" COMING UP. ♪ ROMAINE: THE CALM AFTER THE STORM. FROM STUDIO TWO IN NEW YORK, I AM ROMAINE BOSTICK. ALIX: AND I AM ALIX STEEL. NICE TO HAVE YOU BACK. ROMAINE: HAPPY TO BE BACK ON THIS, WHAT IS IT, TOUCHDOWN TUESDAY? ALEX: NO, TURNAROUND TUESDAY. [LAUGHTER]
LOOK AT THEM VIX AND THE S&P. TELLS THE WHOLE STORY. S&P OF 2% AROUND THE HIGHS OF THE SESSION. THE VIX HAS NOT HAD A DECLINE SINCE 1990 LIKE THIS. S&P IS ABOVE THE 200-DAY MOVING AVERAGE AT 5016. WE ARE DICEY THAT WE WERE DICEY YESTERDAY.
TURNAROUND TUESDAY, DOES IT LAST? ROMAINE: THE TEXTBOOK EXAMPLE OF THAT TURNAROUND TUESDAY, BLOOMBERG NEWS PRINTING THE NUMBERS AND CITING THAT OF THE 582 TIMES THAT THE S&P PLUNGED ON THE CONSECUTIVE THURSDAY, FRIDAY AND MONDAY, THE FOLLOWING TUESDAY, WE DID SEE A REBOUND. THAT IS UNFOLDING TODAY. BUT THE UNDERPINNINGS OF THAT SELLOFF INCLUDING THE DOWNWARD SHIFTS IN THE ECONOMIC OUTLOOK HAVE NOT BEEN RESOLVED, AND THAT IS GIVING PETER TCHIR PAUSE ABOUT BUYING THE DEATH. >> YESTERDAY, ALL ANYONE TALKED ABOUT IS DON'T PANIC. RELIEF SHOULD BE SETTING BECAUSE I THINK WE WILL BREAK THROUGH THE 200 AND MOVING AVERAGES AND THAT COULD CREATE A VACUUM WITH LIQUIDITY. ROMAINE: JUST A SMIDGE ABOVE THE 5000 LEVEL, A LEVEL ANALYSTS SAY WOULD BE WHERE DOWNSIDE HEDGING PRESSURE SUBSIDES. STRATEGIES AT CITI SAY BE CAREFUL AS OF US STILL TILTED TOWARDS A FURTHER UNWIND, DESPITE JP MORGAN QUANTS SAYING INSTITUTIONAL INVESTORS ARE ALREADY BUYING THE DIPS, AND GOLDMAN SEEING HISTORICALLY, A SLUMP OF THE SCALE WE HAVE WITNESSED HAS USUALLY BEEN POSSIBLE IN THE THREE MONTHS THAT FOLLOWED. THAT IS THE SET UP TODAY. U.S.
POLITICS IS BACK ON THE READER OF INVESTORS WITH THE DEMOCRATIC PARTY SHIP WAS EVENT TICKETS TAKING SHAPE. , HAVE TAPPING MINNESOTA GOVERNOR TIM WALZ AS HER RUNNING MATE, A DESIGNED TO BROADEN THE TICKET'S'S APPEAL ACROSS CULTURAL AND POLITICAL LINES. WE WILL TALK ABOUT THAT LATER IN THE DAY. LET'S GET BACK TO THIS TURNAROUND TUESDAY. A BIG ONE INDEED. ALIX: IN THIS CHART TELLS THE ENTIRE
STORY. THIS IS A ONE-DAY CHANGE IN THE S&P. THE BOTTOM PART IS THE VIX. IF YOU CAN SEE HOW WE DID PRETTY MUCH NOTHING FOR A LONG TIME. THEN WE GET A COUPLE OF WEEKS OF VOLATILITY IN THE BIG WINS WE HAVE SEEN, AND YESTERDAY THIS IS THE DECLINE IN S&P. THIS WAS FRIDAY. THEN TODAY, BOOM, OVER 2% ON
THE OUTSIDE OF THE S&P. REMAINS ANOMALOUSLY JP MORGAN SAYS THERE WAS $14 BILLION OF THIS ADDITIONAL NET BUYING ON MONDAY. GOLDMAN SACHS SAYING HEDGE FUNDS ABOUT TECH STOCKS. QUANT INVESTORS WITH 4 BILLION DOLLARS NET INTO STOCK FUNDS ON MONDAY AS WELL.
IT WAS DEFINITELY A BY THE. BUT DOES THAT LAST? ROMAINE: IT'S A BIG DAY. 450 STOCKS IN THE S&P MOVING HIGHER. THE EQUITY STORY DEFINITELY BEING STANTON PERMIT BUT SOME QUESTIONS ABOUT WHAT IS GOING ON IN THE BOND MARKET, PARTICULARLY WHEN IT COMES TO CREDIT.
WHEN HE SEES OR JOINS US NOW, GLOBAL HEAD OF STRATEGY AT CREDITSIGHTS. PROBABLY ONE OF THE SURPRISING THINGS ABOUT THE SELLOFF THE LAST COUPLE OF DAYS PARTICULARLY WITH YESTERDAY'S MOVES IS FINALLY THE BLOWOUT IN FRANCE PEOPLE HAD PREDICTED A YEAR AND A HALF AGO. I GUESS WE GOT IT. QUESTION IS THE WIDENING OF SPREADS YESTERDAY, DO YOU THINK THAT WILL RESUME AT SOME POINT IN THE FUTURE? WINNIE: YES, WE DO, WE HAVE HAD A MORE CAUTIOUS BIAS. AS YOU NOTED, PEOPLE HAVE BEEN EXPECTING TO SEE SOME OF IT, ESPECIALLY AMID EARLIER IN THE YEAR RATES MARKET VOLATILITY AND SOME FLIPS IN THE MARKET VOLATILITY. WE HAVE HAD A MORE CAUTIOUS STANCE IN THE AUGUST THROUGH OCTOBER TIME FRAME ON THE COMPLETION OF THE DISSEMINATED CONSUMER, EXPECTATIONS AROUND A SLOWING OF AI TRADE, AND ALSO EXPECTING THAT THE POLITICAL HEADLINES ACTIVITY WITH THE PLAN , SAID SOME BROADER SEASONAL WEAKNESS.
SO YOU'RE SPEAKING WITH THAT PERSON IN THE NEAR TERM. ROMAINE: WE'RE ALSO SEEING A CLASS ON IN THE EQUITY MARKET, PEOPLE SAYING THAT MAYBE THERE REBOUND TODAY MIGHT BE A HEAD FAKE. WHEN YOU LOOK AT THE FIXED INCOME SPACE, WE STICK WITH TREASURIES FOR SECOND YEAR, THE BIG DROP IN YIELDS BASICALLY ON THE SHORTER END, 2, 5-YEAR, 10 YEAR FALL BELOW 4%, IS IT JUSTIFIED FOR HUMANS TO BE DOWN AT THOSE LEVELS GIVEN HAVEN'T HEARD FROM THE FED? WINNIE: EVERY YEAR AND FORECAST OF THE 10 YEAR TREASURY IS 3.7 FIVE. YOU HAD MORE DOVISH BIAS FED CUTS WHICH REALLY UNTIL THE END OF LAST WEEK LOOKED OFF MARKET. NOW THE MARKET HAS GOTTEN WAY AHEAD OF THE PRICING.
WE THINK THAT WILL PROBABLY BE MORE RETRACEMENT. WE HAVE BEEN CONSTRUCTIVE DURATION BUT WE HAVE HELD OFF GETTING BACK IN IS THE 10 YEAR TREASURY IS A 4%. WE THINK THERE WILL BE RECALIBRATION AROUND FED CUTTING EXPECTATIONS. WE ARE EXPECTING TO SEE YIELDS RISE A BIT ACROSS THE CURVE. ALIX: LIKE A NEW RANGE AGAIN AFTER THE TRAUMA. WHAT DO YOU DO A CORPORATE CREDIT? WHAT DID WE LEARN OVER THE LAST 48 HOURS ABOUT THE CRACKS IN CORPORATE CREDIT? WINNIE: WE LEARNED THERE ARE SO CROWDED LONG POSITIONS ACROSS CORPORATE CREDIT.
THIS FROM A NUMBER OF CLIENTS WE HAVE SPOKEN TO IN THE LAST FEW MONTHS. THEY HAVE BEEN FAVORABLE ON CREDIT FUNDAMENTALS AND ALL-IN YIELDS, BUT SPREADS ARE TIGHT. I THINK THERE WILL BE CONTINUED RECALIBRATION ON THE SPREAD SIDE OF THINGS AS WE UNDERSTAND BETTER WHAT THE ACTUAL LIMITS OF TH THE U.S. ECONOMY -- WILL LOOK LIKE. WE STILL HAVE CONTRARIAN TRADES IN A MORE CHOPPY MARKET. WE LIKE THE FINANCIAL SECTOR, AND INVESTMENT-GRADE STILL. WE STILL LIKE ENERGY FROM A
KIND OF SLEEP AT NIGHT CARRY TRADE PERSPECTIVE. AND WE ARE NOT ENTIRELY THROWING THE CONSUMER COMPLEX OUT, WE STILL THINK THERE ARE POCKETS OF VALUE IN THINGS LIKE CRUISES AND HOMEBUILDERS, AS WELL. ALIX: WHAT ABOUT THE JUNK BOND. RECENTLY, HIGH-YIELD SPREADS
WERE LIKE 2%. NOW THEY ARE AT THE HIGHEST SINCE SEPTEMBER. WINNIE: WITHIN THE JUNK BOND MARKET, WE REALLY LIKE THE BB SECTOR. THE MIX OF FUNDAMENTAL QUALITY AND ALL-IN VALUATIONS ESPECIALLY ON A REGULAR BASIS HAVE LOOKED PRETTY ATTRACTIVE. WE GET MORE HESITANT WHEN WE
START TO GET INTO C'S AND BBB'S, THERE IS POTENTIAL FOR STRONG PERFORMANCE, BUT IT REQUIRES THE MARKET TO OPEN WITH STRONG MOMENTUM TO CONTINUE TO PROVIDE LIQUIDITY TO THOSE LOWER RATED ISSUERS. WE THINK IT WILL BE MORE OF A BLOCK TO GET INVESTORS TO REALLY STEP UP AND PURCHASE LOWER-RATED YIELDS WOULD HAVE BEEN, OF SUCH VOLATILITY IN THE MARKET. ROMAINE: WHAT GOOSE IS THE PRIMARY MARKET IN THE SENSE, IS IT MORE CLARITY ON ECONOMIC CONDITIONS? WINNIE: I THINK SO. WE HAVE A NUMBER OF KEY ECONOMIC INDICATORS COMING UP IN THE NEXT FEW WEEKS. NEXT WEEK WE WILL HAVE CPI. IF WE GET UPSIDE SURPRISE ON INFLATION DATA, I THINK THAT WILL THROW THE MARKET INTO SIGNIFICANT TIZZY. PEOPLE WILL BE PARSING ALL JOBS
DATA, BE IT FOR INITIAL JOBLESS CLAIMS OR WAITING FOR THE UNEMPLOYMENT REPORT IN SEPTEMBER. SO I THINK THERE WILL BE A WAIT AND SEE MENTALITY FOR INVESTORS IN THE NEAR TERM. ROMAINE: ALL IS A GOOD CONVERSATION, WINNIE CISAR IS A GLOBAL HEAD OF STRATEGY AT CREDITSIGHTS, KICKING US OFF TO THE CLOSE. COMING UP, A CONVERSATION WITH THE CEO OF AN ENERGY COMPANY. HIS OUTLOOK ON ENERGY DEMAND AND THE RESILIENCY OF THE U.S. POWER GRID. ALIX:
AND WE WILL SPEAK TO PIPER SANDLER'S ROBERT OWENS ABOUT WHY HE IS TURNING POSITIVE ON THIS STOCK. ROMAINE: AND THE CREATORS OF HBO'S "INDUSTRY" SERIES DON'T T -- JOIN US FOR A BEHIND-THE-SCENES LOOK. ALIX: WITH THE NEEDS OF THE MORNING, VICE PRESIDENT KAMALA HARRIS DEFIED THE LEARNING RATE, MINNESOTA GOVERNOR TIM WALZ. TERRY HAINES OF PANGAEA WRITING SOON AFTER THAT "SHE CHOSE POORLY ADDING "IT'S A SIGNAL THAT HARRIS FIELDS AND TENTATIVE ON HER NOMINEE PERCH JUST AT THE TIME WHEN SHE NEEDS TO BE LOOKING IN CONTROL OF HER CAMPAIGN AND POLITICAL DESTINY."
JOINING US IS ANDY BLOCKER, HEAD OF U.S. GOVERNMENT AFFAIRS AT INVESCO. PRETTY HARSH WORDS. DO YOU AGREE? ANDY: EVERYONE WILL HAVE THEIR OPINION. FIRST RULE OF PICKING A VP WAS
FIRST DO NO HARM. HE WAS ENDORSED BY BERNIE SANDERS ON ONE SIDE OF THE AISLE, AND JOE MANCHIN ON THE OTHER A SPECTRUM OF THE DEMOCRATIC PARTY. AND THERE IS ALSO THE COMFORT LEVEL OF THE CHOICE. CLEARLY SHE IS COMFORTABLE. I THINK HE COULD BE A GOOD CHOICE. BECAUSE OF HOW HE PERFORMS.
ALIX: WE HAVE 90 DAYS. IT'S NOT A LOT OF TIME TO MAKE YOUR CASE. WHERE ARE THE BIGGEST POLICY DIFFERENCES THAT YOU THINK THE WALZ-HARRIS TO CAN PUT FORTH? ANDY: CLEARLY THE NUMBER ONE ISSUE POLITICALLY WILL BE ABORTION. A WOMAN'S RIGHT TO CHOOSE. I THINK THAT IS SOMEPLACE THEY HAVE FARM GROUND ON. THE OTHER SIDE WILL BE, THE ECONOMIC RECORD, WE'RE ALREADY ON INFLATION AND IMMIGRATION? THINK THAT I THINK REPUBLICANS WILL TRY TO GO AFTER THEM ON. WE ARE WATCHING THAT FROM A
POLITICAL STANDPOINT. BUT FROM A POLICY STANDPOINT GOING FORWARD, REALLY IT'S ABOUT TARIFFS, TAXES, REGULATIONS, WHERE THESE PROSPECTIVE PARTIES WILL COME DOWN. ROMAINE: I AM CURIOUS WHAT WALZ ADDS TO THE TICKET. IT WAS SPECULATION ABOUT MARK KELLY, OBVIOUSLY SCHAPIRO FROM PENNSYLVANIA, TWO STATES THAT IF THE DEMOCRATS WERE TO WIN, TO A CERTAIN DEGREE, MAY INSURE AND OF THE TOTAL COLLEGE VICTORY. MINNESOTA WAS NEVER AN ISSUE. THEY VOTED FOR AT DEMOCRATIC PRESIDENT IN EVERY ELECTION GOING BACK TO NIXON, AND I THINK PRIOR TO NIXON, ALMOST EVERY PRESIDENT GOING BACK TO THE 1950'S.
WHAT DOES IT BRING TO THE TABLE IN TERMS OF DELIVERING ELECTORAL VOTES? ANDY: I DON'T THINK HE BRINGS DIRECT ELECTORAL VOTES. I AM NOT EVEN SURE SENATOR KELLY OR EVEN GOVERNOR SHAPIRO WOULD GUARANTEE ELECTORAL VOTES. THEY ARE THE VP CANDIDATE. WOULD THEY HELP? THEY WOULD HELP. IT'S GOOD TO BE FROM STATE THAT IS NEEDED, LIKE PENNSYLVANIA OR ARIZONA. THE CASE FOR WALLS IS THAT HE IS FROM MINNESOTA.
NEIGHBORS WISCONSIN SO HE SPEAKS THE SAME LANGUAGE. HE COULD HELP WITH MICHIGAN, THOSE MIDWEST STATES. ROMAINE: -GRADER STATES, BY THE WAY. ANDY: MINNESOTA NICE. WE COULD GO THE REST OF THE WAY. BUT WALZ, THE THING THAT IS APPEALING ABOUT HIM IS THAT HE IS AUTHENTIC. I THINK JOE MANCHIN CALLED HIM "THE REAL DEAL." WHEN YOU LOOK AT HIM, IT IS
WHAT DOES HE BRING TO THE TABLE AS FAR AS CONNECTING WITH VOTERS IN THOSE REGIONS? THERE IS THE POTENTIAL FOR THAT TO HAPPEN. ROMAINE: ANYBODY WILL TAKE THAT, GIVEN HE SEEMS TO BE A POTENTIAL POLITICAL HATER. THERE IS A LOT OF MEMES ABOUT WALZ, A LOT OF VIDEO CROPPING UP OF HIM BEING A DAD ON THE CAMPAIGN. WHEN YOU LOOK AT THE COMBINATION OF THE TWO PERSONALITIES, AND ALL THE POSITIVE MEDIA ATTENTION RIGHT NOW THAT THE HARRIS CAMPAIGN IS GETTING, HOW LONG DO YOU THINK THAT CAN LAST? WE KNOW HOW PLURAL MEDIA CYCLES CAN BE. THEY LOVE YOU TODAY, BUT IN TWO WEEKS THEY WILL FIND A REASON TO PICK HIM UP AT HER APARTMENT AND MOVE ON TO WHATEVER THE NEXT BIG THING IS. ANDY: CONVENTIONAL WISDOM IS THAT THE
HONEY BOY PERIOD CAN LAST THROUGH THE CONVENTION, BUT AFTER THE CONVENTION, ALL THE GLOVES ARE OFF WITH THE PRESS, AND I THINK SOME OF THE THINK THE TRUMP CAMPAIGN WILL BE PUTTING OUT THERE MIGHT START TO STINK. THE QUESTION IS CAN THEY GET THROUGH WITH IT? I THINK THIS WILL BE PRETTY EFFECTIVE IN THEIR ROLLOUT AND TRYING TO GET THE POSITIVE MESSAGES FOR THE TICKET, BUT ONCE YOU HIT THE FOUL ALL GLOVES ARE OFF AND WE WILL HAVE ALL THE WEAKNESSES THERE AND THE QUESTION IS HOW DO YOU NAVIGATE WHEN THE BULLETS ARE LIVE FIRE. ALIX: IN TERMS OF HEDGING IN THE ELECTION AND PRICING IN RISK, IS IT TOO SOON TO DO THAT? ANDY: IT'S NEVER TOO SOON TO HEDGE ON RISK AND CONSIDER WHAT IS COMING. [LAUGHS]
I WOULDN'T LOCK ANYTHING IN AT THIS POINT BECAUSE WE ARE GOING THROUGH A PROCESS OF CONTINUOUSLY EVALUATING. NOW THAT WE HAVE THE TWO TICKETS, WHAT ARE THE FORCES IN PLAY THAT WILL DETERMINE THEIR AGENDAS GOING FORWARD? AND WHAT WILL CONGRESS LOOK LIKE? ONCE WE GET A BETTER FEEL OF THAT, WE WILL BE BETTER ABLE TO DETERMINE HOW FAR ONE WAY THEY WILL SWING OR THE OTHER AND WHAT THE POSSIBILITIES ARE. ROMAINE: ANDY, LIZ GREAT TALKING TO YOU,, ANDY BLOCKER HEAD OF U.S.
GOVERNMENT AFFAIRS AT INVESCO. A CONVERSATION ABOUT KAMALA HARRIS AND HER NEW RUNNING MATE, THE GOVERNOR OF MINNESOTA. WE ARE EXPECTED TO SEE BOTH OF THEM ON STAGE TOGETHER, THE FIRST JOINT APPEARANCE SINCE THE ANNOUNCEMENT THAT HE HAD BEEN NAMED AS HER RUNNING MATE. YOU CAN SEE THE SCENE OVER AT
TEMPLE UNIVERSITY IN PHILADELPHIA, PENNSYLVANIA. YOU GOING? ALIX: NO, I AM HERE WITH YOU. [LAUGHTER] THAT WOULD BE COOL. ROMAINE: THAT WOULD BE A LOT TO TALK ABOUT.
LOTS MORE TO TALK ABOUT AS FAR AS WHAT IS GOING ON ON THE MARKET IN THIS TURNAROUND TUESDAY, STOCKS FINDING NEW FOOTING, INCLUDING CROWDSTRIKE, AFTER WEEKS OF NEGATIVE INVESTOR SENTIMENT. ONE ANALYST SAYS NOW IS THE TIME TO BUY THE DIP. THAT IS COMING UP NEXT IN OUR TOP CALLS, ON "THE CLOSE" ON BLOOMBERG. ROMAINE: TIME NOW FOR OUR TOP CALLS, THE BIG MOVERS OFF THE BACK OF ANALYST RECOMMENDATIONS. WE START WITH LUCID.
THE EASY MAKER OF GATORADE TO NEUTRAL FROM UNDERWAY. THE CAPITAL RAISE WITH SAUDI ARABIA'S PUBLIC INVESTMENT FUND EXTENDS THE COMPANY CASH RUNWAY BETWEEN 2025 AND ALSO HELPS SOLIDIFY THAT LONGER-TERM COMMITMENT FROM THE SAUDI. SHARES THERE AT 3% OF THE DAY. NEXT IS LOOMING TECHNOLOGIES. CILIA UPGRADING IT TO NEUTRAL. THE TELECOM'S CARRIER ANNOUNCEMENT THAT AI DATA CENTERS HAVE DRIVEN $5 BILLION OF NEW BUSINESS AND $7 BILLION OF POTENTIAL SALES WAS WHAT ANALYSTS WANTED TO HEAR. THE ANALYST SAYING THE COMPANY
WILL HAVE THE ABILITY TO REDUCE ITS DEBT AND IMPROVE ITS OVERALL PERFORMANCE. SHARES OF 80 6%, BACK UP TO AROUND $4.81. CROWDSTRIKE UPGRADED TO OUTPERFORM UPGRADED AT PIPER SANDLER. THE ANALYST TELLING INVESTORS TO BUILD POSITIONS AT CURRENT LEVELS. THE ANALYST SAYS IT IS STILL DIFFICULT TO FULLY ASSESS THE IMPACT, BUT THE RISK-REWARD FOLLOWING A 40% SLUMP IN THE SHARES IS TOO COMPELLING TO PASS UP. SHARES GETTING 5% OF THE DAY. THOSE ARE SOME OF OUR TOP CALLS.
WE WANT TO STICK WITH CROWDSTRIKE. THE ANALYST BEHIND THAT CALL JOINS US NOW, ROB OWENS, WHO HEAD OF TECHNOLOGY RESEARCH AT PIPER SANDLER. ROB, IT'S EASY TO LOOK AT A 40% DROP IN THE STOCK AND SAVED BY THE DEPTH. IS THERE ANYTHING IN THE
VALUATION THAT GIVES YOU THE CONVICTION TO UPGRADE THE STOCK? ROB: CROWDSTRIKE IS ONE OF THE PREMIER COMPANIES A CYBER. CYBER HAS A VERY SOLID BACKDROP FROM A DEMAND PERSPECTIVE. WE BELIEVED IN TRENDS AROUND CONSOLIDATION AND WE FEEL THAT CROWDSTRIKE IS THE BEST WAY TO PLAY THOSE TRENDS.
OPPORTUNISTICALLY WE THINK THAT GIVEN THE 40% DROP REALLY OPENS THE DOOR FOR INVESTORS TO STEP IN AND START TO BUILD POSITIONS THAT A VERY COMPELLING LEVEL. I HAVE BEEN COVERING SECURITY FOR A GOOD 27 YEARS BEFORE WE EVEN CALLED IT CYBERSECURITY, IN THESE TYPES OF EVENTS, WE HAVE SEEN THEM BEFORE. NOT TO THIS MAGNITUDE. BUT THEY ARE TYPICALLY SHORT-LIVED.
WE TOOK RELATIVELY AGGRESSIVE CUTS. WE LOOK AT WHAT IDENTIFY SCENARIO MIGHT BE AND WE THINK SHARES ARE VERY COMPELLING AT THIS LEVEL. SO WE ARE UPGRADING TO OVERWEIGHT. ROMAINE: ONE THING IS A LITTLE DIFFERENT FROM PAST CYBERSECURITY EVENTS, IS THAT WE ARE STILL TALKING ABOUT THE POTENTIAL FOR COMPENSATION FOR DELTA, MICROSOFT OR WHATEVER OTHER COMPANIES FEEL THEY NEED TO BE COMPENSATED. HOW DOES THAT FACTOR INTO YOUR MODELS? ROB: IT DIDN'T FACTOR INTO OUR MODELS.
THERE HAVE BEEN OPEN LETTERS FROM LAWYERS BACK AND FORTH. WE THINK THE RELATIVE IMPLICATIONS FOR CROWDSTRIKE ARE MINIMAL. IT HAS BEEN CHARACTERIZED IN THE SINGLE-DIGIT MILLION-DOLLAR RANGE DESPITE DELTA EXPERIENCING NEARLY HALF $1 BILLION IN TERMS OF DAMAGES. IT WAS DELTA'S OWN I.T. WAS DELTA'S ON I.D. SYSTEMS THAT COULDN'T GET BACK UP AND RUNNING . IF YOU LOOK ACROSS THE BOARD, I DON'T THINK OTHER PEOPLE AND THIS IS EARLY HAD SOME OF THESE CHALLENGES.
AT THE END OF THE DAY OF THE POTENTIAL LEGAL SIDE OF THINGS WILL BE SELECTIVELY DE MINIMUS AND, QUITE FRANKLY, THIS IS A COMPANY THAT DOES A BILLION DOLLARS IN FREE CASH FLOW IN THE TRAILING 12 MONTHS, SO THEY HAVE THE WALL THAT SHOULD ANYTHING HAPPEN. AT THE END OF THE DAY IT WILL BE RELATIVELY INSIGNIFICANT. ALIX: WHEN YOU LOOK AT THE CUSTOMERS, LIKE IF I AM DELTA, WHY DON'T I GO SOMEWHERE ELSE? WALK ME THROUGH WHY THAT BECOMES NOT A RISK? ROB: THAT IS A FAIR QUESTION. WITH OUR ASSUMPTIONS, HE BUILT AND INCREASED LEVELS OF CHURN. CROWDSTRIKE HAS AN 88% RETENTION RATE, ONE OF THE BEST COMPANIES IN THAT SPACE. WE ALSO BUILD IN SOME LEVEL OF PRICING COMPRESSION RELATIVE TO EITHER MINERALS, EXPANSION AND NET NEW BUSINESS. WE WILL SEE SOME LEVEL OF CHURN.
BUT SECURITY IS GROWING IN IMPORTANCE. LOOK AT THIS EVENT. THIS IS NOT A HACK. IT WAS A SIMPLE CONTENT UPDATE THAT WENT WRONG. BUT IT IS SHOWING HOW CRITICAL THESE SYSTEMS ARE AND HOW INTERCONNECTED WE ARE.
I THINK IT NEEDS TO THE NEED FOR INCREASED CYBERSECURITY BECAUSE IF THIS WAS TRULY A HACK AND THESE SYSTEMS WERE DOWN FOR MONTHS, ALL TRANSPORTATION WOULD HAVE GROUND TO A HALT. WILL SOME CUSTOMERS BE FRUSTRATED? SURE. BUT AT THE END OF THE DAY THEY ARE THE, PREEMINENT SOLUTION IN THE SPACE, ONE OF THE BETTER COMPANIES AND THEY PLAY TO A LOT OF THESE POSITIVE TRENDS WE HAVE OUTLINED.
OVER THE COMING YEARS THIS WILL BE A GREAT EQUITY TO HAVE. ALIX: AN MICROSOFT IS THERE TOO. IN TERMS OF TIMING, HOW LONG DO YOU THINK UNTIL INVESTORS GET CLARITY ON THE ACTUAL AMOUNT AND GET THIS BEHIND THEM? ROB: IT WILL TAKE A BIT. I THINK CEO GEORGE KURTH JUST DEALT WITH THIS IN FANTASTIC FASHIONS EITHER WAY, IN TERMS OF CONSPIRACY AND REALLY BEING UPFRONT ABOUT THE PROBLEM.
HE IS GOING TO CONGRESS. GIVEN THE POLITICAL SEASON, WE CAN GUESS HOW THAT WILL GO. BUT IT WILL TAKE SOME TIME TO PLAY OUT BUT I THINK SOME INVESTORS ARE GETTING MORE AND MORE COMFORTABLE WITH THE FACT THAT IT IS PROBABLY NOT GOING TO BE THAT MUCH FROM A LITIGATION PERSPECTIVE. IT DEFINITELY HAS THE BALANCE SHEET. ALIX: THANKS A LOT, ROB OWENS FROM PIPER SANDLER.
NEW YORK TIMES REPORTED THAT MICROSOFT AND DELTA ARE GETTING INTO IT. MICROSOFT STATING IT WAS FALSELY BLAMED. MEANWHILE, MICROSOFT IS CRITICIZING DELTA FOR OVER SITTING TECHNOLOGY COMPANY'S ROLE IN ITS DISRUPTION.
ROMAINE: THIS IS THE OVERHANG. AT SOME POINT THIS WILL FALL ON CROWDSTRIKE. HOW MUCH THEY AGREE TO PAY AMOUNTS TO HOW MUCH THEY FIGHT BACK.
BUT YOU ARE AN INVESTOR, YOU HAVE TO HAVE THIS ON YOUR RADAR AS A POTENTIAL OVERHANG. ALIX: AND IT WILL BE DIFFICULT TO SWITCH HORSES IN MID-RACE AT THE END OF THE DAY. ON THE S&P WE ARE UP 2%. TURNAROUND TUESDAY DEFINITELY STANDS. ONE COMPANY NOT STANDING IS FUN POWER.
WE HAVE TO LOOK AT THE SOLAR INDUSTRY, SPECIFICALLY WITH SUNNOVA ENERGY. DIGESTING THE BANKRUPTCY FROM SOME POWER. THAT SUNNOVA ENERGY CEO WILL BE JOINING US TO TALK ABOUT WHAT IT MEANS FOR THE BROADER SOLAR, POWER INDUSTRY AND WHAT IT WINDS UP MEANING COME 2025 FOR THE INDUSTRY.
ALIX: EQUITIES ARE HOLDING ONTO THEIR GAINS. ONE STOCK THAT ISN'T, SHARES OF SOME POWER, ONE OF THE MOST PROMINENT NAMES IN SOLAR ENERGY AS FILING FOR BANKRUPTCY AFTER A HUGE DOG THAT INVOLVE A RESTRUCTURING, THE REDUCTION OF SUBSIDIES IN CALIFORNIA IT REALLY HAMMERED THEIR BUSINESS, AMONG OTHERS. ROMAINE: YOU KNEW THAT THAT WAS AT THAT STORY UNFOLD IN FOR A WHILE.
IS THAT SPECIFIC TO SUNPOWER OR A BROADER EXPECTATION OF WHAT IS GOING ON IN THE INDUSTRY? I WAS LOOKING AT THE STOCKS AS A BASKET. THE ETFS AT INVESCO, 120 ONE DOLLARS WITH THE HIGH. THAT WAS BACK IN 2021. WE ARE TRADING IN THE 30'S NOW AND THEY HAVE NOT COME CLOSE TO REIGNITING. ALIX: HIGHER RATES IS A NEGATIVE.
BUT ALSO IF YOU GET ANY ADMINISTRATION, DOES THAT CHANGE THE SUBSIDY PROGRAM? SUNNOVA ENERGY SELLS ROOFTOP SOLAR SYSTEMS AND BATTERIES. THE CEO OF JOHN BURGER JOINS US NOW. WHAT ABOUT THAT BANKRUPTCY, IS IT AND VERSUS IDIOSYNCRATIC? JOHN: IT IS IDIOSYNCRATIC. THERE WERE SPECIFIC ISSUES WITH SUNPOWER. THEY HAD STRUGGLES WITH SOME OF THE ACCOUNTING. I THINK THE AUDITOR RESIGNATION SUDDENLY KICK THIS OFF. A LOT OF WHAT SUNPOWER
STRUGGLED WITH, YOU KNOW, TROUBLED ACQUISITIONS AND SO FORTH, ARE REALLY ONE-OFF. THE EQUITIES IN TERMS OF THE BROADER SECTOR INCLUDING SUNNOVA 'S EQUITY HAS BEEN UNDER PRESSURE THE LAST FEW YEARS. IT IS SOMETHING THAT I THINK YOU LOOK FOR IN THE BUSINESS, INTEREST RATE ENVIRONMENT HAS GOTTEN MORE BENIGN. THE RATE DROP WE HAVE SEEN IN THE LAST FEW DAYS HAVE BEEN TREMENDOUS. I THINK THAT HAS BEEN SOME BACK UP HERE TODAY, WHAT I THINK IS PROFIT-TAKING. BUT YEAR OVER YEAR, WE ARE STARTING TO SEE RATES IN SOME CASES, DEPENDING ON WHERE YOU ARE IN THE CURVE, HAVE DROPPED MATERIALLY. SO IN TERMS OF INTEREST RATES,
THAT IS NOT REALLY A FACTOR. WE HAVE ADJUSTED OUR PRICING TO ACCOMMODATE FOR THAT. UTILITIES HAVE PUSHED UP PRICING TREMENDOUSLY BECAUSE OF INTEREST RATES AMONGST OTHER THINGS THAT ALSO DRIVE THEIR RATE STRUCTURE. QUITE SIMPLY, UTILITY RATES HAVE GONE UP. SOLAR EQUIPMENT, PANELS AND BATTERIES HAVE CRASHED DOWNWARDS. THAT OPENS UP A HUGE WEDGE OF
VALUE FOR CUSTOMERS. AS WE SAID LAST WEEK IN EARNINGS, THIS IS ACTUALLY REALLY GOOD AT THIS POINT. SOME DEMISE IN SOME COMPETITORS, YOU CAN IMAGINE THAT BUSINESS HAS TO GO SOMEPLACE. ALIX: I WAS GOING TO SAY, ARE YOU PICKING UP MARKET SHARE? WHO IS CALLING YOU IN THE LAST 24 HOURS? JOHN: WE HAVE SEEN A SURGE IN BUSINESS THAT WAS TREMENDOUS. FRANKLY NEVER SEEN ANYTHING
LIKE IT AND I HAVE BEEN IN THE BUSINESS A NUMBER OF YEARS. WAS THAT IN PART DUE TO SUNPOWER'S FAILURE? THEY HAD ANNOUNCED A SHOT OFF OF OPERATIONS A COUPLE OF WEEKS AGO -- YES. BUT AGAIN, WE ARE ALSO SEEING THE STORM SERVICE IS VERY ACTIVE.
HOUSTON TOOK A DIRECT HIT AS EVERYBODY KNOWS. SO WE ARE SEEING IS UTILITY RELIABILITY DROPPING. WE ARE SEEING A LOT OF CONSUMER INTEREST IN COMING IN AND SITTING ON UTILITY BILLS. THERE HAS BEEN A LOT MORE PRESS
ABOUT A RATEPAYER REVOLT STARTING IN CALIFORNIA WITH THOSE CALIFORNIA RATES JUMPING 85 PLUS PERCENT IN THE LAST THREE OR FOUR YEARS ALONE. SO YOU ARE SEEING A LOT OF INTEREST FROM CONSUMERS THAT IS GROWING DESPITE WHAT IS, YES, HIGHER RATES THAN A FEW YEARS AGO, BUT NOT THAT MUCH HIGHER, AND UTILITY RATES ARE MUCH HIGHER. HIGHER UTILITY RATES, LOWER UTILITY RELIABILITY, IT IS GIVING CONSUMERS THE ONLY CHOICE THEY HAVE AGAINST UTILITIES, AND THAT IS DRIVING A CONSIDERABLE AMOUNT OF DEMAND. AS WE GO INTO A SLOWER ECONOMY, YOU HAVE TO PAY THE POWER BILL, NO MATTER WHAT. AND IT IS CHEAPER WITH SEVEN SUNNOVA FOR ONE OF OUR COMPETITORS.
ROMAINE: WHAT IS THE UPTICK IN CUSTOMERS, FOLKS WHO HAVE NOT ALREADY ADOPTED SOLAR, WHAT IS THE CHANGE VERSUS A COUPLE OF YEARS AGO? JOHN: LAST WEEK WE ANNOUNCED WE WERE STOPPING NEW DEALERS. AT LEAST PAUSING, IF YOU WILL,. WE HAVE NEVER DONE THAT OF THE COMPANY BECAUSE WE HAVE SEEN SUCH TREMENDOUS DEMAND. THAT WILL SET ITSELF OUT. WE HAVE COMPETITION IN THE MARKET, WHICH IS WHAT WE NEED. CONSUMERS NEED COMPETITION IN UTILITIES.
BUT WHEN YOU LOOK AT THE CHEAPER AND BETTER EQUIPMENT THAT IS COMING OUT IN A RAPID FASHION FROM A LOT OF DIFFERENT SUPPLIERS, INCLUDING FOLKS LIKE ENPHASE, TESLA AND GENERAC AND SO FORTH, THERE IS A LOT OF NEW CAPABILITIES OF MANAGING LORD. THOSE SOLAR PANELS DO VERY WELL GOING THROUGH HURRICANES. BATTERIES DO A GREAT JOB, WE SAW THAT MUCH BETTER THAN GENERATORS THROUGH HURRICANES HERE IN HOUSTON. ALL OF THESE ATTRIBUTES OF, AGAIN, UTILITIES GETTING LESS RELIABLE AND MORE EXPENSIVE, BUT THAT EQUIPMENT IS GETTING MORE RELIABLE AND MORE CAPABLE AND BE ABLE TO DELIVER THAT KILOWATT TO THE CUSTOMER WHEN THEY NEEDED, AT A CHEAPER PRICE. ROMAINE: I AM CURIOUS ABOUT THE GOINGS
ON AT YOUR JOB. WHEN WE TALK ABOUT THE EARNINGS REPORT LAST WEEK AND HE SAW A BID IN THE DAY AFTER, THAT SEEMS TO BE BECAUSE INVESTORS WERE PLEASED WITH SOME OF THE COMMENTARY ON CASH GENERATION. THE IDEA THAT IT HAS BEEN, MAY BE A SHIFT IN STRATEGY? CORRECT ME IF I AM WRONG -- BUT THERE HAS BEEN A FOCUS ON CASH GENERATION. WHY? JOHN: SIMPLY PUT, WHEN YOU LOOK AT THE CAPITAL MARKETS, IT BECAME VERY DIFFICULT WHEN RATES MOVED UP IN THE WORST BOND MARKET IN U.S. HISTORY WHICH EVEN A CLEAVAGE OF, WHICH I THOUGHT WAS FAIRLY -- WHICH EVEN ECLIPSE TO THE CIVIL WAR, WHICH WAS NOTEWORTHY. THERE WAS FOCUS ON DEBT
SERVICING, THE ABILITY TO REPAY. WE MADE IT CLEAR WE DON'T TAKE ON DEBT YOU DON'T BELIEVE WE CAN WE PAID. WE HAD A PLAN TO GENERATE THE CASH ON A FORWARD BASIS WHEN WE TOOK ON THE DEBT. WE GOT PLENTY OF RUNWAY IN TERMS OF TIME. OUR COMMITMENT TO INVESTORS WAS THAT WE WILL STOCKPILE CASH. WE ARE NOT BEING PRICED FOR
GROWTH, EVEN THOUGH WE ARE SEEING PLENTY OF GROWTH, MORE GROWTH THAN WE CAN HANDLE, AS I JUST MENTIONED, BUT WE WILL STOCKPILE CASH AND PAY THE DEBT. THAT WAS THE PLAN, IT WAS CUT AND DRY AND THAT IS WHAT INVESTORS APPRECIATED. ALIX: LET'S TALK POLITICS FOR A SECOND. CALIFORNIA IS PEERING BACK SOME
OF THE SUBSIDIES FOR RESIDENTIAL. IF WE GET A FORMER PRESIDENT TRUMP IN THE WHITE HOUSE, WHAT IS YOUR CONFIDENCE LEVEL THAT THE IRA AND SOONER SUBSIDIES DAY? -- SOLAR SUBSIDIES STAY? JOHN: I WOULDN'T CALL IT WHAT THEY CALLED NET METERING, ESPECIALLY NOW WITH BATTERIES, AS A SUBSIDY. THERE IS A LOT OF VALUE THAT HAVING ALL OF THESE SOLAR SYSTEMS WITH BATTERIES AND FLUID MANAGEMENT TO SPREAD ACROSS THE STATE OF CALIFORNIA BEHIND THE METER CAN REALLY ADD VALUE TO THE SYSTEM.
THE PROBLEM IS THE UTILITIES JUST HAVE THE GOVERNOR'S OFFICE REALLY BY THE STRONGHOLD. TRYING TO CONTINUE TO DRIVE UP RATES. LOOK AT THE RATEPAYER REVOLT AND THE RATES BEING GIVEN UP SINCE THEY SUPPORT GOTTEN RID OF NET METERING. THAT IS ONE ISSUE ON THE POLITICAL SIDE. TEXAS HAS BEEN MUCH MORE OF AN OPEN MARKET FOR US IN FENCING OF A MORE GROWTH THERE. ON THE OTHER PSYCH, THAT IRA, THIS IS A BIPARTISAN BILL AT THE END OF THE DAY. IT IS WORKING IN TERMS OF DRUG
MANUFACTURING AND CREATING U.S. JOBS. -- IN TERMS OF THE MANUFACTURING AND CREATING U.S. JOBS. I DON'T THINK THAT NO MATTER WHO GETS IN THE WHITE HOUSE, THEY WILL ROLL THAT BACK BECAUSE IT HAS BEEN SO SUCCESSFUL.
THE LAST THING, I THINK, ANY -- WHOEVER WINS THE PRESIDENCY WOULD WANT TO DO, IS THIS SOMETHING THAT ACTUALLY DROPS FOUR DEGREES OR LESS OF JOB GROWTH AND MAYBE EVEN LEADS TO MORE LAYOFFS. I DON'T THINK THAT IS GOOD PUBLIC POLICY. REGARDLESS WHETHER A DEMOCRAT OR REPUBLICAN. AND CANDIDLY, IN TERMS OF THE
NEED IS ENERGY INDUSTRY THAT WE NEED TO LOOK AT COUNTRY, THERE IS BIPARTISAN SUPPORT FOR THAT. WE ARE LARGELY SPEAKING A LOT OF POLITICS AND AT THE END OF THE DAY, I THINK THE IRA WILL BE LARGELY INTACT REGARDLESS IS THE WHITE HOUSE HERE. ROMAINE:, RIGHT, JOHN. I APPRECIATE YOU TAKING TIME FOR US. JOHN BERGER, PRESIDENT, CHAIRMAN AND CEO AT SUNNOVA ENERGY. SHARES BACKING IN THE DAY, MAYBE THAT IS THE DRAG DOWN FROM THE BANKRUPTCY OF ITS COMPETITOR SUNPOWER. BUT KEEP AN EYE ON ELECTRIC VEHICLE STOCKS. THE A BIT MORE OF AN APPETITE
FOR THE SHARES. THYSSENKRUPP OF ABOUT 3% ON THE DAY. THE LUCID GROUP, OF ABOUT 3% ON. WE WILL GET SOME EARNINGS RESULTS LATER TONIGHT OUT OF RIVIAN WHICH HAS ALSO SEEING A REBOUND HERE. PEOPLE WERE CONCERNED ABOUT ITS FUTURE. BUT IT HAS MANAGED TO RAISE SOME MONEY. ALIX:
LUCID AND RIVIAN CLEARLY NEED CASH INFUSION. BUT THEY HAVE THE COOL TECHNOLOGY IN THE CAR. HOW DO YOU BRIDGE THAT GAP? HOW LONG IS THAT BRIDGE? ROMAINE: AND I SEE THE PARALLELS WITH TESLA. THEY HAD COOL CARS BUT THEY WERE LOSING MONEY. EVERYONE WAS, LIKE, THIS COMPANY WILL CIRCLE THE DRAIN AT SOME POINT. AND THROUGH A LOT OF CREATIVITY BY CERTAIN PEOPLE, THEY MANAGED TO SURVIVE. I THINK PEOPLE ARE LOOKING AT
LUCID AND RIVIAN AND SAYING, CAN THEY REPLICATE WHAT TESLA DID? COMING UP, ANOTHER BIG MOVER TO THE UPSIDE TODAY IS THE SPINOFF OF JOHNSON & JOHNSON, RALLYING MORE THAN 14%. THIS IS THE COMPANY BEHIND TYLENOL AND NEUTROGENA, THINGS THAT YOU SEE AT LOCAL DRUGSTORES. IT IS BUCKING THE TREND. IT IS OUR STOCK OF THE HOUR AND IT IS UP NEXT ON THIS IS "THE CLOSE" ON BLOOMBERG. ROMAINE: IT WAS ONE OF THE BIGGEST IPO'S OF 2023.
KENVUE, THE SPINOFF FROM JOHNSON & JOHNSON. SHARES TODAY UP ABOUT 14%. THIS, ON THE BACK OF THE REPORT THAT SALES TOPPED ESTIMATES IN THE RECENT QUARTER, BUCKING THE TREND AMONG ITS PEERS. ABIGAIL DOOLITTLE JOINED US FOR MORE. IT IS STILL TRADING BELOW ITS
$22 IPO PRICE. IT'S A COMPANY THAT MAKES TYLENOL,, NEUTROGENA BASICALLY YOU WALK INTO A CBS, DUANE READE, THEIR PRODUCTS ARE ON THE SHELVES. SO WHAT IS GOING ON? ABIGAIL: IT'S A CASE OF THAT EXPECTATIONS. THEY DID BEAT SALES AND EARNINGS, BUT EARNINGS WERE UP TO THE WORK. SALES WERE HEALTHY. BUT THE GROWTH OF 1.5% WAS LESS
NONSEQUENTIAL. HOWEVER, IT BEAT THE EXPECTATION FOR A DECLINE. MARGINS SHRUNK ON BRAND INVESTMENT. THEY REITERATED THE FULL-YEAR GUIDE. PUT THAT TOGETHER, SHOULD EQUAL A 14% POP AND THE BEST DAY SINCE THAT IPO? AGAIN, IT GOES BACK TO THE BAD EXPECTATIONS.
PROCTER & GAMBLE HAD A BAD QUARTER, STRONG VOLUME BUT WEAK PRICING. SO FOLKS ARE RELIEVED THAT THIS QUARTER WAS NOT WORSE. THE COMPANY ALSO SAID THEY HAVEN'T MADE MEANINGFUL SHARE IN TERMS OF THEIR PRIVATE-LABEL BRANDS AND CONSUMERS ARE MAKING TRADE-OFFS. THEY DID SAY THEY ARE SPENDING ON HEALTH, THOUGH. ROMAINE:
YOU WOULD THINK PEOPLE WOULD BE DOING BETTER IF PEOPLE ARE FEELING THE PINCH -- PRIVATE-LABEL. ALIX: THERE ARE SO MANY COMPETITORS NOW. ABIGAIL: I THINK THAT IS THE CASE. ALSO, NEUTROGENA HAS BEEN AROUND FOR SO LONG. THESE NEW BRANDS HAVE SOME NICE PACKAGING. ALIX: ABIGAIL, THANKS A LOT. COMING UP, LEE COUNTY DOWN TO
THE CLOSING BELLS 15 MINUTES AWAY. >> I DO THINK THAT WE ARE GETTING A CORRECTION HERE AFTER A VERY STRONG RUN IN THE MARKETS. AND THAT MIGHT BE HEALTHY. IN TERMS OF YOUR QUESTION ABOUT A RECESSION, OUR ECONOMISTS HAVE UPPED THEIR CHANCE OF RECESSION TO 25% FROM 15%. ALL OF THAT IS LOWER THAN THE BROAD CONSENSUS.
MY VIEW IS THAT THE BEST CHANCE AS WE LOOK FORWARD IS THAT THE ECONOMY WILL CHUG ALONG AND WE PROBABLY WILL NOT SEE RECESSION, BUT THE POSSIBILITY IS NOT ZERO. IT'S NEVER ZERO. ROMAINE: CEO OF GOLDMAN SACHS GET DAVID SOLOMON GIVING US HIS THOUGHTS ON ECONOMIC CONDITIONS. ARE YOU PREPARING FOR A? ALIX: OH GOSH, I AM NOT. ROMAINE:
SEEMS LIKE THIS IS A MARKET COMING TO TERMS WITH A POTENTIALLY SOFTER ECONOMY THAN WHAT THEY PRICED THEM BEFORE. BUT ARE THEY PRICING IN A RECESSION? ALIX: IF YOU LOOK AT HOW STEEP THE CURVE DIS-INVERTED CORRECT SOMETHING THAT IS ASSIGNED. BUT I AM DEBATING WHETHER OR NOT TO TRUST THIS RALLY TODAY. IT'S NOT A DEAD CAP BALANCE. ROMAINE: COME ON, LEAVE THAT CAPS ALONE. ALIX: I KNOW. BUT YOU HAVE SO MANY SYSTEMIC FUNDS WITH PHYSICIANS TO START ON THAT FRONT.
THE CARRY TRADE IS ONLY 2% DONE. THERE COULD BE MORE SHOES TO DROP HERE. ROMAINE: BUT YOU HAVE THE DATA SAYING THAT THE DIP-BUYING WAS BY INSTITUTIONS.
AND THAT THE PEOPLE SITTING ON THE SIDELINES WORK PRIMARILY ON THE RETAIL SIDE. INTERESTING TO SEE HOW THIS SHAKES OUT. MAYBE WE GET INSIGHTS FROM OUR NEXT GUEST IS WE GET CLOSER TO THE CLOSING BELLS, JUST ABOUT EIGHT MINUTES TO GO. PAUL CHRISTOPHER JOINS US NOW, HEAD OF GLOBAL INVESTMENT STRATEGY AT WELLS FARGO INVESTMENT INSTITUTE. WHAT DID YOU MAKE OF THAT THREE-DAY SELLOFF, THE MOST SIGNIFICANT SELLOFF WE HAVE HAD IN SOME TIME. IT WAS NOT A FLIP-FLOP IN INVESTOR SENTIMENT, OR DO YOU THINK THAT WILL BE MORE OF A BLIP ON THE WAY TO WHERE WE WERE GOING BEFORE? PAUL: [LAUGHS]. IT'S GREAT TO BE BACK WITH YOU.
I WOULD SEE IT AS PART OF A SEQUENCE THAT STARTED IN JULY WHEN WE GOT THAT INFLATION READING AND AFTER THAT, INTEREST RATES FELL, AND FUTURES PRICE IS A CUT IN SEPTEMBER. THEN LAST WEEK ALL OF A SUDDEN, IS VERY WEAK MANUFACTURING PMI AND EMPLOYMENT REPORT THAT MISSES THAT PEOPLE ARE SAYING, WHOA, THE INFLATION IS FLOWING FASTER AND THE ECONOMY SLOWING FASTER THAN WE THOUGHT SO WE BETTER CATCH UP WITH THAT. THE REAL RISK IS THAT THE ECONOMY SLOWS -- I DON'T THINK WE HAVE A RECESSION, BUT THE RISK IS THAT WE SLOUGH BELOW 2% FOR SOME TIME IN THE BACK HALF OF THIS YEAR AND THEN WE ARE VULNERABLE TO A SHOCK. IT COULD BE ELECTIONS.
COULD BE GEOPOLITICS. IT COULD BE LIQUIDATED. THINK ABOUT THIS, TREASURY WILL SOON START HOARDING CASH INSTEAD OF SPENDING IT LIKE THEY DO IN AN ELECTION YEAR. WHY? BECAUSE YOU HAVE THE DEBT CEILING COMING UP. ROMAINE: WHEN WE TALK ABOUT THE EXPECTATIONS FOR THE FED AND WHAT THEY CAN DO, I WAS LOOKING AT THE OUTLOOK FROM WELLS FARGO FOR RATES. CORRECT ME IF I AM RIGHT. 4.25 TO 4.50 IS THE YEAR TARGET FOR THE FED FUNDS RATE, THAT WOULD BE A FULL PERCENTAGE POINT BELOW WHERE WE ARE NOW. PAUL: SIDES RIGHT.
THAT INCLUDES A 50 POINT CUT PROBABLY IN SEPTEMBER, THEN TWO QUARTER-POINT CUTS. THE FED MAY BE POINTING TO FRONT AEND THAT A LITTLE BIT MORE. ALIX: SO DO YOU BUY STOCKS INTO THAT OR DO YOU SELL INTO THAT? PAUL: WE ARE BUYING. TAKING OUR POSITION INTO NEUTRAL. WE HAVE BEEN OVERWEIGHT AND
BONDS AND UNDERWEIGHT STOCKS. WE USED THE OPPORTUNITY OF THE SELLOFF AND THE BIG DROP IN RATES TO PUT MONEY INTO EQUITIES FROM FIXED INCOME. WE LIKE LARGE CAPS. WE LIKE INDUSTRIALS, MATERIALS, ENERGY. WE LIKE COMMUNICATION SERVICES. WE LIKE FINANCIALS EVEN THOUGH THEY HAVEN'T DONE WELL LATELY ON THE DECLINE ON RATES. WE THINK THERE IS A PIVOT COMING IN THIS ECONOMY LATER THIS YEAR OR EARLY 2025 SO WE WANT TO POSITION FOR THAT NOW. ALIX: SOME OF WHAT YOU ARE MENTIONING
ARE ALSO CYCLICAL NAMES. SO IF WE GET A TURN IN THE ECONOMY, AND A 50 BASIS POINT CUT IN THE FED, THAT WOULD IMPLY THAT THINGS AREN'T GREAT. SO DO YOU JUST HOLD ON AND WAIT? PAUL: THE FED WAS ALWAYS GOING TO CUT RATES EVEN IF THE ECONOMY SLOWED BACK DOWN TO THE LOW 'S 2'S . THE FED DOESN'T WANT US TO GO BELOW 2% BECAUSE LIKE THE BICYCLE ON THE SIDEWALK, WHEN YOU SLOW ENOUGH, YOU HIT A CRACK, A HOLE, AND UNEVEN SIDE OF SIDEWALK SLABS AND ALL OF A SUDDEN YOU ARE FALLING OFF YOUR BIKE. YOU DON'T WANT TO EXPOSE YOURSELF TO THOSE SHOCKS. THAT'S WHY WE THINK THE FED WILL CUT MORE THAN WE PREVIOUSLY THOUGHT. ROMAINE: I LOVED THE BICYCLE ANALOGY, PAUL, AS SOMEONE WHO FALLS OFF HIS BIKE FREQUENTLY. [LAUGHTER]
WHEN WE TALK ABOUT WHETHER PEOPLE WILL BE FEELING THE CYCLICAL TRADE, THE REBOUND WE HAVE SEEN IN THE LAST FEW WEEKS IN SMALL CAPS, GIVEN THE SHIFT IN SENTIMENT ABOUT ECONOMIC CONDITIONS, DO YOU THINK THERE IS LIFE LEFT IN THAT. ? PAUL:? PAUL: NO, THERE ISN'T. GO BACK TO WHAT I SAID A MINUTE AGO, THIS SEQUENCE STARTED BACK IN JULY WITH THAT CPI REPORT. A LOT OF THAT CARRY TRADE HADN'T YET GONE AWAY AND THAT WAS JUST LIQUIDITY. WE ARE RUSHING INTO SMALL CAPS BECAUSE IT LOOKS LIKE THE CHEAPEST DEAL ON THE STREET. NOW THAT THE CARRY TRADE IS PULLING BACK, YOU WILL SEE A LOT OF THAT MONEY GO BACK AWAY FROM WHAT WAS MAYBE A CHASING LOW PRICES THAT ONLY GOT LOWER.
ALIX: I AM CURIOUS HOW MUCH YOU THINK THE INFLUENCE WE SAW ON THE EQUITY MARKET, LIKE I WILL BORROW YEN AND BY TECH STOCKS, OR EVEN A DERIVATIVE PLAY, WAS THAT REAL? PAUL: VERY REAL. THINK ABOUT A JAPANESE INVESTOR, PENSION FUND, MAYBE THEY WERE IN U.S. STOCKS AND CHASING AS WELL, THEN MAYBE THEY SAW THE NEWS FROM THE FED THAT THEY WILL CUT INTEREST RATES, THEN EAT YOU SEE THE WEAK DATA AND YOU THINK I BETTER GET INTO BONDS. SO YOU RUSH INTO BONDS OUT OF
STOCKS. THEN YOU ARE GOING TO HEDGE. AND SO IF INTEREST WOULD COME DOWN SO MUCH, IT IS CHEAP. TO HEDGE IT WILL PUT THE DOLLAR WEAKER, THE YEN STRONGER. SO THIS IS PROBABLY -- THE CARRY TRADE IS NOT THE ONLY SOURCE OF LIQUIDITY, BUT IT IS AN IMPORTANT ONE. IN TERMS OF FLUIDS, IT IS THE
ONE THAT HAS TURNED ON A DIME. ROMAINE: PAUL, ALWAYS GREAT TO GET YOUR INSIGHTS. PAUL CHRISTOPHER IS HEAD OF GLOBAL INVESTMENT STRATEGY AT WELLS FARGO INVESTMENT INSTITUTE ON THIS TURNAROUND TUESDAY THAT IS LOOKING A LITTLE WEAK AS WE GET CLOSER TO THE CLOSE. STILL HOLDING ON SIZABLE GAINS, UP AROUND 8%. WE WERE ABOUT 2% ON THE MAJOR INDICES TWO HOURS AGO. ALIX: THE NEXT FEW MINUTES WILL BE INTERESTING. WE ALSO HAVE EARNINGS --
INSTACART, AIRBNB, RIVIAN, TRIP. ROMAINE: A NICE READ CROSS-SECTION ABOUT DIFFERENT AREAS OF THE ECONOMY. RAISES THE QUESTION AS TO WHETHER THEY WILL MOVE THE NEEDLE. DO THEY TO CHANGE THE SENTIMENT? ALIX:
BOOKINGS DID NOT DO SO WELL. FEELS IDIOSYNCRATIC. A SLIGHT MACRO READ VERSUS SOMETHING BIG LIKE APPLE OR AMAZON. ROMAINE: ROMAINE: IT WILL BE INTERESTING HOW THE MARKET SHIFTS NOT HAVING THOSE ECONOMIC CATALYSTS, MAY BE ANOTHER EARNINGS CATALYSTS EITHER, AS WE MOVE CLOSER TO THE CLOSING BELLS HERE ON THIS TUESDAY AFTERNOON. SIT TIGHT, FULL MARKET COVERAGE COMING UP HERE ON. ANNOUNCER: "THE CLOSING BELL," BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW.
♪ ROMAINE: WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY, ROMAINE BOSTICK ALONGSIDE ALIX STEEL. HERE TO HELP TAKE YOU THROUGH THE CLOSING BELL IS CAROL MASSAR IN THE RADIO BOOTH AND MATT MILLER ALONGSIDE CAROL, FILLING IN TODAY FOR TIM STENOVEC. WELCOME TO OUR AUDIENCES, ACROSS ALL PLATFORMS, INCLUDING OUR PARTNERSHIP WITH YOUTUBE. TIM: SINCE YOU WERE OUT -- CAROL: SINCE YOU WERE OUT FRIDAY, MONDAY, WE ARE GOING TO PEPPER YOU WITH ANALYSIS. ROMAINE: DID I MISS A LOT? CAROL: YOU MISSED A LITTLE BIT. WE ARE SEEING SOME SELLING INTO THE CLOSE.
WE ARE GREEN ACROSS THE BOARD BUT DEFINITELY OFF THE BUS LEVELS OF THE SESSION. MATT: THERE'S STILL A LOT OF GREEN AND THE LIFT OF NVIDIA. FOR THE MOST PART THE MEGA CAP TECH STOCKS ARE UP THERE. A FEW DECLINERS FOR ME, THAT IS MY JOB, I WILL GIVE THOSE TO YOU IN A LITTLE BIT.
CHIPMAKERS IN GENERAL ARE RISING AS WELL. THAT'S GOOD FOR THIS MARKET AFTER THE DROPS WE SAW YESTERDAY. SCARLET: LET'S NOT FORGET J.P. MORGAN SAID THE UNWIND IS HALFWAY THROUGH, MAY BE A LITTLE BIT OVER HALFWAY THROUGH. WE MIGHT HAVE GOTTEN A LITTLE OF A REPLETE -- OF A REPRIEVE TODAY BUT THAT IS FADING THIS AFTERNOON. CLOSER TO FRIDAY, WE MIGHT SEE THINGS PICK UP AGAIN. MATT: YOU'RE JUMPING AHEAD OF YOURSELF. [LAUGHTER] SCARLET:
GOLDMAN SACHS SAID THERE ARE SO MANY SYSTEMIC FUNDS, YOU WONDER IF THEY HAVE TO SELL THAT TREND AND IF THAT MEANS MORE DOWNSIDE FOR EQUITIES. ROMAINE: THERE'S MORE CAUTION CLOSER TO THE BELL. WE HAD MORE THAN 450 STOCKS IN THE GREEN. 400 OF THOSE FINISH THERE AS WELL. AGGREGATE NUMBERS ARE STILL LOOKING GOOD. UP 280 POINTS ON THE DOW JONES, ABOUT .8%, A 1% GAIN ON THE S&P 500, A SIMILAR GAIN FOR THE
NASDAQ COMPOSITE AND THE NASDAQ 100, ALMOST EQUAL ON A PERCENTAGE BASIS. AND BELIEVE IT OR NOT, THE OUTPERFORMER OF THE DAY WAS THE RUSSELL 2000, 1.2% HERE ON THE DAY. CAROL: DEFINITELY OFF ITS EARLIER GAIN OF 2.3%. I WANT TO GO BACK TO THE S&P 500, 394 TO THE UPSIDE, 108 NAMES TO THE DOWNSIDE. ROMAINE: WAS YOUR FAVORITE? CAROL:
UBER MAYBE. SCARLET: LET'S TAKE A LOOK AT THE SECTOR PERFORMANCES. WE HAD THE EQUIVALENT OF A CHERRY PIE, WHAT MATT CALLED IT, TODAY IT IS A PESTO PIE -- THERE ARE A FEW RED SLICES. YOU HAVE TO DIG PRETTY DEEP, TECH, HARDWARE AND EQUIPMENT DOWN, FOOD, BEVERAGE AND TOBACCO OFF. THEY HAVE GAINED AT LEAST A THIRD OF 1%, WITH REAL ESTATE THE BEST PERFORMER. CAROL:CAROL: I WOULD NOT EAT A PESTO PIE -- CAROL: I WOULD NOT EAT A PESTO PIE. ROMAINE: REALLY? SCARLET:
A WHITE PIE IS GOOD. CAROL: LET'S GET YOU SOME OF THE INDIVIDUAL GAINERS, FINISHING THE DAY WITH A 2% GAIN, MATT WAS TALKING ABOUT THIS YESTERDAY, THIS COMPANY GETTING $1.5 MILLION LIFELINE, A CASH INFUSION FROM ONE OF ITS BIGGEST INVESTORS, SO THAT DEFINITELY HELPED LUCID OUT, THE COMPANY REITERATED ITS ANNUAL FORECASTS ARE UP ABOUT 3%. MATT: I SPOKE WITH THE CEO THIS MORNING. CAROL: WHAT DID HE SAY? MATT:
THEY ARE MAKING AMAZING VEHICLES AND PRETTY SOON PEOPLE ARE GOING TO START BUYING A LOT MORE OF THEM. CAROL: I BET HE'S FEELING BETTER WITH A CASH INFUSION. ALSO UP IN TODAY'S SESSION, PLAN SIX, CITING CONTINUED DEMAND FOR AI SOFTWARE. UBER, I MENTIONED IT WAS MY
FAVORITE GAMEER, NUMBER TWO -- GAINER AND THE S&P 500. COMPANY REPORTED BETTER-THAN-EXPECTED ORDERS IN THE SECOND QUARTER, UNDERSCORE AND THE CONTINUED STRENGTH AND DEMAND FOR RIDESHARE UPBEAT, SO INVESTORS LIKE TO. ALSO ONE MORE, CAN VIEW, UP ALMOST 5% -- KENVIEW, UP ALMOST 5% IN TODAY'S SESSION, THEY OWN TYLENOL.
BUCKING A TREND THAT WE SEE FROM OTHERS IN THE CONSUMER SPACE. SCARLET: TRIP ADVISOR SECOND-QUARTER ADJUSTED EARNINGS ARE COMING OUT AT $.39 A SHARE. THAT LOOKS TO BE BEAT. I AM LOOKING AT ITS CORE REVENUE COMING IN AT $250 MILLION, SLIGHTLY BELOW ESTIMATES.
BUT OVERALL THE REVENUE WAS ALSO BELOW ESTIMATES COMING IN AT ABOUT 497 MILLION DOLLARS. SCARLET: WE ALSO HAVE AIRBNB RESULTS COMING OUT. LET'S GIVE YOU THE NUMBERS FOR THE QUARTER THAT ENDED. THE SECOND QUARTER REVENUE, $2.75 BILLION, SLIGHTLY HIGHER THAN ANTICIPATED. GROSS BOOKING VALUE, $21.2 BILLION. A LITTLE BIT SHY OF THE ANALYSTS CONSENSUS OF $21.23
BILLION. THE OUTLOOK IS DRIVING THE STOCK LOWER IN AFTER HOURS TRADING, THE THIRD QUARTER REVENUE OF $3.67 BILLION TO $3.73 BILLION -- ANALYSTS WERE LOOKING FOR $3.84 BILLION. THE MISSED REVENUE FORECAST,
REALLY PULLING THE STOCK LOWER BY 9% RIGHT NOW. ROMAINE: ONE OF THE BIGGEST DECLINERS IN AFTER HOURS TRADING. ONE OF THE BEST GAINERS IS REDDIT. UP ABOUT 8% ON THE BACK OF EARNINGS. DAILY ACTIVE USERS THE MOST RECENT QUARTER UPBEAT. THE STREET WAS LOOKING FOR ROUGHLY ABOUT $85 MILLION, REVENUE ALSO BEATING A 281 MILLION DOLLAR STREET -- THE STREET WAS LOOKING FOR $253 MILLION.
THE FORECASTS, BEATING FORECASTS ACROSS THE BOARD. THE STREET WAS LOOKING FOR $282 MILLION AND CHANGE, THE HIGH-END OF THAT RANGE IS ALMOST DOUBLE THE AVERAGE OF STREET ESTIMATES. MATT: LET'S TAKE A LOOK AT AIRBNB AGAIN. THE FORECAST FOR THE REVENUE MISSED IN THE THIRD QUARTER, THIS IS WHAT MATTERS. IT'S ABOUT THE OUTLOOK. PEOPLE DON'T WATCH THE SHOW OR LISTEN TO IT ON RADIO FOR THE EXACT EARNINGS NUMBERS GOING UP FOR SIGNIFICANT DIGITS. THEY JUST WANT TO KNOW -- IS IT
UP OR DOWN? IT IS A DOWN ARROW STORY WITH AIRBNB. IF THE FORECAST IS DOWN, EXPECT THE SHARES TO FALL IN THE AFTERMARKET AND A ROOF OPEN TOMORROW. CAROL: FREE CASH FLOW, BILLION DOLLARS, UP 16% YEAR-OVER-YEAR. GROSS BOOKINGS, EXPERIENCE, DOWN 2%. ANTICIPATE -- THEY ANTICIPATE IN TERMS OF COMMENTARY THAT THE IMPLIED TAKE RATE THE THIRD QUARTER OF THIS YEAR WILL BE HIGHER YEAR-OVER-YEAR PRIMARILY DUE TO THE CROSS CURRENCY TRANSACTION FEES. THEY ARE GETTING INTO SOME OF THE -- MORE COLOR IN TERMS OF THE EARNINGS.
DOWN ABOUT 12% HERE, BUILDING OFF A 4% DROP FOR 2024. ALIX: X MONITORS ARE INVESTING. THEY TALK ABOUT HOW THEY ARE INVESTING IN UNDERPENETRATED MARKETS. DEFINITE QUESTIONS IN TERMS OF HOW MUCH THEY ARE INVESTING.
I DID NOT GET AN ACTUAL NUMBER BUT THEY ARE TRYING TO RULE OUT DIFFERENT AREAS -- ROLL OUT DIFFERENT AREAS. I WANT TO GET THAT NUMBER. SCARLET: LATIN AMERICA AND ASIA CONTINUE TO BE THE FASTEST GROWING REGIONS FOR AIRBNB, SEEING SHORTER BOOKING LEADTIMES GLOBALLY. SPECIFICALLY WHEN IT COMES TO THE U.S., SIGNS OF SLOWING DEMAND FROM U.S. GUESTS. IT IS EXPECTING SEQUENTIAL MODERATION OF GROWTH ON THE METRIC OF KNIGHTS AND EXPERIENCES BOOKED FOR THIS QUARTER, THE THIRD-QUARTER. AGAIN GOING BACK TO WHAT MATT WAS SAYING, A BIG DOWN ARROW FOR THE THIRD QUARTER. MATT:
WE HAD A DOWN ARROW FOR RIVIAN AS WELL. THE COMPANY COMING OUT WITH A LOSS PER SHARE THAT IS A LOT WORSE THAN THE STREET WAS EXPECTING -- A LOT WORSE THAN THEY HAD YEAR-OVER-YEAR. 127 LAST YEAR, 146 THIS YEAR IS THE LOSS. IF YOU ADJUST THAT, THE ONLY LOSS 113 PER SHARE, COMPARED TO THE ESTIMATE FOR 120. SO THAT LOOKS A LITTLE BETTER. REVENUE WAS BANG IN LINE WITH ESTIMATES AT $1.16 BILLION.
IT'S ALL ABOUT WHAT THEY LOST COMPARED TO WHAT WAS EXPECTED. IT LOOKS LIKE THEY ARE IN THE BALLPARK, IF YOU LOOK AT THE TOTAL DOLLAR FIGURE, $860 MILLION IN THE QUARTER WAS WHAT A LOSS -- $892 MILLION IS WHAT WE WERE LOOKING FOR. THIS COMPANY BURNS ROUGHLY $900 MILLION A QUARTER. SO THEY NEED TO TURN THAT AROUND. ROMAINE: INSTACART OUT WITH EARNINGS AS WELL, SHARES DOWN IN AFTER HOURS TRADING DESPITE A BEAT ON BOTH THE TOP AND BOTTOM LINE.
GROSS PROFIT IN THE QUARTER RISING 18% TO ABOUT $623 MILLION. EPS ALSO COMING IN ABOVE ESTIMATES AND GROSS TRANSACTION VALUE AT $8.2 BILLION. THE STREET WAS LOOKING FOR $8.1 BILLION. THE FORECAST FOR THE THIRD QUARTER, THE COMPANY SAYS IT HAD SEIZED 1.8 TO $5 BILLION, THE LOW END OF THE RANGE IS
RIGHT ON THE NEWS OF THE AVERAGE WALL STREET ESTIMATES, NEVERTHELESS SHARES ALSO LEADING BETWEEN GAINS AND LOSSES RIGHT NOW. CAROL: THIS ONE HAS HAD QUITE A RUN THIS YEAR COME UP MORE THAN 30% HERE IN 2024, BOUNCING AROUND AS YOU SAID, ROMAINE, BUT RIGHT NOW TO THE UPSIDE MORE THAN 3%. THAT IS A WRAP. ANOTHER DROP OF EARNINGS. WE WILL CONTINUE TO TRACK THEM INTO THE AFTERMARKET AND OF COURSE ENTER THE WEDNESDAY TRADE. THAT IS A REP FOR CROSS-PLATFORM -- WRAP FOR CROSS-PLATFORM COVERAGE. TIM AND I, NO, NOT TIM, MATT AND I ARE BACK TO RADIO AND YOUTUBE. SCARLET AND ROMAINE CONTINUE ON
TV. SEE YOU AGAIN SAME TIME, SAME PLACE FOR OUR CROSS-PLATFORM COVERAGE. ROMAINE: OUR COVERAGE CONTINUES HERE ON BLOOMBERG TELEVISION. A SLEW OF EARNINGS COMING OUT HERE AFTER THE BELL.
FULL ANALYSIS AND A FULL BREAKDOWN OF EVERYTHING THAT JUST HAPPENED, WHEN WE COME BACK AFTER THE BREAK. THIS IS A CLOSE ON BLOOMBERG -- SCARLET: WELCOME BACK TO THE CLOSE. I'M SCARLET FU. ROMAINE: I'M ROMAINE BOSTICK.
GREEN ON THE SCREEN TODAY. A BIG REBOUND HERE ON THIS TURNAROUND TUESDAY COMING OFF THOSE BIG THREE DAYS OF LOSSES IN THE MARKET. MOST OF THOSE LOSSES ARE FAR FROM BEING RECRUITMENT, A LOT OF FOLKS WILL TAKE IT.
S&P ON THE NASDAQ, BEGINNING ABOUT A PERCENT ON THE DAY, SIMILAR MOVES FOR THE RUSSELL AND THE DOW. TAKE A LOOK AT THE VIX, WE WENT FROM WHAT WAS THE BIGGEST SURGE GOING BACK TO 1990 TO TODAY, THE BIGGEST DROP GOING BACK TO AT LEAST 1990, THE INVERSION OF THE YIELD CURVE CONTINUES, SO WE DID HAVE THAT BRIEF UN-INVERSION YESTERDAY, BUT OVERALL HERE, THE PICTURE BEING PAINTED SEEMS TO SUGGEST THAT FOR WHATEVER RATTLED MARKETS OVER THE LAST THREE DAYS, SOME PEOPLE ARE COMFORTABLE COMING BACK INTO THIS MARKET. SCARLET: AT LEAST FOR NOW. WE WILL SEE WHAT GOES ON. A LOT DEPENDS ON EARNINGS, GIVING SOME STOCKS A SPECIFIC BOOST. KENVIEW, ALMOST UP 15%, THE CONSUMER GOODS COMPANY'S SALES ROSE LAST QUARTER, IT SELLS THINGS LIKE LISTERINE AND TYLENOL.
IT MAKES IT A STANDOUT FROM OTHER COMPANIES LIKE PMG WHICH REPORTED DISAPPOINTING REVENUE. IT WAS THE SKINCARE LINE THAT ALSO MAKES NEUTROGENA, BECAUSE OF LOTS OF COMPETITION. UBER REPORTED RESULTS.
THE STOCK IS UP 11%. THAT IT WAS RIGHT HILLS, DELIVERY ORDERS, BUT NOT TIPS. THAT CAME IN HIGHER THAN EXPECTED. THE CEO SAYS WE ARE NOT SEEING ANY SOFTNESS OR TRADING DOWN ACROSS ANY OTHER INCOME COHORTS. YOU CAN SEE THE STOCK IS HELPING LYFT GET A BOOST, REPORTING EARNINGS TOMORROW MORNING.
OUR TOP STORY THIS HOUR IS BIG MEDIA'S PRICING POWER. DISNEY, ANNOUNCING PLANS TO RAISE PRICES ON ITS INDIVIDUAL STREAMING SERVICE AND BUNDLES BY DOUBLE-DIGIT PERCENTAGES FOLLOWING RECENT HIKES FROM NETFLIX, COMCAST, PEACOCK, AND MAX. THAT LIFTED SHARES OF DISNEY TODAY AND IT WILL FEED INTO ITS OUTLOOK WHEN THE COMPANY REPORTS EARNINGS TOMORROW ALONG WITH WBD . WE WILL BE SITTING DOWN WITH
THE SHOW RUNNERS OF HBO'S'S HIGH FINANCE TRAUMA "INDUSTRY" LATER THIS HOUR -- DRAMA "INDUSTRY" LATER THIS HOUR. ROMAINE: WE HAVE A BIG TURNAROUND FROM WHAT WAS ON THE PREVIOUS THREE SESSIONS, BUT NOT EVERYBODY IS BUYING INTO IT. DENNIS D. AS THE PRESIDENT AND CHIEF MARKET STRATEGIST AT 22V RESEARCH. HE WROTE IN A NOTE THAT OUR SENSE IS THE MARKET WILL STAY IN A VIOLENTLY FLAT REGIME, AT LEAST UNTIL THE BREATH OF DATA CAN ALLAY RECESSION FEARS. DEENI -- PLEASE TO SAY THAT DENNIS JOINS US NOW ON THE BIG PROGRAM. MANY ARE LOOKING AT THESE FEARS AND SAYING THEY ARE OVERBLOWN.
IS THERE ENOUGH CONFIDENCE IN THE DATA TO PUSH BACK ON THOSE FOR -- THOSE FEARS? MY PUSHING BACK I MEAN PUTTING MONEY BACK INTO THIS MARKET. >> NOT YET. THE BASE -- THE BEST CASE SCENARIO AS WE AVOID A RECESSION.
IT HAS SUCH A BIG IMPACT ON EARNINGS, IT IS BETTER TO AVOID A RECESSION BEFORE LEADING INTO THE IDEA THAT YOU SHOULD BE PUTTING ON A NON-RECESSIONARY TRADE. SO YOU HAVE OVERWEIGHT CYCLICALS RELATIVE TO DEFENSES. WE WILL HAVE INFORMATION THAT DENIES THAT RECESSION VIEW. THAT'S PROBABLY FOR A FEW MORE
WEEKS. THE MAIN ONE BEING CLAIMS. POST PAYROLL, THE MAIN RISK IN THE MARKETS WAS SOME UNWIND IN THE LABOR MARKET. IF WE ARE GOING THROUGH THAT, THE CLEAN DATA SHOULD SIGNAL THAT IS ACTUALLY THE CASE. WE WILL NEED A FEW WEEKS, MAYBE LONGER OF CLAIMS DATA THAT'S STABLE ALONG WITH FOR ACTIVITY DATA THAT IS THEY BEFORE LEADING INTO THE IDEA THAT WE WILL AVOID A RECESSION. ULTIMATELY WE THINK THAT IS A CALL BUT THAT WILL NOT BE THE FRONT RUNNER IN A GIVEN HOW MUCH OF A NEGATIVE TALE TO EARNINGS WE HAVE IF IN FACT THE ECONOMY GOT INTO A NEGATIVE FEEDBACK LOOP. ROMAINE: HAVE BEEN MANY PEOPLE WRINGING THEIR HANDS OVER WHETHER THE FED SHOULD HAVE DONE SOMETHING AT THE LAST MEETING AND THEY SHOULD DO SOMETHING BEFORE WE GET TO THAT SEPTEMBER 18TH DECISION.
BUT I SORT OF WONDER HERE AS TO WHAT THE FED WOULD BE REACTING TO. DO YOU THINK THEY ARE MORE CONCERNED ABOUT SOME OF THAT SOFTNESS IN ECONOMIC CONDITIONS WHICH HELPS THE INFLATION BATTLE OR THEY WILL BE MORE CONCERNED ABOUT THE POTENTIAL TIGHTENING OF FINANCIAL CONDITIONS WHICH LAST TIME I CHECKED ARE NOT NECESSARILY ALL THAT TIGHT? >> I THINK WHAT YOU WILL SEE FROM THE FED IS MORE OF INSURANCE CUTS. YOU HAVE AN INCREASE IN THE EMPLOYMENT RATE TO 4.3%, INFLATION COMING DOWN. THEY DID HAVE SOME LEVEL OF -- THEY DO HAVE A LEVEL OF RESTRICTION THAT SEEMS TO BE PRETTY TIGHT RIGHT NOW.
SO THEY NEED TO REDUCE THE. SOME PEOPLE ARE CALLING THAT A REVERSAL OF THE INSURANCE HIKES. SO THEY ONE ABOVE WHAT THEY THOUGHT TO MAKE SURE INFLATION EXPECTATIONS NEVER BECAME ONBOARD AND NOW YOU CAN REDUCE THAT VERY QUICKLY IN A RISK MANAGEMENT FRAMEWORK. MAY BE AGO ANOTHER 50 -- MAY BE YOU GO ANOTHER 50 IN NOVEMBER. THAT IS PLAUSIBLE, GETTING SOME CUTS IN TO RISK MANAGER WAY FROM AN UNWINDING IN THE LABOR MARKET WHICH GETS BACK TO THE EARLIER QUESTION, NO, THERE'S NO INTERMEDIATE CUT UNLESS SOMETHING IS WRONG WITH THE PLUMBING IN THE FINANCIAL SYSTEM.
WE ARE NOT IN A RECESSION RIGHT NOW. IT IS POSSIBLE THE LABOR MARKET IS GOING THROUGH AN UNWIND. THE CLAIMS THAT I WILL PROVE THAT THESIS.
THERE'S NOTHING THAT SUGGESTS THAT ALL OF US GROWTH DOES NOT GROW AS MUCH AS WE THOUGHT THAT THEY SHOULD BE CUTTING RATES RIGHT NOW. SCARLET: HE USED THE WORD ON WANT TO DESCRIBE THE LABOR MARKET BUT WHAT I HAVE BEEN HEARING IS PEOPLE USE THE WORD UNWIND WITH THE CARRIER TRADE WAR PEOPLE WERE BORROWING, HIGHER-YIELDING ASSETS, AND ACCORDING TO JP MORGAN THE UNWINDING OF THAT TRADE IS ONLY HALFWAY THROUGH -- MAYBE 60% OF THE WAY THROUGH. DOES THAT MEAN WE HAVE STILL GOT MORE TO GO? WHAT DOES THIS NEXT PHASE LOOK LIKE? IS IT GOING TO BE DEPENDENT ON THE YEN'S MOVES AND WHATEVER COMMENTARY MAY COME OUT OF THE BOJ? >> I THINK IF IT WERE TO UNWIND AND YOU ARE INJECTING SIGNIFICANT VOLATILITY, INTEREST RATE VOLATILITY, AND THE KNOWN UNKNOWN OF WHAT COULD GO WRONG OR WHERE THAT COULD EXTEND BEYOND JUST, SAY, THE JAPAN CARRY TRADES, YOU WILL END UP BEING IN A VERY VOLATILE VIOLENTLY FLAT RANGE.
ON THE ONE HAND, IT IS NOT CLEAR THAT THERE IS A SYSTEMIC ISSUE. THERE APPEARS TO NOT BE A SYSTEMIC ISSUE RELATED TO CARRIER TRADE ON ONE -- UNWINDS. ON THE OTHER HAND, WE DON'T KNOW. UNLESS YOU ARE THROUGH THAT
PROCESS, YOU WILL HAVE UNCERTAINTY THAT CREATES A LOT OF VOLATILITY FROM DAY-TO-DAY. SCARLET: IN THAT UNCERTAINTY, WHAT DOES DEFENSIVE POSITIONING LOOK LIKE? THIS GOES BACK TO WHAT ROMAINE WAS ASKING EARLIER. WHAT COUNTS AS A RELIABLE SAFETY PLAY RIGHT NOW? >> LOW VOLATILITY ON DEFENSIVE SECTORS. LOW VOLATILITY STOCKS AND FROM A SECTOR POINT OF VIEW, DEFENSIVE STOCKS, UTILITY, PHARMA, STAPLES.
EVENTUALLY BIG CAP TECH, THEY MIGHT HAVE SPECIFIC AI RELATED ISSUES THEY ARE GRAPPLING WITH. BUT HIGHER-QUALITY SECURITIES -- DEFENSIVE HIGHER-QUALITY SECURITIES. THAT IS WHAT'S DONE REALLY WELL PARTICULARLY ON THE DEFENSIVE SECTORS, STAPLES, UTILITIES AND PHARMA. SCARLET: REALLY APPRECIATE YOU JOINING US, THE PRESIDENT AND CHIEF MARKET STRATEGIST AT 22V RESEARCH.
THERE'S A REALLY GOOD COMMENT IN OUR BIG TECH STORY TODAY THAT CAUGHT MY EYE ABOUT HOW INVESTOR TECHNOLOGY MEGAN'S WITH JITTERS ON THURSDAY AND HEDGING ON FRIDAY AND -- BEGINS WITH JITTERS ON THURSDAY AND HEDGING ON FRIDAY AND IT SETS US UP FOR THIS TURNAROUND TUESDAY. ROMAINE: I SAW THAT, TOO, HISTORICALLY I GUESS THAT IS TRUE. BLOOMBERG CRUNCHED THE NUMBERS. 582 TIMES, WE HAVE HAD THIS SORT OF PATTERN, MONDAY, THURSDAY, THEN CHOOSE A GET THAT REBOUND. ALL GUESTS HAVE BEEN TALKING ABOUT TODAY HOW MUCH CONVICTION THERE IS.
IS THIS A ONE-DAY THING? OR WILL YOU SEE THE BUYING CONTINUE? SCARLET: IT FEELS FRAGILE GIVEN THE FINAL HOUR OF TRADING. ROMAINE: YEAH. THE GOOD THING IS, TOO I WAS LOOKING AT THE VALUATIONS -- SOME GOOD FUNDAMENTAL STOCKS REALLY GOT HIT HARD. WE ARE TALKING DOWN 15%, 20% FROM RECENT HIGHS.
IF YOU ARE LOOKING FOR VALUE, LONG-TERM VALUE, I COULD SEE WHY SOME WOULD COME IN FOR THOSE TYPES OF NAMES. SCARLET: THEY MIGHT WANT TO WAIT UNTIL THE WAVE OF SELLING -- ROMAINE: NEVER WAIT, SCARLET. [LAUGHTER] SCARLET: THE RISK OF TIMING THE MARKET. WE'VE GOT A LOT MORE TO COME. A LOT WILL DEPEND ON EARNINGS. SOME OF THE EARNINGS WE GOT THIS AFTERNOON, NOT LOOKING GREAT.
YOU CAN SEE RIGHT NOW TRIP ADVISOR AND AIRBNB, SOME OF THOSE TRIBAL NAMES, GETTING HIT RIGHT NOW -- TRAVEL NAMES, GETTING HIT RIGHT NOW. ROMAINE: I JUST GOT OFF A PLANE RECENTLY. ALIX: WAS A CROWDED? ROMAINE: I WAS LUCKY -- SCARLET: WAS IT CROWDED? ROMAINE: I WAS LUCKY TO EVEN BE ON THE PLANE. SCARLET: YOU ARE FINDING PLANES FROM CHICAGO? ROMAINE:. APPARENTLY NOT THANKS, AMERICAN. SCARLET: MORE EARNINGS COMING IN FROM SUPERMICRO. THE FISCAL FOURTH-QUARTER, A
MISS ON ALL FRONTS, MARGINS, NET SALES, ADJUSTED EPS. IT IS SURGING, OF 17%, BECAUSE IT'S 2025 NET SALES IS A RANGE FROM $26 BILLION TO $30 BILLION AND ANALYSTS WERE LOOKING ON AVERAGE FOR $23.6 BILLION, SO THE MIDPOINT OF THE RANGE IS HIGHER THAN THE CONSENSUS ESTIMATE. THIS IS A STOCK THAT IS UP 117% SO FAR THIS YEAR FOR THE BEST PERFORMANCE IN THE S&P 500 ON THOSE AI CONNECTIONS. ROMAINE: THIS WAS CONSIDERED THE ALTERNATIVE AI PLAY IF HE WERE CONSIDERED ABOUT NVIDIA'S VALUATION. THE NUMBERS DON'T LOOK INCREDIBLE.
I GUESS INVESTORS ARE PLEASED WITH THE 14%. THAT IS THE BIGGEST GAINER OR AFTER HOURS TRADING AMONG THE BIG AND LARGE CAP NAMES. SOME NOTABLE MOVES OUT THERE FROM REDDIT, TRIPADVISOR, AND INSTACART. LET'S THAT YOU AROUND UP ON SOME OF THE NAMES. WE WILL START THINGS WITH JESS MENTON, ABIGAIL DOOLITTLE, AND BAILEY LIPSCHULTZ.
LET'S START OFF WITH REDDIT. >> THEY SELL THEMSELVES AS AN AI BENEFICIARY, BEATING EXCITATIONS IN THE SECOND QUARTER PROVIDING THIRD-QUARTER REVENUE GUIDANCE AT THE BOTTOM OF THE RANGE WELL ABOVE THE WALL STREET -- WHAT WALL STREET WAS LOOKING FOR. YOU SAY WHY IS A STOCK DOWN 2.5%? STILL UP 60% FROM ITS IPO PRICE EARLIER IN MARCH. THE BIG THING TO KEEP AN EYE ON IS LOCKUP EXPIRATION ON FRIDAY.
THOSE EXECUTIVE INSIDERS AND MANAGEMENT TEAM AND LONG-TERM INVESTORS ARE GOING TO BE ABLE TO SELL SHARES ON FRIDAY. THAT IS SOMETHING INVESTORS HAVE BEEN POSITIONING FOR, DEFINITELY NOT THE 18% MOVE FROM OPTIONS. BUT WHEN YOU WERE UP 60% EVEN WITH THE PULLBACK OVER THE LAST FEW WEEKS AND TECH, THE STOCK IS DOWN MODESTLY TO .5% BUT STILL AT ONE POINT UP 10%. CERTAINLY KEEPING AN EYE ON WHAT COULD BE A CHOPPY SESSION AGAIN WITH ALL EYES ON THE LOCKUP ON FRIDAY. I WANT TO GO TO ANOTHER IPO RECENTLY, INSTACART. SCARLET:
FOR DELIVERY COMPANIES HAVE BEEN ON A TEAR ESPECIALLY WITH EARNINGS THE LAST WEEK OR SO. LOOKING AFTER THE BELL, LOOKING AT INSTACART, UP ALMOST 8% IN AFTER-HOURS TRADING. IF YOU LOOK AT ITS OUTLOOK AS WELL LA SALES GROWTH -- AS WELL AS SALES GROWTH, IT BEAT EXPECTATIONS. TRANSACTION TYPE VOLUMES, COMING IN AROUND $8.1 BILLION TO $8.25 BILLION, THAT IS A KEY METRIC.
YOU ARE SEEING THAT SUPPORTED ON THE EARNINGS CALL. YOU WANT TO SEE MORE DETAILS ABOUT HOW THEY ARE TRYING TO EXPEND MORE INTERNATIONAL, BEYOND THE FOOD DELIVERY BUSINESSES. BECAUSE THEY HAVE BEEN MORE RELIANT ON MORE OF THE HIGH GROSS MARGIN AND ENTERPRISE TYPE BUSINESS. IT TAKES UP A THIRD OF THEIR
REVENUE WHEN YOU ARE LOOKING ANNUALLY. THAT IS SOMETHING KEY TO LOOK AT THIS CALL. UBER POSTED ITS BEST DAY SINCE FEBRUARY ON THE BACK OF STRONG EARNINGS. DOORDASH LAST WEEK CAME OUT WITH RESULTS, ONE OF THE BEST IN NINE MONTHS. WHAT ARE YOU LOOKING AT, ABIGAIL? >> THE STATE OF TRAVEL AND THE SHARES OF TRIPADVISOR, IT IS NOT GOING WELL FROM THE PERSPECTIVE OF INVESTORS.
DOWN ABOUT 8% HERE IN THE POST-MARKET. IT WAS ALL OVER THE MAP BEFORE COMING ON AIR. NOW DOWN 8% AGAIN. THEY BEAT ON THE BOTTOM LINE, PUTTING UP $.39 VERSUS A CONSENSUS OF $.37. RELATIVE TO REVENUE, THERE WAS A MISS.
497 MILLION VERSUS THE ESTIMATE OF 505 MILLION DOLLARS. THEY BREAK IT DOWN AND ALL SORTS OF CATEGORIES BRANDED HOTELS,, ADVERTISING, IMMEDIATE REVENUE, MISSES ACROSS-THE-BOARD. ONE STANDS OUT, THAT IS EXPERIENCES AND DINING REVENUE -- $48 MILLION WAS EARNED THERE, DOWN 4% YEAR-OVER-YEAR, VERSUS THE ESTIMATE, I DON'T KNOW IF THIS IS A BAD PRINT, BUT IT WOULD HELP TO EXPEND WHY THE STOCK IS PLUNGING, OF $238.6 MILLION.
THAT IS COMPRISED OF TWO ESTIMATES BUT IT IS CONSISTENT WITH WHAT MAEX SAID, -- AMEX SAID, WEAKNESS WITH EXPERIENCES AND DINING. SCARLET: THANK YOU SO MUCH, ABIGAIL, JES, AND BAILEY -- JESS, AND BAILEY LIPSCHULTZ. AIRBNB IS ADJACENT TO THIS. SHARES ARE TUMBLING IN
AFTER-HOURS TRADING LOSING MORE THAN 13%. BLOOMBERG'S NATALIE L. HAS BEEN FOLLOWING THE COMPANY. THIS COMES ON THE HEELS OF A DISAPPOINTING OUTLOOK AND WHAT IT SAYS ABOUT WEAKNESS FROM THE U.S. CONSUMER. >> TODAY, AIRBNB REPORTED WEAKER THAN EXPECTED OUTLOOKS.
SPECIFICALLY POINTING TO WEAKNESS IN THE U.S. CONSUMER. THAT SORT OF UNDERSCORES THE SENTIMENT INVESTORS HAVE BEEN WORRIED ABOUT FROM THE TRAVEL SECTOR. ESPECIALLY LAST WEEK WITH BOOKING NOTING WEAKNESS IN EUROPE AS WELL. WHETHER THIS IS A GLOBAL PHENOMENON, WE WILL HAVE TO SEE. ROMAINE: THEY TALK ABOUT, IN THE RELEASE, TRYING TO COME UP WITH NEW PRODUCT OR SERVICES TO AUGMENT THE SOFTNESS YOU ARE SEEING -- WHAT EXACTLY WOULD THAT BE? >> THAT IS AN INTERESTING DEVELOPMENT WE ARE TRACKING AS WELL. THEY MENTIONED MARKETPLACES FOR GUESTS TO ORDER LUXURY SERVICES. A PERSONAL CHEF DURING YOUR
STAY OR A PERSONAL MASSEUSE. THEY WANT TO ENABLE MORE OF THAT. ROMAINE: SO LIKE A HOTEL. OK. [LAUGHTER] NA TALIE, COVERING THIS FOR US. DOWN ABOUT 13% IN AFTER-HOURS TRADING. I FEEL LIKE THE WRITING WAS ON
THE WALL. THERE WAS ANECDOTAL EVIDENCE ABOUT PEOPLE PULLING BACK ON TRAVEL AND PEOPLE BEING UPSET WITH THE FEES THAT ARE BEING -- THAT AIRBNB WAS CHARGING. THAT THEY ARE NOW MORE EXTENSIVE THAN HOTELS. SCARLET: THERE IS A PRICE AND ONCE YOU TALLY EVERYTHING UP, IT BECOMES A TOTALLY DIFFERENT PRICE WITH THE 100 DOLLARS CLEANING FEE AND EVERYTHING THAT GETS ADDED ON. ROMAINE: WHEN WE COME BACK, WE WILL TAKE A LOOK BACK AT THIS DAY IN HISTORY, THE DAY THAT APPLE AND MICROSOFT GRUDGINGLY BURIED THE HATCHET. A QUESTION BEFORE WE GO TO
ROMAINE: LINE ROMAINE:IT WAS ON THIS DAY, AUGUST 6, 1987 WHEN AP
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