Good Tuesday morning, 30 minutes until
the start of trading. I'm Matt Miller.
>> And I'm Katie Grfeld. Bloomberg open
interest starts right now.
[Music]
Coming up, retail earnings roll in. Home
Depot's results offering the latest sign
consumers are staying away from big
purchases. Meanwhile, in tech news,
Intel draws support from Soft Bank as
well as the president of the United
States as Palo Alto wins praise from
Wall Street. Plus, President Trump stuns
the logistics industry by widening his
metals tariffs to include more than 400
consumer items, including baby seats and
motorcycles. Katie, what are you
watching?
>> I know that news hit you particularly
hard when it comes to those motorcycles.
Let's talk about Intel, though. One of
your favorite stocks to watch. It's
surging on news that the Trump
administration is considering a 10%
government stake in the chipmaker. That
also comes as SoftBank announced a $2
billion stake in the company. So, uh, a
lot of folks circling Intel right now.
Shares up another 5.7%.
>> Yeah, we're going to talk about that
because it's such a fascinating story.
We're going to dig deep into this once
iconic chip maker. and Home Depot
reaffirmed guidance for the year despite
a pullback in comparable uh sales as
inflation uncertainty lingers. This I
think is fascinating although the stock
is up 2%.
>> Yeah, an interesting uh pre-market move
there because originally it was down 5%
in the wake of those uh numbers, now up
slightly. Let's unpack it all by with
Bloomberg's Emily Cohen. She leads our
coverage of the US consumer. So what is
the read here? We know that the call
also is kicking off just about right
now. So uh things could change, but it
seems like on some of these key metrics,
there was a little bit of
disappointment.
>> Yeah, I think what we're seeing here is
much of what we've seen throughout the
year, rates continue to be high. That's
keeping people from um going in on big
projects like kitchen and bathroom
renovations, but Home Depot is still
seeing growth in those smaller projects.
They called that out specifically on
this call. Um, think gardening,
lighting,
>> painting refreshes. So, people are still
going to Home Depot. Comp sales growth
was up 1% small, but a positive sign.
And um, they noted that the business
improved over the course of the quarter.
>> So, higher rates are a problem. Higher
prices. Is that uh hitting consumers?
Because they don't get the lion share of
their products from overseas. This is a
company that gets a lot of Americanmade
products.
>> So we spoke to the CFO this morning and
he said that most of what they've been
sell they were selling in this quarter
they already had prior to new tariffs.
So those costs were not getting passed
on to the consumer in this current
quarter. But he did say that price
increases were coming in the back half
of the year. So we are expecting to see
that.
>> All right Emily thanks very much.
Bloomberg's Emily Con you're going to
run over and jump on that call. Let's
get to the tech stories because there
are
>> several many an embarrassment of riches.
>> Yeah, absolutely. The Trump
administration in discussions, as you
probably know, to take a stake of about
10% in Intel, but we're getting more
details as to how they're going to
finance that and what it's going to mean
for actual capital. Plus, SoftBank
agrees to invest $2 billion in the chip
maker, and that's got to make the White
House happy as well. Bloomberg Tech
co-host Caroline Hyde joins us now here
on set. And Caroline, what I'm
interested in is how much actual money
is Intel going to get to invest in
central Ohio? Like what's the government
stake and the soft bank investment going
to yield in terms of working capital?
>> And is it money that has already been
promised? Because Intel is one of the
biggest receivers of the chipsack money.
We're talking about $10.9 billion if you
put it all together. And the talk of the
town and the reporting coming from
Bloomberg is that that's just going to
be converted into an equity stake. When
you're about a hundred billion dollar
company, $10 billion means you get about
a 10% chunk. But does that 10% equity
ownership by the government mean
suddenly they have an impact at the
board level that they have a narrative
in the direction of travel of this
business? Lynx Equities, which is one of
the anal analysts out there that have
written a really a note saying this is
monumental because not only does it
drive in theory far more government
interaction with Intel becoming a key
infrastructure in the United States and
that is but a positive but then you add
the Soft Bank situation $2 billion
coming from Masayoshi Sun. What does
that mean with combining the
architectures with ARM? Remember chip
designer is also controlled by SoftBank.
Suddenly you've got a whole new breadth
of growth and they think a refocus on
R&D coming from Intel instead of being
one of retraction. This is an
expansionary story in the United States
for Intel.
>> Well, it's interesting what you're
touching on too is that it seems like
the US government and SoftBank are
interested in different parts of the
business. It seems like the government
is chiefly concerned with uh the
manufacturing capabilities. That's not
necessarily what ARM is after. It's more
the chip design.
>> It's the design and it's taking on
Nvidia. Massa made a ton of money by
owning Nvidia stock for ages. He kind of
sold out an integral moment. But
recently the numbers have gone up and to
the right again for Masayoshi son's own
wealth because he took a stake back in
Nvidia. Now he also though is a bit of a
friendmy to Jensen W because he does
want to be able to take on the AI
spectrum of chip design. He can much
better do that with ARMS chip design
integrated with Intel and the
manufacturing side there as well to make
a reality. So he wants to drive for
generative AI to tokens and and more
broadly using his hardware and chip
designs going forward. Meanwhile, the
government just wants Ohio to become a
reality. JD Vance used to be a senator
there. They want to put chip well
manufacturing prowess on the ground.
They want to ensure that they got supply
chain here and domestic strength, but
also some jobs. It would help.
>> Yeah. Right in Licking County next to my
hometown. uh or you know Granville, Ohio
is just such an important it's a mecca
>> of uh chipm capabilities.
>> Great people.
>> Um listen,
>> Nvidia wants to provide even more
powerful chips than the H2O chips
they're already allowed to sell into
China.
>> H2O, is that what you're calling?
>> Are they Is it H20? H2O makes a lot more
sense to me in terms of branding, in
terms of marketing. True. But um
>> it's as essential as water,
>> right? The Chinese though have long been
trying to dissuade their own
manufacturers from using these chips at
all.
>> I know they don't want to have US
basically an integral part of their
generative AI prowess in China and they
want to be using their own Huawei made
chips but the basics is they haven't got
enough of them. The supply isn't there.
You're not able to train models as
efficiently. Deep Seek tried it, but
ultimately they want access to Nvidia's
architecture and H20 is great, but maybe
a B30A as Reuters is reporting the
Blackwell Chinese version. That is what
they want. And actually, look, we had
lots of hints of that from the president
himself. Do you remember President Trump
just last week was saying, "I have a
feeling Jensen Wang is going to come
back and want to negotiate about getting
access for his chips that are based on
the Blackwell architecture into China."
So, this had already been kind of hinted
at, but this is what China wants access
to. Who knows what percentage of sales
and Jensen Wang's going to have to pay
to get that access, but clearly
>> Cali Cox probably kickback. Remember
that she did. That was uh
>> she she retracted though that phrase
>> you pushed back. Uh Caroline, before we
let you go, we do have to talk about
Paulo Alto. Uh this cyber security
company.
>> Yeah, absolutely. Investors really
welcoming last night's results with open
arms. What was the big takeaway? Well,
the revenues are going higher in the
quarter that they just posted, but the
next fiscal quarter year more broadly,
they're able to signpost future growth.
Look, this is a company that yes, the
founder who was the CTO is retiring, and
that's a little bit of a worry for
Bloomberg Intelligence going forward in
this whole platformization of the
business, but this is a company that
wants to offer you a one-stop shop when
it comes to cyber security. It's why
they're doing big M&A, and at the
moment, it's working. companies want
fewer vendors and they want a more clear
price point and that's kind of what
they're getting with PaloAlto Networks
and the stock is clearly reacting to
some of the numbers. We got the CEO on
later.
>> We should I want I just want to point
out because we showed the year-to- date
chart which doesn't look that great but
over the last 5 years the shares have
quadrupled.
Over the last 10 years they're up more
than 500%.
>> You always have to zoom out. That is the
take.
>> Yeah, I think it's a fascinating story
and I'm really looking forward to
>> full circle used to be over at Soft
Bank. He's a man who understands Nick
Aurora, the CEO.
>> Exactly. A guy who understands the
financials of a business as well as
sometimes just the offering of what they
can make.
>> Well, that is Bloomberg Tech co-host
Caroline Hyde and as she mentioned,
she'll be back next hour with the CEO of
Palo Alto Networks right here on
Bloomberg television. But let's turn now
to tariffs because President Trump
stunned the logistics industry by
widening steel and aluminum tariffs.
Now, these new tariffs impact more than
400 consumer items, including baby gear,
motorcycles, and table wear. Bloomberg's
economic statecraft reporter Joe Doe
joins us now. So, clearly the timing was
s a surprise. Another surprise here is
that this did not exclude goods in
transit. Joe, what do we know so far?
>> Uh, we know we just got a heck of a lot
more tariffs. Um, in our story today, we
uh quoted a Michigan State uh professor
who focused on supply chains and said uh
if you count everything that just got
listed in inclusions for new tariffs, uh
it's six times more than the total that
we saw in uh the 2018 time period. So
this this is a massive expansion of what
is actually covered. I think importantly
for people to know as as you showed up
on on the screen there, uh these are
derivatives, right? So these are
derivatives of steel and aluminum. Um I
think I think it was a surprise because
well one maybe a lot of people just
forgot that there was a common period
for inclusions. Uh but also the timing
was never quite clear to the market and
so for it to drop uh here like over the
weekend basically I do think that comes
as a bit of a shock and as you said it
it it's instant. So you didn't have a
time period to move or ship any sort of
products into the country ahead of that
tariff coming in. So, a lot of people
are probably going to be uh pretty upset
by that.
>> Yeah. I wonder, Joe, you know, if you're
an importer and all of a sudden the
goods that you've already ordered that
are in transit are now going to cost
more than you expected, um that's a big
burn. And the question is, are you then
a little bit more shy next time you
import stuff? Are we going to see this
um coming through in economic numbers
because people are afraid to put in
orders?
Yeah, I mean, Matt, I mean, I I think
it's fair to wonder that out loud,
right? I I think one of the things that
we're watching tariffs broadly, right,
is kind of the dislocations that we're
constantly seeing uh coming out from
announcements um being far away from
expectations. This might count as one of
those uh people again not knowing that
there would be a massive list of
inclusions coming at the time that it
did. You know, there was a comment
period for people to ask for those
inclusions. I understand that the ones
who asked pretty much got them granted.
Uh but a good example uh comparing this
is like looking at the copper market
just a few weeks ago. Um most of the
copper market had expected that refined
copper would be tariffed and so they
spent months shipping metal into the
United States ahead of tariff
announcement. Of course the president
came out and did not announce that he
was going to tariff refine. Instead it
was on products specifically. Slightly
different here but it still shows you
had a massive dislocation in the market.
I mean copper dropped 20% that day. I
think it's getting really difficult for
buyers in the United States to predict
what they can do moving forward. I mean,
when you're shipping, you're talking
about 90day time periods. Um, and for
this to happen overnight, I think it
hurts.
>> Yeah, absolutely. A lot of big questions
out there that are pretty difficult to
answer at this point. That is
Bloomberg's Joe Doe. He is our economic
statecraft reporter. Meanwhile, let's
take a look at another stock moving this
morning, SoFi. The stock is climbing on
breaking news that it will add
blockchain enabled international money
transfers to its app. It will be
partnering with Lightspark for that
service. You can see shares up about 2%
pre-market.
>> This is I think a fascinating story. As
someone who spent a lot of time living
overseas, right, it is very frustrating
to try and move money uh internationally
in and out of the US. Of course, if
you're doing it within Europe, it's
super easy and quick, but um this will
make it instantaneous if they're if
they're using the technology right and
incredibly cheap. So, um it's a real
problem, I think, for a company like
Wise, like Transfer Wise, which
currently probably dominates this market
for consumer transfers. should note that
this reporting is coming from Dow Jones
and they quote CEO Anthony Notto saying
that this service will first roll out in
Mexico and then it will expand to other
countries maybe help facilitate those
crossber payments that you're talking
about. But coming up,
>> yeah, more talks on Ukraine. President
Trump calls for a meeting between
Presidents Putin's Presidents Putin and
Zalinski. We'll give you the details on
what they've achieved and what's yet to
come next. This is Open Interest.
Let's get a look now at high interest.
What's making headlines around the
world? Tesla is pricing its new Model Y
sport utility vehicle in the same range
as uh local rival Lee Auto's L8 model to
win over middle class families in
China's hyper competitive market.
Tesla's Model Y SUV will be available
for as low as $47,000
there with deliveries anticipated as
early as next month. So, in case you're
buying a Tesla in China, maybe um you
need to know that. Viking Therapeutics
is falling in pre-market trading. The
biotech company's oral weight loss drug
missed Wall Street's estimates. Mitsuo
writes, "The data looks inferior to Eli
Lilly's pill on nearly all metrics and
probably shutters hope for Viking to be
a big-time player in the oral obesity
market over the near to medium term."
And Robin Hood is expanding its
prediction markets with new contracts
that are tied to pro and college
football games. DraftKings and Flutter
Entertainment are falling on the news.
You can see Robin Hood right now up just
about 3/4 of 1% in the pre-market. But
Katie, I think this story is just going
to build.
>> Yeah, absolutely. Robin Hood clearly
trying to expand into sports betting.
We'll see if that works. But let's
switch gears here and get back to
geopolitics because President Trump is
pushing for a summit between Ukraine's
President Zilinski and Russia's
President Putin to discuss terms that
could bring an end to the war. Trump
urged Putin to consider the plans after
European leaders joined Zilinski at the
White House yesterday.
>> We need to stop this war to stop Russia
and we need support American and
European partners. We will do our best
uh for this.
>> If everything works out well today,
we'll have a trilad and I think there
will be a reasonable chance of ending
the war when we do that. the coalition
of willing uh countries, that's 30
countries already working together on
security guarantees, will now work with
the US on those guarantees.
>> For more, we're joined now by
Bloomberg's Washington correspondent
Tyler Kendall. Tyler, it's worth
pointing out that uh Putin and Zilinsky
haven't had a face-to-face meeting since
February 2022, at least when, of course,
Russia invaded Ukraine. What potential
timeline are we talking about for this
potential meeting?
Yeah. Hey Katie. Well, we actually heard
from the German Chancellor MS yesterday
who said that this bilateral could take
place in the next two weeks, but we
should caution that we haven't gotten
any sort of confirmation when it comes
to Russia's side of this. Although, we
did hear from the Kremlin through
Russian state media yesterday saying
that Vladimir Putin did talk with
President Trump about the idea of
lifting the level of official for these
conversations, but did not expand beyond
that. We're still waiting to see some
details here, but President Trump took
to Truth Social yesterday and said that
he has laid the groundwork for first
this bilateral meeting at an undisclosed
location in his words and that that
would then be followed by a trilateral
meeting that would include him. Now,
President Trump did speak by phone with
Vladimir Putin yesterday. Actually, our
reporting indicates that it happened
amid these discussions with European
leaders at what turned out to be an
impromptu summit at the White House
where we really did see a relatively
warmer welcome for the Ukrainian
President Zalinsky compared to the last
time he was at the White House back in
February. And we all know that that
meeting had devolved uh into essentially
a shouting match. It had ended early.
But instead, we saw many of the European
leaders leave the White House yesterday,
striking a more optimistic tones uh
about how uh the talks have been uh have
progressed and progress made yesterday
here in Washington.
>> Yeah, I was listening to uh Balance of
Power Tyler yesterday and I heard yet
another general and you've had a number
on that program recently say that Russia
is losing this war. Um, how much land is
the president of the United States
interested in giving Russia um to stop a
war that that country illegally started
and is losing?
>> This is of course a big issue of
contention here uh Matt and we have
heard President Trump say that any such
peace deal will likely include Ukraine
having to give up territory. But he did
say that this is ultimately up to
Zalinsky and Putin to work out. And we
know that it has been a red line for
Zalinsky before, but yesterday after
that meeting, speaking outside of the
White House to reporters, Zalinsky said
that he would be willing to talk about
this in person if a bilateral meeting
with Russian President Vladimir Putin
ends up happening. And we know that the
Kremlin has demanded that a large part
of eastern Ukraine, the Donbos region,
which includes two very large provinces,
uh would be completely uh handed over in
any such deal. It is hard to imagine
that that would actually be a concession
on the table that Ukraine would be
willing uh to make since you did mention
balance of power. You know that we had
Melinda Herring on yesterday of the
Atlantic Council who told us that Russia
does not completely uh occupy those
areas. In total, they occupy about 87%
right now of the Donbos region, but they
are demanding the entire area. So there
are a lot of big questions here about
what this is going to look like moving
forward, whether or not the sides would
be willing to perhaps freeze the battle
lines where they are. It is a big issue
of contention and is something that our
European allies say uh there cannot be
discussions around yet until there are
firmer security guarantees on the table
when it comes to the future of Ukraine
security, which is another big
development that we got out of
yesterday.
>> Tyler, looking forward to your continued
coverage on balance of power. That is
our Washington correspondent, Tyler
Kendall. Meanwhile, coming up, we'll
discuss the health of the consumer and a
potential big tech bubble concerns with
HSBC's Raquel Odin. That conversation up
next, this is Open Interest.
Options traders are preparing for the
worst with big tech. Traders are buying
disaster puts on the Invesco QQQ ETF as
a hedge for any sharp downturn. That is
according to 22V research. Remember,
concentration in the MAG7 is extreme as
the index has risen 50% since its April
bottom. Joining us now to discuss is
HSBC's head of wealth and private
banking, Raquel Odin. Raquel, great to
see you in person.
>> Great to see you guys. So, let's talk
about where we stand and how investors
should be approaching it. Because you
think about this really violent rebound
that we've seen since the April lows,
does grabbing tail risk protection at
this point make a little bit of sense?
>> It does. But here's what I'm saying. I
as I was just sharing right before we
went on air, um my excitement for what
I'm expecting from the markets right
now. So you're seeing such strong
performance whether it's the NASDAQ's up
42% the S&P's up 19% I mean actually
Dow's up 19% the S&P is up 10%. So
incredible performance. You actually add
to that what we're seeing from these
corporate earnings. Uh corporate
earnings continue to outperform. 95% of
corporates have come in uh over
expectations which is great to see. Then
we talk about this important thing
called the rate cuts. You add the
potential three rate cuts of which what
we're saying right now whether that's
September, November and March at a
minimum 75 biffs will continue to fuel
this incredible market and then you add
to that the efficiencies that we're
seeing from a lot of corporations around
AI. So the fundamentals are telling us
the markets look pretty good and we'll
continue to see that. Of course there's
always that slip or what we anticipate
as a slump which we'll talk about a
little bit later but currently really
strong performance. Yeah, to me it feels
like there's so many things that just
don't quite jive right. Like um the
market's doing great.
>> This is the hottest economy in the world
and we need to cut rates by 75 bips or
we're all buying these disaster puts and
the and Nvidia is the most underowned
that it's been in 16 years. We're going
to talk about that when we come back. Uh
Raquel Odin is staying with us and shall
we check futures before we only have 5
seconds. Not much to talk about because
the market's a little bit lower right
now. We'll walk you through all of the
action up next.
>> We are moments away from the start of
trading. This is Bloomberg Open
interest. I'm Matt Miller. We see
futures down a little bit, but again
really holding at at record highs,
right? I think the S&P 500 closed at
64.449
yesterday. Um, so it's been an
incredible uh gain and not as good as
you would have had if you bought, you
know, like Madrid stocks or uh Frankfurt
stocks, but we're still seeing record
highs or near record highs, I should
say, because futures are falling so
little. At the New York Stock Exchange,
EB Research Partnership is ringing the
bell. It's like super slow season at the
NYSE. They just have like charities and
partnerships like instead of traded
companies like the NASDAQ.
>> Well, at the NASDAQ you have the
Campbell company which they remind us
it's not just Campbell Soup anymore
because they own like Prago and V8 and
Sners and Kettle and uh all kinds of
>> Pepperage Farm Cape Cod. But the stock
has been an absolute dog year to date.
It's down 20%. If you invested for the
last five years, you've lost a third of
your money. Even over the last 10 years,
you've lost money on Campbell. So,
they've got to do something to turn this
around.
>> All right. Well, hopefully that they're
watching and listening. Probably not
because they're ringing the bell, but do
something, says Matt Miller. Let's talk
about Intel. It's been several minutes
since we checked this stock, and we
actually have a lot to talk about when
it comes to Intel. Surging on news that
the Trump administration is considering
a 10% government stake in this
chipmaker. That comes as SoftBank
announced a $2 billion stake in the
company. A really interesting story uh
both uh politically and fundamentally
when it comes to Intel at this moment.
Shares up about 7%. Matt Miller, I
believe they're back over hundred
billion dollars.
>> Yeah, just over I mean they're not worth
as much as Palo Alto Networks, you know,
but um they're getting there.
>> Deep tease, we have Michael Ball coming
on from the Mive team and he has a a
take that really changed the way I think
about this whole uh story.
all about national security.
>> Absolutely. He's coming on in about a
half hour. Uh that's a segment you don't
want to miss. Home Depot reaffirmed
guidance for the year. Maybe that's why
the shares are now climbing 3%. Comp
Store sales grew only 1%. Analysts were
looking for 1.4% growth. The problem
there, I guess, is higher rates. Um but
the question is do people go and brave
the higher rates uh in order to avoid
inflation that has to come later since
all the stuff they sold they already had
in inventory.
>> Well that's the thing we heard from the
CFO that price hikes are coming later in
the year. So we'll have to see.
>> Yeah, you got to weigh uh do you have to
borrow um or can you uh pay with cash?
We are back with HSBC's head of wealth
and private banking Raquel Odin. And
Raquel, I was talking about a couple of
conundrums um before we went to break.
And
>> you know, you say 95% of companies are
beating earnings. That's great. And
earnings growth is fantastic. It's like
eight or nine% if you use the EA
function on the Bloomberg terminal, you
can find that. So why does the Fed need
to cut 75 basis points through year end?
Like
>> rates don't feel super restrictive, do
they?
>> So I'd say there's a couple things
there. So I'd also add to the conundrum.
If we take a look at consumers, they're
doing pretty well, right? Wages are up
4%, outpacing inflation at 2.7%. Uh,
when we look at their what I call their
confidence in the markets and spending,
that's actually happening. Credit debt
is staying flat. So, another conundrum,
if you're saying consumers are doing
great, corporates are doing great, why
would we cut rates? And the big unknown
here, which is really causing the
inflationary items that we're talking
about, is the tariffs. So the unresolved
of the tariffs are absolutely what's
pushing up inflation. We were at 2.3%,
we went up to 2.7%. What we do know is
now producers are going to start passing
those costs on to the consumer. So that
is the need or the importance of the
rate cut truly inflationary through the
tariff decisions that have not been made
or made but changed so often that's
causing. What is Powell going to do? Is
Powell going to say, "Listen, I think
inflation is coming later from tariffs,
so I'm going to do my best to help out
this administration and cut rates."
>> So, I think right now since we're so
close to the what 95% likelihood of the
September rate cut, um, also what's also
important about that when you take a
look is not only anticipation of the
tariffs, but what you haven't seen so
far though is those have not been
actually passed on to the consumer yet.
So, at this point, corporations could no
longer hold back. So, the likelihood of
that happening is going to be pretty
high. So that now means cost of goods
are going up, right, for the individual.
So you've got to figure out ways to ease
that for the individual as well as you
just talked about Home Depot. Home Depot
probably came in a little lower than
earnings expected, but they're tied to
the home market,
>> right? We also want to fuel home buying
and we also want to feel construction
and again going back to that consumer
side of things. So rate cuts are
actually going to be about the
individual, which I think is a good
thing. Well, I feel like we can't ignore
the labor market in this conversation
because, okay, there's a lot of concerns
about inflation. Uh, you think about the
Goldman Sachs estimate that got Yonhias
in trouble with the president that,
okay, businesses are eating the cost
right now that's going to be passed on
to consumers. But then you think about
the July jobs report, which was great,
really ugly revisions that we got. It
really that was what's solidified the
pricing for that September rate cut and
beyond.
>> So, beyond that, but currently, which we
know, unemployment rate is at 4.2%.
Right. So as you said, it's the
anticipation. So that is the intent of
what the Fed needs to do. Anticipate
where things are going and looking at
the core fundamentals. I would say this
is one where it hasn't been a black and
white decision. And the kind of big
unknown that has caused what I call
difference in what we normally see from
the Fed is the tariffs. And there is no
historical history. There's nothing to
point to, right? And I think that's
here. They're just going to have to make
the right judgment call for the
individual.
>> So before we let you go, let's bring
this conversation to uh the portfolio.
Yeah,
>> how do you structure a portfolio around
this around these different crossurrens?
What the Fed is doing? Wait against the
fact that corporate America as you
mentioned is very strong right now.
>> So there's two things I always say, you
know, sees the moment, right? No matter
what's actually happening and I think we
all know for September and October,
that's actually usually the norm normal
cyclical lowest performing months in the
market. So I'd say it's a buying
opportunity in those cyclical months of
September and October that we're going
to see. So we are going to see a little
slow as it relates to what we normally
have seen normally. And then
additionally the hope here is we
actually see that rate cut. So I'd say
there's opportunity in this market in
the next two months.
>> I have to ask you about this chart.
Katie and I were talking about this on
the call this morning. Goodness.
>> It's hard to believe that Nvidia is
under that investors are underweight mag
7 Nvidia and Mag 7 stocks. But Morgan
Stanley was out with this uh inscrutable
chart.
>> Well, I think it's very interesting. It
may be a little bit difficult to read,
but you can go to the Bloomberg terminal
and check it out or you can go to Morgan
Stanley probably. Uh go to go to your
broker stand in front of your TV,
>> call your broker, get professional.
>> The point is these uh dark red diamonds,
right, are institutional waiting and the
dark blue diamonds are the S&P 500
weight. So the the point is
institutional waiting is far below and
has been historically the uh S&P waiting
of these companies Nvidia, Microsoft,
Apple, Amazon. Um but it strikes me that
you're unlikely to hold a a tenth of
your portfolio in Nvidia, right? What
what do you tell clients?
>> So I tell clients as we always talk
about the importance of diversification.
And I think what we have seen though
quite honestly about the mag 7 versus
what I call the forgotten 493 which I
talk a lot about you know it's 2 to1
earnings where mag 7 continues to take
off on a level that none of us can
anticipate. So I'll go back to my
statement a little bit earlier if you
have interest in the mag 7 October might
be the opportunity for you to get back
in there but I will tell you quite
honestly we expected to see more from
the 493 but the mag 7 has just been a
real concentration over this time
period. Yeah, and that's been uh
beeviling active managers for quite a
while now. Raquel, always great to catch
up with you. Really appreciate your
time. That is HSBC's head of wealth and
private banking, Raquel Odin. Meanwhile,
let's get a check on the stock market
right now. We're just about 8 minutes
into the session. Only lower by about a
tenth of a percent on the S&P 500. I'm
so excited to talk about the individual
components, though, because what an
interesting leaderboard you have at the
moment. Up top, uh, you can see that
it's Intel actually is the biggest
points contributor to the S&P 500 right
now, up about 8%. Then you have Palo
Alto Networks up almost 7%. These two
are neck andneck when it comes to the
points. Eli Liy also having a great day
on the heels of some disappointing data
from Viking Therapeutics. We'll get into
that in just a bit. Then you train your
eyes on what's going on on the downside.
Microsoft, Broadcom, Amazon, Palunteer,
some of those big tech heavy hitters
really dragging this index down or
trying to. We'll see who eventually wins
out. But let's take a look at the sector
level as well and what the spread looks
like there. It's almost an even split
when it comes to your sectors. You take
a look at what is green right now. Real
estate, consumer staple, materials.
Those are your top performers on this
Tuesday, Matt. Then you go down to the
bottom. You do have tech down by 4/10en
of a percent. And then communication
services, which is really tech in
disguise, also down about 7/10en of 1%.
>> All right, that is a fascinating look at
what's going on at the index level um
and at the industry group level. Coming
up, it's been a wild few days for Intel.
This is one of Katie's favorite stories
and has been honestly for over at least
over a year. It sees a huge investment
from Soft Bank, $2 billion, a potential
stake from the Trump administration,
onetenth. And there's so much more to
talk about uh involving the great state
of Ohio and Licking County. We'll give
that to you when we come back. This is
Open Interest.
All right, it's time now for top calls.
Some of the analyst action in focus this
morning. And first up, Caterpillar
getting raised to a buy over at
Evercore. The analysts over there say
that the company is trying to reduce
discontinuing in the fourth quarter,
which would boost earning shares up a
little bit this morning. Next up, the
data center energy company Verdive is
getting initiated with a sell rating
over at GLJ Research. The analyst says
that the stock is pricing in perfection.
And good news, we'll sit down with the
CEO next hour. Finally, Paulo Alto is
getting upgraded to over at Bank of
America to a buy after what the firm
calls an impressive performance on all
fronts in its fourth quarter. Also, good
news. We'll talk to the CEO next hour.
Matt Miller,
>> we talked to a lot of CEOs on this
program. That's the point. So, I'm
looking forward to those two interviews.
We've been discussing the US
government's potential 10% stake in
Intel using the Chips Act as equity.
Bloomberg tech editor Peterstrom joins
us now from London to try and sort
through this uh complicated and
fascinating story. Peter, so I've you
know my main concern because I'm from
Licking County, Ohio is that you know
they have the cash they need the capital
to build this giant fab um I guess
between Columbus and and Granville. So
is this money going to come to them?
Have they already gotten some of it? And
how is SoftBank going to help?
Yeah, Matt. Well, I don't know the
geography of Ohio quite as well as you
do, but yeah. Yeah, this there are a
couple things going on here. First of
all, what we heard overnight is that
SoftBank is going to step up. It's going
to spend $2 billion for a stake in
Intel. That is a vote of confidence that
SoftBank perhaps can work with the
company and that Intel is going to be
able to make some of these advanced
chips. SoftBank has some ambitions to be
able to develop AI chips that would
compete with uh Nvidia in particular AI
chips that would help run some of the AI
models like chat GPT. So that looks like
that deal's been announced. That deal is
done. On the other side, uh the Trump
administration is in talks with Intel
about making this investment. Could be
about $10 billion. Howard Lutnook, the
commerce secretary, just confirmed this
uh earlier today that they are in talks
to be able to put this money into Intel
to take an equity stake. Now, Intel was
already supposed to get a bunch of that
money through the chips act, this whole
Biden administration plan to rebuild the
US semiconductor industry. Now, the
Trump administration is changing it a
bit to see whether they can put that
money in and then take an equity stake.
They would probably also have some
influence at the company uh because of
that. Perhaps to invest in Ohio, perhaps
in other areas to try to restore US
manufacturing of semiconductors.
>> Talk us through a little bit more the
soft bank interest in Intel. Uh we
understand the government perspective
pretty well at this point, but the
Financial Times reported that actually
uh Sun was holding talks with Intel CEO
about just outright buying the company's
contract chipmaking business. Instead,
here we are with the $2 billion
investment.
Yeah, there are a couple of divergent uh
interests here. So, SoftBank, the
Japanese conglomerate, has been
investing in a number of different areas
of AI, robotics, and semiconductors.
They own ARM, of course, which is uh the
the chip designer that is used
throughout the smartphone industry in
particular. And ARM has been trying to
move into AI and some of these other
growth areas to add to their potential.
uh in particular, Masioan has had this
secret project that we wrote about uh
called Izanagi where they want to design
AI chips and then having them
manufactured either by uh Taiwan
Semiconductor or perhaps somebody else
like Intel to be able to compete with uh
Nvidia and get some of that growth in
the AI side of the sector. Now, as uh
Lip Bhutan, the new CEO of Intel has
been working on a revival plan. He's
looked at a number of different uh
alternatives as we've reported before.
There is the potential that um the
foundry business which competes most
directly with TSMC could be spun out. It
could become a separate company. There
are possibilities along that uh
scenario. But one of the key things the
key reasons to do that is because the
foundry business requires so much
capital to make these investments. So I
think the Trump administration money if
it comes through could help them make
those investments in the foundry
business. Now what they still need
though is customers. They need customers
for that foundry business. They haven't
been able to demonstrate that their
chipm is so good that they can draw on
customers like Nvidia, Apple, Tesla,
those kinds of companies that you would
want to be able to grow the revenues a
lot.
>> You know, on our um on our call this
morning, which was at 6 a.m., so three
and a half hours before the market open,
I was like, I got to ask Peter why the
shares aren't reacting more strongly.
Like even on Friday when this news came
across, they were only up 3%. And if the
government is going to put its gigantic
weight behind the company and now we
know SoftBank is going to invest as
well, why aren't more investors going
along for the ride like uh Peter Cheer
at Academy Securities is. But now I see
um some real action in the shares. Um
this is over the last 6 days. 27% is the
gain. Today they're up 11%. So it looks
like investors are finally really
starting to buy into this story, Peter.
>> Yeah. Well, shares were up last week. Uh
to be fair, they took a pretty nice run.
Remember, it was just two weeks ago that
Donald Trump called for the resignation
of Lip Bhutan at Intel. He wanted Lip
Bhutan to leave because of some China
China investments that he had made in
the past. Then Tan visited Trump at the
White House. They kind of smoothed over
those issues. And now the Trump
administration is looking at making this
investment. But it's important to look
at exactly what the US is planning on
doing here. Under the chips act in the
Biden administration, the US was going
to give as part of their grants $10.9
billion dollars to Intel to be able to
build these facilities in the US. Now
the Trump administration is saying,
"Hey, we're not going to give that to
you. We're going to we'll we'll forward
it to you if you give us equity in
exchange for that." So the deal may not
be that great from Intel's standpoint.
They still need to decide whether they
want to make this trade of equity for
cash. One of the big advantages though
is that they would get the money much
quicker when one assumes if they go
ahead with this deal, but they still
need to be able to get the customers to
be able to build up that foundry
business to be able to have a shot at a
really good a strong revival from here.
>> It was only on August 7th that President
Trump urged uh the CEO of Intel to
resign. So, what a 12 days it has been.
Peter, really appreciate your insight.
That is Bloomberg executive editor for
Global Tech, Peter Strom. Now coming up,
Viking Therapeutics sinking after its
weight loss pill trial fell short of
expectations and then some. Shares down
40%. We'll get into the details next.
This is Open Interest.
This is Bloomberg Open Interest. I'm
Matt Miller. Let's get a check on what
stocks are doing. Just about 22 minutes
into the session. We're down uh onetenth
of 1% on the S&P, but still at 6441.
So, you know, we closed down yesterday
as well, but we're just inching lower
from all-time highs. The Nasdaq still at
23,600
right now, off about 610 of 1%. The
NASDAQ is a much bigger drop than we see
on the S&P 500. Let's go over to the
stock chicklets and see why. Nvidia is
off 9/10en of 1%. It's a huge weight on
the S&P as we know from that Morgan
Stanley chart, but an even bigger weight
on the NASDAQ. So, when that $4 trillion
dollar company falls, it pulls the rest
with it. Intel is up 10% as we were
talking about Peter Strom a second ago.
So, um that's a big move for Intel. And
over the last uh well, year to date,
it's up 30%. Home Depot is now gaining
5%. This is a company that missed
expectations on same store sales and
warned that consumers are staying away
from big purchases because of high rates
and yet uh just holding their fullear
forecast powers the shares up. I guess
um everybody is hopeful for rate cuts uh
as well. And then Viking Therapeutics,
check it out. Eli getting a little bit
of lift from this news that Vikings pill
did much worse than Lily's uh on pretty
much every single measure. But Viking
getting absolutely punished because its
weight loss pill just didn't work out
that well. I guess side effects were a
big problem, Katie.
>> Yeah, absolutely. You're taking a look
at Viking's worst day since April 2016.
So, let's get a little bit more detail
now on Viking and its disappointing
results from that study. We're joined by
Michael Shaw. He is Bloomberg
Intelligence senior equity research
analyst for pharma and biotech. So
digging into these results, okay, 12%
weight loss, that sounds okay, but then
you think about the dropout rate, 28% of
patients discontinuing treatment, it
seems like that's what investors are
paying attention to.
>> Yeah, I mean, absolutely. I mean, the
12% weight loss when we look at that in
the context of other treatments, I mean,
it's suggestive of of best-in-class, you
know, um, efficacy, especially when we
consider it was at, you know, 13 weeks
and we hadn't seen a plateau in the
curves. Um so you know that coupled with
encouraging um maintenance data as well
I would say is positive. Now you know as
you said what really overshadowed things
was um the tolerability profile of that
this drug. 28% of patients discontinued
treatment. Most of that due to
gastrointestinal side effects you know
known side effects for for the class. um
primarily nausea. Um but you know that
compares higher compared to other
obesity studies out there and that's
something that's going to be need to
need to be addressed um if they're going
to have a commercially viable product.
>> How much does it cost to develop a
treatment like this Michael? Because you
know the the cost to consumers at the
end of the day are massive for the
injectable uh drugs even when they're
discounted by 50%. But I wonder about
the R&D that goes into it for a company
like Viking or a company like Lily. what
are they spending to to build this?
>> I mean, in terms of I mean, you have to
do obviously do your your early to
mid-stage studies, so dose ranging
trials as well, and then you need to
back that up with um two phase three
trials in order to get to market. But in
order to um be competitive, you probably
have to do larger scale outcomes trials.
So, these are, you know, 5,000 patients
plus. Um so, they're they're expensive
trials. So, I mean, it could cost, you
know, billions to get to market
eventually. And then you have to look at
the manufacturing side of things as
well. So you have to have enough
capacity um in order to you know to make
these drugs and supply the market too.
>> All right. Uh great to get some time
with you Michael and we'll definitely
check out your research on Bloomberg
Intelligence. Michael Shaw covers this
sector and you can type uh well if you
type uh Viking um and look at their
equity or if you type Eli Liy and look
at their equity, you can type BIC go to
get the uh coverage from Michael Shaw.
Coming up in the next hour, we have an
interview with the Fed governor. She's
one of um those in which I think the
president puts some hope for uh cut
momentum. Michelle Bowman joins the
program. Plus the CEO of Palo Alto
Networks on the company's robust
outlook. That's a stock that's doing
well. And we're going to go to
Westerville, Ohio, and talk with Gio
Albertazi, the CEO of Vertive. This is
We are 30 minutes into the trading day
with uh markets dropping but still
hanging out near all-time highs. I'm
Matt Miller
>> and I'm Katie Grdel. And it's
interesting how little is going on at
the index level. We are really in the
dog days of summer. I believe yesterday,
uh, we saw the lowest amount of volume
on the New York Stock Exchange since
about May or so, which tells you
something.
>> Yeah. And on the NYC, I've been noticing
that the bell ringers are not companies
anymore. They're just like whatever your
current cause is, you get that charity.
>> You got Make a Wish yesterday
>> and ring a bell. I mean, I'm not saying
they're bad charities. They're fantastic
and good for humanity, but
>> that would be a statement.
>> It's just not like business people up
there. So, it is kind of a lull. Not a
lull in the news because there's so much
going on from earnings to corporate news
to Geop Paul. I mean, it's pretty
amazing. And then of course, we have
Jackson Hole this week.
>> Yeah, absolutely. Really a lot of
potential catalysts out there. Again, it
feels like we're in wait and see. And it
feels like we end up in this situation a
lot where okay, we start a consequential
week and the market just kind of trades
in a little bit of a vacuum until we
actually get some of those risk events
across the line.
>> All right, we have retail earnings
rolling in. Home Depot's sales returned
to growth as shoppers invested in
smaller projects.
>> And Paulo Alto issued a strong outlook,
winning praise from Wall Street. We'll
hear from the company's CEO later this
hour. But up first, the view from
Jackson Hole. Fed Governor Mickey
Bowman, Michelle Bowman. She joins us
live from Jackson Hole in Wyoming. Um,
and we're very excited to get to that
interview. We're going to simoc cast it
on both radio and on television and on
YouTube as well. So, let's do that.
Let's welcome in Bloomberg's
international economics and policy
correspondent, Mike McKe, is in Wyoming
with a special Fed guest. Mike.
Well, good morning to you and to
everyone around the world who's watching
and listening on Bloomberg television
and radio. I am with Michelle Bowman.
She is the vice chairman for supervision
at the Federal Reserve Board and we
thank you for joining us here. Uh most
people know Michelle Bowman lately as
one of the dissenters at the last
meeting. You talked last weekend about
uh the fact that you haven't really
changed your views. So there's not much
to add in that I guess.
>> Nope. The story's out there and that's I
haven't changed my views.
>> Well, the real reason we wanted to talk
to you, of course, is because of your
regulatory job. Uh first, can you give
us a little uh feel for how it fits into
the overall Fed structure? I think most
people, unless you're in banking, pay
much more attention to the monetary
policy activity. So the role for vice
chair for supervision was created in the
DoddFrank uh statute u after the the
financial crisis of the odds and it's
I'm the third person to serve in this
role and uh and so we're we're moving
forward with a number of different
opportunities and we over this person in
this chair oversees the supervision and
regulation of of the banking system
essentially
>> and here you're going to be talking to
the blockchain conference about
debanking
How big a problem is that?
>> Well, I think it's important to
understand that the the president issued
an executive order because it is a
problem in the banking system. And I one
of the first things that I did uh in
assuming this role was to rescend all of
our guidance and to change our um
supervisory materials that referenced
reputational risk so that we could
ensure that the Federal Reserve is no
longer including that in our
examinations or in our supervisory
activities to ensure that um the banks
can that banks can have as customers uh
anyone that they choose to that's
engaged in legal activity and they can't
discriminate against them based on uh
their their business model, their
political views or or otherwise.
>> Well, is that a widespread issue? I
mean, how do you uh stamp it out?
>> Well, I think it's it's difficult
because all of that happens under the
cloak of uh confidential supervisory
information. But as long as our
examination teams and our policy makers
are focusing on ensuring that uh
reputational risk and debanking is not a
part of uh the banking system going
forward, then I think that's that's the
way that we'll work to achieve that. I
also spend a lot of time speaking with
bankers and with people within the
economy. So hopefully if there it is
happening, someone will uh let me know
and and we can try to address it if we
hear about it again.
>> Well, there are some areas uh obviously
you talk about legalities and the
question of whether marijuana can
dealers can be banked or not is uh kind
of a difficult one. But uh you have
something like the crypto industry where
reputational risk might come in and
you've had a lot of failures there. So
what do you tell your bank examiners?
>> So what we're doing now is we've uh
we've disbanded our our novel
supervision group. So we it was created
two years ago to focus on these kinds of
activities innovation and uh the
integration of dig digital assets into
the banking system. So what we're doing
is we're taking the learnings that we
had from from that group and we're
integrating it back into our reserve
bank examination teams so that they
understand that as Congress
overwhelmingly supported the passage of
the Genius Act, these are very um very
acceptable activities and they're of
course legal because we're working on
developing frameworks that will allow
for digital assets to exist both inside
and outside the banking system in a way
that is unquestionably allowable
activity. There are also uh complaints
Elizabeth Warren has made some that
banks might have locked out customers
because of overdraft fees or religious
affiliation or political beliefs. Are
you addressing those as well? Well,
that's all a part of um the president's
executive order and uh certainly will be
included uh in any um debanking
oversight that we might do is to ensure
that that that anyone who's entitled or
eligible for a banking account will have
be have access to banking services.
>> Now, I know you're moving forward on the
enhanced supplementary leverage ratio,
but have you decided yet on a final
rule? Well, we've published an initial
one that was one of the first things
that I did as the vice chair for
supervision was to work with my inter
agency colleagues to publish and uh uh
and put forward this uh proposal on the
supplemental leverage ratio. That's just
one component of our capital framework
though and we're working on all four
pillars of that framework. What the
stress capital buffer, the gub search
charge, the Basel 3 proposal and then
the supplemental leverage ratio proposal
as well. Well, I guess my question gets
to the timing of it when it might come
into effect.
>> So, we've already published it. We're
waiting for the comment period to uh to
lapse and then we'll move forward with
finalizing that proposal. But hopefully,
it will be uh in a comprehensive way
with the other three pillars of our
capital system. So, or capital framework
so that we're we understand how each one
of them builds to the right calibration
of capital within the within the banking
system. And as as set up now, you're
looking to carve out treasuries and
other assets that are risk-free or
almost. So,
>> so the way that our proposal works is
that it doesn't carve out any particular
type of uh asset. So, the purpose of the
way that we've drafted the supplemental
leverage ratio is to ensure that it uh
it works as it was intended, which is to
be a backs stop instead of a binding
constraint. And what we've found over
the past few years is that it's served
in in cases where there's been a lot of
um a lot of activity in the in the
treasury markets as a binding
constraint. So we wanted to make sure
that banks have the ability to allocate
capital in ways that are helpful and
productive for them and that we're not
disincentivizing activities that would
allow them to intermediate the the
treasury markets appropriately.
>> There a lot of issues out there, so I
want to keep moving on through them
while while we've got you here. uh large
financial institution rating system. The
bank policy institute the American
bankers association are uh behind now
your efforts to make changes in that.
Where is that and what are we likely to
see?
>> So we've published that proposal as
well. That's just a a fedonly proposal.
But as a part of reviewing all of our uh
ratings frameworks, we're also reviewing
the camel's framework. So, this is just
one part of an overall effort to to make
sure that our uh that our rating systems
are rationalized and that they're based
and and grounded in material financial
risks and that they're not overweighting
uh something that may not be a material
financial risk. They're all important um
components, but we want to make sure
that we're not downgrading without keep
taking into account if there are
deficiencies in material financial
conditions. So the large bank frame uh
large bank framework proposal that we've
put forward for the ratings uh proposal
um originally it was designed there are
three buckets of of there's capital
liquidity and then uh governance and
controls. The way that it was initially
designed is that a deficiency in any one
of those three categories would
downgrade a bank in its condition. So
now this proposal would require two uh
deficiencies, one in in two different
buckets so that um so that we're not
relying on one that might not be a
material financial risk to downgrade a
bank's condition overall.
>> Yet another one that's hanging out there
is the Basel 3 implementation, right?
Where are you on that? I know that
basically the Fed is looking to redo
what had been proposed. Well, I think
what we're looking at doing is going
back to the original Basil agreement
from 2017 to make sure that we're we're
huing closely to what that agreement
included. We've also seen that every
other jurisdiction around the world
that's subject to the Basil requirements
has already published their
requirements. So, we want to make sure
that we understand what those
requirements are as we're looking to to
frame our own proposal.
>> What's the timing uh on that, do you
think? So, as we're looking at all four
of these pieces of capital in a
comprehensive way, we want to make sure
that we have proposals out that help us
understand how they'll all work together
because we have overlapping,
duplicative, and sometimes conflicting
requirements within the existing capital
framework. So, uh Basel 3 will probably
be the last one that we propose um uh or
repropose essentially. And we'll hope to
have all of these initial proposals out
early next year.
>> Back to where we started with crypto. uh
you're uh you're looking at new global
standards on uh bank uh crypto exposures
that are supposed to come into effect at
the beginning of the year. Um what do
you anticipate there?
>> So those are international standards and
the US is taking a different look.
Obviously Congress has spoken on on how
they see permissibility or allowable
activity and we want to make sure that
what we're doing is appropriate for the
United States. Well, how does the timing
fit with uh the international rules
coming into effect? Timing of what the
Fed and the other regulators in the US
want to uh be telling banks?
>> Well, I I think I I sit on the jihas,
which is the the heads of supervision
committee for the Basil uh for the Basel
committee and that these are
conversations that we'll be having going
forward for the rest of the year. And
you know, I think time will tell.
>> We'll have you back and and get the
update on that. Uh I did want to ask
about um the way the bo the policy
system works. We have three regulators
in the US. Uh most other countries have
maybe one, right?
>> Uh and we
>> shift uh the people in charge of it. Uh
as you mentioned, you're the third one
here and Michael Bar, your predecessor,
had a much more comprehensive Basel 3
proposal. Um we're going to have a new
Fed chair in June of next year.
Will all this change again?
>> Oh, I wouldn't think so. Obviously, our
board has to approve, anything that we
put forward as a regulatory proposal.
So, anything that we move forward will
be broadly supported by the members of
the board that are that are present at
that time.
>> You've been on the Fed for quite a while
now and almost seven years.
>> Almost seven years. And uh now you're in
the supervisory role uh that you're
really well qualified for.
You know, you've been mentioned as a
potential Fed chair, but do you prefer
the supervisory and regulatory side?
>> Well, right now, I'm committed to doing
the job that I have, and we've really
hit the ground running with our with our
request for um information on check
fraud and other payments fraud with the
uh the SLR proposal that we just put
out, the LFI rating system. We're taking
a really hard look at our supervisory uh
components and and across our reserve
banks as well as at the board to ensure
that we're focused on material financial
risk. So, I have a big agenda. We're
moving through it quickly. Um obviously,
we need to get the the capital proposals
completed uh in the near future. Um but,
you know, I I'm I'm really focused on
the job that I'm doing and I'm grateful
to the president for appointing me and
and the Senate for confirming me to this
role. So, that's what I'm focused on
right now. Well, some Republicans on
Capitol Hill have suggested that we
should change this three-headed uh
regulatory system and maybe uh take
regulation away from the Fed. Uh what
are you telling them and what do you
think the odds of something like that
happening are?
>> Well, I think the most important part is
to remember that we have uh we have a a
banking system that's a dual banking
system. So we have national banks and we
have state chartered banks and the FDIC
and the Federal Reserve oversee those
state chartered banks together with the
state banking commissions. So I think
it's important that we maintain the the
ability to oversee both the state
chartered banks and the and the OC OC
with the national banks and that we have
a rational framework that is very
similar for all of those banks going
forward. So there's not arbitrage
between the three regulators. But
Congress is obviously responsible for
making any changes to that system. So,
you know, we'll be working closely with
them to ensure that they understand what
we're focused on and what we're doing
that's supportive of of the efforts of
all of the agencies together.
>> So, you come out to Jackson, but you
also go up to Capitol Hill a lot.
>> I spend some time on on Capitol Hill.
Absolutely.
>> Mickey Bowman, thank you very much for
joining us today. The vice chair for
supervision at the Federal Reserve
Board. We're here in Teton Village,
Wyoming. and we'll send it back to you
in New York.
>> All right, Mike McKe, thanks very much
for that. Bloomberg's Michael McKe and
Fed Governor Michelle Bowman.
Let's now bring in Bloomberg macro
strategist Michael Ball. He's been with
us here on the desk watching that
interview. And of course, we're uh all
waiting to see what happens at Jackson
Hole on Friday. you and your team, the
MiveVive team, I'm sure, uh, are
anticipating
>> maybe a potential shift, but I can't
understand really how that's going to
happen as inflation seems to be at least
50% above the Fed's target and rising
and unemployment is like 4.1%.
So, historically at an incredibly low
level.
>> Look, I think Pal had an opening
following the jobs report. I think PPI
and the core super core CPI to be really
specific sort of reset that and put it
back to neutral. With that said, the
market is leaning into it. He does tend
to take it when it's given. He may use
this uh you know real estate to to pivot
a little bit or at least talk more about
the labor market mandate and how he's
seeing you know EPOP continuing claims.
There's plenty of things there to speak
to. You can quibble over whether or not
they should be cutting rates, but it
seems like the market is pretty much
locked and loaded when it comes to
September. I mean, what would it look
like if somehow they went against
expectations and they didn't cut rates?
They hold steady,
>> right? The financial condition component
there would tighten pretty drastically,
right? We'd see probably the curve bear
flatten. We'd see equities come off.
We'd see a lot of things that literally
would actually indicate almost like it's
a hike in some ways over a longer period
as far as how that transmission
mechanism works. So there is a risk
there that the market will be
disappointed, overreact and we'll have
actually a need then to almost pivot
quickly back because they lost control
of the narrative. I want to talk to you
uh shift gears and talk to you about the
Intel story because
>> stay away from it. Well, we we got the
news, Katie and I, when we were on uh
the close last week, I believe it was
Thursday, that the Trump administration
um may be taking a stake. And, you know,
coupled with the protectionism of the
Republican party and the incredibly high
involvement of the US government in our
economy, it just feels off. And that was
my initial take like this is central
planning 101, right? Um, but then I read
a note from you on the M live blog where
you pointed out it's so important um for
national security that we not leave all
of our chipm capabilities and also rare
earth um production in China. Um how do
you think the markets are viewing this?
>> Yeah, I think everyone's coming around
to that and I think we have now enough
of a story starting in almost you know
day one in January when Trump came in.
We look at the personnel. We look at the
various uh policies adding up to this
moment. And then obviously it makes for
the sense because we all know during
COVID we were in a lot of trouble with
supply chains. We all know that Russia
right now is on a economy. It's on a war
footing. China has completely insulated
themselves and they have hold us. And
why are these negotiations with China
taking longer? Well, they they have
built leverage and Trump 1.0. They
realize that they could get a monopoly
on rare earths on the magnet side of
things. And that's why now when we came
to them and said, "Okay, here's what we
want for our trade side." They said,
"No, hang on. We have this on you." And
they, you know, there was a big pivot
very quickly. And look, that's why the
deal there has dragged on with other
parties like the EU or even India and
other places. It hasn't.
>> I I hear what you're saying. What I
don't understand is how what we're
seeing with Nvidia and AMD factor into
the national security argument. This is
something we talked about at the end of
last week because there it doesn't seem
like it's about national security. It
seems pretty nakedly just about revenue,
>> right? But that's like a subsidization,
right? You're taking revenue from that.
You're saying one, okay, China, look, we
understand we need your magnets. So,
here are some chips and we'll we'll play
nice. We'll use some of that revenue
from the chip exports and we'll
subsidize our own production of chips
and what's going on. And obviously,
you've been speaking to it well about in
Ohio how that's behind schedule. We need
to get that going. There's more of an
urgency. They're running out of time
effectively.
>> So, what does this all mean for the
market though? I mean that that the
federal government is getting involved
in companies and Intel shares have
actually done very well over the last
couple of weeks as we've pointed out. Um
they're up another 10% today. Is that
>> a company with which you want to get on
board or
>> um is the federal government not
historically good at managing uh you
know private companies? You know that's
the question and I I have been asking
that and looking for answers and I don't
think anyone really has a great beat
because historically you're right there
then you know there's other countries
that have done similar moves and it
actually is works against that industry.
They become less competitive you know
they have wasted capital that doesn't go
to more efficient places but when I
think about what's next I mean we've
talked about this too on our side uh
pharmaceuticals are still in the hair.
What happened today with the steel
stuff? Steel is a big part of our
national security. So we, you know, you
can continue to see this spread and
we're only in the earlier innings um of
this.
>> Well, it's a question we're going to
continue to ask. Michael Ball, great to
get some time with you. That is our
Bloomberg macro strategist. Now, let's
turn to an earnings story. Palo Alto
shares rising following a stronger than
expected annual forecast as the company
looks to offer customers a bundle of AI
enabled cyber security products.
Bloomberg Tech co-host Caroline Hyde
joins us now with the CEO. It is a joy
to be with you. Thank you very much
indeed. both Katie and Matt and we
welcome to the network Nikesh Aurora of
course CEO of Palo Alto Networks I mean
as we're seeing record bookings record
number of large new clients mega deals
we're talking about Nikesh is it all
about platformization is all about this
suite of products you're able to offer
them
>> well lovely to see you again Caroline
and thank you for remembering about
platformization yes it is look it is
about the problem in the industry the
industry's got too many fragmented
players
where the customers are left to do the
stitching on cyber security themselves
and now the pace at which attacks are
happening the pace at which the bad
actors able to get in and excfiltrate
data has shrunk to 25 minutes you can't
solve that problem with humans you have
to apply technology you have to apply
automation you have to apply AI and
that's why that's where platformization
comes in
>> you talk about the pervasive attacks I
mean you apply genai to tackle
ultimately attacks coming from genai I
think you had phenomenal statistics in
the
890%
increase in Gen AI traffic in 2024. Can
you just talk to us about how you can
combat that? What sort of things you
need in place to be able to take on the
Gen AI impact?
>> Well, look, as we're noticing everywhere
as AI is getting deployed, the
fundamental problem that every company
is facing in deploying LLMs or AI
effectively is they don't have good
data. You need good data on drug
discovery. You need good data on
self-driving cars to understand where
every tree is, where every plant is. So
you need good data to solve the problem
if you want to use AI. And what we have
done at our end is we have basically
built a platform that ingests or
collects all the data from the
enterprise and makes sense of it as fast
as the bad actors can. Now that can't be
done with humans. For example, in in in
an instance for ourselves, we ingest 150
terabytes a day. That's a lot of data
and that's just for ourselves. And
imagine doing that across 400 customers.
We're ingesting data in pabytes,
analyzing on the fly, and trying to stop
an attack midstream. That requires tons
of technology, tons of AI expertise
because the consequences are disastrous,
right? The bad actors are doing that,
but they're trying to get it right once.
We have to get it right 100% of the
time.
>> Okay. So, your the expertise that you
need, you've had organically, but also
some inorganic expertise coming on. When
I think about the identity focus that
you now brought on with cyber arc, it's
a deal that of course will be folded in
in the longer term.
>> I don't know. Uh you guys like to call
it inorganic. When you hire great
people, that's possibly called
inorganic, isn't it? Like when Meta goes
and hires AI researchers and people hire
people that's inorganic. Yes, we have to
get great people from elsewhere because
we don't have, you know, the prerogative
of having best people on all the time.
So yes, we buy great teams who are doing
great work
>> for 25 billion. This is a $25 billion
aqua hire.
>> Well, we can't get there the way we got
here. So, we're going to have to make
sure that we go ahead. It's not just
Aqua Hire. It's amazing technology. It's
a great bunch of people. And honestly, I
think the way to to frame it, Caroline,
is if you listen to all the narratives I
hear in Bloomberg and around in media,
we're all worried about agents. We all
believe that agents are going to take
over the world. We believe they're going
to be more agents in companies than
they're going to be humans. Now, well,
somebody's got to make sense of these
agents. Somebody's got to make sure
these agents have credentials. They are
managed. They're understood. They don't
run rogue. They have guardrails. that
whole world of agentic AI needs a whole
cloak or framework of identity
management around them and cyber arc is
the world leader in this topic. So
partnering with them, making them part
of Palatoto networks allows us to see
ahead and say two years from now, 3
years from now when the world is talking
about how to manage all these things,
how does Palto get ready and be at the
forefront so our customers can solve
their problems on deploying AI while we
help them with security.
>> What sales synergies do you see in that
two to three years? How do you ensure
that you don't get a hit to that margin
that some were worried about?
>> Like we are as the first atscale cyber
security company. We crossed a $10
billion revenue run rate. Never been
done in cyber security. That allows us
to leverage scale economics. We run at
30% operating margin. We run close to
40% free cash flow margins. We are a
robust profitable company. Any company
that is in a billion2 billion dollar AR
business which is where cyber arc is we
think we can vastly improve their
operations as part of Palatoto because
of scale economics that we bring both on
the go to market side. we have 10 times
the sellers they have and on the
operating side you know we run large
scale systems for 16,000 employees
adding 6,000 employees doesn't doesn't
take a lot but it does improve the
margins the underlying business
substantially so we believe that the
acquisition will be accretive over time
we believe in FI28 we can collectively
achieve a 40% free cash flow margin
which again is gold standard in our
industry let alone our industry in
software
>> network security market the growth there
how is that going to evolve with AI
workloads. How will that evolve
ultimately as the hyperscalers perhaps
edge into that area? I mean, it's all
about the cloud. How do you see that
going forward for you at PaloAlto
Networks?
>> Look, as you can imagine, every year the
network traffic doubles. Yeah.
>> And sometimes more than that. So,
network traffic's not going away. And
very simply put, network security is
about inspecting every bit. So if you
believe the network traffic is doubling
or tripling every year and with the so
of the AI coming in the amount of data
that's going to float around with
everything having to be connected you
just expect the network to continue to
expand. Today the edge of the network is
humans tomorrow the edge of the network
will be agents it'll be devices it'll be
rigs it'll be cars. So you what we're
doing is constantly evolving the
parameter of our network. We're
constantly doubling or tripling the
amount of data in the network that
requires to be inspected. Well guess
what we are the largest player in
network security. We have 30% market
share, which means our organic market,
to use your word, continues to grow. As
long as we make sure the right solutions
are available for our customers, we
think that market has a long-term
sustainable growth rate uh going into
into decades perhaps.
>> People love the strategy. I know you're
f you're waving goodbye to co-founder
CTO who's retiring as well, Nezark. It
is an evolution that we continue to see.
And thank you for joining us. Palo Alto,
CEO joining us, of course, Nikesh Aurora
on Bloomberg television. Back to you
guys.
>> Caroline, thank you so much. Bloomberg
Tech's Caroline Hyde giving us an
interview with the CEO of Palo Alto, one
of the big gainers in uh the market
today and one of the I think it's fair
to say most important companies in the
world when it comes to cyber security.
Coming up, the AI infrastructure race is
underway. We're going to speak to the
CEO of Vertive next. Gio Albertazi joins
us from Westerville, Ohio. This is
Bloomberg.
Verdive is one of the many beneficiaries
of spending on AI infrastructure. The
company which specializes in power and
cooling technology has seen its stock
rise over 80% over the past four months
alone. Now that gain propped up by an
earnings beat and a more optimistic
fullear forecast. Here with us now is
Gio Albertatsi. He is the company's CEO.
Gio, great to have you with us. You've
been with Verdive for about 20 years
now. You've seen the company through
many different cycles. Put the AI data
center boom into context for us. What
has that meant for your company?
>> Well, first of all, thank you for having
me. Um,
it is meant a lot of course is uh is
reinforcing a secular trend uh to do
with uh with data and the growth of data
traffic that's been there was going to
be there anyway, but now it's been
accentuated and accelerated uh by AI as
we all know. You know the the the very
cool thing that is if you asked a five
or 10 years ago about data center to the
general investor or a lot of people in
the street they would not know what it
is and now it's absolutely mainstream
but uh for a reason is that the the the
under the underlying market the demand
for AI factories and uh AI processing
capacity is is really accelerating a
lot. So for us having been in the space
of digital infrastructure for decades uh
truly decades and having a a a market uh
very strong market position um you know
it it was about being in the right place
at the right time but then you have to
be ahead of uh the market and be
cooperating and partnering with with all
the big players like uh like Nvidia or
many of the data center hyperscalers and
data center players to really define the
future of technology, the industry, and
that's what we're doing.
>> Gio, there's so much talk about the
energy needs, and I do want to know how
you're um helping to to power these data
centers around the world, but not an not
as many people are talking about the
cooling needs and it's I think such an
important piece of it. Explain to us how
you think of um the the cooling input to
the AI uh equation. SH I'll start very
quickly from your from your comment
about how we power clearly the the the
power infrastructure is changing there's
going to be a lot more off-grid data
center is self gener selfg generation
and of course everything we do from a
powertrain perspective enables uh that
trend and that change. So we're enabling
the industry to evolve and to um uh you
know
resolve the challenges with uh with
power that we're seeing. But from a
cooling standpoint, we we are undergoing
a what I would say an very rapid
evolution that we believe we are leading
from a traditional air cool type of uh
cooling to a mix
of liquid and air with a lot of uh
liquid cooling done directly at chip
level. and a position that we a
leadership position we have in this
space that we have been uh consolidating
over the last uh uh year and a half two
years and in a space that is very new uh
for the industry. Uh we really started
to have as an industry a real market for
liquid cooling in 2024. So it's now
accelerating but again it's liquid
cooling it's air cooling it's the entire
infrastructure as uh the installed power
installed capacity of a data center is
growing so is the need for cooling and
it's not just cooling what do you do
with all the heat that a data center uh
generates you know it's heat reuse how
you convert that heat again in energy
that can utilize can be utilized to
power the the data center itself. So,
it's a very good, it's very dynamic and
very cool uh space as a matter of fact.
>> And Gio, of course, we're having this
conversation against the backdrop of
rapidly changing trade policies. And our
analysts over at Bloomberg Intelligence
wrote in the wake of your most recent
earnings report that despite
accelerating sales, operating margin
growth has been challenged by tariffs.
Bring us into that conversation. How are
you navigating through some of those uh
tariffs?
>> No, absolutely. We have a a very much uh
resilient um uh supply chain combination
of our suppliers and our manufacturing
footprint. And this is uh coming very
becoming very handy in in terms of uh
reconfiguring our supply chain to make
sure that we best adapt to uh to the to
the tariffs. Of course, we know a little
bit of a a moving target in in many
respects. So um you know we have uh very
vigorous actions to um counter measures
uh to to offset the impact of uh of
tariffs. We are uh we are satisfied
about the speed at which that is uh that
is happening uh and u you know we
believe that we will pretty much offset
that uh impact as we enter 2026.
Can I ask about your location there,
Gio? Because you're I I've been saying
this whole show, you're in Westerville,
Ohio, and you're just a stones throw
away from Alum Creek, where I grew up,
down the street from the Ohio State
University, and only probably 10 or 15
miles away from New Albany, where Intel
is um looking to invest possibly $30
billion to build its mega factory.
What is the central Ohio region like for
you? Why have you picked your
headquarters there? What what kind of
workforce can you get? What kind of
intelligence do you get out of Ohio
State? What's the what's the benefit?
>> Yeah, first of all, we are truly a
global company in the way we operate, in
the type of footprint we have, but
certainly central Ohio is very important
for us. Uh it has been traditionally our
home and continues to be to be our home.
the fact that all the elements that you
listed add to that that uh you know
Columbus uh or the greater Columbus area
and New Orlec increasingly an important
data center spot um all all help of
course the value proposition um it is it
is a good area there is a lot of knowhow
that we are leveraging and it's
certainly a very very strong place to be
to be headquartered here but again this
is home this is our tradition. This is
where we come from and we are global,
absolutely global and certainly very
well present in uh in the United States
when it comes to the way we operate.
>> How do you deal with GEO as a leader,
the incredible growth that you've seen
in your stock? I look at the Bloomberg
terminal over a three-year period. Um
your shares are up a,000%.
Um how do you deal with that? How do you
how does your employee base deal with
that? And how do you fulfill investors
expectations with that kind of growth?
>> Well, certainly we're very proud of uh
of the growth that we have delivered for
our investors uh uh so far, but also it
is very motivating for everyone at
Vertive. Uh our employees understand, we
all understand that it is a unique
industry and a unique position we have
in the industry. So, we're absolutely
focused and make sure that we continue
to to lead and maintain the edge. So
rather than looking in the uh um
rearview mirror um I think it's
important we we look ahead and if we
look ahead we we certainly have the
right uh technology footprint market
presence uh customer relationships very
importantly a very strong service
organization that is uh corroborating
everything that we do in terms of scale
and technology that we take to the
market. So we're we're we're very
optimistic about about the future as we
have been uh explicitly
uh telling our our um our investors. So
a lot of excitement and a lot of focus.
You know we like to think that we are uh
far from full potential. That's a mantra
internally. We know that we can do
better and uh so we look ahead and uh we
look ahead at further growth in revenue
and uh EPS and value for our investors.
>> All right Gio, that's a good place to
leave it. Our big thanks to Gio Albert
Tatsy of Vertives joining us from
Westerville, Ohio. Let's get a check on
these markets right now. We're just over
an hour into the US trading day. There's
not too much to talk about. The S&P 500,
you can call that flat. But you take a
look at the NASDAQ 100. Things do get
interesting. You think about some of the
names on the downside today. Nvidia,
Broadcom, Microsoft, Amazon, Meta, uh,
just really adding up to bring down your
big tech index. The bond market pretty
well behaved. A little bit of a rally
developing at the long end of the curve.
the 10-year Treasury yield down about
two basis points, Matt Miller.
>> All right. So, on the index level, um,
not a lot going on when you look at the
S&P, but it's, I think, fascinating that
you're seeing such big or relatively uh
bigger moves in the NASDAQ. Intel is a
big gainer today. Right now, it's up uh
7.4%. It had been up more than 10% on uh
the stories that Bloomberg has been
putting out for almost a week now. uh
the Trump administration looking to take
a 10% stake in the company. That
according to people familiar, but Howard
Lutnick was on Fox this morning uh
talking about it and Soft Bank agreeing
to invest $2 billion in the company. Not
hurting either.
>> Yeah, absolutely. Uh still a pretty
healthy gain there for Intel shares.
Nvidia can't say the same. It's
reportedly reportedly developing an
advanced AI chip specifically for China
that would need US approval to export.
shares down about 2%. Not a huge move in
the grand scheme of life, but this is
such an enormous company that that is
what's really weighing on the NASDAQ 100
right now.
>> All right. And then Ver uh sorry, Verdiv
Viking Therapeutics is one that we've
been talking about today. Absolutely
plunging, losing almost half of its
value after a study of its weight loss
pill disappointed. Was it that bad?
>> Well, that's the thing. We were talking
with Michael Shaw from Bloomberg
Intelligence. the actual weight loss 12%
uh he said it has best-in-class efficacy
potential but then you think about the
dropout rate I believe it was 28% that
compares to 18% for the placebo that
seems to be what investors are really
seizing on but still 44% uh pretty
shocking
>> yeah that's uh tough all right coming up
depot shares are gaining today on I
guess because they kept their fullear
forecast uh because July sales were
strong, but frankly, same store sales
missed analyst estimates and the company
said people are steering clear of big
projects because of race. We're going to
talk about the whole story with analyst
Brian Nagel of Oppenheimer and Company
next. This is Bloomberg Open Interest.
This week's retail earnings are
underway. Hey, Home Depot sales returned
to growth in the second quarter as
shoppers invested in smaller projects
such as lighting and gardening, but they
steered clear of the big stuff because
rates are too high. Joining us now is
Brian Nagel, senior analyst at
Oppenheimer and Company. He has a market
perform rating on the stock. And uh
Brian, this morning, you know, in the
pre-market these shares were down, now
they're up. What do you make of this
earnings report?
>> Well, good morning. Thanks for having me
on your show. You know, look, as I'm I'm
as I just got off the conference call,
I'm starting, you know, talking to some
of our clients and obviously watching
the stock. And you know, what I think is
happening here is, you know, the market
is getting more optimistic that we're
approaching that point where rates will
start to move lower and then that will
be a prove a uh a propellant if you will
for for Home Depot because as I look at
these results today, again, I've spent a
lot of time this morning digging
through. You know, what we saw is
largely more of the same. I mean, Home
Depot is an extraordinarily well-run
company. the company has been and
continues to manage well through a a
difficult backdrop, but we're just we
just don't have that topline momentum
that that's been the missing piece. And
I've been again I think you know with
this move higher today, I think the
market saying we're getting closer to a
more accommodative environment and then
hence a closer to that that topline
momentum returning at Home Depot.
>> So Brian, you say this is a very
well-run company. Is there anything that
management can do other than wait for
rate cuts? It seems like a lot of their
performance is tied to what's going on
in the housing market. And the housing
market still seems frozen, at least from
where I'm sitting.
>> No, look, I I love that question and
that's a question I've been asking Home
Depot for for several quarters now. You
know, are there internal levers you can
pull? And really, the answer is no
because you it's home improvement retail
is a is different than other areas of
retail. It's not really promotionally
driven. You know, if you look at other
categories like, you know, clothing and
some of, you know, they're they're a
retailer could get more promotional,
drive sales, albeit at the expense of
margins, but promotions really don't
drive much here. I mean, you know, this
is this is there's this Home Depot
relies more on this underlying demand.
And for that demand to take hold, we
just need more activity in the US
housing market. The US housing market
has been largely stagnant now for a
while as rates have remained stubbornly
high. So to answer your question, no, I
really do think I mean despite the
prowess, if you will, of Home Depot, I
do really think they are at the mercy of
this of this rate environment and the
stagnation in the US housing market.
>> Brian, I don't know um how pertinent
this question is, but when I see the
mass deportations, especially police
raiding like home or or ICE agents
raiding Home Depot parking lots, I just
wonder if some of the customer base is
gone. Um, has it had any effect on the
business?
>> Yeah, look, I mean that's a topic I I I
really have not written much on it just
because I I try not to delve into those
type of, you know, topics. But, you
know, you got to think at some level,
you know, whenever there's a disruption
of any sort, you know, to a to a
business like that has some impact. Now,
if I'm looking at the results today, I
don't see it. Okay. Management did not
mention it on their conference call, but
again, like you're saying, you know,
this is going on. You know, it's got to
had some level. It's had to have some
impact on Home Depot's business.
>> Hard to quantify uh there. But Brian, so
you're you are a market perform rating
on Home Depot. As I understand it, you
have an outperform rating on Lowe's.
They report tomorrow, I believe. So,
compare and contrast here. What can we
extrapolate out from what we learned
from Home Depot this morning into what
we're going to hear from Lowe's
tomorrow?
>> Yeah. So, I mean, you know, the key
points for Home Depot, again, like I
said at the onset, I mean, you know,
this this was more of the same. I know
this the company's managing well a
difficult environment. I mean
importantly we did see the business
strengthen through the fiscal second
quarter. So that means basically sales
growth in July was stronger than June,
stronger than May. That bodess well for
Lowe's. I mean the the the two companies
are similar enough that if Home Depot
seeing sales strength, Lowe's is
probably as well. Lowe's arguably is
more skewed to the seasonal categories
and those demand there probably got
better as the weather improved, you
know, across large parts of the country.
So it's a Home Depot I think bodess well
for Lowe's. But to go back, yeah, we are
recommending Lowe's. I mean, that's
basically my way of saying to our
clients, look, if you want to wait out
this this housing market, this interest
rate dynamic. I think the better play is
Lowe's. There's still more operational
slack within that business model. And,
you know, as I've said for a long time,
Lowe's is a much cheaper stock. All that
said, you know, and I don't know
necessarily when this is going to
happen. You know, it seems like we're
getting closer. But when we get that,
you know, announcement so to say, those
clear indications that rates are moving
lower for some in some sustained way. I
think both these stocks are likely going
to work. The market's essentially
waiting for that. Okay. To to get some,
you know, all clear, if you will, on the
rate front. And another point I make a
lot, there's a lot of pent up demand out
there. The longer this stagnation in the
US housing market persists, the more
pent up demand there is for newer homes,
bigger ticket remodeling, whatever. And
so I think, you know, when these when
rates start to cooperate, we're going to
see a significant uptick in demand
within home improvement retail broadly.
>> We heard on the call today that prices
are going to rise. And I know that um
this isn't one of those companies where
the lion share of their products come
from overseas, but there's a substantial
amount of steel and aluminum in a lot of
the tools I see there. We saw a report
today that, you know, th those
deliveries even in transit are now
looking at bigger tariffs.
How do you quantify the impact of
tariffs to this company in the second
half?
>> Yeah. So, I'll make a bigger point
first. You know, as as a as an analyst
studying consumer, I've done a lot of
work on tariffs over the last, you know,
several months now. It's really been a
key focus of my job. My associates and I
have developed a a price tracker that
we're basically watching, you know,
prices on baskets of goods across a
number of companies within our coverage
list. And what we're starting to see is
prices start to tick higher. Now, it's
still they're relatively subdued. In
fact, I put a piece out last week
talking about this. They're still
relatively subdued, but week by week,
we're starting to see prices move
higher. What I think is going to happen
here, and again, this is not necessarily
coming on home improvement, but more
broadly, I think you you will see retail
prices really across the board move
higher through the balance of 25 into 26
as these tariffs take hold. I mean,
there's a lot of, you know, companies
are still evaluating, you know, demand
dynamics. There's still shipping delays,
that type of thing. So the these this
doesn't happen in real time. You know,
we have the tariffs in place, but it
takes a while for those prices to start
to so to say take effect. Now, within
Home Improvement, Home Depot and Lowe's
are well positioned here. You know, they
they uh you know, they have they have a
lot of uh so to say pricing power. You
know, consumers don't necessarily know
the prices of every product. They're
both companies are very very intelligent
so to say and fastened analysis of you
know where they have pricing power,
where they don't know that all together.
So, at the end of the day, I think, you
know, tariffs will probably prove a
positive for Home Depot and Lowe's, and
that that will be the incremental driver
of sales growth.
>> Wow.
>> All right, Brian, really great to get
some time with you. That is Brian Nagel
of Oenheimer and Company. This is
Europe
and the US are said to be working
immediately on how to guarantee security
for Ukraine. For the latest, let's bring
in Bloomberg senior editor, Michael
Shepard. Of course, that is one of the
pressing questions here, Mike.
That was the main topic of discussions
yesterday in Washington between
President Donald Trump, Ukrainian
President Vimir Zalinski and a failank
of European leaders who came in really
to support Zalinski as he was meeting
with Trump just days after this summit
with Vladimir Putin in Anchorage,
Alaska. uh a meeting really that raised
a lot of concerns that perhaps Donald
Trump had pivoted back toward the
Russian position and maybe was uh
willing to hand Ukraine over in essence.
Uh but the tone emerging from
yesterday's meeting uh here at the White
House, Katie, was uh quite positive. Uh
the take from European leaders and from
Zalinski himself and his delegation was
that they saw real progress, especially
on this question of security guarantees.
The president elaborated a little bit on
it this morning during a Fox interview.
He talked about how Europe would provide
the bulk of the heavy lifting and that
would include troops on the ground to
ensure that whatever territorial lines
are settled would be honored and
respected. It didn't sound like American
troops would have much of a role and yet
the US would be working with European
allies and counterparts on this. We'll
be eager to see later in the day what
emerges from further discussions today
on the specifics of those security
guarantees as well Katie as what may
happen in terms of a next step and that
would be a meeting between Vladimir
Putin and Wimir Zalinski to talk about
perhaps a peace plan. Now Zalinski has
expressed some openness to it. It's
unclear whether Putin Katie is aboard
here. Well, hey, Mike. Uh, if the
Europeans are going to step up their
financial commitments and and military
assistance, why can't the Ukrainians
just go out and win this war? Every
general that we hear on Balance of Power
says the Russians are losing.
Uh, everyone says that the Russians over
the long run have been losing and that
their military capabilities have been
degraded. Matt, but really the question
is simply uh the manpower and people
power that Russia can bring to bear.
They just simply have the population and
the ability to keep pouring troops with
and do so without remorse by Vladimir
Putin uh into the killing fields in uh
in especially the eastern regions of
Ukraine where the fighting has been so
bitter and the losses have been so high
on both sides for three and a half
years. Uh Putin has no incentive to uh
pull out of this or end the fighting. uh
he really does see the territorial gains
he has uh made to uh is something he
wants to hold on to.
>> All right, Mike Shepard in Washington.
Thanks very much for that. Coming up
tomorrow, Robin Hood CIO Stephanie Gild
joins us and Matt Mey uh joins us as
well. This is Bloomberg.