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00:00> > EVERYTHING IS EXPENSIVE RIGHT NOW. WE SHOULD EXPECT A RETURNS ACROSS THE BOARD, FROM STOCKS AND BONDS. > > WHEN I LOOK AT THE S & P 490 THERE'S A LOT OF BUSINESSES AND TECH HARDWARE. > > YOU DON'T WANT A SCENARIO WHERE TECH AND TAKE IT SLOWS DOWN. > > WE SAW A GOOD EARNINGS SEASON AND SOME OF THAT HAS BEEN BAKED IN. > > IT FEELS LIKE WE ARE PAYING 2030 PRICES FOR 2025 TECHNOLOGY. > > THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: GOOD MORNING, GOOD MORNING. BLOOMBERG SURVEILLANCE STARTS RIGHT NOW. COMING INTO WEDNESDAY, ONE STOCK DOMINATES. TECH GIANT NVIDIA IS GEARING UP TO REPORT EARNINGS AFTER THE CLOSING BELL AS INVESTORS LOOK TO SHUT OUT THE DRAMA SURROUNDING THE FEDERAL RESERVE. THE WHITE HOUSE MAKING A 50% TARIFF ON IMPORTS FROM INDIA. THE TENSION CONTINUES TO BUILD. ANNMARIE: A LOT OF QUESTIONS THAT REMAIN UNANSWERED. NOT SURE WHERE THE SOLUTION IS GOING WITH THE FED. HOW WILL THAT BE WRAPPED UP IN THE COURTS? TARIFFS ON INDIA? AN ADDITIONAL 25% TARIFF ON IMPORTS FROM INDIA INTO THE UNITED STATES, IS THAT HERE TO STAY OR IS THE ADMINISTRATION STILL IN NEGOTIATING MODE? NVIDIA, THE KEY QUESTION ON THE EARNINGS CALL WILL ALSO BE ABOUT POLICY. HOW HAS POLICY IN WASHINGTON AFFECTED THEIR BUSINESS, ESPECIALLY CRITICALLY WHEN IT COMES TO CHINA? JONATHAN: LET'S START WITH THE FEDERAL RESERVE. IF I WAS WORRIED ABOUT THE TOTAL EROSION OF CENTRAL BANK INDEPENDENCE, THE EMERGENCE OF ABSOLUTE FISCAL DOMINANCE, I WOULD BE LOOKING FOR SERIOUS DOLLAR WEAKNESS. I DIDN'T SEE IT YESTERDAY AND I DON'T SEE IT THIS MORNING. ANNMARIE: BECAUSE AT THE END OF THE DAY THE COURTS WILL RULE ON THIS, SO IT DOESN'T FEEL LIKE THE PRESIDENT HAS ULTIMATE, ABSOLUTE POWER WHEN IT COMES TO THE FED. THAT RELIES IN CONGRESS, IT WILL GO TO THE COURTS. WE ARE HEARING THAT POTENTIALLY AS SOON AS THIS WEEK LISA COOK COULD FILE FOR AN INJUNCTION WHICH MEANS THAT SHE COULD STILL BE WORKING, WHICH MEANS SHE COULD BE AT THE FED MEETING IN SEPTEMBER, AND SHE IS POTENTIALLY ON THE DOVISH SIDE. JONATHAN: IT COULD GET AWKWARD QUICKLY. THE LATEST REPORTING FROM THE TEAM A BLOOMBERG IS THAT THE PRESIDENT IS PUSHING FOR A MAJORITY ON THE BOARD. THERE IS TALK OF MORE SCRUTINY OF REGIONAL FED PRESIDENTS. SOMETHING THAT HAS COME UP IN CONVERSATION A FEW TIMES. LISA: IT'S BASICALLY THE BOARD THAT WILL DECIDE HOW THEY WANT TO REVAMP. THE PRESIDENT YESTERDAY, JONATHAN, I WAS IN A 360 MINUTE CABINET MEETING IN THE PRESIDENT WAS ASKED A FEW TIMES, BY ME AND OTHERS COME ABOUT WHAT IS GOING ON AT THE FEDERAL RESERVE. HE SAID NEXT YEAR WE WILL LIKELY HAVE A MAJORITY. THAT MEANS WHEN IT COMES TO RATES THEY WILL BE COMING DOWN. SOMETHING THE MARKET SHOULD ALSO BE FOCUSED ON, NEXT WEEK, WE REPORTED LAST NIGHT THAT THE SENATE BANKING COMMITTEE IS BACK IN SESSION. THE HEARING FOR STEVE MIRON IS SET TO TAKE PLACE. NOW, THAT WILL BE A LITMUS TEST FOR DEMOCRATS AND EVEN SOME REPUBLICANS ASKING KEY THINGS ABOUT FED INDEPENDENCE. JONATHAN: SEPTEMBER 17 COME A FEW WEEKS AWAY FOR THE FEDERAL RESERVE. FEATURES THIS MORNING ARE POSITIVE BY NOT EVEN .1%. COMING UP THIS HOUR, WE CATCH UP WITH JP MORGAN WITH THE BOND MARKET ON EDGE, WE ARE LOOKING AT THE EARNINGS FROM NVIDIA, AND WE WILL CATCH UP WITH THE FORMER TRUMP TRADE OFFICIAL AS 50% TARIFFS ON INDIA KICK IN. WE BEGIN WITH STOCKS AND BONDS A LITTLE CHANGED AS INVESTORS AWAIT PRESIDENT TRUMP'S PRESSURE ON THE FED. "THIS REMAINS A GOOD ENVIRONMENT FOR OWNING FIXED INCOME. YIELDS ARE STILL HIGH RELATIVE TO THE LAST COUPLE OF DECADES IN THE BAR CUT RATES. IS IT A GOOD ENVIRONMENT OWN TREASURIES? > > IT DOES FEEL THAT WAY. I THINK THAT THE BIG THING THAT HAPPENED OVER THE LAST WEEK WAS JEROME POWELL OPENED THE DOOR FOR THE RATE CUTS IN SEPTEMBER. THERE IS OBVIOUSLY A LOT OF DATA COMING UP, JOBS AND INFLATION BETWEEN NOW AND THEN, BUT IT FEELS AS THOUGH THAT'S THE DIRECTION OF TRAVEL, WITH THE ADMINISTRATION ARE AFTER, THE YIELDS STILL LOOK ELEVATED VERSUS WHERE THEY HAVE BEEN. IT DOES FEEL LIKE WE ARE IN AN ENVIRONMENT WHERE OWNING BONDS MAKES SENSE AND I THINK THERE IS ANY SYMMETRY IN DOING SO. JONATHAN: THERE ARE LIMITS ON HOW FAR OUT THEY WANT TO GO ALONG THE CURVE. DO YOU HAVE LIMITS? IAIN: I THINK YOU HAVE TO HAVE LIMITS AT THE MOMENT, BECAUSE ULTIMATELY YOU'VE GOT THE FEDERAL RESERVE, WHICH IS -- IT DOESN'T LOOK LIKE THEY WILL BE LOWERING RATES. THIS FIGURE OUT OVER THE NEXT COUPLE OF QUARTERS BY HOW MUCH. THAT WILL IMPACT THE INTERMEDIATE PART AND LOWER. YOU HAVE THE LONG END, WHICH IS BEING CONFRONTED BY THE FISCAL SITUATION, BEING CONFRONTED BY QUESTIONS AROUND FED INDEPENDENCE. I DO THINK THAT THE STEEPENER TRADE MAKES SENSE. UNDERSTANDING IT IS A VERY CROWDED POSITION. IT HAS MOVED A LONG WAY OVER THE COURSE OF THIS YEAR, BUT I HAVE MORE CONFIDENCE IN OWNING SHORT OR INTERMEDIATE BONDS RATHER THAN ALONG LONG END, AND THAT'S NOT JUST A U.S. PHENOMENON. IT'S A GLOBAL PHENOMENON AT THE MOMENT. ANNMARIE: ARE YOU SURPRISED ABOUT THE MUTED MARKET REACTION IF INVESTORS ARE REALLY CONCERNED ABOUT FED INDEPENDENCE? IAIN: I THINK I AM, BUT WHEN I TAKE A STEP BACK I THINK THERE IS A BIG QUESTION BETWEEN HAVING, AS PRESIDENT TRUMP SAID, A MAJORITY WITHIN THE FED WHO ARE MAYBE MORE DOVISH BUT THEN REACTING TO THE STAGE OF HOW DOVISH ARE THEY? ULTIMATELY, THE FED IS ON AN EASING TRAJECTORY. IF YOU SEE RATE CUTS THAT COME, MAYBE ONE A QUARTER FOR THE NEXT FEW QUARTERS, I THINK THAT THAT'S OK. THAT IS PROBABLY IN LINE WITH EXPECTATIONS. THE BIGGER CONCERN IS IF IT LOOKS LIKE THEY WOULD TAKE RATES DOWN BY THE 350 BASIS POINTS OR SO THAT HAVE BEEN ASKED FOR PREVIOUSLY. I THINK THAT WOULD BE CONSIDERED OUTSIDE OF WHAT THE MARKET AND ECONOMY NEEDS AT THE MOMENT. I THINK THAT IS WHEN YOU WOULD GET MORE CONCERN AROUND FED INDEPENDENCE. I THINK ALTHOUGH YOU OBVIOUSLY HAVE DOVISH PEOPLE IN BOWMAN AND WALLER ON THE FED AT THE MOMENT, ARE THEY DOVISH TO THAT EXTENT, OR DO THEY THINK THAT SOME MAINTENANCE CUTS ARE NEEDED? I THINK THAT IS WHAT THE MARKET IS HANGING ITSELF ON AT THE MOMENT, AND I AGREE MAY BE EXPECTING A BIT MORE VOLATILITY IN THE DOLLAR, BUT IF IT'S ULTIMATELY THAT TRAJECTORY I THINK THAT'S WHY WE ARE HOLDING UP AT THE MOMENT. JONATHAN: I WANT TO EXTEND THAT THOUGHT. THE NEXT DECISION IN SOME WAYS IS AN EASY ONE BECAUSE MOST PEOPLE ON THE FEDERAL RESERVE BELIEVE WE ARE STILL QUITE RESTRICTIVE. FED FUNDS RELATIVE TO WHAT THEY THINK NEUTRAL IS. I WANT TO UNDERSTAND FROM YOUR PERSPECTIVE WHEN THE DECISION GETS HARDER, WHEN THE CONVERSATION GETS TOUGHER FOR THIS FEDERAL RESERVE? IAIN: I THINK IT WILL GET TOUGHER INTO NEXT YEAR. IF YOU TAKE RATES DOWN BY 50 BASIS, 75 BASIS POINTS, 3.5% RANGE THAT IS OK. THE MARKET IS WILLING TO ABSORB THAT BASED ON WHAT'S HAPPENING WITH THE LABOR MARKET AT THE MOMENT. IF YOU ARE SEEING A STABILIZATION IN THE ECONOMY, MAY A RE-ACCELERATION AT THE SAME TIME WE HAVE INFLATION NORTH OF THE FED'S TARGET, I THINK THAT'S WHEN QUESTIONS WILL BE CALLED AS TO WHETHER THEY NEED TO GO ANY FURTHER. WE AREN'T GOING TO KNOW THAT AND WE ARE ULTIMATELY GOING TO HAVE TO SEE THE DATA. I THINK A LOT OF PEOPLE ARE FORGETTING THAT ALTHOUGH WE'VE BEEN TALKING ABOUT TARIFF SINCE THE BEGINNING OF APRIL, THEY'VE ONLY PROPERLY BEEN IN EFFECT OVER THE LAST COUPLE WEEKS OR SO. SO, I FEEL IT WILL BE VERY DATA DEPENDENT. I FEEL YOU ARE COMPLETELY RIGHT. THE NEXT COUPLE OF MEETINGS IS PROBABLY REASONABLY STRAIGHTFORWARD FROM A FED STANDPOINT INTO NEXT YEAR IT WILL BECOME MORE CHALLENGING. JONATHAN: THE CHAIRMAN IN HIS SPEECH AT JACKSON HOLE ON FRIDAY SUGGESTED THAT WE COULD SEE A ONE-TIME EFFECT BUT NOT ALL AT ONCE. I THINK THAT A LOT OF PEOPLE WALKED AWAY THINKING THAT THE RUNWAY NOW IS A LOT LONGER. THIS COULD PLAY OUT OVER A NUMBER OF QUARTERS. THIS WAS A CHAIRMAN SETTING OF THE FEDERAL RESERVE TO IGNORE HOTTER INFLATION PRINTS. WAS THAT YOUR INTERPRETATION OF WHAT WAS HAPPENING? IAIN: THAT IS EXACTLY THE WAY THAT I THOUGHT HE LAID IT OUT. HE TALKED ABOUT THE BALANCE OF RISKS HAVE NOW MOVED FROM THE ABLATION MARKET, WHICH IS WHAT I THINK THAT I HEARD AT HIS PRESS CONFERENCE IN JULY, TWO THE LABOR MARKET. OBVIOUSLY, THE 258,000 REDUCTION IN JOBS, THE REVISIONS, THAT HAS OBVIOUSLY BEEN A BIG CONCERN. WE WILL BE REALLY EAGLE EYED ON NEXT WEEK'S JOB REPORT. WE SEE A DETERIORATION, SLOW DOWN? DO WE CONTINUE TO SEE BACKWARDS REVISIONS WHICH MEANS THAT THE LABOR MARKET WAS AND EVEN A WORSE PLACE THEN WE ARE THINKING AT THE MOMENT, OR DO WE SEE A RE -STABILIZATION, RE-ACCELERATION? I THINK THAT HE HAS MOVED AWAY FROM THE ACCELERATION PRINTS TO THE LABOR MARKET IN THE NEAR TERM. IF WE GET A HOT PRINT FOR THE NEXT CPI REPORT MAYBE THAT WILL BE ENOUGH, MAYBE IT WILL BE MORE AROUND THE LABOR MARKET FOR THE NEXT COUPLE OF PRINTS FOR SO. ANNMARIE: THE PRESIDENT SAID THE NEXT JOB REPORT WILL BE GOOD. WHAT HAPPENS IF WE GET A STRONG NFP NUMBER? IAIN: THAT IS AN INTERESTING QUESTION. I THINK THAT EVEN WITH 100,000 OR 100 50,000 TO THREE-MONTH RUN RATE IS STILL GOING TO BE TRACKING AT WHAT MOST PEOPLE PERCEIVE TO BE THE NEUTRAL RATE. I THINK ACTUALLY FIGURING OUT THE NEUTRAL RATE GIVEN WHAT'S GOING ON ON THE SUPPLY SIDE IS DIFFICULT AT THE MOMENT, BUT I DO THINK THAT THAT WILL CALL INTO QUESTION IF YOU GET THE 150 THOUSAND, MAYBE THE UNEMPLOYMENT RATE TICKS DOWN AT THE SAME TIME THE INFLATION PRINT IS ELEVATED, THAT WILL CAUSE A LOT OF DEBATE AROUND THE TABLE AT THE SEPTEMBER MEETING. JONATHAN: MIKE OF MORGAN STANLEY WAS LOOKING FOR NO CUTS IN 2025 AND IS NOW LOOKING FOR A MOVE IN SEPTEMBER SAYING THAT PAYROLLS UP TO 25 IN AUGUST AND ANOTHER CLEAR ACCELERATION AND TERRIFIED AND RELATED INFLATION COULD KEEP THEM ON HOLD. IMAGINE HOW CONTROVERSIAL THAT WOULD BE IF ON SEPTEMBER 17 THIS FEDERAL RESERVE DIDN'T CUT INTEREST RATES. ANNMARIE: ABSOLUTELY CONTROVERSIAL GIVEN THAT YOU HAVE THE FED CHAIR OPEN THE DOOR. BUT THAT IS ALSO GOING TO GIVE JAY POWELL POLITICAL COVER. HE CAN POINT TO HIS SPEECH POLITICALLY IN WASHINGTON AND SAY I OPENED THE DOOR TO CUT RATES AND NOT EVERYONE WAS WITH ME AND FOLLOWING BEHIND. JONATHAN: A SNEAK PEEK OF THE ESTIMATE FOR SEPTEMBER 5, ADK SO FAR. THE ESTIMATES -- 80K SO FAR. THE ESTIMATES WILL KEEP COMING IN. THE DISRUPTION IN FRANCE IS CAUSING MORE MARKET HAVE -- MORE MARKET HAVOC. WHAT IS HAPPENING WITH THE FRENCH BOND MARKET? HOW MUCH PHYSICAL SPACE DO THEY HAVE AND HOW LONG DO WE HAVE TO WAIT UNTIL THE FRENCH GOVERNMENT MAKES A MOVE TO DO SOMETHING ABOUT SPENDING AND TAXES? IAIN: THAT'S THE PROBLEM AND IT HAS BEEN A CONTINUING DETERIORATING STORY OF THE LAST FEW MONTHS, AND THAT'S EXACTLY WHAT THE PRIME MINISTER WANTS TO DO, CREATE SOME FISCAL SPACE AND IMPROVE THE FISCAL SITUATION IN FRANCE IS IN. UNFORTUNATELY, AS WE KNOW GLOBALLY, CONDITIONS POLITICALLY, IT'S VERY DIFFICULT TO MAKE THOSE DECISIONS. THAT'S A PROBLEM HE'S FACING AT THE MOMENT. HE WANTS TO BRING THE FISCAL DEFICIT DOWN NORTH OF 5%, HE WANTS TO GET IT CLOSE TO 4.5 PERCENT. THE REST OF THE GOVERNMENT DOES SEEM TO BE IN AGREEMENT, SO IT LOOKS LIKE WE WILL FEEL THE VOTE OF CONFIDENCE ON THE EIGHTH OF SEPTEMBER AND THEN BE TALKING ABOUT ANOTHER PRIME MINISTER POSSIBLY, OR EVEN A REELECTION. IT'S CAUSING MORE TURMOIL IN THE EQUITY MARKET, BUT IT'S CAUSING A LITTLE UNCERTAINTY IN THE GOVERNMENT MARKET. WE HAVE SEEN FRENCH SPREADS RELATIVE TO GERMANY WIDEN. THEY ARE APPROACHING WHERE ITALIAN SPREADS ARE, WOULD YOU BELIEVE IT? I THINK BACK TO WHERE WE ARE WITH THE TOUGH TIMES FROM THE FRENCH STANDPOINT, 85 BASIS POINTS. THAT FEELS LIKE A REASONABLE LEVEL TO START THINKING ABOUT LOOKING AT OPPORTUNITIES, BECAUSE THAT'S ULTIMATELY RELATIVE TO GERMANY. IF YOUR MEMBER THE FISCAL SITUATION IN GERMANY, IT WILL BE WORSE THAN IT WAS BACK THEN WITH ALL OF THE SPENDING AND ISSUANCE THEY WILL HAVE TO DO, BUT IT IS DEFINITELY CAUSING A LITTLE UNCERTAINTY IN THE FRENCH GOVERNMENT. I WOULD PREFER TO ALL AND ITALY AT THE MOMENT. JONATHAN: MORE FAITH IN MALONEY THAN MACRON AT THE MOMENT. THOSE ARE MY WORDS, NOT YOURS. DON'T WORRY. EURO WEAKNESS, 1.15 89. WITH YOUR BLOOMBERG BRIEF, LET'S GO TO YAHAIRA ANAND FOR MORE. YAHAIRA: PRESIDENT TRUMP SAYS THAT HE IS PREPARED FOR A LEGAL FIGHT WITH FED GOVERNOR LISA COOK AFTER HE ATTEMPTED TO. FIRE HER COOK'S LAWYER VOWED TO FILE A LAWSUIT. THE FEDERAL RESERVE SAID THEY WOULD ABIDE BY ANY COURT DECISION. THE PRESIDENT SLAPPED A 50% TARIFF ON INDIAN GOODS TO PUNISH THE COUNTRY FOR BUYING RUSSIAN OIL. THE NEW TARIFFS TOOK EFFECT AT 12:01 A.M. THIS MORNING AND WILL AFFECT MORE THAN 55% OF GOODS SHIPPED TO THE U.S.. KEY EXPORTS LIKE ELECTRONICS AND PHARMACEUTICALS ARE EXEMPT, SPARING APPLE'S NEW FACTORY INVESTMENTS IN INDIA FOR NOW. TAYLOR SWIFT IS GETTING HER OWN SUPER BOWL-SIZED RING FROM KANSAS CITY CHIEFS TIGHT AND TRAVIS KELCE. THE POPSTAR ANNOUNCED THEIR ENGAGEMENT ON INSTAGRAM. USE OF THEIR NUPTIALS SPARKED A PULL FLOOD OF ONLINE VETS INCLUDING WAITERS ON A POSSIBLE WEDDING DATE AND WHEN THE COUPLE MAY HAVE A BABY. A BIT AGGRESSIVE. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: JUST A LITTLE BIT. MORE IN ABOUT 30 MINUTES TIME. NEXT ON THE PROGRAM, GEARING UP FOR A LEGAL BATTLE. > > FED GOVERNOR LISA COOK, HER LAWYER HAS SAID THAT THEY WILL BE FILING A LAWSUIT CHALLENGING LEGAL ACTION. WHAT IS YOUR RESPONSE AND ARE YOU PREPARED FOR LEGAL FIGHT? PRES. TRUMP: SHE SEEMS TO HAVE HAD AN INFRACTION AND SHE CAN'T HAVE AN INFRACTION. JONATHAN: THAT CONVERSATION NEXT. LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. ♪ JONATHAN: THREE DAYS OF GAINS FOR NVIDIA COMING INTO EARNINGS DAY. NVIDIA IN THE PREMARKET, ZERO POINT 6%. EXPECTATIONS ARE SKY HIGH LOOKING FOR A 48% JUMP IN EARNINGS FROM THE PREVIOUS YEAR, A 44% INCREASE FOR REVENUE FROM A YEAR AGO. THE BAR IS SKY HIGH ONCE AGAIN FOR THAT STOCK. THE BROADER EQUITY MARKET IS DOING OK POSITIVE BY CLOSE TO .1%, CLOSE TO ALL-TIME HIGHS AT THE CLOSE YESTERDAY. NASDAQ FUTURES THIS MORNING ARE JUST ABOUT UNCHANGED. UNDER SURVEILLANCE, WE ARE GEARING UP FOR A LEGAL BATTLE. > > FED GOVERNOR LISA COOK, HER LAWYER HAS SAID THAT THEY WILL BE FILING A LAWSUIT CHALLENGING LEGAL ACTION. WHAT IS YOUR RESPONSE, ARE YOU PREPARED FOR A LEGAL FIGHT? PRES. TRUMP: SHE SEEMS TO OF HAD AN INFRACTION AND SHE CAN'T HAVE AN INFRACTION, ESPECIALLY THAT INFRACTION BECAUSE SHE IS IN CHARGE OF -- IF YOU THINK ABOUT IT, MORTGAGES. WE NEED PEOPLE WHO ARE 100% ABOVE BOARD AND IT DOESN'T SEEM LIKE SHE WAS. JONATHAN: THE FED RESPONDING TO PRESIDENT TRUMP'S ATTEMPT TO FIRE LISA COOK SAYING THAT IT WOULD ABIDE BY ANY COURT DECISION ON IF HE HAS THAT AUTHORITY. TYLER KENDALL JOINS US FOR MORE. WHAT IS THE LATEST? TYLER: GOOD MORNING. AT THIS POINT IT DOESN'T APPEAR THAT THE WHITE HOUSE WILL LET OF ITS PRESSURE CAMPAIGN ON THE CENTRAL BANK WITH PRESIDENT TRUMP SAYING THAT HE IS PREPARED FOR THIS LEGAL FIGHT, TELLING ANNMARIE IN THE CABINET ROOM THAT HE WILL ABIDE BY ANY COURT DECISION. THAT'S THE BIG FOCUS AT THIS POINT BECAUSE WE KNOW THAT THERE IS A VERY HIGH LEGAL BAR FOR THE PRESIDENT TO REMOVE A FED OFFICIAL. IT WAS ACTUALLY A PROTECTION THAT WAS BOLSTERED BY THE SUPREME COURT EARLIER THIS YEAR. THE HIGH COURT HEARD TWO CASES RELATED TO OTHER OFFICIALS WHO HAD BEEN FIRED AT OTHER INDEPENDENT AGENCIES. THE COURT RULED THAT THE PRESIDENT WAS ALLOWED TWO OUTS TO THOSE OFFICIALS BUT INSTITUTED A SHIELD FOR FEDERAL RESERVE OFFICIALS CITING THAT MONETARY POLICIES AND THAT UNIQUE STRUCTURE. PRESIDENT TRUMP WOULD HAVE TO PROVE WHAT IS KNOWN AS CAUSE. THE THING IS, THAT BECAUSE IS NOT EXPLICITLY DEFINED AS THOUGH IT IS HISTORICALLY TAKEN TO MEAN MALFEASANCE OR IGNORING OR A NEGLECT OF DUTIES RELATED TO THE JOB. WE SHOULD SAY THAT IT'S IMPORTANT AT THIS POINT THAT THESE ARE JUST ALLEGATIONS AGAINST FED GOVERNOR LISA COOK. NO FORMAL CHARGES HAVE BEEN BROUGHT IN HER LAWYER SAYS THAT THERE WILL CHALLENGE THIS IN COURT -- SAY THEY WILL CHALLENGE THIS IN COURT. WE WILL WATCH IF THEY WILL FILE FOR THAT INJUNCTION, WHICH COULD MEAN THAT SHE IS REINSTATED IMMEDIATELY AS THE COURT PROCESS PLAYS OUT, WHICH MEANS THAT SHE COULD BE THERE FOR THE SEPTEMBER FOMC MEETING. JONATHAN: COULD BE AN INTEREST RATE CUT BASED ON RECENT COMMUNICATION. ANNMARIE: WHICH IS WHY THIS WILL BE AWKWARD. THIS IS SOMEONE THAT THE PRESIDENT IS TRYING TO OUTS TO BUDDY SHE WOULD BE DOING WHAT THE PRESIDENT HAS ASKING JAY POWELL TO DO FOR MONTHS. JONATHAN: THE PRESIDENT HAS DECLARED OPEN WAR ON THE U.S. INSTITUTIONAL FRAMEWORK, WHICH UNDERPINS THE DOLLAR'S DOMINANCE IN GLOBAL FINANCE AND OTHER ASPECTS OF U.S. FINANCIAL SUPREMACY. WELCOME TO THE PROGRAM, SIR. LET'S TAKE YOUR LINE OF THINKING. IF WE DECLARED OPEN WHERE ON U.S. INSTITUTIONS, WHERE DO YOU SEE SIGNS OF DAMAGE? ESWAR: WHAT ARE THE KEY ELEMENTS OF THE FRAMEWORK THAT HAVE INDEPENDENT SUPREMACY AND TRUST IN THE U.S. FINANCIAL SYSTEM? INCLUDES A SYSTEM OF CHECKS AND BALANCES THAT IS INSTITUTIONALIZED COM -- INSTITUTIONALIZED, THE RULE OF LAW, AND AN INDEPENDENT CENTRAL BANK. SOME THINGS DURING THE TRUMP FIRST TERM BUT DURING THE SECOND TERM TRUMP IS REALLY TAKING A HATCHET TO EACH OF THEM. NONE OF THE CHECKS OWNED BALANCES FROM CONGRESS OR THE JUDICIAL SYSTEM SEEM TO BE WORKING VERY WELL. THE FED'S INDEPENDENCE IS CRUCIAL AND OPERATIONAL INDEPENDENCE, NO FED CENTRAL BANK CAN ULTIMATELY BE FREE OF POLITICAL INFLUENCE BECAUSE IT HAS TO SERVE THE WELFARE OF THE PEOPLE, BUT IN THE OPERATIONAL DECISION MAKING ALL EVIDENCE SEEMS TO SUGGEST THAT LEAVING THE CENTRAL BANK OF ROME TO DO ITS JOB MAKES IT -- CENTRAL BANK ALLOWED TO DO A SHOT MAKES IT THE MOST EFFECTIVE. ANNMARIE: THE FED SAID THAT THEY WOULD ABIDE BY WHAT THE COURT DECIDES. I READ THAT STATEMENT TO THE PRESIDENT LIVE IN THE CABINET ROOM WHEN IT CAME OUT AND I ASKED HIM, WOULD YOU ABIDE BY THE COURTS? HE SAID, OF COURSE HE WILL. IF THE COURT DECIDES THAT LISA COOK COULD STAY IS THE DAMAGE ALREADY DONE, OR DO YOU THINK THAT THAT BOLSTERS THE VIEW IN AMERICA THAT WE DO HAVE INDEPENDENT INSTITUTIONS? ESWAR: AT THE MOMENT, I THINK THAT A GREAT DEAL OF DAMAGE HAS ALREADY BEEN DONE BECAUSE TRUMP IS VERY CLEAR THAT HE WANTS TO BEND EVERY INSTITUTION IN THE U.S., INCLUDING A STATUTORILY INDEPENDENT ONE LIKE THE FEDERAL RESERVE, TO HIS WILL IN TERMS OF POLICY MAKING AND THE BROADER ELEMENTS OF POLICY THAT NEED TO LINE UP WITH HIS DESIRES. THAT'S NOT QUITE WHAT HAS HELPED AMERICA MAINTAIN ITS FINANCIAL SUPREMACY. IT IS A SENSE THAT EVERYONE, INCLUDING THE GOVERNMENT, HAS TO PLAY BY THE RULES. THEY MAY NOT LIKE THE RULES BUT A DOMESTIC INVESTOR, FOREIGN TO MUSTER, OR THE GOVERNMENT WHO SETS THE RULES, YOU HAVE TO PLAY BY THE RULES. THAT IS THE FED ELEMENT THAT TRUMP IS ATTACKING. EVEN WITH THE SYSTEM WHEN YOU HAVE THE RULES LAID OUT, YOU CAN'T REALLY WRITE A RULE THAT COVERS EVERY EVENTUALITY OF THE WORLD. THOSE NORMS ARE BEING SHATTERED, AND I THINK THIS IS THE CONCERN. EVEN IF LISA COOK STAYS ON THE BOARD, A RED LINE HAS BEEN CROSSED. TRUMP HAS MADE IT CLEAR THAT IT IS LOYALTY TO HIM THAT MATTERS MORE EVEN IN A INSTITUTION. ANNMARIE: WHAT HAPPENS IF AS THE DOJ SAID LAST WEEK THEY WILL POTENTIALLY INVESTIGATE THIS? WHAT HAPPENS IF GOVERNOR COOK IS CONVICTED OF MORTGAGE FRAUD? DOES SHE BELONG THERE? ESWAR: THIS IS A REALLY UGLY MATTER AND IT WILL GET UGLIER, BECAUSE WE HAVE SEEN THE ALLEGATIONS SEEM TO BE SWELLING WITHOUT MUCH EVIDENCE PRESENT. ONCE THE EVIDENCE COMES OUT THINGS WILL BECOME CLEARER WITH THE INTENTIONS AND MOTIVES WERE. THE DEFINITION OF CAUSE IS IMPORTANT. TRUMP HAS ARGUED THAT LISA COOK IS ONE OF THE OVERSEERS OF THE MORTGAGE MARKET, AND THEREFORE EVEN THE NOTION OF MALFEASANCE IS ENOUGH TO BE CONSIDERED CAUSE FOR FIRING HER. THE QUESTION IS WHETHER THE REAL CAUSE SHOULD BE IN TERMS OF HER INCOMPETENCE WHEN IT COMES TO MONETARY POLICY ISSUES OR A MUCH DEEPER ISSUE OF MALFEASANCE, WHICH HAS NOT BEEN ESTABLISHED YET. WHATEVER IT IS IT HAS BUT THE FED ON NOTICE THAT EVERY ONE OF ITS WORKING MEMBERS WILL BE SUBJECT TO VERY CAREFUL SCRUTINY. WHICH IS PERHAPS BY ITSELF NOT A BAD THING, BUT IN A POTENTIALLY UGLY WAY, BEING HELD TO STANDARDS THAT DEVIATE FROM THE PAST. JONATHAN: I AGREE THAT THE MOMENT IS UGLY AND I WOULD SUGGEST IN THE SAME WAY THAT YOU HAVE THAT IT'S DIFFICULT TO DISCUSS. WE ARE HEARING ABOUT THE ALLEGATIONS BUT NO FORMAL LEGAL INVESTIGATION HAS BEEN OPENED. GOVERNOR COOK HAS NOT DENIED ANYTHING ALLEGED, WHICH MAKES IT EQUALLY AS COMPLICATED. I'M TRYING TO UNDERSTAND HOW DIFFERENT THIS MOMENT IS TO A MOMENT YEARS AGO OF FINANCIAL DISCLOSURES OF FEDERAL RESERVE OFFICIALS WHO LATER RESIGNED THEMSELVES, BECAUSE IT BECAME A DISTRACTION FOR THE INSTITUTION. WHY DO YOU BELIEVE THAT THIS MOMENT IS DIFFERENT? ESWAR: I THINK THAT LISA COOK IS MAKING AN IMPORTANT STAND. WITHOUT EVIDENCE BEING CLEARLY REVEALED, AND IN THE CASE OF THE OTHER FEDERAL OFFICIALS THERE WERE ALLEGATIONS INITIALLY BUT ULTIMATELY THEY RESIGNED WHEN THE EVIDENCE CAME OUT. AT THIS STAGE WE DON'T HAVE ANY CLEAR EVIDENCE. WE HAVE A BUNCH OF ALLEGATIONS BY ONE TRUMP ADMINISTRATION OFFICIAL, AND THESE HAVE LARGELY BEEN INTERMEDIATED THROUGH THE PLATFORM X. I THINK THE ISSUE WILL BE IF THERE WILL BE A PROCESS THAT WILL HAVE TO TAKE ITS COURSE. OTHER THAN FIGHTING ON THE BASIS OF THE ALLEGATION, IF IT WERE A SITUATION WHERE THE EVIDENCE WAS CLEARLY LAID OUT SO THAT WE COULD ALL SEE IT, AND THEN THE RAMIFICATIONS WERE OUT, AND THE PRESIDENT THEN TOOK ACTION, IT WOULD BE DIFFERENT. THE CONTEXT IS DIFFERENT. TRUMP HAS BEEN ATTACKING THE FED. HE HAS MADE COMMENTS OF LISA COOK NOT DOING WHAT HE THINKS THAT SHE SHOULD HAVE DONE, CUT INTEREST RATES AGGRESSIVELY. THERE SEEMS TO BE A MIX OF ALLEGATIONS. PLUS, WHAT HE CONSIDERS MALFEASANCE AND NOT FOLLOWING HIS POLICY. THAT'S ONE REASON WHY LISA COOK MIGHT BE MAKING A STAND. OF COURSE, WE NEED TO WAIT AND SEE HOW THE EVIDENCE PLAYS OUT. JONATHAN: I THINK WE WILL WAIT AND GIVE SPACE FOR DUE PROCESS TO CARRY OUT. ESWAR PRASAD OF CORNELL UNIVERSITY ON A MESSY SITUATION IN WASHINGTON. ANNMARIE: IT WILL GET LOUDER, BECAUSE WHEN STEVE MIRON GOES IN FRONT OF THE SENATE BANKING COMMITTEE IT WILL BE ALL ABOUT THAT INDEPENDENCE AND THEY WILL READ BACK WHAT THE PRESIDENT SAID YESTERDAY. NEXT YEAR WE WILL HAVE A MAJORITY AT THE FED AND I'M LOOKING FORWARD TO THAT. THOSE ARE HIS WORDS. JONATHAN: NEXT ON THE PROGRAM, THERE'S A LOT TO TALK ABOUT WITH REGARDS TO NVIDIA. ANGELO ZINO WILL JOIN US WITH HIS BULLISH CALL. AND DANI BURGER HAS YOUR MORNING MOVERS. ELI LILLY SHARES RISING AS THE WEIGHT LOSS PILL NEARS APPROVAL. ♪ JONATHAN: IT IS THE MAIN EVENT LATER ON THIS AFTERNOON. NVIDIA THIS MORNING POSITIVE BY .65%. MAKES UP 10% OF THE NASDAQ 100. THE EARNINGS REPORT LATER THIS AFTERNOON. S & P POSITIVE BY NOT EVEN 1/10 OF 1%. GETTING CLOSER TO A RECORD HIGH AT THE OPENING BELL. LET'S GET YOU SOME MORNING MOVERS. DANI: ANOTHER STRONG DAY FOR LILLY. SHARES SAW THE BIGGEST GAIN SINCE THE POST LIBERATION DAY BOUNCE BACK. NOW THEY ARE UP ANOTHER 1.5%. IT'S BEEN FUELED BY A TRIAL THEY DID OVER AND OBESITY PILL WHERE PEOPLE LOST 9.6% OF BODY FAT, GETTING IT'S CLOSER TO GETTING APPROVAL. WE ARE SEEING ROCKET AEROSPACE SHARES UP 4% ON CLEARANCE OF THE FAA TO RESUME ROCKET LAUNCHES. THEY HAD A LAUNCH EARLIER THIS YEAR THEY DID NOT GO AS PLANNED. IT EXPLODED. THEY SAY THEY KNOW WHAT WENT WRONG AND THEY ARE LOOKING FOR A WINDOW FOR THE NEXT LAUNCH. LOOKING AT SOFTWARE COMPANIES AFTER EARNINGS AFTER THE BELL. BOTH THESE COMPANIES A RAISE AND A BEAT. SNOWFLAKE IS THE BIG ONE, IT IS RALLYING IN SYMPATHY, UP 4.5%. WE WILL GET THEIR EARNINGS AFTER THE BELL. JONATHAN: PRESIDENT TRUMP GEARING UP FOR A LEGAL FIGHT TO OUST FED GOVERNOR LISA COOK. TRUMP IN THE FED SAY THEY WILL ABIDE BY ANY COURT DECISION. ANNMARIE: WILL LISA COOK HAVE THE BASIC CONFIDENCE IN THE PUBLIC? THIS IS WHAT THE TREASURY SECRETARY WAS GETTING AT YESTERDAY. THEY WENT AROUND THE ROOM AND SOMETHING HE SAID WAS THE FED'S INDEPENDENCE IS A POLITICAL ARRANGEMENT BETWEEN ITSELF AND THE AMERICAN PUBLIC. DOES IT BECOME SO UNTENABLE FOR GOVERNOR COOK IF SHE'S ABLE TO STAND THE POSITION THAT MAYBE SHE HAS TO THINK ABOUT RESIGNING? THAT IS WHY THERE IS CONCERN AMONG ECONOMISTS ABOUT THE PRESSURE BUILDING ON THE INDEPENDENT FED. JONATHAN: LET'S BUILD ON THE INDEPENDENCE OF THE CENTRAL BANK. SHE'S A HUGE PROPONENT OF CENTRAL-BANK INDEPENDENCE. LET'S SAY WHEN THERE'S A HEARING, DON'T CALL THE FED CHAIR A DANGEROUS MAN. IF YOU'RE ON THE BOARD, DON'T MAKE DONATIONS TO SOMEONE RUNNING TO BE PRESIDENT. I'M THINKING OF LAEL BRAINARD TO THE CLINTON CAMPAIGN AND THEN GOING TO WORK FOR PRESIDENT BIDEN. IF YOU WORKED ON THE BIDEN CAMPAIGN AND THE OBAMA CAMPAIGN, MAYBE I'LL THINK ABOUT GOING TO THE CHICAGO FED. AUSTIN GOOLSBY. LET'S BE CONSISTENT ABOUT THIS. MAKE SURE THERE'S A FINE LINE, A THICK, RED LINE BETWEEN SERVING FOR THE CENTRAL BANK AND FOR A POLITICAL PARTY IN WASHINGTON. THAT DOES NOT HELP IN ANY WAY, SHAPE OR FORM. ANNMARIE: IT DOES NOT HELP THE MARKETS. THEY WANT TO SEE MONETARY POLICY IN THIS JEWEL BOX. THE POINT YOU BRING UP IS THAT OF COURSE THE PAST WEEK HAS BEEN ABOUT REPUBLICANS DON'T WANT INDEPENDENCE OF THE FED. WE HAVE SEEN DEMOCRATS JAWBONE THE FED AS WELL. SOMETIMES IT IS NOT AS LOUD BUT IT HAS BEEN FROM THE LIKES OF ELIZABETH WARREN AND OTHERS IN CONGRESS. JONATHAN: WHO WROTE LETTERS ASKING FOR LOWER INTEREST RATES. WE NEED TO BE CONSISTENT ABOUT BELIEVING IN CENTRAL-BANK INDEPENDENCE. SOMETHING TO THINK ABOUT. PRESIDENT TRUMP SLAPPING INDIA WITH A 50% TARIFF, UPENDING A PUSH FROM WASHINGTON TO FORGE CLOSER TIES. IT WILL IMPACT TEXTILES, JEWELRY AND ELECTRONICS AND PHARMACEUTICALS. ANNMARIE: THE FINE PRINT IS SO IMPORTANT. 50% SOUNDS MASSIVE BUT WHAT DO YOU CARE ABOUT COMING FROM INDIA REALLY? IT WILL BE THE IPHONES IN EVERYONE'S POCKETS. TIM COOK TALKED ABOUT U.S.-BOUND IPHONES, HE WANTS TO SEE THE BY 2026 ALL COMING FROM INDIA. GUESS WHAT? THEY GET AN EXEMPTION. THAT IS KEY. JONATHAN: WHAT A STORY IN THE LAST WEEK. CRACKER BARREL SCRAPPING THE NEW LOGO AFTER BACKLASH FROM SOCIAL MEDIA. THEY WILL BRING BACK THE OLD LOGO AFTER CRITICS SAID THE SIMPLIFIED DESIGN STRIPPED THE CHAIN OF ITS HISTORY. ANNMARIE: THEY ARE BACK WITH THE OLD-TIMER. THE WHITE HOUSE IS NOW ACTUALLY TAKING BASICALLY A FULL VICTORY LAP, THAT THEY WERE ABLE TO BRING BACK WHAT WAS OLD. I THINK IT IS CAPITALISM AT ITS FINEST. THE COMPANY SAYS THEY HAVE NOT BEEN ABLE TO GET GEN Z EXCITED ABOUT COMING INTO CRACKER BARREL. IT DEFINITELY FEELS LIKE AN OLD TIMER KIND OF PLACE. THEY WENT WITH MORE OF A MODERN FLAT LOGO. THEY GET ALL THIS PUSHBACK OF PEOPLE SAYING WE WANT THE AMERICANA MOTIF. THEY WENT BACK TO THE OLD VERSION. I WONDER IF ALL THIS IS A PLOY. WOULD WE BE SITTING HERE AT 6:35 IN THE MORNING TALKING ABOUT CRACKER BARREL IF THEY DIDN'T HAVE THIS ENTIRE CONTROVERSY WITH THEIR LOGO? JONATHAN: YOU ARE PROBABLY WRONG AND THAT IS THE PROBLEM. GET RID OF YOUR MARKETING TEAM. THEY HAD A PROGRESSIVE CONSUMER WHICH CEO'S AND C-SUITE HAD TO CATER TO. FOR THE LAST FEW YEARS YOU'VE HAD A MORE CONSERVATIVE, CONSERVATIVE CONSUMER. YOU SHOULD KNOW AND BE TESTING THIS AND NO THEY WILL BE BACKLASH WHEN YOU MOVE AWAY FROM HERITAGE WHEN THE COUNTRY IS LONGING FOR HERITAGE, HISTORY AND AMERICANA. IT IS A TRICKY MOMENT FOR CEOS. FOR GOODNESS SAKE, HIRE A NEW MARKETING TEAM. EVERY LOGO LOOKS EXACTLY THE SAME IN THE LAST DECADE OR SO. ANNMARIE: WHICH IS WHY PEOPLE ARE STARTING TO PUSH BACK AND THEY FELT LIKE THE STRAW ON THE CAMEL'S BACK. MAYBE WHAT CRACKER BARREL IS SHOWING IS THAT LISTEN TO YOUR CONSUMERS. WHEN THEY PUSHBACK, BE QUICK, APOLOGIZE. ONE OF THE PRESIDENT'S KEY DEPUTIES SAID HE HAD A CALL LAST NIGHT WITH THE COMPANY. I AM WAITING FOR THE PRESIDENT TO MAKE A FIELD TRIP TO A CRACKER BARREL NOW. FOR THE COMPANY, THIS IS HELPING THEM. JONATHAN: LET'S TURN BACK TO ATTACK. LOOKING FOR NVIDIA -- TURNING BACK TO TECH. LOOKING FOR NVIDIA'S EARNINGS. "WE ARE BORED CONFIDENT ABOUT THE DATA CENTER BUSINESS." WHAT IS YOUR BIG FOCUS LATER ON THIS AFTERNOON? ANGELO: THANKS FOR HAVING ME. THE DEMAND LANDSCAPE REMAINS EXTREMELY STRONG FOR BLACKWELL. WE SEE THAT RAMP UP HERE IN THE SECOND HALF OF THE YEAR. YOU WILL HAVE THE LAUNCH AS WELL. CLOUD SERVICE PROVIDERS CONTINUE TO INCREASE THEIR CAPEX NUMBERS. LOOKING A ABOUT 46 BILLION YE -- $46 BILLION FOR THE FOURTH QUARTER. THERE WILL BE AN ACCELERATION ON THE SEQUENTIAL GROWTH SIDE OF THINGS FOR THE OCTOBER QUARTER. IT IS A HIGH BAR. THE BACKLOGS WE ARE SEEING FROM THESE OEMS WARRANT THE FACT YOU WILL SEE THE HIGHER REVENUE TRAJECTORY FROM BLACKWELL GOING INTO THE SECOND HALF. AS FAR AS WHAT WE THINK COULD POTENTIALLY MOVE THE NEEDLE FOR THAT STOCK GIVEN THE RUN-UP IT'S HAD, TAKE A LOOK AT THE GROSS MARGINS. THE COMPANY IMPLIED WE ARE GOING TO SEE SEQUENTIAL IMPROVEMENT IN GROSS MARGINS AS THE YEAR PROGRESSES. 72 PERCENT THIS QUARTER, 73.5% THE NEXT QUARTER AND FURTHER MARGIN EXPANSION. WE NEED TO SEE EXECUTION ON THAT SIDE REMAIN INTACT. CHINA WILL BE THE BIG STORY WITH WHAT IT HAS TO SAY ABOUT THE DEMAND TRAJECTORY FOR THE OCTOBER QUARTER AND GOING INTO 2026. THOSE WILL BE THE ITEMS THAT COULD MOVE THE STOCK ONE WAY OR THE OTHER. JONATHAN: YOU HAVE TALKED IN THE PAST ABOUT HOW THE COMPANY HAD MOVED TO DE-RISK THE CHINESE STORY. CAN YOU TELL ME HOW RELEVANT THAT IS TO THE STOCK? ANGELO: YOU LOOK AT THE JULY QUARTER, ZERO REVENUE IN TERMS OF CHINA WITHIN THEIR DATA CENTER BUSINESS. THERE IS ONLY UPSIDE AS FAR AS REVENUE TRAJECTORY. YOU ARE SEEING A LOT OF ANALYSTS STARTING TO THROW NUMBERS IN FOR CHINA. THERE IS A WIDE RANGE. IT'S PROBABLY GOING TO BE ON THE SMALLER SIDE. MORE IMPORTANTLY IS GOING TO BE THE OPPORTUNITY OF UPSIDE POTENTIAL GOING INTO 2026. OUR REVIEW IS THE H20 IS PROBABLY SO OLD THAT CHINA CAN DO WITHOUT IT. THEY ARE LOOKING TO PUSH A BLACKWELL CHIP INTO THAT MARKET. SOMETHING JENSEN IS TRYING TO PUSH WITH THE ADMINISTRATION. COMMENTARY ON MAY BE WHERE HE STANDS IN TRYING TO GET A BLACKWELL CHIP GOING INTO CHINA I THINK WILL BE IMPORTANT TO SEE THAT MOMENTUM IN REVENUE TRAJECTORY RAMP-UP. ANNMARIE: IF CHINA WAS ABLE TO GET THE BLACKWELL CHIP, DOESN'T MATTER? CHINA CHIPMAKERS LOOK TO TRIPLE OUTPUT OF AI CHIPS NEXT YEAR. HOW FAR ADVANCED IS THE U.S. COMPARED TO CHINA? ANGELO: THERE ARE MULTIPLE GENERATIONS -- THEY ARE MULTIPLE GENERATIONS AHEAD. I THINK IT HAS MORE TO DO WITH JUST THE CHIP ITSELF AND THE ECOSYSTEM AND THE TIES NVIDIA HAS WITH THE DEVELOPERS IN CHINA. THAT'S A CRITICAL ASPECT OF THIS. I THINK IT'S ONE OF THOSE -- IF YOU LISTEN TO ALIBABA YOU WILL HEAR THAT IT'S IMPORTANT FOR THEM TO HAVE ACCESS TO NVIDIA'S ECOSYSTEM, THEIR SOFTWARE AND CAPABILITIES. HUAWEI IS A FORMIDABLE THREAT OUT THERE. THE LANDSCAPE IS GOING TO CONTINUE TO BE ROBUST AS WELL. THERE IS NO SURPRISE YOU ARE GOING TO SEE SIGNIFICANT DEMAND NOT ONLY FROM THE DOMESTIC INDUSTRY BUT ALSO FROM NVIDIA IF THEY CAN GET THEIR MORE ADVANCED CHIPS RELATIVE TO THE AH20. ANNMARIE: WILL THE U.S. GOVERNMENT DEMANDED A CUT? ANGELO: AT THIS POINT IN TIME PROBABLY. WE EXPECT THE GOVERNMENT TO ASK FOR THE CUT THEY PREVIOUSLY ALLUDED TO, THAT 15% CUT. I WOULD NOT EXPECT ANY CHANGE FROM THAT. JONATHAN: CAN WE FINISH O ON SOMETHING I THINK WILL BE A BIGGER STORY 12 WITHOUT, THE PRICE OF ELECTRICITY? -- 12 MONTHS OUT, THE PRICE OF ELECTRICITY? THE PUSHBACK YOU CAN SEE FROM THE BUILDOUT OF DATA CENTERS AND THE INCREASE OF PRICE AND ENERGY COULD BE ABSOLUTELY MASSIVE. IS THAT SOMETHING YOU HAVE BEGUN TO THINK ABOUT AND HOW ARE THOSE THOUGHTS DEVELOPING? ANGELO: ARE WE TALKING ABOUT THE PRICE OF ELECTRICITY PUSHED ONTO THE CONSUMER OR ELECTRICITY THE HYPERSCALERS WILL HAVE TO PAY FOR? THE WAY I LOOK AT THIS IS, THERE ARE CONTRACTS BEING PUT IN PLACE BY THE HYPERSCALERS. THEY ARE WILLING TO PAY IN EXCESS OF WHATEVER THE EXISTING PRICE IS TO MAKE SURE THERE IS ENOUGH CAPACITY OUT THERE TO MEET THE GROWING NEEDS FOR AI. I THINK THERE IS A HUGE RISK OUT THERE IN TERMS OF THE AVAILABILITY OF SUPPLY TO MEET THE NEEDS OF AI IF THE EXPLOSION IS TO THE EXTENT OF SOME OF THESE COMPANIES ARE ALLUDING TO. IT WILL PROBABLY BE THE BIGGEST BOTTLENECK WE THINK FOR THE ADOPTION OF AI AS WE LOOK OUT FOR THE NEXT THREE TO FIVE YEARS. IT'S ONE OF THE FLUID STORIES OUT THERE. TYPICALLY WHEN YOU HAVE ISSUES LIKE THIS THE TECH INDUSTRY IS ABLE TO FIND SOLUTIONS TO IT. IT IS DEFINITELY AN ISSUE OUT THERE WE WILL HAVE TO KEEP AN EYE ON. IT WILL PROBABLY BE PROBLEMATIC AS WE LOOK OUT. MAYBE MORE FURTHER THAN 12 MONTHS BUT THE NEXT THREE TO FIVE YEARS IT WILL BE AN ISSUE. JONATHAN: APPRECIATE IT. ANGELO ZINO THERE. THE CONSUMER DOES NOT HAVE A MARK ZUCKERBERG SIZED BALANCE SHEET. ANNMARIE: THE PRESIDENT SAID HE GOT THIS PHOTO FROM MARK ZUCKERBERG. IT WAS IN A IDENTITY CENTER IN LOUISIANA THE SIZE OF MANHATTAN. YOU SAW HOW THE DATA CENTER WHICH IS BASICALLY SUPERIMPOSED ON MANHATTAN. TRUMP TALKED ABOUT THIS. THE ENERGY DEMAND. THERE IS A CONVERSATION IN WASHINGTON. CONGRESSMEN AND WOMEN ARE CONCERNED ABOUT INDIVIDUALS AND SMALL BUSINESSES PAYING HIGHER ELECTRICITY PRICES. JONATHAN: NVIDIA HIGHER AND THE PREMARKET BY ABOUT .75%. YAHAIRA: WE ARE LEARNING PRESIDENT TRUMP IS STEPPING UP HIS EFFORTS TO EXERT MORE CONTROL OVER THE CENTRAL BANK. SOURCES TELLING US THE TRUMP ADMINISTRATION IS REVIEWING OPTIONS FOR EXHORTING MORE INFLUENCE OVER THE FED'S 12 REGIONAL BANKS THAT WOULD POTENTIALLY EXTEND ITS REACH BEYOND PERSONNEL APPOINTMENTS IN WASHINGTON. FRENCH PRIME MINISTER -- THE FRENCH PRIME MINISTER IS UNDER PRESSURE AS OPPOSITION PARTIES UNITE AGAINST HIM. THEY ALL PLAN TO VOTE AGAINST HIM IN NEXT MONTH'S CONFIDENCE VOTE, POTENTIALLY FORCING HIS GOVERNMENT TO RESIGN. THE JUSTICE DEPARTMENT IS WIDENING ITS PROBE OF UNITED HEALTH. SOURCES TELLING US THE DOJ IS LOOKING INTO THE COMPANY'S PRESCRIPTION MANAGEMENT SERVICES AND HOW IT REIMBURSES ITS OWN DOCTORS. THE SCRUTINY GOES BEYOND AN INQUIRY INTO POSSIBLE MEDICARE FRAUD. JONATHAN: THANK YOU. UP NEXT, SLAPPING TARIFFS ON INDIA. > > NO, NO, NO. WE WANT TO MAKE A TRADE DEAL. WE WILL PUT TARIFFS ON USE THAT ARE SO HIGH YOUR HEAD WILL SPIN. JONATHAN: YOU ARE WATCHING BLOOMBERG. ♪ JONATHAN: BOUNCING BACK FROM YESTERDAY'S SESSION. FUTURES THIS MORNING JUST ABOUT POSITIVE, LIKEWISE ON THE NASDAQ 100. SLAPPING TARIFFS ON INDIA. > > HE SAID I DON'T WANT TO MAKE A TRADE DEAL. I SAID, I DON'T WANT TO MAKE A TRADE DEAL WITH YOU. CALL ME BACK TOMORROW BUT WE WILL NOT DO DEALS WITH YOU OR WE WILL PUT TARIFFS ON YOU THAT ARE SO HIGH -- I DON'T GIVE A DAM N. YOUR HEAD IS GOING TO SPIN. JONATHAN: THE EXEMPTION IS SET TO END ON FRIDAY BEFORE THE TRUMP WHITE HOUSE TRADE OFFICIAL KATE KALUTKIEWICZ WRITING THE FOLLOWING, "THEY SPITTED TARIFFS FURTHER WEAKEN THE PROSPECTS OF A NEAR-TERM U.S.-D INDIA WHICH -- U.S.-INDIA TRADE DEAL STALLED." BLURRING THE LINE BETWEEN ECONOMICS AND NATIONAL SECURITY OBJECTIVES. WHY IS INDIA SO IMPORTANT RIGHT NOW? KATE: INDIA IS IN A PLACE THAT IT WAS PREDICTED. THEY HAD RISEN OUT OF THE GATE AS ONE OF THE FIRST COUNTRIES WITH WHICH WE EXPECTED A TRADE DEAL. THE NATIONAL SECURITY ISSUES, THE ONGOING SITUATION WITH RUSSIA AND UKRAINE, HAS REALLY ELEVATED THEM AS A PROBLEM IN THE PRESIDENT'S MIND AND WE SEE THE TARIFFS REACHING THE HIGHEST OF ALMOST ANY COUNTRY. JONATHAN: THE EUROPEANS STILL BUY RUSSIAN GAS. DOES CONSISTENCY MATTER HERE? KATE: APPARENTLY NOT. THE PRESIDENT MADE CLEAR HE WILL GO AFTER THESE OTHER NATIONS WITH THIS NEW EXECUTIVE ORDER THAT TARGETS BUYERS ARE RUSSIAN OIL. IT IS CLEAR ONLY ONE COUNTRY HAS RECEIVED THE ADDITIONAL PENALTIES, INDIA. HARD TO SAY THERE IS CONSISTENCY HERE. ANNMARIE: WHERE DO THE TALKS STAND NOW? HOW QUICKLY COULD THESE TRADING PARTNERS COALESCE AND GET TO AN AGREEMENT? KATE: AS WE HAVE SEEN WITH PREVIOUSLY STUCK AGREEMENTS, ANYTHING CAN HAPPEN IF YOU GET THE LEADERS TOGETHER. WHAT WE HAVE SEEN IS THAT INDIA'S PRIME MINISTER -- HE HAS HIS OWN DOMESTIC POLITICAL CHALLENGES AND IS RELUCTANT TO GET ON THE PHONE WITH PRESIDENT TRUMP. IT CAN BE UNCERTAIN WITH THE PRESIDENT CAN ASK WHEN HE'S ON THE PHONE WITH YOU. IT COULD GET UNSTUCK IF THEY GET TOGETHER AND FIND A PATHWAY FORWARD. THAT IS WHAT WE SAW WITH PRESIDENT TRUMP AND IT CAN HAPPEN WITH INDIA. ANNMARIE: IS HE GOING TO HURT INDIA'S CHANCES GIVEN THE FACT THE PRIME MINISTER IS SAID TO HAVE A MEETING WITH XI JINPING IN THE NEXT COUPLE OF DAYS? KATE: PRIME MINISTER MODI IS TRYING TO SHOW HE HAS OTHER OPTIONS. I'M NOT SURE IT WILL IMPACT PRESIDENT TRUMP'S VIEW. THIS HAS TO BE AN ISSUE RESOLVED BETWEEN THE UNITED STATES AND INDIA. IT DOESN'T MATTER IF THE INDIANS WON THE CHINESE ALONGSIDE. --WANT THE CHINESE ALONGSIDE. THE HIGHEST TARIFFS ARE WITH COUNTRIES ALIGNED WITH CHINA, A GROUP OF NATIONS THE PRESIDENT HAS REPEATEDLY TARGETED. ANNMARIE: THIS IS REALLY KEY. THE LIKES OF APPLE WHICH PUT TIME AND EFFORT INTO WHO THEIR SUPPLY -- MOVING THEIR SUPPLY CHAIN OUT OF CHINA AND INDIA COME , DOES THE EXEMPTION STAY? KATE: IT'S THE IMPENDING ACTION ON SEMICONDUCTORS AND DERIVATIVES. THAT EXCEPTION IS IN PLACE ONLY UNTIL THE PRESIDENT MAKES THAT MOVE ON SEMICONDUCTORS, WHICH THE WHITE HOUSE SAID IS OMITTED. IN THE FIRST ADMINISTRATION A LOT OF COMPANIES MOVED FROM CHINA TO INDIA. WE COULD SEE SOME VERY DRAMATIC CONSEQUENCES FOR THOSE THAT HAVE DONE THEIR MANUFACTURING THERE. JONATHAN: MEXICO, CANADA. NEXT YEAR, HOW CRUCIAL ARE THOSE NEGOTIATIONS GOING TO BE? KATE: REALLY IMPORTANT. THE U.S.-MEXICO-CANADA AGREEMENT WAS RENEGOTIATED BY THE FIRST ADMINISTRATION. HE CALLED IT THE GREATEST TRADE DEAL EVER NEGOTIATED. THE NORTH AMERICAN SUPPLY CHAIN FOR AMERICAN MANUFACTURERS IS CRITICAL AND CRUCIAL IN THE GLOBAL COMPETITION WITH CHINA, INDIA. IT WILL BE IMPORTANT TO SEE THAT RESHORED AND RE-STABILIZED. ANNMARIE: 90% ARE USMCA COMPLIANT AND THEY ARE GETTING THE EXEMPTION WHEN IT COMES TO THE TARIFF RATES. WHAT DOES THE TRUMP ADMINISTRATION WANT TO SEE AND BUILD UPON THE USMCA THEY STRUCK WHEN IT COMES TO RENEGOTIATING THAT EXACT TRADE DEAL? KATE: WHAT WE HAVE SEEN IN THE FRAMEWORKS IS WHAT WE WILL SEE IN THE USMCA NEGOTIATIONS, TO GET RID OF WHAT WE CONSIDERED TRANSIT SHIP THE GOODS TO ENSURE THAT CHINESE INPUTS AND GOODS ARE NOT MAKING THEIR WAY INTO THE UNITED STATES THROUGH THE NORTH AMERICAN PARTNERS. WHEN THE USMCA WAS RENEGOTIATED WE DID SEE TIGHTENED RULES TO ENSURE ALL CARS THAT BENEFIT FROM USMCA ARE ALMOST ENTIRELY NORTH AMERICAN CONTENT, 75%. THE PRESIDENT WILL PUSH MEXICO AND CANADA FOR SIMILAR COMMITMENTS ON A RANGE OF GOODS TO ENSURE ANYTHING BENEFITING FROM THE DUTY-FREE TREATMENT IS A PRODUCT OF NORTH AMERICA. JONATHAN: WE ARE TRYING TO FIGURE OUT IF SOME OF THESE TARIFFS STAND UP TO LEGAL SCRUTINY. THE TREASURY SECRETARY TALKED ABOUT CUSTOMS REVENUE OF WORTH OF -- NORTH OF $500 BILLION A YEAR. IS THIS NOW TOO BIG TO STRIKE DOWN? KATE: THAT'S A GREAT QUESTION. THE PRESIDENT'S RHETORIC AND THE CABINET JUSTIFYING THE VALUE OF THESE TARIFFS AND WHAT THEY ARE DOING FOR THE DEFICIT. IT INDICATES THEY ARE HERE TO STAY. WE HAVE ACTION AFTER ACTION PILING UP WHICH THREATENED TO RAISE THE TARIFF LEVEL. I THINK IT WILL BE CHALLENGING IN A WHOLESALE FASHION TO SEE THE TARIFFS COMING DOWN ANYTIME SOON. JONATHAN: FORMER TRUMP TRADE OFFICIAL KATE KALUTKIEWICZ ON THE SITUATION WITH GLOBAL TRADE. ANNMARIE: SHE IS WAITING FOR THE COURTS TO STRIKE DOWN A YOU BUT I -- STRIKE DOWN IEPA. HE SAYS ONCE IN A WHILE THE CBO HAS GOOD ANALYSIS. THEY SAID THAT TARIFF POLICIES CAN REDUCE THE DEFICIT BY $4 TRILLION IN THE NEXT DECADE. THE TREASURY SECRETARY SAID HE THINKS THAT NUMBER WILL GO UP. JONATHAN: UP NEXT, WE CATCH UP WITH DREW MATUS, MARC SHORT, GEOFFREY GERTZ , AND KRISHNA MEMANI OF LAFAYETTE COLLEGE. GOOD MORNING TO YOU ALL. THE SECOND HOUR OF "BLOOMBERG SURVEILLANCE" IS JUST AROUND THE CORNER. ♪ > > THE FEDERAL RESERVE IS IN AN INCREDIBLY DIFFICULT POSITION. > > IT'S AN ASSAULT ON THE FEDERAL RESERVE'S INDEPENDENCE. > > I EXPECT TO SEE A LITTLE MORE DONE TO CONTROL THE LONG END OF THE YIELD CURVE THIS TIME. > > YOU ARE SEEING SOME -- WHAT YOU ARE SEEING IN THE LONG IT IS SOMEWHAT WORRISOME. > > YOU ARE WATCHING "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN.. . JONATHAN: GOOD MORNING. YOUR SCORES LOOK LIKE THIS. EQUITY FUTURES ADDING JUST A LITTLE BIT AWAY TO YESTERDAY'S RALLY, VERY CLOSE TO ALL-TIME HIGHS. UNCHANGED ON THE S & P AND NASDAQ 100. TWO-YEAR, 10-YEAR, THINGS SLOW AGAIN AFTER ALL THE DRAMA IN THE PAST 24 HOURS. YOUR WEEK AHEAD IS SHAPING UP AS FOLLOWS. THE MAIN DATA POINT, CORE PCE. AFTER THE CLOSING BELL, THE DATA POINT, NVIDIA EARNINGS. ANNMARIE: HIGHLY ANTICIPATED TO HAVE THE EARNINGS REPORT AFTER THE BELL TODAY WHEN IT COMES TO NVIDIA. WE HAVE SEEN WHAT THEIR BIGGEST CUSTOMERS ARE SAYING. THEY ARE SPENDING BIG. EYE WATERING NUMBERS WHEN IT COMES TO AI. ON THE DOWNSIDE PEOPLE WANT TO KNOW I GET A CLEAR PICTURE OF WHAT IS GOING ON WITH NVIDIA AND THEIR SALES TO CHINA. THERE'S BEEN AN ALMOST OFF AND ON AGAIN SALES MOMENTUM GIVEN THE POLICY IN WASHINGTON, D.C. NO ONE HAS A CLEAR UNDERSTANDING OF HOW MUCH THEY ARE STILL SELLING INTO THE MARKET. JONATHAN: YOU CANNOT SELL THEM BUT WE NEED A CUT OF THE REVENUE. THAT IS THE MESSAGE FROM THE WHITE HOUSE RECENTLY. DO THE CHINESE EVEN WANT THEM IN THE COUNTRY RIGHT NOW? THAT IS PART OF THE DEBATE THAT MAYBE -- OR MAYBE IT WASN'T IN THE LAST FEW MONTHS. -- WHERE MAYBE IT WAS IT WAS IN THE LAST FEW MONTHS. ANNMARIE: THEY ARE SAYING STOP MAKING THEM NOW. THAT WAS DAYS AFTER WE REPORTED THAT FIRMS IN BEIJING -- THE CCP TELLING COMPANIES TO SHRUG OFF THE CHIPS. ANGELO MADE A GOOD POINT, WHAT WILL HAPPEN WITH THE BLACKWELL. JENSEN HUANG HAS DONE A GOOD JOB AS THE CEO PUSHING THIS ADMINISTRATION TO SEE HIS WORLDVIEW. WILL THEY DO SO WITH A HIGHER ADVANCED SEMICONDUCTORS? JONATHAN: THE RALLY IS NOT ALL ABOUT BIG TECH. THE S & P 500 WITH IT CLOSE TO ALL-TIME HIGHS. HOMEBUILDERS OF THIS MONTH BY 15%. DELTA, UNITED AIRLINES UP BY DOUBLE DIGITS FOR THE MONTH OF AUGUST. THE ECONOMY IS NOT LOOKING GREAT AT THE MOMENT BUT THE MARKET IS PRICING IN A REBOUND. ANNMARIE: ALSO A RATE CUT WHEN IT COMES TO THE STEP -- WHEN IT COMES TO SEPTEMBER. THAT IS WHY THE PCE REPORT WILL BE INTERESTING. JAY POWELL BASICALLY TOLD US ALL TO LOOK THROUGH ANY HOT CPI PRINTS. THERE WILL BE ON AND ON AND OFF EFFECT WHEN IT COMES TO THE TARIFFS AND HOW THEY WILL IMPACT INFLATION. EVERYTHING WILL COME DOWN TO THIS JOBS MARKET REPORT. THE MARKET IS PRICING IN A FED RATE CUT IN SEPTEMBER. JONATHAN: COMING UP, WE CATCH UP WITH DREW MATUS, MARC SHORT , AND GEOFFREY GERTZ AS THE WHITE HOUSE LISTED TAKE STAKES IN MORE U.S. COMPANIES. STOCKS NEAR ALL-TIME HIGHS AT OF EARNINGS FROM NVIDIA. DREW MATUS WRITING, "THE REAL IMPACT WILL TAKE PLACE OVER THE NEXT DECADE, NOT THE NEXT YEAR." DREW, WELCOME SIR. DO YOU THINK THE MARKET IS OFFSIDES THEN? DREW: THE INVESTMENT HAS TO TAKE PLACE NOW BUT WHEN I THINK ABOUT PRODUCTIVITY AND COST SAVINGS, IS THAT GOING TO COME FROM EXISTING COMPANIES OR FROM COMPANIES THAT ARE BUILT WITHIN NAI ECOSYSTEM? --A AN AI ECOSYSTEM? THOSE OF THE COMPANIES THAT WILL DRIVE THE PRODUCTIVITY EXPERIENCE FOR MARKETS. ON THE SOCIAL SIDE, IT WILL BE A BIG BOOST TO EDUCATIONAL QUALITY. YOU CAN USE AI TO BASICALLY CREATE INDIVIDUALIZED TUTORS FOR STUDENTS. THOSE STUDENTS WILL BENEFIT FROM THAT. WE WILL END UP WITH A SURGEON LABOR QUALITY AS EDUCATIONAL --SURGE IN LABOR QUALITY AS EDUCATIONAL QUALITY GOES UP. JONATHAN: HOW WILL THAT RAMP UP IN THE YEARS TO COME? DREW: THERE ARE A LOT OF INTERESTING THINGS GOING ON WITH ENERGY. OF MOVEMENT TOWARDS MORE PREDICTABLE SUPPLIES -- A MOVEMENT TOWARDS MORE PREDICTABLE SUPPLIES. SOME FACTORS ARE POLITICAL AND SOME ARE BEING DRIVEN BY AI. EVERYTHING HAS CONSEQUENCES. WE SWITCHED FROM HORSES TO AUTOMOBILES AND THAT CREATED A BUNCH OF CHANGES IN JOBS AND CHANGES IN ENERGY SUPPLIES. THERE WERE PEOPLE WHO GOT PUT OUT OF WORK AND ALL KINDS OF PEOPLE WHO ENTERED JOBS THEY DID NOT EXIST IF BEFORE. I THINK AI IS GOING TO BE SOMETHING LIKE THAT. PEOPLE ARE FORCED TO REEVALUATE. THERE IS GOING TO BE LOSSES WITHIN THAT. MANAGING THOSE LOSSES WILL BE A CHALLENGE FOR THE GOVERNMENT AND FOR COMPANIES AS WE MOVE FORWARD. ANNMARIE: HOW MUCH HIGHER DO YOU THINK ENERGY DEMAND AND PRICE MIGHT ACTUALLY GO? DREW: IT'S AN OPEN QUESTION. ANYONE WHO LIVES IN NORTHERN NEW JERSEY SEES THE BROWNOUTS. THERE ARE ISSUES OF ELECTRICITY ON A DAILY BASIS. IF YOU THINK BACK 10 YEARS AGO THAT WAS NOT HAPPENING. I DON'T KNOW HOW THAT GETS RESULTS BUT I KNOW IT HAS THE RESULT AND IT IS WORTH THE FOCUS OF THE GOVERNMENT TO MAKE SURE THERE IS OR ARE SUSTAINABLE SUPPLIES OF ENERGY. SUSTAINABLE IN A WAY THAT MIGHT BE PREDICTABLE. YOU SHOULDN'T BE HAVING BROWNOUTS IN THE UNITED STATES. ANNMARIE: WHEN YOU TALK ABOUT THE SHORT-TERM FAITH IN AI, WHAT COMPANIES ARE GOING TO BE THE ONES DOING THE WORK NOW THAT ARE GOING TO PAY OFF IN THE NEXT DECADE? DREW: I'M FOCUSED ON WHAT KIND OF COMPANIES COME AFTER THE COMPANIES WE CURRENTLY HAVE. WHAT DOES THE FUTURE OF CORPORATE AMERICA LOOK LIKE? IF YOU ARE BUILDING A COMPANY FROM SCRATCH TODAY, HOW WOULD YOU BUILD IT DIFFERENTLY THAN A COMPANY THAT'S BEEN AROUND FOR A FEW DECADES? YOU PROBABLY BUILD IT VERY DIFFERENTLY BECAUSE YOU HAVE A VERY DIFFERENT STRUCTURE WITH REGARD TO THE NUMBER OF EMPLOYEES, A DIFFERENT STRUCTURE WITH REGARD TO HOW THE EMPLOYEES INTERACT WITH EACH OTHER. THE REAL CHALLENGE FOR COMPANIES TODAY WILL BE HOW TO ADAPT TO STAY IN FRONT OF THE CURVE. JONATHAN: IS NOT ALL ABOUT TECH. WE HAVE SEEN A REBOUND IN SMALL CAPS, HOMEBUILDERS, THE AIRLINES. DO YOU THINK THE ECONOMIC DATA IN THE MONTHS TO COME WILL BACK THAT UP? DREW: I DON'T. I THINK THE LABOR MARKET IS IN THE PROCESS OF WEAKENING AND WILL CONTINUE TO WEAKEN. FED CUTS BECAUSE THE ECONOMY IS WEAKENING IS NOT A GOOD THING. WHILE WE ARE NOT REALLY WORRIED ABOUT THE INFLATION STORY, THE GROSS STORY IS NOTHING GREAT. WHO WILL BE BUYING THESE THINGS? ARE PEOPLE GOING TO FEEL CONFIDENT SPENDING? THE ANSWER IS INCREASINGLY THAT PEOPLE ARE TRYING TO FIND WAYS TO COME BACK AND PAY FOR A HIGHER ENERGY COST. JONATHAN: THIS IS SO IMPORTANT. NOT ALL RATE CUTS ARE TREATED EQUALLY. SUMMER BECOME OF A SOFTER LABOR MARKET AND OTHERS BECAUSE INFLATION IS CONTAINED. IF YOU BELIEVE THAT, WHAT WILL THE CORRELATION LOOK LIKE BETWEEN STOCKS AND BONDS IN THE NEXT QUARTER? DREW: I THINK ALONG INTO THE CURVE IS STUCK WHERE IT IS. ANY KIND OF CUTS WILL COME WITH A STEEPENING. IT WILL BE A BOWL STEEPENING BUT A STEEPENING -- BULL STEEPENING BUT A STEEPENING. BY AND LARGE, 10-YEAR YIELDS WILL BE WHERE THEY ARE NOW PLUS OR MIGHT IS 20 FIVE BASIS POINTS. ANNMARIE: ARE YOU SURPRISED WE HAVE NOT SEEN A MASSIVE MOVE WHEN IT COMES TO THE DRAMA SURROUNDING THE FEDERAL RESERVE AND THIS ADMINISTRATION? DREW: I'M NOT. I THINK PEOPLE WANT TO SEE THIS PLAY OUT. I ALSO THINK FOR THE FED TO BE INDEPENDENT THEY HAVE TO BE ABOVE REPROACH. WE DON'T KNOW WHAT HAPPENED. THE TREASURY SECRETARY IS CORRECT. IT'S AN AGREEMENT BETWEEN THE FED AND THE AMERICAN PEOPLE TO SAY, LOOK, WE TRUST YOU TO MANAGE HER BUSINESS IN A WAY THAT IS APPROPRIATE . THEY WILL BE A RE-EXAMINATION OF THAT. OF ALL THE WEEPING AND WAILING AND GNASHING OF TEETH ABOUT THIS AS AN ATTACK ON THE FEDERAL RESERVE, I SEE IT AS BEING IF YOU SEPARATE IT FROM THE PERSON MAKING THE COMMENTS WOULD YOU HAVE THE SAME VISIT WAS BONDS, AND THE ANSWER IS NO. HE WOULD THINK ABOUT THE ALLEGATION RATHER THAN WHO IS MAKING THE ALLEGATION. IF YOU WANT THE FEDERAL RESERVE TO BE CREDIBLE, THE PEOPLE HAVE TO BE ABOVE REPROACH. IF THAT IS NOT HAPPENING, FEDERAL RESERVE INDEPENDENCE DOESN'T MATTER ANYWAY. JONATHAN: WE'VE HAD THIS DANCE BETWEEN THE RESERVE AND WASHINGTON FOR A LONG TIME. WE HAVE SEEN PEOPLE GO FROM THE WHITE HOUSE TO THE FEDERAL RESERVE AND THE RESERVE TO THE WHITE HOUSE. SHOULD WE START TO ESTABLISH RULES ABOUT THE ABILITY TO SWITCH FROM ONE TO THE OTHER IN WASHINGTON? DREW: I THINK THERE SHOULD BE A LOT MORE RULES ABOUT ONCE YOU ARE ON THERE. PEOPLE THINK -- THEY DON'T THINK ABOUT WHAT THEY HAVE DONE. IF YOU THINK ABOUT THE FEDERAL RESERVE, I'M GOING INTO, YOU KNOW, THIS WILL COME ACROSS WRONG BUT I MENTORING THE NEW REGIME -- I AM ENTERING A NEW REGIME, THE PRIESTHOOD OF FINANCE. I HAVE TO BE ABOVE REPROACH. I HAVE TO SEVER ALL TIES. I HAVE TO THINK ABOUT WHAT I MOVING INTO AND OUT OF THE ORGANIZATION. AND I STILL -- I REPRESENT THE ORGANIZATION FOR THE REST OF MY LIFE. THERE HAS TO BE THIS MINDSET. AS A SOCIETY WE HAVE MOVED AWAY FROM A MINDSET OF PERSONAL RESPONSIBILITY AND CREDIBILITY. IT IS HURTING US AS A COUNTRY. WHAT WE ARE SEEING IT REFLECTED IN NOW IS THE POLITICAL SPHERE. JONATHAN: DREW MATUS, SLIGHTLY CONTRARY AND BASED ON WHAT WE HEARD IN THE LAST 24 HOURS. ANNMARIE: DEFINITELY CONTRARIAN. I SPOKE TO THE VICE CHAIR LAEL BRAINARD WHO FELT THIS ATTACK ON GOVERNOR COOK WAS AN ATTACK ON THE ENTIRE INSTITUTION. THE REACTION IS BASICALLY WE NEED TO JUST WAIT AND SEE HOW THE COURTS DECIDE. WHEN IT COMES TO THE COURTS, I GO BACK TO THE SUPREME COURT. THE FEDERAL RESERVE IS A CAUSE I PRIVATE ENTITY -- BEC QUASI-PRIVATE ENTITY. JONATHAN: THE MARKET IS DOING OK. TEACHERS JUST ABOUT UNCHANGED ON THE S & P 500. HERE IS YAHAIRA WITH MORE. YAHAIRA: PRESIDENT TRUMP SAID HE'S PREPARED FOR A LEGAL FIGHT WITH FED GOVERNOR LISA COOK AFTER HE ATTEMPTED TO FIRE HER WHILE HER LAWYER VOWED TO FILE A LAWSUIT OVER TRUMP'S MOVE. THE FED SAID IT WOULD ABIDE BY ANY COURT VERDICT AND DEFERRED ANY DECISION ON COOK'S CURRENT WORKING STATUS. UKRAINE'S PRESIDENT SAYS XI JINPING SENTIMENT INDEPENDENCE DAY GREETINGS, THE FIRST AND CONTACTED MORE THAN TWO YEARS. PRESIDENT ZELENSKYY SHARED THE NOTE, SAYING HE APPRECIATED X I'S OUTREACH. K COMES JUST DAYS BEFORE VLADIMIR PUTIN TRAVELS TO BEIJING BEFORE A MAJOR SUMMIT. NIKON SHARES SURGED AFTER RAY-BAN MAKER SAID IT WILL INCREASE THE STAKE IN THE JAPANESE OPTICAL EQUIPMENT MANUFACTURER. SOURCES TELLING US THE FRANCO ITALIAN COMPANY IS CONSIDERING BOOSTING ITS STAKES TO 20%, MORE THAN DOUBLE ITS CURRENT HOLDING. DELIBERATIONS ARE ONGOING. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: APPRECIATE IT. UP NEXT, GEARING UP FOR A LEGAL BATTLE. > > LISA COOK, HER LAWYER SAID THEY WILL BE FILING A LAWSUIT CHALLENGING THE LEGAL ACTION. WHAT IS YOUR RESPONSE AND ARE YOU PREPARED FOR LEGAL FIGHT? PRESIDENT TRUMP: SHE CAN HAVE AN INFECTION. JONATHAN: OF NEXT, MARC SHORT, FORWARD CHIEF OF STAFF TO MIKE PENCE. FROM NEW YORK CITY GOOD MORNING. ♪ JONATHAN: NVIDIA AND FOCUS THIS AFTERNOON. THE STOCK IN THE PREMARKET HIGHER BY POINT 7% FOLLOWING THREE DAYS OF GAINS COMING IN WAS A. THIS TREE CONTINUES TO UNDERESTIMATE THE DEMAND CURVE FOR THE AI REVOLUTION BEING LED BY NVIDIA. IT IS CLOSE TO ALL-TIME HIGHS. DROWNING OUT THE DRAMA IN WASHINGTON, D.C. UNDER SURVEILLANCE, GEARING UP FOR A LEGAL BATTLE. ANNMARIE: LISA COOK'S LAWYER SAID THEY WILL FILE A LAWSUIT CHALLENGING THIS LEGAL ACTION. ARE YOU PREPARED FOR A LEGAL FIGHT? PRESIDENT TRUMP: SHE SEEMS TO HAVE HAD AN INFRACTION AND SHE CAN HAVE AN INFECTION, ESPECIALLY NOT THAT INFRACTION. SHE'S IN CHARGE OF MORTGAGES AND WE NEED PEOPLE THAT ARE 100% OF THE BOARD. IT DOESN'T SEEM LIKE SHE WAS. JONATHAN: SOURCES TELLING US THE TRUMP ADMINISTRATION IS LOOKING TO EXERT MORE INFLUENCE OVER THE FEDERAL RESERVE'S REGIONAL BANK PRESIDENT. TYLER KENDALL HAS MORE. TYLER: THE WHITE HOUSE IS SAYING THIS WOULD NOT NECESSARILY BE ABOUT TRYING TO MAKE THE CENTRAL BANK MORE DOVISH BUT RATHER ABOUT TIGHTENING SCRUTINY OVER THE VETTING PROCESS OF REGIONAL BANK PRESIDENTS CONSIDERING THEY DON'T GO THROUGH SENATE CONFIRMATION. THIS IS PUTTING ATTENTION ON A ONCE IN EVERY FIVE YEAR EXERCISE, WHICH HAPPENS TO BE HAPPENING THIS FEBRUARY WHEN THE FED BOARD OF GOVERNORS WILL LOOK TO AUTHORIZE THE CURRENT ROSTER OF FEDERAL RESERVE REGIONAL BANK PRESIDENTS. THE CONCERN BEING THAT IF THE WHITE HOUSE WERE TO SECURE A MAJORITY ON THE FED BOARD OF GOVERNORS, FOUR OUT OF THE SEVEN SEATS BEING TRUMP APPOINTEES, OFFICIALS COULD USE THIS AS A TOOL AND THEIR PRESSURE CAMPAIGN BY PUTTING HEIGHTENED SCRUTINY ON THE APPOINTMENT PROCESS. WHETHER OR NOT THIS HAPPENS REMAINS TO BE SEEN. ONE THING THAT'S BECOMING CLEAR IN THE REPORTING IS THAT THE WHITE HOUSE DOES NOT APPEAR TO BE SHOWING ANY ATTENTION IT WILL LET UP ITS -- ANY INTENTION OF LETTING UP ITS PRESSURE CAMPAIGN ON THE FEDERAL RESERVE. TELLING ANNMARIE YESTERDAY HE'S PREPARED TO ABIDE BY ANY DECISION. THE NEXT STEPS WE ARE WAITING FOR IS HOW THE LEGAL FIGHT IS GOING TO PROGRESS AND WHEN LISA COOK COULD POTENTIALLY FILE FOR AN INJUNCTION WHICH WOULD IMMEDIATELY REINSTATE HER INTO THE POSITION AS A FED GOVERNOR AS IT WORKS ITS WAY THROUGH THE LEGAL SYSTEM. PRESIDENT TRUMP IS ELEVATING ALLEGATIONS OF MORTGAGE OCCUPANCY FRAUD AGAINST COOK BUT IMPORTANT TO NOTE THEY ARE ONLY ALLEGATIONS AND NO FORMAL CHARGES HAVE BEEN BROUGHT. JONATHAN: TYLER, THANK YOU. HERE IN NEW YORK CITY, MARC SHORT JOINS US NOW FOR MORE. MARC: THANKS FOR HAVING ME. JONATHAN: A MUCH MORE INTERVENTIONAL LIST WHITE HOUSE. HOW ARE YOU FRAMING THINGS AT THE MOMENT/ ? MARC: THERE IS PROBABLY BROUGHT HER -- BROADER SUPPORT. THE NOTION OF THE FED BEING INDEPENDENT WAS A NICE NOTION. IT HAD $7 TRILLION OF ASSETS ON THE BOOKS. YOU HAVE A LOT OF PEOPLE WITH ENORMOUS INFLUENCE ON THE ECONOMY. IF THERE WAS AN EFFORT TO CHANGE IT, IT WOULD BE MORE ABOVEBOARD. THERE'S PROBABLY PLENTY OF POLITICAL APPOINTEES IN THIS ADMINISTRATION WITH TWO MORTGAGES. I WISH IT WASN'T-- JONATHAN: WHICH ONE DO YOU THINK IT IS? MARC: I THINK THESE ARE BOGUS CHARGES. JONATHAN: WHAT MAKES YOU BELIEVE THAT? MARC: I DON'T KNOW HOW MANY HOMES SHE HAS. I BELIEVE THERE ARE PROBABLY PLENTY OF PEOPLE IN THIS ADMINISTRATION HAVE DONE THE SAME. ANNMARIE: KEN PAXTON, THE ATTORNEY GENERAL OF TEXAS. IS THERE LET MA LITMUS TEST? HE HAS THREE RESIDENTS. MARC: -- RESIDENCES. MARC: I THINK YOU'RE CONCERNED THE TRADE AGENDA IS CAUSING WEAKNESS IN THE LABOR MARKET AND THEY WANT RATES LOWER. THIS IS WHAT THE PRESIDENT HAS ALWAYS WANTED, LOWER RATES, EVEN WHEN HE HAD THE OPTION OF APPOINTING JAY POWELL IN THE FIRST ADMINISTRATION. THAT IS ONE OF THE IRONIES. HE CHOSE THE PERSON STEVEN MNUCHIN TOLD HIM WOULD KEEP RATES LOWER. ANNMARIE: HOW DIFFICULT IS NEXT WEEK GOING TO BE IF THEY START THE HEARING ON STEPHEN MIRON? MARC: I'M NOT SO CONFIDENT THEY WILL BE SIGNIFICANT PUSHBACK ON THE APPOINTMENT. THIS IS ABOUT AN EFFORT TO EXERT CONTROL SO HE CAN LOWER RATES FASTER. IT IS REFLECTIVE OF THE CONCERN ABOUT WHERE THE LABOR MARKET IS GOING. JONATHAN: THE SENATE WAS REPUBLICAN AT THE TIME AND HE DID NOT MAKE IT AND IT WAS PUSHBACK. WHAT IS THE DIFFERENCE BETWEEN THE FIRST TERM AND THE SECOND TERM? MARC: THIS IS BROADER THAN THE FEDERAL RESERVE. YOU GO TO HIS CABINET AND IT'S HARD TO ENVISION THAT RFK WHEN HE WAS CONFIRMED. THIS IS BASICALLY A REFLECTION THAT REPUBLICANS ARE WORRIED ABOUT THE P PRESIDENT IN THE PRIMARIES. THERE IS AN ENORMOUS FEAR FACTOR AND HE'S USING THAT WITH GREAT LEVERAGE. THE PARTY HAS CHANGED. IT HAS BECOME FAR MORE POPULIST. WHEN YOU SEE THE FEDERAL GOVERNMENT LOOKING TO SEIZE MEANS OF PRODUCTION IN THE BIGGEST CHEERLEADERS ARE ELIZABETH WARREN AND BERNIE SANDERS AND THERE'S NOT A REPUBLICAN SPEAKING OUT ABOUT THE GOVERNMENT TAKING OVER 10% OF INTEL ON THE HEELS OF SAYING WE HAVE EXPORT CONTROLS AND SELL THESE CHIPS TO CHINA BUT IF YOU ALLOW US TO TAKE 15% OF THE PROFITS IT IS OK AND SHARES OF NIPPON STEEL AND U.S. STEEL, THIS IS MOVING IN A DIRECTION WHERE THE POPULISM AND PROGRESSIVE MERGE AND THERE HAS BEEN SILENCE AMONG SENATE REPUBLICANS. ANNMARIE: REPUBLICANS, WITH THEIR SILENCE, THEY ARE INTERESTED IN REVAMPING THE FEDERAL RESERVE BECAUSE THEY ARE IN FAVOR OF SMALL GOVERNMENT. NOTHING YOU LISTED IS SMALL GOVERNMENT. MARC: THAT IS ONE OF THE SHOCKING PARTS. I BELIEVE THE FIRST ADMINISTRATION WA PREDOMINATE SMALL REGULAR -- PREDOMINATELY SMALL GOVERNMENT. THEY ARE LOOKING TO EXERT THEIR MUSCLE AND IT'S A DIFFERENT AGENDA. ANNMARIE: THERE'S BEEN A LOT OF CRITICISM THAT THEY ARE MIRRORING WHAT CHINA DOES FOR THE EUROPEANS DID IN THE 1960'S. IS THIS ABOUT BUILDING A SOVEREIGN WEALTH FUND? MARC: HE KIND OF REJECTED THE SOVEREIGN WEALTH FUND THE OTHER DAY. IT IS CONCERNING THE TRAJECTORY IS BASICALLY SAUDI ARABIA, CHINA, IRAN, RUSSIA. I HOPE THAT IS NOT WHERE WE ARE GOING. I THINK IT IS MORE SIMPLY ABOUT LEVERAGE AND WHERE HE CAN HAVE LEVERAGE. HE MORE OR LESS INSINUATED THAT THE INTEL CEO WAS A CHINESE SPY, THEN BASICALLY SAID WE ARE NOT TO WORRY ABOUT THE NATIONAL SECURITY AS LONG AS WE CAN HAVE 10%. WHAT IS THE JUSTIFICATION? YOU CROWD OUT PRIVATE INVESTORS. THIS TALK PRIVATELY DECLINED -- THE STOCK PROBABLY DECLINED. ANNMARIE: IT'S ALSO NOT JUST THE EXAMPLES MARC SHORT BROUGHT UP. THE DOD TOOK A STAKE IN A COMPANY AS WELL AND HOWARD LUTNICK SAID THIS MIGHT BE POTENTIALLY THE DIRECTION OF TRAVEL FOR OTHER DEFENSE COMPANIES. JONATHAN: THE TRADITIONAL REPUBLICAN VIEW OF WHAT IS PLAYING OUT IN WASHINGTON. ANNMARIE: IS IT A TRADITIONAL REPUBLICAN VIEW WHEN IT COMES TO THIS WHITE HOUSE IN CORPORATE AMERICA? THEY ARE TAKING AN INTERVENTION LIST APPROACH WOULD USUALLY PUT SOMETHING ON THE BACKS OF MOST REPUBLICANS. JONATHAN: UP NEXT, WE CATCH UP WITH GEOFFREY GERTZ AND DANI IS BACK WITH YOUR MOORING MOVERS WITH THE KOHLSTOCK UP 17%'S -- KOHL'S STOCK ♪UP 17%. JONATHAN: EQUITIES JUST ABOUT POSITIVE ON THE S & P 500. EARNINGS FROM NVIDIA AFTER THE BELL. ON THE NASDAQ 100, UP BY CLOSE TO 1/10 OF 1%. A BIT SOFTER ON THE RUSSELL. TWO HOURS TO THE OPENING BELL. SOME SINGLE NAMES WITH DANI. DANI: JM'S FALLING, DOWN 4.25% -- J.M. SMUCKER COMPANY. ALL THE CATEGORIES LOOKING WEAKER, EVERYTHING FROM THE COPY BRANDS TO PET SNACKS AND HUMAN SNACKS. IT IS BAD WHEN YOU NOT GIVING YOUR PET AS MANY TREATS. THE CEO SAYS IT'S A DYNAMIC ENVIRONMENT AND THEY'RE DEALING WITH THINGS LIKE TARIFFS ON BRAZIL HURTING THEIR COFFEE BUSINESS. POSITIVE RESULTS WHEN IT CAME TO KOHL'S. THEY HAVE BEEN IN THE MIDDLE OF A TURNAROUND EFFORT. IT IS A BEAT AND A RAISE FOR THEM. 17.3%. KEY FOR ONE OF THE CONSUMER FACING COMPANIES ALSO DEALING WITH TARIFFS AND THEY WERE ABLE TO RAISE THEIR MARGIN OUTLOOK FOR THE ENTIRETY OF THE YEAR. WRAPPING IS UP WITH PAYPAL SHARES FALLING THIS MORNING, DOWN 2.4%. A GERMAN OUTLET REPORTING THERE IS SOME SECURITY ISSUES. GERMAN BANKS HAVE BEEN BLOCKING DIRECT PAYMENT OVER FEARS OF WHAT THE SECURITY SYSTEM FAILURE MEANS. JONATHAN: THANK YOU FOR THE UPDATE. MORE FROM DANI IN THE NEXT HOUR. DONALD TRUMP HITTING AND WITH 50% TARIFFS AS PUNISHMENT FOR BUYING RUSSIAN CRUDE, PUTTING A STRAIN ON TIES WITH THE PRIME MINISTER NARENDRA MODI. ANNMARIE: IPHONES BASICALLY -- TIM COOK ONCE ALL THE U.S.-BOUND IPHONES TO BE COMING FROM INDIA. ARE THEY GOING TO GET HIT WITH THIS MASSIVE HIGH TARIFF? KATE SAID THIS HAS LESS TO DO WITH INDIA AND MORE ABOUT THE PRESIDENT WAITING TO GO FORWARD WITH HIS SEMICONDUCTOR TARIFF RATES. POTENTIALLY THIS STORY COULD CONTINUE AND WHAT MIGHT BE EXEMPT OR NOT DEPENDING ON HOW THEY ARE GOING TO VIEW THE CHIPS SECTOR AND WHAT TARIFF RATE THAT WILL BE SET AT. JONATHAN: THERE ARE MASSIVE BARRIERS FOR IMPORTING INTO THE COUNTRY. THEY SAY NEED WEED TO PROTECT INFANT INDUSTRIES AND THAT'S BECOMING MORE CONTROVERSIAL AS THE COUNTRY GROWS RICHER. THE JUSTIFICATION, THEY HAVE SOME REASONS TO BE IRKED. THEY ARE NOT THE ONLY ONES BUYING RUSSIAN OIL. IT'S A MASSIVE PROBLEM. THE QUESTION OF CONSISTENCY BEING ASKED FROM TRADE PARTNERS. ANNMARIE: IT'S BEEN PUT FORWARD TO THE ADMINISTRATION. THE NUMBER ONE BUYER RUSSIAN ENERGY IS CHINA AND THAT IS WHY PUTIN HAS BEEN ABLE TO CONTINUE FUNDING THE WAR IN UKRAINE. WHEN HE ASKED THE ADMINISTRATION, THEY WILL SAY CHINA HAS DIVERSIFIED AND THE NUMBERS HAVE NOT REALLY CHANGED. THEY ARE DIVERSIFIED. THEY ARE SAYING INDIA WAS OPPORTUNISTIC AND TOOK ADVANTAGE OF THE SITUATION. THIS IS A PROBLEM FOR MODI. HE'S HAVING A TENSE RELATIONSHIP WITH THE PRESIDENT OF THE UNITED STATES. EVERYONE THOUGHT A TRADE DEAL COULD HAPPEN ALMOST IMMEDIATELY. THIS WEEK HE'S MEETING WITH XI JINPING. JONATHAN: THE COMMERCE SECRETARY SPARKING A MINOR RALLY IN DEFENSE STOCKS AFTER SUGGESTING THE U.S. MIGHT TAKE STAKES IN SOME DEFENSE CONTRACTORS. HE MENTIONED LOCKHEED MARTIN. ANNMARIE: HE GETS REVENUE FROM FEDERAL CONTRACTS AND THEY THINK THEY SHOULD HAVE A PIECE OF THE PIE? WHEN YOU SEE THAT VALUATIONS, WHY TAKE A BITE OF THE APPLE WHEN VALUATIONS ARE SO HIGH? NOT GOING TO GET INTO HOW THEY ARE THINKING ABOUT WHERE EVALUATIONS ARE. WHETHER IT IS INTEL, THIS GOLDEN SHARE OF NIPPON STEEL, THERE'S THE PENTAGON HAVING A DEAL WITH A WHERE EARTH MINERAL COMPANY, NP MATERIALS. THEY ARE GOING TO SAY WE ARE DOING THIS BECAUSE OF NATIONAL SECURITY CONCERNS. JONATHAN: SOMETIMES A FREE HAND OF THE MARKET DOESN'T HELP NATIONAL SECURITY OBJECTIVES. BUILDING FOUNDRY CAPACITY MIGHT BE AN EXAMPLE OF THAT. I THINK WE WHAT TO DO OUR BEST TO FOSTER INNOVATION AND I DON'T THINK ANYWAY CAN SIT HERE AND SAY THAT PRIVATE DEFENSE CONTRACTORS HAVE NOT FOSTERED INNOVATION IN THE PAST FEW DECADES. THEY HAVE THE TECHNOLOGY EVERYBODY WANTS. IF YOU WANT TO TAKE STAKES IN THE COMPANY'S WHAT ARE THEY DOING YOU WOULD LIKE FOR THEM TO DO? IS IT ABOUT NATIONAL SECURITY OBJECTIVES OR JUST GETTING SOME MONEY? ANNMARIE: WHAT ARE YOU BASICALLY -- WE SAW THIS WITH THE BIDEN ADMINISTRATION. NATIONAL SECURITY WAS A CLOAK PUT ON EVERYTHING TO MAKE MOVEMENTS THAT WERE EITHER SOCIALLY INCLINED OR POLITICALLY INCLINED. THIS IS BEING USED TO BASICALLY GET AT WHAT YOU WANT. WHAT I WILL SEAY IS THE GOVERNMENT IS INTERVENING AND IT WILL NOT STOP HERE. HOWARD LUTNICK WAS CU CLEAR ABOUT THAT YESTERDAY. JONATHAN: THE WHITE HOUSE TRYING TO GET -- THE PRESSURE ON THE INSTITUTION IS GOING TO CONTINUE TO BUILD. ANNMARIE: THE PRESIDENT SAID THEY WILL HAVE A MAJORITY. THEY WILL IF THEY PUT SOMEONE IN LISA COOK'S SEAT AND SHE'S GOING TO HAVE A LEGAL BATTLE WITH THE OVAL OFFICE. IF THEY ARE ABLE TO POTENTIALLY HAVE THIS MAJORITY, THE THINKING IS THE GOVERNORS APPOINTED BY THE PRESIDENT WILL VOTE TO RESHAPE HOW THE PRESIDENCY WORKS. WE HAVE REPORTING THAT THIS IS SOMETHING THEY ARE THINKING ABOUT. JONATHAN: WE EXPECT GOVERNOR WALLER AND GOVERNOR BOWMAN TO GO ALONG WITH THIS IS START VOTING ON REGIONAL FED PRESIDENTS? TREAT THEM AS POLITICAL PUPPETS? ANNMARIE: IT WAS THE KEY QUESTION. MIKE MCKEE SAID HE FIND THAT HARD TO BELIEVE THAT THE INDIVIDUALS WOULD GO ALONG WITH THIS. JONATHAN: LET'S TURN BACK TO THE MAIN EVENT AFTER THE CLOSING BELL THIS AFTERNOON. EARNINGS FROM NVIDIA. GEOFFREY GERTZ WRITING THE FOLLOWING, "THE FINANCIAL PERFORMANCE OF SEMICONDUCTOR COMPANIES AND ESPECIALLY NVIDIA ARE INCREASINGLY DRIVEN BY GOVERNMENT POLICY. NVIDIA IS SQUEEZED BETWEEN THE BOTH THE U.S. AND CHINESE GOVERNMENTS. IT WILL BE A STRUGGLE TO SATISFY BOTH OF THEM." WELCOME TO THE PROGRAM. I WENT TO EXTENDED SOME OF THE THINKING WITH YOU. WE'LL LOOK IT HARDER TO MAINTAIN A PRESENCE IN BOTH MARKETS? GEOFFREY: THANK YOU FOR HAVING ME. THIS IS THE REAL QUESTION NVIDIA IS FACING AND OTHER COMPANIES AS WELL. CAN THEY BE IN BOTH THESE MARKETS AT THE SAME TIME? WE HAVE SEEN THE UNITED STATES PUT INCREASED POLICIES ON EXPORT CONTROLS TO MAKE IT MORE DIFFICULT TO DO BUSINESS IN CHINA. WE SEE THE CHINESE GOVERNMENT TAKING ITS OWN ACTIONS, SAYING DON'T TRUST U.S. SHIP COMPANIES -- CHIP COMPANIES. NVIDIA IS TRYING TO FIND A PATH BETWEEN THE TWO OF THESE. JENSEN HUANG IS BEING SHUTTLED BACK AND FORTH BETWEEN BEIJING AND WASHINGTON BUT IT'S A PERILOUS PATH TO TRAVEL. JONATHAN: WHAT WE ALLOW TECHNOLOGY IN AMERICA TO GO TO CHINA? NOW WE HAVE TO THINK ABOUT THE OTHER SIDE. WILL CHINA ALLOW TECHNOLOGY TO COME INTO THE COUNTRY? WHERE ARE WE ON THAT POINT NOW? GEOFFREY: WE HAVE KNOWN THAT CHINA ALWAYS WANTED TO HAVE ITS OWN INDIGENOUS CAPABILITIES. GOING BACK TO THE 2018 MOVES, THE FIRST TRUMP ADMINISTRATION, THE CHINESE GOVERNMENT IS NOT STUPID. THEY HAVE BEEN AWARE THIS IS A KEY VULNERABILITY TO THEM. ONCE THE VITA ADMINISTRATION EXPANDED THE SEMICONDUCTOR EXPORT CONTROLS IN 2022, IT'S BEEN FULL STEAM AHEAD IN BEIJING TO INCREASE THEIR OWN CAPABILITIES. PART OF THAT IS SAYING IS DON'T BUY AMERICAN. THERE IS A BACK-AND-FORTH WHERE THE CHINESE WANT ACCESS TO THE CUTTING EDGE WHICH REMAINS ONLY U.S. PRODUCED. FOR EVERYTHING LESS THAN THAT THEY WILL DO ALL THEY CAN TO PROCURE THAT DOMESTICALLY. THAT MEANS SUPPORTING THE DOMESTIC CAPABILITIES RATHER THAN BUYING NVIDIA OR OTHER U.S. CHIPS. ANNMARIE: WHETHER IT IS THE POTENTIAL PROFIT GOING BACK TO CHINA OR THE STAKE IN INTEL, THIS INTERVENTIONIST APPROACH OF THE WHITE HOUSE, WHAT DO YOU MAKE OF IT? WHAT YOU THINK THIS GOVERNMENT WANTS? GEOFFREY: THAT IS THE MILLION DOLLAR QUESTION. I DON'T KNOW. YOU CAN THINK OF THESE EQUITY STAKES IN TWO WAYS. WHAT IS THE GOVERNMENT IS OUT TO GET MONEY. SECOND, THE GOVERNANCE AND SHAPING THE BROADER DEVELOPMENT OF THESE INDUSTRIES. THE ADMINISTRATION HAS NOT BEEN CLEAR. MOST WE HEARD FROM TRUMP AND LUTNICK IS TALKING ABOUT GETTING SOME PAYBACK FOR THE U.S. TAXPAYERS. IT IS NOT CLEAR THAT EQUITY STAKES ARE THE BEST WAY TO DO THAT. DO WE SEE THE GOVERNMENT WANT TO PLAY A MORE HEAVY-HANDED HIDDEN ROLE -- HEAVY-HANDED ROLE SHAPING THESE INDUSTRIES OR JUST TRYING TO TRANSACTIONAL IZE GETTING A FEW EXTRA BUCKS HERE? ANNMARIE: WHO COULD BE NEXT AFTER INTEL? GEOFFREY: WE HEARD TALKS OF OTHER COMPANIES BEING TARGETS. THERE IS AN IMPORTANT DIFFERENCE. INTEL UNDER THE CHIP STACK TO RECEIVE GRANTS YOU NEED TO BE HITTING YOUR VARIOUS PERFORMANCE MILESTONES. IT IS LIKELY THE INTEL WAS NOT HITTING THOSE MILESTONES. THE EQUITY STAKE DEAL IS WITH THEM TO GET CASH OUT EVEN WITHOUT HITTING THOSE MILESTONES. OTHER COMPANIES WILL BE MORE RELUCTANT TO DO AN EQUITY STAKE. WE WILL SEE HOW THAT PLAYS OUT. DEFENSE CONTRACTORS, THAT'S ANOTHER KEY AREA WHERE IT SEEMS POSSIBLE. THE CRITICAL MINERAL SPACE IS ANOTHER SECTOR WITH THE GOVERNMENT HAS MADE SOME MOVES. JONATHAN: THE WHITE HOUSE UNDER BIDEN AND TRUMP HAS REENGAGED WITH INDUSTRIAL POLICY. WHAT IS THE BIGGEST POLICY BETWEEN WHAT YOU WORKED FOR AND WHAT YOU SEE PLAYING OUT NOW? GEOFFREY: WE HAVE SEEN THIS LONGER-TERM SHIFT TOWARDS INDUSTRIAL POLICY AND THAT'S MERITED. WHAT WE HAVE SEEN PREVIOUSLY IS THE GOVERNMENT WITH BROAD RULES OF THE ROAD SAYING HERE'S THE BROAD POLICY PACKAGE OF SUBSIDIES AVAILABLE TO ANY COMPANY THAT MEETS THE VARIOUS REQUIREMENTS TO QUALIFY. SET THE RULES OF THE GAME AND LET THE PRIVATE SECTOR DO ITS THING. WE HAVE SEEN FROM THE TRUMP ADMINISTRATION A MORE TRANSACTIONAL AD HOC ONE-OFF GET INVOLVED WITH INDIVIDUAL COMPANIES. WE SEE THAT TRADITIONALLY WERE YOU GOVERNMENT -- WHETHER GOVERNMENT SETS THE RULES, BUT NOW THEY ARE PLAYING THE GAME ITSELF AND NEGOTIATING ITS OWN DEALS. THAT IS CREATING A LOT OF CHAOS AND UNCERTAINTY FOR WHERE THE MARKET IS GOING. THOSE OF THE COMPANIES THE GOVERNMENT IS TAKING A STAKE IN. FOR ALL THE GOVERNMENT -- THE COMPANIES THAT ARE CUSTOMERS OR POTENTIAL SUPPLIERS TO THOSE COMPANIES, THERE ARE TONS OF UNCERTAINTIES AROUND THIS. JONATHAN: I HOPE YOU TAKE THIS IN THE SPIRIT ITS INTENDED. THE PREVIOUS ADMINISTRATION DID NOT ALLOW YOU TO ENGAGE THE PUBLIC AND TALK ABOUT WHAT YOU WERE ACTUALLY DOING. WHAT WAS THAT ABOUT? WHY WERE YOU ALL HIDDEN AWAY AND NOT ALLOWED TO TALK TO US? GEOFFREY: I DON'T HAVE A DIRECT ANSWER TO THAT. MANY ADMINISTRATIONS STRUGGLE WITH GETTING THE RIGHT NARRATIVE OUT THERE. THE VITA ADMINISTRATION DID THAT AS WELL. -- BIDEN ADMINISTRATION DID THAT AS WELL. WE ARE SEEING FROM THE CURRENT ADMINISTRATION THERE ARE LOTS OF -- IS A LOT OF LACK OF CLARITY AS WELL. IT'S A PROBLEM THAT MANY ADMINISTRATIONS FACE BUT IT'S IMPORTANT THE PUBLIC UNDERSTANDS WHAT THE GOVERNMENT IS TRYING TO ACHIEVE TO PROVIDE FORWARD GUIDANCE FOR INDUSTRY ABOUT WHERE WE WANT TO GO. JONATHAN: THANKS FOR CATCHING UP WITH THIS. GEOFFREY GERTZ THERE. IT WAS RIDICULOUS. ANNMARIE: I THINK BOTH ADMINISTRATIONS COULD LEARN SOMETHING FROM EACH OTHER. SOMETIMES THE TRUMP ADMINISTRATION JUST FLOODS THE AIRWAYS AND THE MESSAGE IS DILUTED BECAUSE THERE ARE SO MANY PEOPLE SPEAKING AT THE SAME TIME. YOU HAVE THE BIDEN ADMINISTRATION WHICH REALLY WAS VERY SHY. JONATHAN: IT WASN'T SHY. IT WAS PREACHY. ANNMARIE: HOW MANY TIMES TO WE SIT DOWN WITH THE CURRENT TREASURY SECRETARY SCOTT BESSENT? MORE TIMES THAT I HAD FACE TIME WITH THE TREASURY JANET YELLEN. JONATHAN: WE SAID THE SAME THING ABOUT LARRY KUDLOW WITH THE FIRST TERM FOR PRESIDENT TRUMP. THERE WAS SOMETHING ABOUT THE FORMER ADMINISTRATION WHERE THEY BELIEVED EVERYTHING AND IT WAS BETTER THAN WHAT YOU KNOW AND THERE IS NO SPACE FOR CONVERSATION BECAUSE WHAT WE SAY GOES. TRUST US BECAUSE WE ARE RIGHT. INFLATION IS NOT HIGH. I REALLY SQUEEZED RIGHT NOW. THIS IS NOT WORKING FOR ME. ANNMARIE: THAT IS WHY THEY HAD TO RECALIBRATE ON A NUMBER OF FRONTS. HE HAD TO BRING GAS PRICES DOWN. FROM A JOURNALIST PERSPECTIVE, THERE WAS A LOT OF NOISE IN THAT CABINET MEETING BUT THAT IS NOT SOMETHING YOU WOULD EXPERIENCE UNDER THE BIDEN ADMINISTRATION. JONATHAN: LET'S GET AN UPDATE ON STORIES WORLDWIDE. HERE IS YAHAIRA. YAHAIRA: THE EUROPEAN UNION WILL TRY TO FAST-TRACK LEGISLATION TO REMOVE ALL TARIFFS ON U.S. INDUSTRIAL GOODS BY THE END OF THE WEEK. PRESIDENT TRUMP IS REQUIRING THE REMOVAL BEFORE THE U.S. LOWERS ITS DUTIES ON THE BLOCK'S AUTO EXPORTS. THE EUROPEAN COMMISSION WILL GIVE PREFERENTIAL TARIFF RATES ON SOME U.S. SEAFOOD AND AGRICULTURAL PRODUCTS. LEGO POSTING RECORD-BREAKING SALES OF THE FIRST HALF OF THE YEAR, BOOSTED BY ITS BRICK FLOWERS AND CARS. THEY EXPANDED THEIR MARKET SHARE IN EVERY MAJOR GEOGRAPHY BUT SAID ASIA IS PLAYING AN IMPORTANT ROLE IN ITS STRATEGY. THE CEO SAID THERE ARE A LOT OF CHILDREN IN ASIA AND LIVING STANDARDS ARE GOING UP. THAT MAKES LEGO MORE RELEVANT. ELON MUSK'S SPACEX LAUNCHED ITS 10TH FLIGHT TO THE PLAY SATELLITES. IT IS THE CENTERPIECE OF PLACE TO SEND HUGE BATCHES OF ITS STARLINK INTERNET SATELLITES INTO EARTH ORBIT AND CARRY HUMANS TO THE MOON AND EVENTUALLY MARS. JONATHAN: THANK YOU. UP NEXT, THE PRESSURE BUILDING ON THE FEDERAL RESERVE. > > THIS IS REALLY AN UNPRECEDENTED ATTACK ON THE INDEPENDENCE OF THE FEDERAL RESERVE, WHICH MEANS HIGHER INFLATION POTENTIALLY, LESS CREDIBILITY, EVEN HIGHER LONG-TERM INTEREST RATES. IT IS BAD FOR THE ECONOMY. JONATHAN: UP NEXT, KRISHNA MEMANI OF LAFAYETTE COLLEGE. YOU ARE WATCHING BLOOMBERG TV. ♪ JONATHAN: EQUITIES POSITIVE BY 1/10 OF 1% OF THE S & P 500. DRAMA IN WASHINGTON. NO DRAMA ON WALL STREET. THE PRESSURE BUILDING ON THE FEDERAL RESERVE. > > THE FEDERAL RESERVE IS AN INCREDIBLY DIFFICULT POSITION HERE. THIS IS NOT ABOUT AN INDIVIDUAL GOVERNOR. THIS IS AN UNPRECEDENTED ATTACK ON THE INDEPENDENCE OF THE FEDERAL RESERVE, WHICH MEANS HIGHER INFLATION POTENTIALLY, LESS CREDIBILITY, EVEN HIGHER LONG-TERM INTEREST RATES. JONATHAN: THE BOND MARKET AND FOCUS AS PRESIDENT TRUMP AND LISA COOK GEAR UP FOR AN INTENSE LEGAL BATTLE FOLLOWING THE MOVE TO OUST THE FED OFFICIAL. KRISHNA MEMANI WRITING, "WHY IS THE LONG INTO THE STABLE? THE ONLY POSSIBLE REASON IS THAT THE TRUMP TACO THINKING PERMEATES THE BOND MARKET." IS THAT YOUR TAKE ON THINGS THIS MORNING? KRISHNA: YOU HAVE TO ASK IF THE FED INDEPENDENCE ISSUE IS REALLY THAT IMPORTANT, THEN IT OUGHT TO HAVE A SUBSTANTIALLY MORE IMPACT ON THE BOND MARKET AND IT DOES SO FAR. WHY IS THAT NOT THE CASE? I CAN COME UP WITH FIVE REASONS. NONE OF THEM ACTUALLY STICK. THE MARKETS ARE SAYING IF THINGS ARE MOVING IN THE WRONG DIRECTION ON A SUSTAINED BASIS, MAYBE ALL OF THIS GETS PULLED IN. JONATHAN: LET'S SAY IT WAS A COMPLETE TAKEOVER OF THE FEDERAL RESERVE. FISCAL GOVERNANCE. I WOULD EXPECT YIELD CURVE CONTROL. KRISHNA: IF THEY DON'T DO YIELD CURVE CONTROL IN THAT ENVIRONMENT, LONG RATES ARE GOING TO BE MEANINGFULLY HIGHER. THERE'S NO DOUBT ABOUT THAT. WE WROTE AN OP-ED, ONE OF THE CANDIDATES, SAYING EXACTLY THE SAME THING. IF FISCAL AUTHORITIES WANT TO CONTROL RATES, WE HAVE SEEN THAT IN 15 DIFFERENT PLACES. JONATHAN: I'M SURPRISED MORE PEOPLE ARE NOT THINKING ABOUT THE POST POWELL WORLD. YOU HAVE GOT TO BELIEVE THAT THE PRESIDENT IS GOING TO WENT LOWER BORROWING COSTS FOR THE GOVERNMENT AND LOWER MORTGAGE COSTS FOR CONSUMERS. SHOULD WE BE THINKING ABOUT MORE ACTIVIST CENTRAL BANK BALANCE SHEET POLICY? KRISHNA: ACTIVIST CENTRAL BANK POLICY TO WHAT END? JONATHAN: MORTGAGE RATES, LOWER BORROWING COSTS. KRISHNA: THAT IS NOT WHAT THE FED'S MANDATE IS. IT IS EMPLOYMENT AND INFLATION IN THE INFLATION PART IS NOT GONE AWAY. SOME WILL PROBABLY EXERT THEMSELVES MORE IN THE WAY THEY ARE EXERTING THEMSELVES NOW. JONATHAN: DANI BURGER TALKED ABOUT THIS IN THE LAST WEEK. YOU COULD SAY I'M LOOKING AT REDUCING INTEREST RATES BUT IT'S NOT LEADING TO A DROP IN LONG AND RATES, THEREFORE I'M SEEING THE BOND MARKET IMPEDE THE EFFICACY OF MONETARY POLICY IN IT WOULD BE HELPFUL TO USE THE BALANCE SHEET TO ADDRESS THE CONCERN. IS IT THAT THE WAY TO GET AROUND THIS/ -- IS IT THAT THE WAY TO GET AROUND THIS? -- ISN'T THAT THE WAY TO GET AROUND THIS? KRISHNA: IT WOULD BE HARD TO JUSTIFY A LIGHT OF THE DATA AT THAT PARTICULAR TIME. THAT DATA IN THAT TIME AND ENVIRONMENT PROBABLY WILL NOT BE AS SUPPORTIVE AS IT IS TODAY TO THAT CAUSE. ANNMARIE: GOVERNOR WALLER IS JUST ONE INDIVIDUAL ON A LIST. WHAT IF THERE IS SOMEONE THINKING ABOUT HOW MAYBE THIS ADMINISTRATION WOULD WANT TO BRING LONG END YIELDS DOWN AND MORTGAGES DOWN? KRISHNA: IF THE ENVIRONMENT IS RIGHT, WE SHOULD NOT BE TOO RESTRICTIVE. IN A SCENARIO WHERE YOU ARE FORCING RATES DOWN, THAT WOULD NOT BE THE CASE. YES, THEY CAN SIGN UP FOR THE POLICY BUT IT WOULD BE DIFFICULT FOR THEM TO JUSTIFY IT ON ECONOMIC GROUNDS. THE ONE THING YOU HAVE TO GIVE TO THIS ADMINISTRATION'S THEY WILL GO ALL IN. IN A DIRE SCENARIO WE SHOULD EXPECT THAT. ANNMARIE: WHEN IT COMES TO FIT INDEPENDENCE AND LISA COOK, IF THE COURT SAYS SHE IS RIGHT IN THE PRESIDENT CANNOT REMOVE HER, WHAT HAPPENS NEXT? KRISHNA: IT WOULD BE VERY DIFFICULT FOR SOMEBODY TO REMAIN CREDIBLE IN THAT SITUATION. ANNMARIE: YOU THINK SHE GOES REGARDLESS? KRISHNA: I THINK SHE GOES BUT AFTER A FIGHT. JONATHAN: STOCKS OR BONDS? KRISHNA: IF I HAD TO BUY SOMETHING, I WOULD RATHER BUY STOCKS AND BONDS. I THINK THE RISK OF RE-ACCELERATION IS PROBABLY NOT BEING DISCOUNTED IN THE MARKET APPROPRIATELY. JONATHAN: EC SMALL CAPS, SOME CYCLICALS, THE AIRLINES, YOU THINK THEY CAN CONTINUE? KRISHNA: MIGHT GUESS IS THE ECONOMY IS NOT SLOWING DOWN. PUT ASIDE INFLATION FOR A SECOND. THE ECONOMY IS SUPPORTIVE OF THE CYCLICAL SECTORS. I THINK THE CYCLICAL PART OF THE ECONOMY IS DOING BETTER THAN WE GIVE IT CREDIT. JONATHAN: YOU ARE EXPECTING A REACCELERATION IN THE U.S. ECONOMY? KRISHNA: YES. THEY WILL PROBABLY BE ONE ADULT RATHER THAN WITH THE BOND MARKET IS THINKING. JONATHAN: FOR THIS YEAR OR NEXT YEAR TOO? KRISHNA: THINGS COULD BE MATERIALLY DIFFERENT THE NEXT YEAR. I HAVE A LOT OF CONFIDENCE IN THE OTHER MEMBERS, WALLER, BOWMAN. I THINK THEY WILL DO THE RIGHT THING FOR THE ENVIRONMENT. WALLER HAS AN ASPIRATION TO BE THE CHAIR. ANNMARIE: HOW IS THAT GOING TO HAPPEN WHEN CONSUMERS MIGHT START PUSHING BACK? WE HAVE SEEN IT IN SOME SECTORS HIGHER PRICES. KRISHNA: IF YOU LOOK AT SOMETHING LIKE BANK OF AMERICA CREDIT CARD DATA, THEY ARE BETTER THIS MONTH THAN LAST MONTH AND LAST MONTH WAS BETTER THAN THE MONTH BEFORE. I THINK THE CONSUMER SLOWDOWN IS PEOPLE TAKING MCDONALD'S DATA AND EXTENDING IT TOO FAR. JONATHAN: GOOD TO SEE YOU. IS THAT WHAT WE CALL BLS DATA? KRISHNA MEMANI. THE THIRD HOUR OF "BLOOMBERG SURVEILLANCE" IS UP NEXT. ♪ > > EVERYTHING IS EXPENSIVE RIGHT NOW. YOU SHOULD EXPECT LOWER RETURNS ACROSS THE WORD DASHBOARD FROM STOCKS AND BONDS. > > WHEN I LOOK AT THE S & P 493 THERE ARE A LOT OF BUSINESSES IN TECH ARE -- HARDWARE. > > WE SAW A REALLY GOOD EARNINGS SEASON AND SOME OF THAT HAS BEEN BAKED IN. > > IT FEELS LIKE WE ARE PLAYING -- PAYING 2030 PRICES FOR 2025 TECHNOLOGY. > > THIS IS BLOOMBERG SURVEILLANCE. JONATHAN: LIVE FROM NEW YORK CITY AND GOOD MORNING TO YOU ALL. THE THIRD HOUR OF SURVEILLANCE STARTS RIGHT NOW AS WE COUNT YOU DOWN TO THE OPENING BELL. YOUR SCORES LOOK LIKE THIS. EQUITY FUTURES FIRMWARE THIS MORNING BY NOT EVEN .1 PERCENT. SIMILAR MOVE ON THE NASDAQ 100 AFTER A PERIOD OF OUTPERFORMANCE. WE ARE SOFTER DOWN BY .10%. THE MAIN EVENT AFTER THE CLOSING BELL, EARNINGS FROM NVIDIA. THE BAR IS ALWAYS HIGH. ANNMARIE: WHAT YOU HAVE BEEN SAYING CONSISTENTLY IS VERY IMPORTANT. THE QUESTION GOING INTO THIS IS NOT EVEN SO MUCH WHAT NVIDIA IS ABLE TO SELL, BUT WHAT CHINA IS WILLING TO TAKE. DO THEY WANT THE CHIPS ANYMORE. AND WHEN YOU LOOK AT HOW JENSEN WANG WILL TALK ABOUT CHINA, WHERE IS HE WITH THIS ADMINISTRATION IN GETTING EXPORT LICENSES TO SELL SOMETHING LIKE A BLACKWELL CHIP. AND THEN WHAT ARE THEY ASKING IN TERMS OF PROFIT IF YOU ARE ALLOWED TO SELL THAT. JONATHAN: NVIDIA MAKES UP 8% OF THE ESSMAN -- S & P AND 110 PERCENT OF INVESTOR SENTIMENT. THIS MARKET IS FALL MORE THAN ABOUT NVIDIA. SMALL CAPS, BANKS, AND AIRLINES ALL ROCKETING. ANNMARIE: WE JUST HEARD THAT HE THINKS THERE IS A BUMP IN THE ECONOMY AND THERE IS MORE TO GO WHICH IS WHY YOU ASKED HIM IF YOU ARE EQUITIES OR BONDS. JONATHAN: HE WAS ON THE PROGRAM 10 MINUTES AGO LOOKING FOR THE FEDERAL RESERVE TO DROP INTEREST RATES AS THE ECONOMY IS REBOUNDING INTO THE BACK HALF OF THE YEAR. A BIG CALL. S & P 500 JUST POSITIVE. COMING UP ALEX SALZMAN WITH STOCKS NEAR ALL-TIME HIGHS. GAIL GLORIA AND MATT LOSE EDDIE -- LUZZETTI. ALEX WRITING "WITH THE BACKDROP OF A LONG WEEKEND APPROACHING AND LOW VOLUMES THAT MIGHT BE ENOUGH FOR RISK TO CONTINUE RALLYING IN THE WAKE OF THESE RESULTS." GOOD MORNING. IT IS GOOD TO SEE YOU. IT IS NOT JUST ABOUT TECH BUT WHAT DID YOU NOTICE IN SMALL CAPS? ALEX: NOT JUST YESTERDAY BUT FOR A FEW WEEKS NOW. WHAT WE THINK IS IMPORTANT TO TALK ABOUT A REGIME SHIFT IN THE EQUITY MARKET, WHICH IS EFFECTIVELY MOVING FROM A POST-COVID OR IN FAYETTE -- INFLATION ENVIRONMENT OF HIGHER FOR LONGER AND SOMETHING THAT LOOKS DIFFERENT WITH LOW INTEREST RATES. I DO NOT MEAN THAT WE WILL SUDDENLY DROP BACK TO ZERO INTEREST RATE. BUT IF WE ARE ON A PATH TO MORE GRADUAL RATE CUTS, WE HAVE TO CONSIDER THAT THERE HAS BEEN A K SHAPED RECOVERY FOR A NUMBER OF YEARS NOW. SMALL CAPS HAVE BEEN SUFFERING FOR A LONG TIME AND MAYBE IT IS THERE A TIME TO OUTPERFORM BECAUSE THEY ARE THE BIGGEST BENEFICIARY OF CUTS. JONATHAN: LET US SIT ON THE WHY. A LOT OF PEOPLE ARE CONVINCED THAT ON THE FRONT END YIELDS WILL DROP. THE LONG END REMAINS A DEBATE. WHY ARE THE SHORT RATE SO IMPORTANT? ALEX: BECAUSE YOU ARE LOOKING AT 45 TO 50% OF THE RUSSELL 2000 DEBT. AND THEN IF YOU LOOK AT THE OVERALL WEIGHTED AVERAGE MATURITY INCLUDING THAT, YOU ARE LOOKING AT THREE AND FOUR YEARS. THE FRONT OF THE CURVE MATTERS, AND THAT IS NOT TO TAKE AWAY FROM THE BACK END RATES BECAUSE THOSE COULD AFFECT THE BROADER RISK SENTIMENT BUT MORE OF THE FACT THAT IF WE JUST OPERATE AN ENVIRONMENT OF THE BACK END OF THE CURB BEING RELATIVELY STABLE, IF THE FRONT END OF THE CURVE COMES DOWN, THAT MEANS THAT WILL BE A DIRECT BENEFICIARY FOR SMALL CAPS. WHO OWN SMALL CAPS? NO ONE. IT IS ONE OF THE BIGGEST UNDER WEIGHTS. ANNMARIE: LET US TALK ABOUT THE INDEPENDENCE OF THE FED. WE HAVE SEEN A STEEPENING, BUT IT HAS BEEN MUTED. IF YOU WERE CONCERNED, WHY ARE WE NOT SEEING A BIGGER MARKET REACTION? ALEX: THERE IS A DEGREE OF INVESTOR LETHARGY AND APATHY AND IT IS THE SUMMER TIME AND THEY WILL NOT DO ANYTHING UNTIL EVERYONE COMES BACK FROM LABOR DAY. WE JUST HAVE TO WORK OFF THE ASSUMPTION THAT IT IS -- EASY TO EXTRAPOLATE THE NARRATIVE INTO DOOM MONGERING FORECASTS. WE ARE OPERATING WITHIN ADMINISTRATION AND THE COMMANDER OF THE UNITED STATES OFTEN SAYS THINGS AND DOES NOT DO THINGS. AND YOU HAVE TO OFTEN TAKE HIM SERIOUSLY BUT NOT LITERALLY. RIGHT NOW WE ARE IN THE ENVIRONMENT WHERE THE MARKET IS GRAPPLING WITH WHAT IS TRUMP ACTUALLY SAYING AND DOING. I KNOW THIS IS A DRAMATIC TANGENT, BUT WHATEVER HAPPENED WITH GREENLAND? WE DO NOT TALK ABOUT THAT ANYMORE. I THINK WE NEED TO PUMP THE BRAKES A LITTLE BIT. ANNMARIE: YOU ARE TALKING ABOUT THE IDEA TRUMP ALWAYS CHICKENS OUT AND HE HAS NOT IN A LOT OF RESPECTS. PEOPLE NEVER THOUGHT THAT WE WOULD BOMB IRANIAN NUCLEAR FACILITIES IN THE WAY THIS ADMINISTRATION DECIDED TO DO. HOW DO YOU KNOW WHICH TRUMP YOU WILL GET WHEN IT COMES TO THE FEDERAL RESERVE? ALEX: I DO NOT THINK WE NEED TO DO AND WE NEED TO TRADE THE SECURITY AND NOT THE END GOALS. THIS TRUMP ADMINISTRATION HAS TAUGHT US THAT WE ARE OPERATING IN ROLLING FOUR WEEK WINDOWS. ALEX: I THINK IT IS -- ANNMARIE: I THINK IT IS TWO THINGS. ALEX: THAT IS ONE OF THE THINGS WE THOUGHT ABOUT IS THAT EVERY TRADE WE TALK ABOUT IS PROBABLY GOOD FOR ABOUT FOUR WEEKS AND THAT IS IT. THAT IS SADLY THE ENVIRONMENT WE ARE OPERATING IN. I CANNOT SAY WHAT THE END GAME OF THIS PRESS WILL LOOK LIKE AND I CAN JUST DO THE NEXT FORECAST FOR THE NEXT FOUR WEEKS AND ITS -- IT STILL LOOKS GOOD. JONATHAN: JUST SELL THE SEQUENCING WITH US. HOW YOU ARE LOOKING AT THE SEQUENCING IN REGARDS TO THE FED? ALEX: WE ARE GOING TO HAVE SEPTEMBER DATA AS WE ENTER IN THE MONTHLY CYCLE. WE WILL HAVE PAYROLL AND WHATNOT. PAYROLL, THE ALTERNATIVE DATA IF YOU LOOK AT THE ADP FORECASTS AND ALL OF THAT IS LOOKING RELATIVELY BENIGN. WE SHOULD GET A RELATIVELY OK NUMBER BASED ON THIS EARLY INDICATION. AND THAT TIES INTO DOES THAT MEAN THE SEP FOR THE FED IN SEPTEMBER MEANS WE GET THE 25 BASIS POINT CUT OR IS IT WANTED DONE? AGAIN, WE ARE TALKING ABOUT SOMETHING FOUR WEEKS AWAY AND THERE IS TOO MUCH INFORMATION TO MAKE BOLD FORECASTS. WE HAVE BUILT A RELATIVELY ROBUST EQUITY TIMING INDICATOR USING A BUNCH OF MARKET VARIABLES. RIGHT NOW IT IS TELLING US IT IS A RELATIVELY FAVORABLE ENVIRONMENT TO BE INVESTED IN U.S. EQUITIES. JONATHAN: WHEN YOU TALK ABOUT PAYROLLS YOU TALK ABOUT ALTERNATIVE JOBS DATA. ARE YOU SEEING INVESTORS ENGAGE IN THE SAME WAY? ARE THEY LOOKING AT ADP AS EVENT RISK? ALEX: THEY ARE AND THAT IS NOT A NEW PHENOMENON. IF YOU ACTUALLY LOOK AT THE TRAJECTORY OF ADP OVER THE PAST NINE TO 12 MONTHS. IT HAS BEEN OK. IT HAS NOT BEEN THE PERFECT FORECASTER ALONG WITH JOBLESS CLAIMS AND TYREE INTENTIONS. THERE IS A VARIETY OF DIFFERENT MEASURES TO GET A REASONABLE PICTURE OF WHAT THE TRUMP MARKET LOOKS LIKE. THERE IS THIS BIG BIRTH AND DEATH ADJUSTMENT. ONE OF THE REASON THERE HAS BEEN SO MUCH CRITICISM OF THEM. I THINK YOU DO GET THIS VOLATILITY IN PAYROLLS ESPECIALLY WHEN WE ARE GENERATING 70 TO 100,000 JOBS A MONTH IN A AN ENVIRONMENT WHERE IMMIGRATION HAS COLLAPSED. IT DOES LEAVE US VULNERABLE TO A WOBBLY PAYROLL PRINT AND THAT IS IN THE CONTEXT OF THE STANDARD DEVIATION AND HARD TO FORECAST. ANNMARIE: ARE YOU ALMOST IGNORING THE INFLATION REPORTS. ALEX: I TRY TO TAKE A STEP BACK. WE CANNOT THINK ABOUT IT LIKE THIS BUT IF WE WERE IN A WORLD WITHOUT TARIFFS WHAT -- WHAT WOULD INFLATION LOOK LIKE. THE BIGGEST COMPOSING -- COMPOSITION IS HOUSING. YOU LOOK AT YOUR OWN DATA OF RENT AND NEW RENT DOWN 9% YEAR ON YEAR. ALL RENT IS ONLY UP TO .5% IN LINE WHERE IT WAS PRE-COVID. THE BIGGEST PART OF THAT INFLATION COMPONENT IS NOT DRAMATIC. IF YOU PUT TARIFFS TO THE SIDE BECAUSE I DO NOT THINK ANYONE KNOWS WHAT THE INFLATION IMPACT WILL BE. I THINK THE INFLATIONARY BACKDROP FOR THE U.S. IS NOT ANYWHERE NEAR AGREE JUST AS COMMENTATORS WILL SAY. ANNMARIE: THE FED HAS AN OPEN DOOR FOR SEPTEMBER. ALEX: BARCLAYS ECONOMISTS WERE THE ONLY ONES HOLDING OUT AND THAT IS PRETTY MUCH ON LOG. AFTER THAT I THINK WE SHOULD TRY AND TAKE A STEP AWAY FROM WHAT OCTOBER AND DECEMBER LOOKS LIKE AND JUST THINK ABOUT WHAT A POST-POWELL FED LOOKS LIKE AND THIS MATTERS FOR STOCKS. STOCKS ARE SUPPOSED TO BE FORWARD DISCOUNTING MECHANISMS. I DO NOT THINK IT MATTERS WHETHER THEY CUT IN SEPTEMBER OR DECEMBER. IF THE PATH IS INTEREST RATES IS LOWER AND WE HAVE A SITE OF LOWER INTEREST RATES THAN WE HAVE TO ASSUME THAT PARTS OF THE ECONOMY THAT HAVE BEEN IN LOW GROWTH OR EVEN RECESSIONARY ENVIRONMENT FOR TWO PLUS YEARS WILL START TO GET REPRIEVE AND INVESTORS ARE NOT POSITION FOR THAT. JONATHAN: WE WILL FIND OUT WHO THE NEXT FED CARE -- FED CHAIR WILL BE IN THE FALL OF THIS YEAR. I DO NOT THINK THEY WILL BE QUIET ABOUT WHAT THEY THINK SHOULD HAPPEN FOR INTEREST RATES NEXT YEAR AND BEYOND. ANNMARIE: THE NAMES HAVE BEEN MAKING THE ROUNDS TALKING ABOUT WHAT THEY WOULD LIKE TO SEE AT THE FEDERAL RESERVE. WHAT'D WE JUST HEAR FROM MARK SHORT WHO WAS IN THE ROOM. HIS BP WAS IN THE ROOM AND ONE OF THE BIGGEST ISSUES GOING INTO WHETHER OR NOT DONALD TRUMP WILL CHOOSE YOU IS A KEY QUESTION, WILL YOU CUT INTEREST RATES. JONATHAN: YOU TALKED ABOUT A BIG CHUNK OF VOLUME WAS GOING THROUGH A HANDFUL OF NAMES THAT MAKE UP BASIS POINTS AND MARKET CAPITALIZATION. ARE WE STILL SEEING A SIMILAR DYNAMIC? ALEX: IT HAS COME OFF THE BOIL WHETHER THIS IS A FUNCTION OF A SUMMER LULL OR A PICKUP IN RETAIL ENTHUSIASM IN THE AUTUMN AND A LAST HURRAH BEFORE THE END OF THE YEAR AND THE BEGINNING TENDS TO BE A SLOWDOWN. WE HAVE SEEN A PICKUP IN ACTIVITY IN SMALL CAPS. WE DID TALK ABOUT THAT. I DO THINK IT IS NOT ABOUT RETAIL GOING ON BUT SOMETHING BIGGER HAPPENING AND THAT IS WHY I WANT TO INSET THE VERNACULAR OF THE REGIME SHIFT. JONATHAN: THANK YOU. ALEX SALZMAN ON THE LATEST EQUITY MARKET MOVES. LET US GET YOU AN UPDATE IN STORIES ELSEWHERE WITH A BLOOMBERG BRIEF. > > PRESIDENT DONALD TRUMP SAYING HE IS PREPARED FOR A LEGAL FIGHT WITH FED GOVERNOR LISA COOK AFTER HE ATTEMPTED TO FIRE HER. THIS IS HER FILE THAT -- YOUR LAWYER FOR BUT VOWED TO FILE A LAWSUIT. THE FED SAID IT WOULD ABIDE BY ANY COURT VERDICT AND DEFERRED ANY DECISION ON HER WORKING STATUS. SHARES OF PEANUT BUTTER AND JELLY MAKER JM'S ARE FALLING 3.2%. THEY REPORTED FIRST-QUARTER SALES THAT MISSED ESTIMATES. COFFEE, SNACKS, SWEET BREAK TO GOODS AND FRUIT SNACKS WERE AMONG THE AREAS HIT BY LOWER DEMAND. IT HAS BEEN BATTLING THE IMPACT OF HIGHER COFFEE COSTS DUE TO TRADE POLICIES. IN SPORT, IG A AND SINNER IS ADVANCING. HE IS AIMING TO BECOME THE FIRST REPEAT CHAMPION AT THE U.S. OPEN OPEN SINCE 2008. 45-YEAR-OLD VENUS WILLIAMS WILL CONTINUE HER BID FOR A TROPHY AFTER BEING AWARDED A WILD CARD INTO THE DOUBLES DRAW. YES ALL OF THE FOCUS HAS BEEN ON ALCARAZ'S BUZZ CUT. JONATHAN: I MENTION THAT YESTERDAY AND I THINK IT IS GOOD. ANNMARIE: MAYBE IT HELPS THEM PLAY BETTER. JONATHAN: LOOKS SHREDDED AND WILL PROBABLY WIN THE U.S. OPEN. UP NEXT THE MORNING CALLS PLUS INVESTORS BRACE FOR RESULTS FROM NVIDIA. THAT IS COMING UP LATER THIS AFTERNOON. FROM NEW YORK CITY, GOOD MORNING. ♪ > > YOU TAKE RATES DOWN BY 50 BASIS POINTS OR 75 BASIS POINTS YOU ARE GETTING IN THE THREE POINT 5% RANGE AND I THINK THE MARKETS ARE WILLING TO ABSORB THAT BASED ON WHAT IS HAPPENING WITH THE LABOR MARKET. IF YOU ARE SEEING AN ACTUAL STABILIZATION AND A BIT OF A RE-ACCELERATION AT THE SAME TIME AS WE HAVE INFLATION NORTH OF 2%, THAT IS WHEN QUESTIONS WILL BE CALLED AS TO WHETHER THEY NEED TO GO ANY FURTHER. JONATHAN: THAT WAS IAIN FROM EARLIER THIS MORNING. GOOD MORNING AND HERE IS THE STATE OF PLAY. FUTURE IS JUST ABOUT POSITIVE AND WE ARE GOING INTO FUTURES FROM NVIDIA LATER ON. THAT IS THE PRICE ACTION AND HERE ARE SOME MORNING CALLS. HSBC UPGRADING ELI LILLY TO HOLD SEEING UPSIDE POTENTIAL. THE SECOND CALL FROM GOLDMAN SACHS DOWNGRADING DEUTSCHE BANK TO NEUTRAL SAYING -- CITING ITS CURRENT EVALUATION AND OUTPERFORMANCE. AND FINALLY JP MORGAN DOWNGRADING KRISPY KREME TO UNDERWEIGHT SEEING EXECUTION RISK IN THEIR TURNAROUND PLAN. LET US TURN TO ATTACK. NVIDIA'S EARNINGS EXPECTED TO GIVE INSIGHT INTO THE DURABILITY OF THE AI SPENDING BOOM AND IT IS THE MAIN EVENT WORLDWIDE. MANDEEP SINGH JOINS US NOW FOR MORE. GOOD MORNING. SET THE STAGE, WHAT ARE YOU EXPECTING? MANDEEP: THEY WROTE DOWN THEIR H20 REVENUE LAST QUARTER SO THE EXPECTATIONS ARE AROUND 45 TO $46 BILLION AND THAT WILL BE BEAT BY ABOUT TWO BILLION PLUS. CONSENSUS IS THAT THEY ARE ON 53 AND I THINK THE BOGEY IS MORE 54 TO 55 AND THEY WILL LIKELY EXCEED IT. FROM THAT PERSPECTIVE THE NUMBERS WILL LOOK GOOD. THEY KEY QUESTION I HAVE FOR NVIDIA AND INVESTORS WHO ARE LOOKING AT IT IS THAT THE MODELS HAVE NOT CONVERGED IN FUNCTIONALITY. IF YOU COMPARE CHATGPT TO ANTHROPIC AND GEMINI, THEY HAVE NOT CONVERGED. IF COMPUTER WAS THE REAL STRENGTH AND EVERYONE CAN USE THE NVIDIA GPO -- GPU TO CONVERGE THE MODELED FUNCTIONALITY COMPUTERS WHERE THE ANSWER LIES. I THINK THE MARKET IS GRAVITATING TOWARDS BETTER DATA AND THAT IS WHERE IF YOU ARE OPTIMIZING FOR BETTER DATA, SOME COMPANIES HAVE STARTED LOOKING AT THAT MORE CLOSELY BY USE CASE SO YOU NEED BETTER DATA FURTHER QUOTING AGENT. SO DEPENDING ON THE USE CASE, YOU NEED TO CREATE THAT DATA. IN THAT SCENARIO, AND VIDEO WILL SEE THAT SLOWDOWN. THE GROWTH RATE WILL STILL BE GREAT, BUT THAT IS THE REAL CRUX OF WHAT WILL DETERMINE THE GROWTH RATE. JONATHAN: STAY CLOSE. I WANT TO BRING GIL, WHO HAS A NEUTRAL RATING ON NVIDIA. I HAVE TO SAY 135 THESE DAYS SOUNDS LIKE A CELL. TALK ABOUT THE DOWNSIDE RISK. GIL: THAT PRICE TARGET WAS SET THREE MONTHS AGO WHEN THE STOCK WAS LOWER. WE HAVE HAD A LOT OF POSITIVE DEVELOPMENTS IN THE SENSE THAT MONTHS HAVE GOTTEN BETTER. TO YOUR POINT, A LOT OF THEM HAVE GOTTEN BETTER. THEY ARE COMPARABLE AND FAR MORE COMPETENT AND USEFUL. AND THE ADOPTION FOR CONSUMERS AND EMPLOYEES IS HAPPENING VERY QUICKLY. WHICH MEANS THE DEMANDS FOR COMPUTE FOR THE HYPERSCALERS CONTINUE TO GO UP AND THAT IS ALL THAT MATTERS. THAT IS WHY THEY SHOULD BE ABLE TO COMFORTABLY HIT THEIR NUMBERS FOR THIS QUARTER AND PROBABLY GUIDE PRETTY WELL FOR NEXT QUARTER. THE ONLY NOISE RIGHT NOW IS AROUND CHINA. THAT IS NOT A DEMAND ISSUE BUT HOW MANY CHIPS CAN NVIDIA SELL IN CHINA, WHICH CHIPS AND HOW MUCH TAXES THEY WILL PAY ON THEM. WILL THEY GET THE NEXT GENERATION APPROVED? THAT IS THE VARIABILITY. IF WE EVEN THREE MONTHS AGO THOUGHT THIS MIGHT BE PEAK YEAR FOR DEMAND FROM NVIDIA, WE NO LONGER THINK THAT. THEY HAVE MODELS ARE DRIVING SO MUCH DEMAND THAT WE EXPECT THEM TO GROW. ANNMARIE: ANOTHER KEY QUESTION FOR CHINA IS WHETHER OR NOT BEIJING WANTS THE CHIPS. HOW DO YOU WANT -- HOW DO YOU SEE IN A MODEL THINK ABOUT WHAT THEY WILL SAY WHEN IT COMES TO PROFITS FROM BEIJING? GIL: THAT IS A BIG QUESTION BECAUSE THE NEWS FLOW IS DAILY ON THAT FRONT. LET US BE CLEAR, CHINA NEEDS THE CHIPS AND CHINESE COMPANIES NEED THE CHIPS. THEY ARE RAMPING UP DOMESTIC PRODUCTION FROM HUAWEI AND THOSE CHIPS ARE CATCHING UP IN TERMS OF FUNCTIONALITY. BOTH AMERICAN AND CHINESE COMPANIES HAVE INSATIABLE DEMAND. THEY WILL TAKE ANY H20'S THEY CAN GET. CHINA IS SIGNALING THAT THEY GOT UPSET OVER THE FACT THAT WE STARTED PUTTING TRACKERS INTO OUR SERVERS AND INTO THE H20 SERVERS. THE U.S. WAS CONCERNED THAT WE ARE SENDING CHIPS TO RESELLERS AND OTHER PARTS OF ASIA THAT ARE ENDING UP IN CHINA. WE STARTED PUTTING TRACKERS IN THOSE SERVERS AND SHIPS TO MAKE SURE THAT SMUGGLING IS NOT HAPPENING. THE CHINESE GOT UPSET OVER IT. THEY ARE WARNING THAT THEIR COMPANY -- THERE COMPANIES NOT TO BUY CHIPS AND SERVERS WITHOUT TRACKERS AND IT IS ADDING TO THE DRAMA. I AM NOT SURE JENSEN HUANG HAS VISIBILITY INTO HOW THAT WILL PLAY OUT. ANNMARIE: DO YOU THINK BEIJING IS POSTURING? THERE WAS A RECENT REPORT THAT NVIDIA TOLD SUPPLIERS TO HOLD COMPONENT PRODUCTION FOR THE H20'S. GIL: WE WILL FIND OUT TODAY. AND THE H20 WILL ADD NOISE BECAUSE THOSE CHIPS WERE ENTIRELY WRITTEN DOWN, SO THEY SHOULD HAVE COME IN AT 100% AND NOW THERE IS A 15% TARIFF ON THEM. THERE MIGHT BE SOME CUSTOMERS IN CHINA THAT LISTENED TO THE GOVERNMENT AND WILL PAUSE BUYING. MAYBE THEY ARE WAITING FOR THE B30 WHICH WILL BE APPROVED. MAYBE THERE IS A NEGOTIATION OF WHETHER OR NOT THERE ARE TRACKERS. WE MIGHT GET SOME OF THAT TODAY, BUT THE COMPANY HAS BEEN GUARDED ABOUT WHAT THEY SAY ABOUT CHINA. WE MIGHT LEAVE TONIGHT NOT KNOWING ANY MORE THAN WE KNOW RIGHT NOW. JONATHAN: CAN YOU IMAGINE A SCENARIO WHEN NVIDIA DOES NOT HAVE A PRESENCE IN CHINA ANYMORE AND HAS TO CHOOSE ANOTHER MARKET? GIL: THAT FUTURE IS QUITE POSSIBLE. I THINK THE ANALOG IS APPLE. CHINA USED TO BE MORE THAN 20% OF APPLE SALES AND THAT HAS BEEN DECLINING EVERY YEAR WITH DOMESTIC COMPETITION. THE CHINESE ARE ALLOWING IPHONES IN, BUT PROMOTING AND ENCOURAGING THE DOMESTIC MAKER, WHICH IS ALSO HUAWEI TO SELL THE PHONES. I WOULD EXPECT A SIMILAR PICTURE FOR NVIDIA. THE CHINESE MARKET WILL GROW FAST AND THEY ARE SHARING CHINA WILL DECLINE OVER TIME. REALLY THE BATTLEGROUND IS COUNTRIES LIKE THE GULF STATES AND EUROPE, WHERE NVIDIA WILL TRY TO HOLD BACK THE CHINESE MAKERS FROM GAINING MARKET SHARE. AND THE U.S. GOVERNMENT IS TRYING TO HELP THEM WITH THAT. JONATHAN: WE SAW THAT PLAY OUT EARLIER THIS YEAR. THANK YOU FOR YOUR TIME. GIL ON NVIDIA. TO EXPLORE THIS FURTHER, CHINA IS A RISK FACTOR COUNTERBALANCED BY SOVEREIGN DEMAND ELSEWHERE. HOW WILL THAT PLAY OUT? MANDEEP: IT WILL. IN SAUDI THEY ARE BUILDING 200 MEGAWATT DATA CENTERS AND THEY WILL USE NVIDIA. WHEN YOU ARE DEALING WITH SUCH LARGE NUMBERS, $200 BILLION BUSINESS GROWING AT 50%, IF EVEN ONE OF THE HYPERSCALERS GOES DOWN IT IS NOT 30 TO 40% GROWTH NEXT YEAR AND THAT WILL HAVE A BEARING ON NVIDIA EVEN WITH SOVEREIGN DEMAND. IF CHINA IS NOT GETTING OUT THEY HAVE 10 OR 15 CUSTOMERS THAT DRIVE THE BULK OF THE REVENUE. WE HAVE TO CLOSELY WATCH OUT FOR EACH OF THESE PROVIDERS ARE THEY ARE WITH RESPECT TO THEIR MODEL FUNCTIONALITY AND HOW MUCH ARE THEY WILLING TO INVEST. ANNMARIE: HE SAYS HE THINKS THERE WILL BE APPROVAL FOR THE B30. WHAT EXIT -- WHAT ADVANCED TECHNOLOGY DOES NOT HAVE? GIL: I THINK -- MANDEEP: I THINK BLACKWELL WILL HAVE SOME VERSION WHICH IS NOT AS ADVANCED AS WHAT THEY ARE SELLING IN THE U.S. AND EUROPE MARKETS. THAT IS WHAT THEY WILL PACKAGE IN THE B30. BUT THE TALK ABOUT NVIDIA GIVING 15% OF THEIR REVENUE TO THE GOVERNMENT, I DO NOT THINK IT IS LIKELY BUT YOU DO NOT KNOW. FROM THAT PERSPECTIVE THE CHINA MARKET IS SO HARD TO MODEL THAT IF YOU ARE AN INVESTOR YOU WANT TO X OUT THE CHINA NUMBER AND SEE WHAT THE GROWTH RATE IS AND THAT IS WHAT THE INVESTORS WILL FOCUS ON. JONATHAN: ONE CONVERSATION WE HAD EARLIER AND MAYBE FOR FURTHER DOWN THE ROAD, ENERGY CONSTRAINTS IN THE BACKLASH YOU COULD SEE FROM CITIZENS OF COUNTRIES LIKE THIS ONE AND ELSEWHERE. MANDEEP: THAT COULD BE A POSITIVE FOR NVIDIA BECAUSE THE NEXT VERSION OF THEIR CHIP IS MORE OPTIMIZED FOR POWER AND PERFORMANCE. IF THERE IS A REAL CASE, THAT IS THE POWER CONSTRAINTS AND THERE WILL BE A LOT OF PUSHBACK ON POWER. IF THE CHIP IS MORE OPTIMIZED FOR POWER, THAT GOES IN ITS FAVOR. JONATHAN: IT WILL GET EXPENSIVE AND MORE EXPENSIVE AND IT ALREADY IS. ANNMARIE: ALREADY THIS IS A HUGE ISSUE IN WASHINGTON, D.C. WITH LAWMAKERS TALKING ABOUT THE FACT THAT INDIVIDUALS ARE SEEING HIGHER ELECTRICITY PRICES AND THE PRESIDENT TALKED ABOUT THIS MARK ZUCKERBERG PHOTO SENT TO HIM A DATA CENTER THE SIZE OF MANHATTAN OPENED UP IN LOUISIANA. JONATHAN: MANDEEP SINGH LOOKING AHEAD TO EARNINGS OF NVIDIA. UP NEXT, MATT AS HE HAS RAMPING UP RATE CUT BETS PLUS WE WILL TOUCH BASE TO GET YOUR MORNING MOVERS. ♪ JONATHAN: LIVE FROM NEW YORK CITY, WELCOME TO THE PROGRAM. FUTURES LOOK AT -- LOOK LIKE THIS, JUST ABOUT POSITIVE ON THE S & P AND NASDAQ GOING INTO THE BIG EARNINGS REPORT AFTER THE CLOSE SESSION AFTER THE CLOSE, NUMBERS FROM NVIDIA. THE 2, 10 AND 30 YEAR SITTING IN FRONT OF THE CURVE. .364 IS A NEW LOW POST PAYROLLS. 3.60 556 WITH A CURVE STEEPER AND BOND YIELDS HIGHER BY TWO SPACES POINTS. THAT THEME CONTINUES. THAT IS THE PRICE ACTION AND LET US GET YOU SOME SINGLE NAMES IN YOUR MORNING MOVERS. DANI: A TRICKLE OF EARNINGS INCLUDING SMUCKER, A DISAPPOINTMENT. SHARES ARE DOWN POINT -- 2.78. COFFEE, SNACKED IN BAKED GOODS LOOKING WEAKER. COFFEE HAS BEEN A PROBLEM WITH THE TARIFFS ON BRAZIL. THEY ARE TALKING ABOUT A DYNAMIC ENVIRONMENT. KOHL'S REPORTING EARNINGS BUT THEY HAVE A BRIGHTER THAN EXPECTED OUTLOOK UPGRADING THEIR FOUR-YEAR FULL CAST. IT IS A TURNAROUND THAT APPEARS TO BE TAKING HOLD AND CRUCIALLY THEY UPGRADED THEIR MARGIN OUTLOOK, SOMETHING THAT IS IMPORTANT FOR A LOT OF THESE RETAILERS WITH CONCERNS AROUND THE CONSUMER. CANADA GOOSE SHARES ARE MOVING HIGHER AS WELL, NEARLY 15 .5%. CNBC REPORTING THEY ARE RECEIVING INTEREST OF A TAKE PRIVATE, AND THEY ARE A PRIVATE EQUITY FORM THEMSELVES. ADVENT IS AMONG THE FIRMS LOOKING AT TAKING CANADA DUES -- CANADA GROUPS PRIVATE. BECAUSE NO COMPANIES WANT TO BE PUBLIC ANYMORE. JONATHAN: HOW MANY TIMES HAVE WE SEEN THIS? > > EVERY DAY. JONATHAN: AMAZING THE LATEST CANADA GOOSE. THANK YOU. LET US TURN TO THE ECONOMY AND INVESTORS ARE WAITING WITH KEY INFLATION DATA DUE OUT ON FRIDAY AS TRUMP RAMPS UP PRESSURE ON LISA COOK. JOINING US IS MIKE MCKEE. MIKE: WELL INCOME SPENDING AND INFLATION NUMBERS COME OUT ON FRIDAY. SMALL CHANGES ARE EXPECTED AND IN THE WRONG DIRECTION. WE EXPECT TO SEE INFLATION RISE. THIS IS ONE OF THOSE INDICATORS WHERE THE ECONOMISTS ARE GOOD AT FORECASTING, SO IT BECAUSE SOMETHING OF A NONEVENT. THE INCOME AND SPENDING NUMBERS WILL ALSO PLAY A ROLE, PARTICULARLY SPENDING BECAUSE THAT IS THE FOLLOW-ON TO THE LABOR MARKET. IF PEOPLE HAVE JOBS AND HAVE MONEY THEY SPEND UP AND IF THEY START COMING BACK THE FED WILL WORRY ABOUT THAT. MEANWHILE WE HAVE TO WORRY ABOUT WHAT IS HAPPENING IN THE LISA COOK SITUATION. SHE SAYS SHE WILL GO TO COURT AND WE ARE WAITING FOR A FILING. SHE WILL ASK FOR AN INJUNCTION TO PREVENT THE PRESIDENT FROM REMOVING HER FROM OFFICE UNTIL THIS IS ADJUDICATED. WHAT WE HAVE SEEN IN THE PAST WITH HIS ATTEMPTS TO FIRE PEOPLE IS THAT THEY GET THE INJUNCTION AND AN APPEALS COURT EITHER UPHOLDS IT OR THROWS IT OUT. AND THEN THEY GO TO THE SUPREME COURT AND THE SUPREME COURT GENERALLY RULES FOR TRUMP. IN THIS CASE I THINK THAT IS HARD TO SEE HAPPENING IN THAT THE COURT HAS ALREADY SAID THERE IS AN EXCEPTION FOR THE FED AND THEY HAVE TO BE FIRED FOR CAUSE. SO FAR THERE IS NO PROOF THAT SHE DID ANYTHING BUT JUST ALLEGATIONS. JONATHAN: VERY MESSY SITUATION. YOU KNOW THE INSTITUTION BETTER THAN MOST, WHAT IS YOUR RESPONSE TO THEIR REACTION? MIKE: I UNDERSTAND THEIR REACTION AND I'VE TALKED TO PEOPLE ABOUT IT. THEIR SITUATION IS THEY DO NOT KNOW WHAT LISA COOK DID OR DID NOT DO. THEY DO NOT HAVE ALL OF THE FACTS AND THEY ARE WAITING FOR HER TO TELL THEM. THEY CANNOT COME OUT AND PUBLICLY DEFEND HER. BUT THEY DO NOT WANT TO CUT HER LOOSE BECAUSE THEY KNOW THIS IS A MAJOR ATTACK ON THE FED ITSELF. IF THEY FEEL THAT COKE IS INNOCENT OR HER MISTAKES WERE MINOR, THEN YOU WILL PROBABLY HEAR POWELL AND OTHERS COME OUT TO DEFEND THE INSTITUTION ITSELF. THE BOTTOM-LINE QUESTION OVER THE LONG RUN IS THAT IF HE GOT RID OF HER, WOULD THAT KEEP JAY POWELL ON THE FED WHEN HIS TERM AS -- TERM AS CHAIRMAN IS OVER AND WEAR IT -- WHEN HE STAY WHEN HIS TERM AS A GOVERNMENT -- GOVERNORS OVER JUST TO FRUSTRATE THE PRESIDENT. JONATHAN: CAN WE SIT ON THE LEGAL STATUS -- SITUATION AND I DO NOT EXPECT US TO LITIGATE BUT WE DO NOT HAVE AN OFFICIAL OPENING OF A LEGAL INVESTIGATION INTO THESE SERIOUS ALLEGATIONS OF FRAUD. DO WE KNOW HOW GOVERNOR COOK HAS RESPONDED HERSELF INTERNALLY WITH THE FEDERAL RESERVE LEADERSHIP. AS SHE PRESENTED ANYTHING TO THEM TO DENY THIS. BECAUSE PUBLICLY WE HAVE NOT HAD A FIRM DENIAL. MIKE: AS OF THE TIME WE WERE IN JACKSON HOLE, SHE HAD NOT AND SHE MIGHT HAVE IN THE LAST 24 HOURS. ONE OF THE THINGS SHE HAD TO DO WAS TO GET A LAWYER, ABBY LOWELL, WHO IS ADVISING HER ON HOW TO HANDLE THIS. ONE OF THESE PROPERTIES WAS IN MICHIGAN AND THE OTHER WAS IN GEORGIA. AND SHE HAS TO COLLECT THE PAPERWORK FROM BOTH OF THOSE. AND THAT COULD TAKE A LITTLE BIT OF TIME IF SHE DOES NOT HAVE IT HANDY BECAUSE SHE MOVED TO WASHINGTON AND LEFT IT SOMEWHERE. I THOUGHT WE MIGHT GO INTO THIS WEEK WITHOUT THE PRESIDENT MAKING A MOVE. HE DID NOT WAIT. YOU WOULD THINK HE WOULD WAIT UNTIL THERE WAS SOME EVIDENCE. SO FAR, HE IS MOVING AHEAD. JONATHAN: THANK YOU FOR THE LATEST AND WE APPRECIATE THE UPDATE. THE PRESSURE KEEPS BUILDING AND IT WILL TAKE A LONG TIME TO PLAY OUT. ANNMARIE: BECAUSE THIS WILL GO THROUGH THE COURTS. IF SHE GETS THE INJUNCTION AND IS ABLE TO CONTINUE WORKING, HOW RIDICULOUS IS SEPTEMBER GOING TO FIELD? THAT PRESS CONFERENCE. CHAIR POWELL WILL HAVE A LOT TO ANSWER FOR AND I DO NOT THINK A ONE-WORD ANSWER WILL DO IT. JONATHAN: SEPTEMBER 17 THE FEDERAL RESERVE MEETING. LET US TURN TO INTEREST RATE EXPECTATIONS. MATT WRITING "WE NOW SEE A 25 BASIS POINT RATE CUT IN SEPTEMBER LIKELY AND THEN WE SEE THE FED DELIVERING 25 BASIS POINT REDUCTIONS IN SEPARATE -- IN DECEMBER AND. MARCH" GOOD MORNING. THIS WAS A CHANGE YOU WERE NOT EXPECTING ANYTHING IN SEPTEMBER AND THEN JACKSON HOLE HAPPEN. MATT: WE EXPECTED THE FED TO WAIT UNTIL DECEPTIVE -- DECEMBER AND THEN WE HAD THEM CUTTING DECEMBER, JANUARY AND MARCH IN OUR VIEW WAS THAT THE LABOR MARKET ALTHOUGH SLOWING WAS HANGING IN WELL ENOUGH TO KEEP THE FED ON HOLD AND WE WERE GETTING TROUBLING INFLATION DATA THAT WE SAW OUT OF THE PPI RECENTLY AND WE WILL SEE IT FROM CORE PCE LATER THIS WEEK WITH AN PLACEMENT -- INFLATION AROUND 3%. THE ARGUMENT FOR CUTTING IN SEPTEMBER WAS STRONG. WE GOT A SIGNAL THAT CHAIR POWELL WAS LEANING IN THAT DIRECTION. HE SAID THE BALANCE OF RISKS ARE SHIFTING AND HE IS WORRIED ABOUT THE LABOR MARKETING AND THAT COULD WARRANT A POLICY RESPONSE. WE TOOK THAT AS EVIDENCE TO PULL FORWARD A RATE CUT. ANNMARIE: WHAT ABOUT THE FACT THAT CHAIR POWELL SAID THAT YOU CAN LOOK THROUGH INFLATION PRINTS. THIS JOBS NUMBER IS REALLY IMPORTANT. WHAT IF IT COMES OUT STRONG? MATT: IF IT COMES OUT STRONG, IT MORE TELLS US ABOUT OCTOBER AND DECEMBER THAN SEPTEMBER. I THINK THE SIGNAL AT THIS POINT WAS WE ARE SO RESTRICTIVE AT THIS POINT IN TIME THAT WE HAVE SOME WAY TO GO TOWARDS NEUTRAL. I THINK HE HAD MORE DOVISH COMMENTS ON THE INFLATION SIDE BUT HE ADOPTED AN ARGUMENT FROM GOVERNOR WALLER WHICH IS AS LONG AS THE LABOR MARKET IS NOT TIGHT, THIS WILL NOT BE A PERSISTENT SHOCK. IF YOU GET A STRONG JOBS REPORT IT IS VIEWED IN THE CONTEXT OF THE JOLTS AND THE Q CE DATA POINTING TOWARDS DOWNWARD REVISIONS AND THAT WILL SAY IS THE FED COUNTING OCTOBER AND DECEMBER? JONATHAN: THEY CAN ALL AGREE THAT THEY ARE RESTRICTIVE. WHEN DOES THAT CONVERSATION GET A LITTLE MORE TRICKY. IS THAT ANOTHER 50 BASIS POINTS, 75? WHEN DOES THAT GET HARDER? MATT: IT IS TRICKY FOR THE FED AND FOR THE TYPES OF INDICATORS WE LOOK AT. ON MANY THE FED IS NOT MEANINGFULLY OR MODESTLY RESTRICTIVE BUT CLOSE TO NEUTRAL. ONE THING WE LOOK AT OUR FINANCIAL CONDITIONS. THEY ARE THE EASIEST THEY HAVE BEEN SINCE THE FED STARTED RAISING RATES. IN THAT CONTEXT, THEY ARE PROBABLY NOT ALL THAT RESTRICTIVE. POWELL HAS TO BALANCE THIS AMONG A COMMITTEE THAT IS INCREASINGLY DIVIDED ON ALL KEY ISSUES INCLUDING WHERE THEY ARE A NEUTRAL AND POWELL TOOK A STAND. HE WAS NOT IN THE CAMP OF THE HAWKS THAT THINK WE ARE AT NEUTRAL OR CLOSE TO IT. HE THINKS THEY HAVE A LITTLE BIT OF SPACE TO CUT RATES. JONATHAN: THE NEW YORK FED PRESIDENT RATE -- WEIGHED IN ON IT. IS HE AN OUTLIER OR THE CORE VIEW? MATT: THE HISTORY IS THAT HE HAS TWO OF THE CANONICAL MEASURES OF ARE STAR -- R STAR AT LOW LEVELS. BUT IF YOU LOOK AT A SUITE OF INDICATORS THAT ARE OUT THERE, NEUTRAL IS HIGHER THAN WHAT THOSE INDICATORS SUGGEST AND YOU CAN SEE TERM STRUCTURE MODELS AND OTHER MODELS THAT ARE OUT THERE. I JUST THINK THE BALANCE OF OF IT -- EVIDENCE IS THAT IT HAS MOVED HIGHER. ANNMARIE: IF THEY ARE CUTTING YOU THINK TWICE THIS YEAR, 2026 WHEN THE PRESIDENT WAS LOOKING FORWARD TO HAVING THIS MAJORITY AT THE FED, HOW MUCH ROOM DO THEY HAVE TO CUT? MATT: THE MARKET, ALTHOUGH WE HAVE SEEN A MOVE LOWER, THE MARKET IS PRICING A 3% FED FUNDS RATE. THAT SOUNDS AGGRESSIVE BECAUSE WE THINK NEUTRAL IS HIGHER BUT THE LONG RUN DOT AND GUIDANCE IS STILL TOWARDS 3%. WE HAVE NOT BUILT IN ANY CHANGE IN REACTION FUNCTION FOR THE FED. WE HAVE THE FED STOPPING IN MARCH BETWEEN 3.5 AND THREE POINT 75% RATES. AS YOU SEE SHIFTS IN FED PERSONNEL AND WE GET A SENSE OF WHO KNEW THAT -- WHO THE NEW FED CHAIR WILL BE WE MIGHT HAVE TO BUILD A MORE DOVISH REACTION FUNCTION. ANNMARIE: WHEN YOU LOOK AT THE NAMES FLOATED AROUND, WHO IS THE DUMBEST OF THE DOVE? MATT: IT IS HARD TO KNOW, GOVERNOR WALLER SEEMED MORE LIKELY THAN OTHER CANDIDATES TO US BECAUSE IT IS NOT JUST HOW DOVISH ARE YOU BUT CAN YOU GET THE REST OF THE COMMITTEE ON BOARD. CAN YOU BRING TOGETHER A VERY DIVIDED COMMITTEE TO FORGE A CONSENSUS OR MAJORITY? I THOUGHT HE WAS WELL-PLACED TO DO THAT AND OVER THE PAST FEW MONTHS HE HAS MADE THAT ARGUMENT. AFTER DISSENTING IN JULY AND GETTING WEAKER MARKET DATA HE HAS HELPED HIM PROCESS. JONATHAN: IT SOUNDED LIKE GOVERNOR WALLER HAD WRITTEN HIMSELF, PARTICULARLY ON THE LABOR MARKET. JUST YOUR VIEWS ON THE LABOR MARKET. HOW THEY CONTRAST WITH THE TARIFF YOU ON THE MOMENT. HE ANCHORED HIS VIEW ON THE LABOR MARKET WHICH HE CALLED SOLID AROUND THE UNEMPLOYMENT RATE. THE GENERAL VIEW FROM SOME ECONOMISTS IS THAT YES WE HAD A STEP DOWN AND PAYROLLS GROWTH, BUT WE HAVE NOT SEEN AN INCREASE IN LABOR MARKETS LACK AND MEASURES HAVE REMAINED STABLE. IT DOES NOT APPEAR TO BE SOMETHING HE IS PUTTING A LOT OF WEIGHT ON. IS THERE SOME DAYLIGHT ON YOU -- BETWEEN YOU AND HIM. MATT: I THINK THERE IS NUANCE. HE POINTED THAT THE MEASURES HAVE NOT MOVED HIGHER. AT THE SAME TIME, HE HAS NOTED THAT THE PACE OF THE DOWNGRADES INCREASE THE DOWNSIDE RISKS. WITH THOSE RISKS, EVEN IF YOUR VIEW THAT THE BASELINE IS SOLID IT MAKES SENSE TO TAKE OUT INSURANCE. I WOULD GENERALLY AGREE. WE VIEW THE QUITS RATE AND THE UNEMPLOYMENT RATE HAS BEEN VERY STABLE OVER THE PAST YEAR. WE THINK PAYROLL GAINS COULD BE 50000 AND KEEP THOSE MEASURES STABLE GIVEN WHAT HAS HAPPENED. 50 K OR COULD BE LOWER GIVEN ON THE IMMIGRATION SIDE. IT MAKES SENSE FOR MONETARY POLICY AS YOU BALANCE THE RISKS. YOU WOULD WANT TO GET CLARITY THAT WE ARE STABILIZING RATHER THAN SEEING PAYROLL FALL. JONATHAN: WHAT IS YOUR GUEST FOR NEXT FRIDAY? MATT: WE HAVE NOT PUT OUT A PREVIEW. BUT I ANTICIPATE TWO THINGS. WE GET A BIT OF A BOUNCE BACK IN THE PAYROLLS DATA. ADP WAS SOLID LAST MONTH WHEN YOU LOOK AT THE JOBLESS CLAIMS. THE OTHER DATA POINT IS A BIG POINT OF THE UNEMPLOYMENT RATE LAST MONTH WAS THE SURGE IN NEW ENTRANCE -- AND -- ENTRENTS. THOSE SUGGEST A REASONABLY SOLID DOT -- JOBS REPORT. JONATHAN: WE APPRECIATE YOUR TIME. LET US GIVE AN UPDATE ON STORIES ELSEWHERE. LET US GET A NEWS UPDATE AND BLOOMBERG BRIEF. > > PRESIDENT TRUMP IS STEPPING UP HIS EFFORTS TO EXERT MORE CONTROL OVER THE CENTRAL BANK. SOURCES TELLING US THAT THE ADMINISTRATION IS REVIEWING OPTIONS FOR EXERTING MORE INFLUENCE OVER THE FED'S 12 REGIONAL BANKS THAT WOULD EXTEND ITS REACH BEYOND PERSONNEL APPOINTMENTS IN WASHINGTON. YOU WE ARE SEEING SAY IT -- WE ARE SHE ATE -- WE ARE SEEING SHARES OF ABERCROMBIE & FITCH FALLING DESPITE THE RETAILER RAISING ITS FOUR YEAR SALES GUIDANCE FOLLOWING A STRONGER-THAN-EXPECTED QUARTER. IT IS THE SECOND STRAIGHT QUARTER THAT THE RETAILER BOOSTED ITS REVENUE OUTLOOK. INVESTORS ARE NOT IMPRESSED. TAYLOR SWIFT GETTING HER OWN SUPERVISED SIZED -- SUPER BOWL SIZED RING. THEY ANNOUNCED THEIR ENGAGEMENT ON INSTAGRAM AND THE NEWS OF THEIR IMPENDING NUPTIALS SPARKED A TON OF BETS ON A WEDDING DATE AND WHEN THEY MIGHT HAVE A BABY. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: THANK YOU AND APPRECIATE IT. WILL THIS BARK A LOT OF MARRIAGES ACROSS THE COUNTRY? ANNMARIE: I SAW PEOPLE CELEBRATING AS IF THEY GOT ENGAGED. A HUGE MEDIA COUP. JONATHAN: -- I JUST DO NOT CARE. I KNOW OTHER PEOPLE DO BUT I AM HAPPY FOR THEM. WE WILL SET YOU UP FOR THE DAY AHEAD PLUS TROY WILL JOIN US AS WE COUNT YOU DOWN FOR THE OPENING BELL IN THE MAIN EVENT LATER ON THIS AFTERNOON. ♪ > > I WISH THERE WAS A MORE INTELLECTUAL APPEAL ABOUT THE FED'S ROLE INSTEAD OF THE BOGUS CHARGES. THIS IS HIS EFFORT TO EXERT CONTROL BECAUSE THEY ARE CONCERNED THAT THEIR TRADE AGENDA IS CAUSING WEAKNESS IN THE LABOR MARKET IS AN -- MARKET AND THEY WANT RATES LOWER, AND THIS IS WHAT THE PRESIDENT HAS ALWAYS WANTED, EVEN WHEN HE HAD THE OPTION TO APPOINT JEROME POWELL. JONATHAN: THAT WAS THE FORMER CHIEF OF STAFF TO THE FORMER VICE PRESIDENT A LITTLE BIT EARLIER. IN THE MARKET AS WE COUNT YOU DOWN ABOUT 42 MINUTES AWAY WITH EQUITY FUTURES UNCHANGED ON THE S & P 100. ON THE NASDAQ -1%. WE HAD HAVE SOME UNDERPERFORMERS AND WE ARE DOWN. IN THE BOND MARKET, INTRIGUING MOVES AT THE FRONT AND LONG END. ON THE MONTH SO FAR, 30 YEAR BOND YIELDS. THE DIFFERENCE BETWEEN THE TWO, 130 BASIS POINTS AND THAT IS THE WIDEST GOING BACK TO 2021 AND 2022. THAT CURVE IS GETTING STEEPER AND STEEPER. LET US GET THE DAY AHEAD AS WE COUNT YOU DOWN TO THE OPENING BELL. THE U.S. TREASURY IS AUCTIONING $17 BILLION OF FIVE-YEAR NOTES AFTER THE MARKET CLOSE AND NVIDIA EARNINGS TO THURSDAY, ANOTHER ROUND OF JOBLESS CLAIMS PLUS YOU MITCH CONSUMER SENTIMENT DATA. AS WE LOOK AHEAD TO THE EARNINGS, TROY OF FUTURE STANDING WRITING "NVIDIA RESULTS ARE HUGELY IMPORTANT TO THE MARKET IN ORDER TO VALIDATE CONTINUED GROWTH OF A I SPENT." TROY, WELCOME TO THE PROGRAM. BIG EARNINGS EVENT. WHAT ARE YOU EXPECTING? TROY: THERE IS NO REASON TO EXPECT ANY DRAMATIC HUNDRED UP -- UNDERPERFORMANCE OR DISAPPOINTMENT. MARKETS HAVE BROUGHT DOWN FORWARD REVENUE GROWTH EXPECTATIONS. THE BIG PICTURE IS THAT WE ARE IN ONE OF THE BIGGEST FACED -- FIXED INVESTMENT BOOMS AND IN THIS YEAR ALONE 55 BASIS POINTS OF ADDITIONAL CONTRIBUTION WILL COME FROM THE FOUR HYPERSCALERS AND APPLE. NEXT YEAR THAT SHOULD BE 40 BASIS POINTS ON $30 TRILLION IN NOMINAL GDP. THE IMPORTANCE DOES NOT GO TO THE ACTUAL CAPITAL MARKETS IN TERMS OF JUSTIFYING THE MULTIPLES AND CURRENT VALUE RELATIONS, -- VALUATIONS BUT ALSO THIS REDUCE OF RECESSION AND HIGHER GDP. ANNMARIE: WE CONTINUOUSLY HEAR THAT THE BIG QUESTION HEADING INTO THE EARNINGS WILL BE ABOUT CHINA. HOW DO YOU FEEL ABOUT NVIDIA'S ACCESS TO THAT DEPARTMENT? TROY: THAT IS THE WILDCARD. MARKETS YOU HATE TO SAY THAT YOU WILL LOOK PAST THAT BUT THAT IS AN UNCONTROLLABLE VARIABLE. YOU SEE GOING FORWARD IS CLEARLY MORE SPENDING AND OBVIOUSLY NVIDIA HAS A BORDERLINE MONOPOLY ON THAT MARKET. I WOULD MUCH RATHER THE MULTIPLE BE 25% LOWER. THE WHOLE HYPERSCALER COMPLEX, THE FAB FIVE WITH FOUR COMPANIES SPENDING LIKE CRAZY AND ONE COMPANY IS THE BENEFICIARY. THOSE MULTIPLES HAVE REVALUED FULLY, WHICH IS THE BIGGEST DANGER FOR MARKETS AND THAT IF THERE IS DISAPPOINTMENT THERE IS MORE DOWNSIDE THAN SIX TO EIGHT WEEKS AGO WHETHER YOU LOOKED AT META, GOOGLE OR NVIDIA WHERE THEY HAD A MORE RATIONAL MULTIPLE. THINGS ARE PRICED TO PERFECTION BUT THE AI SPEND AND NVIDIA EARNINGS GO FAR BEYOND MARKET CONDITIONS AND COULD SPILL OVER INTO THE BROADER ECONOMY. ANNMARIE: IF THEY ARE PRICED FOR PERFECTION, IS JUST COMING IN-LINE ENOUGH, OR DO THEY NEED TO OUTPERFORM? TROY: AS LONG AS THERE IS MARGINAL OUTPERFORMANCE. IT DOES NOT HAVE TO BE BLOCKBUSTER. I THINK MARKETS WILL DIGEST THAT WELL. IT DOES NOT MEAN THAT THERE IS MATERIAL UPSIDE. IT JUST MEANS THAT WE ARE SET UP TO HAVE A STRONG Q4. IN A DIFFERENT OUTCOME, IF THEY DISAPPOINT, YOU WILL HAVE A SERIES OF QUESTIONS RAISED ABOUT WHAT IS THE ROIC, AND WHAT ARE THE HYPERSCALERS GOING TO START TO NOT TO CUT BACK BUT CEASED TO GROW AT THESE PACES? IN TERMS OF THAT NUMBER IF IT IS DISAPPOINTING YOU WILL HAVE A LOT OF QUESTIONS OF WHETHER OR NOT WE CAN FINISH THE YEAR WITH STRENGTH. IN THE SHORT-TERM, IT WILL TAKE QUITE AN EXCEPTIONAL EARNINGS NUMBER TO DRIVE HIGHER UPSIDE. JONATHAN: CAN WE TURN TO THIS PUSH TO GO PRIVATE. MASSIVE FOR AUGUST. WE SAW THIS LAST WEEK AND SEEING IT AGAIN THIS MORNING AND THE PROSPECT OF IT HAPPENING WITH CANADA GOOSE. WHAT IS HAPPENING AND EXPLAINS A SHIFT FROM PUBLIC TO PRIVATE? TROY: WE HAD THIS TREMENDOUS TRANSFORMATION OF THE U.S. ECONOMY OVER THE LAST 20 TO 25 YEARS AND WE CREATED A DISS -- A DISINCENTIVE FOR COMPANIES TO BE PUBLIC. AND AS YOU HAD THIS SUBSTANTIAL CAPITAL INFLOW TO PRIVATE EQUITY AND PRIVATE CREDIT IN ORDER TO FINANCE THESE COMPANIES, YOU KNOW IT IS REALLY STUNNING THAT 96% OF THE COMPANIES THAT HAVE 100 MORE EMPLOYEES ARE PRIVATELY HELD. WE ALWAYS THOUGHT THE SWEET SPOT OF THAT WAS BETWEEN 10 MILLION AND 10 BILLION OF REVENUE. THAT IS NOT CHANGING AND IT SLOWED DOWN POST LIBERATION DAY. A LOT OF FINANCING AND A LOT OF ENTHUSIASM ABOUT MERGERS. THAT IS EXPECTED TO COME BACK IN A DRAMATIC FASHION IN Q4. WE ARE SEEING IN OUR CREDIT BUSINESSES WHERE A LOT OF THE CAPITAL WE ARE LINING UP TO FINANCE CERTAIN SITUATIONS ARE FOCUSED NOT JUST ON PRIVATE TO PRIVATE TRANSACTIONS BUT CONTINUING THAT THEME. JONATHAN: GOOD TO HEAR FROM YOU. SEEING A LOT OF THOSE MOVES TAKE PLACE OVER THE PAST MONTH AND IN THE MONTHS TO COME. COMING UP, DAN IVES ON NVIDIA EARNINGS AND STUART KAISER OF CITI. WE WILL CATCH UP WITH LISA TOMORROW AND SHE WILL DROP BY TO GET HER THOUGHTS ON WHAT IS HAPPENING WITH THE GLOBAL ECONOMY AND THE LATEST DEVELOPMENTS AS THE PRESSURE BUILDS ON THE FEDERAL RESERVE. ANNMARIE: PRESSURE WILL CONTINUE TO BUILD AND JUST SO EVERYONE KNOWS IT WILL BE A LONG SLOG DEPENDING ON WHAT HAPPENS AT THE FEDERAL RESERVE. THERE WILL BE A COURT BATTLE AND AS SOON AS THIS WEEK WE WILL GET AN INJUNCTION FROM THE GOVERNOR AND THAT WILL TELL US WHETHER OR NOT SHE WILL BE THEY ARE VOTING FOR A RATE CUT OR NOT. JONATHAN: TWO DIFFERENT THINGS ARE GOING ON, ONE IS THE PRESIDENT'S ABILITY TO FIRE A SITTING FED GOVERNOR AND THE OTHER IS THE ALLEGATIONS OF MORTGAGE FRAUD. WE DO NOT HAVE AN OFFICIAL INVESTIGATION OPENING UP AND WE HAVE NOT HAD AN OFFICIAL DENIAL FROM THE GOVERNOR. SOME PEOPLE MIGHT HAVE SYMPATHY WITH THE FACT THAT THERE IS NOT AN INVESTIGATION. BUT IF THE EVIDENCE IS THERE, SHE IS GOING TO PRESENT THAT INTERNALLY TO THE FED CHAIR. IF SHE IS NOT ABLE TO DO THAT DO WE END UP IN THE SAME SITUATION IN A NUMBER OF YEARS AGO WHEN SOME FED OFFICIALS HAD TO STEP ASIDE. ANNMARIE: THERE ARE TWO DIFFERENT PATHS BUT THEY MIGHT END UP AT THE DIFFERENT PLACE WHERE THIS BECOMES UNTENABLE FOR HER TO SERVE AND SHE HAS TO RESIGN OF NOT JUST THE PRESSURE BUT SHE IS NOT IN HER OWN CAPACITY ABLE TO FIGHT THIS CASE. A BIG QUESTION WILL BE WHETHER OR NOT THE FED COMES OUT IN HER DEFENSE. ALL THE FED SAID IS WHAT WE -- AS WE WILL ABIDE WHAT THE COURT PRESIDES. JONATHAN: YOU SAID HOW AWKWARD IT WOULD BE IF LISA COOK IS STILL THERE. HE WILL BE CONFIRMED BY THE TIME WE GET TO THAT. ANNMARIE: THE SENATE BANKING HEARING WILL MOVE QUICKLY IN TERMS OF HIS HEARING BECAUSE THEY ARE STARTING NEXT WEEK. HIS HEARING IS GOING TO BE IN AFTER -- ABSOLUTE REFERENDUM FOR THE DEMOCRATS ON FED INDEPENDENCE. JONATHAN: THAT WILL, SHORTLY AND IT IS GOOD TO HAVE YOU BACK IN THE SEAT. LET US TURN TO THE MARKETS ABOUT 35 MINUTES AWAY. EQUITY FUTURES SHAPING UP AS FOLLOWS. WAIT FOR BERNIE -- WE ARE WAITING FOR EARNINGS OF NVIDIA AND THE ENTHUSIASM OF THE WHOLE SECTOR AND BEYOND WILL BE SHAPED BY THAT ONE NAME ALONE LATER ON THIS AFTERNOON. IN THE BOND MARKET A FEW THINGS TO WORK OUT FOR. THE MOVEMENT FOR THE FRONT END COMPARED TO THE LONG END. THE CURVES ARE LOWER AT THREE BASEMENTS POINTS AND LONGER HIGHER BY THREE BASIS POINTS. 4.90 FIVE AND CLIMBING AS WE PERP WROTE -- AS WE APPROACH THE LINE IN THE SAND AND GET CLOSER TO 5%. THANK YOU FOR CHOOSING BLOOMBERG TV. ♪

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Bloomberg Surveillance 8/27/2025

Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern speak daily with leaders and decision makers from Wall Street to Washington and beyond. No other program better positions investors and executives for the trading day. (Source: Bloomberg)

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