Stocks Hit by Tech Rout on Eve of Fed Day | Bloomberg: The Close 03/18/2025
♪ ANNOUNCER: THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ♪ ALIX: LIVE FROM STUDIO 2 IN NEW YORK, I'M ALIX STEEL. SCARLET: AND I'M SCARLET FU. WE ARE KICKING YOU AFTER THE CLOSE. ALIX: IT TOUGH DAY FOR THE EQUITY MARKET.
LET'S LOCATE WHERE WE ARE SEEING THE BIGGEST BREAKDOWN. TAG. NASDAQ IS SLIGHTLY OFF THE LOWS OF THE SESSION BUT STILL PRETTY UGLY, LED LOWER BY THE MAG SEVEN. SNP OFF 1%. WHERE DO YOU GO IN SAFETY?
BY THE VIX? GOLD CONTINUES TO HOLD ONTO THAT RECORD RARELY. UP TO $35 PER OUNCE, WELL OFF THAT THREE THOUSAND DOLLAR LEVEL. DEFINITELY THAT RISK-OFF TO. SCARLET: STOCKS RESUMING THEIR SELLOFF
AFTER THE TWO-DAY REPRIEVE, AS THE U.S. EXCEPTIONALISM NARRATIVE FADES. YOU SEE THIS IN BACK OF AMERICA'S LATEST INVESTOR SURVEY WHICH SHOWS U.S. ALLOCATION IN EQUITIES FALLING BY THE MOST ON RECORD.
A FEW MONTHS AGO THE S&P AND NASDAQ WERE SCALING NEW HEIGHTS IN THE HOPES THAT PRESIDENT TRUMP'S POLICIES WOULD STROKE GROWTH BUT UNCERTAINTY HAS NOW TAKEN CENTER STAGE. >> THE TARIFF RATE WILL BE ABOUT 13%. PREVIOUSLY IT WAS 3%. THOSE ARE THE BUILDING BLOCKS -- SLOWER GROWTH, HIGHER TARIFF RATE, AND SLIGHTLY LOWER P/E MULTIPLE ASCRIBED TO THE YEAR-END GROWTH FOR NEXT YEAR. SCARLET: THAT GROWTH HE ASKED OF THE MARKET IS UNDER THE MOST SELLING PRESSURE TODAY AND ALL THIS YEAR, MAG SEVEN NAMES IN THE BEER MARKET AND STUCK AT SIX MONTHS LOADS, IT WITH NO RELIEF EVEN AFTER JENSEN HUANG'S COMMENTS.
M&A NOT HELPING EITHER, WITH GOOGLE DOWN, DESPITE ANNOUNCING ITS BIGGEST PURCHASE EVER, A 32 BILLION DOLLAR ALL-CASH BID FOR CLOUD SECURITY STARTUP WHEREAS. NORMALLY INVESTORS WOULD LOOK FOR SOOTHING WORDS FROM THE FED, CULMINATING IN A RATE DECISION ABOUT 23 HOURS FROM NOW. BUT JAY POWELL AND COMPANY WOULD BE HARD-PRESSED TO OFFER REASSURANCES WHEN THEY, TOO, HAVE NO IDEA WHAT WILL HAPPEN WITH TARIFFS.
THAT SLOWS DOWN THE GROWTH WHEN INFLATION IS STILL AN ISSUE. ALIX: AND THAT INFLATION ISSUE MIGHT BE CRYSTALLIZED APRIL 2 WHICH IS WHEN WE GET THE RECIPROCAL TARIFFS. STAY WITH ME. THIS IS THE VIX CURVE, FUNCTION CCRV . THIS IS WHERE WE ARE RIGHT NOW IN A SPOT AND THIS IS WHERE THE CURVE PANS OUT IN THE NEXT COUPLE OF MONTHS. THIS IS WHERE WE WERE A MONTH AGO, LOOK WHERE THE CURVE HAS RELATED AT THE SPOT LEVEL, BUT ALSO COME APRIL AND MAY OF 25. A HUGE JUMP IN EXPECTATIONS FOR THE VIX. THAT SAYS THAT POTENTIALLY, APRIL 2 WILL BE THAT DECIDING
FACTOR. WHAT WILL LEAD THE MARKET AND WHAT WILL MOVE THE MARKET UNTIL WE GET TO THE PIVOTAL DATE? WILL YOU JUST HAVE TO BATTEN DOWN THE HATCHES AND WAIT UNTIL WE GET PART OF THAT RECIPROCAL TARIFF DATE AND THEN GAME OUT HOW TO PLAN FOR THE PORTFOLIO? SCARLET: ALL GOOD QUESTIONS. OF COURSE APRIL 2 IS TWO WEEKS FROM NOW. LET'S KICK THINGS OFF WITH THE GLOBAL HEAD OF STRATEGY WITH CREDITSIGHTS. WEENIE, TALK ABOUT APRIL 2 AND
WHAT THAT MEANS FOR THE CREDIT MARKETS POINT OF VIEW. WHAT DO YOU SEE INCLUDED MARKET IN TERMS OF POSITIONING BEFORE APRIL 2? >> IN TERMS OF POSITIONING, PEOPLE ARE MAY BE CONCERNED ABOUT APRIL 2, BUT NOT PANICKED. MAY BE THREE TIMES THE CHARM. WE HAVE ALREADY HAD THIS FIRE DRILL A COUPLE OF TIMES THIS YEAR. IT IS APRIL 2 THE BIG ONE? I DON'T REALLY UNDERSTAND HOW
WE ARE SUPPOSED TO ASCERTAIN WHAT THE REALITY OF POLICY CERTAINTY IS GOING TO BE. BUT PEOPLE ARE CERTAINLY STARTED TO PAY ATTENTION, BECAUSE WHILE WE HAVE THIS POLICY UNCERTAINTY, WE ALSO HAVE ECONOMIC INDICATORS THAT HAVE STARTED TO SO, OFTEN WHICH IS WHAT. INVESTORS ARE TURNING MORE TO. SCARLET:
WHEN YOU SAY THAT CREDIT INDICATORS ARE SHOWING THE ECONOMY STARTING TO SOFTEN, I KNOW MANUFACTURING IS NOT THE LION'S SHARE OF THIS ECONOMY, BUT MAYBE IT IS AN INDICATOR? WINNIE: I THINK STAGFLATION LIGHT IS HOW WE HAVE BEEN CHARACTERIZING OUR EXPECTATIONS FOR THIS YEAR. PRICING PRESSURE IS NOT COMING DOWN, WE ARE NOT SEEING THIS IMMACULATE DISINFLATION, IF ANYTHING WE ARE SEEING INCREMENTAL PRICING PRESSURE BECAUSE OF TARIFFS AND POLICY UNCERTAINTY, AND THINGS THAT NEEDED MORE TIME TO RECALIBRATE THEMSELVES AFTER THE COVID SUPPLY SHOCKS AND ALL THOSE THINGS THAT HAPPEN. WHILE AT THE SAME TIME, CONSUMER MOMENTUM HAS SLOWED DOWN. WHETHER THAT WAS GOOD TO SLOW DOWN WITH OR WITHOUT TARIFFS IS A HARD QUESTION. IT PROBABLY WOULD HAVE STARTED TO SLOW DOWN JUST BECAUSE INFLATION HAS BEEN SUCH A SIGNIFICANT HEAD TO A LOT OF CONSUMER SPENDING. ALIX: SO THE RESULT OF ALL OF THIS HAS BEEN MONEY MOVING OUT OF THE U.S. INTO EUROPE, RIGHT,
PARTICULARLY WITH THE UNCERTAINTY. IT'S BEEN MOST PRONOUNCED IN EUROPEAN EQUITIES. DO YOU EXPECT THAT FLOW TO CONTINUE AND DOES THAT BLEED THROUGH INTO THE U.S. CREDIT, TREASURY MARKET, AND WHAT IS THE IMPLICATION? WINNIE: WE ARE EXPECTING MARGINAL DOLLARS TO INVEST, PROBABLY NOT GOING INTO THE U.S. RIGHT NOW. THE REALITY IS THE REST OF THE WORLD IS LONG THE U.S. -- THAT IS JUST THE REALITY, WE
ARE THE BIGGEST AND MOST LIQUID MARKET, THE U.S., BUT THERE IS A LOT LESS POLICY CERTAINTY HERE THAN THERE IS A GERMANY AT THIS POINT, SO PEOPLE ARE THINKING, OK, IF U.S. EXCEPTIONALISM HAS TO BE RECONSIDERED THAN HE WOULD NEED TO ALIGN OURSELVES WHERE VALUATIONS STILL OFFER YOU A LITTLE BIT OF SOMETHING AND ALSO WE HAVE SOME INCREMENTAL POLICY CERTAINTY. ALIX: YOU ARE NOT SEEING SELLING TODAY AND BUY? WINNIE: WE HAVE SEEN SOME CHOPPY FLUIDS FOR THE U.S., ESPECIALLY THE RETAIL SIDE OF THINGS. WE HAD A FEW WEEKS OF MUTUAL FUND OUTFLOWS IN THE INVESTMENT-GRADE MARKET WHICH IS ALWAYS SOMETHING YOU HAVE TO PAY ATTENTION TO BECAUSE IT MARKS A SEA CHANGE IN TERMS OF HOW PEOPLE ARE THINKING ABOUT THE MARKET AND WHERE TO INVEST.
BUT WE HAVEN'T SEEN A FLEE. SPREADS ARE STILL VERY TIGHT. CONSIDERED ECONOMIC DATA THIS YEAR WHICH HAS DEFINITELY BEEN UNDERWHELMING ON THE CONSUMER SIDE OF THINGS, AND THEN THE BLIP OF A JOBS REPORT LAST EARLY AUGUST, CREDIT SPREADS BLOWOUT MUCH MORE THAN THEY HAVE NOW. THAT TELLS ME THAT PEOPLE ARE NOT NECESSARILY TOTALLY RUNNING FOR COVER AND FLEEING THE U.S. SIDE OF THINGS. SCARLET:
SPREADS ARE VERY TIGHT, ESPECIALLY IN INVESTMENT-GRADE, I'M WONDERING WHAT CORRELATION THERE SHOULD BE BETWEEN HIGH-GRADE CREDIT AND SMALL CAPS. SMALL CAPS ARE DOWN 15% SINCE NOVEMBER 20 FIVE. IT IS THE STOCK MARKET OVERREACTING, OR ARE ACCREDITED INVESTORS BEING COMPLACENT? WINNIE: CREDIT INVESTORS ARE NOT NECESSARILY DERBENT THEY HAVE BEEN QUITE OK TO KIND OF HANG OUT AND SAY, BALANCE SHEETS ARE IN GOOD SHAPE, THERE HAS BEEN NO NEED TO RE-LEVERAGE. WE HAVE NOT SEEN MANAGEMENT TEAM IS DOING REALLY CRAZY THINGS AND SPINOFFS AND RE-LEVERAGING SHARE BUYBACKS. BUT YIELDS ARE GREAT. NEAR TERM, WE THINK THERE COULD BE INCREMENTAL SPREAD VOLATILITY BECAUSE SOME RISK PREMIA PROBABLY STILL NEEDS TO BE ADDED TO THE EQUATION.
PEOPLE ARE REALLY BULLED UP ON ANIMAL SPIRITS. AT LEAST THINGS MIGHT STILL MANIFEST, JUST NOT TODAY AND PROBABLY NOT BEFORE APRIL 2 AND MAYBE EVEN UP BEFORE THE END OF THIS YEAR. SCARLET: YES, LOTS OF QUESTIONS ON THAT FRONT. I BELIEVE THIS MORNING THERE ARE 10 ISSUERS LINING UP TO 70'S. A LOT OF SUPPLY COMING TO THE MARKET. MAYBE BEFORE APRIL 2 AS WELL. IS THERE ENOUGH DEMAND TO BLOW
UP ALL THE SUPPLY? WINNIE: SO FAR, YES WHEN YOU LOOK AT HOW DEALS HAVE BEEN ABSORBED, IT HAS BEEN FINE. MAYBE NOT AS GREAT AS LAST YEAR WHEN THERE WAS INSATIABLE DEMAND ESPECIALLY FOR INVESTMENT-GRADE PAPER. I THINK PEOPLE ARE LOOKING AT THE YIELD ENVIRONMENT AND SAYING THINGS MAY GO UP, THEY MAY GO DOWN, LIKE, AND MIGHT HAVE ANOTHER OPPORTUNITY TO BUY AN IG NEW ISSUE AT FIVE POINT 5%. LAST YEAR SO PEOPLE WERE NOT THINKING THAT WAS THE CASE. THEY WERE TAKING 4.5% IS THE NEXT STOP, SO I THINK THERE IS A LOT OF INVESTORS BEING MORE CRITICAL WITH HOW AND WHEN THEY ALLOCATE THEIR CAPITAL TO THE PRIMARY MARKET. BUT IT IS NOT A BUYER ESCORT STRAIGHT. SCARLET:
WINIFRED CISAR, THANK YOU SO MUCH. A LOT MORE COMING UP. ANALYSTS IN THE SNACK SPACE ARE WARNING OF INCREASED MACRO PRESSURES ON THE SECTOR. ALL EYES ON GENERAL MILLS RESULTS ARE TOMORROW. WE WILL SPEAK TO ONE OF THOSE ANALYSTS OVER WHETHER THE FOOD GIANT CAN REPORT RESULTS THAT WILL MAKE INVESTORS CUCKOO FOR COCOA PUFFS. ALIX: AS THE TECH ROUT CIRCUIT DEEPENS, WE WILL TALK TO ROSS GERBER ABOUT TESLA.
SCARLET: AND BY THIS TIME TOMORROW, WILL HAVE A CLEAR VISION OF THE FED'S PATH FORWARD. WE WILL BREAK DOWN WHAT TO EXPECT FROM CHAIR POWELL WITH BETSEY STEVENSON, PROFESSOR OF PUBLIC POLICY AND ECONOMICS AT UNIVERSITY OF MICHIGAN. THIS IS "THE CLOSE" ON BLOOMBERG. ♪
ALIX: NVIDIA STOCK NOT HAVING A LOT OF SUPPORT DESPITE THE FACT THAT CEO JENSEN HUANG TOOK TO THE CONFERENCE STAGE TODAY WHERE HE ENTERED THEIR NEXT CHIP UPGRADE IS WHEN YOU'RE OUT. HERE TO DISCUSS IS BLOOMBERG TECHNOLOGY'S CAROLINE HYDE. NOT GONNA LIE WHEN I LOOK AT THE HEADLINES, I DON'T UNDERSTAND WHAT IT MEANS.
FILTER THE NOISE. WHAT IS THE TOP TAKEAWAY? CAROLINE: TOP TAKE AWAY IS THAT JANSEN CANNOT RALLY THE CROWD EVEN WITH A WHOLE HOST OF ANNOUNCEMENTS. WHETHER HE IS TRYING TO BLESS YOU THAT THE NEXT SCALING IS VISITING MODELS, THE FACT THAT THEY GO OFF AND COME BACK WITH A COMPANY'S ABILITY TO RETURN YOUR TASKS ULTIMATELY, SAYING THIS IS WHAT THE BLACKWELL ALTRA WILL BE A MEETING FOR, THE NEXT ITERATION THAT COMES OUT OF THE SECOND HALF OF THE YEAR. BUT DON'T EVEN THINK ABOUT
THAT, BECAUSE WE HAVE THE VERA RUBIN FOR YOU THAT WILL, IN 2026. WE ARE THINKING ABOUT 2026, 2027 ROLL OUT FOR THAT PARTICULAR, 3X COMPUTER POWER. BUT THEN THERE IS ALSO THE FIRST EVER FOR AN ADDITIONAL MODEL FOR PHYSICAL AI, FOR ROBOTICS. HE IS TALKING ABOUT DEALS WITH GM THERE THEY WILL HAVE AN AUTOMOTIVE FOCUS. THERE IS A BIT OF SOMETHING FOR EVERYONE. IT STILL, THE STOCK IS DOWN
2.6%. PEOPLE ARE PAST THE HYPE FACTOR, I THINK. SCARLET: I THINK HE SUMMARIZED IT PRETTY WELL BY SAYING THAT PEOPLE ARE PART OF THE HYPE FACTOR. [LAUGHTER] WHEN IT COMES DOWN TO IT, WHAT DO INVESTORS WANT TO HEAR? CAROLINE: I THINK MAYBE PEOPLE HAVE FRONT RUN THIS. HE HAS THIS IN THIS MANNER SAID THAT THEY ARE LIKE APPLE, EVERY YEAR THERE WILL BE A NEW SET OF CHIPS FOR INNOVATION.
WHAT HE NEEDS TO CONVINCE PEOPLE OF IS THE FACT THAT AS THESE MODELS GET EVER MORE EFFICIENT WITH FEWER TRIPS -- THINK OF WHAT HAPPENED WITH COHERE, THIS WEEK OR THE END OF LAST WEEK, BOTH GOOGLE AND COHERENT RELEASED NEW MODELS TRAINED ON JUST ONE H100 CHIP. OR ONLY TWO. WE ARE NOT MEETING THE COMPUTER POWER. THEN BLOOMBERG INTELLIGENCE PUT OUT THAT THEY SEE COMPUTER NOT ONLY GOING UP, BUT DEMAND FOR THESE POWERFUL CHIPS IS HERE TO STAY. AND THINK ABOUT WHAT THIS TARGET ANNOUNCEMENT TODAY IS,
WE UNDERSTAND FROM ORACLE THAT THEY ARE BUSY ON THE FIRST SET OF MANUFACTURING PLANTS IN TEXAS WILL HAVE 40,000 OF THESE CHIPS. THAT IS A PHENOMENAL AMOUNT OF DEMAND COMING FOR GPUS FOR NVIDIA AND JENSEN HUANG. I DON'T SEE COMPUTE DEMAND GOING ANYWHERE, BUT THE MARKET HAS STARTED TO BASICALLY COOL OFF AND IT WILL TAKE A LOT TO TURN IT AROUND. ALIX:
BUT ALSO WHEN YOU HAVE THESE TIGHT SUPPLY CYCLES, IF YOU HAVE A NEW CHIP EVERY YEAR DOES THAT CANNIBALIZE OR PEOPLE JUST BOUGHT? THEN YOU HAVE THE MARGIN ISSUE WHICH WE SAW IN THE LAST COUPLE OF QUARTERS. IT'S HARD. CAROLINE: JENSEN LAUGHED ABOUT THAT WHEN HE WAS SPEAKING IN FRONT OF HIS FAN BASE. THIS IS LIKE MECCA, WOODSTOCK, LIKE THE AI SUPER BOWL, EVERYONE IS IN CALIFORNIA CELEBRATING THE GTC. HE IS SAYING, MY SALES PEOPLE ARE GOING TO HATE THIS, BUT WHY ON EARTH ARE YOU GOING TO NEED THE GRACE HOPPER? LOOK AT WHAT MY BLACKWELL WILL DO FOR YOU. HE IS CANNIBALIZING HIMSELF ON THE PAST ITERATIONS. SO I'M SURE THAT IS SOMETHING
THE INVESTOR BASE WILL NEED TO GET THEIR HEAD AROUND AS WELL. SCARLET: ABSOLUTELY, CAROLINE HYDE, THANK YOU FOR MAKING SENSE OF THAT, AND LYDIA ITS GTC CONFERENCE, GIVING US AROUND UP THERE. CAROLINE: SORRY, NOT 40,000, 400,000 CHIPS WILL BE NEEDED. SCARLET: MY GOODNESS. BIG NUMBERS. THE OTHER STORY WE DIDN'T GET TO WORK GOOGLE MAKING ITS BIGGEST-EVER PURCHASE, $32 BILLION IN CASH FOR CYBERSECURITY STARTUP WIZ, EVEN THE FTC UNDER TRUMP HAS SIGNALED IT WILL TAKE A LOOK AT THESE DEALSM YOU KNOW WHY? EXTRA PREMIUM. EXTRA BILLIONS. WASN'T IT IN THE 20 BILLIONS OR SO WHEN THEY FIRST CAME OUT AND ASKED FOR THE DEAL AND WHEREAS WAS LIKE NO, NO, NO, SORRY, WANT TO DO IT. NOW, 32 BILLION -- THAT IS
WORTH THE PREMIUM. SCARLET: ALRIGHT, MORE COMING UP. INCLUDING A LOOK AT THE LATEST ANALYST CALLS.
WE WILL TAKE A LOOK AT WHAT IS HAPPENING WITH GENERAL MILLS. THIS IS BLOOMBERG. MY♪ SCARLET: TIME NOW, A LOOK AT THE BIG MEMBERS OF THE BACK OF ANALYST RECOMMENDATIONS.
LET'S START WITH COINBASE. BERNSTEIN GIVEN IN PERFORM RATING. THE ANALYST SAYS RECORDING THIS WILL GAIN FROM STRONG REGULATORY TRAIL WINDS FROM THE TRUMP ADMINISTRATION'S PROMISE TO MAKE AMERICA THE CRYPTO CAPITAL OF THE ROAD. SHARES DOWN 3.4%. ALIX: BLOOM ENERGY. MIZUHO WITH A $20 PRICE TARGET. IT SAYS THE COMPANY BENEFITS
FROM RAPID DEMAND OF DATA CENTER GROWTH BUT ANY A GRANT FROM AI HAS ALREADY BEEN PRICED IN. THE STOCK ESCROW VALUATION. SHARES ARE DOWN. SCARLET: AND THIS COMPANY LOST ITS OVERWEIGHT RATING AFTER IT WAS CUT TO EQUAL WEIGHT. BARCLAYS' ANALYST SAYS THE FRITO-LAY BUSINESS HAS SUFFERED SIX SEQUENTIAL QUARTERS OF VOLUME DECLINED AND TELLS INSPECTORS TO EXPECT SOFTWARE QUARTERS AHEAD AS MACRO PRESSURES CONTINUE TO WEAR THE SECTOR. SHARES ARE DOWN 1.3.
ALIX: PERCENT. THOSE ARE SOME OF OUR TOP CALLS. ALIX: PEPSI IS NOT THE ONLY CONSUMER STAPLES BREAD STRUGGLING. THE OVERALL SENTIMENT IN THE PACKAGE FOOD SNACKING SPACE IS OVERWHELMINGLY PESSIMISTIC AND THAT IS WHY INVESTORS WILL BE LOOKING AT GENERAL MILLS RESULTS ARE TOMORROW FOR WHAT TO EXPECT THIS YEAR. WE ARE JOINED BY NICK MOODY, GLOBAL CO-HEAD OF RESEARCH AT RBC CAPITAL MARKETS. WHAT ARE YOU LOOKING FOR TOMORROW? NICK: I'M LOOKING FOR IT SUCH GREAT NEWS. I THINK WE WILL GET A CONFIRMATION THAT THE ENVIRONMENT IS TOUGH.
COMING INTO THE YEAR, THERE WAS EXPECTATIONS AND HOPE THAT THINGS WOULD IMPROVE. IT LOOKS LIKE THINGS ARE ACTUALLY GETTING WORSE. THEY'RE AS REAL REASONS WHY THAT IS HAPPENING. OBVIOUSLY, INFLATION CONTINUES
TO CONSUMERS, BUT WE HAVE ADDED ISSUES WITH OTHER HEADLINES AROUND JOB LOSSES ESPECIALLY AT THE FEDERAL LEVEL AND EVEN IF YOU ARE A PRIVATE SECTOR WORKER, YOU'RE PSYCHOLOGY AND CONSUMER BEHAVIOR IS STILL BEING IMPACTED BY THE NEWS. AND THEN THERE IS HISPANIC CONSUMERS, WE ARE SEEING SENTIMENT AMONG HISPANICS AT EFFECTIVELY IMMERSED THEM HAVE TO ADAPT LETTER TO SOME OF THE IMMIGRATION NEWSSTAND RHETORIC WE HAVE BEEN SEEING OUT OF THAT ADMINISTRATION. ALIX: A LOT TO UNPACK. PART OF IT IS THE MACRO ISSUES WHICH WOULD PROBABLY AFFECT CONSUMER STAPLES. DOES GENERAL MILLS HAVE THE RIGHT PRODUCT MIX AT THIS TIME? >> THEY HAVE DONE A GOOD JOB RESHAPING THEIR PORTFOLIO. THEY HAVE GOTTEN BIGGER INTO THE PET CARE CATEGORY WHICH IS A GOOD CATEGORY. UNFORTUNATELY, THEIR BRAND BLUE
BUFFALO HAS BEEN KIND OF SQUEEZED IN THE MIDDLE DR. RAMO: IF YOU HAVE CONSUMERS TRADING DOWN TO A DISCOUNT-VALUE BRANDS. LOOKING FOR AFFORDABILITY. YOU HAVE THINGS THAT ARE HIGHER ELSE, LIKE FRESH PET WHICH GENERAL MILLS DOES NOT PLAY IN HER LEG MEANINGFUL WAY. LONG TERM IT IS STILL A GOOD
PLACE TO BE. THE OTHER SIDE OF THE BUSINESS, THEY HAVE DONE A GOOD JOB INNOVATING, BUT THEY NEED TO BE MORE DISRUPTIVE IN TERMS OF MOVING WHERE CONSUMERS ARE MOVING. HAVING PROTEIN INTERIORS IS IMPORTANT, THAT IS AN ATTRIBUTE CONSUMERS ARE LOOKING FOR -- IN CHEERIOS. WHAT ABOUT PROTEIN-HEAVY SNACKS AND FOOD PRODUCTS THEY COULD POTENTIALLY GET INTO? THERE IS A LOT OF OPPORTUNITY FOR THEM, BUT IT'S TOUGH TO INVEST WHEN THE TOP LINE IS UNDER SO MUCH PRESSURE. SCARLET: SO THE PLAN TO RAISE PRICES, PROBABLY THAT RUNNER HAS ENDED, FOR NOW BECAUSE A-LISTERS ARE SO INFLATION AND PRICE-CONSCIOUS.
IT IS GENERAL MILLS DOING ENOUGH WHEN IT COMES TO MIXING UP THE DIFFERENT VOLUMES AND PACKAGE SIZES? NIK: I WOULD SAY THE PACKAGE FOOD SECTOR IN GENERAL, IS BEHIND THE HOUSEHOLD, PERSONAL CARE, BEAUTY AND BEVERAGE INDUSTRIES. THERE IS A LOT OF UPSIDE, BUT IT TAKES TIME. YOU HAVE TO ADJUST TO THE MANUFACTURING FOOTPRINT AND MANUFACTURING FACILITIES TO MAKE SMALLER SITE PRODUCTS THAT CONSUMERS MAY BE LOOKING FOR. IT'S NOT LIKE YOU CAN JUST ALL OF A SUDDEN YOU'RE PUMPING OUT DIFFERENT PACK SIZES THAT CONSUMERS FIND MORE AFFORDABLE. I THINK THEY ARE ON THE RIGHT TRACK JIB.
THERE IS STILL A LOT OF WOOD TO CHOP IN TERMS OF GETTING THEM WHERE THEY NEED TO BE IN TERMS OF THE SCALE OF THESE PRODUCT OFFERINGS. SCARLET: THE OTHER THING THAT HAS WEIGHED OVER A LOT OF THESE COMPANIES IS THE FACT THAT RFK, JR. MET WITH TOP EXECUTIVES FROM MAJOR FOOD COMPANIES THIS WEEK. WHAT KIND OF OUTCOME DO YOU
EXPECT FROM THAT? IS THIS SOMETHING GENERAL MILLS IS LIKELY TO DISCUSS OR SHARE ON THE CALL TOMORROW? NIK: I'M NOT EXPECTING THEM TO BE EXPLICIT IN TERMS OF WHAT CAME OUT OF THAT MEETING. THERE WILL PROBABLY BE A LOT OF BACK-AND-FORTH. I WOULD SAY THAT, WE ALL KNOW THAT CERTAIN ATTRIBUTES IN SOME OF THESE PRODUCTS, NOT HAVING THEM AT MIGHT BE BENEFICIAL TO THE CONSUMER, TO THE ACTUAL HEALTH PROFILE OF THAT PARTICULAR PRODUCT. I THINK THE ISSUE HAS BEEN THAT NO ONE WANTS TO MOVE FIRST BECAUSE YOU DON'T WANT A DISADVANTAGE. BUT IF EVERYONE HAS TO REMOVE A CERTAIN DAY FROM THEIR PRODUCT, THAT EVERYONE IS ON THE SAME FOOTING. THAT IS SOMETHING INVESTORS NEED TO THINK ABOUT. WE HAVE A UBIQUITOUS AND
UNIFORM KIND OF APPLICATION OF WHAT IS ALLOWABLE IN PRODUCTS. I THINK THESE COMPANIES CAN REFORMULATE AND DO IT TOGETHER AND THEN THERE IS NO DISTINCT ADVANTAGE THAT ONE PRODUCT MIGHT HAVE OVER THE OTHER IN TERMS OF POTENTIAL COLOR OR TASTE OF THE PRODUCT. SO, I THINK IF WE SEE THAT, IT WILL NOT BE AS IMPACTFUL AS MANY INVESTORS MIGHT THINK.
ALIX: TAKING ALL OF THAT INTO ACCOUNT, WHAT COMPANY IN THIS SPACE IS DOING THINGS RIGHT THAT IS WORTH INVESTING IN RIGHT NOW, BECAUSE AS YOU POINTED OUT, THERE ARE A TON OF HEADWINDS THAT DON'T SEEM TO GO ANYWHERE ANYTIME SOON. NIK: ON THE PACKAGED FOOD SITE, IT'S A TOUGH CALL. THERE IS NOT A LOT OF OPTIMISM, AT LEAST FROM MY SIDE, I HAVE BEEN NEGATIVE FOR THE PAST YEAR AND A HALF. I DON'T SEE A FUNDAMENTAL BOTTOM AT THIS POINT.
NO QUESTION, SENTIMENT IS AS NEGATIVE AS I HAVE SEEN IN 25 YEARS. BUT THE FUNDAMENTALS STILL HAS SOME DOWNSIDE. MY TOP IDEAS ARE BEVERAGE RELATED. THERE IS A LOT MORE OPPORTUNITY
AND OPTIONALITY IN THE BEVERAGE SPACE. MONSTER ENERGY,. , DR. PEPPER. PACKAGE FOOD IS JUST A TOUGH PLACE TO INVEST IN RIGHT NOW. ALIX:
I GUESS YOU BEN STILLER'S NEW DRINK? THE LOW SUGAR STILL THERE? [LAUGHTER] IT IS IN YOUR ZONE? NIK: PERHAPS. ALIX: THANKS A LOT, NICK MODI AT RBC CAPITAL MARKETS. TAKE A LOOK AT THE MARKET, WE ARE OFF THE LOWS OF THE SESSION BUT BARELY.
NASDAQ UNDERPERFORMING, BUT THE EQUAL WEIGHTED INDEX AND RUSSELL AND MID-CAPS WRITE DOWN, BUT NOWHERE NEAR WHERE WE SEE IN TECH. SCARLET: GOES BACK TO THE IDEA THAT PEOPLE ARE ROTATING OUT OF BIG-CAP TECH. IN 23 TO COME UP WITH THE S&P AND NASDAQ DECLINED DOUBLE DIGITS. NO PROTECTION THAT YEAR. ALIX: HE MEMORIZED ALL OF THOSE STATISTICS? SCARLET: THE NUMBERS WERE SO BIG! [LAUGHTER] ALIX: COMING UP, WE WILL ABOUT ANOTHER UNDERPERFORMING STOCK. WHY INVESTORS ARE PICKING EV'S AT THE BIG WINNER FOR AI, BUT TESLA STOCKS JUST CAN'T GET BIG. WE WILL TALK TO ROSS GERBER OF
GERBER KAWASAKI NEXT. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ THE S&P IS OF ONE PERSON. BOND MARKET, A LITTLE BIT MIXED.
A BIT OF BUYING BUT OBVIOUSLY NOT A LOT OF MOVEMENT. THIS IS BLOOMBERG. >> IT IS JUST ABOUT 3:30 P.M. ON NEW YORK. THIS IS THE COUNTDOWN TO THE CLOSE. ALIX: WE’VE HAD HAD A WHOLE HALF HOUR OF TELEVISION. WE HAVEN’T SPOKEN ABOUT THE FED BECAUSE THAT FEELS LIKE IN SOME WAYS A SIDE BAR BECAUSE JAE POWELL’S GOAL WILL BE TO NOT MAKE WAVES. SCARLET: YEAH. HE’S LIKE, I CAN’T BELIEVE I
HAVE TO HOST A NEWS CONFERENCE AND NOT ANSWER ANY QUESTIONS THE ENTIRE TIME. ALIX: THE INTERESTING PART IS THE SOFT DATA HAS CONTINUED TO COME IN AND BEEN REALLY ROLLING OVER. IN THE PAST THE FED HAS LOOKED AT THE YOORT OF MICHIGAN -- UNIVERSITY OF MICHIGAN, PARTICULARLY THE INFLATION EXPECTATION, AND THEY HAVE MOVED ON TARIFF FEARS. HOW DO YOU MOVE AROUND THAT? SCARLET: YOU HAVE TO WAIT FOR THE HARD DATA AND SOME ANNOUNCEMENT FROM THE WHITE HOUSE. THAT’S WHAT IT COMES DOWN TO. ALIX: TECH CONTINUES TO SELL OFF. META JUST BECAME THE LAST STOCK IN THE GROUP TO TURN NEGATIVE BUT IT’S TESLA’S PERFORMANCE THAT’S REALLY DRAGGING DOWN THAT INDEX. SHARES ARE DOWN ROUGHLY 44%
YEAR TO DATE. JOINING US NOW FOR MORE ON THIS IS THE PRESIDENT AND C.E.O. OF GERBER KAW SACKY. HE INVESTS IN TESLA AND CURRENTLY OWNS 262,000 SHARES. ARE YOU BUYING ON THE DIP? >> NO. I’M NOT BUYING ON THE DIFFICULT.
YOU KNOW, UNFORTUNATELY I WISH I COULD TELL YOU TESLA WAS CHEAP. BUT AT 110 TIMES EARNINGS, IT’S STILL THE MOST EXPENSIVE STOCK OF THE MAG-7 AND IN THE ENTIRE S&P BY MY STANDARDS OF ANY LARGE CAP. SO THIS IS THE PROBLEM THAT TESLA HAS. IF YOU COMPARE ITS VALUATION TO PES CAN LIKE NVIDIA OR MICROSOFT, TESLA COULD GO MUCH LOWER THAN IT IS TODAY AND THAT’S WHAT WE’RE WORRIED ABOUT. ALIX:
WOULD YOU BE SELLING THEN WHEN WE DECLINE OR ARE YOU COMMITTED TO THIS POSITION? >> WELL, I DON’T LIKE TO TALK TOO MUCH ABOUT TRADING BECAUSE MY COMPLIANCE PEOPLE DON’T LIKE IT. BUT THAT SAID, WE’VE BEEN SELLERS OF TESLA OVER THE QUARTER AND YOU’LL SEE US HAVE LOWER SHARES IN OUR NEXT FILING. SCARLET: TESLA’S INVESTOR BASE IS PRETTY VARIED. YOU HAVE RETAIL INVEST, THEN A LOT OF FOLKS WHO JUST LIKE MUSK MUSK. ARE PEOPLE ROOTING FOR DOGE TO HIT A SPEED BUMP HERE SO THAT ELON CAN THEN RETURN TO TESLA AND STEER THE COMPANY BACK ENCORES? >> WELL, I WAS JUST HAVING THIS DISCUSSION WITH TWO OF MY GREAT CLIENTS WHO ARE JUST MASSIVE TESLA LOVERS AND HUGE AMOUNT OF THEIR ASSETS THEY HAD PUT INTO TESLA EARLY AND MADE LOT OF MONEY AND STILL HAVE A TON OF TESLA STOCK AND WE WERE TALKING ABOUT THIS EXACT ISSUE WHICH IS IF ELON CAME BACK TO TESLA, THAT WOULD BE GREAT. THAT’S EXACTLY WHAT TESLA NEEDS.
BUT HE’S NOT. AND HE’S GOING TO STAY AT DOGE AND HE’S ONE OF THE MOST POWERFUL PEOPLE IN THE WORLD NOW AND IT’S DEFINITELY GOTTEN TO HIS HEAD AND I JUST DON’T SEE HIM CHANGING, GOING BACK. I ACTUALLY THINK HE’S COMPLETELY NEGLECTING TESLA AT THIS POINT. SCARLET: THAT RAISES ANOTHER INTERESTING ISSUE WHICH IS, DO THEY HAVE A SUCCESSION PLAN THERE? I’M NOT SAYING HE’S GOING TO LEAVE TESLA BUT DOES HE HAVE PEOPLE TO MINE THE STORE WHEEL -- MIND THE STORE WHILE HE’S GONE.
>> THIS IS WHY I’M UPSET. ALL THE PEOPLE THAT WERE MINDING THE STORE FROM TWO YEARS AGO GOT FIRED. AND THERE’S A WHOLE NEW TEAM OF PEOPLE RUNNING TESLA AT THIS CRITICAL PERIOD OF TIME AND SO HE’S MADE HIMSELF INDISPENSABLE FOR TESLA. THE TEAM BEFORE WITHDREW -- WITH DREW AND ZACH AND MARTIN, THEY EASILY COULD HAVE BEEN RUNNING TESLA AND DOING A GREAT JOB AND IF ANYTHING I THINK ELON SHOULD APPOINT A NEW C.E.O. TO RUN TESLA SO THAT HE CAN
JUST FOCUS ON WHAT HE’S DOING IN THE GOVERNMENT AND ALSO SEPARATE HIMSELF FROM TESLA WHICH IS THIS GREAT COMPANY THAT’S TRYING TO SOLVE CLIMATE CHANGE. IT’S NOW ASSOCIATED WITH ELON IN SUCH A NEGATIVE FASHION THAT IT’S DESTROYING THE SALES OF THEIR MAIN PRODUCT WHICH IS SELLING E.V.’S. SO, YOU KNOW, SOMETHING’S GOT TO CHANGE AND I THINK IT’S GOING TO HAPPEN THIS YEAR. ALIX: SO THERE’S A COUPLE THINGS. ONE, OBVIOUSLY IS THE MUSK EFFECT AND THIS TIME TO THE DOWN SIDE. AND THEN THE OTHER IS THE OVERVALUATION WHICH WE TALKED ABOUT. BUT THEN THE THIRD IS THE ACTUAL SALES.
IN CHINA, IN THE U.S., IN GENERAL. AND WE SAW AN R.B.C. ANALYST TALKING, LOWERING HIS PRICE TARGET TODAY SAYING LOWER ESTIMATES FOR THE PRICING OF FULL SELF-DRIVING TECHNOLOGY WHICH WAS SUPPOSED TO BE A CATALYST FOR THAT STOCK. HOW MUCH OF IT IS JUST FUNDAMENTAL? >> THAT’S WHAT I’M SAYING. I THINK A LOT OF IT IS
FUNDAMENTAL. WE CAN GET INTO ALL THE EMOTIONAL REASONS WHY TESLA ISN’T DOING WELL AND THEN YOU CAN LOOK AT HOW THESE EMOTIONAL REASONS ACTUALLY EFFECT THE ACTUAL SALES AND PROFITS OF THE COMPANY BECAUSE IT IS NOW. AND THEN HOW THAT EXTRAPOLATES OUT INTO THE VALUATION AT 110 TIMES EARNINGS, MAYBE AT SOME POINT INVESTORS AREN’T GOING TO GIVE THIS HUGE PREMIUM BASED OFF ALL THE POTENTIAL OF ELON MUSK WITH ROBOTS AND ALL THIS STUFF. AND ALL OF A SUDDEN TAKE THIS COMPANY BACK TO EARTH BECAUSE HONESTLY, AFTER WATCHING THE NVIDIA PRESENTATION, YOU SAY, WELL, NVIDIA’S DEFINITELY THE BEST COMPANY IN THE WORLD. SO IT TRADES 40 TIMES EARNINGS. I CAN BUY IT WITH 40 TIMES EARNINGS, THIS IS THE CHEAPEST OF THE MAG-7 OR THE BIG CAPS OR THE TECH COMPANIES. AND IT’S GROWING THE FASTEST.
SO IT SEEMS ABSURD THAT TESLA WOULD HAVE TWO TO THREE TIMES THE VALUATION OF NVIDIA WHEN THERE’S SO MANY THINGS GOING WRONG. AND THAT’S WITH A WE’RE WORRIED ABOUT, THAT THE FUNDAMENTAL STORY COMES BACK TO REALITY AND THAT COULD BE VERY COSTLY TO CURRENT TESLA SHAREHOLDERS. ALIX: I TOTALLY HEAR YOU ON THAT. WHAT WOULD STABILIZE IT ASIDE
FROM MUSK COMING BACK? FUNDAMENTALLY WHAT WOULD STABILIZE IT? >> THE MOST IMPORTANT THING WITH ANY COMPANY IS EARNINGS AND EARNINGS GROWTH AND THE CERTAINTY OF THAT EARNINGS GROWTH. SO CERTAINLY IF YOU WANT THE STOCK TO STABILIZE, YOU’VE GOT TO HAVE SALES NOT CONTINUING TO GO DOWN. YOU KNOW, SO SALES AND PROFITS GOING DOWN IS DEFINITELY NOT GOING TO STABILIZE THE STOCK. SO THEN YOU CAN ASK YOURSELF THE QUESTION, HOW CAN WE GET TESLA SALES TO INCREASE WHILE THEY HAVE A NEW MODEL OUT, THEY HAVE A NEW TRUCK OUT, THEY HAVE THE BEST PRODUCTS IN THEIR INDUSTRY, THE BEST SOFTWARE IN THEIR INDUSTRY.
THE BEST PRODUCTS, LIKE, HOW CAN SALES BE GOING DOWN? WHAT SHOULD WE DO TO RECTIFY THAT SITUATION? AND WHY IS IT HAPPENING? AND WE KNOW EXACTLY WHY IT’S HAPPENING. AND THERE ARE MANY SOLUTIONS TO RECTIFY IT. BUT TESLA ISN’T RUN BY THE BOARD OF DIRECTORS. IT’S RUN BY ELON MUSK.
AND SO IT’S JUST NOT GOING TO HAPPEN. SCARLET: RIGHT. THERE’S NO URGENCY BECAUSE HE’S NOT FEELING PARTICULARLY URGENT ABOUT IT. >> HE JUST DOESN’T CARE. SCARLET:
THAT’S ANOTHER WAY OF PUTTING IT. ALIX: HE CARED ENOUGH FOR PRESIDENT TRUMP TO BUY A TESLA. >> HE CARED ENOUGH TO GET TRUMP TO TRY TO SELL SOME TESLAS BUT I DON’T KNOW IF THAT HELPED AT ALL AND THEN HE DIDN’T PICK A CYBERTRUCK. IT’S SUPER LAME. HE SHOULD HAVE PICKED CYBERTRUCK. COME ON. TRUMP. PICKS AN OLD MODEL S. GUY DOESN’T EVEN DRIVE. AND THE OTHER THING IS, IF
YOU’RE GOING TO DO A SALES EVENT, GET A GUY WHO DRIVES, YOU YOU KNOW? SCARLET: ALL GOOD POINTS AND MAYBE IT’S SOMETHING THEY CAN CONSIDER FOR THE NEXT TIME AROUND. >> I HOPE MAGA BUYS A LOT OF TESLAS. THEY HAVE TO BUY ABOUT 100,000 MORE TESLAS THIS QUARTER. SCARLET: THAT’S A GOOD NUMBER TO KEEP IN MIND. ROSS, AS YOU LOOK AT THE MAG-7 AND ALICS STARTED US OFF SAYING META IS THE LAST MAG-7 NAME TO TURN NEGATIVE FOR THE YEAR. WHICH OF THE SAME NAMES ARE -- SEVEN NAMES ARE WORTH BUYING RIGHT NOW ON THE DIP? >> I DID BUY SOME META IN MY FUND G.K.
THIS WEEK AND I OPENED A POSITION DURING THE CORRECTION BECAUSE META HAS COME DOWN TO A MUCH MORE REASONABLE VALUATION AT 25 TIMES FORWARD EARNINGS AND ALTHOUGH THEIR EARNINGS GROWTH ISN’T EXPECTED TO GROW. THIS YEAR, I THINK THAT THEY’VE KIND OF GUIDED DOWN ENOUGH AND I DON’T LIKE META BUT I’VE GOTTEN TO THE POINT WITH THEIR A.I. AND WHAT THEY’RE BUILDING AND THEIR DOMINATION AND THE POSITION THEY HAVE IN THE WORLD IS PRETTY DOMINANT NOW AND THEIR PROFITS ARE REALLY FLOWING.
SO WE ADDED METAL TO THE PORTFOLIO RECENTLY AND I THINK IT’S A GOOD STOCK TO OWN. SCARLET: SO YOU CAN’T HELP BUT LIKE META IN MANY WAYS THEN. ROSS, THANK YOU SO MUCH FOR JOINING US TODAY. ROSS GERBER OF GERBER KAWASAKI. COMING UP, IT IS OUR STOCK OF THE HOUR. WE’RE LOOK AT SHARES OF ABBOTT LABS. THEY ARE DOWN AFTER R.F.K. JR., THE SECRETARY OF HEALTH
AND HUMAN SERVICES DEPARTMENT, ANNOUNCED PLANS TO MEET WITH BABY FORMULA MAKERS AS PART OF OPERATION STOCKER SPEED. STOCK IS DOWN ABOUT 1% RIGHT NOW. THIS IS "THE CLOSE" ON BLOOMBERG. ♪ SCARLET: WE’RE LOOKING AT SHARES OF ABBOTT LABS. DOWN ABOUT 1%. THIS COMES ON THE NEWS THAT HEALTH AND HUMAN SERVICES SECRETARY R.F.K.
JR. IS PLANNING TO MEET WITH EXECUTIVES OF U.S. INFANT FORMULA COMPANIES TO DISCUSS NUTRITIONAL STANDARDS AND SUPPLY CHAIN ISSUES. THIS IS ACCORDING TO BLOOMBERG REPORTING. SO JOINING US NOW TO DISCUSS IS BLOOMBERG’S MADISON MULLER. CAN YOU TELL US MORE ABOUT THIS?
BECAUSE PRESUMABLY THIS WOULD BE GOOD NEWS FOR CONSUMERS OF BABY FORMULA AND THEIR MOMS. AND THE STOCK HOWEVER STILL DOWN. >> YEAH. SO THIS FOLLOWS MEETINGS THAT R.F.K. JR. HAS HAD WITH FOOD COMPANY
C.E.O.’S AND REALLY FITS IN HIS MAKE AMERICA HEALTHY AGAIN INITIATIVE TO REVIEW INGREDIENTS THAT ARE USED IN THE U.S. SUPPLY CHAIN FOR FOOD AND FOR BABY FORMULA AND SO WE HEARD FROM SOURCES THAT THIS MEETING WAS HAPPENING TODAY. AND THEN H.H.S. JUST CAME OUT WITH A STATEMENT SAYING THAT THEY ARE GOING TO REVIEW THE INGREDIENTS THAT ARE USED IN FORMULA SUPPLIES. THEY’RE ALSO GOING TO TEST PRODUCTS FOR HEAVY METALS LIKE ARSENIC AND LEAD WHICH IS SOMETHING THAT IS DONE BUT I THINK THAT THE STANDARDS MAYBE ARE NOT WHERE R.F.K. JR. WOULD WANT THEM TO BE. SO THIS IS SOMETHING THAT, I MEAN,
IT COULD HELP. IT COULD BE A GOOD THING. WE ALL WANT HEALTHY PRODUCTS FOR THE SMALLEST KIDS AND BABIES. SO IT’S JUST -- IT’S A MATTER OF WHAT THIS WILL LOOK LIKE IN TERMS OF POLICY, HOW IT’S GOING TO EFFECT THE MANUFACTURERS, IF IT’S GOING TO LEAD TO HIGHER COSTS FOR THEM. SOME OF THOSE THINGS WE STILL DON’T KNOW. ALIX: FOR ABBOTT IN PARTICULAR, HOW
MUCH OF THEIR BUSINESS IS INFANT FORMULA AND WHAT ARE THE MARGINS FOR THIS COMPANY IN THAT? HOW DOES THAT TRICKLE THROUGH? >> THEY HAVE INFANT FORM LAXER THEY HAVE DIAGNOSTICS, THEY HAVE MEDICAL DEVICES AND INFANT FORMULA STILL IS A BIG PART OF THEIR BUSINESS. OR NUTRITION IN GENERAL. THEY ALSO MAKE ADULT NUTRITION PRODUCTS. THEY MAKE A PROTEIN SHAKE FOR PEOPLE ON GLP-1 DRUGS, ANOTHER HOT TOPIC. SO IT IS STILL A BIG PART OF THEIR BUSINESS BUT OVER THE LAST FEW YEARS, WE’VE SEEN ISSUES WITH CONTAMINATION, RECALLS, THERE WAS A NATIONWIDE BABY FORMULA SHORTAGE IN 2022 INTO 2023 THAT WAS VERY BAD. AND SO THEY’VE SORT OF DEALT WITH SOME OF THIS SUPPLY CHAIN UNCERTAINTY REGULATORY ISSUES BEFORE AND I GUESS WE’LL SEE WHAT ENDS UP HAPPENING NOW. SCARLET: ABBOTT MAKES SIMILAC AND THERE’S ANOTHER BIG BABY INFANT FORMULA COMPANY. IN TERMS OF THE BIG PLAYERS IN
THE MARKET, IS THAT IT? ARE THESE THE TWO COMPANIES THAT WE’RE REALLY LOOKING AT HERE? >> YES. THERE ARE THREE MANUFACTURERS OF BABY FORMULA IN THE U.S. AND SOME OF THIS CONSOLIDATION IS WHY WE SAW SUCH BAD SHORTAGES AFTER ABBOTT ISSUED A RECALL BACK IN 2022 IS BECAUSE THESE ARE REALLY THE BIG -- THE ONLY BIG PLAYERS AND WE’VE SINCE SEEN SOME SMALLER, INDEPENDENT COMPANIES SORT OF STEP IN TO FILL THE GAPS BUT IT IS REALLY STILL DOMINATED BY THESE THREE MAIN COMPANIES. SO THAT’S SORT OF ONE OF THE ISSUES THAT LED TO THE SHORTAGES. ALIX: HOW SOON DO YOU THINK WE’LL GET GUIDANCE FROM THE H.H.S.? >> THAT’S ANOTHER GOOD QUESTION. I THINK THIS ADMINISTRATION’S
MOVING REALLY QUICKLY. SO WHERE THEIR PRIORITIES LIE, WE’RE SEEING A LOT OF ACTION HAPPENING AND THEY’RE LAYING OUT THESE INITIAL PRIORITIES AFTER MEETING WITH THE BABY FORMULA MANUFACTURERS AND I GUESS WE’RE STILL JUST GOING TO WAIT FOR MORE DETAILS BUT WITH THE PACE THAT THIS ADMINISTRATION’S MOVING AT, WE CAN PROBABLY EXPECT DO SEE SOME MORE SOON. ALIX: THANK YOU SO MUCH. REALLY APPRECIATE IT. MADISON MULLER JOINING US. SPEAKING OF, LOOKING AT THE MARKET, THE S&P IS OFF BY A LITTLE OVER 1%. SO OFF THE LOWS OF THE SESSION,
BUT NONETHELESS IT’S GOING -- IT LOOKS TO BE RELATIVELY UGLY CLOSE ON THIS TUESDAY. SCARLET: IT WILL PROBABLY STAY AT THESE LEVELS GIVEN WE HAVE THE FOMC DECISION COMING OUT TOMORROW AT 2:00 P.M. AND WE TEND NOT TO SEE A LOT OF MOVEMENT IN THE LAST 24 HOURS BEFORE THAT HAPPENS. ALIX: WE MAKE A LOT OF CORRECTION ABOUT THE -- HAY ABOUT THE CORRECTION WE SAW IN THE S&P BUT YOU CAN MAKE THE ARGUMENT AND SOME PEOPLE DO THAT THIS IS A NORMAL CORRECTION FOR TECH BECAUSE IT WAS SO VALUED AND THERE WAS SO MUCH INTEREST IN IT THAT IT WAS A NORMAL RERATING FOR A SECTOR THAT WAS REALLY OVERHYPED. SCARLET: THINGS DON’T JUST GO STRAIGHT UP? ALIX: APPARENTLY NOT. THAT’S WHAT WE’RE SEEING VERSUS
A FUNDAMENTAL CORRECTION. WE’RE GOING TO TAKE YOU TO CLOSING BELLS. >> I THINK THAT STAGNATION-LIGHT IS HOW WE HAVE BEEN CHARACTERIZING OUR EXPECTATIONS FOR THIS YEAR. PRICING PRESSURE IS NOT COMING DOWN. WE’RE NOT SEEING THIS EMACK LATE DISINFLATION. IF ANYTHING, WE’RE SEEING SOME INCREMENTAL PRICING PRESSURE BECAUSE OF TARIFF AND POLICY UNCERTAINTY AND ALSO JUST THINGS THAT NEEDED MORE TIME TO KIND OF RECALIBRATE THEMSELVES AFTER THE COVID AND SUPPLY SHOCKS AND ALL OF THESE THINGS THAT HAVE HAPPENED. SCARLET: THAT WAS GLOBAL HEAD OF
STRATEGY WITH CREDITSIGHTS KICKING OFF THE SHOW. THIS IDEA THAT JUST FOUR WEEKS AGO WE HAD THE STRONG ECONOMY AND NOW PEOPLE ARE TALKING ABOUT STAGNATION-LIGHT. THEY’RE UTTERING RECESSION. ALIX: BUT AGAIN, IT’S STILL TECH
LEADING THE WAY DOWN. PARTICULARLY WHEN IT COMES TO TODAY. AND META ROLLING OVER NOW, ERASING ALL ITS GAINS FOR THE YEARS. YOU LOOK AT THE EQUAL WEIGHTED INDEX AND THE RUSSELL AND THEY’RE NOT AS TERRIBLE. THEY’RE STILL HOLDING IN SOMEWHAT OK. SO I JUST -- IT REALLY RAISES THE QUESTION TO ME, IS THIS A STAGNATIONARY TRADE AND FEAR OR IS THIS JUST A RERATING OF SOME HIGH FLYERS? SCARLET: A CORRECTION. A CORRECTION TENDS TO HAPPEN,
RIGHT? DOWN 10% FROM YOUR HIGHS. LET’S MOVE ON AND BRING IN OUR NEXT GUEST HERE. SHE IS SINEAD COLTON GRANT. CHIEF INVESTMENT OFFICER AT B.N.Y. HEALTH. IF THE STOCK MARKET WAS PRICED FOR CORRECTION, PERFECTION, AT THE END OF 2024, AND WE’VE NOW FALLEN 10% SINCE THEN, CERTAINLY FOR THE S&P 500, MORE, FOR THE MAG-7 SPECIFICALLY, WHAT IS THE STOCK MARKET PRICE FOR NOW IN 2015 IN MID MARCH? >> IT’S A GREAT QUESTION. AND LET’S REMEMBER THAT WE ALSO HAD STRONGER EARNINGS IN 2024 SO SOME OF THE REASON WHY WE’RE SEEING MARKETS MOVE A LITTLE LOWER IS BECAUSE SOME OF THAT WAS PULLED FORWARD INTO 2024. THERE’S A LITTLE BIT MORE
UNCERTAINTY IN THE MACRO ENVIRONMENT. MARKETS ARE FINDING IT SOMEWHAT CHALLENGING TO GRAPPLE WITH TARIFFS AND FRANKLY WE DON’T REALLY HAVE A FRAMEWORK YET. THAT’S WHY APRIL’S GOING TO BE SO IMPORTANT.
IF WE HAVE A FRAMEWORK ON HOW TARIFFS WILL BE APPLIED AND WE CAN BUILD FROM THERE, THEN I THINK YOU’LL SEE MARKETS TURN A LITTLE BIT MORE CONSTRUCTIVE. SCARLET: WHAT IS THE FRAMEWORK FOR NOW THOUGH? ASSUMING WE SEE MORE OF WHAT WE HAVE SEEN THUS FAR WHICH IS APRIL 2 COMES AND WHATEVER TARIFFS ARE GOING TO TAKE PLACE GET KICKED DOWN THE ROAD TO MAYBE MAY 2 OR MAY 3. HOW DO YOU -- WHAT DO YOU DO IN THE MEANTIME WHEN EVERYTHING IS IN A HOLDING PATTERN? >> WELL, LOOK, YOU ASSESS THE PROBABILITIES. AND FOR US, WHAT THAT MEANS IS THAT THIS YEAR GROWTH WE THINK IS GOING TO BE A LITTLE BIT LOWER THAN WE HAD THOUGHT A FEW MONTHS AGO. SO WE’VE SHAVED OFF ABOUT A HALF A PERCENT FROM THE MIDPOINT FOR EXPECTATIONS.
WE THINK IT’S GOING TO BE SOMEWHERE BETWEEN 1.5% AND 2% FOR THE FULL YEAR. AT THE SAME TIME INFLATION A LITTLE BIT HIGHER. SO A MID POINT OF 3%. AGAIN, WE’RE SEEING PRICES A LITTLE BIT STICKIER BUT WE ALSO HAVE TO TAKE INTO ACCOUNT THE TARIFFS THAT HAVE BEEN PUT IN PLACE. SO I WOULD AGREE THERE’S AN S WORD ON THE HORIZON BUT IT’S SLOWING, NOT STAGNATION. ALIX:
IF YOU LOOK AT WHAT’S DONE WELL THIS YEAR WITHIN THE S&P, HEALTH CARE AND ENERGY AND UTILITIES HAVE DONE WELL. ON THE DOWN SIDE IT’S CONSUMER DISCRETIONARY AND TECH. HOW DO YOU POSITION THEN FOR THE ENVIRONMENT THAT YOU JUST LAID OUT? >> WELL, LOOK, TECH TENDS TO DO WELL OR TENDS TO DO BADLY WHEN YOU HAVE ECONOMIC UNCERTAINTY. RIGHT? IT TENDS TO BE OVERINDEXED TO ECONOMIC GROWTH. SO NOT A SURPRISE THAT YOU SEE IT PERFORMING AS IT IS.
WE LIKE FINANCIALS, WE ALSO LIKE UTILITIES. SO WITH FINANCIALS THEY ARE BENEFITING FROM THE RATE CURVE, THEY’RE ALSO BENEFITING FROM THE POTENTIAL FOR LOOSER REGULATION, MORE M.N.A. ACTIVITY. WITH UTILITIES, THEY’RE VERY INTERESTING.
THEY HAVE SOME BOND-LIKE QUALITIES THAT HOPE IT DIVERSIFY PORTFOLIOS IN TIMES LIKE THIS. BUT WE ALSO SEE THAT THEY’VE GOT LONG-TERM BENEFITS WITH A.I. WE’RE HEARING ABOUT DEMAND FOR POWER FROM DATA CENTERS. SO THERE’S A VERY NICE UPLIFT THAT YOU CAN GET FROM THE UTILITIES SECTOR AS WELL. BUT LOOK, TECH, CONSUMER DISCRETIONARY, WHEN THERE WERE ANY QUESTIONS ABOUT THE HEALTH OF THE CONSUMER, THOSE ARE SECTORS CERTAINLY DISCESSIONARY WILL BE -- DISCRETIONARY WILL BE HIT. ALIX: WE HAVE SEEN, THIS GOES BACK TO FINANCIALS, NOTHING’S HAPPENING, RIGHT? LIKE M.N.A. IS REALLY STUCK.
I.P.O.’S ARE STUCK. NOTHING SEEMS TO BE MOVING BECAUSE OF THE UNCERTAINTY. DOES THAT WIND UP CHANGING YOUR OUTLOOK FOR FINANCIALS? BECAUSE THE GOOD STUFF JUST HASN’T COME YET. >> WHAT WE’VE BEEN HEARING FROM THE ADMINISTRATION IS THAT TARIFFS ARE FIRST. THEN WE’RE GOING TO TALK ABOUT TAXES AND DEREGULATION. AND WHEN YOU THINK ABOUT THE
PREVIOUS TRUMP ADMINISTRATION, IT WAS THE OTHER WAY AROUND. WE GOT THE TAX CUTS FIRST AND THEN BY THE TIME THAT TARIFFS CAME AROUND, THERE WAS A CUSHION. AND SO WHAT WE’RE EXPECTING IS THAT BY THE TIME WE GET INTO THE SECOND HALF, THE PICTURE IS MUCH CLEARER AND TARIFFS ARE IN THE REAR-VIEW MIRROR TO AN EXTENT.
YES, THERE’S AN IMPACT ON INFLATION BUT THEN WE’RE FOCUSED ON HOW THE ECONOMY IS GOING TO EXPAND AND GROW. SCARLET: THAT’S WHAT THE TRUMP ADMINISTRATION WANTS PEOPLE TO FOCUS ON AS WELL. THEY TALKED ABOUT HOW TRUMP DOESN’T OWN THE ECONOMY UNTIL 12 TO 18 MONTHS IN. WE’VE SEEN MONEY LEAVING U.S. STOCKS AND THEY’RE GOING OUTSIDE THE U.S. BORDERS. THEY’RE GOING TO EUROPEAN STOCKS, FOR INSTANCE. AND THAT’S CONTRIBUTING TO
DOLLAR WEAKNESS AND EURO STRENGTH. IS THIS THE START OF A NEW TREND OR IS THIS JUST KIND OF A HICCUP? >> WE HAD SOME REALLY SURPRISING NEWS FROM GERMANY WHERE THEY WERE GOING TO EXCLUDE DEFENSE SPENDING FROM THEIR BUDGET CALCULATIONS. THAT’S ENORMOUS. IT’S PROMPTED A HUGE EUPHORIA IN TERMS OF EUROPEAN STOCKS THAT WE’VE SEEN SINCE THE START OF THE YEAR. BUT THERE IS A LONG WAY TO GO FROM THAT DECISION TO ACTUALLY IMPLEMENTATION AND ONE OF THE BIG HEADWINDS THAT EUROPE HAS HAD FOR QUITE SOME TIME IS REGULATION. RIGHT? IT’S JUST HARD TO GET THINGS DONE. IT’S HARD TO BUILD BUSINESSES. AND THAT’S WHAT WE NEED TO SEE
CHANGE AS WELL. IF YOU SEE THAT CHANGE TOO, THAT IS VERY, VERY SIGNIFICANT. BUT WE’RE NOT THERE YET. SCARLET: WE’RE NOT THERE YET BUT PEOPLE ARE POSITIONING AS IF THIS IS THE TRADE TO GO IN ON. EVERYONE’S PILING INTO EUROPEAN DEFENSE STOCKS.
TALK A LITTLE BIT ABOUT HOW HEADLINES LIKE PUTIN AND PRESIDENT TRUMP’S CONVERSATIONS HELPS DRIVE THAT OR DOESN’T DRIVE THAT. BECAUSE WE’RE GETTING BITS AND PIECES OF NEWS, YOU KNOW, TRICKLING OUT DAY IN AND DAY OUT THAT DOESN’T GET US ANYWHERE. >> SO THIS AFTERNOON WE HAVEN’T REALLY HEARD ANYTHING MUCH ABOUT OR ANYTHING MATERIAL ABOUT THAT CONVERSATION BETWEEN TRUMP AND PUTIN. BUT HERE’S WHAT WE DO NEED THINK ABOUT.
IF WE ASSUME THERE IS A PEACE AGREEMENT BETWEEN UKRAINE AND RUSSIA, THEN IT IS LOGICAL TO ASSUME THAT EUROPEAN COUNTRIES WILL NEED TO SPEND MORE ON DEFENSE. AND THE BIG HEADWIND THAT WAS POINTED OUT IN THE REPORT FROM FOUR OR FIVE MONTHS AGO IS THAT EUROPEAN ECONOMIES HAVE SPENDING ON -- BEEN SPENDING ON DEFENSE, NOT ENOUGH, BUT THE CHALLENGE IS THEY’VE BEEN SPENDING OUTSIDE THE E.U. BECAUSE THEY DIDN’T HAVE ENOUGH DOMESTICALLY LOCATED COMPANIES, WHEREVER THEY WERE IN THE E.U. AND THAT’S PART OF WHAT NEEDS
TO CHANGE IN ORDER FOR EUROPE TO REALLY GET THE BENEFIT OF THAT INCREASED DEFENSE SPENDING. ALIX: TO YOUR POINT, THAT TAKES TIME TO RAMP UP THE INDUSTRIAL BASE TO DO THAT. ALL RIGHT. SINEAD, THANKS A LOT. SINEAD COLTON GRANT. CHIEF INVESTMENT OFFICER AT B.N.Y. WEALTH. WE’RE A FEW MINUTES AWAY FROM THE CLOSING BELL. YOU’RE LOOKING AT THE NASDAQ.
STILL AROUND THE LOWS OF THE SESSION. WORST PERFORMING STOCKS IS QUITE A MIX. YOU GET FOR THIS WEAKEN, ROYAL CARIBBEAN ARE DOWN -- NORWEGIAN, ROYAL CARIBBEAN ARE DOWN.
TESLA OF COURSE JUST CANNOT SEEM TO FIND ITS FOOTING. SCARLET: CARNIVAL CREWS WILL BE REPORTING LATER THIS WEEK ALONG WITH NIKE. SO WE GET A READ ON THE CONSUMER. BUT THE RETAIL SALES NUMBER DID
INDICATE THAT THINGS ARE SLOWING DOWN. IT’S NOT TERRIBLE, IT HASN’T GONE COMPLETELY SOUTH BUT IT’S VERY MUCH AN INDICATION THAT THINGS ARE MOVING IN THE DIRECTION OF DETERIORATION OR AT LEAST A SLOWDOWN. ALIX: ABSOLUTELY. ALL RIGHT. ALSO LOOKING AT THE VIX. A LITTLE BIT HIGHER HERE, JUST HITTING ABOUT 21 AND THE BOND MARKET NOT DOING MUCH OF ANYTHING. GOLD THOUGH CONTINUING TO GET A BID. WE’RE MOVING CLOSER TO THE
CLOSING BELL. FULL MARKET COVERAGE RIGHT HERE ON BLOOMBERG. ♪ ANNOUNCER: "THE CLOSING BELL." BLOOMBERG’S COMPREHENSIVE COVERAGE OF THE MARKETS CLOSE STARTS RIGHT NOW. ALIX: TWO MINUTES AWAY FROM THE END OF THE TRADING DAY.
WE’RE TAKING YOU THROUGH THE CLOSING BELL IN A GLOBAL SIMULCAST. WE’RE JOINED BY CAROL MASSER AND TIM STENOVEC. BRINGING TOGETHER OUR BLOOMBERG TELEVISION, RADIO AND YOUTUBE AUDIENCES WORLDWIDE TO PARIS THROUGH THE MOST -- PARSE THROUGH THE MOST CRUCIAL MOMENTS OF THE DAY. I SWEAR WE HAD RALLIES WHEN YOU WERE GONE. YOU WOULDN’T KNOW IT BY LOOKING AT THE MARKET TODAY. CAROL: WHAT ARE YOU SAYING, I CAME BACK AND DRAGGED DOWN THE MARKET? IT’S WILD.
THE MAG-7 DOWN. I WILL BELIEVE YOU THAT THERE WERE RAL IDEALS. TIM: EVEN THOUGH THE MAG-7 SAT OUT YESTERDAY’S RALLY. SO THAT’S WHAT WAS PRETTY REMARKABLE. A PRETTY BROAD-BASED RALLY YET. BUT WE SAW SOME OF THE MEGACAP TECH NAMES NOT EVEN TAKE PART.
SCARLET: AND IN FACT YOU HAVE META NOW LOSING GROUND AS WELL. SO ALL THE MAG-7 NAMES ARE NEGATIVE FOR 2025. IT WASN’T THAT SURPRISING IN THE END WHEN BANK OF AMERICA SAID THAT IN ITS LATEST SURVEY, INVESTORS CAN CUT THEIR HOLDINGS OF U.S.
STOCKS BY THE MOST IN RECORD. A BIG CHANGE. ALIX: EXACTLY. THE QUESTION IS DOES THAT CONTINUE AND WHAT ELSE DOES IT ENTAIL? DOES IT MEAN WE’RE GOING TO SELL TREASURIES AND U.S. CREDIT? DOES THAT GO ELSEWHERE IN THE EUROPEAN MARKET? CAROL: I’M GOING HEAD TO EUROPE. THAT’S WHAT I WAS GOING TO SAY. ALIX: ARE THEY GOING TO LIKE YOU
THERE? I DON’T THINK THEY’RE GOING TO LIKE US ANYMORE. TIM: THERE’S A NEW AIR FRANCE CABIN THAT YOU CAN FLY. WE’RE GOING TO TALK ABOUT THAT IN A LITTLE BIT. CAROL: WE ARE GOING TO TALK ABOUT THAT. ALIX: OK. I LIKE THAT. THAT SOUNDS NICE AND FANCY. BUT YOU’RE LOOKING HERE AT -- WE’RE RIGHT NEAR THE CLOSING BELLS HERE. S&P SEEMS TO BE TRADING NEAR THE LOWS OF THE SESSION, GUYS. THE S&P AROUND 1% LOWER.
THE NASDAQ OFF BY 1.7%. A LITTLE BIT OF STEAM TO THE DOWN SIDE AS WE HEAD INTO THE CLOSE. DOW JONES INDUSTRIAL AVERAGE UP .6%. BUT I’VE BEEN SAYING THIS ALL DAY, GUYS. IT’S REALLY BEEN TECH-DRIVEN BECAUSE YOU LOOK AT THE EQUAL WEIGHTED INDEX, FOR EXAMPLE, YOU LOOK AT SMALL CAPS. YES, THEY’RE STILL LOWER BUT NOWHERE NEAR WHERE WHAT WE’RE SEEING WITHIN THE TECH SECTOR. YOU HAVE THE EQUAL WEIGHTED
INDEX JUST OFF BY .5%. CAROL: REALLY INTERESTING WHAT’S GOING ON. THE S&P 500, YOU DO HAVE THOUGH A MAJORITY OF NAMES LOWER IN TODAY’S SESMGHTS 338, LOSING SOME GROUND ON THIS TUESDAY. 161, THOUGH DID ACTUALLY SHOW UP WITH SOME GAINS HERE. SCARLET: YEAH. LOOK AT THE MAP.
THERE ARE TWO SECTORS IN THE GREEN. ENERGY UP ABOUT .25% AND HEALTH CARE GAINING .1%. AS YOU MENTIONED, TECH IS REALLY THE LAG ADDER HERE AND WHETHER IT’S COMMUNICATION SERVICES, WHICH INCLUDES THE INTERNET SERVICE PROVIDERS ALONG WITH ALPHABET, CONSUMER DISCRETIONARY WHICH INCLUDES TESLA, OR TECH OVERALL WHICH HAS NVIDIA, THOSE GROUPS ARE ALL DOWN AT LEAST 1.5%. CAROL: LET’S GET TO SOME OF THE INDIVIDUAL GAINERS. ATOP MY LIST IS INTEL WHICH IS AMONG YOUR TOP GAINERS IN BOTH THE S&P AND THE NASDAQ 14U7B OR AT LEAST WAS EARLIER IN THE SESSION. A GAIN OF EARLIER IN THE DAY
ABOUT 2.8%. FINISHING THE DAY WITH ABOUT A 1% GAIN. STOCK REALLY RALLIED NEARLY 7% YESTERDAY. IT’S BEEN UP FIVE SESSIONS IN A ROW. SO IT’S UP JUST AROUND 30% OVER THAT TIME PERIOD. OUR TEAM NOTING THAT AHEAD OF
TODAY, TAKING ON ITS NEW ROLE AS C.E.O., LOUIE BOUTON SAID IT WON’T BE EASY FOR THE COMPANY TO HOLD OFF THE FORCES THAT HAVE SET IT INTO DECLINE. YESTERDAY’S REUTERS SAYING THAT THE C.E.O. POTENTIALLY PLANS TO CUT BACK ON MIDDLE MANAGEMENT. SO WE’RE KEEPING AN EYE ON THIS ONE. BUT DEFINITELY A LITTLE BIT HIGHER IN TODAY’S SESSION.
B.Y.D. HAD, TO MENTION, AT ITS HIGHS, UP ABOUT 3.3%. CLOSING WITH A GAIN OF 2.6%. THE A.D.R.’S IN THE UNITED STATES, THE CHINESE AUTOMAKER
UNVEILED A LINEUP OF ELECTRIC VEHICLES THAT IT SAYS CAN CHARGE ALMOST AS FAST AS IT TAKES TO REFUEL A REGULAR CAR. SO THAT’S PRETTY IMPRESSIVE. AND THEN LOSE I HAD GROUP -- LUCID GROUP. IT’S JUST ABOUT A $2 STOCK HERE
BUT STILL UP ALMOST 9%, UP ALMOST 16% OR MORE THAN 16% INTRADAY. REALLY RALLIED EARLIER BUT UP ABOUT 9% HERE AT THE CLOSE. THE E.V. MAKER UPGRADED TO EQUAL WEIGHT FROM UNDERWEIGHT OVER AT MORGAN STANLEY WHICH SAYS IT SEES POTENTIAL FOR THE STOCK TO RERATE WITH NEW LEADERSHIP THAT CAN PUT FORWARD AN EXECUTABLE A.I. STRATEGY THROUGH PARTNERSHIPS.
SO SOME ANALYSTS LINGO THERE. PRICE TARGET UNCHANGED AT $3. KEEP IN MIND IT’S DOWN ABOUT 19% YEAR TO DATE AND DOWN ABOUT 96% FROM ITS HIGH BACK IN FEBRUARY OF 2021 AND IT’S GOT A HIGH SHORT POSITION AS WELL. TIM: YOU GOT THE GAINERS. I WAS WATCHING THE DECLINERS TODAY. STARTING WITH NVIDIA DOWN 3.4% TODAY. THIS AS WONG SPOKE AT THE
COMPANY’S G.T.C. CONFERENCE WHICH HE REFERRED TO AS THE SUPER BOWL OF A.I. WE GOT A LOT OF NEWS TODAY. NVIDIA UNVEILED PLANS FOR MORE POWERFUL CHIPS, AN A.I. MODEL FOR ROBOTICS AND PERSONAL A.I. SUPERCOMPUTERS. AND THIS EVENT IS JUST GETTING STARTED. WE WATCHED THIS EVENT CLOSELY FOR A FEW REASONS BECAUSE WE LEARNED A LOT ABOUT WHAT NVIDIA’S PLANS ARE FOR THIS YEAR AND NEXT YEAR. BUT ALSO BECAUSE IT TENDS TO
MOVE THE COMPANY’S STOCK. IT’S A DIFFERENT MOVEMENT TODAY, THOUGH, THAN WHAT WE SAW OVER THE PAST TWO YEARS. WHEN G.T.C. HAS GONE ON. THE STOCK GAINED .7% ON THE FIRST DAY IN BOTH 2024 AND 2023. GAINS EXTENDED TO 4% AND 5% RESPECTIVELY BY THE TIME THE CONFERENCE CONDITIONING CONCLUDED LATER IN THE -- CONFERENCE CONCLUDED LATER IN THE WEEK. STAY TUNED. CAROL: THAT WAS A VERY IMPRESSIVE
SUMMARY OF EVERYTHING THAT HAPPENED THERE. SCARLET: WE WERE LOOKING AT THE HEADLINES EARLIER AND A LOT OF IT WAS JUST TECH JARGON THAT WE TTOTALLY DIFFERENT UNDERSTAND. THERE WAS A LOT OF COMPLICATED JURG JARGEN IN THERE. TIM:
YOU’RE IN GOOD COMPANY. LYNN CAME ON OUR PROGRAM AND SHE WAS LIKE, I DON’T EVEN KNOW WHAT THIS MEANS. ALIX: OK, GREAT. TIM: YOU’RE IN GOOD COMPANY. ALL YOU NEED TO KNOW IS IT’S ABOUT PHYSICAL A.I. WE’RE GOING TO HAVE THESE ROBOTIC BUTLERS DOING OUR WORK FOR US. THAT’S ALL I NEED. I THINK YOU MENTIONED, WAS IT SCARLET OR ALIX, WHO MENTIONED META PLATFORMS TODAY.
FALLING INTO NEGATIVE TERRITORY FOR THE YEAR. SCARLET: ONE OF US. TIM: DOWN 3.7% ON THE DAY. IT’S BECOME THE LAST OF THE SO-CALLED MAG-7 STOCKS TO GO NEGATIVE FOR THE YEAR. DOWN HALF A PERCENT ON THE YEAR
SO FAR. IT’S INTERESTING BECAUSE WE SAW EARLIER THIS YEAR THAT RECORD RALLY FOR META PLATFORM, UNPRECEDENTED 20 STRAIGHT SESSIONS OF GAINS. THE STOCK CLIMBED NEARLY 26% SO FAR THIS YEAR BUT IT SINCE ERASED ALL OF THOSE GAINS AND FINALLY, ABBOTT LABS FELL BY 1% TODAY. IT MAKES SIMILAC INFANT FORMULA.
IT WAS DOWN OVER 2% BUT IT BOUNCED OFFITY LOWS A LITTLE LATER IN THE SESSION -- OFF ITS LOWS A LITTLE LATER IN THE SESSION. THIS AFTER ROBERT K. KENNEDY JR. IS PLANNING TO MEET WITH EXECUTIVES OF FORMULA COMPANIES. ALIX: NOTHING HAPPENED IN THE BOND MARKET. THAT WAS 20-YEAR AUCTION. THE SOLID $13 BILLION, 20 YEAR. DOES ANYONE CARE KIND OF GOING
NO ANYWHERE. NOT A LOT OF VOLATILITY OR MOVEMENT. BUT DEFINITELY A WAIT AND SEE WHEN IT COMES FOR THE FED TOMORROW. SCARLET: EXACTLY.
WE’RE JUST KIND OF WAITING FOR THAT FED DECISION OR LACK THEREOF. CAROL: AS LEAST WHAT WE GET IN TERMS OF OUTLOOK. HEY, GUYS, IN TERMS OF WHAT CAUGHT OUR ATTENTION, THERE IS A REDESIGN. TIM TALKED ABOUT THIS. FIRST CLASS CABIN CALLED LE PREMIER. IT’S FROM AIR FRANCE. SCARLET: OF COURSE. CAROL: RIGHT? IT’S SUPPOSED TO BE LIKE A PRIVATE JET-LIKE EXPERIENCE. 3.5 SQUARE METERS OF PRIVATE
SPACE, A FULL-LENGTH BED. YOU HAVE FULL CURTAINS AND I THINK THERE’S SOME NICE WINE AND I THINK IT COSTS ABOUT -- LIKE $11,000 U.S. TIM: YES, $10,000 OR $11,000 FOR A ROUND TRIP. ROUND TRIP. CAROL: I THINK THAT’S A ONE WAY, ACTUALLY. TIM: $10,000 EUROS. CAROL: A RETURN FLIGHT TO NEW YORK COSTS ABOUT $10,000 EURO AND THAT’S ABOUT $11,000 U.S. ALIX: IS THIS IN ADDITION TO THE PLANE THAT HAS BUSINESS CLASS? DOES THIS MAKE BUSINESS CLASS CHEAPER? I’M JUST ASKING FOR A FRIEND.
CAROL: I THINK BUSINESS CLASS IS NOT GOING TO BE AS NICE AS THIS REDESIGNED FIRST CLASS CABIN. TIM: IT’S BASICALLY YOUR OWN CABIN HERE. THERE’S A REAL BED THAT YOU CAN SLEEP IN. IT’S PRETTY GREAT. THE EXECUTIVES WHO UNVEILED THIS, THEY TALKED ABOUT -- THAT THEY WEREN’T SEEING ANY SORT OF SOFTNESS WHEN IT COMES TO THE HIGH END OF SPEND, WHEN IT COMES TO THE TRAVEL CATEGORY. THERE’S A QUOTE IN HERE, THE
C.E.O. SAID, PARIS IS STILL THE NUMBER ONE DESTINATION PEOPLE COME TO FOR MANY, MANY REASONS. IT’S CRAZY WHAT PEOPLE ARE WILLING TO SPEND. SCARLET: WHEN THE CONSUMER’S UNDER PRESSURE, YOU DOUBLE DOWN ON THE GUY WHO CAN SPEND A LOT OF MONEY. I FEEL LIKE I NEED TO TAKE ON SIX OR SEVEN EXTRA JOBS TO BE ABLE TO AFFORD THAT FLIGHT. ALIX: YOU DO. THIS WOULD BE TRUE. SCARLET: THERE’S A STORY THAT CAUGHT MY
EYE WHICH IS ABOUT A GENERAL XER WHO PLANS TO EARN $800,000 THIS YEAR. STILL PROBABLY NOT ENOUGH TO TAKE THAT FLIGHT. BY HOLDING ON TO SIX REMOTE JOBS. HOW DOES HE DO THAT ME? HIRES PEOPLE TO BE HIM.
BASICALLY. HE’LL MAKE THE DECISION, HE’LL SHOW UP ON THE CONFERENCE CALL BUT OTHERWISE HE HIRES OTHER PEOPLE TO DO A LOT OF THE WORK. ALIX: IS THE $800,000 NET OR GROSS? SCARLET: I THINK THAT’S GROSS AND HE NETTED $320,000 IN PROFIT. FROM THIS WHOLE GIG. ALIX: COULDN’T HE JUST GET A JOB FOR
$320,000? CAROL: SO HE TAKES ON THE JOB AND THEN HE HIRES PEOPLE TO DO IT. SO HE’S OBVIOUSLY GOING TO PAY THEM LESS. SCARLET: HE TAKES ON SEVERAL JOBS, SIX JOBS, AND THEN HE HIRES OTHER PEOPLE TO DO PARTS OF THOSE JOBS. THAT WAY HE THINKS IT PROVIDES HIM JOB SECURITY BECAUSE IF HE GETS LET GO FROM ONE OF THOSE COMPANIES, THAT’S FINE, HE HAS FIVE OTHER JOBS. CAROL:
I WOULDN’T WANT TO BE HIS ACCOUNTANT. TIM: SOUNDS LIKE IT COULD ALL COME CRASHING DOWN VERY QUICKLY. [TALKING SIMULTANEOUSLY] SCARLET: WHAT IF THEY SAY, COME BACK TO WORK, GET IN THE OFFICE? ALIX: WHAT IF THEY FIND OUT? IS THAT BAD? IS HE IDENTIFIED IN THE STORY? SCARLET: NO. CAROL: WAIT, HARRISON. SCARLET: THAT’S HIS PSEUDO
NYM. CAROL: I THINK WE ALL KNOW A HARRISON. PROBABLY NOT HIM. THAT’S A WRAP. TUESDAY’S OVER. SCARLET: OR HE’S HARRISON FORD. TIM: IT’S A GEN-XER. CAROL:
OUR CROSS PLATFORM COVERAGE, RADIO, TV, YOUTUBE, BLOOMBERG ORIGINAL NALLS. CLOSING BELL. WE’LL SEE YOU TOMORROW. SCARLET: OUR THANKS TO OUR RADIO COLLEAGUES AND ALSO OUR THANKS TO ALIX STEEL AS WELL WHO IS GOING TO TAKE OFF. IN THE MEANTIME, COMING UP ON THE REST OF "THE CLOSE," HOW THE DEFENSE SECTOR IS RESPONDING TO REDUCED GOVERNMENT SPENDING. THIS IS "THE CLOSE" ON BLOOMBERG.
SCARLET: WELL COMPANY BACK TO "THE CLOSE." I’M SCARLET FU. LET’S LOOK AT THE MARKETS. THE S&P 500 LOSING GROUND BY MORE THAN 1% LOWER. CERTAINLY NOT THE LOWS OF THE SESSION BUT IT’S BEEN A STEADY DREUM BEAT LOWER THROUGH MOST OF THE TRADING SESSION. ALL SEVEN NAMES IN THE MAG-7 ALSO FINISHING DOWN.
WITH META BECOMING THE LAST OF THE CO-HOTTER TO ERASE ITS -- COHORT TO ERASE ITS GAINS FOR THE YEARS. IT’S NOW IN THE RED FOR 2025. NOT MUCH MOVEMENT IN THE BOND SPACE. THE 10-YEAR YIELD INCHING LOWER BY ONE BASIS POINT TO 4.28%. AND I INCLUDED THE E.T.F.
THAT TRACKS GERMANY. IT IS RISING. EXTENDING GAINS FROM THE REGULAR TRADING SESSION IN EUROPE BECAUSE LAWMAKERS PASSED A LANDMARK SPENDING BILL THAT WILL UNLOCK HUNDREDS OF BILLIONS OF EUROS IN DEBT FINANCING FOR DEFENSE AND INFRASTRUCTURE. CERTAINLY THAT HAS BEEN A VERY POPULAR TRADE, DEFENSE COMPANIES IN EUROPE GETTING A BIG BOOST ON THAT.
LET’S LOOK AT SOME OF THE BIG MOVERS ON THE DAY AS WELL. ABBOTT LABS AND BECKETT BENCKENSER. MEETING WITH R.F.K. JR. INTEL DEFYING THE DECLINES
WE’VE SEEN IN TECH STOCKS OVERALL. THE C.E.O., IN HIS LETTER TO EMPLOYERS, HE WARNED THAT IT WILL NOT BE EASY FOR THE CHIP MAKER TO HOLD OFF THE FORCES THAT TEND IS INTO DECLINE BUT HE ALSO DID NOT OFFER CLUES ON WHAT HIS PLAN FORWARD IS. WHETHER HE WOULD BREAK IT UP AND SELL PARTS OR TRY TO REWORK THE COMPANY FROM INSIDE.
SO WATCH THIS SPACE IN TERMS OF WHAT HAPPENS NEXT ON THAT FRONT. ALL RIGHT. ANOTHER STOCK I’M LOOKING AT IS THE GOVERNMENT CONTRACTOR B.A.H. IT IS RAMPING UP ITS A.I.
INVESTMENTS AND TEAMING UP WITH SHIELD A.I. TO DELIVER A.I.-POWERED AUTONOMOUS SOLUTIONS FOR THE PENTAGON. JOINING NEWS TO WITH MORE ON THIS IS HORACIO. TELL US MORE ABOUT THIS PARTNERSHIP WITH SHIELD A.I. WHAT DOES SHIELD A.I.
DO AND WHAT IS BOOZ ALLEN GOING TO BE DOING? >> IT’S GOOD TO SEE YOU. I’M HEAR HERE IN D.C. AND JUST FOR CONTEXT, YOU KNOW, A.I. IS THE TECHNOLOGY THAT IS GOING TO POWER BOTH OUR ECONOMIC SECURITY AND OUR NATIONAL SECURITY FOR AT LEAST THE NEXT 20 TO 30 YEARS. AND BOOZ ALLEN IS AT THE FOREFRONT OF THIS. WE’RE AN ADVANCED TECHNOLOGY COMPANY PROVIDES SOME OF THE MOST IMPORTANT OUTCOMES IN A.I. TO THE FEDERAL GOVERNMENT TODAY. SHIELD A.I.
IS AN AMAZING COMPANY, A RELATIVELY YOUNG COMPANY, AND WHAT THEY DO IS THEY ESSENTIALLY, THEY’RE IN THE AUTONOMY BUSINESS. THE COOLEST THING THAT THEY DO IS THEY BUILD -- THINK OF IT AS THE OPERATING SYSTEM FOR DRONES. SO IN ADDITION TO THE DRONES THAT THEY MAKE, IF SOMEBODY ELSE WANTS TO CREATE A DRONE, THEY DON’T HAVE TO BUILD THE SOFTWARE FROM SCRATCH. THEY CAN START WITH SHIELD.
THEY’VE HAD TREMENDOUS SUCCESS, ALMOST MORE SUCCESS THAN THEY CAN HANDLE. AND BOOZ ALLEN, WE FIND OURSELVES AS BEING AN ACCELERATION PLATFORM FOR COMPANIES LIKE SHIELD A.I., EVEN LARGER COMPANIES WE ALSO ANNOUNCED SOMETHING WITH NVIDIA TODAY AND WHAT WE DO IS WE HELP THEM GET TO OUTCOMES MUCH FASTER, WE HELP THEM CREATE NEW ENGINEERING IN A CASE LIKE SHIELD, IF YOU NEED TO CREATE NEW AUTONOMOUS BEHAVIORS, ALMOST THINK OF IT AS APPS ON AN APP STORE. WE WOULD BE CREATING THOSE. AND MAKING SURE THAT THEIR PRODUCT CAN REACH MANY, MANY MORE CUSTOMERS. FASTER. SCARLET: THANK YOU SO MUCH FOR EXPLAINING ALL OF THAT. WHEN I LOOK AT YOUR STOCK PRICE, THERE’S OBVIOUSLY BEEN A LOT OF CONCERN ABOUT THE TRUMP ADMINISTRATION AGENCIES COST CUTTING EFFORTS.
AND YOUR STOCK REFLECTS THAT. IT’S DOWN ABOUT 20% OVER THE PAST YEAR. COMPARED WITH GAINS IN THE S&P 500 AND IN THE S&P 500 AEROSPACE AND DEFENSE GROUP. IS THIS AN OVERREACTION ON INVESTORS’ PARTS TO CONCERNS ABOUT YOUR GOVERNMENT CONTRACTS? >> I UNDERSTAND THAT THE UNCERTAINTY CREATES A REACTION. HAVING SAID THAT, YOU KNOW, BOOZAL SEASON ATTACK NOTHING COMPANY AND -- BOOZ ALLEN IS A TECHNOLOGY COMPANY AND WE’RE DRIVING IMPORTANT OUTCOMES THAT REDUCE WASTE, FRAUD AND ABUSE, INCREASE EFFICIENCY, AND WILL DRIVE THESE TECHNOLOGIES LIKE A.I., LIKE QUANTUM, LIKE ALL OF THE TECHNOLOGIES OF THE FUTURE. OUR PROGRAM WITH D.O.D.
HAS HELPED SAVE OVER $16 BILLION IN IMPROPER PAYMENTS SINCE INCEPTION. WE HAVE TREMENDOUS PROGRAMS AT PLACES LIKE VETERANS AFFAIRS THAT ARE VASTLY REDUCING THE COST TO PROCESS A VETERAN’S CLAIM. AND AGAIN, ON NATIONAL SECURITY, WE’RE ACCELERATING OUR NATION TOWARD SOME OF THESE OUTCOMES BY WORKING WITH COMMERCIAL COMPANIES THAT HAVE UNIQUE TECHNOLOGY THAT WE CAN HELP IT OUT. SCARLET: I UNDERSTAND ALL OF THAT BUT GIVEN THE D.O.D. BUDGET CUTS, WHAT’S THE STATUS OF SOME OF THEIR EXISTING CONTRACTS? FOR INSTANCE, THE $24R5 MILLION CONTRACT TO SUPPORT THE CYBERCOMPLAND’S JOINT COMMAND ACCESS PLATFORM. THERE’S A LOT OF ANALYSTS
SAYING THAT PERHAPS YOU MIGHT NEED TO MAKE SOME ADJUSTMENTS TO THAT KIND OF PROGRAM. IS THAT SOMETHING THAT IS IN THE WORKS? >> YOU KNOW, WE SEE IS NEAR TERM UNCERTAINTY AND DISCORRUPTION BUT ALSO TREMENDOUS -- DISCORRUPTION BUT ALSO TREMENDOUS -- DISRUPTION BUT ALSO LONG-TERM OPPORTUNITY. AREAS LIKE GOLDEN DOME FOR AMERICA, THE SPACE DEFENSE PROGRAM, BOOZ ALLEN HAS SOME UNIQUE SOLUTIONS WE’RE OFFERING THERE. AREAS LIKE HAVANA WHERE WE BELIEVE WE CAN BRING ADDITIONAL TECHNOLOGY TO BEAR. SO ON THE WHOLE AND THE MAIN, WE’RE OPTIMISTIC ABOUT THE FUTURE. SCARLET: YOU GENERATE ALMOST ALL OF YOUR REVENUE FROM THE PUBLIC SECTOR. ANY PLANS TO CHANGE THAT UP AND
PERHAPS PURSUE MORE BUSINESS IN THE PRIVATE SECTOR? >> YOU KNOW, WE DID THAT DELIBERATELY BECAUSE OF OUR WORK IN NATIONAL SECURITY. WE WANTED TO MAKE SURE THAT WE WERE FOCUSED ON WHAT MATTERED MOST WHICH WAS TO BRING OUR WAR FIGHTERS HOME SAFE. BUT WE DO THIS WITH COMMERCIAL COMPANIES ALREADY. WHILE OUR REVENUES COME FROM THE PUBLIC SECTOR, WE WORK WITH PRIVATE SECTOR COMPANIES ALL THE TIME. SCARLET: SURE, SURE. STILL, THERE’S A LOT OF UNCERTAINTY AND I JUST WONDER HOW THIS IS EFFECTING YOUR STAFFING OR YOUR PLANS FOR STAFFING IS. THIS SOMETHING WHERE YOU ARE FREEZING HIRING, ARE YOU CUTTING JOBS RIGHT NOW? ARE YOU SHRINKING YOUR HEAD COUNT OR JUST BEING MORE CONSERVATIVE ABOUT HOW YOU THINK ABOUT EXPANDING? >> AT A TIME LIKE THIS WE’RE RUNNING OUR BUSINESS TIGHTLY.
WE’RE MAKING SURE THE PEOPLE WE HIRE HAVE THE SKILL SETS AND FOCUS NECESSARY TO ACCELERATE THE MISSIONS THAT MATTER THE MOST TO THE AMERICAN PEOPLE. WE ARE VERY FOCUSED ON THIS LONG-TERM OPPORTUNITY. WE’RE VERY FOCUSED OP PROVIDING SOLUTIONS TO REDUCING PROPER PAYMENTS ACROSS THE FEDERAL GOVERNMENT, NOT JUST IN D.O.D. AND TO SUPPORT THE AGENDA OF THE ADMINISTRATION. AND SO OUR STAFFING REFLECTS ALL OF THAT. SCARLET: ALL RIGHT. HORACIO ROZANSKI JOINING US
FROM WASHINGTON. THANK YOU SO MUCH. COMING UP ON "THE CLOSE," TRUMP TARIFFS THREATENING TO BOOST THE COST OF BUILDING MATERIALS. WE’LL DISCUSS WITH THE PRINCIPLE OF FOREST ECONOMIC ADVISORS WHICH PROVIDES ANALYSIS ON NORTH AMERICAN WOOD PRODUCTS. LUMBER DEFINITELY IN THE CROSS HAIRS OF THOSE TARIFFS. THIS IS BLOOMBERG. SCARLET: IT’S BEEN TWO MONTH SINCE THE L.A. WILDFIRES DESTROYED MORE THAN 16,000 STRUCTURES AND RECOVERY EFFORTS ARE QUICKLY SHIFTING TO A COSTLY AND AT TIMES CHAOTIC REBUILDING.
SLOW PERMIT APPROVALS AND LABOR SHORTAGES ARE CLOUDING THE REBUILDING PROCESS OF WHAT IS SET TO BE THE MOST EXPENSIVE DISASTER IN L.A. HISTORY. JOINING US NOW TO DISCUSS IS BLOOMBERG’S SARA MCGREGOR. THANK YOU SO MUCH FOR JOINING US. GIVE US A LITTLE MORE COLOR HERE IN TERMS OF WHAT STAGE THE RECOVERY IS AT NOW THAT WE’RE A COUPLE MONTHS OUT OF THE FIRES. >> YES. SO ALMOST SORT OF UNBELIEVABLY THE CLEANUP HAS HAPPENED VERY QUICKLY.
WE’VE BEEN TO ALTADENA, TO PALISADES, TO SOME OF THE AFFECTED AREAS RECENTLY. SOME PROPERTIES HAVE EVEN BEEN RAKED AND SORT OF READY FOR A NEWHOUSE TO BE PUT ON. OTHERS, THEY’RE GOING THROUGH THE ASHES AND THE RUBBLE AND
2025-03-23 00:08
