US Consumer Spending Jumps by Most in a Year

>> THIS IS "BLOOMBERG BUSINESS WEEK 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 BUSINESS WEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC. LIVE ON BLOOMBERG RADIO, TELEVISION, AND BLOOMBERG ORIGINALS. >> GOOD AFTERNOON AND WELCOME TO "BLOOMBERG BUSINESS WEEK DAILY." I’M CHRISTINA RUFFINI, NOT CAROL MASSAR. DAVID: THEY’RE MAKING THEIR WAY TO THE WEST COAST, SCREEN TIME KICKS OFF TONIGHT, TWO-DAY EVENT, PUT ON BY BLOOMBERG. LUCAS SHAW HEADS UP OUR ENTERTAINMENT COVERAGE. AN AMAZING EVENT. WE’RE GOING TO TALK WITH LISA MATEO ABOUT THIS LATER. CHRISTINA: I DO FEEL LIKE WE ARE HERE TO CONTINUE THE FUN THINGS. HOWEVER, WE’LL BE FUN. WE’RE GOING TO CARRY YOU THROUGH THE AFTERNOON. I THINK WE’RE GOING TO START, HERE’S THIS HOUR. IT’S WEDNESDAY, SEPTEMBER 30. WE’RE GOING TO TALK ABOUT THE MARKETS, HOW THEY REACTED TO THE LATEST INFLATION DATA. WE’VE GOT THE FED LOOKING AT THE P.C.E. NUMBERS. WHAT ARE THE EXPECTATIONS GOING FORWARD, AND WHAT ARE POLICY MAKERS GOING TO DO ABOUT IT? DAVID: MIKE MCKEE IS GOING TO JOIN US FOR HIS PERSPECTIVE. WE ALSO GOT THIS REPORT FROM THE FEDERAL RESERVE ABOUT THE RENOVATION, THE CONTROVERSIAL RENOVATION OF THE FED BUILDING. WE’LL ASK MIKE ABOUT THAT. AND THE CHIEF ECONOMIST WILL TALK ABOUT INFLATION DATA, THE JOBS DATA. WE’RE LOOKING FORWARD TO THAT ON FRIDAY AS WELL. CHRISTINA: WE’LL KEEP YOU POSTED ON ALL THE STOCKS MAKING MOVES THIS WEDNESDAY AFTERNOON. BUT FIRST, WE’RE GOING TO GO TO CHARLIE PELLETT. CHARLIE, WHAT YOU GOT? CHARLIE: A VERY MIXED MARKET. NICE SEEING BOTH OF YOU, NOT ON A WEEKEND. THE DOW LOWER, S&P, NASDAQ BOTH ADVANCING. NASDAQ 100 INDEX UP BY .8%. S&P IS BASELINE, UP 32, UP BY JUST ABOUT .4%. LOTS OF ECONOMIC DATA TODAY. STOCKS RISING AS THE INFLATION SURPRISE THIS MORNING CURVES BETS ON A FED RATE HIKE IN OCTOBER. DOW INDUSTRIALS, HOWEVER, DO REMAIN LOWER, DOWN BY .2%. S&P UP BY .4%. ALL OF THIS WITH THE V.I.X. BELOW 16, A TWO-YEAR, 4.88%. WE’VE GOT THE FIVE-YEAR, 5.09%. THE 10-YEAR, 5.29%. AND 30-YEAR BONDS, YIELD REMAINS AT THE HIGHEST SINCE 2002. CERTAINLY GETS YOUR ATTENTION WITH THE 30-YEAR AT 5.64%. GOLD IS DOWN $32 AN OUNCE. SPOT GOLD, $49.49, DOWN BY .8%. CRUDE ON THE PLUS SIDE. WEST TEXAS INTERMEDIATE ABOVE $90 AT $90.77 A BARREL. BARREL OF BRENT, $103.62, UP BY 1%. SPEAKING OF OIL, TRADERS AND ANALYSTS SAY OIL FLOWS THROUGH THE STRAIT OF HORMUZ ARE CLOSING IN ON PREWAR LEVELS, ADDING MUCH NEEDED SUPPLY TO A GLOBAL MARKET WHERE CRUDE CONTINUES TO SWING AROUND $1100 A BARREL. AMONG THE OIL MAJORS, THEY’RE ALL HIGHER TODAY. EXXONMOBIL UP 1.8%. CHEVRON UP 1.2%. CONOCO PHILLIPS UP 1.6%. A STORY WE’LL HAVE MORE ON COMING UP RIGHT HERE ON "BLOOMBERG BUSINESS WEEK DAILY," THE FED’S INTERNAL WATCH DOG SAID IT FOUND NO EVIDENCE OF CRIMINAL WRONGDOING IN THE CENTRAL BANK’S RENOVATION OF ITS WASHINGTON HEADQUARTERS, A $2.4 BILLION PROJECT. DAVID GURA, CHRISTINA RUFFINI, THAT IS A BLOOMBERG BUSINESS FLASH. DAVID: CHARLIE, THANK YOU VERY MUCH. OIL IS SOMETHING I’VE BEEN FOCUSING ON TODAY. YOU HAVE BEEN AS WELL. WE REPORT A LOT ON WHAT IS GETTING IN AND OUT OF THE STRAIT OF HORMUZ. IT DOES SEEM LIKE, ACCORDING TO REPORTS THAT WE’VE SEEN, LEVELS ARE BACK CLOSE TO WHAT IT WAS BEFORE THE WAR. CHRISTINA: MAYBE RUNNING EVEN HOTTER THAN THEY WERE BEFORE THE WAR, TRYING TO GET SOME OF THAT PRODUCT OUT TO MARKET. AND IT DOES SEEM LIKE, WE’RE GETTING REPORTS FROM INDUSTRY ANALYSTS, SAYING THEM DON’T THINK IT CAUSED LONG-TERM DAMAGE TO THE SYSTEMS, TO THE PRODUCTION THERE. BUT TO ME, THE ISSUE IS ALWAYS NOT JUST PRODUCTION, IT’S THE RISK FACTOR AND ALL THE OTHER PRICING. DAVID: WE’LL GET INTO THAT LATER IN THE SHOW. CHRISTINA: BUT FIRST, WE’RE GOING TO MIKE MCKEE, OUR INTERNATIONAL ECONOMICS AND POLICY CORRESPONDENT HERE AT BLOOMBERG TV, BECAUSE AMID ALL THE ECONOMIC DATA THIS WEEK, OF COURSE WE’VE GOT P.C.E., C.P.I., FED. OK, SO MANY ACRONYMS. LET’S START WITH THE CORE P.C.E. DATA. CAN YOU START AT THE 30,000 FEET, CHRISTINA RUFFINI WILL UNDERSTAND THIS LEVEL, AND THEN YOU CAN DIG INTO WHAT STOOD OUT TO YOU. MIKE: THANK YOU. IT’S GREAT TO BE HERE WITH YOU ON SATURDAY MORNING. [LAUGHTER] GOOD TO SEE BOTH OF YOU IN THE CHAIR. THIS WAS KIND OF AN INTERESTING REPORT, BECAUSE THE BUREAU OF ECONOMIC ANALYSIS CHANGED SOME OF THE METHODOLOGY IT USES IN MEASURING SOME OF THE COMPONENTS OF THE PCE REPORT. WE KNEW IT WOULD BE REVISED LOWER. SO THE QUESTION IS, AND ECONOMISTS ARE FIGHTING ABOUT THIS SINCE THE REPORT CAME OUT, THE QUESTION IS, WHAT DID IT TELL US ABOUT THE DIRECTION OF INFLATION? BASICALLY, TO MY MIND, IT GIVES UMS THE IDEA THAT INFLATION HASN’T CHANGED A WHOLE LOT. WHAT IT DID WAS LOWER THE LEVELS OF THE INFLATION, OF PCE AND CORE SINCE 2021 ON A YEAR OVER YEAR BASIS. BUT WHAT IT SHOWED IS THAT THERE WAS REALLY NO CHANGE IN AUGUST. WE SAW THE CORE PCE REVISED DOWN FROM JULY TO 3.4% FROM 3.7%. BUT THEN IT WAS STILL 3.4% IN AUGUST. SO THE FED HAWKS COULD SAY WE’RE NOT REALLY MAKING PROGRESS. SOME PEOPLE SAY ON A THREE-MONTH BASIS, WE’RE AT 2%. BUT YOU CAN ALSO MAKE THE ARGUMENT THAT WITHIN THIS REPORT, THERE WERE SIGNS THAT OFFICES INFLATION IS STILL RISING, AND THEN, OF COURSE, THIS MORNING WE GOT NEWS ABOUT THE MORTGAGE RATES MOVING UP QUITE A BIT. SO THAT’S GOING TO HAVE AN IMPACT ON HOUSING. THERE’S A LOT IN THE NUMBERS OUT TODAY THAT DON’T REALLY TAKE US ANYWHERE DIFFERENT, I DON’T THINK AT THIS POINT. DAVID: THE THE MORTGAGE RATE NUMBER DEPRESSING MY CO-HOST AS WELL. CHRISTINA: I WAS GOING TO SAY, MIKE HAS BEEN ENOUGH WEEKEND TO KNOW I HATE TALKING ABOUT THE FACT THAT I’M NEVER GOING TO OWN A HOUSE, AND I’M GOING TO LET IT GO. DAVID: ESPECIALLY IN THE BROADER MARKET. I LOOK AT THE ODDS OF A CUT, RATHER, A HIKE HAPPENING THIS OCTOBER. WE CAN SEE IT’S 40% ROUGHLY SPEAKING. HOW DOES THIS CHANGE THE CAPITAL FOR FED POLICY MAKERS? WE’VE HAD AN AMPLE SERVING OF FED SPEAK HERE OVER THE LAST FEW DAYS, AND THAT CONTINUES OVER THE REST OF THE WEEK. MIKE: THIS IS KIND OF AN UNUSUAL SITUATION, BECAUSE THE NEXT FED MEETING IS OCTOBER 28, SO IT’S LIKE FIVE DAYS BEFORE THE MIDTERM ELECTION. SO ORDINARILY YOU WOULD THINK THE FED WOULD NOT WANT TO GET INVOLVED IN THAT OR MIXED UP IN THAT BY RAISING RATES. BUT IT ALL DEPENDS ON THE INFLATION NUMBERS WE GET BETWEEN NOW AND THEN. WE’LL GET C.P.I., P.P.I., SO I DON’T THINK I WOULD TRUST THE FED FUNDS FUTURES AT THIS POINT. THEY CHANGE ALL THE TIME WITH THE LATEST DATA. AND THAT COULD EASILY CHANGE IF WE GET A HOT INFLATION REPORT. IF NOT, THEY MAY HOLD OFF. BUT YOU HEARD JOHN WILLIAMS, THE VICE CHAIR OF THE OPEN MARKET COMMITTEE, SAY YESTERDAY HE THOUGHT ANOTHER RISE WOULD BE JUSTIFIED BEFORE THE END OF THE YEAR, SO THEY COULD DO THAT IN DECEMBER. TODAY’S NUMBERS DIDN’T DISSUADE ANYBODY. YOU LOOK AT THE OTHER NUMBERS WE GOT TODAY, CONSUMER SPENDING WAS AT THE HIGHEST IN YEARS IN AUGUST, UP .9%. WE GOT A 90,000 JOB FIGURE FOR PRIVATE SECTOR JOBS FROM ADP. WE’LL SEE WHAT HAPPENS ON FRIDAY WITH THE BLS NUMBERS. BUT IT DOES SEEM THAT THE ECONOMY IS GOING STRONG, IF NOT EXPANDING. THAT IS ALWAYS THE POSSIBILITY OF MORE INFLATION. DAVID: I WANT TO BRING IN THE CHIEF ECONOMIST THERE. GREAT TO SPEAK WITH YOU AS ALWAYS. I WANT YOU TO PICK UP ON WHAT MIKE WAS TALKING ABOUT, AND THAT IS THE EVIDENT RESILIENCE, CONTINUED RESILIENCE OF THE CONSUMER IN THE UNITED STATES. I THINK IT’S FLUMMOXED A LOT OF PEOPLE, AND I WONDER IF YOU LOOK AT THE BROADER COMPLEMENT OF DATA, IF THERE’S ANYTHING THAT GIVES YOU CAUSE FOR CONCERN ABOUT THE CONSUMER’S ABILITY TO WITHSTAND THE UNCERTAINTY AND DIFFICULTIES THEY’VE BEEN FACING OVER THE LAST FEW MONTHS. >> I THINK THE UNDERLYING STORYLINE, AS MIKE LAID OUT, IS THE RESILIENCE OF THE U.S. CONSUMER, DESPITE ELEVATED ENERGY PRICES. THE CONSUMER IS STILL OUT IN THE MARKETPLACE SPENDING ON GOODS AND SERVICES. NOW, DOING SO AT A SLIGHTER SLOWER PACE, AND WE ARE SEEING INCREASED VOLATILITY IN THE SPENDING PATTERNS MONTH TO MONTH. BUT OVERALL, THE GROWTH IN SPENDING IS QUITE IMPRESSIVE, WELL ABOVE WHAT MANY ECONOMISTS ANTICIPATED THE CONSUMER WOULD BE ABLE TO MAINTAIN GIVEN THIS UPSIDE GROWTH IN ENERGY COSTS. BUT TO YOUR QUESTION, IS THERE ANYTHING THAT GIVES ME PAUSE? I WOULD SAY THE ONE THING THAT DOES COME TO MIND IS THE DIFFERENTIAL IN THE GROWTH THAT WE ARE SEEING BETWEEN INCOME AND CONSUMPTION. CONSUMERS CONTINUING TO OUTPACE THE GROWTH WE’RE SEEING ON THE WAGE SIDE. NOW, THAT HAS BEEN SUPPLEMENTED IN SOME DEGREES WITH SAVINGS, BUY NOW PAY LATER OPTIONS, TAPPING INTO 401(K)’S WITH HARDSHIP WITHDRAWALS, UP DOUBLE DIGITS IN A SHORT PERIOD OF TIME. WE ALSO SEE AN INTERGENERATIONAL WEALTH TRANSFER, SO MEANING MONEY COMING DOWN FROM THE OLDER GENERATIONS, MOM AND DAD, GRANDMA AND GRANDPA. THAT’S BEEN HELPING TO FILL THAT GAP. BUT WE WON’T BE ABLE TO NECESSARILY INDEFINITELY SUSTAIN THAT GAP. AS WE CONTINUE TO SHOULDER HIGHER ENERGY PRICES, THAT WILL PUT DOWNWARD PRESSURE ON THE CONSUMER, AND IF SUSTAINED, EVENT WE’LL FURTHER SLOW AND POTENTIALLY CHOKE OFF UPSIDE POTENTIAL GROWTH ON THE PART OF THE CONSUMER. CHRISTINA: YOU MENTIONED ENERGY PRICES. WHEN YOU TALK ABOUT SOME OF THE STRESS ORS, I AM GOING TO GO BACK TO MORTGAGE RATES, BECAUSE HOLY SMOKES, I MEAN, WHEN YOU’RE LOOKING AT THIS, THOSE ARE BIG FACTORS. UNLESS I’M BENEFITING FROM THAT GENERATIONAL WEALTH TRANSFER AND INHERENTING A HOME, A LOT OF PEOPLE, THIS IS JUST BECOMING INAS ACCEPTABLIBLE. WHAT DOES IT MEAN FOR THE ECONOMY, HAVING THOSE RATES SO HIGH? HOMEOWNERSHIP FACTORS INTO SO MANY OTHER THINGS, SUCH A HUGE FACTOR IN PUTTING THAT MONEY IN OTHER PLACES. >> WELL, IT ABSOLUTELY DOES. AND WHAT WE SEE, JUST LIKE HIGHER ENERGY PRICES, WHEN YOU’RE DIVERTING MORE TO SHELTER COSTS OR FILLING UP THE FAMILY CAR, THAT MEANS THAT YOU’RE DIVERTING BILLIONS OF DOLLARS IN SPENDING ELSEWHERE. SO INSTEAD OF MAKING THAT DECISION TO GO OUT TO DINNER, OR TAKE A FAMILY VACATION, NOW YOU’RE SAVING A BIT MORE TO HOPEFULLY MAKE THAT DOWN PAYMENT OR MAKE THAT MONTHLY PURCHASE, THAT MONTHLY MORTGAGE PAYMENT. OR AGAIN, JUST FILLING UP THE FAMILY CAR. SO WHAT WE’RE SEEING IS THAT CONSUMERS ARE DRAMATICALLY SHIFTING FUNDS AWAY FROM DISCRETIONARY AREAS INTO THOSE VERY VITAL COMPONENTS OF SPENDING MONTH TO MONTH. DAVID: I WANT TO ASK ABOUT CORE P.C.E. THE FAVORITE OF THE FEDERAL RESERVE, YOU’RE STRIPPING OUT ENERGY, YOU’RE STRIPPING OUT FOOD. AND YET IN THIS MOMENT, THOSE TWO THINGS ARE SO CRITICAL TO OUR UNDERSTANDING OF HOW THIS ECONOMY IS DOING, AND AS THIS WAR DRAGS ON, IT’S HAD A SIGNIFICANT IMPACT ON BOTH THINGS. WHAT SHOULD WE MAKE OF THAT? THE CAPACITY OF THIS NUMBER, OF THESE DATA, TO GIVE US A FULL SENSE OF, YES, THE ECONOMY IS DOING BROADLY, BUT THE INFLATION PICTURE IS WELL. MIKE: CONSUMER CONFIDENCE HAS CRATERED, AND THAT’S LARGELY BALLS OF THE INFLATION NUMBERS FOR FOOD AND ENERGY. THOSE MATTER TO THE PUBLIC. I WAS JUST OUT IN SOUTHERN ILLINOIS YESTERDAY, AND GASOLINE, FOOD PRICES, AND FOR THE FARMERS, DEESE HE FEEL PRICES, THEY WERE THE BIG ISSUES OUT THERE. AND THAT’S, THAT GIVES YOU SOME PAUSE, BECAUSE YOU THINK THAT MIGHT CAUSE PEOPLE TO STOP SPENDING, BUT IT DIDN’T. SO THE FED HAS TO BALANCE THAT ASPECT OF IT. BUT WHEN YOU LOOK AT THE UNDER THE HOOD SERVICES PRICES, DIESEL GETS INTO THAT AS WELL. PETROLEUM GETS INTO THAT AS WELL. AND WE DO SEE SOME CONTINUED PRICE PRESSURES ON THE SERVICE INDUSTRIES. WE SAW CORE SERVICE INDUSTRIES EX-HOUSING AND ENERGY, UP BY .4 LAST MONTH. THAT WAS UP FROM JULY’S .1. SO THERE ARE STILL UNDERLYING PRESSURES, SO THE HAWKS STILL HAVE SOMETHING TO TALK ABOUT. CHRISTINA: WE TALK ABOUT CONSUMER CONFIDENCE AND HOW PEOPLE FEEL VERSUS HOW THE ECONOMY LOOKS ON PAPER. I’M WONDERING HOW YOU TAKE THE FED’S ASSESSMENT OF THE ECONOMY FROM A FEW WEEKS AGO. DOES IT STILL STAND? IS IT STILL SOLID? >> I DO THINK FROM A 10,000-FOOT VIEW, WHEN WE TALK ABOUT AN ECONOMY GROWING OVER 2%, REFLECTING THIS MORNING’S UPWARD REVISION, AND A CONSUMER STILL SPENDING AROUND 6%, THAT IS RELATIVELY SOLID. THAT BEING SAID, THE FED DID ACKNOWLEDGE THE ELEVATED LEVEL OF INFLATION AND THE UNCERTAINTY THAT ELEVATED INFLATION AND PERSISTENT PRICE PRESSURES WOULD PLAY ON UNDERMINING LONGER RUN GROWTH. SO THAT REALLY IS THE QUESTION. AS MIKE POINTED OUT, WE HAVE A NUMBER OF DIFFERENT ITERATIONS OF INFLATION TO GIVE US A BETTER UNDERSTANDING OF HOW THAT’S GOING TO HIT THE ECONOMY. HEADLINE INFLATION, AS MENTIONED, INCLUDES THE CORE COMPONENTS OF FOOD AND ENERGY, WHICH WE AS CONSUMERS PAY FOR ON A DAY-TO-DAY BASIS. BUT THE FED NEEDS TO OFTEN LOOK THROUGH SOME OF THOSE TEMPORARY CHANGES, SOME OF THAT TRANSITORY VOLATILITY. SO THEY FOCUS ON THE SUPER CORE. WE’RE LOOKING AT SERVICES EXCLUDING HOUSING, WHICH AGAIN AS MENTIONED, THIS CONTINUED TO ACCELERATE, EVEN WITH THAT WELCOME STABLIZATION THAT WE SAW BOTH IN THE HEADLINE AND THE CORE. SO FOR THE FED, THERE’S STILL A LOT OF PRICE PRESSURES, NOT ONLY EMBEDDED ALREADY IN THE ECONOMY, BUT STILL COMING DOWN THE PIPELINE THAT THEY’RE GOING TO HAVE TO ADJUST MONETARY POLICY TO FIGHT AGAINST. SO ONE CONCILIATORY RATE HIKE IN SEPTEMBER IS CERTAINLY NOT GOING TO BE ENOUGH TO REIN IN PRICE PRESSURES AND RETURN US BACK TO PRICE STABILITY, WHICH CHAIRMAN WARSH CONTINUES TO SAY IS A FOCUS FOR THIS FED. DAVID: MIKE, I’D LOVE IF YOU COULD GIVE US A PREVIEW OF WHAT WE CAN EXPECT ON PRICES SHIPPED TO THE OTHER SIDE OF THE FED’S MANDATE. WE TALKED A LOT ABOUT INFLATION. WHEN IT COMES TO THE JOBS REPORT, WHAT ARE YOU LOOKING FOR, HEADLINE LEVEL, AND WHAT AT A MORGAN LAWYER LEVEL ARE YOU GOING TO BE PAYING ATTENTION TO? MIKE: WE’RE NOT EXPECTING A WHOLE LOT OF CHANGE. IT SHOULD LOOK MUCH THE SAME AS WHAT WE SAW IN THE MONTH OF AUGUST WITH AROUND 100,000 JOBS CREATED AND THE UNEMPLOYMENT RATE, ACCORDING TO CONSENSUS, ISN’T GOING TO CHANGE AT 4.1%. WHAT WILL BE INTERESTING TO SEE IS IF WE SEE A CHANGE IN THE LABOR FORCE UP OR DOWN. THAT’S BOUNCED BACK AND FORTH, AND THAT HAS AN IMPACT ON THE UNEMPLOYMENT RATE. THE FED HASN’T BEEN WORRIED ABOUT WHAT PEOPLE ARE EARNING. AVERAGE HOURLY EARNINGS HAVE BEEN FALLING. SO WE’LL SEE IF THAT TURNS AROUND. IF THERE’S A SHORTAGE OF EMPLOYEES, THAT SHOULD MEAN HIGHER WAGES, BUT WE HAVEN’T SEEN THAT YET. CHRISTINA: I WANT TO ASK YOU ABOUT THE FED REPORT RELEASED TODAY. THEY DUG INTO WHAT WE’VE LEARNED ABOUT THIS $2.4 BILLION REPUBLICAN OVATION. WE’VE BEEN HEARING ABOUT IT FOR A LONG TIME. I KNOW I WORKED IN THE STATE DEPARTMENT FOR YEARS, AND IT SEEMS LIKE IT’S BEEN UNDER CONSTRUCTION ALMOST THE ENTIRE TIME I’VE BEEN IN WASHINGTON. OBVIOUSLY A HUGE POINT OF CONTENTION WITH THE PRESIDENT IN THE PAST. WHAT DID WE LEARN FROM THIS REPORT? MIKE: A YEAR AGO THE PRESIDENT THREATENED TO FIRE JAY POWELL BECAUSE HE SAID THE PRICE OVERRUNS SHOWED COMPLETE MISMANAGEMENT, HINTED AT MAYBE THERE WAS SOME IRREGULARITIES. CHARGING JAY POWELL DIDN’T WORK OUT. TODAY THE FEDERAL RESERVE BOARD WAS CLEARED OF ANY CRIMINALITY, SAYING AT NO POINT DURING OUR EVALUATION DID WE FIND REASONABLE GROUNDS TO BELIEVE THAT A VIOLATION OF FEDERAL CRIMINAL LAW HAD OCCURRED. SO THEY’RE NOT REFERRING ANYTHING TO THE A.G., BUT THAT DOESN’T MEAN THE BOARD IS OFF THE HOOK. THEY FOUND A LOT OF MISMANAGEMENT. THE BOARD DIDN’T SET A OVERALL COST CEILING OR EXECUTE A MANAGER AT RISK CONTRACT, WHICH WOULD PUT THE CONTRACTOR AT RISK FOR OVERRUNS. THEY TINT GET A GUARANTEED MINIMUM PRICE, AND THEY DIDN’T GET A CONSTRUCTION COST ESTIMATE UNTIL 3 1/2 YEARS INTO THE PROJECT. THEY DIDN’T MANAGE IT EFFECTIVELY ON A DAY-TO-DAY BASIS. SO THE I.G. FOUND A LOT OF ISSUES WITH THE WAY THE FED MANAGED THIS, AND IT’S IMPORTANT TO NOTE THAT EVERY OTHER GOVERNMENT BUILDING IN WASHINGTON IT WOULD BE HANDLED BY THE GOVERNMENT SERVICES ADMINISTRATION. IN THIS CASE, IT’S NOT, BALLS THE FEDERAL RESERVE ACT GIVES THE FED CONTROL OVER ITS OWN BUILDINGS, AND THEY APPARENTLY DECIDED THEY WERE QUALIFIED TO DO IT. THE I.G. FOUND OTHERWISE. AND TODAY KEVIN WARSH SAID WE’RE APPOINTING THE G.S.A. TO RUN THE REST OF THIS RENOVATION. CHRISTINA: YEAH, I THINK I WOULD HAVE DONE THE SAME THING IN HIS POSITION. MICHAEL MCKEE IS OUR NATIONAL ECONOMICS AND POLICY CORRESPONDENT FOR BLOOMBERG TV AND RADIO. AND THE CHIEF ECONOMIST AT TIDAL INSTITUTE. THANK YOU SO MUCH FOR JOINING US. WE APPRECIATE YOUR INSIGHT. DAVID: SCRUTINY CONTINUES TO MOUNT ON THE FEDERAL RESERVE. AS WE WERE GETTING TO BOTH OF THEM THERE, THIS IS SUCH A HUGE WEEK FOR ECONOMIC DATA, YET ALL THE WHILE IT SEEMS LIKE OUR UNDERSTANDING IS THINGS ARE VERY MUCH STATUS QUO. CHRISTINA: AND IT JUST KEEPS ON TRUCKING. THIS IS SOMETHING YOU KNOW IS A QUESTION I ASK CONSTANTLY. I FIND A LOT OF TIMES THAT SOMEONE WHO COME FROM THE POLICY SIDE OF THE ECONOMIC DATA DOESN’T ALWAYS RELATE IN A WAY THAT IT SEEMS TO THE AVERAGE PERSON TO THE REALITY ON THE GROUND. BUT I THINK YOU’RE SEEING THE MOMENTUM FROM STRONG INDICATORS, STRONG ECONOMIC INDICATORS ARE JUST KIND OF PUSHING IT FORWARD. WITH THIS OPTIMISM YOU KEEP TALKING ABOUT. DAVID: BUT I THINK AS MIKE BROUGHT UP, THERE IS A GAP BETWEEN SENTIMENT AND PEOPLE ACROSS THIS FEELING ARE FEELING WHAT’S REPRESENTED IN THE HARD DATA. THE GAP BETWEEN SENTIMENT DATA AND HARD DATA SEEMS TO BE GETTING WIDER AND WIDER. THIS IS "BLOOMBERG BUSINESS WEEK DAILY" ON BLOOMBERG RADIO AND TELEVISION. CAROL AND TIM ON THEIR WAY TO LOS ANGELES FOR THE SCREEN TIME SUMMIT. AS WE LOOK AHEAD TO THE NEXT SELLING AM, ON TRADING 24 HOURS A DAY. ♪ CHARLIE: IT’S 2:21 ON WALL STREET. WE CHECK MARKETS ALL TAKE LONG HERE AT BLOOMBERG. THE DOW LOWER. S&P AND NASDAQ ARE BOTH ADVANCING. FINAL DAY OF THE QUARTER, THE 30-YEAR, THE HIGHEST SINCE 2002. MONEY MARKETS NOW SEE LESS THAN 40% CHANCE OF A FED RATE HIKE NEXT MONTH. TRADERS DRIVING STOCKS HIGHER AFTER SLOWER THAN ANTICIPATED INFLATION DATA, REINFORCED BETS THAT THE FED IS GOING TO HOLD OFF ON RAISING RATES IN OCTOBER. THE S&P AT 7696, UP 25. WE’RE OFF SESSION HIGHS, UP BY .3%. THE DOW DOES REMAIN LOWER, DOWN .4%, LOWER BY 186 POINTS. NASDAQ UP 231. FOR THE NASDAQ COMPOSITE INDEX, A GAIN OF .9%. THE SOX, THE PHILADELPHIA SEMICONDUCTOR INDEX, IS TRADING LITTLE CHANGED. THE V.I.X. HOLDING BELOW 16. WALL STREET’S SO-CALLED FEAR GAUGE, WE HAVE GOT THE TWO-YEAR, 4.88%. RIGHT NOW, THE FIVE-YEAR AT 5.08%. THE 10-YEAR, 5.29%. AND THE 30-YEAR, 5.64%. RIGHT NOW, SPOT GOLD IS LOWER, 41-50 AN OUNCE. A BARREL UP BY 1.2%. BARREL OF BRENT, 10363, UP BY 1%. MATTEL C.E.O. IS LEAVING THE COMPANY FOR ANOTHER OPPORTUNITY. HE’LL BE REPLACED BY CONDE NAST C.E.O. ROGER LYNCH. MATTEL SHARES DOWN BY 3.7%. AND MORGAN STANLEY BANK ANALYST BETSY GRASICK, WHOSE CAREER HAS SPANNED FOUR DECADES, PLANS TO RETIRE EARLY NEXT YEAR. 40 YEARS AT MORGAN STANLEY. MORGAN STANLEY SHARES DOWN BY 2.1%. I’M CHARLIE PELLETT. DAVID GURA, CHRISTINA RUFFINI, THAT IS A BLOOMBERG BUSINESS FLASH. DAVID: I BEFORE YOU YOU GOOD NEWS -- I BRING YOU GOOD NEWS IF YOU’RE A VIEWER OF THE WEEKEND. IT LOOKS LIKE WE ARE HEADED TO AN ERA OF 24/7 TRADING IN THE QUEST MARKETS. ROBIN HOOD PLANNING TO OFFER SATURDAY AND SUNDAY TRADING FOR U.S. MARKETS WITH THE COOPERATION OF BRUCE MARKETS, SUBJECT TO REGULATORY REVIEW. CHRISTINA: THAT’S RIGHT. THE C.E.O. OF BRUCE MARKETS JOINS US NOW, ALONG WITH HERE IN STUDIO. ALL RIGHT, BRUCE, WHAT IS THE MARKET FOR THIS? DO WE REALLY HAVE TO HAVE THIS? CAN’T WE JUST SLOW DOWN AND HAVE -- JASON, I’M SORRY. CAN’T WE JUST HAVE SOME TRADING HOURS WHERE WE’RE NOT TRADING? DON’T WE NEED A BREAK? WHAT IS THE MARKET FOR THIS? IS THERE REALLY A NEED OR A DESIRE? >> THE DESIRE IS HERE. THE DEMAND IS HEREMENT WE’VE SEEN OUR MARKETS EVOLVE OVER CENTURIES AND DECADES, GOING FROM A TIME WHERE THERE WERE CALL ACTIONS, ONCE, TWICE A DAY, TO WHERE WE ARE NOW, LOOKING AT CONTINUOUS TRADING, FIVE DAYS A WEEK, AND NOW MOVING INTO A 24/7 ENVIRONMENT. >> JASON, YOU’RE AT THE INVESTOR CONFERENCE WHERE THIS WAS LAUNCHED. WHAT ARE TRADERS TELLING YOU ABOUT THIS PRODUCT, ABOUT THE IDEA OF BEING ABLE TO TRADE ON SATURDAY AND SUNDAY? >> I MEAN, THERE’S GENUINE EXCITEMENT. THERE’S A LOT OF INNOVATION GOING ON RIGHT NOW. CERTAINLY ON THE EQUITIES SIDE. WE ARE SEEING EQUITIES MAINTAIN THEMSELVES AT THE FOREFRONT OF OUR CAPITAL MARKETS, REALLY SET I STANDARDS FOR AROUND THE GLOBE. THE DEMAND -- >> GO AHEAD. >> OF A QUESTION FOR YOU, AND THE ISSUES OF DOING THIS, AND I KNOW THAT WE HAD THEM IN THE 1940’S FOR A TIME, AND THE NEW YORK MARKET SAID IT WENT AWAY. WHAT ARE THE CHALLENGES THAT MARKETS FACE IN IMPLEMENTING THIS? I KNOW OF, I WOULD IMAGINE, LOWER VOLUME IN THE EARLY MORNING, OR THE LATE EVENING. WHAT HAVE YOU HAD TO NAVIGATE AS YOU TRY TO PLAN THE WAY IN WHICH THIS IS GOING TO PROCEED SUBJECT TO APPROVAL BY REGULATORS? >> IT’S A LOT OF THINGS COMING TOGETHER. IT’S NOT JUST TURNING THE LIGHTS ON FOR ANOTHER TWO NIGHTS. WE WORK CLOSELY WITH OUR REGULATORS. WE CERTAINLY WORK CLOSELY WITH OUR CLEARING PARTNER AS WE MAKE SURE THAT WE HAVE A RESILIENT INFRASTRUCTURE IN PLACE TO DELIVER ON WHAT WE SET OUT IN THE BEGINNING TO DO, WHICH IS HAVE A CONFIDENT SOLUTION FROM A TECHNOLOGY PERSPECTIVE. WE PARTNERED WITH NASDAQ DELIVERING ONE OF THE MOST MATCHING ENGINES OUT THERE TO PROVIDE THE CONSISTENCY AND RELIABILITY, MAINTAIN THAT CUSTOMER CONFIDENCE THROUGHOUT. YOU HAVE TO PULL ALL THESE PIECES TOGETHER. THE TECHNOLOGY IS THERE. THE INFRASTRUCTURE IS THERE. BUT PULLING IT ALL TOGETHER, MAKE SURE YOU’VE GOT PROPER STAFFING AND SCALABILITY TO ENSURE THAT THE STANDARDS WE SET FOR THE CORE SESSION ACROSS OUR MARKETS ARE DELIVERED ULTIMATELY THROUGHOUT THE WEEKEND AS WELL. IT. DAVID: WE’RE GOING TO PULL ALL THE PIECES TOGETHER. IT IS COMPLICATED SOUNDING. MAYBE YOU COULD TALK ABOUT THE MAGNITUDE OF THIS EFFORT. >> YEAH, IT’S DEFINITELY SOMETHING THAT’S NEVER BEEN DONE BEFORE AT THIS SCALE. I THINK ONE OF THE BIG CHALLENGES, AS JASON JUST MENTIONED, IS HAVING PEOPLE AROUND AT THE WEEKEND. YES, MARKETS ARE VERY ELECTRONIC, BUT YOU STILL NEED A RISK MANAGER. IF YOU’RE A MARKET MAKER, YOU STILL NEED TO BE PEOPLE TRADING. IN THE CRYPTO MARKETS, WE’VE HAD PEOPLE TRADING 24/7. CHRISTINA: RIGHT, IT’S ONE OF THE FEW LIVE MARKET DATAS WE GET ON THE WEEKEND SHOW. >> SO THIS IS ALL WITH THE MARKET STRUCTURE PULLING INTO THE EXISTING EQUITY MARKETS. AND I THINK SOME OF THE CRYPTO GUYS MIGHT HAVE A BIT OF AN ADVANTAGE TRADING AT WEEKEND, BECAUSE THEY’RE USED TO IT. WHAT DO YOU THINK, JASON? >> THE DEMAND IS WHERE IT STARTS. IF YOU THINK ABOUT THINGS FROM A RESTAURANT, THE RESTAURANT, IF THEY’VE GOT DEMAND ON SUNDAY, THEY’RE GOING TO HAVE THAT OPEN, THEY’RE GOING TO HAVE A WAIT STAFF TO SUPPORT IT. SAME THING HOLDS TRUE IN OUR MARKETS. THE TECHNOLOGY IS IN PLACE. KEEPING THINGS RUNNING IS A MATTER OF TIME AND SUPPORT. I THINK THE MARKET IS RESPONDING WELL TO THAT. TO YOUR POINT, THERE’S BEEN A MODEL PUT OUT THERE. WE’VE GOT A FUTURE WORLD THAT IS ON A 24/7 BASIS NEARLY TODAY. I THINK WHAT WE’RE GOING TO SEE IS THE BENEFITS OF HAVING ALL THESE DIFFERENT ASSET CLASSES COEXIST IN A BROAD MARKET ECOSYSTEM THAT PROVIDES OPTIONALITY, PROVIDES FLEXIBILITY, ADDRESSES HISTORICAL HIGH LEVELS OF INTEREST IN FOREIGN INVESTORS IN OUR U.S. EQUITY MARKETS, AND ULTIMATELY CREATES THIS ROBUST ECOSYSTEM THAT CONTINUES TO PROPEL INVESTMENT BOTH ON THE RETAIL SIDE, AS WELL AS THE INSTITUTIONAL SIDE AS WELL. CHRISTINA: JASON, I WANT TO START WITH YOU, I WAS READING EARLIER THIS WEEK THAT ONE OF THE CHALLENGES WITH IMPLEMENTING THIS COULD POSSIBLY BE JUST ON THE BACK-END TECHNOLOGY SIDE. RIGHT NOW THE MARKET BREAKS MAKE IT MUCH EASIER AND MORE CONSISTENT FOR YOU TO GO INTO THESE SYSTEMS, UPDATE THINGS, YOU SCALE CAPACITY, DO ALL THE NUTS AND BOLTS THAT ALLOW THE TRADING AT THE CURRENT PACE. WHAT ARE SOME OF THE CHALLENGES JUST ON THE TECHNICAL SIDE OF IMPLEMENTING THIS, AND IS IT ANYTHING YOU’RE CONCERNED ABOUT? >> RIGHT, SO IT STARTS WITH THE MATCHING ENGINE AND MAKING SURE THAT WE CAN RUN THAT OVER THE WEEKEND AND HAVE PROPER SUPPORT, AND ALL THE RAILS IN PLACE THAT DEFINE OUR EQUITY MARKETS. THE SECOND PIECE IS ON THE CLEARING SIDE OF BACK OFFICE COMPONENTS. WE WORK CLOSELY WITH APEX SOLUTIONS AND APEX CLEARING TO ENSURE THAT ALL OF OUR TRADES FOR OUR SUBSCRIBERS HERE IN THE U.S. ARE LOCKED IN AS SOON AS POSSIBLE. THEY EXTENDED THEIR HOURS, BUT AGAIN, IN RESPONSE TO THE DEMAND OF A GROWING MARKET. WE WATCHED THE SHEER VOLUME ACROSS THREE, WE THINK OF THEM AS OVERNIGHT TRADE SESSION, GO FROM ROUGHLY 22 MILLION SHARES TO ABOUT 109 MILLION SHARES PER OVERNIGHT SESSION. IT’S ALMOST A 400% INCREASE. THE INFRASTRUCTURE IS IN PLACE, NOT ONLY ON THE TRADING SIDE, BUT ON THE BACK SIDE TO SUPPORT THAT, EXTENDING THAT TO THE WEEKEND IS NATURAL AS THE DEMAND CONTINUES TO GROW AND MARKET-MOVING NEWS DOESN’T STOP. >> I THINK THAT’S PART OF THE PROBLEM, ISN’T IT? IF YOU THINK BACK TO THE SILICON VALLEY BANK CRISIS, THAT WAS A SITUATION A COUPLE OF YEARS AGO WHERE A BANK HAD A HUGE RUN ON IT OVER THE WEEKEND, AND THE FDIC, THE FEDERAL AGENCY THAT STEPS IN TO ELSE COULD YOU BANKS, WAS ABLE TO CLOSE IT DOWN OVER THE A WEEKEND. WHEN THE BANK’S SHARE PRICE WASN’T TRADING, AND YOU OPENED THE SHARE PRICE IS ZERO AND PEOPLE HAVEN’T LOST THEIR MONEY, BECAUSE IF WE HAD THESE FAIL SAFES. AND ONE OF THE FAIL SAFES IS WHERE YOU HAVE A WEEKEND WHERE YOU CAN TAKE A BREAK. LEHMAN BROTHERS, IT WAS THE SAME THING. I THINK THERE IS A BIG STRUCTURAL PROBLEM WITH JUST HAVING EVERYTHING TRADING ALL THE TIME, WHICH IS SOMETIMES REGULATORS, THE FED, THE FDIC DOES NEED TO STEP IN DURING AN EMERGENCY, AND THE CURRENT SYSTEM IS QUITE WELL SET UP FOR THAT. IT’S GOING TO BE VERY INTERESTING TO SEE HOW THAT WORKS IN A WORLD WHERE TRADING NEVER STOPS. DAVID: SUBJECT TO REGULATORY APPROVAL, THE BILL SAYS. LET ME ASK YOU ABOUT THE REGULATORS AND THEIR CAPACITY TO DEAL WITH THIS, AT A TIME WHEN WE TALK ABOUT HOW UNDERFUNDED OR LOW MANNED A LOT OF THESE REGULATORS ARE. HOW MUCH CONCERN IS THERE BROADLY WITHIN THE SYSTEM ABOUT THE REGULATORY CAPACITY TO DEAL WITH THE MARKET THAT WOULD BE OPEN 24/7? >> WELL, THE SECURITIES AND EXCHANGE COMMISSION IS EXTREMELY ENTHUSIASTIC ABOUT THESE PROPOSALS. THERE WAS A RECENT ROUNDTABLE THEY DID, AND IT’S VERY COMFORTABLE THEY HAVE THE RESOURCES THEY NEED. I DO THINK THERE IS AN INHERENT PROBLEM, WHICH IS CIVIL SERVANTS DON’T TEND TO WORK ON THE WEEKEND. ANYTHING DOES GO WRONG, YEAH, WE MIGHT BE, AND ALSO, YOU KNOW, FINANCIAL JOURNALISTS DON’T DO THAT EITHER. >> NO COMMENT. NO COMMENT ON THAT MATTER. CHRISTINA: WE HAVE LOVELY COLLEAGUES THAT COME ON OUR SHOW. WE APPRECIATE EVERY SINGLE ONE OF THEM. JASON, HOW MUCH OF THE DESIRE DO YOU THINK IS COMING FROM THE FACT THAT OVERSEAS MARKETS ARE ACCESSIBLE AT OFF HOURS, AND HOW MUCH OF THAT ARE YOU TRYING TO CAPTURE WITH THESE EXPANDING HOURS? >> IT’S A LARGE PART OF THE MARKET. A LOT OF THIS IS POWERED BY THE REDUCED BARRIERS OF ENTRIES THAT HAVE BEEN CREATED BY ROBIN HOOD AND OTHER BROKERS IN THIS SPACE THROUGH THE TECHNOLOGY PLATFORMS THAT THEY OFFER. WE WORK CLOSELY WITH BROKERS AROUND THE GLOBE, DISTRIBUTING DATA AND MAKING SURE THAT THERE’S PROPER RAILS IN PLACE TO CREATE A VERY CONFIDENT MARKET FOR OVERNIGHT TRADING AND NOW WEEKEND TRADING TO CONTINUE TO GROW. DAVID: MAYBE WE COULD END BY MARKING THIS KIND OF CULTURAL MOMENT, AND JASON, I’LL TURN TO YOU ON THAT FIRST. IT WE HAVE A SCHEDULE IN PLACE, A TRADING DAY WE ALL KNOW, AND I WONDER WHAT YOU MAKE OF THIS MOMENT OF TRANSITION, HOW YOU THINK ABOUT THE MOVE AWAY FROM SOMETHING WE’VE HAD IN PLACE HERE IN THE UNITED STATES FOR SO MANY DECADES NOW, WHAT IT INDICATES TO YOU ABOUT WHERE INVESTING IS HEADED AND THE APPETITE OF INVESTORS TO GET INVOLVED IN THIS WAY. >> YEAH, SO I SPOKE ABOUT THIS EARLIER. IT’S EXCITING. IT’S A CONTINUING OF A THEME OF OURS AND ACCESS CONTINUING TO EVOLVE WITH DEMAND. IF WE GO BACK TO THE 1700’S, THE BIRTH OF THE AGREEMENT, WE WATCHED TRADING EVOLVE INTO CONTINUOUS TRADING IN THE 1800’S, AND ULTIMATELY FOR A PERIOD OF TIME OFFERING THE TWO-HOUR SESSION ON SATURDAY. AS TECHNOLOGY WASN’T THERE, WE WATCHED THE MARKET ADJUST, TO YOUR EARLIER POINT. IT’S I DRIVING FACTOR THAT NEEDED THE TECHNOLOGY TO CATCH UP. AND AS IT DID, WASATCH THE ESTABLISHMENT OF THE FIVE-DAY-TRADING WEEK THAT WE KNOW AND EVENTUALLY THE EXTENSION OF A CORE SESSION OF 9:30 TO 4:00 TO INCLUDE A PREAND POST MARKET, AND ANYWAY 2024, SOON TO BE A 2027 OFFERING AS WELL. >> DO YOU EXPECT CHANGES TO FOLLOW? YOU KNOW, IN DECEMBER -- DO YOU THINK EXCHANGES WILL FOLLOW? >> YES, WE’VE SEEN THIS PLAY OUT WITH THE 2024-2025 MODEL. ULTIMATELY THERE WAS EVIDENCE OF DEMAND, AND THE MARKET RESPONDED. I MEANINGED THE REGULARRERS TO. APPLY THEM FOR THE ROUNDTABLE THEY HOSTED. I WAS HAPPY TO BE THERE. CERTAINLY I EXPECT IT TO CONTINUE TO MODERNIZE AND MATURE. THE OVERALL PIE WILL CERTAINLY GROW, AND YEAH, IT’S AN EXCITING TIME. DAVID: JASON, THANK YOU VERY MUCH FOR JOINING US. OUR THANKS TO BERNARD AS WELL, OUR COLLEAGUE HERE AT BLOOMBERG NEWS. OUR WEEKEND LIKELY TOE GET MORE EVENTUALLY, AND I WELCOME IT. I WELCOME HAVING SOME TRADING ON THE WEEKEND. WHEN WHEN WE COME BACK. CHARLIE: IT’S 2:40 ON WALL STREET. WE CHECK MARKETS ALL DAY LONG. ONE HOUR, 20 MINUTES TO GO UNTIL WE WRAP UP THE MONTH AND THE QUARTER. U.S. STOCKS TRADING MIXED RIGHT NOW. THE DOW LOWER. S&P 100 INDEX ADVANCING. 30-YEAR AT THE HIGHEST SINCE 2002. RIGHT NOW S&P UP 26 TO 7697. THAT’S A GAIN OF .3%. SLOWER THAN ANTICIPATED INFLATION DATA REINFORCING BETS THAT THE FED WILL HOLD OFF ON RAISING RATES IN OCTOBER. THE DOW DOWN 182, A DROP OF .4%. NASDAQ HIGHER BY .8%. NASDAQ 100 UP .7%. TWO-YEAR, 4.88%. THE FIVE-YEAR, 5.08%. THE 10-YEAR, 5.29%. THE 30-YEAR GETTING A LOT OF ATTENTION, AT 5.63%. GOLD DOWN $28 AN OUNCE TO $41.53. AN ADVANCE FOR CRUDE, W.T.I. UP 1.6%. BRENT, 103.50, UP BY .9%. MODERNA SHARES FALLING THE MOST IN A MONTH AS A CITIGROUP ANALYST RECOMMENDED SELLING THE STOCK, SAYING ITS CURRENT VALUATION IS "UNJUSTIFIABLE" FOLLOWING A RALLY. MODERNEYESHADES DOWN BY 5%. ELI LILLYLESS A NEW DRUG COMBINATION HELPED PEOPLE WITH DIABETES LOSE AS MUCH AS 23% OF THEIR WEIGHT, MORE THAN OTHER MEDICINES IN SIMILAR STUDIES, SUGGESTING IT HAS THE POTENTIAL TO BE THE DRUG MAKER’S STRONGEST OBESITY SHOT TO DATE. ELI LILLY SHARES DOWN BY 1.1%. AGAIN RECAPPING, S&P 500 INDEX UP BY .3%. CANNOT IGNORE MICRON, REPORTING AFTER THE CLOSE OF TRADING. MICRON UP BY .3%. FOR ON-DEMAND NEWS 24 HOURS A DAY, GO TO BLOOMBERG NEWS NOW, DOWNLOAD IT WHEREVER YOU GET YOUR PODCASTS. DAVID, CHRISTINA, THAT MY FRIENDS IS A BLOOMBERG BUSINESS FLASH. CHRISTINA: THANKS, CHARLIE. IF WE’RE MOVING TOWARDS 24-HOUR TRADING, DOES THAT MEAN THAT CHARLIE CAN START COMING IN ON THE WEEKEND? DAVID: BE WONDERFUL IF HE WOULD. I THINK HE’S ALREADY FLED THE STUDIO. CHRISTINA: NOW HE CAN TALK ABOUT FARMERS MARKETS, MEDIA MARKETS, GROCERY MARKETS. SO MANY MARKETS. WE COULD HAVE CHARLIE DO UPDATES ON THOSE. I’M GOING TO WORK ON THAT. DAVID: WE’RE GOING TO TALK ABOUT NONBANK LENDING, THAT LANDSCAPE WITH THE FONDER AND C.E.O. OF J. PALMER COLLECTIVE HERE IN NEW YORK. GREAT TO HAVE YOU WITH US. MAYBE I COULD START WITH THE BASIC QUESTION. WERE WE IN AN ELEVATOR OR RESTAURANT, I WOULD SAY WHAT IS THE FARMERS MARKET? HOW DO YOU DEFINE THE COMPANY? WHAT’S THE WORK YOU DO? >> THANK YOU SO MUCH FOR HAVING ME ON. I’M SO EXCITED TO BE HERE. WHAT WE DO IS WE’RE AN ASSET-BASED LENDER. MOST PEOPLE HAVE NEVER HEARD OF THAT BEFORE. ASSET-BASED LENDING IS A FORM OF DEBT FINANCING. WHAT WE DO IS WE LOOK TO OUR CLIENTS’ BALANCE SHEETS AM WE LOOK AT THE ASSETS ON THEIR BALANCE SHEETS. WE LEVERAGE THOSE. A LOT OF TIMES THERE’S A GAP IN THE SALES CYCLE MUCH THERE’S A CASH FLOW GAP BETWEEN BUY AND SELF SO WE LOOK TO FILL THAT WITH OUR LEVERAGE, AND THAT CREATES WORKING CAPITAL, WHICH ALLOWS OUR COMPANIES TO ACCELERATE GROWTH. IT’S ALL DEBT, AND IT HELPS OUR CLIENTS GROW. CHRISTINA: WHO DO YOU WORK WITH THE MOST? >> I ALWAYS SAY JUST IMAGINE YOU’RE WALKING THE AISLES OF WHOLE FOODS OR TRADER JOE’S OR YOUR LOCAL HEALTH AND WELLNESS SHOP, THOSE ARE OUR CLIENTS. SO FOR EXAMPLE, HIPPIES, YOU MIGHT KNOW THEM. DAVID: POPULAR SNACK GOOD. CHRISTINA: I’M A BIG FAN OF THOSE. >> THEY ARE AMAZING. MY KIDS ARE OBSESSED WITH THEM. CHRISTINA: WE HAVE THEM UPSTAIRS IN THE PANTRY. >> GOOD DECISION. WE’RE VERY COMMITTED TO FINANCING FEMALE-LED BUSINESSES. WE’RE SO EXCITED TO SHARE HERE TODAY FOR THE FIRST TIME EVER THAT WE JUST FINANCED SHAKIRA. YOU MAY HAVE HEARD OF HER. CHRISTINA: SHAKIRA, SHAKIRA. >> THAT’S RIGHT, SHE HAS THE MOST AMAZING HAIR CARE LINE, AND SHE NEEDED WORKING CAPITAL TO HELP ACCELERATE ITS GROWTH. SO WE FINANCED HER COMPANY. CHRISTINA: THAT’S REALLY INTERESTING. DO YOU FIND WOMEN-LED BUSINESSES HAVE A HARDER TIME SECURING CAPITAL? >> ABSOLUTELY. WE HAVE FOUND THAT. I FOUND THAT IN MY 20-YEAR CAREER. STATISTICS SHOW THAT, ABSOLUTELY. IT’S MUCH MORE DIFFICULT. IF A MAN AND WOMAN WALK INTO THE ROOM TO GET FINANCING, A WOMAN WILL RECEIVE 32% LESS THAT HER MALE COUNTER PART. AS A WOMAN IN FINANCE, I FEEL LIKE IT’S MY RESPONSIBILITY TO DO MY PART. IT’S NOT AT THE EXPENSE OF MEN, JUST MAKE SURE WE’RE FINDING ROCK STAR ENTREPRENEURS AND MAKE SURE THEY HAVE THEIR FAIR SHOT AS WELL. DAVID: HOW DO YOU FIND CLIENTS’ COMPANIES? HOW DO THEY FIND YOU? >> A LOT OF TIMES IT’S CLIENT REFERRALS, WHICH IS THE GREATEST REFERRAL YOU CAN GET WHEN A CLIENT IS LIKE, I LOVE WORKING WITH J.P.C., LET’S REFER THEM OVER. THOSE ARE THE BEST T. UNFORTUNATELY WE’RE ONE OF VERY FEW SHOPS REALLY FOCUSED ON MAKING FINANCING MORE ACCIDENT INCLUSIVE. WHEN THERE’S A WOMAN LOOKING FOR FINANCING, A LOT OF PEOPLE ARE LIKE, HEY, CALL JEN PALMER, THIS IS HER PASSION. SHE SPENT HER ENTIRE CAREER DOING THIS. IT’S AUTHENTIC. SO WE GET THOSE CALLS, WHICH IS INCREDIBLE. CHRISTINA: WHY IS THAT? WHY AT THIS POINT IS THIS ABOUT WE’RE STILL HAVING IT? IS IT JUST THE DEFAULT, I MEAN, THE THRESHOLD FOR A WOMAN WALKING INTO THE ROOM, THE SELL IS JUST HARDER? THE LEVEL OF TRUST. I MEAN, WE TALK ABOUT 25-YEAR-OLDS BEING GIVEN BILLIONS OF DOLLARS OF CAPITAL TO INVEST AND ALL THE YOUNG ENTREPRENEURS ARE ALMOST ALWAYS MEN. VERY RARELY HAVE THEY BEEN WOMEN. WHY IS THAT? >> IT’S SO FRUSTRATING. HOW ARE WE STILL HAVING THIS CONVERSATION? I’VE BEEN IN THE INDUSTRY FOR 20 YEARS. THE STATISTICS HAVE NOT CHANGED. IT’S SO DIFFICULT. AND I THINK, UNFORTUNATELY, THERE’S JUST NOT ENOUGH FEMALE CHECK WRITERS. AND WITHOUT THE WOMEN AT THE TABLE MAKING THOSE DECISIONS, WE’RE JUST MISSING OPPORTUNITY. THERE’S A LOT OF PRODUCTS OUT THERE THAT CATER TOWARDS WOMEN THAT, UNFORTUNATELY, THE CHECK WRITERS THAT ARE MEN, THEY JUST DON’T UNDERSTAND WHAT SERVICE THAT PRODUCT CAN FULFILL. AND UNFORTUNATELY, THERE IS STILL DISCRIMINATION. THERE’S STILL BIAS, AND A LOT OF TIMES WOMEN ARE NOT TAKEN SERIOUSLY. MAYBE IT’S A HOBBY OR THEY THINK IT’S -- CHRISTINA: DO THEY PER SEIVER A HIGHER RISK? >> THEY DO. AND STATISTICALLY WOMEN ARE A MUCH SAFER BET. FOR EVERY DOLLAR INVESTED, A WOMAN WILL OUTPERFORM HER MALE COUNTER PART N. MY EXPERIENCE, WOMEN ARE MUCH LOWER RISK AS WELL. SO I ALWAYS SAY, DOING RIGHT AND DOING GOOD BUSINESS GO HAND IN HAND. CHRISTINA: I THINK I’M THE RISKIER COMPONENT HERE, BUT YOU KNOW, WE’LL BE THE EXCEPTION THAT PROVES THE RULE. DAVID: TALK ABOUT A COMPANY LOOKING FOR FINANCING, WHAT ARE YOU COMPETING WITH? WHO COMES TO YOU FOR MONEY VERSUS OTHER FORMS OF FINANCING? >> IN THIS MARKET, IT FEELS LIKE I’M COMPETING WITH EVERYONE. THERE’S A LOT OF MONEY OUT THERE, YOU GUYS KNOW BETTER THAN EVERYONE ELSE. BUT OFTENTIMES WE CAN COMPETE WITH PERHAPS BANKS THAT ARE BEING A LITTLE BIT MORE AGGRESSIVE AND SHOULDN’T BE GOING INTO THIS SPACE. AND WE USED TO COMPETE A LOT WITH V.C.’S AS WELL. SO IT WAS FOR A PERIOD OF TIME THAT BUSINESS OWNERS WOULD SAY DEBT IS TOO EXPENSIVE, I GREW UP THINKING THAT DEBT IS BAD. IT’S ALMOST LIKE A FOUR-LETTER WORD, SO I’M JUST GOING TO RAISE MONEY. FORTUNATELY THE MARKET IS CHANGING, AND ENTREPRENEURS NOW UNDERSTAND THAT EQUITY IS ACTUALLY YOUR MOST EXPENSIVE FORM OF FINANCING, SO I ALWAYS SAY DEBT IS DATING, EQUITY IS MARRIAGE. YOU WANT TO UNWIND IT, GREAT. UNWIND IT ANY TIME. BUT THERE’S A LOT OF COMPETITION OUT THERE. WE ALL KNOW THAT PRIVATE CREDIT HAS EXPANDED AND GROWN. SO THERE’S A LOT OF MONEY OUT THERE. SO THERE’S A LOT OF COMPETITION OUT THERE. BUT WHAT WE ARE LOOKING FOR IS CLIENTS WHO REALLY WANT A RELATIONSHIP, WHO REALLY WANT TO GROW WITH SOMEONE WHO SEES THEIR VISION. AND THERE’S NOT A LOT OF LENDERS OUT THERE THAT FOCUS ON THE RELATIONSHIP LIKE WE DO, SO FORTUNATELY, WE’RE UNIQUE IN THAT. CHRISTINA: WHEN YOU LOOK AT THE PUBLIC VERSUS PRIVATE MARKETS, DO YOU HAVE ANY INSIGHT INTO WHERE I.P.O.’S ARE RIGHT NOW, WHAT THE MARKETS ARE FOR THAT? >> I MEAN, ALL OVER THE PLACE, THAT’S FOR SURE, RIGHT? IT IS SUCH A CRAZY MARKET OUT THERE. WE HAVE A LOT OF CLIENTS THAT ARE THINKING ABOUT THAT AND THEN THEY BACK TRACK, BECAUSE THERE’S JUST A LOT OF UNCERTAINTY OUT THERE. SO WE APPEARS TELL OUR CLIENTS, JUST TAPE THE COURSE. WHAT IS YOUR VISION? EVEN IF IT’S NOT THE RIGHT TIME FOR YOUR COMPANY, IT WILL BE. JUST CONTINUE TO DO WHAT YOU’RE DOING. CHRISTINA: AND DON’T JUST DO IT BECAUSE ALL THE OTHER KIDS ARE DOING IT. >> EXACTLY. THE WORST THING THAT A BUSINESS OWNER CAN DO IS JUST TAKE CAPITAL WHEN IT’S AVAILABLE. IF YOU REALLY HAVE TO THINK ABOUT WHAT IS THE PURPOSE BEHIND CAPITAL? BECAUSE IF YOU TAKE CAPITAL AT THE WRONG STAGE OF YOUR JOURNEY, IT’S JUST EXPENSIVE MONEY, EVEN IF IT’S PUBLIC. DAVID: WE HAVE ABOUT 30 SECONDS LEFT. I WANT TO GET YOUR TAKE ABOUT THE ATMOSPHERE, THE FEELING IN THE MARKETS RIGHT NOW. IS THERE A LOT OF ANXIETY? A VIBE CHECK TO CLOSE, YEAH. >> I FEEL LIKE ANXIETY IS A BUZZWORD RIGHT NOW. EVERYBODY’S GOT IT. SO YES, THERE’S A LOT OF ANXIETY OUT THERE, BUT THERE’S A LOT OF GREAT OPTIONS OUT THERE. WE ALWAYS ENCOURAGE OUR CLIENTS, ANY POTENTIAL CLIENTS THAT WE TALK TO, THERE’S A LOT OF OPTIONS. JUST DO YOUR HOMEWORK, DO YOUR DUE DILIGENCE, AND STAY TRUE TO YOUR PURPOSE AND ARE FOUND A GOOD PARTNER. DAVID: GENERALLER IT, GREAT TO MEET YOU. SHE’S JOINING US HERE IN OUR STUDIO IN NEW YORK. FASCINATING, JUST TO DIG INTO THIS. CHRISTINA: THIS IS SOMETHING I’M ALSO FASCINATED IN, BECAUSE TWO SIMILARLY QUALIFIED BUSINESS PEOPLE GET A VERY DIFFERENT REACTION. DAVID: IT’S STARTLING TO HEAR SO MUCH LITTLE HAS CHANGED. PROGRAMS UNSURPRISING, BUT SOBERING. CHRISTINA: GOT TO TELL YOU, SHAKIRA, DIDN’T KNOW SHE HAD A HAIR LINE. THIS IS "BLOOMBERG BUSINESS WEEK DAILY." DAVID GURA, CHRISTINA RUFFINI IN FOR TIM STENOVEC AND CAROL MASSAR. THEY’RE ON THEIR WAY TO LOS ANGELES TOMORROW AFTERNOON. >> THIS IS "BLOOMBERG BUSINESS WEEK DAILY" WITH CAROL MASSAR AND TIM STENOVEC. ON BLOOMBERG RADIO AND TELEVISION. DAVID: FALSE ADVERTISING. TIM STENOVEC, CAROL MASS PAR ON THEIR WAY TO CALIFORNIA, TO HOLLYWOOD NO LESS. THE SCREEN TIME SUMMIT KICKING OFF TONIGHT, A TWO-DAY EVENT. CHRISTINA: WE’RE HOLDING IT DOWN ON THE LEFT COAST HERE. DAVID: MAYBE A LITTLE LESS STAR POWER, BUT WE’RE DOING OUR BEST. DAVID GURA, CHRISTINA RUFFINI, HOLDING DOWN THE FORT FOR YOU HERE TODAY. DAVID: LET’S LOOK AT STOCKS ON THE MOVE TODAY. WHAT DO YOU GOT? WHAT’S THE FIRST ONE YOU’VE BEEN PAYING ATTENTION TO OVER THE COURSE OF THE DAY? >> I’VE BEEN THINKING ABOUT MODERNA ALL DAY. DAVID: THE PHARMACEUTICAL COMPANY. >> EXACTLY. AND THE TICKER IS MRNA. DAVID: LIKE THE VACCINE. CHRISTINA: OH, LOOK AT THAT. >> EXACTLY. THIS IS WHAT WE’RE GOING TO TALK ABOUT. CITIGROUP ANALYSTS RECOMMENDED SELLING THE STOCKS, SAYING THE VALUATION IS UNJUSTIFIABLE. JUST TO GIVE YOU CONTEXT, THE STOCK SOARED NEARLY 600% THIS YEAR. DAVID: DOING ALL RIGHT. >> YEAH, THE COMPANY HAS BEEN DOING ALL RIGHT AFTER A FEW DIFFICULT YEARS, ACTUALLY. SO THE SURGE IS COMING ON THE BACK OF POSITIVE DATA FROM THEIR CANCER VACCINE THAT THEY’RE DOING WITH MERCK. PRETTY MUCH SAYING THIS IS UNSUSTAINABLE, IT’S A BIG RALLY, AND IT’S PRIESTED. ONE INTERESTING QUOTE THEY’RE MAKING, THEY’RE SAYING THAT THE EXPERIMENTAL VACCINE COULD BECOME A MARKET-LEADING THERAPY FOR MELANOMA, BUT THEY SAY THAT THIS DOESN’T VALIDATE THE PLATFORM FOR OTHER TUMOR TYPES, WHICH HAS BEEN AN IMPORTANT PART. NEVERTHELESS, STOCK IS UP 550% THIS YEAR. REALLY BIG RALLY, EVEN IF THERE’S NEGATIVE NEWS FROM CITIGROUP. CHRISTINA: OVERALL PICTURE. DAVID: HAVING AN IMPACT, THOUGH. CHRISTINA: ROUGH LANDSCAPE FOR VACCINE MAKERS IN CERTAIN MARKETS. WHAT ELSE DO YOU GOT? >> WE’RE TALKING ABOUT PREDICTION MARKETS A LOT, BUT TODAY WE’RE TALKING ABOUT KPI. WE’RE TALKING ABOUT WORKING WITH ROBIN HOOD ON THIS NEW CATEGORY OF BINARY CONTRACTS. IT’S SOMEWHAT SIMILAR TO PREDICTION MARKETS, BUT I WOULD SAY IT’S MORE INSTITUTIONAL-BASED. YOU CAN CHOOSE DIFFERENT PARTS OF THE EARNINGS REPORT, KIND OF BET AROUND, HEDGE AROUND IT. IT’S VERY SOPHISTICATE. IT’S THE KPI BINARY OPTION. TH A PARTNERSHIP WITH ROBIN HOOD. ROBIN HOOD ON THE OTHER SIDE IS NOT GETTING THE SAME REACTION IN EARLIER TRADING WE SAW A JUMP IN ROBIN HOOD ACE PRICE. IT DOESN’T NECESSARILY, THE STOCK IS DOWN MORE THAN 3%. THEY’VE HAD A FEW ANNOUNCEMENTS. YOU CAN HAVE AGENTS DURING YOUR INVESTMENT STRATEGY. DAVID: MORE AGENTS. >> YEAH, PERPETUAL FUTURES, PREDICTION MARKET IS GOING STRONG. THE COMPANY IS DOING ALL THOSE INNOVATIVE THINGS, BUT NEVERTHELESS, IT’S DOWN AND FLAT ON THE YEAR. SO WE’RE SEEING DIFFERENT REACTION, WHICH IS MORE INSTITUTIONAL-BASED AND DIFFERENT FOR ROBIN HOOD, WHICH IS MORE RETAIL FOCUSED. DAVID: HAVING A BIG CONFERENCE IN NEW YORK, WE WERE TALKING TO AN EXECUTIVE FROM ANOTHER FIRM WHO WAS THERE. CHRISTINA: JASON WALLACK. DAVID: AND HE MENTIONED, AS WE WERE TALKING ABOUT THIS, THIS 24/7 TRADING, HOW BIG A PHENOMENON IS THIS GOING TO BE? >> THEY’RE THE FIRST COMPANY THAT’S DOING IT ON THE WEEKEND. THEY JUST ANNOUNCED THAT. IT’S REALLY FASCINATING, BECAUSE YOU HAVE THIS, AT THE SAME TIME YOU HAVE PERPETUAL FUTURES, WHICH PROVIDES IN THEIR CASE 10 TIMES LEVERAGE. YOU HAVE THIS AT THE SAME TIME YOU HAVE PREDICTION MARKETS AND ALL THAT AND HAVE AGENTS POTENTIALLY TRADING THAT. SO IT FEELS LIKE IT CAN BE KIND OF A COMPLICATED THING. DAVID: I GUESS THE AGENTS WILL BE ALLOWING US TO REST. CHRISTINA: SURE, IT WILL BE OK. >> AS A MARKETS REPORTER, I’M STRESSED. DAVID: ONE MORE T. CHRISTINA: WHAT DO YOU GOT? >> TARGET WAS UP IN EARLY TRADING. NOW IT’S FLAT. IT’S COMING OFF A RAISE. THEY ACTUALLY HAVE A PRETTY GOOD NEW PRICE TARGET, $190. IT USED TO BE $125. WHAT THEY’RE SAYING IS SAYING THE SECOND QUARTER PROVIDED STRONG EVIDENCE ABOUT THE TURNAROUND. WHAT TARGET HAS BEEN DOING, THEY’VE BEEN GIVING A LOT OF DISCOUNTS. WE SEE SOME PRESSURE FOR CONSUMERS. ALL THOSE BRANDS INCLUDING WAL-MART AND TARGET HAVE BEEN TRYING TO LURE WITH DIFFERENT DEALS, AND NOW IT SEEMS LIKE TARGET IS DOING GREAT. WHAT ANALYSTS ARE SAYING, THEY’RE SEEING MORE FOOT TRAFFIC. CHRISTINA: I WAS TRYING TO GET INTO THAT, BECAUSE WAL-MART IS THE LARGER GOSHER IN THE COUNTRY, AND TARGET IS TRYING TO MOVE INTO THAT MARKET. >> AND THE FOOD TRAFFIC IS INCREASING, WHICH CLEARLY HELPS A LOT, AND ANALYSTS ARE VERY EXCITED. THE COMPANY IS ALREADY UP 6 APPROXIMATE 0%. I CAN -- IS ALREADY UP 60%. I CAN ARGUE THAT GAIN REALLY SHOWS A LOT OF BULLISHNESS GOING INTO THIS. NEVERTHELESS, INTERESTING TO SEE AS EVERYONE IS WATCHING THE CONSUMER. DAVID: YEAH, A COMPANY THAT’S GONE THROUGH A LOT OF LEADERSHIP TRANSITION IN RECENT YEARS, ALSO FASCINATING THE WAY THE COMPANY LIKE TARGET AND WAL-MART ARE TRYING TO INSULATE THEIR CUSTOMERS FROM THE EFFECTS OF TARIFFS. CHRISTINA: AND TRADE WINDS AT THE TOP OF THE COMPANIES, APPEALING TO DIFFERENT MARKETS, AND THEN THERE WAS A BOYCOTT OF TARGET, THEN A DIFFERENT ONE. THEY’RE TRYING TO DO ALL THIS RACE, NOT ANTAGONIZING A NEW GROUP. IT’S HARDER FOR RETAILERS THAN IT USED TO BE, BECAUSE IT’S NOT JUST ABOUT THE PRODUCT. THEY’RE USING THE WORD VIBE AND THE BRAND. THAT’S SO IMPORTANT, EVEN IN SOMETHING LIKE WAL-MART AND TARGET. GUY: HOW GOOD IS TARGET OR WAL-MART, GIVEN THAT SENSE OF THE HEALTH OF THE CONSUMER TODAY? >> WE ALL CARE ABOUT GUIDANCE. SO THEY BOOSTED THEIR GUIDANCE FOR THE SECOND TIME THIS YEAR. THIS IS WHAT ALL INVESTORS CARE ABOUT, AND PERHAPS ONE OF THE REASONS THEY’RE UP 60%. ANALYSTS ARE SAYING THIS IS REFLECTING THE CONFIDENCE IN THE BUSINESS, AS YOU SAID, YOU’VE BEEN THROUGH A LOT OF SHAKEUP AND LEADERSHIP CHANGES. SEEMS LIKE WE WERE IN GOOD TRAGIC TOUR. WAL-MART HAS MADE SOME GAINS AT THEIR EXPENSE. SEEMS LIKE THEY’RE COMING BACK. DEFINITELY GOOD NEWS THERE. >> THANK YOU VERY MUCH. THANK YOU FOR JOINING US HERE IN NEW YORK, LISTEN TO OUR STOCK MOVERS PODCAST. SUBSCRIBE ON THE BIGGOLOGIST BIGGEST WINNERS AND LOSE ON APPLE, SPOTIFY OR ANYWHERE ELSE YOU GET PODCASTS.