Stocks Mixed, Bitcoin Rally | Bloomberg Markets: The Close 02/27/2024

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ROMAINE: AND TOUGH LINE STOCK MARKET AND A PATH TO A SOFT ECONOMIC LANDING. >> YOU SAID THAT WITH A QUESTION MARK. DAVID SULLIVAN AGREES WITH YOU. WE ARE KICKING YOU OFF TO THE CLOSING BELL IN THE U.S. THE S GOING NOWHERE AND I MEAN ABSOLUTELY NOWHERE. FIVE TENTS OF 1%. INTERESTING STORIES TO LOOK AT IS APPLE. THAT STOCK UP BY 3/10 OF 1%. NASDAQ 100 UP. APPLE IS ABANDONING ITS EV CAR PLANTS THE MARKET SEEMS TO LIKE THAT. WE HAD A SEVEN YEAR AUCTION. A LOT OF SUPPLY YESTERDAY. THE TAKEDOWN, THE TENURE YIELD UP BY THREE BASIS POINTS. THE DOLLAR-YEN DOWN JUST 1/10 OF 1%. THE TWO YEAR YIELD IN JAPAN HAD THE HIGHEST LEVEL IN 2011. INFLATION HIT A SURPRISE TO THE UPSIDE. THE DOLLAR-YEN NOT MOVING. I WONDER, IS IT A U.S. EXCEPTIONALISM KIND OF THING? ROMAINE: YOU’RE KILLING ME WITH THE DOLLAR-YEN TODAY. I FEEL LIKE WE HAVE BEEN THERE FOR A WHILE. HOW ABOUT TALKS OF A SOFT LANDING? BACK TO THAT CONVERSATION AGAIN. THAT IS WHAT HAS BEEN UNDERPINNING THE BID WE HAVE BEEN SEEING TODAY IN U.S. EQUITY MARKETS PARTICULARLY INTO INDUSTRIAL MATERIALS AND ECONOMIC SENSITIVE STOCKS. A DRAFT OF THE G20 CLOSING STATEMENT CAME OUT. THE STATEMENT AT THE END OF THIS WEEK’S MEETING IN BRAZIL. THAT IS GOING TO SAY THE RISKS TO THE GLOBAL OUTLOOK ARE MORE BALANCED AND THE WORLD ECONOMY HAS A CHANCE OF PULLING OFF A SOFT LANDING. JANET YELLEN PUTTING A FINER POINT ON THAT AT A NEWS CONFERENCE IN SAO PAULO. >> HAD THE U.S. RECESSION, IN 2023 LIKE MANY PREDICTED, GLOBAL GROWTH WOULD HAVE BEEN THROWN OFF TRACK. IF YOU ARE — THERE ARE RISKS TO OUR OUTLOOK. AMERICA’S GROWTH HAS CONSISTENTLY EXCEEDED PROJECTIONS. AMERICA’S PATH TO A SOFT LANDING HAS UNDERPINNED GLOBAL GROWTH. ROMAINE: I WOULD BE REMISS IN TRYING TO DOUBT THE OUTLOOK FROM ONE OF THE WORLD’S MOST RENOWNED ECONOMISTS OUT THERE BUT IT DOES NOT SYNC UP WITH THE LATEST BATCH OF ECONOMIC DATA. U.S. CONSUMER CONFIDENCE FALLING IN FEBRUARY FOR THE FIRST TIME IN FOUR MONTHS AS ABUSE ABOUT THE JOB MARKET AND FINANCIAL CONDITIONS DID DETERIORATE. YOU HAD ORDERS PLACED WITH U.S. FACULTY’S THAT BARELY ROSE IN JANUARY SUGGESTING COMPANIES ARE RESTRAINING THEIR INVESTMENT AMID WHAT IS STILL AN UNCERTAIN OUTLOOK. THAT BRINGS US BACK TO THE TOUGH ON STOCK MARKET. THE BRAZILIAN ON THE MARKET AND ALMOST $3 TRILLION IN CASH THAT FLED INTO MONEY MARKETS SINCE THE START OF THE PANDEMIC. ALIX: YOU TAKE A LOOK AT JANET YELLEN VERSUS THE DATA WE GOT. THE DATA VERSUS THE SNP. IT SPEAKS TO THE TEFLON MARKET IS SOMETHING THAT MAKES ME SCRATCH MY HEAD. I WANT TO FOCUS RIGHT HERE. THIS LINE IS THE S AND P. THE ORANGE LINE ARE TWO YEAR YIELDS. AND YOU WIND UP HAVING TWO YEAR YIELDS A HIT THE HIGH WE SAW IN 2023, YOU SOLD THE LOW AROUND OCTOBER FOR 2023 FOR THE SNP. BOTH ARE MOVING HIGHER TOGETHER. THE TWO YEAR YIELD NOW NEAR ITS PEAK THAT WE SAW IN 2023. THE SNP CONTINUES TO GRIND HIGHER. BEGS THE QUESTION, DOES THAT MAKE SENSE? IF WE DO HAVE A SOFT LENDING, THAT MIGHT MAKE SENSE. IF WE DON’T, ONE OF THEM IS GOING TO BE MISPRICED. ROMAINE: JEROME SCHREINER STARTING US OFF TO THE CLOSE ON THIS TUESDAY AFTERNOON. EDGING DIRECTOR AND HEAD OF SHORT-TERM PORTFOLIO MANAGEMENT AND FUNDING OVER AT PIMCO. I DON’T KNOW IF YOU HEARD ALEX’S QUESTION BUT I WILL STEAL HER QUESTION. I WOULD LIKE TO GET YOUR THOUGHTS ON THAT. >> THERE IS A NATURAL TENDENCY TO SEE WHERE THE PEAK IN RATES MAKES RISK-TAKING LESS SUSTAINABLE AS WE WITNESSED IN 2023. ONE OF THE MAIN FACTORS AS WE CONTINUE ON, THERE IS A NOTION OF THE SOFT LANDING IS POTENTIALLY POSSIBLE. WE THINK THERE IS SOME OF THE MACRO ECONOMIC DATA THE PRETENSE TO MORE DETERIORATION. WHAT WE THINK AS THE ECONOMY STILL MOVES FORWARD AT A SLOWER GDP GROWTH THAN WE SAW IN 2023 WHICH DOES NOT FOREBODING DEEP RECESSION. WE HAVE TO GET MORE COMFORTABLE AS HAVE HIGHER RATES, ONES THAT ARE MORE IN TUNE WITH THE FED’S OUTLOOK, WE ARE GOING TO SEE THE RISK TAKING BE MORE SUBDUED OVER LONGER PERIODS OF TIME. THE RISK-TAKING IS GOING TO BE MORE SPECIFIC AND CERTAIN ELEMENTS OF RISK-TAKING IN SECTORS VERSUS A BROAD-BASED RISK-TAKING. WE THINK THERE IS GOING TO BE A RECALIBRATION OF TENDENCIES OF HOW YOU THINK ABOUT FIXED INCOME VERSUS EQUITIES. WHERE WE ARE RIGHT NOW, WE ARE FINDING FIXED INCOME ELEMENT MORE ATTRACTIVE IN TERMS OF VOLATILITY MANAGEMENT, INCOME POTENTIAL AND TOTAL RETURN. ROMAINE: WE HAVE SEEN FROM THE LAST THREE AND A HALF MONTHS SOME BIT OF EXTENSION OF DURATION. YOU DON’T HAVE TO STAY CAMPED OUT IN T-BILLS OR MONEY MARKET FUNDS. THERE IS LIFE ACROSS THE SPECTRUM. >> WHAT WE ARE SEEING OVER THE PAST FOUR WEEKS IS THE RATE ADJUSTMENT, THE MOVEMENT TOWARD THE HIGHER YIELDS WE HAVE NOT SEEN IS CREATING A SENSE OF OPPORTUNITY. PERHAPS THOSE INVESTORS WHO MISSED THE HIGHER YIELDS IN 23 ARE REVISITING THAT AND LOOKING TO MOVE SOME OF THE ASSETS OUT OF CASH EVEN THOUGH CASH RATES ARE STILL NEAR THE PEAK WE HAVE WITNESSED FOR A LONG TIME. THEY WANT TO TAKE ADVANTAGE OF THE PRICE APPRECIATION WHICH WILL END UP DEVELOPING ONCE THE FEDERAL RESERVE MOVES INTO ACTION LATER THIS YEAR. THAT CALIBRATION BETWEEN THE FEDERAL RESERVE’S CONTINUAL FOCUS ON EDGING PRICE STABILITY, MANAGING JOB GROWTH AND DOING SO IN AN ECONOMY THAT WHEN WE FOCUS ON FINANCIAL STABILITY ULTIMATELY LEADS THE RECONCILIATION TO FOCUS TO THE FED EXPECTATIONS. THAT IS WHAT WE HAVE WITNESSED. INVESTORS WANT TO BEGIN TO THINK ABOUT WHAT THAT MEANS TO THEIR PORTFOLIO AND NOT MISS THE OPPORTUNITY TO EXTEND THE DURATION OUT OF THE CASH COMPONENT OF THE PORTFOLIOS WHICH HAVE BEEN INUNDATED THE LAST FEW YEARS. ALIX: I HAVE A CD MATURING. I WAS LIKE, WHAT DO I DO NOW? DO I GO BACK TO CDS? >> THERE ARE SO MANY OPPORTUNITIES. ALIX: THERE ARE DIFFERENT OPTIONS NOW THAN 18 MONTHS AGO. ARE YOU OF THE CAMP LIKE JANET YELLEN WHERE WE ARE LOOKING AT A SOFT LANDING OR YOU OF THE DAVID SOLOMON OR ROMAINE BOSTICK CAMP WHERE YOU ARE MORE SKEPTICAL? >> WE ARE THINKING ABOUT THE HISTORICAL PRECEDENT. THE VARIABLES NECESSITATED FOR A SOFT LANDING, TAKES A LOT TO MAKE SURE THE EQUATION COMES OUT PRECISE. WE ARE SEEING SOME OF THE MACRO ECONOMIC INDICATORS SLOW. MOTHER IS A POTENTIAL FOR A SOFT LANDING, IT IS NOT A HIGHLY PROBABLE EVENT. WHAT WE ARE THINKING ABOUT IS A RISK A SCENARIO THAT BEGINS TO MATERIALIZE OVER THE COURSE OF 2024 INTO 2025 WHERE THINGS LIKE WAGE PRESSURES, JOB GROWTH IN GENERAL BECOME MORE SUBDUED AS PROFITABILITY IN THE CORPORATE SECTOR NOT JUST IN THE U.S. BUT GLOBALLY BEGINS TO WEIGH ON SENTIMENT. NOT ON A HARD LANDING BUT THE SOFT LANDING IS A BIT IDEALISTIC WHEN YOU TAKE IT FROM A HISTORICAL CONTEXT. ALIX: THAT WORKS. PERSPECTIVE. WHERE SHOULD THAT MONEY IN MY MONEY MARKET FUND BELONG TO? SHOULD IT BELONG TO THE CORPORATE CREDIT MARKET? WHERE ON THE CURB DOES IT BELONG TO? I HAVE BEEN STUNNED TO SEE THE AMOUNT OF ISSUANCE WE HAVE SEEN. ALSO THE AMOUNT OF DEMAND EVEN WITH O.A.T.’S IN FRANCE. >> THERE IS A DEMAND COMPONENT WHICH IS SELF-FULFILLING. LET ME SPEND A MOMENT ON THAT. CONTINUE TO SEE TRENDS IN MONEY MARKET FUNDS MOVE HIGHER OVER THE COURSE OF THE FIRST QUARTER THIS YEAR. WHAT WE ARE SEEING IS THERE IS A BIT OF SELF-PROPELLED INERTIA WITHIN THAT. WHEN HE MARKET FUND SPINOFF 25 BILLION DOLLARS OF INCOME ON A MONTHLY BASIS TO THEIR INVESTORS WHICH MEANS THEY ARE GOING TO HAVE TO BE REINVESTED IN SOME WAY. WE ARE SEEING SOME OF THAT GO INTO RISK ASSETS. WE ARE SEEING THAT EXTEND OUT THE YIELD CURVE BUT A LOT OF IT GETS RECYCLED WITHIN MONEY MARKET FUNDS CREATING AN UPWARD TRAJECTORY. THE KEY POINT IS WHEN YOU WANT TO THINK ABOUT THE BALANCE OF HOW TO PUT THE CAPITOL TO WORK, A LOT OF INVESTORS ARE SHYING AWAY AND EMBRACING VOLATILITY, FINDING RISK ASSETS AND LOOKING FOR THE INCOME-BASED COMPONENT WHICH IS ULTIMATELY A VOLATILITY MANAGEMENT STORY. WHILE WE FIND IT RELATIVELY ATTRACTIVE AND YOU HIGHLIGHTED EARLIER ON BLOOMBERG THIS MORNING WE ONLY HAVE 75 BASIS POINTS OF RED CUTS PRICED IN TO THE 2024 MARKET PRICING FOR THIS TIME, THAT IS CLOSE TO WHERE WE SEE AS FAIR VALUE AN INVESTOR SHOULD USE THIS AS AN OPPORTUNITY TO MOVE OUT THE YIELD CURVE, EMBRACE POTENTIAL FOR CAPITAL APPRECIATION, FOR PRICE APPRECIATION FROM BONDS THAT ALSO EARN AND LOCK IN HEALTHIER INCOMES FOR LONGER MONEY MARKET FUNDS CANNOT SUSTAIN ONCE THE FED BEGINS THE CUT RATES. THAT IS THE LOGICAL PRECEDENT. INVESTORS IN CASH STRATEGIES, PERHAPS YOUR CD WANT TO NECESSITATE RUNNING THE INCOME FOR HIGHER YIELDS AND LONGER. IT REQUIRES MATURITY EXTENSION OF INTEREST-RATE EXPOSURE TO MANAGE THAT OVER THOSE POINTS. INVESTORS ULTIMATELY WANT TO POSITION THEMSELVES OF PRICE APPRECIATION AND BONDS BY EXTENDING THE YIELD CURVE. ROMAINE: HEAD OF SHORT-TERM PORTFOLIO MANAGEMENT AND FUNDING AT PIMCO HELPING US KICK YOU OFF TO THE CLOSE ON THIS TUESDAY AFTERNOON. AFTER THE BREAK, A CLOSER LOOK AT MACY’S. PLANS TO CLOSE A THIRD OF ITS U.S. LOCATIONS. HIGHLIGHTS FROM MY CONVERSATION WITH THE NEW CEO. ALIX: PLUS YOU HAVE TOM PALMER, PRESIDENT AND CEO OF NEWMONT RUNNING THE PROGRAM LIVE. ROMAINE: FORGET OZEMPIC. BK 2735. THAT IS THE NEWEST WEIGHT LOSS DRUG ON THE BLOCK. WE WILL TALK ABOUT THE LATEST TRIAL. IT IS OUR STOCK OF THE HOUR. COMING UP IN BIT. THIS IS THE CLOSE ON BLOOMBERG. ♪ ALIX: AS THE STORY OF THE DAY. IF YOU WORK IN A BANK, KEEP AN EYE OUT FOR AI. A NEW STUDY FINDS OUT ARTIFICIAL INTELLIGENCE IS LIKELY IMPACTING TASKS MAKING UP THREE QUARTERS OF EACH DAY. KATHERINE DOHERTY HAS MORE. THAT IS A LOT TO WHAT TASKS ARE WE TALKING ABOUT? >> THE ONES THAT WILL BE THE MOST AUTOMATED ARE THE ONES THAT WILL THE MOST WITH NUMBERS WITH DATA THAT CAN BE EASILY CONSUMED BY THESE GENERATED SYSTEMS. THINK ABOUT A BANK TELLER THAT IS TRYING TO EVALUATE THEIR IS A CONSUMER THAT COMES IN AND IS ASKING ABOUT THEIR ACCOUNT, HOW MUCH MONEY THEY HAVE. A LOT OF THESE ANSWERS CAN BE AUTOMATED. YOU CAN USE BOTS TO POTENTIALLY ANSWER A QUESTION FASTER OR YOU MAY NOT NEED A PERSON AT ALL. A BANK TELLER MIGHT SHIFT TO ONLY ANSWER THE QUESTIONS THAT NEED A PERSONAL TOUCH, SOMEONE THAT CAN ANALYZE SOMETHING MAYBE A COMPUTER CANNOT PROCESS THEMSELVES. ROMAINE: MY FIRST THOUGHT WAS, THEY STILL HAVE BANK TELLERS? I GUESS THEY STILL EXIST OUT THERE. I FEEL LIKE THERE HAS ALWAYS BEEN ENOUGH ATTRITION IN CERTAIN POCKETS OF THE BANKING SECTOR WHERE MAYBE THIS WILL NOT HAVE A MATERIAL IMPACT ON JOBS. >> YOU ARE RIGHT. THERE HAS BEEN A TRANSITION EVEN BEFORE AI. TO MAKE THIS CLEAR, AI HAS BEEN A TECHNOLOGY THAT HAS BEEN AROUND FOR A DECADE PLUS. WE ARE TALKING GENERATIVE AI. LARGE LANGUAGE MODEL. THESE ARE BOTH USING DATA BUT GIVING AN ANSWER THAT COULD BE GIVEN AS A SENTENCE USING ACTUAL ENGLISH AS A LANGUAGE IF YOU’RE GOING IN LET’S SAY IF YOU’RE WALKING OUTSIDE OF NEW YORK. A BANK TELLER MIGHT NOT BE NECESSARY. AND SO — BUT THINK ABOUT A LOAN OFFICER. THAT IS ANOTHER IMPACTED JOB THAT MIGHT BE ABLE TO TAKE AND EVALUATE SOMEONE’S CREDIT WORTHINESS. WHETHER A BANK COULD — WHAT KIND OF OPTIONS MIGHT BE AVAILABLE TO A CONSUMER. THOSE ARE SOME TASKS THAT CAN BE AUTOMATED. ROMAINE: ALIX IS TRYING TO ROLL OVER ONE OF HER CDS. ALIX: I HAD A CD IN 2002. I DON’T KNOW WHAT THAT SAYS ABOUT ME. WHAT I’M INTERESTED IN IS WHERE TO THE WORKERS AGO. ARE THE THERE OTHER OPPORTUNITIES FOR THEM? >> THE ROLES THAT WILL BE THE MOST AUTOMATED, THOSE TEAMS WILL LIKELY SHRINK. THIS REPORT WAS SAYING THERE ARE OPPORTUNITIES — THERE ARE ALTERNATIVES. INSTEAD OF MASSIVE CUTS ACROSS BANKING, YOU COULD SEE PEOPLE MOVING INTO OTHER AREAS, OTHER TEAMS THAT MIGHT NEED MORE OF A PERSONAL TOUCH THAT ARE NOT AS AUTOMATED. ACROSS THE BOARD, THE BIG HEADLINE NUMBER HERE IS THREE QUARTERS OF ALL THE TIME THAT IS SPENT ACROSS THE BANKING SECTOR WILL BE AFFECTED WHETHER THAT IS AUTOMATED OR AUGMENTED. IT IS GOING TO BE TOUCHED IN SOME WAY. IT IS A MATTER OF, WILL YOU BE ASSISTED? WILL THAT TIME BE REPLACED BY A BOT? IN THAT TIME IF IT IS REPLACED, CAN YOU USE THAT IN OTHER WAYS TO DO OTHER JOBS TO ACCELERATE POTENTIALLY HELPING A CONSUMER OR GETTING A DEAL DONE? ROMAINE: A CLOSER LOOK AT THE LATEST STUDY OUT BY ACCENTURE. A CLOSER LOOK AT HOW AI COULD REPLACE A LOT OF BANKING JOBS. WE WANT TO STICK WITH AI BECAUSE THERE WAS INTERESTING NEWS CROSSING THE WIRE SAYING APPLE HAS FINALLY ACKNOWLEDGE THE EFFORT TO BUILD AN ELECTRIC CAR MIGHT HAVE BEEN AN EFFORT IN VAIN. ACTUALLY MOVING A LOT OF THE EMPLOYEES TO THEIR AI DIVISION. ALIX: I FIND THIS INTERESTING FOR TWO REASONS. THEY GOT IN LATE ANYWAY. USUALLY GET IN LATE TWO A PRODUCT, THEY WANT TO SEE HOW IT GOES ELSEWHERE. IN SOME WAYS IT MAKES SENSE. AI COULD GENERATE PART OF A STREAMING REVENUE FOR THEM AND BECOME A SERVICES COMPANY WHICH IS WHAT THEY ARE TRYING TO DO. I’M NOT SURE HOW A CAR WOULD HAVE DONE THAT FOR THEM. ONE THING THAT WAS INTRIGUING AND WE FIRST LEARNED ABOUT IT WAS IT WAS SUPPOSED TO BE FULLY AUTONOMOUS AND THEN IT BACKED OFF. THE TECHNOLOGY IS NOT QUITE THERE. MAYBE THEY REACHED A POINT WHERE THEY SAID THIS IS WAY AHEAD OF ITS TIME RIGHT NOW FROM A PROFITABILITY PERSPECTIVE. THERE WERE A LOT OF DISCUSSIONS ABOUT HOW MUCH AN. APPLE CAR WOULD COST. . MOST PEOPLE SAID THAT WOULD BE IN THE SIX FIGURES. MOST PEOPLE ARE NOT IN THE MARKET FOR A SIX-FIGURE CAR. ALIX: THAT WAS ENOUGH MARGIN FOR THEM APPARENTLY. ROMAINE: THERE IS ALWAYS THE IPHONE. ALIX: THAT IS WHY I AM IN THE CD. IT IS GOING TO HELP ME PAY FOR THE APPLE CARD. ROMAINE: THIS IS THE CLOSE ON BLOOMBERG. ♪ ROMAINE: LET’S GET A VIEW FROM THE SELL SIDE. BIG MOVERS. START WITH UNITY SOFTWARE APPEARED PRICE TARGET BEING CUT TO 30 FROM 35. CITING DISAPPOINTMENT WITH THE VIDEOGAME DEVELOPERS ANNUAL SALES FORECAST. THE LACK OF CLEAR STRATEGIC DIRECTION. SANE THAT IS WHY HE MAINTAINS A HOLD RATING ON THE STOCK. ROKU UP NEXT GETTING CUT TO UNDERWEIGHT FROM EQUAL WEIGHT OVER AT WELLS FARGO. THE PRICE TARGET GOING DOWN TO 51 BUCKS A SHARE WITH ANALYSTS CITING SUBSTANTIAL RISK ON THE BACK OF WALMART’S PLANS TO BUY SMART TV MAKER VIZIO. SHARES ME DOWN FRACTIONALLY BUT THEY ARE DOWN 36% OF THE LAST TWO WEEKS SINCE WE FIRST LEARNED ABOUT THE DEAL. LET’S TAKE A LOOK AT AMERICAN EAGLE OUTFITTERS. OPENING A 90 DAY CATALYST WATCH ON THE STOCK WITH EXPECTATIONS FOR THE APPAREL RETAILER TO ISSUE A STRONG ANNUAL PROFIT OUTLOOK WHEN IT REPORTS NEXT WEEK. THE ANALYSTS SEEING STRONG MOMENTUM AND PRAISES THE COMPANY’S COMMITMENT TO MANAGING COSTS. SHARES MOVING HIGHER BY A PERCENT ON THE DAY. THOSE ARE SOME OF OUR TOP CALLS. WANT TO STAY IN THE RETAIL SPACE AND TAKE A LOOK AT ABLED NEW CHAPTER. THAT IS HOW MACY’S IS SPINNING IT. THE NEW STRATEGY FROM THE NEW CEO. AN EFFORT TO FREE UP ASSETS THE RETAILER ANNOUNCED WOULD INVOLVE CLOSING 150 OF ITS NAMESAKE STORES. DID HAVE A CHANCE TO CATCH UP WITH THE NEW CEO ABOUT THE NEW CHAPTER. HERE’S WHAT HE HAD TO SAY. HE SAID IT IS NOT THE QUANTITY OF STORES. IT IS THE QUALITY. IT IS THE RIGHT STORES IN THE RIGHT GEOGRAPHIC PARTS OF THE COUNTRY WHERE CONSUMERS ARE STILL SHOPPING. DAVID SCHWARTZ JOINING US FOR HIS PERSPECTIVE. MORNINGSTAR SENIOR EQUITY ANALYST AND HE HAS A BUY RATING ON MACY’S SHARES. GIVE ME A SENSE HERE. WHEN YOU SELL THE ROADMAP OUTLINED WHICH IS PRIMARILY CLOSING STORES, GETTING INVENTORY UNDER CONTROL AND MAINTAINING SOME OF THE OTHER COST CONTROLS THAT WERE ALREADY IN PLACE UNDER HIS PREDECESSOR, WERE YOU IMPRESSED BY WHAT YOU HEARD TODAY? >> I THINK IT IS A NEEDED STEP THAT IS PROBABLY LONG OVERDUE. ANY PEOPLE INCLUDE MYSELF HAVE SAID AND WRITTEN MACY STILL HAS TOO MANY STORES IN B AND C CLASSED MALLS THAT NEED TO CLOSE. MACY’S HAS BEEN HESITANT TO CLOSE THEM IN THE PAST ALTHOUGH THEY HAVE CLOSED A LOT OF STORES. MACY’S WANTED TO KEEP STORES OPEN THAT IT SAW AS PROFITABLE. ULTIMATELY THEY WERE NOT DRIVING MUCH PROFITABILITY. THERE NEEDED TO BE SOME BIG CHANGES. BRINGING IN A NEW CEO IS A GOOD CHANCE TO BRING SOME NEW CHANGES TO THE COMPANY. ROMAINE: CERTAINLY A BIG CHANCE. WE WOULD BE REMISS IN NOT POINTING OUT YOUR TALKING ABOUT ACTIVIST INVESTORS CIRCLING THE COMPANY. COMPANIES LIKE ARC HOUSE WHICH MADE IT CLEAR THEY SEE VALUE THAT COULD BE UNLOCKED BY SELLING OFF MORE OF THE REAL ESTATE ASSETS MUCH MORE AGGRESSIVELY HERE. DO YOU THINK THE 150 STORES WE GOT TODAY IS GOING TO PLACATE SOME OF THE INVESTORS? >> I DON’T THINK SO. MOST LIKELY THE 150 STORES THAT ARE GOING TO BE CLOSED OR NOT THE PRIME REAL ESTATE STORIES BECAUSE THE PRIME REAL ESTATE STORES ARE THE ONES THAT ARE THE BEST-PERFORMING STORES. THOSE ARE THE ONES THAT WILL NOT BE CLOSED. I DON’T THINK THIS IS GOING TO PACIFY THE ACTIVIST INVESTORS. I THINK THEY ARE GOING TO GO AHEAD WITH THEIR TAKEOVER ATTEMPT. I DON’T THINK IT WILL BE SUCCESSFUL BUT IT IS GOING TO CONTINUE BECAUSE ARC HOUSE AND OTHERS IN THE PAST HAVE SEEN MACY’S OWNS SIGNIFICANT REAL ESTATE. IT DOES NOT HAVE A PLAN TO MONETIZE THE REAL ESTATE. CLOSING WEAKER STORIES IS NOT THE BIG PLAN MACY’S INVESTORS HAVE BEEN LOOKING FOR FOR YEARS TO UNLOCK THE VALUE OF THE REAL ESTATE. ALIX: WHAT WOULD BE THAT PLAN? WELL WITH THE GIGANTIC REAL ESTATE MONETIZATION LOOK LIKE? >> THERE ARE A COUPLE THINGS MACY’S COULD DO. IT COULD CREATE A READ. OTHER RETAILERS AND CASINOS HAVE DONE THAT. ANOTHER POSSIBILITY WHICH IS EASIER WOULD BE A SALE-LEASEBACK WHICH WOULD BE A SALE OF THE REAL ESTATE TO THE REAL ESTATE INVESTMENT FIRM AND LEASE IT BACK. THAT DOES PUT THE COMPANY AT RISK BECAUSE THE COMPANY WOULD HAVE TO PAY SIGNIFICANT RENT ON THE BUILDINGS. RIGHT NOW MACY’S PAYS LIMITED RENT ON MOST OF ITS PROPERTIES. THERE IS RISK TO THAT END THAT IS WHY MACY’S BOARD IS HESITANT TO SELL TO A COMPANY LIKE THE ONE THAT IS TRYING TO BUY IT NOW BECAUSE THEY DON’T SEE THAT AS A COMPANY THAT IS GOING TO TAKE CARE OF MACY’S FOR THE FUTURE. ALIX: WHAT ARE OTHER LEVERS TO PULL? ? IF THEY ARE NOT GOING TO TAKE THAT GENETIC OF A STEP, THEY STREAMLINED THEIR INVENTORIES, THEY MANAGED LOGISTICS, TRIMMED A LOT OF MANAGEMENT THOUGHT. WHAT ELSE IS THERE GOING TO DO? >> MACY’S MAIN MOVE IS TO OPEN SMALLER STORES. MACY’S IS GOING TO BE CLOSING A LOT OF THE BIGGER DEPARTMENT STORES. THEY ARE ABOUT 180,000 SQUARE FEET ON AVERAGE. THE MARKET DOES NOT NEED THOSE GIANT APARTMENT STORES. MACY’S IS GOING TO BE CLOSING A LOT OF THEM AN OPENING 40,000 SQUARE FEET MOSTLY IN RETAIL THAT IS OFF MALL. MOSTLY IN STRIP MALLS, PLACES YOU WILL SEE LIKE FROM CROSS AND RACK AND DSW. MACY’S IS MOVING TOWARDS AND ALL FORMAL MODEL. — AND OFF MALL MODEL. IT IS NOT A REAL ESTATE STRATEGY. THE PEOPLE THAT WANT TO OWN REAL ESTATE — MACY’S FOR THE REAL ESTATE ARE GOING TO BE UNHAPPY MACY’S DOES NOT HAVE A BIG PLAN TO MONETIZE REAL ESTATE. ALIX: DAVID SCHWARTZ OVER AT MORNINGSTAR. WHAT WERE SOME OF THE BIG TAKEAWAYS? ROMAINE: THIS IS NOT A REAL ESTATE STRATEGY. HE IS SPOT ON. IT WAS MY SENSE TALKING TO TONY. HE TALKED SO MUCH HOW TO IMPROVE THE RETAIL EXPERIENCE. MOST OF THESE ACTIVIST INVESTORS ARE LOOKING AT THE CROWN JEWELS OF THE COMPANY WHICH AS OF TODAY STILL REMAINS WHAT SOME PEOPLE ESTIMATE TO BE $8 BILLION WORTH OF REAL ESTATE. ALIX: HOW DO YOU INCREASE YOUR OPERATING MARGIN? HOW DO YOU DO THOSE THINGS IF YOU DON’T MONETIZE REAL ESTATE? ROMAINE: HE DID TALK ABOUT IMPROVING THE EXPERIENCE, I CAN GET MORE EXPERIENTIAL TO COME INTO THE STORES. WHEN HE TALKED ABOUT, REDUCING REDUNDANCIES. . SAY THEY HAVE TWO — SAYING THEY HAVE TOO MANY BRANDS. ANNABELLE: WE WILL STAY WITH THE C-SUITE. ROMAINE: JUST ABOUT 3:30 P.M. IN NEW YORK. AS OF THE COUNTDOWN TO THE CLOSE. ALIX: ONE OF MY FAVORITE STORIES OF THE DAY. CHEVRON AND CNOOC. CHEVRON OFF BY A COUPLE PERCENT. THIS IS A FIGHT ABOUT DIANA. CHEVRON MADE A BIG BID FOR HESS. MERGER SUPPOSED TO GO THROUGH. THE CROWN JEWEL IS GUYANA. EXXON AND CNOOC ARE PARTNERS WITH HESS. THEY SAY THEY HAVE THE RIGHT OF FIRST REFUSAL. CHEVRON HAD THAT IN FILING. ROMAINE: I SAW THIS AND I WAS CONFUSED. WHAT IS EXXON GET OUT OF BLOCKING THE STEEL? ALIX: IN THEORY THEY ARE MAKING THE POINT THEY SHOULD BE ENTITLED TO THEIR PORTION OF GUYANA. CHEVRON CAN BUY HESS BUT THEY CANNOT GET THE GUYANA. THE IDEA IS HESS IS NOT WORTH ANYTHING TO CHEVRON WITHOUT GUYANA. ROMAINE: I FEEL LIKE EVERYTHING GOING ON IN GUYANA IS A BIT OF A MESS BETWEEN WHAT WE ARE LEARNING ABOUT CHEVRON OR EXXON. AND OF COURSE WHATEVER THE HECK IS GOING ON WITH VENEZUELA CLAIMING THE OIL RESERVES ARE ON THEIR PROPERTY. IS THIS GOING TO END IN SOME BIG FIGHT? ALIX: THAT IS THE INTERESTING PART. WE ARE ALL THINKING ABOUT DOJ OR ANTITRUST. WE ARE THINKING ABOUT WHAT IS GOING TO HAPPEN TO VENEZUELA. ARE THEY GOING TO TRY TO CO-OPT THESE ASSETS OFF THE COAST. NO ONE WAS THINKING THIS WAS GOING TO GO DOWN. ROMAINE: REMIND US AND THE VIEWERS BECAUSE YOU COVER THIS CLOSELY. THE OIL DISCOVERY OFF THE COAST, THAT IS ONE OF THE MORE MEANINGFUL DISCOVERIES WE HAVE HAD IN A WHILE. ALIX: I CANNOT EMPHASIZE IT ENOUGH. PERMIAN BASIN AND SHOW OIL IN THE U.S. BUT THIS IS NOT THAT. HIS DEEP WATER. THESE GUYS ARE NOT EXPLAINED TO THE SAME EXTENT THEY DID 30, 40 YEARS AGO. THIS IS THE ASSET. UNLESS YOU ARE LOOKING AT QATAR AND NATURAL GAS FIELDS, THIS IS WHERE THE REAL PRODUCTION EXPLORATION IS GOING TO BE AND THE ASSET COULD BE IN OUR MISS. ROMAINE: FINAL QUESTION FOR YOU. I THOUGHT WHENEVER YOU MAKE THESE TYPE OF DEALS USUALLY YOU SIT DOWN WITH A BUNCH OF LAWYERS AND OTHER CONSULTANTS AND THEY TALK ABOUT THE POTENTIAL RISK. WAS THIS NOT DISCUSSED? ALIX: WHAT THE LAWYERS LIKE DON’T WORRY ABOUT IT — WEREN’T THE LAWYERS LIKE, DON’T WORRY ABOUT IT? GOT TO BE HONEST WITH YOU. YOU WOULD THINK THIS WOULD HAVE BEEN GOTTEN. WHEN STOCK WE ARE WATCHING IS NEWMONT MINING. SHARES DOWN 5/10 OF 1%. SINGLE PRICES ARE TRADING AT THE TOP AND OF THE FIVE YEAR RANGE AND MIGHT NOT MOVE HIGHER. JOINING US NOW FROM THE MINING CONFERENCES THE PRESIDENT AND CEO OF NEWMONT. THANKS FOR JOINING. >> ALIX: THANKS FOR HAVING ME. GOOD PRICE IS NOT GOING TO GO MUCH FURTHER FROM HERE SO — WHAT DO YOU SAY TO THAT? >> OUR STOCK IS AT A ONCE IN A GENERATION PRICE. LAST WEEK WE ANNOUNCED FOLLOWING A BIG ACQUISITION A PORTFOLIO THAT IS NEVER BEEN SEEN BEFORE IN THE GOLD INDUSTRY. IT IS ALL TIER ONE OPERATIONS. IT HAS GREAT EXPOSURE TO COPPER. GREAT PROJECTS BEHIND IT. IF YOU COME INTO NEWMONT STOCK NOW AND RIDE THE VALUE WITH US, YOU ARE GOING TO GO FOR A JOURNEY WITH US THAT WILL SIGNIFICANTLY INCREASE THE STOCK FROM WHERE IT WAS TODAY. ALIX: IT IS A CEO ANSWER IF I EVER HEARD ONE. ON THE FLIPSIDE YOU ARE LOOKING AT PUTTING THE QUARTERLY DIVIDEND. YOU HAD TO RESET YOUR DIVIDEND POLICY. YOU HAVE TO SELL A LOT OF ASSETS TO MAKE THE ACQUISITION HAPPEN AND YOU HAVE TO DEAL WITH SYNERGIES. PART OF THAT IS $2 BILLION IN CASH SALE OF ASSETS. HOW IS THAT GOING? >> ALL GOING TO PLAN. IS WHAT WE ANNOUNCED IN MAY OF LAST YEAR. WE SAID THERE WOULD BE $2 BILLION OF CASH FROM PORTFOLIO OPTIMIZATION. WE EXPECTED TO ADJUST CAPITAL ALLOCATION TO MATCH THE TRANSFORMED BUSINESS. WE WILL GET OUR BALANCE SHEET NICE AND FIT. WILL PAY A ONE DOLLAR A SHARE PRICE DIVIDEND. $2 BILLION FROM PROCEEDS COMING THROUGH AND A GOOD PORTION OF THE MONEY WILL GO TOWARD HER $1 BILLION SHARE BUYBACK. EVERYTHING CONSISTENT WITH WHAT WE ANNOUNCED MAY OF LAST YEAR. ROMAINE: HOW SOON DO THINK THOSE DIVESTMENTS WILL COME? ONCE THEY ARE NOT, WHERE IT IS — WAS THERE DONE, WHAT DOES THAT PUT NEWMONT NEXT? >> WE COMMITTED TO WORK THROUGH SIX ASSETS WE HELD FOR DIVESTMENT. WE WILL THROUGH THOSE FOR THE COURSE OF THE NEXT 12 MONTHS. THERE ARE A BUNCH OF NORTH AMERICA THAT WILL STAR IN THE NEXT MONTHS. WE ARE ON TRACK WITH CLEAR PLANS TO HAVE THAT WORK THROUGH OVER THE COURSE OF THIS YEAR. OUR FOCUS IS ON DELIVERING THE VALUE AND SYNERGIES FROM OUR GO FORWARD TIER ONE PORTFOLIO. THAT IS OUR FOCUS FOR 2024. BEYOND THAT WE HAVE SOME BIG COPPER GOLD PROJECT SITTING IN THE WINGS WAITING TO INCREASE EXPOSURE TO COPPER IN 25, 26. ROMAINE: ALL THOSE NEW PROJECTS OVER THE SAME COST-EFFECTIVENESS AS WHAT YOU HAVE NOW? >> WE HAVE PROJECTS THAT ARE THE ENVY OF NOT ONLY THE GOLD MINING INDUSTRY, THE MINING INDUSTRY. WE HAVE THREE BIG COPPER GOLD PROJECTS. WHEN IN BRITISH COLUMBIA, PERU, PAPUA NEW GUINEA. THEY ARE THE SCALE THE MATCH OF ANY COPPER MINING, GOLD-MINING COMPANY. WAITING TO BE IMPLEMENTED. ALIX: MARK BRISTOW MIGHT CHALLENGE YOU ON THAT. I AM CURIOUS AS TO HOW RUNNING YOUR BUSINESS IN TERMS OF YOUR INPUT COST, YOUR LABOR, YOUR ENERGY COSTS, WHAT ARE YOU NOTICING? WHAT IS THIS YOUR GOING TO BE FOR YOU ON THAT FRONT? >> EVERYTHING IS PRETTY CONSISTENT WITH WHAT WE ARE PREDICTING FOR THIS YEAR AND WITH WHAT WE SAW LAST YEAR. THERE IS STABILITY IN TERMS OF OUR COST BASE. WHAT ALSO COMES AS WE TRANSFORMED THE BUSINESS WILL BE $1300 AN OUNCE THIS YEAR. AS WE BRING ON NEW OUNCES AND IMPROVE COST WITH OUR TRANSFORM PORTFOLIO OVER THE NEXT TWO OR THREE YEARS WE WILL BRING THAT DOWN TO $1150 AN OUNCE. STRONG MARGINS OUT OF OUR PORTFOLIO. IT IS A COMBINATION OF FOCUS ON COST, PRODUCTIVITY AND PURPOSE BUT NEW OUNCES WE ARE INVESTING IN TO BRING ON BOARD. ALIX: AS INFLATION ROLLS OVER, AS THE FED WINDS UP CUTTING RATES, DO YOU FEEL THAT IT’S GOING TO AT SOME POINT STOP GOLD’S RISE? THEIR OTHER ASSETS AND OTHER MACRO FACTORS THAT IS GOING TO MAKE GOLD LESS APPEALING YET GOING TO LET >> WE ARE EXCITED ABOUT THE LONG-TERM VIEW OF GOLD. WE WOULD NOT HAVE THE SIZE OF TIER ONE PORTFOLIO WE HAVE. WE HAVE 10 TIER ONE OPERATIONS IN OUR PORTFOLIO. WE ARE EXCITED ABOUT THE POTENTIAL OF GOLD, THE LONG-TERM POTENTIAL OF GOLD. THE KEY IS TO HAVE A MARGIN TO WHATEVER THE GOLD PRICE IS. YOU ARE RUNNING AT 11, $1200 AN OUNCE, YOU HAVE A GREAT MARGIN. COULD BE GENERATING CASH THROUGH THE CYCLE AND THAT IS OUR FOCUS WITH OUR LONG-TERM PORTFOLIO. ALIX: THANKS FOR JOINING US. YOUR MOM PRESIDENT AND CHIEF EXECUTIVE OFFICER JOINING US FROM THE CAPITAL METAL AND MINING CONFERENCE. I WAS COVERING 17 YEARS AGO DURING THE FINANCIAL CRISIS. IF YOU TOLD ME GOLD WAS AT $2000 AN OUNCE, THESE WOULD HAVE BEEN FLYING HIGHER. IT IS INTERESTING HOW THE CORRELATION HAS CHANGED. ROMAINE: I AM CURIOUS TO SEE HOW THE FUTURE OF MINING SHAKES OUT. WE HAVE HEARD SO MUCH ABOUT LESS COST-EFFECTIVENESS OF IT NOW. SOME OF THE OTHER ONES INCLUDING COPPER THAT HE MENTIONED. INTERESTING TO SEE HOW IT — HOW HE DEALS WITH THAT. I WAS READING A STORY ABOUT THIS GUY WHO WAS FLYING — SUPPOSED TO FLY TO HOLLYWOOD CALIFORNIA AND HE GOT ON A FLIGHT TO HOLLYWOOD, FLORIDA. I JUST KEPT THINKING ABOUT THAT THE WHOLE INTERVIEW. ALIX: HOW DOES THAT HAPPEN? DON’T THEY CHECK YOUR STICK ITS — YOUR TICKETS? IS THIS HOME ALONE TO? DELAY ROMAINE: I THINK IT IS HOME ALONE 5.0. ALIX: THEY ARE LIKE HERE IS YOUR FLIGHT TO HOLLYWOOD CALIFORNIA. THEY WOULD HAVE THOUGHT ABOUT ITS. ROMAINE: SOMETHING TO THINK ABOUT TONIGHT. ALIX:ALIX: IT IS THE NEWCOMER AMONG THE WEIGHT LOSS DRUG. VIKING THERAPEUTICS IS SURGING. 123%. AFTER MID-STAGE TRIAL RESULTS FOR THE OBESITY DRUG EXCEEDED EXPECTATIONS. WE WILL BREAK THAT DOWN COMING UP. THIS IS BLOOMBERG. ROMAINE: TIME NOW FOR OUR STOCK OF THE HOUR. VIKING THERAPEUTICS MORE THAN DOUBLING TODAY ALONE. THIS IS AFTER POSITIVE TRIAL RESULTS OF THE OBESITY DRUG. MADISON MULLER JOINING US WHO COVERS THE WEIGHTLESS DRUG INDUSTRY AND IT HAS BECOME AN INDUSTRY. THIS NEW ONE, VK 227 315, SHARES ARE RALLYING. IS THIS BETTER? >> THE THING IS, IT IS STILL YEARS AWAY. FROM REACHING PATIENTS. THAT IS WHY IT IS AMAZING THE MARKET REACTED LIKE IT DID TO THIS DATA READ TODAY BECAUSE IT IS STILL IN MID-STAGE TRIALS. PATIENTS ARE NOT GOING TO BE ABLE TO GET ANYTIME SOON. STILL HAS TO SHOW POSITIVE RESULTS BEFORE GETTING IT APPROVED. ROMAINE: WHAT DID IT SHOW? >> IT SHOWED 14.37 SENT WEIGHT LOSS IN 13 WEEKS WHICH IS A GOOD RESULT AND IT LOOKS TO BE TOLERABLE. PATIENTS DID NOT HAVE BAD SIDE EFFECTS. IT LOOKS TO BE SAFE. THAT LEVEL OF WEIGHT LOSS PUTS IT ON PRODUCTS AND PETE WITH OZEMPIC, MUG OVI. THAT IS WHAT THE MARKET WAS REACTING TO. IT LOOKS TO. IT LOOKS TO BE THE BEST IN — OBVIOUSLY STILL EARLY-STAGE BUT LOOKS TO BE THE BEST IN THE RIVALS. ROMAINE: TRYING TO DECIDE HOW MANY POUNDS THAT WOULD BE. IT IS LIKE THREE POUNDS. ALIX: THAT DOES NOT REALLY MOVE THE NEEDLE. THE IDEA IS THIS REMINDS ME BUT THIS COMES WITH THE DATA LIKE SIX OR EIGHT MONTHS AGO AND A COMPANY THAT SAID AI ON THE CONFERENCE CALL YOU SAW THEIR STOCKS SPIKE UP BECAUSE OF IT. THIS FEELS SIMILAR BUT THIS COMES WITH REAL STUFF. THAT MAKES ME THINK IT IS REAL AND THIS IS A LONGER RUNWAY. ROMAINE: WE HAVE SEEN THAT WITH PHARMA COMPANIES. IF THEY MENTION WEIGHT LOSS DRUGS OR THEY ARE DEVELOPING A WEIGHTLESS DRUG, IT IS SEEN AS A POSITIVE. THIS IS OBVIOUSLY DATA LIKE YOU SAID. ALIX: I’M CURIOUS ABOUT THE COMPETITION FACTOR. THERE WAS SO MUCH ENTHUSIASM. NOW YOU HAVE TWO OTHER COMPANIES THAT SEEM LIKE THEY ARE CLOSE TO HAVING SOMETHING ON MARKET. BY MY COUNT AT LEAST FOUR OR FIVE OTHER COMPANIES THAT HAVE SOMETHING IN DEVELOPMENT. ARE WE GOING TO GET TO THE POINT WHERE IT IS GOING TO BE SO DILUTED THIS IS NOT GOING TO BE A BLOCKBUSTER FOR ANYBODY? >> ONE OF THE HOPES IS HAVING MORE DRUGMAKERS IN THE SPACE WILL MAKE THE DRUGS CHEAPER BECAUSE THEY ARE QUITE EXPENSIVE AND THE INCREASED COMPETITION WILL HOPEFULLY BE A POSITIVE THING FOR PATIENTS. AS MORE DATA IS GENERATED AROUND THE DIFFERENT HEALTH BENEFITS FROM THESE DRUGS COME HOPEFULLY THAT WILL ENCOURAGE INCUR — ENCOURAGE INSURANCE COMPANIES TO COVER THE DRUGS. THE COMPANIES SAY MORE ENTRANTS INTO THE SPACE IS ONLY GOING TO INCREASE THE MARKET SIZE TO I GUESS IT REMAINS TO BE SEEN WHAT HAPPENS. ALIX: THERE GET FLINT GOING TO SAY WE LOVE COMPETITION. — THEY ARE DEFINITELY GOING TO SAY WE LOVE COMPETITION. THE IDEA IT IS GOING TO LIVE A — TO WIND UP SOLVING THESE OTHER HEALTH PROBLEMS, THAT IS THE KEY FROM MEDICARE, MEDICAID AND INSURANCE COMPANIES TO COVER IT. THAT IS WHAT THEY HAVE TO PROVE. COMING UP, A FRESH SLATE OF EARNINGS RESULTS AFTER THE BELL. WE ARE GOING TO BREAK IT DOWN WITH THE CHIEF MARKET STRATEGIST OVER AT 22 RESEARCH COMING UP NEXT. THIS IS THE CLOSE ON BLOOMBERG. ROMAINE: WELCOME BACK TO THE CLOSE. A CLOSER LOOK AT ONE OF THE BIG STOCKS MOVING. UNITED HEALTH SESSIONS DOWN. AFTER THE WALL STREET JOURNAL REPORTED THE U.S. JUSTICE DEPARTMENT HAS LAUNCHED AN ANTITRUST PROBE OF THE HEALTH INSURER. BASED ON THE WALL STREET JOURNAL’S REPORTING, WE HAVE LEARNED INVESTIGATORS HAVE BEEN INTERVIEWING HEALTH CARE INDUSTRY REPRESENTATIVES IN SECTORS WHERE UNITEDHEALTH COMPETES. THAT INCLUDES DR. GROUPS ACCORDING TO PEOPLE WITH KNOWLEDGE OF THE MEETINGS. UNITEDHEALTH SHARES HAD BEEN RELATIVELY UNCHANGED. THAT CHANGE IN A BIG WAY WHEN THE HEADLINE MOVED THE SHARES AT ONE POINT DOWN AS MUCH AS 2.5%. ALIX: IT IS A SNOOZE FEST. NASDAQ 100 IS UP BY A TOUCH. TAKING A LOOK AT APPLE, THEY DITCHED THEIR EV CAR IN FAVOR OF GENERATIVE AI. 7/10 OF 1%. THE S&P UTILITIES INDEX IS THE BEST PERFORMING SECTOR WITHIN THE S AND P. CONSTELLATION ENERGY BEATING ESTIMATES. SMALL CAPS, THE SNP DOING ALL RIGHT. SMALL CAPS IN A BIG WAY. ROMAINE: YOU LOOK AT WHAT TYPES, IT IS THE CYCLICAL TRADE. A BROADENING OUT OF THE RALLY. YOU SEE THE LOPSIDED MESS, THAT IS WHAT A LOT OF FOLKS WANTED TO SEE. INVESTORS ARE AWAITING THE DATA THAT WILL COME DOWN THE PIKE LATER THIS WEEK. WE HAD A CHANCE TO CATCH UP WITH PIMCO’S JEROME SCHNEIDER ON HIS VIEW OF THE SOFT LENDING DEBATE. >> WHAT WE ARE THINKING ABOUT IS A RISK SCENARIO THAT BEGINS TO MATERIALIZE OVER THE COURSE OF 2024 INTO 2025 WERE THINGS LIKE WAGE PRESSURE, JOB GROWTH, GROWTH IN GENERAL BECOMES MORE SUBDUED AS PROFITABILITY ON THE CORPORATE SECTOR NOT JUST IN THE U.S. BUT GLOBALLY BEGINS TO WEIGH ON SENTIMENT. NOT IN A HARD LANDING BUT THE SOFT LENDING IS A BIT IDEALISTIC WHEN YOU TAKE IT FROM A HISTORICAL CONTEXT. ROMAINE: JEROME SCHNEIDER AT PIMCO WHO HELPED KICK US OFF ABOUT AN HOUR AGO. HERE TO TAKE US TO THE CLOSE, THE PRESIDENT AND CHIEF MARKET SHED JUST AT 22 THE RESEARCH. . I WANT TO START THERE. THERE’S BEEN A LOT OF TALK ABOUT ECONOMIC CONDITIONS AND WHETHER THE ALL CLEAR OR AT LEAST ENOUGH CLARITY FOR INVESTORS TO START ROTATING OUT OF THE SAFETY OF THE MAGNIFICENT SEVEN AND INTO SOMETHING MORE ECONOMICALLY SENSITIVE. MORE CYCLICAL. >> YOU’RE SEEING THAT TODAY. TO GET CONFIDENCE ON THAT OVER THE COURSE OF THE CYCLE, YOU’RE GOING TO SEE MONETARY VOLATILITY COME DOWN. THAT STARTED THE YEAR COMING DOWN SIGNIFICANTLY. THAT IS WHY YOU HAD THE BROADENING OUT OF EQUITIES IN DECEMBER. THAT REVERSED TO START THE YEAR BECAUSE ECONOMIC GROWTH HAS BEEN SO MUCH STRONGER THAN EXPECTED. THE FED IS HYPER FOCUSED AND THERE IS SOME RISK IF ECONOMIC GROWTH STAYS AT THE STRONG A LEVEL, INFLATION WILL NOT COME DOWN TO A PLACE WHERE THEY CAN LOWER POLICY RATE IN CONSISTENT WAY. THAT WOULD BE A PROBLEM FOR THE EXTENSION OF THE CYCLE. A BROADENING INTO THE AVERAGE STOCK RELATIVE TO THE MEGA SEVEN. ROMAINE: FOR THOSE FOLKS WHO ARE LOOKING TO SMALL CAPS, LET’S TAKE THE RUSSELL FOR EXAMPLE AND TRYING TO FIND IF THERE IS A MODICUM OF SAFETY, IS THE CORRELATION THEY SHOULD LOOK AT — IS THAT MORE TIGHT TO INTEREST RATES OR THE ECONOMIC DATA ITSELF? >> AT THIS POINT IT IS MORE TIED TO INTEREST RATES. ONE OF THE CHARTS WE HAVE BEEN HIGHLIGHTING IS THE INTENSE DEEP NEGATIVE CORRELATION BETWEEN RELATIVE PERFORMANCE OF THE RUSSELL 2000 AGAINST TENURE YIELDS. TENURE YIELDS MOVING UP. RUSSELL 2000 IS GOING TO UNDERPERFORM. STABLE TO LOWER. THE RUSSELL TENDS TO DO VERY WELL ASSUMING TENURE YIELDS ARE NOT MOVING LOWER BECAUSE RECESSION RISK IS INCREASING. THAT IS WHERE YOU NEED TO FOCUS. IF WE SEE A MOVE FROM CURRENT LEVELS ON THE 10 YEAR YIELD TO 450 OR ABOVE THE, THAT WOULD BE A BIG PROBLEM FOR RUSSELL ASSUMING THAT IS ASSOCIATED WITH MORE INFLATION RISK. ALIX: HOW DO OPTIONS TRADERS OR MARKET PARTICIPANTS USING OPTIONS TO TRADE THE RUSSELL SAY VERSUS THE S AND P? >> THAT IS A GREAT QUESTION BECAUSE THE VOLATILITY IN THE RUSSELL IS AT AN ABSOLUTE EXTREME. YOU ARE LOOKING AT THE SPREAD BETWEEN RUSSELL VOLATILITY AND S AND P VOLATILITY THE HIGHEST IT HAS EVER BEEN. YOU ARE SEEING MORE VOLATILITY PRICED WITHIN THE RUSSELL WHICH IS WHERE A LOT OF HEDGING IS GOING ON RELATIVE TO BAD OUTCOMES VERSUS THE S AND P. A WAY TO THINK ABOUT THIS IS A LOT OF POTENTIAL NEGATIVITY HAS BEEN PRICED ON THE RUSSELL. TO THE EXTENT WE SEE ECONOMIC DATA THAT IS BENIGN, WHAT I MEAN BY BENIGN IS DATA THAT DOES NOT SUGGEST INFLATION IS GOING TO MOVE UP AGAIN THAT CAN STEADILY MOVE DOWN TOWARD THE FED TARGET. YOU CAN SEE IT COLLAPSE IN VOLATILITY RELATIVE TO THE SNP. MAYBE YOU ARE STARTING TO SEE THAT TODAY. WE WILL SEE WHAT HAPPENS WITH THE ECONOMIC DATA. THIS IS AN IMPORTANT POINT. THANKS FOR BRINGING IT UP. ALIX: I LIKE OPTIONS. IT IS TO THAT POINT I FEEL LIKE RENT THE RALLY FOR THE SNP HAS BEEN THE THING. THE CALL VOLUME MATCHING THE PUT VOLUME. THIRD SO MAY CAUSE GOING IN. FEELS LIKE THAT IS THE WAY WE ARE TRADING. DESPITE THE FACT WE HAVE RECORD HIGHS ON THE SNP. WHAT DO YOU DO WITH THAT. >> THE ONE THING YOU CAN DO ON AN SNP LEVEL IS FEEDFORWARD RETURNS. YOU HAVE TO SAY OVER THE NEXT SIX MONTHS WHEN WE LOOK AT THE HISTORICAL DATA, GIVEN WITH THE OPTION MARKET IS AN BROADER INVESTOR SENTIMENT IS SUGGESTING YOU SHOULD HAVE LOWER THAN NORMAL FORWARD RETURNS TO THE TUNE OF ROUGHLY ONE ISSUE PERCENT OVER THE NEXT THREE MONTHS. THAT IS TYPICALLY HOW THE STUFF IS PLAYED OUT. THE CASH RETURNS ARE SO INTENSE ALL HISTORY GETS KNOCKED OUT BUT THAT IS THE WAY I WOULD THINK ABOUT IT. I WANT TO BE FADING S AND P AND LONG THE RUSSELL AND BROADENING OUT. THAT WILL LOOK DOWN IF PAYROLL IS HOT AND INTEREST RATES GO HIGHER BUT THAT IS OUR CALL. ROMAINE: DO YOU HEDGE THAT OR TRY TO? >> IF I WAS GOING TO HEDGE THAT, I WOULD HEDGE IN THE DEBT SUSTAINABILITY BASKETS. THERE ARE A LOT OF BASKETS THAT WOULD DO POORLY IF 10 YEAR YIELDS MOVED HIGHER. THE WAY TO THINK ABOUT THAT IS LOW COVERAGE RATIOS WITH HIGH EARNINGS VOLATILITY. A BASKET LIKE THAT IS AN IDEAL HEDGE. ROMAINE: ALWAYSROMAINE: WONDERFUL TO TALK TO YOU. THE PRESIDENT AND CHIEF MARKET DATA JUST AT 22 V RESEARCH HELPING US COUNTDOWN TO THE CLOSING BELL’S. STOCK SCREEN ACROSS THE SCREEN WITH THE EXCEPTION OF THE DOW JONES INDUSTRIAL AVERAGE. YOU HAD THE BOARD UP EARLIER. YOU SELL THE LOPSIDED NESTS. A LOT OF MONEY GOING INTO THE RUSSELL. ALIX: THAT IS THE SOFT LENDING. YOU STILL HAVE HIGHER YIELDS AND YOU STILL HAVE STOCKS GO WELL BECAUSE IF THE ECONOMY IS DOING WELL, THAT IS WHY YOU HAVE THE HIGHER YIELDS. THEREFORE STOCKS ARE A GOOD PLAY. ROMAINE: EVEN WHEN YOU GO THROUGH THE S AND P NUC WHO IS LEADING, IT IS NOT THE NAMES WE WOULD LOOK TO. NORWEGIAN CRUISE LINES, CONSTELLATION, ENERGY, AUTOZONE AND PALO ALTO NETWORKS. ONE OF THE FEW TECH STOCKS. ALIX: THAT IS ALL ACROSS THE BOARD. NORWEGIAN DOING REALLY WELL. EVEN THOUGH THERE WAS NEAR MAURITIUS PEOPLE CANNOT GET OFF BECAUSE THEY THOUGHT THERE WAS CHOLERA. DID YOU HEAR ABOUT THIS? ROMAINE: I DON’T HAVE MAURITIUS IN MY NEWSFEED. ALIX: IT WOULD NOT LET PEOPLE DISEMBARK BECAUSE THEY THOUGHT IT WAS CHOLERA. ROMAINE: I THOUGHT THAT WAS STANDARD WITH CRUISE SHIPS. ALIX: TELL ME BUGS? ROMAINE: FULL MARKET COVERAGE COMING UP ON BLOOMBERG AS WE TAKE YOU TO THE BELL AND BEYOND. >> BEYOND THE BOW, BOOM BROOKS COMPREHENSIVE CROSS PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: RIGHT NOW WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK ALONGSIDE ALIX STEEL COUNTING YOU DOWN TO THE CLOSING BELL. HERE TO TAKE US BEYOND THE BELL, A GLOBAL SIMULCAST WITH SCARLET FU, CAROL MASSAR AND TIM STENOVEC AS WE BRING TOGETHER AUDIENCE ACROSS ALL OF OUR PLATFORMS. I AM SURE SOMETHING ELSE I FORGOT. MAURITIUS. CAROL: EVERYBODY IS WATCHING. WE ARE POPULAR PEOPLE. HAVING SAID THAT, THE MARKET OVERALL — ROMAINE: SPEAK FOR YOURSELF CAROL:. I THINK WE ALL ARE. I FEEL LIKE AMONG THE MAJOR MARKET EQUITY AVERAGES. WE LIKE TO TALK ABOUT THE SMALL-CAP SPACE. FOUR DAYS IN A ROW, A 3% GAIN. IT IS INTERESTING TO SEE WOMEN TALK ABOUT BROADENING OUT OR THE OUTPERFORMANCE AMONG THE SMALL-CAP NAMES. TIM: BITCOIN, OUTPERFORMANCE ONCE AGAIN. UP ANOTHER $2000. OVER $56,000 PER BITCOIN. THEY TRADE ALL THE TIME BUT AT THE CURRENT LEVEL IT IS THE HIGHEST GOING BACK TO DECEMBER OF 2021. AT THE HIGHEST LEVELS OF THE DAY GOING BACK TO NOVEMBER OF 2021. SCARLET:SCARLET: YOU SEE THAT REFLECTED IN HOW ETF’S HAVE BEEN TRADING AND TAKING IN INFLOWS. MOST ALL OF THEM HAVE BEEN TAKING IN INFLOWS WITH THE EXCEPTION OF GRAYSCALE WHOSE PRICING IS MUCH HIGHER. >> WE TALKED ABOUT HOW SOME ECONOMIC DATA WAS NOT GREAT. CONSUMER CONFIDENCE WAS NOT GREAT. PEOPLE ARE WORRIED ABOUT THEIR JOBS. THEY DON’T FEEL GOOD ABOUT IT. ROMAINE: YOU SOLD DURABLE GOODS AS WELL. I KNOW THE STORY HAS BEEN SOFT FOR A WHILE. YOU ARE NOT SEEING A REBOUND IN CONSUMER CONFIDENCE. THE ONLY SILVER LINING WE GOT THE CLOSING BILLS HERE IN NEW YORK. THE DOW JONES INDUSTRIAL AVERAGE HAS BEEN THE RED FOR MOST OF THE SESSION AND THAT IS WHERE IT WILL IN, DOWN ROUGHLY 100 POINTS OR ABOUT .2%. THE S&P WILL NEWS HIGHER BY ROUGHLY NINE POINTS OR .2%. THE NASDAQ COMPOSITE HIGHER BY .4%. LET’S TALK ABOUT THE RUSSELL 2000. 1.4% GAIN — 1.3%, EXCUSE ME. THE THIRD STRAIGHT DAY WHERE WE’VE SEEN OUTPERFORMANCE PERFORMANCE OUT OF THE RUSSELL RELATIVE TO THE S&P. CAROL: MAYBE I RISK ON TRADE TO SOME EXTENT, BUT DESPITE SOME NOT SO GREAT ECONOMIC NEWS, HAVING SAID THAT, TAKE A LOOK AT THE S&P, MOST NAMES IN THE S&P 500 ARE HIGHER TODAY. SCARLET: IF YOU LOOK AT THE SECTOR PERFORMANCES, IT MAY NOT BE JUST PICKING UP RISKY ASSETS BUT ALSO SOME PERENNIAL LAGGARDS. THE UTILITIES INDEX UP 1.9% ON THE DAY, THE BIG GAIN OR EVEN AS IT IS ONE OF THE SMALLER SUB INDEXES IN THE S&P 500. IT WAS POINTED OUT THAT UTILITIES IS ONE OF THE ONLY SECTORS TRADING BELOW ITS LONG-TERM AVERAGE. ENERGY, AND HEALTH CARE IN THE RED. CAROL: MACY’S OUTPERFORMING, COMING OFF ITS HIGHS OF THE DAY WHEN IT WAS UP ABOUT 7.5%, FINISHING WITH THE 3.4% GAIN. THE CEO SAYING THEY PLAN TO CLOSE ALMOST ONE THIRD OF ITS LOCATIONS. A LOT GOING ON ON THAT ONE. INVESTORS SEEMING TO LIKE THAT NEWS FROM MACY’S TODAY. LET’S GET TO VIKING THERAPEUTICS, THIS ONE SOARING IN TODAY’S SESSION, PROBABLY NOT A NAME THAT’S ON EVERYBODY’S RADAR, BUT MAYBE IT SHOULD BE NOW. THE STOCK 121%. SOARING AFTER THE DRUG DEVELOPER SAID AMID STAGE TRIAL OF ITS THERAPY MEDICINE FOR PATIENTS WITH OBESITY MET ITS MAIN GOALS. PARTNERS CALLING IT A CLEAR WIN, AND THE CRUISE NAMES OUTPERFORMING, REGENT STOCK GAINING ABOUT 20% IN TODAY’S SESSION. IT SURPRISED INVESTORS SO IT LIFTED THE OVERALL GROUP. CARNIVAL AND ROYAL CARIBBEAN TRADED HIGHER THROUGHOUT THE DAY. TIM: I HEARD YOU GUYS TALKING ABOUT THIS EARLIER, CHOLERA. ALIX: IT WAS A VOMIT AND DIARRHEA SITUATION, NOT MY FIRST CHOICE. YOU GUYS WENT THERE. ROMAINE: I DIDN’T GO THAT FAR. TIM: MY DECLINERS, AMONG THE WORST PERFORMERS ON THE DAY, ONE OF THE STANDOUTS WAS CHEVRON. IT SLIPPED AFTER EXXON MOBIL SAID IT IS CONSIDERING A MOVE THAT COULD BREAK UP THE COMPANY’S $53 BILLION MERGER. AN INCREASE SHARES OF GUYANA’S GIANT OFFSHORE OIL RESERVES. EXXON IS EXPORTING ITS RIGHT OF REFUSAL. COULD THIS HAPPEN, COULD THIS DEAL BE OFF? ALIX: I THINK THE LAWYERS ARE PROBABLY HEAVENLY GETTING INVOLVED. YOU THINK OF ALL THE REASONS WHY THE DEAL WOULDN’T HAPPEN, THIS WOULD NOT HAVE BEEN ON YOUR RADAR. THIS WAS NOT ONE OF THOSE THINGS. TIM: LET’S TALK NUMBERS, SMOKER FORECAST A DECLINE IN THE MIDTEENS, WORSE THAN THE BLOOMBERG CONSENSUS ESTIMATE, FALLING TODAY BY 2%. I WANT TO TALK ABOUT UNITED HEALTH CARE, THE WALL STREET JOURNAL STORY THAT CAME OUT MOMENTS BEFORE THE BELL CLOSED, CAUSING SHARES OF UNITEDHEALTH THE FALL BY 2.27%. THE WALL STREET JOURNAL REPORTED AN INVESTIGATION INTO THE HEALTH INSURER. ALIX: WE GOT A TON OF SUPPLY OVER THE LAST 24-48 HOURS. RECORD CORPORATE BOND ISSUANCE AND THE TAKEDOWN CONTINUES. OR IS THE DEMAND THERE FOR ALL THE SUPPLY THAT’S COMING ONLINE. ROMAINE: IT GETS TO THE ISSUE THAT ONCE WE GET THE LATEST BACK — BATCH OF ECONOMIC DATA, THE ONES THAT REALLY MATTER, WHETHER IT CHANGES THE DYNAMIC WE SEE IN THE BOND MARKET WHICH THE LAST FEW DAYS HAS BEEN STASIS. SCARLET: LET’S START WITH EBAY, FOURTH-QUARTER NET REVENUE, $2.6 BILLION BC ANALYST ESTIMATE OF 2.50 ONE BILLION. FOR THE FOURTH QUARTER, GROSS MERCHANDISE VOLUME, 18.6 BILLION. ALIX: AND WE ARE ALSO LOOKING FOR THE TAKE RATE, HOW MUCH THEY ARE MAKING ON EACH TRANSACTION. IT WAS A STRONG PROMOTIONAL RETAIL ENVIRONMENT OVERALL. THE CEO SAYING THEY MADE SIGNIFICANT PROGRESS TOWARD THEIR VISION TO REINVENT THE FUTURE OF E-COMMERCE FOR ENTHUSIASTS AND THEIR VOLUME GROWTH IMPROVED YOU’RE ON YEAR. TIM: SPC DOWN AFTER THE COMPANY REPORTED REVENUE THAT MISSED ESTIMATES, FOURTH-QUARTER ADJUSTED EBITDA VERSUS ESTIMATES OF 1.1 — ONE A $1.7 MILLION. REVENUE SHY OF ESTIMATES OF $2.98 MILLION IN THE FOURTH QUARTER. ROMAINE: IT’S KIND OF HARD TO UNDERSTAND WHAT THE NEXT STEP IS FOR THAT COMPANY. BUMBLE, THE DATING APP, ALSO CROSSING THE WIRE. SCARLET: AND IT CUT 350 JOBS LIKE SO MANY COMPANIES IN THE TECH UNIVERSE. ANALYSTS WERE LOOKING FOR 277 MILLION DOLLARS, SO THAT IS AMISS WHEN IT COMES TO FIRST-QUARTER REVENUE. ADJUSTED EBITDA, ANALYSTS WERE LOOKING FOR 71 MILLION DOLLARS. THAT EXPLAINS THE JOB CUTS AS WELL. MOBILE SHARES TUMBLING AND AFTER-HOURS TRADE, DOWN 9%. CAROL: BEYOND MOVING UP IN THE AFTERMARKET. A LOSS OF $125.1 MILLION, FOURTH-QUARTER NET REVENUE, THIS IS A BEAT VERSUS THE ESTIMATE OF 66.8 MILLION DOLLARS. THE STOCK IS UP 18% IN AFTERMARKET. IT’S BETTER THAN THE STREET WAS EXPECTING. KEEP IN MIND THE UPBEAT NEWS, ABOUT 38% OF THE FLOAT HAS BEEN SHORTED ON THIS ONE. ROMAINE: THAT’S WHAT I’M CURIOUS ABOUT, WITH REVENUES DOWN A PERCENT OVERALL, AND YOU LOOK AT THE INDIVIDUAL BREAKDOWN, WHERE IS THE GROWTH AND RESET FOR THIS COMPANY? CAROL: IT IS STILL DOWN MORE THAN 90% THE LAST THREE YEARS. WE TALKED ABOUT THIS SPACE AND IT SEEMS A BIT TORTURED TO SAY THE LEAST. SO WE WILL LOOK FOR MORE COMMENTARY IN THE AFTERMARKET. THAT’S A WRAP ON HER CROSS-PLATFORM COVERAGE. WE WILL SEE YOU AGAIN, SAME TIME, SAME PLACE, TOMORROW. ROMAINE: STICK WITH US, URBAN OUTFITTERS SHARES DOWN 12%. BEYOND MEAT ONE OF THE BIG GAINERS IN AFTER-HOURS TRADING. A FULL BREAKDOWN OF ALL THE EARNINGS WE JUST GOT COMING UP AFTER THE BREAK, RIGHT HERE ON BLOOMBERG. SCARLET: WELCOME BACK TO "THE CLOSE." FOR MUCH OF THE DAY, THE S&P WAS IN CONSOLIDATION MODE, ROUNDING OFF ITS CLOSING RECORD 2:13 SO FAR IN 2024. BY THE END OF THE TRADING SESSION ON THE S&P 500 DID MANAGE TO EKE OUT A GAIN OF ABOUT .2%. FOR A SECOND STRAIGHT DAY YOU START TO SEE SMALL CAPS PICK UP SOME OF THE SLACK AS THEY HAD BEEN TRAILING THEIR BIG CAP BROTHERS FOR MOST OF THE PAST SIX MONTHS. YOU LOOK AT WHAT’S HAPPENING IN THE TREASURY MARKET, MOSTLY LOWER AFTER A THIRD BIG TREASURY OPTION THIS WEEK AND A SLEW OF CORPORATE BOND SALES YESTERDAY AND TODAY. BITCOIN DID SURPASS $57,000 EARLIER, CURRENTLY JUST BELOW THAT LEVEL. AS FOR MOVERS, LET’S START WITH THE DECLINERS. CHEVRON AND HESS BOTH DOWN AFTER EXXON CAME OUT AND SAID THEY WOULD TRY TO BREAK UP THERE MERGER BY MAKING A BID FOR THE HESS STAKE IN A GUYANA OIL PROJECT. CHINEXT THERAPEUTICS WAS A BIG GAINER, A JUMP TO A RECORD HIGH OF 230% TO JUST UNDER $50 A SHARE AFTER THE BIOTECH FIRM GAVE UPDATED EFFICACY DATA FROM ITS CANCER PROGRAM. THAT WAS ENCOURAGING, ACCORDING TO ANALYSTS PORTS PROTOCOL. NORWEGIAN CRUISE LINE UP 20% ON THE DAY, IT’S FORECAST TOPPED ESTIMATES DESPITE DISRUPTIONS FROM ALL THE UNREST IN THE MIDDLE EAST. CARNIVAL AND ROYAL CARIBBEAN CRUISE LINES ALSO GOT A LIFT AS WELL. ROMAINE: LET’S GET BACK TO THE EARNINGS, URBAN OUTFITTERS CROSSING THE WIRE, IT LOOKS LIKE AMISS ON THE BOTTOM LINE NUMBER. $.50 A SHARE, THE STREET WAS LOOKING FOR $.74 A SHARE. THE COMPANY SAID RETAIL INVENTORY WAS UP ABOUT 5% AND THAT APPEARS TO BE THE BUGABOO, A BIG MISS ON THE BOTTOM LINE. INVENTORY LEVELS RISING AND YOU SEE THE SHARES FALLING, DOWN 11% HERE IN AFTER-HOURS TRADING. IN THE OPPOSITE DIRECTION, EBAY SHARES HIGHER BY ABOUT 5% IN AFTER-HOURS TRADING. THAT COMPANY REPORTING FOURTH-QUARTER NUMBERS THAT DID COME PRETTY MUCH IN LINE WITH ESTIMATES AND A FORECAST FOR THE FIRST QUARTER ALSO COMING IN LINE, ABOUT 2.50 4 BILLION DOLLARS IN NET REVENUE FOR THE FIRST QUARTER, THAT’S WHAT THE STREET WAS LOOKING FOR. NICHOLAS JONES JOINED EGGS — JOINING US NOW. WHEN YOU SAW THESE NUMBERS, WHAT WAS YOUR FIRST REACTION? >> I THINK SIMILAR TO YOURS, THEY WERE LARGELY IN LINE, THE OUTLOOK WAS IN LINE. A LOT OF CONCERNS AROUND THE CONSUMER HEADING INTO THE END OF THE YEAR AND 20 BETWEEN FOUR. WHAT WE DID SEE THAT I THOUGHT WAS A BRIGHT SPOT ALREADY, GROSS MERCHANDISE SALES WERE HIGHER, SO THAT IMPLIES IMPROVING FREQUENCY AMONG BUYERS. THE BUYER NUMBERS CONTINUE TO TREND IN THE RIGHT OR ACTION. IT COULD BE PART OF WHAT IS DRIVING THE PRICE REACTION. SCARLET: EBAY IS STILL IN COST-CUTTING MODE WITH THE JOB CUTS THEY ANNOUNCE RECENTLY. EBAY IS COMMITTED TO RETURNING 125% OF FREAK CASH FLOW TO INVESTORS. IT HAS RAISED ITS DIVIDEND BY 8% . IS THAT THE BEST USE OF ITS CASH? >> I THINK RIGHT NOW, YES. HAVE A LOT OF EXPOSURE, IT’S EXECUTION IN THEIR FOCUS CATEGORY LIKE ACCESSORIES AND JEWELRY AND SNEAKERS AND WATCHES AND THINGS LIKE THAT. THEY’VE INVESTED IN AUTHENTICATION AND MADE ACQUISITIONS. THEY ARE CUTTING COSTS, RETURNING CASH TO SHAREHOLDERS IS A GREAT WAY TO GET THE STOCK MOVING FROM HERE. IT’S REALLY ABOUT FREQUENCY, WHICH WILL SHOW UP IN GMS FOR ACTIVE BUYERS. SCARLET: SO WHAT DO YOU WANT TO HEAR FROM EBAY WHEN IT COMES TO HOW IT IS IMPLEMENTING ITS COST SAVINGS IN ORDER TO UPGRADE THE STOCK TO A BUY? >> WE ARE LOOKING FOR COMMENTS ABOUT FREQUENCY AND ACTIVE BUYER GROWTH. THIS PLATFORM IS PURCHASING THINGS AND COMING BACK AND PURCHASING WITH MORE FREQUENCY, WHICH IS HARD TO GROW. THEY’VE BEEN FOCUSED ON KEY CATEGORIES WHERE THEY THINK THEY HAVE AN EDGE AGAINST AMAZON OR ETSY. WHAT WE WANT TO HEAR IS NOT THE DIVIDEND OR BUYBACK, IT’S REALLY ABOUT HOW YOU GET ACTIVE BUYERS ON THE PLATFORM MORE ENGAGED AND HOW DO YOU GET THE ENGAGED BUYERS TO SPEND MORE. ROMAINE: WE TALK ABOUT THE PERFORMANCE OF THE CEO, HE WAS BROUGHT IN FROM WALMART. THERE WAS A LOT OF TALK ABOUT HOW THIS COULD TURN EBAY INTO SOMETHING MORE THAN WHAT IT IS FOR A LOT OF US, BASICALLY FOR COLLECTIBLES OR AUTO PARTS OR OTHER THINGS. WE HAVEN’T EXACTLY SEEN THAT MATERIALIZE DESPITE THE FACT THEY GENERATED A LOT OF CASH. THERE ARE QUESTIONS ABOUT WHY IT IS STILL A STANDALONE COMPANY, AND WHAT IS THE LONGER-TERM GROWTH STORY IF IT STAYS A STANDALONE COMPANY? >> I THINK IT COMES DOWN TO HAVING A VISION OF FOCUS CATEGORY. EARLY INTERNET DAYS, E-COMMERCE COMPANIES TRIED TO BE ALL THINGS TO ALL PEOPLE, SO I THINK HAVING MORE FOCUS ON CATEGORIES WHERE THEY ALREADY KNOW WHAT BUYERS NEED , THAT TELLS YOU WHAT YOU NEED TO DO TO WIN IN THE CURRENT ENVIRONMENT AND GET MORE FOCUS. SPECIALIZATION MATTERS MORE TODAY THAN IT USED TO. ROMAINE: GOOD TO CATCH UP WITH NICHOLAS JONES, A CLOSER LOOK AT EBAY. THOSE SHARES MOVING SLIGHTLY HIGHER IN AFTER-HOURS TRADING. THERE IS A LOT OF NEWS OUT THERE ABOUT NEW ENTRANCE TO THE PUBLIC MARKET. KLARNA IS MOVING FORWARD WITH ITS PLANS TO ENTER THE U.S. MARKET. IT COULD LIST AS SOON AS THE THIRD QUARTER. THIS IS NOT THEIR FIRST FLIRTATION WITH COMING TO THE PUBLIC MARKETS. WHAT IS DIFFERENT THAN A YEAR OR TWO AGO? >> IT SEEMS LIKE THEY’RE TEASING OUT BANKS, SEEING WHAT THAT VALUATION COULD LOOK LIKE. HE COULD BE A VALUATION IN THE $20 BILLION RANGE, HIGHER THAN THEIR FUNDING ROUND BACK IN 2022 WHICH WAS $6.7 BILLION. IT SEEMS LIKE IT’S KICKING THE TIRES AND GAINING TRACTION, MUCH LIKE REDDIT WHO DID FLIP PUBLIC. IT DOES SEEM LIKE THIS COULD BE A TIME THAT KLARNA GOES AHEAD AND RIPS THE BAND-AID OFF. SCARLET: IT WAS A HUGE DROP-OFF FROM ITS PREVIOUS FINANCING VALUED AT $45.6 BILLION. WHEN YOU HEAR OF A $20 BILLION VALUATION THE COMPANY SEEKING, IS THAT CONSIDERED AGGRESSIVE OR JUST KIND OF HO-HUM? >> WE HAVEN’T REALLY HAD TIME TO TEASE THAT OUT. SECONDARY TRADING PLATFORMS WHICH ARE WELL-KNOWN KNOWN TO BE ILLIQUID, A FEW SOURCES SAY IT’S IN THE $6 BILLION-$7 BILLION RANGE. WERE LOOKING AT POTENTIALLY $20 BILLION, IF THEY DO IN FACT PRESSED THE BUTTON TO GO PUBLIC, IT DOES LINE UP WITH LABOR DAY. BUT WE’VE SEEN A LOT OF RESETTING OF EXPECTATIONS FROM THE BUY SIDE AND THE SELL SIDE. ROMAINE: THIS IS A COMPANY THAT WAS WORTH $50 BILLION ON PAPER AT ONE POINT. IT IS WORSE — WORTH LESS THAN THAT NOW. >> YOU LOOK AT PUBLIC COMPARISONS AND IF THEY’RE DOING POORLY — ROMAINE: I’M CURIOUS ABOUT SOME OF THE OTHER ISSUES THAT DERAILED IT EARLIER, SOME OF THE INFIGHTING WE LEARNED ABOUT PUBLICLY AMONGST THEIR BACKERS AND BOARD MEMBERS. HAS THAT ALL BEEN RESOLVED? >> FOR THE MOST PART THEY REMOVED ARE MOVED ON FROM THOSE ISSUES AND IT IS IMPOSSIBLE TO REALLY KNOW WHAT IS GOING ON BEHIND THE SCENES AND WHO IS PULLING THE STRINGS. THAT’S BEEN ONE OF THE THINGS THAT HAS BEEN DOGGING KLARNA. HERE WE ARE IN 2024, EQUITIES ART RECORD HIGHS, BUT NOT ANYWHERE NEAR THOSE PEAKS. ROMAINE: CONSUMER SPENDING WILL HAVE TO PLAY A FACTOR IN HOW YOU VALUE THE COMPANY. KLARNA COULD COME TO THE U.S. MARKET AS SOON AS THE THIRD QUARTER. SCARLET: IT HAS TO HAVE A GOOD STORY ON HOW IT INCORPORATES AI. ROMAINE: IT GETS INTO THE IDEA THAT WE ARE TALKING A LOT MORE ABOUT NEW COMPANIES COMING TO THE MARKET. THERE WAS A SEVERAL MONTHS PERIOD WHERE WE DIDN’T HAVE THIS CONVERSATION BECAUSE NOBODY WANTED TO COME TO THE MARKET. SO IT IS A GOOD SIGN. SCARLET: THEY HAVE NOT PULLED THE TRIGGER JUST YET, SO THIS MIGHT JUST BE ANOTHER STEP TOWARD THE INEVITABLE. COMING UP, THE TOP THREE MOVERS AND SHAKERS AT THE CENTER OF TODAY’S BIGGEST STORIES. THIS IS "THE CLOSE." ON BLOOMBERG. SCARLET: TIME FOR THE TOP THREE WHERE WE TAKE A DEEP DIVE — INTO THE PEOPLE AT TO HEAD OF TODAY STORES. ELIZABETH WARREN, HERE’S WHAT SHE SAID ABOUT THE IMPENDING GOVERNMENT SHUTDOWN. >> THIS IS THE CRAZIEST KIND OF NEGOTIATION YOU WOULD EVER SEE. THAT IS THAT AS FAR AS I CAN TELL, EVERYBODY WANTS A DEAL TO KEEP THE GOVERNMENT OPEN, IT IS A BUDGET DEAL, RIGHT? EVERYONE HAS AGREED ON IT, AND THE REPUBLICANS IN THE HOUSE ARE JUST SAYING NO. IT’S HARD TO SIT DOWN AND NEGOTIATE WITH SOMEBODY BECAUSE YOU WANT WHAT? AND THEN SOME CRAZY THING FLIES IN THAT THE MAJORITY OF REPUBLICANS DON’T EVEN WANT. SCARLET: I FEEL LIKE WHEN SHE SAID NEGOTIATE, WE NEEDED QUOTE MARKS AROUND THAT, FOR BOTH SIDES. ROMAINE: YOU CAN CHECK OUT THE FULL INTERVIEW ON BALANCE OF POWER, COMING UP IN ABOUT 35 MINUTES. SHE MADE A LOT OF INTERESTING COMMENTS ABOUT ANTITRUST ISSUES LIKE BREAKING UP AMAZON OR ANYTHING IN HER MIND THAT IS A LITTLE TOO BIG FOR THEIR BRITCHES. THE CEO OF GOLDMAN SACHS STEP DOWN IN THE QUESTION WAS WHERE IS HE GOING, AND WE HAVE LEARNED HE IS GOING OVER TO CARLYLE GROUP TO BE THE CHIEF STRATEGY OFFICER OF THE ENERGY PATHWAYS GROUP OVER AT CARLISLE. JEFF CURRY REALLY MADE HIS MARK PREDICTING THE BOOM IN CHINA AT THE TURN OF THE LAST CENTURY. HE WAS VERY PRESCIENT ABOUT A LOT OF ISSUES ONE ON OVER THERE. SCARLET: HE GOES FOR MAKING CALLS ON COMMODITY PRICES IN SPECIFIC MARKETS TO INVESTING IN THE TRANSITION TO RING ENERGY WHICH IS SOMETHING CARLISLE HAS BEEN TALKING A LOT ABOUT. JOSH HARRISON AND DAVID PULITZER, THEY ARE IN ADVANCE TALKS TO SELL THEIR MINORITY STAKE IN THE PITTSBURGH STEELERS. THE NFL HAS TO APPROVE ALL TRANSACTIONS AND THEY HAVE A STAKE OF LESS THAN 5%, BUT JOSH HARRISON RECENTLY BOUGHT THE WASHINGTON COMMANDERS FOR $6 BILLION. ROMAINE: I KNOW HARRIS HAD TO SELL, THERE’S NO POINT IN HOLDING A STAKE IN THE STEELERS IF YOU BASICALLY HAVE A FULL STAKE IN THE COMMANDERS, BUT WHAT IS BLITZER’S DEAL? SCARLET: JOSH HARRISON WENT INTO THE COMMANDERS ON HIS OWN. ROMAINE: MAYBE HE WILL JUST INVEST IN ANOTHER SPORTS FRANCHISE. HOW IS JOSH HARRIS THE COMMANDERS WORKING OUT? SCARLET: IT IS EARLY DAYS, SO WE WILL SEE. THEY DID NOT HAVE A GREAT SEASON LAST YEAR. ROMAINE: WHEN WE COME BACK, WE WILL TAKE A LOOK BACK AT THIS DAY IN 2007 AND THE BURSTING OF THE CHINA STOCK BUBBLE. WHAT ABOUT — WHAT AMOUNT OF CHINESE SHARES WERE OWNED BY INVESTORS AS OF LAST YEAR? YOU CAN GIVE THE ANSWER IN YUAN OR IN DOLLARS. SCARLET: SO IT IS A DOLLAR AMOUNT, NOT A PERCENTAGE? IT HAS GONE WAY DOWN SINCE 2008, I KNOW THAT. ROMAINE: WE WILL HAVE THE ANSWER, WHEN WE COME BACK. THIS IS "THE CLOSE." ROMAINE: EQUITY MARKETS IN CHINA THIS WEEK RESUMED THEIR ADVANCE TO ERASE LOSSES FOR THE YEAR AMID STRONG OFFSHORE LINE, AND THAT’S A PERFECT OPPORTUNITY TO LOOK AT THE STATE IN HISTORY AND THE BURSTING OF THE CHINA STOCK BUBBLE BACK IN 2007. IT WAS A 9% PLUNGE IN THE SHANGHAI COMPOSITE ON THIS DAY 17 YEARS AGO IN WHAT AT THE TIME WAS THE LARGEST DROP IN 10 YEARS AND WHAT NOW IS THE BIGGEST DROP TODAY. WITH THE REGULATORY CRACKDOWN ARTICULATED THREE WEEKS PRIOR BY THE VICE CHAIRMAN OF THE NATION’S PEOPLE CONGRESS, WHO WROTE IN A COMMENTARY THAT THE GOVERNMENT MUST DEAL WITH MARKET BUBBLES FOR THE GET OUT OF HAND. MAYBE HE HAD A POINT. THE SHANGHAI COMPOSITE HAVE MORE THAN DOUBLED IN 2006 AND STARTED OFF THE FIRST EIGHT WEEKS OF 2007 WITH A 14% RUN. DENNY MARKET SWINGS OF 3% OR MORE AND PRICE-TO-EARNINGS RATIO SWELLED TO MORE THAN TWICE SOME OF ITS OTHER ASIAN MARKET PEERS. IT WAS A WAKE-UP CALL FOR CHINA AS WELL AS U.S. INVESTORS HAD BEEN BETTING ON ECONOMY THAT ARE GROWN TO THE FOURTH LARGEST IN THE WORLD. 10% ECONOMIC GROWTH, AND ONE POINT 3 BILLION PEOPLE BECOMING RICHER EVERY DAY. BURSTING THE BUBBLE DID HAVE AN EXISTENTIAL IMPACT ON INVESTORS PSYCHE, SCARRED FURTHER BY DRAWDOWNS IN THE EQUITY MARKET. THAT BRINGS US TO A QUESTION OF THE DAY. THE AMOUNT OF CHINESE SHARES ON BY FOREIGN INVESTORS DROPPED 13% LAST YEAR AND MORE THAN 30% SINCE THE PEAK AT THE END OF 2021. NET PURCHASES LAST YEAR WITH THE LOWEST SINCE BLOOMBERG STARTED TRACKING THE DATA IN 2017 AND A SUPER ANALYSIS OF 13 FILINGS FOR 270 LARGE U.S. PENSION FUNDS LAST YEAR FOUND THAT JUST 14 OF THEM HAD INVESTMENTS IN U.S. LISTED CHINESE STOCKS. CHINA STATE THAT FUNDS HAVE SOUGHT TO REVERSE THAT TREND THIS YEAR ALONE. >> WE LIKED THE CHINA DOMESTIC MARKET MORE THAN THE OFFSHORE MARKETS. ROMAINE: BEIJING IS DRAFTING A LAW TO PROMOTE BETTER PROTECTIONS OF PROPERTY RIGHTS AS WELL AS THE INTEREST OF ENTREPRENEURS. WILL IT BE ENOUGH TO CONVINCE FOREIGN INVESTORS IT IS SAFE TO RETURN? IT’S NOT AN ACADEMIC QUESTION EITHER. WITH ALL THE HYPE AND HANDWRINGING OVER THE LATEST RALLY, THE SHANGHAI COMPOSITE SIOUX REMAINS 50% BELOW ITS ALL-TIME PEAK FROM 2007. SCARLET: THAT’S WHY YOU OFTEN SEE INFLOWS INTO ETF’S SINCE THE HEYDAY OF 2008. LET’S RETURN TO THE EARNINGS BONANZA WE GOT AT THE TOP OF THE HOUR. VIZIO POSTED REVENUE PRETTY MUCH MEETING ANALYST ESTIMATES, BUT THE BIG STORY IS ITS DEAL WITH WALMART. HERE IN THE STUDIO IS DAN DAY, A SENIOR EQUITY RESEARCH ANALYST. HE HAS A NEUTRAL RATING ON SHARES OF VIZIO. CAN YOU EXPLAIN HOW WALMART IS GOING TO UTILIZE VIZIO IN THE NEAR TERM VERSUS WHAT IT WOULD LOOK LIKE FIVE OR 10 YEARS FROM NOW? >> A LOT OF PEOPLE PROBABLY KNOW VIZIO IS A TV MANUFACTURER. THREE OR FOUR YEARS AGO THEY STARTED TO INVEST IN THE SOFTWARE SIDE OF THE TV, YOU MIGHT HAVE A SAMSUNG PHONE WITH THE ANDROID OPERATING SYSTEM. WHAT THEY DID WAS BUILD OUT THE OPERATING SYSTEM SO THEY DON’T HAVE TO USE SOMETHING LIKE A ROKU OR FIRE TV. THAT IS PRIMARILY WHAT WALMART WANTS OUT OF THE DEAL, IS THAT OPERATING SYSTEM. WITH THAT, THEY GET A LOT OF VALUABLE ADVERTISING INVENTORY. EVERY RETAILER OUT THERE’S TRYING TO BUILD A NEVER TITHING BUSINESS LIKE THAT. SCARLET: HOW WILL IT LOOK SIMILAR TO ARE DIFFERENT FROM WHAT AMAZON HAS? WE ARE TALKING ABOUT DIFFERENT AUDIENCES. >> THEY WON’T HAVE THE SCALE THAT FIRE TV HAS ON ACTIVE ACCOUNTS. SO THEY HAD THEIR OWN TV’S THE SELL THROUGH AMAZON AND THEY HAVE LICENSING DEALS WITH OTHERS. VIZIO HAS ABOUT 18.5 MILLION ACTIVE ACCOUNTS. THE ONLY WAY THEY GET AN ACTIVE ACCOUNT IS BY MOVING A VIZIO TV. WALMART ALSO SELLS THE ONN BRAND, THEORETICALLY MY SENSE OF WHAT THEY WOULD DO IS THEY HAVE A DEAL WITH ROKU AND THEY WOULD MOVE SMART CAST ONTO THE ONN TV’S AND SELL THAT SMART CAST THROUGH BOTH. SO THEY WOULD CLOSE THE GAP WITH WHAT FIRE TV OR ROKU WOULD HAVE. ROMAINE: WE BEEN TALKING ABOUT WALMART THAT HAS SEEN ITS GROWTH MARGIN SHRINK BY LOW-END RETAIL STANDARDS. IT’S GOTTEN PRETTY SMALL. HOW MUCH WILL THIS POTENTIALLY IMPROVE THOSE MARGINS ONCE I FULLY INTEGRATE IT? >> THE DOLLARS ARE SMALL BECAUSE WALMART IS TALKING ABOUT HUNDREDS OF BILLIONS IN SALES. VIZIO IS NOT GOING TO MOVE THE NUMBERS TO ANY EXTENT IMMEDIATELY. BUT IT WILL HELP WALMART BUILD OUT A BRAND ADVERTISING BUSINESS LIKE AMAZON AND LET THEM COMPETE WITH THEM. WHAT THEY WILL BRING TO WALMART IS THE ABILITY TO SELL THOSE BRAND EVER TOSSING SPOTS. ROMAINE: IT MAKES SENSE FOR AMAZON, BUT I WONDER HOW IT MAKES SENSE FOR WALMART. >> WHAT WALMART WANTS TO DO, WHAT AMAZON CAN DO IS TAKE ADVERTISER X AND TELL THEM THE TYPICAL — SELL THEM THE TYPICAL PAID SPONSOR, WITH AMAZON PRIME AND THINGS LIKE THURSDAY NIGHT FOOTBALL, THEY CAN ALSO SELL THEM 30 SECOND TV SPOTS. WALMART WANTS TO HAVE THAT CONNECTED TV BRAND SPOTS TO SELL. SO THE THEY SELL THAT PERFORMANCE ON THE WALMART.COM WEBSITE, THEY DON’T REALLY HAVE THE EQUIVALENT OF WHAT CRIME HAS. ROMAINE: SO VIZIO STILL ENDS UP BEING A WALMART PROPERTY. SCARLET: I HAVE A QUESTION ABOUT ROKU BECAUSE IT IS A COMPETITOR TO VIZIO STOCK TUMBLE ON THIS DEAL. WHAT HAPPENS NEXT TO ROKU? >> PEOPLE HAVE SPECULATED ABOUT THAT, I THINK THERE ARE A LOT OF PUTS AND TAKES FORT ROKU, THE STOCK STUMBLED BECAUSE WALMART’S ONN BRAND USES ROKU FOR THEIR OPERATING SYSTEM. IN BACK YOU LEADERS ARE SPECULATING THAT THE VIZIO SMART CAST WOULD REPLACE THAT, IT WOULD MAKE IT TOUGHER FORT ROKU TO GROW THOSE ACCOUNTS. IF WALMART OWNS VIZIO, ALL OF A SUDDEN THOSE ROKU TV’S ARE MOVING AROUND WITH OTHERS. THERE ARE A LOT OF WAYS THIS COULD PLAY OUT. I’M NOT A SURE IT IS NEGATIVE FOR ROKU AS A LOT OF PEOPLE THINK. ROMAINE: WE WILL CONTINUE THE CONVERSATION WITH THE HEAD OF RETAILING ON BROAD LINES AND HARDLINES OVER AT J.P. MORGAN. HE HAS A NEUTRAL RATING ON WALMART. IS THIS GOING TO BE MONEY WELL SPENT OVERALL ON WALMART’S PART? >> IF YOU LOOK BACK AT WALMART’S HISTORY, THEY HAVE SHOWN THEY ARE WILLING TO THROW A LOT OF STUFF AGAINST THE WALL. THEY ACQUIRED FLIP CART IN INDIA, THEY ACQUIRED BONOBOS, THEY SOLD THAT. THEY ARE WILLING TO TRY AND THEY HAVE THE BALANCE SHEET TO DO SO. IT’S GOING TO BE SLIGHTLY DILUTING TO EARNINGS. TO YOUR QUESTION EARLIER, WALMART HAS ROUGHLY A LOW 20% GROSS MARGIN. THESE ADVERTISING REVENUES COULD POTENTIALLY COME IN AT 50%-70% GROSS MARGIN, SO SMALL DOLLARS HAS BEEN GREAT, AND ULTIMATELY THAT’S THE PROMISE OF TAKING THE EARNINGS GROWTH OUT FROM WHAT HAD HISTORICALLY BEEN MAYBE MID SINGLE DIGIT AND GETTING IT TO HIGH SINGLE DIGIT TO LOW DOUBLE DIGIT. ROMAINE: I UNDERSTAND THAT WALMART HAS ITS OWN PROFITABLE ECOSYSTEM BUT THERE HAS BEEN SOME CONCERN, THE IDEA THAT ONCE VIZIO IS UNDER THAT UMBRELLA, THERE’S NOT A LOT OF UNSENT — INCENTIVE FOR OTHER RETAILERS TO CARRY THESE TV’S AS WELL, THAT IT COULD END UP JUST BEING A WALMART PRODUCT. DOES THAT MATTER? >> I DON’T THINK NECESSARILY, THERE COULD BE SOME LOSS IN TERMS OF SALES. VIZIO REALLY JUST MANUFACTURES THE TV AND THEY SELL IT AT ZERO PROFIT. SO ALL THE PROFITABILITY OF VIZIO IS IN THE ADVERTISING BUSINESS AND IT’S NOT SUFFICIENT TO GENERATE ANY PROFIT AT THIS POINT. SO THE MARKET SHARE IN THE UNITED STATES, BEST BUY IS THE LARGEST TV RETAILER HOLDING A 30% SHARE. AMAZON IS NOT FAR BEHIND THAT. AND THEN WALMART WOULD BE BASICALLY THIRD. I DO THINK YOU ARE NOT GOING TO SEE VIZIO IQ WOULD HISTORICALLY SEE IT, BEST BUY HAS ITS OWN BRAND CALLED INSIGNIA WHERE THEY ALSO HAVE THE SOFTWARE. SO YOU WILL SEE SOME LOST TV SALES I WOULD EXPECT FOR VIZIO, BUT THEY ARE ESSENTIALLY LOSING MONEY ON THAT IN THE FIRST PLACE. SCARLET: WHAT KIND OF INVESTMENT OR SPENDING WILL WALMART NEED TO DO IN ORDER TO BUILD OUT ITS CONNECTED TV BUSINESS? >> WALMART HAS MULTIPLE ALTERNATE PROFIT POOLS. THE LARGEST AND MOST PROFITABLE PIECE OF IT IS THE ADVERTISING SIDE. A LOT OF THAT IS PARTICULARLY IN THE GROCERY SIDE WHERE THEY ARE CHARGING PEPSI OR PROCTOR FOR PLACEMENT ON ITS WEBSITE, TRACKING CONSUMERS AROUND THE WEB, BEING ABLE TO MATCH AN AD THEY SERVE UP ON THEIR WEBSITE TO ASSAIL IN THE STORE. THAT IS PROFITABLE AND THIS WILL MAKE THAT BUSINESS MORE PROFITABLE. IT’S MORE ABOUT THE ADVERTISING BUSINESS GROWING AND FUNDING OTHER ALTERNATE PROFIT POOLS WHICH HAVE YET TO BE MATERIAL OR ARE EVEN LOSING. FOR EXAMPLE IF YOU THINK ABOUT THEIR THIRD PARTY MERCHANDISE OFFERING ON THE WEBSITE, THEIR HEALTH INITIATIVE, IT’S REALLY ABOUT THE ENTIRE PROFIT POOLS WORKING IN TANDEM. SCARLET: CHRIS, WE APPRECIATE YOU JOINING US, GIVING US A LITTLE MORE INSIGHT INTO HOW WALMART IS GOING TO INTEGRATE VIZIO INTO ITS OVERALL STRATEGY. IT’S CIRCUIT ON MARKETS CLOSED ON THE DAY. WE ACTUALLY FINISHED HIGHER AFTER BEING LOWER FOR MOST OF TRADING TODAY AND THIS WEEK. THE S&P 500 SITTING ABOVE THAT — UP .2%. TREASURIES MOSTLY LOWER AFTER THE MARKET ABSORBED THREE BIG TREASURY OPTIONS THIS WEEK. THE DOLLAR UNCHANGED AT THE MOMENT AND WTI MOVING UP 1.3%. THIS IS "THE CLOSE." ON BLOOMBERG. ♪ SCARLET: CONSUMERS ARE STICKING TO THEIR BUDGETS THESE DAYS AND DISCOUNT RETAILER SALES MAYBE THANKFUL FOR IT. JOINING US FOR PREVIEW IS ADRIAN. TJX IS THE PARENT COMPANY OF MARSHALS IN T.J. MAXX AND HOME GOODS. CONSUMERS ARE WILLING TO SPEND AND WERE WILLING TO SPEND DURING THE HOLIDAYS, BUT THE QUESTION IS HOW MUCH THAT SPENDING IS SLOWING IN THE NEW YEAR. WHAT DO YOU EXPECT TO HEAR FROM TJX? >> FOR THE FOURTH QUARTER THEY WERE SPOT ON. WITH COLLIS THIS THEIR PEEKING MOMENT, MEANING THEY EXERTED MAXIMUM HOLIDAY PRESSURE ON THE CONSUMER WHILE THE CONSUMER WAS STILL HEALTHY AND THEY WERE LOOKING FOR VALUE AND A BARGAIN. AT THE SAME TIME, PROBABLY THE BEST BRANDED INVENTORY IN THOSE STORES FOR THE GREATER PART OF THE LAST DECADE, FRANKLY. SO IT’S ACCOMMODATION OF TWO DIFFERENT THINGS, REQUIRING PEOPLE TO LOOK FOR VALUE, AND GREAT PRODUCTS THROUGHOUT ALL OF THEIR BANNERS. SCARLET: WE’VE HEARD FROM RETAILERS THAT MANAGING THEIR INVENTORY HAS BEEN TOP OF THE LIST FOR ALL OF THEM. THE IDEA IS THAT THEY DON’T HAVE A LOT OF EXCESS INVENTORY TO PUSH DOWN TO THE DISCOUNT RETAILERS. HOW IS TJX ABLE TO OPTIMIZE ITS INVENTORY WHEN YOU HAVE THAT KIND OF ENVIRONMENT WHERE THE RETAILERS THEMSELVES ARE DOING A GOOD JOB MANAGING IT? >> THERE ARE TWO PARTS OF THE SOURCE OF THE INVENTORY. THE FIRST HALF OF THE YEAR, THEY WERE GETTING ALL THE INVENTORY FROM RETAIL CLOSEOUTS IN THE BACK HALF OF 2022 AND THE EARLY PART OF 2023. WHAT THEN HAPPENED WAS THE RETAILERS — RESELLERS STOPPED BUYING FROM BRANDED MANUFACTURERS LIKE NIKE OR WHATEVER. SO THE PIPELINE MOVED BACKWARDS SO TO SPEAK AND STARTED GETTING A TON OF BRANDED INVENTORY FROM THE MANUFACTURERS DIRECTLY. AT THE END OF THE HOLIDAYS, YOU ARE RIGHT, THINGS WILL START TO NORMALIZE. ROMAINE: SO THE EXPECTATIONS, WERE TALKING ABOUT 4.1% OF COMP SALES GROWTH, WE TALK ABOUT THE IDEA OF WHAT THAT THRESHOLD IS BETWEEN WHAT WILL MAKE INVESTORS HAPPY OR SAD, IS 4% MORE OR LESS THE BREAKEVEN? >> I WOULD SAY THE EXPECTATION FOR TJX IS A LITTLE HIGHER THAN THAT. 4% IS ACTUALLY THERE BREAKEVEN CALM. SO ANYTHING ABOVE 4% FLOWS THROUGH, ALL THAT JUST MAGICALLY FLOWS THROUGH AND BECOMES MARGIN OF PROFITABILITY. THE OVER UNDER IS TO SEE A SOLID 5% COMP AND I THINK YOU WILL SEE THAT HIGHER, BUT THE HOME GOODS PIECE OF IT REALLY CAME THROUGH LAST QUARTER. SO I THINK YOU WILL HAVE A STOCK THAT WILL LOOK GREEN. ROMAINE: EVEN THE HOUSEHOLD PRODUCTS THE CARRY AND T.J. MAXX STORES, HAS BECOME MORE OF A DRIVER OF GROWTH IN APPAREL WOULD BE? >> EXACTLY. FROM 2019 WHERE YOU WOULD WALK INTO A MARSHALS OR TJX AND IT WOULD BE AT PRIMARILY APPAREL AND FOOTWEAR, YOU WALK INTO THAT STORE NOW, IT HAS BEAUTY, LUGGAGE. THERE IS AN ENTIRE SECTION OF CONSUMABLES, GOURMET PRODUCTS AND COOKWARE. THE EXPANSIVENESS OF ALL THESE CATEGORIES OVER THE PAST FIVE YEARS HAS FRANKLY MULTIPLIED. SO THEY ARE IN A MUCH BETTER POSITION AND EVEN AS YOU SAY, ON THE HOME GOODS SIDE OF THINGS, THEY EVEN SELL FURNITURE. THESE ARE SMALL ITEMS, DECORATIVE ITEMS, MORE DISPOSABLE INCOME IN NATURE. ROMAINE: WE WERE WASHING COMFORTERS THIS WEEKEND AND I ASKED MY WIFE WHY WE HAD THREE — 12 COMFORTERS EVEN THOUGH WE ONLY HAVE THREE BEDS IN THE HOUSE. THAT IS ANOTHER CONVERSATION, BUT SHE IS A T.J. MAXX MAN. THOSE EARNINGS EXPECTED TO THE WIRE TOMORROW MORNING. WE WILL HAVE FULL COVERAGE OF THAT. STICK WITH US HERE ON "THE CLOSE." WE WILL SET YOU UP FOR SOME OF THE OTHER BIG MARKET MOVING EVENTS FOR THE NEXT 24 HOURS. THIS IS BLOOMBERG. EBITDA ROMAINE: — MORE EARNINGS COMING DOWN THE PIKE TOMORROW, INCLUDING PARAMOUNT. ARE WE GOING TO BE TALKING ABOUT THE ACTUAL EARNINGS AND NUMBERS HERE OR WILL WE BE TALKING MORE ABOUT THE SUITORS FOR THIS COMPANY? >> THAT’S A REALLY GOOD QUESTION. WITH PARAMOUNT IT’S ALWAYS BEEN ABOUT ALL OF THE MNA NOISE. TODAY WE HAD SOME HEADLINES CROSSING, IT LOOKS LIKE WARNER BROS. DISCOVERY IS FORMALLY DROPPING OUT OF ANY MERGER TALKS. THIS IS BAD NEWS FOR PARAMOUNT BECAUSE THE LIST OF POTENTIAL SUITORS IS DEFINITELY SHRINKING. WE HEARD A FEW DAYS AGO THAT BERKSHIRE ACTUALLY CUT IT’S TAKEN PARAMOUNT BY ABOUT A THIRD. SO DEFINITELY OPTIONS ARE RUNNING OUT. SCARLET: THIS IS SOMETHING THE REDSTONE FAMILY WILL REALLY HAVE TO WORK ON HERE. ANOTHER ISSUE FOR PARAMOUNT IS THAT S&P RECENTLY PUT THE COMPANY ON CREDIT WATCH FOR POSSIBLE DOWNGRADE AND SAID IT WILL CAN ACTUAL DECISION ON THE RATING AFTER THESE FOURTH-QUARTER RESULTS. WHAT DOES PARAMOUNT NEED TO SHOW TO AVOIDED DOWNGRADE? >> PARAMOUNT REALLY NEEDS TO SHOW SOME KIND OF STREAMING PROFITABILITY IMPROVEMENT. THEY DID REPORT ABOUT $1.8 BILLION IN STREAMING LOSSES IN 2022. THEY ARE SUPPOSEDLY GOING TO PARE THAT DOWN TO 1.7 MILLION BUT I DON’T THINK THAT’S GOING TO BE ENOUGH. ULTIMATELY THE PROBLEM FOR ALL OF THESE LINEAR TV COMPANIES AND ESPECIALLY PARAMOUNT WHICH HAS A REALLY HEAVY DEBT LOAD AS WELL AS HEAVY LINEAR TV EXPOSURE. 90% OF EBITDA COMES FROM TV EXPOSURE. SO THEY’RE ABLE TO OFFSET THE LOSSES WITH SOME PROFITABILITY IN STREAMING. UNFORTUNATELY IT’S GOING TO TAKE A LONG TIME FOR THEM TO GET TO ANY LEVEL OF EVEN BREAKEVEN IN THE STREAMING BUSINESS AND THAT’S REALLY WHAT THE INVESTORS WILL LOOK FOR. I THINK THAT WAS THE REPORT ABOUT $1.7 BILLION IN 2023. IS GOING TO BE BAD EVEN FOR 2024. ROMAINE: A LOT OF FOLKS WILL BE KEEPING AN EYE ON THAT TOMORROW. SOME OTHER POTENTIAL MARKET MOVING EVENTS INCLUDING A RATE DECISION NEW ZEALAND. SCARLET: ECONOMISTS ARE EXPECTING IT TO STAY UNCHANGED AT 5.5%. ROMAINE: AND WE WILL GET A REVISION ALMOST QUARTERLY GDP NUMBERS AND QUITE A BIT OF FED SPEAK AS WELL TOMORROW. SCARLET: THE SECOND READ OF FOURTH-QUARTER GDP IS EXPECTED TO STAY UNCHANGED AT 3.3%. IT’S ALL THE BUILDUP TO THE BPCE NUMBER ON THURSDAY. ROMAINE: G20 FINANCE MINISTERS ARE MEETING IN SAO PAULO, BRAZIL. WE GOT A LITTLE BIT OF A TASTE OF THAT EARLIER TODAY WITH THAT DRAFT COMMUNIQUE THAT BLOOMBERG MANAGED TO OBTAIN. SCARLET: EARNINGS SEASON IS NOT OVERCOME IN THE MORNING WE HAVE RBC AND TJX THAT WE JUST TALKED ABOUT. AND WW, THE COMPANY FORMERLY KNOWN AS WEIGHT WATCHERS. ROMAINE: A BIG ONE OUT OF SALESFORCE AND HP IN THERE AS WELL. CERTAINLY ONE TO KEEP AN EYE ON. WE APPRECIATE YOU JOINING US HERE TODAY ON BLOOMBERG MARKETS "THE CLOSE." STICK AROUND, BALANCE OF POWER IS COMING UP NEXT WITH A CLOSER LOOK AT THE WORLD OF POLITICS AND THAT INTERVIEW WITH SENATOR ELIZABETH WARNED THAT WE TEASED EARLIER. THIS IS BLOOMBERG.