Top-Heavy Stock Rally Dares Bonds

>> THIS IS "BLOOMBERG BUSINESSWEEK DAILY," REPORTING FROM THE MAGAZINE THAT HELPS GLOBAL LEADERS STAY AHEAD WITH INSIGHT ON THE PEOPLE, COMPANIES, AND TRENDS SHAPING TODAY'S COMPLEX ECONOMY. PLUS, GLOBAL BUSINESS, FINANCE, AND TECH NEWS AS IT HAPPENS. "BLOOMBERG BUSINESSWEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC, LIVE ON BLOOMBERG RADIO, TELEVISION, AND BLOOMBERG ORIGINALS. CAROL: A VERY GOOD AFTERNOON EVERYBODY ACROSS BLOOMBERG PLATFORMS. YES INDEED THIS IS THE TUESDAY EDITION OF "BLOOMBERG BUSINESSWEEK DAILY." I AM CAROL MASSAR. TIM ON VACATION. YEAH, FAMILY GATHERING OF SORTS. HE WILL BE BACK IN ABOUT A WEEK OR SO. JESS COVERS THE EQUITY MARKETS, ALL THE TWISTS AND TURNS. ON A DAY WHERE YESTERDAY WE WERE TALKING ABOUT AMERICAN EXCEPTIONALISM. THE S&P 500 AT AN ALL-TIME HIGH. JESS: THANKS TO THE AI LINK STOCKS. WE WILL TALK ABOUT THE GOOD, BAD, AND UGLY WITH AI OVER THE NEXT THREE HOURS. CAROL: I LOVE THAT YOU SAID THAT. YES, WE HAVE A PULLBACK IN OIL PRICES AND A PULLBACK ON TRADE. SHARES OF NVIDIA ON THE VERGE OF BECOMING THE FIRST COMPANY WITH A $6 TRILLION MARKET CAP. THAT IS OUR BACKDROP. WE WILL TALK ABOUT AI TODAY. SO TOO TALKING ABOUT AI IS ONE OF THE MOST LISTENED TO VOICES ON WALL STREET. JESS: JAMIE DIMON. CAROL: A GREAT EXCLUSIVE WITH OUR TOM MACKENZIE. THEY TALK ABOUT AI, THE BOOM, BUT OUR BIGGER MACRO, WHETHER IT IS INFLATION, DEBT, WHERE WE ARE IN THE WORLD. JESS: OF COURSE, THE MOVES IN U.S. TREASURIES AND WHY A TOP-HEAVY STOCKS RALLY DEAR IS BONDS TO BREAK -- DARES BONDS TO BREAK. WE WILL HEAR FROM JOHN ARTHUR SOON. CAROL: HE WILL JOIN US AND LISTEN TO A JAMIE DIMON HAD TO SAY WITH US AND GIVE US SOME ANALYSIS. SPEAKING OF AI, IT IS OUR BIG THEME THIS HOUR. WE HAVE ISABEL GUZMAN. SHE WILL TALK ABOUT GLOBAL AI RISKS. SHE WAS THERE DURING THE BIDEN ADMINISTRATION SO WE WILL GET HER THOUGHTS. WE ALSO HAVE THE TIA CHIEF OPERATING OFFICER TALKING ABOUT THE WORKPLACE FLOWS. HE WILL BE BACK WITH US. IT IS ALL AI. I DON'T KNOW IF YOU KNOW THAT. JESS: IT WILL BE A GREAT CONVERSATION. LOOKING FORWARD TO THAT. STOCKS UP ON AI BUT TALKING BUT THE RISKS. CAROL: HAVE TO LOOK AT HOW IT IS IMPACTING. LET'S GET A CHECK ON THE TRADE AND THE ALL-TIME HIGH ON THE S&P 500. CHARLIE PELLETT IS BACK. CHARLIE: THANK YOU SO MUCH. JUST A MEMBER, IT TAKES AI TO SPELL GAIN. AND 54 POINT ADVANCE ON THE S&P. A RECORD 7828, UP BY 0.7%. WE WILL KEEP YOU POSTED. TWO HOURS TO GO AHEAD OF THE CLOSING BELL. NASDAQ WILL DEFINITELY BE A RECORD. NASDAQ UP BY 0.2%. DOW INDUSTRIALS UP BY 0.5%. S&P AT A RECORD. THE TWO-YEAR, 4.78%. THE FIVE-YEAR AT ABOUT 5%. THE 10 YEAR, 5.26%. THE 30 YEAR, 5.63%. GOLD UP BY ABOUT 0.6%. CRUDE HAS BEEN BOUNCING AROUND BUT THE KEY TAKE AWAY PERHAPS A LITTLE CHANGED ON WEST TEXAS INTERMEDIATE. DOWN UNDER 0.1%. $89.38 A BARREL. A BARREL OF BRENT UP BY 0.1%. A STORY WE ARE KEEPING AN EYE ON, DELTA AIRLINES SAYS THE SYSTEMS ARE STABILIZING AFTER A LIMITED GLOBAL TECH ISSUE THAT DISRUPTED DATA CONNECTIVITY TO SOME BACKEND OPERATIONS. DELTA SAYS THE TEAMS ARE ACTIVELY WORKING TO RESTORE FULL SYSTEMS SAFELY. DELTA SHARES RIGHT NOW ARE TRADING A LITTLE CHANGED ON SHARES UP BY ABOUT 0.2%. NVIDIA NEARING A $6 TRILLION MARKET CAP AS INVESTORS RETURN TO THE AI CHIPMAKER AFTER A DISAPPOINTING START TO THE YEAR. SHARES OF NVIDIA ARE ADVANCING TODAY, UP BY ABOUT 0.5%. SO AGAIN, RECAPPING, THE DOW, S&P, NASDAQ HIGHER. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: WE WILL CHECK IN WITH HIM THROUGHOUT THE HOUR. AS WE MENTIONED, THIS HOUR WE REALLY ARE LOOKING AT AI FROM A BUNCH OF DIFFERENT VANTAGE POINTS AND HEARING ABOUT IT. WE WILL HEAR FROM J.P. MORGAN CHASE CHAIRMAN JAMIE DIMON ABOUT AI. WE WILL ALSO HEAR ABOUT WHAT HE HAD TO SAY ABOUT THE MACRO ENVIRONMENT IN A MOMENT, BUT WE WANT TO GET HIS VIEW ON THE MACRO AND WHY A TOP-HEAVY STOCKS RALLY DARES BONDS TO BREAK IT. THE FORMER CHIEF MARKETS COMMENTATOR AT THE FT JOINS US IN STUDIO. GOOD TO HAVE YOU HERE. >> GREAT TO BE HERE. CAROL: ARE WE SEEING ANOTHER FUEL FOR RISE IN MARKETS BECAUSE OF AI? >> THERE ARE QUITE A LOT OF KEY DIFFERENCES BETWEEN THE ONE THAT GOT THE TITLE OF THAT BOOK WHICH WAS IN LARGE PART ABOUT HOW QE WAS KEEPING YIELDS EFFECTIVELY ZERO. THAT WAS WHAT WAS FUELING. CAROL: WE ARE NOT AT ZERO ANYMORE. JOHN: THIS IS DIFFERENT. THIS IS ABOUT A GENUINE -- WHETHER IT IS CORRECT IS THE KEY QUESTION. THIS IS ABOUT A GENUINE BELIEF THAT THE ECONOMY AND CORPORATE AMERICA CAN KEEP GROWING EVEN WITH BOND YIELDS HAVING RETURNED TO BASICALLY A HISTORICAL NORM. WELL, I AM NOT THE ONLY ONE WHO HAS MY DOUBTS. IT IS OBVIOUS THE MARKET OVERALL IS STILL BEING CONVINCED. JESS: WE TALKED ABOUT THE PAIN THRESHOLDS FOR GLOBAL BOND YIELDS. WHERE DO YOU VIEW THAT? THERE IS THE ARGUMENT OF THE SPEED WITH WHICH THEY RISE WE HAVE NOT SEEN IN PAST CYCLES. JOHN: THE SPEED WITH WHICH YOU'VE GOT , YOU HAD THE 5% PSYCHOLOGICAL BARRIER AND THE PREVIOUS PRECRISIS HIGH WERE CLOSE TO EACH OTHER AND WENT IN VERY SHORT ORDER. SO I CERTAINLY THOUGHT THERE WAS A RISK THAT WOULD BE THE PIVOT POINT. IT HAS NOT PROVED TO BE THE CASE. CAROL: BECAUSE HERE WE ARE AT RECORDS. JOHN: YES. CAROL: AND HIGHER YIELDS. JOHN: THAT BEING SAID, ONE OF MY KILLER FACTOIDS FROM A COLUMN EARLIER THIS WEEK, IF YOU LOOK AT ADVANCERS AND DECLINERS FOR THE S&P 500 SINCE THE LOW FOR THE YEAR ON MARCH 30, 200 DECLINERS. CAROL: SAYS A LOT. JOHN: WE ARE AT AN ALL-TIME HIGH EVEN THOUGH 40% OF THE INDEX HAS ACTUALLY FALLEN SINCE HITTING QUITE A MAJOR LOW. THAT IS NOT USUAL. I THINK FOR THE TIME BEING WHAT WE ARE SEEING, YOU CAN SEE THE POLITICS OF DISTRIBUTION COMING BACK INTO POLITICS, BUT THERE IS A DISTRIBUTIONAL AFFECTS BETWEEN STOCKS AND BONDS AND THE WINNERS AND LOSERS OF THE STOCKS WE ARE NOT USED TO. CAROL: I WANT TO GET TO JAMIE DIMON IN JUST A SECOND. IN A WEEK WHERE WE ARE TALKING ABOUT FRANCE AND THEIR DEBT SITUATION AND WE TALKED ABOUT THE U.S. DEBT SITUATION, BUT WE ARE SEEING A DEBT BUILDUP. WE ARE LOOKING AT THE FISCAL HOUSES OF MANY COUNTRIES. JOHN: YES. I THINK THERE IS AN ANALOGY WITH THE TEQUILA CRISIS WITH MEXICO IN 1994. BACK THEN, FOR THOSE LUCKY ENOUGH NOT TO REMEMBER, ALAN GREENSPAN -- CAROL: I MAY HAVE BEEN DRINKING TEQUILA, SORRY. JOHN: IF YOU WERE NOT, YOU CERTAINLY WERE BY THE END OF THAT YEAR. ALAN GREENSPAN SURPRISES PEOPLE BY BEING HAWKISH, CREATES A BRIEF BUT QUITE BRUTAL BEAR MARKET IN BONDS, AND THEN MEXICO HAS AN UNREALISTICALLY STRONG THING AGAINST THE DOLLAR. IT IS THAT RISE IN YIELDS THAT POINTS OUT TO THE WORLD WHERE THE WEAKNESS IS, WHICH IN THAT CASE WAS MEXICO. BY THE END OF THAT CRISIS, HALF OF THE ENTIRE BANKING ASSETS IN MEXICO HAD BEEN WRITTEN OFF. THIS TIME AROUND, IT IS FRANCE THAT HAS AN UNREALISTIC CURRENCY WHICH IT DOES NOT CONTROL BECAUSE IT IS SHARED WITH THE REST OF THE EURO ZONE THAT HAS A VERY HIGH FISCAL DEFICIT. AND IT IS FRANCE THAT IS NOW -- ONCE THOSE YIELDS RISE FAST IN THE STATES, IT REVEALS WHO IS SWIMMING NAKED. I AM NOT SAYING FRANCE WILL BE AS BAD AS THE TEQUILA CRISIS, BUT FRANCE IS THE MEXICO OF THIS PARTICULAR BOND BEAR MARKET. SORRY I TALKED SO LONG. CAROL: NO YOU DO NOT TALK SO LONG. YOU TALK SMART. I WANT TO BRING INTO THE DISCUSSION WHAT JAMIE DIMON HAD TO SAY EARLIER TODAY ON BLOOMBERG. HE SPOKE EXCLUSIVELY WITH TOM MACKENZIE AT THE CONFERENCE IN LONDON, AND THEY TALKED ABOUT DEBT. JAMIE: WE CAN'T BORROW ENDLESSLY AND SPEND ENDLESSLY. IT HAS BEEN GOING ON FOR A LONG TIME. IF YOU LOOK AT THE BUILDUP OF DEBT AROUND WORLD, AMERICA HAS GONE FROM 50% OF GDP TO 100%. COUNTRIES AROUND THE WORLD ARE BORROWING MONEY. I THINK WE CANNOT BE COMPLACENT. THE LESSON IS THERE WILL BE A POINT WHERE THE MARKET WILL ASK FOR MORE AND MORE AND MORE AND AT ONE POINT THAT WILL FEED INTO CORPORATE DEBT, THINGS LIKE THAT. THE BEST THING TO DO IS DEAL WITH IT BEFORE IT BECOMES A CRISIS. IF IT BECOMES A CRISIS, WE WILL DEAL WITH IT BUT IN A MUCH LESS PLEASANT WAY. TOM: SOME WOULD ARGUE WE ARE ON THE WAY FOR THAT IN FRANCE WITH THE CRISIS AND WHERE POLITICS STAND. DO YOU WATCH FOR CONTAGION INTO THE CREDIT MARKETS? IS THAT THE TRANSITION MECHANISM WE SHOULD BE MONITORING? JAMIE: I THINK YES. ALL BUSINESSES SHOULD PREPARE FOR DIFFERENT OUTCOMES. I WILL RUN MY BUSINESS ACCORDING TO THAT BECAUSE YOU SHOULD BE PREPARED FOR A WIDE RANGE OF OUTCOMES. IT IS VERY GOOD TO THINK ABOUT IT. YOU MAY THINK THE ODDS ARE LESS THAN ME OR MORE THAN ME BUT INFLATION IS STICKY AND RATES CONTINUE TO GO UP. FOR CORPORATIONS WHETHER YOU ARE LEVERAGED OR NOT, WHEN YOU HAVE TO BORROW MONEY, YOU ARE PREPARED FOR HIGHER CREDIT SPREADS AND STUFF. AT JP MORGAN, WE HAVE TO BE PREPARED FOR IT. IF RATES GO UP, WE ARE COMPLETELY FINE. THE REASON WE RUN IT THAT WAY AS WE CONTINUE TO SERVICE OUR CLIENTS. WE ARE NOT MAKING BETS ON THOSE KINDS OF THINGS. WE ARE SERVING CLIENTS THROUGH THICK AND THIN. TOM: ON THE U.S., ESSENTIALLY FULL EMPLOYMENT, GROWTH NORTH OF 2%, FISCAL EXPANSION, THE DEFICIT OF 6%, RECORD BORROWING. IS THAT DEALT WITH ULTIMATELY THROUGH FINANCIAL REPRESSION? IS THAT ULTIMATELY WHAT IT HAS TO COME TO, MORE INFLATION? JAMIE: WE DON'T KNOW YET. WE HAVE GOOD NEWS. CORPORATE DEBT IS NOT TOO MUCH. CONSUMER DEBT IS NOT TOO MUCH. IT IS GOVERNMENT DEBT. THE GOVERNMENT DEBT FUELS A LITTLE INFLATION AND CORPORATE PROFITS. SO I DON'T KNOW HOW IT WILL SORT OUT. IT DOES NOT HAVE TO BE FINANCIAL REPRESSION. I THINK RATIONAL THINGS MAKE IT BETTER. THIS MAY BE MY NEXT OP-ED. GOOD POLICY IS FREE. I BELIEVE THAT GOOD POLICY IN THE UNITED STATES AND IN EUROPE CAN DRIVE GROWTH 1% HIGHER AND DOES NOT CAUSE MONEY. THAT IS PERMITTING, SCHOOL EDUCATION, DEREGULATION, WITHOUT CREATING ANY ADDITIONAL RISK. RATIONAL CLIMATE POLICY, DIFFERENT IMMIGRATION POLICIES CAN DRIVE GROWTH. DONE PROPERLY, IT IS DEFLATIONARY. IN ALMOST EVERY COUNTRY, THE 1% GROWTH WILL DRIVE DEBT TO GDP DOWN. TOM: I WANT TO ASK YOU ABOUT THE TREASURY MARKETS. RAY DALIO SAYS THE CHINESE AND JAPANESE ARE GETTING MORE CAUTIOUS AND WANT TO UNWIND IN TREASURIES. THAT PUSHES UP THE LONG END. YIELDS UP FURTHER. IS THAT UNDERESTIMATED BY THE MARKETS, THE ROLE OF JAPAN AND CHINA IN THE MARKETS? JAMIE: NO BECAUSE IT IS COMPLETE THE PUBLIC. CHINA HAS ALREADY GONE FROM 1.2 TRILLION TO 700 BILLION. IT HAS BEEN GOING ON FOR TWO YEARS. JAPAN IS A LITTLE DIFFERENT BECAUSE THEY HAVE ISSUES ABOUT THE YEN TO BUY THE DOLLAR, AND HOW THEY WILL FAN SOME GROWTH. I WILL LEAVE THAT TO THE SECRETARY OF TREASURY ON HOW THEY DEAL WITH THAT. IT IS SUPPLY AND DEMAND. THE DOLLAR IS A COMMODITY, AND BONSAI COMMODITY. INTEREST RATES ARE A COMMODITY -- AND BONDS ARE A COMMODITY, INTEREST RATES ARE A COMMODITY. TOM: INFLATION MOVES HIGHER FROM HERE GIVEN THE SUPPLY CHAIN, GIVEN THE COMPETITION, SPENDING AROUND CAPEX AROUND AI. ARE WE LOOKING AT A MORE INFLATIONARY WORLD? JAMIE: I DON'T KNOW YET BECAUSE I DON'T LIKE PREDICTING THE FUTURE. THERE ARE SOME GOOD ARGUMENTS THAT THESE THINGS WILL DRIVE INFLATION DOWN AND DRIVE GROWTH. GROWTH IS GOOD. GROWTH CAN BE NONE INFLATIONARY. IT DOES NOT HAVE TO BE INFLATIONARY. THERE ARE SIGNS THINGS ARE INFLATIONARY THAT WE ARE DOING LIKE SPENDING MONEY. IMMIGRATION POLICY IS PROBABLY A LITTLE INFLATIONARY. YOU HAVE TO BALANCE BOTH. I LOOK AT WHAT IS THE POSSIBILITY AND PROBABILITY. THE POSSIBILITY OF GOING HIGHER IS HIGHER THAN OTHER PEOPLE. TOM: I DON'T YOU DON'T WANT TO PREDICT THE FUTURE BUT MARKETS ARE PREDICTING ANOTHER HIKE -- I KNOW YOU DON'T WANT TO PREDICT THE FUTURE BUT MARKETS ARE PREDICTING ANOTHER HIKE FROM THE FED THIS YEAR. JAMIE: THE MARKETS, WHATEVER THEY SAY, THEY HAVE BEEN ALWAYS WRONG. IT'S THE FED PREDICTS THEY ARE WRONG AND I WOULD HAS GONE FROM GOING DOWN TO GOING UP. IT DOES NOT TELL YOU ANYTHING. IN MY VIEW, THEY ARE REACTING TO SHORT-TERM DATA. THE THING THAT MAY DRIVE INFLATION LONG-TERM, THE ISSUES LIKE OIL PRICES AND WARS AND GLOBAL DEFICITS AND THINGS LIKE THAT. THERE ARE A LOT OF FORCES TAKING PLACE HERE. I DON'T SPEND A LOT OF TIME GUESSING ABOUT IT. CAROL: ALL RIGHT, DOES NOT SPEND A LOT OF TIME GUESSING WHERE THE MARKETS ARE GOING. WE KNOW MEMBERS OF HIS TEAM TALK ABOUT IT A LOT AS EXCLUSIVELY WITH OUR TOM MACKENZIE AT THE CONFERENCE IN LONDON. STILL WITH US IS JOHN AUTHERS, BLOOMBERG OPINION COLUMNIST. WHAT WAS INTERESTING? JOHN: UNFORTUNATELY, I AM PAID TO SPEND A LOT OF TIME THINKING ABOUT THE MARKET. THERE IS ALMOST NOTHING IN THERE I WOULD DISAGREE WITH. I THINK MAYBE HE IS BEING A LITTLE DISINGENUOUS SAYING IF CREDIT SPREADS BURST OUT MY JP MORGAN WILL BE FINE. I AM SURE THEY HAVE DONE THEIR RISK MANAGEMENT SO THEY WILL NOT GO BUST. I WOULD IMAGINE THAT WOULD NOT BE GREAT FOR THEIR SHARE PRICE IF BOND SPREADS, CREDIT SPREADS BURST OUT. CAROL: RIGHT. JOHN: BEYOND THAT, I AM AFRAID TO SAY FROM THE POINT OF VIEW OF THE CUT AND THRUST DISCUSSION HERE I COULD NOT FIND MUCH TO DISAGREE WITH IN THERE. WHICH ASPECTS WOULD YOU LIKE TO TALK ABOUT FIRST? CHINA AND JAPAN, COMPLETELY RIGHT. 20 YEARS AGO, PEOPLE WERE SCARED CHINA WOULD REPATRIATE A LOT OF DEBT IN A HURRY AND DELIBERATELY CRASH THE U.S. ECONOMY. IT WAS ALWAYS NONSENSE AND THEY HAVE DONE IT VERY SLOWLY. CAROL: COMPLAINS ABOUT U.S. DEBT. JESS: HE ALSO BROUGHT UP FRANCE. JOHN: I CANNOT DISAGREE WITH HIM. IT HAS BEEN A CONCERN, A PROBLEM FOR A WHILE. AND ULTIMATELY, IT WILL BE A POLITICAL DECISION. WHETHER IT BECOMES A REALLY MAJOR CRISIS. YOU DO HAVE THE EUROPEAN CENTRAL BANK, WHICH HAS A FAIR AMOUNT OF FREEDOM OF MOVEMENT AND PROBABLY GIVEN WHAT HAS HAPPENED THE LAST TIME THERE WAS A SOVEREIGN DEBT CRISIS IN THE EURO ZONE WILL PROBABLY DO "WHATEVER IT TAKES" TO KEEP THE EURO TOGETHER. CAROL: YEAH. JOHN: IF THE POLITICAL RISKS MIGHT BE GREATER IN GERMANY THAN IN FRANCE IF YOU GET A POLITICAL DECISION, IF PEOPLE VOTE FOR ACTUALLY WE ARE REALLY FED UP. WE ARE THE AUSTERE. WE ARE THE GERMANS TIRED OF BAILING OUT THE FRENCH. CAROL: SPEAKING OF ELECTIONS. JESS: LESS THAN A MONTH BEFORE U.S. MIDTERM ELECTIONS, HOW DOES THAT FIT INTO THIS? CAROL: DO YOU SEE THAT AS A RISK? JOHN: NOT REALLY. IN TERMS OF THE THINGS WE ARE MOST WORRIED ABOUT AT THE MOMENT, I DON'T SEE ANY WAY THE DEFICIT GETS WORSE WITH GRIDLOCK. CAROL: MARKETS LOVE GRIDLOCK. JOHN: BOND MARKETS IN PARTICULAR LIKE GRIDLOCK. IF A BLUE WAVE INCLUDING A DEMOCRATIC PRESIDENT, RIGHTLY OR WRONGLY THAT WOULD PROBABLY CREATE SOME CONCERN. THE TRUMP PRESIDENCY SO FAR HAS NOT EXACTLY BEEN A GROUP OF DEFICIT HAWKS. BROADLY SPEAKING, WHEN YOU HAVE A GRIDLOCK WITH CONGRESS, THEY TRY TO STOP YOU FROM DOING WHATEVER YOU ARE DOING, WHICH AT THIS MOMENT INCLUDES INCREASING THE DEFICIT. SO IN TERMS OF THE MOST IMPORTANT ISSUES WE LOOK AT AT THE MOMENT, I DON'T THINK THAT IS A PROBLEM. SIMILARLY, THE EXECUTIVE BRANCH NEEDS TO SIGN OFF ON TIGHTER REGULATION OF AI. SO IF YOU HAVE THE STATUS QUO, THAT IS FINE. LOOKING AT NVIDIA'S SHARE PRICE, ETC. CAROL: WE WILL HAVE MORE COLUMNS FROM YOU. I ALWAYS LOOK FORWARD TO THE END OF THE YEAR WHEN WE LOOK BACK WITH YOU. JOHN AUTHERS, THANKS FOR STICKING AROUND. HE IS THE BLOOMBERG OPINION COLUMNIST, SENIOR EDITOR FOR BLOOMBERG MARKETS. COMING UP, WE ARE STILL IN ON AI. WE WILL GET YOU SOME OF THE RISKS. YES, THEY ARE OUT THERE. CHARLIE: IT IS TO 21 P.M. ON WALL STREET. WE CHECKED MARKETS ALL DAY LONG I BLOOMBERG. STOCKS WELL OFF SESSION HIGHS. HOWEVER, STILL ON TRACK FOR A RECORD CLOSE. S&P AT 7827. THAT IS A GAIN OF 0.7%. THE CLOSING HIGH IS 7798 ON THE S&P 500 INDEX. THE DOW UP BY 0.5%, 248 POINTS. TRADERS DRIVING STOCKS TO RECORDS ON GROWING DEBTS AN CORPORATE AMERICA ABLE TO WHETHER THE THREAT OF THE ELEVATED PRICE OF OIL. AN INTEREST RATES. NASDAQ UP 0.6%. THE FIVE-YEAR ABOVE 5% AT 5.02%. THE 30 YEAR YIELD, 5.63%. GOLD UP TO 4170, UP BY ABOUT 0.7%. CRUDE MOVING LOWER. WTI, $89 25 SINCE A BARREL, DOWN 0.2%. BRENT FLAT ON THE DAY RIGHT NOW. $100.32 FOR A BARREL OF BRENT. MCDONALD'S PLANS TO OVERHAUL ITS RESTAURANTS AND MENU. THAT PLAN IS PARKING A LOT OF CONCERN AMONG U.S. FRANCHISEES FACING UPGRADES THAT WILL COST AT LEAST $800,000 A PERSON. MCDONALD'S SHARES MOVING LOWER TODAY, DOWN BY 0.4%. STOCKS HIGHER. S&P AT RECORD. FOR ON-DEMAND NEWS 20 FOR HOURS A DAY, SUBSCRIBE TO BLOOMBERG NEWS NOW WHEREVER YOU GET YOUR PODCASTS. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: THANK YOU SO MUCH. YOU ARE LISTENING TO AND WATCHING "BLOOMBERG BUSINESSWEEK DAILY." OPENAI TODAY REITERATING ITS APOLOGY FOR ARTIFICIAL INTELLIGENCE MODELS BREACHING AUSTRALIAN GOVERNMENT WEBSITES. THEY PLEDGED TO RESPOND FASTER IF THEY DO OCCUR. JP MORGAN'S CEO JAMIE DIMON, WE JUST TALKED ABOUT IT WITH JOHN AUTHERS. HE TALKED ABOUT A LOT OF THINGS INCLUDING AI. JESS: THE POTENTIAL CYBER RISKS THAT ARE OUT THERE THAT GO ALONG WITH THAT AS WELL AS DATA CENTERS. CAROL: I REMEMBER YEARS AGO, MIGHT EVEN BE 20 YEARS AGO HE WAS UP ON A STAGE TALKING BY THE BIGGEST RISK TO THE COMPANY AND HE SAID CYBER RISK AND TALKED ABOUT THE AMOUNT THEY WERE SPENDING WHEN IT CAME TO TECH AND SECURITY. IN THE INTERVIEW WITH BLOOMBERG, JAMIE DIMON TALKED ABOUT ANTHROPIC'S MYTHOS AI MODEL AND HOW IT DRAMATICALLY INCREASED GLOBAL SECURE THE RISKS. HE SAID IT WENT UP TENFOLD AFTER MYTHOS. HE SPOKE TODAY WITH TOM MACKENZIE IN LONDON. HERE IS WHAT HE HAD TO SAY ALSO ABOUT DATA CENTERS AND WHEN THEY ARE PLACED IN DIFFERENT COMMUNITIES. JAMIE: DATA CENTERS, HALF OF THE NEW ONES IN AMERICA ARE IN TEXAS AND VIRGINIA. PEOPLE DON'T WANT THEM THERE. YOU WILL NOT WIN. YOU HAVE LAWSUITS. THERE ARE A LOT OF STATES THAT WILL TAKE IT THAT HAVE ACCESS TO POWER. ANY BIG COMPANY NEEDS TO BE A COMMUNITY CITIZEN. CAROL: THAT IS JAMIE DIMON EARLIER WITH TOM MACKENZIE AT THE CONFERENCE IN LONDON. THAT FULL INTERVIEW ON THE BLOOMBERG TERMINAL. OUR NEXT GUEST AND TEAM HAVE BEEN LOOKING AT THE IMPACT OF AI AS WELL. SHE IS CHAIR OF THE GLOBAL RISK ADVISORY COUNCIL OF GLOBAL SITUATION ROOM, APR CRISIS AND MANAGEMENT FIRM BASED OUTSIDE OF WASHINGTON, D.C. SHE SERVED IN PRESIDENT BIDEN'S CABINET. I SPOKE TO YOU WERE NEWER IN THE PRESIDENT'S CABINET. -- I SPOKE TO YOU WHEN YOU WERE IN THE PRESIDENT'S CABINET. HOW ARE YOU? >> GOING TO BE BACK. GREAT TO SEE YOU. I AM DOING WELL IN LOS ANGELES AND FOCUSING ON ISSUES AROUND ECONOMIC DEVELOPMENT. CAROL: TELL US ABOUT THE WORK YOU ARE DOING. I WANT TO GET INTO THE GLOBAL AI RISK REPORT BECAUSE AS YOU HAVE GATHERED IF YOU HAVE BEEN LISTENING, ALMOST EVERY CONVERSATION HAS TO DO WITH AI. WE ARE LIKE, WHAT HAPPENED? WHAT WENT WRONG? TELL US ABOUT YOUR WORLD RIGHT NOW IN THIS REPORT. ISABEL: YES, ONE OF THE FIRST THINGS I DID WAS AGREE TO CHAIR THIS GLOBAL SITUATION ROOM AND THE GLOBAL COUNSEL THAT GUIDES IT. THE INDEX IS THE BAROMETER OF THE REPUTATIONAL THREATS THAT EXIST IN TODAY'S ENVIRONMENT. IT IS NO SURPRISE THAT AI HAS AGAIN REEMERGED AT THE TOP OF THE LIST. IT HAS BEEN TOPPED THROUGHOUT THE LAST YEAR AND A HALF PLUS THAT THE INDEX HAS BEEN RELEASED. IT IS REALLY REPUTATIONAL DAMAGE CAUSED BY EXIT LIMITED ADOPTION OR THE LACK OF ADOPTION OR MISUSE -- BY ACCELERATED ADOPTION OR THE LACK OF ADOPTION OR MISUSE. WHETHER YOU ARE A DOOMERISM BELIEVER, AI REPRESENTS OPPORTUNITY FOR GROWTH AND TRANSFORMATION IF IT CAN BE BROADLY DISTRIBUTED SAFELY. THE RISKS TELL THE STORY OF HOW IT PERCEIVES THE BROAD AND EQUITABLE DISTRIBUTION OR THE SAFE DEPLOYMENT. I THINK PUBLIC TRUST IN THE U.S. AT LEAST IS NOT HIGH WHEN IT COMES TO AI. IT IS EMERGING CONSTANTLY AS THE RISK FOR COMPANIES. JESS: THOSE REPUTATIONAL RISKS YOU ARE TALKING ABOUT, WITHIN THE SURVEY IT WAS MENTIONING WHEN IT COMES TO FINANCIAL SERVICES ORGANIZATIONS. TELL US MORE ABOUT THOSE FINDINGS. ISABEL: YEAH. IN PARTICULAR, THEY ARE AT THE NEXUS IN TERMS OF TRUST LEVEL. THEY ARE NOT THE HIGHEST RANKED IN TERMS OF GENERAL TRUST IN PARTICULAR. JESS: WHY IS THAT? ISABEL: THAT HAS BEEN BROAD SINCE THE GREAT RECESSION. AS INDUSTRIES CONTINUOUSLY TRY TO BUILD REPUTATION, CONSUMER TRUST IS ONE THING THAT HAS ALWAYS BEEN A CHALLENGE. IN PARTICULAR NOW WITH AI, YOU SEE THESE ACCELERATED RISKS AROUND FRAUD AND MISCONDUCT IN PARTICULAR, EXECUTIVE MANAGEMENT CONTROVERSY. I DON'T THINK IT IS A MISTAKE AND A LOT OF CEOS HAVE UPPED THEIR GAME ON SOCIAL MEDIA TO TRY TO CONNECT IN A VERY INTIMATE LEVEL, BUILD THAT TRUST, BUILD THAT AUTHENTIC VOICE THAT FOLKS WANT TO CONTINUE TO HEAR. IT IS ALSO ABOUT THE SPEED AND CERTAINTY WITH WHICH TOY. WITH AI -- CERTAINTY WITH WHICH THEY NEED TO DEPLOY. WITH AI, IT REMOVES SOME OF THOSE CHALLENGES, SPEED UP ACCESS, BUT FOLKS ARE STILL DEMANDING ZERO FRAUD AND FAIRNESS. THEY HAVE A LOT TO NAVIGATE AROUND THE DEPLOYMENT OF AI. JESS: I AM GLAD YOU BROUGHT UP THE AUTOMATED CUSTOMER SERVICE TYPE ISSUES BECAUSE EVERYONE HAS BEEN THROUGH THOSE TYPES OF SITUATIONS WHERE YOU FEEL LIKE YOU CANNOT GET A HUMAN ON THE PHONE TO HELP YOU. BREAK THAT DOWN AS FAR AS THE FRUSTRATIONS YOU FOUND IN THOSE TYPES OF FINDINGS AND WHAT CAN BE MITIGATED TO FIX THAT. ISABEL: YEAH, IT IS INTERESTING BECAUSE AS THE COMPANIES DEPLOY IT, SOME WORK BETTER THAN OTHERS. PEOPLE FEEL FRUSTRATED IF THEY DON'T HAVE THAT HUMAN CONNECTION OR TRUST, ESPECIALLY WHEN IT COMES TO THEIR MONEY. OBVIOUSLY, THAT IS WHY FINANCIAL SERVICES WAS AN INTERESTING SECTOR TO LOOK AT IN PARTICULAR. PEOPLE, THEIR SAFETY, SECURITY, FAMILY HOPES AND DREAMS ARE TIED UP IN THEIR MONEY AND THEIR ABILITY TO PARTICIPATE IN THE ECONOMY. ANY RISK ALONG THOSE LINES REALLY HURTS THE BRAND OR THE REPUTATION. PEOPLE WANT TO BE ABLE TO STREAMLINE, GET ACCESS ONLINE FASTER. PEOPLE LIKE THE FEATURES, THE TECHNOLOGICAL ADVANCEMENTS, BUT THEY ALSO WANT TO BE ABLE TO QUICKLY PIVOT TO A LIVE HUMAN WHEN POSSIBLE. SOME THINGS CANNOT BE SOLVED. CAROL: I AM CURIOUS WHAT YOU MAKE FROM SOMEONE WHO HAS WORKED INSIDE THE WHITE HOUSE, WORKED WITH A PRESIDENT, WORKED ON INITIATIVES, AND WHAT YOU ARE SEEING WHEN IT COMES TO WHITE HOUSE MOVES ON AI. WE JUST HAD A BUNCH OF GLOBAL LEADERS, A BIG LUNCHEON AT THE WHITE HOUSE, AND AGREEING TO TERMS KIND OF ON MORAL GROUNDS. I GUESS WE ARE WAITING FOR SOMETHING MORE CONCRETE. WE HAVE ALSO HAD THE PRESIDENT ENDORSING USING OUTSIDE AUDITORS TO ASSESS THE SAFETY OF AI SYSTEMS THROUGH AN ACCORD WITH SILICON VALLEY LEADERS. THERE IS A LOT OF DIFFERENT THINGS GOING ON. WHAT IS YOUR TAKE ON ALL OF THIS? THERE ARE BIG COMPANIES AND THERE ARE SMALLER COMPANIES WHO ARE STRUGGLING TO PAY BILLS TO KEEP THEIR BUSINESSES GOING AND THE CHALLENGES OF AI AND THEIR WORLD. HOW DO YOU SEE ALL OF THAT? I WOULD LOVE FOR YOU TO COMMENT ON WHAT YOU HAVE BEEN SEEING OUT OF THE WHITE HOUSE ON AI SPECIFICALLY AN OVERSIGHT AND GUARDRAILS AND ALL OF THAT STUFF. ISABEL: I THINK THE RAPID ADOPTION OF AI, WITHOUT REGULATION, WITHOUT GOOD CORPORATE CITIZENS THAT REALLY CARE ABOUT COMMUNITY, I THINK THAT RAPID ADOPTION WITHOUT REGULATION IN PLACE PUTS INDUSTRY AT HIGHER RISK. THERE IS NO SAFEGUARD TO RELY BACK ON. YOU ARE HELD FULLY RESPONSIBLE FOR ANY NEGATIVE IMPACTS. I THINK WHETHER IT IS A PRIVACY CONCERN OR AI ENABLED CYBERATTACKS, ETC., AND I THINK RIGHT NOW WITH THE TRUST LEVEL SO LOW, IT WOULD PERHAPS BE CONSUMER CONFIDENCE BUILDING TO BE ABLE TO FEEL LIKE THERE ARE SOME GUARDRAILS SO I CAN ANSWER THESE QUESTIONS. IS IT SAFE? AND IS MY FUTURE OPPORTUNITY SAFE AS WELL? I THINK THOSE TWO THINGS MATTER TO THE PUBLIC TRUST RIGHT NOW. CAROL: IF WE DON'T DO IT, IN YOUR VIEW, IS EUROPE GOING TO LEAD THE WAY ON IT? IS SOMEBODY GOING TO LEAD ON THE GUARDRAILS? IT DOES NOT REALLY HAVE ANY BOUNDARIES. SO I AM JUST CURIOUS. WILL OTHER PARTS OF THE WORLD AND TAKE A LEAD ON THIS IN TERMS OF CREATING GUARDRAILS, OR DOES IT HAVE TO BE A COORDINATED GLOBAL EFFORT? I AM CURIOUS WHEN YOU SPEAK WITH BUSINESS LEADERS IN YOUR ROLE, WHAT YOU ARE HEARING FROM THEM ABOUT WHAT THEY WOULD LIKE TO SEE DONE. ISABEL: FOR SURE. ESPECIALLY MY REALM OF FOCUSING ON SMALL BUSINESSES AND ALL BUSINESSES, THE UNIQUE CHALLENGES THEY FACE CLEARLY ARE ALWAYS TOP OF MIND. OVERREGULATION OR FURTHER BARRIERS. OBVIOUSLY, WE DON'T WANT TO WE HOLD OUR FRONTIER MODELS BACK. I APPRECIATE THAT ARGUMENT. BUT WHERE CONSUMER CONFIDENCE IS NOT HIGH, TAKING LEADERSHIP AND WE ARE SEEING IT FROM SOME FRONTIER MODELS AS WELL, OUTLINING WHERE THERE WOULD BE ABILITY TO REGULATE AND ENSURE THAT THERE IS SAFETY FROM CYBERATTACKS, FROM PRIVACY CONCERNS, YOU NAME IT. I THINK THERE IS ROOM TO ACT QUICKLY. GLOBALLY, IT IS SUCH A DYNAMIC ENVIRONMENT BECAUSE TRUST LEVELS FOR AI ARE DIFFERENT AROUND THE WORLD AND HIGHER FRANKLY. I THINK A COORDINATED EFFORT, ESPECIALLY AS WE WANT TO SEE OUR FRONTIER MODELS CONTINUE TO ADVANCE IS IMPORTANT. WE CANNOT RISK NOT ADVANCING. I DO AGREE WITH THAT. YOU SEE CHINA REGULATING WHEN IT COMES TO CHINA SAFETY. NUMBER THREE RISKS AROUND PRIVACY CONCERNS AND CHILD SAFETY. THOSE THINGS ARE ALL INTERACTING WITH AI. IF WE DO NOT TAKE STEPS TO ENSURE THAT WITH PUBLIC CONFIDENCE, THERE IS RESISTANCE TO DEPLOY QUICKLY. JESS: RIGHT. WE ONLY HAVE ABOUT A MINUTE LEFT WITH YOU BUT YOU GOT INTO THE OTHER RISKS BEHIND THE AI REPUTATIONAL RISKS LIKE CHILD SAFETY HARM. WHAT WAS YOUR BIGGEST TAKE AWAY AS FAR AS WHAT COMPANIES NEED TO DO TO MITIGATE THESE POTENTIAL REPUTATIONAL DAMAGES FROM THE INFORMATION YOU GATHERED? CAROL: JAMIE DIMON SAID ANY BIG COMPANY HAS TO BE A GOOD COMMUNITY CITIZEN. WE HAVE ABOUT A MINUTE LEFT. WHAT IS THE RESPONSIBILITY OF COMPANIES IN ALL OF THIS? ISABEL: I THINK IT IS VERY HIGH. YOU ARE PROTECTING YOUR BRAND, COMMUNICATIVE VALUES, BUILDING TRUST WITH CONSUMERS, CONSTITUENTS IF YOU ARE A GOVERNMENT LEADER. ALL OF THOSE THINGS HAVE TO BE TOP OF MIND AS YOU ARE DEPLOYING AI FOR GROWTH AND EFFICIENCY. CAROL: AND ARE YOU READY TO PLAY BALL? I WONDER IN AN ENVIRONMENT WHERE LEADERS ARE AFRAID TO WRANGLE WITH THE WHITE HOUSE, YOU KNOW, ARE THEY CAREFUL? JUST REAL QUICKLY. ISABEL: I DO BELIEVE COMPANY'S HAVE TO TAKE ONUS ON THEMSELVES AS WELL. JAMIE DIMON MENTIONS JPMORGAN CHASE CONTINUALLY TRIES TO LEAD IN THIS PLACE. WE WANT COMPANIES TO ACT RESPONSIBLY. I THINK MORE AND MORE AS THEY ARE CREATING THEIR OWN BRANDS AND GETTING ONLINE WITH THEIR OWN SOCIAL MEDIA, FOLKS SHOULD BE CONSIDERING THIS FACTOR. CAROL: TO CATCH UP WITH YOU. HOPEFULLY YOU WILL JOIN US AGAIN REAL SOON. SHE IS CHAIR OF THE GOOGLE RISK ADVISORY COUNCIL GLOBAL SITUATION ROOM. WHEN WE COME BACK, WE WILL TALK MORE ABOUT WORKPLACE. YES, WE HAD NUMBER FOUR. CURIOUS WHAT HE HAS TO SAY ABOUT AI IN THE WORKPLACE ESPECIALLY AS WE ARE SEEING WELL-KNOWN FIRMS CUT BACK HOW MUCH AI THEIR WORKERS CAN USE. ♪ CHARLIE: WE CHECK MARKETS ALL DAY LONG HERE ON BLOOMBERG. A RECORD FOR THE S&P 500 INDEX. ONE HOUR 20 MINUTES TO GO AHEAD OF THE CLOSING BELL. THE S&P CURRENTLY AT 7825, UP BY 0.7%. THE OLD CLOSING HIGH 779, SO RIGHT NOW A RECORD ON THE S&P. ANY ADVANCE TODAY FOR THE NASDAQ WILL BE A RECORD. THE DOW UP 0.5%. THE NASDAQ 100 UP 0.6%. THE RUSSELL 2000 INDEX OF SMALL-CAP SHARES DOWN BY ABOUT 0.5%. WE HAVE THE TWO YEAR YIELD AT 4.79% WITH THE FIVE-YEAR AT 5.02%. THE 10 YEAR AT 5.26%. THE 30 YEAR, 5.63%. GOLD UP 0.7%. $4167 THE OUNCE. WEST TEXAS INTERMEDIATE CRUDE, $89.63 A BARREL. A BARREL OF BRENT ABOVE $100 NOW , UP BY 0.4%. OPTION HEALTH CARE SHARES ARE SOARING AFTER MCKESSON ANNOUNCED THERE WILL BE BUYING OPTION HEALTH CARE FOR AN ENTERPRISE VALUE OF ABOUT $5.8 MILLION. MCKESSON UP BY 1.2%. OPTION CARE HEALTH IS ADVANCING, SOARING BY 33%. SOURCES TELL BLOOMBERG THE HEAD OF AN INSURANCE COMPANY TOLD AUTHORITIES HE WAS UNAWARE OF THE FIRM'S MORE THAN $20 BILLION TO THE SPORTS MOGUL'S OTHER BUSINESSES. THE BILLIONAIRE OWNER OF THE DODGERS WAS ABLE TO BORROW FROM HIS INSURERS WITHOUT HAVING THEM DISCLOSE THE ARRANGEMENTS TO STATE REGULATORS AS REQUIRED. RECAPPING, STOCKS HIGHER. S&P UP BY 0.7%. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: GOOD STUFF. ALREADY EVER NEXT GUEST HAS SAID, DO YOU HAVE HALF AN HOUR FOR ME? WE DON'T, BUT WE WILL LEAVE YOU WANTING MORE. I WANT TO SET THE STAGE. LATE YESTERDAY, WE MENTIONED MICROSOFT WORKING TO CUT THEIR EMPLOYEES'S USE OF CLAUDE. THIS IS COMING FROM THE INFORMATION OF TWO IDENTIFIED PEOPLE. THERE IS A COST OF TOKENS AND SO ON AND SO FORTH. WE ARE STARTING TO SEE THIS PLAY OUT. WE WANT TO TALK ABOUT AI WHEN IT COMES TO WORKFORCES AND WORKFLOW. SO GREAT TO HAVE BACK WITH US TO TALK ABOUT HOW AI AT SCALE INCORPORATED INTO THE WORKPLACE. WITH US IS THE TIA CHIEF OPERATING OFFICER, LEADING THE ENTERPRISE OPERATIONS AND INFORMATION ACROSS RETIREMENT WEALTH MANAGEMENT, ASSET MANAGEMENT. HE DOES SO MUCH. THEY CHANGED HIS TITLE AND SHORTENED IT EVEN THOUGH YOUR RESPONSIBILITIES HAVE GROWN. >> ALWAYS GLAD TO BE HERE. CAROL: TALK TO US ABOUT AI IN THE WORKPLACE. WE JUST TALKED WITH ISABEL GUZMAN LOOKING AT RISKS AND HOW COMPANIES WORRY ABOUT THEIR IMAGES, BUT SOME COMPANIES ARE INCREASINGLY LOOKING AT THE COST OF WORKERS USING AI. THERE HAS TO BE RETURN ON INVESTMENT. WHAT ARE YOU SEEING AND THINKING ABOUT HERE? >> THE KEYWORDS ARE THE WORKFORCE OF THE FUTURE AND WORKFLOWS OF THE TEACHER. CAROL: DIFFERENT THINGS. >> I HAVE THIS 80/20 HYPOTHESIS ON AI THAT 80% OF THE JOBS IN THE WORLD WILL CHANGE AT LEAST 20% WITH AI AND 20% OF THE JOBS WILL CHANGE AS MUCH AS 80% WITH AI. SO THAT IS THE WORKFORCE AND ALL OF OUR JOBS ARE CHANGING AS MY JOB IS CHANGING, YOUR JOB IS CHANGING. WORKFLOWS OF THE FUTURE, MORE COMPLEX. THIS IS ESPECIALLY REPRESENTING A 100 PLUS YEAR OLD COMPANY, I CAN SAY THIS WITH CONFIDENCE THAT THE COMPLEXITY DEBT FOR ADOPTION. CAROL: LEGACY FIRMS, LEGACY SYSTEMS. SASTRY: PROCESSES, CULTURE, EVERYTHING. AI COULD BE THE BIGGEST AMPLIFIER OF THIS COMPLEXITY IF YOU ARE NOT CAREFUL. IF YOU ARE SMART, AI COULD BE THE BIGGEST ENABLER. THAT IS KIND OF MY WHOLE PREMISE OF HOW I THINK ABOUT AI. IF YOU WANT TO BRING AI COMING WANT TO MAKE SURE YOU ARE REWIRING THE ENTERPRISE. FOR INSTANCE, I WILL GIVE YOU THE EXAMPLE I ALWAYS QUOTE. APPLIED SERVICES, THE CLIENT CENTER. TO THE CALLS FROM THE FOLKS, WHAT WE DID WAS WE LOOKED AT ALL THE WORKFLOWS THEY HAVE. WE PRINTED EVERYTHING THEY HAVE TO LOOK AT. WE STITCHED IT TOGETHER. IT IS 81 INCHES LONG. IT IS AS TALL AS LEBRON JAMES. CAROL: A LOT. SASTRY: EVERY TIME THERE IS A CALL, YOU ARE LOOKING AT LEBRON JAMES AND HOW TO ANSWER THE QUESTION. CAROL: HOW TO DO THAT WELL. SASTRY: SIMPLIFYING THE WORKFLOWS AND USING AI TO REWIRE THE WORKFLOWS, TO ME THAT IS MORE IMPORTANT. WE FOCUS ON WORKFORCE AND WHAT DOES. OF COURSE, IF YOU ARE A START UP, YOU DO NOT HAVE THE COMPLEX CITIES AND YOU COULD GO ALL IN. -- YOU DO NOT HAVE THE COMPLEXITIES AND YOU CAN GO ALL IN. YES, THERE IS A LOT OF DISCUSSION ON TAOKENOMICS. I BELIEVE THE WORLD WILL BEAT MODEL AGNOSTIC, TECHNOLOGY AGNOSTIC, AND YOU WILL HAVE TO USE THE RIGHT MODEL AT THE RIGHT TIME AND THE RIGHT PRICE POINT. THAT WILL BE REALLY TESTED AS WE GO THROUGH THIS. AS YOU REWIRE WORKFLOWS, COMPLEXITY IS THE TOP, THE NUMERATOR. AI WILL BE DRIVEN BY KNOWLEDGE IS THE POTENTIAL BUT THE COMPLEXITY YOU WILL REDUCE AS PART OF THAT. JESS: YOUR FIRM, HOW DO YOU ACTUALLY USE THAT WHEN IT COMES TO RETIREMENT AND PROTECTING THAT TYPE OF INCOME FOR THE LONGEVITY OF PEOPLE'S LIVES? SASTRY: INCOME IS THE OUTCOME. WE WANT TO MAKE SURE WE ARE ENABLING OUR PARTICIPANTS AS WE CALL OUR CUSTOMERS AND CLIENTS WITH TOOLS THAT WILL HELP THEM IN A TIME OF PLANNING, RETIREMENT EDUCATION. ALSO PROTECTING THEM BECAUSE AS YOU QUOTED EARLIER, JAMIE DIMON SEES A 10 TIMES INCREASE POST MYTHOS. SO ABSOLUTELY WE WANT TO DEPLOY AI TO PROTECT THEM. OUR APPROACH IS PEOPLE ARE LIVING LONGER. LONGEVITY IS ON THE RISE, WHICH IS FANTASTIC. SO THEY LIVE LONGER, BETTER, AND SAFER WITH AI AND DESPITE AI. JESS: WHAT ARE THE RISKS WHEN IT COMES TO TRYING TO PROTECT THAT? WHAT ARE YOU PROTECTING AGAINST BEYOND THE OBVIOUS? SASTRY: FINANCIAL SCAMS IS ONE BUT MORE IMPORTANTLY, GOVERNANCE OF THESE AGENTS. WE DISCUSS IT WIDELY IN THE INDUSTRY. WE HAVE TAKEN AN APPROACH FOR OUR AGENTS SO WE HAVE HUNDREDS OF AGENTS, HUNDREDS OF USE CASES. WE HAVE A FOUR STAGE FRAMEWORK. YOU ARE AUGMENTING SOME TASKS, AI IS LEARNING FROM YOU, TAKING OVER, AND AI AUTONOMOUS LIKE THE WAYMO OF AGENTS. I BELIEVE AS AGENTS GRADUATE, THE HUMAN IN THE LOOP DEPENDENCY WILL REDUCE. BUT RIGHT NOW BECAUSE WE ARE A HIGHLY PREGNANT COMPANY, WE ARE IN STAGES 1, 2, 3. WE WANT TO MAKE SURE RETIREMENT SECURITY, FINANCIAL SECURITY IS A BIG UNDERTAKING AND A BIG RESPONSIBILITY. AS PEOPLE RELY ON US, WE WANT TO MAKE SURE WE ARE PROTECTING THEM NOT JUST FROM SCAMMERS BUT HOW WE IMPLEMENT AI IN THEIR LIVES. CAROL: WHAT ARE THE CONVERSATIONS YOU ARE HAVING WITH WHETHER IT IS ANTHROPIC OR OPENAI OR ALPHABET, GOOGLE? THE CONVERSATIONS YOU ARE HAVING WHEN IT COMES TO GUARDRAILS, BECAUSE THAT IS THE THING WE ARE ALL TRYING TO FIGURE OUT. EVERYONE IS SAYING LET'S DO THE RIGHT THING. HANDSHAKE AND WE WILL DO THE RIGHT THING. AS SOMEONE SAID TO BE IN THE FINANCIAL SECTOR, THERE IS YOUR GREATEST TEST IF YOU WILL. IF SOMETHING GOES WRONG, NOBODY WILL USE IT. BUT I AM CURIOUS, IS THAT A FAIR ASSUMPTION TO MAKE? SASTRY: IT IS AN INSTITUTIONAL RESPONSIBILITY AND ALSO AN INDIVIDUAL RESPONSIBILITY. INSTITUTIONAL RESPONSIBILITY, EVERY INSTITUTION HAS TO HAVE THEIR OWN RESPONSIBLY POLICY. IT HAS TO BE DEFINED INTO THE WORKFLOWS I JUST TALKED ABOUT. SO WHEN YOU IMPLEMENT AGENTS, THAT IS A TIAA RESPONSIBILITY POLICY THAT WILL GOVERN HOW WE IMPLEMENT THEM. THAT IS THE POLICY WE USE, THE STANDARDS, THE CODIFIED STANDARDS. WE WORK WITH ANTHROPIC, OPENAI, GOOGLE OF THE WORLD AND EVEN THE LIGHTWEIGHT MODELS WE WORK WITH. THAT IS WHAT WE ARE TRYING TO WORK WITH. OF COURSE, THE INDUSTRY HAS TO COME TOGETHER ON THIS. WE ARE OBVIOUSLY PART OF A RANGE OF INDUSTRY CONSORTIUM WHERE WE TRY TO COALESCE. CAROL: WORK IN PROGRESS? SASTRY: IT IS A WORK IN PROGRESS. CAROL: COME BACK. WE WILL DO MORE BECAUSE I AM CURIOUS ABOUT IF YOU CAN PUT GUARDRAILS ON WITHIN THESE MODELS. SASTRY DURVASULA, TIAA'S CHIEF OPERATING OFFICER JOINING US IN STUDIO. WE PROMISE WE WILL DO MORE WITH HIM. A PLEASURE FOR US AS WELL. WHEN WE COME BACK, CHECKING ON STOCKS RIGHT HERE ON "BLOOMBERG BUSINESSWEEK DAILY." >> THIS IS "BLOOMBERG BUSINESSWEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC ON BLOOMBERG RADIO AND TELEVISION. CAROL: CAROL MASSAR ALONG WITH JESS INFO TIM STENOVEC. IT IS INTERESTING WITH THE NASDAQ AT RECORDS. WE HAD THE S&P 500 TODAY. JESS: TODAY WOULD BE 40 IN CONSECUTIVE SESSIONS IF THE S&P CAN HOLD ITS GAINS WITHOUT A 1% DROP. CAROL: WHAT WOULD THAT SAY TO YOU? UPWARD MOVEMENT, RIGHT? I DON'T KNOW WHAT TO DO WITH THE VIX ANYMORE. COMPLACENCY MAKES ME A LITTLE ROCKY AND CRAZY -- A LITTLE WACKY AND CRAZY. MIDTERMS WILL BE INTERESTING TO WATCH. JESS: LESS THAN A MONTH AWAY SO YOU ARE SEEING THAT. STARTING TO SEE MORE VOLATILITY PICK UP. CAROL: WE ARE. THIS IS WHY IT IS SO IMPORTANT ON A DAY WHERE THE INDEX IS DOWN BUT MOST NAMES ARE UP OR VICE VERSA, INDEX IS UP BUT MOST NAMES ARE DOWN. IT GETS YOU INTO WHAT IS GOING ON. LET'S TALK ABOUT WHAT IS GOING ON HERE. LET ME PULL OUT MY NUMBERS ON THE BLOOMBERG IN TERMS OF THE TRADE ON THIS TUESDAY. WE ARE SEEING THE S&P OFF OF ITS HIGHS OF THE SESSION, STILL UP 54 POINTS, 0.7%. THE NASDAQ 100 UP 207 POINT, TWO THIRDS OF A PERCENT. JESS: TODAY, WE HAVE MORE THAN 300 STOCKS THAT ARE ADVANCING IN A LITTLE MORE THAN 160 DECLINING. SO IN THE NAMOR IMPROVING BRANDTH TODAY EVEN THOUGH THE HAS GIVEN US A HARD TIME. BUT IMPROVEMENTS. CAROL: BIG TECH ON THE MOVE AND WE ARE TAKING A LOOK. 10 YEAR YIELD AT 5.27%. TWO YEAR AT 4.70%. SO WE ARE OFF OF THE HIGHS WE SAW THIS MORNING. I AM CAROL MASSAR. LET'S GET YOU STOCKS ON THE MOVE. HERE TO DO THAT IS NORAH MULINDA. SHE IS IN THE HOUSE WITH STOCK MOVERS. GOOD TO HAVE YOU BACK HERE. NORAH: HAPPY TO BE HERE. CAROL: CONSOLATION ENERGY AND ALPHABET, LET'S GO THERE. I LIKE THAT STORY. NORAH: CONSTELLATION ENERGY IS THE BEST PERFORMING IN THE S&P 500 RIGHT NOW ON A PERCENTAGE BASIS. YOU CALLED OUT ALPHABET BECAUSE ALPHABET AGREED TO BY NUCLEAR POWER FROM CONSTELLATION ENERGY. IT IS A 20 YEAR AGREEMENT BETWEEN THE TWO COMPANIES ENTERED ESSENTIALLY BRING IN 900 MEGAWATTS OF NEW NUCLEAR CAPACITY AND SHOULD DRIVE $4 BILLION WHEN IT COMES TO INVESTMENTS TO UPGRADE THE 11 CONSTELLATION REACTORS. A PRETTY MASSIVE DEAL BETWEEN THE TWO OF THEM. CONSTELLATION ENERGY'S IS A STOCK THAT HAS BEEN DOWN ON THE YEAR BUT WHEN YOU. WITH A NAME LIKE GOOGLE, OF COURSE YOU WILL SEE A RALLY. CONSTELLATION UP RIGHT NOW. CAROL: THEY ALREADY GO TO WHEN IT COMES TO NUCLEAR POWER. WE WILL TALK ABOUT THIS WITH WILL WADE IN THE NEXT HOUR BECAUSE I ALWAYS FEEL LIKE HE IS A REALITY CHECK IN TERMS OF WHAT WE CAN REALLY DO. NUCLEAR POWER, YOU DON'T JUST FLIP THE SWITCH. JESS: MARVELL. NORAH: MARVELL TECHNOLOGY. THE STOCK IN THE GREEN, HIGHER BY 5.6%. THE COMPANY BOOSTED ITS FISCAL 2028 REVENUE OUTLOOK TO $20 BILLION SO THAT TOPPED ESTIMATES THAT WERE EXPECTED ON WALL STREET. IT EXPECTS DATA CENTER REVENUE TO GROW BY 80% THAT YEAR. CLEARLY BULLISH SENTIMENT THERE. THE STOCK IS ABOUT 250 $1 BILLION IN MARKET CAP BUT WHAT IS INTERESTING IS THE MOVE ON A YEAR-TO-DATE BASIS. JESS: OVER 200%. NORAH: 236% SO FAR THIS YEAR. CAROL: LOOK AT GO. NORAH: YOU CAN MAKE SOME NICE MONEY IF YOU INVESTED IN IT JANUARY 1. JESS: THE BEST YEARLY PERCENTAGE GAIN IF IT CAN HOLD ONTO THAT SINCE 2001. CAROL: LET'S GO ON OVER TO -- THIS IS YOUR AREA. NORAH: OF COURSE. CAROL: LOVE TALKING REALTY. NORAH: ESRT, MOST PEOPLE DO IT BECAUSE IT OWNS THE EMPIRE STATE BUILDING, BUT IT IS ALSO FOR OFFICES IN THE BOND SPACE. IT CAME OUT LATE YESTERDAY AND SHOWED AN ASSET MANAGEMENT COMPANY TOOK A $10 MILLION SHARE STAKE IN THE OFFICE LANDLORD, ESSENTIALLY SAYING THE STOCK ITSELF IS UNDERVALUED. THE STOCK IS DOWN 32% SURPRISE THIS YEAR SO THAT IS PUTTING IT AT $766 MILLION IN MARKET CAP SO LOSING SOME OF THE VALUE. WHAT WE ARE SEEING WITH THE FILING IS PUTTING THE COMPANY AT 5.8% OF THE COMPANY. IT HAS COMMUNICATED TO EMPIRE STATE REALTY THE POSSIBILITY OF A STRATEGIC REVIEW OF SOME OR ALL OF THE TRUST ASSETS. JESS: IN YOUR WHEELHOUSE. WHAT DOES THAT TELL YOU MORE BROADLY WITH WHAT YOU HAVE BEEN FOLLOWING? NORAH: IT HAS BEEN AN INTERESTING TIME. THERE ARE SO MANY DIFFERENT SUBSECTORS WITHIN THAT SPACE. CAROL: A LOT OF BUCKETS. NORAH: REALTY INCOME CORE'S CEO, FANTASTIC SITUATION. KEEPING AN EYE ON WHAT IS HAPPENING IN THE BOND MARKET BECAUSE THAT HAS BEEN DICTATING THE PERSPECTIVE WHEN IT COMES TO RATES AND HOW IT FILTERS INTO THE REAL ESTATE MARKET, COMMERCIAL REAL ESTATE SPECIFICALLY. WE WERE TALKING ABOUT THE RETAIL SPACE. CAROL: THE CEO, RIGHT? NORAH: YES. CAROL: I THINK IT IS SUPER INTERESTING. YOU ARE RIGHT. WHEN YOU LOOK AT THE RATE ENVIRONMENT, YOU LOOK AT THE RATE ENVIRONMENT, AND NOT EVERYBODY DOES THE SAME. GOOD STUFF. THANK YOU, NORAH MULINDA. NORAH MULINDA WITH THE STOCK MOVERS. CHECK OUT OUR STOCK MOVERS PODCAST. BIG WINNERS AND LOSERS. YOU CAN CHECK IT OUT ANYWHERE YOU GET YOUR PODCASTS. ALL RIGHT, FOLKS, WE ARE HEADED TO THE LAST HOUR OF TRADE ON THIS TUESDAY. WE WILL DIG MORE INTO THE GOOGLE, CONSTELLATION ENERGY DEAL. ALSO GOING TO TALK ABOUT MEDICAL DEVICES. WE WILL DO THAT WITH A CEO.