S&P 500 Erases 1% Slide as Dip Buyers Wade Back In | Bloomberg: The Close 05/19/2025

>> THE COUNTDOWN IS ON, EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET TODAY. THIS IS THE CLOSE. ROMAINE: A DOWNGRADE FRIDAY MOVED TO A BUY. LIVE HERE AT BLOOMBERG HEADQUARTERS IN NEW YORK, I'M ROMAINE BOSTICK. ALIX: DIME ALIX STEEL. I'M VERY SURPRISED BY THE MARKET INTO THE CLOSE. ANYWAY, I'M SURPRISED BY THE LACK OF REACTION WE ARE SEEING HERE FOR THE S&P IS COMPLETELY FLAT. YIELDS ARE HIGHER. NOW IT IS REVERSED ALL OF THAT, THE LAST 72 HOURS, IT IS LIKE IT DID NOT HAPPEN, AND S&P FLAT, THE VIX, AROUND

18, THE 30-YEAR YIELD FLAT. THE ONE OUTLIER, WE WILL GET TO THE SECOND IN A MOMENT, THE ONE OUTLIER IS SPOT GOLD COME UP BY OVER 1%. QUESTIONS AS TO WHETHER THE U.S. CREDIT RATING IS STILL IN PLAY. ROMAINE: ABSOLUTELY. IT IS IMPORTANT IN THE PRICE ACTION TODAY. SUNDAY AND I DID CONTRIBUTE TO THE CELL IF WE HAD AT THE START OF MONDAY MORNING. BACK INTO THE POCKET BY MIDWAY. THE EQUITY DIP BUYERS DID TAKE THE WHEEL. MICHAEL MCLEAN AVENUE BARCLAYS SAID DISCOVERED A DEBT D BALANCE DOWNGRADE FROM A LAW SIGNIFICANCE AFTER THE S&P CUT

IN 2011 LEAD TO LIMITED IF ANY REPERCUSSIONS. THAT SEEMS TO BE THE MINDSET FOR A LOT OF FOLKS TODAY, BUT NOT EVERYONE SEEMS TO FEEL THAT WAY. JILL MILSTEIN AT GUGGENHEIM AND ANOTHER SAID THAT IT IS STILL A REMINDER THAT BUDGET ATTEMPTS TO DO MATTER AND MAY COMPEL WITH HIGHER BORROWING COSTS, HIGHER INFLATION, LOW ECONOMIC GROWTH. QUESTIONS ABOUT THAT AND THE WAIT AND SEE MANTRA. VICE CHAIR PHILIP JEFFERSON SAYING IT WILL MONITOR INFLATION, NEW YORK FED CHAIR AGREES, SAID WE NEED TO GET MOST, AND WE ARE IN ATLANTA FED RAFAEL BOSTIC SAYING IT SIGNALS A

WILLINGNESS TO QUICKLY, ALIX. ALIX: THIS ECHOES ON ROMAINE'S BUY THE DIP MOMENT. WHAT YOU DID NOT SEE WAS THE DOLLAR. THE DOLLAR CONTINUES TO SLIDE OFF. THE YELLOW LINE IS THE 30-YEAR TREASURY YIELDS. THE BLOOMBERG DOLLAR INDEX IS YELLOW. WE SEE A REAL DIVERGENCE BETWEEN THE TWO, WHICH MEANS BONDS AND THE DOLLAR ARE SELLING OFF TOGETHER. WHAT DOES THAT MEAN? IS THAT A RE-WEIGHTING OF U.S. ASSETS? IS THAT A LOG OF CONFIDENCE IN U.S. ASSETS? -- LACK OF CONFIDENCE IN THE U.S. ASSETS? MORGAN STANLEY SAID THE 10-YEAR YIELDS CONTINUE TO HAVE AROUND THE 4.5% LEVEL.

THAT'S A VERY KEY LEVEL FROM MARKET VALUATION IN TERMS OF EQUITY MARKETS. WE ARE ON THE VERGE OF HAVING INCREASED SENSITIVITY FROM YIELDS TO THE STOCK MARKET, ROMAIN. ROMAINE: LET'S KICK THINGS OFF ON THIS MONDAY AFTERNOON WITH MIKE CONTOPOULOS, DEPUTY CHIEF INVESTMENT OFFICER AT RICHARD BERNSTEIN ADVISORS. FRIDAY NIGHT, A LOT OF PEOPLE SAW THE DOWNGRADE BY MOODY'S AND THOUGHT THE WORST. WE HAD TIME TO DIGEST IT OVER THE WEEKEND. IF YOU LOOK AT THE PRICE ACTION TODAY, I THINK THE MARKET'S GIVING US A FEELING OF WHAT THEY THINK ABOUT IT. MIKE: THAT'S RIGHT. QUITE FRANKLY,

THIS WAS NOT REALLY NEWS. WE WERE TALKING ABOUT THE FISCAL SITUATION IN THE U.S. FOR SEVERAL YEARS NOW. THAT'S NOT A GREAT SPOT. QUITE FRANKLY, THE U.S. HAS REALLY SORT OF ACQUIRED HIGHER RISK PREMIUM OVER HIGHER YIELDS RELATIVE TO THE REST OF THE WORLD SINCE HE DOWNGRADED 2011 YOU MENTIONED A FEW MOMENTS AGO. I WOULD ARGUE THERE HAS BEEN A STRUCTURAL CHANGE SINCE THAT FIRST DOWNGRADE, BRING UP THE CHART OF THE BOEING VERSUS THE 10 YEAR, FOR EXAMPLE, THE 10 U.S.-10 YEAR, IT HAS GROWN, AND A LOT OF THAT HAS TO DO WITH THE HIGHER

RISK PREMIUMS ON U.S. TREASURIES. ROMAINE: WHEN WE TALK ABOUT AN ADDITIONAL RISK PREMIUM BUILT INTO THIS MARKET, THAT SEEMS TO BE THE GENERAL CONSENSUS. WHAT DOES THAT LOOK LIKE TO YOU? MIKE: I THINK IT IS A NUMBER OF THINGS. ONE IS THAT SELLING COULD BE HARD FOR RISKS TO RALLY MEANINGFULLY FOR ANY EXTENDED PERIOD OF TIME. IF NOTHING ELSE, THERE'S CLEARLY A DEGREE OF UNCERTAINTY IN MARKETS, AND THIS DOES NOT HELP. YOU HAVE UNCERTAINTY AROUND POLICY COME UNCERTAINTY AROUND THE CREDIT WORTHINESS OF THE UNITED STATES. IT'S NOT SURPRISING THAT TODAY YOU DON'T GET A BIG

REACTION. THE VERY SIMPLE WAS TAX CUTS, A COUPLE HIGHER THAN EXPECTED INFLATION, HIGHER EARNINGS GROWTH. TO ME IT CREATES AN ENTIRE ENVIRONMENT HAVE MORE UNCERTAINTY AND THEN IT BECOMES A SCARCITY VALUE TO CERTAINTY. I THINK THAT IS A LOOK AT OVER THE NEXT SIX TO 12 MONTHS. THAT'S GOING TO BE THE BIG THEME, IS WHERE CAN I GET CERTAINTY? ALIX: THAT'S WHAT THEY CALL THEIR OWN TERMS. [LAUGHTER] CAN WE BE IN AN ENVIRONMENT,, THOUGH WE SEE THE DOLLAR, CONTINUE TO SELL OUT, EQUITIES PULL UP? MIKE: UM, YOU KNOW, IT WOULD BE SURPRISING TO ME TO

SEE THE BOND MARKET SELLOFF AND EQUITIES HOLD UP. IT DEPENDS ON HOW THAT HAPPENS. IF IT COMES WITH A LOT OF VOLATILITY, YOU WOULD EXPECT EQUITY MARKETS TO FALL, CREDIT SPREADS TO WIDEN, PARTICULARLY IF THAT IS HAPPENING AT A TIME OF DECLINING EARNINGS WITH CREDIT HIGHLY SENSITIVE TO EARNINGS AS WELL APPEAR THAT WOULD KIND OF BE LIKE A VERSION OF 2022 IN A LOT OF WAYS. HIGHER RATES, FOLLOWING EQUITIES. ON THE OTHER HAND, OF COURSE, IF YOU HAVE FALLING TREASURIES, YOU COULD HAVE FALLING EQUITIES BECAUSE OF WHAT THAT WOULD APPLY FOR GROWTH. SO, YOU KNOW,

I COULD SEE BOTH SCENARIOS, AND QUITE FRANKLY, YOU PROBABLY HAVE ONE BEFORE THE OTHER. YOU PROBABLY HAVE EIGHT PERIOD OF POSITIVE -- A PERIOD. OF POSITIVE CORRELATION, WHERE RATES ARE GOING UP, RIGHT? AND STOCKS ARE GOING DOWN, AND THAT SORT OF LEADS TO NEGATIVE CORRELATION IN THE FUTURE. ALIX: WHERE DOES THAT LEAVE THE CREDIT MARKET, PARTICULARLY INVESTMENT-GRADE? ALIX: WHEN I LOOK AT INVESTMENT-GRADE CREDIT, THERE'S NOT A WHOLE LOT TO LIKE, QUITE FRANKLY. SPREADS ARE JUST TOO TIGHT. IT'S NOT REALLY THAT THE FUNDAMENTALS ARE SO BAD, IS JUST THAT THERE ARE BETTER OPTIONS OUT THERE. FOR

EXAMPLE, WHY WOULD I EARN INVESTMENT-GRADE CORPORATE SWING FOR THE SAME YIELD I COULD EARN MORTGAGE BACKED SECURITIES WITH MORE SPREAD TIGHTENING POTENTIAL AND A GOVERNMENT GUARANTEED ISSUE IS THAT TO ME IS THE RELATIVE VALUE PROPOSITION THAT INVESTORS TO MAKE A CHOICE TO EVERY DAY, AND IF I'M PRESENTED WITH THAT CHOICE, WHY OWN CORPORATE? SPREADS, WE WERE THEY ARE BIG AND RBA IN EARNINGS, AND SPREADS OVERCOMPENSATE FOR A DECLINING EARNINGS GROWTH WHEN YOU CAN GET THE SAME RISK PROFILE, THE SAME RETURN PROFILE. ROMAINE: WE ARE GOING TO SEE MEANINGFUL LEARNING GROWTH THIS YEAR? MIKE: MEANINGFUL, YES,

BUT NOT SORT OF TOE-CURLING RECESSION, RIGHT? I DON'T THINK WE ARE IN A POINT WHERE WE ARE HIDING UNDER OUR DESKS IN THE FETAL POSITION, THINGS OF THAT NATURE. [LAUGHTER] HIGH SINGLE DIGITS TURNING GROWTH IN Q1, WHERE I THINK YOU WILL END UP, YOU ARE PROBABLY LOOKING AT THE 0% EARNINGS GROWTH AS YOU LOOK OUT TOWARD Q4. REMEMBER, MARKETS TRADE ON DIRECTION, FOR BETTER OR WORSE. IT'S NOT THAT EARNINGS ARE FALLING OFF THE CLIFF BUT RATHER THAT THEY ARE DECLINING. ROMAINE: INTERESTING. IF YOU GO THROUGH THE MOODY'S REPORT, THEY MAKE SOME SALIENT POINTS. AND I

UNDERSTAND THIS IS STUFF THAT HAS BEEN LITIGATED NOW FOR YEARS IF NOT DECADES. THEY POINT OUT THAT THE IDEA THAT WE HAVE NOT SEEN THE FULL IMPACT OF THE TIM: -- OF THE TARIFFS. I AM CURIOUS IF THAT IS AN EVENT THAT YOU PREPARE FOR, OR DO YOU JUST WAIT UNTIL IT SHOWS UP AND TRY TO ASSESS WHAT THE DAMAGE IS AGAIN? MIKE: WHAT I WOULD SAY IS YOU DON'T HAVE TO WAIT, BECAUSE WE ALREADY HAVE A LOT OF DATA, RIGHT? SO WE KNOW THEIR EARNINGS PEAK WAS IN Q1. THE EARNINGS GROWTH IS DECLINING PEER

WE KNOW THAT INFLATION IS NOT AT 2%. THE FED HAS INDICATED THEY ARE NOT IN ANY RUSH TO CUT INTEREST RATES, RIGHT? SO RIGHT OFF THE BAT, YOU ARE ALREADY -- AND VALUATIONS ARE STILL PRETTY WONKY, GIVEN THE RALLY BACK IN EQUITY MARKETS AND THE RALLY AND SPREAD PRODUCTS. U.S. PRETTY RICH VALUATIONS, TIGHT MONETARY POLICY COME AND DECLINING EARNINGS GROWTH. THAT ALONE, ABSENT TARIFFS, YOU SHOULD PROBABLY START INCREASING CERTAINTY IN A PORTFOLIO IN QUALITY AND DEFENSIVENESS. THEN YOU THROW IN THE IMPACT OF TARIFFS, SEEING THE WHITES OF THE EYES OF WHAT THAT MIGHT MEAN FOR

THE GROWTH AND INFLATION. YOU DON'T NEED TO WAIT FOR THAT. YOU ARE ALREADY PREPARED FOR IT. ALIX: THAT SET UP MAKES YOU WANT TO BUY TREASURIES. MIKE: I THINK IT IS WHERE IN THE CURVE YOU BUY THEM. YOU PROBABLY DON'T WANT TO BE OVERLEVERAGED TO THE LONG END OF THE YIELD CURVE. THERE WILL BE AT INFLATION PREMIUM BUILT INTO THE LONG END OF THE CURVE. THE BELLY OF THE CURVE MAKES A BIT MORE SENSE BECAUSE OF THE THREAT COMPRESSION POTENTIAL ALSO MAKES SENSE, THE SPREAD CUSHION. BUT FOR RIGHT NOW, YOU ARE GOING TO BE IN

A LITTLE BIT MORE OF A RELATIVE GAME, PERFORMING FROM A RELATIVE BASIS VERSUS, SAY, THE BLOOMBERG, AND THAT SHOULD BLEED INTO AN ULTIMATE RETURN ENVIRONMENT, WHERE TREASURIES DO FALL AS GROWTH FALLS. I THINK THAT WILL BE PROBABLY LATER IN THE YEAR, MAYBE 2026, AND BETWEEN NOW AND THEN, IT'S ABOUT, HOW DO I OUTPERFORM? ROMAINE: MIKE CONTOPOULOS, DEPUTY CHIEF INVESTMENT OFFICER OVER AT RICHARD BERNSTEIN ADVISORS, KICKING US OFF TO THE "THE CLOSE" ON THIS MONDAY AFTERNOON, HERE ALL DAY LONG WERE COMPANIES ARE QUICKLY TRYING TO FIND WAYS TO REASSURE FACILITIES BACK TO THE U.S. A CONVERSATION

WITH AMERICA'S FACTORY WHISPER, DIDI CALDWELL. ALIX: WE SPEAK TO THE CEO OF CARRIER IN AMERICA, HOW DAVID -- DAVID GI TLIN PLANS TO INVEST. JP MORGAN ROMAINE: ABOUT WHERE IT SEES INVESTMENT GOING. THAT IS NEXT. THIS IS "THE CLOSE" ON BLOOMBERG . RAPHAEL: SO MUCH OF OUR ECONOMY IS BASED ON FAITH THAT WE WILL DELIVER ON WHAT WE PROMISED FOR THE FUTURE. WHEN YOU START TO SEE MARKET WAVER A LITTLE BIT, YOU HAVE TO ASK THE QUESTION, DO WE STILL HAVE THAT SAME LEVEL OF FAITH? I THINK THE SIGN THAT RATES HAVE STARTED TO COME

BACK DOWN AND THE MARKETS ARE SORT OF RETURNING BACK TO A NORMAL STASIS, THERE IS THAT LANGUAGE OF MOVING FORWARD. WE HAVE TO SEE WHERE IT GOES. ALIX: THAT WAS BLOOMBERG'S MICHAEL MCKEE INTERVIEWING ATLANTA FED PRESIDENT RAPHAEL BOSTIC A SHORT TIME AGO. MICHAEL, WHAT IS YOUR BIGGEST TAKE AWAY FROM THIS CONVERSATION WHEN IT COMES TO THAT MUNIS DYING GRADE AND WHAT THE INSURGENCY MIGHT MEAN FOR THE FED? MICHAEL: WELL, HE SEEMED TO THINK AT THIS POINT MARKETS ARE RELATIVELY WELL PRICED, SO IT SUGGESTS THAT UNLESS WE SEE SOME ADDITIONAL MOVEMENT BEYOND WHAT HAPPENED TODAY, IT

IS NOT GOING TO CHANGE WITH THE FED IS GOING TO DO, AND IT PROBABLY IS NOT GOING TO CHANGE THE ECONOMIC OUTLOOK ALL THAT MUCH, BECAUSE MARKETS ARE ALREADY SETTING A PRICE FOR THINGS LIKE MORTGAGES. IF THAT DOES NOT CHANGE, IF THE 10 YEAR YIELD DOES NOT GO UP MUCH FURTHER, THE IMPACT ON THE ECONOMICS GOING FORWARD IS NOT GOING TO BE THAT GREAT. THAT DOES NOT CHANGE ANYTHING ABOUT WHAT THE OUTLOOK IS UNDER TARIFFS AND THE NEW BUDGET PLAN, BUT AT LEAST WITH MOODY'S, IT MAY NOT BE A HUGE ISSUE. ROMAINE: I'M CURIOUS ABOUT

THAT ECONOMIC OUTLOOK, MIKE. WE HEARD FROM OTHER CHAIRS TODAY, INCLUDING WILLIAMS, JEFFERSON. THE MESSAGE SEEMS TO BE CLEAR HERE, THAT THEY DO NOT REALLY HAVE THAT CLARITY. I'M CURIOUS WHY RAPHAEL BOSTIC HAD TO SAY SPECIFICALLY ABOUT WHEN THE FED MIGHT BE A LITTLE BIT MORE COMFORTABLE ABOUT WAITING INTO THAT OUTLOOK. MIKE: YEAH. YOU ARE HEARING UNCERTAINTY FROM ALL OF THESE OTHER FED PEOPLE, RAPHAEL AND I TALKED ABOUT LET'S TRY NOT TO USE THAT WORD, BUT IT IS THE BASE CASE FOR EVERYBODY AT THIS POINT. NOBODY KNOWS WHAT IS GOING TO HAPPEN. HIS VIEW IS UNDER

THE TIMETABLE THAT WE SEEM TO BE OPERATING ON, IT COULD BE THREE MONTHS TO SIX MONTHS, IT COULD BE THE FALL, SEPTEMBER, OR BEYOND BEFORE THE FED HAS ENOUGH INFORMATION TO DECIDED IT HAS TO DO SOMETHING. REMEMBER, ONE OPTION AS THEY DO NOT DO ANYTHING. SO IT COULD BE QUITE A WHILE. ON THE OTHER HAND, HE SAID IF THE PRESIDENT COMES OUT AND CHANGES THROUGH HIS WHOLE TIMETABLE, THAT IT COULD BE SOMETHING THAT HAPPENS MUCH SOONER, IF HE COMES OUT AT THE END OF THE 90 DAYS THAT WE ARE UNDER FOR RECIPROCAL TARIFFS AND SAYS

THIS IS WHAT WE ARE GOING TO DO, THEN THEY MIGHT HAVE A BETTER IDEA BEFORE SEPTEMBER OF WHAT MIGHT NEED TO BE DONE. ALIX: AT LEAST THIS TIME WE ARE GETTING A THREE-TO-SIX-MONTH WINDOW. YOU GET THE SENSE THAT FED OFFICIALS ARE WORRIED MORE ABOUT INFLATION OR GROWTH? MIKE: WELL, MOST OF THEM WILL SAY THEY ARE MORE CONCERNED ABOUT INFLATION, BECAUSE GROWTH HAS BEEN RELATIVELY STRONG. WE STILL SEE, DESPITE A WEAKER RETAIL SALES REPORT, PEOPLE ARE STILL OUT BUYING STUFF. THE UNEMPLOYMENT RATE HAS STAYED LOCKED IN, 4.2%. RIGHT NOW, THE DANGER SEEMS TO BE ON THE

INFLATION SIDE, BUT ALL OF THAT COULD CHANGE VERY QUICKLY. I SPOKE WITH ONE FED OFFICIAL TODAY WHO SAID THEY ARE LOCKED IN ON THE IDEA OF THE JOBLESS CLAIMS NUMBER. IF THAT STARTS TO MOVE SIGNIFICANTLY, THAN THAT WOULD TELL THEM THAT THINGS ARE STARTING TO FALL APART ON THE EMPLOYMENT SIDE OF THE MANDATE, AND THAT IS SOMETHING THEY WOULD HAVE TO PAY ATTENTION TO. BUT FOR RIGHT NOW, AS PRESIDENT BOSTIC WAS SAYING, AT THIS POINT, IT LOOKS LIKE COMPANIES ARE GOING TO BE HOLDING ON TO LABOR, BECAUSE THEY DO NOT KNOW WHAT TO DO. THE

ISSUE COMES UP WHEN THEY HAVE TO MAKE A DECISION. WHAT WILL THAT DECISION BE? ROMAINE: MICHAEL MCKEE DOWN THERE, GREAT INTERVIEW THAT JUST OCCURRED WITH RAPHAEL BOSTIC, THE ATLANTA FED PRESIDENT. WE CONTINUE OUR CONVERSATION HERE AS STUDIO 2 IN NEW YORK WITH STEPHANIE KELTON, ONE OF THE GREAT MINDS IN NEW YORK, A PROFESSOR OF PUBLIC POLICY AND ECONOMICS AT STONY BROOK UNIVERSITY. I WENT TO GET YOUR REACTION TO THE DOWNGRADE ON FRIDAY. I KNOW THIS WAS A LONG TIME COMING, GIVEN THE MOVES BY S&P BACK IN 2011, AND, OF COURSE, 2023. DO THESE RATINGS COMPANIES

STILL HAVE ANY SORT OF SENSE, I GUESS, OF TRYING TO BE AHEAD OF THE CURVE RATHER THAN, AS SCOTT BESSENT AND SOME FOLKS IN THE ADMINISTRATION HAVE SAID, NOT JUST BEING THE WAGON, IF YOU WILL. PROF. KELTON: I KNOW A LOT OF PEOPLE ARE SAYING IT WAS A LONG TIME COMING. I ACTUALLY HAD A PIECE THAT I PUT UP IN FEBRUARY, I THINK ON FEBRUARY 3, AND I WAS SAYING THEN, WHERE ARE THE RATINGS? IT WAS NOT ABOUT THE FISCAL PICTURE, WHICH WE'VE KNOWN ABOUT FOR A VERY LONG TIME. AND I REALLY DON'T THINK THAT

IS THE JOB OF THE RATING AGENCY, TO OPINE ON THE FISCAL TRAJECTORY, PER SE. IT'S ABOUT CREDIT RISK IN THE RISK OF A CREDIT EVENT. WHAT WE SAW IN THE FIRST 30 DAYS OF THIS ADMINISTRATION WAS, FROM MY VANTAGE POINT, SUFFICIENTLY WORRYING THAT I WROTE A PIECE AND SAID, WHY AREN'T THESE AGENCIES WEIGHING IN? I'M TALKING ABOUT THE HIGHEST RANKING CAREER OFFICIALS AT THE TREASURY DEPARTMENT, WALKING AWAY FROM HIS JOB BECAUSE PEOPLE FROM DOGE ESSENTIALLY INFILTRATED THE TREASURY AND TOOK OVER SENSITIVE ACCESS TO SENSITIVE TREASURY PAYMENT SYSTEMS. AT THAT POINT, IT BECAME A QUESTION OF,

YOU KNOW, EMPOWERMENT. ARE WE GOING TO SPEND, AS CONGRESS HAS INSTRUCTED? ARE THESE YOUNG MEN RUNNING AROUND WITH ACCESS TO A PAYMENT SYSTEM WHERE THEY CAN TURN PAYMENTS OFF, INCLUDING POTENTIALLY PAYMENTS TO BONDHOLDERS? SO IF THERE WAS EVER A MOMENT TO STEP IN AND SAY, LOOK, IN LIGHT OF CONCERNS ABOUT THE BREAKDOWN IN GOVERNANCE, WHICH IS WHAT FITCH CITED WHEN IT DID IT RECENTLY, A BREAKDOWN IN GOVERNANCE, YET THE RATINGS AGENCIES WERE SILENT. ROMAINE: WAS THERE ANY PARALLELS TO WHAT WE LEARN IF WE GO BACK TO 2011? BECAUSE THERE WAS A LOT OF CRITICISM ABOUT

THE OBAMA ADMINISTRATION AT THE TIME ABOUT WHY THEY DID WHAT THEY DID, AGAIN LOOKING AT THE BUDGETING PROCESS GOING TO CONGRESS. THEY SAID THERE WAS A DISCONNECT AND AN UN-COHESIVENESS TO THE GOVERNMENTAL PROCESS. AT THE END OF THE DAY, THOUGH, WE NEVER STOPPED PAYING OUR BILLS, WE NEVER STOPPED PAYING THEM ON TIME. I WONDER WHY THIS TIME WOULD BE ANY DIFFERENT? PROF. KELTON: WELL, THERE IS LEGITIMACY IN TERMS OF WEIGHING IN ON SOME OF THESE THINGS. IF YOU'VE GOT CONGRESS, EVEN IF IT IS JUST A HANDFUL OF PLAYERS, IT CAN BE ENOUGH TO CALL INTO

QUESTION THE FULL FAITH AND CREDIT ON THE UNITED STATES GOVERNMENT ON A WILLINGNESS TO PAY BASIS. IN OTHER WORDS, IF CONGRESS STARTS PLAYING AROUND WITH THE DEBT CEILING AND SAYING A DEFAULT WILL NOT BE THAT BAD AFTER ALL, YOU KNOW, THAT SORT OF THING, THAT IS A REAL CAUSE FOR CONCERN TO HIM AND THE RATING AGENCIES OUGHT TO COME IN AND DO WHAT NEEDS TO BE DONE TO PUT INVESTORS ON THE RIGHT SIDE OF THIS TO SAY, HEY, THERE IS A LEGITIMATE CHANCE HERE THAT YOU COULD SEE A CREDIT EVENT, A VOLUNTARY DEFAULT. BUT THEY

NEED TO DISTINGUISH BETWEEN A WILLINGNESS TO PAY, WHICH IS WHAT THEY WERE TALKING ABOUT THEN, AND AN ABILITY TO PAY. ALIX: IT'S ALMOST HIDDEN GENTLE, BUT THE CONSTITUTIONAL SEPARATION -- TANGENTIAL, BUT THE CONSTITUTIONAL SEPARATION OF POWERS, MEANING THAT THE U.S. COULD GO DOWN. WHAT SHOULD THE CREDIT RATING BE THAN FOR THE UNITED STATES? PROF. KELTON: WELL, THE CREDIT RATING FOR THE UNITED STATES SHOULD BE AAA. I REMEMBER WARREN YEARS AGO -- ALIX: DESPITE ALL THE RISKS YOU JUST TALKED ABOUT. PROF. KELTON: I DON'T MEAN A BREAKDOWN IN TERMS OF A PRESIDENT WHO LIKES TO TWEAK

OR LIEN ON THE FEDERAL RESERVE -- ALIX:ALIX: A WILLINGNESS TO PAY BILLS. PROF. KELTON: YEAH. I'M RESTRICTING MY COMMENTS TO A WILLINGNESS TO PAY. IF YOU ARE MESSING AROUND WITH THAT, THERE IS A LEGITIMATE REASON FOR A RATINGS AGENCY TO PUT INVESTORS ON NOTICE AND SAY, YOU MIGHT WANT TO BE VERY CAREFUL IN THIS MOMENT. BUT ONE SHOULD BE TALKING ABOUT ABILITY TO PAY, AND ON THOSE GROUNDS, THERE IS NO RISK. THERE SHOULD NEVER BE A POINT AT WHICH YOU QUESTION THE UNITED STATES GOVERNMENT'S ABILITY TO PAY ITS BILLS,, ON-TIME, IN FULL IN PERPETUITY, GIVEN

THAT EVERY PROMISE THAT HAS BEEN MADE IS TO PAY U.S. DOLLARS TO SOMEONE. AND BECAUSE THE U.S. GOVERNMENT HAS THE SOVEREIGN CURRENCY AND ALL OF THIS DEBT IS IN U.S. DOLLARS, THERE IS NOT AN ABILITY TO PAY QUESTION. ALIX: RIGHT, WE JUST LIKE TO PLAY CHICKEN, I GUESS. PROF. KELTON: YEAH. BOTH SIDES, AND MAYBE TO A LESSER EXTENT WITH ONE POLITICAL PARTY, YOU KNOW, BOTH SIDES ARE USING THIS DOWNGRADE OPPORTUNISTICALLY, RIGHT NOW, RIGHT? ONE SITE IS SAYING, HEY, DID YOU SEE WHAT MOODY'S JUST DEAD? WE NEED TO GO DEEPER WITH OUR SPENDING CUTS. THE OTHER

SIDE IS SAYING HEY, DID YOU SEE WHAT MOODY'S JUST DID? WE ARE GOING TO EXERCISE SOME LEVERAGE. DEMOCRATS WOULD LIKE A SEAT AT THE TABLE RATHER THAN LET REPUBLICANS RUN THE ENTIRE SHOW. I MENTIONED WARREN BUFFETT A MOMENT AGO. THERE WAS A TIME WHEN THE RATINGS AGENCIES DOWNGRADED U.S. TREASURIES, AND HE WARREN BUFFETT SAID, THIS IS CRAZY. IF I COULD, I WOULD GIVE IT A QUADRUPLE AA RATING. ROMAINE:ROMAINE: IS THAT ON A RELATIVE BASIS OR LOOKING AT THE LENS OF THE U.S. RELATIVE TO EUROPE, ASIA, ASIAN COUNTRIES, OR IS IT JUST THE ABSOLUTENESS OF WHERE

THE U.S. STANDS? PROF. KELTON: WELL, WITH EUROPE, EUROPE EXPERIENCED A DEBT CRISIS IN THE EARLY 2010'S, BUT THESE ARE A GROUP OF COUNTRIES THAT STOPPED BORROWING IN SOVEREIGN CURRENCIES AND START ISSUING DEBT DENOMINATED, AND ESSENTIALLY FOREIGN CURRENCY, EUROPE. GREECE, SPAIN, OTHER COUNTRIES THAT BECAME KNOWN AS "THE PIG," IT WAS LEGITIMATE TO HAVE CREDIT RISK BECOME A THING, BECAUSE THERE WAS A REAL CHANCE THAT THESE COUNTRIES WERE GOING TO FIND THEMSELVES IN A SITUATION WHERE THEY HAD PAYMENTS COMING DUE IN EURO, AND THEY DID NOT HAVE THE ABILITY TO MAKE THOSE PAYMENTS. . IT WAS NOT

A WILLINGNESS, IT WAS A LEGITIMATE ABILITY TO PAY. THERE IS A DISTINCTION THERE. ROMAINE: YOU DO HAVE AN ADMINISTRATION THAT HAS GIVEN SOME LIP SERVICE TO THE IDEA OF POTENTIALLY RESTRUCTURING U.S. DEBT, WHICH IS STILL A HYPOTHETICAL, BUT CERTAINLY SOMETHING THAT THEY ARE LEGITIMATELY TALKING ABOUT. IT IS IN PROJECT 2025. THE CONSENSUS IS IF THEY WERE TO FOLLOW THROUGH ON THAT, THAT IN EFFECT IS A TECHNICAL DEFAULT. PROF. KELTON: I AGREE. ROMAINE: WHAT DOES THAT DO? IF WE GET TO A POINT WHERE WE ARE HAVING SERIOUS NEGOTIATIONS ABOUT REFINANCING DEBT, DOES THAT MEAN MOODY'S IS

RIGHT, OR DOES THAT MEAN MAYBE THEY SHOULD DOWNGRADE US AGAIN? PROF. KELTON: WELL, NOT ON THE GROUNDS THAT THERE IS A DESIRE TO MAYBE MOVE INTO LONGER-TERM DEBT. I MEAN YOU HAVE TO BE A LITTLE MORE SPECIFIC ABOUT WHAT YOU MEAN THERE, BUT I KNOW WHAT YOU ARE TALKING ABOUT, AND THE EXTENT TO WHAT IS BEING DISCUSSED AND POTENTIALLY PROPOSED AS A SOFT DEFAULT OF ANY KIND. THERE IS A LEGITIMATE SPACE FOR THE RATING AGENCIES TO COME IN AND TALK SERIOUSLY TO INVESTORS ABOUT THE IMPLICATIONS OF THAT. ALIX: BEFORE WE LET YOU GO, YOU ARE

PRO-THE 2017 TAX BILL. YOU ARE NOT NOW. PROF. KELTON: WELL, I WOULD NOT SAY THAT I WAS PRO THE 2017 TAX BILL. WHAT I WAS IS NOT CONCERNED ABOUT THE 2017 TAX BILL FOR THE REASONS THAT MANY OF MY ECONOMIST FRIENDS ON, LET'S SAY, THE DEMOCRATIC PARTY WERE CONCERNED. THEY WERE CONCERNED ABOUT THINGS LIKE, YOU KNOW, INCREASING THE DEFICIT BY TOO MUCH, DRIVING UP INTEREST RATES, CROWDING OUT, SLOWING THE ECONOMY. THIS IS NOT THE STUFF THAT WOULD CONCERN ME. WHAT WOULD CONCERN ME IS THE INFLATIONARY RISK ASSOCIATED WITH THAT BILL, WHICH I CONSIDERED TO BE

REALLY LOW AT THE TIME. NOW IT IS DIFFERENT. NOW IT IS VERY DIFFERENT. WE HAVE RE-CREATED, OR RE-CREATING THE CONDITIONS FOR SUPPLY CHAIN PROBLEMS. I THINK THE INFLATION RISK IS CLEAR AND PRESENT DANGER. I THINK DOING FISCAL EXPANSION ALLOWING SIDE -- ALONGSIDE A SUPPLY CONSTRAINED ECONOMY, WE JUST SAW THAT THREE OR FOUR YEARS AGO. SO THE INFLATION RISK IS MUCH HIGHER THIS TIME. ROMAINE: ARE YOU SURPRISED THERE'S NOT A BIGGER PUSH BACK AFTER SOME OF THOSE HARD-LINE REPUBLICANS AS THAT MOODY'S REPORT CAME OUT? YOU HAD AT LEAST FOUR WERE PUBLICANS ON THE HOUSE THAT MADE

IT CLEAR ON THE HOUSE BUDGET COMMITTEE THAT THEY WANTED TO SEE A LITTLE BIT MORE TIGHTENING, THEY WANTED CUTS ON SOCIAL SERVICES RATHER THAN TAX CUTS, BUT THAT ARGUMENT WAS THERE. WHY DID THEY NOT FOLLOW THROUGH? PROF. KELTON: WELL, THEY ARE RUNNING UP AGAINST RESISTANCE, PEOPLE ON ALL SIDES OF THIS. THERE ARE SOME REPUBLICANS, AS YOU WELL KNOW, WHO ARE SAYING, OK, IN LIGHT OF WHAT MOODY'S HAS JUST DONE, LET'S GET MORE REVENUE. LET'S RETURN TO THE CONVERSATION ON RAISING TAXES ON PEOPLE MAKING MORE THAN $2.5 MILLION A YEAR. THERE'S NOT A LOT OF APPETITE

FOR THAT. THERE IS NOT AN APPETITE FOR TAX INCREASES AT THE TOP. ALIX: STEPHANIE, THANK YOU FOR COMING TO TALK WITH US TODAY, STEPHANIE KELTON, PROFESSOR OF PUBLIC POLICY AND ECONOMICS AT STONY BROOK UNIVERSITY. COMING UP, A CONVERSATION WITH DIDI CALDWELL OF GLOBAL >> 330 IN NEW YORK. THIS IS THE COUNTDOWN TO THE CLOSE. AVRIL: IF YOU WERE EXPECTING PRICE -- ALIX: IF YOU EXPECTED THE PRICE THE SAME AS A DOWNGRADED 2011 YOU WILL BE DISAPPOINTED IN THE BOND MARKET. ROMAINE: IT IS A NOTHING BURGER AT THIS POINT. OVERNIGHT SUNDAY INTO MONDAY, BUT AS YOU,

OR YOU MIGHT SEE WHEN THE NUMBERS POP UP ON THE SCREEN. BASICALLY UNCHANGED MORE OR LESS AROUND THE HORN. AND THE TREASURY MARKET. ALIX: ONE STOCK THAT IS INTERESTING TO WATCH IS U.S. STEEL. OVER 2%. NIPPON STEEL APPARENTLY HAS STRENGTHENED ITS COMMITMENT TO INVEST IN U.S. STEEL OF PRESIDENT TRUMP APPROVES THE TAKEOVER OF $14 MILLION IN PART OF THAT IS PROMISING TO BUILD A NEW STEEL MILL. IN THE UNITED STATES BUT SOMETHING I DO NOT THINK WE EVER THOUGHT WOULD HAPPEN. ROMAINE: DEAR MEMBER THE LAST TIME THAT HAPPENED -- DO YOU REMEMBER THE LAST TIME

THAT HAPPENED? WE TALK ABOUT THIS IDEA OF BRINGING STUFF BACK HERE. WHICH AREAS ARE REALISTIC? WHEN I HEAR A STEEL MILL I THINK, IS THAT GOING TO HAPPEN, THE COST, NOT TO MENTION JUST HOW MUCH IT COSTS TO RUN THOSE THINGS ON A DAILY BASIS. HOW COMPETITIVE CAN YOU BE? BUT THERE ARE OTHER PARTS OF OUR ECONOMY THAT IS AN ARGUMENT TO BE MADE TO DO THAT. ALIX: NONETHELESS, COMPANIES ARE TALKING ABOUT IT. THIS CHART WE HAVE SHOWS HOW MANY TIMES COMPANIES IN THE S&P AND RUSSELL 3000 ARE TALKING ABOUT ONSHORING. I LOOK ABOUT HOW

MUCH THAT HAS JUMPED IN THE LAST FEW WEEKS. OUR NEXT GUEST SPENT THE FIRST PART OF HER CAREER MOVING COMPANIES OUT OF THE U.S. AND IS SPENDING THE SECOND HALF MOVING THEM BACK IN. JOINING US NOW IS DD CALLABLE, THE PRESIDENT AND CEO OF GLOBAL LOCATION STRATEGIES. HER FIRM HAS GOT IT $44 BILLION FOR PROJECTS THAT INCLUDE AUTO MANUFACTURING, DATA CENTERS AND OTHERS. THANK YOU FOR JOINING US. DID YOU EXPECT TO HAVE THIS KIND OF CAREER RIGHT NOW WHAT DO YOU DO DAY-TO-DAY? >> DAY TO DAY WHAT I'M DOING IS TRYING TO HELP COMPANIES MATCH

WITH COMMUNITIES FOR LONG-TERM MUTUAL PROSPERITY. AND, LIKE YOU SAID, FOR THE FIRST HALF OF MY CAREER, A LOT OF IT, THE WORK I DID WAS MOVING U.S. MANUFACTURING INTO OTHER COUNTRIES. AND GIVEN THE CHANGE IN ENERGY AND WORKFORCE AND THE ECONOMY, THE LAST HALF OF MY CAREER HAS BEEN SPENT ON MOVING THEM BACK. I THINK IT IS INTERESTING WHAT YOU'RE TALKING ABOUT WITH PRIMARY METALS AND HOW THE UNITED STATES HAS BECOME A PRIME LOCATION FOR PRIMARY METALS. ALIX: WHAT SECTORS, SPEAKING OF, ARE YOU NOTICING, WHAT CLIENTS IN EACH SECTOR ARE YOU NOTICING CALLING YOU THE

MOST? DIDI: I WOULD SAY THAT REALLY COMING OUT OF THE PANDEMIC WE SAW A LOT OF ACTIVITY IN THINGS LIKE BATTERIES AND ELECTRIC VEHICLES, CLEAN TECH, DRIVEN BY THE INFLATION REDUCTION ACT. THEN, OBVIOUSLY YOU HAD THE CHIPS ACT WHICH COST A LOT OF ACTIVITY ON SEMI CONDUCTORS AND THE SUPPLY CHAINS AROUND THAT. BUT THERE IS GENERALLY SPEAKING CAPITAL AND RESOURCE INTENSIVE PROJECTS HAVE BEEN INCREASINGLY LOOKING AT THE UNITED STATES. I WOULD SAY THAT STARTED WITH THE SHALE REVOLUTION WHEN OUR ENERGY PRICES STARTED TO BECOME MUCH MORE COMPETITIVE RELATIVE TO THE REST OF THE WORLD. ROMAINE:

IS INTERESTING POINT THAT OUT BECAUSE WE WERE TALKING BEFORE ABOUT U.S. STEEL AND NIPPON TO BUILD A NEW STEEL PLANT. THERE HAVE BEEN SOME DEALS IN THE WORKS WITH REGARDS TO OTHER METALS THAT INCLUDES ALUMINUM. I'M CURIOUS AS TO WHY YOU THINK THAT DEAL GOT DONE WHEN IT DID, AND WHAT'S THE PROGRESS SO FAR? DIDI: ARE YOU SPEAKING ABOUT THE EGA ANNOUNCEMENT? YES. WELL, I THINK IT HAS BEEN IN THE WORKS FOR A WHILE TO THE FUNDAMENTALS HAVE BEEN ANALYZED FOR MANY YEARS. AND IT REALLY JUST MADE SENSE AT THIS TIME. ALUMINUM IS ONE OF

THOSE THINGS WHERE THE PRODUCER DOES NOT CONTROL THE PRICE OF THEIR PRODUCT. SO, THEY TRY TO CONTROL THEIR OPERATING COSTS AS MUCH AS THEY CAN. IT JUST MADE SENSE NOW IN THE U.S. WITH THE ENERGY PRICES WHERE THEY ARE AND WITH THE GROWING DEMAND. AND WE ONLY SOURCE ABOUT 15% OF THE DOMESTIC DEMAND FOR ALUMINUM IN THE U.S. CURRENTLY. SO THIS WILL ADD 600,000 TONS TO DOMESTIC MANUFACTURING WHICH WOULD DOUBLE WHAT WE HAVE RIGHT NOW. EVERYTHING CAME TOGETHER AT THE RIGHT TIME. ROMAINE: THAT PLANT IN OKLAHOMA, I AM CURIOUS. WHEN YOU GO THROUGH THAT SEARCH

PROCESS, WHEN YOU WERE WORKING ON THIS, HOW DID YOU END UP IN OKLAHOMA RATHER THAN THE OTHER 48, 49 STATES? DIDI: YES, WELL, IT WAS A VERY COPPER HAS A PROCESS. WE REALLY DID NOT WANT TO LEAVE ANY STONE UNTURNED. AND SO, WE BASICALLY LOOKED AT EVERY STATE WHICH HAD THE RIGHT COMBINATION OF ELECTRICITY AVAILABILITY AND THE LOGISTICS INFRASTRUCTURE TO BE ABLE TO MAKE THIS PROJECT A REALITY. SO WHEN YOU THINK ABOUT LOGISTICS, THEY ARE GOING TO BE IMPORTING ALUMINA AND THAT IS SUFFICIENTLY DONE IN MARINE VESSELS, DEEPWATER OR BARGE OPERATIONS. SO, THAT AUTOMATICALLY ELIMINATED

A LOT OF PLACES. AND THEN WE NEEDED A PLACE FOR PEOPLE TO HAVE LOW COST, RELIABLE ELECTRICITY. SO THAT ALSO NARROWS THE FIELD. SO, WHEN YOU GET DOWN TO THAT, THEN YOU'RE LOOKING AT A SELECT NUMBER OF STATES, AND THEN THERE IS ONLY A CERTAIN NUMBER OF THOSE STATES WHICH ARE GOING TO HAVE INVESTMENT READY SITES THAT CAN ACCOMMODATE A PROJECT LIKE THIS. ONE OF THE THINGS WE'VE SEEN OVER THE LAST FIVE YEARS OR SO IS AN EXPLOSION IN MEGA PROJECTS, PROJECTS OVER $1 BILLION IN INVESTMENT IN INVESTMENT AND OVER 1000 JOBS AS WELL AS

HYPERSCALER DATA CENTERS. AND THAT HAS MEANT THAT OUR INVENTORY OF INVESTMENT READY INDUSTRIAL SITES HAS BEEN DEPLETED. SO WHEN YOU START TO PUT ALL OF THOSE THREE THINGS TOGETHER, IT NARROWS THE UNIVERSE REALLY QUICKLY. ALIX: WHAT ONSHORING TYPE OF FACILITY OR INDUSTRY CAN'T HAPPEN? DIDI: WELL, YOU GOT TO THINK THERE IS A LOT OF SUNK COSTS. I THINK CHINA HAS $73 TRILLION WORTH OF INDUSTRIAL INVESTMENT. WHEN YOU MAKE THAT KIND OF INVESTMENT YOU WILL RUN THAT UNTIL YOU CANNOT GET ANYMORE RETURN OUT OF IT. THAT DOES NOT MEAN, SO WHAT WE'RE MAINLY SEEING IS ONSHORING

V. RESHORING, WHERE WILL I PUT MY NEXT DOLLAR AS OPPOSED TO WHETHER I WILL CLOSE A FACILITY IN ONE LOCATION AND OPEN IT IN ANOTHER. ALIX: ARE YOU SEEING COMPANIES ALSO MOVE, OR WHEN THEY BUILD THEIR NEXT PLANT, CHOOSING THE U.S. VERSUS MEXICO OR CANADA? WHAT IS THE OPPORTUNITY SET THERE? DIDI: SO, SPECIFICALLY WITH MEXICO, I THINK, I TEND TO DIVIDE PROJECTS INTO CAPITAL VERSUS LABOR INTENSIVE. AND THE LINE I TYPICALLY DRAW IS $1 MILLION INVESTED PER JOB CREATED IS THE THRESHOLD BETWEEN LABOR INTENSIVE AND CAPITAL-INTENSIVE. SO A PROJECT LIKE THIS, INVESTING $4 BILLION AND

CREATING 1000 JOBS. THAT IS VERY CAPITAL INTENSIVE. IN UNITED STATES IS SET UP REALLY WELL FOR THAT. BECAUSE OUR LABOR COSTS ARE MORE EXPENSIVE THAN MEXICO. BUT OUR ENERGY COSTS ARE MUCH LOWER. AND WE ALSO HAVE BETTER RELIABILITY. OUR REGULATIONS ARE MUCH MORE STRAIGHTFORWARD. LOGISTICS, IF YOU'RE CLOSE TO YOUR CUSTOMER, THEN YOUR COSTS ARE REDUCED TO THERE. IF IT IS $100 MILLION AND CREATING 400 JOBS, THEN MEXICO WILL BE MUCH MORE ADVANTAGEOUS FOR THESE OPERATIONS. AND, TYPICALLY, WE ARE ALWAYS LOOKING FOR GOOD QUALITY WORKFORCE, AND LOGISTICS CAN HAVE MORE OR LESS OF AN IMPACT, BUT

MORE OFTEN THAN NOT THE LABOR-INTENSIVE IS GOING TO GET MEXICO, CAPITAL-INTENSIVE TO THE U.S. IN CANADA A LOT OF IT HAS TO DO WITH THE ENERGY SUPPLIES. THEY HAVE AN ABUNDANT SUPPLY OF HYDRO POWER, GREEN ENERGY. IT REALLY DEPENDS ON WHAT THE CRITERIA OF THE PROJECTS ARE. ROMAINE: THIS IS REALLY FASCINATING. HAVE TO LEAVE IT THERE. DIDI CALDWELL, THE CEO OF GLOBAL LOCATION STRATEGIES. SOME BREAKING NEWS. INVOLVING THE SWISS BANKING GIANT UBS. WE ARE LEARNING THAT THAT COMPANIES FIGHT TO WARD OFF A BILL WORKING ITS WAY THROUGH THE SWISS PARLIAMENT THAT WOULD RAISE ITS CAPITAL

COST BY $25 BILLION, THEY LOST THE FIRST ROUND OF THAT. THERE IS A PROPOSED BILL THAT WOULD EFFECTIVELY MEAN THAT UBS WOULD HAVE TO COVER BY 100% THE CAPITAL IN ITS FOREIGN SUBSIDIARIES BASED ON BLOOMBERG ESTIMATES, THAT COULD BE AS MUCH AS $25 BILLION. THIS IS A RATHER LONG PROCESS. OUR REPORTER SPEAKING TO PEOPLE FAMILIAR WITH THE SITUATION SAYS THE BILL WILL BE PUBLISHED ON JUNE 6, AND THAT IT COULD TAKE AT LEAST UNTIL 2029 TO FIND A RESOLUTION. YOU'RE LOOKING AT THE U.S. SHARES OF UBS, NOW ARE REBOUNDING UP 2%. BACK IN A MOMENT.

THIS IS BLOOMBERG. ♪ ROMAINE: TIME NOW FOR OUR STOCK OF THE HOUR. JP MORGAN SHARES DOWN A PERCENT ON THE DAY. MORGAN STANLEY MOVING LOWER IN THE WAKE OF COMMENTS THAT -- BY CEO JAMIE DIMON THAT HE IS WARY OF RISK. WE SHOULD POINT OUT THAT THE BANK'S PRESENTATION ALSO INCLUDED AN ESTIMATE THAT INVESTMENT BANKING FEES WILL BE DOWN BECAUSE OF THE VOLATILITY FROM TARIFFS. OUR CHIEF WALL STREET CORRESPONDENT JOINING US. LET'S START WITH THAT SECOND POINT, BECAUSE THAT SEEMED TO BE WHAT MOVED THE MARKETS. I GUESS I'M NOT SURPRISED BY THAT BUT I'M ALSO

A LITTLE SURPRISED BECAUSE WE CAME INTO THIS YEAR AND THIS WAS SUPPOSED TO BE THE REBOUND OF DEALMAKING ACTIVITY. >> SUPPOSED TO BE THE REBOUNDING. IF YOU LOOK AT THE NUMBERS, M&A ACTIVITY FOR THE YEAR IS UP 14% OVER LAST YEAR. THE PROBLEM IS 2022, 2023, 2024 WE HAVE NOTE -- WE ARE NOWHERE NEAR THE LEVELS OF 2021. BANKERS WANT TO GET BACK TO THAT LEVEL. EVEN HEADING INTO 2021 YOU HAD SOME REALLY STRONG YEARS, SO BANKERS WANT TO GET BACK TO THAT LEVEL. YOU ARE SEEING A BIT OF A REBOUND. AND WITH TRUMP'S RETURN

TO THE WHITE HOUSE THEY EXPECTATION WAS CRAZINESS ASIDE, CRAZINESS WAS KEPT AT BAY THERE WOULD BE A FLOOD GATE OPENING AND DEALS WOULD COME BOUNDING BACK. THAT IS NOT HAPPENED AND THAT IS WHAT THEY WANT TO CHANGE. ALIX: SO, WHAT IS GOING ON WITH FEES? DOWN BY HOW MUCH? >> IN THE SECOND QUARTER THEY EXPECT FEES TO BE DOWN BY THE MID- TEENS. WHEN YOU TALK ABOUT DEALMAKING, AND THAT IS NOT EVEN CONVERSATIONS YOU ARE HAVING IN THE SECOND QUARTER. THESE ARE CONVERSATIONS YOU HAD EARLIER. IN THE SECOND QUARTER, IF YOU GO BACK TO APRIL

2, LIBERATION DAY WHICH WAS IN THE SECOND QUARTER, THAT FORCED A LOT OF CHANGE AT THE CORPORATE LEVEL FOR A LOT OF APRIL DEAL MAKING CONVERSATIONS BECAUSE YOU HAVE NO IDEA WHAT WILL HAPPEN TO YOUR BUSINESS. CAPITAL MARKETS ACTIVITY AND LISTING ACTIVITY WAS CHILLED. NOW YOU ARE SEEING SOME OF THAT COMEBACK BACK AS MARKET START TO NORMALIZE. IN Q3 AND Q4 SOME OF THAT EFFECT WILL PLAY THROUGH BECAUSE ALL OF THE CONVERSATION HAPPENING NOW WILL RESULT IN SOME REALIZED FEES IN THE NEXT FEW MONTHS. SO THAT IMPACT, THAT EFFECT WILL BE FELT FOR THE REST

OF THE YEAR. ROMAINE: TALK MORE ABOUT THE COMMENTS OUT OF JAMIE DIMON. HE'S BEEN AT IT FOR A WHILE, BUT HE WAS POINTED ABOUT THE RISK, IS -- PARTICULARLY IN CERTAIN POCKETS OF THE MARKET. >> TO BE FAIR, HE HAS CONSTANTLY POINTED OUT THAT WHEN HIS BUSINESS IS DOING WELL, AND THEY HAVE DONE A GOOD JOB OF GUARDING THEIR BANK, IT IS A STRONG CITADEL, THE PROBLEM IS THERE A LOT OF THINGS THAT IF THEY GO WRONG COULD HAVE A BIG IMPACT ON THE GLOBAL ECONOMY AND BANKS ARE AT THE FOREFRONT OF BENEFITING FROM GLOBAL

GROWTH. IF THAT WERE TO TAKE A HIT, JP MORGAN WOULD BE AFFECTED. HAVING SAID THAT, HE HAS BEEN TALKING ABOUT THIS IN VARIOUS RISKS FOR THE LAST FEW YEARS. THEY HAVE NOT PANNED OUT YET, BUT THAT DOES NOT MEAN DELAY IS DENIED. ALIX: REALLY GREAT STUFF. OUR CHIEF WALL STREET CORRESPONDENT FOR BLOOMBERG. 15 MINUTES AWAY FROM THE CLOSING BELL. WE WILL TAKE YOU TO THE BELL WITH TONY OF FUNDAMENTAL EQUITIES OF THE BLACKROCK LARGE-CAP VALUE ACTIVE ETF. THIS IS BLOOMBERG. >> CLEARLY A DEGREE OF UNCERTAINTY IN THE. AND THIS DOES NOT HELP. YOU HAVE THE

UNCERTAINTY AROUND POLICY AND THE CREDIT WORTHINESS OF THE UNITED STATES. THAT IS WHERE THEY LOOK OUT OVER THE NEXT 6-12 MONTHS, THAT WILL BE THE BIG THEME AMONG MARKETS IS WHERE CAN I GET CERTAINTY? ROMAINE: KICKED US OFF TO THE CLOSE 15 MINUTES AGO AND IS STIMULATING DAY AND FINANCIAL MARKETS. THAT IS SARCASM. ALIX: WE SEE SOME VOLUME WITHIN TECH, BECAUSE IT WAS DOWN HALF A PERCENT. WITHIN THE S&P, THE WORST PERFORMING SECTOR IS ODD BECAUSE OIL PRICES WERE NOT MOVING ALL THAT MUCH. ROMAINE: WE SAW ACTIVITY AND INDUSTRIAL METALS TODAY. THIS IDEA, WE CAME

OUT OF FRIDAY WITH THE MOODY'S DOWNGRADE AND EVERYBODY THOUGHT THAT WOULD BE THE BIG DRIVER TODAY. IT REALLY WAS NOT. YOU SAW VOLATILITY IN THE OVERNIGHT HOURS AND MAY BE RIGHT OUT OF THE GATE AT 9:30, BUT THAT HAS DISSIPATED. ALIX: WHAT WE MAKE OF THAT? IS THAT GOOD NEWS BECAUSE THE S&P ABSORBED BAD NEWS IN A N OK WAY, OR ARE WE DUE FOR SOMETHING IF YOU HAVE THE 30-YEAR-YEI IELD? ROMAINE: THOSE CORRELATIONS ARE IMPORTANT. WE TALKED ABOUT THE IDEA THAT ONE OF THE REASON YOU SAW THE BIG DROP WAS BECAUSE WE HAD SEEN

THAT SPIKE IN YIELDS BUT AS SOON AS THOSE YIELDS STARTED TO TAMP DOWN A LITTLE BIT EVERYBODY WAS BACK INTO THE POOL. BORROWING COSTS COULD DRIVE THE NARRATIVE BUT UNTIL WE GET THERE. ALIX: IT IS NOT LIKE WE'RE DROPPING TO 3% ON THE 30 YEAR. ROMAINE: WELL, THERE YOU HAVE IT. ALIX, YOU ARE BULLISH. ALIX: I AM DEFINITELY GLASS HALF-EMPTY. ROMAINE: KIND OF A STATUS QUO, IF YOU WILL TODAY. BUT OF COURSE THERE IS STILL A LOT OF LONGER-TERM ISSUES THAT THE MARKET IS TRYING TO PARSE WITH EVERYTHING GOING ON IN WASHINGTON. THE GLOBAL CIO

OF FUNDAMENTAL EQUITIES A PORTFOLIO MANAGER OF THE BLACKROCK LARGE-CAP VALUE ACTIVE ETF'. GREAT TO SEE YOU. WE TALK ABOUT A MARKET THAT I THINK HAS TRIED TO FIND, REI FIND ITS FOOTING COMING OUT OF THE RUSSIANS IN MARCH AND APRIL AND THE ROUND TRIP BACK TO WHERE WE WERE PRE-LIBERATION DAY. AND THE QUESTION IS NOT WHAT GIVES US THE NEXT RALLY? IS THERE SOMETHING THE MARKET IS LOOKING FOR? HASLINDA: DURING THE DOWNDRAFT TONY: DURING THE DOWNDRAFT, THOUGH YOUR MARKET WAS FOCUSED ON TRADE. WE GET TO SEE THE WORST CASE SCENARIO OFF THE TABLE AND LOOKING

FORWARD TO MORE FAVORABLE TAX POLICY, DEREGULATION OF THE BANKING SECTOR. ALL OF THOSE ARE REAL POSITIVE, THE EARNINGS VIS SEASON WAS REALLY GOOD FIT SO THOSE ARE THE POSITIVES. ROMAINE: WE TALK ABOUT THE RALLY WE'VE HAD OVER THE LAST FEW WEEKS. THERE HAS BEEN A LOT OF TALK ABOUT THE LACK OF PARTICIPATION, A LOT OF RETAIL IN, NOT NECESSARILY ALL OF THE -- IF YOU GO BY SHORT-TERM TREASURIES. WHEN WE GET MAYBE A LITTLE BIT BROADER PRECIPITATION?-- -- PARTICIPATION? TONY: WE TELL GOT IT RIGHT. THERE IS A LOT OF MONEY ON THE SIDELINES. THAT IS

MORE GOOD THINGS TO COME. AND THE ONLY HESITATION IS ON THE VALUATION SIDE WHICH IS WHERE I THINK INVESTORS SHOULD REMEMBER REMEMBER THE DOWNTURN, BUILD RESILIENCY IN YOUR PORTFOLIO, DO THAT BY BUYING HIGH-QUALITY BUSINESSES OR CREATE SAFETY THROUGH BUYING VALUE STOCKS. ALIX: WHAT ARE THOSE RIGHT NOW? TONY: THE LIST OF HIGH QUALITY STAPLE LIKE EARNERS HAS NARROWED. YOU SEE CONSUMER STAPLES UNDER ATTACK BOTH BECAUSE THEY HAVE OVERPRICED THEIR PRODUCT IN GLI P-1,S MAYBE THEY ARE IN A STABLE. ON THE HEALTH CARE SIDE, PHARMACEUTICALS ARE UNDER ATTACK IN TERMS OF BOTH THE PATENT EXPIRATION AND PRICING.

IT NARROWS THE NUMBERS OF COMPANIES. A COMPANY LIKE MICROSOFT HAS KINDA BECOME THE NEW, NEW TECH STAPLE, I WILL CALL IT. YOU HAVE TO PAY UP A LITTLE BIT FOR IT VERSUS ONE OF THE LARGE TRADITIONAL CONSUMER STAPLES COMPANIES BUT NOT THAT MUCH, GIVEN THAT YOU GET A LOT BETTER EARNINGS GROWTH AND A LOT BETTER QUALITY BOTH IN TERMS OF BUSINESS AND THE BALANCE SHEET. THIS IS A COMPANY WITHOUT ANY DEBT AS OPPOSED TO MANY CONSUMER STAPLES WHICH ARE LEVERAGED. ALIX: WHAT WOULD YOU AVOID IN THIS KIND OF ENVIRONMENT? TONY: I THINK INDUSTRIALS ARE HIGHLY

PRIZED. AND THERE ARE NOT REALLY ANY POSITIVE CATALYST, ON THE FLIPSIDE, ON THE CYCLICAL SIDE I SEE BANKS AND MONEY BANKS AS ATTRACTIVE BECAUSE OF THE DEREGULATORY IMPULSE. THAT MEANS LOWER CAPITAL REQUIREMENTS. THAT MEANS THEY CAN RETURN MORE CAPITAL TO SHAREHOLDERS. IN THE FORM OF BUYBACKS AND DIVIDENDS. AND THEY CAN LEND MORE MONEY. AND THAT IS GOOD FOR GROWTH. ROMAINE: ARE YOU SEEING ACTUAL EMBRACE OF THOSE VALUE PLAYS? BECAUSE IT SEEMS EVERY TIME WE HAVE THESE RUPTIONS AND PEOPLE COME BACK, THEY GRAVITATE TOWARDS THE LARGE-CAP NAMES. MICROSOFT MAY BE MORE OF A VALUE PLAY THAN

JUST NECESSARILY GROWTH, BUT I DO WONDER IF THE MENTALITY IS THAT THERE IS SOMETHING OUT THERE OTHER THAN JUST THOSE LARGE CASH GENERATING NAMES. TONY: THE MARKET IS POISED TO BROADEN. WHEN I LOOK AT THE MAG-7 THE GAP IN GROWTH RATE IS NARROWING. IF YOU LOOK AT ESTIMATES FOR THIS YEAR, IT IS SUPPOSED TO BE ABOUT 10% OR LESS. THAT PEAKED IN 2023 AT A 30% FOR THAT GAP IS NARROWING AND YET THE VALUATION HASN'T. ROMAINE: FOR FOLKS WHO ARE FOR INVESTMENT OPPORTUNITIES, LET ME TRY TO PICK THE WINNERS AND LOSERS IN TERMS OF STOCKS,

WHAT ARE THE THEMES THAT YOU'RE SEEING PEOPLE GO AFTER? WE TALKED ON THE SHOW OVER THE LAST 2.5 YEARS ABOUT A.I. AND SOME OF THE OTHER ECOSYSTEMS THAT FEEDS INTO THAT. IS THAT STILL IN HIGH DEMAND? TONY: A.I. IS STILL VERY MUCH A REAL THEME BUT I DO NOT THINK IT IS A SET IT AND FORGET IT. YOU HAVE TO PLAYED AN ACTIVE WAY. IN THE BEGINNING IS ABOUT THE HARDWARE LAYER, THE CHIPS, THE SEMI CONDUCTORS, ETC., INCREASINGLY WE WILL MOVE TO THE SOFTWARE LAYER AS WE START TO SEE APPLICATIONS. YOU HAVE TO CHANGE HOW

YOU PLAY THAT THAT INVESTMENT THEME. ALIX: DO YOU THINK THAT WE NEED LESS BAD NEWS OR GOOD NEWS TO REALLY FIND STABILITY IN THE MARKET? TONY: I THINK WE ARE AT THE POINT OF STABILITY. AS LONG AS WE DO NOT HAVE BAD NEWS WE WILL BE STABLE BUT TO REALLY DRIVE IT UP THAT WOULD REQUIRE GOOD NEWS WHICH COULD BE EARNINGS, COULD BE TAX POLICY, COULD BE DEREGULATION. ROMAINE: REAL QUICKLY. WHAT WERE YOUR THOUGHTS ON THE MOODY'S DOWNGRADE? TONY: NOT REALLY NEWS. YES, GOVERNMENT DEBT IS A PROBLEM. WE ARE ABOUT DEBT TO GDP OF ONE

TIMES, THAT IS A MAGIC NUMBER. IT IS HARD TO GROW OUT OF IT. IF YOU LOOK AT DEFICITS, 6% OF GDP, NOMINAL GDP IS GROWING JUST UNDER 5%. SO THE DEBT TO GD P IS GROWING. THIS IS NOT NEW NEWS. AND MOODY'S IS THE THIRD, LAST IN LINE, S&P DOWNGRADED IN 2011. FITCH IN 2023. I SEE IT AS A LAGGING INDICATOR. ROMAINE: GREAT STUFF. THE GLOBAL CHIEF INVESTMENT OFFICER FUNDAMENTAL EQUITIES AT THE BLACKROCK LARGE-CAP VALUE ACTIVE ETF'. COUNTING US DOWN TO THE CLOSING BELL WHICH ARE JUST ABOUT TWO MINUTES AWAY. STOCKS RELATIVELY UNCHANGED ON THE

DAY. THEY HAD SPENT A BIG PORTION OF THE DAY IN THE RED. THE RUSSELL HOLDING ONTO MOST OF HIS LOSSES. THE S&P, THE DOWN AND THE NASDAQ 100 POKING INTO THE GREEN. ALSO BREAKDOWN OF THE PRICE ACTION STARTS NOW WITH OUR GLOBAL SIMULCAST. >> THE CLOSING BELL, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: AND RIGHT NOW WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK WITH ALIX STEEL TAKING YOU THROUGH TO THE CLOSING BELL. A GLOBAL SIMULCAST AND A STARTS RIGHT NOW. CAROL MASSAR AND

TIM STENOVEC TOGETHER IN THE RADIO. ALL FIVE OF US BACK TOGETHER ON THIS MONDAY AS WE WELCOME OUR AUDIENCES ACROSS OUR PLATFORMS INCLUDING OUR PARTNERSHIP WITH YOUTUBE. CAROL: WE ARE A CROSS PLATFORMS, WE ARE EVERYWHERE. I FIND IT FASCINATING THAT I GUESS INVESTORS ARE LOOKING AT ANOTHER DOWNGRADE, OK. WE THOUGHT IT WAS COMING, NOT SURPRISING. INVESTORS CERTAINLY THE EQUITY SIDE SEEM OK WITH IT. TIM: THEY ALSO SEEM TO BE OK WITH IT ON THE BOND MARKET YOU SAW SOME BUYING ON THE 30 YEAR, WHEN THERE WAS CONCERN IT HAD GONE ABOUT 5%. I DON'T KNOW,

MAYBE EVERYONE IS DESENSITIZED. I DO NOT KNOW WHAT THE ANSWER IS . SCARLET: IN AUGUST 2011 WHEN S&P DOWNGRADED THE U.S. THE S&P LOST 6.7%. IN 2023 THE S&P LOST 1.4% AND NOW WE ARE IN CHANGE. ALIX: WE DID HAD THAT 5% LEVEL ON THE 30 YEAR. THAT IS REALLY THE TOP AND YOU BRING IN BUYERS AND THAT WILL BE A SELF-CORRECTING MECHANISM. ROMAINE: YOU POINT OUT SORT OF THE BIG OUTSIZED MOVE THAT WE HAD IN 2011. THAT WAS A SHOCK. I DO NOT THINK ANYONE SAW THAT COMING. A LOT OF OUR GUESTS SAY ON

THE PROGRAM, S&P ALREADY DID IT. FITCH ALREADY DID IT, WHAT TOOK YOU SO LONG? CAROL: FED OFFICIALS ARE SAYING, DON'T GET TOO EXCITED ABOUT RATE CUTS. MAYBE WE WILL GET ONE THIS YEAR. ROMAINE: THE MARKETS TAKING FRIDAY'S NEWS IN STRIDE HERE. AND MAYBE FOCUSING MORE ON THE TAX BILL AND SOME OF THE OTHER EFFORTS IN WASHINGTON AMID -- TO MAKE THINGS EASIER FOR COMPANIES. GREEN ACROSS THE STREAM FOR THREE INDICES, THE DOW JONES UP BY 100 POINTS. THE S&P 500 IS GOING TO CLOSE UP OF POINTS. IN THE NASDAQ COMPOSITE IN THE GREEN BUT WE

WILL CALL IT UNCHANGED, UP FOUR POINTS, SIMILAR MOVE FOR THE NASDAQ 100. IN THE SMALL AND MID-CAP SPACE YOU DID SEE A SIGNIFICANT DECLINE ON THE DAY. DOW TRANSPORTS DOWN .3%. CAROL: QUICK CHECK ON THE S&P 500. KIND OF AN EVEN SPLIT WHEN IT COMES TO WINNERS AND LOSERS. YOU HAVE 255 NAMES GAINING GROUND ON THIS MONDAY. AND SCARLET, 246 TO THE DOWNSIDE. SA CARLET: YOU HAVE SEVEN GROUPS IN THE GREEN AND FOUR IN RED. HEALTH CARE SHARES UP A PERCENT. CUSTOMER STAPLES AND INDUSTRIALS EACH GAINING ABOUT .4%. THE BIGGEST LAGGARD IS ENERGY LOSING ABOUT

1.5%. 1.6%. BUT FOR THE YEAR DOWN 2.2%. WITH SOME IN CONSUMER DISCRETIONARY A- AND TECH, BUT THOSE ARE LEANING TOWARDS UNCHANGED. CAROL: LET'S GET TO SOME OF THE GAINERS. THERE WERE REALLY SMALL PERFORMANCE, PARAMOUNT GROUP, THIS ONE UP AS MUCH AS 20%, FINISHING WITH A GAIN OF 13%. IT IS A MAJOR OFFICE LANDLORD, NEW YORK CITY, D.C., SAN FRANCISCO, 1.1 BILLION-DOLLAR MARKET CAP. THE BOARD IT INITIATED AN EVALUATION OF STRATEGIC ALTERNATIVES. SOME SPECULATION MIGHT THAT MEAN IN OUT OF THE COMPANY? AND THIS IS ALL COMING AFTER IT NAMED A NEW CFO AND TREASURER. KEEP IN

MIND, THE WALL STREET JOURNAL MAKING POINTS ABOUT THIS COMPANY HAD A LOT OF RED FLAGS IN THE LAST FEW MONTHS. AND SO, THIS COMPANY LOOKING KIND OF TO SEE WHAT IS NEXT IN ITS NEXT CHAPTER. TAKE 2 INTERACTIVE, UP 3%. IT WAS A TOP GAINER. DID REPORT EARNINGS LAST WEEK. AND WE ARE SEEING THE COMMUNITY COMING TO WEIGH IN. RAISING PRICE TARGETS FOR THE COMPANY. SINCE IT REPORTED EARNING 16, CHANGING PRICE TARGETS, THE AVERAGE CHANGE UP 11%. ANALYSTS RAISED IT BY 12%. OPTIMISM ON THE STREET. AND NOVAVAX, TALK ABOUT OPTIMISM, UP AS 30% DURING THE

SESSION, FINISHING WITH A GAIN OF 15%. REGULATORS FULLY APPROVE THE COMPANY'S COVID VACCINE, EASING CONCERNS AFTER THE CLEARANCE WAS DELAYED. ROMAINE: NICELY DONE. CAROL: EXACTLY. WHEW. GOOD STUFF. ALIX: IT IS NOT MRNA. IF YOU NEED A DIFFERENT PERSON, THAT IS SOMETHING FOR YOU. CAROL: I WILL SAY MODERNA ALSO, YOU THOUGHT THE GOVERNMENT WAS GOING TO GET TO BE SO ANTI-VACCINE AND YET THIS HAPPENS FOR NOVAVAX SO INVESTORS ARE CLIMBING INTO MODERNA 6% TODAY. TIM: I GOT THE DECLINERS. CAROL: YOU HAD SOME TROUBLE. TIM: BUT YOU KNOW WHAT THE TEAM IS READY, THEY WERE ABLE TO

SWITCH IT OUT FOR ME. I PREACH AT THAT. I WANT TO START WITH SHARES OF JP MORGAN. ROMAINE: NO ONE HAVE EVER KNOWN. TIM: WITH FRIENDS LIKE CAROL. CAROL: DO I COME ACROSS LIKE A LITTLE SISTER? TIM: @% TO THE DOWNSIDE -- 1% TO THE DOWNSIDE FOR JP MORGAN PARISH SHARES FELL EARLIER IN THE SESSION. AND THEY HAD A SESSION LOW AFTER AN EXECUTIVE AT THE COMPANY SAID INVESTMENT BANKING FEES WILL F ALL. PEER ORGANIZATIONS FELL AS WELL. JAMIE DIMON IN A SPEECH DID WARN AGAINST COMPLACENCY IN THE FACE OF A SLEW OF RISKS. HE

SAID EVERYTHING FROM INFLATION AND CREDIT SPREADS TO GEOPOLITICS, ULTIMATELY SHARES FELL 1% TODAY. I WANT TO TALK ABOUT SOLAR STOCKS, SUNRUN, DOWN 720%. A SOLAR COMPANY SLUMP. AFTER REPUBLICAN LAWMAKERS SAID THEY SECURED A COMMITMENT FROM LEADERSHIP TO END KEY CLEAN ENERGY TAX CUTS EARLIER THAN PLANNED. PART OF THE PRESIDENT TRUMP'S GIANT TAX PACKAGE. AND SHARES OF SHAKE SHACK 1.6% TO THE DOWNSIDE, AFTER THEY CUT THEIR RECOMMENDATION ON THE COMPANY TO HOLD FROM BUY, CITING A HIGH VALUATION AMID CHANNELS IN CONSUMER SPENDING. ALIX: COMING INTO THE SESSION IT LOOK LIKE WE WOULD SEE SOME INTENSE ACTION,

THE LONG END WAS SELLING OFF BY SIX BASIS POINTS AND THEN WE REVERSE COURSE. WITH THE WHOLE CURVE LOWER BY ABOUT TWO TO THREE BASIS POINTS I WANT TO POINT OUT THAT THE 30 YEAR YIELD HIT THE 50% LEVEL. WE HAVE NOT SEEN THAT SINCE 2023 AND YOU LOOK AT THE TECHNICAL BASIS, AND WE ARE LOOKING AT AT A GOLDEN CROSS, GUYS. WHOO HOO. THE SHORT TERM MOVING AVERAGE LOOKS TO BREAK ABOVE MEDIUM TERM MOVING AVERAGE. THAT'S A GOLDEN CROSS, THAT TENDS TO BE BULLISH. WHICH MEANS HIGHER YIELDS AND YOU WONDER AT SOME POINT IS

IT WHERE WE HAVE THAT TIPPING POINT WHERE YIELDS ARE DIRECTLY HURTING STOCKS? CAROL: YOU KINDA WONDER WHERE IT GOES NEXT. I HAVE NO GOOD SEGUE. WHAT? ALIX: THERE IS NO SEGUE. ACAROL: LET'S TALK ABOUT THE MAKER OF DUM DUMS. ROMAINE: WHAT DID YOU CALL ME? CAROL: DUM DUMS LOLLIPOPS AND SWEETHEARTS, CANDY. APPARENTLY THE MAKER THE CEO OF THE COMPANY THAT MAKES ALL THIS GOOD STUFF, APPARENTLY PUSHING BACK ON THE IDEA OF SWITCHING FROM SYNTHETIC DYES TO NATURAL COLORS PIT HE'S WORRIED ABOUT THE TASTE AND MAYBE WHETHER CONSUMERS WERE LIKE IT IS MUCH. TIM: BEET JUICE

MIGHT BE A NICE READ BUT GUESS WHAT? BUT GUESS WHAT. IT TASTE LIKE BEETS. ROMAINE: THIS GUYS A NATIONAL HERO. HE SHOULD BE IN CHARGE OF HHS. IF YOU'RE EATING CANDY, IT IS LIKE WHEN YOU HAVE HEALTHY GUMMY BEARS, RIGHT? ALIX: THAT IS PERSONAL. ROMAINE: IT IS PERSONAL. I DO NOT EAT CANDY BECAUSE I'M TRYING TO BE HEALTHY. TIM: IT IS SKULLCANDY, NOT VEGETABLES. ROMAINE: THANK YOU. LET ME GET MY VEGETABLES. ALIX: DIDN'T THEY SAY IT IS A DANGEROUS FOR ALLERGIES, TOO? SCARLET: WHAT YOU SAY IS THAT THE CANDY NEEDS A WARNING LABEL. CAROL: RED

DYE NO. 3 WHICH HAS BEEN LINKED TO CANCER, THEY WILL ONLY START TO PHASE IT OUT IN 2027. IT WAS ALREADY BENT AND MAKEUP. WHY IS IT EVEN STILL THERE? ROMAINE: I DO NOT KNOW WHY YOU NEED TO YEARS. TIM: I DO NOT KNOW WHY YOU NEED THE DYE, IF YOU'RE EATING SOMETHING THAT IS NOT THE FLAVOR THAT THE CONCERN IS, THE CONCERN OF THESE ARE DYE. CRYSTAL PEPSI. IT WAS SO SUCCESSFUL. ALIX: WHAT? NO. I DON'T REMEMBER THAT AT ALL. CAROL: HE IS BEING FACETIOUS. SCARLET: IT WAS FOR A HOT SECOND IN ONS COMMERCIAL.

ECAROL: NETFLIX WILL BE AIRING NEW EPISODES AND ALL SEASONS OF "SESAME STREET." FOR PEOPLE WHO CUT THE CORD COMPLETELY AND DO NOT HAVE PBS, YOU CAN GET IT NOW I NETFLIX. ALIX: IT HAS BEEN ON HBO. YOU GET THE RERUNS AND THE -- THAT PARTNERSHIP WAS BROKEN SO IT IS YOU NOW HAVE A WAY TO GET IT. HUGE. ROMAINE: WHAT I REALLY LOVE ABOUT THIS IS THE OTHER WAY TO GET IT WITHOUT PAYING, BECAUSE THEY PARTNER WITH PBS. UNLIKE HBO, WHICH TOOK IT OFF OF PBS AND YOU HAD TO WAIT SEVERAL MONTHS TO SEE A

NEW EPISODE, NETFLIX IS NOT DOING THAT. WHEN IT AIRS ON NETFLIX, IT WILL AIR ON PBS. IF YOU CANNOT AFFORD THE SUBSCRIPTIONS, YOU CAN JUST BRING IT HERE, AND YOU SIT THERE WITH YOUR DUM DUM LOLLIPOP, PINEAPPLE. ALIX: GNARLY! YOU DON'T LIKE PA PINEAPPLE. CARI OL: ARE YOU INTO BEET JUICE? ROMAINE: ONE WITH THE LAST TIME HE HAD A LOLLIPOP? CAROL: JUST KIDDING. YOU SAID IT BEFORE. ROMAINE: WOW. WE'RE NOT THAT FAR AWAY FROM IT. CAROL: THAT'S A WRAP. GOOD TO BE BACK TOGETHER. WE LOVE EACH OTHER. I SWEAR. WE WILL SEE YOU. SCARLET WILL

STICK AROUND WITH ROMAINE. ALIX IS HEADING OUT. WE WILL SEE YOU AGAIN. SAME TIME, SAME PLACE TOMORROW. ROMAINE: OUR COVERAGE CONTINUES ON BLOOMBERG TELEVISION WITH A SPECIAL ON THE U.S. DOLLAR. WE HAVE A GREAT CONVERSATION COMING UP WITH THE CO-HEADS OF GLOBAL INVESTMENT STRATEGY AT JP MORGAN PRIVATE BANK, A NEW OUTLOOK FOR THE FUTURE AND YOU DO NOT WANT TO MISS IT. THIS IS "THE CLOSE" ON BLOOMBERG. >> THE COUNTDOWN IS ON. THIS IS "THE CLOSE" SCARLET: WELCOME BACK TO "THE CLOSE." ROMAINE: INTERESTING DAY ON WALL STREET. YEAH, WELL, IT WAS A LITTLE BORING. WE

CAME INTO THE DAY KIND OF EXPECTING A BIT OF FIREWORKS PAID WE HAD THE DOWNGRADE OF THE U.S. CREDIT RATING ON FRIDAY. AND YOU DID SEE SOME PRETTY SIGNIFICANT PRICE ACTION. THE OVERNIGHT HOURS IN THE TREASURY MARKETS ON SUNDAY, AND OF COURSE AROUND THE OPEN ON MONDAY, BUT THAT DEBATED PRETTY QUICKLY. PARTLY WAS THE BIG REASON WAS THE SECOND LINE. DID NOT HAVE YIELDS BREAK ABOVE THE 5% LEVEL. AND THEN THEY DROPPED BACK DOWN PRETTY QUICKLY IN AS THOSE YIELDS DRAFTED BACK DOWN INTO THE POCKET YOU STARTED TO SEE EQUITIES START TO RISE, DOWN ABOUT

1% ON THE DAY PUT CLOSING OUT THE DAY RELATIVELY UNCHANGED. A LITTLE BIT OF STRONGER ACTIVITY WHEN YOU GET TO CERTAIN POCKETS OF THE MARKET AND MAYBE THAT GIVES A SENSE HERE, THAT MAYBE PEOPLE ARE NOT TOO WORRIED ABOUT WHAT IS GOING ON RIGHT NOW WITH THE FISCAL DEFICIT IN THE BUDGET, THEY'RE CONTENT WITH THE STATUS QUO. SCARLET: THESE ARE LONG-TERM STRUCTURAL ISSUES WE ARE PRICING IN FOR A WHILE. LET'S TAKE A LOOK AT INDIVIDUAL MOVERS AND WE START WITH FIRST SOLAR. THIS IS THE CASE FOR MOST OF THE SOLAR COMPANIES. DOWN AFTER A CONSERVATIVE

REPUBLICAN LAWMAKERS SAID THAT CONGRESS LEADERSHIP AGREED TO END CLEAN ENERGY TAX CREDITS EARLIER THAN PLANNED AS PART OF THE COMPROMISE TO MOVE THE BIG BEAUTIFUL TAX BILL ALONG. WE HAVE SEEN SOLAR COMPANIES DECLINE. UNITED HEALTH CARE, UP 8%. THAT IS FOLLOWING AN EIGHT DAY STRETCH IN WHICH THEY LOST A 30 THIRD OF ITS MARKET VALUE. BOTH BUYING SHARES AND THEY WANT TO SIGNAL CONFIDENCE IN THE COMPANY ON CONCERNS OVER AN INVESTIGATION OVER A MEDICARE FRAUD, ACCORDING TO THE WALL STREET JOURNAL. OUR TOP STORY, SOMETHING THAT -- WHICH IS MOODY'S. DOWNGRADING ITS VIEW OF BORROWERS AND

THIS APPLIES TO THE GOVERNMENT AND THE NATION'S BIGGEST BANKS. ON FRIDAY, MOODY'S DOWNGRADED THE U.S. GOVERNMENT'S CREDIT SCORE TO AA1. JOINING FISH AND S&P AND STRIPPING UNCLE SAM OF ITS TOP RATING. AT BLAME, SUCCESS PRESIDENTIAL ADMINISTRATIONS AND CONGRESS FOR SLOWING THE DEBT BURDEN. WE SAW MOODY'S CUT B OF A AND JP MORGAN CHASING THE FEDERAL GOVERNMENT HAS LESS ABILITY TO SUPPORT THESE FIRMS. ROMAINE: IT IS KIND OF INTERESTING TO SEE THE REACTION IN THAT MARKET. THE DOLLAR SLIDING AFTER THAT DOWNGRADE. JP MORGAN ARE WEIGHING IN ON THE CURRENCY'S OUTLOOK AND A NEWLY RELEASED REPORT THAT

WAS WRITTEN BEFORE THE DOWNGRADE. SAYING "THE U.S. DOLLAR STATUS AS THE WORLD'S RESERVE CURRENCY WON'T SUDDENLY VANISH. BUT THERE IS ELEVATED RISK OF AN ERA OF DOLLAR DECLINE." GRACE PETERS AND STEPHEN PARKER ARE CO-HEADS OF GLOBAL INVESTMENT STRATEGY AT J.P. MORGAN INVESTMENT BANK. GREAT TO SEE BOTH OF YOU. I'M SORRY I DID NOT WEAR MY BOWTIE TODAY. THANKS FOR DOING THAT. I DO WANT TO START OFF WITH YOUR CALL ON THE DOLLAR. BECAUSE I THINK WE HAVE SEEN THE DOLLAR WEAKNESS OVER THE LAST FEW MONTHS. AND EVERYONE HAS BEEN TALKING ABOUT THIS IDEA, IS THIS

THE END OF KING DOLLAR , THE END OF AMERICAN EXCEPTIONALISM? BY NO MEANS, IS ITS DOMINANCE GOING AWAY. >> THAT IS CORRECT OR THE DOLLAR STORY HAS BEEN THE HEADLINE ALONG WITH TARIFFS THIS YEAR. AND I THINK MOST INVESTORS ACKNOWLEDGE THE FACT THAT THE DOLLAR MAY HAVE BEEN OVERVALUED, BUT THE PREMIUM GROWTH YOU WERE GETTING IN THE U.S. THE POLICY CERTAINTY IN THE U.S. KEPT FOREIGN INVESTORS COMING FROM OR DOLLARS. THAT QUESTION FROM A POLICY PERSPECTIVE IS A NARROWING OF THAT PREMIUM, NOT THE END OF U.S. EXCEPTIONALISM, BUT CAUSING INVESTORS GLOBALLY TO REASSESS AND QUESTION

THE FACT OF WHETHER THEY SHOULD BE REALLOCATING TO NON-DOLLAR ASSETS. ROMAINE: I POSE THIS QUESTION TO YOU, GRACE, BECAUSE A BIG PART OF THE STORY HAS BEEN A CONSIDERATION OF RELOCATION GEOGRAPHICALLY, THE IDEA ON A RELATIVE BASIS MAY BE EUROPE OFFERS BETTER POTENTIAL RETURNS ACROSS THE VARIETY OF ASSET CLASSES. WHEN YOU SAW STARTED TO SEE SOME OF THOSE FLOWS INTO THOSE ASSETS, IS THAT A SIGNAL THAT PEOPLE WERE ABANDONING THE U.S. OR A NATURAL CYCLE WE WERE MAKING TOO MUCH OF? GRACE: WE ARE NOT ABANDONING THE U.S.. THE DOLLAR HAS BEEN OVERVALUED FOR A WHILE,

PLUS THE CONCENTRATION RISKS IN THE U.S. MARKET HAVE BEEN GOING FOR A WHILE. BUT WE'VE NOT HAD A CATALYST TO UNLOCK SOME OF THAT VALUE. AND I THINK TO ME, THE FLIP FLOPPING WE HAVE SEEN OF U.S. POLICY SO FAR THIS YEAR, PLUS ACTUALLY THE RESPONSE WE HAVE SEEN IN EUROPE WITH A TO MENACE AMOUNT OF SPENDING ANNOUNCED BY THE GERMAN GOVERNMENT, 12% OF GDP IS A HUGE NUMBER AND THAT IS ENOUGH TO MOVE THE NEEDLE ON EUROPEAN GROWTH AND EUROPEAN EARNINGS. THE CONFIDENCE OF THOSE FACTORS -- THIS CONFLUENCE OF FACTORS AT A TIME WHEN

VALUATIONS IN EUROPE ARE CHEAP. THE DEGREE OF FLOWS LOOKING TO BE REPATRIATED, TOGETHER PAINTS A COMPELLING PICTURE. FOR OUR CLIENTS ARE SAYING, I AM VERY OVERWEIGHT ON DOLLARS. WHAT CAN I DO? THE NUMBER ONE, BY EUROPEAN EQUITIES AND NUMBER TWO BUY GOLD. THAT IS WHERE YOU'VE SEEN SOME OF THESE FLOWS GOING. SCARLET: ARE WE SPENDING MORE AS A DIRECT RESULT OF THE CHANGING GEOPOLITICAL CONDITIONS? HOW RELIABLE IS ANY MOVE THAT ANY GOVERNMENT MAKES RIGHT NOW BECAUSE ALL OF IT IS IN RESPONSE, I DO NOT WANT TO SAY KNEE-JERK REACTION BUT IT IS DEPENDENT ON SOMEONE

ELSE MAKING THE FIRST MOVE. GRACE: I THINK THAT IT IS MORE ENDURING SHIFT TAKING PLACE IN YOUR. THERE HAS BEEN A REAL REALIZATION AND EUROPEAN POLICYMAKERS EFFORT TOO LONG THEY HAVE OVERREGULATED THEIR OWN COMPANIES AND UNDER REGULATED NATIONAL SECURED RISKS. SO I THINK THIS IS THE START OF MANY MEASURES. WE MENTIONED THE GERMAN FISCAL SPENT, MOST OF WHICH WILL GO TOWARDS INFRASTRUCTURE AND DEFENSE. YOU HAVE THE NATO SUMMIT AT THE END OF JUNE. YOU WILL SEE MORE ANNOUNCEMENTS, AS YOU DID LAST WEEK. MORE SPENDING ON DEFENSE. SO I DO THINK THIS IS A DURABLE SHIFT.

IT HAS 50 BASIS POINTS TO MAYBE 1% TO GROWTH TO THE EUROZONE WHEN WE LOOK NEXT YEAR, IT WILL TAKE -- WE THINK WHEN IT COMES TO EARNINGS, THIS WILL MEAN MORE EARNINGS FOR INDUSTRIALS AND FINANCIALS. SCARLET: 50 BASIS POINTS IS PRETTY SIGNIFICANT FOR EUROPE. LET ME COME BACK TO YOU AND ASK YOU ABOUT THE CURRENCY SITUATION. WE TALK ABOUT CURRENCY DIVERSIFICATION WITH THIS DOLLAR WEAKNESS. WHEN WOULD WE KNOW, AT WHAT POINT, WE ARE SEEING THE U.S. DOLLAR BEING REPLACED AS A RESERVE CURRENCY? IS IT GOING TO BE SOMETHING GRADUAL AND THEN SOMETHING SUDDENLY WILL

SHOW UP? >> I DON'T THINK THAT TODAY WHEN YOU LOOK AT THE OTHER OPTIONS AROUND THE WORLD THERE IS A SINGLE OPTION THAT CAN REPLACE THE DOLLAR FOR THE DOLLAR IS STILL INVOLVED IN 90% OF FX TRANSACTIONS AROUND THE WORLD. AND THAT IS NOT GOING TO CHANGE ANYTIME SOON. WHAT WE WILL SEE IS SOMETHING THAT CENTRAL BANKS HAVE BEEN DOING, WHICH IS GRADUAL DIVERSIFICATION TO OTHER KEY CURRENCIES AROUND THE WORLD. AND THAT'S GRACE SAID, INVESTORS ARE LOOKING TO SOURCES LIKE GOLD TO ADD DIVERSIFICATION. ROMAINE: IT IS INTERESTING. WE TALK ABOUT WE HAVE RIGHT NOW IN

THE UNITED STATES SOME EFFORTS TO TRY TO ADDRESS ECONOMIC CONDITIONS. YOU HAVE A TAX BILL MOVING THROUGH CONGRESS THAT OSTENSIBLY IS SUPPOSED TO BE ABOUT FISCAL STIMULUS. IN A TAXABLE PART OF THE REASON WHY MOODY'S MADE THE DECISION OVER THE WEEKEND TO DOWNGRADE THE U.S. CREDIT RATING. I AM CURIOUS. AS TO HOW THE FISCAL MEASURES OR LACK THEREOF FACTOR INTO INVESTMENT ALLOCATIONS. I KNOW THEY ARE OURS -- THESE ARE LONG TERM, WE HAVE BEEN TALKING ABOUT OUR DEFICIT AND THE U.S. FOR AS LONG AS I'VE BEEN ALIVE. WHY DOES IT BECOME A RELOCATION THAT YOU

HAVE TO CONSIDER? GRACE: OUR MAIN THEME FOR 2025 HAS BEEN STRENGTHENING PORTFOLIOS, WHICH IS INTENDING TO REALLY MAKE ACTIONABLE INVESTMENT RECOMMENDATIONS AROUND THE FACT THAT THE TAIL RISKS ARE LARGE. THESE ARE KNOWN UNKNOWNS, THE DEFICIT, THE STEEPENING OF THE CURVE, THEY ARE THINGS THAT INVESTORS CAN DO TO INTENTIONALLY DIVERSIFY TO PROTECT THEIR PORTFOLIO AGAINST THESE RISKS. INFRASTRUCTURE. WE THINK IS A GREAT INVESTMENT WHEN YOU'RE THINKING ABOUT POTENTIALLY A HIGHER INFLATION WORLD WHICH COULD COME FROM DEFICIT CONCERNS BUT ALSO FROM OTHER ISSUES, THE REORIENTATION OF SUPPLY CHAINS AND THE AGING DEMOGRAPHIC AND IMMIGRATION CHANGES. GOLD, WE'VE

MENTIONED, ASSETS THAT MONETIZE VOLATILITY. WE THINK MARKETS WILL MAKE NEW HIGHS OVER THE NEXT 12 MONTHS BUT WITH THE FIRM OUT OF VOLATILITY. IT WOULD BE HEDGE FUNDS, PARTICULAR MACRO AND RELATIVE VALUE PAID WHEN YOU START PUTTING THESE PIECES TOGETHER, TO COMPLEMENT A CLASSIC STOCK BOND PORTFOLIO, WE THINK THE TIME IS NOW TO START THINKING ABOUT THESE LONGER-TERM RISKS. SCARLET: WHEN YOU LOOK AT A CENTER -- A SECTOR LIKE TECH WHICH IS MASSIVE SPECIFICALLY WHEN IT COMES TO A.I., SHOULD YOU LOOK AT THAT IS HIS OWN ASSET CLASS? >> THE INTERESTING THING IS COMING INTO

THIS YEAR, OWNER OF THE REASONS WHY THE U.S. HAD OUTPERFORMED SO LONG WAS BECAUSE OF THIS CONCENTRATION IN THE TECH SECTOR WITH A.I. BEING THE MOST RECENT DRIVER. THE DEEPSEEK NEWS, WHICH IF YOU REMEMBER, WAS THE FIRST THING THAT SHOCKED MARKETS EARLY IN THE YEAR BEFORE TARIFFS, CAUSE INVESTORS TO QUESTION WHETHER THIS WAS A SOLELY U.S. STORY. I THINK THE TREND THAT WE ARE SEEING, WHICH IS CHEAPER AND FASTER TO MARKET A.I. WHICH IS WHAT DEEPSEEK BROUGHT US, IS A SHIFT IN TERMS OF THE ULTIMATE BENEFICIARIES OF A.I. WHAT WAS ONCE A CONCENTRATED STORY AROUND

THE HYPERSCALERS, THE HARDWARE NAMES, WE THINK THE NEXT REGIME IS GOING TO BE ABOUT THAT STORY BROADENING AND THE BENEFITS OCCURRING TO A MUCH WIDER AUDIENCE. WHICH IS WHY WE LIKE SOFTWARE SPECIFICALLY, BECAUSE AS YOU TRANSITION FROM THE HARDWARE BUILD OUT OTO THE APPLICATIONS A.I. WILL ENABLE, SOFTWARE AND THE PUBLIC AND PRIVATE SPACE -- ROMAINE: I'M CURIOUS ON A.I. INVESTMENT, THERE HAS BEEN A LOT OF TALK ABOUT TRYING TO FIND SYRIA THE A.I. -- THE IDEA THAT THE USERS OF A.I., IN TERMS OF PRODUCTIVITY, >> A.I. WILL ULTIMATELY IMPACT EVERY SECTOR OF MARKET. CHINA A.I.

WOULD BE ANOTHER STORY THAT WE WOULD TAP INTO IS PART OF THE GLOBAL DIVERSIFICATION PIECE. BUT THIS IS WHY YOU THINK THE ENVIRONMENT IS STRONG FOR ALPHA. BECAUSE AS THE WINNERS AND LOSERS COME THROUGH, THEY BENEFIT. SCARLET: THANK YOU BOTH SO MUCH FOR COMING IN. COMING UP WE HAVE THE TOP THREE WHERE WE FOCUS IN ON THE TOP THREE MOVERS AND SHAKERS AT THE CENTER OF THE DAY'S BIGGEST STORIES AND WE FEATURE TWO TRUMP ADMINISTRATION OFFICIALS. THAT IS NEXT. THIS IS "THE CLOSE" ON BLOOMBERG. SCARLET: IT IS TIME NOW FOR THE TOP THREE, WHERE WE

NAME DROP THE PEOPLE DRIVING THE MOST TALKED ABOUT STORIES AND FIRST UP IS HOWARD LUTNICK, THE U.S., SECRETARY TO VESTING'S OWNERSHIP OF HIS WALL STREET BUSINESSES INCLUDING CANTOR FITZGERALD TO HIS CHILDREN AND INVESTORS LED BY 26 NORTH AND CASHING OUT AND GAINING HUNDREDS OF MILLIONS OF DOLLARS FOR ROMAINE: THIS IS LONG EXPECTED AFTER HE HAD AGREED TO TAKE THE WHITE HOUSE JOB. THERE WAS A LOT OF SPECULATION THAT THIS WAS ACTUALLY IN THE WORKS. THE GREATEST THING ABOUT THIS STORY IS THE PHOTOS OF HIS CHILDREN AND THE LIFE'S THEY HAVE BEEN LIVING. TWO VERY YOUNG

GUYS WHO NOW, I GUESS TO A CERTAIN EXTENT, THEY ARE NOT RESPONSIBLE FOR ANYTHING BUT MAYBE? SO, YOU KNOW, MAYBE THIS IS POTENTIALLY THE FUTURE OF THIS FIRM. IT'LL BE INTERESTING TO SEE. SCARLET: ABSOLUTELY. LET'S NOT FORGET THE DETAILS TO INCLUDE NOT HAVING TO PAY CAPITAL GAINS TAXES BECAUSE HE IS SERVING THE PUBLIC. HE JUST HAS TO PUT HIS PROCEEDS IN TREASURIES OR BROAD FUNDS. ROMAINE: AND CHOOSING TO SEE 26 NORTH A PART OF THIS, THE FIRM FOUNDED BY JOSH HARRIS. NOW THE OWNER OF THE COMMANDERS. YOU ARE FOOTBALL PERSON. PAUL ATKINS. THE SEC CHAIR

IS ASKING STAFF TO CONSIDER REVISING 23-YEAR-OLD RULES FOR PRIVATE FUNDS. IF YOU WANT TO GET INTO PRIVATE CAPITAL FUND, $25,000 MINIMUM INVESTMENT, HE WAS TO LOWER THAT, IT SOUNDS LIKE TO NEXT TO NOTHING. THIS HAS BEEN OF COURSE ALSO SOMETHING THAT HAS BEEN TALKED ABOUT A LOT AND WE KNOW THAT A LOT OF THESE PRIVATE EQUITY FIRMS HAVE OTHER AVENUES TO FIND SLIGHTLY LESS WEALTHY INVESTORS AND GET THEM IN THE DOOR BUT FOR CLOSED END FUNDS, THEY DID NOT HAVE THAT OPTION. SCARLET: THIS IS ABOUT THE DEMOCRATIZATION OF THE PRIVATE AS AN INDUSTRY, MORE ACCESSIBLE

TO EVERYONE AND IN MARCH A APOLLO AND SAY STREET LAUNCHED A PRIVATE ETF'. AS FOR NUMBER THREE ON THE DOCKET, WENDY MCMAHON, THE CEO OF CBS NEWS RESIGNING UNDER PRESSURE AFTER PARAMOUNT RAISED CONCERNS ABOUT THE FAIRNESS OF ITS REPORTING AND THIS CAME AFTER PARAMOUNTB BOARD MET SUNDAY OVER ISSUES REGARDING ALICIA. PEARMAN IS TRYING TO COMPLETE ITS MERGER WITH SKY DANCE. ROMAINE: INTERESTING TO SEE HER BEING, SOME REPORTS HAVE SAID THAT BASICALLY FORCED OUT, SHE DID NOT WANT TO GO ALONG WITH THIS AND I GUESS THEY WILL FIND SOMEONE TO PUT IN WHO WILL. WHEN WE

COME BACK WE GO BACK TO THE MARKETS AND TAKE A LOOK AT THIS DAY IN HISTORY. A DAY WHEN MICHAEL MURRAY BEGAN TO BUILD HIS BIG SHORT. COMING UP AFTER THE BREAK RIGHT HERE ON BLOOMBERG. ROMAINE: LET'S TAKE A LOOK BACK AT THIS DATE IN HISTORY WITH ONE OF THE GREATEST TRADES EVER MADE , WHICH BEGAN ON MAY 19, 2000 FIVE, WHEN A 33-YEAR-OLD FUND MANAGER CLOSED ON A DEAL FOR THE FIRST EVER CREDIT DEFAULT SUBPRIME MORTGAGE BONDS. IT WAS AN IMPROBABLE DEAL VALUED AT $60 MILLION. THAT IS A PALTRY AMOUNT FOR ANY WALL STREET

TIGHTEN, BUT A FORTUNE FOR AN IMPROBABLE SPECULATOR WORKING FROM A HOME OFFICE 2000 MILES AWAY IN CALIFORNIA. HIS STORY IS LEGEND. AND DOES NOT NEED TO BE COMPLETELY RETOLD HERE. A MEDICAL RESIDENT WHO IN HIS SPARE TIME DELVED INTO MARKET RESEARCH AND PARTLY FUNDAMENTAL ANALYSIS INTO FUNDRAISING MILLIONS OF DOLLARS TO INVEST IN SOMETHING THAT HAD NEVER BEEN INVESTED IN BEFORE. HE BOUGHT CDS CONTRACTS ON $10 MILLION EACH ON SIX DIFFERENT SECURITIES OF SUBPRIME MORTGAGE DEBT. THE CONTRACTS WHEN HELD TO MATURITY EFFECTIVELY ACT AS AN INSURANCE POLICY. A PREMIUM TO THE BANK IN EXCHANGE FOR A

CONTRACT THAT COMPENSATES IF THE VALUE OF THE UNDERLYING SECURITIES FALLS BELOW A CERTAIN THRESHOLD. HE TOOK A STEP FURTHER, REALIZING HE DID NOT HAVE TO OWN ANY OF THE UNDERLYING MORTGAGES AND YOU CAN TAKE A CONTRACT OUT ANYWAY, A CONTRACT THAT WOULD INCREASE PERIODICALLY IN VALUE IF THE PRICE OF THE UNDERLYING ASSET FELL. JP MORGAN PIONEERED THE VEHICLES A DECADE EARLIER, BUT NO ONE EVER ACTUALLY USED THEM TO SPECULATE INDIVIDUAL SUBPRIME DEBT. EVEN THE BANKS SAW WHAT HE WAS DOING WAS OUTLANDISH. WHAT THEY DID NOT REALIZE WAS HE HAD SNIFFED OUT A MAJOR FAULT LINE

IN THE MORTGAGE MARKET. BY AUGUST OF 2005, HE WAS SITTING ON $750 MILLION OF SWAPS. BY DECEMBER, IT BECAME CLEAR IN THE BANKS WERE ON THE WRONG SIDE OF THAT TRADE AS MORE SUBPRIME MORTGAGE DELINQUENCIES BEGAN TO SWELL. ALL TOLD, HIS FUND IS SAID TO HAVE MADE AROUND $800 MILLION IN PROFITS FROM THE BIG SHORT. WHILE NO MEANS THE GREATEST TRADES EVER, IT WAS ONE OF THE MOST NOVEL EVER EXECUTED AT THAT SCALE. SCARLET: I KINDA FORGOT WHAT HE LOOKED LIKE BECAUSE WHEN I HEAR HIS NAME, I THINK OF CHRISTIAN BALE FROM "THE BIG SHORT."

WE ARE TALKING ABOUT CARRIER. IT IS TARGETING 6% 8% ORGANIC SALES GROWTH IN THE MEDIUM-TERM. JOINING US NOW IS THE CHAIRMAN AND CEO OF CARRIER, WHICH IS A WORLD LEADER IN THE HEATING, AIR-CONDITIONING, AND REFRIGERATION SOLUTIONS. GREAT TO SEE YOU HERE. DAVID: GREAT TO SEE YOU. THANK YOU FOR HAVING ME. SCARLET: TALK TO US ABOUT WHAT IS NEW IN YOUR INVESTOR DAY. IT LOOKS LIKE A LOT OF THE GOALS ARE SIMILAR. WHAT IS DIFFERENT THIS TIME AROUND IN 2025? DAVID: WHAT WE SAID IS WE DID EVERYTHING WE SAID WE WERE GOING TO DO IN 2022.

MARGIN EXPANSION, 50 TO 100. WE SAID WE WOULD GROW EPS. WE DID 15% A YEAR. WE DID CASH FLOW EQUAL TO THE INCOME. WE SAID WE WOULD GROW SALES 6% TO 8% PER YEAR. THE LAST FEW YEARS, WE HAVE GROWN 4%. WE HAD FOUR HOURS THIS MORNING AT THE NYSE. HOW DO WE GET TO 6% TO 8% GROWTH? WE INTRODUCED THE MARKET ALGORITHM. BE CONSERVATIVE. WE HAD A THREE-PRONGED STRATEGY TO GROWTH. ONE IS OUTGROWING THE MARKET THROUGH PRODUCTS SO SHARE GAINS. THE SECOND WAS AFTERMARKET WHERE WE SAID AFTER MARKET WOULD GROW DOUBLE DIGITS FOREVER FOR

US. THE THIRD IS KIND OF A NEW FRONTIER, SYSTEMS OFFERINGS. THAT COMBINATION GETS US TO 6% TO 8% PER YEAR. SCARLET: SOUNDS LIKE THERE ARE TAILWINDS IN YOUR INDUSTRY. WALK US THROUGH WHICH OF IT IS STRUCTURAL AND WHICH OF IT IS CYCLICAL. DAVID: THERE ARE UNIQUE TAILWINDS RIGHT NOW AROUND DATA CENTERS. IF YOU THINK ABOUT A TYPICAL COMMERCIAL OFFICE BUILDING, THEY HAVE THREE CHILLERS. A DATA CENTER MAY HAVE 150. THE MASSIVE INVESTMENT WE ARE SEEING IN DATA CENTERS PLACE TO OUR STRENGTHS. WE ARE IN A BRAND-NEW OFFERING CALLED QUANTUM LEAP WHICH IS A COMMISSION OF

TRADITIONAL COOLING BUT ALSO A NEW LIQUID COOLING WHICH IS A DIRECT TO CHIP COOLING. OUR COMBINATION IS UNIQUE BECAUSE WE ARE THE ONLY ONES IN THE INDUSTRY INTEGRATING TRADITIONAL COOLING, LIQUID COOLING, AN ENTIRE BUILDING MANAGEMENT SYSTEM SERVER MANAGEMENT, ALL INTO ONE OFFERING. ROMAINE: WHAT HAS BEEN THE DEMAND? WE TALKED A LOT ON THIS PROGRAM ABOUT THE BUILDOUT OF DATA CENTERS AND SUCH BUT THERE HAVE BEEN PROVINCES TO BUILD THINGS, AND I DON'T THE BUILDING HAS NOT STARTED FOR SOME OF THAT, SO WHAT HAS BEEN THE UPTAKE, AND DO YOU EXPECT IT TO INCREASE? DAVID: WE

DO. LAST YEAR, WE WERE 500 MILLION DOLLARS IN BUILDING SALES, NOW $1 BILLION. THE HYPERSCALERS ARE GROWING AT DIFFERENT PLACES RIGHT NOW BUT VERY STRONG DEMAND, AND WE ARE SEEING INCREASED DEMAND FOR THE CALL LOCATORS ESPECIALLY IN EUROPE AND CHINA. ROMAINE: ARE YOU INVOLVED AT ALL IN SOME OF THE ADMINISTRATION'S PUSH TO HELP BUILD DATA CENTER PROJECTS IN THE MIDDLE EAST AND ELSEWHERE OUTSIDE OF THE U.S.? DAVID: 100%. WE ARE VERY MUCH WORKING ON NEW WINS IN THE UAE. WE HAVE A LOT GOING ON IN SAUDI ARABIA SO WE SEE THE MIDDLE EAST AS A

GROWTH FACTOR FOR US. SCARLET: YOU ALSO HAVE A LOT GOING ON IN THE U.S. BECAUSE THE PAST FIVE YEARS YOU HAVE GROWN AND WORKED ON EXPANDING YOUR U.S. WORKFORCE BY APPROXIMATELY 20%. HOW MUCH OF THIS IS IN RESPONSE TO THE CHANGING POLITICAL WINDS? HOW MUCH OF THIS WAS A STRATEGIC ADVANTAGE FOR YOU SPECIFICALLY? DAVID: A STRATEGIC ADVANTAGE FOR YOU TO WE LIKE TO BE WHERE OUR CUSTOMERS ARE. IF YOU PERCENT OF OUR SALES ARE IN THE U.S. WE HAVE GROWN -- 50% OF OUR SALES ARE IN THE U.S. WE ARE BY FAR THE BIGGEST HEADQUARTERED

IN THE U.S. IN OUR INDUSTRY. WHAT WE ANNOUNCED LAST WEEK WAS AN INCREMENTAL BILLION-DOLLAR INVESTMENT IN THE UNITED STATES OVER THE NEXT FIVE YEARS, WHICH WILL CREATE 4000 ADDITIONAL JOBS. THESE ARE VERY TECHNICAL JOBS. IT IS A COMBINATION OF R&D. YOU CAN THINK MECHANICAL, TRADITIONAL SOFTWARE, AND ENGINEERING, TECHNICIANS AROUND THE FIELD. WE ALSO ANNOUNCED WE WILL ESTABLISH A MANUFACTURING FACTORY IN THE U.S. WE ARE IN NORTH CAROLINA, GEORGIA, TENNESSEE. WE WILL NOW BUILD A NEW FACTORY. WE ARE LOOKING AT A LOCATION LIKE TEXAS BUT HAVE NOT FINALIZED THE CHOICE YET. ROMAINE: WHAT REQUIREMENTS AND TAX

COLLECTION F -- AND TECHNICAL EXPERTISE DO YOU NEED FOR THE JOBS? DAVID: WE ARE LOOKING FOR SOME SUPPORT ON SOME OF THE TECHNICAL TRAINING, BUT WE WILL TRAIN ABOUT 100,000 TECHNICIANS A YEAR, SO WE KNOW HOW TO TRAIN AND INTEGRATE THEM WHETHER THEY ARE TECHNICIANS OR HIGHLY SKILLED MANUFACTURING LABOR AS WELL. SCARLET: SO WHEN IT COMES TO WHAT WE ARE SEEING IN THE HIGHER EDUCATION LANDSCAPE, THIS IDEA THE GOVERNMENT WILL REDUCE FUNDING TO UNIVERSITIES, HOW DOES THAT IMPACT A COMPANY LIKE YOU WHO IS LOOKING TO INCREASE YOUR FOOTPRINT IN THE U.S., HIRE MORE? IS THERE

A DIRECT CAUSE AND EFFECT FOR A COMPANY LIKE CARRIER? DAVID: WE SEE IT AS A VERY COMPETITIVE LABOR ENVIRONMENT FOR THE KIND OF SKILLS WE ARE LOOKING FOR RIGHT NOW. WHEN WE LOOK AT TECHNICIANS, WE HAVE SAID WE WILL ADD 1000 TECHNICIANS IN THE UNITED STATES OVER FIVE YEARS. WE TRY TO PARTNER WITH TECHNICAL SCHOOLS IN PARTICULAR. THAT PARTNERSHIP HAS BEEN VERY STRONG, BUT WHAT WE ALSO HAVE TO DO IS ESTABLISH TRAINING UNIVERSITIES WITHIN OUR FOUR WALLS WITHIN CARRIER, SO WE HAVE SEEN GREAT SUCCESS, ESPECIALLY RECENTLY, OVER BOTH MANUFACTURING R&D AND TECHNICAL LABOR HIRING. SCARLET:

THOSE AMERICAN COMPANIES THAT ARE STRUGGLING TO BRING BACK JOBS, BRING MANUFACTURING JOBS TO THE U.S., HOW WOULD YOU ADVISE THEM? WHAT WOULD YOU SAY TO THEM TO RETHINK WHAT THEY ARE ABLE TO DO? DAVID: IT IS COMPETITIVE. FOR EXAMPLE, WE HAVE A MANUFACTURING SITE JUST OUTSIDE OF MEMPHIS IN TENNESSEE, AND WE DO COMPETE. WE COMPETE WITH AMAZON. WE COMPETE WITH FEDEX FOR LABOR. OUR GOAL IS TO CREATE AN ENVIRONMENT WHERE PEOPLE WANT TO COME AND WANT TO STAY. PEOPLE ONE UPWARD MOBILITY. PEOPLE WANT TO FEEL LIKE THEY HAVE A LOT OF UPSIDE ON THE COMPENSATION

SIDE. THEY WANT TO BE PART OF A COMPANY THAT MATTERS. ONE OF THE THINGS WE HAVE IN OUR PURPOSE STATEMENT IS ENHANCING THE LIVES WE LIVE IN THE WORLD WE SHARE. WHAT WE DO MATTERS. OUR INDUSTRY CONTRIBUTES TO CLIMATE CHANGE, SO WE CAN BE PART OF THE SOLUTION. THAT MATTERS TO PEOPLE THAT WE CAN CREATE A SAFER PLANET FOR GENERATIONS TO COME. THERE ARE 3.5 BILLION PEOPLE IN THE WORLD THAT LIVE IN THE HOTTEST PART OF THE WORLD. ONLY 10% OF THOSE FOLKS HAVE AIR CONDITIONING. SO WE HAVE AN ABILITY TO IMPACT PEOPLE'S LIVES ALL

OVER THE WORLD. PEOPLE WANT TO COME TO A COMPANY AND FEEL LIKE THEY ARE PART OF SOMETHING THAT REALLY MATTERS. WE HAVE INVESTED IN OUR CULTURE, PEOPLE, WORKFORCE, AND THAT HAS BEEN PAYING OFF FOR US. ROMAINE: IS THE GROWTH YOU ARE LOOKING TO DO RIGHT NOW, IS THAT PRIMARILY ORGANIC OR THROUGH ACQUISITIONS? DAVID: PRIMARILY ORGANIC. WE ARE COMING OFF THE HEELS OF AN ACQUISITION WITH THE GERMAN ACQUISITION WE DID. THAT HAS DONE PHENOMENALLY WELL. THE LAST YEAR, THE SALES WERE A LITTLE BIT LOWER THAN ANTICIPATED BUT IT IS A TRULY WORLD-CLASS COMPANY THAT WILL CREATE

VALUE FOR YEARS TO COME. RIGHT NOW, OUR WHOLE THING THIS MORNING WAS ON ORGANIC GROWTH, THAT 6% TO 8%, WITH A CLEAR STRATEGY TO DRIVE IT AND A LOT OF CONFIDENCE IN THE TEAM TO DO IT. AND A VERY DIFFERENT PORTFOLIO THAN WE HAD FIVE YEARS AGO. ROMAINE: REALLY APPRECIATE YOU COMING HERE. WHAT IS TOUGHER, FACING INVESTORS FOR FOUR HOURS OR FACING SCARLET? DAVID: FACING SCARLET AND YOU GET THANK YOU FOR HAVING ME -- YOU. THANK YOU FOR HAVING ME. SCARLET: SHARES OF CARRIER CLOSED UP ON THE DAY. IF YOU LOOK AT THE BROADER MARKET

OVERALL, IT MAKES TODAY WITH THE S&P 500. IT WAS NEGATIVE, NOW POSITIVE BUT BARELY AT THIS POINT, UP 0.1%. YOU HAD THE DOLLAR CONSISTENTLY LOWER THROUGHOUT THE DAY. ROMAINE: GOLD HAS BEEN CONSISTENTLY HIGHER AS WELL. DEFINITELY NOT AS SANGUINE AS YOU SAW IN THE TREASURY AND EQUITY SPACE. SCARLET: THE 30 YEAR YIELD POKED ABOVE 5%, BUT AS YOU CAN SEE IT CLOSED AT ABOUT 4.9%. THIS IS "THE CLOSE" ON BLOOMBERG. >> SO MUCH OF OUR ECONOMY IS BASED ON FAITH THAT WE WILL DELIVER ON THE THINGS THAT WE SAY WE PROMISED FOR THE FUTURE. WHEN

YOU START TO SEE MARKETS WAVER A LITTLE BIT, I THINK PEOPLE ARE ASKING THE QUESTION. DO WE STILL HAVE THAT SAME LEVEL OF FAITH? I THINK THE SIGN THAT RATES HAVE STARTED TO COME BACK DOWN AND THE MARKETS ARE SORT OF RETURNING BACK TO A NORMAL STASIS, THEY THINK THERE IS THAT LIGHT MOVING FORWARD. WE WILL JUST HAVE TO SEE WHERE IT GOES. ROMAINE: THE PRESIDENT OF THE ATLANTA FEDERAL RESERVE SITTING DOWN EARLIER TODAY WITH BLOOMBERG'S MICHAEL MCKEE. HE ASKED HIM POINT-BLANK ABOUT THE DOWNGRADE OF THE U.S. CREDIT RATING ON FRIDAY AND YOU HEARD HIS

RESPONSE THERE AND SAW THE REACTION IN THE MARKETS TODAY. WE CONTINUE THAT CONVERSATION WITH AN ANALYSIS OF WHAT IS NEXT. THE CHIEF STRATEGIST OF INTERNATIONAL POLITICAL AFFAIRS AND PUBLIC POLICY FOR ISI JOINS US NOW. I WANT TO FOCUS ON ONE PARTICULAR WORD THAT THE ATLANTA FED PRESIDENT USED. THE IDEA THAT SO MUCH OF OUR CREDIT WORTHINESS IF YOU WILL IS REALLY JUST BASED ON THE GENERAL IDEA THAT PEOPLE BELIEVE THAT NO MATTER WHAT WE WILL MAKE GOOD ON OUR DEBTS. IS THERE ANY SENSE BASED ON WHAT WE LEARNED FROM MOODY'S ON FRIDAY THAT THERE IS

ANY REAL CRACK IN THAT FAITH? >> I THINK WHAT MOODY'S WAS EXPRESSING WAS A CONCERN OF HOW HIGH OUR DEFICITS ARE GETTING AND THAT CONGRESS IS ABOUT TO PASS A TAX CUT OR AT LEAST SEEMS ON TRACK TO PASS A TAX CUT THAT MAKES IT SUBSTANTIALLY WORSE EVEN IN A RELATIVELY GOOD ECONOMY. AS THE CONCERN -- THAT IS THE CONCERN. INVESTORS SEEM TO HAVE FAITH THAT WE WILL FIGURE OUT WAYS TO MEET THESE DEFICITS, BUT IT IS CERTAINLY UNUSUAL TO HAVE PERSISTENT DEFICITS THIS AGAIN IN GOOD ECONOMIC TIMES. THAT HAS TO RAISE A QUESTION FOR

ANY ECONOMY. ROMAINE: ONE QUESTION THAT WAS RAISED WHEN I SAW THIS ON FRIDAY WAS THE IDEA THAT WHETHER THIS WOULD SORT OF BE AMMUNITION FOR THOSE FISCALLY CONSERVATIVE REPUBLICANS WHO HAD BEEN LOOKING FOR YEARS TO ADDRESS THE DEFICIT AND ADDRESS DEBT LEVELS. THEY HAD AN OPPORTUNITY TO DO THAT AND AT LEAST BASED ON WHAT WE KNOW RIGHT NOW, THEY PRETTY MUCH CAVED AND IT LOOKS LIKE THIS TAX BILL IS ON ITS WAY TO BEING PASSED BY THE HOUSE OF REPRESENTATIVES. WHAT IS THE THRESHOLD? WHAT IS THE IMPETUS? WHAT IS THE CATALYST WERE WE WOULD ACTUALLY

SEE CONGRESS PUSHBACK ON THESE TYPES OF SPENDING MEASURES IN THE FACE OF SOME OF THESE GDP AND DEBT RATIO -- DEFICIT RATIOS WE ARE LOOKING AT NOW? SARAH: IT IS A GREAT QUESTION BECAUSE THEY CERTAINLY DID TALK A REALLY BIG GAME, AND THEN IT DOES APPEAR WHEN IT CAME DOWN TO NOT CONTINUING TO REDUCE REVENUE EVEN FURTHER OR CUT SPENDING, JUST NOT A LOT OF APPETITE FOR IT RIGHT NOW. IT DOES SEEM LIKE THEY ARE GOING TO BE WILLING TO SIGN OFF ON ALL THINGS THAT AGAIN AS YOU MENTIONED SUBSTANTIALLY ADD. MY GUESS IS IT

WILL TAKE A LARGER SIGNAL FROM THE MARKET IN THIS -- THAN THIS. WE HAVE SEEN THE BOND MARKET HAVE SOME JITTERS THIS YEAR IN AND AROUND THESE ISSUES. BUT WE REALLY HAVE NOT SEEN KIND OF A REAL ACCIDENT OR A SIGNAL IF YOU WILL THAT IS ENOUGH TO GET WASHINGTON POLICYMAKERS TO CHANGE THEIR PERSPECTIVE AND BE WILLING TO MAKE SOME DIFFICULT CHOICES. SCARLET: WELL, THAT HAS BEEN THE CASE FOR DECADES NOW. YOU SERVED AS DEPUTY U.S. TRADE REPRESENTATIVE FROM 2021 TO 20 24. YOU OVERSAW CRITICAL TRADING RELATIONSHIPS ACROSS ASIA AND AFRICA. HOW OFTEN DID THE

TOPIC OF TREASURIES AND OTHER COUNTRIES BUYING TREASURIES COME UP IN NEGOTIATIONS? IS THAT SOMETHING DISCUSSED DIRECTLY? SARAH: NOT TYPICALLY. NOT TYPICALLY. I THINK WE HAVE BEEN IN AN ENVIABLE POSITION WHERE IT IS JUST A GOOD DEAL FOR COUNTRIES AND A GOOD STEADY PLACE TO PUT RESOURCES, SO YOU DON'T HAVE TO HAVE THE CONVERSATION. BUT WE ARE OBVIOUSLY GETTING TO A POINT WHERE AGAIN WE WILL ADD EVEN SIGNIFICANTLY MORE, AND IT IS NOT BECAUSE OF, YOU KNOW, COVID WHERE THE GOVERNMENT HAD TO LARGELY SHUT THE ECONOMY DOWN. OF COURSE, YOU EXPECT DURING THEN. THESE ARE NORMAL

ECONOMIC TIMES. AND THAT IS WHAT IS MAKING THIS. SCARLET: I AGREE AND AM GLAD YOU BRING THAT UP. AS A PRACTICAL MATTER, DOES THE LOSS OF THE LAST AAA CREDIT RATING ACTUALLY MEAN THAT SOME COUNTRIES OR SOME CENTRAL BANKS WOULD BE LESS INCLINED TO BUY TREASURIES AT ALL, OR AS LONG AS IT IS INVESTMENT GRADE, THE HIGHEST RATING OVERALL WITHIN THAT BAND, IT IS NOT AN ISSUE? SARAH: WELL, IT IS CERTAINLY GOING TO MAKE EVERYBODY LOOK AT THINGS AGAIN. BUT AS YOU MENTIONED, THIS IS THE FIRST WE HAVE SEEN MAKE THIS CHOICE. I DON'T KNOW

IN THAT REGARD THAT IT IS TELLING THESE COUNTRIES ANYTHING THEY ALREADY DID NOT KNOW. BUT IT SHOULD SERVE AS A CAUTIONARY REMINDER TO ALL OF US THAT THIS IS NOT A SUSTAINABLE WAY TO RUN OUR DEBT AND OUR DEFICITS. AT SOME POINT, IT WILL CATCH UP WITH US. I DON'T KNOW IF THIS WILL BE THE MOMENT, BUT WE ARE CERTAINLY IN A MORE PRECARIOUS POSITION. SCARLET: THANK YOU SO MUCH. SAAH IS THE CHIEF -- SARAH IS THE CHIEF STRATEGIST OVER AT EVERCORE ISI. THIS IS YET ANOTHER ADMINISTRATION THAT POINT OUT THESE ARE SUCCESSIVE PRESIDENTIAL AND

MINISTRATIONS THAT HAVE BASICALLY ALLOWED THE DEFICIT, THE DEBT BURDEN TO INCREASE. ROMAINE: THIS IS CONGRESS' JOB. AND I REALLY MAIN THAT. I AM NOT TRYING TO MAKE A POLITICAL STAMEN. IT IS EASY TO SAY TRUMP DID THIS OR BIDEN DID THAT OR OBAMA DID THIS. AT THE END OF THE DAY, THE CONSTITUTION BUT IT CLEAR, AND IT IS CONGRESS. MIKE JOHNSON DID NOT DO IT. PREVIOUS SPEAKER DID NOT DO IT. THE PREVIOUS SPEAKER BEFORE THAT DID NOT DO IT. SCARLET: OR THESE ARE PEOPLE WHO NEED TO GET REELECTED. THAT IS WHAT THEY SAID. ROMAINE: I

AM SURE. WHEN WE COME BACK, WE WILL SET YOU UP FOR WHAT COULD POTENTIALLY BE IN THE MARKET OVER THE NEXT 24 HOURS, AND THAT COULD BE INTERESTING THINGS INCLUDING FROM HOME DEPOT. SCARLET: ALL RIGHT. HOME DEPOT REPORTS EARNINGS TOMORROW, KICKING UP A WEEK OF RETAIL RESULTS. INVESTORS KEEPING AN EYE ON THE EXPOSURE TO TARIFFS AND THE POTENTIAL FOR CONSUMERS PULLING BACK. JOINING US AS A GUEST WHO COVERS THE COMPANY. I THINK A LOT OF THAT WILL BE ENCAPSULATED IN WHAT HOME DEPOT SAYS ABOUT COMPARABLE SALES, SAME-STORE SALES.WHAT THE TREND THERE LIKE? >> SALES ARE

EXCITED TO TURN SLIGHTLY NEGATIVE FOR THE QUARTER. THAT METRIC HAD BEEN IN THERE FOR ABOUT TWO YEARS AND JUST TURNED POSITIVE DURING THE PREVIOUS QUARTER, SO I THINK INVESTORS ARE GOING INTO TOMORROW EXPECTING SOFTER NUMBERS. THE START OF THE YEAR HAS BEEN A BIT SLOWER THAN EXPECTED, AND CONSUMER SENTIMENT IN ADDITION TO HOMEBUILDERS SENTIMENT HAVE REALLY TAKEN A HIT IN RECENT WEEKS FROM UNCERTAINTIES CAUSED BY TARIFFS. ROMAINE: I AM CURIOUS WHEN WE GET THOSE NUMBERS AND MORE IMPORTANTLY SOME OF THE COMMENTARY, ARE WE JUST GOING TO HEAR ABOUT I GUESS THE ECONOMIC CONDITIONS THAT MIGHT

BE WEIGHING ON THE COMPANY? IS THERE ALSO A DIRECT TARIFF IMPACT? JAEWON: YEAH, SO I MEAN HOME DEPOT AND OTHER HOME FOCUSED RETAILERS HAVE BEEN TRYING TO NAVIGATE THROUGH THIS SLOW HOUSING MARKET FOR A FEW YEARS NOW. INTEREST RATES HAVE BEEN REALLY HIGH. THAT HAS PUSHED PEOPLE TO STAY ON THE SIDELINES WHEN IT COMES TO MOVING HOMES OR HOUSING PROJECTS. AND THAT IS STILL THE BACKDROP. AND WHAT THEY ALSO HAVE TO DEAL WITH NOW IS OF COURSE TARIFFS, AND PRICES OF GOODS ARE EXPECTED TO RISE. SOME OF THOSE COSTS WILL FLOW THROUGH TO CONSUMERS. SO

THE BIG QUESTION NOW IS, WHICH ITEMS ARE GOING TO GET MORE EXPENSIVE? BY HOW MUCH? AND TO WHAT EXTENT THAT HURTS DEMAND FOR THE SECTOR THAT HAS ALREADY BEEN UNDER A LOT OF PRESSURE. SCARLET: OF COURSE, THE HOUSING MARKET AS A WHOLE UNDER PRESSURE BECAUSE OF AFFORDABILITY ISSUES. HOW DOES THAT PLAY INTO HOME DEPOT'S RESULTS? WHAT IS THE CORRELATION BETWEEN HOUSING PRICES AND MORTGAGE RATES AND HOME DEPOT SALES? JAEWON: YEAH, SO WITH INTEREST RATES STAYING REALLY HIGH, PEOPLE ARE NOT REALLY AS WILLING TO MOVE HOMES OR TRY OUT PROJECTS THAT TYPICALLY NEED FINANCING. SO THAT

HAS REALLY SLOWED BUSINESS FOR THEM OVER THE LAST TWO YEARS. IT IS NOT JUST HOME DEPOT, LOWE'S. THEY TALK ABOUT THE SAME THING, AND GENERALLY DISCRETIONARY SPENDING HAS BEEN HURT QUITE A BIT. SO WE EXPECT TO HEAR MORE CALL AROUND THAT TOMORROW AS WELL. ROMAINE: JAEWON KANG WILL BE ALL OVER THAT, THE HOME DEPOT EARNINGS IN THE MORNING. COMP SALES EXPECTED TO BE DOWN ON A YEAR-OVER-YEAR BASIS. TOTAL REVENUE WILL BE DROPPING IF YOU BELIEVE ANALYST ESTIMATES FOR A FIFTH STRAIGHT QUARTER. LET'S TAKE A LOOK AT THINGS THAT CAN MOVE THE MARKETS. A BIT OF

A HODGEPODGE HERE. SCARLET: YOU HAVE VIKINGS HOLDINGS, A MANUFACTURER OF SPORTING GOODS AND SPORTING APPAREL, AND THEN PALO ALTO NETWORKS, THE CYBERSECURITY COMPANY, A BIG ONE. THAT SHOULD BE INTERESTING BECAUSE IT WILL SET THE TONE FOR THE OTHERS IN THE INDUSTRY. ROMAINE: WE WILL GET MORE FED SPEAK IF YOU DID NOT GET ENOUGH TODAY. SCARLET: LET'S JUST ADD THAT ONE. ROMAINE: SPEAK EVERY DAY. WHY NOT? ELON MUSK IS SPEAKING AT THE QATAR ECONOMIC FORUM IN DOHA. SCARLET: DID YOU JUST GIVE HIM A TITLE? SIR ELON MUSK? ROMAINE: YES. SCARLET: LEAVE IT AT THAT. ROMAINE: G7

FINANCE MINISTERS AND THE SECRETARY OF STATE MARCO RUBIO SET TO TESTIFY BEFORE THE SENATE FOREIGN RELATIONS COMMITTEE. DID I STUNNED YOU? SCARLET: YOU DID. I AM STILL RECOVERING FROM THAT, SIR ELON MUSK. WOW. ROMAINE: ON BEHALF OF MYSELF AND DAME SCARLET FU, WE THANK YOU FOR JOINING US ON "THE CLOSE." STICK AROUND FOR GOOD BALANCE