RAMIFICATIONS ACROSS THE TECH SECTOR. DANI: THAT'S INCREDIBLY IMPORTANT CONTEXT. CHARLES SCHWAB REPORTED ASSETS UNDER MANAGEMENT THAT BEAT ESTIMATES. RETAIL INVESTORS ARE CONTINUING TO PILE ONTO THE STOCK MARKET. ANALYSTS ARE STILL SKEPTICAL OF SOFTER GUIDANCE. IT'S AN OVERALL MARKET THAT IS DOWN THIS MORNING. THE CHIPMAKER IS STILL UNDER A LOT OF PAIN THIS MORNING. WE ARE BACK WITH ANASTASIA AMAR OSO. IS THE COST OF CAPITAL ENOUGH OF A PROBLEM FOR THE AI ECOSYSTEM, DOES IT JUSTIFY SOME OF THE SELLING OFF WE ARE SEEING TODAY? ANASTASIA: I THINK FOR SOME OF IT. INVESTORS ARE RIGHT TO QUESTION SOME OF THE COMPANIES THAT ARE DEBT RELIANT. THEY WILL COME UNDER SCRUTINY AS WE ARE IN A HIGHER FOR LONGER RATE ENVIRONMENT. THAT IMPLIES -- APPLIES TO ALL OF THE AI ECOSYSTEM. WHEN YOU LOOK AT THE HYPERSCALERS, THEY ARE TAKING ON MORE DEBT AND HAVE FREE CASH FLOWS. THEY CAN HAVE THAT DEBT ON THE BALANCE SHEET. THEY STARTED FROM A VERY LOW POINT PRAYED THEY HAVE PLENTY OF CASH AND PLENTY OF OPERATING CASH FLOW. I THINK THE BOND MARKET IS ABSORBING THAT. THE HYPERSCALERS ARE STILL SOMETHING LIKE FOUR TIMES THAT OF THE REST OF THE INVESTMENT GRADE. I THINK THAT PART OF THE ECOSYSTEM IS FINE. IF YOU THINK ABOUT THE SEMI CONDUCTORS, CLEARLY THEY ARE COMING INTO PRESSURE BECAUSE I GUESS THE THEORY IS THAT IF YOU CAN'T USE DEBT TO BUY UP THE CHIPS AND TO INVEST IN THOSE COMPANIES, MAYBE THAT'S WHAT UPSETS THE APPLE CART. I DON'T FULLY BUY THAT. THE REALITY IS THERE IS MORE AND MORE SCALING OF ARTIFICIAL INTELLIGENCE, NOT JUST THE CLOSED-END MODELS. THEY NEED CHIPS. JUST BECAUSE MAYBE THE BALANCE OF POWER IS SHIFTING BETWEEN THE TYPES OF MODELS DOES NOT ACTUALLY MEAN THE BALANCE OF POWER IS GOING AWAY FROM SEMI CONDUCTORS. IF YOU LOOK AT FREE CASH FLOW OF THOSE SEMI CONDUCTORS, IT'S THE INVERSE MIRROR IMAGE OF WHAT WE SEE FROM HYPERSCALERS. I THINK THE SIGNIFICANT PARTS OF THE -- THERE ARE SIGNIFICANT PARTS OF THE ECOSYSTEM THAT ARE QUITE SOLID. BUT I LIKE THE FACT THAT THERE ARE INVESTORS QUESTIONING HOW MUCH THAT IS JUSTIFIABLE FOR A PARTICULAR BUSINESS MODEL. I THINK THAT'S WHAT PUTS THE BRAKES ON IRRESPONSIBLE ACCELERATION OF AI. DAVID: IS THERE SOMETHING UNIQUE ABOUT COREWEAVE? IS IT ANOMALOUS, IS IT INVESTORS TRYING TO SEIZE ON TO SOME PART OF THE STORY? HOW MUCH DO YOU MAKE OF A MOVE LIKE WHAT WE'VE SEEN OVER THE PAST TWO DAYS? ANASTASIA: THERE ARE THINGS COMING TOGETHER THAT ARE MAKING THIS SUCH A HEADLINE. PART OF IT IS THE DEBT ASSOCIATED WITH THE COMPANY. THE COMPANY IS QUITE RELIANT ON ISSUING MORE DEBT. IT'S ALSO RELIANT ON CONTINUING TO SIGN THE CONTRACTS WITH SOME OF THE LEADING LABS AND OTHER CUSTOMERS. YOU HAD TWO PIECES OF INFORMATION THAT CAME IN. FIRST, HIGHER INTEREST COSTS AND BEING ABLE TO PLACE THAT DEBT ON HIGHER INTEREST COSTS. AT THE SAME TIME, THERE IS CONCERN ABOUT THE SLOW DOWN AND RUN RATES. THEY ARE STILL EXCITED AT -- ACCELERATING, THE LIKES OF ANTHROPIC AND OPENAI, BUT MAYBE NOT TO BE MARKETS LIKING AT THE SAME SPEED THEY WERE BEFORE. I THINK IT'S A MOMENT IN TIME. I DON'T THINK THIS IS A COMPLETE NARRATIVE CHANGING SHIFT. BUT THAT IS SORT OF WHAT'S WAITING ON A STOCK LIKE COREWEAVE. -- WEIGHING ON A STOCK LIKE COREWEAVE. DANI: IT'S IMPORTANT WE HAVE INVESTMENT GRADE BECAUSE THE AMOUNT OF CAPITAL WE NEED MEANS WE NEED INSURANCE MONEY. I WOULD BE CURIOUS TO GET YOUR VIEW FROM THE POWERHOUSE THAT IS PARTNERS GROUP. YOU GUYS DON'T HAVE THE INSURANCE MODEL THAT APOLLO DOES. BUT I WONDER IF THAT KIND OF THING IS NECESSARY FOR THE BUILD OUT. IF YOU NEED THE INSURANCE MONEY COMING FROM THE APOLLO'S OF THE WORLD BEING COMMITTED TO INVESTMENT GRADE COMPANIES TO CONTINUE THIS WHOLE PROJECT. AND IF THEY'VE MOVED BELOW INVESTMENT GRADE, IF THIS THING IS IMPOSSIBLE. ANASTASIA: YOU NEED ALL SORTS OF CAPITAL FROM ALL SORTS OF INVESTORS TO ENABLE THE BUILDOUT OF AI. LET'S PUT SOME NUMBERS BEHIND IT , ONE TRILLION DOLLARS IN GLOBAL HIGH 4 -- HYPERSCALER AI CAPEX. THAT WILL BE SOMETHING LIKE $7 TRILLION BY 2031. THAT WILL MEAN INVESTMENT GRADE ISSUANCE, HIGH YIELD ISSUANCE. IT WILL ATTRACT INSURANCE CAPITAL. I THINK IT'S ABSOLUTELY UNDERSTANDABLE, THE DESIRE TO CHASE THE INVESTMENT GRADE RATING AND THE REALITY IS IT'S GOING TO PULL ALL OF THOSE PARTICIPANTS IN. DANI: WHAT'S GOING ON WITH LISTED PRIVATE CAPITAL AT THIS MOMENT? IT'S CARLYLE, KKR, BLACKSTONE. I THINK THIS GROUP IS DOWN SOMETHING LIKE 45% FROM THEIR PEAK. IT'S BEEN REALLY PAINFUL. IS THIS MARKET OVERREACTING? IS IT PRICING AI, IS IT PRICING RATES? WHY ARE LISTED PRIVATE CAPITAL MANAGERS SO NOT LOVED AT THE MOMENT? ANASTASIA: THERE'S BEEN A ROLLING WAVE OF CONCERNS THAT HAVE AFFECTED THE INDUSTRY. IT STARTED WITH SOFTWARE AND THE EXPOSURE THE INDUSTRY HAD WITHIN PRIVATE CREDIT, WHICH IS DEPENDING ON WHAT YOU LOOK AT, IS 20% TO 30%. IT'S MUCH LESS THAN WHAT 10% OF EXPOSURE IS TO SOFTWARE. THE MARKET WAS WORRIED ABOUT THAT AND THAT WAS THE FIRST LEG DOWN FOR THE INDUSTRY. OVER THE SUMMER, THE ACTIVITY ACTUALLY SLOWED. WHEN I LOOK TODAY AT THE EMPLOYMENT ACTIVITY, IT HAS DIPPED TO THE BOOMING TIMES WE HAD AT THE END OF 2025. THE SAME THING FOR EXITS. INVESTORS ARE STILL LOOKING FOR THOSE PORTFOLIO COMPANIES TO BE SOLD, TO BE MONETIZED. AND THE HOLDING PERIOD CONTINUES TO BE EXTENDED, SO THAT THE EXITS HAVE REALLY SLOWED. THAT IS PREDOMINATELY WHAT AFFECTED THE MARKETS INDUSTRY IN THE -- THE PRIVATE MARKETS INDUSTRY IN THE BACK HALF OF THE YEAR. LOOKING AHEAD TO 2027, THIS COULD BE A YEAR OF CLEARING AND RESOLUTION FOR THE PRIVATE MARKET INDUSTRY. PART OF THE REASON I SAY THAT IS , REMEMBER, IN 2028, THERE IS A BIG WALL OF MATURITIES COMING OUT FOR THE INDUSTRY. WHETHER THAT'S IG, HIGH-YIELD OR PRIVATE DEBT. IF YOU HAVE A LOAN THAT IS COMING DUE, WHAT HE LIKELY TO DO? YOU MIGHT THINK ABOUT SELLING THE COMPANY. IF NEEDED, YOU MIGHT RESTRUCTURE A COMPANY. ONE WAY OR ANOTHER, I THINK MEASURES WILL BE TAKEN TO TRY TO MONETIZE SOME OF THOSE. I WOULD EXPECT, IT'S NOT THAT EXITS HAVE BEEN CANCELED. THEY HAVE BEEN POSTPONED INTO 2027. DANI: I GUESS IF THEY DO START IN 2027 AND THEY NEED TO BECAUSE OF THE ISSUES YOU'VE BEEN TALKING ABOUT, IF WE DON'T GET ANY SORT OF RATE DECREASE OR EVEN IF WE JUST HOLD WHERE WE ARE, DOES THAT MEAN THE PROCESS IS GOING TO BE PAINFUL? THAT MANAGERS WILL HAVE TO SELL AT VALUATIONS THEY PERHAPS DON'T WANT TO, ESPECIALLY CONSIDERING HOW EXPENSIVE THAT 2021 -- IS? ANASTASIA: IF YOU INVESTED HIGH MULTIPLES IN 2021, YOU ARE LIKELY NOT GETTING THE HIGH MULTIPLE. IF YOU INVESTED IN THE SOFTWARE STOCK THAT WAS GROWING IN 20% -- AT 20% OR 30% OR MORE AND IT'S NOW GROWING AT 10% TO 15%, THAT'S A DIFFERENT VALUATION PARADIGM. I THINK THERE WILL BE SOME DISLOCATION THERE. WHAT I WILL SAY FROM OUR STANDPOINT, FROM OUR PRIVATE CREDIT BUSINESS, WE ACTUALLY ARE STARTING TO SEE THIS ATTRACTIVE MOMENT IN MARCH FOR PRIVATE CREDIT, NEW CAPITAL AGAIN. BECAUSE BASE RATES ARE HIGHER, WHICH IS GREAT FOR PRIVATE CREDIT. AT THE SAME TIME, WE ARE SEEING SOME CREDIT SPREAD WIDENING. AND THE DOMAIN -- DEMAND FOR CAPITAL IS VERY ROBUST. DANI: GREAT TO GET YOU ON. DAVID: GOOD TO SEE YOU. DANI: THANK YOU FOR JOINING US. LET'S GET A CHECK OF YOUR MARKETS UNDER 10 MINUTES INTO YOUR TRADING DAY. WE ARE SELLING OFF, EVEN THOUGH BREADTH IS HIGHER. APPLE IS DOING PRETTY GOOD. WE HAD A SPATE OF ANNOUNCEMENTS. SAFETY STOCKS ARE DOING WELL. AS OUR CONSUMERS. TO THE DOWNSIDE, NVIDIA IS HAVING A BAD DAY. THAT IS DRAGGING THE INDEX DOWN 20 POINTS. THE INDEX IS DOWN BY 32 POINTS. THIS IS ALL NVIDIA. IT'S A WHO'S WHO OF DIFFERENT CHIPMAKERS IN THE SEMI INDEX HAVING ANOTHER REALLY POOR DAY. WHEN YOU LOOK AT THE VARIOUS SECTORS, AGAIN, THIS IS THE MOVE SCREEN. THERE ARE THE SECTORS. TECH IS DRAGGING US DOWN, DOWN NEARLY 2%. WE JUST GOT RETAIL SALES. THOSE ARE VERY STRONG. HEALTH CARE REAL ESTATE, THEY ARE SITTING IN THAT SAFETY BUCKET IN A DECIDEDLY RISK OFF DAY. DAVID: COREWEAVE HAS LOST A QUARTER OF ITS VALUE AS ITS MODEL COMES INTO SCRUTINY, ADDING TO ANGST ON AI TRADE. WE WILL GET INTO THAT ON "BLOOMBERG OPEN INTEREST." ♪ TIME NOW FOR YOUR TOP CALLS. HERE WITH THAT IS NORA. >> BANK OF AMERICA LOOKING TO OUTPERFORM NEUTRAL. BANK OF AMERICA'S 2027 NET INTEREST OUTLOOK IS AN INCREMENTAL POSITIVE. YOU ARE SEEING SHARES TO THE DOWNSIDE BY 3/10 OF A PERCENT. SPEAKING OF BANK OF AMERICA, BANK OF AMERICA DOUBLE UPGRADED CARMAX. SAYING FTC COMBINED WITH THE COMPANY'S OWN ACTIONS HAS MADE CARMAX THE MOST PRICE COMPETITIVE IT'S BEEN IN YEARS. FINALLY, DEUTSCHE BANK UPGRADING WALMART TO A BUY FROM A HOLD. THE CURRENT INFLATIONARY ENVIRONMENT ENCOURAGES SHOPPERS TO HUNT FOR VALUE. THOSE ARE YOUR TOP CALLS. DAVID: APPRECIATE THAT. COREWEAVE SHARES CONTINUING TO DROP AS INVESTORS QUESTION THE HEAVY BORROWING BEHIND THE MASSIVE AI INFRASTRUCTURE BUILDOUT. COREWEAVE'S DEBT MODEL IS DESTROYING VALUE. >> IF COREWEAVE GOING AT 9% AND THE BEST RETURN THEY CAN GET OFF OF THAT IS A 5% RETURN, IT DOESN'T MATTER HOW MUCH THEY SCALE, THEY ARE DESTROYING VALUE AT EVERY TURN. THAT IS ESPECIALLY TRUE FOR THE TYPE OF MEAL CLOUD THAT FUNDS THEIR ENTIRE INVESTMENT BASED ON THAT. SO, THE MORE LEVERAGE WE USE FOR DATA CENTERS, THE MORE RISK WE ARE BRINGING INTO THE SYSTEM. DAVID: MANDEEP SINGH JOINS US ON SET. YOU LISTENED TO THE CEO OF THIS COMPANY SAYING THE MARKET MISUNDERSTANDS WHAT'S HAPPENING HERE AND THE MARKET IS ACTING IRRATIONALLY. DO YOU AGREE WITH THAT? MANDEEP: NOT REALLY. IN HIS CASE, CLEARLY THEY HAVE BENEFITED FROM BEING THE EARLY INVESTORS AND THE AI INFRASTRUCTURE AND HOW IT HAS HELPED THEM GROW VERY FAST AND IT SHOWED UP IN THEIR BACKLOG NUMBERS TOO. BUT RIGHT NOW, I THINK BECAUSE OF COST OF CAPITAL GROWING -- GOING UP, IT'S NOT JUST COREWEAVE. EVERYONE WHO IS FINANCING USING THAT IS GOING THROUGH THE SAME STRUGGLE. FUNDAMENTALLY, THERE IS NOTHING WRONG. WE ARE IN A COMPUTER CONSTRAINED ENVIRONMENT. EVEN IF WE LOOK AT ANTHROPIC NUMBERS, THERE IS NO EVIDENCE THAT SUGGESTS THIS APPLY DEMAND IMBALANCE IN COMPUTE AS -- HAS GOTTEN BETTER OR ANYTHING LIKE THAT. IT'S REALLY ABOUT THE COST. I THINK IT IS SHOWING UP IN COREWEAVE MORE THAN ANYONE ELSE RIGHT NOW. BUT I DON'T THINK THERE'S ANYTHING MORE THAN THAT. DANI: ISN'T THE CENTRAL BANK OF NVIDIA GOING TO MAKE SURE COST AND CAPITAL DOESN'T GO UP? THEY HAVE AN INVESTMENT IN COREWEAVE THEMSELVES. MANDEEP: THEY DO. THAT'S WHERE THE MARKET CAN EXPRESS SORT OF THE GROWING COSTS OF CAPITAL IN THE FORM OF YIELDS, WHICH HAVE GONE UP FOR COREWEAVE. TO MY MIND, THERE IS NO PANIC FUNDAMENTALLY. AND YOU ARE RIGHT. I THINK NVIDIA WOULD BE THE BACKSTOP IF SOMETHING BAD WERE TO HAPPEN. THEY SHOULD STEP IN HERE. DAVID: WE GOT THIS LETTER FROM THE NEW YORK CITY COMPTROLLER, URGING THAT COMPANY TO SCALE, TO STOP ITS IPO AND NOT GO AHEAD WITH IT. WE GOT REVENUE FIGURES FROM ANTHROPIC AS WELL. YOUR SENSE OF HOW THAT'S COLORING THE PROGRESS THEY ARE MAKING AND WHAT THE ENVIRONMENT LOOKS LIKE GIVEN THOSE TWO THINGS THAT WE JUST MENTIONED. MANDEEP: FROM THE NUMBERS, WE KNOW ANTHROPIC HAD THE $65 BILLION NUMBER. FROM THAT PERSPECTIVE, IT SEEMS LIKE EVEN THOUGH THE GROWTH RATE IS STILL SOMETHING THAT A LOT OF COMPANIES WOULD DESIRE FOR, THE GROWTH RATE IN THE LAST TWO MONTHS SEEM TO HAVE DECELERATED. WHY? WE KNOW META HAS A NEW MODEL. MET IT WAS ONE OF THE BIGGEST USERS OF ANTHROPIC -- META WAS ONE OF THE BIGGEST USERS OF ANTHROPIC TOKENS. THERE ARE FACTORS I FEEL ARE TEMPORARY. THE COMPANY'S -- IT'S THE COMPANY'S CHOICE TO START CRACKING DOWN ON DISTILLATION NOW. FROM THAT PERSPECTIVE, THERE ARE SOME TEMPORARY FACTORS. ON THE AI SAFETY THING, IT'S NOT JUST ANTHROPIC. IT'S EVERYONE. ANTHROPIC STILL, I FEEL, HAS A GOOD STORY TO TELL IN TERMS OF WHAT THEY HAVE DONE AROUND AI SAFETY. TO MY MIND, THEY WON'T SHELVE THE IPO BECAUSE OF THAT. DANI: AS LONG AS THE RACE BETWEEN THESE MODELS IS WHO CAN BUILD THE BEST FRONTIER MODEL, AREN'T THEY STILL GOING TO FOREVER BE BURNING MASSIVE SUMS OF CASH? ESPECIALLY AS THE REST OF THE WORLD OR THEIR AVERAGE CORPORATION JUST CARES ABOUT INFERENCE? MANDEEP: YES, BUT THAT'S WHY ANTHROPIC STILL HAS THAT PREMIUM PRICING FOR THEIR FABLED MODEL. THEY HAVE LOWERED THEIR PRICE FOR THE OLDER MODELS. BUT, FOR THEIR LEADER -- LEADING MODEL, THEY STILL HAVE THE PREMIUM PRICING. WHY? BECAUSE THERE ARE CUSTOMERS WILLING TO PAY FOR THAT. DANI: I CAN IMAGINE HEALTH CARE, DRUG DISCOVERY, THAT MODEL WOULD BE GOOD FOR IT. WHAT ARE THE OTHER CUSTOMERS FOR THE TOP-TIER MODELS THAT WOULD BE WILLING TO PAY THAT? MANDEEP: YOU ARE PAYING HERE FOR INTELLIGENCE. YOU DON'T WANT TO OVERPAY FOR SIMPLE USE CASES. BUT THERE ARE USE CASES LIKE DRUG DISCOVERY OR ANYTHING ELSE AROUND CODING AGENTS. THAT'S WHERE ANTHROPIC LEAPFROGGED OPENAI. TO MY MIND, IF YOU HAVE THE BEST INTELLIGENCE IN A MODEL AND YOU IDENTIFY THE USE CASE, YOU PROBABLY ARE WILLING TO PAY FOR THE TOKENS. WHICH IS THE CASE, OTHERWISE THEY WOULD HAVE LOWERED THE PRICE. DANI: THAT IS MANDEEP SINGH FROM BLOOMBERG INTELLIGENCE. COMING UP, APPLE PREPARES TO RELEASE ITS FIRST AI FUTURES FOR THE IPHONE. THAT IS COMING UP NEXT. ♪ WE LOOK AT THE MAJOR INDEXES, THEY ARE DOWN. THE S&P IS DOWN 4/10 OF 1%. NASDAQ IS DOWN, ADDING TO ANXIETY. COREWEAVE DOWN 8%. THE BROADER THEME HERE OF COMPANIES PERHAPS OVEREXTENDING THEMSELVES ON DEBT AS THEY TRY TO BUILD OUT AI INFRASTRUCTURE. LOOKING AT OTHERS, NVIDIA IS DOWN 3.28%. THE BANK OF NVIDIA HERE IS SO CRUCIAL TO THIS BROADER ECOSYSTEM, INVOLVING AI. LOOKING AT SCHWAB, B AND Y, THOSE COMPANIES REPORTED EARNINGS THIS MORNING. -- BNY, THOSE COMPANIES REPORTED EARNINGS THIS MORNING. IT'S AN UNPREDICTABLE ENVIRONMENT FOR A LOT OF THESE BANKS. THE REGIONAL BANKS INCLUDED. SPACEX HAVING ISSUES WITH DEBT ITSELF, DOWN 6%. APPLE AFTER TIM COOK MADE A PILGRIMAGE, ANOTHER PILGRIMAGE TO CHINA, ANNOUNCING SOME OF ITS AI FEATURES WILL BE AVAILABLE TO TIME -- CHINESE CUSTOMERS. THIS IS SOMETHING LONG IN THE MAKING. THE COMPANY HAS BEEN PUSHING THIS FOR A VERY LONG TIME, AS IS THE CASE IN THE EUROPEAN UNION. NOT ALL OF THE FEATURES WILL BE AVAILABLE ON IPHONES IN CHINA WHEN ALL OF THIS HAPPENS. MARK GURMAN WITH THAT PIECE. I DIDN'T REALIZE -- DANI: I DIDN'T REALIZE MY IPHONE HAD AI FEATURES. LET'S DISCUSS THIS WITH OUR BLOOMBERG TECH REPORTER, RYAN. HOW IMPORTANT IS THIS FOR APPLE TO GET INTO THE CHINESE MARKET, EVEN IF THE AI FEATURES ON THE IPHONE MAYBE AREN'T EXACTLY WHERE MANY INVESTORS HOPED THEY WOULD BE AT THIS POINT? >> CHINA IS A VERY IMPORTANT MARKET FOR APPLE. THEY GET ABOUT 1/5 OF THEIR REVENUE FROM THE GREATER CHINA REGION. ANYTHING THEY CAN DO THERE TO SUPPORT DEMAND TO MAKE IT MORE APPEALING, THAT'S OBVIOUSLY GOING TO BE VERY CLOSELY WATCHED BY INVESTORS. THIS COMES AT A TIME WHEN THERE IS A LOT OF CONCERN ABOUT THE STATE OF THE SMARTPHONE MARKET. I THINK WE JUST SAW A REALLY BIG PULLBACK IN SMARTPHONE DEMAND, IN PART BECAUSE OF HIGHER MEMORY PRICES, HIGHER COMPONENT PRICES, WHICH IS A BYPRODUCT OF THE AI INFRASTRUCTURE BUILDOUT. THIS COMES ALSO AHEAD OF THE RELEASE OF THE FOLDABLE IPHONE, WHICH I BELIEVE GOES ON PREORDER TOMORROW. PEOPLE ARE GOING TO BE PAYING A LOT OF ATTENTION TO WHAT DEMAND LIKE THAT LOOKS LIKE. ANY SORT OF THING THEY CAN DO TO MAKE IT MORE ATTRACTIVE WITH AI FEATURES AND SO FORTH, ALL OF THAT WILL BE FILLING INTO WHAT KIND OF DEMAND WE ARE SEEING FOR THESE NEW PRODUCTS AND WHAT CAN THAT MEAN FOR APPLE'S GROWTH GOING FORWARD. DAVID: PAYING A LOT OF ATTENTION, PAYING A LOT OF MONEY FOR THIS PHONE AS WELL. LET ME ASK YOU ABOUT THE IMPORTANCE OF CHINA WHEN YOU LOOK AT APPLE'S BROADER AI BUILDOUT. WE KNOW THIS MARKET HAS BEEN SO CRUCIAL TO APPLE'S GROWTH OVER THE LAST MANY YEARS. PUT INTO CONTEXT FOR US THE ACHIEVEMENT HERE OF GETTING THIS TECHNOLOGY AVAILABLE TO CHINESE CUSTOMERS FOR THE FIRST TIME. >> THIS IS STUFF THAT'S BEEN AVAILABLE IN AMERICA SO IT MIGHT NOT BE SUPER SIGNIFICANT. THERE ARE ALSO CHINESE AI SERVICES THAT ARE OUT THERE. I DON'T KNOW THAT IT WILL BE ENOUGH TO NECESSARILY MOVE THE NEEDLE BUT ANYTHING THEY CAN DO TO MAKE PHONES MORE ATTRACTIVE IN CHINA, GIVEN THE SIZE OF THAT MARKET, OBVIOUSLY GOING TO BE A POSITIVE. DANI: ELSEWHERE, YOU'VE BEEN WRITING ABOUT SPACEX'S SPECTRUM PURCHASE. THE CONCERN IS THEY ARE WELL ON THEIR WAY TO DISRUPTING SOME OF THE MORE TRADITIONAL TELECOM COMPANIES. HOW CLOSE ARE THEY GETTING TOO UPSETTING SOME OF THEIR BUSINESSES? >> THERE'S BEEN THREE MAJOR PLAYERS WITHIN TELECOM. YOU HAVE VERIZON, AT&T AND T-MOBILE. THERE'S BEEN A LOT OF FIGHTING BETWEEN THOSE THREE OVER MARKET SHARE AND GROWTH. THE IDEA THAT ANOTHER PLAYER COULD COME IN AND DISRUPT THINGS LIKE SPACEX HAS MADE A LOT OF TELECOM INVESTORS VERY NERVOUS. THERE'S ALREADY BEEN CONCERNS ABOUT THE SECTOR'S GROWTH. THERE'S BEEN CONCERNS ABOUT HOW ATTRACTIVE ARE THEIR DIVIDENDS IN THE FACE OF RISING RATES. SPACEX WOULD TAKE A LOT OF TIME AND IT WOULD REQUIRE A LOT OF TERRESTRIAL INFRASTRUCTURE FOR THEM TO REALLY EFFECTIVELY COMPETE, ESPECIALLY IN DENSE, URBAN AREAS OR INDOOR COVERAGE. THINGS LIKE THAT THAT ARE VERY IMPORTANT. CERTAINLY JUST A PROSPECT OF A COMPANY LIKE SPACEX WHICH IS SO BIG, HAS SUCH DEEP POCKETS, THAT IS CERTAINLY ENOUGH TO MAKE PEOPLE VERY CAUTIOUS ABOUT WHAT THIS COULD POTENTIALLY MEAN FOR THE SECTOR AND ITS GROWTH AND OF MARKET SHARE OF THESE INCUMBENT PLAYERS. THERE'S A LOT OF CONCERN ABOUT WHAT THAT WILL LOOK LIKE GOING FORWARD. DANI: RYAN, THANK YOU FOR JOINING US. ONE OF THE POTENTIAL FLIES IN THE OINTMENT FOR SPACEX BEING ABLE TO BUY THINGS AND TO SPEND IS THEIR ABILITY TO ISSUE DEBT. SPACEX IS ONE OF THESE COMPANIES THAT HAS A LOT OF DEBT OUTSTANDING WHOSE STOCK IS ALSO GETTING SLAMMED. DAVID: I SAW ONE OF THESE MOBILE CARRIERS ALSO GETTING SPACEX IS USING THIS SATELLITE TECHNOLOGY WITH A MOBILE PHONE. INSIDE A HOME OR OFFICE MIGHT BE MORE DIFFICULT. I'M NOT AN EXPERT. DANI: I'M NOT, EITHER. STARLINK HAS REALLY GOOD SERVICE. I THINK A LOT OF PEOPLE WOULD BE ENTHUSIASTIC ABOUT BUYING THAT. COMING UP ON THE SHOW, REALLY PLEASED TO SHARE THAT RYAN ISRAEL WILL BE JOINING US TO TALK ABOUT OVERALL MARKETS, AI AND ACCESS TO PRE-IPO COMPANIES. WE HAVE A LOT THAT'S COMING UP IN THE SECOND HOUR OF "OPEN INTEREST." ♪ DANI: THE SELLOFF CONTINUES AFTER THE WORST DAY SINCE JULY. WE ARE 30 MINUTES INTO YOUR TRADING DAY. WELCOME TO BLOOMBERG OPEN INTEREST. I AM DANI BURGER ALONGSIDE DAVID GURA. INFLATION FEARS RAISE THE STAKES AS MARKETS AWAIT REMARKS FROM FED CHAIR KEVIN WARSH TONIGHT. DAVID: ANTHROPIC'S REVENUE SURGING AHEAD OF EXPECTED IPO TONIGHT. THAT'S DOING LITTLE TO CALM ANXIETY OVER THE BROADER AI TRADE. DANI: COREWEAVE'S SUDDEN CRASH FUELING FRESH CONCERNS OVER THE DEBT POWERING THE AI BOOM. WE BEGIN WITH U.S. PRODUCER PRICES RISING IN SEPTEMBER AT THE FASTEST PACE IN MORE THAN FOUR YEARS. JOINING US NOW IS READE PICKERT, U.S. ECONOMY EDITOR IN WASHINGTON. THIS ADDS TO THE CPI DATA. WHAT POSITION DOES THIS PUT THE FED IN AS THEY HAVE THEIR UPCOMING MEETING AT THE END OF THIS MONTH? READE: ON THE HEELS OF THE HIGHER-THAN-EXPECTED CPI REPORT YESTERDAY, WE SAW A PPI REPORT THAT -- ROSE AT THE FASTEST PACE IN MORE THAN FOUR YEARS. WHILE A LOT OF THAT WAS ENERGY, IT WAS A BIT MORE BROAD-BASED THAN THAT AS WE THINK ABOUT ENERGY PRICES MOVING ACROSS THE ECONOMY AND HOW THAT'S IMPACTING THINGS LIKE TRANSPORTATION PRICES AND WHOLESALER MARGINS. BEFORE THESE NUMBERS, WE HAD SEVERAL OPEN OFFICIALS COME OUT AND SAY THAT WE COULD WAIT IN TERMS OF RAISING INTEREST RATES AT THIS MONTH'S MEETING. ALL THE EYES WILL BE ON KEVIN WARSH TONIGHT AS INVESTORS PARSE THE RATES. WARSH HAS VOWED NOT TO TRY TO MOVE MARKETS WITH HIS NEAR TERM POLICY OUTLOOK. THE SETTING IS A CONVERSATION WITH IMF MANAGING DIRECTOR'S -- DIRECTOR GEORGE. WE WILL SEE WHAT WE GET. DAVID: YOU MENTIONED ENERGY PRICES MOVING ACROSS THE BROADER ECONOMY. TALK ABOUT THAT IN THE CONTEXT OF RETAIL SALES. WE GOT THOSE NUMBERS AS WELL AS WE CONTINUE TO PROBE THE RELATIVE HEALTH OF THE U.S. CONSUMER GIVEN ALL WE HAVE BEEN TALKING ABOUT. HIGH INFLATION, HIGH ENERGY PRICES AND THE LIKE. READE: RETAIL SALES CAME IN HIGHER-THAN-EXPECTED. A LOT OF THAT WAS DUE TO HIGHER GASOLINE PRICES. WHEN WE THINK ABOUT WHAT GASOLINE PRICES DID IN SEPTEMBER, WE SAW A HUGE SURGE TO AVERAGE PRICES PER GALLON NEARING $4.50. BUT, THERE WAS, IF YOU LOOK AT THE DETAILS OF THAT REPORT, THERE WERE SIGNS OF MORE CONSUMERS TAKING A BIT OF A BREATHER. THE AUGUST REPORT WAS REALLY STRONG IN TERMS OF CONSUMER SPLURGING. AND THEN THIS REPORT SHOWED THAT THE UNDERLYING DETAILS LOST A LITTLE STEAM. BUT, THE UNDERLYING PICTURE SEEMS TO BE A CONSUMER THAT IS RESILIENT AND CONTINUES TO SPEND. AND AN ECONOMY THAT, WHEN YOU LOOK AT A LOW UNEMPLOYMENT RATE, WHEN YOU LOOK AT A BRAZILIAN CONSUMER AND YOU LOOK AT INFLATION THAT'S TOO HIGH, ONE THAT CERTAINLY WOULD -- RESILIENT CONSUMER AND YOU LOOK AT INFLATION THAT'S TOO HIGH, ONE THAT CERTAINLY WOULD -- DANI: THANK YOU SO MUCH. THAT IS READE PICKERT IN WASHINGTON. THOSE FEARS OF MORE HIKES AND HIGHER RATES ARE SENDING RIPPLE EFFECTS, SPECIFICALLY THROUGH TECH AND THE AI PLAYERS WHO ARE HEAVY BORROWERS IN THIS MARKET. LET'S CONTINUE THE CONVERSATION. JOINING US NOW, I'M PLEASED TO SAY IS RYAN ISRAEL. GREAT TO GET YOU ON. COREWEAVE IS MAY BE THE POSTER CHILD FOR THIS. A LOT OF AI NAMES ARE SELLING OFF. IN YOUR PORTFOLIO, YOU DON'T HAVE ANY SORT OF PURE AI NAMES. AMAZON IS MAY BE THE CLOSEST COROLLARY. WHEN YOU LOOK AT SEMI SELLING OFF 18% IN THE PAST TWO WEEKS, IF YOU ARE FEELING VALIDATED IN THE DECISION TO AVOID THEM. RYAN: ONE OF THE THINGS THAT IS FASCINATING TO US IS THE STRENGTH IN THE S&P 500 HAS BEEN DRIVEN BY A SMALL COLLECTION OF COMPANIES. A LOT OF THE ONES YOU JUST MENTIONED. WHAT THAT MEANS FOR OUR STRATEGY WHERE WE ARE TRYING TO CURATE A PORTFOLIO OF A DOZEN OR 15 OF THE WORLD'S GREAT HIGH QUALITY DURABLE GROWTH BUSINESSES, THOSE HAVE BEEN ON SALE ALL YEAR LONG. BUSINESSES ARE PERFORMING INCREDIBLY WELL BUT THE STOCK MARKET HAS NOT BEEN PAYING ATTENTION TO THOSE BUSINESSES. WE'VE BEEN ABLE TO BUY THEM AT VERY ATTRACTIVE PRICES. YOU ARE STARTING TO SEE THE STRENGTH OF THAT STRATEGY WHERE A LOT OF THE NAMES THAT HAVE DRIVEN A LOT OF THE STOCK MARKET PERFORMANCE YEAR-TO-DATE ARE GIVING UP AND A LOT OF WHAT WE OWN ARE DOING WELL AS PEOPLE ARE DIFFERENTIATING THE BUSINESS IS WHERE WE THINK THE PURCHASE PRICES ARE VERY ATTRACTIVE AND HAVE GREAT GROWTH AND RELATIVELY BOUGHT A LITTLE -- A RELATIVELY VOLATILE ENVIRONMENT OF RATES. DANI: BECAUSE WE ARE STARTING TO QUESTION IT IN EARNEST AND PRICE THE END, DO YOU THINK SOMETHING HAS FLIPPED IN THIS MARKET THAT THOSE NOT LOVED NAMES THAT YOU PICKED UP WHEN THEY WERE UNLOVED ARE STARTING TO GET RECOGNIZED? RYAN: IT'S HARD TO SAY WHEN A LEADERSHIP SHIFT WILL EMERGE OR WHEN IT HAPPENS. BUT WHEN YOU STEP BACK, WHAT WE ARE ULTIMATELY TRYING TO DO IS BUY BUSINESSES THAT CAN COMPOUND THEIR EARNINGS BETWEEN 15% AND 25% A YEAR AND TAKING A LONGER-TERM PERSPECTIVE. IF WE HOLD THESE BUSINESSES FOR A LONG PERIOD OF TIME, THE RETURNS WILL OVER A VERY LONG PERIOD OF TIME, APPROXIMATE THEIR GROWTH IN EARNINGS PER SHARE. THAT'S ONE COMPONENT OF IT. THE SECOND COMPONENT IS THE MULTIPLE PEOPLE ASSIGNED TO THOSE EARNINGS CHANGES. IN THE SHORT TERM COME THAT FLUCTUATION HAS A MUCH LARGER IMPACT THAN THE GROWTH. OUR GAME IS TRYING TO FIND GREAT BUSINESSES, WHERE WE KNOW IF WE HOLD THEM FOR 3, 5, 10 YEARS AND WE ARE RIGHT IN OUR ANALYSIS OF THE PROSPECTS, IT WILL BE RIGHT. WE ARE STARTING TO SEE A LITTLE BIT OF THE MULTIPLE APPRECIATION, WHICH COULD BE THE START OF A TREND. WE WILL HAVE TO SEE. DAVID: COULD YOU TALK MORE ABOUT THE CURATORIAL PROCESS? THE WAY YOU LOOK AT COMPANIES AND WHAT YOU'RE LOOKING TO ADD TO THE PORTFOLIO. RYAN: WE HAVE BASICALLY HAD A LIBRARY FOR THE PAST TWO DECADES. 300 TO 400 OF THE WORLD'S GREAT BUSINESSES. GREAT BUSINESSES IN OUR VIEW ARE BUSINESSES THAT HAVE SIMPLE, PREDICTABLE FREE CASH FLOW INTERNET BUSINESSES. STRONG BARRIERS TO ENTRY. RUN BY A HIGH TEAMS WITH MINIMAL AMOUNTS OF FINANCIAL LEVERAGE WHERE SHAREHOLDERS GET A LOT OF VALUE FROM THE CAPITAL ALLOCATIONS THE ASSESSMENT MANAGEMENT TEAM MAKES. WE MONITOR THOSE COMPANIES EVERY SINGLE DAY. ALWAYS LOOKING AT ADDING TO THE LIBRARY FOR NEW COMPANIES THAT BECOME AVAILABLE. AND WE ARE REALLY JUST WAITING FOR THE OPPORTUNITY TO PURCHASE THEM AT ATTRACTIVE PRICES. SO THIS YEAR, WHERE THERE HAS BEEN A SMALL NUMBER OF COMPANIES THAT HAVE DRIVEN STOCK MARKET PERFORMANCE, THAT'S ADVANTAGEOUS TO OUR STRATEGY BECAUSE WE GET BUSINESSES THAT ARE SOME OF THE WORLD'S GREAT BUSINESSES THAT ARE ON SALE AT PRICES WE WOULD NOT PROBABLY HAVE GUESSED THEY WOULD BECOME AVAILABLE. DAVID: A COMPLEMENT TO THAT CONCENTRATION WE TALK SO MUCH ABOUT. DANI: I'M SURE YOU DON'T WANT TO GIVE NAMES AWAY BUT YOU ARE VERY MUCH ALLOWED TO. I WONDER WHAT IS ON THE WATCHLIST. WHAT'S IN THE LIBRARY. IF YOU CAN'T SAY SPECIFIC COMPANIES, IS THERE IS -- IS THERE A SECTOR YOU HAVE YOUR EYE ON? RYAN: IF AI GROWS LARGER THAN THE BIGGEST BULL'S THING OR IS MORE IN LINE WITH THE BEARS, THOSE BUSINESSES WOULD PRODUCE THE SAME LEVEL OF EARNINGS OVER TIME. A LOT OF THOSE BUSINESSES ARE COMPLETELY OUTSIDE OF THE AI SPACE AND HAVE BEEN IGNORED. TO GIVE YOU AN EXAMPLE OF SOMETHING WE HAVE PURCHASED AND TALKED ABOUT BEFORE, WE HAVE A CONTACT LENS MANUFACTURER. THEY DO THINGS INVOLVED WITH CATARACT SURGERY. THAT BUSINESS IS WHEN WE THINK AND GROW ITS EARNINGS AT A HIGH TEENS RATE. VERY STRONG REVENUE GROWTH AND VERY STABLE. THE WORLD NEEDS MORE EYE CARE IN TOTALITY. IT IS A DUOPOLY AND THEY HAVE THE OPPORTUNITY TO IMPROVE THEIR PROFIT MARGIN SIGNIFICANTLY. WE HAVE WATCHED THIS COMPANY SINCE IT SPUN OUT IN 2019 AND NEVER HAD THE OPPORTUNITY TO BUY IT BECAUSE IT'S BEEN A GREAT BUSINESS BUT ALWAYS TRADED IN MULTIPLES BECAUSE PEOPLE WERE TOO EXCITED. IT FEELS LIKE HEALTH CARE HAS BEEN THROWN ON THE WAYSIDE AS PEOPLE ARE FOCUSING ON THINGS LIKE AI. WE'VE HAD AN OPPORTUNITY TO STEP IN AND BUY A BUSINESS WE HAVE WATCHED FOR A DECADE THAT HAS HAD VERY GOOD BUSINESS PROCESS BUT WAS TOO EXPENSIVE AND HAS NOW BECOME AVAILABLE FOR A VERY ATTRACTIVE PRICE. DAVID: LET ME ASK YOU ABOUT THE ECONOMIC ENVIRONMENT WE ARE IN RIGHT NOW AND WHAT CONCERN IF ANY OF THAT IS GIVING YOU AT THIS MOMENT. WE WERE TALKING ABOUT INFLATION A MOMENT AGO AND THE HEALTH OF THE CONSUMER. ANY RED LIGHTS OR ALARMS SOUNDING THAT YOU SEE RIGHT NOW? RYAN: I WOULD NOT USE THE WORDS RED LIGHTS OR ALARMS BUT I THINK IT'S AN INTERESTING BACKUP THAT WE HAVE NOT SEEN IN A WHILE. IT'S AN INCREDIBLY BIFURCATED ECONOMY. IF YOU DECOMPOSE GDP, 70% OF THE ECONOMY IS GENERALLY DRIVEN BY CONSUMER SPENDING. YOU ARE SEEING A LOT OF PRESSURE. YOU CAN SEE THIS IN THE GOVERNMENT NOW AND IN INDIVIDUAL COMPANIES. PEOPLE ARE SAYING THE COST OF LIVING IS VERY HIGH. WAGES ARE NOT KEEPING UP WITH THE INFLATION WHICH IS A RELATIVELY NEW DEVELOPMENT. PEOPLE'S REAL INCOMES THEY CAN SPEND OUR GOING DOWN. IN ORDER TO FINANCE THE GOODS THEY NEED AND THE SERVICES MOST CONSUMERS NEED, THEY ARE HAVING TO BORROW FOR THEY ARE HAVING TO REDUCE THE AMOUNT THEY CAN SAVE, WHICH IS GENERALLY NOT A SIGN OF GREAT HELP. AT THE SAME TIME, YOU ARE ALSO SEEING A LOT OF WEAKNESS IN SECTORS THAT DEPEND UPON FINANCING. AUTOMOBILE SALES, THINGS THAT REQUIRE THE COST OF CAPITAL TO BE LOWER FOR PURCHASES. THOSE ARE STRUGGLING RIGHT NOW AT A HIGHER THAN NORMAL RATE ENVIRONMENT. THIS IS JUST BY THE LAST 20 YEARS. ON THE OTHER HAND, YOU HAVE THIS AI GROWTH AND INFRASTRUCTURE THAT IS SIMPLY UNBELIEVABLE AND DOESN'T SEEM TO END ALL BE IMPACTED BY HIGHER RATES. IT'S NOT REALLY CLEAR, EVEN IF YOU DOUBLED THE FEDERAL FUNDS, IF THAT WOULD HAVE ANY IMPACT ON SLOWING DOWN THIS BUILDOUT OF GROWTH. THAT'S WHAT'S HOLDING UP THE ECONOMY RIGHT NOW. IT'S NOT A TYPICAL ECONOMIC ENVIRONMENT WHERE IF A LARGE PORTION OF THE ECONOMY THAT IS ACTUALLY BEING HURT BY HIGHER RATES. BUT YOU HAVE ANOTHER PART OF THE ECONOMY THAT EVEN IF YOU RAISED RATES SIGNIFICANTLY MIGHT NOT SLOWDOWN AT ALL. AND HOW YOU SOLVE THAT SEEMS TO BE A REAL PUZZLE. DANI: THE RATE IN SENSITIVITY HAS BEEN REMARKABLE. EVERY NOW AND THEN, YOU WILL HAVE A MACRO LAYER, A HEDGE THAT YOU WILL PUT ON YOUR PORTFOLIO. YOU DESCRIBED IT BEFORE AS SOMETHING THAT WILL BE EPISODIC. YOU HAVE TO ASYMMETRIC INFORMATION. THE COVID TRADE, TO PUT ON CDS, I THINK MANY HAVE TAGGED THAT AS AN EPIC TRADE THAT PAID OFF HANDSOMELY. IS THERE ANYTHING YOU ARE EYEING NOW, ANY SORT OF MACRO OVERLAY THAT MIGHT MAKE SENSE FOR THE PORTFOLIO? RYAN: THE WORK GOING INTO THIS ASYMMETRIC TRADE -- THAT HAPPENS EVERY DAY. WE HAVE A TEAM THAT WORKS ON THAT AT PERSHING SQUARE. IN ORDER TO PUT ON ONE OF THOSE TRADES, WE NEED TWO OF THOSE THINGS TO HAPPEN. WE NEED TO HAVE A DIFFERENTIATING PERSPECTIVE ABOUT WHAT THE WORLD MIGHT ULTIMATELY COME OUT TO LOOK LIKE VERSUS WHAT A LOT OF PEOPLE THINK IS THE CASE. SECONDLY, WE NEED TO FIND AN INSTRUMENT THAT IS TRADING AT AN ATTRACTIVE PRICE SO THAT IF WE ARE CORRECT IN OUR ANALYSIS, WE CAN HAVE HUGE ASYMMETRIC RETURNS . I WOULD SAY RIGHT NOW WE ARE NOT SURE WE HAVE A DIFFERENTIATING PERSPECTIVE BUT WE ARE SEEING THINGS THAT ARE QUITE INTERESTING THAT WE ARE CAREFULLY FOLLOWING. THE PRICE OF THE INSTRUMENTS THAT WE NEED, THAT'S NOT YET COME AT A LEVEL THAT WE THINK IS VERY ATTRACTIVE. WHEN THOSE THINGS LINE UP, WE WILL HAVE SOMETHING TO DO. IF NOT, WE WILL PATIENTLY STUDY AND WAIT UNTIL AN OPPORTUNITY APPEARS. DANI: RYAN IS GOING TO STICK AROUND WITH US. THAT IS RYAN ISRAEL OF PERSHING SQUARE. THE WORST OF LOSSES ARE STARTING TO EASE, STILL DOWN 2/10 OF A PERCENT FOR THE S&P. NASDAQ, VAST UNDERPERFORMANCE. THAT'S BECAUSE OF THE SELLOFF IN NVIDIA. SPACEX, ANYTHING THAT ISSUES A LOT OF DEBT. EVEN THOUGH YOU ARE SEEING A RALLY IN BONDS THIS MORNING, BONDS ARE BACK. HOORAY FOR 6040, 10 YEAR YIELDS ARE DOWN ABOUT 13 BASIS POINTS AS BRENT CRUDE ALSO FALLS. LET'S LOOK AT SINGLE DAY MOVERS. WITH THAT IS NORAH MULINDA. >> COREWEAVE IS GETTING PUNISHED FOR A SECOND DAY. THIS AS INVESTORS ARE QUESTIONING FINANCING THAT AI INFRASTRUCTURE. BLOOMBERG INTELLIGENCE IS SAYING THIS LOOKS MORE LIKE A FUNDING ISSUE THAN A DEMAND PROBLEM. SHARES OF COREWEAVE ARE DOWN NEARLY 7%. NEXT UP, TSMC IS BEATING EXPECTATIONS AND PROVIDING A STRONG OUTLOOK. INVESTORS ARE FOCUSING INSTEAD ON RISING COSTS AND PRESSURE ON MARGINS. AS THE BROADER SELLOFF IN AI STOCKS CONTINUES. SHARES ARE LOWER BY ABOUT FOUR POINT 2%. OVER TO CHARLES SCHWAB, EARNINGS MEETING EXPECTATIONS. BANK DEPOSITS AND NET INTEREST MARGIN COMING IN LIKE. THAT IS PUSHING SHARES LOWER THIS MORNING BY ABOUT 5%. THOSE ARE YOUR MORNING MOVERS. DANI: THANK YOU VERY MUCH. WE WILL CATCH UP WITH YOU LATER IN THE HOUR. COMING UP, WE WILL BRING YOU HIGHLIGHTS FROM MY INTERVIEWS AT THE CASE SUMMIT IN BEVERLY HILLS AND MORE, WITH RYAN ISRAEL. THAT IS AFTER THIS BREAK. YOU ARE WATCHING "OPEN INTEREST." ♪ >> THE MACRO ENVIRONMENT IS VERY DIFFICULT. ON THE HEADLINE LEVEL, YOU HAVE HIDE -- HI GDP BECAUSE OF THIS DATA CENTER AND BUILD UP. UNDER THE HOOD, WITH INFLATION AND TARIFFS AND DIESEL ENERGY PRICES, YOU HAVE A LOT OF STRESS IN THE SYSTEM AND THAT'S WHERE YOU START TO SEE THE RUBBER HIT THE ROAD AND YOU WILL START TO SEE SOME COMPANIES GO THROUGH DEFAULTS. >> INVESTORS LIKE OURSELVES ARE NOT GOING TO ALLOCATE 20%, 30%, 40%, 50% OF OUR PORTFOLIOS TO A CORRELATED STRATEGY IN AI DATA CENTER BUILDOUT WHERE THE ULTIMATE CHIP PROVIDERS ARE THE ULTIMATE END USERS LIKE OPENAI AND ANTHROPIC. I THINK RAISING ADDITIONAL CAPITAL WILL COME AT A HIGHER PRICE. WE WILL USE THE GLOBAL FINANCIAL MARKETS TO TAP >> INTO THAT. ENTERPRISE SOFTWARE -- >> TAP INTO THAT. >> ENTERPRISE SOFTWARE HAS TWO DIFFERENT STATES THAT WILL BE SUSTAINABLE. ONE WILL BE AGENCIES OPERATING WITHIN THE WORKFLOWS AND MANIPULATING DATA SETS. HAVING A DETERMINISTIC OUTCOME. >> WHAT'S REALLY IMPORTANT IN TERMS OF THAT ACHIEVING IS BEING VERY LINEAR ON THE WAY OUT. JUST LIKE WE ARE LINEAR IN HOW WE INVEST, WE ARE ALSO VERY LINEAR IN HOW WE EXIT OUR BUSINESSES. WE LIKE GOOD COMPANIES AND MAKE THEM GREAT. WE GET IN AND DO OUR WORK. WHEN WE HIT 80% OF THE VALUE WE CREATE, WE GO SELL THEM. DANI: LET'S STICK WITH PRIVATE MARKETS. PERSHING SQUARE IS WORKING ON A NEW FUND THAT WILL GIVE INVESTORS ACCESS TO PRE-IPO COMPANIES. RYAN ISRAEL, THE FIRM'S CHIEF INVESTMENT OFFICER IS BACK WITH US. THE OVERALL MARKET FOR PRIVATE MARKETS AT THIS MOMENT IS CONCERNS ABOUT EXITING AND WHERE OPPORTUNITIES ARE BEYOND AI. WHY START THIS NOW? AND WHAT ARE YOU LOOKING AT? RYAN: THE WEIGHT THAT STRATEGY STARTED IS THE WAY AND HE STRATEGY STARTS WHICH IS WHAT ARE WE LOOKING AT INTERNALLY THAT WE CAN FURTHER LEVERAGE IN ORDER TO DO SOMETHING MORE? WE'VE BEEN DOING A LOT OF WORK IN THE AI SPACE FOR SOME OF OUR HISTORICAL INVESTMENTS. ALL OF THE HYPERSCALERS AND COMPANIES THAT TOUCH AI. THE MORE WORK WE HAVE DONE ON THESE BUSINESSES, THE MORE WE HAVE A FRAMEWORK FOR WHAT GOOD AI LOOKS LIKE. THERE ARE SO MANY LARGE EMERGING PRIVATE COMPANIES THAT COULD BE AMONG SOME OF THE LARGEST COMPANIES IN THE WORLD. CERTAINLY THE S&P 500, IF THEY WERE PUBLIC. WE FIND OURSELVES INCREASINGLY DOING WORK ON PRIVATE COMPANIES AND HAVING THE PUBLIC MARKETS PERSPECTIVE. WE FELT THERE WAS A NATURAL SYNERGY TO SAY WHY DON'T WE START INVESTING IN LATER STAGE GROWTH COMPANIES AND VC COMPANIES MORE BROADLY? DAVID: WE WANT TO ASK YOU ABOUT NETFLIX, WHICH IS ONE OF THE FUNDS HOLDINGS. WE SAW NEWS OF LAYOFFS YESTERDAY. WE GO BACK TO WHAT YOU SAID A FEW MONTHS BACK, SAYING NETFLIX EFFECTIVELY HAD WON THE STREAMING WARS. DOES THIS CHANGE HER STRATEGY WHEN IT COMES TO NETFLIX? RYAN: KNOW, WE ARE EXCITED ABOUT THE LONG-TERM OPPORTUNITY WHEN IT COMES TO NETFLIX. PEOPLE GET VERY FOCUSED ON SHORT-TERM METRICS THAT MAY NOT NECESSARILY BE INDICATIVE OF LONGER-TERM VALUE. WITH NETFLIX, A LOT OF PEOPLE ARE CONCERNED THAT WHAT THEY CALL ENGAGEMENT, PEOPLE ARE SPENDING HAS COME DOWN A LITTLE BIT. NETFLIX DOES NOT DIRECTLY GET PAID BASED UPON THAT SINGLE METRIC. PEOPLE PAY A CERTAIN AMOUNT OF MONEY BASED ON AROUND THE WORLD, EACH MONTH, IN ORDER TO WATCH NETFLIX. LONGER-TERM, NETFLIX HAS THIS HISTORY WHERE THEY HAVE BEEN INVESTING IN CONTENT FOR THE LAST 15 YEARS. ANOTHER WAY TO THINK ABOUT IT IS WHEN THEY HAVE A LARGER FAN BASE BY A FACTOR OF TWO, THEY CAN AFFORD TO, ON A PER USER BASIS, SPEND WAY MORE MONEY THAN THE NEXT COMPETITOR. BUT THEY CHARGE THE SAME PRICE PER USER AS COMPETITORS. YOU'RE GETTING MORE VALUE FOR YOUR MONEY THAN ANY OTHER SERVICE. EVERY PERSON WHO COMES TO NETFLIX TO SUBSCRIBE GETS THE BENEFIT OF THE LAST TWO DECADES OF CONTENT INVESTMENTS THEY HAVE MADE PLUS NEW SHOWS. OVER TIME, THAT GIVES THEM AN ENORMOUS COST ADVANTAGE AND CAN BE REFLECTED IN HIGHER PROFIT MARGINS. WE THINK THIS COMPANY HAS BEEN TRADING AT SOME OF THE LOWEST LEVELS IT'S BEEN TRADING AT IN HISTORY AT A TIME IN WHICH THE FUNDAMENTAL BUSINESS PERFORMANCE IS VERY STRONG. REVENUES ARE STILL GROWING AT A DOUBLE-DIGIT RATE. THE COMPANY HAS EXPANDED PROFIT MARGIN SIGNIFICANTLY. WE THINK THIS IS A BUSINESS -- DAVID: EMILY IN PARIS CONTINUES. DANI: I'M SURE THAT'S A HUGE PART OF RYAN'S THESIS, EMILY IN PARIS. DOES THAT MEAN YOU'VE BEEN BUYING? ARE YOU BACKING UP THE TRUCK, LOADING ON NETFLIX IN THE SELLOFF? RYAN: THAT IS SOMETHING WE HAVE BEEN BUYING. AND SOMETHING WE'VE BEEN VERY EXCITED ABOUT. ONE OF THE THINGS WE LIKE ABOUT OUR STRATEGY IS WE CAN BUY ENOUGH WHERE IT'S MEANINGFUL NOW TO THE EXTENT WHERE IT FIRST DOESN'T GOES UP AND IT MOVES DOWN, WE HAVE THE OPPORTUNITY TO BUY MORE. DANI: IF YOU THINK THE BUSINESS IS GOOD, WHAT DID YOU MAKE OF THE NEWS THAT DAVID MENTIONED THAT THEY LAID OFF ABOUT 1000 JOBS, INCLUDING SOME OF THE EXECUTIVES ON TV AND FILM? THAT FEELS LIKE THEM SAYING WE HAVE A CONTENT PROBLEM AND WE ARE SHAKING THINGS UP. RYAN: THE WAY WE LOOK AT THAT IS THAT HAS HOW NETFLIX HAS ALWAYS -- IS THAT IS HOW NETFLIX HAS ALWAYS OPERATED. THEY WERE GOING TO HAVE VERY HIGH PERFORMANCE CULTURE AND STANDARDS AND PEOPLE NEEDED TO MAKE SURE THEY WERE CONSTANTLY PROVING THEMSELVES, ADDING VALUE TO THE BUSINESS OR ULTIMATELY THEY WERE GOING TO ASK THEM TO LEAVE AND BRING IN OTHER PEOPLE. IT'S A VERY DIFFERENT OPERATING PHILOSOPHY THAN MOST OF CORPORATE AMERICA HAS. BUT THESE LAYOFFS, FOR SOME COMPANIES, MIGHT SIGNAL A PROBLEM. FOR NETFLIX, IT'S AN ONGOING WAY FOR WHICH THE BUSINESS HAS OPERATED FOR SEVERAL DECADES. DANI: IF I COULD ASK MORE BIG PICTURE ABOUT THE FUND, THE PERFORMANCE ITSELF IS ESSENTIALLY FLAT SINCE HE LAUNCHED. THE MARKET HAS NOT TREATED IT THIS WAY. THIS IS SOMETHING BILL HAS DISCUSSED VERY WIDELY, BEING THE THING THAT HAS DRAGGED THE VALUE DOWN. I JUST WONDER WHAT YOU MAKE OF THE MARKET'S TREATMENT OF IT AND THE OVERALL FUND'S PERFORMANCE THIS LAUNCH. RYAN: YOU ARE RIGHT. THERE'S BEEN A BIFURCATION OF THE PERFORMANCE OF THE UNDERLYING INVESTMENTS AND THE DISCOUNT, BOTH OF WHICH COMPOUND TO THE SHARE PRICE. WHICH HAS BEEN RELATIVELY WEAK. I THINK WE ARE KIND OF THE FIRST COMPANY THAT IS TRADING WHERE WE ARE ABLE TO BRING EFFECTIVELY HEDGE FUND LIKE RETURNS TO THE MARKETS AT ONLY A MANAGED -- FOR A RELATIVELY LOW COST. SOMETIMES IT'S HARD FOR PEOPLE TO UNDERSTAND THE COMPARISONS. WE ARE WET -- WORKING TO ACTIVELY CLOSE THE DISCOUNTS. OVER THE LONGER-TERM, MUCH LIKE STOCKS, FOR THEY ARE ULTIMATELY TETHERED TO THE EARNINGS GROWTH OVER TIME, SIMILAR WITH PS U.S., WHICH NOW REFLECTS ULTIMATELY THE GROWTH IN EACH OF THE INVESTMENTS WE OWN PER SHARE OVER TIME, IF WE WERE TO GROW AT A VERY HIGH RATE, SOMETHING CLOSE TO 20%, EVEN IF THAT DISCOUNT DECIDED NOT TO NARROW, YOU WOULD STILL EARN FROM TODAY, AT A NEARLY 20% RETURN OVER TIME. IF WE GET MORE DISCOUNT NARROWING, YOU MIGHT GET EVEN BETTER THAN THAT. BUT THE PERFORMANCE WILL DRIVE THE LONG-TERM GROWTH IN TERMS OF SHAREHOLDER RETURNS. DANI: I'M EXCITED FOR THIS EARNINGS SEASON. MIGHT WE GET SOME OF THAT FROM SOME OF THESE COMPANIES YOU HOLD? RYAN: I HOPE SO. DANI: PLEASE JOIN US AGAIN SOON. RYAN ISRAEL OF PERSHING SQUARE. STILL HAD, BRIAN MOYNIHAN TAKES ACCOUNT FOR THE $1.2 BILLION IN FINES FOR BANK OF AMERICA. THIS IS BLOOMBERG OPEN INTEREST. ♪ DAVID: LET'S GET A QUICK CHECK OF THE MARKETS. THE S&P 500 DOWN 2/10 OF A PERCENT. THE NASDAQ 100 DOWN 1.1%. WE HAVE SEEN THIS FLIGHT FROM AI STOCKS INTO TREASURIES. THE YIELD ON THE 10 YEAR AT 5.0 5%. BRENT CRUDE A LITTLE LOWER. CONVERSATIONS ON HOW THIS WAR IN THE MIDDLE EAST COULD MEET SOME RESOLUTION. COMING UP, BANK OF AMERICA IS SEEING ONE OF ITS WORST EARNINGS DAYS IN RECENT YEARS. A $1.2 BILLION TREASURY PENALTY. BRIAN MOYNIHAN IS COMING UP NEXT HERE ON "OPEN INTEREST." ♪ BANK OF AMERICA SEEN ONE OF ITS WORST EARNINGS DAYS AND IS SEVERAL YEARS. BRIAN MONAHAN SAYING THE BANK HAS A TO A PATH TO RESOLVING ISSUES TIED TO THE 1.2 BILLION DOLLARS SPECIALTY FRESH TREASURY PENALTY AND IS CARRYING OUT REMEDIATION WORK. >> BY THE END OF THE DAY WE HAD AN EXAMINATION A FEW YEARS AGO. WE GOT A CEASE-AND-DESIST ORDER. WE HAD TO DO THE WORK. THAT FINE RELATES TO THAT EFFORT. THERE WAS A DEBATE ABOUT WHAT EXACTLY WE HAD TO DO. THAT IS RESOLVED. IT'S BEHIND US. A FEW MONTHS AGO WE STARTED PICKING UP THE COST STRUCTURE AND PUTTING IT IN. WE TAKE IT SERIOUSLY. I THINK AS TIME GOES BY, PEOPLE WILL UNDERSTAND IT BETTER. >> I IMAGINE YOU WANT TO DRAW A LINE UNDER THE WHOLE ISSUE, BUT TO EXPAND CONVERSATION, HOW MUCH OF THIS HAS ALREADY BEEN COMPLETED? WHAT IS LEFT TO FIX? THIS AFTERNOON FROM A GIVEN WHERE THE STOCK IS, THERE NEEDS TO BE CONFIDENT FOR INVESTORS IS THAT THE COST ASSOCIATED WITH REMEDYING THIS ARE IN THE BASELINE AND THERE WON'T BE MORE SURPRISES IN THE FUTURE. HOW CONFIDENT CAN INVESTORS BE THAT THAT IS THE CASE? >> WE HAVE ADDED A OF EXPENSE. IT IS IN HER BASELINE. IT IS A FEW HUNDRED MILLION DOLLARS IN THE QUARTER HERE. IT IS AN ADDITIONAL EXPENSE WE HAVE BEEN RUNNING THROUGH. WE HAVE TO UNDERSTAND A CLEAR PATH FORWARD. WE HAVE BEEN COMPLETING TASKS OVER THE PAST SEVERAL MONTHS. IT CAME UP A LOT HOW THE THRESHOLDS ARE SET AND THINGS LIKE THAT. AT THE END OF THE DAY, WE UNDERSTAND WHAT WE NEED TO DO. >> CAN YOU TAKE US INSIDE THE BANK AND DISCUSS ACCOUNTABILITY. WHAT ARE DISCUSSIONS LIKE WITH THE BOARD AROUND ACCOUNTABILITY? >> WOULD YOU BE OPEN TO THE RENUMERATION WITH SOME OF THOSE DIFFICULTIES? >> WE HAVE ACCOUNTABILITY FOR EVERYTHING WE DO AT THE COMPANY INCLUDING A FINE. WE HAVE GONE THROUGH THIS BEFORE. IN 2004 THERE WAS ACCOUNTABILITY FOR THE EXAMINATION OF THE ORDER ALREADY TAKEN. WE WILL DECIDE IT OUT WHEN WE GET TO THE END OF THE YEAR. >> HE TALKED ABOUT TAKING REMEDIATION STEPS. IT SEEMS LIKE MAYBE THIS IS A MARKET NOT NECESSARILY CONVINCED IT HAS SEEN THE WORST AND IS TRADING AT THE LOWEST SINCE THIS SUMMER. SHRI: THERE WAS A LOT OF FOCUS ON BANK OF AMERICA COMING INTO THE EARNINGS. THIS HAS BEEN ONE OF THE WORST PERFORMING BIG BANK STOCKS. YOU ONLY NEEDED TO OUTPERFORM BY JUST A LITTLE BIT AND INVESTORS WOULD HAVE BEEN, PERHAPS, HAPPY. BUT A 1.2 BILLION DOLLAR FINE THE NIGHT BEFORE EARNINGS, YOU ALSO HAD AN EFFECT THEY HAD A BIG ISSUE WITH THEIR SECURITIES PORTFOLIO AND THE MASSIVE MOVEMENT IN RATES HE SAW THIRD-QUARTER. THEY HAVE UNREALIZED LOSSES ON THAT. IT DOES NOT IMPACT EARNINGS BUT IT IS A REMINDER TO INVESTORS ABOUT THE OPPORTUNITY COST. THAT PORTFOLIO COULD HAVE BEEN EARNING SO MUCH MORE HAD A BANK OF AMERICA NOT MADE THIS FATEFUL DECISION. WHEN YOU TAKE THOSE TWO VARIABLES ASIDE, A MISS IN INCOME TRADING AND EQUITIES TRADING. WHEN YOU ARE MISSING ON SEGMENTS WHERE OTHERS HAVE HAD SLIGHTLY BETTER RESULTS, A LET DOWN ACROSS AT THE BANK BUT EQUITIES TRADING GOOD FOR EVERYONE ELSE. BANK OF AMERICA MISSED ON THAT FRONT, PARTIALLY BECAUSE THEY DON'T HAVE THE BALANCE SHEET TO EXTEND TO THEIR MARKET GROUP BECAUSE THEY HAVE TO MEET NET INCOME TARGETS. OR THEY HAVE TO KEEP UP WITH THAT. WHEN YOU HAVE SO MUCH IN A LOW YIELDING CORNER OF YOUR BUSINESS YOU HAVE TO MAKE SURE YOU CAN MEET NET INCOME INTEREST TARGETS IN OTHER WAYS AND THAT COMES AT THE EXPENSE OF YOUR GROWTH BUSINESS OR YOUR BANKING BUSINESS. THE STOCK SOLD OFF ABOUT 6% YESTERDAY. THAT'S NOT A GOOD LOOK. >> WE AWAIT THE FED'S NEXT DECISION IN TERMS OF RAISING INTEREST RATES. HOW DOES THAT CUT OF THE RESULTS WE HAVE SEEN. HOW DOES THAT SHAPED THEM DIRECTIONALLY LOOKING TO NEXT QUARTER? WORKS IF YOU LOOK -- >> IF YOU LOOK WITHIN THEIR FIXED INCOME TRADING BUSINESS, AND YOU HAVE A BIG BOOM, CONSIDERING BANKS EARNED IN THE MIDDLE OF THIS TRADING IT WILL HAVE AN ADVERSE IMPACT. IT HAS OTHER EFFECTS. WHEN YOU LOOK AT THE CONSUMER SIDE OF THE BUSINESS, AND HOW IT WILL IMPACT THE IN IRA -- NII AND NET INTEREST MARGINS FOR THE BANKS. DEPOSIT RATES FOR THE BIGGEST BANKS DON'T FEEL PRESSURE TO LIFT VERY QUICKLY. IF THE ENVIRONMENT STAYS THAT WAY AND THE RATES REMAIN ELEVATED, YOU HAVE TO LIVE THE DEPOSIT COST. THEN YOU SEE SOME DECOMPRESSION. AT LEAST ON THE FRONT END YOU WILL SEE SOME BENEFITS FOR THE BANKS. THAT IS WHY BANK OF AMERICA TALKED ABOUT IMPROVEMENT IN ITS NII NUMBERS NEXT YEAR. THAT'S A LITTLE BOOST FOR THE BANKS. IT'S NOT ALL BAD NEWS. >> ON THE INVESTMENT BANKING SIDE, DO ACTIVITY HAS SLOWED AFTER A BANNER FIRST HALF OF THE YEAR. HOW IMPORTANT IS IT THAT THE ANTHROPIC IPO GOES RIGHT TO THE BIG BANKS INVOLVED IN FUTURE IDEAS? NORMAL RULE BEST WAY TO THINK ABOUT IT IS LIKE BUT JAMIE DARMAN SAID ABOUT THE MARKET CONDITIONS OUT THERE. IT'S LIKE AN ACCORDION. WE HAVE BEEN IN AN EXPANSIONARY MODE, THAT COULD QUICKLY COMPRESS. WE COULD SEE A CHANGE IN SENTIMENT. PERHAPS WE HAVE SEEN THAT OVER THE LAST FEW WEEKS. THE WORRIES, CAMP OUT LAST? CAN WE GO BACK TO EASE YOUR CAPITAL MARKET CONDITIONS? OR WE'VE IS YOUR POSTER CHILD FOR WITH THAT THERE WAS AN AI FINANCING STEM OUT THERE, CONSIDERING HOW THE BANKS ARE TO LIVE -- AI FINANCING PLAY, IT CAN BE A WORRYING SIGNAL. >> THE COCKROACH METAPHOR GIVES WAY TO THE ACCORDION SIMPLY -- ACCORDION SIMILE. >> LET'S CHECK YOUR MARKETS THIS MORNING. WHERE IS THE ACCORDION TODAY? IS IT GETTING STRETCHED OUT OR PULLED RNA? FEAR OVER TECH AND CORE WEAVE. SYDNEY IS HAVING ANOTHER NOT SO GOOD THEY ARE ON TRACK FOR A LONG LOSING STREAK DOWN 1.3 PERCENT. 10 YEAR YIELDS GET A BID BECAUSE SAFETY IS IN, HAVENS ARE IN. I AM DOWN POTENTIAL BASIS POINTS. TRADING AT THE HIGHEST IN DECADES. WE HAVE MOVED AWAY FROM THAT. LET'S LOOK AT SOME SINGLE DAVE >> THIS IS BLOOMBERG OPEN INTEREST. THREE WEEKS FROM THE MIDTERM ELECTIONS AND AFFORDABILITY IS FRONT AND CENTER. 83 PERCENT OF REGISTERED VOTERS SAY THE ECONOMY IS IMPORTANT TO THEIR MIDTERM VOTE. LISA ABRAMOWITZ LOOKS AT THE POLITICAL STAKES HEADING INTO NOVEMBER. >> HEADING INTO THE MIDTERMS, ONE ISSUE KEEPS HITTING AMERICANS WHERE IT HURTS. THEIR WALLETS. SOME AMERICANS FEEL SQUEEZED. ON HOUSING, MANY SAY HOMEOWNERSHIP FEELS INCREASINGLY OUT OF REACH. AS PRICES CLIMB, SO DID THE POLITICAL STAKES THIS ELECTION CYCLE. WHEN IT COMES TO THE WORD AFFORDABILITY, PRESIDENT TRUMP IS NOT BUYING IT. >> AFFORDABILITY WAS CONJURED UP BY THE DEMOCRATS. AS A THE AFFORDABILITY PROBLEM -- THEY CREATED THE AFFORDABILITY PROBLEM AND WE SOLVED IT. MORE PORTLY, WE BROUGHT BACK THE AMERICAN DREAMING PRINT >> THE GOVERNMENT'S OWN DATA TELLS A DIFFERENT STORY. THE CONSUMER PRICE INDEX HAS SURGED OVER A YEAR REFLECTING HIGHER HOUSING, FOOD, AND ENERGY COSTS. >> VERY LITTLE EFFORTS TO ADDRESS PHOTO CONCERNS OVER AFFORDABILITY IN THIS CONGRESS. >> THE PUBLIC IS SAYING, CAN WE GET OUT OF THIS AFFORDABILITY CRISIS? >> MARKETS ARE DOING REMARKABLY WELL FOR THE PRESIDENT'S SECOND TERM. YOU HAVE THE AFFORDABILITY QUESTION THAT KEEPS PEOPLE ON THE EDGE OF THEIR SEAT. >> WARS IN IRAN AND UKRAINE HAVE SPARKED ONE OF THE LARGEST ENERGY SUPPLY DISRUPTIONS IN HISTORY. SINCE LAST NOVEMBER, BRENT SURGED MORE THAN 60%. RETAIL PRICES FOR DIESEL MORE THAN SIX DOLLARS PER GALLON. GASOLINE SURPASSING FOUR DOLLARS PER GALLON. PRESIDENT TRUMP TRIES TO REASSURE VOTERS WHO RELIEF IS ON THE WAY. >> AFTER THE ELECTION, OIL PRICES WILL BE TUMBLING DOWN. YOU CAN GET THEM TWO DOLLARS PER GALLON. >> EFFECTS OF THE IRAN WAR AND HIGHER COSTS HAVE SEEPED INTO THE HOUSING MARKET. MORTGAGE RATES SUPPRESSED A 7% FOR THE FIRST TIME SINCE 2023. IN THE PAST FIVE YEARS, CONSUMER PRICES HAVE RISEN MORE THAN 20%. >> EVERY TIME PEOPLE GO TO THE GROCERY STORE THEY FEEL LIKE THEY ARE FALLING FURTHER AND FURTHER BEHIND BECAUSE PRICES ARE STILL TOO HIGH. >> ONE EXAMPLE IS THE PRICE OF GROUND BEEF. THE U.S. CATTLE HERD IS DECLINING BUT THE DEMAND FOR GROUND BEEF HAS CLIMBED TO SEVEN DOLLARS PER POUND, THE MOST IN RECENT HISTORY. THE FINANCIAL HIT GOES BEYOND THE CHECKOUT LINE. >> THE HIGHEST PRICES FOR MY THREE TOP INPUTS. FEED BECAUSE OF THE GROUND AND HIGH DIESEL PRICES BECAUSE OF THE STRAIT OF HORMUZ AND THE HIGHEST FERTILIZER COSTS I HAVE EVER PAID. >> PRESIDENT TRUMP ANNOUNCED A PLAN ASKING RANCHERS TO PROCESS AND SELL ME DIRECTLY TO CUSTOMERS. >> THIS IS THE LARGEST GOVERNMENT EVER TO CHANGE OUR -- ALL RULES AND REGULATIONS NECESSARY TO SUPPORT OUR RANCHERS AND FARMERS. >> VOTERS LISTED INFLATION AND THEIR ECONOMY. VOTERS SAY THE PRESIDENT'S APPROVAL RATING IS REACHING HISTORIC LOWS. >> LET'S LOOK DEEPER INTO THOSE ISSUES WITH BLOOMBERG'S FED AND ECONOMY REPORTER ENADA CURRAN. WE LISTEN TO THE PRESIDENT ON THE CAMPAIGN TRAIL A FEW MOMENTS AGO TALKING ABOUT ENERGY PRICES AND THE PROSPECT OF THEM COMING DOWN. GIVE US A DOSE OF REALISM ABOUT WHAT EXACTLY THE PRESIDENT COULD DO OVER THE NEXT TWO WEEKS, IF ANYTHING, OR AFTER THE MIDTERMS TO GET THESE PRICES DOWN. HOW MUCH IS IN HIS CONTROL? ENDA: HE CAN'T DO MUCH IN THE NEXT FEW WEEKS BUT THE INFLATION STORY HAS NOT GONE AWAY. IT HAS RETREATED FROM DOUBLE DIGIT OR ALMOST DOUBLE DIGIT GAINS DURING THE PANDEMIC ERA, BUT REMAINS HIGH AND PERSISTENT FOR PEOPLE. WE HAVE HAD THE IMPACT OF TARIFFS ON GOODS IMPORTED. AND WE HAVE THE ENERGY STORY AND YOU KNOW WHAT THAT MEANS FOR DIESEL AND GAS AT THE PUMP AND THE AI BOOM, WHICH MIGHT FEEL ABSTRACT IN TERMS OF DATA CENTERS AND THE LIKE. IT IS ALSO FLOWING THROUGH TO HOUSEHOLD GOODS. SMART PHONES, LAPTOPS, ANYTHING WITH CHIPS HAVE TO RAISE THEIR PRICES DO TO WHAT IS HAPPENING WITH AI DEMAND. ON AN AGGREGATE LEVEL, HEADLINE INFLATION -- INFLATION IS NO WHERE NEAR WHAT IT WAS IN THE PANDEMIC LEVEL. FOR HOUSEHOLDS AND BUSINESSES, THIS IS QUITE REAL. >> ONE THING THE FED CHAIR CARES ABOUT IS DIFFUSION. TO YOUR POINT, LOTS OF ELEMENTS OF THE CPI BASKET REMAIN ELEVATED. IT'S ANYTHING OFFSETTING ON THE OTHERS ARE? WHERE HAVE WE SEEN RELIEF IN PRICES? ENDA: ALL THE NUMBERS ARE BROAD-BASED. IF I HAVE SPOKEN ABOUT AI AND ENERGY. TOYS HAD A RECORD GAIN ON A YEARLY BASIS. THEIR BIGGEST GAIN ON A MONTHLY BASIS SINCE 1998. THERE ARE POCKETS SHOWING RELIEF. WE HAVE SEEN THAT IN MILK. THAT IS BECAUSE OF THE INCREASED SUPPLY OF MILK. PEOPLE TALK ABOUT WOMEN'S DRESSES, WHICH I KNOW IS OF INTEREST IN THIS PROGRAM. THERE IS PARTICULAR COMPETITION FROM ASIA. IF YOU WANT TO CALL IT OVERSUPPLIED THEY ARE WE HAVE SEEN SOME DECREASE IN TOMATOES. THAT IS A REFLECTION OF THE WEATHER STORY. BEEF REMAINS A BIG ISSUE AND REFLECTS THE WEATHER STORY. SO, THERE ARE SOME POCKETS OF RELIEF. CAR INSURANCE IS NOT ONE THAT HAS BEEN COMING UP. BUT THE AGGREGATE OF ALL OF IT AS IT IS LIKE A BUSHFIRE EVERY MONTH OR SO. YOU SEE A NEW POCKET OF INFLATION FLARING UP WHEN IT IS UNDER CONTROL SOMEWHERE ELSE. LAST MONTH, WE HAD THE INFLATION DATA IN SEPTEMBER BLAMED ON A BIG INCREASE IN WIRELESS TELEPHONE CHARGES. YOU SEE A BIG JUMP IN TOY PRICES. AT SOME POINT, POLICYMAKERS WON'T STOP CALLING THEM AND SAYING IT IS BROAD-BASED INFLATION. POTENTIALLY WE ARE LOOKING AT HIGHER INTEREST RATES. >> OUR NOTICE TO THE PRICE OF BACON DOWN 4%. >> I CARE MORE ABOUT BACON BEING DOWN THEN DRESSES BEING DOWN. DAVID: THIS CUTTERS THE CONVERSATION ABOUT THE LEGITIMACY OF THE 2% TARGET -- COLORS THE CONVERSATION AROUND THE LEGITIMACY OF THE 2% TARGET THEY HAVE. THIS WAS FORMALLY CODIFIED IN 2012 UNDER FED CHAIR BEN BERNANKE. MAYBE YOU CAN TALK ABOUT THE REALISM OF THE 2% TARGET IN LIGHT OF THE TRIPLE WHAMMY YOU WERE MENTIONING IN THE WAY THIS HAS PERSISTED AS MUCH AS IT HAS. ENDA: 2% FOR AN AVERAGE PERSON IS MEANINGLESS AND FOR POLICYMAKERS IT IS MEANINGLESS. THIS IS WHAT THEY AGREED TO ANCHOR INFLATION TOO. THIS IS WHAT THEY HAVE WRITTEN DOWN. YOU CAN CHANGE YOUR ROLES BETWEEN NOW AND THEN. I DO NOT KNOW ANYBODY THAT WOULD SAY 2% IS THE MAGIC NUMBER FOR THE INFLATION TARGET. NOW YOU ARE MOVING THE GOAL. NOW YOU ARE GETTING INTO A DANGEROUS GAME. SOME CENTRAL BANKS HAVE BOUNCED BETWEEN 2%-3%. THERE IS AN ARGUMENT FOR THAT. THE FED CHAIR HAS ARGUED THERE WILL BE A BROAD RE-THINK IN TERMS OF WHAT THE FED IS DOING. NOW, YOU RISK BRINGING ON A LOT OF CRITICISM. YOU RISK BRINGING ON A THREAT TO YOUR CREDIBILITY. AND I DON'T THINK IT CAN BE DONE UNTIL THE POLICYMAKERS DO DELIVER. DAVID: COMING UP VOLODYMYR ZELENSKYY DEFIES PRESIDENT TRUMP DESPITE A CEASE-FIRE THE PRESIDENT SAID WAS IN PLACE WHEN IT COMES TO ENERGY FACILITIES. THAT'S NEXT ON BLOOMBERG OPEN INTEREST. >> UKRAINE'S PRESIDENT VOLODYMYR ZELENSKYY SAYS KYIV WILL RESUME STRIKES ON RUSSIAN OIL REFINERIES ENDING A THREE DAY PAUSE URGED BY PRESIDENT TRUMP ADDING STRAIN TO A TENSE RELATIONSHIP BETWEEN KYIV AND WASHINGTON. JOINING US IS TYLER KENDALL. PRESIDENT ZELENSKYY SPEAKING TO THE FINANCIAL TERMS. HE SAID THE BLOCK ON ATTACKING REFINERIES IS OUT. WE ARE DONE. HIS FRUSTRATION IS PROBABLE. THE ANNOUNCEMENT ABOUT THE DIESEL DEAL CAME OUT OF NOWHERE. THE CEASE-FIRE DEAL AND A SHORT ORDER AFTER THAT CAUGHT A LOT OF PEOPLE BY SURPRISE, PERHAPS, THE PRESIDENT OF UKRAINE. WHAT IS THE STATUS OF THE OFF-ROAD THAT THE PRESIDENT OF THE UNITED STATES THOUGHT WAS THERE? >> AT THIS POINT, AS YOU KNOW, THIS IS PART OF THE PUSH AND PULL BETWEEN WASHINGTON AND KYIV. PRESIDENT TRUMP COMING OUT OVER THE WEEKEND THING THERE WOULD BE AN ENERGY TRUCE, AS HE CALLED IT BUT BOTH SIDES SAID THEY WERE NOT CONFERRED WITH AHEAD OF TIME OR AGREE TO IT. HOURS AFTER PRESIDENT TRUMP ANNOUNCED THE TRUCE RUSSIA CONTINUED TO ATTACK UKRAINIAN POWER PLANTS AND GAS INFRASTRUCTURE. THIS APPEARED TO BE A BID BY THE WHITE HOUSE TO PUT FORWARD SOME SORT OF SOLUTION TO HELP AMERICAN CONSUMERS AS A DIESEL STOCKPILES CONTINUE TO BE PUT AT RISK WEIGHING ON THE AMERICAN CONSUMER. TODAY, $6.31 PER GALLON IN TERMS OF THE NATIONAL AVERAGE FOR DIESEL ACCORDING TO AAA. DAVID, THIS GOES TO SHOW THE LINKS -- LENGTH AT THE WHITE HOUSE IS GOING TO AT THE MOMENT. YOU MENTIONED OTHER TENSION POINTS FOR YOU TO THE RUSSIAN DIESEL DEAL TO GET MORE SUPPLIED TO THE MARKET. OUR OWN ANALYST SAID FOLDBERG INTELLIGENCE HALOGENS CRUNCHED THE NUMBERS AND THEY SAY -- ANALYST CRUNCH THE NUMBERS AND THEY SAY THEY AREN'T GOING TO DO MUCH TO MAKE UP THE GAP. >> IS THIS ABOUT THAT INDENTED ADMINISTRATION THAT HAS RUN OUT OF TIME WITH JUST OVER TWO WEEKS TO GO. ARE THERE MORE LEVERS OF THE WHITE HOUSE CAN PULL TERRAIN IN THE COST. WILL IT IMMEDIATE -- TO REIGN IN THE COSTS. WE ARE SO CLOSE TO ELECTION THEN WE KNOW ANY POTENTIAL SOLUTIONS TAKE TIME TO MAKE THEIR WAY THROUGH THE SUPPLY CHAIN, ESPECIALLY TALKING ABOUT REFINED PRODUCT. KEEPING IN MIND, A LOT OF VOTER EXPECTATIONS ARE ALREADY BEING BACK IN AND TRACKED INTO THE BALLOT BOX. BY TOMORROW, 17 STATES WILL BE IN EARLY VOTING. PRESIDENT TRUMP IS CONSIDERING ASKING CONGRESS TO DO A FEDERAL GAS TAX HOLIDAY THAT WOULD REQUIRE LAWMAKERS COMING BACK TO WASHINGTON NOW THEY ARE SCHEDULED TO BE OUT OF TOWN UNTIL THE MIDTERM ELECTIONS. DISCUSS TO HIGHLIGHT THE ADMINISTRATION IS HAVING LIMITED -- THIS GOES TO HIGHLIGHT THE ADMINISTRATION IS DOING LIMITED OPTIONS. THE TREASURY DEPARTMENT IS LOOKING AT LEVERS THEY COULD PULL RELATED TO STUDYING THE TAXES DEDUCTED COULD GO INTO REFINED PRODUCTS FIT A LOT -- NOT A LOT COULD BE DONE BETWEEN NOW AND ELECTION DAY. WE SAW G-7 PARTNERS ANNOUNCING THEY WOULD MAKE GOOD PRIOR COMMITMENTS TO GET MORE SUPPLIED MARKET. >> BLOOMBERG'S TYLER KENDALL IN WASHINGTON. A TECH TODAY IS UNDERPERFORMING. NOTHING HAS CHANGED ON THE FUNDAMENTAL PICTURE. DAVID KILLED ENCORE LEAVES, WE HAVE BEEN WATCHING THE STOCK OVER THE COURSE OF THE MORNING -- DAVID: CORA OREEAVE WE HAVE BEEN WATCHING OVER THE COURSE OF THE MORNING. THE ELECTIONS ARE VERY CLOSE. DANI: THEY HAVE SNUCK UP ON US. COMING UP ON TOMORROW'S SHOW WE . WE WILL SEE YOU TOMORROW.