The countdown is on. Everything you need
to get the edge at the end of the market
day. This is the close.
>> A make or break week for AI or well
maybe for those inflation bets too. Live
from Studio 2 here at Bloomberg
headquarters in New York. I'm Roma
Bostic
>> and I'm Katie Grifeld. We're kicking off
to the closing bell here in the US with
just an hour to go. Here's the setup.
You can see the S&P 500 lower on the day
after Friday's big finish coming off by
about 2/10en of a percent. The NASDAQ
100 fairing slightly better right now.
Your big tech index pretty much flat on
the day. The pessimists would say
actually it's a little bit lower. You do
have a sell-off underway when it comes
to the bond market. I highlighted the
2-year yield here, Roma, because we know
that those rate cut bets came back in a
big way on Friday. Some of that coming
off right now. Two-year Treasury yields
rising by about three basis points. That
might help explain what's happening with
the small caps right now. The Russell
2000 currently lower by about 6/10 of a
percent. This is an area of the market
that really needs lower rates right now.
>> We're going to talk about that. And of
course, you're hitting on two big
pillars that have pushed stocks higher
this year. And two big pillars that at
least on a day like today has actually
put a bit of a floor under any of those
pullbacks. The big bet on AI, the
growing bets for Fed rate cuts.
Chipmaker Nvidia center stage first.
earnings report coming out Wednesday
afternoon which could prove where
exactly we do stand in that red-hot AI
trade.
>> We believe this is the most profound
technology shift that we will see in our
lifetimes. So whatever happens over the
next couple of months is going to happen
but the direction of travel over the
next 20 years we think is very positive.
>> In the short term there are still some
concerns about the long-term outlook.
Nvidia commands three quarters of the AI
chip market, almost 8% of the S&P
waiting. And it's a big reason for why
we've seen so much narrowness in this
record rally. But here's a hitch.
Nvidia's revenue is also narrow. Just
five companies account for 50% of its
sales, a third of the dispersion that we
had just two years ago. And that means
Nvidia indeed its earnings could be a
break makeorb breakak moment for this
market. And even if investors do manage
to clear that hurdle on Wednesday,
they're going to have to contend with
the PCE inflation report on Friday. A
report that may call into question just
how much room the Fed would even have to
embark on a rate cutting cycle. A fear
that for now puts bond investors at risk
of another potential sell-off like we
saw in March, like we saw in April, and
then again in June, Katie,
>> and maybe it's a little bit less
sensitive when it comes to the S&P 500,
though, when you think about that
relationship with rate cut bets. I was
just talking about the Russell 2000,
those small caps still really trading on
the odds of whether or not we're going
to see the Fed cut here. But you take a
look at the relationship between those
rate cut bets and the S&P 500. We're
taking a look at the 30-day correlation,
and you can see it really had moved
higher at the beginning of August. The
more that rate cuts would get priced in,
the more the S&P 500 would rally. You
can see we've since steadily come down
right now. We know that relationship
really kicked in on Friday Roma. But as
it stands right now, you have that
correlation at 0.2 which isn't very
significant. And the question is why?
Maybe it's going to take more than a
rate cut, a single rate cut now that
we're pretty much close to all-time
highs on the big benchmark.
>> Yeah, that chart really jumped out at me
when I saw it earlier here in the day as
we kick you off to the close on this
Monday afternoon with Kamal Patia. He's
the CEO of Principal Asset Management.
Great to see you here. Good to see you.
Roman,
>> is there a fixed income trade here right
now? I mean, do you try to get in front
of this or do you just kind of stay
where you are?
>> Well, there's always a fixed income
trade, but what I would say is I think
Jackson Hole brought a lot of clarity. A
took out a lot of steam and speculation
in the marketplace. I think the more
interesting thing is the Fed literally
told us they have reconciled where they
think inflation will anchor itself. The
big issue they have is the unemployment
or the employment situation is very
unclear. And I think that's going to be
the factor that determines where the
equity and the fixed income market goes
>> on the fixed income side. I mean, we've
seen a lot of conviction at least in the
swaps market that we're going to get two
rate cuts this year and that will be the
start a lot of people think of a longer
term rate cutting cycle. But we've
spoken with several economists last
year, last week, excuse me, who are
including Robert Kaplan, former Dallas
Fed president, who don't actually think
this is going to be the start of a
actual rate cutting cycle. We'll get
rate cuts, but this is not going to be a
prolonged cycle.
>> Yeah.
>> Why not? Is is the economy not providing
enough signals for the Fed that it
should provide that support?
>> Look, this economy has gotten
increasingly tricky. um there are a lot
of non-traditional forces like tariffs
that are changing the nature of how
price stability works and then you add
on the changes in the employment
structure both demographic as well as
long-term. So to to your question, I
think this is going to be a lumpy rate
cycle. Uh you may get two rate cuts
here, then a pause and then others. I
think the direction of travel pretty
much is 100 basis points lower. The
question is whether it happens over 12
months or 24 months.
>> Absolutely. I mean that's a big
discrepancy there. One year to two
years.
>> What what would be the biggest
difference? Let's say it's two years.
What behaves differently versus if we
saw those 100 basis points over the next
12 months or so? Well, if it is one
year, I I think there is an upside to
the equity market. If it's two years, I
would say it's a different direction of
travel. The natural question for for
investors right now is do you diversify
beyond equities? And I would say the
fixed income markets at least if you
look at the spread market, it has been
priced for perfection.
>> So the risk is really credit risk. We
know the direction of interest rate
travel. We know where duration is going
to end up being. The real play for fixed
income investors is credit and how
credit behaves if there is a situation
on the employment front and the economy
slows down that is ultimately the play
for fixed income.
>> Well, when it comes to fixed income, I
mean what is the profile of the role
that fixed income plays? Because I mean
you think about fixed income
specifically treasuries as a hedge, it's
been really unreliable. So when you are
talking about fixed income here, are you
talking as you know a return generating
asset class or truly as a portfolio
hedge?
>> Look, I think you hit it on the head.
The treasury as a diversifier
has become less um the behavior has
become less expected and so I think
there is a natural search for newer
diversifiers. You know talk about
private asset classes has picked up in
work again. I think there is a bigger
discussion around crypto these days. So
I think the the investment landscape is
looking for non-traditional diversifiers
because treasuries are not playing that
role anymore.
>> Well, maybe you could expand on that. I
when I started in you know when I basic
when I came out of college and I look at
my portfolio it was basically two
things. It was US stocks maybe
international stocks and then uh
treasuries bonds of some sort. Uh you
mentioned crypto which has now become
much more of a portfolio asset but
private assets too which have always
been a portfolio asset but primarily for
the ultra wealthy correct.
>> We're seeing this quote unquote
democratization of that. You are
responsible for hundreds of billions of
dollars of other people's money.
>> Do they want more exposure to private
assets?
>> Absolutely. Look, we we manage over $750
billion Roma and we work with over 1100
institutions around the globe. They've
always wanted private assets. In fact, I
would tell you a lot of these
institutions are probably more
overallocated to private asset compared
to public asset. We also work with just
in US itself 13 million 401k
participants over 35,000 employers. I
think this topic is become important to
them. The retail investors uh are
looking for that. So yes, I I think that
is a topic of work these days.
>> On the retail side though, how informed
do you think investors are going to be?
It's one thing for a wealthy person to
come in and say, "I want this." But when
you have retail investors who are
dealing with 401ks or target date funds,
things that they're not necessarily
looking at on a day-to-day, week-toeek
basis,
>> are they going to know that this stuff
is in there? Are they going to have a
say?
>> Well, I think what they need first is
two things. They need a lot of
education.
>> I don't think so. It's right to provide
access to something without
understanding the risks and education.
And what is going to happen is and we
are at the center of this is the amount
of education and engagement you're going
to have on private assets is only going
to grow over time but it isn't there
today. So I think that's probably going
to be the first chapter of of of that
conversation. The second chapter is when
you really think about retail or even
retirement these are markets where the
sponsors and the regulators want to pay
a lot of attention to liquidity
>> and fees. And I think that needs a lot
of work.
>> Uh it isn't clear how you manage
liquidity with these assets in that
situation. And I think the fee profiles
will have to come down over time for
them to be palatable to those broad swat
of investors.
>> Well, principal will be one of those
people that tries to put downward
pressure on that.
>> Well, that that is our role is to
provide access to our retirement
investors around the world and we
certainly will be focused on that.
>> All right, Kamal, we have to leave it
there. Always great to have you here in
studio. Kamal Batz, the CEO of Principal
Asset Management, kicking us off to the
close here on a Monday afternoon with a
closer look at the AI trade, the AI
boom, and of course, the earnings that
we shall not speak its name. We're going
to get an interesting perspective out of
Natasha Sarin, the president and
co-founder of the Yale Budget Lab and
exactly what impact AI has had on the
economy.
>> Plus, the US Open in full swing. A
conversation with Belinda Oakley, the
CEO of Sedexo Live North America, the
company that oversees food and beverage
operations at events from the Super Bowl
to the Paris Olympics.
>> Well, move over tennis. I just found out
there's another sport that's sweeping
the nation. Uh Wayne Boyich is going to
be joining us. He's the founder and CEO
of Reserve Paddle. If you haven't heard
of it, you definitely want to tune in
for this. The Fullcourt press to expand
the sport across the US. All that and
more coming up in a bit right here on
the close on Bloomberg.
[Music]
Well, it's a make orb break week for the
mega caps. Nvidia reporting earnings on
Wednesday with investors hoping for
another blowout quarter to confirm AI
demand is on track. And even if it is,
it's not clear whether productivity
advancements will complement or
substitute the labor force and whether
the billions being spent on AI are one
of the few things keeping the economy
from recession. Let's bring in Natasha
Serin. She is president and co-founder
of the Yale Budget Lab. Natasha, great
to have you with us. I sometimes joke
that Nvidia is more important than the
Fed, but maybe it's not a joke. When you
think about all of the capex, all of the
money being spent on AI percolating in
the economy. Put that into context how
important that is at this juncture.
>> It's immensely important. You know,
you've had some economists say versions
of like we're in an AIX recession. And
what they mean by that, I think it's
kind of a misnomer in some sense because
it's not really the case that we would
know how capital was being used if it
wasn't being deployed in this way for
these massive power centers and this
massive changing force in our economy.
But the reality is there's a lot going
in here and it's going to fundamentally
transform the way that the economy
functions and it already is and it's
kind of too early to tell where we are
in this process. But what we do know is
this is kind of transformational change
and there's a lot of money being put
into efforts to try and understand how
the technology can be best used and
deployed and I think it's going to be a
hugely important trend to follow.
Something I wonder about though is that
when it comes to these big tech
companies, these AI companies, it feels
like they spend money in a circle. Roma
mentioned at the top of the show that
50% of Nvidia sales uh come from just
five companies. So I mean how how
widespread is the theoretical benefit
coming from this spend?
>> You know if you spend time around many
of the people who are at the frontiers
of artificial intelligence, what they'll
tell you is that in some sense we're at
the beginnings of the computer
revolution or the industrial revolution
even with the ways in which this type of
technology is going to be used so
broadly across every sector and so
transformationally with respect to how
the labor market functions. Right now
we're kind of in early innings with
respect to understanding the extent to
which all of this money is actually
chasing exactly that type of
transformation or the extent to which
maybe there's some frothiness in this
market and it's kind of the same
companies and the same resources being
deployed in a particular way and there
going to be some winners and there going
to be some losers of that. It's just in
some sense as an economist as we're
watching all of these trends it feels a
little bit early to try to make any sort
of predictions about what I'm likely to
expect and anticipate. And as a
professor who's trying to teach students
about what they should be doing in the
labor market going forward, it's kind of
a challenging moment.
>> And it's challenging too because I mean
when you try to find parallels with with
sort of past big sort of technological
improvements, whether it was.com boom,
internet boom, or even going back to the
computer age in the 50s and 60s, there
was a lot of job creation, but there was
also a job a lot of job loss. It's more
about what the balance is. is and I know
you can't really predict that but do you
see evidence at least now that this
could be a net beneficiary for the labor
market and for the economy
>> and that's such a good question Roma
it's kind of at the foundation of the
questions that we're all asking
ourselves like are we talking about
compliments or are we talking about
substitutes
>> are we talking about changing the way
that first year associates are lawyers
or are we talking about fewer first year
associates working in legal markets
>> and right now I think there's a really
interesting fundamental data question
that my colleagues and I at budget lab
are really interested in which is we
have some great data from companies like
anthropic and open AI with respect to
how exposed certain occupations are to
artificial intelligence but we don't
even really have the capacity right now
to map that exposure onto actual
employment records to see is there
displacement that's happening in the
labor market as it stands and so
actually it's a question we're really
interested in being able to answer but
the second piece of it is that I think
that fundamentally in a lot of these
occupations where we're talking about
the knowledge economy and there's a ton
of exposure, you have to wonder, isn't
there space to do more types of work?
Aren't there certain types of legal
services or certain sectors that are
underserved presently where the presence
of AI and its ability to sort of allow
us to do even more work is actually
going to mean more access and more
services for those who need it?
>> Well, that's what I'm curious too. And
do you how close do you pay attention to
productivity? I feel like that was a hot
thing I don't know 30 years ago and then
everyone just stopped caring I guess
because it was maybe they felt that the
data really wasn't reflective of what
was going on. Does that change with AI?
Do we need to start paying more
attention to that? Well, we economists
pay a fair bit of attention to
productivity. And something that's
pretty important for us all to
understand is that a bunch of what the
Congressional Budget Office thinks with
respect to broad economic growth, so GDP
growth over the course of the next
decade, is coming on the heels of
expectations about labor force growth
that comes from immigration. And we're
now watching over the course of the
first few months of this administration
a lot of those tailwinds with
immigration kind of slowing down. And so
those productivity levers are also
slowing down in the economy. So the
question I guess is like is AI in some
sense going to be a supplement that's
going to allow for that type of
productivity growth the way in the late
90s we saw a boom from computerization
that can counteract some of those trends
in immigration and also the broad aging
of the economy.
>> And Natasha we don't have a lot of time
left but I do want to talk about the
labor market and labor market data
collection outside of just AI. Uh, I
mean, taking politics out of the
equation, we know that there's been a
lot of focus on the BLS. There's been a
lot of focus on the very big revisions
that we've been getting to the monthly
uh, jobs figures. And one of the points
that keeps coming up is that it's just
harder to get people to respond to the
surveys. And I would love to hear your
perspective on whether that's just
inevitable.
>> So, I think it's not, but one thing I
want to do for your viewers is to try to
put some of those revisions into
context. The idea is that we send out
these surveys in relatively short order
and we ask people to report about
employment trends and even a really
massive sounding downward revision
248,000
jobs adjusted downward over the course
of a few month period in context of
actual payrolls is something like 0.15%
of overall employment. So it's pretty
small actually even a big revision and
it's what you would expect because as
more data comes in we have a more
accurate reflection in real time of what
the economic picture actually looks like
and so I think there's a ton of scope
for us to spend energy thinking about
how to up survey responses how to use
artificial intelligence in new ways to
improve data collection but something we
should like deeply appreciate is the US
is the sort of gold standard with
respect to government data it's really
important we don't break that and a lot
of what you're seeing with respect to
the politicization of the agency and
frankly defunding the BLS. Its budget is
down 20% and it's lost a ton of its
headcount. It's actually going in the
wrong direction, not the right one.
>> All right, well said. They have to leave
it there. Natasha Sarin, president and
co-founder of the Yale Budget Lab. Stick
with us. This is Bloomberg.
Let's get right to our top calls. Big
movers on the back of analyst
recommendations. And we start off with
Octa Truis upgrading to buy ahead of the
cyber security company's earnings
tomorrow. Also boosting the price target
and saying the stock is approaching an
inflection point. Nevertheless, the
shares down a half a percent. Next up,
Alaska Airlines. Raymond James lifting
to outperform with the expectation for
the shares to take off towards the
firm's new $70 price target. Those
shares up for a second straight day. And
finally, American Eagle Outfitters. Bank
of America turning bearish, downgrading
the stock to underperform, saying the
negative impacts from tariffs that
outweighs any positive vibes from Sydney
Sweeney. Those shares down 3% on the day
and down more than 25% on a year-to-ate
basis. And those are some of our top
calls. But let's stick with that last
one because our next guest also covers
American Eagle and she's not necessarily
been so hot on the stock. She also
covers Ulta, Gap, and quite a few other
retailers, several of which are
reporting this week. Adrien Yei is
managing director and senior retail
analyst over at Barclays. And Adrien,
let's start with American Eagle. Uh I
mean, when I looked at the Sydney
Sweeney campaign, I thought, shouldn't
this be a boom for the company? Is this
all about tariffs right now?
>> So So at first first blush, um one would
think that Sydney Sweeney is absolutely
kind of high impact and high PR value.
Um what I would say is we've been
underweight on the stock for the pretty
much the the entirety of the year
year-to- date period. It's really not so
much about, excuse me, about the current
pace of business. The company's been
having some issues with inventory,
making some bad merchandising decisions
and everything that we've seen in the
marketplace since July, right, since the
campaign came on, is that the denim
category of which is about 40% of AE
brand sales is under tremendous pressure
from promotional activity already. So
sales, we definitely believe she's
driving sales, but is she driving profit
margins? We have a huge question mark
and we think the answer might be no.
>> Well, it's really interesting, Adrian. I
mean, when you think about this entire
episode, you did see the stock react
very positively to that Sydney Sweeney
campaign, but then you take a look on
social media, it's a completely
different story. I mean, there was some
really intense backlash and I wonder,
you know, as an analyst, how do you try
to factor that into the work that you're
doing? How do you possibly quantify what
is going on in social media?
Yeah. So, we are um a student of of
store checks um and kind of old school,
very old school. So, we look at
promotions, inventory, store checks. And
what I would say is, you know, the
mantra of any PR is good PR. Eyeballs
are on American Eagle. But what I would
also say is that their customer is very
attuned kind of to the social landscape.
So let's not forget that airy their
their um intimates apparel business was
born out of kind of body positivity and
kind of doing the right thing. So you
know you can understand how their core
consumer might be put aside by some of
the rhetoric and and some of the things
that are going on there. At the end of
the day she is driving traffic but again
I would say you know we are seeing you
know a very promotional environment. So
we still think that the combination of
tariffs, you know, maybe off-putting
some of their of their target market,
um, and then just this nature of it's a
tough way, you know, apparel is a very
tough landscape to raise prices. Not a
good, uh, combination.
>> Well, I am curious. I mean, there's been
a lot of focus on American Eagle,
Abbercrombie, some kind of, I guess you
could kind of say older school uh,
brands that have really tried to
revitalize themselves. One name also in
the mix of all that is GAP which reports
I think later this week which you
actually downgraded I believe last week
uh to uh equal weight if if I remember
correctly. What's the story there? I
thought they were actually doing a
relatively good job at the turnaround.
>> They are um and we love Richard Dixon
and we love the seed suite and we love
everything that they are doing. We've
been long this stock since the, you
know, fall of 2023. And the reason we
were long this stock was what our blue
sky scenario was 10% operating margins
from where they sit today at 7% by 2026.
Right. I think with tariffs, it's a
really kind of a a fairly simple call um
in that with tariffs, we just think that
that's pushed out a year. I would also
say I think that their current quarter
they're doing exceptionally well kind of
with the new GAP campaign launch and
with Old Navy, but we're no longer
seeing kind of the ability to pull back
on promos. So at the margin, we're just
seeing a much more competitive landscape
with tariff tariff pressure on the
horizon and that's really the reason why
um you know we move to the sidelines. So
not an underweight. We're just going to
pause here for a moment for a couple
quarters, see how everything kind of
comes out and then revisit it and you
know at the beginning of next year
perhaps.
>> All right, Adrien, great to get some
time with you. That is Adrien Ye. She is
analyst over at Barclay.
>> Did you go out and buy new jeans because
of Sydney Sweeney?
>> I actually bought jean shorts at
American Eagle. Not related to Sydney
Sweeney though, but coming up next after
the break to private assets. This is the
close.
>> We manage over $750 billion dollars
remain and we work with over 1100
them.
>> The CEO of Principal Asset Management
kicking us off to the close just about
30 minutes ago, Roma Bostic alongside
Katie Griffel and he was making the
point here that there is actually
appetite amongst the retail set to get a
piece of the pie from private assets. Is
that true?
>> I mean uh it seems like that is what
people keep telling us. We do have some
data that we can put to it because
Schroers uh put out their US retirement
survey for 2025. 45% of investors that
participate in retirement plans said
that they would invest in private equity
and private debt, which is
>> yeah,
>> almost half if my math is correct.
>> That's almost half. That actually seemed
a little high to me because I maybe
maybe this is just me prejudging, but I
always felt like a lot of the retail set
don't even really know about these
assets or have any real familiarity. But
maybe I'm wrong. Maybe their data says
otherwise.
>> Well, to that point, 12% of the surveyed
participants said that they were very
knowledgeable about private assets.
Yeah, we should have them on the show.
But actually joining us right now, I'm
pleased to say we have Deb Bdon. She is
head of defined contribution over at uh
Schroers. And Deb, it's great to have
you with us. So let's start with the
headline number there. 45% of your an
answerers say that they would like to
participate in private equity, private
debt in their portfolios. That's up from
36% last year, Deb. That is an enormous
jump.
>> It is. And there's just a lot of news
and education around private assets not
only to DC investors but wealth
investors as well as of late. And these
this data actually was came from uh
before the executive order uh that that
President Trump had recently issued. And
I think these numbers would jump even
higher if it was if we could look at the
data after that order.
>> Interesting, Deb. And you have to
wonder, I mean, how much of people's
retirement portfolios are we talking
about? Because I mean, if we're you're
talking about less than 10%, sure, why
not? But I mean, what kind of magnitude
of investment do you think that these
people had in mind?
>> It sounds to us as about 10 to 20% of
their investments they'd be interested
in investing in private assets. And that
can change over a period of time. And I
want to point out that it's important in
the way that we implement private assets
and defined contribution plans and that
we will likely see them in a structure
such as a multi-asset product. So where
the professional management of that
allocation is really done for the
individuals. So they're not choosing
themselves which private assets to
invest in and how much and at what time
to change that allocation. That's likely
going to be done through professional
management.
>> Well, well, I do have two questions on
that front. Deb, obviously a lot of this
is going to have to come uh through uh
the investment advisory channel and I do
wonder how up to speed those folks are
at least in the here and now on be on
not only their own knowledge but more
importantly being able to articulate
that knowledge the potential reward but
also the potential risk of getting into
these assets to their uh clients.
>> There's a lot of education being done
around private assets and defined
contribution right now. So the private
asset firms themselves are spending a
lot of time on communication and
education. Broadly industry associations
are doing the same whether it's through
webinars or papers. Many mechanisms of
education and content is coming for the
consultants for the individuals
themselves for the fiduciaries of these
plans. It's really important and the
industry recognizes that. when we talk
about the level of knowledgeability. So
for example in your survey I am curious
as to what that kind of entails because
when we think traditionally about
retirement plans as a as an retail
investor you really had two things to
worry about. You know what stocks or
what exposures to stocks do I want and
maybe what sort of duration uh am I
willing to take when it comes to the
fixed income side. There's a complexity
to some of these private assets where
you're not only dealing with uh return
dynamics but also of course duration and
liquidity dynamics that are much
different than what we've had in the
past.
>> That's right. There are certain
challenges to private assets and defined
contribution plans such as you pointed
out. So things we want to consider are
liquidity, transparency, costs, but we
want to look at them on the whole. You
want to look at each individual
challenge, but also look at it in the
context of the net risk adjusted returns
and the diversification benefits the
private assets really can bring to the
individuals in a 401k plan.
>> And uh just to give some details on this
study. So your researchers interviewed
1500 US investors aged 29 to 79. So big
range there uh including 602 that
currently participate in workplace
retirement plan. This survey was held
March 25th to April 17th. So to your
point, that was before President Trump's
executive order. And were you able to
glean any reason why investors do want
access? Because uh some push back you
often hear is that you take a look at
returns in the public market. They're on
par with what you can get in the private
market, but with a lot more
transparency. Deb,
>> again, it goes back to diversification
and looking at those net riskadjusted
returns and that is important to take a
take a look at. And the reason why I
think people are taking a second look at
this is we've seen private assets within
the traditional pension plans being used
for many many years and the benefits to
that, right? We want to ensure that the
investors in the 401k plans have that
access as well and get the benefits that
one could see from private assets that
we have seen from the pension market.
>> It's also interesting to me that the
study uh you know it was about private
assets as a whole. It didn't necessarily
break apart at least from I can tell
private equity to private credit and I
know that you know one of the the things
that you asked about was about knowledge
of private assets. I have to imagine
though that private equity has been much
more socialized to the investable
universe than private credit for
example.
>> That's right. It seems as though private
equity is a bit more um educated out
there in the market than maybe private
credit, but really both are important to
take a look at. And going back again to
diversification, really important that
both private equity and private credit,
whether it's a it's a standalone sitting
within a multi-asset product or there
are products that come to market that
combine both public markets and private
markets to get the benefits and the
diversification of both markets.
>> And real quickly, Deb, I am curious. I
just kind of want you to put on your uh
you know your sort of sear your crystal
ball if you will. If we have this
conversation 10 years from now, do you
think the allocation that we're going to
see in these 401ks uh and other
retirement plans will be material,
meaning not just sort of a 2 or 3%
slice, but it could compose a much
bigger proportion of those portfolios.
I certainly wish I do had that crystal
ball, but I do think we will see a
material increase in allocation to
private assets over the next 10 years.
That's almost certain we will start to
see that happen. And and again, that
brings the benefits to individuals
saving their hard-earned money to
retirement and increasing their outcomes
and getting the retirement that they
envisioned in having.
>> All right, Deb, I really appreciate it
and a really interesting study out
today. Deb Bdon is the head of defined
contribution over at Schroeder. Schroers
of course out with that recent survey
showing that there is appetite at least
uh from the survey uh for allocating
more to private assets.
>> Yeah. And it's interesting to read that
because sort of the pessimistic question
you could ask is you know whether or not
we're talking about these things because
you have the Apollos of the world
pushing to put private assets in 401ks
but at least according to this study
from Schroers there's legitimate demand
for it too.
>> Yeah. Because that's but the question is
where is that demand and what exactly
are they demanding? Are they looking at
past returns and saying look you know we
missed out we only got you know x% in
equities or x% in fixed income.
Meanwhile all the fat cats you know are
getting you know a double digit
percentage returns.
>> Yeah. Yeah. A lot of big question.
>> Hopefully those returns continue.
>> All right. Well if you're looking for
returns don't look to the furniture
market. RH, Wayfair, and a lot of the
furniture stocks been under pressure all
day long after President Trump teases
the idea of increasing tariffs on the
products that they sell. That's our
stock of the hour and it's coming up
next. This is the close on Bloomberg.
Time now for our stock of the hour and
taking a closer look at the furniture
retailer RH. This after President Trump
announced a major investigation on
furniture coming into the US. Lindseay
Dutch covers this space for us over at
Bloomberg Intelligence. We should point
out several other stocks in this space
are down and I know we kind of teased
about this on Friday. I already thought
that this industry was already facing
relatively high tariffs.
>> Yes, that's right. Um I think this this
new announcement just injects another
level of uncertainty for these home
furnishing retailers like an RH William
Sonoma, our our house. They're already
battling the country reciprocal tariffs,
coming up with plans to mitigate those
costs, and this is now a new level. We
don't have all the details yet. It might
take us 50 days to find out to find out
what that new rate might be on
furniture. Yeah, certainly uh searching
for some clarity here. But you do write
in a report today, Lindsay, that these
home furnishing retailers, they might
actually be able to ship sourcing for
2026. So it seems like it seems like
they would be able to mitigate some of
this pressure.
>> Yeah. So I do think that this is more of
a next year problem because I think that
most of the inventory for fiscal second
half is already in place. It's already
in the US in a warehouse or in a store.
These companies are ready to sell for
that pivotal um holiday selling season.
And so they do have some time to come up
with a plan to continue to shift their
sourcing, their supply chain, you know,
for that 2026 year. Um, and they were
already making progress this year. So RH
is highly exposed, you know, to this
higher tariff. They only got about 10%
of their cost of goods golds in 2024
made in the US. Mhm.
>> It would be a huge lift for them to
increase that number, but they were
already targeting about 50% of the
upholstered furniture, you know, in 2025
being made in North Carolina, you know,
so progress was already going to be made
this year. And I think that they, you
know, do have some time with inventory
in place to make plans for next year.
>> I I am curious about uh the pricing
power and assuming that they can't sort
of get out from under the tariffs that
they can pass them on to the consumer.
There's a big difference between an RH
customer and a Wayfair customer. You go
to Wayfair because you're looking to
save money. If you're at RH, you clearly
got money to burn if if you looked at
the prices there. Do do you look at RH
and think that they still have pricing
power even given at the already elevated
prices that they sell?
>> Yes. So I do think you know having a
higher income customer you know helps
when you're looking to pass along price
increases and that is certainly
happening in the industry in the second
half. Um like you said RH does play to
that higher end consumer. You know
demand you know has been a little
finicky and a little bit hard to predict
though and I think that's why RH is
especially vulnerable to these new
pressures on cost. You know they have
very high goals for this year. you know,
they're looking to increase sales double
digits. Um, they really need a strong
rebound coming out of the back half to
hit some of the goals that they've set.
Uh, the demand doesn't seem like it's
quite there, you know, with interest
rates still high and and home sales
still being a little bit soft. So, while
their customer might be able to absorb
higher cost, that that underlying demand
push is not quite in the industry.
>> All right, Lindsay, great to get some
context with you. That is Lindsay Dutch
of Bloomberg Intelligence. She also
points out in her note, Roma, that
William Sonoma exposure to USm made
goods is nearly double that of our rage.
So maybe a little bit better positioned
there.
>> Well, coming up, we'll take it to the
closing bell just a few minutes away.
Steve Sausnik from Interactive Brokers
joins us up next. This is the close on
Bloomberg.
I think this is going to be a lumpy rate
cycle.
uh you may get two rate cuts here then a
pause and then others. I think the
direction of travel pretty much is 100
basis points lower. The question is
whether it happens over 12 months or 24
months.
>> Kamal Batia, CEO of Principal Asset
Management kicking us off to the show
just about 50 minutes ago with his
expectation and I think it's the
market's expectation overall. We're
going to get rate cuts or else.
>> Yeah. Yeah. I mean Jerome Pal said as
much on Friday. Not quite as strong but
certainly that was how the market
reacted. A different reaction today. You
can see the S&P 500 down about 3/10en of
a percent. I will say on pretty
uninspired volume, it is August 25th,
but still the big benchmark moving
lower. You
>> did you go out for lunch?
>> Did I There's literally no one on the
streets of New York City right nor as
there uh should be. No, I'm glad
everyone get out of here except for
those watching this show. Let's talk
about tech really briefly. You did see a
little bit more resilience uh in tech,
but still the NASDAQ 100 down about a
tenth of a percent. We know that Nvidia
is coming up on Wednesday. Don't worry,
we will talk a lot more about that. The
bond market selling off a little bit and
that is putting a dent in the small caps
as well.
>> Steve Sashnik joins us right now, chief
strategist at Interactive Brokers. They
help us count it down to those closing
bells just about 9 minutes away and we
came out of last week of course with the
big Jackson Hole speech by J. Pal. We
come into this week with a closer look
at Nvidia. What do you think is going to
end up being more consequential for this
market, Nvidia or what's going on with
the Fed?
>> I think actually Nvidia. Um, and the
reason being a as much as the market
loved what Powell had to say, he didn't
actually say anything all that
different. All that what really all that
changed was instead of the burden of
proof being tell me why I need a rate
cut, the burden of proof is tell me why
we don't need a rate cut. But it still
leaves data dependency in there. And the
Fed, the FOMC did tighten their
statement on inflation. So there's a
couple of crossurrens in there. The
market heard what it wanted to hear.
I've often called him Goldilocks in a
suit and he lived up to that name to a
certain extent in his, you know, final
in his final Jackson Hole address.
Nvidia, on the other hand, is the poster
child for this market. And I don't want
to overstate it because it just sounds
it sounds hokey, but it is. I mean, the
the market the bull market dates to
November 2022, which is when chat GPT
was released. this almost everything we
talk about has is AI related whether
it's dead-on AI like Nvidia peripherally
AI related you know let's say a Meta or
Microsoft but there's a reason these
stocks are all AI focused and so if
Nvidia tells us that people are starting
to wonder if all this money they're
spending on AI is is not yielding the
rewards that they're hoping
>> and maybe taking a little bit of
breather and more about implementation
rather than buildout that could have a
really broader effect on the markets.
>> We started off the show and Katie had
showed a chart about how low the
correlations are right now between the
equity market and basically the
expectations for rate cuts. The idea
that I guess now that that's priced in,
the market is kind of left to its own
devices with a much more of a focus on
corporate fundamentals, which you would
think it would always be. But I do
wonder, and I'm basically going to ask
you the exact same question I asked you,
but in a different way, and it's about
disappointment. If for some reason Pal
doesn't deliver or Nvidia and Nvidia
doesn't deliver, what which one do you
think would have the most negative
reaction in markets?
>> I think that I think either could and
this is and and and that's the I don't
mean to I don't mean to dodge here which
we'll find out a lot on Friday,
>> you know. I think I think Friday
>> core PCE comes out and core PCE has been
creeping higher each of the last three
readings. it it had a bit of a blip up
then went down and it's been creeping
back up and somewhat on services as
well. Lost in the FOMC statement was
this 2% target. And so that could be the
sort of thing that makes the market
decide, wait, maybe maybe the Fed has
room to pause. By the way, rate
expectations when I looked earlier today
were about 84% for a cut. They were 105%
a week and a half ago. So, so we're all
talking about how how these rate cuts
are so crucial to to the market
narrative, but we're actually not as
high. We're not as built in as we were
two weeks ago, call it.
>> Yeah. No, it's it's a good reminder that
we were talking about the possibility of
a 50 basis point rate cut next month.
That conversation has quietly gone to
the wayside. But to talk a little bit
more about the economic data, you point
out in your notes that if there is a
reason to not cut rates, it'll come in
the form of core PCE coming on Friday.
But you have the two sides of the Fed's
mandate kind of in conflict right now.
You have the inflation picture, then you
have the labor market picture. Core PCE
could upset things. What if we get a
very very strong August jobs report?
>> That also upsets things. And that's
that's kind of the issue is I I think
what the market took what the market
took away was and this was a really big
this is a huge question is if the dual
if the dual mandate aspects conflict,
who who wins out? do they are they more
inflation conscious um or are they more
labor market conscious? He leaned toward
labor market. Now the theme of the
Jackson Hole uh conference was about
labor market. So that kind of probably
should have tipped us all off in
advance, but um I I wasn't quick enough
to pick up on that. Um but what happened
was basically that that's that that's
this feeling. But if the labor market is
strong, well then you don't need the the
preemptive cuts, you know, the the you
know the preventative medicine uh
because what's it there for? So if so I
can come up with a scenario and I don't
I don't I I can't put enough odds on it
but you can come up with a scenario
where PC core PCE is higher CPI etc are
higher and the jobs market is strong
enough that maybe the inflation maybe
maybe the labor market is is okay and
doesn't need a cut well that that
changes the narrative of things doesn't
it? It certainly does and it would be
interesting to see the president's
reaction there. But Steve, we're talking
about all these different crossurrens
blowing away in the market. Is the
options market showing any concern about
all any of this? Because I take a look
at the VIX trading with a 14 handle that
doesn't seem that uh stressed out.
>> Nope. Um you know, remember I I I always
like to caution that VIX is not a fear
gauge. It does play one on TV from time
to time, but it's not a fear gauge. It
is the market's best um estimate of
volatility over the coming 30 days.
Here's the part that really gets me is
there's a there's actually a VIX 9D, a
9-day version of VIX, which they which
basically uses um you know, options with
call it two two weeks till expiration,
nine days average. And that's actually
trading lower than VIX itself. So, it's
telling us that with this whole
discussion we had about all the things
that can cause volatility in the next
two weeks,
>> market is like no big deal. Just real
quick, we're only about a minute left.
How concerned are you right now about
tariffs and I guess more broadly just
about uh the policies coming out of the
White House or at least the rhetoric I
should say coming out of the White
House?
>> It's interesting. I mean, you know,
obviously the tariffs we the tariffs are
less than, you know, basically less than
3 weeks old. I was actually on my way
here, I was talking with one of your
print reporters and you said, you know,
what are you hearing about tariffs for
before earnings? I'm like, it's still
early. You know, we don't really know
yet. and some of the other policies, you
know, seem a bit scattershot, but I
think the market has is of the mindset
that what, you know, that that that
Washington right now is market friendly.
Um, and I think again the burden of
proof is until it's proven not to be
market friendly. That's the that's the
way that stock investors are taking it.
>> Steve Sashnik, chief strategist over at
Interactive Brokers, helping us count it
down to the closing bells right across
the screen for the major indices here in
the US. Biggest lagger, Dow Transports.
There we go.
>> Down 1.8%.
>> Not uh not a screen that I had up, but
certainly we know uh it seems to be a
little bit of a sell-off following that
really enthusiastic Friday that we had.
>> Yeah, we're going to have a full
breakdown of all of today's market
action, how it links back to what we
learned on Friday, and more importantly,
how it links to the big events later in
this week. A full breakdown starts right
now with our global simocast.
The closing bell. Bloomberg's
comprehensive cross-platform coverage of
the US market close starts right now.
>> And right now we are two minutes away
from the end of the trading day. Roma
Bostic here with Katie Grifeld taking
you through to that closing bell with a
global simocast. It starts now. Tim
Stick in the radio booth. Carol Master
for some reason has the week off once
again. Nora Melinda doing the best to
fill her shoes. Welcome to our audiences
across all of our Bloomberg platforms
including our partnership with YouTube.
Right across the screen, a big flip uh
Tim from what we saw on Friday where you
had the majority of the stocks in the
green. Today the majority in the red.
>> Yeah, it was a relief rally uh based on
what we heard from Jay Powell in Jackson
Hole. The exuberance is maybe a little
bit gone. I don't know. Everybody's just
waiting to hear what Nvidia says on
Wednesday because no question that sets
the tone for the week. Of course, when
we look at everything that came out of
the commentary from JPAL last week,
that's really what we're thinking about
this week. But of course, we have Nvidia
on Wednesday. That's what a lot of
traders are really looking forward to.
But as we really just think about the
broader economy, of course, we know that
that September rate cut is all but
priced in at least by traders here. But
the question really is what is the
cadence after that? Are we going to see
cuts into the end of the year into 2026
or is it going to be a bit more of a
doubbish situation here? I hear what
you're saying, but Steve Sausnik just
reminded Roma and I that uh we're taking
a look at 84% odds or so of a September
rate cut. We were talking about above
100%. We were talking about a 50 basis
point rate cut just a couple weeks ago.
And that feels like a long time ago.
>> And I'm glad you pointed that out, too,
because even when you look out to the
next few meetings, that sort of 100%
conviction you saw for two rate cuts
this year and a continuation of that
cycle into 2026. Certainly a lot of
people on the fence right now about
whether that is actually the case. Right
across the screen here
on your major indices in New York as we
get the closing bells, the Dow Jones
Industrial Average uh leading the charge
lower, down about 8 cents, up 1%, a drop
of more than 300 points. We should point
out the Dow transports also falling
about 300 points or about 1.8%. The S&P
500 on Friday, you had about 400 stocks
in that index rise on Friday. about 400
fell today. That pushes the index down
28 points or 4/10en of 1%. The Nasdaq
Composite down two ten of 1% and the
Russell 2000 closing out the day lower
by about 1% on the nose.
>> I think Roma just took my line. That's
okay, Roma. 101 stocks did move higher
in the S&P 500.
>> He probably practiced for that.
>> 400 stocks to you know I want to tell
you guys
>> I heard from Carol today.
>> Oh, what'd she say?
>> She's doing great.
>> Does she think I'm doing great? She's
having a great vacation.
>> Okay. So, I just want to let you know
rubbing that in. Sure. All right.
>> There are signs of life. Okay. All
right. Yeah. Uh 400 stocks did decline.
100 stocks did move higher in the S&P
500.
>> All right. Let's take a look at the
sector breakdown here. Uh not a lot of
green on the circle. The circle mostly
red today and you can see uh tech looks
particularly angry. That is a big
decliner here. What did do okay today?
Communication services. We know that
Alphabet had an okay day. You also had
the energy sector managing to go a
little bit green here, but definitely uh
when it comes to the sector level, a lot
of declines to choose from.
>> Did you say that's that tech sector was
angry?
>> Yeah, look at it. It's dark red and
screaming at me.
>> If you're short the market, though, you
know,
>> there's some very happy bears today if
>> you could be okay. Hey, I want to start
with fertilizer stocks today. Did manage
to find a few stocks in the green. Had
to go outside of the US for a couple of
them, though. 1.8% 8% to the upside for
the Mosaic company. We did see
fertilizer stocks rise today after the
USGS's draft of mineral commodities to
be included in the 2025 list of critical
minerals included potach. This according
to a notice in the Federal Register.
Minerals listed include aluminum,
cobalt, copper, silicon, and more. Also,
did you see the news earlier today? A
lot of like deal news today. We spoke
with Lyanna Baker from the deals team
earlier. a merger Monday, a deals
Monday, call it what you will. Some
information about Puma uh coming out. Uh
Puma shares rose as much as 20% earlier
in the session. These ADRs finished the
day higher by close to 15%. This is the
most going back to October of 2020 uh
October 2001 after Bloomberg News
reported that the billionaire Pano
family is weighing options for the
sportsware company, including a sale.
The Pinoclan owns about 29% of Puma
through their Artemis vehicle. Well, the
family is working with advisers and has
reached out to potential buyers to gauge
interest according to people familiar
with the matter. And another ADR on the
rise today. Shares of JDE Pets today,
ADRs of JDE Pets today, higher today by
close to 17%. Uh Craig, Dr. Pepper
agreed to buy JD Pets for about 18.4
billion to bolster its struggling coffee
business. You may remember that there
was this takeover
>> of soda maker Dr. Pepper by Curig back
in 2018. This essentially undoes
>> that transaction.
>> I was about to ask you when they tie it
up. I mean, that wasn't that long ago.
>> It wasn't that long ago. That was when
that was when the whole idea with JB
Holdings, you know, which is controlled
by that that one German family. Their
idea was if we can control
>> all the coffee
>> uh at these different, you know, various
firms, uh, including Prety
Cream as well, Panera as well. Yeah,
>> I mean they were they were um but a lot
has changed since then, including coffee
prices have gone up and there have been
tariff concerns. So yeah, there have
been some issues.
>> Well, interestingly, if we look at the
other side of the coin, I've got some
decliners for us to take a look at. And
one of them is of course with the story
that Tim has just been talking about
here. Let's look at shares of curig Dr.
Pepper. That's ticker KDP here. And this
we are seeing the stock that closed down
about 11% in trading today. It was the
worst performing stock in the S&P 500.
And of course, we know this is after
that deal that we were just talking
about, $18.4 billion deal to buy JDP. It
seems as though investors on the CURIG
Dr. Pepper side not too happy. Shares
are down about 3% year to date. I also
want to take a look at some furniture
stocks. I mean, of course, we know
tariff headlines continue to fly. And
here of course we know that a lot of
these furniture related companies like
RH for instance uh falling wayfair down
a lot of those other companies that are
all related to the fact that Trump
announced a major tariff investigation
on furniture coming into the US and this
of course is weighing out a lot of those
companies. Shares of RH down about 41%.
Wayfair on the other hand up about 65%.
Investors really just still trying to
digest what's going on here and what
that means for the sector moving
forward. But another company let's look
let's look into right now that is
American Eagle. This has nothing to do
with Sydney Sweeney this time of course
but this is uh the company is sliding
today especially after Bank of America
cut its recommendation on the stock to
underperform from neutral. They're
really pointing toward tariff pressures
on profitability, which we know has
really been in focus for a lot of these
retailers as we think about clothing
companies and what that means in terms
of whether or not they're going to
actually have to pass on the tariff
prices on to consumers here. But if you
look at the stock of American Eagle, it
seems as though the majority of Wall
Street is really advising that traders
hold on to the stock. One analyst has a
buy rating. Eight have a hold and three
of us sell. Shares are down about 25%
year-to- date.
>> And I just want to put an honorable
mention to FIG is a ticker. for Figma.
Uh, of course, coming off that IPO.
Analyst coverage started today. You had
eight notes out today and seven of them
were for neutral equivalent. So, not a
lot of bullishness on this stock. Seven
holds right now and three buys. Let's
take a quick check on yields right now
because we did talk see some movement
across the curve primarily to the upside
which sort of belies what we saw last
week coming off of J. Pal's speech here.
But a lot of this does have to do with a
pretty heavy auction slate over the next
few days. About $183 billion of
treasuries slated to go on sale started
tomorrow, five and seven-year notes. And
as Steve Sashnik was telling us on the
TV program, Katie, just a second ago, uh
this of course that big PCE report on
Friday that might be giving some bond
investors pause.
>> Yeah, absolutely. A lot to look forward
to there. It's not all about uh Nvidia,
you guys.
>> Is it about Netflix, too?
>> I I think that uh you're going to lead
us there.
>> Yeah, I'm gonna I'm gonna lead us there.
Uh so Netflix of course is known as this
company that took analog uh DVDs and
brought us into the streaming age with
uh really inventing a category. Now
they're kind of going analog again.
They're out creating these Netflix
houses and it's exactly what it sounds
like. It's 100,000 square ft. The
company says it's a quote first of its
kind permanent year-round home for fans.
It's free to enter. You can bring most
popular shows to life. Stranger Things,
Love is Blind, and yes, even Squid Game,
which I don't really want to bring to
life, but I don't like that too much.
>> I had to tap out a Squid Game. It was a
little bit too violent for me. Um,
>> didn't make it to the next the next
season.
>> No. No. I Life is too short. What I want
to quct, it says that Netflix House is
opening in Philadelphia at King of
Pussia on November 12th.
>> King of Pussia isn't in Philly, is it?
>> That's You're asking the wrong person.
>> Yeah, it's in Pennsylvania. It's not in
Philly. It's pretty far, I guess. So,
you're a stickler, so you won't be
there. No.
>> Um, so, so how is this work? Is this
like a Soho house where you have to be a
member and it's just all the cool people
or do they just let anyone in?
>> It's just based on the membership tier
romant. That's what it sounds like. But
>> the old HD of not not, you know, SD, it
doesn't matter. You know,
>> Tim and I were earlier talking. This
kind of reminds us a lot of Disney. I
mean, I'm really interested to see how
this all evolves, especially when you
think about yourself. You watch these
shows and then now you're actually kind
of immersed into the situation here.
Really? Like I don't know. I don't know
how I'd feel about that, especially as
we think about Squid Games, but I think
it could be a great opportunity for
people to get some merch, of course,
from their favorite shows.
>> Well, we do have some breaking news out
of South Korea. Actually, uh this coming
from the president, the the president uh
of the United States says on South Korea
that we think we have a deal here. Of
course, we know that they have been
meeting President Trump and President
Lee all day and you can see the scenes
in the Oval Office right now.
>> Absolutely. there. We are keeping an eye
on that as the two leaders wrap up their
meeting here and of course what exactly
the trade relationship uh with the
government here in the United States and
we should point out the relatively new
government over there in South Korea
looks like.
>> Yeah, the big question you know are the
devils in the details as Carol always
says when it comes to these trade deals
and also I think we can expect a steady
steady stream of international leaders
continuing making their way to the White
House uh to try to negotiate better
terms uh for their trading deals. That
is going to do it for our crossplatform
coverage of the market close on this
Monday afternoon. We're going to be back
tomorrow, same time, same place.
Stick with us. Our coverage continues
here on Bloomberg television with a
closer look on tech stocks, a closer
look at Nvidia. Ray Wang joins us after
the break. This is the close on
>> The countdown is on. Everything you need
>> Welcome back to the close. I'm Katie
Griffeld
>> and I'm Roma Bostic. You know Katie, I
was out on Friday, so I missed the big
rally that we had on the back of that
Goldilock speech by JP Pal. A gain of
about one and a half% on the S&P 500,
giving back about 4/10en of a percent
here on this day. Almost a complete
flip-flop of where we were on Friday
where about 400 stocks in the S&P
rallied. Today about 400 of those stocks
dropped. Not a really mass selloff. And
we should point out volume is light on
what for a lot of folks is basically a
holiday week. But you take a look at the
NASDAQ 100. That's going to be a big
focus this week. Uh Katie Grifeld with
those earnings out of Nvidia.
>> Absolutely. A lot to look forward to
there. We'll get back to Nvidia in just
a moment. Don't worry. Let's talk about
some of the other movers today though
because actually it was a pretty busy
day under the surface as well. We start
with CSX. This is a rail company. There
was a lot of M&A speculation about maybe
Berkshire Hathaway coming in, but CNBC
reporting that actually Warren Buffett
isn't too interested. That was worth a
5% decline. We were also talking about
it being an M&A Monday. Certainly when
it comes to coffee, you're taking a look
at shares of curig Dr. Pepper. The news
coming out they're going to pay $18
billion to buy JDE pets. A pretty big
price tag that's worth an 11 and a half%
decline. And then I also wanted to
highlight Intel as where as well
declining a little bit even though
President Trump had a lot of nice things
to say about Intel. Of course, the US
government taking a 10% stake in the
company that's been worth some pretty
big gains in Intel, but coming down a
little bit today. But while we're on the
topic of chips, that brings us back to
our top story this hour. And of course,
it's Nvidia as we approach the next big
t test for the stock market. That's
coming on Wednesday with the chipmaker
set to report results with traders
really hoping that it can soothe fears
about AI spending and effectively
confirm that the stock market's latest
rally isn't just a technology bubble.
Roma,
>> absolutely. Well, let's pose that
question to our next guest. Ray Wong
joins us right now. He's the chairman
and CEO over at Constellation Research.
And Ry, I I know we make such a big deal
out of Nvidia. It has become a
phenomenal stock, a phenomenal cultural
moment. I mean the last few earnings
reports you've actually had watch
parties at bars. I am curious though
about the sustainability of this rally
at least at AI rally led almost
primarily by Nvidia. Well, you're right.
This is 7.4% of the S&P uh and it is
actually a significant component and
everything rides on this because six out
of the seven mag 7 are spending money
with Nvidia to build out data centers.
Their 80 to$100 billion capital
commitments over the next years. the 12
months that's really what's driving the
part one of the growth but we haven't
talked about part two which is sovereign
data centers part three physical AI and
of course as it continues to extend and
there are companies that are going to be
disrupted and of course transformed in
the middle just like we had in the
internet era but that's really what it
is everything's riding on the chips and
then everything coming from the stack
after that
>> I am curious about the broadening out
there's been a lot of hey and any uh
Bloomberg customer can sort of run this
function on the terminal SPLC and you're
talking about a company that gets almost
20% of its revenue from Microsoft. You
throw in Meta, Super Micro, Amazon,
Alphabet, that's 50% of revenue. That's
for a company of this size, that's
incredibly narrow. And that does pose a
risk if even any one of those customers
pulls back significantly on their capex
spend. Do you think there is another
group of companies out there that can
maybe fill that void should we see a
pullback from some of those big names?
>> No, it's a great point. And I think the
next group is really sovereign
governments that are trying to bring AI
to their citizens. You're going to see
that. We saw that with the Middle East
and the orders that they're making.
They're also working in conjunction with
the hyperscalers to be able to get stuff
out there. Uh and that's really what's
driving that capability. Uh and then
after that, it's going to be at the
edges. Uh and that's really where it
gets into some of the other
organizations. But you're going to see
that shift from cloud to on premises AI
that's going to happen. But not as big
as you're right as you're saying as
what's happening with the mag 7 and the
six out of the mag 7. The good news is
the six out of the mag 7 their business
models are strong. The digital ad
revenue business is good. Uh what you're
seeing as well with digital goods and
services is also strong. So when you
look at an Amazon, a Google, Microsoft,
their businesses are still very solid.
Uh and that's why there's proof that
this rally is still going to continue.
And Ray, I'm curious to hear your
perspective on the crossurrens that are
trade policy and the US administration's
changing stance. It seems to shift a lot
when it comes to Nvidia. We know that
right now it seems like the Trump
administration is preoccupied with
Intel, but it feels like Nvidia in
particular has really been in the
crosshairs of the USChina relationship.
>> That's a great point. This USChina
policy, as I mentioned before, was a
little bit bizarre. So the question is,
do we want China to have US chips or do
we not want China to have US chips? I
think the short answer is we do and we
believe that we're at least three
generations ahead of China. So it's okay
to give them what they call single die
chips instead of the multi- die chips
which are a little bit more complex
technology that packs more of the
capability. And so I think that's what
we're trying to do is saying, hey, we
greenlighted HTO chips. China's like
fine, we don't want our people our
organizations having them. So let's go
create some new chips. And so Nvidia's
back to the drawing board saying we'll
have new chips available for the China
market. And so I think at the end of the
day, it looks like the US policy is we
want them to have chips, but we don't
want them to be ahead. And we think
Nvidia might have it right. So we're
going to create these kind of trade
deals or specialized trade deals.
>> What does Nvidia without China look
like? Okay. Because you can imagine a
situation where they're allowed to sell
chips in China, but it's not like anyone
in China is buying to the point that you
just mentioned. I mean, putting that
into context, how painful would that be
for Nvidia?
That's a $30 billion annual business. $
32 billion business that uh would be
gone for Nvidia. Uh the main point here
is using the chips means they use CUDA
which is the software layer. The Chinese
uh startups have all figured out how to
maximize access to chips without CUDA.
And so the question is where is the
sticking point and what actually makes
the uh makes the chip sticky? That's
going to be the question. So is it
providing more chips? And we see a lot
of chip trade. There are a lot of back
channel chips going through Singapore
and Dubai. And if you follow that trade,
there's still a lot of demand for Nvidia
chips despite what the government says
because these chips outperform
everything else that's in China today.
>> And we should point out, of course, uh
for our viewers, I mean, we're still
talking about a company with phenomenal
growth rates and analyst expectations
coming into this. Expect those growth
rates to continue, though slightly lower
than what was expected. 50% uh growth on
the profitability side and on the
revenue side uh Ray we're talking about
50 plus percent growth which is for a
company this size absolutely
mind-boggling. I do want to just move on
a little bit from Nvidia specifically
and get your view on where we start to
see the sort of more consumerf facing
use cases for AI overall. I know we all
are using chat bots in some shape or
fashion, but when do we start seeing
something a little bit more integrated
in our homes, a little bit more
integrated in our devices, maybe
actually, you know, glasses or something
separate? Uh, what do you expect?
You're absolutely right and you touched
on the main point. Glasses are going to
be the new form factor that's going to
enable all the AI capabilities from
being able to remember someone's name
and have the context or remember when
you last saw something or the ability to
actually take a picture of something and
actually buy it on site. You're going to
see those consumer examples and I think
that's going to happen when we see Meta
when the release of their next set of
glasses where they bring together Insta,
Facebook, the rest of the glass empire,
AR and VR together. That's where we'll
see that big use case where we all want
to see on the consumer side. But on the
enterprise side, we're seeing it
already. You're seeing 10 person
companies that are worth 200 million 200
billion 200 million in revenue. Sorry,
not billion, 200 million in revenue like
Curser. You're seeing potentially a 100
person company that could take out
existing software companies. We're
seeing thousand person companies that
are going to potentially take out the
Accentur and the TCS's of the world.
This is happening at that scale. So, we
haven't seen anything like this before.
Uh, and I think you're going to see more
and more of that as we actually progress
throughout the year.
>> Absolutely, Ray. Great to get some time
with you. That is Ray Wong. He is
chairman and CEO over at Constellation
Research. And coming up, all eyes on
Washington following President Trump's
meeting with the president of South
Korea. We'll discuss the latest from the
visit next. This is the close on
It's time now for the top three where we
named drop the people driving some of
the day's most talked about stories. And
up first sharing our top slot is Dave
Heath and Randy Goldberg. They are the
co-founders of the sock company Bombas,
which is on track to reach $500 million
in sales this year. And I will point out
that the company, it donates a pair of
socks for every pair purchased. So,
they're doing good as well.
>> And of course, a lot of this this
company came to the attention of a lot
of people from their Shark Tank
appearance from some years back with
Damon John who every time you talk to
him about anything, you ask him the
weather, he starts talking about Bombas
socks. But this is I own several pairs
of these. So, full disclosure, they they
are pretty comfortable. I have to say
they're cute.
>> Yeah. And anyway, but it's kind of
interesting to see how you can take
something so simple like just a pair of
socks and turn it into 500, you know,
multi-million dollar business.
>> Follow your dreams.
>> A follow your dreams. A company, well,
of course, it took something simple and
also turned itself into a gigantic
business, a billion-dollar business is
Levi. Now, they have a relatively new
CEO in Michelle Gas, and she's been
trying to find ways to revitalize
things. And here's what they're doing.
They're identifying bluecollar men in
rural areas as the company's next big
customer opportunity. a big roll out
here, including a partnership with Boot
Barn where they're going to offer all of
their brand selection uh in that chain.
They said right now they'd only been
offering about 10% of their selection in
Boot Barn.
>> There you go. Yeah, they're uh looking
to roll out functional staples for real
cowboys.
>> Now, I not not to be, you know, cheeky,
but
>> go ahead.
>> Did they not know this already?
>> Because when I think, you know, denim,
you kind of typically associate it with
>> blue collar blue cowboys, factory
workers, you know, people who, you know,
need a rugged pant that they can get
dirty in.
>> The consultants told them so. They got
there in the end. Let's talk about the
third on the dock at the Pino family.
The billionaire family is weighing
options for Puma, including a sale after
the sports brand lost more than half of
its market value in the past year alone.
Shares really popping today on the back
of that. But, uh, boy, what an ugly
chart.
>> All right. Uh, one other person that we
are keeping our eye on, uh, Katie right
now is the president of the United
States. The president uh actually had a
chance to sit down with the president of
South Korea earlier today. You see them
speaking there. This was a few hours
ago, but just a couple of minutes ago,
the president came back into the Oval
Office for another event and he was
asked about the progress of what's been
going on with South Korea. Took a lot of
folks by surprise. Skyler Woodhouse is
down there on the White House lawn. She
had a front row seat to that. What did
we learn, Skyler?
>> Yes, Roma. Uh it was a big day here at
the White House with South Korea's
president um here visiting President
Trump and uh just moments ago like you
said uh the president um President Trump
said that you know he thinks they have a
deal um and thinks that South Korea will
agree to that deal. Now this all comes
after um from you know earlier this
month in July uh South Korea and uh the
US agreed to um South Korea agreed to
invest in the US which is essentially
what President Trump is hoping to get
out of all of these meetings he's doing
with foreign leaders. Um and today we
learned that uh South Korea would would
be investing about $150 billion dollars
into the US um around ship building. Um
President Trump said that uh the US
would be um you know that South Korea
would be building bridges here in um the
the US. And so this is just sort of the
next development in um you know,
President Trump sort of going after
bringing manufacturing back to the US.
And it's interesting, you think back to
this morning, we had President Trump
post on social media some pretty harsh
words about uh the state of South Korea
just hours ahead of this potential
meeting with the benefit of hindsight.
Could that be uh perceived basically as
a negotiating tactic?
>> Oh, absolutely. I think it's it's uh
quite the norm from President Trump to
sort of post something on social media
ahead of a meeting he's doing or or a
phone call that he's having with other
foreign leaders. um you know so this was
sort of not shocking to see from
President Trump. It you know definitely
brought maybe some tension but during
the meeting earlier today the two um
appear to have maybe eased those
tensions a bit. Um but that is you know
sort of true Trump fashion to uh say
something on social media ahead of a
meeting.
>> Hey real quickly. I mean we do know the
South Korean president was scheduled to
meet with leaders at the business
roundt. Some headlines already coming
out of Reuters that he might actually be
meeting with the CEO of Nvidia. Do we
know anything about that Skyler?
I do not have anything to report at this
moment. Um, but you know, from what
we've seen with what's going on with
with Intel u, you know, I'm assuming
that these, you know, meetings are going
to be happening uh very frequently and
very often. So, um, you'll have to check
back in to see uh what the latest is
>> All right, Skyler, really appreciate
your reporting. That is Bloomberg's
Skyler Woodhouse. To bring you that uh
Reuters headline once again, the South
Korean president also due to meet with
the CEO of Nvidia. And we were just
talking about the role that Nvidia is
playing in all of these geopolitical
discussions.
>> Yeah, I mean Jensen Wong has kind of
become a bit of a diplomat in addition
to being the CEO of a big chipmaker. Uh
but it's sort of makes sense, right? You
think about how big South Korea's role
is in the chip industry. SK Heinex and
quite a few others. So Jensen Wong
certainly has a certain dependency on
South Korea and South Korea might have
dependency on him.
>> Absolutely. Well, coming up, we'll move
on from Nvidia just for a moment and
talk about rate cut euphoria. It's
fading ahead of a key inflation reading.
That conversation up next with Lauren
Goodwin of New York Life Investments.
This is the close.
Well, Wall Street's PAL rally sputtering
today as rate cut euphoria fades ahead
of a key inflation reading on Friday.
Our next guest expects the Fed to cut
rates by 25 basis points at their next
meeting, but warns, quote, "We're still
doubtful that a September cut points to
a prolonged interest rate cutting
cycle." Joining us now is Lauren
Goodwin. She is economist and chief
market strategist over at New York Life
Investments. She joins us now. So
Lauren, that's interesting that okay,
maybe we get what Wall Street has been
betting on, and that's a September Fed
cut. But the path beyond that, at least
in your view, looks a little bit murky.
Yeah, that's absolutely right. I think
Cher Pal was much more dovish on Friday
than I was expecting. And I want to be
clear that that's a constructive
backdrop for risk assets. A 25 basis
point interest rate cut in September,
which is now our base case. It's a lower
cost of capital for those that are
borrowing on the short end. It does make
a difference. We think it will
contribute to extending the cycle and
the market rally. But when we look at
the data that the Fed is using to make
this decision and future decisions, we
still don't see it pointing clearly to a
consistent interest rate cutting cycle.
Inflation risk is still present. It's
coming from many directions. The labor
market, though coming into better
balance or even weakening, sees some
potential upside risk related to labor
supply and financial conditions are
really loose. And so again, a a cut in
September is a constructive thing. We're
we're we're positive about it. I want to
be clear about that. It's just that what
we get from there is a much more open
picture.
>> Well, Lauren, you touch on something
that I always wonder about and that's
how much would a quarter point cut
actually matter and you point out there
are some benefits there, but you think
about what the White House in particular
has been vocal about wanting lower uh
mortgage rates, lower federal borrowing
costs. What do you need to see there?
What magnitude are we talking about
where it would actually make a
difference in some of those areas?
I think it's such an important question
and it's important also to point out
that some of the sectors of the economy
or the markets that we care about the
most including the US equity market
aren't likely to be driven by a single
25 basis point cut. Unfortunately for
those asset classes like housing as an
example like private equity that would
need to see a more consistent uh
reduction in interest rates on the long
end. There's very little that Fed
cutting at this phase in the cycle is
going to do to assist those segments of
the economy. And that's because that
inflation risk that's still present.
It's likely to keep the long end, let's
call it the 10-year yield sticky above
4%. Now, what would it take to get the
long end to move lower and therefore
mortgage rates to move lower? Slowing
economic activity. That's not likely to
be as constructive for other asset
classes like public equities. And so
it's it's an unfortunate but precarious
balance where we don't see those more
sort of long end anchored segments of
the economy accelerating so much at this
phase in the cycle.
>> I'm glad you brought that up. I was
having a conversation with someone on my
vacation about kind of the performance
of uh private assets overall in this
environment. Why we didn't see a little
bit more activity particularly coming
out of private equity given how uh
public markets did open up. And I do
wonder that if this is kind of it,
meaning that we've had this big rally,
not saying we won't have future gains,
but it won't necessarily be this
euphoria and we're going to have to deal
with a potentially softer economy and a
more complex economy. Is there an
opportunity or is that opportunity lost
to see some of the exits out of the
private capital space and into public
markets?
>> Think that there is an opportunity. It's
just that that opportunity might look
different than it did in uh previous
economic cycles. Really what you're
describing in what sounds like a very
fun vacation, very fun vacation
conversation is the difference between
>> it's it's the difference between a
reduction in the cost of capital and a
real improvement in investor confidence.
And the reality that businesses are
facing, especially those companies that
are considering initial public offering,
is do they have the confidence not only
in their business model, but in the
capital markets to be sustained for the
six or nine months it takes to go
through that process in the best case
scenario and there are potential
opportunities to move in that direction.
The deregulatory impulse that investors
were hoping for is starting to come
through. little bit of relief on the on
the cost of capital side is coming
through. But our best guess is that it
does take more consistency in the let's
call it positive business confidence
side of things before we see a
meaningful uptick in private equity
exits. Now, where we're seeing
meaningful opportunity is that as
capital continues to flow into the large
and mega funds of private equity, there
are middle market and lower middle funds
that are exiting actually into those
larger private market funds. And so we
see the capital markets backdrop as uh
potentially it creating an interesting
competitive dynamic where those smaller
funds do uh much better um even than the
large and mega funds. Hey, just real
quickly, Lauren, I do just want to get
your general thoughts on the Fed, not so
much from a rate perspective, but more
on the balance sheet perspective and
some interesting comments coming out of
Lori Logan just a little while ago, the
Dallas Fed president speaking uh at an
event uh hosted by Mexico's central bank
and this idea that she thinks you can
actually start to see some short uh end
uh concerns uh once we get to the end of
the quarter. Basically, concerns in the
money market primarily because of the
Fed's pullback. And I am curious. I
mean, we talk so much about what's going
on in the long end of the curve. When we
make it out like the short end is just,
you know, you just go in there and grab
your 4% or whatever it is. Now, do you
worry at all that maybe what the Fed's
doing right now could complicate the
short end of the curve as well?
>> I think it's a really important question
and a space that we'll all have to
watch, but a space where the Fed is is
very aware of the potential risks. The
reality that the Federal Reserve find
itself finds itself in is something that
we've actually seen play out over major
market events over the last five years,
which is just that issuance from the
federal government really over the last
10 years or so, is just a lot higher
than than we've been accustomed to in
this economy, especially when the
economy is doing well. And so supply
concerns on every element of the curve
are important. It's just that as
investors, we've typically seen those
concerns come in more at the long end.
As more supply is issued in the short
end, I think it's a place where we'll
have to be uh have to be vigilant.
>> All right, Lauren, always a pleasure.
Lauren Goodwin, economist and chief
market strategist at New York Life
Investments.
>> Meanwhile, let's take a look at how
markets finished up on this Monday, the
first trading day of the week. You can
see the S&P 500 actually declining a bit
into the close, finishing lower by about
4/10en of a percent, outpacing losses in
the NASDAQ 100, down about 3/10en of a
percent. I will say that uh we have a
lot of risk events weighted towards the
end of the week. This really feels like
wait and see.
>> Yeah, and we should point out volume
about 20% below uh where it would
normally be. Of course, this is a August
end of August week. A lot of people have
just decided I'm going to take off until
after Labor Day. But you have Nvidia on
Wednesday and the PCE report which Steve
Sashnik talked a lot about saying that
that actually might be a little bit more
important.
>> Yeah, absolutely. That could upset the
Apple cart with about an 84% chance of a
September Fed rate cut priced in. But
still, we'll have to see how the uh
tenor of this week goes along with PC
right at the end of it. This is a close
on Bloomberg.
Well, here in New York, it is open
season, the US Open for all you tennis
fans out there. Katie Griffeld.
Attendees and players alike are
descending on the city for the world,
one of the tennis world's biggest
events. And our next guest has a unique
perspective on the huge undertaking for
the hospitality providers that of course
have to deal with all of the people like
me. Belinda Oakley, she's the CEO of
Sedexo Live North America, which
oversees food and beverage operations
and major venues, including big events
such as the Paris Olympics. Belinda,
great to have you here. Uh, and it's a
great time to talk to you because when
we talk about just sort of the logistics
of these largecale events, and I know
this is kind of an old hat for you, but
I do I am curious just about how you
sort of manage all of the different sort
of uh appetites, if you will. Uh,
everybody wants something different and
how you even sort of plan something out
where you make sure you have something
for everybody without necessarily going
overboard and being left with a lot of
waste.
Well, I think you said it perfectly when
when you said deal with people like you.
It's honestly it's great to have all the
individual tastes and preferences
because it it really pushes us to be
more innovative than ever and and I
think you nailed it. The expectations
are so varied today. I think there is
such a blurry line between what has
value and meaning in an experience where
we used to see a lot more division
between high-end and general attendance
experiences. that line has completely
shifted and it is now how do you create
a unique experience for 50,000 fans in
some cases. Um and so to your point, you
have to love what we do and you have to
love the individual preferences uh and
treat it in the spirit of the challenge
that it is. Uh we have very talented
employees over 20,000 what we call
experience makers here in North America
and 40,000 worldwide who really do take
this game of planning for the event as
seriously as their own weddings uh in
many cases
>> when we talk about the different uh
venues like what's kind of more
lucrative for you is it sports is it uh
kind of concerts and entertainment what
>> it's so interesting I think um it really
depends on how well you're planning
something like a concert might have 70
or 80% what we would call wet or or
beverage purchases. Whereas something
like uh obviously BMP Parabar, another
tennis tournament, you know, you're
doing a lot more unique dining
experiences with incredible restaurant
partners like Nou or or super exclusive
offerings. Uh even a $50 Michelin star
burger in concessions there. So, I think
like always it is a balance between
putting what's important to the fan
available to the fan at as fast as they
can get it without missing a moment of
what they came for. Um, and so
ultimately, if you're not looking at it
with that lens, you can probably find a
way to make any of this business uh not
very lucrative, but it takes kind of
care and consideration for every fan and
every event uh to plan the miracles that
are our favorite experiences. Well, on
that topic, let's talk a little bit
about pricing because what I really care
about when I'm at a concert or a game is
whether or not I'm going to be paying
$11 for a bottle of water. So, how do
you approach that? How you you price the
food and beverages that you have on
offer?
>> Yeah, it's such a great question and we
recently completed a very large study
across North America deep diving into
certain cities as well as taking
aggregate fan information. And you know
what's really interesting is we're
always very price sensitive. We really
take it very seriously to make sure that
um we're conscious of making that
experience fantastic, not something
that's offensive when you come out the
gate with the $11 bottle of water as you
said. And what was really interesting is
across the board we heard it's not about
price, it's about value. I expect to pay
more when I'm in these environments, but
when I pay more and I don't get
something that feels like quality,
that's when I'm offended. So for us, you
know, obviously in in a dynamic
environment, we're trying to use local
supply as much as possible, shorten that
supply chain. We're trying to optimize
our purchasing value. We're trying to
make sure most importantly that we're
creating an experience that is worth
paying for. And that can mean worth
paying for with, you know, the hot dog
on the concourse all the way through to
the beluga topped uh caviar in uh in one
of the suites. So, it's much less about
price is what we've heard and much more
about quality.
>> Mhm. Yeah. And offended is a good word
there. But I want to seize on something
that you said and that is shortening the
supply chain. I'd love to talk about
that a little bit uh because that has
definitely been a mission across
industries and it sounds like uh it's
also an urgent question in yours.
>> Yeah, look, I think again these times
are are are dynamic is the best word for
it right now and I think um the fan
expectation continues to change. It's
absolutely true that our our customers
and our guests are probably frequenting
venues less often, but when they come,
they want it to feel like the best
version of the experience that they
splurge on that that sort of experience
economy is not slowing anytime soon. And
I think things like what's happening in
supply chain disruption, whether it was
in the pandemic or obviously most
recently with tariffs, at the end of the
day, it's aligning with what our
customers and guests are asking for,
which is help me feel the local market
that I'm in when I'm there. When I'm in
in Seattle, I want to feel the Pacific
Northwest as an example. So, it's a
great challenge for us because we get to
obviously lower our carbon footprint. We
also get to leverage really incredible
local purveyors. And most importantly,
we need to make sure the fan really
feels the place beneath their feet.
That's what they came for. They came to
fill New Orleans or Seattle or Chicago.
Um, and so our culinarians have a a
really fun time figuring that out. And
in the meantime, we take care of our
local communities while we're there and
local partners. That's a good place to
leave it, Belinda. Great to get some
time with you. That is Belinda Oakley.
She is the CEO of Sedexo Live North
America. And of course, with Racket
Sports in the spotlight, let's turn our
attention to an emerging phenomenon
known as Paddle. Our next guest has been
central to its explosive growth that he
says has fueled a 100% year-over-year
boost to his business. Joining us live
on set is Wayne Voyage. He is the
founder and CEO of Reserve Paddle. And
Wayne, I actually made a decision there,
but I want to get your take on
pronunciation. Is it paddle or podel?
>> I get I get asked that uh during every
interview. It's usually the first
question.
>> And it's called paddle, but because of
paddle tennis in the Northeast, a lot of
people from Northeast like to say pedel.
And then a lot of the Spanish folks,
which is where a lot of the sport is
played,
>> they when they say it with a Spanish
accent, you're not quite sure if it's
paddle or padell. But we call it paddle.
>> Okay. So paddle, we've at least
established that. Let's talk about the
explosive growth because we're well
acquainted with tennis, of course, we're
well acquainted with pickle ball. It
seems like paddle has been up and coming
for a few years. How much of that is
thanks to pickle ball? People getting
socialized to the idea of, okay, there's
things you can do with a racket outside
of just tennis.
>> Sure. I think I get asked that a lot as
well. I think um paddle in the US
definitely owes somewhat of a thank you
to pickle. It kind of came on a little
bit earlier than paddle and for myself I
feel just incredibly lucky because I
grew up being a tennis player and it was
a big part of my youth and as I look
back it really formed me in what I am
today and I discovered paddle at like 38
years old. I started playing, got very
like into it and it was amazing. Health,
wellness, very active. Thought we got
really good at the sport, myself and a
few friends. We went to Spain to kind of
see what it was like at the highest
level and we realized what an incredible
sport it was on the pro level. And back
then there wasn't um it just wasn't very
international yet. So, we started
bringing the pros back and doing
exhibitions um at at our house. And over
time, you could tell it really became a
thing. And when people get on the court,
they just feel very athletic very
quickly. Obviously, the health and
wellness movement that we're all in the
midst of right now. Um, and over time, I
thought to myself, not that I wasn't
busy with other businesses, this could
be very different and interesting. So,
we thought we'd launch Reserve, not as a
company that was just going to build
paddle clubs, but more a lifestyle brand
that started on the backs of paddle and
all that it has to offer. Well, that's
what I'm curious about because when
pickle ball came out, it was just kind
of like, okay, you know, go out, buy a
paddle, maybe, you know, a few gyms
opened up here and there. Your approach
is a little bit different. I mean, these
are basically clubs more or less that
you would get a membership to. And is
the idea that is not just coming just to
play just whenever you want
recreationally, but there are more
organized events?
>> Yeah, I mean, we we started up the
company and launched the brand with our
first club in February of 23. We
launched it. Yes, there's a membership
component to it, but we wanted it to be
very welcoming to all. If you're a
member, you get certain privileges,
discounts, ability to book early,
>> but we really wanted, as I said, to to
set this up as a brand, right? That
started off the backs of paddle. So,
everything we do, we try and be
best-in-class. And because of what we
saw as, you know, major growth coming to
the US and globally, we wanted to kind
of capitalize on different verticals. So
we started up a court business, Reserve
Courts, where we put courts in people's
houses or or companies in their
developments like Discovery Land Company
and all their clubs that have paddle, we
put them all in. Um, and then over time,
we've now created five clubs. We have
different events that our membership
community really want to be involved in
and travel with us. So,
>> so you have the self health and wellness
movement. You have a sport that people
really get into quickly, feel athletic
quickly. There's a big community sense
on the court. The court's only 33 ft
wide, right? So, you're playing doubles
only and paddle, right? It's not
singles.
>> So, when you're an amateur getting into
it, we do these proam series and they
feel like they're pros kind of and
that's very intoxicating to someone, you
know, as you're out there, you know,
trying to be healthy or do whatever. So,
we have a prom series we do that our
members kind of like to follow. We have
a a a prolevel series now called the
Reserve Cup in which we take the top 16
players in the world and they play over
three days in a very hotly contested
competition. We opened it in 24. We're
expanding it this year. We did Miami in
24 and 25 and now we're doing Marba in
September at Pento Romano which is kind
of an iconic resort where they happen to
be playing
>> Davis Cup three days before we do
Reserve Cup.
>> Uh so we're very excited about that. But
the the movement is is very very
palpable and and our membership base is
only limited by the assets we create
right now. I
>> I'm I'm very intrigued by all the big
names that you've pulled into this and
and for those who aren't familiar with
the rules. I mean it's kind of like you
can use the walls and stuff like in
squash and uh raet ball and things like
that. So a little bit different than
paddle ball where you're just hitting
over the net. I do wonder for the
recreational player uh you know one of
the appeals of paddle ball was that it
wasn't you know terribly hard on your
body. So, if you're older like me, you
could kind of get away with it in a way
you maybe couldn't get with tennis
unless you're super competitive and
playing against someone like Katie. But,
but how does that stack up? I mean, can
just kind of someone who isn't as
athletic kind of step in and do this and
not get hurt?
>> Another great question. Um, and I will
tell you this, one of one of our our
platform club is in is in Miami. It's
called Reserve at Solomia. It's on the
Sofur and Lfrack family's uh piece of
real estate that they own that they're
developing out. And I had this
discussion with the LFracks and uh and
we got on the court with them and they
were amazed at how you know you pick
your pace like any sport. Yeah.
>> And now they're very into paddle. They
play with their their children and
grandchildren at SolMia. And that's one
example of people that thought, wait a
minute, I see it. I go on YouTube. It
looks fast.
>> It's not like that. If you're you
whatever level you're playing at, you
can really feel like you're getting a
great workout. That that was part of the
appeal. The demographic, men, women,
kids. My kid's obsessed with it now. He
was a tennis player.
>> Um, it's just so wide and enticing to
all.
>> I will say I played it on vacation. I
took a week off in May. It was hard. I
was expecting a pickle ball level of
intensity. Uh, but we were also playing
singles on that 33 foot wide court. So,
that probably made it a little bit
harder. We only have about 30 seconds
left with you. Talk to us just quickly
about your physical footprint and where
you want to go next.
>> Yeah, right now we have uh three clubs
in Miami, two in New York. We're in
discussions um uh domestically at a
bunch of spots in internationally. Part
of the value in what we have as a brand
now is we're getting a lot of
interesting incoming about building
clubs in the Middle East, South America,
and Europe. We're getting a lot of
inbound about trying to uh get us to ho
people to host Reserve Cup events for
us, the pro events because again, we
make it like an event. We're, you know,
through my real estate uh company, we're
in the process of developing what we
think will be an amazing um reserve club
wellness and condo. We're getting
approached now to do reserve boutique
condos. So, you know, it's just the
beginning, but it's exciting to be two
and a half years to be in this position
as a brand and capitalize on what's an
amazing sport.
>> All right, Wayne, we have to leave it
there. And I'm glad you brought up your
real estate. We didn't get a chance to
talk about it, but you're obviously a
prolific investor and now his latest
adventure is reserve paddle. Wayne
Voyage there, the CEO of that company.
Stick with us. This is Bloomberg.
>> Here's what the markets are going to
have their eyes on over the next 24
hours. Durable goods, conference board,
consumer confidence, as well as other
economic data. What are you most
interested in?
>> I'm most interested in the earnings that
we're going to get after the bell. PBH
Corp, MongoDB, and Octa. Earning season
continues.
>> Earning season never ends, Katie
Grifeld. And of course, we will have
full coverage of that right here on the
close. Join us tomorrow for all your
politics coverage. Stick around. Balance
of power is up next.