Wall Street Sees Ominous Sign in Bond Market’s Latest Selloff

>> THIS IS BLOOMBERG BUSINESSWEEK DAILY. REPORTING FROM THE MAGAZINE THAT HELPS GLOBAL LEADERS STAY AHEAD. WITH INSIGHT ON THE PEOPLE, COMPANIES, AND TRENDS IN 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 BLOOMBERGRADIO.COM A TELEVISION, AND BLOOMBERG ORIGINALS. CAROL: VERY GOOD AFTERNOON. WE ARE ACROSS BLOOMBERG PLATFORMS. RADIO, TV, BLOOMBERG ORIGINALS. LUCKY FOR US, JUST MITTEN COME BACK. >> IT IS ONLY REASON. CAROL: THAT IS NOT THE ONLY REASON SHE'S HERE. BLOOMBERG NEWS EQUITIES TEAM LEADER. SHE REMINDED US WE ARE JUST ABOUT TO MARK THE FOUR YEAR ANNIVERSARY OF THE BULL RUN. >> IT WILL BE THIS COMING MONDAY, 2022. UP ALMOST 120 PERCENT. THAT WOULD RANK AS THE THIRD-LARGEST BULL MARKET AFTER THE FOURTH ANNIVERSARY GOING BACK TO WORLD WAR II THANKS TO DATA OVER AT SAM A ENCYCLOPEDIA. CAROL: LOVE SAM, ALWAYS MARKING THAT. INTERESTING. THAT IS HAPPENING ON A DAY, A WEEK, A MONTH, THREE YEARS AND COUNTING THAT WE CONTINUE TO TRY TO MAKE SENSE OF THE AI HEADLINES. THAT IS THE THEME THIS HOUR. SO HIS RATES. WHEN WE HAVE A STORY ABOUT WALL STREET SEEING OMINOUS SIGN IN BOND MARKETS, THE BOND MARKET LATEST SELLOFF. WE WILL TRY AND MAKE SENSE OF ALL OF THAT. >> THE LOGITECH CEO WILL BE TALKING ABOUT MOUSES, KEYBOARDS DURING THE AI ERA. >> IF YOU HAVE AN AGENT, YOU NEED A MOUSE. >> SHE WILL HAVE MORE INTO THAT. BASICALLY COMMERCIALIZING. CAROL: WE WILL TALK ABOUT THAT. WEEKLY CHECK ON THE NFL. THE WEEKEND IS ALMOST HERE. A REQUEST OF THE U.S. SUPREME COURT AND ONE OF ITS OWNERS. WE WILL DIG INTO THAT WITH RANDALL WILLIAMS. A LOT COMING YOUR WAY. A BUSY WEEK. LET'S GET YOU GOING WITH A CHECK OF THE TRADE WITH CHARLIE PELLETT. CHARLIE: ONE HOUR 59 MINUTES TO GO UNTIL THE CLOSING BELL ON WALL STREET WITH THE DOW, S&P, NASDAQ 100 INDEX, RUSSELL 2000 ALL ADVANCING RIGHT NOW. S&P 500 AS A BASELINE UP 44. WE ARE TRADING VERY CLOSE TO SESSION HIGHS RUNNING THE GIP SCREEN ON THE BLOOMBERG. THE S&P 500 UP ABOUT .60%. THE DOW UP .80%. NASDAQ COMPOSITE INDEX DOWN BY .50%. THE VIX, WALL STREET FEAR GAUGE BELOW 15. TWO YEAR 4.79%. 10 YEAR, 5.24%. THE THIRTY-YEAR HOLDING AT 5.60 PERCENT. GOLD 1.5 PERCENT. 4190 SEVEN DOLLARS A BOUNCE. WEST TEXAS INTERMEDIATE CRUDE FLUCTUATING. HIGHER BY .40%. A BARREL OF BRENT 104.61. OIL HIGHER RIGHT NOW. WASHINGTON'S ASSURANCES THAT THE U.S. WILL NOT ATTACK IRAN AHEAD OF NOVEMBER'S MIDTERM ELECTIONS, COMPETING WITH MOUNTING SUPPLY RISKS. SPECIFICALLY, TANKER ATTACKS AND THE HURRICANE IN THE GULF. THE OIL MAJORS ALL PUSHING HIGHER. EXXON MOBIL UP .40%. CHEVRON UP .70%. CONOCOPHILLIPS UP. S&P 500 HIGHER BY .60%. AND FOR ON DEMAND NEWS 24 HOURS A DAY, SUBSCRIBE TO BLOOMBERG NEWS NOW OR WHEREVER YOU GET YOUR PODCASTS. I'M CHARLIE PELLETT. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: THANK YOU. A SET UP ON THE TRADE CROSSING THE BLOOMBERG TERMINAL. THE NEW YORK TIMES OUT WITH A REPORT. KATIE IS A CONSERVATIVE COMMENTATOR WHO BRIEFLY WORKED WITH THE DEPARTMENT OF HOMELAND SECURITY. SHE WILL BECOME THE NEW WHITE HOUSE PRESS SECRETARY SUCCEEDING KAROLINE LEAVITT. WORKED AT THE DEPARTMENT OF HOMELAND SECURITY. THIS IS ACCORDING TO TWO PEOPLE FAMILIAR WITH THE MATTER. CAROLINE LEFT BACK IN AUGUST. SO IT HAS BEEN AN OPEN SPOT. NOW SOMEBODY BACK THERE, AT LEAST ACCORDING TO THE NEW YORK TIMES. >> IT IS IMPORTANT, THE CHANGES. A LOT GOING ON THE LAST DAY OF TRADING. >> SHE IS LIKE LET'S TALK ABOUT THE TRADE. I TOTALLY GET IT. SO LET'S GET TO WHAT IS GOING ON WHEN IT COMES TO THE TRADE. THE TWO BIG THEMES, I MENTIONED IT AS WE KICKED OFF. NONSTOP STORIES ON ARTIFICIAL INTELLIGENCE, THE GIANTS IN THIS SPACE RELATED TO THEIR IPO'S, AND MORE ABOUT THEIR FINANCIALS. WE WILL GET INTO THAT AND THE SPENDING. BUT ALSO, CONTINUING TO WATCH WHAT IS GOING ON IN U.S. YIELDS. SOMETIMES BECAUSE OF HIGHER ENERGY PRICES AND WORRIES ABOUT INFLATION. >> COMING OFF OF THE MULTI-DECADE HIGHS, BUT STILL ELEVATED EVEN THOUGH THEY HAVE COME DOWN FOR YIELDS SLIGHTLY, THE U.S. OR MORE GLOBALLY. CAROL: A STORY KIND OF KICKED OUR ATTENTION. ONE OF THE LEAST UNDERSTOOD SIGNALS IN THE FIXED INCOME WORLD. LATELY EVERYONE ON WALL STREET IS ABUZZ ABOUT WHAT IT MEANS AS IT REASSERTS ITSELF IN THE MARKET. IS IT AN OMINOUS SIGN? LET'S GET TO IT WITH MACRO STRATEGIST FRANK MARKHAM, PREVIOUSLY WORKED AT COMMODITY TRADING HOUSES, DID A STINT AT PIMCO, HE KNOWS HOW THE MARKETS WORK AND WHAT PEOPLE THINK. HAPPY FRIDAY. I'M A LITTLE WACKY. TAKING COLD MEDICINE ALL WEEK AND MAY JUST KICKING IN. TALK ABOUT THIS SIGNAL. THE TERM PREMIUM, EXTRA PAYOUT INVESTORS DEMAND FOR ONLY 10 YEAR TREASURIES, SPIKING TO LEVELS NOT SEEN IN OVER A DECADE. IS IT ANONYMOUS -- OMINOUS SIGN FOR WALL STREET? >> IT IS, GIVEN THE MOVE WE HAVE SEEN IN RATES, YIELDS BACK, ESPECIALLY THE 10 YEAR CROSSING THE 5% THRESHOLD. THIS NOTION THAT THE LEVELS ARE APPETIZING ENOUGH, GIVEN REBOUNDS IN QUARTER THREE, SEPTEMBER 30, PENSION FUNDS HAVE BEEN TO BE OVERFUNDED WHEN THE FUNDING RATIO WAS AROUND OVER 100 PERCENT. THE BALANCE BY SELLING EQUITIES AND BUYING BONDS. WE HAVE NOT SEEN THAT HAPPENING. WE HAVE SEEN A COME OFF IN YIELDS TO LIKE 525 ON THE 10 YEAR BY 10 BASIS POINTS. THE REASON WHY YIELDS REMAIN ELEVATED AND OFFSETTING FROM FUNDS AT THE END OF THE QUARTER'S TERM PREMIUM IS RELENTLESSLY MOVING HIGHER. TERM PREMIUM USHERS VOLATILITY IN THE BOND MARKET. THE MOVE INDEX CONTINUES TO PUSH HIGHER. SO UNTIL WE SEE A BIT OF A FADE IN TERM PREMIUM, IT IS HARD FOR YIELDS TO REALLY CORRECT BACK DOWN MEANINGFULLY. WE WILL AT SOME POINT, BUT WE NEED TO SEE IT HAPPENING IN THE TERM PREMIUM. >> IF YOU ARE LOOKING AT THE MOOD INDEX VERSUS A VOLATILITY GAUGE IN THE BOND MARKET VERSUS EQUITIES, THEY ARE VERY DIFFERENT STORIES. THE VIX STILL UNDER 16 RIGHT NOW. BUT THE RATIO THE LOWEST IT HAS BEEN IN ABOUT TWO YEARS. WHAT IS IT TELLING US AND HOW MUCH LONGER CAN THE RATIO BE UNTIL WE SEE THE SPILL OVER TO MORE VOLATILITY AND EQUITIES? >> THAT IS THE MILLION DOLLAR QUESTION. I SAID EARLIER THIS WEEK WITH A BUNCH OF BIG ASSET ALLOCATORS. THAT IS WHAT EVERYONE IS TRYING TO SQUARE, WHEN EQUITIES ARE GOING TO CRACK. RIGHT NOW IT IS DRIVEN BY THE AI STORY. SO THE VOLATILITY TRANSFER IS NOT REALLY TAKING PLACE BECAUSE THE EQUITY MARKET IS SO CONCENTRATED INTO THE AI NAMES. >> ON AN INDEX LEVEL, YOU ARE NOT SEEING THAT FOR THE S&P 500. UNDERNEATH THE SURFACE, THE RUSSELL 2000 COMING OFF OF ITS SECOND WERE QUARTER RELATIVE TO THE S&P 500. MORE SPECULATIVE CORNERS ON PROFITABLE TECH. WE SEE IT IN EQUITIES, JUST NOT MORE BROADLY ON AN INDEX LEVEL. WHEN DOES IT AFFECT THE AI MADE A CAP TECH STOCKS? >> THE MOMENTUM THERE IS HARD TO FADE. I THINK I TALKED ABOUT THIS BEFORE, AI IS KIND OF A CENTRAL BANK, BECAUSE WHAT WE HAVE SEEN THIS AS A EQUITIES MARKET HAS BEEN ON THE PRESSURE OF THE RATE VOLATILITY, AI HAS BEEN A SAFE HAVEN. USING AI NAMES TO REALLY HIDE AGAINST VOLATILITY, WHICH IS VERY DYNAMIC. IT IS THE ONE PROPOSITION THAT CONTINUES TO DRIVE INVESTORS, A STORY SO COMPELLING IT FEELS LIKE THE PLACE TO HIDE. CAROL: WE WILL TALK ABOUT THE CREDIT SIDE OF THINGS, INCLUDING HYPERSCALERS. WITH AMAZON DOING THIS SPECIAL PURPOSE VEHICLE, THAT JUST KIND OF RAISED THE HAIR ON MY NECK. ONE OF THE THINGS I WANT TO ASK ABOUT, BACK TO THE TREASURY TRADE IN TERMS OF RATES, THE CHAIRMAN AND CEO OF LAZARD, FORMER DIRECTOR OF THE OFFICE OF OMB, THE OBAMA ADMINISTRATION DURING THE GREAT FINANCIAL CRISIS, HE HAS SEEN SOME CRISES. HE JOINED THE MONEY TEAM EARLIER. HE ADDRESSED TODAY'S RATE LEVELS. >> I THINK THE INTEREST RATE ENVIRONMENT IS DIFFERENT THAN THREE OR FOUR YEARS AGO. IT IS UNFORTUNATE WE DID NOT TAKE ADVANTAGE OF THAT MOMENT WHEN WE HAD LOW RATES, EXTENDING THE MATURITY OF TREASURIES, WHICH IS SOMETHING BOB RUBIN AND JOE STIGLITZ AND I CALLED FOR, HAD BEEN SHORTENING MATURITY, THAT IS TOO BAD. BUT WE ARE IN A NEW ERA IN WHICH THE BOND VIGILANTES ARE COMING BACK. CAROL: THAT IS PETER ORSZAG, CHAIRMAN AND CEO OF BLOOMBERG MONEY. WE TALK ABOUT THIS OFTEN. WE HAVE OVER THE LAST 10, 20 YEARS. WHAT KIND OF PAIN WITH THAT MEAN FOR INVESTORS MORE GENERALLY IF THAT HAPPENS? IF THE BOND VIGILANTES COME BACK? REMIND INVESTORS IF WE ARE NOT GOING TO DO THE WORK, WE WILL DO IT FOR YOU. >> CLEARLY, THAT IS GOING TO USHER IN A LOT OF VOLATILITY AND CROSS ASSET. NOT SO MUCH THE LEVEL OF RATES AT THE PACE WHICH RATES CONTINUE TO MOVE HIGHER. WE HAVE NOT SEEN THE REPRICING YET. >> DOES IT PUT EQUITIES AT RISK? >> IT WOULD. I THINK THE MORE THE TRANSITION MECHANISM OF VOLATILITY LEADS EQUITIES, THE MORE IT IS DELAYED BECAUSE YOU CAN SEE THE HARDY MOVE DOES HAPPEN. I HAVE CALLED THE VOLATILITY DIFFERENCE THEY ARE ACCUMULATING RIGHT NOW. IS THIS KIND OF LIKE A STEEP DEFICIT. YOU THINK IT IS FINE, BUT IT CAN CRASH REALLY HARD BECAUSE IT CAN ACCUMULATE A LOT. SO THAT ONE WEEKEND WHEN IT HITS YOU, YOU MIGHT END UP CALLING OFF OF WORK FOR TWO WEEKS. THAT IS THE KIND OF DYNAMIC I'M AFRAID OF HERE, FRANKLY. >> IT IS AN INTERESTING TIME, NO DOUBT ABOUT THE DYNAMIC. THANK YOU SO MUCH FOR JOINING IN OUR MISERY. IT IS A GOOD THING BECAUSE WE LOVE FRIDAYS. FRANK JOINING US HERE IN STUDIO. THAT IS THE TREASURY RATE PICTURE WE KEEP FOCUSING ON. WE WANT TO GET TO THE ONGOING AI WATCH AND THE BIG PLAYERS MOVING CLOSER TO THEIR IPO'S. OPENAI IS EXPECTING TO REACH OR EXCEED $70 BILLION IN ANNUALIZED REVENUE BY THE END OF THE YEAR, ACCORDING TO PEOPLE FAMILIAR. DRIVEN LARGELY BY ITS GROWTH IN ITS ENTERPRISE BUSINESS. WHAT IS SO INTERESTING, THAT IS TODAY'S STORY. JUST YESTERDAY WE HEARD OPENAI IS ON TRACK TO GENERATE ANNUALIZED REVENUE AT ROUGHLY $50 BILLION ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. BUT LESS THAN SOME RECENTLY REPORTED ESTIMATES FOR THE CHATGPT MAKER. WHAT IS FASCINATING AS WE GET CLOSER AND CLOSER TO THE IPO OF OPENAI AND ANTHROPIC, GETTING MORE DETAILS INTO THE BUSINESSES THAT THEY ARE. I'M WONDERING IF THE EXPECTATIONS OR THE REALITY -- IF THE REALITY WILL MATCH UP WITH THE EXPECTATIONS. >> BLOOMBERG HAD THE STORY LAST MONTH HOW OPENAI IS CONSIDERING SLOWING DOWN THE DEVELOPMENT OF THE CUTTING EDGE AI, AND THE CHATGPT MAKER, CEO, SAM ALTMAN HOPING OTHER AI COMPANIES WILL DO THE SAME. WHAT DOES IT MEAN WITH ANTHROPIC, POTENTIALLY MID-NOVEMBER? BAILEY LIPSCHULTZ REPORTING ON THAT, MAYBE THAT HAS BEEN DELAYED. >> IT IS NOT OUR RESPONSIBILITY TO KEEP TRACK OF THIS, IT IS -- THE AI EDITOR AT BLOOMBERG NEWS HERE IN OUR STUDIO. IT IS A LOT. I FEEL LIKE I HAVE TALKED ABOUT AI MORE THIS WEEK THAT I HAVE IN A LONG TIME. WE SPEND HOURS JUST DEVOTED WITH ENTIRE BROADCASTS. I'M SORRY FOR YOU, TOO. OPENAI, WHAT IS A REALITY? I FEEL LIKE WE GET MIXED STORIES . STILL GENERATING A LOT, IT SEEMS. BUT WHAT ARE WE FINDING OUT? >> CERTAINLY FROM OUR REPORTING, AND THIS COMPANY IS GOING OUT A PRETTY HEALTHY CLIP. THE STORY OF THIS WEEK IS MORE ABOUT THE CONFUSION AROUND THIS METRIC. IF YOU STEP BACK, THIS IS NOT PART OF YOUR STANDARD REVENUE ACCOUNTING METRIC DATES, EARNINGS REPORT, IT IS INCREASINGLY COMMON WHAT WE SEE IN THE AI START UP, ANNUALIZED REVENUE PROJECTING WHAT THEY THINK WILL BE THE FULL YEAR BASED ON A WEEK, A MONTH, A QUARTER. THEY ALSO HAVE DIFFERENCES IN HOW THEY ACCOUNT FOR SALES. IT IS UNCLEAR WHETHER YOU ARE MEASURING APPLES TO APPLES. I THINK THEY JUST CONFUSED. AND THIS NUMBER, THESE FIGURES ARE AMONG THE ONLY REAL VISIBILITY WE'VE HAD. GIVEN HOW IMPORTANT AND CENTRAL OPENAI AND ANTHROPIC ARE TO THE WIDER TRILLION DOLLAR AI BOOM, ANY PERCEPTION THAT IT IS WEAKER OR NOT WHAT IS EXPECTED HAS THIS. >> IS IT WEAKER? >> NOT THE INDICATION THAT WE HAVE HAD SO FAR. IT FEELS MORE A QUESTION OF CALCULATION. WE HAD REPORTED IN JULY IT WAS $40 BILLION, NOW $50 BILLION, IT FEELS LIKE A LOT OF IT HAPPENS WITH OTHER NEWS OUTLETS THAT MIGHT CALCULATE IT DIFFERENTLY. >> WHAT IS THE VALUATION WE ARE EXPECTING? >> RIGHT NOW, THE COMPANY IS IN FUNDING TALKS, WE HAVE REPORTED A CAN VALUE AT $4 TRILLION. ANTHROPIC WHICH IS VALUED AT $965 BILLION IN THE PRIVATE MARKET CAN GO PUBLIC. >> WHAT IS THE PE ON THAT? AND IT IS -- THAT WAS SUPPOSED TO BE THIS REALLY POPULAR RELATED TO AUSTRALIA COMING OUT AND THE NEWS WE HAD COMING ABOUT THAT, NOT HELPFUL FOR THE OUTLOOK FOR THEM. IT WAS SUPPOSED TO BE THIS DATA CENTER DARLING. BUT NOW IT IS NOT. WHEN YOU SEE POCKETS LIKE THAT AND YOU HAVE THE DELAYED IPO'S, WHAT IS IT TELLING US ABOUT THE DIRECTION OF WHERE IT IS GOING WHEN THERE IS SO MUCH EXCITEMENT ABOUT IT AND WE SEE DELAYS? >> A LOT OF JITTERS, AND THE STORY IS THE SAME IT HAS BEEN FOR MONTHS. THE MORE MONEY BEING INVESTED IN THIS SPACE, THE HIGHER THE STAKES IN THE LAST MARGIN THERE IS FOREVER. EVERY MONTH, IF NOT, MORE FREQUENTLY, I COME HERE OR ARE OTHER SHOWS AND THERE IS A MOMENT WHERE I'M LIKE THIS IS THE MOMENT EVERYTHING FALLS APART. EVERYTHING SPEAKS TO SO MUCH UNCERTAINTY WHETHER PEOPLE CAN KEEP PACE WITH THE AMOUNT OF SPENDING AND REALLY SEE THE PAYOFF OF THAT. >> THE OTHER THING I WANT TO THROW ON, THIS IS WHAT I'VE BEEN OBSESSED WITH, HAVEN'T HAD CHRIS BRYANT ON TO TALK ABOUT IT, BUT HE SAYS DATA CENTER PROJECTS ARE ENCOUNTERING HOLDUPS, INCLUDING EQUIPMENT AND LABOR SHORTAGES, LOCAL COMMUNITY OPPOSITION, AND PERMIT DELAYS WHICH COULD IMPACT THE ABILITY TO BUILD SERVER FARMS. THEN IT SAYS THE TECH INDUSTRY WILL END UP WITH TOO MANY CHIPS, AND THEY HAVE SEEN THIS BEFORE, NOT ENOUGH OPERABLE SERVER FARMS DUE TO POWER SERVICES. THERE IS A LOT OF FACTORS TO BE CONSIDERED. THAT IS REAL, SUPPLY CHAINS, COMMUNITIES IT SAYING THANKS BUT NO THANKS WHEN IT COMES TO DATA CENTERS. >> WE HAVE REPORTED THIS, A SURGE IN PUBLIC OPPOSITION. I THINK MORE PROJECTS WERE STALLED JUST IN THE FIRST QUARTER THAN ALL OF LAST YEAR COMBINED, TOTALLY EASILY MORE THAN $100 BILLION WORTH OF DATA CENTERS. THIS MATTERS A LOT BECAUSE THERE IS LESS MARGIN FOR ERROR. IF YOU HAVE THESE MASSIVE DATA CENTER PROJECTS NOT COMING ONLINE IN THE NEXT COUPLE OF YEARS OR AT ALL, THAT WILL SHIFT INVESTOR EXPECTATIONS OR THE RETURN ON THESE BETS. ULTIMATELY I THINK YOU HAVE SEEN THE INDUSTRY AND PEOPLE LIKE SAM ALTMAN ACKNOWLEDGE WE NEED TO CHANGE OUR MESSAGING. BECAUSE POLITICAL PUSHBACK, WHICH WILL ONLY GROW IN THE COMING WEEKS, IS HAVING A REAL MEASURABLE IMPACT ON THE PACE OF DEVELOPMENT AND CAN FUNDAMENTALLY ALTER PROJECTIONS. >> GOOD STUFF. INTERESTING STUFF. >> IT HAS BEEN KIND OF EVERYTHING, EVERY CONVERSATION IN PARTICULAR THIS WEEK FOR US, A LOT GOING ABOUT THIS. HAVE A GREAT WEEKEND. SETH FIEGERMAN, EDITOR OF AI BLOOMBERG NEWS. UNBELIEVABLE HERE AT BLOOMBERG. CROSSING BLOOMBERG, AN EIGHT POINT ZERO MAGNITUDE EARTHQUAKE HITTING 14 KILOMETERS SOUTHWEST OF PANAMA. THAT IS ACCORDING TO THE WIDESPREAD HAZARDOUS TSUNAMI WAVES POSSIBLE ACCORDING TO THE PACIFIC TSUNAMI WARNING CENTER. INCLUDING PANAMA, COLOMBIA, ECUADOR, AND OTHERS. JUST CROSSING THE BLOOMBERG TERMINAL THIS FRIDAY. YOU ARE LISTENING AND WATCHING THE FRIDAY EDITION OF BLOOMBERG BUSINESSWEEK DAILY. CAROL MASSAR ALONG WITH JESS MITTON, WHO HAS BEEN -- IN FOR TIM STENOVEC WHO HAS BEEN OFF. THERE IS AN AI COMPONENT TO THIS. THE CEO OF LOGITECH INTERNATIONAL ON THE TECH IMPACT AND COMPUTER PERIPHERALS AND AN AI WORLD. >> A PROFESSIONAL DIVER IN HIGH SCHOOL. >> WE WILL TALK ABOUT THAT. SHE IS JOINING US IN A MOMENT. THIS IS BLOOMBERG. >> IT IS 2:21 ON WALL STREET. WE CHECKED MARKETS ALL DAY LONG. A DEVELOPING STORY, EIGHT .0 MAGNITUDE EARTHQUAKE STRUCK PANAMA. ACCORDING TO THE U.S. GEOLOGICAL SURVEY. SPARKING WARNINGS ABOUT TSUNAMIS OFF OF THE COAST OF PANAMA. THE EARTHQUAKE HIT ABOUT 8.7 MILES SOUTHWEST OF --, THAT IS 120 MILES AWAY FROM THE PACIFIC ENTRANCE OF THE PANAMA CANAL. DEVELOPING STORY WE ARE WATCHING, AND 8.0 MAGNITUDE EARTHQUAKE STRIKING PANAMA. U.S. STOCKS PUSHING HIGHER RIGHT NOW. TRADERS BETTING ON ANOTHER SOLID CORPORATE EARNINGS SEASON. BIG BANKS REPORTING NEXT WEEK. STOCKS HIGHER DESPITE THE LINGERING CONCERNS ABOUT ENERGY PRICES AND TREASURY YIELDS. THE S&P 500 UP 47. A GAIN OF JUST ABOUT .60%. WE ARE ALSO TRADING AT SESSION HIGHS ON THE S&P 500. CURRENTLY 78 POINT 12. INDUSTRIALS OF 447, UP BY .90%. NASDAQ COMPOSITE INDEX UP .60%. THE RUSSELL 2000 INDEX SMALL-CAP SHARES ALSO UP .60%. THE VIX, WALL STREET SO-CALLED FEAR GAUGE HOLDING BELOW 15. THE 2, 4 POINT 79%. 10 YEAR AT 5.2%. 30 YEAR, 5.6 0%. GOLD UP 1.6 PERCENT, 4190 SIX DOLLARS THAT OUNCE. WEST TEXAS INTERMEDIATE CRUDE UP .40%. WTI, 91.82 A BARREL. BRENT, 104 $.62 A BARREL. CRUDE SPECIFICALLY, JET FUEL, A FACTOR FOR THE AIRLINES. DELTA REDUCING ITS FULL-YEAR EARNINGS OUTLOOK. JET FUEL PRICES REMAIN ELEVATED. DELTA DOWN 1%. UNITED DOWN 1.3%. AMERICA DOWN BY ONE .2%. THAT IS A BLOOMBERG BUSINESS FLASH. >> CHARLIE PELLETT, THANK YOU CONTROL TOMORROW STUDY -- RENEWED PERFORMANCE AND POTENTIAL. TECHNOLOGY WE TALK A LOT ABOUT. WHAT IMPACT IT IS HAVING ON SOCIETY, KIDS, AI TAKES IT A LEVEL FURTHER. >> IT IS INTERESTING. I LOOKED INTO THE NEXT COMPANY WE ARE ABOUT TO TALK ABOUT AND ITS CHIEF EXECUTIVE. WE HAVE A QUOTE ABOUT THE MOUSE THAT BUILT THIS HOUSE BECAUSE THEY COMMERCIALIZED THE MOUSE WE HAVE USED FOR YEARS. >> IT IS NOT JUST DISNEY. >> IT IS ANOTHER COMPANY TIED TO THIS VERY CLOSELY. >> WHAT INNOVATION DISRUPTION MEANS. WE WELCOME THE CEO OF THE $15.8 BILLION MARKET CAP COMPANY, LOGITECH INTERNATIONAL. THEY ARE DOWN ROUGHLY 2% OR SO YEAR TO DATE, ABOUT 9% OF THE FLOAT IS SHORT. SHE JOINS US FROM SAN JOSE, CALIFORNIA. GOOD TO HAVE YOU HERE. TALK ABOUT YOU, THE BUSINESS, HOW THINGS ARE GOING RIGHT NOW WITH SO MUCH BEING THROWN AT COMPANIES AND CEOS, ESPECIALLY WITH AI. >> GOOD MORNING, THANK YOU FOR HAVING ME. NEVER A DULL MOMENT, THAT IS FOR SURE. WE HAVE BEEN DEALT A LOT OF BODY BLOWS IN THE LAST COUPLE OF YEARS BETWEEN TARIFFS, WARS, AND CHIP SHORTAGES. NOT AN EASY TIME, BUT WE WERE SUPER PROUD TO DELIVER A 10TH CONSECUTIVE QUARTER OF GROWTH IN THE LAST EARNINGS REPORT AT REALLY RECORD MARGINS. SO THE BUSINESS IS STRONG AND WE ARE PROUD OF THAT AND WE WILL CONTINUE TO BATTLE ON. >> WE WERE TALKING ABOUT HOW YOU ARE KNOWN FOR YOUR MOUSE IS, THE KEYBOARDS. WHETHER SOMEONE REALIZED IT OR NOT USING YOUR PRODUCTS. HOW DO YOU KEEP UP TO SPEED WHEN YOU HAVE TECHNOLOGY CHANGING SO RAPIDLY AND AI? >> ABSOLUTELY. WE CELEBRATED OUR 45TH ANNIVERSARY LAST WEEK, WHICH MAKES US POSITIVELY ANCIENT FOR A TECH COMPANY. BUT FROM FROM THE VERY FIRST COMPUTERS, TWO LAPTOPS AND TABLETS, TWO PHONES, NOW AI, WE CONNECT THE HUMAN AND THE TECHNOLOGY. WE DO THAT WITH PHYSICAL HARDWARE WITH A LOT OF SOFTWARE INSIDE. BUT TODAY, AI IS A REAL TAILWIND BECAUSE IT OFFERS ALL KINDS OF NEW WAYS TO CONNECT HUMANS AND TECHNOLOGY. >> GO THERE, BECAUSE WHEN WE WERE PREPPING FOR THIS SEGMENT, ONE OF OUR PRODUCERS BROUGHT UP AN INTERESTING POINT. WE TALK SO MUCH ABOUT AGENTIC AI , AND I'M CURIOUS, YOU ARE GOING TO BE TALKING TO YOUR COMPUTER A LOT. THERE ARE AGENTS -- WILL PEOPLE NOT NEED TO USE THEIR KEYBOARDS AND MOUSE SO MUCH AND THINGS LIKE THAT? TELL US HOW YOU EVOLVE WITH THAT. >> ABSOLUTELY. PEOPLE ARE LOOKING FOR CONTROL. WE JUST RAN THIS BIG STUDY, BUT PEOPLE FEEL -- A LOT OF PEOPLE FEEL TECHNOLOGY IS A LITTLE BIT OUT OF CONTROL TODAY. 77% SAY WHEN THEY ARE IN CONTROL OF THEIR TECH, THEY FEEL BETTER, THEY GET MORE OUT OF LIFE. THREE OUT OF FIVE SAY WHEN THERE IS FRICTION AND THEY FEEL OUT OF CONTROL, THEY GET DOWN, THEY ARE DEPRESSED, EVEN AFTER WORKING HOURS. >> WHAT IS BEING IN CONTROL AND NOT IN CONTROL OF TECH IN THIS ENVIRONMENT? >> IN CONTROL MEANS YOU ARE THE ONE CONTROLLING. NOT A BUNCH OF AGENTS ARE RUNNING AROUND DOING THINGS THAT YOU ARE NOT AWARE AND YOUR STUFF ENDS UP ON SITES WHERE YOU DID NOT WANT IT TO, THERE'S A LOT OF CONCERN OUT THERE WITH REGULAR CONSUMERS. THEY ARE LOOKING FOR CONTROL. WE ALSO FOUND TWO OUT OF THREE PEOPLE FEEL MORE IN CONTROL WHEN THERE IS A PHYSICAL ELEMENT TO THAT CONTROL. WE KNOW HOW IT FEELS WHEN YOU CLICK AND YOU SAY YES RATHER THAN JUST RUNNING AMOK. WEARING A HEADSET WITH GREAT SOUND AND YOU CAN SAY YES BEFORE THE AI AGENT DOES SOMETHING. SO PHYSICAL STUFF PLAYS A BIG ROLE AND THAT OFFERED NEW OPPORTUNITIES FOR US IN TERMS OF INNOVATION. MY SALES WERE UP 12% LAST QUARTER. SO THIS THOUGHT OF THE MOUSE IS GONE -- >> INTERESTING, I HAVE A MOUSE NEXT TO ME AND WHEN I USE MY LAPTOP. SPEAKING OF CONTROL, IN THIS WORLD WHERE SUPPLY CHAINS ARE CONSTRAINED AND EVERYONE IS COMPETING FOR A LOT OF STUFF GLOBALLY, GIVE US AN UPDATE ON YOUR SUPPLY CHAIN, THE AVAILABILITY OF CHIPS FOLLOWING. YOU HAD A FAB FIRE AT ONE OF YOUR SUPPLIERS. YOU HAD A $200 MILLION SALES IMPACT IN THE DECEMBER QUARTER, DOES IT STILL HOLD AND DOES SUPPLY NORMALIZE AFTER THE DECEMBER QUARTER? >> UNFORTUNATELY, AS WE KNOW, CHIPS ARE IN SHORT SUPPLY. THIS THOUGHT OF AI CHIPS IS REAL FOR EVERYONE OUT THERE. WE HAVE A GREAT OPERATIONS TEAM. WE HAVE BEEN OK. BUT WE DID HAVE AN ACCIDENT, ONE OF OUR MAIN CHIP SUPPLIERS HAD A SERIOUS ACCIDENT BACK IN JUNE. THEY DID NOT START UNTIL EARLY OCTOBER. THAT HAS BEEN DIFFICULT. WE SIGNALED IT WOULD HAVE ABOUT A $20 MILLION SALES IMPACT IN THE SEPTEMBER QUARTER AND UP TO $200 MILLION IN THE DECEMBER QUARTER. WE HAVE BEEN WORKING VERY HARD TO MITIGATE THOSE IMPACTS, BUT THERE WILL BE AN IMPACT FROM A SUPPLIER BEING CLOSED FOR AN ENTIRE QUARTER. >> DOESN'T NORMALIZE AFTER THE DECEMBER QUARTER? >> YES, IT DOES. >> GOOD TO KNOW. ONE OF THE OTHER THINGS I WANT TO BRING INTO THE COMPORTED INFLATION, EVERYONE HAS TALKED ABOUT IT. WE HAVE HEARD APPLE TALK ABOUT IT. HOW DO YOU PRESERVE YOUR GROSS MARGINS GIVEN WHAT YOU HAVE SEEN IN RECENT QUARTERS? HANNEKE: OUR GROSS MARGINS HAVE BEEN EXCELLENT. IN THE 44% RANGE. IT IS UNIQUE AND OUTSTANDING. HOW DO WE DO IT? MAINLY FROM DESIGNING FOR VALUE. WE ARE CONSTANTLY LOOKING AT NEW COST SAVINGS WE CAN DO WITHOUT AFFECTING QUALITY. SOMETIMES OUR INTERVENTIONS ARE BETTER, CHEAPER AND MORE SUSTAINABLE. A KILLER TEAM THAT IS SUPER COST-CONSCIOUS AND CONSTANTLY DESIGNING FOR VALUE. IN THE RECENT PAST, WE HAVE ALSO TAKEN -- WHICH WE DO NOT USUALLY DO -- ONE PRICE INCREASE ACROSS OUR VIDEOCONFERENCING BUSINESS IN MEMORY CHIPS. WE TOOK A 10 PERCENT PRICE INCREASE ON GLOBAL VIDEOCONFERENCING, WHICH IS ABOUT 15% OF OUR BUSINESS. NOT A HUGE PART. THAT HAS BEEN FINE. EVERYONE IN THE INDUSTRY HAS HAD TO DO THE SAME THING. JESS: MARK FROM BLOOMBERG NEWS HAD A STORY ABOUT HOW APPLE HAS AN UPCOMING PUSH FOR HOME DEVICES. THIS ACT CREATE OPPORTUNITIES FOR YOU WITH A HOME DEVICES OR OTHER APPLE PRODUCTS LIKE IPHONES? HANNEKE: WE ARE FOCUSED MOSTLY ON WORK AND PLAY. WE ARE THE MARKET LEADERS IN PRODUCTIVITY DEVICES AT WORK. JESS: YOU MENTIONED THE HEADSETS EARLIER. I WILL AUTOMATICALLY THINK OF ZOOM, WHICH WE HAVE USED SO MUCH. IS THAT THE OPPORTUNITY FOR YOU NOT AS MUCH APPLE PRODUCTS OR ITS RIVALS? HANNEKE: ABSOLUTELY. THE OTHER BIG OPPORTUNITY IS GAINING. GAMING PERIPHERALS. GAMING IS MAINSTREAMING, A CONTINUES TO GROW. GTA 6 LAUNCH COMING UP. IT WILL BE AN EXCITING QUARTER, AND QUARTERS, IN GAMING. WE ARE ONE OF THE GLOBAL LEADERS IN THE HEADSET SPACE, BOTH GAMING AND WORK. WE LAUNCHED A BEAUTIFUL HEADSET LAST WEEK THAT YOU CAN USE BOTH FOR WORK AND LIFE. GORGEOUS. A LOT OF OPPORTUNITY IN THE AGE OF AI FOR DESIGN LED SOFTWARE ENABLED HARDWARE. CAROL: GTA, GRAND THEFT AUTO, RIGHT? [LAUGHTER] SORRY. I KNOW EVERYBODY KNOWS. I WANT TO GO BACK TO THE APPLE QUESTION -- IS THERE AN OPPORTUNITY FOR YOU WITH THE APPLE HOME PRODUCTS? HANNEKE: HOME IS NOT SO MUCH OF OUR FOCUS. WE WORK WITH APPLE CLOSELY IN AREAS LIKE EDUCATION. WE MAKE TABLET KEYBOARDS FOR APPLE IPADS. WE HAVE ALSO WORKED WITH APPLE ON THEIR APPLE VISION PRO AND A STYLIST IN VIRTUAL REALITY. VERY IMPORTANT IN THE AGE OF AI. WE WORK WITH APPLE BUT HOME IS NOT OUR TOP PRIORITY. CAROL: ACCORDING TO MARK IT IS A HEAVY PIECE. WHAT ARE YOUR THOUGHTS ON CORPORATE AI ADOPTION? A IMPACTN YOU ARE HAVING ON YOUR BUSINESS AND HOW YOU ARE USING IT? THE STUDY YOU DID AND THE FINDINGS YOU SEE? HANNEKE: WE ARE A COMPANY OF ENGINEERS AND DESIGNERS. THEY ARE ON THE FOREFRONT OF THIS, ANYWAY. WE HAVE BUILT MORE THAN 2000 INTERNAL AI AGENTS OURSELVES IN ALL KINDS OF SPACES. SOME AREAS ARE REALLY EXCITED ABOUT, AI MANUFACTURING. WE ARE SEEING MASSIVE PRODUCTIVITY INCREASES IN MANUFACTURING FROM THE AI AGENTS WE HAVE BUILT. OF COURSE, CODING AND CUSTOMER SERVICE, WHICH EVERY COMPANY ON THE PLANET IS DOING. ALSO, AREAS LIKE MARKETING. TODAY, UNLIKE A FEW YEARS AGO, WE HAVE SO MANY CREATORS WORKING ON OUR BUSINESS, PUTTING OUT THOUSANDS OF CREATORS AROUND THE WORLD PUTTING OUT TENS OF THOUSANDS OF PIECE OF CONTENT. HUMANS CANNOT OPTIMIZE FOR THAT IN REAL TIME. BUT AI AGENTS CAN. CAROL: [LAUGHTER] HANNEKE: THIS IS WORK THAT HUMANS CANNOT DO. WE ARE NOT REPLACING ANY PEOPLE BUT DOING A BETTER JOB WITH AGENTS AND I LOVE IT WHEN THAT ALL COMES TOGETHER. CAROL: GREAT STUFF. NEXT TIME YOU COME BACK WE WANT TO FIND OUT WHAT IS HARDER -- BEING A COMPETITIVE DIVER OR RUNNING A COMPANY IN THIS ENVIRONMENT? [LAUGHTER] YOU HAVE TO COME BACK SO WE CAN TALK MORE ABOUT THAT. HAVE A GREAT WEEKEND. HANNEKE FABER. CEO OF LOGITECH INTERNATIONAL. WE HAVE SOME PROBLEMS NEXT. ♪ CHARLIE: IT IS 2:40 ON WALL STREET. WE DO CHECK MARKETS ALL DAY AMONG A BLOOMBERG. THE DOW, S&P AND NASDAQ ALL ADVANCING. TRADERS ANNA -- COUNT ON BLOOMBERG FOR THE FIRST WORD. THE S&P UP BY 46 POINTS, 7812. WILL WE HOLD ABOVE 7800 AT THE CLOSE? S&P UP .6%. DOW INDUSTRIALS UP .9%, RALLYING 482 POINTS. NASDAQ COMPOSITE OF .6%. TO YEAR, 4.79%. 30 YEAR, 5.60%. GOLD UP 1.5%. WTI HIGHER, UP .1%, $91.59 A BARREL. BRENT, $104.46. HUMANA SHARES ARE SURGING BY 13% AS THE COMPANY IMPROVES ITS PERFORMANCE ON CRUCIAL MEDICARE ADVANTAGE RATINGS THAT WILL BOOST FUTURE REVENUE. SHARES OF HUMANA UP 14%. A SOURCE TELLS BLOOMBERG A CONSERVATIVE COMMENTATOR HAS BEEN APPOINTED AS THE NEW WHITE HOUSE PRESS SECRETARY. AS THE U.S. MIDTERM ELECTIONS APPROACH, CHECK OUT BLOOMBERG'S WASHINGTON EDITION, A NEWSLETTER ABOUT MONEY, POWER AND POLITICS IN THE NATION'S CAPITAL. REPORTING AND INSIGHT THROUGH THE LENS OF BUSINESS, MARKETS AND THE ECONOMY. SIGN UP FOR FREE AT BLOOMBERG.COM/NEWSLETTERS. S&P UP .6%. THAT IS A BLOOMBERG BUSINESS FLASH. CAROL: THANK YOU SO MUCH. CHARLIE PELLETT WITH THE LATEST. THE WEEKEND IS JUST ABOUT HERE. THAT MEANS FOOTBALL. I MIGHT SEE MY GREAT-NEPHEW. HE IS A LITTLE CRITTER, BUT HE PLAYS FOOTBALL SO I'M LOOKING FORWARD TO IT. HE IS GOOD. HE IS REALLY GOOD. THAT IS MY WORLD. LET'S GET TO THE WORLD OF BLOOMBERG'S RANDALL WILLIAMS. HE IS ALL ABOUT SPORTS, THE NFL. HE IS A BLOOMBERG SPORTS REPORTER. HOW ARE YOU? RANDALL: I AM DOING ALL RIGHT. HOW ARE YOU? CAROL: A BUSY WEEK. I AM A LITTLE TIRED. NFL, IT SOUNDS LIKE THEY ARE GEARING UP FOR THE SUPREME COURT. RANDALL: THE NFL HAS HAD A LOT OF CONVERSATIONS GOING BACK TO THE TOP OF THE YEAR WITH PREDICTION MARKETS TO FIGURE OUT IF THEY WOULD STRIKE A DEAL, WHAT IS THE DEAL THEY WILL STRIKE? WHAT RELATION. THERE HAVE BEEN SPORTING LEAGUES THAT HAVE STRUCK PARTNERSHIPS BUT THE NFL NORMALLY WAITS. CAROL: WHAT ARE THEY WAITING FOR SPECIFICALLY? WHAT IS THE RIGHT DEAL? RANDALL: WE WOULD HAVE TO ASK THEM. [LAUGHTER] BASED ON THE REPORTING, THEY WANT STATES TO REGULATE TRADITION MARKETS. THERE IS NOT MUCH REGULATION RIGHT NOW BUT A LOT OF MONEY IS BEING TRADED OFF OF SPORTS. CAROL: THE MAJORITY OF IT. RANDALL: EXACTLY. OVER 80%. WHAT IS THE DIFFERENCE --THIS IS THE DEBATE RIGHT NOW --WHAT IS THE DIFFERENCE BETWEEN SPORTS BETTING AND SPORTS TRAINING? THE NFL SAID IF WE ARE GOING TO DO BUSINESS. IT HAS TO BE ON OUR TERMS. JESS: IS THAT THE KEY LEGAL QUESTION? RANDALL: IN SOME WAYS. THERE IS A GREATER FEDERAL BATTLE ABOUT PREDICTION MARKETS THAT WILL TAKE MONTHS, AND PROBABLY YEARS TO FIGURE OUT WHAT IS BETTING AND WHAT IS TRADING. IT IS THE EXACT SAME THING AS TRADING IF THE RAVENS ARE GOING TO WIN VERSUS IF THE RAVENS ARE GOING TO WIN WITH A BET. JESS: ANY SORT OF PRESIDENTS WITH OTHER PROFESSIONAL SPORTS LEAGUES BEYOND?THE NFL RANDALL: THE MLB AND THE NHL HOW TRADITION MARKET SPONSORSHIPS. THOSE PARTNERSHIPS MIGHT LOOK DIFFERENT DEPENDING ON WHAT HAPPENS WITH REGULATION. IF THE FEDERAL GOVERNMENT DECIDES THAT KALSHI CAN DO WHATEVER IT WANTS. I THINK THE DEALS WILL LOOK DIFFERENT OVER TIME. CAROL: I WAS AT THE U.S. OPEN, KALSHI HAD A PRESENCE, THE AMOUNT OF GAMBLING. RANDALL: YOU CANNOT ESCAPE IT. CAROL: IT BREAKS MY HEART. [LAUGHTER] RANDALL: IT IS EVERYWHERE. CAROL: IT BREAKS MY HEART. PREDICTION MARKETS, WE ARE TRYING TO FIND OUR WAY. THERE IS A GREAT STORY LOOKING AT SOME OF THE BETS AND HAVE A LOT OF THEM ULTIMATELY DO NOT PAN OUT -- SURPRISE! SPEAKING OF STUFF IN THE NFL, VIDEO THAT MAY CATCH ONE OF THE OWNERS AND THE BEHAVIOR THAT SOME SAY HAS COME UNDER SCRUTINY. RANDALL: I THINK CARLIE IRSAY-GORDON -- CAROL: OF THE INDIANAPOLIS COLTS. RANDALL: HER FATHER DIED LAST YEAR OR THE YEAR BEFORE, HE WAS THE FORMER OWNER AND SHE HAS SINCE INHERITED THE TEAM. SHE IS ON THE SIDELINE AND LISTENING TO PLAY CALLS AND TAKING IN THE SCENE. SHE SAID I AM LEARNING. JESS: WHY IS IT BOTHERING EVERYONE? RANDALL: YOU DO NOT REALLY WANT TO SEE OWNERS ON THE SIDELINE WITH HEADSETS ON. WOULD YOU RATHER HAVE A DONOR THAT IS NOT VISIBLE? THIS IS SOMETHING THAT WAS PASSED DOWN FROM HER GRANDFATHER TO HER FATHER AND NOW TO HER. THE FACT SHE HAS TAKEN AN INTEREST, I THINK FANS SHOULD BE EXCITED THAT SHE CARES SO MUCH TO BE ON THE SIDELINE. CAROL: IF SHE WAS A GUY, DO YOU THINK WE WOULD BE TALKING ABOUT THIS? RANDALL: I DON'T THINK SO. LOOK AT JERRY JONES. HE IS ONE OF THE BEST OWNERS IN THE NFL AND RESPONSIBLE FOR AMERICA'S TEAM. BUT HE IS THE GENERAL MANAGER AND THE OWNER. HE IS NOT LISTENING TO THE PLAY CALLS BUT I GUARANTEE HE KNOWS WHAT PLAYS ARE BEING CALLED. THIS IS ALL PERSPECTIVE. THERE ARE MALE FANS WHO SAID IT DO NOT LIKE THIS AS MUCH AND THERE IS PRESSURE ON THE COACHES. THERE IS PRESSURE ON THE COACHES REGARDLESS. CAROL: DUDES, I DO NOT LIKE WHEN YOU MANSPREAD ON THE TRAIN. [LAUGHTER] RANDALL: THERE IS MUCH WORSE MICROMANAGING THAT CAN BE DONE IN SPORTS. SHE IS NOT THE HEAD COACH. CAROL: IS SHE SAYING YOU SHOULD CHANGE THE CALL? RANDALL: I DON'T THINK SO. THAT IS NOT WHAT HAS BEEN REPORTED. IF SOMEONE WAS FIRED THEY WOULD LEAK THAT QUICKLY. CAROL: SEE WHAT WE WOMEN HAVE TO DEAL WITH? WE HAVE TO TALK ABOUT MAJOR LEAGUE BASEBALL. IT FEELS LIKE WE WERE TALKING ABOUT THIS BEFORE GETTING READY TO TALK TO YOU. EVERYBODY WANTS TO BE THE NFL, THE POWER, PRESTIGE AND MONEY. I KNOW BASEBALL IS A DIFFERENT BEAST. THEY WANT TO SHORTEN THE SEASON AND DO OTHER THINGS. RANDALL: AND ADD PLAYOFF GAMES. THERE ARE A LOT OF REGULAR-SEASON GAMES THAT FOR A LOT OF FANS, THEY FEEL LIKE THEY DO NOT MATTER. INSTEAD OF A THREE OR FIVE-GAME SERIES AND IT GOES SEVEN, IT UPS THE TENSION FOR VIEWERS AND PLAYERS AND YOU CAN SELL THAT IN A HIGHER PRICE THAN 10 REGULAR-SEASON GAMES. JESS: HOW IS THE TIMELINE ON THAT? WHEN CADETS START? RANDALL: IT DEPENDS ON THE CBA NEGOTIATIONS. THEY WILL BE NEGOTIATING VERY HARD WITH ONE ANOTHER. THERE IS A WORK STOPPAGE THAT IS EXPECTED OR A LOCKOUT -- ONE OF THE TWO WILL HAPPEN. THE BASIS IS THE OWNERS WANT A SALARY-CAP AND THE PLAYERS WANT A SALARY FOR. CAROL: YOU SAID THEY WOULD NEVER DO THAT. RANDALL: NEVER SAY NEVER. THEY ARE THE LAST LEAGUE WITHOUT A SALARY-CAP AND THAT IS SACRED TO THE PLAYERS. WITHOUT THAT, THERE IS NO $700 MILLION DEALS. CAROL: DO YOU THINK IT SHOULD BE A SHORTER SEASON? RANDALL: MLB? CAROL: YEAH. RANDALL: NATURALLY, YES. IT IS TOO MANY GAMES TO WATCH. EVEN IF YOU ARE A DIEHARD FAN YOU SHOULD NOT HAVE TO WATCH 162 OR 164 GAMES. THERE IS AN ARGUMENT THE SEASON SHOULD BE SHRUNK. IN THE NFL, THEIR ARGUMENT IS WE WANT TO ADD ANOTHER GAME SO WE CAN ADD MORE MONEY. LET'S GET RID OF THE PRESEASON GAMES. WHAT BASEBALL IS TRYING TO DO IS GET RID OF SOME REGULAR-SEASON GAMES TO ADD PLAYOFF GAMES. CAROL: MORE MONEY? RANDALL: MORE MONEY, MORE PROBLEMS. [LAUGHTER] CAROL: SHOCKING. RANDALL WILLIAMS, WE LOVE YOU. HE IS A HOST OF A PODCAST. BE SURE TO CHECK IT OUT. A HEADLINE FROM A TRUTH SOCIAL POST. PRESIDENT TRUMP SINGH VLADIMIR PUTIN OF RUSSIA AGREEING TO RELEASE DIESEL. STICK AROUND. >> THIS IS "BLOOMBERG BUSINESSWEEK DAILY," WITH CAROL MASSAR AND TIM STENOVEC ON BLOOMBERG RADIO AND TELEVISION. CAROL: THIS IS "BLOOMBERG BUSINESSWEEK DAILY" ON THIS FRIDAY. CAROL MASSAR ALONG WITH JUST -- JESS. JESS: THE S&P 500 IS ON PACE FOR ITS FOURTH WEEK OF GAINS. CAROL: THAT IS PRETTY CONSISTENT MOMENTUM. JESS: OBVIOUSLY STOPS TRADING AROUND RECORDS. DESPITE WHAT WE HAVE SEEN IN RECENT WEEKS. CAROL: IS IT A STRONG RALLY WE HAVE SEEN? BREADTH? VOLUME? JESS: THERE HAVE BEEN A LOT OF KNOCKS ABOUT BREADTH. OVER 300 STOCKS ADVANCING AND 180 SLOWING. CAROL: WHAT I THINK IS INTERESTING YOU HAVE HAD MANY DAYS WHERE THE INDEX IS UP. FOR THE INDEX IS DOWN AND MOST NAMES ARE UP. YOU HAVE TO LOOK UNDER THE HOOD TO GET A FEEL OF WHAT IS GOING ON. JESS: TELLING THE STORY, ESPECIALLY THE LACK OF VOLATILITY. CAROL: COMPLACENCY ALWAYS MAKES ME A LITTLE FREAKY. I AM CAROL MASSAR ALONG WITH JESS. BACK WITH US IS OUR EQUITIES REPORTER AT BLOOMBERG NEWS. WE HAVE TO TALK HUMANA. >> IT IS CURRENTLY UP 12%. MOST SINCE JULY. EARLIER TODAY WE SAW IT AS MUCH AS 2020. THE HEALTH INSURER RECEIVED A LOT OF GOOD NEWS IN ITS STAR RATINGS FOR MEDICARE AND MEDICAID. HIGH-STAR RATINGS BENEFIT COMPANIES THAT OFFER PLANS INTO THOSE 65 AND OLDER. THAT CAN TRANSLATE INTO BIG BONUSES THAT CAN BE WORTH BILLIONS OF DOLLARS FOR COMPANIES LIKE HUMANA. WITH THE RESULTS, THIS LOOKS LIKE IT SETS THE STAGE FOR SIGNIFICANT EARNINGS POWER FOR HUMANA IN 2028. JESS: IT WAS SUCH A BIG MOVE. WIRELESS CARRIERS, WHAT IS GOING ON? A BUNCH OF THEM ARE THE TOP DECLINERS ON THE MARKET. >> T-MOBILE, AT&T. SLUMPING 12%, THE MOST SINCE 2020, AND THAT IS AFTER SPACEX SAID IT IS ACQUIRING A LICENSE FOR CELL PHONE SERVICE. THIS DEAL COULD ENABLE ST SPACEX TO BECOME A CELL CARRIER IN THE U.S. IT IS BUILDING A SERVICE ON PAR AND THAT TAKES A LONG TIME. IT WILL TAKE YEARS. AND IT IS A VERY MASSIVE INVESTMENT. CAROL: WE USE SPACEX WHEN WE ARE IN THE WATER. IT WILL BE A MATTER OF TIME BEFORE ALL OF OUR CELL PHONES AND TELECOMMUNICATIONS IS OFF OF STARLINK. >> VERIZON COMMUNICATIONS DOWN 10%, ON PACE FOR ITS WORST DAY SINCE JULY OF 2002. THAT IS A BIG MOVE. CAROL: EXACTLY. WE WILL TALK MORE ABOUT SPACEX. I FEEL LIKE EVERY DAY WE TALK ABOUT SPACEX. THAT IS T-MOBILE. APPLE, WHAT IS GOING ON? >> IT IS CURRENTLY SLIPPING ABOUT 40 8% AFTER A REPORT THE COMPANY CUT ORDERS FOR THE IPHONE 18 AND IPHONE 18 MAX. THE TIMING OF THESE ORDERS IS CONCERNING BECAUSE IT MEANS THAT JUST THREE WEEKS OF DATA HAS ALLOWED APPLE TO CONCLUDE THE CASE IS OFF THE TABLE. HOWEVER, BLOOMBERG INTELLIGENCE IS CAUTIONING AGAINST THAT, NOTING MULTIPLE FACTORS COULD CONTRIBUTE, INCLUDING THE ROLLOUT OF THE IPHONE DUO, MAYBE PEOPLE ARE MORE INTERESTED IN THE FOLDABLE PHONE. CAROL: I TOLD TIM, BUY YOUR NEW PHONE. HE IS A FEW ITERATIONS BEHIND. JESS: I JUST GOT ONE A YEAR AGO. CAROL: NOT THIS CYCLE? JESS: I HAVE THE OTHER ONE FOR 4-5 YEARS AND I WAS FORCED TO DO IT. [LAUGHTER] CAROL: I FEEL LIKE A LOT HAS BEEN FLOWING THROUGH WHEN IT COMES TO APPLE AND WHAT THEY'RE UP TO. AVALON PURNELL IS EQUITIES REPORTER AT BLOOMBERG NEWS. THAT WILL DO IT FOR OUR FIRST HOUR OF "BLOOMBERG BUSINESSWEEK DAILY." BE SURE TO CHECK OUT OUR PODCAST. FIVE MINUTE EPISODES WITH WINNERS AND LOSERS IN THE STOCK MARKET. FIND IT ON APPLE OR SPOTIFY OR ANYWHERE YOU YOUR PODCASTS. WE ARE CRUISING TO THE FINAL HOUR OF TRADING. THE BLOOMBERG SPACE REPORTER WILL BE WITH US. WE WILL TALK MORE ABOUT SPACEX. WHEN IT COMES TO STARLINK, THE IMPACT IT COULD HAVE. JESS: THERE IS SO MUCH GOING ON. MORE AI. WE TALKED ABOUT THE COLLISION. THE SCIENCE BEHIND WHAT IT DOES TO YOUR MIND. CAROL: EXACTLY. IT IS A LITTLE BIT FREAKY. THERE IS A GREAT STORY ABOUT IF YOU WANT TO WORK FOR SPACEX, WHAT IS INVOLVED. BASICALLY, YOU WILL HAVE TO TALK TO ELON OR GET SOME ENDORSEMENT FROM HIM. JESS: [LAUGHTER] CAROL: WITH ALL THE SPEND, THE BUILD AND THE STORIES THAT COME OUT OF AI AND GETTING SOME PEAKS BEHIND THE FINANCE WHEN IT COMES TO OPENAI AND ANTHROPIC, WE WILL CHECK IN WITH BOB, ANALYST FOR BLOOMBERG INTELLIGENCE.