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This is Bloomberg Business Week Daily.

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Plus, global business, finance, and tech

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>> SpaceX has already received orders for

more than the shares available in its

$75 billion IPO. That's according to

people familiar with the matter. It puts

the company on the verge of setting the

record for the biggest ever listing

separately just crossing the Bloomberg

terminal. Bailey Lipult's leading this

story, too. A quiet effort by Morgan

Stanley to prevent retail investors from

placing multiple orders for shares of

SpaceX in the company's massive IPO is

facing push back from some of the

country's largest brokerages. Bay Lip

Schultz joins us now. He's holding on

the fort in Bloomberg headquarters in

New York, the Bloomberg Interactive

Brokers Studio. Bailey, you lead our IPO

coverage. We're going to talk about uh

SpaceX and the fantastic reporting that

you and the team have done around it. We

do. Before we do that though, as we just

heard from Charlie, we're seeing a major

sell-off today with some of the chip

names uh really leading the charge

lower. Your view on this equity market,

especially as tech has been leading the

way, giving back some of these historic

gains.

>> I mean, Tim, I go to Italy for about 2

weeks and the market's at an all-time

high. On no news though, Tim, no news

happens, the market goes up, no one bats

an eye, we see two days of weakness and

all of a sudden the sky is falling. Just

want to call out the fact that yes, the

Philadelphia semiconductors index is

down more than 9 and a half% right now.

It's up 74% year to date. If anyone told

you that uh that would be the case

sitting here on June 5th, I think they

would take that. NASDAQ 100 of course

down 5% from its uh all-time high on

Tuesday. It does seem like a bit of

concernation. I think the big question

when I talk to investors is what's the

next move for the Fed? And it does seem

increasingly that the logical answer has

to be a hike. Whether that's later this

year, whether that's early next year,

obviously we'll see how the economic

data play out, but it does seem like

kind of a natural way to take your foot

off the gas pedal going into a weekend.

Obviously, we're still living in uh

breathing everything that comes from the

from the White House. But the big

question at the end of the day is, is

this a market that did nothing but go up

for a number of weeks, if not months, uh

for no real reason, and what kind of

lies ahead? And obviously, there's going

to be a big IPO next week. That'll be

interesting to track as well.

You know, having said that, Bailey, I do

feel like this is a moment in time where

like there's just such a FOMO trade,

especially when it comes to AI and tech

and even some of these IPOs, which we're

going to dig into in just a moment. We

talked with John Flood over at Goldman

Sachs earlier, you know, and he tracks

hedge funds and institutional investors

and did talk about um the hedging that

these folks are doing so that they're

not all in on everything. Um do we see

any of that? Do we see a rise in short

positioning at all? Do we see anything

that kind of says all right people are

enthusiastic but they're also playing

this smart?

>> I think there is kind of that sense when

you look at some of the data that we see

in others track it does seem like dips

are being bought in the sense that some

of these memory stocks are being added

to today. We did see people taking

protection over the last few weeks as it

relates to some of those higher flyers.

But Carol, it still is an interesting

market where you do see certain uh short

positions rising, but in other pockets

of the market, you're still seeing

exuberance or even just shades of

exuberance as it relates to what the

future could hold. So, we're seeing a

lot continuing to play out. The big

thing has been this is a market that

when I look back over a few days ago

even uh I expected to see a sharper

pullback and coming into today we were

down you know

>> 80 NASDAQ. Sorry.

>> Yeah. No, don't be sorry. It's like a

lot coming at us. We're looking at, if

we look at the chart, kind of a slope

down on all these major equity averages

and we are now uh down about 4 and a.5%

or more than 4% on the uh NASDAQ 100.

So, we continue to see selling into the

close here, Tim.

>> Yeah, Bailey, does it change? Does it I

know I know one day does not make a

market and especially given the the

rapid move higher going back to the end

of March that we've seen, especially

with tech. As I mentioned earlier this

week, the NASDAQ 100 was up more than

30% just from March. The Socks was was

up more than 90% earlier this week,

still up, as Carol mentioned, more than

70%. Does it does it change I'm not

going to say does it change the timing,

but does it change the environment that

SpaceX goes public in?

>> I think anyone who says that the NASDAQ

100 down almost 5% in a single day

doesn't matter is uh is probably lying

to you. Um, but I do think, listen, this

is I'll give you the summary that I've

been giving people.

>> It's been 5 months ago. We and others

reported that SpaceX wanted to raise $75

billion at a 1.75 to 1.8 maybe $2

trillion valuation. That was 5 months

ago. Here we are in June and it's

happening. They set a fixed price a few

days ago for this IPO. If there ever was

a deal that has been as transparent or

the worst kept secret, it's this one.

So, anyone who's now all of a sudden

saying, you know, the NASDAQ 100's down

4 and a.5%. I actually can't cut the

check to SpaceX that I thought I could a

week ago. Well, where were you when the

stock was the market was in a bit more

turmoil? And I think that's just one

thing that I think people have to keep

in mind that we've been talking about

this for months. This isn't a deal that

came out of left field. It's not a deal

that started with a price range that was

north of $2 trillion and they have to

sell investors on that notion. This is

something that bankers in the the

company have been at least through our

reporting and others been pretty open

and very clear about

>> the demand that we're already seeing

right now for this IPO next week. How

would you characterize it?

>> It's expected. Uh I mean 75 billion

>> nothing nothing off the charts, nothing

surprising.

>> No, I I think this is again we know that

the company did one-on-one meetings at

Starbase with some of the biggest

portfolio managers in the world back in

January.

>> Does it need to do that? Everybody sees

what the rockets do.

>> Everybody knows who Elon Musk is.

>> Tim, I'm gonna direct you to some of our

reporting and say that this is a company

that

>> a year ago was a space monopoly and now

they're pitching a 26.5 trillion AI

market. This is a company that when you

look at the sellside models that we were

able to get our hands on, analysts are

penciling in AI to bring in 755 billion

in sales in 2031 according to Evercore

ISI research analyst. That was 3.2

billion last year. So there's a lot of

excitement, there's a lot of opium, but

this is a company that before the XAI

merger was strictly a space company. And

now we're seeing the magic of Elon Musk

or at least uh people being excited

about what AI could bring and what

orbital data centers could bring. And I

tuned into that conversation Musk had

with Jamie Diamond yesterday talking

about making Star Trek reality. Yes,

this is all Elon Musk, but this is

something we saw play out with Tesla and

we're going to see it play out with

SpaceX.

>> Well, as people reminded us at the

Bloomberg Technology Summit yesterday,

ble never count uh Elon out just about

30 seconds. I think

>> that's Trey Stevens at Anderville with

his conversation with Ed Love. He said,

"Don't bet against Elon."

>> Exactly. Um what will be key though is

how this stock once it IPOs trades in

the months uh right after just quickly.

>> Yeah. It'll be critical and I think even

day one will be closely watched if 30%

of this does get allocated to retail

north of $20 billion. We've never seen

that. So it's going to be key for

markets and for the company hands down.

>> Got to say it is a fun time to be

covering markets right now.

>> Yeah. Don't go back to Italy next week.

[laughter]

I came back and all of a sudden

everything was still going crazy.

>> Madness. [laughter]

>> Yeah, I I I I agree that you can kind of

disappear, come back and create crazy

still exists. Bailey Lip Schultz, we

love you. Bloomberg News Markets

reporter covers the IPO market and so

much more at Bloomberg.

>> Stay with us. More from Bloomberg

Business Week Daily coming up after

this.

>> You're listening to the Bloomberg

Business Week Daily podcast. Catch us

live weekday afternoons from 2:00 to

5:00 Eastern.

>> Listen on Apple CarPlay and Android Auto

with the [music] Bloomberg Business App

or watch us live on YouTube.

[music]

>> A force behind the event, Tom Giles.

He's senior executive editor for global

technology here at Bloomberg. He joins

us from our [music] San Francisco

bureau, just steps away from us. Tom,

first of all, congratulations on a great

event. You had some awesome

conversations. We're going to talk about

some of them. Andrew Feldman over at

Cerebras. Dan Schulman of Verizon. Alli

Godsy, president and CEO of Data Bricks.

Uh Hawkan of Broadcom. That's kind of

where I want to start because Broadcom's

now having its worst two-day stretch

ever. Shares getting crushed yesterday

down more than 12%. Uh the company

forecast for AI chips disappointed

investors down again today. Really

timely conversation. What did you want

to to to hear from Hawkan at Broadcom?

Well, the biggest thing I mean, you

know, yesterday on the news was the

fact, as you said, its shares were

falling, dragging down chip stocks. It's

having another bad day today. And that's

on the heels of basically a uh a lighter

than expected forecast for revenue in

the current quarter. And remember that

that is on the heels of a huge runup,

adding hundreds of billions of dollars

in a in market capitalization in a

matter of days. What that speaks to is

just how many how high the expectations

are for chipmakers like Broadcom in the

AI era. Um, and if you don't meet or

exceed expectations, and sometimes if

you don't exceed expectations by a lot,

there's going to be disappointment. What

people are worried about and a theme

that we kept coming back to during the

conference yesterday is whether enduser

demand will be sustainable and that's

demand for chips and the infrastructure

needed to uh for these large language

models that are that are basically

changing the way we live and work and

operate. Um and then whether there will

be end-user demand for those the actual

outcomes the actual services that are

being created by chat by open AI

anthropic XAI and the other large

language models that are investing so

much money into these into these into

this infrastructure. Um

>> well let's Tom I want to jump in because

I want to go to part I want to go to

part of that interview that you had with

Hawkan over at Broadcom yesterday. This

is him there was a lot to choose from.

This is him just weighing in Hawkan at

Broadcom on the AI super cycle and the

hype cycle the enthusiasm.

>> Yes, we are kind of like AI in a very

surreal environment.

Frankly, I I don't think about that. No,

it's hard not to, right?

>> But no, just focus on fundamentals,

create value, and stop thinking about

your stock price. Trouble is very hard

to do that.

Yeah, I would imagine it's it's very

hard to stop thinking about the stock

price. That was Hawkan on the Broadcom

uh AI hype cycle from your conversation

yesterday at the Bloomberg Tech Summit.

I mean, it is it is hard to walk around

San Francisco and not think about AI

because it is everywhere. I mean, every

single ad, every billboard from the

legacy tech companies talking about how

they're harnessing AI agents to startups

that this point I I've never heard of. I

mean, this is what this is the

environment that we're in right now.

>> Yeah. I'm so glad other people are

experiencing it who live outside of San

Francisco. Um it is surreal. Um and we

are in something of a bubble and I don't

mean a bubble in terms of inflation of

stock prices although that may be the

case. I just mean a bubble in terms of

the fact that this is on everybody's

mind. It's the topic of conversation and

it is a there is a big conversation

happening right now about whether we've

experienced paradigm shift from whe

where the old values the old adages and

the old truths about how markets operate

um boom bust cycles and whether we're

breaking out of it. And there's a lot of

people who are very pessimistic about

the idea and that that look we are in a

bubble that there will be a crash that

demand will not uh meet these

expectations. Um

there's also people who say we've kind

of entered a new phase and I just want

to give one case in point. When I was

talking to Broadcom Broadcom uh when I

was talking to Hawk Tan

>> I asked him about this is a company that

has built itself in many ways on

acquisitions. Hawk is known for big bold

acquisitions. Not all of them came

together but he made some really really

big ones and that was very much a

trademark of the way he managed things.

Now in the generative AI era he has

obviously embraced AI chipm providing an

alternative a competitor to Nvidia which

is the far andway leader right in

designing these AI AI accelerator chips.

Um, and he's basically said, "We're kind

of entering a post M&A phase where I

don't need to do that to add growth.

What I'm doing now is doubling down on

chip development and working." And a

couple of examples are his the deal that

he that he has with uh Google through

2031 to work on his TPUs. Another uh

another one is the work that they're

doing with Anthropic, right? One of the

biggest LLM.

Well, and you know what's interesting,

like kind of playing off of that, so

many people, Tom, as you know, just

talked about the incredible demand and

trying to keep up with it. There was

another conversation that Shireen Gafari

had uh with anthropic co-founder and

president Daniela Amode, and she too

talked about just the incredible spend

that's needed. Let's just listen to a

snippet of that conversation at

Bloomberg Technology yesterday. speaking

for you know ourselves and I think

ideally probably really for the AI

industry more broadly it's a very

capital intensive business to to train

AI models I think the sort of core set

of companies that are working to advance

the frontier are just going to need

access to capital um and I think the

public market is very well suited to

that

and that of course is Daniela Amode of

Anthropic it's interesting on a day

where Meta is weighing raising tens of

billions of dollars in a new share sale

that came from from FT, but it everybody

seemed to talk about that you got to

keep spending to build Tom.

>> Right. Every couple of days we hear of

another mega multi-billion dollar deal

whereby a company uh whether it's the

open AI anthropic side of the fence or

the uh the big uh the the Googles and

the metas and the Microsofts of the

world um these so-called hyperscalers

they all are looking for ways to raise

the capital that they need to keep

developing their models and to keep

ensure that they have access to the

computing power. It's very expensive.

It's very capital intensive as you said.

Um, you know, every couple of days

there's another, you know, multi-billion

dollar deal. And, you know, we're

talking about, we're on the cusp of

three major IPOs. Another big theme of

the conference, another big theme out

here in Silicon Valley is ex uh, sorry,

SpaceX, Anthropic, Open AAI, all of them

looking to raise tens of billions of

dollars in the public markets. Um, and

you know, just when you thought it was

safe to, you know, kind of get back

into, you know, IPO mode, here comes

Google, which IPOed decades ago. They

too are going to tap the public markets

through an equity offering again to

raise tens of billions of dollars. Uh,

but to get back to Daniela, one of the

one of the nice things about that

interview was getting her to weigh in on

the IPO. There's not a lot that they

have said about their IPO plans. There's

not a lot that they can say publicly.

they did file confidentially um and they

really need to be careful to not run a

foul at the SEC rules, but she did um uh

to our um to our you know delight talk a

little bit about the IPO and just

admitting like yeah we need this is

another source of capital for us to buy

those chips and those data centers.

Yeah, I I I you know, it's kind of a

good segue to talk about an interview

that you did too this week, Tom, with a

company that did go public a few weeks

ago. Carol was there for for this one.

She's been raving about it. Um we're

talking about the interview that you did

with Cerebrus' CEO, Andrew Feldman. Um

let's take a listen to what he had to

say uh about the idea of bubbles. I

think historically bubbles were

characterized by um a notion of if you

build it they will come. What is unusual

about AI right now is the builders are

so far behind the demand it's absurd. We

we have a backlog of more than $25

billion of demand that there are none of

us, not us, not AMD, not Nvidia that can

keep up with the demand that that your

employees are driving.

And that's sort of in a lot of ways the

the opposite of a bubble.

>> Andrew Feldman, Cerever's CEO, talking

to you uh Tom earlier this week at the

Bloomberg Technology Summit here in San

Francisco.

I the the demand question I think is a

really important one right now. He

pointed if you're just listening to us

on radio, he pointed to the audience and

he said um your employees are driving

and he's referring to the executives in

the audience there. But at the same

time, we're hearing from some companies

that they they want to crack down on

token usage at their companies. We had

an executive at Uber this week

essentially saying that. We've had

critics come on our program that say,

"Well, the idea of all these employees

using all these tokens and us spending

so much money, we're not actually seeing

a return on that." How are you thinking

about that part of the conversation

right now?

>> Mhm. Yeah. And you know, we talked to

several executives about that, including

the Verizon CEO and and and there's, you

know, there's two schools of thought.

There is the people who say, "Look,

yeah, we do need to impose limits. we

don't want people, you know, just

willy-nilly using this computing power

which is so expensive. Um, and so, yeah,

they're being a little bit more choosy.

They're putting limits, they're

metering, they're throttling, whatever

verb you want to use. Um, they want to

know that there's going to be a return

on that investment. So in the earlier

days of the generative AI phase kicked

off you know late 2022 roughly um there

were a lot of companies who were telling

their employees go experiment build

create chat bots and now we're talking

more and more about agents that's still

happening but I think people are

starting to get and businesses are

starting to get more strategic about how

they're doing that how much you can

spend and so it does make sense for

people to be a little bit more choosy,

be a little bit more put impose some

restrictions, put some parameters around

that. Um, uh, yeah. So, um, I think the

other thing, well, go ahead, Carol.

>> No, you know what I love too is when you

talked to, um, Andrew Feldman and he

said, "We're going to you're going to

see people shopping, I think, for AI,

right, in different models or usages

like we go to Costco." Like, it was a

really smart kind of analogy to how you

think about it.

Yeah, I remember him talking about

buying a big tub of mayonnaise and you

know, you just don't need it. So, you

got to be you got to be strategic. Um,

the other thing that we're starting to

see too is that as you as engineers,

software programmers have the option to

choose between different LLMs. You don't

have to you're not you don't have to be

wedded to one particular one. So,

they're going to start shopping around

um more and more and being strategic.

And what is interesting is that there

are certain tools that we can look to um

that open router for example that can

give us an indication of token usage and

and who's ahead and which LLMs are sort

of gaining momentum at any particular

time. Um and we've seen over recent

months um when people have the choice

when engineers have the choice when they

can choose between a different LLM for

particular you know one one thing or

another one task or another they're

gravitating toward the lowerc cost LLMs

and increasingly the lowerc cost LLMs

are coming from China that's something

that's really interesting now there are

certain companies there or businesses

that place limits maybe don't you know

let their employees use say something

created by Alibaba or Deepseek for

example and then there's others where if

you've got access to them people are

using them um you know and obviously

different LMS have different strengths

anthropic has really leaned into

tailoring its tools for businesses um

and so people you know for certain tasks

people say you know nobody can beat

Anthropic um Mythos their their tool for

cyber security is something that comes

to mind people say that's you know

significantly ahead of comparable tools

by other companies. On the other hand,

if there is some kind of a task that uh

that you can accomplish using a cheaper

LLM, people are going to do that and

that does have implications for again

lower cost models coming from China.

they just have done a better job of

doing things more efficiently. And

that's something that's, you know,

should resonate with us at a time when

the US is engaged in this war with China

over who's ahead in AI. We have done the

US has done a lot to try to handicap uh

China's ability to get access to chips,

for example, advanced chips to sort of

ensure that the US stays ahead, right?

And you know, in many ways,

Chinese-based LLMs are catching up.

>> Yeah. I mean, I highly, it's just

amazing like all the conversations and

and what's going on and and you can't

help but feel that the uh CFOs of

companies are going to start looking at

that ROI and looking at the cost and

what the benefits are to an

organization. Tom Giles, you rock.

>> Stay with us. More from Bloomberg

Business Week Daily [music] coming up

after this.

You're listening to the Bloomberg

Business Week daily podcast. Catch us

live weekday afternoons from 2:00 to

5:00 Eastern. Listen on Apple CarPlay

and Android [music] Auto with the

Bloomberg Business App or watch us live

on YouTube.

As you know, um, trading news, a lot of

things keep us honest and all bullish

things must come to an end. We're

certainly seeing that in the trade

today, Tim, or at least a little bit of

a breather. Yeah, as we've been

reporting, as you just heard from

Charlie, Wall Street's historic weekly

run poised to come to a halt. Stocks and

bonds falling after that solid jobs

report added to speculation that the

Fed's next interest rate move could

actually be a hike.

>> All right, so let's get into the trade

now that we know what the backdrop is

right now. Natalyia Kenny Javich is with

us. Bloomberg News equities reporter.

She's back at home base at Bloomberg

headquarters in New York City along with

John Flood. He's Goldman Sachs partner

and head of America's Equities Execution

Services. as we said, both back in New

York City.

>> Hey, John, Natalya, good to have you

both with us. John, I just want to get

your thoughts on on where we are in in

in maybe a cycle here. And I'm I'm

struck by the news of Meta Platform

shares down right now, the company

weighing a big equity raise after that

blockbuster Google deal that we got

earlier this week, $85 billion in a

share sale. John, I know I I'm not going

to get you to comment on an individual

company, but comment on what it means to

you when you have huge mega cap tech

companies doing share sales or possibly

doing share sales like this. What signal

does it tell you?

>> Signal tells me that it's a very healthy

market right now in terms of the supply

and demand that's out there in the

marketplace. And I think that we've seen

uh you know in I speak with institutions

at Goldman Sachs, institutional

investors and there's never been more

robust demand for these offerings and uh

my expectation is that trend continues.

Uh and uh that's a major piece of why we

are very constructive this equity market

despite S&P 500 already making you know

24 all-time highs. Uh we expect more of

that to come in the future. So, John,

how do we know though that it isn't just

a case of FOMO and people just chasing?

I mean, it's so much money, so much

momentum in terms of the AI spend and

build debt side equity tapping markets.

We heard from the Bloomberg technology

folks yesterday, a big conference, lots

of major players in the AI space saying

demand is incredible. They just the

momentum. How do we know though that

it's not just kind of a major major FOMO

trade and that there's going to be some

kind of reality or reckoning coming in

the near future?

>> Because from the institutional investor

perspective, we actually still see a lot

of discipline out there. There's still,

I think, a wall of worry left to climb

higher in this market. What what we look

at is our prime brokerage data. And one

of the most important pieces out there

right now, I think, is gross exposure.

So essentially hedge funds are still

long a lot of their single stocks AI

tech exposed names. They're also more

short macro products against these longs

than they ever have been in the history

of our data set. What that tells me is

there's still healthy skepticism about

what is going to happen next. I want to

be I want to hold my longs, but I want

to make sure I'm hedged. And it's

essentially the most hedged we've ever

seen hedge fund clients at Goldman Sachs

on the equity floor. John, what is your

take actually on today's stock market

sell off? Because we hear lots of

conversations about uh some market

participants, you know, uh taking

profits off the table because they're

prepping for this huge wave of big tech

IPOs. Uh so what is your take and what

does Goldman also think? Is it a buying

opportunity? Is it time to buy the dip?

>> I think that there have been few and far

dips to buy uh so far this year. Um, so

yes, when you have a a 2% sell off in

the S&P 500, it has paid to buy those

dips and and I think it continue and I

think that will continue. Uh, I think

today you have some profit taking into

the weekend um, ahead of what is likely

going to be continued supply uh, as

evidenced by the news that just broke.

But really, we had a strong job sprint

this morning. And I would say what are

the fears that people continue to uh,

list as top concerns? It's inflation.

It's Iran. It's private credit and this

morning's jobs print, you know, has

moved has rates moving higher and people

now think that we will get a rate hike

and by year end. So, it it is I think

it's healthy. I do think it's a buying

opportunity. Um, and I think that there

is still a significant amount of worry,

cash on the sidelines, short exposure

out there for for the market to climb

higher.

>> Got it. You know, I also wanted to ask

you about one um indicator tracked by

Goldman Sachs. It basically tracks all

positioning across um hedge funds um

long only investors, retail funds. It is

interesting because the stock market is

at all-time high. At the same time,

positioning is still at a neutral level

which means that there is more room to

run. So, first of all, please tell me

why is that why positioning is still so

low and what it means for the stock

market direction.

>> It it's likely a tailwind and that's

exactly what we said. Despite us being

close to all-time highs at the index

level, from an institutional investor

perspective, there is still concern out

there. We see that through gross

exposure being at all-time high

expressed through a lot of short hedges

and macro product and from mutual fund

cash balances. If you look at uh

notional dollars that remain on the

sidelines for mutual funds, we are still

at uh you know, we're still at long-term

average. It's not like there's it's not

an outlier. So when you look at hedge

fund exposure, you look at mutual fund

cash, there's still plenty of skepticism

left out there. That's why our sentiment

indicator is showing healthy

positioning, not overextended

positioning.

>> John, that makes me happy that there's

some negative sentiment out there. I get

very nervous. You know, we're just at

this tech event. We talked a lot about

AI. Hctan of Broadcom was here. I mean,

all of the major players and there was a

lot of enthusiasm. I think it's safe to

say with some cautiousness but a lot of

enthusiasm. Having said that, because of

what you are seeing particularly among

institutional investors and hedge funds,

do you think the retail investor and

markets overall are not really thinking

that we could see some kind of pullback

or mini correction as a result?

>> I think that there is a slight

disconnect between the retail investor

right now and the institutional

investor. Uh that being said, I think

that retail will continue to buy the

equity market. Um as we have some uh

mega cap uh IPOs likely in the pipeline

between now and year end. We we'll see

what how that plays out. But these are

high-profile companies that typically

grab the attention of retail. And once

retail stops by starts buying, they

don't really stop unless there is true

job loss. Our data shows that that

retail bid disappears when there is job

loss. And the last time that we saw

retail as a net seller of the US equity

market for more than a consecutive week

was back in March of 2020 during the

depths of CO. So really like you have to

watch the you have to watch employment,

you have to watch jobs and until we

start to see job destru destruction that

retail bid will likely remain a healthy

uh a healthy constant in the

marketplace. Well, we we certainly got a

positive print today in in that arena.

John, I'm I'm wondering though, what

would give you pause apart from job

losses? What would what would give you

pause with an equity rally such as this?

>> If we started to get disappointed in

earnings um and frankly, we continue to

see companies clear these hurdles. Uh

last quarter, earnings were solid. We

are optimistic about next quarter. If

you start to see earnings holistically

across the S&P 500 disappoint, that

would be highly concerning to me. Um, we

haven't seen any evidence of that. We

aren't bracing for any uh evidence of

that in the near term.

>> I have to ask you John about systematic

funds because uh as we um remember in

March this market was really driven by

technical factors. uh what does uh your

data tell us right now about how uh

positioning look like looks like across

CTAs uh well control funds and what does

it mean again for the stock market

direction

>> systematic funds have had a solid year

of performance uh and right now they are

relatively full in terms of S&P 500

exposure this is an incredibly

momentumdriven community and right now

as the market moves higher they will

continue to add that being said the

highest velocity of buying is behind us.

If we do take a turn lower, you know,

have several more days of what we're

going through today, you will see that

CTA community start to sell the equity

market. That being said, the systematic

uh positioning in the marketplace is

very small relative to retail, relative

to corporates, relative to hedge funds,

asset managers, sovereign wealth funds.

So that would be one noteworthy piece of

supply. We think all the other sleeves

of demand outweigh that in a move lower.

>> I agree. But at the same time, when they

sell, you really feel it because they do

it so quickly.

>> Correct.

>> Uh so again, regarding today's selloff,

we see that the S&P 500 basically is now

trading uh P ratio uh closer to

long-term average. So do you feel that

the market right now is fairly priced in

ahead of the next earning season?

>> We don't think it's overly expensive. We

get this question in terms of, you know,

are we optimistic on earnings? Yes, we

get this question within memory space

all the time. Um, and we still think

memor memory, one of the highest

momentum uh sleeves of the market right

now is still relatively fairly priced

and and we see that with our

institutional clients right now. There's

a ton of focus in Korea, in Taiwan,

Taiwan, outside of the US. And it's

there is still uh you know, there's

still real value to find even though

some of these markets appear to have

gone up and to the right, there's still

room to run because the fundamentals

back it.

>> Mhm. Hey, John, just Oh gosh. Go ahead,

Nat.

>> No, no, please go ahead, Carol.

>> Hey, well, I just got to ask John, we

just got about 30 40 seconds. We

obviously want like an hour with you

because this is all incredible. the IPO,

Cerebrous IPO, that was the biggest.

We're getting ready for the SpaceX IPO,

anthropic IPO. Um, just watching. I know

you can't talk specifics, but does any

of this smell a little bit like a top of

the market, or does it all feel

justified and fundamentally justified?

And again, just got about 30 seconds.

>> As of right now, we still think that

fundamentals justify uh what we're

seeing go on in the equity market. Um,

so yes, like we are constructive on our

desk. Uh, we think S&P 500, we think

these dips are buying opportunities and

and we think that there's a clear path

to 8,000 and beyond this year.

>> Wow. All right, John Flood, thank you so

much. Goldman Sachs partner, head of

America's equities execution services. I

hope you will grace us with coming back

again and joining us. Natalyia Keny of

course too and uh really appreciate it.

She is Bloomberg News equities reporter

back there at Bloomberg headquarters.

>> Stay with us. More from Bloomberg

Business Week Daily coming up after

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live on YouTube.

>> Well, the FIFA 2026 World Cup kicking

off next week across Canada.

>> Did you get your tickets?

>> I did not. I don't I don't know that I

could afford them.

>> I I know somebody who's going to five

games.

>> Somebody

>> I'm I'm not joking. A friend of mine is

going to five games. He's been saving

up.

>> Did they mortgage? Did he mortgage his

house?

>> He He said, "I remember I was 7 years

old the last time this was in the US in

North America. I am going to go He's

going He's going to four games that he

paid for and one for work that a client

is taking him to."

>> Uh I don't I get it. If you're really

>> Seattle, LA, New York, all over the

country. also going to games. Uh, of

course, our our team here at Bloomberg

who covers sports. Bloomberg's Vanessa

Pommo Magleion will be at some of the

games as well. And she's been reporting

out on what to expect, some of the

controversy because it's not inexpensive

to go see uh some of these games and

there's a lot of issues at play

including security. So, Vanessa joins

us. Vanessa, of course, she is Bloomberg

News sports business reporter and host

of the Bloomberg business of sports

podcast back at Bloomberg headquarters

in New York City. Also with us is Dan

Arnold. He's senior vice president of

national operations at the uh managed

security services provider Protoc. He

joins us from Omaha, Nebraska. Uh Dan,

great to have you here with Tim,

Vanessa, and myself. Security is a big

issue. You've been in the industry for

like a quarter of a century. I'm not

trying to date you or age you or

anything, but you've seen a lot. You

understand you've worked with corporate

security. Put the World Cup games here

in North America, here in the United

States. Give us some context. How do you

characterize this event in terms of

spend difficulty and heightened

concerns?

>> Carol, it's a great question. And Carol,

Tim, Vanessa, thanks for letting me

participate. Carol, you can join me in

Kansas City if you want to come watch me

here in a couple weeks.

>> I would love to.

>> Yeah, let's let's do it. You'll sit

right beside me. I'm going to be in the

stands cheering with the others. But

sitting in those stands, you know, I

think that's that's really where your

question and how do you get safely to

those stands? This is like 11 sites

across the country, right? In the United

States alone, it's 11 simultaneous Super

Bowls. And the challenge of security for

those environments at 11 at one time is

is a major strain on public and private

uh municipal and federal security

partnerships. Dan, I you know, I think

the interesting thing here is how

differently each city is handling it.

We've had a lot of cities come out

against the funding that wasn't released

right away, but how are different

cities, you know, in Kansas City, how is

it being handled differently than New

York? How how are each city and the size

of those cities go into play here?

Yeah, the funding certainly

[clears throat] is controversial and

some challenge, but I but I know what

the local folks are doing and you get

private private security companies and

the and the public law enforcement uh

the municipal leadership I know well

over a year, right? There's been very

detailed planning and those groups are

very tight and very coordinated. And

while they always will want more funds,

um setting up communication,

understanding where forward operating

centers will be, understanding how

you're going to use technology in and

around the venues, uh different routes,

different patrols, uh you know, how are

we going to get people safely in and out

of these environments. So the the

coordination

um has been very strong and it's been

very exciting to watch these private

public partnerships

>> and just so we know I mean because of

how differently everyone's handling it.

Is it up to each city to decide how much

they want to invest into security? I

mean every city like we said it's

different. the Metife getting to Metife

is completely different and having to

deal with potentially a Knicks NBA

Finals overlap there is going to cost a

little bit more have a little bit more

people. So how are the budgets decided

there and how do they spread spread out

this money?

>> Yeah, certainly with BEFA coordination

there are standards and minimum

standards for safety and security but

these venues have great and strong

security operations teams right they

support NFL events and other events. So,

these venues have a lot of expertise and

experience and understand the funding it

it does take to to provide safety and

security for these events. Um, but it's

important that it's not one plan fits

all. And I think that's what's been very

good about the the local jurisdictions

and the local venues to say roots like

you mentioned to get to Metife or get to

Arrowhead. Uh, wildly different wildly

different needs in each community, in

each market. And so, um, again, I think

the funding has been appropriate. Could

always be more, uh, but they, but

they've been able to design good, safe,

solid security plans, you know, in all

of these local markets that really fit

the local market. Dan, I don't want to

obviously I don't want to give away any

secret sauce here, but in an age of uh

where where we're seeing drones deployed

in ways that was kind were kind of

unthinkable in the last few years, it

does seem like sort of airborne threats

are potentially some of the biggest

challenges around the country. How do

you think about that and sort of drone

technology?

Yeah, I think with drone technology,

with the advancements of um, you know,

some of the AI with camera systems and

operations in security space, um, it has

been it has become uh much cheaper, you

know, less expensive to uh maybe cause

some chaos or cause some frustration,

right, with with drones and other

things. People most of the time in good

nature want to have cool videos and

something for socials uh but they don't

understand the disruption it causes and

so it is certainly part of the plans

right there is counter intelligence

teams there are teams with technology

trying to monitor uh there are flight

restrictions around these facilities um

and all those are in place to try to

prevent but it doesn't mean it's 100%

and so the teams have response plans and

have been working hard understanding

that some of these technologies and the

the cost of these technologies have made

it a little bit easier to cause a little

disruption.

>> Dan, one thing I want to ask you about

that I've been hearing about because of

the inflated prices on some of the

transportation is that some fans are

going to try and find ways to walk to

the stadiums. How do you plan for

something like that?

>> Well, it's it's certainly depends on the

market, right? a little harder to uh

probably walk the Metife than it is some

others. But um you you have major issues

with all the uh uh ju just transport in

general, right? The public

transportation routes like you

mentioned, but as we're talking about

pedestrian traffic, the choke points and

uh you know guide paths that you need to

be able to do that safely and securely,

not disrupt traffic is highly

challenging. And so um

they are working very hard to allow

pedestrians and others to get to these

facilities. It is not the easiest path.

It is not usually the common path at

these facilities.

>> But there are um I'd say centrific

centrific levels of security right

there. There are layers and layers of

security. They start very very close to

the facility and so as you go out

further around

>> Dan, we got to run. We got to run. So

apologize Dan Arnold and of course our

own Vanessa Purdomo Magleone. This is

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