It's finally here. Nvidia after the
bell. 30 minutes until the start of
trading. I'm Matt Miller.
And I'm Katie Grifeld. Bloomberg open
interest starts right now.
Coming up, Wall Street gears up for
Nvidia. The world's most valuable
company takes the earnings spotlight
after the bell. And President Trump
imposes a crushing 50% tariff on Indian
goods while Europe seeks to remove all
tariffs on US industrial goods this
week. Plus, another full bag of retail
results, back to school demand, and
celebrity partnerships helping boost the
bottom line. But Katie, there is one
stock to watch today.
Only one stock to watch today. You
guessed it. It's Nvidia. Nvidia priced
to move 6% in either direction after
earnings today. That's according to a
look at the option market. Now, that is
the lowest implied move in about two
years as traders focus on the staying
power of the AI boom. And of course,
China sales have taken on new levels of
complexity with 15% of revenue for chips
sold in China going to the US
government. You see shares not moving
around too much right now, Matt. We know
that the main event is after the close.
Yeah, absolutely. looking forward uh to
Roma and crew breaking those numbers.
We're also watching shares of the other
Mag 7 stocks. Meta, Microsoft, Alphabet,
and Amazon are the big four. They
account for 40% of Nvidia's revenue. You
can see there's pretty little change
here. I mean, up 4/10, down 310, but
these are the stocks uh along with
Nvidia that really move the market.
These four stocks make up 15% of the S&P
500's total uh market waiting.
All right, for more on Nvidia earnings,
I'm pleased to say we're joined now by
Bloomberg Tech co-host Caroline Hyde and
man Deep Singh. He is global head of
tech research for Bloomberg
Intelligence. So important that we
decided to do a round table. So
Caroline, let me start with you.
Obviously, I can't imagine that you'll
be talking about anything else on
Bloomberg Tech today. What is what is
the expectation heading into these
results? If you take a look at the
options market, 6% isn't nothing, but
it's certainly not the fireworks in the
past,
but it's potential big swings and big
market impact when you've got a $4.4
trillion company and the most valuable.
And as you've just been insinuating, it
will affect a lot of other companies.
But there's also a big divergence in the
highest of the highs and the lowest of
the lows when you look at Anna's
expectations for revenue. And Mandep can
speak to what his expectations are. But
when you're looking across the board,
ironically, the only sell rating on
Nvidia is actually the highest
expectation for the revenue number and
excess of 50 billion. I'm thinking about
52 billion are expected over at
Seapport. But then the lowest is about
$15 billion under that. And the real
discrepancy here is whether you're
factoring in the Chinese revenues or
not. Whether you're seeing any H20 sales
whatsoever, or whether you're thinking
that's off the table for now. What do we
hear in terms of Chinese actual demand?
I think a really interesting tell today
was some earnings we got out of China.
Cameracon is one of a key AI accelerator
developer over in China. They're against
Smith and the like and Huawei and
they've seen incredible growth in their
market cap and their revenues. So, China
is trying to pull away from the likes of
Nvidia. What is the longerterm
perception of Jensen on that? That's
going to be a big volatility gauge. But
actually, a lot of analysts and
investors I speak to say in the longer
term doesn't matter. This is a demand
supply issue. This is not a demand
issue.
How how important mandep are China sales
to this final number today. And you know
every time China comes out and tells um
its companies not to buy the H20 chips,
we act like it's a new story, but
they've been saying this all year long,
right? They issued a directive I think
in uh March that they didn't want their
companies buying Nvidia's H20 chips. So
are they going to have bought them this
quarter?
So when Nvidia reported last time they
actually took a $8 billion write down
for this quarter. The reason why the
estimates are somewhat lower 45 to 46
billion for this quarter is because they
took a $8 billion write down on H20s. So
clearly the estimates have been derised
from a China exposure standpoint. With
that being said, if Nvidia is able to
sell back to China, whether it's the new
Blackwell B30s or some other version,
then that means there's upside to 3Q.
And that is where you know the bogey
that at least the consensus numbers are
there probably I would say it should be
2 to three billion higher than what the
consensus is for next quarter which is
around 53 billion. How do you approach
the question of what Chinese sales will
look like though? I mean, you take a
look at our Bloomberg News reporting.
There's a $15 billion range for third
quarter revenue projections. You have
the likes of Susuana saying that they're
refusing to put sales of H20 chips into
their models. That seems hard to do, but
at the same time, it's just hard to know
here. So if you're in Nvidia right now
and you don't have a lot of visibility
with the Chinese customers and you have
limited capacity with TSMC to make those
chips, you're probably not going to make
uh H20s or B30s. You're going to make
other chips that the sovereigns can buy.
And so from that perspective, actually
it could be a positive for the gross
margins if you're not selling H20s or
B30s. So I I think if Nvidia is
planning, you know, for the next three
four quarters, given the uncertaintity,
they'll try to downplay the China
exposure and focus more on the
sovereigns. And really, I I do think
that should help the margins.
Uh what about the big four that you and
Ed cover on Bloomberg Tech so closely,
right? They make up a huge chunk of
NVIDIA's revenue, these hyperscalers on
the West Coast, and they've all
announced their capex already. So, we
essentially know like is that spending
baked into today's number and um what's
the risk that they're spending too much
and they won't be spending more in the
future?
It's interesting. We had Beth Kri on the
show yesterday, IO fund, and she's
actually ahead of many seen what the
overall appetite for data center spend
and capital expenditure is going to be.
She's saying, look, we're we're only
going up and to the right. She foresees
Nvidia becoming a $6 trillion company on
the back of just the Blackwell
architecture. Ruben, she's seeing like a
$10 trillion company because of this
sheer size of the capital expenditure
that is going to keep on coming from
hyperscalers but then others around as
well. This is going to spread out as you
say sovereigns become a big area of
demand and so I think it's more about
what's forecast and what's baked in
there. We kind of had had a tell and
actually we saw Alphabet and many others
raise their capital expenditure
forecasts. So people particularly
analysts at least nine of them last week
upgraded their forecasts for Nvidia.
people are getting more and more excited
about what the numbers are going to be.
But the risk is I think one risk is
indigestion, right? I mean, if they bite
off more than they can chew this year,
then next year that will slow down a
little bit, right? We've seen
overinvestment in the past when you were
laying fiber for the internet in 1999.
On that point, so uh this year the capex
from the hyperscalers is growing north
of 50% and Nvidia's revenue is growing
almost 60% data center side. Next year,
Meta and all the others have said it's
going to be over hundred billion in
capex. So for Meta, it translates to
over 30% growth. For Alphabet and
Microsoft, anything over 100 billion
could mean 10 to 15% growth or it could
be higher. But we don't know exactly
what it's going to be. So it really
matters whether all the hyperscalers in
aggregate grow their capex 25 to 30%. Or
the aggregate number is below 20%. And
that will have a bearing on Nvidia's
growth for next year.
And I mean Mandy's been so articulate
about the issue of whether it's all
about training your models or whether
it's moved to inference and Jensen's
spoken a lot about that. But Matt your
point if you go into the EM function for
Nvidia on the Bloomberg terminal we are
forecasting a significant slowdown in
revenue growth. Look, this was a company
that was growing revenues more than 250%
last year. We're now expecting for the
full year about 56%, then it slows down
to about 28%. Then it slows down to
about 15%. These are gargantuan numbers,
but they are going to start slowing in
the pace of absolute growth.
All right. Yeah. And we'll see, of
course, how investors digest that. It is
interesting that you take a look at
Nvidia's uh valuations and it's cheaper,
less expensive than it has been, but
still some eye watering levels there.
Great round table to set us up. That is
Caroline Hyde of Bloomberg Tech. You can
catch her at 11 a.m. Eastern. And of
course, Mandep Singh of Bloomberg
Intelligence. I imagine you'll see these
two faces all over Bloomberg television
today. But let's get to what else is
going on in the market. And believe it
or not, there's things other than Nvidia
reporting today. We start with Kohl's
boosting its sales outlook for the year
as turnaround efforts gain a little bit
of traction. You can see shares
skyrocketing higher, up nearly 21%
pre-market. This is a stock that has a
pretty hefty short interest though,
Matt.
Yeah. Um, and we're going to be
following all of these a little bit
later on the program. We're going to
talk to Mary Ross Gilbert from Bloomberg
Intelligence about all of these
retailers. Uh, PVH is a company that
owns Calvin Klein and Tommy Hilfiger.
It's raised its outlook thanks to
celebrity partnerships and
collaborations um with the F1 film,
which most of our team went to.
Yeah, I know that you were among them.
Yeah, you were not. I
did you see by the way F1 eventually?
Do you think that I did? No, I didn't.
But it got rave reviews from the open
interest team.
It was It wasn't that good.
Let's quickly talk about JM Smucker
falling after sales decreased for coffee
dog snacks and sweet baked goods and
also fruit spreads. That's a lot of bad
news. Shares down about
coffee dog snacks% coffee dog
coffee, dog snack snacks. They also have
cat food as well, I believe.
Have you played um what is it called?
Uh, Taco Cat go cheese pizza.
You know, I haven't.
It's a fantastic card game. I recommend
you check it out.
Interesting.
Especially fun if you're under the age
of like nine. No.
Let's check on what's going on with
futures this morning. Not a lot right
ahead of Nvidia earnings after the bell.
Um, I didn't see much movement last time
I checked
and I don't see much movement now.
No. But, you know, everything will
change after the close today. It's
really the cash session today that's the
boring part. Uh it's everything after
the market that happens and we'll see. I
mean Nvidia has an 8% waiting in the S&P
500. So we'll uh have to see what
happens in the after hours session. The
NASDAQ 100 also in a holding pattern
down about a tenth of a percent. The
Russell 2000, the small caps of course
really uh being the most volatile area
of the market, the pre-market that is
the Russell 2000 off by about 4/10en of
a percent. Matt.
All right. Coming up, the EU looks set
to propose cutting its tariffs on the US
to meet President Trump's demands and
get its flat 15% rate. We'll give you
your global trade update next. This is
Bloomberg Open interest.
Let's get to high interest now. Look at
what's making headlines around the
world. The gold mining giant Pneumont is
studying plans to slash costs that may
lead to deep job cuts. This follows its
15 billion dollar acquisition of New
Crest Mining in 2023. Pneumont has told
managers it wants to be closer in line
with its lowest cost peers. That would
mean lowering costs by 20%. You can see
shares in Newmont mining down 4/10en of
1% in the pre-market. Cracker Barrel Old
Country Store said it is getting rid of
that new logo that no one liked and
prompted a huge slump in its share
price. Cracker Barrel had faced backlash
on social media and from the president
of the United States of America after it
changed its vintage logo by removing an
image of a man leaning against a barrel
while making the lettering more modern.
In a statement, the company said, "Our
oldtimer will remain." It was pushed
yesterday by Donald Trump on Truth
Social. William Sonoma is out with
earnings. The kitchen and homeg goods
retailer is boosting its fullear
forecast. The company is keeping a close
eye on tariffs. President Trump said
he's thinking about putting tariffs on
furniture and that would impact some
Williams Sonoma brands like West Elm and
Pottery Barn. So, William Sonoma shares
up 1 and 23% Katie.
All right. Keeping a close eye on
tariffs. That's what we're doing, too,
because sources tell Bloomberg that the
EU will propose removing US tariffs on
industrial goods this week. Let's get
more detail from Bloomberg's Brendan
Murray, who leads our global trade
coverage. So, potentially removing
tariffs on US industrial goods, also
potentially giving preferential tariff
rates on certain seafood and
agricultural goods as well. Brendan,
what is the calculus here? What does the
EU hope to get in return?
Well, this is all part of the the
framework that the US and and uh the EU
agreed to uh a week or two ago. They're
trying to put this in place as soon as
they possibly can in Brussels because as
uh President Trump showed earlier this
week, he can throw something like uh his
opposition to the the digital regulation
and taxation that goes on in in Europe.
He can throw that into the into the
discussion. So they're trying to push
this through the legislative process to
get it sort of ratified to follow
through on what they promised the US
that they would do. In return, the US
will lower uh the auto tariffs on
European exports to the US from 27 12%
down to 15%. So, the Europeans really
think that time is is the clock is
ticking against them here and that they
need to do this quickly so that they can
get some follow through from the US on
what's been agreed to in this uh in this
trade agreement.
Brendon, it's interesting to see um the
EU concede on tariffs on industrial
goods and yet they push back so hard on
this on these digital uh um tariffs that
the president is so unhappy about. He's
called them unfair. he's been uh he's
been railing against them for quite a
long time. How do they uh reconcile
those two things and and do they face a
backlash over the digital stuff?
Well, they they they drew a red line
around the around the digital service uh
services regulation and said that that's
our sovereign uh right to to regulate uh
these industries. And effectively, we're
talking about Google and Meta and and
Amazon and the big US e-commerce and
social media uh companies that the the
Europeans said, "Look, we're not going
to touch that." And when they got uh
that issue uh that that it wasn't
addressed in the framework agreement,
they took that as a victory. Uh and but
President Trump is still pushing pushing
against that. Uh so well I think what it
suggests is these negotiations are never
really going to end in the near term
that the that President Trump will raise
this stuff uh with the Europeans or with
the Koreans or the Japanese that the
these uh contentious issues are really
never going to go away and he's going to
pull them out when he feels like he can
use them as leverage.
But still signs of progress when it
comes to the EU US relationship. a
different story unfolding uh when it
comes to our relationship, the US
relationship with India because as of
12:01 a.m. Washington time, there's a
50% tariff on Indian goods here.
Brendan, what do we know so far?
Yeah, this is the highest rate in in
across Asia. It's really going to put
Indian exporters at a disadvantage
compared to some of their neighbors who
are uh whose exports are subject to a
tariff of something around 20%. So,
we'll see how much uh the pain threshold
is for the Modi government to to sit
back and watch uh their export
industries uh take this one on the chin.
Uh that Modi is is traveling uh to Japan
and to China in the next couple of days
to perhaps shore up some of those uh
relationships uh improve those if uh the
the trading alliance with the US is
deteriorating. So uh it's just a matter
of time before those that 50% uh tariff
really starts to hit India hard and they
either need to find alternative trading
partners that they can do business with
or go back to the negotiating table with
President Trump and give up something uh
along the lines of agriculture or or
some some other industries that they've
been unwilling to uh to budge on to this
uh so far.
All right, Brendan, great to get caught
up with you. Brendan Murray runs our
global trade coverage for Bloomberg News
out of London. And obviously, we're
going to keep in contact with him as um
this is never going to stop. Coming up,
Kim Forest of Bokeh Capital says the
health of Nvidia's China business and
demand for data center scaling is top of
mind for traders today. She joins us to
talk all about it. Next, this is
Bloomberg Open Interest.
If you look at where we've been most
recently, we've been at the tip top of
kind of a we kind of broke through the
top of the range. We're still pretty
extreme. The valuations are still pretty
extreme. So, I think the whole market,
frankly, is a bit vulnerable from a
valuation perspective. Um, but just the
the narrative has been so choppy. You
know, can we sort of get the focus back
on that AI narrative? That's really what
I'm looking to see.
And that was RBC's Lori Calvacina on
Bloomberg Brief this morning. Let's keep
this conversation going now with VOCA
Capital founder and chief investment
officer Kim Forest. Kim, it's finally
here. It's finally Nvidia earnings day
and we know it's not just about this one
company. This is a marketwide event. It
it really is because it feels like for
the past 18 months absolutely any good
news that has driven the market has been
uh two letters AI and I think the
buildout of AI has we've kind of assumed
that you know data centers like Sherwin
Williams will cover the earth and um
that's their that's the paint company's
slogan anyhow but I mean really we we
think that there is absolutely no limit
of the amount of chips demanded. And I
think that's sort of foolish. And um
while I am a huge believer in AI, I also
understand its limitations and we're
kind of bumping up a couple against them
and I worry that uh you know the fickle
market will turn away from AI for a
while. Yeah, I I am interested to hear
you say that because I was asking today
and have been wondering if we risk
developing some kind of indigestion with
these hyperscalers spending, you know, a
hundred billion dollars plus on capex.
Don't we get to a point when they're
like, "All right, you know what? we have
enough and it doesn't matter that it's
Blackwell or Reuben or whatever the next
thing is like uh we don't need to
continue buying a hundred billion
dollars of chips per hyperscaler per
year
right and and that is the law of large
numbers which we're um bumping up
against I think it was excellent your I
listened to the top of the show and your
panel on this was excellent about that
and just the growth rate the crazy
growth growth rate that Nvidia has
experienced in the past 5 years can't
continue for many reasons. You know,
just the world will run out of money
essentially. I'm being glib about it,
but I think this needs to investors need
to reset their expectations and maybe um
go a little soft on this. But we'll see
about what um investors think after
today's earnings, too. And Kim, we only
have about a minute left with you here,
but it's something I wonder about even
outside of the stock market. It's a
conversation we were having the other
day that you think about all this capex,
all this money coming from the tech
companies. You think about the economy X
AI, perhaps it doesn't look as robust as
it does right now.
And I think that is like a great time to
actually look for great companies. If
you don't think the economy is that
robust ostensibly when the o when the
economy regains its footing or gets a
little bit of forward momentum which I
think it can um there's always slowdowns
and you know happening in any industry
um it's a great time to go shopping
right now and I think that should
refocus investors away from you know
maybe trying to ride that momentum train
called Nvidia
the momentum train called IND video.
That is a good place to put a pause in
this. Kim, you are staying with us
through the opening bell just a couple
minutes away. Let's take a look at the
setup as we countdown. And there's not
too much to talk about. The S&P 500 off
by about a tenth of a percent. We did
manage to build a rally into the close
yesterday. We know that the main event
is after the close today. You can see
that the NASDAQ 100 down a little bit in
anticipation. The Russell 2000 off by
about 3/10en of a percent right now. We
will walk you through all the action at
the opening bell coming up next. This is
Open Interest.
We are moments away from the start of
trading. This is Bloomberg open
interest. I'm Matt Miller and it is
Nvidia day. Although uh those earnings
don't come out until after the bell. So
this whole entire cash session is going
to be super boring just waiting for Roma
to come on at 4:00 and for the closed
team to break the earnings. Uh futures
down onetenth of 1% 210 on the NASDAQ.
By the way, Nvidia is worth 8% plus of
the S&P. It's worth more than 10% of the
NASDAQ 100 and somehow 12% plus of the
NASDAQ composite. Abbott Labs ringing.
Wait, why is Brutus there?
I think it's
that's my man.
It's mascot.
Ohio State University kicking off
college football season this Saturday.
Who are they playing, Joe? Texas. All
right. will definitely win that game.
That's very cool. Abbott Labs over the
last 5 years, by the way, up about 30%,
underperforming the S&P 500, but at
least not losing uh money. And then down
at the NASDAQ, we have Vevel 3D. They
were there. I swear to God, they were
there. At least a couple of guys ringing
the bell. And apparently, they went
public, I believe, by a spa on August
19th because if you look at the chart,
it's just down, down, down, down, down.
They print out very cool metal stuff for
rockets.
That's pretty cool. And uh they were via
spax. So spaxs are back. Let's talk
about though Nvidia. That is the big
focus of today. As Matt mentioned, it's
priced to move 6% in either direction
after it reports earnings after the
bell. That is according to the options
market. That is the lowest implied move
in two years as traders focus on the
staying power of the AI boom. Shares not
doing too much right now as you might
expect. Matt, this is a company that is
about 35% higher on a total return basis
so far this year. Obviously dragging the
whole market up along with it.
All right. Uh and by the way, over the
last year I think it was up 171%. The
year before that it was up like 235%.
So obviously it's just been a behemoth.
Um a momentum what did Kim call it?
Momentum train.
A momentum train. All right. Uh we're
going to watch shares of other Mag 7
companies as well, especially um the big
four, which are these hyperscalers that
account for 40% of Nvidia's revenue.
We're talking about these massive um
capex numbers. I think Google was $80
billion. Uh Facebook is going to be over
a hundred billion. none of them doing
much of anything right now because I
guess like us traders are waiting for
the numbers to come out for Let's get
back to uh Kim Forest, chief investment
officer at Bokeh Capital. And Kim, you
have a background in uh software
programming. You have a a background um
in AI. What's your take on on this whole
thing? because I feel like, you know,
we've made so much momentum and chat GPT
5 is like so much lazier and slower than
GPT4, but eventually or maybe that's how
it gets uh more human. It's actually
lazy now.
Well, I don't think they are human. I
mean, I think we always lose our grip on
what they are because they seem human to
us, right? that the chatbot actually
works more or less like
kind of like a friend kind well I yeah I
don't like that whole idea but these are
mathematical models and what they're
doing is they've kind of crushed in a
good way the problem of natural language
processing that was a very hard um uh
problem that as long as I've been a
computer scientist
Uh that's what my original degree, my
bachelor's degree was in. It was a
problem for computers to solve. And I
believe that's really what chat GPT and
all of these large language models are
doing is they're able to understand us
and then go and retrieve information or
synthesize a little bit of information
together. But again, mathematical
models. So there are these holes in
these models where it comes up with
complete and utter nonsense. They call
them hallucinations and we must overcome
this or these models are really
unusable. If you worked at Goldman Sachs
as a entry-level person and were 85%
right, I don't think you'd last very
long there. But that's what the these
models are. They're 85 to 95% right. And
you can't have that much um wrong and
still be a useful tool in enterprise.
So, this is the problem that they need
to overcome. And guess what? It's a
really hard problem.
Yeah, absolutely. One that I mean, we'll
have to check in on the timeline of how
long that takes, but Kim, at 9:34 in the
morning, I should probably ask you about
how Nvidia interacts with some of the
other crossurrens in the market right
now. You pull up a chart of the 2-year
yield versus Nvidia. You can see that
Nvidia has just pretty much steadily
climbed higher since about May 1st after
that April low that it hit. You take a
look at what the two-year Treasury yield
is doing. Of course, moving off of what
people expect the Fed to do. It's been
dropping in that time. And uh you know,
the topic of rate cuts at the index
level is an urgent conversation. But
does it matter for a company like
Nvidia? Does monetary policy really
interact with what's going on with
Nvidia's core businesses?
Um absolutely not. They are completely
divorced from any kind of tie to
leverage because the companies that are
funding them and you you talked about
this again in your in that a block is
that they have the cash to spend. That's
the crazy thing that you know the four
horsemen of the mag seven uh that
actually are developing AI
um they have the cash for this. So they
don't have to borrow nobody cares. Not
one person cares in that um those
companies about what treasury rates are.
By the way, I have a viewer writing in
who says uh each point move for Nvidia
is $25 billion in market cap. So a
four-point move is the entire market cap
of Intel.
Amazing.
Which I love. Um Kim, on that note,
what's your take on the US government
buying a 10% stake in Intel? um you know
buying an 11 billion stake for $1
billion essentially. Um is that a good
move? Do we need to for national
security purposes? Right? We don't want
all the chip makers to be outside of the
US in case we get in a fight with
everybody else. Um and what does it mean
for Intel's business?
Well, a couple of things. First, I I
have to say this. This is going to be
not a surprise to anybody that's ever
listened to what I say. I'm a capitalist
first and foremost. I am not fond of
government intervention other than
common sense regulation. Whatever that
means, you know, doesn't matter. We're
not getting into that. Ownership
of Intel at this point seems like not a
great move, but not the catastrophe move
either. The company has let itself
decline. We all know that with respect
to its fab technology and it does have
75% of the chips it makes made here in
the US and you're right it is an
extremely important fact that you know
Taiwan 60 miles off of mainland China is
where the world's most important ships
are made. I don't think that's prudent.
Forget the political ramifications. Just
having one area in the world be that
important not smart. though I can see my
way to this. um what it's going to do
for shareholders. I think shareholders
are kind of demoted at this point that
it can be subject to its 10% or 9.99%
owner the US government and makes and it
probably will be pushed to make
decisions to improve its processing
capabilities match that of Taiwan semi
not bad but it's going to have to speed
that up to uh you know answer its one
big shareholder.
Absolutely. Kim, uh, have to leave it
there. Always enjoy the conversation.
That is Kim Forest of Bokeh Capital.
Meanwhile, let's get a check on the
stock market right now about 8 minutes
into the trade on Nvidia earnings day.
You can see it's pretty quiet at the
index level. And interestingly, it's an
even split pretty much when it comes to
the ratio of gainers to losers right
now. As you can see up at the top,
what's leading gains is Amazon higher by
about 4/10en of a percent. This is a big
company we're talking about though, so
it's your biggest points contributor. Uh
Tesla, we haven't seen Tesla up here in
a while. Tesla higher today, as is
United Health and Salesforce as well
getting in the mix. But then you go to
what isn't doing too hot, Nvidia at the
top there, only down about half a
percent as we anticipate earnings after
the bell. You can see Broadcom also
following it at lower as too is Meta
Platforms and AMD. Let's take a look at
the sector breakdown, how it shakes out
there. there. I would imagine it's
similar, of course, to what we were just
looking at at the individual level.
Almost an even split when it comes to
the sectors. Real estate up at the top
right now, which is interesting. Higher
by about half a percent. Energy,
consumer discretionary also higher as
well. You take a look at the bottom
though, you do have tech down there.
That Nvidia drop isn't going to help.
Consumer staples and then materials is
your biggest loser at the moment right
now, Matt. Lower by about 4/10en of a
percent. All right, so that's the setup
as we await the big earnings
announcement of the season. Nvidia,
we're going to talk more about that
next. The stock uh worth $4.3 trillion.
Anton Skybon uh of New Street Technology
Infrastructure uh joins us next to tell
us where he think it's thinks it's going
from here. This is Bloomberg Open
Interest.
All right, it's time now for our top
calls. Some of the analyst action in
focus this morning. And first up, Crispy
Cream getting downgraded to a sell over
at JP Morgan with the analyst citing
execution risks for the doughnut makers
turnaround plan. Shares down more than
7%. Next up, we have Eli Liy getting
upgraded at HSBC after its obesity pill
moved one step closer to approval. Now,
after this upgrade, there's no firms
with a sell rating on Eli Liy, almost a
perfect score there, higher by about 610
of a percent. And finally, CLSA
initiating coverage of Micron with a buy
rating. The firm says that the memory
chip maker is well positioned to benefit
from demand. Remember, Matt, the stock
is up nearly 40% year-to date. I had
forgotten, but thank you for reminding
me.
You're welcome.
Staying on chips here. Nvidia reports
earnings today in a test of AI demand.
Joining us now is Antoine Skybond, New
Street Technology infrastructure
analyst. And Antoine, um, as I said, you
know, this company, well, our Alaska has
called it a momentum train. It's just
been unstoppable and the growth seems to
know no bounds. What's your take on
today's earnings report?
Yes, thanks Pat for for having me. I
think you know a big focus is on China.
Um uh as you know uh there's been you
know a lot of news flow around Beijing
trying to achieve self-sufficiency.
U Nvidia posing again production for the
H20. Um I think there's a lot of
concerns around whether you know China
is going to be included in the guide
whether Nvidia is going to beat
expectations. So of course there's one
aspect related to that. I think you know
it's very hard to predict what's going
to happen on that front and I think it
goes even beyond uh whether you know
China is going to get reassured on
whether those chip have back doors. Uh
you know there's been like some reports
that some some China senior leaders uh
found some some comments insulting you
know so I think it's more you know
negotiation between the US and China
that's going to shape up what's going to
happen next. Uh and the bottom line is
that China is probably going to continue
to represent a source of volatility for
for GPU vendors.
Now you know I think 2025 is fairly well
round up. So I don't you know expect a
major beat for for Nvidia. I think you
know capex expectations uh now you know
make room for Nvidia like earlier one of
your colleagues talk about hyperscalers
you know who account for 40% of Nvidia's
revenues. They make room for Nvidia now
to to meet these expectations. It's more
2026 the debate. So what I would really
love to hear you know from Jensen on the
call is you know some visibility that
they get into next year possibly even
27. Well, it's interesting when you
think about the call and sort of the
messaging that might come from the
seauite. We were talking with Mandep
Singh of Bloomberg Intelligence. His
expectations is that maybe they're going
to deemphasize China a little bit, focus
more on the domestic market given all of
the uncertainties when it comes to the
Chinese market and how of course trade
policy and the relationship between
those two nations will shake out. Is
that your expectation as well?
Yes, Casey. I would say that's our
expectation as well. you know um I think
there are two more much more important
things to monitor than than what's going
to happen in China and things where we
can really build up a conviction. First
one is how demand is shaping up and uh I
mean in our view it's still very very
strong you know you still have these
scaling lows you have um Elon Musk you
know tweeting that he he he expects to
uh to have like an installed base of 50
million H100 GPUs uh by the end of the
decade. That's the kind of data point
that matter to us. That's the you know
where we think the debate is going to
shift. Um there's of course you know the
question of the defensibility of pricing
power um how competitive dynamics are
going to play out you know at the
different layers of the AI supply chain
guys developing models guys developing
applications um so you know I think
that's that's where the the debate
should be going.
You've done uh long range modeling and I
wonder
you know how long Nvidia maintains this
dominance. When I see a story like
yesterday AMD said it's going to work
with IBM on uh quantum centric
supercomputers. I don't know what that
is, but it sounds like they might get an
edge there. How long does Nvidia rule
the roost?
So quantum computers are are still, you
know, uh a few years out. So I wouldn't
call that, you know, like a threat to to
Nvidia.
Antoine Jensen said like still 15 years
out and then two weeks later he's like
actually coming soon. So, it seems like
uh we're all over the shop in terms of
when that's going to happen.
Yes. I mean, um there's a lot of
excitement and I hope that they're going
to come sooner than than we think
because they're going to be very very
helpful, very useful, but they're not
going to replace traditional computing
to to begin with. Uh they're more going
to complement it. Um and AMD building a
strong position there, you know, and by
the way, they're not building only a
strong position in quantum computing.
AMD has a very good GPU. They're just
gaining momentum. I just came out from a
great chips conference here in Palo Alto
um where all the developers were talking
about how great you know AMD software
has become compared to a year ago and
that was one of the roadblocks that AMD
had in order to gain adoption you know
so they've been working very hard with
the largest customers to build you know
a software stack a momentum and
ecosystem to to to be able to gain
momentum but that doesn't mean you know
that's a a major threat to Nvidia you
know I think you know they're starting
from almost zero like less than 5%
market share you know I think even if
you give AMD 10 15% share which you know
in in in a context where Nvidia is
probably going to remain dominant. They
have much more resources to invest. Um
you would still have you know like a
win-win situation where the market is
going to diversify to AMD to in-house
programs but Nvidia is still going to
remain dominant in a very fast growing
market. So you know we like the sector
overall.
Well Antoine to that point I'm taking a
look at your notes. uh you write that
when it comes to uh GPUs, you expect
Nvidia to maintain 90% share in 2029,
which is down from 96% today, but 90%
share 2029 uh is a long way away from
here. How long do you expect them to
maintain that sort of dominance? Does it
ever get into the 80s, the 70s?
So this 90% shares if you look
specifically at GPUs if you look at the
overall data center compute market we
actually you know you you don't have any
GPUs you have um Google for example is
developing a TPU you have meta who's
ramping AS6 Amazon who who also has
ramped A6 Microsoft who's trying
reportedly not doing very well so you if
you include that part of the market as
well actually Nvidia the share that
we're modeling for Nvidia is actually
closer to 60 70%. It's just within GPUs
which is one category of the market
where against it's only AMD that they're
playing that we see them remaining you
know the dominant because of course they
have much more resources to invest. They
have a head start. AMD just started you
know they're at like their their third
real generation GPU that they're ramping
now. You know it takes it took Nvidia
like decades to get where they they are
today.
Right. Yeah. Good reminder of course
this is a company that has been around
for a long time. It's not uh an upstart
new shot. out there that is Antoine
Skybond of New Street Research. Of
course, Nvidia, like you uh have been
mentioning, Matt, it only has one sell
rating of the 80 or so analysts that
Bloomberg tracks that covers it. So,
really uh this is this is a stock that
Wall Street loves.
Yeah, absolutely. 71 buy ratings, only
uh eight holds, and as you say, one
sell, but the growth this year has been
so much slower than the last two years,
right? um what did you say 34% year to
date and that compares to 171% in 2024
and 238% in 2023. So
it's possible we've gotten a bit
spoiled.
It is if you look at the price earnings
ratio, it actually holds steady with the
exception of a big spike um that we saw.
Obviously it's still very high. uh 57.7.
That's uh pretty high, but
but it's not um you know, Palanteer.
Yeah, everything is relative. Coming up,
more trouble for United Health as
Bloomberg learns the Justice Department
is investigating more than just its
Medicare practices. We'll bring you the
details next. This is Open Interest.
This is Bloomberg open interest quick
check on stocks and there are some
sincere movers in this market. But at
the index level it's a whole lot of
nothing. Absolutely unchanged the S&P
500 though at 6465
after yesterday's rally. We're only
three points off of the all-time high.
NASDAQ 100 uh trading down about 3/10en
of 1%. That's interesting to see the
tech stocks um doing so much worse than
uh than the broader index. Let's figure
out why. Join me uh as we look at these
uh big stocks. Nvidia down 1%. It's
worth a lot more on the NASDAQ uh than
it is on the S&P. It's worth 12% of the
larger composite uh versus 8% on the
S&P. Taiwan Semiconductor down 1% as
well. So, chip stocks off as we wait
those earnings. MongoDB is up uh making
a move to the upside 33% after a
big earnings beat. Kohl's also up 24%.
This is a pretty volatile market when
Kohl's can move a quarter of its value
in a day on earnings. Eli Liy gaining
about 1%. Um, and we're continuing to
focus on, at least I'm continuing to
focus on this obesity pill. Are the side
effects really that bad? Did they last a
long time? Do I just get through a
couple minutes of it? All right, United
Health Group is up and that's the stock
we're going to focus on, Katie, right
now.
Absolutely. Because Bloomberg has
learned the Justice Department is
investigating more than United Health's
Medicare business as part of a criminal
probe into the firm's operations. The
company says it has full confidence in
its practices. Bloomberg healthc care
reporter John Tazy, he helped break this
news. He joins us now. So, how broad is
this probe? So, what we reported
yesterday is that the uh Justice
Department's criminal probe into United
Health, which was known, ongoing,
disclosed by the company uh last month,
that it includes uh investigations into
the company's pharmacy benefits uh unit,
Optimx, and it that the Justice
Department is looking at how the company
pays its owned or affiliated uh
physician practices. So upcoding, we've
only got 30 seconds, but how serious a
problem is that? How expensive is it?
Yeah. So the um the understanding of
this probe from uh earlier reporting was
that it was focused on Medicare uh
upcoding. Um I don't know that we have a
real sense of the scale of that. Um, you
know, we've seen other companies uh, you
know, settle uh, claims uh, some in the
hundreds of millions of dollars, but um,
but you know, the news here is really
that the the the
investigation is broader uh, than was
previously known.
All right, John, we're going to continue
to follow your work. You can follow him
on the Bloomberg terminal as well. John
Tazy covers healthcare for us. Coming up
next, back to Nvidia.
We are 30 minutes into the trading day.
Welcome to Bloomberg Open Interest. I'm
Matt Miller.
And I'm Katie Grryfeld. Volume, as you
would expect it, depressing right now
because we're all waiting for the big
event. And coming up, Wall Street
gearing up for Nvidia, the world's most
valuable company, takes the earning
spotlight after the bell today.
President Trump imposes a crushing 50%
tariff on Indian goods, while Europe
seeks to remove all tariffs from US
industrial goods this week.
Plus, another full bag of retail
celebrity partnerships helping to boost
the bottom line.
All right, the stock to watch today is
obviously Nvidia. Certainly after the
bell, that's going to be the hot one.
Last hour we discussed what's at stake
with Bokeh Capitals Kim Forest.
We think that there is absolutely no
limit of the amount of chips demanded
and I think that's sort of foolish and
um while I am a huge believer in AI, I
also understand its limitations and
we're kind of bumping up a couple
against them and I worry that uh you
know the fickle market will turn away
from AI for a while. Let's bring in
Allspring Global senior portfolio
manager Margie Patel. And Margie, you
you were early on on this trade, the
Nvidia trade on on the chips trade. Um,
how do you see it now having uh owned
the assets for for a while, having
watched this incredible growth, this
momentum train as Kim Forest called it?
Um, you know, h how has it progressed?
Well, I think it's still sustainable and
the real key is when we saw second
quarter earnings to see the big
investors in AI all continue to have
capital expenditures that were as large
or even larger than the market expected.
So these leading companies still think
that they want to invest in AI. The
question is will they at some point down
the road say oh we're not getting a
competitive return on those assets and
AI u will be an issue but I don't think
it's an issue over the near term. a lot
of emotionalism in Nvidia because it's
so widely owned. So the talk could
easily the stock could move easily, you
know, 10% either way no matter what the
numbers are. But I think that it still
should be one of the outperformers over
the ne certainly over the next few
years. Uh today there's so much hope and
enthusiasm in who knows how the market
will react today, but the fundamentals
for AI are still very strong. Well,
let's talk a little bit more about
positioning Margie because you say this
is a widely owned stock. There has been
some hay made from the fact that you
take a look at institutions and they're
underweight at least relative to the S&P
500 when it comes to Nvidia. I've heard
that used as a bullish case for the
stock going forward. I wonder how you
see that.
Well, that's true that they uh most
funds don't own a statistically equal
waiting. However, um most investors have
other internal rules for what percent
they might own in a portfolio. So a
large institutional investor might say,
well, I don't care how great it is. Our
limit is say 3% of our holdings or 4% or
5%. So I think a lot of investors s
simply underweight for that reason
rather than uh feeling that they'd like
to invest more if the stock pulled back
or something like that. I think and so
much of it too is owned by short-term
traders. So we have a lot of the
short-term volatility, not from the long
investor side, but rather from uh people
looking for very short-term moves. and
uh you can't really that sometimes it's
pretty hard to tell the the two apart.
Margie, you obviously you're managing an
equity portfolio now, but you're famous
you became famous as a bond fund manager
and um you're always paying attention to
how uh yields reconcile with stock
valuations. And now we're looking at the
two-year yield considerably below the
Fed funds rate. Um does that encourage
you to hold high multiple stocks? How
does that story play along? We're
looking at a chart, by the way, here
with Nvidia, uh, the the S&P, I should
say, just running higher as the 2-year
yield, you know, hits the lowest level
since May.
Yeah. Well, I think that clearly the
market wants and expect short-term rate
should go lower because from two years
to seven years, everything on the
Treasury curve is trading below the Fed
funds rate. So, I think it'd be very
appropriate. Uh but really when you look
at equities if you say well the the uh
earnings yield is sta standard and pores
is you know call roughly say four and a
half percent more or less in line with
treasuries but what's more important is
what's happening to the profit margins
and earnings growth on the equity side
and uh corporate profit margins have
stayed very very high near the historic
peak which says that even though we have
inflation people concerned about
inflation depressing margins it just
hasn't happened yet. And maybe that's
why we see inflation above above what
people are expecting simply because
companies have pricing power maintain
their margins. And to me that's more
important as to when the Fed will lower
short rates. Clearly that's important at
the margin that will help a couple
sectors like housing. Uh but we think
the main bulk of corporate earnings uh
are positioned to continue more or less
in that 10 to 12% level they've been
over the last few quarters even with
very muted economic growth. Well, I want
to focus this conversation on, of
course, what's going on in the bond
market and monetary policy back on the
big tech giants, which especially in the
case of Nvidia, it feels like all these
tech companies are just spending money
on each other. We were having this
conversation also with Kim Forest and
she said Nvidia is entirely divorced
from what's going on on the monetary
monetary policy front. Is that an
argument that you agree with? I mean
whether or not the Fed cuts rates by 24
basis points, is that going to affect
the profit margins of a company such as
Nvidia?
No. And I don't think that uh cutting
short rates although I think it would be
good for the economy uh has much of an
effect on the in the whole tech sector
because really it's been driven by
secular growth. Uh now it's AI but
there's still other parts of the economy
that are increasingly using more
technology, industrials, aerospace,
defense, things like that. So we don't
think that the tech sector is dependent.
You're not looking at the tech sector as
a PE uh relating that to where interest
rates are, but rather what's their
growth rate? Can they maintain the
margins? What's the outlook? So I think
that more importantly is um is the
secular growth still there for
technology? It looks like from what
companies reported in the second
quarter, the answer is yes. And it looks
like we're still on that sustainable
trend. Uh a cut in rates would be nice,
but it certainly isn't going to be
what's going to be driving earnings on
the on the tech side.
Do we hold it? I mean, I was surprised
at I think a lot of people were
surprised at how well second quarter
earnings did. If you look at the EA
function on the Bloomberg terminal,
you'll see 10% growth for the S&P. Do we
hold uh do we stay in that range? Is
that sustainable, Margie?
Well, I think it is because we've seen
that for the last number of quarters
where corporate earnings have come in uh
9 10 12% for the quarter even though
growth the economic growth has been much
more modest half a percent to one and a
half% and I think that's why you've seen
um the market uh divide into the slow
growers who haven't had much positive
movement and so much money go to the
fast growing sector like technology
because in a slow growth market that's
where you want to be. Um, but as I said,
I look at profit margins and companies
seem to be able to maintain them. Uh,
they seem to be able to have pricing
power which is very important for
maintaining those margins. So, we think
that that is going to continue and uh I
see no reason why we shouldn't see
another quarter third quarter that we
about to start uh finishing here would
be really the same type of thing. 8 10
12% corporate earnings maybe a little
bit more widespread because we're
starting to see more parts of the
economy participate in in a better
economy. So you have to say the outlook
for stocks looks pretty good even if Fed
the Fed is is sort of lagging on uh
cutting short rates which the market
would like to see.
All right Margie that's a good place to
leave it. Great to preview some of the
action with you. That is Allspring
Global Senior Portfolio Manager Margie
Patel. Meanwhile, we are just almost 40
minutes into the session. Let's take a
look at some of the individual movers on
our radar. Database software company
MongoDB soaring after raising results uh
raising its fullear forecast. Also
reporting strong results. So, a beat and
a raise quarter. That's good for what a
32% jump in shares.
I'm never going to get over the name. I
will never
I will never ever get over it. Nor
should you.
It is hilarious. William Sonoma also
boosting its outlook. Um, it had strong
results across all of its brands. Um,
that kept concerns of increased tariffs
on imported furniture at bay because
William Sonoma isn't just the kitchen
stuff. They own
West Elm
and what's the other one? Not Kraton
Barrel.
Pottery Barn. Pottery Barn. So, uh, a
couple of furniture stores in um their
portfolio, but the shares are off 1%.
Maybe it was a buy the room or sell the
Maybe something like that. Let's talk
about Canada Goose though because having
a great day, the company's controlling
shareholder has reportedly received take
private bids. CNBC reporting uh that
these bids value the company at about
$1.35 billion. That is roughly where
this surge that you're seeing takes its
market cap to up about 16% right now.
You've never owned a Canada goose coat,
which I would say I'm surprised because
they're so popular, but you tend to um
assue the fads, don't you?
Yeah. I just don't really buy clothes,
so I tend to miss all the trends that
way.
It's also like a grand.
Yeah.
For the
Yeah, I'm not going to do that
for
I have to spend that on horses
damn coat. Coming up, from Travis Kelce
to Bad Bunny, whatever that is,
retailers are tapping star power to help
fuel sales. That's next. This is
It's getting out of high interest. Look
world. Treasury Secretary Scott Besson
is calling for Fed Chair Jerome Powell
to conduct an internal review of the
central bank and saying mortgage fraud
allegations about Fed board member Lisa
Cook should be included in the probe.
Meanwhile, Bloomberg opinion columnist
and former New York Fed President Bill
Dudley penned a column outlining his
concerns about Fed independence. He
writes, quote, "Markets are too
complacent. Even if Trump stands only a
small chance of taking control of the
Fed, the effort itself is disruptive and
the consequences of success would be
dire. The Trump administration is
reviewing options for exerting more
influence over the Federal Reserve's 12
regional banks. The administration's
goal is to scrutinize how regional
presidents are vetted and chosen as they
are not Senate confirmed. The move would
mark another step in Trump's ongoing
campaign to influence monetary policy.
Deal making during the typically slow
summer months has crossed the $1
trillion mark after a flurry of mergers
and acquisitions. This month, there's no
such thing as a merger. That's the
highest tally since the record-breaking
summer of 2021 when the pandemic sparked
a deals boom. Some of the biggest deals
so far, Union Pacific's agreement to buy
Norfolk Southern and Palo Alto's planned
purchase of Cyber Arc. There's always a
buyer, there's always a seller. There's
never a merger of equals. On the back of
the buzzy American Eagle campaign with
Sydney Sweeney, the retailer has nabbed
Travis Kelce as its newest face. The
drop is welltimed following Kelsey's
blockbuster engagement to pop sensation
and billionaire and really once in a
century talent.
Look at that ring. That is a rock.
Shares of American Eagle are spiking.
But
I mean, I guess it's really the
engagement. It's the wedding that we
want to talk about. Yeah.
More than this 2.3% move. What do you
think, Katie? As a lifelong fan,
I'm really happy for her. I'm not like a
parasocial Swifty, but I was certainly
feeling genuine happiness when I saw the
news yesterday. Congratulations, Taylor
Swift. I know you're watching right now.
There she is. Look at how happy they
are. Uh looking forward to some of the
photo ops there.
Good beard.
Let's get back to American Eagle,
though. Uh and basically the retail
landscape in general because Kohl's,
Abberrombi, and PVH, the company behind
brands like Calvin Klein, all out with
results this morning. Mary Ross Gilbert,
senior retail analyst for Bloomberg
Intelligence joins us now. I won't ask
you about the engagement though. I do
want to keep talking about it. Let's
talk about Kohl's though because Kohl's
having a great morning. Uh they were out
with results. It looked like a beat and
raised quarter and this was needed good
news for this company.
Yes, you're absolutely right, Katie.
It's needed good news for Kohl's. You
know, they're not out of the woods yet,
right? Because their comp sales are
still negative and they're tracking
against negative comp sales for the last
three years for every quarter. And that
means even going forward. But green
shoots on the conference call. One
interim CEO Michael Bender came across
very well talking about the initiatives
that you know some of the big
initiatives bringing back the private
brands and the strength and sales that
they're seeing there. And that's part of
the margin improvement that you're
seeing better than expected and as a
result their raise. Now, they ended the
quarter with July comp sales flat and
traffic up in the stores. Online did
lead sales. So, we're seeing some very
encouraging signs there. And what we
think is that not only with Kohl's, but
some of these other retail brands are
doing a good job in managing
expectations with their guidance. And
so, we think it's the it's the same for
Kohl's for the second half. And we think
they're they're already have a great
start to the third quarter. And we think
that the guidance that they put out,
which still looks pretty weak with comp
sales for the full year to be down, you
know, four to 5% that there's uh there's
a good chance that they can, you know,
blow through that. And I think that the
stock reaction that you're seeing is
part of it is the short covering, right?
you know, they had been the sh the
number of shares borrowed had been as
much as 49% of shares outstanding. Now
it's down around a third, but it's
still, you know, five about five days to
cover. So, you know, I think that's some
of the reaction. What is interesting
with this Kohl's news, however, is that
Bloomberg News yesterday reported an
article that they were having
discussions with some vendors about
extending some of their terms, which is
usually like a a red flag that never
came up on the conference call this
morning.
I I'm I'm looking through uh MODL is
like my one of my favorite functions on
the Bloomberg terminal. I'm looking uh
through for Abberrombie and Fitch
because you know speaking of
expectations they raised their sales
forecast. Um but tariffs are eating into
margins and this is a company let's see
cash flow from operations
um it looks like it's coming down. So uh
are they eating into their margins by
not raising prices here?
No. I think with if you look at
Abberroie and Fitch actually you know
for the third quarter they did guide
down for margins you know as a result of
tariffs and they did tell us that the
net impact of tariffs is about tariffs
are about it's going to be about 90
million for the full year but I think
what's really going on is one when you
look at what happened in the quarter the
decline in comp sales at Abbercrombie
were more than expected and that was
because they had some carryover
inventory So that means that their
average price points were lower. They're
hoping they're they they're indicating
that look, their inventory is in a
better position for the brand. They've
got great initiatives just like you
talked about the Travis Kelsey and
American Eagle. They're going to be
announcing some, you know, new campaigns
and some collabs, too. So that will be
coming up and they're very excited about
how that brand can turn around.
Hollister meanwhile is on fire with
their comp sales up 19% and also a
strong start for the third quarter. So I
think with the tariff um you know go you
know as we get through the fourth
quarter I think margins should be okay
not impacted too badly because of
tariffs and everything else. They've got
tailwinds with regard to freight and
that type of thing. So uh I think I
think we'll see an improvement there.
It's it's I would say that the tariff
fear is turning out to be less of a hit
than the fear that investors had
earlier.
Well, Mary Ross, you uh brought up brand
campaigns. That's exactly where I want
to go. The topic of celebrity tie-ups
for some of these companies. You think
about American Eagle with Sydney Sweeney
really causing a lot of discussion on
social media, if you uh want to call it
that. The president also weighing in on
that. Then you think about GAP for
example coming out with their own denim
campaign. Uh I'm sure on a certain level
all news is good news. But how do you
think about that as an analyst covering
these companies? How this uh sort of
conversation factors into the bottom
line?
I I think it does factor into the bottom
line. Absolutely. And and I'm glad you
brought up the the GAP campaign with
Cats. Uh when you look at that campaign
that came out last week, within days
they had, you know, two or three million
views. It's now over six million views
on that campaign. And if you look about
their prior campaigns, which were also
incredible campaigns, they didn't have
that level of of views. And I think what
that's saying is that gap is now back in
the center of Gen Z and millennial minds
and actually across the the uh age
spectrum. So I think that you when you
look at the prospects for these brands
and what they're doing, you know, you
just brought up PVH, they were out with
numbers. same thing, Beaten Rays, and
they have the new Hilfiger Racing Club
bringing in Claudia Schiffer and
Nicholas Hol in there with their
campaign. So, it creates a lot of
excitement. It's it's it's across social
media and that's really resonating with
consumers. So, I think it's these are
very very smart moves. Now, it also
starts with the product. You've got to
have great product, but we're also
seeing that too. real improvement in
quality across most of these brands and
also great fashion and styles. And even
Cole said denim is doing really well for
them as it is for everyone. And it's the
fashion denim. So that means the the
baggier fits, the loose, and the low
slung.
Good jeans are important. Mary Ross
Gilbert of Bloomberg Intelligence,
thanks so much for joining us talking
about the earnings that were and those
still to come in retail. Now, still
ahead, uh, the countdown to tech chip
maker Nvidia earnings. Wall Street is
conflicted about what to expect,
particularly regarding revenue in China.
That's really, I think, the big question
mark. We'll talk more about it. This is
Let's get a check on the stock market
right now using the move screen, which
as you know is the most dynamic way of
looking at really any index on the
Bloomberg terminal. While I'm doing
this, Katie, go ahead and check for me
if this is an all-time high. 6476.
So, we continue to trade higher and
higher and the breadth is good. 332 over
168. You can see the S&P just climb
climb climbs into well maybe into the
close which is when Nvidia uh reports
earnings. Nvidia not on the winning
side. Microsoft, Apple, Google,
Bergkshire, Amazon, uh Service Now all
up here. Nvidia is the biggest point
deduction, but it's only taking off at a
loss of about a quarter% 1.2 points. So,
not doing a lot. Everyone's waiting for
the 4:00 earnings.
There you go. Uh it looks like the
intraday record high is 64.81. The
record closing high is 6468. So uh we'll
see if these levels hold. Coming up,
we're going to be talking about jewelry.
Don't go anywhere. This is open
interest.
Do you know we put a 50% tariff on India
on oil?
You're going to see a lot more. So this
is a taste.
You're going to see a lot more. You're
going to see so much secondary sanction.
That 50% tariff has kicked in with
President Trump following through with
his threat to secondary sanctions uh on
India over the country's continued
purchase of Russian oil. For more, we're
joined by Bloomberg's Washington
correspondent, Tyler Kendall. And Tyler,
it's interesting to me um that India
seems to be caught between a rock and a
hard place, right? because obviously
they don't want these massive tariffs.
They're crushing to the Indian economy.
On the other hand, they can't stop
buying Russian oil, can they? They're I
wouldn't say addicted, but they need it.
Right. Exactly. And we know that the
discount on Russian oil has helped to
fuel supplies in the growing economy as
well as keep domestic prices low for
India. So our analysts at Bloomberg
Economics have said that when India does
the riskreward calculation, there really
is no uh confirmation that the US would
even give into any trade concessions if
they were to halt imports of Russian
oil. So at this point, they're going to
keep importing them. Another interesting
factor here is that our analysts also
say that this divide here when it comes
to these uh stalled trade negotiations
with India is likely to push the country
closer to its fellow brick nations
including of course Russia as we're
talking about uh these imports but also
China as we know that the Indian prime
minister Modi is set to meet in China
with Chinese president Xi Jinping on the
sidelines of a security summit there
just next week. So it is clear that they
are trying to balance uh shifting
alliances perhaps but also at the same
time India has been a really critical
geopolitical alliance to the US to
counter China in that region but at this
point Matt and Katie it doesn't seem
that enough concessions were really put
on the table to help get this over the
finish line. 50% tariffs of course
doubling the 25% tariff that's been in
place since August 7th but that
additional 25% tariff over their imports
of Russian energy supplies. Well, what
does the dialogue between the two
countries look like? Because you think
about where we are right now. It's the
27th. We knew uh that a US trade team
was scheduled to arrive in India uh for
a sixth round of trade talks between the
25th and the 29th.
Right. Exactly. And that trip has
appeared to be deferred and we haven't
even gotten an update at this point on
when it's going to be rescheduled. not
really marking a too positive a
development here as we try to wait to
see if there are any sort of progress
that can be made to bring those tariffs
down. And we have to keep in mind this
marks a pretty stunning reversal for the
country since it was long prioritized in
these trade talks. In fact, you had the
US Treasury Secretary Scott Bessant in
an interview this morning saying he
himself was surprised by how these uh
discussions have progressed. Keep in
mind, Indian Prime Minister Modi was one
of the first foreign leaders to visit
the US after President Trump's
inauguration. They offered concessions
pretty early on, including slashing
tariffs on a range of US goods. Uh
everything from luxury items to
motorcycles. But if we've gleaned
anything from these negotiations over
the past few months, it's clear that the
White House wants more than just to see
tariff barriers uh dropped. And uh our
reporting has indicated that perhaps
some of India's more protectionist
policies particularly around market
access for US agricultural as well as
dairy products really does seem to have
stalled these negotiations and at this
point we haven't gotten an update on
where those stand.
Absolutely Tyler really appreciate your
reporting on this fluid situation. That
is Bloomberg's Washington correspondent
Tyler Kendall. Meanwhile let's take a
closer look at the impact of these
tariffs on the jewelry business. India
processes around 90% of the world's cut
and polished diamonds by volume.
Anordaga is the CEO and co-founder of
Angara. Angara is a jewelry manufacturer
and and retailer with a large footprint
in India and specifically your major
manufacturing facility is in India. So
talk to us a little bit about how you're
approaching and plan to navigate these
levels.
Yeah, just for some context. So we uh
manufacture out of Thailand, Los Angeles
and India. So India is one of three. Uh
the 50% tariffs is truly profound. Uh
it's something that we did not
anticipate. Manufacturing centers of
course take a long time to build. Uh so
for the US market now we are
manufacturing all out of Thailand. Uh
because that's uh incurs a 19% tariff as
opposed to starting today a 50% tariff.
How can you be so nimble anchor? How can
how is your supply chain set up that you
can easily make such a switch?
We're relatively different in that we're
completely vertically integrated. So we
cut and polish a lot of our own
gemstones that we buy from rough uh
mines all across the world. Uh we design
jewelry, manufacturing jewelry uh
inhouse in Thailand, India and the US.
And we also sell in the US, UK,
Australia and Canada. So we have some
amount of flexibility of where we
manufacture what and for which markets.
So luckily we're in a position where we
can shift to Thailand. a lot of other
retailers are not able to do so and thus
they'll be subject to the 50% tariffs
that India will apply
interesting
that US will apply
put this into context for the overall
business I mean outside of just Angara
as I said I mean you think about how
important India is when it comes to the
global jewelry market specifically to
the diamond market I have to imagine
that a lot of folks can't be as nimble
here
yeah um so you know diamonds tend to be
on the wholesale and manufacturing side
very low margin, very high velocity,
very high inventory turn. Uh so a 50%
tariff will upend the entire e economics
of the industry. Um you know this is
something where
expertise is really built over
generations. So people in India have
been doing this for for many decades.
Getting that skill set and moving that
to other countries is just it's just
very hard to do. Uh historically there
was zero import duty on loose diamonds
from India to the US. So people used to
import diamonds here and then
manufacture in the US. That is no longer
feasible because whether it's mounted in
jewelry or coming loose, it will be
dutable. Now
I want to uh just pull up a picture of
Taylor Swift's diamond ring here. Um
Aner, I don't I don't know if you've
seen it. I imagine you have because this
is your business and it was like
earthshattering news yesterday. There it
is. And Katie's guessing it's about
eight carats. Is that a guess or
Yes, it's pretty much a guess. Um, and
I'm guessing it's not a lab grown
diamond. Uh, I would venture to say this
is real, if not even antique. What do
you think about the price here? Have you
have you seen it? Can you speculate on
the on the possible cost?
Yeah, gut is somewhere between half a
million and 600,000. It looks like an
elongated cushion cut, probably an old
mine gold cond type to a diamond. Uh,
that that's again just speculation. Uh,
set in yellow gold. Uh so yeah,
somewhere upwards of half a million
would be my best guess.
Wow.
Interesting. And I mean you think about
Taylor Swift's influence and I think
it's fair to call it that. We know that
uh for younger generations uh
particularly Gen Z, they've been
gravitating more towards uh the lab
grown diamonds. The fact that Taylor
Swift's is not going with lab grown
here. She's going with a mind diamond.
Do you think that that will have any
effect on demand from some of those
younger generations?
Not necessarily. So u I would say a
couple of things. One is the 50% tariff
on natural helps lab considerably
because lab is a much cheaper price
point. So lab diamonds trade at anywhere
from 90 to 95% less than the natural
equivalent. So even with the 50% tariff
it's still easier to absorb on lab. And
second is what we've seen is with Gen Z
specifically a lot of the shift is
happening to lab. So this last quarter
over half of engagement rings sold in
the US had a lab grown diamond. Uh, and
that's up from 2% in 2018. So, we don't
see that trend reversing. Uh, and
certainly not a lot of people can afford
a half, you know, $500,000 plus uh,
engagement ring.
Well, if his salary I mean, first of
all, it's not her choice necessarily,
right?
What do you mean?
A lot of times the guy picks the ring
and it's a surprise.
I don't think so.
It was not a surprise. You think they
they planned this?
I think maybe she made a Pinterest board
like a lot of other brides. I would have
thought maybe Travis, you know, picked
it out himself and he makes a base
salary of 4.5 million, roster bonus of
12 12. Um, that's a a workout bonus of
like 250. I don't know. He
I think that she had
this is more than two months. Uh, this
is less than two months salary is what I
should say for him. So, it makes sense
and I feel like she's worth it. Ancher
uh as are you. Great having you on the
program. Thanks so much for joining us.
Anchor Daga there of Angara, friend of
the show. We love talking about uh
diamonds, the lab grown diamonds and uh
gold as well as it uh you know hovers
sits almost going nowhere a record high
for the last like 6 months. Let's get a
check on the markets right now. We do
see the S&P moving firmly higher at
6475.
This would be a closing high. Katie
mentioned the um intraday high is like
64.81.
The Nasdaq also putting up some gains
but not as strong about onetenth of 1%
at 23,546.
The 10-year yield also doing a heck of a
lot of nothing really. This is probably
the most surprising to me. Yeah. Move,
not at the tens, but at the twos that
you just don't see a lot of action in
bonds even as
President Trump moves to fire Lisa Cook.
He's trying to stack the board of
governors. He's considering using more
influence on the regional presidents.
Like a Fed takeover should affect, I
think, more of a move in the bond
market, but it doesn't.
Absolutely. Yeah. didn't see a huge
initial reaction to that news. I have to
think that what people are waiting for
of course are the PCE numbers on Friday
at least. We will know that those
numbers are solid. Whereas when it comes
to the removal of Fed governors, I mean
there's so many questions there you
could make yourself dizzy. Let's take a
look at some of the single stocks moving
this hour though. Gold miner Newmont
exploring plans to drive down costs that
could lead to deep job cuts. Uh shares
not moving that much down about 7/10en
of a percent. JM Smucker struggling with
sales in the last quarter as people pull
back on buying coffee and snacks or
those things are more uh expensive and
maybe more difficult to afford and you
can see smokers down 4 and a.5%.
And we heard on the earnings call that
that company uh plans to hike coffee
prices in the winter due to tariffs. So
uh some bad news coming for coffee
drinkers. Let's talk a little bit though
about Cracker Barrel. The people have
spoken and Cracker Barrel pulled plans
to change its logo after social media
backlash, including from President
Trump. Uh this is really interesting. I
mean, we've been talking so much about
some of the uh campaigns by American
Eagle, uh by Gap, and it really just
goes to say that marketing matters. And
with Cracker Barrel, this was a case
where it was pretty much universal
universal that people didn't like it.
Well, look at uh the Bud Light marketing
issues, you know, that destroyed um its
shelf position with Cracker Barrel.
Uh I'm I've only been in uh recently a
Cracker Barrel that still looks the same
as it always has, but I've heard from
others that it's not just the logo. Some
of the stores were actually remodeled to
remove the charm um and the traditional,
you know, Cracker Barrel vibes.
We need someone to do some on the ground
reporting there. I will say that is one
of the draws of Crackle Cracker Barrel
that you go in, every store is the same.
You have all the chachkis and then you
have the restaurant over here. It's very
comforting.
And the stock is up year to date up 17%
with today's move. But if you look at a
comp chart, as uh we so often do over
the last 5 years, it's lost 43% of its
value. So, they have to do something.
And that must have been what they were
thinking when they changed their awesome
logo to a boring logo.
Well, as we were just discussing with
Mary Ross Gilbert, all news on some
level is good news. So, we'll see maybe
if this publicity, even though it was
kind of bad publicity, whether it uh
reignites some interest in Cracker
Barrel in terms of people actually
showing up to eat there.
What did the president say? They've
gotten a billion dollars worth of free
marketing from this.
Something like that. Yeah. Anyway,
they need it. It's been like 5 minutes
since we talked about Nvidia, so we're
going to get back to that. Nvidia's
China sales are taking on a new level of
complexity. We'll take a look at what
investors are looking for next. This is
It goes even beyond uh whether you know
know so I think it's more you know a
That was Antoine Skybond of New Street
Research speaking to us in the last
hour. And for more on Nvidia, we welcome
Bloomberg Equities deputy team leader
Carmen Reini. So Carmen, I'm taking a
look at the story you have out on the
Bloomberg terminal. You write that third
quarter revenue projections for the
company are roughly $15 billion apart.
And I think that really tells the whole
story. Honestly, it does. This is a huge
spread for Nvidia guidance like
estimates. Usually it's a much much
narrower um range of what people expect
them to say for the guidance going into
the third quarter. And really the reason
for this is this China revenue. So a lot
of uh analysts on Wall Street have
included some revenue in the third
quarter for China in their estimates but
just as many haven't. So, uh, lining up
the numbers once Nvidia reports might be
a little bit difficult, um, to see right
away if they've met, beat, missed that
third quarter guidance estimate. Um, so
we'll be watching for some volatility in
the shares. I think that Nvidia will be
very clear on what they're including and
what they aren't. That's what they did
the last time they reported earnings,
but everybody is going to have to do
sort of some quick math potentially to
make, you know, their numbers align with
that guy. I mean, I uh I often write to
Ed Lello or I message Ian K.
He's off this week, Ed Lllo.
Well, but he still is uh covering
Nvidia. Um and I asked them, you know,
how
strong is a Chinese
Communist Party warning to Chinese
businesses, do not buy Nvidia H20 chips
because they warned companies not to buy
them earlier this year. I mean, months
and months ago because of supposed
energy concerns, right? And now they've
done it again. And if I were a Chinese
company and I got wind that the
Communist Party didn't want me to do
something, I would not do it.
Yeah. I mean, I think you're right. I
think it is a very strong message to
send to those companies. And we had
reports earlier this week or last week,
I can't quite remember, that Nvidia had
halted some production of its H20 chips
in China. So that could be a sign that
they really just aren't seeing demand
come back online. Uh it could also be a
sign that they are just moving forward
through development of a new chip. There
is the potential that they could have a
version of their Blackwell chip rolled
out in China. Um that's something
obviously they would have to get another
license for. Um and you know those
revenues would be subject to the 15% you
know tax. But um that's something that
investors are really going to be
listening for more details on from
Jensen Wong tonight. you know what is
demand looking like for AI overall right
because Nvidia still is you know above
and beyond the leader in this space but
what is it looking like in China and
what are the plans there going forward
yeah absolutely any clarity that we can
hear from Jensen Wong on some of those
points will be certainly market moving
but speaking of moving markets it's
interesting that you take a look at the
options market and Nvidia is priced for
about a 6% swing either way which when
you think about how big this company
that's certainly is that is material to
the broader market, but that's much
lower than we've seen in previous
quarters.
Yeah. So, it has gotten more muted. I
think the especially in after hours
trading, the initial swings that we're
seeing on Nvidia's um reports and really
what that is is that so much good news
is baked in here that traders have
already sort of priced. You know, they
have their positions. We are, you know,
1% from a record high on shares of
Nvidia. Clearly, people are feeling very
bullish. Um, so I think that, you know,
the the the days of the 20% swing uh are
sort of behind us because it's it's
going to be difficult for them to just
completely blow a report out of the
water. Um, but that being said, you
know, a 6% move is hundreds of billions
of dollars in market cap. This is the
largest company in the world. It has the
biggest waiting on the S&P 500 index.
So, what happens is going to affect the
entire market.
All right, Carmen, thanks so much for
joining us on this. Bloomberg's Carmen
Riniki covers uh stocks for Bloomberg.
And
yeah,
when we come back,
this last two hours we've been saying
don't pay attention to anything else but
Nvidia,
but
we're going to say forget about Nvidia.
Bloomberg opinion columnist Jonathan
Leven says you should be paying
attention to Costco or paying attention
to Walmart. He joins us next to explain
why. This is Bloomberg Open Interest.
Forget about Nvidia. Jonathan Leven of
Bloomberg Opinion says Walmart and
Costco's valuations are much scarier. He
writes, "In markets, the most painful
sell-offs tend to involve things that
people erroneously assume to be
absolutely secure. I can't help but
wonder whether the stocks of Walmart and
Costco represent a similar sort of risk.
Jonathan joins us now for more. And um
look, I'm in the morning meeting today.
Somebody brought up Costco and
everybody's like, "Ah, I love it. Who
doesn't love Costco?" You know, it's so
fun to shop there. But I'm looking at uh
the Bloomberg terminal right now on the
description page and I see a PE of 53
and a half for Costco. Uh that seems
insane, especially compared to Nvidia.
When I pull up the uh PE there, it's
only 58.4.
So what gives?
Yeah, basically it is insane in my
opinion. Uh you know, the story here is
obviously pretty great as it is pretty
great for uh for Walmart. These are uh
companies that are seen as all-weather
stocks. They do well when the economy
does well. when the e economy does
poorly and in recent years they've seen
growth sort of uh inflect higher but the
reality of it is these things don't have
growth runways like like an Nvidia is
you can't make the argument that their
uh their revenue potential is like a
cajillion% as some people will make that
argument with AI stocks they're earthly
retail stocks basically hemmed in by
like the size of the American economy
and the total wealth solid of American
spenders. And so my argument is that
like these stocks have basically become
a classic safety paradox.
More and more people have just wanted to
buy them because of the perception that
they never go down. Their earnings
basically uh never go down even in
challenges like a pandemic or like uh
Fed hikes and the sort of earnings
recession of 2022. And their stocks are
not very volatile at all. they deliver
recently extraordinary returns with
little volatility and minimal downside.
So the temptation which is always like a
very very risky temptation in financial
markets is to say well this has worked
for the past 5 years so let's just bid
it up like crazy and the the valuations
have now become a risk in and of
themselves.
Well let's talk about that a little bit
and we have just about a minute left
here. you write that this perception of
safety, it's inflated valuations. This
puts them actually at a heightened risk
of a correction. But you think about the
size of these companies. They're big. I
mean, Walmart has a market cap of about
766 billion dollars, but they're not
invidia big. So, it's not like they're
going to take down the whole market
necessarily.
No, but I I I think if you were to see
these stocks uh shutter, it would it
would send a little bit of a shudder
through the rest of the market because
in a way they've become emblematic of uh
the momentum in this uh in this economy.
They're the guys that are not supposed
to falter uh ever. And uh if if they
were to do so, it would mean something
for the rest of the market.
All right. Uh Jonathan, I'm going to
encourage people to go ahead and read
your column on the terminal. You can
type opin
uh for Jonathan's work. You can see it
on Bloomberg.com as well. Jonathan
Leven, Bloomberg opinion columnist who
covers markets and finance for us out of
Miami.
Not bad,
which must be awesome. Coming up, Wall
Street reacts to Nvidia. We'll hear from
analyst VJ Rocky, strategist Marian
Bartell's, and investor Joe Kaiser of
Marcato tomorrow. This.