Transcript — bloomberg-live

Full Transcript

Showing latest 55 of 287 segments. Ads filtered. Auto-refreshes 90 s.

13:55
PDT

Authentic Brands is pursuing joint ventures to leverage media expertise and brand management.

Authentic Brands Jamie Salter Stephen Bartlett Drake Kevin Hart Paramount Disney DXY

– 35% of revenue now comes from international markets, up from less than 30% last year.

– The company is preparing for an IPO, with systems and processes in place.

– Authentic Brands aims to double its $10 billion IP portfolio in the next 24 months.

– Expansion efforts include new offices in India, Europe, and Indonesia.

creator economyIPO readinessinternational expansion

▸ Full transcript

The future of money to some, the future of others. We see cryptos' trillion-dollar swings. While others follow the noise, we follow the money. It touches on everything that we care about: information, prey, and geopolitics.

Analysis

The discussion highlights the strategic shift towards joint ventures in the creator economy, emphasizing the collaboration between media experts and brand management to enhance creator growth. The CEO of Authentic Brands, who joined in 2025, indicates readiness for an IPO, with significant revenue growth from international markets, suggesting a robust expansion strategy.

Smart investors should note the company's focus on diversifying its intellectual property across various sectors, including hospitality and food, while also preparing for a potential IPO within the next year. The emphasis on both organic growth and acquisitions positions Authentic Brands to capitalize on the expanding creator economy and its associated revenue streams.

13:53
PDT

Authentic Brands has 1,700 global partners and significant revenue from entertainment.

Authentic Brands Matt Maddox Jamie Salter Paramount Disney India Europe Brazil Indonesia IP Wall Street DXY

– The company is expanding its presence in key international markets, including India, Europe, and Brazil.

– CEO Matt Maddox emphasizes the importance of both organic growth and acquisitions.

– The total addressable market for Authentic Brands is projected to be in the trillions.

– The company views Paramount and Disney as competitors in the IP space.

creator economyIP acquisitionglobal expansionM&A strategy

▸ Full transcript

Big players of consequence and now it seems like everybody's popping up, not to mention all these Wall Street firms that have decided they want to be in the business too. So I think our mode is our scale; we have 1,700 partners around the world, but also we're not just in one industry. If you think about entertainment being over $425 million of our revenue, that's something that other people aren't doing. We just got into character IP, so we view Paramount as a competitor. We view Disney as a competitor. So we're now looking across all different spectrums of IP that we can focus on. So I think the total addressable market that you'll see as we're going out is literally in the trillions. On the organic revenue side, though, I mean as you're acquiring this IP, I mean some of this IP is pretty valuable. I would think the organic growth opportunities long term could at some point actually outpace M&A opportunities in terms of growth. I want both. So I think that we're going to continue to be aggressive on the acquisition front. That is Jamie's secret sauce; he's one of the best deal guys around the world, actually. And on the organic side, that's why we're expanding around the country. We just opened a big office in India. We're expanding throughout Europe. We just opened a new office in Indonesia. So, I mean, we're expanding in Brazil. So what I really want to see is the Authentic footprint and platform all over the world, so that way we can really drive organic growth in all the markets. All right, Mac, I have to leave it there. Really great to have you here. Thank you very much.

Analysis

Authentic Brands is aggressively expanding its global footprint, with significant revenue from entertainment and a focus on acquiring valuable IP across various industries. The company aims to balance organic growth with acquisitions, indicating a robust strategy to capture a larger share of the trillion-dollar total addressable market in the creator economy.

Smart investors should note that Authentic Brands is not only leveraging its existing partnerships but also diversifying its IP portfolio to compete with major players like Paramount and Disney. This dual approach of aggressive M&A and organic expansion positions the company well for sustained growth in a rapidly evolving market landscape.

13:51
PDT

Authentic Brands aims for an IPO within 12 months.

Authentic Brands Matt Maddox Stephen Bartlett Jamie Salter IP IPO Sports Illustrated

– The company is currently 'IPO ready' with systems and processes in place.

– Focus on the creator economy is central to growth strategy.

– Partnership with Stephen Bartlett highlights a shift towards creator-driven media.

– Authentic Brands has a $10 billion IP portfolio, expected to double in 24 months.

creator economyIPO readinessbrand partnerships

▸ Full transcript

is what we do. And that could be in hospitality. We have hotels going up under the Sports Illustrated brand. It can be in food. We have chefs that we may be working with. It can really be across the board. We have $10 billion of IP on our balance sheet, and I'm hoping to see that double over the next 24 months. So we should point out that back in May when Jamie kind of unveiled you publicly, I think one thing he said was he wanted to see an IPO within 12 months. I know it's only been four months. Are you any closer to that? What I can tell you is I did come on to help with the IPO process. The company is ready. We are IPO ready. Our systems are in place. Our people are in place. Our story is crisp. We are ready to go. That'll be up to our board and our shareholders when they decide to hit the button for us to start that process. That has not happened yet. We've been talking about it could be as early as the first half of next year. But that decision hasn't been made. What are they waiting on to make that decision? Is there some marker they're looking for? I think there is no marker that we're looking for. It was really, is the company ready? And just within the last couple of months, we have all the processes and everything in place to actually press the button and go when the time is right. I mean, what is the story pitch to investors that this is basically a company that's, you know, just generating a bunch of royalty streams, or is this going to be more of a longer-term growth structure type of story? Oh, it's a growth.

Analysis

Authentic Brands is poised for an IPO within the next year, with CEO Matt Maddox stating the company is 'IPO ready' and has all necessary systems in place. The focus on the creator economy, projected to grow significantly, positions Authentic Brands to leverage its $10 billion IP portfolio for future growth.

Investors should note that the partnership with Stephen Bartlett represents a strategic move to tap into the evolving media landscape, where creators are becoming pivotal in shaping culture and driving audience engagement. This joint venture model may provide a more sustainable growth trajectory compared to traditional celebrity partnerships, reflecting a shift in consumer engagement dynamics.

13:49
PDT

Authentic Brands' revenue from international markets has increased to 35%.

Authentic Brands Matt Maddox Stephen Bartlett Jamie Salter CEO United States So Jamie

– The company is focusing on the creator economy as a growth engine.

– Partnerships with creators like Stephen Bartlett are central to their strategy.

– CEO Matt Maddox emphasizes the importance of visionary leadership.

– The joint venture model allows for shared risk and audience growth.

creator economyglobal expansionjoint ventures

▸ Full transcript

Authentic Brands is building licensing and live events to really provide lots of creators the opportunity to come on our platform. That's what this is about. It's about being able to invest in the creator economy up and down the value chain of the creators on this platform. Let's talk about the rest of the machine that is Authentic Brands and it's grown into a juggernaut. When you talk about what your role is, and it was your point out you're relatively new. You joined the company in 2025. You got the CEO title earlier this year. What exactly did Jamie Salter, the founder of this company, sort of task you with? What does he want to see this company become under you? So the reason I love this company, and it was very similar to my past life, I'm drawn to companies with strong founders that are visionaries. That is Jamie Salter. He sees value where other people do not see it. He understands where the puck is going to use a Canadian term. My job as CEO is to keep the trains on time, to keep the engine running, to grow globally. We're expanding, we're growing faster around the world than we are in the United States right now. In fact, 35% of our revenue is coming from outside of the United States, and that's up from less than 30% just a year ago. So Jamie sees the vision. He is out driving the M&A machine, the Mergers and Acquisitions machine, and then I'm taking that and growing it inside our platform. Where is that, where does that M&A machine stand right now? Are you out there right now shopping for deals?

Analysis

Authentic Brands is expanding its global reach, with 35% of revenue now coming from outside the U.S., up from less than 30% a year ago. The company is focusing on the creator economy, partnering with influential figures like Stephen Bartlett to drive growth and brand awareness.

The shift towards a joint venture model with creators indicates a strategic pivot to leverage their audience growth potential while minimizing risk. This approach allows Authentic Brands to tap into the evolving media landscape, positioning itself as a leader in the creator economy, which is projected to grow significantly in the coming years.

13:47
PDT

Starmoire's model includes on-demand storage and a favorable commission structure for members.

Starmoire Katie Palanchar Stacey London Authentic Brands Stephen Bartlett Drake Kevin Hart So Stephen Bartlett

– One in three households currently use public storage, with millennials particularly storing clothing.

– The creator economy is expected to reach $1.18 trillion by 2032.

– Authentic Brands is focusing on partnerships with creators to enhance brand growth.

– Joint ventures with creators may provide a more sustainable growth model compared to outright ownership.

creator economyjoint venturesbrand partnershipsstorage solutions

▸ Full transcript

These content creators are moving in and changing media because of the eyeballs they are getting, the millions of people that are following them; they are shaping culture and they are people that we want to be a part of. Why do this structure as a joint venture? I looked at some of your past deals; obviously, you bought like Drake's Oveal thing, which was bought outright. I think with Kevin Hart, it's a co-ownership model. What was the decision to do this more as a joint venture with the partner? All the deals that we work on with people that are living legends are partnerships, and each partnership is structured a little bit differently. Stephen is an expert in media and audience growth, while we are experts in global brand awareness, licensing, and live events. Bringing those two things together is really what allows this joint venture to provide a platform for the creators to accelerate their growth. How do you assure, particularly when you look at the origins of Authentic Brands and what Jamie built it up, especially with some of the legacy celebrities, particularly those that have passed on, whether we're talking about Elvis and others, where you kind of have a proven star and a star that has staying power even beyond their lifespan? When you're in the creator economy, particularly with people that are still in their 20s and 30s, there's so much runway where things could go wrong. How do you sort of structure this in a way where you have confidence that the payoff is not just today, but it will be lasting? Of course. So Stephen Bartlett is a creator, but he also has a company.

Analysis

Starmoire, co-founded by Katie Palanchar, is leveraging on-demand storage and a unique commission structure to differentiate itself in the competitive resale market. The creator economy is projected to grow significantly, with Authentic Brands focusing on partnerships with influential creators like Stephen Bartlett to drive brand growth and audience engagement.

The emphasis on storage solutions highlights a growing consumer need, particularly among millennials, which could be a key driver for Starmoire's success. Authentic Brands' joint venture model with creators suggests a strategic shift towards sustainable partnerships that could mitigate risks associated with the volatile creator economy.

13:45
PDT

Creator economy expected to grow to $1.18 trillion by 2032.

Authentic Brands Stephen Bartlett SNS Insider SNS CEO Matt Maddox So Authentic Kevin Hart DXY

– Authentic Brands partners with Stephen Bartlett to enhance brand visibility.

– 20% of Authentic's revenue comes from the entertainment sector.

– The partnership aims to drive audience growth through creator engagement.

– Shift towards creator-led partnerships may redefine marketing strategies.

creator economybrand partnershipsentertainment sector growth

▸ Full transcript

The creator economy is expected to grow to almost 1.18 trillion dollars by 2032. That's according to SNS Insider. Authentic Brands is one of the companies cashing in on that opportunity by focusing on supporting the creator. Joining me on set to talk about the latest launches is Matt Maddox, the CEO of Authentic Brands, and that partnership we're talking about is with Stephen Bartlett, the owner of Stephen.com, a true creator as he calls himself. The creator is being the new franchise, and you've got to venture with him. But that seems a little bit different than some of the last projects that you've had. Explain to me what drew you to him. Yeah, sure. Thanks for having me today. So Authentic is a global lifestyle and entertainment platform with 2.2 billion in revenue. About 20% of that is actually in the entertainment space. The creator economy is what we think the new media and audience growth engine over the next 10 years. So we really decided that we wanted to partner with the best, and that is in our opinion, Stephen Bartlett, to drive a new partnership around bringing creators on platform to help grow our brands and also grow their brands. Is that going to have an entertainment focus? No shade to them, but when I think about some of the other people that you've had, you know, Shaq and Kevin Hart and some of the other people that you partner with, Stephen Bartlett's obviously a huge deal, but I don't think of him as entertainment. He has a great podcast with the Diaries CEO, some of the other.

Analysis

The creator economy is projected to reach nearly $1.18 trillion by 2032, with Authentic Brands positioning itself to capitalize on this growth through a partnership with creator Stephen Bartlett. This collaboration aims to leverage Bartlett's influence to enhance both Authentic's and creators' brand visibility in a rapidly evolving media landscape.

Smart investors should note that Authentic Brands is diversifying its revenue streams by integrating creators into its business model, which could redefine brand engagement and audience growth. The shift towards creator-led partnerships signals a significant trend in how brands will interact with consumers, potentially reshaping marketing strategies across industries.

13:43
PDT

Investment strategies are increasingly data-driven.

Starmoire Katie Palanchar Stacey London Reebok

– Collaboration among experts enhances decision-making.

– The digital landscape is redefining investment opportunities.

– Future investments will focus on statistical analysis.

– Technology's role is evolving beyond mere facilitation.

data-driven investmentcollaborative research

▸ Full transcript

Das ist für die, die in allem ein Muster erkennen, das ist für die Kraft der Finanz. Das ist das Coolste, was du mit Geld machst. Was soll man eigentlich tun? Ist das nur für die Reichen? Wie soll man es denn wählen? Wir bekommen viele smartere Leute zusammen, wir analysieren alle die Statistiken. Wir machen die Recherche. Wir holen alle zusammen, um zu denken, was heute die beste Investition ist, in die Zukunft wird. Investiere, wie die Zukunft, die sie sehen. Eine neue digitale Ordnung ist nicht von Technologie selbst definiert.

Analysis

The discussion highlights the evolving landscape of investment strategies, emphasizing the importance of collective intelligence in identifying future opportunities. A new digital order is emerging, driven not solely by technology but by the insights derived from comprehensive data analysis.

Smart investors should note the shift towards collaborative research and statistical analysis as a means to navigate investment choices. This approach suggests that the future of investing will increasingly rely on data-driven insights rather than traditional methods, potentially reshaping market dynamics.

13:41
PDT

Starmoire combines digital closet management with clothing reselling.

Starmoire Stacy London Katie Palanchar Reebok AI CEO Stacey London Fame Stylist

– The service targets the growing demand for sustainable fashion and storage solutions.

– Recurring revenue from subscriptions and storage is a key business model.

– Market demand for resell is significantly outpacing traditional retail growth.

– The company aims to unlock supply by encouraging member participation.

fashion techsustainable fashionsubscription economy

▸ Full transcript

But as we look to the future in these next couple of months, what can be done with photography, moving pieces through a warehouse, robotics, storage, combining those worlds with digital AI and physical AI? This is the time to be building this business. This is really about sort of where you actually take Starmoire. I mean, today is the official unveiling of it to the public. Give me a sense here as to, I guess, how fast you want to scale this up. And are there any sort of markers that you're looking at where you would come back and look at an investor and say, we're ready to do something even more? Yeah, I mean, we are definitely a high growth business. And as we've talked about today, the demand is there. We're so excited to unlock the supply. So I think as we look at members, how many items of clothes they have, what the digital closets look like, how that's driving our resell marketplace, we know that people have a lot of clothes. We've learned that in the pilot. And so continuing to see members come back, right? Consistency, markets love predictability. And so when we can get that reoccurring member coming back to us, retrievals, pickups, participating across the whole optionality of end-to-end wardrobe management, we're onto something. That was Katie Palanchar, the co-founder and CEO of Starmoire and Stacey London, Fame Stylist there. Now that she's Stylist at Starmoire, which officially launches to the public today. Meanwhile, our next guest knows a thing or two about fashion. He's controlled several big brands like Reebok.

Analysis

Starmoire, co-founded by Stacy London and Katie Palanchar, officially launched today, offering a subscription-based wardrobe management service that combines digital closets with reselling options. The company aims to capitalize on the growing demand for resell markets and on-demand storage solutions, positioning itself as a high-growth business in the fashion tech space.

Investors should note the unique blend of asset management principles applied to personal wardrobes, which could disrupt traditional retail and resale models. The emphasis on recurring revenue from storage and digital management could provide a stable financial foundation, appealing to investors looking for predictable growth in a volatile market.

13:39
PDT

Starmoire offers on-demand storage and digitization for clothing.

Starmoire Katie Stacy London KB Palinger Female Innovators Lab Venture Fund Zara H&M LeWeyVe RealReal ThreadUp

– The company has a recurring revenue model that enhances profitability.

– Millennials are increasingly using public storage for clothing.

– Starmoire aims to provide a better commission structure for resellers.

– The resale market is evolving with technology and consumer demand.

wardrobe managementresale marketstorage solutionsmillennial trends

▸ Full transcript

Same pieces or the same designers. And just to your point, Katie, about what we were saying in terms of value, quantitative quality, look, I'm a great picker. I have lots of friends who are great pickers. We may pick the best five things at Zara this month, right? But a year from now, you may want that jacket and not be able to get it. That's the other great thing about resale sites, is that it's not just about the cost of something, but about finding something that maybe is no longer on the market. What about the competition in this space, Katie? I mean, there are a lot of companies trying to do this, maybe not necessarily in the exact way that you're doing it. How are you going to stand out from a RealReal or a ThreadUp or some of these other companies that have already staked the claim to the resale market? Yeah. So what's interesting about our model is that we have this recurring revenue, right? The on-demand storage piece, the digitization, that's really driving our cost of goods. And then we can reward our members who are participating with a better commission structure before their resale. So as you look at this on-demand storage piece as well, I think something else that I wanted to mention is that one in three households are using some type of public storage right now. And then out of that subset, 33% of millennials are storing clothes, right? So I think it's a big differentiator, this storage piece. No matter if you're in a suburban market or urban market, people are struggling with storage, have a lot of stuff and want to make space. But on that point though, I mean, these are pretty operationally heavy.

Analysis

Starmoire is positioning itself as a unique player in the wardrobe management and resale market by offering on-demand storage and digitization of clothing, which could disrupt traditional resale models. The company aims to differentiate itself through a recurring revenue model and a better commission structure for members participating in the resale process.

The insight here is the growing demand for storage solutions among millennials, with one in three households using public storage and a significant portion storing clothes. This trend indicates a potential market for Starmoire's services, as consumers seek to manage their wardrobes more efficiently while capitalizing on resale opportunities.

13:37
PDT

Resale market quality varies from high-end to fast fashion.

Stacy London KB Palinger LeWeyVe H&M Justin Bieber

– Social media significantly influences fashion item values.

– Curated resale platforms are gaining traction among consumers.

– Brand reputation remains critical in resale pricing.

– Technology is reshaping the fashion resale landscape.

resale market dynamicssocial media influencefashion technology

▸ Full transcript

When we talk about this idea of a resale market, which has obviously changed dramatically from the old days where you would just go to a thrift store hoping to find something, it has become more curated. Obviously, with technology, it has allowed people to search a lot quicker. Give me a sense here, Katie, about the quality of what is out there because this has been talked about a lot too. In the old days, you would go to the thrift store, and it might be high-end designers and more quality clothes. Now you're seeing a lot of fast fashion type of stuff show up that maybe isn't as valuable on the resale market. Absolutely. So when we look at our closets that we've piloted with our customers, we're seeing everything from H&M to LeWeyVe. When you look at quality and where it's moved in the market, there may be clothes that you looked at 10 years ago that the quality is still consistent, and you can really depend on that. Our users see that; they look for certain brands, they know. I also think when you look at what moves the market as far as value, social media, content, and marketing can move markets. So when Justin Bieber wears a pink hoodie at Coachella, all of a sudden, the value of that sweatshirt goes up. So we're looking at the quantitative demand, the qualitative demand, and the quality of this. Well, good luck to see that idea though too. I mean, obviously, fashion, I mean, there is something that is just more human about it. And I do wonder about the balance between including the technology and the automation for something that is, to a certain extent, about.

Analysis

The resale market for fashion is evolving, with technology enabling quicker searches and a shift in the quality of items available. While high-end brands still hold value, fast fashion is increasingly prevalent, impacting resale prices and market dynamics influenced by social media trends.

Smart investors should note that the quality of resale items varies significantly, with brand reputation and social media influence playing crucial roles in determining value. The rise of curated resale platforms indicates a growing consumer preference for quality over quantity, suggesting potential investment opportunities in tech-driven fashion solutions.

13:34
PDT

AI funding enthusiasm remains strong despite capital constraints.

Anthropic Christian Hoffman Athornburg JP Morgan Stacy London KB Palinger Female Innovators Lab Venture Fund Starmoire

– Investment-grade and high-yield markets are experiencing spread widening.

– Anthropic's IPO is expected soon, potentially impacting market sentiment.

– Regulatory calls may affect competition in the AI space.

– The Fed's upcoming rate decision could signal the start of a new rate hiking cycle.

AI funding dynamicsIPO market sentimentfixed income trendsregulatory impacts

▸ Full transcript

Whatever you want. Yes, yes. The clean version of it. But give me a sense here. I mean, you've been in so many closets and you see you are judging people more from the perspective of what fits them or maybe what doesn't fit them, or what fits their lifestyle. And a lot of times, like I try very hard to say this just generally speaking. I mean, stylists are not there to impose their style on you. They're there to help refine the style that's in you. And a lot of times that refinement comes from being able to edit what is not working in your closet in order to see what is. This is not just about like, okay, then we make you a shopping list and you go out and you buy new things. You get to store what you're not sure about or things that maybe don't serve you right now but you're not willing to get rid of, and that makes room for your closet to be a place where we can actually shop and create. So for me, what's so wonderful about this is you can't see what you can't, you know, you can't style what you can't see, right? So one, if we're digitizing things that we're taking away, that doesn't make it any harder for you to be like, huh, that dress, I want it back. We get it back to you same day. Or, you know what, that dress has been in storage. I haven't worn it in six months. I'm gonna put it in my shed, which is our online resell store. I can help you orchestrate those things. I can help you make those decisions. And for me, when I first met Katie, it was really just because I was interested in investing in the company. And the more I heard about it, I was like, I wanna be a part of this. Are you gonna give people a better sense of what their clothes are worth? And that'll mean just from the asset management perspective, as Katie talked about, I know there's a price.

Analysis

The discussion highlights the ongoing enthusiasm for AI despite some limitations in capital willingness, with a notable spread widening in investment-grade and high-yield markets. The upcoming IPO of Anthropic is anticipated to be a significant event, reflecting the current dynamics in AI funding and regulation challenges.

13:32
PDT

Starmoire offers a digital closet with on-demand storage and retrieval.

Stacy London KB Palinger Female Innovators Lab Venture Fund Starmoire KB Female Innovators Lab Venture

– The service includes optional resale with recommended pricing.

– The resale market is a significant growth area in fashion.

– Starmoire positions itself as asset management for personal wardrobes.

– The collaboration between a stylist and a financier highlights innovation in fashion.

fashion innovationsubscription economysustainability

▸ Full transcript

All right, what not to wear, wear whatever you want, or maybe, well, sell what you're not wearing anymore. There's a new force in the world of fashion led partly by famed stylist Stacy London, teaming up with famed financier KB Palinger, the founder of the Female Innovators Lab Venture Fund. They are creating a new end-to-end wardrobe management company called Starmoire. The company is focused on building a new subscription service that will give its members a digital closet with complete control over storing, valuing, and reselling their clothing. I had a chance to sit down with Stacy and Katie earlier today about the new venture. Take a listen. We actually look at it as asset management for your closet. So there is definitely connectivity there. We're a category creator end-to-end wardrobe management on-demand storage and retrieval of your clothes. We digitize the closet. You can request anything back whenever you need it and then that optional resell and we can give you recommended pricing as well. So really the optionality is this new category that we're so excited to bring to market today. I mean what sort of intrigued you about this idea though? I mean if a founder had just come to you with this pitch, I mean would you have been receptive to it? Well it's so interesting Romaine that you say that because when I was on the investing side and I started to dig into this white space and I saw that resell was growing five times faster than retail.

Analysis

Stacy London and KB Palinger are launching Starmoire, a subscription service for wardrobe management that allows users to store, value, and resell clothing. This venture taps into the rapidly growing resale market, which is expanding five times faster than retail.

13:30
PDT

Growing public sentiment against AI and data centers may push for regulatory changes.

President Trump President Xi Jinping Anthropic Christian Hoffman Athornburg FOMC China US AI data centers JP KI

– The willingness to fund AI development is experiencing limits despite high enthusiasm.

– Anthropic's upcoming IPO could impact investor sentiment in the AI market.

– Regulatory capture concerns are influencing the narrative around AI competition.

– The fixed income market is facing spread widening amid increased supply.

▸ Full transcript

Höhre Ausschüttungen. Wählen Sie aus globalen, US, Europa und Tech-Aktien. Alle aktiv gemanagt mit monatlichen Ausschüttungen. JP Morgan Equity Premium Income Active ETFs. Wir sind die Heimat der aktiven ETFs. Starten Sie Ihre Suche nach JP Morgan Income ETFs. Eine neue digitale Ordnung wird nicht nur durch Technologie definiert. Während souveräne KI digitale Unabhängigkeit umgestaltet. Während genetische KI Entscheidungen transformiert. Während Quanten neue Möglichkeiten freischalten. Alle Anwendungen sind ein cyber-firstes Minimum. Das ist, warum die Zukunft im Gisek Global betrifft. Das größte Cyber-Sicherheits-Event der Süden der Süden. Wir schämen Politik, wir streiten Innovationen, wir protekten die digitale Ordnung. Action! Was ist das Coolste, was du mit Geld machen kannst? Was soll man eigentlich tun? Ist das nur für die reichen Menschen? Wie wissen wir, was zu wählen? Wir haben viele smarte Menschen zusammen. Wir analysieren alle die Statuten. Wir machen die Recherche. Und wir sind alle zusammen, um zu denken, was heute die beste Investition ist, um Geld in der Zukunft zu machen.

Analysis

The discussion highlights the urgent need for a national strategy on technology and science policy, particularly in the context of AI regulation and competition with China. There is a growing sentiment among the American public against data centers and AI, which may create an opportunity for regulatory conversations to gain traction.

Smart money should note that while enthusiasm for AI remains high, the willingness to fund its development is showing signs of limits, particularly in the investment-grade and high-yield markets. The upcoming IPO of Anthropic could serve as a litmus test for investor sentiment and market dynamics in the AI sector.

13:28
PDT

Rate hike expected soon, but its significance may be limited.

Christian Hoffman FOMC Warsh President AI

– Fed leadership credibility is in question after recent meetings.

– Market focus should be on inflation control rather than individual rate hikes.

– Potential for increased market volatility if Fed missteps.

– Shift in Fed's approach indicates challenges in managing expectations.

Fed policyinflation controlfixed income market

▸ Full transcript

And I think a lot of these calls for regulation are an attempt to certainly put bands around foreign competition, but also smaller competitors that are increasingly entering this marketplace. And just before we let you go, Christian, I do just have to get your thoughts less on AI and more just on the broader fixed income picture. We're going to get a great decision in a couple of days, and most people expect we will get a rate hike. Is that going to be the start of a rate hiking cycle, or is this just going to kind of be a one-off? The controversial answer is it doesn't matter at all. Unfortunately, Warsh came out of the gate with really establishing credibility. I think he blew most of his credibility at the second meeting. And now I think he's painted himself into a corner where really the only way to get credibility back is not one hike or a series of hikes, but it's really getting the market to no longer worry about inflation, to get inflation under control. So we've seen this transformation from hawkish Warsh to really home-alone Kevin. I think he's going to feel himself increasingly alone from the marketplace, from his fellow FOMC committee members, and probably the president as well. It's going to be a tough sled for him. All right, Christian, we'll have to leave it there. See if this is a home alone one or home alone two, some different outcomes there. Christian Hoffman, head of fixed income.

Analysis

The upcoming rate hike decision is anticipated to be a pivotal moment, but credibility issues surrounding the Fed's leadership may undermine its impact. The market's focus should shift from individual rate hikes to broader inflation control measures as the key to restoring confidence in monetary policy.

Smart money should note that the Fed's credibility is at stake, and any missteps could lead to increased market volatility. The shift from a hawkish stance to a more cautious approach indicates potential challenges ahead for the Fed in managing inflation expectations and market reactions.

13:25
PDT

The demand for AI funding is robust, but investment willingness is limited.

Christian Hoffman Athornburg Anthropic CEO AI CNBS IPO Fixed Income

– Capital constraints may pose challenges for future AI innovations.

– Widening spreads in investment-grade and high-yield markets reflect investor caution.

– Anthropic's upcoming IPO could signal a pivotal moment for AI investment.

– Investors are actively seeking to identify the peak in AI-related investments.

AI fundingmarket volatilityinvestment sentiment

▸ Full transcript

After that big slowdown call by the CEO of Anthropic, joining us now to discuss is Christian Hoffman, the head of Fixed Income over at Athornburg. Christian, I do want to get to this idea. I mean, look, there's a short-term noise, a short-term concern; longer-term though, have we seen any real cracks in the need, and more importantly, the willingness to fund the AI build-out? The need is showing no signs of slowdown. The willingness, I think, has had fits and starts and continues to show not exhaustion, but certainly some limits. I think the enthusiasm and excitement around AI might be unlimited, but in any innovation in any cycle like this, it's the limits of capital and the enthusiasm around that capital that tends to be the real bottleneck towards the next frontier. We've certainly seen spread widening in the investment-grade market, in the high-yield market, and the CNBS market, and when you have this never-ending free train of supply, it seems hard to take the other side of that. With that in mind, obviously a lot of investors are certainly along for the ride, but a lot are also sort of trying to figure out where the top is. And it's interesting in your notes you talk about this idea that Anthropic's IPO, which most people expect to come within the next few weeks, would be to this time. Those are your words in quotes.

Analysis

The head of Fixed Income at Athornburg, Christian Hoffman, highlighted that while the need for AI funding remains strong, the willingness to invest shows signs of limits. He noted that the excitement around AI is tempered by capital constraints, which could hinder future advancements in the sector.

Investors are grappling with widening spreads in various markets, indicating a cautious approach despite ongoing enthusiasm for AI. Hoffman's comments on Anthropic's anticipated IPO suggest that market dynamics may be shifting, with investors keen to identify potential peaks in AI-related investments.

13:23
PDT

Cybersecurity companies saw stock increases amid rising bot traffic concerns.

Cloudflare Matthew Prince Dario Amade Anthropic Alondra Nelson President Trump President Xi Jinping U.S.China USSR AI But China USDCNH

– Matthew Prince believes AI can enhance cybersecurity despite threats.

– Projections indicate bots may outnumber humans online significantly in five years.

– Concerns about vulnerabilities in AI systems are expected to rise over the next two years.

– Calls for regulation may increase as public sentiment towards AI grows negative.

cybersecurityAI regulationU.S.-China relations

▸ Full transcript

How do we do data centers and build them out, you know, with more clean and great energy? How do we think about bolstering, putting a bulwark against some of the workforce implications of artificial intelligence? How do we think about issues of fairness in the workplace and the housing market and, you know, places like healthcare? So there was a whole suite of, you know, proposals and actual policies that the prior administration brought to the table that in his very first hours in office, President Trump, you know, rescinded. And it's unfortunate because now we have no plan and we don't even have a desire to make a plan for the nation. And I will say, you know, I appreciate the, you know, that we do have a real competition with China. But China has quite a lot of policy and planning around its national strategy. We see it in critical minerals. We see it in technology. Well, that brings up a point because in Amade's letter, I mean, he actually raised this idea of having more cooperation between the U.S. and China on this. I know that may not happen. But do you think that would be a good idea? We're going to have a, you know, President Trump is meeting President Xi Jinping, you know, in a couple of weeks, actually. So it's an opportunity to really see if there can be some cooperation. I mean, you know, during the height of the Cold War, the USSR and the United States were able to collaborate on a few things. And so that window of opportunity could still be here. I think issues of AI.

Analysis

Cybersecurity stocks surged following discussions on AI's impact on internet traffic and security vulnerabilities. Matthew Prince, CEO of Cloudflare, expressed optimism about the ability of good actors to leverage AI for cybersecurity improvements despite the rising threat from bot traffic.

The conversation highlights a critical juncture where AI's rapid advancement could lead to significant vulnerabilities, yet also offers tools for mitigation. Smart money should note the potential for increased investment in cybersecurity solutions as companies adapt to the evolving landscape of AI-driven threats.

13:21
PDT

Companies are urged to enhance safety measures before product launches.

Dr. Gebru President Trump OpenAI Hugging Face AI And President Trump FEDFUNDS USDCNH

– Public sentiment towards AI is increasingly negative, especially in the U.S.

– There is a potential window for regulatory discussions on AI safety.

– The narrative around AI regulation is shifting towards corporate responsibility.

– Concerns about data centers are influencing public opinion and policy.

AI regulationpublic sentimentcorporate responsibility

▸ Full transcript

Be regulating, please be regulated by the federal government, when in fact there are things that the companies could do. I mean your prior guest, Dr. Gebru, was talking about the fact that companies could be doing a lot more on the safety side to make sure that they're not shipping products before they're ready to be shipped. So instead of being asked to be regulated, there's much more that the companies could be bringing to the table. And I think it's just our failure of an ability to have a national strategy for science and technology policy. And it's really being highlighted in this moment. And I think in the context, I think what's different from our other conversations, Robane, is that in this context you have an American public that is upset about data centers, that has growing negative sentiment. If you look at about all the polling with regards to AI, Americans have some of the highest negative sentiment in the world. And people are concerned about things like this OpenAI hack of Hugging Face. And so I hope that this is a window of opportunity to finally get some regulation, conversation about serious regulation on the table. I don't think President Trump feels the same way, but we'll see. Well, yeah. And President Trump has already weighed in on this, basically saying, we can't basically lose to China. And that seems to be the end of it. There's also the whole issue of regulatory capture that the companies are the ones seemingly driving this story. You raise this issue about having a national sort of strategy around technology and science.

Analysis

There is a growing call for companies to take more responsibility for AI safety rather than relying on federal regulation, as highlighted by Dr. Gebru's comments. The American public's increasing negative sentiment towards AI and data centers presents a critical opportunity for serious regulatory discussions to take place.

Smart money should note that the current climate of public concern could lead to more stringent regulations in the tech sector, particularly around AI. This shift may impact companies' operational strategies and their approach to product safety, potentially reshaping the competitive landscape in the industry.

13:19
PDT

AI advancements are expected to improve global cybersecurity infrastructure.

Matthew Prince Cloudflare Dario Amade Anthropic Alondra Nelson Institute for Advanced Study AI CEO Glass Wing Advanced Study And Alondra MSFT

– Good actors in cybersecurity have more resources than malicious entities.

– Emerging vulnerabilities will be identified and addressed more quickly due to AI.

– Innovation in AI should continue despite calls for a slowdown.

– Cybersecurity companies may experience increased demand as threats evolve.

cybersecurity innovationAI technology deployment

▸ Full transcript

And getting ahead of it. And I think we're on the cusp the next two to five years of having a much more secure infrastructure around the world and AI is going to drive a lot of that. So you don't support some of these calls that we've heard from Dario, Microsoft engineers, to actually slow down the pace of AI rollout? I think we need to make sure that we understand whenever you have a new technology what the responsible ways of using that technology are. But whether OpenAI or Anthropic slow down there, what they're building. You have other organizations all around the world that are working on building these tools out and their level of sophistication is getting more and more. So I think it's good for us to be aware of what's there. It's good for us to make sure that as these tools come out, the good guys who are protecting the infrastructure have access to them. Again, we were part of Anthropic's Glass Wing project. We were able to get access to that. And again, our systems and our customer systems have become significantly more secure as a result of that. I think that's what's important, but we should continue to innovate here and make these systems more powerful because they're bringing a lot of good to the world. Cloudflare CEO Matthew Prince speaking a little bit earlier here on the program and our next guest. Well, she's advised governments on science and technology for years currently serving on the U.N. advisory body on A.I. Alondra Nelson is a Harold F. Linder professor at the Institute for Advanced Study. And Alondra, I mean, we've talked before here about this idea for needing rules and maybe these CEOs have seen the light or maybe they've seen the light.

Analysis

Matthew Prince, CEO of Cloudflare, emphasized the importance of innovation in AI to enhance cybersecurity, arguing that the good actors in the space have more resources than the bad ones. He believes that while vulnerabilities will emerge, the overall trend points towards a more secure infrastructure driven by AI advancements.

Smart money should note that the cybersecurity landscape is evolving rapidly, with AI tools being leveraged to identify and fix latent vulnerabilities. This suggests that companies in the cybersecurity sector may see increased demand for their services as organizations seek to bolster defenses against emerging threats.

13:17
PDT

Concerns about AI-driven cybersecurity threats are escalating.

Dario Amade Anthropic AI

– The potential for a botnet-induced internet shutdown is being discussed.

– AI tools are improving the ability to find and fix software vulnerabilities.

– Defenders in cybersecurity may have more resources than attackers.

– The next two years may see a rise in reported vulnerabilities.

cybersecurity threatsAI vulnerabilities

▸ Full transcript

Around the clock at an just unparalleled speed, trying to find every possible way. And that's, I think, what's different here, is the speed and the ability to chain together multiple vulnerabilities and find whatever is a possible way into various systems. Well, just a couple of days ago, Dario Amade, who of course runs Anthropic, raised this particular issue about cybersecurity in this age of AI. He invoked the hugging face attack and said that in his view within six to 12 months, we could actually have a full shutdown of the internet created by some sort of botnet. Are there security measures available now that could actually prevent that? Yeah, I think I'm much more optimistic on this than Dario is. I think that while we are going to see, I think probably for the next two years, a series of rules will seem like very, very, very scary vulnerabilities that are coming out. The flip side of that is that we're actually finding these bugs. These bugs have been latent, persistent in software for a really long time, and the AI tools are being able to go through, find those bugs. The good news is the good guys have more resources than the bad guys. They have the latest models, they have access to these things. These things are actually relatively expensive to run, and the good news is that the bad guys don't have necessarily the same resources to be able to pay for those. They don't have the bank accounts to do that. And then as a result, I think you're going to see, again, a lot of scary vulnerabilities that are going to come up over the next little bit. Two years from now, it might be kind of like we fall off a cliff in terms of cybersecurity, in terms of the vulnerabilities that we see, because it's possible to actually.

Analysis

Dario Amade raised concerns about potential cybersecurity threats from AI, suggesting a possible full internet shutdown by a botnet within 6 to 12 months. However, there is optimism that the resources available to cybersecurity defenders may outweigh those of attackers, as AI tools help identify long-standing vulnerabilities in software.

13:15
PDT

BUG ETF rose 11%, its best day since 2019.

Tim Nick Distributed Artificial Intelligence Research Institute Matthew Prince Cloudflare China North Korea Iran ChatGPT Claude Grock Dario Amade Elon Musk USDCNH

– Increase in bot traffic attributed to AI tools like ChatGPT.

– Bots expected to outnumber humans online by a significant margin.

– Concerns about cybersecurity risks are growing.

– Calls for cautious AI development may influence tech investments.

cybersecurity riskAI developmentbot traffic

▸ Full transcript

I appreciate you joining us. Tim Nick, a brew founder and executive director of the Distributed Artificial Intelligence Research Institute. As we focus in on the safety surrounding AI, we saw a big pop in the stocks of a lot of the cybersecurity companies, including Cloudflare. I caught up with the CEO Matthew Prince earlier today and asked him about Amadea's warning and, more importantly, the increase in bot traffic on the Internet. Take a listen. I think there have been bots online for a long time. If you look at adversaries like China, North Korea, or Iran, they're using bots for hacking. I think most of what's driving the increase in bot traffic today is actually what consumers are doing or businesses are doing as they're using AI tools. Whether you've used ChatGPT, Claude, or Grock, and typed a query in, you watch as it scans thousands of websites in order to answer something. That's just a lot more than what you, as an average consumer, would do. You might, if you're searching for a digital camera, look at five websites, whereas your agent is going to look at 5,000. What we're seeing is that's just driving an enormous amount of new volume of traffic to the internet. Our projections are that in five years, which is not that long from now, we'll see over a thousand times more bots on the internet than we'll actually see humans. In other words, humans are going to be around in our online. Is the security threat, though, because of the increase in volume? Or is it that the bots sort of bring, I guess, for lack of a better phrase, certain sophistication to this that creates more threats? Yeah, I don't think the volume is necessarily a problem.

Analysis

Cybersecurity stocks surged, with the BUG ETF rising 11%, marking its best performance since inception in 2019. The increase in bot traffic driven by AI tools raises concerns about security threats, as bots are projected to outnumber humans online significantly in the coming years.

Investors should note the dual nature of AI's impact: while it enhances efficiency, it also escalates cybersecurity risks. The narrative around AI's existential risks is evolving, with calls for more cautious development potentially affecting investment strategies in tech and cybersecurity sectors.

13:13
PDT

AI security issues stem from negligence, not rogue models.

Tim Gabaru DeepMind Google Sebastian Malaby Microsoft Anthropic Elon Musk Peter Thiel Bank of America AI The Infinity Machine GOOGL

– Tim Gabaru's book critiques the existential risk narrative in AI.

– The narrative around AI risks is influenced by vested interests.

– Increased scrutiny on AI governance is necessary.

– Investors should be cautious of AI-related investments without proper oversight.

AI governanceCybersecurity risks

▸ Full transcript

To your accounts, checking accounts or things like that, you should not expect things to go well because the reason that these security protocols were put in place in the first place was to make sure that there are clear people and processes that are in charge of different parts of processes, which is how you can maintain security protocols in the first place. I don't see how you can do that with a bunch of agents getting every single access to a software that you would never give a person or a group because the resulting issues are not rogue models; it's really just negligence. I have to ask you, Tim, just a few months ago, I read Sebastian Malaby's great book, The Infinity Machine about DeepMind, the company basically underneath the umbrella of Google. You've got a new book coming out, I think at the start of the year called Deep on Learning, the rise of AI and the radicalization of a tech idealist. I'm not going to ask you to compare and contrast these two books, but I am curious as to the message that you want your book to get across that maybe we aren't seeing from some of the other tomes put out there. The message of my book, actually, I speak in my book about how far back I have met this existential risk narrative and who it's being pushed by, and how far back we've had this preordained inevitability kind of rhetoric. So my message is that...

Analysis

The discussion highlights the negligence in AI security protocols, emphasizing that issues arise not from rogue models but from poor oversight. Tim Gabaru's upcoming book aims to challenge the prevailing existential risk narrative surrounding AI, suggesting a need for more nuanced understanding of the technology's implications.

Smart money should recognize that the narrative around AI risks is being shaped by vested interests, which may not align with the actual operational realities of AI deployment. The focus on negligence rather than technological failure indicates potential vulnerabilities in AI investments and the need for enhanced governance frameworks.

13:11
PDT

OpenAI's security failures indicate a lack of basic protocols.

OpenAI Pentagon Dario Amade Jacob Coxen Timney Gabaru Distributed Artificial Intelligence Research Institute

– Concerns are growing over human oversight in AI deployment.

– Cybersecurity stocks are benefiting from the current climate.

– The narrative around AI risks is evolving towards human incompetence.

– Investors should monitor the implications of AI safety discussions.

AI safetycybersecurityhuman oversight

▸ Full transcript

The incompetence displayed by OpenAI, the lack of basic security protocols that have been in place for a long time, was more the story and less a story of increasingly capable, quote unquote, rogue models. The models did exactly as they were designed to do; the engineers designed them to do, and the engineers were testing for specific things, but they forgot that they gave the models internet access. They didn't have a properly, what's called an air gap environment. If you speak to people with cybersecurity expertise, they'll tell you that this is more a story of company incompetence, shocking company incompetence, and less a story of rogue models gone wild. I want to get to an underlying issue, and this is about the human involvement in all this, because, I mean, your landmark research sort of dealt with things like bias, environmental costs, and opaque training data. But a lot of it sort of circled back to this idea of maybe having too many things automated, not enough human involvement in the decision-making process. And now that you kind of see where we've come over these last few years, particularly where you have the Pentagon pushing greater deployment of these models without human involvement, and even on the corporate side, with a lot of corporate uses without human involvement, have we just kind of crossed the Rubicon, sort of that proverbial Pandora's box? It's open, and we're never going to put that genie back into the bottle. I never...

Analysis

The recent issues with OpenAI highlight significant incompetence regarding basic security protocols, rather than rogue AI models. This raises concerns about the human oversight in AI deployment, particularly as organizations push for greater automation without adequate human involvement.

Smart money should note that the narrative around AI risks is shifting from technological failures to human errors in oversight and security. As companies like OpenAI face scrutiny, the implications for investment in AI technologies may become more pronounced, especially in sectors reliant on cybersecurity and ethical AI practices.

13:09
PDT

AI investment narrative shows inconsistency between calls for caution and acceleration.

Timmy Gabaru Google Elon Musk Peter Thiel Microsoft Distributed Artificial Intelligence Research Institute AI Ethical Artificial Intelligence Distributed Artificial Intelligence Research GOOGL

– Historical figures like Elon Musk and Peter Thiel have raised existential risks associated with AI.

– Concerns about transparency and accountability in AI deployment are growing.

– The potential for regulatory scrutiny on AI development is increasing.

– Cybersecurity stocks are benefiting amid broader market concerns.

AI risk managementInvestment volatilityRegulatory scrutiny

▸ Full transcript

Us as a species, as a nation, is gradually accelerating. And our next guest has raised questions and really warnings about the risks surrounding artificial intelligence all the way back in 2020 when she was ousted from her role as co-lead of Google's Ethical Artificial Intelligence team. Timmy Gabaru is the founder and executive director of the Distributed Artificial Intelligence Research Institute. And she joins us right now. Her work is focused less on hypothetical futures in which machines escape human control and more on what happens when we deploy systems without sufficient transparency or accountability. Timmy, I want to ask you right now whether we are actually asking the right questions about the safety and security of artificial intelligence. We are not. That's your answer is no. So I want to give you a very quick brief history lesson. The same people who have been investing the most amount of money in AI have been saying that it's an existential risk to humanity and have been calling for a pause. So one year they call for a pause, the next year they say that they at least be accelerated. Going back to 2012, Elon Musk called AI summoning the devil. Peter Thiel in 2013 called it a larger existential risk than climate change. That was all over the press. 2015 there was a pause AI letter similar to now. Same in 2020, same in 2020.

Analysis

The discussion highlights the ongoing concerns regarding the risks of artificial intelligence, with Timmy Gabaru emphasizing that the right questions about AI safety and security are not being asked. Historical calls for pauses in AI development juxtaposed with accelerated investment raise critical questions about accountability and transparency in AI deployment.

Smart money should note the inconsistency in the AI investment narrative, where leading figures oscillate between advocating for caution and pushing for rapid advancement. This tension could lead to increased regulatory scrutiny and impact the valuation of companies heavily invested in AI technologies.

13:07
PDT

BUG ETF rose 11%, marking its best performance since 2019.

BUG ETF Jacob Coxen Dario Amade Microsoft President Trump Beijing BUG ETF AI CEO BUG BUG ETF MSFT

– Concerns over AI development pace are increasing among industry leaders.

– Calls for regulation could impact investment in AI technologies.

– Political responses to AI risks may create market volatility.

– Cybersecurity sector benefits from heightened awareness of AI risks.

AI regulationcybersecurity investmentmarket volatility

▸ Full transcript

Issues when it comes to the pace of spending. Meanwhile, one of the beneficiaries of all that were all the cybersecurity stocks. One of the main ETFs that tracks it, the BUG ETF, having one of its best days going back, well, ever, up 11% on the day, best days since that ETF started trading back in 2019. And that does bring us to our top story of the hour. And that is the existential risk of AI and the investment risk now attached to it. The AI boom, as we know, rests on an enormous bet that increasingly capable systems will drive widespread adoption across consumers, companies, governments, and of course, justify the vast sums of money being spent on chips, data centers, power, and model development. But what happens to that investment case if the companies at the center of the boom begin arguing that the most advanced systems should be developed more slowly? Last week, anthropic researcher Jacob Coxen accused leading AI labs of 'gambling with our lives.' Then on Saturday, anthropic CEO Dario Amade called for what he described as pacing frontier AI. That was followed this Monday by a 15,000-word manifesto put out by Microsoft AI researchers that also called for limits. President Trump has dismissed calls to slow development. Beijing has accused Amade of fear-mongering. But when some of the people building the world's most advanced AI systems, the...

Analysis

Cybersecurity stocks surged, with the BUG ETF experiencing its best day since inception, up 11%. The existential risk of AI is now a focal point, as leading AI researchers call for a slowdown in development, raising concerns about the sustainability of investments in the sector.

Smart money should note the growing tension between rapid AI advancement and calls for regulation, which could impact investment strategies. The divergence in opinions among AI leaders and political figures may create volatility in tech stocks, particularly those heavily invested in AI development.

13:05
PDT

S&P 500 down 0.5% amid rising crude oil prices.

S&P 500 Bank of America Bloomberg Gisec Global Fed crude oil 10-year yield AI US Middle East The Close S&P 500 PRIVATE FEDFUNDS CL=F

– 10-year yield briefly surpassed 5%, indicating rate concerns.

– Investors are increasingly focused on diversification strategies.

– AI investments remain strong despite market volatility.

– Market sentiment is cautious ahead of the Fed meeting.

market volatilityinterest ratesoil pricesdiversification strategies

▸ Full transcript

A new digital order isn't defined by technology alone. As sovereign AI reshapes digital independence, as agentic AI transforms decisions, as quantum unlocks new possibilities, every breakthrough demands a cyber-first mindset. That's why the future meets at Gisec Global, the Middle East and Africa's largest cyber security event. We shape policy and power innovation. We protect the digital order. At terminal speed, nobody covers jobs day like Bloomberg. The countdown is on. Everything you need to get the edge at the end of the market day. This is The Close. Welcome back to The Close, a down day here on this Monday afternoon for US stocks. A half a percentage point drop for the S&P 500. But that really belied some of the churn that we saw underneath the surface. A churn that really started because of the big bump up in crude oil prices yet again. And a continued bump up in 10-year yields yet again. 10-year yield at one point on the day, trading above 5% before pulling back just a touch. Some of those rate concerns fed into the broader market concerns as well. Bank of America shares.

Analysis

US stocks experienced a down day, with the S&P 500 dropping half a percentage point, driven by rising crude oil prices and increasing 10-year yields. The market's concerns about interest rates are compounded by a significant uptick in crude oil, which is influencing broader market sentiment.

Smart money should note that while there is a focus on AI and tech investments, the underlying volatility from rising yields and oil prices suggests a cautious approach is warranted. The correlation between stocks and bonds is increasing, prompting investors to seek diversification strategies to mitigate risks in a potentially higher rate environment.

13:00
PDT

Brent crude prices peaked above $108 but retreated slightly, currently around $106.

Brent crude WTI Federal Reserve Kevin Hassett President Trump Kevin Warsh Fox News New York FEDFUNDS

– WTI crude is trading near $102, impacting yield expectations.

– Ten-year yields surpassed 5% for the first time in years.

– Economists are divided on whether the Fed will hike rates or hold steady.

– Political influences are complicating the Fed's decision-making process.

energy pricesFed policybond market dynamics

▸ Full transcript

Those earnings look. So definitely not the best news for equities remain. Yeah, we talk about this idea of how much energy prices have started to move this market. We had one point, we had Brent crude prices topping out above 108 bucks a barrel, though they did retreat just a little bit from those highs still camped out at 106. WTI right around 102. But that also feeds into the yield picture with the Fed set to start its two-day meeting tomorrow morning, a two-day meeting that sees a two-year yield more than 20 basis points higher than where they were just a couple of weeks ago. Ten-year yields at one point on the day trading above 5% for the first time in a couple of years. A meeting that has investors all but pricing in a rate hike, but still it's very contentious. We had Kevin Hassett last week on Friday saying that the president will have something to say if he does see a hike, but on Sunday he softened that on Fox News. He said that President Trump will support an independent Fed, but it's really political as well as market moving. Yeah, and this is a fan standoff right now, particularly with the bond market. The bond market has kind of made it clear what it wants to see or at least what it thinks it's going to see, whether Kevin Warsh has the ability to push back on that. I don't know. I don't know who you, who would you, who are you more scared of, the president or the bond market, I guess is the question here. Tough question to answer, but economists are split. We did see a lot of actually advising their call, but it's still split between a hike and a hold. We'll get the closing bells here in New York on this Monday afternoon. Remember last week he had three straight days of losses on Tuesday, Wednesday and Thursday.

Analysis

Equities are facing downward pressure, particularly influenced by rising energy prices and expectations of a Federal Reserve rate hike. The bond market is signaling a preference for a rate increase, creating a contentious atmosphere as political dynamics also play a role in market movements.

Smart money should note the split among economists regarding the Fed's decision, indicating uncertainty that could lead to volatility. Additionally, the bond market's reaction to potential rate hikes suggests that investors may need to reassess their strategies in light of changing interest rates and energy costs.

12:58
PDT

Chip sector weakness is impacting broader market performance.

Black Rock Jay Jacobs AI biotech Fed US Alright Jay FEDFUNDS AI

– Investors are increasingly focused on diversification amid rising correlations between stocks and bonds.

– Strong interest in AI and biotech persists despite potential rate hikes.

– Disruptive technologies are less affected by short-term rate changes.

– Clients are seeking strategies to mitigate volatility.

diversification strategiesinterest rate impactAI investment opportunities

▸ Full transcript

Can we allocate to diversifiers? Can we allocate to buffer ETFs? Can we find ways to participate in these markets while mitigating some of the volatility? But we certainly haven't seen widespread bearish positioning. I do have to just ask you about the rate environment. We do have that Fed meeting in a couple of days or the Fed decision, I should say, in a couple of days. When we talk about the prospect of a higher rate environment, at least higher than where we are right now, does that change the dynamics of what people look for or is a quarter point or half a percentage point over the next couple of meetings just kind of immaterial overall for valuations? On the short end of the curve, I don't think it changes a lot on sort of what we're talking about here, which is disruptive technologies, which are much more driven by the long end of the curve. But even saying that, we still see so much interest in AI. We see interest in biotech stocks. These tend to be negatively affected by higher long end of the curve rates and that hasn't really happened over the last few months. So I think in a lot of ways, the growth opportunity is outpacing even percentage points in interest rate moves. When you talk to clients, what is their biggest concern these days? I think it's really about diversification. It's about stocks and bonds having higher correlation. How do you weather the unknown and that's really about looking at diversifying strategies. Alright Jay, always appreciated. Jay Jacobs, Black Rock's US head of equity ETFs counting us down to those closing bells, closing bells right now, just about two minutes away on this Monday afternoon. Been on the back foot all day long. Isabelle, I mean, the only real gainers that we're seeing in this market, at least in terms of the big sector.

Analysis

The market is experiencing volatility, particularly in the chip sector, which is dragging down broader indices. Despite concerns over interest rates and AI development, there remains strong interest in biotech and AI investments, indicating a divergence in investor sentiment.

Smart money should note that while there is a push for diversification strategies, the demand for AI and biotech stocks continues to outpace concerns over rising interest rates. This suggests that growth opportunities in these sectors may remain resilient despite macroeconomic headwinds.

12:56
PDT

Shift in AI focus towards governance and responsible regulation.

AI Fed IAlt Labor Day FEDFUNDS

– Insatiable demand for AI adoption among companies.

– Divergence in investor sentiment: aggressive vs. defensive strategies.

– Increased interest in diversified alternatives for portfolio protection.

– Market positioning reflects caution ahead of Fed meetings.

AI governanceinvestment diversification

▸ Full transcript

No, I mean we continue to be very optimistic about AI investment opportunities. I think what might shift is it's been all about performance of large language models thus far. I think the conversation is going to shift towards one of performance and governance. And look, coming from the finance industry, we've seen a lot of innovation with regulation in a responsible way. And I think that might be a model that could be applied to the AI space as well. And if we see slower build out and also higher rates with that point toward the same conclusion, which is maybe less liquidity and less premium, how do you square those two? At the end of the day, this is going to be driven by demand for AI adoption. What we see is that's insatiable right now. There's so much interest in artificial intelligence. The key is how our company is using it. It's not enough to just say we now have a subscription to an AI large language model. Companies need to really reorient themselves around how to utilize this technology. So when we talk about the market overall, and this is a market that's kind of been trending a little bit of water, we knew kind of coming back from the Labor Day holiday, a lot of people would kind of assess all the big gains. And of course you have a big Fed meeting that's staring a lot of folks down in a midterm election as well. What is positioning looking like overall, just irrespective of just the AI trade? Are people maybe just being a little bit more cautious relative to maybe what we saw at the start of the year? I think we're really seeing a barbell right now. We're seeing a lot of clients who really want to lean into mega-caps, want to lean into AI, they're full throttle. Another client segment though is really looking more defensively at diversification. We're seeing that in tickers like IAlt which is really a diversified alternatives fund, think about all different types of strategies that can diversify a portfolio away from that.

Analysis

AI investment opportunities remain strong, with a shift in focus from large language model performance to governance and responsible regulation. Demand for AI adoption is insatiable, but companies must effectively integrate this technology into their operations to capitalize on it.

Market positioning is currently polarized, with some investors aggressively pursuing mega-cap stocks and AI, while others are adopting a more defensive stance through diversification strategies. This divergence suggests a cautious sentiment as the market prepares for upcoming Fed meetings and midterm elections.

12:54
PDT

121 gigawatts of data center capacity needed in 4-5 years.

NVIDIA biotech companies AI data centers chips memory chips power companies NVDA

– Cost of data center build-out is $40-$50 billion per gigawatt.

– Supply chain issues are impacting AI infrastructure development.

– Investors are diversifying into companies using AI operationally.

– Biotech companies are showing strong performance despite rising rates.

supply chain riskAI investment trendsbiotech performance

▸ Full transcript

We just put out our thematic meteor update, and it's all about that insatiable demand for artificial intelligence. I mean, just to put some numbers to it, we believe there could be a need for about 121 gigawatts of data center build-out in the next four or five years. Each individual gigawatt is about the size of a mid-sized city and costs about $40 to $50 billion per gigawatt to bring online. So there's a tremendous amount of investment. Frankly, where we're seeing more of the challenges is supply chain constraints: the ability to get certain chips and memory chips, the ability to get power at that speed, to get land and data centers, and critical materials. This is where we're starting to see some of the challenges in terms of the AI build-out. Well, I mean, where are investors looking right now? And I know you can't talk about individual stocks, but there is this idea that for the last couple of years, it was just, you buy NVIDIA, you buy the pick-and-shovels types of companies. Now, most of the investors who come on this show are talking about basically what's on the edge, so to speak, the power companies, the little routers, and other little things that have to go into this. Are you starting to see that show up in some of the flows into certain ETFs and such? I think for the last three or four years, all of the focus has been really on the infrastructure side of the equation. That's going to be the chips, that's going to be the data, that's going to be the data centers, that's going to be the power. But we're starting to see just kind of at the beginning of the trend a shift towards companies that are starting to use AI in their actual everyday functioning and how much more efficient they can be. So we're seeing some pretty strong performance of biotech companies even despite the tenure rising pretty quickly over the last few years.

Analysis

The demand for artificial intelligence is driving a significant need for data center build-out, estimated at 121 gigawatts over the next four to five years, with costs ranging from $40 to $50 billion per gigawatt. Supply chain constraints, particularly in chip availability and critical materials, are emerging as challenges to this rapid expansion.

Investors are beginning to shift focus from traditional infrastructure plays, like chip manufacturers, to companies that are integrating AI into their operations. This trend suggests a potential for strong performance in sectors like biotech, even amidst rising interest rates, indicating a broader acceptance of AI's transformative potential across industries.

12:52
PDT

Chip makers are dragging down broader market indices.

Microsoft Anthropic OpenAI Dario China AI Romain Bostic Isabel Lee MSFT USDCNH

– Concerns about AI development pace are influencing market sentiment.

– Investors are reassured that spending on AI is not expected to stop.

– Global consensus on AI regulation is crucial, especially regarding China.

– Valuations may be at risk if AI spending slows significantly.

AI development concernsTech sector volatilityGeopolitical risks

▸ Full transcript

Get to the closing bells, Romain Bostic here. And I'm Isabel Lee. Romain, it's really looking like an ugly day for the markets. We're seeing a sell-off in chip makers really dragging down the broader market. As we heard over the weekend, just a drumbeat of those concerns. You had a good manifesto earlier at the start of the show, but it's really Microsoft, Anthropic, and OpenAI that said we need to probably slow the pace of this whole AI development that we're seeing. Yeah, and that's sort of the big fear here is that all of this spending that has been made, and more importantly, all the spending that's been committed, whether that, if we do see a slowdown in that, whether that sort of upends some of the valuations, the forward valuations that we've seen baked into this market. It's kind of interesting though too, because we listen to what Dario said in his letter, or that I didn't read all of the, you know, 15,000 words. Well, I read Dario's; that was a short one. I don't know if you saw the Microsoft researchers' one which they decided. 15,000? I tapped out at about two or three thousand. But it gets to the idea, no one's saying that we should stop doing this. They're just saying, look, maybe we slow things down just a little bit on the most advanced AI models. They're still sort of advocating for the rollout here. So maybe if some investors are kind of spooked by the headlines, but when you really sort of read what they wrote, no one's saying that the spending should stop or come to any sort of an immediate halt. Absolutely. And then Amode also said that the key question is China, because if you want to slow down the pace, all the global superpowers have to agree; otherwise, I mean, then it becomes.

Analysis

The markets are experiencing a downturn, primarily driven by a sell-off in chip makers, with concerns about the pace of AI development weighing heavily on investor sentiment. Despite fears of a slowdown in AI spending potentially impacting valuations, key players advocate for a measured approach rather than a complete halt in investment.

12:50
PDT

Texas Capital is relocating its primary listing to the Texas Stock Exchange.

Texas Capital Rob Holmes Texas Stock Exchange Energy Transfer Black Rock Scarlett Food Danny Berger Bloomberg EMS IPO Bloomberg Trade Middle East PRIVATE

– The decision was influenced by the exchange's management and technology.

– Texas is seen as a dynamic economy attracting talent and investment.

– Other companies may follow Texas Capital's lead in moving to local exchanges.

– Concerns about technology and safety were addressed prior to the move.

regional exchange growthIPO market trendsinvestment in Texas

▸ Full transcript

Equity indices built on opinions? That's the old way. The new way is Bloomberg equity indices, built using transparent, rules-based methodologies that are more responsive to changes in the markets, powered by 450 billion daily data points, and backed by research from hundreds of global experts, delivering benchmarks driven by the markets, not opinions. Bloomberg equity indices get evolved benchmarks for today's equity markets. This is it. The trade that will make your number. And with next generation speed, automation, and integration, this is the new fixed income EMS that will make sure you win it. Expect more from your execution management system. Bloomberg Trade EMS. Things going in the IPO market is just one symptom of that. It is an early indicator of what we're going to see in the M&A market. Let's go to Scarlett Food, who's taking a closer look at drone companies. With ongoing conflicts in the Middle East and Ukraine, there's renewed investor appetite for new names in the space. Excellent reporting. I'm Danny Berger and this is Bloomberg deals every Wednesday at 5 p.m. London time only on Bloomberg television. At a time when policy in Washington is driving Wall Street, we draw a distinction between the rhetoric and the action, bringing you market moving guests and original reporting.

Analysis

Texas Capital is moving its primary stock listing to the Texas Stock Exchange, a decision driven by the exchange's strong management and advanced trading technology. This move signals a growing trend among companies to seek listings that align more closely with regional economic strengths and investor bases.

The shift to the Texas Stock Exchange reflects a broader trend of companies prioritizing local exchanges that offer better net present value and investor engagement. As Texas continues to attract talent and capital, other firms may follow suit, indicating a potential shift in the competitive landscape of stock listings.

12:46
PDT

Texas Capital is relocating its primary listing to the Texas Stock Exchange.

Texas Capital Rob Holmes Texas Stock Exchange Energy Transfer Black Rock J. Jacobs CEO US Texas Capitol Humbloom Room

– The decision was driven by superior management and technology at the new exchange.

– Rob Holmes highlighted the strong investor base and better net present value.

– Concerns about technology and cybersecurity were addressed satisfactorily.

– Texas Capital is experiencing rapid growth in treasury, investment banking, and wealth fees.

regional exchange growthfinancial technologyinvestment banking trends

▸ Full transcript

of today and the Texas capital of 2020-2021? Well, we wouldn't have tried it anywhere else. It is the most dynamic economy in the world. And you're able to attract talent from anywhere on the globe, which is really the thing that changed it. So what's the difference? We have a lot of capital. We have a lot of liquidity. We have the products. We can do anything a money center bank can do today. We're the number one lender in Texas business of any tech space bank. We're growing treasury fees way faster than the market. Investment banking fees faster, wealth fees faster. And we're doing it in a very responsible way. We opened the first institutional sales and trading floor in Texas in 50 years. We have great distribution. And we have an employee base that's totally dedicated. They came here for a shared vision and realized it through client selection. All right, Rob, I have to leave it there. Really appreciate you joining us. And congratulations on the move. Thank you, Roman. All continued success down there, Texas Capitol CEO Rob Holmes taking us to those closing bells when we come back. A closer look at the market action which has been relatively to the downside here for the major indices largely because of concerns about inflation and that bump up in yields. We're going to catch up with J. Jacobs, Black Rock's US head of equity ETFs when we come back after the break. Right here, Humbloom Room.

Analysis

Texas Capital is moving its primary stock listing to the Texas Stock Exchange, citing superior management and technology as key factors in the decision. The CEO, Rob Holmes, emphasized the strong investor base and better net present value as critical reasons for the move, indicating a strategic shift in the competitive landscape of financial exchanges.

The transition to the Texas Stock Exchange reflects a broader trend of companies seeking more localized and supportive environments for growth. This move could signal increased interest in regional exchanges, potentially reshaping market dynamics and attracting more firms to follow suit, especially in a robust economic environment like Texas.

12:44
PDT

Texas Capital is relocating its primary listing to the Texas Stock Exchange.

Texas Capital Rob Holmes Texas Stock Exchange Energy Transfer Kelsey CEO

– The decision is based on superior management and technology at the new exchange.

– The move is independent of emotional ties to Texas.

– There is significant interest from other companies in following Texas Capital's lead.

– The Texas Stock Exchange has been trading successfully without issues.

exchange relocationmarket dynamicsinvestment strategy

▸ Full transcript

They all have some affiliation with Texas, and you yourself have an affiliation with the governing structure there. Is this just sort of the people who have a vested interest in seeing Texas succeed are now a part of this? Are we going to just see other people, people who have no affiliation with this, also sort of look to Texas and say there's an opportunity here? Well, people say that about Kelsey, but I mean what an incredible innovator he is. I mean he's created hundreds of thousands of jobs. He helped make the country safer with national defense and independence of energy. And he saw this as another investment as something we needed. So I use that, I view that as a real positive. And our investment in taxi is so minor, it means nothing. The people that made that decision didn't make the decision to move. It was the board and me that made the decision to move. So it's totally independent decision. And by the way, it would be wrong as CEO and chairman to make that decision for any other reason. I think you'll see many companies follow; there's a lot of interest. We just happen to be first, but there's a lot of interest. What was the main concern that you had to allay from whether you're C-suite or investors regarding your move to the Texas exchange? I'm sure there were some. Well, look, you gotta make sure the technology is good. You gotta make sure cyber is safe. So you gotta make sure it's good, you gotta make sure it's safe. You gotta make sure that it can perform. They've been trading over 13,000 symbols since mid-summer without any hitch at all. So there's really actually no concern. Some people will.

Analysis

Texas Capital is moving its primary stock listing to the Texas Stock Exchange, citing superior management and technology as key reasons for the decision. The CEO emphasized that the move is independent and reflects a strategic choice rather than emotional ties to Texas.

The decision to relocate to the Texas Stock Exchange may signal a trend where other companies follow suit, attracted by the exchange's advanced trading technology and investor base. This could indicate a shift in market dynamics, with Texas potentially becoming a more prominent hub for financial listings.

12:42
PDT

Texas Capital is relocating its primary listing to the Texas Stock Exchange.

Texas Capital Rob Holmes Texas Stock Exchange Energy Transfer CEO Hazlinda Amen New York PRIVATE

– The decision is based on the new exchange's management and technology.

– Better net present value was a key factor in the decision.

– This move may indicate a trend towards regional exchanges.

– Investor engagement could improve with localized listings.

regional exchangeslisting strategies

▸ Full transcript

Insight with Hazlinda Amen only on Bloomberg. Texas Capital is moving its primary stock listing to the Texas Stock Exchange following announcements from Energy Transfer and several others that will do the same beginning in early October. Texas Capital CEO Rob Holmes joins us here today in New York, although you've got to be spending a lot more time in Texas. Talk to me about why you did this. I mean you could have done a dual listing, kept your NASDAQ listing, got a listing on the taxi, but you decided just to go whole hog down there. Why? Well, it's pretty simple. People like to think that it's for romantic reasons, like we took the ticker home; that had nothing to do with it. Once this exchange came to fruition, it was our responsibility to look at three exchanges and pick the best one for Texas Capital. So that's what we did. Number one, the new exchange has a very good management team that has done it at the most significant firms in the world. They have match trading technology that is state of the art. Their investor base is incredible, some of the best, smartest investors in the world that affirm their strategy, their technology, etc. And then another reason, just to get right down to it, the net present value is better. So they have a share listing construct.

Analysis

Texas Capital is moving its primary stock listing to the Texas Stock Exchange, opting for a full transition rather than a dual listing with NASDAQ. The decision is driven by the new exchange's superior management, advanced trading technology, and better net present value for the company.

Smart investors should note that Texas Capital's move reflects a strategic shift towards localized exchanges that may offer enhanced investor engagement and operational efficiencies. This trend could signal a broader movement among companies seeking to leverage regional exchanges for competitive advantages in trading and valuation.

12:40
PDT

AI investments are increasing significantly.

Bloomberg Annabel Rulers Sherry Yan AI Hong Kong PRIVATE

– Geopolitical factors are influencing tech markets.

– Regulatory changes could impact capital allocation.

– Investors should focus on financial movements, not just hype.

– The tech sector is evolving amidst job market changes.

AI investmentgeopolitical riskregulatory environment

▸ Full transcript

Geopolitics. The end of jobs. Or the end of human struggle. We see the endless funds fueling the AI hype. While others follow the noise, we follow the money. The stars. Bloomberg brings you the latest stories from the people and companies pushing the tech sector to new frontiers, and the politics that shape global tech markets. I'm Annabel Rulers in Hong Kong. I'm Sherry Yan in Tokyo.

Analysis

The tech sector is witnessing a surge in investment fueled by AI hype, with significant funds flowing into this space. However, amidst the noise, discerning investors should focus on the underlying financial movements that are shaping the market landscape.

The recent geopolitical tensions and evolving job markets are influencing tech investments, suggesting a shift in how capital is allocated. Smart money should pay attention to the regulatory environment and its potential impact on the tech sector's growth trajectory.

12:38
PDT

NFL season kickoff shows strong engagement with fans.

Adam Greenblatt Bet MGM NFL American Gaming Association Fan Duel DraftKings Texas Capital Texas Stock Exchange Bloomberg CEO MGM Rob Holmes PRIVATE

– Bet MGM reports positive reactivation volume and first-time depositor interest.

– Concerns remain about the impact of prediction markets on regulated sports betting.

– Legal rulings are increasingly favoring the sports betting industry.

– Bet MGM is focusing investments on high-value players and gaming content.

sports bettingregulatory landscapeconsumer protectiongaming investment

▸ Full transcript

Adam, we'll leave it there. Adam, we hope we can catch up with you again as the season continues deeper into the year. Adam Greenblatt there, the CEO over at Bet MGM. Meanwhile, when we come back, we're going to have a sit down with the newest kid on the block, or maybe this old kid on the block, but certainly a new exchange. We're going to talk with the CEO of Texas Capital, Rob Holmes, and his company's move to the Texas Stock Exchange. This is a close on Bloomberg. The small things, you look closer. Because where others only see details, you can see the possibilities. This is for everyone who makes a big difference from small inserts. This is for the craft of finance of active ETFs.

Analysis

The NFL season has started strongly, with bookmakers facing challenges as fans enjoyed a successful Sunday, particularly with 10 of 13 favorites winning. Bet MGM is focusing on strategic investments in gaming and higher-value players, while expressing concerns about the regulatory landscape surrounding prediction markets.

Smart money should note that while Bet MGM is currently prioritizing profitability, the ongoing legal developments favoring the sports betting industry could reshape competitive dynamics. The emphasis on consumer protection and responsible gambling in regulated markets may create a significant barrier for unregulated prediction markets, impacting their growth potential.

12:36
PDT

Recent court rulings favor the sports betting industry.

Adam Greenblatt Bet MGM American Gaming Association Supreme Court tribal gaming stakeholders CEO

– Concerns persist regarding prediction markets and regulatory challenges.

– The industry is focused on consumer protection and responsible gambling.

– Investors should monitor the evolving legal landscape.

– Strategic investments are being prioritized for higher returns.

regulatory environmentsports bettingprediction marketsconsumer protection

▸ Full transcript

Under established regulatory frameworks designed to protect consumers, maintain integrity in sports, and promote responsible gambling, these features do not exist, certainly not to the same degree in prediction markets as they do in online sports betting. We share the concerns raised by regulators, attorneys general, and tribal gaming stakeholders regarding these prediction markets, and we hope that they're going to be resolved in the Supreme Court in new courts. I understand why you would say that, and I understand the passion; I could hear it in your voice behind it. But you're still the CEO of a company that has investors it has to answer to. My question is that if the puck is going in the direction of prediction markets, fairly or unfairly, do you run the risk of being left behind if some of these lawsuits and other regulatory issues don't fall your way under what you just described? The first point is that we believe the puck is going in our direction. All of the recent state and appeals court rulings have been in favor of the sports betting industry, and we hope, and the more recent rulings have been very deeply reasoned. There is now an ever-growing and expanding body of rationale for why the position that we and the stakeholders are...

Analysis

The CEO expressed confidence that recent court rulings favor the sports betting industry, suggesting a positive trajectory for regulated markets over prediction markets. However, concerns remain about potential regulatory challenges that could impact the industry's growth and competitive positioning.

12:34
PDT

TAVA has a $13 billion late-stage pipeline.

TAVA Adam Greenblatt NFL Bet MGM FanDuel DraftKings American Gaming Association Game Thrones DXY

– Investor focus is shifting towards TAVA's innovative products.

– Current market still values generics over branded medicines.

– TAVA's strategy is a long-term 10-year plan.

– Transition from generics to biopharmaceuticals is underway.

biopharmaceutical transitiongaming market strategy

▸ Full transcript

Much a gaming-first offering, and our market share reflects that, reflecting the degree of investment we've made and, of course, that brand impact. We also have a very sophisticated and successful content strategy in gaming, where we have the best and deepest range of games. The big blockbuster at the moment, which our players are loving, is called Game Thrones. It's a title that requires no explanation. Its success on the big screen has very much translated into game interest online. Your rivals, FanDuel and DraftKings, are both leaning into profitability. I think they're also pulling back when it comes to promotional spend. Are you in the position to do the same, or are you still chasing profitability? It's interesting; our strategy, which we set out, our strategic refinement, had us really focusing on areas where we can make the most impact. We are seeking to allocate our investment dollars to where we see the highest payback, where we are most strategically focused, which is iGaming first, and then to higher value focus on higher value players in the world of sports. Well, I am curious though, Adam, I mean, just going back to the prediction market issue, has there no...

Analysis

TAVA is transitioning from a generics company to a biopharmaceutical firm, boasting a late-stage pipeline valued at $13 billion, which is generating excitement among investors. The focus is shifting towards innovative and patented products, indicating a potential for long-term growth despite current market valuations favoring generics over branded medicines.

The company's strategy is a long-term journey, with a 10-year plan already three and a half years in. Investors are increasingly recognizing the value of TAVA's innovative pipeline, suggesting that as the transition progresses, the company's valuation could improve significantly.

12:32
PDT

NFL season starts with strong fan engagement.

BetMGM American Gaming Association NFL NBA

– BetMGM sees increased reactivation and new deposits.

– Legal NFL betting expected to remain flat at $29.5 billion.

– Illegal betting continues to pose a risk to regulated sportsbooks.

– Overall sports betting landscape includes college sports and NBA.

sports bettingillegal gamblingNFL season

▸ Full transcript

Do you have an early read on what the handles and signups look like so far in this first week of the NFL? Well, fortunately, as expected, the season has started enthusiastically. From a results perspective, unfortunately, for the bookmakers, Sunday started very favorably. The fans left happy. I was left shouting last night for the Giants, who saved the day in a day where 10 of 13 favorites won. So, really good day for the fans generally, and we're very encouraged by both reactivation volume and first-time depositor interest. All right, I had to break it to Adam, but the Giants will probably let you down at some point later this season. All jokes aside, give me a sense though, when we talk about how important, obviously the NFL season is to BetMGM, but also with some of the other sports underway now from the college sports, but also heading into the NBA season here. Are you expecting overall a better year for 2026 in this totality than what you saw in 2025? Well, the American Gaming Association has estimated that in NFL only, legally wagered action will be about the same as last year at around $29.5 billion. But we also need to recognize that that excludes all of the volume that's being taken by unregulated, illegal sportsbooks, and also prediction market operators.

Analysis

The NFL season has kicked off with strong engagement, leading to increased reactivation volume and first-time depositor interest for sportsbooks like BetMGM. However, the American Gaming Association estimates that legal NFL betting will remain flat at around $29.5 billion, not accounting for illegal betting activities.

Smart money should note that while the NFL season is crucial for sportsbooks, the overall betting landscape remains impacted by unregulated markets. This could indicate potential revenue risks for legal operators if illegal betting continues to thrive alongside regulated platforms.

12:30
PDT

African nations must lead their own development trajectory.

Africa Gisec Global Middle East cybersecurity AI ETF IQ As Africans PRIVATE DXY

– A cyber-first mindset is essential for future growth.

– Sovereign AI and quantum technologies are key focus areas.

– Investment opportunities are emerging in cybersecurity.

– Regional integration is becoming a priority.

digital transformationcybersecurityeconomic growthregional integration

▸ Full transcript

Cortical infrastructure not only enables economic growth but, in certain instances, enables regional integration as well. We're an organization that's very deliberate about action, execution, and results. As Africans, we have to take charge of our development trajectory, and we have to move from potential to prosperity, from aspiration to execution. But we must build it ourselves as Africans. The future that our children will inherit is the future we build. A new digital order isn't defined by technology alone. As sovereign AI reshapes digital independence, as agentic AI transforms decisions, and as quantum unlocks new possibilities, every breakthrough demands a cyber-first mindset. That's why the future meets at Gisec Global, the Middle East and Africa's largest cybersecurity event. We shape policy and power innovation. We protect the digital order. It's a multi-trillion dollar industry. We'll show you what's happening in ETFs like no one else, ETF IQ Mondays on Bloomberg.

Analysis

The discussion emphasizes the need for African nations to take control of their development and build their own future, particularly in the context of digital transformation and cybersecurity. The emergence of sovereign AI and quantum technologies is reshaping the digital landscape, necessitating a proactive approach to policy and innovation in the region.

Smart investors should note that the focus on building a cyber-first mindset indicates a significant shift in how African nations are approaching economic growth and regional integration. This could lead to increased investment opportunities in cybersecurity and technology sectors as the continent seeks to harness these advancements for its development.

12:28
PDT

Teva moves to ordinary shares to enhance investor access.

Teva Pharmaceuticals Richard Francis New York Stock Exchange McKinsey NFL Adam Greenblatt Dein Lieblingsspiel Die Afrika Die Afrika Infrastruktur Summit

– CEO highlights a shift towards a biopharmaceutical focus.

– Company has a $13 billion late-stage pipeline.

– Market still values Teva primarily on generics.

– Long-term strategy in place for growth and valuation improvement.

biopharmaceutical transitioninvestor accesslong-term strategy

▸ Full transcript

Adam Greenblatt wird uns durch die Company zu reichen. Die letzten Offrains und was sie in der NFL-Saison sehen, wird jetzt auf die Kiste gespielt. Das ist die Kiste in Bloomburg. Dein Lieblingsspiel, Punkteverbänden. Denn für dich sind Daten nicht einfach nur Daten. Sie sind das große Ganze nur gut getarnt. Das ist für die, die in allem ein Muster erkennen. Das ist für die Kraft der Finanz. Das cooleste, was du mit Geld hast, Was machen Sie eigentlich? Ist das nur für die reichen Menschen? Wie wissen Sie, was zu wählen? Wir haben viele smartere Menschen zusammen. Wir analysieren alle die Statue. Wir machen die Forschung. Wir holen alle das zusammen, um zu denken, was heute das beste Investment ist, das Geld in der Zukunft machen wird. Investieren wie die Zukunft, die wir sehen. Die Afrika, die wir bauen, in der Fertigung der Afrika, die wir wollen. Die Afrika ist in der Zukunft jetzt. Die Afrika Infrastruktur Summit ist ein Lohnpad für was wir wollen.

Analysis

Teva Pharmaceuticals has transitioned from trading American Depositary Shares (ADRs) to ordinary shares on the New York Stock Exchange, aiming to broaden investor access and appeal. The CEO emphasized the company's shift from a generics focus to a biopharmaceutical model, highlighting a robust pipeline with significant sales potential.

Investors should note that while Teva's valuation currently leans towards generics, there is a growing recognition of its innovative pipeline. This transition is part of a long-term strategy, suggesting that patience may be required for the market to fully appreciate Teva's evolving business model.

12:26
PDT

Teva's late-stage pipeline valued at $13 billion.

Teva Pharmaceuticals Richard Francis New York

– Market still prioritizes generics over branded medicines.

– Investor focus is shifting towards Teva's patented business.

– Teva's strategy is a long-term 10-year plan.

– Transition to biopharmaceuticals is underway but requires time.

biopharmaceutical transitionlong-term growth strategy

▸ Full transcript

Top line, we've got the bottom line. We've transitioned from a pure-play generics company now to, I think, a world-class biopharmaceutical company where we have a pipeline where, you know, I've just come back from a banking conference in downtown New York today. We've been talking about the pipeline. In fact, we have $13 billion of sales in that late-stage pipeline. So I think people are excited about the transition of Teva. They see the opportunity for value creation, and they see the opportunity for long-term top and bottom line growth. So I think that's where people are focused. Well, I mean, there is, I mean, right now, though, I mean, the market is still valuing more on the generic stand on the branded medicines. And I know that could change in the future. But give me a sense, some of the criticism has been that at least for right now, that branded growth is still heavily surrounding one particular drug rather than all three. Yes. So, look, I think where people probably have started to see that transition now. I think when we speak to investors, as I said, I've just come from a conference or speaking to them all morning. Every question is focused on our innovative, our patented business, our patented pipeline predominantly. So I think people see this transition happening. I think what you've highlighted is there more opportunity for us to be valued appropriately as a world-class biopharmaceutical company. But I see there's opportunity, it's a journey. And this strategy is a 10-year strategy with three and a half years into it. So as impatient as I can be, I know that we will keep moving this forward, will keep moving the portfolio both in our innovative as well as our biosimilar. And with that I think the valuation will look...

Analysis

Teva Pharmaceuticals is transitioning from a generics-focused company to a biopharmaceutical firm, boasting a $13 billion late-stage pipeline that excites investors about potential long-term growth. However, the market currently values Teva more on its generics than its branded medicines, indicating a need for further demonstration of its innovative capabilities to achieve appropriate valuation.

Investors are increasingly focused on Teva's patented pipeline, suggesting a shift in perception towards its innovative products. The company's 10-year strategy is still in its early stages, and while impatience is natural, sustained progress in both innovative and biosimilar portfolios is crucial for future valuation improvements.

12:23
PDT

Teva Pharmaceuticals begins trading ordinary shares on the NYSE.

Teva Pharmaceuticals Richard Francis New York Stock Exchange Israel CEO

– The move is part of a three-year growth strategy.

– Maintaining domicile in Israel may limit index inclusion.

– Broader access to U.S. investors is a key goal.

– The transition reflects a strategic milestone for Teva.

corporate strategyinvestor access

▸ Full transcript

Down as a few buyers saw an opportunity to come back in. For now, let's take a look at one of the stocks we're watching, and that's Teva Pharmaceuticals. We have ordinary shares beginning to trade directly on the New York Stock Exchange today, and we have the president and CEO, Richard Francis, who will be ringing the closing bell. But for now, he joins us live. Richard, thank you so much. Why make this move today? Why move from ADRs into trading directly? Talk to us about what exactly will change. Yeah, so firstly, thank you for having me on. I mean, the reason to do it now is the progression of the privilege growth strategy. We started this three years ago. We've done many things to transform this company, and we think moving from ADSs to ordinary shares and listing on the stock exchange just gives a broader access to investors who in the U.S. we know want to have access to Teva shares. And so it really supports our appeal and access. So it's a simple sort of milestone of the further movement of our privilege growth strategy. I am curious, with regards to broader access, obviously a lot of that would necessarily come with regards to access to the indices, meaning Teva being put apart in there. But you are keeping your corporation in Israel, which means that there are certain indexes that aren't going to take you if you're not domiciled here in the U.S. Has there been discussion about changing your domicile? No, there hasn't. No, not at all. This is merely about making sure that we know that some investors would like access to Teva stock and it was made more complicated.

Analysis

Teva Pharmaceuticals has transitioned from trading American Depositary Receipts (ADRs) to ordinary shares on the New York Stock Exchange, aiming to broaden investor access. This move is part of their ongoing privilege growth strategy, which has been in development for three years.

The decision to maintain their corporate domicile in Israel while seeking broader access to U.S. investors highlights a strategic choice that may limit inclusion in certain indices. Smart money should note that while this shift enhances visibility, it may also restrict Teva's potential index participation, impacting institutional investment flows.

12:22
PDT

S&P 500 down 0.3%; NASDAQ down 0.6%.

S&P 500 NASDAQ Philadelphia Semiconductor Index Tronsi Lachua Lake Como Romain Bostic Isabel Lee The Philadelphia Semiconductor Index PRIVATE S&P 500 NASDAQ

– Semiconductor stocks are a major drag on the market.

– 10-year yield approaching 5% could signal market instability.

– Market participants are concerned about potential indigestion if yields breach 5%.

– Sector-specific pressures in tech could affect overall market sentiment.

interest ratestech sector volatility

▸ Full transcript

News whenever and wherever it happens. I'm Tronsi Lachua on Lake Como, Italy, and this is Bloomberg. Just about 39 minutes until we get to the closing bells here on this Monday afternoon. Romain Bostic is out alongside Isabel Lee. With stocks now taking a little bit of a drop here, down about three-tenths of a percent on the S&P 500. We're down about six-tenths of a percent on the NASDAQ. We don't have it on the screen there. Oh yes, we do actually. The Philadelphia Semiconductor Index is the big drag here, a lot of those chip stocks. Definitely, that chip stocks and also yield domain. We have the 10-year yield hitting around 5 percent, and we have a lot of people telling us that if it breaches the 5 percent level, that's where you see some indigestion from the stock market. I find the word indigestion a bit funny, but it is what we're seeing.

Analysis

The S&P 500 and NASDAQ are experiencing declines, with the latter down about six-tenths of a percent, largely driven by weakness in semiconductor stocks. The 10-year yield is approaching the critical 5 percent level, which market participants warn could lead to significant market indigestion if breached.

Investors should note the potential for heightened volatility as the 10-year yield nears 5 percent, a threshold that could trigger broader market reactions. The focus on semiconductor stocks indicates sector-specific pressures that could impact tech valuations and investor sentiment moving forward.

12:19
PDT

30% of companies are eliminating software types due to AI advancements.

McKinsey Kate Smey Teva New York Stock Exchange Bloomberg AI ROI CEO PRIVATE

– Investors should assess their software stacks for alignment with business outcomes.

– AI integration requires a focus on workflow and human resource management.

– No universal solution exists; different software serves different purposes.

– Cautious evaluation of software investments is advised.

AI integrationsoftware investmentworkforce management

▸ Full transcript

Software use has seen a significant shift, with around 30% of companies deciding to eliminate at least one type of software due to the advancements in AI tools and enhancements. Investors have reacted to this trend, and the question arises whether they should be more concerned. I think they should take a hard look at their software stack and determine if it still fits their purpose and desired outcomes. This typically leads to a variety of choices across the software spectrum. However, it's not a one-size-fits-all situation; different software serves different uses and must be integrated with the human aspect of the organization. Therefore, there's no need to panic about any specific topic. I appreciate you coming here and not panicking. McKinsey's deep research on the state of AI in 2026 and the road to ROI is available, and I am Kate Smey, a senior partner and global leader on technology and AI for McKinsey. When we return, we will discuss the pharmaceutical world, with Teva completing its first day of trading directly on the New York Stock Exchange. We'll catch up with the CEO after the break. This is Bloomberg.

Analysis

Companies are increasingly reevaluating their software stacks due to advancements in AI tools, with a significant percentage opting to eliminate certain software types. This shift indicates a broader trend where organizations must align their technology choices with desired outcomes rather than relying on a one-size-fits-all approach.

Smart investors should note that the integration of AI is not merely a technological upgrade but requires a fundamental change in workflows and human resource management. The emphasis on tailored software solutions suggests a potential market shift towards more specialized AI applications, which could impact software investment strategies.

12:17
PDT

AI adoption is outpacing regulatory capabilities.

David Saxe Bank of America McKinsey AI CEO

– Companies need to focus on desired outcomes from AI investments.

– Workflow changes and human factors are critical for ROI.

– There is a call for both speed and caution in AI deployment.

– Investments may shift towards firms that effectively integrate AI.

AI regulationtechnology adoptionworkflow transformation

▸ Full transcript

The show. So we have those people in unison, the biggest AI leaders, but we also have some pushback, so to speak, like from David Saxe, who said, okay, regulate it; I mean, no one's stopping you. Then we also have some prominent people saying it's a little too late. Where do you sit in the spectrum? Yeah, I mean, the thing I would say on this is the rate and pace of technology change right now is outstripping, you know, organizational regulatory ability to absorb that change. And that's the piece that I think we've heard over the weekend and in the past weeks that we need to start closing the gap of. And so for me, all of this comes down to where we start at the top of this of there are some places where actually pace is really, really needed, right? For maybe not the frontier frontier sort of side of things, but regular model use and so on in companies. Yeah, we need to speed up the pace of translating the 80% to the 37%. But there are other areas, you know, and you said it on your show earlier, you had the Bank of America CEO on, where actually some of that needs a little bit of patience to say, we've got to make sure that we're doing this right and we're not just going to release fully autonomous agents out without any real thought. I mean, Mackenzie, I mean, you guys are advising a lot of these companies on this sort of AI build-out for lack of a better phrase. I mean, would you advise them to slow things down? Would you actually point to anything and say, maybe you shouldn't adopt this particular agent or this particular practice? So first and foremost, I would advise them to say, look, what's the outcome that you're actually trying to drive here? What is the benefit that you're going to see?

Analysis

The rapid pace of AI technology is outstripping regulatory frameworks, necessitating a balance between speed and caution in adoption. Companies must focus on the outcomes they aim to achieve with AI rather than merely deploying technology for its own sake.

Smart money should note that the conversation around AI is shifting from technology deployment to the importance of workflow changes and human factors in realizing ROI. This indicates a potential pivot in investment strategies towards firms that prioritize effective integration of AI into their business models.

12:15
PDT

AI ROI depends on workflow reimagining, not just technology deployment.

McKinsey Kate Smey AI corporate America ROI DXY

– Human capital investment is critical for successful AI integration.

– Companies may need to spend equally on technology and workforce transformation.

– The disconnect in AI value realization is primarily due to inadequate focus on people.

– Profitability from AI requires a holistic approach to transformation.

AI transformationworkforce investmentROI in technology

▸ Full transcript

You or I can write our emails faster or could be more productive in our day, but that does not translate to companies actually getting more value from this. When you step back from it and say, why is that happening? What's the disconnect? One of the biggest factors is people are still treating this as a technology transformation. I'm going to pick the right models, I'm going to deploy the right technology, and good things will flow. Actually, what we find is that an AI transformation is at its heart a people transformation. It's actually the workflow change, right? The upskilling and re-skilling. The changes in the jobs to be done make a far, far bigger difference than, you know, did I just pick the right technology? So then what happens to ROI? Because you do point to the fact that when AI companies pitch, they say, okay, costs will fall. But you say that's not true. So if human oversight is still there, how are you going to think about profitability when we need people and these expensive AI models? Yeah, it's a great point. So, you know, the way that I would think about it is the ROI is going to come from actually reimagining how the work gets done, right? So what are the jobs to be done? And then how does that workflow need to change? So I often say to companies, for every dollar that you're going to spend on the technology, there should be an equal and opposite dollar, sometimes many times that, in actually getting to, well, what's the workflow that now needs to change? Can I reimagine that, not just re-engineer it? How do I need to invest in the human way, if you like, not just the software and the hardware, to make sure that the ROI translates down?

Analysis

The discussion highlights that while AI technology promises cost reductions, the actual return on investment (ROI) hinges on reimagining workflows and investing in human capital rather than merely deploying technology. Companies must focus on upskilling and changing job roles to realize the full potential of AI, as simply adopting the right models is insufficient for generating value.

Smart money should note that the disconnect between AI investment and tangible returns stems from a lack of focus on the human aspect of transformation. The emphasis on workflow changes and employee training is crucial for achieving profitability, suggesting that firms may need to allocate significant resources to these areas to see meaningful results from their AI initiatives.

12:13
PDT

Most companies can't prove ROI from AI investments.

McKinsey Kate Smey Dario Ed Anthropic Microsoft AI AGI MSFT

– CEOs face pressure to justify tech spending.

– Boardroom discussions focus on scalability and profitability.

– Urgency around AGI risks may slow down tech adoption.

– Investments in AI need to translate to sustainable outcomes.

AI investment riskcorporate profitabilityAGI development

▸ Full transcript

Now, all this comes against the backdrop of a new study out by McKinsey, which finds that most companies still can't point to a bottom line return. So a big question here, are CEOs being asked to assume more risk before they even have proven the value? Joining us right now is Kate Smey, she's senior partner and global leader on technology and AI for McKinsey. Great to see you here. Good to see you. Good to see you. Yeah, so about three weeks ago, you guys published a survey. And before we get to that, I am curious about whether some of the warnings that we got, and it wasn't just Dario, Ed Anthropic. We had a team of researchers at Microsoft today, put out a 15,000-word manifesto, and there have been a few other warnings from some of these CEOs to kind of just slow things down a little bit. I'm wondering how that feeds into the sentiment right now amongst the users, meaning the CEOs that have been deploying all of this stuff internally for their own employee use. Yeah. A great question. And the reality is that the debate that's been playing out over the last sort of weeks, days, etc., is a really important one, right? Where AGI is going to go, what the threats are, where we need pace, yes, but where we also need patience. But what's interesting is when you transport yourself into the boardrooms, the management teams and so on, their question is a different one. Their question is, okay, I get all of that that's happening on the frontier and we're going to get there. But right now, I've spent a ton of money and I've really got to make sure that everything that I'm doing is actually going to translate through to scalability, to profitability and to sustainability going forward. So the conversation in the boardroom is not.

Analysis

A recent McKinsey study reveals that most companies struggle to demonstrate a clear return on investment from their AI initiatives, raising concerns about the risks CEOs are expected to take without proven value. In boardrooms, the focus is shifting towards ensuring that substantial investments in technology translate into scalability, profitability, and sustainability, rather than just keeping pace with advancements in artificial intelligence.

The ongoing debate about the future of AGI and the associated risks is creating a sense of urgency among executives to validate their technology investments. Smart money should note that while there is a push for rapid adoption, the emphasis on tangible outcomes may lead to a more cautious approach in tech spending, impacting sectors reliant on AI advancements.

12:09
PDT

Philly Semiconductor Index down nearly 5%.

CrowdSource Palo Alto NVIDIA Broadcom Dell Corning Constellation Energy Kevin Warsh Jitanya Kandari Morgan Stanley Investment Management Adam Greenblatt Authentic Brands PRIVATE

– NVIDIA and Broadcom leading the semiconductor sell-off.

– Investor concerns about AI spending and inflation are rising.

– Market is positioned for three or more rate hikes.

– Profit pools are shifting from AI enablers to adopters.

AI adoptionsemiconductor volatilityinflation concernsrate hike expectations

▸ Full transcript

To really be discerning, if you have the hardware side where the earnings, the analysts have moved the earnings up with the lag, but I think we have to really look outside the AI enablers, which have been the infrastructure semi-companies, to the AI adopters. We're already seeing that in software that's doing actually very well, cyber that's doing well, because who is going to use these AIs, these agents, and build them into business models really helps the broader corporate America to get synergies on costs on business models. So I think the profit pools will shift like they always do. So really kind of thinking about which digital platforms and which sectors will do well. All right. Jitanya got to leave it there. Jitanya Kandari, deputy CIO of the Solutions and Multi-Asset Group over at Morgan Stanley Investment Management, kicking us off to the close as the NFL season kicks off here in the U.S. And so too does high season for sports betting. We're gonna catch up with the CEO of MGM, Adam Greenblatt, in just a second. And if more from prediction markets to a new vision for your wardrobe, but not to air star Stacy London talks a new way to manage apparel. All that and more coming up, this is the close on Bloomberg. I think there's one more, Romaine, for you. And we're also gonna catch up with the CEO of Authentic Brands. Stick with us. We'll be back in a moment, right here on Bloomberg.

Analysis

The semiconductor sector is experiencing a significant sell-off, with the Philly Semiconductor Index down nearly 5%, primarily driven by declines in major players like NVIDIA and Broadcom. This downturn is exacerbated by investor jitters regarding AI spending and rising energy prices, which are contributing to inflationary concerns and impacting bond markets.

Smart money should note the shift in profit pools from AI enablers to AI adopters, as companies leveraging AI in their business models may outperform. Additionally, the current market positioning suggests that investors are bracing for multiple rate hikes, which could further influence market dynamics and sector performance.

12:07
PDT

Energy-importing countries are benefiting from strong export multiples.

Korea Taiwan NVIDIA Broadcom Japan Europe AI

– AI remains a dominant theme in equity markets despite recent corrections.

– Diversification is crucial to avoid dependency on correlated trades.

– Real assets are seen as a hedge against monetary and geopolitical risks.

– Strength in the yen and European spending are creating opportunities in smaller markets.

AI investmentglobal economic shiftsreal assetsdiversification strategies

▸ Full transcript

So that's kind of offset some of these inflationary concerns, both in the U.S. markets and also globally in markets like Korea and Taiwan, where they are energy importers, but their exports are four to five times multiple of what their energy imports are. So there's been this shifting of profit pools globally that has helped. I think on the equity side, the story is clearly AI, but I think AI is a full stack capital cycle and we're seeing today that 17% of the index is semis, and an event like what we saw today is kind of leading to that correction. So really diversifying both within the U.S. and outside the U.S. is the way we've been building portfolios, just trying to get anti-correlated sources of alpha so that we're not dependent on one highly correlated trade. Real assets look like a great opportunity, both as a monetary hedge and also as a geopolitical hedge in portfolios. So that's another area that's very important. But pockets of Japan with the yen strength, pockets of Europe with all of the spending that's happening there, the deleveraged credit cycles globally, and some of these opportunities across smaller markets which have commodities that have helped their terms of trade, and that's spilling over into domestic economies positively to drive domestic cycles.

Analysis

Global markets are experiencing a shift in profit pools, particularly in energy-importing countries like Korea and Taiwan, which are benefiting from strong export multiples. The equity landscape is dominated by AI, but the recent correction in semiconductor stocks highlights the need for diversification within portfolios to mitigate risks associated with highly correlated trades.

Smart money should note that real assets are emerging as a compelling opportunity, serving both as a monetary and geopolitical hedge. Additionally, the strength of the yen and increased spending in Europe are creating favorable conditions in smaller markets, positively impacting domestic economies and driving cycles.

12:05
PDT

Market is positioned for three rate hikes.

Bank of America SpaceX NVIDIA Broadcom CrowdSource Palo Alto Dell Corning Constellation Energy Kevin Warsh Federal Reserve U.S. Government

– Concerns about public debt levels are rising.

– Historical parallels drawn to past debt crises.

– Financial repression may be needed to manage debt.

– Economic conditions may not support aggressive rate hikes.

interest rate policypublic debtfinancial repression

▸ Full transcript

Then issues occur in market behavior and market reactions when there's a disconnect from what's in the expectations. So yes, there could be one hike for now, but I don't think this really tips the market out of balance from a fundamental perspective. Well, get to the idea of that maybe one hike, maybe multiple, because that seems to be more of the fear. Much that we get a 25 basis point hike on Wednesday. But the idea is to whether this is the start of a hiking cycle. If you do believe that maybe the economic conditions don't necessarily warrant that, is the market positioned for that idea that this might be a one and done or maybe a two and done and we get back to normal? I think the market's clearly positioned for three hikes plus. So I think the market's in the market expectations. But I just kind of zoom out a little bit and think about what does it mean to have this much public debt and this much of an increase in public debt. The last time we had these kinds of exponential moves in the debt to GDP of this country was during the Civil War, World War I, World War II, and COVID. And in all those times, you really needed financial repression as negative real rates to grow out of that debt problem. So overarchingly, I think the bigger template in my mind is that this kind of a situation in debt, where debt has increased so much.

Analysis

Market expectations are leaning towards multiple rate hikes, with a consensus around three hikes anticipated. However, the significant increase in public debt raises concerns about the sustainability of such a monetary policy approach.

The historical context of rising debt levels suggests that financial repression may be necessary to manage this debt, similar to past crises. Smart money should consider the implications of high public debt on future economic growth and interest rate policies.

12:02
PDT

AI stocks are facing a sell-off due to fears of a spending slowdown.

Dell Corning Constellation Energy S&P 500 Philadelphia Semiconductor Index NVIDIA Broadcom Kevin Warsh Barclay Bloomberg Television AI CEO PRIVATE

– Investors have heavily favored technology ETFs, with $52 billion invested since March.

– Rising energy prices are contributing to broader inflationary fears.

– The bond market is reacting to persistent inflation, impacting central bank strategies.

– Market sentiment is cautious as investors reassess their positions.

AI stock volatilityinflation concernstechnology ETF flowsbond market dynamics

▸ Full transcript

A broader basket of related names like Dell, Corning, and Constellation Energy are all nose-diving as well. This is the unwind that some folks out there had feared, not so much for the fundamentals, but because so many were overweight AI stocks to begin with that even the smallest scare of a spending slowdown would cause investors to bail out. Maybe it's short-term noise, maybe not, but since the S&P bottomed out back in March, $52 billion has been put into technology ETFs alone, compared with just $4 billion into the rest of the stock market. That's a lopsidedness that, even without the noise, was due for a wrecking. Now, not helping matters, as Isabel just pointed out, is the yield backdrop. A lot of those refresh concerns about AI are coming against that backdrop of a massive reawakening in energy prices, which is stoking broader inflationary fears and is now feeding into a bond market that is backing Kevin Warsh into a bit of a corner and telling him, 'You got to do something, dude.' They need to respond to the persistency of inflation. Actually, the more they act on the front end, the better they probably can control the long end. Those are the things I imagine are weighing on their minds as they come into their decisions this week. The CEO of Barclay spoke a little bit earlier here on Bloomberg Television, as we kick you off to the close this Monday afternoon with Jitanya Kandari, Deputy CIO of the Solutions and Multi-Asset Group.

Analysis

The market is experiencing a significant sell-off in AI-related stocks, with the Philadelphia Semiconductor Index down nearly 5%, driven by fears of a spending slowdown. This comes amid a backdrop of rising energy prices and persistent inflation concerns, which are pressuring the bond market and influencing central bank decisions.

11:58
PDT

Fed likely to raise rates three times, impacting economic dynamics.

Fed Bank of America Kenison team small businesses medium-sized businesses USB The Fed FEDFUNDS

– Inflation expected to remain above target until late 2027 or 2028.

– Consumer spending increased by 4% year-over-year.

– Small and medium-sized businesses are actively borrowing.

– Fixed-rate loans insulate consumers from immediate rate impacts.

Fed policyconsumer spendinginterest rates

▸ Full transcript

Well, I think the long-term yields and short-term yields are two different questions. I think on short-term yields, the Fed raising rates, our team has had the Fed doing three rate increases for a long time now. We were kind of out of the, you know, Kenison team said it earlier, people that looks now we may be closer to being right. But the point is three rate rises, if they do it this year or two this year and early next year, the idea is getting back sort of putting back in the interest rate cuts that were made and getting inflation to come down. We don't think inflation, even with three rate rises, would get down to where the target would be until the end of 2027 and 2028. The Fed has to keep inflation because that will help with the real growth rate in wages and also the economy. And the economy is robust. Our consumers spent 4 percent more money in August than they did last August. Their credit quality is very strong. The small and medium-sized businesses are borrowing money. Interestingly enough, short-term rate moves affect the small and medium-sized line of credit users faster than they do the consumer because mortgages are fixed, cars are fixed, and credit cards, the rate move doesn't mean as much. So as we look at it, that's where we got to watch it if it causes any stress. We don't think it has because 12 months ago, 15, 18 months ago, they were at the levels we're talking about, and they were fine. So it's all, is the online economy growing? And that's more the important question. And then the rate structure can be more normal. Everybody says higher, it's actually more normal. And then that will then, it will grow us through that. That's actually a good place for the USB and that helps the whole world get more.

Analysis

The Fed is expected to implement three rate increases, with inflation not reaching target levels until late 2027 or 2028. Consumer spending remains strong, with a 4% increase year-over-year, indicating robust economic activity despite potential rate hikes.

Smart money should note that while short-term rate changes impact small and medium-sized businesses quickly, consumer credit remains less sensitive due to fixed-rate loans. This suggests that the economy may withstand rate increases better than anticipated, allowing for a more normalized rate structure that could support growth.

11:56
PDT

Bank of America is actively participating in M&A, focusing on retail distribution capabilities.

Bank of America SpaceX Matthew Coder AI

– The firm is cautious about transaction timing due to market sensitivity.

– Self-regulation is emphasized as a key strategy in managing AI-related risks.

– Companies are encouraged to maintain strong relationships with users for product knowledge.

– The M&A cycle is expected to continue, driven by a robust revenue stream.

M&A activityAI developmentself-regulationretail distribution

▸ Full transcript

Actually run them is going to be there. It may be growth curve X or growth curve Y up or down. There's a lot of debate about can it get billed as fast as you want. Also just the CapEx issuance and what that is meant for. It'll be a supercycle. I'm fairly convinced because we see the value. It means we're willing to pay something for it. And when we're willing to pay something for it, we're not different than any company. That provides a revenue stream that will build. Is it build X or 75% X or 50% X? It's still a lot of X to get to. Just on that, so M&A obviously has been quite robust for Bank of America. And you mentioned some of the M&A cycle, you may be not being as heavily invested or as concentrated where some of that is taking place. How much of that is around AI? Because you've obviously been participating in these big blockbuster IPOs, but things like SpaceX, for example, maybe not necessarily top billing. What does it take to get top billing on these? It's a complex thing of how long the relationship in SpaceX we participated in that, especially. Well, we have a unique in Bank of America because we have the retail capability to distribute retail. A lot of these companies want to get out to the broad base for two reasons. One is a good shareholder base, but secondly, it's also a good user base. They are the people who will keep the product knowledge out there and stuff. So we have that. We have good underwriters, good coverage bankers. The issue is that we'll have a transaction pushed off a quarter. This is fairly sensitive, especially when these larger fees come into something happen when you think of doing it. This is the amount of cash we received, not the transactions announced. So we're fine with it. Team's doing a good job. Matthew Coder and team.

Analysis

Bank of America is experiencing a robust M&A cycle, leveraging its retail capabilities to distribute shares effectively, which is crucial for companies seeking broad user bases. The firm is cautious about the timing of transactions, indicating sensitivity to market conditions and the potential impact on fees and cash flow.

The emphasis on self-regulation within the financial services industry highlights a growing awareness of the risks associated with AI and the need for ethical development. This proactive stance may mitigate regulatory pressures but also suggests that companies must navigate complex relationships and market dynamics to maintain their competitive edge.

11:53
PDT

Self-regulation is emphasized as crucial for AI development.

Bank of America President Donald Trump Lehman Brothers Merrill Lynch Congress King Pope AI AAPL

– Leaders are advocating for proactive measures to mitigate risks.

– Concerns about regulatory overreach could slow revenue streams.

– The financial services industry is under pressure to ensure ethical AI practices.

– Market stability is contingent on effective risk management.

AI regulationself-regulationfinancial stability

▸ Full transcript

bring them together, have people talk and learn from each other. And I've seen it happen with new energy transition with other types of activities. He's quite something how he can bring people together and get them to think about things. Just given what you've learned about that again, you've advocated for other initiatives too. Yes. Is it the role of regulators? Because this president, President Donald Trump was saying earlier, we don't need regulation. We don't need AI guardrails. Should regulators be stepping in? Or is this a self-regulatory moment for these companies? Well, I think it's always a self-regulatory moment, because in the end of the day, you shouldn't require, just like with us regulations, a bank, we regulate ourselves tighter than the regulators do, because in the end of the day, we think it's the right thing to do for the customer, right thing to do for the future. Here we are, really on the anniversary of Lehman failing and us buying Merrill Lynch, a bank of America, in just a hugely disastrous time for the financial services industry, from which we recovered it on a great job. That was a lot of self-regulation, honestly. And that's important. So it's encouraging to hear the leaders of these companies say, hey, we've got to take it seriously. That's first order because of the day. Just jump in. Does that mean that if these companies don't self-regulate, of course, it's apples to oranges to compare the two. But they could go to a moment where their businesses face a risk of that type of blow up. But something more catastrophic, if they don't start to self-regulate. There's a plaintiff's bar. There's a state attorney general. There's a state legislature. What we advocate for is, wait, if you have everybody regulated, then you have a patchwork of stuff that's hard to figure out. So can we operate with our tools and...

Analysis

The discussion highlighted the importance of self-regulation in the financial services industry, particularly in the context of AI development and its potential risks. Leaders in the sector are recognizing the need for proactive measures to avoid regulatory pitfalls and ensure ethical practices.

Smart money should note that the emphasis on self-regulation suggests a potential shift in how financial firms approach risk management, especially as they navigate the complexities of AI integration. This could lead to increased scrutiny and a more cautious investment environment if firms fail to act responsibly.

bloomberg-live Transcript

Full Transcript