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00:00IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. VONNIE: IT IS 2:00 P.M. IN NEW YORK. THIS IS BLOOMBERG MARKETS THE CLAUDE. ROMAINE: EVERY INDUSTRY, OIL PRICES DROPPED, AS VOLATILITY GRIPS MARKETS. WE WILL LOOK AT THAT. PRESIDENT TRUMP THREATENS TO PUNISH ANY AMERICAN COMPANY THAT CREATES JOBS OVERSEAS AND FORBIDS THOSE THAT DO BUSINESS IN CHINA FROM WINNING FEDERAL CONTRACTS. WE WILL DISCUSS THE LATEST TENSIONS. SHARES OF ELECTRIC TRUCK MAKER AND GENERAL MOTORS SURGE AFTER ANNOUNCING A PARTNERSHIP. WHAT DOES THIS MEAN FOR TESLA? WE SPEAK TO NIKOLA'S FOUNDER. ALL THAT AND SO MUCH STILL AHEAD. THE MARKETS FIRST AND FOREMOST. ROMAINE: QUITE A DAY. WE OPENED UP WELL DOWN, ONCE AGAIN ON THIS DAY, LED BY A LOT OF THOSE HIGHFLYING TECH NAMES. YOU TALK ABOUT PRIOR TO LAST THURSDAY, WE HAD NINE AND HALF WEEKS WHERE WE HAD NOT SEEN A SWING OF 2% OR MORE. WE GOT THAT LAST WEEK TO FINISH THE WEEK OFF. NOT CERTAIN WE ARE GOING TO GET THAT TODAY. STILL A SIGNIFICANT MOVE DOWN. ALSO A LOT OF BUYING IN THE 10 YEAR YIELD, IN THE TREASURY SPACE, AND THE CURVE, DOWN ABOUT FIVE BASIS POINTS. NOW AT 141. WE WERE DOWN TO 138. OIL, REMARKABLE, SOMETHING WE CAN TALK ABOUT LATER. WE SAW BRENT CRUDE DROPPED FOR THE FIRST TIME GOING BACK TO LATE JUNE. A LOT OF CONCERN ABOUT DEMAND. THIS IS NOT JUST THE TECHNICAL ISSUES. WHEN YOU TALK ABOUT THE DEMAND OUT OF CHINA, AND THE FISCAL STIMULUS, AND WHETHER THAT WILL MATERIALIZE. CAROLINE: IT REALLY IS A FOCUS ON THE OVERWHELMING DISCUSSION ON ANY TECHNOLOGY AND ALSO THIS DEBATE OF WAS IT ALL ONE WAY IN TERMS OF BULLISH CALL OPTIONS? ACTUALLY IT FEELS AS THOUGH THERE MORE NUANCE. ROMAINE: A LOT OF PEOPLE MAY BE DID NOT PAY CLOSE ATTENTION AND ARE NOW FOCUSING ON IT. WHEN YOU LOOK AT THE WHITE LINE, THIS IS THE CALL AND YOU SEE THAT SPIKE. THIS IS WHAT PEOPLE HAVE BEEN FOCUSING ON. THIS IS WHERE THE CONSPIRACY THEORIES COME INTO PLAY. THIS IDF FOLKS ARE MOVING INTO CALL OPTIONS AS A WAY TO FORCE THE HAND OF SOME OF THE DEALERS TO HEDGE THEIR OWN BEDS GOING LONG ON THE STOCK ITSELF, WHETHER THAT CREATED A FEED BACK LOOP NOT THAT COULD HAVE BEEN IN QUESTION. YOU CAN SEE THE DIFFERENCE BETWEEN THE PUT AND CALL VOLUME. CAROLINE: WE HAVE SEEN SOME PROTECTION IN THE LAST FEW DAYS AND THE MOVES INTO HAVENS IS A STARK DIFFERENCE TO FRIDAY. NOW IT FEELS AS THOUGH THE RISK ON, RISK OFF MOOD, MONEY MOVING INTO THE JAPANESE YEN. MONEY MOVING INTO BONDS. THE YIELDS ON THE 10 YEAR ARE LOWER. EVEN GOLD GOING UP. IT IS INTERESTING THE DEBATE AS TO WHETHER IT MAY BE A SELLOFF IN GOLD AND SEARCH FOR LIQUIDITY . ROMAINE: LET'S TRY TO MAKE MORE SENSE OF THIS. ONE GUY WHO SPENDS HIS ENTIRE DAY TRYING TO MAKE SENSE OF IT IS CAMERON, OUR MACRO STRATEGIST. THANK YOU FOR BEING ON TODAY. LET'S START WITH THE OPTIONS, SOME OF THE RECENT RALLIES AND WHETHER THAT WAS DRIVEN BY A LOT OF OUTSIDES BETS ON CALL OPTIONS. IS THERE A CREDENCE TO THAT THEORY? > > TO SOME EXTENT IT DOES TICK A FEW OF THE BOXES WE HAVE SEEN INSOFAR AS WHEN THERE IS A LARGE VOLUME OF CALLS BEING BOUGHT BY A CUSTOMER, IT DOESN'T MATTER IF IT IS SOFTBANK OR A THOUSAND DENTISTS IN THOUSAND SMALL TOWNS. THE IMPACT IS THE SAME. THEY HAVE TO BUY THE UNDERLYING STOCK TO HEDGE. ONE OF THE CHARACTERISTICS OF THE RALLY HAS BEEN MARKET LIQUIDITY IS QUITE POOR. EVEN AS RISK SENTIMENT HAS NORMALIZED. THERE IS A SENSE THERE'S AN OUTSIZED IMPACT. ANOTHER WAY TO LOOK AT IT IS THAT NORMALLY YOU WOULD EXPECT THE VIX, APPLIED VOLATILITY, TO BE RELATIVELY MUTED WHEN THE EQUITY MARKET IS AT AN ALL-TIME HIGH. GOING BACK TO 1990, THE AVERAGE LEVEL OF THE VIX, IS ABOUT 14.5. THE ALL-TIME HIGH OF THE VIX IS 26.57. WE REACHED THAT LAST WEDNESDAY. THAT'S AN INDICATION THERE IS DEMAND FOR VOLATILITY WHICH FEEDS THROUGH IN THIS IDEA OF THIS CALL VOLUME. CAROLINE: ARE PEOPLE TALKING ABOUT BUYING NOW? OUR PEOPLE BUYING THIS DIP? ARE WE EXPECTING THE NASDAQ TO PLUMB THE DEPTHS AND FOLLOWER? CAMERON: I THINK IT IS A POSSIBILITY. THE CALL IN THE SHORT-TERM IN THIS MARKET IS LIKE FORECASTING THE WEATHER. EVEN THE BEST MODELS CAN GO A LITTLE BIT AWRY. I PREFER TO THINK OF THAT IN TERMS OF WHAT IS THE REALISTIC OR PLAUSIBLE OUTCOME. AND IN THIS MARKET, ALMOST EVERYTHING. THAT DOES NOT ADD A LOT OF VALUE TO PEOPLE WONDERING. IT'S IMPORTANT TO UNDERSTAND THE ENVIRONMENT YOU ARE OPERATING IN. WE ARE IN AN ENHANCED VOLATILITY ENVIRONMENT NOW. A 1% MOVE TODAY IS NOT THE SAME AS A 1% MOVE WHEN VOLATILITY IS LOW. IT IS MUCH LESS SIGNIFICANT IN THE SENSE OF THE SIGNAL BEHIND IT. THE FINANCIAL SIGNIFICANCE IS JUST AS IMPORTANT. 1% NO MATTER THE VOLATILITY. THESE DAYS YOU CAN'T NECESSARILY POINT TO A FUNDAMENTAL REASON WHY YOU MAY HAVE LOST THE MONEY. ROMAINE: ARE THERE TECHNICAL MEASURES THAT INVESTORS SHOULD BE LOOKING TO IN THIS MOMENT RIGHT NOW THAT MIGHT GIVE THEM INSIGHT? CAMERON: AGAIN IT DEPENDS ON YOUR TIMEFRAME. IF YOU ARE A DAY TRADER, YOU WANT TO LOOK AT SHORT-TERM CHARTS, TEMPORARY PEAKS AND VALLEYS IN MOMENTUM. ON A BROADER BASE, A LONGER TIMESCALE, THAT IS WHERE THINGS LIKE VALUATION, A QUAINT ARCHAIC METRIC THESE DAYS IT FEELS LIKE. VALUATION COMES INTO PLAY. THE DEGREE TO WHICH THE INEQUITY IN THAT STOCK HAS DIVERT FROM A LONGER-TERM 200 DAY MOVING AVERAGE IS A GOOD INDICATION OF HOW OVERBOUGHT THINGS ARE. ROMAINE: ALWAYS GREAT TO CATCH UP WITH YOU, CAMERON CRISE. STILL AHEAD, A 2 BILLION-DOLLAR DOLLAR DEAL. GM'S STAKE IN NIKOLA, UP ABOUT 50%. WE WILL TALK ABOUT THAT PARTNERSHIP AND WHAT IT MEANS FOR THE FUTURE. YOU DON'T WANT TO MISS THAT. WE WILL MONITOR THE SELLOFF IN TECH AND PREVIEW ONE OF THE STOCKS THAT IS UP TODAY, SLACK TECHNOLOGY. EXPECTATIONS ARE HIGH. WE WILL LOOK AT THE TENSIONS BETWEEN THE U.S. AND CHINA AS PRESIDENT TRUMP CAROLINE: LET'S TALK ELECTRIC VEHICLES. BIG NEWS FOR TESLA AFTER THE COMPANY WAS FAILED TO BE INCLUDED IN THE S & P 500. IT IS STILL UP 300% YEAR TO DATE, BUT WE HAVE SEEN A PAUSE IN THE STOCK SURGE WE SAW TO THE TUNE OF 74% IN ANTICIPATION OF BEING INCLUDED IN THE S & P 500. INSTEAD MEDICAL TECH COMPANIES GET IN AND NOT TESLA. TESLA HAS MANAGED TO COMPLETE THE 500 BILLION DOLLARS SHARE. ALSO ADDING TO BE SELLING PRESSURE TODAY IS THE NEWS OF A DELL BEING MADE BETWEEN ITS COMPETITORS. A BIG DEAL OUT OF GENERAL MOTORS ANNOUNCING A $2 BILLION EQUITY STAKE IN NIKOLA IN EXCHANGE FOR GM'S TECHNOLOGY. LET'S FOCUS IN MORE ON THAT DEAL WITH NONE OTHER THAN TREVOR MELTON. GREAT TO HAVE YOU. IT IS FASCINATING. NO CASH IS EXCHANGED. GMC'S $4 BILLION IN VALUE, A BOARD SEAT, REGULATORY CREDIT, THEY GET A BOOST IN THEIR BRAND PERCEPTION AND THEY GET PAID TO MANUFACTURE THE TRUCK, PAID FOR BATTERIES. WHAT DO YOU GET? TREVOR: IT IS A REALLY GOOD DEAL FOR BOTH PARTIES. THE MOST IMPORTANT THING IS WE ARE ABLE TO GET SOME OF THE BEST SUPPLY CHAIN IN THE WORLD THAT CAN BUILD OUR BADGER WITH A FACTORY THAT EXISTS. THE HARD PART IS IT TAKES BILLIONS TO BUILD A FACTORY AND DECADES TO LEARN THE SUPPLY CHAIN THE RIGHT WAY. THE SECOND THING THEY BRING IS THE ABILITY TO LEVERAGE THEIR BATTERY AND OTHER PARTS. THE BATTERIES ARE LOANER GOING TO SAVE NIKOLA OVER $4 BILLION. JUST FROM THE BATTERIES ALONE WE HAVE DOUBLED WHAT WE EXCHANGED IN IN-KIND SERVICES. WE GAVE UP ABOUT $2 BILLION WORTH OF STOCK AND WE SAVED ON BATTERIES. THEIR BATTERY COSTS ARE 30% LESS THAN OURS. IT IS A HUGE ADVANTAGE ALONG WITH THE ACCESS OF EVERYTHING ELSE. IMAGINE HAVING ONE OF THE BEST TEAMS IN THE WORLD MANUFACTURE YOUR TRUCK FOR YOU. COULD NOT WISH FOR ANYTHING BETTER. ROMAINE: A LOT OF COMPARISONS BETWEEN YOUR COMPANY AND TESLA BECAUSE OF THE NAME AND YOU ARE IN THE ELECTRIC VEHICLE INDUSTRY. YOUR APPROACH TO MANUFACTURING IS DIFFERENT THAN THE APPROACH TESLA TOOK AND YOU HAVE THE ANCILLARY BUSINESSES. IS THAT GOING TO ALLOW YOU TO SIDESTEP SOME OF THE CHALLENGES AND PITFALLS TESLA WENT THROUGH TO RAMP UP ITS OWN PRODUCTION? TREVOR: RIGHT OR WRONG WE TOOK A DIFFERENT APPROACH THAN TESLA. TESLA HAD ACCESS TO CAPITAL, IN THE BILLIONS OF DOLLARS. THEY COULD DO THINGS ON THEIR OWN. WE KNEW WHEN WE STARTED THERE WAS NO WAY TO RAISE THAT KIND OF CAPITAL IMMEDIATELY. IT WAS IMPORTANT TO BUILD THESE RELATIONSHIPS. PEOPLE LIKE SEMI-TRUCKS, WE FOCUSED ON THE BIG TRUCKS. THAT IS WHERE OUR COMPANY CAME FROM. WE'VE GOT OVER 10 BILLION IN PREORDERS WAITING TO BE BUILT. MARGINS ARE HUGE. THEY ARE REALLY GOOD. WE KNEW WE COULD NOT DO IT ALONE. WE PARTNERED AND FOR THE BADGER WE DID THE SAME TO GM. THIS ALLOWS US TO GET TO MARKET FAST, ENTER A SUPPLY CHAIN THAT EXISTS, AND FOR THE BADGER, WE WILL HAVE A STOCK IN A YEAR AND A HALF. THAT IS INCREDIBLE. CAROLINE: WHAT VALUE DOES NIKOLA ADD? GM IS DOING THE MANUFACTURING. WHAT DO YOU BRING TO THE TABLE? TREVOR: WE HAVE ALREADY BUILT THE BADGER OURSELVES. EVERYTHING IN IT IS OWNED BY NIKOLA. WE DECIDED TO LEVERAGE COMMON PARTS WITH THE GM. GENERAL MOTORS HAS THE BEST PURCHASING POWER IN THE WORLD. THEIR PARTS ARE CHEAPER, I MEAN THEY PAY LESS THAN ANYONE ELSE IN THE WORLD. PRETTY MUCH WITH THE EXCEPTION OF MAYBE VOLKSWAGEN. TO BE ABLE TO LEVERAGE THOSE PARTS, WEEKEND, NICE -- WE CAN COMMONIZE THINGS. THAT IS THE VALUE YOU GET WITH GM. IT DOESN'T MEAN WE ARE NOT DOING ANYTHING. WE ARE COMMONIZING PARTS. WE DO THE SOFTWARE, INFOTAINMENT, CONTROLS, UPDATING, THE PHONE CONTROLS, THE DESIGN, THE INTERIOR, THE EXTERIOR, AND GM HANDLES THE BOTTOM. ULTIMATELY I WOULD SAY IT IS NOT REALLY ACCURATE. WE PROVIDE A TREMENDOUS AMOUNT OF THE TRUCK. ROMAINE: WITH REGARD TO SALES DOWN THE ROAD, WHAT TYPES OF VOLUMES ARE YOU HOPING TO REACH IN THE SHORT-TERM? TREVOR: WE HAVE TO BE CAREFUL NOT TO RUN TOO FAST. I USE TESLA AS A GOOD UNDERSTANDING BECAUSE THEY HAVE BEEN THROUGH A LOT OF PROBLEMS AND LEARN FROM THEM. WHEN THE MODEL Y CAME OUT THERE WAS PROBLEMS WITH PAINT. WE CAN BUILD AS MANY AS WE WANT. CAN YOU SERVICE THEM? CAN YOU MAKE YOUR CUSTOMERS HAPPY? WE ARE NOT LOOKING TO BUILD HALF A MILLION A YEAR. WE WANT TO FOCUS ON A SMALL QUANTITY THAT IS PROFITABLE AND MAKE IT AN ITEM THAT EVERYONE WANTS. THERE MIGHT NOT BE ENOUGH SUPPLY. CAROLINE: HOW ABOUT SALES AND SERVICING? WILL THAT BE OWNED BY NIKOLA? TREVOR: DIRECTLY THROUGH NIKOLA. THE WORLD IS CHANGING. WE DON'T THINK THE EXISTING WAY IS THE RIGHT WAY. IT IS PROBABLY A BLEND. TESLA DOES EVERYTHING. WE DON'T DO EVERYTHING. WE DO SOME OF IT. DIRECT TO CONSUMER DEFINITELY IS IMPORTANT FOR US. WE ARE IN CHARGE OF THAT. AND WARRANTY. WE WILL PARTNER WITH SOMEONE ON WARRANTY. MAY BE GM SOMEONE ELSE. WE WANT A NATIONWIDE INFRASTRUCTURE. CAROLINE: WHAT ABOUT STATES LIKE TEXAS WHERE YOU CAN'T DO DIRECT TO CONSUMER? TREVOR: THERE'S A LOT OF WAYS TO HANDLE THAT. THEY HAVE FIGURED THAT OUT, TESLA HAS FIGURED THAT OUT. SOME ARE OUTSIDE, BROUGHT IN. WE BELIEVE TEXAS AND OTHER STATES WILL ALLOW YOU TO WORK WITH THEM. IT IS JUST A LITTLE BIT OF LEGISLATION. ROMAINE: YOUR COMPANY CAME TO THE ATTENTION OF FOLKS WHEN YOU DID THAT REVERSE MERGER IN JUNE. WITH THE EQUITY STAKE BY G.M., WHAT IS THE LONG-TERM LOOK FOR YOUR COMPANY? ARE YOU GOING TO REMAIN YOUR OWN STANDALONE COMPANY? A LOT OF PEOPLE ARE SPECULATING A PARTNERSHIP WITH G.M. COULD LEAD TO FURTHER INTEGRATION TREVOR:. NIKOLA IS ONE OF THE MOST EXCITING BRANDS IN THE WORLD. THE MAIN REASON IS WE ARE SOLVING POLLUTION IN THE SECOND LARGEST INDUSTRY IN THE WORLD. THAT BRINGS A LOT OF ATTRACTION TO BRANDS INTERESTED, ESPECIALLY G.M. WHERE THEY HAD A LITTLE BIT OF HARD TIME FIGURING OUT HOW TO DO IT ON THEIR OWN. THERE'S SOMETHING SPECIAL ABOUT PEOPLE THAT REALIZE THE NEED FOR OTHERS. MARY IS A GENIUS. SHE SAID YOU GUYS BRING INNOVATION, EXCITEMENT, FUN. TECHNOLOGY. WE CAN HELP YOU REALIZE THAT. WE ARE NOT YOU. IF WE CAN LET YOU BE YOU, WE CAN MAKE THIS WORK. THERE MAY BE SOMETHING MORE DOWN THE ROAD. IF WE DECIDE TO DO ANYTHING, WE WOULD TALK TO THEM FIRST. I THINK NIKOLA, EVERYONE SAYS I WISH I WOULD HAVE GOTTEN INTO TESLA WHEN THEY WERE $50 A SHARE. IF YOU THINK ABOUT THAT, THAT IS WHERE NIKOLA IS. IN THE NEXT YEAR, BILLIONS OF DOLLARS IN TRUCK SALES, MY ANSWER IS, IF PEOPLE WANT TO WAIT UNTIL THERE IS ZERO RISK, COME IN HI. IF YOU WANT TO GET IN EARLY, THERE'S VOLATILITY. IT WILL GO UP AND DOWN. YOU GET TO BE PART OF THE STORY FROM THE BEGINNING. NIKOLA IS THAT STORY. DO YOU -- G.M. IS AN ASSET TO OUR GROWTH. ROMAINE: UP $50 A SHARE IS THERE FOR THE TAKING. THAT IS THE FOUNDER AND CAROLINE: LET'S GET A CHECK ON THE LATEST HEADLINES. A WIDENING GAP AS AFFLUENT BORROWERS ARE TAKING ADVANTAGE OF RECORD LOW RATES. MORE THAN 2.2 MILLION WERE 90 DAYS LATE IN JULY. THAT IS AN INCREASE FROM PRE-PANDEMIC NUMBERS. AN EXECUTIVE WILL BE THE NEXT CEO OF GO TO INVEST. SHE HAS BEEN -- GIRLS WHO INVEST AIMS TO EXPAND THE ROLE OF WOMEN IN FINANCE HAVING 30% OF THE WORLD'S INVESTABLE CAPITAL MANAGED BY WOMEN BY 2030. DISNEY TAKING SOME HEAT OVER ITS MILLION DOLLAR LIVE-ACTION REMAKE OF MULAN. CRITICS -- UP TO ONE MILLION ETHNIC INDIVIDUALS HAVE BEEN DETAINED AND WHAT CHINA CALLS VOLUNTARY EDUCATION. THAT IS YOUR BUSINESS UPDATE. THIS IS LEADING FURTHER TO PERHAPS NOT THE TRUE TEST OF WHETHER PEOPLE ARE GOING TO BE WATCHING BIG-BUDGET FILMS. WE WANT MULAN TO BE THAT TEST, BUT IT FEELS LIKE THE PROTEST IS GETTING LARGER. SUPPORTIVE OF THE POLICE IN HONG KONG AND NOW THIS ADDED ISSUE. ROMAINE: IT IS A FINE LINE THESE COMPANIES HAVE TO THREAD. YOU ARE TRYING TO FILM AROUND THE WORLD AND MAKE THEM PALATABLE TO EVERYONE. YOU HAVE TO NAVIGATE THOSE POLITICS. IT BECOMES HARDER TO DO THAT. WE ARE GOING TO TALK ABOUT THIS AND EVERYTHING GOING ON WITH I'M KARINA MITCHELL. THIS IS BLOOMBERG. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. ♪ ROMAINE: THIS IS "THE CLOSE." CAROLINE: LET'S TAKE A LOOK AT WHERE THE COMMODITIES ARE SETTLING. IT IS 2:30 P.M.. WHAT A DAY FOR OIL, DOWN BY 7%. ROMAINE:ROMAINE: WE ARE GETTING THE SETTLEMENT NOW. YOU SAW THE DROP IN BRENT CRUDE IN LONDON, DROPPING BELOW $40 FOR THE FIRST TIME SINCE JUNE. $36.84, AND LOOKS LIKE IT WILL SETTLE THERE. GASOLINE FUTURES AND DIESEL FEATURES LOWER ON THE DAY. -- DIESEL FUTURES LOWER ON THE DAY. CAROLINE: PRICING CUTS BEGIN DISCUSSED ABOUT THE WORLD'S BIGGEST OIL PRODUCERS, THIS IS OFF EATING INTO THE RISK AVERSION ACROSS THE MARKET. THERE IS A SEARCH FOR A HAVEN WITH A GOLDEN PLAY. AND IT IS INTERESTING HOW MANY FEEL THAT GOLD WILL BE RISING SHARPER. LOOKING AT GLOBAL GROWTH AND COPPER UP. ROMAINE: IT WAS HIGHER ON THE DAY. IT CLOSED A COUPLE HOURS AGO IN THE U.K., BUT SOMETHING TO WATCH. CAROLINE: AND IT HAS ALMOST A BEEN TESLA OF THE COMMODITY WORLD, HOW FAR IT WILL GO -- ROMAINE: I HAVE NEVER HEARD OF THAT. CAROLINE: I AM MAKING LUMBER, WOOD SEXY FOR YOU GUYS. THERE WAS A BEETLE INFESTATION, CONCERNS ABOUT DEMAND. WOULD PEOPLE BE BUYING HOMES WITH THE RECORD LOW MORTGAGES. AND YOU MAY BE UPDATING YOUR YARD OR PATIO. BUT NOW WE HAVE THE PRICE HEADING FOR A SEVENTH STRAIGHT DECLINE, THE LOWEST SLUMP IN A YEAR AS PEOPLE ARE GETTING EDGY ABOUT THIS. IT WAS SIGNIFICANT FALLS WE SAW THE TUNE OF A $29 LIMIT IN THE PREVIOUS THREE SESSIONS. VERY UNUSUAL. AND OUT OF FASHION. ROMAINE: INTERESTING ADJECTIVES TO USE TO DESCRIBE LUMBER. IT HAS BEEN A MARKET ON FIRE FOR A GOOD PART OF THE YEAR. CAROLINE: SEXY. ROMAINE: I WAS BEING DIPLOMATIC. SOMETHING TO WATCH IN REGARDS TO THE PACE OF THE ECONOMIC RECOVERY HERE. THE OTHER THING WE WANT TO TALK ABOUT IS WHAT HAS BEEN GOING ON WITH THE U.S. AND CHINA, BECAUSE THE PRESIDENT SAYS NOW HE WILL CURB THE U.S. ECONOMIC RELATIONSHIP WITH CHINA COMMAND THREATENING TO PUNISH AMERICAN COMPANIES IN CHINA FROM WINNING FEDERAL CONTRACTS. WE CANTERBURY AND ISAAC --, SO WE WANT TO BRING IN ISAAC. ANYTIME I HEAR ANYBODY TALKING ABOUT CURBING AN ECONOMIC RELATIONSHIP BETWEEN THE U.S. AND CHINA, MY FIRST THOUGHT IS, WHAT IS THE ECONOMIC FALLOUT OF SOMETHING LIKE THAT ACTUALLY HAPPENING? ISAAC: THERE IS A REASON IT HAS NOT HAPPENED OVER THE PAST 20 YEARS. FIRST, THERE WAS THE BELIEF WE WOULD HAVE ECONOMIC RELATIONSHIPS THAT WOULD INFLUENCE OF THE POLITICAL REALITY IN CHINA. THAT WAS PROVEN INCORRECT. IT WAS A FALLACY TO BELIEVE THAT. SECONDLY, THERE WAS A COST DYNAMIC. THINGS ARE CHEAPER BECAUSE OF THIS RELATIONSHIP. SO YOU HAD THE POLITICAL AND PRACTICAL MOVING AGAINST THIS DECOUPLING NARRATIVE. NOW LEAD TIMES ARE DIFFERENT. MY ONE CAUTIONARY POINT IS WE HAVE 56 DAYS UNTIL THE ELECTION, AND THE TWO MAJOR PARTY CANDIDATES FOR THIS ELECTION, AND THE PRESIDENCY, WILL TRY TO OUTDO ONE ANOTHER IN TERMS OF THEIR CHINA HAWKISH NEXT. SO WHILE WE SHOULD -- HAWKISHNESS. SO WHILE WE SHOULD TAKE THE MESSAGING, WE SHOULD KEEP IN MIND THAT THERE WILL BE AGGRESSIVE RHETORIC AROUND CHINA, JUST BECAUSE EACH OF THESE MEN WANT TO SEEM LIKE THEY ARE THE TOUGH ONE ON CHINA. CAROLINE: DOES IT HAVE REAL-WORLD CONSEQUENCES? SUDDENLY, THE STEPS ARE BEING TAKEN, WHERE IF YOU ARE A BUSINESS THAT WORKS WITH CHINA IN PARTICULAR, AND CANNOT START WINNING FEDERAL CONTRACTS, DOES IT HAVE REAL-WORLD IMPLICATIONS RIGHT NOW? ISAAC: ALL OF IT DOES. THE PAST 3.5 YEARS HAS A RAILROAD IMPLICATIONS, WHEREBY WE CAN SEE THE SUPPLY CHAINS MOVING. HERE IS ONE OF THOSE AREAS WHERE THE NARRATIVE FALLS APART. WE ARE NOT NECESSARILY SEEING THE SUPPLY CHAINS MOVING BACK TO THE U.S., INSTEAD THEY ARE MOVING TO A NEW ON COUNTRIES LIKE INDIA, OR VIETNAM. SO, WHILE THIS ONSHORING OF MANUFACTURING NARRATIVE HAS LEGS IN PLACES LIKE PUERTO RICO AND ITS CAPACITY TO MANUFACTURE EITHER PPE OR PHARMACEUTICALS, THE BIG PICTURE IS WE ARE ONLY MOVING SUPPLY LINES AROUND TO DIFFERENT COUNTRIES. ROMAINE: I WANT TO PROVE IT TO WHAT HAS BEEN -- PIVOT TO WHAT HAS BEEN GOING ON WITH THE LACK OF THE ECONOMIC STIMULUS. YOU HAVE A MARKET SELLING OFF, THERE IS CONCERN ABOUT WHETHER THE ECONOMIC RECOVERY HAS ENOUGH MOMENTUM, AND THERE ARE CONCERNS HERE ABOUT THE LABOR FORCE OR UNEMPLOYED LABOR FORCE THAT MAY NOT BE COMING BACK TO WORK AS FAST AS EXPECTED. DO WE HAVE ANY SENSE THAT REPUBLICANS AND DEMOCRATS IN CONGRESS UNDERSTAND THE GRAVITY OF WHAT RIDES ON THE NEXT ROUND OF FISCAL STIMULUS? ISAAC: I BELIEVE SO, BUT WE HAVE A FUNDAMENTAL PROBLEM IN THAT BOTH SIDES, AT THE MOMENT, STILL BELIEVE THEY HAVE THE UPPER HAND IN THE NEGOTIATIONS. AND THERE ARE A COUPLE MORE ROUNDS OF POLITICAL THEATER NECESSARY BEFORE, I THINK, WE CAN GET TO A DEAL. I AM OPTIMISTIC ABOUT GETTING TO A DEAL. I HAVE BEEN BULLISH AND WRONG ABOUT A DEAL FOR THE PAST TWO MONTHS, BUT I THINK WITH THE ECONOMIC AND POLITICAL BASIS FOR AN AGREEMENT, WE WILL SEE A BILL COME THROUGH THE SENATE LATER THIS WEEK. AND I THINK THAT THE MORE IMPORTANT STORY IS THAT THE WHITE HOUSE IS REPORTEDLY GOING TO MOVE ITS TOP LINE NUMBER UP FROM $1.3 TRILLION TO $1.5 TRILLION. SO WE ARE SEEING THEM MOVING TOWARD A TOPLINE AGREEMENT, SLOWLY, BUT THE BIG PICTURE IS THE SAME -- THE ECONOMIC RECOVERY NEEDS MORE SUPPORT. WE HAVE HEARD IT FROM EVERY SINGLE FED OFFICIAL AND GOVERNOR WHO HAS BEEN TALKING ABOUT IT FOR THE PAST TWO WEEKS. CAROLINE: WE HAVE BEEN FOCUSING ON THINGS ACROSS THE BOARD, BUT WE HAVE TALKED ABOUT THE INEQUALITY ACCENTUATED BY THIS CERTAIN RECOVERY. AND DO YOU THINK WASHINGTON GETS THAT, WHEN THEY ARE DRAFTING THE RELIEF BILL, WILL IT TACKLE THE INEQUALITY IN THINGS, OR WILL IT BE THERE TO TRY TO SUPPORT THE ECONOMY IN ITS ENTIRETY? ISAAC: THIS PANDEMIC HAS UNCOVERED A LOT, INCLUDING THE GAP BETWEEN THE HAVES AND HAVE-NOTS. AND WE HAVE HEARD THE LETTERS ACCORDINGLY, AND TALK ABOUT THIS BEING A K SHAPED RECOVERY. IN D.C., BY AND LARGE, STORIES PLAY BETTER THAN SPREADSHEETS. THAT IS THE GENERAL RULE OF THUMB. AND HEARING FROM THE AIRLINES THAT AS MANY AS A 75,000 OF THEIR EMPLOYEES COULD BE FURLOUGHED, THAT HAS TRACTION AND GETS PEOPLE'S ATTENTION. BUT THE REPUBLICAN BILL THAT WAS JUST RELEASED EARLIER TODAY, THE SKINNY BILL, IS SO SKINNY IT DOES NOT EVEN INCLUDE MORE ASSISTANCE FOR THE AIRLINES. MY ANSWER IS I THINK THAT WE STILL HAVE MORE OF THIS POLITICAL SHOWMANSHIP, BUT THERE IS AN UNDENIABLE ECONOMIC NEED FOR MORE ASSISTANCE, AND THERE ARE INDUSTRIES DYING FOR IT. THE AIRLINES ARE ONE, THE RESTAURANT ASSOCIATION ESTIMATES IT WILL LOSE $240 BILLION. THESE ARE REAL PEOPLE. AND I THINK THAT WILL BE WHY WE SEE A PHASE FOUR DEAL. CAROLINE: IT IS REAL PEOPLE, NOT JUST INDUSTRIES. WE THANK YOU, GREAT TO HAVE YOU ON. NOW COMING UP, A CONVERSATION WITH NANCY PELOSI. ROMAINE: WE WERE SPEAKING WITH ISAAC A MOMENT AGO, TALKING ABOUT THE POLITICAL THEATER IN WASHINGTON. THE BATTLE LINES ARE HARDENING. MITCH MCCONNELL IS SAID TO INTRODUCE THE REPUBLICAN'S VERSION OF THE SKINNY BILL, MEANWHILE DEMOCRATIC LEADERS HAVE BLASTED THAT PACKAGE. NANCY PELOSI DESCRIBED IT AS FRAUDULENT. TAKE A LISTEN. REP. PELOSI: THE GERMAN OF THE FED AND OTHER FED LEADERS AROUND THE COUNTRY HAVE SAID CLEARLY THAT WE NEED A STIMULUS, THAT WE NEED A BOOST. THEY HAVE EVEN REFERENCED THAT STATE AND LOCAL GOVERNMENTS, THAT FISCAL STIMULUS IS IMPORTANT TO OUR ECONOMY. AND NOT SUPPORTING STATE AND LOCAL GOVERNMENTS, PEOPLE WILL BE PUT OUT OF THEIR JOBS AND IT THEY WILL GO ON UNEMPLOYMENT INSURANCE. WHAT GOOD IS THAT? WHY WOULD WE WANT TO DEPRIVE THE AMERICAN PEOPLE OF THE SERVICES THAT THEY DESERVE? WHY WOULDN'T WE HONOR OUR HEROES, IN HEALTH CARE AND FOOD, TEACHERS, TRANSPORTATION, SANITATION, OUR FIRST RESPONDERS, WHY WOULD WE WANT THEM TO RISK THEIR LIVES TO SAVE LIVES, SO THEY CAN LOSE THEIR JOBS? IN THE SENATE, ON THE REPUBLICAN SIDE, THEY SAY THEY DO NOT WANT TO SPEND ONE MORE DOLLAR. IMAGINE, THEY DO NOT WANT TO SPEND ONE MORE DOLLAR TO CRUSH THE VIRUS, TO OPEN UP OUR ECONOMY BY CRUSHING THAT VIRUS, TO SUPPORT OUR STATE AND LOCAL GOVERNMENTS, AND BY PUTTING MONEY IN THE POCKETS OF THE AMERICAN PEOPLE. > > THAT LEADS ME TO THE QUESTION, IS THERE A DEAL, EVEN THOUGH YOU MAY NOT WANT TO TAKE IT, IS THERE A DEAL YOU COULD TAKE FROM THE REPUBLICANS? YOU SAID TODAY IT IS AN EMACIATED BILL, IS THERE ROOM AT ALL FOR AN QB SEATED BILL? SOME SAY NOT ONE DOLLAR. REP. PELOSI: WHAT SENATOR MITCH MCCONNELL PUT FORTH AS FRAUDULENT. AS CHUCK SCHUMER SAID, YOU MAY SEE AIDED. THEY CALL IT -- EMACIATED. THEY CALL IT A SKINNY BILL. IT IS ONLY TO CHECK THE BOXES SO THAT THE REPUBLICAN SENATORS CAN GO HOME AND A SAY, I TRIED. BUT IT IS NOT TRYING. IT IS NOT EVEN AN ATTEMPT TO DO THE RIGHT THING. AND MITCH MCCONNELL KNOWS THAT . HE HAS TO SATISFY THOSE REPUBLICANS IN THE CAUCUS WHO DO NOT WANT TO SPEND ONE MORE DOLLAR, WHETHER IT IS FEEDING CHILDREN, SAVING THEIR FAMILIES FROM EVICTION, STOPPING THE DISMANTLING OF THE POSTAL SERVICE, SO PEOPLE CAN VOTE WITHOUT RISKING THEIR HEALTH. AND FIRST AND FOREMOST, CRUSHING THE VIRUS AND PUTTING MONEY INTO THE POCKETS OF THE AMERICAN PEOPLE. AND WHAT THEY HAVE IS SO MEAGER, THAT IT INSULTS THE INTELLIGENCE OF THE AMERICAN PEOPLE AND DOES NOT SOLVE THE PROBLEM. AND IT IS, AGAIN, WE KNOW WE NEED TO COMPROMISE AND NEGOTIATE TO REGION AGREEMENT. WE ALL WANT AN AGREEMENT. MAKE NO MISTAKE ABOUT THAT. BUT GET REAL. HE PUSHED THE PAUSE BUTTON. REMEMBER, WHEN WE PASSED OUR ABILITY PUSHED THE PAUSE BUTTON, AND IT WAS NOT UNTIL THE LAST FEW WEEKS HE IS EVEN COMING UP WITH A SUGGESTION. AND IN THAT TIME, NEARLY 5 MILLION MORE PEOPLE HAVE BECOME INFECTED. AND NEARLY 100, OVER 100,000 PEOPLE HAVE DIED. DAVID: TALK ABOUT WHAT IT MEANS TO GET SERIOUS. GET SERIOUS WITH HIM? IS IT SENATOR MITCH MCCONNELL THAT YOU ARE NEGOTIATING WITH, IS IT SECRETARY MNUCHIN, OR MARK MEADOWS? IT WAS ON THE OTHERS OF THE TABLE? REP. PELOSI: IT IS CERTAINLY NOT MARK MEADOWS. THE REPUBLICANS HAVE TO NEGOTIATE AMONG THEMSELVES. MITCH MCCONNELL HAS THIS PATHETIC BILL, WHICH IS HALF OF WHAT THE SECRETARY, SECRETARY MNUCHIN, HAS PROPOSED, SO THEY ARE NOT IN AGREEMENT. WE CAME DOWN $1 TRILLION. THEN WE CAME DOWN EVEN FURTHER AND IT SAID WE WOULD MEET THEM HALFWAY. AND SOME OF THAT IS BECAUSE WE CAN PUT OFF THE TIMING OF SOME OF OUR BILL, WE ARE NOT BEING SOPHIE'S CHOICE, SAYING WE WILL FEED OF SOME CHILDREN AND NOT OTHERS. IT IS ABOUT TIMING AND WE CAN HAVE THAT NEGOTIATION, BUT TO IGNORE THOSE NEEDS, TO IGNORE -- HOW CAN THEY IGNORE THE VIRUS AND THE SPREAD OF IT AND THE COST TO OUR EDUCATION SYSTEM, THE ECONOMY AND THE REST? THE STICKING POINTS ARE STATE AND LOCAL GOVERNMENT, WHICH BY THE WAY, NOT ONLY PROVIDE MANY NEEDS OF THE AMERICAN PEOPLE, BUT OVER 90% OF PUBLIC EDUCATION IN OUR COUNTRY. AND THEN FURTHER MONEY FOR THE CORONAVIRUS, IN TERMS OF EDUCATION, WHERE WE ARE PROBABLY DOUBLE WHAT THEY WANT TO DO. AND OF COURSE THE FUNDING FOR CRUSHING THE VIRUS. IT WOULD BE THREE AREAS WHERE WE ARE PRETTY FAR APART. CAROLINE: NANCY PELOSI SPEAKING WITH OUR OWN DAVID WESTIN EARLIER. TIME FOR OUR STOCK OF THE HOUR. DESPITE CRITICISM -- CRITICISM AROUND "MULAN", CUSTOMERS ARE LOOKING AT THE STREAMING APP AROUND THE FILM'S RELEASE. DAVE, IS IT ALL ABOUT "MULAN?" DAVE: THAT IS A BIG REASON FOR IT. THIS IS DIFFERENT IN A SENSE, WHAT THEY DID WITH "MULAN" AND WHAT THEY DID WITH "HAMILTON." THEY PUT IT OUT FOR FREE A COUPLE MONTHS BACK, BUT WITH "MULAN," YOU HAVE TO PAY $30, AND THAT IS ON TOP OF THE MONTHLY FEES THAT GO ALONG WITH DISNEY PLUS. BUT THE RESPONSE HAS BEEN THERE. THERE IS AN OUTFIT CALLED CENTER TOWER THAT COLLECTS MOBILE APP DATA AND IT THEY FOUND OUT THERE WAS A 68% INCREASE IN THE NUMBER OF DOWNLOADS OF THE DISNEY PLUS APP FROM THE PREVIOUS WEEK, WORKING OUT THE 900,000 DOWNLOADS. AND THE AMOUNT SPENT ON THE APP ALMOST TRIPLED TO $12 MILLION. THERE WAS ONLY ONE MOVIE, CHRISTOPHER NOLAN'S "TENANT," THAT SURPASSED THAT AT THE BOX OFFICE. THEATERS ARE JUST NOW REOPENING. BUT NONETHELESS, IT SHOWS HOW LUCRATIVE IT WAS, AT LEAST AT THE START, FOR DISNEY. BEYOND THAT, YOU SAW DEUTSCHE BANK RAISED ITS RATING ON THE STOCK TO BUY FROM HOLD, SPECIFICALLY BECAUSE THEY ARE OPTIMISTIC ABOUT THE COMPANY'S PUSH INTO STREAMING VIDEO. THE WAY THAT BRIAN KRAFT PUT IT IN THE NOTES, "MULAN" SHOULD SERVE AS AN EARLY PROOF POINT ABOUT THE POTENTIAL FOR THIS PREMIUM VIDEO-ON-DEMAND. AND, YOU KNOW, HE CHANGED TO SHARE PRICE ESTIMATE BY 27%, TO 160 THREE DOLLARS, THE SECOND-HIGHEST ON THE BLOOMBERG SURVEY. BUT IT JUST GOES TO SHOW THAT WHAT HAPPENED THIS PAST WEEKEND WITH "MULAN" COULD BE THE START OF SOMETHING BIGGER FOR DISNEY. ROMAINE: DISNEY IS OUR STOCK OF THE HOUR. ONLY FOUR STOCKS UP ON THE DOW JONES, AND DISNEY IS ONE OF THEM. LATER, WE WILL TALK ABOUT ANOTHER STOCK THAT HAS BEEN HOT, SLACK. SHARES ARE UP BY 5%. REPORTING EARNINGS AFTER THE BELL TONIGHT. AND EXPECTATIONS ARE HIGH. ♪ ROMAINE: TIME FOR OUR TOP CALLS, A LOOK AT THE MOVERS. AND FIRST UP, ROKU, INITIATED WITH AN OVERWEIGHT WAITING, AND 8215 TARGET OVER AT WELLS FARGO. IT IS DESCRIBED AS "AN ADVERTISING HEAVYWEIGHT IN THE MAKING." SHARES OF ROKU ARE UP 2% ON THE DAY. WYNN RESORTS DOWNGRADED OVER AT GOLDMAN, THE ANALYST SOCIETY AND THE OUTSIZED EXPOSURE OF THE COMPANY TO THE MACAU GAMING REGION WITH A 60% OF REVENUE DEPENDENT ON THE IMAGE OF PROPERTY. SHARES OF THE COMPANY ARE DOWN 5% ON THE DAY. DRAFT KINGS, A NEUTRAL RATING AND $40 PRICE TARGET AT BANK OF AMERICA AND AT THE ANALYST SAYS THAT DRAFT KINGS HAS A STRONG GROWTH PROSPECT, BUT NOTED THE ONLINE GAMING INDUSTRY IS STILL HIGHLY COMPETITIVE WITH UNSTABLE SHARES. IT IS UP FRACTIONALLY ON THE DAY. THOSE ARE YOUR TOP CALLS. CAROLINE: LET'S STICK WITH CORPORATE STORIES AND TO THINK ABOUT SLACK, REPORTING SECOND-QUARTER RESULTS AFTER THE MARKET CLOSED. AND WALL STREET IS LOOKING TO SEE HOW THE MESSAGING PLATFORM TRANSLATE INTO ACTUAL BILLING. IT IS CURRENTLY TRADING AROUND $30. JOINING US TO DIG INTO WHETHER THIS WILL HOLD IS MICHAEL TURRIN , FROM WELLS FARGO, WHO HAS AN OVERWEIGHT WAITING OF A $40 PRICE TARGET ON THE STOCK. WHAT DO YOU THINK WE WILL GET TODAY? WILL THEY BE ABLE TO PROVE TO THE NAYSAYERS THAT THEY CAN MAKE MONEY OUT OF THIS? MICHAEL: THIS HAS BEEN A GREAT TAKE FOR SOFTWARE. SLACK HAS BEEN THE ONE WORK FROM HOME NAME THAT HAS NOT PARTICIPATED TO THE SAME EXTENT AS OTHERS WE HAVE COVERED. IT IS UP 30% YEAR-TO-DATE. DOC YOU SIGN IS UP MORE THAN 100%. I THINK INVESTORS CONTINUE TO POINT TO MICROSOFT AS AN OVERHANG. SO WE SAID THAT THERE IS ROOM FOR POSITIVE SURPRISE ON THIS EARNINGS PRINT, MAYBE UNLIKE THE OTHER NAMES THAT HAVE PARTICIPATED MORE FULLY. ROMAINE: IT SEEMS SOME OF THE REASON IT HAS NOT PARTICIPATED IS THE FACT THAT THE COMPANY ITSELF SAID NOT TO EXPECT MUCH, THAT SOME OF THE GROWTH THEY WERE SEEING WAS NOT GOING TO SUSTAIN ITSELF. WHEN YOU LOOK AT BILLINGS, AND YOU LOOK AT THE ACTUAL GROWTH, MEANING NEW USERS, WHY ISN'T THAT MORE SYNCED UP? MICHAEL: I THINK IN SOME WAYS THAT SLACK IS SETTING A MORE ACHIEVABLE BAR. WE DO THINK THAT EVEN THOUGH Q1 WAS A STRONG, THREE MONTHS AGO THERE WAS A MUCH MORE NEGATIVE SCENARIO PLAYING OUT IN THE MACRO THAN WHAT WE HAVE SEEN SINCE THEN. WE WE HAVE SEEN THESE NAMES FROM THREE MONTHS AGO PUT IT BETTER NUMBERS THIS QUARTER AND I THINK THAT SLACK SET A LOWER BAR. 17 MILLION IN THE HEADWINDS FROM Q1, SO A LOOK AT THE LOW AS THE BILLINGS NUMBER, AND WE THINK THAT INVESTOR EXPECTATIONS ARE SOMEWHAT HIGHER, BUT THE LOW 30'S ARE ACHIEVABLE. WITH THE NEW CUSTOMERS THAT CAME ON LAST QUARTER, 12,000 AND TWO TIMES WHAT THEY ADDED IN PRIOR QUARTERS, WE THINK THERE IS ROOM FOR SOME TOPLINE PERFORMANCE. CAROLINE: WHAT ABOUT THE COMPETITION? MICHAEL: THAT IS THE BIGGEST QUESTION IN THIS MARKET. MICROSOFT, OBVIOUSLY, IS PUTTING THEIR FOOT DOWN. THEY WANT TO PROTECT THE PROTECT CAVITY -- THE PRODUCTIVITY SUITE. AND WE HAVE SAID THAT THIS IS A MARKET THAT IS ONE OF THE LARGEST IN SOFTWARE, YOU CAN LITERALLY TOUCH EVERY BUSINESS USER, SO NOW YOU ARE DOWN TO A TWO HORSE RACE NOW. THEY HAVE INCREASED FOCUS ON COLLABORATION, SO WE THINK EVEN IN THE NUMBER TWO POSITION FROM A MARKET SHARE PERSPECTIVE THERE IS ROOM FOR SUSTAINED GROWTH HERE FOR SLACK. ROMAINE: IT IS SO GREAT THAT YOU COULD TAKE TIME TO COME ON WITH US. ALL EYES ARE GOING TO BE ON SLACK. ALL EYES STILL ON THE MARKET HERE. THE LOW OF THE DAY AT 33.31, COMPANIES RELY ON FORCED LABOR BY UIGHURS. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M KARINA MITCHELL. THIS IS BLOOMBERG. ♪ CAROLINE: 3:00 P.M. IN NEW YORK, 8:00 P.M. IN LONDON, ON CAROLINE HYDE. ROMAINE: I'M ROMAINE BOSTICK. THIS IS "BLOOMBERG MARKETS: THE CLOSE." CAROLINE: INVESTORS ARE RACING HAVENS. WE ARE LOOKING AT DRIVERS FIND THE ROUT. UNEQUAL RECOVERY. THE WIDENING GAP BETWEEN HAVES AND HAVE-NOTS IN THE U.S. MORTGAGE MARKET, BORROWERS CAPITALIZING ON RECORD LOW RATES WHILE UNEMPLOYMENT REACHES RECORD HIGHS. MORE COMING UP WHEN WE LOOK AT HOW WE HAVE LULULEMON AND SLACK AFTER THE BELL, KEEPING A CLOSE EYE ON STOCKS AND THE SECOND QUARTER EARNINGS RECAP. ROMAINE: THE NASDAQ 100 COMING OFF THE RECORD HIGH WEDNESDAY. HAVEN'T HAD MAJOR GOING BACK 11 AND A HALF WEEKS. WE HAVE TO GO BACK 11 AND A HALF WEEKS TO ANY 2% OR 3% MOVE. NASDAQ DOWN 4% ON THE DAY RIGHT NOW, THE LOW OF THE DAY YOU ARE LOOKING AT, GIVE OR TAKE A COUPLE POINTS. INDEXES ARE DOWN LED PRIMARILY BY TEXAS AND MODERN -- TESLA AND MODERNA, SEEING CHIP STOCKS GET BATTERED AROUND. THERE WAS A NEWS REPORT THE TRUMP ADMINISTRATION COULD BLACKLIST SHANGHAI-BASED SEMI CONDUCTOR INTERNATIONAL. THE THREAT IS BEING REPORTED BY NEWS SOURCES THAT YOU CAN SEE THE SPOT INDEX UP ON THE DAY. WE WILL TALK ABOUT SLACK EXPECTED EARNINGS AFTER THE BELL. WE ALL ARE ALSO KEEPING AN EYE ON THE CORPORATE THAT. REMEMBER, WE HAD ACID ISSUANCE HEADING INTO MID-AUGUST WHERE WE SURPASSED $1 TRILLION MOCK -- MARK, SURPASSING THE FOR YOUR RECORD WE HAD IN 2017 IN THE FIRST EIGHT MONTHS. THAT IS PICKING UP. WE HAVE 24 U.S. YIELDS AND SYNDICATION BETWEEN INVESTMENT-GRADE HIGH-YIELD, A HUGE PRICE MANEUVER IN YOUR'S MORNING AND IN JAPAN. AIRLINE. -- CAROLINE. CAROLINE: WE BASICALLY COULDN'T GO TO THE TOILET MOST DAYS IN SEPTEMBER BECAUSE IT IS SO QUICK AS FAR AS HOW FAST THESE BENCHMARK DEALS COME OUT, BUT IT SEEMS MANY ARE STILL COMING TO THE MARKET AMID VOLATILITY IN THE SELLOFF AND THE CREDIT RATING, WITH A RATING THAT HIGH, YOU CAN COMMAND WHATEVER THE MARKETS. ROMAINE: LET'S BRING IN MATT BRILL, SENIOR INVESTMENT ADVISOR OVER AT INVESCO ADVISERS. $150 BILLION IN INVESTMENT GRADE DEALS HERE ON THE U.S. SIDE THIS MONTH, NOT UNEXPECTED THAT SEPTEMBER WOULD BE A HAPPY MONTH, BUT DOES SEEM INTERESTING WE ARE SEEING THIS TYPE OF ACTIVITY, GIVEN THE MARKET SELLOFF AND LONGER-TERM CONCERNS ABOUT ECONOMIC GROWTH HERE. WHAT IS DRIVING THE DEMAND RIGHT NOW? MATT: THANKS FOR HAVING ME BACK, AND YOU ARE RIGHT, WE ALWAYS PICK UP SEPTEMBER WITH A HEAVY CALENDAR, A LOT OF COMPANIES WHILE -- COMPANIES WANT TO ISSUE WHILE INVESTORS ARE COMING BACK FROM SUMMER VACATIONS. I WOKE UP THIS MORNING AND THOUGHT, MAYBE WE AREN'T GOING TO SEE THE DEALS WE EXPECT, BECAUSE THE EQUITY MARKET WAS STARTING TO SLIDE. AND YET, THE COMPANIES DID, ANYWAY, $20 MILLION IN ISSUANCE TODAY. THE AMAZING IS THAT THE DEALS ARE OVERSUBSCRIBED AND GETTING TAKEN DOWN VERY EASILY. EVEN IF WE HAVE CONCERNS TODAY, CORPORATE CREDIT IS STILL ON THE MOVE. CAROLINE: SOVEREIGN CREDIT AND END INTERESTING SYNDICATED DEAL DONE BY THE U.K. GOVERNMENT AMID RISK AVERSION. GIVEN RISK AVERSION, INVESTMENT-GRADE, ARE THERE STILL AREAS OF THE HIGH-YIELD MARKET THAT ARE SHUT OUT? MATT: HIGH-YIELD DEALS ARE GOING OK TODAY AS WELL, IF ANYTHING, THE HEIGHT YIELD SPACE IS EASIER TO MOVE. TRIPLE C INVESTORS WERE WONDERING IF YOU COULD KICK THE CAN DOWN THE ROAD ON THE TRIPLE SEES AND HAVE THEM EXTEND TO CHARITIES, AND THAT WILL BE MORE CHALLENGING IF THE EQUITY MARKET CONTINUES TO HAVE THIS VOLATILITY. FOR NOW, TRIPLE C IS FINE, DOUBLE B IS FINE, BUT IF THIS PERSISTS, HIGH-YIELD WILL BE A LOT MORE DIFFICULT. AND YOU WILL SEE IT A LOT MORE DIFFICULT FOR THOSE COMPANIES AND COUNTRIES TO COME WITH DEALS. ROMAINE: HOW HAS THE GENERAL TRAJECTORY WE HAVE SEEN IN THE SOVEREIGN DEBT SPACE AFFECTING THE WILLINGNESS OF INVESTORS TO EMBRACE CORPORATE CREDIT? MATT: BECAUSE RATES ARE UNDER TRAJECTORY LOWER FOR THE WHOLE YEAR, YOU ARE SEEING A LOT OF COMPANIES WANTING TO ISSUE DEBT WE SAW THAT THE FIRST TOUGH OF THE YEAR, ROUGHLY $1 TRILLION. WE ARE SITTING ON RECORDS AND TERMS -- IN TERMS OF THE PACE OF ISSUANCE. BUT YOU WOULD THINK INVESTORS WOULD BE PULLING BACK BECAUSE OF YES -- LAST YIELDS FOR THEM. BUT KEEP IN MIND, THIS IS A GLOBAL MARKET RIGHT NOW AND THERE IS $15 TRILLION OF DEBT AROUND THE WORLD. I TAKE ALMOST EVERY NIGHT WITH JAPAN, GETTING A LOT OF SKYPE AND ZOOM NEWS OUT OF THAT REGION, AND THEY CONTINUE TO FLOCK TO THE U.S., BECAUSE WITH HEDGING COSTS LOWER, THEY CAN STILL GET A POSITIVE YIELD IN THE U.S.. IT IS HARD TO BELIEVE, BUT IT IS A MARKET THAT WORKS FOR INVESTORS AS WELL AS ISSUERS RIGHT NOW. THAT IS BECAUSE THERE IS A VERY OF OTHER OPTIONS -- DARTH -- THERE IS A DEARTH OF OPTIONS RIGHT NOW. CAROLINE: I'M INTERESTED, ABOUT A DECADE AGO WHEN I WAS BUSY TYPING UP THE LATEST ISSUES COMING TO THE MARKET, IT WAS ALWAYS FOR GENERAL CORPORATE PURPOSES. BUT WHAT ARE COMPANIES USING THESE NEW BENCHMARKS FOR? MATT: GREAT POINT. THE FIRST HALF OF THE YEAR WAS FOR GENERAL PURPOSES, I WOULD CALL THAT SURVIVAL CASH, TRYING TO HOARD AS MUCH CASH BECAUSE THEY DID KNOW WHERE THE ECONOMY WAS GOING TO GO, WHAT WAS GOING TO HAPPEN TO THE BUSINESS, SO COMPANIES ARE OWNED AT RECORD LEVELS TO HAVE IT SIT ON THEIR BALANCE SHEET AND BE THERE IF THEY NEEDED TO READ AND NOW, THEY HAVE SO MUCH CASH ON THE BALANCE NEEDS, THEY NO LONGER NEEDED AND ARE LOOKING AT A LIGHT AT THE END OF THE TUNNEL AND SAYING, MAYBE WE ARE CLOSE TO THE RECOVERY, CLOSE TO A VACCINE, SO WE DON'T NEED TO CONTINUE TO STOCKPILE LIQUIDITY. NOW, WHAT THEY ARE DOING ARE TAKING OUT THE FRONT END DEBT AND TENDERING FOR DEBT. THE CORPORATE MARKET -- GET MARKET -- THE CORPORATE DEBT MARKET, YOU CAN'T JUST CALL THEIR DEALS IN REFINANCE AT A LOWER RATE. IN THE CORPORATE MARKET, THEY HAVE TO PRY IT OUT OF THEIR HANDS. THEY ARE COMING WITH TENDERS THAT A LARGE PREMIUM AT WHERE THESE BONDS ARE TRADING IN ORDER FOR US TO BE INCENTIVIZED TO SELL IT BACK TO THE M -- BACK TO THEM. WE ARE GETTING REALLY ATTRACTIVE OPPORTUNITIES TO SELL DEBT BACK TO COMPANIES. IT MAKES IT HARD FOR THESE COMPANIES TO GET THE BONDS BACK, BUT LITTLE BY LITTLE, THEY ARE ACCUMULATING FRONT-END DEBT AND MATURING RATHER THAN ADDING NEW DEBT. WE WOULD CALL THIS A NET LEVERAGE MARKET, SO THEY ARE USING NEW DEALS TO REFINANCE EXISTING DEALS THEY HAD IN THE PAST. ROMAINE: WHAT ARE WE TALKING ABOUT IN TERMS OF EXTENSION? MATT: DURATION IS ONE OF THE KEY THINGS TO KEEP AN EYE ON FOR THE YEAR. SO AS -- AS COMPANIES HAVE EXTENDED NEAR DEBT MATURITY AND LONGER-TERM MATURITIES AND COUPONS HAVE GOTTEN LOWER, THOSE ARE TWO COMBINATIONS THAT HAVE EXTENDED THE DURATION OF THE INVESTMENT RATE MARKET SEVEN IN THE PAST EIGHT AND A HALF. IT IS A LOT LONGER THAN BEFORE AND WITH THAT COMES MORE VOLATILITY, MORE MARKET TO MARKET VOLATILITY. IT IS AT RISK TO POINT OUT, BUT I WOULD POINT OUT ALSO, A LOT OF INSURANCE COMPANIES CONTINUE TO HAVE A NEED FOR LONG-END PAPER, WE ARE SEEING 40-YOUR DEALS, NOT TODAY BUT THE PAST FEW MONTHS, THAT ARE GETTING EASILY DONE BECAUSE INSURANCE COMPANIES AND PENSION PLANS ARE LOCKING UP THESE YIELDS FOR MANY YEARS. CAROLINE: MATT BRILL, GREAT TO HAVE YOU WITH US INDEED. COMING UP, BLACKROCK AS A NEW STAR IN TOWN. HOW ONE FEMALE MANAGING DIRECTOR HELPED SEAL THE DEBT RESTRUCTURING FOR ARGENTINA AND SOVEREIGN BOND NEGOTIATIONS. I WIDENING CAP BETWEEN WINNERS AND LOSERS IN THE U.S. MORTGAGE MARKET. AND BRENT CRUDE TUMBLES IN THE WAKE BOLSTERING DEMANDS AND SOURING MARKET SENTIMENT. ♪ ROMAINE: LET'S TALK ABOUT THOMAS AND. FOR THE FIRST TIME, THE INVESTMENT COMPANY'S HOLDINGS IN CHINA SURPASSED ITS HOLDINGS IN SINGAPORE. THIS IS ACCORDING TO AN ANNUAL OR THAT SHOWS THE FIRM'S BIG IS HOLDING SHAW -- SAW VALUATIONS TUMBLE. WE SPOKE TO TEMASEK'S CHIEF INVESTMENT STRATEGIST ON THE HISTORIC SHIFT. > > WE ARE FOCUSING IN CHINA ON THE DOMESTIC MARKET, AND WE THINK IT WILL BE STRONG FOR US. THE ALIBABA SWAP IS A NONISSUE. WE HAD MOST OF OUR SHARES IN ADR AND DIVIDED THEM BETWEEN HONG KONG AND THE U.S. SO WE COULD TRADE IN MORE TIME ZONE. -- TIME ZONES. [NO AUDIO] -- SIGNIFICANT MARKET THAT CHINA IS, THE GROWTH IN CONSUMPTION, GROWTH IN THE ECONOMY, AND YOU ARE SEEING THIS YEAR JOHN IS THE ONLY LARGE ECONOMY WITH POSITIVE GDP GROWTH. -- CHINA IS THE ONLY LARGE ECONOMY WITH OZZIE TO GDP GROWTH. HASLINDA: SOUTHEAST ASIAN GROWTH COULD BE MUTED. WHAT WILL THAT DO FOR INVESTMENT OPPORTUNITIES? > > SOUTHEAST ASIA, WE THINK IS AN ATTRACTIVE DESTINATION, PARTLY BECAUSE OF THE RAPID INCREASE IN DIGITALIZATION AS FAR AS THE ECONOMY AND THE USE OF THE INTERNET ACROSS VARIOUS BUSINESSES. SO IT IS NOT JUST TRADITIONAL E-COMMERCE AND GAMING, WE ARE SEEING HEALTH AND FINANCIAL SERVICES , AN AREA WE ARE LOOKING AT CLOSELY? HASLINDA: WHERE IN PARTICULAR, YOU SAY YOU ARE ENCOURAGED BY OPPORTUNITIES? > > SINGAPORE, INDONESIA, VIETNAM, VERY ACTIVE ECONOMIES. WE PUBLISH A REP OR ANNUALLY TOGETHER WITH GOOGLE ON -- PUBLISH A REPORT ANNUALLY TOGETHER WITH GOOGLE ON THE SOUTHEAST ASIA ECONOMY, AND THOSE ARE THE TWO MARKETS ACCORDINGLY WHERE THERE ARE MAXIMUM OPPORTUNITIES, BUT THERE CONTINUE TO BE OPPORTUNITIES IN MALAYSIA, ETC. CAROLINE: CHIEF INVESTMENT STRATEGIST AT TEMASEK, A KEY PLAYER IN ASIA. > > WE ARE TAKING A CLOSER LOOK AT SKEW, SOMETHING READY COMPLICATED RELATIVE TO THE WORLD OF OPTIONS BUT STEVE SAW'S NET TELLS ME -- STEVE SOSNICK, EXPLAINED TO US EXACTLY WHAT IT MEANS. I THINK IT HAS SOMETHING TO TWO WITH DIFFERENT IMPLIED VOLATILITIES FOR THE SAME EXPIRATION DATES AND SAME SECURITY. STEVE: THAT'S CORRECT. THANKS FOR HAVING ME. IF YOU LOOK AT IMPLIED VOLATILITIES, SAY THE APPLE SEPTEMBER OPTIONS, AND EACH OF THOSE OPTIONS, 10% ABOVE THE MARKET AT MONEY, 10% BELOW THE MARKET, THEY ALL HAVE THEIR OWN IMPLIED VOLATILITIES. WHEN WE GRAPH THEM OUT, THAT GIVES US THE CONCEPT OF SKEW. TYPICALLY, WHEN YOU HAVE RISK AVERSION IN THE MARKET, YOU SEE BELOW-MARKET OPTIONS IN THE FORM OF PUTS PRIMARILY WITH HIGHER IMPLIED VOLATILITIES THEN OUT OF THE MONEY CALL. THERE IS NATURAL DEMAND FOR HEDGING THROUGH PUT PURCHASES BUT NOT A LOT OF NATURAL SELLERS OF PUTS, SO YOU TEND TO SEE SKEW, IT LOOKS LIKE A SMILE WHEN YOU GRAPH IT OUT AND THERE IS MORE VOLATILITY ON THE DOM -- ON THE DOWNSIDE. WHAT WE SAW RECENTLY WAS MORE VOLATILITY TO THE UPSIDE, PEOPLE HAD MORE DEMAND FOR CALLS THAN THEY DID FOR PUTS, WHICH MEANS MORE GRIEF THAN FEAR. > > WAS THIS PRIOR TO THE BEGINNING OF THE TECH DROP OVER THE PAST THREE DAYS, OR GOING INTO IT, AND WHAT DOES IT MEAN GOING FORWARD? STEVE: IT HAD BEEN BUILDING AND WE HAD SEEN THE SKEW FLATTENING AND IN FACT INVERTING OVER SESSIONS LEADING UP TO THE WRECK LAST WEEK. I PUT SOMETHING ON OUR WEBSITE WEDNESDAY TO SAY IT WAS WACKY IN TESLA AND APPLE INVERT, WHICH MEANT THERE WAS A HUGE DEMAND FOR CALLS. WE HAVE LEARNED SOFT BANK WAS BEHIND IT BESIDES ALL KINDS OF RETAIL DEMAND FOR THOSE KINDS OF CALLS. ABIGAIL: HOW DO YOU SEE IT FLATTENING OUT GOING INTO THE BIG SELLOFF FOR APPLE AND TESLA AND OTHER BIG MEGA CAPS THAT SKEW WAS INVERTING IN THAT WAY AND NO SHARES HAVE FLATTENED. IS THERE MORE DEMAND FOR BUYING RELATIVE TO AN ACTUAL OUTRIGHT OR AT LEAST HEDGING? STEVE: IT DEPENDS. I HATE TO GIVE THAT ANSWER, BUT IN APPLE'S CASE, THE SKEW IS MORE OR LESS UNCHANGED, WHICH MEANT THERE ARE PEOPLE LOOKING FOR POTENTIAL BALANCE. TESLA, SKEW GOT STEEP ON THE DOWNSIDE BECAUSE THERE IS REAL FEAR BECAUSE THE REASONS FOR BUYING IT HAVE KIND OF EVAPORATED. ABIGAIL: SO IT SUGGESTS BEING RELATIVE TO APPLE, TESLA IS ITS OWN THING, BUT THERE ARE STILL BULLISH MEGA CAP INVESTORS OUT THERE RELATIVE TO APPLE. I WOULD LIKE YOU TO SPEAK TO THE NASDAQ 100 VIX, BECAUSE IT IS DOWN. WE HAVE THE NASDAQ 100 DOWN 4.3% BUT ALSO THE NASDAQ 100 VIX, SUGGESTING MAYBE SELLING PRESSURE IS GOING TO ABATE? STEVE: VOLATILITY ITSELF LEADING INTO LAST WEEK WAS VERY HIGH ON VIX, WE DID SEE IT ELEVATED AND VIX PARTICULARLY HIGH RELATIVE AND IT -- RELATIVE TO VIX. SOME OF THE SKEW IS COMING FROM OPTIONS BELOW 10% OUT OF THE MONEY, SO IT MEANS MANY PEOPLE THINK WE ARE GOING TO SEE A CORRECTION AND MOVE ON. WE'LL SEE HOW IT TURNS OUT. ABIGAIL: ♪ ROMAINE: WELCOME BACK TO "BLOOMBERG MARKETS: THE CLOSE." . KEEPING AND I ON EMERGING MARKETS, MSI INDEX THAT TRACKS EMERGING MARKETS INDICES IS DOWN FOR THE FIFTH STRAIGHT DAY, FAILING TO MAINTAIN GAINS ON A ONE-YOUR BASIS, UP 8%. THERE IS A LITTLE RISK OFF APPETITE FOR THE DAY HERE, FEEDING THE WEAKENING INTO SOME CURRENCIES AND RISK PROXIES LIKE THE COLOMBIAN PESO AND SOUTH AFRICAN RAND. A LOT OF TALK ABOUT THE ARGENTINE BAY SO -- THEY SELL, WHICH IS WEAKER ON THE DAY, RIGHT NOW -- THE ARGENTINE PESO, WEAKER RIGHT NOW, ON 117 DAY LOSING STREAK, 117 DAYS, CAROLINE, A LOT OF IT HAVING TO DO WITH THE DEBT AND NEGOTIATIONS TO GET THE DEBT RENEGOTIATED. FINALLY, CREDITORS GETTING SOME REPRIEVE, BUT THIS HAS BEEN A LONG JOURNEY. WE WANT TO BRING IN SHERY AHN, HOST OF "DAYBREAK ASIA" AND "DAYBREAK AUSTRALIA". CREDITORS STRUCK A DEAL OF $.55 ON THE DOLLAR, LESS THAN WHAT ARGENTINA WAS HOPING TO GIVE UP. A LOT OF CREDIT IS BEING GIVEN TO A PARTICULAR PERSON AT BLACKROCK AND HOW SHE WAS ABLE TO COME IN AND GET THIS DEAL DONE. S HERY: JENNIFER O'NEILL, MANAGING DIRECTOR AT BLACKROCK, TAKING OVER NEGOTIATIONS IN JULY, STRIKING A DEAL AT $.55 ON THE DOLLAR, 15 BILLION DOLLARS MORE THAN WHAT ARGENTINA ACTUALLY SAID THAT THEY COULD PROVIDE. THIS TOOK ARGENTINA OFFICIALLY OUT OF THEIR NINTH HISTORIC DEFAULT. THE SNP GLOBAL RATINGS AGENCY NOW LIFTING ITS RATING TO TRIPLE C PLUS. THEY DEFAULTED ON $65 BILLION OF OVERSEAS DEBT HELD BY DOZENS OF INVESTMENT FIRMS, INCLUDING BLACKROCK. JENNIFER O'NEILL, HELPING SEAL THIS DEBT RESTRUCTURING NOT ONLY FOR ARGENTINA, BUT ALSO ECUADOR, A $17 BILLION RESTRUCTURING RECENTLY. LOTS OF HER COLLEAGUES AS WELL AS ARGENTINIAN OFFICIALS CREDITING HER RAPPORT WITH THE ECONOMY MINISTER OF ARGENTINA. SHE HAD AN INTERVIEW WITH OUR COLLEAGUE LAST WEEK AND SAID SHE SEES IT AS A MARATHON RATHER THAN A SPRINT AND SHE TRIED NOT TO GET CAUGHT UP IN THE NEGOTIATIONS, BUT FINALLY THEY WERE ABLE TO REACH THAT AGREEMENT. CAROLINE: IT IS A BIT OF A MARATHON IF YOU OWN ARGENTINE DEBT, BECAUSE IT IS NOT PERFORMING WELL ON THE DAY. SHERY: YEAH, INVESTORS NOW BETTING ON A POTENTIAL DEFAULT. WE ARE SEEING THAT ON NOTES THAT STARTED TRADING IN THE U.S. AND THEN NOW ARE YIELDING DOWN AVERAGE 11% OR 12%, FAR HIGHER THAN ANY OTHER SOVEREIGN ISSUER AMONG ITS PEERS. IT IS ROUGHLY THE SAME AS WHAT INVESTORS WERE DEMANDING FOR THE NOTES IN THE GREEN MARKET LAST WEEK. SO ANALYSTS NOW SAY THE HIGH YIELDS INVESTORS ARE DEMANDING RIGHT NOW ARE UNLIKELY TO FALL UNTIL THEY CAN ACTUALLY SEE SOME GROWTH PROSPECTS FOR THE ECONOMY, AND THAT DOESN'T LOOK LIKELY AT THIS POINT WHEN WE ARE TALKING ABOUT ECONOMIST PROJECTING A RECORD 12% CONTRACTION FOR GDP OF ARGENTINA . THE INFLATION RATE, ABOVE 40%, A SOARING BUDGET DEFICIT AS ARGENTINA TRIED TO PRINT ITS WAY OUT OF THIS PANDEMIC. CAROLINE: I DOWNGRADE FOR EMERGING MARKETS ACROSS THE BOARD, SHERY AHN. LOOKING AT THE REST OF THE I'M KARINA MITCHELL. THIS IS BLOOMBERG. ♪ CAROLINE: THIS IS THE COUNT TO THE CLOSE, I'M CAROLINE HYDE. ROMAINE: I'M ROMAINE BOSTICK. TAYLOR RIGGS IS STUCK IN A SNOWSTORM IN DENVER. CAROLINE: AND WHAT IT DAY SHE IS MISSING, BIG DAY OF SELLING PRESSURE AS THE SEARCH FOR THE HAVEN CONTINUES, MONEY MOVING INTO THE JAPANESE YEN THE DOLLAR DOWN BY POINT 25% -- THE DOLLAR DOWN BY A QUARTER OF A CENT. BARGAINING BETWEEN THE U.K. AND EU IS UGLY, U.K. TWO-YEAR YIELDS HITTING A RECORD LOW, THE POUND DOWN NOW FOR FIVE STRAIGHT DAYS, COVID CRACKS HITTING THE ECONOMY, ISSUES ABOUT BREXIT AND THE LIKELIHOOD THE U.K. WILL BE BREAKING INTERNATIONAL LAW. YOU CAN'T MAKE UP WHAT IS HAPPENING IN THE U.K. YOU CAN'T MAKE UP WHAT IS HAPPENING IN LUMBER. ROMAINE: YOU CAN'T BRING SEXY BACK TO THE LONDON MARKET. IT LOOKS LIKE WE ARE HEADED DOWN ABOUT 2%, UP .8% HEADED TO THE CLOSE. APPLE HAS BEEN WHIPSAWED ALL DAY. MEANWHILE, WE PASSED $2 TRILLION MARKET VALUE JUST THREE WEEKS AGO. AT ONE POINT TODAY ON INTRADAY BASIS IT WAS BACK DOWN BELOW THE $2 TRILLION MARK. IF IT CLOSES AT THIS LEVEL, THAT WILL BE THE CASE. INTERESTING SELLOFF. THERE WAS ANALYSIS FROM ROD HALL AT GOLDMAN TALKED ABOUT THE IDEA THAT APPLE GROWTH POTENTIAL ISN'T REFLECTED IN THE CURRENT SHARE PRICE AND HE SEEMS TO THINK THE NEXT IPHONE CYCLE OPTIMISM MAY NOT BE AS STRONG AS INVESTORS THINK. CAROLINE: $292 BILLION WIPEOUT IN ITS MARKET CAPITALIZATION IN THE LAST TWO DAYS, 13%, THE WORST THREE-DAY STREAK SINCE 2008. ROMAINE: VERY INTERESTING NOTE BY ROD HALL. TOP CALLS, MOVERS ON THE BACK OF ANALYST RECOMMENDATIONS, THIS INITIATED WITH AN OVERWEIGHT RATING AND STREET HIGH $250 BY WELLS FARGO. ANALYSTS SAY THE STREAMING PLATFORM, ROKU, IS HELPED BY THE SHAKEUP IN BROADCAST ADVERTISING. WYNN RESORTS, ANALYSTS SAYING ITS OUTSIZED EXPOSURE TO MACAU, DEPENDENT ON ASIAN PROPERTIES, WAY DOWN, DOWN 4% ON THE DAY. FINALLY, DRAFT KINGS, $40 PRICE TARGET AT BANK OF AMERICA, ANALYSTS SAY DRAFTKINGS HAS STRONG PROCESS -- PROSPECTS, BUT ONLINE GAMING STILL REMAINS HIGHLY COMPETITIVE WITH A LOT OF INSTABILITY IN RICES, DRAFTKINGS UP .7 ON THE DAY -- .7% ON THE DAY. CAROLINE: NETFLIX CEO REED HASTINGS HAS BEEN SPEAKING TO BLOOMBERG ABOUT THE COMPANY'S DUAL CEO ARRANGEMENT. > > IT IS DEPENDENT ON THE TWO PEOPLE. IT IS UNUSUAL. BUT IF YOU THINK OF EVERY FAMILY, THERE ARE GENERALLY TWO CEO'S IN THE FAMILY AND YOU JUST HAVE TO BE REALLY CLOSE. HEATHER AND I HAVE BEEN TOGETHER FOR MORE THAN 20 YEARS, AND WITH THE TWO OF US, IT WILL WORK RIGHT. > > THE PANDEMIC IS PLAYED RIGHT INTO NETFLIX'S HANDS IN MANY WAYS. YOU ARE IN A PERFECT POSITION FOR THIS MOMENT. BUT PRODUCTION HAS COME TO A HEALTH, PROJECTS ARE BACKING UP, I'M NOT COMPLAINING, BUT IT IS GETTING HARDER TO FIND SOMETHING NEW TO WATCH EVERY NIGHT. HOW DOES THE INDUSTRY LOOK DIFFERENT WHEN IT EMERGES FROM THIS? > > IT IS A REAL CHALLENGE BECAUSE OF THE LACK OF PRODUCTION, PARTICULARLY IN THE U.S. AND EUROPE. EUROPE, IT IS COMING BACK, BUT IN THE U.S. IT IS QUITE SLOW AND CHALLENGING AND THAT WILL HAVE MORE OF AN EFFECT NEXT YEAR AND THIS YEAR, NOT ONLY FOR US, BUT FOR OUR COMPETITORS ALSO. BUT EVERYBODY IS TRYING TO FIGURE OUT HOW TO MAKE IT WORK. JUST LIKE THERE WAS A WRITER'S STRIKE AND OTHER THINGS THAT HAPPENED OVER THE PAST 50 YEARS. IN THE LONG TERM, COVID IS A BLIP AND A HISTORIC FOOTNOTE, KIND OF LIKE THE 1918 PANDEMIC WE READ ABOUT TODAY. EMILY: YOU HAVE SAID THERE IS SPACE FOR MANY STREAMING SERVICES IN THE MARKET AND YOU SAID YOU WERE IMPRESSED BY WHAT DISNEY HAS ACCOMPLISHED, HBO MAX, HOW MANY OF THESE SERVICES ACTUALLY HAVE THE POTENTIAL TO REACH 100 MILLION OR 500 MILLION PEOPLE? AND WILL THERE BE CONSOLIDATION, AND WHO IS LEFT STANDING? > > THERE IS A HUGE DIFFERENCE BETWEEN DISNEY PLUS, OVER 60 MILLION SUBSCRIBERS IN THE FIRST YEAR, THEN HBO MAX, WHICH IS 3 MILLION OR 4 MILLION. ONE OF THOSE IS REALLY INCREDIBLE. I WOULD NOT HAVE GUESSED YOU COULD GET TO 60 MILLION IN THE FIRST YEAR. BUT WE WILL SEE, DEPENDING ON WHAT THE QUALITY OF THE SERVICES ARE. I DO THINK THAT OVER TIME, ADDITIONAL CONSOLIDATION, LIKE FOX-DISNEY, WHICH HAS PROVEN TO BE GREAT FOR DISNEY. BUT THERE WILL PROBABLY BE MORE OF THAT. CONSUMERS WANT FEWER BRANDS, THEY GOT A WIDE RANGE OF ENTERTAINMENT INSTEAD OF TOO MANY. EMILY: HOW MANY YEARS UNTIL LET -- UNTIL NETFLIX HAS TO THINK OF SOMETHING NEW, AND WHAT MIGHT THAT BECOME, VIDEO GAMES, SOCIAL MEDIA? > > WE ALWAYS TRY TO KEEP AN OPEN MIND. MY FIRST COMPANY, WE ACQUIRED A LOT OF COMPANIES. SO WE HAVE BEEN THROUGH THAT. MOSTLY WE WANT TO MAKE OUR SERVICE BETTER. 5, 10, 15, 20 YEARS OF GROWTH, REALLY FOCUSED ON MAKING OUR SERVICE BETTER. WE HAVE ALWAYS ADDED NEW TYPES OF PROGRAMMING, FOR EXAMPLE, STARTING A SERIES END EXTENDING INTO FILM AND NONFICTION END NOW ANIMATION. WE WILL CONTINUE TO EXPAND WHAT WE OFFER ON THE SERVICE. CAROLINE: NETWORKS COFOUNDER AND CEO REED HASTINGS. BREAKING NEWS, SPECIAL ACQUISITION COMPANIES YOU USED TO BE ABLE TO LIST GO PUBLIC, WE UNDERSTAND THE PERSON WHO USED TO LEAD MGM RESORTS FOR MORE THAN A DECADE IS TEAMING UP FOR POTENTIAL ONLINE GAMING. LET'S WATCH THE MARKET UNRAVEL, THE S & P 500 INDEX, THE POUND SINKING, BREXIT TENSIONS, POTENTIALLY INTERNATIONAL LAW BROKEN IN THE U.K. AND GOLD DOWN .6%. ROMAINE: ONE OF THOSE DAYS WHERE THE STARS SEEM TO BE ALL LINING UP AGAINST THE MARKETS. ♪ TIME -- CAROLINE: TIME NOW FOR OUR NEW SERIES, UNEQUAL RECOVERY. SOME COMPANIES ARE EXPERIENCING A ROUGHER RECOVERY IF ANY AT ALL. TODAY WE DISCUSSED THE DIVIDE IN THE MORTGAGE MARKET AND WE ARE JOINED BY OUR REPORTER JOHN KETELSEN. JOHN, YOU WROTE A GREAT STORY ABOUT THE HAVES AND HAVE-NOTS WHEN IT COMES TO MORTGAGES. TALK ABOUT THE DIVIDE. SOME ARE ABLE TO DINE OUT ON RECORD-LOW BORROWING COSTS AND OTHERS SEE THE MORTGAGE MARKET IN DISARRAY AND INABILITY TO PAY. THAT'S RIGHT, IT IS A HAVE AND HAVE NOT STORY. YOU HAVE RECORD LEVEL OF NUMERAL LOAN ORIGINATIONS -- NEW LOAN ORIGINATIONS IN THE SECOND QUARTER, $1.1 TRILLION OF NEW MORTGAGES, 70% OF THAT REFINANCING. AND THEY SAY THERE IS 18 MILLION MORE HOMEOWNERS WHO COULD TAKE ADVANTAGE OF FALLING RATES RIGHT NOW. SO IT IS ONLY GOING TO GROW FOR THE SHORT-TERM FUTURE. YOU COULD MAKE A FEW HUNDRED DOLLARS BY JUST TAKING ADVANTAGE OF LOWER INTEREST RATES. ROMAINE: I'M CURIOUS ABOUT THE DIVIDE HERE. A LOT OF IT HAS TO DO WITH BANKS AND LENDERS MAKING DETERMINATIONS ABOUT CREDIT SCORES AND INCOME LEVELS ON WHETHER PEOPLE ARE EMPLOYED. IS THE IDEA THAT PEOPLE BEING SHUT OUT, IS IT THE IDEA THAT THEY LOST THEIR JOBS AND DON'T HAVE THE ABILITY TO TAKE ADVANTAGE OF THIS? OR WERE THEY ALREADY IN A POSITION WHERE THEIR CREDIT WAS ALREADY TOO LOW TO TAKE ADVANTAGE OF IT? JOHN: GOOD QUESTION. I DON'T HAVE AN EXACT ANSWER. BUT OBVIOUSLY, IF YOU LOST A JOB, YOU ARE NOT GOING TO BE ABLE TO REFINANCE. 11 MILLION PEOPLE WHO HAVE LOST THEIR JOBS SINCE THE PANDEMIC, STILL WITHOUT JOBS, AND NOT ALL THOSE PEOPLE ARE HOMEOWNERS. BUT MAYBE IF THE ONES WHO LOST THEIR JOBS ARE RELATIVELY LOW WAGE EARNERS, THOSE ARE THE PEOPLE THAT CAN PROBABLY BENEFIT THE MOST, IF THEY COULD GET ACCESS TO THESE LOWER-RATE MORTGAGES. TWICE AS MANY DELINQUENT LOANS HAVE FHA OR V.A. LOUNGE, -- FHA OR V.A. LOANS, WHICH ARE LOANS FOR PEOPLE WITH LOWER CREDIT SCORES AND CAN'T AFFORD TO DO THE LARGER DOWNPAYMENTS WHERE, IF YOU BORROW WITH FANNIE MAE OR FREDDIE MAC, YOU ARE USUALLY REQUIRED TO GIVE. SO THE WEAKEST BORROWERS THE OTHER ONES HIT THE MOST BY WHAT IS HAPPENING TO THE ECONOMY. CAROLINE: AND WE HAVE ONLY JUST SEEN THE TAPS TURNED ON FROM A FISCAL POINT OF VIEW, TAP TURNED OFF, EVEN. WE HAVE ONLY JUST SEEN THE END OF SUPPLEMENTAL EMPLOYMENT BENEFITS. ARE WE BRACING OURSELVES FOR EVEN MORE DIRE CONSEQUENCES WHEN WE SEE EVICTIONS MORE PREVALENT, AND THE LIKE? JOHN: YEAH. THE EVICTION PICTURE IS CLOUDY BECAUSE THERE WAS THAT CDC, CENTERS FOR DISEASE CONTROL DECISION RECENTLY, THAT SAID DON'T EVICT ANYBODY UNTIL THE END OF THE YEAR, WHILE WE ARE IN THIS PANDEMIC. SO EVICTIONS ARE MOUNTING UP. THERE IS A BIG DAM THAT IS BUILDING UP, ALL THE WATER BEHIND THE DAM, AND THE DAM WILL BREAK. OR, IF THEY CAN DRAIN IT POSSIBLY BY HAVING MORE PEOPLE TURN TO EMPLOYMENT, MAYBE THEY COULD FEND OFF THIS HUGE FLOOD. BUT RIGHT NOW, IT IS STILL IN THE BUILDING PHASE. THE NUMBER OR PERCENT OF PEOPLE WHO ARE SERIOUSLY DELINQUENT ON THEIR LOANS INCREASED 450% SINCE THE CRISIS BEGAN. CAROLINE: PHENOMENAL NUMBER. JOHN GITTELSOHN, GREAT READ, REALLY SHOWING PAIN IN THE MORTGAGE MARKET AND THE ACCESS OF -- ACCESS QUALITY BUILDING. MORE ON OUR DEEP DIVE ON UNEQUAL RECOVERY IN THE PANDEMIC. ♪ CAROLINE: COUNT DOWN TO THE CLOSE, WE ARE WITH YOU. I'M CAROLINE HYDE. TECHNOLOGY FEELING PAIN ONCE AGAIN. BUT NOWHERE TO HIDE IN THIS MARKET. EVERY INDUSTRY TANKING. THE NASDAQ 100 NOT JUST CLINGING TO GREEN, OVER THE COURSE OF THREE SHORT TRADING DAYS, ERADICATING WHAT IT MANAGED TO BUILD UP SINCE THE START OF SEPTEMBER. CHANGE IS UPON US, RISK AVERSION IN TECHNOLOGY, HEAVY HEIGHTS BEING QUESTIONED, TESLA'S WORST DAY EVER COME OFF 20%. ROMAINE: BIG MOVES ON INDIVIDUAL NAMES. WHEN YOU LOOK AT SECTORS, ENERGY WAS WEIGHING US DOWN THE MOST, DOWN 3.4% AT THE MOMENT, BUT TECH HAS OUTPACED THAT, IN THE S & P 500, CHECK NOW FOR CASH TACK -- IN THE S & P 500 INDEX, TECH DOWN FOR PERCENT. OFFICIALLY CORRECTION MODE, THE NEWS TODAY CAME OUT OF THE IDEA THE TRUMP ADMINISTRATION MAY BLACKLIST ANOTHER CHINESE COMPANY, SEMICONDUCTOR COMPANY, THAT COULD HAVE REVERBERATION FOR U.S. COMPANIES THAT RELY ON CHINESE COMPANIES FOR SALES. AIRLINES, SECOND STRAIGHT SESSION, WHEN YOU ARE AT THE BOTTOM OF THE BARREL, THE ONLY PLACE YOU CAN GO IS UP. AND REGIONAL BANK STOCKS TAKE A BEATING TODAY, A SLAVE TO ECONOMIC EXPECTATIONS RIGHT NOW AS WELL AS WHAT WE HAVE BEEN SEEING IN THE EQUITIES MARKET. BRENT SCHUTTE JOINS US, NORTHWESTHERN MUTUAL WEALTH MANAGEMENT CHIEF STRATEGIST, JOINING US FROM MILL WALKIE. -- MILL WALKIE -- JOINING US FROM MILWAUKEE, WISCONSIN. IS THIS A TEMPORARY PULLBACK, REMOVAL OF THE FROST, OR SOMETHING MORE STRUCTURAL IN THIS MOVE DOWNWARD? BRENT: I'M OF THE OPINION IT IS A TEMPORARY MOVE DOWN. YOU HAD A BIG RUN IN OVER LOVED AND OVER-KNOWN NAMES IN TECHNOLOGY AND OTHER STOCKS. I DON'T THINK THERE IS ANYTHING ECONOMIC OR VIRUS DRIVEN TO THE SELLOFF. YOU HAVE DECENT ECONOMIC DATA OVER THE PAST FEW WEEKS. A LOT OF THIS DOES RESEMBLE SOMETHING LOOKING LIKE A THE, -- LIKE A V, AND CORONAVIRUS NEWS TENDS TO TILT POSITIVE. LAST WEEK, WE HEARD ABOUT A POSSIBLE VACCINE BY OCTOBER. I THINK THAT COULD CAUSE RISK OFF. THINK ABOUT IT THIS WAY. YOU HAD THE NAMES THAT YOU MENTIONED REALLY BENEFITING FROM ALL OF US STAYING AT HOME. IF THE VIRUS CONTINUES TO TILT IN A POSITIVE DIRECTION AND WE HAVE A VACCINE, THAT MEANS WE ALL WANT TO HAVE TO STAY HOME ANY LONGER AND THAT SHOULD BROADEN THE ECONOMIC RECOVERY AND BROADEN THE EARNINGS RECOVERY. FOR THE PAST FEW MONTHS, WE HAVE BEEN POSITIONING FOR LEADERSHIP CHANGE TO MORE ECONOMICALLY-SENSITIVE STOCKS. THE QUESTION, COULD THE LEADERSHIP CHANGE OCCUR WITHOUT BACK AND FORTH SPILLOVER EFFECTS? THE ANSWER IS NO. BUT WE THINK THAT AS YOU MOVE INTO NEXT YEAR, YOU WILL HAVE LEADERSHIP CHANGE COMING OUT OF THIS THAT IS MORE ECONOMICALLY SENSITIVE, THINK VALUES AND SMALL CAPS. CAROLINE: RUSSELL 2000 TODAY IN THE RED, BUT NOT NEARLY AS MUCH PAIN AS THE NASDAQ. BUT SOME SMALL CAPS AND CYCLICAL NAMES HAVE FALLEN OFF AS WELL. WHEN WE START TO SEE BUYING? BRENT: I AM HOPING SOON, BECAUSE WE ARE OVERWEIGHT. THE QUESTION, COULD THIS HAPPEN AFTER SPILLOVER EFFECTS? THE ANSWER IS NO. OTHER THINGS THAT HAPPEN DOWN THE LINE HAVE A DOMINO EFFECT ON THOSE NAMES HAVE SOLD OFF, BUT HAVE DONE TO THE LESSER. I BELIEVE THEY ARE OFF UP TO 5% WHILE NASDAQ AND TECHNOLOGY STOCKS ARE OFF 10% PLUS. AS WE COME OUT OF THIS SELLING PRESSURE, LEADERSHIP IN THIS SMALL AND VALUE STOCKS CONTINUES. ROMAINE: SPEAKING WITH BRENT SCHUTTE, CHIEF STRATEGIST AT NORTHWESTHERN MUTUAL WEALTH MANAGEMENT COMPANY. WE WILL CONTINUE WITH HIM IN A MOMENT BUT WANT TO GET A LOOK BACK AT MARKETS, TESLA'S WORST DAY EVER, APPLE ITS WORST THREE-DAY DROP WE HAVE SEEN IN YEARS. ABIGAIL, WHEN YOU TALK ABOUT RISK OFF, YOU GET SIGNALS IN OTHER AREAS OF THE MARKET AS WELL? ABIGAIL: THERE ARE INDEED AND NOT ALL ARE RISK OFF. IT IS INTERESTING. EVEN WITH TECHNOLOGY SELLING, IT SEEMS ISOLATED AND NOT AND IT, MORE ORDERLY SELLING. THE EMERGING-MARKET INDEX, INTERESTING, THIS IS FAR OUT ON THE RISK CONTINUING. IT IS ONLY DONE .7 PERCENT. INVESTORS ARE NOT SELLING THAT PART OF THE MARKET AND THAT IS ALSO TRUE FOR CORPORATE BONDS. YOU CAN MAKE THE CASE THAT IS A RISK ASSET AND WE HAVE THE ELK USING ETF -- LQZ ETF UP. CREW, WORST DAY IN MONTHS, THE FAANG INDEX DOWN 6.8%. CRUDE, WORST IN MONTHS, THE FANG INDEX DOWN 6.8%. THE BLOOMBERG DOLLAR INDEX IS UP .5% THE PAST TWO DAYS, ACTUALLY MORE, THE BEST TWO DAYS GOING BACK TO JUNE. SO YOU HAVE ALL THESE RISK ASSETS AND NON-DATE TO DOLLARS, A HEADWIND CREATING A RIPPLE. LET'S SEE HOW THAT PLAYS OUT. AS FOR THE TECHNICALS COME UP TO THE BLOOMBERG TERMINAL NASDAQ 100 UNDER PRESSURE IN ADDITION TO THE FANG, RIGHT NOW CLINGING TO THE 60-DAY MOVING AVERAGE. IF IT ROLLS OVER THAT MOVING AVERAGE COME IT TELLS YOU NEAR TERM BUYERS ARE GOING TO SUPPORT THE MARKET DESPITE JITTERS SIMILAR TO WHAT WE SAW FOR GOLD AND SILVER LAST MONTH. A LOT OF THIS SEEMS LIKE THE FROST COMING OUT. HOWEVER, IF BELOW THAT SUPPORT, THE SELLOFF COULD INTENSIFY, RIGHT NOW BUYERS STEPPING UP. OUR STOCKS OF THE HOUR, APPLE AND TESLA, OVER THE LAST WEEK IT IS INCREDIBLE. APPLE DOWN 15 POINT 7%, TESLA DOWN 30%. WHAT THESE STOCKS HAVEN'T COME IN, IT COULD BE THE POST PUT HANGOVER, SINCE VALUE WASN'T CREATED. IT SEEMS TO BE A SELLOFF EVENT FOR TESLA NOT BEING INCLUDED IN THE S & P 500 INDEX. CAROLINE: THAT DID SHAKE THE MARKET, THE NASDAQ FALLING TOWARD THE CLOSE, OFF FOUR POINT 1%, AGGRESSIVE SELLING WITH VOLUMES NOT THAT MUCH HIGHER ON THE NASDAQ. S & P 500 COME AT THEY AFTER LABOR DAY, 40% UPTAKE IN TERMS OF AVERAGE VOLUME. ROMAINE: THERE ARE MIXED MESSAGES IN THIS BECAUSE NAMES ARE MOVING HIGHER BUT MOST WHO ARE FALLING ARE THE ONES WHO ROSE THE MOST IN THE LEAD UP TO THE SELLOFF. GENERAL MOTORS, A LOT OF RETAIL STOCKS, UNDER ARMOUR UP 5% ON THE DAY, SOME TRAVEL STOCKS UP. SO THERE ARE BUYERS WHO ARE WILLING TO LOOK FOR SOME VALUE IN THIS MARKET AT THEY ARE FINDING IT IN SOME OF THESE NAMES. LET'S BRING BACK PRINT INTO THE CONVERSATION, WITH NORTHWESTHERN MUTUAL WEALTH MANAGEMENT. WHEN YOU SEE PEOPLE BUYING THESE BEATEN-DOWN NAMES, WHAT DO YOU MAKE OF THAT SENTIMENT? IS IT THE IDEA THAT THOSE NAMES WERE BEATEN WAY TOO MUCH, OR MADE THIS BE A LONGER-TERM BET ON THE ECONOMY AND THAT NO MATTER HOW DEEP THE RECESSION, THE ECONOMY WILL BOUNCE BACK IN SHORT ORDER? BRENT: IT IS A RETURN TO A LITTLE NORMALCY. I DON'T THINK WE ARE ALL GOING TO LIVE THE LIFE WE ARE LIVING NOW AND WE ARE CERTAINLY LIVING DIFFERENT ONES THAN THREE MONTHS AGO WHEN WE HAD MORE FREEDOM. IF YOU ACCOUNT FOR A VACCINE IN THE FUTURE OR JUST THE U.S. ECONOMY ADAPTING, WE FORGET THAT THE U.S. ECONOMY ADAPTS AND PEOPLE COME UP WITH NEW, CREATIVE WAYS TO SERVICE THEIR CLIENTS. I DO THAT EVERY DAY. YOU TURN ON THE TV COME AND OUT THERE ARE SPORTS ON. AS NASDAQ CONTINUES, THERE ARE GOING TO BE WINNERS IT SHAKEN OUT INDUSTRIES BECAUSE THE COMPETITION IS GOING TO BE GONE. CERTAIN THINGS WILL COME BACK IN THE PLAYERS THAT SURVIVE THOSE INDUSTRIES WILL EARN DECENT PROFITS BECAUSE OF LACK OF COMPETITION. SO IT IS A COMBINATION OF ALL THE THINGS YOU MENTIONED, BUT MORE IMPORTANTLY, IT IS MORE OF A CONVERSATION, BROUGHT-BASED, ABOUT SOME RETURN TO WHERE WE WERE IN JANUARY AT SOME POINT IN THE FUTURE. CAROLINE: BRENT, YOU HAVE HELPED MANAGE MONEY FOR RETAIL INVESTORS. S & P 500 CLOSING DOWN 95 POINTS. WE ARE SEEING THE LOWEST LEVELS IN FOUR WEEKS. BIG MOVES ON THESE INDICES THAT WE HAVE NOT SEEN SINCE THE LIKES OF JUNE. IN THREE SHORT DAYS, YOU REALLY HAVE ERADICATED A LOT OF WHAT WAS A BIG CRESCENDO IN BUYING. ROMAINE: A LOT OF PEOPLE WERE SAYING THERE WAS SOME POINT WE WOULD GET A CORRECTION. THE S & P 500 INDEX, DOWN ABOUT 7% FROM THE HIGH IT HIT LAST WEDNESDAY. NASDAQ DOWN 11%. SEMICONDUCTOR DOWN. NEW YORK FAIN INDEX -- NEW YORK FAANG INDEX, DOWN 14. MANY DOING MASSIVELY WELL FROM THEIR ALL-TIME HIGHS. I GUESS THE CONCERN, DOES THIS CONTINUE OR IS THIS NOW THE RESET WHERE YOU START TO SEE PEOPLE COME IN TOMORROW AND LOOK AROUND I GUESS AT ASHES FOR SOME VALUE? CAROLINE: TESLA PLUMMETS FOR ITS WORST ONE-DAY LOSS ON RECORD. THIS IS NOT JUST EQUITY MARKETS. WE SAW ACROSS ASSET MOVEMENT. BRENT IS STILL WITH US. YOU MANAGE MONEY FOR THE RETAIL INVESTOR. HOW MUCH COULD THE SO-CALLED ROBINHOOD TRADER COME OUT OF THE MARKET? WHAT SORT OF PRESSURE DOES THAT LEAD TO? BRENT: I HOPE IT IS NOT SO HARD THAT THERE ARE THOSE PANIC SELLING MECHANISMS YOU MENTIONED. BECAUSE IT IS MORE OF A RETAIL SENTIMENT, I DO THINK THIS PERIOD IS LIKE 1999. ROBINHOOD, THE IMPACT SOME OF THOSE PEOPLE HAVE HAD ON THE MARKETS. 1999 IS WHEN SELF-DIRECTED TRADERS AND -- SELF-DIRECTED BROKERS AND DAY TRADERS. YOU HAD STOCKS LEADING THE MARKETS HIGHER ON THE BELIEF THAT THEY WERE CHANGING THE WAY WE LIVE FOREVER, WHICH PERVERSELY PROBABLY DID COME -- COME TRUE IN THE COMING YEARS, BUT THE STOCKS HAD ALREADY DISCOUNTED THAT. I THINK WHAT WILL HAPPEN NEXT IS JUST LIKE WHAT HAPPENED BACK THEN, WHERE MORE VALUE THINGS OUTPERFORM, WHERE MORE SENSITIVE THINGS OUTPERFORM BECAUSE THEY WERE BEATEN DOWN AND LEFT IN THE RUBBLE. PEOPLE WERE MORE SMIT WITH SOME OF THOSE TECHNOLOGY STOCKS. PEOPLE WANTED TO EARN -- WANT TO OWN MORE OF THOSE BECAUSE THEY WERE DOING SO WELL. ROMAINE: THERE IS ANECDOTAL EVIDENCE THAT THERE IS CASH ON THE SIDELINE. WHAT BRINGS THAT CASH OFF THE SIDELINES? BRENT: I STILL THINK IT IS A BUY THE DIP. I KNOW THERE IS THIS BELIEF THAT PEOPLE HAVE BEEN BULLISH, BUT THAT IS NOT THE CASE. THE ONE WAY THAT THIS IS PROBABLY DIFFERENT THAN 1989 IS THAT BONDS OFFER VERY LITTLE IN THE WAY OF RETURNS AND CAPITAL HAS TO GO SOMEWHERE. PEOPLE WILL BE INCLINED TO BUY STOCKS. THE FED HAS MADE A PROMISE THAT THEY WILL KEEP THEM THERE. KEEP THE ECONOMY FIRST AND TARGET THE MARKET. I DO THINK SOME OF THAT MONEY WILL BE COMING OFF THE SIDELINES, IT IS JUST A MATTER OF WHEN. AS VALUE GETS BETTER, I DO THINK THEY WILL BRING IN MONEY. CAROLINE: NORTHWESTERN WEALTH MANAGEMENT COMPANY CHIEF INVESTMENT STRATEGIST TALKING ABOUT HOW THIS IS REMINISCENT OF 1999. MORE MARKETS COMING UP. WE WILL LOOK AT THE CRUDE MOVE TODAY. OIL CAUGHT UP IN THE SELLOFF. WILL THAT CONTINUE? THIS IS BLOOMBERG. CAROLINE: THAT WAS QUICKLY CLOSE TO THE MARKET. RISK AVERSION WE SAW SWEEP THROUGH. WE HAVE ERASED MOST OF AUGUST'S GAINS. NASDAQ 4% LOWER IN CORRECTION TERRITORY. ROMAINE: CORRECTION TERRITORY FOR THE NASDAQ. AND S & P 500. WELL INTO CORRECTION TERRITORY FOR TESLA. MODERNA DOWN ABOUT 13%. A QUICK MENTION OF WHAT WE SAW WITH NIKOLA TODAY, UP 41%. CAROLINE: THEY SEE A NON-CASH DEAL WITH GM. NIKOLA SOARS. WE STILL HAVE SOME EARNINGS COMING OUT. THERE IS YOUR TESLA MOVE. 21%. BEAR MARKET NOW, OFF BY MORE THAN 20%. REMEMBER HOW QUICKLY THAT TURNAROUND WAS. ROMAINE: LAST WEEK, DOWN ON THOSE THREE DAY. CAROLINE: IT HAS BEEN QUITE THE ROLLER COASTER. LULULEMON, SECOND QUARTER NET REVENUE $900 MILLION. THAT IS BETTER THAN EXPECTED. STILL, THEY ARE NOT PROVIDING DETAILED GUIDANCE FOR FISCAL 2020. ADJUSTED EARNINGS-PER-SHARE WAS A BEAT FOR THE SECOND QUARTER. LULULEMON SELLING OFF EVEN AS THEY BEAT MARKET EXPECTATIONS. THIS WAS RISK AVERSION ACROSS THE BOARD. WE SAW A SELLOFF IN COMMODITIES. LET'S TALK OIL. WE WILL BE DIGGING IN DEEPER WITH REBECCA BABBITT. SHE WILL BE TALKING TO US A LITTLE BIT MORE ABOUT WHERE SHE SEES OIL MOVING. SAUDI ARABIA TELLING US THEY WILL BE ADJUSTING THEIR PRICES LOWER. ABU DHABI LENDING THEIR VOICE TO THAT. CIBC PRIVATE WEALTH MANAGEMENT VICE PRESIDENT AND TRADER. HOW WAS TRADING FOR YOU TODAY? REBECCA: TRADING TODAY WAS PRETTY VOLATILE. THE COMMODITY WAS UNDER SIGNIFICANT PRESSURE. WHAT I THINK WAS INTERESTING, IT WAS NOT LIKE ANYONE CALLED IN AND WAS PANICKED. THE MARKET HAD GIVEN US A COUPLE OF SIGNALS OVER THE TAIL END OF THE RALLY THAT THINGS WERE STARTING TO SOFTEN. WHETHER THAT WAS REFINERY MARGINS, BRENT. THE SELLOFF DEFINITELY RAISED EYEBROWS, BUT IT DID NOT KIND OF INSIGHT THAT PANIC THAT WE MAY HAVE SEEN MORE IN THAT MARCH-APRIL TIMEFRAME. THE MARKET IS A LITTLE BIT I THINK MORE NEGATIVE IN IT SENTIMENT JUST GIVEN THE FACT THAT WE ARE ENTERING A SEASONABLY WEEK PERIOD WITH REFINERS GOING INTO MAINTENANCE. THE END OF THE SUMMER DRIVING SEASON. THE SELLOFF WAS DEFINITELY MET WITH, THAT IS A BIG MOVE, BUT NOT NECESSARILY THAT PANIC WE SAW IN THE PAST. ROMAINE: WE SAW TIGHT RANGES HERE ON WTI AS WELL AS BRENT CRUDE. WHEN WE WERE INTRODUCING YOU, WE PUT UP A CHART HERE OF THE SPREADS, TAKING A LOOK AT HOW THAT COMES BACK INTO PLAY. I AM WONDERING IF THIS IS SOMETHING THAT IS SIGNIFICANT ENOUGH FOR YOU AND OTHER TRADERS TO USE AS A BAROMETER? REBECCA: I THINK THAT TRADERS DO LOOK AT IT AND IT WILL CONTINUE TO BE IMPORTANT. IT IS NOT A GREAT INDICATOR OF WHERE SPOT DEMAND IS. I THINK DEMAND IS THE REAL STORY. I THINK YOU ARE STARTING TO SEE SUPPLY-SIDE ALTERCATIONS FROM OPEC OR VARIOUS U.S. SHALE PRODUCERS, HAVING LESS OF AN IMPACT. IT IS THAT SPOT DEMAND INFLECTION THAT PEOPLE WANT TO SEE. I DO THINK THOSE SPREADS, PEOPLE WILL CONTINUE TO WATCH IT. IF THEY ARE LOOKING TO PUT ON NEGATIVE FOR PARISH POSITIONS, THEY WILL PROBABLY USE THAT AS A BAROMETER WHETHER THEY ADD TO THEIR SHORT RALLIES. IT WILL CONTINUE TO BE IMPORTANT FOR TRADER TYPES. OVER THE LONGER TERM, YOU HAVE TO LOOK BIGGER PICTURE AND THINK ABOUT HOW MANY PROJECT'S ARE BEING DELAYED. WHEN THAT DEMAND COMES BACK. THOSE BIGGER PICTURE THINGS, PROBABLY NOT AS FOCUSED ON THE CONTANGO ASPECT BUT I THINK DAY-TO-DAY IT IS A REAL FACTOR. CAROLINE: IT IS MORE THE SUPPLY-SIDE YOU ARE LOOKING TO FOR A REBALANCING. WHEN YOU ARE LOOKING IN THE LONGER TERM THINK SEASONING OUT WHAT FOR NOW THE -- LONGER-TERM THINGS EVENING OUT. > > I THINK THE DEMAND SIDE IS REALLY WITTY -- REALLY WHERE THE JUICE IS. I THINK THE SUPPLY-SIDE IS HAVING LESS OF AN IMPACT. AS DEMAND STARTS TO REALLY TAKE OFF FROM HERE, THAT COULD SURPRISE PEOPLE. CAROLINE: WHERE DO YOU SEE THE DEMAND TAKING OFF? REBECCA: THAT WOULD HAVE TO COME FROM PROBABLY CHINA, FROM THE U.S. MAKING A VACCINE, OR THAT WE CAN RETURN TO NORMAL AND PEOPLE START FLYING AGAIN. JET FUEL DEMAND HAS REMAINED EXTREMELY LOW. IT IS GOING TO TAKE THE DATA POINT OF RETURN TO PREVIOUS PRE-COVID TYPE OF LIFESTYLE. THAT IS PROBABLY CENTERED AROUND INFORMATION REGARDING A VACCINE. THAT IS WHERE THE JUICE IS. THE SUPPLY-SIDE WILL CONTINUE TO BE WATCHED. IN THE BIG PICTURE, IT IS THE DEMAND SIDE THAT MATTERS. ROMAINE: I FEEL LIKE YOU ARE NOT SEEING THE CURTAILMENT IN PRODUCTION THAT WOULD HAVE EXPECTED GIVEN THE WE HAVE NOT RETURNED TO COVID ACTIVITY LEVELS. DOES THE SUPPLY EVER BECOME A FACTOR AT THE CURRENT LEVELS OF PRODUCTION? REBECCA: THAT IS A GREAT POINT. IT NEVER SEEMS LIKE U.S. SHALE IS REDUCING SUPPLY BY ENOUGH TO MAKE THE MARKET HAPPY OR WHAT PEOPLE WOULD EXPECT. THAT IS TRUE. BUT I WOULD SAY, IF THE COMMODITY REMAINS BELOW 40 OR IN THAT LOW 40'S RANGE, THESE COMPANIES ARE FORCED TO CUT. OVER THE NEXT YEAR. THEY DO NOT HAVE THE FLEXIBILITY TO ACCESS CAPITAL, TO CONTINUE TO DO PROJECTS, TO GROW. IT IS GOING TO FORCE THEM INTO THAT. THEY HAVE KEPT PRODUCTION AS HIGH AS THEY CAN FOR AS LONG AS THEY CAN. ULTIMATELY, THE MARKET WILL CORRECT FOR THEM AND LOWER PRICES WILL PUSH THEM THERE. CAROLINE: HOW ARE YOU SETTING YOURSELF UP FOR TOMORROW? > > I THINK THE WAY YOU SET YOURSELF UP IS YOU LOOK AT THE RISK-REWARD PROFILE, GET YOURSELF COMFORTABLE WITH WHERE YOU ARE ON YOUR RISK SPECTRUM OVER THE LONGER TERM. IN THE SHORT TERM, I THINK YOU ARE BETTER OFF LOOKING FOR OPPORTUNITIES RATHER THAN BY ON WEAKNESS, BECAUSE YOU HAVE LOST THAT ENVIRONMENT THAT WAS SUPPORTIVE. TO ME, IT FEELS LIKE A TIME WHEN YOU WANT TO PLAN A LITTLE SAFER AND NOT GET OVER YOUR SKIS. CAROLINE: REBECCA BABIN, WE THANK YOU. SORRY, I AM STEALING YOUR THUNDER, ROMAINE. ROMAINE: VROOM, HAVE YOU HEARD OF THEM? CAROLINE: THE MARKET WILL LIKE WHAT THEY HEAR. VROOM REVENUE, BASICALLY UPDATING AND UPSCALING. THEY SAY RESULTS CONTINUE TO IMPROVE AFTER THE EARLY PANDEMIC. THIRD QUARTER TOTAL GROSS PROFIT BETTER THAN EXPECTED. SHARES RISING AFTER HOURS. ROMAINE: UP ABOUT 6%. FALLING AFTER HOURS, SLACK. 2Q REVENUE COMING IN AT -- FULL-YEAR GUIDANCE, 876. ANALYSTS WERE EXPECTING AN AVERAGE 871. BILLINGS, A MISS. THE ESTIMATE WAS FOR $232 MILLION. SHARES DOWN 12%. WE SHOULD POINT OUT, LAST EARNINGS PERIOD, THEY ALSO MISSED ON THAT NUMBER. WE WILL KEEP AN EYE ON THIS. BUT RIGHT NOW, WE WILL HAVE THE BLOOMBERG FIRST WORD NEWS WITH CAROLINE. CAROLINE: OFFICIALS ARE WORKING TO MAKE SURE THAT THE WHITE HOUSE DOES NOT INTERFERE WITH A SAFE AND EFFECTIVE COVID-19 VACCINE. THE FDA COMMISSIONER TWEETED TODAY THAT THERE WILL BE NO CUTTING CORNERS WHEN IT COMES TO APPROVING A VACCINE. TWO WEEKS AGO, PRESIDENT TRUMP MADE UNSUBSTANTIATED CLAIMS THAT THE "DEEP STATE WAS SLOWING APPROVAL OF A VACCINE. TODAY, HOUSE SPEAKER NANCY PELOSI LABELING MITCH MCCONNELL'S PROPOSAL FOR A SLIMMED-DOWN PACKAGE "FRAUDULENT." IT IS EXPECTED TO COST $500 MILLION, A FAR CRY FROM THE $2 TRILLION DEMOCRATS WANT. BORIS JOHNSON'S ATTEMPT TO BREAK INTERNATIONAL LAW OVER BREXIT BEING SLAMMED BY HIS OWN PARTY. THEY WRITE THAT IT WOULD DAMAGE THE U.K.'S GLOBAL STANDING AND INVITE MISTRUST IN OTHER COUNTRIES. THE POUND FALLING TODAY ON THE NEWS. JAPAN IS MOVING FORWARD WITH PREPARATIONS FOR THE TOKYO OLYMPICS TO BE HELD NEXT YEAR EVEN THOUGH THERE IS NO CLEAR SIGN THAT THE COVID-19 PANDEMIC WILL BE UNDER CONTROL BY THAT TIME. AFTER HE SAYS THEY WILL GO AHEAD NEXT YEAR REGARDLESS OF CORONAVIRUS SITUATION. THE OLYMPICS WERE SCHEDULED TO BE THIS SUMMER BUT WERE PUSHED BACK A YEAR. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. THIS IS BLOOMBERG. ROMAINE: MARKET UPPER INDEED. -- MARKET UPROAR INDEED. VOLATILITY PICKING UP AND A BIG FOCUS ON U.S. TECHNOLOGY SHARES WITH THAT SELLOFF. HERE IS WHAT ANALYSTS HAD TO SAY ABOUT THE SELLOFF. > > THIS IS HEALTHY. OBVIOUSLY, THE CORRECTION IS CONCENTRATED IN A FEW STOCKS. YOU ARE GOING TO HAVE THESE PULLBACKS, EVEN ON SOME WHITE KNUCKLE HEADLINE RISK NUMBERS. BUT, AS WE DRIVE FUNDAMENTALS THE NEXT FEW QUARTERS, THE PATH FOR TECH IS STILL HIGHER. > > WE STILL THINK LARGE-CAP TECH LEADERSHIP IS THE WAY TO BE POSITIONED. THIS IS PROBABLY A SHORTER-TERM DISRUPTION FOR THE MARKETS. > > WE ARE SMACK IN THE MIDDLE OF SOME INDIGESTION, I WOULD SAY, FOR THE STREET, FOR HOW THEY ARE PROCESSING THE DIFFERENT OPTIONS POSITIONS WE HAVE SEEN FROM LARGE INSTITUTIONAL INVESTORS AND THE RETAIL COMMUNITY. > > WE ARE URGING INVESTORS TO LOOK AT OTHER TYPES OF FACTORS AND NOT SELL THE MARKET OFF ALTOGETHER BUT JUST BE A LITTLE BIT MORE PRAGMATIC. > > WE ARE HEADING INTO A PERIOD OF PRETTY SIGNIFICANT VOLATILITY, I THINK, IN THE MARKET. CAROLINE: CONTINUED TO BRING YOU THE LATEST MARKET NEWS AND ANALYSIS. WE KNEW THAT WE HAD A COUPLE OF DAYS OF CONCERNS BUT FRIDAY WAS DIFFERENT. ROMAINE: WHEN THIS SELLOFF FIRST STARTED, IT WAS A ROTATION IN THE MARKETS, INTO SOME OF THE LOWER WEIGHTED NAMES. BUT TODAY WAS A DAY WHERE FOLKS WERE REALLY JUST LOOKING FOR AN EXIT. CAROLINE: WE SAW SIGNIFICANT PRESSURE ACROSS THE BOARD, EVERY INDUSTRY APART FROM AIRLINES. ROMAINE: A LOT OF CONCERNS ABOUT GETTING THE ECONOMY RESTARTED. THAT WILL DEPEND ON A LOT OF FOLKS -- DEPEND FOR A LOT OF FOLKS ON WHETHER THEIR KIDS GO BACK TO SCHOOL. MANY PARENTS HAVE DEBATED THE RETURN TO SCHOOL FOR THEIR CHILDREN. NOW THEY ARE ABOUT TO SEE HOW THOSE PLANS PLAY OUT IN REAL LIFE. BLOOMBERG CITY LAB TOOK A DEEP DIVE INTO THE ISSUE. LINDA BOONE JOINING US NOW. SO FAR THIS WEEK, WE HAVE HEARD A LOT OF STORIES ABOUT SCHOOLS NOT NECESSARILY BEING QUITE READY BUT THEY HAD TO OPEN THEIR DOORS ONE WAY OR ANOTHER. > > PUTTING THEIR PREPARATIONS TO PLAN AND A LOT OF THEM ARE SORT OF HOPING FOR THE BEST. CAROLINE: HOPE FOR THE BEST. HOPE FOR LARGELY A MIXTURE OF ONLINE AND IN SCHOOL LEARNING, DO YOU THINK? > > I THINK MOST WILL START WITH REMOTE LEARNING, ESPECIALLY THE LARGEST DISTRICTS, NEW YORK CITY IS THE ONLY MAJOR DISTRICT IN THE U.S. TO INCORPORATE SOME IN PERSON LEARNING. SOME HAVE A TIMELINE. SOMEONE TO REOPEN SCHOOLS LATE FALL. OTHERS ARE JUST WATCHING IT, PLAYING BY EAR. ROMAINE: ONE CONCERN HERE, WE TALK ABOUT THE REMOTE LEARNING ASPECT. FOR THOSE OF US WHO ARE FORTUNATE ENOUGH TO BE ABLE TO AFFORD COMPUTERS AT OTHER DEVICES, IT IS PRETTY EASY. BUT THERE IS STILL A LARGE CADRE OF PARENTS WHO DO NOT HAVE THE LUXURY OF THE REST OF US DO. > > THERE IS SOMETHING CALLED A HOMEWORK GAP, THE IDEA THAT SOME FAMILIES DO NOT HAVE THE COMPUTER ACCESS TO HAVE THEIR KIDS LOGON. SOME SCHOOL DISTRICTS HAVE TRIED TO REMEDY THAT. PARTNERING WITH CABLE COMPANIES. THE PROBLEM WITH THAT IS THAT SOME PARENTS SAY THE INTERNET IS NOT HIGH-QUALITY. SOME COMPUTERS ARE ON BACKORDER OR THERE IS JUST NOT ENOUGH FOR ALL THE KIDS. THE OTHER PROBLEM IS THAT THERE IS NOT ENOUGH DATA ON WHO HAS INTERNET ACCESS AND WHO DOES NOT. CAROLINE: GREAT ANALYSIS, BLOOMBERG'S LINDA POON. IT IS INTERESTING WHAT IS HAPPENING IN THE U.K.. THE U.K. HAS WELCOMED SCHOOLS TO REOPEN. AN AWFUL LOT OF THE POLITICAL COMMENTATORS HAS BEEN ABOUT CHILDREN NOW HAVING TO ADVISE THEIR PARENTS THAT IT IS TIME TO GO BACK TO WORK. YOU ARE STARTING TO HEAR THAT CALLED OUT IN NEW YORK. ROMAINE: WE HAD A LOT OF FOLKS TALK ABOUT THE IDEA OF GETTING KIDS BACK THAT ONLY FOR THE HEALTH OF THE ECONOMY BUT BECAUSE IT IS SAFE. THERE WAS A GREAT STORY ON THE TERMINAL SAYING THAT A LOT OF THESE EMPLOYERS MAY TAKE A HARDER LINE IN TERMS OF GETTING PEOPLE BACK IN THE OFFICE. CAROLINE: A DISCUSSION POINT ABOUT NEEDING KIDS TO GET BACK TO SCHOOL AND PEOPLE TO GET BACK TO THE OFFICE. > > CULTURE AND TENDENCIES IS A REALLY STRONG THING ON WALL STREET. THE CULTURE AROUND WALL STREET HAS ALWAYS BEEN A CULTURE OF SHOWING OFF. HE NEVER WANTED TO GET INTO THE OFFICE AFTER YOUR BOSS ARRIVED. YOU NEVER WANTED TO BE THE FIRST PERSON TO LEAVE ON A FRIDAY AFTERNOON. HE ALWAYS WANTED TO SHOW UP. THERE HAS BEEN THE OPTICS AROUND THAT, WHICH HAS BEEN REALLY IMPORTANT. AND THEN THERE IS THE REALITY THAT THE DENSITY OF A TRADING DESK, THE WORKFLOW AND RISK OF TRADING SITUATIONS, SOMETHING ABOUT THE TRUST AROUND I TO EYE CONTACT -- AROUND EYE TO EYE CONTACT. CAROLINE: PRESENTEEISM. ROMAINE: JUST SHOWING UP. IT IS AN INTERESTING COMMENT AND I GUESS IT RINGS TRUE FOR CERTAIN INDUSTRIES AND CORNERS OF THOSE INDUSTRIES. WHERE IS TAYLOR, BY THE WAY?

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'Bloomberg Markets: The Close' Full Show (09/08/2020)

Caroline Hyde & Romaine Bostick bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackle GM's stake in Nikola and tech stocks continue their selloff Guests Today: Trevor Milton of Nikola, Isaac Boltansky of Compass Point Research, Michael Turrin of Wells Fargo Securities, Matt Brill of Invesco, Brent Schutte of Northwestern Mutual Wealth Management, Rebecca Babin of CIBC Private Wealth Management. (Source: Bloomberg_TV)