The countdown is on. Everything you need
to get the edge at the end of the market
day. This is the close.
>> The link between the AI boom and
inflation live from studio 2 here at
Bloomberg headquarters in New York. I'm
Roma Boston
>> and I'm Scarlet Fu. We're kicking off to
the closing bell here in the US. Roma is
going to explain that link in just a
bit, but let's show you where things are
going in equity markets. You have the
S&P 500 at a record high. any gain on
yesterday's advance is a record high. So
a new high there for the S&P and of
course the MAG 7 doing a little bit
better than the overall market. However,
we should note that Nvidia who has been
the star of the Mag 7 since the April
8th low is a lagard today. Uh we are
seeing an interesting move here in
treasuries because in the bond market
it's a reversal of the steeping yield
curve with uh yields on the two-year
actually rising right now and the
Bloomberg dollar index showing a weaker
US dollar remain
>> an interesting day Scarlet because two
of the biggest overhangs in this market
inflation risk and fears of an AI bubble
are today ironically giving both the
bulls and the bears reason for
conviction. Nvidia's decelerating growth
from ludicrous speed to well, just
merely light speed is being shrugged off
by the bulls as more a function of trade
policy rather than what the bears say is
a sign the AI boom is bursting.
>> I think the boom's just starting. I
mean, if you look at these numbers,
especially when you factor in what China
is going to be, I mean, you know, Jensen
talked about 50 billion 50% type growth
number. This just shows the next stage
of adoption is actually just starting.
>> And in fairness, a lot of investors do
think Dan Eyes's sentiment is right,
particularly evidence in private markets
where AI startups accounted for 65% of
VC funding in the first half. But just
like the public stock market
concentration concerns with Nvidia and
Microsoft, etc., There are concerns that
privately held behemoths like OpenAI,
Anthropic, Data Bricks are hoovering up
most of that money and masking cracks
for the hundreds of other companies in
that space. And that actually segus us
to that link into inflation with a
critical PCE index report due out
tomorrow that is likely to show the
persistence of price pressures. That may
seem like an odd link to AI investment,
but higher inflation would begat higher
funding costs for an AI sector that if
you do believe that MIT paper from last
week has generated no measurable returns
for 95% of the enterprise AI pilots out
there.
>> Yeah, that raises a lot of eyebrows. But
I do want to go back to the point you
made about tech startups because they
are staying private for longer. This
chart goes back five years. And if you
look at it, here's the pandemic and then
you can see the number of VC exits from
companies they invest in pick up in the
second half of 2021 uh 2020 to 2021 and
you can see that they peaked right here.
Now since then VC exits have declined
and of course now have pretty much
stabilized. What is notable is that the
IPO share of VC exits and that is the
blue slice in these bars pretty visible
throughout 2021 but not so much in uh
the past five quarters or so. You can
barely see it. Most VC exits are
actually through M&A which is the orange
section of the bars and to a lesser
degree buyouts which is the yellow part
of the bars. So in the first half of
this year remain only 27 companies that
count VC firms among their investors
went public. That is the smallest number
in at least 10 years. All right, as we
kick you off to the close, we want to
talk about B Capital. This is a tech
focused firm started by Facebook
co-founder Eduardo Savin and former Bane
Capital investor Raj Ganguli, a tech
focused fund with $8 billion under
management. Pleased to say that Raj, the
co-CEO and co-founder of B Capitalap
joins us right now. And Raj, I do want
to talk to you about the sentiment right
now out there about this big investment
that we've seen in the AI ecosystem writ
large, not just in chips, but really the
overall infrastructure out there. you've
been at the forefront of this with a lot
of early stage investments as well as
growth stage investments like Perplexity
and Ryder and a few others. What is the
state of that right now from where you
sit?
>> You know, I I think um the state of AI
is that AI is just getting started. Um
AI is the new electricity, but there's a
lot of bottlenecks. the grid is made out
of of GPUs made by companies like Nvidia
and by data centers and there's a lot of
investment that needs to go on there and
um I remain bullish on Nvidia and remain
bullish on the fact that um we're going
to need a lot more GPUs to power the
next wave of the AI boom
>> when we talk about the mismatch if there
is one at all between what we're seeing
in terms of expectations and what we're
seeing in terms of returns and I know
there was a lot of hay made about that
MIT paper last week. Obviously, a lot of
criticism that there was really nothing
new in there in terms of information,
but I am curious as to how aligned right
now investor expectations are with at
least the current reality.
>> You know, I I think the uh the paper
from MIT is um it's spoton, but to your
point, it's nothing new. Um the startup
world has always been about taking a lot
of risk and trying new things. I think
AI has made it such that it's the best
time ever that I've seen to be a
founder, to build a company. you can be
a soul founder now. You don't
necessarily even need a technical
co-founder because um people who have
never learned coding are vibe coding and
building great products. I think you're
going to see a plethora and a boom in
terms of the number of startups and what
that means is that a lot of them won't
work. A lot of them will fail. Um, and
it's probably one of the hardest times
that I've seen to to be a venture
investor because um, we know that there
is the next generation of companies that
are going to be built, the last
generation of the hyperscalers, the mag
7 that have really driven the market. I
think you're going to see public market
shift to a much broader necessary 90 a
broader set of companies that are
durable and that have um, are really
built for the next generation of AI
native apps. But you can't just invest
in the models. You've got to invest in
the power. You've got to invest in the
GPUs. You've got to generate um also
invest in the pipelines that are really
going to drive the next wave of AI.
>> Well, I'm sure a lot of people are
looking forward to that next wave
because there's a lot of focus on those
seven critical companies right now.
Speaking of the Mag 7, I did want to get
your take on Nvidia's results and its
forecast, which disappointed a lot of
people even though we're talking about
pretty robust growth rates here. Um,
we've seen the stock and I know that you
don't follow the stock market as
carefully as those who track public
markets, but it opened lower and it has
steadily paired its losses. What What
does this say about the level of
expectations tied to a company like
Nvidia and how that may translate into
how people view tech startups overall?
>> Yeah, it's a it's a great question. I I
think you know the AI boom is not going
to be linear. I think you'll see um
starts and stops to it. Um, you saw this
in e-commerce. For those of us who've
been doing this since uh the late 90s,
we saw this with e-commerce. It took 20
years for e-commerce to really get to um
to much more of of where it is today. I
think AI is going to be faster than 20
years, but I think we're in the first
we're in, you know, the first two or
three years of a 20-year cycle. Um, this
is going to take time and I think Nvidia
is suffering from just astronomical
expectations. Um, it's still pretty
impressive growth and I do think that we
need other companies building these kind
of J GPUs. Um, it can't just be Nvidia.
It can't be one company and I think for
the US to be able to continue to be a
leader in AI, um, we've got to see a
broadening of the Mag 7, I think we've
got to see a broadening of the number of
companies that are building the
fundamental infrastructure of AI.
>> I know for Nvidia at least, there is
some concern that the pace of investment
in AI systems is perhaps not
sustainable. How much do you see that
reflected in the private markets?
>> I think you're you're definitely seeing
it in the private markets. There was a
lot of focus on kind of the fundamental
models. That focus is now shifting to
the AI app layer. You're seeing the big
um hypers scale scalers focus on the AI
app layer. We're seeing a lot of
startups in that AI app layer. Um it's a
really tough layer because there's so
many companies that are being built in
it. And I think that there is a real
stark divide between companies that are
legacy companies which um when I started
in tech a legacy company was a 40 50
year old company like GE but now a
legacy company is a company like Google.
Um a legacy company is a company that
was started just you know even a
10-year-old company is a legacy company
and you're seeing a whole new wave of AI
native companies. I think the legacy
companies have an advantage in the data
that they have and if it if they can
figure out how to leverage that data, I
think you're going to see some legacy
companies really pull ahead, but you're
going to see a lot of new AI native app
companies, challenge companies that were
started 5, 10, 20 years ago. Well,
that's an interesting comparison because
someone pointed out, we were talking a
couple weeks ago with someone about uh
the.com boom and and the bubble burst in
what was it kind of 2000 into 2001 2002
and the idea of who the winners were in
that sort of internet race. The idea
that Alphabet then Google uh for the
most part let's say came out on top
certainly when it comes to the search
and advertising side of that space. This
was a company that effectively didn't
exist during that dot bubble. It was
still a private company. didn't go
public in 2004. So where you sit right
now, where you are investing in a lot of
companies that are in the private space
and maybe could one day enter the public
markets and maybe potentially be that
next big thing. Is that a fair parallel
maybe for investors in both public and
private markets to be mindful of?
>> I think it's it is absolutely a fair
parallel we should all learn from, you
know, not only from 1999, but we should
learn from 2021. There's been frothy
periods in venture capital and in tech
investing before. Um, you know, I was a
skeptic in 1999 about a lot of the
companies that were being built that had
no real kind of profitability. I think
today what you're seeing is that a lot
of these AI companies um they are
fundamentally profitable. They are
profitable because they have um very low
costs. Um they're able to have their
developers use AI so they have less
development costs. they're able to have
AIdriven customer service and so there
is fundamentally better profitability
but I think what a lot of venture
capitalists um are looking at is that
companies are getting very quickly to 10
million 20 million of revenue but that
doesn't imply durability it takes you
know I think it takes a track record of
3 to 5 years to really prove that you
have product market fit and we can't get
fooled again by companies who you know
in a very short period of time gain a
bunch of traction but they're not
solving a fundamental problem that their
customers have. Um they're much more
about experimentation.
>> All right, Raj, uh always smart and
always great talking to you. Raj Ganguli
there. He is the co-CEO of the founder
focus and founder le B Capital as we
continue the program here counting you
down to the close with the focus on
Nvidia and the market moves around it.
Lisa Charlotte, CIO over at Morgan
Stanley Wealth Management joins us in a
sec.
>> Plus, back to school shopping in full
swing as summer draws to a close.
>> Sad face, I know. Sad face. We'll get a
check on the retail sector and the state
of the consumer with Steven Yellof. He
is Tanganger president and CEO.
>> And speaking of the state of the
consumer, a push ahead to tomorrow's
inflation gauge, at least the one that
the Fed prefers, the PCE data, a
conversation with RBC senior uh chief
economist Francis Donald. All that and
more coming up in a bit. This is the
close on Bloomberg.
[Music]
All right, socks getting a lift. We had
data showing jobless claims staying
pretty much where they were before and
uh GDP data showing the US economy grew
faster than initially reported last
quarter. Now much of that fueled by
companies rushing to import goods ahead
of tariffs. Where does that leave the
market when it comes to expectations for
the rest of the year. Lisa Charlotte,
chief investment officer of wealth
management at Morgan Stanley joins us
now. So Lisa, GDP clearly backwards
looking, the jobless claims more
current. Uh the next data points though
are going to be key. PCE and jobs for
the month of August with a September
rate cut of 25 basis points pretty much
baked in at this point. How comfortable
are you with current valuations?
>> Um, look, I think we have to just take a
step back and ask ourselves what's going
to happen with earnings. Um, I think if
you look at this market when all is said
and done, earnings this year are up
about 10% in the market, the S&P 500's
up about 10%. uh overall valuation
multiples are actually flat. And that is
telling us that look, we've squeezed
about as much as we can squeeze uh out
of price earnings valuations and and
valuation ratios. A lot of the valuation
in the market as we know is concentrated
in those top 10 uh just behemoth stocks.
Uh and so it's all going to come down to
earnings as far as we're concerned. And
there we think that the the story is one
of stock picking, right? We think that
certainly um some of those top names are
going to continue to to be earnings
compounders and probably grow their
earnings double digits. Uh but if in
fact the the capital spending boom that
we're in and that we're seeing
continues, uh there are going to be
other places to invest.
>> Well, I am curious about that capital
spending boom. I was looking at the GDP
report and uh the thing that struck me
was the pace of business spending. I
think it was like 5.7% which is not only
phenomenal but like triple what we saw
in the personal consumption side. I know
that can't sustain itself long term but
do you think that it will settle at a
level that is higher than historical
norms?
>> Well, it depends on on how long, right?
So, do I think that we're going to go
through a period where capital spending
in many ways aided both by the
generative AI and all the in
interrelated infrastructure build uh
gives us a boost and certainly the one
big beautiful bill will give us at least
a one-year boost. Yeah, I think the
question is where are we uh in this
capex journey? It's interesting. A lot
of folks think that we're uh you know in
the first or second inning of the
generative AI infrastructure buildout.
I'm of of the mind that we're a little
bit closer to the sixth inning at least
when it comes to data centers uh and
some of the the the power grid uh
investment. And so, you know, maybe this
has got another year, year and a half to
run. Uh but but then I think capital
spending as it always does, you know,
settles back and and we have to digest
capacity.
>> So if you believe we're in the sixth
inning, it might be time to start
looking ahead and think about where you
want to diversify away from those big
cap tech. Where do you go to? Which
sectors do provide value at this point
or which groups of stocks if is whether
it's small caps, whether it's
international stocks, whether it's you
know just long ignored um cons certain
consumer names.
>> Yeah. So uh for us that's a very easy
question right now because we're finding
a lot of stuff that we really like and
that we want to own. So we're big bigger
we're big owners and buyers of global
financials uh in the US both the large
cap guys and and the midcap guys and
regional banks we like quite a lot but
you know global financials as yield
curves really around the world steepen
as we get uh some of the developments
around deregulation some of the
developments in uh stable coin and in
the digitization digital assets asset
space. Financials are are a key sector
for us. Um we're we also like energy and
energy infrastructure as we alluded to.
Investment there uh is going to have to
continue and we think that there are a
host of winners again around the world.
Uh industrials another place where we're
finding uh pockets of value. And last
but not least we would say healthcare.
Uh we are uh believers in uh the
fundamental underlying demographic
trends here and we think you know
healthcare has continued to kind of
maybe uh get beaten up unjustly when you
actually look at the fundamental growth
of the cash flows that many of these
companies are putting up.
>> Uh so we we like that merging markets.
Yeah.
>> Another one of our favorites.
>> Yeah. All right, Lisa, we have to leave
it there. Great stuff as always. is Lisa
Charlotte, CIO over at over at Morgan
Stanley Wealth Management. Coming up
here on the program, a closer look at
the consumer and a closer look at that
so-called dimminimous rule, the tariff
exemption ending at midnight. A
conversation on that as when we come
back after the break. This is Bloomberg.
Let's get right to our top calls. Big
movers on the back of analyst
recommendations. And we start with
international paper. Bank of America
boosting its rating to buy, citing
expected price increases next year that
the analysts expect to outweigh
near-term operating issues elsewhere in
the business. Next up, Win Resorts. UBS
raising its rating to buy, hiking its
price target to 147 from 101. The firm
bullish on that casino resort project in
the United Arab Emirates. It's opening
in 2027, which would make Win the only
gaming operator in the UAE. Those shares
on a 5-day run. And finally, Kohl's.
Gordon Hask says the name back in style,
boosting its rating to accumulate,
raising its price target to 18, saying
the retailer second quarter earnings
should keep management's near and
medium-term outlooks on track. Those
shares, which had surged 24% yesterday,
giving it back about 5 1.5% today. And
those are some of our top calls. We do
want to stay in the retail space and
focus in on the so-called dimminimous
tariff exemptions here in the United
States. Those exemptions expire at
midnight tonight.
The gist of it is any goods that were
coming into this country under $800
effectively were not subject to any
major import duties. Joining us right
now to talk a little bit more about this
is Tyler Radkkey, city's co-head of US
software equity research who covers a
lot of companies in the e-commerce
space. And Tyler, I just want to set the
scene. This dimminimous rule or
exemption, I should say, has been around
forever since like the 1930s. But at
some point about 10 years ago, it
increased dramatically. a $200 exemption
went to $800 exemption and starting
tomorrow that drops to a $100 exemption.
Who does that affect most?
>> Yeah. So, I I think the reality is we we
don't know the the exact impacts.
Obviously, this happens tomorrow, but a
couple interesting things that that that
I would call out. So, again, on my
coverage, uh we we cover Shopify, Adobe,
Salesforce. These are players that
target uh large uh merchant uh BTOC
companies. They help them launch their
websites to sell goods to consumers. We
also cover some of the marketing uh
automation vendors in that space. Be it
Claio, Braze, HubSpot uh as well. Now go
back to last quarter. There was a lot of
concerns for Shopify. uh you know the
stock went down call it 50% from the
highs on uh many of the tariff uh
concerns in in the month of of April and
May. uh what happened last quarter in in
the June quarter you saw their strongest
GMV performance in several years over
30% growth and by the way China took
place the dimminimous exemption expired
for China
>> uh in in in May and that had virtually
no impact for them and Shopify also said
on their last call that only about 3 to
4% of overall GMV is subject uh to this
dimminimous uh impact And so we don't
think it's going to be as significant.
Obviously there there is a lot of
uncertainty with these things but um it
did not have an impact last quarter with
with China rolling off and and again
it's not a huge part of their business.
>> Are the companies saying that this is
something that could potentially be a
source of confusion or a headwind going
forward because it hasn't been activated
yet. It's August 29th when the rest of
the world loses access to dimminimus.
>> Yeah. So I think ultimately the the key
question is what does this do uh to
consumer demand, right? And so I think
in in in c certain circumstances, right,
um this could have a a a negligible uh
impact, right? If if if the if the cost
of something is is is only going up
marginally. Uh and again, the the
Shopifies, the Clavios of the world,
they tend to cater not to your discount
uh retailers, right? These are generally
more uh you know uh higher income
consumers that are buying from uh from
Shopify merchants. Uh so so overall
we're not expecting a huge uh impact on
this.
>> I am curious though what the potential
impact could be on sentiment. Bloomberg
has a great story today with some uh
anecdotes from folks who have already
been hit potentially with higher bills.
one guy who was shopping for computer
parts and all of a sudden received a
$1,000 bill uh that he had not expected
primarily because of the exemption of
this rule end of this exemption, excuse
me.
>> Yeah. Yeah. I mean, there could be some
surprises. Uh we actually have our uh
city global tech conference next week
here in New York City. We have the
Shopify uh CFO on stage uh presenting on
Wednesday, Thursday. So, that will be a
great question. Hopefully, we get an
update on just what they've seen.
Obviously, it will have been less than a
week at at that point, but uh you know,
certainly we'll we'll be watching this
carefully into September.
>> All right, definitely something to watch
for then. Tyler Ratkkey is co-head of US
Software Equity Research. Thank you so
much for joining us. I would be so mad
if I got a package and then I got an
invoice saying you now owe this amount.
Well, actually, I wouldn't get the
package, right? I just get the invoice
first.
>> You get the invoice first and I guess
you can just not pay it and but you
don't get your goods either, right?
>> Right. And you've already paid for the
goods, so then you're kind of stuck,
right?
>> Okay. This is kind of weird. So, what
does this mean? Shop local
>> or not shop?
>> Basically, you gota you got to look into
the provenence of everything you want to
buy. All right, coming up to a Tanger.
How about that?
>> There you go. Digging deeper into
consumer consciousness with Tangar
president and CEO Steven Yaof. We're
going to ask him about the state of
spending, his company's latest earnings
report, and the biggest risks facing the
retailers. From New York, this is the
close on. I'm Bloomberg.
3:30 p.m. here in New York. This is the
countdown to the close. I'm Roma Boston.
>> And I'm Scarlett Fu. And of course,
we're keeping an eye on retailers
because it's a thick of uh earnings
season for these retailers. And we've
gotten pretty much a mixed bag here for
the ones that have reported.
>> Yeah. Yeah. Yeah. Dollar General come
out. They actually reported better than
expected earnings and that maybe it's
due to the idea that we're all looking
for values. Burlington stores as well.
Then you have like Best Buy
>> which which actually did better. did
better. But they did raise some concerns
about tariffs and how that might affect
things going forward. Then I don't know
what the heck's going on with Bath &
Body Works. Have you ever been in a Bath
and Body Works?
>> Not in a long time because I don't want
to smell like, you know, cherry blossoms
in the middle of winter um when it
doesn't feel season appropriate.
>> What about in the middle of summer?
>> I guess I could do that, but
>> but it gets to the idea of where people
are shopping. We get some earnings after
the bell, we should point out, too. Gap
and Ulta. So, beauty as Alex would say,
invest in your face and and Gap would
just kind of become a bit of a
turnaround story. And our next guest has
a little bit of connection to that. It
>> Yes, absolutely. But the cultural
relevance of GAP is still about one that
we can't really answer yet. I mean, it's
in a turnaround mode, but its glory days
it feels like are behind it. So, it has
to kind of re, you know,
>> introduce itself, reintroduce itself to
a new audience, right?
>> All right. Well, when it comes to the
consumer, we're not seeing signs of a
slowdown in the consumer. That's the
message at least from Dick Sporting
Goods following its latest earnings. And
of course, we do await the release of
PCE tomorrow. But recent economic data
have showed a solid spending picture, at
least on goods in recent months. Our
next guest has his pulse on the state of
the consumer and the biggest risks to
spending. Steven Yof is president and
CEO of Tanganger, the REIT that owns and
operates Outlet Malls, and he joins us
now. Stephen, great to speak with you.
And just on the heels of what we're
discussing, the latest batch of earnings
really show consumers are spending
despite uncertainty over a tariffs and
longerterm inflation. The wrinkle, as
Roma pointed out, is that everyone wants
value. How is that showing up in your
malls, in foot traffic, and in sales?
>> Well, we are a value platform. So, we're
really where the customer wants to shop,
where their favorite brands, the best
possible price every day, and we're
seeing the customer show up. You know,
if you go back to tariff, you know, you
talked about tariffs there for a little
bit and you you think about tariffs
being announced in April. We've seen
traffic build since April. So, it's been
a pretty interesting story as customers
might have anticipated some issues in
third and fourth quarter. So, we did
some pretty smart things. We we induced
the customer through back to school to
start shopping a little bit earlier. And
as we've gotten that customer earlier,
it's really resonated. And in fact as
the tariff impact was not as u strong as
those some of those pe some of the
customers anticipated it would be
particularly in Q3 we see that customer
actually coming back for a second visit
>> and our retailers are saying to us what
are you doing to get the customer in
earlier for back for holiday shopping.
So that's what we're working on right
now.
>> Gotcha. Gotcha. Well, of course,
handinhand with tariffs is uh
geopolitical tensions with other
countries and we know that uh there have
been foreign fewer foreign visitors to
the US anecdotally. Uh domestic travel
is up but maybe fewer Canadians coming
to the US. Is that showing up in any
material way at your malls?
>> You know, most of our shopping centers
are really drive to domestic tourist
destinations, places like Savannah,
Charleston, Hilton Head. So, we're still
seeing a lot of those folks who are
going on their holidays come and visit
and shop with us. In fact, our summer uh
traffic numbers were outstanding this
year. But what what's more important is
that our centers that you know 10 or 15
years ago, the narrative on outlets were
they were far away from you know most of
most of the centers of uh of the cities.
We're seeing a lot of folks moving back
to those geographies. Uh secondary homes
becoming primary homes just because of
how the customer is working today. And
because of that, we're seeing a lot of
traffic during the week. So, our traffic
continues to build in those domestic
tourism markets. And it's also driven by
the uh the local consumer as well.
>> I am curious. Obviously, Tanganger has a
very specific focus that allows that
brickandmortar model to shine through in
a way that maybe it doesn't for other
segments of retail. I mean, uh we were
uh joking before this uh or kind of
mentioned that you had a connection to
GAP. you were basically the real estate
guy although many moons ago and we had
Mickey Drexler uh your former uh
colleague on a couple of weeks ago uh
kind of talking about the transitions
that we've seen in that space. Is there
hope for maybe the more higherend
retailers or the retailers that maybe
need to be more uh e-commerce focused?
Is there still a place for
brickandmortar in their uh strategy?
>> Well, I I certainly believe so. You
know, in fact, I think a younger
consumer wants to shop brick and mortar.
I think online is definitely part of the
journey. So, customers like to window
shop online, but they like to execute in
store, particularly if they're buying
fashion items. So, if they're, you know,
if they're buying whether they're buying
Gap or they're buying Prada, the
customer wants to feel the fabric, they
want to try things on. And I find that
to be true in the in footwear as well as
accessories as well as uh as fashion
apparel. There's also been I mean you've
made some expansions and changes to the
tang model itself making a little bit
more I guess experiential for lack of a
better phrase. Talk about how much
progress you've made on that so far and
whatever plans you can disclose publicly
uh to go further with that.
>> Well sure that I mean that's an
important part of our business. You
know, uh, pure play outlet shopping was
a real fun thing 10 years, 15 years ago,
but now what we're finding, particularly
as our centers have become more and more
important to the communities that they
serve, that the consumer wants more when
they get off the couch and come shop
live. And that's better food and
beverage offerings, more entertainment
opportunities, whether it's a a Dave and
Busters, a main event, or a movie
theater. They're looking for better
amenities. And also with Tanganger
loyalty, we're gamifying the uh the the
situation. When the people come and shop
our centers, we're rewarding the
customers for coming to shop with us. So
the more they spend, the more they're
rewarded and they can use those rewards
across any uh Tanganger shopping center
across our entire portfolio.
>> Stephen, I'm wondering if you've
observed whether there's a saturation
point for the number of factory stores
for certain brands. Um, I just looking
at J Crew for instance, it has about 117
regular stores across the US, but there
are about 369 factory stores. And some
could make the argument that that is
devaluing the brand, watering down the
brand. And I wonder how that might show
up uh in, you know, at across your
outlets.
>> Sure. Well, first of all, I love what J
Crew is doing. And J Crew not only
presents their outlet brand and outlet
centers. You're seeing a lot of J Crew
outlet stores in nonoutlet centers as
well. So I think J Crews identified the
fact that there's a customer that loves
their brand, loves their style, loves
their fabrications, but wants it in that
value price point. And if the if J Crew
can provide that customer the value
price point as their entry level, get
them into the store, get them to buy the
product, I think it's then J. cruise uh
opportunity to trade that consumer up to
the more expensive products and make
that customer a customer for life.
>> Do these kinds of companies, whether
it's a J Crew or another kind of
company, need to provide more than just
apparel? Can they turn themselves into a
lifestyle brand at uh an outlet level?
>> Well, you know, that's what I think is
so exciting about the outlet stores. You
know, there's plenty of places to buy
discount. There's uh there's secondary
discount stores. There's there's uh
discount stores that sell product by the
pound. There's discount school stores
that use classification merchandising
where they'll take five or 10 brands
that compete and put them on the same
rack just because they're the same size
in the same classification.
>> I think outlet provides the opportunity
for all the retailers to produce to to
show their their product uh soup to nuts
the entire lifestyle. So if you're a fan
of a brand, I'll use Ralph Lauren as an
example. If you're a fan of Ralph
Lauren, you can buy socks, you can buy
shoes, belts, pants, shirts. housewares,
sheets, towels, the entire product
assortment from end to end is available
for the consumer and it's all Ralph
Lauren product. And I think that that
gives not only the consumer an
opportunity to shop the way they want to
shop, but more importantly, it gives the
brand the opportunity to showcase all of
their uh product lines at an entry-level
price point that ultimately turns that
consumer into a lifelong consumer for
that for that brand.
>> Stephen, always a pleasure. Steven Yalof
is the president and CEO of Tanganger.
And we should point out we'll get
another read on the state of retail
after the bell tonight with earnings out
of GAP, Alta, and Petco. And we'll throw
a firm in there as well. We're also
going to get some tech earnings, another
read on the AI space, another read on
data centers with Dell. It's our stock
of the hour. And as we await those
results, we'll have a breakdown of what
to expect when we come back after the
break. This is Bloomberg.
Time now for our stock of the hour and
it is Dell. That company set to report
earnings after the bell is expected to
raise its forecast for fullear AI server
shipments. Wu Jin Ho covers the stock
for us over at Bloomberg Intelligence
and he joins us right now. And Wu Jen,
this is kind of like one of those kind
of a old tech companies that has kind of
become back in vogue again because of
all of the demand for data centers.
What's your expectation for tonight and
what type of guidance do you think the
company might give?
>> Yeah, hey, thanks Rainine. So, um, look,
they're going to have a solid quarter in
terms of uh AI servers. I do expect them
to um, uh, book roughly or or or
recognize roughly $7 billion in AI
server revenue. Uh, PCs is actually
going to be fairly good. So, there is
some scope from for upside. In terms of
the outlook, um, it look, all eyes are
going to be on that AI server revenue
uh, number. uh they've already
forecasted out 15 billion dollars in
sales for the year. Uh consensus has
started to creep up higher. Um I thought
the the 15 billion was conservative. You
have some as high as 20 billion uh for
the for the year. So if that if they
don't meet that $20 billion bogey,
they'll be considered a a a
disappointment.
>> Okay. So there's a whisper number here
that everyone's working with. Um when it
comes to those AI server shipments, I
keep reading about Neocloud partners.
What does that mean, Rugen?
>> Oh yeah, NeoCloud, new cloud,
sovereigns. Um the I guess the mo best
or the most well-known Neocloud out
there is is Coreweave, right? Uh they've
been on the show quite a few times. Um
they're a customer of actually Dell, but
there also some other smaller NeoClouds
or emerging NeoClouds like Crusoe that
are building out uh AI servers as well.
So they're offloading some of the cloud
hypers scale cloud capacity from uh
customers like uh Microsoft as well as
Google and Meta and uh they're doing
some of their training work for them. So
they're doing a lot of the purchasing um
of of these uh AI servers. I
>> I am curious about what's going on with
PC demand. Uh I mean I know there was
some uptick in that. It kind of ebed a
little and now it seems to be coming
back. How important of that is is
something how important is that for
investors to pay attention to?
>> Yeah. So so
pretty important in the sense from a
revenue perspective. We have to keep in
mind that PCs still represent roughly
half of uh total revenue or or I guess
uh the personal systems grow for for for
these guys uh roughly half of total
sales. Now a couple of things right we
thought that tariff head tariff
headwinds were going to be a monkey
wrench in terms of num not only growth
but also margins but uh that didn't turn
out to be the case. If we look at HP's
results yesterday, uh they managed their
PC revenues as well as margins well in
the last quarter results and I do expect
the same uh for for Dell uh into results
as well as the outlook.
>> So in other words, the PC PCs are not
dead. The PC cycle is alive and well. I
guess my question is when it comes to a
company like HP which makes both
printers and laptops, the printers were
not getting the similar kind of boost.
Yeah, look, uh, printers are still in in
secular decline for for a couple of
reasons. Consumers have really, uh, not
really picked things up and the back to
work bump up, uh, that we expected from
the office printers haven't really
helped as well. Uh, more importantly,
uh, margins fell short of expectations,
but we do expect um, uh, you know, some
back- to-school buying for for HP in
terms of the printer side, but also an
improvement in supplies next uh, next
quarter.
>> All right, Wujun, thank you so much.
Wuen Ho of Bloomberg Intelligence. I
think I'm the only person left on earth
who likes printers. I print up
everything.
>> Yeah, me too. I mean, I'm, you know, but
I hate to say it, but we're old, so
sorry.
>> Yeah, Gen X. All right, come on. Coming
up, we're going to take you to the
closing bell with Charles Lemonites,
Valley Works Chief Investment Officer.
This is the closed on Bloomberg. Print
it up, Roma.
>> AI is just getting started. Um, AI is
the new electricity, but there's a lot
of bottlenecks. The grid is made out of
of GPUs made by companies like Nvidia
um I remain bullish on Nvidia. Venture
capital investor Raj Ganguli kicking us
off to the close of discussion about
everything going on in the AI space with
of course the big leader in that space
not really participating in the rally
but I just took a look at the shares.
They're only down about 510 of a
percent. They had dropped about 3%
earlier in the session.
>> Yeah, really pairing their declines.
We'll see if they actually make it into
the green by the end of the trading day.
But, you know, for long-term investors
and those who believe in the AI story
like Raj, uh they say that, you know,
expectations at least from the public
markets investors were just simply too
high.
>> Absolutely. Here and you take a look at
the numbers there on your screen and we
should point out once again, Scarlet,
last week of August here, uh we are in
the summer doldrums. Volume is light.
So, a lot can change when we come back
after the Labor Day holiday here in the
United States. But we count you down to
the close here on this Thursday
afternoon with the focus on where
markets are going and with a focus on
where investors are finding value.
Charles Lemonites is the chief
investment officer of appropriately
titled value works and he joins us right
now. And I do want to start there first
with the tech space here in the US
specifically as to whether you do see
value in any of the companies out there
in this market chasing that AI dream.
Well, you know, I think that's a that's
a really great starting point for a
conversation where we are today because,
you know, there are some valuations that
are very very robust and hard to argue
that you're going to make money. There
are plenty that are not that robust. The
the economic expansion we're seeing and
the and the economic growth we're seeing
in AI and that part of the economy is
explosive and powerful. Some stocks have
gotten way way ahead of themselves.
Nvidia being a case important, Palanteer
being another case in point, although
not exactly related but close. Um that
said, I think we're going to an extended
boom. I don't think that we are at a
cyclical market top yet. I think that's
2, three years away. So, so I think
investors are in this place where the
exciting names have become way overdone,
>> but there are plenty of tech names that
are not overdone. And couple of names we
like are Micron Technologies and
Qualcomm which are both totally fair
valuations and probably both have a lot
of growth also.
>> And we've heard that from some other
investors too particularly as they try
to look for any sort of alternative to
the NVIDIA and Microsofts of the world.
As you search for value though something
interesting popped up on the Bloomberg
terminal and that was a stake that you
were taking uh in the wind power company
uh Orstead. This is a Danish company
that makes the big windmills there. The
shares at one point had basically
dropped to a record low to start the
week, down 40% in a matter of weeks just
because of some concerns here about
cancellations of some wind power
contracts by the Trump administration.
We now have learned that you have bought
what something more than 100,000 shares
of this company uh in the past few days
and weeks. That seems like a pretty big
bet. I mean, is this a bet on ORstead or
a bet against some of the policies
coming out of this administration?
This is a contrarian bet on Orstead and
on wind and it's, you know, speaks to
how we invest money and look at the
world. Um,
you know, four years ago, five years
ago, uh, the wind companies are where
the AI companies are today in terms of
investor enthusiasm and excitement and
how they were going to take over the
bloody world. um you know they probably
will end up having a huge role to play
in producing electricity for the globe
uh over the next five years and 25
years. The the ability to produce energy
and electricity from offshore wind farms
is not is today not like anything it's
been in the past ever and it's going to
be an economic growth engine and it's
going to be economic power. That said,
investors have turned on the stocks
because there've been a bunch of
hiccups.
>> Um, and there've been a bunch of bumps
in the road as there always will be in
growth businesses.
>> And, you know, the valuation now is, you
know, dirt cheap and investors are
completely capitulating and throwing in
the towel. So, that's where we try to
dig our dig in and do the work and see
if there's real value there. And in the
case of Worstead, we're pretty darn sure
there is. I mean, there's a pretty big
bump in the road when it comes to a
Trump administration that is just
completely opposed to wind energy or
alternative sources of energy. Uh,
halting work on this project off Rhode
Island um that's already 80% done. How
do you think about this idea that
ORstead can't do very much in the US for
the time being? I mean, this is a long
How patient are you willing to be here?
>> First of all, we're willing to be pretty
darn patient. you know, administrations
last for four years or so. Um, we own
some um gas pipeline companies uh six
years ago. Um, and they couldn't get uh
environmental approvals to cross like
minor um pieces of of waterway and they
90% of their pipelines were built um and
they couldn't get administration
approval to get across the finish line.
Um the administration changed and they
got that approval and you know the the
pipelines are being have been finished
and we saw 3x on our investment. Um
difference here is that well is that
Orstead's not a US company and Orstead
is a very very global company. They
produce a huge percentage of the
electricity used in the UK. They're a
global player and their US operations
while they're measured in the, you know,
5 10 billion range, you know, are not
25% of what they've invested around the
world. So even if the US is a total
disaster and a total donnut hole, we're
pretty sure ORstead is very cheap from
today's price.
>> And ultimately, you know, this
administration has proven to be very
transactional. They're looking for for
their piece of the action. And up until
now, they've always been willing to
strike a deal and give something to get
something. And we're pretty sure that's
how it'll work out for Orstead on these
offshore wind farms off of Long Island
and and Rhode Island and Connecticut.
Um, but if it doesn't, you know, the
rest of their businesses protect us
really, really well. And, you know,
these things will end up being worth an
awful lot of money, do you think?
>> How confident are you that it will be
able to place the rights offering? I
mean, you're committed to it. you said
that
>> that that's a very important point.
Also, look, the in order for them to be
adequately funded, they need to bring in
billions of dollars. Um that said, their
equity cap today is $12 billion. Um
their 50% investor has said they're
willing to pony up their share. We'd be
super surprised if everyone if if they
can't price it in such a way that the 9
billion comes into the company and that
may or you know what what share price
that is it doesn't really matter to
investors because you're going to have
the same prata interest in this company
um if you exercise those rights as you
have today and the company will have
that money on the balance sheet. So
whether you take it from one pocket to
the and put it in the other, it doesn't
matter economically. And so we think
that's going to get done and we think
that's important and we think that
that's going to relieve a an important
psychological overhang in the market. I
I think the stock will be up 25% once
that's done.
>> All right. Well, it's already getting a
pop today. Looks uh like it closed uh up
over there uh in Denmark, up about 6%
here on the day. We'll check back in
with you soon, Chuck. I'm sure to see
how things are going. Charles Lemonites
is the chief investment officer over at
Value Works with the story on the
terminal about a big bet he's making on
a a non US company orstead the wind
power company. Scarlet.
>> Yeah. A company that's very much or a
company in an industry that's very much
in the target of President Trump and his
entire administration. Yeah. So it's uh
it's something that might take a while
to play out, right? The bet will have to
unfold over time.
>> And it gets to this idea too as we bring
it back to US markets as we get closer
to those closing bells two minutes away.
the big focus on Nvidia, but he's kind
of hitting at this other issue too. The
idea of how much power is needed to
power this AI trade. So whether it's
coming through the traditional utility
grid or through renewable energy
sources, this has become of course a big
source of investment for investors as
well.
>> Absolutely. And this is why so many of
the tech companies are going out and
kind of doing things on their own
looking for nuclear power as their own
source of energy to make sure that uh
they have enough power to to continue to
move forward with their AI uh developing
their AI build out. Uh we should point
out that right now the major indices
here in the US are in the green only
fractionally higher but given uh some of
the drag that we thought we were going
to get from Nvidia last night. Certainly
something that I think a lot of folks
are probably pleased to see. Roma Bosik
here with Scarlet Fu we're kind of down
to the closing bells and joining us here
in studio 2 in New York is Jess Menon
and Bailey Lip Schultz who help to lead
our equities coverage here at Bloomberg.
And guys I want to start off with
Nvidia. We talk about a stock that
everybody thought was just going to like
tank this market. did sort of drop about
3% earlier in the session, but as of
right now, it's only down about 6/10en
of 1%. The biggest waiting effectively
in the the NASDAQ uh and the S&P 500.
>> Well, if you look at the implied moves
coming into this, especially for this
stock specifically, it was supposed to
be a 6% swing in either direction. That
is low relative compared to where it's
been on those earnings day moves over
the last few years when it's been more
double digits. But actually, if you're
looking on over the next month, it was
supposed to be the second highest
implied move behind Fed day. But because
the VIX is still closing around its
lowest level of the year, those implied
moves are still below 1% for the index.
>> We're talking about a stock that's going
to end the day down 7/10 of 1%. When you
look at the earnings, beaten raised
really delivering across the board.
We're uncertain about China, but really
good print, guys.
>> Absolutely. And we should point out we
are expecting some other earnings in the
AI space and that includes from Dell uh
the big maker of PCs and servers. As we
get the closing bells here in New York,
green across the screen, the Dow Jones
Industrial Average up more than 70
points or almost 2/10en of 1%. The S&P
500 for the first time ever crossing the
6,500 mark 6501 and change that is a
record high 310en of a percent higher.
The Nasdaq 100 up about five 610 of 1%.
The Nasdaq Composite up a half a percent
and the Russell 2000 SCAR up 210 of 1%.
Okay, so green across the board, but
interestingly, you look at the S&P 500
and the number of of advancers versus
decliners. More decliners than
advancers. 278 versus 222. So very much
big cap names keeping it a loft.
>> That would be Yeah, big cap names
keeping a loft because I thought it was
kind of interesting the S&P equal
weighted index actually closing in the
red today.
>> Oh, interesting. By how much?
>> Uh, only uh less than a tenth of a so
marginal.
>> So marginally.
>> All right. And Jess, you were going to
say,
>> well, I was going to say, I know you're
about to get into the IMAP, but I wanted
to point out if you look within
utilities, it's those independent power
producers, even though that sector was
lowest. That was the one that was higher
and that group was up more than 1%.
>> All right, so the AI theme plays itself
out across the market today. You look at
the IMAP, a lot of green there. It's
notable that there are four sectors in
the red. And to what Jess was saying,
utilities down 9/10en of 1%, consumer
staples, and healthcare, so more of the
defensive groups, uh, in the red.
communication services, uh, energy and
tech leading the gains.
>> All right. Uh, we are going to get to
some of the other individual gainers and
decliners on the day, but we are getting
some earnings to squeeze in here.
Autodesk, uh, the software, uh, company
coming in with its results for the most
recent quarter. A beat on operating
margin. It looks like a beat on net
revenue of about $1.76 billion. The
street was looking for 1.72 and a beat
on the bottom line of about $2.62 a
share. Here's your guidance going
forward. For the full year, the company
is giving a revenue range, a tight
range, 7.03 to 7.08 billion. That's
higher than the previous range it had
given. And for the current quarter that
we're in, the company says that bottom
line, the number adjusted EPS $248 to
251, also higher than the average of
street estimates. Bailey,
>> it looks like the stock uh maybe the
bots or the junior analysts trading the
stock up more than 7% right now. Again,
tra closed around 288. had traded his
high uh just a little over a month ago
uh north of $315. So, working its way
back towards that. Again, one to keep an
eye on when we get into tomorrow's
session.
>> And then also looking at the gainers
today. Really hefty moves here in
software and cloud providers. So, I'm
going to start off with Data Dog. DDoG
is the ticker up over 7%. So, it's best
day since July 3rd. Actually was one of
the best gainers in the S&P 500 as well
as the NASDAQ 100 here. So you saw other
peers on the back of what we saw with
that huge move for MongoDB yesterday
because yesterday had been up close to
40%. So that was rising as well
>> and that was a concern coming into these
this earning season. The idea that the
software companies particularly kind of
these mid-tier ones were getting left
behind.
>> And then obviously if you think of sort
of the AI trade now they're catching up.
And then also on the back of that
another one that was gaining today
snowflake the ticker is snow. So that
also is part of the story that we've
seen when it comes to the earnings theme
here with those companies. So up 20%
best day since November 21st of last
year. And also that company ease some of
those investor anxieties that you were
talking about Roma because the software
vendors will the concern that they'd be
hurt by slowing economy and new
competition when it comes to AI
startups. So they're basically kind of
bucking that trend there. And then I
wanted to point out actually pure
storage. Pure storage. Yes.
>> This is like the biggest gainer on the
day.
>> It is actually up more than 30%. Best
percentage gain on record for this
company. So it is another cloud storage
provider. So it topped those estimates
for fiscal second quarter results and it
also raised its 2026 fullear forecast.
Bailey
>> Jess, you're taking the bullish stocks.
Let's go with the bearish stocks and
talk about companies that are exposed to
the real economy. Talking about some of
the worst performers across a number of
indexes starting with Horell Foods,
maker of spam. This is a company that
really called out cost pressures. Uh
looking at the terminal ending the day
down more than 13%. One of the worst
days in history. The reason I say one of
the worst days in history, this company
was founded in 1891, talked about going
public in 1925. So, it's been a long
time traded company. Uh, but as we talk
about the uncertainty around the
consumer, they're blaming cost. So,
certainly something that kind of again
stands out. One of the other poor
performers gauging or trading to
consumers and Brown Foreman, the parent
company, uh, that makes Jack Daniels.
>> Yeah. What happened there?
>> They they reported results that were not
as good as expected. And when you look
at it underwhelming kind of with what
Wall Street was looking for, it does
seem like uh alcohol consumption in the
US remaining weak. I don't know about
>> So I'm told it's like younger people
like you that are ruining the alcohol
industry that apparently the the Gen
Zers don't don't drink anymore. Is that
true?
>> Gen Z.
>> It's funny because you
>> trust me the Gen Xers are still
drinking.
>> The millennials will too.
>> I don't know who's buying Jack Daniels.
I'm not buying Jack Daniels. You know,
I'm a more of a bougie Burick kind of
guy. And then just going to call out uh
some of the weakness we saw with Urban
Outfitters. That stock down uh about 11%
this coming after a big runup.
>> All right. Uh we are getting Dell
earnings crossing the wire right now.
Scarlet, let's uh get right to it here.
Uh the red headline crossing the wire.
We're actually going to start with the
forecast here. The company says that
full year its AI server shipments will
be $20 billion. It had previously guided
to $15 billion. So basically guiding
almost 30% higher than what it had
previously given fullear revenue 105 to
109 billion. The previous estimate was
101 to 105. The street was looking for
105 and change. So basically the lower
end of the guidance looks like it's
coming in above estimates. Now if you
care about the quarter that just passed
net revenue of 29.78 billion roughly in
line with estimates slightly higher than
estimates and operating income of SCAR
2.28 billion roughly in line with
estimates as well. Interesting to see
the shares actually lower here on the
back of that.
>> Yeah. In fact, we had just talked to Wu
Jenho of Bloomberg intelligence who told
us that $20 billion was kind of the
whisper number here for the fullear AI
server shipments and that was the number
that this stock move is really hinged
on. Uh previously it had seen it had
expected something above 15 billion. So
hitting the whisper number uh is not
enough these days I guess. Uh in terms
of the fullear outlook adjusted EPS $955
at the midpoint. Previously it had seen
$9.40 40 cents at the midpoint and
remain I like what we talked about
earlier this idea that this is an old
school tech name that has kind of caught
up with the AI revolution and has found
a place a nichy place in it.
>> Yeah. Yeah. And I want to get your
thoughts on this Jessa. I mean just stay
in the tech space for one second here.
We are getting Ulta earnings as well but
Marbell the chip maker out now out with
its results as well. Those shares now
moving lower down about 5% in the after
hours trade. Jess they're providing
revenue figures that are pretty much in
line with estimates 2.01 01 billion EPS
numbers relatively in line with
estimates 67 cents a share in guidance
on the current quarter slightly below
estimates and I am curious as to where
these kind of second tier not and that's
not a discier kind of companies fit into
the AI story
>> well the big thing three months ago you
think back to last May so Marll at that
point had actually delayed its investor
call and that kind of rattled the stock
then and it sold off and then it also
had cut the high end of its revenue
forecast at the time so investors were
really trying to focus now that 3 months
has gone by. Was there better guidance
there? And Bloomberg Intelligence was
thinking that the chipmakers results
were expected to align with those
estimates. But if you look at this, the
stock's still down about 30% year to
date. So even if you see some bright
spots there, still has a long way to
catch up compared to some of its peers
this year.
>> And you mentioned Marll, that company
just coming out with results as well. So
speak of the devil, right? Second
quarter adjusted EPS 67 cents matching
the estimate. Net revenue 2.01 billion
also in line with estimates. in terms of
the third quarter net revenue 2.06
billion trailing the consensus estimate
and third quarter adjusted EPS just a
penny better than what people are
expecting.
>> Let's pivot just real quickly to the
consumer space here. Petco out and so is
Ulta. Let's start with Ulta. Uh uh
Bailey uh they're coming out with their
results here and there was a lot of talk
about whether people would continue to
spend on consumer discretionary items. A
beat on the bottom line in the most
recent quarter here $5.78. The street
was looking for 511. Net sales coming in
at about 2.8. 8 billion dollars slightly
ahead of estimates and the company says
that for the full year it now is
providing a comp sales range of 2.5 to
3.5% growth. Bailey its previous
guidance was 0% to 1.5% growth. So a
meaningful bump up here in their
expectations for the rest of the year.
>> Yeah, big bump up in comp sales. Even
going to call out the expectations for
operating margin 11.9% to 12% had seen
11.7 to 11.8%. This is a stock right
now, After Hours, up more than 4 1.5%.
And when you look at concerns around the
consumer, it seems like there is going
to be continued spending. And again,
we're talking about some of the better
or worst performing stocks this year.
Ulta shares up 22% year to date.
>> Yeah, absolutely. Here, um, and we just
should also just real quickly point out
a Petco just came out with their
earnings.
>> PCO is absolutely flying.
>> Put those shares up, please.
>> And this is a consumer discretionary
company. I argue it's a consumer staple.
Nevertheless, stock jumping 31% after
boosting its fullear adjusted IBID dot
outlook.
>> Just going to call out though on Petco
23% short interest. So that could be a
short fair fair fair.
>> Just final word here.
>> That's what I was going to say too. But
also it was trading around $30 in 2021.
Now it closed just above $3. So a lot of
pain still.
>> Great context as always from Jess Metton
and Bailey Lip Schultz who helped to
lead our markets coverage here at
Bloomberg. Uh that does it for them.
That does it for Scarlet Vu. I'll be
sticking around with additional coverage
coming up after the break of some of
those big earnings we just got,
including out of Dell. This is
Bloomberg.
>> The countdown is on. Everything you need
Welcome back to the close. And it was a
record high for the S&P 500. A record
high without the help of Nvidia, believe
it or not. that low volume summer grind
higher pushing the S&P to its first
close above the 6,500 mark in its
history. Outperformance at least as of
late a rare outperformance relative to
the small cap stocks. The biggest
percentage movers out there were still
in the tech space. Names like Data Dog,
Service Now, Trade Desk, Oracle, and
Crowd Strikes helping to push things
higher. Apple, Amazon also participating
in that rally. Meanwhile, some of the
biggest individual movers on the day.
You had names like Pure Storage, an
enterprise hardware and software company
up more than 30% here on the day and
just now we are getting earnings in the
aftermarket out of a firm that stock
held its own uh during the earlier
session but now slightly lower here.
That company providing a revenue uh for
the most recent quarter that did beat
estimates but its guidance uh giving a
very wide range that's slightly below on
the low end of what the street was
looking for. I want to go back to some
of the individual movers specifically on
this day and that includes a knowledge
of the names in the consumerf facing
spaces. Names like Horell dropping the
most uh since going public all the way
back in 1980. Some concerns here about
the rise in commodity prices and eBay
and Etsy under pressure here. In fact,
Etsy has been on a six-day slide. A lot
of concerns here about the expiration of
that dimminimous exemption uh overnight
tonight that basically allowed those
firms to allow shipments from overseas
into this country as long as they were
under $800. Basically, they would avoid
any tariffs. And that brings us to our
top story and it really is the state of
AI and an e and an economy that has
historically been driven almost entirely
by the consumer and that's changing.
Personal consumption, yeah, it still
makes up 67% of gross domestic product.
at least it did last quarter. That GDP
in the most recent quarter, it expanded
at a healthy 3.3% annualized pace. But
there was one big asterisk on that.
While the dollar value of GDP is still
all consumer all the time, that growth
rate, at least for right now, appears to
be all AI. So-called nonresidential
investment, a measure of expenditures by
companies, that category surged at a
5.7%
pace. That was more than triple the pace
for consumer spending. A rare
outperformance that follows a 10%
advance in the first quarter. Two
back-to-back quarterly advances in
business investment largely seen as
directly related to the ground swell of
attention on technology and AI. And that
brings us where to where we are here in
the after hours trade with a closer look
at those results that we just got out of
Dell and Dan Niles who joins us right
now, the founder and portfolio manager
at Niles Investment Management. And Dan,
I do want to start off with where this
sort of investment spree in the AI space
stands right now given what we learned
out of Nvidia last night and what we're
learning in the moment right now out of
companies like Dell.
>> Well, I think you're at this interesting
crossroads where if you think about some
of the things we've heard over the past
two weeks, you had Sam Alman, the CEO of
OpenAI, come out and say, "We're in an
AI bubble." You had chat GPT which they
released really disappoint where a lot
of users actually went back to chat GPT4
from chat GPT5 that came out. You had
that MIT study out that said 95% of
enterprises that were investing in AI
weren't seeing any return. And so and
then you know the final one is Meta
which was spending money on AI
researchers like they were you know
major league baseball pitchers. They
actually went into a hiring freeze. So,
you've had a massive surge in AI
spending since the end of 2022
when we heard about this thing called
chat GPT.
And so, I think you're getting to the
point now where it's going to get a lot
more interesting where you have to start
to see some return on that. And the
results from from Nvidia last night, if
you really look at it, were a little bit
on the disappointment side. I mean, it's
amazing that the stock hung in as well
as it did because they actually missed
Wall Street's estimates for data center
revenues. Not by much, by just a
percent, but it's the first miss they've
had since we ever heard about this thing
called Chat GPT in 2022. So, yeah, it's
going to be more interesting between now
and I think the end of the year.
>> Well, I am curious about that. And we
should point out, I mean, we're coming
up on the three-year anniversary of
that. I think that was late November
2022, at least when it came to the
public's uh consciousness of it. And we
did hear uh Jensen Wong and his CFO talk
a lot about this on the conference call.
And one big component of this though has
been the idea at least in their
characterization that their future
growth is at least right now kind of
somewhat dependent not so much on the
companies buying their stuff but on
whether the governments here in the US
and around the world are going to allow
it to sell its stuff where it wants to
sell its stuff. Does it concern you that
at least as of today, it basically has
no market in China for its advanced
chips?
>> Well, here's the good news. There was no
revenues in China in the last quarter.
So, there's no real downside from that.
It's all upside. As they said on the
call when they gave the guidance, which
was just about, you know, a percent
above where consensus was, that guidance
was predicated with no China revenues in
that guidance. And if they get China
revenues, they believe that that'll add
an extra 2 to 5 billion to that guidance
that they gave, which would raise it by
about 6% or so. So, it's all upside if
you get it. If you're asking from a
longer term perspective, obviously the
more the US puts pressure on China, and
we've heard this over the last couple of
weeks, the Chinese government's
encouraging their companies to go ahead
and buy domestic Chinese AI products,
whether it's Deep Seek on the software
side or chips from Ascend to instead of
Nvidia chips. The government would like
Chinese companies using Chinese products
for obvious reason because they don't
want them dependent on US companies for
their technology. So from a longer term
basis, China's pushing towards
self-sufficiency, this just accelerates
the process. And if we're not willing to
sell them Blackwell chips, that's just
going to accelerate it even more. And so
that's kind of
>> something you have to think about for
the ultimate market share potential for
Nvidia in China and every other company
that wants to sell into China.
>> I'm curious your thoughts on kind of the
other players in this space. I mean, we
just got Dell earnings. Obviously,
they've been a big beneficiary of the
data center buildout. Uh there are a lot
of other companies that have benefited
from the AI infrastructure buildout,
whatever's going on with Nvidia
specifically, whatever's going on with
advanced chips, no one seems to think
that this AI buildout is somehow coming
to a halt, that it will continue. Are
are you in that camp?
>> Well, I'm not. Well, it depends if
you're talking short-term or long term.
In the short term,
I've been talking about or I started
talking about midl last year how you
were going to go through this plateauing
or digestion phase and training demand.
And you kind of saw that and what I mean
is if you go back and you look at what
happened when the three biggest
hyperscalers so Microsoft, Amazon and
Google reported their results for the
June quarter of 2024. The revenue
estimates all went down for the
September quarter of 2024. And when they
reported the December quarter of 2024,
the revenue estimates for all three of
those companies went down again for the
March quarter of 2024. Then you had
inference demand which really start to
pick up. So you had you know companies
like Google say hey we're seeing 50
times more token processing in the month
of May versus a year ago. And Google
talked about you know uh or sorry
Microsoft talked about five times more
tokens processed in the March quarter
versus a year ago. And then they started
to put up pretty decent numbers as as
inference demand, you know, the stuff it
takes to generate your answers overtook
the training demand.
>> And so that has kind of helped
transition the baton. But if MIT is
right and 95% of the enterprises
investing in AI are seeing zero return.
Yeah,
>> that's a problem when you're, you know,
almost three years into this AI buildout
since we heard about Chat GPT at the end
of 2022.
>> All right, Dan, great stuff. We have to
leave it there. Dan Niles, founder and
portfolio manager at Niles Investment
Management. And I just want to draw your
attention to two big movers in the after
hours trades. Amberella, which is a
maker of chips and kind of video
compression using AI. That's one of your
biggest gainers in the after hours
trade, but one of your biggest decliners
right now is GAP. The shares were down
as much as 11% now down 9%. They just
reported earnings. Comp sales did appear
to miss analyst expectations and a lot
of uh talk in this release right now
about the impact of tariffs. We're going
to have that conversation in depth when
we come back after the break right here
on Bloomberg.
Apparel maker Gap just reported
earnings. This has been a turnaround
story and up until today it had been a
relatively positive one. The shares down
about 8% in the after hours trade after
the company said comp sales in the
second quarter came in at 1%. Uh the
street was looking for almost 2% about
1.7%. Comp sales at Old Navy up 2% that
was better than expected. Comp sales at
Gap Global were up 4%. That was actually
better than expected but you did have
some weakness there in the Athleta
business that was down 9%. Now here's
the issue. The company providing a
forecast saying that net sales for the
current quarter will be in a range of
one and a half to two and a half
percent. That's a pretty wide range, but
it says the gross margin will be
impacted in a big way by at least by as
much, excuse me, two percentage points
because of the effect of tariffs.
Deborah Wines joins us right now, the
CEO of Corsite Research to talk a little
bit more about this. And we also, of
course, we had Elta Beauty shares up
there on the screen which seem to be
doing well. But let's start off with the
tariff impact here. That's a huge hit.
Two margins to have a two percentage p
percentage point hit and I am curious as
to why you don't think we saw a little
bit more mitigation by management there
to blunt that impact.
>> First of all, thank you for having me.
Secondly, like I said, it's not often
that my jaw drops and you just can't
believe the size of this number because
we haven't heard anything even close to
that from any other retailer or brand.
and you know the the fact that they
haven't had better kind of you know do
fuel tariff mitigation strategies that
they didn't talk about that more in the
press release I mean that says that this
is something that is almost beyond their
control which I would say is concerning
and I think the stock is reacting as
such.
>> Well that's what I'm curious I mean what
what would you actually expect to hear
uh out of uh Richard Dickerson on the
conference call and beyond because we're
we're already in the back to school
season. I mean anyone who had kids has
basically already done their back to
school shopping. We're already looking
ahead to the holiday shopping season.
And if this is a company already guiding
into the next three quarters with a hit
from tariffs, what levers, if at all,
would they have to pull?
>> I I mean, it would have to be on the top
line, but I think even that was
disappointing this quarter. And so, you
know, if we start to look at kind of a a
two-year stack, right, and they they've
had a kind of a lot long way that
they've like been digging out of, but I
I think that they are kind of flattening
out in terms of their the degree of
improvement in top line. And if you
can't work that down to to earnings,
right, through the bottom line and and
the number one thing you're calling out
is tariffs, I mean, let alone other
challenges like shrink, etc.,
It's it gives one cause for concern on
truly on the leadership there.
>> I am curious. I mean, you've been uh uh
in this space for a long time uh and you
understand how these retailers operate
and there there's always been challenges
over the years. If it's not tariffs now,
it was something 10 years ago and
something 10 years prior to that. What
are you seeing at other retailers in
their ability to manage the tariff
impact? What are they doing right if at
all?
>> That is a great question. So, we had
talked to a lot of our clients and it
was like get as much in as you can as
early as you can because it will not
only remove a lot of the uncertainty but
also right you you don't you won't be
faced with the same degree of potential
tariffs as others and I think you know
going back and forth I mean Ulta
obviously in a different space but they
saw an incredibly strong gross margin
this quarter and so and they have their
own brand as well and so there are there
are definitely levers to pull in terms
of you know supply chain risk tariff
risk and it just doesn't seem like that
was top of mind for for Gap at this
point which is quite surprising
>> we only have about 30 seconds left
Deborah unfortunately pricing power
where does that stand right now in the
retail space who has it
>> so I you know going back to earnings
last week we had expected to see you
know Walmart I think had talked about
pushing back on their vendors. We didn't
see as much as we would have expected,
but I think they've said they're they're
trying to kind of share some of the
burden. Yeah.
>> You know, another company, Tractor
Supply, has said, right, same thing.
They're they're working with their
vendors, but what we're seeing is it's
those kinds of companies that are seeing
significant opportunity to to really
share the pain. Yeah.
>> And I think that, you know, we'll
there'll be more to come.
>> All right. Thank you, Deborah. Corsite
Research CEO
Let's get right to our top three, the
people driving some of the day's most
talked about stories. And we start with
Xiinping Bloomberg reporting. China's
president quietly reached out to India
all the way back in March to test the
waters on improving ties. This, of
course, amid a lot of concerns here
about the US's trade policies toward
Beijing and India as well. Next up, back
here in the US, Susan Mes. She's the CDC
director, at least for now. She's been
ousted by the Trump administration,
according to the Trump administration.
This after clashing with RFK Jr. over
her views on vaccines. The Health and
Human Services Secretary RFK Jr. saying
that the CDC, which is under his
purview, is likely suffering from a
quote deeply embedded malaise. Third,
Lisa Cook, the Fed governor, filing a
lawsuit challenging President Trump's
attempt to fire her. her lawyers
suggesting an unintentional clerical
error may have been behind some of the
discrepancies on her financial
disclosure forms regarding at least two
mortgages that she took out back in
2021. Now, we've been following that
case and we continue to follow the
lawsuit now that Lisa Cook has filed.
So, too has Elliot signed. He's senior
litigation analyst for Bloomberg
Intelligence and he joins us here around
the desk. I want to kind of juxtapose
two sort of firings and I got to put
those in quotation marks. Lisa Cook over
at the Fed and Susan Monz over at the
CDC. When we talk about the legal
standing to push back on Trump's attempt
to ou these folks, who has a bigger leg
to stand on? Well, the the there are so
many cases concerning President Trump
firing commissioners of various
agencies, and we've seen a distinction
between the Federal Reserve and pretty
much every other agency, including the
CDC now because even last night you s
and what's interesting is Abby Lel is a
lawyer for both the CDC director Oh,
really?
>> and and Lisa Cook busy.
>> Yeah. And you saw um you saw uh the CDC
director's lawyers last night put out
tweets saying essentially conceding that
the president could probably fire her,
but they contested some of the the
procedural uh mechanisms that resulted
in her being removed um because it
didn't come from the president directly.
And so, you know, you really need to
contrast that with the Federal Reserve,
which the Supreme Court all the way back
in May
>> said is uniquely structured. It's sort
of more quasi private and as a result it
doesn't really fit under the president's
authority to remove those people at
will.
>> You've had a chance to look at Lisa
Cook's lawsuit.
>> What exactly is she saying in that
document? Well, so she's saying that the
Federal Reserve Act has a four cause
removal restriction, which again the
Supreme Court hinted in May is a
constitutional removal restriction, and
that the president hasn't satisfied that
standard because what he is accusing
Lisa Cook of doing is really just an
allegation. At this point, there's been
no investigation and he can't make that
determination solely on his own. There
has to be some sort of process. She has
to be given due process to contest these
allegations at a minimum. And none of
that has happened.
>> None of that has happened. There were of
several uh Trump administration
officials who came out and said that at
minimum Lisa Cook should I guess
effectively recuse herself in the
interim as this case plays out. I know
we're kind of in pre unprecedented
territory here, but is there some legal
precedent to say that you should not be
involved in policym while this legal
process plays out? Really, that's for a
court to decide. And we're gonna have a
court hearing tomorrow at 10:00 a.m. on
Lisa Cook's application for a temporary
restraining order, a TTRO, because
that's essentially what she's seeking.
You know, if you ask President Trump,
Lisa Cook is is fired. If you ask Lisa
Cook, she's still a Federal Reserve
Board governor because President Trump's
letter has no legal effect.
>> This matters a lot because we're three
weeks away from another Fed meeting.
Less than three weeks away, really, from
another Fed meeting. the decision
tomorrow is that effectively at least
for the short term going to be the
definitive decision as to whether she's
going to be participating in that
meeting in a couple of weeks
>> for the short term and we don't know if
the judge will decide tomorrow the
hearings tomorrow I think there's a good
chance the judge will decide on the TTRO
application tomorrow that will stay in
place for potentially 10 days or two
weeks um then Lisa Cook would either ask
for that to be uh elongated and you know
stay in place longer as a preliminary
injunction or even as a permanent
injunction um And presumably the
president will go to the DC circuit, the
appeals court um and ask for the TTRO to
be dissolved essentially.
>> All right. Uh Elliot Stein, uh our
litigation analyst over at Bloomberg
Intelligence and of course we will have
a full coverage of the results that come
out of that hearing tomorrow morning as
we continue our coverage on the close
this afternoon. A big question mark as
to whether Lisa Cook will actually be
part of the Fed's next policy meeting
September 16th and 17th. And there's a
possibility that a new Trump appointee
could also be part of that meeting.
Steven Myin, apparently the Senate is
now rushing to actually hold a hearing
on his nomination to the Federal Reserve
Board as soon as next week. All of this
coming against the backdrop of a PCE
inflation report that is set to come out
tomorrow morning. Francis Donald is the
chief economist over at RBC and she
joins us now. And Francis, there's a lot
to unpack here. We're talking about the
economy. We're talking about the data.
And of course, we're talking about a lot
of the politics swirling around the Fed.
I want to start with first this PCE
report. It's an inflation. It's a
personal consumption inflation
expenditures explation price index
report that most people think is going
to ratify this idea that the persistence
of inflation is still there. Is that
your outlook?
>> Yes. Uh but maybe not for the reasons
that others may be discussing. So all
the focus right now on inflation is
related to whether tariffs are going to
show up. Our take is that it's too early
for tariffs to show up because companies
still have to run down serious
inventories before we see numbers like
the PCE and the CPI start to show goods
inflation. What we're looking for in
this report is more signs of that
services inflation holding in too
strong, uncomfortably strong. And the
problem here is services inflation.
Well, the Fed is sensitive to that. It's
more nefarious and it has to do with
that tighter labor market. It's going to
be stickier. So, that's the challenge
and that's what we're going to be
looking for tomorrow. Not the tariff
story. That's a later 2025 story, but
how persistent is services side of the
picture. What did you make though of J
Pal's presentation about a week ago
where he seemed to put a little bit more
emphasis at least that was the
interpretation on the state of the labor
market rather than on tariffs and
inflation.
Well, that's the challenge. You and I
are used to that dual mandate heading in
the same direction at the same time, but
we are now in what we call stagflation
light, which is growth and labor that's
uncomfortably low, but inflation that is
uncomfortably high. The Fed could choose
from a range of indicators to cut or
frankly even hike if they were just
going off of the inflation side. So, we
have to listen really carefully to what
the biases that exist within this Fed
are. And clearly, this is a Federal
Reserve that has not ruled out a
September cut. Our take, however, is
that they're not going to have the right
data that permits that and it's going to
be hard to cut before December. But
again, the Federal Reserve can choose to
speak to a variety of different
indicators, for example, those recent
non-farm payroll numbers and say that's
enough for us to want to move. Now, I'll
just say this one thing, Roman. We are
still at 4.2% unemployment rate. That's
exactly where we were last year, and yet
inflation is crusting around 3%. That's
not exactly a clear-cut easing cycle
type of data landscape. So, the Fed can
navigate this, but they're going to have
to get really tricky with what kind of
words and data points they use to
justify That actually brings us though
to the makeup of the Fed and it could
look a little bit different in just a
couple of weeks times. Uh Steven Myron
who's been nominate is going to be
nominated to the Federal Reserve Board
could get a hearing as soon as next week
which would rush him onto the board
ahead of that meeting. And of course uh
the courts may have to actually decide
be the arbiter of whether Lisa Cook is
going to be in that room as well. Does
that matter to what the outcome might
actually be with regards to the monetary
policy decision on September 17th?
probably not for September 17th, but
absolutely when you're looking at some
of the potential erosion of that Fed
independence over time, it can't be
something that's entirely dismissed.
Call me a traditionalist, but for me, it
always comes down to no, not who's in
the positions, but what is the data
showing us? And our take is that that
upside uncomfortableness that happens in
the inflation is probably going to make
the Fed's job very difficult come
September. That's going to be what the
markets latch on to in addition to some
of the noise and the politics around the
Fed composition.
>> What did you make of the GDP data
revisions that we got today? Obviously
backwards looking, but we're talking
about a 3.3% growth rate. Under any
circumstance, that would be phenomenal
for a country our size. But it did seem
that the majority of that was driven by
investment spending, business spending I
should say, uh tied to technology and AI
that a lot of people don't necessarily
think is sustainable.
Well, let's say this. If you uh were in
a coma for the last 5 years, you woke
up, I told you GDP was 3.3%, the
unemployment rate was 4.2% and inflation
was above 2%. You'd say the economy is
booming. It's running almost on too hot
side of the picture. We wouldn't be
talking about material weakness in the
labor market. We wouldn't be talking
about a significant slowdown. Now,
looking forward, you're right. Some of
these factors that have supported growth
are going to slow down. We should be
looking at something more like 1 and
a.5% GDP. If you average out the second
half of the year, we're not going to see
capex that strong. Housing is
effectively in a recession. And that
highinccome consumer is showing some
signs of slowing. We're going to be
watching that personal uh spending
number tomorrow for that as well. But
it's really hard if you look at a blank
piece of paper and add in the data where
we are now to make justifications that
this economy is in serious trouble.
>> All right. Uh Francis got to leave it
there. Francis Donald is the chief
economist at RBC. 8:30 a.m. tomorrow
Washington time. We are scheduled to get
that PCE report and we should also point
as Elliot Stein just talked about a
little bit earlier. We're all expected
also tomorrow morning to get maybe
potentially uh uh some sort of decision
regarding Lisa Cook's status on the
Federal Reserve Board. As we take a look
here at the after hours trade and some
of the big gainers and decliners in that
space. Keep an eye on GAP. The shares
had been down as much as 12%. That
company saying it's going to see a major
tariff impact up ahead for the next
quarter. Those shares now down about 5%.
Meanwhile, Ulta Beauty also in the same
retail space saying it's not seeing the
same pressures and it's still seeing
pretty healthy consumer spending. A firm
and Dell moving in opposite directions
as we take a look at what's been going
on in the technology space and of course
the AI buildout. We'll be back in a
moment. This is Bloomberg.
Well, the college football season here
in the US is already underway. Though we
should point out the big games
ostensibly start today. A big game
tonight, a little bit later with Boise
State and South Florida and a marquee
matchup coming up on Saturday between
Texas and Ohio State. But a lot of
doctors out there are bracing for an
impact, an impact that maybe we didn't
see in the past. This is college
athletes raking millions of dollars
through their name, image, and likeness
deals. This means that team physicians
are now faced with a heightened risk and
liability for their decisions as to
whether to put folks back out on the
field. a precarious and increasingly
visible position for medical
professionals. Our next guest has a key
perspective on this issue. After all, he
is the president and CEO of the US
Council for Athletes Health and the
Chief Medical Officer for the Big 10,
Dr. James Borchers. Uh Dr. Borchers,
great to have you here on the program.
You know, I hadn't really thought about
this angle before. Uh as someone who
also played sports, I mean, we all kind
of know, you know, there's kind of this
idea that you get hurt as long as it's
not like a a broken broken bone or
something like that. you dust yourself
off and you get back out on there in the
field. But if you're a college player
who's making hundreds of thousands, even
potentially millions off your name,
image, likeness, is this going to now
force the hand of some of those medical
professionals with regards to the
decisions that they make?
>> Yeah. Well, first of all, thanks for
having me. You, you know, you're exactly
right. There's a new variable that's
been introduced into collegiate
athletics through name image and
likeness and revenue sharing and it is
this impact of finances and the
financial impact that some of these
athletes face if they are not on the
field. Um and so now physicians, medical
personnel are now looking at this
additional variable when an athlete may
not be able to return to the field. And
certainly there are questions now
because as you know these athletes are
not employees about what that means and
what it means for the medical
professionals and looking at what's
happened in professional sports what
some of the ramifications can be if
there's a disagreement about the
decisions that are made or the
recommendations that are made from those
team physicians or medical
professionals.
>> I am curious about how many cooks are in
this kitchen. I mean, you have a unique
perspective, not only being a medical
doctor and currently an adviser, but a
former player yourself. And I think
we're kind of the same generation. And
it was it seemed to be a decision back
in the days, usually between maybe the
head coach or uh the skills coach and
maybe that and whoever the the doctor
was on the field. How many other people
might end up having to be part of that
decision-making process today?
>> Well, I think there's definitely going
to be the representatives of the
players. You now have agents that are
involved or uh agencies that are
representing players and they're
certainly seeking out opinions of
physicians that are not part of the
university or the institution and
they're going to have an impact on what
the recommendations may be or there may
be a differing of opinions. And so
trying to reconcile that, working with
the athlete and making certain that the
best decision is made to get them back
out on the field, but understanding what
their decisions are when they think
about their financial decisions. And
we've seen some of this with opting out
of bowl games. We've seen some of this
when thinking about taking the next step
to the NFL, but we now have a new market
in collegiate athletics where
individuals are not only making a lot of
money, they're looking for opportunities
to make money either moving through the
transfer portal within their own
institution. So, there's a lot of new
variability to this college athletic
scene.
>> There's one other aspect to this that
has been raised as well. Beyond physical
health, there have been questions about
how you approach uh potential mental
health issues with these athletes,
particularly with some of the money that
might be at stake.
>> Absolutely. You're talking about in
collegiate athletics, you know, um late
adolescence, young adults who may not
have dealt with any of these variables,
the pressure now that is uh on them to
produce, not only to produce on the
field, but to produce financially. And
so there is significant um you know
stress. There can be significant
anxiety. You take an 18-year-old who's
performing on a big stage and now has
these sorts of financial um issues along
with it. There can be a lot of stress, a
lot of mental stress and certainly the
support needed there for those
individuals to be able to perform.
>> All right. Uh Dr. Borches have to leave
it there. Really appreciate you coming
on. I want to ask you who you're rooting
for in that Texas Ohio State game. Uh
Dr. James Borch is the president and CEO
of the US Council for Athletes Health.
Now, if you're a Sports Plan fan, this
is your time of year. This new era of
hyper popular college players coming to
the four this weekend with those big
games, Texas versus Ohio State. And
don't forget, you know, my alma mater,
Northwestern, of course, uh you know,
taking on uh you know, the mighty mighty
Bulldogs there. You also have the US
Open in full swing here in New York. And
all that a big reason of course to bring
all of the power players in sports under
one roof here at Bloomberg world
headquarters. Jason Kelly is the host of
the deal and power players and of course
he is the one leading that charge. You
have a big event here next week where
you're going to be a lot of athletes and
a lot of people in the business of
sports to talk about just how much it's
involved. And we were just talking with
him about name, image, likeness,
something that we couldn't talk about
just what you know three or four years
ago.
>> Totally. And it's at the core of what
we're doing. power players next
Thursday. We're very excited to bring
everybody here to Bloomber World as you
say as the US Open is happening. And
speaking of which, Maria Sherupova, she
just the Tennis Hall of Fame. She'll be
here in conversation with David
Rubenstein. But to the point of college
sports, we're going to have the athletic
directors from Ohio State, UCLA,
Dartmouth, and Duke all talking about
this unbelievably new era. I was
fascinated by that conversation with Dr.
Borchers. I hadn't even thought about
that. I mean, I do this for a living. I
had even thought about that.
>> Yeah. And it really I mean it complic
it's good for in a lot of ways for the
players obviously uh and there's been a
lot of talk over the years about making
the college football business more
equitable but it does introduce just a
different dynamic into the decisions
that have to be made. So when you get up
there and you start to talk to these
folks I mean the types of questions
they're going to be asking them are they
going to be amongst the line of how to
protect these players how to maximize
their value? I mean what's the balance?
I think it's yes and I mean I I I think
what we really are starting to see and
it it was interesting again to listen to
that conversation.
>> We're all figuring out how this is going
to work. I mean one of the questions I
have and Janet Lauren you know our
colleague is going to be leading that
conversation with the ads.
>> One of her questions I know is going to
be how much are you paying these
players? How you know how are you
actually paying them? Are you worried
they're going to leave? You know are
these prices going to go up? you know,
there's a settlement that each, you
know, uh, school that's bought into this
has about $20 million to to pay players.
Is that going to be enough going
forward? You know, you have players who
between NIL and what they're getting
paid by their schools are making, you
know, 1012 million.
>> Well, one thing I'm I'm interested in
with with your event next week, I mean,
you go back, you know, probably when we
were kids, I mean, there were kind of
three sports more or less. I mean, you
know, football, baseball, basketball,
and maybe hockey, depending on your
region, but now we're talking about the
WNBA. women's basketball has become this
big force. You have a lot of uh MLS, you
know, Major League Soccer in this
country has now become a big business
and you're going to have a couple of
folks from that uh that realm also on
stage.
>> Exactly. Right. So, we'll have Don
Garber who is the commissioner of the of
Major League Soccer and Cindy Con who
runs US soccer. Keep in mind a year from
now we will be on the back half of the
World Cup. It's going to be here in
North America. So, we we've got to talk
to them. I mean, one of the questions I
have to be honest with you, Raine, is
why aren't we talking more about the
World Cup? I mean, it feels like I sort
of have to remind myself this is coming.
I feel like if you and I were sitting in
London, it's all would we'd be talking
about a year out. So, where's the hype?
You know, how big of an event um is this
going to be? So,
>> particularly because we just had the the
club World Cup title here in the United
right here in New York.
>> Exactly. And and you know, when we last
had the World Cup here in the United
States in 1994, that gave birth to the
MLS. So, what is this gonna give birth
to? Is this finally going to be, you
know, this has been, you know, the next
big thing, soccer? Yeah. As long as
we've been around.
>> All right. Uh, Jason, something to look
forward to for next week here on
Bloomberg television and beyond. Jason
Kelly, the host of the deal and power
players. And you can catch our coverage
of the power player summit next week
with some of those names he just talked
about like Maria Sherupova, Justin Tuck,
and Carl Anthony Towns. All right,
before we go to break, I just want to
bring you an update here on some
breaking news involving Caterpillar. The
shares plunging here in the aftermarket
down 3% after the company now
articulating the impact of tariffs on
its business. Basically, the company
says that it sees a net impact for the
full year of 1.5 to 1.8 billion and says
that that will take its operating profit
margin down to the bottom of its
previously of its previous range that
hit had guided for. Though it does say
there will be no impact on sales or its
revenue outlook. So again, they're
saying this will be a margin story, but
a pretty big one of at least $1.5
billion dollars. This is Bloomberg.
Some breaking news here on the Centers
for Disease Control and Prevention here
in the United States. The Washington
Post reporting that the Trump
administration is now pushing James
O'Neal to take over the CDC. This after
the Trump administration moved to ou CDC
director Susan Monorance. James O'Neal,
of course, has been a close ally of
Peter Teal and actually ran Teal's
foundation uh for at least about three
years a few years ago. We'll try to get
you some more details on that and the
team at Balance of Power. I'm sure we'll
have some more details as well as we
close out our coverage here on the close
with a push ahead to some of the things
that could move the markets tomorrow,
including some earnings out of Alibaba
and BYD. Of course, two big Chinese
companies with two uh big imprints here
on the global picture. We're going to
get the economic data, the PCE price
index at 8:30 a.m. time. University of
Michigan sentiment numbers at 10:00 a.m.
And don't forget midnight tonight. That
dimminimous exemption that has been in
place all going all the way back to the
1930s, that's going to be lowered from
$800 to $100 starting at midnight. Could
have a big impact on the e-commerce
sector. That does it for us here on the
close. But stick around. The
intersection of what's going on on Wall
Street and Washington, that comes up
next on Balance of Power.